A PROJECT REPORTONWORKING CAPITAL MANAGEMENT OF I.T.I Limited ,MankapurSUBMITTED TO: SUBMITTED BY: Mr. Haridas GuptaMukul SaxenaDeputyFinanceHead MBA(FS) , 3rd Se!"! #t. Mankapur PREFACET$e %inter trainin& is an inte&ral part '( acadeic curriculu. Durin& t$is a student &ets'pp'rtunity t' understand t$e practical aspects '( )ari'us (uncti'nal d'ains. "$ere isal%ays &ap *et%een t$e'ries and practices and t$e trainin& is aied at re')in& t$is &ap."$is pr'+ect rep'rt is t$e 'utc'e '( t$e suer trainin& t$at ! $a)e under&'ne at !"!#iited Mankapur ('r t$e partial (ul(illent '( Masters '( Business Adinistrati'n inSc$''l '( ,c'n'ics , De)i A$ilya -is$%a)id$yalaya , !nd're."$e t'pic is c'ncerned %it$ t$e ./O01!NG 2A3!"A# MANAG,M,N"4. "$is pr'+ect%'rk $as *een undertaken t' kn'% t$e pr'cedures in)'l)ed in t$e F!NAN2,D,3A0"M,N" in !"! #iited. "$e rep'rt is %ritten acc'unt '( %$at ! $a)e learnt andexperienced in y trainin& and $a)e tried y le)el *est t' enc'pass eac$ and e)eryaspect '( it %$ic$ is necessary t' +usti(y t$e pr'+ect undertaken."$epreparati'n'( t$is pr'+ect re5uiresinitiati)e, perse)erance, pr'per &uidanceanddirecti'n."$ere('re, it *ecae andat'ry t' take aids (r' )ari'us departents.ACKNOWLEGEMENTI %'uld like t' express y &ratitude t' all t$'se pe'ple %$' $a)e pr')ided e supp'rt,c'6'perati'n and t$eir )alua*le tie t' $elp e in t$e c'pleti'n '( t$is pr'+ect. ! %$'le6$eartedlyackn'%led&et$eintellectual siulati'n'(yestee&uideMr.Hari DasGuptaji('r &i)in& e 'pp'rtunity t' %'rk in suc$ an ip'rtant sp$ere and s$arin& $is)isi'n and experience.!, express y deep sense '( &ratitude and sincere t$anks t' Mr. Tiwarijiand Mr. SunilGuptaji%$' $as pr')ided e %it$ t$e necessary in('rati'n and t$eir )alua*lesu&&esti'n and c'ents in *rin&in& 'ut t$is rep'rt in t$e *est %ay p'ssi*le. ! %'uldliket't$ankMr.Bhist, HumanResourceDevelopment Centre(HRDC)('rpr')idin& e t$e 'pp'rtunity t' c'plete y interns$ip in t$is esteeed 'r&ani7ati'n. !als' &i)e y sincere t$anks t' all t$'se pe'ple %$' directly 'r indirectly $elped e in(indin& t$e %ay t' c'llect t$e re5uisite in('rati'n and c'pletin& t$e pr'+ect tiely ande((ecti)ely. At last ! %'uld als' like t' t$ank t$e entire ana&eent tea '( Finance departent in!"!, as %'rkin& %it$ t$e $as *een an enric$in& and 'ti)atin& experience ('r e.Date 89:"H ;?9@3lace8 MAN1A3('r anu(acturin&'(di&ital electr'nic s%itc$in&e5uipent inc'lla*'rati'n%it$MIS2!",A#2A",# France t' anu(actureE"(0 type'(s%itc$in& syste ('r t$e(irst tie in c'untry. "$isunit$as *eensetup ('r in re'te area t' *rin&ups'ci'6ec'n'ic&r'%t$ in eastern part '( 2rkin? +apita*H An analysis '( circulati'n '( %'rkin& capital$i&$li&$tst$ee((iciency%$ic$%'rkin&capital is*ein&utili7ed. F'rt$ispurp'se)ari'us turn')er rati's suc$ as in)ent'ry turn')er rati', 0ecei)a*les turn')er rati',cas$ turn')er rati' etc. are calculated %$ic$ s$'% e((iciency '( t$e use '( %'rkin&capital in eac$ 'r its c'p'nents as %ell as 'n t$e %$'le. Generally t$e $i&$er t$ele)el '( t$ese turn')er rati's, t$e saller %'uld *e t$e %'rkin& capital re5uireents'( an enterprise.RATIO ANAL&-I-!"/ LiIuid Rati2! A (irCs a*ility t' eet s$'rt ter '*li&ati'ns %$en t$ey *ec'e due('rpayent can*eeasuredt$r'u&$li5uidityrati's. #i5uidityisaper5uisitet't$esur)i)al '( t$e (ir and re(lects t$e s$'rt6ter (inancial stren&t$ and s'l)ency '( a (ir."$e li5uidity rati's are89.9G 289. TA0LE NO. "."&EAR C%RRENTA--ET-C%RRENTLIA0ILITIE-C%RRENTRATIO'("@ >:@::9 >B3:M@ ?.J3'("# >:>@99 >B3MJ? ?.J92HA0" NO. 9.9INTERPRETATION!"$estandardrati'('r c'paris'nis>89. !n>?9:it is'nly?.J9%$ic$eans t$atc'panyCs li5uidity p'siti'n in ters '( current rati' is n't t$at s'und. H'%e)er, $i&$ercurrent rati' is n't al%ays (a)'ra*le ('r t$e c'pany. !t ay *e iplied t$at t$ey $a)eexcess cas$ 'r in)ent'ry %$ic$ reains idle ('r l'n& peri'd due t' %$ic$ t$eir (und ay*e *l'cked 'r in)ent'ry ay *ec'e '*s'lete.".'J Kui+k Rati2! !t depicts t$e relati'ns$ip *et%een 5uick assets and current lia*ilities. !t re(ers t' all current assets %$ic$ can *e c'n)erted in t' cas$ at a s$'rt n'tice %it$'utdiinuti'n '( )alue. "$us current assets %$ic$ are excluded in t$e calculati'n '( 5uickassets are prepaid expenses and in)ent'ries. Kui+k Rati2 7 Kui+k A88et8 L Current Lia9i*itie8"AB#, NO. 9.>&EARK%ICKA--ET-C%RRENTLIA0ILITIE-K%ICK RATIO'("@ >:3:BL >B3:M@ ?.J>'("# >:?LBM >B3MJ? ?.J92HA0" NO. 9.>INTERPRETATION!"$e 5uick rati' is uc$ 're exactin& easure t$an t$e current rati' t' pay E'(( t$e de*t'( t$e c'pany. "$e 5uick rati' '( 989 is c'nsidered t' *e satis(act'ry. !n >?93 and >?9:t$e c'panyCs p'siti'n in ters '( 5uick rati' %as &''d *ut a(ter t$at it started t' (allc'nsidera*ly%$ic$ipliest$at t$ein)ent'riesi&$t n't*ec'n)ertedint'cas$andt$ere('re lead t' reducti'n in 5uick rati'. !t is als' indicatin& t$at t$e a+'r p'rti'n '(current assets is in)ent'ry.".@J Ca8: Rati2! 2as$ is t$e 'st li5uid asset. A (inancial analyst exaines t$e cas$Ratio and its equialent to current liabilities in order to get the actualliquidity position of the frm in case of contingency. )ash Ratio depictstherelationshipbetweencashandcurrent liabilities andshows theability of the frm to meet its current obligations with cash and cashequialents. Trade inestments or marketable securities are equialentofcashandtherefore! maybeincludedinthecomputationof cashratio. $t can be calculatedas8 CashRatio=(Cashandequivalent+MarketableSecurities)/Current LiabilitiesTA0LE NO. ".@CA-$ C%RRENTLIA0ILITIE-&EARCA-$ RATIO9>B >B3:M@ '("@ ?.???:@B >B3MJ? '("# ?.???>2HA0" NO. 9.3INTERPRETATION!"$e c'pany is c'nstantly (acin& li5uidity t$reat. 2as$ $as crunc$ed and t$e c'panyneeds t' put 're e(('rt 'n t$e issue as it is uc$ *el'% t$e industry standard.'J WORKING CAPITAL T%RNO1ER RATIO!/'rkin& capital rati' easures t$ee((ecti)e utili7ati'n'( %'rkin&capital. !t als'easures t$es''t$runnin&'( t$e*usiness 'r 't$er%ise. "$e rati' esta*lis$es relati'ns$ip *et%een c'st '( salesIsales and%'rkin&capital. !t is calculated %it$ t$e $elp '( ('ll'%in& ('rula8W2rkin? +apita* turn2=er rati2 7 -a*e8 L Net W2rkin? Capita*

*et +orking )apital , )urrent Assets - )urrent "iabilities TA0LE NO. '&EAR -ALE- NETWORKINGCAPITALWCT%RNO1ERRATIO'("@ B9M@ (9L?3:) (?.3:)'("# L:J9 (>9>MJ) (?.3J)2HA0" NO. >INTERPRETATION! 2'n)enti'nally a $i&$er /2 rati' eans $i&$er e((iciency, *ut t$ere is al%ays a (lipside'( t$e c'in. ,xtreely $i&$ rati' ay als' *e due t' inade5uate %'rkin& capital. Sincet$e c'pany $as excess '( current lia*ilities ')er current assets $ence it is als'$aperin& t$e %'rkin& capital turn')er rati' '( t$e c'pany.@J CAPITAL T%RNO1ER RATIO! 2apital turn')er rati' easures t$e e((iciency '( t$e ana&eent. Mana&eent e((iciency t$r'u&$ capital turn')er rati' is calculated *y esta*lis$in& t$e relati'ns$ip *et%een c'sts '( sales %it$ a'unt '( capital in)ested in t$e *usiness. 2apital turn')er rati' is calculated %it$ t$e $elp '( t$e ('ll'%in& ('rula8 Capita* Turn2=er Rati2 7 -a*e8 L Capita* Emp*25edM 2apital ,pl'yed F "'tal Assets E 2urrent #ia*ilitiesTA0LE NO. @&EAR -ALE- CAPITALEMPLO&ECAPITALT%RNO1ERRATIO'("@ B9M@ B?>9L ?.9?'("# L:J9 @JB>M ?.9:2HA0" NO. 3INTERPRETATION! 2apital turn')er rati' durin& >?936>?9: is l'% %$ic$ indicates t$e ine((iciency '( t$eana&eent. !t ust *e due t' p''r (inancial p'siti'n '( !"!.#J FI.E A--ET- T%RNO1ERRATIO!"$is rati' deterines e((iciency '((ixedassetsand pr'(ita*ility '( a *usiness c'ncern. Hi&$er t$e rati' 're is t$e e((iciency inutili7ati'n'((ixedassets.A l'%errati'ist$eindicati'n'(underutili7ati'n'((ixedassets. Fi4ed A88et8 Turn2=er Rati2 7 Net -a*e8 L Net Fi4ed A88et8"AB#, NO. :&EAR NET -ALE- NET FI.EA--ET-FI.E A--ET- T%RNO1ERRATIO'("@ BB:@ >@9@J ?.>B'("# LJLJ >:9>B ?.3M2HA0" NO. :INTERPRETATION!"$e (ixed asset turn')er rati' '( t$e c'pany is l'% %$ic$ indicates t$e underutili7ati'n'( (ixed assets. ).J C%RRENT A--TE- T%RNO1ERRATIO! "$israti'deterinese((iciency'(current assets andpr'(ita*ility'( a *usiness c'ncern. Hi&$er t$e rati''re is t$ee((iciency in utili7ati'n '( current assets. A l'%er rati' is t$e indicati'n '(underutili7ati'n '( (ixed assets. Current A88et8 Turn2=er Rati2 7 Net -a*e8 L Current A88et8"AB#, NO. @&EAR NET -ALE- C%RRENTA--ET-C%RRENTA--ET-T%RNO1ERRATIO'("@ BB:@>:@::9?.?>'("# LJLJ>:>@99?.?32HA0" NO. @INTERPRETATION!"$e current assets turn')er rati' is inc'nsistent *ut since t$e )ariati'ns are n't t'' $i&$, itcan *e c'ncluded t$at t$e current assets are *ein& e((iciently utili7ed.B.J TOTAL A--TE- T%RNO1ER RATIO!"$is rati' deterines e((iciency '( t'talassets and pr'(ita*ility '( a *usiness c'ncern. Hi&$er t$e rati' 're is t$e e((iciency inutili7ati'n '( t'tal assets. A l'%er rati' is t$e indicati'n '( underutili7ati'n '( t'tal assets. Total Assets Turnover Ratio = Net Sales / Total Assets"AB#, NO. B&EAR NET-ALE-TOTALA--ET-TOTAL A--ET-T%RNO1ER RATIO'("@ BB:@3>3BJ3 ?.?>?'("# LJLJ3>3:9M ?.?>M2HA0" NO. @INTERPRETATION! "$e t'tal assets turn')er rati' is n't satis(act'ry and indicates t$e underutili7ati'n '( t$et'tal assets t$ereas'nsae%it$t$at '( t$ecapital turn')er rati'and(ixedassetsturn')er rati'.C.J IN1ENTOR&T%RNO1ERRATIO!!n)ent'ry "urn')er 0ati' indicates t$enu*er '( ties t$ein)ent'ryis r'tateddurin&t$erele)ant acc'untin&peri'dande)aluatest$ee((iciency%it$%$ic$a(irisa*let'ana&eitsin)ent'ry. "$erati'indicates %$et$er in)estent in st'ck is %it$in pr'per liit 'r n't. ITR7COG- 2r Net -a*e8LA=era?e In=ent2r5"AB#, NO. M&EAR NET -ALE- A1ERAGEIN1ENTOR&IN1ENTOR&T%RNO1ERRATIO'("@BB:@ (>@:.9M) (>B.9:)'("# LJLJ L9 99?.JM2HA0" NO. MINTERPRETATION!