Summer project On

Working capital management

By Vinod S kanojiya

Atharva Institute of Management Studies

Marve Road, Malad (W), Mumbai 4000 95.

July 2005
Summer project On Working capital management By Vinod .S. kanojiya

Submitted to:

Mr. Girish .P. Bangui

Manager Bank of Maharashtra, Charkop, kandivli

Atharva Institute of Management Studies

Marve Road, Malad (W), Mumbai 4000 95.

Declaration
I, Vinod kanojiya, of Atharva Institute of Management Studies, Malad (w), of MMS I, hereby declare that I have completed a summer project on working capital management in the Academic year 2004-05. The information submitted is true and original to the best of my knowledge.

Vinod kanojiya MMS-I

CERTIFICATE

This is to certify that Mr. Vinod kanojiya of Atharva Institute of Management Studies specializing in finance has completed his two months (viz. May-June, 2005) of summer project on working capital management, here at Bank of Maharashtra. The information submitted is true and original to the best of my knowledge.

Girish p Bangui Manager Bank of Maharashtra

CONTENTS: Project objectives1 Profile of Bank of Maharashtra......2 Concept of Working Capital Management.4 Types of Working Capital..5 Management of Working Capital7 Management of Cash.13 Cash Management Models21 Management of Inventories..24 Management of Accounts Receivables.30 Management of Accounts Payable33 Key Working Capital Ratios.38 Factors Influencing Working Capital Requirements39 Working capital assessment in MAHABANK.40 Assessment of Working Capital in MAHABANK...41 Recommendations 43 Scanning of working capital financing in MAHABANK44 Bibliography.45

Acknowledgements
I wish to take this opportunity to express my deep gratitude to the persons and the organization that have helped, encouraged, inspired and enlightened me with their constructive ideas and overall support towards the completion of this project successfully. This project would have been incomplete without the active co-operation and guidance of senior persons of Bank of Maharashtra (kandivli branch). I am very thankful to Mr. Girish p. Bangui, branch manager, charkop, kandivli (west), and his senior staff members for helping me throughout my project showing me the right direction towards the completion of my project. I am very grateful to prof. sujata pandey for providing me their expertise in the completion of my project. I thank prof. N.S. Rajen for his effort he put in for the towards my summer project. I am thankful to prof. Seema sant and prof. Mahesh rane for guiding me in referring the books for my projects. No words and language can ever be sufficient to express my gratitude to the above-mentioned persons who provided me with the support to prepare this project.

Vinod shyamji kanojiya

Executive summary
Working capital management refers to the administration of all aspects of current assets, namely cash, marketable securities, debtors and stock (inventories) and current liabilities. The financial manager must determine levels and composition of current assets. He must see that right sources are tapped to finance current assets, and that current liabilities are paid in time. He must see that right sources are tapped to finance current assets, and that current liabilities are paid in time. There are many aspects of working capital management, which make it an important function of the financial manager: Time: working capital management requires much of the financial managers time. Investment: working capital represents a large portion of the total investments in assets. Significance: working capital management has great significance for all firms but it is very critical for small firms. Growth: the need for working capital is directly related to the firms growth. Investment in current assets represents a very significant portion of the total investment in assets. Working capital management is critical for all firms. A small firm may not have much investment in fixed assets, but it has to invest to in current assets. Small firms in India face a severe problem of collecting their debtors. Banks have their own policies to assess the working capital of the firm to finance them with the shortage. Bank of Maharashtra adopts certain method for financing their customers working capital requirements. There are certain recommendations from the committees for the banks to finance the working capital needs of their clients. It may, thus, be concluded that all precautions should be taken for the effective and efficient management of working capital. The finance manager should pay regular attention to the levels of current assets and the financing of current assets.