Working capital management of a multinational company: British American Tobacco Bangladesh Ltd

Abstract

This study attempts to explore the working capital management of British American Tobacco Bangladesh Ltd- one of the most prominent multinational corporations in Bangladesh. Working Capital can be demarcated as the amount when current asset is surpassing current liabilities. The focus of this paper is to analyze how the company manages its working capital based on cash, inventory period, receivable period and payable period management and how it influences the profitability of a multinational company. This internship report starts with the objective of the study and the methodology. The project paper contains the analysis of 15 years data of BATB commencing from the year 2002 to 2016. Most of the researchers found that degree of proficiency of administration of working capital largely establishes the success or failures of overall operations of an organization. The objective of this report is to analyze the earlier studies and relate them with this paper. Afterwards description of the company including its history, products, mission, vision, organization structure etc. is discussed in chapter three. Corporate social responsibility is an extraordinary part of BATB. In the fiscal year 2013-14 BATB contributed more than 8436 crore taka as taxes to the national Exchequer. WCM policy for BATB is discussed sumptuously in this chapter as well. They follow aggressive WCM policy because of their higher utilization of short term financing. Inventory management performance is evaluated using inventory conversion period. In the year 2014 it was approximately 171 days which is quite high in comparison to other years. BATB’s time gap between collecting money from the creditors is very pleasing with an average period of 4 days. The organization tries to defer the accounts payable as much as possible. The time taken by BATB to make payments to creditors is around 107 days. The impact of equity and leverage is also analyzed and discussed to see the relationship of these two with the company’s profitability. Analysis of the collected data is presented in chapter five. It contains descriptive, correlation and multiple regression analysis of the variables with proper interpretation and it was found that there is relationship between profitability and working capital components. Correlation analysis shows that receivable period is negatively related with profitability and other variables are positively related. Finally, findings and conclusion chapter include a summary of the results found in the analysis portion.