A project report on working capital management
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This document is a summer project report submitted to Bank of Maharashtra on working capital management. It was completed by Vinod S. Kanojiya of Atharva Institute of Management Studies in Mumbai in 2004-2005. The report includes an introduction, profile of Bank of Maharashtra, concepts of working capital management, types of working capital, management of cash, inventories, receivables and payables. It also discusses key working capital ratios, factors influencing working capital requirements and provides recommendations for working capital assessment and financing at Bank of Maharashtra.
A project report on working capital management
- 1. Projectsformba.blogspot.com Summer project On Working capital management By Atharva Institute of Management Studies Marve Road, Malad (W), Mumbai – 4000 95. Projectsformba.blogspot.com
- 2. Projectsformba.blogspot.com Summer project On Working capital management By Vinod .S. kanojiya Submitted to: Manager Bank of Maharashtra, Charkop, kandivli Atharva Institute of Management Studies Marve Road, Malad (W), Mumbai – 4000 95. Projectsformba.blogspot.com
- 3. Projectsformba.blogspot.com Declaration I, …………………….., of Atharva Institute of Management Studies, Malad (w), of MMS – I, hereby declare that I have completed a summer project on “working capital management” in the Academic year 2004-05. The information submitted is true and original to the best of my knowledge. Projectsformba.blogspot.com
- 4. Projectsformba.blogspot.com CERTIFICATE This is to certify that Mr. Vinod kanojiya of …………………… ……………………… specializing in finance has completed his two months (viz. May-June, 2005) of summer project on working capital management, here at Bank of Maharashtra. The information submitted is true and original to the best of my knowledge. Manager Bank of Maharashtra Projectsformba.blogspot.com
- 5. Projectsformba.blogspot.com CONTENTS: Project objectives……………………………………………1 Profile of Bank of Maharashtra..…………………………....2 Concept of Working Capital Management………………….4 Types of Working Capital…………………………………..5 Management of Working Capital……………………………7 Management of Cash……………………………………….13 Cash Management Models…………………………………21 Management of Inventories………………………………..24 Management of Accounts Receivables…………………….30 Management of Accounts Payable…………………………33 Key Working Capital Ratios……………………………….38 Factors Influencing Working Capital Requirements………39 Working capital assessment in MAHABANK…………….40 Assessment of Working Capital in MAHABANK………...41 Recommendations …………………………………………43 Scanning of working capital financing in MAHABANK…44 Bibliography……………………………………………….45 Projectsformba.blogspot.com
- 6. Projectsformba.blogspot.com Acknowledgements I wish to take this opportunity to express my deep gratitude to the persons and the organization that have helped, encouraged, inspired and enlightened me with their constructive ideas and overall support towards the completion of this project successfully. This project would have been incomplete without the active co-operation and guidance of senior persons of Bank of Maharashtra (kandivli branch). I am very thankful to ……………….., branch manager, charkop, kandivli (west), and his senior staff members for helping me throughout my project showing me the right direction towards the completion of my project. I am very grateful to prof. sujata pandey for providing me their expertise in the completion of my project. I thank prof. …………… for his effort he put in for the towards my summer project. I am thankful to ……………………. for guiding me in referring the books for my projects. No words and language can ever be sufficient to express my gratitude to the above-mentioned persons who provided me with the support to prepare this project. Projectsformba.blogspot.com
- 7. Projectsformba.blogspot.com Executive summary Working capital management refers to the administration of all aspects of current assets, namely cash, marketable securities, debtors and stock (inventories) and current liabilities. The financial manager must determine levels and composition of current assets. He must see that right sources are tapped to finance current assets, and that current liabilities are paid in time. He must see that right sources are tapped to finance current assets, and that current liabilities are paid in time. There are many aspects of working capital management, which make it an important function of the financial manager: • Time: working capital management requires much of the financial manager’s time. • Investment: working capital represents a large portion of the total investments in assets. • Significance: working capital management has great significance for all firms but it is very critical for small firms. • Growth: the need for working capital is directly related to the firm’s growth. Investment in current assets represents a very significant portion of the total investment in assets. Working capital management is critical for all firms. A small firm may not have much investment in fixed assets, but it has to invest to in current assets. Small firms in India face a severe problem of collecting their debtors. Banks have their own policies to assess the working capital of the firm to finance them with the shortage. Bank of Maharashtra adopts certain method for financing their customer’s working capital requirements. There are certain recommendations from the committees for the banks to finance the working capital needs of their clients. It may, thus, be concluded that all precautions should be taken for the effective and efficient management of working capital. The finance manager should pay regular attention to the levels of current assets and the financing of current assets. Projectsformba.blogspot.com