Case Stud v

? v /lc sIn da e

? tttlia ..,

1 (1 n 0

Impact of \k orking Capita'

Management on the Profitabili

DSCE, Bangalore (Karn.

T ' -,

Trivedi SaN i i

savitatrivedi@yahou.cu.iu

A bstract

Finance is regarded as the lifeblood of any Working capital management is that the company should business organization. The Financial always he in a position to meet its current obligations management deals vv hich should be properly be supported by the current asset
with the process of procuring of financial resources and

reduce the locking up of funds in working capital and can improve the return on capital employed in the business;

its judicious utilization with a view to maximizing the Shareholders wealth. Efficient management of every business enterprise is largely dependent on the efficient
m anagem ent m anagem ent of its finance. is Financial

available with the firm. But maintaining excess funds in \\orking capital means locking of funds without return;
i, niana, c the firm's current assets in such a way that the

managerial activity which is concerned with planning and controlling of the firm's .financial resources. Most of the businesses fail as they are unable to meet their w orking capital requirem ents. If the firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent.
Keywords: Working capital, Concept, Ratio analysis.

Introduction
In accounting "W orking capital is the difference between the inflow and out flow of funds." It other words it is the net cash inflow. It can be defined as excess of current assets over current liabilities and provision. It is net current asset or net working capital. The Concepts of Working Capital: There are two concepts of working capital-Gross and Net. The gross w orking capital is the investments in the current assets. The Net Working Capital (NWC) is the difference between the current assets and the current liabilities. The NWC is a yardstick in comparing the liquidity position of a business concern over a time. So, this is quite useful for internal control. Objective of the Working Capital Management: The basic ihjectives of the working capital management are as follows: To optimize the investment in current asset and to reduce the level of current liabilities so that the company can

marginal return on investment in these assets is not less than the cost of capital employed to finance the current assets. Working Capital Management - What for? Management of working capital is an extremely important area of financial management as current assets represent more than half of the total assets of a business. Fixed assets though essential for a business organization, do not by itself produce revenue or income. Fixed assets act with current assets to generate revenue or income. Therefore, working capital is necessary for utilizing the productive capacity of fixed capital. For shortage of working capital, the enterprise would suffer reduction in earnings because productive capacity remains unutilized. Excess working capital leads to extra cost for want of productive capacity. Thus, the amount of working capital in every enterprise whether manufacturing or non-manufacturing, should be neither more nor less than what is actually required. Like human blood, the proper circulation of fug (working/circulating capital) is utmost necessary to conti business. If the circulation of working capital becomes wC, the businesses can hardly prosper. An enterprise shoo maintain optimum amount of working capital so as to ca on the productive and distributive activities smoothly. Whi the determination of optimum level of working capir., involves fundamental decisions to an organization's liquidity w hich in turn are influenced by a tradeoff betw een profitability and liquidity. Sagnar James' in his article "cut cost using working capital management" wrote that managing working capital involves organizing your company's shortterm resources to sustain ongoing activities, mobilize funds

and optim liquidity. Banos Banos-Caballero ize et a16 examined that how the determinants of cash conversion cycle (CCC) play a important role on utilization of working capital. Bauer, Dennis' believes that organizations can levera' innovative methods to utilize working capital while balanci the needs of suppliers, procurem finance, ent, AP a treasury.

Methodology
Data used for analysis have been take balance sheet and P/L statement of the comp, ? ,

ldr'ances In 11anagenictzl received immediately and therefore no receivables arc calculations have been carried out through Microsoft Excel _ '007 worksheet. The data from public limited company are analyzed and presented in the form of tables and graphs. Interpretation (Graph 1): The net working capital showed a upward trend from 2005 to 2007 and then decreased in 2008, then went up again in 2009. It was Rs. 2294.56 million in '005 and then increased to Rs. 2824.91 million in 2007.In 2008 in went down to Rs. 2377.94 million and in 2009 in went up to Rs. 3040.19 million. Interpretation (Graph 2): The chart indicates that the current assets are fluctuating i.e. in 2005 it was 0.32%, then increased by 35.81%.But in 2008 it showed a negative growth -6.75%, then increased in 2009 by 36.84 %.

4 9 )

of

Management of Inventory
Inventory constitute major portion of current asset of public lim ited com panies in India. The m anufacturing companies hold inventories in the form of raw material, work-in-process and finish goods. T here are at least three m otives for holding
inventories.

To facilitate sm ooth production and sales operation (Transaction motive) To guard against the risk of unpredictable changes in usage rate and delivery time (Precautionary Motive) To take advantage of price fluctuations.
Motive)

(Speculative

Inventories represent investment of a firms funds and that is why management of inventory is necessary for the maximization of the value of the firm The firm should . therefore consider-C osts, Return and Risk Factors in establishing its inventory policy. Evaluation of Inventory Management Performance: Ratio analysis has been used for making evaluation of Inventory management performance. As the raw material used in the company is pig iron, proper planning and handling is required purpose of achieving the right quality of output.

for the

Interpretation (Graph 4 a and 4 b): The chart shows that the inventory turnover was 7.2 in the year 2005, went slightly down to 6.9 and in 2006 and 2007 and then increased to 7.5 and 8 in 2008 and 2009. The company took an average of 51 days to convert the inventory to sales in 2005 and in 2006 and _ '007, it increased slightly to 53 days and it reduced to 46 days in the year 2009.

Management of Receivables
W hen firm sell goods for cash, paym ents arc

of. 4 (tO) (201 i created. However when a firm sells goods or services oi credit, payments are received only at a future date an, receivables are created. It is an essential marketing tool modern business trade. Credit creates receivables which the i f rm is expected to collect in near future. A firm grants credit to its customers so that its sales are its customers so that its sales are not lost to com petitors. A ccount receivable constitutes a significant portion of the total current assets of the business after inventories. The receivables arising out of credit has three characteristics: It involves an element of risk which should be caretull\ analyzed. It is based on econom value. T the buyer. the ic o economic value goods or services pass immediately at the time of sale, white the seller expects an equivalcnt value to be received later on. It im plies futurity. T custom fromw he ers hom receivables have to collect in future are called debtors and represent the firm's claim or asset. D ebtors turn-over ratio: This is also called "D ebtors velocity" or "Receivable Turnover". A firm sells goods on credit and cash basis. W hen firm extends credit to its customers, book debts are created in firms A/c debtors expected to convert in to cash over short period and thus included in current assets. It is used to measure liquidity
the receivables or to find out period over which receivables

2.8%. 3.2%, 2.5 which

%,

4.0% and 3.7% from 2005 to 2009

im plies that the debtor collection period is at a Ilurut;ttin

rate.
M anagem of cash: The firm should keep sufficient ent call.

neither more or less. Cash shortage will disrupt the firm', manufacturing operation while excessive cash will simple remain idle, without contributing anything towards firm', profitability. Thus, a major function of the Inanncial nr;uiawYi is to maintain a sound financial position. Cash management involves followinI, 1101
facRR i,, n ii ,nrn C in ;isli cot;trollin,c the lcvcls of cash. A scertain en o th m t f e ;iLuicr end

of

remain uncollected.
Total Sales

Receivable turnover Ratio =

Average I)chtor, 365

Debt collection period = Receivable turnover ratio Interpretation (Graph 5 a and 5 b): The chart indicates that the debtors turnover ratio shows a fluctuating trend i.e. it was

Advances In Manage mr
Controlling cash in flows Controlling cash outflows Optimum utilization of surplus cash.

than current ratio.

Cash is required to meet a firm's transactions and precautionary needs. A firm needs cash to make payment for acquisition of resources and services for the normal conduct of business. It keeps additional funds to meet any emergency situation. Some firms maintain cash for taking advantages of speculative changes in price of input and output. E valuation of C ash M anagem ent Perform ance: The following ratios have been used to evaluate different aspects management. C R ash atio. Cash turnover Ratio. Holding period of cash. assets of cash

( S O )

The figures of cash and bank balance, total current and current liabilities for the year 2005 to 2009 are given in the table 1

Interpretation (Graph 6 c): T quick ratio show a he s fluctuating rate where in the year 2005 shows the highest of 69.8 which means the company can pay 69.8% of its current liabilities by cash. The cash turnover ratio in the year 2009 was comparatively less satisfactory than the year 2008. The 5 year ratio shows a fluctuating trend which indicates that the company is not using its cash effectively.

Analysis through Working Capital Ratios

Current Ratio: It is most common measure for measuring liquidity. It is also called "W orking Capital Ratio." It expresses relationship between cu rr ent assets and current liabilities. A relatively high cu rr ent ratio is an indication that the firm is liquid and has the ability to pay its cu rr ent obligation in time as and when it becomes due, a decrease in cu rr ent ratio indicates that there has been deterioration in the liquidity position. A cu rr ent ratio of 2:1 is considered satisfactory. Current Ratio Current Assets = Current Liabilities Interpretation (Graph 7): The company's current ratio is going down as the year is going by. A relatively low current ratio represents that the liquidity position of the firm is not good and the firmshall not be able to pay its current liabilities in time without facing difficulties. Quick Ratio: It is also known as liquid ratio or acid test ration. It is a relation betw een quick assets and quick liabilities. It is more useful in knowing the liquidity of firm

Quick Assets =

Quick Rat, Current Liabilities,

A quick asset means current assets excluding stock and prepaid expenses. Interpretation (Graph 8): The quick ratio of the firm is showing a downward trend which indicates that the company is not sound well. Though the company at present is able to meet its short term liabilities but at later years it may not able to meet its liabilities. Composition of gross working capital: The structure of gross working capital is evaluated by finding out the ratio of each component of current assets with the total current assets. These ratios indicate in which components of current assets. excess funds have been invested to that extent. Gross working capital ratio: The method is used to examine the effectiveness of gross working capital. It is circulated as: Circulation of Gross Working Capital Net Sales = Total Gross W. C. Interpretation (Graph 10): The gross working capital ratio is showing a fluctuating trend i.e. during the year 2005 it was 0.98, then it increases to 1 14 in 2006. Then in 2007 it went down to 0.79. The year 2008 showed the highest ratio of' I I compared to other years. W orking capital turnover ratio: The m ethod used to measure the effectiveness of net working capital is to divide net sales by net working capital. The ratio is computed as follows: Circulation of Net Working Capital Net Sales = ----------------------------------------------Net Working Capital Interpretation (Graph 11): The working capital turnover ratio was less from the year 2005 to 2007 and in the year 2008 it increased to 2.78 and in the year 2009 in decreased slightly to 2.53. The reason for increase is because of increase of sales in 2008 and 2009.

Inventory to Working Capital Ratio: In order to ascertain that there is no overstocking, the ratio of inventory to working capital should be calculated. Working capital is the excess of current asset over current liabilities. Increase in the volume of sales requires increase in the size of inventory. But from a sound point of view, inventory should not exceed amount of working capital. Inventory to Working Capital Ratio Inventory = --------------------------------------------Working Capital

Advances In M anagem ent Interpretation (Graph 12): The inventory to working capital turnover ratio was less from the year 2005 to 2007 and in the dear 2008 it increased to 0.366 and in the year 2009 in decreased slightly to 0.314. The reason for increase is because of increase of stock in 2008 and 2009. Net Profit Ratio: Net profit ratio establishes the relationship between net profits after tax and sales. It indicates the efficien o th m cy f e anag en in m factu , em t anu ring administrating and selling the products. This is a measure of os erall profitability. It indicates what portion of sales is left to the owners after all expenses have been met. The net profit ratio can he calculated by using the following formula: Net Profit Net 1 'iol it Ratio -------------- x 100 Net Sales Interpretation (Graph 1 ): T n p fit sh w a 3 he et ro o s downward trend from 2005 to 2007 and then increases from a necative ratio to 13.71 in 2009 which indicates higher overall efficiency of the business, better utilisation of lim ited retiources and reasonable return to owners. Return on Fixed Assets Ratio: This ratio indicates a return asset,. It can he calculated as Return on Fixed Assets ----------------------------- x 100 Net fixed assets on fixed

(51 )

Net proit) alter tax = -

14): The year 2007 and 2008 showed ery less return because of very low profits. During the the t\return on fixed assets was 27% and in 2006 it went to 1 8.1 1 %. In 2(X)9 the return on fixed assets was the highest at 31.21% which indicates that the firm earned high prods that year.
Intr-rpretatiun ((;raph

d(, wn

Current assets to total assets ratio: The ratio brings out the percentage of current assets to total net assets of the business. I his ratio indicates the extent of liquidity nature of assets repaired in comparison with total net assets as in table 20. Interpretation (Graph 15): During the year 2006 the ratio of current assets to total assets show the highest of ed 0.54.whereas in 2005.2007 2008 and 2009 the ratio of current assets to total assets was 0.5 1, 0.41, 0.34 and 0.32.

Findings

The gross working capital decreased in 2008 by 6.79% Join then increased highly by 36.84% in 2009. 1 he liquidity position is not satisfactory. The quick ratio shows the company is not liquid.

The

financial position of the business shows normal.

Vol. 4 (10) Oct.

( 2011)
The com pany ,ales turnover
is

increasing' rapidly

The average current ratio of the firm is 2.24 The cash turnover ratio is fluctuating over the s car, The inventory turnover is increasing over the inventory holding period is satisfactor\ The receivables management of the cony better The projected sales of the company from 2010 to 2014 are 8538.47, 9616.83, 10695.19, 1 1773.55, and 12851.91. There is an increasing trend in the sales turnover of the company.

future it may not be sufficient enough to pay its short term liabilities. The company is expanding its operation and need,
m working capital to support the grovxin ore the

L needs of

operation.

References
1. G p K S ash an u ta . h i ti
(inpta

N eelu. I inancial M cii em anx it

Kalyani publishers (2009) 2. Khan M. Y. and Jain P.K., Financial Management.

edi(ilui 5'h

McGraw Hill (2011) 3. Pandey I.M., Financial Management, 6'h edition (2005) 4. Rechard D., Corporate Finance, Boston. Irwin Inc., 55 (20051 5. Sagner James S. "Cut costs using working capital manager , ni
jo rn l o C rp ra A o iliiwA u a f o o te re w 22 0). 3-7
F Ile e . in n ,

Conclusion
The primary goal of working capital management in a firm is to manage short term funds required for day to day business activity of a firm. The company requires effective w orking capital m anagem ent policy for a sm ooth uninterrupted production and sale activity. The study of working capital management in a limited company reveals that the management of working capital is greatly responsible for level of profits earned by the firm along with the tremendous expansion activity. The turnover of current assets employed by the company is not efficiently used by the working capital funds which happen t( , be most important factor for the running of the business enterprise with normal profits. The basic objective of working capital management is to have a balanced liquidity position. The company has a positive working capital durint all the years of its operation. This indicates the compan\ , good liquidity position. This is also made clear by the current ratio which is greater than I in all these years. It means that the investment in current asset is sufficient at present but in

M pr. ar/A

( -,fill )

Advances In M anagem ent P artcu l ars i Current assets Inventories Sundry debtors Unbilled revenues Cash and bank balances Loans and advances Total Current Assets (A) Current Liabilities Sundry creditors Unclaimed dividend Accrued interest Other liabilities

Working Capital Statement from 2005 to 2009

Table I

4.

YEARS 2007 722.07 1 241.61 560.59 1255.92 1 662.49 5442.68 1687.09 1.59 41.98 44.97

\OI. 4 (l0 O i (2011)

2008 2009 869.71 955.03 2084.4 2075.27 778.84 1 63.82 313.82

2005 2006 502.78 638.3 -777.51 157.4

1206.17 1 669.27

921.55 1 542.69 3408.01 4007.66 748.48 1283.57 0.03 0.79 2.69 3.86 16.7113.73

1 176.28 3597.85
5073.05 6941.97 1 649.58 2124.91 1.54 1 .84 14.24 6.33 1 9.67 24.09

Advances received from customers Provisions Total current liabilities (B) Net Working Capital [A-B]

85.25 260.29 2294.56

36.83 315.53 2353.35

549.44 292.7 2617.77 2824.91

300.93 49.13 709.15 1 695.48

1 1 1 3.45 1654.31

2695.11 3901.78
2377.94 3040.19

Net Working Capital

30 50 34. 9 00 1 30 00 20 50 29. 6 24 5 2? R4 0t 27. 4 37 9

?000
L0 50 L0 00

So o

0
20 05 20 06 20 07

20 08

20 09

Graph 1: Gross Working Capital Table 2 Gross Working Capital Growth in five years
Year 2005 2006 2007 Gross working capital 3408.01 4007.66 5442.68 Growth (%) 0.32 17.60 35.81 (52) 2008 2009 5073.05 6941.97 -6.79 36.84

20.00 0.00 A"IF -20.00 0.321

17.60%
-6 '%

2005 2000 2007 2008 2000

Graph 2: Growth in Gross Working Capital

Advances In ,%Iu,uit. 'men/

Table 3 Raw Material Holding Period

Particulars 2005 279.1 2006 2009 463.1 542.04 4473.36 71

\oi. (

4 ( l0) C>ut_ 2(tl 1 )

Years 2007 553.7 2378.43 84 2008 600.4 2418.65 63

Average Stock of Raw Material Average Consumption of Raw Materials Raw Material Holding Period (Days)

640.33

1 3464.85 66 52

Average Work-in-progress inventory

W= Work-in-progress period =

Average cost of production per day

Table 4 Work-in-Process Conversion Period

PARTICULARS YEARS 2005 69.64 88.3 1 2309.04 20 14 2006 2009 67.97 240.05 2501.25 1 2007 76.9 1 2823.16 6 2008 98.34 535.19 12

Average Stock of Work-in-Process Cost of Production Work-in-Process Conversion Period (Days)

Average finished stock inventory 1= Finished Stock Storage period = Average cost of goods sold per day

Table 5
Finished Stock Conversion Period Particulars Years 2005 37.82 83.75 2782.09 7296.52 5 9 2006 2009 39.53 3913.62 4 2007 49.59 4727.69 4 2008 97.15 5966.1 6 1

Average Finished Stock Cost of Goods Sold Finished Stock Conversion Period (Days) Average debtors
l )_ I >, I,tr, nl le t inn prrio 1= Average credit sales per day

fable 6
Debtors Collection Period

Particulars

Years 2005 1210.95 2079.84 2716.07 6801.42 163 2006 2009 1437.72 4176.79 126 2007 1455.44 3473.75 153 2008 1663.01 5161.49

Average Debtors Average Credit Sales Debtors Collection Period (Days)

1
6. Banos Caballero Sonia, Garcia-Teruel. Pedro J. and MartrnezAdditior,ti Solano Pedro. Working capital manar' r1 in ')111:<.
1 I m,im , Scl, . 511 ( ( 20101

118

7. Bauer Dennis.
, jlu, 'cithiil

Working Capital
i ,l /

Management:
iun Lt (21.

Driving
,)'i ;t

14' I

31.

I I-27 (2011 )

(53)

1 (lrnncc.c In Managem ent Particulars Average Creditors Average Credit Purchases Creditors Payment Period Creditors payment period =

Table 7 Creditors Payment Period 2005 2006 666.02 1016.03 1 718.73 2569.68 141 144 Average creditors

Years 2007 1485.33 2408.7 225

\,)I 41111) ( ) ( 2011 (

2008 2009 1 668.34 1 887.25 3568.25 4743.75 171 145

Average credit purchase per day

Table 8
Operating Cycle Period From 2005 - 2009 Particulars Inventory Storage period Raw material Work-in-progress Finished Stock Debtor Collection Period Total (A) Creditors Payment Period (B) Operating Cycle Period (A-B) 66 20 5 163 254 141 113 71 16 4 126 217 144 72

2005

2006

Grap h 3: Oper ating Cycl e Peri od

(54)

Table 9
Inventory Ratios ITEM (1) Average Inventory (2) Total Current Assets (3) Cost of Goods Sold Ratio ( a) Inventory to Gross Working Capital (1/2) b) Inventory Turnover (3/I) c) Inventory Conversion Period [(365/h) days] 2005 386.54 3408.61 2782.09
%)

2006 570.54 4007.66 3913.62 14.2 6.9 53

1 1.3
7.2 51

150
100 50 0 2005 2006 a 2007
72

27 0 2008

30

2009

Years

2007 2008 2009

84 12 4 153 252 225 27 0 63 52 14 1 1 69 118 112 201 184 1 71 145

(In 111011m)")

2007

2008 2009

680.19 795.89 912.37 5442.68 5073.05 6941.97 4727.69 566.1 7296.52 12.5 7.0 53 15.7 1 3.1

7.5 8.0
49 46

ldrances In M anagem ent

54 52 50 48
46 4 4 42 4 0
20 05 20 06

Inventory Turnover Ratio

53

693 Quick Ratio

V 4(10)O ol. (2011 )

6.1

20 07

20 08

20 09

2005

2006

2007 2008 20,

Graph 4 (a)
Inventory Conversion Period 8.0
8.0 7.5 7.2 7.0
65

w Cash Ratio

Graph 6 (a)
Cash Turnover Ratio
45.00 40.00 35.00 30.00 25.00 { 20.00 15.00 1 10.00 5.00 0.00

6.0
1005 2006 2007 2008 2009

2005

2006

2007 2005 2i_nl0

Graph 4 (b)

Graph 6 (b)

Debtor Turnover Ratio 1.2

Holding Period of Cash

7
150 100 i. 50 13 I 85 106

2000

2007

2008

2009

2005

2006

2007 200' 2 0 1 1

RATIO Graph 5 (a)

Debtor Collection Period 147 132 115 YaNt er e 92 99

Graph 6 (c) Table 10 Receivables Ratios

Average R atioC ollection Period

Graph S (b)

1 . 1
(lLi.

2000

2007

2008 2009

z Collection Period

sales debtors
(: )

(days) 2005 3337.84 1210.95 2.8 1 32 2006 1437.72 4550.88 3.2 4312.48 2.5 6621.33 4.0 7694.42 7

1 15

2007 1735.74 147 2008 1 663.01 92

2009 99

1079.8.1

Advances In M anagem ent Particulars Cash & Bank Balance Net Sales Current Liabilities
R tio% a

Cash Ratios 2005 2006 777.51 1 57.40 3337.84 4550.88 1 1 1 3.45 1 654.31 69.8 9.5 4.29 28.91 85 1 3 48.0 3.43 1 06 2007 1255.92 4312.48 2617.77

Table 11

V o l .4 (10) (Kt.
( 2011) In million s (Rs I

2008 2009 1 63.82 313.82 6621.33 7694.42 2695.11 3901.78 6.1 8.0 40.42 24.52 9 15

Quick Ratio (1/3) Cash Turnover Ratio (2/1) Holding Period of Cash (3 65/b) days

Current Ratio
061

2.^23

2.079
1 77

3 2.609

Q114", R ol,i
2.03

2006

2007

2008

2009 2005

Graph 7

2006 2007
G rapi,

?002 ?nn

2 .0 7 4 3 .4 8

51 .8

..C).00
S. 36;

000
O C) C )

w1C)P

T [)RY[)EEi 1OI''

1C).C)0) ) ()C)
v V N IN 'E

T )R " < I1

G raph 9

t (h'anees In Management YearCurrent AssetsCurrent Liabilities 111 2005 3408.61 1 3.45 2006 2007 2008 2009 4007.66 2.037 5442.68 803 5073.05 .560 6941.97

'f'able 12

Current Ratio 3.45 2.609 2.423 2.079 1 882 1 .779 2006 2007 2008 Table

YearLiquid assetsCurrent liabilitiesQuick ratio 3.061 2005 2905.23 2006 2007 2008 638.3 722.07 869.71 3369.36 4720.61 4203.34 1654.31 2617.77 2695.11 2353.35 2824.91 2377.94 0.271 0.256 0.366

Table 13

Vol. 4 (10) ()it. 2011) 11

1654.31 2617.77 2695.11 3901.78

1 1

2009
P i l artcu ars 2005 1 4.75 35.39 0.00 22.81 27.04 100.00

955.03

3040.19

0.314
(57 )

Inventories Sundry debtors Unbilled revenues Cash and bank balances Loans and advances
T otal (% )

Table 15
Year 2005 1006 2 007 _ 2008
2009

Net sales 3337.84 4550.88 4312.48 6621.33 7694.42

Gross working capital 3408.01 4007.66 5442.68 5073.05 6941.97

Ratio 0.98 1 14 0.79 1 31 1. 1 1

Fable 16
Year 2005 2006 2007 2008 'U(I > Net sales 3337.84 4550.88 4312.48 6621.33
700 l,1'

Net working capital 2294.56 2353.35 2824.91 2377.94

Ratio 1 .45 1 .93 1.53 2.78 2.53

300)
Table 17

19

Years 2005

Inventory 502.78

Working capital 2294.56

Ratio 0.219

5001 94

30 (). 1 7R 1 531

1.4
Years 2006 1 5.93 41.65 0.00 3.93 38.49 100.00 2007 13.27 22.81 1 0.30 23.08 30.55 100.00 2008 2009 1 7.14 1 3.76 41.09 29.89 15.35 0.00 3.23 4.52 23.19 51.83 1 0 .0 1 00.0) 0 --

Gross Working Capital Ratio

i0

1.31

)0 i0 )0 2005 2006 2007 2008 2009

Graph 10 Working Capital Turnover Ratio

3.001
2.00 1.00 0.00 2005 2006 2007

Graph
Table IS YearNet profit /(loss) after taxNet salesNet profit ratio 2005 2006 2007 2008 2009 461.09 361.84 -1 1 52.14 61.35 1055.14 3337.84 1 3.81 4550.88 7.95 4312.48 -26.72 6621.33 0.93 7694.42 1 3.71

Advances In Management Inventory to workine capital ratio 0,366 0171

0.300 0.21)

20.00
0.314 10.00

0200 0.100
1104

0.00 -10.00 2005 -20.00 -30.00

81

Net Profit Ratio

1 111i t ? i 2u1 I

7.95

13.71 "x. 93

2006 2009

2007 <72008

2007 Graph 12

2008

2009

-26.72 NET PROFIT RATIO

Graph 13

Table 19 YearNet profit /(loss) after taxNet fixed assetsRatio 2005 2006 2007 2008 2009 461.09 361.84 -1 1 52.14 61.35 1 055.14 1 707.54 0.27 1 998.45 0.18 2160.13 3066.71 0.02 3381.07 0.31

Table 20
Year Ratio 2005 2006 2007 2008 2009 Current assets 3408.61 4007.66 5442.68 5073.05 6941.97 Total assets 6706.71 ( .51 7449.16 (1.54 1 3346.73 0.41 14840.45 (1.34 21601 68 0.32

Table 21
Statement of changes in working capital for the year 2008 -2_(1(19 Particulars Current Assets a) Inventories h) Sundry debtors cc) Unbilled revenues (1) Cash & bank balances r) Loans and advances I otal Current Assets Less: Current liabilities & Provisions a) Current liabilities h) Provisions Total current liabilities Net working capital
i )ifference

2008 Decrease 869.71 2084.4 9.13 778.84 778.84 1 11 5073.05 1 2206.3 709.15 695.48 2695.11 2377.94 662.25
3040.19

2009

Increase

955.03 2075.27 63.82 76.28 6941.97 985.96 220.34 1 986.33 3901.78 3040.19

85.32

313.82 1 50 3597.85 2421.57

662.25
I o1al

3040.19

2656.89

2656.89

Table 22
Statement of Changes In Working Capital for Particulars Current Assets ( Inventories
'll

tlu

1 c.i. '1, 07 -2008 2008 Increase

2007 Decrease 722.07

I 11 0,1

869.71
r)d 1_I

147.64
71)

,;

rd:htofti

:tdrances In M anagem ent c) Unbilled revenues ( 1) Cash & bank balances e) Loans and advances "Total Current Assets Less: Current liabilities & Provisions a) Current liabilities h) Provisions Total current liabilities Net working capital Difference Total

560.59 1 255.92 1 662.49 5442.68 2325.07 292.70 2617.77 2824.91 2824.91

778.84 218.25 163.82 1092.1 1 176.28 486.21 5073.05 1 985.96 339.11 709.15 2695.11 2377.94 446.97 446.97 2824.91 416.45

V ol.4(10)(h 1. 21)1 1

1 994.76 1994.76

Return on Fixed Assets Ratio

300 40 250

Current Assets to Total Assets Ratio

TOTAL ASSETS
U R N A [T C R E T SS ,

200
18.

150

100

o.o
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Graph 14

Graph 15
(Received 28th July 2011, accepted I 201 )" September

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