● Mr. Roy wants to start a new trading business and gives the following information:

(i) The projected annual sales—`60,00,000

(ii) He has estimated fixed expenses of `10,000 per month and variable expenses equal to 2% of turnover.

(iii) Percentage of gross profit on cost of purchase will be 25%.

(iv) Average expected credit period from suppliers—15 days.

(v) Average expected credit period allowed to debtors—1 month.

(vi) He expects to turnover his stock five times in a year.

(vii) Average cash holding—1 month’s expenses.

You are required to forecast his Working Capital requirement.