MS – 41: Working Capital Management – IGNOU Latest solved assignments

MS-41

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Management Programme

ASSIGNMENT

FIRST SEMESTER

(January to June)

2021

MS – 41: Working Capital Management

  ASSIGNMENT
   
Course Code:MS-41
Course Title:Working Capital Management
Assignment code:MS-41/TMA/SEM-I/2021
Coverage:All Blocks
   

Note : Attempt all questions and submit to the coordinator of your study centre on or before 30th April, 2021.

  1. Take the latest monetary policy and discuss the important highlights of this policy.
  • You are required to prepare a Cash Budget for the months of May, June and July 2021on the basis of the information given below :
  • Income and Expenditure Forecasts
MonthsCreditCreditWagesManu-OfficeSelling
 SalesPurchases facturingExpensesExpenses
    Expenses  
       
March60,00036,0009,0004,0002,0004,000
       
April62,00038,0008,0003,0001,5005,000
       
May65,00033,00010,0004,5002,5004,500
       
June58,00035,0008,5003,5002,0003,500
       
July56,00039,0009,5004,0001,0004,500
       
August60,00034,0008,0003,0001,5004,500
       
  • Cash balance on 1st May, 2021 is Rs 8,000.
  • Plant costing Rs 16,000 is due for delivery in July, payable 10% on delivery and the balance after 3 months.
  • Advance tax of Rs 8,000 each is payable in March and June.
  • Period of credit allowed
  • by suppliers – two months, and
  • to customers – one month.
  • Lag in payment of manufacturing – ½ months.
  • Lag in payment of office and selling expenses – one month
  • As a Finance Manager what are the sources that you would prefer to raise short term loans from the money market for meeting working capital needs of your business and why?
  • 4.                   XYZ Ltd. is in the business of manufacturing water filters. The current ratio at the end of the last year was 3:1 which appeared to be comfortable. However, the cash flow position, is rather weak and the company finds it difficult to make payments to the suppliers and workers on time. The composition of working capital as per the last balance sheet is provided here:
  (Rs.)
Current Assets:   
Inventories18,00,000 
Receivables12,00,000 
Cash and bank balances1,00,000 
Loans and advances20,00,000 
   
  51,00,000 
Current Liabilities  
 17,00,000 

Mention specific possibilities of what might be causing cash flow difficulties in this context.

Suggest any better ratios  which the company might use to gauge its liquidity in future.

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