Question
A seasonal manufacturing unit submits a monthly cash budget showing peak cash deficits of ₹18 crore in August, ₹22 crore in September and ₹15 crore in October. The promoter confirms availability of ₹4 crore from own sources to support operations. Based strictly on the cash budget method, what should be the maximum permissible working capital limit?
Solution
Peak deficit = 22. Promoter margin = 4. Bank finance = 22 – 4 = ₹18 crore.
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