Working capital management: A case study on ABJA investment CO. PTE. LTD. (Subsidiary of Tata Steel)

Abstract

Purpose of this case study is to understand the concept of working capital management and actual working capital position of a subsidiary of Tata Steel. Identifying the major components of the working capital with the help of studying and analyzing the balance sheet of the company. Identifying the factors which lead to increase or decrease in ABJA Investment Company. I have explained the concept of working capital management. The major decision management takes using working capital ratios. How ratios are calculated and how their impact on companies operations and management decision? ABJA Investment Company issues guaranteed notes listed on the Open Market of the Frankfurter Wertpapierborse, Frankfurt Stock Exchange and the Official List of the Singapore Exchange Securities Trading Limited. The company is based in Singapore. I have analyzed its financial data in last 3 years and calculated its ratios and provided by suggestion based on my analysis. Working capital management is to utilize the two components of working capital, current assets and current liabilities, to ensure the most financially efficient operation of the company. Working capital management is to make sure the company always maintains sufficient cash flow to meet its short-term operating costs and short-term debt obligations. The working capital cycle is the amount of time it takes to turn the net current assets and current liabilities into cash. The longer the cycle is, the longer a business is tying up capital in its working capital without earning a return on it. Therefore, companies strive to reduce their working capital cycle by collecting receivables quicker or sometimes stretching accounts payable.