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Download S . N o . P A R T I C N O . 1 . W O R C A P I T A L N Y P R O F I L E A N A L Y S T I V E S O F S T U D Y 5 . R E M E T H O D O L M I T I O A I N T E R P E R I N D I N G O S T U D Y 9 . T I O N S L U S I O N U L K 2 3 I T S O N T F S 1 0 A G H E A I . . S E A Y S T T U . 6 7 I O H Z C E Z O E N C R C . . N D 8 H L A . I T F R S N C S 4 G O W . O P A M O B G E P T E A

INTRODUCTION OF THE STUDYMeaningOfWorkingCapitalManagement:-

Working capital means the part of the total assets of the b usiness that change from one form toanother form in the ordinary course of business operations. The word working capital is a made of two words working and capital. The word working means day to day operation of the business, whereas the word capital means monetaryvalue of all assets of the business.Working capital may be regarded as the life blood of business. Working capital is of major importance to internal and external analysis because of its close relationship with thecurrent day to-day operations of a business. Every business needs funds for two purposes. 1 . L o n g t e r m 2.Short term 1. Long term funds are required to create production facilities through purchase of fixed assetssuch as plants, machineries, lands, buildings & etc2. Short term funds are required for the purchase of raw materials, payment of wages, and other day-to-day expenses.It is other wise known as revolving or circulating capitalIt is nothing but the difference between current assets and current liabilities. i.e. Working Capital = Current Asset Current Liability.

Businesses use capital for construction, renovation, furniture, software, equipment, or machinery.It is also commonly used to purchase inventory, or to make payroll. Capital is also used often by businesses to put a down payment down on a piece of commercial real estate. Working capital isessential for any business to succeed. It is becoming increasingly important to have access to more working capital when we need it. Concept of Working Capital Gross Working Capital = Total of Current Asset Net Working Capital = Excess of Current Asset over Current Liability Constituents of Working Capital:-C u r r e n t A s s e t s C u r r e n t L i a b i l i t i e s Cash in hand / at bank Bills Receivable Bills Payable Sundry Creditors

Sundry Debtors Short term loans Investors/ stock Temporary investment Prepaid expenses

 Accrued incomes Outstanding expenses Accrued expenses Bank Over draft Working capital in terms of five components: 1. Cash and equivalents: T h i s m o s t l i q u i d f o r m o f w o r k i n g c a p i t a l r e q u i r e s c o n s t a n t supervision. A good cash budgeting and forecasting system provides answers to key questions s u c h a s : I s t h e c a s h l e v e l a d e q u a t e t o m e e t c u r r e n t e x p e n s e s a s t h e y c o m e d u e ? W h a t i s t h e timing relationship between cash inflow and outflow? When will peak cash needs occur? Whenand how much bank borrowing will be needed to meet any cash shortfalls? When will repayment be expected and will the cash flow cover it? 2. Accounts receivable: Many businesses extend credit to their custom ers. If you do, is theamount of accounts receivable reasonable relative to sales? How rapidly are receivables being collected? Which customers are slow to pay and what should be done about them? 3. Inventory: Inventory is often as much as 50 percent of a firm's current assets, so naturally itrequires continual scrutiny. Is the inventory level reasonable compared with sales and the natureof your business? What's the rate of inventory turnover compared with other companies in your type of business? 4. Accounts payable :Financing by suppliers is common in small business; it is one of themajor sources of funds for entrepreneurs. Is the amount of money owed suppliers reasonablerelative to what you purchase? What is your firm's payment policy doing to enhance or detractfrom your credit rating? 5. Accrued expenses and taxes payable: These are obligations of your company at any giventime and represent a future outflow of cash . Two different concepts of working capital are : Balance sheet or Traditional concept Operating cycle concept. Balance sheet or Traditional concept: -

It shows the position of the firm at certain point of time. It is calculated in the basis of balancesheet prepared at a specific date. In this method there are two type of working capital: Gross working capital Net working capital Gross working capital: It refers to the firms investment in current assets. The sumof the current assets is the working capital of the business. The sum of the current assetsis a quantitative aspect of working capital. Which emphasizes more on quantity than its quality, but it fails to reveal the true financial position of the firm because every increase in currentliabilities will decrease the gross working capital. Net working capital: It is the difference between current assets and current liabilities or the excess of total current assets over total current liabilities. Working capital= current assets - current liabilitiesNet working capital: - It is also can defined as that part of a firms current assets which isfinanced with long term funds. It may be either positive or negative. When the current assets exceed the current liability, the working capital is positive and vice versa. Operating cycle concept :-

The duration or time required completing the sequence of events right from purchase of raw material for cash to the realization of sales in cash is called theoperating cycle or working capital cycle. RawMaterial Debtors&BillsReceivables Cash Work InProcess FinishedGoods Sales KINDS OF WORKING CAPITAL Gross Working Capital Gross working capital refers to the amount of funds invested in current assets that are employedin the business process. This is a going concern concept, since it is these aspects that financial O p e r a t i n g C yc l e

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Janvi Kochar janvi 09 / 17 / 2011 4 Debtor Conversion Period for project report on oswal woolen mills Download or Print 3,231 Reads Uploaded by pabalapreet Follow TIP Press Ctrl-F to quickly search anywhere in the document. Sections

DECLARATION ACKNOWLEDGEMENT TABLE OF CONTENTS INTRODUCTION OF THE STUDY Meaning Of Working Capital Management :Concept of Working Capital Constituents of Working Capital:- Current Assets Current Liabilities Working capital in terms of five components: Two different concepts of working capital are :KINDS OF WORKING CAPITAL Temporary or Variable Working Capital:Temporary or variable And some special al is the amount of working capital which is required to meet the seasonal set IMPORTANCE OF ADEQUATE EXCESS OR INADEQUATE WORKING CAPITAL FACTORS DETERMINIG THE WORKING CAPITAL REQUIREMENTS SOURCES OF WORKING CAPITAL Permanent or Fixed Temporary or Variable Financing of Permanent/Fixed or Long-Term Working Capital Financing of Temporary/Variable or Short-Term Working Capital Statement of Working Capital Working Capital How to determine the working capital:G e n er al nature of bu siness Production cycle OSWAL WOOLEN MILLS LIMITED (OWM) MANAGEMENT OF THE COMPANY DETAILS OF DIRECTORS FEATURES OF NAHAR GROUP

ACHIEVEMENTS OF NAHAR GROUP MAJOR COMPETITORS OF OWM LENDER Strengths of the company Weakness of the company OPPURTUNITES THREATS OBJECTIVES OF THE STUDY RESEARCH METHODOLOGY Scope of Study Research Design Analysis and Interpretation 1) Raw Material Conversion Period: 2. Work in Progress Conversion Period: 3. Finished Goods Conversion Period 4 Debtor Conversion Period SUGGESTIONS CONCLUSION BIBLIOGRAPHY Books: Website

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