WORKING CAPITAL

MANAGEMENT
DEFINITION
 Working capital management is concerned with the problems that arise in
attempting to manage the current asset, current liabilities and the the
interrelationship that exist between them.

working capital generally stands for excess of current assets over current
liabilities. Working capital management therefore refers to all aspects of the
administration of both current assets and current liabilities.
INVENTORY MANAGEMENT
The inventory is stock of goods or a list of goods.
Kinds of inventories :
1. Raw material
It is basic and important part of inventories. These are goods which have not yet
been committed to production in a manufacturing business concern.
2. work in progress
These includes those materials which have been committed to production process but
have not yet been completed.
INVENTORY MANAGEMENT
3. consumables
These are materials which are needed to smooth running of the manufacturing
process
4. finished goods
These are the final output of the production process of the business concern. It is
ready for consumers
OBJECTIVES OF INVENTORY
MANAGEMENT
1. to efficient and smooth production process
2. to maintain optimum inventory to maximize the profitability
3. to meet the seasonal demand of the products
4. to avoid price increase in future
5. to ensure the level and site of inventories required
6. to plan when to purchase and where to purchase
7. to avoid both over stock and under stock of inventory
TECHNIQUES OF INVENTORY
MANAGEMENT
A. techniques based on the order quantity of inventories :
1. stock level
 is the level of stock which is maintained by the business concern at all times.
The business concern must maintain optimum level of stock to smooth running of
the business process.
2. minimum level
 the business concern must maintain minimum level of stock at all times. If the
stock are less than the minimum level, then the work will stop due to shortage of
material.
TECHNIQUES OF INVENTORY
MANAGEMENT
3. Re-order level
 is fixed between minimum level and maximum level. Reorder level is the level
when the business concern makes fresh order at this level.
Reorder level = max consumption x max reorder period
4. maximum level
 it is the maximum limit of the quantity of inventories, the business concern must
maintain. If the quantity exceeds maximum level limit the it will be overstocking.
Maximum level = (reorder level + reorder quatity) – (min Consumption x min
delivery period)
TECHNIQUES OF INVENTORY
MANAGEMENT
5. Average stock level
 calculated :
Average stock level = min stock level + ½ re-order quantity max level
6. Lead Time
 is time normally taken in receiving delivery after placing orders with suppliers.
The time taken in processing the order and then executing it is known as lead time
7. safety stock
 implies extra inventories that can be drawn down when actual lead time and/or
usage rates are greater than expected.
TECHNIQUES OF INVENTORY
MANAGEMENT
Economic order Quantity (EOQ)
 refers to the level of inventory at which the total cost of inventory comprising
ordering cost and carrying out. Determining an optimum level involves two types of
cost such as ordering cost and carrying cost.
 The EOQ is that inventory level that minimizes the total of ordering of carrying cost.
EOQ =
Where : A = annual consumption (units)
S = buying cost per order
I = inventory carrying cost per unit
EXAMPLE
A firm buys equipment from outside suppliers $ 30/unit. Total annual needs are 800
unit. The following data :
a. annual return on investment 10%
b. rent, insurance, taxes per unit per year $1
c. cost of buying an order, $ 100
d. determine the EOQ
SOLUTION
Annual consumption = 800 units
Ordering cost = $ 100
Annual consumption in $ = 800 unit x $ 30/unit = $ 24.000
Total interest cost = 10% x $ 24.000 = $ 2.400
Interest cost per unit = 2.400/800 = $ 3
Inventory carrying cost (I) = interest cost + rent, insurance, taxes cost = 3 + 1=4
= = 200 unit
EXAMPLE
The annual demand for a product is 6.400 units. The unit cost is $ 6 and inventory
carrying cost per unit per annum is 25% of the average inventory cost. If the cost of
procurement is $ 75, determine :
A. economic order quantity (EOQ)
B. number of orders per annum
C. time between two consecutive orders
SOLUTION
a. annual consumption (A) = 6.400 units
ordering cost (S) = $ 75
inventory carrying cost per unit (I) = 25% x $6 = $ 1.5 per unit
= = 800 unit
b. number of order per annum = 6.400/800 unit = 8 orders
c. time between two consecutive orders = 12 months/8 orders = 1,5 months
VALUATION OF INVENTORIES
1. FIRST IN FIRST OUT ( FIFO)
2. LAST IN FIRST OUT (LIFO)
3. AVERAGE PRICE METHOD
EXAMPLE
From the particular given below write up the stores ledger card :
2016 Januari 1, opening stock 1.000 units at $ 26 each.
Date Particulars
January 5 Purchased 500 units at $ 24,50 each
January 7 Issued 750 unit
January 10 Purchased 1.500 units at $ 24 each
January 12 Issued 1.100 units
January 15 Purchased 1.000 units at $ 25 each
January 17 Issued 500 units
January 18 Issued 300 units
January 25 Purchased 1.500 units at $ 26 each
January 29 Issued 1.500 units

Adopt the FIFO and LIFO method of issue and ascertain the value of the closing stock
 A. FIFO METHOD
DATE RECEIPTS ISSUED BALANCE
QUANTIT QUANTI QUANTI
  Y PRICE AMOUNT TY PRICE AMOUNT TY PRICE AMOUNT
                   
2016                  

1-Jan BALANCE       1000 26.00 26,000

5-Jan 500 24.50 12,250       1000 26.00 26,000

              500 24.50 12,250

7-Jan       750 26.00 19,500 250 26.00 6,500

              500 24.50 12,250

10-Jan 1500 24.00 36,000       250 26.00 6,500

              500 24.50 12,250

              1500 24.00 36,000

12-Jan       250 26.00 6,500      

        500 24.50 12,250      

        350 24.00 8,400 1150 24.00 27,600

15-Jan 1000 25.00 25,000       1150 24.00 27,600

              1000 25.00 25,000

17-Jan       500 24.00 12,000 650 24.00 15,600

              1000 25.00 25,000

18-Jan       300 24.00 7,200 350 24.00 15,600

              1000 25.00 25,000

25-Jan 1500 26.00 39,000       350 24.00 15,600

              1000 25.00 25,000

              1500 26.00 39,000

29-Jan       1000 25.00 25,000      

        350 24.00 15,600      

        150 26.00 3,900 1350 26.00 35,100

 A. LIFO METHOD
DATE RECEIPTS ISSUED BALANCE
QUANTI QUANTI QUANTIT
  TY PRICE AMOUNT TY PRICE AMOUNT Y PRICE AMOUNT
                   
2016                  
1-Jan BALANCE       1000 26.00 26,000
5-Jan 500 24.50 12,250       1000 26.00 26,000
              500 24.50 12,250
7-Jan       500 24.50 12,250 750 26.00 19,500
        250 26.00 6,500      
10-Jan 1500 24.00 36,000       750 26.00 19,500
              1500 24.00 36,000
12-Jan       1100 26.00 28,600 750 26.00 19,500
              400 24.00 9,600
15-Jan 1000 25.00 25,000       750 26.00 19,500
              400 24.00 9,600
              1000 25.00 25,000
17-Jan       500 25.00 12,500 750 26.00 19,500
              400 24.00 9,600
              500 25.00 12,500
18-Jan       300 25.00 7,500 750 26.00 19,500

              400 24.00 9,600

              200 25.00 12,500
25-Jan 1500 26.00 39,000       750 26.00 19,500
              400 24.00 9,600
              200 25.00 12,500
              1500 26.00 39,000
29-Jan       1500 26.00 9,600 750 26.00 19,500
              400 24.00 9,600
              200 25.00 12,500 41,600
1350
MANAJEMEN PIUTANG
- Piutang tercipta pada saat perusahaan melakukan penjualan secara kredit.
- alasan perusahaan menjual secara kredit merupakan suatu upaya untuk
meningkatkan penjualan. Dengan penjualan yang semakin meningkat, diharapkan
laba juga meningkat.
- untuk mengendalikan piutang, perusahaan perlu menetapkan kebijakan kredit yang
berfungsi sebagai standar, apabila kemudian dalam pelaksanaan tidak sesuai dengan
standar yang telah ditetapkan, maka perusahaan perlu melakukan perbaikan.
MANAJEMEN PIUTANG
Penjualan kredit tanpa diskon.
Misalkan suatu perusahaan semula melakukan penjualan secara tunai, penjualan
yang tercapai setiap tahun rata-rata sebesar Rp. 800 juta. Perusahaan kemudian
merencanakan akan menawarkan syarat penjualan n/60. ini berarti bahwa pembeli
bisa membayar pembelian mereka pada hari ke 60.
Diperkirakan dengan syarat penjualan yang baru tersebut tersebut perusahaan akan
bisa meningkatkan penjualan sampai dengan Rp. 1.050 juta. Profit margin yang
diperoleh sekitar 15%. Jika dana yang diperlukan untuk membiayai piutang tersebut
sebesar Rp. 148,75 juta, Apakah perusahaan perlu beralih ke penjualan kredit,
apabila biaya dana sebesar 16%?
ANALISIS PENJUALAN KREDIT
TANPA DISKON DENGAN
PENJUALAN TUNAI
Manfaat :
Tambahan keuntungan karena tambahan penjualan :
= 15% x (1.050 juta – 800 juta) = Rp. 37,50 juta
Pengorbanan :
Perputaran piutang = 360 hari/60 hari = 6 kali dalam setahun
Rata-rata piutang = Rp. 1.050 juta/6 = Rp. 175 juta
Dana yang diperlukan untuk membiayai piutang tersebut = Rp. 148,75 juta
Biaya dana yang harus ditanggung karena memiliki piutang = 16% x Rp. 148,75 juta = Rp. 23,80 juta.
Tambahan manfaat bersih = Rp. 37,50 juta – 23,80 juta = Rp. 13,70 juta.
Analisis tersebut menunjukkan bahwa manfaat lebih besar dari pengorbanan, sehingga rencana untuk
menjual secara kredit diharapkan memberikan hasil yang menguntungkan.
MENJUAL SECARA KREDIT
DENGAN DISKON
Misalkan perusahaan menawarkan syarat penjualan, 2/20 net 60, yang berarti bahwa
jika pembeli melunasi pembeliannya pada hari ke 20, mereka akan memperoleh
diskon 2%, tetapi jika melunasi pada hari ke 60 mereka harus membayar dengan
harga penuh.
Diperkirakan 50% akan memanfaatkan diskon dan sisanya akan membayar pada hari
ke 60. apakah perusahaan sebaiknya menjual kredit secara diskon atau menjual
kredit tanpa diskon?
ANALISIS PENJUALAN KREDIT
DENGAN DISKON
DIBANDINGKAN DENGAN
TANPA DISKON
Manfaat :
Rata-rata periode pembayaran piutang= 50%(20) + 50% (60) = 40 hari
Perputaran piutang = 360/40 = 8 kali
Rata-rata piutang = 1.050 juta/8 kali = Rp. 131,25 juta
Rata-rata dana yang dibutuhkan untuk membiayai piutang = Rp. 111,56 juta
Penurunan biaya dana = (Rp. 131,25 juta – Rp. 111,56 juta) x 16% = 3,15 juta
Pengorbanan :
Diskon yang diberikan = 2% x 50% x Rp. 1.050 = Rp. 10,50 juta
Manfaat bersih = 3,15 juta – 10,50 juta = - 7,35 juta
Analisis tersebut menunjukkan bahwa diskon yang diberikan ternyata lebih besar dari penghemtan biaya,
dengan demikian maka perusahaan tidak perlu memberikan diskon.
PENJUALAN KREDIT DENGAN
KEMUNGKINAN PIUTANG
TIDAK TERTAGIH
Misalkan dari penjualan dengan syarat n/60 tersebut diperkirakan 1% tidak terbayar,
apakah perusahaan sebaiknya menjual secara kredit atau tetap tunai
ANALISIS PENJUALAN KREDIT TANPA DISKON
DENGAN PENJUALAN TUNAI (MEMPERHATIKAN
KEMUNGKINAN PIUTANG TIDAK TERTAGIH)
Manfaat :
Tambahan keuntungan karena tambahan penjualan :
= 15% x (1.050 juta – 800 juta) = Rp. 37,50 juta
Pengorbanan :
Perputaran piutang = 360 hari/60 hari = 6 kali dalam setahun
Rata-rata piutang = Rp. 1.050 juta/6 = Rp. 175 juta
Dana yang diperlukan untuk membiayai piutang tersebut = Rp. 148,75 juta
Biaya dana yang harus ditanggung karena memiliki piutang = 16% x Rp. 148,75 juta = Rp. 23,80 juta.
Kerugian karena penjualan tidak terbayar = 1% x Rp. 1.050 juta = Rp. 10,50 juta
Tambahan manfaat bersih = Rp. 37,50 juta – (23,80 juta + 10,50 juta) = Rp. 3,20 juta.
Analisis tersebut menunjukkan bahwa dengan mempertimbangkan kemunginan penjualan tidak terbayar, penjualan
kredit diharapka masih menguntungkan apabila dibandingkan dengan penjualan secara tunai.
 SEKIAN
TERIMA KASIH