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Malek Spinning Mills Ltd.

WORKING CAPITAL MANAGEMENT

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Malek Spinning Mills Ltd.
Incorporation 02 November 1989
Operation January 01, 1991
Public14 September 2008

Product Premium quality yarn
Capacity 14,621,000 kgs
Location Shafipur, Gazipur
Kazi Mohammad Selim 14-005

Deposits.5 2. Pre-payments ↗Accounts Receivable ↗Inventories June 10 (Actual) June 11 (Forecasted) 18.1 .892.782. June 09 (Actual) Current Assets 1.2 ↗Cash and Cash Equivalents ↗Advances.Current Assets Figures are in million tk.112.

35% Account Inventory. 2011.5 Account Receivable June 11 (Forecasted) 2. 39% Cash. Receivable. 2009. 4. 51%Inventory Account Receivable.2 June 10 (Actual) 18. . 2010.1 Cash Inventory.892. 2009. 7% 2009. 45% Account Receivable.2010. 2011.112.Percentage of Current Assets Current Assets Inventory.70% 2011. 4%3.60% 3% Cash. 2010. June 09 (Actual) 1. Cash.782.

257.921. Current Liabilities June 09 (Actual) June 10 (Actual) June 11 (Forecasted) 1.8 756.9 ↗Short Term Loan ↗Current Portion of Long Term Loan ↗Security Deposit against Sales ↗Acceptance Liabilities for Raw Cotton ↗Acceptance Liabilities for Machinery ↗Creditors and Accrues ↗Provision for Income Tax .4 1.Current Liabilities Figures are in million tk.

Net Working Capital Net Working Capital June 09 (Actual) -29.7 .025.90 854.4 June 10 June 11 (Actual) (Forecasted) 18.

Working Capital Policy Tasfik Awal 14-067 .

926 432.997 1.477.297.137.000 200.008.660.859.188 2.536.343 410.579 271.309.Closing Cost of Goods Sold +Selling.158.156 -Closing Inventory of Raw Materials Raw Material Consumed Total Manufacturing Cost +Work-in-Process .690 769.547.856 598.970 1.673.234.739.374 1.050.817 211.221 1.789.011.384.129.229.116.102.557 245.973 472.125 240.660.163.463.469 1.804 123.381 180.738 170.488.428 97.164.115 820.156 871.001.180.724.880 2.161.600 550.745.110 303.433 474.200.Closing Cost of Production +Finished Goods .044 +Direct Expenses 18.017.074.472 73.100 +Factory Overhead 98.929.500.100.187.798.248 232.096 71.502.250.615 129.309 490.633.744 90.085 1.Cost of Goods sold Statement Jun09 (Actual) Jun10 (Actual) Jun11(Forecasted) Opening Inventory Raw Materials 211.399.335 838.082 40.& general expenses Cost of sales .694. ad.459 610.800.453.632.838 650.015.589 1.Opening Cost of Goods Available for Sales -Finished Goods .850 640.Opening Cost of Goods available for Use -Work-in-Process .615.683.231 230.812.450.599.063 2.540.428 1.809.571 1.860 +Purchase during the period 221.934.594 42.820 1.348.162.857 70.257.198.238.727.428 671.952.

603.225.134.202.421.070.200.017.929.502.536.015. Finished Goods Conversion Period (a) Cost of goods sold 671.817 211.865.800.76 2278333.25 106 82 2.798.000 (a) Debtors outstanding days 303 135 118 5.335 838.727.660.22 (a) Finished goods inventory 97.571 1.161.008.374 1.477.926 (a) Raw material inventory holding days 0.381 180.683.896.000 170 14 36 (a) Raw material inventory (a) Work in process inventory holding days (a) Finished goods inventory holding days (a) Purchase per day (a) Creditors (a) Creditors outstanding days 9 . Creditors Deferral Period (a) Credit purchase 221.676.257.309.857 70.30 6.599.662.579 271.39 4.464.859.745.037.600.738 (a) Cost of production per day 1.599.928.789.044 (a) Raw material consumption per day 1.502.011.997 1. Collection Period (a) Credit sales at cost 871.329.329.638.188 2.64 104.459 610.399.115 820.297.99 3.453.18 5.86 4.297.694.92 4. Raw Material Conversion Period (a) Raw material consumption 432.723.June 09 (Actual) June 10 (Actual) June 11 (Forecasted) 1.37 3.856 25 23 15 3.27 (a) Work in process inventory 42.739.557 245.198.172.156 (a) Sales per day 2.32 (a) Debtors 733.472 73.859.000 (a) Cost of goods sold per day 1.638 81. Work in Process Conversion Period (a) Cost of production 598.589 1.488.187.071 24.34 303.428 52 45 38 4.820 1.744.080 629.38 2.187.83 1695269.074.110 616106.830.039.271.063 2.348.317 743.463.

25 106 82 Work in Process 25 23 15 Finished goods 52 45 38 Inventory Conversion Period 77 174 135 Debtors Conversion Period 303 135 118 Gross Operating Cycle 380 309 253 Payment Deferral Period 170 14 36 210 295 217 Raw material Net Operating Cycle .Inventory Conversion Period June 09 (Actual) June 10 (Actual) June 11 (Forecasted) 0.

Working capital turnover June 09 (Actual) June 10 (Actual) June 11 (Forecasted) 1.66 Tafiz Mahmud 14-141 .22 1.71 1.

83 1.68 .68 Working Capital Ratio -0.Ratio Analysis June 09 (Actual) June 10 (Actual) June 11 (Forecasted) Liquid Ratio 0.83 0.92 Current Ratio 0.71 0.02 23.49 23.98 24.

934.200 2.756.692.995.029 429.159 502.518 246.132 Investment in Work-in process 41.132.243 272.071.321 740.020.000 Cash Balance 140.641 181.804 123.220 1.778 72.800.472.087.894 212.017.639 1.558 Investment in Raw Materials Total Deduct Creditors Total Net working Capial .811 -15.805.000 Wages 18.500.790 Investment in advance 58.100 1.032.500.008 84.008.615 129.888.992.878.255.560.579 Investment in Book debts 733.511.369.432 631.092.522 1.800.458 Investment in inventory 138.162.000.871 242.477.194.989 Investment in Finished Goods 97.276 1.000 74.055 99.307.489.615.952.874 677.733.082 40.369 104.738.600 Short term loan 862.822.163.174 10.777 82.510.420.011 Deferrel payment 1.775.000 1.161 23.315.096 71.161 401.831.458.100 Overhead 98.Investment in Working Capital June 09 (Actual) June 10 (Actual) June 11(Forecasted) 300.868 485.408 1.180 200.796.026.482.379.049.086.385.

M S 389350547.Inventory Management   Raw material: Raw cotton Procured from USA only Malek Spinning Mills Ltd. USA. Greenwood. PO Box–547. West Market St. are licensees of COTTON USA Main supplier Staple Cotton Co-operative Association 214. and Salek Textile Ltd. Khandaker Shohag 14-127 .

Percentage of inventory Current Assets 51% 4% 45% Sales 117% Total Assets 19% 50% 43% 4% 16% MSML’s inventory Raw Materials Stock-in-Transit Work-in-Process Finished Goods Stores and Accessories .

726.000 So optimum production run = 2 AS = c 31.554 *10.000  So Economic Order Quantity = c 31.726.834.803 unit.523*15.200 tk 2 * 2.554 tk.EOQ in 2009 Annual requirement = 959.834.651kgs.523 kgs (1st July 2009 to 30th September 2009) Set up cost =15.200 tk. Ordering cost = 10. 2 AO 2 * 959. OPQ in 2009 Annual production =2. .000 Carrying cost =31.000 Carrying cost = 31.200 =24.200 = 1.

Account Receivable Management Accounts Receivable •Bills Receivable is carried at original invoice amount •No provision for doubtful debts •Trade debtors occurred in the ordinary course of business are unsecured but considered good Accounts Receivable June 09 (Actual) June 10 (Actual) June 11 (Forecasted) 733.896.008.080 629.317 743.187.000 Md Anisur Rahman 14-007 .

000 242.315.055 10. The banks areI) Trust Bank Ltd II) Dhaka Bank Ltd III) HSBC IV) Eastern Bank Ltd.087.A Cash in Hand at Head Office Cash at Banks: June 09 (Actual) 140.874 58. VI) Shahjalal Islami Bank Ltd A/C VII) CITI Bank N.000 . V) One Bank Ltd. •They have 15 accounts with 7 banks.871 June 11 (Forecasted) 99.831.489.174 June 10 (Actual) 677.255.Cash Management Cash Management •According to BAS-7 cash comprises of cash-in-hand and demand deposits. •Cash in hand and Bank balances have been considered as cash and cash equivalents.995.

Recommendation     A fluctuating trend in net working capital Import raw material from USA Export is made on 100% confirmation LC with fixed maturity dates Cash in hand and Bank balances have been considered as cash and cash equivalents & they get overdraft facility 19 .