Working Capital Management
EXECUTIVE SUMMARY
Working Capital is the required for maintenance of day to day business operations. The present day competitive market environment calls for an efficient management of working capital. The reason for this is attributed to the fact that an ineffective working capital management mat force the form to stop its business operations, may even lead to bankruptcy. Hence the goal of working capital management is not just concerned with the management of current assets and current liabilities but also in maintaining a satisfactory level of working capital. Holding current assets in substantial amount strengthens the liquidity position and reduces the riskiness but only at the expense of profitability. Therefore achieving risk-return trade off is significant in holding of current assets. While cash outflows are predictable it runs contrary in case of case of cash inflows. Sales program of any business concern does not bring back cash immediately. There is a time lag that exists between sale of goods of services and sales realization. The capital requirement during this time lag is maintained by the operating cycle concept. This study gives in detail the working capital management practices in BALIC. Management of each current asset, namely cash management, accounts receivable management is studied permanent to BALIC. Similarly management of accounts payable, deposit is studied to understand the managing of current liabilities. A part from this concept of operating cycle is studied. The research methodology adopted for this study is mainly from secondary source of data which include annual reports of BALIC, and website of the company. The use of primary sources is limited to interviews with few of the employees in credit department. The study of working capital management has shown that BALIC has a strong working capital position. The Company is also enjoying reasonable profits
Working Capital is the required for maintenance of day to day business operations. The present day competitive market environment calls for an efficient management of working capital. The reason for this is attributed to the fact that an ineffective working capital management mat force the form to stop its business operations, may even lead to bankruptcy. Hence the goal of working capital management is not just concerned with the management of current assets and current liabilities but also in maintaining a satisfactory level of working capital. Holding current assets in substantial amount strengthens the liquidity position and reduces the riskiness but only at the expense of profitability. Therefore achieving risk-return trade off is significant in holding of current assets. While cash outflows are predictable it runs contrary in case of case of cash inflows. Sales program of any business concern does not bring back cash immediately. There is a time lag that exists between sale of goods of services and sales realization. The capital requirement during this time lag is maintained by the operating cycle concept. This study gives in detail the working capital management practices in BALIC. Management of each current asset, namely cash management, accounts receivable management is studied permanent to BALIC. Similarly management of accounts payable, deposit is studied to understand the managing of current liabilities. A part from this concept of operating cycle is studied. The research methodology adopted for this study is mainly from secondary source of data which include annual reports of BALIC, and website of the company. The use of primary sources is limited to interviews with few of the employees in credit department. The study of working capital management has shown that BALIC has a strong working capital position. The Company is also enjoying reasonable profits