Purbanchal University

BBA VII Semester

LH: 48

Course Title : Working Capital Management

Code No : FIN - 172

Areas of Study : Specialization (Finance)

Credit Hour :3

Course Objectives:

This course aims to provide the students with an understanding of the concept and
principles of working capital components and financing from the intermediate sources.

Contents:

Unit 1: Working Capital Policy LH 8

Concept and importance of working capital; Working capital cash flow cycle; Alternative
current asset financing policies;

Unit 2: Short-term Financial Management LH 10

Sources of short- term financing and cost analysis: trade credit, accruals, commercial
papers, line of credit, revolving credit, accounts receivable financing (pledging and
factoring), inventory financing ( floating lien, trust receipt, warehousing).

Unit 3: Inventory Management LH 10

Controlling investment in inventory; Costs influencing the size of inventory, the economic
order quantity model, inventory policy with lead time, re-order level; ABC analysis and
JIT system.

Unit 4:Receivable Management LH 10

Credit and collection policies: credit standard, credit period, cash discount and collection
effort, and their evaluations; evaluating the credit applicants.

Unit 5: Cash Management LH 10

Functions of cash management; motives for holding cash; Managing collections and
control of disbursement: Cash transfer tool and concentration banking; Models for
determining optimal cash: inventory model and stochastic model; Cash budget.
Suggested Readings:

Van Horne, James C., Financial Management and Policy: PHI, New Delhi

Weston, J. Fred and Thomas E. Copeland, Managerial Finance: The Dryden Press, NY

Stephen A. Ross, Randolph W. Westerfield, and Bradford D. Jordan, Fundamentals of

Corporate Finance: Tata McGraw-Hill, New Delhi