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WORKING CAPITAL MANAGEMENT
Submitted by : Geeti Gourav Pati
What is working capital?
• Working capital is that it is the flow of capital required for the day-to-day running of operations. Generally, the longer the business cycle the more working capital you require.
• Working capital is required to ensure that a firm is able to continue its operations and has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses.
CONCEPT
• Gross working capital:Gross working capital is the total cash and cash equivalents, that a business has on-hand.
• Net working capital:Net working capital refers to its current assets minus its current liabilities. The result measures the current liquidity of the company and its ability to repay creditors.
OBJECTIVE
• Study the level of current assets and current liabilities year to year basis.
• Study the level of working capital.
• Study the liquidity and profitability position of the company.
• Study the pattern of financing of the company (whether conservative or aggressive).
• Comment on the effectiveness of working capital management with respect to Inventory and receivables management.
TATA MOTORS MARUTI SUZUKI
V/S
TATA MOTORS
1 2 3 4 5 6 7 8 9 100.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
WCSALES
ITR V/S INVENTORY
1 2 3 4 5 6 7 8 9 100.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
ITR
ITR
1 2 3 4 5 6 7 8 9 100.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
INVENTORY
INVENTORY
RTR V/S DEBTOR
1 2 3 4 5 6 7 8 9 100
5
10
15
20
25RTR
RTR
1 2 3 4 5 6 7 8 9 100.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00DEBTOR
DEBTOR
1 2 3 4 5 6 7 8 9 10
-0.2
0
0.2
0.4
0.6
0.8
1
CRNET PROFIT MARGIN
NET PROFIT MARGIN V/S CR
LIQUDITY V/S PROFITABILITY
1 2 3 4 5 6 7 8 9 100
5000
10000
15000
20000
25000
30000
35000
40000
45000LIQUIDITY
LIQUIDITY
1 2 3 4 5 6 7 8 9 100
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16PROFITABILITY
PROFITABILITY
MARUTI SUZUKI
1 2 3 4 5 6 7 8 9 100.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
45,000.00
50,000.00
WCSALES
ITR V/S INVENTORY
1 2 3 4 5 6 7 8 9 100.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
ITRINVENTORY
RTS V/S DEBTOR
1 2 3 4 5 6 7 8 9 100.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
RTRDEBTOR
NET PROFIT MARGIN V/S CR
1 2 3 4 5 6 7 8 9 100
0.2
0.4
0.6
0.8
1
1.2
1.4
NET PROFIT MARGINCR
LIQUDITY V/S PROFITABILITY
1 2 3 4 5 6 7 8 9 100
500
1000
1500
2000
2500
3000
3500
4000
PROFITABILITY LIQUIDITY
ASIAN PAINTS AND
BERGER PAINTS
ASIAN PAINTS
1 2 3 4 5 6 7 8 9 10
-4,000.00
-2,000.00
0.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
SALESWORKING CAPITAL
ITR V/S INVENTORY
1 2 3 4 5 6 7 8 9 100
1
2
3
4
5
6
7
8
9 ITR
ITR
1 2 3 4 5 6 7 8 9 100.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00INV
INV
RTR V/S DEBTOR
1 2 3 4 5 6 7 8 9 100
2
4
6
8
10
12
14
16RTR
RTR
1 2 3 4 5 6 7 8 9 100.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00DEBTOR
DEBTOR
NET PROFIT MARGIN V/S CR
1 2 3 4 5 6 7 8 9 100
0.1
0.2
0.3
0.4
0.5
0.6
NET PRO MARGINCR
BERGER PAINTS
1 2 3 4 5 6 7 8 9 10
-500.00
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
SALESWORKING CAPITAL
NET PROFIT MARGIN V/S CR
1 2 3 4 5 6 7 8 9 100
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
NET PRO MARGINCR
MAHINDRA INDIA AND
BAJAJ AUTO INDIA
MAHINDRA INDIA
1 2 3 4 5 6 7 8 9 10
-10,000.00
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
SALES WORKING CAPITAL
NET PROFIT MARGIN V/S CR
1 2 3 4 5 6 7 8 9 100
0.5
1
1.5
2
2.5
NET PRO MARGINCR
NET PROFIT MARGIN V/S CR
1 2 3 4 5 6 7 8 90
0.2
0.4
0.6
0.8
1
1.2
1.4
NET PRO MARGINCR
AIRTEL AND
RELIANCE TELECOM
AIRTEL
1 2 3 4 5 6 7 8 9 10
-35,000.00
-30,000.00
-25,000.00
-20,000.00
-15,000.00
-10,000.00
-5,000.00
0.00
WC
WC
1 2 3 4 5 6 7 8 9 100.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
90,000.00
100,000.00
SALES
SALES
ITR V/S INVENTORY
1 2 3 4 5 6 7 8 9 100
100
200
300
400
500
600
700
800
900
1000
ITRINVENTORY
RTR V/S DEBTOR
1 2 3 4 5 6 7 8 9 100
2
4
6
8
10
12
14
16
RTR
RTR
1 2 3 4 5 6 7 8 9 100.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00DEBTOR
DEBTOR
NET PROFIT MARGIN V/S CR
1 2 3 4 5 6 7 8 9 100
0.1
0.2
0.3
0.4
0.5
0.6
NET PROFIT MARGINCR
RELIENCE
1 2 3 4 5 6 7 8 9 100.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
300,000.00
350,000.00
400,000.00
450,000.00
500,000.00
WCSALES
ITR V/s INVENTORY
1 2 3 4 5 6 7 8 9 100.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
INVENTORY
INVENTORY
1 2 3 4 5 6 7 8 9 100
1
2
3
4
5
6
7
8
9
10
ITR
ITR
RTR AND DEBTOR
1 2 3 4 5 6 7 8 9 100.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
16,000.00
18,000.00
RTRDEBTOR
1 2 3 4 5 6 7 8 9 100.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
16,000.00
18,000.00
DEBTOR
DEBTOR
Dabur and
P&G
DABUR
1 2 3 4 5 6 7 8 9 100.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
9,000.00
WCSALES
ITR AND INVENTORY
1 2 3 4 5 6 7 8 9 100.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00ITR
ITR
1 2 3 4 5 6 7 8 9 100
200
400
600
800
1000
1200INVENTORY
INVENTORY
RTR AND DEBTOR
1 2 3 4 5 6 7 8 9 100
100
200
300
400
500
600
700
800
DEBTORRTR
CR AND NET PROFIT MARGIN
1 2 3 4 5 6 7 8 9 100
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
CRNET PROFIT MARGIN
P&G
1 2 3 4 5 6 7 8 9 10
-10,000.00
-8,000.00
-6,000.00
-4,000.00
-2,000.00
0.00
2,000.00
4,000.00
6,000.00
8,000.00
SALESWC
ITR AND INVENTORY
1 2 3 4 5 6 7 8 9 100.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
ITR
ITR
1 2 3 4 5 6 7 8 9 100.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
INVENTORY
INVENTORY
RTR AND DEBTOR
1 2 3 4 5 6 7 8 9 100
0.5
1
1.5
2
2.5
3
3.5
RTR
RTR
1 2 3 4 5 6 7 8 9 100.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
DEBTOR
DEBTOR
NET PROFIT MARGIN AND CR
1 2 3 4 5 6 7 8 9 10
-0.5
0
0.5
1
1.5
2
CRNET PROFIT MARGIN
CONCLUSION
Thus working capital management is the most prominent function of the company because it wakeup the firms operations for long term or short term purpose. Cash on hand is not a big deal but proper utilization of the capital becomes the overcome of all the issues faced by the company.
THANK YOU
