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      Question

      For the calculation of Maximum Permissible Bank finance

      recommended by Tandon Committee , which of the following correctly depicts the second method?  
      A (Current assets – Other Current liabilities) – 25% (CA – Other Current Liabilities) Correct Answer Incorrect Answer
      B (Current assets – Other Current liabilities) – 25% (CA – Other Current Liabilities- Existing Short term borrowings) Correct Answer Incorrect Answer
      C (Current assets – Other Current liabilities) – 25% (CA) Correct Answer Incorrect Answer
      D (Current assets – Other Current liabilities) – 25% (Other Current Liabilities Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      The Tandon Committee prescribed three alternative methods of computation   of   Maximum   Permissible   Bank   Finance ( MPBF).   OCL = Other Current Liabilities (Current Liabilities –Bank borrowings)   WCG = Working Capital Gap = Current Assets –Other Current Liabilities.  

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