Get help now

PART-B REVIEW OF LITERATURE Sakshi vasudeva

Updated September 16, 2022
dovnload

Download Paper

File format: .pdf, .doc, available for editing

PART-B REVIEW OF LITERATURE Sakshi vasudeva essay

Get help to write your own 100% unique essay

Get custom paper

78 writers are online and ready to chat

This essay has been submitted to us by a student. This is not an example of the work written by our writers.

The goal working capital management is to manage the firm’s current liabilities in such a way that a satisfactory level of working capital is maintained. This is so because if the firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy. As the working capital is the difference between current assets and current liabilities, the current assets should be large enough to cover its current liability in order to ensure a reasonable margin safety. S.P.Jain ; K.L.Narang – In their book – Cost and Management Accounting, The working capital requirements are determined by a wide variety of factors. It should be noted that tease factors affect different enterprises differently. They also vary from time to time.

The following factors are involved in proper assessment of the quantum of working capital required. S.P.Jain ; K.L.Narang – In their book – Advanced Accounting, Working capital is the life blood and nerve center of business .just as circulation of blood is Essential in the human body for maintaining life, working capital is very essential to Maintain the smooth running of a business .no business can run successfully without an Adequate amount of working capital. –Smith – In his study, “Working capital management is concerned with the problem that arises in attempting to manage the current asset, current liabilities, and the inter-relationship that exist between them  General introduction about the topic Working capital discusses portion of total capital,and recycled for unchanging of regular business process.it is sum of capital charity for funding day to day processes. the business is working capital is defined as excess of current assets over current liabilities. Meaning The team “working capital” position’s is the part of capital, which is obligatory for the financing of working desires of the company.

Working capital is the lifetime of every concern. Whether it is manufacturing or non-manufacturing one without suitable working capital around can be no improvement in the industry. Insufficient working capital means lack of raw materials, labour etc., follow-on in incomplete current liabilities-has no economic significance in the sense of indicating few type of normative performance. Allowing to this line of thinking.

It is largely an accounting item. Working capital Management, then is a inaccuracy. The working capital of the strong is not achieved. The term pronounces a kind of management decisions affects unambiguous kind of current assets and current liabilities. In turn, those decisions would be fixed in the overall evaluation of the firm.

Current assets These are those assets which are adapted into cash within crrent accounting historical or within the next year because of even procedures of business.Net cash possessions or cash are includes. Bank &cash balance Debtors Inventories Stores, Spares parts& raw materials Work in progress Finished goods Prepaid expenses Short term advances Provisional investments The values signified by those assets parties between numerouscash item used to buy raw material for wages paying and others manufacturing expenditures.finished goods created and those are held as inventories.when those are sold account receivables are generated. The collected of accounts receivables being cash into firm round tics again. This can be shown in figure below Cash Inventories Receivables Current liabilities These are those credits of firms that must pay during current book keeping period These includes. creditors for goods procured. Outstanding expenses. Short term borrowings.

Advances received against sales Taxes and dividend payments. Other liabilities maturing with in a year Importance of the working capital Working capital shows as part of blood in human body suitable management of working capital important for working of business. Its policy is troubled with two significant factors that is level of current assets to be held and techniques by which assets are financed. company efficiency is in one way firm by management of its working capital. the benefits of working capital are Easy loan Regular source of raw materials Goodwill Cash discount Capability to face crisis Rapid and systematic returns on investments Steady payments made Affluence of the business In current years, working capital management increased position for number of explanations those like registered below.

These are controllable in sense that funds are committed reasonably for smaller period and wrong period can more simply manageable with insignificant alteration in way for greater grades. Contribution of cash discount firm can persude customers to pay bills immediately sale is complete in shortest conceivable time so falling and removing intermediate stages of account receivables. By shifting the length of business cycle, firm can decrease its financial and administrative cost. lessening in the investment of working capital does not essentially mean enhancement in the profitability of the firm. However, when all other things remain the same, lessening in the volume of working capital growths profitability. Sources of working capital The sources of working can be obtained from the resulting sources Long Term sources Short Term Sources Long Term sources Long term sources are of two types Owned sources Borrowed sources Owned sources Issue of shares Retained earning Funds Action of fixed assets Borrowed Sources Debentures Long term debt Short Term sources Short term sources exit of two types Internal sources External sources Internal sources Depreciation funds Outstanding payments Provision for taxation External sources Trade credit Letter of credit Bank credit Advances from customers Finance companies Public deposit Working Capital management Working capital management shows protection the wheels of a business enterprise successively.

Working capital management are becomes greater in recent years.In other words of smith “working capital management is worried with the problem that arises in trying to accomplish current assets, current liabilities and inter relationship that occurs between them”. Brown and Howard, who compared the working capital with a river which is always there but whose water level is changing It may be experimental to life blood of business its efficient providing that could to do much certify success of business. Its incompetent management may lead to net loss (or) profit and also downfalls of the business. It is important with internal &external analysis because of close connotation with current day-day operation of business.

Each business needs capitals for purpose of Raw material Payments of wages Others daily expenses Significance of working capital Significant portion of capital of a firm is in of working capital. Capital is raised from borrowed(or) outsiders Interest to be paid Ensure usage and eliminate wastage Ensure to yield good profit and benefit to service borrowed capital Maintaining adequate level of working capital Investment in current assets in “never static” Working capital is difficult to control (or) to estimate exact amount required Working capital addresses the issues “liquidity and profitability” Deficiency (or) shortage of of working capital investments will not only disturb routine business but also affect “solvency”of firm in the little run. Aspects of working capital management Working capital management has different aspects.They are Management of cash Management of account receivables Management of inventories Modules of working capital Management of cash Management of Inventory Management of Receivables RESEARCH DESIGN Statement of the problem A substantial portion of total investment is current assets, Level of current assets and current liabilities will change quickly with variation in sales, so it needs to be determined and level of current assets &current liabilities need to be known Objective about the study To study on how efficient utilization of funds in the organization To know the composition of gross working capital and net working capital To know financial performance of the company through ratio analysis. Scope of the study The learning was done at M.G.M. Springs pvt. Ltd.

in Ananthapuram. The study looks at only the liquidity position as well as to maintain the profitability of the company. This study is confined to only Ananthapuram, the analysis of working capital management for the period from 2013-2017. Methodology of the study The above objectives were studied by using descriptive research design, where the study employed various ratios like liquidity ratios, activity ratios and solvency ratios to analyze the working capital of PSMW. Future information related to ratios was collected through secondary data, which is explained in detail in the next sub point. Source of data The report describes the collecting of the data.

The data collected is an interesting aspect of the study. The research tasks depend upon the type and sources of the data which has to yield the desired for the study. The present study has used secondary sources of information, which is obtained from the balance sheet and profits & loss accounts. Tools used for the study Ratio analysis is the main tool used in the study. Different ratios related to working capital that are used in study are as follows. Ratios Analysis Report on changes in working capital Apart since ratio analysis, working capital schedules of changes in working capital are also used as a tool for data analysis.

The analysis data presented in tables and graphs. Limitations of the study The study on working capital management in M.G.M. Springs pvt. ltd has some of the limitation that are discussed in the below The project is just a brief working capital management .it is not exhaustive. The research conducted on the basics of secondary data, so its not exhaustive. DATA ANALYSIS AND INTERPRETATION Ratio analysis The ratio is modest numerical arrival of relationship of one number to another it may be clear as specified quotient of two exact expresssions. Liquidity ratio Liquidity ratio used to measure the ability of firm to pay its maturing responsibility on time.

The first anxiety of the financing analysis of the liquidity of working capital is used for both short term creditors and internal management of the firm.

PART-B REVIEW OF LITERATURE Sakshi vasudeva essay

Remember. This is just a sample

You can get your custom paper from our expert writers

Get custom paper

PART-B REVIEW OF LITERATURE Sakshi vasudeva. (2019, Jul 22). Retrieved from https://sunnypapers.com/part-b-review-of-literature-sakshi-vasudeva/