Almost Final

CASH MANAGEMENT IN WORKING CAPITAL
EXECUTIVE SUMMERY Introduction A basic limitation of the traditional financial statements comprising the balance sheet and the profit and loss A/c is that they do not give all the information related to the financial operations of the firm. Nevertheless, they provide some extremely useful information to the extent that the balance sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owners equity, and so on and the profit and loss account shows the results of operations during the certain period of time in terms of the revenues obtained and the cost incurred during the year. Thus, the financial statements provide summarized view of the financial position and operations of the firm. Therefore, much can be learnt about a firm from a careful examination of its financial statements as invaluable documents! Performance reports. The analysis of financial statement is, thus, an important aid to financial analysis.
The focus of financial analysis is on key figures in the financial statements and the significant relationship that exists between them. The analysis of financial statements is a process of evaluating the relationship between components parts of financial statements to a better understanding of the firms position and performance. The first task of the financial analyst is to select the information relevant to the decision under consideration from the total information contained in the financial statements. The second
INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI
step is interpretation and drawing of interference and conclusions. In brief, financial analysis is the process of selection, relation and evaluation.
Statement of the problem Financial statements can provide valuable insights into a firms performance. Analysis of financial statements is useful for the company to evaluate its own performance and also it is of interest to lenders (short term as well as long term), inventors, security analysts, managers and others. Financial statement analysis may be done for a variety of purposes, which may range from a simple analysis of the short term liquidity position of the firm to a comprehensive assessment of the strengths and weaknesses of the firm in various areas. It is helpful in assessing corporate excellence, judging creditworthiness, forecasting bond ratings, predicting bankruptcy, and assessing market risk.
To evaluate the effectiveness of operations and to determine it success an analyst has to combine quantitative results with qualitative factors. For instance a companys current profitability may be low. However, because of actions initiated by the management like technology up gradation, joint venture, joint
2
venture, and collaboration with a foreign partner, etc., the prospects for better performance of the company in future may be bright.
Aims and Objectives Objectives of the study To gain corporate exposure
To get exposed to all the departments of the company
To know the financial position of the firm access
To assess the financial strengths and weakness of the firm to give valuable suggestion to attain operational excellence
Scope of the study This project as a reference guide or as a source of information. It gives the idea about the financial analysis of the firm. The main objective of the study was to put into practical the theoretical aspect of the study into real life work experience. The study aims to study the liquidity position of the firm. Ratio analysis has been used to analyze the financial position of a firm. It deals with analysis and interpretation of data collected through the sources of primary and secondary data. Graphs diagrams and tabulation methods are used to analyze and interpret the data collected. Methodology The data in this project is enabling in secondary in nature. Financial reports, company records, were referred for data analysis. The study has been undertaken by collecting relevant data from the balance sheets, profit and loss statements, operating statements of the company and financial tools were used in analyzing and interpretation of data. However, primary data is also collected by observation, discussing with company officials. This primary data is used to fill in the gaps while preparing this report, and to know the latest procedures adopted by the company. This helped me to draw inferences and conclusions.
METHODOLOGY OF DATA COLLECTION

Research methodology Research methodology is a systematic way for solving any research problem. It is a science of analyzing how research is done scientifically. It studies the various steps that are generally adopted by a researcher in studying the research problem.
Sources of Data There are two type of data Primary data Secondary data Primary data The primary data are those, which are, collected a fresh for the first time and thus happen to be original in character. The primary data collection involves the collecting of information for the first time by observation, experimentation and through questionnaire in the original form by the researching himself or his nominees. Such data are published by authorities who themselves are responsible for their collection. Secondary data The secondary data are those which have been collected by some other and which have been processed. Generally speaking secondary data are information, which have been previously collected by some organization to satisfy its own need. But the department under reference for an entirely different reason is using it.
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There are two main sources for secondary data. Published data Data that is already available in books, magazines, trade journals, newspapers, reports, prepared by research scholar etc. Unpublished data This is not published, it can be found in unpublished biographies, autobiographies, some governmental aspects, and private individual organization etc.
Limitations of the study The span of study is confined to only 3 years. The
comparison of various ratios may not have the same conditions, which may result in unrelated comparisons. The other limiting factor being the confidential in nature of
certain aspects. The study was conducted to the extent of information provided. Time constraint : It is not possible to study in detail the
finance operation of the company.
FINDINGS SHARE CAPITAL The authorized share capital of the company is Rs. 100,00,000 divided into 100000 equity shares of Rs. 100 each VEIW OF FINANCIAL POSITION Though the company is incorporated in the year of 2000 its actual commercial work stated in the year of 2003 April 1st The company had not started any business, so there is no question of profit in the year 2000 to 31st March 2003. But however as a first step towards the commencement of commercial activity the company has taken over the business of timing gear blanker on April 2003 2003-04 this year the company has started commercial activity by acquiring the building, plant & machinery from Divgi Metal ware Pvt. Ltd. , on an annual lease of Rs 9,00,000/- plus taxes Rs 51,750/-. Using these leased assets the company has carried out job work for Divgi Warner Pvt. Ltd. After expenses the company made a modest profit of Rs 3745/- before depreciation. But the depreciation was Rs 1,09,604/- ,so less in that year was Rs 1,05,858/-.
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With the automobile sector looking up DIPL have all confidence that in the coming years the company will turn the corner.
2004-05 in this year as made aprofit before depreciation Rs. 3, 36, 064/- so it result as follows Financial Results Year Ended Particulrs 31-3-2005 Rs. .. Profit/(Loss) Before Depreciation Less: Depreciation Profit/(Loss) for the year 3, 36, 064 1, 75, 159 .. 1, 60, 905
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Brought Forward Profit/(Loss) Balance Carried to Balance Sheet
1, 12, 393 .. 48, 512 ..
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Recommended Capabilities for Cash-Flow Tools A good cash-flow management system should be easy to use, offer flexible "what-if" and reporting options, and allow you to update projections once actual results are available. The importance of ease of use depends on how frequently you need to use your cash-flow management system. Many businesses will calculate and update their cash-flow projections monthly. A few small or cash-flush businesses may only need to look at it once a quarter. Larger companies, or ones walking a financial tightrope, may manage their cash daily. If you need to use your cash-flow tool often, you will learn its ins and outs and capabilities over time and become expert in its use. If you use the tool only occasionally, then it's very important that it be easy to use effectively, because you don't want to have to relearn a complex tool each quarter. The need for "what-if" scenarios is important for businesses that do not have easily predictable financial results due to the nature of their work. For example, cash flow may be highly dependent upon the timing of the signing of a large contract that provides an up-front payment. You would want to project cash flow scenarios both with and without the contract, to see your options. Since managing cash flow is a never-ending task, you'll usually want some way of easily updating your cash-flow
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projections from the last period to include this period's actual results as a basis for moving forward. A cash-flow tool that's integrated into your business accounting system will usually have this capability. Otherwise, look for a way to easily export your actual numbers from your accounting package and then import them into your cash-flow tool.
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Conclusion Each company struggles in the initial stage. But it recovers slowly. It does not happen suddenly itself. It takes time. While Divgi Industries Pvt. Ltd.(DIPL) is a developing company. It has bright future, because there is a wide scope for automobiles in the whole world. So there is no chance of decrease in demand for automobiles components and innovation in the area. DIPL is working at their best level. According to me company is utilizing local facilities effectively but company is not utilizing its plant & machinery and land & building fully. The workers, staff, and management people are conscious about their work and putting their full effort to see DIPL as a developed company. WHEN A PERSON IS CONSCIOUS AND SINCERE ABOUT HIS WORK HE WILL ACHIEVE THE GOAL.
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Introduction In 1997, the government has published the Mechanical industry Development Plan for the period 2000-2010 composed by Industrial Strategy and Policy Research Institute of Ministry of Industry. The Development Plan also provided guide line for the development of auto industry, both assembling and producing parts and components. Ever since, many policies to promote the development of mechanical industry in general and auto industry in particular has been promulgated. Priorities which auto parts and components producers may be entitled to includes The Daimio policy initiated in 1986 has given a extra development momentum for the whole economy in general and auto industry in particular. Fourteen foreign investors have been granted investment license in car assembling and manufacturing and about twice as much investment licenses have been granted to foreign auto component and spare parts investors. However, due to various hindrances, there are only 11 auto foreign-invested manufacturers currently working and a dozen component and spare parts foreign-invested manufacturers actually back up for auto industry (several other investors just provide components and spare parts for motorbike manufacturing thought they registered to produce components and spare parts for auto manufacturing), coexisting with the previously available domestic auto spare parts producers. These companies construct the backbone of Vietnam auto industry.
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As for foreign invested auto component and spare parts producers, most the projects are small scaled in relation with auto industry. These projects often assemble imported materials and export most of their products for auto manufactures in the region and only a small portion is for domestic consumption.
Demand for products is derived from two sources: components and spare parts for repair and maintenance of currently running vehicles and for production of auto manufactures (domestic and abroad). However, a considerable proportion of the operational vehicles has been in use for quite along time and is in need of overhaul or even replacement. Component and spare parts demand can be inferred from this pool. Auto manufacturers employ brand-new components and spare parts for their production and after-sale services. Only those satisfy the produces technical requirements and financially reasonable producers. For the purpose of assembling brand-new auto, complete sets of auto parts and components are imported. Local finish is just assembling, welding and painting. As mentioned above, such complete sets are imported from abroad factories of the suppliers. For example, complete set of auto parts for the assemble of
are
employed,
especially
for
foreign-invested
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TOYOTA are imported from other factories of TOYOTA in Japan, Indonesia, Australia, etc. The annual volume of import is based on the operation capacity of the investors and annual overall plan for import is approved by the Prime Minister. Parts and components for maintenance, repair and after sale services of such producers are also imported. These items are often distributed through authorized dealers network of the producers. Customers are mainly wealthy owners of brand-new auto who want origin parts and components of the maker to be sure that such replacements are compatible and meet the producer standards. Demand for parts and components for repair and
maintenance of currently operating vehicle is diversified. The restriction on import of secondhand auto parts and components whereas domestic production is still infant results in the fact that available separate parts and components for substitution in the market are second-hand ones which were knocked downed from other auto or smuggled.
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The volume of brand-new imported separate parts is inconsiderable. For most of auto currently in use in Vietnam are from CIS, South Korea and Japan, the separate auto parts and components are also originated from these countries. Whenever there is something breakdown, the owner may find second-hand substitution in open air markets or mechanical workshops, both private and State owned. Domestic auto parts and components producers are mainly State owned mechanical and chemical enterprises. These enterprises were established during the 60s and 70s with the assistance of East Europe socialist countries and China. The technology and machinery were also equipped ever since. As mentioned above, these enterprises produced some 25 type of external2 parts and components for autos made in socialist countries. No main parts of the engine or body-works were produced in large scale. Products followed socialist vehicle norms and standards therefore may mot compatible with auto made in other countries such as Japan, West Germany, USA, etc. The renovation of outdated machinery is not comprehensive and continually for lack of fund. Replaced machinery originated from difference sources and are not synchronous. This results in the inferior quality of products produced by these producers consequently. The constrain on the ability of providing qualified products for auto parts and components markets forces domestic mechanical
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to diversify their products. Though this solution allows them to maintain their operation but confused orientations drift them off specialization and producing qualified auto parts and components
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Company profile DIVGI INDUSTRIES PVT.LTD. is situated at the out skirts of the city SIRSI in Banavasi road. It is a medium scale engineering industry of prestigious city SIRSI. It is a place which is situated at the top of western ghats and is one of the famous city in North Canara. DIVGI INDUSTRIES PVT.LTD. (DIPL) is incorporated in the year of 2000.its actual commercial activities stared in April 2003. its registered office is in Sirsi (KARNATAK). It produces the finished and semi finished components of automobiles. It is certified with ISO/TS 16949 quality system in 2005 There is another one industry is situated in the same area DIVGI WARNERS PVT.LTD(DWPL) for which DIPL does the job work. Actually buildings and machineries are taken on lease basis from DIVGI METALWARES PVT.LTD. DIPL is produces automobile components likes companion flange, sun gear, shaft, yoke, etc Raw materials are comes from Divgi warners pvt. ltd.(Puna) to Divgi warners pvt. ltd.(Sirsi) Again these raw materials supplied DIPL from Divgi warners pvt.ltd.(Sirsi).After the job work on DIPLagain supplied to DWPL(Sirsi) after some value addition work these products are send to DWPL(Puna) for export
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(USA) and other customers like Mahindra & Mahindra, Telco, Tata ,etc There are 120 employees working in DIPL. The workers have shift basis work with specified target. The company is paying them a good salary and provide good facilities and motivational programs. DIPL is a developing company and has turnover near crore . DIPL doing a job work for DWPL but this year company is fetching new customer.
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VISION : To be catalytic and innovative organization in the society that supplies goods and services that are of superior value to those who use them; create jobs that provide meaning for those who do them , and offers our talents and wealth to help and reward all who invest in us their time money and trust GOALS : To become Indias prominent and perfect technology and in crate based solution provide in automotive transmission and power train application for on and off highway usage to achieve world class standard in spheres of our business activities. MISSION : Our mission is to assist our customer seek new frontiers of value for the continuously evolving needs of a globalizing market place in so doing ,we seek to bring unique distinctive and superior value to those who use our products and services .We seek to provide our customers a continuous sources of innovation by anticipating change and shaping it to our purpose.
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THE OBJECTIVES OF THE COMPANY: To manufacture, process, treat, buy sell import and export. Exchange after improve manipulate report prepare for market or otherwise deal in all kinds of automobile engineering components including their costing, by products joint there of and for the purpose do all the necessary process including machining champhering cutting, grinding, boaring, moving, as well as smelting, founding, melting, sintering, defining, making chaping shealing threating welding fabricating, extracting, foiling and finishing of the casting including any part derived as by product out of any of the above process in to finish component required for engineering industry in general and automobile industry in particular. To carry on the business of engineer contractors builders filters founders wire drawers galunisers enamollers electro platers. To own run manage and carry on the business of workshop or structure mechanical, ferrous, foundry, storage tanks, chimneys pressure vessels, fabricated items agriculture implements cycle parts pipes and fittings. To carry on the business as technic advisors, consultants for any other person or person inturned in or carrying or any of
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the business, as similar to or connected with the objects of the company for such consideration and on such terms and condition beneficial to the company.
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Board of directors Balachandra Narasighrao Divgi Puna Umesh Narasighrao Divgi Sirsi Jitendra Bhasker Divgi Sirsi Meera Ramrao Divgi Sirsi
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ORGANIZATION CHART
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COMPANY PRODUCTS Name range/weight 1 : YOKE Yoke Reg DC 1.5000 Kg Yoke Reg SC 1.5000 Kg Yoke Export DC Kg 2 : COMANION FLANGE 13-00-031-006-M Kg 44-00-031-009-B Kg 44-00-031-029-A Kg 44-00-031-030-A Kg 3 : SHAFT Lower output shaft (Reg) Kg
size
1.3000
1.0300 1.4500 1.6800 1.7500
0.8500
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Lower output shaft (Exp) Kg Upper output shaft 2.8760 Kg 4 : SUNGEAR Sun gear Kg
0.8500
0.6740
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COMPANY PROFILE WITH REFERANCE TO 7S MODEL OF McKINSEY Strategy The DIPL has a very systematic action .The organization is very systematic in all its operations. The allocation of resources are
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effectively done. This strategy is followed to achieve the companys aims Structure The organization structure is a very formal one. The department is structure is done in such a manner that it helps in the smooth running of the organization. The authority and responsibility relationships are formally structured. System The system may be in the production department, HR department, finance ,management representative , customer representative departments are very well organized . good control techniques are used in all the departments. Style Style refers to the way of managing labours and spends its time to achieve the organizational goals. The leading functions in DIPL is done effectively so that organizational goals are achieved. Staff The staff refer to the people in the enterprise and their socialization into the organizational culture. The staff of DIPL have perfectly adjusted with the organizational culture. Shared value This value helps the members in the organization to achieve effective goals. It helps in creating a favorable organizational
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culture by taking into consideration the goals of both the superiors and subordinates. Skills Skills in the 7S model refers to the distinctive capabilities of the organization. The DIPL is very effective in the achievement of quality systems. It is also been certified by International Organizational for Standardization. The organization doing extremely well in the domestic as well as international market.
The 7S McKinsey model
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General requirement Defining the process for quality management system to apply across the company. Defining the sequence and interaction of these process. Ensure both sequence and control of these process. Providing resources and information to operation and monitoring of these process. Monitor measure and analyze these process. Implement and achieve the planned results . Achieve the continual improvement of the processes. Control the outsourced processes that affect the product conformity with the requirements by identifying with the quality management. The company takes the responsibilities of conformity to all customer requirement out sourced processes. Ensure the above requirements are achieved in a accordance with ISO/TS 16949. The results shall be reviewed as necessary or determine further opportunities for improvement. Audits, customer feedback and review of the quality management system can also be considered as continual activity. The company shall be on improving the system and its ability to provide conforming product/services consistently. Reference :
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1. Procedure of control of quality records 2. Minutes of management review meeting 3. Procedure for corrective action 4. Procedure for preventive action 5. Procedure for internal audit 6. Procedure for control of non-conforming products
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Management commitments The top management demonstrate leadership with respect to quality though management Communicating to organization the importance of meeting customer as well as statutory and regulatory requirements. Establishing the quality policy objectives and providing resources Conducting management reviews Review product realization processes and support processes to ensure their effectiveness and efficiency The directors/CEO is not only committed to the development of system but also to the improvement and its effectiveness Customer focus The process determining customer requirements is being covered by the following procedures: Customer related process Planning of product realization Customer satisfaction
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The management is activity involved and ensures that these processes are actually working and the system is effective in promoting customer satisfaction through management review.
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Quality objectives
1. To continually enhance CUSTOMER SATISFECTION by
monitoring the CUSTOMER SATISFECTION INDEX 2. To improve PRODUCTIVITY achieve higher PROCESS CAPABILITIES with a focus to achieve ZERO DEFECT in all out business activities.
3. To achieve OPTIMUM INVENTORY LEVELS through ON
TIME PROCUMENT of quality materials at competitive prices.

4. To
improve
the
OVERALL
INVENTORY
EFFICTIVENESS.
5. To develop a motivated committed and effective team by
providing the necessary resources, good training programs and a congenial atmosphere for overall growth of the employees.
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QUALITY POLICY We at Divgi Industries Pvt. Limited are committed to pursue excellence, and enhance customer satisfaction through the process of continual improvement in all the spheres of our business activity.
We endeavor to achieve these goals through the development of standardized processes, measurable obj ect i ve s , a n d t h e si n c e r e and mot i va t e d involvement of all our people.
We
are
committed
to
creating
high
level
consciousness to defect prevention, reduction of data variation, and wastage minimization, in our continuous efforts to give our customer a complete defect and hassle-free experience.
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Continual improvement Continual improvement is part of our culture and way life of DIPL. It is a comprehensive and all compassing system of method and practice based on continual leaving to achieve sustain such maximize business success. It is driven by a close understanding of the customer, disciplined use of facts, data and analysis and deli gent attention to managing improving and investing where require our business process. To follow our vision to the future, we must see that differences between traditions that no longer serve us and have a courage to act on that knowledge we must be aiming the few who anticipate change and shape into our propose.
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CONTINUOUS IMPROVEMENT TARGET FOR - 2006 KEY PERFORMANCE INDICATOR SI No. 1 2 KPI MATERIAL YIELD IN HOUSE REJECTION TARGET 99.20% 0.040%
3 4
MANUFACTURING EFFECTIVENESS RIGHT FIRST TIME
82.00% 99.82%
UNSCHEDULED DOWN TIME
1.40%
OVERALL EQUIPMENT EFFECTIVENESS ON TIME DELIVERY
82.00%
100.00%
44
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SAFETY RULES AND REGULATIONS: Safety is a very important factor that has to be considered at the shop floor. The workers working at the shop floor must take precautions for the purpose of the machines, material and themselves. If precautions are not observed by employees, the chance of accident will increase and this will result in the loss of machinery and the injury to workmen who may lead to disability or even death in measure cases. Hence, it is necessary to the company to keep a close vision on safety precautions. In Divgi industries, efforts or taken by the management for sector of chargemen and other leading hands putting efforts for safety. Various posters are pasted on the walls, shop floors and near the punch card clocks showing the importance of safety, employees engaged on shop floor are provided with safety goggles, hand gloves, etc. Company has got important of returns regarding observance of safety. As a company has sufficient land, care has been taken for more space in the workshop and ample apace is left around the machine for the workers to move freely. In addition to this, the shops are properly maintained with proper ventilation, lighting etc. in the department where thers is direct contact with the electricity proper has been taken.
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Thus the company has got better policy maintaining safety. This policy has been made not just for the sake of provison a Factory Act 1948, but to keep its work force away form any accidents or mishaps. If in case the accident occurs sufficient medical provisions are made. In this way, almost care is being taken by DIPL for the employees safety. WORKERS PARTICIPATION IN MANAGEMENT: There is no provision of workers participation in management in DIPL but the beneficial suggestions are always welcomed by management. If the suggestion are truly beneficial to the company then the same are awarded accordingly. Communication: This is very effective, tere is very less communication gap between management and the employees. Weekly meeting are conducted for senior management level, twice a month meetings are held for supervisors and for workers notices are put on the notice board in evrery dept. in case of any problems workers can directly communicate to top management or through supervisioors. Communication system is upword aswell as downword which reduces problems and increases productivity of the company.
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Welfare Facilities Provided by DIPL (As per the factory act 1948) Statutory welfare facilities. Non-statutory welfare facilities 1) Provisions Regarding health and Safety: ( Cleanliness section 11 ) The company is kept clean by daily sweeping and washing the floors. The company has 3 sweepers. The effective arrengments are made to dispose off the waste and efficient According to the settlement signed by the management and employees it is agreed that all workmen will keep their machines and work area absolutely clean and maintain orderliness in the area around working place.
This company provides all sort of safety equipment and all safe working condition as required by the factory Act 1948. Employees engaged in shop are provided with safety shares and hand gloves, safety goggles, ear muffs, safety belts etc. The company has also provided fire fighting equipments.
2) Ventilation and Temperature: ( Sec. 13 )
Suitable arrangement are made to ensure ventilation and working temperature with the help of sufficient number of
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windows, exhaust and cross ventilation. The temperature is kept nearly constsnt with the effective measures at the working place. 3) Dust and Fumes: ( sec 14 ) This company is immune to the dust and as a results of adoption of modern technique to over come this factors. 4) Light : ( sec 17 ) Every part of the company is provided with sufficient and suitable lighting both natural and artificial. Glazed windows and sky light are used for lighting work rooms. Effective provisions are made to prevent glare and formation of shadows to such an extent so as to avoid strain. 5) Drinking water : ( sec 18 ) The company has provided a clean drinking water facility to all employees. The water tank is kept in clean and hygienic condition. There are big clay pots fitted with tops in every section of the company.
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6) Latrines and Urinals : ( sec 19 ) Sufficient latrines and urinals are provided which are
conveniently situated and accessible to workers at all the times .these are cleanly maintained and are in good conditions. 7) washing Facilities:- [ Sec 42] The company has provided adequate and suitable washing facilities as per the factories Act 1948. the number of taps and basions are sufficient other things like soap towels are provided . 8) First Aid application and dispenssry:The company has proided first aid boxes in every dept.and they are checked periodically by the authorised person .Being a light engineering company accidenta rate is very low. If an accident arise the injuried person is taken to Rotary Hospital Sirsi [ there is agreement between and the hospital ]. 9) Canteen : [ Sec 46 ] Free canteen facilites are proided for employees. The canteen proides the worker with break fast ,tea,and lunch. 10) Welare Officer :- [ Se 49] As vper the reqirements the company has appointed the HRD officer in 3 shifts. Each employee works for 8 hours a day. Sunday is a weekly holiday.
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A break of half an hour is givan in each shift. The office staff work in a general shift of 9am to 5pm. 1.General shift 2.First shift 3. Second shift 4. Third shift 9 am to 5 pm 7.30am to 4 pm 4 pm to 12.30 am 12.30 am to 7.30 am
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12.
Leave / Paid holidays :
An employ in the company enjoys different types of leave which are as follows: a) Earned leave:- 15 days for first 240 days. b) Casual leave:- 7 days per year. c) Sick leave 10 days for those who are not covered by E.S.I.C and 4 days for those covered by E.S.I.C. Paid holidays: The company has sanctioned paid holidays through out the year which are as follows:1. Republic day 26th January
2. Karnataka Rajyotsava Ist November

3. independence day 15th August
4. Vijaya Dashami 5. Anant chturdasi 6. Diwali 13) Other statutory welfare benefits:-
The company provides all other statutory benefits like gratuity bonus as per rules laid down in their following acts. Gratuity: - It is paid as per the gratuity Act 1972 and it is also linked with the life insurance corporation of India.
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Bonus: - Bonus is paid according to the settlement. Usually 8.33% per annum is paid.
B. Non statutory facilities:1. Pay scales and Allowances:As per settlement signed between workers and management. 2. Financial assistance to perform last rites of Death: If an employee dies while in service his/her immediate family member is given Rs 4000/- as emergency assistance to the performance of last rites.
3. Transport The company has 3 cars, tempo and jeeps for its purpose which is managed by the transport department of the company. 4. Lons and Advances: Advances are given by the company to its employees but it depends upon the situation and the management decision. 5. Leave Travel allowances:
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The company pays Rs 830.00 per annum as leave travel allowances to its employees who fulfill attendance i.e. not less then 240 days. 6. Uniform: The company issues two pairs of dress per person per year. The company also issues one pair of safety shoes.
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7. Training:
Training is given to the employees inside a well as outside the factory according to the training needs. I T I/ Diploma holders are given practical training after being recruited apart from that at intervals especially when new machines are installed. 8. Promotion: Every employees has an opportunity for promotion. Usually promotion are awarded to employees according to their respective work. Which is based on qualities. Certain facts are considered .. persons are liable for promotions. a) b) c) d) Responsibility Sincerity Quality of work Attendance However seniority as well merit is considered according to the performance. There is performance appraisal. PLANT LOCATION:
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Ideal plan location is important a business activity. Plant location decision being strategic long term and non repetitive require detailed analysis of long term consequences.
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Factors governing plant location. Regional factors Community factors Site factors Regional factors:- Decide the overall area within the country , proximity to markets, proximity to source of raw materials, availability of utilities, transport facilities, climatic condition, industrial and taxation laws. Community factors:Community factors influences
selection of the plant location within the region such factors are; availability of labour, industrial and labour attitudes,social structure, service facilities etc. Site factors:- Site factors favour specific site within the community. Such factors are, availability and cost of the land, suitability of the land etc.
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INFRASTRUCTURE FACILITIES: Infrastructure facilities consider availability of utilities like power water, disposal of west etc. Power:- It is one of the useful need of the industry, which helps the organization to maintain his productivity Divgi industries Pvt Ltd sanctioned power of 750 KVA AR with an independent transformer. The unit also having a generator of 250 KVA to ensure continuity of production even at the if power failure. Water:- The requirement of waters is main for human consumption and to some extend for processing. The water requirement will be more than 1500 liters per day. The location has very good water facility. Fuel:- In Divgi industries Pvt Ltd they use the diesel in the generator. They have the generator of high capacity. That is 250 KVA for which the fuel is consumed more i.e 17 liters of diesel for one hour.
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LEGISLATION AND TAXATION: The policies of the state government and local bodies relating to issue of licenses, building codes, labour laws etc. are the factors in selecting rejecting a particular community site.
CLASSIFICATION OF EMPLOYEES : 1. 2. 3. 4. Permanemt Probationery Casual Apprentice Permanent employee : Permanent employee is one who has been emerged on a permanent basis and includes any person also has satisfactorily completes a probationary period of not less then three months in the same an onother accupation in the establishment including breaks due to sickness, accident, leave, lockout, strike,(not seeing an illegal strike) or involuntary closure of the establishment. Probationer : Is an employee who is provisionally engaged to fill a permanent cacancy in post and has not completed three months services there in. If a permanent employee is employed as a probationer in a new post , he may at any time during the
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probationary period be reverted back to his old permanent post. Absence on side leave or due to accident or any other reason shall not be included in computing probationary period. Casual worker : Is a work man whose employment is of casual nature. Apprentice : Is a learner who is paid an allowance during the period of training.
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JOB DESCRIPTION Chief Executive Officer: 1) To Plan operation delegate duties appropriately to his subordinates, and coordinate their work on a day to day as well as long range basis to reach his units objectives. 2) To appreciate the changing conditions and trends affecting the work of his unit and the services it should render. 3) To select appropriate personnel for specific assignments. 4) To direct the work of his immediate subordinates which require the ability to understand thoroughly their work and guide them. 5) To stimulate, motivate and lead his subordinates with a view to secure their interested and willing participation towards achieving the common goals of the unit and the enterprise. 6) To supervise, follow up, and appraise the performance of his subordinates. 7) To interview subordinates, obtain information from them and get them to express their interests and attitudes. 8) To develop his subordinates to better efforts.
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9) Technical skills to accomplish the mechanic of the particular job. 10) Human skills to build team spirit as a leader,
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Production In charge: 1) To initiate and set up procedures to ensure that quality of the production is maintained up to the standards. 2) To discuss and finalize with concerned personnel the fortnightly production plans. 3) To Ensure that the various section maintain their production and delivery schedules. 4) To Ensure that production requirements are met with on time. 5) To decide and give overtime working when production not met with customer requirement. 6) To sort out problems encountered during regular production and solve the same with advice and help of service depts., if necessary. 7) To attend the Technical committee meeting and report the technical problems incurred during routine production. 8) To ensure production related machines & other equipments are in always good condition.
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9) To ensure that there is a general cleanliness and orderliness throughout the manufacturing as well as storage and other facility areas. 10) staff To ensure that there is a general discipline and as far
as possible a feeling of well-being among the production
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Quality Assurance Officer: 1) To prepare the Quality Plan for the finished products. 2) To ensure that all incoming materials, in process, & finished products for production are inspected and rested in accordance with the established procedures. 3) To approve and release the finished product for dispatch to the customer. 4) To ensure that the relevant inspection records are maintained at appropriate stages of inspection. 5) To ensure calibration of monitoring and measuring devices at defined frequency. 6) To implement the Measurement System Analysis & Statistical process control techniques appropriately. 7) To hold production, in the event major deviation pertaining to quality systems is observed on the production line.
Stores Officer: 1) To ensure proper storage of inventories in the Stores. 1) To ensure that proper inventory levels are maintained. 2) To issuing the materials for production on FIFO system. 3) To maintaining & updating the stock registers. 4) To prepare DCs of finished goods, & ensure that the finished goods are delivered to the customer with proper dispatch documents.
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Purchase officer: 1) To evaluate the Sub contractors for out sourced components only 2) To prepare & maintain approved suppliers list, & ensure the purchases are made from the approved suppliers. 3) To ensure that the purchased materials are in accordance with the POs. 4) To interact with, stores, production, & maintenance departments before finalizing the POs, and prepare the POs. 5) To periodically monitor the supplier through supplier rating.
Officer maintenance
1) To
planned
maintenance,
breakdown
maintenance,
predictive & preventive maintenance of machines. 1) To maintain the relevant maintenance records. 2) To ensure the proper inventory of critical spare parts are maintained. 3) To ensure that while ordering spare/parts proper specifications, are clearly specified in the POs And further confirm the incoming materials ordered by his department
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are in accordance with their specifications, and authorized to clear the GRRs for such materials.
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Officer Personnel:
1) Maintaining contacts with the Factory Inspectors, Labour
Inspectors and Act, and other govt. authorities. Representing the Company before the Conciliation Authorities 2) Counseling and assisting employees in regard to personal difficulties and problems affecting ability and contentment in work. 3) To collect the training needs from the respective departments of the company 4) To prepare annul training plan. 5) To arrange the faculties for training to meet the training to meet the training topic needs. 6) To keep training records. 7) To evaluating the training, trained employees in consultation with faculty and concerned Dept. head. 8) Ta maintain the records of each employee. 9) To recruitment of the new employee in consultation with the department heads & C.E.O./Manager. Management Representative:
1) To
ensure the management policies & control are
understood,
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implemented and maintained in accordance with Quality std, requirements. 2) To issue & withdrawal of quality system documents. 3) To conduct internal quality audits & liasoning audits. 4) To conduct Management reviews. 5) To monitoring appropriate action for system nonconformities. 6) To maintain the department records. external
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Customer Representative:
1) To interacting with customer on special characteristics &
communication the details of interaction in the concerned personnel of his company and collecting the customer information 2) To take concession on specification/manufacturing processes. 3) To interacting with customer for delivery schedules & on time delivery of products to the customer. 4) To take the resolving customer complaints. Operators: 1) To take instruction from Supervisors/in charge about the machine to be operated, & job to be machined. 2) To follow the work instructions & process flow diagram. 3) Monitor the process by given instruments & documents. 4) Keep separately rework/rejected jobs with proper identification. 5) End of the shift fill the production detail in necessary documents. 6) Inform Production in charge in case of machine break down. 7) Stop production in consultation with Prod. In charge / Quality inspector, if improper deviation observed in the job.
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JOB WORK In this system, goods are produced according to the customers orders. Continuous orders will be there from the customer and when ever orders are received, the job will be taken up for the production. This is also known as Market Order Business. As the need of each customer varies the materials and machinery will also be differ. Each job is different, distinct and support class by itself. The cost of the items produced by this method will therefore be higher than the cost of the similar items produced in mass production bases.
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Brief view of departments Production DIPL produces different types of components which are used in gearbox of the automobiles. like, sun gear, companion flange, yoke, shaft For different products there are many in chargers ,who carried out production through workers. When job work comes, production in chargers , operators, supervisors together make the schedule for the work. The raw materials are in the forging form. After they have to under go mainly 4 process. 1 Rough turn 2 Finish turn 3 Broaching 4 Drill tap These process are carried out separately for both the sides. Water soluble, oils are used as a coolant which increases the life of the machines. Quality assurance The quality assurance department is specially meant for final approval. It is responsible for verification of products. After the approval from this department , only the final products are supplied to customer. The company is certified with ISO/TS16949 quality system guidelines and improves its effectiveness.
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Functions: Monitoring the process continuously to ensure that suitable product parameters are in compliance with the established requirement.
Approving process, equipment, personnel for maintaining records of qualified and special process.
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Maintenance This department is essential in all production organizations which is mainly concerned with the machine work. The machinery maintenance is one of the part of day to day work. Function Look after the day to day maintenance of the machinery To purchase the parts that may require for the maintenance To keep the machineries in good condition every day To make the repairs of the machineries Stores It is responsible to ensure proper storage of inventories in the store It is responsible to ensure that proper inventory levels are maintained It is responsible and authorized for issuing the materials for production on FIFO method It is responsible for maintaining and updating the store register It is responsible to prepare DCs of finished goods and ensure that the finished goods are delivered to the customer with proper dispatch documents. Personal department
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Human
resource is
our valuable
asset.
So
proper
management of this asset is very important. This department involves 2 types of functions Regulatory functions: Maintain attendance register and wages register in form no 22 Maintain adult register in form no 11 Maintain leave book of employees Collect provided fund amount i.e.12%
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Administrative functions: Safety and cleaning of premises Recruitment Training and development programs for all the departments Prepare annual training report, performance appraisal Management representative It is responsible for the total quality programs and shall have authority and freedom for ensuring. The management policies and control are understood implemented and maintained in accordance with ISO/TS16949 Customer representative This department is responsible to ensure customer
representative are communicated to appropriate departments and fulfill the special characteristics, setting quality objective, conduct related training programs. Also responsible to take corrective and preventive actions, product design & development. Most important function is handling the customer related issue. Finance Finance is essential component of the business. To maintain this
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effectively a specialized department is there i.e. FINANCE DEPARTMENT. This department is concerned with the day to day financial activities like purchase, sale, payments, receipts etc. It properly manages the accounts of concerned year.
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Functions Day to day cash /bank transactions Recovering Bills passing and payments Recording of all the transactions in books of A/Cs Preparation of cash flow statement budget Providing various types of management information reports required by the management from time to time Carry out auditing Main sources of income

Labour charges from DWPL From the sale of scrape which is available during the time of production From dividend of share Current customer for scrape
Southern Ferro India Pvt. Ltd. M.S.P.Division 173 Belur Industrial estate Dharwad First steel Traders Hubli
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CASH MANAGEMENT INTRODUCTION Cash is the important current asset operations of the business. Cash is basic input needed to keep the business running on a continuous basis; it is also the ultimate output expected to be realized by selling the service or product manufactured by the firm. The firm should keeps sufficient cash, neither more nor less. Cash shortage will disrupt the firms manufacturing operation while excessive cash will simply remain idle, without contributing anything toward the firms profitability. Thus, a major function of the financial manager is to maintain a sound cash position. Cash is the money which a firm can disburse immediately without any restriction. The term cash includes coins, currency and cheques held by the firm, and balances in its bank accounts. Some times near-cash items, such as marketable securities or bank times deposits, are also included in cash. The basic characteristic of nearcash assets is that they can readily be converted in to cash. Generally, when a firm has excess cash, it in marketable securities. This kind of investment contributes some profit to the firm.
Cash flow isn't the same as profit and loss. Believe it or not, a company can be profitable while experiencing cash flow problems that drive it to bankruptcy.
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Profit is an accounting term, which includes non-cash items and estimates. Cash flow is a less forgiving number with a harder edge that factors in payments and expenditures. If your sales are profitable, but you need to need to invest millions in new plant and equipment to make the products you sell, cash flow may not be a pretty sight.
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Another fallacy: Cash is not the balance in your business bank account. Your cash balance in your accounting books needs to cover checks you have issued which have not yet been paid by your bank. You may have customer payments in hand, checks and bank drafts, which have not yet been deposited in your bank. That's cash, too, even though you can't bank on it. Where does cash come from, asked the little boy? For most businesses, a major source of cash comes from sales to customers. It's not necessarily a direct path, though. Many businesses extend credit to customers, so the sale hangs around as an account receivable, preferably for as short a time as possible, before the customer sends payment for the purchase and the receivable converts to good old cash. Cash can also come from financing activities, such as a bank loan or an investment by the business owners. Where does cash go? Just about where you would expect: to pay suppliers and employees and investments in plant and equipment. It may also be used to repay debt or provide an investment return to owners. Cash flow can be more difficult to predict than profit and loss, particularly for smaller businesses that are dependant on a few large customers. You may be able to estimate when you will close a sale and earn the profit. But you may have little control over when your customers pay you and the cash comes in.
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Typically, a business has more control over its cash payments than its cash receipts. Granted, your employees expect to receive their pay on payday. However, you may be able to stretch the time you take to pay your trade suppliers within reason, of course.
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"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." - Charles Dickens (David Copperfield) Victorian author Charles Dickens deftly summarized the importance of positive cash flow 150 years ago. Today, cash flow is still the lifeblood of any business. Like it or not, cash is how business keeps score. If you don't have enough cash on hand, you can't pay your suppliers, your employees, or your financers. Without sufficient cash, you'll go out of business soon enough. Cash flow is the flow of spendable money into your business and back out again. You may have sold tons of goods and have a fistful of invoices to show for it. But you can't spend those invoices directly you can't pay your employees with them come payday, nor your suppliers when you're ready to make a new batch of widgets. It's when you are on a deadline to pay cash out, but your cash in hasn't showed up yet, that you are in cash-flow-crunch hell. Yet managing your cash flow can be a tricky business, and your business policies regarding, for example, how you extend credit to your customers, how many customers you have, and how quickly they pay, all can combine to make it too complex to track in your head. When it gets this complicated, smart business
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managers turn to computerized tools to help them get a handle on the process, the risks, and the opportunities. In this All Business.com Buyer's Guide, we provide a backgrounder on cash-flow concepts, an overview of software tools for managing cash flow, and some tips about which policies you've got to keep an eye on if you expect to stay out of unanticipated trouble.
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FACETS OF CASH MANAGEMENT Cash management is concerned with the managing of: (i) cash flows into and out of the firm, (//) cash flows within the firm, and (Hi) cash balances held by the firm at a point of time by financing deficit or investing surplus cash. It can be represented by a cash management cycle as shown in the bellow figure. Sales generate cash which has to be disbursed out. The surplus cash has to be invested while deficit has to be borrowed. Cash management seeks to accomplish this cycle at a minimum cost. At the same time, it also seeks to achieve liquidity and control. Cash management assumes more importance than other current assets because cash is the most significant and the least productive asset that a firm holds. It is significant because it is used to pay the firm's obligations. However, cash is unproductive. Unlike fixed assets or inventories, it does not produce goods for sale. There-fore, the aim of cash management is to maintain adequate control over cash position to keep the firm sufficiently liquid and to use excess cash in some profitable way. Cash management cycle
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The management of cash is also important because it is difficult to predict cash flows accurately, particularly the inflows, and there is no perfect coincidence between the inflows and outflows of cash. During some periods, cash outflows will exceed cash inflows, because payments for taxes, dividends, or seasonal inventory build up. At other times, cash inflow will be more than cash payments because there may be large cash sales and debtors may be realised in large sums promptly. Cash management is also important because cash constitutes the smallest portion of the total current assets, yet management's considerable time is devoted in managing it. In recent past, a number of innovations have been done in cash management techniques. An obvious aim of the firm now-a-days is to manage its cash affairs in such a way as to keep cash balance at a minimum level and to invest the surplus cash in profitable investment opportunities.
In order to resolve the uncertainty about cash flow prediction and lack of synchronisation between cash receipts and payments, the firm should develop appropriate strategies for cash management. The firm should evolve strategies regarding the following four facets of cash management:
Cash planning - Cash inflows and outflows should be planned
to project cash surplus or deficitfor each period of the planning period. Cash budget should be prepared for this purpose.
Managing the cash flows - The flow of cash should be
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properly managed. The cash inflows should be accelerated while, as far as possible, the cash outflows should be decelerated.
Optimum cash level - The firm should decide about the
appropriate level of cash balances. The cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balances.
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Investing surplus cash - The surplus cash balances should be
properly invested to eam profits. The firm should decide about the division of such cash balance between alternative short-term investment opportunities such as bank deposits, marketable securities, lending. The ideal cash management system will depend on the firm's products, organisation structure, competition, culture and options available. The task is complex, and decisions taken can affect important areas of the firm. For example, to improve collections if the credit period is reduced, it may affect sales. However, in certain cases, even without fundamental changes, it is possible right bank and controlling the collections properly. M O T IV E S F O R H O L D IN G C A S H The firm's need to hold cash may be attributed to the following three motives, to significantly reduce cost of cash management system by choosing a or intercorporate
The transactions motive The precautionary motive The speculative motive. Transaction Motive
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The transactions motive requires a firm to hold cash to conduct its business in the ordinary course. The firm needs cash primarily to, make payments for purchases, wages and salaries, other operating expenses, taxes, dividends etc. The need to hold cash would not arise if there were perfect synchronisation between cash receipts and cash payments, i.e., enough cash is received when the payment has to be made. But cash receipts and payments are not perfectly synchronised.
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For those periods, when cash payments exceed cash receipts, the firm should maintain some cash balance to be able tomake required payments. For transactions purpose, a firm may invest its cash in marketable securities. Usually, the firm will purchase securities whose maturity corresponds with some anticipated payments, such as dividends, or taxes in the future. Notice that the transactions motive mainly refers to holding cash to meet anticipated payments whose timing is not perfectly matched with cash receipts. Precautionary Motive The precautionary motive is the need to hold cash to meet contingencies in the future. It provides a cushion or buffer to withstand some unexpected emergency. The precautionary amount of cash depends upon the predictability of cash flows. If cash flows can be predicted with accuracy, less cash will be maintained for an emergency. The amount of precautionary cash is also influenced by the firm's ability to borrow at short notice when the need arises. Stronger the ability of the firm to borrow at short notice less the need for precautionary balance. The precautionary balance may be kept in cash and marketable securities. Marketable securities play an important role here. The amount of cash set aside for precautionary reasons is not expected to earn anything; therefore, the firm should attempt to earn some profit on it. Such funds should be
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invested in high-liquid and low-risk securities and relatively less in cash. Speculative Motive
marketable securities.
Precautionary balance should, thus, be held more in marketable
The speculative motive relates to the holding of cash for investing in profit-making opportunities as and when they arise. The opportunity to make profit may arise when the security prices change.
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The firm will hold cash, when it is expected that interest rates will rise and security prices will fall. Securities can be purchased when the interest rate is expected to fall; the firm will benefit by the subsequent fall in interest rates and increase in security prices. The firm may also speculate on materials' prices. If it is expected that materials' prices will fall, the firm can postpone materials' purchasing and make purchases in future when price actually falls. Some firms may hold cash for speculative purposes. By and large, business firms do not engage in speculations. Thus, the primary motives to hold cash and marketable securities are: the transactions and the precautionary motives. CASH PLANNING Cash flows are inseparable parts of the business operations of firms. A firm needs cash to invest in inventory, receivable and fixed assets and to make payment for operating expenses in order to maintain growth in sales and earnings. It is possible that firm may be making adequate profits, but may suffer from the shortage of cash as its growing needs may be consuming cash very fast. The cash poor' position of the firm can be corrected if its cash needs are planned in advance. At times, a firm can have excess cash with it if its cash inflows exceed cash outflows. Such excess cash may remain idle. Again, such excess cash flows can be anticipated and properly invested if cash planning is resorted to. Thus, cash planning can help to anticipate the future cash flows and needs of
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the firm and reduces the possibility of idle cash balances (which lowers firm's profitability) and cash deficits (which can cause the firm's failure).
Cash planning is a technique to plan and control the use of cash. It protects the financial condition of the firm by developing a projected cash statement from a forecast of expected cash inflows and outflows for a given period.
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The forecasts may be based on the present operations or the anticipated future operations. Cash plans are very crucial in developing the overall operating plans of the firm. Cash planning may be done on daily, weekly or monthly basis. The period and frequency of cash planning generally depends upon the size of the firm and philosophy of management. Large firms prepare daily and weekly forecasts. Medium-size firms usually prepare weekly and monthly forecasts. Small firms may not prepare formal cash forecasts because of the non-availability of information and small scale operations. But, if the small firms prepaid cash projections, it is done on monthly basis. As a firm grows and business operations become complex, cash planning becomes inevitable for its continuing success. Cash Forecasting and Budgeting
Cash budget is the most significant device to plan for and control cash receipts and payments. A cash budget is a summary statement of the firm's expected cash inflows and outflows over a projected time period. It gives information on the timing and magnitude of expected cash flows and cash balances over the projected period. This information helps the financial manager to determine the future cash needs of the firm,
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plan for the financing of these needs and exercise control over the cash and liquidity of the firm.' The time horizon of a cash budget may differ from firm to firm. Monthly cash budgets may be prepared by a firm whose business is affected by seasonal variations. Daily or weekly cash budgets should be prepared for determining cash requirements if cash flows show extreme fluctuations. Cash budgets for a longer intervals may be prepared if cash flows are relatively stable.
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Cash forecasts are needed to prepare cash budgets. Cash forecasting may be done on short or long-term basis. Generally, forecasts covering periods of one year or less are considered short-term; those extending beyond one year are considered long-term. Short term forecasts It is comparatively easy to make short-term forecasts. The important functions of carefully developed short-term cash forecasts are: To determine operating cash requirements To anticipate short-term financing To manage investment of surplus cash. The short-term forecast helps in determining the cash requirements for a predetermined period to run a business. If the cash requirements are not determined, it would not be possible for the management to know how much cash balance is to be kept in hand, to what extent bank financing be depended upon and whether surplus funds would be available to invest in marketable securities. To know the operating cash requirements, cash flow projections have to be made by a firm. As stated earlier, there is hardly a perfect matching between cash inflows and outflows. With the short-term cash forecasts, however, the financial manager is
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enabled of the firm.
to
adjust
these
differences
in
favour
It is well known that, for their temporary financing needs, most companies depend upon banks.
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One of the significant roles of the short-term forecasts is to pinpoint when the money will be needed and when it can be repaid. With such forecasts in hand, it will not be difficult for the financial manager to negotiate short-term financing arrangements with banks. This in fact convinces bankers about the ability of the management to run its business. The third function of the short-term cash forecasts is to help in managing the investment of surplus cash in marketable securities. A carefully and skillfully designed cash forecast helps a firm to: (0 select securities with appropriate maturities and reasonable risk, (//) avoid over and underinvesting and (Hi) maximise profits by investing idle money. Short-run cash forecasts serve many other purposes. For example, multi-divisional firms use them as a tool to coordinate the flow of funds between their various divisions as well as to make financing arrangements for these operations: These forecasts may also be useful in determining the margins or minimum balances to be maintained with banks. Still other uses of these forecasts are, Planning reductions of short and long-term debt Scheduling payments in connection with capital expenditures programmes Planning forward purchases of inventories Checking accuracy of long-range cash forecasts
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Taking advantage of cash discounts offered by suppliers Guiding credit policies.
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Short-term Forecasting Methods Two most commonly used methods of short-term cash forecasting are: The receipt and disbursements method The adjusted net income method. The receipts and disbursements method is generally employed to forecast for limited periods, such as a week or a month. The adjusted net income method, on the other hand, is preferred for longer durations ranging between a few months to a year. Both methods have their pros and cons. The cash flows can be compared with budgeted income and expense items if the receipts and disbursements approach is followed. On the other hand, the adjusted income approach is appropriate in showing a company's working capital and future financing needs.
Receipts and disbursements method - Cash flows in and out in most companies on a continuous basis. The prime aim of receipts and disbursements forecasts is to summarise these flows during a predetermined period. In case of those companies where each item of income and expense involves flow of cash, this method is favoured to keep a close control over cash.
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Three broad sources of cash inflows can be identified: (i) operating, (//) non-operating, and (Hi) financial. Cash sales and collections from customers form the most important part of the operating cash inflows. Developing a sales forecast is the first step in preparing a cash forecast. All precautions should be taken to forecast sales as accurately as possible. In case of cash sales, cash is received at the time of sale. On the other hand, cash is realised after sometime if sale is on credit. The time in realising cash on credit sales depends upon the firm's credit policy reflected in the average collection period.
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The virtues of the receipt and payment methods are: It gives a complete picture of all the items of expected cash flows. It is a sound tool of managing daily cash operations. This method, limitations:
Its reliability is reduced because of the uncertainty of cash
however,
suffers
from the following
forecasts. For example, collections may be delayed, or unanticipated demands may cause large disbursements. It fails to highlight the significant movements in the working capital items.
Adjusted net income method This method of cash forecasting involves the tracing of working objectives of the adjusted net income approach are: (/) to project the company's need for cash at a future date and (//') to show whether the company can generate the required funds internally, and if not, how much will have to be borrowed or raised in the capital market. The benefits of the adjusted net income method are:
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capital
flows. It is sometimes called the sources and uses approach. Two
It highlights the movements in the working capital items, and thus helps to keep a control on a firm's working capital. It helps in anticipating a firm's financial requirements. The major limitation of this method is: It fails to trace cash flows, and therefore, its utility in controlling daily cash operations is limited.
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Sensitivity Analysis One useful method of getting insights about the variability of cash flows is sensitivity analysis. A firm can, for example, prepare cash budget based on three forecasts; optimistic, most probable and pessimistic. On the basis of its experience, the firm would know that sales can decrease at the most by 20 per cent under unfavourable conditions as compared to the most probable estimate. Thus, cash budget can be prepared under three sales conditions. A knowledge of the outcome of extreme expectations will help the firm to be prepared with contingency plans. A cash budget prepared under worst conditions will prove to be useful to the management to face those circumstances. L o n g -te r m C a sh F o r e c a stin g Long-term cash forecasts are prepared to give an idea of the company's financial requirements in the distant future. They are not as detailed as the short-term forecasts are. Once a company has developed long-term cash forecast, it can be used to evaluate the impact of, say, new-product developments or plant acquisitions on the firm's financial condition three, five, or more years in the future. The major uses of the long-term cash forecasts are,
It indicates as company's future financial needs, especially for
its working capital requirements.

It helps to evaluate proposed capital projects. It pinpoints the
cash required to finance these projects as well as the cash to be

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generated by the company to support them.

It helps to improve corporate planning. Long-term cash forecasts
compel each division to plan for future and to formulate projects carefully. Long-term cash forecasts may be made for two, three or five years. As with the short-term forecasts, company's practices may differ on the duration of long-term forecasts to suit their particular needs.
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The short-term forecasting methods, i.e., the receipts and disbursements method and the adjusted net income method, can also be used in long-term cash forecasting. Long-term cash forecasting reflects the impact of growth, expansion or acquisitions; it also indicates financing problems arising from these developments. MANAGING DISBURSEMENTS CASH COLLECTIONS AND
Once the cash budget has been prepared and appropriate net cash flow established, the financial manager should ensure that there does not exist a significant deviation between projected cash flows and actual cash flows. To achieve this, cash management efficiency will have to be improved through a proper control of cash collection and disbursement. The twin objectives in managing the cash flows should be to accelerate cash collections as much as possible and to decelerate or delay cash disbursements as much as possible. Accelerating Cash Collections A firm can conserve cash and reduce its requirements for cash balances if it can speed up its cash collections. The first hurdle in accelerating the cash collection could be the firm itself. It may take a long time to process the invoice. A day taken to get the invoice to buyers adds to order processing
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delay. In India, yet another problem is with regard to the extra time enjoyed by the buyers in clearing of bills; particularly, the government agencies take time beyond what is allowed by sellers in paying bills. Cash collections can be accelerated by reducing the lag or gap between the time a customer pays bill and the time the cheque is collected and funds become available for the firm's use.
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The amount of cheques sent by customer which are not yet collected is called collection or deposit float. Within this time gap, the delay is caused by the mailing time, i.e. the time taken by cheque in transit and the processing time, i.e., the time taken by the firm in processing cheque for internal accounting purposes. This also depends on the processing time taken by the bank as well as the inter bank system to get credit in the desired account. The greater the firm's deposit float, the longer the time taken in converting cheques into usable funds. In India, these floats can assume sizeable proportions as cheques normally take a longer time to get realised than in most countries. An efficient financial manager will attempt to reduce the firm's deposit float by speeding up the mailing, processing and collection times. How can this be achieved? A firm can use decentralized collection system and lock-box system to speed up cash collections and reduce deposit float. Decentralised Collections A large firm operating over wide geographical areas can speed up its collections by following a decentralised collection procedure. number of A decentralised collection collection instead procedure, of a called single concentration banking in USA, is a system of operating through a centres, collection centre centralised at the firm's head office. The basic purpose of the decentralised collections is to minimise the lag
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between the mailing time from customers to the firm and the time when the firm can make use of the funds. Under decentralised collections, the firm will have a large number of bank accounts operated in the areas where the firm has its branches. All branches may not have the collection centres. The selection of the collection centre will depend upon the volume of billing. The collection centres will be required to collect cheques from customers and deposit ir their local bank accounts.
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The collection centre will transfer funds above some predetermined minimum to a central or concentration bank account, generally at the firm's head office, each day. A concentration bank is one where the firm has a major account usually disbursement account. Funds can be transferred to a central or concentration bank by wire transfer or telex or fax or electronic mail. Decentralised collection procedure is, thus, a useful way to reduce float.
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Cash Collection Instruments in India The main instruments of collection used in India are: (/) cheques, (ii) drafts, (Hi) documentary bills, (iv) trade bills, and (v) letter of credit, (shown in the bellow table)
Pros No charge Payable through clearing Can be discounted after receipt Low discounting charge of Rs 3.50 perRs 1,000. Requires customer limits which are inter-changeable with overdraft limits. Payable in 2. Drafts local clearing Chances of bouncing are less. 3.Documenta Theoretically, goods ry are not released till bills payment is made or the bill is accepted Low discounting charge of Rs 3.50 perRs 1,000. 4. Trade bills No charge except stamp duty (approx, Re 0.50.' perRs 1,000) Can be discounted. Discipline of payment on due date. Good credit control 5. Letters as of goods are released on credit payment or acceptance of bill. Seller forced to meet delivery schedule because of expiry date.
Instrument 1. Cheques
Cons Can bounce Collection times can be long Collection charge of Rs 2.00 per Rs 1,000 with a maximum ofRs 1,000.
Cost Rs 2.00 per Rs 1.000 subject to a maximum of Rs 1,000 Not payable Buyers account through clearing. Collection cost of Rs 4.50 per Rs 1,000 subject to a maximum ofRs 1,000. Long delays. Procedure is relatively cumbersome. Buyers are reluctant to accept the due date discipline. Opening charges Transit period interest Negotiation charges Need bank lines to open LC. Stamp duty on usance bills.
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Cash Flow Monthly Summary 1-April-2003 to 31-March-2004
Particulars Inflow April May June July August September October November December January February March Grand Total 338821 618470 491219 542964 817567 311437 612595 465651 652577 773807 557408 599013 6781529
Cash Movement Outflow 234858.13 650938.1 339582.03 505271.45 821729.15 311170.2 543697.1 488513.26 631025.63 699626.41 650237.5 858738 6735386.96 Net flow 103962.87 (-)32468.1 151636.97 37692.55 (-)4162.15 266.8 68897.9 (-)22862.26 21551.37 74180.59 (-)92829.5 (-)259725 46142.04
1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0
Ap ril M ay Ju ne Ju Au ly Se gu pt st em b O er ct o No be ve r De mb ce e r m b Ja e r nu Fe a ry br ua r M y ar ch
Inflow Outflow Net flow
Cash Flow
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Monthly Summary 1-April-2004 to 31-March-2005 Particulars Cash Movement
Inflow April May June July August September October November December January February March Grand Total 720568.37 624731 480778 597691 932440.5 880970 914683 675831 807998 1330322 965818 1538207 10470037.87
Outflow 544665.25 574668.3 455121.37 615047.2 726328.5 723932.15 819478.73 800498.15 972002.85 1142315.35 1143136.76 1969182.95 10488362.94
Net flow 173918.12 50062.7 25956.25 (-)17356.2 206112 157037.85 95204.27 (-)124667.15 (-)164004.85 188006.65 (-)177318.76 (-)430975.95 (-)18325.7
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2500000 2000000 1500000 1000000 500000 0

Ap ril M ay Ju ne Ju Au ly Se gu pt st em b O er ct o No be ve r De mb ce e r m b Ja e r nu Fe a ry br ua r M y ar ch
Inflow Outflow Net flow
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STATEMENT OF CHANGES IN CASH FLOW Year 2003-04 2004-05 Total Inflow Total Outflow 67,81,529.00 67,35,386.96 1,04,70,037.8 1,04,88,362.9 7 4 Net Flow 46,142.04 (-)18,325.07
Net cash flow for the year 2003-04 is Rs. 46,142.04/- but for the year 2004-05 it is decreased to Rs. (-)18,325.07
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PROFIT AND LOSS ACCOUNT Particulars INCOME Sale of Scarp Labour charges form DWPL Dividend & other income TOTAL EXPENDITURE Direct expenses Administrative Expenses TOTAL PROFIT (LOSS) BEFORE DEPRECIATION Less: Depreciation NET PROFIT/(LOSS) FOR THE YEAR Less: Preliminary expenses written off PROFIT/(LOSS) CARRIED FORWARD TO BALANCE SHEET 105858.09 160905.34 1340287.20 4485102.00 5629.00 5831018.20 5047654.21 779618.08 5827272.29 3745.91 109604.00 105858.09 1836536.75 7225505.00 26615.58 9088657.33 6438433.50 2254714.49 8693147.99 395509.43 175159.00 220350.34 59445.00 31.03.2004 31.03.2005
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The 10 Cash Flow Rules
1. 2. 3. 4. 5. 6. 7.
Never Run Out of CASH CASH Is King Know the CASH Balance Right Now Do Todays Work Today Either You Do the Work or Have Someone Else Do It Dont Manage From the Bank Balance Know What You Expect the CASH Balance to be Six Months From Now
8. 9.
CASH Flow Problems Can Be Seen In Advance You Absolutely, Positively Must Have CASH Flow Projections
10. Eliminate Your CASH Flow Worries So You Are Free to Do What You Do Best - Grow Your Business and Make More Money.
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Some Concluding Tips for Your Cash-Flow Management Efforts How closely do you need to monitor your cash flow? For many companies, month-by-month projections for the next 12 to 24 months are sufficient. However, some businesses, such as retailers, prefer more frequent projections, week by week. A few businesses that handle a lot of cash, such as financial institutions, prepare daily cash-flow projections. At the other end, a small business with simple needs may be able to get by with quarterly projections. Most cash-flow management tools can handle preparation of monthly projections for one or two years in advance. If you require a period of different duration or need to project further into the future, check to ensure the tool can handle it. Bear in mind, however, that the utility of cash-flow projections too far into the future may be limited. The cash-flow projection for the 60th month out may bear only a faint resemblance to reality. The duration of the cash-flow projection period usually relates to the frequency of revisions or updates to the calculations. The shorter the period, the more frequent the updates. The frequency of your revisions and the amount of detail in your projection will determine how important it is to have the capability of automatically importing the latest actual number from your financial accounting or ERP system.
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Improving Your Cash Flow Cash shortages can prevent you from meeting your financial obligations, and they can make it difficult to plan for the future and expand your company. That's why you should try to improve your cash flow by making some minor adjustments in your business practices. These seven ideas can provide relief and ultimately change your cash flow:
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Tighten inventory. Keeping too much product on hand can tie up a great deal of cash. Make sure your inventory turns over at a regular pace. Bill early and often. Bill a project when it's complete, and invoice products as soon as they ship. Keep a detailed receivables report and act immediately on overdue accounts. Don't expand until you have the cash to support growth. Figure out what your projected expansion will cost and make sure you have the cash to cover it. Have a cushion to cover a cash flow crunch. Chances are, a cash crunch will come sooner or later perhaps due to a temporary slump in the economy or your industry. If you're prepared for rough times, you can ride them out. Stretch out payables. Don't pay every bill as soon as it arrives wait 30 or 60 days and keep the cash on hand. If suppliers want their money more quickly, ask about discounts for early payment. Consider raising your prices. Check out what the competition's doing and make sure your prices or rates aren't too low.
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Comparison shop. The Internet makes it much easier to compare prices for everything from airplane tickets to office supplies to computers. Start using the Web to get the best deals. Avoiding Cash Crunches A company's cash flow is its lifeblood. Without a steady stream flowing in and out, you run the risk of damaging your credit and stalling the growth of your business.
The key to warding off cash flow problems is to project your cash flow needs. These strategies will help you manage your receivables and expenses so you don't get caught in a crunch: Establish a receivable process. You can improve your chances of receiving timely payments from your customers by setting up an accounts receivable process that lets you record sales, generate invoices and monthly statements, and track your customers' current and past-due balances. Forecast your cash flow. Study your customers' paying habits especially for major accounts so you can predict roughly when and how much they'll pay. The amount you forecast should be within 5 percent of your receivables each month. If your predictions are way off the mark, a cash flow problem could be looming. Track expenses. Each month, compare your projected expenses to your actual expenses. This will help you anticipate the
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need for more cash and react immediately. For example, if you unexpectedly have to repair broken machinery, you can cut expenses elsewhere or take an advance on a credit line. Project your sales. It's easy to assume the demand for your products or services will be high, but it's safer to base your projected sales on facts. When you can project your sales revenues for a specified period, you can spend accordingly. Use past experience to project future sales, and talk to your customers to determine their future needs. If you're just starting out, market research will help you determine how much demand exists for your product or service.
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Track your sales. Even after you've projected your sales, you need to monitor your actual sales to make sure you're on track. If sales dip below your projections, the sooner you make adjustments cut expenses, extend credit or borrow money the better. Prepare for cash flow imbalances. For many companies it's normal to experience cash flow fluctuations throughout the year. Anticipate when your sales are likely to drop. Then make sure you've put some cash aside to cover your expenses during the lean months. Seek professional help. If you don't think you can manage your company's cash flow yourself, hire a professional. An accountant can help you project your cash flow needs. Successful Cash Flow Management Cash management is ultimately about cash flow -- and very few small businesses are awash in cash. Even successful, growing companies are vulnerable to cash flow problems because they tend to add employees and inventory rapidly. This may quickly deplete the company coffers and lead to cash shortages. Because having cash at the right time is so important, entrepreneurs must pay close attention to cash management. Here are some tips for saving money and managing cash flow:
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Make financial projections. Forecast both expenses and anticipated revenues for at least the coming year. This will help you predict when you're likely to have cash and when you're likely to need it. You should also maintain a cash reserve if possible.
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Create contingency plans. Have several budget projections, including best case and worst case scenarios, and think about how you might respond. In the event sales don't take off as expected or there's some unforeseen problem, you'll be better prepared. Keep a lid on spending. One of the most common problems with new businesses is the owners' tendency to spend freely. There's no need to have lavish offices or expensive furniture. Remember, you're in this for the long haul: You should try to get as much value as possible out of every transaction, whether you're leasing office space or stocking the company kitchen. Keep inventory low. Don't stock inventory based on your fantasy of what you think you'll be selling in six months. Instead, stock only what you know you can sell in the short term. Lease, don't buy. Another good way to conserve cash is to lease equipment instead of buying it. Although leasing can be more expensive in the long run, it helps you avoid laying out a lot of capital all at once for things like office furniture, computers and copiers. Delay hiring employees. Try to improve the productivity of current employees (without burning them out), use independent contractors and consider outsourcing certain nonessential functions. Employees are expensive, so you should put off adding permanent hires as long as you can -- or at least until you're earning the revenue to support them.
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Go without a salary. Some experts recommend stockpiling a year's worth of living expenses before going into business. Admittedly, this may be difficult, but you should at least avoid paying yourself an excessive salary. Too many entrepreneurs waste cash by paying themselves big salaries without the revenues to justify them.
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Speed up customer payments. Try to get customers to pay on time or early, if possible. Offer incentives like discounts or late fees, and adopt more effective collection techniques for deadbeat customers. Don't be wasteful. Recycle and reuse what you can -- for example, boxes, computer discs and file folders. The savings may not be large on any given item, but they can add up over time.
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WORKING CAPITAL MANAGEMENT Introduction: One of the vital aspects of companys financial management is to manage its current assets and the current liabilities in such a way that a satisfactory level of working capital is maintained. Working capital management means administration of all aspects of working capital i.e. current assets and current liabilities. Firm has to manage it properly in order to attain its goal of wealth maximization. Meaning: Working capital is that part of total capital which is used for carrying out routine business operations. In simple terms, working capital is the capital with which the business of the company is worked over. Working capital is the lifeblood of business and it is the controlling system of every business firm. . The working capital management is concerned with the problems that arise in attempting to manage the current assets and current liabilities and the interrelationships that exist between them. This tries to evolve how much funds to be invested in each type of current assets and what should be the proportion of longterm funds to short term funds and which are the sources that are ideal for financing current assets.
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Need and Importance of Working capital: To fulfill its endeavor to maximize the shareholders wealth, firm has to earn sufficient return from its operations, which needs a successful sales activity. The firm has to invest sufficient funds in current assets to succeed in sales, as the sales do not convert into cash instantaneously because of time gap between the sale of goods and actual receipt in cash.
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Hence there is a need for working capital in the form of current assets to sustain sales activity during that period. Since cash inflows and cash out flows dont match, firms have to necessarily keep cash or investment in short term liquid securities to fulfill its obligations as and when they become due. The adequate stock of inventory provides a cushion against being out of stock and helps as a guard to meet the demand for its products. To be competitive, the firm must sell its products to their customers on credit, which necessitates the holding of accounts receivables There fore an adequate level of working capital is absolutely necessary for the smooth sales activities, which in turn enhances the owners wealth. The working capital need arises for the following purposes: For purchasing raw material, components and spare parts. For paying wages and salaries. To incur day-to-day expenses and overhead costs like fuel, power and office expenses, etc. To meet selling costs of packing advertising etc. To provide credit facilities to customers. To maintain inventories of raw materials, work-in-progress, spare parts and finished goods. Objectives of working capital management:
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The basic objective of working capital management is to manage firms working capital i.e. current assets and current liabilities in such a way that a satisfactory level of working capital is maintained i.e. neither excessive nor inadequate. Excessive working capital provides better liquidity position but lowers the earnings. Inadequate working capital brings higher profits at the cost of short-term solvency.
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An overall control over working capital can ensure a proper functioning of business operation. Financing the day-to-day business activities is an important decision making area of financial management of an enterprise. It requires an understanding of: How to raise and allocate financial resources? How to relate short-term investments and financial decisions to the overall objectives of the firm? How to relate short term financial decisions to long term financial decisions? Working capital is an integral part of every concerns financial structure since it plays a vital role in the smooth functioning of the business.
Concepts of working capital: There are two concepts of working capital. They are: 1. Gross working capital concept. 2. Net working capital concept. Gross working capital concept: Gross working capital refers to firms investment in its current assets. Current assets are assets, which can be converted into cash within an accounting year (or operational cycle) and includes cash, short-term securities, debtors, bills receivables and inventories.
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The gross working capital is a financial concept. It is also called as current capital or circulating capital and is represented as sum total of current assets of an enterprise. The gross working capital concept focuses attention on two aspects of current asset management: a) Optimum investment in current assets. b) Financing of current assets Net working capital concept: Net working capital is the difference between current assets and current liabilities. It may be positive or negative. A positive working capital arises when current assets exceed current liabilities and a negative working capital occurs when current liabilities exceed current assets. NET WORKINGCAPITAL = CURRENT ASSETS CURRENT LIABILITIE S Net working capital is a qualitative concept and it indicates the: a) Liquidity position of the firm and b) Suggests the extent to which working capital needs may be financed by permanent sources of funds.
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The current assets of the firm should be sufficiently in excess of current liabilities to constituting a margin for maturing obligations within the ordinary operating cycle of the business. A weak liquidity position poses a threat to the solvency position of the firm and makes it unsafe and unsound. A negative working capital may prove to be harmful for the companys reputation. On the other hand, excessive liquidity is also bad which may lead to mismanagement of current assets. The net working capital concept also covers the question of judicious mix of long-term funds for financing the current assets. Every firm needs a minimum amount of net working capital, which is permanent. Hence a portion of working capital should be financed with the permanent sources of funds such as owners capital, debentures, long-term debts, preference capital or retained earnings. Management must there fore decide the extent to which current assets should be financed with long-term sources.
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Even though both gross and net working capital concepts are the important facets of working capital, there is no precise way to determine the exact amount of gross or net working capital for every firm. The working capital needs depends upon the business operations of the firm. Current assets: Current assets are those assets, which in the normal course of business, convertible into cash within a short period of time i.e. an accounting year (or operating cycle) Components of current assets a) Stock of materials in trade and in transit. b) Stores and spare parts. c) Sundry debtors. d) Bills of exchange. e) Loans and advances. f) Deposits. g) Cash and bank balance. h) Investment in government and other securities. i) Amount due from subsidiary companies, etc. j) Prepaid expenses. k) Outstanding incomes. Current liabilities: Current liabilities include all the obligations of the concern that are maturing within an accounting year.
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< Components of current liabilities a) Sundry creditors. b) Loans from bank and others. c) Provisions for taxation, dividend, etc. d) Liabilities towards gratuity, etc. e) Outstanding expenses. f) Incomes received in advance. Methods of estimating working capital: Usually there are two methods followed for estimating working capital requirements.
1) Conventional Method:
In this method, cash inflows and
outflows are matched with each other. Greater emphasis is laid on liquidity and greater importance is attached to current ratio, liquidity ratio, etc.which pertains to the liquidity of the business.
2) Operating cycle method: operating cycle refers to the length
of time involved between the sales and their actual realization in cash. In other words, it is the cycle time required in conversion of: Cash to raw materials Raw materials to work in process Work in process to finished goods Finished goods to accounts receivables Accounts receivables to cash
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The operating cycle of a manufacturing company involves the following phases: a) Purchase of resources such as raw materials, labour, power and fuel etc.with cash.
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b) Conversion of raw materials into work- in-progress into finished goods. c) Sales of finished product either for cash or on credit. Credit sale create book debts for collection. d) Conversion of book debts into cash. The operating cycle of a manufacturing company may be diagrammatically explained as in figure:
Cash Accounts Work in progress
Raw materials receivables
Finished goods Operating cycle of a manufacturing firm
These phases affect the cash flows. The cash inflows and cash outflows are neither synchronized nor certain. The firm needs to maintain liquidity to purchase raw material and pay expenses such as wages, salaries, other manufacturing and administration and selling expenses and taxes, as the cash outflows are certain. If surplus cash is available at any time in an intermediary state should be invested in short-term securities without keeping it idle. Longer the duration of the operating cycle greater is the extent of working capital requirements. Generally, the operating cycle is lengthier in case of manufacturing industries.
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Non-manufacturing firms such as wholesalers and retailers will not have the manufacturing phase. They will acquire the stock of finished goods and convert them into debtors and debtors into cash.
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Cash goods Debtors or Bills receivables
Stock of Finished
Operating cycle of non manufacturing firm Service and financial enterprises will not have inventory of goods. Their operating cycle will be the shortest. They need to acquire cash and then lend it, i.e. created debtors and again convert lendings in to cash. Debtors Cash Operating cycle of service or financial firm
Classification of working capital: The operating cycle is a continuous process and there fore the need for current assets is felt constantly. The magnitude of current assets need not always be the same; it increases or decreases over time depending on the business transactions.
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Working capital
Permanent working capital
Variable working capital
Initial
Regular
Seasonal
Special
Classification of working capital
Permanent working capital: Permanent or fixed working capital is the amount of working capital that remains in the business permanently in one or the other form. This is a minimum level of current assets that are continuously required by the firm to carry out business operations. The need for working capital will fluctuate over and above permanent working capital depending upon the changes in production and sales. a). Initial working capital: In the beginning any company do not have regular sales and earnings. Company requires time to establish its creditworthiness in the market i.e. the beginning years company may not get credit facility easily from its supplier, banker
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and others. But at the same time it is forced to give credit facility to its customers to create clientele. During this period company need to source for its operations, which is named as initial working capital.
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b). Regular working capital: Some minimum stock of raw material, finished goods has to be maintained to run the business smoothly. No return can be expected from the regular working capital as they are permanently locked up. Hence it is required to be financed from long-term funds. Variable working capital: Variable or temporary working capital goes on fluctuating from time to time with the change in the volume of the business. It is the additional investment in current assets required at different times during the operating year. a). Seasonal working capital: This is required to meet the business operations of some seasonal industries. During the season time firm require to source its needs to meet the seasonal demand. b). Special working capital: This includes the funds needed to finance the special business operations. This is the reserved capital developed to meet the emergencies, unforeseen contingencies, or to adjust with the extra demand, extra production, extra purchase etc. Both kinds of working capital, permanent as well as temporary are necessary to facilitate production and sales through out the operating cycle. Temporary working capital, which is created by the firm to meet its liquidity requirements that will last temporarily.
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Am ount of WC (in Rs) R
Temporary working capital
Time
Permanent and Temporary working capitals of stable firm The above figure illustrates that the permanent working capital is stable overtime, while temporary working capital is fluctuating, some times increasing and some times decreasing. However the permanent working capital line need not be horizontal, if the firms requirement for permanent working capital is increasing or decreasing over a period. For a growing firm, the difference between permanent and temporary working capital can be depicted through the figure below:
Temporary working capital Am of growingount of WC (in Rs) R
Permanent and Temporary working capitals

Time
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Permanent and Temporary working capitals of growing firm
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Adequacy of working capital: A firm must have to invest sufficient funds in working capital i.e. as much as needed by the firm. It should neither be excessive nor inadequate. Both situations are dangerous. Excessive working capital means the firm has idle funds, which earns nothing for the firm. In adequate working capital means the firm does not have sufficient funds to meet its current obligations, which ultimately affect the production process and all operations of the firm, and ultimately checks the bottom line. The dangers of holding excessive working capital: Resulting in idle funds, excess working capital lowers the profitability of the firm. It results unnecessary accumulation of inventories that may lead to mishandling, wastage, theft, etc. of inventories. Huge accounts receivables exhibits the defective credit policy of the firm that results in huge bad debts, which adversely affect profits. Excess working capital makes management complacent in their work and contributes to managerial inefficiency. Tendency to speculative profits grows when inventory accumulates because of excess working capital that leads to liberal dividend policy. This makes it difficult for the firm to cope up with future when the firm is unable to make speculative profits.
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The dangers of holding inadequate working capital: Inadequate working capital makes it difficult for the firm to execute the operating plans to achieve profit targets. This makes it difficult for the firm to undertake profitable projects because of non-availability of working capital and stagnates growth of the firm. Due to shortage of funds it will be difficult to meet day-today commitments, which results in operating inefficiencies
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Fixed assets are under utilized, when a firm suffers from inadequacy of working capital, resulting in reduction in the rate of return on investment. Firms is unable to avail attractive credit opportunities, etc. from suppliers and creditors because of shortage of working capital There is a danger of the firm loosing its reputation in the market when it fails to meet its short-term obligations due to lack of working capital. To avoid the consequences of holding both excess and inadequate working capital, firm has to maintain a right amount of working capital on a continuous basis. In short, every business must maintain adequate working capital with out affecting its solvency and profitability positions.
Norms of current assets and current liabilities: The structure of current assets constantly keeps changing from one form of asset to another. There is always a time gap between investment of cash in other current assets and re conversion of it into cash. The available cash is used to pay off creditors and other liabilities and a part of it is used to buy materials and to meet other expenses. Therefore, the investment in current assets should be larger than the amount of current liabilities leaving some amount for making cash purchase or to meet the
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urgent expenses. Thus, it is generally expected that the level of current assets should be twice the current liabilities to constitute a margin of buffer for maturing obligations within the ordinary operating cycle of a business and is to be financed by trade credit and other short-term sources. The other half of current assets should be sourced from long-term funds. However, the quality of current assets should be considered in determining the level of current assets vis--vis current liabilities.
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Current asset policies: To support a particular level of output firm needs fixed assets as well as current assets. Firm can have different levels of current assets to support the same level of output. When the output and sales increases the current asset requirements increases, but at a decreasing rate with the output. This is because of the notion that when only a few units of outputs are produced it takes a greater proportional investment in current assets. The level of current assets can be measured by relating current assets to fixed assets. Firms use different working capital policies to obtain a proper mix of current assets and fixed assets. They are: Conservative policy: As per this policy firms investment in current assets is at a higher proportion than fixed assets. The ratio of current assets to fixed assets is higher for a constant level of fixed assets. Average policy: Here the firms invest at a same proportion both in current assets as well as fixed assets. Aggressive policy: In this policy firms invest at a lesser proportion in current assets than fixed assets. The ratio of current assets to fixed assets is lower for a constant level of fixed assets.
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The alternative current assets policies may be shown as:
Conservative policy Lev el of curr ent asse ts Average policy Aggressive policy Fixed asset level
Output
Alternative current assets policies Financing Approaches: The firm must find out the proper sources to finance its working capital needs. It may utilize long-term financial sources, short-term sources or spontaneous sources based on their requirements. One of the most important decisions to be made in the firm is with respect to financing its current assets and current liabilities. . A firms financial requirements can be broken into permanent and seasonal needs. The permanent needs consist of both fixed assets and current assets. While the seasonal needs are attributed to the existence of certain temporary current assets, which varies over the year. Firms use different approaches to finance its requirements from different sources available for financing. They include:
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Matching approach. Conservative approach. Aggressive approach.
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Matching approach: It is also called hedging approach, which involves matching of the expected life of the asset and expected life of the sources of funds raised to finance it. When the firm follows this approach, long-term financial sources will be used to finance fixed assets and permanent current assets and short term financing to finance temporary current assets. However, an exact matching is not possible because of uncertainty about the expected lives of assets. Conservative approach: Under this approach, firms depend more on long term financing and finances the permanent assets and a part of temporary assets with long term financing and depend less on short-term risky funds. When the company has no temporary current assets the long-term funds released could be invested in marketable securities to build up the liquidity position of the firm. Aggressive approach: A firm is said to have aggressive in financing its assets when it uses more short term financing than warranted by the matching plan to finance is needs. Firm finances a part of its permanent current assets with short term financing. Some extremely aggressive firms may even finance a part of their fixed assets with short term financing. The relatively more use of short term financing makes the firm more risky but adds more to the profit line.
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Liquidity Vs Profitability: The two important aims of working capital management are profitability and solvency. Solvency, used in technical sense, refers to the firms continuous ability to meet maturing obligations. To ensure solvency, the firm should be very liquid, which means larger current assets holdings. If the firm maintains a relatively larger investment in current assets, it will have no difficulty in paying off its obligations as and when they become due and will be able to fill all sales orders and ensure smooth production. Thus, a liquid firm will have less risk of insolvency.To achieve firms basic goal of maximizing the wealth of the shareholders, firm needs to earn sufficient profit. To have higher profitability, the firm needs to sacrifice solvency and maintain a relatively low level of current assets. When the firm does so, its profitability will improve as fewer funds are tied up as idle. But its solvency would be threatened and would be exposed to greater risk of cash shortage and stock outs.Hence, if a firm focuses on profitability it faces the threat of solvency and vice-versa. Therefore, the firm will have to do risk-return trade off to have both liquidity and profitability under control.
Cost trade off: There are two types of costs involved while financing the current assets i.e. the cost of liquidity and cost of ill liquidity.
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While looking into the risk return trade off the finance manager has to see the cost involved in each current assets of the firm. When the firm has very high level of current assets it results in excessive liquidity. Return on its investment will be low, as funds are tied up in idle cash and stocks, which earn nothing. High levels of debtors reduce profitability.
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Thus, the cost of ill liquidity arises because of holding insufficient current assets. The firms will not be in a position to fulfill its obligations if it carries too little cash, which force the firm to borrow at high rates of interest. This will also adversely affect the credit worthiness of the firm. Similarly, the low level of stock will result in loss sales and customers may shift to competitors due to delay in supply. Thus firm involves cost, which increases as the level of current assets falls. For determining the optimum level of current assets, the firm should balance the profitability, solvency tangle by minimizing total cost i.e. cost of liquidity and the cost of ill liquidity. With a change in the level of current assets the cost of liquidity increases while cost of ill liquidity decreases and viceversa. It is shown diagrammatically below:
Cost trade-off Financial sources for working capital: C Cost
Minimum cost
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Optimum lev Level of current assets
The firm can finance its working capital needs from deferent sources of funds using different approaches. The sources of funds are categorized as: Long term financial sources Short term financial sources Spontaneous sources
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Long-term financial sources are sources through which funds are raised for a longer period of time i.e. more than five years. It is used mainly to finance permanent assets Short-term financial sources provide financial assistance for a shorter period of less than one year. The firm must arrange these sources in advance to meet day-to-day operational expenses. Spontaneous sources refer to the automatic sources of short-term funds, which arise in the regular course of business operations. The major sources of such financing are trade credit and outstanding expenses.
Sources of Working Capital Finance
Short-term sources
Internal sources -Shares -Debentures -Retained earnings -Long-term loans -Sale of fixed assets
External sources -Bank credit -Customer advances -Short-term public deposits -Installment credit -Factoring -Commercial papers -Indigenous bankers
-Depreciation fund
-Retained earnings -Using the resource meant for taxation
-Trade credit -Outstanding expenses
Sources of working capital finance.

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From the above sources available for financing working capital needs, the finance manager has to select the best suitable source depending on the requirements of the company.
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Determinants of working capital: There are number of factors which influence in determining the working capital needs and each factor has their own importance in the issue. Below chart shows the factors, which determine the working capital needs of an organization.
General Factors: -Business Cycle -Price level changes -External environment -Growth & Expansion Production & Marketing Factors: -Nature of business -Manufacturing cycle -Nature of raw material -Nature of finished goods -Competition -Production Policy -Operating efficiency
Working Capital Financial Factors: -Credit policy -Dividend Policy -Depreciation policy -Profit Levels -Repayment ability -Capital market Government Factors: -Monitory policy -Taxation policy Other Factors: -Past trend -Management ability
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Factors influencing working capital requirement.
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Accessing working capital requirements: Working capital is the lifeblood and controlling nerve center of a business. Without an adequate amount of working capital no business can run its operations successfully. An estimation of working capital requirements should be made in advance to arrange the funds. Estimation of working capital requirements is not an easy task and a large number of factors have to be considered before accessing the working capital requirements. Even though an accurate estimation is not possible due to fluctuations in business operations. Following factors are to be considered while making an estimate of working capital: Total cost incurred on material, wages and overheads The raw material holding period i.e. the length of time for which raw materials are to remain in stores before they are to issue for production. The processing period i.e. length of production process The finished goods holding time i.e. the length of sales cycle during which the finished goods will remain in warehouse before sale. The average period of credit allowed to customers. The amount of cash required for paying day-to-day expenses of the business. The average amount of cash required for making advance payments, if any. The average period of credit availed from the suppliers
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Time lag in payment of wages and overhead expenses From the total amount blocked in current assets estimated on the basis of first seven items given above, the total of the current liabilities that is the last two items should be deducted to find out the requirements of working capital. Some extra amount generally calculated as a fixed percentage of net current assets in order to provide for contingencies that are added as margin of safety. Conclusion: The working capital management contributes much in the overall management of the organization affairs. Efficiency of organizations operations depends on how it manages its short-term business dealings. The working capital management contributes for firms efficiency as well as the bottom line by optimally utilizing the available wealth and maintaining the required liquidity. Types of Working capital. WC can be divided into two categories on the basis of time 1. 2. 1. Permanent W.C. Temporary W.C. PERMANENT W.C. This refers to that minimum amount of investment in CA, which required at all times to carry out minimum level of business activities on a continuous and uninterrupted basis .
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Permanent WC is fairly contact throughout the business and therefore it should be finance out of long terms funds. than one. 2. TEMPORARY W.C. Any amount over and above the permanent level of W.C. is temporary, fluctuating or variable W.C. The position of the required WC is indeed to meet fluctuations in demand consequent upon the charges in production and sales as a result of seasonal charges.The basic distinction between pursuant and temporary WC is illustrated here. This is the reason why the current ratio has to be substantially more
Changes in W.C. The changes in the level of W.C. occur for the following three basic reason : 1. 2. 3. Changes in sales and operating expenses Policy changes initiated by management Technological Changes Source of WC Financing of long term or permanent level of W.C
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Financing by issue of shares. Financing by issue of debentures. Long term loans. Retained Carvings. Public Deposit. Financing of temporary fluctuating WC Internal source of finance. External source of finance. Customers credit
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Statement of Changes in working capital for year 2004 Particulars Current asset Debtors Divgi Warners pvt. Ltd., Cash and Bank Balance Cash in Hand Sisri Urban Co-op, Bank Sisri Urban Co-op, Bank Loan and Advance Advance Centre Divigi Metal wre Pvt.,Ltd. Pune Advanced Partnership in which interested. Other Advances Electricity Diposit Advanced workers T.D.S. Total Current Liabilities Creditors for suppliers & services Creditors expenses
31.3.04 2035974.0 0
31.3.03
Increase Decrease 2035974. 513784.00 00
40022.87 8980.00 910.17 5340.00 26093.00
4686.00 85.00 -
35336.87 8895.00 910.17 5540.00
Modi
Xerox
76619.00 -
directors
are
66890.00 42486.00 91992.00
48170.00
18720.00 42486.00 91992.00
to
Staff
&
2319688.8 4 2140125.9 3 314732.00
241654.0
155912.00 11261.00
1984213. 90 303471.0 0
173
for
outstanding
Total Networking Capital (Current Liability Asset Current
2454857.9 3 135169.09
167173.00
74481.00
Statement of Changes in working capital for year 2004
Particulars Current asset Debtors Divgi Warners pvt. Ltd., Cash and Bank Balance Cash in Hand Sisri Urban Co-op, Bank Sisri Urban Co-op, Bank Loan and Advance Advance Centre Divigi Metal wre Pvt.,Ltd. Pune Advanced Partnership in which directors are Modi Xerox
31.3.04 2035974.0 0
31.3.03
Increase Decrease 2035974. 513784.00 00
40022.87 8980.00 910.17 5340.00 26093.00
4686.00 85.00 -
35336.87 8895.00 910.17 5540.00
76619.00 -
66890.00
48170.00
18720.00
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interested. Other Advances Electricity Diposit Advanced workers T.D.S. Total Current Liabilities Creditors for suppliers & services Creditors expenses Total Networking Capital (Current Liability Asset Current for outstanding to Staff &
42486.00 91992.00
42486.00 91992.00
2319688.8 4 2140125.9 3 314732.00 2454857.9 3 135169.09
241654.0
155912.00 11261.00
1984213. 90 303471.0 0
167173.00
74481.00
175
Statement of Changes in working capital for year 2005
Particulars Current asset Debtors Divgi Warners pvt. Ltd., Cash and Bank Balance Cash in Hand Sisri Urban Co-op, Bank Sisri Urban Co-op, Bank Loan and Advance Advance Centre Divigi Metal wre Pvt.,Ltd. Pune Other Advances Electricity Diposit Advanced workers U.L. Bangalore Gagni International, Hubli T.D.S. Total Current Liabilities Creditors for suppliers & India Pvt. Ltd., to Staff & Modi Xerox
31.3.05 31.3.04 Increase 1517190.0 2035974 0
Decrease 513784.00
21384.70 9980.00 1223.27 7829.63 66890.00 56047.00 84375.00 2950.00 143325.00
40022.87 8980.00 910.17 5340.00 26093.00 66890.00 42486.00 91992.00 13561.00 84375.00 2950.00 51333.00 1000.00
18638.17
1911194.6 0 1837154.3
2319688.8 4 2140125.9
176
302971.00
services Creditors expenses Total Networking Capital (Current Liability Asset Current for outstanding
5 269117.00 2106271.3 5 195076.25
3 314732.00 2454857.9 3 135169.09
45615.00
177
The working capital of the company should be always positive. It should not be negative. In the year 2003 the companys working capital was 74481.00 but, during 2003-04, 2004-05 it is increased to 135169.09 and 195076.25. It clearly shows that DIPL is newly established company. So it is facing shortage of working capital in initial years, so it must increase its working capital to stand in the business world.
178
179
Ratio Analysis Ratio Analysis is widely accepted tool of financial analysis. It is defined as a systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of the firm as well as historical performance and current financial conditions can be determined. The ration refers to the numerical or quantitative relationships between two items or variables. Current Ratio Current ratio is a measure of firms short term solvency. This ratio is also known as Working Capital Ratio. Current ratio is a measure of general liquidity and is most widely used to check the relationship of the current assets and current liability. Current assets include cash and those assets which can be converted into cash within a year. Such as inventories, debtors, loans, advances and deposits are included. Current liabilities include creditors, bills payable and other liabilities. Current Asset Current Ratio = Current Liability 2319688.84
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For, 2003-04
= 2454857.93 1911194.6
= 0.94:1
For, 2004-05
= 2106271.35
= 0.94:1
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Current Ratio The standard ration is 2:1 but companys current ratio is lags during the both years. Absolute Liquidity Ratio It is a ratio of cash in hand and in bank to current liabilities. The standard ratio is 0.70:1 Cash in hand + Cash at bank Absolute Liquidity ratio = Current Liabilities 40022.87+10890.17 For, 2003-04 = 2454857.93 = 0.02 : 1
2138470 + 11203.27 For, 2004-05 = 2106271.35 = 0.015 : 1
Companys absolute liquidity ratio has to be increased to reach the standard ration.
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Debt Equity Ratio financial solvency of the firm.
It is the ratio between borrowed
money to owners fund. It is popular measure of the long term
Equity share + Preference share capital + Reserves + Surplus + Share premium Loss. Long term liability Debt Equity Ratio = Shareholders Fund 567034 For, 2003-04 = 153000 105858.09 967034 For, 2004-05 = 153000 + 160905.34 = 3.08 : 1 = 12.03 : 1
Debt equity ratio - In 2003-04 debt equity ratio is 12.03 : 1 it implies that 12.03 of outside liabilities the firm has one rupee of owners capital, therefore this is not a satisfactory margin for the creditors of the firm. But in 2004-05 it decreased, it shows the company is increasing debt equity ratio.
183
Acid Test/Quick Ratio It is a ratio between quick current assets and current liabilities and is calculated by dividing the quick asset by current liability. It refers to as quick ratio because it is measure of a firms ability to convert its current assets quickly into cash in order to meet its current liability
Quick ratio Quick Ratio = Current liabilities 2319688.84 For, 2003-04 = 2454857.93 1911194.6 For, 2004-05 = 2106271.35 Generally acid test ratio of 1 : 1 is considered satisfied as a firm can easily meet all current claims. In 2003-04 the ratio is 0.94 : 1 and 0.91 : 1 in 2004-05. = 0.91 : 1 = 0.94:1
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Return on Working Capital Net Profit Return on Working Capital = Working Capital 105858.09 For, 2003-04 = 135169.09 160905.34 For, 2004-05 = 195076.75 It clearly shows that return on working capital is increasing in the year 2004-05 with compare to 2003-04. = 82.48 % = 78.32 %
185
Part III Introduction A basic limitation of the traditional financial statements comprising the balance sheet and the profit and loss A/c is that they do not give all the information related to the financial operations of the firm. Nevertheless, they provide some extremely useful information to the extent that the balance sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owners equity , and so on and the profit and loss account shows the results of operations during the certain period of time in terms of the revenues obtained and the cost incurred during the year. Thus, the financial statements provide summarized view of the financial position and operations of the firm. Therefore, much can be learnt about a firm from a careful examination of its financial statements as invaluable documents! Performance reports. The analysis of financial statement is, thus, an important aid to financial analysis.
The focus of financial analysis is on key figures in the financial statements and the significant relationship that exists between them. The analysis of financial statements is a process of evaluating the relationship between components parts of financial statements to a better understanding of the firms position and performance. The first task of the financial analyst is to select the information relevant to the decision under consideration from the
186
total information contained in the financial statements. The second step is interpretation and drawing of interference and conclusions. In brief, financial analysis is the process of selection, relation and evaluation.
Statement of the problem Financial statements can provide valuable insights into a firms performance. Analysis of financial statements is useful for the company to evaluate its own performance and also it is of interest to lenders (short term as well as long term), inventors, security analysts, managers and others. Financial statement analysis may be done for a variety of purposes, which may range from a simple analysis of the short term liquidity position of the firm to a comprehensive assessment of the strengths and weaknesses of the firm in various areas. It is helpful in assessing corporate excellence, judging creditworthiness, forecasting bond ratings, predicting bankruptcy, and assessing market risk.
To evaluate the effectiveness of operations and to determine it success an analyst has to combine quantitative results with qualitative factors. For instance a companys current profitability may be low. However, because of actions initiated by the management like technology up gradation, joint venture, joint
187
venture, and collaboration with a foreign partner, etc., the prospects for better performance of the company in future may be bright.
188
Aims and Objectives Objectives of the study To gain corporate exposure
To get exposed to all the departments of the company
To know the financial position of the firm access
To assess the financial strengths and weakness of the firm to give valuable suggestion to attain operational excellence
189
190
Scope of the study This project as a reference guide or as a source of information. It gives the idea about the financial analysis of the firm. The main objective of the study was to put into practical the theoretical aspect of the study into real life work experience. The study aims to study the liquidity position of the firm. Ratio analysis has been used to analyze the financial position of a firm. It deals with analysis and interpretation of data collected through the sources of primary and secondary data. Graphs diagrams and tabulation methods are used to analyze and interpret the data collected. Methodology The data in this project is enabling in secondary in nature. Financial reports, company records, were referred for data analysis. The study has been undertaken by collecting relevant data from the balance sheets, profit and loss statements, operating statements of the company and financial tools were used in analyzing and interpretation of data. However, primary data is also collected by observation, discussing with company officials. This primary data is used to fill in the gaps while preparing this report, and to know the latest procedures adopted by the company. This helped me to draw inferences and conclusions.
METHODOLOGY OF DATA COLLECTION

191
Research methodology Research methodology is a systematic way for solving any research problem. It is a science of analyzing how research is done scientifically. It studies the various steps that are generally adopted by a researcher in studying the research problem.
Sources of Data There are two type of data Primary data Secondary data Primary data The primary data are those, which are, collected a fresh for the first time and thus happen to be original in character. The primary data collection involves the collecting of information for the first time by observation, experimentation and through questionnaire in the original form by the researching himself or his nominees. Such data are published by authorities who themselves are responsible for their collection. Secondary data The secondary data are those which have been collected by some other and which have been processed. Generally speaking secondary data are information, which have been previously collected by some organization to satisfy its own need. But the department under reference for an entirely different reason is using it.
192
There are two main sources for secondary data. Published data Data that is already available in books, magazines, trade journals, newspapers, reports, prepared by research scholar etc. Unpublished data This is not published, it can be found in unpublished biographies, autobiographies, some governmental aspects, and private individual organization etc.
Limitations of the study The span of study is confined to only 3 years. The
comparison of various ratios may not have the same conditions, which may result in unrelated comparisons. The other limiting factor being the confidential in nature of
certain aspects. The study was conducted to the extent of information provided. Time constraint : It is not possible to study in detail the
finance operation of the company.
193
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FINDINGS SHARE CAPITAL The authorized share capital of the company is Rs. 100,00,000 divided into 100000 equity shares of Rs. 100 each VEIW OF FINANCIAL POSITION Though the company is incorporated in the year of 2000 its actual commercial work stated in the year of 2003 April 1st The company had not started any business, so there is no question of profit in the year 2000 to 31st March 2003. But however as a first step towards the commencement of commercial activity the company has taken over the business of timing gear blanker on April 2003 2003-04 this year the company has started commercial activity by acquiring the building, plant & machinery from Divgi Metal ware Pvt. Ltd. , on an annual lease of Rs 9,00,000/- plus taxes Rs 51,750/-. Using these leased assets the company has carried out job work for Divgi Warner Pvt. Ltd. After expenses the company made a modest profit of Rs 3745/- before depreciation. But the depreciation was Rs 1,09,604/- ,so less in that year was Rs 1,05,858/-.
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With the automobile sector looking up DIPL have all confidence that in the coming years the company will turn the corner.
2004-05 in this year as made aprofit before depreciation Rs. 3, 36, 064/- so it result as follows Financial Results Year Ended Particulrs 31-3-2005 Rs. .. Profit/(Loss) Before Depreciation Less: Depreciation Profit/(Loss) for the year 3, 36, 064 1, 75, 159 .. 1, 60, 905
196
Brought Forward Profit/(Loss) Balance Carried to Balance Sheet
1, 12, 393 .. 48, 512 ..
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Recommended Capabilities for Cash-Flow Tools A good cash-flow management system should be easy to use, offer flexible "what-if" and reporting options, and allow you to update projections once actual results are available. The importance of ease of use depends on how frequently you need to use your cash-flow management system. Many businesses will calculate and update their cash-flow projections monthly. A few small or cash-flush businesses may only need to look at it once a quarter. Larger companies, or ones walking a financial tightrope, may manage their cash daily. If you need to use your cash-flow tool often, you will learn its ins and outs and capabilities over time and become expert in its use. If you use the tool only occasionally, then it's very important that it be easy to use effectively, because you don't want to have to relearn a complex tool each quarter. The need for "what-if" scenarios is important for businesses that do not have easily predictable financial results due to the nature of their work. For example, cash flow may be highly dependent upon the timing of the signing of a large contract that provides an up-front payment. You would want to project cash flow scenarios both with and without the contract, to see your options. Since managing cash flow is a never-ending task, you'll usually want some way of easily updating your cash-flow
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projections from the last period to include this period's actual results as a basis for moving forward. A cash-flow tool that's integrated into your business accounting system will usually have this capability. Otherwise, look for a way to easily export your actual numbers from your accounting package and then import them into your cash-flow tool.
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Conclusion Each company struggles in the initial stage. But it recovers slowly. It does not happen suddenly itself. It takes time. While Divgi Industries Pvt. Ltd.(DIPL) is a developing company. It has bright future, because there is a wide scope for automobiles in the whole world. So there is no chance of decrease in demand for automobiles components and innovation in the area. DIPL is working at their best level. According to me company is utilizing local facilities effectively but company is not utilizing its plant & machinery and land & building fully. The workers, staff, and management people are conscious about their work and putting their full effort to see DIPL as a developed company. WHEN A PERSON IS CONSCIOUS AND SINCERE ABOUT HIS WORK HE WILL ACHIEVE THE GOAL.
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CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

Aims and Objectives Objectives of the study To gain corporate exposure

To get exposed to all the departments of the company

To know the financial position of the firm access

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

METHODOLOGY OF DATA COLLECTION

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

finance operation of the company.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

Brought Forward Profit/(Loss) Balance Carried to Balance Sheet

1, 12, 393 .. 48, 512 ..

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

1.0300 1.4500 1.6800 1.7500

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH - HUBLI

CASH MANAGEMENT IN WORKING CAPITAL