A Study on Analysis of Receivable Management

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A STUDY ON ANALYSIS OF RECEIVABLEMANAGEMENT IN TECHNICO LABOATORY

PRODUCTS PRIVATE LIMITED,

THIRUMUDIVAKKAM, CHENNAI

SUMMER PROJECT IN FINANCE

BY J.YUVARANISHANTHI


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ABOUT A TOPIC

Receivable are one of the majorcomponents of working capital of afirm.

The Receivable management is aprocess of taking decisionsregarding the amount of

investment is the process of takingdecision regarding receivables. Ifthere are large amounts tied up inreceivables, working capital

requirements and consequently


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ABOUT A COMPANY

The company was promoted andregistered in the year of 1984 as apropriety company. Later it was

converted to a private limitedcompany in the year of 2003.

Laboratory Equipment Division.

Laboratory Glassware Division.

Laboratory Modular Furniture andExhaust/ Clean Ventilation Systems

Division


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Objectives of the study

To evaluate the opportunity costinvolved in granting credit sales andto maximise the profit in the Technico

Laboratory Products and Pvt Ltd.

Secondary objectives:

To forecast sales and receivablemanagement in Technico.

To evaluate ratio analysis and trend

analysis.


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SCOPE OF THE STUDY

This study was conducted to knowthe Profile of Technico LaboratoryProducts Pvt Ltd,

Thirumudivakkam.This study depends upon the data

in annual report.

LIMITATIONS OF THE STUDY

This study relies more onsecondary source. No primary data

is used.


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RESEARCH METHODOLOGY

I have chosen a analyticalresearch for my study, which thatincludes a facts or information

available, and analyse these tomake a critical evaluation of thematerial.

TOOLS AND TECHNIQUES USEDRatio analysis

Trend analysis


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DATA ANALYSIS ANDINTERPRETATION

0

2

4

6

810

12

VENTORY HOLDING PERIO

Inventory holding

period is (561days),which implies theefficient inventorymanagement and

efficiency businessoperation

In 2010 -2011 it was

lower (.65 times)low value indicatinghigh quantity offunds locked up in a

company.


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0

2

4

68

10

Detor turnover ratio

0

2

4

6

810

btor turnover period(in da

In the year of 2010-2011 the ratio ishigher (3.49 times)the company takestime to receive their

receivables

In the year of 2010-2011 the ratio is higher(3.49 times) but debtors

turnover period is low(105 days) whichimplies that payment bydebtors are prompt.


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0

2

4

6

810

Debtors to sales ratio

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Detor to current asset ratio

In the year of 2010 2011 the ratio shows

lower (28.59%). Itshows the companymaintain lower creditsales, but the sameyear sale is higher soit shows the higher

In 2010 2011 thedebtor to current assetratio shows lower (23.64

%). Here debtors islower and current assetis high than the previousyear.


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0

2

4

6

810

Inventories to sales ratio

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2

4

6

8

10

12

Operating cycle

The inventories

are fluctuatingbut sales is inincreased in theyear of 2010 2011 than theprevious year.

The operating cycle ishigh as 673 days in the

year of 2009 2010 thecash is tied up more inreceivable and inventory.


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0

2

4

6

8

10

Trend analysis for debtors

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2

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Trend analysis for sales

The table showsincreasing trend,

that meancompany allowingmore credit salesbut not in loss

within certaineriod the are

In the year of 2010 2011 the sales

increased by puttingmore effort onincreasing facilities tocustomer, allowingcredit sales withintheir limit


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FINDINGS

The stock turnover ratio in the period of

2010 -2011 was lower (.65 times) lowvalue indicating high quantity of fundslocked up in a company.

The debtor turnover ratio in the year of2010 -2011 the ratio is higher (3.49times) the company takes time toreceive their receivables.

In the year of 2007 -2008 the debtor tosales ratio is little higher (30.28%) itshows that the company allows morecredit sales as well as cash sales.


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CONTD................

In 2010 2011 the debtor to currentasset ratio shows lower (23.64 %). Here

debtors is lower and current asset is highthan the previous year.

The Inventory to sales ratio in the year

of 2010 2011 is high (84.58%). Itmeans that the inventory and sales ofthe year is increased than the previousyear.

The number of days in operating cycleand also inventory holding periodincreasing year by year, which showsthat cash is tied up in receivables and

inventory. In the year of 2010 2011 the


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SUGGESTIONS

To avoid delay in receivables, the

accounting staff should schedulefirst about the vendors due dates.

All the record should be

computerised. It will make us toaccess easy in future.

Accounting receivables staff and

their head should have a meeting


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CONTD...........

Its well again to make a receivables

releases in weekly once at specifiedperiod of time. It leads to avoid wastageof time of account receivables staff tospend much more times with the

vendors.

It is suggested to put promotional /advertisements efforts for increasingthe sales.

Firm try to collect those who are longperiod of holding debt.


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Documents

A Study on Analysis of Receivable Management