A STUDY OF VISION SAVING AND CREDIT CO-OPERATIVE LIMITED

ON
WORKING CAPITAL MANAGEMENT

A Project Work Report Submitted By:

DEEPESH KATUWAL
Exam Roll: 2190017
T.U. Regd. No: 7-2-219-6-2015
Myanglung Multiple Campus, Terhathum

Submitted to:
The Faculty of Management
Tribhuvan University Kathmandu, Nepal

In the Partial Fulfillment of the Requirement for the Degree of Bachelor

of Business Studies (B.B.S.)
Myanglung , Terhathum
Baisakh-2076
 DECLARATION

I, hereby, declare that the work reported in this project work report
entitled “A STUDY OF VISION SAVING & CREDIT CO-OPERATIVE
LIMITED ON WORKING CAPITAL MANAGEMENT” submitted to the
Faculty of Management, Tribhuvan University, is my original work done
for the partial fulfillment of the requirement for the Bachelor of
Business Studies (BBS) under the supervision of Myanglung Multiple
campus, Terhathum
 
…………........................
Deepesh Katuwal
Date : May 2019
 Recommendation

This is to certify that the project work report Submitted by:

Deepesh Katuwal
Entitled:
A Study of Vision Saving & Credit Co-operative Limited
On
Working Capital Management

Has been prepared as approved by this Department in the prescribed

format of the Faculty of Management. This project work report is
forwarded for examination.

----------------
Shiva Prasad Dahal
Myanglung Multiple Campus Terhathum
2076-01-25
 ACKNOWLEDGEMENT

This is an attempt to present project work report entitled “ A Study of

Vision Saving & Credit Co-operative Limited on Working Capital
Management”  prepared for partial fulfillment of the requirement for
the Degree of Bachelor of Business Studies (BBS) is an outcome of
continuous and immeasurable cooperation and support of several
hands. I would like to express my heartfelt gratitude to all for their
support.

I express my sincere honor and special sense of gratitude to my

academic supervision, Mr. Shiva Prasad Dahal for their generous
guidance, thoughtful encouragement and brilliant insight throughout
this research work.
I am extremely indebted to my parents and brothers who have
contributed their valuable time and resources in making me what I am
now.
I owe great intellectual debt for support and immense contribution to
administrative of Vision Saving & Credit Co-operative Limited. I am
thankful to library staffs of Tribhuvan University, Myanglung Multiple
Campus .

Deepesh Katuwal
Myanglung Multiple Campus
Terhathum, Nepal
 ABBREVIATIONS

VSCCL Vision Saving & Credit Co-operative Limited 

B. S. Bikram Sambat
Co. Company
Ed. Edition
FY Fiscal Year  
NBL Nepal Bank Limited
i .e That is
LTD Limited
BBS Bachelor of Business Studies
NEPSE Nepal Stock Exchange  
No. Number  
NRB Nepal Rastra Bank
S.D Standard Deviation
T. U. Tribhuwan University
LC Letter of Credit
Ktm. Kathmandu
PEs Public Enterprises
& And
% Percentage
WC Working Capital  
NWC Net Working Capital
Misc. Miscellaneous
HBL Himalayan Bank Limited
 CHAPTER – ONE
INTRODUCTION

1.1 Background of the Study

Financial institution can be considered as the catalyst to the economic growth of a
country. The development process of a country involves the mobilization and
deployment of resources. Development of trade, commerce and industry are the
prime requisite for the attainment of the economic political and social goals. To
fulfill the purpose of planning, financial functions more often dominate the other
functions. “There is always lack of finance in underdeveloped economy because
natural resources are either underutilized or utilized in non-productive sectors.
Likewise, underdeveloped countries are not efficient in mobilization of financial
resources. So in these countries for the rapid development of the economy, there
should be proper mobilization of resources. Due to various difficulties or even
ignorance of the people, such resources have not been properly utilized. Hoarding
could be one of the reasons for this. So, financial institutions play a vital role to
encourage thrift and discourage hoardings by mobilizing the resources and
removing the habit of hoarding. Co-operatives are the heart of the financial
system, they pursue rapid economic growth, developing the saving/banking habit
among the people, collecting the small-scattered resources in one bulk and
utilizing them in further productive purposes and rendering other valuable
services to the country. Thus, this gives the individuals an opportunity to borrow
funds against future income, which may improve the economic well-being of the
borrower. The management of working capital plays a vital role for exiting of any
public enterprises successfully while studies it. It is the centers on the routine day-
to-day administration of current assets and current liabilities. Therefore working
capital management in public enterprises is very important mainly for four
reasons.

1. Public enterprises must need to determine the adequacy of investment in

current assets otherwise it could seriously erode their liquidly base.
 2. They must select the type of current assets, suitable for investment so as to
raise their operational efficiency.
3. They are required to ascertain the turnover of current assets, which
determine profitability of the concerns.
4. They must find out the appropriate source of funds to finance current
assets.

1.1.1 Organization of the Study

The whole study is divided into five main chapters. The first chapter presents of
introduction, statement of the problems, and objective of the study, significance
of the study, and limitation of the study. The second chapter presents of review of
literature. Review of related material like previous case study, browser booklets,
journals, articles and report, magazines etc. will be done. The third chapter
presents of research design, nature and source of data, method of data collection
and method of analysis under research methodology. The fourth chapter presents
the collected data will be tabulated and analyzed by using various financial tools,
mathematical and statistical tools under data presentation and analysis. The fifth
chapter presents of the brief summary of whole research report and conclusions.
It’s also provides some useful suggestion and recommendations to concerned
parties.

1.2 Profile of Vision Saving & Credit Co-operative Limited.

Vision Saving & Credit Co-operative Limited was registered on B.S. 2068-06-06
with an objective of efficient co-operative services to various segments of the
society. Today the VSCCL has grown to become one of the leading co-operative on
operating area Myanglung Municipality Terhathum, Nepal.

The board of directors of VSCCL as follows:

1. President : Mr. Krishna Prasad Subedi
2. Vice President : Mrs. Parbati Sanu Dangi
1.3 Objective of the Study
Working capital plays a vital role behind the success and failure of business.
Working capital has to be adequate. The excess or the shortfall of the working
capital is harmful for a business. The main objectives of the study are to examine
the management of working capital of VSCCL. The specific objectives of the study
are as follows.
1. To examine the current assets and current liabilities and their impact on
liquidity.
2. To analyze the working capital trend position of VSCCL.
3. To analyze the financial position of VSCCL by using different tools and
techniques.
4.  To find out suggestions and recommendations on the basis of applied
system and financial position.

1.4 Significance of the study

Working capital is regarded as the lifeblood for any enterprise because it is
needed for sustaining the enterprise in day operation. If the business cannot
maintain a satisfactory level of working capital, it is likely to become insolvent and
may even push into bankruptcy. So the goal of working capital management is
likely to become management is to manage the firm's current's assets and current
liabilities in such a way that a satisfactory level of working is maintained. The
success or failure of any organization depends on its strategy which is affected by
working capital management. Working capital management is the crux of problem
to prepare proper strategy on its favors. The study has multidimensional
significance which can be divided into four broader headings.

 Its significance to the Shareholders: The study can be helpful to aware the
shareholders regarding the working capital management, i.e., liquidity and
profitability of their co-operatives. The comparison will help them to
identify the productivity of their funds.
  Its significance to the Management: The study can be helpful to go deep
into the matters as to why the working capital management of co-operative
is better (or worse) than competitors.
 Its significance to the Outsiders: Among outsiders, mainly the members,
customers and financing agencies are interested in the performance of co-
operative and the customers (both depositors and debtors) can identify the
overall position of co-operative. The financial agencies can understand
where they are secured or not.
 Its significance to the Policy Makers: The study will be helpful to them
while formulating the policy regarding saving & credit co-operative.

1.5 Review of Literature

This chapter is basically concerned with review of literature relevant to the topic
working capital management. The purpose of reviewing of literature is to develop
some expertise in one’s area, to see what new contribution has made and to
receive some ideas for developing a research design. Thus, previous studies
cannot be ignored as they provide the foundation of the present study. This
chapter highlights the literature that is available in concerned subject as to my
knowledge, research work, and relevant study on this topic, review of journals and
articles and review of thesis work performed previously.

1.5.1 Conceptual Framework

Conceptual framework deals with the theoretical aspects of working capital,
working capital management, working capital investment and financing policies,
financing of working capital, need for working capital, determinants of working
capital etc.

1.5.2 Concept of Working Capital

Every Saving & Credit Co-operative needs various types of assets in order to carry
out its function without any interruption. They are fixed and current assets. Some
fixed assets have physical existences and are required to producing goods and
services over long period. This type of fixed assets is called tangible fixed assets. It
includes land, building, plant, machinery, furniture, and so on. But some other
fixed assets cannot generate goods and services directly. However, it reflects the
right of the firm. It is called intangible fixed assets. It represents patents,
copyrights, trademarks, and goodwill. Both fixed assets are written off over a
period of time. Current assets are those resources of the firm, which are either
held in the form of case or expect to be converted into cash with in an operating
cycle of the business. It includes, cash, prepaid expenses, marketable securities,
account receivable, stock of raw materials, work-in-progress, and finished goods.
Among these, some assets are required to meet the need of regular production
and some for day-to-day expenses and short-term obligations. Current liabilities
are those claims of outsiders, which are expecting to be matured with in an
accounting year. It includes; creditors, bill payable and outstanding expenses.
Working capital refers to the resources of the firm that are used to conduct
operations day to day work that makes the business successful. Without cash, bills
cannot be paid, without receivables; the firm cannot allow timing difference
between delivering goods or services and collecting the money to pay for them.
Without inventories the firm cannot engage in production nor can it stock goods
to provide immediate deliveries. As a result of the critical nature of current assets,
the management of working capital is one of the most important areas in
determining whether a firm will be successful. The term working capital refers to
the current assets of the firm those items that can be converted into cash within
the year. Hence, working capital management is the management for the short
term. It is a process of short term decision making regarding the current assets
and current liabilities affecting the long term operation of an enterprise. It is a
process of planning and controlling the level of mix of current assets of the firm as
well as financing these assets. It concludes decision regarding cash and
marketable securities, receivables, inventories and current liabilities with an
objective of maximizing the overall value of a firm.
According to N.P. Agrawal (1981:70) “working capital consists broadly at the
portion of the assets of business used in, or related to ,current operational and
represented at the any one time of the operating cycle by such items an account
receivable, inventories of raw material, stores work in progress, finished goods
bills receivable and cash. Asses of this type are relatively temporary nature, since
the invested names are normally capable of being reconverted or of being change
in form with in the short period of time, and the time ultimate recovery depends
on the manufacturing cycle as well as sales and collection cycles”.
 Working capital is a controlling nerve of center of every business organization
because no business can run smoothly without the proper control upon it. Thus, it
plays the crucial role in the success and failure of the organization. As the
management of current assets and current liabilities of the business organization
is necessary for day-to- day operations, it plays the key role in the success and
failure of the organization not only in the short run, in the long run also. In the
concern of the management of working capital there have been made number of
studies from different management experts and students in various enterprises.

1.5.3 Working Capital Management

Finance is the lifeblood for any organization, without which the operation of any
business concern is not possible. But only the availability fund is not enough, it
requires the proper management of those funds to drive a firm on the road to
success. The management of the funds of a business can be described as financial
management. Financial management is mainly concerned with two aspects. They
are fixed assets and liabilities and current assets and liabilities. Fixed assets and
liabilities are long term investment and sources of funds, current assets and
liabilities means current or the short-term uses and sources of funds. Both of such
funds play an important role in the financial aspects of a business concern.
 Figure: 1.1
Working capital management as a financial function

In the words of K.V. Smith, the term working management is closely related with
short term financing and it is concerned with collection and allocation of
resources. Working Capital management is related to the problems that arise in
attempting to manage the current assets, the current liabilities and the
interrelationships that exist between them. (Smith, 1974:5)
According to I.M. Pandey there are two concepts of working capital gross concept
and net concept. The gross working capital, simply called as working capital refers
to the firm's investment in current assets. Current assets are the assets which can
be converted into cash within accounting year (or operating cycle) and include
cash, short-term securities, debtors, bill receivable and stocks. The term net
working capital refers to the difference between current assets and current
liabilities. Current liabilities are those claims of outsiders, which are expected to
mature for payment within an accounting year and include creditors, bills payable
and outstanding expenses. Net working capital can be positive or negative. A
positive net working capital will arise when current assets exceed current liabilities
and a negative net working capital occurs when current liabilities are in excess of
current assets. He also added that net working capital concept also covers the
question of judicious mix of long-term and short term funds for financing current
assets. (Pandey, 1991: 796-797)  

Net working Capital = Current Assets – Current Liabilities

The goal of working capital management is to support the long-term operation

and financial goals of the business.

1.5.4 Types of Working Capital

Working capital can be classified into two parts; permanent working capital and
variable working capital. These working capitals are necessary for any organization
for continuous production and sales without any interruption.

1. Permanent (Fixed) working capital: Permanent working capital refers to

that level of current assets, which is required on continuous basis over the
entire year. A manufacturing concern cannot operate regular production
and sales functions in the absence of this portion of working capital.
Therefore, a manufacturing concern holds certain minimum amount of
working capital ensure uninterrupted production and sales functions. This
portion of working capital is directly related to the firm's expansion of
operation capacity.
2. Variable working capital: variable working capital represents that portion
of working capital, which required over permanent working capital.
Therefore, this portion of working capital depends up on the nature of
firm’s production, relation between labor and management. The firms
which are seasonal in character in their business need a large amount of
working capital for holding inventory during the peak period. But as soon as
the peak period is over, the working capital becomes idle. Therefore, firm
having seasonality in their business find it convenient to meet their working
capital requirement by restoring to short term sources such as
 Bank loan
 Members’ deposit
 Other payables
  Provision for taxation
 Depreciation provision etc.

Figure: 1.2
Permanent and variable working capital

Variable Working Capital

Permanent Working Capital

Time Period

1.5.5 Determinants of Working Capital

 All the firms, whether public or private, manufacturing or non-manufacturing,
must have adequate working capital to survive in competitive market. It should
have neither too excess nor too inadequate working capital. But, there are no sets
of rules or formulae to determine the working capital requirement of the firm. It is
because of a large number of factors that influence the working capital
requirement of the firm. A number of factors affect different firm in different
ways. Internal policies and changes in environment also affect the working capital.
Generally, the following factors affect the working capital requirement of the firm
(Pandey; 1999: 816).
1. Nature & Size of the Business:  working capital requirements of a firm are
basically influenced by the nature of its business. Greater the size of the
business, greater will be the need of working capital similarly, the trading
business needs more working capital then that of service type business.
2. Manufacturing Cycle: Working capital requirement of an enterprise is also
influenced by the manufacturing or production cycle. It refers to the time
involved to make the finished goods from the raw materials. During process
of manufacturing cycle, the larger will be working capital requirement and
vice-versa.
3. Production Policy: Working capital requirements is also determined by its
production policy. The firm producing seasonal goods may locate it sales in
different season. This type of fluctuating production policy affects the
working capital policy of the firm.
4. Availability of Credit: Availability of credit facility is another factor that
affects the working capital requirement. If the firm can get credit facility
easily on favorable conditions, it requires less working capital to run the
firm smoothly otherwise more working capital is required to operate the
firm smoothly.
5. Profit Margin: The level of profit margin differs from firm to firm. It depends
upon the nature and quality of product, marketing management and
monopoly power in the market. If the firm deals with the high quality
product, has a sound marketing management and has enjoyed monopoly
power in the market then it earns quite high profit and vice-versa. Profit is
sources of working capital pool by generating more internal funds.
6. Growth and expansion: A growing firm needs more working capital than
those static ones. However, it is difficult to precisely determine the
relationship between the growth and expansion of the firm and working
capital needs.
7. Credit Policy: Working capital requirement depends on terms of sales.
Different terms may be followed to different customers according to their
credit worthiness. If the firm follows the liberal credit policy then it requires
more working capital. Conversely, if firm follows the stringent credit policy,
it requires less working capital.
8. Level of Tax: The level of taxes also influences working capital requirement.
The amount of taxes to be paid in advance is determined by the prevailing
tax regulations. But the firm's profit is not constant or can't be
predetermined. Tax liability in a sense of short term liquidity is payable in
 cash. Therefore, the provision for tax amount is one of the important
aspects of working capital planning. If tax liability increases, it needs to
increase the working capital and vice versa.
9. Price Level Change: Generally, a firm is required to maintain the higher
amount of working capital if the price level rises, because the same level of
current assets needs more funds due to the increasing price. In conclusion,
the implications of changing price level on working capital position will vary
from firm to firm depending on the nature and other relevant consideration
of the operation of the concerned firms.

1.5.6 Need for Working Capital

Working capital is the lifeblood and controlling nerve center of every business
organization because without the proper control upon it, no business organization
can run smoothly. Thus, it plays a crucial role in the success and failure of the
organization. The need for working capital to run the day to day business activities
cannot be overemphasized. We will hardly find a business firm which does not
require any amount of working capital. Indeed, firms differ in their requirements
of the working capital. We know that firms aim at maximizing the wealth of
shareholders. In its endeavor to do so, a firm should earn sufficient return from its
operation. The extent to which profit can be earned naturally depends upon the
magnitude of sales among the other things. For constant operation of business,
every firm needs to hold the working capital components, cash, receivable,
inventory etc. therefore, every firm needs working capital to meet the following
motives (Pandey; 1999: 809).
1. Transaction Motive: Transaction motive require a firm to hold cash and
inventories to facilities smooth production and sales operations in regular.
Thus, the firm needs working capital to meet the transaction motive.
2. Precautionary Motive: Precautionary motive is the need to hold cash and
inventories to guard against the risk of the unpredictable change in
demand and supply forces and other factors such as strike, failure of
important customers, unexpected slowdown in collection of account
receivable, cancellation of some other order for goods and some other
 unexpected emergency. Thus, the firm needs the working capital to meet
contingencies in future.
3. Speculative Motive: It refers to the desire of a firm to take advantages of
the opportunities like opportunities of profit making investment, an
opportunity of purchasing raw material at a reduced price on payment of
immediate cash, to speculate on interest rate, and to make purchase at
favorable price etc. Thus, the firm needs the working capital to meet the
speculative motive (Van Horne & Wachowicz; 1999: 220).

1.5.7 Financing of Working Capital

Every manufacturing concern or industry requires additional assets whether they
are in stable or growing conditions. When the growing firm wants to generate
sustained normally require fixed capital as well as working capital. Additional
portion of working capital is approximately dominated by the same rate as sales.
But this portion of capital requirement depends upon the nature of the firm. So
the most important function of finance manager is to determine the level of
working capital and to decide how it is to be financed. Financing of any assets is
concerned with two major factors-cost and risk. Therefore, the financial manager
must determine an appropriate financing mix or decide how current liabilities
should be used to finance current assets. However, a number of financing mixes
area available to the financial manager. He can present generally three kinds of
financing.
 
1. Long Term Financing: Long term financing has high liquidity and low
profitability. Ordinary share, debenture, preference share, retained
earnings and long term debts from financial institution are the major
sources of long term financing. Even it includes retained earnings and long
term loan from Nepal Industrial Development Corporation and long term
other commercial banks.
2. Short Term Financing: Firm must arrange short term credit in advance. The
sources of short term financing of working capital are trade credit and bank
borrowing.
 a. Trade Credit: It refers to the credit that a customer gets from supplies of
goods in the normal course of business. The buying firms does not have to
pay cash immediately for the purchase is called trade credit. It is mostly an
informal arrangement and granted on an open account basis. Another form
of trade credit is bills payable. It depends upon the term of trade credit.

b. Bank Credit: Bank credit is the primary institutional sources for working
capital financing. For the purpose of bank credit, amount of working capital
requirement has to be estimated by the borrowers and banks are
approached with the necessary supporting data. Bank determines the
maximum credit based on the margin requirements of the security. Loan
arrangement, overdraft arrangement and commercial paper are the types
of loan provided by commercial bank

c. Spontaneous Financing: Spontaneous financing arises from the normal

operation of the firms. The two major sources of such financing are trade
credit (i.e., credit and bills payable) and accruals. Whether trade credit is
free of cost or not actually depends upon the terms of trade credit.
Financial manager of the firm would like to finance its working capital with
spontaneous sources as much as possible. In practical aspect, the real
choice of current assets financing is either short term or long term sources.
Thus, the financial manger concentrates his power in short term versus long
term financing. Hence, the financing of working capital depends upon the
working capital policy, which is perfectly dominated by the management
attitude towards the risk return.

1.5.9 Review of Major Empirical Studies

There are various studies concerned with Working Capital Management
documented in internal arena. The books written by different author entitled to
review as under;
1.5.9.1 Review of Various Books
Weston and Brigham (1997) have given some theoretical insights into working
capital management after their various research studies on it. The bond
conceptual findings of their study provide sound knowledge and guidance for the
further study on the field of management working capital in any enterprises and
naturally to this study as well. They explain in the beginning, the important of
working capital, the use of short term versus long-term debt, relationship
between current assets to fixed assets. The components of working capital they
have deal with current assets, which are, cash, marketable securities, receivable
and inventory. For the efficient management of cash, they have explained the
different cash management model.

Van Horne (1994) has categorized the various components of working capital, i.e.,
liquidity, receivable and inventory and current liabilities and grouping them
according to the way they affect valuation. He has also described the different
methods for efficient management of cash and marketable securities and various
models for balancing cash and marketable securities. For the management of
receivable, different credit and collection policies have been described and various
principles of inventory have been examined for inventory management and
control. He has written different types of books, articles and other facts relating to
financial terminology. He is dealing about working capital management in broad
version. He has explained all short-term assets. Working capital management
usually described as involving the administration of these assets namely cash,
marketable securities, receivables, inventories and the administration of current
liabilities.

Pandey I.M (1999) “There are specially two concepts of working capital: Gross
concept and net concept. The gross working capital simply called as working
capital refers to the firm's investment on current assets. Current assets are those
assets which can be converted in to cash with in an according year and included
cash, short term securities, debtors, bill receivable, stock, inventories and pre-paid
expenses. The term net working capital refers to the differences between current
assets and current liabilities. Current liabilities are those claims of outsiders which
can expected to mature for payment with in an accounting year and includes
creditors, bills payable, Bank overdraft and outstanding expenses or accrued
income. Net working capital can be negative or positive. A negative net working
capital occurs when current liabilities are in excess of current assets.” 

Agrawal N.K (1998) “Working capital management is the effective life blood of
any business. Hence the management of working capital plays vital role for exiting
of any public enterprises successfully while studies it. It is the centers on the
routine day-to-day administration of current assets and current liabilities.
Therefore working capital management in public enterprises is very important
mainly for four reasons .Firstly,  public enterprises must need to determine the
adequacy of investment in current assets otherwise it could seriously erode their
liquidly base. Secondly, they must select the type of current assets, suitable for
investment so as to raise their operational efficiency. Thirdly they are required to
ascertain the turnover of current assets, which determine profitability of the
concerns. Lastly, they must find out the appropriate source of funds of finance
current assets.”
1.6 Research Methodology
"Methodology is the systematic, theoretical analysis of the methods applied to a
field of study. It comprises the theoretical analysis of the body of methods and
principles associated with a branch of knowledge" 1. A systematic study needs to
follow a proper methodology to achieve pre determine objective. Research
methodology may be defined as “a systematic process that is adopted by the
researcher in studying problem with certain objective and view”. In Other word,
research methodology describes the methods and process applied in the entire
aspect of the study focus of data, data gathering instrument and procedure, data
tabulating and processing and methods of analysis. It is really a method of critical
thinking by defined and redefining the problems, formulating hypothesis or
suggested solution and collecting and organizing and evaluating data, making
deduction and making conclusions. Research methodology is a path from which
we can solve research dilemma systematically to accomplish the basic objective of
the study. It consists of a brief explanation of research design, nature and sources
of data, method of data collection and methods of tools used for analyzing data.

1.6.1 Research Design

A research design is the arrangement of conditions for collection and analysis of
data that aim to combine relevance to the research purpose with economy in
procedure. Research design is the plan, structure and strategy of investigation
conceived so as to obtain answers to research questions and to objective of this
study. To achieve the objective of this study, descriptive and analytical research
design has been used. It is the process which gives us an appropriate way to reach
research goal. It includes definite procedures and techniques which guide in
sufficient way for analyzing and evaluating the study. This study is carried out by
using both quantitative and qualitative analysis methods. Mostly, secondary data
has been used for analysis, but the discussion and personal interview with the
concerned employees of the selected co-operative is also used for qualitative
analysis. Hence, research design of this study is based on descriptive and analytical
method.

1
www.wikipedia.org
1.6.2 Nature and Source of Data
For the purpose of this study, data are collected mainly from the secondary
source. The secondary data are based on the second hand information. Secondary
data were gathered much more quickly than primary. Secondary source are
annual reports, official document, reference material collected from library.

1.6.3 Method of Data Collection

It indicates the sources of data and how they collected. In this study data are
collected through published sources. They were collected from the correspondent
offices and their respective websites. The annual reports of VSCCL, NRB
publications, the data regarding the profile of VSCCL and other related documents
were collected from internet websites. Unpublished master's thesis, books,
research papers, articles, journals have been collected mainly form Centre Library
of Tribhuvan university, Myanglung Multiple Campus and NRB Magazines and
newspapers were from concerned authorities.
 After collecting data, as necessarily required, they were separated and analyzed
presentation and analysis of the collected data is the main theme of the research
work. Collected data were first presented in systematic manner in tabular forms
and then analyzed by applying different financial and statistical tools to achieve
the research objectives. Besides these, some graph, charts and tables have been
presented to analyze and interpret the finding of the study.

1.6.4 Method of Data Analysis

Method of data analysis is the raw data processing technique to find out the result
for making decision. Financial as well as statistical tools are used to analysis of
data.

1.6.4.1 Financial Tools

Financial analysis is the process of identifying the financial strengths and
weaknesses of the organization by properly establishing relationships between the
items of the balance sheet and the profit and loss account. Ratio analysis is a
powerful tool of financial analysis. A ration is designed as the indicated quotient of
two mathematical expressions and as the relationship between two or more
variables. In financial analysis, ratio is used as a benchmark for evaluating the
financial position and performance of a firm. The financial tools used in this study
are as follows.
1. Liquidity Ratio:- Liquidity ratios are used to judge the ability of co-
operatives to meet its short term liabilities those are likely to mature in the
short period. The current ratio and quick ratio measure the liquidity position
of the company. Liquidity of any business organization is directly related to
working capital or current assets and current liabilities of that organization.
One of the main objectives of working capital management is to maintain
good liquidity position.

a. Current Ratio:-  Current Ratio reflects the strength of current assets

available with the company over its current liabilities into cash in one
accounting year. This ratio indicates the current short term solvency
position of the co-operative. The current ratios are the ratios of total
current assets to current liabilities. Higher current ratio indicates better
liquidity position.

Current Assets
Current Ratio¿ Current Liblities

b.  Quick Ratio:- Quick ratio is used to measure the ability of concerned firms
to  pay current obligation (Short term) without depending on other liquid
assets of current ratio . It provides relationship between quick assets with
current liabilities. This quick ratio can be found out by dividing the total
quick assets by total liabilities.

Quick Assets
Quick Ratio ¿ Current Liblities

2.  Debt Management Ratios:- The debt management ratios, also known as

leverage ratios, indicate the extent to which debt financing is being used by
a firm. It is a measure of long term solvency of firm. In relation to financial
 ratio analysis, it is important to analyze leverage position from two aspects:
first, how firm is using the borrowed funds to finance its assets; second,
how far the firm is able to serve it debts in term of satisfying regular fixed
charges. On the light of these facts we analyzed following financial ratios:

a. Debt-Assets Ratio:-The debt assets ratio, shows the proportion of total

debts used in financing total assets of a firm. Low debt ratio indicates that a
firm has greater amount of equity in comparison to debt. It is calculated as:

Total Debt
Debt assets ratio ¿ Total Assets

b. Debt-Equity Ratio:- This ratio is express the relationship between debt

capital and equity capital, and reflects their relative claim on the assets of a
firm. Debt-equity ratio is used as a tool for analyzing financial risk both by
creditors as well as by the firm. A high debt-equity ratio indicates greater
contribution by creditors then shareholders in a firm’s financing. Low debt-
equity ratio provides a cushion of protection to the creditors against losses.
It is calculated by dividing total debt by total equity.

Long Term Debt

Debt-Equity Ratio ¿ Total Equity

c. Long-Term Debt to Total Assets Ratio:- Long-term debt to total assets ratio
represents the relationship between long term debt to total assets of a firm.
This ratio shows the proportion of total assets that is financed by long-term
capital of the firm. It is calculated as:

Long Term Debt

Long-Term Debt to Total Assets Ratio ¿ Total Asstes
  
3. Assets Management Ratio:- Assets management ratio also known as
turnover ratios or activity ratios or efficiency ratios. These ratios look at the
amount of various types of assets and attempt to determine if they are too
 high or too low with regard to current operating levels. They provide the
measure for how efficiency the firm’s assets are being managed. If too
many funds are tied up in certain types of assets that could otherwise be
employed more productively elsewhere, the firm is not a profitable as it
should be. Following ratios are calculated to measure how efficiency a firm
employs its assets.

a. Loan & Advances to Total Deposit Ratio:- The ratio assess to what extent
the co-operatives are able to utilize the depositors' fund to earn profit by
providing loans and advances. High ratio shows the better position of the
firm.

Loan∧Advance
Loan & Advances to Total Deposit Ratio ¿ Total Deposit

b. Total Assets Turnover Ratio:- The total assets turnover ratio reflects the
efficiency of management for investments in Total Assets each of the
individual assets items. It shows the effective utilization of assets in the
generation of income. It can be calculated as:

Total Income
Total Assets Turnover Ratio¿ Total Assets
 
c. Fixed Assets Turnover Ratio:-The rate of utilization of fixed assets is
significant because investments in plant and equipment, machinery,
furniture are large and of long duration. This ratio measures the extent to
which co-operatives are able to invest in fixed assets and how effectively
and efficiently the fixed assets are used. It can be calculated as:

Total Income
Fixed Assets Turnover Ratio¿ ¿ Assets

d. Net Working Capital to Total Assets Ratio: - Working capital management is

the management of all short term assets used in daily operations. Investing
 in raw materials, inventories, work-in-progress, account receivables are all
known as working capital investment. The proper management of a firm's
working capital is very much crucial to the financial manager in the
competitive scenario. Furthermore, the total investment in the current
assets that can be converted into cash within one year is called gross
working capital but the difference between current assets and current
liabilities is known as net working capital. This ratio is useful to calculate the
percentage of net working capital to total assets.  

Net Working Capital

Net Working Capital to Total Assets Ratio ¿ Total Assets

4. Profitability Ratios:- Profitability is the end result of a number of corporate

policies and decisions. It measures how effectively the firm is being
operated and managed. Besides owner and managers, creditors are also
interested to know the financial soundness of the firm. Owners are eager to
know their returns where as manager are interested in their operating
efficiency.
 
a. Return on Loans & Advances:- This ratio shows the return on loans and
advances during the year. Higher ratio of net income to loans & advance is
better.

Net Profit after Tax

Return on Loans & Advances¿ Loans∧ Advance

b. Return on Total Deposit:- The ratio of return on Total deposit measures the
capacity of co-operative to generate profit from its investment on total
deposit. In other words, return on total deposit is the contribution of total
deposit to net profit after tax. So this ratio is the proportion of return from
total deposit and it is calculated as follows.

Net Profite after Tax

Return on Total Deposit ¿ Total Deposit
 
c. Return on Total Assets:- The return on total assets measure the overall
effectiveness of management in generating profit with its available assets.
The higher the firm’s return on assets the better it is doing in operation and
vice versa. It is calculated as follows:

Net Income
Return on Total Assets¿ Total Assets
 
d. Return on Equity:- The return on equity measure the return on the owner’s
Investment in the firm. Higher ratio on return on equity is better for owner.

Net Income
Return on Equity¿ Total Equity

1.6.4.2 Statistical Tools

Statistical tools are used to analyze the relationship between two or more
variables and to find how these variables are related. In this study, following
statistical tools are used.
a.  Arithmetic Mean or Average:- The mean or average value is a single value
within the range of the data that is used to represent all the values in the
series. Since an average is somewhere within the range of the data, it is also
called a measure of central value. It is calculated by;
Mean ( X́ )=
∑ X́
N
  Where,

X́  = Arithmetic Mean
∑X = Sum of values of all items, and
N = Number of items

b. Standard Deviation:- The standard deviation is the measure that is most

often used to describe variability in data distributions. It can be thought of
as a rough measure of the average amount by which observations deviate
 on either side of the mean. Denoted by Greek letter’s (read as sigma),
standard deviation is extremely useful for judging the representatives of the
mean. Standard deviation is calculated as;
 
2
Standard deviation(σ ) =

Where,
√ ∑ ( X− X́ )
N

σ = Standard deviation
2
 ∑ ( X− X́ ) = Sum of squares of the deviations Measured from arithmetic
average.
 N = Number of items

c. Trend Analysis:- Trend analysis is used to show decrease or increase in

variables over the period of time. With the help of trend analysis the
tendency of variables over the period can be seen clearly.
 
1.7 Limitation of the Study
Although there are several saving & credit co-operatives in Nepal but the study
has been confined to Vision Saving & Credit Co-operative Limited only. The main
limitations of the study are as follows.

1. As the study is the partial fulfillment of BBS program, the time assigned for
it is limited i.e. to be completed within the specific time frame.
Consequently the study faced time and resource constraints.
2. The study is only concentrated in working capital management and
financial performance of the VSCCL.
3. The study is mainly based on secondary data.
4. The report has taken only three year data for study from year 2068/69 to
2072/73 B.S.
5. Although there are many Saving & Credit Co-operative Limited but the
study confines to only VSCCL.
6. The study follows limited tools such as ratio analysis, mean, standard
deviation.
1.8 Research Gap
Research gap refers to the gap between previous research and this research.
Many research studies have been conducted by the different students, experts
and researcher about working capital management. There have been found
numerous research studies on financial companies and public enterprises
regarding working capital management. Some studies are related to case study of
two company and some others are comparative in nature. But the case study on
working capital management of single financial company can be hardly found.
From the review of related studies no one studies have been found as a case study
on working capital management of VSCCL. The financial and statistical tools used
by most of the researchers were ratio analysis, test of hypothesis and regression
analysis. This research includes different tools like ratio analysis, standard
deviation as specific tools. Thus the research study made on "A Study of Vision
Saving & Credit Co-operative Limited on working capital management " will be an
effort to analyze on detail about working capital management of the VSCCL in
present situation with the help of various related financial as well as statistical
tools and techniques. The study can be beneficial to all the concerned parties and
people as well.
 CHAPTER - II
PRESENTATION & ANALYSIS OF DATA

To find the answer of research problem, the collected data are necessary to
present and analyze by processing. This chapter will present the data on table &
figure. The main objective of the study is to present data and analyze them with
the help of various financial and statistical tools. This chapter consists of analysis
and presentation of empirical data. The important variables are very sensitive and
taken into consideration, so this chapter will present the analysis of components
of working capital. The major ratios for the study are liquidity ratios, assets
management ratio, debt management ratios, profitability ratios and composition
of working capital. The variables of the ratios indicated above are also tried to
study in details. Firstly it is attempted to deal about the working capital policies
followed by co-operative and then financial position of success/failure companies
has been analyzed applying various methods.

2.1 Working Capital Policy & Trend Analysis

Working capital policy can be categorized into three categories aggressive,
moderate and conservative policy. NEPSE have also followed the above
mentioned types of working capital policies. The firms use to adopt different
working capital policies according to the financial managers' attitude towards the
risk return trade off. One of the most important decisions of financial manager is
how much current liabilities should be used to finance current assets. Hence, it is
tried to analyze on the basis various variables and ratios, taking five years data.
The analysis is done period wise.

2.1.1 Analysis of Composition of Current Assets

Business needs different types of assets to operate its activities some assets are
needed for the long term fulfillment of the business activities while others are
needed to carry out the day to day operation of the business. The assets that are
used to carry out the day to day operation of business are known as current
assets. Every cooperative has to maintain the appropriate level of current assets
to run the business smoothly because the success/failure of any co-operative
depends upon the proper management of current assets. The level of current
assets is analyzed as year-wise. The main components of current assets of VSCCL
are cash, bank balance; loan, advances and Miscellaneous current assets are also
the components of it. Outstanding incomes, interest receivable, and other current
assets are included on miscellaneous current assets.

Table: 2.1

Components of Current Assets

Years Cash Bank Balance Loan & Total current
Advances Assets
2072/73 152603.92 8237461.83 54491494.10 0
2073/74 441498.82 4200125.87 63456586.98 0
2074/75 532695.44 10867272.87 76468967.39 0
Sources: Annual report of VSCCL 2073 to 2075

Above table 2.1 shows that VSCCL has the highest level of current assets of Rs.
11399968.31in the year 2072/73 and the lowest level of current assets of Rs.
4641624.69 in the year 2073/74. The proportion of each component is shows in
the following tables and figure.
Table: 2.2
Components of Current Assets
(In Percentage)
Year Cash Bank Loans & Total current
Balance Advances Assets
2072/73 0.24 13.10 86.66 100
2073/74 0.65 6.17 93.18 100
2074/75 0.61 12.37 87.08 100
Sources: Annual report of VSCCL 2073 to 2075
 Figure: 2.1
Components of Current Assets

100

90

80

70

60
Cash
50
Bank Balance
40 Loan & Advance

30

20

10

0
2072/73 2073/74 2074/75

Above table 2.2 and below figure 2.1 shows that VSCCL has the highest level of
Cash in current assets of .65 percentages in the year 2073/74 and the lowest level
of it in current assets of .24 percentages in the year 2072/73 Out of these
components major proportion holds by loan in each year and all components are
in fluctuating trend in this three year time period

2.1.3 Analysis of Composition of Current Liabilities

The amount of money payable by the business to the outsider with in a period of
one year is known as current liabilities. Those are the financial obligation of
business which must be Meer in a short period such as 3, 6, 9, 12 months or so.
The main components of current liabilities of VSCCL are Deposit Liabilities and
Other Current Liabilities. Other liabilities are also the components of it. Sundry
Creditors, Interest on Deposit, are included on other liabilities
Table: 2.3
 Components of Current Liabilities
Year Deposit Liabilities Other current Total current Liabilities
2072/73 48654473.17 247495.69 0
2073/74 50408888.08 37352.86 0
2074/75 62484094.12 59441.13 0
Sources: Annual report of VSCCL 2073 to 2075

Table 2.3 shows that VSCCL has the highest level of current liabilities of Rs.
62543535.25 in the year 2075/75 and the lowest level of current liabilities of
48901968.86 in the year 2072/73. The components of current liabilities of the co-
operative are deposit liabilities and other liabilities. Out of these two components
deposit liabilities has the highest amount in each year. Deposit liabilities, other
current liabilities and Total Current Liabilities are fluctuating trend.
 
2.1.4 Analysis of Components of Net Working Capital
 Net Working Capital is the difference between current assets and current
liabilities.Net working capital can be positive or negative. A positive net working
capital will arise when current assets exceed than current liabilities. A negative net
working capital occurs when current liabilities are excess than current assets.

  Net Working Capital = Current Assets – Current Liabilities

All the organization should have just adequate working capital to serve in
competitive market. Excessive or inadequate working capital is dangerous from
the firm's point of view. Excessive investment working capital affects a firm's
profitability just as idle investment yields nothing. In the same way inadequate or
negative working capital may be harmful to the organization. So, net working
capital can be more useful for the analysis of trade-off between profitability and
risk. It enables a firm to determine how much amount is left for operational
requirement.
 Table: 2.4
Components of Net Working Capital
Year Current Assets Current Liabilities Net Working Capital
2072/73 0 0 000
2073/74 0 0 0
2074/75 0 0 0
Sources: Annual report of VSCCL 2073 to 2075

The above table 2.4 and graph 2.2 shows that the level of net working capital of
VSCCL is in increasing trend over the period of time. During the study period of 3
years from2072/73 to 2074/75, the highest amount of net working capital is Rs.
25325400.45, current assets is Rs. 87868935.7, current liabilities is Rs.
62543535.25in 2074/75 and that of lowest amount are Rs. 13979590.99,
17651970.73 respectively.  Over the study period VSCCL has positive working
capital, it means the firm has higher level of current assets then current liabilities.

Figure 2.2
Components of Net working Capital

100000000

90000000

80000000

70000000

60000000
Current Assets
50000000
Current Libilites
40000000 Net Working Capital

30000000

20000000

10000000

0
2072/73 2073/74 2074/75
Above table 2.4 and below figure 2.1 shows that VSCCL has the highest level of in
Net working Capital in the year 2074/75 and the lowest level of it in Net working
capital in the year 2072/73 Out of these components major proportion holds by
loan in each year and all components are in fluctuating trend in this three year
time period

2.2 Financial Ratio and Trend Analysis

Financial analysis is the process of identifying the financial strengths and
weaknesses of the organization by properly establishing relationship between the
items of the balance sheet and the profit and loss account. Ratio analysis is a
powerful financial tool to measure the financial performance of co-operatives. As
mentioned in research methodology, liquidity, management and profitability are
calculated.

2.2.1 Liquidity Ratio:-

Liquidity of any business organization is directly related with the working capital
or current assets and current liabilities of that organization. In other words, one of
the main objectives of working capital management is keeping sound liquidity
position. Co-operative is different organization which is engaged in mobilization of
funds. Therefore, without sound liquidity position, co-operative is not able to
operate its function. In this study, to measure the co-operatives solvency position
or ability to meet its short-term obligation, current ratio and quick ratio are
calculated to know the trend of liquidity. Current ratio indicates the current short
term solvency position of co-operative. Higher current ratio indicates better
liquidity position. In other words, current ratio represents a margin of safety, i.e. a
cushion of protection for creditors and the highest the current ratio, greater the
margin of safety, large the amount of current assets in Relation to current
liabilities, more the co-operatives ability to meet its current obligations. Quick
ratio establishes a relationship between quick or liquid assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or
reasonably soon without a loss of original value. Cash is a most liquid asset. Other
assets which are considered to be relatively liquid and included in quick assets are
bank balance, loan and misc. current assets
Table: 2.5
Computation of Liquidity Ratio
Year Current Current Quick Assets Current Quick
Assets Liabilities Ratio Ratio
(CA/CL) (QA/CL)
2072/7 0 0 8390067.75 ** **
3 Expression is Expression
faulty ** is faulty
**
2073/7 0 0 4641624.69 ** **
4 Expression is Expression
faulty ** is faulty
**
2074/7 0 0 11399968.31 ** **
5 Expression is Expression
faulty ** is faulty
**

Sources: Annual report of VSCCL 2073 to 2075

Figure: 2.3
Liquidity Ratios
 1.6

1.4

1.2

0.8 Current Ratio

Quick Ratio
0.6

0.4

0.2

0
2072/73 2073/74 2074/75

Table 2.5 and figure 2.3 shows that the liquidity position of VSCCL by the help of
current ratio and quick ratio. During the study period of 3 years from 2072/73 to
2074/75, the highest current ratio is 1.405 times in 2074/75 and that of lowest is
1.2859 times in 2072/73. Over the study period the current ratio of EBL is in
increasing trend.

2.2.2 Debt Management Ratios

Debt management ratio indicates the extent to which debt financing is being used
by a firm. It is a measure of long term solvency of firm. In this study, to measure
the co-operatives long term solvency position debt-assets, debt-equity, long-term
debt to total assets and total deposit to total assets ratio are calculated to know
the trend of long term solvency. Debt-assets ratio shows the proportion of total
debts used in financing total assets of a firm. Higher debt ratio is better for the
firm.
Debt-Equity ratio is express the relationship between debt capital and equity
capital, and reflects their relative claim on the assets of a firm. Lower debt-equity
ratio is better for the firm. Long-term debt to total assets ratio represents the
relationship between long term debts to total assets of a firm. This ratio shows the
proportion of total assets that is financed by long-term capital of the firm.
 Table: 2.6
Computation of Debt management Ratios
Year Total Assets Total Total Equity Long Debt Debt
Debt Term Assets Equity
Debt Ratios Ratio
2072/73 63691604.96 14764636.10
2073/74 68882120.90 18410879.96
2074/75 88655069.77 21503200.52

Sources: Annual report of VSCCL 2072 to 2075

2.2.3 Assets Management Ratio

Assets Management Ratio look at the amount of various types of assets and
attempt to determine if they are too high or too low with regard to current
operating levels. Assets management ratios measure the effectiveness of a firm’s
assets utilization. In this study, to measure the effectiveness of a firm’s assets
utilization, loan & advance to total deposit calculated. Loan & Advances to Total
Deposit Ratio assess to what extent the co-operatives are able to utilize the
depositors' fund to earn profit by providing loans and advances. High ratio shows
the better position of the firm.

2.4 Major Finding of the Study

Basically in this research work, all the data has been obtained from secondary
sources. Data has been analyzed by using financial as well as statistical tools. This
topic focuses on the major findings of the study, which are derived from the
analysis of working capital management of the VSCCL with comparatively applying
three years data from 2072/73 to 2074/75, The major findings of the study
derived from the analysis of financial as well as statistical tools of VSCCL are given
below.
i. The major components of current assets of VSCCL are cash, bank balance,
loan advance and current liabilities are deposit liabilities & other current
 liabilities. The level of current assets and current liabilities are in
fluctuating trend.
ii. The liquidity positions of VSCCL are not very poor but the rule of thumb
the standard ratio should be 2:1.The co-operative is unable to maintain
the current ratio in accordance with standard.
iii. Level of current assets of VSCCL is in fluctuating trend over the study
period. The highest level of current assets is Rs. 87868935.7 in the year
2074/75 and the lowest level of current assets of Rs. 62881559.85 in the
year 2072/73
iv. The level of net working capital of VSCCL is in increasing trend over the
period of time. During the study period of 3 years from 2072/73 to
2074/75,, the highest amount of net working capital is Rs.25325400.45 in
2072/73 and that of lowest amount is Rs. 13979590.99 in 2072/73

 
 CHAPTER - III
SUMMARY, CONCLUSION & RECOMMENDATION

This chapter includes summary conclusion & recommendation of the study. The
final and most important task of the researchers is to enlist fact findings of the
study and give suggestion for further improvement. The analysis is performed
with the help of financial tools and statistical tools. The analysis is associated with
comparison and interpretation. Under financial analysis, various financial ratios
related to the working capital management are used and under statistical analysis
some relevant statistical tools are used.

3.1 Summary
The development of any country mainly depends upon its economic development.
Economic development demands transformation of savings or resources into the
actual investment. Capital formation is the prerequisite in setting the overall pace
of the economic development of a country. It is the financial institution that
transfers funds from surplus spending units to deficit units. Co-operative sector
plays a vital role for the country's economic development likely to banking. Co-
operative is a resource mobilizing institution, which collects deposits from various
sources, and invests such accumulated resources in the fields of agriculture, trade,
commerce, industry etc. Co-operatives help to mobilize the small saving
collectively to huge capital markets.
The main objective of the study is to study the working capital management of
VSCCL. To fulfill this objective and other specific objective as described in chapter
one, an appropriate research methodology has development, which include the
ratio analysis as a financial tools and statistical tools. The major ratio analysis
consists of the composition of working capital position, liquidity ratio.  Now-a-
days, many co-operative are rapidly opened in Nepal. But in this study, only one
saving and credit co-operative is taken i.e. VSCCL .This study has been completed
mainly on the basis of secondary data. Periodical review and analysis of financial
aspects of the co-operatives are very necessary to see the clear financial pictures;
working capital's components of VSCCL has been carried out to fulfill this
requirement. Studied of selected co-operative are introduced. Problems are
stated to set the objectives of the study. The objectives are to evaluate the
working capital management and financial analysis of VSCCL and to identify
strengths and weaknesses of co-operative. Theoretical framework of ratio
analysis, its importance and limitations, research methodology and limitations of
the study are mentioned. This regard to its operation. All of the information and
data are collected from related co-operatives i.e. websites, annual reports. The
operating efficiency of the selected co-operative and abilities to ensure adequate
returns to the shareholders have been measured.

3.2 Conclusion
On the basis of entire research study some conclusions have been deduced. This
study particularly deals about the working capital position with financial analysis
of VSCCL. The present study is mainly an attempt to give account of case study of
VSCCL in different aspects of liquidity position, and market position and other
related ratios and indicators of the basis of financial statement. After conducting
the working capital management of VSCCL covering the study period of 2072/73
to 2074/75, the following conclusions can be drawn from the study.
i. The level of current assets and current liabilities of VSCCL is in increasing
trend and fluctuating trend respectively each year it shows that the
business volume of VSCCL is growing up.
ii. The level of working capital is positive and is in increasing trend each
year, more investment in working capital is not better for the company.
iii. The liquidity positions of VSCCL are not very poor but the rule of thumb
the standard ratio should be 2:1. The co-operative is unable to maintain
the current ratio in accordance with standard.
iv. The last period of study shows that VSCCL handle its current liability
having sufficient balance of current assets . i.e. current assets can face
the current liability
3.3 Recommendation
 On the basis of major finding of the study, some important recommendations
have been forwarded. Although this co-operative has more than 7
years’ experiences in the Nepalese co-operative sector, with a competent
managerial team, some weaknesses have come into light through the study. The
co-operative may use it as a remedial measure. The recommendations have been
the following.
i. Although proportion of loan and advances out of the total current assets
of VSCCL is more than other current assets but the proportion of loan &
advance is fluctuating each year it is not better for the organization. So,
it should review its policy to increase the trend, as it is the most
productive assets.
ii. Positive working capital represents the sound financial management of
the co-operative. Similarly, negative working capital represents the poor
financial management of the co-operative. In case of VSCCL, we found
positive working capital. Therefore, to eradicate this situation this co-
operative should be formulate and implement suitable working capital
policy. There should be keeping optimum size of investment in current
assets and current liabilities.
iii. The liquidity position in terms of current ratio and quick ratio of VSCCL
are below than normal standard. Therefore, the co-operative suggest
that to enhance liquidity position by keeping optimum current assets.
iv. The turnover of the co-operative is the primary factor of income
generating activity.
v. The unskilled manpower, unnecessary expenses, misuse of facilities,
heavy expenses on overhead etc. may be the causes for high operating
cost. So, the co-operative is recommended to pay attention to these
aspects.
vi. The co-operative is suggested to invest in deprived sector as directed by
NRB in order to contribute to the overall development of the working
area of co-operative.
vii. Since the economy of the country has become weaker since the last
decade, the studied co-operative is advised to concentrate more on risk
free securities and low risk loans.
viii. Last, but not the least the co-operative should keep in peace with the
changing co-operative technologies, improve organizational structure,
provide quality services to its customers and actively participate in social
welfare programmers. Organizational culture that acquires, develops,
utilizes and maintains the employees in a high morale is preferred.
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Master Degree Thesis

Amatya, Pooja. (2007).  A Comparative Study of Working Capital of
Manufacturing Companies, Kathmandu, An Unpublished Master Degree thesis,
Faculty of Management, Shankar Dev Campus.
 
Dhugana, D.P. (2009). Working Capital Management of Unilever Nepal  Limited ,
Kathmandu, An Unpublished Master Degree thesis, Faculty of Management,
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Koirala, Anusha. (2010). 
 A Comparative Study of Working Capital Management With Reference to Standard
Chartered Bank Nepal Limited and  Himalayan Bank Limited , Kathmandu, An
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Websites
 www.businessweek.com 
 www.google.com 
 www.wikipedia.org 
 www.nrb.org.np 
 www.nepalstock.com 
 www.planware.com 
 www.sebon.com