Buvan.project

8/13/2019 Buvan.project

1/106

INTRODUCTION

Introduction:

Working capital management is one of the most important aspects of financial management. It

forms a major of the fianc manager and accountant.

Meaning and definition:

Working capital management or administrisiation of all aspects of working capital, which manage

the firms current assets and current liabilities in such a way that a satisfactory leel of working capital is

maintained.

!ccording to smith "working capital management is concerned with the problems that arise in

attempting to manage the current assets and current liabilities and the inter#relationship that e$its between

them.

Working %apital refers to that portion of an organi&ations capital which is re'uired in the short#

run to finance current assets such as cash, bank balance, debtors, marketable securities, bills receiables

and inentories. Working capital is the capital re'uired for meeting the needs of current operations.

Working %apital Management inoles efficient management of different elements or components

of working capital such as cash, inentories, accounts receiables and accounts payable. It should result

in determining the optimum leel of inestment in each working capital.

(he basic objectie of financial management is to ma$imi&e shareholders wealth and its made by

the e$tent of performance of an organi&ation in terms of profits. (he main contributoryto profits of the

organi&ation is turnoer)sales. *ales are not conerted into cash instantaneously. (his is on account of

+


2/106

credit e$tended by firms to customers. (here is time lag between sale of goods and receipt of cash. It

creates the need for working capital during the period to sustain sales actiity. If ade'uate working

%apital is not aailable during the period, the firm may not be in a position to pay wages, purchase

raw material and pay for other e$penses re'uired for manufacturing the goods to be sold.

(his project has been taken up to find the effectieness of the working capital management in

Cheyyar Co-op. Sugar Mills t!."and also to find out the projected working capital, the current assets

and current liabilities, the inentory position and performance in Cheyyar Co-op. Sugar Mills t!." the

different aspects of working capital management in the area of cash and receiables and the credit

position of the company.


3/106

O#$%CTI&%S O' T(% STUD)

To *in! out the in+entory position o* Cheyyar Co-op. Sugar Mills t!."

To e+aluate the e**ecti+eness o* the ,oring capital anageent using the acti+ity

ratios.

To *in! out the areas o* strength an! ,eaness o* Cheyyar Co-op. Sugar Mills t!.

To no, the sche!ule o* changes ,hether there is an increase or !ecrease in Cheyyar

Co-op. Sugar Mills t!.

To *in! out the ,oring capital ratio per*orance o* a copany *or the last *i+e

years /001-/002 to /003-/004 Through ratio analysis.

-


4/106

N%%D 'OR STUD)5

ery business needs some amount of working capital. (he need for working capital arises due to

the time gap between production and reali&ation of cash from sales.

(here are time gaps in purchase of and production of and production/ production and sales and

reali&ation of cash.

(hen, working capital is needed for the following purposes.

0or the purchase of raw materials, components and spares.

(o pay wages and salaries.

(o incur day#to#day e$penses and oerhead costs such as fuel power and office e$penses.

(o meet the selling costs such as packing, adertising etc.

(o proide credit facilities to the customers.

1


5/106

SCO6% O' T(% STUD)

(he scope of the study is concerned with the proper management of funds, as much to know how

effectiely funds are utili&ed for meeting short#term and long#term needs. (he basic scope of the

researcher is to enroll the firms inolement in rising of funds and their effectie utili&ation keeping in

iew the oerall objecties of the firm and also the researcher to analy&e the risk return possibilities in the

employment of funds, applying analytical tools to procure the profitability of the business.

!scertaining the working capital will come to know either inade'uacy or e$cess funds with the

concern. (he inade'uacy of funds will adersely affect the day#to#day working of the concern where as

e$cess funds may tempt management to include in e$traagant spending.

!naly&ing the capital structure, inferences the kind and proportion of different securities for

raising funds and proper decision about the kind of securities to be employed which influences the short#

term and long#term financial planning of an enterprise.

0inding the inestment pattern is essential so that it will come to know the source of funds. (he

decision#making techni'ue such as capital budgeting may be applied in making decision about capital

budgeting.

!ssessing cash position of the concern will achiee greater task, such as cash re'uirements for,

2urchases of 3aw materials,

Making payment to creditors,

Meet wage bill,

Meet day#to#day e$penses.

4


6/106

!nd different sources of cash from preparing cash flow statement is able to find us the arious sources

and applications

%ash sales,

%ollection of debtors.

2reparing cash flow statement is able to find us the arious sources and applications.

*ome of the financial control deices are

3eturn on inestments,

5udgetary control,. 3atio analysis will helps in ealuating the arious areas and take to correctie

measures whateer needed

iitations o* the stu!y5

(he *tudy is mainly based on the information gathered from secondary data.

(he whole study is based on obserations in the past, which can only be related to

laws that operated in the past, as there is no eidence that the laws will continue to operate in

future also.

(he analysis and information of the data are constrained by the accuracy of arious tools used

for analysis.

(he findings of the study are based on historical data. 6ence, accuracy cannot be ascertained.

(ime is a constraint for the study, since the time aailable for project is only fie months.

7


7/106

INDUSTR) 6RO'I%

M7NU'7CTUR% O' SU87R5

It shall be competent for the committee.

(o purchase or hire plants and machinery for the manufacture of sugar.

(o incure the necessary e$penditure for the purpose.

It can purchase for the members such as sugar can seed materials manure and agricultural

implements.

(wo types of sugar is being manufactured in the World namely.

+. %ane *ugar.

. 5eat sugar.

SU87R C7N%5

*ugar cane grows in all tropical and subtropical countries. ! hot, moist climate with a day season is

suitable for its growth.

T(% COM6OSITON O' C7N% IS5

Water # 84.49

!sh # .49

*ugar # + ; +19

2ectin < =ums # .9

0iber # + ; +19

0ats < Wa$es # .9

%ombined acids # .+9

>itrogenous 5odies # .19

8


8/106

T(% COM6OSITION O' C7N% $UIC% IS5

Water # 81.49

Inorganic ions ?!sh@ # . ; .79

3educing sugars # .- ; -.9

*ucrose # A ; +79

Brganic matter # .4 ; +.9

'7CTOR) SIT% 7ND 7)OUT

S%%CTION O' '7CTOR) SIT%

'7CTOR) SIT%

(he sugar industry is one of the important agro industry and therefore it should be located near by the

place where large of cane cultiation is aailable, otherwise it will increase the cost of production.

TR7NS6ORT5

(ransporting raw material to the industry such as cane sulfur, lime, chemicals and finished products to the

market need efficient transport.

97T%R 7&7I7#IIT)5

Water is more important for sugar industry. It must be located nearly rier or lake for abundant water

supply.

A


9/106

'7CTOR) 7)OUT:

*ufficient land is proided for factory, colony, offices, workshop and factory installation.

(he location of the colony is the wind direction.

(he location of the spray pond is away from the godowns.

5oilers are at right angles with the mill.

Cuice weighing and heating is near for future e$pansion.

(he cane yard is ery large.

+. Main factory

. *pray pound

-. 2ump room

1. *ugar godown

4. Dime godown

7. *ulphur godown

8. =unny godown

A. Molasses tank

E. 0urnace oil tank

+. 0resh water tank

++. %anteen

+. Fiesel set

+-. (ransformer yard

+1. *tore room

+4. Workshop

+7. !dministratie building

+8. *ecurity sheet

+A. %ycle stand

E


10/106

+E. (ransport office

. =rowers sheet

+. (ime office

. (oilet room

-. %himney

1. Weight bridge

4. Mini spray pond

7. Water treatment tank

8. (emple

A. 6ospital

E. %lub

+


11/106

Copany pro*ile

(he cheyyar co#operatie sugar mills, anakkaoor, thendalam perumbalai post, cheyyar taluk,

tiruanamalai district. It was been registered at the date as on 4.4.+EAA. (he of function at

+4..+EE+,and the total cost of sugar mill 7.A7 crores.the co#operatie purchase the land to found the

sugar mill was +-.-4 !cres. (here are 1E employees are working in the company.

(he main production was F.*.- white sugar molasses, also producing power >os.of .4 MG

?turbine cogan plant@ production power to (.>..5 from the waste molasses. (otal capacity of goodown

4 (%F.

India which is regarded as the original home of sugarcane being the largest product of sugarcane

has considerable potential after the deelop of the sugar industry to meet domestic demand and part of the

oerseas demand.

(he sugar industry proides direct employment to larger number of people and indirect

employment to millions. (he deelopments of industries like the sugar machinery manufacturing

distilleries, confectionary, etc., are linked to the deelopment of the sugar industry. (he sugar industry is

also responsible for employment of a large number of people in the transport and other serice sectors.

!bout 4 million farms are estimated to be engaged. In the sugar can cultiation.

*ugar industry has been making significant contribution to Indias e$port earnings.

*ugar industry is ery important to the Indian national economy, because of its multiple

contribution is the shape of employment, proision of raw materials to other industries/ it been rightly

pointed out by late (hiru. Mr. 0akhruddin ali !hmed, when he was minister for food and agriculture, at

the ++th

annual general meeting of the national federation of the co#operatie sugar factories limited, that

"Hco#operatie sugar factories limited in some parts of the country hae become symbols of

industriali&ation in ancillary industries proiding opportunities of employment to the illage folkH.

++


12/106

DI&ISION7 O''IC%S5

+. %heyyar

. oraikkai

-. Gembakkam

1. 2eranamallur

4. Gandaasi

7. ilkodungalore

8. (hellar

A. Fesur

E. Ma&haiyur

+. Mill site

(he nearest railway station is anchipuram which is -7 km from the mill. It is a meter gage

railway time. It goes between !rakonam to %hengalpet the mill has established on 4.4.AA the area of

operation of the mills consists of %heyyar and andaasi (aluks.

(he mill was inaugurated by the former 2rime Minister Mr. 3ajiigandhi. *ince the period of

starting. (he mill has been successfully running to deelop the wealth of its members, farmers and all in

the surrounding areas.Many people are working in the mill. (he mill proides a lot of direct employment

opportunities.

+


13/106

M7NU'7CTURIN8 7ND 6RODUCT 6RO'I%

*ugar ?sucrose@ is a carbohydrate that occurs naturally in eery fruit and egetable. It is a major

product of photosynthesis, the process by which plants transform the sunJs energy into food. *ugar occurs

in greatest 'uantities in sugarcane and sugar beets from which it is separated for commercial use. (he

natural sugar stored in the cane stalk or beet root is separated from rest of the plant material through a

process known as refining.

0or sugarcane, the process of refining is carried out in following steps

+. 2ressing of sugarcane to e$tract the juice.

. 5oiling the juice until it begins to thicken and sugar begins to crystalli&e.

-. *pinning the crystals in a centrifuge to remoe the syrup, producing raw sugar.

1. *hipping the raw sugar to a refinery where it is washed and filtered to remoe remaining non#sugar

ingredients and color.

4. %rystalli&ing, drying and packaging the refined sugar

5eet sugar processing is similar, but it is done in one continuous process without the raw sugar

stage. (he sugar beets are washed, sliced and soaked in hot water to separate the sugar #containing juice

from the beet fiber. (he sugar#laden juice is then purified, filtered, concentrated and dried in a series of

steps similar to cane sugar processing. 0or the sugar industry, capacity utili&ation is conceptually different

from that applicable to industries in general. It depends on three crucial factors the actual number of ton

of sugarcane crushed in a day, the recoery rate which generally depends on the 'uality of the cane and

actual length of the crushing season.

*ince cane is not transported to any great e$tent, the 'uality of the can that a factory receies

depends on its location and is outside its control. (he length of the crushing season also depends upon

location with the ma$imum being in south India. *ugarcane in India is used to make sugar, khandsari or

gur. 6oweer, sugar products produced worldwide are diided into four basic categories: granulated,

brown, li'uid sugar and inert sugar.

+-


14/106

Types o* sugar pro!uce! in DDCSM lt!5

8ranulate!Sugar5

(here are many different types of granulated sugar. Most of these are used only by food processors

and professional bakers and are not aailable in the supermarket. (he types of granulated sugars differ in

crystal si&e. ach crystal si&e proides uni'ue functional characteristics that make the sugar appropriate

for the food processorJs special need.

;Regular; Sugar"

$tra 0ine or 0ine *ugar

K3egularK sugar, as it is known to consumers, is the sugar found in eery homeJs sugar bowl and most

commonly used in home food preparation. It is the white sugar called for in most cookbook recipes. (he

food processing industry describes KregularK sugar as e$tra fine or fine sugar. It is the sugar most used by

food processors because of its fine crystals that are ideal for bulk handling and are not susceptible to

caking

'ruit Sugar5

0ruit sugar is slightly finer than KregularK sugar and is used in dry mi$es such as gelatin desserts,

pudding mi$es and drink mi$es. 0ruit sugar has a more uniform crystal si&e than KregularK sugar. (he

uniformity of crystal si&e preents separation or settling of smaller crystals to the bottom of the bo$, an

important 'uality in dry mi$es and drink mi$es

#aers Special5

5akers *pecials crystal si&e is een finer than that of fruit sugar. !s its name suggests, it was deeloped

specially for the baking industry. 5akers *pecial is used for sugaring doughnuts and cookies as well as in

some commercial cakes to produce fine crumb te$ture

+1


15/106

Con*ectioners


16/106

9OR>IN8 C76IT7:

Working capital is the e$cess of current assets oer current liabilities. It is re'uired for running

the day#to#day affairs of the unit. !ccording to *habin, "working capital is the amount of funds necessary

to coer the cost of operating the enterpriseH.

!ccording to =enstenberg, "working capital means current assets of a company that are changed

in the ordinary course of business from one form to anotherH. 0or e.g. ; from cash to inentories,

inentories to receiables, receiables to cash.

%B>%2( B0 WB3I>= %!2I(!D

There are t,o concepts o* ,oring capital

+. =ross working capital,

. >et working capital.

8ross 9oring Capital5

=ross working capital, simply called as working capital refers to the firms inestment in current

assets. %urrent assets are the assets, which in ordinary course of business can be conerted into cash

within an accounting year.

%?aples o* Current 7ssets:

%ash and 5ank 5alances

*hort term loans and adances

5ill 3eceiables

*undry Febtors

+7


17/106

Inentory

2repaid $penses

!ccrued Income

Money 3eceiable in + month

(he gross working capital concept focuses attention of two aspects of current assets management.

a. (he considerate Bptimum inestment in current assets and

b. %urrent liabilities.

(he consideration of the leel of inestment in current assets should aoid two danger points#e$cessie

and inade'uate inestments in current arranging funds to finance current assets. When eer a need for

working capital funds arises due to the increasing leel of business actiity or for any other reason

arrangement should be made 'uickly.

Net 9oring Capital5

>et working capital refers to the difference between the current assets and current liabilities.

%urrent liabilities are those claims of outsides, which are accepted, to mature for payment with an

accounting year and include creditors, bills payable and outstanding e$penses.

Net ,oring capital @ current assets A current liabilities

>et working capital can be positie or negatie. ! positie net working capital will arise when

current assets e$ceeds current liabilities. It is a 'uantitatie concept.

+. Indicate the li'uidity position of the firm and

. *uggests the e$tent to which working capital needs may be financed by permanent sources of

funds.

+8


18/106

Types o* 9oring Capital5

Working capital can be classified into two categories i.e.

+. 2ermanent working capital

. (emporary or ariable working capital.

6eranent 9oring Capital5

It is the minimum amount of inestment in all current assets which is re'uired at all times to carry

out minimum leel of business actiities. (an don %ommittee has resered to this type of working capital

as "%ore %urrent !ssetsH.

Characteristics o* 6eranent 9oring Capital5

!mount of permanent working capital remains in the business in one form or another.

It also grows with the si&e of the business. It is permanently needed for the business, and

therefore, it should be financed out of long term funds.

&ariable 9oring Capital5

(he amount of working capital oer permanent working capital is known as ariable working

capital. (he amount of such working capital keeps on fluctuating from time to time on the business

actiities. It may again be subdiided into seasonal working capital and special working capital.

*easonal working capital is re'uired to meet the seasonal demands of busy periods occurring at stated

interals on the other hand, special working capital is re'uired to meet e$traordinary needs for

contingencies.

+A


19/106

7pproaches *or 'inancing 9oring CapitalB

(here are three approaches to financing the working capital.

+. Matching approach

. %onseration approach

-. !ggressie approach

. Matching 7pproach5

(he firm can adopt a financial plan, which matches the e$pected life of assets with the e$pected

life of the source of funds raised to finance assets. (he firm follows matching approach, long term

financing will be used to finance fi$ed assets and permanent current assets and short term financing

temporary or ariable current assets. 6oweer, it should bed reali&ed that e$act matching is not possible

because of the uncertainty about the e$pected life of the assets. (he firms fi$ed assets and permanent

current assets are financed with long#term funds and as the leel of these assets increases, the long term

financing leel also increases. (he temporary or ariable current assets are financed with short#term

funds and as their leel increases, the leel of short#term financing also increases.

/. Conser+ati+e 7pproach5

! firm is practice may adopt a conseratie approach in financing its current and fi$ed assets. (he

financing policy of the firm is said to be conseratie when it depends more on long#term funds for

financing needs. Lnder a conseratie plan, the firm finances its permanent assets and also a part of

temporary current assets with long term financing. In the periods when the firm has no need for

temporary current assets, the idle long#term funds can be inested in the tradable securities to consere

li'uidity. (he conseratie plan relies heaily on long term financing.

+E


20/106


21/106

. Nature o* #usiness5

(he amount of working capital is basically related to the nature and olume of business in

concerns where the cost of the raw materials to be used in the manufacturing of a product is ery large in

proportion to its total cost of manufacturing the re'uirement of working capital will be ery large.

/. Sie o* the #usiness Unit5

(he si&e of the business unit has an important impact on its working capital needs. *i&e may be

measured in terms of scale of operation. ! firm with larger scale of operation will need more working

capital than a small firm.

1. Seasonal &ariationB

*easonal industries re'uire more working capital to stock the raw materials during the season.

2. Tie Consue! in Manu*acturing5

(he aerage time taken in the process of manufacture is also an important factor in determining the

amount of working capital. (he longer the period of manufacturing the larger the inentory re'uired.

E. Turno+er o* Circulating Capital5

3apidly of turnoer determines the amount of working capital. (he faster the sales the larger the

turnoer hence less working capital.

F. Nee! to Stocpile Ra, Material an! 'inishe! 8oo!s5

In industries where raw materials are bulky and best purchasable in large 'uantities such as

cement of where labour stoppage is fre'uent large amount of working capital is re'uired

+


22/106

3. 8ro,th an! %?pansion5

=rowing concerns re'uires more working capital than those that are static. It is logical to e$pect

larger amount of working capital in a growing concern to mean its growing needs of funds.

4. In+entory Turno+er5

With a better inentory control, a firm is able to reduce its working capital re'uirements. If the

inentory turnoer is high the working capital re'uirements will be low.

G. Di+i!en! 6olicy5

Fiidend policy and working capital are interrelated. Management takes a iew of current assets

before declaring a diidend.

0. 6ricing e+el Changes5

3ising price leel re'uires more working capital to maintain the same leel of current assets.

. Ters o* 6urchase an! Sale5

(erms of purchase and sales affect the amount of working capital. (he practice of cash purchases

with credit sales re'uires more working capital.


23/106

SOURC%S O' 9OR>IN8 C76IT7

!fter determining the leel of working capital on the basis of arious determinants the ne$t step is

to consider how it will be financed. ! large manufacturing concern may procure funds from arious

sources to meet its working capital re'uirements from time to time. 0or the conenience of study the

sources of working capital may be classified under two heads.

*ources of long term or regular working capital

*ources of short term or seasonal working capital

Sources o* ong Ter 9oring Capital5

(he long term working capital re'uirements can be met from the following sources.

. Issue o* Shares5

It is the safest way of procuring permanent and regular working capital without any fi$ed charges.

/. Issue o* Debenture5

3egular and long term working capital may be obtained at lower cost of trade on e'uity.

1. Retaine! 6ro*its5

!ccumulated large profits are also considered to be a good source of financing long#term working

capital re'uirements. It is the best and the cheapest source of finance.

2. Sale o* 'i?e! 7ssets5

-


24/106

If there is any idle fi$ed assets in the firm can be sold out and the proceeds may be utili&ed for

financing the working capital re'uirements.

Sources o* Short ter 9oring CapitalB

(he sources of short#term working capital may be classified in two heads.

+. Internal sources

. $ternal sources

Internal Sources5

Lnder this category the sources of working capital are tapped from within the internal sources are

depreciation funds, proision for ta$ation and accrued e$penses.

. Depreciation 'un!5

Fepreciation funds created out of profits proided they are inested in or represented by assets.

/. 6ro+ision *or Ta?ation5

(here remains a time lag between making the proision for and payment of ta$ation. ! company

may utili&e such proision during the intermittent period temporarily.

1. 7ccrue! %?penses5

(he company sometimes postpones the payment of certain e$penditure due to finali&ation of the

accounts. (hese accrued e$penses also constitute an important source of working capital.

1


25/106

%?ternal Sources5

$ternal sources mean the sources proiding finance for companys working capital other than

those of internal sources. (hese may be enumerated as gien below.

. Noral Tra!e Cre!it5

%reditors proide short#term finance to the company by selling the goods, inentories and

e'uipment on the basis of deferred payment. It is ery common source of short#term finance and

normally eery concern use this source as a normal trade practice.

/. Cre!it 6apers5

5ills payable or promissory note, which may be discounted from bankers for meeting short term

capital by the drawer.

1. #an Cre!it5

(he greater part of the working capital is supplied by commercial banks to their customers through

direct adances in the shape of loans, cash credit or oer draft and through discounting the credit, papers,

e.g. bills payable and promissory notes etc.

2. Custoer Cre!it5

!dance may also be obtained from customers against the contracts entered into b the enterprise

such adances are generally asked for, by the companies manufacturing large plants and machinery

inoling longer time in completing the process of manufacturing e.g. ship building industries. (he

amount can be used for purchasing raw materials.

4


26/106

E. 6ublic DepositsB

Most of the companies in recent years depend on this source to meet their working capital

re'uirements. Lnder the companies !ct +E47 a company is authori&ed to raise funds e'ual to 49 of

paid up capital and free reseres this source

9oring Capital 6olicy5

Working capital management policies hae a great effect on firms profitability, li'uidity and its

structural health. ! finance manager should therefore, chalk out appropriate working capital policies in

respect of each competent of working capital so as to ensure high profitability, proper li'uidity and sound

structural health of the organi&ation.

In order to achiee this objectie the financial manager has to perform basically following two functions.

+. stimating the amount of working capital.

. *ources from which these funds hae to be raised

O6%R7TIN8 C)C%

Working capital is re'uired because of the time gap between the sales and their actual reali&ation

in cash. (his time gap is technically terms as operating cycle of the business.

In case of manufacturing company, the operating cycle is the length of time necessary to complete the

following cycle of eent.

%onersion of cash into raw materials.

%onersion of raw materials into work in progress.

%onersion of work in progress into finished goods.

7


27/106

%onersion of finished goods into account receiables.

%onersion of accounts receiable into cash.

(his cycle is continuous phenomena. In case of "(rading 0irmH the operating cycle will include the

length of time re'uired to:

%ash into inentories.

Inentories into accounts receiables.

!ccounts receiables into cash.

In case of "0inancing 0irmH the operating cycle includes the length of time taken for + year.

+. %onersion of cash debtors, and

. %onersion of debtors into cash.

IT%R7TUR% SUR&%)

8


28/106

+. =.5hargai ?May A@ "! study on working capital managementH on M5! project at

"%6I((BB3 %B#B23!(IG *L=!3* DIMI(F MIDD*H. 6as suggested in the company should

utili&e the reseres and surplus by either capitali&ing or inest the money some where as inestment to

get benefits. It is suggested that the company has to increase the shares holders fund to fianc fi$ed

assetsH+

. MrW.>arasimha raju ?May A@H ! study on working capital managementHon M5! project at

"5F *L=!3* < FI*(IDD3I* DIMI(F ".6as suggested in 5F sugars and industries limited

take improe the profit by reducing indirect e$penses the 5F sugars and industries limited take

necessary step to deelop an optimum credit policy and .5.F sugars and industries limited determine

ma$imum rate of cash discount they can gie to the customers.H

-. Mr. 2.3aman ?May A@ "! study on working capital managementH on M5! project at "I2

0B>DI> DIMI(FH. 6as suggested in the company contributes more funds in the fi$ed assets. (he

fi$ed assets turnoer ratio is maintained and controls the profit to increase the efficiency of

production. (he company should control the inentory for the better management of inentory to

aoid the situation in futureH-

A


29/106

R%S%7RC( M%T(ODOO8)

Research Design5

3esearch Fesign is purely and simply the framework or plan for a study that guides the collection and

analysis of data. !n analytical research techni'ue was adopted in the project.

Data Collection5

(he data are collected from the annual reports cost sheets and other brochures of the company. (he major

source of data is *econdary.

6erio! o* Stu!y5

(he study has been made for a period of si$ financial years from #A

Tools an! techniHues use!5

In this study certain tools and techni'ues are applied to test the factual information are financial and

statistical process control tools.

3atio !nalysis,

*tatement of change working capital,

%omparatie 5alance sheet,

%ommon si&e statement ,

%orrelation,

(rend !nalysis.

. R7TIO 7N7)SIS

E


30/106

3atio analysis continues to represents one of the financial worlds most powerful and ersatile tools

but 'uestions about accounting consideration and ratio definitions affect 'uality of analysis

ratio analysis is uniersally recogni&ed as a powerful tool and is often used in the following contest

by companies when ealuating the creditworthiness of their debtor

by inestor when considering the merits of alternatie inestment

by bank and other lenders before granting loan

/. ST7T%M%NT O' C(7N8%S T(% 9OR>IN8 C76IT7

(he e$cess of current asset oer current liability is referred to as company working capital . (he

difference between the working capital for two gien reporting period is called the statement of working

capital

1. COM67R7TI&% ST7T%M%NT

! simple method of tracing the periodic changes in the financial performance of a company is to prepare

comparatie statements. %omparatie financial statements will contain items at least for two periods.

%hanges#increases and decreases# in the income statements and balance sheet oer a period can be shown

in two ways.

+. !ggregate change

. 2roportional change

7ggregate change5

!ggregate changes can be indicated by drawing special columns for aggregate amount or percentage, or

both, of increase and decreases

6roportional change

-


31/106

2roportional changes is known as relatie changes, on the other hand are shown by recording percentage

calculated in relation to a common base in special columns.

-+


32/106

2. COMMON SI% ST7T%M%NTS

(he financial statements prepared in terms of common base percentage are called as common si&e

statements. (his kind of analysis is called as ertical analysis and indicates static relationships since

relatie change are studied at a specific date.

%ommon si&e financial statements are those in which figures reported are conerted into

percentage to some common base. In the income statement the sales figure is assumed to be + and all

figures are e$pressed as a percentage of this total.

%ommon si&e financial statements when read hori&ontally dont gie information about the trend

of indiidual items but the trend of their relationship to total obseration of these trends is not ery useful

because there are no definite norms of the preparation of each item to total.

6oweer common si&e financial statements are useful for studying the comparatie financial position of

two or more business howeer to make such comparison really meaningful, it is necessary that the

financial statements of all such companies s

NJ!?!y -


33/106

E. TR%ND 7N7)SIS

(rend signifies a tendency and as such the reiew and appraisal of tendency in accounting ariables are

nothing but trend analysis. (rend analysis is carried out by calculating trend ratios ?percentage@ and or) by

plotting the accounting data on graph paper or chart. (rend analysis is significant for forecasting and

budgeting. (rend analysis discloses the changes in financial and operating data between specific periods.

F. CORR%7TION

%orrelation which is one of the methods of studying the relationship between two ariables. In statistical

analysis we come across the study of two ariables wherein the change in the alue of one ariable

produces a change in the alue of other ariable. In that case we say that the ariables are correlated or

there is a correlation between two ariables. (wo ariables may hae appositie correlation, a >egatie

correlation or they may be uncorrelated.

Types o* correlation5

2ositie %orrelation,

>egatie %orrelation,

>o %orrelation,

*imple %orrelation.

--


34/106

D7T7 7N7)SIS K INT%R6R%T7TION

= CURR%NT R7TIO5

(he current ratio is the ratio of total current assets to total current liabilities. It is calculated by

diiding current assets by current liabilities

CURR%NT 7SS%TS

CURR%NT R7TIO ####################################

CURR%NT I7#IIT)

Table No5 1..

Year

Current Assets

(in Rs)

Current Liabilities

(in Rs) Ratio

2003-2004 17331602 12016823 1.44

2004-2005 14427761 12059330 1.20

2005-2006 19469988 11997083 1.62

2006-2007 31061083 16090590 1.93

2007-2008 32785188 15151160 2.16

INT%R6R%T7TION5

(he %urrent 3atio of :+ is considered as ideal 3atio. 0rom -#1 the %urrent ratio is ?+.11@

trend. In 1#4 and 4#7 was increasing ?+. and +.7@ then it was increasing gradually for the last

years. (he current ratio 8#A ?.+7@ it was so high because of low current liability for the particular

year.

-1


35/106

CURR%NT R7TIO

-4


36/106

/= LUIC> R7TIO5

(he Nuick ratio is a measure of li'uidity designed to oercome the defects of the current ratio. It is often

referred as 'uick ratio because it is a measurement of a firms ability to conert its current assets 'uickly

into cash in order to meet its current liabilities.

ILUID 7SS%TS

LUIC> R7TIO @ -------------------------------------

CURR%NT I7#IIT)

Table No5 1../


37/106

INT%R6R%T7TION5

(he Nuick ratio of +:+ should be considered as ideal.In the year -#1 it was decreased due to %urrent

Diabilities more than the Nuick assets. (hen 4#7 to 8#A it was increased due to paid for the

creditors .(he Nuick 3atio is good for the company so it should be maintain for the future years also.

LUIC> R7TIO

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

Quick Liabilitie

Quick Ratio

-8


38/106

1= 'I%D 7SS%T TURNO&%R R7TIO5

(his ratio indicates the e$tent to which the inestments in fi$ed assets contribute towards sales. (he ratio

is calculated by diiding net sales by fi$ed assets

S7%S

'I%D 7SS%T TURNO&%R R7TIO @ -------------------------

0IOF !**(

Table No5 1..1


39/106

INT%R6R%T7TION5

In the year -#1 the 3atio was A.-9 but 1#4 it was increased.+.19and 4#7 to 8#A

moderately increased. It is due to high sales for the years and low amount inested in the fi$ed assets

.(hen last year decrease the 0i$ed !ssets turn oer ratio due to reduce the sales.

'I%D 7SS%T TURN O&%R R7TIO

0

20000000

40000000

60000000

80000000

100000000

120000000

!ear 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

"i#ed $et %in R&

'et (ale

-E


40/106

2=9OR>IN8 C76IT7 TURNO&%R R7TIO5

(his ratio indicates the e$tent to which the working capital is contributed towards sales. (he ratio is

calculated by diiding the net sales by working capital.

*!D*

9OR>IN8 C76IT7 TURNO&%R R7TIO @ -------------------

N%T 9OR>IN8 C76IT7

Table No5 1..2


41/106

INT%R6R%T7TION5

It is an indicator of efficiency of Working %apital Management. 6igher the 3atio is greater is the

efficiency. In -#1 the Working %apital turn oer 3atio is 8.A8 9 and the ne$t year it was increase

1.89 due to decrease the >et sale and increase the >et Working %apital .(he last year 8#A increase

the Working %apital so the working capital turn oer ratio is ery so high.

9OR>IN8 C76IT7 TURNO&%R R7TIO

'igure No5 1..2

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

)orkin* +a,ital

'et (ale

1+


42/106

9OR>IN8 C76IT7 8ROU6 R7TIOS

=. CURR%NT 7SS%T TO TOT7 7SS%T5

CURR%NT 7SS%TS CURR%NT 7SS%T TO

TOT7 7SS%T @ -------------------------------00

TOT7 7SS%T

Table No5 1..E


43/106

'igure No5 1..E

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

otal $et

+urrent $et

1-


44/106

/= CURR%NT I7#IIT) TO TOT7 I7#IIT)5

CURR%NT I7#IIT)

CURR%NT I7#IIT) TO TOT7 I7#IIT) @ -----------------------00

TOT7 I7#IIT)

Table No5 1./..F (323(!(IB>:

It increasing -#1 to 1#4 and 4#7 to 8#A it was decreased due to increase the total

liabilities .then it shows that decreasing trend because of year to year increasing the liabilities of the

concern so they should reduce Diabilities.

CURR%NT I7#IIT) TO TOT7 I7#IIT)

11


45/106

'igure No51..F

0

10000000

20000000

30000000

40000000

50000000

60000000

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

otal Liabilitie

+urrent Liabilitie

14


46/106

1= 9OR>IN8 C76IT7 TO TOT7 7SS%T5

Working capital

9OR>IN8 C76IT7 TO TOT7 7SS%T @ ---------------00

(otal assets

Table No5 1..3


47/106

9OR>IN8 C76IT7 TO TOT7 7SS%T

'igure No51..3

0

10000000

20000000

30000000

40000000

50000000

60000000

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

otal $et

)orkin* +a,ital %in R&

67)7#% M7N78%M%NT CR%DITORS TURNO&%R R7TIO5

18


48/106

N%T CR%DIT 6URC(7S%

CR%DITORS TURNO&%R R7TIO @ -------------------------

7&8.7C.67)7#%

Table No51..4


49/106

0

20000000

40000000

60000000

80000000

100000000

120000000

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

+reditor

'et .urc/ae

CR%DITORS CO%CTION 6%RIOD5

1F0

1E


50/106

CR%DITORS CO%CTION 6%RIOD @ --------------------------

CR%DITORS TURNO&%R R7TIO

Table No5 1..G

INT%R6R%T7TION5

In -#-1to 8#A the creditors holding period is decreasing, it is due to decrease in sundry creditors,

therefore the company has to make payments with in shorter period of time. It should be maintained

future years also

CR%DITORS CO%CTION 6%RIOD

'igure No52..G

Year "a#s

Creditors Turn $%er

Ratio

Creditors Collection

eriod ( in da#s)

2003-2004 360 6.38 56

2004-2005 360 7.41 49

2005-2006 360 10.14 36

2006-2007 360 16.46 22

2007-2008 360 9.71 37

4


51/106

0

50

100

150

200

250

300

350

400

450

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

+reditor +ollect ion .eriod % in

da&

+reditor urn er Ratio

a

IN&%NTOR) M7N78%M%NT5

4+


52/106

(he ratio indicates the number of times inentory is replaced during the year. It measures the

relationship between the cost of goods sold and the inentory leel

COST O' 8OODS SOD

=IN&%NTOR) TURNO&%R R7TIO @ ---------------------------

7&%R78% IN&%NTOR)

Table No5 1..0


53/106

0

20000000

40000000

60000000

80000000

100000000

120000000

2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008

Ratio

$era*e (tock

+ot o ood (old %in

R&

/= IN&%NTOR) (ODIN8 6%RIOD5

4-


54/106

1F0

IN&%NTOR) (ODIN8 6%RIOD @ -------------------------------

IN&%NTOR) TURNO&%R R7TIO

Table No5 1./.

Year "a#s

n%entor# Turn

$%er Ratio

n%entor# olding eriod

(in da#s)

2003-2004 360 8.79 41

2004-2005 360 12.32 29

2005-2006 360 11.85 302006-2007 360 15.25 24

2007-2008 360 9.86 37

INT%R6R%T7TION5

In period has been higher ?1+@ it mainly due to less 'uantity of funds looked up in stock. 0rom -#A it

was fluctuating for the 4 years because due to changes in the Inentory (urn oer 3atio and *ales has

been increase so reduce the Inentory 6olding 2eriod.

IN&%NTOR) (ODIN8 6%RIOD

41


55/106

0

50

100

150

200

250

300

350

400

450

2003-2004 2004-2005 2005-2006 2006-2007

Inentor oldin* .eriod

Inentor urn er Ratio

a

1= IN&%NTOR) TO CURR%NT 7SS%TS5

INVENTORY

IN&%NTOR) TO CURR%NT 7SS%TS @ ---------------00

44


56/106

CURR%NT 7SS%TS

Table No5 1././


57/106

0

20000000

40000000

60000000

80000000

100000000

120000000

2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008

Ratio

+urrent $et

Inentor

2= IN&%NTOR) TO 9OR>IN8 C76IT75

INVENTORY

IN&%NTOR) TO 9OR>I8 C76IT7 @ --------------------00

48


58/106

9OR>IN8 C76IT7

Table No5 1./.1 IN8 C76IT7

'igure No5 1./.1

4A


59/106

0

5000000

10000000

15000000

20000000

25000000

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Ratio

)orkin* +a,ital

Inentor

R%C%I&7#% M7N78%M%NT5

= D%#TORS TURNO&%R R7TIO5

(o aoid the difficulty arising out of the non#aailability of information in respect of credit sales and

aerage debtors and bills receiables, the alternatie method is to calculate the debtors turnoer in terms

of the relationship between total asset and closing balance of debtors.

4E


60/106

N%T S7%S

D%#TORS TURNO&%R R7TIO @ --------------------------------

7&8.7C.R%C%I&7#%

Table No5 1./.2


61/106

'igure No5 1./.2

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008

Ratio

ebtor

'et (ale

/= D%#T CO%CTION 6%RIOD5

7+


62/106

(his type of ratio for measuring the li'uidity of a firms debtors is the aerage collection period. (his is in

fact, interrelated with, and dependent upon the receiables turnoer ratio. It is calculated by diiding the

days in a year by debtors turnoer ratio.

1F0

D%#T CO%CTION 6%RIOD @ ------------------------------

D%#TRORS TURNO&%R R7TIO

Table No5 1./.E

Year "a#s

"ebtors Turn

o%er Ratio

"ebtors Collection

eriod(in da#s)

2003-2004 360 4.33 83

2004-2005 360 8.88 41

2005-2006 360 5.61 64

2006-2007 360 8.63 42

2007-2008 360 4.98 72

INT%R6R%T7TION5

It found that the Febtor %ollation has been higher in-#1 ?A- days@ and 4#7 ?71 days @, 8#A

?8. days@ it was due to Febtor outstanding amount not recoered that why it takes high days for the -

years. (he debtor collection 2eriod was fluctuating for the all years. (he main reasons for Febtors

outstanding. (he last year it is ?8 days@

D%#T CO%CTION 6%RIOD

7


63/106

0

50

100

150

200

250

300

350

400

450

500

2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008

ebtor +ollection.eriod%in da&

ebtor urn oer Ratio

a

7-


64/106

O6%R7TIN8 C)C% @ D%#T CO%CTION 6%RIOD

P IN&%NTOR) (ODIN8 6%RIOD

Table No5 1./.F

Year

"ebtors

Collection eriod

(in da#s)

n%entor# olding

eriod (in da#s)

operating

c#cle

2003-2004 83 41 124

2004-2005 41 29 70

2005-2006 64 30 95

2006-2007 42 24 65

2007-2008 72 37 109

INT%R6R%T7TION5

(he the cheyyar co#op sugar mills ltd is tme gap was fluctuating year to year. It is mainly due to effectie

debt collection period but inentory holding period keep on fluctuating. (he last year 8#A increased it

is due to the increase the debtors turn oer and Inentory 6olding 2eriod.

71


65/106

O6%R7TIN8 C)C%

'igure No51./.2

0

50

100

150

200

250

300

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

o,eratin* ccle

Inentor oldin* .eriod %in

da&

ebtor +ollection .eriod

74


66/106

9OR>IN8 C76IT7 7N7)SIS /001-02

*%6FLD B0 %6!>=* I> WB3I>= %!2I(!D 0B3 -#1

Table No51./.4


67/106

9OR>IN8 C76IT7 7N7)SIS /002-0E

*%6FLD B0 %6!>=* I> WB3I>= %!2I(!D 0B3 1#4

Table No51./.G


68/106

9OR>IN8 C76IT7 7N7)SIS /00E-0F:

*%6FLD B0 %6!>=* I> WB3I>= %!2I(!D 0B3 4#7

Table No51./.0


69/106

9OR>IN8 C76IT7 7N7)SIS /00F-03

*%6FLD B0 %6!>=* I> WB3I>= %!2I(!D 0B3 7#8

Table No51.1.


70/106

Diabilities and 2roisions ?3s -7E4, 3s A88+74@ .(he main 3eason %reditors. (he >et ffect is

increase in Working %apital.

9OR>IN8 C76IT7 7N7)SIS /003-04

*%6FLD B0 %6!>=* I> WB3I>= %!2I(!D 0B3 8#A

Table No51.1./


71/106

It is inferred that the table shows that the year 8#A increase the Working %apital. 5ecause due to the

%urrent !ssets ?+EA7@, %urrent Diabilities increased. (he only decreased. (he >et 3esult is increase in

Working capital.

COM67R7TI&% 'IN7NCI7 ST7T%M%NTS

8+


72/106

C6YYAR C$7$ S8'AR 9LLS LT"

C$9ARAT:6 5ALANC6 S66T F$R T6 Y6AR 6N"6" ,/ST 9ARC

*++, T$ *++-

articulars*++,

(in Rs)*++-

(in Rs)A;ount(in Rs) 5) ? C **-//4-4 /1/,321+ 7,*3-+24 7/-=4/

Liabilities.

+urrent Liabilitie 11415690 10732099 -683591 -5.99

roiion 202700 902109 699409 345.05

eerred a# 398433 425122 26689 6.70

Total Current Liabilities (") /*+/40*, /*+21,,+ -*2+3 +=,2

Capital and Reser%es.

(/are +a,ital 4995000 4995000 0 0.00

(/are $dance 795000 981000 186000 23.40

Reere and (ur,lu 93660 683006 589346 629.24

(ecured Loan 2811153 19254 -2791899 -99.32

necured Loan 1700000 400000 -1300000 -76.47

Total Capital and Liabilities (6) 10394813 7078260 -3316553 -31.91

Total Liabilities (">6) ? F **-//4-4 /1/,321+ 7,*3-+24 7/-=4/

81


75/106

COM67R7TI&% #77NC% S(%%T O' /00E A /00F

Interpretation5

It is found that there is increase in the %urrent !ssets ?P-1.E4 9@ and Fecreased 0i$ed !ssets ?#

1.E4 4 [email protected] is due to sale of 0i$ed !ssets for the year. (he %urrent Diabilities increase ?P.4E 9@ and

Feferred (a$ also increase ?P#EA 9@ and *hare %apital, *hare !dances there is no changes. *ecured

Doans and Lnsecured Doans are increased .(he oer all balance sheet is positie ?P4.+- 9@.

C$9ARAT:6 5ALANC6 S66T F$R T6 Y6AR 6N"6" ,/ST 9ARC Table No51.1.F

*++2 T$ *++4 ?in crores@

articulars*++2

(in Rs)*++4

(in Rs)A;ount(

in Rs) ;

Assets.Current Assets.

+urrent $et 14039007 19154311 5115304 36.44

Loan and $dance 388754 315677 -73077 -18.80

Total Current Assets (A) /--*334/ /1-41100 2+-***3 ,-=12

Fixed Assets."i#ed $et 3925829 3693217 -232612 -5.93

Inetent 784000 784000 0 0.00

Total Fixed Assets (5) 4709829 4477217 -232612 -4.94

Total Assets (A>5) ? C /1/,321+ *,1-3*+2 -0+14/2 *2=/,Liabilities.

+urrent Liabilitie 10732099 10668414 -63685 -0.59

roiion 902109 890886 -11223 -1.24

eerred a# 425122 437783 12661 2.98

Total Current Liabilities (") /*+21,,+ //113+0, 74**-3 7+=2*


(/are +a,ital 4995000 4995000 0 0.00

(/are $dance 981000 981000 0 0.00

Reere and (ur,lu 683006 608241 -74765 -10.95

(ecured Loan 19254 3665881 3646627 18939.58necured Loan 400000 1700000 1300000 325.00Total Capital and Liabilities (6) 7078260 11950122 4871862 68.83

Total Liabilities (">6) ? F /1/,321+ *,1-3*+2 -0+14/2 *2=/,

84


76/106

COM67R7TI&% #77NC% S(%%T O' /00F A /003



Table No51.1.3 *++4 T$ *++3


77/106

Interpretation5

While comparing the balance sheet of 7#8.(he current !ssets and 0i$ed !ssets increase

?P4A.A 9@, ?P-.4- 9@ and Inestment there is no changes for the year. (he current Diabilities and

2roisions are increased e$cept Feferred (a$ only decreased ?#+.+4 9@.(he 3esere < surplus, *ecured

Doans increasing ?P+77.++ 9 and 41.E 9@.(he Ber all financial position is satisfactory.

88


78/106

COM67R7TI&% #77NC% S(%%T O' /003 A /004

Table No51.1.4



*++3 T$ *++0


79/106

Interpretation5

(he %omparatie balance sheet of the company reeals that during 8#A there has been

decrease in fi$ed !ssets of ?3s# 484-@,while current Diabilities also decreased ?3sPE-1-@.(he %urrent

!sset and Doan !dances increase ?P1.1A 4@,?P44.8- [email protected] %apital and *hare !dances decreased for

the year 8#A.

CORR%7TION 7N7)SIS5

%orrelation which is one of the method studying the 3elationship between two ariables. (wo

ariables may hae 2ositie %orrelation ?or@ >egatie %orrelation ?or@ may be Lncorrelated.

Correlation 7nalysis *or the 9oring Capital ,ith Current 7ssets:

Table No51.2.E

x # dx?x7A d#?#7A dx* d#* dx=d#

8E


80/106

4275 12898 -1039 -1529 1079521 2337841 1588631

5314 17331 2946 -2904 8678916 8433216 -8555184

2368 14427 0 0 0 0 0

7472 19469 5104 5042 26050816 25421764 25734368

14970 31061 12602 16634 158810404 276689956 209621668

2663 32785 295 18358 87025 337016164 5415610

19908 35601 194706682 649898941 233805093

A


81/106

NJ!?!y -


82/106

Interpretation5

It is found that the alue of the %orrelation %o#efficient is .1E .(his indicates that there is 2ositie

%orrelation between %urrent !ssets and Working capital

Correlation 7nalysis *or the 9oring Capital ,ith Net Sales

Table No51.2.F


4275 45122 -1039 -13386 1079521 179184996 13908054

5314 41823 2946 -16685 8678916 278389225 -49154010

2368 58508 0 0 0 0 0

7472 62027 5104 3519 26050816 12383361 17960976

14970

10816

5 12602 49657 158810404 2465817649 625777514

2663 94160 295 35652 87025 1271065104 10517340

19613 58757 194706682 4206840335 619009874

NJ!?!y -


83/106

@ 1320EG/22 - E/202

@ F4/200G/ A 142FFG3FG . /E/202/00 A 12E/14E02G

@ /EFFE4/01

@


84/106

Correlation 7nalysis *or the 9oring Capital ,ith Sun!ry Debtors5

Table No5 1.2.3


4275 6587 -1039 1 1079521 1 -1039

5314 9662 2946 3076 8678916 9461776 9061896

2368 6586 0 0 0 0 0

7472 11047 5104 4461 26050816 19900521 22768944

14970 12532 12602 5946 158810404 35354916 74931492

2663 18911 295 12325 87025 151905625 3635875

19613 25809 194706682 216622839 110397168

NJ!?!y -


85/106


86/106

TR%ND 7N7)SIS

Tren! 7nalysis *or Net 6ro*it5

Table No51.2.4

Year (A) 9% ?7A * Y Y

2002-2003 2001.5 -2 4 331237 -662474

2003-2004 2002.5 -1 1 310286 -310286

2004-2005 2003.5 0 0 909020 0

2005-2006 2004.5 1 1 812289 812289

2006-2007 2005.5 2 4 2539287 5078574

2007-2008 2006.5 3 9 2097805 6293415

, /1 41111*- //0,*+1+

)@aPb?B a @J)n @ FGGGG/2F

@ FFFE2

b@JN)?/ @ 41/0G0G

@ F//32/


87/106


88/106

Table No51.2.G

Year (A) 9% ?7A * Y Y

2002-2003 2001.5 -2 4 45122903 -90245806

2003-2004 2002.5 -1 1 41823714 -41823714

2004-2005 2003.5 0 0 58508320 0

2005-2006 2004.5 1 1 62027557 62027557

2006-2007 2005.5 2 4 108165032 216330064

2007-2008 2006.5 3 9 94160187 282480561

, /1 -+10+33/, 2/*-/4+1+

)@aPb?B a @J)n @ -+10+33/,B4

@ F410/4F

b@JN)?/ @ 2/*-/4+1+B/1

@ /FGFG/F4


89/106

@ /10F4G2


90/106

Tren! 7nalysis *or Sun!ry !ebtors5

Table No51.2.0

Year (A) 9% ?7A * Y Y

2002-2003 2001.5 -2 4 6587167 -13174334

2003-2004 2002.5 -1 1 9662293 -96622932004-2005 2003.5 0 0 6586555 0

2005-2006 2004.5 1 1 11047858 11047858

2006-2007 2005.5 2 4 12532238 25064476

2007-2008 2006.5 3 9 18911909 56735727

, /1 42,*0+*+ 01,,4+*+

)@aPb?B a @J)n @ 42,*0+*+

@ 0444001

b@JN)?/ @ 01,,4+*+B/1

@ 2304GF

0

50000000

100000000

150000000

200000000

250000000

300000000

2008-09 2009-10 2010-11 2011-12 2012-13

Y6AR

N6TSAL6S

E


91/106


92/106

0

10000000

20000000

30000000

40000000

50000000

60000000

2008-09 2009-10 2010-11 2011-12 2012-13

Y6AR

S8N

"RY

"65T$RS

E


93/106

Tren! 7nalysis *or Sun!ry Cre!itors5

Table No51.E.

Year (A) 9% ?7A * Y x#

2002-2003 2001.5 -2 4 6608177 -13216354

2003-2004 2002.5 -1 1 5884502 -5884502

2004-2005 2003.5 0 0 7294764 0

2005-2006 2004.5 1 1 5846400 5846400

2006-2007 2005.5 2 4 6282602 12565204

2007-2008 2006.5 3 9 9283262 27849786

, /1 -//113+3 ,01*12,0

)@aPb?B a @J)n @-//113+3B4

@ F4FFF4

b@JN)?/ @ ,01*12,0B/1

@ /024G1/


94/106


95/106

'INDIN8S

0

5000000

10000000

15000000

20000000

25000000

2008-09 2009-10 2010-11 2011-12 2012-13

Y6AR

S8N"RY

CR6"(T$

RS

E4


96/106

0rom -#1 the %urrent ratio is increasing trend. In 1#4 and 4#7 was increase ?+.

and +.7@ then it was increasing gradually for the last - years. (he current ratio 8#A ?.+7@ it

is more than ideal 3atio. *o maintain same leel in future years.

(he Nuick 3atio increase year to year. (he Nuick 3atio of +:+ should be considering ideal. In

8#A ?+.4:+@ it so high the company is good 0inancial 2osition.

(he 0i$ed !sset turnoer ratio has been continuously increasing for the last 4 years and

therefore it may further increase in the following years.

(he Working %apital turnoer ratio has been higher in 8#Abut last year it was decreased

because of increase in current liability may lead to >egatie >et Working %apital ?%!#%D@ for

sum of years.

(he 2ayable turnoer ratio are increasing when compare to preious year. (he higher payable

turnoer ratio in 8#A indicates that the creditors are not paid in time.

(he Febtors are continuously decreasing year to year. It shows that the company is following an

efficient policy in collection of debts, therefore the companys cash li'uidity position will be

increased.

(he (urnoer 3atio of the company is keeps on Increasing for the last 4 years and it may further

increase in the following years/ therefore the efficiency of the company is increasing.

(he Bperating %ycle of the company is in good position because eery year the operating cycle

decreases and it is due to reduce in Febt collection period and Inentory holding period.

(he Inentory turn oer 3atio is increase from 7#8 and 8#A it decreased E.A79.It

shows that the sale has decreased.

E7


97/106

(he inentory to Working capital ratio increase year to year .It is inentory to Working capital

balanced correctly.

(he Working %apital is Increase from 7#8 because less %urrent Diabilities.

(he comparatie balance sheet has increase current !ssets -1.-79 and 0i$ed !ssets 8.--9.(he

(otal %urrent Diabilities increase -E.-79 and 2roisions decrease #47.+- .(he total 5alance

sheet 2ositie. 7.79.

In the year 4#7 and 8#A increase the positie trend .(he total asset increase 4.+-9and

4-.+9for 7#8.It was negatie in 1#4 because due to the %urrent !ssets ad

Inestments.

It is found that the alue of the %orrelation %o#efficient is .1E .(his indicates that there is

2ositie %orrelation.

(he correlation !nalysis for the sundry debtors ?.@ and >et *ales ?.7@ for Working %apital

relation shows that 2ositie %orrelation

(he trend !nalysis shows that increase the future years for >et *ales and *undry Febtors

sundry %reditors < >et 2rofits

SU88%STIONS

0rom the data analysis and interpretation the researcher has gien certain suggestions for

improing the financial efficiency of %heyyar co#op sugar mills ltd. ,Is managed its financial operation in

E8


98/106

a cost efficient manner in the option of researcher ,its can reach further higher standard which is not a

long way head.

The Recoen!ations are

(he company should concentrate to maintain the Di'uidity position on cash balance and try to

mobili&e the funds from banks or other financial institutions. (he company has to take proper

decision to maintain there current assets and current liabilities.

(he 0i$ed !sset turnoer ratio of the company is on the increasing eery year/ therefore the

efficiency of the company is increasing year after years It should maintain the same in future.

(he >et Working %apital shown negatie trend for the years, it is because of increase in current

liability. (herefore the company should go for cash sales, it will help to more cash purchase so, it

will reduce the sundry creditors and increase in current assets, it may result in positie >et working

capital but it will take for a long period of time

(he company should take additional Working %apital in terms of Dong (erm 0unds and from other

0inancial Institution and the company should take proper decision that the major sales be on cash

sales. (his will leads to increase the inentory, Febtors, %ash and 5ank balance, and Doans 5) ? C /1/,321+ *,1-3*+2

Liabilities.

+urrent Liabilitie 10732099 10668414

roiion 902109 890886

eerred a# 425122 437783

Total Current Liabilities (") /*+21,,+ //113+0,


(/are +a,ital 4995000 4995000(/are $dance 981000 981000

Reere and (ur,lu 683006 608241

(ecured Loan 19254 3665881

necured Loan 400000 1700000

Total Capital and Liabilities (6) 7078260 11950122

Total Liabilities (">6) ? F /1/,321+ *,1-3*+2

+-


104/106

#77NC% S(%%T O' /00F A /003


5ALANC6 S66T F$R T6 Y6AR 6N"6" ,/ST 9ARC

TA5L6=2


105/106

#77NC% S(%%T O' /003 A /004


5ALANC6 S66T F$R T6 Y6AR 6N"6" ,/ST 9ARCTA5L6=4


106/106

#I#IO8R76()5

#OO>S5

I.M 2andey, 0inancial Management, Gikas publishing 6ouse 2t Dtd.,, Ath dition +EEE.

M.Q.han and 2..Cain, 0inancial Management, (ata Mc=raw 6ill 2ublishing %ompany

Dtd. 1th dition 1.

2rasana %handra, 0inancial Management, (ata Mc=raw 6ill 2ublishing %ompany Dtd, 4th

dition +.

othari.c.3.3esearch Methodolo, Methods and (echni'ues,ndditions, ishwa

prakashan,>ew Felhi.

9%#SIT%S ,,,.co-op sugar ills .co

h

Documents

Buvan.project