Concept and determinant of working capital, Schemes and Mind Maps of Business

Download Concept and determinant of working capital and more Schemes and Mind Maps Business in PDF only on Docsity! 1 Theories and Approaches UNIT 1 CONCEPTUAL FRAMEWORK Objectives The objectives of this unit are to: • Explain the various types of working capital and their behaviour. • Examine the cyclical flow and characteristics of working capital. • Discuss the significance and tools of planning for working capital. • Find out the impact of inflation on working capital and finally. • Analyse the trends in working capital in Indian companies. Structure 1.1 Introduction 1.2 Definition of Working Capital 1.3 Constituents of Working Capital 1.4 Types of Working Capital 1.5 Cyclical Flow and Characteristics of Working Capital 1.6 Planning for Working Capital 1.7 Working Capital and Inflation 1.8 Trends in Working Capital 1.9 Summary 1.10 Key Words 1.11 Self Assessment Questions 1.12 Further Readings 1.1 INTRODUCTION Financial management can be divided into two broad areas of responsibility as the management of long-term capital and the management of short-term funds or working capital. The management of working capital which constitutes a major area of decision-making for financial managers is a continuous function which involves the control of the every ebb and flow of financial resources circulating in the enterprise in one form or another. It also refers to the management of current assets and current liabilities. Efficient management of working capital is an essential pre–requisite for the successful operation of a business enterprise and improving its rate of return on the capital invested in short-term assets. Virtually every business enterprise requires working capital to pay-off its short- term obligations. Moreover, every firm needs working capital because it’s not possible that production, sales, cash receipts and payments are all instantaneous and synchronised. There elapses certain time for converting raw materials into finished goods: finished goods into sales and finally realisation of sale proceeds. Hence, funds are required to support all such activities in the firm. A number of terms like working funds, circulating capital, temporary funds are used synonymously for working capital. However, the expression, Working Capital, is preferred by many due to its popularity and simplicity. 1.2 DEFINITION OF WORKING CAPITAL Working capital may be defined in two ways, either as the total of current assets or as the difference between the total of current assets and total of current liabilities. 2 Concepts and Determination of Working Capital Like, most other financial terms the concept of working capital is used in different connotations by different writers. Thus, there emerged the following two concepts of working capital. i) Gross concept of working capital ii) Net concept of working capital Gross concept: No special distinction is made between the terms total current assets and working capital by authors like Mehta, Archer, Bogen, Mead and Baker. According to them working capital is nothing but the total of current assets for the following reasons: i) Profits are earned with the help of the assets which are partly fixed and partly current. To a certain degree, similarity can be observed in fixed and current assets in that both are partly borrowed and yield profit over and above the interest costs. Logic then demands that current assets should be taken to mean the working capital of the corporation. ii) With every increase in funds, the gross working capital will increase while according to the net concept of working capital there will be no change in the funds available for the operating manager. iii) The management is more concerned with the total current assets as they constitute the total funds available for operating purposes than with the sources from which the funds came, and that iv) The net concept of working capital had relevance when the form of organisation was single entrepreneurship or partnership. In other words a close contact was involved between the ownership, management and control of the enterprise and consequently the ownership of current and fixed assets is not given so much importance as in the past. Net concept: Contrary to the aforesaid point of view, writers like Smith, Guthmann and Dongall. Howard and Gross, consider working capital as the mere difference between current assets and current liabilities. According to Keith. V. Smith, a broader view of working capital would also include current liabilities such as accounts payable, notes payable and other accruals. In his opinion, working capital management involves the managing of individual current liabilities and the managing of all inter-relationships that link current assets with current liabilities and other balance sheet accounts. The net concept is advocated for the following reasons: i) in the long-run what matters is the surplus of current assets over current liabilities. ii) it is this concept which helps creditors and investors to judge the financial soundness of the enterprise. iii) what can always be relied upon to meet the contingencies is the excess of current assets over current liabilities, since it is not to be returned; and iv) this definition helps to find out the correct financial position of companies having the same amount of current assets. In general, the gross concept is referred to as the Economics concept, since assets are employed to derive a rate of return. What rate of return is generated by different assets is more important than the analysed difference between assets 5 Theories and Approachesbring about a change in the investment of working capital. This is said to vary depending upon the type of working capital. These variations with respect to different types of firms are presumed to vary as indicated in Fig. 1.1 Figure 1.1 exemplifies the behaviour of different types of working capital in diverse firms affected by seasonal and cyclical variations in production or sales. In case of non-growth non-seasonal and non-cyclical firms, all the working capital can be considered permanent as shown in (A). Similarly, growing firms require more working capital over a period of time, but fluctuations are not assumed to occur. As such, in this case also, no variable portion of working capital is present. In the third case (growing seasonal and non-cyclical firms), there are two types of working capital. On the contrary, in case of growing, seasonal and cyclical firms, all the working capital is assumed to be of varying type. Fig. 1.1: Behaviour of Working Capital (A) Non-growth, non-seasonal (B) Growing, non-seasonal non-cyclical firms and non-cyclical firms Permanent W.C (C) Growing, seasonal and (D) Growing, seasonal and non-cyclical firms cyclical firms Variable W.C. Variable W.C. Activity 1.1 Mention the points of differentiation between i) Gross concept and Net concept ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... Pe rm an en t w or ki ng Cap ita l Permanent W.C W or ki ng C ap ita l (R s. ) Time (years) 6 Concepts and Determination of Working Capital ii) Permanent working capital & Variable working capital ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 1.5 CYCLICAL FLOW AND CHARACTERISTICS OF WORKING CAPITAL For every business enterprise there will be a natural cycle of activity. Due to the interaction of the various forces affecting the working capital, it transforms and moves from one to the other. The role of the financial manager then, is to ensure that the flow proceeds through different working capital stages at an effective rate and at the appropriate time. However, the successive movements in this cycle will be different from one enterprise to another, based on the nature of the enterprises. For example: i) If the enterprise is a manufacturing concern, the cycle will run something like: Cash→(buying)→Raw Materials→(production)→Finished Goods→(sales on credit) Accounts Receivable→(Collections)→Cash. ii) If the enterprise is purely a Retailing Company and one, which has no manufacturing problem the cycle is shortened as: Cash→(buying)→Merchandise→(Sales)→Accounts Receivables→(Collections) → Cash. iii) If the enterprise is a purely financing enterprise, the cycle is still shorter and it can be shown as: Cash→(sanction of loans)→Debtors→(collections)→Cash. But in real business situations, the cyclical flow of working capital is not simple and smooth going, as one may be tempted to conclude from these simple flows. This cyclical process is repeated again and again and so do the values keep on changing as they move through the cash to cash path. In other words the cash flows arising from cash sales and collections from debtors will either exceed or be lower than cash outflows represented by the amounts spent on materials, labour and other expenses. An excess cash outflow over cash inflow is a clear indication of the enterprise having suffered a loss. Thus it is apparent, that the amount of working capital required and its level at any particular time will be governed directly by the frequency with which this cash cycle can be sustained and repeated. The faster the cycle the lesser will be the investment needed in working capital. Form the aforesaid discussion, one can easily identify three important characteristics of working capital, namely, short life span, swift transformation and inter–related asset forms and synchronization of activity levels. 1. Short-life Span Components of working capital are short-lived. Typically their life span does not exceed one year. In practice, however, some assets that violate this criterion are still classified as current assets. 2. Swift Transformation and Inter-related Asset Forms In addition to their short span of life, each component of the current assets is swiftly transformed into the other asset. Thus cash is utilised to replenish 7 Theories and Approachesinventories. Inventories are diminished when sales occur that augment accounts receivable and collection of accounts receivable increases cash balances. Thus a natural corollary of this quick transformation is the frequent and repetitive decisions that affect the level of working capital and the close interaction that exists among the members of the family of working capital. The latter entails the assumption that efficient management of one asset cannot be undertaken without simultaneous consideration of other assets. 3. Assets Forms and Synchronization of Activity Levels A third characteristic of working capital components is that their life span depends upon the extent to which the basic activities like production, distribution and collection are non-instantaneous and unsynchronized. If these three activities are only instantaneous and synchronized, the management of working capital would obviously be a trivial problem. If production and sales are synchronized there would be no need to have inventories. Similarly, when all customers pay cash, management of accounts receivable would become unnecessary. 1.6 PLANNING FOR WORKING CAPITAL Planning provides a logical starting point for many of the decisions. It is very much true for working capital decision also. Unless, we plan for procurement and effective use we will not be in a position to get best out of working capital. In a way, effective planning leads to appropriate allocation of the money among different components of working capital. Drawing a distinction of the kind of Peter F. Drucker, between efficiency (doing things right) and effectiveness (during right things). Planning clearly embraces the latter. It is for this reason planning for working capital is considered highly appropriate and inclusive of the present discussion on conceptual framework. While planning should logically begin at the top of the organisational hierarchy, responsibility for planning exists at all levels within the organisation. While working capital planning is a part of financial planning the responsibility permeats among different managers within the organisation responsible for managing different components of working capital. At the level of planning for individual components of working capital persons like materials manager, credit manager and cash manager are involved. However, the overall responsibility for co- ordinating the planning of working capital typically rests with the top management. 1.6.1 Tools of Planning for Working Capital It should be interesting to know how to identify the relevant tools for completing the planning exercise. Treating the planning for working capital as part of financial planning. We can note down the following tools of analysis with respect to time- frame. a) Short term planning – Cash Budgeting b) Medium term planning – Determination of appropriate levels of working capital items c) Long term planning –Projected pay outs and returns to shareholders in terms of CVP and funds flow analysis. Cash budget: In the short term cash budgeting is considered a handy device for planning working capital. The use of cash budget technique as a means of determining the size of the cash flows is considered superior to the use of proforma balance sheets or judging by the past experience. A cash budget is a 10 Concepts and Determination of Working Capital In India, the rate of inflation was more grievous than in many other countries, and the wholesale prices rose by almost 32 percent during 1956-61, by slightly less than 30 percent during 1961-66, and 25 percent during the Annual Plan periods (1966-69). Besides fluctuations the annual rate of rise in the wholesale price was exceptionally high and in 1974-75, almost alarming. Inflation rate based on Wholesale Price Index (WPI) averaged around 9 per cent during 1970-71 to 1990-91. Again it touched the highest level of the decade in 1991-92 at 16.7 percent, when the economic activity was at its lowest ebb. Consequent upon the reforms, there has been some recovery in the economy and the rate of inflation has come down to even 2 percent during 1998-99, threatening the regime of deflation. Nevertheless, there is no consistency in the performance of the economy. Again the rate of inflation is moving towards an average of 4-5 percent. Alongside these indices there are some hidden inflationary potentials which are not apparent. Prominent among these are generous subsidies, changing international prices of crude oil and petroleum products and the administered prices for certain other products. The combined impact of these factors is definitely seen on the inflation. The impact of inflation on working capital be understood in the following manner. 1.7.1 Size of Working Capital Inflation causes a spurt in the prices of input factories like raw materials, labour, fuel and power, even though there is no increase in the quantum of such input factors used. Secondly inflationary conditions by providing motivation for higher profits induce the manufacturers to increase their volume of operations. High profits and high prices create further demand thus, leading to further investments in inventories, receivables and cash. The cycle, thus continues for a long time, entailing on the finance manager to arrange for larger working funds after each successive increase in the volume of operations. Thirdly, companies also tend to accumulate inventories during inflation to reap the speculative profits. This kind of blocking up of funds, in turn necessitates enterprise to maintain larger working capital funds. Finally the existing financial reporting practices of firms on the basis of historical costs as per the companies Act and Income Tax Act are also responsible, for the reduction in the size of working capital finance. During the period of inflation, since historical costs set against the current prices and inventories are valued at current prices, higher profits would be reported. The reporting of inflated profits creates two aberrations. The company has to pay higher taxes on the inflated profit figure though much of it is unrealised and if the company also declares the remaining profits as dividends, it leads to distribution of dividends out of capital and eventually reduces the funds available to the company for operations in inflationary years owing to escalation in cost of inputs, increase in the volume of operations, accumulation of speculative inventory and the adoption of historical cost accounting system. 1.7.2 Availability of Working Capital Besides the problem of increased demand for funds there would be a reduction in the availability of such funds associated with higher costs during inflation. There would be no problem if the working capital funds were available to an unlimited extent at a reasonable cost, regardless of the economic condition prevailing in the economy. In reality, the situation is completely the opposite as both internal and external sources of funds for financing working capital become scarce. As pointed out earlier, during inflation the availability of internal sources gets reduced because of the maintenance of records on historical cost basis. On the other hand, the position with regard to external sources of funds is equally 11 Theories and Approachesdisheartening. The rapid increase in inflation has given rise to the formulation of tight money policy by the Reserve Bank of India with a view to restricting the flow of credit in the economy. Consequently, the extension of credit facilities from banks have become extremely limited. Further, the diversion of bank funds to priority sectors, after nationalisation has made it more difficult to raise funds from banks. Till recently, companies depended heavily on public deposits for meeting their working capital requirements. Their availability however was reduced due to the restrictions imposed by the RBI on the companies for the mobilisation of deposits from public, particularly since 1978. Further the advent of Government companies into the capital market for accepting public deposits made it more difficult to attract funds from the public. Coming to the trade credit, one must note that it may not be available for long periods, and the suppliers of goods tighten the credit facilities during inflationary period. The issue of long term loans may also be slackened, as the investors would be less attracted by investments offering a fixed return like debentures and preference shares. This is so because in terms of purchasing power the principal amount of investment as well as the interest would dwindle. Thus, these restrictions and limitations on the availability of working capital from internal and external sources makes it difficult for the finance manager to raise funds during inflation. 1.7.3 Components of Working Capital It may be interesting at this stage of the analysis to consider the impact of inflation on the components of working capital, namely, inventory receivables and cash. Inventory Not many understand fully the impact of inflation on the management of inventory. Inflation affects the decisions in respect of inventory in many ways, namely; i) It leads to over-investment in inventory. ii) It results in shortages. iii) It affects valuation of inventories; and iv) It renders the traditional inventory control techniques ineffective. During the periods of inflation when the prices rise rapidly, companies will have an incentive to invest more heavily in inventory than is indicated by the minimum cost calculation. If the management believes the price of an item will increase by 10 per cent in the next month, substantially more of that item may be ordered than normal, of course, due to increase in inventory the company may get speculative gain, but this speculative gain may be off-set by the increase in taxes due to higher profit figures, reported in times of inflation and higher carrying costs. Another difficulty that the company is required to face is the material shortages in the periods of inflation. It is not known whether inflationary escalations result in shortages or shortages occur because of instability caused by inflation. Whatever be the real source of the problem, companies should be conscious of the price trends and accordingly re-evaluate their internal purchasing and organisational systems. 12 Concepts and Determination of Working Capital Very few firms realise the impact of inflation on the valuation of inventory and the extent to which it contributes to unrealised profits. In other words, inflation affects the valuation of inventories, affecting thereby the amount of profits reported in the financial statements. Not only inflation affects the inventory, but inflation itself is also increased due to the inefficient management of inventory. Delivering the keynote address at a National Convention on the subject of, ‘Curbing Inflation through Effective Materials Management’, Shri P.J.Fernandes put forward the following five propositions to show the impact of inflation on the materials management. a) The stocks which are held by the enterprises have a direct and immediate relationship to general price levels. b) The price level in any country is to a great extent determined by the cost of production. The cost of production is to a great extent determined by the cost of inputs. Hence, if the cost of inputs goes up, the cost of production as well as the price level also goes up. c) An effective system of materials management must necessarily result in an increase in production. d) The materials manager can have a total and absolute impact on production outside his unit, and e) It is the materials management, which can reduce the crushing burden of credit expansion, and the money supply, which again will have a direct and absolute impact on inflationary tendency. Finally, it may be considered with the help of the following illustration how inflation renders the traditional inventory control techniques ineffective. Assumptions 1) Annual consumption Rs. 1,00,000 2) Economic Ordering Quantity Rs. 3,125 3) No of orders per year 32 4) Ordering cost Rs. 20 per order 5) Carrying cost Rs. 25 per cent 6) Lead time constant 7) Price rise 5 per cent per month. The ordering and carrying costs would be as follows: a) Ordering costs = 32 × 20 = Rs 640 3125 25 b) Carrying costs = ——— × —— = Rs 390.63 2 100 c) Total costs = Rs. 640 + 390.63 = Rs 1030.63 If 32 orders are placed in a year, the distribution of the same in each month and the material cost month-wise would be as given below. 15 Theories and Approachesstandard. It was varying between the lowest of 1.23:1 and the highest of 1.52:1 during the period, 1992-98. In case of individual industries too none of them could achieve this mark except shipping industry. (See Table 1.2). 1.8.2 Constituents of Working Capital In order to know the significance of each of the items of working capital, it is better to decompose the total. Such an attempt is made both for current assets and current liabilities. Among the current assets, loans and advances dominated the total position. Almost half of the current assets are in the form of debtors and advances (see Table-1.3). It is heartening to note that the dominant position of inventories once has come down significantly from around 60 percent to only just 32 percent now. Receivables always blamed more than half of the current assets. Debtors can be considered more liquid than inventories. In that sense this development can be considered a healthy feature of the Indian corporate sector. Among the current liabilities sundry creditors and other current liabilities have occupied a prime place (see Table- 1.4), constituting around almost 60 percent. Bank borrowings for working capital purposes have come down following the credit discipline exercised by the Reserve Bank, during nineties, but showing up during 2001-02. These trends give an idea of the behaviour of working capital in Indian companies. 1.9 SUMMARY This unit has aimed at providing a conceptual understanding of the issues involved in working capital. Thus, it started with the discussion on definition and ended with the trends in working capital in Indian companies. There is a clear difference in the understanding of the concept of working capital among accountants and economists. This unit has attempted to highlight this aspect. Similarly, what constitutes working capital is discussed to enhance the understanding of the readers. Though there is a broad consensus, there are a few differences in identifying the constituents, particularly in the area of investments and advance payments. Attempt has also been made to highlight the significant characteristics of working capital. Working capital planning is considered yet another issue, which engages the attention of corporate managers. The discussion is further strengthened to incorporate matters on inflation and trends. At the end, a synoptic view is presented of the working capital trends, as compiled from the data of RBI. 1.10 KEY WORDS Working capital: Working capital is defined as the total of current assets or as the difference between current assets and current liabilities. Current assets: The total of inventories, debtors, loans and advanced, cash and marketable securities. Current liabilities: The sum of sundry creditors, unclaimed dividends short term loans, bank credit and various types of provisions. Permanent working capital: Minimum level of investment in current assets required for production. Variable working capital: Working capital which takes care of the fluctuations in business activity. Cash budget: A projection of estimated cash inflows and outflows. CVP analysis: A measure of long term planning to study the relationship among cost, volume and profit. 16 Concepts and Determination of Working Capital Funds flow : A tool to underline changes in the movement of funds. Inflation: A phenomenon of rising prices. 1.11 SELF ASSESSMENT QUESTIONS 1) Distinguish between gross working capital and net working capital? 2) Why is working capital considered a liquidation concept? 3) Discuss the various types of working capital and trace out the behaviour of working capital with respect to time? 4) What is the impact of inflation on working capital? 5) How do you plan for the working capital of an organisation? Choose your own company as an example? 6) Refer to the balance sheets of a company for a few years and analyse the trends is working capital. What do they mean to the enterprise studied? Table 1.1 : Current Assets as percentage of total net assets among different industry groups in public limited companies in India Sl. Industry 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 99-00 00-01 01-02 1) Tea 38.1 34.6 41.2 38.8 36.2 39.5 38.6 36.5 35.6 2) Sugar 62.6 58.9 60.4 56.3 56.2 54.8 55.4 56.8 57.6 3) Tobacco 68.5 66.3 66.7 67.6 61.8 60.0 - - - 4) Cotton Textiles 51.7 53.5 53.5 53.2 51.8 50.7 42.1 41.6 41.8 5) Silk Rayon 50.1 48.4 49.3 35.9 30.8 28.9 - - - Textiles 6) Engineering 62.2 58.3 58.4 57.3 52.5 49.2 - - - 7) Chemicals 45.0 44.3 42.8 41.5 37.3 36.1 45.5 45.4 46.1 8) Rubber 57.3 56.5 55.6 60.0 58.0 56.8 46.8 47.9 46.3 9) Paper 47.3 43.8 44.7 43.4 34.5 37.6 34.3 35.3 32.7 10) Construction 74.5 71.6 71.7 50.9 66.5 37.1 66.3 64.5 65.5 11) Electricity 23.6 16.1 19.6 23.8 29.4 23.9 61.5 58.7 57.4 12) Trading 79.2 77.7 79.5 80.9 79.1 80.1 82.5 83.5 81.6 13) Shipping 28.6 30.6 38.8 36.9 37.0 36.6 50.4 47.3 45.4 14) Diversified Co. 47.5 45.0 44.3 48.9 43.7 40.8 36.8 43.1 42.6 Source: RBI Bulletins, October 1997, October 1999 and October 2003. Table 1.2 : Current ratio among different industry groups in public limited companies in India Sl. Industry 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 99-00 00-01 01-02 1) Tea 1.56 1.60 1.96 1.5 1.4 1.7 1.6 1.4 1.4 2) Sugar 1.16 1.32 1.35 1.2 1.1 1.1 1.2 1.1 1.0 3) Tobacco 1.22 1.34 1.30 1.3 1.3 1.3 - - - 4) Cotton Textiles 1.26 1.33 1.35 1.4 1.4 1.3 1.2 1.2 1.0 5) Silk Rayon 1.43 1.64 1.72 1.6 1.0 0.8 - - - Textiles 6) Engineering 1.35 1.36 1.44 1.3 1.3 1.2 - - - 7) Chemicals 1.41 1.43 1.54 1.5 1.5 1.3 1.3 1.3 1.2 8) Rubber 1.36 1.38 1.54 1.6 1.4 1.4 1.3 1.3 1.2 9) Paper 1.17 1.34 1.52 1.3 1.3 1.2 1.1 1.1 0.8 10) Construction 1.09 1.04 1.09 1.1 1.5 0.9 1.3 1.3 1.1 11) Electricity 1.00 0.98 1.18 1.3 1.1 1.4 1.4 1.3 1.3 12) Trading 1.21 1.29 1.28 1.4 1.5 1.4 1.4 1.4 1.4 13) Shipping 1.28 1.64 2.29 2.1 2.1 1.9 1.4 1.2 1.2 14) Diversified 1.84 1.73 1.82 1.4 1.3 1.2 1.0 1.1 1.2 17 Theories and ApproachesCompanies Source: RBI Bulletins, October,1997; October 1999 and October 2003. Tabla-1.3 : Constituents of current Assets (in percent )in public limited companies. Sl. Particulars 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 99-00 00-01 01-02 1. Inventories 39.8 33.3 32.5 34.5 32.2 32.0 33.8 33.7 31.8 2. Receivables 50.9 47.5 52.9 53.2 56.3 55.2 53.4 53.7 54.3 3. Quoted Investments 2.6 11.8 7.4 4.9 4.8 3.5 4.9 5.5 5.5 4. Advance of 0.1 0.1 0.2 0.1 0.1 0.1 0.4 0.4 - Income tax 5. Cash & Bank 6.6 7.3 6.9 7.3 6.6 9.2 7.5 6.7 8.4 Balances Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Current Assets (67558) (82134) (115541) (136469) (148353) (155716) (179159) (189080) (196426) Source: RBI Bulletins, October, 1997, October 1999 & October 2003. Note: Figurers in the brackets indicate absolute amounts in crores. Table 1.4 : Constituents of current liabilities (in per cent) in public limited companies Particulars 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 99-00 00-01 01-02 A. Short term 33.2 28.3 29.5 29.7 29.8 29.3 32.0 37.5 40.0 borrowings from Banks B. Unsecured loans 6.5 8.4 9.4 8.9 13.4 15.6 - - - from Companies and others C. Trade dues and 59.7 62.7 60.6 60.7 55.9 54.0 63.1 55.2 53.2 other Current liabilities 1.Sundry creditors 38.5 39.2 34.2 37.6 35.2 20.2 37.5 33.8 31.7 2.Others 21.2 23.5 26.4 23.1 20.7 31.8 25.6 21.4 21.5 D. Provisions 0.6 0.6 0.5 0.7 1.0 1.0 4.9 5.4 9.8 Total Current Liabilities 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 (48089) (54307) (67618) (96646) (111653) (126555) (133005)(164273) (180165) Source: RBI Bulletins, October 1997; October.1999 and October 2003. Note: Figures in the brackets indicate absolute amounts in crore. 1.12 FURTHER READINGS 1) V.K. Bhalla, 2003, Working Capital Management, Amol Publications Pvt. Ltd., New Delhi-110002. 2) Rao, K.V., 1990, Management of Working Capital, Deep & Deep,New Delhi. 3) Ramamoorthy, V.E., 1976, Working Capital Management,. IFMR, Madras. 4) Dileep R. Mehta., 1974, Working Capital Management, Englewood Cliffs, Prentice Hall. 5) Park and Gladson, 1963, Working Capital, Macmillan, New York.