Certification in Working Capital Management

Explore unit two planning of working capital, including the operating cycle and its significance, plus the estimation of working capital requirements, determinants, production cycle, and business cycle growth and expansion.

Learn the planning of working capital, assess cash flow health, and analyze current assets and liabilities to manage short-term funding for payroll, vendors, rents, and taxes.

Analyze gross working capital as the total current assets a firm holds, including cash, marketable securities, debtors, and inventory, and explain its link to net working capital via current liabilities.

Analyze the operating cycle and cash cycle, detailing how inventory days plus accounts receivable days minus payable days measure business efficiency and cash flow.

Explore the significance of the operating cycle, defined as the days to buy, sell, and collect cash, and its impact on cash flow, working capital, and operational efficiency.

Learn how to estimate working capital requirements using current assets minus current liabilities, apply methods like percentage of sales and cash forecasting, and assess risks of undercapitalization.

Explore the determinants of working capital, from business nature and size to production cycles, seasonal factors, policy choices, storage levels, capital structure, and types of working capital.

Explore how the production cycle converts raw materials into finished goods, linking product design, planning, sourcing, manufacturing, and cost accounting to optimize working capital and timely delivery.

Analyze how the business cycle influences working capital needs, with expansion increasing finance for inventories and investments, and recession reducing capital requirements, linked to GDP and expenditures.

Explore how growth and expansion drive higher working capital needs and require continual planning, clear time-bound goals, and strategic methods like market development, diversification, and partnerships.

Explore financing of working capital needs by examining interaction with commercial banks and trade credit in unit three, and introduce the key concepts of this financing.

Learn how to estimate and finance working capital, covering raw materials, work in process, finished goods, receivables, and cash, with financing options and liquidity strategies for daily operations.

Trade credit is a spontaneous, supplier-provided short-term financing that lets customers buy now and pay later, often without collateral, with terms set by the supplier.

Get an introduction to the financing mix, focusing on working capital concepts and banking policy recommendations from the Tandon, core, Marathi, and Kannan committees.

Understand the financing mix as the proportion of current assets funded by current liabilities and long-term funds, balancing debt and equity to enhance profitability, manage risk, and ensure long-term survival.

Examine how banks finance daily operations through working capital policies, influenced by RBI recommendations and the Tandon Committee, balancing current assets and liabilities with liberal, conservative, or matching credit approaches.

The lecture explains the Tandon committee recommendations that shifted banks toward need-based lending, set inventory norms for industries, and outline financing sources, margins on working capital gaps, and end-use supervision.

The core committee recommends streamlining cash credit with peak and non-peak limits, bifurcating limits into demand loan and cash credit, and quarterly statements for limits above ₹51 lakh.

The Marathi committee recommends dropping the third lending method, adopting the second method for working capital, and introducing a fast-track credit appraisal while aligning assets with RBI guidelines.

Liberate working capital finance through Kannan Committee recommendations, granting banks discretion over credit limits and security levels, with mpbf withdrawn and RBI guidelines guiding credit practices.

Explore unit five: credit risk management, and learn risk rating model principles for managing credit risk, as well as credit rating and credit scoring.

Credit risk management evaluates borrower default risk using the five Cs—character, capacity, capital, collateral, conditions—and aims to reduce loan losses with integrated quantitative solutions and real-time scoring.

Learn the fundamentals of risk management in financial institutions, including identifying, analyzing, evaluating, prioritizing, and treating risk; implement monitoring, risk control, and financing strategies to minimize losses and maximize opportunities.

Credit risk is the potential lender loss from a borrower failing to repay, arising from intrinsic risk and portfolio concentration, measured by default probability and exposure at default.

Assess how the risk rating model combines probability of default and impact to quantify credit risk for lending decisions and portfolio management.

Explore principles for the management of credit risk, including capacity, capital, collateral, and character, and learn to apply risk monitoring and policy to maximize risk-adjusted returns.

Credit rating assesses the credit worthiness and repayment capacity of borrowers. Banks use internal ratings or external agencies like Moody's to guide loan pricing and decisions.

Credit scoring uses statistical techniques to combine ratios into a single three-digit score that predicts creditworthiness, based on factors like repayment history, credit utilization, and length of credit history.

Explore unit six: manage collections and disbursement of working capital, control disbursements, find the optimal working balance, plan cash requirements, and evaluate cash investment criteria and yields.

Learn how to manage collections and disbursements of working capital by optimizing cash, accounts receivable and payable, inventory, and the cash conversion cycle to boost profitability and solvency.

Learn to control disbursements to maximize available cash for investments and debt payments, using centralized cash management, checkbook flow, and rigorous audit and payment controls in accounts payable.

Find the optimal work life balance by taking steps such as starting with values, setting boundaries, tracking time, and balancing work with personal life in organizational settings.

Plan cash requirements with cash flow planning and a cash budget to forecast balances, identify deficits or surpluses, and support smooth expenditures and minimize borrowing costs.

Invest idle cash by placing excess working capital into liquid, interest-bearing assets to protect value against inflation and earn returns from stocks, fixed deposits, mutual funds, and government securities.

Identify and apply investment criteria to evaluate excess cash investments, focusing on return on investment, liquidity, risk tolerance, portfolio diversification, and long-term cash flow in working capital management.

Explain how yield reflects income from investments, with yield curve risk from interest-rate shifts, price–yield inverse relation, and how short maturities affect yields; compare yield to roi and rental yield.

Explore the fundamentals of cash management, including motives for holding cash and marketable securities, factors determining the optimum cash balance, and an introduction to the stone model.

Cash management monitors and maintains cash flow to ensure liquidity for operations, investments, and liabilities, by forecasting inflows and outflows and using strategies like discounting debtors and negotiating supplier terms.

Forecast cash inflows and outflows to optimize liquidity and working capital, applying invoice financing, efficient receivables processing, and franchising as a strategic growth method.

Explain motives for holding cash and marketable securities, including transaction, precautionary, tax, agency, and speculative motives, and discuss liquidity and near-cash assets as hedges.

Identify the factors determining the optimum cash balance and explain how cash flow, liquidity, and safety stock influence meeting obligations and solvency.

The stone model uses upper and lower control limits with a look ahead forecast of cash flows. It minimizes transaction costs and disposes surplus to a predetermined return point.

Explore the essentials of unit eight cash planning, including cash budget simulations, cash balance uncertainties, and strategies like hedging with futures and options for forecasting and managing working capital.

Cash flow planning identifies future expenditures and planned investments to accumulate required cash within a target time frame, and forecasts inflows and outflows for cash budgets and pro forma statements.

Explore cash budget simulations to monitor cash position, plan capital needs, and anticipate short- and long-term borrowings, guided by steps from beginning balances to inflows and outflows.

Define cash balance as cash on hand and in bank, including petty cash, adjusted for discounts and returns, to forecast collections and determine beginning balance, inflows, and outflows.

Explore cash balance uncertainties by examining how short run cash forecasts, sales and collection rate variability, and volatile cash flows challenge liquidity planning.

Assess uncertainty in cash forecasts using sensitivity analysis and simulation, and measure accuracy with actual versus forecast cash flows. Acknowledge challenges and external influences on forecast accuracy.

Explore hedging against interest rate exposure, using swaps, forwards, caps, and collars to stabilize cash flows, manage risk, and align budgets.

Explain futures contracts as standardized, exchange-traded agreements with settlement guarantees, and options as rights to buy or sell assets at a set price by expiration, including calls and puts.

Explore cash flows forecasting and treasury management as part of unit nine, covering cash forecasting horizons, hedging cash balance uncertainties, and treasury risk management.

Forecast cash flows to guide treasury management, ensuring enough cash for obligations, improving planning, and mitigating risks through visibility into future inflows and outflows.

Identify cash forecasting horizons, short term, medium term, and long term, and compare direct and indirect methods to forecast cash flow, linking financial statements for accurate working capital planning.

Explore hedging cash balance uncertainties by weighing hedge costs against avoided expenses and understanding the trade-offs among methods to stabilize cash flows.

Highlight treasury risk management through planning for unexpected expenditures, optimizing cash flow via receipts, disbursements, forecasting, and reporting, while mitigating liquidity, operational, technology, third-party, and people risks.

Explore the introduction to unit ten receivable management, outlining its contents and the introductory details you will study.

Accounts receivable management tracks credit sales and collections to sustain cash flow. It covers steps from receive order to write-off and defines accounts receivable manager’s duties—invoice, collect, and apply cash.