Business Principles, Tools, and Techniques in Participating in Various Types...
Working Capital Management.pptx
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201-Financial MANAGEMENT
Unit No.3. Working Capital Management
3.1 Meaning and Definition of
Working Capital
Presented By:
Dr. V. M. Tidake
Ph. D (Financial Management), MBA(FM), MBA(HRM) BE(Chem)
Dean EDP & Associate Professor MBA
1
Sanjivani College of Engineering, Kopargaon
Department of MBA
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Unit 3: Working Capital Management
At the End of the Session Student will be able to
understand-
A. Meaning and Definition of Working Capital
Management
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WORKING CAPITAL
• Working Capital is the Capital required to run
the day to day operations of a business
enterprise.
• It is also known as Current Capital or Running
Capital or Short Term Capital.
• W.C.M. is Balancing between Holding Cost and
Carrying Cost.
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SCOPE OF WORKING CAPITAL
• Positive Correlation between Sales and W. C. M.
• More than 50% Capital is in the form of Working
Capital.
• Fixed Asset can be acquired on Lease but
Working Capital can’t.
• Working Capital needs are mostly financed from
outside Sources.
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FACTORS AFFECTING WORKING CAPITAL
• Nature of Business,
• Production Policy,
• Market Conditions,
• Seasonal Fluctuations,
• Growth and Expansion Strategy,
• Operating Efficiency,
• Credit Policy,
• Growth Rate,
• Dividend Policy.
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CURRENT ASSET (CA)
• Current Asset is the asset of an Organization which is already in the
form of Cash or will readily get converted in the form of Cash within
One Year.
• EXAMPLES OF CA:
• Stock of R.M.
• Stock of WIP
• Stock of Finished Goods
• Cash in Hand,
• Cash at Bank,
• Debtors,
• Bills Receivables,
• Prepaid Expenses
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CURRENT LIABILITY (CL)
CURRENT LIABILITY:
Current Liability is the Liability of an Organization
which is already due for payment or will become due
for payment within one Year.
EXAMPLES OF CL:
• Outstanding Expenses,
• Creditors,
• Bills Payables,
• Proposed Expenses,
• Various Provisions etc.
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FORMAT OF WORKING CAPITAL
Particular Amount
A) CURRENT ASSET:
a) Stock of RM
b) Stock of WIP
c) Stock of Finished Goods
d) Debtors
e) Bills Receivables
f) Prepaid Expenses
g) Cash in Hand
h) Cash at Bank
TOTAL CURRENT ASSET:
B) CURRENT LIABILITY:
a) Creditors
b) Bills Payables
c) Outstanding Expenses
d) Provisions if any
e) Proposed Expenses
TOTAL CURRENT LIABILITY:
WORKING CAPITAL (A-B):