Godrej company sells goods in the home market and earns a gross profit of 20% on sales. Its annual figures are as follows: Sales, Rs 3,00,000; Materials used, Rs 1,08,000; Wages, Rs 96,000; Manufacturing expenses, Rs 30,000; Administrative expenses, Rs 12,000; Depreciation, Rs 12,000; Selling expenses, Rs 18,000. Additional Information:   

(a) Credit given by suppliers 2 months,   

(b) Credit allowed to customers 1 month,   

(c) Average time lag in payment of wages ½ month,   

(d) Average time lag in payment of administrative expenses 1 month,   

(e) Selling expenses are paid quarterly in advance, (f) Raw materials and finished goods are in stock for 1 month, and   

(g) Cash balance estimated to be maintained at Rs 30,000. You are required to prepare a statement of working capital requirements.

Answer rating: 100% (QA)

ANSWER d Average time lag in payment of administrative expenses 1 month The working capital gap in s... View the full answer