Case Study:

Practical Question:

You are supplied with the following information in respect of XYZ Ltd$.,$ for the ensuing year:

$\backslash$table$[[$Production for the year,$69,000$ units$],[$Finished goods in store,$3$ months$],[$Raw material in store,$2$ months' consumption$],[$Production process,$1$ month$],[$Credit allowed by creditors,$2$ months$]]$

$\backslash$table$[[],[$Credit given to Debtors,$3$ months$],[$Selling price per unit,Rs$.50],[$Raw material,$50\%$ of Selling Price$],[$Direct Wages,$10\%$ of Selling Price$],[$Overheads$,20\%$ of Selling Price$]]$

There is a regular production and sales cycle and wages and overheads accrue evenly. Wages are paid in the next month of accrual. Material is introduced in the beginning of production cycle.

You are required to find out the working capital requirement of XYZ Ltd$.$