Report On Working Capital Management

Chapter-1
Introduction of the Study

(i)
(ii)
(iii)
(iv)
Objective of the study

Significance of the study
Methodology to be used
Limitation of the study
INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 1]
Introduction of the study

The project undertaken is on WORKING CAPITAL MANAGEMENT IN
Timul Sudha Dairy Muzaffarpur. It describe about how the company manages
its working Capital and the various steps that required in the management of
working capital. Cash is the lifeline of a company. If the lifeline deteriorates, so
does the companys ability to fund operation, reinvest and meet capital
requirement and payments.
The Working Capital Management refers to the management of working capital,
or precisely to the management of current assets. A firms working capital
consists of its invest in current assets, which influence short term assets cash
and bank balance, inventories, receivable and marketable securities.
The working capital is an important yardstick to measure the companys
operational and financial efficiency. Any company should have a right amount of
cash and lines of credit for business needs at all times. This project describe
how the management of working capital takes place at Timul Sudha Dairy
Muzaffarpur.
(i) Objective Of The Study

The objective of this project were mainly to study inventory, cash
requirement at Timul Sudha Dairy Muzaffarpur but there are some more and
they are : To find out all the components which are considered while
calculating working capital in the company .
To find out the problem are which affect the credibility of working
capital.
How this working capital work is done is the striking feature of
my topic.
To show the lifeline between an organisation and its working
strategy.
The main purpose of the study is to render a better understanding
of the concept Working Capital Management
To understand the planning and management of working capital at
Timul Sudha Dairy Muzaffarpur.
To measure the financial soundness of the company by working
capital.
To suggest ways for better management and control of working
capital at the concern.
(ii) Scope of the study

The project will be a learning device for the finance student.
Through this project we would study the various methods of the

working capital management.
The project will be a learning of planning and financing working
capital.
The project would also be an effective tool for credit policies of the
companies.
This will show different methods of holding inventory and dealing
with cash and receivables.
This will show the liquidity position of the company and also how do
they maintain a particular liquidity position.
(iii) Methodology used

This project requires a detailed understanding of the concept
WORKING CAPITAL MANAGEMENT. Therefore, firstly we
need to have a clear idea of what is working capital, how it is

managed in Timul Sudha Dairy Muzaffarpur, what are the different
ways in which the financing of working capital is done in the
company.
The management of working capital involves managing inventories,
account receivable and payable and cash. Therefore one also needs to
have a sound knowledge about cash management, inventories
management and receivables management.
Then comes the financing working capital requirement, i.e. how the
working capital is financed, what are the various source through
which it done.
And, in the end, suggestion and recommendation on ways for better
management and control of working capital are provided.
(iv) Limitation of The Study

In the completion of the study may difficulties had to confront which are
given below.
The availability of the time was main enough to cover the vast depot
topic such as working capital. So it is very difficult to arrive at any
conclusion absolutely.
Lack of printed material on this topic.
Since all the employees and executive were engaged in their work so
cooperation from them was not up to mark.
As Timul Sudha Dairy Muzaffarpur Does not want to raved its secrecy so
gatheration of data from them was very difficult.
Chapter -2
Introduction of the Organisation
(i)
(ii)
(iii)
(iv)
Brief History
Company Profile
Record Achievement
Operating Division
Introduction of the organisation

The dairy sector in the India has shown remarkable development in the past decade
and the India has now become the largest producer of milk and value-added milk
products in the worlds. The dairy sector has developed through co-operative
through in many part of state. The state had 73 milk processing plants. In addition
to these processing plants, 123 government and 33 co-operatives milk chilling
centres operate in the state. Dairy is a place where handling of milk and milk
product is done and technology refers to the application of scientific knowledge for
practical purpose.
Dairy technology has been defined as the branch of dairy science, which deals with
the processing of milk and the manufacture of milk products on an industrial scale.
In developed dairying countries such as USA where as the rural area were identifies
for milk production, the urban centres where selected for the location of milk
processing plants and products manufacturing factories. These plants and factories
their rapidly expanded and modernised with improved machinery and equipments
to secure the various advantages of large scale production. India has highest
livestock population in the world with 50% of buffalos and 20% of worlds cattle
population. Most of these are milk cows and milk buffalos, Indias dairy industries
is considered as one of the most successfully developed industry from the post
independence period. Dairy industry is dominated by the cooperative sector , about
60% of the installed processing capacity is in the cooperative sector.
Dairy cooperative account for the major share of processed liquid milk marketed in
India. Milk is processed and marketed by 170 milk producers cooperative union,
which federate into 15 state cooperative milk marketing federations. Prominent
state in producing dairy product are; Uttar Pradesh, Punjab, Haryana, Rajasthan,
Gujarat, Maharashtra, Andhra Pradesh, Tamil Nadu, and Karnataka. In India,
dairying has been practised as a rural cottage industry since the remote past. The
high cost of Milk production, problem of sanitation etc., restricted the practice; and
gradually the family cow in the city was eliminated and city cattle were all sent
back to the Rural areas.
The Indian dairy industry has made rapid progress since independence. A large
number of modern milk plants and products factories have since been established.
These organized dairy have been successfully engaged in the routine commercial
production of pasteurized bottled milk and various western and Indian dairy
product. With modern knowledge of protection during transportation, it became
possible to locate dairies where land was less expensive and crops could be grown
more economically. In India, the market milk technology may be considered to
have commenced in 1950, with the functioning of The Central Dairy of Aarey milk
colony, and milk product technology in 1956 with the establishment of AMUL
Dairy, Anand. More than 2,445 million people economically active in agriculture in
the world, probably 2/3or even more than of them are wholly or partly depended
on livestock farming. India is endowed with rich flora & fauna & continues to be
vital avenue for employment and income generation, especially in rural areas.
India, which is 66% of economically active population, engaged in agriculture
drives 31% of Gross Domestic Product (GDP) from agriculture. The share of
livestock product is estimated at 21% of total agriculture sector.
SUDHA DAIRY IN INDIA

A new organisation Bihar State co-operative milk producer federation limited
came into existence to implement the project and the actual field work was taken up
in 1983. The project originally to complete within 3 years by the end of the 1986
and was closed in 1988. After extending of the project period twice each time by
one year the project was implemented 8 districts of Bihar namely Patna, Barouni
(Begusarai), Bokaro, Samastipur, Ranchi, Jamshedpur, Muzaffarpur and Gaya. The
Sudha dairy of Bokaro district co-operative milk process societies limited has 22
years back in the name of compfed. Sudha dairy is also approving by the National
Dairy Development Board. Any dairy industry has some important section as like:1. Milk reception section.
2. Quality control section.
3. Processing and packaging section.
4. Store keeping section.

5. Marketing section
6. Administrative section.
(i) Brief History

The Tirhut Dugdh Utpadak Sahkari Sangh Ltd. was registered under the Bihar
and Orissa state Cooperative society Act, 1935 in the year 1989. Formally
known as Muzaffarpur Dairy. Is the largest milk union in the eastern part of
India and Industrially deprived region, 14th January 1991 was the day when
Muzaffarpur dairy was handed over by Bihar State Cooperative Milk
Producers Federation Limited (COMPFED) to management of Milk Union.
The Cooperative dairying in the region encompassing, Sitamarhi, East
Champaran, Gopalganj, and Sheohar districts. The union was re-registered on
August 1st 2005 after the inclusion of the Bettiah milk union covering the
districts of west Champaran and Siwan.
The milk shed is predominately rural- about 93% of its total 180 lakhs
population resides in the rural areas as per the 2001 human census (Annex 02).
As per the livestock Census 2003 (Annex 03), the milk population animal of
the milk shed is around 11 lakhs consisting of some 0.98 lakh local cows,
about 4.75 lakh cross bred cows and some 5.45 lakh buffaloes.
Agriculture is the mainstay for the majority of the population in the milk shed
area, with dairying being a subsidiary occupation for mall and marginal
farmers. The milk shed has a total number 8171 inhabited villages, thus it has
covered only about 19% of the villages in the milk shed area. The total DCS
organised by union are 1710 and of these 1023 are functional, which forms
60% of the organised societies.
The total milk production in the milk shed is estimated (based on ISS survey
2008-09l) at 25.07L kg PD with marketable surplus of about 16.38L kg PD.
During 2008-09, unions milk procurement was 45.9T kg PD which is
approximately 2.85 of marketable surplus. The milk trade in the milk shed is
dominated by small dairies in the unorganised sector, selling unprocessed loose
milk.
Infrastructure:The milk union has a rated capacity of 1 LL Pd and 10 MTD powder plant
which is being presently operated at 84% capacity utilization. The union has 7
chilling centre at Sitamarhi (20000 LPD), Sheohar (4000 LPD), West
Champaran (4000 LPD) & East Champaran (20000 LPD), Siwan (4000 LPD),
Gopalganj (4000 LPD) and Sahibganj (4000 LPD) with a combined capacity
of 60 TLPD. In addition, 14 bulk milk cooler have been installed in the milk
shed at village level with combined capacity of 28.5 litres.
Physical Performance:The detail of physical progress along with year-wise milk procurement of the
union for last five year are given below:
Table 2.1:-
Parameters
2010-11
2011-12
2012-13
2013-14
2014-15
DCS Organised
DCS functional
Farmer member
Women member
Pourer member
Milk procurement
Societies (000 Kg PD)
Other unions (000 Kg
934
745
42275
7797
28280
1109
834
46910
8467
30010
1324
851
52395
9173
29195
1500
845
67055
11615
35545
1710
1023
7644
13148
42891
77.77
87.43
53.67
45.9
84.7
2062.76
4273.86
1085.62
7169.95
580.65
6580.31
226.57
6362.25
354.13
PD)
Cattle feed sold (MT)
Bypass Feed Sale (MT)
The union sells liquid milk in three variants viz. Standard milk and Toned milk
and Full Cream milk in Muzaffarpur, Sitamarhi, Bettiah, Siwan, Motihari, and
Gopalganj. The major competitors in the organized sector is Raj dairy who
have a share of 1000 LPD. Details of average milk and milk product is as
under :
Parameters
Liquid Milk (TLPD) in
pouch by union
Ghee (MT)
Table Butter (MT)
Lassi (MT)
2010-11
2011-12
2012-13
2013-14
2014-15
53.20
55.97
62.19
73.82
83.23
145
47.6
88
197.6
41.38
727.99
104.3
25.2
752.664
86.7
20.4
977.30
196.8
18.5
1360.8
Financial Performance :The annual turnover of the union during 2009-10 was Rs 10528.55 lakh and it
posted a net profit of Rs 438.62 lakh.
The year wise financial performance in last five year is given below:
Table 2.3:- Financial Performance
(RS in Lakh)
Parameter
Sales (Milk,
2010-11
2011-12
2012-13
2013-14
2014-15
Milk Product
4197.04
5188.81
53334.58
6766.07
10528.55
and feed
Net
5.74
-45.12
-45.12
181.44
438.62**
profit/loss
Share capital
144.14
150.54
154.51
157.87
157.87
Source: copy Company Profile
The union has availed financial assistance of Rs 60.26 Lakh and Rs 90.16
Lakh as loan under OF-II and OF-III respectively from NDDB and Rs. 167.60
Lakh was released as grant under OF-II/III.
The union has refunded loan taken from NDDB.
Board of Union:The union has an elected board consisting 10 elected farmers representatives
including one lady director, two nominees of the state government and four
official nominees (one each from RCS, NDDB, Milk-Federation and
Managing Director of the union). The list and profile of the elected board
members is furnished in.
Concerns:1. The competitors in the unorganised sector in the area have stepped in and
started doing milk procurement. The loyalty of the milk producers during
the flush and lean season in milk procurement is the issue of concern.
2. The existing plant and machinery of dairy plant is old and needs
repair/refurbishment in various areas. Some equipment not functioning to
the rated capacity and require replacement/repair for the efficient operation
of improved hygiene or safety. Although steps have been initiated.
3. The plant area designed for only 25000 LPD handling.
By
incorporating/installing some equipment/machineries the capacity has been

increased to 100000 LPD. Last year we have handled 150000 Ltd. Concern
of less plant area is being addressed by construction of product hall with
the assistance of government.
Award and Achievement
The Muzaffarpur dairy has adjudged the best performing dairy for the year of
1997-98. Cost reduction and technology Management, Modernization of
process and plant technology, quality assurance program leading to ISO 90002000 and HSCCP Certification, high tech information management and high
profile human resource management, all are measures under way to update the
technology available to rural producers/ employee/ customers/ suppliers/

dealer/ retailer/ all one associates direct or indirect and so further improve their
socio-health.
The union has been conferred with National Industries Excellence Award by
world economic process society (WEPS) New Delhi for its contribution in
Samman purashkar by Indian economic development and research association
(IEDRA) New Delhi for its significant contribution towards socio-economic
growth of rural India by providing rural employment. The impact of Tirhut
Dugdh Utpadak Shakari Sangh Limited, Muzaffarpur Dairy, Bihar, established
in the region, resulted Pride of India award, International Gold Star
Millennium Award, Kohinoor Award conferred to its managing Director.
Fig.2.2:- Milk Flow Process
Milk Frame
Village Milk Co-op Soc. (Collection centre)
Chilling centre
Raw milk Reception Dock (RMRD)
Milk processing Plant
Powder Section
Butter & Ghee Section
Milk Packing section
Storage
Dispatch
Figuration
Distribution channel
Consumer
STATEMENT OF PROBLEM
Financial information provided in financial statement is useful in business
decisions. However, it must be noted that financial statement are means not to an
end in themselves. Thus the use of financial statements in decision making is not
always easy owing to the following problems:
1. In view of the summarized nature of the information contained in financial
statements, they need to be analyzed and interpreted by mean of financial ratios
to enable management and stakeholders understand them and make wellinformed business decisions,
2. Many user dos financial statements are nit knowledge about working capital
and how the working capital can be applied to financial statement to aid
decision-making.
3. Despite the immense benefits of ratio analysis, there are a lot of weaknesses or
limitations associated with its use.
In view of the above stated problem, this research is embarked upon to identify
the proper use of financial ratios, and the roles ratio analysis plays in business
decisions.
Financial analysis
Introduction
Financial management is the part of the managerial activity, which is concerned
with planning, and controlling of the firms financial resources. It is an applied
branch of general management it has to plan to organise and control the finance
of the enterprise. Chief duties of financial management are planning and control
of corporate finance. Financial management is called upon to take three major
decisions viz. Investment decision, Financial decision, and Individual decision.
Financial management involves the implementation of these three decisions it is
an integral part of overall management rather than merely a staff activity
concerned with fund raising operations without sound management of financial
resources, business cannot achieve its objective and may occur heavy losses.
Thus financial management in charge of efficient planning and control of the
cycle of flow of funds inflow and outflow of funds.
Fig 5.1:- Structure of Finance Management
Board of Directors
Chief Executive Officer
Vice president
Marketing
Treasure
Vice president Finance or

Chief Financial Officer
(CFO) Duties
Observe financial planning
Corporate strategic planning
control corporate cash flow
Vice president
Production and
Operation
Controller
Duties
Duties
Cash Management Credit

Management
Capital Management
Raising Capital
Financial Planning
Taxes
Financial statement
Cost accounting
Data processing
PROCESS OF FINANCE & ACCOUNT

The accounting function covering the Muzaffarpur office and plant, the one
chilling centres at SITAMARHI performed by the accounts Department at
Muzaffarpur head office of Sudha dairy. All the purchase and sales for Sudha
Dairy are executed from the Muzaffarpur head office Centrally. The purpose
and scope of account process are management of financial resources of the

union accurate and timely payment to societies and supplies, maintain proper
book of the union and advise Sudha dairys management of the performance of
the union based on accounting, records, finance process includes the accounting
functions of payables, Receivables, Cash Management, Asset Management, and
General Accounting & Reporting functions including Budgeting.
It also covers Costing activities performed at Sudha dairy. The audit Budgeting
and costing process are performed by the internal audit department in closeness
with account department.
Financial Planning
A firm needs to manage its resource effectively and efficiently to achieve its
objective. The managing of resources in an a effective manner is possible only
when the management work out the future course of action in advance and take
decision in professional manner and rational manner thats why financial
planning is very important financial planning is a statement estimating the
amount of capital and determining its composition. It includes; determination
the amount needed for implementing the business plan.
The determination from and proportionate amount of securities.

Laying down the policies as to administration of financial plan.
Fig.5.2:- Steps of Financial Planning

Analysis of past performance
Establishing Objective
Determine investment need
Forecasting cash flow
Financing
Budgeting and Costing
Currently the budgeting activities are restricted to annual preparation of budget
and monitoring of budget versus actual cost quietly. Budget is made annually
by the manually obtaining the amount from each department against the several
budget head description in a form. Sudha dairy wants to track and implement
budgetary controls while making expenditure.
Sudha dairy has limited exercise towards allotment and structuring of cost code,
sub code and purpose code according operation classification. As sales are more
or less regulated, a more system orientation is adhered to in drafting cost
budget. The code allocation practice is on to allot the codes based on direct cost
and to the sub division or activity the codes are both all allotted to process and
product. In case of stores stock transfer is booked to stock ledger code and
subsequent issues and consumption are booked to cc/sc/pc. In case of finance
and accounts, situation is different in cash where the tally accounts and budget
code are some and in circumstance where they are different. In case where they
are different the budget accounting system codes are input against each account
conversation to BAS Codes occur where they same.
Budget is tracked against the cost centres and sub centres are defined with the
responsibility centre but currently the responsibility centres are not in use the
stores consumption tracked till the cost centre and sub centre level at the time of
consumption itself for other expenses the cost centre and sub centre are entered
to categories the expenses after exporting them into on oracle based system
from the tally system for the purpose of tracking. A quarterly budget review
report is prepared depicting the quarterly budget amount actual expense and
variance figures along with the cumulative figures.
Statutory Budget
it is required to be prepared by Sudha Dairy under the co-operative act this
budget is prepared annually and approved in the annual general matting as
according to the law and including in the annual report this budget in is
prepared by the internal audit department. The budget is internal to Sudha dairy
and not presented in the board AGM.
The budget is prepared by seeking the budget amount from all the department
by giving the respective budget heads pertaining to the specific department for
aiding the department to prepare the budget. The relevant previous wears
expenditure is also given to them from the trial balance if required the detail
expenditure is also given by the account department. The department provide

the budget after approval from the departmental head. The LA department in
consultation with the respective department makes some alteration to the budget
amount. The LA department than compiles and consolidate the department
budget into Sudha dairy budget, which is then resets to the managing director,
the MD can revise the budget before approving it, to be presented to the board.
The board recommend s the budget in the AGM Seeking its approval.
Costing Activities
In Sudha dairy it is done on yearly basis for the financial year. This is too
limited to the product group costing. As the value of asset is not finally known
production wise process, depreciation is avoided for all allocation to the product
group. The yearly cost sheets forms an important basis in the estimation of
costs, pack wise prepared, yearly for all product packs.
If late concept of conversation costing where by the milk purchase price is
excluded from the estimated contribution analyses. The client opinions that as
milk purchase price of the last year does not reflect the current and by
comparing the gross contribution and gross profit visa-a-versa the milk
purchase price existing as on the date, one could as certain the profitability of
the product and packs. The incremental cost of milk for fat, SNF and moisture
are based on standard costing. The unit price is the actual transportation and
chilling post based on the previous years financial data. The wastage is
calculated based on actual content of milk fat and SNF content in milk
purchased of the previous year less the standard content of fat and SNF for
actual production for which milk had been consumed. The wastage is applied to
the fat and SNF inputs in proportion. Based on the standard inputs the actual
quantity product wise is derived applying the wastage rate on the standard the
consumption.
Capital Structure
Capital is the one of the most important factors of production without capital
organisation cannot production or other type of activity. Capital includes share
capital reserve and surplus and long term liabilities. The authorised share
capital of the dairy is 2,00,000 shares of Rs. 100 each and the capital is Rs.
200,00,000.
Share Capital
Amount (In Rs.)
Table 5.1:- share capital
Year
Share capital
2012-13
Sagar
25,000,0000
2013-2014
Sudha dairy
30,00,0000
Sagar
250000000
Sudha dairy
30000000
INTERPRETATION
Share capital is the amount contributed by shareholders towards the companys
capital and is entered in the companys share capital account. It is the capital of
the company represented by the shares. In the table we can see that there is no
change in capital year 2009-2010 and 2010-11. So from the above graph we can
analyses that in the no change in the share capital of the company, this is
because that Sudha dairy is the co-operative milk producer so their share holder
are only milk producer farmer thats why no significant change in the share
capital. And the Sudha dairy are contributes 2 cr. From the share holder. Sudha
dairy has not a much stake holder as compare to the Sagar dairy. Sagar dairy
have some more share holder from the sudha dairy. So we see that Sagar dairy
have some more financial leverage as compare to the sudha diary. That is not
good for the any firm because the responsibilities are increase for him.
RESERVE AND SURPLUS

Amount (in Rs.)
Table 5.2:- Reserve and Surplus
Year
Reserve and Surplus
Sagar
2012-13
Sudha dairy
28,35,00,000
7,68,4,826.95
Sagar
2013-2014
Sudha dairy
39,92,00,000
27,18,19,603.23
INTERPRETATION
From the above table we can know the actual trend of the reserve and surplus of
the company firm.
For Sagar Dairy:- Compare with base year indicates that the reserve company
gradually increasing which shows the strong financial position of the company.
Companys reserve and surplus has increase by 362.57cr. after one year
company is managing well with this source thus rely less on other financial
sources like share capital and loans. We easily decided that the Sagar dairy
management very well in the finance factor, so that they have very good
financial position.
For Sudha Dairy:- In the above Balance sheet we clearly see that Sagar
reserve and surplus are increase highly but they should maintain consistent in
all year. So we many comparison between the two dairy we clearly decide that
Sagar dairy is financially good than Sudha diary.
Loan & Advances:

Amount in Rs.
Table 5.3:- Loan and Advances
2012-13
Year
Loan and Advances
2013-2014
Sagar
Sudha dairy
Sagar
Sudha dairy
30,03,93,847
16,37,53,048.57
53,14,48,223
8,66,52,088.05
Interpretation
Here loans and advances saw the firm current assets. The firm should give some
advance payment for their responsibilities. And some loans give to their
branches for improvement. So the loan & advances come under current assets.
For Sagar Dairy :- in the above table we clearly mention that management
should give loans and advances in every year & that was increase in every year.
But in the current year there is a huge increment in the loans and advances.
For Sudha Dairy :- in the above table we clearly mention that management
should give loans and advances in every year and that was increase in every
year.
CASH & BANK BALANCE

Amount (in Rs.)
Table 5.4:- cash and bank balance
Year
Cash & Bank
Balance
Sagar
2012-13
Sudha dairy
29,44,992.51
13,0911.53
Sagar
2013-2014
Sudha dairy
2,34,65,619.63
,15,05,388.11
DEBTORS:Amount (in Rs.)

Table 5.5:- Debtors
Year
Debtors
Sagar
2012-13
Sudha dairy
84,43067.83
9,63,853.99
Sagar
2013-2014
Sudha dairy
57,13,63,017
1,44,36,462.84
INTERPRETATION
Debtors refers the current assets in the firms. When the debtors is very high
then say that the firm business on the credit base. If the debtors are very high
then affected to the firm.
Chapter -3
A Theoretical aspect of Working Capital
Management
(i) Concept of Working Capital
(ii) Importance of Working Capital
(iii) Working Capital Policy
A THEORETICAL ASPECT OF WORKING CAPITAL
Meaning of Working Capital

Working Capital is requires for running day to day operation of a business.
It may be expressed as excess of current assets over current liabilities.
Working capital represents the position of current assets financed

with long term debt and equity. Any firm with current ratio
greater than one has positive working capital. For a given level of
current liabilities, the grater the working capital of the firm, the
larger is its current ratio. Long term debt agreement often
contains provision requiring the firm to maintain level of working
capital.
Working Capital is also termed as gross working capital. it refers to the
firms total current or circulating assets. Current assets are those assets that
are usually converted into cash with in an accounting year. thus they are
cash or near cash resources of the firm .
Some basic definitions and Concepts :
Working capital sometimes called gross working capital simply
refers to current assets.

Net working capital is defined as current assets minus current
liabilities.
working capital policy refers to the firms policy regarding.
(i) Target levels for each category of current assets and
(ii) How current assets will be financed.
working capital Management involved in the administration, will in

policy guidelines of currents assets and current liabilities.
Working Capital represents the portion of current assets financed with

long term debt and equity. Any firm with a current ratio greater than 1.0
has positive working capital. For a given level of current liabilities, the
working capital of the firm, the larger is its current ratio.
What is Working Capital Management :Working capital management is a time gap to converting cash into cash its
various form. It is also known as short term financial management. When
any organisation produced any product it takes some times to convert the
cash into cash through different steps. These are raw material, works-inINSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 24]
progress, finished goods, account receivables. In this time gap the

organisation need additional amount of capital to run the organisation
smoothly. This capital is known as working capital.
It plays a vital role in keeping the wheels of the business enterprise
running. Lack of efficient and effective utilisation of working capital leads
to earn low rate of return on capital employed.
The value represented by these assets circulate among several items. Cash
is used by raw material, to pay wages and to meet other manufacturing
expenses. Finished goods are produced. These are head as inventories.
When these are sold account receivables are created. The collection of
account receivable bring cash into the firm.
Objective of Working Capital Management :The firms policies for managing its working capital should be designed to
achieve four goals.
(i)
By optimizing the investment in current assets and by reducing the

level of current liabilities, the company can reduce the looking up of
funds in working capital thereby. It can improve the return on capital
employed in the business.
(ii)
The second important objectivities of working capital management

is that the company should always be in a position to meet its
current assets available with the firm. But maintain excess funds if
working capital means looking of funds without return.
The firm should manage its current assets in such a way that the
(iii)
marginal return on investment in these assets is not less than the cost
of capital employed.
The basic objective of working capital management is to manage the
(iv)
firms current assets and current liabilities in such a way that the
satisfactory level of working capital is maintained. i.e. it should
neither inadequate nor excessive.
Why we need working capital?

Working capital is investment need to carry out day to day operation of
the business smoothly. A firm needs working capital:
To buy adequate raw material.

To pay the wage bill.
To wait for market for its finished products.
To be able to offer credits to its customers.
(i)Concepts of working capital :Introduction:The total investment in a business organization as characterised by total
assets is called capital. The term capital refers to the total property of
assets owned and control by the business in order to earn profits. The total
assets comprise fixed assets and current assets. Fixed assets are tangible
assets, which we can touch. These assets are not for the sale purpose and
earring cash by conversion. Apart from this these assets are held by the
organisation for long term purposes or till the date of winding up the
organisation such assets which comes under the fixed assets can be cited as
land & building, plant & machinery, furniture and fixtures, etc.
While on the other hand, the current assets are reasonably expected to be
realised in cash or sold or consumed in cause of normal operating year or
business cycle.
The current assets are required with the intension of running organisation.
Smoothly by selling or converting in to cash, current assets can cited as
cash, inventory, debtors, short term securities bill receivables etc.
The management of fixed as well as current assets, however, differs in
three ways: While managing fixed assets time considered very important factor.
As a result of this, compounding and discounting techniques play a
key role in capita budgeting and a minor in the management of
current assets.
The large holding of current assets strengthen the firms liquidity

position but at the same time reduce the overall profitability, thus, a
risk-return trade of is involved in holding current assets.
The level of fixed as well as current assets depends upon expected
sales, however, it is only current assets that can be adjusted with
sales fluctuation in the short run.
There is direct relationship between sales and working capital needs. As
sales grow the firm need to invest more in inventories and book debts.
These needs become very frequent and fast whom sales grow continuously,
continuous, growth in sales may also required additional investment in fixed

assets but they do not indicate some urgency as displayed by current assets.
Thus, current assets are required to feed the fixed assets and to carryout
manufacturing operation and distribution objectives and refer to the
working capital i.e. funds invested in day to day operation of the business.
The working capital investment in current assets, invested in the business
must be managed efficiently so as to achieve the objective of the firm. The
changing nature of current assets and their primary characteristics of
feeding manufacturing and distribution operation emphasize the importance
of working management of working capital.
With the management of current assets, working capital management
require the management of current liabilities also current liabilities
Are those claim of outside which are nature for payment within an
accounting year or normal operation business cycle which include creditors,
bills payable outstanding expense etc.
Working capital management refer to the administration of all aspect of

current assets and current liabilities. It is important to determine the level
and composition of current assets and current liabilities and to see that right
source are tapped to finance current assets and current liabilities are paid in
time.
There are two concepts of working capital are: Gross working capital : gross working capital refer to the firms investment
in the current assets.
Net working capital : net working capital can be positive or negative. A
positive net working will arise when current assets exceeds current
liabilities and a negative net working capital occurs when current liabilities
are in excess of current assets.
(ii) IMPORTANCE OF WORKING CAPITAL.

We know that basic objective of financial management is to maximise the
wealth of share holder. The wealth of shareholder. The wealth of
shareholder can only be maximise when organisation earn profit in
sufficient amount. The amount of profit depend upon the magnitude of the
sale mostly. As we know that sales can not be converted in to cash is
received after some time. We know that business can not be possible
without credits sales. I mean to say that there is always a time gap between
sale of good and receipt of cash. Hence working capital is required for this
period in order to sustain or continue the sale activity. If the inadequacy of
working capital is there in any organisation then organisation will be in such
a position to continue its sales activity because it will not be capable to
purchase raw materials.
Importance of working capital can also be considered in such a way which

are given below.
Regular payment of salary, wages and other day to day
commitments.
Sense of security and confidence.
Solvency and continuous production.
Sound good will and it is possible only when payment is made
quickly.
Distribution of dividend :For the distribution of dividend there is need of cash to be
distributed to the shareholder. This cash can be utilised from
working capital.
Exploitation Of Good Opportunity :Organisation can not avail or take advantage of good
opportunity without having working, capital. So it is
considered more important taking this fact in to consideration.

Meeting unseen contingencies.
Increase In Efficiency Of Fixed Assets :
If the organisation wants to improve or increase in production
capacity from its previous capacity then the organisation can
utilise its working capital for the time being.
Quick and regular return on investment.

Cash discount.
High Moral :If the organisation has sufficient amount as a working capital
then it will not be in a scaring position to fulfil it prevailing
requirement. So organisation moral as well as shareholder moral
are at apex.
(iii) WORKING CAPITAL POLICY

We know that the proper estimation of working capital should be there of
the efficient running of business and earning the profit. Therefore, the basic
objective of working capital management is to manage organisations
current assets and current liabilities so that the satisfactory level of working
capital is maintained. It means that the level of working should neither be
inadequate nor be excessive.
So in the light of above fact working capital policy is maintained in order to
keep the level of current assets suitable. These policies are given below :(1) Flexible Policy:Under this policy the investment in current assets is kept high. This
means that a firm maintains a large balance of cash and marketable
securities. This shows that firm keeps its inventory at the rich level and
ensure to provide generous term of credit, which means high level of
debtors for a firm.
(2)
Restrictive policy :-
Under this policy the investment in the current assets is made law. It
means that the firm keeps a small level of balance of cash and
marketable securities, it also manages small level of balance of cash and

marketable securities. It also manages small amount of inventory and
offers term credit. It ultimately leads to a law level of debtors for a firm.
Apart from working capital policy the working capital requirement of a
firm are influenced by numerous. Each factor having their own
importance.
The factors which generally influence the working capital requirement

of the firm are given below.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
Production policy
Nature of the business
Length of the manufacturing process
Credit policy
Rapidity of turnover
Seasonal fluctuation
Fluctuation of supply
Operating efficiency
Price level changes ]
Working capital or operating cycle
The above points can be described in such a way that :(i) Production policy :The decision of the management regarding automation etc, will have its
effect on working capital requirement. If the organisation is labour
intensive then for the organisation requirement of working capital will
be more. Hence the production policies, which is generally pursued by
management have significant effects on the business.
(ii) Nature of Business :Working capital requirement also depends upon the nature of business.
If we consider the working capital requirement of Railway, Electricity.
We find that those organisation require less working capital because it

major transaction are completed on cash basis. While in the case of
trading or manufacturing organisation working capital requirement
become large to keep its inventory level optimum.
(iii) Length of Manufacturing process :Longer the manufacturing process, the higher will be the requirement
of working capital and vice versa.
(iv) Credit Policy :If a firm is supplied raw material by the supplier on the basis of liberal
credit policy then firm will in position to maintain low working capital.
It means that working capital requirement for a firm becomes low hence
working capital requirement depends on credit policy.
(v) Rapidity of Turnover :There is high degree of co-r-relation between the quantum of working
capital and the speed with which the sales are affected. A company as
compared to a company that has a lower turnover.
(vi) Seasonal Fluctuation :A number of industries manufacture and sale goods only during certain
seasons. For example, the sugar industry produces practically sugar
between December & April and hence the working capital requirement
of this industry will be higher during this period as compared to any
other period.
(vii) Fluctuation of supply :Certain company have t5o obtain and maintain large reserve of raw
material due to their irregular sales and intermittent supply. This is
particular true in case of company requiring special kind of raw material
available only from one or two source. In such a case large quantity of
raw has to be kept in stores to avoid any partialities of the production

process coming to a deaf halt. Thus, the working capital requirement in
case of such industries will be large.
(viii) Operating efficiency :The operating efficiency of a firm relates to the optimum utilization of
resources at minimum cost. The firm will be efficiently contributing in
keeping the worki8ng capital investment at a lower level if it is efficient
in controlling operating cost and utilising current assets. The use of
working capital is improved and place of cash conversion cycle is
accelerated with operating efficiency.
(ix) Price level changes :When the prices are rising, in general, high investment in working
capital required because the same level of current assets would need
increased investment due to rise in price. But if the firm is able to rise
the price of its product upward, it may not be compelled to increase the
level of working capital in the period of rising prices. But all concern
may not full the impact of prices level changes upon working capital
level to the same extent magnitude.
(x) Working Capital operating cycle :In a manufactory concern, the working capital cycle starts with the
purchase of raw material and ends with the realisation of cash from the
sale of finished products. The involves purchase of raw material and
store, its convention of finished goods through work- in- progress with
progressive increment of labour & service casts conversion of finished
stock into sales debtors & receivable and ultimately realisation of cash
and this cycle continue gain from cash to purchase of raw material and
so on.
Computation of the working capital

The two components of working capital are current assets and current
liabilities. They have a direct bearing on the cash operating cycle. In order
to calculate the working capital needs what is required is the holding period
of various types of inventories, the credit collection period and the credit
payment period. Working capital also depends on the budgeted level of
activity in terms of production/sales. The calculation of working capital is
based on the assumption that the production sales is carried on evenly
throughout the year and all cost accrue similarly. As the working capital
requirements are related to the cost excluding depreciation and not the sales
price, working capital is computed with reference to the cash cost. The cash
cost approach is comprehensive and superior to the operating cycle
approach based on the holding period of debtors and inventories and
payment period of creditors.
Statement
showing
working
capital
requirements
(A) Current Assets
Amount (Rs)
(1) Stock of Raw material(for ..... month consumption)
--------------
(2)(a) work in progress(for month)
--------------
(b) Direct Labour
--------------
(c) Overheads
--------------
(3) stock of finished goods (for.....months sales)
--------------
(a) Raw material
--------------
(b) labour
--------------
(c) Overheads
--------------
(4) Sundry debtors or Receivables( for .... months)

(a) Raw Materials
--------------
(b) labour
--------------
(c) overheads
--------------
(5) Payments in advance(if any)
--------------
(6) Balance of cash (required to meet day-to-day expenses)

(B) Current Liabilities
(1) Creditor (for months purchase of Raw material) -------------(2) lag in payment of expenses
(outside expenses ....... months)
--------------
(3) Others (if any)

Net Working capital (A) (B)
-------------
Add: Provision for contingencies
-------------
Total Working Capital Required
(C) Project balance sheet Method :Under this method, estimates, of different assets (excluding cash) and
liabilities are made taking into consideration the transaction in the ensuring
period.
Therefore, balance sheet is prepared based on these forecast. Assets and

liabilities of this balance sheet are treated as shortage or surplus cash of that
period. If the total liability is more than total assets, it represents excess
cash, which is not required by the firm. The management may plan for its
investment. On the contrary, if total assets are more than total liabilities,
then it indicates the deficiency of working capital, which is to be arranged
by the management either from bank overdraft of from other sources.
(D) Adjusted profit and loss method :In this method, estimated profit is calculated based on transactions of the
ensuring period. Therefore increase or decrease in working capital is
computed adjusted the estimated profit by cash inflows and cash outflows. It
is like cash flow statement. A few banks in India use forms for computing
working capital under this method.
(E) Cash forecasting method :In this method, estimate is made of cash receipts and payment in the
ensuring period. The difference of this receipt and payment indicates
deficiency or surplus or surplus of cash. The management formulates plan
to procure the amount of deficit. This method, in a way, is a form of cash
budget.
What determines the inventory conversion period ?

The raw material conversion period should be depends on :
The Raw material computation per day and

Raw material inventory
Raw material consumption per day is given by the total raw material
consumption divided by the number of days in the year. The raw material
conversion period is obtained when raw material inventory is divided by
raw material consumptions per day, similar calculations can be made for
other inventories, debtors and net operating cycle is also referred to as cash
conversion cycle. Depreciation and profit should be excluded in the
consumption of cash conversion cycle since the firms has to ultimately
recover total costs and make profits. Therefore, the calculation of operating
cycle should include depreciation and even the profits.
Also, in using the above mentioned formula, average figures for the period
may be used.
Impact of inflation on Working Capital :The factor of inflation usually contributes to a two pronged attack on
working capital. The first is the increase in the selling price that will be
passed on to the consumer. Looking at the first point will notice that, in a
containing spiral of inflation, to buy the same quantity of goods will require
more cash. In fact an additional portion of gross profit has to be allocated to
the repurchase of stock.
Example 1
Day 1
Buy 100 bags at Rs 1 each ( Rs 100)
Day 30
Sells 100 bags at Rs 2
each
(Rs200)
Now
purchase 100 bags at Rs

1.20 each (Rs 120) i.e.
funding
of
repurchases
new
Rs
100(initial Investment +
Rs 20 gross profit)
One might, at this point, say that the owner will cover himself by increasing
his own prices but in many cases this increase in price may :
1. Make him uncompetitive
2. Decrease the demand for the product
3. Bring a substitute product into contention
This phenomenon is accentuated in a recessionary climate.

Example 2
Day 1
Buy 100 bags
Day30
Day60
Sell 100 bags (Rs 200) buys Sell 70 bags at Rs
(Rs 100)
100 bags (Rs 120) profit after 2.40 each (Rs 168)
repurchase = Rs 80
buys 70 bags at Rs
1.30 each
A probable consequence is that purchase cost more and consumers buy less
so that profits already diminishing the need to finance inflated purchases
are vulnerable to an absolute drop in turnover. This, in turn, has
consequence for the need to say above break even point and contribute
towards the fixed costs (fixed cost stay constant irrespective of level of
sales). Not understanding the impact of inflation on working capital has
been the cause of many business failures.
*************
Chapter - 4
Data
Analysis
and
Interpretation
Net working capital

Table provides the data relating to the net working capital of Sudha dairy.
An analysis of the net working capital will be very help full for knowing the
operational efficiency of the company.
Net Working Capital = Current Asset Current Liabilities
Years
(1)
Current Assets
Current
Net Working
2012-13
247104262.26
Liabilities
288343507.01
Capital
4123944.75
2013-14
252592237.58
358000402.80
105408165.22
Ratio Analysis
Ratio analysis is powerful tool of financial analysis. Alexander Hall first
presented it in 1991 in Federal Reserve Bulletin. Ratio analysis is a process
of comparison of one figure against other, which makes a ratio and the
appraisal of the ration of the ratios to make proper analysis about the
strengths and weakness of the firms operation. The term ratio refers to the
numerical or quantitative relationship between two accounting figures.
Ratio analysis of financial statements stands for the process of determining
and presenting the relationship of items and groups of items in the
statements.
Note :- I have used the ratio analysis in the project in order t substantiate
the managing of working capital. For this, I used some of the ratios to get
the required output.
Various working capital ratios used by me are as follows:-
(i)
Liquidity Ratio
Liquidity ratio to the ability of a firm to meet its current obligations as and
when these become due. The short-term obligations are met by realizing
amounts from current, floating or circulating assets.
Following are the rations which can help to assess the ability of a firm to
meet its current liabilities.
(a) Current Ratio
(b) Acid test ration/ Quick ratio/ Liquidity ratio
Absolute liquid ratio
(a) Current Ratio

It is a ratio, which express the relationship between the total current assets
and current liabilities. It measures the firms ability to meet its current
liabilities. It indicates the availability of current asset in rupee or current
liabilities. A ratio of greater than one means that the firm has more current
assets than current liabilities claims against them. A standard ratio between
them is 2:1.
Current Ratio:-
Current Assets
Current Liabilities
Year
Current Assets
Current Liabilities
Current ratio
2012-13
247104262.26
288343507.01
0.86
2013-14
252592237.58
358000402.80
0.70
(b) ACID TEST RATIO/ QUICK RATIO/ LIQUIDITY RATIO :This ratio establishes a relationship between quick/liquid assets and current
liabilities. It measures the firms capacity to pay off current obligations
immediately. An asset is liquid if it can be converted in to cash immediately
without a loss of value; inventories are considered to be less liquid. Because
inventories normally require some time for realizing into cash. This ratio is
also known as acid-test ratio. The standard quick ratio is 1:1. Is considered
satisfactory.
Quick Assets (Current Assets Inventory)

Quick Ratio :Current Liabilities
(c) Absolute Liquid ratio :Absolute liquid ratio may be defined as the relationship between absolute
liquid assets and current liabilities. Absolute liquid assets include cash in
hand and cash at bank.
Cash & Bank Balance
Absolute Liquid Ratio :Current Liabilities
Year
2012-13
2013-14
(ii)
Cash &Bank
Balance
1309114.53
11505388.11
Current
Liabilities
288343507.01
35800402.80
Absolute Liquid
Ratio
0.005
0.32
Turnover/ Activity Ratio :

These are the ratio which indicates the speed with which assets are
converted or turned over into sales.
(a) Inventory Turnover Ratio.
(b) Debtors/ Accounts Receivables Turnover Ratio.
(c) Creditors/ Accounts Payables Turnover Ratio.
(a) Inventory Turnover Ratio :Inventory turnover ratio is the ratio, which indicates the number of times the
stock is turned over i.e., sold during the year. This measures the efficiency
of the sales and stock levels of a company. A high ratio means high sales,
fast stock turnover and a low stock level. A low stock turnover ratio means
the business is slowing down or with a high stock level.
Net Sales
Inventory turnover Ratio :Closing Inventories
Closing
Inventory Turnover
Inventory
Ratio
1745700883.61
193916351.72
9.00
2298123010.73
150850625.07
1523
Year
Net sales
2013-13
2013-14
(b) DEBTORS/ ACCOUNTS RECEIVABLES TURNOVER

RATIO :Debtors turnover ratio indicates the speed of debt collection of the firm.
This ratio computes the number of times debtors (receivables) has been
turned over during the particular period.
Net sales
Debtors Turnover Ratio :-
Average Debtors
Year
Net sales
Average Debtors
Debtors
Turnover Ratio
2012-13
2013-14
1745700883.61
2298123010.73
963853.99
14439462.84
1811
159
(C) Working Capital Turnover Ratio :-
This ratio indicates the number of times the working capital is turned over
in the course of the year. This ratio measures the efficiency with which the
working capital used by the firm. A higher ratio indicates efficient
utilization of working capital and a low ratio indicates otherwise. But a very
high working capital turnover is not a good situation for any firm.
Working Capital Turnover =

Ratio
Net Sales
Net working Capital
Year
Net Sales
Net Working
Capital
WCTR
2012-13
1745700883.61
41239244.75
42.31
2013-14
2298123010.73
105408165.22
21.80
Chapter - 5
Findings
Conclusion & Suggestion
Findings
Working Capital of Sudha Dairy was constant and showing negative

working capital per year.
The Sudha Dairy has lower current and quick ratios are i.e. 0.70 and
0.28 respectively.
Inventory turnover ratio is very low in year 2007-08. In the year 201213 it has increased by 6.23 times as compares to 2014-15.
Debtors turnover ratio is very high in the year 2012-13. In the year
2013-14 it has decreased as compared to 2013-14.
Working capital Turnover ratio is very low in the year, in the year
2013-14 it has increased by 20.51 times as compared to 2012-13.
suggestion
Working capital of the company has increased every year. Profit also
increasing every year this is good sign for the company. It has to
maintain it further, to run the business long term.
The current and quick ratio are almost down to the standard
requirement. So the working capital management of Sudha dairy is nor
satisfactory and it has to increased further.
The company has not sufficient working capital and has not better
liquidity position. By efficient utilising the short-term capital, them it
should decrease the turnover.
The should take precautionary measures for investing and collecting
funds from receivables and to reduce the bad debts.
The company is utilising working capital effectively this is not good for
the company. It has to increase it further.
CONCLUSION
The study on working capital management conducted in Sudha dairy to
analyze the financial position of the company. The companys financial
position is analyzed by using the tool of annual reports from 2012-13 to

2013-14.
The financial status of Sudha dairy is not good.
In the last year the inventory turnover has increased, this is good sign for
the company.
The companys liquidity position is good with regard to the investment in
current assets there are more funds require invested in it. Care should be
taken by the company to make further investments in current assets, which
could otherwise be effectively utilized for some productive purpose. On the
whole, the company is moving forward with good management.
Sudha Dairy Balance Sheet Year Ending 2015
Sudha Diary profit & loss Sheet year ending 2015
REFERENCE
Books
Management Accounting by Dr. S.P. Gupta
I.M Pandey Financial Management. Vikas Publishing house Pvt.
Ltd. 8th edition.
Nrayanaswamy, Financial Management Theory & Practice 3 th
edition.
Prasanna Chandea Financial management theory & practice 7 th
edition.
Website
www.Sagar .com
www.cmmf.com
www.dudhSagar dairy.com
www.amul.com
www.indiadairy.com
www.sudhadairy.com
www.sudhatimul.com

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Chapter-1

Introduction of the Study

Objective of the study

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 1]

Introduction of the study

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 2]

(i) Objective Of The Study

(ii) Scope of the study

Through this project we would study the various methods of the

(iii) Methodology used

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 4]

need to have a clear idea of what is working capital, how it is

(iv) Limitation of The Study

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 5]

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 6]

Introduction of the organisation

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 7]

SUDHA DAIRY IN INDIA

4. Store keeping section.

(i) Brief History

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 10]

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 11]

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 12]

Source: copy Company Profile

incorporating/installing some equipment/machineries the capacity has been

technology available to rural producers/ employee/ customers/ suppliers/

Butter & Ghee Section

Milk Packing section

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 15]

Vice president Finance or

Cash Management Credit

PROCESS OF FINANCE & ACCOUNT

and scope of account process are management of financial resources of the

The determination from and proportionate amount of securities.

Fig.5.2:- Steps of Financial Planning

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 17]

expenditure is also given by the account department. The department provide

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 19]

RESERVE AND SURPLUS

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 20]

Loan & Advances:

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 21]

CASH & BANK BALANCE

DEBTORS:Amount (in Rs.)

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 22]

A THEORETICAL ASPECT OF WORKING CAPITAL

Meaning of Working Capital

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 23]

Working capital represents the position of current assets financed

Some basic definitions and Concepts :

Working capital sometimes called gross working capital simply

refers to current assets.

working capital Management involved in the administration, will in

Working Capital represents the portion of current assets financed with

progress, finished goods, account receivables. In this time gap the

By optimizing the investment in current assets and by reducing the

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 25]

The second important objectivities of working capital management

Why we need working capital?

To buy adequate raw material.

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 26]

The large holding of current assets strengthen the firms liquidity

INSTITUTE OF ADVANCED MANAGEMENT AND RESEARCH GHAZIABAD [Page 28]