CMA Intermediate · Financial Management and Business Data Analytics · Financing Working Capital
A firm discounts a bill of exchange of ₹5,00,000 with its bank 72 days before maturity at a discount rate of 10% p.a. (360-day year). What amount does the firm receive?
The firm receives ₹4,90,000. The bank deducts a discount of 10% a year on ₹5,00,000 for 72 days of a 360-day year, which is ₹10,000, leaving ₹4,90,000 as proceeds.
- A₹4,90,000Correct
- B₹4,95,000
- C₹4,85,000
- D₹5,00,000
Explanation
Discount = 5,00,000 × 10% × 72/360 = ₹10,000. Proceeds = 5,00,000 − 10,000 = ₹4,90,000. Option ₹4,95,000 results from using 36 days.
Did you get it right without looking?
One question tells you little. A timed set on Financing Working Capital shows your real accuracy, how long you take and where you lose marks.
More Financing Working Capital questions
- Meera Exports has annual credit sales of ₹3,60,00,000 with a 45-day collection period (360-day year). A factor will collect in 30 days, char…
- Sunrise Textiles sells goods on credit and enters into a factoring arrangement. Under a 'non-recourse' factoring arrangement, which party be…
- Which feature distinguishes a cash credit facility from a term loan in bank finance for working capital?
- A firm moves from a conservative to an aggressive working capital financing policy, keeping total assets unchanged. Which combination of eff…
- Kaveri Ltd needs ₹50 lakh of permanent working capital and a seasonal need that averages ₹20 lakh. Long-term funds cost 12% p.a. and short-t…
- Which of the following is a spontaneous source of short-term working capital finance for a manufacturing company?