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The Amount of Funds Necessary To Cover The Cost of Operating The Enterprise

This document discusses working capital management at Kerala Agro Machinery Corporation (KAMCO) LTD from 2012-2017. It defines working capital as funds needed to cover daily business expenses. The objectives are to study KAMCO's working capital effectiveness and assess its liquidity, profitability, and ways to improve. Key performance ratios like working capital, inventory turnover, and collection will be analyzed to identify areas for better inventory, cash, receivables, and payables management. An efficient working capital management is necessary for a firm's liquidity and profitability.

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77 views

The Amount of Funds Necessary To Cover The Cost of Operating The Enterprise

This document discusses working capital management at Kerala Agro Machinery Corporation (KAMCO) LTD from 2012-2017. It defines working capital as funds needed to cover daily business expenses. The objectives are to study KAMCO's working capital effectiveness and assess its liquidity, profitability, and ways to improve. Key performance ratios like working capital, inventory turnover, and collection will be analyzed to identify areas for better inventory, cash, receivables, and payables management. An efficient working capital management is necessary for a firm's liquidity and profitability.

Uploaded by

Vaunted
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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 .

1 INTRODUCTION

Finance is regarded as the life blood of every business activity. Without adequate
finance, no enterprise can accomplish its objectives, so finance is one of the most important
of all business functions. The success of business mainly depends on how well the finance
function is performed. Hence, efficient management of every business enterprise is closely
linked with efficient management of its finance.

Working capital is like the heart of the business. If it becomes weak the business
property is affected. Working capital is an index of the liquidity of a concern. The study of
working capital is more importance to external and internal analysis because of close
relationship to day to day business activities.

Working capital is defined as,

“The amount of funds necessary to cover the cost of operating the enterprise”

In general working capital is the fund needed for meet day to day expenses of an
organization.

Working capital refers the excess of current assets to current liabilities. So


management of working capital is the administration of both current assets and current
liabilities. In other words it refers to a firm’s investment in short term assets like cash, short
term securities amount receivables and inventories of raw materials, work in progress and
finished goods. It can also be regarded as the portion of the firm’s total capital. It refers to
excess of current assets to current liabilities. So management system is an excellent way for
many companies to improve their earnings. Working capital is the investment needed for
carrying out day to day operations of the business smoothly.

A managerial accounting strategy focusing on maintaining efficient level of working


capital, current assets and current liabilities, in respect of each other. Working capital
management ensures a company has sufficient cash flow in order to meet its short term debt
obligations and operating expenses.

A few key performance ratios of a working capital management system are the
working capital ratio, inventory turnover and the collection ratio. Ratio analysis will lead
management to identify areas of focus such as inventory management, cash management,
accounts receivable and payable management.

An efficient working capital management is necessary for achieving both liquidity


and profitability of a firm. A poor to a tie up of funds in idle assets reduces the liquidity and
profitability of a company. This is to evaluate the working capital management practices of
Kerala Agro Machinery Corporation (KAMCO) LTD during the period 2012-2013 to 2016-
2017.

OBJECTIVES OF THE STUDY

 PRIMARY OBJECTIVE

To study the effectiveness of working capital management with reference Kerala Agro
Machinery Corporation (KAMCO) LTD, Athani.

 SECONDARY OBJECTIVES
 To measure the operational and financial efficiency of the company.
 To ascertain the liquidity and profitability position of the company.
 To suggest any ways to improve the present condition.
 To give suggestions to improve working capital management of the company.

SCOPE OF THE STUDY

The present day study covers a period of five years. The scope of the study is an
attempt to analyze the working capital management of Kerala Agro Machinery Corporation
(KAMCO) LTD. The study gives an idea about the importance of working capital in an
organization.

LIMITATION OF THE STUDY

 The study is mainly done on the secondary data available from various records .
Therefore, it suffers from all the limitations of secondary data.
 The study is entirely based on the quantitative data involving numerical figures and
no qualitative factors are taken into consideration for the purpose of the study.
 The study does not take into account the other areas of financial management such as
capital budgeting, capital structure, dividend policy etc.
 Ratios may be varying accordingly. Errors may happen.

RESEARCH METHODOLOGY
Research methodology is the systematic way of solving the research
problem. It may be used understood as a science of studying how research
is done scientifically. The process used to collect information and data for
the purpose of making business decisions.

It is defined as the procedure used in making systematic


observation or otherwise obtained data ,evidence or information as part
of research methodology .Research methodology is the way in which
researches specify how they are going to retrieve the all the important
data and information that company will need to make vital decisions
TOOLS
Interview
Questionnaire

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