Amount of working capital, Managerial Accounting

Assignment Help:

Number of Operating Cycles: The number of operating cycles in a period is determined by dividing the number of days in a year i.e.365 by the length of net operating cycle. Expressed as formula-

No. of Operating Cycles = 365/Operating Cycle Period

Amount of Working Capital: One time the operating expenses and the number of operating cycles have been determined, the amount of actual working capital required is calculated by dividing the total operating expenses for the period through the number of operating cycles in such period.

For illustration, if the total operating expenses for the number of operating cycles in a year and the year amounts to Rs. 45,000 are assumed to be 3, the amount of working capital would be as Rs.15,000 that is Rs.45000/3.

Instead, the working capital may be determined by using the subsequent formula:

WC =  C + (OC/ N) . CS

Here WC = Working Capital

C = Cash Balance Required

OC = Operating Cycle Period

CS = Estimated Cost of Goods sold

N = Number of days in year


Related Discussions:- Amount of working capital

What is ratio analysis, Ratio analysis A ratio is a simple arithmetical...

Ratio analysis A ratio is a simple arithmetical expression of the relationship of one number to another. It may be explained as the indicated quotient of two mathematical ex

7. Alma and Associates, Alma and Associates, a new consulting service, rece...

Alma and Associates, a new consulting service, recently received a bill for repairs on its computers totaling $2,350. Alma thinks it may have been overcharged and is trying to recr

Interpreting the simplex tableau- sensitivity analysis, INTERPRETING THE SI...

INTERPRETING THE SIMPLEX TABLEAU We can now see that our attention must be directed to reading, interpreting and analyzing the (simplex) results. It is erroneous, however, to a

Industrial Grinders, accepted#Regarding the Overhead costs, these are alloc...

accepted#Regarding the Overhead costs, these are allocated based on Direct Labor;

Difference between marginal costing and absorption costing, Question: A...

Question: A friend of yours is revising for his examination in management accounting and needs some help from you. He asks you the following questions. Write brief notes on eac

Compute the expected return and risk of a portfolio, Compute the Expected R...

Compute the Expected Return and Risk of a Portfolio? The subsequent data are presented to you as a portfolio manager Security Expected Return

Illustration of short-term decisions, Illustration of short-term decisions ...

Illustration of short-term decisions These are, to a significant extent, determined by the excellence of the firm's long-term decisions. Illustration of short-term decisions in

Homework.., given the above data what would the breakeven in units and doll...

given the above data what would the breakeven in units and dollars be if u wanted a necessary after tax profit of $ 36,000 (assume a 30% tax rate ) units __________ ales dollars _

Define performance budgeting according u.s. bureau of budget, Define perfor...

Define performance budgeting according U.S. bureau of budget U.S. bureau of budget defines performance budget as one which presents purposes and objectives for which funds are

Need help, Pantheon Company has prepared the following forecasts of monthly...

Pantheon Company has prepared the following forecasts of monthly sales: July August September October Sales (in units) 4,300 5,100 3,800 2,500 Pantheon has decided that the num

Write Your Message!

Captcha
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