Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Talam Co. (March/June sample questions 2019)
- This topic has 5 replies, 3 voices, and was last updated 4 years ago by John Moffat.
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- August 28, 2019 at 3:44 pm #543568
In the question I have a query regarding the working capital adjustment.. aren’t we supposed to decrease the already working capital investment provided in the first year from the second year requirement and so on for subsequent years?
August 28, 2019 at 5:12 pm #543596I think that maybe you have misread the question.
The question says that they will need additional or a reduction in working capital equal to 10% of the increase or decrease in the sales revenue.
In the second year, the revenue is higher by 19,723. Therefore the need additional working capital at time 1 (the start of the second year) of 10% x 19,723 = 1,972.
In the third year, the revenue is higher by 24,957. Therefore they need addition working capital at time 2 (the start of the third year) of 10% x 24,957 = 2,497.
And so on 🙂
February 2, 2020 at 2:32 pm #560434Why have we not used incremental working capital here
February 2, 2020 at 5:54 pm #560446We have used incremental working capital !!!!
Incremental means extra, and the extra needed at time 1 is 1,972 and at time 2 they need an extra 2,497 – as I have explained above.
February 3, 2020 at 8:22 pm #560572I read the question again and yes they already told in the qs that any additional or reduction in working capital ! Thanks again
February 4, 2020 at 7:50 am #560609You are welcome 🙂
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