1

WORKING CAPITAL MANAGEMENT - AN OVERVIEW

INTRODUCTION:-

Working capital is the life- Blood and Controlling Nerve Centre of a business
The working capital management precisely refers to management of current assets. A
firms working capital is consists of investment in current assets, which include shortterm assets such as:

Cash and bank balance,

Inventories,
Receivables (including debtors and bills),
Marketable Securities,
Working capital is commonly defined as the difference between current assets andcurrent liabilities.
Working Capital=Current Assets-Current Liabilities

Working capital means the funds which are required to meet the daily of business. In
another words it refers to that part of the firms capital which is required for financing
current assets such as- cash, marketable securities, debtors, and inventories. Thus
working capital is very significant facet of financial management. Every business
concern should have adequate working capital to run its operations smoothly. It should
have neither excess working capital nor inadequate working capital because both of
these have adverse effects on firms profitability and liquidity positions. Therefore,
business concern should maintain adequate working capital.
The basic objective of working capital is to manage the firms current assets and
current liabilities in such a way that a satisfactory level of working capital is maintained.
Working capital policies have a great effect on firms liquidity and profitability.
Therefore, the working capital should be managed in such a way that which will insure
higher profitability and proper liquidity to the business concern.
The significance of working capital management is to ensure that the organization
maintains a good fit with the changing environment and strives to build the capability
to cope with the challenges.
2

There are two major Concepts of Working Capital

Gross working capital.
Net working capital.
a. GROSS WORKING CAPITAL
It refers to firm's investment in current assets. Current assets are the assets, which can
be converted into cash with in a financial year. The gross working capital points to the
need of arranging funds to finance current assets.
b. NET WORKING CAPITAL
It refers to the difference between current assets and current liabilities. Net working
capital can be positive or negative. A positive net working capital will arise when current
assets exceed current liabilities. In addition, vice-verse for negative networking capital.
It indicates the liquidity position of the firm and suggests the extent to which working
capital needs may be financed by permanent sources of funds.

OPERATING CYCLE OF WORKING CAPITAL

Cash

Debtors
&
Bills
Receivables

Raw Material

Work-in
-progress
Operating
Cycle

Sales

Finished Goods

SOURCE OF WORKING CAPITAL

The various sources for the financing of working capital are as follows:1. FIXED/PERMANENT WORKING CAPITAL
Permanent working capital represents the minimum level of current assets (raw
materials, work-in-progress, finished goods, stores, accounts receivables and cash),
which is continuously required by the firm is known as permanent working capital.
2. VARIABLE/TEMPORARY WORKING CAPITAL
Besides fixed working capital, a business may need additional working capital to meet
the growing demands of busy seasons at stated intervals. If the demand for the products
of the business goes up at any time it needs additional funds to pay for more materials,
labour and Other expenses and to meet the requirement of cash balance to be maintained
in the changed situation. This additional working capital required supporting the
changing production and sale is known as variable or temporary working capital. It is
called variable or temporary because the business does not need it always but it is
required according to the need of the situation
Generally, the importance of variable working capital is more acute in business concern
having seasonal market demands. Variable or temporary working capital may be further
sub- divided into(a). Seasonal working capital and
(b). Special working capital.
a). SEASONAL WORKING CAPITALThe additional working capital required by a concern to carry out its operating activities
in busy seasons of high market demands is known as seasonal working capital.
Businesses, which mostly have seasonal demands of their products like ice- cream, cold
drinks, wool and likely products manufacturing concern may need huge amount of
seasonal working capital. In other business concerns, too the market may rise to the peak
4

in some particular time. So in all types of business a portion of working capital may be
preserved for meeting seasonal needs.
.

b). SPECIAL WORKING CAPITALOn the other hand, the portion of working capital that is needed by a concern to meet the
extraordinary requirements of special situations is known as special working capital.
This is called special working capital because it is needed in special situations and not in
normal circumstances.

SOURCES OF WORKING CAPITAL

Permanent or fixed

Temporary or Variable

Shares

Commercial Banks

Debentures

Indigenous Bankers

Public Deposits

Trade Creditors

Ploughings back of profit

Instalment Credit

Loans from Financial Institutions

Advances
Account Receivable
Accrued Expenses
Commercial Paper

FORMULAS
1.Working capital = Current Assets - Current Liabilities.
2. Working Capital = Raw Material + Work - in - progress + Finished goods + Debtors Creditors.

Diagrammatic representation of the concept of working capital:

KINDS OF WORKING
CAPITAL

ON THE
BASIS OF
TIME

PERMANENT/
FIXED
CAPITAL

SEASONAL
WORKING
CAPITAL
SPECIFIC
WORKING
CAPITAL

IMPORTANCE OF WORKING CAPITAL

The adequate reserve of working capital ensures a steady flow of raw materials to the
production process.

The adequate reserve of working capital indicates the good solvency position of the
concern and helps it to get loan from the market at favourable terms.

The adequate stock of working capital makes it possible for a concern to purchase the
trading goods in cash and cash purchase always carries the benefit of getting cash
discount.

A strong working capital base is probably the only remedy to overcome the odd
situations like dull market conditions, scarcity of raw materials and other components
in case of any emergency, sudden market fluctuations, etc.

A business concern can exploit the market opportunities with the help of adequate
working capital.

The regular flow of adequate working capital makes possible efficient use of fixed
assets, reduces wastage, ensures quick replying of current assets, and establish a welltuned working environment.

A quick rotation of working capital cycle and an efficient management of working

capital reduce cost and increases production and sales. The combined effect of all these
favourably add to the profitability of the concern.

The adequate amount of working capital and its quick rotation increases profit. The rate
of dividend of the shareholders also increases because of such increase in profit.

NEEDS OR OBJECTS OF WORKING CAPITAL

The need for working capital cannot be over emphasized. Every business needs
some amount of working capital. The need for working capital arises due to the time gap
between production and realization of cash from sales. There is an operating cycle
involved in the sales and realization of cash. There are time gaps in purchase of raw
materials and production; production and sales; and sales and realization of cash. Thus,
working capital is needed for the following purpose:
1. For the purpose of raw materials, components and spares.
2. To pay wages and salaries.
3. To incur day-to-day expenses and overhead costs such as- fuel, power and office
expenses, etc.,
4. To meet the selling costs as packaging, advertising, etc.,
5. To provide credit facilities to the customers.
6. To maintain the inventories of raw material, work-in-progress, stores, spares, and
finished stocks.

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DETERMINANTS OF WORKING CAPITAL

The total working capital requirement is determined by a wide variety of factors. It

should be, however, noted that these factors affect different enterprises differently. They
also vary from time to time. In general, the following factors are involved in a proper
assessment of the quantum of working capital required:1. GENERAL NATURE OF BUSINESS:
The working capital requirements of an enterprise are related to the conduct of the
business. According to the nature of business, they have to maintain a sufficient amount
of cash, inventories and book debts. The industrial concerns require large amounts of
working capital though it varies from industry to industry depending on their assets
structure.
2. PRODUCTION CYCLE:
Another factor, which has a bearing on the quantum of working capital, is the
production cycle. The term production or manufacturing cycle refers to the time
involved in the manufacture of goods. It covers the time span between the procurement
of raw materials and the completion of the manufacturing process leading to the
production of finished goods. To sustain such activities the need of working capital is
obvious.
3. BUSINESS CYCLE:
The working capital requirements are also determined by the nature of the business
cycle. The variations in business conditions may be in two directions: (i) upward phase
when boom conditions prevail (ii) downward phase when economic activity is marked
by a decline. During the upswing of the business activity, the need of working capital is
more as opposed to the downward phase of the business.
4. PRODUCTION POLICY:
The requirement of working capital also depends on the production policy of the firm. In
manufacturing concerns, having mostly seasonal demand for the product the production
policy is a significant determinant of working capital.

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5. CHANGES IN PRICE LEVEL:

General increase in price level increases working capital need of a firm because the firm
has to pay more for maintaining the previous level on working capital

STRUCTURE OF WORKING CAPITAL

The structure of working capital includes a study of the components of current assets
and current liabilities.
CURRENT ASSETS:
The list of current assets comprises inventories (including raw materials, work-inprogress and finished goods and spares), sundry debtors including receivables, readily
realizable securities and tax reserve certificates, short term investments, accrued
incomes, prepaid expenses (not in the nature of deferred charge), cash at bank, and cash
in hand. Current assets are: Inventories (stores & spares, raw materials, semi-finished
products)

Sundry debtors
Cash & bank balances
Interest receivable/accrued
Loans & advances etc.

CURRENT LIABILITIES:
The list of liabilities includes trade creditors, accounts payable, outstanding or
accrued expenses, bank overdraft, outstanding liabilities, short-term loans and
borrowings and certain obligations including different provisions, i.e., provision for
taxation, proposed dividend etc. Current liabilities are:
Sundry creditors
Advances from customers
Security deposit
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 Other liabilities etc.

THE DANGERS OF EXCESSIVE WORKING CAPITAL

1.

It results in unnecessary accumulation of inventories thus chances of inventory

mishandling waste theft and losses increases.

2. It is an indication of defective credit policy and slack collection period. Consequently

higher incidence of bad debts results, which adversely effect degenerated into
management co placement, which degenerated into managerial inefficient.
3. Excessive working capital makes management complacent, which degenerates into
managerial efficiency.
4. Tendencies of accumulating inventories to make speculation profits grow this may tend
to make dividend policy liberal and difficult to cope with in future when the firm is
unable to make speculative profits.

THE DANGERS OF INADEQUATE WORKING CAPTIAL

i. It stages growth and become difficult for the firm to undertaken profitable projects for
non- availability of working capital funds.
ii. It becomes difficult to implement operating plans and achieve the firms profit target.
iii. Operating inefficiencies creep in when it becomes difficult even to meet day-to-day
commitments.
iv. Fixed assets are not efficiently utilized for the lack of working capital funds thus the
firms profitability would deteriorate.
v. Scarcity of working capital funds renders the firm unable to avail attractive credit
opportunities etc.
vi. The firm losses its reputation when it is not in position to honour its short term
13

obligation as result the firm faces tight credit terms. Thus, enlightened management
should therefore maintain a right amount of working capital on a continuous basis
which helps to develop the organization effectively and efficiently.

14

15

INTRODUCTION TO MUTUAL FUND

A mutual fund is a trust that pools the saving of a number of investors to share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could
range from shares to debentures to money market instruments. The income earned in
these investments and the capital appreciations realized by the scheme shared by its unit
holders in proportion to the number of units owned by them. Thus, a mutual fund is the
most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed portfolio at a relatively low cost. Anybody with an
invest able surplus of a few thousand rupees can invest in mutual funds. Each mutual
fund scheme has a defined investment objective and strategy.
A mutual fund is the ideal investment vehicle for todays complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income instrument,
real estate, derivative and other assets have become mature and information driven.
Price changes in these assets are driven by global events occurring in faraway places. A
typical individual is unlikely to have the knowledge.
A mutual fund is answer to all these questions. It appoints professionally qualified
and experienced staff that manages each of these functions on a fulltime basis. The large
pool of money collected in the fund allows it to hire such staff at a very low cost to each
investor. In fact, the mutual fund vehicle exploits economies of scale in all three arearesearch, investment and transaction processing.
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SBI MUTUAL FUND

COMPANYS PROFILE

Mutual Fund

SBI Mutual Fund

Setup Date

Jun-29-1987

Incorporation Date

Feb-07-1992

Sponsor

State Bank of India

Trustee

SBI Mutual Fund Trustee Company Pvt. Ltd.

Chairman

Mrs. Arundhati Bhattacharya

CEO / MD

Mr. Dinesh Kumar Khara

CIO

Mr. Navneet Munot

Compliance Officer

Mr. Vinaya Datar

Address

9th Floor, Crescerzo, C-38 & 39, G Block, Bandra

Kurla Complex, Bandra (East), Mumbai 400051

Fax No.

022-67425687

E-mail

partnerforlife@sbimf.com

17

18

HISTORY OF SBI MUTUAL FUND

SBI Mutual fund was set up on June 29, 1987 and incorporated on February 7 th 1992. It
is a result between joint venture of State bank of India and Society Generale Asset
Management of France. This is a bank sponsored mutual fund and has a base of 3.5
million investor (approx). Over the years it has carved a niche for itself through
prudent investment decision and consistent wealth creation for its customers. They
offer mutual fund products in equity funds, index funds, balanced funds, debt funds,
etc.
The Assets under Management are Rs. 33,727.90 crore of June 30, 2010.
Investment yogi analysis the best performing SBI mutual fund in the balanced fund,
Equity fund and Equity Linked Saving Schemes (ELSS) categories.
SBI Mutual Fund operates under State Bank of India and Society, Generale Assets
Management of France and has asset management experience of more than 25 years.
The company has grown immensely since its establishment. SBI Mutual Fund offers
different types of product like- growth based product, income based products, and
balanced funds.
SBI Mutual funds offer innovative mutual fund product to its wide pool of customers
and its product are available across India. It has wide portfolio of products that meet the
requirement of different types of investors. The SBI mutual fund is headed by Mr. Syed
Shahabuddin, Managing Director of the company.
The mutual fund industry in India started in 1963 with the formation of unit trust of
India, at the initiative of the govt. of India and RBI. Through the growth was slow, but it
accelerated from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both qualities wise as well as quantitative wise. Before, the monopoly of the market had
seen an ending phase; the Assets Under Management (AUM) was Rs. 67 billion. The
private. Sector entry to the fund family raised the AUM to Rs. 470 billion in March 1993
and till 2004; it reached the height if Rs. 1540 billion.
The mutual fund industry is obviously growing at a tremendous space with the mutual
fund industry can be broadly put into four phases according to the development of the
sector. Each phase is briefly described as under.

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FIRST PHASE - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the RBI
and functioned under the regulatory and administrative control of the RBI. In 1978 UTI
was de-linked from the RBI and IDBI took over the regulatory and administrative
control in place of RBI. The 1st scheme launched by UTI was United Scheme 1964. At
the end of 1988 UTI had Rs. 6700 crores of AUM.
SECOND PHASE - 1987-1993(Entry of Public Sector Funds)
1987 marked the entry of non -UTI, public sector mutual fund set up by public sector
banks and LIC & GIC. SBI mutual fund was 1st non-UTI mutual fund established in
June 1987 followed by Canbank mutual fund (December 1987), PNB mutual fund
(August 1989), India Bank mutual fund (November 1989), Bank of India (June 1990),
BOB mutual fund (October 1992). LIC established its mutual fund in June 1989 while
GIC had setup its mutual fund in December 1990. At the end of 1993, the mutual fund
industry had Assets under Management of Rs. 47,004 crores.
THIRD PHASE - 1993-2003(Entry of Pvt. Sector Funds)
1993 was the year in which the 1st Mutual Fund Regulation come into being, under
which all mutual funds, expect UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the 1 st pvt. Sector mutual
fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations 1996. The industry now function under the SEBI
(Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual
funds with total assets of Rs. 1, 21,805 crores.
FOURTH PHASE - since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963,
UTI was bifurcated into two separate entities. One in the Specified Undertaking of the
Unit Trust of India with Assets Under Management of Rs. 29,835 crores as at the end of
20

January 2003.

COMPANYS IDENTITY
With 28 years of rich experience in fund management, at SBI funds management pvt,
Ltd. Bring forwards its expertise by consistency delivery value to their investors. They
have a strong and proud lineage that traces back to the SBI- Indias largest bank. It is a
joint venture between SBI and AMUNDI (France), one of the worlds leading fund
management companies.
With its network of over 222 points of acceptance across India,
They deliver value and nurture the trust of their vast and varied family of investors.
Excellence has no substitute. And to ensure excellence right from the 1 st stage of
product development to the post-investment stage, they are ably guided by their
philosophy of growth through innovation and their stable investment policies. This
dedication is what helps their customers achieve their financial objectives.

21

COMPANYS VISION
To be the most preferred and the largest fund house for all asset classes, with a
consistent track record of excellent returns and best standards in customer service,
product innovation, technology and HR practices.

COMPANYS MISSION
Investors are their priority. Their mission has been to establish Mutual Fund as a
viable investment option to the masses in the country. Working towards it, they
developed innovative, need- specific products and educated the investors about the
added benefits of investing in capital markets via Mutual Fund.

MUTUAL FUND OPERATIONS

FLOW CHART

INVESTOR
Given back to

RETURN

Pool their money in

FUND
22

That generates

Which is invested in
SECURITIES

23

24

Research Methodology
Research:
Research is commonly used refers to a systematic and objective investigation of a
subject or problem in order to discover relevant information. It is an academic activity
and as such, the term should be used in a technical sense.

Definition:
Research as a systematic effort to gain new knowledge
By Redmen and Mory
Another definition of research Research comprises defining and redefining problems,
formulating hypothesis or suggested solutions, collecting, organizing and evaluating
data, making deduction and reaching conclusion, and at the least carefully testing the
conclusion to determine whether they fit the formulating hypothesis.
According to Clifford woody

What is research methodology?

Research Methodology is a systematic way to solve the research problem. It may be
understood as a studying how research is done scientifically. It is necessary for the
researcher to know not only the research method techniques but also the methodology.
There is a slight difference between research methods and research methodology.
Research methods may be understood as all those methods or techniques that are used
for conduction of research, whereas research methodology is a way of solving the
research problem with the help of research method. The scope of research methodology
is a wider than that of research method.

25

26

COLLECTION OF DATA:Collection of data means the methods that are to be employed for obtaining the required
information from the units under investigation. The data is divided into two types and
they are:1. Primary data
2. Secondary data

TYPES OF DATA
Primary Data
The data obtained for the first time by the investigator himself for some specific purpose
are called primary data.
For Ex:- If a person collects data personally at birth rate of child, then this data is
primary for him.
METHODS:

Direct Personal investigation.

Indirect Oral investigation.
Information through local sources / correspondence.
Questionnaire

Secondary Data
The data which have been already collected by some other investigator/ person/
institution for their purpose and used by others, this is called secondary data.
For Ex:- If a person use the regarding import and export published by government for
studying payment- balance, then these data are secondary for him as it has been already
published.
27

METHODS:
Methods of secondary data is further classified into two sources i.e.,
1). Published Source
2). Unpublished
PUBLISHED SOURCES
Government Publications
Semi-official publications
International Publications
Report of commission and committee
Newspapers
Journals
UNPUBLISHED SOURCES

Unpublished data of research institute

Trade association
Colleges and Universities
Research Scholars
Records maintained by various government and private offices
Unpublished report of commission and committee
28

RESEARCH DESIGN

Research Design is a conceptual structure within which research is conducted. My topic

of study is Analysis of Working Capital with an objective to analyze the financial
soundness of the organization. The major part of the study is done in BHOPAL. The
research strategy adopted was to conduct study in the organization. The study is purely
based on the secondary data. The data has been readily collected by different sources
such as annual reports, broachers, internet etc.
The design chosen for this research is exploration because there is no hypothesis is to
prove. The major emphasis is placed on the discovery of the new ideas and insight of the
problem under study. The investigation is done with a view to keep it flexile so that
different aspects can be considered for the problem under study.

29

OBJECTIVE OF THE STUDY:-

To analyse the concept of Financial Statement.

To analyse the profitability of the firm.
To evaluate the liquidity position of the company.
To access the strengths and weakness of the firm in various areas.
To examine the Analysis of Working capital.
To study the current assets and current liabilities of the company.
To access the overall efficiency and performance of the firm.

LIMITATIONS OF THE STUDY:-

The lack of information sources from the analysis part.

Time and money are critical factor limiting the study.
The data provided by the prospects may not be 100% correct as they too have their
limitations.
This study is based on secondary data.

30

 Only working capital cannot show the financial position of the enterprise totally.

31

32

BALANCE SHEET AS AT MARCH 31, 2015

.
-

EQUITY AND LIABILITIES

31-03-14 (in lakhs.) 31-03 15 (in lakhs.)
Shareholders funds
-Share capital
5,000.00
5,000.00
-Reserve and surplus
48,776.94
39,318.36
-------------------------53,776.94
44,318.36
Non-current liabilities
(a)Deferred tax liabilities (Net)
443.06
189.97
(b) Other long term liabilities
160.44
271.83
(c) long- term provisions
612.12
553.39
-------------------------1,215.62
1,015.19
Current liabilities
(d)Trade payables
1,838.22
987.41
(e)Other current liabilities
435.00
237.13
(f)Short- term provision
10,246.33
9,126.30
--------------------------12,519.55
10,350.84
TOTAL

67,512.11
55,684.39
-------------------------

ASSETS
a). Fixed Assets
(i) Tangible assets
17,032.14
17,323.35
(ii) Intangible assets
118.27
107.24
(iii) Capital work-in-progress
2.39
12.92
(b) Non-current investments
10,995.15
4,498.66
(c) Long-term loans and advances
7,834.73
2,202.29
(d) Other non-current assets
82.91
82.22
----------------------36,065.59
24,226.68
Current assets
- Current investments
14,376.24
22,034.60
- Trade receivables
1,863.76
1,558.10
- Cash and bank balances
8,036.28
6,564.82
- Short-term loans and advances
7,118.94
1,223.30
- Other current assets
51.30
76.89
----------------------31,446.52
31,457.71
----------------------TOTAL
67,512.11 55,684.39
-----------------------33

34

WORKING CAPITAL ANALYSIS IN SBI MUTUAL

Net working Capital ( CURRENT ASSETS CURRENT LIABILITIES)

Year

(2015)

(2014)

CURRENT ASSETS:
a). Current Investments
14,376.24
22,034.60
b). Trade Receivables
1,863.76
1,558.10
c). Cash and bank balances
8,036.28
6,564.82
d). Short-term loans and advances
7,118.94
1,223.30
e) . Other current assets
51.30
76.89
_________
________
Total current assets
31,446.52
31,457.71
_________
________
Less:
CURRENT LIABILITIES:
a). Trade Payable
b). Short-term provision
c). Other current liabilities
Total current liabilities

NET WORKING CALITAL

1,838.22
987.41
435.00
237.13
10,246.33
9,126.30
________
________
12,519.55
1,0350.84
________
________
18,926.97

35

21,106.87

FUND:

1.

NET WORKING CAPITAL

Net working capital is the difference between current assets and current and liabilities.

Year

2015
18926.97

Amount (in lakhs.)

2014
21,106.87

Data Interpretation:We have concluded the data of SBI Mutual Fund, so we have find out that company has
insufficient working capital to meets its short term liability, it is not good indicator for the
company, in 2015, net working capital is decreased from 21,206.87 (in lakhs) to
18,926.979 (in lakhs), which shows that an insufficient amount has been blocked in
working capital which could be used for some other more beneficial purpose.

36

CURRENT LIABILITIES ANALYSIS

2.

Current liabilities are any liabilities that are incurred by the firm on a short term basis or
current liabilities that has to be paid by the firm within one year.
Position of Current Liabilities in SBI MUTUAL FUND

Year

2015

2014

Current Liabilitiesa) Trade Payable

b) Short-term provision
c) Other current liabilities
Total current liabilities

37

1,838.22
987.41
435.00
237.13
10,246.33
9126.30
________ ________
12,519.55 1,0350.84
________ ________

INTERPRETATION
If we have been interpreted the available data then, we can see that it follow an uneven
trend. The important component of current liabilities is trade payable, in 2015 it
increased from 987.4 (lakhs) to 1838.22 (lakhs.) & short-term provision, in 2015 it
increased from 237.13 (lakhs) to 435 (lakhs.). This is liability for company so this
should be less. When company have minimum liabilities it creates a better goodwill in
market. High current liabilities indicate that company is using credit facilities by
creditors. But this data indicates the bad condition of SBI Mutual Fund as they are
having maximum current liabilities in 2015 as compared to 2014.

3.

CURRENT ASSETS ANALYSIS

Current assets are the assets which can be easily get converted into cash easily within
the period of one year. For Ex:- Sundry debtors, cash and bank balances, Interest
receivable/accrued, Loans & advances etc.
38

Position of current assets in SBI MUTUAL FUND

Year

2015

2014

Current Assetsa) Current Investments

14,376.24 22,034.60
b) Trade Receivables
1,863.76 1,558.10
c) Cash and bank balances
8,036.28 6,564.82
d) Short-term loans and advances
7,118.94 1,223.30
e) Other current assets
51.30
76.89
_________ ________
Total current assets
31,446.52 31,457.71
_________ ________

INTERPRETATION:If we have concluded the above data then we can see that it follows an uneven pattern.
The important component of current assets is trade receivable, in 2015 it increases from
1558.10 (lakhs) to 1863.76 (lakhs) and cash & bank balances, in 2015 it increases from
39

6564.82 (lakhs) to 8036.82 (lakhs) . These are assets of the company so this should be
more. When company have maximum assets so, it creates a better goodwill in market.
This data indicates the better condition of SBI Mutual Fund as they are having
maximum current assets.

4.

ANALYSIS OF CURRENT INVESTMENT

Position of current investments in SBI MUTUAL FUND

Years
2014

Current
Investment
(in lakhs.)
22,034.60

2015

14,376.24

INTERPRETATION:-

40

If we analyse the above data then we can see that it follows a decreasing trend. The
important component of current assets is current investment. In 2015 it decreases from
22,034.60 (lakhs) to 14,376.24 (lakhs). These are the assets of the company so this
should be more. But, in this interpretation it shows the inability of the organization. As
the current assets of the firm are goes down.

5.

ANALYSIS OF TRADE RECEIVABLES

Position of trade receivables in SBI MUTUAL FUND

Years

2015

2014

Trade Receivables

1,863.76

1558.10

INTERPREATION:If we interpret the above data then we can see that it follows an increasing trend. The
important component of current assets is trade receivable. In 2015 it increases from
41

1558.10 lakhs to 1863.76 lakhs. These are the assets of the company so this should be
more. But in this interpretation it shows the ability of the organization. As the current
assets of the firm are goes up.

6.

ANALYSIS OF CASH AND BANK BALANCES

Cash is called the most liquid asset a vital current assets, it is an important component of
working capital. In a narrow sense, cash includes notes, bank draft, cheque etc while in a
broader sense it includes near cash assets such as marketable securities and time deposits
with bank.

Position of trade cash and bank balances in SBI MUTUAL FUND

YEARS

2015

2014

Cash & Bank

Balances

8,036.28

6564.82

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INTERPTETATION:If we interpret the above table and chart we find that it follows an uneven pattern. In the
year 2014 it had maintained a less amount of cash and bank balance. But in the year
2015, cash and the bank balances has been increased from 6564.82 (in lakhs.) to 8036.28
(in lakhs), which is a good sign for the company because it shows that company is using
its cash for beneficial activities. It is good sign for company because they are having the
cash in hand for using the cash for better projects. From the other point of view,
company will be able to face the problem of liquidity as company is maintaining
sufficient cash balance.

7. ANALYSIS OF SHORT-TERM-LOANS AND ADVANCES

Short- term -loans and Advances here refers to any to amount given to different parties,
company, employees, for a specific period of time and in return they will be liable to
make timely repayment of that amount in addition to interest on that loan.

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Position of Short-term-loans in SBI MUTUAL FUND

Years
Short-term-loans and
advances

2015
7,118.94

2014
1,223.30

INTERPRETATION:If we analyze the table and the chart we can see that it follows an increasing trend
which is a good sign for the company. We can see that from the year 2014 to 2015 shortterm loan and advance increases more than 50%. We can see that it increase from
1,223.30 lakhs to 7,118.94 lakhs from previous year.
The increasing pattern shows that company is giving advances for the expansion of
plants and machinery which is good sign for better production of an organization.

8.

ANALYSIS OF OTHER CURRENT ASSETS

Other Current Asset refers to the additional assets of the firm which increases the firms
goodwill as well as can be easily converted into cash within a period of one year.
Position of other current assets in SBI MUTUAL FUND
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Years

2015

2014

Other current assets

51.30

76.89

INTERPTETATION:If we analyze the above data then we can see that it follow a decreasing pattern. The
most important component of current assets is other current assets. In 2015 it decreases
from 76.89 lakhs to 51.30 lakhs. These are assets of the company so this should be more.
When company having maximum assets, so it creates a better goodwill in market. This
data indicates the bad condition of SBI Mutual Fund as they are having minimum other
current assets.

9.

ANALYSIS OF TRADE PAYABLE

Position of analysis of trade payable in SBI MUTUAL FUND

Years

2015

2014

Trade payable

1,838.22
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987.41

INTERPRETATION:The important component of current liabilities is trade payable. If we conclude the

available data then we see that, in 2015 it increased from 987.41 lakhs to 1838.22 lakhs.
This is liability for company so this should be less. When company having minimum
liabilities it creates a better goodwill in market. High current liabilities indicate that
company is using credit facilities by creditors. This data indicates the bad condition of
SBI Mutual Fund as they are having maximum current liabilities.

10.

ANALYSIS OF SHORT-TERM PROVISION

Position of analysis short term provision in SBI MUTUAL FUND

Years
Short term provision

2015
46
10,246.33

2014
9,126.30

INTERPRETATION:From the above table we can interpret that provision shows an increasing trend and the
huge amount is being kept in these provisions. Though the profits of the company are
increased income tax is also increased which is good that company is creating goodwill
in market by paying income tax in time. Although company is paying more income tax
but also they are earning more. Other provisions are also for the benefit of employees
and public. This is good sign for Company growth. But it is not good as it is the liability
of the company, so it should always be less.

11.

ANALYSIS OF OTHER LIABILITIES

Position of analysis of other liabilities in SBI MUTUAL FUND
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Years
Other current
liabilities

2014
435.00

2015
237.13

INTERPTETATION:If we conclude the above table then we can see that it follow an uneven pattern. The
important component of current liabilities is other current liabilities. In 2015 it increased
from 237.13 lakhs to 435 lakhs. This is liability for company so this should be less. But
here it shows the maximum liability of the company. When company have maximum
liabilities it creates a poor goodwill in market. High current liabilities indicate that
company is using credit facilities by creditors.

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CONCLUSION
The working capital position of the company is sound and the various sources through
which it is funded are optimal.

The company has used its purchasing, financing and investment decisions to good
effect can be seen from the inferences made earlier in the project.

The debts doubtful have been doubled over the years but their percentage on the debts
has almost become half. This implies a sales and collection policy that get along with
the receivables management of the firm.

The working capital calculated are an indicator as to the fact that the profitability of
the firm and sales are on a rise and also the deletion of the inefficiencies in the working
capital management.

The firm has not compromised on profitability despite the high liquidity is
commendable.

SBI MUTUAL FUND has reached a position where the default costs are as low as
negligible and where they can readily factor their accounts receivables for availing
finance is noteworthy.

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SUGGESTIONS

The management of working capital plays a vital role in running of a successful

business. So, things should go with a proper understanding for managing cash,
receivables and inventory.

SBI MUTUAL FUND is managing its working capital in a good manner, but still
there is some scope for improvement in its management. This can help the company in
raising its profit level by making less investment in accounts receivables and stocks
etc. This will ultimately improve the efficiency of its operations.

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BIBLIOGRAPHY
BOOKS & REFERENCESFollowing sources have been sought for the preparation of this report:
- Financial Statements (Annual Reports)
- AMC (Annual Report)
Internet ----www.sbimutualfund.co.in
-www.workingcapitalmanagement.co.in

Textbooks on financial management - I.M.Pandey

- Khan and Jain

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