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      Question

      Under the Maximum Permissible Bank Finance (MPBF)

      method, the maximum bank finance is calculated based on:
      A Total current assets – Total current liabilities Correct Answer Incorrect Answer
      B 75% of working capital gap Correct Answer Incorrect Answer
      C 25% of projected sales Correct Answer Incorrect Answer
      D Total current liabilities Correct Answer Incorrect Answer
      E Net profit Correct Answer Incorrect Answer

      Solution

      MPBF = 75% of Working Capital Gap, where Working Capital Gap = Current Assets – Current Liabilities (excluding bank borrowing).

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