A

PROJECT REPORT
ON

WORKING CAPITAL IN MANAGEMENT

AT
ADHUNIK POWER & NATURAL RESOURCES LIMITED

Submitted in the partial fulfillment of the degree of

Bachelor of Commerce

For the session 2021-2024

Submitted By
Name: RAJITA SHARMA

University Enrollment Number: AJU/210222

Faculty Mentor
Name: Prof. Ranjan Kumar

School of Commerce and Management, ARKA JAIN UNIVERSITY

 DECLARATION BY STUDENT
I, RAJITA SHARMA, hereby declare the project titled
“WORKING CAPITAL IN MANAGEMENT”, has been carried
out by me during my ‘SUMMER INTERNSHIP PROJECT
REPORT’ and is hereby submitted in the partial fulfilment
of the requirement of ARKA JAIN UNIVERSITY for the
award of the degree of Bachelor of Commerce.
To the best of my knowledge, the project undertaken, has
been carried out by me and is my original work. The
contents of this report are authentic and this report has
been submitted to ARKA JAIN UNIVERSITY and it has not
been submitted elsewhere for the award of any Certificate/
Degree/ Diploma etc.
Name of the Student: RAJITA SHARMA
University Enrollment No.: AJU/210222
BCom
 CERTIFICATE OF APPROVAL

This Dissertation Report of “RAJITA SHARMA” titled

“WORKING CAPITAL IN MANAGEMENT” is approved in
quality and form and has been found to be fit for the
Partial Fulfilment of the requirements of ARKA JAIN
UNIVERSITY for the award of the degree of Bachelor of
Commerce.

Approval of the Program Coordinator Approval of Assistant Dean(UG)

Department of BCom School of Commerce and
School of Commerce and Management Management
ARKA JAIN UNIVERSITY ARKA JAIN UNIVERSITY

APPROVAL OF THE EXAMINER

CERTIFICATE FROM FACULTY MENTOR

This is to certify that RAJITA SHARMA, of ARKA JAIN

UNIVERSITY, AJU/211326 , a student of BCom (2021-
2024), has undertaken Dissertation Report Title “WRKING
CAPITAL IN MANAGEMENT” for the partial fulfilment of
the requirement of ARKA JAIN UNIVERSITY for the award
of the degree of Bachelor of Business Administration, under
my supervision.

Signature of the Faculty Mentor,

Name of the Faculty Mentor: Prof. RANJAN KUMAR
 ACKNOWLEDGEMENT

I take this opportunity to thank my faculty mentor Prof.

Ranjan Kumar, ARKA JAIN UNIVERSITY. For his valuable
guidance ,closely supervising this work with helpful
suggestions which helped me to complete the report
properly and present .

More importantly ,his valuable advice and support helped

me to put efforts on my project . He has been a driving
force for me and has constantly enriched my raw ideas
with his vast experience and knowledge .

I would also like to thank my parents with their support I

have completed this project so well.

Name of the Student: RAJITA SHARMA

University Enrollment No.: AJU/210222
BCom.(2021-2024)
 TABLE OF CONTENT
S.no TOPIC PG.NO
1 INTRODUCTION 07-08
2. COMPANY PROFILE 09-12
3.. WORKING CAPITAL MANAGEMENT 13-20
5. GOOD AND BAD CONTROL OVER
WORKING CAPITAL 21-24
6. WORKING CAPITAL MANAGEMENT
THROUGH SIMPLE EXAMPLE 25-28
7. OBJECTIVE OF WORKING CAPITAL
MANAGEMENT 29-30
8. SIGNIFICANCE OF WORKING CAPITAL 31-32
9. CONCEPTUALIZATION 33-34
10. SUGGESTION 35-37
11. CONCLUSION 38-39
12. BIBLIOGRAPHY 40
 INTRODUCTION

Finance is a system that involves the exchange of funds between the

borrowers and the lenders and investors. It operates at various levels
from firms to global to national levels. Thus, there are many
complexities involved in it related to markets, institutions, etc.

There are various components of financial systems. They are:

Financial Institutions

Financial institutions include banks and other nonfinance banking

institutions. It is a company that is engaged in the business of dealing
with monetary and financial transactions like loans, deposits, and
investments.

It comprises various banking operations like trusting the companies,

brokerage firms, insurance companies, and dealers. A bank is a financial
institution that is legally allowed to borrow and lend money.

Financial Services

The economic services that are provided by financial institutions and

covers a broader aspect of money like managing money, banks, credit
cards, debit cards are called financial services.
Also, the other financial services that are offered by the institutions are
consumer finance, stock brokerage, investment funds, and many more.

Financial Markets

Financial markets consist of 2 types of market, primary market, and the

secondary market. This is a broad term used to describe a marketplace
where equities, currencies, and bonds are traded. So, in the primary
market, the exchange for the government, companies, are done by the
new companies. Thus, this is done through equity-based or debt-based
securities.

Financial Instruments

Financial instruments are the assets which can be traded in the market.
They can also be a form of package which is traded. Most financial
instruments provide an efficient flow to facilitate the transfer of capital.

Thus, this asset can be of any form from cash to a contractual right to
receive and deliver the cash. They are usually monetary contracts
between the two firms. Also, these instruments can be modified, traded,
or settled.

The cash instruments are the instruments whose value is directly

determined by the market. They can also be securities which are
tradable and transferable.
 COMPANY PROFILE

Adhunik Power And Natural Resources (APNRL) is an

Independent Power Producer (IPP) owning and operating a
2x270 MW coal based thermal power plant in Padampur,
Saraikela-Kharsawan, Jharkhand State. APNRL inaugurated
its first unit of 2x270 MW coal fired thermal power plant on
16th October 2012.

Adhunik Power And Natural Resources (APNRL) is

operating for about 10 years. The Project is 2x270 MW
(Gross) coal fired power plant located in Padampur in
Saraikela-Kharsawan district and is about 20 kms from
Jamshedpur. The power from the project is being
evacuated through CTU substation (PGCIL) located very
near to the power plant site. APNRL signed Long Term
Power Purchase Agreement (PPA) directly with Jharkhand
State Electricity Board, WBSEDCL (PTC) and TANGEDCO.
APNRL built this 2x270 MW power plant through BTG and
multiple BOP contracts. Bharat Heavy Electrical Limited was
the Engineer, Procure and Construct (EPC) Contractor
responsible for Boiler Turbine Generator package and they
provided complete BTG ; auxiliaries excluding civil works.
All other balance of plant systems and civil works were
executed through multiple BOP package contractors. Water
requirement for the power plant is fulfilled from
Subarnarekha River which about 10 km from the plant.

Presently around 400 on roll employees are working in this

plant. This plant is providing jobs to thousands of other
employee through contracts directly or indirectly.

The availability of Coal in abundance makes Jharkhand an

ideal state for setting up Thermal Power Plants at the Coal
Pits. The Present total installed power capacity of
Jharkhand is 2590 MW. APNRL with a total of 540 MW
comes to about 21% of the present installed capacity. The
coal for APNRL plant comes from BCCL and CCL mines
situated in the Jharkhand state.
MORE ABOUT THE COMPANY

Adhunik Power and Natural Resources Limited (APNRL)

has entered into a Memorandum of Understanding (MoU)
with the Government of Jharkhand to set up a 1,080 MW
coal-based Thermal Power Plant. As a first step towards
this, the Company has implemented 540 MW (2x270 MW)
power plant at villages Padampur and Srirampur in
Seraikela-Kharsawan district in the State of Jharkhand.
Plans are firmly in place to add another 2x270 MW in
Stage-II. Unit-1 of Stage-I has achieved Commercial
operation on 21stJanuary 2013 and Unit-2 on 12thJune 2013
subsequently. The Power Plant is in operation from last 2
years. The Project is about 20 Kms. from Jamshedpur city
in Jharkhand State. The power from the project is being
evacuated through Central Transmission Utility (CTU)
substation i. e. Power Grid Corporation of India Limited
(PGCIL), Ramchandrapur located very near to the Power
Plant site.

APNRL built this 2x270 MW power plant through awarding

BTG and multiple BoP Contracts. M/s. Bharat Heavy
Electrical Limited was the Engineering, Procurement and
Construction (EPC) Contractor responsible for Boiler-
Turbine-Generator package. All other Balance of plant
(BoP) systems and civil works were executed through
multiple BoP Package Contractors. M/s. Development
Consultants Pvt. Ltd., Kolkata was Owner’s Engineer during
the project development and execution stage. APNRL
signed Fuel Supply Agreement for Unit-1 and Unit-2 with
Central Coalfields Limited for the supply of Coal on
Tapering Linkage basis. APNRL has signed Water Supply
Agreement for the Power plant consumptive water with
Government of Jharkhand for the supply of 40 cusec of
water from downstream of Chandil dam from Subarnarekha
River. APNRL has signed long term Power Purchase
Agreement (PPA) directly with Jharkhand State Electricity
Board (JSEB), West Bengal State Electricity Distribution
Company Ltd (WBSEDCL) through Power Trading Company
(PTC)and Tamil Nadu Generation and Distribution
Corporation Limited (TANGEDCO) through PTC.

Further at various places, APNRL is planning to set-up

Supercritical Thermal Power plant, which are in advance
stage of planning and approval. APNRL is also aggressively
planning to set-up the Renewable Power plant in various
parts of India in coming years.
 WORKING CAPITAL MANAGEMENT

Working capital management is a business strategy

designed to ensure that a company operates efficiently by
monitoring and using its current assets and liabilities to
their most effective use.

Types of Working Capital

• Permanent Working Capital: Permanent working
capital is the amount of resources the company will
always need to operate its business without
interruption. This is the minimum amount of short-term
resources vital to operations.
• Regular Working Capital: Regular working capital is a
component of permanent working capital. It is the part
of the permanent working capital that is actually
required for day-to-day operations and makes up the
"most important" part of permanent working capital.
• Reserve Working Capital: Reserve working capital is
the other component of permanent working capital.
Companies may require an additional amount of
working capital on hand for emergencies, seasonality,
or unpredictable events.
• Fluctuating Working Capital: Companies may be
interested in only knowing what their variable working
capital is. For example, companies may opt into paying
for inventory as it is a variable cost. However, the
company may have a monthly liability relating to
insurance it does not have the option to decline.
Fluctuating working capital only considers the variable
liabilities the company has complete control over.
• Gross Working Capital: Gross working capital is
simply the total amount of current assets of a business
before considering any short-term liabilities.
• Net Working Capital: Net working capital is the
difference between current assets and current liabilities.

Components of Working Capital

Here are some key components and considerations in
working capital management:
1. Current Assets:
 • Cash and Cash Equivalents: This includes money
in the bank and short-term investments that can
be quickly converted to cash.
• Accounts Receivable: The money owed to the
company by its customers for goods or services
provided on credit.
• Inventory: The goods and materials a company
holds for production or resale.
2. Current Liabilities:
• Accounts Payable: The money that a company
owes to its suppliers for goods or services
received on credit.
• Short-Term Debt: Any debts or loans that need to
be repaid within a year.
3. Working Capital Cycle:
• The working capital cycle is the time it takes for a
company to convert its current assets into cash. It
includes the time it takes to sell inventory, collect
receivables, and pay off payables.
4. Optimizing Working Capital:
• Companies aim to strike a balance between
maintaining enough working capital to operate
smoothly and minimizing excess, which could be
invested elsewhere for better returns.
 • Over-investing in working capital ties up funds that
could be used for other purposes, while
inadequate working capital can lead to liquidity
problems.
5. Cash Flow Management:
• Efficient working capital management ensures a
positive cash flow, which is crucial for a
company's day-to-day operations.
• It involves monitoring and managing the cash
inflows and outflows to maintain a healthy cash
position.
6. Credit Policies:
• Establishing appropriate credit policies for
customers is essential to ensure timely payment of
receivables.
• Balancing between providing attractive credit terms
to customers and minimizing the risk of late
payments or defaults is crucial.
7. Inventory Management:
• Maintaining an optimal level of inventory is critical.
Too much inventory ties up funds, while too little
can lead to production disruptions or missed sales
opportunities.
8. Supplier Relationships:
 • Building strong relationships with suppliers can
lead to favorable payment terms, discounts, and
better overall terms, which can positively impact
working capital.

Effective working capital management contributes to a

company's financial health, operational efficiency, and
ability to seize business opportunities. It requires
constant monitoring, analysis, and adjustments to adapt
to changing market conditions and business needs.

Working capital management involves

balancing movements related to five main
items
• Cash
• Trade receivables,
• Trade payables,
• Short-term financing
• Inventory
-To make sure a business possesses adequate
resources to operate efficiently.
Working capital management
Decisions relating to working capital and short term
financing are referred to as working capital management.
These involve managing the relationship between a firm's
short-term assets and its short-term liabilities. The goal of
working capital management is to ensure that the firm is
able to continue its operations and that it has sufficient
cash flow to satisfy both maturing short-term debt and
upcoming operational expenses.
A popular measure of working capital management is the
cash conversion cycle, that is, the time span between the
expenditure for the purchases of raw materials and the
collection of sales of finished goods for example, found that
the longer the time lag, the larger the investment in
working capital. A long cash conversion cycle might
increase profitability because it leads to higher sales.
However, corporate profitability might decrease with the
cash conversion cycle, if the costs of higher investment in
working capital rise faster than the benefits of holding more
inventories and/or granting more trade credit to customers.
For many firms the current assets account for over half of
their total assets. The management of working capital may
have both negative and positive impact of the firm’s
profitability, which in turn, has negative and positive impact
on the shareholders’ wealth. The present study seeks to
explore in detail these effects. Firms may have an optimal
level of working capital that maximizes their value. Large
inventory and generous trade credit policy may lead to high
sales. The larger inventory also reduces the risk of a stock-
out. Trade credit may stimulate sales because it allows a
firm to access product quality before paying. Another
component of working capital is accounts payables. It is
believed that delaying payment of accounts payable to
suppliers allows firms to access the quality of bough
products and can be expensive if a firm is offered a
discount for the early payment. By the same token,
uncollected accounts receivables can lead to cash inflow
problems for the firm.
By definition, working capital management entails short term
decisions - generally, relating to the next one year period -
which is "reversible". These decisions are therefore not
taken on the same basis as Capital Investment Decisions
(NPV or related, as above) rather they will be based on
cash flows and / or profitability.
• One measure of cash flow is provided by the cash
conversion cycle - the net number of days from the outlay
of cash for raw material to receiving payment from the
customer. As a management tool, this metric makes explicit
the inter-relatedness of decisions relating to inventories,
accounts receivable and payable, and cash. Because this
number effectively corresponds to the time that the firm's
cash is tied up in operations and unavailable for other
activities, management generally aims at a low net count.
• In this context, the most useful measure of profitability is
Return on capital (ROC). The result is shown as a
percentage, determined by dividing relevant income for the
12 months by capital employed; Return on equity (ROE)
shows this result for the firm's shareholders. Firm value is
enhanced when, and if, the return on capital, which results
from working capital management, exceeds the cost of
capital, which results from capital investment decisions as
above. ROC measures are therefore useful as a
management tool, in that they link short-term policy with
long-term decision making. See Economic value added
(EVA).
• Credit policy of the firm: Another factor affecting working
capital management is credit policy of the firm. It includes
buying of raw material and selling of finished goods either
in cash or on credit.
GOOD AND BAD CONTROL OVER WORKING
CAPITAL

GOOD CONTROL :

1.Improved Liquidity:
• Positive working capital ensures that a
company has enough liquid assets to
cover its short-term obligations and
operational needs.
• Improved liquidity enhances the
company's ability to seize business
opportunities, weather economic
downturns, and invest in growth
initiatives.
2. Optimized Cash Flow:
• Efficient working capital management
contributes to a positive cash flow,
allowing the business to meet its day-to-
day expenses and invest in projects that
drive long-term value.
3. Better Credit Terms:
• Strong working capital positions allow
companies to negotiate better credit
terms with suppliers. This can lead to
discounts, extended payment periods,
and improved relationships.
4. Flexibility and Agility:
• With good control over working capital,
a business is more agile and responsive
to market changes. It can quickly adapt
to new opportunities or challenges
without facing liquidity constraints.
5. Reduced Financing Costs:
 • Companies with optimal working capital
may rely less on external financing or
short-term loans, reducing interest
expenses and financial risk.
6. Enhanced Investor Confidence:
• Positive working capital is often seen as
a sign of financial health. Investors and
stakeholders are more likely to have
confidence in a company with effective
working capital management.

BAD CONTROL :

1. Liquidity Issues:
• Inadequate working capital can lead to
liquidity problems, making it challenging
for a business to meet its short-term
obligations, such as paying suppliers or
covering operating expenses.
2. Opportunity Costs:
• Insufficient working capital may force a
business to pass up lucrative
opportunities due to a lack of funds. This
can hinder growth and competitive
positioning.
3. Increased Borrowing Costs:
• Businesses with poor working capital
may need to rely on external financing,
leading to higher borrowing costs,
interest payments, and potential strain on
the balance sheet.
4. Supplier and Creditor Issues:
• Delayed payments to suppliers due to
poor working capital management can
strain supplier relationships, potentially
leading to disruptions in the supply chain
or loss of discounts.
5. Risk of Insolvency:
 • Persistent negative working capital or
severe liquidity issues can increase the
risk of insolvency, putting the long-term
viability of the business at stake.
6. Limited Strategic Flexibility:
• Companies with inadequate working
capital may find it challenging to pursue
strategic initiatives, invest in research
and development, or undertake necessary
capital expenditures.

effective working capital management is

crucial for maintaining a healthy financial
position and sustaining business operations.
It allows a company to navigate economic
fluctuations, capitalize on opportunities, and
build resilience.
 WORKING CAPITAL MANAGEMENT
THROUGH A SIMPLE EXAMPLE .

1. Current Assets:
• Cash and Cash Equivalents: $50,000
• Accounts Receivable: $30,000 (money owed by
customers)
• Inventory: $40,000 (value of goods held for
production or resale)

Total Current Assets: $120,000

2. Current Liabilities:
• Accounts Payable: $25,000 (money owed to
suppliers)
• Short-Term Debt: $15,000

Total Current Liabilities: $40,000

 3. Working Capital Calculation:
Working Capital=Total Current Assets−Total Current Lia
bilitiesWorking Capital=Total Current Assets−Total Curre
nt Liabilities

{Working Capital} = $120,000 - $40,000 = $80,000

In this example, Company has a positive working capital of
$80,000, indicating that it has more current assets than
current liabilities. This suggests a healthy liquidity position.

4.Working Capital Cycle:

• Let's say the Company takes 60 days to sell its
inventory, 30 days to collect receivables, and 45
days to pay its payables.

Working Capital Cycle=Days Inventory Outstanding (DIO)+D

ays Sales Outstanding (DSO)−Days Payable Outstanding (
DPO)Working Capital Cycle=Days Inventory Outstanding (DI
O)+Days Sales Outstanding (DSO)−Days Payable Outstandi
ng (DPO)

Working Capital Cycle=60+30−45=45 daysWorking Capital C

ycle=60+30−45=45 days
The working capital cycle is 45 days, indicating that it
takes, on average, 45 days for Company to convert its
current assets into cash.

1.Optimizing Working Capital:

• Company regularly reviews its inventory levels,
ensuring they are neither excessive nor too low. It
maintains a balance that meets customer demand
without tying up excessive funds.
• The company also manages its receivables by
offering reasonable credit terms and actively
monitoring and collecting outstanding payments.
• It negotiates favorable terms with suppliers,
ensuring that it can take advantage of discounts
and favorable payment terms.

2.Cash Flow Management:

• Company closely monitors its cash flow, ensuring
that it has enough liquidity to cover day-to-day
operations, unexpected expenses, and upcoming
payments.

3.Adjustments and Improvements:

 • If the company identifies areas for improvement,
such as reducing the working capital cycle or
optimizing inventory turnover, it implements
strategies to address these issues.

Working capital management is an ongoing process, and

Company continuously assesses and adjusts its strategies
based on market conditions, business needs, and financial
goals.

We have to always remember that the actual figures and

strategies would vary based on the industry, company size,
and specific business circumstances. The example provides
a simplified illustration for explanatory purposes.

Effective working capital management can have a significant

impact on a business, influencing its financial health,
operational efficiency, and overall performance. Here's a
breakdown of the impacts of both good and bad control
over working capital .
OBJECTIVE OF WORKING CAPITAL
MANAGEMENT

To study and analyses working capital

management

1. Inventory management
2. Receivable management
3. Cash management

The aim is to learn how to manage working

capital needs of the organization and to learn
the different ways through which theoretical
learning is applied practically in the
organization. The project is aimed to learn and
gain knowledge of the day to day working of
the organization as to how does the different
decision are taken and on what basis. The
project will help in gaining the knowledge of
different steps of raising the short term funds
and their effective management so as to ensure
adequate availability of funds. The various
analyses will help the management to assess
the efficiency of the working capital
management of the company.
 SIGNIFICANCE OF WORKING CAPITAL
MANAGEMENT

Financial Analysis is the process of identifying the financial

strengths and weaknesses of the firm by properly
establishing relationships between the items of the balance
sheet and the profit & loss account. Financial analysis can
be undertaken by management of the firm, viz. Owners,
creditors, investors and others. Ratio analysis is a powerful
tool of financial analysis. A ratio is defined as “the
indicated quotient of two mathematical expressions and as
“the relationship between two or more things”.
Ratios help to summarize large quantities of financial data
and to make qualitative judgments about the firm’s financial
performance. WORKING CAPITAL MANAGEMENT deals
with the management of current assets. The management
of current assets is similar to that of fixed assets in the
sense that in both cases firm analyses their effect on their
return and risk profile. The management of fixed assets
and current assets, however, differ in three aspects. First,
in managing fixed assets, time is a very important factor;
consequently, discounting and compounding techniques play
a significant role in capital budgeting. Second, the large
holding of current assets, especially cash, strengthens the
firm's liquidity position (and reduces risk). Third, levels of
fixed as well as current assets depend upon expected
sales, but it is only current assets that can be adjusted
with sales fluctuations in the short run.
Thus with such importance attached, a due diligence should
be given to proper management of the working capital .
 CONCEPTUALIZATION

There are two concepts of working capital- gross and net.

Gross Working Capital refers to the firm's investment in

current assets. Current assets are the assets which can be
converted into cash within an accounting year and include
cash, short-term securities, debtors, (accounts receivable or
book debts) bills receivables and stock (inventory).

Net Working Capital refers to the difference between

current assets and current liabilities. Current liabilities are
those claims of outsiders which are expected to mature for
payment within an accounting year and include creditors
(accounts payable), bills payable, and outstanding
expenses. Net working capital can be positive or negative.
A positive net working capital will arise when current assets
exceed current liabilities.
Net Working Capital (+) =Current Assets - Current
Liabilities

Also, negative net working capital will arise when current

liabilities exceed current assets.

Net Working Capital (-) = Current Liabilities - Current

Assets
 SUGGESTION

Dividend policy is set largely at the discretion of the

management. One of the major important factor
management has to consider is shareholders’ interest. By
observing responses of the shareholders regarding the
dividend policy and shareholders’ beliefs regarding
dividend policy and making comparative analysis of
dividend policies of selected companies, following
suggestions can be made:

Every year declaration of dividends is necessary. As

shareholders’ are the owners of the company and risk is
directly associated with the ownership. As shareholders
bear the risk, so they expect a fair return in form of
dividend.So it is suggested to the companies to provided
fair dividends to the shareholders for better investment
options and goodwill of the company.
 Since reduction in dividend may create a negative
impression in the mind of shareholders which will affect
the credit position of the company so it is suggested to
the companies that dividend raised should not be
reduced.

Management of each company sets its unique dividend

policy which depends on a few “determinants” or factors
affecting dividend policy because Dividend policy of a
company should depend on various internal firms specific
factors hence companies should design internal policies
in such a way that best interest of both the shareholders
and the company are satisfied

Dividend policy should be decided keeping in mind the

growth needs of the firm. A high dividend payout reduces
firm’s access to retained earnings, the cheapest source
of capital. For that reason management may prefer lower
dividend payout ratios, especially in growth firms as the
retained funds would be required for expansion purposes.

It has been found that majority of old age people

prefers to invest their income only in those companies
which provides fair dividends. However to them, it is
suggested that rather than making investment in only
dividend paying firms, they should also focus on capital
appreciating firms which in turn would result in increasing
their overall capital.

Contrary to above point, it has been found that majority

of youngsters prefers to invest their income only in those
companies which provides capital appreciation. However
to them, it is suggested that rather than making
investment in only capital appreciating firms, they should
also focus on dividend paying firms which in turn would
help them to receive consistent gain.
 CONCLUSION

In this section the major conclusions and suggestions

emerging out of the present study conducted on working
capital management in automobile industry have been
highlighted.

The companies are not using real professional assistance

and are not using scientific analysis effectively. Although
they have been emphasizing upon the coordination and
joint decisions, in reality decision are made independently.
Decision are taken in short term perspective& its viability
and the impact in long term for expansion and replacement
are not given due consideration.

Most of the companies study the past trends of different

components of working capital and try to make decisions
on their basis.
 The companies rely more on bank borrowing and don’t
try to generate funds from internal sources. Besides this,
the cost effectiveness of each source of funds is not
analyzed. The cost of different sources of funds is also not
compared.

Cash Planning is not effective and they are finding it

difficult to procure from operations leading to overtrading.
The companies are not clear in determining cash levels.

The companies are becoming stricter regarding collection.

But the credit terms of the companies are varying. A major
portion of current assets are blocked in advances.

The investment in inventory is reducing showing clearly

that the companies are now managing inventory more
efficiently than was done previous year .
 BIBLIOGRAPHY

https://www.adhunikpower.com
https://www.investopedia.com
https://www.corporatefinancialinstitute.com
WORKING CAPITAL MANAGEMENT AND FINANCE -R.K.
GUPTA AND HIMANSHU GUPTA