FINANCIAL MANAGEMENT

WORKING CAPITAL MANAGEMENTWORKING CAPITAL MANAGEMENT

Presenting

Ziauddin Ahmed Siddiqui

Reg #: 51310

Presented To

Sir. Zia-ur-Rehman

SS Industry provides innovative solutions for pretreatment Vat dyeing, Bleaching, Mercerizing, Cotton Yarn, printing and finishing of textiles products

Our specialists provide color matching with high quality, trend monitoring as well as sector specific concepts

Generate greater value from their products

Our package produce improved color yields and excellent brightness

COMPANY INTRODUCTIONCOMPANY INTRODUCTION

To transform the Company into a modern and dynamic yarn, cloth, processed cloth and finished products manufacturing company with highly professionals and fully equipped, to play a meaningful role on sustainable basis in the economy of Pakistan.

VISION STATEMENTVISION STATEMENT

To provide quality products to customers and explore new markets to promote/expand sales of the company through good governance and foster a sound and dynamic team, so that to achieve optimum prices of products for sustainable and equitable growth and prosperity of the company.

MISSION STATEMENTMISSION STATEMENT

Its our policy to achieve Quality Parameters through continuously improving Processes and Quality Management System having long term relationship with Buyers Satisfaction

OUR QUALITY POLICYOUR QUALITY POLICY

Blended Yarns

100% Cotton (Medium to Dark Colors)  100% Cotton Yarn (White to Light Colors)  Extra Long Staple Cotton  Compact Yarns  Slub Yarns  Compact Core Spun Yarn   Eli Twist yarns 

PRODUCTSPRODUCTS

FEROZE TEXTILE

COSMIC TEXTILE

M.A TEXTILE

ANWAR TEX INDUSTRY

UNIVERSAL TEXTILE INDUSTRY (UTI) PVT

MEHTABI TOWELS

SAYA  WEAVING MILLS PVT LTD

MIRTEX INTERNATIONAL PVT.

CUSTOMERSCUSTOMERS

WOKING CAPITAL POLICIESWOKING CAPITAL POLICIES

Here are four different working capital policies:

 Matching Working Capital Policy

Aggressive Working Capital Policy

Conservative Working Capital Policy

Balance Working Capital Policy

Matching policy matches the maturity of a financing source with an asset’s use full life

Short term assets should be financed with short term liabilitiesLong term assets should be funded by long term financing sources.

MATCHING POLICYMATCHING POLICY

Conservative policy ignores the difference between temporary and permanent current by financing almost all asset investments with long term capital.

This policy greatly reduces the risk of liquidity & eliminated the firm’s exposure to fluctuating loan rate and availability of short credit.

It is less profitable because it has a higher financing cost.

CONSERVATIVE POLICYCONSERVATIVE POLICY

Aggressive policy is an attempt to increase the return on equity by taking advantage of the cost differential between short and long tern debt.

It takes extreme position of restoring to short term liabilities not only temporary but also part or all of permanent current asset requirement.

AGGRESSIVE POLICY

Long term financing is used to support permanent current assets and part of temporary current assets.

BALANCED POLICYBALANCED POLICY

S.S INDUSTRY’S POLICIES

ACCOUNTS RECEIVABLES (A/R) oA/R policy is applied for 30 to 120 daysoGrants trade creditoSpecial discounts

  ACCOUNTS PAYABLES (A/P) oStandard terms of payment is 30 to 120 daysoFollow the restricted time periodoFinance Manager will be responsible  INVENTORIES oMaterial presence in inventory is determinedoInventory kept for not more than one month after purchasingoPurchase department will maintain procurement

WORKING CAPITAL PROCEDURESCASH MANAGEMENT oAt SS Industry, cash budget is prepared when they receive customer order.oCash budget is prepared on the basis of information from various departments such as engineering, production & economics assumption. oOutflow is determined on the basis of raw material, payment of taxes, interest or borrowing

INVENTORY MANAGEMENT oFirst of all, purchase of material for inclusion in the total inventory is determined.oProcurement is done by purchase department.oPurchase order is placed for entire quantity of a specific item and its delivery over a period of time is received.oInventory is placed in store not more than one month.oQuality is checked by Q.C department.oRecord and processing is maintained by Ms-Excel.

ACCOUNTS RECEIVABLE MANAGEMENTo S.S industry credit policy is applied for 30 to 120 days

o S.S industry grants trade credits to attract potential customers.

o S.S industry provides special discounts for valuable customers

o If payments are not received within due date, the finance department will contact the customer by telephone or e-mail

o If no response is received after the mentioned due date, Legal Recoveries and Collections will be advised.

o Another favor for valuable customers is that they can pay after two months from the due date.

o Payable invoices are processed by accounts department

o Review the invoices paid within due date

o Standard terms of payment are 30 to 120 days from date of receipt of a valid invoice.

o No invoices will be paid on any other terms unless expressly agreed by the Finance Manager

ACCOUNTS PAYABLE MANAGEMENTACCOUNTS PAYABLE MANAGEMENT

By carefully analyzing the above working capital procedures at S.S Industry, we can give the following suggestion to S.S Industry:- S.S Industry must maintain buffer stock or excess level of inventory, i-e above the required level so that unexpected large orders can be met by the company easily in case of emergency The credit policy of S.S Industry should be formulated again and customers should be allowed credit days of 30 to 60 days or in other words, debtor turnover period should be reduced so that company can have sale receipts before the expiry of credit time period allowed by the creditors. In this way company will have excess cash beforehand.

CONCLUSION CONCLUSION