This is an original preparation plan, not a new examination announcement. Check dates, stages, eligibility and application instructions in the issuing authority’s current notice.
01 / UNDERSTANDING
Plan your preparation
Draw the wholesaler's cycle before practising ratios. Change one timing assumption per revision session, and explain why the cash requirement changes even when the profit margin stays the same. Revise by changing collection days first and inventory days next, leaving other assumptions unchanged. Explain the direction of the resulting financing need before calculating. This isolates each driver and prevents the learner from treating turnover growth as the only reason a working-capital requirement can rise.
02 / UNDERSTANDING
The concept in context
A business pays for inputs, holds inventory, sells goods and collects receivables over time. Supplier credit may finance part of that cycle. The length and amount of funds tied up depend on production, stock turnover, collection terms and the payment arrangements with suppliers.
03 / UNDERSTANDING
A worked learning case
A wholesaler pays suppliers after thirty days but collects from retailers after sixty days, while also holding stock before sale. A profitable sales month can increase the cash tied up in receivables. The banker maps inventory, creditor and collection periods to understand the financing gap before discussing a short-term facility.
ORIGINAL EDUCATIONAL PRACTICE
Try it before you check.
Can a profitable business experience a working-capital cash shortage?
Show the answer and reasoning
Yes.
Profit and cash collection occur on different timelines. Cash may be tied up in stock or customer receivables before suppliers and other costs must be paid. A working-capital review therefore examines inventory, collection and supplier-payment timing, rather than assuming that a positive income statement guarantees available funds.
Two traps to watch for.
- Using profit as proof that collections are already available.
- Ignoring supplier credit when mapping the operating cycle.
YOUR TOPIC-SPECIFIC LEARNING MAP
Build your next study session
Place inventory, supplier payments and collections on one timeline.
Identify the period the wholesaler must finance.
Test the effect of slower customer collections on cash need.
Explain the idea, apply it to a new situation, then check what changed in your reasoning.
BANKERS TUTORIAL · SOURCE NOTES
Keep the source alongside your notes.
Official links provide subject context and authoritative reference material. This guide’s explanation, scenario and question are original Bankers Tutorial learning content.
- iibf.org.in https://iibf.org.in/jaiib-junior-associate-IIBF
- iibf.org.in https://iibf.org.in/documents/RulesSyllabus/2026/FlagshipCourses/21%20-%20JAIIB-Final_Exam_24.07.25_Final_23.02.2026.pdf
- www.rbi.org.in https://www.rbi.org.in/commonperson/English/Scripts/PressReleases.aspx?Id=2123
For JAIIB preparation, check the current official notice before relying on changing dates, rules or examination requirements.
