Project WKM Copy12111

01
PROJECT REPORT
ON
ANALYSIS OF WORKING CAPITAL MANAGEMENT IN ( J&K)
S U B M I T T E D I N PA RT I A L F U L F I L M E N T O F
DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
[2019-2021]
SUBMITTED BY : MANZOOR AHMAD GANIE
ENROLLMENT NO : 1903611301 2
U N D E R S U PE R V I S I O N OF :
Dr G o u s i a S h a h
[A s i s t a n t P r o f e s s o r]
S o u t h C a m p u s]
D E PA R T M E N T
OF
M A N A G E M E N T STUDIES
U NI V E RSIT Y O F K A S H M I R
Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

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DECLARATIO
N
The project on “Analysis of Working Capital” is exclusively done by me at J&K Bank,
Main Branch Pulwama, and I assure that it is not submitted in any other institute.
NAME: MANZOOR AHMAD GANIE
CLASS: MBA 4TH SEM
SESSION: 2019-2021
ENROLLMENT NO :
19036113012
PROJECT ON: WORKING CAPITAL MANAGEMENT IN JK BANK

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1.2 ACKNOWLEDGEMENT
Concentration , dedication and application are necessary but not sufficient to achieve any
goal. These must be awarded by guidance , assistance and co-operation of many people to
make it enable. And I am thankful to God that I got them all.
I am extremely grateful and remain indebted to my guide Dr Gousia Shah (Assistant

Professor in South Campus UNIVERSITY OF KASHMIR for his invaluable
guidance and constant support throughout this project. I am thankful to his for
valuable suggestions, which have benefited me a lot while developing this project.
I am even grateful to the employees of J&K Bank for supporting me towards making
this study meaningful . I also express my sincere gratitude to my guide Mr MOHMMAD
ALTAF Advance Manager in J&K Bank Main Branch Head Mr. NAZIR AHMAD
(Highly Thankful ) for taking keen interest in my training /project work and giving me
valuable guidance at every stage.
Finally I acknowledge with deep gratitude , the immense support I received from my
parents and my brothers who have encouraged me, have been a source of inspiration and
helped me in continuing my effort.
This project was a great source of learning and value addition for me.

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CONTENTS
Chapter-1 Introduction
1.1 Overview of the J &K Bank 7-8
1.2 Profile of the J & K Bank 9-11
12-21
1.3 Meaning and Conceptual Frame
1.4 Analysis of working capital management in J&K bank 22-26
27-28
Chapter-2 Literature review
Chapter-3 Research Methodology 29
3.1 Objectives of the study 30
31- 32
3.2 Research Design
Chapter-4 Data Analysis
4.1 Data Analysis and interpretation
CHAPTER-5
5.1 Findings
5.2 Conclusion
5.3 Summary
5.4. Limitations
5.5 Suggestion
References & Bibliography

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EXECUTIVE SUMMARY
I did my winter training programmed in J&K Bank. My project was based on the procedure of “
WORKING CAPITAL MANAGEMENT ”. I got the exposure of banking sector which is a very
important sector of the Indian economy. The sector has made a marked improvement in the
liberalization period . As a part of curriculum, every student studying MBA has to undertake a
project on a particular subject assigned to me Accordingly I have been assigned the project work
on the study of working management J&K BANK PVT LTD . Decisions relating to working
capital (Current assets-Current liabilities) and short term financing are known as working
capital management. It involves the relationship between a firm’s short-term assets and its short
term liabilities. The goal of working capital management is to ensure that the firm is able to
continue its operation and that it has sufficient cash flow to satisfy both maturing short term debt
and upcoming operational expenses. Working capital management is used in bank ltd.,
for the following purpose:- Raw material, work in progress, finished goods, inventories, sundry
debtors, and day to day cash requirements. The J&K BANK PVT LTD, keep certain funds which
is automatically available to finance the current assets requirements. The various information
regarding “Working Capital Management” such as classification, determinants, sources have
been discussed relating to J&K BANK PVT LTD, Ratio Analysis has been Carried out using
Financial Information for last five financial years i.e. from 2016 to 2021 Ratios like Working
capital Turnover Ratio, Quick Ratio, Current Ratio, Inventory Turnover Ratio, Debtor Turnover
Ratio, Creditors turnover ratio have also been analyzed
A Statement of Changes in Working Capital has also been analyzed. At J&K BANK PVT LTD .,
the working capital management has shown increase in the period of study. This shows working
capital is managed effectively and all the other departments are working in perfect co-ordination
to ensure the progress of J&K BANK PVT LTD

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But I have given some Suggestions & Conclusions on the basis of my Project Study The JK bank is
one of the oldest bank India ,contributing significantly to both the industrial and economic growth of
the country since it achieved independence in 1947. The J&K BANK To build a global brand we need
to do two things- go global physically and second more importantly, have a unique business model
product offering and services standards, all of which are globally.
In one of the sharpest turnarounds of financials in its history, J&K Bank’s Q-o-Q profit jumped
more than four times to Rs 315.75 Cr for the fourth quarter of FY 2020-21 from Rs 65.94 Cr
recorded for the third quarter of the financial year. The bank’s operating income increased by 6%
YoY to Rs 4489.77 Cr from Rs 4252.59 Cr recorded for the corresponding period last year.
The operating profit of the bank for the financial year is up by 6% YoY to Rs 1611.23 Cr as against
Rs 1525.05 Cr recorded on March 31, 2020, while as the Net Interest Income has increased to Rs
3770.78 Cr from Rs 3706.67 Cr. The Net Interest Margin (NIM) for the reviewed financial year is
3.64%.
Boosted by the contribution by the treasury operations bank’s other income increased from Rs
546 Cr in FY 19-20 to Rs 719 Cr in FY 20-21 registering a YoY growth of 32%

The current ratio is 3.28 This ratio is used for short term paying ability of the firm.
Approximate of 2 of current ratio the creditors will be able to get their payment in full.
This ratio indicates the degree to which the selling price of goods per unit may decline without
resulting in losses from operations to the firm. If there is continuous increment in gross profit ratio
then it means the selling price of goods is increasing day by day
•Net profit ratio indicates net margin on sales. This margin is continuously increasing year to year.
The Bank's aggregate business crossed yet another psychological mark and stood at ` 11,394,122
Corers at the end of the financial year 2020-21. The Bank's total business increased by ` 4,321,240
Corers from the previous year's figure of 101,316,218` Corers, registering a growth of 7.54%

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1. INTRODUCTION TO THE ORGANISATION

1.1 OVERVIEW OF THE JK BANK AS A WHOLE
Banking in India:-
The economic reforms undertaken in the last 20 years have brought about a considerable
improvement in the health of banks and financial institutions in India. The banking sector is
a very important sector of the Indian economy. The sector has made marked improvements
in the liberalization period. There has been extraordinary progress in the financial health of
the commercial banks with respect to capital adequacy, profitability assets quality and risk
management. Deregulation has opened new doors for banks to increase revenues by entering
into to investment banking, insurance, credit cards, depository services, mortgage,
securitization etc.
Currently, banking in India is generally fairly mature in terms of supply, product range
and reach even through reach in rural India still remains a challenge for the private sector
and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheet relative to other banks in
comparable economies in its region. The Reserve Bank of India is an autonomous body,
with minimal pressure from the government. The stated policy of the bank of Indian
Rupee is to manage volatility but without any fixed exchange rate and this has mostly been
true.
With the growth in the Indian economy expected to be strong for quite some time
especially in its services sector the demand for banking services are expected to be
strong. In March 2006, the Reserve Bank of India allowed Warburg Pincus to
increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is
the first time an investor has been allowed to hold more than 5 % in a private
sector bank since the RBI announced norms in 2005 that any stake exceeding 5%
in the private sector banks wouldneed to be vetted by them.

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Currently, India has 137 scheduled commercial banks (SCBs) 31 private sector banks and 27
are public sector banks and 79 foreign banks. They have a combined network of over 53000
branches and 252 thousands ATMs. According to a report by ICRA Limited, a rating agency,
the public sector banks hold over 75 percent of total assets of the bank in industry with the
private and foreign banks holding 18.2% and 6.5% is just say. Liberalization and
globalization have created a more challenging environment in banking sector as well as the
other segments of the financial sector such as mutual funds, non banking finance companies,
post offices, capital market, venture capitalist etc. Now the challenge faced by The
sectorwould be gaining profitability, reinforcing technology, maintaining global standards,
corporate governance, risk management and the most important of all, to establish customer
intimacy.

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1.2 Profile of the J&K Ban k
Brief History of the Bank
Jammu and Kashmir Bank Limited was incorporated on 1st October, 1938 and
commenced its business from 4th July 1939 at in Kashmir (India). The bank was the
first in the country as a state owned bank. “In my opinion the bank should be an organ
of public interest and not an instrument for the government or the shareholders to
achieve their own end.”
(Maharaja Hari Singh)
According to the extended central laws of the state, Jammu and Kashmir Bank was
defined as agovernment company as per the provision of Indian companies act 1956.
In the year 1971, the bank received the status of scheduled bank. It was declared as “
A” class bank by RBI in 1976
BOARD OF DIRECTOR OF JK BANK
Baldav Prakash since january 2022
Unique characteristics of the bank

o Private sector bank deposit government holding 53 percent of equity.
o Sole banker and lender of last resort to the government of J&K.
o Plan and non-plan fund, taxes and non-taxes revenues routed through the bank.
o Salaries of government officials disbursed by the Ban

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PAST PERFORMANCE
To build a global brand we need to do two things- go global physically and second more
importantly, have a unique business model product offering and services standards, all of
which are globally recognized.For the full year 2020-21, the bank posted net profit of Rs 432
.12 crore, while there was a net loss of Rs 1,139.41 crore in 2019-20.
The lender said its net interest income increased to Rs 3,770.78 crore during the year from
Rs 3, 706.67 crore, while the net interest margin for the year stood at 3.64 per cent.
Branches
Area
Metro 45
193
Urban 157
Semi-Urban 462
Rural 857
Total
FUTURE PLANNING AND TURNOVER
Jammu & Kashmir Bank rose 1.22% to Rs 24.90 after the bank said that its board will
meet on
12 May 2021 to consider the proposal of capital infusion of Rs 500 crore by the Government
of
Jammu & Kashmir. The Government of Jammu & Kashmir is the promoter shareholderof
the bank. It held 68.18 % stake in the bank as on 31 March 2021. J&K Bank offers
banking services under the three major divisionsas support services , depository services
and third party services.The bank reported 32.8% jump in net profit to Rs 65.94 crore on
a 6.9% rise in total income to Rs 2348.02 crore in Q3 FY21 over Q3 FY20

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PRODUCT AND SERVICES OF J&K BANK
Financial Products
o Personal finance
o Specialized finance
o Agriculture and Allied Finances
o Business Loan
o Micro finance.
Technology based financial service
o Anywhere Banking
o Internet Banking
o ATM Services
o Debit and Credit Cards
o Merchant acquiring
Depositor services
o Dematerializations services
o Stock broking Services through investment
o Depository Participant of NSDL and CDSL.

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1.3 MEANING AND CONCEPTUAL FRAME
CONCEPT OF NET WORKING CAPITAL
Generally net working capital refers current assets minus current liabilities Working capital
measures how much in liquid assets a company has available to build its business. The number
can be positive or negative, depending on how much debt the company in carrying. In general,
companies that have a lot of working capital will be more successful since they can expand And
improve their operations.Companies with negative working capital may lack the funds
necessary for growth.
Net working capital also called liquid surplus, net current assets or current
capital.
MEANING OF NET WORKING CAPITAL
Working capital refers to the funds required for financing the minimum total current assets.
Liquid surplus or net working capital refers to the surplus long term sources over long term uses.
It is desirable, that the net working capital should be positive which would signify liquidity and
availability of adequate working funds. If in a particular case, the net working capital is
negative, the difference will be called as net working capital deficit.

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CONSTITUENTS OF CURRENTS ASSESTS
1) Cash at bank
2) Cash in hand
3) Bills receivables
4) Sundry debtors
5) Inventories of stock as;
a) Raw material
b) Work in progress
c) Stores and spares
d) Finished goods
6) Temporary investment of surplus fund
7) Prepaid expenses
8) Accrued income
9) Marketable securities
CONSTITUENTS OF CURRENT LIABILITIES
1) Accrued or outstanding expenses

2) Short term loan and advances
3) Dividends payable
4) Bank overdraft
5) Provision and Taxation
6) Bills payables
7) Sundry credit
The gross working capital concept is financial or going concern concept whereas net working capital is an
accounting concept of working capital. Both the concepts have their own merits. The gross concept is
sometimes preferred to the concept of workingcapital for the following reasons:
It enables the enterprise to provide correct amount of working capital at correct time.
1.Every management is more interested in total current assets with which it has to operate
then the source from where it is made available.
2. It take into consideration of the fact every increase in the funds of the enterprise
would increase its working capital.
4. This concept is also useful in determining the rate of return on investments in working
capital. The net working capital concept, however, is also important for following reasons:
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MANAGING OF WORKING CAPITAL
1) Working capital cycle

2) Sources of working capital
3) Handling of receivables (debtors)
4) Managing of payable (creditors)
5) Inventory management
6) Key working capital ratio
7) Introducing plan ware
8) Copyright and legal stuff
WORKING CAPITAL CYCLE
Working capital is the cash needed to pay for the day to day operations of the business. In
other words, working capital is needed by the business to:
 Pay suppliers and other creditors

 Pay employees
 Pay for stock
 Allow for customer who is allowed to buy now, but pay later so called trade
debtors
.
Cash in
Goods sold
Payment to suppliers /employers
Goods purchased

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SOURCES OF WORKING CAPITAL

 Net Income
 Long term loans
 Sale of capital assets
 Injection of funds by stockholders
 Customers
 Trade vendors
 Commercial banks
 Short term loans
 Short term assets(Inventories, loans and advances, drs ,investment,cash and bank balance
 Short term liabilities(Creditors, Trade advances, borrowings and provisions)
These sources are main sources of workingcapital. All these sources play a very
important role in collecting working capital. Without these sources any business cannot stand in the
world.Therefore we can say that commencing of any business is totally depending on working
capital management. Working capital is the life blood of most small businesses.
Access to working capital provides the ability to support and grow a healthy cash flow for
your business. So let‟s take a look at just a few easy sources of working capital. First did you
know
that your credit card receipts can be a source of working capital? There are many small business
lenders that will know now purchase amount of your “ future” credit card receipts and in return
you get working capital. If your business has account receivables with other businesses that too
can be a quick and easy source of working capital. With this source of working capital your
business sells the outstanding receivables to the lender and the lender gives your business cash for
working capital now.
Does your business own equipment? Owned equipment can be turned in to working capital
through a small business loan called a sale and leaseback. Your business sells your equipment
to the lender for cash you then lease the equipment back from the lender for a monthly
payment
,and at the end of lease your owns the equipment again.

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METHOD OF WORKING CAPITAL

There are four methods of financing working capital gap. In order to explain the
methods we took an example of projected financial results of ABC traders this is as
follows:
(Resin
Lacks)
Liabilities Amount Assets Amount
Capital 4.00 Fixed Assets 1.00
Unsecured Loans 2.00 Cash in hand 1.25
Sundry Creditors 3.25 Stocks 10.00
C/C Limit 10.00 Sundry Debtors 7.00
Total 19.25 Total 19.25

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Holding Periods:
Stocks *365/
Cost of Sales
= 65 Days Debtors
*365/
Sales
= 43 Days
Creditors*365/
Purchases
= 20 Days
A. TRADITIONAL
METHOD
Holding
Amount Margin% Margin MPBF
Particulars Periods
Amt
Stocks
65 10 25 2.5 7.5
Sundry
Debtors
43 7 50 3.5 3.5

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Working
Expenses 0.25 100 0.25 Nil
Total
17.25 6.25 11
Less Creditors
20 3025
Amount
Sectioned
7075
Deficit in NWC = Rs 2.25 Lacs
B. F I R S T M E T H O D O F F I N A N
CE
S.No. Particulars Holding Period Amount
A Current Assets
Stock
65 10
S. Debtors
43 7
Others
0.25
Total
17.25
B Current Liabilities
S. Creditors
20 3.25

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Others Nil Nil

Total
3.25
C. Working Capital Gap A-B
14.00
D. Stipulated margin @ 25% in SSI and
40 4.31
% in trading units
E. Projected NWC of “A”
4.00
F. MPBF C-(D or E whichever
is higher) 9.69

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C. SECOND METHOD OF FINANCE
S. No. Particulars Holding Period Amount
A. Current Assets
Stock in Trade
65 Days 10.00
S. Debtors
43 Days 7.00
Others
0.25
Total
17.25
B. Current Liabilities
S. Creditors
20 days 3.25
Others
Nil
Total
3.25
C. Working Capital Gap

(A-B)
14.00
D. Stipulated Margin @ 25% 25% of WCG
3.50
E. Projected NWC
4.00
F. MPBF C-(D or E
whichever is 10.00
higher)

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D. TURNOVER METHOD

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1.4 ANALYSIS OF WORKING CAPITAL IN J&K BANK
The analysis of working capital can be conducted through a number of devices, such as:
1. RATIO ANALYSIS
A ratio is a simple arithmetical expression one number to another . The technique of ratio
analysis can be employed for measuring short -term liquidity or working capital position of a
firm. The following ratios can be calculated for these purposes:
1. Current ratio.
2. Quick ratio
3. Gross Profit Ratio
4. Fixed Assets turnover ratio
5. Receivables turnover.
6. Payable turnover ratio.
7. Working capital turnover ratio.
8. Net Profit Ratio
9. Ratio of current liabilities to tangible net worth.
10. Total assets turnover ratio
2. FUND FLOW ANALYSIS
Fund flow analysis is a technical device designated to the study the source from which
additional funds were derived and the use to which these sources were put. The funds flow
analysisconsistsof
a. Preparing schedule of changes of working capital
b. Statement of sources and application of funds.
It is an effective management tool to study the changes in financial position (working capital)
business enterprise between beginning and ending of the financial dates.

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WORKING CAPITAL MANAGEMENT
Every business needs finance for two purposes – for its establishment and to carry out its day to
day operations. Long term funds are required to create production facilities through purchase
of fixed assets such as plant and machinery, land & building, furniture etc. funds are also needed
for short term purposes : for purchase of raw material , payment of wages and other day to day
expenses etc. These funds are known as working capital. In simple terms working capital refers
to that part of firm’s capital which is required for financing short term or current assets such as
such as cash, marketable securities, debtors and inventories etc. Funds thus invested in current
assets keep revolving fast and are being constantly converted into cash and these cash flows out
again in exchange for other assets. Hence it is also known as revolving or circulating capital or
short term capital.
KINDS OF WORKING CAPITAL
Working capital may be classified into two ways:
 On the basis of concept
 On the basis of time
On the basis of concept, working capital is classified as Gross Working capital and Net Working
capital. On the basis of time, working capital is classified as permanent or fixed working capital
and temporary and variable working capital.

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 Gross working: It represents the amount of funds invested in current assets. Thus the
Gross working capital is the capital invested in the total current assets of the enterprise .
Current assets are those assets which in the ordinary course of business can be converted
into cash within a short period of normally one accounting year.
Examples of current assets are:
1. Cash in hand and

bank balance.
2. Bills receivables
3. Sundry debtors(less
provision for bad
debts).
4. Short term loans
and advances.
5. Inventories of stock.
6. Temporary
investment in
surplus goods.
7. Prepaid expenses.
8. Accrued incomes.
Net working capital : It is the excess of current assets over current liabilities . Net working
capital may positive or negative . When the current assets exceed the current liabilities , the
working capital is positive and the negative working capital results when the current
liabilities are then the current assets. Current liabilities are those liabilities which are intended to
paid in the ordinary course of business within a short period of normally one accounting year out
of the current assets or the income of the business.
Examples of current liabilities are:
9. Bills payables
10. Sundry creditors.
12. Dividend payable.
13. Bank overdraft.
14. Provision for

taxation,
if it does not amount to
appropriate
Project Made to profits.
on Working Capital Management in (J&K) by Manzoor Ahmad Ganie
Net working capital = current

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Permanent working capital: It is the minimum amount which is required to ensure effective
utilisation of fixed facilities and for maintaining the circulation of current assets. There is always
a minimum level of current assets which is continuously required by the enterprise to carry out
its normal business operations. For example, every firm has to maintain a minimum level of raw
material, work in progress, finished goods and cash balance. The minimum level of current assets
is called fixed or permanent working capital as this part of working capital is permanently
blocked in current assets. As the business grows, the requirement of permanent working capital
also increases de to the increase in current assets. The permanent working capital can further be
classified as regular working capital and reserve working capital.
Temporary or Variable working capital : it is that amount of working capital which is

required to meet the seasonal demand and some special exigencies. Variable working capital can
further be classified as seasonal working capital and special working capital . Most of the
enterprise have to provide additional working capital to meet seasonal and special needs . The
capital requirement to meet the seasonal needs of the enterprise is called seasonal working capital
. Special working capital is that part o working capital which is required to meet the special
exigencies such as launching of extensive marketing campaigns for conducting research.
IMPORTANCE OF WORKING CAPITAL
The working capital is the life -blood and nerve centre of a business firm . The sufficiency of
working capital assists in raising credit standing of a business because of better terms on goods
bought, lesser cost of manufacturing due to the acceptance of cash discounts , favorable rates of
interest etc.
No business can run effectively without a sufficient quantity of working capital . It is crucial to
retain right level of working capital . Finance manager is required to decide the amount of
accurate working capital.

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A business enterprise with ample working capital is always in a position to avail advantages of any
favorable opportunity either to buy raw materials or to implement a special order or to wait for
enhanced market status.
Cash is needed to carry out day-to-day workings and buy inventories etc. The shortage of cash may
badly affect the position of a business concern . The receivables management is related to the
volume of production and sales. For escalating sales there may be a need to offer additional credit
facilities. While sales may ascend but the danger of bad debts and cost involved in it may have to be
considered against the benefits.
Inventory control is also a significant constituent in working capital management . The

deficiency of inventory may cause work stoppage. On the other hand, surplus inventory may result
in blocking of money in stocks.
The overall success of the company depends upon its working capital position. So, it should be
handled properly because it shows the efficiency and financial strength of company.

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CHAPTER -2
LITERATURE REVIEW
The purpose of this chapter is to present a review of literature of relating to the working capital
management. Although working capital is an important ingredient in the smooth working of business
entities, it has not attracted much attention of scholars. Whatever studies have conducted, those have
exercised profound influence on the understanding of working capital management good number of
these studies which pioneered in this area have been conducted. The size and composition of working
capital can vary between industries . For some types of Business, the investment in
working capital can be substantial. For example, a manufacturer will invest heavily in raw materials,
work-in-progress and finished good and it will often sell its goods on credit, thereby generating trade
debtors. A retailer, on the other hand, will hold only one form of stock (finished goods) and will usually
sell goods for cash. Working capital represents a net investment in short-term assets. These assets are
continually flowing into and out of a business and are essential for day-to-day operation. the various
elements of working capital are interrelated and can be seen as part of a short-term cycle.
Literature review is indispensable part of a thesis because it represents the whole range of research in the
past on the topic selected by the researcher on the basis of which research design of a study is formulated.
Literature review gives better insight and helps bridge gap for the research to be undertaken.

Efforts have been made to present a common scheme of various facets and issues relating to this empirical
studies carried out in past and the national and international stage in different companies. Some important
conclusions and research gap have been drawn from review of some research papers , articles , thesis and
text books available in the accessible libraries and internet sources. Different researchers have done studies
In the field of management of working capital , which have been summarized into following parts.

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The level of working capital required is also affected by the following factors:
1. The nature of business, for e.g. manufacturing companies need more inventory than service companies.
2. Uncertainty in supplier deliveries, uncertainty would mean that extra inventory needs to be carried in
order to cover fluctuations.
3. The overall level of activity of the business, as output increases, receivables, inventory, etc. all tends to
increase.
4. The company's credit policy, the tighter the company's policy the lower the level of receivables.
5.The length of the operating cycle. The longer it takes to convert material into finished goods into cash
the greater the investment in working capital.
6. The credit policy of suppliers. The less credit the company is allowed to take, the lower the level of
payables and the higher the net investment in working capital The investment of a business in working
\
capital can be expressed in terms of time taken to move from cash ready for investment back to cash again.

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CHAPTER-3
RESEARCH METHODLOGY
INTRODUCATION
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying now research is done systematically. In that various steps,
those are generally adopted by a researcher in studying his problem along with the logic behind
them. It is important for research to know not only the research method but also know
methodology. ”The procedures by which researcher go about their work of describing, explaining
and predicting phenomenon are called methodology.” Methods comprise the procedures used for
generating, collecting and evaluating data
RESEARCH GAP
The working capital gap in simple words is the difference between total current assets and total
current liabilities of bank. It can also be defined as Long term sources less long term uses .
Working capital gap= Current assets – current liabilities (other than bank borrowings)
The current assets of J&K bank is 111,259,671 and current liabilities is 33,899,922
,bank liability is 77,3,59,747 Then, current liability other than bank borrowings is 77,3,59,747 -
33,899,922 =4,34,59,825 The working capital gap is 14,51,59,593 - 4,34,59,825 = 71699769
The net capital gap is long term sources of the company less long term uses of the company. It
means, the surplus in long term sources like owners capital and term loans less long term uses like
Fixed Assets, miscellaneous and Non-current Assets, Intangible Assets.

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3.2 OBJECTIVES OF THE STUDY
1.To analyze the trend in various components of working capital.
2.Evaluation of working capital management.
3.To study the operating cycle of J&K Bank
4. To study the liquidity position through various working capital related ratios.
5.To study the working capital components such as receivables accounts, cash
management, Inventory position
6. To study the way and means of working capital finance of the J&K BANK Ltd.
7. To estimate the working capital requirement of J&K BANK Ltd
3.3 RESEARCH DESIGN
Research design is concerned with makings specific questions. Good research design should
make it possible to draw valid inferences from data in terms of generalization, association
and causality. There are many types of research designs but, my project involves Analytical
& Descriptive research design.

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In order to learn and observe the practical applicability and feasibility of various
theories and concepts, the following sources are being used:
Primary Sources of Information
 Discussions with the project guide
 Discussions with various other department head.
Secondary Sources of Information
RBI guidelines regulating the activities of the banks
 Banks Credit policy and related circulars and guidelines issued by the bank.
 Research papers, power point presentations and PDF files prepared by the bank and
its related officials.
 Study of proposals and manuals
 Website of Jammu and Kashmir bank and other net sources
Analysis of data 32 The information gathered are the policies and practices regarding
management of the working capital.
The major source of data of this project was collected through annual reports, profit
and loss account of the four year period of company, i.e. from 2019-2020 to 2020- 2021
and some more information collected from the internet and text source.
Analysis is done in terms of the theoretical concepts. Analysis of the working capital
performance is done with the help of percentages by showing graphs, ratios and operating
cycles etc.

32
Sample design
A sample design is a definite plan for obtaining a sample from a given population. It refers to
the technique or the procedure adopted in selecting items for the sample. The main
constituents of the sampling design below-
Sample unit
A sampling framework, i.e. developed roe the target population that will be sampled,
i.e. who is to be surveyed
 Sample unit taken by me – Financial statement of the company
Sample size
It is the substantial portions of the largest population that are sampled achieve reliable
results.
 Sample size – the last four years, i.e. 2018-2019 to 2019-2021 financial statements
of the bank
A Tool used for calculation

MS-Excel
Tools used for Analysis of data

The data were analyzed using the following tools.
They are-
 Ratio Analysis.
 Statement of changes in working capital.

CHAPTER-4
DATA ANALYSIS
An analysis of working capital will be very helpful for knowing the

operation efficiency of the banks. The following table provides data
relating to the net working capital of J&K bank
(A) Net Working Capital =Current Assets–Current Liabilities

TABLE SHOWING NET WORKI CAPITAL
Year Current Assets Current Liabilities Net Working Capital
2018-2019 74053.76 2517.34 71,536.42
2019-2020 81078.53 2670.81 78,407.70
2020-2021 84075.30 3389.99 80685.31
Source: financial statement (Amount in Crores)
Net Working Capital
110000
100000
80000
70000
60000 Net
Working Capital
50000
40000
30000
0
2018-2019 2019-2020 2020-2021
(Amount in Crores)
Interpretation
The above chart shows that during the financial year 2018-2019 the JK BANK had Net
Working Capital about Rs. 71,536.42 CRORES. During the next year, i.e. 2019-2020 it
increased by Rs.6,871.28 crores. It was Rs. 78,407.70 crores in the year 2019-20 .And in the
year 2020-21 it was Rs. 80685.31 crores which again increased by Rs.2,277.3 crores as
compared to last year, i.e. 2019-2020. The above chart interprets that the JK BANK is
continuing increase in the NWC till 2019-2021. During this year NWC was about Rs.
80685.31 crores. This means that the company is in a positive position in the year 2020-2021
and it has sufficient capital to pay off its current liabilities.
1.1 Current Ratio
The Current ratio is a ratio, which express the relationship between the total current
assets and current liabilities. It measures the firm’s ability to meet its current
liabilities. It indicates the availability of current assets in rupees for every one
rupee of current liabilities. A ratio of greater than one means that the firm’s has
more current assets in the comparison of current liabilities. A standard ratio
between them is 3; 1.
Current Ratio=CurrentAssets-Current Liabilities

Table showing the current ratio
Year Current Assets Current Liabilities Current Ratio
2018-2019 74053.76 2517.34 29.42
2019-2020 81078.53 2670.81 23.92

2020-2021 84075.30 3389.99 24.80
Source: financial statement (Amount in Crores]
Current Ratio
4.5
4
3.5
3
2.5
2
Current Ratio
1.5
1
0.5
0
2018-19 2019-20 2020-2021
(Amount in crores)
Interpretation
The above chart shows that during the financial year 2018-2019 the company had a
current ratio of 29.42:1.During the next year, i.e.2019-20 it decreased by 23.92:1 And in
the year 2020-2021 it was again increased by 24.80:1 During this year, i.e. 2019-2020 it
was about 23.92:1 These show that the current ratio was decreased every year. But in the
last year, i.e. 2020-2021 the current ratio was increased to 24.80:1 due to increase in
current assets. The current ratio is greater to the standard ratio, i.e. 3:1. Hence it can be
said that there are enough current assets in JK BANK Pvt. Ltd. to meet its current
liabilities.
1.2 Acid Test Ratio /Quick Ratio / Liquidity Ratio
The Acid test ratio/Quick ratio/Liquidity ratio establishes a relationship
between quick/liquid assets and current liabilities. It measures the firm’s
capacity to pay off the current obligation immediately. An asset is liquid
if it can be converted into cash immediately without a loss of value;
Inventories are considered to be less liquid. Becauseinventory’snormally
require some time for converting into cash. This ratio is also known as an
acid-test ratio. The standard quick ratio is 1:1 is considered satisfactory.
Quick Ratio = Quick Assets (current assets –

Inventory) Current Liabilities
Table showing Quick Ratio
Year CurrentAssets Inventories Quick Assets Current Quick Ratio

Liabilitis
2018-2019 74053.76 8213.61 28,984.98 2517.34 30.03
2019-2020 81078.53 10654.21 32,876.82 2670.81 28.80
2020-2021 84075.30 11543.32 44,654.78 3389.99 24.09

Source: Financial statement (Amount in crores)
Quick Ratio
4
3.5
3
2.5
2
Q
u
i
c
k
R
a
t
i
o
1.
5
1
0.5
0
2
0
1
8
-
2
0
1
9
Interpretation
The above chart shows that during the financial year 2018-19 the company
had a Quick ratio of 30.03:1. In the next year, i.e.2019-2020 it decreases by
1.23. It was about 28.80:1 in the year 2019-2020. During the year 2019-
2020 the quick ratio was again decreased by 4.71:1. And it was about
24.09:1 in the year 2020-2021 due to increase in quick assets and decrease
in current liabilities.. And it was decrease to 5.93:1. The quick ratio of the
company is greater to the standard ratio, i.e., 3:1. Hence it shows that the
liquidity position of the company is adequate.
1.3Absolute Liquidity Ratio
The absolute liquidity ratio may be defined as the relationship between Absolute liquid
assets and current liabilities. Absolute liquid ratio includes cash in hand and cash at
bank. The standard ratio is 0.5:1.
Absolute Liquidity Ratio = Cash & Opening Balance
Current Liabilities
Table Showing Absolute Liquidity Ratio

Year Cash Current Liability Absolute Liquidity Ratio
2018-2019 4,87,49,687 2517.34 1.06
2019-2020- 2,94,74,809 2670.81 2.15
2020-2021 36,853,326 3389.99 3.44

Absolute Liquidity Ratio
3.45
3.30
3.0
2.20
2.16
2.05
1.06 Absolute Liquidity Ratio
1.0
0.7
0.5
0
2018-2019 2019-2020 2020-2021
(Amount in crores)
Interpretation
The above chart shows that during the financial year 2018-2019 the absolute
liquidity ratio of the company was about 1.06 :1.In the next year 2019-2020 it
increased by 0.15. 2018-2019.In the year 2019-2020 absolute liquidity ratio
increased by 1.06, and it was about 1.09:1, in the year 2019-2020. In the last
year,i.e. 2020-2021 it increased by 1.29, and it was about 2.44:1. After 2018-2019
the absolute liquidity ratio of the company is increasing every year.. Hence it
shows that the liquidity position of the company is satisfactory.
2.1.Inventory Turnover Ratio

The Inventory turnover ratio is the ratio, which indicates the number of times the stock
is turned over i.e., sales during the year. This measures the efficiency of the sales and
stock levels of the company. A high ratio means high sales, fast stock turnover, and a low
stock level. A low stock turnover ratio means the business slows down or with a high
stock level.
Inventory Turnover Ratio = Net sales

Closing Inventory
Table showing the Inventory turnover ratio
Year Net Sales Closing Inventory Inventory Turnover Ratio
2018-2019 7675.56 901.88 8.51 Times
2019-2020 8446.29 981.44 8.61 Times
2020-2021 8111.09 899.58 9.01 Times
Inventory turnover ratio

12
10
6
Inventory turnover ratio
4
2018-2019 2019-2020 2020-2021
(Amount in crores)
Interpretation
The above chart shows that during the financial year 2018-2019 2019-2020,
and in all two years there is major difference in the inventory turnover
ratio, which is in all two years, the inventory turnover ratio was about
8.51 times,8.61 times, respectively.But in the last year, i.e. 2020-2021 it
increased by 0.4 times as compared to the previous year, i.e. 2019-2020.
And it was about 9.01 times in the year 2020-2021. It shows that in all
three years the J&K bank had general sales, but in the last year 2020-2021
the company increased in its sales as compared to last three previous
years i.e. 2018-2019, 2019-2020. and 2020-2021
2.2 Debtors/Account receivable Turnover Ratio
The Debtors/Account receivable turnover ratio indicates the speed of debt

collection of the firm. This ratio computes the number of times debtors
(receivables) has been turned over during the particular period.
Debtors Turnover Ratio = Net credit sales

Average Debtors
Table showing the Debtors turnover ratio

Year Net Credit Sales Average Debtors Debtors Turnover Ratio
2018-2019 4,374.65 7,53.72 5.45 Times
2019-2020 5,052.91 8,61.06 5.87 Times
2020-2021 5,254.01 890.96 5.91Times
Debtors turnover ratio
3 Debtors turnover ratio
2018-2019 2019-2020 2020-2021
(Amount in cores)
Interpretation
The above chart shows that the debtor turnover ratio is fluctuating over the years. It was
about 5.45 times in the year 2018-2019. But in the year 2019-2020 it was increased by 0.42
times, and it was about 5.87 times in the year 2019-2020 During the next year, i.e. 2020-
2021 it was 0.56 which again increased by 5.91 times as compared to the last year i.e.
2019-2020. This graph is showing that the company is collecting debt rapidly.
2.3. Creditors/Account payable Turnover Ratio
The creditor’s turnover ratio is the ratio, which indicates the number of times
the debts are paid in the year. This ratio is calculatedto be as follows:
Creditors Turnover Ratio = Net Purchase
Average Creditors
Table showing the creditors turnover ratio
Year Net Purchases Average Creditors Creditors Turnover Ratio
2018-2019 3560.39 416.68 8.55 Times
2019-2020 3864.81 548.81 7.05 Times
2020-2021 4095.25 616.96 6.64 Times

Creditors T urnover
Ratio
8
4
Creditors Turnover Ratio
3
2018-2019 2019-2020 2020-2021
(Amount in crores)
Interpretation
The above chart shows that the creditor’s turnover ratio is fluctuating over the years. It
was about 8.55 times in the year 2018-2019.During the next year, i.e. 2019-2020 it was
decreased by 1.50 times.During that year the creditor’s turnover ratio was about 7.05
times. But in the next year 2020-2021 it was decreased by 1.61 times and it was about
6.64 times in the year 2020-2021. which due to decreasein creditors. This chart is showing
that the J&K bank has made prompt payment to the creditors.
2.4. Working Capital Turnover Ratio
TheWorking Capital Turnover Ratio indicates the number of times the working capital
is turned over in the course of the year. This ratio measures the efficiency with which the
working capital is used by the firm. A higher ratio, efficient utilization of working capital
and a low ratio indicates inefficient utilization of the working capital. But a very high
working capital turnover ratio is not a good situation for any company.
Working Capital Turnover Ratio = Net Sales
Net Working Capital

Table showing the working capital turnover ratio
Year Net Sales Net Working Capital Working capital Turnover Ratio
2018-2019 49,34.65 15,04.84 3.27 Times
2019-2020 52,05.91 12,36.41 4.22 Times
2020-2021 85,25.01 16,88.86 4.87 Times
Source: Financial statement (Amount in CRORES)
Working Capital Turnover Ratio

4.9
4.5
4
3.5
3
2.5
2 Working Capital Turnover Ratio

1.5
1
0.5
0
2018-2020 2019-2020 2020-2021
(Amount in CRORES)
Interpretation
The above chart shows that the working capital turnover ratio is
fluctuating year to year that was minimum in the year 2018-2019,about
3.27 Times. There was a subsequent increase in the year 2019-2020 from
1.05 times, and it was about 4.22 times. It was again increased in the year
2019-2020 from 0.65 times, due to decrease in net working capital.It was
about 4.87 times in the year 2019-2020. But in the last year i.e. 2020-2021
During that year the working capital turnover ratio was about 4.87 times.
This chart shows that the company is utilizing working capital effectively.
Table 1:
Statement of Change in Working Capital of the Year
2019-2020
AS on AS on Effect on Working capital
Particulars
31-03-2019 31-03-2020 Increase Decrease
CURRENT
ASSETS
Inventories 8213.76 10654.21 2352.78 -
Provisions 800.12 300.10 500.02
Cash & Bank Balance 8252.88 5861.88 2391.88
Loans and Advances 60940.11 70709.21 9769.21
(A) Total Current

Assets 77406.64 87225.09
CURRENT
LIABILITES
Current Liabilities 1891.57 2517.34 626.42
Sundry Debtors
556.84 100.12 456.72
(B) Total current
Liabilities 1891.57 2517.34
(A)-(B) Net Working 75514.43 84707.75

Capital - -
Decrease in Working
Capital 9193.32
TOTAL 89742.12 89742.12 12748.90 12748.90

Interpretation
In the above table, it is seen that during the financial year 2019-2020 there
was a net decrease in working capital of Rs. 9193.32 which indicates that
there is not an adequate working capital in J&K BANK Pvt. Ltd.
This is because of:-
 Increase Current Assets such as Inventories by Rs. 2352.78 . And

other current assets such as Loans and Advances by Rs. 9769.21
 Decrease in Cash & Bank Balance by Rs. 2391.88
 Decrease in Current Liabilities by Rs. 626.42 crores

 Decrease in provisions by Rs. 500.02 crores
Table 2:
Statement of Change in Working Capital of the Year
2020-2021
AS on AS on Effect on Working capital
Particulars 31-03-2020 31-03-2021 Increase Decrease
CURRENT ASSETS
Inventories 10654.21 11543.32 889.11 -
Sundry Debtors 254.25 582.21 328 -
Cash & Bank Balance 9497.59 9782.83 285.24
Loans and Advances 73966.51 77967.70 4001.19 -
(A) Total Current Assets 20,915.61 20,743.18
CURRENT LIBALITIES
Current Liabilities 2568.256 3178.25 610 -
Provisions 102.52 210.25 108 -
(B)Total current Liabilities 2670 3389.99
(A)-(B) Net Working Capital 17525.62 18058.18
Increase in Working Capital 6223.00 6223.00
TOTAL 23585.01 23858.01 6223.00 6223.00

Interpretation
In the above table, it is seen that during the financial year 2020 -21 there was a net increase in
working capital of Rs.575.37 lakh. It indicates that an adequate working capital in Marathon
Electrical India Pvt. Ltd.
This is because of:-
 Increase in Current Assets such as Inventories by Rs. 6223.00 Crores Sundry

debtors by Rs 328 crores , and Loans and advances by Rs. 4001.19 crores
 Increase in Cash and bank balance of Rs.285.24 crores
 Increase in Current Liabilities by Rs 610 crores, and Provisions by Rs.108 crores
33
COMPOSITION AND LEVEL OF CURRENT ASSETS
The level of current assets is measured with the help of ratio i.e., current assets as
a percentage of total assets.
INVENTORY
(Rs in ‘’000’’)
YEARS INVENTORY TOTAL INVENTORY

(IN RS) ASSETS IN % AGE
2019 8213.61 2061 19.01
2020 10654.21 2334 25.09

2021 11543.32 3543.97 32.02

34
I n ve n to r y of total a s s e t s
32.02 19.01 2019

2020
20 2 1
25.09
I n ve n to r y in % a g e
35
30
25
Inventory in
20 % age
15
10
0
201 9 202 0 20 21

35
ANALYSIS
The percentage of inventory is clearly depicted in the table from the year
2019 to 2020. From 2020 to 2021 the percentage of the total inventory to total assets has
increased from 19.01% to 25.09% and this has been further increased to 32.02%.
INTERPRETATION:-
The level of inventory is continuously increasing in the J&K Bank

because of bank’ s successful marketable strategies and its continuous increased
market base.
DEBTORS
(Rs in ‘000’)
YEARS DEBTORS TOTAL DEBTORS IN

(IN RS) ASSETS %AGE
2019 556.84 2061 2.60
2020 254.21 2334 1.08
2021 582.25 3543.97 1.64

36
DEBTORS IN % A G E
6.6 0
1.64 201 9
202 0
2021
1.08
D E B T O R S TO TOTAL S S E T S
20000000
18000000
16000000
14000000
12000000 DEBTORS TO TOTAL S SE TS
10000000
8000000
6000000
4000000
2000000
0
2019 2020 2 02 1
ANALYSIS:-
From the above table it is very evident that the debtors are increasing
from 2019 to 2020. In 2020 debtors are 2.60% and in 2019 it is 1.08 % and in 2021
%age of debtors to total assets has increased to 1.64%

37
INTREPRETATION:-
In the year 2020, debtors have increased from 254.21 Crores to 582.25 Crores
indicating an increase from 1.08% to 1.64% of total assets . Such increase has been
gained by bank due to increase in sales followed by expansion activities in spinning ,
weaving and processing units respectively.
CASH BALANCE
YEARS CASH TOTAL CASH

BALANCE
ASSETS
%AGE
2019 5861.88 2061 1.40
2020 9497.59 2334 4.11
2021 9782.83 3543.97 6.95

38
CASH BALANCE % A G E
6.95
1.40 20 19
20 20
20 21
4.11
8000000
6000000
4000000
2000000
1000000 CAS H B ALAN CE
800000 TOTAL A SSETS
600000
400000
200000
0
201 9 202 0 20 21
LOANS AND ADVANCES
YEAR LOANS TOTAL LOANS

AND AND
ASSETS
ADVANCES ADVANCES %AGE
2019 70709.21 2061 34.30
2020 73966.51 2334 45.28
2021 77967.70 3543.97 50.25

39
LOANS A N D ADVANCES % A G E
2019; 3 4 %
2021; 5 0 %
2020; 4 5 %
L O A N S A N D A D V A N C E S TO TOTAL A S S E T S
65000
60000
55000
50000
LOANS A N D ADVANCES
35000 TOTAL ASSETS
25000
15000
10000
5000
0
201 9 20 20 20 21
ANALYSIS
From the above table it is clear that the loans and advances are continuously increasing
but consecutively its total assets are increasing .

40
INTERPRETATION
From the table since loans and advance to total assets is consecutively increasing from 34.30%
in 2019, 45.28% in 2020 and 50.25% in 2021, it means bank’s are optimally using their
assets to gain the maximum profits and is relatively trying to attracting the more customers.
COMPOSITION AND LEVEL OF CURRENT LIABILITIES:-
PARTICULARS 2019 2020 2021

Current liabilities Amt. % Amt. % Amt. %
Sundry creditors 20613 1.95 34696 3.06 33812 3.72
Security deposits 329 .0315 2160 .0372 2999 .473
Int. accrued 596 .0245 2039 .0180 426 .0045
Adv. 8382 .174 21114 4.600 1369 .125

From
customers
Stat liabilities 0155 .853 74619 .658 7720 .635
Other liabilities 14454 2.02 59291 3.172 42748 3.77
Unclaimed 14454 2.029 592691 3.172 342748 3.77

dividend
Provisions 6838 .4432 46838 .4135 6838 .515
Total 84686 5.533 398012 12.34 47318 9.329

Total liabilities 1567023 1326723 982216
ANALYSIS:-
The above table shows the composition and level of current liabilities . The position of
creditors of J&K Bank is revealed from the table. The creditors remain fluctuating in 2019, the
creditors are of Rs 20613 and bank has projected increase in creditor level in 2020 are 34696 ,
in 2021 creditors are 33812 . Advances from the customers have been increased immensely
from 2020 to 2021
INTERPRETATION:-
The table shows that the creditors have been increased in 2020 with rise in inventory
level. And in the year 2021 the level of inventory is decreased due to less prominent schemes.

41
COMPUTATION OF GROSS WORKING CAPITAL:-

Inventory 8213.61 10654.21 1153.32
(+) sundry debtors 556.84 254.21 582.25
(+) cash balance 5861.88 9497.59 9497.59
(+)loans and 70709.21 73966.51 77967.70
advances
GROSS 85341.25 94390.24 89201.89
WORKIN
G
CAPITAL
INTERPRETATION:-
From the table it is evident that the gross working capital is constantly increasing in J&K Bank
, this increase is due to the fact that in every successive year the J&K Bank has introduced or
updated the new schemes for its customers and has efficiently improve the their service for
customers. It is clear that in 2019 the GWC was 85341.25, in 2020 it was 94390.24 and in 2021 it
has drastically increased to89201.89
COMPUTATION OF NET WORKING CAPITAL:-

Total current 76571.09 83749.34 87465.29
assets
(-) Total current liabilities 2517.34 2670.81 3389.99
Net working capital 74045.26 81079.21 84076.54
INTERPRETATION:-
Net working capital is the excess of current assets over the current liabilities. And from
the table it is clear that in 2019, the NWC was and it increased

42
to 81079.21 in 2020 and again increased to 84076.54 in 2020 . The reason for this increase is the
bank ’s intervention in different financial fields (mutual funds , insurance , etc ) and the
profound customer base infra-structure.
OPERATING CYCLE AND CASH CYCLE
All business firms aim at maximizing the wealth of the shareholder for which they need to earn
sufficient return on their operations . To earn sufficient profits they need to do enough sales ,
which further necessitates investment in current assets like raw materiel etc. There is always
an operating cycle involved in the conversion of sales into cash.
The duration of time required to complete the following sequences of events in case of a
manufacturing firm is called the operating cycle:-
1. Conversion of cash into raw material
2. Conversion of raw material into WIP
3. Conversion of WIP into FG
4. Conversion of FG into debtors and bills receivable through sales
5. Conversion of debtors and bills receivable into cash
Each component of working capital namely inventory , receivables and payables has
two dimensions time and money . When it comes to managing working capital - Time Is
Money . Therefore , if cash is tight, consider other ways of financing capital investment -
loans , equity , leasing etc. Similarly , if you pay dividends or increase drawings , these are
cash outflows remove liquidity from the business.
 Collect receivables (debtors) faster You release cash from the cycle
 Collect receivables (debtors) slower Your receivables soak up cash
 Get better credit from suppliers You increase your cash resources
 Shift inventory (stocks) faster You free up cash
 Move inventory (stocks) slower

You consume more cash
ni
e
43
Operating Cycle Of Non Manufacturing Firms / Operating Cycle Of Service And

Financial Firms
D EB T OR S
C AS H
CASH D E B TO R S
STOCK OF
FINISHED
GOODS
Operating cycle of non -manufacturing firm like the wholesaler and retail includes
conversion of cash into stock of finished goods, stock of finished goods into debtors and
debtors into cash . Also the operating cycle of financial and service firms involves
conversion of cash into debtors and debtors into cash.
Thus we can say that the time that elapses between the purchase of raw material and
collection of cash for sales is called operating cycle whereas time length between the
payment for raw material purchases and the collection of cash for sales is referred to as
cash cycle. The operating cycle is the sum of the inventory period and the accounts
receivables period , whereas the cash cycle is equal to the operating cycle less the
accounts payable period.
STOCK ARRIVES C A S H RECD.
O R D E R PLACED INV. PERIOD A/C’S REC. PERIOD
A/C’S Pay.
Period

44
FIRM REC. INVOICE C A S H Pd. FOR MATERIALS
OPERATING CYCLE
C A S H CYCLE
7675.56
8446.29
8111.09
DEBTORS COLLECTION PERIOD:-
2019 2020 2021

SALES 7675.56 8446.29 8111.09
SALES PER DAY 252.25 245.85 287.25
BOOK DEBTS 879660 1122564 1314231
DCP 35 DAYS 46 DAYS 47 DAYS
ANALYSIS:
In the year 2019 the DCP is 35 days which increases to 45 days in 2020. In
2021 there has been slight increase in DCP and it rises to 47 days
. INTERPRETATION:
In the year 2018 bank is able to maintain its satisfactory debtor

’s collection period but in the year 2019 and 2020, debtor ’s collection period has been
increased to 46 days and further to 47 days in 2021. This shows the bank is not able to
maintain its debt collection policy. However bank enjoys its good debtor status.

CHAPTER-5
5.1 FINDINGS
An ideal current ratio is 3.28 This ratio is used for short term paying ability of the firm.
Approximate of 2 of current ratio the creditors will be able to get their payment in full.
This ratio indicates the degree to which the selling price of goods per unit may decline without
resulting in losses from operations to the firm. If there is continuous increment in gross profit ratio
then it means the selling price of goods is increasing day by day
Net profit ratio indicates net margin on sales. This margin is continuously increasing year to year.
For the full year 2020-21, the bank posted net profit of Rs 432.12 crore, while there was a net loss of Rs
1,139.41 crore in 2019-20. The lender said its net interest income increased to Rs 3,770.78 crore during
the year from Rs 3,706.67 crore, while the net interest margin for the year stood at 3.64 per cent.
The above parameters are used for critical analysis of financial position. With the evaluation of each
component, the financial position from different angles is tried to be presented in well and
systematic manner. By critical analysis with the help of different tools, it becomes clear how the
financial manager handles the finance matters in profitable manner in the critical challenging
atmosphere, there commendation are made which would suggest the organization in formulation of
a healthy and strong position financially with proper management system. I sincerely hope, through
the evaluation of various percentage, ratios and comparative analysis, the organization would be
able to conquer it's in efficiencies and makes the desired changes.

Other Findings
In one of the sharpest turnarounds of financials in its history, J&K Bank’s Q-o-Q profit jumped
more than four times to Rs 315.75 Cr for the fourth quarter of FY 2020-21 from Rs 65.94 Cr
recorded for the third quarter of the financial year. The bank’s operating income increased by 6%
YoY to Rs 4489.77 Cr from Rs 4252.59 Cr recorded for the corresponding period last year.
The operating profit of the bank for the financial year is up by 6% YoY to Rs 1611.23 Cr as against
Rs 1525.05 Cr recorded on March 31, 2020, while as the Net Interest Income has increased to Rs
3770.78 Cr from Rs 3706.67 Cr. The Net Interest Margin (NIM) for the reviewed financial year is
3.64%. Boosted by the contribution by the treasury operations bank’s other income increased from Rs
546 Cr in FY 19-20 to Rs 719 Cr in FY 20-21 registering a YoY growth of 32%

71
5.2 CONCLUSION
Working capital may be regarded as the life blood of business. Working capital is of major importance to
internal and external analysis because of its close relationship with the current day-to-day operations of a
business. Every business needs funds for two purposes.

*Long term funds are required to create production facilities through purchase of fixed assets such as plants,
machineries, lands, buildings & etc
*Short term funds are required for the purchase of raw materials, payment of wages, and other day-to-day
expenses. . It is otherwise known as revolving or circulating capital It is nothing but the difference between
current assets and current liabilities. i.e. Working Capital = Current Asset – Current Liability. Businesses
use capital for construction, renovation, furniture, software, equipment, or machinery. It is also commonly
used to purchase inventory, or to make payroll. Capital is also used often by businesses to put a down
payment down on a piece of commercial real estate. Working capital is essential for any business to succeed.
It is becoming increasingly important to have access to more working capital when we need it.
Importance of Adequate Working Capital
A business firm must maintain an adequate level of working capital in order to run its business smoothly. It
is worthy to note that both excessive and inadequate working capital positions are harmful. Working capital
is just like the heart of business. If it becomes weak, the business can hardly prosper and survive. No
business can run successfully without an adequate amount of working capital.
Danger of inadequate working capital
When working capital is inadequate, a firm faces the following problems.
Fixed Assets cannot efficiently and effectively be utilized on account of lack of sufficient
working capital. Low liquidity position may lead to liquidation of firm. When a firm is unable to meets its
debts at maturity, there is an unsound position. Credit worthiness of the firm may be damaged because of
lack of liquidity. Thus it will lose its reputation.
There by, a firm may not be able to get credit facilities. It may not be able to take
advantages of cash discount.
Project Made on Analysis of Working Capital in Banking (J&K) by Manzoor Ahmad

Ganie
72
It is helpful for us, as a business owner, to think of working capital in terms of five
components:
1. Cash and equivalents. This most liquid form of working capital requires
constant
supervision. A good cash budgeting and forecasting system provides answers to key
questions such as:
Is the cash level adequate to meet current expenses as they come due
What is the timing relationship between cash inflow and outflow?When will peak
cash needs occur?
When and how much bank borrowing will be needed to meet any cash shortfalls? When will
repayment be expected and will the cash flow cover it?
2. Accounts receivable. Many businesses extend credit to their customers. If you do, is the
amount of accounts receivable reasonable relative to sales? How rapidly are receivables being
collected? Which customers are slow to pay and what should be done about them?
3. Inventory. Inventory is often as much as 50 percent of a firm's current assets, so naturally it
requires continual scrutiny. Is the inventory level reasonable compared with sales and the
nature of your business? What's the rate of inventory turnover compared with other
companies in your type of business?
4. Accounts payable. Financing by suppliers is common
Therefore we can say that working capital plays a very important role in Corporate Banking.
Without working capital any business cannot run.

• Holding a major Market share of 64% of banking business in UT of J&K and 60%
in the UT of Ladakh as on March 31, 2021.
• Designated as RBI‟s agent for carrying out banking business for the Government
of UTs of J&K and Ladakh.
• Authorized to collect central taxes for CBDT.
• Convenor of Union Territory Level Banker's Committee (UTLBC) in UT of J&K.
• Acting as lead bank in 12 districts of J&K.
• Unique and competitive position within UT‟s of J&K and Ladakh due to its strong
market presence.
• Huge account base of 1.83 Crore (Deposits & Advance on Pan India basis, with
1.75 crore accounts (Deposit & Advances) in UTs of J&K and Ladakh, thus
reflecting dominance & vast coverage in the region with a total population of 1.25
Crore.
Ganie
76
5.3 SUMMARY
Cash flows in a cycle into, around and out of a business. It is the business's life blood and every
manager's primary task is to help keep it flowing and to use the cash flow to generate profits. If a
business is operating profitably, then it should, in theory, generate cash surpluses. If it doesn't
generate surpluses, the business will eventually run out of cash and expire.The faster a business
expands, the more cash it will need for working capital and investment. The cheapest and best
sources of cash exist as working capital right within business. Good management of working
capital will generate cash will help improve profits and reduce risks. Bear in mind that the cost of
providing credit to customers and holding stocks can represent a substantial proportion of a
firm's total profits.There are two elements in the business cycle that absorb cash - Inventory
(stocks and workin-progress) and Receivables (debtors owing you money). The main sources
of cash are Payables (your creditors) and Equity and Loans.
Each component of working capital (namely inventory, receivables and payables) has two
dimensions ........TIME ......... and MONEY. When it comes to managing working capital - TIME IS
MONEY. If you can get money to move faster around the cycle (e.g. collect monies due from debtors
more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels relative to sales), the
business will generate more cash or it will need to borrow less money to fund working capital. As a
consequence, you could reduce the cost of bank interest or you'll have additional free money available
to support additional sales growth or investment. Similarly, if you can negotiate improved terms with
suppliers e.g. get longer credit or an increased credit limit, you effectively create free finance to help
fund future sales.

Ganie
5.4 LIMITATION OF THE STUDY
Following limitations were encountered while preparing this project:
Limited data:-This project has completed with annual reports; it just constitutes one part of data
collection i.e. secondary. There were limitations for primary data collection because of confidentiality.
Limited period:-This project is based on five year annual reports. Conclusions and recommendations
are based on such limited data. The trend of last five year may or may not reflect the real working
capital position of the company
Limited area:-Also it was difficult to collect the data regarding the competitors and their financial
information. Industry figures were also difficult to get

77
5.5 SUGGESTION
Working capital management analysis is an in-depth analysis. Coverage's the entire

financial management with refers to integrated. The
JAMMU AND KASHMIR BANK LTD is
company, which give preference to the common man's privilege.
Hence, it is on integrated approach and constant measure may be adopted for better managerial
performance. Working capital analysis, its criteria is distinctive work while and commendable
technique in postulating the financial behavior of business enterprise .
After a lot of research of working capital, I am able to say that there should be more liquid surplus
for smooth running of any business. But under the corporate banking this is more prominent
requirement. Because in banking, working capital is more exchangeable as compare other
organization. When we provide term loan to our
customer as per RBI guidelines. Loan can be short term or long term. Profitability of the bank is
also affect by working capital.
Generally, all things are affected by working capital under in a house.

The J& K Bank is the only private sector bank in the country assigned with the responsibility of
convening State Level Banker ‟s Committee meetings . The bank continued to discharge its lead bank
responsibility in 12 out of 22 districts of J&K State satisfactory.

Ganie
78
REFERENCES AND BIBLIOGRAPHY

During the completion of this project work I have taken references from various
sources which include:
 Annual report of The Jammu and Kashmir Bank ltd.

 Magazines such as Business Economics, Newspaper such as Greater Kashmir
, Bank Dairy, Bank Catalogue, Bank magazine etc.
 Yearly journals of the Jammu and Kashmir Bank Ltd.
 Website of the bank;
www.jkbank.net
www.jkbank.com
www.rbi.org.in
 Circulars of J&K Bank

Ganie

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01

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY : MANZOOR AHMAD GANIE

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

NAME: MANZOOR AHMAD GANIE

CLASS: MBA 4TH SEM

PROJECT ON: WORKING CAPITAL MANAGEMENT IN JK BANK

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

I am extremely grateful and remain indebted to my guide Dr Gousia Shah (Assistant

helped me in continuing my effort.

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

1.1 Overview of the J &K Bank 7-8

1.2 Profile of the J & K Bank 9-11

1.4 Analysis of working capital management in J&K bank 22-26

Chapter-3 Research Methodology 29

3.1 Objectives of the study 30

Chapter-4 Data Analysis

4.1 Data Analysis and interpretation

References & Bibliography

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

regarding “Working Capital Management” such as classification, determinants, sources have

Ratio, Creditors turnover ratio have also been analyzed

to ensure the progress of J&K BANK PVT LTD

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

product offering and services standards, all of which are globally.

546 Cr in FY 19-20 to Rs 719 Cr in FY 20-21 registering a YoY growth of 32%

then it means the selling price of goods is increasing day by day

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

1. INTRODUCTION TO THE ORGANISATION

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

sectorwould be gaining profitability, reinforcing technology, maintaining global standards,

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

1.2 Profile of the J&K Ban k

Brief History of the Bank

achieve their own end.”

(Maharaja Hari Singh)

A” class bank by RBI in 1976

BOARD OF DIRECTOR OF JK BANK

Baldav Prakash since january 2022

Unique characteristics of the bank

o Salaries of government officials disbursed by the Ban

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

a 6.9% rise in total income to Rs 2348.02 crore in Q3 FY21 over Q3 FY20

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

PRODUCT AND SERVICES OF J&K BANK

Technology based financial service

o Stock broking Services through investment

o Depository Participant of NSDL and CDSL.

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

1.3 MEANING AND CONCEPTUAL FRAME

CONCEPT OF NET WORKING CAPITAL

necessary for growth.

MEANING OF NET WORKING CAPITAL

Project Made on Working Capital Management in (J&K) by Manzoor Ahmad Ganie

CONSTITUENTS OF CURRENTS ASSESTS

CONSTITUENTS OF CURRENT LIABILITIES

1) Accrued or outstanding expenses

then the source from where it is made available.

would increase its working capital.

MANAGING OF WORKING CAPITAL

1) Working capital cycle

WORKING CAPITAL CYCLE

 Pay suppliers and other creditors