Beruflich Dokumente
Kultur Dokumente
OF
ON
SUBMITTED BY
SAURABH ANEJA
MBA II YEAR
2009-2011
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attempting to manage the current assets, current liabilities and
the relationship that exists between them.
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Types of working capital
The type, kinds of a thing are depending upon the different
utilization of working capital. It prominently works in the
direction of performing different functions in different
situation and in the context of divergent variables. So
following are some important types of working capital.
Net Working
Capital Gross Working
Capital
Negative
Working Capital
Types of
Working Capital Permanent
Working capital
Cash Working
Capital
. Balance Sheet
Temporary
Working Capital
Working Capital
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i) It is the difference between current assets and
current liabilities.
ii) Amount left for operational requirement.
2) Gross Working Capital:
Gross working capital means the total current assets.
3) Permanent Working Capital:
It is the minimum amount of the current assets, which are
needs to conduct the business even during the dullest season
of the year. This amount varies from year to year depending
upon the growth of a company and stage of the business cycle
in which it operates. It is the amount of funds required to
produce the goods and services, which are necessary to
satisfy demand at a particular point.
It represents the current assets, which are required on a
continuing basis over the year. It is maintain as the medium
to carry on operation at any time. Permanent working capital
has following features:
i) It is classified on the basis of the time factor.
ii) Its size increase with the growth of the business.
iii) It constantly shifted from one assets o another and
continues to remain in the business process.
4) Temporary Working Capital:
It represents the additional assets, which are required at
different times during the operating year. Seasonal working
capital is the additional amount of current assets particularly
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cash, receivables, and inventory which is required during the
more active business seasons of the year. It is the temporary
investment in the current assets and possesses he following
features:
a) It is not always gainfully employed, though is
May also shift from one asset to another as
permanent working capital does.
b) It is particularly suited to business of seasonal
on cyclical nature.
5) Balance Sheet Working Capital:
The balance sheet working capital is one, which is
calculated from the items appearing in the balance sheet.
Gross working capital, which is represented by the excess of
current assets over current liabilities, is example of the
balance sheet working capital.
6) Cash Working Capital:
It is one, which is calculated from the items appearing in
he Profit and Loss Account. It shows the real flow of money
or value at a particular time and considered to be most
realistic approach in working capital management. It is the
basic of he operation cycle concept, which has assumed a
great importance in financial management in recent year. The
reason is that the cash working capital indicates he adequacy
of he cash flow which is an essential pre requisite of a
business.
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7) Negative Working Capital:
It emerges when current liabilities exceeds current assets,
such a situation is absolutely theoretical and occurs when a
firm is nearing a crisis of some magnitude.
Methods of Calculation of
Required Working
Capital
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3) Finished Goods Holding Period =
Avg. Cost of Goods Sold per day
O = R+W+F+D-C
where, O = Operating Cycle (In Days)
R = Raw Materials Holding Period
W = Work in Process Holding Period
F = Finished Goods Holding Period
D = Receivables Collection Period
C = Creditors Collection Period.
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Components of Working Capital:
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Working Capital (CA – CL)
---------
Add: Provision/ Margin for contingencies
------
Net Working Capital Required
----------
Evaluation of working
capital
The working capital management needs attention of all the
finance head/ working capital management is important for
avoiding unnecessary blockage of fund. Like that liquidity is
important at it refer to the short-term financial strength of
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company. It is very important to have proper balance in regard
to the liquidity of the firm.
B. Current
Liabilities
213.2 306.5 119.5
Liabilities 8 1 4 86 45.75
Provisions 5.4 3.67 3.81 0.72 2.97
218. 310. 123. 48.7
Total Current Liabilities 68 19 35 86.72 2
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Table II - Statement of Changes in Working
Capital
(Rs. In Crores)
Effect on
Working
Capital
Mar' Mar' Decrea
Particulars 09 10 Increase se
A. Current Assets
Inventories 13.25 11.93 1.32
Sundry Debtors 299.7 252.8 46.9
Cash And Bank 17.04 1.12 15.92
140.8 135.2
Loans And Advances 5 3 5.62
470.8 401.0
Total Current Assets 4 8
B. Current Liabilities
306.5 213.2
Liabilities 1 8 93.23
Provisions 3.67 5.4 1.73
310. 218.
Total Current Liabilities 19 68
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Graph Showing Working
Capital
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Graph Showing Working
Capital movement
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Table I: -
It is observed that current asset and the current liabilities has
been increase from 2006-10. Working capital of JDI Ltd. shows
a fluctuation of current liabilities and current assets.
Table II: -
Statement of changes in the working capital is prepared
to show the changes in the working capital between the two
balance sheet dates. This statement is prepared with the help of
the current asset and current liabilities derived from the 2
balance sheets
So,
i) An increase in current asset increases working capital
ii) A decrease in current assets decreases in working
capital
iii) An increase in current liabilities decreases working
capital.
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iv) A decrease in current liabilities increase working capital
It is worth noting that schedule of changes in working capital
is prepared only from current assets and current liabilities and
the other information is not of any use for preparing this
statement.
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TOTAL 1,058. 375.4 261.0 202.1
EXPENDITURE 73 704.4 9 5 2
Operating Profit 136.64 73.43 37.27 43.44 21.72
EBITDA 142.07 78.18 39.28 45.2 23.6
Depreciation 12.1 12.81 8.95 10.04 11.26
Other Write-offs 0 0 0 0 0
129.9
EBIT 8 65.37 30.33 35.16 12.33
Interest 1.87 2.66 3.27 4.11 1.39
EBT 128.11 62.71 27.06 31.05 10.94
Taxes 43.97 20.02 10.47 11.25 1.47
Profit and Loss
for the Year 84.14 42.69 16.59 19.8 9.47
Non Recurring
Items 0 -5.48 1.78 -1.79 -2.49
Other Non Cash
Adjustments 0.01 0.12 0 0 0
Other Adjustments 0 0 0 0 0
REPORTED PAT 84.14 37.33 18.37 17.95 6.98
Balancesheet
- Jindal
Drilling &
Industries
Ltd.
(RS. In
Crores)
Mar'1 Mar'0 Mar'0 Mar'0 Mar'0
Particulars 0 9 8 7 6
12 12 12 12 12
Mont Mont Mont Mont Mont
Liabilities hs hs hs hs hs
Share Capital 11.47 11.47 11.47 10.27 10.27
339.6 258.8 224.6
Reserves & Surplus 8 8 9 60 42.65
351.1 270.3 236.1
Net Worth 5 5 5 70.27 52.92
Secured Loans 19.05 39.5 40.36 21.27 62.65
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Unsecured Loans 0 0 0 3.55 8.56
309.8 276.5 124.1
TOTAL LIABILITIES 370.2 5 2 95.09 2
Assets
129.4 127.4 102.3
Gross Block 1 8 3 56.41 46.1
(-) Acc. Depreciation 54.75 43.53 32.63 25.3 16.08
A. Net Block 74.66 83.95 69.69 31.1 30.02
B. Capital Work in
Progress. 0.83 0.39 4.32 0 78.45
112.3
C. Investments. 2 64.85 64.85 24.94 0.17
Inventories 11.93 13.25 7.23 6.88 3.73
126.7
Sundry Debtors 252.8 299.7 1 90.31 43.98
Cash And Bank 1.12 17.04 56.77 1.96 2.31
135.2 140.8
Loans And Advances 3 5 70.3 26.6 14.18
Total Current 401.0 470.8 261.0 125.7
Assets 7 5 1 6 64.2
213.2 306.5 119.5
Current Liabilities 8 1 4 86 45.75
Provisions 5.4 3.67 3.81 0.72 2.97
Total Current 218.6 310.1 123.3
Liabilities 8 9 5 86.72 48.72
D. NET CURRENT 182.3 160.6 137.6
ASSETS 9 6 6 39.04 15.48
Misc. Expenses 0 0 0 0 0
TOTAL ASSETS 309.8 276.5 124.1
(A+B+C+D) 370.2 5 2 95.09 2
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