Working capital management
The Project Report is a summary of Study of some of the elements of Working Capital Management at the Heavy Engineering Division of Larsen & Toubro Limited (L&T, HED). The various aspects of these working capital elements have been studied. The Study of working capital management involved understanding of receivables, payables and to an extent inventory management. After a brief introduction to the nature of Business activity of Larsen & Toubro and its Business Division - Heavy Engineering Division, the report comprises a detailed comparison of Heavy Engineering Division's performance with its Indian and Foreign Competitors. The comparison is based on profitability, productivity and working capital management aspects. The basis for conducting this study has been ratio analysis. The second phase of the Project report deals with the various aspects of Working capital Management. An effort has been made further to suggest alternatives / recommendations in order to improve the performance of Payables management at HED. Some of these alternatives include viability study of Futures contracting for high value items procured, rationalization of the supplier base by means of consolidation etc. The report also includes a brief study about Receivables Management at Larsen & Toubro, Heavy Engineering Division. Objective
The basic aim of the project is to study the Management of Working Capital at Heavy Engineering Division of Larsen & Toubro Limited. The project is divided into the following 1. Study of current performance of working capital Management (Receivables, Payables and Inventory Management) at L&T, HED based on Ratio Analysis. 2. Study of Receivables Management and observations.
3. Study of Payables Management Process in detail and observations. Methodology And Data Collection Methods
The basic type of research used to prepare this report is Descriptive. The major purpose of descriptive research is to give a description of the state of affairs, as it exists during the time of study. The main characteristic of this method is that researcher has limited control over the variables affecting the study. The researcher can only report what has happened or what is happening. What, Where, When, How are the questions that can be answered by the researcher and not “Why”. Descriptive Report is that subscription which answers or addresses all these questions. The study is mainly based on the secondary data which refers to that form of information that has already been collected and is available. These include some internal sources such as annual reports and some amount of first hand information which could be gathered through one of the team members, engaged as a supplier to the company. Some of the external sources of data collection include competitor websites for annual report, research papers etc. Other sources include books and periodicals, published reports. For the measurement of performance of the Heavy Engineering Division and comparison with its competitors, the data has been sourced from the annual reports available for L&T. The period of study is Five Years i.e. the data and the financial results for the period 2003-2007 has been taken into consideration for analysis and calculations. In the case of data for Indian competitors, financial results have been accessed using Prowess and other internet resources. For financial results of foreign competitors, company websites have served as the main data source. Other sources have been SEC (EDGAR) from the United States of America where all the mandatory filings for companies are available. Various other stock exchange websites for different countries have been listed in detail in the reference section. For the Payables management and Receivables management study, information has been collected as much as possible from the net. In order to study the viability of alternatives such as futures trading for high value...
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