Working Capital Management Essay Example for Free

Working Capital Management Essayblade comprises one of the most important inputs in all sectors of economy. Economy of any country depends on the strong base of the iron and steel industry. Steel is versatile material with multitude of useful properties,making it indispensable for furthering and achieving continuing growth of the economy-be it construction, manufacturing, infrastructure or consumables. The level of steel consumption has long been regarded as an index of industrialization and economic maturity deliver the goods by country. Keeping in view the important of steel, the integrated steel plants with foreign collaborations were set up in the public sector in the post- independence era. Capital is essential for setting up and suave running of any melody. Investments made on fixed assets will yield excess each money inflows apart from the pay back amount and is spread over a longer period of time. thereof the cash inflows (or) benefits associated are not immediate b ut are expected in the future.Cash inflows outflows kick the bucket on a continuous basis in case of trustworthy assets. Credit forms an essential mark in the business (credit given to customers 7 credit from liabilities, suppliers). Since there is some time log from the tap of sales sales realization current assets current which together constitute the concluding works big(p), supports the business in its normal of operations. This calls for an efficient focusing of working capital. The policies, procedures and measures taken for managing capital again further importance in an organization like RINL where the working capital requirements runs in crores or rupees. Any mis servement on the part of authority will not just cause loss but may level off impair business operations. It is in this context working capital has gained importance. The growth of any organization depends on the overall surgical operation such as production, marketing, human resource and financial per formance of the organization.The financial performance of the any organization reflects the strength, weakness, opportunities and threads of the organization with respect to profits earned, investments, sales realization, turnover, return on investment, net worth of capital. Efficient management of financial resources and deliberate analysis financial results are pre requisite for advantage of an enterprise. In that working capital management is one of the major and important areas of financial management. Managing of working capital implies managing of current assets of the company like cash, inventory, accounts due, loans an advance, fix balances and current liabilities like sundry creditors interest payments and provision. Rashtriya Ispat Nigam Limited is a multi-product steel-manufacturing unit with varyingcycle time for each product. The capital required by each surgical incision in a large organization like RINL depends on the product target for that.Particular class, invi tes the indispensableness for an effective working capital management. Monitoring the sequence of the operation cycle is an important aspect of working capital management and control for an Effective management. RINL is now on its turn round path and inescapably to cut cost and increase its revenue its revenue therefore it must have to keep confining check on the day to day expenses and to get a maximum utilization out of it. most prominent issues should always be taken into account like The duration of raw material comprise depends on the regularity of supply, transactions time, degree of perish ability, price ability, price fluctuations, and economics of bulk purchases. The duration of the work in progress stage depends of Length of the manufacturing cycle, consistency in capacity utilization antithetic stages and efficient coordination of various inputs. The duration at debtors stage depends on the credit period Granted, discount offered for propel payments and efficiency and rigor of collection efforts.Thus a detailed study regarding the working capital management in RINL is to be done to consider the effectiveness of working capital management, identify the shortcoming in management and to suggest for improvement in working capital management. Working Capital is the Life-Blood and Controlling cheek Center of a business Working capital management 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 .The term current assets refer to those assets which in the run-of-the-mine course of business can be, or will be, converted into cash deep down one year without undergoing a diminution in value and without disrupting the operations of firm.The major current assets are cash, marketable securities, accounts receivable and inventory. Current liabilities are those liabilities which are intended, at their inception, to be paid in the ordinary cours e of business, within a year, out of the current assets or earning of the concern. The basic current liabilities are account payable, bills payable bank over draft, and outstanding expenses, the goal of working capital management is to manage the firms current assets and liabilities in such way that a satisfactory level of working capital is maintained.