Current Asset Management
Teacher
Dr.Susanta Kumar Mishra
Category
Domain Courses
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Code(Credit) : CUFM-2355
Course Name : Current Asset Management
Course Objectives
- This course provides an understanding on how to manage Current Assets, working capital financing policies, increasing profits through working capital management and how to properly fund working capital
- The course also discusses the cash conversion cycle, Cash budgeting and credit policy and credit variables.
- Students are expected to be familiar with the Current Asset Management policy of any Organization. They are expected to get hands on experience on any Organization .
Learning Outcomes
• The students will be able to have a basic understanding regarding the sources of Current Assets.
• Understand how proper management of Current Assets can increase the profits of a Company.
• Have an understanding of the various Current Asset management policies
• Calculate the cash conversion cycle
• Establish knowledge of working capital in the budgeting process and credit policy
Course Syllabus
Module-I
Concept & Significance
Concept of Current Asset Management, Significance , Determinants of working capital, Operating cycle, Estimation of working capital, Risk-return trade-off of working capital, Working capital policies: Current asset policy and financing policy, Working capital financing,
Module -II
Inventory management:
meaning, Tools and technique of inventory management, EOQ, Various levels of inventory, inventory control (ABC and VED analysis);
Module- III
Cash Management
Cash management: Meaning, Objectives/Motives of holding cash, Determinants of cash needs and method for determining cash needs (Baumol Model and Miller-Orr Model).
Module-IV
Receivables management:
credit policy variables, evaluation of alternative receivable policy, collection policy, cost of receivables,
Suggested Books:
1. I M Pandey-Financial Management-Vikash
2. Prasanna Chandra- Financial Management-TMH
3. Khan and Jain-Financial Management-TMH
4. Sudhindra Bhatt- Financial Management-Excel
Session Plan
Session 1
Introduction to Current Assets, Concept of Current Asset Management , Significance of Working Capital
Session 2
Determinants of Working Capital,Significance of Working Capital
Session 3
Operating Cycle,Estimating working Capital Requirement through Operating Cycle
Session 4
Various Policies of Working Capital,Aggressive Policy,Conservative Policy,Matching Policy
Session 5
Working Capital Financing: Banking Norms for Working Capital Financing
Session 6
Tandon Committee, Chore Committee and Dahejia Committee report on Working Capital Financing to Corporates in India
Session 7
Maximum permissible Bank Finance on financing working capital as per Tandon Committee
Session 8
Inventory Management:Meaning,Types of Inventory,Slow moving inventory and Obsolete items
Session 10
Economic Ordering Quantity,Ordering Level,Re-Order Level,Safety Stock
Session 12
Cash Management:Meaning of Cash Management,Effective Cash Management
Session 14
Session 15
Case Study on ITC
Students must look into the Annual Report of ITC attached herewith.
i.They have to look into the Current Assets and Current Liabilities position of the Company and find out the ratios relevant to Working Capital.
ii.They should go to the notes on accounts (which are numbers given against the items of assets and liabilities ) and verify these for last five years to find out the changes in them .
iii.They should analyze the Changes in working Capital on the Profitability of the Company.
iv.They should Compare these with that of any other Company of Similar nature.
vi.Students can log into the site http://www.annualreports.com/Company/bce-inc where they can find 72,000 annual reports of 5,800 Companies.
Case Study on Infosys
Students must look into the Annual Report of Infosys attached herewith.
I.They have to look into the Current Assets and Current Liabilities position of the Company and find out the ratios relevant to Working Capital for last five years.
II.It is interesting to note that Infosys don’t have any long-term loans over last few years and they have very less short-term loans. Students should go to the notes on accounts (which are numbers given against the items of assets and liabilities ) and verify these for last five years to find out the changes in them .
III.Students should analyze the changes in working capital and should prepare a report how it affects their profitability and turnover.
IV.Students have to prepare a report on how the Current Assets and Liabilities position of an IT Company (which is a service provider company) is different from that of an FMCG Company.
V. They should Compare these with that of any other Company of Similar nature.
VI.Students can log into the site http://www.annualreports.com/Company/bce-inc where they can find 72,000 annual reports of 5,800 Companies.
Case Study
Studying the Inventory Management System of any Organisation(e.g.UMBC or GTET and suggesting changes required if any to improve profitability)
Case Study on Inventory Management
A Case Study on Inventory Management by using Economic Ordering Quantity Model of XYZ Ltd.
Assignment
Comparing Reports of Various Committees relating to Working Capital Finance(Tandon Committee, Chore Committee and Dahejia Committee ) and analysing these reports.
Assignment
Assignment on finding the Maximum Permissible Bank Finance as per the Various Methods.
Assignment
Assignment on LIFO,FIFO,HIFO and Weighted Average Method
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