EXECUTIVE SUMMARY

A well designed and implemented working capital management is expected to contribute

positively to the creation of a firm’s value. The purpose of this project is to examine the
trends in assessment of working capital management (AWCM).

This project aims at learning various facets assessment of working capital management
by studying the day to day activities at its division which mainly deals in power projects.

Assessment of Working capital management involves not only managing the different
components of the current assets, but also managing the current liabilities, or to be more
precise, financing the current assets.

A firm is required to maintain a balance between liquidity and profitability while

conducting its day to day operations.

Liquidity is a precondition to ensure that firms are able to meet its short-term obligations
and its continued flow can be guaranteed from a profitable venture.

The importance of cash as an indicator of continuing financial health should not be

surprising in view of its crucial role within the business. This requires that business must
be run both efficiently and profitably.

The financial statements are used to work out various ratios which help us in better
understanding the organization’s assessment of working capital management.

The key variables used in the analysis are inventories days, accounts receivables days,
accounts payable days and cash conversion cycle. These ratios are then compared with
industry’s standard to get an insight to understand the nuances of the working of the
organization.