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Presentation by - Group 8: Jaipuria Institute of Management Jaipur
Presentation by - Group 8: Jaipuria Institute of Management Jaipur
Presentation by
group-8
JAIPURIA INSTITUTE OF
MANAGEMENT
JAIPUR
Introduction
Study of working capital is not only an
important part of financial management but also are
overall management of the business concern.
Working capital is described as the capital
which is not fixed but the more common uses of the
working capital is to consider it as the difference
between the book value of current assets and
current liabilities.
Classification of capital
Capital
Net
Working
Capital
Working Capital Concepts
GWC = CA
Working Capital
WORKING CAPITAL
PERMANENT TEMPORARY
WORKING CAPITAL SEMI VARIABLE
WORKING CAPITAL WORKING CAPITAL
Time
Temporary Working Capital
seasonal requirements.
TIME
Semi Variable Working
Capital
Working Capital
Amount of
Time
Why Working Capital is required ?
no profit for the business & no proper rate of return on its
investments.
lead to unnecessary purchasing & accumulation of
inventories .
Excessive WC implies excessive debtors & defective credit
policy which may cause higher incidences of bad-debts.
It may result in overall inefficiency in org.
HOW TO ANALYSIS WC OF ANY
COMPANY
Funds Working
Ratio Flow Capital
Analysis Analysis Budget
Current ratio.
Acid test ratio.
Absolute liquid
ratio.
Inventory turnover
ratio.
Factors Determining WC
Factors:
1 . Nature of Business
3 . Production Cycle
5 . Business cycle
7 . Credit Policy
9 . Growth and Expansion
11 . Availability of raw materials
13 . Production Policy :
14 . Earning Capacity :
10.
Operating
cycle
five Phases : -
I. Conversion of cash in to Raw materials.