WORKING CAPITAL MANAGEMENT OF

NABIL BANK

A Project Work Report

By
Alish Maharjan
Bluebird College
T.U Reg. No:7-2-147-19-2017
Exam Roll No: 701470008

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

in partial fulfillment of the requirements for the degree of Bachelor of

Business Studies (BBS)
Kathmandu
February, 2022
 DECLARATION

I hereby declare that the project work entitled “WORKING CAPITAL MANAGEMENT OF
NABIL BANK” submitted to the Faculty of Management, Tribhuvan University, Kathmandu is
an original piece of work under the supervision of Mr. , faculty member, Bluebird College, and is
submitted in partial fulfillment for the award of the degree of Bachelor of Business Studies
(BBS). This project work report has not been submitted to any other university or institution for
the award of any degree or diploma.

………………………..
Alish Maharjan
Date: ……………
 SUPERVISOR’S RECOMMENDATION

The project work report entitled “WORKING CAPITAL MANAGEMENT OF NABIL BANK”
submitted by Alish Maharjan of Bluebird College, Lalitpur is prepared under my supervision as
per the procedure and format requirements laid by the Faculty of Management, Tribhuvan
University, as partial fulfillment of the requirements for the award of the degree of Bachelor of
Business Studies (BBS). I, therefore, recommend the project work report for evaluation.

Mr.

Bluebird College

Date:……………………..
 ENDORSEMENT

We hereby endorse the project work report entitled “WORKING CAPITAL MANAGEMENT
OF NABIL BANK” submitted by Alish Maharjan of Bluebird College, Kathmandu in partial
fulfillment of the requirements for award of the Bachelor of Business Studies (BBS) for external
evaluation.

Mr. Mr. Pawan Shrestha

Chairman, Research Committee Bluebird College

Date:………………… Date:………………...
 ACKNOWLEDGEMENT

It is a great pleasure in presenting this report as the requirement for the degree of

Bachelor of Business Studies (BBS) of T.U for the partial fulfillment of Business

Research Methods. This report contains all the data. This project work report will provide

valuable information to justify and understand the concept of the study “WORKING CAPITAL
MANAGEMENT OF NABIL BANK”.

I am sincerely grateful to my research supervisor Mr., Head of research department Mr. Bir
Singh Chhetri,

Campus Chief who helped me by providing his suggestion, ideas and time who helped

me during the preparation of the project. I would also like to thanks all my teachers who

helped me in writing report and guided over time for the completion of my report.

Last but not the least; I would like to express my greetings to my family and friends who

helped me a lot in finishing this report within the limited time. I am making this project

not only for marks but to increase my knowledge.

Submitted By

Alish Maharjan

BBS 4th Year

 TABLE OF CONTENTS
Title Page
Declaration
Supervisor’s Recommendation
Endorsement
Acknowledgement
Table of contents
List of table
List of figures
List of Abbreviations

CHAPTER I: INTRODUCTION
Introduction
Profile of the Organization
Problem Statement
Objectives of the study
Significance of Study
Limitation of Study

CHAPTER II: RELATED LITERATURE REVIEW

Literature Review
Research gap

CHAPTER III: RESEARCH METHODOLOGY

Types of Research
Population and sample
Types of Data
Data Collection Procedure
Techniques of Analysis

CHAPTER IV: RESULTS AND FINDINGS

Presentation of Data and their Analysis
Findings of the Project Work

CHAPTER V: DISCUSSIONS AND CONCLUSIONS

Discussions
Conclusions and Implications

REFERENCES
APPENDICES
 CHAPTER-I INTRODUCTION

1.1 Introduction

As a developing country, Nepal is striving to develop and modernize economy rapidly.

Development of trade, commerce and industry are the prime requisite for the attainment of the
economic, political and social goals. To fulfill the purpose of planning, financial functions more
often dominate the other functions. 

In the underdevelopment countries like Nepal, there is always lack of financial resources not
only because of its real absence but because of the available resources are not properly mobilized
and are not fully utilized for the productive purpose. So, for the rapid economic development in
the underdevelopment countries like Nepal there should be proper utilization of resources. For
proper utilization of resources financial institution play a vital role. Financial institution gives the
opportunity to individuals to borrow funds against future income, this may improve the
economic well-being of the borrower. In this course, the bank plays most important role in
modern economic organization. Their business mainly consists of receiving deposits, giving
loans and financing the trade of a country. They provide short term credit that is lend money for
short term or periods.

Bank is the backbone as well as the foundation for the development of the country. In other
words, bank is an institution that deals with money and provides other financial services.
Commercial banks are the major financial institutions that occupy quite an important place in the
framework in the economy development sectors as well as in saving and investment sectors.
Commercial banks are the suppliers of finance for trade and industry and play a vital role in the
economic and the financial life of the country. In general view, commercial bank is a financial
institution which accepts deposit from the public and gives loan for the purposes of consumption
and investment to make profit.

Working capital is the life blood of the organization. To sustain the belief of the people and
customer, the organization should always get ready to meet the obligations. Decisions related to
current assets and short-term financing are defined as working capital management. Working
capital refers to the part of firm’s capital which is required for financing short term or current
assets such as cash, marketable securities, debtors and inventories. In other words, working
capital is the amount of funds which is needed to cover the cost of operating the enterprises. It
typically means the firm’s holding of current of short-term assets.

According to I.M. Pandey, there are two concepts of working capital:

 Gross Working Capital

The gross concept of working capital refers to total current assets. Gross working capital and
total current assets are synonymous. Current assets are the assets which can be converted into
cash within an accounting year (or operating cycle) and include cash, short-term securities,
debtors, bills receivables and inventories. Gross working capital is also known as total working
capital. Working Capital = Total of all current assets

 Net Working capital

The net working capital refers to current asset’s fewer current liabilities. The need for the net
working capital arises due to the fact that the gross concept fails to consider the current
liabilities. Current liabilities are those claims of outsiders which are expected to mature for
payment within an accounting year and include creditors, bills payable, Bank overdraft and
outstanding expenses. Net working capital can be calculated by using following equation:

Net Working Capital= Current assets- Current liabilities

  Types of Working Capital

Sources of finance of working capital are decided on the basis of the period for which the fund is
required. For this purpose, working capital is classified into two groups: permanent working
capital and variable working capital. These working capitals are necessary for any organization
of continuous production and sales without any interruption.

Permanent Working Capital

The amount of working capital required for business to maintain a minimum level of current
assets for the whole period is called permanent working capital. It is also known as fixed
working capital. It is comprised of minimum cash balance, minimum level of inventory etc.

Variable Working Capital

The requirement of working capital may be high during a particular season and it comes down
during other periods. This additional portion working capital which is required during peak
business season is known as variable or temporary or seasonal working capital. Variable working
capital is required during peak season only. Therefore, it is desirable to n finance the temporary
working capital from short term external sources like trade credit, commercial paper,
arrangement of other short-term loan from the bank.

1.2 Profile of the organization

NABIL Bank Limited is commercial bank in Nepal which was Founded in 1984, the bank has
branches across the nation and its head office in Kathmandu. It began as the first bank in Nepal
incepted by multinational (primarily foreign) investors (as Nepal Arab Bank Ltd) on 12 July
1984.  NABIL was incorporated with the objective of extending international standard modern
banking services to various sectors of the society. The bank commenced with a team of about 50
staff members and Rs. 28 million as capital.
 Today the banks mission is to be bank of first choice to all stakeholders. For the customers, the
bank craves to be the first choice in meeting all financial requirements, for shareholders the bank
wants to be the investment of choice, for regulators to be an example of model bank, and wants
to be an outstanding corporate citizen in all the communities and finally to be the first choice as
an employer with whom to build a career.

Today NABIL bank is a leader in the financial sector in Nepal with a network that has 112
branches spread across the nation; complimented by a network of 183 ATM outlets. NABIL is a
full-service bank providing an entire range of products and services, starting with deposit
accounts in local and foreign currency, visa and master card denominated in rupees and dollars,
visa electron debit cards, personal lending products for auto, home and personal loans, Trade
finance products, Treasury services and corporate financing. In terms of deposits, NABIL bank is
in 4th rank which has Rs.235.28 Arba deposit during the beginning of 3rd quarter, i.e., Poush 2078
B.S.

NABIL, as a pioneer in introducing many innovative products and marketing concepts in the
domestic banking sectors, represents a milestone in the banking history of Nepal as it started an
era of modern banking with customer satisfaction measured as a focal objective while doing
business.

1.3 Statement of problems

Working capital management has been regarded as one of the conditioning factors in a decision-
making issue. The management of working capital is synonymous to the management of short-
term liquidity. Working capital is regarded as the life blood and nerve of the business concern
and is essential to accommodate the smooth operations of any organization. Under and over
allocation of working capital is harmful to an enterprise to achieve its objectives. Therefore,
maintaining optimum level of working capital is the crucial problem as it is strongly related to
the tradeoff between risk and return. An organization, which is not willing to take more financial
risk, can go for more short-term liquidity. The more short-term liquidity means more of current
liabilities imply less short-term financing. So, it is very essential to analyze and find out
problems and solutions to make efficient use of funds for minimizing the risk of loss to attain
profit objective. On the other hand, excessive investment in working capital yields nothing.
Therefore, working capital should be determined in such a way that total cost i.e., cost of
liquidity and cost of non-liquidity is minimum. Hence, the goal of working capital management
is to manage the firms’ current assets and current liabilities in such a way that it should maintain
satisfactory level. Working capital management of banks is more difficult than that of
manufacturing and non-manufacturing business organization. Commercial banks are great
monetary institution, which are playing important role to general welfare of the economy. The
responsibility of commercial banks is more than any financial institution. They must be ready to
pay on demand without warning a notice, a good share of their liabilities. Banks collected funds
from different types of deposits for providing loan and advance to different sector. To get higher
return, the bank must try to increase funds from deposits as well as their investment. The first
motive of banking business is to borrow public saving and lend to needy people. But commercial
banks always face the problem for utilizing more deposits as investment of loans increase the
cash balance on bank, which require paying its large amount of liabilities on its depositor’s
demand without notice. But large amount of idle cash balances also decreases profitability of
banks.

The major problems that have been identified for the purpose of study are as follows:

· What is the banks image in relation to working capital?

· What are the major factors affecting the management of working capital?

· Which of the current assets are more problematic?

· What are the lending patterns of loan and advance and other investment?

· What are the components of working capital, which affects the operating income?

 
  

1.4  Objectives of study

The main objectives of this study are to highlight and examine the management of working
capital in NABIL bank. The specific objectives of this study are as follows:

· To analyze and evaluate the position of current assets and current liabilities.

· To evaluate the composition of working capital, profitability and assets utilization.

· To provide recommendation and suggestion on the basis of major findings.

· To show the relationship of net profit with the working capital, and debt of the bank.

· For the partial fulfillment of BBS 4th year research report preparation.

1.5 Significance of study

Working capital is regarded as the life blood and nerve of a business concern and is essential to
accommodate the smooth operations of any organization. This study has multidimensional
significance such as:

· Significance to the policy maker: policy makers here refer to the government. The study
is helpful to them while formulating the policy regarding commercial banks.

· Significance to the management: The study might be helpful to go deep into the matters
as to why working capital of management of NABIL bank is better or worse than their
competitors.

· Significance to the outsiders: among outsiders, mainly the customers, financing agency,
stock exchange and stock traders are interested in the performance of finances and the
 customers are able to identify to which finance they will prefer. The financial agencies can
understand where there is more secure and stock exchange, stock traders can find out the
relative worth of the stocks of each corporate.

· Significance to shareholders: the study might be helpful to aware the shareholders

regarding the working capital management, i.e., liquidity and profitability of their finance.

This study helps to identify the productivity of funds of NABIL bank ltd. Therefore, considering
all these facts, the study of working capital management of NABIL bank is considerably
important and helpful.
 

1.6 Limitation of Study

Under the world of uncertainty everything goes by assumptions or limitations. In other words, no
study can be complete without certain assumptions. Hence, this study also has some limitations;
lack of previous research experience is the major limitation. The study is conducted on the basis
of following limitations:

· This study follows with only specific tools such as ratio analysis, mean, standard
deviation and coefficient of variation, which is not sufficient.

· This study has been confined to only for Co-operatives.

· The study is mainly based on secondary data. It is done on the basis of the published
annual report and internet.

· The lack of sufficient time and resources is another limitation of the study. The study is
fully based on the student’s financial resources and is to be completed within limited
time.

· The report has taken only 6-year data for study from year 2072/73 to 2077/78.

· Data only cover six years’ time so it may lack detailed information and may not reflected
the actual trend.
 CHAPTER II – LITERATURE REVIEW

2.1 Literature Review

A literature review is a comprehensive summary of previous research on a topic. The

literature review surveys scholarly articles, books, and other sources relevant to a particular area
of research. The review should be enumerated, described, summarized, objectively evaluate and
clarify this previous research. It should give a theoretical base for the research and help you (the
author) determine the nature of your research. The literature review acknowledges the work of
previous researchers, and in so doing, assures the reader that your work has been well conceived.
It is assumed the reader that by mentoring a previous work in the field of study, that the author
has read, evaluates, and assimilated that work into the work at hand. A literature creates a
“landscape” for the reader, giving her or him full understanding in the field. This landscape
informs the reader that the author has indeed assimilated all previous, significant works in the
field into her or his research. Literature review is a self- contained unit in a study which analyzes
critically assessment of a published body of knowledge through summary, classification and
comparison of prior research studies and theoretical articles. In other word, a literature review is a
summary of current knowledge about a particular topic or area of enquiry. Books and research
journals, abstracts, reports, thesis, electronic medium are the sources of literature review.
Literature review is useful in research because it provides the insight and general knowledge
about the subject matter of research. In the topic of working capital management, so many
researches are done previously. I have taken some of them as references which are mention as
below:

Acharya (2009) has carried out research “Working Capital Management of Manufacturing
Companies Listed in NEPSE.”

Findings:

· It is found out that the companies are accompanied with various hindrances like lower
turnover, lower return, lower net working capital or poor liquidity position.
 · There is lack of proper working capital policy, deteriorating financing situation, lack of
appropriate credit and collection policy.

Pathak (2012) has done a research work on “Working Capital Management of Commercial
banks in Nepal” a comparative study of EBL and NBBL.

 Findings:

· The net working capital of NBBL is negative in some year so the sufficient amount of
working capital for operational requirement for NBBL in case of EBL, the net
working capital is positive.

· There is very high variability of net working capital maintained by NBBL and EBL.
v In case of EBL fluctuation of the study period, this shows that EBL is more
efficiency than NBBL.

· The profitability position of NBBL is better than EBL.

· Correlation between investment on government security and total deposit of EBL is

highly significant.

· It shows that there is close relationship between investment on government securities
and total deposit of EBL. However, it is not significant in case of NBBL.

· While testing the hypothesis of composition of working capital, it has been observed
that the mean value of proportion of cash and bank balance, loan and advance and
government securities of NBBL and EBL are not statistically different.

Dahal (2010) has done a research on “A Case Study of a Working Capital and its Impact”
with reference to NIC and NABIL Bank.

Findings:
 · The average cash and bank balance percentage and loans and advances percentage are
higher in NIC than NABIL. But the average government securities percentage is
higher in NABIL than NIC.

· The liquidity position of NIC is better than NABIL. The trend of liquidity ratio i.e.
quick ratio and cash and bank balance ratio of both banks are decreasing. The both
banks tried to reduce its idle money; however, it is shown that the liquidity position of
NIC is always 7 betters than NABIL. It means NIC is bearing lower risk, which mean
lower profits in commercial banks; higher liquidity is not always the cause of lower
profitability.

· NABIL has better turnover than NIC. Thus, NABIL has better utilization of deposits in
income generating activity than NIC. However, NIC is utilizing its saving deposit in
loans and advances more effectively than NABIL.

· Profitability measures more efficiency of the firm. The profitability position of NABIL
is far better than NIC although the interest earned by NABIL and NIC is equal.

· The average long-term debt to net worth ratio of NABIL is higher than that of NIC. So,
NABIL has higher proportion of outsiders claim in total capitalization than NIC or
NABIL has more risky and aggressive capital structure than NIC.

2.2 RESEARCH GAP

All above studies are concerned with research of Working capital. Some researchers have
selected various different companies for this research and some have concentrated on only one
company. But this study selects NABIL’s Working Capital to cover the analytical part &
fulfillment of objectives of study. In this study, it is tried to carry out the distinct from other
previous report studies in the term of sample size, nature of sample banks, methodology &
statistical tools used. Analysis of standard deviation, regression analysis, and trend line analysis
& field survey are used as main model of study with the view to obtain the relevant & accurate
result. So, it has been believed that the study will be different than earlier one.
 CHAPTER III – RESEARCH METHODOLOGY

3.1 Research Methods

Research methodology is the process of arriving at the solution of the problem through planned and
systematic dealing with the collection, analysis and interpretation of facts and figures. Research is a
systematic method of finding right solution for the problem whereas research methodology refers to the
various sequential steps to adopt by a researcher in studying a problem, with certain objectives in view.
In other words, research methodology refers to the various methods of practices applied by the
researcher in the entire aspect of the study. It is the plan, structure and strategy of investigations
perceived to answer the research question or test the research hypothesis.

It includes different dependent and independent variables, types of research design, research
questions and hypothesis sample, data collection activities, technique of analysis etc.

Type of Research

 Fundamental research. ...

 Applied research. ...
 Qualitative research. ...
 Mixed research. ...
 Exploratory research. ...
 Field research. ...
 Laboratory research. ...
 Fixed research.

Population and sample

The population refers to the industries of the same nature and its services and product in

general. Population is the entire collection of interest i.e. People, Objects or events as

defines by the researcher and sample is the entire collection of all observations of the

interest for the researcher. Currently, there are 33 development banks in Nepal. Out of total 33
development banks of Nepal, NABIL Bank is selected as a sample for this study.
 Data collection procedure:

Data collection procedure is the process of gathering and measuring information on variable of
interest, in an established systematic fashion that enables one to answer stated research question,
test hypothesis, and evaluate outcomes. In other word, Data collection procedure is the official
way of collection of data for the relevant studies. There are two types of data. Firstly, primary
data and second is secondary data.

a) Primary data:

Data collected by the investigator himself/herself for a specific purpose. In the simple way, the
primary data are those data which are collected by researcher him/herself for their own use as
per 8 the objective of research. These types of data collected by engage in work field.
Observation, Questionnaire and Interview are the sources of primary data. There is no doubt
about the quality of the data collected (for the investigators). If required, it may be possible to
obtain additional data during the study period.

b) Secondary data:

Data collected by someone else for other purpose (but being utilized by the investigator for
another purpose). In other word, the secondary data are those data which is collected from the
published and unpublished sources for the fulfillment of any types of research. In the secondary
data, the investigator is not personally responsible for the quality of data. All the data collected
for this study from the secondary sources such as annual report and internet. Due to the poor
database, the data obtained from the various sources cannot be directly used in their original
form. Further they need to be verified and simplified for the purpose of analysis. Hence, in the
study the available data, information, figures and facts were checked, rechecked, edited and
tabulated for computation.

Data analysis tools

Financial as well as statistical tools are used to make the analysis more convenient, reliable and
authentic. For, data analysis, different items from balance sheet and other statements are
tabulated. Their ratios, percentage, mean and standard deviation are then calculated and
 presented in the tables and bar diagram. Following are the brief introductions of the financial and
statistical tools used in this study.

A. Financial tools

Financial ratios are calculated to ascertain the financial condition of the firm. It is the
relationship between financial variables contained in the financial statements (i.e., balance sheet,
profit and loss account and income statements). It helps the related partied to spot out the
financial strength and weakness of the firm. There are several financial tools, which can be
applied in order to analyze the performance of the cooperative finance. The financial tools used
in this study are as follows: liquidity ratio activity ratio, and profitability ratio. Similarly, net
working capital and composition of working capital in terms of cash and bank balance
percentage, loan and advances percentage, government securities percentage and miscellaneous
current assets percentage are also calculated.

i. Liquidity ratio
This ratio measures the liquidity position and short-term solvency of the firm indicating the
company’s ability to meet short-term obligation. The current ratio and quick ratio measure the
liquidity position of the company. These ratios are calculated to judge the long term as well as
short-term financial position of concerned firm. Liquidity of any business organization is directly
related to working capital or current assets and current liabilities of that organization. One of the
main aims of working capital management is keeping good liquidity position. The liquidity ratios
calculated in this study are as follows.

 Current ratio

This ratio indicates the current short term solvency position of the bank. It can be expressed as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 Quick ratio

Quick ratio is used to measure the ability of concerned firms to pay current obligation (short
term) without depending on other liquid assets of current ratio. It can be expressed as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 Cash and bank balance to deposit ratio (Excluding Fixed Deposit)

This Ratio shows the ability of cooperative finance immediate funds to cover their (current
margin, and saving) deposit. This ratio can be expressed as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 Fixed Deposit to Total Deposit Ratio

This ratio is calculated in order to find out the proportion of total deposit that has higher interest
charge bearing. It is expressed as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 Saving Deposit to total deposit Ratio

Saving Deposit is an interest-bearing short-term deposit. The ratio is developed in other to find
out the proportion of saving deposit, which is interest bearing and short term in nature. It is
expressed as:

(Sources: Paudel, R. B., Baral, K. J.,

Gautam, R. R., &Rana, S. B.,2006)
ii.Activity or Turnover Ratio
The fund of creditors and owners are invested in various assets to generated sales and profit.
Activity ratios are used to evaluate the efficiency with which the firm manages and utilize its
assets. From this ratio it can be known whether or not the business activities are efficient, these
ratios are also called turnover ratios because they indicate speed with which assets are converted
or turnover into profit generating assets. These ratios, moreover, help in measuring the
cooperative finance ability to utilize their available resources. Following ratios are used under the
activity’s ratios.

 Loans and advances to total deposit ratio

This ratio assesses to what extend the firm are able to utilize the depositor’s fund to earn profit
by providing loans and advances. It can be expressed as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 Loan and advances to total fixed deposit ratio

This ratio measures how much amount is used in loans and advances in comparison to fixed
deposits. This can be stated as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

  Loan and advances to saving deposit ratio

This ratio is also employed for the purpose of measuring utilization of saving deposits in
generating revenue by giving loan and advances to the client. It can be express as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

iii.Profitability ratio
The profitable ratio, as the name suggests, measured the operating profitability in term of profit
margin return on equality and return on total investment, and reflects the overall efficiency and
effectiveness of management. Shareholders, government, tax collector, employees are concerned
with the profitability of the company; the shareholders are interested with their rate of return,
employees in the future prospect of the company, government in company’s tax payment capacity
and cooperatives in the perspective of the company. Profitability can be measure in term of a
relationship between net profit and assets. This ratio is also known as profit-to-assets ratio. It
measures the profitability of investment. Various ratios can be developed based upon the profit
under different circumstances. These different ratios are called profitability ratios, which are
required to support the purpose of the study. The profitability Ratios calculated in the study are as
follows:

 Interest earned to total assets ratio

This ratio is used to deter mind the total interest earned from investment over the total assets
of a firm. It can be computed as follows:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

  Net profit to total assets ratio

Profit to total assets ratio is useful in measuring the profitability of all financial resources
invested compared to total assets of a firm. It is expressed as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 Net profit to total deposit ratio

This ratio measures the percentage of profit earned from the utilization of the total deposits.
It can be expressed as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

iv.Composition of working capital

To operate the business, different kinds of assets are required. In case of SMSACCL, the main
components of current assets are cash and bank balance, loan and advances and government
securities. Miscellaneous current assets are also a component of current assets. Prepaid expenses,
outstanding income like interest receivable and other current assets are included in miscellaneous
current assets

.  Cash and bank balance percentage

 Loan and advances percentage

 Government securities percentage

  Miscellaneous current assets percentage

v.Net working capital

Net working capital is the difference between current assets and current liabilities. It can be
positive or negative. A positive net working capital arises when current assets exceed current
liabilities are in excess of current assets. It is the part of current assets which is financed by long
term funds. It shows the current liquidity position of organization.

B. Statistical tools

Various financial tools mentioned above were used to analyze the working capital
management of TSCCL. Likewise, the relationship between different variables related to the
study topics were also drawn out using statistical tools.

 Mean or average

The mean or average value is a single value within the range of data that is used to represent
all the values on the series. Since, an average is somewhere within the range of data, it is also
called a measure of central value. The formula is given by:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

  Standard deviation

The standard deviation is the measure that is most often used to describe variability in data
distributions. Standard deviation is extremely useful for judging the representatives of the mean.
Standard deviation is represented as:

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 Coefficient of variation

The coefficient of variation is the ratio of standard deviation to the mean for a given sample
used to measure spread. It can also be thought of as measure of relative risk. The larger the
coefficient of variation, the greater the risk relative to the average mathematically,

(Sources: Paudel, R. B., Baral, K. J., Gautam, R. R., &Rana, S. B.,2006)

 CHAPTER IV- RESULTS AND FINDINGS
The main theme of this chapter is to analyze and interpret the data by data by using financial
and statistical tools. In this chapter, the concern is given in the presentation and analysis part of
data in detail. A data presentation and analysis is the crucial part of any research, the purpose is to
organize the collected data so that it can be used for interpretation whereas analysis of the data is
to convert it from a rough form to an easy and understand able presentation. It is so obvious that
the presentation of the data and its analysis help us to draw valid conclusion. There are a number
of methods which can be used to simplify the data. It is being felt that the easiest way to
understand the data is by examining it through charts, tables and graphs. Necessary tables and
figures are presented to achieve the objectives of the study. Here, all possible data are collected
from the corporate finance. Similarly, some of the data are also collected from internet, journals
and other concerned sources.

2.1. Data Presentation

Data presentation refers to the organization of data into tables, graphs or chart, so that logical and
statistical conclusions can be derived from the collected measurements. In other word, Data
presentation is the process of presenting the calculated data into tables and any diagrams or chart
to making the whole calculation certain and clears to the reader. Data may be presented in three
methods that are textual, tabular and graphical. The data of this study are presented in tables and
bar diagrams.

a) Composition of working capital

The operation of the business requires different kinds of current assets. The main components of
current asserts at NABIL are cash and bank balance, loan and advances and investment
government securities. Miscellaneous current assets are also a component of current assets such as
pre-paid expenses; outstanding incomes for instance, interest receivable, and other current assets.
The percentage composition of currents assets to total current assets i.e. cash and bank balance,
loans and advances, investment in government securities and miscellaneous current assets are as
follows:
Table no.1: Percentage composition of current assets of NABIL bank.

Fiscal year Cash and Loan and Government Miscellaneous Total

Bank Advances securities Current Current
balance Assets Assets
2072/73 7.68 56.93 32.98 2.41 100
2073/74 12.23 84 0.045 3.71 100
2074/75 10.37 76.95 11.09 1.57 100
2075/76 10.36 72.01 11.01 6.2 100
2076/77 11.58 71.83 10.25 6.32 100
2077/78 3.25 92.31 2.85 1.67 100
Average 9.245 75.83 11.37 3.63
S.D. 17.73 10.96 10.56 1.99
C.V 1.91 0.144 0.92 0.54

(Sources: Annual Report of NABIL bank, 2072/73-2077/78)