Published Paper Details:

The capital of a business which is used in its day-to-day trading operations is called working capital. Working capital is considered a part of operating capital of a business. There are two concepts of working capital. Gross concept of working capital refers to the amount of funds equal to current assets whereas net concept of working capital refers to the amount of capital calculated by deducting current liabilities from current assets. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit and negative working capital. Working capital management is concerned with determining the institution's level of investments in current assets and financing pattern of the current assets. The objective of working capital management is to determine the level of investment that maximize owner's wealth. In this paper the author attempts to evaluate and analyze the working capital need and its proper use in the Grameen Bikas Lagubitta Bittiya Sanstha Ltd. operating in Nepal. In this study it is found that the working capital in the beginning of three years of the study period are absolutely negative and the remaining two years are slightly positive. The investment in current assets is not sufficient and it has showed difficulty in meeting short term obligations. Net profit to total asset ratios are slightly satisfactory. However these ratios indicate that the institution required further efficient utilization of current assets and fixed assets. Likewise net profit to shareholder's equity ratio shows the proper utilization of owner's equity and the firm seems able to earn reasonable profit in the investment. This study has been carried out with analytical research design to analyze the working capital of this microfinance institution.