Impact of Efficient Working Capital Management for the Profitability of a Firm

Impact of Efficient Working Capital Management for the Profitability of a Firm

Submitted to: Dr. Sheikh Abu Taher Lecturer Department of Finance & Banking Jahangirnagar University

Submitted by: Md. Baki Billah (1272) Md. Hafizur Rahman (1276) Kazi Majharul Azam (1283)

Department of Finance & Banking Jahangirnagar University Savar, Dhaka

Date of submission: 01 September, 2012

Letter of Transmittal
01 September, 2012

Dr. Sheikh Abu Taher

Lecturer and course Teacher Working capital management

Subject: Submission of report on Impact of efficient working capital management for the profitability of a firm Dear Sir,

It is our immense pleasure to submit you to the report on Impact of efficient working capital management for the profitability of a firm. We have searched information about different sorts of pharmaceutical industries existing in Bangladesh through difference types of annual report. For this reasons, we went to DSE for the searching difference information. Thus we have prepared an informative report for you.

We are so happy having performed this assignment. If you need any assistance in construing this report or in implementing my recommendations, please contact with me at Palashfnbju@yahoo.com on behalf of my group.

Sincerely Yours,

KaziMajharulAzam Student Id: 1283

Md. Baki Billah

Student id: 1272

Md. Hafizur Rahman

Student id: 1276

Acknowledgement

Our effort to prepare the report has not only been an amazing guideline in my future, but also, it has taught me to deal with real life issues like never before. In this little but significant journey of mine through this path, I have come across people who have immense contribution in the reaching of my destination.

My special indebtedness is to honorable course teacher Dr. Sheikh Abu Taher for giving us the opportunity of preparing a report. By doing such report I have gathered a lot of valuable experience that will help us in near future. His advice, guidance and support helped us enormously to do this properly.

We would like to express gratitude towards Performance Study on Banking in Bangladesh. Without his heartiest interest it would never possible to carry out this report.

We would like to thanks all the people whom we bothered to collect the information. All these sources have helped us providing all the information when we needed these.

In this report we tried our best to present all the relevant documents. But as human being, mistakes may be occurred. We pray apology for that. We also want to mention that any constructive suggestion is cordially welcome.

Table of Contents
Chapter Name
Table of Contents

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Executive Summary Introduction Background and problem statement Objectives and Methodology Limitation and Literature review Figure 01,02 Figure 2.1,2.2 Figure 2.3,2.4 Figure 2.5,2.6 Figure 2.7,2.8 Figure 2.9,3.1 Figure 3.2,3.3 Figure 3.4,3.5 Figure 3.6,3.7 Conclusion Appendix

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Page (A1-A10)

Executive summary: The summary comprises a concise, but complete scenario of the impact of efficient working capital management for the profitability of a firm. The management of Working Capital is one of the most important and challenging aspect of the overall financial management. Merely more effective and efficient management of working capital can ensure survival of a business enterprise. Working Capital Management is concerned with the problems that arise in attempting to manage the Current Assets, Current Liabilities and the interrelation that exists between them. The objective of this study is to critically evaluate working capital management as practiced in the selected firms of the Pharmaceutical industry. The study covers a production of 10 years, (1997-2006). For the purpose of investigation secondary data has been used. To achieve this goal the study also examines the policy and practices of cash management, evaluation of various ratios, procedures and techniques of inventory management, receivable management and payable management. But the study does not examine the political and economic impacts on the working capital management. Efficient management of working Capital and its components have a direct effect on the profitability levels of pharmaceutical industries. They reveal that there is a standoff between liquidity and profitability and the selected corporate has been achieving a tradeoff between risk and return. From the analysis we can conclude that pharmaceutical firms operated in Bangladesh are efficiently deal with their liquidity preferences and investment criteria and this is due to the competitive nature of this industry.

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