At present, the current ratio is 1,804,900/1,504,100 = 1·20 times.
The current net working capital is $300,800.
The revised figures for inventory, trade receivables, trade payables and overdraft must be calculated in order to
find the current ratio after the planned working capital policy changes.
Revised inventory = 2,160,000 x 50/365 =$295,890
Revised trade receivables = 5,400,000 x 62/365 = $917,260
Revised trade payables = $2,160,000 x 45/365 = $266,301
Revised overdraft level = 295,890 + 917,260 – 266,301 – 300,800 = $646,049
Why are they subracting $300,800
