Escolar Documentos
Profissional Documentos
Cultura Documentos
ON
WORKING CAPITAL MANAGEMENT
OF
External Guide
Internal Guide
Sri B.K.Panda
Submitted By:
Sandeep Kumar Khandelwal
Roll No. :13799U733006
DECLARATION
I do hereby declare that the project work entitled is the original piece of work
done by me. This report in being submitted as part of fulfillment of the
requirements for the summer internship of the Master in Financial Control
MFC programme conducted in Institute of Media Studies, Bhubaneswar.
ACKNOWLEDGEMENT
CONTENTS
Declaration
Acknowledgement
Certificate
Chapter 1:- Research Design and Methodology
Introduction
Objectives
Scope
Place
Limitation
Research and Methodology
Chapter 2:- Company Profile
Introduction
History
Structure
Function and Role of OSCB
Mission and Achievement
Direct Financing
Retail Banking
CHAPTER 1
RESEARCH
DESIGN
AND
METHODOLO
GY
INTRODUCTION
In the present day economy finance is defined as provision of money as and
when desire or required. Every enterprise needs finance or capital to start or
carry out its operations. Finance act as life blood and nervous system of an
organization. So finance should be managed effectively both for short term
and long term purpose.
SUBJECT
Working capital is the life blood of an organization, which indicates or
shows the source and resource of fund in an organization. Source indicates
the total fund requirement of an organization i.e. at a particular point of time
it is equal to the sum of equity and debt which forms the liabilities of a firm.
The liabilities include long-term and short-term liabilities. Long-term,
liabilities indicates the liabilities which are either permanent or have a long
life and short-term or current liabilities indicates the liabilities generated due
to the business activities or related due to the operating activities of a
business. The total fund employ is equal to debt plus of equity i.e. the
sources from which business secured or raised fund is known as sources of
fund. There are two types of sources from which an organization get fund.
The owners contribution is known as capital otherwise called as fixed
liabilities i.e. equity or owners equity. Owners equity =Equity share capital +
Preference share capital + Retain earning. The new concept retain earning
is another sources of fund this is called fund generating by the business.
The second source is known as debt financing. The fund collected through
debenture and termed loan cones under debut financing which is called as
creditors of the business
Working capital is that part of the long-term financed locked in and use
to support the current activities i.e. to maintain the productivity of fixed asset
i.e. without the fund to support current activities the fixed assets are
valueless. The amount blocked for or locked for current activities is really
Working Capital.
DEFINITION
"Circulating capital means current asset of a that are changed in the
ordinary course of business from one to another as for example, from cash
to inventories, inventories to receivable, receivable to cash."
-GENESTERNBERG
"WORKING CAPITAL is the amount of fund necessary to cover the
cost of operating the enterprise."
-SHUBIN
NET WORKING CAPITAL = CURRENT ASSET - CURRENT LIABILITY
OBJECTIVE
This study is made as a part of the MFC programme, IMS, Utkal University
in the form of summer internship project with the following objective.
To study the working capital management in order to study the
financial efficiency of OSCB Ltd.
To find out the strategies and managerial aspect of managing current
assets.
The bank whether has the strength to fulfill its current obligation or
not.
Performance of OSCB Ltd for generation credit providing loan &
advanced, accepting deposits and making investment etc.
Growth rate of OSCB Ltd.
SCOPE
The scope is expanded within organization introduction to practical
exposure to co-operate day to day activity.
The data and information were gathered during the training.
The result includes secondary data only.
Aim of the research is academic representation of corporate data & to
obtain the % of current asset and current liabilities.
To know the partial part of working capital management of OSCB Ltd
through the data available as managerial tool & its future prospects.
LIMITATIONS
CHAPTER 2
COMPANY
PROFILE
INTRODUCTION :
The Odisha state co-operative bank Ltd registered (Reg. No.-29 cu/date
02.04.1948) under the Bihar and Odisha co-operative society act 1935 as
Odisha provisional co- operative bank with its head quarter at Cuttack and
functioning from 2nd April 1948. Later the bank shifted to the state capital,
Bhubaneswar.
The Odisha State co-Operative bank is apex bank in odisha has office at
Bhubaneswar with its branches at. It supports 17 central co-operative banks
which in turns support a more than 4000 primary co-operative society.
HISTORY OF O.S.C.B LTD
With the growth of central bank the need for loan and advances are credit
as reasonable rate of interest grew for central banks to enable them make
adequate finance available to the societies. So, in April 1941 the Bihar and
Odisha provincial co-operative bank was formed.
The early 40s witnessed the introduction of provincial autonomy in British
Indian provinces and what was the paramount importance was the birth the
odisha province on 1st April 1936. The odisha provincial co-operative bank is
of the manifestations of great historical indentifying of odishia people.
During this period the number of the separate odisha province the OSCB
was registered on 15th August 1936 and sum of Rs. 10520 was collected
towards share capital of the bank.
THE MAIN OBJECTIVE OF THE BANK IS
To finance the co-operative societies.
To act as a balance centre for the surplus fund of the societies in
odisha.
To carry on the banking business.
The central bank and union of odisha applied for the bifurcation of the Bihar
and odihsa provincial co-operative bank. The 13 central co-operative bank in
north Odisha served all connections with the Bihar provincial cooperative
bank in 1983, and their net liability to the bank was taken over by odisha
govt.
DELIVERY
SYSTEM
Kissan credit card has been introduced to adequacy and time liner
in credit delivery.
2. Role towards rural saving mobilization to attain self reliance of CCB &
PACS.
3. To make loan availability easier in the state.
4. To serve as a balancing center in the state for all type all type of cooperative societies registered under the co-operative societies act.
5. To function as banker accepts all type of deposits such as current.
6. To act as refinancing agency to the affiliated societies in respect of
production and investment credit and investment credit and handloom
credit in the state.
DIRECT FINANCE
Direct finance by OSBC
The OSBC has financed the sugar industries state to help cultivation to
remunerative price for the sugar cane crop. It has also financed the Odisha
co-operative marketing federation for fertilizer business. The following large
unit are also financed by bank.
RETAIL BANKING
HOUSING LOAN
The is financing housing loan under its APNA GHAR scheme maximum
under this head is Rs. 2 lakh purchase of readymade house or construction
for repair renovations, additions, alteration the limit is Rs 10 lakh. The rate
of interest is competitive and varying time on reducing balance Maximum
repayment period is 15 years.
Personal loan
Requirement / formalities.
Maximum limit is Rs. 50 lakhs or 75% of the cost of the item
Subject to 50 times net monthly income, the net monthly salary
should not less than Rs. 3000 per month under any
circumstances.
Repayable in maximum 96 monthly installments in reducing
balance.
Motor vehicles loans
For any start of surface transport and water transport vehicle both
commercial and Commercial and for personal purpose.
Requirement / formalities
75% of the total cost of vehicle including insurance and
registrations.
Repayable in 60 monthly installment in reducing balance.
Business enterprise.
Term loan for
Fixed asset for project
Commercial project and kalian mandap
Hotel, Tourist Resort and Health care units.
Equipment and machine.
Requirement / Formalities.
Maximum 75% of the fixed asset
Maximum payable period is to 10 years.
Interest in reduced balance method.
Working capital loans.
Retail business
Trader
Wholesaler
Project solution
Requirement / formalities.
Maximum 75% of working capital requirement subject to stock
holding.
Quarterly interest on days balance.
CHAPTER 3
THEORETIC
AL
ASPECT
Working capital means the part of the total assets of the business that
change from one form to another form in the ordinary course of business
operations.
The word working capital is made of two words 1.Working and 2. Capital
The word working means day to day operation of the business, whereas
the word capital means monetary value of all assets of the business.
Working capital : -
Current Assets
Cash in hand / at
bank
Bills Receivable
Current Liabilities
Bills Payable
Sundry Creditors
Sundry Debtors
Outstanding
expenses
Accrued expenses
Investors/ stock
Temporary
investment
Prepaid expenses
Accrued incomes
CASH
RAW MATERIAL
OPERATING CYCLE
WORK IN PROGRESS
SALES
FINISH GOODS
T O
PP
TT
B
O
O
WO
B
NN
C
P
HH
N
S F
R/
CK
C G
P
A
Y
EE
F
S
OI
T
L
EE
S
IN C R E A S E
IN F IX
ASSETS
IN C R E A S
E
E F FE C IE
N C -Y
IN C R E A S E
DEBT
C A PAC IT Y
D IV ID E N D
D IS T R IB U
T I-O N
E A SY
LO A N
FR O M
BANKS
S IG N IFIC A N --C E
O F W O R K IN G
C A P ITA L
PAY M E N T
TO
S U P P LIE
RS
Bank borrowing
Over draft
Cash credit
Purchase or discount of bill
Letter of credit
Working capital loan
Ride credit
Accrued expenses and deferred income
Bank borrowing
Factoring of receivable
Commercial paper
Hypothecation
Pledge
Mortgage
Lien
CHAPTER
4
DATA
ANALYSIS
AND
REPORTING
Current Liability
YEAR
CURRENT
ASSET
CURRENT
LIABILITY
2010-11
2783507045
4520990074
7
2011-12
4934687022
0
2544153187
0
2012-13
6191712333
2
2558105542
6
2013-14
7060843496
9
3930490458
1
Interpretation
As a convention of current ratio the minimum of 2:1 is referred to as a
banker rule of thumb current ratio of OSCB satisfactory as shown in the
above table and graph.
2010-11
4520990074
7
2647794419
2011-12
2544153187
0
2475124810
2012-13
3558105542
6
8089649155
4
2013-14
3930490458
1
3195184432
1
YEAR
CURRENT
ASSET
CURRENT
LIABILITY
WORKING
CAPITAL
2010-11
2783507045
2011-12
4934687022
0
4520990747
2544153181
0
-18026393702 2390533835
0
2012-13
6191712333
2
3558105542
6
2633606790
6
2013-14
7060843496
9
3930490458
1
3130853038
8
YEAR
CURRENT
ASSET
WORKING
CAPITAL
2010-11
27183507045
2011-12
4934681022
0
-18026393702 2390533835
0
2012-13
6191712333
2
2633606790
6
2013-14
7060843496
9
3130353038
8
YEAR
CURRENT
LIABILITY
CURRENT
CAPITAL
2010-11
4520990074
7
2647794419
2011-12
2544153187
0
2475124810
2012-13
3558105542
6
8089649155
4
2013-14
3930490458
1
3195184432
1
The excess of receipt over payment represents surplus of cash & the
excess of payment over receipt case and deficit of amount of working capital
required.
PROJECT VALANCED METHOD
Under this method project balance sheet for future date is prepared by
forecasting of asset & liability by following any of the method.
The excuse of estimated current liabilities, as shown in the projected
balance sheet computed to indicate the estimated amount of working capital
required.
ESTIMATION OF WORKING CAPITAL:
As percentage of fixed asset
Total of foxed asset = total of asset [current asset + fictitious asset]
Total of asset = total of asset side = sum of fixed asset, current asset and
fictitious assets.
As a percentage of fixed investment.
Working capital is the computed as a percentage of fixed investment or total
investment.
Fixed investment = total of fixed asset before depreciation i.e. amount of
capital blocked in fixed assets.
Total investment or gross assets = fixed assets before depreciation + total of
current assets.
WORKING CAPITAL ANALYSIS
Working capital is the very essential of running of business, smoothly and
profitability . The concept of working capital has its own importance in a
going concern and a position working capital i.e. excesses of current asets
over current liability shows the healthy existence of a business. But
sometimes the uses of working capital may be more than the sources
resulting in negative value of working capital. This ve balance is generally
off set soon by gains in the following periods. A study of changes in the uses
and sources of working capital is necessary to evaluate the efficiency with
which the working capital is employed in the business. This involves the
need of working capital analysis and this analysis is conducted through a
No. of device such as:
RATIO ANALYSIS
These techniques can be employed for measuring short term liquidity of
working capital position of the firm as:
Current ratio
Acid test ratio
Absolute liquidity ratio
Receivable turnover ratio
Payable turnover ratio
Working capital turnover ratio
Working capital leverage ratio
Ratio of current liability
Analysis of ratio:
Liquidity ratios:
It measure the organization meet its current obligations. In fact analysis of
liquidity budget and cash and fund flow statement. But liquidity ratio by
establishing a relationship between case and other current asset to current
obligation provide a quick measure of liquiditys very degree of liquidity is
also bad as asset earn nothing in this case. So it is necessity to strike a
proper balance between high liquidity and lack of liquidity. The most
common ratio relevant to study is:
A) Current ratio
B) Absolute liquid ratio
Current ratio
Current ratio defined as the relationship between current asset and current
liabilities. This ratio is also known as working capital ratio. It is widely used
to make the analysis of short term financial position of the firm.
Current ratio= current assets/current liability
Current assets
Cash in hand
Cash in bank
Money at call & short notice
Advances (short-term, cash, credit & O/D)
Interest receivable
Bills receivable
CHAPTER 5
FINDING
AND
SUGGESTION
CHAPTER-5
FINDINGS
SUGGESTION
CHAPTER 6
CONCLUSI
ON
CONCLUSION
The finding are obtained from the analysis of the various level of
working capital requirements can suggest the management of
adequate amount of working capital is how much necessary for banks.
It enhances the efficiency of the banks and enabled them to meet the
day to day requirements of finance when needed.
It can be concluded that the excess and inadequate amount of
working capital is dangerous for many organization in smooth
functioning of the organizations.
Hence, the management of adequate level of working capital is very
much Important for the bank as working capital is lire blood for any
organization.
An organization having a well managed working capital requirement
has a long life smooth and profitable functioning.
CHAPTER 7
BIBLIOGRA
PHY
BIBLIOGRAPHY
WEBSITES :
WWW.OSCB.COOP
WWW.GOOGLE.COM
WWW.RBI.COM