Soft Copy: Yes
Downloadable File: Yes
University: IGNOU
Course: Master of Business Administration
Q&A of Mba MS-41 Solved Assignment 2022 - Working Capital Management
Q. Discuss the Role of Central Bank in designing and implementing monetary and credit policy. What are the important policy measures announced as a part of the latest credit policy.
Answer........
Q. You are to prepare Cash Flow Statement from the Balance Sheets of alpha Ltd.
Assets 2020 (Rs.) 2021 (Rs.) Liabilities 2020 (Rs.) 2021 (Rs.)
Buildings 8,00,000 10,00,000 Share Capital 17,00,000 18,35,000
Plant & Machinery 2,50,000 3,70,000 Reserves 40,000 83,700
Fixtures & Fittings 5,000 6,000 Profit & Loss appropriation A/c 1,00,000 1,30,000
Cash 2,000 2,200 Provision for Dividends 70,000 50,000
Debtors 1,00,000 45,000 Creditors 1,00,000 95,000
Accounts Receivable 8,000 9,000 Bank Overdraft 8,000 18,000
Stock 4,00,000 3,43,700 Bills Payable 14,000 13,000
Prepaid Expenses 3,000 3,100 Loan on Mortgage 10,000 70,000
Investments 1,64,000 1,70,000
Goodwill 3,00,000 3,43,700
Preliminary Expenses 10,000 2,000
20,42,000 22,94,700 20,42,000 22,94,700
Additional information
(i) Depreciation is charged on building at 3 percent of cost of Rs. 9,00,000 on plant; machinery at 8 percent of cost Rs. 4,00,000 and fixtures & fittings at 5 percent of cost Rs. 8,000.
(ii) Interest received Rs. 3,000 on investments was used in writing down the book value of
investments.
(iii) Dividends declared for 2020 was paid and interim dividend of Rs. 20,000 was paid out of
Profit & Loss Appropriation Account.
Answer. .........
Q. What is a Commercial Paper (CP)? Discuss the terms and conditions laid down by companies for
issuing CP. Describe the procedure followed in India for issuing commercial paper.
Answer.......
Q. If you are a manager of an MNC, under what circumstances would you consider using Euro-Currency
markets? What advantages or disadvantages these markets would offer compared to borrowing from
domestic markets?
Answer.........
Q. Taking a suitable example explain how maximum permissible bank finance is determined under the
three methods of lending.
Answer.........
Product Details: MS-41 Solved Assignment 2022 - Working Capital Management
Course: Ignou MBA (Master of Business Administration)
Session: Jan - June 2022 or July - Dec
Old Sample Answers of Mba Ignou MS-41 Assignments
Q. What is Working Capital?
Answer. Working capital is a measure of a company's current assets less its current liabilities........... The management of working capital is a crucial element of cash flow management......
Managing working capital is essential for success, as the ability to avoid a cash crisis and pay debts as they fall due depends on managing
Receivables, through effective credit approval, invoicing, and collection activity
Inventory, through effective ordering, storage, and identification of inventory
Payables, by negotiation of trade terms and through taking advantage of prompt-payment discounts
Cash, by effective forecasting, short-term borrowing, and/or investment of surplus cash where possible
The working capital cycle works (at least in theory) as follows: a firm will purchase inventory (either as finished goods or as raw materials) on credit from its suppliers (appearing as creditors in the working capital)...... After production has taken place the finished goods will be sold on to customers as either cash or credit sales (now appearing as trade receivables in the working capital)........... The firm will eventually receive the cash from these credit customers, which in turn can then be used to settle the amounts owing to the credit suppliers as well as any other obligations it has run up during this period, such as wages and other expenses.......... Get Ignou Mba MS-41 Solved Assignment 2022 Jan - June Working Capital Management..........
A firm will wish to minimize the length of its working capital cycle. The longer a firm holds inventories and the longer a firm takes to collect cash from its customers in respect of credit sales, the more likely a firm will face liquidity problems........ Therefore a firm will want to minimize the time cash is tied up in working capital, so as to avoid potential difficulties with cash flow.
The working capital cycle also known as the firm's operating cycle can also be measured in terms of the time taken for money to pass through each stage of the working capital. The operating cycle for its working capital will consist of the following timings for cash being tied up in the various stages of the working capital cycle.........
The objective of working capital management by all the firms is to provide enough liquidity so that production process continues smoothly during the normal course of the business.......... Further, the focus is to maintain an optimum level of current assets so that funds of the firm do not remain unnecessarily idle.......... The finance manager aims at efficiently managing the current assets and liabilities to meet the firm's working capital requirement. Inefficient working capital management may lead to higher cost of funds and may increase the risk profile of the firm.
