WORKING CAPITAL MANAGEMENT - FINANCIAL MANAGEMENT HD

WORKING CAPITAL MANAGEMENT - FINANCIAL MANAGEMENT AS 10 IND AS 16 IAS 16: PROPERTY PLANT AND EQUIPMENT PPE https://youtu.be/Xsj5bW2JDwY AS 3 IND AS 7 IAS 7: CASH FLOW STATEMENT https://youtu.be/3BGqGDPbCSo AS 12 IND AS 20 IAS 20: ACCOUNTING FOR GOVERNMENT GRANTS https://youtu.be/wm1cE6AEVug. AS 7 IFRS 15 CONSTRUCTION CONTRACTS https://youtu.be/6iW2-O7wU_8 AS 5 IND AS 8 IAS 8 NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES https://youtu.be/DQW9JjIkkfc AS 4 IND AS 10 IAS 10 EVENTS OCCURING AFTER REPORTING PERIOD EVENTS OCCURING AFTER BALANCE SHEET DATE https://youtu.be/2E-pEK4p2tA AS 2 IAS 2 IND AS 2 VALUATION OF INVENTORY INVENTORY VALUATION https://youtu.be/D6RxsGVaxhc OPERATIG CYCLE 1. Operating cycle is also known as working capital cycle or cash cycle. 2. It indicates the length of time between a company paying cash for raw materials, converting raw materials into work in progress and finished goods, selling stock of finished goods and receiving cash from debtors. 3. Operating cycle can be determined by adding number of days of each stage in operating cycle. 4. It is expressed in terms of number of days or months. Working Capital refers to the funds required to meet day to day operating expenses and to pay off short term trade liabilities. WORKING CAPITAL MANAGEMENT 1) Working Capital management involves a) Estimation of working capital required b) Maintaining adequate working capital c) Balancing firms short term assets and short term liabilities (management of the level of individual current assets and the current liabilities) d) Financing the working capital required. 2) To calculate and maintain adequate working capital in a business, the finance manager needs to plan and compute the working capital requirement for its business. And once the requirement has been computed he needs to ensure that it is financed properly. This process is called working capital management. 3) Various aspects of working capital management which make it important function of financial management are: a) Time: working capital management requires much of the finance manager’s time b) Investment: working capital represents a large portion of the total investment in assets c) Credibility: working capital management has great significance for all firms but it is very critical for small firms. The ability to pay off bills and short term trade liabilities determines the goodwill of an entity. d) Growth: the need for working capital is directly related to the firm’s growth. WORKING CAPITAL MANAGEMENT - FINANCIAL MANAGEMENT