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MMPF 001 (July 2024 - January 2025) - ENGLISH

ASSIGNMENT

Course Code : MMPF-001

Course Title : Working Capital Management

Assignment Code : MMPF-001/TMA/JULY/2024

Coverage :All Blocks

Note: Attempt all the questions and submit this assignment to the Coordinator of your study centre. Last date of submission for July 2024 session is 31 October, 2024 and for January 2025 session is 30th April 2025.

1. Discuss the Industry Norm Approach and Economic Modelling Approach to the determination of working capital.

2. The Profit and Loss Account for the year ended 31 March, 2024 and the Balance Sheet as on that date, for Alpha Ltd. is as follows:

Profit and Loss Account for the year ended 31st March, 2024

Particulars	Rs. Lakhs	Particulars	Rs. Lakhs
Opening stock	1.75	Sales : Credit	12.00
Add: Manufacturing costs	10.75	Cash	3.00
	12.50
Less: Closing stock	1.50
Cost of goods sold	11.00
Gross Profit	4.00		15.00
	15.00
Administrative expenses	0.35	Gross Profit	4.00
Selling expenses	0.25	Other Income	0.09
Depreciation	0.50
Interest	0.47
Income –tax	1.26
Net Profit	1.26
	4.09

Balance Sheet as on 31st March, 2024

Liabilities	Rs. Lakhs	Assets	Rs. Lakhs
Equity shares of Rs. 10 each	3.50	Plant and machinery	10.00
10% Preference shares	2.00	Less: Depreciation	2.50
Reserves and Surplus	2.00	Net plant and machinery	7.50
Long-term loan (12%)	1.00	Goodwill	1.40
Debentures (14%)	2.50	Stock	1.50
Creditors	0.60	Debtors	1.00
Bills Payable	0.20	Pre-paid expenses	0.25
Accrued expenses	0.20	Marketable securities	0.75
Provision for tax	0.65	Cash	0.25
	12.65		12.65

The market price of the shares of Alpha Ltd. on 31st March, 2024 is Rs. 45

	(Rs. Lakhs)
Reserves at the beginning	1.465
Net Profit during the year	1.260
Preference dividends	2.725
Equity dividends	0.200
Reserves at the close of year	0.525
	2.000

Calculate the following Ratios – (1) Current ratio (2) Quick ratio (3) Debt- equity ratio (4) Interest coverage (5) Fixed charge coverage (6) Stock turnover (7) Debtors turnover (8) Average collection period (9) Gross profit margin (10) Net profit margin (11) Operating ratio (12) Return on capital employed (ROCE) (13) Earnings per share (14) Return on shareholders’ equity (15) P/E ratio and (16) Earning yield.

3. How does uncertainty affect Inventory Management? Explain any one model of Inventory Management under the condition of uncertainty.

4. Explain the significance of trade credit. What are the factors that influence the availability of trade credit?

5. Select any Small or Medium Enterprise (SME) of your choice. Discuss with them about why they need to manage working capital and how it is done. What are the various barriers faced by them in optimization of working capital

 

MMPF 001 (July 2025 - January 2026) - ENGLISH

ASSIGNMENT

Course Code

MMPF-001

Course Title

Working Capital Management

Assignment Code

MMPF-001/TMA/JULY/2025

Coverage

All Blocks

Note: Attempt all the questions and submit this assignment to the Coordinator of your study centre. Last date of submission for July 2025 Semester is 31 October, 2025 and for January 2026 Semester is 30th April 2026.

Q1. What is the Role of Central Bank in designing and implementing monetary and credit Policy? Highlight the main points of the latest monetary and credit policy declared by Reserve Bank of India.

Q2. You are required to prepare a Cash Budget of XYZ Ltd. for the months June 2025 to October 2025 from the details given below:

(a) The Actual sales for April, May 2025 and Estimated Sales during June 2025 to December 2025                                                       

                                                                                   (Rs. In Lakhs)

April	May	June	July	August	September	October	November	December
160	140	160	200	160	200	180	240	200

(b) On an average 20% of sales are cash sales. The credit sales 80%, payable in the third month.

(c) Variable expenses 5% on turnover, there is a time lag of half a month.

(d) Commission 5% on credit sales payable in the third month.

(e) Purchases amount to 60% of sales. Payment will be made in the third month of purchases.

(f) Rent Rs. 6,00,000 paid every month.

(g) Other Payments:

Fixed assets purchased - August Rs. 100 lakhs; Taxes - September Rs. 40 lakhs.

(h) Opening cash balance Rs. 50,00,000

Q3. As a Finance Manager which sources you would prefer to raise short term loans from the money market for meeting working capital needs of your business and why?

Q4. Study the case of 'Receivables Management In Tata Consultancy Services Limited' given in Unit 15 of this course and answer the questions given at the end of the case, on page 324.

MMPF 001 (July 2026 - January 2027) - ENGLISH

ASSIGNMENT
Course Code : MMPF-001
Course Title : Working Capital Management
Assignment Code : MMPF-001/TMA/JULY/2026
Coverage : All Blocks
Note: Attempt all the questions and submit this assignment to the Coordinator of your
study centre. Last date of submission for July 2026 Semester is 31st October 2026
and for January 2027 Semester is 30th April 2027.
Q1. Explain different approaches to the determination of working capital. As a new entrepreneur,
which of the three broad approaches would you prefer and why?
Q2. Alpha Ltd. has a annual sales of Rs. 50 lakhs and is currently extending 30 days credit to the
dealers. It is felt that sales can pick up if dealers are willing to carry increased stocks, but
dealers have difficulty in financing their inventory. The company is therefore considering
shifts in credit policy. You are required to determine which policy the company should
adopt from the following information that is available:
Credit
Policy
Average Collection
Period
Annual Sales
Rs. lakhs
P 45 days 56
Q 60 days 60
R 75 days 62
S 90 days 63
The average collection period now is 30 days.
Costs: Variable cost is 80 per cent on sales.
Fixed cost is Rs. 6 lakhs per annum.
Required (pre-tax) return on investment is 20 per cent.
Also mention the assumptions that you have made while approaching your decision.
Q3. Describe the salient features of the Guidelines issued by the Securities and Exchange Board
of India (SEBI) for the conversion of Debentures into Equity.
Q4. Study the case of ‘Inventory Management In Maruti Suzuki India Limited (MSIL)’ given in
Unit 15 of this course and answer the questions given at the end of the case. 

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