IBMRD's Journal of Management & Research

Abstract

The financial crisis exhibited many inherent loopholes in the banking system; from non-compliance, non-disclosure and nontransparency to the need to maintain reserves of capital as buffers to be utilized in the crunch situations. What typically started as credit and counterparty risk for banks in the process of underwriting home-mortgage loans to subprime category of consumers and actually mutated into a number of other types of risk through the web of CDS and CDOs and involved almost all sectors and sections of economy engulfing the almost the whole of developed world into recession notwithstanding its impact of the growing emerging markets. This changed the very perception of risk management and control especially for Banks and FIs.

The main objective of this paper is to study and understand the various reformatory measures introduced under Basel III and other measures introduced by international financial authorities like the Federal Reserve, the FSA, the IMF to rehabilitate the banking system and its impact on the banking system of the emerging markets particularly because emerging markets are still in the developing phase with constraints on several fronts; from financial consolidation to financial inclusion.

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Abstract

Working capital management is one of the most important factors impacting the performance of the firm. Efficient management of working capital is crucial of sustaining the business in the long run. Working capital best captured through Cash Conversion Cycle (CCC) or Cash Conversion Efficiency (CCE) reveals how good the company is at managing its working capital. Analysis of working capital management over the past few years has revealed that while many companies have enjoyed double-digit sales growth, but their CCE, which is the ratio of operating cash flow as a percentage of sales, has been decreasing year-on-year. This means that organizations are converting sales to cash at a lower rate and not taking advantage of the scale in good times. Improving the CCE will become all the more imperative in the face of slowdown due to economic downturn and with growing competition. This means companies would need to resort to both cost minimization and adopt the best practices in working capital management to improvise cash flows.

This paper focuses on the understanding and analysing the best practices adopted the by companies across several industries like automobile, steel, cement etc. to improve their working capital management and cash management capabilities to better survive and thrive in the competitive economic environment. The paper attempts to enlist best practices which can be adopted by companies to perform their operations efficiently and to improve their financial performance.

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