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184 Financial Management
Solution
Statement of Working Capital
Particulars Rs. Rs.
Current Assets
Stock of Raw Materials (1 Month)
(5,00,000 x 35% x 1/12) 72,917
Work in process (1/2 months)
Materials (25,00,000 x 35% x 1/24) 36,458
Labour (25,00,000 x 25% x 1/24) 26,041
Overheads (25,00,000 x 20% x 1/24) 20,833 83,332
Stock of finished goods (one month)
Materials (25,00,000 x 35% x 1/12) 72,917
Labour (25,00,000 x 25% x 1/12) 52,083
Overheads (25,00,000 x 20% x 1/12) 41,667 1,66,667
Debtors (2 months) At cost
Materials (25,00,000 x 35% x 3/12) 2,18,750
Labour (25,00,000 x 25% x 3/12) 1,56,250
Overheads (5,00,000 x 20% x 3/12) 1,25,000 5,00,000
8,22,916
Less: Current liability
Credits (2 Months) for raw materials
25,00,000 x 35% x 2/12 1,45,833
Net working capital required 6,77,083
Forecast Profit and Loss Account
Dr.
Cr.
To Materials By cost of goods sold 20,00,000
(25,00,000 x 35%) 8,75,000
To Wages
(25,00,000 x 25%) 6,25,000
To Overheads
(25,00,000 x 20%) 5,00,000
20,00,000 20,00,000
To Cost of goods sold 20,00,000 By Sales 25,00,000
To Gross profit 5,00,000
25,00,000 25,00,000
To Interest on
debentures 30,000 By Gross profit 5,00,000
To Net profit 4,70,000
5,00,000 5,00,000