1) Inventory turnover ratio= COGS/Av.

Inventory 2) Inventory conversion period= 365/ Inventory turnover ratio

inventory turnover inventory conversion period

45 40 35 30 25 20 15 10 5 0 2008 2009

2008 24.18 15.09

2009 23.89 15.27

2010 30.27 12.05

inventory conversion period inventory turnover

2010

The inventory turnover ratio is showing increasing trend this shows that the no of times per year the inventory is converted into COGS is increasing i.e no of times inventory is converted into sales is increasing. So , the company efficiency of inventory management is increasing. 3) Debtors turnover ratio= Net credit sales/debtor 4) Debtors collection period=365/ Debtors turnover ratio

debtors ratio debtors collection period

2008 29.97 12.17

2009 29.1 12.54

2010 36.56 9.98

The debtors turnover ratio has also showing increasing trend this shows that the company s efficiency of credit management is also increasing. This is good sign for the company.

50 45 40 35 30 25 20 15 10 5 0 2008 2009 2010 debtors collection period debtors ratio

5) Gross operating cycle= Inventory conversion period + Debtors collection period

gross op. cycle

2008 27.26

2009 27.81

2010 22.03

The gross operating cycle is showing the decreasing trend this shows that the company efficiency of managing the working capital is increasing. The company is able to sell its product and able to collect cash from the debtors.

gross op. cycle

30 25 20 15 gross op. cycle 10 5 0 2008 2009 2010

6) Net working capital= Current Asset + Current Liability 2008 102.1 2009 1938.4 2010 67.6

Net Working Capital

Net Working Capital

2500 2000 1500 1000 500 0 2008 2009 2010 Net Working Capital

The net working capital is showing decreasing trend this shows the company is having less money to finance its day to day operation . Hence this can be risky for the company. This not a favourable sign for the company.