8/9/2019 Vinay FinL

1/25

DATA

ANALYSIS

8/9/2019 Vinay FinL

2/25

8/9/2019 Vinay FinL

3/25

(a) Raw material conversion period = (Average stock of raw material / Raw Material

Comsumption) X 365 days

Particulars 2009-10 2008-09

Average Stockofraw material 121,745.25 122,207.65

Raw material consumption 4,198,466.65 4,487,736.20

Raw material conversion

period

11 days 11 days

(b) Work-in-process conversion period = (Average stock of W I P inventory / Cost of

production) X 365 days

Particulars 2009-10 2008-09

Average StockofW I P

Inventory

54,109.00 62,414.60

costofproduction 8,609,863.19 9,583,297.21

Work-in-process

conversionperiod

2 days 2 days

(c) Finished goods conversion period = (Average stock of Finished Goods / Cost of

goods sold) X 365 Days

Particulars 2009-10 2008-09

Average StockofFinished

Goods

94,690.75 111,602.75

Costofgoodssold 8,613,324.69 9,613,659.71

Finishedgoods conversion

period

4 days 4 days

8/9/2019 Vinay FinL

4/25

(d) Debtors conversion period = (Average debtors / Cost of sales) X 365 days

Particulars 2009-10 2008-09

Average Debtors 1,578,514.61 1,425,380.79

Creditpurchases 9,164,654.64 10,093,915.70

Creditors Deferral period 63 days 52 days

(e) Creditors Deferral period = (Average Creditors / Creditor purchases) X 365 days

Particulars 2009-10 2008-09

Average Debtors 11,65,481.61 977,848.04Creditpurchases 4,103,618.18 4,374,195,90

Creditors Deferral period 103 days 82 days

8/9/2019 Vinay FinL

5/25

ANALYSIS OF OPERATING CYCLE :-

Particulars No.ofDays

2009-2010

No.ofDays

2008-2009

(a) Raw material conversion period 11 10

( b) Work-in-process conversion period 2 2

(c) Finished goods conversion period 4 4

(d) Debtors conversion period 63 52

(e) Creditors Deferral period 103 82

GROSS OPERATING CYCLE

PERIOD (a+b+c+d)

80 68

NET OPERATING CYCLE PERIOD

(a+b+c+d-e)

-23 -14

8/9/2019 Vinay FinL

6/25

CURRENT RATIO:-

Table No. 1 :Table showing Current ratio

Current Ratio = Current assets/current liabilities

Particulars 2009-2010 2008-2009 2007-2008

Current Assets 3,822,251.70 34,73,635.21 33,78,650.78

Current Liabilities 1,492,324.22 18,59,645.86 15,16,067.90

Current Ratio 2.56 1.87 2.23

Interpretation :-

From the above data it is clear that the ideal current ratio is 2:1 as calculated above the

current ratio during the past Three years is well within the recommended range, i.e. 2.23 in 2007-

08, 1.87 in 2008-09 and 2.56 in 2009-10. That means during the years under review the companyhad the liquidity to meet the short term obligations and at the same time it was not excessively

liquid.

INVENTORY TURNOVER RATIO:-

0

1

2

3

Current Ratio

2009-2010 2008-2009 2007-2008

8/9/2019 Vinay FinL

7/25

Table No. 3 :Table showing Inventory Turnover ratio

Inventory turnover ratio = cost of goods sold/average inventory

Average inventory = (opening + closing stock)/2

Particulars 2009-2010 2008-2009 2007-2008

Cost of Goods Sold 86,13,324.69 96.13,659.71 71.60,092.38

Average Inventory 2,70,545.00 2,96,225.00 2,27.385.00

Current Ratio 31.83 32.45 31.48

Interpretation :-

From the above data it is clear that a high inventory turnover ratio indicates that

maximum sales turnover is achieved with the minimum investment in inventory. As such, as a

general rule high inventory turnover ratio is desirable. On the other hand, a low inventory

turnover ratio may indicate over investment in inventory.

In the year 2007-08 Inventory turnover ratio indicates that sales turnover was not

achieved with the minimum investment in inventory. In the year 2008-09 Inventory turnover

ratio indicates that maximum sales turnover was achieved with the minimum investment in

inventory. In the year 2009-10 Inventory turnover ratio indicates that maximum sales turnover

was achieved was but compare to year 2008-09 it is less.

INVENTORY HOLDING RATIO:-

30.5

31

31.5

32

32.5

Inventory Turnover Ratio

2009-2010 2008-2009 2007-2008

8/9/2019 Vinay FinL

8/25

8/9/2019 Vinay FinL

9/25

Table No. 5 :Table showing Current Asset Turnover Ratio

Current Assets turnover Ratio = Net Sales / Current Assets

Particulars 2009-2010 2008-2009 2007-2008

Net sales 1,19,46,981.68 1,29,40,511.97 1,22,53,314.24

Current assets 38,22,251.70 34,73,635.21 33,78,650.78

C.A. turnover ratio 3.13 3.73 3.63

Interpretation :-

From the above data it indicates A high current assets turnover ratio indicates thecapability of the organization to achieve maximum sales with the minimum investment in current

assets. In the year 2007-08 ratio indicate that the organization had increased sales with the

minimum investment in current assets. It indicates that the current assets were turned over in the

form of sales more number of times.

In the year 2008-09 ratio indicates that the organization had increased sales but

investment in current assets were also increased compared to previous year. But it indicates that

current assets were turned over in the form of sales more number of times, compared to previous

year.

In the year 2009-10 ratio indicates that the sales had decreased, and current assets were

increased, it indicates that current assets were not turned over in the form of sales more number

of times, compared to previous year.

FIXED ASSETS TURNOVER RATIO:-

2.5

3

3.5

4

Current Asset Turnover Ratio

2009-2010 2008-2009 2007-2008

8/9/2019 Vinay FinL

10/25

Table No. 6 :Table showing Fixed Asset Turnover Ratio

Fixed Assets Turnover Ratio = Net Sales / Fixed Assets

Particulars 2009-2010 2008-2009 2007-2008

Net sales 1,19,46,981.68 1,29,40,511.97 1,22,53,314.24Fixed Assets 1,24,22,939.85 1,28,86,198.00 68,67,835.00

F.A. turnover ratio 0.96 1.00 1.78

Interpretation :-

From the above data it is clear that in the year 2007-08 that, the organization has

increased sales and organization had purchased new fixed assets as Machinery in this year. And

machinery is directly related to production, thats why the ratio was increased. In the year 2008-

09 ratios indicate that, the organization had increased sales. But in this year company purchased

new fixed assets as vehicles and vehicles are not directly related to sales because of that fixed

assets turnover ratio was decreased compare to last year. If we excluded vehicles from the fixed

assets then the fixed assets turnover ratio is 1.29. (12940511.97/10050059)

In the year 2009-10 ratios indicate that, the sales has decreased and fixed assets were

increased. So it indicates that the fixed assets are not turned over in the form of sales morenumber of times. If we excluded vehicles from the fixed assets then the fixed assets turnover

ratio is 1.19. (11946981.68/10012222.85)

WORKING CAPITAL TURNOVER RATIO:-

Table No. 7 :Table showing Working Capital Turnover Ratio

0

1

2

Fixed Asset Turnover Ratio

2009-2010 2008-2009 2007-2008

8/9/2019 Vinay FinL

11/25

Working Capital Turnover Ratio = Net Sales / Working Capital

Particulars 2009-2010 2008-2009 2007-2008

Net sales 1,19,46,981.68 1,29,40,511.97 1,22,53,314.24

Working Capital 23,29,927.48 16,13,989.35 18,62,582.88

W.C. turnover ratio 5.13 8.02 6.58

Interpretation :-

From the above data it is clear that a high working capital turnover ratio indicates thecapability of the organization to achieve maximum sales with the minimum investment in

working capital. It indicates that the working capital is turned over in the form of sales more

number of times. As such, higher the working capital turnover ratio better will be the situation.

In the year 2007-08 the organization had increase sales with minimum investment in

working capital. Cause of organization kept low investment in fixed assets and current assets.

In the year 2008-09 also the organization had increased sales with minimum investment

in working capital. Cause of organization kept low investment in working capital. And it

increased sales more number of times. And ratio has increased to 8.02.

In the year 2009-10 the organization has decreased sales and increased investment inworking capital. And it shows that ratio it has further decreased to 5.13.

0

10

Working Capital Turnover

Ratio

2009-2010 2008-2009 2007-2008

8/9/2019 Vinay FinL

12/25

8/9/2019 Vinay FinL

13/25

8/9/2019 Vinay FinL

14/25

STATEMENT OF CHANGES IN WORKING CAPITAL

(2008-09)

PARTICULARS 2007-08 2008-09

Amount (Rs.) Amount (Rs.) Increase Decrease

Current Assets,

Loans & Advances

Stock In Trade

Raw Material 120,444.80 123.970.50 3,525.70

WIP 69,731.20 55,098.00 - 14633.2

Finished Goods 126784 96421.5 - 30362.5

Sundry Debtors 1,468,624.33 1,382,137.25 - 86.487.08

Loans & Avances

Adv Employees 162,818.00 193,848.00 31,030.00 -Adv-MarshalEngineers

850,615.00 944,545.00 93,930.00 -

Advance Tocreditors

50,404.00 - - 50,404.00

Tax Deducted At

Source

33,202.00 49.032.00 15,830.00 -

Advance Tax 225,000.00 150,000.00 - 75,000.00

Fringe Benefit Tax - 50,990.00 50,990.00 -

Fringe Benefit Tax

(A.Y.2009-10)

- 11,533.23 11,533.23 -

MVAT Receivable - 410,198.28 410,198.28 -Cash In Hand 17,294,45 5,861.45 - 11,433.00

RD with JansevaBank

253,733.00 - - 253,733.00

Total (A) 3,378.650.78 3,473.635.21

Current Liabilities

& Provisions

Sundry Creditors 809,915,51 1,145,780.56 335,865.05

Outstanding

Expenses

Light Bill Payable 11,500.00 19,860.00 - 8360.00Telephone Expenses

Payable

6,861.20 7,650.00 - 788.8

A/C Writing

Charges Payable

- 1,500.00 - 1,500.00

Salary & Wages

Payable

100,299.00 104,336.00 - 4,037.00

8/9/2019 Vinay FinL

15/25

Ex-Gratia Payable 105,000.00 113,979.00 - 8,979.00

Service Tax Payable - 34,459.81 - 34,459.81

TDS Payable - 22,154.00 - 22,154.00

VATAudit DutyPayable

16,836.00 16,854.00 - 18.00

Audit Fees Payable 14,030.00 14.045.00 - 15.00Professional Fees

Payable

9,112.00 18,224.00 - 9,112.00

CST Payable - - - -

VAT Payable - - - -

Duties & Taxes 26,150.49 10,803.49 15,347.00 -

Advances from

Debtors

412,235,93 350,000.00 62,235.93 -

Interest Paid On

Loans

3,841.00 - 3,841.00

TDS on L/C 286.77 - 286.77 -

Total (B) 1516,06.90 1,859,645,86

Working Capital

(A-B)

1,862,582.88 1,613,989.35

Decreasein

Working Capital

248,593.53 248,593,53

1,862,582.88 1,862,582.88 947,341,44 947,341.44

8/9/2019 Vinay FinL

16/25

STATEMENT OF CHANGES IN WORKING CAPITAL

(2009-10)

PARTICULARS 2008-09 2009-10

Amount (Rs.) Amount (Rs.) Increase DecreaseCurrent Assets,

Loans & Advances

StockIn Trade

Raw Material 123,970.50 119,520.00 - 4450.5

WIP 55,098.00 53,120.00 - 1,978.00

Finished Goods 96421.5 92,960.00 - 3461.5

Sundry Debtors 1,382,137.25 1,774,891.97 392,754.72 -

Loans & Advances

Adv Employees 193,848.00 233,238.00 39,390.00 -

Adv-Marshal

Engineers

944,545.00 1,171,285.00 226,740.00 -

Tax Deducted At

Source

49,032.00 20,530.00 - 28,502.00

Advance Tax 150,000.00 150,000.00 - -

Fringe Benefit Tax 50,990.00 86,294.00 35,304.00 -

Fringe Benefit Tax

(A.Y.2009-10)

11,533.23 7,987.00 - 3,546.23

MVAT Receivable 410,198.28 96,190.28 - 314,008.00

Cash In Hand 5,861.45 4,351.45 - 314,008.00

Bank ofMaharashtra CA - 11,884.00 11,884.00 -

Total (A) 3,473,635.21 3,822,251.70

Current Liabilities

& Provisions

Sundry Creditors 1,145,780.56 1,185,182.66 39,402.10

Advances FromDebtors

350,000.00 350,000.00

OutstandingExpenses

Light Bill Payable 19,860.00 - 19,860.00 -Telephone

Expenses Payable

7,650.00 - 7,650.00 -

A/C Writing

Charges Payable

1,500.00 1,500.00 - -

Salary & Wages

Payable

104,336.00 139.306.00 - 34,970.00

8/9/2019 Vinay FinL

17/25

Ex-Gratia Payable 113,979.00 - 113,979.00 -

Service Tax

Payable

34,459.81 48,051.56 - 13,591.75

TDS Payable 22,154.00 - 22,154.00 -

VATAudit DutyPayable

16,854.00 16,854.00 - -

Audit Fees Payable 14,045.00 36,470.00 - 22,425.00

Professional FeesPayable

18,224.00 18.224.00 - -

CST Payable - 2,260.00 - 2,260.00

VAT Payable - 44,476.00 - 44,476.00

Duties & Taxes 10,803.49 - 10,803.49 -

Total (B) 1,859,645.86 1,492,324.22

Working Capital(A-B)

1,613,989.35 2,329,927.48

Increasein

Working Capital

715,938.13 - - 715,938.13

2,329,927.48 2,329,927.48 1,230.519.21 1,230,519.21

8/9/2019 Vinay FinL

18/25

FINDINGS

8/9/2019 Vinay FinL

19/25

FINDINGS

On the basis of Data Analysis following findings are given to Marshal threading

company.

1) Standard current ratio is 2:1 and for industry it is 2.56 in this year. This shows thatMarshal Threading companys ratios are satisfactory.

2) Liquid ratio is more than one so, it is satisfactory.3) As there are more number of debtors the average collection period of debtors also

increased. The decrease in the debtor turnover ratio shows that there are more receivables

from debtors. Because of the recession, it was very difficult for a company to collect the

debtors hence; there is less recovery from debtors.

4) Inventory turnover ratio is improving, which means inventory is used in a better way so itis good for the company & Inventory holding period is decreasing which is good

indicator of business.

5) Fixed assets turnover ratio is decreasing year after year. In the Year 2009-10 ratiosindicate that, the sales has decreased and fixed assets were increased. So indicates that the

fixed assets are not turned over in the form of sales most of the times.

6) In the year 2009-10 creditors turnover ratio was 3.52. It shows that there are morepayables as compared to previous year.

7) In the calculation of the net operating cycle it has been seen that the company hasnegative net operating cycle which shows the company is getting more credit period and

they are making business with others money. It shows that company has good reputation

in the market.

8/9/2019 Vinay FinL

20/25

LIMITATIONS

8/9/2019 Vinay FinL

21/25

LIMITATIONS

Every project has its own limitations. But we have to work irrespective of these limitations and

find our way, so that we can achieve the required aim.

Some of the limitations of our project are :-

y As the project is based on the data recorded by the company, we face the limitation ofextracting that particle data because our access is limited for the sake of confidential

information of the company.

y The grouping of different items in the balance sheet also created difficulties for us, as it isvery difficult to identify which item is clubbed with which head. But thanks to accounts

personal who made it easy to understand these clubbing.

y This project is based on three year annual reports. Findings and suggestions were basedon such limited data. The trend of last three year may or may not reflect the real working

capital position of the company.

y The study is limited only to working capital management aspect of the Marshal TreadingCompany, Pune.

8/9/2019 Vinay FinL

22/25

CONCLUSION

8/9/2019 Vinay FinL

23/25

CONCLUSION

The title of the project is Working Capital Management which is carried out in Marshal

Threading Company. The objectives of the project were primary and secondary i.e. to analyze

the financial statement of the company through ratio of the company, to find out the working

Capital of the company, the net operating cycle of the company. In this study an attempt is made

to provide an idea about the way in which a decision can be taken to decide in the field of

finance for better progress.

The ratio analysis of the Marshal Threading Company explains the different operations and

financial position which shows a recession affect on company that the sales were decreased.

There is a negative operating cycle in the company which means that they are doing business

with others money. The working capital management of Company is being effectively done as

they have a proper management and control over the WCM.

The Company has been progressive in all aspects. Through this analysis we can concluded that

even though the company is progressing. Company should minimize its loan and company

should work on its operating cycle although they have negative working capital company should

pay to its creditors on time.

8/9/2019 Vinay FinL

24/25

SUGGESTIONS

8/9/2019 Vinay FinL

25/25

SUGGESTIONS

On the basis of findings drawn following suggestions are given to Marshal threading company :-

1) It can be said that the overall financial position of the company is sound but it is requiredto improve from the point of view of profitability.

2) Company should have proper policy for salary increment & labour welfare policy.3) Company should minimize its inventory holding period.4) Company should try to increase their sales.

5)

Company should raise funds through short term requirement of funds, which iscomparatively economical as compared to the long terms funds.

6) Company should work on the negative working capital because it will affect thecompanys reputation in the long term, by paying off their creditors dues in the given

period of time i.e. the credit period.

7) Company should plan for the cash purchases & take a cash discount & bring down thecost & make profit and also plan for the repayment of loan.