Read the case given below and answer the questions given at the end.
CASE STUDY – I
You are required by A P Paper Mills Ltd. To estimate working capital required for the level of activity of 6,24,000 units of production. Add 5% for safety. You may assume that production is carried on evenly throughout the year and wages and overhead expenses accrued similarly and a time period of four weeks is equivalent to a month. It provides the following information:
Additional Information:
Raw material in stock: one month; Material in process: half month; Finished goods in stock: four weeks; Credit allowed by suppliers: one month; Credit allowed to customers: eight weeks; lag in payment of wages: one and a half week; Overheads: one week; 20% of sales are cash sales and cash at bank is expected to be Rs 60,000