Bajaj auto is the worlds thirdlargest manufacturer of motorcycles and the. Abstract firms financial management policies compose ofvery important decisions including working capitalmanagement. Components of shortterm assets include inventories, loans and advances, debtors, investments and cash and bank balances. Working capital management has lately been a hot topic since the financial turmoil of the late 2000s. Working capital management is the regulation, adjustment and control of the balance of current assets and current liabilities of a firm such that maturing obligations are met, and the fixed assets. Tandon committee has referred to this type of working capital as core current assets. That leads to the obvious next question as to the definition of assets and liabilities. The viability of any company or business depends much on the proper working capital management. A case study on working capital management of bajaj auto.
The management of the working capital is equally important as the management of longterm financial investment. They argued that cash conversion cycle and inventory turnover significantly affect the operations of the firms. Working capital management, credit management, cash conversion cycle. Working capital has to be managed because the firm cannot always control how quickly the customers will buy, and once they have made purchases, exactly when they will pay. This paper analyzes the effect of working capital management on firms profitability in kenya for the period 2003 to 2012. Pdf in the last decade, special attention has been paid to the issue of. Pdf working capital management practices and financial. Profits need not always be a source of financing working capital. Working capital management is about the commercial and financial aspects of inventory, credit, purchasing, marketing, and royalty and investment policy.
Van horne 1995 explains that, working capital management is the administration of current assets in the name of cash, marketable securities, receivables and. Pdf an analysis of working capital management in select. Business, report to the uk department of trade and industry project on. Global working capital management dpo is the only working capital measure that has shown a consistent year over year improvement across the globe 1 biggest improvement to working capital came from improved payables performance 1. Jun 17, 2015 in this article, we start witht he 1 introduction to working capital management, and continue then with 2 the working capital cycle, 3 approaches to working capital management, 4 significance of adequate working capital, 5 factors for determining the amoung of working capital needed. Firms can achieve optimal management of working capital by making the tradeoff between profitability and liquidity. It is, however, essential to study the whole syllabus and not only the. The paper also investigates the impact of negative working capital on the relevant firms profitability. Working capital management is concerned with the problem that arises in attempting to manage the current assets, the current liabilities and the interrelationship that exist between them. In simple words, working capital refers to that part of the firms capital which is required for financing short term or current assets such as cash, marketable.
International case study conference 2015, mumbai, india 35 page ies management college and research centre, mumbai, india working capital management. Working capital management, profitability, net working capital, corporate. A case study on working capital management of bajaj auto ltd. Because of this, the properties of working capital are such that it does not earn interest e. This study helps to identify the areas that could be improved. Explore mba finance projects pdf, financial management projects topics, finance project topics list or ideas, accounting based research projects, latest synopsis examples, abstract, base papers, fm thesis ideas, corporate phd dissertation for financial management students fm, reports in pdf, doc and ppt for final year mba, bba diploma, bsc, msc, btech and mtech students for the year 2015 and 2016. This will reduce liquidity position of the firm or increasing unnecessary holding cost and. The goal of working capital management is to manage a firms current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. Pdf working capital management in smes researchgate.
Every business needs funds for two purposes for its establishment and to carry out its day today operations. Ia project that breaks even gives you your investment back iit does not cover the opportunity cost of the capital initial investment p. Working capital is the money used to make goods and attract sales. Current assets are the assets which can be converted into cash within an accounting year or operating cycle and include cash, shortterm securities, debtors, accounts receivable or book debts bills receivable and stock inventory. The video explains what working capital management is and how businesses can successfully use it to leverage hidden liquidity reserves within the value. Pwc s annual working capital study 201819 declining cash conversion and investment point to troubles ahead while modest improvements in working capital have begun to manifest themselves, the levels of cash and investment relative to revenue have declined more dramatically. Simply click the download link below to get mba working capital management summary ebook and lecture notes pdf file.
Working capital management in the banking sector includes abstract and chapter one, complete project material available working capital management in the banking sector a case study of united bank for african plc lagos. It is also concerned with maintaining liquidity in the business to ensure smooth running of day to day operations and to meet its financial obligations. Empirical evidence from manufacturing and construction firms listed on nairobi securities exchange, kenya daniel mogaka makori1 ambrose jagongo, phd2 abstract working capital management plays a significant role in improved profitability of firms. To the management of a company, the source of the working capital ownedborrowed resources is immaterial however, in an everchanging economy, it is very difficult to secure perfect equilibrium between inflow and outflow of cash, hence, it is the objective of sound financial management to always maintain enough supply of working capital. Carrying costs increase with the level of investment in current assets, and include the costs of maintaining economic value. Working capital cycle period was moving between 92. Effects of working capital management on company profitability abstract.
Form this point of view, the management of working capital becomes a tedious exercise for a financial manager of a firm. Working capital management in a management firm pdf. Working capital may be classified in two ways k inds of working capital a c oncept based working capital. India money market, india market size, global integration of indias money market, model and estimation. Costs of investments need to manage the tradeoff between carrying costs and shortage costs. Project report on working capital management in hcl mba. A project report on analysis of working capital management. Previous research findings related to working capital management practices indicated that if working capital management could be significantly improved in the sme sector, then few firms would fail, thus supporting the view that working capital management practices are extremely important for smes peel and wilson, 1994. Capital required for a business can be classified under two main categories via, 1 fixed capital. Working capital management a case study on working capital management of bajaj auto ltd. The most important point of that, working capital management is not only for big companies it is also quite important for small firms. Aug 16, 2014 project report on working capital management 1. Project report working capital management working capital meaning of working capital. Finance mba dissertation topics by finance mba disse.
For the purpose of the determining working capital provided by net profit it is necessary to adjust the net profit for income tax, dividend, drawings and so on. Download project on working capital management file in pdf. This research is part of the project eco200806179econ. Working capital management, project report working capital. Further suggestions were quoted which the company could use it in the future. Practically speaking, it is the daily, weekly and monthly cash requirement for the operations of a business.
Project topic on working capital management in the banking. Smith 1980 suggests that working capital management wcm is important. It would be hard to get the amounts of the components used in operations for an operating cycle. Working capital management plays a significant role in improved profitability of firms. Net working capital may also be negative, in which case the company has more current liabilities then assets. We believe the total global cash opportunity that companies could release through better working capital management is 1. Npvbased or economic breakeven analysis iit is more properly because the opportunity cost of the capital is taken into consideration.
However, smith 1980 suggests that working capital management is important because. Working capital management belongs to most relevant companys decisions, as it influences both profitability and liquidity. Impact of working capital management on the profitability of. Mba working capital management summary ebook lecture. Working capital management in a management firm with abstract, chapter 15, references and questionnaire. Carrying costs increase with the level of investment in current assets, and include the costs of maintaining economic value and opportunity costs. Effects of working capital management on company profitability. Both are equally important for the efficient management of working capital. Concept, importance and objects chapter 1 page 6 the use of existing resources properly classifiable as current assets, or the creation of other current assets, or the creation of other current liabilities. The term working capital is commonly used for the capital required for daytoday working in a business concern, such as for purchasing raw material, for meeting daytoday expenditure on salaries, wages, rents rates, advertising etc. Introduction to working capital management any firm, from time to time, employs its shortterm assets as.
The company undertakes job works on contract basis like project engineering. Working capital funds required by the business to pay for the daytoday operation of the business. Efficiency of working capital management year working capital turnover in days rota in %. Explore mba finance projects pdf, financial management projects topics, finance project topics list or ideas, accounting based research projects, latest synopsis examples, abstract, base papers, fm thesis ideas, corporate phd dissertation for financial management students fm, reports in pdf, doc and ppt for final year mba, bba diploma, bsc, msc, btech and. Includes both establishing working capital policy and then the daytoday control of cash, inventories, receivables, accruals, and accounts payable. Companies search for liquidity and operational efficiency through minimizing their investment in working capital. It is difficult trying to achieve and maintain an optimum level of. Background bajaj auto ltd is a flagship of bajaj group which is amongst the top 10 business houses in india. There relationship between working capital management and profitability of nigerian firms. Principles of working capital management mba knowledge base. Working capital of a firm comprises on current assets. The different components of working capital management of any organization are.
Search and upload all types of project report on working capital management. The period of time between the point at which cash is first spent on the production of a product and the final collection of cash fro m a. Concepts of working capital gross working capital gwc refers to the firms total. Optimizing working capital management from processes. Working capital is part of the total assets of the company. A project report submitted to jawaharlal nehru university kakinada in.
Working capital management deals with the most dynamic fields in finance, which needs constant interaction between finance and other functional managers. Working capital management is the administration of current assets and current liabilities. The less working capital used to attract sales, the higher is likely to be the return on investment. Working capital management page 8 words, it represents the current assets required on a continuing basis over the entire year. Pdf working capital management and liquidity reserves. Download this complete banking and finance project material titled. Effective management of working capital ensures that the organisation is maximising the benefits from net current assets by having an optimum level to meet working capital demands. Working capital has great influence on profitability and solvency.
Capital expenditure capex as a percentage of revenues has plummeted during the last five years, suggesting that companies are managing cash flows by. This project intends to study the working capital position of the public enterprises. The main goal of working capital management according to mansoori and muhammad 2012 is to ensure that. Analysis of working capital management of indian fmcg companies. Project report on working capital management mba project reports. Temporary working capital b net working capital c gross working capital. Working capitalmanagement whilst working capital is often assumed to fall under the remit of finance, the various stakeholders involvedthroughout the procuretopay, forecasttofulfilandthe ordertocashprocessesresults in every part of the business having an impact on working capital performance. In the liquidity context, the paper offers a broader view on the scope. In recent times a few case studies regarding management of working capital in selected.
The relationship between current assets and current liability items is called working capital of the organization. When there is a poor working capital management, a lot of fund may be tied up in an idle current assets or it might result into shortage of inventory. A high level of management focus on working capital along with a high level of initiatives are key to achieve significant improvements working capital management working capital wc performance is often seen as a barometer of how well a company is managed. Generally, it is the difference between current assets and current liabilities. Introduction to working capital management, components of. Working capital management in projects case study on indian construction companies. An analysis of working capital management in select construction companies. Project report on working capital management in hcl. The study of working capital management as a financial. Impact of working capital management on the performance of. Download project on working capital management file in pdf format. Working capital management practices of small firms in the. A study on working capital management in public enterprises.
The finance manager acting alone cannot improve the working capital situation. Working capital management is a core area of the syllabus and can form part, or the whole of, a 20mark question in the exam, as well as being examined by objective test questions. According to fishers separation theorem, gross working capital is the investment and net working capital the financing of the working capital. Working capital is the difference between the current assets of a business and its current liabilities working capital is the cash needed to pay for the day today operation of the business. Investment in current assets represents a very significant portion of. Pdf working capital management in projects case study. Impact of working capital management on the performance. Working capital is the excess of current assets that has been supplied by the longterm creditors and the stockholders. This is a research report on project report on working capital management. Working capital management refers to the management of current or shortterm assets and shortterm liabilities. Working capital defined working capital is the excess of current assets over current liabilities. Therefore, working capital management is a process of managing shortterm assets and liabilities.
702 54 70 980 703 954 407 978 919 712 622 1128 1331 341 148 261 648 205 338 1205 401 485 392 488 787 296 160 934 451 1054 717 1296 1142 1246 104