Home
Science
I.T.
Arts

Earnings And Working Capital Management - Power Sector Companies Of India  


Abstract Category: Accounts and Economics
Course / Degree: Commerce PhD Regd No.15069/06
Institution / University: Magadh University, India
Published in: 2013


Paper Abstract / Summary:

Introduction:
To start any business, First of all we need finance and the success of that business entirely depends on the proper management of day-to-day finance and the management of this short-term capital or finance of the business is called Working capital Management. Working Capital is the money used to pay for the everyday trading activities carried out by the business - stationery needs, staff salaries and wages, rent, energy bills, payments for supplies and so on. I have tried to put my best effort to complete this task on the basis of skill that I have achieved during the last one year study in the institute. I have tried to put my maximum effort to get the accurate statistical data. However I would appreciate if any mistakes are brought to me by the reader.
Working capital is the lifeblood and nerve centre of business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business, no undertaking, no enterprise can run successfully and smoothly without an adequate amount of working, capital. Working capital brings a sound solvency to the business. It also enables an undertaking in creating and maintaining goodwill. It also enables a business undertaking to pay off its current dues and also provides regular supply of raw materials. Adequate working capital provides inherent strength to a business undertaking and ability to face crisis.
Objectives of the study :
The objectives of the research study consists of – (a) Main objectives and (b) Subsidiary objectives.
Main objectives
The main objective of the research is to investigate into the relationship between earnings / profitability and working Capital of Power Sector Companies in India.
Subsidiary Objectives
Subsidiary objectives are stated to be profitability, liquidity, efficiency in the use of working capital , appropriates use of fixed assets etc. basing on these concepts our concern is to investigate relationship between –
Profitability and Liquidity, Profitability and Debtors Turnover Ration; (DTR) Profitability and working capital; (WC) Profitability and Current Ratio; (CR)Profitability and Inventory Turnover Ration; (ITR) Profitability and Acid Test Ration; (ATR) Profitability and Absolute Liquid Ration; (ALR) Profitability and Creditors Turnover Ration; (CTR) Profitability and Age of the undertaking, etc.
Funds needed for short term needs for the purpose like raw materials, payment of wages and other day to day expenses are known as working capital. Decisions relating to working capital (Current assets-Current liabilities) and short term financing are known as working capital management. It involves the relationship between a firm's short-term assets and its short term liabilities. By definition, working capital management entails short-term definitions, generally relating to the next one year period.
The goal of Working Capital Management is to ensure that the firm is able to continue its operation and that it has sufficient cash flow to satisfy both maturing short term debt and upcoming operational expenses.
Working capital is primarily concerned with inventories management, Receivable management, cash management & Payable management.
Methodology of the study :
The required sample for the purpose of the present study has been selected on the basis of “Random Sampling technique out of large universe of Power Sector Companies of India keeping in view of all the characteristics of the total number of companies of the universe. The present study is confined to large cap and mid cap power sector companies of the country.
The sample included in the present research comprises of several large power sector companies and also same well performing well managed prominent mid cap power sector companies. The sample included power generating companies, power T&D (Transmission & Distribution) companies and power equipment manufacturing companies.
The secondary data used in this research study in order to analyze the trends of working capital and profitability have been extracted, processed and analyzed from the Reserve Bank of India’s publication
Review of Literature :
The review of literature, for our study purposes has been divided into three categories, viz. Review Literature on Profitability, Review Literature on Working Capital Management and Review Literature on Profitability and Working Capital Management in power sector.
Conclusion and Suggestions :
In connection with working capital planning, over 100 per cent of the financial managers replied that they were using cash forecast methods as supporting to determine the working capital requirements. Further, they answered that for determination of working capital requirements, 6 out of 15 said that the production is the key factor while other emphasized on the sales as the key factor. About the conventional standard current ratio of 2:1, 14 out of 15 replied that they emphasized as ‘great’ while others indicated it as ‘high’. About the quick ratio, the financial managers said that it was the realistic measure of liquid position of the concern. Regarding components of working capital, the executives ranked inventory component as ‘great’ in the list of various components of current assets. Large amount of working capital is used to be blocked in the inventory.
Each component of working capital (namely inventory, receivables and payables) has two dimensions ......TIME...... and MONEY. When it comes to managing working capital - TIME IS MONEY. If you can get money to move faster around the cycle (e.g. collect monies due from debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels relative to sales), the business will generate more cash or it will need to borrow less money to fund working capital. As a consequence, you could reduce the cost of bank interest or you'll have additional free money available to support additional sales growth or investment. Similarly, if you can negotiate improved terms with suppliers e.g. get longer credit or an increased credit limit, you effectively create free finance to help fund future sales.


Paper Keywords/Search Tags:
Earnings and Working Capital Management

This Paper Abstract may be cited as follows:
No user preference. Please use the standard reference methodology.

Paper Images:
Accounts and Economics - Earnings And Working Capital Management - Power Sector Companies Of India Dr Srinivas Annabathula
(click to enlarge)

 

Submission Details: Paper Abstract submitted by Srinivas Annabathula from India on 18-Aug-2013 13:58.
Abstract has been viewed 2497 times (since 7 Mar 2010).

Srinivas Annabathula Contact Details: Email: asrinivas9999@hotmail.com



Disclaimer
Great care has been taken to ensure that this information is correct, however ThesisAbstracts.com cannot accept responsibility for the contents of this Paper abstract titled "Earnings And Working Capital Management - Power Sector Companies Of India". This abstract has been submitted by Srinivas Annabathula on 18-Aug-2013 13:58. You may report a problem using the contact form.
© Copyright 2003 - 2024 of ThesisAbstracts.com and respective owners.


Copyright © Thesis Abstract | Dissertation Abstracts Thesis Library 2003-2024.
by scope.com.mt @ website design