Chapter 3 Need, Scope and Objectives Of the Study

3.1 NEED OF THE STUDY

Before this research, various researchers had conducted study on working capital management in context to what should be the current asset management policies and what will be its impact on firm, what should be the cash conversion cycle and its impact on the profitability of a firm, what should be the amount of working capital.But no one has conducted study on efficient working capital management in detail.So, the motive behind the study was to develop an understanding about all areas of working capital management in the running business organization with the help of various current ratios and schedule of changes in working capital which will help the company in developing the efficient working capital management. So, it helps in future planning and control decisions.

3.2 SCOPE OF THE STUDY

The study was conducted at Vardhman Spinning & General MillsLudhiana for 6 weeks duration.To get proper understanding of this concept, I had done the study of the balance sheets, profit and loss a/cs, cash accounts, trial balance, cost sheets for the last 5 years i.e. 2005-06 to 2009-10.

3.3 OBJECTIVES OF THE STUDY

The objectives of the study are as follows: To analyze the short term solvency position of the company. To know the investment in inventory is efficiently used or not.. To study about the debt collection period and average payment period. To analyse whether working capital is efficiently used in the organization. To study the cash position of the organisation To study the changes in amount of working capital over the previous years.

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