Raja & Co. has the following items in its Balance Sheet: Stock Rs.50,000; Trade creditors Rs.32,000; Debtors Rs.75,000; Cash Rs.1,00,000; Dividend Payable Rs.50,000; Tax Rs.44,000; Short-term loan Rs.61,000; Short-term investment Rs.76,000. Calculate gross and net working capital.

Question

Accepted Answer

Current Assets:
- Stock = ₹50,000
- Debtors = ₹75,000
- Cash = ₹1,00,000
- Short-term investment = ₹76,000

Total Current Assets = 50,000 + 75,000 + 1,00,000 + 76,000 = ₹3,01,000

Current Liabilities:
- Trade creditors = ₹32,000
- Dividend Payable = ₹50,000
- Tax = ₹44,000
- Short-term loan = ₹61,000

Total Current Liabilities = 32,000 + 50,000 + 44,000 + 61,000 = ₹1,87,000

**Gross Working Capital** = Total Current Assets = ₹3,01,000

**Net Working Capital** = Current Assets − Current Liabilities = ₹3,01,000 − ₹1,87,000 = ₹1,14,000