A Study On Working Capital Management At Karnataka Milk Federation

Introduction

Introduction To Finance:-

Finance is the lifeblood of a business. The Financial Management study is about the process of procuring and judicious use of financial resources with a view to maximizing the value of the firm thereby the value of the owners i.e., equity shareholders in a company is maximized.

The traditional view of Financial Management looks into the following functions that a Finance Manager of a business firm will perform.

✔Arrangement of short-term and long-term funds from financial institutions.
✔ Mobilization of funds through financial instruments like Equity shares, Preference shares, Debentures, Bonds etc.
✔ Orientation of Finance functions with the Accounting function and compliance with legal provisions relating to funds procurement, use and distribution.

With the increase in complexity of modern business situations, the role of a Finance Manager is not just confined to the procurement of funds, but his area of functioning is extended to judicious and efficient use of funds available to the firm, keeping in view the objectives of the firm and expectations of the providers of funds.

Working Capital

Working capital management is significant in financial management due to the fact that it plays a pivotal role in keeping the wheels of a business enterprise running. Working capital management is concerned with short-term financial decisions. Shortage of funds for working capital has caused many businesses to fail and in many cases, has retarded their growth. Lack of efficient and effective utilization of working capital leads to earning a low rate of return on capital employed or even compels to sustain losses. The need for skilled working capital management has thus become greater in recent years.

A firm invests a part of its permanent capital in fixed assets and keeps a part of it for working capital i.e. for meeting the day-to-day requirements. We will hardly find affirm which does not require any amount of working capital for its normal operations. The requirement of working capital varies from firm to firm depending upon the nature of the business, production policy, market conditions, seasonality of operations, conditions of supply etc. Working capital for a company is like the blood of the human body. Working capital is the lifeblood of any business firm and shortage of funds for working capital will lead to business failure. The management of short-term funds. Working capital management if carried out effectively, efficiently and consistently, will assure the health of an organization.

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