Department of Finance MBA (Evening) Program
Course: Working Capital Management
Report on Working Capital Management Of Atlas Bangladesh Limited Submitted to M. Shahjahan Mina Professor Department of Finance University of Dhaka Submitted By Abul Jannat Jiban (18038) Md. Naharul Islam (18043) January 01, 2013
INTRODUCTION Working capital management is concerned with the problems arise in attempting to manage the current assets, the current liabilities and the inter relationship that exist between them. The term current assets refers to those assets which in ordinary course of business can be, or, will be, turned in to cash within one year without undergoing a diminution in value and without disrupting the operation of the firm. The major current assets are cash, marketable securities, account receivable and inventory. Current liabilities ware those liabilities which intended at there inception to be paid in ordinary course of business, within a year, out of the current assets or earnings of the concern. The basic current liabilities are account payable, bill payable, bank over-draft, and outstanding expenses. The goal of working capital management is to manage the firm s current assets and current liabilities in such way that the satisfactory level of working capital is mentioned. The current assets should be large enough to cover its current liabilities in order to ensure a reasonable margin of the safety. DEFINITION OF WORKING CAPITAL According to Guttmann & Dougall “Excess of current assets over current liabilities “. According to Park & Gladson “The excess of current assets of a business (i.e. cash, accounts receivables, inventories) over current items owned to employees and others (such as salaries & wages payable, accounts payable, taxes owned to government) “ . COMPANY PROFILE
ATLAS BANGLADESH LIMITED
Registered Office: 265-267, Tongi Industrial Area, Tongi, Gazipur. Year of Establishment: 1966 as a Private Limited Company. Listing Status: Public Limited Company from 1987 Business Lines: Assembling motor cycle and mishuk (three wheeler) and importing spare parts. Authorized Capital (Taka): 100,00,00,000 Paid-up Capital (Taka): 23,70,00,000 Number of Outstanding Share: 2,37,00,000 Stock Exchange Listings: Dhaka Stock Exchange Limited, Bangladesh. Atlas Bangladesh Limited was established in 1966 under private management by the then West Pakistani entrepreneur. It was nationalized and placed under the management of Bangladesh Steel & Engineering Corporation (BSEC) in 1972 and converted into a Public Limited Company in 1987 when 49% of its share was sold to general public and 51% is retained with BSEC. Amount of authorized capital of the company is TK.100.00 Crore and Paid-up Capital is TK.23.70 Crore.
Atlas Bangladesh Ltd. is one of the major profitable companies in the engineering sector. The company assembles motor cycles and Mishuk (three-wheeler) and also imports spare parts. It also manufactures and markets some of these parts locally. The company is the sole distributor of Honda Motor Company, Japan, Hero Honda Motors Ltd. India, Atlas Honda Ltd. Pakistan in Bangladesh. It belongs to the motor cycle and three wheeler industry in Bangladesh under engineering sector. This industry composed of some private and public limited companies. WORKING CAPITAL MANAGEMENT Working Capital Management is the process of planning and controlling the level and mix of current assets of the firm as well as financing these assets. Specifically, Working Capital Management requires financial managers to decide what quantities of cash, other liquid assets, accounts receivables and inventories the firm will hold at any point of time. Working capital is the capital you require for the working i.e. functioning of your business in the short run. Gross working capital refers to the firm’s investment in the current assets and includes cash, short term securities, debtors, bills...