Hi Sir,
Hope you are fine!
Lets say material is $450,000 and the WIP represents two months worth of half produced goods. How do we calculate the average value for WIP to be used in the calculation working capital?
Is it 2 months for 50%completed WIP implying 4 months for full completion?
If yes, average WIP for working capital = 4/12*450,000
It seems exaggerated.
Please advise.