Question

5. Which of the following is not a technique of estimating working capital requirements:
(A) Cash forecasting method
(B) Repression Analysis Method
(C) Operating cyclc Method
(D) Percentage of sales Method

Answer 1

Answer:

I think so operating cycle method

Answer 2

Answer:

Percentage of Sales Method:

It is a traditional and simple method of determining the level of working capital and its components. In this method, working capital is determined on the basis of past experience. If, over the years, the relationship between sales and working capital is found to be stable, then this relationship may be taken as a base for determining the working capital for future.

This method is simple, easy to understand and useful for projecting relatively short-term changes in working capital. However, this method cannot be recommended for universal application because the assumption of linear relationship between sales and working capital may not hold good in all cases.