An analysis and evaluation of the management of an organisation’s working capital over a three year period and its impact on the organisation’s funding strategies
“The key to a successful completion of the RAP is the improved knowledge of the working capital management and the vast information on the selected organization with specific aim to the technical aspects and its connection with the organization’s funding strategy under the guidance of a highly qualified mentor.”
This topic is based on the overall analysis of the working capital management of an organization over a period of three years and how the management of the working capital impacts on the overall funding strategy of the organization.
The amount by which the current assets of a company exceed the current liabilities is called a working capital for an organization, also known as net working capital. The term “working capital” is used as a synonym for the term “current assets” or as “net working capital” – all terms explain a number of current assets that exceed the current liabilities. This term is usually used in measuring the company’s ability to satisfactorily meet its obligations. It is also a measure of a number of liquid assets in possession of the company on which it builds its business. The working capital is a common indication of the liquidity, efficiency, and health of a company. The decisions pertaining the working capital and the short-term financing are known as working capital management. These decisions include the management between the short – term assets (inventory, receivable accounts, cash) and the short-term liabilities.
When preparing a RAP on this topic, the student needs to have a basic knowledge of the working management and excellent knowledge on the overall management of the selected company. Through utilizing their knowledge, the students can make the crosslink of the working capital management (whether it is good or bad) with the overall funding strategies of the selected company. The student will have to calculate the working capital ratios (investment turnover, debtors turnover, creditor turnover, etc) and make a comprehensible discussion on the overall performance of the selected company according to the ratios by bearing in mind all the internal and external factors. Further, the student will need to analyze the mitigation measures the company has undertaken in order to overcome the working capital problems and needs to, in an effective manner, crosslink these to the overall funding strategies of the selected company.
The focus of this topic is the working capital aspect of a selected company, so the student will require a specific evaluation and discussion in their project. The use of unnecessary or irrelevant information will have a negative influence on the overall grades of the RAP.
In accordance with the prescribed requirements by OBU, the students that will choose topics 8 and 15, must select a company from these three sectors: Mining, Health Care Providers and Electronic & Electrical Equipment.
1. Coal Companies engaged in the exploration for or mining of coal.
2. Diamonds & Gemstones Companies engaged in the exploration for and production of diamonds and other gemstones.
3. General Mining Companies engaged in the exploration, extraction or refining of minerals not defined elsewhere within the Mining sector.
4. Gold Mining Prospectors for and extractors or refiners of gold-bearing ores.
Health Care Providers: Owners and operators of health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes, rehabilitation and retirement centres. Excludes veterinary services, which are classified under Specialized Consumer Services.
Electronic & Electrical Equipment:
1. Electrical Components & Equipment Makers and distributors of electrical parts for finished products, such as printed circuit boards for radios, televisions and other consumer electronics. Includes makers of cables, wires, ceramics, transistors, electric adapters and security cameras.
2. Electronic Equipment Manufacturers and distributors of electronic products used in different industries. Includes makers of lasers, smart cards, bar scanners, fingerprinting equipment and other electronic factory equipment.
Key features / requirements
- An adequate explanation of the general concept of working capital in general sense, and in a specific sense related to the selected company.
- Assessing how the selected company was managing its working capital over a period of three years and its impact on the overall funding strategy of the organization.
- Providing quantitative and qualitative analysis to properly support the named aspects.
- To have a good balance when explaining and analyzing the various aspects of the management of the working capital of the selected organization over a period of three years, and its impact on the funding strategies of the organization.
Key Success Factors
- The appropriate implementation of the proposed goals and objectives (that were set at the beginning of the RAP) in the appropriate sections.
- Appropriate answers to the research questions (that were set at the beginning of the RAP).
- Using the adequate research methodology to obtain good results on all the proposed goals and objectives (that were set at the beginning of the RAP)
- Ensure proper flow of information during the discussion by keeping up all the requirements of the topic.
- Give a logical conclusion to the overall work process at the end of the Research Report by having all the requirements of the topic in consideration.
Major benefits of choosing this topic
- The student can implement the theoretical knowledge of this topic in practical, real life conditions.
- The different techniques learned in this topic will undoubtedly help the student in their professional life.
Major possible limitations faced by student under this topic
- The student may be ignored by the management of the selected organization, and not be provided with the necessary information due to different factors like confidentiality issues, unavailability of authorized personnel etc.
- The student can be faced with a lack of quality information on this topic and may lack ideas for improving the progress of the project (due to improper research approach).
- If the student does obtain information from primary sources, he/she still may face confusion by the gathered research material (verbal or documented) that is provided by primary sources with the material derived from other research done according to the requirements of this topic.
Suitable organisation under this topic
The most acceptable organization where the student can properly undertake this topic is the one where the student can have appropriate access to the management of the company and such where the management is willing to provide all the necessary and required information for the proper completion of this topic. The selection of the proper organization is essential as the student needs to have a better understanding of the sector of operation of the selected organization. Upon the knowledge of the selected organization and its sector of operation, the student can connect the different aspects of the general operation of the selected organization with the prescribed requirements of this topic that will, in turn, help them obtain good grades on their RAP. The student will need to follow some guidelines in selecting a company for their RAP:
- The OBU prescribed sectors for selection of company (i.e. Mining, Health Care Providers and Electronic & Electrical Equipment).
- The personal interest of the student in relation to the business of the company.
- Access to information from primary sources (not 100% necessary, as it varies according to the approach);
- Access to information from reliable secondary sources;
- Comprehension of the general operations of the organization (of great importance for topic 15);
- Comprehension of the associated sector of the selected organization;
- The basic understanding of the requirements of the selected topic and the proper application in the proposed organization at the beginning of the preparation of the RAP.
Suggested approach for this topic
When the student picks this topic for their RAP, a proper plan must be set from the beginning so the student can conduct all the necessary tasks in a proper manner. The student needs to have an in-depth understanding of the major requirements of this topic and needs to analytically evaluate the obligatory required aspect by establishing a detailed strategy of operation. The student needs to assess the processes of action that they will follow in order to meet all the necessary requirements, this is only possible by a thorough planning at the beginning stages of the RAP.
The student will need to prepare the overall contents of their RAP under topic 15 so that they flow in a logical sense, and cover all the tasks that need adhering to. The prepared table of contents will enable the student to stay on the proper track from the beginning of the project, and also the student can estimate the time factors of planned versus actual time necessary for completing the various tasks required for the proper completion of the RAP.
After finalizing the general table of content for the RAP under topic 15, the student needs to start gathering the proper information per the requirements of the topic. The student will need to evaluate all the gathered information in an analytical manner through consultation with their Project Mentor. The feedback from the Project Mentor on the key areas of the RAP is essential in the proper completion of the RAP, so the student needs to regularly share their thoughts with their Project Mentor in order to get the proper guidance in a timely manner.
It is understandable that there is no 100% guaranteed approach for topic 15, and there is the broad level approach described above, but the detailed approach under topic 15 varies greatly on the students’ perception of the requirements of the topic along with the available information on the selected company. Whichever approach you choose to follow, you need to keep getting guidance from your Project Mentor at every step of the way so you will meet all the prescribed information of this topic and get good grades on your RAP.
Availability of Information
The student will need to complete their RAP based on the information provided straight from the management of the selected organization (the primary sources of information) along with the various other relevant secondary sources of information (online sources, newspapers, journals, books, etc). For topic 15, the availability of primary sources of information is not very essential and it depends on the approach that the student will take. If the student decides to use a primary source of information in their work, then he/she needs to make sure that he has access to this information, and that there are no confidentiality clauses that prevent the company from releasing such information.
The student needs to carefully consider selecting this topic for their RAP, as all the requirements of this topic can only be met if the student has access to enough relevant information on the selected organization. If there are any issues in providing the required information during the preparatory stage of the RAP, the student should consider choosing a different topic, as the improper information can lead to low-quality RAP and low grades or even failure of the RAP.
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