“MANAGEMENT OF WORKING CAPITAL” 

ATPROTEIN FOOD PRODUCTS

GUIDED BY-PROF. BALA

 SUBMITTED BY-

SOHAIL SALIM LAKHAMSEY

ROLL NO. 29S.Y.MBA FINANCE

ALLANA INSTITUTE OF MANAGEMENT SCIENCES CAMP, PUNE

Working Capital

Working capital typically means the firm’s holding of current or short-term assets such as cash, receivables, inventory and marketable securities.

These items are also referred to as circulating capital. Corporate executives devote a considerable amount of

attention to the management of working capital.

 Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets such a cash marketable securities, debtors and inventories.

Funds thus, invested in current assets keep revolving fast and are constantly converted into cash and this cash flow out again in exchange for other current assets. Working Capital is also known as revolving or circulating capital or short-term capital.

Definition of Working Capital

Introduction to the StudyName of the Company: Protein Food Products

Nature of Company: Food Processing

Major Product: Chikki

Purpose of the Study: To understand the Working Capital Management of the

organization.

Objectives of the StudyTo determine policy regarding profitability and liquidity by considering company's objectives.

To determine the structure of current assets.

Determining the relationship between the current assets and current liabilities and hence liquidity is determined.

Optimization of the amount of sales and investment in receivables.

Analysis of Financial Statements. 

A Comparative Analysis of the Company’s Performance

TYPES OF WORKING CAPITAL

WORKING CAPITAL

BASIS OF CONCEPT

BASIS OF TIME

Gross Working Capital

Net Working Capital

Permanent / Fixed

WC

Temporary / Variable

WC

Regular WC

Reserve WC

Special WC

Seasonal WC

THE WORKING CAPITAL CYCLE

(OPERATING CYCLE)

Accounts Payable

Cash

RawMaterials

W I P

Finished Goods

Value Addition

AccountsReceivable

SALES

Ratios associated with WCM

Stock Turnover Ratio (Times) COGS AVERAGE STOCK

Stock Turnover Ratio (Days) Average Stock x 365 COGS

Receivables Turnover Ratio (Times)

Net Credit SalesAverage Accounts Receivable

Average Receivables Period (Days)

Avg A/C Receivable x 365 Net Credit Sales

Payables Turnover Ratio (Times)

Net Credit PurchasesAverage Accounts Receivable

Average Payables Period (Days)

Avg A/C Receivable x 365 Net Credit Sales

Current Ratio Current AssetsCurrent Liabilities

Quick Ratio CA – StockCurrent Liabilities

Working Capital Turnover Ratio

Net SalesNet Working Capital

Thank you