Mathematics · Working Capital Assessment
A borrower presents the following working capital projections (in ₹ lakh): Total Current Assets (TCA) = 1,000; Current Liabilities (CL) other than bank borrowings = 280. Stock statement reveals: Raw Materials (RM) = 300, Work-in-Process (WIP) = 150, Finished Goods (FG) = 260 (includes ₹20 obsolete/ineligible items), Debtors = 260 (includes ₹40 overdue >90 days/ineligible), and Creditors for RM = 120. Bank margins are: RM 25%, WIP 50%, FG 25%, Debtors 40%. Calculate the Maximum Permissible Bank Finance (MPBF) under Tandon Method II, Drawing Power (DP), and the prudent sanctionable limit.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1MPBF ₹520 lakh; DP ₹472 lakh; Sanction ₹472 lakh
- 2MPBF ₹500 lakh; DP ₹492 lakh; Sanction ₹492 lakh
- 3MPBF ₹470 lakh; DP ₹480 lakh; Sanction ₹470 lakh
- 4MPBF ₹470 lakh; DP ₹492 lakh; Sanction ₹470 lakh✓
Correct answer
MPBF ₹470 lakh; DP ₹492 lakh; Sanction ₹470 lakh
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