Raj Kishor Verma

PROJECT REPORT ON WORKING CAPITAL
A Project Report
On
Working Capital
At
BHARAT COKING COAL LTD.
DHANBAD (JHARKHAND)
(A SUBSIDARY OF COAL INDIA LTD).
Submitted to
BCCL Dhanbad
In partial fulfillment for the course of

“Post Graduate Diploma in Management”
Under the Supervision of: Submitted By:

Mr.J.P.BHAGAT RAJ KISHOR VERMA
GENERAL MANAGER FINANCE CA & T Batch: PGDM 2009-2011
Roll No: 37
Mangalmay Institute of Management Studies (Greater Noida)

1
INDEX
CH. Particulars Page No.
No.
Declaration 4
Preface 5
Acknowledgement 6
1 BRIEF PROFILE OF THE COMPANY 7
About BCCL 8
Board of Directors 9
Coal Reserve 10
Product & Services 11-12
Gradation of Coal 13
Suitability of Coal 14
Areas 15
Washery 16-17
Performance 18
2 CONCEPTUAL FRAMEWORK OF 19
WORKING CAPITAL MANAGEMENT
Working Capital 20
Concept of Working Capital 20-21
Working Capital Management 22
 Types of Working Capital 23-24
 Factors Determining of Working Capital 25-28
 Estimate of Working Capital Requirement 29
 Financing of Working Capital 30-31
 Management of Inventory 32
o Need to Hold Inventory 32
o Objective of Inventory Management 32
2
 Management of Cash 34
o Need to Hold Cash 34
 Management of Receivables 35
 Operation Cycle 35-36
 Components of Working Capital Management 37
 Significance of Working Capital Management 38
3. Research Methodology 39-41
4. ANALYSIS OF WORKING CAPITAL 42
MANAGEMENT OF THE BHARAT
COKING COAL LIMITED
Working Capital 43-44
Current Ratio 45-46
Acid-Test Ratio 47-48
Debtors Turnover Ratio 49-50
Inventory Turnover Ratio 51-52
Net Working Capital Turnover Ratio 53-54
Debt Collection Ratio 55-56
Statement of Ratio Analysis 57
5. CONCLUSION 58-61
6. BIBLOGRAPHY 62
3
I, undersigned Mr. Raj Kishor Verma, hereby declare that the project
report entitled “WORKING CAPITAL MANAGEMENT” under the
guidance of Mr. J.P.Bhagat submitted in partial fulfillment of the
requirements for the award of the degree of Post Graduate Diploma in
Management, from Mangalmay Institute of Management Study is my
original work – research study – Carried out during 24th May, 2010 to 24th
July, 2010 and not submitted for the award of any other
degree/diploma/fellowship or other similar titles or prizes to any other
institution/organization or university by any other person.
Place: B.C.C.L. (Dhanbad) Signature
4
Date: 24-7-2010 Raj

Kishor Verma
5
“Practice makes it more perfect”

In the field of management every time there is a requirement of
understanding or practical aspect of the organization with managerial mind. There
is requirement to go for practical training of any subject supplement to the
theoretical knowledge and clarified concept.
It is more applicable in the field of the management especially a
professional course like Post Graduate Diploma in Management from
Mangalmay Institute of Management Studies has prescribed 8 to 10 week of
practical training & a project report during the 4th Tri. Sem. as a part of PGDM
programmers my training at the Bharat coking Coal Limited is to comply with
this requirements also.
The project report on Working Capital Of Company, which provide
perfect direction of invest the money. The data collections were by annual report
of the different companies, magazines related to the cement association and
discussion with concerned employees and experts.
At the end findings and suggestions are reported.
I hope this serves the Purpose.
6
Words are indeed inadequate to convey my deep sense of gratitude to all those
who have helped me in completing this summer project to the best of my ability.
Being a part of this project has certainly been a unique and a very productive
experience on my part.
I am really thankful to, Mr.J.P.Bhagat (General Manager Finance CA &
T) for making all kinds of arrangements to carry the project successfully and for
guiding and helping me to solve all kinds of quarries regarding the project work.
His systematic way of working and incomparable guidance has inspired the pace
of the project to a great extent.
I would also like to thank my mentor and project – coordinator, Mr. Shyam
Agarwal for assigning me a project of such a great learning experience and
acquainting me with real life project financing and appraisal.
I am very grateful to Mr. Anupam Narula, Dean of Mangalmay Institute
of Management Study Who has given me the opportunity to do this project in
the Bharat Coking Coal Ltd. and very thankful to all lecturers of MIMS for
their useful guidance and advise.
This project would not have been successful without the help of
Mr.P.Banarjee (General Manager Finance, Fund) & Mr.P.K.Chakraborty
(Chief General Manager Finance) of Bharat coking Coal Ltd.
Last but not least I would like to thank all the employees of Bharat coking
Coal Ltd. who have directly or indirectly helped me with their moral support for
the completion of my project.
7
BRIEF PROFILE OF THE COMPANY
About BCCL
Board of Directors
Coal Reserve
Product & Services
Gradation of Coal
Suitability of Coal
Areas
Washery
Performance
8
ABOUT B.C.C.L
RTI Act 2005 | Tenders | Contact Us

 Bharat Coking Coal Limited (BCCL) is a Public Sector Undertaking engaged in mining of
coal and allied activities.
 It occupies an important place in as much as it produces bulk of the coking coal mined in the
country. BCCL meets almost 50% of the total prime coking coal requirement of the integrated
steel sector.
 BCCL was incorporated in January, 1972 to operate coking coal mines (214 Nos) operating
in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on 16th Oct,1971 to
ensure planned development of the scarce coking coal resources in the country.
 Currently, the Company operates 81 coal mines which include 40 underground, 18 opencast
& 23 mixed mines as on 01.04.2010.
 The Company also runs 6 coking coal washeries, 2 non-coking coal washeries.
 The mines are grouped into 13 areas for administrative convenience.
 The total manpower as on 1.4.05 was 92,268 and as on 01.03.2010 is 72,222.
9
Board of Directors
Permanent Invitee
10
Coal Reserve

COAL RESERVES IN INDIA : (As on 1st April, 2009)

(in billion tonnes)
Indicated Inferred
Total Reserve Proved Reserve
Reserve Reserve
Coking 33.4 17.5 13.8 2.1
Non-Coking 233.8 88.3 109.7 35.8
Total 267.2 105.8 123.5 37.9
11
Product & Services

COKING COAL :
These coals, when heated in the absence of air, form coherent beads, free from volatiles, with
strong and porous mass, called coke.
 These have coking properties

 Mainly used in steel making and metallurgical industries
 Also used for hard coke manufacturing
SEMI COKING COAL :

These coals, when heated in the absence of air, form coherent beads not strong enough to be directly fed into
the blast furnace. Such coals are blended with coking coal in adequate proportion to make coke.
 These have comparatively less coking properties than coking coal

 Mainly used as blend-able coal in steel making, merchant coke manufacturing and other metallurgical
industries
NLW COKING COAL :

This coal is not used in metallurgical industries. Because of higher ash content, this coal is not acceptable for
washing in washeries. This coal is used for power utilities and non-core sector consumers.
NON-COKING COAL :
These are coals without coking properties.
 Mainly used as thermal grade coal for power generation

 Also used for cement, fertilizer, glass, ceramic, paper, chemical and brick manufacturing, and for other
heating purposes
HARD COAL :
Hard coke is formed from coking / semi-coking coal through the process of carbonisation.
 Mainly used in metallurgical industries

 Also used in industrial plants utilising furnaces
WASHED AND BENEFICIATED COAL :

These coals have undergone the process of coal washing or coal beneficiation, resulting in value addition of
coal due to reduction in ash percentage.
 Used in manufacturing of hard coke for steel making

 Beneficiated and washed non-coking coal is used mainly for power generation
 Beneficiated non-coking coal is used by cement, sponge iron and other industrial plants
MIDDLINGS :
Middlings are by-products of the three stage coal washing / beneficiation process, as a fraction of feed raw
coal.
12
 Used for power generation

 Also used by domestic fuel plants, brick manufacturing units, cement plants, industrial plants, etc.
REJECTS :
Rejects are the products of coal beneficiation process after separation of cleans and / or middlings, as a
fraction of feed raw coal.
 Used for Fluidized Bed Combustion (FBC) Boilers for power generation, road repairs, briquette
(domestic fuel) making, land filling, etc.
CIL COKE / LTC COKE :

CIL Coke / LTC Coke is a smokeless, environment friendly product of the Dankuni Coal Complex, obtained
through low temperature carbonisation.
 Used in furnaces and kilns of industrial units

 Also used as domestic fuel by halwais, hotels, etc.
COAL FINES / COKE FINES :

These are the screened fractions of feed raw coal and LTC coke / CIL Coke respectively, obtained from the
Dankuni Coal Complex and other coke oven plants.
 Used in industrial furnaces as well as for domestic purposes
TAR / HEAVY OIL / LIGHT OIL / SOFT PITCH :

These are products from Dankuni Coal Complex using low temperature carbonisation of non-coking coal in
vertical retorts.
 Used in furnaces and boilers of industrial plants as well as power houses, oil, dye, pharmaceutical
industries, etc.
13
GRADATION OF COAL

A. COKING COAL
Grade Parameter
Steel – I Ash not exceeding 15%
Steel – II Ash exceeding 15% but not exceeding 18 %
Washery – I Ash exceeding 18% but not exceeding 21 %
Washery – II Ash exceeding 21% but not exceeding 24 %
Washery – III Ash exceeding 24% but not exceeding 28 %
Washery – IV Ash exceeding 28% but not exceeding 35 %

B. SEMI COKING COAL
Grade Parameter
Semi Coking – I Ash + moisture not exceeding 19 %
Ash + moisture exceeding 19 % but not exceeding
Semi Coking – II
24 %

C. NON-COKING COAL
Grade UHV RANGE (KCALS/KG)
A Exceeding 6200
B Exceeding 5600 but not exceeding 6200
C Exceeding 4940 but not exceeding 5600
D Exceeding 4200 but not exceeding 4940
E Exceeding 3360 but not exceeding 4200
F Exceeding 2400 but not exceeding 3360
G Exceeding 1300 but not exceeding 2400
D. HARD COKE
Grade Ash %
By Product Premium Not exceeding 25 %
By Product Ordinary Exceeding 25 % but not exceeding 30 %
Beehive Premium Not exceeding 27 %
Beehive Superior Exceeding 27 % but not exceeding 31 %
Beehive Ordinary Exceeding 31 % but not exceeding 36 %
14
SUITABILITY OF COAL

E. HARD COKE
Industry Type of Coal Required
Coking and semi-coking coal, direct feed and
Steel making washed; blendable coal; low ash % Assam and
Ranigunj coal
Non-coking coal of high Initial Deformation
Steel making, sponge iron industry
Temperature (IDT) (>1200 degrees Celcius)
Cokeries / coke oven plants Coking and semi-coking coal
Semi-coking and non-coking coal; middling &
Briquette making / domestic fuel making
rejects of washeries
Special Smokeless Fuel (SSF) Semi-coking coal of Coking Index 8 – 10
Non-coking coal; middlings of coking coal
Power sector washeries; washed coal of non-coking coal
washeries
Cement sector
washeries
Glass and potteries Long Flame non-coking coal
Cast iron castings Hard coke
Steel castings Non-coking coal
Bricks
washeries
Old boilers Superior grades of non-coking coal
Halwais, domestic use, hotels, etc. Non-coking coal; CIL Coke / LTC Coke

15
Areas
1. BARORA
2. BLOCK II
3. GOVIINDPUR
4. KATRAS
5. SIJUA
6. LODNA
7. C. V. AREA
8. KUSUNDA
9. P. B. AREA
10. KUSTORE
11. BASTACOLLA
12. E. JHARIA
13. W. JHARIA
Washery
16
BCCL WASHERIES

Introduction :
Coal Washing is a process of separation mainly based on difference in Specific
Gravity of Coal and associated impurities like Shale, Sand & Stones etc so that we
get relatively pure marketable coal without changing its physical properties.

The Washed Coking Coal is meant for Steel Plants. The Washed Power

Coal/Washed Non-Coking Coal/Middlings is dispatched to various Power Houses.
Washing Process:

Washery System of Washing
Dugda-II HM Cyclone (13-0.5mm), Flotation (-0.5mm)
Bhojudih Deshaling Jig (75-0mm), HM Bath (75-25mm),
Batac Jig (25-0.5mm), Flotation (-0.5mm)
Patherdih Deshaling Jig(75-0mm), HM Bath(75-13mm),
HM Cyclone (13-0.5mm)
Sudamdih 2 Stage HM Cyclone (37-0.5mm), Flotation (-0.5mm)
Moonidih 2 Stage HM Cyclone (30-0.5mm),W/O Cyclone(-0.5mm)
Mohuda HM Cyclone (25-0.5mm), Flotation (-0.5mm)
Madhuban Batac Jig (13-0.5mm), Flotation(-0.5mm)
Details of Existing Washeries :

S. Operable Capacity
Name of Washery Year of Commissioning
No. MTY
A. Coking Coal:
1 Dugda-II 1968 2.00
2 Bhojudih 1962 1.70
3 Patherdih 1964 1.60
5 Moonidih 1983 1.60
4 Sudamdih 1981 1.60
6 Mohuda 1990 0.63
7 Madhuban 1998 2.50
TOTAL (Coking Coal) 11.63

B. Non-Coking Coal:
1 Dugda – I 1961/1998 1.00
TOTAL (Non-Coking Coal) 1.00
GRAND TOTAL 12.63
17
Remarks:
Dugda-I stoped since Oct.'96 for safety reasons and its Sink Upgradation Section is being
used for production of washed power coal w.e.f. '98.
Madhuban Washery was originally designed for washing Coking Coal.Due to non-
availability of Coking Coal because of stoppage of Block-II OCP, the Washery was
temporarily converted for Washing Non-Coking Coal which has been reverted back to
washing coking coal again from October 2008.

Modernization of Washeries:
►
Revival Plan of BCCL provides Rs. 125 Crores for Renovation of Washeries.
► Study was undertaken by CMPDI for performance improvement.
► In the 1st Phase, the Revival Schemes involving an expenditure of Rs. 54.80
Crores has been approved by BCCL Board for Dugda-I, Dugda-II, Bhojudih,
Sudamdih, Moonidih & Mohuda Washeries and they are under various
stages of implementation.

18
Performance
PRODUCTION
(Figs in Million Tonnes)
2009 -
1974 1984 1994 2001 2002 2003 2004 2005 2006 2007 2008
Company Type 10
- 75 - 85 – 95 – 02 - 03 - 04 – 05 - 06 - 07 - 08 - 09

U/G 15.64 13.34 11.49 7.59 7.29 6.74 6.38 5.47 4.90 4.46 4.13 3.9
BCCL OC 2.10 8.50 17.26 17.66 16.86 15.94 15.94 17.84 19.30 20.75 21.38 23.61
TOTAL 17.74 21.84 28.75 25.25 24.15 22.68 22.32 23.31 24.21 25.21 25.51 27.51
19
CONCEPTUAL FRRMEWORK OF WORKING

CAPITAL MANAGEMENT
 WORKING CAPITAL
 CONCEPT OF WORKING CAPITAL
 WORKING CAPITAL MANAGEMENT
 TYPES OF WORKING CAPITAL
 FACORS DETERMINING OF WORKING CAPITAL
 ESTIMATE OF WORKING CAPITAL REQUIREMENT
 FININCING OF WORKING CAPITAL
 MANAGEMENT OF INVENTORY
o NEED TO HOLD INVENTORY
o OBJECTIVE OF INVENTORY MANAGEMENT
 MANAGEMENT OF CASH
o NEED TO HOLD CASH
 MANAGEMENT OF RECEIVABLE
 OPERATION CYCLE
 COMPONENTS OF WORKING CAPITAL MGT
 SIGNIFICANCE OF WORKING CAPITAL MGT
20
What is WORKING CAPITAL?
Fixed Capital is that part of which is required for the purchase of fixed
assets like Land and Building , Plant and machinery etc. The fixed capital
provides the basic means for the business to earn its return... But by
themselves, these fixed assets would not produce anything. For instance, to
operate the machines, we require men, materials, power, tools, accessories etc.
These factors involve expenses. In addition, we have to maintain certain
current assets like stocks, stores, equipments, etc. All these require enough
resources to keep the wheels of the business in motion. Therefore, in addition
to the amount of fixed capital every business – whether new or growing
requires Working Capital. Working Capital is that portion of a business
concern’s total capital, which is employed in term of operations. Without
working capital, fixed capital would be idle and ineffectual.
A number of definitions have been formulated: perhaps the most widely
acceptable would be;
“WORKING CAPITAL represents the excess of

CURRENT ASSETS over CURRENT LIABILITIES”
The same may be designated in the following equation:

WORKING CAPITAL= CURRENT ASSETS – CURRENT LIABILITIES:
Funds thus invested in current assets keep revolving fast and are being constantly
converted in to cash and this cash flows out again in exchange for other current
assets. Thus it is known as revolving or circulating capital or short term capital.
TWO CONCEPT OF WORKING CAPITAL :-

a. Gross Working Capital.
b. Net Working Capital.
Gross working capital is the total of all current assets. Net working capital is the
difference between current assets and current liabilities. Though the later concept
of working capital is commonly used it is an accounting concept with little sense
21
to say that a firm manages its net working capital. What a firm really does is to
take decisions with respect to various current assets and current liabilities. The
constituents of current assets and current liabilities are shown in table A.
TABLE A:
Constituents of Current Assets and Current Liabilities
PART –A: CURRENT ASSETS
 Inventories – Raw materials and components, Work in progress,
Finished goods, other.
 Trade Debtors.
 Loans and Advances.
 Investments.
 Cash and Bank balance.
PART –B: CURRENT LIABILITIES
 Sundry Creditors.
 Trade Advances.
 Borrowings.
 Provisions.
22
WORKING CAPITAL MANAGEMENT:-
Working Capital Management refers to management of current assets and current liabilities.
The major thrust of course is on the management of current assets This is understandable
because current liabilities arise in the context of current assets. Working Capital
Management is a significant fact of financial management. Its importance stems from two
reasons:-
 Investment in current assets represents a substantial portion of total investment.
 Investment in current assets and the level of current liabilities have to be geared quickly
to change in sales. To be sure, fixed asset investment and long term financing are responsive
to variation in sales. However, this relationship is not as close and direct as it is in the case
of working capital components. The importance
of working capital management is effected in the fact that financial manages spend a great
deal of time in managing current assets and current liabilities. Arranging short
term financing, negotiating favorable credit terms, controlling the movement of
cash, administering the accounts receivable, and monitoring the inventories
consume a great deal of time of financial managers.
The problem of working capital management is one of the “best” utilization of a
scarce resource.
Thus the job of efficient working capital management is a formidable one, since
it depends upon several variables such as character of the business, the lengths of
the merchandising cycle, rapidity of turnover, scale of operations, volume and
terms of purchase & sales and seasonal and other variations.
23
TYPES OF WORKING CAPITAL:-
Working Capital may be classified in to two ways:-

a) On the basis of concept.
b) On the basis of time.
TYPES OF WORKING CAPITAL
S E
P
Y
E
O
H
T
N F
O
I
S
A
K
R
W
B
N O
F
S
/
B
G
I
A
P
E
N
O
C
T
L
I
T
E
M T
Permanent or Fixed Working Capital:-

Permanent or Fixed Working capital is the minimum amount which is required
to ensure effective utilization of fixed facilities and for maintaining the
circulation of current assets. There is always a minimum level of current assets
that is continuously required by the enterprise to carry out its normal business
operation. For example every firm has to maintain minimum level of raw
materials, work in process, furnished goods and cash balance. The minimum
level of current assets is called permanent or fixed working capital as their part of
working capital is permanently blocked in current assets. With the growth of
business there is an increase in current assets.
1) Temporary or Variable Working Capital:-

24
Temporary or Variable Working Capital is the amount of working capital that is

required to meet the seasonal demands and some special exigencies. Variable
working capital can be further classified as:-
a) Seasonal Working Capital.
b) Special Working Capital.
Most of the enterprises have to provide additional working capital to meet the
special and seasonal needs. The capital required to meet the seasonal needs of
enterprise is called Seasonal working capital. Special working capital is the part
of working capital which is required to meet the special exigencies such as part
of working capital which is required to meet special exigencies such as launching
of extensive marketing campaigns for conducting research etc. is called Special
working capital.
FACTORS DETERMINING WORKING CAPITAL

25
REQUIREMENTS:-
With the type of business and the ambition of proprietors the amount is bound to
vary. For instance, a small business would need lesser amount of working capital
than a larger business engaged in the same line. As the business expands the
amount needed would grow. Similarly, business with seasonal demand would
require larger amount of working capital. Therefore, an estimate of requirements
of working capital will differ from concern and from industry to industry.
Further, cyclical changes, periods of prosperity and depression cause wide
variations in the demand for working capital. Other unexpected happenings are
likely to create unusual demands for working capital. There is no concrete
formula to decide the amount of workings capital required by a business. There
are also business in which fixed is small ion relation to working capital. The
Major determinants of the proportion of fixed to working capital are as follows:-
1.Nature of Business:-
Business units selling service (like public utilities) instead of a commodity, have
little need for working capital, as they have little demand for large inventories.
Generally they operate in cash and prepay basis. But trading concerns
(merchandising companies) make a greater use of working capital, since
inventory represents a major item of investment. A relatively small proportion
will consist of working capital in case of manufacturing concerns. Larger
working capital will require in labor intensive industries than in highly
mechanized industries. In chemical or engineering industries, working capital
would be relatively larger.
1) Size of Business :
The working capital requirements of a concern are directly influenced by the size
of the business which may be measured in terms of scale of operations. Greater
the size of a business unit generally larger will be the requirement of working
capital. However, in some cases even a smaller concern may need more working
capital due to high over head charges Insufficient use of available resources and
other economic disadvantages of small size.
1) Production Policy:-
26
In certain industries the demand is subject to wide fluctuation due to seasonal

variation. The requirement of working capital, in such cases depends upon the
production policy. The production could be kept either steady by accumulating
inventories during slack period with a view to meet high demand during the peak
season or the production could be curtailed during the slack season and increased
during peak season. If the policy is to keep production steady by accumulation
inventories it will require higher working capital. A company should have some
production policy i.e. to maintain the production is a considerable range in order
to meet the changing demand. A company like BCCL whose productive
capacities can be utilized for manufacturing varied products can have the
advantages of diversified activities and solve their working capital problem.
2) Manufacturing Process/ Length of the production cycle:-
In manufacturing business, the requirements of working capital increase in direct

proportion to length of manufacturing process, longer the process period of
manufacture, longer is the amount of working capital required. The longer the
manufacturing time, the raw materials and other supplies have to be carried for a
longer period in the process with progressive increment of labor and service costs
before the finished product is finally obtained. Therefore, if there is alternative
process of production, the process with the shortest production period should be
chosen.
3) Working Capital Cycle:-
In manufacturing concern, working capital cycle starts with the purchase of raw
materials and ends with realization of cash from the sale of finished goods. The
cycle involves the purchase of raw materials and ends with the realization of cash
from the sale of finished products. The cycle involves purchase of raw materials
and stores, its conversion in to stock of finished goods through work in progress
with progressive increment of labor and service cost, conversion of finished stick
in to sales and receivables and ultimately realization of cash and this cycle
continuous again from cash to purchase of raw materials and so on.
4) Market Condition:-
27
The degree of competition prevailing in the market places has an important

bearing on working capital needs. When competition keen, a larger inventory of
finished goods is required to promptly serve customer who may not be inclined
to wait because other manufacturers are ready to meet their needs, further,
generous credit terms may have to be offered to attract customers in a highly
competitive market. Thus, working capital needs tends to be high because of
greater investment in finished goods inventory and accounts receivable.
If the market is strong and completion weeks a firm can manage with a smaller
inventory of finished goods because customers can be served with some delay.
Further in such situation the firm can insist on cash payment and avoid lock – up
of funds in accounts receivable, it can even ask for advance payment, partial or
total.
5) Credit Policy:-
The credit policy is concerned in its dealings with debtors and creditors influence
considerably the requirements of the working capital. A concern that purchases
its requirements on credit and sells its products/services on cash requires lesser
amount of working capital. On the other hand a concern buying its requirements
for cash and allowing credit to its customers, shall need larger amount of funds
are bound to be tied up in debtors or bills receivables.
6) Business Cycle:-
Business Cycle refers to alternate expansion and contraction in general business

activities. In a period of born i.e. when the business is prosperous there is a need
for larger amount of working capital due to increase in sales, rise in prices,
optimistic expansion of business etc. On the country at he time of depression i.e.
when there is a down swing of the cycle, business contracts, sales decline,
difficulties are faced in collections from debtors and firms may have a large
amount of working capital lying ideal
28
7) Rate of Growth Of business:-

The working capital requirements of a concern increase with the growth and
expansion of its business activities. Although it is difficult to determine the
relation between growth in the volume of the business and in the growth of the
working capital of the business, yet it may be concluded that for normal rate of
expansion in the volume of the business, we may have retained profits to provide
for more working capital but in the first growing concerns, we shall require larger
amount of capital.
8) Earning Capacity And Dividend policy:-
Some firms have more earning capacity than others due to the quality of their
products, monopoly conditions etc. Such firms with high earning capacity may
generate cash profits from operations and contribute to their capital. The dividend
policy of a concern also influences the requirements of the working capital. A
firm that maintains steady high rate of cash dividend irrespective of its generation
of profits needs more capital than the firm retains larger part of its profits and
does not pay high rate of cash dividend.
9) Price Level Changes:-
Changes in the prices level also effects the working capital requirements.
Generally the rising prices will require the firm to maintain larger amount of
working capital as more funds will require maintaining the same current assets.
The effect of rising prices may be different for different firms. Some firms may
be affected much while some other may not be affected at all by the rise in
prices.
10) Other Factors:-
Certain other factors such as operating efficiency, management ability,

irregularities a supply, import policy, asset structure, importance of labor,
banking facilities etc. also influences the requirement of working capital.
4.d)Estimate of working capital requirements:

29
To avoid the storage of working capital at once an estimate of working capital

requirements should be made in advances so that arrangement can be made to
procedure adequate working capital. But estimation of working capital
requirements is not an easy task and a large number of factors have to be
considered before starting this exercise.
Factors requiring consideration while estimating working capital:-Total costs

incurred on materials, wages and overheads.
1) The length of time for which raw materials are to remain in stores before
they are issued for production.
2) The length of the production cycle or work in progress, i.e. the time taken for
conversion of raw materials into finished goods.
3) The length of sales cycle during which finished goods are kept waiting for
sales.
4) The average period of credit allowed to customers.
5) The amount of cash required to pay day-to-day expenses of the business.
6) The average amount of cash required to make advance payment.
7) The average period expected to be allowed by suppliers.
8) Time lag in the payment of wages and other expenses.
FINANCING OF WORKING CAPITAL:-

30
The working capital requirements of a business concern can be classified as:-

a) Permanent or Fixed working capital requirements.
b) Tempory ot variable capital requirements.
In concern, a part of working capital investments are as permanent investment in

fixed assets. This is so because there always a minimum level of current assets
which are continuously required by the enterprise to carry out its day-to-day
business operations and this minimum cannot be expected to reduce at any time.
This minimum level of current assets gives rise to permanent or fixed working
capital as this part of working capital is permanently blocked in current assets.
Similarly some amount of working capital may be required to meet the seasonal
demands and some special exigencies such as rise in prices, strikes etc. this
proportion of working capital gives rise to temporary or variable working capital
which cannot be permanently employed gainfully in business.
The fixed proportion of working capital should be generally financed from the
fixed capital sources while the temporary or variable working capital
requirements of a concern may be met from the short term sources of capital. The
various sources for the financing of working capital are:-
PERMANENT OR FIXED SOURCES OF WORKING CAPITAL:-

1) Shares
2) Debentures
3) Public Deposits
4) Ploughing back of profits
5) Loans from financial institutions
TEMPORARY OR VARIABLE SOURSES

OF WORKING CAPITAL:-
1) Commercial banks
2) Indigenous bankers
3) Trade creditors
4) Installment credit
5) Advances
6) Accounts receivable- credit/factoring
7) Accrued expenses
31
8) Commercial paper
Commercial banks are the most important sources of short term capital. The
major portions of working capital loans are provided by commercial banks. They
provide of wide variety of loans tailored to meet the specific
requirements of a concern. The different forms in which the banks normally
provide loans and advances are as follows:-
A) Loans
b) Cash credits
c) Overdrafts
D) Purchasing and discounting of bills
In addition to the above mentioned forms of direct finance, commercial banks

help their customers in obtaining credit form their suppliers through the letter of
credit arrangements.
It is always a test to the prudence of a financial manager to obtain the correct
amount of working capital at the right time, at a reasonable cost and at the most
favorable terms.
 MANAGEMENT OF INVENTORY
 MANAGEMENT OF CASH
 MANAGEMENT OF RECEIVABLES
MANAGEMENT OF INVENTORY:-
32
Inventories constitute the most significant part of current assets of a large

majority of companies in India. On an average, inventories are approximately 60
% of current assets in public limited companies in India.
Because of the large size of inventories maintained by firms maintained by firms,
a considerable amount of funds is required to be committed to them. It is,
therefore very necessary to manage inventories efficiently and effectively in
order to avoid unnecessary investments. A firm neglecting a firm the
management of inventories will be jeopardizing its long run profitability and may
fail ultimately.
The purpose of inventory management is to ensure availability of materials in
sufficient quantity as and when required and also to minimize investment in
inventories at considerable degrees, without any adverse effect on production and
sales, by using simple inventory planning and control techniques.
1.1 Need to Hold Inventories:-

There are three general motives for holding inventories:-
1) Transaction motive emphasizes the need to maintain inventories
to facilitate smooth production and sales operation.
2) Precautionary motive necessities holding of inventories to guard against the

risk of unpredictable changes in demand and supply forces and other factors.
3) Speculative motive influences the decision to increases or reduce inventory

levels to take advantage of price fluctuations and also for saving in re-ordering
costs and quantity discounts etc.
2.2. Objective of Inventory Management:-

The main objectives of inventory management are operational and financial.
The operational mean that means that the materials and spares
Should be available in sufficient quantity so that work is not disrupted for want
of inventory. The financial objective means that investments in inventories
should not remain ideal and minimum working capital
33
Should be locked in it. The following are the objectives of inventory

management:-
1) To ensure continuous supply of materials, spares and finished goods.
2) To avoid both over-stocking of inventory.
3) To maintain investments in inventories at the optimum level as required

by the operational and sale activities.
4) To keep material cost under control so that they contribute in reducing cost of
production and overall purchases.
5) To eliminate duplication in ordering or replenishing stocks. This is possible

with the help of centralizing purchases.
6) To minimize losses through deterioration, pilferage, wastages and damages.
7) To design proper organization for inventory control so that management.

Clear cut account ability should be fixed at various levels of the organization.
8) To ensure perpetual inventory control so that materials shown in stock

ledgers should be actually lying in the stores.
9) To ensure right quality of goods at reasonable prices.
10) To facilitate furnishing of data for short-term and long term planning and
control of inventory
MANAGEMENT OF CASH:-
34
Cash is the important current asset for the operation of the business.
Cash is the basic input needed to keep the business running in the continuous
basis, it is also the ultimate output expected to be realized by selling or
product manufactured by the firm.
The firm should keep sufficient cash neither more nor less. Cash shortage will
disrupt the firm’s manufacturing operations while excessive cash will simply
remain ideal without contributing anything towards the firm’s profitability. Thus
a major function of the financial manager is to maintain a sound cash position.
Cash is the money, which a firm can disburse immediately without any
restriction. The term cash includes coins, currency and cheques held by the firm
and balances in its bank account. Sometimes near cash items such as marketing
securities or bank term deposits are also included in cash. Generally when a firm
has excess cash, it invests it is marketable securities. This kind of investment
contributes some profit to the firm.
NEEDTO HOLD CASH:

The firm’s need to hold cash may be attributed to the following three motives:-
The Transaction Motive: The transaction motive requires a firm to hold cash to
conduct its business in the ordinary course. The firm needs cash primarily to
make payments for purchases, wages and salaries, other operating expenses,
taxes, dividends, etc.
The Precautionary Motive: A firm is required to keep cash for meeting various
contingencies. Though cash inflows and outflows are anticipated but there may
be variations in these estimates. For example a debtor who pays after 7 days may
inform of his inability to pay, on the other hand a supplier who used to give
credit for 15 days may not have the stock to supply or he may not be in
opposition to give credit at present.
Speculative Motive: - The speculative motive relates to the holding of cash for
investing in profit making opportunities as and when they arise.
The opportunities to make profit changes. The firm will hold cash, when it is
expected that interest rates will rise and security price will fall.
MANAGEMENT OF RECEIVABLE:-
35
A sound managerial control requires proper management of liquid assets and

inventory. These assets are a part of working capital of the business. An efficient
use of financial resources is necessary to avoid financial distress. Receivables
result from credit sales. A concern is required to allow credit sales in order to
expand its sales volume. It is not always possible to sell goods on cash basis
only. Sometimes other concern in that line might have established a practice of
selling goods on credit basis. Under these circumstances, it is not possible to
avoid credit sales without adversely affecting sales. The increase in sales is also
essential to increases profitability. After a certain level of sales the
increase in sales will not proportionately increase production costs. The increase
in sales will bring in more profits. Thus, receivables constitute a significant
portion of current assets of a firm. But for investment in receivables, a firm has to
insure certain costs. Further, there is a risk of bad debts also. It is therefore, very
necessary to have a proper control and management of receivables.
Operating cycle:
Operating cycle refers to the time duration required to convert sales ,after the
conversion of recourses into inventories, into cash .the operating cycle of a
manufacturing company like BCCL includes:
1.) Accusation of resources such as raw materials, labor, power and fuel etc.
2.) Manufacture of the product which includes conversion of materials into work-
in-progress into finished goods.
3.) Sale of the product either for cash or on credit. Credit sales create account
receivables for collection.
OPERATING CYCLE:
36
COMPONENTS OF WORKING CAPITAL ARE CALCULATED AS

FOLLOWS:
1) Raw Materials Storage Period=Avarage stock of raw materials/Avarage cost of
raw material consumption per day.
37
2.) W-I-P Holding period=Average w-i-p in inventory/Average cost of

production per day.
3.) Stores and spares conversion period = Average stock of Stores and spares/
Avarage consumption per day.
4.) Finished goods conversion period= Average stock of finished goods/Avarage
cost of of goods sold per day.
5.) Debtors collection period=Avarage book debts/Avarage credit sales per day.
6.) Credit period availed=Avarage trade creditors/Average credit purchase per
day..
SIGNIFICANCE OF WORKING CAPITAL:-
38
G
S
N
K
R
W
F
O
E
T
I
P
A
C
L
-
39
40
Research Methodology
For Every Comprehensive research a proper research methodology is

indispenensable & it has to be properly conceived. The methodology adopted by
me is as follows:-
Research Design
Problem Identification
@ Find out Ratios related to working capital management of BCCL and compare
with last 2 years.
@ Find deviation of calculated from standard or Norms
@ Calculating the working capital requirement of Bharat Coking Coal Ltd.

Information needed
@ Information about firm’s assets, liabilities, revenue, expenditure, bankers,
investment etc.
@ Information about firm’s loan, security, stock level & other financial
information.
Data Collection
My data collection source was secondary i.e.
@ Annual reports of companies
@ Balance sheet
@ Profit & Loss Accounts
Analysis & Interpretation

The data collected and analysed subjectively as well as graphically where it is
possible. The analysis is based upon available information & interpreted
accordingly.
Conclusion
On the basis of analysis conclusion has been drawn.
Suggestion
Suggestion has been given in order to improve performance of the firm.
41
Limitation
My scope of study is limited to the annual reports, Balance sheet of units for
analysis
42
ANALYSIS OF WORKING CAPITAL
MANAGEMENT OF
BHARAT COKING COAL LIMITED
 WORKING CAPITAL
 CURRENT RAIO
 ACID-TEST RATIO
 DEBTORS TURNOVER RATIO
 INVENTORY TURNOVER RATIO
 NET WORKING CAPITAL RATIO
 DEBT COLLECTION RATIO
 STATEMENT OF RATIO ANALYSIS
43
WORKING CAPITAL Rs. In Lakhs
PARTICULARS YEAR 2010 YEAR 2009
CURRENT ASSETS:
Inventories 93890.02 70725.53
Sundry Debtors 39380.24 18682.50
Cash & Bank Balances 92302.76 91088.72
Loans & Advances 31950.62 22070.92
TOTAL CURRENT ASSETS (A) 257523.64 202567.67
% Change in Current Assets 27.12 N.A
CURRENT LIABILITIES:
Sundry Creditor’s 9411.40 13247.29
Small Scale Industries 254.18 237.63
Deposits From: Customers, Contractors,& 49138.91 63798.78
Others
Employees Remunaration & Benefits 321673.81 340733.74
Power & Fuel 16049.21 16011.20
Contractual Exp. 15933.32 11706.30
Repair & Maintainance 3426.74 2874.31
Other Expences 4077.12 6093.89
Bank Overdraft 12370.92 4966.96
CISF Exp. 1893.63 5578.05
Audit Fees & Exp. 41.45 39.20
Enter Subsidiary Current A/c Balances 283142.09 297766.54
44
CIL & CMPDIL

Statutory Dues 33231.64 26857.29
Pension Fund & Interest 11324.26 17987.45
Unutilised Grants 10278.71 6237.51
CBM Project Grants 165.34 145.34
Other Liabilities & Provisions 22377.61 20014.95
TOTAL CURRENT LIABILITIES (B) 794790.34 834296.43
% Change in Current Liabilities -4.73 N.A
NET WORKING CAPITAL (A-B) -537266.70 -631728.76
45
CURRENT RATIO
It is also known as “working capital ratio” .It is a measures of short-term
financial strength of the business and shows whether the business will be able
to meet it’ s current liabilities as when they mature.
Current assests
Current ratio=
Current liabilities
Current Assets including assets which can be converted in to cash easily and
itself like market securities debtors, inventory, prepaid expenses etc.
Current Liabilities included creditors, bills payable, accrual expenses, short
term bank loan, income tax liabilities and long term debt maturity in current
year. In short it can be said as all obligation within a year are included in
current liabilities.
Current ratio is a measure of the firm’s short term solvency. It indicate the
availability of current assets in rupee of current liabilities. As a conventional
rule, a current ratio should be or slightly more. It focuses the strong of weak
position of the company.
Current assests
Current ratio=
Current liabilities
For the year:
257523,64,000
2009−2010=
794790,34,000
= 0.32
202567,67,000
2008−2009=
834296,43,000
= 0.24
YEAR CURRENT RATIO
2009 - 2010 0.32
2008 - 2009 0.24
46
CURRENT RATIO
0.35
0.3
0.25 CURRENT RATIO

0.2
0.15
0.1
0.05
0
2010 2009
Interpretation:
It is generally believed that 2:1 ratio shows a comfortable working capital

position. The tendon committee appointed by RBI had wide recommended a
current ratio of 2:1.
Company doesn’t maintain this ration but trying to increase it year by year. A
current ratio is 0.32 in the current year. But in the previous year the ratio is
nearer to 0.24:1 so we can say that the company doesn’t having comfortable
working capital position previous year but the company is trying to increase its
current ratio.
47
ACID-TEST RETIO
The measure of absolute liquidity may be obtained only cash and bank balance
as well as only ready marketable security with liquid liabilities. This is every
existing standard of liquidity and it is satisfaction if the ratio is 1.50:1
C . A−Inventory
Acid−Test Ratio=
C.L
For the year
257523,64,000 – 93890,02,000
2009−2010=
794790,34,000
= 0.205
202567,67,000 – 70725,53,000
2008−2009=
834296,43,000
= 0.158
YEARS ACID-TEST RATIO

2009-2010 0.205
2008-2009 0.158
48
ACID - TEST RATIO
0.25
0.2
ACID - TEST RATIO
0.15
0.1
0.05
0
2009-2010 2008-2009
Interpretation :
Acid-test ratio is near to one in current year that is 0.205 as compare to 0.158
in the previous year. Over all the acid-test ratio of last year & this year is not
very satisfactory so we can conclude that the absolute liquidity of the Bharat
Coking coal ltd. is in favour.
49
DEBTORS TURNOVER RATIO
This ratio shows the proportion of sales to average receivables. It shows the
efficiency of the collection policy of the firm. The higher the ratio, the less
satisfactory position of the firm. Higher ratio indicates weak collection policy
of the firm.
Credit Sales
DebtorsTurnover Ratio=
Account Receivable
43,90,07,93190
2009−2010=
5,47,48,00000
= 8.018 days
36,46,72,78394
2008−2009=
5,13,47,00000
= 7.102 days
YEARS DEBTORS TURNOVER RATIO
2009-2010 8.018 Days
2008-2009 7.102 Days
50
8.2
8
7.8
7.6
7.4
7.2
7
6.8
6.6
2009-2010 2008-2009
Interpretation :
We know that the higher Debtor’s turnover ratio is not good for the firm. The
lesser the period of the collection the better policy of collection of the
company. In the year 2009-10 it is 8.018 days to collect the debts. So we can
say that the collection policy of the company is excellent that they recover their
debts near to 1/3 of month. But we also consider that in previous year this is
7.102 days so we can say that the company have to maintain this ratio.
INVENTORY TURNOVER RATIO

51
This ratio is also known as” stock turnover ratio”. The number of times the
average stock is turnover during the year is known as stock turnover. It is
computed by deciding the sales by the inventory. The ratio is important in
joining the ability of management which it can move the stock.
Net sales
Invertory Turnover ratio=
Average Inventory
45,15,14,53000
2009−2010=
9,38,90,02000
= 4.80 times
37,13,28,70000
2008−2009=
7,07,25,53000
= 5.25 times
YEARS INVENTORY TURNOVER RATIO
2009-2010 4.80 times
2008-2009 5.25 times
52
5.3
5.2
5.1
5
4.9
4.8
4.7
4.6
4.5
2009-2010 2008-2009
Interpretation:
Higher the ratio more profitability the business would be. The ratio is joining
the ability of management with which it can move the stock. Inventory
turnover ratio is highest in the year 2008-09 is 5.25 as compare to current year
it is 4.80 which is little bit lower than previous year but it is obvious that in
heavy industries like Bharat Coking coal ltd. it is not a huge difference.
53
NET WORKING CAPITAL TURNOVER RATIO
Net working capital turnover ratio is obtained by net working capital joining to
sales. The excess of current assets over current liabilities is called working
capital. It is found for measuring firm liquidity. It also measures the firm
potential reserve of funds.
Net Working Capital Turnover ratio
Sales
¿
Net Working Capital
45,15,14,53000
2009−2010=
−53,72,66,70000
= -0.84 times
37,13,28,70000
2008−2009=
−63,17,28,76000
= -0.58 times
2009-2010 -0.84 times
2008-2009 -0.58 times
54
NET WORKING CAPITAL TURNOVER RATIO

0
2009-2010 2008-2009
-0.1
-0.2
-0.3
NET WORKING CAPITAL TURNOVER
-0.4 RATIO
-0.5
-0.6
-0.7
-0.8
-0.9
INTERPRITATION:
As per the balance sheet data of the creditor, the working capital turnover ratio
is different for the different years. The ratio is -0.84 in 2009-10 and -0.58 in
2008-09. So it means that higher the ratio better the working capital condition
of the company. BCCL having a negative ratio in both year so it doesn’t
shows the sound position of the company.
55
DEBT COLLECTION PERIOD
The Debt Collection shows the number of days taken to collect the debts of
credit sales. It shows the efficiency and collection policy of the company. The
ratio is computed by dividing the Debtor’s turnover ratio in to 365 days.
365 days
Debt Collection Period= '
Debto r s Turnover Ratio
365 days
2009−2010=
8.01
= 45.56 days
365 days
2008−2009=
7.10
= 51.40 days
2009-2010 45.56 days
2008-2009 51.40 days
56
DEBT COLLECTION PERIOD
50
45
40
35 DEBT COLLECTION PERIOD
30
25
20
15
10
5
0
2009-2010 2008-2009
INTERPRETATION:
The collection period is highest in 2008-09 is 51.40 days as compare to low in

the year 2009-10 is 45.56 only days. This shows the improvement in collection
policy of the Bharat Coking Coal Limited. So it is very important for any
company to collect the debs which this company do very well.
57
STATEMENT OF RATIO ANALYSIS
RATIOS 2009-2010 2008-2009

Current ratio 0.32 0.24
Acid-test ratio 0.205 0.158
Debtor’s turnover 8.018 days 7.102 days
ratio
Inventory turnover 4.80 Times 5.25 Times
ratio
Net-working capital -0.84 Times -0.58 Times
turnover ratio
Debt collection 45.56 Days 51.40 Days
period
58
59
CONCLUSION
The study involves practical and conceptual over view of decisions

concerning current assets like cash and bank balance ,inventories( like raw
materials ,w-i-p,finished goods ),sundry debtors, loans and advances, other
current assets and current liabilities like sundry creditors, securities and other
deposits, other current liabilities and provisions of BCCL. Was with the
objective of maximizing the overall net profit of the bank. And complete
synchronization and co ordination among the working capital components
which shall contribute to optimum level of operations. Mismanagement of each
or any of these components shall be detrimental to the objectives of efficient
operation, profitability and maximization of overall value of the bank.
The working capital limits would be considered only after the project
nearing completion and after ensuring control over the inventory. The inventory
is a great concern for BCCL and it need proper procurement and management.
Eligible working capital limits would be assessed by cash Budget method

And Projected production method depending the market condition, scale of
operation, nature of activity/enterprise and duration/length of operating cycle
etc.
60
RECOMMENDATION & SUGGESTION:
The recommendation & suggestion for effective management of working capital

at BHARAT COKING COAL LTD. are given bellow:
1) For inventory, in order to improve the position, BCCL can reduce the level of
stocks by resorting to phased production i.e. producing according to requirement
and disposing off or recycling the unserviceable inventories.
However, the low turnover of stock may also be due to problems with
generation of sales
Inventory management is a great concern for BCCL especially stores and
spares. The purchase manager should take proper steps for procurement of
inventories.
2.) The company must increase its Current Assets & decrease their Current
Liabilities to overcome from Negative Working Capital.
3.) The plant must take certain steps to decrease the working capital cycle. One
way can be better management of inventories.
4.) The plant is suggested to maintain a balance in capacities, synchronization of

various inputs availability of some materials or parts which are not easily
available.
5.) The plant should maintain inventory at an optimum level rather than a very
optimistic level.
6.) The procurement for materials requisition processing should be reduced so as

to minimize the lead time.
7.) Plant should given freedom in deciding the credit policies, cash discount or
credit ratings.
8). BCCL can also consider negotiating its creditors for relaxing the debt
repayment period and repaying only on or just before the expire of the credit
period.
61
Bibliography
62
The Reference Books:

Author
Financial Management Khan & Jain

Financial Management I.M.Pandey
Research Methodology C.R.Kothari
BCCL last 2 year annual reports
 bccl.cmpdi.co.in/
 www.coalindia.in/
 And help from:
Google search engine
63

Raj Kishor Verma

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Raj Kishor Verma

Uploaded by

Copyright:

Available Formats

PROJECT REPORT ON WORKING CAPITAL

In partial fulfillment for the course of

Under the Supervision of: Submitted By:

Mangalmay Institute of Management Studies (Greater Noida)

Place: B.C.C.L. (Dhanbad) Signature

Date: 24-7-2010 Raj

“Practice makes it more perfect”

I hope this serves the Purpose.

BRIEF PROFILE OF THE COMPANY

RTI Act 2005 | Tenders | Contact Us

COAL RESERVES IN INDIA : (As on 1st April, 2009)

Product & Services

 These have coking properties

SEMI COKING COAL :

 These have comparatively less coking properties than coking coal

NLW COKING COAL :

 Mainly used as thermal grade coal for power generation

 Mainly used in metallurgical industries

WASHED AND BENEFICIATED COAL :

 Used in manufacturing of hard coke for steel making

 Used for power generation

CIL COKE / LTC COKE :

 Used in furnaces and kilns of industrial units

COAL FINES / COKE FINES :

 Used in industrial furnaces as well as for domestic purposes

TAR / HEAVY OIL / LIGHT OIL / SOFT PITCH :

Details of Existing Washeries :

CONCEPTUAL FRRMEWORK OF WORKING

What is WORKING CAPITAL?

“WORKING CAPITAL represents the excess of

The same may be designated in the following equation:

TWO CONCEPT OF WORKING CAPITAL :-

WORKING CAPITAL MANAGEMENT:-

TYPES OF WORKING CAPITAL:-

Working Capital may be classified in to two ways:-

TYPES OF WORKING CAPITAL

Permanent or Fixed Working Capital:-

1) Temporary or Variable Working Capital:-

Temporary or Variable Working Capital is the amount of working capital that is

b) Special Working Capital.

FACTORS DETERMINING WORKING CAPITAL

In certain industries the demand is subject to wide fluctuation due to seasonal

2) Manufacturing Process/ Length of the production cycle:-

In manufacturing business, the requirements of working capital increase in direct

3) Working Capital Cycle:-

The degree of competition prevailing in the market places has an important

Business Cycle refers to alternate expansion and contraction in general business

7) Rate of Growth Of business:-

8) Earning Capacity And Dividend policy:-

9) Price Level Changes:-

10) Other Factors:-

Certain other factors such as operating efficiency, management ability,

4.d)Estimate of working capital requirements:

To avoid the storage of working capital at once an estimate of working capital

Factors requiring consideration while estimating working capital:-Total costs

4) The average period of credit allowed to customers.

5) The amount of cash required to pay day-to-day expenses of the business.

6) The average amount of cash required to make advance payment.

7) The average period expected to be allowed by suppliers.

8) Time lag in the payment of wages and other expenses.

FINANCING OF WORKING CAPITAL:-

The working capital requirements of a business concern can be classified as:-

In concern, a part of working capital investments are as permanent investment in

PERMANENT OR FIXED SOURCES OF WORKING CAPITAL:-