Corporate Finance

Estimation of Working Capital 
 291

where

2

Opening balance Closing balance

Average balance of sundry debtors

+

=

and

Average daily credit sales = Annual credit sales/365.

V.
Average daily credit purchases

Average balance of sundry creditors

Average accounts payable period (in days)=

where

Average daily credit purchases = Annual credit purchases/365

and

2

Opening balance Closing balance

Average balance of sundry creditors

+

=

APPENDIX 3: FORMAT FOR ASSESSMENT OF

WORKING CAPITAL

month’s raw material requirement Rs ———————————
week’s/month’s consumable stores & spares Rs ———————————
week’s stock in process at any time Rs ———————————
month’s finished goods at cost Rs ———————————
___ week’s/month’s receivables Rs ———————————
One month’s manufactuing & admninistrative expenses Rs ———————————

Total working capital requirement Rs ———————————
Less: Credit available on purchase Rs ———————————
Advance payment received from customers Rs ———————————

Rs ———————————

APPENDIX 4: ESTIMATION OF PERMISSIBLE LIMIT

Permissible limit
Raw materials Rs
Less: percent margin Rs
——————— ————————— (A)
Stock-in-progress Rs
Less: percent margin Rs
——————— ————————— (B)
Sundry debtors Rs
Less: percent margin Rs
——————— ————————— (C)