Jagannath University

Department of Finance

8th Batch

Course Title: Working capital management

Course Code: FIN-4206

Group List

No. Name Id. No

1 Farzan Ahamad B130203020
2 Mosa. Farhana Sultana B130203025
3 Md. Rasel Ahmed B130203058
4 Md. Billal B130203076
5 Ranajit Kumar Bhadra B130203079
6 Mohammad Sajib Miah B130203092
7 Seema Parvin B120203006
8 Md. Shamim Ahmed Saikath B120203110

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Citizens’ Band Radio

Citizens band radio is a system of short-distance radio communications

between individuals on a selection of 40 channels within the 27-MHz (11 m)
band. In many countries, CB operation does not require a license, and (unlike
Amateur Radio) it may be used for business or personal communications. Like
many other two-way radio services, Citizens band channels are shared by many
users. Only one station may transmit at a time; other stations must listen and wait
for the shared channel to be available.

The citizens band radio service originated in the United States as one of several
personal radio services regulated by the Federal Communications Commission
(FCC). These services began in 1945 to permit citizens a radio band for personal
communication (e.g., radio-controlled model airplanes and family and business
communications). In 1948, the original CB Radios were designed for operation
on the 460–470 Megacycle UHF band.

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SWOT analysis

A SWOT analysis is a structured planning method used to evaluate the strengths,

weaknesses, opportunities, and threats involved in a project or in a business
venture. A SWOT analysis can be carried out for a product, place, industry or
person. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable to
achieving that objective.

The SWOT analysis of Citizens’ Band Antenna Company:

Strength:
- Original contribution of equity capital by family member
- Manufacturing modern antenna
- Manufacturing various types of antennas
- Using marketable securities for temporary investments

Weakness:
- Forcing to curtail some fixed asset.
- Lower power communication
- Amateur radio do not work well in other applications

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Opportunity:

- Adding extra workers

- Scheduling a second production shift
- Purchasing some new equipment
- Increasing inventories
- Applying executives manager for increasing sales and profit

Threat:
- Family owned company
- Cash amount dangerously low level /liquidity crisis
- Increasing liabilities

Management challenges faces in the market

There is some important challenge that faces Citizens’ Band Antenna

Company, given below:
1. Liquidity crisis: The liquidity crisis is one of the most important
challenges for the company. In the year of 1975 and 1976 the company
face highly liquidity problem.

2. Increasing liabilities: when firm face liquidity problem and shortage of

funding then firm forced to borrowing fund from fund. By this way
increasing liability of the year 1975 and 1976.

3. Curtail fixed assets: curtail of fixed assets is another challenges of this

firm. When the firm experience funding shortage then curtail the fixed
assets acquisition plan.

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 4. Lower power communication: the Citizens’ Band Antenna Company
provide low power communication. It is a set of radio frequency near 27
megahertz.

5. Family own company: it is a family own company. And most of the fund
is come from the family member. So that the fund of the firm is
comparatively lower than any other company. It also has declining
possibilities

How can they overcome this?

In the flowing way the Citizens’ Band Antenna Company can overcomes the
challenge which comes from market:

1. Controlling overtime work and administrative expenses closely.

2. Expanding kept sales.
3. Borrowing long-term debt because risk is low.
4. Postponing purchase of fixed asset.
5. Cutting the firm’s dividend payout rate.
6. Implementing a policy of delaying payments to trade suppliers beyond
the suppliers’ stated terms of sales.
7. Increase the liquidly of the firm.
8. Improve the connection application and providing high power
communication system.

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The performance of working capital and the impact
overall performance of the Citizens’ Band Antenna
Company.

Current Assets of Citizens’ Band Antenna Company

.
Title of Assets 12/31/1974 12/31/1975 12/31/1976
Cash $145 $185 $73

Marketable Securities 174 0 0

Account Receivable 278 409 588
Inventory 255 401 572
Other Current Assets 28 36 49
Total Current Assets $880 $1,031 $1,282

Current Liabilities of Citizens’ Band Antenna Company.

Title of Liabilities 12/31/1974 12/31/1975 12/31/1976

Account payable $82 $108 $337
Accrued Wages 82 108 139
Others Accruals 74 98 118
Short Term Notes Due 0 150 300
Current Portion- L.T.D 50 60 70
Total Current Liabilities $288 $524 $964

To determine the performance of working capital of Citizens’ Band Antenna

Company, at first we need to Net working capital of the company in the years of
1974, 1975 and 1976. The working capital is calculated as:

Year

(Thousands of dollars)
1974 $ 880 $ 288
$ 592
1975 $ 1031 $ 524
$507
1976 $ 1282 $ 964
$ 318

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Recommendation: Increasing in investment of working capital of the firm
during the time period of 1974 to 1976. The portfolio of marketable securities
used as temporary investments when the firm had surplus funds and instead
funded seasonal variation in assets by borrowing of short term credit from firm’s
bank. The firm also curtails some fixed assets for the shortages of fund.

The working capital ratio indicates whether the company has enough short term
assets to cover its short term debt. Anything below 1 indicates negative W/C
(working capital). While anything over 2 means that the company is not investing
excess assets. Most believe that a ratio between 1.2 and 2.0 is sufficient.

Year

(Thousands of dollars)
1974 3.06 $ 800 $ 288
1975 1.97 $ 1031 $ 524
1976 1.33 $ 1282 $ 964

Recommendation: From the scenario of working capital ratio of Citizen’s Band

Antenna Company is positive and it also show that in 1974 the firm invest low
amount of assets but in the year of 1975 and 1976 is normal amount.

The Impact of working capital in overall performance of the Citizen’s Band

Antenna Company is seemingly good situation but not actually in good situation.
Because they are involved in huge liabilities compare to 1974 with 1975 and
1976. Though the firm increase in sales 68.4% and increase in profit 72.5%. In
the situation, if the firm had one more year of this sort of success, it would end
up in bankruptcy court.

Conclusion:

The Citizen’s Band (CB) is a set of radio frequencies with low-power

commutation radio spectrum aside in United State. Though the firm experience
some odd situation but the company always try to improve their weaknesses for
build up the firm in financially health.

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