Bangladesh University of Professionals (BUP)

FACULTY OF BUSINESS STUDIES

FIN 4707: WORKING CAPITAL MANAGEMENT

Dr. Sumon Das, Associate Professor, University of Dhaka
PROPOSAL REPORT:
Working Capital Management of British American Tobacco Bangladesh Ltd.

Submitted by:
Ahmed Zawad ID: B1506002
Fuhad Ahmed ID: B1506025
Sajeed Mahmud Mahee ID: B1506045
Izbath Tarik ID: B1506061
Abidur Rahman ID: B1506169
 1. Objective
Broad Objective: The objective of the study is to gain an insight into the concept of working capital
management from British American Tobacco’s perspective and how it influences the overall performance of
the company.
Specific Objective:
I. Evaluation of working capital management
II. Evaluation of liquidity position & inventory
III. Evaluation of receivables and accounts payable

2. Methodology
I. Data Source: Secondary data is mainly collected from the annual reports of the
company as well as some previous work on working capital management. Some
websites are also used as reference while doing this research.

II. Data Analysis:

A. Determining the working capital policy of BATB: The current asset to sales level is compared
to identify the working capital policy of BATB. Last 10yrs current asset data and sales have been
collected and compared. If a firm follows a highly aggressive policy, it would carry a low level of
current assets in relation to sales and vice versa.

B. Determination of Inventory period of BATB: Inventory Period is an efficiency ratio that shows
how quickly a company uses up its supply of goods over a given time frame. It is computed by
dividing inventories by the company's average daily cost of goods sold. 10yrs dta
Inventory Period= Inventories/ (COGS/365)

C. Determination of A/C receivable days: (data obtained from aging schedule): Number of Days
Accounts Receivable is the length of time required to collect cash receipts. It is also called "Days
of Sales Outstanding". 10yrs data have been collected and the trend have been analyzed.

D. A/C payable periods: Accounts Payable Period is calculated by dividing trade payables by the
company's cost of goods sold per day. Accounts Payable Period= Trade Payables/ (COGS/365)
 E. Cash conversion cycle:

Operating Cycle is the interval between the order of inventory stock and the date when cash is
collected from receivables. And CCC begins when the company pays cash to suppliers for the
materials purchased and ends when cash is collected from customers for credit sales.

From the above 4 information:

CCC = (Inventory Period + Accounts Receivable Period) - Accounts Payable Period

3. Analysis
I. Descriptive Analysis: Descriptive statistics are used to describe and discuss characteristics of
the given data. Mean and standard deviations of the receivable days, payable days, inventory days
and the cash conversion cycle have been computed.
II. Correlation Analysis: Correlation between the above key variables have been computed and
analyzed.
III. Multiple regression analysis: Multiple regression analysis have been done between the
abovementioned variables.