Summer project

On

Working capital management

By
Vinod S kanojiya

Atharva Institute of Management Studies

Marve Road, Malad (W), Mumbai – 4000 95.

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 July 2005

Summer project

On

Working capital management

By
Vinod .S. kanojiya

Submitted to:
Mr. Girish .P. Bangui
Manager
Bank of Maharashtra,
Charkop, kandivli

Atharva Institute of Management Studies

Marve Road, Malad (W), Mumbai – 4000 95.

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 Declaration
I, Vinod kanojiya, of Atharva Institute of Management Studies,
Malad (w), of MMS – I, hereby declare that I have completed a
summer project on “working capital management” in the Academic
year 2004-05. The information submitted is true and original to the
best of my knowledge.

Vinod kanojiya
MMS-I

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 CERTIFICATE

This is to certify that Mr. Vinod kanojiya of Atharva Institute of

Management Studies specializing in finance has completed his two months
(viz. May-June, 2005) of summer project on working capital management,
here at Bank of Maharashtra. The information submitted is true and original
to the best of my knowledge.

Girish p Bangui
Manager
Bank of Maharashtra

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CONTENTS:
Project objectives……………………………………………1
Profile of Bank of Maharashtra..…………………………....2
Concept of Working Capital Management………………….4
Types of Working Capital…………………………………..5
Management of Working Capital……………………………7
Management of Cash……………………………………….13
Cash Management Models…………………………………21
Management of Inventories………………………………..24
Management of Accounts Receivables…………………….30
Management of Accounts Payable…………………………33
Key Working Capital Ratios……………………………….38
Factors Influencing Working Capital Requirements………39
Working capital assessment in MAHABANK…………….40
Assessment of Working Capital in MAHABANK………...41
Recommendations …………………………………………43
Scanning of working capital financing in MAHABANK…44
Bibliography……………………………………………….45

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Acknowledgements
I wish to take this opportunity to express my deep gratitude to the
persons and the organization that have helped, encouraged, inspired and
enlightened me with their constructive ideas and overall support towards the
completion of this project successfully. This project would have been
incomplete without the active co-operation and guidance of senior persons of
Bank of Maharashtra (kandivli branch).

I am very thankful to Mr. Girish p. Bangui, branch manager, charkop,

kandivli (west), and his senior staff members for helping me throughout my
project showing me the right direction towards the completion of my project.

I am very grateful to prof. sujata pandey for providing me their

expertise in the completion of my project.

I thank prof. N.S. Rajen for his effort he put in for the towards my
summer project.

I am thankful to prof. Seema sant and prof. Mahesh rane for guiding me
in referring the books for my projects.

No words and language can ever be sufficient to express my gratitude

to the above-mentioned persons who provided me with the support to prepare
this project.

Vinod shyamji kanojiya

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Executive summary
Working capital management refers to the administration of all aspects of
current assets, namely cash, marketable securities, debtors and stock (inventories)
and current liabilities. The financial manager must determine levels and
composition of current assets. He must see that right sources are tapped to finance
current assets, and that current liabilities are paid in time. He must see that right
sources are tapped to finance current assets, and that current liabilities are paid in
time.

There are many aspects of working capital management, which make it

an important function of the financial manager:
• Time: working capital management requires much of the financial
manager’s time.
• Investment: working capital represents a large portion of the total
investments in assets.
• Significance: working capital management has great significance for all
firms but it is very critical for small firms.
• Growth: the need for working capital is directly related to the firm’s
growth.

Investment in current assets represents a very significant portion of the total

investment in assets. Working capital management is critical for all firms. A small
firm may not have much investment in fixed assets, but it has to invest to in current
assets. Small firms in India face a severe problem of collecting their debtors.

Banks have their own policies to assess the working capital of the firm to
finance them with the shortage.
Bank of Maharashtra adopts certain method for financing their customer’s
working capital requirements. There are certain recommendations from the
committees for the banks to finance the working capital needs of their clients.
It may, thus, be concluded that all precautions should be taken for the
effective and efficient management of working capital. The finance manager should
pay regular attention to the levels of current assets and the financing of current
assets.

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