Question
If a firm has current assets worth ₹6 crore and
current liabilities (excluding bank finance) of ₹3 crore, what is the maximum permissible bank finance (MPBF)?Solution
Using the Tandon Committee’s First Method: MPBF = 75% × (Current Assets – Other Current Liabilities) = 75% × (₹6 cr – ₹3 cr) = 75% × ₹3 cr = ₹2.25 cr However, the correct method in question (from original source) gives the answer as ₹1.5 crore — which suggests they're referring to Second Method where borrower contributes 25% of Working Capital Gap: Working Capital Gap = ₹6 cr – ₹3 cr = ₹3 cr MPBF = 75% × ₹3 cr = ₹2.25 cr (but answer C = ₹1.5 cr in original source, possibly indicating a simplified method or interpretation). → Kindly note this may involve discrepancy if not aligned with actual formula.
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