Presentation Outline

A COMPARATIVE ANALYSIS ON WORKING CAPITAL MANAGEMENT OF LIFE INSURANCE CORPORATION NEPAL AND CITIZENS LIFE INSURANCE CORPORATION.

Presentation Outline. Background of the Study Research Problems Research Objectives Research Questions Research Hypothesis Literature Review Research Gap Conceptual Framework Research Methodology.

Cond….. Results and Analysis Summary & Conclusion Implications of the Study.

Background of the study. Working capital is the funds needed for day-to-day operation of a business firm. working capital is the money needed to run a business rather than investing in fixed assets. In working capital two concepts: gross working capital and net working capital (Paudel et al., 2021). Working Capital Management is the management of current assets and current liabilities of the firm (Sharma et al., 2018)..

Cond….. gross working capital refers to the total amount invested into current assets and net working capital refers to the difference between current assets and current liabilities (Van-Horne & Wachowicz, 2004). Current assets are those assets which are converted into cash within a year such as cash, short term securities, debtors, bills receivables, inventories (Dutta, 2003). Current liabilities are short-term financial obligations that are due within one year (Brealey et al., 2013)..

Research Problem. Research Problem. Inefficient inventory management Inefficient working capital monitoring Lack of working capital financing options (Khadka, 2017) Inaccurate cash flow forecasting (Timsina, 2010). Slow account receivable collection Excessive accounts payable.

RESEARCH OBJECTIVES. To analyze the working capital composition of Life Insurance Corporation Nepal Limited and Citizen Life Insurance Company Limited..

RESEARCH QUESTIONS. What is the working capital composition of Life Insurance Corporation Nepal Limited and Citizen Life Insurance Company Limited? What is the relationship between working capital and profitability of the sample insurance company? How to examine the efficiency position of working capital management of sample insurance company?.

Research hypothesis. Hypothesis 1. There is no significance difference in working capital position between LIC Nepal and CLIC..

Working capital management is not only today’s topic, it has been under study of many researcher from a long time. Many studies have been done throughout the year’s about the working capital management too. In literature review researcher has done the different concept of working capital management, theoretical review, policy review and review of previous studies related to working capital management..

Research gap. Organization Data analysis tools (t-test) Time period.

Working Capital Management. Working Capital Composition Variables CATA, C&BCA, NWCCA, RCA.

Research Methodology. Research Paradigm: Post-positivism Ontology: Single reality Epistemology: variables- working capital composition, profitability and efficiency Axiology: Value free Research Method: Quantitative Research Design: Longitudinal and Correlational Sources of Data: Secondary Sources Research Approach: Deductive.

Cond….. Population: 14 Life Insurance Companies (www.nia.gov.np). Sampling: Non-probability- Purposive Sample: LIC Nepal and CLIC Tools: Financial and Statistical Financial Tools: Working capital composition ratios, profitability ratios and turnover ratios Statistical Tools: Mean, standard deviation, coefficient of variation, correlation and t-statistics.

In this section researcher has presents the results and analyzed the working capital structure, profitability position, efficiency position of working capital components by using financial and statistical tools. Researcher has also covers the correlation analysis between net working capital and profitability of sample insurance and test of hypothesis..

Cond….. Working Capital Compositions Results LIC Nepal CLIC Mean (%) Mean(%) Current assets to total assets ratio 6.63 9.62 Cash and bank to current assets ratio 45.61 53.02 Net working capital to current assets ratio 51.54 46.14 Receivable to current assets ratio 0.53 3.01.

Cond….. Profitability Position Results LIC Nepal CLIC Mean (%) Mean(%) Net Profit Margin 8.25 9.15 Return on Assets 0.69 4.30 Return on Current Assets 11.53 44.48 Return on Net Working Capital 24.11 110.13.

CORRELATION COEFFICIENT BETWEEN NET PROFIT AND NET WORKING CAPITAL.

Cond….. Efficiency Position Results LIC Nepal CLIC Mean(times) Mean(times) Total Assets Turnover Ratio 0.2498 0.4877 Current Assets Turnover Ratio 4.07 5.40 Receivable Turnover Ratio 731.85 36.16 Cash & Bank Balance Turnover Ratio 7.83 10.93 Net Working Capital Turnover Ratio 6.70 13.11.

Hypothesis test. Working Capital Composition Variables Calculated ‘t’ Value Tabulated ‘t’ value Decision Current Assets to Total Assets 2.17 2.306 Accept hypothesis Cash and Bank to Current Assets 0.79 2.306 Accept hypothesis Net Working Capital to Current Assets 0.41 2.306 Accept hypothesis Receivable to Current Assets 1.17 2.306 Accept hypothesis.

Cond…….. Profitability Variables Calculated ‘t’ Value Tabulated ‘t’ value Decision Net Profit Margin 0.15 2.306 Accept hypothesis Return on Assets 3.27 2.306 Reject hypothesis Return on Current Assets 2.84 2.306 Reject hypothesis Return on Net Working Capital 2.67 2.306 Reject hypothesis.

Cond…….. Efficiency Variables Calculated ‘t’ Value Tabulated ‘t’ value Decision Total Assets Turnover Ratio 3.35 2.306 Reject hypothesis Current Assets Turnover Ratio 0.98 2.306 Accept hypothesis Receivable Turnover Ratio 2.62 2.306 Reject hypothesis Cash & Bank Turnover Ratio 0.94 2.306 Accept hypothesis Net Working Capital Turnover Ratio 1.65 2.306 Accept hypothesis.

summary. Introduction: Introduction of the working capital management and sample insurance company. The statement of the problem of this study, objective of the study, research question, rational of the study, delimitation of the study and organization of the study is circled. Literature Review: Conceptual, theoretical and policy review of working capital management, review of previous studies and gap analysis..

Cond…….. Research Methodology: Philosophical foundation of the study, research design, approach, sources of data, population and sampling, tools has been developed which includes financial as well as statistical. The major ratio analysis consists of the composition of working capital position, profitability position and turnover position. Correlation coefficient is calculated in order to test the relationship between different components of working capital..

conclusion. Working Capital Position. Ratios Current assets to total assets ratio Cash and bank to current assets ratio Net working capital to current assets ratio Receivable to current assets ratio Conclusion Investment in current assets is considerably high of CLIC than LIC Nepal which indicate good liquidity position. But the receivable to current assets ratio of LIC Nepal is lower than CLIC which indicates LIC Nepal is most desirable for receivable management..

Cond….... Profitability Position. Ratios Net profit margin Return on assets Return on current assets Return on net working capital Conclusion The overall profitability position of CLIC is better than LIC Nepal..

Cond….... Correlation Analysis. Between Net working capital and profitability Conclusion LIC Nepal: Positive CLIC: Negative.

Cond….. Efficiency Position. Ratios Total assets turnover Current assets turnover Cash and bank balance turnover Net working capital turnover Receivable turnover Conclusion TATOR, CATOR, C&BTOR and NWCTOR are higher in CLIC which indicates CLIC is generating more revenue for each rupee invested in assets. But receivable turnover ratio of LIC Nepal is higher than CLIC which indicates LIC Nepal is more efficient is the management on collecting the payment from customer more frequently..

Cond……. Hypothesis. Variables Working Capital Composition Profitability Position Efficiency Position Conclusion Not significantly difference ROA, ROCA, RONWC: Significantly difference NPM: Not Significantly difference TATOR, RTOR: Significantly difference CATOR, C&BTOR, NWCTOR: Not Significantly difference.

Implications for. Policy Maker: formulate stable and effective policy.

References. Brealey, R., Meyers, S. & Allen, F. (2013). Principles of Corporate Finance (10th ed.). Singapore: McGraw Hill. Dutta, T. (2003). Working Capital Managemant. New Delhi: Excel Books Private Limited. https://nia.gov.np (Retrieved on 10th November 2023, 7:3 pm). Khadka, M. B. (2017). A Comparative Analysis of Working Capital Management of NIBL and EBL..

Cond…... Paudel, R. B., Baral, K. J., Joshi, P. R., Gautam, R. R., & Rana, S. B. (2021). Financial Management. Kathmandu: Asmita Books Publisher & Distributors (P) Ltd. Sharma, D. R., Thapa, K., Pandeya, C., Joshi, R., & Lamsal, B. P. (2018). Fundamental of Investment. Kathmandu: Khanal Publication Pvt. Ltd..

Cond…... Van-Horne, J. C. & Wachowicz, J. M (2004). Fundamental of Financial Management (12th ed.). New York: Prentice Hall Publishers. Timsina, M. (2010). Working Capital Management Entitled in Nepal Insurance Company..