A Study on Working Capital
Management in STATE BANK OF
INDIA
Synopsis
1
Introduction:-
Working capital management is concerned with the problems arise in
attempting to manage the current assets, the current liabilities and the inter
relationship that exist between them. The term current assets refers to those
assets which in ordinary course of business can be, or, will be, turned in to cash
within one year without undergoing a diminution in value and without
disrupting the operation of the firm. The major current assets are cash,
marketable securities, account receivable and inventory. Current liabilities ware
those liabilities which intended at their inception to be paid in ordinary course
of business, within a year, out of the current assets or earnings of the concern.
The basic current liabilities are account payable, bill payable, bank over-draft,
and outstanding expenses. The goal of working capital management is to
manage the firm’s current assets and current liabilities in such way that the
satisfactory level of working capital is mentioned. The current should be large
enough to cover its current liabilities in order to ensure a reasonable margin of
the safety.
Definition:-
1. According to Guttmann & Douglas-
“Excess of current assets over current liabilities”.
1. According to Park & Gladson-
“The excess of current assets of a business (i.e. cash, accounts
receivables, inventories) over current items owned to employees and others
(such as salaries & wages payable, accounts payable, taxes owned to
government)”.
There are many aspects of working capital management, which make it
an important function of the financial manager:
Time: working capital management requires much of the financial
manager’s time.
Investment: working capital represents a large portion of the total
investments in assets.
2
Significance: working capital management has great significance for all
firms but it is very critical for small firms.
Growth: the need for working capital is directly related to the firm’s
growth.
Investment in current assets represents a very significant portion of the
total investment in assets. Working capital management is critical for all firms.
A small firm may not have much investment in fixed assets, but it has to invest
to in current assets. Small firms in India face a severe problem of collecting
their debtors.
Banks have their own policies to assess the working capital of the firm to
finance them with the shortage. It may, thus, be concluded that all precautions
should be taken for the effective and efficient management of working capital.
The finance manager should pay regular attention to the levels of current assets
and the financing of current assets.
Objectives:-
1. To know the importance of working capital in an organization.
2. To know the working capital management process of Banks.
3. To know that how SBI manage their working capital.
4. To know the strategies that SBI adopt to control the working capital.
Scope:-
1. This will help me to know in details about the working capital.
2. This will help me to learn how to manage working capital in an
organization.
3. This will help me to learn about the working capital management process
of SBI.
Methodology:-
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DATA COLLECTION METHOD
To fulfill the objectives of my study, I have taken secondary data
into considerations.
Secondary data:-
The data is collected from the Magazines, Annual reports, Internet,
Text books.
The various sources that were used for the collection of secondary data
are:-
1. Internal files & materials
2. Websites :- Various sites like:-
A) www.indiainfoline.com
B) www.sbi.co.in
C) www.investopedia.com
D) www.wikepedia.com and other site
Conclusion:-
This project will be very helpful for my future career because this project
is going to give me a broad idea about the working capital management which is
one of the most important part of an organization as well as SBI.
Working capital is a very vital part of an organization weather it is a Bank
or any other organization and this project is going to help me in my future a lot.
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