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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 тАУ Other Current liabilities) тАУ 25% (CA тАУ Other Current Liabilities) Correct Answer Incorrect Answer
    B (Current assets тАУ Other Current liabilities) тАУ 25% (CA) Correct Answer Incorrect Answer
    C (Current assets тАУ Other Current liabilities) тАУ 25% (CA тАУ Other Current Liabilities- Existing Short term borrowings) Correct Answer Incorrect Answer
    D (Current assets тАУ Other Current liabilities) тАУ 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 тАУ Other Current liabilities) тАУ 25% (CA) Other Current Liabilities exclude short term borrowings from the bank (existing)

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