Study on Working Capital Management at PNB

mba finance projectsThe prime objective of any business is to maximize the value of the company and to maximize the wealth of its shareholders. Working capital management has its own role to play in attaining this goal. Working capital is the funds required for day to day working in a business concern. The working capital management involves deciding upon the amount and composition of current assets and how to finance those assets. There should be a proper trade off between risk and profitability in each decision relating to it.

This project work has been undertaken to know the procedures involved in the working capital management in PUNJAB NATIONAL BANK. An attempt is made to study the factors contributing towards working capital and the sources on which the company is depending for funds. The research study was also conducted to derive working capital ratios, to know the performance and efficiency of working capital management and to know the kind of policy adopted in this part of the management. For analyzing the factors and conditions influencing working capital tables and graphs were drawn based on the study.


Based on this study the major findings are that from the overall finance point view, company is not performing well. Some of the symptoms may be great deal of time is taken in managing current assets and liabilities, arranging short-term financing, negotiating favorable credit terms, controlling movement of cash, receivables, inventory etc. It is also been found that important financial ratios like all the liquidity position, current ratio, working capital ratio comparatively below the industry standards and are causing concern.

This research study indicates that in order to improve the over all performance of PNB the management must take all possible steps, review and modify various policies, cash budgets and inventory status by using sound information management system to enable management to have a close control over the various operations.

A strong banking sector is important for flourishing economy. The failures of the banking sector may have an adverse impact on other sectors. The skill for working capital is some what unique and novel, through the goals are to make an efficient use of funds for minimizing the risk of loss to attain project objective. It involves deciding upon the amount and composition of current assets and how to finance these assets. Working capital management is not a simple one.

It enables an enterprise to start and conduct its operations. Working capital requirements is estimate under optimistic assumptions, but what the expectations come true, the firm may be confronted with a difficult situation. The optimum working capital investment to be determined by decision on the level of capacity utilization. We have human and natural resources in abundance but our

capital resources are limited and arresting the pace of development, storage of funds for working capital has caused many business to fail and in many cases has restarted their growth. Working capital which is concerned with short term financial decision, have been relatively neglected in the literature of finance. From the banker’s point of view, it is working capital gap (total current assets minus total current liabilities excluding bank borrowing). This is actually needed by a borrower for working capital. It is the successful play with finance traders that generally decides the fortune of any business enterprise.

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