Answer / shiks

There are 3 methods for assessment of working capital
1.Turnover method i.e. working capital is generally 25 % of the turnover out of which 5% of turnover is contributed by promoter and rest 20% by financers.
2.Cashflow method i.e. W.C.=Cash inflow- Cash outflow.It is gen used in service sector.
3.Tondon Commitee recomendations
(i)25% of W.C. is contribed by promoters
(ii)25% of current assets cont. by promoters
(iii)100% of hard core current assets and 25% of other current assets.
Generally (ii)is followed.

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