Aluminium Industries Case Study

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Aluminium Companies in India • Hindalco • Hindustan Zinc • Jindal Stainless • Kennametal India • Nalco • Malco • Ratnamani Metals • Sujana Metal Products WORKING CAPITAL MANAGEMENT “More business fails for lack of cash than for want of profit” .Proficient administration of working capital is one of the preconditions for the accomplishment of a venture. Productive administration of working capital means administration of different parts of working capital in such a path, to the point that a sufficient measure of working capital is kept up for smooth running of a firm and for satisfaction of twin goals of liquidity and benefit. While insufficient measure of working capital weakens the company's liquidity. Holding of overabundance working…show more content…
Stores are additionally required for fleeting purposes with the end goal of crude materials, installment of wages and other regular costs, and so on. These trusts are known as living up to expectations capital. In straightforward words, working capital alludes to that some piece of the company's capital, which is needed for financing transient or current resources, for example, money, attractive securities, indebted individuals and inventories. Working capital is a valuation metric that is computed as present resources less present liabilities. Working capital is otherwise called working capital. Concept of working capital There are two concepts of working capital: 1. Gross working capital It refers to the firm’s investment in total current assets or circulating assets. 2. Net working capital (defined in two ways) (i) It is the excess of current assets over current liabilities. (ii) It is that portion of a firm’s current assets which is financed by long-term…show more content…
Permanent working capital 2. Temporary or Variable working capital 1. PERMANENT WORKING CAPITAL:- This refers to that minimum amount of investment in all current assets which is required at all times to carry out minimum level of business activities. It represents the current assets required on a continuing basis over the entire year. Tandon committee has referred to this type of working capital as “core current assets”. The following are the characteristics of this type of working capital:- 1. Amount of permanent working capital remains in the business in one form or another. This is particularly important from the point of view of financing. The suppliers of such working capital should not expect its return during the lifetime of the firm. 2. It also grows with the size of the business. Permanent working capital is permanently needed for the business and therefore it should be financed out of long-term funds. REASONS FOR ADEQUATE WORKING CAPITAL:

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