Question
A business has monthly cash inflows of ₹10 lakh and
monthly outflows of ₹12 lakh. What is the working capital requirement as per the Cash Budget Method?Solution
Working Capital Requirement = Monthly Outflow – Monthly Inflow = ₹12 lakh – ₹10 lakh = ₹2 lakh The Cash Budget Method is used especially for seasonal businesses or where cash flows vary. It’s one of the most precise methods of working capital estimation.
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