A STUDY ON WORKING CAPITAL MANAGEMENT IN

COOPER BUSSMANN INDIA PRIVATE LIMITED,

PUDUCHERRY
SUMMER PROJECT REPORT

SUBMITTED BY
S.RAJAN
REGISTER NO. 27348330

UNDER THE GUIDANCE OF

MRS. M. JANAKIRAMA, M.B.A., P.G.D.C.A.,
FACULTY, DEPARTMENT OF MANAGEMENT STUDIES

in partial fullfilment of the award of degree

of

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES

SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE
PONDICHERRY UNIVERSITY
PUDUCHERRY
SEPTEMBER 2007
SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE

MADAGADIPET, PUDUCHERRY

DEPARTMENT OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This to certify that the project work entitled “A STUDY ABOUT WORKING
CAPTIAL MANAGEMENT IN COOPER BUSSMANN INDIA PRIVATE
LIMITD” is a bonafide work done by S.RAJAN [ REGISTER NO: 27348330 ] in
partial fulfillment of the requirement for the award of Master of Business Administration
by Pondicherry University during the academic year 2006 – 2008.

GUIDE HEAD OF DEPARTMENT

Submitted for Viva-Voce Examination held on

EXTERNAL EXAMINER
 ACKNOWLEDGEMENT

First and foremost, I thank the God for his substantial blessing and mercy at all
stages in the completion of the project.
I take this opportunity to express my deep sense of gratitude to
SHRI.N.KESAVAN, Founder Chairman, SHRI.M.DHANASEKARAN, Managing
Director and SHRI.S.V.SUGUMARAN, Vice-Chairman of our college for their good
wishes for this project.
I express my immense gratitude to my Principal
DR.V.S.K.VENKATACHALAPATHY for his support and encouragement for the
completion of my project.
I extend the immense gratitude to the Head of the Department
Mr.S.JAYAKUMAR for his motivation, inspiration, and encouragement for the
completion for my project.
The valuable and unflinching requital support in this Endeavor
Mrs.M.JANAKIRAMA my internal guide, Department of Management Studies whose
assistance was immeasurable to the completion of this project.

I also thankful to all other faculty members of the department for the constant co-
operations and encouragement in pursuing my project work.

I am sincerely thankful to Mr.ARUMUGAM, Administrator for giving me an

opportunity to do this project work at COOPER BUSSMANN INDIA PRIVATE
LIMITED, SEDHARAPET and for guiding me throughout the project duration.

My heart gratitude to all employees of COOPER BUSSMANN INDIA

PRIVATE LIMITED, Sedharapet for providing me details about the company for the
completion of the project. Last, but not the least, my heart felt gratitude to my parents,
relatives and my friends for their constant encouragement, support, help and valuable
advice to make this project a success.
 ABSTRACT

The Project has been done in Cooper Bussmann India Private Limited,
Puducherry. The title of the project is “A Study on the Working Capital Management in
Cooper Bussmann India Private Limited”.
The study starts with an Company’s profile and also the need for study, review of
literature and objectives are set out for the study. Research methodology, Data analysis &
Interpretation, Findings and Suggestions of the study follow.

One of the main areas of the project is the analysis part, where the data are
analyzed & interpreted, to find out the working capital. Some of the tools used in
working capital are regarding to:

 Ratio Analysis
 Comparative Financial Statements.
 Trend Analysis.
And then conclusions, limitations & scope for further study were discussed.
 CONTENTS

CHAPTER TITLES PAGE NO.

LIST OF TABLES
LIST OF CHARTS
INTRODUCTION 1
I PROFILE OF THE COMPANY 2

NEED FOR THE STUDY 6

II REVIEW OF LITERATURE 7

III OBJECTIVES OF THE STUDY 14

IV RESEARCH METHODOLOGY 15

V DATA ANALYSIS AND INTERPRETATION 16

FINDINGS OF THE STUDY,

VI 46
SUGGESTION AND RECOMMENDATIONS
47
VII CONCLUSION 48

LIMITATIONS OF THE STUDY

VIII 49
SCOPE FOR THE FUTHER STUDY
50
BIBILIOGRAPHY 51

LIST OF TABLES
Table. no Name of Tables Page. no
5.1 Current ratio 16
5.2 Working Capital turnover ratio 18
5.3 Inventories to current assets 20
5.4 Cash to Current assets ratio 22
5.5 Cash to Working capital ratio 24
5.6 Cash to sales ratio 26
5.7 Cash ratio 28
5.8 Current assets to Fixed assets ratio 30
5.9 Current assets to Total assets ratio 32
5.10 Working Capital ratio 34
5.11 Inventories 36
5.12 Cash/Bank 37
5.13 Receivable 38
5.14 Current liabilities 39
5.15 Bills payable 40
5.16 Comparative balance sheet (2000&2001) 42
5.17 Comparative balance sheet (2001&2002) 43
5.18 Comparative balance sheet (2002 & 2003) 44
5.19 Comparative balance sheet (2002 &2003) 45
 LIST OF CHARTS

Table. no Name of Charts Page. no

5.1 Current ratio 17
5.2 Working Capital turnover ratio 19
5.3 Inventories to current assets 21
5.4 Cash to Current assets ratio 23
5.5 Cash to Working capital ratio 25
5.6 Cash to sales ratio 27
5.7 Cash ratio 29
5.8 Current assets to Fixed assets ratio 31
5.9 Current assets to Total assets ratio 33

CHAPTER I
 INTRODUCTION
COMPANY PROFILE

COOPER BUSSMANN INDIA PRIVATE LIMITED

BACKGROUND – COOPER INDUSTRIES

Cooper Industries having their manufacturing excellence and market leading

product. Initially started with a small iron foundry in Ohio, US, Cooper has grown world
wide, diversified over 100 manufacturing bases spread over five continents. The two
businesses segments namely electrical products and Tools & Hardware products are the
best known brands in their industries.

Cooper products known worldwide for its superior quality, reliability and
innovation. Their business divisions are Cooper lighting, Cooper Menvier, Cooper Power
Systems, Cooper Cruise-Hinds, Cooper Power Tools, Cooper Tools and Cooper
Bussmann.

COOPER BUSSMANN

Cooper Bussmann is one of the world’s largest producers of circuit protection and
power quality equipment manufacturing, a wide range of fuses to protect electrical,
electronic and automotive systems globally. It is one of the leading suppliers of circuit
protection Fuses and Gears in the world. Each product is backed by an efficient world
wide distribution network service and technical support. Bussmann circuit protection
solutions comply with the major international standards such as BS, IEC, DIN, and CSA
AND UL. Cooper Bussmann also offers inductors and transformers designed to provide
power quality in electronic applications. One of the principal factories is at Burton near
Leistershire in U.K.

Cooper Bussmann Inc, a company incorporated in the United States of America,

acquired 100% equity in M/s S&S Low Tension Switch Gear Limited vide approval of
Foreign Investment Promotion Board, for Direct Investment in India. The name of the
company was changed to Cooper Bussmann India Private Limited (CBIL).
COOPER BUSSMANN INDIA PRIVATE LIMITED

CBIL is committed to quality products and services is an ISO 9001-2000 certified

company. It has therefore adopted formal quality management systems helping it to
demonstrate its continued ability to look on the ultimate satisfaction of the customers up
keeping standards of ISO 9001-2000 certification.

CBIL has a reputation as a quality supplier and an innovator through its ability to
anticipate customer’s needs with its technology and manufacturing excellence. One of the
key requirements of the European market was that the processes and product should
conform to the European Standard and be certified by the ASTA, a leading electrical
product certifying agency. Hence the company had all the tests done in line with
European requirement for the new Bussmann Range of Products.

PRODUCTS

CBIL manufactures “Bussmann” brand products for local markets and exports them
to UK for further distribution and customer services. Global Brand now locally available.
Bussmann is now setting up new production lines for the export market of Europe and for
world wide distribution. Following are the total circuit protection solutions:

1. One stop shop: full line of products for not only electrical, but also in areas like
electronic, telecom and automotive circuit protection.
2. Voltage range: offers circuit protection solutions in LV, MV and High speed
categories.
3. Types: offers tag type, bolted type, ferrule type, bottle type and square body blade
type constructions.
4. Standards: offers all major global approval and certification standards ASTA, UL,
CE, CSA, IEC, BS, VDE covering British, European & North American Style
fuses
 CBIL covers a wide range of applications in the electrical industry including
Industrial general protection, motor protection, Transformer protection, Capacitor
protection, Control switchgear, Semiconductor protection, Power distribution including
house-service and feeder pillar to name a few.

This existing unit has commenced the commercial production during the year 2000.
The following are the products manufactures:

a. NHDIN Indicating Industrial HRC fuse range

b. Medium Voltage DIN fuse range
c. Medium Voltage OIL fuse range
d. European DIN High speed fuse range

NHDIN DUAL INDICATING HRC FUSE RANGE:

This is a new range of industrial fuse links with unique dual indicating
mechanism complying with DIN 43620 dimensional standards and IEC 60269
International electrical standards and the approved to VDE standards, an international
approving agency located in Germany. The dual indicating design mechanism is a
patented design of Bussmann. These fuses are used largely in industrial low voltage
power distribution and Motor protection applications, besides feeder pillar distribution
applications. The protection covers both electrical overloads and short circuits, offered in
all the international sizes and the current range covers 6A to 630A at 500V AC having
utilization protection having full range of breaking capacity of 120KA. Other product
range includes 400 V AC, 690 V AC with insulated lifting tag.

MEDIUM VOLTAGE DIN FUSE RANGE:

 This current limiting fuse range comply with DIN 43625 dimensional standards
and IEC 60282 electrical standards having a spring assisted striker mechanism for fail
indication. These are used for back up protection in an medium voltage circuit system.
MEDIUM VOLTAGE OIL FUSE RANGE:

This range of fuses complies with IEC 281 -1 electrical standards and BS 2692 -1
standard. These are designed or use in oil filled switchgear such as Ring main unit panels
used for ring main distribution system. These can be used inside oil filled transformer
tanks where high oil temperatures may be expected. The range planned to be
manufactured is from 7.2 KV to 12 KV covering a current rating of 10A to 140 A and
fitted with striker pin with unique triple seal system ensuring against long term seal
deterioration.

EUROPEAN DIN HIGH SPEED FUSE RANGE:

This range planned to be manufactured complies with DIN 43653 dimensional

standards IEC 60269-4 electrical standards and offered in various sizes from size 000 to
size 4. The immediate range covers the size 1* which has body cross section of 45
*45mm. these are used for protection of semiconductor devices which are sensitive to
over load surges. This fuse is used in majority of Industrial Rectifiers, Rolling stock
rectifiers, Industrial DC and AC drives, AC controllers and many other power electronic
equipments. Bussmann square body fuses are a very attractive solution for high
applications which require a compact design with superior performance.

MARKET
Cooper Bussmann India Private Limited has a large network of distributors and
stockiest for its products:
- North America
- Europe
- Middle East
- Far East
 - Australia
The products are being marketed and sales are supported by selling team in all the
above areas.

NEED FOR THE STUDY

 Working capital constitutes part of the Crown's investment in a department.
Associated with this is an opportunity cost to the Crown. (Money invested in one area
may "cost" opportunities for investment in other areas.) If a department is operating with
more working capital than is necessary, this over-investment represents an unnecessary
cost to the Crown.

From a department's point of view, excess working capital means operating

inefficiencies. In addition, unnecessary working capital increases the amount of the
capital charge which departments are required to meet from 1 July 1991.

CHAPTER II
 REVIEW OF LITERATURE

Working capital management involves the relationship between a firm's short-

term assets and its short-term liabilities. The goal of working capital management is to
ensure that a firm is able to continue its operations and that it has sufficient ability to
satisfy both maturing short-term debt and upcoming operational expenses. The
management of working capital involves managing inventories.
Decisions relating to working capital and short term financing are referred to as
working capital management. These involve managing the relationship between a firm's
short-term assets and its short-term liabilities. The goal of Working capital management
is to ensure that the firm is able to continue its operations and that it has sufficient cash
flow to satisfy both maturing short-term debt and upcoming operational expenses.
By definition, Working capital management entails short term decisions -
generally, relating to the next one year period - which are "reversible". These decisions
are therefore not taken on the same basis as Capital Investment Decisions (NPV or
related, as above) rather they will be based on cash flows and / or profitability.
The importance of cash flow is not new to the finance literature. Over twenty
years ago, Largay and Stickney (1980) reported that the then-recent bankruptcy of W.T.
Grant, a nationwide chain of department stores, should have been anticipated because the
corporation had been running a deficit cash flow from operations for 8 of the last 10 years
of its corporate life. As part of a study of the Fortune 500’s financial management
practices, Gilbert and Reichert (1995) find that time value of money cash flow analysis is
used to select projects in 91 percent of the firms. Accounts receivable management
models are used in 59 percent of these firms, while inventory management models were
used in 60 percent of the companies.

Recently, Farragher, Kleiman and Sahu (1999) find that 55 percent of firms in the
S&P Industrial index complete some form of a cash flow assessment, but did not present
insights regarding accounts receivable and inventory management, or variations of any
current account asset or liability accounts across industries.
 Theoretical determination of optimal trade credit limits are the
subject of many articles over the years (e.g., Schwartz, 1974 and
scherr, 1996), with scant attention paid to actual accounts receivable
management.

Across a limited sample, weinraub and visscher (1998) observe a

tendency of firms with low levels of current ratios to also have low
levels of current liabilities. Combining accounts receivable and payable
into one issue is hill, satoris, and ferguson’s (1984) finding that payees
define date of payment as the date payment is received, while payors
view payment as the postmark date. Additional WCM insight across
firms, industries, and time is needed! maness and zietlow (2002, pp.
51, 496) presents two models of value creation through effective short-
term financial management activities.

However, these models are generic models and do not consider

unique firm or industry influences. maness and zietlow discuss industry
influences in a short paragraph that includes the observation that “an
industry a company is located in may have more influence on that
company’s fortunes that overall gnp” (2002, p. 507).” In fact, a careful review of
this 627-page textbook finds only sporadic information on actual firm levels of WCM
dimensions, virtually nothing on industry factors except for some boxed items with titles
such as “should a retailer offer an in-house credit card” (p. 128), and nothing on WCM
stability over time. This research will attempt to fill in this void space.

How are the readings connected? If there any other text out there
besides the one in the last paragraph. The first annual cfo working capital
survey, a joint project with rel consultancy group, was published in the june 1997 issue of
cfo. rel is a london, england-based management consulting firm specializing in working
capital issues for its global list of clients. The original survey reports several working
capital benchmarks for public companies using data for 1996. Each company is ranked
against its peers and also against the entire field of 1000 companies. rel continues to
update the original information on an annual basis. The industries that include at least 8
companies over the 1996-2000 periods are listed below. Deleted: represented.

DEFINITION OF WORKING CAPITAL

The term working capital refers to the amount of capital which is readily available
to an organization. That is, working capital is the difference between resources in cash or
readily convertible into cash (Current Assets) and organizational commitments for which
cash will soon be required (Current Liabilities).

Current Assets are resources which are in cash or will soon be converted into cash
in "the ordinary course of business".

Current Liabilities are commitments which will soon require cash settlement in
"the ordinary course of business".

Thus:

WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES

In a department's Statement of Financial Position, these components of working

capital are reported under the following headings:

CURRENT ASSETS:

• Liquid Assets (cash and bank deposits)

• Inventory
• Debtors and Receivables

CURRENT LIABILITIES:

• Bank Overdraft
 • Creditors and Payables
• Other Short Term Liabilities

APPROACHES TO WORKING CAPITAL MANAGEMENT

The objective of working capital management is to maintain the optimum balance

of each of the working capital components. This includes making sure that funds are held
as cash in bank deposits for as long as and in the largest amounts possible, thereby
maximizing the interest earned. However, such cash may more appropriately be
"invested" in other assets or in reducing other liabilities.

Working capital management takes place on two levels:

• Ratio analysis can be used to monitor overall trends in working capital and to
identify areas requiring closer management.
• The individual components of working capital can be effectively managed by using
various techniques and strategies.

When considering these techniques and strategies, departments need to recognize that
each department has a unique mix of working capital components. The emphasis that
needs to be placed on each component varies according to department. For example,
some departments have significant inventory levels; others have little if any inventory.

Furthermore, working capital management is not an end in itself. It is an integral part

of the department's overall management. The needs of efficient working capital
management must be considered in relation to other aspects of the department's financial
and non-financial performance.

Financial ratio analysis calculates and compares various ratios of amounts and
balances taken from the financial statements.
The main purposes of working capital ratio analysis are:

• to indicate working capital management performance; and

• to assist in identifying areas requiring closer management.

Three key points need to be taken into account when analyzing financial ratios:

• The results are based on highly summarized information. Consequently, situations

which require control might not be apparent, or situations which do not warrant
significant effort might be unnecessarily highlighted;
• Different departments face very different situations. Comparisons between them, or
with global "ideal" ratio values, can be misleading;
• Ratio analysis is somewhat one-sided; favorable results mean little, whereas
unfavorable results are usually significant.

However, financial ratio analysis is valuable because it raises questions and indicates
directions for more detailed investigation.

The following ratios are of interest to those managing working capital:

• working capital ratio;

• liquid interval measure;
• stock turnover;
• debtors ratio;
• creditors ratio.

WORKING CAPITAL RATIO

Current Assets

Current Liabilities
 The working capital ratio (or current ratio) attempts to measure the level of
liquidity, that is, the level of safety provided by the excess of current assets over current
liabilities.

The "quick ratio" a derivative, excludes inventories from the current assets,
considering only those assets most swiftly realizable. There are also other possible
refinements.

There is no particular benchmark value or range that can be recommended as

suitable for all government departments. However, if a department tracks its own
working capital ratio over a period of time, the trends-the way in which the liquidity is
changing-will become apparent.

LIQUID INTERVAL RATIO

Liquid Assets

Average Operating Expenses

This is another measure of liquidity. It looks at the number of days that liquid
assets (for example, inventory) could service daily operating expenses (including
salaries).

STOCK TURNOVER RATIO

Cost of Sales

Average Stock Level

This ratio applies only to finished goods. It indicates the speed with which
inventory is sold-or, to look at it from the other angle, how long inventory items remain
on the shelves. It can be used for the inventory balance as a whole, for classes of
inventory, or for individual inventory items.
 The figure produced by the stock turnover ratio is not important in itself, but the
trend over time is a good indicator of the validity of changes in inventory policies.

In general, a higher turnover ratio indicates that a lower level of investment is

required to serve the department.

Most departments do not hold significant inventories of finished goods, so this

ratio will have only limited relevance.

DEBTOR RATIO

There is a close relationship between debtors and credit sales to third parties (that
is, sales other than to the Crown). If sales increase, debtors will increase, and conversely,
if sales decrease debtors will decrease.

The best way to explain this relationship is to express it as the number of days that
credit sales are carried on the books:

Credit sales per period x days per period

Average Debtors

Where trading terms are 30 days net cash, and customers buy from day-to-day
during the 30 day period and pay 30 days after a statement is rendered, a collection
period of 45 days (the average between 30 and 60 days) would be satisfactory.

If the average collection period extends beyond 60 days, debtors are holding cash
that should have flowed into the department. This means that the department is unable to
satisfy pressing liabilities or to invest that cash.

The debtor ratio does not solve the collection problem, but it acts as an indicator
that an adverse trend is developing. Remedial action can then be instigated.

CREDITOR RATIO
 This ratio is much the same as the debtor ratio. It expresses the relationship
between credit purchases and the liability to creditors. It can be stated as the number of
days that credit purchases are carried on the books.

Credit purchase per period x days per period

Average Creditors

CHAPTER III

OBJECTIVES OF THE STUDY

• To find whether the company maintains minimum investment in inventory

organized the profitability.
• To know whether the company maintain a large size of inventory for efficient and
smooth production and sales operations.
• To know how the company maintains its credit policy.

• To point out how well the company manage its cash.

• To find whether there is proper match between current assets and current
liabilities.
• To know the ways and means of financing working capital

• Suggestions for the working capital management.

 CHAPTER IV

RESEARCH METHODOLOGY

RESEARCH DESIGN

A research design is the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with economy in
procedure.

The formidable problem that follows the task of defining the research problem is
the preparation of the design of the research project, popularly known as the “research
design”. Decisions regarding what, where, when, how much, by what means concerning
an inquiry or a research study constitute a research design.

DATA COLLECTION

SECONDARY DATA

Secondary data means that are already available i.e. they refer to the data which
have already been collected and analyzed by someone else. Secondary data may either be
published data or unpublished data. Usually published data are available in various
publications of the central, state, local governments. Also in technical and trade journals,
books, magazines and newspapers, reports and publications of various associations
connected with business and industry, banks, stock exchanges reports prepared by
research scholars universities in different fields
This study is period for the annual reports and statements of accounts extended
from the years

ANALYTICAL TOOL FOR THE STUDY

During the course of research for the researcher for analysis and interpretation o
data is given below has applied various tools.
• Ratios analysis
• Comparative balance sheet
• Trend analysis
CHAPTER V
DATA ANALYSIS AND INTERPRETATION

LIQUIDITY OF WORKING CAPITAL:

The liquidity position of a firm is largely affected by the liquidity of its
working capital. The appropriate tests of this important feature of working capital
analysis are analysed below.

5.1CURRENT RATIO

CURRENT CURRENT RATIO

YEAR ASSETS LIABILITIES
( Times )
1999-2000 1259369408 221154699 5.69
2000-2001 1607087538 184830664 8.69
2001-2002 857669926 120407697 7.12
2002-2003 1135662118 112919857 10.05
2003-2004 1049098939 220779845 4.75

Inference:
 This ratio is an indicator of the firm’s commitment to meet its short-term
liabilities. The company has not had adequate current assets. An ideal current ratio 2 is
considered as a safe margin of solvency due to the fact that if the current assets are
reduced to half (i.e) instead of 2 then also the creditors will able to get their payments in
full. However a business having seasonal trading activity may show a lower current ratio
at a certain period of the year. A very high current ratio is also not desirable since it
means efficient use of funds. The company is not desirable in efficient use of funds.

Chart 5.1 Current Ratio

12

10

8 1999-2000
2000-2001
6 2001-2002
2002-2003
4
2003-2004
2

0
 5.2WORKING CAPITAL TURNOVER RATIO

WORKING RATIO
YEAR SALES CAPITAL ( Times )

(Rupees) (Rupees)
1999-2000 98492557 1038214709 0.09
2000-2001 136214011 241219109 0.56
2001-2002 148087677 1084194229 0.14
2002-2003 121535360 1022742261 0.12
2003-2004 85410661 828319091 0.10

Inference:
This ratio indicates whether working capital has been effectively utilized in
making sales or not.
From the table it is noted that working capital had some fluctuation in the middle
of the study period, yet the company was able to increase it in the later years.
Hence the turnover indicates that company had utilized its working capital
efficiently and the company can also try to work on this to get more effective values.
 Chart 5.2 WORKING CAPITAL TURNOVER RATIO

0.6

0.5

0.4 1999-2000
2000-2001
0.3 2001-2002
2002-2003
0.2
2003-2004
0.1

0
 5.3 INVENTORIES TO CURRENT ASSETS

CURRENT RATIO
YEAR INVENTORIES ASSETS ( Times )
(Rupees) (Rupees)
1999-2000 443218275 1259369408 0.35
2000-2001 4565366544 1607087538 0.28
2001-2002 493646982 857669926 0.41
2002-2003 478946594 1135662118 0.42
2003-2004 453879029 1049098939 0.43

Inference:
From the table it is known that the inventories to current assets ratio also register
a fluctuating trend during the entire study period.
The average ratio is 0.41 times and thus it is found that the investment in
inventories is kept at the considerable level.
 Chart 5.3 INVENTORIES TO CURRENT ASSETS

0.45
0.4
0.35
0.3 1999-2000
2000-2001
0.25
2001-2002
0.2
2002-2003
0.15
2003-2004
0.1
0.05
0
 5.4 CASH TO CURRENT ASSETS RATIO

CURRENT RATIO
YEAR CASH ASSETS ( Times )
(Rupees) (Rupees)
1999-2000 472165527 1259369408 0.37
2000-2001 357605655 1607087538 0.22
2001-2002 521248923 857669926 0.43
2002-2003 306643076 1135662118 0.27
2003-2004 241319457 1049098939 0.23

Inference:
From the table shows the details of cash to current assets ratio and registered a
fluctuating trend throughout the study period from 1999 to 2004.
The average cash to current assets is maintained at proper times. Hence we find
that company had moderate level of cash in proportion to current assets.
Chart 5.4 CASH TO CURRENT ASSETS RATIO

0.45

0.4

0.35

0.3
1999-2000
0.25 2000-2001
2001-2002
0.2 2002-2003
2003-2004
0.15

0.1

0.05

0
 5.5 CASH TO WORKING CAPITAL RATIO

WORKING RATIO
YEAR CASH CAPITAL ( Times )
(Rupees) (Rupees)
1999-2000 472165527 1038214709 0.45
2000-2001 357605655 241219109 0.15
2001-2002 521248923 1084194229 0.48
2002-2003 306643076 1022742261 0.29
2003-2004 241319457 828319091 0.29

Inference:
The cash to working capital ratio registered a fluctuating trend during the study
period this is noted from the table.
The average ratio of cash to working capital is balanced. Hence it is found that the
working capital ratio is managed by using the cash & bank balance available in the
company.
Chart 5.5 CASH TO WORKING CAPITAL RATIO

0.5
0.45
0.4
0.35 1999-2000
0.3 2000-2001
0.25 2001-2002
0.2 2002-2003
0.15 2003-2004
0.1
0.05
0
 5.6 CASH TO SALES RATIO

RATIO
YEAR CASH SALES ( Times )
(Rupees) (Rupees)
1999-2000 472165527 98492557 4.79
2000-2001 357605655 136214011 2.62
2001-2002 521248923 148087677 3.52
2002-2003 306643076 121535360 2.52
2003-2004 241319457 85410661 2.82

Inference:
This is one of the important ratios of controlling cash. A study of cash to sales
ratio will provide a deep insight into the cash balance held in the concerns.
Evident from the table shows cash to sales registered a fluctuating trend
throughout the study period.

Chart 5.6 CASH TO SALES RATIO

5

4
1999-2000
3 2000-2001
2001-2002
2 2002-2003
2003-2004
1

5.7 CASH RATIO

 CURRENT RATIO
YEAR CASH LIABILITIES ( Times )
(Rupees)
(Rupees)
1999-2000 472165527 221154699 2.14
2000-2001 357605655 184830664 1.93
2001-2002 521248923 120407697 4.33
2002-2003 306643076 112919857 2.71
2003-2004 241319457 220779845 10.9

Inference:
From the table it is noted that the cash position of the company is satisfactory as
the average ratio.
It is found that the cash required to meet out the current liabilities is maintained at
a normal level hence its shows that company follows an average policy.

Chart 5.7 CASH RATIO

12

10

8 1999-2000
2000-2001
6 2001-2002
2002-2003
4
2003-2004
2

5.8 CURRENT ASSETS TO FIXED ASSETS RATIO

 CURRENT FIXED RATIO
YEAR ASSETS ASSETS ( Times )
(Rupees) (Rupees)
1999-2000 1259369408 445335336 2.83
2000-2001 1607087538 445335336 3.61
2001-2002 857669926 298717767 4.03
2002-2003 1135662118 477487671 2.20
2003-2004 1049098939 468492769 2.42

Inference:
The level of current assets can be measured by using this current asset to fixed
assets ratio.
From the table it is noted that the ratio is between the average ratio and this
indicates the company had a moderate current asset policy throughout the study period.
Chart 5.8 CURRENT ASSETS TO FIXED ASSETS RATIO

4.5
4
3.5
3 1999-2000
2000-2001
2.5
2001-2002
2
2002-2003
1.5
2003-2004
1
0.5
0
 5.9 CURRENT ASSETS TO TOTAL ASSETS RATIO

CURRENT TOTAL RATIO

YEAR ASSETS ASSETS ( Times )
(Rupees) (Rupees)
1999-2000 1259369408 1941885379 0.65
2000-2001 1607087538 1838866594 0.87
2001-2002 857669926 1878097191 0.64
2002-2003 1135662118 1799527219 0.63
2003-2004 1049098939 1711356105 0.61

Inference:
From the table shows the current assets to total assets ratio of the company, which
registered a fluctuating trend throughout the study period.
This ratio implies that company is maintaining a considerable level of current
assets in proportion to total assets.
Chart 5.9 CURRENT ASSETS TO TOTAL ASSETS RATIO

0.9
0.8
0.7
1999-2000
0.6
2000-2001
0.5
2001-2002
0.4
2002-2003
0.3
2003-2004
0.2
0.1
0
 5.10 WORKING CAPITAL RATIO

WORKING CURRENT RATIO

YEAR CAPITAL ASSETS ( Times )
(Rupees) (Rupees)
1999-2000 1038214709 1259369408 0.82
2000-2001 241219109 1607087538 0.15
2001-2002 1084194229 857669926 0.90
2002-2003 1022742261 1135662118 0.90
2003-2004 828319091 1049098939 0.78

Inference:

From the table working capital ratio registered a fluctuating trend during the
study period this is noted .
Hence it is found that the working capital ratio is managed by using the cash &
bank balance available in the company.
 Chart 5.10 WORKING CAPITAL RATIO

0.9
0.8
0.7
0.6 1999-2000
2000-2001
0.5
2001-2002
0.4
2002-2003
0.3
2003-2004
0.2
0.1
0
 TREND ANALYSIS:

Y = a + bX

Where a = ∑Y ; b = ∑XY
n ∑X2

Table – 5.11

INVENTORIES

Inventories
2 (Rs )
YEAR X X XY
Y (Rs)

1999-00 -2 4 4,43,218,275 -8,866,436,550

2000-01 -1 1 4,56,536,544 -4,56,536,544
2001-02 0 0 4,93,646,982 0
2002-03 1 1 4,78,946,594 4,78,946,594
2003-04 2 4 4,53,879,029 9,07,758,058
TOTAL 5 10 2,326,227,424 43,731,558
(Source: Annual Report)

a = 2,326,227,424 = 4,65,245,484.8
5

b = 43,731,558 = 4,373,155.8
10

Inventories value in 2004-05 will be about 1,31,19,467.4 lakh.

 Table – 5.12

CASH / BANK

Cash / Bank
2 (Rs )
YEAR X X XY
Y (Rs)
1999-00 -2 4 4,72,165,527 -9,44,331,054
2000-01 -1 1 3,57,605,655 -3,57,605,655
2001-02 0 0 5,21,248,923 0
2002-03 1 1 3,06,643,076 3,06,643,076
2003-04 2 4 2,41,319,457 4,82,638,914
TOTAL 5 10 20,92,339,562 11,87,644,681
(Source: Annual Report)

a = 20,92,339,562 = 41,84,667,912.4
5

b = 11,87,644,681 = 11,81,644,681
10

cash/Bank value in 2004-05 will be about 418,46,67,912.4 lakh.

 Table – 5.13

RECEIVABLE

RECEIVABLE
(Rs)
YEAR X X2 Y XY
(Rs)
1999-00 -2 4 3,26,151,232 -65,23,622,464
2000-01 -1 1 3,19,961,287 -3,19,961,287
2001-02 0 0 2,96,585,354 0
2002-03 1 1 3,14,999,942 3,14,999,942
2003-04 2 4 12,02,157,55 24,04,315,108
4
TOTAL 28 56,005.28 41,322.97
(Source: Annual Report)

a 24,04,315,108 = 8000.75
5

b = 41,322.97 = 1,475.82
28

Sundry Debtors value in 2004-05 will be about 13,904.03 lakh.

 Table –5.14

CURRENT LIABILITIES

Current
2
YEAR X X Liabilities XY
(Rs) (Rs)
Y
1999-00 -2 4 2,21,154,699 -4,42,309,398
2000-01 -1 1 1,84,830,664 -1,84,830,664
2001-02 0 0 1,20,407,697 0
2002-03 1 1 1,12,919,857 1,12,919,857
2003-04 2 4 2,20,779,848 4,41,559,696
TOTAL 5 10 8,60,092,765 -40,52,660,509
(Source: Annual Report)

a = 8,60,092,765 = 17,2018,553
5

b = 40,52,660,509 = 4,05,266,050.9
10

Current liabilities value in 2004-05 will be about 8,01,438,369.33 lakh.

 Table – 5.15
BILLS PAYABLE

BILLS
PAYABLE
X X2 (Rs ) XY
YEAR Y (Rs )
1999-00 -2 4 56,677,194 -1,13,354,388
2000-01 1 1 1,28,990,90 -1,28,990,900
0
2001-02 0 0 14,045,050 0
2002-03 1 1 1,04,122,99 1,04,122,991
1
2003-04 2 4 67,966,652 1,35,933,304
TOTAL 5 10 4,98,208,58 -2,288,993
7
(Source: Annual Report)

a = 4,98,208,587 = 99,641,717.4
5

b = -2,288,993 = -228,899.3
10

Bills Payable value in 2004-05 will be about -6,866,979 lakh.

 FINANCIAL STATEMENTS:

The history of financial statement analysis is traced back to the beginning of 20th
century. The analysis was started in western countries for the use of credit analysis. Till
1914, financial institutions used to rely on the facts of financial statements. But over a
period of time, the need for analysis was felt and a number of techniques were invested
and made use of the purpose of analysis.

The important techniques of analysis and interpretation of financial statements are

listed below

a. Comparatives financial statement

b. Trend analysis
c. Ratio analysis
.

(a). COMPARATIVE FINANCIAL STATEMENT.

This is yet another technique used in financial statement analysis. These

statements summaries and present related data for a number of years, incorporating there
in changes (absolute and relative) in individual items of financial statements. These
statements normally comprise comparative balance sheets, comparative statements of
change in total capital as well as in working capital.

They help in making interfered and inter – firm comparisons and also highlights
the trends in perforanance effeminacy, and financial position.
 Table 5.16
COMPARATIVE BALANCESHEET OF
THE COOPER BUSSMANN INDIA PRIVATE LIMITED
AS ON 31st MARCH (2000 AND 2001)

PARTICULARS 2000 2001 (+) (or) (-)

(Rs) (Rs) In 2002 over 2001
Amount percentage
ASSETS
CURRENT ASSETS
Stock 443218275 456536544 13318269 3.00%
Deposits 7498550 9038550 154000 20.54%
Bill Receivable 326151226 319961287 -6189945 -1.87%
Sundry debtors 141649658 136081699 -5567959 -3.93%
Cash in hand 94433105 90721130 -3711975 -3.93%
Cash at bank 2,36082764 12,39142039 92799539 -3.93%
TOTAL (A) 1249033578 1239142039 -9891539 -9.32%
FIXED ASSETS
Fixed Assets 445335336 445335336 - -
TOTAL (B) 445335336 445335336 - -
TOTAL ASSETS
(A+B) 1694368914 1684477369 -9891545 -5.837%
LIABILITIES:
CURRENTLIBILITY:
Sundry creditors 16069405 22107922 6038517 37.57%
Bill Payable 290514861 235280109 -55234.782 -19.01%
TOTAL (C) 306584266 257388031 49196235 -16.04%
CAPITAL&RESERVE:
Capital 277556924.6 356772334.5 155673887 56%
Profit & loss a/c 763281556 856253602.8 41230204 -5.40%
LONGTERM –LOANS
Loans 346946162 214063400.7 -58125822 -16.75%
TOTAL LIABILTIES 1694368914 1684477369 -9891539 -5.83%
 Table 5.17
COMPARATIVE BALANCESHEET OF
THE COOPER BUSSMAN INDIA PRIVATE LIMITED
AS ON 31st MARCH (2001 AND 2002)

PARTICULARS 2001 2002 (+) (or) (-)

(Rs) (Rs) In 2002 over 2001
Amount percentage
ASSETS
CURRENT ASSETS
Stock 456536544 493646982 +37110438 +8.12%
Deposits 9038550 12580790 3542240 +39.10%
Bills Receivable 319961281 296585354 -23375933 -7.30%
Sundry debtors 136081699 143439642 +7357943 +5.40%
Cash in hand 90721130 95626428 4905298 5.40%
Cash at bank 226802829 239066070 12623241 5.40%
TOTAL (A) 1239142039 1280945266 41802227 3.37%
FIXED ASSETS
Fixed Assets 445335336 447161879 1826543 +4.10%
TOTAL(B) 445335336 447161879 1826543 +4.10%
TOTAL ASSETS
(A+B) 1684477369 1728107145 43369736 +2.59%
LIABILITIES:
CURRENTLIBILITY:
Bills Payable 235280109 145140974 -90139135 -38.31%
Sundry debtors 22107922 443822569 21714647 98.22%
Provisions - 153914443 153914647 100%

TOTAL 257388031 342877986 85489955 33.25%

CAPITAL&RESERVE:
Capital 356772334 207784373.9 -148987960 -41.75%
Profit & loss a/c 856253602.8 900398953.5 44145350.6 5.1%
LONGTERM –LOANS
Loans 214063400 277045831.7 62982431 29.42%

TOTAL LIABILITIES 168447369 1728107145 43629776 2.59%

 Table 5.18
COMPARATIVE BALANCESHEET OF
THE COOPER BUSSMAN INDIA PRIVATE LIMITED
AS ON 31st MARCH (2002 AND 2003)

PARTICULARS 2002 2003 (+) (or) (-)

(Rs) (Rs) In 2003 over 2002
Amount percentage
ASSETS
CURRENT ASSETS
Stock 493646982 478946594 -14700388 -2.97%
Deposits 12580790 25871970 13291180 105.64%
Bills Receivable 296585354 314999999 18414645 6.20%
Sundry debtors 143439354 91998322 -51441320 -35.82%
Cash in hand 956626428 61332216 -34294212 -33.83%
Cash at bank 239066070 153330539 -85735531 -32.86%

TOTAL (A) 1280945266 1126479640 -154465626 -12.05%

FIXED ASSETS
Fixed Assets 447161879 468472769 21330890 4.77%
TOTAL (B) 447161879 468472769 21330890 4.77%
TOTAL ASSETS
(A+B) 1728107145 1594972409 -133134690 -12.05%
LIABILITIES:
CURRENTLIBILITY:
Sundry creditors 43822569 51128387 7305818 16.67%
Provision - 68174856 68174856 100%
Bills Payable 145140974 128472622 -16668352 -11.48%

TOTAL 188963543 247775865 58839322 31.13%

CAPITAL&RESERVE:
Capital 769571780 353842850 -415728930 -54.20%
Profit & loss a/c 461743068 1061528550 599785482 129.89%
LONGTERM –LOANS
Loans 30782871 - -307828714 -100%
4
TOTAL LIABILITIES 1728107145 1594792409 -133314696 -7.71%

Table 5.19
COMPARATIVE BALANCESHEET OF
THE AUROMODE & CO
AS ON 31st MARCH (2003 AND 2004)

PARTICULARS 2003 2004 (+) (or) (-)

(Rs) (Rs) In 2004 over 2003
Amount percentage
ASSETS
CURRENT ASSETS
Stock 8,35,823.09 15,35,450.00 +6,99,626.31 +83.70%
Deposits 13,720.00 38,720.00 +25,000.00 +182.21%
Loans & Advances 52,150.00 72,632.60 +20,482.60 +39.27
Sundry debtors 42,083.40 4,78,970.52 +4,36,887.10 +1038.14%
Cash in hand 4,012.95 1,321.55 -2,691.40 -67.06%
Cash at bank 37,136.40 7,11,908.54 +6,74,772.14 +1817.01%
TOTAL (A) 9,84,926.44 28,39,003.21 +18,54,076.77 +188.24%
FIXED ASSETS
Fixed Assets 40,30,052.7 38,82,952.75 -1,47,100.00 -3.65%
5
TOTAL (B) 40,30,052.7 38,82,952.75 -1,47,100.00 -3.65%
5
INVESTMENT:
Investment 1,00,000.00 40,000.00 -60,000.00 -60%
TOTAL © 1,00,000.00 40,000.00 -60,000.00 -60%
TOTAL ASSETS
(A+B+C) 51,14,979.1 67,61,955.96 +16,46,976.77 +32.19%
9
LIABILITIES:
CURRENTLIBILITY:
Sundry creditors 4,07,343.50 10,91,486.72 +6,84,143.22 +167.95%
Provision 1,00,350.00 1,94,241.00 +93,891.00 +93.56%

TOTAL (D) 5,07,693.50 12,85,727.72 +7,78,034.22 +153.24%

CAPITAL&RESERVE:
Capital 45,07,285.6 44,17,978.24 -89,307.45 -1.98%
Profit & loss a/c 9 - - -
-
TOTAL (E) 45,07,285.6 44,17,978.24 -89,307.45 -1.98%
9
LONGTERM –LOANS
Loans 1,00,000.00 10,58,250.00 +9,58,250.00 +958.25%
TOTAL (F) 1,00,000.00 10,58,250.00 +9,58,250.00 +958.25%
TOTAL LIABILITIES
(D+E+F) 51,14,979.1 67,61,955.96 +16,46,976.77 +32.19%
9
CHAPTER VI

6.1 FINDINGS:

 Cash to current assets ratio has huge fluctuations during the period.

 Cash position in of the company has uneven trend.

 Uneven trend in networking

 The company has its working capital ratio has been above the standard norms

during the period 2000-01, 01-02, 02-03.

 Liquidity position of the company is satisfied.

 Current assets are not properly utilized by the concern towards the turnover.

 Working capital turnover ratio in the year 2003 better when compare to the

previous year.

 The company has spent huge expenses.

 6.2 SUGGESTION:

 The cash position of the company has not been properly maintained. So the
company has to make an effort to reduce the expenses and also cash to current
assets ratio.

 Company can utilize their assets properly.

 Modernized equipments can purchase.

 From current ratio, overall ratio was above the accepted norms of 0.5. so the
company has to reduce the overall ratio avoid the unnecessary cash kept in ideal.

 Company can properly maintain their debtors to sales turnover ratio.

 A Working capital ratio has been maintained below the norms.

 CHAPTER VII

CONCUSION

The project report is the apex of the master of business administration course
conducted by the Pondicherry University. The study is conducted at Cooper Bussman
India Private Limited, Setharapet with the title of a study on working capital
management. This study was conducted mainly with help of secondary data obtained
from the unit.
The company should use the minimum investment in inventory to organized it
profitability. Whether the company may invest large size of inventory to the concern.
The efficient and production levels are decreased. So the concern should maintain the
maximum investment in inventory. The company able to achieve the working capital
management objectives in proper way.
 CHAPTER VIII

8.1 SCOPE OF THE STUDY

The scope of the present study on composes within its fold a theoretical frame
work of working capital management. In general, analysis of working capital trends,
relationship of working capital to sales, liquidity of working capital, analysis of
management of components of working capital and the management of working capital
finance in the select unit. The period covered by the study in five years from 2000 to
2004.
 8.2 LIMITATIONS OF THE STUDY

 An account of Shortage of time, money and energy this is confined only to

Cooper Bussmann India Private Limited.

 Some data’s are not given because of confidential.

 Due to lack of practical knowledge, I am unable to research in an in depth

manner.
 BIBILIOGRAPHY

 Management accounting - S.N.MAHESHWARY

 Financial management - I.M.PANDEY

 Research methodology - C.R.KOTHARY

 Management accounting - R.S.N.PILLAI

&
BAGAVATHI

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