Question

    On what basis should working capital assessment be done

    for seasonal cash flows?
    A Cash Budget Method Correct Answer Incorrect Answer
    B Turnover Method Correct Answer Incorrect Answer
    C MPBF Method Correct Answer Incorrect Answer
    D Tandon committee method Correct Answer Incorrect Answer
    E Any of the above Correct Answer Incorrect Answer

    Solution

    A  cash  budget  is  usually  a  forecast  of  receipts  and  payments  of  an  enterprise,  drawn  at small  intervals  of  time,  say  monthly,  weekly  etc. Financing Seasonal activities: Peak and Non-Peak levels of WC requirements for seasonal  activities  can  be  effectively  worked  out  by  employing  the  cash  budget technique.  Activities  depending  on  agriculture  are  generally  seasonal  in  nature. Credit  decisions  in  respect  of  these  activities  are  usually  taken  on  the  basis  of carefully drawn cash budgets for a year. Limits may go high during the peak activity of a year and may go down during the non-peak period

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