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MS-41 Solved Assignment

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  • Version: 2019 Jan - June

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Soft Copy: Yes
Downloadable File: Yes
University: IGNOU
Course: Master of Business Administration

Q&A of Mba MS-41 Solved Assignment 2019 - Working Capital Management

Q. What are the major changes that were made by RBI in the Fifth Bi-monthly Monetary Policy statement for 2018-19?

Answer........

Q. You are required to suggest XYZ Ltd. as to which Credit Policy it should adopt. The company has a present annual sales level of 10,000 units at Rs 300 per unit. The Variable cost is Rs 200 per unit and the Fixed costs amount to Rs 3,00,000 per annum. Presently the company allows 1 month credit period which it intends to increase to 2 months and 3 months. The estimates made are as follows:

Credit Policy Existing Proposed
1 month 2 months 3 months
Increase in sales --- 15% 30%
% of Bad debts 1% 3% 5%

There will be increase in fixed cost by Rs 50,000 on account of increase in sales beyond 15% of present level. The company plans on a pre-tax return of 20% on investment in Receivables

Answer. .........

Q. Taking a Suitable Example explain how Permissible Bank Finance can be assessed under the First, Second and Third method of Lending. How do these methods differ from each other?
Answer.......

Q. If you are a Finance Manager of an MNC, what circumstances would you consider using Euro-Currency Markets? Also explain why you have selected these markets instead of borrowing from Domestic Markets.

Answer.........

Product Details: MS-41 Solved Assignment 2019 - Working Capital Management

Course: Ignou MBA (Master of Business Administration)
Session: Jan - June 2019

Old Sample Answers of Mba Ignou MS-41 Assignments

Q. What is Working Capital?
Answer. Working capital is a measure of a company's current assets less its current liabilities........... The management of working capital is a crucial element of cash flow management......
Managing working capital is essential for success, as the ability to avoid a cash crisis and pay debts as they fall due depends on managing
Receivables, through effective credit approval, invoicing, and collection activity
Inventory, through effective ordering, storage, and identification of inventory Payables, by negotiation of trade terms and through taking advantage of prompt-payment discounts
Cash, by effective forecasting, short-term borrowing, and/or investment of surplus cash where possible
The working capital cycle works (at least in theory) as follows: a firm will purchase inventory (either as finished goods or as raw materials) on credit from its suppliers (appearing as creditors in the working capital)...... After production has taken place the finished goods will be sold on to customers as either cash or credit sales (now appearing as trade receivables in the working capital)........... The firm will eventually receive the cash from these credit customers, which in turn can then be used to settle the amounts owing to the credit suppliers as well as any other obligations it has run up during this period, such as wages and other expenses.......... Get Ignou Mba MS-41 Solved Assignment 2019 Jan - June Working Capital Management..........
A firm will wish to minimize the length of its working capital cycle. The longer a firm holds inventories and the longer a firm takes to collect cash from its customers in respect of credit sales, the more likely a firm will face liquidity problems........ Therefore a firm will want to minimize the time cash is tied up in working capital, so as to avoid potential difficulties with cash flow.
The working capital cycle also known as the firm's operating cycle can also be measured in terms of the time taken for money to pass through each stage of the working capital. The operating cycle for its working capital will consist of the following timings for cash being tied up in the various stages of the working capital cycle.........
The objective of working capital management by all the firms is to provide enough liquidity so that production process continues smoothly during the normal course of the business.......... Further, the focus is to maintain an optimum level of current assets so that funds of the firm do not remain unnecessarily idle.......... The finance manager aims at efficiently managing the current assets and liabilities to meet the firm's working capital requirement. Inefficient working capital management may lead to higher cost of funds and may increase the risk profile of the firm.


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