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5th Sem Financial Management Notes

WORKING CAPITAL MANAGEMENT

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Last updated: 17 July 2023

WORKING CAPITAL

The capital of a business which is used in its day-by-day trading operations, calculated as the
current assets minus the current liabilities. Working capital is also called operating assets or net
current assets.

                                                          WC= CA-CL

WORKING CAPITAL MANAGEMENT

Working capital management refers to a company’s managerial accounting strategy designed to
monitor and utilize the two components of working capital, current assets and current liabilities,
to ensure the most financially efficient operation of the company.

NEED OF WORKING CAPITAL MANAGEMENT

  • Inventory Management
  • Receivables Management
  • Cash Management

 

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Syllabus BHM307

01 Financial Management

  1. MEANING & SCOPE
    1. Meaning of business finance
    2. Meaning of financial management
    3. Objectives of financial management

02 Financial Statement

  1. ANALYSIS AND INTERPRETATION
    1. Meaning and types of financial statements
    2. Techniques of financial analysis
    3. Limitations of financial analysis
    4. Practical problems

03 Ratio Analysis

  1. Meaning of ratio
  2. Classification of ratios
  3. Profitability ratios
  4. Turnover ratios
  5. Financial ratios
  6. Du Pont Control Chart
  7. Practical Problems

04 Funds Flow Analysis

  1. Meaning of funds flow statement
  2. Uses of funds flow statement
  3. Preparation of funds flow statement
  4. Treatment of provision for taxation and proposed dividends (as non-current liabilities)
  5. Practical problems

05 Cash Flow Analysis

  1. Meaning of cash flow statement
  2. Preparation of cash flow statement
  3. Difference between cash flow and funds flow analysis
  4. Practical problems

06 Financial Planning

  1. MEANING & SCOPE
    1. Meaning of Financial Planning
    2. Meaning of Financial Plan
    3. Capitalisation
    4. Practical problems

07 Capital Expenditure

  1. Meaning of Capital Structure
  2. Factors determining capital structure
  3. Point of indifference
  4. Practical problems

08 Working Capital Management

  1. Concept of working capital
  2. Factors determining working capital needs
  3. Over trading and under trading

09 Basics of Capital Budgeting

  1. Importance of Capital Budgeting
  2. Capital Budgeting appraising methods
  3. Payback period
  4. Average rate of return
  5. Net Present Value
  6. Profitability index
  7. Internal rate of return
  8. Practical problems