Current assets of a company are Rs.800 lac and other current liabilities Rs.80 lac. What will be the MPBF as per the first method of lending of Tandon Committee?

a. Rs.720 lac

b. Rs.540 lac

c. Rs.520 lac

d. Rs.440 lac

At the time of renewal of working capital limits, the loan officer observed that M/s BD Enterprise's increase in long term use of funds is 80% of the increase in long term sources of funds during the year.

a. The Current liabilities would increase.

b. The Current assets would decline.

c. The Current ratio & NWC would decline.

d. The Current ratio & NWC would improve.

Under Nayak Committee recommendations, the working capital limits from the bank is the minimum of the projected annual sales:

a. 5%

b. 15%

c. 20%

d. 25%

e. 30%

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