Review of literature on working capital management

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We can do about 40 types of paper, for example: research paperterm paperessay writingdissertationliterature reviewapplication lettercase studybeside the mentioned above items, we can proofread a paper written by you or complete a problem solving assignment. Capital management - ivth semester mba sity - kottayam - keralauploaded by sasikumar r nairrelated interestsworking capitalnatural gasomanpetroleumbarrel (unit)rating and stats4. 11)document actionsdownloadshare or embed documentembeddescription: a g capital n industries code : 406 register no: 32118 enrollment no: the gui... Ted in partial fulfillment of the requirement for the award of the degree sity kottayam – project is based on the study of working capital management in arabian industries llc, an insight view of the project will encompass – what it is all about, what it acopyright: attribution non-commercial (by-nc)download as doc, pdf, txt or read online from scribdflag for inappropriate contenta code : 406 register no: 32118 enrollment no: the guidance . Ted in partial fulfillment of the requirement for the award of the degree sity kottayam – project is based on the study of working capital management in arabian industries llc, an insight view of the project will encompass – what it is all about, what it aims to achieve, what is its purpose and scope, the various methods used for collecting data and their sources, including literature survey done, further specifying the limitations of our study and in the last, drawing inferences from the learning so far. The working capital management refers to the management of working capital, or precisely to the management of current assets. A firm’s working capital consists of its investments in current assets, which includes short-term assets— cash and bank balance, inventories, receivable and marketable securities. This project tries to evaluate how the management of working capital is done in arabian industries llc, through inventory ratios, working capital ratios, trends, computation of cash, inventory and working capital, and short term financing. 32118 a ivth semester mba student of sity - kerala, has visited our organization and conducted a study about it’s working capital management and he has successfully completed his project works, during the period from january to february 2010.. Under our guidance, he has submitted his project report titled “working capital management” of arabian industries llc, in partial fulfillment of the requirement for the summer internship project during the post graduate degree in master of business administration studies. The undersigned, an mba student of sity, kerala do hereby declare that this report titled “working capital management” of arabianindustries llc, under the guidance of prof. Kumar, department of management studies for inspiring me and for his valuable guidance and assistance provided. Sindhu divakaran divakaran, faculty of management studies, polyglot institute, has also guided me with her valuable suggestions and advice for making this report a good success. 10 12 13 14 15 15 16 uction present scenario foreign investment oman economy – a review major diversification manufacturing industry in oman infrastructure industry for crude oil aim of mfg. Profile of arabian industries uction industry profile subsidiary and joint n and vision objectives and goals product and project profiles financial highlights literature review. Uction need of working capital concept of working capital classification of working capital determinants of working capital. Type of data collection objective of the study scope and limitation of the g capital level and analysis. Working capital level working capital trend analysis current asset analysis current liability analysis changes of working capital operating cycle working capital is of financial uction role of ratio analysis limitations of ratio analysis classification of wc ency ratio liquidity g capital management-finance and estimation. Uction receivables management inventory management cash management working capital – finance and estimation source of working capital estimation of working y of findings, conclusion and gs conclusions of tables, and figures. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 description/name of the table business unit wise performance-fbu business unit wise performance-mbu-tsu business unit wise performance-pdu business unit wise performance-emu division wise performance financial performance financial summary cash flow analysis five year planned turnover business plan capital expenditure size of working capital working capital - variance working capital-size analysis of current asset and liabilities current asset - size composition of current asset current liabilities changes in working capital operating cycle working capital leverage working capital turnover ratio inventory turnover debtors turnover current asset turnover current ratio quick ratio absolute liquid ratio size of receivable average collection period size of inventory components of inventory table no. 36 36 37 37 38 38 39 41 41 43 43 72 74 74 76 76 77 79 82 89 91 95 98 100 101 104 106 108 111 112 115 ory turnover ratio inventory holding period size and index of cash operating cycle cash conversion cycle estimation of working capital. 1 2 3 4 5 6 7 8 2 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ption-name of charts performance review-fbu performance review-mbu-tsu performance review-pdu performance review-emu finance performancefinancial summary cash flow analysis permanent working capital temporary working capital working capital index current asset index current asset component current liability index changes in working capital net operating cycle working capital leverage working capital turnover ratio inventory turnover ratio receivable turnover ratio current asset turnover ratio current ratio quick ratio cash and bank to current liabilities receivable index average collection period inventories index components of no 3-1 3-2 3-3 3-4 3-5 3-6 3-7 4-1 4-2 6-1 6-2 6-3 6-4 6-5 6-6 6-7 7-1 7-2 7-3 7-4 7-5 7-6 7-7 8-1 8-2 8-3 no. 36 36 37 37 39 40 41 59 60 73 77 78 79 82 89 91 96 97 100 101 104 106 108 111 112 115 ory turnover ratio inventory holding period cash index cash conversion cycle cash conversion cycle estimation of working capital-2010. 118 121 123 124 127 ure of arabian industries llc-holding company inants of working ch methodology – data to g capital conversion graphy books referred 1) banarjee. Shashi k gupta - business management (2008) – kalyani publishers – ial statement – (annual report for 2009) company journals – arabian industries llc. Main economic and social indicators – 2009 - ministry of national economy – llc aim llc aip llc aits llc apo aro buh ccc cfo cnc coo cpp dcp dss epc fgcp gcc goc gwc icp iod llc mbu md nwc pbu pdo pwc qaqc rcp rmcp tor twc wcc wcm wipcp arabian industries llc arabian industries manufacturing llc arabian industries project llc arabian industries technical support llc account payable outstanding account receivable outstanding business unit head cash conversion cycle a us magazine computed numerically controlled chief operating officer creditors payment period debtors conversion period decision support system engineering, procurement and construction finished goods conversion period gulf co-operation council gross operating cycle grows working capital inventory conversion period inventory over days liability limited company manufacturing business unit managing director networking capital project business unit petroleum development oman permanent working capital quality assurance and quality control receivable conversion period raw material conversion period turn over ratio temporary working capital working capital cycle working capital management work in progress conversion period. Working capital of the shortfalls if any project undertaken is on “working capital management of arabian industries llc. It describes about how the company manages its working capital and the various steps that are required in the management of working capital. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. A good way to judge a company's cash flow prospects is to look at its working capital management (wcm). Capital refers to the cash of a business requires for day-to-day operations or, more specifically, for financing the conversion of raw materials into finished goods, which the company sells for payment. Among the most important items of working capital are levels of inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a company's efficiency and financial working capital is an important yardstick to measure the company’s operational and financial efficiency. This project describes how the management of working capital takes place at arabian industries llc.. Are numerous instances in the history of business world where inadequacy of working capital has led to business failures when a firm finds it difficult to meetings day to day affairs. Operating expenses essential out lays may have to be postponed for want of funds, operating plans will go out of gear & enterprise objectives on investment slumps the suppliers & creditors of the firm may have to wait longer to raise their dues & will hesitate to extend further credit to the efficient management of working capital in an important prerequisite for successful working of a business concern it reduces the chances of business failure generates a felling of security and confidence in the minds of personnel in the organization it assurance solvency of steady of the ent of problem in the management of working capital, the firm is faced with two key problems: 1. Second, given these optimal amounts, what is the most economical way to finance these working capital investments? Projects is helpful in knowing the companies position of funds maintenance and setting the standards for working capital inventory levels, current ratio level, quick ratio, current asset turnover level & size of current liability etc. This project is helpful to the managements for expanding the dualism & the project viability & present availability of funds. It will give overall view of the organization and it is useful in further expansion decision to be taken by ives of the main objective of the study is to determine the effect of working capital on business profitability which has to do with:-. Availability of ample funds as and when they are accomplishment of these two objectives, the management has consider the composition of current assets pool. The working capital position sets the various policies in the business with respect to general operations like purchasing, financing, expansion and dividend etc,The subsidiary objective of working capital management is to provide adequate support for the smooth functioning of the normal business operations of a company. Consequently, the investment in current assets for a given level of forecasted sales will be higher if the management follows a conservative attitude than when it follows an aggressive attitude. Working capital does not create an environment of security, confidence, and overall efficiency in a business. Therefore, firstly we need to have a clear idea of, what is working capital, how it is managed in arabian industries llc, what are the different ways in which the financing of working capital is done in the organization recognize the various type of information which are necessary for the study of working capital management. Therefore one also needs to have a sound knowledge about cash management, inventory management and receivables comes the financing of working capital requirement, i. How the working capital is financed, what are the various sources through which it is , in the end, suggestions and recommendations on ways for better management and control of working capital are tion of data from various department of aillc to analyze the working capital management of the are several ways of collecting both data-primary and secondary datas,Considerably in context of money, cost, time and other sources at the disposable of the are two types of data: · primary data · secondary tion:the first handed information/fresh data collected through various methods is known as primary data. Secondary data was collected various reports, annual reports, documents charts, management information systems, etc in ai llc, and also collected various magazines, books, newspapers analysis of the information gathered has been made on the basis of the clarifications sought during the personal discussions with the concerned people and perception during the personal visits to the important areas of marking observations identifying problems and suggesting certain remedies such emphasis was given on the basis of opinions gathered during the personal discussions and with the personal experience gained during the academic study of m.

Review of literature of working capital management

Chapterization this research work is to be organized in nine chapters as follows: chapter – 1 chapter-ii chapter-iii chapter-iv chapter – v chapter vi chapter vii chapter – viii chapter – ix - introduction - manufacturing industry in oman – a profile - arabian industries llc-a profile - a theoretical perspective of working capital management - research methodology - analysis of working capital level - analysis of financial statement - management of working capital and it’s financing and estimation - findings, conclusion and recommendations. Potential businesses should supply the company's articles of incorporation and other pertinent information when applying for authorisation to the foreign capital investment committee at the ministry of commerce and industry. Mega projects like oil refineries and their downstream industries and steel mills require massive investments whereas medium and small units could be set up with less capital in areas where indigenously available resources could be made use of. As a result, companies are applying advanced technologies and improved processes to meet growing demand, as well as working to keep abreast of the constantly shifting geopolitical landscape so critical to success in this sector. Introduction 2-industry profile 3-subsidiary and joint venture 4-mission and vision 5-objectives and goals 6-product and project profiles 7-financial highlights 8-literature review. Arabian industries llc and its subsidiaries are committed to become one of the leading companies providing complete solutions to the energy sector by enhancing customer satisfaction, strengthening employee & supplier relations and continually improving its product & services through the quality continuous improvement, enhancing employees safety, providing proper resources & suitable working environment, achieving national development and improving profitability and budget”. Arabian industries llc, is currently executing a number of major contracts in oman for activities, which include greenfield and brownfield epc & cme&i construction contracts for facilities, pipelines and process plant, long term maintenance contracts for oil & gas facilities, pipeline integrity management services including rehabilitation and routine / planned maintenance of cross country pipelines and environmental n industries llc, owns one of the biggest fleet of plant and equipment amongst the oil and gas sector contractors in oman and directly employs approximately 2500 multi-disciplined experienced staff personnel. The the company’s health, safety, environmental & waste management standards are one of the most effective amongst the omani contracting community with a number of major milestone achievements to its iary companies & joint ventures. We will also pursue business activities that emphasize corporate social responsibility (csr) in order to contribute to a better ng jobs arabian industries llc, creates various types of employment by examining working arrangements, working environment, job content, and conditions of employment contributing to society arabian industries llc, contributes to society’s betterment by creating jobs and developing effective human resources adding value to the individual arabian industries llc, supports people who want to improve themselves through their work, regardless of age, sex, or nationality. Mission to achieve market leadership through excellence in the quality of product and services by adopting state of the art technologies and innovative management approaches aim towards customer satisfaction. Though their business expands to diverse sectors they still abide by their vision & policy and maintain integration of their quality management system and consistency of operations through empowerment, motivated & dedicated peers and strong leadership. They achieve this through team-building, supply chain management and continual training & development of their llc’s quality management system established since 1996 has been certified to iso 9001 – 2000. To ensure for its customers the availability of its products and services on reasonable terms, for its shareholders a fair return on capital invested and, for itself, development of adequate internal resources for continual growth and ate objective 3. Dedicated team of quality assurance and quality control engineers (lead by the company’s qa/qc manager and quality systems engineer) supports the implementation and monitoring of quality management of the company. All departments in the company are certified to iso 9001 and regular internal and external audits are conducted to check the compliance and renewal of 9001:2000 requires that an organization’s quality policy provide a framework for reviewing the company’s quality objectives. So, the standard requires that management periodically review changes to both the policy and objectives. An organization’s objectives must be measurable and its quality management system processes designed to meet those n industries the company began operations in 1991, it has successfully executed numerous projects for clients within the gulf region. Engineering maintenance mance review for ation business -3-1- performance review for 2009-fabrication business unit. 2  performance review for cal support -3-2- performance review for 2009-technical support e i w b -t ef r a c rv - u s e m i. R c se oe a t d dc 8 e '-3-2-performance review-technical support d forecasted dec'08 revenue 1727 1225 810 margin 487 marketing strategy and business tie-up’s have been planned for the year 2009 a better turnover to counter the underperformance in terms of planned revenue by this business mance review for 2009 of projects development unit chart-3-3- performance review for mancerev iew -2008-pbu. However the firm expects a better turnover in the year 2009 based on a healthy order book for the year ended mance review for 2009 engineering maintenance unit chart-3-4- performance review for 2009-emu. Million ro 1 al of capital expenditure for omr- 3 million approval of acquisition of proposed land and building at salalah. Million (before tax and after adjustment of management fees) expand client base especially for the fabrication shop. 127,822 7,712,855 -1,220,241 -454,483 6,038,-3-11-capital ss unit arabian industries manufacturing unit investment – air coolers intl arabian industries technical support unit investment in new technology arabian industries project developmennt unit new project engineering maintenance unit corporate total. Investment in proposed project omr 6 million  equivellant to usd#15,463,ing proposed for the capital capital expenditure planned for 2010 term loan for new project-1 term loan for new project 2 term loan for new project 3 balance financed by cash generated from operations. Proceed with the setup of representation office in all gcc countries raise the share capital to ro 5 million by allocating ro 500,000 from the profits of year al of payment of management fees to cmd 10% of net profit before tax. A literature review is an essay or is part of the introduction to an essay, research report, or thesis. A detailed guide to the literature review is available on the language and learning services website. Ture review must do these things:Be organized around and related directly to the thesis or research question you are developing synthesize results into a summary of what is and is not known identify areas of controversy in the literature formulate questions that need further uring a literature review it is often difficult to decide how to organize the huge amount of information you have collected. Structuring a literature review introduction to the literature review main part conclusions a literature review is a piece of discursive prose, not a list describing or summarizing of literature after another. Instead,Organize the literature review into sections that present themes or identify trends, including relevant theory. Abstract of current study contributes to the literature by examining impact of working capital management on the operating performance and growth of new public companies. The study also sheds light on the relationship of working capital with debt level, firm risk, and industry. G capital policy refers to the firm's policies regarding 1) target levels for each category of current operating assets and liabilities, and 2) how current assets will be financed. Previous literature on working capital management has found a negative association, overall, between level of working capital and operating performance as measured by operating returns and operating margins (peterson and rajan, 1997). Sales, costs, lead times, payment periods, and so on, are known), firms have little reason to hold more working capital than a minimum analysis g capital management results across industries :-. Working capital is the difference between resources in cash or readily convertible into cash (current assets) zational commitments for which cash will soon be required (current liabilities). The objective of working capital management is to maintain the optimum balance of each of the working capital components. A recent example of business attempting to maximize working capital management is the recurrent attention being given to the application of six sigma® methodology. When used to identify and rectify discrepancies, inefficiencies and erroneous transactions in the financial supply chain, six sigma® reduces days sales outstanding (dso), accelerates the payment cycle, improves customer satisfaction and reduces the necessary amount and cost of working capital needs. Even in a business using six sigma® methodology, an “optimal” level of working capital management needs to be identified. Fortunately, these issues are testable with data published by cfo magazine (mintz and lazere 1997; corman 1998; mintz 1999; myers 2000; fink 2001), which claims to be the source of “tools and information for the financial executive,” and are the subject of this following section presents a brief literature review. Next, the research method is described, including some information about the annual working capital management survey published by cfo magazine. Gilbert and reichert (1995) :Find that accounts receivable management models are used in 59 percent of these firms to improve working capital projects, while inventory management models were used in 60 percent of the companies. More recently, farragher, kleiman and sahu (1999) find that 55 percent of firms in the s&p industrial index complete some form of a cash flow assessment, but did not present insights regarding accounts receivable and inventory management, or the variations of any current asset accounts or liability accounts across industries. Maness and zietlow (2002, 51, 496) presents two models of value creation that incorporate effective short-term financial management activities. That efficient liquidity management involves planning and controlling current assets and current liabilities in such a manner that eliminates the risk of inability to meet due tions and avoids excessive investment in these assets. The results were stable and had important implications for liquidity management in various saudi companies. The current rules that govern letter of credit transactions(ucp 500) have been under review for the past three years and an updated set of rules (ucp 600) is expected to be introduced on 1july 2007. Firstly the paper provides some background to letters of credit, then comments on existing literature and models, and subsequently an analysis of the most important changes to the existing rules, before reaching a conclusion. Introduction 2-need of working capital 3-concept of working capital 4-classification of working capital 5-determinants of working uction- working capital management “working capital occupies a peculiar position in the capital structure of a company. The decision as to the adequacy of working capital is a complicated and yet a very important decision”. For trading enterprises, the capacity to stock a variety of goods for sale depends upon its working capital. Many companies still under estimate the importance of working capital management as a lever for freeing up cash from inventory, accounts receivable, and accounts payable.

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This will not only lead to more financial flexibility, but also create value and have a strong impact on a company’s enterprise value by reducing capital employed and thus increasing asset productivity. High working capital ratios often mean that too much money is tied up in receivables and inventories. The extra working capital is not utilized in business operations and earns no profit for the firm. The abundance of working capital would lead to waste and inefficiency shortage of working capital funds renders the firm unable to avail attractive credit opportunities etc. Cash, accounts receivables, inventories) over current items owned to employees and others (such as salaries & wages payable, accounts payable, taxes owned to government)” “working capital like many other accounting terms and financial terms has been used by different people in different senses. School of thought believes that, as all capital resources available to a business organization – from shareholders, bondholders, and creditors (secured and unsecured) works up in the business activities to generate revenues and facilitate future expansion and growth; they are to be considered as ‘working capital’. According to them, the excess of current assets over current liabilities is to be rightly considered as the working capital of a business organization. According to “shubin” working capital is “the amount of funds necessary to cover the cost of operating the enterprise. Working capital in a going concern is a revolving (circulating fund), it consists of cash receipts from sales which are used to cover the cost of current operations. Circulating capital means current assets of the company that are changed in the ordinary course of business from one form to another, as for example from cash to inventories, inventories to receivables and receivables to cash. But, the more common use of working capital is to consider it as the difference between the current assets and the current liabilities”. Working capital, also known as net working capital, is a measurement of a business’s current assets, after subtracting its short-term liabilities, typically short term. Sometimes referred to as operating capital, it is a valuation of the assets that a business or organization has available to manage and build the business. Generally speaking, companies with higher amounts of working capital positioned for success because they have the liquid assets that are essential to expand their business operations when required. Characteristics of working capital working capital is the life blood and nerve centre of a 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. The features of working capital distinguishing it from the fixed capital are as follows: 1 short term needs: working capital is used to acquire current assets which get converted into cash in a short period. In this respect it differs from fixed capital which represents funds locked in long term assets. The duration of the working capital depends on the length of production process, the time that elapses in the sale and the waiting period of the cash receipt. 2 circular movement:Working capital is constantly converted into cash which again turns into working capital. 3 an element of permanency: though working capital is a short term capital, it is required always and forever. As stated before, working capital is necessary to continue the productive activity of the enterprise. Hence so long as production continues, the enterprise will constantly remain in need of working capital. 4 an element of fluctuation: though the requirement of working capital is felt permanently, its requirement fluctuates more widely than that of fixed capital. If need arises, working capital can be converted into cash within a short period and without much loss. A company in need of cash can get it through the conversion of its working capital by insisting on quick recovery of its bills receivable and by expediting sales of its product. It is due to this trait of working capital that the companies with a larger amount of working capital feel more secure. Moreover, working capital gets converted into cash again and again; therefore, it is free from the risk arising out of technological changes. 7 special accounting system not needed: since fixed capital is invested in long term assets, it becomes necessary to adopt various systems of estimating depreciation. On the other hand working capital is invested in short term assets which last for one year only. When a company has more debts than current assets, it has negative working capital; when current assets outweigh debts, a company has positive working capital”. If a company is not operating efficiently, this will show up as an increase in the working capital. This can be judged by comparing the amounts of working capital from one period to another. Advantages proper management of working capital gives a firm the assurance that it is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short term debt and upcoming operational expenses. A declining working-capital ratio over a longer time period could also be a red flag that merits further analysis. For example, it could be that the company’s sales volumes are decreasing and, as a result, its accounts receivable are s influencing working of working g capital is among the many important things that contribute to the success of a business. Not only does a lack of working capital render a company unable to build and grow, but it may also leave a company with too little cash to pay its short-term obligations. Simply put, a company with a very low amount of working capital may be at risk of running out of a company has too little working capital, it can face financial difficulties and may even be forced toward bankruptcy. If late payments have affected the company’s credit rating, it may have difficulty obtaining a loan at an affordable interest need for working capital gross or current assets cannot be over emphasized. There is a need for working capital in the form of current assets to deal with the problem arising out of lack of immediate realization of cash against goods sold. The gross working capital is the capital invested in the total current assets of the enterprises. Marketable working capital “in a narrow sense, the term working capital refers to the net working capital. Net working capital is the excess of current assets over current liability” “net working capital = current assets – current liabilities. Net working capital can be positive or negative constituents of current liabilities current liabilities are considered as liabilities of the business that are to be settled in cash within the fiscal year. The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. The gross concept is sometimes preferred to the concept of working capital for the following reasons: 1. Every management is more interested in total current assets with which it has to operate then the source from where it is made available. It take into consideration of the fact every increase in the funds of the enterprise would increase its working capital. This concept is also useful in determining the rate of return on investments in working capital. It suggests the need of financing a part of working capital requirement out of the permanent sources of funds. Working capital, on the one hand, can be seen as a metric for evaluating a company’s operating liquidity. Comparably high working capital levels may indicate that too much money is tied up in the business. The most important positions for effective working capital management are inventory, accounts receivable, and accounts payable. Classification of working g capital may be classified in to ways: • • on the basis of concept.

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On the basis of the basis of concept working capital can be classified as gross working capital and net working capital. On the basis of time, working capital may be classified as: • • permanent or fixed working capital. The operating cycle is a continuous feature in almost all the going concerns and therefore creates the need for working capital and their efficient management. This minimum amount of current assets, which is required on a continuous and uninterrupted basis, is after referred to as fixed or permanent working capital. This type of working capital should be financed (along with other fixed assets) out of long term funds of the unit. Chart 4-1 permanent working amount of current assets require to meet a firms long term minimum permanent current asset o time permanent working capital the amount of current assets required to meet a firm’s long-term minimum needs are called permanent current assets. Any amount over and above the permanent level of working capital is variable, temporary or fluctuating working capital. This type of working capital is generally financed from short term sources of finance such as bank credit because this amount is not permanently required and is usually paid back during off season or after the contingency. As the name implies, the level of fluctuating working capital keeps on fluctuating depending on the needs of the unit unlike the permanent working capital which remains constant over a period of time. The temporary or variable working capital is the amount of working capital which is required to meet the seasonal demands and some special exigencies. Variable working capital can further be classified as seasonal working capital and special working capital. The capital required to meet the seasonal need of the enterprise is called seasonal working capital. Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing for conducting research, etc. Temporary working capital differs from permanent working capital in the sense that is required for short periods and cannot be permanently employed gainfully in the business. Chart 1-2 temporary working capital amount of current asset required to meet short term minimum ary current assets value permanent working temporary working capital 4. However the total working capital requirements of the firm are influenced by the large number of factors. In general, the determinants of working capital which are common to all organizations can be summarized as under:  nature of is one of the main factors. Usually in trading businesses the working capital needs are higher as most of their investment is concentrated in stock or inventory. Manufacturing businesses also need a good amount of working capital to meet their production requirements. Whereas, those companies that sell services and not goods, on a cash basis require least working capital because there is no requirement on their part to maintain heavy inventories. Size of very small company the working capital requirement is quit high due to high overhead, higher buying and selling cost etc. But if the business start growing after certain limit, the working capital requirements may adversely affect by the increasing size. Credit terms / credit time due to competition or custom, it may be necessary for the company to extend more and more credit to customers, as result which more and more amount is locked up in debtors or bills receivables which increase the working capital requirement. On the other hand, in the case of purchase, if the credit is offered by suppliers of goods and services, a part of working capital requirement may be financed by them, but it is necessary to purchase on cash basis, the working capital requirement will be higher. If terms are: buy on credit and sell by cash, working capital is lower buy on credit and sell on credit, working capital is medium buy on cash and sell on cash, working capital is medium buy on cash and sell on credit, working capital is ling trade practices and changing economic condition do generally exert greater influence on the credit policy of concern. When longer credit period is allowed to debtors as against the one extended to the firm by its creditors, more working capital is needed and vice tion policy is another influencing factor. A stringent collection policy might not only deter away some credit customers, but also force the existing customers to be prompt in settling dues resulting in lower level of working capital. A decentralized collection of dues from customers and centralized payments to suppliers shall reduce the size of working capital. But with centralized collections and decentralized payments, the working capital need would be the highest. Depression period – less business, less production, less working ion period – slackening business, stock pile-up, more working capital. Inflationary conditions generally working capital increases, since with rising prices demand reduces resulting in stock pile-up and consequent increase in working capital. Longer this time period, higher is the volume and value of work-in-progress and hence higher the requirement of working capital and vice versa. System of production capital intensive, high-technology automated system is adopted for production, more investment in fixed assets and less investment in current assets are involved. Also, the conversion time is likely to be lower, resulting in further drop in the level of working capital. On the other hand, if labor intensive technology is adopted, less investment in fixed assets and more investment in current assets which would lead to higher requirement of working capital. Growth and expansion plans growth and expansion industries need more working capital than those that are static. Profitability of the business may be vary in each and every individual case, which is in turn its depend on numerous factors, but high profitability will positively reduce the strain on working capital requirement of the company, because the profits to the extend that they earned in cash may be used to meet the working capital requirement of the company. Operating the business is carried on more efficiently, it can operate in profits which may reduce the strain on working capital; it may ensure proper utilization of existing resources by eliminating the waste and improved coordination etc. Apart from the above factors, dividend policy, depreciation policy, price level changes, operating efficiency and government regulations also influence the level and the size of working of production cycle system of production g capital of the term or credit policy. In that various steps, those are generally adopted by a researcher in studying his problem along with the logic behind collection is important step in any project and success of any project will be largely depend upon now much accurate you will be able to collect and how much time, money and effort will be required to collect that necessary data, this is also important s steps for research project requires a detailed understanding of the concept – “working capital management”. Therefore, firstly we need to have a clear idea of what is working capital, how it is managed in ai llc, what are the different ways in which the financing of working capital is done in the company. Therefore one also needs to have a sound knowledge about cash management, inventory management and receivables management. How the working capital is financed, what are the various sources through which it is done. And, in the end, suggestions and recommendations on ways for better management and control of working capital are provided. These are as follows:– this project will be a learning device for the finance h this project we would study the various methods of the working capital project will be a learning of planning and financing working project would also be an effective tool for credit policies of the will show different methods of holding inventory and dealing with cash and will show the liquidity position of the company and also how do they maintain a particular liquidity position. This research is focusing on working capital management and its effects on profitability for a sample of omani firm. Study of the working capital management is important because unless the working capital is managed effectively, monitored efficiently planed properly and reviewed periodically at regular intervals to remove bottlenecks if any the company can not earn profits and increase its turnover. The main objectives of the studies are: to study the way and means of working capital finance of the company. To establish a relationship between working capital management and profitability over a period of five years of the company.. To find out the effects of different components of working capital management on profitability to establish a relationship between the two objectives of liquidity and profitability of the omani firm. To find out the relationship between debt used by arabian industry llc and its profitability to draw conclusion about relationship of working capital management and profitability of the company. To study the working capital components such as receivables accounts, cash management, inventory is used in study : descriptive analysis. With descriptive statistics you are simply describing what is, what the data ch design step 1 - to study the financial statement of arabian industries llc step 2 – data analysis of working capital through estimation of working capital. The study of working capital is based on tools like trend analysis, ratio analysis, working capital leverage, operating cycle etc.

The trend of last five year may or may not reflect the real working capital position of the company 3) limited area:also it was difficult to collect the data regarding the competitors and their financial information. 5) changes of working capital 6) operating cycle 7) working capital g capital guiding principle for working capital is called the hedging principle or principle of self-liquidating debt or matching principle (different from the matching principle used in measuring accounting profit). Size of working : company ted from audited balance sheet of arabian industries llc 2004 current asset bank balances trade debtors inventory work in progress dues from related parties other receivables total current assets 45,595 2,18 8,348 1 12,639 1,75 8,719 3 49,388 4,45 4,689 current liabilities short-term borrowings current portion of long term loan trade creditors dues to related parties provisions - tax other payables 3 40,867 1 47,493 1,17 1,301 4 49,842 1,21 7,574 1 96,786 2,92 1,799 4 59,404 2,14 2,770 52,319 5,77 3,078 9 00,676 1 84,717 3,01 3,726 2,043 27,422 1,53 3,552 67,900 7,70 2,727 1 60,412 2,77 3,635 2 14,325 7 25,857 11,64 4,857 2,04 9,745 4 98,801 5,15 4,023 23,504 1 82,064 3,48 9,970 5 62,828 12,54 3,178 3 73,118 1,27 5,523 1 91,658 5 12,228 15,45 8,533 1,43 6,567 6,84 0,688 31,073 1 75,183 6,65 2,454 1 43,351 20,19 4,201 5 63,989 1,42 2,625 3 16,956 3 36,700 22,97 7,822 2,01 5,753 1,50 3,569 10,29 3,795 1,49 9,973 4 02,530 6,94 8,035 1,892,3 72 13,437,9 81 724,1 45 2,274,6 90 4,632,7 89 99,2 43 23,061,2 19 553,8 12 2,188,4 46 6,186,8 54 420,9 00 922,4 51 5,588,5 69 2005 2006 2007 2008 current liabilities net working capital - (a-b). In working capital analysis the direction at changes over a period of time is of crucial importance. It is therefore very essential for an annalist to make a study about the trend and direction of working capital over a period of time. Such analysis enables as to study the upward and downward trend in current assets and current liabilities and it’s effect on the working capital position. Emphasizing the importance of working capital trends, man mohan and goyal have pointed out that “analysis of working capital trends provide as base to judge whether the practice and privilege policy of the management with regard to working capital is good enough or an important is to be made in managing the working capital funds. Working capital variance is of variance of working capital years total current assets total current liabilities net working capital - (a-b) w-c variation –in % 2004 4,454,689 3,327,077 1,127,612 100% 2005 5,773,078 5,662,135 110,943 9. Working capital g capital current assets total current lia bilities net working capital - (a-b) w-c v ariation –in %. Working capital is of variance of working capital years total current assets total current liabilities net working capital - (a-b) w-c variation –in % 2004 4,454,689 3,327,077 1,127,612 100% 2005 5,773,078 5,662,135 110,943 9. In the year 2005 compared to e the net working capital was omr 1,127,612/- in 2004 but in 2005 it was reduced to omr 110,943/- in the year 2005 due to the increase in current liability of 70% compared to 2004. In the year position of working capital is very good in 2009 because the bank balance in 2008 was only 143,351/- omr where as in 2009 it is increased to omr 1,892,372/-; ie. The bank balance is increased to omr 1,892,372/- in 2009 from omr 143,351/- in the year shows that management is using only it’s own fund for the short term requirements and wc has been increased 7,200,186/- in the year 2009-a growth of 638. The increase in working capital is a clear indication that the company is utilizing its own funds and resources with efficiency. Variance analysis of current asset and current ation of working current assets yearly variation growt compared to 2004 yearly growth in %. Current liabilities yearly variation growth compared to 2004 yearly growth in % net working capital - (a-b) working capital size total current assets variation compared to 2004 total current liabilities variation compared to 2004. Urr nt e asse t inde ition of current is of current assets components enable one to examine in which components the working capital fund has locked. These shows that the a good cash collection from receivables in 2009 which shows a good working capital reserve of omr 6,845,509/- which used to pay back the current liabilities of sundry creditors, other payables and due to related ed to 2008 in 2009 the bank balance also increased to omr 1,917,381/-from omr 145,245/in the year 2008. Current assets components show sundry debtors are the major part in current assets it indicates that the efficiency in collection management. Current liabilities as a total are information that is used as one measure of the financial condition of a company, especially in association with current assets to calculate the level of working 6. To get maximum credit from supplier which is profitable to the company it reduces the need of working capital of firm. But due to the good collection process the change in working capital is not affected much and the company enjoyed good credit terms over creditors which may include indirect cost of credit terms. From the graph we can see that the requirementof working capital has been increased drastically during the year 2006-2007-2008and it has been paid and cleared n 2009, and still the firm is having a good reserve in it’s working capital. Changes in working capital the excess of current assets over current liabilities is referred to as the company’s working capital. The difference between the working capital for two given reporting periods is called the change in working capital. Benefit changes in working capital is included in cash flow from operations because companies typically increase and decrease their current assets and current liabilities to fund their ongoing operations. Changes in working capital simply shows the net affect on cash flows of this adding and subtracting from current assets and current liabilities. When changes in working capital is negative, the company is investing heavily in its current assets, or else drastically reducing its current liabilities. When a change in working capital is positive, the company is either selling off current assets or else raising its current liabilities. 3 for the processing: for many growing companies, changes in working capital is a little like capital spending: it’s money the company is investing—in things like inventory—in order to grow. To get a true picture of the cash a company is generating before investment, one can add back changes in working capital to cash flow from operations. Another point: a negative value for changes in working capital could mean the company is investing heavily in growth, or that something’s gone wrong. If a company is having trouble selling its goods, inventories will balloon, and changes in working capital will turn sharply negative. B) cyclical changes in economy dealing to ups and downs in business activity will influence the level of working capital both permanent and temporary. Policy changes:the second major case of changes in the level of working capital is because of policy changes initiated by management. Technology changes:the third major point if changes in working capital are changes in technology because change sin technology to install that technology in our business more working capital is required a change in operating expanses rise or full will have similar effects on the levels of working following working capital statement is prepared on the base of balance sheet of last two year. Net change in working capital is the difference in working capital levels from one year to the next. When more cash is tied up in working capital than the previous year, the increase in working capital is treated as a cost against free cash flow” . Table 6-8-changes in working s in working capital 2008 current asset - a bank balances / deposits trade debtors (net of provisions) inventory work in progress dues from related parties other receivables total current assets-a 145,2 45. Current liabilities - b short-term borrowings current portion of long term debt trade creditors dues to related parties provisions - tax other payables total current liabilities-b net working capital - (a-b) net increase in wc 2,042,3 93. 00 00 ,0 ,0 6 00 00 ,0 ,0 5 00 00 ,0 ,0 4 00 00 ,0 ,0 3 00 00 ,0 ,0 2 00 00 ,0 ,0 1 00 00 ,0 ,0 2 0 0 s ar dc e e e r as in r as ce g capital has been increased in the year 2008 to 2009 because: trade receivables in the year 2008, for omr 20,461085/- has been reduced to omr. This leads to show a good performance and result in it’s working ing cycle or working g capital is also known as revolving capital and a circular path of conversion/recon version takes place. This revolution of cycle is called as the operating cycle available cash tends to be tied up in what is known as the working capital cycle (wcc). The need of working capital arrived because of time gap between production of goods and their actual realization after sale. It will demonstrate the importance on the efficient operation of the working capital cycle, how to improve debtor collection and stock turnover to help increase cash holdings and reduce the overdraft , the term operating cycle, otherwise called as cash cycle refers to the length of time necessary to complete the following cycle of events: 1 2 3 conversion of cash into inventory conversion of inventory into debtors conversion of debtors into 1: cash to inventory – in this stage, cash first gets converted into raw materials, then work-in progress and then finished goods in a typical manufacturing concern. Stage 3: debtors to cash -the debtors or accounts receivables get in turn converted back into cash when they make raw materials remain in store pending issue for production for a less duration, when raw materials gets converted into wip in a short duration, when finished goods remain in warehouse pending for sales for a short duration only, and when cash realizations out of sales are made quickly and finally when payment to creditors is made slowly, the operating cycle would be smaller and consequently the working capital will also be reasonable. Operating cycle is an important concept in management of cash and management of cash working capital. Quicker the operating cycle less amount of investment in working capital is needed and it improves profitability. The duration of the operating cycle depends on nature of industries and efficiency in working capital ing to this approach, the requirements of working capital depend upon the operating cycle of the business. Operating cycle of the ai llc vary year to year as changes in policy of management about credit policy and operating control. The duration of the operating cycle for the purpose of estimating working capital requirements is equivalent to the sum of the durations of each of these stages less the credit period allowed by the suppliers of the firm. The total expenditure in the year when year when divided by the number of operating cycles in a year will give the average amount of the working capital ing cycle/working the firmcollect receivables (debtors) faster  collect receivables (debtors) slower  get better credit (in terms of duration or amount) from suppliers  shift inventory (stocks) faster  move inventory (stocks) slower cash conversion cycle or net operating the firm willrelease cash from the cycle receivables soak up cash increase the cash resources free up cash consume more ing cycle and cash cycle are two important components of working capital er they determine the efficiency of a firm regarding working capital management. Operating cycle of ai llc shows the numbers of day are decreasing in recent year it is reflect the efficiency of management. L leverage or gearing finance, leverage (also known as gearing or levering) refers to the use of debt capital to supplement equity capital.

Companies usually leverage to attempt to increase returns on equity capital, as it can increase the scope for gains or losses. In macroeconomics, a key measure of leverage is the debt to gdp of the important objectives of working capital management is by maintaining the optimum level of investment in current assets and by reducing the level of investment in current assets and by reducing the level of current liabilities the company can minimize the investment in the working capital thereby improvement in return on capital employed is achieved. The term working capital leverage refers to the impact of level of working capital on company’s profitability. The working capital management should improve the productivity of investment in current assets and ultimately it will increase the return on capital employed. Higher level of investment in current assets than is actually required means increase in the cost of interest charges on short term loans and working capital finance raised from banks etc. Working capital leverage measures the responsiveness of roce (return on capital employed) for changes in current assets. It is measures by applying the following formula,The working capital leverage reflects the sensitivity of return on capital employed to changes in level of current assets. Working capital leverage would be less in the case of capital intensive capital employed is same working capital leverage expresses the relation of efficiency of working capital management with the profitability of the g capital leverage = % changes in roce / % changes in current assets. 20 06 20 07 ya s er 20 08 20 g capital leverage of the company has decreased in the year 2009 as compare to the year 2006, and increase in working capital shows the efficient current assets management. Ratio analysis is one of the best possible techniques available to management to impart the basic functions like planning and control. As future is closely related to the immediately past, ratio calculated on the basis historical financial data may be of good assistance to predict the future, the ratio analysis may be able to locate the point out the various arias which need the management attention in order to improve the situation. Liquidity ratios, leverage ratios, operating ratios, and profitability working capital g capital ratio means ratios which are related with the working capital management e. 2 ratios compounded under this group indicate the short term position of the organization and also indicate the efficiency with which the working capital is being used. 1 efficiency l turnover signifies that for an amount of sales, a relative amount of working capital is needed. If any increase in sales contemplated working capital should be adequate and thus this ratio helps management to maintain the adequate level of working capital. The ratio measures the efficiency with which the working capital is being used by a firm. Working capital turnover ratio = sales / net working capital this ratio maker a comparison between net sales and net working capital in order to find the working capital turnover ratio the working capital turnover ratio for the year 2004-2009. We can see an increase in working capital turnover ratio for the next 5 year has increased in a gradual way in the last year the net sales has been increased and the working capital in being similarly that of previous year hence the working that of previous year hence the working that capital turnover ratio is 27. 16000000 14000000 wc turnover 12000000 10000000 8000000 6000000 4000000 2000000 0 2004 2005 2006 years 2007 2008 turn over ratio net working capital net sales ations high working capital ratio indicates the capability of the organization to achieve maximum sales with the minimum investment in working capital. Company’s working capital ratio shows mostly more than two, except for the year 2005-06 because of excess of cash balance in current assets which occurred due to encashment of deposits. In the year 2004 and 2008 the ratio was above 3, it indicates that the capability of the company to achieve maximum sales with the minimum investment in working capital. That means after clearing all bills payables, still ai llc is having a good working capital reserve. It is a sign of ineffective inventory management because inventory usually has a zero rate of return and high storage cost. If the value of the inventoryturnover ratio is low, then it indicates that the management team doesn't do its job properly in managing inventories. Generally the higher the value of debtor’s turnover, the more is the management of credit. It concludes that over investment in the debtors which adversely affect on requirement of the working capital finance and cost of such finance. The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. An analysis of this ratio over a period of time reflects working capital management of a firm. The components of current ratio (current assets and current liabilities) can be used to derive working capital (difference between current assets and current liabilities). Working capital is frequently used to derive the working capital ratio, which is working capital as a ratio of sales. On the other hand, if a company is able to operate with a low current ratio, it means that the company is more efficient about using its capital. 40 cash for every 1 rupee of expenses; such a policy is called conservative policy of finance for working capital, rs. Introduction 2) receivables management 3) inventory management 4) cash management 5) working capital finance and estimation 6) source of working capital 7) estimation of working ons relating to working capital and short term financing are referred to as working capital management. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the current assets (generally cash and cash equivalents, inventories and debtors) and the short term financing, such that cash flows and returns are s management. Credit terms which t customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence return on capital (or vice versa); see discounts and management. Identify the cash balance which allows for the business to meet day expenses, but reduces cash holding ory management. Identify the level of inventory which allows for tion but reduces the investment in raw materials - and minimizes reordering costs - and hence increases cash flow; see supply chain management; just in time (jit); economic order quantity (eoq); economic production term financing. Receivables management receivables or debtors are the one of the most important parts of the current assets which is created if the company sells the finished goods to the customer but not receive the cash for the same immediately. However extension of credit involves risk and cost, management should weigh the benefit as well as cost to determine the goal of receivable management. Thus the objective of receivable management is to promote sales and profit until that point is reached where the return on investment in further funding of receivables is less . All the above factors directly or indirectly affects in the debtors turnover ratio, current ratio and working capital ratio. For effective management of credit, the firm should lay down clear cut guidelines and procedure for granting credit to ers and collecting individual accounts should involve following steps: (1) credit information (2) credit investigation (3) credit limits (4) collection procedure. Inventory management inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Inventory management involves a retailer seeking to acquire and maintain a ndise assortment while ordering, shipping, handling, and related costs are kept in check. Systems and processes that identify inventory requirements, set targets, provide ques and report actual and projected inventory s all functions related to the tracking and management of material. Management of the inventories, with the primary objective of determining/controlling within the physical distribution function to balance the need for product availability against the need for minimizing stock holding and handling costs the term ‘inventory’ is used to designate the aggregate of those items of tangible assets which are:1) finished goods (‘saleable’) 2) work-in-progress (‘convertible’) 3) material and supplies (‘consumable’) in financial view, inventory defined as the sum of the value of raw material and supplies, including spares, semi-processed material or work in progress and finished goods. It implies that while the management should try to pursue financial objective of turning inventory as quickly as possible, it should at the same time ensure sufficient inventories to satisfy production and sales demand. The objectives of inventory management consist of two counterbalancing parts: to minimize the firms investment in inventory to meet a demand for the product by efficiently organizing the firms production and ion. This two conflicting objective of inventory management can also be expressed in term of cost and benefits associated with inventory. Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs are kept in check. Operating cash flow (internal) operating cash flow, often referred to as working capital, is the cash flow generated from internal operations.

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A new loan, the repayment of a loan, the issuance of stock and the payment of dividend are some of the activities that would be included in this section of the cash flow management means:Knowing when, where, and how your cash needs will occur, knowing what the best sources are for meeting additional cash needs; and, being prepared to meet these needs when they occur, by keeping good relationships with bankers and other creditors. Daily cash, and long-term (annual, 3-5 year) cash flow projections to help firms to develop the necessary capital strategy to meet their business needs. A sufficient of cash can keep an unsuccessful firm going despite losses an efficient cash management through a relevant and timely cash budget may enable a firm optimum working capital and ease the strains of cash shortage, fascinating temporary investment of cash and providing funds normal management involves balance sheet changes and other cash flow that do not appear profit and loss account such as capital expenditure. The cycle is composed of the three main working capital components: accounts receivable outstanding in days (aro), accounts payable outstanding in days (apo) and inventory in days (iod). It is also a powerful tool for assessing how well a company ng its working capital. Cash conversion conversion cycle e collection of inventory holding 100 115 106 170 85 7011867 55 78 44 cash convertion ors payment size of the cash in the current assets of the company indicates the good cash management of the company. After the study of cash management it mentioned above it can be conclude that management of cash involve three things: a) managing cash flow into and out of the firm. The high portion of cash balance in the current assets it adversely affected on profitability of the company as cash is ideal asset; it reduced the working capital leverage. Working capital finance introduction corporate finance is an area of finance dealing with financial decisions business enterprises make and the tools and analysis used to make these decisions. Capital investment decisions are long-term choices about which projects receive investment, whether to finance that investment with equity or debt, and when or whether to pay dividends to shareholders. On the other hand, the short term decisions can be grouped under the heading "working capital management". The typical role of an investment bank is to evaluate the company's financial needs and raise the appropriate type of capital that best fits those needs. After determine the level of working capital, a firm has to consider how it will finance. It can be viewed as an essential element of capitalization in an operating business because it can reduce the required capital investment required to operate the business if it is managed properly. Trade credit is the largest use of capital for a majority of business to business (b2b) sellers in most of the countries, and is a critical source of capital for a majority of all businesses. After trade credit, bank credit is the most important source of financing working capital in india. A banks considers a firms sales and production plane and desirable levels of current assets in determining its working capital requirements. The amount approved by bank for the firm’s working capital is called credit limit. 2) term the four prior debt instruments address cyclical working capital needs, term loans can finance medium-term no cyclical working capital. 200,000 1,000,000 800,000 600,000 400,000 200,000 2004 2005 ations arabian industries llc, takes only very low working capital loan to fulfill the requirement of working capital, thus company saved a lot from paying interest, on working capital loan. Estimation of working considering the various factors affecting the working capital needs, it is necessary to forecast the working capital requirements. Difference between the estimated current assets and estimated current liabilities will represent the working capital requirements. The estimation of working capital requirement of arabian industries llc is based on few assumptions such as follows. Current asset -a bank balance trade debtors inventory work in progress due from related parties other receivable total current assets 199 ,387 2,960 ,413 465 ,475 2,171 ,088 53 ,010 5,849 ,374 current liabilities - b short term loan current portion of term loan trade creditors due to related parties provision for tax other payables total current liabilities net working capital - (a-b) 912 ,579 187 ,158 3,053 ,555 2 ,070 27 ,784 1,553 ,819 5,736 ,965 112 ,409 68, 798 7,804, 526 162, 532 2,810, 291 217, 158 735, 450 11,798, 754 2,076, 834 505, 393 5,222, 137 23, 814 184, 470 3,536, 092 11,548, 742 250, 012 570, 267 12,708, 947 378, 049 1,292, 380 194, 191 518, 997 15,662, 831 1,455, 553 6,931, 094 31, 484 177, 498 6,740, 372 15,336, 000 326, 831 145, 245 20,461, 085 571, 443 1,441, 426 321, 144 341, 150 23,281, 494 2,042, 393 1,523, 440 10,429, 836 1,519, 796 407, 850 7,039, 860 22,963, 175 318, 319 1,917, 381 13,615, 576 733, 715 2,304, 752 4,694, 015 100, 555 23,365, 993 561, 131 2,217, 368 6,268, 619 426, 463 934, 642 5,662, 426 16,070, 649 7,295, 345 383 ,476 2,723 ,115 146 ,743 460 ,950 938 ,803 20 ,111 112 ,226 443 ,474 1,253 ,724 85 ,293 186 ,928 1,132 ,485 2,300,857 16,338,691 880,458 2,765,702 5,632,818 120,666 28,039,192 673,357 2,660,841 7,522,343 511,755 1,121,570 6,794,912 19,284,778 8,754,414 2006 2007 2008 2009 20% 8-10-estimation of the working capital for the year 2010 for ai llc. Chart 8-10-estimation of the working capital for the year 2010 for ai tion of working capital for 2010 30,000,000. In the year 2006 and 2008, term loan from bank was the major source of finance, but it reduced by 250% in the subsequent year, which shows the paying capacity due to the efficient financial management and also it ndicate that company changed the finance policy to get benefit sources like term credit (export package credit) which is not directly affect on cost of finance. Company mainly used term loan and letter of credit for the working capital requirement and clearing the debt for import within the year itself. For working capital finance company use cash credit facility provided by scheduled banks and national banks. Company required such huge amount for working capital finance because liquidity of the company locked in debtors. Company has receivable but not liquidity to payment of creditors thus company took cash credit and credit term, which increased the interest on working capital finance by around 126% from year 2006 compared to 2005, but in 2007 it become 126% and it reduced to 38. Cash management of the company is more efficient and conservative thus company carry huge amount in terms of liquid assets. The study of working capital management of arabian industries llc, has revealed that the current ratio was as per the standard industrial practice but the liquidity position of the company showed an increasing trend. The study has been conducted on working capital ratio analysis, working capital leverage, working capital components which helped the company to manage its working capital efficiency and affectively. Positive working capital indicates that company has the ability of payments of short terms liabilities. Working capital increased because of increment in the current assets is more than increase in the current liabilities. Current assets components shows sundry debtors were the major part in current assets it shows that the efficient receivables collection management. In the year 2009 working capital decreased because of increased the expenses as manufacturing expenses and increase the price of raw material as increased in the inflation rate. Study of the cash management of the company shows that company have a good control on cash management in the year 2009, where cash came from receivables and short term funds. When comparing working capital is compared with net sales it is in increasing trend indicating the effective utilization of the net working capital. The decrease in figures of sources and applications from the year 20004- to the year 20009 makes at clear that the company is doing activity increasing or standardizing of its g capital is the lifeline of every industry, irrespective of whether it’s a manufacturing industry, services industry. Working capital is the prime and most important requirement for carrying out the day to day operations of the business. Working capital finance reduces the overall fund requirement, required to build up the current assets, which in turn help you improve your turn over company is performing exceptionally well due to the up wising in the global market followed by the domestic market. The company being mostly dependent on the working capital facilities, it is maintaining very good relationship with their banks and their working capital management is well balanced. The working capital position of the company is sound and the various sources through is funded are optimal. The returns have been affected by a marked growth in working capital and 2009 return ment is good, but it got reduced as compared to 2008. The various ratios calculated are an indicator as to the fact that the profitability of the firm are on a rise and also the deletion of the inefficiencies in the working capital management. Tions can be use by the firm for the betterment increased of the firm after study and analysis of project report on study and analysis of working capital. The current assets should be managed more effectively so as to avoid unnecessary blocking of capital that could be used for other purposes. It was an opportunity to learn about inventory management at the same time problems faced by the company. There we could learn how to interpret working capital and ratio analysis with the help of guidance given by the finance manager. 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