Following data relates to M/s ABC Pvt. Ltd. : Particulars Amount (in lakh) Particulars Amount (in lakh) Creditors for purchases 200 Raw Material 380 Other Current Liabilities 100 Work in Process 40 Finished Goods 180 Rec

Working Note: Calculation of Total Current Assets (TCA) Particulars Amount (₹ In lakhs) Raw Material 380 Work in Process 40 Finished Goods 180 Receivables 110 Other Current Assets 30 Total Current Assets (TCA) 740 Calculation of Maximum Permissible Bank Finance (MPBF) as per 2nd Method of Lending (Tandon Committee Recommendations): Sr. No. Particulars Amount (₹ in lakh) 1 Total Current Assets (TCA) 740 2 Less: Current Liabilities other than banking borrowing (Creditors for purchases + Other Current Liabilities) 200 + 100 = 300 3 Working Capital Gap (WCG) (1-2) 440 4 Less: 25% of Total Current Assets (25% of 1) 0.25 * 740 = 185 5 Maximum Permissible Bank Finance (MPBF) (3-4) 255 With this additional borrowing, the Current Liabilities shall become ₹ 555 lakhs (300 + 255) and the new Current Ratio shall become 1.33 (740/555).