XYZ Company has estimated revenue for the year 2022 of Rs.100000. The cost structure of the company is as follows

cost Structure % on Selling Price

Raw Materials 55%

Labor 15%

Overheads 20%

Total Cost 90%

Profit 10%

Sales 100%

The production process requires 7days in process with 50% completion on an average (Assume raw materials are used 100% while computing WIP). IT has made 3 strategies like Aggressive, Moderate & Relaxed with regards to working capital. Under each strategy, time duration for holding of inventories, customers collecting period and suppliers’ payment period are given below

Current asset Holding Period(days)

Aggressive strategy

Raw Materials 15

Finished goods 15

Debtors 30

Creditors 45

Moderate Strategy

Raw Materials 65

Finished goods 40

Debtors 80

Creditors 85

Relaxed Strategy

Raw Materials 100

Finished goods 60

Debtors 120

Creditors 105

In addition to net working Capital, the company employs Fixed assets worth Rs.100000

Establish a relationship between Liquidity and Profitability, Specially, calculate current ratio & ROCE