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Question
Calculate working capital of Raja & Co. has the following items in its Balance sheet: Stock — 50,000; Trade creditors – 32,000; Debtors – 75000; Cash -1,00000; Dividend payable – 50,000; Tax – 44,000; Short term loan – 61,000; Short term investments – 76,000. Calculate gross and net working capital.
Solution
- Total Current Assets = Debtors + Stock + Cash + Short term investment Total Current Assets = (Rs 75000 + Rs 50,000 + Rs 1,00000 + Rs 76,000) Total Current Assets = Rs 3,01,000
- Total Current Liabilities = Sundry Creditors + Dividend Payable + Tax + Short Term loan)
Total Current Liabilities = (Rs 32,000 + Rs 50,000 + Rs 44,000 + Rs 61,000) = Rs 1,87,000 - Gross Working Capital = Total Current Assets
Gross Working Capital = Total Current Assets = Rs 3,01,000 - Net Working Capital = Total Current
Assets – Total Current Liabilities
Net Working Assets = Rs 3,01,000 – Rs 1,87,000 = Rs 1,14,000
(a) Gross Working Capital = Rs 3,01,000
(b) Net Working Assets = Rs 1,14,000
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