CONTENT

CHAPTER.NO
TITLE PAGE No.
ACKNOWLEDGEMENT
LIST OF TABLES 6
LIST OF CHARTS 7
1 INTRODUCTION
1.1 Introduction !out t"# Stud$
%
1.& A!out t"# co'(n$
)
1.* Co'(n$ (ro+i,# 11
& OB-ECTI.ES
&.1 O!/#cti0# +or t"# 1tud$
1%
&.& N##d +or t"# 1tud$
1%
2.3 Sco(# o+ t"# 1tud$ 1%
* RE.IEW OF LITERATURE 12
% RESEARCH 13
%.1 Dt co,,#ction
16
2 DATA ANAL4SIS AND INTERPRETATION *5
3 FINDINGS AND SUGGESTIONS 25
3.1 Findin61
57
3.& Su66#1tion1
58
5 CONCLUSION 2)
BIBLIOGRAPH4 37
LIST OF TABLES
S.NO PARTICULARS PAGE NO
1 CURRENT RATIO %2
& DEBTORS TURNO.ER PERIOD %3
* CREDITOR8S TURNO.ER PERIOD %9
% IN.ENTOR4 TURNO.ER PERIOD 27
2 WORKING CAPITAL TURNO.ER PERIOD 2&
3 DEBTORS COLLECTION PERIOD 2%
5 WORKING CAPITAL PERIOD 23
LIST OF CHARTS
CHARTS.NO PARTICULARS PAGE NO
1 CURRENT RATIO %2
& DEBTORS TURNO.ER PERIOD %5
* CREDITOR8S TURNO.ER PERIOD %)
% IN.ENTOR4 TURNO.ER PERIOD 21
2 WORKING CAPITAL TURNO.ER PERIOD 2&
3 DEBTORS COLLECTION PERIOD 22
5 WORKING CAPITAL PERIOD 23
3
CHAPTER:I
WORKING CAPITAL MANAGEMENT
1.1 INTRODUCTION
Working Capital management refers to that part of the firms capital which is required for
financing short- term or current assets such as cash, marketale securities, detors ! in"entories#
$unds, thus, in"ested in current assts keep re"ol"ing fast and are eing constantl% con"erted in to
cash and this cash flows out again in e&change for other current assets# 'ence, it is also known as
re"ol"ing or circulating capital or short term capital#
Working Capital management is concerned with the prolems arise in attempting to manage the
current assets, the current liailities and the inter relationship that e&ist etween them#
(he term current assets refers to those assets which in ordinar% course of usiness can e, or, will
e, turned in to cash within one %ear without undergoing a diminution in "alue and without
disrupting the operation of the firm# (he ma)or current assets are cash, marketale securities,
account recei"ale and in"entor%#
Current liailities ware those liailities which intended at their inception to e paid in ordinar%
course of usiness, within a %ear, out of the current assets or earnings of the concern# (he asic
current liailities are account pa%ale, ill pa%ale, ank o"er-draft, and outstanding e&penses#
(he goal of Working capital management is to manage the firms current assets and current
liailities in such wa% that the satisfactor% le"el of working capital is mentioned#
4
1.&.ABOUT THE COMPAN4
4#r o+ E1t!,i1"'#nt *+1+
L#6, Sttu1 o+ Fir' ,ri"ate -imited Compan%
Ntur# o+ Bu1in#11 .anufacturer, /&porter
Nu'!#r o+ E'(,o$##1 51 to 1++ ,eople
Turno0#r 012 +#*5-1 .illion 3or 4s# 1-5 Crore 6ppro&#7
SS FINE MOTORES AND APPLIANCES PRI.ATE LIMITED is promoted % %oung and
energetic entrepreneurs, and supported % a "irant work force#
(his sunrise enterprise acquired lock stock and arrel the hosur unit of m8s# $ores ! compan%
limited manufacturing uni"ersal and special purpose motors equipped with state of the art
manufacturing and 4 ! 9 facilities# (he product range includes such as: "acuum motors, home
appliance motors for food processors8mi&er grinders8)uicers8lenders8front loading washing
machines 1pecial purpose motors ;eared8ungeared etc#, dc motors and lowers for "entilation
s%stem of armored "ehicle for defense su-assemlies for portale electric power tools and
"acuum motors contract manufacturing of allied electrical products#
(he highlights of the erstwhile unit of m8s# $ores ! compan% limited were the dedicated,
de"oted, diligent workforce which car"ed out a niche for their products in the national and
international markets#
.8s# $ores and compan% limited ceased the operation of the unit for reasons other than
economical and put the same on sale, thus rendering )oless the entire managerial and laour
force at large#
5
<t goes without sa%ing, to maintain a competiti"e edge in the present market qualit%
must e nurtured with passion and =eal#
<t will e our endea"or to inno"ate and impro"ise our products in all facets of its
functioning#
(he state of the art machineries and research facilities at our disposal would go a long
wa% in continuousl% fine tuning our products to the entire satisfaction of our "alued
customers#
We shall ne"er dilute on these asic usiness tenets#
We shall adopt to adhere the following strategies to attain the pinnacle of glor% and
mo"e ahead#
Concentrate in manufacturing and marketing of mi&er grinder motors#
>esides mi&er grinder motors, there is e&cellent scope for granite8marle cutter
machine motors, wet grinder motors and circuit reaker motors#
,rice the products in a "er% competiti"e manner#
4educe the o"erhead and laor cost drasticall% % emplo%ing skilled workers of
erstwhile $ores ! compan% limited with salar% and perks in tune with the present
market trend# 1treamline purchases#
'andpick honest and sincere staff to wholeheartedl% support and impro"e the o"erall
performance#
?eep the work force and managerial staff to the arest minimum# <ntroduce
performance linked compensation to the workforce#
@ptimi=e usage of state of the art machiner% and integrated research facilit% a"ailale
with the compan%, which no competitor is equipped with in this field, to ma&imi=e
production and upgrade the product ased on the requirement of indi"idual customers#
@ptimum utili=ation of the installed capacit% of the plant, which is 1 3one7 lac motors
per month as of now# 4efurish the machineries and tools for ma&imi=ing output#
/&plore the market for mi&er grinder motors since we ha"e a strategic ad"antage of
eing located in the south and almost all the mi&er grinder manufacturing units are
concentrated 7in the south and the% source the motors from the north#
@ur unit eing in the south en)o%s logistic and regional economic enefits#
6
1.*. COMPAN4 PROFILE
.ALUES ; <UALIT4 POLIC4=
OUR .ALUES=
A<ntegrit%, 4espect for ,eople, 0nit% of ,urpose, @utside-in $ocus, 6gilit% and <nno"ationB#
<UALIT4 POLIC4
A>are committed to meet customers requirements through continual impro"ement @f our
qualit% management s%stems# We shall sustain organi=ational e&cellence through "isionar%
leadership and inno"ati"e effortsB#
.ISION=
We shall relentlessl% stri"e to uild an organi=ation of international repute coupled with
e&cellence in all facets of functioning in the light engineering segment# @ur o)ecti"e is to
attain world-class standards in order to ensure customers delight#
MISSION=
We shall redefine mutuall% eneficial relationship with all our constituents and culti"ate it as
eternall% flourishing# @ur a"owed aim is to con"ert all our customers as our rand
amassadors# /"er e"ol"ing "alue addition in all our endea"ors will e our hall mark#
11 $ine .otors is committed to inculcate awareness and practice qualit% standards in each stage
of processes with a "iew to offer products of etter qualit% and e competiti"e in the gloal
market % acquiring e&pertise in the
,roduct design and de"elopment
.anufacturing methodsC and
>usiness processes
7
<UALIT4 CONTROL PROCESS
11 $ine .otors, qualit% is not onl% a mindset, ut also a formali=ed s%stem# (hrough
strict documentations and procedures, our engineers and operators maintain control of
qualit% throughout e"er% step of production#
We ha"e de"eloped a qualit% management s%stem that includes testing and maintaining high
standards of our products# We use optimum qualit% raw materials like steel, copper ! high
qualit% 6luminum <ngots to manufacture our uni"ersal motors#
We follow an estalished qualit% strateg% and ensure that all our products and raw materials
undergo through strict qualit% tests# @ur qualit% e&perts use modern equipment to perform tests
on finali=ed products to make sure that the% are accurate and efficient# 9edicated to offer
impeccale qualit% products, our qualit% control auditors run qualit% checks and regularl% check
the performance and durailit% of the machines as a whole#
@ur qualit% auditing department de"ises and implements latest methodologies to ascertain that
we produce onl% flawless products# (o reali=e the same, we ensure that the raw material
procured % us is of optimum qualit%#
@ur qualit% inspectors scrutini=e all processes carefull% and check the finished products on "arious
to ensure impeccale products# (he "arious qualit% tests that our products undergo are:
'#D (est
1urge test
4esistance test
With a close coordination with our design and de"elopment department, our qualit% inspectors work
hard to ensure that our products meet and e&ceed the e&pectations of our clients# .oreo"er, all our
personnel are gi"en periodical training to keep them updated with the latest market trends#
8
<UALIT4 POLIC4
@ur compan% shall understand the needs of the customers and manufacture products in
conformit% with their requirements keeping qualit%, cost, timel% deli"er% and continue impro"ing
the qualit% management s%stem#
We are certified <1@ E++1:*++8 (0D 1outh 6sia ,ri"ate -imitedF
Dacuum Cleaner .otors
G"acuum cleaner motors
- 65+w to 1H++w capacit%
- in single stage ! doule stage
- in through flow and %pass construction
.i&er ;rinder .otors
.i&er grinder motors
@ther products ! ser"ices we offer
o 0ni"ersal .otor
o $ood ,rocessor .otors
o 1pecial ,urpose .otors
9
CHAPTER >II
OB-ECTI.ES
&.1 OB-ECTI.ES OF THE STUD4
(o stud% the working capital management in 11 $<I/ .@(@41 ,D( -(9#
SECONDAR4 OB-ECTI.E=
(o anal%=e the financial position of the societ%#
(o e&amine liquidit% position of the societ%#
(o ascertain the profitailit% of the societ%
(o highlight the strength ! weakness of the societ%#
(o anal%sis the comparati"e and common si=e financial statement in order to know the
potential in"estment#
2.2 NEED FOR THE STUD4
<t is necessar% to find out the performance of the compan% whether the compan% is going
in profit or in loss# <n order to e"aluate the net profit or net loss it is necessar% to
determine the current assets and current liailities#
(o understand the proportion of the components of current assets#
(o e"aluate the effecti"e of utili=ation of assets in da% to da% acti"ities#
2.3 SCOPE OF THE STUD4
(he pro)ect was done on working capital management in 11 $<I/ .@(@41 ,D(
-(9# <t will help the concern to know aout its financial position in "arious areas such
as profitailit%, liquidit%, operating le"els# (he stud% would enale the concern, to make
suggesti"e and correcti"e measures in future concert and shareholders to know their
performance and also help researchers and students as a reference for their academic
purposes#
10
CHAPTER >III
RE.IEW OF LITERATURE
.uthami=han#D and 6nnadurai#4 3*+1H7 conducted a stud% on <ndian pulic sector power
industries and found that in the power industries the selected "ariales e&plain E8J of the "ariations
in profitailit% of the firms included in profitailit%# <t is e"ident from the result that age is found to
e strongest determine of profitailit% followed % operati"e e&penses to sales ratio, le"erage, fi&ed
asset turno"er ratio, in"entor% turno"er ratio, si=e, current ratio, growth rate and "ertical integration#
$urther si=e, operating e&penses to sales ratio and fi&ed assets turno"er ratio ha"e a negati"e
contriution in "ariation of profit in these industries# @ther "ariales ha"e positi"e contriution in
Dariation of profit rate# 'owe"er, current ratio is found to e in significant in e&plaining profitailit%#
(he result of regressing profit margin with selected "ariales shows an almost similar picture in this
regard# <n a nutshell, it can e concluded that firms should e considered all these possile
determinants while considering profitailit%B
Chandrasekhar 31E887 anal%=ed the growth structural change in motor industr% from 1E5+-51 to
1E85-85# (he rele"ant data was collected from 61<# 'e concludes that the growth of "alue addition
in auto moile industries has shown a decreasing trend#
11
CHAPTER >I.
RESEARCH METHODLOG4
%.1 INTRODUCTION
4esearch methodolog% is a s%stematic procedure to sol"e the research method ut also
considering the ehind the method#
RESEARCH DESIGN
6 research design is the arrangement of conditions for collection and anal%sis of data in a
manner that aims to comine rele"ance to the research purpose with econom% in procedure#
(he formidale prolem that follows the task of defining the research prolem is the
preparation of the design of the research pro)ect, popularl% known as the Aresearch designB#
9ecisions regarding what, where, when, how much, % what means concerning an inquir% or a
research stud% constitute a research design#
T4PES OF RESEARCH
(he research adopted in stud% is anal%tical research# 6nal%tical research means the research
has to use facts of information alread% a"ailale#
DATA COLLECTION
(he source of data used in the research is secondar% data#1econdar% data means that are
alread% a"ailale i#e# the% refer to the data which ha"e alread% een collected and anal%=ed %
someone else# 1econdar% data ma% either e pulished data or unpulished data# (he present stud%
makes use of secondar% data in the form of compan% alance sheet, compan% wesite, )ournals,
maga=ines, ooks, etc#
(his stud% is period for the annual reports and statements of accounts e&tended from the
%ears
12
DEFINITION=
6ccording to Pr? ; G,d1on:
A(he e&cess of current assets of a usiness 3i#e# cash, accounts recei"ales, in"entories7
o"er current items owned to emplo%ees and others 3such as salaries ! wages pa%ale, accounts
pa%ale, ta&es owned to ;o"ernment7B#
Capital required for a usiness can e classified under two main categories "ia#
1) $i&ed Capital
2) Working Capital
/"er% usiness needs funds for two purposes for its estalishment and to carr% out its da%-
to-da% operations# -ong terms funds are required to create production facilities through purchase
of fi&ed assets such as ,!-, land, uilding, furniture, etc# <n"estments in these assets represent
that part of firms capital which is locked on permanent or fi&ed asis and is called fi&ed
capital# $unds are also needed for short-term purposes for the purchase of raw material, pa%ment
of wages and other da% K to- da% e&penses etc#
6ccording to Gutt'nn ; Dou6,,:
A/&cess of current assets o"er current liailitiesB
13
CONCEPT OF WORKING CAPITAL
(here are two concepts of Working Capital:
1. ;ross Working Capital
2. Iet Working Capital
(he gross Working Capital is the capital in"ested in the total current assets of the enterprises
current assets are those assets which can con"ert in to cash within a short period normall% one
accounting %ear#
(he net working capital means difference etween current assets and current liailities
14
CONSTITUENTS OF CURRENT ASSETS
1) Cash in hand and cash at ank
2) >ills recei"ales
3) 1undr% detors
4) 1hort term loans and ad"ances
5) <n"entories of stock as:
a. 4aw material
b. Work in process
c. 1tores and spares
d. $inished goods
6. (emporar% in"estment of surplus funds#
7. ,repaid e&penses
8. 6ccrued incomes#
9. .arketale securities#
<n a narrow sense, the term Working Capital refers to the net working# Iet Working
Capital is the e&cess of current assets o"er current liailit%, or, sa%:
NET WORKING CAPITAL @ CURRENT ASSETS > CURRENT LIABILITIES.
Iet Working Capital can e positi"e or negati"e# When the current assets e&ceeds the current
liailities are more than the current assets# Current liailities are those liailities, which are
intended to e paid in the ordinar% course of usiness within a short period of normall% one
accounting %ear out of the current assts or the income usiness#
15
CONSTITUENTS OF CURRENT LIABILITIES
1. 6ccrued or outstanding e&penses#
2. 1hort term loans, ad"ances and deposits#
3. 9i"idends pa%ale#
4. >ank o"erdraft#
5. ,ro"ision for ta&ation, if it does not amt# to app# of profit#
6. >ills pa%ale#
7. 1undr% creditors#
CLASSIFICATION OF WORKING CAPITAL
Working Capital ma% e classified in to wa%s:
@n the asis of concept#
@n the asis of time#
@n the asis of concept Working Capital can e classified as gross Working Capital and net
Working Capital# @n the asis of time, Working Capital ma% e classified as:
,ermanent or fi&ed Working Capital#
(emporar% or "ariale Working Capital
16
6mount of Working
Capital (emporar% capital
,ermanent Capital
(ime
PERMANENT OR FIAED WORKING CAPITAL
,ermanent or fi&ed Working Capital is minimum amount which is required to ensure effecti"e
utili=ation of fi&ed facilities and for maintaining the circulation of current assets# /"er% firm has
to maintain a minimum le"el of raw material, work- in-process, finished goods and cash alance#
(his minimum le"el of current assets is called permanent or fi&ed Working Capital as this part of
working is permanentl% locked in current assets# 6s the usiness grow the requirements of
Working Capital also increases due to increase in current assets#
17
TEMPORAR4 OR .ARIABLE WORKING CAPITAL
(emporar% or "ariale Working Capital is the amount of Working Capital which is required to
meet the seasonal demands and some special e&igencies# Dariale Working Capital can further e
classified as seasonal Working Capital and special Working Capital# (he capital required to meet
the seasonal need of the enterprise is called seasonal Working Capital# 1pecial Working Capital is
that part of Working Capital which is required to meet special e&igencies such as launching of
e&tensi"e marketing for conducting research, etc#
(emporar% Working Capital differs from permanent Working Capital in the sense that is required
for short periods and cannot e permanentl% emplo%ed gainfull% in the usiness
18
IMPORTANCE OR AD.ANTAGE OF ADE<UATE WORKING CAPITAL
PAYMENT
TO
SUPPLIERS
EASY LOAN DIVIDEND
FROM
DISTRIBUTI
-
BANKS ON
SIGNIFICAN--CE
OF WORKING
CAPITAL
INCREASE INCREASE
EFFECIENC- DEBT
Y CAPACITY
INCREASE
IN FIX
ASSETS
19
1@-D/ICL @$ ('/ >01<I/11:
6dequate Working Capital helps in maintaining the sol"enc% of the usiness % pro"iding
uninterrupted of production#
;oodwill:
1ufficient amount of Working Capital enales a firm to make prompt pa%ments and
makes and maintain the goodwill#
/as% loans:
6dequate Working Capital leads to high sol"enc% and credit standing can arrange loans
from anks and other on eas% and fa"orale terms#
Cash 9iscounts:
6dequate Working Capital also enales a concern to a"ail cash discounts on the
purchases and hence reduces cost#
4egular 1uppl% of 4aw .aterial:
1ufficient Working Capital ensures regular suppl% of raw material and continuous
production#
4egular ,a%ment @f 1alaries, Wages 6nd @ther 9a% (@ 9a% Commitments:
<t leads to the satisfaction of the emplo%ees and raises the morale of its emplo%ees,
increases their efficienc%, reduces wastage and costs and enhances production and profits
6ilit% to $ace Crises:
6 concern can face the situation during the depression#
20
FACTORS DETERMINING THE WORKING CAPITAL RE<UIREMENTS
1. NATURE OF BUSINESS=
(he requirements of working is "er% limited in pulic utilit% undertakings such as
electricit%, water suppl% and railwa%s ecause the% offer cash sale onl% and suppl% ser"ices not
products, and no funds are tied up in in"entories and recei"ales# @n the other hand the trading
and financial firms requires less in"estment in fi&ed assets ut ha"e to in"est large amt# of
Working Capital along with fi&ed in"estments#
&. SIBE OF THE BUSINESS=
;reater the si=e of the usiness, greater is the requirement of Working Capital#
*. PRODUCTION POLIC4=
<f the polic% is to keep production stead% % accumulating in"entories it will require
higher Working Capital#
%. LENTH OF PRDUCTION C4CLE=
(he longer the manufacturing time the raw material and other supplies ha"e to e carried
for a longer in the process with progressi"e increment of laor and ser"ice costs efore the final
product is otained# 1o Working Capital is directl% proportional to the length of the
manufacturing process#
SOURCES OF WORKING CAPITAL
(he compan% can choose to finance its current assets %
1. -ong term sources
2. 1hort term sources
3. 6 comination of them#
Lon6 t#r' 1ourc#1 o+ (#r'n#nt Wor?in6 C(it, inc,ud# equit% and preference shares,
retained earnings, deentures and other long term dets from pulic deposits and financial
institution# (he long term Working Capital needs should meet through long term means of
financing# $inancing through long term means pro"ides stailit%, reduces risk or pa%ment and
increases liquidit% of the usiness concern# Darious t%pes of long term sources of Working
21
Capital are summari=ed as follow:
1. I11u# o+ 1"r#1=
<t is the primar% and most important sources of regular or permanent Working Capital# <ssuing
equit% shares as it does not create and urden on the income of the concern# Ior the concern is
oliged to refund capital should preferal% raise permanent Working Capital#
&# R#tin#d #rnin61=
4etain earning accumulated profits are a permanent sources of regular Working Capital# <t is
regular and cheapest# <t creates not charge on future profits of the enterprises#
*# I11u# o+ d#!#ntur#1=
<t creates a fi&ed charge on future earnings of the compan%# Compan% is oliged to pa% interest#
.anagement should make wise choice in procuring funds % issue of deentures#
S"ort t#r' 1ourc#1 o+ t#'(orr$ Wor?in6 C(it,=
(emporar% Working Capital is required to meet the da% to da% usiness e&penditures# (he
"ariale Working Capital would finance from short term sources of funds# 6nd onl% the period
needed# <t has the enefits of, low cost and estalishes closer relationships with anker#
1ome sources of temporar% Working Capital are gi"en elow:
1. Co''#rci, !n?=
6 commercial ank constitutes significant sources for short term or temporar% Working Capital#
(his will e in the form of short term loans, cash credit, and o"erdraft and though discounting
the ills of e&changes#
&# Pu!,ic d#(o1it1=
.ost of the companies in recent %ears depend on this source to meet their short term Working
Capital requirements ranging from si& month to three %ears#
22
*# .riou1 cr#dit1=
(rade credit, usiness credit papers and customer credit are other sources of short term Working
Capital# Credit from suppliers, ad"ances from customers, ills of e&changes, etc helps to raise
temporar% Working Capital
%# R#1#r0#1 nd ot"#r +und1=
Darious funds of the compan% like depreciation fund# ,ro"ision for ta& and other pro"isions kept
with the compan% can e used as temporar% Working Capital# (he compan% should meet its
Working Capital needs through oth long term and short term funds# <t will e appropriate to
meet at least *8H of the permanent Working Capital equipment form long term sources, whereas
the "ariales Working Capital should e financed from short term sources# (he Working Capital
financing mi& should e designed in such a wa% that the o"erall cost of Working Capital is the
lowest, and the funds are a"ailale on time and for the period the% are reall% required#
SOURCES OF ADDITIONAL WORKING CAPITAL
1ources of additional Working Capital include the following-
1. /&isting cash reser"es
2. ,rofits 3when %ou secure it as cash7
3. ,a%ales 3credit from suppliers7
4. Iew equit% or loans from shareholder
5. >ank o"erdrafts line of credit
6. -ong term loans
<f we ha"e insufficient Working Capital and tr% to increase sales, we can easil% o"er stretch the
financial resources of the usiness# (his is called o"ertrading# /arl% warning signs include
1. ,ressure on e&isting cash
23
2. /&ceptional cash generating acti"ities# @ffering high discounts for clear
cash pa%ment
3. >ank o"erdraft e&ceeds authori=ed limit
4. 1eeking greater o"erdrafts or lines of credit
5. ,art pa%ing suppliers or there creditor#
6. .anagement pre occupation with sur"i"ing rather than managing#
24
Di++#r#nt A1(#ct1 o+ Wor?in6 C(it, Mn6#'#nt
.anagement of <n"entor%
.anagement of 4ecei"ales89etors
.anagement of Cash
.anagement of ,a%ales8Creditors
MANAGEMENT OF IN.ENTOR4
<n"entories constitute the most significant part of current assets of a large ma)orit% of companies#
@n an a"erage, in"entories are appro&imatel% 6+J of current assets# >ecause of large si=e, it
requires a considerale amount of fund# (he in"entor% means and includes the goods and
ser"ices eing sold % the firm and the raw material or other components eing used in the
manufacturing of such goods and ser"ices#
Ntur# o+ In0#ntor$=
(he common t%pe of in"entories for most of the usiness firms ma% e classified as raw-
material, work-in-progress, finished goods#
RC 't#ri,=
<t is asic inputs that are con"erted into finished products through the manufacturing process#
4aw materials in"entories are those units which ha"e een purchased and stored for future
productions#
Wor?>in>(roc#11=
Work-in-process is semi-manufactured products# (he% represent products that need more work
efore them ecome finished products for sale#
Fini1"#d 6ood1=
(hese are completel% manufactured products which are read% for sale# 1tocks of raw materials
and work-in-process facilitate production, while stock of finished goods is required for smooth
marketing operations# (hus in"entories ser"e as a link etween the production and consumption
of goods#
25
(he le"els of three kinds of in"entories for a firm depend on the nature of usiness#
6 manufacturing firm will ha"e sustantiall% high le"els of all the three kinds of in"entories#
While retail or wholesale firm will ha"e a "er% high le"el of finished goods in"entories and no
raw material and work-in-process in"entories
So o(#rtin6 c$c,# cn !# ?noCn 1 +o,,oCin6=
4aw materials
Cash collection from
detors
1ales
Work in ,rogress
$inished ;oods
Credit 1ales Cash 1ales
26
C61'
>@@? 46W
9/>(1
.6(/4<6-
1
$<I<1'/
9
W<
,
;@91
N##d to "o,d in0#ntori#1
.aintaining in"entories in"ol"es tr%ing up of the compan%s funds and incurrence
of storage and holding costs# (here are three general moti"es for holding
<n"entories:
Trn1ction1 Moti0#=
<( emphasi=es the need to maintain in"entories to facilitate smooth production and sales
operation#
Pr#cutionr$ Moti0#=
<t necessitates holding of in"entories to guard against the risk of unpredictale changes in
demand and suppl% forces and other factors#
S(#cu,ti0# Moti0#=
<t influences the decision to increase or reduce in"entor% le"els to take ad"antage of price
fluctuations#
Mn6#'#nt o+ R#c#i0!,#1DD#!tor1
(he 4ecei"ales 3including the detors and the ills7 constitute a significant portion of the
Working Capital# (he recei"ales emerge whene"er goods are sold on credit and pa%ments are
deferred % customers# 6 promise is made % the customer to pa% cash within a specified period#
(he customers from whom recei"ale or ook dets ha"e to e collected in the future are called
Trd# d#!tor1 and represents the firms claim or assets# (hus, recei"ale is s t%pe of loan
e&tended % the seller to the u%er to facilitate the purchase process#
R#c#i0!,# Mn6#'#nt ma% e defined as collection of steps and procedure required to
properl% weight the costs and enefits attached with the credit polic%# (he 4ecei"ale
.anagement consist of matching the cost of increasing sales 3particularl% credit sales7 with the
enefits arising out of increased sales with the o)ecti"e of ma&imi=ing the return on in"estment
of the firm#
Ntur#
(he term credit polic% is used to refer to the comination of three decision "ariales:
Cr#dit 1tndrd1=
<t is the criteria to decide the t%pe of customers to whom goods could e sold on credit# <f a firm
has more slow Kpa%ing customers, its in"estment in accounts recei"ale will increase# (he firm
will also e e&posed to higher risk of default#
Cr#dit t#r'1=
<t specifies duration of credit and terms of pa%ment % Customer <n"estment in accounts
recei"ale will e high <f customers are allowed e&tended time period for making pa%ments#
Co,,#ction #++ort1=
<t determine the actual collection period# (he lower the collection period, the
lower the in"estment in accounts recei"ale and "ice "ersa#
Mn6#'#nt o+ C1"
Cash management refers to management of cash alance and the ank alance and also includes
the short terms deposits# Cash is the important current asset for the operations of the usiness#
Cash is the asic input needed to keep the usiness running on a continuous asis# <t is also the
ultimate output e&pected to e reali=ed % selling the ser"ice or product manufactured % the
firm# (he term cash includes coins, currenc%, and cheque held % the firm and alance in the
ank accounts#
Fctor1 o+ C1" Mn6#'#nt=
Cash management is concerned with the managing of
1. Cash flows into and out of the firm
2. Cash flows within the firm and
3. Cash alance held % the firm at a point of time % financing deficit or in"esting
surplus cash#
1ales generate cash which has to e disursed out# (he surplus cash has to e in"ested
while deficit has to orrow# Cash management seeks to accomplish this c%cle at a minimum cost
and it also seeks to achie"e liquidit% and control#
Moti0#1 o+ "o,din6 c1"
6 distinguishing feature of cash as an asset is that it does not earn an% sustantial return for
the usiness# /"en though firm hold cash for following moti"es:
(ransaction moti"e:
,recautionar% moti"e
1peculati"e moti"es
Compensator% moti"e
Trn1ction 'oti0#:
(his refers to the holding of cash to meet routine cash requirement to finance# (he transactions,
which a firm carries on in the ordinar% course of usiness#
Pr#cutionr$ 'oti0#=
(his implies the needs to hold cash to meet unpredictale contingencies such as strike, sharp
increase in raw materials prices# <f a firm can orrow at short notice to pa% them unforeseen
contingenc%, it will need to maintain relati"el% small alances and "ice-"ersa#
S(#cu,ti0# 'oti0#1:
<t refers to the desire of the firm to take ad"antage of opportunities which present themsel"es at
une&pected mo"ements and which are t%picall% outside the normal course of usiness#
Co'(#n1tor$ 'oti0#=
>ank pro"ides certain ser"ices to their client free of cost# (he% therefore, usuall% require client to
keep minimum cash alance with them to earn interest and thus compensate them for the free
ser"ice so pro"ided#
Mn6#'#nt o+ P$!,#1DCr#ditor1
Creditors are a "ital part of effecti"e cash management and should e managed carefull% to
enhance the cash position# ,urchasing initiates cash outflows and an o"er-=ealous purchasing
function can create liquidit% prolems# Consider the
$ollowing:
Who authori=es purchasing in our compan%-is it tightl% managed or spread among a
numer of peopleM
6re purchase quantities geared to demand forecastsM
9o we use order quantities which take account of stock-holding and
,urchasing costsM
9o we know the cost to the compan% of carr%ing stockM
9o we ha"e alternati"e source of suppl%M
'ow man% of our suppliers ha"e a returns polic%M
6re we in a position to pass on cost increases quickl% through price
<ncreaseM
MANAGEMENT OF WORKING CAPITAL
.anagement of Working Capital is concerned with the prolem that arises in attempting
to manage the current assets, current liailities# (he asic goal of Working Capital management
is to manage the current assets and current liailities of a firm in such a wa% that a satisfactor%
le"el of Working Capital is maintained, i#e# it is neither adequate nor e&cessi"e as oth the
situations are ad for an% firm# (here should e no shortage of funds and also no Working
Capital should e ideal# W@4?<I; C6,<(6- .6I6;/./I( ,@-<C/1 of a firm has a great
on its proailit%, liquidit% and structural health of the organi=ation# 1o Working Capital
management is three dimensional in nature as
1. <t concerned with the formulation of policies with regard to profitailit%, liquidit%
and risk#
2. <t is concerned with the decision aout the composition and le"el of current assets#
3.<t is concerned with the decision aout the composition and le"el of current
liailities of the firm during a particular period of time#
B#n#+it1 +or t"# SS FINE MOTORES P.T LTD=:
(o prepare the cash udget#
(o compare the cash udgets#
(o show the position of the cash and cash equi"alents#
WORKING CAPITAL=:
Working Capital is the process of the determining and presenting the relationship of the items
and group of items in the statements#
B#n#+it1 o+ Wor?in6 C(it, to SS FINE MOTORES P.T LTD=:
'elpful in anal%sis of financial statements#
'elpful in comparati"e stud%#
'elpful in locating the weak spots of the 11 FINE MOTORES P.T LTD.
'elpful in forecasting#
/stimate aout the trend of the usiness#
$i&ation of ideal standards#
BALANCE SHEET
Sourc#1 o+ Fund1
Prticu,r1 &711 &71& &71*
Tot, S"r# C(it, 195.9* 195.99 195.)%
EEuit$ S"r# C(it, 195.9* 195.99 195.)%
S"r# A((,iction Mon#$ 7.1 7 7.79
Pr#+#r#nc# S"r# C(it, 7 7 7
R#1#r0#1 *F)3%.59 %F5*).92 2F9&9.&7
R#0,ution R#1#r0#1 7 7 7
N#t Cort" %F12&.51 %F)&5.5* 3F713.&&
S#cur#d Lon1 &33.7* %27 227
Un1#cur#d Lon1 %7.*9 *&.7* 13.)&
Tot, D#!t *73.%1 %9&.7* 233.)&
Tot, Li!i,iti#1 %F%2).1& 2F%7).53 3F29*.1%
%.1.& APPLICATION OF FUNDS=
Prticu,r1 &711 &71& &71*
5,565#+7 5,8H5#67 6,8*6#*7
;ross >lock
*,15E#H5 *,H65#E7 *,667#E8
-ess: 6ccum#
9epreciation
*F*1%.5& *F%3).57 %F129.&)
N#t B,oc?
1,6+*#86 *,156#*1
Capital Work in
,rogress
35).79 1F%52.3%
In0#1t'#nt1
7EH#*7 778#E8
<n"entories
H1+#17 *+H#7
1undr% 9etors
87#57 E5#65
Cash and >ank
>alance
1,+EE#+* 1,1E1#+1 1,+78#H*
(otal Current
6ssets
77E#76 715#55
-oans and
6d"ances
8E6#67 65+#75
$i&ed 9eposits
*,H+7#E5 *,867#55 *,55H#61
(otal C6, -oans !
6d"ances
+ + +
9eferred Credit
1,EE1#*7 *,*55#HE *,558#7H
Current -iailities
666#*7 E6H#EH 1,+E1#88
,ro"isions
*,657#55 H,*+E#H* H,65+#61
(otal C- ! ,ro"isions
:*%).3 :*%1.99 :1F&75.77
N#t Curr#nt A11#t1
+ + +
.iscellaneous /&penses
%F%2).1& 2F%7).53 3F29*.1%
Tot, A11#t1
8E+#6* 1,7H5#*1 85+#5*
Contingent -iailities
**1#HH *6*#56 H*+#55
>ook Dalue 34s7
PROFIT ; LOSS ACCOUNT
::::::::::::::::::: in R1. Cr. :::::::::::::::::::
CASH FLOWS
Prticu,r1 D#c G11 D#c G1& D#c G1*
1* mths 1* mths 1* mths
N#t Pro+it B#+or# TH 1515.19 1395.5% &&)%.*)
Iet Cash $rom @perating
6cti"ities *++5#E 17+8#HH *HE7#E5
Iet Cash 3used in78from
-
<n"esting 6cti"ities -8*5#H 117+#55 -*181#**
Iet Cash 3used in78from
$inancing 6cti"ities -1+57#*E -*E7#1H -555#58
N#t Id#cr#1#JDincr#1#
In C1" nd C1"
EEui0,#nt1 1&*.*1 &%7.53 :&*5.93
@pening Cash ! Cash
/qui"alents 6*+#17 75H#58 E85#*5
Closing Cash ! Cash
/qui"alents 75H#58 E85#*5 756#H8
Prticu,r1 D#c G11 D#c G1& D#c G1*
1* mths 1* mths 1* mths
Inco'#
1ales (urno"er 7,865#11 8,H++#18 8,8+H#17
/&cise 9ut% E7+#H* 1,+7+#*1 781#58
Iet 1ales 6,8E5#7E 7,**E#E7 8,+*1#5E
@ther <ncome H6E#H5 *5*#85 1H7#5
1tock
6d)ustments 6#EH +#HH *8#75
Tot, Inco'# 5F&51.75 5F%9*.1% 9F195.5*
4aw .aterials 1,85H#65 1,18+#58 1,*HH#5*
,ower ! $uel
Cost 517#56 1,5E8#E6 1,5HE#65
/mplo%ee Cost H5*#7H 51H#+5 H67#71
@ther
.anufacturing
/&penses H55#17 H6*#E 5*1#6E
1elling and
6dmin
/&penses 1,557#H+ 1,6*+#65 1,658#7E
.iscellaneous
/&penses H55#51 *7+#EE *6*#7*
,reoperati"e /&p
Capitali=ed + + +
(otal /&penses 5,E5E#E* 5,557#+* 5,58H#E8
Prticu,r1 D#c G17 D#c G11 D#c G1&
O(#rtin6 Pro+it 1F)%1.97 1F59*.&9 &F233.*2
,>9<( *,H11#15 *,+H6#1* *,7+H#75
<nterest 7H#87 HE#E6 85#H
,>9( *,*H7#*8 1,EE6#16 *,61E#55
9epreciation H+5#5H *E5#18 H5*#+E
@ther Written
@ff 1#55 + +
,rofit >efore (a& 1,EH+#H+ 1,7+1#E8 *,*77#H6
/&tra-ordinar%
<tems -+#16 H5#HE *1#55
,>( 3,ost /&tra-
ord <tems7 1,EH+#15 1,7H7#H7 *,*E8#E+
(a& 5E1#7 5*5#6 688#EH
Prticu,r1 &711 &71& &71*
R#(ort#d N#t 1F%*9.2) 1F&1&.5) 1F373.5*
Pro+it
(otal Dalue H,116#*7 5,*66#55 5,*5+#56
6ddition
,reference + + +
9i"idend
/quit% 9i"idend H75#+* H75#HH 5H1#76
Corporate 6H#75 6H#7E 7H#H8
9i"idend (a&
P#r 1"r# dt
Innu,iK#dJ
1hares in issue 1,876#*5 1,876#8* 1,877#5+
3lakhs7
Ernin61 P#r 53.35 3%.3& 92.29
S"r# IR1J
/quit% 9i"idend *++ *++ *H+
3J7
>ook Dalue **1#HH *6*#56 H*+#55
34s7
%.& CURRENT RATIO
<t is also known as AWorking Capital ratioB #<t is a measures of short-term financial strength of
the usiness and shows whether the usiness will e ale to meet it s current liailities as when
the% mature#
Curr#nt A11#t1 including assets which can e con"erted in to cash easil% and itself like
market securities detors, in"entor%, prepaid e&penses etc#
Curr#nt Li!i,iti#1 included creditors, ills pa%ale, accrual e&penses, short term ank
loan, income ta& liailities and long term det maturit% in current %ear# <n short it can e said as
all oligations within a %ear are included in current liailities#
Curr#nt rtio is a measure of the firms short term sol"enc%# <t indicates the a"ailailit%
of current assets in rupee of current liailities# 6s a con"entional rule, a current ratio should e or
slightl% more# <t focuses the strong of weak position of the compan%#
For t"# $#r=
&71&:1* @ R1. 58756#+7 N 1#61:1
R1. H5756#E8
&711:1& @ R1. 51588#87 N *#1E:1
R1. *H517#51
&717:11 @ R1. *EE1H#H5 N 1#77:1
R1. 16865#5H
%.&.1 THE TABLE SHOWING THE CURRENT RATIO
4EARS CURRENT RATIO
*+1*-1H 1#61:1
*+11-1* *#1E:1
*+1+-11 1#77:1
THE CHART SHOWING THE CURRENT RATIO :%.&.&
Curr#nt rtio
*#5
*
1#5
1
+#5
+
*+1*-1H *+11-1* *+1+-11
INTERPRETATION=
<t is generall% elie"ed that *:1 ratio shows a comfortale Working Capital position# (he tendon
committee appointed % 4>< had wide recommended a current ratio of *:1#Compan% has
maintained this ration and increased it %ear % %ear# 6 current ratio is 1#61 in the current %ear#
>ut in the other %ear the ratio is nearer to 1:* so we can sa% that the compan% ha"ing comfortale
Working Capital position#
%.% DEBTORS TURNO.ER PERIOD
(his period shows the proportion of sales to a"erage recei"ales# <t shows the efficienc% of the
collection polic% of the firm# (he higher the period, the less satisfactor% position of the firm#
'igher ratio indicates weak collection polic% of the firm#
For t"# $#r=
&71&:1* @ R1. 151**5#+1 N H1#*1:1
R1. 5855#E7
&711:1& @ R1. 1H7156#66 N **#6+:1
R1. 6+68#H+
&717:11 @ R1. 1116E*#7* N *E#E*:1
R1. H7H*#5*
%.%.1 THE TABLE SHOWING THE DEBTORS TURNO.ER PERIOD
YEARS DEBTORS TURNOVER PERIOD
*+1*-1H H1#*1:1
*+11-1* **#6+:1
*+1+-11 *E#E*:1
THE CHART SHOWING THE DEBTORS TURNO.ER PERIOD:%.%.&
detor turno"er period
H5
H+
*5
*+
15
1+
5
+
*+1*-1H *+11-1* *+1+-11
INTERPRETATION=
We know that the higher 9etors turno"er ratio is not good for the firm# <n the %ear *++8-+E it is
H1#*1:1 ut in the pre"ious %ear it was **#6+:1# 1o some impro"ement is needed#
%.2 CREDITOR8S TURNO.ER PERIOD
Creditors turno"er shows the proportion of purchase to account pa%ale numer of da%s within
which we make pa%ment to our creditors for credit purchases estimated the creditors period if
this ratio is higher it means compan% has to check whether compan% is making pa%ment within
credit period a"ailale# <f it is making pa%ment efore the due date means the compan% is not
taking full ad"antage of it credit period and if compan% making the pa%ment the period that
indicates that the compan% is not taking the enefit of discount allowed#
For t"# $#r=
&71&:1* @ R1. 118E61#16 N H#HH:1
R1. H5756#E8
&711:1& @ R1. 1+8*7+N 5#6*:1
R1. *H517#51
&717:11 @ R1. E*H+1#+E N 5#57:1
R1. 168H5#5H
%.2.1 THE TABLE SHOWING THE CREDITOR8S TURNO.ER PERIOD
4EARS CREDITOR8S TURNO.ER PERIOD
*+1*-1H H#HH:1
*+11-1* 5#6*:1
*+1+-11 5#57:1
THE CHART SHOWING THE CREDITOR8S TURNO.ER PERIOD :%.2.&
Cr#ditor turn o0#r (#riod
6
5
5
H
*
1
+
1eries
1
*+1*-1H *+11-1* *+1+-11
INTERPRETATION=
'igher period of creditor turno"er forces the compan% to check that pa%ment is
made with in credit period properl% or not# (he creditors turno"er period is H#HH
in *+1*-1H as compare to *+11-1* the period is 5#6* which is higher than the
other %ears#
%.3 IN.ENTOR4 TURNO.ER PERIOD
(his period is also known as Astock turno"er periodB# (he numer of times the a"erage
stock is turno"er during the %ear is known as stock turno"er# <t is computed % deciding the sales
% the in"entor%# (he period is important in )oining the ailit% of management which it can mo"e
the stock#
For t"# $#r=
&71&:1* @ R1. 151**5#+1 N 7#51 times
R1. *+1+E#61
&711:1& @ R1. 1H7156#66 N 7#17 times
R1. 1E1*6#15
&717:11 @ R1. 1116E*#7* N E#*+ times
R1. 1*1H6#51
%.3.1 THE TABLE SHOWING THE IN.ENTOR4 TURNO.ER PERIOD
4EARS IN.ENTOR4 TURNO.ER RATIO
*+1*-1H 7#51 times
*+11-1* 7#17 times
*+1+-11 E#*+ times
THE CHART SHOWING THE IN.ENTOR4 TURNO.ER PERIOD :%.3.&
in"entor% turn o"er period
1+
E
8
7
6
5
5
H
*
1
+
*+1*-1H *+11-1* *+1+-11
INTERPRETATION=
'igher the more profitailit% the usiness would e# (he period is )oining the ailit% of
management with which it can mo"e the stock# <n"entor% turno"er period is highest in the %ear
*++6-+7 is E#*+ as compare to the other %ear ut in current %ear it is 7#51 which is little lower
than pre"ious %ear ut it is o"ious that in hea"% industries like 11 $<I/ .@(@41 #
%.5 NET WORKING CAPITAL TURNO.ER
Iet Working Capital turno"er is otained % net Working Capital )oining to sales# (he
e&cess of current assets o"er current liailities is called Working Capital# <t is found for
measuring firm liquidit%# <t also measures the firm potential reser"e of funds#
For t"# $#r=
&71&:1* @ R1. 151**5#+1 N 5#8H times
R1. 1E875#+6
&711:1& @ R1. 1H7156#66 N 5#57 times
R1. *56**#18
&717:11 @ R1. 1116E*#7* N E#85 times
R1. 11HH5#E5
%.5.1 THE TABLE SHOWING THE WORKING CAPITAL TURNO.ER PERIOD
4EARS WORKING CAPITAL TURNO.ER PERIOD
*+1*-1H 7#6+ times
*+11-1* 5#57 times
*+1+-11 E#85 times
THE CHART SHOWING THE WORKING CAPITAL TURNO.ER PERIOD : %.5.&
capital turn o"er period
1+
8
6
5
1eries 1
*
+
*+1*-1H
1eries 1
*+11-1*
*+1+-11
INTERPETATION=
6s per the alance sheet data of the creditor the Working Capital turno"er period is
different for the different %ears# (he times is 7#6+ in *++8-+E and 5#57 in *++7-+8 ut the
est fa"orale period is in *++5-+6 which is 1+ times# 1o it means that higher the times
etter the Working Capital condition of the compan%#
%.9 DEBTOR COLLECTION PERIOD
(he 9et Collection shows the numer of da%s taken to collect the dets of credit sales# <t shows
the efficienc% and collection polic% of the compan%# (he period is computed % di"iding the
9etors turno"er in to H65 da%s#
For t"# $#r=
&71&:1* N H65 da%s N 11 da%s
H1#*1
&711:1&@ H65 da%s N 16#15 da%s
**#6+
&717:11@ H65 da%s N 1*#*+ da%s
*E#E*
%.9.1 THE TABLE SHOWING THE DEBTORS COLLECTION PERIOD
4EARS DEBTORS COLLECTION PERIOD
*+1*-1H 11#++ da%s
*++11-1* 16#15 da%s
*++1+-11 1*#*+ da%s
THE CHART SHOWING THE DEBTORS COLLECTION PERIOD :%.9.&
detor collection period
1++J
E+J
8+J
7+J
6+J
5+J
5+J
H+J
*+J
1+J
+J
*+1*-1H *+11-1* *+1+-11
INTERPRETATION=
(he collection period is highest in *++5-+5 is *+#71 da%s as compare to "er% low in *++8-+E is
onl% 11 da%s# (his shows the impro"ement in collection polic% of the 11 $<I/ .@(@41# 1o it
is "er% important for an% compan% to collect the des which this compan% do "er% well#
%.) STATEMENT OF WORKING CAPITAL PERIOD
PERIOD 2012-13 2011-12 2010-11
Inven!"# $"n!ve" %e"&!' 1#65 *#1E 1#77
De(!")* $"n!ve" %e"&!' H1#*1 **#6+ *E#E*
C"e'&!")* $"n!ve" %e"&!' H#HH 5#6* 5#57
Ne-W!"+&n, C-%&-. $"n!ve" 7#6+ 5#57 E#85
%e"&!'
De( /!..e/&!n %e"&!' 11 16#15 1*#*+
THE WORKING CAPITAL PERIOD
E+
8+
7+
6+
5+
5+
H+
*+
1+
+
<ID/I(@4L 9/>(@41 C4/9<(@41 I/(-W@4?<I; 9/>(
(04I@D/4 (04I@D/4 (04I@D/4 C6,<(6-
C@--/C(<@
,/4<@9 ,/4<@9 ,/4<@9 (04I@D/4 ,/4<@9
,/4<@9
*+1+-
11
*+11-
1*
*+1*-1H
CHAPTER:.
2.1 OBSER.ATIONS ; FINDINGS
Findin61 o+ Wor?in6 C(it, 'n6#'#nt o+ SS FINE MOTORES P.T LTD
(he compan% ha"ing comfortale Working Capital position#
(he asolute liquidit% of the 11 $<I/ .@(@4/1 ,D( -(9 is in fa"or#
(he collection polic% of the compan% is "er% good#
(he creditors turno"er period is H#HH in *+1*-1Has compare to *+11-1* the ratio is 5#6*
which is higher than the other %ears#
<n"entor% turno"er period is highest in the %ear *+1+-11is E#*+ as compare to the other
%ear ut in current %ear it is 7#51 which is little it lower than pre"ious %ear ut it is
o"ious that in hea"% industries like 11 $<I/ .@(@4/1 ,D( -(9 ha"e lower ratio as
compared to $.C;#
(he Working Capital period is 7#6+ in *+1*-1Hand 5#57 in *++7-+8 ut the est fa"orale
ratio is in which is 1+ times# 1o it indicates etter Working Capital condition of the
compan%#
(his is an impro"ement in collection polic% of the 11 $<I/ .@(@4/1 ,D( -(9#
2.& SUGGESTIONS
(he recommendation ! suggestion for effecti"e management of Working Capital at 11 $<I/
.@(@4/1 ,D( -(9 are gi"en ellow:
10 $or in"entor%, in order to impro"e the position, 11 $<I/ .@(@4/1 ,D( -(9 can reduce
the le"el of stocks % resorting to phased production i#e# producing according to requirement and
disposing off or rec%cling the unser"iceale in"entories#
'owe"er, the low turno"er of stock ma% also e due to prolems with generation of sales#
<n"entor% management is a great concern for 11 $<I/ .@(@4/1 ,D( -(9 especiall% stores
and spares# (he purchase manager should take proper steps for procurement of in"entories#
(he compan% must take certain steps to decrease the Working Capital
c%cle# @ne wa% can e etter management of in"entories#
(he compan% ha"ing comfortale Working Capital position#
(he asolute liquidit% of the 11 $<I/ .@(@4/1 ,D( -(9 is in fa"our#
(he collection polic% of the compan% is "er% good#
2.* CONCLUSION
<n the present stud% < ha"e anal%=ed the Working Capital management of 11 $<I/
.@(@4/1 ,D( -(9
(he stud% in"ol"es practical and conceptual o"er "iew of decisions concerning current
assets like cash and ank alance ,in"entories3 like raw materials ,w-i-p, finished goods 7,sundr%
detors, loans and ad"ances, other current assets and current liailities like sundr% creditors,
securities and other deposits, other current liailities and pro"isions of 11 $<I/ .@(@4/1
,D( -(9 was with the o)ecti"e of ma&imi=ing the o"erall net profit of the ank# 6nd complete
s%nchroni=ation and coordination among the Working Capital components which shall contriute
to optimum le"el of operations# .ismanagement of each or an% of these components shall e
detrimental to the o)ecti"es of efficient operation, profitailit% and ma&imi=ation of o"erall
"alue of the ank#
(he Working Capital limits would e considered onl% after the pro)ect nearing
completion and after ensuring control o"er the in"entor%# (he in"entor% is a great concern for 11
$<I/ .@(@4/1 ,D( -(9 and it need proper procurement and management#
/ligile Working Capital limits would e assessed % cash >udget method 6nd ,ro)ected
production method depending the market condition, scale of operation, nature of
acti"it%8enterprise and duration8length of operating c%cle etc#
BIBLIOGRAPH4
http:88www#stud%finance#com8lessons8workcap 8
http:88en#wikipedia#org8wiki8WorkingOcapita l
www#rcom#co#i n
www#trai#go"#i n
http:88www#ief#org8industr%8telecommunications#as
p&
$inancial .anagement ?han ! in
$inancial .anagement <#.#,ande%
4esearch .ethodolog% C#4#?othari
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