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Question 4 [10] The following is the balance sheet of Prestige Textile Distributors. Liabilities Assets Share capital 25 000 Fixed assets 30 000 Retained earnings

Question 4 [10]

The following is the balance sheet of Prestige Textile Distributors. Liabilities

Assets

Share capital

25 000

Fixed assets

30 000

Retained earnings

12 000

Investments

8 000

Long-term loan

17000

Stock

16 000

Trade creditors

22 000

Trade debtors

20 000

Overdraft

0

Other debtors

5 000

Accruals and others

9 000

Cash

6 000

Total

85 000

Total

85 000

1. Discuss working capital requirement. (5)

2. Show the working capital situation if turnover doubles without change in the current terms of trade. (5)

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