fin340 project

GROUP PROJECT ON RATIO ANALYSIS

FIN340Section: 3

Submitted To:

Muntasir Alam (MtA)

Senior Lecturer

Submitted by:

Sharzin Shavina Reza 1110773030

Md. Masud Rana 1120492030

Asif Kabir Rony 1020634030

Date of Submission: 09.01.2013

Acknowledgement

To complete our project, first of all we are very grateful to Almighty Allah for the

hard work, dedication, our effort and patience we put to finish our project work on time.

We would like to thank different websites, articles from where we took the information,

some of our friends who had helped us a lot by providing necessary information to

complete the project successfully. Information on the sites helped and supported us a lot

and without it, it would not possible to complete the project properly. Finally we are very

grateful to our course instructor “Muntasir Alam” who had given us the chance to do the

project, and helped us in every possible way. So, we are very thankful to him and honour

to have “Muntasir Alam” as an instructor for his cordial cooperation and support.

LETTER OF TRANSMITTAL

September 1, 2013

Muntasir Alam

Senior Lecturer,

Department of Business Administration

North South University.

Subject: Submission of report on ratio analysis.

Dear Sir,

We humbly thank you for all that you have taught us in these three months and hopefully we

have been able to portray some of what we have learned in this Term Project.

We appreciate having this project under this course of Working Capital Management

(FIN340). We have used different sources of data through DSE and the website of DSE and

also the annual reports of the companies we worked for. Hope, we will not disappoint you.

Sincerely,

Sharzin Shavina Reza 1110773030

Md. Masud Rana 1120492030

Asif Kabir Rony 1020634030

Table of Contents

Bangas Ltd 1

Ratio Analysis 1-8

ACI Foods 9

Ratio Analysis 9-17

British American Tobacco 18

Ratio Analysis 18-25

Fu-Wang Industries Ltd. 26

Ratio Analysis 26-33

Appendix 27-50

BANGAS LIMITED

RATIO ANALYSIS:

1. Days Inventory Held:

Days Inventory held= Inventory/ (cost of goods sold/365)

2008 2009 2010 2011 20120

50

100

150

200

250

300

139159

235 241

116

DIH

Since inventory carrying costs take significant investment, a business must try to

reduce the level of inventory. Lower level of inventory will result in lower days'

inventory on hand ratio. Therefore lower values of this ratio are generally favorable

and higher values are unfavorable.


Year Inventory Cost of Goods Sold Days DIH

2008 35716865 93543766 365 139

2009 38381623 88110673 365 159

2010 30084005 46703165 365 235

2011 34461781 52196045 365 241

2012 21710123 68316521 365 116

In 2012, BANGAS has Days Inventory held of 116 days, which means, on an average

they sell off their inventory within 116 days.

From the time series view, we can clearly see that from 2008 to 2012 the DIH ratio

was high at 2011 which means they were selling their inventory reluctantly. But

from2012 the reduced their DIH. So, they are sales their inventory more quickly than

before.

2. Days Sales Outstanding:

Days Sales Outstanding = Accounts Receivable / (Sales/ 365)


Year Sales Account Receivable Days DSO

2008 108525735 7996868 365 27

2009 104409785 13364697 365 47

2010 59864768 15669025 365 96

2011 68844483 16139448 365 86

2012 91332367 13939830 365 56

2008 2009 2010 2011 20120

20

40

60

80

100

120

27

47

96

86

56

DSO

Since it is profitable to convert sales into cash quickly, which means that a lower value of

Days Sales Outstanding is favorable whereas a higher value is unfavorable. Any significant

increase in the trend is unfavorable and indicates inefficiency in credit sales collection.

In 2008 Bangas had a good number of DSO that means they were being able to collect their

credit within a short span of time. But gradually their DSO increased till 2010 and then again

had a decrease till 2012. It means they are again trying to re-gain the minimal DSO numbers

to be more efficient in credit sales collection.

3. Days Payable Outstanding:

Days Payable Outstanding = Accounts Payable/ (Cost of Goods Sold / 365)

Days Payable Outstanding = Accounts Payable/ (Cost of Goods Sold /

365)

Year Account Payable Cost of Goods Sold Days DPO

2008 8457382 93543766 365 33

2009 9414565 88110673 365 39

2010 2047262 46703165 365 16

2011 2002040 52196045 365 14

2012 2058854 68316521 365 11

2008 2009 2010 2011 20120

5

10

15

20

25

30

35

40

45

33

39

1614

11

DPO

DPO is impacted by both contractual terms and by the promptness of our payment. The

shorter the number of days payable outstanding, the more expensive it is, because we don’t

have the cash, and we may have to borrow to pay our own bills. The longer our DPO days,

the better we are managing our cash, and the more flexibility we have to invest in our own

business.

In 2012, Bangas had an average payment period of 11days, which means, on an average it

takes 11 days to make the payments to the creditor.

From the time series point of view, they were having a higher average payment period which

is the highest on 2009 (39 days). The payment of creditor is hugely depended upon the

decision of the management committee. Gradually the company is making its payment earlier

and causing problems to its owners.

4. Operating cycle:

Operating cycle= DIH+DSO

Year DSO DIH OC

2008 27 139 166

2009 47 159 206

2010 96 235 331

2011 86 241 327

2012 56 116 172

2008 2009 2010 2011 20120

50

100

150

200

250

300

350

166

206

331 327

172

OC

The operating cycle involves determining how long it takes to create inventory and sell

inventory and collect on invoices to customers. The lower the OC is, the more benefitted

the company is.

From the graph we see that in 2008 Bangas used to have a better Operating Cycle which

gradually worsened during 2009, 2010 and 2011. Then again in 2012 it re-gained its

previous situation of OC.

5. Cash Conversion Period

Cash Conversion Period = Days in Inventory + Days Sales Outstanding – Average

Payment Period.

Year DSO DIH DPO CCP

2008 27 139 33 133

2009 47 159 39 167

2010 96 235 16 315

2011 86 241 14 313

2012 56 116 11 161

2008 2009 2010 2011 20120

50

100

150

200

250

300

350

133

167

315313

161

CCP

Shorter the cash conversion cycle the better the company is off because it has to lock up cash

for a relatively smaller period of time.

In 2012, BANGAS has cash conversion cycle in 161 days, which means, on an average it

takes 161 days for BANGAS to get back the cash as revenue for the company.

From the time series analysis, BANGAS has reduced their cash conversion cycle drastically

form 313 days to only 161 days. This is because they are always decreeing days sales

outstanding more than average payment period.

6. NET Liquid Balance:

NET Liquid Balance=Cash + Mkt.sec -N/P-Current Maturities Long-term Debt

NET Liquid Balance

Year Cash Mkt. sec N/P CMLTD NLB

2008 606967 0 571020 5199567 -4021580

2009 625972 0 5924749 3158731 3391990

2010 725813 0 3379290 3391071 714032

2011 1211994 0 3523406 10032335 -5296935

2012 1586400 0 3976370 4407715 1155055

2008 2009 2010 2011 2012

-6000000

-5000000

-4000000

-3000000

-2000000

-1000000

0

1000000

2000000

3000000

4000000

NLB

Company Bangas had negative liquid assets in 2008, meaning that if it was forced to pay off

all of its current liabilities in 2008, it would not be able to do so. Then, it’s NLB rose high in

2009 and again had a gradual decrease till 2011. In 2012, Bangas could make it’s Net liquid

Balance in a positive number. It means In 2012 they were able to pay off their liabilities with

their liquid assets.

7. Working Capital Requirement:

Working Capital Requirements= A/R +Inventory + Prepayments and Other CA – A/P –

Accruals and Other CL

Working Capital Requirement =A/R+ Inv+ Prepaids & other CA –A/P- Accruals & other CL

Yea

r

A/R Inv. Prepaids &

others CA

A/P Accruals &

other CL

WCR

2008 7996868 35716865 5329120 5329120 2138040 41575693

2009 13364697 38381623 3518444 3518444 1995892 49750428

2010 15669025 30084005 795507 2009788 2523675 42015074

2011 16139448 34461781 993872 1966166 3201379 46427556

2012 13939830 21710123 1173563 2029984 3706440 31087092

2008 2009 2010 2011 20120

10000000

20000000

30000000

40000000

50000000

60000000

41575693

49750428

4201507446427556

31087092

WCR

Positive working capital means that the business is able to pay off its short-term liabilities.

Also, a high working capital can be a signal that the company might be able to expand its

operations.

Negative working capital means that the business currently is unable to meet its short-term

liabilities with its current assets. Therefore, an immediate increase in sales or additional

capital into the company is necessary in order to continue its operations.

From the graph we can see that Bangas Company had always made a positive working

capital. Though it had some insignificant fluctuations over the 5 years, it was quite consistent

in making a positive amount of working capital.

8. Working Capital Requirement/Sales:

Working Capital Requirement/sales= A/R+ Inv+ Prepayments & other CA –A/P- Accruals &

other CL)/sales.

2008 2009 2010 2011 20120

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.383095

0.476492

0.7018330.674383

0.340373

WCR/S

ACI FOODS

1. Days Inventory Held:


Year Sales WCR WCR/S

2008 108525735 41575693 0.383095

2009 104409785 49750428 0.476492

2010 59864768 42015074 0.701833

2011 68844483 46427556 0.674383

2012 91332367 31087092 0.340373


Year Inventory Cost of Goods Sold Days DIH

2008 8800000 395940000 365 8

2009 278938000 1633072000 365 62

2010 361478000 1857531000 365 71

2011 1770481777 5317279883 365 122

2012 2128984396 6089878323 365 128

2008 2009 2010 2011 20120

20

40

60

80

100

120

140

8

6271

122128

DIH





In 2012, ACI has Days Inventory held of 128 days, which means, on an average they

sell off their inventory within 128 days.


has gradually been increasing at a foster rate. So, the company is going through an

unfavorable condition.

2. Days Sales Outstanding: Days Sales Outstanding = Accounts Receivable / (Sales/ 365)


Year Sales Account Receivable Days DSO

2008 417653000 77738000 365 68

2009 2742817000 261567000 365 35

2010 3199375000 317744000 365 36

2011 8513841846 1270066524 365 54

2012 3680061562 1399774690 365 139

2008 2009 2010 2011 20120

20

40

60

80

100

120

140

160

68

35 36

54

139

DSO

Since it is profitable to convert sales into cash quickly, this means that a lower value of Days

Sales Outstanding is favorable whereas a higher value is unfavorable. Any significant


In 2009 to 2010 ACI had a good number of DSO that means they were being able to collect

their credit within a short span of time. But gradually their DSO increased till 2011 and then

again had a fast increase in 2012. It means they are not being profitable as they cannot turn

their sales into cash quickly, it takes 139 days.

3. Days Payable Outstanding:Days Payable Outstanding = Accounts Payable/ (Cost of Goods Sold / 365)

Days Payable Outstanding = Accounts Payable/ (Cost of Goods Sold /

365)

Year Account Payable Cost of Goods Sold Days DPO

2008 16047000 395940000 365 15

2009 48950000 1633072000 365 11

2010 59360000 1857531000 365 12

2011 2487707979 5317279883 365 171

2012 3856614632 6089878323 365 231

2008 2009 2010 2011 20120

50

100

150

200

250

15 11 12

171

231

DPO





business.

In 2012, ACI had an Days Payable Outstanding of 231 days, which means, on an average it


From the time series point of view, they were having a very low Days Payable Outstanding

which is the lowest on 2009 (11 days). But from 2010 the DPO increased dramatically and

reached 231 days on 2012. Gradually the company is making its payment later and later and

causing benefits to the owners.

4. Operating cycle:Operating cycle= DIH+DSO

Year DSO DIH OC

2008 68 8 76

2009 35 62 97

2010 36 71 107

2011 54 122 176

2012 139 128 267

2008 2009 2010 2011 20120

50

100

150

200

250

300

76

97 107

176

267

OC



the company is.

From the graph we see that in 2008 ACI used to have a better Operating Cycle which

gradually worsened during 2009, 2010, 2011 and 2012.

5. Cash Conversion Cycle:

Cash Conversion Cycle = Days in Inventory +Days Sales Outstanding – Days Payable

Outstanding

Year DSO DIH DPO CCP

2008 68 8 15 61

2009 35 62 11 86

2010 36 71 12 95

2011 54 122 171 5

2012 139 128 231 36

2008 2009 2010 2011 20120

10

20

30

40

50

60

70

80

90

100

61

86

95

5

36

CCP



In 2012, ACI has cash conversion cycle in 36 days, which means, on an average it takes 36

days for ACI to get back the cash as revenue for the company.

From the time series analysis, ACI has reduced their cash conversion cycle drastically from

2010 to 2011 (95 to 5 days). This is because they are always decreasing days sales

outstanding more than Days Payable Outstanding.



NET Liquid Balance

Year Cash Mkt. sec N/P CMLTD NLB

2008 112966000 0 75000000 0 37966000

2009 1116875000 0 74867000 0 1042008000

2010 1074414000 0 55237000 0 1019177000

2011 223659923 0 221220224 0 2439699

2012 161461711 0 318773624 0 -157311913

2008 2009 2010 2011 2012

-400000000

-200000000

0

200000000

400000000

600000000

800000000

1000000000

1200000000

NLB

Company ACI had negative liquid assets in 2012, meaning that if it was forced to pay off all

of its current liabilities in 2012, it would not be able to do so. Then, it’s NLB was positive in

2008 and rose high in 2009 and 2010 and again had a gradual decrease till 2011.


Working Capital Requirement =A/R+ Inv+ Prepaids & other CA –A/P- Accruals &

other CL

Working Capital Requirement =A/R+ Inv+ Prepaids & other CA –A/P+ Accruals & other CL

Year A/R Inv. Prepaids &

others CA

A/P Accruals &

other CL

WCR

2008 77738000 8800000 9483000 16047000 24068000 55906000

2009 261567000 278938000 107158000 48950000 175699000 423014000

2010 317744000 361478000 117641000 59360000 206801000 530702000

2011 127006652

4

1770481777 522847653 2487707979 0 1075687975

2012 139977469

0

2128984396 460184564 3856614632 0 132329018

2008 2009 2010 2011 20120

200000000

400000000

600000000

800000000

1000000000

1200000000

55906000

423014000

530702000

1075687975

132329018

WCR


Also

a high working capital can be a signal that the company might be able to expand its

operations.




From the graph we can see that ACI Company had always made a positive working capital.

Though it had some significant fluctuations over the 5 years, but they have been able to pay

off its short-term liabilities.


Working Capital Requirement/sales= A/R+ Inv+ Prepaids & other CA –A/P- Accruals &

other CL)/sales

2008 2009 2010 2011 20120

5

10

15

20

25

30

7.470629271000016.483986346

6.02857158999999

7.91478759999999

27.80993631

WCR/S


2008 417653000 55906000 7.470629271

2009 2742817000 423014000 6.483986346

2010 3199375000 530702000 6.02857159

2011 8513841846 1075687975 7.9147876

2012 3680061562 132329018 27.80993631

BRITISH AMERICAN TOBACCO LTD.

1. Day’s Inventory Held:

Day’s Inventory held= Inventory/ (cost of goods sales/365)

2008 2009 2010 2011 20120

20

40

60

80

100

120

140

160

110 114 118

146

113

DIH





In 2012, BAT has Days Inventory held of 113 days, which means, on an average they

sell off their inventory within 113 days.


was high at 2011 which means they were selling their inventory reluctantly. But from

Day’s Inventory held= Inventory/ (cost of goods sold/365)

Year Inventory Cost of Goods Sold Days DIH2008 2719086 8999361 365 1102009 3577588 11463840 365 1142010 4366664 13475693 365 1182011 5373033 13455535 365 1462012 4956887 15946224 365 113

2012 the company reduced their DIH. So, they are selling their inventory more

quickly than before.



Year Sales Account Receivable Days DSO2008 14030386 854808 365 222009 17576490 514498 365 112010 20946040 488053 365 92011 23268861 926842 365 152012 27471344 937873 365 12

2008 2009 2010 2011 20120

5

10

15

20

25

22

119

15

12

DSO




In 2008 BAT had a high number of DSO that means they were not being able to collect their

credit within a short span of time. But gradually their DSO decreased till 2010 and then again

had a increase till 2011. Finally in 2012 BAT faced a decrease in DSO and tried to regain its

minimal DSO.

3. Days Payable Outstanding:Days Payable Outstanding = Accounts Payable/ (Cost of Goods Sold / 365)

Days Payable Outstanding = Accounts Payable/ (Cost of Goods Sold / 365)

Year Account Payable Cost of Goods Sold Days DPO2008 3274713 8999361 365 1332009 3911116 11463840 365 1252010 2643529 13475693 365 722011 3437758 13455535 365 932012 3245676 15946224 365 74

2008 2009 2010 2011 20120

20

40

60

80

100

120

140133

125

72

93

74

DPO





business.

In 2012, BAT had a Days Payable Outstanding of 74 days, which means, on an average it


From the time series point of view, they were having a higher Days Payable Outstanding

which is the highest on 2008 (133 days). The payment of creditor is hugely depended upon

the decision of the management committee. Gradually the company is making its payment

earlier and causing problems to its owners.

4. Operating cycle:

Operating cycle= DIH+DSO

Year DSO DIH OC2008 22 110 1322009 11 114 1252010 9 118 1272011 15 146 1612012 12 113 125

2008 2009 2010 2011 20120

20

40

60

80

100

120

140

160

180

OC



the company is.

From the graph we see that in 2008 BAT used to have a better Operating Cycle which

gradually worsened during from 2010 to 2011. Then again in 2012 it re-gained its

previous situation of OC.

5. Cash Conversion Cycle:

Cash Conversion Cycle = Days in Inventory +Days Sales Outstanding – Days Payable

Outstanding

Year DSO DIH DPO CCP2008 22 110 133 -1

2009 11 114 125 0

2010 9 118 72 55

2011 15 146 93 68

2012 12 113 74 51

2008 2009 2010 2011 2012-10

0

10

20

30

40

50

60

70

80

-1 0

55

68

51

CCP



In 2012, BAT has cash conversion cycle in 51 days, which means, on an average it takes 51

days for BAT to get back the cash as revenue for the company.

From the time series analysis, BAT has increased their cash conversion cycle drastically form

0 days to only 55 days. In 2008 and 2009 BAT faced a very short period to convert their

sales into cash. But after 2009, it became worse and from 2011 to 2012 they were having

another decrease in CCP.



NET Liquid BalanceYear Cash Mkt. sec N/P CMLTD NLB2008 1678466 0 3274713 0 -15962472009 2000165 0 3911116 0 -19109512010 1343853 0 2643529 0 -12996762011 837393 0 3437758 0 -26003652012 2270567 0 3245676 0 -975109

2008 2009 2010 2011 2012

-3000000

-2500000

-2000000

-1500000

-1000000

-500000

0

NLB

Company BAT has been having a negative liquid assets from 2008 to 2012, meaning that if it

was forced to pay off all of its current liabilities , it would not be able to do so. Its NLB rose

high in 2012and trying to reach the positive amount in future years.


Working Capital Requirement =A/R+ Inv+ Prepaids & other CA –A/P - Accruals & other CL

Working Capital Requirement =A/R+ Inv+ Prepaids & other CA –A/P - Accruals & other CL

Year

A/R Inv. Prepaids & others CA

A/p Accruals & other CL

WCR

2008 854808 2719086 157277 1547547 0 2183624

2009 514498 3577588 379310 2338135 0 2133261

2010 488053 4366664 419348 1596984 0 3677081

2011 926842 5373033 521809 1838021 0 4983663

2012 937873 4956887 578111 2188035 0 4284836

2008 2009 2010 2011 20120

1000000

2000000

3000000

4000000

5000000

6000000

2183624 2133261

3677081

4983663

4284836

WCR


Also, a high working capital can be a signal that the company might be able to expand its

operations.




From the graph we can see that BAT Company had always made a positive working capital.

Though it had some significant fluctuations over the 5 years, it was quite consistent in

making a positive amount of working capital.


Working Capital Requirement/sales=( A/R+ Inv+ Prepaids & other CA –A/P+ Accruals & other CL)/sales


2008 14030386 2183624 6.4252755972009 17576490 2133261 8.239259052010 20946040 3677081 5.6963770992011 23268861 4983663 4.6690277812012 27471344 4284836 6.411294155

2008 2009 2010 2011 20120

1

2

3

4

5

6

7

8

9

6.42527559699999

8.23925905

5.696377099

4.669027781

6.41129415500001

WCR/S

FU-WANG INDUSTRIES LTD.

1. Day’s Inventory Held:

Day’s Inventory held= Inventory/ (cost of goods sales/365)

Day’s Inventory held= Inventory/ (cost of goods sold/365)

Year Inventory Cost of Goods Sold day's DIH2008 188961135 231137880 365 2982009 181961135 244158561 365 2722010 193656260 320728956 365 2202011 202324975 431388868 365 1712012 128761124 577224631 365 81

2008 2009 2010 2011 20120

50

100

150

200

250

300

350

298272

220

171

81

DIH





In 2012, FU-WANG has Days Inventory held of 81 days, which means, on an average

they sell off their inventory within 81 days.


has gradually been decreasing at a consistent rate. So, the company is going through

an favorable condition.



Year Sales Account Receivable Days DSO2008 296667642 54843994 365 672009 312617029 62330698 365 732010 428081147 67101722 365 572011 607801483 97200107 365 582012 758459050 116404833 365 56

2008 2009 2010 2011 20120

10

20

30

40

50

60

70

80

6773

57 58 56

DSO




In 2010 to 2012 FU-WANG had a good number of DSO that means they were being able to

collect their credit within a short span of time. But gradually their DSO increased till from

2008 to year 2009. It means at that moment they are not being profitable as they could not

turn their sales into cash quickly.

3. Days Sales Outstanding:Days Sales Outstanding = Accounts Payable/ (Cost of Goods Sold / 365)

Days Sales Outstanding = Accounts Payable/ (Cost of Goods Sold / 365)

Year Account Payable Cost of Goods Sold Days DPO2008 319122197 231137880 365 5042009 369825735 244158561 365 5532010 346965241 320728956 365 3952011 110899847 431388868 365 942012 66497124 577224631 365 42

2008 2009 2010 2011 20120

100

200

300

400

500

600

504

553

395

94

42

DPO





business.

In 2012, FU-WANG had a Days Payable Outstanding of 42 days, which means, on an

average it takes 42 days to make the payments to the creditor.

From the time series point of view, they were having a decreasing pattern of Days Payable

Outstanding from 2009 to 2012, the lowest was in 2012 (42 days). There was an increase in

DPO from 2008 to 2009. It means it’s the most flexible in managing cash in 2012.

4. Operating cycle:Operating cycle= DIH+DSO

Year DSO DIH OC2008 67 298 3652009 73 272 3452010 57 220 2772011 58 171 2292012 56 81 137

2008 2009 2010 2011 20120

50

100

150

200

250

300

350

400

365345

277

229

137

OC



the company is.

From the graph we see that FU-WANG had a decreasing trend of OC that indicates it has

been well operated with its inventory and cash collection.

5. Cash Conversion Cycle:Cash Conversion Cycle = Days in Inventory +Days Sales Outstanding – Days Sales

Outstanding

Year DSO DIH DPO CCP2008 67 298 504 -139

2009 73 272 553 -208

2010 57 220 395 -118

2011 58 171 94 135

2012 56 81 42 95

2008 2009 2010 2011 2012

-250

-200

-150

-100

-50

0

50

100

150

200

-139

-208

-118

135

95

CCP



In 2012, FU-WANG has cash conversion cycle in 95 days, which means, on an average it

takes 95 days for FU-WANG to get back the cash as revenue for the company.

From the time series analysis, FU-WANG has increased their cash conversion cycle

drastically from 2010 to 2011 (-118 to 135 days). This is because they are always decreasing

days sales outstanding more than Days Payable Outstanding.


NET Liquid Balance=Cash +Mkt.sec-N/P-Current Maturities Long-term Debt

NET Liquid Balance

Year Cash Mkt. sec N/P CMLTD NLB2008 5386613 0 34060728 0 -286741152009 6319883 0 15260479 0 -89405962010 5498960 0 19053828 0 -135548682011 194150548 0 19739056 0 1744114922012 1013683 0 52787662 0 -51773979

2008 2009 2010 2011 2012

-100000000

-50000000

0

50000000

100000000

150000000

200000000

-28674115

-8940596

-13554868

174411492

-51773979

NLB

Company FU-WANG had negative liquid assets in 2012, meaning that if it was forced to pay

off all of its current liabilities in 2012, it would not be able to do so. Then, its NLB was

positive in 2011 and negative in the rest of the years showing an unfavorable situation of the

company.

Working Capital Requirement:Working Capital Requirement =A/R+ Inv+ Prepaids & other CA –A/P+ Accruals & other CL

Working Capital Requirement =A/R+ Inv+ Prepaids & other CA –A/P+ Accruals & other CL

Year

A/R Inv. Prepaids & others CA

A/P Accruals & other CL

WCR

2008 54843994 188961135 0 319122197 3887972 -792050402009 62330698 181961135 0 369825735 5953150 -1314870522010 67101722 193656260 0 346965241 8587147 -947944062011 97200107 202324975 0 110899847 8585194 180040041

2012 116404833 128761124 0 66497124 5269145 173399688

2008 2009 2010 2011 2012

-150000000

-100000000

-50000000

0

50000000

100000000

150000000

200000000

-79205040

0

-94794406

180040041 173399688

WCR


Also

a high working capital can be a signal that the company might be able to expand its

operations.




From the graph we can see that FU-WANG Company had mostly made negative working

capital in the earlier years (2008 and 2010). It means in the early years FU-WANG faced

difficulty in meeting the short term liabilities with the CA. But after 2010 it started making

positive WCR and till 2012 it continued having a good WCR.

E) Working Capital Requirement/Sales:

Working Capital Requirement/sales=( A/R+ Inv+ Prepaids & other CA –A/P - Accruals & other CL)/sales


2008 296667642 -79205040 -0.2669824032009 312617029 -131487052 -0.4206010542010 428081147 -94794406 -0.2214402732011 607801483 180040041 0.2962152052012 758459050 173399688 0.228621028

2008 2009 2010 2011 2012

-0.5

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

-0.26698240300000

1

-0.420601054

-0.221440273

0.2962152050.228621028

WCR/S

APPENDIX

fin340 project

Documents