Working Capital Management at Kadakkal Service Co-operative Bank
1. A STUDY ON WORKING CAPITAL MANAGEMENT AT
KADAKKAL SERVICE CO-OPERATIVE BANK
Submitted to the University of Kerala
In partial fulfillment of the requirement for the award of degree of
Under the guidance of
Mr. Rajaprasad
Associate Professor
Submitted by
NIRMAL PR
Reg. No. 13 459 020
Gurudev Institute of Management Studies
JULY 2015
MASTER OF BUSINESS ADMINISTRATION
PROJECT REPORT
2. INTRODUCTION
Working capital is the life blood of any organization. Working capital
refers to the part of the firm’s capital which is required for financing of
current assets such as cash, marketable securities, debtors and
inventories. Working capital is required for meeting the day to day
expenses of a business. No business can run successfully without an
adequate amount of working capital. There are two concepts of
working capital- Gross concept and Net concept. Gross working capital
represents the total current assets. Net working capital is the difference
between current assets and current liability. The firm should maintain a
sound working capital position.
3. Cont..
Working capital management is highly important in firms as it is used to generate
further returns for the stakeholders. When working capital is managed improperly,
allocating more than enough of it will render management non-efficient and
reduce the benefits of short term investments. On the other hand, if working
capital is too low, the company may miss a lot of profitable investment
opportunities or suffer short term liquidity crisis, leading to degradation of
company credit, as it cannot respond effectively to temporary capital
requirements. Efficient management of working capital means management of
various components of working capital in such a way that an adequate amount of
working capital is maintained for smooth running of a firm and for fulfilment of
objectives of liquidity and profitability.
4. COMPANY PROFILE
The Kadakkal Service Co-operative Bank was registered as
Kadakkal Service Co-operative Society Limited, No: 3456 in the
year 1954 under Kadakkal Panchayat, Kottarakkara Taluk,
Kollam District. The name was amended in the year 1972 as
Kadakkal service co-operative bank Ltd No: 3456.
The Kadakkal Service Co-operative Bank is a primary co-
operative society in the grade a category in the district. The
Kadakkal Service Co-operative Bank has four branches. These
are located in Kadakkal and nearby panchayats. Majority of
common consumers are agricultural, women and traders.
5. BACKGROUND OF THE PROBLEM
This project work is based on the working capital management at
The Kadakkal Service Co-operative Bank (KSCB), Kollam. The
problems of the study were related with the evaluation and
utilization of working capital management of the bank, working
capital positioning, cash management performance, the
performance of inventory management and the management of
receivables. Thus efficient management of working capital in an
important prerequisite for successful working of a business
concern. It reduces the chance of business failure, generates a
feeling of security and confidence in the minds of personnel in
the organization. It assures a steady solvency position in the
organization.
6. OBJECTIVES OF THE STUDY
To assess the working capital position of the bank.
To evaluate the liquidity position of the bank.
To determine composition of current assets and current liabilities.
To identify the reasons for the changes in the net working capital.
To compare the working capital position of the current and previous
years.
7. RESEARCH METHODOLOGY
The nature of research design adopted for the study is analytical. In analytical
research the researcher has to use the facts and information already available and
analysis of these to make the critical evaluation of the material.
Period of the Study
The time period allowed for research is 45 days from 20th May 2015 to 5th July
2015. Data for five years, i.e., 2009 – 2014 are taken for analysis and
interpretation.
SOURCES OF DATA
The study was conducted with the help of secondary data available at during the
period of the study. The secondary data was available from annual reports, Audit
reports, balance sheet and profit & loss account of the bank.
8. LIMITATIONS OF THE STUDY
An extensive study could not be undertaken due to lack of time
and cost.
The study is based on the information given in the annual report or
other secondary sources connected to the topic. So errors are
possible.
Analysis is purely is based on the historical facts and information.
The study entirely based on quantitative data, qualitative factors
are not taken in to consideration for the purpose of the study.
Scope of the study is limited as it concentrates only on Kadakkal
Co-Operative Bank.
9. FINDINGS
1) The net working capital of Kadakkal Service Cooperative Bank shows an increasing trend, so that, it has
better working capital position.
2) The current ratio and quick ratio are above standard ratio. Hence it shows that the liquidity position of the
company is adequate so that the company is able to meet its short term obligations.
3) The absolute liquid ratio is above standard ratio. Hence the company is able to pay its creditors promptly.
4) The working capital turnover ratio shows that there is an efficient utilization of working capital during the
last 5 years.
5) Cash and Working Capital Turnover Ratio shows a fluctuating trend.
6) The utilization of fixed assets during the period under study is satisfactory.
7) There is no change in the utilization of current asset during the period under study.
8) The schedule of changes in working capital for the past five years shows an increasing trend.
9) The current asset shows an increasing trend.
10) The current liability shows a decreasing trend.
10. SUGGESTIONS
1. Overall service capacity level is high. It is increasing the cost of service. So,
the bank may try to increase its services. It reduces cost and increases profit.
2. The company must undertake better financial management practices in
order to promote its financial growth.
3. All necessary steps should be taken to increase the liquidity position.
4. The company should maintain a good debt redemption policy for the prompt
collection of debts.
11. CONCLUSION
A study entitled “A STUDY ON WORKING CAPITAL MANAGEMENT OF
KADAKKAL SERVICE CO-OPERATIVE BANK” has been undertaken in order to
identify the working capital position of the company for a period of five years
commencing from 2009-2014. The working capital positions have been analysed on the
basis of data collected from the annual report and financial statements of a company.
The tools used for analysis are schedule of changes in working capital and ratio
analysis.
The objective of the study were to analyse the working capital position of KADAKKAL
SERVICE CO-OPERATIVE BANK along with the liquidity position and to evaluate
the financial performance of KADAKKAL SERVICE COOPERATIVE BANK. The
current ratio of KSCB during the year 2010 is 11.8 and then it gradually decreased it
gradually increased ratio 14.1 which indicate the liquidity position of the bank is good.
After analysing the ratios, the test result shows that liquidity position of the bank is
good. This indicated by the ratios like current ratio, quick ratio, acid test ratio, working
capital turnover ratio. The test result shows that overall performance of company is
good. The working capital management of KSCB is also good.