WORKING CAPITAL

MANAGEMENT

Presented By:
Group IV
Harsh Tulsian, Himanshu Pal,
Ankit Gupta
Ankit Singh Lohiya

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 Company Profile

The company was established in Jamshedpur,

India, in 1907. Tata Steel is the world's 10th largest
steel manufacturer.
It operates in more than 20 countries and has a
commercial presence in over 50 countries . The
company produces crude steel and basic steel
products, and makes steel for building and
construction applications.

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 Working Capital is?

The term working capital refers to the amount of capital

which is readily available to an organization. It is a
measure of both a company's efficiency and its short-
term financial health. Working capital is the difference
between resources in cash or readily convertible into
cash (Current Assets) and organizational commitments
for which cash will soon be required (Current Liabilities).

WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIES

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Objectives Of Working Capital Management

I. To examine the impact of accounts receivables days,

inventories days, accounts payable days and cash
conversion cycle on return on total assets
II. To analyze the trend in working capital needs of firms.

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 Working Capital Cycle
Working capital cycle, also known as the asset
conversion cycle, operating cycle, cash conversion cycle
or just cash cycle, is used in the financial analysis of a
business. The higher the number, the longer a firm's
money is tied up in business operations and unavailable
for other activities such as investing.
The cash conversion cycle is the number of days
between paying for raw materials and receiving cash
from selling goods made from that raw material.

Cash Conversion Cycle = Average Stockholding Period (in days) +

Average Receivables Processing Period (in days) - Average Payables
Processing Period

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Working Capital Cycle
Particulars Year 2004-05 Year 2005-06
Inventory Period
Raw material inv. Holding days 72.95 85.39
Work in progress holding days 1.53 1.07
Finished goods holding days 43.29 45.20
Total Inventory holding days 117.78 131.66
Debtors outstanding days 14.65 13.01
Creditors Outstanding days 113.21 114.47
Gross Working Capital Cycle - GWC 132.43 144.66
Net Working Capital Cycle – NWC 19.22 30.20

GWC CYCLE = Inventory Period + Receivables Period

NWC CYCLE = Inventory Period + Receivables Period - Payables Period

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Thank You !