...MANAGEMENT OF WORKING CAPITAL 1. Meaning and Types of Finance: Finance - Finance is the Art & Science of Managing Money - Finance is the Art of passing currency from hand to hand until it finally disappears Types & Sources of Finance ____________________________________________________________ ________ Long Term Sources of Finance - Finance required to meet Capital Expenditure - Also, known as Fixed Capital Finance Short Term Sources of Finance - Finance required to meet day-to-day Business requirements - Also, known as Working Capital Finance 2. Working Capital Management: Working Capital (WC) ____________________________________________________________ ____________________________ Basics regarding WC Meaning of WC Working Capital Concept Factors Affecting WC Meaning of WC Management Importance of WC Management Classification/Type of WC A On the Basis of Concept (i) (ii) Gross Working Capital Net Working Capital (Positive & Negative Working Capital) Methods of estimating WC Conventional Method Operating Cycle Method Cash Cost Method Balance Sheet Method B On the Basis of Periodicity (i) (ii) Fixed / Permanent Working Capital (Regular & Reserve Margin/ Cushion WC) Variable Working Capital (Seasonal & Special Working Capital) Parag Nalin Doshi 1/12/2009 www.CAalley.com Meaning of Working Capital: - Working Capital is the amount of Capital that a Business has available to meet the day-to-day cash requirements of its operations - Working...
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...MANAGEMENT OF WORKING CAPITAL 1. Meaning and Types of Finance: Finance - Finance is the Art & Science of Managing Money - Finance is the Art of passing currency from hand to hand until it finally disappears Types & Sources of Finance ____________________________________________________________________ Long Term Sources of Finance Short Term Sources of Finance - Finance required to meet Capital Expenditure - Also, known as Fixed Capital Finance - Finance required to meet day-to-day Business requirements - Also, known as Working Capital Finance 2. Working Capital Management: Working Capital (WC) ________________________________________________________________________________________ Basics regarding WC - Meaning of WC Working Capital Concept Factors Affecting WC Meaning of WC Management Importance of WC Management Classification/Type of WC A On the Basis of Concept (i) (ii) Gross Working Capital Net Working Capital (Positive & Negative Working Capital) Methods of estimating WC - Conventional Method Operating Cycle Method Cash Cost Method Balance Sheet Method B On the Basis of Periodicity (i) Fixed / Permanent Working Capital (Regular & Reserve Margin/ Cushion WC) (ii) Variable Working Capital (Seasonal & Special Working Capital) Parag Nalin Doshi 1/12/2009 www.CAalley.com Meaning of Working Capital: - Working Capital is the amount of Capital that a Business has available to meet the day-to-day cash...
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...Inventory of Assets Introduction Inventory of assets is the accounting of information technology and systems, both hardware and software, that is necessary for maintaining a stable and accurate support in order to provide information security and assurance, disaster recovery, as well as to avoid service interruption. In any organization, it is important to have an organized list of all assets including hardware and software, as well as licensing. Company-issued laptops, smartphones, tablets, and other mobile devices can be an easy target of cyber attackers. It is ideal to have an organized way of keeping track of company assets (i.e. spreadsheets or database). Quick references such as spreadsheets/workbooks or databases can easily provide reports of asset inventory containing type of equipment, count, value, asset tag information, software license number, license expiration, employee ID to whom assets are issued to, etc. As an employee of any company or organization, the company issued laptops, devices and other peripherals should be the responsibility of the employee that the item(s) is issued to. A stolen laptop could cause the company a huge amount because it does not only require the replacement cost, but has serious security concerns involved. According to Mitnick and Simon, “Even when security is being well handled within a company, there is too often a tendency to overlook the corporate network, leaving an opening that attacker(s) can take advantage of. Laptops and...
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...Financial Management for NPO I. Introduction “Ten years ago, management was still a dirty word for those involved in nonprofit organizations. Nonprofits prided themselves on being free of the taint of commercialism and above such sordid considerations as the bottom line… Today, nonprofit organizations have learned that they need management and leadership even more than business does…” (Montana and Petit, 2009) The years when “management” was a prohibited word in nonprofit organizations are long gone. Nowadays, nonprofit leaders are starting to realize what an essential role financial management plays in NPOs. Moreover, as the number of nonprofit organizations around the world keeps rising, more nonprofit leaders and managers have aimed to develop their skills in financial management. As a matter of fact, the nonprofit sector is one of the fastest-growing sectors around the world: just in the United States there are 1.5 million nonprofit organizations and growing, employing one in 10 American employees. In this paper, we will look at: 1) the financial management process, 2) the importance of financial management for nonprofit organizations, 3) financial management for nonprofits organizations. II. What is Financial Management? One of the most accepted definitions of financial management was given by Kuchal, stating that “Financial Management deals with procurement of funds and their effective utilization in the business” (as cited in Paramasivan & Subramanian...
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...stock or acquire it through benefits. (Shareholder Rights When investors buy shares of a company’s stock, they acquire ownership rights to the organization. However, shareholder ownership rights are usually limited. A corporation’s bylaws outline the specific rights of shareholders. In most cases, shareholders acquire rights to vote in members of a corporation’s board of directors, and to vote on certain issues that impact the organization. The voting power of shareholders is dependent on the number of individual shares owned. Shareholders possess certain rights to a company’s assets and dividends. If a company goes bankrupt, a bankruptcy court may award shareholders the rights to receive money from the liquidation of the company’s assets. Importance of Shareholders Companies depend on shareholders to buy their stocks to raise money for growth, research, development and marketing. The importance of shareholders to a business causes some managers to cater to the desires of shareholders without considering how they affect employees. In some cases, shareholders can pressure firm directors by refusing to reelect them, effectively excluding employee interests. Shareholders who exercise their power are usually institutional...
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...Human resource accounting Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the use of people in an organization. Historical cost approach This approach is developed by Brummet, Flamholtz and Pyle but the first attempt towards employee valuation made by R. G. Barry Corporation of Columbus, Ohio in the year 1967. This method measures the organization’s investment in employees using the five parameters: recruiting, acquisition; formal training and, familiarization; informal training, Informal familiarization; experience; and development. The costs were amortized over the expected working lives of individuals and unamortized costs (for example, when an individual left the firm) were written off. Limitations * The valuation method is based on false assumption that the dollar is stable. * Since the assets cannot be sold there is no independent check of valuation. * This method measures only the costs to the organization but ignores completely any measure of the value of the employee to the organization (Cascio 3). Replacement Cost approach This approach measures the cost of replacing an employee. According to Likert (1985) replacement cost include recruitment, selection, compensation, and training cost (including the income foregone during the training period). The data derived from this method could be useful in deciding whether to dismiss or replace the staff. Limitations * Substitution of replacement...
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...of compensation plans, e.g., employee profit sharing. Non profit making organisation: A non profit organization exists to provide a particular service to the community. The word "non profit" refers to a type of business one which is organized under rules that forbid the distribution of profits to owners. "Profit" in this context is a relatively technical accounting term, related to but not identical with the notion of a surplus of revenues over expenditures. The main aim of these organisations is helping the community and is concerned with money only as much as necessary to keep the organisation operating. TREASURY MANAGEMENT. Treasury management (or treasury operations) includes management of an enterprise's holdings, with the ultimate goal of maximizing the firm's liquidity and mitigating its operational, financial and reputational risk. Treasury Management includes a firm's collections, disbursements, concentration, investment and funding activities. In larger firms,...
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...010914 Webinar Risk Management-Assessing Risks Thank you for standing by. At this time all lines are in a “listen only” mode. Today’s call is being recorded; if you have any objections you may disconnect. I would now like to turn the call over to Danny Jennings. Thank you sir you may begin. Danny: Alright thank you ma’am. Before we get started, please be aware that the video portion of this webinar is being recorded. Once we receive the red light to begin, we will. And they’re telling me that we can go ahead and get started right now. Good Afternoon! My name is Danny Jennings; I am the Physical & General Security Curriculum Manager here at CDSE and I will be your host for today’s webinar. First, I want to thank you for taking time out of your busy schedules to join us today. As a Curriculum Manager, some of my responsibilities include Curriculum Development, Course Instruction, and Course Review. The topic for today’s webinar is Risk Management-Assessing Risks. My producers for today are Rachel Mojo and Roy Ringrose. At this time, Rachel will provide you some instructions on how to navigate the webinar room. Rachel! Rachel: Thank you Danny! If you take a look at your screen in the lower left hand corner, you will find a notes box. This gives you the call-in number and other announcements as necessary. It will be on the screen for the duration of the webinar. Over on the right, there’s a Q&A box. If you have any questions or comments please enter them in this box. Your phones...
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...Question-1: What is finance? Ans: Finance is the life blood of every corporation. In the era of modern trade and commerce, business firm have to decide from where they will raise fund, where they will invest and how much of the profit will be distributed among the shareholders. “Finance” Came from Latin word “finis” means “dealing with the money”.finace is called the art and science of managing money. At the micro level, finance is the study of financial planning, asset management and fund raising for business and financial institutions. At the macro level, finance is the study of financial institution and financial markets and how they operate within the financial systems in both the domestic and global economics. Scholar’s view: “Finance consists of providing and utilizing the money, capital rights, credit and funds of any kind which are employed in the operation of an enterprise.” _George R Terry “Finance is concerned with the process, institutionsmarkets and instruments involved in the transfer of money among and between individuals, business and governments”. _Lawrence J Gitman From the above discussion, it can be said that finance is the process of financial planning, identification of sources of fund raising, investment of fund, protection of fund, distribution...
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...MARKET SCOPE Asset performance management Addressing the root cause A properly and adequately designed asset performance management framework can bring a cohesive approach to manage assets, monitor equipment health, and ensure the compliance of critical operational & business processes. Such a framework has to leverage the established asset management capabilities provided by the best-in-class systems. Courtesy: PCM Ltd n the 1980s, the world was awakened by two major disasters that signified the vitality of engineering assets and the importance to manage their performance. The first event was a lethal methyl isocyanate (MIC) leak in Bhopal on December 2, 1984, and the second the catastrophic Chernobyl nuclear disaster on April 26, 1986. Over 20,000 were killed, and half a million victims maimed, disabled or otherwise affected in the Bhopal gas tragedy. Criminal cases were filed against the then corporate Chairman. In the Chernobyl reactor, the accident happened because of a combination of basic engineering deficiencies in the reactor and faulty actions of the operators (as per UN Chernobyl Forum report, the safety systems had been switched off, and the reactor was being operated under improper, unstable conditions, a situation which allowed an uncontrollable power surge to occur). More than 20 years have passed since the tragedy occurred, and it is difficult to tell precisely the number of deaths – past and future – attributable to the Chernobyl accident. Since the...
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...There are many reasons why minimizing working capital is important. With its importance, though, there are many challenges. The most important reason to minimize working capital is to maximize shareholder wealth. Nicholas Havoutis states, “Proactive working capital management is fundamental to a company’s ability to adapt in a challenging economy, because it’s a discipline firmly within an organization’s control that can be practiced independent of the current macroeconomic environment,” (2003). He goes on to say, “Cash management activities, once seen as managing cash inflows and outflows, are increasingly viewed as fundamental to enhancing shareholder value,” (2003). Another importance of minimizing working capital is “to ensure that the organization is able to find the difference between short-term assets and short-term liabilities,” (Capital Eyes). When minimizing working capital we are basically managing short-term assets and liabilities. This means cash, receivables, and payables. Successful cash management means increasing cash surplus to cover debt. There are three ways a company can increase their cash surplus in an effort to cover their debt. First, collect receivables faster. Second, get better credit terms from suppliers. Third, move inventory faster, (Capcut). “Good capital management practices can lead to the optimal management of short-term assets and the efficient use of working capital,” says Havoutis (2003). Melissa...
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...FINANCIAL ANALYSIS AND WORKING CAPITAL MANAGEMENT TECHNIQUES USED BY SMALL MANUFACTURERS: SURVEY AND ANALYSIS Morris Lamberson, University of Central Arkansas ABSTRACT This article summarized the responses of 103 small manufacturers to a mail questionnaire survey sent to the chief financial officer of 477 firms located in the southern region of the U.S. The major thrust of the paper was to provide insight into the importance of and utilization of financial analysis and working capital management concepts by small manufacturers. Findings from the study suggest that respondents considered financial analysis and working capital management to be important and most firms were heavy users of these concepts. While the findings were encouraging, a significant percentage of the small firms expressed little or no usage of the concepts. Academicians need to continue efforts to communicate to practitioners of the potential benefits of applying these financial management concepts. INTRODUCTION A frequent concern, expressed by those who develop collegiate finance curricula, is whether or not the financial concepts normally taught in undergraduate finance courses are actually utilized in the business world. While we recognize the fact that a gap will always exist between what is taught in the classroom and what is practiced in the business world, academicians have a responsibility to both students and financial managers to help bridge the gap between theory and practice. This concern over real...
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...Title: The analysis of Profitability and Liquidity management of Bangladesh Steel Re-Rolling Mills Limited. (The Comparative Ratio analysis of the Financial Statement between 2011 and 2012). Abstract: Liquidity and its management determines to a great extent the growth and profitability of a firm. This is because either inadequate liquidity or excess liquidity may be injurious to the smooth operations of the organization. This seeming controversy has attracted a lot of interest in the subject of liquidity management. The present study aims to reveal the Comparative analysis of liquidity and profitability of Bangladesh Steel Re-Rolling Mills Limited so that the company has to maintain this relationship while in conducting day to day operations. The results show that there is a significant impact of only liquid ratio on ROA while insignificant on ROE and EPS; the results also show that ROE is no significant effected by three ratios current ratio, quick ratio and liquid ratio while EPS is greatly affected by current ratios, quick ratios and liquid ratio. The main results of the study demonstrate that each ratio has a significant effect on the financial positions of enterprise with differing amounts and that along with the liquidity ratios in the first place. Profitability ratios also play an important role in the financial positions of enterprises. Every stakeholder has interest in the liquidity position of a company. Suppliers of goods will check the liquidity of the company...
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...MORALE By Melissa P. Abbey EM 290D DIRECTED STUDEY IN MANAGEMENT Submitted To Professor Donovan A. McFarlane, D.B.A. FREDERICK TAYLOR UNIVERSITY Moraga, California September 25, 2013 Abstract This report explores the aspects and importance of effective internal controls and how to maintain positive employee morale while developing and implementing organizational processes. The author explores various concepts and components of internal controls and the relationship of implementing effective controls while maintaining positive employee morale. Using a variety of resources including academic journals and electronic resources-informational sites, the author outlines standard components for developing effective internal controls and strategies for implementation in order to maintain positive employee morale. Keywords: Internal Controls, risk management, policies and procedures, organizational structure and culture, roles and responsibilities communication, collaboration, risk assessment, monitoring. Introduction All Organizations, no matter the size should have some type of internal controls in place. Although broad in scope, internal controls are intended to prevent companies from securing financial risk or wrongdoing and increase the chances of success while obtaining a specific objective; any business that does not implement and monitor internal controls is surely at risk. On the other hand, risk management is about dealing with the possible and actual risks to...
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...Introduction Financial statements are the key elements of business performance and health, and very related to accounting which is the back bone of any successful company. In this paper I will cover the three financial statements and the difference between each one of them, as well as which one is of most interest to investors, creditors, and management. The four statements are balance sheet, income statement, earning statement, and the statement of cash flow. A brief description of each statement will be provided according to its importance and use. The Balance Sheet Known as the most critical statement because it simply exposes what the business owns and owes. In other words the company’s points of power and weakness. It also shows the difference between the two which is known as the owners interest. What the company owns is called assets, and assets includes properties, lands, vehicles, inventory items, basically anything touchable including cash money. The balance sheet is organized similar to the equation: Assets = Liabilities + Shareholder’s equity, where assets are on the left of the sheet and liabilities on the right as well as shareholder’s equity (Walther, 2011). Balance sheet normally reflects a period of time and by the end of the reporting period owners are educated on what they own and owe. Liabilities on this sheet show current and long-term as they are listed based on due dates (Cagan, 2006). The Income Statement The elements of Income statement is revenue...
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