First Method:

MPBF = (CA - OCL) - 25% of (CA-OCL)

Second Method: MPBF = (CA - OCL) - 25% of CA Third Method: MPBF = (CA - OCL) - CCA - 25% of (CA - OCL)

Example: 1 Current Assets 2 Core Current assets 3 Other Current Liabilities 4 Bank Borrowings 5 Total Current Liabilities (2+3) 6 Current Ratio

1000 200 400 475 875 1.14

Calculation Current Assets (-) O Curr Liab Work Cap Gap (-) CCA Less Margin* MPBF Excess borrowing

1000 400 600 0 150 450 25

CA Total Current Assets OCL Other Current Liabilities (excl bank borrowings)* Core Current Assets (value will be given separately) CCA * Bank borrowings ->only short term borowings MPBF Maximum permissible bank finance -> Bank will lend this amount

1000 400 600 0 250 350 125

1000 400 600 200 200 200 275

Bank will lend this amount