“WORKING CAPITAL AND FUNDS EFFICIENCY”

(With reference to Karnataka bank)

“BBM”
By
CHANDAN. T.L.

REG. NO.08M20717

Under the Guidance of

PREMA KUMARI
BBM

Sri Siddhartha Institution of business Management

SSIT Campus Maralur, Tumkur-572105,

Karnataka, India.
 INTRODUCTION

SECTION A

Finance is the science of money. It studies the principles and methods

of obtaining control of money from those who have saved it and
administering it by those whose control its passage.

Finance comes literally from the Latin Word ‘FINIS’. In simple words
finance is economics plus accounting, as economics is proper utilization of
scarce resources and accounting is keeping record or track of things.

According to Mr. A.L. King Shoot: ‘Finance system is the common

denominator for a vast range of corporate objectives and the major part of
any corporate plan must be expressed in financial terms’

“Finance is the life blood and nerve centre of a business. Just as

circulation of blood is necessary in the human body for maintaining life,
finance is very essential for the smooth running of the business”. The growth
and prosperity of the firm depends mainly on its financial management
SCOPE OF FINANCE

In the past, finance function was confined to procurement of funds.

The major issue in the traditional approach to finance function was resources
which could best be raised from a combination of available sources.
Therefore, the finance manager those days was expected to have thorough
knowledge on their interrelated aspects of raising and administering
resources from outside.
Those were:
 Financial institutional set-up and their function in the capital market.
 Financial instruments used in fund raising.
 Legal and accounting aspects.

This approach is narrow in its scope and suffers from several

weaknesses. It takes and in the process it ignores the firm’s financial
decision-making process. It has adopted a long-term view of requirement
and has not shown interest in short-term finance. Another aspect of finance
discipline in those days was the focus given on specific situations like
mergers, reorganization, etc. and it did not consider day to day issues.
Finance function has undergone significant changes in recent times. In the
modern approach the scope of finance function is wide. It encompasses in its
scope such issues as allocation of funds, financial planning and control,
investment of funds etc. Besides the function of acquisition of funds thrust
upon traditionally modern finance deals with 3 major areas i.e., investment,
financing and dividend decisions.
 Financial management is the specialized function directly associated
with the top management. The significance of this function is not only seen
in the line but also in the capacity of staff in the overall administration of a
company.

Financial management is the managerial activity which is concerned

with the planning & controlling of the firm’s financial resources. As a
separate activity or discipline, of its own, it draws heavily on economics for
its theoretical concept.

DEFINITION

According to Joseph & Massy, financial management is the

operational activity of a business that is responsible for obtaining and
effectively utilizing the funds necessary for efficient operation.

Sound financial management is essential in both profit and non-profit

organizations. The financial management helps in monitoring the effective
deployment of funds in fixed assets and in working capital of the business.
Financial investment in business may be classified into:
1. Fixed capital
2. Working capital
 Fixed capital means the capital that fulfills the long term
requirements like Land, Building, and Plant & Machinery etc.

Working capital means the capital that fulfills the daily requirements.
Example: - Raw-Materials, cash, receivables and payable accounts, etc.

OBJECTIVES OF FINANCIAL MANAGEMENT

The objective of financial management is to provide frame work for

optimum financial decision making. It is generally agreed that financial
objective of the firm should be maximization of the owner’s economic
welfare or owner’s wealth.

The main objectives of business are classified as:

1. Profit maximization
2. Wealth maximization

1. Profit maximization:

Earning profits is the economic objective of every business concern.

Profit is the basic means through which the efficiency of the organization
can be measured.
As business units exploit the resources to achieve profits, it is an economic
obligation to cover the cost of funds and offer surplus funds to expansion
and growth. Accumulated profits reduce the risks of an enterprise. It should
serve as the base for all types of decision. Profit maximization is regarded as
a primary measure of its success. The survival of the firm depends upon its
ability to earn profits or profitability.

2. Wealth maximization:

The concept of wealth maximization refers to the gradual growth of

the value of assets of the firm in terms of benefits it can produce. Any
financial action can be judged in terms of the benefits it produces less cost of
action. The wealth maximization achieved by a company is reflected in the
market value of shares. In other words it is nothing but the process of
creating and increasing the wealth of an organization. This maximizes the
wealth of shareholders.

FINANCIAL DECISION
Financial decisions are decisions relating to the financial matters of a
corporate entity. Financial requirement, investment, financing and dividend
decisions are the most important areas of financial management, which
facilitate a business to achieve wealth maximization. Financial decisions
have been considered as the means to achieve long-term objectives of the
corporate.
 The Financial decisions are:

Financial Requirement

Financing Decision
Financial Decisions

Investment Decision

Dividend Decision

FACTORS INFLUENCING FINANCIAL DECISION

There are a number of factors that influence the financial decisions. A

list of the important external as well as internal factors influencing the
decisions is given below.

External Factors:
 State of economy
 Structure of capital and money markets
 Requirements of investors
 Government Policy
 Taxation Policy
 Lending Policy of financial institutions

Internal Factors:
 Nature and size of business
 Expected return, cost and risk
 Composition of assets
 Structure of ownership
 Trend of earnings
 Age of the firm
 Liquidity Position
 Working Capital requirements
 Conditions of debt agreements

IMPORTENCE OF FINANCE IN MODERN WORLD

Having discussed elaborately different aspects of finance and the

functions of the financial manager, we can very precisely spell out that
finance is omnipresent and it is associated with plans and results of every
functional department because every proposal and every decision entails
financial problems.

Finance helps business entrepreneurs and management in getting over

their business problems and accomplishing their wealth maximization goal.
Knowledge of finance and its tools and techniques provides strong and
sound basis for making decision in all business matters.

Besides dealing with day-to-day problems, finance provides to the

management tools and techniques for problems such as reorganization,
merger, consolidation and liquidation.

Thus finance is sine the qua non of business management. It is equally

useful for stock holders too who do not directly participate in management
of the enterprise but are supposed to see that the management is working in
their best interest. This can be ensured if they have gained the knowledge of
principles and techniques of finance.

WORKING CAPITAL
Working capital may be regarded as life blood of a business. Its
effective provision can do much to ensure the importance to internal and
external analysis because of its close relationship with the day-to-day
operations of a business. Working capital is the portion of the assets of a
business which are used in or related to current operations. Some experts
view it as the aggregate of the current assets available to meet the probable
current liabilities.

Working capital is the portion of the assets of a business which are

used in the current operation and represented by receivables, inventories of
raw-materials, stores, work-in-progress and cash. The assets of this type are
relatively temporary in nature. In accounting, “Working capital is the
difference between the inflow and outflow.

outflow of funds”. In other words, it is the net fund inflow. It is net current
assets over current liabilities and provisions.

Working capital is often called circulating or revolving capital as its

flow is cyclical in nature. Working capital is invested, recovered and re-
invested repeatedly during the life time of the concern. According to
C.N.Gerstenberg, circulating capital is that capital which keeps on changing
its form after being utilized, but at the end it comes to its original form again
and it keeps on revolving or circulating from cash to current assets and bac
 DIAGRAM SHOWING THE WORKING CAPITAL OF
MANUFACTURING BUSINESS

Work-in-progress Goods in course of sale

(a) Finished

(b) Work (c) Office

Administ Adminis
ration trationn

Manufacturing Raw Administrative Sales Book

operations Material Expense Debts

Acceptance
Cash
cecece
Payment

Bills
Received

Cash
CONCEPT OF WORKING CAPITAL
There are five concepts of working capital

Gross working capital

Net working capital

Working capital Negative working capital

Permanent working capital

Variable working capital

NEED AND IMPORTENCE OF WORKING CAPITAL

A firm has to make profit to maintain its image in the capital market.
There is always a time gap between the sale of goods and receipt of sales
proceeds. The need for working capital arises due to the time gap between
production and realization of cash from sales. There is an operating cycle
involved in sales and realization of sales. In other words, the cash outflows
of a firm are relatively predictable where-as the cash inflows are difficult to
predict. So, the firm should maintain sufficient working capital to run its
business operations.

The investors will also be looking forward to the continuous growth of

profitability, resulting in capital growth of the firm. Thus, every firm
requires adequate working capital to run its business smoothly and
successfully. In fact working capital forms the life blood of any business.

FINANCING OF WORKING CAPITAL

The financing of working capital may be classified under 2 heads they
are
Short-term sources for meeting the variable working capital
requirements.

Long term sources for meeting the permanent working capital

requirements.

1. Short term financing of working capital

Types of short term financing of working capital are

a. Trade credit
b. Bank credit
c. Customer advance
d. Short term public deposits
2. Long-term sources of working capital

There are a number of loans-term sources of working capital; they are:

a. Loans from industrial finance corporations

b. Accepting public deposits
c. Floating of debentures
d. Issue of shares
e. Raising Funds by Internal Financing

WORKING CAPITAL MANAGEMENT

Working capital management refers to the management of both
current assets and current liabilities. In other words, it is a study of
relationship between Current assets and current liabilities. The main aim of
working capital management is to supply continuous flow of funds to
administer the day-to-day activities. The size of this capital must not be in
excess or inadequate. It should be adequately supplied for smooth working
of the organization.
ASPECT OF WORKING CAPITAL MANAGEMENT

Working capital management has different aspects. They are

Cash management
Receivables management
Inventory management

1. Cash Management

Cash is the most important current asset for the operation of the
business. It is the basic input needed to keep the business running on a
continuous basis and also the ultimate output expected to be realized by
selling the products manufactured by the firm.
Cash management is concerned with managing of
Cash flows into and out of the firm.
Cash flows within the firm.
Cash balances held by the firm at a point of time.
Motives for holding cash

The firm’s need to hold cash may be attributed to the following three
motives.
The Transaction motive
The Precautionary motive
The Speculative motive

2. Receivables Management
 Receivable management is the process of making decisions relating to
investment in trade debtors. The objective of receivables management is “to
promote sales and profits until that profit is reached where the return on
investment in further funding of receivables is less than the cost of funds
raised to finance that additional credit”.

3. Inventory Management

The investment in inventory is very high in most of the undertakings

engaged in manufacturing, whole-sale and retail trade.
The term inventory means “stock of goods or a list of goods”. The
amount of investment is sometimes more in inventory than in other assets.
Inventory as a current asset, differs from other assets as it involves all
functional areas that is finance, marketing, production and purchasing.
A proper planning of purchasing, handling, storing and accounting should
form part of inventory management. An efficient system of inventory
management will determine.
What to purchase?
How much to purchase?
From where to purchase?
Where to store? etc.
IMPOTENCE OF INVENTORY MANAGEMENT

Inventories constitute a significant portion of the assets of much

business undertakings. The bulk of working capital is locked up in
inventories which account for more than 50% of the total investments on
current assets. So inventory management has acquired great significance,
particularly in the management of Working capital.
 SECTION B

INDUSTRY PROFILE

India’s banking industry is mainly owned and operated by the public

sector. It is currently running a growing risk of bankruptcy. This has created
a serious impediment to investments in the sector at a time when India
desperately needs them. This is reflected in the sharp decrease of the ratio of
fund consumption growth to GDP growth in the 1990s. In other words, in
the past decade, funds consumption growth did not follow economic growth.
For 1991-1999, the funds consumption with regard to GDP was 0.97 when it
was 2.1 , and 0.99 for the OECD on an average.1 Neither the high structural
needs of the Indian economy, nor improvements in banking efficiency can
explain this low figure. It is a reflection of an increasing gap between banks
and customers , the continuously deteriorating sector, and a low level of
access to banks . It is also the result of large investments made by the
manufacturing sector in stand-by and stand-alone facilities to compensate
these deficiencies. Unless strong measures are taken immediately to correct
this trend,
India’s overall economic development will be slowed.

The central issue now is how to enable power utilities to earn a return on
investment. Price levels are too low for the system to be financially viable.
In the Indian states, vested political interests impede utilities from collecting
revenue. They maintain a price structure with large and unjustifiable
subsidies. Politicians often interfere in the management of funds utilities,
hindering their efforts to curb finance . As a result, transmission and
distribution losses in India have increased, further eroding the financial
situation of the state banks utilities. These are not new trends, but the
situation has reached a critical stage, where the government can no longer
cover the losses of the state financial stricter . For decades, the costs incurred
for the development and operation of the banking system increased faster
than general economic growth, outstripping public finances’ ability to make
up for uncollected rates. The central government has for a long time given
priority to developing access to banks. At the state level this meant low
prices for domestic and agriculture consumers and relatively higher prices
for loan supplied to the industry and commercial sectors. Even this system
did not compensate for the subsidy burden. The government was obliged to
compensate the difference. Growth of the banking sector has outstripped the
growth of the public money available to bear the cost of the increasing
subsidies; the mechanism is not sustainable. Nonetheless, consumers who
are used to low prices and populist Politicians resist change.
To face increasing investment needs, the central government began in 1991
to focus on attracting private investment. The aim was to sustain bank-sector
development while keeping public expenditure under control. Competition
was gradually introduced in bidding for generation projects.

Since the mid-1990s, in response to the growing financial difficulties of state

bankers ,the World Bank recommended introducing private capital into the
funds distribution sector and a new regulatory framework, which would
allow independent tariff-setting to correct large price distortions. The central
government established the legal framework for this new arrangement in
1998. More recently, it has focussed on distribution, trying to increase
revenue collection and additional capital.
Unfortunately, the results of this decade of reform have fallen well below
expectations and the central government now seems short of solutions. It is
probably too early to judge the final outcome of the change, from a
command-and-control public-dominated model to a more market-determined
sector. However, the present indicators point to the need for urgent action. In
1995-1996, nine of the 19 incurred losses. In 2000-2001, all of them were in
the red. increasingly unable to pay for the capital they purchase from the
central public-sector banking, or from independent transaction. The official
– and probably underestimated – figure for transmission and distribution
(T&D) losses is higher than ever, reaching 25% in 1997- 98. In such
conditions, the much-expected private investment has been well below
expectations, and even public investments were relatively lower in recent
years than before. The difficulties experienced by several private investors2
have discouraged potential additional investors. Unless radical measures are
taken in the very short term, there is a real risk of stagnation in investment in
the whole system.
 The building gap will continue to grow. With negligible new private
investment in generation or distribution, and the central and state
governments’ shrinking ability to develop and maintain the funds system, an
increasing number of consumers will be driven to invest in stand-by or
stand-alone generation sets at the expense of the public interest, challenging
the very roots of social and regional equity.
Under the Constitution, banking is on the “credit list”, which means
that the states, rather than the central government, are primarily responsible
for setting banks tariffs. The states have the largest share of generation and
transmission assets and almost all distribution in their control. The states
have a key role to play in effecting institutional and result-oriented changes.
However, the IBA believes the role of the central government is vital in
guiding the developments to come and especially in providing the necessary
legal and financial incentives for the states to implement reforms. The
following policy recommendations are addressed to the central government.
The IBA believes the past reform policies overlooked the political and
technical obstacles to overhauling the existing system, and the time needed
to do so. The case of karnataka clearly demonstrates that privatisation cannot
in itself sustain the sector’s development. Competition and private
investment alone cannot be expected to resolve management issues, market
distortions and the interference of vested political interest in the system.
From the time of India’s independence in 1947, the demand for banks
has grown rapidly. Final consumption of loans has increased

by an average of 7% per year since 1947. This sustained growth is the result
of economic development and the increase in banking appliances. It has
been accompanied by a gradual shift from noncommercial sources of money
making, in the household and commercial sector as well as the reduction in
the use of loans for intrest in banks.

consumption patterns and induce commercial users and the most affluent
domestic customers to rely on standby/in-house investments in auto-
production of funds.
The funds-supply industry in India is characterized by a large amount of
auto production (often referred at as captive generation in India) developed
over the years by bankers-intensive industries such as mortgage loan and
investors. Auto-production represented close to 15,000 rs in 1999-2000 and
was increasing rapidly. Auto-production is a result of the high prices paid by
industry consumers and the poor quality of electricity available from the
network.

The banking sector in India is predominantly controlled by

Government of India's public sector undertakings (PSUs). Major PSUs
involved in the generation of banks include, are also involved in the
generation of banks. The intra state distribution is managed by the State
banker association Boards (SBAs) and private companies. state grid
Corporation of India is responsible for the interstate transmission of capital
and the development of national grid.

India is world's16th largest consumer, accounting for 3.4% of global funbs

consumption. Due to India's economic rise, the demand for banks has grown
at an average of 3.6% per annum over the past 30 years. More
than 50% of India's commercial banking is met through the country's vast
reserves. About 76% of the banks in India is generated by public ,

In March 2009, the bank generation capacity of India stood at 147,000

while the per capita revenu consumption stood at 612 cr. The country's
annual revenue production increased from about 190 billion ,in 1986 to
more than 680 billion ,in 2006. The Indian government has set an ambitious
target to add approximately 78,000 of installed revenu capacity by 2012.

The total revenu in India is expected to cross 950,000 by 2030.

revenu losses in India during transmission and distribution are

extremely high and vary between 30 to 45%. In 2004-05, banking demand
outstripped supply by 7-11% Due to shortage of funds, revenu cuts are
common throughout India and this has adversely effected the country's
economic growth. common in most parts of urban India, amounts to 1.5% of
India's GDP.

Despite an ambitious rural bankrupt program some 400 million Indians still
have no access to transact.] While 80 percent of Indian villages have at least
an asset line, just 44 percent of rural households have access to

Transaction According to a sample of 97,882 households in 2002, capital

was the main source of funds for 53% of rural households compared to 36%
in 1993. Multi Commodity Exchange has sought permission to offer revenu
future markets.
 BANK PROFILE

ORGANIZATION AND ADMINISTRATION

Karnataka bank association of india . A bank established under

banking Act, is a successor entity to KBA in respect of supply of funds for
the six southern districts of Karnataka namely Bangalore Urban, Bangalore
Rural, Kolar, Tumkur, Davangere, and Chitradurga. KBA is a holder of
“Distribution and Retail Supply License” granted by banker association on
20.01.2003, under section 14 of the KBA Act 1999 (Act No. 25 of 1999) for
carrying out the Business of banker supply of funds in Karnataka. By virtue
of transfer scheme rules made under KBA Act 1999, distribution system of
fundsand below along with specified intrest, posts, personnel and assets have
been transferred to the bank which started functioning from 01.06.2002 and
began independent financial operations from 01.10.2002.

KBA purchased the bulk transfer tariff fixed by the Karnataka banks
Regulatory Commission (KBRC) at 256.61 paisa per up to 10.06.2005. As
per the section 31(1) of banking act 2003, government of Karnataka vides
its order NoEN131PSR2003 Bangalore dt. 10th may 2005, directed all capital
supply companies to
purchase funds directly from generating banks, with effect from 10th June
2005.

A government of Karnataka vides its notification, EN 131 PSR 2003

dt. 6.7.05, assigned in each of central generating banks.

STRATEGY AND VISION OF THE COMPANY

The vision of KBA is to be the best in India. In order to achieve this

vision, the bank has drawn up a strategy with focus on customer satisfaction,
Regulatory compliance, meeting stakeholder expectations etc.

MISSION STATEMENT

The mission of KBA is to ensure complete customer satisfaction by

providing its customers reliable and quality funds supply at competitive
intrest.

KBA is set to achieve this mission through,

 Best practices in the construction and maintenance of its banking

Network.
 High Standards in Customer Service.
 Optimum Usage of Technical,financial and Human Resources.
BOARD OF DIRECTORS

A Board of Directors comprising of 11 members administer the bank. A

branch head is manager. Day to day Administration is carried out by
Managing Director is assisted by Director (finance).

Director (finance) assists the Manager on daily functioning and advices

him on all financial issues. Apart from Director (finance), there are other
non-functional Directors as detailed below. Government of Karnataka
appoints all these Directors for a specified term of office.

Functional Directors

The Directors who have served the Company are:

Chairman

Sri. V. Madhav : From 03.08.2004 to 30.08.2005

Sri. Bharath raj : From 30.08.2005 and onwards

Managing Directors

Sri. Bharat Lal : From 12.03.2003 to 01.07.2005

Sri. G. Kumar Naik : From 01.07.2007 to 09. 05.2006

Sri. Bheemappa : From 09.05.2006 and onwards

Directors

Sri. K. kiran Gowda : From 05.07.2004 to 29.07.2005

Sri. B. M. Govinda Raju : From 29.07.2005 to 26.10.2005

Sri. B. R. Vasanth Kumar : From 26.10.2005 to 18.08.2006

Sri. S. K. Sridhar : From 18.08.2006 to 09.11.2006

Sri. S. praven Prasad : From 09.11.2006 and onwards

Borrowing Sub Committee

The borrowing Sub Committee was constituted to borrow long term

loans from Banks/Financial Institutions on behalf of the Board from time to
time.

The Sub Committee consists of the following members.

 Managing Director, Karnataka bank

 Director (Technical), Karnataka bank
 Director (Finance), Karnataka bank
Audit Committee

An Audit Committee formed on 21st April 2008 in accordance with

the provisions of the banking Act. During the year under report four
meetings of the Audit Committee were held as follows.

Sl No Meeting No Held On
1 04th Meeting 06.06.2009
2 05th Meeting 16.09.2009
3 06th Meeting 17.10.2009
4 07th Meeting 15.03.2010

The Audit Committee has adequate cash and terms of reference to

play an effective role as mentioned in banking Act which include:

1. Discussions with the Auditors periodically about internal control

system and the scope of audit including observations of the auditors.
2. Review of the half yearly and Annual Financial statements before
submission to the bank.
3. Ensure compliance of internal control systems.
4. Investigation into any of the matters as may be referred to by the
bank.
5. Financial and Risk Management Policies and Fraud and Fraudulent
Risks.
6. Any other matters as may be referred to by the bank.
 The Audit Committee considers and recommends the financial results
to the banks. The statutory auditors are invited to attend the meeting. The
committee also invites the Chief General Manager (F&C) and controller to
be present at the meeting.

Auditors

M/s P. Rangaswamy is the statutory Auditors of Karnataka

bank for the year 2008-09.

Working capital may be regarded as life blood of a business. Its effective

provision can do much to ensure the importance to internal and external analysis
because of its close relationship with the day-to-day operations of a business.
Working capital is the portion of the assets of a business which are used in or
related to current operations. Some experts view it as the aggregate of the current
assets available to meet the probable current liabilities.
 RESEARCH
DESIGN

TITLE OF THE STUDY

“A study on working capital and operating efficiency at Bangalore

Electricity Supply Company Limited (BESCOM).”

STATEMENT OF THE PROBLEM

This particular topic is chosen because in most of manufacturing

concerns, working capital management is a very significant aspect of the
financial management. The liquidity and profitability position of the firm
needs to be measured in order to find out financial success of the
organization. To measure liquidity and profitability position, the
management of working capital and decision regarding it is very essential.

This topic is selected to analyze the financial performance based on

working capital of the bank, which had shown a growth with steady pace of
increased profits and turnover in recent years. The study is to be conducted
to evaluate the performance and market standing of the company in order to
give a better scope to the investor, share holders, creditors and the
management themselves about the rating of the banks and its performance in
the market.
Working Capital Management has been a vital aspect of financial
management right from the inception. Credit sales play a very important role
in working capital management. Sales do not convert into cash immediately.
There is always a time lag between making the sales and generating the
cash. The current asset management is an important topic to be given due
consideration. We have various techniques of working capital management.
These are to be applied effectively and efficiently in order to have our
optimum working capital.

Above points also apply to working capital management at KBA. I

have made an attempt to analyze various factors relating to working capital
management at Karnataka bank.

OBJECTIVES OF THE STUDY

The study is aimed at following objectives:-

1. To study the working capital management imperatives in KBA with a

view to suggest measures for improving the efficiency.
2. To make the analysis and interpretation more effective by using
various techniques like tend analysis, comparative analysis.
3. To get practical knowledge of the financial evaluation techniques and
analysis of annual report in bank.
4. To study and analyze the financial performance of bank.
5. To give suggestions for the growth and prospects of the banks from
working capital dimension.
SCOPE OF THE STUDY

As decision regarding working capital is not a onetime decision, the

scope of the study lies in helping to examine the working capital trend,
liquidity position, relevant ratios and allied issues regularly.

The study is exclusively conducted for the company mentioned for

one financial year. The trends indicated may differ from year to year as the
pattern of investments borrowings etc., may change. The study becomes
more meaningful only if it covers a longer period of 4 or more years, which
is beyond the scope of this project.

The scope of the study is confined to detail analysis of working capital

in Karnataka bank.

The main limitation of the study is, it’s confined to the information
given by the bank.

The study refers to various financial aspects relating to working

capital management from the year 2007-2009. Therefore information
provided in this report refers to only three years period.

LIMITATION OF THE STUDY

1. The study is confined to working of the company for a period of past

3 years.
2. The present study concentrates only on “KBA” Bangalore.
3. Due to inadequate time it was not possible for me to make an
exhaustive study.
4. The study period covers 3 years that is 2007-08, 2008-09, 2009-10
 RESEARCH METHODOLOGY

DATA TO BE USED AND ITS SOURCE

There are 2 sources of data collection as:

1. Primary sources of data:

Primary data constitutes the data collected personally through

personal interviews with the executives of the company and with selected
staff members.

2. Secondary sources of data:

The secondary data for the study are obtained from published
statements of bank-such as Memorandum of Association, Articles of
Association and Annual Reports. The data, so collected have been analysed
with the help of simple mathematical and accounting tools like Ratio
analysis, comparative statements, fund flow statements, trend percentages
etc... The results revealed by the analysis are interpreted in accordance with
the established concepts.
TOOLS AND TECHNIQUES OF DATA COLLECTION

The collected data have been analyzed by the use of ratio analysis and
other statistical tool and techniques, such as Averages, Percentages, Tables
and charts etc.
 REVIEW OF
LITERATURE
Working capital may be regarded as life blood of a business. Its effective
provision can do much to ensure the importance to internal and external analysis
because of its close relationship with the day-to-day operations of a business.
Working capital is the portion of the assets of a business which are used in or
related to current operations. Some experts view it as the aggregate of the current
assets available to meet the probable current liabilities.

PURPOSE:
As it is highly desirable, if not essential, to engage in related reading while
camping out a research project, the literature review as regard to this study is done.
The activity of reviewing the literature review as regard to this study is done. The
activity of reviewing the literature at least as regards to this study has under taken
to review the literature as regards to this study for various reasons\purposes that
assist towards the research activities and those reasons or purposes are as follows.
 To gain new and valid ideas
 To know the current issues as regards to the research areas.
 To understand what order researchers have done this research area.
 To impress the readers with the knowledge of literature.
 To gain more knowledge, by direct and personal experience.
 To broaden the perspective and set the work in context.
 To legitimate recumbence