Professional Documents
Culture Documents
The M.B.A programme is well structured and integrated course of business studies.
The main objective of summer training at M.B.A level is to develop skill in student by
supplement to the theoretical study of business management in general. Project training helps
to gain real life knowledge about the industrial environment and business practices. The
MBA programme provides student with a fundamental knowledge of business and
organizational functions and activities, as well as an exposure to strategic thinking of
management.
It is only the project through which I come to know that what an industry is and how it works.
I learn about various departmental operations being performed in the industry, which would,
in return, help me in the future when I will enter the practical field.
During this whole training I got a lot of experience and came to know about the
management practices in real that how it differs from those of theoretical knowledge and the
practically in the real life.
“Accomplishment of a task with desired success calls for dedication towards work
and prompt guidance, co-operation and deliberation from seniors.”
This report is the outcome of my project that I did at UNIGLASS PVT. LTD.
First of all, I wish to express my profound gratitude and sincere thanks to MR.ROMESH
PRAJAPATI, Manager – Finance for his constant and tireless guidance and encouragement
given during the project and MR.SUDHIR JOGANI- Manager , HR who allowed me to do
project at Uniglass Pvt. Ltd.
In last, I express my profound gratefulness and indebtedness to the esteemed organization for
granting me the grand privilege of working on a project under team of experts and
professionals in the field of finance.
TABLE OF CONTENT
Executive Summary
1 Design of the study
Introduction of the study
Objective of the study
Research Methodology
Limitations
2 Company Profile
Introduction
Genesys Strength
Product Profile
3 Conceptual Framework of working capital management
Introduction
Meaning of working capital
Constituents of working capital
Types of working capital
Determinants of working capital
Excess or inadequate working capital
Meaning of working capital management
Objectives of working capital management
Steps involved in working capital management
Sources of working capital
4 Working capital management at Genesys Systems Ltd.
5 Findings
6 Suggestions
7 Bibliography
EXECUTIVE SUMMARY
“Working capital means the part of the total assets of the business that change from one
In a perfect world, there would be no necessity for current assets and liabilities
scheduling costs, or production and technology constraints. The unit cost of production would
not vary with the quantity produced. Borrowing and lending rates shall be same. Capital,
labour, and product market shall be perfectly competitive and would reflect all available
information, thus in such an environment, there would be no advantage for investing in short
term assets. However the world we live is not perfect. It is characterized by considerable
amount of uncertainty regarding the demand, market price, quality and availability of own
products and those of suppliers. There are transaction costs for purchasing or selling goods or
There are spreads between the borrowings and lending rates for investments
and financings of equal risks. Similarly each organization is faced with its own limits on the
production capacity and technologies it can employ there are fixed as well as variable costs
associated with production goods. In other words, the markets in which real firm operated are
not perfectly competitive. These real world circumstances introduce problem’s which require
the necessity of maintaining working capital. For example,, an organization may be faced
reasonable price. This may necessitate the holding of inventory, current assets. Similarly an
organization may be faced with an uncertainty regarding the level of its future cash flows and
insufficient amount of cash may incur substantial costs. This may necessitate the holding of
reserve of short term marketable securities, again a short term capital asset. In corporate
financial management, the term Working capital management” (net) represents the excess of
Working capital may be regarded as the life blood of business. Working capital
is of major importance to internal and external analysis because of its close relationship with
the current day-to-day operations of a business. Every business needs funds for two purposes
Long term funds are required to create production facilities through purchase of fixed
Short term funds are required for the purchase of raw materials, payment of wages,
The study is formulated by the research design for analyzing the profitability,
soundness and liquidity of the company.
The research design used for this study is analytical research design. Secondary data
is collected from journals, magazines, reports and books.
The statistical tool for the study is ratio analysis. Graphs are also used for the
diagrammatic representation of the interpretation. The study was mainly based on the annual
reports of Uniglass Pvt. Ltd.
CHAPTER -1
DESIGN OF THE STUDY
importance to internal and external analysis because of its close relationship with the current
day-to-day operations of a business. Every business needs funds for two purpose. There are
spreads between the borrowings and lending rates for investments and financings of equal
risks. Similarly each organization is faced with its own limits on the production capacity and
technologies it can employ there are fixed as well as variable costs associated with production
goods. In other words, the markets in which real firm operated are not perfectly competitive.
These real world circumstances introduce problem’s which require the necessity of
maintaining working capital. For example, an organization may be faced with an uncertainty
This may necessitate the holding of inventory, current assets. Similarly an organization may
be faced with an uncertainty regarding the level of its future cash flows and insufficient
amount of cash may incur substantial costs. This may necessitate the holding of reserve of
short term marketable securities, again a short term capital asset. In corporate financial
management, the term Working capital management” (net) represents the excess of current
Research Design
A research design is the arrangement of the condition for collection and analysis of data. Actually
it is the blueprint of the research project.
1) Primary data
The primary data is that data which is collected fresh or first hand, and for first time
which is original in nature. Primary data was collected through personal interview of head of
account department, head of SQC department and other concerned staff member of finance
department and observation of working of finance department.
DATA ANALYSIS
The analysis was made with the help of the secondary data collected from the
company.
Only last 5 years data was taken into account.
Because of the company’s policy of maintaining secrecy some amount of data was not
made available to which could have helped me in making my project report better.
The study is academic in nature.
The final conclusion can be also affected by some of the extraneous variables.
CHAPTER -2
COMPANY PROFILE
INTRODUCTION
Uniglass industry is also serving society using CATIA V5 software in association with
dassault systems, Anga Karunaya Kendra (AKK) and RK foundation designed, fabricate and
disperse free cost of fiber glasses composite artificial limbs, artificial lower limbs are
provided to amputees.
They provide wide variety of cylinders and laminated sheets, rods, tubes and customized
molding.
VISION
PRODUCT RANGE
A. UNIROD
Drive Rods
Switching bars
Tension plates
Operating Rods
B. UNICYL
Applications:
Selector column
Switch pillars
Centering tubes
OLTC tubes & hollow shafts
C. UNILAM
Terminal boards
Stepped blocks
Yoke insulation
Barriers
ORGANIZATION CHART
Board of Directors
Management CEO
Representative
Manager
Dy. Manger Finance
Production
Dy. Manager tech Dy. Manager
Admn
Workers
CUSTOMERS
CHAPTER -3
Introduction
“More business fails for lack of cash than for want of profit…
Efficient management of working capital is one of the pre-conditions for the success
of an enterprise. Efficient management of working capital means management of various
components of working capital in such a way that an adequate amount of working capital is
maintained for smooth running of a firm and for fulfillment of twin objectives of liquidity
and profitability.
While inadequate amount of working capital impairs the firm’s liquidity, holding of excess
working capital results in the reduction of the profitability. But the proper estimation of
working capital actually required, is a difficult task for the management because the amount
of working capital varies across firms over the periods depending upon the nature of
business, production cycle, credit policy, availability of raw material, etc.
In simple words, working capital refers to that part of the firm’s capital, which is
required for financing short-term or current assets such as cash, marketable securities, debtors
and inventories.
Working capital is a valuation metric that is calculated as current assets minus current
liabilities. Working capital is also known as operating capital.
Current Assets
This is any cash or assets that can be quickly turned into cash. Current assets
are assets, which can be converted into cash within an accounting year.
Current liabilities are those claims of outsiders, which are expected to mature for payment
within an accounting year.
1. Gross working capital: The gross working capital refers to the firm’s investment in all the
assets taken together. The total of investment in all the individual current assets is the gross
working capital.
For example: if a firm has a cash balance of Rs. 50,000 ,debtors of Rs.70,000 and inventory
of raw material and finished goods has been assessed at Rs.1,00,000,then the gross working
capital of the firm is Rs.2,20,000 (i.e. ,Rs 50,000+Rs.70,000+Rs.1,00,000).
2. Net working capital: The term net working capital may be defined as the excess of total
current assets over total current liabilities. Current liabilities refer to those liabilities which
are payable within a period of 1 year. The net working capital may either be positive or
negative. If the total current assets are more than total current liabilities, then the difference is
known as positive net working capital, otherwise the difference is known as negative net
working capital. The net working capital measures the firm’s liquidity. The greater the
margin, the better will be the liquidity of the firm.
1. Permanent /fixed working capital: Permanent working capital may be defined as the
minimum level of current assets, which is required by a firm to carry on its business
operations. Every firm has to maintain a minimum level of raw materials, work-in-progress,
finished goods and cash balances.
For example-extra inventory of finished goods will have to be maintained to support the peak
periods of sale. Permanent working capital is permanently needed for the business and
therefore, it should be financed out of long term funds.
2. Fluctuating /variable working capital: It is the extra working capital needed to support
the changing production and sales activities of the firm. The amount of temporary working
capital keeps on fluctuating on time to time on the basis of business activity. Both kind of
working capital – permanent and fluctuating (temporary) are necessary to facilitate
production and sales through the operating cycle. The amount over and above permanent
working capital is temporarily variable or fluctuating.
The working capital requirement depends upon the nature of business carried on by the
Manufacturing cycle
Time span required for the conversion of raw materials into finished goods is a block
period. The period in reality extends a little before and after the work-in-progress. The
manufacturing cycle and the fund requirements vary in direct proportion. The funds
blocked in manufacturing cycle vary from industry to industry. Further, even within the
same group of industries, the operating cycle may be different due to technological
considerations.
Business cycle
Business fluctuations lead to cyclic and seasonal changes which, in turn, cause a shift in
working capital position particularly for working capital requirement. The variations in
(i) Upward phase when boom conditions prevail, and, (ii) downswing phase when
economic activity is marked by a decline. During the upswing of business activity, the
need for working capital is likely to grow and during the downswing phase the working
capital requirement is likely to be less. The decline in economy is associated with a fall in
the volume of sales which, in turn, leads to a fall in the level of inventories and book
debts.
Seasonal variation
Variation apart, seasonality factor creates production or even shortage problem. This is
the reason as to why manufacturing concerns producing seasonal products purchase their
raw material throughout the year and carry on the manufacturing activity. For example;
Woolen garments have a demand during winter. But the manufacturing operation for the
same has to be conducted during the whole year resulting in working capital blockage
during off-season.
Production policy
While working capital requirements vary because of seasonal factors, the impact can be
minimized by suitably gearing the production schedule. There are two choices- either the
the off-season.
Scale of operations:
Operational level determines the working capital demand during a particular period.
Higher the scale, higher will be the need for working capital. However, pace of sales
turnover is another factor. Quick turnover calls for lesser investment for inventory while
Credit policy
The credit policy influences the requirement of working capital in two ways:
(i) Through credit terms granted by the firm to its customers/buyers of goods.
(ii) Credit terms available to the firm from its creditors.
It is, of course difficult to determine precisely the relationship between the growth and
volume of business and the increase in working capital. The composition of working
capital also shifts with economic circumstances and corporate practices. However, it is to
be noted that the need for increased working capital funds does not follow the growth in
Dividend policy
The payment of dividend consumes cash resources and, thereby, effects working capital
to that extent. However, if the firm does not pay dividend but retains the profit, working
capital increases. There are wide variations in industry practices as regards the inter
relationship between working capital requirement and dividend payment. In some cases,
shortage of working capital is sometimes a powerful reason for reducing or even skipping
Depreciation policy
depreciation lower the profits and tax liability and, thus, more cash profits. Higher
depreciation means lower disposable profits and a smaller dividend payment. Thus cash is
preserved. If the current capital expenditure falls short of the depreciation provision, the
working capital position is strengthened and there may be no need for short-term
borrowing. If the current capital expenditure exceeds the depreciation provision, either
outside borrowing will have to be resorted to or a restriction on dividend payment
coupled with retention of profits will have to be adopted to prevent working capital
Rising prices necessitate the use of more funds for maintaining an existing level of
activity. However, the implications of rising price levels on working capital position may
vary from company to company depending on the nature of its operation, its standing in
Operating efficiency
The efficient utilization of resources by eliminating waste, improved coordination and full
operations accelerates the pace of cash cycle and improve the working capital turnover. It
releases the pressure on working capital by improving profitability and improving the
Every business concern should have adequate amount of working capital to run its
business operations. It should have neither redundant or excess working capital nor
inadequate nor shortages of working capital. Both excess as well as short working capital
positions are bad for any business. However, it is the inadequate working capital which is
Excessive working capital means ideal funds which earn no profit for the firm and
inventories.
Excessive working capital implies excessive debtors and defective credit policy which
If a firm is having excessive working capital then the relations with banks and other
Due to lower rate of return on investments, the values of shares may also fall.
For studying the need of working capital in a business, one has to study the business under
varying circumstances such as a new concern requires a lot of funds to meet its initial
requirements such as promotion and formation etc. These expenses are called preliminary
expenses and are capitalized. The amount needed for working capital depends upon the size
of the company and ambitions of its promoters. Greater the size of the business unit,
generally larger will be the requirements of the working capital. The requirement of the
working capital goes on increasing with the growth and expensing of the business till it gains
maturity. At maturity the amount of working capital required is called normal working
capital.
Meaning of working capital management
Working Capital Management is concerned with the problems that arise in attempting to
manage the Current Assets, Current Liabilities and the inter-relationship that exists between
them. Working Capital Management means the deployment of current assets and current
liabilities efficiently so as to maximize short-term liquidity. Working capital management
entails short term decisions - generally, relating to the next one year periods - which are
"reversible"
II. Decide Optimal Mix of Short Term and Long Term Capital
• Total costs incurred on materials, wages and overheads. The length of time for which raw
materials remain in stores before they are issued to production.
• The length of the production cycle or WIP, i.e., the time taken for conversion of raw
material into finished goods.
• The length of the sales cycle during which finished goods are to be kept waiting for sales.
• The average period of credit allowed to customers.
• The amount of cash required to pay day to day expenses of the business.
• The amount of cash required for advance payments if any.
• The average period of credit to be allowed by suppliers.
• Time – lag in the payment of wages and other overheads
OPERTING CYCLE
The working capital requirement of a firm depends, to a great extent upon the
operating cycle of the firm. The operating cycle may be defined as the time duration starting
from the procurement of goods or raw material and ending with the sales of realization. The
length and nature of the operating cycle may differ from one firm to another depending upon
the size and nature of the firm. In a trading concern, there is a series of activities starting from
procurement of goods (saleable goods) and ending with the realization of sales revenue (at
the time of sale itself in the case of cash sales and at the time of debtors realization in case of
credit sales).similarly in case of manufacturing concern, this series starts from the
procurement of raw materials and ending with the sales realization of finished goods. In both
the cases, however, there is a time gap between the happening of the first event and the
happening of the last event. This time gap is called the operating cycle.
Thus, the operating cycle of a firm consists of the time required for the
completion of the chronological sequences of some or all of the following:
The length or time duration of the operating cycle of any firm can be defined as the sum
of its inventory conversion period and the receivable conversion period.
1. Inventory conversion period:
It is the time required for the conversion of raw material into finished goods sales. In a
manufacturing firm the inventory conversion period is consisting of raw material conversion
period (RMCP), work-in-progress conversion period (WPCP) and finished goods conversion
period (FGCP).
Raw material conversion period refers to the period for which the raw material is generally
kept in stores before it is issued to the production department.
The work-in-progress conversion period (WPCP) refers to the period for which the raw
material remains in the production process before it is taken out as finished units.
The finished goods conversion period refers to the period for which finished units remains
in stores before being sold a customer.
1. Issue of shares:
It is the primary and most important sources of regular or permanent working capital.
Issuing equity shares as it does not create and burden on the income of the concern. Nor the
concern is obliged to refund capital should preferably raise permanent working capital.
2. Retained earnings:
Retain earning accumulated profits are a permanent sources of regular working
capital. It is regular and cheapest. It creates not charge on future profits of the enterprises.
3. Issue of debentures:
It creates a fixed charge on future earnings of the company. Company is obliged to
pay interest. Management should make wise choice in procuring funds by issue of
debentures.
4. Long term debt:
Company can raise fund from accepting public deposits, debts from financial
institutution like banks, corporations etc. the cost is higher than the other financial tools.
5. Other sources:
Sale of idle fixed assets, securities received from employees and customers are
examples of other sources of finance.
3. Various credits:
Trade credit, business credit papers and customer credit are other sources of short
term working capital. Credit from suppliers, advances from customers, bills of exchanges, etc
helps to raise temporary working capital.
1. Current Ratio
TABLE – 1
Rs. in Thousands
INTERPRETATION
Current ratio during the year 2013-2014 was 1.58 and it came down in 1.46 at 2014-2015
and its again decreased 2015–2016 and 2016-17 and it slightly increased in 1.32 at 2017-18. The
standard norm for this ratio is 2:1 required.
We can say that company’s current ratio is less than 2:1 in all the years. So company doesn’t have
enough current assets to pay current liabilities. Overall we can say that company’s liquidity position is
not good.
2. Quick Ratio
TABLE –2
Rs. in Thousands
The quick ratio in the year 201-2014 was 1.22 and its decreased 0.04% at 2014- 15 (1.17) and
in 2015-2016 get decreased 0.06% (1.10) and 2016-2017 get decreased 0.063% (1.03) and its get
increase in slightly on 2017-2018 at 0.001%(1.04). The standard norm for this ratio is 1:1, means for
every 1 rupee of current liability, company must have 1 rupee of quick assets.
In all years quick ratio is greater than 1:1. We can say that company has enough quick assets to pay
current liabilities. Firm is liquid and it has ability to pay off its current obligations.
3. CASH RATIO
TABLE – 3
Rs in Thousands
INTERPRETATION
The Cash ratio of the Co. in the 2013-2018 was fluctuating. In 2017-2018 it was 0.30 times
and in 2013-2014 it was 0.40 times and 2015-2016 it was increased to 0.42.
The standard norms of absolute quick ratio are 0.5:1. From the above table the firm
does not maintain the sufficient level of quick assets because of the day-to-day expenses .It is
fluctuating between the standard norms for this ratio is 1:2 means for every 2 rupees of
current Liabilities, Company must have 1 rupee of cash and bank balance and marketable
securities.
In all the year company’s cash ratio is less than 0.5:1. This means that company is not having enough
cash to pay off current liabilities. Co. might have faced the difficulty of short liquidity in terms of
cash. So it has to maintain its cash resources effectively in order to cover its current liabilities.
4. DEBTORS TURNOVER RATIO: -
Debtors constitute an important constituent of current assets and therefore the quality of
the debtors to a great extent determines a firm’s liquidity. It shows how quickly receivables or
debtors are converted into cash. In other words, the DTR is a test of the liquidity of the debtors of a
firm. The liquidity of firm’s receivables can be examined in two ways they are DTR and Average
Collection Period. The higher the ratio, the better it is, since it would indicate that debts are being
collected promptly.
TABLE –4
Rs in Thousands
In the year 2017 - 2018 the debtor’s turnover ratio is 1.59 comparing to the previous year, it
came downwards. In the year 2013-14, DTR is the highest i.e. 1.87 and it shows decreasing trend up
to the year 2015-16 and came down to 1.61. It slightly increased to 1.64 in 2016-17. And again came
down to 1.59 in 2017-18. This ratio shows decreasing trend this shows that firm is taking time to
collect its debtors. Firm’s collection policy is liberal or quality of the debtors might not be good. Firm
has to maintain strict payment collection policy to have higher debtors turnover ratio.
Debtor’s collection period is nothing but the period required to collect the money from the
customers after the credit sales. A speed collection reduces the length of operating cycle and vice
versa.
TABLE – 5
Rs in Thousands
DEBT
TURNOVER 1.87 1.78 1.61 1.64 1.59
RATIO
DEBT
COLLECTION
195 205 227 223 230
PERIOD
INTERPRETATION
The debt collection period of the Co. in the 2013-2014 was 195 days and in 2017- 2018 it was
increased to (18%) 230 days. Standard Debt Collection Period of a firm is less than 90 days.
Compared to 2013-14, debt collection period has increased in 2017-18. This shows that debtors are
not converted into sales rapidly. Company is not focusing much on collecting payment from debtors.
There should be strict follow up of collection of payment.
6. CREDITORS TURNOVER RATIO
TABLE – 6
Rs in Thousands
CREDITORS TURNOVER
2.53 2.88 2.67 3.01 2.73
RATIO
INTERPRETATION
The Creditors turnover ratio of the Co. was fluctuating during the year 2013 – 2018. It was
2.53 in the year 2013-14 and then goes up to 2.88 in the year 2014-15. It goes down in 2015-16 to
2.67 and again goes up in 2016-17 to 3.01 and reduced to 2.73 in the year 2017-18. This shows that
firm is making delay in paying to its creditor and enjoying more credit period. This is good sign for the
firm.
7. CASH TO CURRENT ASSETS RATIO
TABLE –7
Rs in Thousands
CAS TO
CURRENT 0.25 0.27 0.30 0.28 0.23
ASSETS RATIO
INTERPRETATION
The Cash to current assets ratio is 0.25 for the year 2013-14 and goes up in the year 2015-16
to 0.3. It shows decreasing trend and reduced to 0.23 in the year 2017-18. This shows that portion of
cash to current has reduced in the year 2017-18. Company should maintain enough cash balance.
TABLE –8
Rs in Thousands
CASH
TURNOVER 3.24 2.97 2.31 2.54 3.36
RATIO
INTERPRETATION
The cash turnover ratio in the years 2013-2018 was fluctuating. In the year 2013-14, it is 3.24
and shows decreasing trend up to 2015-16. Again it shows increasing trend up to the year 2017-18
and reached up to 3.36.
As this ratio shows increasing trend it shows firm is efficiently use its cash for generation of sales
revenue.
Inventory turnover ratio indicates the efficiency of the firm in producing and selling its
products. It is calculated by dividing the cost of goods sold by the average inventory. The average
inventory is the average of open and closing balance of inventory.
TABLE –9
Rs in Thousands
INVENTORYTUR
3.57 4.09 3.37 3.34 3.56
NOVER RATIO
INTERPRETATION
Inventory turnover ratio for the year 2013-14 is 3.57. It increased to 4.09 in the year
2014-15. Again it decreased to 3.37 in the year 2015-16 and again decreased to 3.34 in the year
2016-17. It shows increasing trend and touched to 3.56 in the year 2017-18.
This ratio shows how quick inventory is converted into sales. As this shows increasing trend, we can
say that inventory is converted into sales quickly and less amount of money is tied up in inventory.
Firm’s inventory management is efficient.
TABLE –10
INVENTORYHOL
102 89 108 109 103
DING PERIOD
INTERPRETATION
Inventory holding period for the year 2013-14 is 102 days and reduced to 89 days in the
year 2014-15. Again it goes up to 108 days in the year 2015-16 and 103 days in 2017-18. This shows
that firm need to hold inventory for less days and inventory is converted into sales very fast.
Rs in Thousands
WORKING
CAPITAL
2.23 2.59 2.45 3.06 3.13
TURNOVER
RATIO
INTERPRETATION
Working capital turnover ratio for the year 2017 - 2018 was 3.13 times. It is higher when comparing
the past four years. Working capital turnover ratio shows increasing trend. This means firm is using
its working capital efficiently to generate sales. We can say that firm’s working capital management
is good.
TABLE –12
Rs. in Thousands
In this current asset is increasing during the period of study. Current liability is also increased
during the period of study. And working capital is also increased.
TABLE –13
CURRENT ASSETS
Rs in Thousand
INTERPRETATION
In this period 2013 – 2018 Sundry debtors and other current assets was only maintained in
stable for the period of study. Uniglass Pvt. Ltd. must take extra care about cash and bank balance in
future. In the period of 2015-2018 inventory ratios are in increasing trend. All about Co. should be
very careful and must maintain in adequate current assets in future.
INVENTORY
SUNDRY DEBTORS
CASH AND BANK BALANCES
TABLE – 14
Rs in Thousands
Gross Profit /
256435 373607 443039 484885 659065
Profit before tax
Total Sales 1337403 1723753 1930464 2621233 3286144
Gross Profit ratio 19.2 21.7 23.0 18.5 20.1
INTERPRETATION
In the analysis of Gross profit ratio Co. must control production expenses in future.
Comparison of 2015-16 to 2016-17 margin profit ratio will goes down in 2 %. Firm should control
production cost in next coming years, such as raw material, freight and transport expenses.
Otherwise, Co. must increase sales unit price.
As every business is to earn profit, this ratio is very important because it measures the
profitability of sales. A business may yield high gross income but low net income because of
increasing operating and non-operating expenses. This situation can easily be detected by calculating
this ratio.
The profits used for this purpose may be profits after/before tax. To obtain this ratio, the
figure of net profits after tax is divided by the figure of net profits after tax is divided by the figure of
sales the ratio is also known as sales margin as we can ascertain with its help the margin which the
sales leave later deducting all the expenses. The unit of expression is percentage, as is the case with
profitability ratios.
TABLE – 15
Rs in Thousands
Net Profit /
167916 241470 285934 313821 431064
Profit after tax
Net Sales 1337403 1723753 1930464 2621233 3286144
Net Profit ratio 12.6 14.0 14.8 12.0 13.1
INTERPRETATION
In this period of research of study, Net profit of the Co. goes downwards from 2016 – 2018
comparing previous year achievements.
TREND ANALYSIS
Particulars
Current Assets :
Debtors
100 135.26 167.06 222.87 288.62
Current Liabilities :
Liabilities
100 135.08 188.20 265.19 318.17
Provisions
100 166.79 214.54 329.01 292.14
INTERPRETATION
Above Table Inventory and debtors goes to growth level in all the years. Loans and Advances
and Other Current assets show high level of improvement in all the years. Cash and Bank balances
are fluctuating ratio in the year 2016 – 2018. Current Liabilities are increasing in all the years and
Provisions are fluctuating in the year 2018 compared to previous years.
CHAPTER - 6
FINDINGS
1) Company’s current ratio is less than 2:1 in all the years. So company doesn’t have enough
current assets to pay current liabilities. Overall we can say that company’s liquidity position is
not good.
2) In all years quick ratio is greater than 1:1. We can say that company has enough quick assets
to pay current liabilities. Firm is liquid and it has ability to pay off its current obligations.
3) In all the year company’s cash ratio is less than 0.5:1. This means that company is not having
enough cash to pay off current liabilities. Co. might have faced the difficulty of short liquidity
in terms of cash. So it has to maintain its cash resources effectively in order to cover its
current liabilities.
4) Debtors turnover ratio shows decreasing trend this shows that firm is taking time to collect
its debtors. Firm’s collection policy is liberal or quality of the debtors might not be good.
5) Compared to 2013-14, debt collection period has increased in 2017-18. This shows that
debtors are not converted into sales rapidly. Company is not focusing much on collecting
payment from debtors.
6) Creditors turnover ratio reduced to 2.73 in the year 2017-18. This shows that firm is making
delay in paying to its creditor and enjoying more credit period. This is good sign for the firm.
7) Cash to current assets shows that portion of cash to current has reduced in the year 2017-18.
8) Cash turnover ratio shows increasing trend it shows firm is efficiently use its cash for
generation of sales revenue.
9) Inventory turnover ratio shows increasing trend, we can say that inventory is converted into
sales quickly and less amount of money is tied up in inventory. Firm’s inventory management
is efficient.
10) Inventory holding period is 103 days in 2017-18. This shows that firm need to hold inventory
for less days and inventory is converted into sales very fast.
11) Working capital turnover ratio shows increasing trend. This means firm is using its working
capital efficiently to generate sales.
CHATER - 7
1) The company depends more on bank borrowings and long term sources of funds for working
capital needs. The working capital required by the company is increasing over years. The
company should try to curtail the unnecessary expenditure in order to reduce the cost of
production and promote high return on sales.
2) As the company’s current ratio is less than the standard ratio, it should increase the current
assets which are in the form of cash, sundry debtors and inventory etc. Company should try
to be more liquid.
3) More than 45% of current assets are blocked in the form of receivables. This is due to giving
credit sales to its customers and maximum portion of sales are in credit terms only. If at all
there is any possibility, the company should reduce the credit sales and receivables holding
period and to bridge the gap between the excess and shortage of working capital.
4) The inventory position of the company is satisfactory. If the company will increase its stock of
inventory, then it will be more satisfactory in future.
5) The company needs to invest in marketable securities in order to increase its cash ratio.
6) As the company maintaining low cash resources it should try to maintain balance between
debtors and cash. That means it should reduce its debtors and increase cash resources.
CHAPTER - 8
BIBLIOGRAPHY
Books:
Payday I.M., ”Financial Management, ”7th edition; New Delhi: Vikas Publishing House
Pvt. Ltd; 1995.
Rustagi R. P.,” Fundamentals of Financial Management, ”3rd edition; New Delhi: Galgotia
Publishing Company; 2002.
Gupta S.P., “Management Accounting, ”12th edition; Agra: Sahitya Bhawan Publication;
2007.
Annual Report:
Annual Report of Financial Year 2013-14, 2014-15, 2015-16, and 2016-17 and 2017-18
of Uniglass Pvt. Ltd.
Internet Sources:
http://www.wikipedia.com
http://www.workingcapital.com
http://www.uniglass.com