- 23 3 Working Capital Requirement The Following Annual Figures Relate To Xyz Co Sales At Two Months Credit 300 000 1 (102.26 KiB) Viewed 58 times
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23.3 Working Capital Requirement The following annual figures relate to XYZ Co. ₹ Sales (at two months' credit) 300,000 to con Materials consumed (suppliers extend two months credit) 700,000 Wages paid (monthly in arrear) 600,000 Manufacturing expenses outstanding at the end of the year 70,000 (Cash expenses are paid one month in arrear) Total administrative expenses, paid as incurred 200,000 Sales promotion expenses, paid quarterly in advance 100,000 The company sells its products on gross profit of 20 percent counting depreciation as part of the cost of production. It keeps two months' stock each of raw materials and finished goods, and a cash balance of 80,000. Assuming a percent safety margin, work out the working capital requirements of the company on cash cost basis. Ignore work-in-process.