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(Net worth =paid capital +reserve &surplus) 3. The institution must have profit Ratio of cash to current liabilities is significant because cash is the most liquid asset. Investment in marketable securities & deposited in bank are also considered this ratio since they can be converted in to cash if required to meet current liabilities. Cash & near cash items are maintained at a more than required level to repay the liabilities. MANAGEMENT OF RECEIVABLES IN DCI: Receivables refer to amount due from customer to the firm arising out of sale of goods& services in ordinary course of business. The receivables have three characteristics risk, economic value& futurity. Receivables arise since almost every firm sell its product or provide service on credit to the same extent .it is inevitable to increase the turnover & there by its profit. Apart from the benefit of increasing market & turnover, there are costs involved in managing receivable that arise due to credit sale. They are: Capital cost, Diligence cost & Collection cost each firm follow certain credit policies, credit terms& policies to ensure the benefit are more than costs. The objectives of receivable management are to promote sales & profits until that point is reached to finance that additional credit. The efficient receivable management aims at securing tradeoff between costs & benefits. Most of the customers of DCI are part of government undertaking. They entre in contract with DCI regularly. Assignments with private sector are few.DCI extends its services mostly on credit basis, Services are provided & later bills are raised some amount is received before the operations as advance. It does not evaluate the worthiness of the customers because as explained above, most of them are regular customer & part of the government undertaking. In most of the contracts where the period of credit is specified it is mentioned that the payment is made with 30 days after bills are raised (15 days in few cases), 0.25%dicount is allowed. In some contracts the period of credit is not mentioned. COLLECTION EFFORTS: Bills are raised &send to the costumers for release of payment. A sale is incomplete until the value is collected is an old saying but true any day & any business. Following this important saying effort required to be made with15/30 days as stipulated in the contact terms & condition. Unfortunately, a major portion of the amount is blocked in sundry debtors. The customers disallow the claims of DCI on various grounds. In such cases, sometimes the matter is referred to arbitration. The amount disallowed by the client is considered doubtful till it is settled. As & when arbitration awarded the amount which DCI has to forego is written off as bad debt. 1.7 CONCLUTIONS More than anything else, the apparent efficient planning of the company contributes to the profitability. Where there are no long term objectives, there will not be long term plans; where there are no long term plans, there will not be short term goals and targets; where there are no short term goals, there will not be short term plans. Without objectives and plans of any sort, then the organization cannot stand the challenges of a dynamic world. Here in lies the root of this good performance of the company in working capital management. The management of working capital impacts on liquidity, investment portfolio and profitability. All these three factors are decisive in the growth or failure of a business. Hence, good performances in working capital management affects these decisive factors favorably and thus, contribute to growth and success of the Dredging Corporation of India (DCI). The three research questions are: What are the consequences of working capital management for company value? What factors influence a firm’s working capital management performance? How efficient is the company at converting working capital to ready money? In line with industry surveys and evidence gave by the company’s finance manager, I find evidence that companies over-invest in working capital. Given this evidence, it is imperative then to focus on what factors influence DCI working capital management. I discover that industry practices, company size, future company sales growth, the proportion of outside directors on a board, executive compensation, and CEO share ownership significantly influence the efficiency of a company’s www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 09, July-2013 Page 92
working capital management. I examine both of these issues: what are the consequences of working capital management for a company value, and factors that influence a firm’s working capital management performance. The third is how efficient is the company at converting working capital to ready money. In what influences a firm’s management of working capital, I discover during my interview with the finance manager that a company’s working capital policy is influenced by its industry’s working capital policies, its size, its expected sales growth, & etc have a significant influences on a firm’s working capital management performance. Given the above evidence that working capital management significantly influences company value; let now turn to the question of what factors influence a firm’s working capital management are the company’s working capital management practice, the size of the firms& the amount of the firm’s asset. BIBLIOGRAPHY 1. I.M.Pandey financial management Vikas publishing New Delhi 2 nd edition, 1997 2. .Ali, kursheed fundamentals of financial management Himalaya publication house New Delhi, first edition 1997 3. Peter Atrill, Eddie McLaney “Accounting and Finance for Non-Specialists”, sixth Edition, Prentice Hall, 4. Shin, H. & Soenen, L 1998 “Efficiency of Working Capital Management and Corporate Profitability,” Financial Practice and Education 5. Harris Andrew “Working capital management: difficult, but rewarding”, Financial Executive, 6. Weston J.F. & Brigham E.F. 1977 “Essentials of Managerial Finance” Illinois. The Dryden Press, 7. Nunn, K. 1981 “The Strategic Determinants of Working Capital: A Product-Line Perspective,” Journal of Financial Research 8. Van Horne J.C. 1986 “Financial Management & Policy” 7th edition, N.J. Prentice Hall, 9. http://www.scribd.com/doc/25272544/Theory-of-working-capital-management 10. 10.http://www.insolvencyhelpline.co.uk/business_advice/finance_grants/managing_finance/cas h flow.php www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 09, July-2013 Page 93
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Table of Contents Articles THE GLOB
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The capital market of a country can
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Figure 1: Components of Indian Fina
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esults as regards the stability of
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10. Hasan, M., K., Haque, M., & Law
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In the first stage of development,
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References: 1. Krishnamacharyulu CS
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and the additional procedures neede
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TO FIND THE RELATIONSHIP BETWEEN ST
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Table No.8: Association between Inv
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The foremost factor to be considere
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economic and social. Some people ma
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eliance, and transparency (Gain Raj
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loans/borrowings has been invested
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Pressure Nowadays, management is in
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includes the red flags that were ex
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The Impact of Macroeconomic Factors
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Bajaj 2.53 0.003 4.38 0.24 1.68 -0.
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Nestle 2012 ITC 2012 Q1 -0.28 -0.28
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Suzuki 2011 .22 1.82 1.91 1.87 1.99
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