SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

A
PROJECT REPORT
ON
EVALUATION OF WORKING CAPITAL MANAGEMENT IN
BAJAJ ALLIANZ LIFE INSURANCE

SUBMITTED IN PARTIAL FULLFILMENT OF THE REQUIREMENT

FOR THE AWARD OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

Submitted By
Rashmita Mishra
Roll No: 11MBAS03070

Under The Guidance Of

Santanu Kumar Sahu
Submitted To

DDCE, SAMBALPUR UNIVERSITY

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

ACKNOWLEDGEMENT
I owe a great many thanks to a great many people who helped and supported me during the
completion of project.
My deep sense of gratitude to Mr. Santanu Kumar Sahu (Branch Manager) for support and
guidance. Thanks and appreciation to the helpful people at Bajaj Allianz Life Insurance, for
their support.
I would like to take this opportunity as privilege to express my deep sense of gratitude to
Sanjay Samal, Director IMST, ANGUL, for their continuous encouragement, invaluable
guidance and help for completing the present research work. They have been a source of
inspiration to means I am indebted to them for initiating me in the field of research.
My deepest thanks to Srikant Chandra Pradhan, the faculty guide of the project for guiding
and correcting various documents of mine with attention and care. He has taken pain to go
through the project and make necessary correction as and when needed.
I would also thanks my institution and my faculty members without whom this project would
have been a distant reality. I also extend my heartfelt thanks to my family and well wishers.

Rashmita Mishra
Roll No : 011MBAS03070

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

CERTIFICATE OF APPROVAL
This is to certify that the Project Report entitled:
Evaluation Of Working Capital Management In Bajaj Allianz Life Insurance
Submitted by Rashmita Mishra (Roll No. 011MBAS03070), Sambalpur
University, Burla towards partial fulfillment of the requirements for the
award of the degree of Master of Business Administration (MBA) is a bona
fide record of the work carried out by him under the able guidance of
Srikant Chandra Pradhan, Faculty, IMST, ANGUL.

(Approval of the center director)

Center Director

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

DECLARATION
I Rashmita Mishra, here by declare that the project entitled Evaluation Of
Working Capital Management In Bajaj Allianz Life Insurance, has been
prepared and submitted to DDCE, Sambalpur University for the award of Master
In Business. The work has not been submitted to any other institution /
university before for award of any degree or diploma thereof.
I further declare that this project is the result of my own efforts.

Rashmita Mishra
Roll No. : 011MBAS03070

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

CERTIFICATE
This is to certify that project report entitled Evaluation Of Working
Capital Management In Bajaj Allianz Life Insurance is a bonafide work
done by Rashmita Mishra with Roll. No: 11MBAS03070 under my
guidance and supervision. This project is submitted to DDCE,
Sambalpur University in fulfillment of the award of degree of
Master of Business Administration.

Santanu Kumar Sahu

(Branch Manager)

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

EXAMINERS CERTIFICATE

This Project Report is submitted by Rashmita Mishra of MBA

bearing the Roll No. 11MBAS03070 under DDCE, Sambalpur
University and forwarded for evaluation.

Internal Examiner

External Examiner

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

INDEX

Chapter No.

Particulars

Executive Summary

1.

Introduction

2.

Profile of the organization

3.

Research Methodology

4.

Conceptual Background

5.

Data presentation and interpretation

6.

Finding, Suggestions and conclusion

7.

Limitations

Bibliography

Appendix

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

EXECUTIVE SUMMARY

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

Executive Summary:
Working Capital is the required for maintenance of day to day business operations. The present
day competitive market environment calls for an efficient management of working capital. The
reason for this is attributed to the fact that an ineffective working capital management mat force
the form to stop its business operations, may even lead to bankruptcy. Hence the goal of
working capital management is not just concerned with the management of current assets and
current liabilities but also in maintaining a satisfactory level of working capital.
Holding current assets in substantial amount strengthens the liquidity position and reduces the
riskiness but only at the expense of profitability. Therefore achieving risk-return tradeoff is
significant in holding of current assets. While cash outflows are predictable it runs contrary in
case of case of cash inflows. Sales program of any business concern does not bring back cash
immediately. There is a time lag that exists between sale of goods of services and sales
realization. The capital requirement during this time lag is maintained by the operating cycle
concept.
This study gives in detail the working capital management practices in BALIC. Management of
each current asset, namely cash management, accounts receivable management is studied
permanent to BALIC. Similarly management of accounts payable, deposit are studied to
understand the managing of current liabilities. A part from this concept of operating cycle is
studied.
The research methodology adopted for this study is mainly from secondary source of data which
include annual reports of BALIC, and website of the company. The use of primary sources is
limited to interviews with few of the employees in credit department.
The study of working capital management has shown that BALIC has a strong working capital
position. The Company is also enjoying reasonable profits.

INTRODUCTION

The overall success of the company depends upon its working capital position. So it should
be handled properly because it shows the efficiency & financial strength of a company.
WCM is highly important in firms as it is used to generate further returns for the
stakeholders.
Working Capital Management is a very important fact of financialmanagement due to:
Investments in current assets represent a substantial portion of
total investment.
Investment in current assets & the level of current liabilities have tobe geared
quickly to change sales.
The working capital is the life blood & nerve center of a business firm. The importance of
working capital in any industry needs no special emphasis. No business can run effectively
without a sufficient quantity of working capital.
It is crucial to retain right level of working capital. WCM is one of the most important
functions of corporate management. A business enterprises with ample working capital is
always in a position to avail advantages of any favorable opportunity either to buy raw
material or to implement a special order or to wait for enhanced market status.
Working capital can be utilized for operating costs that are involved in the everyday life of
business. Even very successful business owners may need working capital funds when the
unexpected circumstances arise.
WCM is highly important in firms as it is used to generate further return for the
stakeholders. When working capital is managed improperly, allocating more than enough of
it will render management non-efficient & reduce the benefits of short term investments. On
the other hand, if working capital is too low, the company may miss a lot of profitable
investment opportunities or suffer short term liquidity crises, leading to degradation of
company credit, as it cannot respond effectively to temporary capital requirements.

Some the points to be studied under this topic are:

How much cash should a firm hold?
What should be the firms credit policy?
How to & when to pay the creditors of the firm?

OBJECTIVES
The objectives of project on evaluation of working capital are as follows:
1. To study concept of working capital & components of working capital.
2. To study change of working capital.
3. To analyze profitability, liquidity & working capital position of the company.
SCOPE
The management of working capital helps us to maintain the working capital at asatisfactory
level by managing the current assets and current liabilities. It also helps tomaintain proper
balance between profitability, risk and liquidity of the businesssignificantly.
By managing the working capital, current liabilities are paid in time. If the firm
makespayment to it creditors for raw material in time, it can have the availability of
rawmaterial regularly, which does not cause any obstacles in production process.
Adequateworking capital increases paying capacity of the business but the excess working
capitalcauses more inventory, increases the possibility of delay in realization of debts.On the
other hand, absence of adequate working capital leads to decrease in return oninvestment.
The goodwill of the firm is also adversely affected due to the inability to paycurrent
liabilities in time.
Hence, the management of working capital helps to manage all the factors affecting
theworking capital in the most profitable manner.

Limitation of the study:

The scope of the present study has been limited interns of period of study as well as sources
and nature of data. The period covered by the study extends over 5 years from F.Y 2008/9 to
2011/12. At the time of study, the data could be available up to 2011/12. The limitations of
this study are as follows:

1. The study is mainly on secondary data. It is cone mostly on the basis of and
published financial documents, like balance sheet, profit and loss account and other
related journals, magazines and books etc.
2. The study follows with specific tools financial ratio analysis.
3. The lack of sufficient time and resources is another limitation of the study. The study
is fully based on the students financial resources and is to be completed within
limited time. The report has taken only 5-years data for the study from year 2008/09
to 2012/13.
4. The study is limited from the point of view of submission on partial fulfillment of the
requirement for the Master degree in Business Administration(MBA).

BAJAJ ALLIANZ LIFE INSURANCE

Name and location of the Company:

Name: Bajaj Allianz Life Insurance Company

Address : GE Plaza, Airport Road, Yerawada, Pune 411006
Tel

: +91 020 66026777

Fax

: +91 020 66026789

E-mail

: websaleslife@bajajallianz.co.in

Introduction:
Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance
Company and Bajaj Finserv.
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world, managing assets worth over a Trillion (Over INR. 55,00,000Crores).
Allianz SE has over 119 years of financial experience and is present in over 70 countries
around the world.
At Bajaj Allianz Life Insurance, customer delight is our guiding principle. Our business
philosophy is to ensure excellent insurance and investment solutions by offering customized
products, supported by the best technology.

Vision:
To be the first choice insurer for customers
To be the preferred employer for staff in the insurance industry
To be the number one insurer for creating shareholder value

Mission:
As a responsible, customer focused market leader, we will strive to understand the insurance
needs of the consumers and translate it into affordable products that deliver value for money.

Our Achievements:
Bajaj Allianz has received IAAA rating, From ICRA Limited, an associate of Moodys
Investors Service, for Claims Paying ability. This rating indicates highest claims paying
ability and a fundamentally strong position.

Awards:
Best Insurance Company in Private sector at the IPE Banking Financial Service and

Insurance (BFSI) 2013.

SKOCH Financial Inclusion-Organization of the year 2013.
Best Life Insurance Provider (Runner up) at the Outlook Money Award 2012.
Best Investor Education and Category Enhancement.
Best utilization of Information Technology.
SKOCH Financial Inclusion Award.

Member in Board of Director:

Chairman

Rahul Bajaj

Niraj Bajaj
Sanjiv Bajaj
S.H Khan
Directors
Ranjit Gupta
Sanjay Asher
Suraj Mehta
Manu Tandon

FACTSHEET

1
2
3
4
5
6
7
8
9
10
11
12
13
14

15

Date of Incorporation

12th March 2001

Started Operation on

3rd August 2001

Head office

Pune, India

WorldWide Web Address

www.bajajallianz.com

Toll free number

1800-209-5858

Brand Statement

JiyoBefikar

Chairman

Mr. Sanjiv Bajaj

MD & CEO

Mr.V.Philip

Total assets under Management

38,003 crore*

Solvency ratio

643.31%**

Claim Settlement Ratio NOP

91.56%**

Total no. of lives covered

1.56crore**

Total no. of office

992*

Latest Award Won

1.SKOCH Financial Inclusion Award

2013- Organization of the Year
2.SKOCH Financial Inclusion Award
for Micro Insurance initiatives in the
following categories:
Micro Insurance Initiative
Securing the Unsecured
Setting the Claims at
Nominees doorsteps
Insurance Awareness &
Education
Micro Insurance Renewals &
Persistency Management

Sour product cater to all the financial needs like Protection, Savings, Retirements, Investment
& Health for Individuals and Groups

Note: *The value are as on 31st March 2013

** The values are for FY 2012-13

Growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz
has emerged as a strong player in India...
Bajaj Allianz Life Insurance Company Limited is a joint venture between two leading
conglomerates Allianz AG and Bajaj Auto Limited. Characterized by global presence with a
local focus and driven by customer orientation to establish high earnings potential and
financial strength, Bajaj Allianz Life Insurance Co. Ltd. was incorporated on 12th March
2001. The company received the Insurance Regulatory and Development Authority (IRDA)
certificate of Registration (R3) No 116 on 3rd August 2001 to conduct Life Insurance
business in India.

Product:

Life Insurance
Motor Insurance
Health Insurance
Travel Insurance
Home Insurance

Channel Partner:
1. Standard Chartered Bank

2. Dhanlaxmi Bank

3. Team Life Care Co. India Ltd.

The data in this project is enabling in secondary in nature. Financial reports,

company records were referred for data analysis. The study has been undertaken by
collecting relevant data from the balance sheet, profit and loss a/c, annul report & Audit
report of the BALIC the company is used financial tools for the analyzing and interpretation
data.
However primary data is also collected by observation discussing with company
officials. This primary data is used to fill in the gaps while preparing this report and to know
the latest procedures adopted by the company. This has helped to draw inferences and
conclusions.

Sources of data
This study is based on Secondary data:The secondary data are those, which have been collected by some other and
which have been processed. Generally speaking secondary data are information, which
have been previously collected by some organization to satisfy his own need. But the
department under reference for an entirely different reason is using it.
For this project secondary sources used are:
1. Annual reports of the company.
2. Company website
3. Books
4. Other company documents

SAMPLING DESIGN
0

Sampling unit

: Financial Statements & Audit Reports

Sampling Size

:Last four years financial statements

WORKING CAPITAL:
Introduction:
Financial management looks after two types of capital need: for fixed capital to invest it
tings such as buildings, plants &equipments and working capital principally to pay for stock
and to cover the amount of credit extended to customers. Fixed capital, as the name implies,
tends not vary in the short but to move up or down in jumps when major investment
decisions are made (or assets sold). Working capital on the other hand, is much more fluid
and fluctuates with level of business.
Working capital is a furnish investment in short term assets. Working capital is the firms
investment in short term assets cash, short term securities. Account receivables and
inventories.
Working capital management is the important branch of the financial management which
gives answers the questions such as:
1. How much should we invest in each category of current assets?
2. How should we finance this investment in current assets i.e. appropriate mix of short
and long term sources to finance?

In most business, funds are deployed in assets which are in the form of cash or bank deposits
or will be turned into cash in a relatively short period as part of normal business activities. In
short the working capital is the sources of financing current assets and it includes short as
well as long term financing.
The management of the funds of business can be described as financial management.
Financial management is mainly concerned with two aspects. Firstly, Fixed assets and fixed
liabilities, in other words, long term investment and sources of funds. Secondly, current
assets and current liabilities. Both of these types of funds play a vital role in business
finance.
Management of working capital usually involves management or administration of current
assets, namely cash, marketable securities, account receivables and inventories and also the
administration of current liabilities such as creditors, account payable, notes and bills

payables, bank overdraft, outstanding expenses, temporary loans and provisions. A firm
should always maintain the right cash balance so that flow of funds is maintained at a
desirable speed not allowing slowdowns or stoppage. Thus, the enterprises can have a
balance between liquidity and profitability.
The term working capital is often used to refer the firms current assets like primarily cash,
marketable securities, account receivables and inventories. Working capital refers to the fact
that most of its components have their impact over weeks and month rather than years. For
this reason, working capital management is often referred to as short-term finance. The term
working capital is closely related to the term funds and has two common meaning. It is used
to mean current assets of current assets means current liabilities.
Working capital management is concerned with the problems that arise in attempting to
manage the current assets. The term current assets refers to those assets which is ordinary
course of business can be or will be turned into cash within one year without undergoing a
diminution in value and with our disrupting the operations of the firm. The major current
assets are cash, marketable securities, account receivables and inventory.
Current liabilities are those liabilities, which are intended at their inception to be paid in the
ordinary course of business within a year, out of the current assets of earnings of the
concern. The basis current liabilities are accounts payable, bank overdraft and outstanding
expenses. The goal of working capital management is to management the firms current
assets and current liabilities in such a way that a satisfactory level of working capital is
maintained.
This is so because if the firm cannot maintainto satisfactory level of working capital, it is
likely to become insolvent and may be forced into bankruptcy. The current assets should be
large enough to cover its current liabilities in order to ensure a reasonable margin of safety.
Each of the current assets must manage efficiently in order to maintain the liquidity of the
firm while not keeping too high level of any of them. Each of the short-team sources of
financing must be continuously managed to ensure that they are abstained and used in the
best possible way. The interaction between current assets and current liabilities is, therefore,
the main theme of the theory of working capital management.
Working capital may be defined more particularly as the assets held for current use within a
business less the amount due to those who await settlement in short term in whatever form.

Working capital is an important aspect manufacturing compares that have so far developed
country. Among all available options proper management of working capital is the only best
possible option to improve their operational viability. Working capital is the financial
management practice in manufacturing enterprises. Working capital represents portion that
circulates from one form to another in the ordinary conduct of business. This idea embraces
recurring transaction from cash to inventories to receivable to cash that forms the
conventional chain of business operations.
Fund deployed for short term are mainly for working capital or operational purpose.
Towards the day-to-day operation, a firm will have to provide money towards the purchase
of raw materials, payment of wage and salaries to extend credit to buyers of goods as well as
to meet other day to day operations.
By analyzing about the working capital, we concluded that, all the corporations. Weather
public or private, manufacturing or non-manufacturing have just adequate working capital to
serve in competitive market. It is because excessive or inadequate working capital is
dangerous from the firms point of view. Excessive investment on working capital affects a
firms profitability just idle investment, yields nothing. In the same way, inadequate
investment on working capital affects the liquidity position of the company and leads to
financial embarrassment and failure of the company.
It is therefore, recognized fact that any mistake made in management of working capital can
lead to adverse effects in business and reduced the liquidity, turnover, profitability and
increases the cost of financing of the enterprises.
DEFINITIONS OF WORKING CAPITAL:
The following are the most important definitions of Working capital:
1) Working capital is the difference between the inflow and outflow of funds. In other words
it is the net cash inflow.
2) Working capital represents the total of all current assets. In other words it is the Gross
working capital, it is also known as Circulating capital or Current capital for current assets
are rotating in their nature.
3) Working capital is defined as The excess of current assets over current liabilities and
provisions. In other words it is the Net Current Assets or Net Working Capital

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:- gross & net. Gross working capital, simply
called working capital, refers to the firms investment in current assets. Current assets are the
assets which can be converted into cash within an accounting period (or operating cycle)and
cash, short-term securities, receivables, debtors and stock (inventory) are included in current
assets. Net working capital refers to the difference between current assets and current
liabilities. Current liabilities are those claims of outsiders, which are expected to mature for
payment within an accounting periodand include creditors, bills payableand outstanding
expenses.

1) Gross working capital:

According to this concept, total current assets are working capital which presents both
owned capital as well as loan capital used for financing current assets. It includes cash,
short-term securities and receivables inventories. These assets can be converted into cash
within a year. Generally, when it comes to current assets, cash is the most valuable element
because it is immediately available to settle bills and debtors are more value than stock
which is nearer to being turned into cash. The gross concept of working capital refers to the
amount funds invested in short-term assets that are employed in the enterprise. Gross
working capital is the firms total current asset and net working capital is current assets
minus current liabilities.
Another name of gross working capital is circulating capital. Circulating capital means
circular flow of cash. This is also called operating cycle in case of manufacturing firm. This
cycle starts with which is used to pay for raw materials. Raw materials are converted into
work-in progress which is again converted into finished goods. When it is ready for sale, it is
a circular cash-flow from cash into inventories to receivables and back to cash, this cycle
will be repeat again for the whole life of the firm.
The value represented by current assets circulates from one working capital to another
working capital from purchase accounts to goods manufacturing accounts. From inventory
accounts to sales accounts, from sales accounts to cash accounts, this is described as
circulating nature of current assets of in other work working capital has circulating nature.

The speed of circulating of working capital of the turnover of current assets is an indicator of
degree of efficiency of the management. The faster the turnover shows the higher degree of
efficiency.

The working capital cycle can be presented in the diagram as:

CASH

CREDITORS

COLLECTION

PAYMENTS

RAW MATERIALS

DEBTORS

SALES
PRODUCTION
FINISHED GOODS

WORK-INPROGRESS
VALUE ADDED CONVERSION

Figure: 4.1 The working capital cycle of manufacturing firms.

If the business is profitable the firms assets at the end of each cycle will be greater than the original
investment. In this manner, each cycle will produce a gross profit, and the amount of net
earnings for the year will depend. In part, on number of times the cycle occurs or how
measured by the ratio of sales to current assets. The higher the ratio, the more efficiency the
operations, fewer current assets are needed to support each dollar of sales.
The flow of working capital does not always proceeds as it is pre- planned when it moves
through different stage of cash cycle, for example, sales may decline due to can in consumer
taste, slow economy and receivable become more difficult to collect the working capital
cycle will be interrupted. This leads to decline in profitability and firm could suffer
bankruptcy if this adverse situation prevails for sometimes.

There is also a much shorter cycle of activity where in goods and materials are held for
manufacture and sale, and credit is advanced to customers for rapid conversion into cash to
provide the funds with which to continue in business and to make a profit distribution
possible.
The working capital cycle shown in figure 4.1 is theoperating cycle for non- manufacturing
firm where, cash is required to purchase raw materials which are needed to convert into
work-in- progress, which is again converted into finished goods. Are sold for cash and
credit and ultimately debtors will be realized.
The non manufacturing firms such as wholesalers and retailers do not manufacture goods.
So, they have the direct conversion of cash into stock of finished goods into debtors and
then into cash. This can be shown graphically as:
CASH

DEBTORS

STOCK OF FINISHED GOODS

Figure: 4.2 Operation cycle of non-manufacturing firms.

Sometimes service and financial concerns may not have any inventory. In this case the
operations cycle will be shortest as follows:

CASH

DEBTORS
Figure: 4.3 Operating cycle of service and financial firms.

The gross capital working capital focuses on two aspects of current assets
management:
a) Optimum investment in current assets: As state earlier, both excessive and inadequate
investment is harmful for the business. This aspectsthus, emphasis on the optimum
adequate level of current assets, working capital depends upon the business
activated. It also changes with the change in business activities. This may cause
excess or shortage of working capital frequently. The management should be active
and alert to correct the imbalance.
b) Financing of current assets: This aspect focus on the need of arranging funds to
finance current assets when more working capital is required due to the increase in
business activities. Then the arrangement should be made quickly. Similarly, when
surplus funds arise, then they should be invested in short term securities.

2) Net working capital:

Net working capital comprises short term net assets: stock, debtors and cash less
creditors. Working capital management then is to do with management of all aspects of
both current assets and current liabilities, so as to minimize the risk of insolvency while
maximizing return on assets.
Net working capital represents the excess of total current assets over total current
liabilities. It is a qualitative concept which shows the financial soundness of current
financial position. Net working capital may be positive or negative according to the size
of current assets and current liabilities. Current assets should be sufficiently in excess of
current liabilities for the positive working capital. This concept lives idea about the case
and cost of raising working capital to the management.
Not only for the management, is it also a major importance to investors and lenders.
They always like a company to maintain current assets should be two fold of current
liabilities and these concepts is measured by the current ratio via current assets current
liabilities. Which should be 4:1. A large ratio indicates greater solvency and makes it
unsafe and unsound. A negative working capital denotes negative liquidity which is also
dangerous for the company.
Management should always be alert to improve the imbalance in the liquidity position of
the firm. Mathematically, it is presented as:

Net working capital Current assets Current liabilities

An alternatives definition of net working capital is that portion of a firms current assets
financed with long term funds.
For every firm today, minimum portion of working capital is financed with the
permanent sources of funds such as owners capital, debentures, long-term debt, and
preference capital or retained earnings; this portion of working capital which is financed
with long term funds is called permanent working capital. Management must therefore,
decide the extent to which current assets should be financed with equity capital or/ and
borrowed capital.
Both the concepts of working capital, gross and net, are not mutually exclusive,
however. They are equally important from the management point of view in the gross
concept points out two important aspects of current assets: (i) Optimum investment in
each of the component of current assets and (ii)Financing of these current assets; while
the net concept indicates (i) The liquidity position and (ii) The extent to which working
capital may be financed by permanent sources of funds. Both the concepts have their
own advantages and disadvantages, which concept to choose depend upon the purpose of
the firm. The concept of gross capital is a financial concept where as that of net concept
is an accounting concept. Management is interested in current assets to operate the
business with efficiency. To evaluate the efficiency, gross concept is appropriate. On the
other hand interest of investors and lenders is in concept of net working capital because
it helps in the judgment if liquidity position of the enterprise.

4.3) Objective of Working capital:

Even profitability companies fail if they have inadequate cash flow. Liabilities dare
settled with cash and net profits. The primary objective of working capital management
is to ensure that sufficient cash is available to:

Meet day to day cash flow needs;

Pay wages and salaries when they fall due;
Pay creditors to ensure continued suppliers of goods and services;

Pay government taxation and providers of cash dividends; and

Ensure the long term survival of the business entity.

4.4) IMPORTANCE OF WORKING CAPITAL

Working capital may be regarded as the lifeblood of the business. Without insufficient
working capital, any business organization cannot run smoothly or successfully.
In the business the Working capital is comparable to the blood of the human body. Therefore
the study of working capital is of major importance to the internal and external analysis
because of its close relationship with the current day to day operations of a business. The
inadequacy or
mismanagement of working capital is the leading cause of business failures.
To meet the current requirements of a business enterprise such as the purchases of services,
raw materials etc. working capital is essential. It is also pointed out that workings.

Growth and Expansion Activities

As a company grows, logically, larger amount of working capital will be needed, though it is
difficult to state any firm rules regarding the relationship between growth in the volume of a
firm's business and its working capital needs. The fact to recognize is that the need for
increased working capital funds may precede the growth in business activities, rather than
following it. The shift in composition of working capital in a company may be observed
with changes in economic circumstances and corporate practices. Growing industries require
more working capital than those that are static.
Operating Efficiency
Operating efficiency means optimum utilization of resources. The firm can minimize its
need for working capital by efficiently controlling its operating costs. With in-creased
operating efficiency the use of working capital is improved and pace of cash cycle is

accelerated. Better utilization of resources improves profitability and helps in relieving the
pressure on working capital.
Price Level Changes
Generally, rising price level requires a higher investment in working capital. With increasing
prices the same levels of current assets need enhanced investment. However, firms which
can immediately revise prices of their products upwards may not face a severe working
capital problem in periods of rising levels. The effects of increasing price level may,
however, be felt differently by different firms due to variations in individual prices. It is
possible that some companies may not be affected by the rising prices, whereas others may
be badly hit by it.

Other Factors
There are some other factors, which affect the determination of the need for working capital.
A high net profit margin contributes towards the working capital pool. The net profit is a
source of working capital to the extent it has been earned in cash. The cash inflow can be
calculated by adjusting non-cash items such as depreciation, out-standing expenses, losses
written off, etc, from the net profit, (as discussed in Unit 6).
The firm's appropriation policy, that is, the policy to retain or distribute profits also has a
bearing on working capital. Payment of dividend consumes cash resources and thus reduces
the firm ',s working capital to that extent. If the profits are retained in the business, the firm 's
working capital position will be strengthened.
In general, working capital needs also depend upon the means of transport and
communication. If they are not well developed, the industries will have to keep huge stocks
of raw materials, spares, finished goods, etc. at places of production, as well as at
distribution outlets.

4.5) Determinants of working capital:

There are no hard and fast rules or certain formulae to determine the working capital
requirement of the firm. The importance of efficient working capital management is an
aspect of overall financial management. Thus a firm plans its operations with adequate
working capital requirement or it should have neither too excess nor too inadequate working

capital. A number of factors affect the working capital. Generally, the following factors
affect the working capital requirement of the firm.
i)Nature and size of business:
The working capital requirement of a firm is basically related size and nature of the
business. If the size of the firm is bigger, then or requires more working capital whereas
small firm needs less working capital relatively to public utilities.

ii) Manufacturing Cycle:

Working capital requirement of an enterprise are also influenced by the manufacturing or
production cycle. It refers to the time involved to make finished goods from the raw
materials. During the process of manufacturing cycle funds are tied up longer the
manufacturing cycle, the larger will be working capital requirement and vice-versa.
iii) Production Policy:
Working capital requirement is also determined by its production policy. If a firm produces
seasonal foods, the its production and sales volume fluctuate with different seasons. This
type of fluctuating policy affects the working capital policy of the firm.
iv) Credit Policy:
Credit policy affects the working capital of a firm. Working capital requirement depends on
terms of sales. Different term may be followed by different customers according to their
credit worthiness. If the firm follows the liberal credit policy, then it requires more working
capital. Conversely, if a firm follows the stringent policy, it requires less working capital.
v) Availability of Credit:
Availability of credit facility is another factor that affects the working capital requirement. If
the creditors avail a liberal credit terms then the firm will need less working capital and viceversa. In other works, the firm can get credit facility easily on favorable conditions. Thus, it
requires less working capital to run the firm otherwise more working capital is required to
operate the firm smoothly.
vi) Growth and Expansion:

Growth and expansion also affects the working capital requirement of firm. However, it is
difficult to precise; determine the relationship between the growth and expansion of the firm
and working capital needs, however, the other things being the same growing firms needs
more working capital than those static ones.
vii) Price level Change:
Price level change also affects the working capital requirement of a firm. Generally, a firm
requires maintaining the higher amount of working capital, if the price level rises. Because
the same level of current assets needs more due to the increasing price. In conclusion, the
implications of changing price level of working capital position will vary from firm to firm
depending on the nature and another relevant consideration of the operation of the conserned
firm.
viii) Operating Efficiency:
Operating efficiency is also an important factor, which influences the working capital
requirements of the firm. It refers to the efficient utilization of available resources at
minimum cost. Thus, financial manager can contribute to strong working capital position
through operating efficiency. If a firm has strong operation efficiency then it needs lesser
amount of working capital and vice-versa.
ix) Profit Margin:
The level of profit margin differs from firm to firm. It depends upon the nature and quality
of product has a sound marketing management and enjoy the monopoly power in the market
then it earns quite high profit and vice-versa. Profit is sources of working capital because it
contributes towards the working capital as a pol by generating more internal funds.
x) Level of Taxes
The level of taxes also influences working capital requirement of firm. The amount of taxes
to be paid in advances is determined by the prevailing tax regulations. But the firms profit is
not constant, or can note be predetermined. Tax liability in asense of short-term liquidity is
payable in cash. Therefore, the provision for tax amount is one of the important aspects of
working capital planning. If tax liability increase, it needs to increase the working capital
and vice-versa.

4.6) Financing of Working Capital:

The firms working capital assets policy is never set in a vacuum; it is always established in
conjunction with the firms working capital policy. Every manufacturing concern of industry
requires additional assets whether they are instable or growing conditions. The most
important function of financial manager is to determine the level of working capital and to
decide how it is to financed. Financial of any assets is concerned with two major factorscost and risk. Therefore, the financial manager must determine an appropriate financing mix,
or decide how current liabilities should be used to finance current assets. However, a number
of financing mixes are available to the financial manager. He can resort generally there kinds
of financing.

i) Long-term financing:
Long-term financing has high liquidity and low profitability, Ordinary share, Debenture,
Preference share; retained earnings and long-term debt of financial institution are major
sources of long-term finance.
ii) Short-term financing:
A firm must arrange its short-term credit in advance. The sources of short-term financing
of working capital are trade credit and bank borrowing.
Bank credit: Bank credit is the primary institutional sources for working capital
financing for the purpose of bank credit, amount of working capital requirement has to
be estimated by the borrowers and banks areapproached with the necessary supporting
data.
After availability of this data, bank determines the maximum credit based on the margin
requirements of the security. The types of loan provided by commercial banks are loan
arrangement, overdraft arrangement, commercial paper etc.

4.7) APPROACHES TO MANAGING WORKING CAPITAL

Two approaches are generally followed for the management of working capital: (i) the
conventional approach, and (ii) the operating cycle approach.
The Conventional Approach
This approach implies managing the individual components of working capital (i.e.
inventory, receivables, payables, etc.) efficiently and economically so that there are neither
idle funds nor paucity of funds. Techniques have been evolved for the management of each
of these components. In India, more emphasis is given to the management of debtors
because they generally constitute the largest share of the investment in working capital. On
the other hand, inventory control has not yet been practised on a wide scale perhaps due to
scarcity of goods (or commodities) and ever rising prices.
The Operating Cycle Approach
This approach views working capital as a function of the volume of operating expenses.
Under this approach the working capital is determined by the duration of the operating cycle
and the operating expenses needed for completing the cycle. The duration of the operating
cycle is the number of day involved in the various stages, commencing with acquisition of
raw materials to the realization of proceeds from debtors. The credit period allowed by
creditors will have to be set off in the process. The optimum level of working capital will be
the requirement of operating expenses for an operating cycle, calculated on the basis of
operating expenses required for a year.
In India, most of the organizations use to follow the conventional approach earlier, but now
the practice is shifting in favour of the operating cycle approach. The banks usually apply
this approach while granting credit facilities to their clients.

ADEQUACY OF WORKING CAPITAL

The firm should maintain a sound working capital position. It should haveadequate working
capital to run its business operations. Both excessive aswell as inadequate working capital
positions are dangerous from the firms point of view. Excessive working capital not only
impairs the firmsprofitability but also result in production interruptions and inefficiencies.

The dangers of excessive working capital are as follows:

It results in unnecessary accumulation of inventories. Thus, chances of
inventory mishandling, waste, theft and losses increase.
It is an indication of defective credit policy slack collections period.
Consequently, higher incidence of bad debts results, which adversely
affects profits.
Excessive working capital makes management complacent which
degenerates into managerial inefficiency.
Tendencies of accumulating inventories tend to make speculative
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.
Inadequate working capital is also bad and has the following dangers:
It stagnates growth. It becomes difficult for the firm to undertake
profitable projects for non- availability of working capital funds.
It becomes difficult to implement operating plans and achieve the firm s
profit target.
Operating inefficiencies creep in when it becomes difficult even to meet
day commitments.
Fixed assets are not efficiently utilized for the lack of working capital
funds. Thus, the firm s profitability would deteriorate.
Paucity of working capital funds render the firm unable to avail
attractive credit opportunities etc.
The firm loses its reputation when it is not in a position to honor its
short-term obligations.
An enlightened management should, therefore, maintain the right amount of working capital
on a continuous basis. Only then a proper functioning of business operations will be ensured.
Sound financial and statistical techniques, supported by judgment, should be used to predict
the quantum of working capital needed at different time periods.

A firm s net working capital position is not only important as an index of liquidity but it is
also used as a measure of the firms risk.
Risk in this regard means chances of the firm being unable to meet its obligations on due
date. The lender considers a positive net working as a measure of safety. All other things
being equal, the more the net working capital a firm has, the less likely that it will default in
meeting its current financial obligations. Lenders such as commercial banks insist that the
firmshould maintain a minimum net working capital position.

In this study four years data ( 2008 to 2012 have been presented and analyzed. It covers to
analyze the ratio as well trend and composition of working capital, which means current
assets, current liabilities, liquidity, turnover, leverage and profitability of BALIC.

5.1) Components of current assets:

For the day to day business operation different types of current assets are required. Current
assets refer those assets that are cash or can be converted into cash within a year. The
composition of current assets or the main components of current assets at BALIC are cash
and bank balance, loan and advances and government securities. Miscellaneous current
assets are also a component of current assets. Prepaid expenses, outstanding income like
interest receivable and other current assets are also included in miscellaneous current assets.
The following table shows the amount of cash and bank balance, money at call or short
notice, loan and advanced government securities and other current assets of Bajaj Allianz
Life Insurance Company Pvt. Ltd.

Table 1 :
Current Assets
Fiscal Year

Sundry
Debtors

Cash and
balance

Bank Loan
advance

and Other C.A

Total

2008/09

639,948

3,515,993

76,970

1,148,475

5,381,386

2009/10

1,089,070

2,186,908

130,275

2,022,560

5,298,538

2010/11

1,341,359

4,285,098

147,078

2,344,020

8,217,555

2011/12

1,223,706

4,520,165

170,660

3,832,457

9,746,988

Source:- Annual Report of BALIC From 2008/09 to 2012/13

Assets of Company was amounted to Rs. 5,460,356 which included Rs. 3,552963 of
cash and bank balance, Rs. 76,970 of loan and advance, Rs. 1,828,423 of
miscellaneous current assets. Current assets of the company increase in all four years.

INTERPRETATION 1 :
As stated in above figure the current assets of BALIC increases all the four year from
FY 2008/09 t0 2011/12. In the cash of FY 2009/10, the increasing trend is low from
FY 2008/09. But the overall increasing trend of current assets is higher.

5.2) Component of Current Liabilities:

Current liabilities is a short-term obligation which is payable within a year. The composition
of current liabilities or the main components of current liabilities. Tax provision, staff bonus,
proposed dividend payable and other liabilities are included in other current liabilities. The
following table shows the amount of deposit and other accounts, short term loan, bills
payable and other current liabilities of BALIC.

Table 2 :
Current Liabilities
Fiscal Year

Creditors

Deposit

Bills Payable

Other C.L

Total

2008/09

2,249,357

3,318,900

87,607

2,396,492

8,052,356

2009/10

3,701,079

4,129,900

196,168

2,491,564

10,518711

2010/11

3,281,079

4,430,900

98,372

1,690,564

9,500,915

2011/12

4,246,449

4,142,491

97,087

2,368,827

10,654,854

In the above table, the component of current liabilities which consists deposits.Source
annual report of company.

INTERPRETATION 2 :
In the above figure shows that the current liabilities of the company is increasing In fiscal
year 2008/09 the total amount of current liabilities Rs. 8,052,356 for the increasing impact
of deposits and other current liabilities. In all four year deposits and other current liabilities
are increased.
5.3) Working capital of BALIC:
Working capital is required to run business smoothly and efficiently in the context of set
objectives. It is no doubt that no organization can achieve its goal without proper use of
working capital. It means money invested on working capital should be neither more nor
less because both the position of working capital affects not only liquidity but also
profitability of the organization. The investment decision should be made on any type of
current assets by considering their role in company and determining which one is more

beneficial to the company and which is not. The following table shows the amount of
working capital of BALIC of the study period.
Table 3 :
Working capital of Company
Fiscal Year

Total C.A

Total C.L

WC= CA-CL

2008/09

5,381,386

8,052,356

4,470,970

2009/10

5,298,538

9,500,915

4,202,377

2010/11

8,217,555

10,518,711

2,301,156

2011/12

9,746,988

10,654,854

907,866

Sources: Annual Report of company.

INTERPRETATION3:
In the above figure we clearly show the current assets, current liabilities and working capital
condition of BALIC from fiscal year 2008/09 to 2011/12. Working capital condition of the
company is at satisfactory level. All the year of the study period the working capital of the
company is negative.

Liquidity Ratio:
Liquidity ratios measures ability of the firms to meet its short-term obligations.
Liquidity of any business organization is directly related with working capital or
current assets and current liabilities of that organization. In other words, one of the
main objectives of working capital management is keeping sound liquidity position.
Company is a different organization which is engaged in Mobilization of funds. So,

without sound liquidity position of ability to meet its short-term obligation various
liquidity ratios are calculated and to know the trend of liquidity are trend analysis of
major liquidity ratios have been considered.
5.4) Current Ratio:
This ratio indicates the short-term solvency position of bank. In other words current
ratio indicates better liquidity position. It is calculated as follows:
Current assets (CA)
Current liabilities (CL)

The following table shows the current ratio to compare the following capital management of
BALIC.
Table 4 :

Current ratio
Fiscal Year

Total CA

Total CL

Current ratio

2008/09

5,381,386

8,052,356

0.67

2009/10

5,298,538

10,518,711

0.50

2010/11

8,217,555

9,500,915

0.86

2011/12

9,746,988

10,654,854

0.91
Average=0.74
Sources: Annual Report of BALIC from 2008/09 to 2012.

Current Ratio of BALIC

INTERPRETATION4 :
The above table shows the CA, CL and current ratio of the BALIC. The current ratio of the
BALIC is fluctuating over the year. The highest current ratio is in fiscal year 2011/12 0.91.
And in all year it is increasing. The average ratio is 0.74.
5.6) Cash and bank balance to Current Assets:
The cash and bank balance is almost liquids from the current assets, this ratio shows the
percentage of readily available fund within the banks. It can be calculated by dividing cash
and bank balance by current assets, which is given below.

Cash and bank balance

Current assets
This ratio shows that the percentage of current assets cover cash and bank balance. The
following table and figure shows the cash and bank balance to current assets ratio of BALIC
over the study period.

Table 5 :

Cash and Bank to Current Assets Ratio of BALIC

Fiscal Year
2008/09

Cash& Bank
Balance
3,552,963

Current Assets

Ratio (%)

5,381,386

0.67

2009/10

2,186,908

5,298,538

0.41

2010/11

4,385,098

8,217,555

0.53

2011/12

4,382.396

9,746,988

0.44

Sources: Annual Report of Company

INTERPRETATION5 :
Cash and Bank balance to current assets ratio of the company is in 2009/10 decreased and in
2010/11 it increased and again in 2011/12 is decreased.

5.7) Cash and Bank Balance to Total deposit:

The ratio shows the ability of bank immediate funds to cover their deposits. It can be
calculated by dividing cash and bank balance by deposits. The ratio can be expressed as:
The following table and figure shows the cash and bank balance to total deposits ratio of the
BALIC over the study period.
Table 6 :
Cash and Bank balance to total Deposit Ratio of BALIC
Fiscal Year

Cash & bank

Total deposit

Ratio

2008/09

3,552,963

2,318,900

1.53

2009/10

2,186,908

2,123,900

1.03

2010/11

4,385,098

2,899,500

1.51

2011/12

4,382.396

3,857,000

1.14

Sources: Annual report of Company

INTERPRETATION6 :
The above figure depicts that the cash and bank balance to total deposit of BALIC has been
slightly decreasing in FY 2009/10, 2010/11, 2011/12.
5.8) Net Profit to Total Assets:

This ratio is very much crucial for measuring the profitability of funds invested in the bank
assets. It measures the return on assets it computed by using the following formula.

Net profit after tax

Total assets

Table 7
Net Profit to Total assets Ratio of BALIC
Fiscal Year

Net Profit

Total assets

Ratio(%)

2008/09

5,605,846

5,336,042

1.05

2009/10

6,182,978

5,298,538

1.17

2010/11

10,387,412

8,217,555

1.26

2011/12

23,499,431

9,746,988

2.41

Sources: Annual Report of company

INTERPRETATION7:
Net Profit to total asset ratio in 2008/09 1.05 and it increasing slightly in financial year
2009/10, 2010/11 and 2011/12.

5.9) Debtors Turnover Ratio:

Concept: Debtors are expected to be converted into cash over a short period of time
and therefore are included in current assets. It shows how many times debtors are converted
into cash in a year.

Debtors Turnover Ratio = Net credit sales

Average Debtors
Table 8 :
Debtors Turnover Ratio
Year
2008/09

Credit sales
102,199,181

Average Debtors
19,080,194

Ratio
5.35

2009/10

132,858,985

27,192,101

4.88

2010/11

171,671,451

36,302,837

4.72

2011/12

221,246,824

42,584,634

5.19

Diagram:-

INTERPRETATION8 :
The debtors turnover ratio was very less in the year 2010/11 at 4.72 times,
but them it has increased to 5.19, 5.66 times in the year 2011/12 and 2008-09. This shows
that the company is making all the offers to speed up the collection process.
5.9) Creditors Turnover Ratio:

Concept: Creditors turnover ratio establishes relationship between not credit purchases
and average trade creditors and accounts payable. The ratio indicates the velocity with which
the creditors are turned over in relation to purchases.

Creditors Turnover Ratio = Net Credit Purchases

Average creditors
Table 9 :
Creditors Turnover Ratio
Year

Credit Purchases

Average Creditors

Ratio

2008/09

96,724,469

82,074,994

1.17

2009/10

127,553,879

112,554,635

1.13

2010/11

165,680,148

146,617,013

1.13

2011/12

213,323,185

189,501,666

1.12

INTERPRETATION9 :
The creditors turnover ratio was 1.17 times in the year 2008/09& it decreased to 1.13 times
in the year 2009-2010 but creditor turnover will be remain same two year 2009/10 and
2011/12.

5.10)Working Capital Turnover Ratio:-

It is taken as one of the primary indicators of the

short-term solvency of the business. It establishes the relationship with the net sales. It
measures the efficiency with which the working capital is being used by the firm.
WORKING CAPITAL TURNOVER RATIO =

Net Sales
Net Working Capital

Table 10 :
Year

Net Sales

Net Working Capital

Ratio

2008/09

102,199,181

20,229,751

5.05

2009/10

132,858,985

23,244,807

5.72

2010/11

171,671,451

36,879,727

4.65

2011/12

221,246,824

32,265,850

6.86

Source: Annual report of BALIC

INTERPRETATION10 :
In The year 2008/09 working capital t/o ratio was5.05 time ,5.72 time in the year 2009/10. In
the year 2009/10 the working capital has increases. And in financial year 2010/11 it
decreased and again in financial year 2011/12 it increased.

Table 11 :

Statement of changes in working Capital for the year 2009/10

Particulars

31-3-2009

31-3-2010

Increase

Decrease

Sundry debtors

639,948

1,089,070

449,122

Cash& bank balance

3,515,993

2,186,908

Loan& advance

76,970

130,275

53,310

Other C.A

1,148,475

2,022,560

834,085

Total 5,381,386

5,298,538

1,336,517

1,366,055

Current assets

1,366,055

Current Liabilities
Sundry creditors

2,249,357

3,701,079

1,451,722

Deposit

3,318,900

4,129,900

811,000

Bills payable

87,607

196,168

108,561

Other C.L

2,396,492

2,491,564

95,072

10,518,711

2,466,355

Total 8,052,356
INTERPRETATION 11 :

Current assets for the year 2009/10 is increases and it is good condition for the company and
current liabilities of the company is increased by 2,466,355.and by putting formula
(W.C= C.A- C.L)working capital of the company for year 2009/10 is 4,470,970.
Here working capital of company is increasing that means profitability of company
also increasing.

Table 12 :

Statement of changes in working Capital for the year 2m,010/11

Particulars

31-3-2010

31-3-2011

Increase

Sundry debtors

1,089,070

1,341,359

298,850

Cash& bank balance

2,186,908

4,285,098

2,198,190

Loan& advance

130,275

147,078

16,803

Other C.A

2,022,560

2,344,020

468,538

Total 5,298,538

8,217,555

2,982,381

Decrease

Current assets

Current Liabilities
Sundry creditors

3,701,079

3,281,079

Deposit

4,129,900

4,430,900

196,168

98,372

97,796

2,491,564

1,690,564

801,000

Bills Payable
Other C.L

Total 10,518,711

9,500,915

420,000
301,000

301,000

1,318,796

INTERPRETATION12 :
Current assets for the year 2009/10 is increases and it is good condition for the company and
current liabilities of the company is decreased by 1,017,796 thats shows the working capital
of the company is increased. Here debtors increased means cash balance of company
decreased.

Table 13 :

Statement of changes in working Capital for the year 2011/12

Particulars

31-3-2011

31-3-2012

Increase

Sundry debtors

1,341,359

1,223,706

Cash& bank balance

4,285,098

4,520,165

235,067

Loan& advance

147,078

170,660

23,582

Other C.A

2,344,020

3,832,457

1,488,437

Total 8,217,555

9,746,988

1,747,086

Decrease

Current assets
117,653

117,653

Current liabilities
Sundry creditors

3,281,079

4,246,449

765,370

Deposit

4,430,900

4,142,491

98,372

97,087

1,690,564

2,368,827

678,263

10,654,854

1,443,633

Bills payable
Other C.L

Total 9,500,915

288,409
1,285

289,694

INTERPRETATION13 :
Current assets for the year 2009/10 is increases and it is good condition for the company and
current liabilities of the company is increased by 1,153,939 thats shows working capital of
company decreased. Here debtors decreased thats good for company it shows cash of
company increased.

FINDINGS

1. Current assets for the year 2009/10 is decreases and its application for the company
and current liabilities of the company is increased by 2,466,355.and by putting
formula (W.C= C.A- C.L)working capital of the company for year 2009/10 is
4,470,970.
2. Current assets for the year 2009/10 is increases and it is good condition for the
company and current liabilities of the company is decreased by 1,017,796 thats
shows the working capital of the company is increased. Here debtors increased
means cash balance of company decreased.
3. Current assets for the year 2009/10 is increases and it is good condition for the
company and current liabilities of the company is increased by 1,153,939 thats
shows working capital of company decreased. Here debtors decreased thats good for
company it shows cash of company increased.
4. Current ratio (C.R) of fiscal year 2008/09 to 2011/12 showed slightly increase i.e.
0.67 to 0.91. But in fiscal year 2009/10 C.R decreased comparatively in deposits and
in fiscal year 2010/11 C.R is again increase 0.86 due to increase in factors which
influence it.
5. Cash and Bank balance to current assets ratio of the company is in 2009/10
decreased and in 2010/11 it increased and again in 2011/12 is decreased.
6. The above figure depicts that the cash and bank balance to total deposit of BALIC
has been slightly decreasing in FY 2009/10, 2010/11, 2011/12.
7. Net profit to total asset ratio in 2008/09 1.05 and it increasing slightly in financial
year 2009/10, 2010/11 and 2011/12.
8. The debtors turnover ratio was very less in the year 2010/11 at 4.72 times, but them
it has increased to 5.19, 5.66 times in the year 2011/12 and 2008-09. This shows that
the company is making all the offers to speed up the collection process.
9. The creditors turnover ratio was 1.17 times in the year 2008/09& decreased to 1.13
times in the year 2009-2010 but creditor turnover will be remain same two year
2009/10 and 2011/12.
10. In The year 2008/09 working capital t/o ratio was5.05 time ,5.72 time in the year
2009/10. In the year 2009/10 the working capital has increases. And in financial year
2010/11 decreased and again in financial year 2011/12 increased.

SUGGESTION
On the basis of the analysis and observation an attempt made to present some
suggestions.

1. In the year 2009-2010 the current assets of the company has declined and current
liability of the company has increases therefore the net working capital declined.
There for the current ratio has declined. The net working capital of the company has
increased remaining year.

2. The company has able to repay the liability of the creditors because the profit of the
company has increased every year.

3. Because of the current assets has declined in the year 2010-2011 but profit of the
company has increased in the year 2008-2009. There for the return on current assets
is high.

4. Company has able to full fill the standard level of current ratio i.e. 2:1 .There for the
company has able to repay the liability and loan of company.

CONCLUSION
At the end it is stated that the working capital management is a part of money invested in the
business.Working capital may be regarded as lifeblood of a business. Its effective provision
can do much to ensure the success of a business.

The Working Capital Management contributes much in the over all management of the
organization affairs, efficiency of organization operations depend on how it manages its
short term business dealings. Working Capital management contributes for the firm
efficiency as well as the finance manager is proper utilizing the available wealth and
maintaining the required liquidity.
Working capital is considered to be an important tool for progress. Working capital
management techniques are playing significant role in assisting the management for decision
making. The study of working capital management at Bajaj Allianz Life Insurance Pvt.
Ltd.Is found to be very effective. The working capital contains the management of Cash,
Debtors, and creditors. The Bajaj Allianz Life Insurance Pvt. Ltd has profit oriented
company .The profit of the company will be increases every year .The company has able to
the repay the amount of the creditor. The company has more working capital and also sale
has increases year to year.

LIMITATIONS
1. The analysis is limited to three years of data study (for the year 2008/09 to 2011/12 )
for financial analysis.

2. The estimation and expectation made in the financial statements may differ from actual
performance due to various economic conditions, government policies and other
related factors.
3. All the data accumulated and presented in this project is procured from secondary
sources which may have been subject to stealthy biased nature.