WHAT ARE THE METHODS USED FOR WORKING CAPITAL APPRAISAL?
(This post explains the definitions of working capital , Operating cycle and various methods of working capital appraisal viz. Tandon’s first method, Tandon’s second method, Turnover method or Nayak committee norms, Cash budget method, Chore committee norms, Maximum permissible bank finance, Minimum permissible bank finance and Important things to note in assessment of working capital assessments) Definitions of (a)working capital , (b) Operating cycle : (a) Working capital means the sum of the funds invested at various current assets used in the operating cycle, by the industrial and trading establishments. (b) Operating cycle means the length of time required to convert ‘Non-Cash current assets’, ( like raw material (RM), work in process (WIP), finished goods (FG), and receivables) into cash . Methods of Working capital appraisal: B anks in India have evolved their own method of lending as they have been given ...