Question

42. Which technique of working capital forecast , the banks prefer:
(A) Current assets and current liabilities method
(B) Operating cycle method
(C) Cash forecasting method
(D) None of the above​

Answer 1

Answer:

cash forecating method

Answer 2

(A) Current assets and current liabilities method -

a. Current assets occur on the balance sheet of a company.

b. It should be completed each year as it is one of the compulsorily required

c. The current assets of a company include cash, accounts, stocks, marketable securities, pre-paid liabilities and more assets that are liquified.

(B)  Operating cycle method

a. It is the cycle of raw materials that are left to work in progress to make finished good so they account payable and finally to cash

b. The cycle starts from raw material purchase and ends in conversion into cash

(C) Cash forecasting method

a. It is also known as cash forecasting

b. Its the way of estimating the in and out flow of cash in any particular business

c. It is an estimate across all areas over a particular period of time.

Since we have described what each of the options is, we can say the correct answer is (A) the Current asset and current liabilities method.