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Working Capital

  • Date Submitted: 04/21/2012 08:06 AM
  • Flesch-Kincaid Score: 61.3 
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INTRODUCTION

          Growth of a successful venture depends on efficient overall management of a business unit. It is a collective effort of technical, marketing and finance personals.

          Working capital is an important aspect of financial management. Till recently, working capital management was neglected in India by both private and public sector companies.   This was to some extent a reflection of comparative ease in availability of funds from the capital market or commercial and development bands in case of public sector, funds were made available to the government. Due to the development in the recent years, situation has completely changed. With the commercial and industrial development in the recent years, need for working capital management is hard felt. No longer it is possible for even a very big and well established company to get funds from financial institutions, the dependence on which is fast growing without most detailed security of its requests. In a developing country like India where sources are limited, they should be put to best possible use. Exceptional care is needed for managing unit so that the organization can without ups and downs and there should be reasonably adequate resources available for its day -to-day operations. Thus the need of working capital.

                Working capital refers to the excess of current assets over current liabilities. Management of working capital therefore, is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the inter relationship that exists between them. Any financial control or planning can be effective only with the active participation of entire managerial group of organization. If a new project has to come up the civil mechanical project engineers have to do their job well. All are equal partner in achieving goal fined by the management. Responsibility of finance is to keep a close watch on various financial operations and...

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