The term liquid surplus used in computing working capital denotes:

a. Net working capital

b. Surplus from operations

c. Cash and bank balances

d. Surplus of long term sources over long term uses.

As per the first method of lending of Tandon Committee, Net Working Capital requirement is 25% off:

a. Working capital gap

b. Total current required

c. Working capital required

d. Current liabilities

e. Total assets

Sales of an MSE unit for the previous year were Rs. 200 lac and projected at Rs. 300 lac for next year. As per Nayak Committee, the level of minimum bank working capital limits to be sanctioned would be:

a. Rs.40 lac

b. Rs.60 lac

c. Rs.20 lac

d. Rs.100 lac

A proposal for sanction of a term loan of Rs.8 lac is received by Credit Bank Ltd. The party proposes to repay the loan within 4 years. On scrutiny, it is found that the debt-service coverage ratio is 1.5:1 which indicates that the party may find it difficult to make repayment. What remedies are possible?

a. The proposal should be turned down as that would result in an increase in sub-standard assets at the branch at a later stage

b. The lower amount of term loan may be considered to improve the debt service ratio it may be asked to bring interest-free funds so as to improve the debt coverage ratio

c. The repayment period of 4 years appears to be less which can be increased to 6 or 7 years, which would improve the ratio

d. b and c

While sanctioning credit facilities to their borrowers, the bankers calculate a number of ratios. Which of the following ratios is more relevant for sanction of term loan?

a. Debt equity ratio

b. Return on investment

c. Debt service coverage ratio

d. Current ratio

e. Return on equity

An MSME has been sanctioned working capital limit of Rs.30 lac at a minimum of 20% as per the Nayak Committee. What is the amount of projected sales?

a. Rs.300 lac

b. Rs.200 lac

c. Rs.150 lac

d. Rs.100 lac

e. Rs.60 lac

Credit Bank determined the minimum working capital amount of Rs.200 lac in favour of an MSE unit for the coming year. What is the level of projected sale?

a. Rs.600 lac

b. Rs.800 lac

c. Rs.1000 lac

d. Rs.1200 lac

Which of the following is not a component of working capital?

a. Stocks

b. Receivables

c. Security deposit for electricity connection

d. Vehicles in case of a vehicle dealer

e. Land in case of the land developer

An MSE unit with projected turnover of Rs.30 lac approaches your branch for sanction of working capital limits. What will be the minimum amount of working capital, to be assessed for this firm?

a. Rs.6 lac

b. Rs.1.50 lac

c. Rs.15 lac or more

d. Rs.7.50 lac

e. Rs.5 lac or more