1. From the following particulars, compute (i) Net operating cycle period (ii)number of operating cycles in a year (iii) The amount of working capital. Period covered – 360 days Average period allowed by suppliers – 30 days Average period allowed to debtors – 45 days Raw material consumed during the year – Rs.6,00,000 Average stock of raw materials – Rs.50,000 Work in progress = Rs.5,00,000 Average work in progress inventory= 30,000 Finished goods = Rs.8,00,000 Average finished goods stock held = Rs.40,000 Total cost of sales = Rs.8,40,000

2. Computation of Net operating cycle:
Raw materials held in stock :
Avg.stock of materials Avg.consumption per day – 50,000/ 1667 – 30 days
(6,00,000 / 360 days – 1667)
Work in progress :
Average WIP / Avg.consumption per day ,000/ days
(500000/360 days – 1388)
Finished goods held in stock :
Avg.finished goods/Avg cost of goods sold per day -40,000/2222 –18 days
(8,00,000 / 360 days – 2222)
Credit period to debtors days
115 days
Average credit period allowed by creditors days
Net operating cycle period days

3. ii. No. of operating cycles in a year = 360 / 85 = 4. 2 cycles iii
ii.No.of operating cycles in a year = 360 / 85 = 4.2 cycles iii.Working capital required = Total cost of sales No. of operating cycles in a year = Rs.8,40,000 / 4.2 = Rs.2,00,000

4. Percentage of sales method: In this method the level of working capital is decided on the basis of past experience. 1.The balance sheet of national steel ltd as on is as under: Liabilities Rs Assets Rs Share capital 200 Land and building 60 Reserves & Surplus 160 Plant & machinery 200 Term loans 120 Debtors 220 Sundry creditors 120 Inventories 200 Provision of taxation 60 Cash and bank The company’s turn over for 2004 – 2005 was 1200 lakhs. It anticipates a sales turn over of Rs.1800 lakhs in Estimate the working capital requirement for

5. Statement of working capital requirement for % of sales based on 2004 – 05 (Actuals) (Estimate) Sales Current assets: Debtors Inventories Cash and bank Total (A) Current liabilities: Sundry creditors Provision for Tax Total (B) Working capital (A –B)