Management of Working Capital

Paper Code: 
EMF 423
Credits: 
04
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 

•To develop the skills to manage working Capital.

12.00
Unit I: 

Introduction to Working Capital:
Nature, Scope and Definition of Working Capital, Working Capital Cycle, Assessment and Computation of Working Capital Requirement, Profitability-Liquidity trade-off, Working Capital Policy-Aggressive & Defensive. Overview of Working Capital management.
 

12.00
Unit II: 

Management of Cash and Marketable Securities:
Meaning of Cash, Motives for holding cash, objectives of cash management, factors determining cash needs, Cash Management Models, Cash Budget, Cash Management: basic strategies, techniques and processes, compensating balances; Marketable Securities: Concept, types, reasons for holding marketable securities, alternative strategies, choice of securities, Cash Management Practices in India.
 

12.00
Unit III: 

Management of Receivables:
Receivables: Nature & Cost of maintaining receivables, objectives of receivables management, factors affecting size of receivables, policies for managing accounts receivables, determination of potential credit policy including credit analysis, credit standards, credit period, credit terms, etc, Collection Policies, Credit Management in India.
 

12.00
Unit IV: 

Management of Inventory:
Inventory: Need for monitoring & Control of Inventories, objectives of inventory management, benefits of holding inventory, risks and costs associated with inventories, Inventory Management: Minimizing cost in Inventory, Techniques of Inventory Management-Classification, Order Quantity, Order Point etc.
 

12.00
Unit V: 

Working Capital Financing:
Need and objectives of financing of Working Capital, Short Term credit, mechanism and cost benefit analysis of alternative strategies for financing working capital: accrued wages and taxes, accounts payable, trade credit, bank loans, overdrafts, bill discounting, commercial papers, certificates of deposit, factoring, secured term loans, etc, Pattern and sources of working capital financing in India, with reference to government policies.
 

*A minimum of one case study will be discussed per unit of the syllabi.

References: 

Text Books:

  1. Rangrajan and Mishra- Working Capital management (Excel)
  2. Periasamy, P- Working Capital Management-Theory & Practice (Himalaya, 2007)

Suggested  readings:

  1. Pandey, I.M.- Financial Management (Vikas, 9th Ed.)
  2. V.K. Bhalla-Working Capital Management (Anmol)
  3. Dheeraj Sharma-Working Capital Management (Himalaya, 2005)