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प्रश्न
Ramu is buying and selling ice-cream.Explain his working capital requirement.
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उत्तर
Ramu is a trading entrepreneur.
- Trading entrepreneur is one who undertake trading activities, whether domestic or overseas.
- They deal in buying and selling of manufactured goods.
- Before launching the business they identify the potential market for his product in order to stimulate the demand.
They believe in creating a demand in the market to market survey and push many ideas ahead of others in the form of demonstration to promote
Operating cycle or cash conversion cycle for trading business:
- Money needed to fund the normal, day to day operations of a business is known as the Working Capital.
- For trading, where there is no manufacturing (or conversion), the operating cycle will be shorter.
- Ramu needs less amount of working capital as ice-cream is a perishable goods and can’t keep for a long time period.
- Therefore, Ramu has to purchase and sale of goods through cash only.
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संबंधित प्रश्न
Explain the following term with proper example:
SKU
Explain the two dominant forms of budgeting process.
Calculate working capital of Raja & Co. has the following items in its Balance sheet: Stock — 50,000; Trade creditors – 32,000; Debtors – 75000; Cash -1,00000; Dividend payable – 50,000; Tax – 44,000; Short term loan – 61,000; Short term investments – 76,000. Calculate gross and net working capital.
Given below are information obtained from the balance sheet of PQR ltd., What will be the gross working capital for PQR ltd. for the year ending 31st March 2022?
- Assets: (in Rupees)
- Cash - 60,000
- Stock - 50,000
- Trade Debtors - 65,000
- Short-term investment - 15,000
- Liabilities: (in Rupees)
- Short-term loans - 25,000
- Trade creditors - 5,000
- Outstanding expenses - 10,000
How do current assets compare with fixed assets in liquidity and returns?
Which current asset follows Cash in hand / Cash at bank in order of liquidity?
Which current asset follows Marketable securities in order of liquidity?
Which current asset follows Work in progress in order of liquidity?
Which current asset comes last in order of liquidity?
Which of the following is a current liability?
How are Outstanding expenses classified?
Which of the following is an example of current liabilities?
Which formula gives Net Working Capital?
What does NWC represent?
What does CA represent in the Net Working Capital formula?
What finances part of current assets through short-term sources?
What is the remaining part of current assets financed through long-term sources called?
What is the effect of Boom in the Business Cycle on working capital?
What is the effect of Depression in the Business Cycle on working capital?
How does Peak season affect working capital requirement?
How does lean season affect working capital requirement?
How does a shorter Production Cycle affect working capital?
How does easy Availability of Raw Material affect working capital?
What is the effect of irregular raw material supply or longer lead time on working capital?
How does Inflation affect working capital requirement?
