The details Current Assets and Current Liabilities of M/s Shine & Company is as follows: Total Current Assets required by the borrower ₹ 50,000 Current Liabilities (Excluding Bank Borrowing) ₹ 10,000 Core Current Ass

I. Method In the first method of lending, 25% of the working capital gap [Current Assets - (Current Liabilities, Excluding Bank Borrowings)] should be contributed by the borrower through long term funds and remaining 75 percent can be financed through bank borrowings. Particulars Amount in ₹ Total Current Assets required by the borrower 50,000 Current Liabilities (Excluding bank borrowings) 10,000 Working Capital Gap 40,000 Less: 25% from borrower through long term source 10,000 Maximum Permissible Bank Borrowing (i.e. 75% of Working Capital Gap) 30,000 II. Method Under this method, the borrower should provide 25% of the total current assets through long term funds. Particulars Amount in ₹ Total Current Assets required by the borrower 50,000 Less: 25% to be provided by borrower through long term funds 12,500 Less: Current Liabilities (Excluding bank borrowings) 10,000 Maximum Permissible Bank Borrowing (i.e. 75% of Current Assets - Current Liabilities other than Bank Borrowings) 27,500 III. Method In this method, borrower shall contribute from long term sources to the extent of core current assets (Fixed Current Assets) and 25% of the balance of current assets. The remaining of the working capital gap can be met from the bank borrowings. This method will further strength the current ratio. Particulars Amount in ₹ Total Current Assets required by the borrower 50,000 Less: Core Current Assets 4,000 Balance (A) 46,000 25% to be provided by the borrower through long term sources 11,500 Balance (B) 34,500 Less: Current Liabilities (excluding bank borrowings) 10,000 Maximum Permissible Bank Finance 24,500