Abstract:
The present study is conducted to understand the concept of working capital management at Kohinoor Textile Mills Limited and Taxila cotton Mills. Calculate liquidity ratios relative to the working capital management and understand how working capital management influences the liquidity position of the firm, study the various components of working capital and its management. The operating cycle, the working capital cycle, the cash balances and other individual activities that drive the working capital. The methods to collect, generate, disburse, and invest idle cash effect the cash balances of a company. The data to be taken for analysis consist of accounts of 2004-06 years, policies and procedures of the company and methods used by the company. According to the major findings of the study, working capital management is effecting the net operations and cash conversion cycle of the companies. According to the findings, though liquidity ratios calculated does not give a favorable picture for Taxila Cotton and lacks behind than the ideal standard and working capital cycle is also not running efficiently whereas Kohinoor is doing well but still need to address. The major reason for this is that payment period, collection period and turnover time for Kohinoor in case of inventories is of shorter duration than Taxila according to the policies and procedures of the Kohinoor textile company. The problems, which investigated through study, were the lack of written credit policy by both companies. The present study shows that the efficient working capital management benefits by the ability to produce distribute and sell products while costs include the opportunity cost of funds invested.
