1. Explain different approaches to the determination of working capital and discuss the concept of operating cycle.
2. What are the different classes of cash flows? How do cash flow problem arise? Discuss the various methods to overcome this problem.
3. Discuss the risk return considerations in financing of current assets.
4. “Liquidity and profitability are competing goals for the finance manager”. Comment.
5. From the following details you are required to make an assessment of the average amount of working capital requirement of Hindustan Ltd.
Particulars |
Average period of credit |
Estimate for the 1st year (Rs.) |
Purchase of material |
6 weeks |
26,00,000 |
Wages |
1½ weeks |
19,50,000 |
Overheads : |
|
|
Rent, rates, etc. |
6 months |
1,00,000 |
Salaries |
1 month |
8,00,000 |
Other overheads |
2 months |
7,50,000 |
Sales cash |
|
2,00,000 |
Credit sales |
2 months |
60,00,000 |
Average amount of stock and work-in-progress |
|
4,00,000 |
Average amount of undrawn profit |
|
3,00,000 |
It is to be assumed that all expenses and income were made at even rate for the year.