MAGIC OF MANAGING THE

BALANCE SHEETBy

Deepak JaiswalPrateek KhareRohit Shukla Akshat Bajpai

Sisir Show

Balance sheet

"a statement of the financial position of an enterprise as at a given date, which exhibits

assets, liabilities and capital”.

Benefits of having a Balance Sheet

It allows companies to improve financial performance, without boosting sales or

lowering cost. Balance sheet management make business

more efficient at converting input into output and resulted in cash.

It can speed up the cash conversion cycle.

Why CFO And Separate Finance department ???

Understanding working capital

Definition of 'Working Capital'A measure of both a company's efficiency and its short-

term financial health.

Working capital = current assets – current liabilities

• Positive working capital means that the company is able to pay off its short-term liabilities.

Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory).

PRODUCTION CYCLE OF AMANUFACTURING CONCERN.

The Elements of Working Capital

Major elements Major element

Stocks

Receivables

Cash (in hand and at bank)

Trade creditors

lessequals

Current liabilitiesWorking capital Current assets

Why do we need to Manage Working Capital?

A shortage of Working Capital may lead to operating difficulties - shortage of stock, inability to offer credit to clients, slow payment to creditors, missed opportunitiesAn excess of Working Capital also represents money “locked up” in stocks and debtors - investment may not produce an appropriate returnWorking capital, therefore, needs careful management

Relationship with banker

• Share the true picture of financial position of the company.

• Discuss the planning .• Repayment of loan.• Submission of budget report to bank.• Transparency in flow of transactions.

Analyzing the account receivables.

•Analysis of debtors behavior. •It will represent the firm’s debt collectionPeriod .