MBA Project on Working Capital Management


Many finance managers, who are quite at home and competent in dealing with long term decisions, such as capital investments experience difficulties when they have to scout for funds to meet the day to day working needs. With bank finance getting increasingly scare, regulated and expensive the emphasis has shifted to closer attention to internal generation of funds and the development of the enterprises ability to raise funds in the market.


Working capital can be defined as the amount at funds, which a Company must have to finance tits day-to-day operations. It can also be regarded as that proportion of the companies’ total capital, which is employed in “current liabilities” which are short term assets that are normally expected to get converted into cash within a year. Current liabilities are short term liabilities maturing for the payment within a short period say one year, and they partly support the investment in current assets. In other words they serve as a source of working capital.

Net working capital is defined as the difference between current assets And current liabilities, and represents the extent to which current assets are financed by long-term funds.

Working capital management is the process of administration of current assets and current liabilities within the policy guidelines of the company.

Working capital policy is concerned with basic policy decisions regarding. The target levels each category of current assets.

The methods of financing the current assets

Current assets in many cases constitute more than half of the total Assets employed In business and therefore, it is essential to evolve an appropriate working capital policy to suit the specific needs of the firm an manage its working capital accordingly. Current liabilities that are specifically financing current assets come under the preview of working capital policy.

These are distinct from current liabilities which are consequences of past long term financing decisions, such as current maturates of long term debt or those in nature of temporary financing of capital projects which will be subsequently funded by long term sources off finance.

The aim in working capital management and policy is to maintain a proper balance between the magnitude of working capital and the general scale of operations of the company and to determine, with reference therefore, the appropriate levels of components of current assets to be maintained and the pattern of financing them.


The importance of working capital management can be. Traced to the following main considerations.

a) Current assets constitute the dominant segment of the total assets employed in most business and, therefore, require more intense and careful managerial attention.

b) The investment in current assets and level of current liabilities are very sensitive to changes in sale and the funds requirements shifts rapidly, demanding quick short-term decisions to sustain smooth operations.

C) Through profitability and proper selection of investments are essential for the long fun prosperity of the business, its short-term survival depends on its liquidity or ability to meet short-term obligations fully and promptly. The precondition for liquidity is efficient management of the elements of working capital and the ability to raise sufficient short and long-term finance. The finance managers of companies will have to devote considerable time and energy in arranging short term financing obtaining favorable credit terms from the suppliers of goods and services, deciding on credit policies for credit sales, keeping n chech on the funds blocked in inventories and monitoring and directing the movement of cash in the business.


• The objective of the study is to know the short term financial position of the Cement Company with Working Capital Management.
• To, identify the limitations in management of the Cement Company and suggestions to overcome those limitations.
• To provide a conceptual frame work and theoretical perception about the performance of Cement Company.
• To provide credit facilities to the customers
• To pay wages and salaries to the employees working in the organization.
• To know the day-to-day expenses.


For, the purpose of the study, the data collected from primary and Secondary has sanitized edited and presented in the form of tables and statements. The analysis of the data has been made with the help of certain mathematical techniques lie percentages etc. Where ever feasible and appropriate graphs and diagrams are used.

The collection of data is done through two principles sources viz

1. Primary Data
2. Secondary Data


It is the information collected directly without any reference. In the study, it mainly interviews with concerned officers and staff either individually or collectively. Some of the information had been verified or supplemented with personal observation, the data collected through conducting personal interview with the officer of the Cement Company.


When an investigator uses the data which is already been collected by other, that data is called secondary data. Such as pamphlets annual reports, return and internal records.

The data includes:

1. Collection of required data from annual report of Cement Company.
2. Reference from text book and journals relating to financial management.
3. Articles published in business dailies like economic times, Business world, and etc.


The limitations of present study are as follows:

1. Due to the time constraint the study is confined to the assessment of working capital management only.
2. Data collected for 5 years which is limited.
3. The study is confined to the secondary source of data and figures are taken from the annual reports and suggestions of various accountants.
4. The data which is used in this project are taken from the annual reports, published at the end of the year.
5. The study is limited to the period of 5 Years.

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