A

SYNOPSIS REPORT
ON
WORKING CAPITAL
AT
HERO

Submitted
By
MANASA
H.T.NO: ******
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE
PEERZADIGUDA
(Affiliated to Osmania University)
2023-2024
 Aurora’s PG College , PEERZADIGUDA
Department of Management

SYNOPSIS

Title of the Project : WORKING CAPITAL

Student Name : MANASA

Hall Ticket Number : ******

Signature of the Student :

Signature of the Guide :

 INDEX
. No. CONTENTS Page No

1 TITLE OF THE PROJECT

2 STATEMENT OF THE PROBLEM

3 INTRODUCTION

4 AIMS AND OBJECTIVES

1) NATURE OF THE STUDY
2) SCOPE OF THE STUDY
3) DATA COLLECTION METHODS
4) TOOLS FOR ANALYSIS
5) CHAPTERISATION
CHAPTER – I
INTRODUCTION
INTRODUCTION
WORKING CAPITAL:
Cash is the lifeline of a company. If this lifeline deteriorates, the company's ability to fund
operations, reinvest and meet capital requirements and payments also deteriorate. Understanding
a company's cash flow health is essential for making investment decisions. A good way to judge
a company's cash flow prospects is to look at its working capital management (WCM).

Working capital of a company reveals more about the financial condition of a business than
almost any other calculation. It tells you what would be left if a company raised all of its short
term resources, and used them to pay off its short term liabilities. The more working capital, the
less financial strain a company experiences.

Working capital also gives investors an idea of the company's underlying operational efficiency.
Money that is tied up in inventory or money that customers still owe to the company can't be
used to pay off any of its obligations. So, if a company is not operating in the most efficient
manner (slow collection) it will show up in the working capital. This can be seen by comparing
the working capital from one period of time to another; slow collection may signal an underlying
problem in the company's operations.

DEFINITION

The definition of working capital is that it is the difference between an organization’s current
assets and its current liabilities. Of more importance is its function which is primarily to support
the day-to-day financial operations of an organization, including the purchase of stock, the
payment of salaries, wages and other business expenses, and the financing of credit sales. It’s a
measure of both a company's efficiency and its short-term financial health.

The better a company manages its working capital, the less the company needs to borrow. Even
companies with cash surpluses need to manage working capital to ensure that those surpluses are
invested in ways that will generate suitable returns for investors.
There are two concepts of working capital. They are
→ Gross working capital and
→ Net working capital.

The term gross working capital, also referred to as working capital means the total current assets.

The term net working capital can be defined in two ways:

 The most common definition of net working capital is the difference between the current
assets and the current liabilities.

 The alternate definition of NWC is that portion of current assets which is financed with
long term funds. Since the current liabilities represent the sources of short term funds, as
long as current assets exceed current liabilities, the excess must be financed with long
term funds.

The net working capital, as a measure of liquidity is quite useful for internal control. The net
working capital helps in comparing the liquidity of the same firm over time.

Therefore:
NEED OF THE STUDY
Working capital management is one of the key areas of financial decision-making. It is
significant because, the management must see that an excessive investment in current assets
should protect the company from the problems of stock-out. Current assets will also determine
the liquidity position of the firm.
The goal of working capital management is to manage the firm current assets and current
liabilities in such a way that a satisfactory level of working capital is maintained. If the firm
cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may
be even forced into bankruptcy.
SCOPE OF THE STUDY:
A study of the Workingcapital involves an examination of long term as well as short
term sources that a company taps in order to meet its requirements of finance. The scope of the
study is confined to the sources that Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.)
tapped over the years under study i.e. 2013-18.
OBJECTIVES OF THE STUDY
 To study the existing working capital management system of Hero MotoCorp Ltd.
(Formerly Hero Honda Motors Ltd.).
 To find the liquidity position of the current assets and current liabilities of the
company.
 To examine feasibility of present system of managing working capital.
 To understand how the company finances its working capital
 To analyze the financial performance of the company with reference to working
capital.
 To give some suggestions to the management based on the information studied.
LIMITATIONS

 Due to the busy schedule of the executives in the company, all the required primary data
could not be collected, which might affect the results of the study.

 Recommendations of the study are only personal opinions. Hence the judgments may be
biased and could not be considered as ultimate and standard solutions.

 Short period of time is one of the limitations, due to which a detailed study could not be
conducted on the topic.
 METHODOLOGY

 The study of Working Capital management is based on primary as well as secondary data.
Data relating to. Has been collected through
SECONDARY SOURCES:
Published annual reports of the company for the year 2013-18.
PRIMARY SOURCES:
Detailed discussions with Vice-President.
Discussions with the Finance manager and other members of the Finance department.
DATA ANALYSIS
The collected data has been processed using the tools of
 Ratio analysis
 Graphical analysis
 Year-year analysis

These tools access in the interpretation and understanding of the Existing scenario of the Capital
Structure.
 The primary data was gathered through personal interaction with the director of the
company.
 The secondary data was collected from company’s annual reports from 2014-15 to 2018-19,
various books and Internet.