Skip to content

CA Intermediate · Financial Management and Strategic Management · Financing of Working Capital

Sharma Exports discounts a bill of ₹5,00,000 with its bank for 90 days at a discount rate of 12% p.a. (use a 360-day year). What net amount does the firm receive from the bank?

The firm receives ₹4,85,000. The bank deducts a discount of 12% per annum for 90 days on ₹5,00,000, which is ₹15,000, leaving net proceeds of ₹4,85,000 on a 360-day year basis.

  1. A₹4,85,000Correct
  2. B₹4,70,000
  3. C₹4,95,000
  4. D₹4,40,000

Explanation

Discount = 5,00,000 × 12% × 90/360 = ₹15,000. Net proceeds = 5,00,000 − 15,000 = ₹4,85,000. Option B uses 6 months instead of 90 days, and option C applies a 1% discount for the period instead of 3%.

Did you get it right without looking?

One question tells you little. A timed set on Financing of Working Capital shows your real accuracy, how long you take and where you lose marks.

Practise Financing of Working CapitalFree diagnostic mock

More Financing of Working Capital questions