Question

Vasudha Ltd provides following information:
i) Raw Material Stock Holding Period: 3.5 months, Work-in-Progress Holding Period: 1 month
m
Finished Goods Holding Period: 4.5 months, Debtors Collection Period: 6 months
You are required to compute the Operating Cycle of Vasudha Ltd, What would happen if the
Trade Payables of the Company are paid in 14 months - whether these should be classified as
Current or Non-Current Liability?
ii) The Management of Kshitij Ltd contents that the Work-in-Progress is not valued since it is difficult
to ascertain the same in view of the multiple processes involved. They opine that the value of
Opening and Closing Work-in-Progress would be more or less than same, Accordingly, the
Management had not separately disclosed the Work-in-Progress in its Financial Statements.
Comment in line with Schedule III.
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Answer 1

Explanation:

Finished Goods Holding Period: 4.5 months, Debtors Collection Period : 6 months. You are required to compute the ...