Calculate the additional working capital requirement

Assignment Help Corporate Finance
Reference no: EM13181809

A company is currently operating at 75% of its capacity producing 60,000 units during the year 2009 at the following cost price structure:




Raw Materials per unit


5.00

Wages per unit


4.00

Overheads per unit:



Variable

2.00


Fixed

2.00

4.00

Profit per unit


2.00

Selling Price per unit


15.00

On 31 December 2009, the company has the following Current Assets and liabilities:



Stock of Raw Materials - 10,000 units at cost

50,000

Stock of WIP - 5,000 units at cost

45,000

Stock of Finished Goods - 15,000 units at cost

1,95,000

Sundry Debtors

1,50,000

Sundry Creditors

50,000

Liability for Wages

20,000

Liability for Overheads

10,000

In view of the increased demand for the product, it has been decided to operate at 90% capacity on and from 01 January 2010 at the same cost price structure, period of block and selling price of 2009.

Calculate the additional Working Capital Requirement for the year 2010.

Reference no: EM13181809

Questions Cloud

Find b for the equation of the least-squares line : It is thought that prehistoric Indians did not take their best tools, pottery, and household items when they visited higher elevations for their summer camps.
Explain available electrons and needed electrons : For oxygen difluoride, OF 2 give the following information: a.) Available Electrons (AE) b.) Needed Electrons (NE) c.) Geometry Description d.) Number of sigma bonds
Calculate the additional working capital requirement : Calculate the additional Working Capital Requirement in the year 2010 - In the year 2010, the company wishes to operate at 80% of its capacity at the same Cost Price structure and selling price of 2009.
State engineering team is studying the effect of temperature : To prevent tank rupture during deep-space travel, an engineering team is studying the effect of temperature on gases confined to small volumes. What is the pressure of 3.40mol of gas D measured at 251 C in a 1.75-
Calculate the additional working capital requirement : Calculate the additional Working Capital Requirement for the year 2010 and it has been decided to operate at 90% capacity on and from 01 January 2010 at the same cost price structure, period of block and selling price of 2009.
Explain what will be the final temperature of the system : what will be the final temperature of the system when thermal equilibrium is attained
What is the annual compounding interest charged : What is the annual compounding interest charged? Using the compounding annual interest rate from above, what is the nominal, period interest rate and corresponding effective interest rate if compounding is hourly? Assume 30 days per month.
Describe the best situation to use each method : Describe the best situation to use each method. provide an example that uses either the substitution or elimination method to solve two linear equations.State which method classmates should use to solve the system.
What is expenditure multiplier : Marginal propensity: 0.63 - 0.76 what is expenditure multiplier? wil increase from __ to _____ and if multiplier increases, everything else equal. changein expend. will raise aggreg. ependiture to a [larger,smaller,same] amount

Reviews

Write a Review

Corporate Finance Questions & Answers

  Find the present value

Determine the present value if $5,800 received at the end of first year, $6,400 received at the end of second year, and $8,700 at the end of third year.

  Determine the present value of stock

Joe's Ski Shop Incorporated has maintained a dividend rate of $4/share for many years. The same rate is expected to be paid in future years.

  Determine the return on equity

Determine the return on equity do investors expect for a company with a 17$ stock value, a dividend in one year of 2$, a beta of 1.6, & a constant growth rate is 2 percent?

  Economic benefits of the patent

On January 1, 2008, Rans Corporation purchased a patent for $595,000. The patent is being amortized over its lasting legal life of fifteen years expiring on January 1, 2023.

  Find the company''s current stock price

Calculation of required rate of return and valuation of current stock price - Find the company's current stock price?

  Computation of present value of bond

Computation of present value of bond to check whether it is overpriced - Ron Rhodes calles his broker to inquire about purchasing a bond of Golden Years Recreation Corporation

  Calulate the average returns & the standard deviations

Following holding-period returns shown here, calulate the average returns & the standard deviations for the company and for the market.

  Determine the expected return for individual stock

Jane is planning investing in 3 different stocks or developing three distinct 2 stock portfolios. Jane considers herself to be a rather conservative investor. Determine the expected return for each individual stock.

  Capm and valuation of the company to be purchased

CAPM and Valuation of the company to be purchased -  What is the expected rate of return for BigCo and What discount rate should BigCo use to evaluate ChemCo and why?

  Question on treasury stock

The following items discusses the practices related to the treasury stock. Select the item that is not a correct practice.

  Explain what is aq&qs indifference level of ebit

Explain what is AQ&Q's indifference level of EBIT and provide its current situation, might it benefit from increasing or decreasing its use of debt? Explain.

  Find the return on equity

A stock had a value at the starting of the year of $100 and was selling for $102 at the end of the year. If the total shareholder returns were 5%, then the cash dividend per share must have been

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd