Presented by,

Muhammad ahmed ul haq

Ahmed hussain
Hamza
Wassy nawab
salman
• Working capital management refers to the set of activities performed by a
company to make sure it got enough resources for day-to-day operating
expenses while keeping resources invested in a productive way.
• 
 Working capital is the difference between a company’s current assets and its
current liabilities.
• Current assets include cash, accounts receivable, and inventories.
• Current liabilities include accounts payable, short-term borrowings, and accrued
liabilities.
• Some approaches may subtract cash from current assets and financial debt from
current liabilities.
3.Ensuring that the company possesses appropriate resources for its daily activities
means protecting the company’s existence and ensuring it can keep operating as a
going concern. Scarce availability of cash, uncontrolled commercial credit policies, or
limited access to short-term financing can lead to the need for restructuring, asset
sales, and even liquidation of the company.
 
4. Working capital needs are not the same for every company. The factors that can
affect working capital needs can be endogenous or exogenous.
• Endogenous factors include a company’s size, structure, and strategy.
• Exogenous factors include the access and availability of banking services, level of
interest rates, type of industry and products or services sold, macroeconomic
conditions, and the size, number, and strategy of the company’s competitors.
5. Managing Liquidity
• When a company's liquidity is well-managed, it can meet both its routine business demands and any
unexpected ones with a decent quantity of cash on hand. Creditworthiness plays a role in the success or failure
of an enterprise. This is why it's so critical.
• If everything else is equal, a corporation with little liquidity is more likely to be in financial trouble.
• It is possible, however, that too much money is being invested in low or non-earning assets.
6. Managing Accounts Receivables
• Allowing consumers the appropriate degree of commercial credit while also ensuring that enough cash flows
into operations is essential for every business.
• For example, a company's credit conditions will be determined by its customer's financial strength, the
industry's rules, and its rivals' policies.
• Customers that have standard credit terms have a specified number of days in which to pay their invoices
(generally between 30 and 90). Cash before delivery, cash on delivery, bill to bill, or recurring billing may be
required depending on the company's regulations and the manager's discretion.
• 
7. Managing Inventory
• It is the goal of inventory management to retain enough inventory on hand to handle normal operations and
changes in demand without putting a lot of money into the asset.
• There is a large quantity of capital attached to an excessive amount of inventory. Goods value may be eroded
as a result of unsold inventory and possible obsolescence.
• As a result, a lack of inventory might result in a loss of revenue for the organisation. 
8. Managing Short-Term Debt
• Managing short-term financing, like liquidity management, should concentrate on ensuring that the firm has
sufficient liquidity to fund short-term operations without taking on undue risk.
• Short-term financing can only be properly managed if the relevant financing instruments are used and the
funds obtained via each instrument are properly sized. Collateralized loans, discounted receivables and
factoring are just a few of the financing options available to small businesses.
• A business should make certain that it has enough access to liquidity to meet any sudden spikes in cash
requirements. It is possible for a business to establish an extended line of credit to cover any unanticipated
shortfalls in working capital. 
9. Managing Accounts Payable
• Trade credit issued by a company's suppliers is the most common source of accounts payable. Commercial debt should be
balanced with early payment incentives.
• Early payments may limit the amount of money that may be used in more productive ways.
• In the event of late payments or excessive commercial debt, the company's image and business ties might be damaged.
10. Conclusion:
• Working capital management involves balancing movements related to five main items – cash, trade receivables, trade
payables, short-term financing, and inventory – to make sure a business possesses adequate resources to operate efficiently.
• The levels of cash should be enough to deal with ordinary or small unexpected needs, but not so high to determine an
inefficient allocation of capital.
• Commercial credit should be used properly to balance the need to maintain sales and healthy business relationships with
the need to limit exposure to customers with low creditworthiness.
• Managing short-term debt and accounts payable should allow the company to achieve enough liquidity for ordinary
operations and unexpected needs, without an excessive increase in financial risk.
• Inventory management should make sure there are enough products to sell and materials for its production processes while
avoiding excessive accumulation and obsolescence.
Gul Ahmed vs Sapphire
Genral comparion between both
companies
Gul Ahmed
• 40 retail stores
• Revenue ₨53.42 billion
• Total assets 71.8 billion
• Total laiblities 55 bilion
Shappire textile mill
• 23 stores
• Revenue 34 billion
• Total assets 109 billion
• Total laiblities 25 billion
Gul Ahmed sapphair
FISCAL YEAR 2020
CURRENT RATIO 1.02 1.15 1.35
QUICK RATIO 0.91 0.7 0.62
NUMBER OF DAYS OF 38.58 days 7.1 days 29.847 days
recievable
NUMBER OF DAYS Of 210 days 205 days 111.40 days
inventory
NUMBER OF DAYS OF 89.614 day 55.65 days 46.46 days
PAYABLE
NET WORKING capital 1015601 4905867 3583870
FORMULA:
•OPERATING CYCLE = NUMBER OF DAYS OF
RECIEVABLES + NUMBER OF DAYS OF INVENTORY 
•OPERATING CYCLE (INDUSTRY AVERAGE) = 212.1 DAYS 
•OPERATING CYCLE (GUL AHMED) = 248.58 DAYS 
•OPERATING CYCLE (SAPPHIRE) = 141.247 DAYS 
•The Sapphire operating cycle is at very good position
as compared to Gul Ahmed and the industry average. 
FORMULA:
• NET OPERATING CYCLE = NUMBER OF DAYS OF RECIEVABLES +
NUMBER OF DAYS OF INVENTORY - NUMBER OF DAYS OF PAYABLE 
• NET OPERATING CYCLE (INDUSTRY AVERAGE) = 156.45 DAYS 
• NET OPERATING CYCLE (GUL AHMED) = 158.97 DAYS 
• NET OPERATING CYCLE (SAPPHIRE) = 94.787 DAYS 
• The Sapphire cash conversion cycle is at very good position as
compared to Gul Ahmed and the industry average.