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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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