A Report on Comparative Analysis of Working Capital Management of Two Indian Cement Manufacturing Companies”


3)Working Capital
: Working Capital is considering what the best way would be in terms of a management for short-term resources and obligations. The concept of this decision focuses on if it is possible to maintain enough capital for payments of its bills including and extra money earned as interest. Current assets and current liabilities are considered as the part of this decision.

Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the report.

Working capital is the key to a successful business. It is like their blood flow and the manager’s job is to help keep it flowing. Under the Generally Accepted Accounting Principles working capital is simply the difference between a company’s Current Assets, which are cash, inventory, accounts receivable and prepaid items, and Current Liabilities, accounts payable and accrued expenses.

George 's Train Shop is a family owned business that focuses on the sales and repairs of train toys. George is running a profitable business, but as he is aware of my MBA Managerial Finance class, he has asked for advice on his working capital practices. Although George is currently enjoying the benefits of a profitable business, there are opportunities for him to expand his business ventures. This first starts by dissecting degree of aggressiveness in working capital practices, current capital budgeting practices, and areas where he can improve in both arenas. In addition, careful management of the company 's cash flow will

One determinant of a company’s debt capacity is the liquidity of its assets. An asset is liquid if it can be readily converted to cash, while a liability is liquid if it must be repaid in the near future. Liquidity is the company’s working capital, current ration and acid-test ration. The components of Liquidity are Working Capital, Current Ratio and Acid Test Ratio.

In order to be a great leader / manager one must understand capital cycle and how to achieve and maintain the organizations components. The working capital cycle comprises of four parts: cash, creditors, inventory, and debtors. A successful cash-flow management would mean a complete control on each of the working capital cycle parts. The shorter the working capital cycle, the faster supplies can be converted into cash; therefore, lessening the need for cash. If one component of the cycle fails, it is a domino effect on the other cycles. For instance, without careful financial and management planning, an organization will not know whether it is making the most effective use of its available resources funded and allocated through the capital financial process.

Working capital is the measure of a company’s efficiency and operating liquidity. The working capital is usually calculated by

Liquidity is an important factor in financial statement analysis since an entity that can not meet its short term obligations may be forced into liquidation. The focus of this aspect of analysis is on working capital, or some computer of working capital.

Liquidity reflects the ability of a firm to meet its short-term obligations using those assets that are most readily converted into cash. Liquidity ratios, current ratio and quick ratio, tell about the company’s ability to meet its immediate obligations. (Foster, 1986)

Working or functioning capital is the extent at which the organization’s cotemporary possessions enhanced from the liabilities. In this scenario group A evaluate the financial statement of Wal-Mart that includes balance sheets, cash flow statements, and suggestion by the managerial administration along with the postscripts to the financial statements of account that needs to demonstrate how every existing resource as well as liability has influenced the tactics that are concerned with the cash management administration. Moreover perceiving the upcoming year’s prediction of Wal-Mart’s profitability or income would boost up by 20%, we then give a diversified suggestion concerning working

Liquidity refers to the availability of cash in the near future after taking account of immediate financial commitments (also known as current liabilities). Cash in the near future will be available from bank deposits, cash released by sale of stocks and cash collected from customers. Immediate financial commitments are shown in current liabilities. The first ratio of liquidity is the current ratio, which is a simple comparison of current assets with current liabilities.

Humbro PLC have been successful with their Olympic themed board game, they have decided to take on a business venture of an expansion where they would be able to create a new product which can capitalise on the next football world cup. The finance director has been absent on a long term leave which has led to a lack of clarity and understanding of the various financial options among the other board members within the company. The managing director has asked for some financial advice and if this expansion will go ahead. In this report I will analyse Humbro PLCs financial information give my conclusion followed by my own recommendations for the company and if the expansion is to go ahead.

The financial health of a business greatly depends on its ability to maintain current commitments and obligations. Liquidity or the ability to generate cash from current assets to meet short-term obligations as well as unforeseen responsibility is important for the subsistence of a company. “A reasonable level of liquidity is essential to the survival of a company, as poor cash control is one of the main reasons for business failure. (Pyke, 2007) Through utilization of tools, such as liquidity ratios, or financial metrics, to evaluate the company’s ability to meet current business obligations, should the debt needs to be settled, we are able to assess its immediate financial strength. Liquidity ratios provide creditors as well as businesses a quick analysis tool, using data, which are readily available from annual financial statements, to complete these assessments. These ratios are critical to creditors and are “the most widely used ratios, perhaps next to profitability ratios.” (Joe Lan, 2002) Liquidity ratios include current ratio, quick ratio (also referred to as acid-test ratio), net working capital ratio, and cash ratio. Current ratio is the most basic or fundamental of the four and focuses mainly on current assets, while quick ratio is more stringent, eliminating inventory and prepaid expenses, as both are more difficult to liquidate (Morningstar, 2016). Cash ratio is the most “conservative”, as it mainly focuses on cash and investments

The elapsed time before an asset becomes cash or a liability is settled is called liquidity (Spiceland, 115). A liquid company is one which can quickly generate cash from its assets and pay its short-term liabilities on time (Spiceland, 365) (Libby, 453). Current assets are positioned in order of decreasing liquidity on the balance sheet, and liabilities are listed in order of how quickly these debts are expected to be settled (Spiceland, 117) (Libby, 45).

In this paper I’ll analyze the fundamental differences between the working capital structures and components for Google and Oracle, and speculate upon the main reasons why such differences exist; how each company could improve its working capital positions. As a Wall Street Analyst who has to recommend one of the companies as an investment to a company’s clients; based solely on that company’s working capital; as an Investment Banker who has to recommend loaning a substantial amount of capital to one company based solely on that company’s working capital.