Working Capital Management In A Manufacturing Company Finance Essay

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Era Buildsys Limited is the pre- engineering arm of the Era group of companies. An ISO 9001:2000, ISO 14001:2004 and OHSAS 18001:2007 certified company, Era Buildsys holds the distinction of being one of the single largest, fastest growing and fully integrated PEB manufacturing units at Pantnagar in North India. The Company is equipped with a fully integrated facility, an automated laboratory and ultra-modern machinery for offering complete turnkey Pre-Engineered Building (PEB) solutions for hi-end applications across diverse sectors.

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The group’s construction prowess and over two decades of experience have armed Era Buildsys with remarkable design, execution, erection and on-time delivery capabilities. Working capital is the life blood of the company. From February to May 2011, I propose to conduct a thorough analysis of the working capital management at Era Buildsys Limited. I plan to study the working capital requirements of the company by analyzing the secondary information available in annual reports, company records and other internal reports. The project contain the basic postulates of working capital, procedure of analysis of working capital, ratio being used to define the working capital and the impact of working capital in the company in case of excess or inadequacy. Also, the project contains analysis of estimation of working capital requirement and the procedure to estimate working capital requirement in manufacturing and trading concern and from the data available it can be concluded that it holds a very strong position in the market. Working capital management is a very important facet of financial management due to: Investment in current asset represents a substantial portion of total investment. Investments in current asset and level of current liability have to be geared quickly to change sales. I also plan to collect the data regarding company policies, future plans, possible expansions etc. by interviewing head of departments and other staff for deriving my own set of assumptions to come out with the projected financial figures, which are needed for the completion of credit monetary assessment form. After compilation and tabulation of the above said data, I plan to analyze it with the help of different financial ratios and other financial instruments and compare the result with industry benchmarks, hence identifying the financial strengths and weakness of the company. Finally after a thorough analysis of the data, a set of most important attributes/ components can be found out, which has a major contribution to the working capital cycle or requirement of the company. So that steps or methods can be identified to control or manage these components.

Review of literature:

Impact of Working Capital Management Policies on Corporate Performance-An Empirical Study

Sushma Vishnani, Bhupesh Kr. Shah (2007) It is felt that there is the need to study the role of working capital management policies on profitability of a company.

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