Tata motors working capital management

Tata  motors working capital management project report

Project Synopsis

The automobile sector is a key driver of industrial growth in the global and Indian economy. According to the Organisation Internationale des Constructeurs d’Automobiles, 2006, annual turnover of the global auto industry is around $5.09 trillion, which is equivalent to the sixth largest economy in the world. Moreover, the industry is an indirect contributor to several other sectors of the economy and it is treated as a leading economic sector. The Indian automotive industry is distinguished as a key component and core driver of national economy. Over the decades, the industry has undergone rapid transformation, witnessed enormous prospects and emerged as most attractive markets in the world.

The project undertaken is on “Working capital management in Tata Motors Ltd.”. It describes about how the company manages its working capital and the various steps that are required in the management of working capital. Working Capital refers to the cash a business requires for managing its day-to-day operations, for financing the conversion of raw materials into finished goods which the company sells for generating revenue. Among the most important items of working capital are levels of inventory, accounts receivable and accounts payable. Analyst looks at these items for signs of a company’s efficiency and financial strength. Working Capital refers to the fund invested in current assets that is investment in stocks, sundry debtors, cash and current assets. Current assets are essential to use fixed assets profitably. A company can be endowed with assets and liabilities but short of liquidity if it is assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both short term-debt and upcoming operational expenses.