Mismanagement of Working Capital

Working Capital Loans

2008

2010

2012

SPMSchool ofPetroleumManagement

PDPUPandit Deendayal Petroleum University

What is working capital

Objective of Working Capital Management

• To ensure sufficient liquid resources• To minimise the risk of insolvency while

maximising the return on assets• To maintain the optimum balance of each of the

working capital components.• For the purchase of raw materials, components

and spares.

Types of Working Capital

WORKING CAPITAL

BASIS OF

CONCEPT

BASIS OF TIME

Gross Working

Capital

Net Working

Capital

Permanent /

Fixed WC

Temporary /

Variable WC

THE WORKING CAPITAL CYCLE(OPERATING CYCLE)

Current Asset Mismanagement

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Current Asset Mismanagement

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Current Asset Mismanagement

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Sail & Tata Steel Ltd