A STUDY ON CASH MANAGEMENT WITH SPECIAL REFERENCE TO RHYTHM FASHION PRIVATE LIMITED, TIRUPUR, TAMILNADU

PROJECT REPORT Submitted by

K.KARTHI Register No: 088001614028
in partial fulfillment for the award of the degree Of

MASTER OF BUSINESS ADMINISTRATION
in

DEPARTMENT OF MANAGEMENT STUDIES

SSM COLLEGE OF ENGINEERING
KOMARAPALAYAM-638183 MAY 2010

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SSM COLLEGE OF ENGINEERING
KOMARAPALAYAM-638183 Department of Management studies
PROJECT WORK PHASE II MAY 2010

This is to certify that the project entitled A STUDY ON CASH MANAGEMENT WITH SPECIAL REFERENCE TO RHYTHM FASHION PRIVATE LIMITED, TIRUPUR, TAMILNADU is the bonafide record of project work done by K.KARTHI Register No: 088001614028 of MBA (DEPARTMENT OF MANAGEMENT STUDIES) during the year 2009-2010.
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Project Guide

Head of the Department

Submitted for the Project Viva-Voce examination held on__________
--------------------------Internal Examiner ---------------External Examiner

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DECLARATION I affirm that the project work title A STUDY ON CASH MANAGEMENT WITH SPECIAL REFERENCE TO RHYTHM FASHION PRIVATE LIMITED, TIRUPUR, TAMILNADU being submitted in partial fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION is the original work carried out by me. It has not formed the part of any other project work submitted for award of any degree or diploma, either in this or any other University.

K.KARTHI 088001614028

I certify that the declaration made above by the candidate is true

Mrs. J. Esther Gnanapoo, MBA, M.Phil, Ph.D Professor, Department of MBA, SSM College of Engineering.

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Phil.A. J. MCSD.S. The project has been made possible by the greatest efforts and dedicated support extended to me by my guide Mrs. M. SSM College of Engineering. HGDM (Lon).S. I express a deep sense of gratitude and hearty thanks to Mr. Komarapalayam for making all necessary arrangements for the successful completion of this project. Kerala for the guidance and constant support for completing the project. PhD. Above all. for the encouragement he rendered me in doing the project well. B. M. AIBM.. Principal. K. A project of this dimension would not have been possible without the sincere help and earnest support provided to me from all sources that was approached. MBA. I thank. who provides us all facilities during the course of study. M. Ph.T.KRISHNA KUMAR. God Almighty for his entire blessings. A.KARTHI 4 .D Director of MBA Department.. Esther Gnanapoo. I would also like to express my gratitude towards Mr.Vijayan . Komarapalayam. MBA.4 ACKNOWLEDGEMENT With great pleasure.Phil.M..Com.S. M.MATHIVANAN. P.College of Engineering.. S. College of Engineering..M. F. Accountant and other staffs of Oushadhi Pharmaseuticals Ltd Thrissur.Phil.A. I am presenting this project entitled “A Study on Cash Management with Special reference to Rhythm Fashion Pvt. I feel great pleasure to thank our beloved ‘CAVALIER’ Dr.E. Ph. Ltd. SUBRAMANIYAN Ph. Tamil Nadu”.D.D Head of MBA Department. Words are insufficient when we endeavor to express our heartfelt thankfulness to Dr. Chairman S. Tirupur.M. M.

3 Conclusion Appendices Bibliography 3 4 5 .5 CONTENTS Chapter No List of Tables List of Charts Abstract Introduction 1 Description Page No.3 Limitations of the study 2.3 About the Industry 1.1 Findings 4.4 About the company Main theme of the project 2.2 Scope of the study 2.1 Introduction of the study 1.1 Objectives of the study 2 2.4 Research Methodology 2. vi vii viii 1 to 14 1 2 8 10 15 to 20 15 15 16 16 19 21 to 49 50 to 59 50 58 59 1.2 About the study 1.5 Review of Literature Analysis & Interpretation Findings.2 Recommendations 4. Recommendations and Conclusion 4.

1. 3.2 3.5 the year 2003-04 to 2009-10 Liquidity ratio from the year 2003-04 to 2009-10 Turn over ratio from the year 2003-04 to 2009-10 Average Payment & Average Receipts period from the year 2003-04 to 2009-10 Cash flow statement from the year 2004-2009 Optimum cash balance from the year 2003-04 to 200910 Correlation test from the year 2003-04 to 2009-10 25 35 38 40 43 46 49 LIST OF CHARTS 6 .1 2003-04 to 2009-10 Common size Profit and Loss account statement from 22 3.2.1.3 3.4 3.1 3. Particulars Common size Balance Sheet statement from the year PAGE No.2 3.2.3 3.6 LIST OF TABLES Table No.2.

2 Particulars PAGE No.7 Table No. This study highlights the concepts of cash management.2 Common size Payments statement from the year 200304 to 2009-10 Liquidity ratio from the year 2003-04 to 2009-10 30 3.2.2 Average Payment & Average Receipts period from the 3. Garments at Tirupur.1. 3. This study also points out the problem faced by the company at the time of maintaining a proper cash management level.2.3 3.2.4 year 2003-04 to 2009-10 Optimum cash balance from the year 2003-04 to 200910 36 39 41 47 SYNOPSIS The study deals with the CASH MANAGEMENT in RHYTHM FASHION Private Ltd.1.1 Turn over ratio from the year 2003-04 to 2009-10 3. its components and the trend and the cash management based on past six years data. This study also helps the 7 . 28 Common size Receipts statement from the year 200304 to 2009-10 3.

to suggest measures for improving the cash management of the firm effectively. To study helpful to maintain effective cash management. Industry profile. optimum cash balance. The research methodology part contains the research design and the tools used for analysis. Ratio analysis. cash flow statement. The study is conducted for some specific purpose termed as objectives.8 company to analyze the financial strength and weakness and to take proper corrective measures. objective of the study. The information was collected through both primary and secondary source. needs for the study of cash management. First chapter includes the introduction to the study. research methodology and analysis. Correlation test and optimum cash balance taking into account the past seven years from 2003-04 to 2009-10. The duration of the study was seven years. cash flow statement. This chapter contains the scope and limitations of the study. the history and product details. net etc. The second chapter includes objectives. company profile.. To analyses the cash management in the company. 8 . The study was carried out using various tools such as common size statement. ratio analysis and correlation test analysis has been calculated. to know the current financial position of the company. useful to know about the liquidity position of the firm. common size statement. The research is of analytical type with the secondary data as data type. The company profile explains the various features of the company like its present status in the market. The Primary data’s are collected from personal interview secondary data’s are collected from the company’s financial records. scope of the study and its significance in the introduction to cash management. The secondary data collected are analyzed using the above tools and meaningful conclusions are drawn. The analysis and interpretation part contains the five accounting and statistical tools. Limitation of the study.

9 CHEPTER 1 INTRODUCTION 1. the most liquid asset.1 INTRODUCTION OF THE STUDY Cash. is of vital importance to the daily operations of business firms. Efficient cash management processes are pre-requisites to execute 9 .

and creditors. Managing the channels of collections. This kind of investment contributes some profit to the firm. Cash is the money which a firm can disburse immediately without any restriction. Cash management refers to the flow of cash into and out of a business over a period of time. The firm should keep sufficient cash. currency and cheque held by the firm and balances in its bank accounts. when a firm has excess cash. Cash is the most important factor in financial management and current asset for the operations of the business. Every activity in an enterprise revolves round the cash. Cash is the basic input needed to keep the business running on a continuous basis: it is also the ultimate output expected to be realized by selling the service or product manufactured by the firm. a major function of the financial manager is to maintain a sound cash position. payments and accounting information efficiently becomes imperative with growth in business transaction volumes. Thus. collect receivables and manage liquidity. Sometimes near-cash items. The term cash includes coins. it in marketable securities. cash flow within the firm. Sound financial management means knowing the firms cash flow. The basic characteristic of near-cash assets is that they can readily be converted into cash. The term cash includes coins. Cash management with the managing of cash flow into and out of the firm. Sales generated cash which has to be disbursed out. Generally. such as marketable securities or bank times deposits. The inflows are the cash you receive from customers. and balances in its bank accounts. neither more nor less. currency and cheque held by the firm. lenders. planning to borrow at the appropriate time and substantiating the firm’s payable ability. and cash balances held by the firm at a point of times by financing deficit or investing surplus cash. and investors. The outflow of cash is measured by the money you pay every month to salaries. Cash shortage will disrupt the firm’s manufacturing operation while excessive cash will simply remind idle without contributing anything toward the firm’s profitability. suppliers. Cash is the important current asset for the operation of the business. 10 . Sometimes near-cash item also included. are also includes in cash.10 payments. forecasting cash needs.

11 The surplus cash which has to be invested while deficit has to be borrowed. optimum cash level and investing surplus cash. Profit growth does not always mean more cash. but it takes cash on hand or in the bank to pay suppliers. Cash management assumed more important than other current assets because it is used to pay the firm’s obligations. This study on cash management in Rhythm Fashion private limited will helpful to the firm to cash planning. It is not inventory. and it is not property. the aim of cash management is to maintain adequate control over cash position to keep the firm sufficiently liquid and to use excess cash in some profitability way. and how your cash needs will occur. Cash management is concerned with the managing of cash flows into and out of the firm. where. cash flows within the and cash balances held by the firm at a point of time by financing deficit or investing surplus cash. Therefore. The starting point for avoiding a cash crisis is to develop a cash flow projection. and. monthly) cash flow projections to help them manage daily cash. it is not accounts receivable. Cash management involves managing the money of the firm in order to maximize cash availability and interest income on any idle funds. These might be converted to cash at some point in time. However. Knowing what the best sources are for meeting additional cash needs. by keeping good relationships with bankers and other creditors.2 ABOUT THE STUDY Cash is money that is easily accessible either in the bank or in the business. it does not produce well for sales. cash is unproductive. Unlike fixed assets or inventories. 1. to pay the rent. CASH MANAGEMENT MEANS • • • Knowing when. and long-term (annual. Smart business owners know how to develop both short-term (weekly. Being prepared to meet these needs when they occur. and to meet the payroll. 3-5 year) cash 11 . managing the cash flows.

often referred to as working capital. it may be in serious trouble. Profit is the amount of money you expect to make if all customers paid on time and if your expenses were spread out evenly over the time period being measured. such as too much or obsolete inventory. The inflows are the cash you receive from customers. The outflow of cash is measured by the money you pay every month to salaries. Over time. the company has a negative cash flow. a company's profits are of little value if they are not accompanied by positive net cash flow. lenders. or poor collections on accounts receivable. is the cash flow generated from internal operations. They also prepare and use historical cash flow statements to gain an understanding about where all the money went. the company has a positive cash flow. 1. and investors. You can't spend profit. Cash is what you must have to keep the doors of your business open. Positive Cash Flow management If the cash coming into the business is more than the cash going out of the business. Operating Cash Flow (Internal) Operating cash flow. A Cash Flow Statement is typically divided into three components so that you can see and understand both the internal and external sources and uses of cash. and creditors. A negative cash flow can be caused by a number of problems that result in a shortage of cash. A positive cash flow is very good and the only concern here is managing the excess cash prudently. suppliers.12 flow projections to help them develop the necessary capital strategy to meet their business needs. Cash Flow refers to the flow of cash into and out of a business over a period of time. you can only spend cash. it is not your day-to-day reality. Negative Cash Flow management If the cash going out of the business is more than the cash coming into the business. However. If the company doesn't have money in the bank or can't borrow additional cash at this point. It is the cash generated from sales of the 12 .

1 GOOD CASH MANAGEMENT Knowing when. Knowing the best sources for meeting additional cash needs. The starting point for good cash flow management is developing a cash flow projection. by keeping good relationships with bankers and other creditors. One way to relieve the pressure for cash is through better management of company receivables. This component would include investments in plant and equipment or other fixed assets. the issuance of stock and the payment of dividend are some of the activities that would be included in this section of the cash flow statement. or other sources and uses of cash outside of normal operations. Because it is generated internally. Being prepared to meet these needs when they occur.13 product or service of your business. it is under your control. 2.2. 1. such as lenders. sources from which cash can be obtained and determining whether marketable securities are to be purchased. Cash Decision made by a firm are Determining when cash should be obtained. the repayment of a loan. 3. Cash flow shortages are a challenge for many small businesses. Financing Cash Flow (External) Financing cash flow is the cash to and from external sources. nonrecurring gains or losses. A new loan. Here are some ways to tighten control of your cash. Investing Cash Flow (Internal) Investing cash flow is generated internally from non-operating activities. Facets of cash management  Cash planning : 13 . where and how company’s cash needs will occur. investors and shareholders.

the cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balances. The cash inflows should be accelerated while. as far as possible.14 Cash inflows and outflows should be planned to project cash surplus or deficit for each period of planning Period. 1.  Managing the cash flows : The flow of cash should be properly managed.  Optimum cash level : The firm should decide about the appropriate level of cash balances. the cash outflows should be decelerated. The firm should decide about the division of the such cash balance between alternative short-term investment opportunities such as bank deposits. marketable securities or interoperate lending.2 CASH MANAGEMENT 14 .  Investing surplus cash : The surplus cash balances should be properly invested to earn profits.2.

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3 ABOUT THE INDSUTRY 16 .4 CASH MANAGEMENT CYCLE CASH COLLECTIONS BUSINESS OPERATIONS DEFICIT SURPLUS SURPLUS BORRO Investment INVEST INFORMATION & CONTROL CASH & PAYMENTS 1.2.16 1.

Amongst than national textile corporation plays a vital role to manufacture quality cloths in a bulk quantity and so the competition in the textile market is not small. During this period cloth was made from materials including wool. Textile industry is one of the oldest India’s of the country. cotton came to be regarded as an imported fiber. There were various stages – from a historical perspective – where the textile industry evolved from being a domestic small-scale industry. Today cotton textile industry is spread practically all over India. Bombay was known as the Manchester of India. In Indian context due to the high competition some mills are falling down but some are going up. Maharastra. people had the knowledge of converting stapple cotton in to yarn. At present. The cotton textile units are suffering from increasing raw material prices and other global competition. The word “Textile” is derived from the latin word “texture” meaning “to weave”. The Indian cotton textile industry has recorded history of 150 years. During the later phases of 17 . and the time they were being made.17 Textile Industry place an important role in the national economy. In the later half of the medieval period in the northern parts of Europe. The ‘cottage stage’ was the first stage in its history where textiles were produced on a domestic basis. there are hundreds of mills in India of which 75% mills are concentrate to four states Gujarat. manufacture and design came during the Industrial Revolution – these new wheels. to the status of supremacy it currently holds. THE TEXTILE INDUSTRY New innovations in clothing production. Bombay and Ahamadahad were largest cotton textile centers in India in the early 1920. In India there are lot of private organized textile mills producing variety of items. The material depended on the area where the cloth was being produced. India holds second place among the countries of the world in cloth production. and spinning processes changed clothing manufacture forever. flax and cotton. The birth of the industry dates back of 1818 when first cotton mill was established at fort gloster near Calcutta. Tamil Nadu and West Bengal. looms. The Indian cotton textiles were would famous from the immemorial. During early period of history.

Though the industry was started in UK. new machines such as spinning wheels and handlooms came into the picture. electronics and innovation have led to a competitive. while flax was the primary material used in the northern parts of Europe. A variety of processes and innovations were implemented for the purpose of making clothing during this time. Today. excess cloth was bought by the merchants who visited various areas to procure these left-over pieces. low-priced textile industry offering almost any type of cloth or design a person could desire. but there were three basic steps commonly employed in making clothing. In the Industrial Revolution era. modern techniques. They accounted for almost 25% of the total exports made at that time. With its low cost labour base. and the Roller Spinning machine by John Wyatt and Lewis Paul in 1738. When the Romans ruled. wool. wool was the major export item at this point of time. A number of new innovations led to the industrialization of the textile industry in Great Britain. During this era. These steps included preparing material fibers for the purpose of spinning. China has come to dominate the global textile industry The history of development in World Textile industry was started in Britain as the spinning and weaving machines were invented in that country. During the Industrial Revolution. still in 19th Century 18 . Making clothing material quickly became an organized industry – as compared to the domesticated activity it had been associated with before. However. These processes were dependent on the material being used. Clothing manufactured during the Industrial Revolution formed a big part of the exports made by Great Britain. doubling in the period between 1701 and 1770. The center of the cotton industry in Great Britain was Lancashire – and the amount exported from 1701 to 1770 had grown ten times. cotton and silk over the world has boosted the industry in recent years. High production of wool. a lot of effort was made to increase the speed of the production through inventions such as the flying shuttle in 1733.18 the 16th century cotton was grown in the warmer climes of America and Asia. the flyer-andbobbin system. leather and linen were the materials used for making clothing in Europe. knitting and weaving.

Corespun Yyra Yarn. was estrablised on april 2003 and now it achieved a worthwhile turnover. Tamil Nadu. Tripur-641607. a concern dealt in purchase and sale of variety of yarns such as Filament dyed Yarn. 100% Spun Polyester Yarn. and all type of T-shirts etc.M chairman.. A. Ltd.19 the textile production passed to Europe and North America after mechanization process in those areas.Saminathan. The World Trade Organization (WTO) has taken so many steps for uplifting this sector. 1. Polyester Cotton Yarn. Milange Yarn.4 ABOUT THE COMPANY Introduction about the Company: RHYTHM fashion Pvt. K. Since it has more dealers in TamilNadu and other state also. The Rhythm Fashion Established In April 2003 and the plant was setup at Tirupur in TamilNadu in 2003. New Market Street. founder. PRESENT BANKERS : 1) UNION BANK OF INDIA. WTO had renewed its MFA and adopted Agreement on Textiles and Clothing (ATC). Spun Viscose. First they started the business with small level of Capital.K. The Rhythm Fashion authorized main dealers in 2004. Tirupur. Cotton slub Yarn.G. which states that all quotas on textile and clothing will be removed among WTO member countries. Polyester Viscose blender Yarn. In the year 1995. Cotton Acrylic blended Yarn. Located in 28. Product exporting to United States. It is managed and run by the partners Nataraj. LAY-OUT. However the level of exports in textiles from developing countries is increasing even if in presence of high tariffs and quantitative restrictions by economically developed countries. (Current a/c) 2) INDUS IND BANK (Current a/c) 3) STATE BANK OF INDIA Tripur (current account) 19 . 2 nd Street. Canada and United Kingdom..

Polytex..V.. 20 .. Milange Yarn. Bhiwondi Agreement : For 10 years (to be signed) Product : Filament Dyed Yarns (various denier) ii) S..N. TRADERS FOR : 1) P. Mumbai Agreement : For 10 years (to be signed) Product : Grey Filament Yarn (various denier) iii) Pallipalayam spinners (p) Ltd. Selam. 3) Thambi Modern Spinning Mills (P)Ltd. Polyester Viscose blender Yarn.K. Corespun Iyara Yarn. Selam. Cotton Acrylic Blend Yarn.R. PC Yarn. Pallipalayam Product : Spun Viscose. Mills (P)Ltd.20 THE PRODUCTS DEALT IN : i) Melkay Industries Ltd. Pallipalayam Product : 100% Spun Polyester Yarn. Product : Cotton Slub Yarn. Tiruchengode. Agreement : For 3 years (to be signed) Product : Spun Viscose.P.. 4) Paranthaman Spinning Mills (P)Ltd. Product : PC word blended yarn. 2) Rohit Spinners (P)Ltd..

To feed the export market.Still the growth of turnover is going very fast and achieved a turnover of Rs.21 Finance Requirement In order to meet ever increasing yarn requirement and increase in price also. to meet the market demand. With its low cost labour base. enhancing the capacity of yarn Products produce with high quality with reasonable price and capture the market.8. ever increasing. Along with.22 Lakes. DEMAND & SUPPLY POSITION: The total demand for garments in the world market is ever growing one and the share of India in this prime market is 2% and on the uptrend since India is having a very good opportunity to develop this market especially after the phasing out of quakes under WTO treaty. Management and company plans • Today.. The plan envisages installation of raw materials and Continuous process facilities to produce large production.07 core for the period April-2006 to Dec-2009. This turnover was achieved without any finance from any person or authorities such as Bank etc. the company dealt in Raw material requirement part. To Cope with this market the company need financial assistance of Rs. so our textile industry offering almost any type of cloth or design a person could desire. Expansion Plan Expansion and modernization of Textile is presently on. the company keep stock to the turn of Rs. expansion of all department .15 Lakes. 21 . • The company has strong Research and Development center enabling it to develop superior products matching customized needs. electronics and innovation has implement in concern. modern techniques. • The Rhythm Fashion is the largest dealers in Tirupur and surrounding area. possible in our concern because of new innovation. which is no doubt.

Core Values • • • • • • • Good Employee relationship Mutual trust and respect Close relationship with our suppliers and debtors Customer satisfaction Clear goals and objectives Quality control Professional ethics Financial requirement are a challenge for many small businesses. 22 . Due to the historical legacy the manpower cost in the company is higher than its competitors. One way to relieve the pressure for cash is through better management of company receivables. Here are some ways to tighten control of your cash.22 • Need strong financial position to meet unexpected expenses and losses. In Rethym fashion follow the ethics and maintaining effective cash management.

23 1.1 ORAGANISATION CHART 23 .4.

• This study will help the firm in making some financial decisions for future years. • The study clearly explains about at what areas they have to improve their performance. 24 . • It helps in making some reference for its past performance. To know about the optimum cash balance of the company. To analyze the cash sales. • This study will help the management to decide the cash position in order to increase the profitability and the value of the firm. To determine the cash inflows and outflows of the company. 2. Tripur. Tamil nadu.3 LIMITATIONS OF THE STUDY  The data was obtained from the annual reports of the company so the reliability of the study depends on the accuracy of information found in the annual reports.2 SCOPE OF THE STUDY: This Study on Cash Management with Special Reference to RHYTHM FASHION Private Limited. 2.24 CHAPTER II MAIN THEME OF THE STUDY 2. was for a Period of 7 years from the year 2003 to 2009. 2.1 MAIN OBJECTIVES OF THE STUDY The main objectives of the study are. 1. To know the liquidity position of the firm. 3. credit sales. To study the cash position and financial position of the company. 4. 5. cash payments and cash disbursements made by the company.

2 ANALYTICAL RESEARCH This study is based on analytical research. It is the conceptual structure within the research is constituted.1 RESEARCH DESIGN A research design is the arrangement of condition for the collection and analysis of the data in a manner that aims to combine relevance to the research purpose with economy in producer. The time value of money is not considered.25  The data used in this study has been taken from published annual reports only. It constitutes the blue print for the collection. Research Methodology has many dimensions and research method does constitute a part of research methodology.4. data has been grouped and sub grouped  The data taken for analysis is historical in nature. 2. As the study concerned with the evaluation of the expost facts analytical method of research will be suitable. the researcher has to use facts or information already available and analyze these to make a critical evaluation of the study.  As per the requirement and necessity. In research methodology we study the various steps that are generally adopted by a researcher in studying his research problem along with logic behind them.4. 2. 2. 2. measurement and analysis of data.4.4 RESEARCH METHODOLOGY Research methodology is a way to systematically solve a research problem. In analytical research.3 SOURCE OF DATA USED  Primary data  Secondary data a) Primary Data 25 .

4. supported by various books and internet sides. It will save the time. It means the data that are already collected and analyzed by someone else such as annual reports. money and efforts to collect the data. internal records. The study depends mainly on company’s annual reports and company profile etc. with respect to the problem under study.4 TOOLS FOR ANALYSIS The main tools used for the study are  Common size statement. journals. balance sheets. 26 . head of Finance department and other concerned staff members. 2. Secondary data also made available through trade magazines.  Ratio Analysis  Cash flow statement. It is also known as raw data. books etc. direct personal Interview. The methods used to collect primary data was.26 The data directly collected by the researcher. But primary data collection had limitations such as matter confidential information thus project is based on secondary information collected through seven years annual report of the company. This project is based on primary data collected through personal interview of head of account department. The data collection was aimed at study of cash management of the company. magazines and newspapers. b) Secondary Data Secondary data mainly used in this study. is called as primary data.  Optimum cash balance (Bamoul Model)  Correlation.

An analysis of financial statement ratios is imperative. They are even misleading. Two or more variables are said to be correlated if change in the value of appears to be related as linked with change in the other correlation. Ratio Analysis Ratio analysis is one of the powerful tools of financial analysis. Cash flow statement Cash flow statement can be defined as a statement which summaries sources of cash inflows and uses of cash outflows of the firm during a particular period of time say as month or year. Correlation Correlation analysis is the statistical tool that describes the degree to which the variables linearly related to other variables. It indicates a quantitative relationship between the figures and group of figures which are used for evaluation and decision-making. Economic order quantity is used in the standard inventory situation.27 Common size statement Financial statement when read with read with absolute figures is not easily understandable. 27 . Each item of assets is converted into percentage to total assets and each item of capital and liabilities is expressed to total liabilities and capital fund. Optimum cash balance It is determination of optimum level of each of a company.

cash management may have a consequent impact on small business survival and growth (Kargar and Blumenthal. 1996). The cash flow problems of many small businesses are exacerbated by poor financial management and in particular the lack of planning cash requirements (Jarvis et al. If it becomes weak. the business can hardly prosper and survive. The success of a firm depends ultimately. the flow of funds is very necessary to maintain business. not retained in the business in a particular form for longer than a year. marketing and operations. 1996). The need for maintaining an adequate working capital can hardly be questioned. Cash management starvation is generally credited as a major cause if not the major cause of small business failure in many developed and developing countries (Rafuse. Just as circulation of blood is very necessary in the human body to maintain life. on its ability to generate cash receipts in excess of disbursements. The money invested in it changes form and substance during the normal course of business operations. The Journal of Nepalese Business Studies Extensive research works on working capital management have been done in both public and private sectors including 28 . It is a trading capital.28 2.5 REVIEW OF LITERATURE Kesseven Padachi is about the cash management meets the short-term financial requirements of a business enterprise. While the performance levels of small businesses have traditionally been attributed to general managerial factors such as manufacturing. 1994).

Pollachi in 2003 was done by Ms.S..Selvanayaki. Of all aspects of financial management.29 Multinational Companies in Bangladesh. Optimum working capital enables a business to have its credit standing and permits the debts payments on the date of its maturity and helps to keep itself fairly in liquid position which enables the business to attract borrowing from the banks. 29 . The main objective was to analyse the cash management and to highlight the various changes that have been taken place in the management of cash. It also helps to maintain all-round efficiency in operations. Findings of the study were the growth in the cash of the concern and good liquidity position. in1990. A study on cash management of Sakthivelu poly pack. It is suggested that the ability of the firm to meet its short-term liabilities is normal and this practice may be adopted in the future also.Meena in Palai Andavar Cotton And Synthetics Ltd. Mohiuddin (1983) had conducted a study on cash budget. The main objective was to present the conceptual framework for working capital and to find out the working capital employed. Cash management analysis was done by S. working capital management is the vital one. Islam and Rahman (1994) had article on "cash management Trends of the Selected Enterprises in Bangladesh".

They are even misleading. In the words of Kennedy and Memullar.1 COMMON SIZE STATEMENT Financial statement when read with read with absolute figures is not easily understandable. Each item of assets is converted into percentage to total assets and each item of capital and liabilities is expressed to total liabilities and capital fund. These account balances do not represent homogenous data so its difficult to interpret them and draw conclusions.” the analysis and interpretation of financial statements are an attempt to determine the significance and meaning of the financial statements data so that a forecast may be made to the prospects for the future earnings. ability to pay interest and debt maturities and profitability of a sound dividend policy”. For the purpose of analysis individual items are studied. their interpretation with other related figures are established.30 CHAPTER – III ANALYSIS AND INTERPRETATION Analysis is the process of critically examining in detail accounting information given in financial statement. interpretation have no value. Thus the whole balance sheet is converted into percentage 30 . This requires analysis of data in the financial statements. Interpretation is not possible without analysis and without analysis. Various account balances appear in the financial statements. 3. Interpretation is thus drawing inference and stating what the figures in the financial statements really mean. Analysis financial statements is a process of evaluating relationship between component parts of financial statements to obtain understanding the firms position and performance. The data is sometimes rearranged to have better understanding of the information with the help of the different techniques or tools for the purpose.

&acc.1. Such converted balance sheet is known as common size statement. TABLE 3. Creditors P & L account 100% 43% 13% 16% 2% 1% 0% 14% 10% 100% 31% 12% 24% 2% 1% 0% 19% 11% 100% 30% 12% 24% 4% 1% 0% 20% 9% 100% 26% 13% 26% 6% 1% 0% 23% 6% 100% 31% 15% 20% 4% 1% 0% 23% 6% 100% 32% 14% 17% 4% 2% 0% 27% 5% 100% 33% 13% 13% 4% 1% 0% 30% 7% 31 .1 COMMON SIZE STATEMENT SHOWING BALANCE SHEET FROM THE YEAR 2003-2009 (Rs. Here we are going to anglicizing the common size statement of profit and loss account and common size statement of balance sheet. income Bills receivables Debtors Inventories 4% 16% 28% 2% 2% 5% 1% 1% 25% 17% 2% 9% 47% 1% 1% 3% 1% 1% 22% 12% 2% 7% 45% 1% 1% 2% 3% 1% 27% 10% 2% 6% 45% 1% 1% 2% 3% 1% 30% 10% 2% 5% 48% 1% 1% 2% 3% 1% 29% 9% 1% 4% 48% 1% 1% 2% 2% 1% 31% 9% 1% 4% 48% 1% 1% 2% 2% 1% 32% 8% 200304 200405 200506 200607 200708 200809 200910 TOTAL ASSETS LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Bills Payables Outstanding Exp.31 form. in %) Year ASSETS Building Land Plant & Machinery Furniture Investment Cash in Hand & Bank Int. rec.

• Plant and Machinery covers major portion of the total assets. it was 1%. It shows a decreasing trend from the year 2003-04 to 2009-10. it was 2% • Bills receivable shows a stable trend from the year 2003-04 to 2009-10. • Furniture and Investment covers a 1% of the total assets. It shows decreasing trend from the year 2003-04 to 2009-10. it was 1% for all the years. it was 28% to 48%. It shows a decreasing trend from the year 2003-04 to 2009-10. From the year 200405 to 2009-10 value was contend it 1%. it was 2%. From the year 2004-05 to 200709 value was stable. it was 3%. From the year 200506 to 2009 value was stable. From the2008-09 to 2009-10 value was stable. it was 2% to 1%. • Cash in hand covers a tiny portion of the total assets. • Interest received and accrued income covers a small portion of the total assets. It covers almost 50% of total assets.32 TOTAL LIABILITES Interpretation: 100% 100% 100% 100% 100% 100% 100% From the above table it was interpreted that Assets • Buildings cover a minor portion of total assets. It shows an increasing trend from the year 2003-04 to 2009-10. it was 2%. it was 16% to 4%. From the year 2008-09 to 2009-10 value was stable. It shows an increasing trend from the year 2003-04 to 2009-10. it was 5% to 2%. it was 4 % to 1%. 32 . it was 1% to 2%. From the year 2005-06 to 2007-08 shows increasing trend and also stable. From the year 2008-09 to 2009-10 it shows decreasing trend and value also constant. • Land covers a small portion of total assets it shows a decreasing trend from the year 2003-04 to 2009-10. it was 4%.

Liabilities • Share capital covers major portion of the total liabilities. Value was stable in the year 2005-06 to 2006-07. • Loans and advances show a fluctuating trend. Again it shows decreasing trend next years. From the year 2003-04 to 2004-05 it shows decreasing trend it was 13% to 12%. From the year 2007-08 to 2008-09 shows increasing trend. it was 16% to 26%. it was 1% to 2%. it was 15%. it was 14% to 30%. Again it shows increasing trend in the year 2006-07 to 2007-08. • Creditor’s covers a second major portion of the total liabilities. it was 31% to 33%. • Reserve and surplus shows a fluctuating trend. From the year 2003-04 to 200708 value stable. From the year 2007-08 to 200910 shows decreasing trend 20% to 13%. • An inventory shows a decreasing trend from the year 2003-04 to 2009. it was 13% to 13%. 9% value stable in the year 2007-08 to 2009-10. it was 43% to 33%. From the year 2007-08 to 2009-10 value was constant it was 4%. Again it decreased 1% to remaining years. it was 2% to 4%. From the year 2003-04 to 2006-07 shows decreasing trend. it was 10%.33 • Debtor’s covers a second major portion of the total assets. From the year 2003-04 to 200607 shows increasing trend. From the year 2007-08 to 2009-10 it shows increasing trend. 33 . it was 17% to 8%. • Bills payable shows a stable value for all years. From the year 2003-04 to 2009-10 it shows increasing trend. it was 43% to 26%. It shows a decreasing trend from the year 2003-04 to 2009-10. From the year 2003-04 to 200910. It shows an increasing trend from the year 2003-04 to 2009-10. it was 25% to 32%. • Provision and taxation shows an increasing trend from the year 2003-04 to 2009-10. it was 1%. From the year 2006-07 to 2007-08 shows decreasing trend it was 6% to 4%.

Other expenses Depreciation Tax paid Total Expenses Net profit after tax (from sales) Interpretation: Receipts • 8% 63% 24% 3% 2% 100% 2% 24% nil 26% 9% 12% 1% 8% 1% 4% 13% 100% 20% 9% 72% 16% 2% 1% 100% 3% 37% 13% 3% 11% 10% 0% 6% 0% 4% 13% 100% 18% 10% 76% 11% 1% 2% 100% 4% 38% 9% 14% 9% 9% 0% 4% 0% 3% 10% 100% 12% 8% 80% 10% 1% 1% 100% 5% 40% 8% 10% 6% 9% 0% 3% 0% 3% 16% 100% 6% 11% 80% 7% 1% 1% 100% 4% 39% 7% 5% 6% 8% 0% 3% 0% 2% 26% 100% 5% 10% 81% 7% 1% 1% 100% 5% 39% 6% 6% 10% 9% 0% 3% 0% 2% 20% 100% 5% 11% 81% 6% 1% 1% 100% 5% 38% 6% 6% 10% 8% 0% 3% 0% 2% 22% 100% 6% Cash sales shows an increasing trend from the year 2003-04 to 2005-06.2 COMMON SIZE STATEMENT SHOWING PROFIT AND LOSS ACCOUNT FROM THE YEAR 2003-2009 (Rs. It shows a decreasing trend in the year 2005-06 to 2006-07. 3.34 • Profit and loss of the concern shows a decreasing trend from the year 2003 to 2009 it was 10% to 7%. it was 34 . In %) 200304 200405 200506 200607 200708 200809 200910 Year Particulars Receipts Cash sales Credit sales Closing stock Interest received Commission received Total receipts Particulars Payments Cash purchase Credit purchase Opening stock consumed Raw material in store Staff expenses Power and fuel Interest and bank charges Administrative Exp.1. it was 8% to 10%. From the year 2006-07 to 2007-08 stable value was 6%.

Again it was decreasing trend in the year 2006-07 it was 1%. • Closing stock shows a decreasing trend from the year 2003-04 to 2009-10 it was 24% to 6%. In the year 2007-08 to 2008-09 it posses a stable value of 7%. • Raw material in store shows a decreasing trend from the year 2003-04 to 200405 it was 26%to 3%. Increasing trend in the year 2004-05 to 2005-06 it was 3% to 14%. it was 24% to 40%. A credit sale covers major portion of total receipts. From the year 2006-07 to 2007-08 it shows increasing trend it was 8% to 11%. From the year 2003-04 to 2009-10 shows an increasing trend it was 8% to 11%. • Interest received shows decreasing trend from the year 2003-04 to 2009-10 it was 3% to 1%. • Credit purchase shows an increasing trend from the year 2003-04 to 2006-07. From the year 2006-07 to 2009-10 value was stable it was 1%. • Opening stock consumed shows a decreasing trend from the year 2003-04 to 2009-10 it was 13% to 6%. 35 . • Commission received shows a decreasing value from the year 2003-04 to 200405 it was 2% to 1%. Again it shows a decreasing trend from the year 2005-06 to 2009-10 it was 14% to 6%. In the year 2008-09 again shows it a decreasing trend to 10%. Showing decreasing trend from the year 2007-08 to 2009-10 it was 39% to 38%. Decreasing trend from the year 2006-07 to 2007-08 it was 5% to 4%. From the year 2008-09 to 2009-10 stable value it was 6%. Next year it shows an increasing trend it was 2%. From the year 2005-06 to 2009-10 stable value it has 1%.35 10% to 8%. Again it was increasing trend from the year 2007-08 to 2008-09 it was 4% to 5%. Stable value from the year 2008-08 to 2009-10 it was 5%. Payments • Cash purchase shows increasing trend from the year 2003-04 to 2009-10 it was 2% to 5%. • Credit sales shows an increasing trend from the year 2003-04 to 2009-10 it was 63% to 81%.

From the year 2003-04 to 2004-05 value shows constant it was 4%. From the year 2005-06 to 2007-08 shows a decreasing trend it was 9% to 6%. • Power and fuel shows decreasing trend from the year 2003-04 to 2009-10 it was 12% to 8%. Decreasing trend from the year 2004-05 to 2005-06 it was 13% to 10%. • Depreciation shows decreasing trend from the year 2003-04 to 2009-10 it was 4% to 2%. Remaining years it was zero. • Interest and bank charges and other expenses for the year 2003-04 1%.1. From the year 2006-07 to 2009-10 it was stable value of 3%. Remaining years from 2007-08 to 2009-10 shows stable value of 2%. It shows increasing trend from the year 2008-09 to 200910 it was 5% to 6%. • Net profit from the sales shows decreasing trend from the year 2003-04 to 200809 it was 20% to5%. • Tax paid shows stable value from the year 2003-04 to 2004-05 it was 13%.36 • Staff expenses shows an increasing trend from the year 2003-04 to 2004-05 it was 9% to 11%. Increasing trend from the year 2005-06 to 2009-10 it was 10% to 22%.2 CHART SHOWS COMMON SIZE STATEMENT RECEIPTS FROM THE YEAR 2003-2009 36 . • Administrative expenses show a decreasing trend from the year 2003-04 to 2009-10 it was 8% to 3%. Again it was increasing trend from the year next two years also stable vale from the year 2008-09 to 2009-10 it was 10%. 3. From the year 2005-06 to 2006-07 stable value it was 3%.

37 RECEIPTS 2003-04 Commision received 2% Interest received 3% Closing stock 24% Cash sales 8% Credit sales 63% RECEIPTS 2004-05 Commision received 1% Interest received 2% Cash sales 9% Closing stock 16% Credit sales 72% RECEIPTS 2005-06 Commision received 2% Cash sales 10% Interest received 1% Closing stock 11% Credit sales 76% 37 .

38 RECEIPTS 2006-07 Commision received 1% Cash sales 8% Interest received 1% Closing stock 10% Credit sales 80% RECEIPTS 2007-08 Interest received 1% Closing stock 7% Commision received 1% Cash sales 11% Credit sales 80% RECEIPTS 2008-09 Commision received 1% Cash sales Interest received 10% 1% Closing stock 7% Credit sales 81% 38 .

39 RECEIPTS 2009-10 Interest received 1% Closing stock 6% Commision received 1% Cash sales 11% Credit sales 81% 3.1.2 CHART SHOWS COMMON SIZE STATEMENT PAYMENTS FROM THE YEAR 2003-2009 39 .

11% Interest and bank charges 1% Power and fuel 16% Raw material in store 36% Staff expenses 12% PAYMENTS 2004-05 Deperciation 4% Other expenxes 0% Administrative Exp. 6% Interest and bank charges 0% Power and fuel 10% Credit purchase 37% Tax paid 13% Cash purchase 3% Staff expenses 11% Raw material in store 3% Openig stock consumed 13% 40 .40 PAYMENTS 2003-04 Tax paid 18% Deperciation 5% Other expenxes 1% Administrative Exp.

4% Interest and bank charges 0% Credit purchase 38% Staff expenses 9% Power and fuel 9% Raw material in store 14% Openig stock consumed 9% Deperciation 3% Other expenxes 0% Administrativ e Exp.41 PAYMENTS Deperciation 3% Other expenxes 0% Tax paid 10% 2005-06 Cash purchase 4% Administrative Exp. 3% Interest and bank charges 0% Power and fuel 8% Credit purchase 39% Staff expenses 6% Raw material in store 5% Openig stock consumed 7% 41 . 3% Interest and bank charges 0% PAYMENTS 2006-07 Tax paid 16% Cash purchase 5% Credit purchase 40% Power and fuel 9% Staff expenses 6% Raw material in store 10% Openig stock consumed 8% PAYMENTS 2007-08 Deperciation 2% Tax paid 26% Cash purchase 4% Other expenxes 0% Administrative Exp.

3% Interest and bank charges 0% Power and fuel 9% Staff expenses 10% Raw material in store 6% Tax paid 20% Cash purchase 5% Credit purchase 39% Openig stock consumed 6% PAYMENTS 2009-10 Deperciation 2% Other expenxes 0% Administrative Exp. Interest and 3% bank charges 0% Tax paid 22% Cash purchase 5% Credit purchase 38% Power and fuel 8% Staff expenses 10% Raw material in Openig stock consumed store 6% 6% 42 .42 PAYMENTS 2008-09 Deperciation 2% Other expenxes 0% Administrative Exp.

The absolute accounting reports do not provide a meaningful understanding in the performance of the firm. the technique of ratio analysis has been used.1 LIQUIDITY RATIOS • Current ratio Current ratio is a measure of firms short terms solvency. It is expressed when one figure is dividend by others. 43 . In this study for assessing the performance of the working capital position. It reflects a quantitative relationship in forms of quality judgment.2 RATIO ANALYSIS Ratio is powerful tool of working capital management analysis. It summarizes large quantities of financial data and to make quality judgment about firms financial performance. Current Assets Current ratio = ------------------------------------Current Liabilities • Quick ratio It establishes a relationship between liquid assets and current liabilities where an assets can be converted into cash reasonably with out a lose of value. The various ratios used in this study are 3. It helps in measuring firms liquidity and its ability to meet current obligations.2.43 3. Ratio is the numerical of arithmetical relationship between two figures. It indicates the availability if current assets in rupees for every one rupees of current liabilities. In financial analysis a ratio is used as a benchmark for evaluating the financial position and performance of a firm.

379 0.055 1.284 44 .588 200405 1.481 1.532 1. When liquidity is highly restricted in terms of cash and cash equivalents. Current Asset Current Asset to Liquidity Asset Ratio = ---------------------------Liquid Asset TABLE 3.13 0.355 200809 1.118 0.979 2.305 0.088 1.44 Current asset – Inventories Quick ratio = ------------------------------------------Current liabilities • Absolute Liquidity Ratio (or) Cash position Ratio It is a variation of quick ratio. Absolute liquid asset (cash) Absolute Liquidity Ratio = ---------------------------------------Liquid Liabilities • Current Asset to Liquidity Asset Ratio It relationship between current asset and liquid assets purpose of this ratio to know about the current asset to liquid assets level.441 1.333 1. this ratio calculated.439 0.188 1.187 0.1 LIQUIDITY RATIOS FROM THE YEAR 2003-04 TO 2009-10 (In times) 2003Liquidity Ratio 04 Current asset ratio Quick ratio Absolute Liquidity Ratio Current Asset to Liquidity Asset Ratio Interpretation From the above table was interpreted that 1.511 200506 1.07 1.245 1.322 200910 1.359 0.145 1.2.441 200607 1.317 1.113 1.08 1. Liquidity relationship between cash and near cash items on the one hand and immediately obligation on the others.393 200708 1.

• Liquidity ratio shows decreasing trend from the year 2003-04 to 2009-10 it was 0.055. More than 1:1 indicates sound financial position.333 to 0.441 to 1. It shows concern is not a sound position. This is less than standard norm of 0.588 to 1.118 to 1.13. 3.532. Again it was decreasing trend from the year 2006-07 to 2009-10 it was shows from 1. Companies were shows sound financial position.2 TURN OVER RATIO & ASSETS RATIO 45 .441.284. Less than 2:1 ratio indicates concern is not a sound position.979 to 1.1 CHART SHOWS LIQUIDITY RATIOS FROM THE YEAR 2003-04 TO 2009-10 3. This is less than standard norm of 2:1. Standard norms 1:1. Here our firm quick ratio gives better picture of firm’s ability to meet its short term debt out of short term assets. Less than standard norms shows firm hasn’t enough cash on hand.2.2.45 • Current ratio from the year 2003-04 to 2005-06 it shows decreasing trend it was 1. • Current asset to liquidity asset ratio was showing decreasing trend from the year 2003-04 to 2009-10 it was 1.75:1. From the year 2005-06 to 2006-07 increasing trend it was 1. • Quick ratio shows a decreasing trend from the year 2003-04 to 2009-10 it was 2.532 to 1.188.

• Debtor Turnover Ratio This ratio shows whether the debts are properly collected or not. The ratio reveals that in the earliest years the fixed assets cab be efficiently utilized. The ratio calculated as follows Net Sales Debtor Turnover Ratio = ----------------------------Average debtors • Creditors Turn Over Ratio A Business concern usually purchases raw materials. So the fixed asset turnover ratio is decreased every year. The higher the ratio the better is the performance. A business concern generally adopts different methods of sales. Higher the ratio better the profitability and use of capital. The ratio is calculated as follows:Net Credit Purchase Creditors Turn Over Ratio = • ---------------------------------------------Average creditors Fixed Assets Turnover Ratio:The fixed assets turnover ratio is important in the case of manufacturing concerns because sales are produced but also by amount invested in fixed assets. Goods are sold in credit based on credit policy adopted by the firm. creditors turnover ratio indicates the number of times the payables rotates in a year. services and goods Credit the quantum of payable of a business concern depends upon its purchase policy. a low ratio indicates that fixed assets are not being efficiency utilized. On the other hand.46 These ratios are very important for a concern to judge how well the disposal of the concern is being used or to use the effectiveness with which a concern uses its resources at its disposal. But now a days the fixed assets cannot properly utilized. One of them is selling in credit. Net Sales Fixed Assets Turnover Ratio = --------------------------------Fixed assets 46 . the quality of purchases and suppliers credit policy.

A high ratio is an indicator of over trading of total assets while a low ratio is an indicator of over trading of total assets while a low ratio reveals idle capacity.498 2.661 to 3.481 200405 2.115.2 TURNOVER RATIO FORM THE YEAR 2003-04 TO 2009-10 (In times) 2003Turn over ratio 04 Debtor Turnover Ratio Creditors Turn Over Ratio Fixed Assets Turnover Ratio Total Asset Turn Over Ratio Interpretation: From the above table was interpreted that • Debtor turnover ratio shows increasing trend from the year 2003-04 to 2007-08 it was 1.115 to 3. 1.661 0.735 1.168 1. Net Sales Total Asset Turn Over Ratio = -----------------------------Total Assets TABLE 3. The traditional standard for the ratio is two times.67 1.932.339 0. Then it shows decreasing trend from the year 2007-08 to 2009-10 it was 1.752 200607 2.122 200910 3.047 1. Thereafter again it was increasing trend from 2008-09 to 2009-10 it was 3.47 • Total Asset Turn Over Ratio This ratio is calculated by dividing the net sales by the value of total assets.108 200809 3. • Creditor turnover ratio shows increasing trend from the year 2003-04 to 200708 it was 0.224.59 to 1.2.123 so during this period debtors level was increased it has good for concern.684 0.956 1.994 0.939 0. Then it shows decreasing trend from the year 2007-08 to 2008-09 it was 3.115 1.931 1.224 to 3.606 200506 2.498 so during this period creditor’s level was increased it shows firm stock consuming level was appreciated.399 1.972 0.191 47 .394 1.326 1.123 1.189 0.59 2.972 to 1.224 1.918 200708 3.

2005.191.2008. So it shows net sales level was to be increased than compare to total asset.2.2 CHART SHOWS TURNOVER RATIO FORM THE YEAR 2003-04 TO 2009-10 3.48 • Fixed asset turnover ratio shows increasing trend from the 2003-04 to 2009-10 it was 0. • From the above table it has been inferred that fixed asset to current asset ratio shows increasing trend from the 2003-04 to 2009-10 it was 0.2004.481 to 1.5 1 0. • From the above table it has been inferred that Total asset turnover ratio shows increasing trend from the 2003-04 to 2009-10 it was 0.2007. So it shows net sales level was to be increased than compare to fixed asset.5 R AT IO 2 1.3 AVERAGE COLLECTION & PAYMENT PERIOD • Average Payment Period 48 .481 to 1. So it shows net sales level was to be increased than compare to total asset.200904 05 06 07 08 09 10 Y E AR 3.191.5 3 2.5 0 T UR NO V E RR AT IOF R O MT H EY EAR 2 0 0 3 -1 0 Debtor Turnover Ratio Creditors Turn Over Ratio Fixed Assets Turnover Ratio Total Asset Turn Over Ratio 2003.2. 3.2006.939 to 2.168.

High payment period was 10.5 3.9 8.01 3.4 6.72 7. collection period (in months) Interpretation: From the above table was interpreted that • Average payment period shows increasing trend from the 2003-04 to 2004-05 it was 8.49 It relationship between account payable and net credit purchase multiply with total number of month or total number of days in the year. 49 . Account Payable Average payment period = -----------------------------*12month Net credit purchase • Average Collection Period It relationship between account receivables and net credit sales its multiply with total number of month or total number of days in the year Account Receivables Average collection period = -----------------------------. Then it shows decreasing trend from the year 2004-05 to 2007-08 it was 10.2 3. The shorter average payment period good for the concern.2 10.4 months to 10.6 5.01 7.8 months) Avg.3 AVERAGE COLLECTION & PAYMENT PERIOD FORM THE YEAR 2003-04 TO 2009-10 (In months) Avg.1 5. payment period (in 8.2 months.*12 month Net credit sales TABLE 3.1 months to 6.4 7.1 months. Low period month was 6.2 4.1 months.2 8.2.2 months to 8. Thereafter again it was shows increasing trend from the year 2007-08 to 2009-10 it was 6.01 months. period 200304 200405 200506 200607 200708 200809 200910 Avg.2 months.

50 • Average collection period shows decreasing trend from the 2003-04 to 2009-10 it was 7. payment period (in months) Avg. Shorter average collection period better for the concern.2004. It helps management in making plans for the 50 .200904 05 06 07 08 09 10 YEAR Avg.2007. The cash flow statement explains the reasons for such inflows or outflows of cash.2 month to 3. Collecting with in short period is good for concern. A Cash flow statement is a statement depicting change in cash position from one period to another. 3.2006. as the case may be.3 CHART SHOWS AVERAGE COLLECTION & PAYMENT PERIOD FORM THE YEAR 2003-04 TO 2009-10 AVERAGE PAYMENT AND RECEIPT PERIOD 12 10 8 RATIO 6 4 2 0 2003.3 CASH FLOW STATEMENT A Cash flow statement can be defined as a statement which summaries sources of cash inflows and uses of cash outflows of the firm during a particular period of time say as month or year.2.2005.8 month.2008. collectio period (in months) 3.

3) It discloses the complete story of cash movement. TABLE 3. to pay bank loans and to pay dividend to the shareholders.3 51 .51 immediate future. Its advantages are as follows 1) Cash flow analysis helps in evaluating financial policies and cash position 2) Cash flow analysis provides information about funds which will be available from operations. A projected cash flow statement will help the management in ascertaining how much cash will be available to meet obligations to trade creditors. A cash flow statement is useful for short term planning.

842 to Rs. 117 842 25786 267 324 2245 29581 328 1156 18445 325 439 2898 23592 458 839 14548 113 421 3247 19626 487 321 21229 122 243 1472 3127 27000 366 239 19795 288 179 5343 25910 304 220 18462 122 274 4829 4583 28794 1933 6780 11941 8926 29581 2245 12210 11299 50 -2212 23592 2898 4000 10001 2727 19626 3247 17835 5919 27000 3127 15276 802 102 6604 25910 5343 15289 8161 28794 52 . Then it shows Decreasing trend from the year 2007 to 2009 it was Rs. Then it shows Decreasing trend from the year 2006 to 2009 it was Rs.1156.487.304. It shows total value of machinery increased every year. It shows total value of building increased every year. in ‘000) CASH FLOW STATEMENT FOR THE YEAR 2003 to 2010 2004 2005 2006 2007 2008 2009 Amount Amount Amount Amount Amount Amount Application (cash out flow) To Cash (Purchase of building) To Cash (Purchase of machinery) To Cash (Purchase of P & Mac.839 to Rs.52 CASH FLOW STATEMENT FROM THE YEAR 2004-2009 (Rs.) To Cash (Purchase of Furniture) To cash (investment) To repayment of loan Closing Balance Total Sources (cash in flow) By Opening Balance By Capital Appreciation By loans & advances By cash (sale of machinery) By cash (Sale of Furniture) By Cash From Operation Total Interpretation: • Purchase of building shows increasing trend from the year 2004 to 2007 it was Rs.220. • Purchase of machinery shows increasing trend from the year 2004 to 2006 it was Rs.117 to Rs.487 to Rs.

21229. In the year loan received it was Rs.12210.274.5343. Then it shows decreasing trend from the year 2005 to 2006 it was Rs.1933 to Rs. There after again it was increasing trend from the year 2008 to 2009 it was Rs.324 to Rs. For the year 2007 and 2009 loan was repaid. 53 .50.14548.21229 to Rs. It shows total value of investment increased every year.53 • Purchase of Plant and Machine shows decreasing trend from the year 2004 to 2006 it was Rs.17835.179 to Rs.17835 to Rs. There after again it was decreasing trend from the year 2007 to 2009 it was Rs.1472 and Rs.802 • Sale of machinery happened in the year 2005 it was Rs. • Closing balance of the concern was increasing trend from the year 2004 to 2009 it was Rs.6780 to Rs.439 to Rs179.10001. It shows total value of plant and machine increased every year. • Investment in cash shows increasing trend from the year 2004 to 2005 it was Rs.4000. Then it shows increasing trend from the year 2006 to 2007 it was Rs.12210 to Rs. • Loans and advances received decreasing trend from the year 2004 to 2006 it was Rs.5343. decreasing trend from the year 2007 to 2009 it was Rs. • Capital appreciation shows increasing trend from the year 2004 to 2005 it was Rs. It shows total value of capital appreciation increased every year.439.4829.14548 to Rs. Then it shows Decreasing trend from the year 2005 to 2008 it was Rs.11941 to Rs.4000 to Rs. • Repayment of loan happened during the year 2007 and 2009 it was Rs.2245 to Rs. There after again it was increasing trend from the year 2006 to 2007 it was Rs.25786 to Rs. Sale of furniture happened in the year 2008 it was Rs.102. • Opening balance of the concern was increasing trend from the year 2004 to 2009 it was Rs.18462.4583.

C= 2 UP / S C= Optimum cash balance U= Monthly cash disbursement P= Fixed cost per transaction S= Opportunity cost of one Re.a. 3.54 • Cash from operation shows decreasing trend from the year 2004 to 2004 it was Rs.a. Economic order quantity is used in the standard inventory situation. In ‘000 000) Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 U= Monthly cash disbursement 1946087 4116850 7996970 12686477 18361900 22781512 27332462 P= Fixed cost per transaction 92 105 112 124 134 144 153 S= Opportunity cost of one Re. BAUMOL MODEL) It is determination of optimum level of each of a company. optimum cash balance level is that level of cash where the carrying costs and transaction costs are minimum in the other words . P.013 0. TABLE – 3. OPTIMUM CASH BALANCE (WILLIAM J.013 0.8161 it shows firm generating profit successfully.2212.012 0.4.014 C= Optimum cash balance 189230 268412 371206 491954 615254 684579 772923 54 .2212 to Rs. the optimum level of cash is one at which cost of carrying the inventory of cash and cost going to the marketable securities. According to this model. 0.4 THE TABLE SHOWS OPTIMUM CASH BALANCE FROM THE YEAR 2003-04 to 2009-10 (Rs. P.014 0.8926 to –Rs.013 0.01 0. It was increasing trend from the year 2004 to 2009 it was –Rs.

772923 From year 2003-04 to 2009-10 cash balance is increased frequently.7.55 INTERPRETATION • Optimum cash balance increasing trend from the year 2003-04 to 2009-10 it was Rs. Over all optimum cash balance shows increasing trend. 3.189230 to Rs. Highest optimum cash balance in the year of 2008 it was Rs.923.4 THE CHART SHOWS OPTIMUM CASH BALANCE FROM THE YEAR 2003-04 to 2009-10 Optimum Cash Balance From the year 2003-09 900000 800000 700000 600000 Cash balance 500000 400000 300000 200000 100000 0 1 2 3 4 year 5 6 7 55 . 72. Lowest optimum cash balance in the year of 2003.

5 CORRELATION TEST Correlation analysis is the statistical tool that describes the degree to which the variables linearly related to other variables. We cannot say which the cause is and which effect is. Two or more variables are said to be correlated if change in the value of appears to be related as linked with change in the other variables. • When r=-1. Correlation co-efficient is another measure designed to indicate the similarity or dissimilarity in the behavior of two variables. there is perfect positive correlation the correlation co-efficient would be +1. It does not tell anything cause and effect relationship if there is a high degree of correlation between two variables.0. 56 . there is perfect negative correlation. • • It lies always between +1 and -1. When r=+1. The correlation co-efficient would be -1.0 if an upward movement in one security is by down ward movement of another security.0. The total variables consist of explained variation as well as unexplained variation.0 if an upward movement in the security is accompanied by an upward movement of another security.56 3.

When r is less than 0.5 THE TABLE SHOWS CORRELATION TEST FROM THE YEAR 2003-04 to 2009-10 57 . • When r lies between 0.5. Formula ∑ X.999 (-0. • • When r lies between 0.999).5 to 0.699 there is moderate degree of correlation. there is high degree of positive (or negative) correlation. The correlation coefficient would be 0 if two securities are independent of each other.57 • When r=0 there is no correlation. there is low degree of correlation.7 to -0.Y Correlation (r) = √ ∑ (X) 2 * √ ∑ (Y) 2 TABLE 3.7 to 0.

70 29.80 7107.2 502 y=Receipts 3. When r lies between 0.2 20.3 13.57 454.5 7.8 = 0. In ''000 Correlation Test X= (x-x Y=(y-y Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 000'') x=Payments 10. The total payment of the concern was 502. The range of correlation is should be in between of -1 to +1.30 13. The total receipt of the concern was 149.7 29.55 CHAPTER – 4 FINDINGS.3) = 16795 / 30704.70 156.55.55 INTERPRETATION ( Rs.5 149 bar) -61.2*127.40 34.699 there is moderate degree of correlation.4 34 45.9 34. SUGGESTIONS AND CONCLUSION 4.67 152.58 (Rs. Correlation was to be r=s0. Overall payment of the concern leads than compare to overall receipts.46 20.44 2754.20 430 bar) -17.1 FINDINGS The main finding of the study are Common size balance sheet 58 .50 127 X*Y 1088.90 34.71 7.7 126.5 to 0.78 4307.70 59. Correlation (r) = 0.00 45. Here our calculated correlation was moderate.10 15.1 15.20 93.2 93. In ‘000 000) • Receipts and payments show moderate correlation.70 126.10 16795 (X)2 3777 437 1204 3505 8780 16053 24398 58154 (Y)2 314 53 172 246 864 1156 2070 16202 = 16795 / (241.7 156.57 929.7 59.

From the year 2008-09 to 2009-10 value was stable. • Plant and Machinery covers a major portion of the total assets. • Debtor’s covers a second major portion of the total assets. it was 1% to 2%. it was 25% to 32%. It shows a decreasing trend from the year 2003-04 to 2009-10. it was 4 % to 1%. it was 4%.it was 16% to 4%. it was 5% to 2%. It shows decreasing trend from the year 2003-04 to 2009-10. it was 2% • Bills receivable shows stable trend from the year 2003-04 to 2009-10. • Cash in hand covers a small portion of the total assets. It shows a decreasing trend from the year 2003-04 to 2009-10.59 • Buildings covers minor portion of total assets. it was 43% to 33%. From the year 59 . It shows an increasing trend from the year 2003-04 to 2009-10. • An inventory shows a decreasing trend from the year 2003-04 to 2009. it was 2%. It covers almost 50% of total assets. it was 17% to 8%. From the year 200405 to 2009-10 value was contend it was 1%. it was 10%. It shows an increasing trend from the year 2003-04 to 2009-10. From the year 2008-09 to 2009-10 it shows decreasing trend and value also constant. • Interest received and accrued income covers small portion of the total assets. it was 3%. Value was stable in the year 2005-06 to 2006-07. it was 2% to 1%. It shows decreasing trend from the year 2003-04 to 2009-10. • Furniture and Investment covers a 1% of the total assets. it was 1% for all the years. • Land covers a small portion of total assets it shows decreasing trend from the year 2003-04 to 2009-10. it was 28% to 48%. 9% value stable from the year 2007-08 to 2009-10. It shows increasing trend from the year 2003-04 to 2009-10. From the year 2005-06 to 2007-08 shows increasing trend and also stable. From the year 200506 to 2009 value was stable. • Share capital covers a major portion of the total liabilities.

From the year 2003-04 to 2009-10 it shows increasing trend. Next year 2008-09 Again it shows decreasing trend it was 10%.60 2003-04 to 2006-07 shows decreasing trend. From the year 2003-04 to 2006-07 shows increasing trend. Common size Receipts & Payments • Cash sales shows an increasing trend from the year 2003-04 to 2005-06. Again it decreased 1% to remaining years. From the year 2007-08 to 2009-10 shows decreasing trend 20% to 13%. Again it shows increasing trend in the year 2006-07 to 2007-08. it was 13% to 13%. • Loans and advances shows fluctuating trend. it was 15%. From the year 2007-08 to 2009-10 value was constant it was 4%. From the year 2007-08 to 2009-10 it shows increasing trend. it was 1% to 2%. • Reserve and surplus shows fluctuating trend. 60 . From the year 2006-07 to 2007-08 shows decreasing trend it was 6% to 4%. • Profit and loss of the concern shows decreasing trend from the year 2003-04 to 2009-10 it was 10% to 7%. it was 31% to 33%. it was 2% to 4%. From the year 2007-08 to 2008-09 shows increasing trend. From the year 2003-04 to 200910. Again it shows decreasing trend next years. From the year 2003-04 to 2009-10 shows increasing trend it was 8% to 11%. it was 16% to 26%. it was 8% to 10%. it was 10% to 8%. From the year 2006-07 to 2007-08 stable value it was 6%. it was 1%. • Provision and taxation shows increasing trend from the year 2003-04 to 200910. • Bills payable shows stable value for all years. From the year 2003-04 to 200708 value stable. It was decreasing trend in the year 2005-06 to 2006-07. From the year 2003-04 to 2004-05 it shows decreasing trend it was 13% to 12%. it was 14% to 30%. From the year 2006-07 to 2007-08 it shows increasing trend it was 8% to 11%. • Creditor’s covers second major portion of the total liabilities. it was 43% to 26%.

• Credit purchase increasing trend from the year 2003-04 to 2006-07. Increasing trend in the year 2004-05 to 2005-06 it was 3% to 14%. 61 . it was 24% to 40%. Again it was decreasing trend in the year 2006-07 it was 1%. Decreasing trend from the year 2006-07 to 2007-08 it was 5% to 4%. • Closing stock shows a decreasing trend from the year 2003-04 to 2009-10 it was 24% to 6%. Again it was decreasing trend from the year 2005-06 to 2009-10 it was 14% to 6%. From the year 2006-07 to 2009-10 value was stable it was 1%. In the year 2007-08 to 2008-09 stable value it was 7%. • Raw material shows a decreasing trend from the year 2003-04 to 2004-05 it was 26%to 3%. Again it was increasing trend from the year 2007-08 to 2008-09 it was 4% to 5%. From the year 2008-09 to 2009-10 stable value it was 6%. • Cash purchase shows increasing trend from the year 2003-04 to 2009-10 it was 2% to 5%. • Staff expenses increasing trend from the year 2003-04 to 2004-05 it was 9% to 11%.61 • Credit sales shows an increasing trend from the year 2003-04 to 2009-10 it was 63% to 81%. Decreasing trend from the year 2005-06 to 2007-08 it was 9% to 6%. Credit sales cover a major portion of total receipts it was almost above 62% for all years. Stable value from the year 2008-08 to 2009-10 it was 5%. • Commission received shows decreasing value from the year 2003-04 to 200405 it was 2% to 1%. Next year it was shows increasing trend it was 2%. Showing decreasing trend from the year 2007-08 to 2009-10 it was 39% to 38%. • Opening stock consumed shows a decreasing trend from the year 2003-04 to 2009-10 it was 13% to 6%. • Interest received shows a decreasing trend from the year 2003-04 to 2009-10 it was 2% to 1%. From the year 2005-06 to 2009-10 stable value it has 1%.

Again it was decreasing trend from the year 2006-07 to 2009-10 it was shows from 1.532.441 to 1.188.118 to 1. • Administrative expenses shows decreasing trend from the year 2003-04 to 2009-10 it was 8% to 3%. • Interest and bank charges and other expenses for the first year 1%. • Power and fuel shows decreasing trend from the year 2003-04 to 2009-10 it was 12% to 8%. Ratio analysis • Current ratio from the year 2003-04 to 2005-06 it shows decreasing trend it was 1. Standard norms 1:1. Less than 2:1 ratio indicates concern is not a sound position. Remaining years from 2007-08 to 2009-10 it was stable value of 2%. • Tax paid shows stable value for first two years it was 13%.441. This is less than standard norm of 2:1. • Net profit from the sales shows decreasing trend from the year 2003-04 to 200809 it was 20% to5%. • Depreciation shows decreasing trend from the year 2003-04 to 2009-10 it was 4% to 2%.13. Remaining years it was zero. It was increasing trend from the year 2008-09 to 2009-10 it was 5% to 6%. Increasing trend from the year 2005-06 to 2009-10 it was 10% to 22%. First two years value is to stable it was 4%.62 Again it was increasing trend from the year next two years also stable vale from the year 2008-09 to 2009-10 it was 10%.532 to 1. From the year 2006-07 to 2009-10 it was stable value of 3%. Decreasing trend from the year 2004-05 to 2005-06 it was 13% to 10%. From the year 2005-06 to 2006-07 increasing trend it was 1. More than 1:1 indicates sound financial 62 . • Quick ratio shows a decreasing trend from the year 2003-04 to 2009-10 it was 2. From the year 2005-06 to 2006-07 stable value it was 3%.979 to 1.

So it shows net sales level was to be increased than compare to total asset.588 to 1.115 to 3. So it shows net sales level was to be increased than compare to fixed asset. • Liquidity ratio shows decreasing trend from the year 2003-04 to 2009-10 it was 0.191.59 to 1. Less than standard norms shows firm hasn’t enough cash on hand.939 to 2. • Current asset to liquidity asset ratio was showing decreasing trend from the year 2003-04 to 2009-10 it was 1.932. 63 .224.75:1. • Creditor turnover ratio shows increasing trend from the year 2003-04 to 200708 it was 0.498 so during this period creditor’s level was increased it shows firm stock consuming level was appreciated.972 to 1. • Fixed asset turnover ratio shows increasing trend from the 2003-04 to 2009-10 it was 0.224 to 3.055. So it shows net sales level was to be increased than compare to total asset. • Debtor turnover ratio shows increasing trend from the year 2003-04 to 2007-08 it was 1. Then it shows decreasing trend from the year 2007-08 to 2008-09 it was 3. Quick ratio shows sound financial position of a firm.191. It shows concern has not a sound position.63 position.481 to 1. • From the above table it has been inferred that Total asset turnover ratio shows increasing trend from the 2003-04 to 2009-10 it was 0. Thereafter again it was increasing trend from 2008-09 to 2009-10 it was 3. Then it shows decreasing trend from the year 2007-08 to 2009-10 it was 1.168.284. This is less than standard norm of 0.115.481 to 1.333 to 0.123 so during this period debtors level was increased it has good for concern.661 to 3. Here our firm quick ratio gives better picture of firm’s ability to meet its short term debt out of short term assets. • From the above table it has been inferred that fixed asset to current asset ratio shows increasing trend from the 2003-04 to 2009-10 it was 0.

1 months. Then it shows increasing trend from the year 2006 to 2007 it was Rs. Low period month was 6.179 to Rs.18462.487. Then it shows Decreasing trend from the year 2005 to 2008 it was Rs.274.487 to Rs.4 months to 10.2 months.439. It shows total value of investment increased every year.14548 to Rs.179.2 months to 8. The shorter average payment period good for the concern.439 to Rs. Shorter average collection period better for the concern.220.2 month to 3.117 to Rs. 64 .8 month.64 • Average payment period shows increasing trend from the 2003-04 to 2004-05 it was 8.14548. Then it shows Decreasing trend from the year 2006 to 2009 it was Rs. High payment period was 10.21229. There after again it was increasing trend from the year 2008 to 2009 it was Rs. Cash flow statement • Cash Purchase of building shows increasing trend from the year 2004 to 2007 it was Rs. Then it shows Decreasing trend from the year 2007 to 2009 it was Rs.21229 to Rs.2 months. Thereafter again it was shows increasing trend from the year 2007-08 to 2009-10 it was 6.1156. • Average collection period shows decreasing trend from the 2003-04 to 2009-10 it was 7.1 months.01 months. It shows total value of machinery increased every year.1 months to 6. It shows total value of building increased every year. There after again it was decreasing trend from the year 2007 to 2009 it was Rs. • Cash Investment shows increasing trend from the year 2004 to 2005 it was Rs.304. • Cash purchase of Plant and Machine shows decreasing trend from the year 2004 to 2006 it was Rs. • Cash Purchase of machinery shows increasing trend from the year 2004 to 2006 it was Rs.839 to Rs.324 to Rs.25786 to Rs. It shows total value of plant and machine increased every year.842 to Rs. Then it shows decreasing trend from the year 2004-05 to 2007-08 it was 10. Collecting with in short period is good for concern.

65 • Repayment of loan happened during the year 2007 and 2009 it was Rs.189230 to Rs.772923 From year 2003-04 to 2009-10 cash balance is increased frequently.5343. • Opening balance of the concern was increasing trend from the year 2004 to 2009 it was Rs.2212.1472 and Rs.1933 to Rs. It was increasing trend from the year 2004 to 2009 it was –Rs. • Capital appreciation shows increasing trend from the year 2004 to 2005 it was Rs.6780 to Rs.50.102. In the year loan received it was Rs.4000 to Rs. Sale of furniture happened in the year 2008 it was Rs.12210. For the year 2007 and 2009 loan was repaid. • Closing balance of the concern was increasing trend from the year 2004 to 2009 it was Rs. Highest optimum cash balance in the year of 2008 it was Rs. Lowest optimum cash balance in the year of 2003. Optimum cash balance • Optimum cash balance increasing trend from the year 2003-04 to 2009-10 it was Rs. Correlation test 65 .10001. 72.4583. Then it shows decreasing trend from the year 2005 to 2006 it was Rs.2245 to Rs.12210 to Rs.923. There after again it was increasing trend from the year 2006 to 2007 it was Rs.17835.802 • Sale of machinery happened in the year 2005 it was Rs.8161 it shows firm generating profit successfully.4829. • Loans and advances received decreasing trend from the year 2004 to 2006 it was Rs.4000. It shows total value of capital appreciation increased every year. Over all optimum cash balance shows increasing trend.7.2212 to Rs. • Sash from operation shows decreasing trend from the year 2004 to 2004 it was Rs. 17835 to Rs.11941 to Rs.8926 to –Rs. decreasing trend from the year 2007 to 2009 it was Rs.5343.

When r lies between 0. Correlation was to be r=s0. • The concern should concentrate to appreciate the liquidity and absolute liquidity cash position to meet the firm requirement. It can be done by reducing the float involved in conversion of payments into cash. The total receipt of the concern was 149. The total payment of the concern was 502.699 there is moderate degree of correlation. The range of correlation is should be in between of -1 to +1.2 SUGGESTIONS • The firm should increase the investment in current asset as the current asset ratio is not up to the mark. 4.55. Here our calculated correlation was moderate.66 • It found that receipts and payments. Steps to be take to increase the current assets of the company to achieve of standard norms. 66 . • The company can make necessary steps to accelerate the cash collection. The overall payment of the concern higher than overall receipts. • It is necessary that a firm should have sufficient cash for paying its bills on the due dates to take advantage of trade discounts offered by the suppliers and to maintain its credit standing.5 to 0.

To improve the performance of the company needs to implement new policies. knowing what the best sources are for meeting additional cash needs and being prepared to meet these needs when they occur. Sufficiently liquidity is important and must be achieved and maintained to provide that funds to pay-off obligation as they arise or mature. This analysis and statements are useful to the concern to maintain the cash position control the shortage of cash and to know about the financial performance of the company each year. Ltd. Maintaining the decreasing trend of the loans and advance • The company should make use of credit period to the fullest extent and should pay only on due date. This study useful to the concern to control the cash flows. The cash management analysis refers to the management of individuals current assets. • Knowing when. where. The project done at Rhythm fashion Pvt. Thus the overall performance of the company in the area of cash 67 . 4. and how company cash needs will occur. The adequacy of cash and other current assets together with their efficient handling virtually determine the survival or demise of the company.3 CONCLUSION The study conducted at Rhythm EXPORTS entitled “CASH MANAGEMENT OF RHYTHM FASHION” gives a view of analysis and evaluation of liquidity position of the company.67 • The company should concentrate to repay the loans and dues to their concerned parties and banks.. Tirupur on “Analysis of cash Management” was very helpful and Informative.. by keeping good relationships with bankers and other creditors.

68 . The company should enhance its performance for meeting challenges and exploiting opportunities in the future.68 management is satisfactory.

69 APPENDIX PROFIT & LOSS ACCOUNT Particulars 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 INCOME Sales Closing stock other income 19243672 6612178 1415519 47528562 9068781 1589562 91683185 12291874 3151172 142877561 15343678 3096682 209776689 16221591 4837415 261527577 20049914 4273388 318976518 21143165 5842365 Total Inc. Profit & Loss account 23353044 3918325 49402154 8784751 95963622 11162609 152237727 9080194 220342833 10492862 273378146 12472733 327989539 17972509 Total 27271369 58186905 107126231 161317921 230835695 285850879 345962048 69 . EXPENDITURE 27271369 58186905 107126231 161317921 230835695 285850879 345962048 Opening stock Raw material consumed Store consumed Staff expenses Power and fuel Interest and bank charges Administrative Exp. Other expenses Depreciation Tax paid 6056729 4541183 1612878 2048162 2918597 201136 1862182 145628 912621 3053928 6612178 19351928 1663191 5469569 4971911 162233 2826924 205529 1841562 6297129 9068781 40163522 13291688 8753676 8259668 172414 3981419 293588 2839455 9139411 12291874 68512121 14874347 9436827 12969527 156581 5291171 398878 3953472 24352929 15343678 95841518 10193836 11696927 18093418 222928 6541599 476911 5010979 56921039 16221591 118727512 17384948 27256728 24953921 310518 7918672 577210 6179518 53847528 20049914 139842981 20014462 33352728 27838122 353591 9251728 683071 7250472 69352470 Total exp.

income Other Cur. CURRENT LIABILITIES Other cur. liabilities Creditors P & L account Total current Lib. asset Debtors Inventories Total Current Assets 1493916 6226328 11187981 806791 783942 20498958 1611128 7068691 36973668 1073768 1107893 47835148 1939247 8224906 55368164 1398813 1546882 68478012 2397389 9063551 69916671 1511665 1967781 84857057 2883911 9384779 91145451 1633497 2210977 107258615 2949898 9623412 110897892 1921782 2389899 127782883 3253436 9843687 129359498 2043667 2663468 147163756 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 1933412 459623 643978 9866471 6612178 2244685 1096174 1053819 17113588 9068781 2897982 3863781 869126 33456178 12291874 3246897 4356065 1484648 46425518 15343678 3126675 4913189 2119743 55719462 16221591 5343463 5382160 2237442 72358177 20049914 4583498 5246873 3048438 86572571 21143165 19515662 30577047 53378941 70856806 82100660 105371156 120594545 TOTAL ASSETS LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Total Fixed Lib. 4001462 0 7841219 5 12185695 3 15571386 3 18935927 5 23315403 9 26775830 1 17353933 5313511 6571820 913466 30152730 24133789 9248139 18513153 1953918 53848999 36343510 14332412 29812133 4332415 84820470 40343521 20151622 39813411 9152626 109461180 58178143 29067818 38341568 8343528 133931057 73453921 32367142 39143110 8163518 153127691 88743288 33741522 34313628 9451119 166249557 502046 5441519 3918325 9861890 1038698 14739747 8784751 24563196 340422 25533452 11162609 37036483 1309067 35863422 9080194 46252683 2253189 42682167 10492862 55428218 3941528 63612087 12472733 80026348 4351928 79184307 17972509 101508744 TOTAL LIABILITES 4001462 0 7841219 5 12185695 3 15571386 3 18935927 5 23315403 9 26775830 1 70 .70 BALANCE SHEET FROM THE YEAR 2003-2009 2003-04 ASSETS FIXED ASSETS Building Land Plant & Machinery Furniture Investment Total Fixes Assets CURRENT ASSETS Cash in Hand & Bank Interest received & acc.

asset Debtors Inventories Total Current Assets 1933412 459623 643978 9866471 6612178 19515662 2244685 1096174 1053819 17113588 9068781 30577047 1493916 6226328 11187981 806791 783942 20498958 1611128 7068691 36973668 1073768 1107893 47835148 2003-04 2004-05 TOTAL ASSETS LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Total Fixed Lib.71 BALANCE SHEET FROM THE YEAR 2003-04 to 2004-05 Particulars ASSETS FIXED ASSETS Building Land Plant & Machinery Furniture Investment Total Fixes Assets CURRENT ASSETS Cash in Hand & Bank Interest received & acc. CURRENT LIABILITIES Other cur. liabilities Creditors P & L account Total current Lib. income Other Cur. 40014620 78412195 17353933 5313511 6571820 913466 30152730 24133789 9248139 18513153 1953918 53848999 502046 5441519 3918325 9861890 1038698 14739747 8784751 24563196 TOTAL LIABILITES 40014620 78412195 71 .

income Other Cur. liabilities Creditors P & L account Total current Lib.72 BALANCE SHEET FROM THE YEAR 2004-05 to 2005-06 2004-05 ASSETS FIXED ASSETS Building Land Plant & Machinery Furniture Investment Total Fixes Assets CURRENT ASSETS Cash in Hand & Bank Interest received & acc. CURRENT LIABILITIES Other cur. asset Debtors Inventories Total Current Assets 2244685 1096174 1053819 17113588 9068781 30577047 1611128 7068691 36973668 1073768 1107893 47835148 2005-06 1939247 8224906 55368164 1398813 1546882 68478012 2897982 3863781 869126 33456178 12291874 53378941 TOTAL ASSETS LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Total Fixed Lib. 78412195 121856953 24133789 9248139 18513153 1953918 53848999 36343510 14332412 29812133 4332415 84820470 1038698 14739747 8784751 24563196 340422 25533452 11162609 37036483 TOTAL LIABILITES 78412195 121856953 BALANCE SHEET FROM THE YEAR 2005-06 to 2006-07 72 .

73

Particulars ASSETS FIXED ASSETS Building Land Plant & Machinery Furniture Investment Total Fixes Assets CURRENT ASSETS Cash in Hand & Bank Interest received & acc. income Other Cur. asset Debtors Inventories Total Current Assets

2005-06

2006-07

1939247 8224906 55368164 1398813 1546882 68478012

2397389 9063551 69916671 1511665 1967781 84857057

2897982 3863781 869126 33456178 12291874 53378941

3246897 4356065 1484648 46425518 15343678 70856806

TOTAL ASSETS
LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Total Fixed Lib. CURRENT LIABILITIES Other cur. liabilities Creditors P & L account Total current Lib.

121856953

155713863

36343510 14332412 29812133 4332415 84820470

40343521 20151622 39813411 9152626 109461180

340422 25533452 11162609 37036483

1309067 35863422 9080194 46252683

TOTAL LIABILITES

121856953

155713863

BALANCE SHEET FROM THE YEAR 2006-07 to 2007-08

73

74

Particulars

2006-07

2007-08

74

75

ASSETS FIXED ASSETS Building Land Plant & Machinery Furniture Investment Total Fixes Assets CURRENT ASSETS Cash in Hand & Bank Interest received & acc. income Other Cur. asset Debtors Inventories Total Current Assets 3246897 4356065 1484648 46425518 15343678 70856806 3126675 4913189 2119743 55719462 16221591 82100660 2397389 9063551 69916671 1511665 1967781 84857057 2883911 9384779 91145451 1633497 2210977 107258615

TOTAL ASSETS
LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Total Fixed Lib. CURRENT LIABILITIES Other cur. liabilities Creditors P & L account Total current Lib.

155713863

189359275

40343521 20151622 39813411 9152626 109461180

58178143 29067818 38341568 8343528 133931057

1309067 35863422 9080194 46252683

2253189 42682167 10492862 55428218

TOTAL LIABILITES

155713863

189359275

BALANCE SHEET FROM THE YEAR 2007-08 to 2008-09

Particulars ASSETS

2007-08

2008-09

75

189359275 233154039 58178143 29067818 38341568 8343528 133931057 73453921 32367142 39143110 8163518 153127691 2253189 42682167 10492862 55428218 3941528 63612087 12472733 80026348 TOTAL LIABILITES 189359275 233154039 BALANCE SHEET FROM THE YEAR 2008-09 to 2009-10 Particulars ASSETS FIXED ASSETS Building 2949898 3253436 2008-09 2009-10 76 .76 FIXED ASSETS Building Land Plant & Machinery Furniture Investment Total Fixes Assets CURRENT ASSETS Cash in Hand & Bank Interest received & acc. asset Debtors Inventories Total Current Assets 3126675 4913189 2119743 55719462 16221591 82100660 5343463 5382160 2237442 72358177 20049914 105371156 2883911 9384779 91145451 1633497 2210977 107258615 2949898 9623412 110897892 1921782 2389899 127782883 TOTAL ASSETS LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Total Fixed Lib. CURRENT LIABILITIES Other cur. income Other Cur. liabilities Creditors P & L account Total current Lib.

No. Kalyani Publishers.77 Land Plant & Machinery Furniture Investment Total Fixes Assets CURRENT ASSETS Cash in Hand & Bank Interest received & acc. SHASHI K. CURRENT LIABILITIES Other cur. 233154039 267758301 73453921 32367142 39143110 8163518 153127691 88743288 33741522 34313628 9451119 166249557 3941528 63612087 12472733 80026348 4351928 79184307 17972509 101508744 TOTAL LIABILITES 233154039 267758301 BIBLIOGRAPHY SL. Authors Name Book Name & Publications 1. SHARMA R. income Other Cur. 77 . asset Debtors Inventories Total Current Assets 9623412 110897892 1921782 2389899 127782883 9843687 129359498 2043667 2663468 147163756 5343463 5382160 2237442 72358177 20049914 105371156 4583498 5246873 3048438 86572571 21143165 120594545 TOTAL ASSETS LIABILITIES Share capital Reserve & Surplus Loans & Advances Provision for Taxation Total Fixed Lib. GUPTA “Management Accounting” Principles and Practices. liabilities Creditors P & L account Total current Lib.K.

4. 1997.S. PILLAI & BHAGAVATHI R. 1997. Second Edition.78 Seventh Revised Edition. KOTHARI C. Eighth Edition. 3. 2000. KHAN M. 78 . 6. Second Edition. New Delhi. 1996.N. New Delhi. JAIN P.. “Financial Management” Tata Mc Graw – Hill Publishing Company Ltd. Wishwa Prakashan. 2. “Financial Management”. 5.R.Y. “FINANCIAL MANAGEMENT” Second Edition. “Research Methodology methods Techniques”.. PARASANNA CHANDRA “Management Accounting” Sultan chand & Sons. PANDEY I.K. Vikas Publishing house Pvt Ltd.M.

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