19. 15 5. The working capital Model The short term operating activities of the firm & their impact on cash & working capital
20. 15 5. The working capital Model THE OPERATING CYCLE & THE CASH CYCLE - Short Term Operating Activities : How to collect cash Collecting cash 5 Offer cash / credit term to the customer Selling the product 4 Choice of production technology Manufacture the product 3 To borrow / draw down cash balance Paying cash & purchases 2 How much inventory to order Buying raw-material 1
21. 12 DABUR GODGEJ 5. The working capital Model Inventory Beg 20114.69 End 26171.64 A/C Receivables Beg 10046.43 End 11236.01 A/c Payables Beg 17289.1 End 19384.87 Net Sales 239616.39 Cogs 196953.07 Inventory Beg 19771.19 End 9355.62 A/C Receivables Beg 14873.23 End 16099.98 A/c Payables Beg 18.95 End 47.17 Net Sales 81623.72 Cogs 86745.94
22. 13 5. The working capital Model Dabur Godrej Avg Inventory 23143.16 14563.4 Inventory turnover 8.5 times 5.95 times Inventory pd 42.9 61.3 Avg Receivables 10641.22 15486.6 Receivables turnover 22.51 times 5.27 times Receivables pd 16.21 69.25 Avg payables 18336.98 33.06 Payables turnover 10.7 times 2623 8 times Payables pd 34.11 0.139
23. 14 Inventory Period 42.9 Receivable Period 16.21 Operating Cycle 59.11 days + Operating Cycle 59.11 A/c Payable period 34.11 Cash Cycle 25 days = = Inventory Period 61.3 Receivable Period 69.25 Operating Cycle 130.55 days + Operating Cycle 130.55 A/c Payable period 0.139 Cash Cycle 130 days = = DABUR GODREJ 5. The working Capital Model