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Dear Sir,
I have a slight confusion, do we take cash balance in hand or bank into account while deriving Working Capital? and also when calculating Current Ratio..?
Thanks
In future, if you want me to answer then please ask in the Ask the Tutor Forum. This forum is for students to help each other.
In answer to your question, it really depends what it is you are looking at, but in most cases cash is included.
However, working capital questions in the exam usually are asking about specific areas of working capital of which cash is one of them.
Certainly cash is included when calculating the current ratio.
(In F9 there is never a distinction made between cash in hand and cash at bank – they are both cash 🙂 )I do suggest that you watch the free lectures (together with the free lecture notes). They comprise a complete course covering all you need to pass F9 well. In particular, there are a whole series of lectures on Working Capital Management.
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