ASSIGNMENT

Course Code : MS-41

Course Title : Working Capital Management

Assignment No. : MS-41/TMA /SEM-I/2016

Coverage : All Blocks

Note : Attempt all the questions and submit this assignment on or before 30th April, 2016 to the coordinator of your study centre.

  1. Collect the Financial Statements of any two firms from the same industry for 2014-2015 and calculate their Efficiency, Liquidity and Structural Ratios. Based on these ratios give your views on the working capital management of these firms. 

2. The Ratan Corporation sells goods earning a gross profit of 25% on sales. You are required to prepare a Statement showing the Working Capital requirement of the company adding 10% margin for contingencies from the annual figures given below : Sales Materials used Wages Manufacturing Expenses Administrative and other Expenses Selling and Distribution Expenses Depreciation Income Tax Payable in four installments of which one falls in the next financial year

Rs. 3,00,000 1,08,000 96,000 1,20,000 30,000 18,000 12,000 60,000 Additional Information is as follows: - Credit given by suppliers of materials is 2 months - Credit allowed to customers is 1 month - Wages are paid half month in arrear - Manufacturing and administrative expenses are paid one month in arrear - Selling and distribution expenses are paid quarterly in advance - The company wishes to keep one month stock of raw material and also of finished goods - The company believes in keeping cash of Rs. 50,000 including the overdraft limit of Rs. 20,000 not yet utilized by the company.

3. (a) Why are the Letters of Credit (LCs) known as non fund based working capital finance and what role do they play in facilitating trade? (b) Is it right to say that the LCs do not involve any financial obligation or risk on the part of the issuing banker? Give your comments

. 4. What do you mean by ‘Short Term Integrated Funds Planning’? Discuss whether this planning is really practiced in the corporate world in India. 5. Identify the major players in the Indian Money Market. Discuss the major hurdles they face in their operations.

5. Study the Brooke Bond (India) Ltd case given in Block – 5 and answer the questions