The situation
Cost of sales is ₹365 lakh, purchases are ₹438 lakh, inventory days rise from 30 to 40 and payable days rise from 25 to 30. Use 365 days.
Your task
Estimate the incremental net cash tied up.
Reveal step-by-step solution
Set up the problem
Inventory grows by (40 − 30) × ₹365 ÷ 365 = ₹10 lakh.
Work through the numbers
Payables grow by (30 − 25) × ₹438 ÷ 365 = ₹6 lakh.
Interpret the result
Net cash tied up rises ₹4 lakh. Supplier financing offsets part of the inventory build.
What to remember
Use the flow that creates each balance. Convert days using the same period length.