MS- 41: Working Capital Management

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

  help.mbaassignments@gmail.com

or

call us at : 08263069601

MS- 41: Working Capital Management

ASSIGNMENT

Course Code                                                      :                                               MS-41

Course Title                                                       :                                               Working Capital Management

Assignment Code                                            :                                               MS-41/TMA/SEM-I/2015

Coverage                                                             :                                               All Blocks

Note: Attempt all the questions and submit this assignment on or before 30th April, 2015 to the coordinator of your study center.

Q.1. Distinguish the different working capital financing strategies. Under the present capital and money market conditions which of these would you recommend to a consumer durable manufacturing firm. Explain with reasons and list out your assumption, if any.

Answer:There are broadly 3 working capital management strategies / approaches to choose the mix of long and short term funds for financing the net working capital of a firm viz. Conservative, Aggressive, Hedging (Or Maturity Matching) approach. These strategies are different because of their different trade-off between risk and profitability. Another remarkable difference is the extent or proportion of application of long and short term fund to finance the working capital.

The terms methods of working capital management, strategies and approaches to working capital management are interchangeably used in

Q.2.You are required to recommend as to which of the policies given below should be adopted by a trader who wants to pursue a more liberal credit policy to improve sales. His current sales are Rs. 15 lacs per annum & average collection period is 30 days.

Credit Policy                      Increase in collection period                                      Increase in sales

P                                                             15 Days                                                                 Rs.          60,000

Q                                                             30 Days                                                                                 90,000

R                                                             45 Days                                                                            1,50,000

S                                                              60 Days                                                                            1,80,000

T                                                              90 Days                                                                            2,00,000

The selling price per unit is Rs. 5. Average cost per unit is Rs. 4 and variable cost per unit is Rs. 2.75 paise per unit. The required rate of return on additional investment is 20 percent. Assume 360 days a year and that there are no bad debts.

Answer:

Q.3. Assume that the following quantity discount schedule, for a particular bearing, is available to a retails store

Order Size (units)                                            Discounts

0-49                                                                       0%

50-99                                                                     5%

100-199                                                                10%

200 and above                                                   12%

The cost of a single bearing with no discount is Rs. 30. The annual demand is 250 units. Ordering cost is Rs. 20 per order and annual inventory carrying cost is Rs. 4 per unit. Determine the optimal order quantity and the associated minimum total cost of inventory and purchasing costs if shortage is not allowed.

Answer:

Q.4. Assume that you are in important business. Does a bank need to be satisfied about your credit worthiness before extending non fund facilities to you. Discuss the issue with a banker and explain fully.

Answer:Banks are prohibited from entering into any commitment for granting any loans or advances to or on behalf of any of its directors, or any firm in which any of its directors is interested as partner, manager, employee or guarantor, or any company (not being a subsidiary of the banking company or a company registered under Section 25 of the Companies Act, 1956, or a Government company) of which, or the subsidiary or the holding company of which any of the directors of the bank is a director, managing agent, manager, employee or guarantor or in which he holds substantial interest, or any individual in respect of whom any of its directors is a partner or guarantor.

Q.5. “In simulating financial decision, the strategy that produces the best simulated results is not necessarily the optimal financing strategy”, do you agree with this statement? Why or why not?

Answer:Companies are increasingly turning to simulations to help build strategic alignment and execution capability when faced with one or more of the following business challenges:

·         Implementing a new strategy and key performance objectives

·         Accelerating innovation and strategy execution

·         Improving business acumen and financial decision-making

·         Transforming sales organizations into business-results accelerators.

·         Focusing leadership development on front-line execution.

·         Implementing culture change aligned to

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

  help.mbaassignments@gmail.com

or

call us at : 08263069601