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      Question

      Which one of the following is a second method of

      Calculation of Maximum Permissible Bank finance recommded by Tandon Committee?
      A (Current assets – Other Current liabilities) – 25% (CA – Other Current Liabilities) Correct Answer Incorrect Answer
      B (Current assets – Other Current liabilities) – 25% (CA) Correct Answer Incorrect Answer
      C (Current assets – Other Current liabilities) – 25% (CA – Other Current Liabilities- Existing Short term borrowings) 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

      As per Tandon Committee, three methods were suggested for the calculation of Maximum Permissible Bank Finance for the working capital needs of a borrower. Second method is mostly used by the banks which is: (Current assets – Other Current liabilities) – 25% (CA) Other Current Liabilities exclude short term borrowings from the bank (existing)

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