CHAPTER III

RESEARCH METHODOLOGY

Introduction

Research methodology is a way to systematically solve the research problem. It

may be understood as a science of studying how research is done systematically. In
that various steps, those are generally adopted by a researcher in studying his
problem along with the logic behind them. It is important for research to know not
only the research method but also know methodology. ”The procedures by which
researcher go about their work of describing, explaining and predicting data. All
this means that it is necessary for the researcher to design his methodology for his
problem as the same may differ from problem to problem

STATEMENT OF PROJECT

 Evaluation, analysis & interpretation of working capital management of

COGOGIES TECH.

 Suggesting ways to improve its working capital utilization.

OBJECTIVE OF RESEARCH

 Study of the working capital management is important because unless the

working capital is managed effectively, monitored efficiently planed
properly and reviewed periodically at regular intervals to remove bottlenecks
if any the company cannot earn profits and increase its turnover. With this
primary objective of the study,

The following further objectives are framed for a depth analysis.

 Estimation of working capital requirement

 Evaluation of working capital management

 To study the optimum level of current assets and current liabilities of the
 Company

 Evaluation of Liquidity position & working capital utilization

 Analysis of relationship between working capital and profitability

 Analysis & sources of working capital

 To make an item wise study of the components of the working capital.

 To suggest the steps to be taken to increase the efficiency in management of

working capital

 Analyzing the level of current assets with relation to current liabilities.

 To study the operating and cash cycle of the company.

 To study the various techniques used in managing the

working
Capital effectively such as ratio analysis

PLACE OF STUDY:

The project study is carried out at the Finance Department of COGOGIES TECH
Corporate office Situated at Chennai, Tamil nadu. The study is undertaken as a
part of the curriculum.

PERIOD OF STUDY:

The project was undertaken for a time period ranging from 01-02-10 to 15-04-10

PROBLEM IDENTIFICATION

 Find out Ratios of COGOGIES TECH and compare it with that of the past
five year’s data.
  Find deviation of calculated ratios from standard or Norms

 Calculating the working capital requirement of COGOGIES TECH.

DATA COLLECTION:

Introduction:

Data collection is important step in any project and success of any project will

be largely depend upon now much accurate you will be able to collect and how

much time, money and effort will be required to collect that necessary data, this

is also important step.

Data collection plays an important role in research work. Without proper data

available for analysis you cannot do the research work accurately.

Types of data collection

There are two types of data collection methods available.

1. Primary data collection

2. Secondary data collection

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 can collect through

  Personal interview and clarifications from the officials of COGOGIES
TECH.

2) Secondary data collection method

The secondary data are those which have already collected and stored.

Secondary data easily get those secondary data from records, journals, annual

reports of the company etc. It will save the time, money and efforts to collect

the data. Secondary data also made available through trade magazines, balance

sheets, books etc.

. But primary data collection had limitations such as matter confidential

information thus project is based on secondary information collected through

 six years annual report of the company,

 various books and business magazines and journals

 Internet sides.

The data collection was aimed at study of working capital management of the
company

Project is based on

1. Annual report of COGOGIES TECH 2003-04

2. Annual report of COGOGIES TECH 2004-05

3. Annual report of COGOGIES TECH 2005-06

 4. Annual report of COGOGIES TECH 2006-07

5. Annual report of COGOGIES TECH 2007-08

6. Annual report of COGOGIES TECH 2008-09

METHODS OF QUANTATIVE ANALYSIS

 Calculation of net working capital requirements.

 Ratio analysis

 Operating cycle & cash cycle

 Cash flow analysis

 Determining the Financing mix

 Statistical tools like graphical presentation

DATA PROCESSING AND ANALYSIS:

1.) Net Working capital of previous 6 years.

2.) Use of Carl Pearson’s core ration to know the relation between

a) Correlation between total current Assets and Total Current Liabilities.

b) Correlation between total current Assets and Working capital.
c) Correlation between total current Liabilities and Working capital
TECHNIQUES IMPLIED:

The analysis has been based on simple tools like

 Ratios Analysis
 Statement of changes in working capital
 Fund flow analysis

TOOLS USED:

 Microsoft excel
 Microsoft Word
 SPSS package
 Analysis tools like Pie charts,Bar Diagrams ,etc

ASSUMPTIONS

 Year is taken of 365 days

 All purchases have been taken as credit purchases and all sales have been
taken as credit sales.

 In the absence of relevant data the data from internet site is taken as the
relevant information.

LIMITATIONS

 Secondary in nature:

The data is mostly secondary in nature

 Inconsistent data:

Data has been recalculated & regrouped wherever necessary

 Personal judgments:

In the absence of sufficient data personnel judgment have been taken

on reasonable assumption.

 In sufficient data:

In the absence of sufficient data in-depth study of cash, Receivables

and inventory management was not possible.

 Limited data:

This project has completed with annual reports; it just constitutes one
part of data collection i.e. secondary. There were limitations for
primary data collection because of confidentiality.

 Limited period:

This project is based on five year annual reports. Conclusions and

recommendations are based on such limited data. The trend of last five
 year may or may not reflect the real working capital position of the
company

 Limited area:

Also it was difficult to collect the data regarding the competitors and
their financial information. Industry figures were also difficult to get.