Working Capital Management

Syllabus

MBAT 314: Working Capital Management

Unit 1

Concept and Meaning of Working Capital – Liquidity and Profitability – Identification of Factors Affecting Working Capital Requirements – Theories of Working Capital

Unit 2

Approaches to Estimation of Working Capital – Operating Cycle Approach.

Management of Inventories – Determination of Optimum Inventory – Lead Time – Safety Stock – EOQ Approach

Unit 3

Management of Receivables – Credit and Collection Policy – Credit Standards – Credit Terms – Credit Analysis – Management of Payables – Maturity Matching.

Unit 4

Management of Cash – Accelerating Cash Inflows – Managing Collections – Concentration Banking – Lock Box System – Control of Disbursements – Models for Determining Optimum Level of Cash – Inventory Model, Stochastic – Cash Budgeting – Investment of Surplus Cash.

Sources of Working Capital Finance – Approaches to Optimum Mix of Funds – Trade Credit, Accrual Accounts – Money Market Instruments, Commercial Paper, Certificate of Deposits – Bill Discounting and Factoring – Inter Corporate Loans – Short Term Bank Loans.