Please find below the data for a manufacturing company located in Noida called Infinity Ltd: 1,000,000...

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Please find below the data for a manufacturing company located in Noida called Infinity Ltd: 1,000,000 Revenue for the year: Cost as a % of Sales Direct Material Direct Labour Variable overheads Fixed Overheads Selling and Distribution On an average it has been observed: i) It takes 2.5 months before Debtors give payment ii) Raw materials remain in inventory for 3 months iii) WIP is 1 month of partially produced goods iv) Finished goods represents 1 month or production v) Credit is taken as follows: Direct Material Direct Labour Variable overheads Fixed Overheads Selling and Distribution 35% 25% 10% 15% 5% 2 months 1 week 2 months 1 month 0.5 months WIP and FG are valued at direct material, direct labour and variable expense cost Assume all labour is paid for 50 weeks in a year a. Prepare a statement of Working Capital. b. There is a competitor in Gurgaon called Black Hole Ltd that has similar terms as Infinity Ltd, but they have a better relationship with their vendors, and are able to procure Direct Material at 32% of Cost of Sales. They also pay their labour slightly better wages than Infinity Ltd at 28% of Cost of Sales. Even their Selling and Distribution expenses are more streamlined at 4% Cost of Sales. All other things remaining the same, how do you think this impacts the numbers of Black Hole Limited? Who is performing better? Please validate your answer with adequate explanation. Please find below the data for a manufacturing company located in Noida called Infinity Ltd: 1,000,000 Revenue for the year: Cost as a % of Sales Direct Material Direct Labour Variable overheads Fixed Overheads Selling and Distribution On an average it has been observed: i) It takes 2.5 months before Debtors give payment ii) Raw materials remain in inventory for 3 months iii) WIP is 1 month of partially produced goods iv) Finished goods represents 1 month or production v) Credit is taken as follows: Direct Material Direct Labour Variable overheads Fixed Overheads Selling and Distribution 35% 25% 10% 15% 5% 2 months 1 week 2 months 1 month 0.5 months WIP and FG are valued at direct material, direct labour and variable expense cost Assume all labour is paid for 50 weeks in a year a. Prepare a statement of Working Capital. b. There is a competitor in Gurgaon called Black Hole Ltd that has similar terms as Infinity Ltd, but they have a better relationship with their vendors, and are able to procure Direct Material at 32% of Cost of Sales. They also pay their labour slightly better wages than Infinity Ltd at 28% of Cost of Sales. Even their Selling and Distribution expenses are more streamlined at 4% Cost of Sales. All other things remaining the same, how do you think this impacts the numbers of Black Hole Limited? Who is performing better? Please validate your answer with adequate explanation.

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Here are the steps to solve this problem a Statement of Working Capital for Infinity Ltd Current Ass... View the full answer