N. S. Toor Solutions for Chapter: Loan Policy and Loan Documentation, Exercise 14: TEST YOUR SELF

Firm trading in goods and services takes an insurance policy for various risks for Rs. 15 lacs, whereas they maintain average inventory in the range of Rs.20 lac. Unfortunately, a fire takes place, and the goods worth Rs.4 lac are destroyed. What will be the amount of insurance claim the party will be able to obtain from the insurance company in case their claim is accepted:

A business firm has been sanctioned working capital limits of $₹6$ lac at $25\%$ margin by the bank and book debt limit of$₹4$  lac at $50\%$ margin. What will be the total margin requirement to avail the limit fully?

An MSE has been sanctioned working capital limits against the actual level of stock which normally remains around 30% of the annual sale. The annual sales are Rs.100 lac. What should be the value of insurance policy if the limit is Rs.22.50 lac, by maintaining 25% margin on stocks? 

Your branch has sanctioned working capital limit of Rs.9 lac to a partnership firm which submits stock report with stocks worth Rs. 28 lac and sundry creditors of Rs.18 lac. The margin in the account is only 20%, the unit being an SS1 unit. What is the maximum amount up to which the limit can be allowed to be availed by the party?

Your branch has sanctioned a cash credit limit of Rs.1.40 lac with 30% margin to a borrower. What must be the value of stocks if the unit is to avail the full limit?

A firm has been sanctioned a cash credit limit of Rs.4 lac. It submits stock statement for stock value of Rs.6 lac. The margin on the security is 25%. What is the amount of drawing power in the account?

Model Bank had granted a cash credit limit of Rs. 12 lac to M/s Banwari Traders against the stocks in trade with 25% margin. What should be value of stocks that the firm should have with them, if they want to avail the sanctioned limit fully. It may be noted that the firm avails regular credit from market against stocks to the extent of Rs. 6 lac:

Your branch has sanctioned a cash credit limit of Rs.$12$ lakh to M/s United Pharmacy. At the closing of July $31$, it had stocks worth Rs.$9$ lakh, sundry creditors of Rs.$3$ lakh and book debts of Rs $6$ lakh. Bank prescribed a margin of $25$% on stocks and $30$% on book debts. What is the maximum amount that can be withdrawn from the cash credit limit?