WORKING CAPITAL MANAGEMENT IS A KEY TO SUCCESS FOR ORGANIZATION AS IT DEPICTS OPERATIONAL EFFICIENCY OF A BUSINESS VENTURE.

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201-Financial MANAGEMENT
Unit No.3. Working Capital Management
3.1 Meaning and Definition of
Working Capital
Presented By:
Dr. V. M. Tidake
Ph. D (Financial Management), MBA(FM), MBA(HRM) BE(Chem)
Dean EDP & Associate Professor MBA
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Sanjivani College of Engineering, Kopargaon
Department of MBA
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Unit 3: Working Capital Management
 At the End of the Session Student will be able to
understand-
A. Meaning and Definition of Working Capital
Management

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WORKING CAPITAL
• Working Capital is the Capital required to run
the day to day operations of a business
enterprise.
• It is also known as Current Capital or Running
Capital or Short Term Capital.
• W.C.M. is Balancing between Holding Cost and
Carrying Cost.

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TYPES OF WORKING CAPITAL
• Gross Working Capital and Net Working
Capital.
• Permanent Working Capital and
Temporary Working Capital.

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SCOPE OF WORKING CAPITAL
• Positive Correlation between Sales and W. C. M.
• More than 50% Capital is in the form of Working
Capital.
• Fixed Asset can be acquired on Lease but
Working Capital can’t.
• Working Capital needs are mostly financed from
outside Sources.

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WORKING CAPITAL FINANCING
Trade
Credit
Non Cash
Financing
Bank
Financing
Bank OD
Cash Credit
Bills
Discounting
Letter of
Credit
Working
Capital Loans

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WORKING CAPITAL CYCLE
CASH
RM
WIP
Finished
Goods
Sales
Debtors

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FACTORS AFFECTING WORKING CAPITAL
• Nature of Business,
• Production Policy,
• Market Conditions,
• Seasonal Fluctuations,
• Growth and Expansion Strategy,
• Operating Efficiency,
• Credit Policy,
• Growth Rate,
• Dividend Policy.

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CURRENT ASSET (CA)
• Current Asset is the asset of an Organization which is already in the
form of Cash or will readily get converted in the form of Cash within
One Year.
• EXAMPLES OF CA:
• Stock of R.M.
• Stock of WIP
• Stock of Finished Goods
• Cash in Hand,
• Cash at Bank,
• Debtors,
• Bills Receivables,
• Prepaid Expenses

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CURRENT LIABILITY (CL)
CURRENT LIABILITY:
Current Liability is the Liability of an Organization
which is already due for payment or will become due
for payment within one Year.
EXAMPLES OF CL:
• Outstanding Expenses,
• Creditors,
• Bills Payables,
• Proposed Expenses,
• Various Provisions etc.

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FORMAT OF WORKING CAPITAL
Particular Amount
A) CURRENT ASSET:
a) Stock of RM
b) Stock of WIP
c) Stock of Finished Goods
d) Debtors
e) Bills Receivables
f) Prepaid Expenses
g) Cash in Hand
h) Cash at Bank
TOTAL CURRENT ASSET:
B) CURRENT LIABILITY:
a) Creditors
b) Bills Payables
c) Outstanding Expenses
d) Provisions if any
e) Proposed Expenses
TOTAL CURRENT LIABILITY:
WORKING CAPITAL (A-B):

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EXERCISE
 State and Explain the concept of
Working Capital?

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For More Details Contact
Dr. V M Tidake
tidkevishal@gmail.com
tidkevishalmba@sanjivani.org.in

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Thank You