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Working Capital
Working capital is capital, which is needed to complete a whole operating cycle of a business. There
are two concepts of working capital:
Production cycle
Business cycle
Credit policy
Operating efficiency
b) New Unit
2. Inventory
:
:
:
:
:
3. Receivables
4. Cash in hand
Tied up period
Working capital
Requirements
Raw Materials
a) Imported
b) Local
Work in process
Finished Goods
Stores and Spares
Receivables
Cash
90 days
30 days
03 days
10 days
90 days
15 days
Lump-sum
Note:
1. Margin/security will be as per bank-client relationship.
2. The norms as indicated above including actual capacity utilization for determining working capital
requirements may, however, vary from bank to bank on the basis of actual situation for unit requiring
special dispensation.
Source: Bangladesh Bank, BRPD Circular No.07 dated 5 July, 2000 & BCD Circular No.30 dated 29
December, 1988.
Capacity Utilization
a) Existing Unit
b) New Unit
02.
Inventory
:
:
:
:
:
03. Receivables
Tied up period
Working capital
Requirements (Tk.)
Raw Materials
a) Imported
b) Local
Work in process
Finished Goods
Stores and Spares
Receivables
Cash
90 days
30 days
05 days
15 days
90 days
15 days
Lump-sum
Note:
1. Margin/security will be as per bank-client relationship.
2. The norms as indicated above including actual capacity utilization for determining working capital
requirements may, however, vary from Bank to Bank on the basis of actual situation for unit requiring
special dispensation.
Source: Bangladesh Bank, BRPD Circular No.07 dated 5 July, 2000 & BCD Circular No.30 dated 29
December, 1988.
Exercise
M/S General Electric Co. in support of their application for working capital loan from your bank for
Tk.18.00 lac has supplied the following information.
1. Projected annual sales (10,000 fans @ Tk.1,200)
2. Annual cost of Store and Spares
3. Annual Consumption of Raw Materials
Tk.1,20,00,000.00
Tk.72,000.00
Tk.60,00,000.00
Tk10,00,000.00
Tied-up
Period
90 days
30 days
05 days
15 days
90 days
15 days
Lump-sum
10 days
Chargeable
Current
Asset
23,78,056
[(10,00,000/360) 10 =
27,778
23,50,278
[(23,18,056.2) + 60,000]=5,23,611
18,26,667
Note: COP= Cost of R.M used +Labor cost + Factory overhead +Stores & spares
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Exercise
M/S General Electric Co. in support of their application for working capital loan from your bank for
Tk.18.00 lac has supplied the following information.
1. Projected annual sales (10,000 fans @ Tk.1,200)
2. Annual cost of Store and Spares
3. Annual Consumption of Raw Materials
Tk.1,20,00,000.00
Tk.72,000.00
Tk.60,00,000.00
Tk10,00,000.00
Tied-up
Period
1. Inventory
a. Raw Materials imported
b. Raw Materials - local
c. Work-in-process
d. Finished goods
e. Stores & spares
90 days
30 days
05 days
15 days
90 days
2. Receivables
15 days
10 days
23,18,056
[(10,00,000/360) 10 =
27,778
Chargeable
Current
Asset
22,90,278
(23,18,056.2) = 4,63,611
18,26,667
Note: COP= Cost of R.M used +Labor cost + Factory overhead +Stores & spares
COP = (60,00,000 + 10,00,000) + 2,40,000 + 60,000 + 72,000 Taka
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