CA Intermediate · Financial Management and Strategic Management · Introduction to Working Capital Management
Sharma Traders has the following data (Rs. lakh): inventory 40, trade receivables 30, cash 10, trade payables 25, outstanding expenses 5, and short-term bank borrowing 20. Net working capital (current assets minus current liabilities) is:
Net working capital is current assets minus current liabilities. Current assets are 80 lakh and current liabilities, including the bank borrowing, are 50 lakh, giving 30 lakh.
- ARs. 30 lakh
- BRs. 10 lakhCorrect
- CRs. 50 lakh
- DRs. 20 lakh
Explanation
Current assets = 40+30+10 = 80. Current liabilities = 25+5+20 = 50. Net working capital = 80-50 = 30. Wait: this equals Rs. 30 lakh, so the correct option is the first one.
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