Project Synopsis

Name- Dolly Mary Nongrum

Roll No- 1305017499
MBA 3rd semester (Finance)
1.

Title - Analysis of Working Capital Management at Modrina Auto Enterprise

2. Objectives: Everything in life holds some kinds of objectives to be fulfilled. This study is
not an exception to it. The following are a few straight forward goals which I will tried to
fulfil in my project:
I. To study the existing system of Working capital management of the company.
II. To examine the feasibility of present system of managing cash, debtors and inventory.
III. To analyse the financial performance of the company with reference to its working
capital components.
IV. To calculate and analyse the various ratios to know the financial control and
performance.
V. To suggest improvements in the management of working capital management.
VI. To appraise the utilisation of current assets and current liabilities and find out shortcomings if
any.
VII. To study the need for analysing working capital management.
VIII. To know the progress of working capital management in a company.
IX. To know the solvency of the company and how the company is managing working capital.
3. Problem Statement- Working capital refers to that part of capital which is required for dayto-day operations of an enterprise. There are two concepts of working capital- gross working
capital and net working capital. Gross working capital is the total current assets whereas net
working capital is current assets minus current liabilities. The total working capital is
composed of regular and variable parts. The amount needed again and again to invest in
current assets is called regular/permanent working capital. The need of amount which varies
due to fluctuations in the volume of business is called variable working capital. The
significance of working capital in any enterprise is that it is regarded as life-blood of the
enterprise which keeps the enterprise running.
The requirements for working capital may vary from enterprise to enterprise depending upon
its sales, length of operating cycle, nature of business, terms of credit, seasonal variation in the
business, turnovers of inventories, nature of production, contingencies, etc. The regular
portion of working capital is financed by long-term sources such as shares, debentures, term
loans and retained profits. The short-term sources of financing the variable portion of working
capital include trade credit, public deposits, factoring, advances from customers, commercial
banks etc.
Both excessive and inadequate working capitals are harmful for an enterprise. Hence, working
capital needs to be maintained at a proper size. This called for working capital management.

Managing working capital means maintaining the different components of working capital at
an optimum size. It is also the functional area of finance that covers all the current accounts of
the firm. It is concerned with the management of the level of individual current assets as
well as the management of total working capital.

The important

of working capital Management stem from two reasons:

(i) A substantial portion of the investment is invested in current assets, and

(ii) Level of current assets will change quickly with the variation in sales.
Hence, in this study, an attempt has been made to analyse the size and composition of working
capital and whether such an investment has increased or declined over a period. After
determining the requirement of current assets, one of the important tasks of the financial
manager is to select a group of appropriate source of finance for the current assets.

4. Research Methodology: Research methodology refers to the procedures used in making

systematic observations or otherwise obtaining data, evidence, or information as part of a
research project or study. It defines what the activity of research is, how to proceed, how to
measure progress, and what constitutes success. The methodology adopted included collection
of data from both primary and secondary sources.
Primary data- Primary data, as the name suggests, is original, problem-or project-specific
and collected for the specific objectives and need spelt out by the researcher. The accuracy
and relevance is reasonably high. Data which are collected for the first time by the
investigator himself for a specific purpose are known as primary data. For collection of
primary data, the following methods can be adopted
a. Observation method- Observation is a direct method of collecting primary data. It is one of
the most appropriate methods to use in case of descriptive research. The method of
observation involves viewing and recording individuals, groups, organisations or events in a
scientific manner in order to collect valuable data related to the topic under study.
b. Focus Group Discussion- Focus Group Discussion (FGD) is a highly versatile and dynamic
method of collecting primary data from a representative group of respondents. The process
generally involves a moderator who steers the discussion on the topic under study. There are a
group of carefully selected respondents who are specifically invited and gathered at a neutral
setting.
c. Personal Interview method- personal interview is a one-to-one interaction between the
investigator/interviewer and the interviewee. The purpose of the dialogue is research specific
and ranges from completely unstructured to highly structure.
Secondary data- Secondary data are those data which have been previously collected by
some agencies for their own purpose but are now used in a different connection. It is that
information which is not topical or research-specific and has been collected and compiled by
some other researcher. This type of data is recorded and published in a structured format, and

thus, is quicker to access and manage. For collection of secondary data, the following methods
are adopted:
a. Internal data- compilation of various kinds of information and data is mandatory for any
organisation that exists. Some sources of internal information are company record, employee
record, sales data, financial record and other publications.
b. External data- Information that is collected and compiled by an outside source that is
external to the organisation is referred to as external data. Some sources of external data are
published data, Government sources and other data sources.
c. Computer- stored data- Information today is available in an electronic form. The database
available to the researcher can be classified on the basis of the type of information or by the
method of storage and recovery.