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Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
Working  Capital  Management  by Raghav Malhotra
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Working Capital Management by Raghav Malhotra

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  • 1. • Concerned with management of current assets • Short-term decisions are taken • Moves around day to day operations • Unlike fixed assets,time plays a minor role • Unlike fixed assets,greater flexibilty • Risk-return trade off
  • 2. Definition – Working Capital • Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets Cash Marketable Current Securities Debtors Assets Inventories
  • 3. Expert’s Views
  • 4. Total Current Asssets Gross WC Positive NWC = CA > CL Balancesheet Negative NWC = CA < CL Concept Net WC Current Assets - Current Liabilities
  • 5. Accounts Payable Raw Materials WIP Cash Finished Goods Accounts Sales Receivable
  • 6. Purchase Sell Receive Pay for Cash resources Resources Product purchases On credit Inventory Receivable conversion Conversion period period Payable Net Operating Cycle Deferral period Gross Operating cycle
  • 7. WORKING CAPITAL BASIS OF BASIS OF CONCEPT TIME Gross Net Permanent Temporary Working Working / Fixed / Variable Capital Capital WC WC Seasonal Special WC WC Regular Reserve WC WC
  • 8. Total Assets Short-term Debt Fluctuating Current Assets Amount of WC Rs Long-term Debt + Permanent Current Assets Equity Capital Fixed Assets Time
  • 9. (Un)Balanced Working Capital
  • 10. Bal Balanced Working Capital
  • 11. Bal Balanced Working Capital
  • 12. Nature of Business Availability of Credit from suppliers
  • 13. Dimension I Profitability, Risk, & Liquidity
  • 14. Long-term Financing Matching Approach Short-term Financing Conservative Approach Spontaneous Financing Aggressive Approach
  • 15. Cost Flexibility Risk

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