Working Capital Management Question Bank Q1. The Balance Sheet and Income Statement of XYZ Ltd.

For the year ended 31.3.2009 are given below. Calculate the Total Operating Cycle Period and Net Operating Cycle Period of XYZ Ltd.
Income Statement for the year ended 31.03.2009 Amount Particulars (in Rs.) Particulars By Net Sales To Opening Stock: (on credit) By Closing Raw Materials 10000 Stock: Work-in-Progress 30000 Raw Materials Work-inFinished Goods 5000 Progress To Net Purchases (on credit) 35000 Finished Goods To Wages & Manufacturing exps. To Gross Profit c/d To Administrative exps. To Selling & Dustribution exps. To Net Profit t/f to BS 15000 55000 150000 15000 10000 30000 55000 By Gross Profit b/d Balance Sheet (as at 31.03.2009) Amount Amount Liabilities (in Rs.) Assets (in Rs.)

Amount (in Rs.) 100000 11000 30500 8500

Share Capital P/L A/c Creditors

160000 30000 10000

Fixed Assets Closing Stock: Raw Materials WIP Finished Goods Debtors Cash & Bank

100000

11000 30500 8500 30000 20000 200000

150000 55000 200000

Additional Information: Opening debtors and Opening Creditors were Rs. 55000 6500 & Rs. 5000 respectively.

Q2. 'Working Capital decisions deal with decisions ensuring an optimum mix and level of current assets and current
liabilities.' Elucidate the statement.

Q3. Distinguish between the following: (i) Liquidity and Profitability in Working Capital Decisions (ii) Operating Cycle and Cash Conversion Cycle (iii) ABC Analysis and VED Analysis as methods of inventory classification (iv) Public Deposits and Certificate of Deposits Q4. Briefly explain the purposes of the following models: (i) Baurnol Model (ii) Miller and Orr Model