Question

Perform a working capital analysis with the following internal company information for a new product to be marketed.

Supplies will be purchased from a supplier for $ 45,000 and there are 45 days of credit. The replacement is made every two months.
Customer A is projected to purchase $ 20,000 each month and is awarded 60 days of credit.
Client B is projected to purchase $ 10,000 each month and is granted 30 days of credit.
Indicate which months of the first semester of the year, the company requires financing for its working capital.

Indicate which months of the first semester of the year, the company requires financing for its working capital.

Response options group

February, March, April and June

February, April and June

January, February, March, April and June

January, February, April and June

Answer 1

The schedule of payments and receipts can be understood as following:

Particulars	January	February	March	April	May	June
Purchase made on credit of 45 days (Payment will be on 15th of every second month)		(45,000)		(45,000)		(45,000)
Sales to customer A with 60 days credit (Amount shall be received in every second month)		20,000		20,000		20,000
Sales to Client B on credit of 30 days (Amount will be received within each month)	10,000	10,000	10,000	10,000	10,000	10,000
Total	10,000	(15,000)	10,000	(15,000)	10,000	(15,000)

There will be requirement of financing in every second month, i.e. February, April and June.