WORKING CAPITAL

MANAGEMENT OF

Guided By Submitted
By Prof.Debidutta Acharya Sandhya Rani Mishra
Regd. No.-2106107043
Introduction:
 The life blood of business,as is evident, signified funds required for day-to-day
operation of the firm. The management of working capital assumes great
importance because shortage of working capital funds perhaps the biggest
possible cause of failure of many business units in recent times.

 Decision relating to working capital and short term financing are reffred to as
working capital management. These involve managing the relationship
between a firm’s assets and its short term liabilities.

 The goal of working capita lmanagement is to ensure that the firm is able to
continue its operations and that it has sufficient money flow to satisfy both
maturing short-term debt and upcoming operational expenses.
Objectives:
 To determine the amount of working capital requirement and to
calculate various ratios relating to working capital.

 To make an item wise study of the components of the working capital.

 To suggest the steps to be taken to increase the efficiency in

management of working capital.
Scope :
Improve business solvency
Ability to face crises
Increase credit worthiness
Better relations with supplier and creditors
Helps in expansion
Competitive advantage
Limitations of the study:
During the course of study of summer training project
entitled Working Capital Management of Nalco the report
has been prepared subject to the following limitations.
1. The study is limited to five financial years from 2016 to 2021 performance.
2. The data used in the study have been taken from balance sheet and their
relatedschedule of Nalco.

The study has been conducted during the boundaries of Nalco. The
analysis ignores the time value of money.
Data source and Methodology:
Source of data collection: Secondary data
. Net worth
.Financial performance(Income&Net profit)
. Financial position

Duration of data: 2016-2021(Five years)

Concepets of working capital:
Balance sheet concept
1. Gross working capital
2. Net working capital
Operating cycle or circular flow concept
Operating cycle:
 The working capital cycle for a business is the length of time it takes to
convert the total net working capital into cash.
How to calulate WC?
 Working capital= Current Assets-Current Liabilities

 Net working capital= Accounts receivable + Inventory-Accounts

payable

 Working capital turnover ratio= Net Sales/ Net working capital

Data Analysis and Interpretation:
Financial Performance
Financial Position:
Working Capital of NALCO(2021-22)
(Amount in ₹ Crore)
 Working capital = current asset-current liabilities
= 6,485.00-3,099.14
= 3,385.86
Net working capital= Trade receivables+Inventory- Trades payables
= 75.25+1,646.17-1,457.1
= 264.32
Working capital Turnover Ratio= Net sales/ Net working capital
= 3,289.98/264.32
= 12.44
Findings of the Study:
Nalco is not providing credit sales to its customer.
Nalco has a good liquidity position.
The return generated by employing capital is not good.
The profitability position also not satisfactory.
Nalco is efficient in managing the working capital.
The company has high liquid asset which is enough for
repayment of short term liabilities.
Moreover the company has good current ratio position,
which shows that company uses its current assets
efficiently.
CONCLUSION
‘The financial statement analysis’ plays a vital role in helping the financial
manager and top management of the company to plan and control their
financial structural operations.
 It found that the company has a sound and effective policy and its performance
is very good even in this bad recession situation company has managed to post
good profit.
 Company is competing well at the domestic as well as the international level
and it is among the low cost producers of aluminium in the world only.
 We can say that the companies management of finance and its working capital
management system is very good because of which only the company has got
the status of NAVRATNA company.
BIBLOGRAPHY
Financial Management………. Prasanna Chandra
Financial Management………. I.M. Pandey
Annual Report of NALCO
Auditors Report, Directors Report and Investors
Report.
www.nalcoindia.com