This document discusses working capital, which refers to the capital required for financing short-term operations like raw materials, wages, expenses. It is important for businesses to maintain adequate working capital to pay debts and support daily operations. The document outlines different types of working capital, sources of funding, and how ratios can assess working capital management efficiency. Maintaining the right level of working capital is essential for business liquidity, profitability and reducing risk of insolvency.
Elements of financial management & working capitalCh Naresh
The PPT Covers the 2 topics
1.Elements of Financial Management
2.Working Capital
which consists of following topics:
Contents :
Finance
Shares
Debentures
Bonds
Right shares
Venture capital
Mutual fund
Importance of working Capital
Types of working Capital
Components of working Capital
➢Meaning
➢Importance
of Working capital
Capital
Elements of financial management & working capitalCh Naresh
The PPT Covers the 2 topics
1.Elements of Financial Management
2.Working Capital
which consists of following topics:
Contents :
Finance
Shares
Debentures
Bonds
Right shares
Venture capital
Mutual fund
Importance of working Capital
Types of working Capital
Components of working Capital
➢Meaning
➢Importance
of Working capital
Capital
Meaning
Types of working capital
Factors of determining working capital
Operating working capital cycle
Importance of operating cycle concept
Internal factors
External factors
General factors
Types of capital structure
Characteristics of security
Working capital Management notes for MBA students to prepare for exam. The file contains ample theory and solved problems on working capital management
The capital which is needed for the regular operation of business is called working capital. 1- for the purchase of raw materials
2- for the payment of wages
3- payment of rent and of other expenses
Working capital is kept in the form of cash, debtors, raw materials inventory, stock of finished goods, bills receivable etc.
Size Of Business
Nature Of Business
Storage Period
Credit Period
Seasonal Requirement
Potential Growth Or Expansion Of Business
Changes In Price Level
Dividend Policy
Working Capital Cycle
Operating Efficiency
Other Factors
Working capital requirement of a firm is directly influenced by the size of its business operation.
Big business organizations require more working capital than the small business organization.
Working capital requirement depends also upon the nature of business carried by the firm. Normally, manufacturing industries and trading organizations need more working capital than in the service business organizations.
A service sector does not require any amount of stock of goods. But in the manufacturing or trading firm, credit sales and advance related transactions are in large amount.
Time needed for keeping the stock in store is called storage period. The amount of working capital is influenced by the storage period. If storage period is high A firm should keep more quantity of goods in store and hence requires more working capital. if the storage Period is less , then more stock of goods must be held in store as work-in-progress.
Introduction
Working capital typically means the firm’s holding of current or short-term assets such as cash, receivables, inventory and marketable securities.
These items are also referred to as circulating capital
Corporate executives devote a considerable amount of attention to the management of working capital
Definition
Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets such a cash marketable securities, debtors and inventories. Funds thus, invested in current assets keep revolving fast and are constantly converted into cash and this cash flow out again in exchange for other current assets. Working Capital is also known as revolving or circulating capital or short-term capital.
Nature Of Working Capital
Working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the interrelations that exist between them.
Current assets refer to those assets which in the ordinary course of business can be, or will be, converted into cash within one year without undergoing a diminution in value and without disrupting the operations of the firm.
Examples- cash, marketable securities, accounts receivable and inventory.
Current liabilities are those liabilities which are intended, at their inception, to be paid in the ordinary course of business, within a year, out of the current assets or the earnings of the concern.
Examples- accounts payable, bills payable, bank overdraft and outstanding expenses.
Working capital decisions in Financial management Dr Naim R Kidwai
This presentation covers the topics of working capital decisions.It covers types of working capital, determinants of working capital, cash management, inventory control and account recievables
Meaning
Types of working capital
Factors of determining working capital
Operating working capital cycle
Importance of operating cycle concept
Internal factors
External factors
General factors
Types of capital structure
Characteristics of security
Working capital Management notes for MBA students to prepare for exam. The file contains ample theory and solved problems on working capital management
The capital which is needed for the regular operation of business is called working capital. 1- for the purchase of raw materials
2- for the payment of wages
3- payment of rent and of other expenses
Working capital is kept in the form of cash, debtors, raw materials inventory, stock of finished goods, bills receivable etc.
Size Of Business
Nature Of Business
Storage Period
Credit Period
Seasonal Requirement
Potential Growth Or Expansion Of Business
Changes In Price Level
Dividend Policy
Working Capital Cycle
Operating Efficiency
Other Factors
Working capital requirement of a firm is directly influenced by the size of its business operation.
Big business organizations require more working capital than the small business organization.
Working capital requirement depends also upon the nature of business carried by the firm. Normally, manufacturing industries and trading organizations need more working capital than in the service business organizations.
A service sector does not require any amount of stock of goods. But in the manufacturing or trading firm, credit sales and advance related transactions are in large amount.
Time needed for keeping the stock in store is called storage period. The amount of working capital is influenced by the storage period. If storage period is high A firm should keep more quantity of goods in store and hence requires more working capital. if the storage Period is less , then more stock of goods must be held in store as work-in-progress.
Introduction
Working capital typically means the firm’s holding of current or short-term assets such as cash, receivables, inventory and marketable securities.
These items are also referred to as circulating capital
Corporate executives devote a considerable amount of attention to the management of working capital
Definition
Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets such a cash marketable securities, debtors and inventories. Funds thus, invested in current assets keep revolving fast and are constantly converted into cash and this cash flow out again in exchange for other current assets. Working Capital is also known as revolving or circulating capital or short-term capital.
Nature Of Working Capital
Working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the interrelations that exist between them.
Current assets refer to those assets which in the ordinary course of business can be, or will be, converted into cash within one year without undergoing a diminution in value and without disrupting the operations of the firm.
Examples- cash, marketable securities, accounts receivable and inventory.
Current liabilities are those liabilities which are intended, at their inception, to be paid in the ordinary course of business, within a year, out of the current assets or the earnings of the concern.
Examples- accounts payable, bills payable, bank overdraft and outstanding expenses.
Working capital decisions in Financial management Dr Naim R Kidwai
This presentation covers the topics of working capital decisions.It covers types of working capital, determinants of working capital, cash management, inventory control and account recievables
Working Capital Financing & Sources Of Working CapitalMerchant Advisors
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Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital is equal to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit and Negative Working capital
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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2. Introduction to Working Capital
Definition of Working Capital
Objectives of Working Capital
Sources of Working Capital
Working Capital & Ratio Analysis
Types of Working Capital
Working Capital Policies
Advantages
Disadvantages
3. Working capital is the life blood and nerve centre of a business. Just
as, working capital is very essential to maintain the smooth running of a
business
Working capital refers to that part of firm’s capital which is required for
financing short term or current assets such as cash, marketable
securities, debtors, and inventories. In other words working capital is the
amount of funds necessary to cover the cost of operating the enterprise.
Meaning: Working capital means the funds (capital) available and used
for day to day operations ( working) of an enterprise. It consists broadly
of that portion of assets of a business which are used in or related to its
current operations. It refers to funds which are used during an
accounting period to generate a current income of a type which is
consistent with major purpose of a firm existence.
4. Working capital :is the fund which is used for daily operation of
businesses. That acts as important concept in finance.
Working capital: represents the funds available with the
company for day to day operations.
working capital: finances the cash conversion cycle. company
cannot survive with negative working capital which represents
that the company has no funds for day to day operations
Working capital is: Current asset – current Liabilities.
5. Every business needs some amount of working capital. It is needed for
following purposes-
For the purchase of raw materials, components and spares.
To pay wages and salaries.
To incur day to day expenses and overhead costs such as fuel, power, and
office expenses etc.
To provide credit facilities to customers etc.
Factors that determine working capital:
The working capital requirement of a concern depend upon a large number
of factors such as
Size of business? Nature of business.
Seasonal variations working capital cycle
Operating efficiency
Profit level.
6. The working capital requirements should be met both
from short term as well as long term sources of funds.
Financing of working capital through short term
sources of funds has the benefits of lower cost and
establishing close relationship with banks.
Financing of working capital through long term sources
provides the benefits of reduces risk and increases
liquidity.
7. Ratio Analysis is one of the important techniques that can be used to check
the efficiency with which working capital is being managed by a firm. The
most important ratios for working capital management are as follows.
Gross Working Capital : Cash and short-term assets expected to be
converted to cash within a year. Businesses use the calculation of gross
working capital to measure cash flow Gross working capital does not
account for current liabilities, but is simply the measure of total cash and
cash equivalent on hand. Gross working capital tends not to add much to
the business' assets, but helps keep it running on a day-to-day basis.
Net working capital: is the difference between current assets and current
liabilities. An analysis of the net working capital will be very help full for
knowing the operational efficiency of the company
NET WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIS
8. Positive working capital: means that the company
is able to pay off its short-term liabilities
-> When current asset outweigh Debts.
Negative working capital: means that a company
currently is unable to meet its short-term liabilities
with its current assets (cash, accounts receivable
and inventory).
-> When a company has debts than C.Asset.
9. Essentially: working capital is the answer to the
question: *How much short term funding do you need
to operate this business?*. Short term funding is
important because, with long term funding already in
place, the business still needs short term funding to
operate. Without the short term funding, the business
will go bankrupt.
10. if you have invested your money to purchase
machineries of company and if you don’t have enough
money to buy raw material, then your machinery will
no use for any production without raw material
11. Working capital an be divided into two categories:
Permanent working capital:
It refers to that minimum amount of investment in all
current assets which is required at all times to carry out
minimum level of business activities.
Temporary working capital:
The amount of such working capital keeps on fluctuating
from time to time on the basis of business activities.
12. Liquidity:
Under this policy, finance manager will increase the amount of
liquidity for reducing the risk of business. If business has high volume
of cash and balance, then business can easily pays its dues at
maturity.
Profitability policy
Under this policy, finance manger will keep low amount of cash in
business and try to invest maximum amount of cash and bank balance.
It will sure that profit of business will increase due to increasing of
investment in proper way but risk of business will also increase because
liquidity of business will decrease and it can create bankruptcy position
of business. So, profitability policy should make after seeing liquidity
policy and after this both policies will helpful for proper management
of working capital.
13. Policies Liqui profit Risk
ability
dity
GWC Average Average Average
NWC High Low Low
PWC Low High High
14. It can arrange loans from banks and others on easy
and favorable terms.
It helps the business concern in maintaining the
goodwill.
It enables a concern to face business crisis in
emergencies such as depression
It creates an environment of security, confidence, and
over all efficiency in a business.
It helps in maintaining solvency of the business.
15. Gives a company the ability to meet its current
liabilities.
Expand its volume of business.
Take advantage of financial opportunities as they arise.
16. Rate of return on investments also fall with the
shortage of working capital.
Excess working capital may result into over all
inefficiency in organization.
Excess working capital means idle funds which earn
no profits.
Inadequate working capital can not pay its short term
liabilities in time.
17. · You can't expand, can't pay your staff, can't pay
yourself, and can't pay your suppliers. So in a nutshell,
no cash flow, or working capital, no viable business.
· Lack of sufficient working capital and inability to
liquidate current assets are frequent causes of business
failure.
18. After study the nature of production, we can estimate the need for
working capital. If company produces products at large scale and
continues producing goods, then company needs high amount of
working capital.
As we discussed working capital is the life blood of the
business so we should keep it controlled I think if we
use from Gross Working capital we can expedite our
business well and every thing in average will work
more.