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PROJECT SYNOPSIS

INTRODUCTION: Working capital is the excess of current assets over the current liabilities. It is the portion of the current assets which is being financed by the long term funds in an organization. Working capital management refers to the administration of the current assets and the current liabilities. It is concerned with the problems that arise in attempting to manage the current assets, current liabilities and the interrelationships that exist between them. Current assets should be sufficient enough to cover current liabilities in order to maintain a reasonable safety margin. Moreover different components on working capital are to be properly balanced. In the absence of such situation, the financial position in respect of the firms liquidity may not be satisfactory in spite of satisfactory liquidity ratio. Working capital management policies have a great effect on firms profitability, liquidity and its structural health. In order to determine the amount of working capital needed by a firm a number of factors such as production policies, nature of business, length of

manufacturing

process,

credit

policy,

rapidity

of

turn-over,

seasonal

fluctuations etc., are to be considered by the management.

Working capital management refers to the administration of all aspects of current assets, namely cash, marketable securities, debtors and stock (inventories) and current liabilities. The financial manager must determine levels and composition of current assets. He must see that right sources are tapped to finance current assets, and that current liabilities are paid in time. He must see that right sources are tapped to finance current assets, and that current liabilities are paid in time. There are many aspects of working capital management, which make it an important function of the financial manager: Time: working capital management requires much of the financial managers time. Investment: working capital represents a large portion of the total investments in assets. Significance: working capital management has great significance for all firms but it is very critical for small firms. Growth: the need for working capital is directly related to the firms growth. Investment in current assets represents a very significant portion of the total investment in assets. Working capital management is critical for all firms. A small firm may not have much investment in fixed assets, but it has to

invest to in current assets. Small firms in India face a severe problem of collecting their debtors. It may, thus, be concluded that all precautions should be taken for the effective and efficient management of working capital. The finance manager should pay regular attention to the levels of current assets and the financing of current assets.

Objectives of the study:

To analyze the working capital trend during the last five years.

To establish a significant relationship between individual components of financial statements through application of financial tools. To evaluate operational efficiency of the management for the past 5 years. To suggest measures for optimizing the working capital requirements.

Research methodology: Secondary data will be applied for this research study. Research type will explorative in nature. Financial statements for the years 2006-2010.
Financial tools such as Ratio analysis, working capital analysis & capital

budgeting analysis will be applied.