Working Capital Management by Asik
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share

Working Capital Management by Asik

  • 920 views
Uploaded on

Ahammed Bin Mannan Asik ...

Ahammed Bin Mannan Asik
Cell: 01717517491
Email: asik31@gmail.com

More in: Education
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
920
On Slideshare
920
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
20
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Presentation onA Study on Working Capital Management of Public Limited Pharmaceuticals Company (Beximco Pharmaceuticals limited)
  • 2. • To find out the existing working capital planning process of the company• To find out the existing working capital controlling system of the company.• To detect the bottlenecks involved in the process of working capital i.e. Planning and Controlling.• To advocate the steps to be taken to increase the efficiency in management of working capital
  • 3. Methodology of the Study Literature study Analysis of secondary data of financial report of the company by calculating ratiosLimitations of the Study The study duration was very short and it was not possible to cover and analyze every part of the working capital management practice
  • 4. Rational of the StudyThe investment of the company are made in two ways in anorganization that is-a)Working Capitalb)Fixed Investment or Long Term InvestmentEfficient management of working capital as well as fixed investment are equally important to achieve the desired objective of the company
  • 5. Beximco Pharmaceuticals Limited• Registered as a company in 1976 as a member of Beximco Group• Began in 1980 when BPL’s first product made under license of Bayer AG, Germany rolled out of a small manufacturing plant in Tongi, Dhaka.• Launching of its own products in 1983• Listing in the Dhaka Stock Exchange as a Public Limited Company as well as the member of Chittagong Stock Exchange• Won the first prize of ICAB National Awards 2000 for ‘Best Published Accounts and Reports’ in Non-Financial Sector Category in 2002• Listing in the London Stock Exchange (LSE) in 2005• Blockbuster Products are Neoceptin R, Napa, Amdocal, Filmet, Neoflox, Azmasol
  • 6. Accounts Payable Value Addition Raw WIP Materials THE WORKING CAPITALCash CYCLE Finished (OPERATING CYCLE) goods Accounts SALES Receivable
  • 7. Data AnalysisInventory Management
  • 8. Inventory Management Inventory as a proportion of Current Asset of BEXIMCO Pharmaceuticals Limited SL Current Asset 2011 2010 2009 2008 2007 1 Inventories 36.64 36.5 28.50 60.94 56.51 2 Accounts Receivable 13.68 13.26 10.03 17.00 17.09 3 Loans, Advances & Deposits 11.75 12.60 10.10 19.02 22.53 4 Short-Term Investment 30.68 13.88 36.07 0.1 - 5 Cash & Cash Equivalents 7.25 23.76 15.03 2.94 2.93 6 Gross Working Capital 100 100 100 100 100
  • 9. Inventory Management Composition of Inventory Name of elements in SL. 2011 2010 2009 2008 2007 Inventory 1 Finished Goods 27.90 29.14 32.17 23.78 22.54 2 Work in Process 7.38 9.83 11.00 11.40 9.70 3 Raw Material 64.724 62.66 56.83 64.82 67.73 4 Stores & Spares 3.95 3.9 3.5 5.02 4.23 4 Total Inventory 100 100 100 100 100
  • 10. Raw Materials Storage PeriodRaw Materials Storage Period= Average stock of Raw Materials/ Average cost of raw materials per day Particulars 2011 2010 2009 2008 2007 Average Stock Raw 295163921 286673911 284271612 278681856 235556789 Material 5 9 1 4 9 Average Cost of Raw 7854080 7854080 6571863 7635119 6453611 Material per day Raw Material Storage 376 365 433 365 365 Period (Days)
  • 11. Finished Goods Conversion Period Finished goods conversion period= Average stock of finished goods/Average cost of goods sold per dayParticulars 2011 2010 2009 2008Average Stock of finished goods 559721452 456201878.5 344724356 364770493 6259010.69Average Cost of goods sold per day 10166232 8060064.219 5438878.3 5Finished Goods Conversion Period (days) 55.06 56.60 55.08 67.07
  • 12. Stores & Spares Conversion PeriodStores and spares conversion period= Average stock of Stores and spares/Average consumption per day Particulars 2011 2010 2009 2008Average Stock of store and spares 215036533 183998556 168056628 150397257Average Consumption per day 589141.19 502597.066 460429.12 412047.28Store & spares conversion period 365.00 366.10 365.00 365.00(days)
  • 13. W-I-P Holding Period W-I-P Holding Period= Average w-i-p in inventory/ average cost of production per day 2011 2010 2009 2008 182228787 103280829 180522329 157195606Average W-I-P in InventoryAverage Cost of Production 10567895.77 8574498.421 6715980.67 5488502.937per DayW-I-P Holding period (days) 17.24 12.05 26.88 28.64
  • 14. Comment about Inventory Management
  • 15. Credit Management
  • 16. Average Collection period Average Collection Period= 365 days/ Accounts Receivable Turnover 2011 2010 2009 2008 2007=365/8.7689 =365/8.5661 =365/8.1271 =365/7.9915 =365/7.7361=41.62 days =42.61days =44.91days =45.67days =47.18 Days
  • 17. Return on Investment Return on Investment = Net Profit Before Taxes/ Total assets 2011 2010 2009 2008 2007=1198525342/ =1051648808/ =624740307/ =545341273/ =353067878/23093340533 21372399509 19891933422 14819665441 11953418940 5.19% 4.92% 3.14% 3.68% 2.95%
  • 18. Z -Score Analysis Z= 1.2T1+ 1.4T2 + 3.3T3 + 0.6T4 +0.999T5T1= Working Capital/ Total Asset (Working Capital= Current Assets – Current Liabilities)T2= Retained Earnings/ Total AsstsT3= Earnings before Income Tax/ Total AssetsT4=Market value of equity/ Total liabilities [Number of Shares * Current Share Price]T5= Sales/ Total Assts.Formula =If (B9>2.99,"SAFEzone", IF (B9>1.81,"GREYZone","DISTRESS")) Year Z-Score Value Remarks 2011 1.1269 Distress 2010 1.0445 Distress 2009 0.9840 Distress 2008 0.5828 Distress 2007 0.8800 Distress
  • 19. Findings• BEXIMCO Pharmaceuticals has large amount of capital;• According to ratio analysis the company’s stand on a comparatively weak position in 2011 than previous year• To some extent Inefficient management of working capital especially on inventory part• From the result of Z -Score model, BEXIMCO Pharma places on “DISTRESS” zone• After analysis the financial data, the company is ruling the market by their brand name, not by their performance• They are lagging behind for time management about collecting money from the creditors• It’s also bearing a large amount of money in inventory sector, which create an impact on product price
  • 20. SWOT Analysis • Strengths • Weakness • Opportunities • Threats Recommendations • Reduce the days of collection period to collect money from creditors • Efficient management should be ensured for operating inventory sector • Proper utilization of liquid asset to ensure maximum profitability; • Keep concentration on every part of operations viz: cash management, sale increase, credit terms; • Proper measures should be taken to invest in different assets (current and fixed).
  • 21. Question ???