A STUDY ON WORKING CAPITAL MANAGEMENT

K.CHAITANYA
Student, Department of MBA, Narayana Engineering College, Nellore
EMAIL: chaitanyakaveti777@gmail.com
Ms.Ch.Swathi
Assistant Professor, Department of MBA, Narayana Engineering College,
Nellore

ABSTRACT :

Working capital management is part of the financial considerations that a finance manager
needs to determine and plays an important role in determining the profitability of the firms. In
view of its importance, this study aims to investigate on the effect of working capital management
components and working capital management policy towards profitability of Vijaya Dairy
Limited at SPSR Nellore for five years period from 2013 to 2019. India has been the leading
producer and consumer of dairy products worldwide since 1998 with a sustained growth in the
availability of milk and milk products.

Key words: working capital, milk dairy.

CHAPTER -1

INTRODUCTION

INTRODUCTION FINANCIAL MANAGEMENT :

Financial Management is that specialized function of general management which is related to the
procurement of finance and its effective utilization for the achievement of common goal of the
organization.

In our present day economy, finance is defined as the provision of money at the time
when it is required. Finance may be defined as the art and sciences of managing money.
Finance holds key to all human activity. No business activity can ever be pursued
without financial support. Financial statement analysis can be undertaken either by the
management of the organization or by outside parties, viz., creditor’s investors and public. The
nature of analysis differs depending upon the purpose of analysis.

A proper financial analysis must be used to analyze a firm past performance and asses its present
financial strengths for making the better future plans. The financial resources of every organization
are always scarce and therefore require proper planning and control in order to achieve the best out
of funds available .In that working capital management is one of the major areas of financial
management. Managing of working capital implies managing of current assets of the company
like cash, inventory, accounts receivable, loans and advances and current liabilities like sundry
creditors, interest payment and provision.

Definitions of financial management:

Financial management is that managerial activity which is concerned with the planning and
control of the firm’s financial resources. It was a branch of capital economics till 1890, and as a
separate discipline, it is of recent origin. Still it has no unique body of knowledge of its own, and
draws heavily on economics for its theoretical concepts even today.

MEANING OF FINICIAL MANAGEMENT :

From the various definitions of the term business given above, it can be concluded that the term
business. Finance mainly involves, rising of funds, and their effective utilization keeping in view
the overall objective of the firm.

CONCEPT OF WORKING CAPITAL

1. Gross working capital.

2. Net working capital.

COMPOSITION OF WORKING CAPITAL

The individual composite items of working capital consist of current asset and current liabilities.

CURRNET ASSETS:

Current assets are those, which can be converted into cash with in one year
without effecting the operations of the firm.
\CURRENT LIABILITIES :

Current liabilities are those, which are intended to be paid in the

ordinary course of business within a short period of normally one year out of the current assets or
the income of the business.

CHAPTER -2

REVIEW OF LITERATURE

P Sudha (2024) :

In order to run their operations and reach their goals, businesses of all sizes rely on financial
resources. Money is so crucial in modern business that it is often referred to as the” lifeblood” of a
company.

Deepika Gupta,(2024):

This study investigates the influence of corporate governance standards on the effectiveness of
working capital management in various sectors of the publicly traded companies in India.

Corporate governance practices like board meetings, CEO tenure, size of the audit committee,
board size and women directors are used for constructing a corporate governance index.

Arnaldo Arnaldi, (2021) :

This paper analyzes the impact of working capital management policies on manufacturing SMEs
in the Czech Republic. The data necessary for the research was collected through a questionnaire.

Ahmed Mohamed Habib, (2022) :

This study aims to explore the relative efficiency of the working capital management (WCM) for
Emirati firms before and during the coronavirus crisis. The results of this study model showed a
negative and significant

Manufacturing SMEs in the Czech Republic. The data necessary for the research was collected
through a questionnaire.
Thanh Su Dinh (2022) :

The purpose of this paper is to investigate the non- linear relationship between working capital
management (WCM) and firm profitability (FP). 16 As well as checking whether there is a
financial leverage threshold in the decision on working capital, thereby assessing the change in the
impact of working capital on corporate profits with a defined threshold. Through panel data of 405
enterprises listed.

OBJECTIVES OF THE STUDY :

In the present scenario the sales and distribution creating few problems such as late delivery,
mediators involvement with lot of expenses incurring, transportation inadequate in rural areas and
other factor impact like competition with other brands like retail market. The main important
objectives of the study are listed below:-

To know the details of sourcing of milk.

To know the channels of distribution from its manufacturing unit to end users

To know the media effectiveness for milk sales.

To know the consumer buying behavior .

To find the sale of milk per day.

To know the consumer opinion on door to door delivery.

To know the brand awareness of the

 CHAPTER -3

RESEARCH METHODOLOGY DATA ANALYSIS AND

INTERPRETATION

TABLE-1

THE CHANGING TRENDS IN THE WORKING CAPITAL SCHEDULES

CURRENT RATIO :

Current ratio = Current Asset / current liability

YEAR S CURR ENT CURRE NT WORKI NG REMA RKS

ASSE TS LIABILI CAPITA L
TIES

2013-14 508620 139378 369242 Decrease

2014-15 450235 2704033 193040 Decrease

2015-16 328385 119672 32511 Increase

2016-17 188153 77096 111057 Decrease

2017-18 254940 87884 167056 Increase

INTERPRETATION

The above table shows the scheduled changes of working capital statements one can understand
that there are different working capital requirements has been allotted during period. However ,if
we go to in depth analysis of the trend In the changing pattern of the working capital in the
company we must analysis with subtle tool two get the actual trends are changes in the schedules
of working the period of 2013-14 to 2017-18 financial years.

CHART-1
3000000

CURRENT ASSETS

CURRENT LIABILITIES
WORKING CAPITAL
500000

2013-14 2014-15 2015-16 2016-17 2017-18

Table -2

Year wise Current assets, Current liabilities and Current ratio of Vijaya

Diary LTD, NELLORE.

WORKING CAPITAL TURNOVER RATIO:

Working capital turn over ratio = Sales / Net working capial.

Year Current Current Ratio

Assets liabilities
2013-14 508620 139378 3.6

2014-15 450235 274033 1.64

2015-16 328385 119672 2.7

2016-17 188153 77096 2.44

2017-18 254940 87884 2.9

 CHART- 2

3.5

2.5
Ratio

1.5

0.5
2013-14 2014-15 2015-16 2016-17 2017-18

CHAPTER-4

RESULTS & DISCUSSION

CONCLUSION :

From the analysis about the working capital at Vijaya Dairy Ltd, conclude that the company’s
interest is to reduce it is cost of production by increasing its sales. The concern has efficient
management. But contribution at working capital towards inventory is decreased. Due to this, the
company has under stocking at inventory. Also the company would pay it is creditors amount in
order to get raw material without failure. It is worth noticing that its overall performance is
favourable . But a little more care may be taken in managing the various aspects at working capital
management. Hence the suggestion listed in the previous page is realistic which would lead to that
increase in the profitability at the company.
 REFERENCES

WEBSITES :

https://www.hul.co.in/

https://www.hul.co.in/investror-relations/annual-reports/

https://en.mwikipedia.org/wiki/hindustan-uniliver

https://www.hul.co.in/our-company/

https://www.hul.co.in/our-comapny/inrtoduction-to-hul/

BOOKS:

Management Accounting by Dr Jayan