A STUDY ON WORKING CAPITAL MANAGEMENT WITH SPECIAL REFERENCE TO COIMBATORE MURUGAN MILLS, COIMBTORE.

PROJECT REPORT Submitted by

R.KOKILA
Register No: 108001140021

In partial fulfillment for the award of the degree Of

MASTER OF BUSINESS ADMINISTRATION In

Department of Management Studies PPG INSTITUTE OF TECHNOLOGY COIMBATORE -641 035. JUNE 2012

PPG INSTITUTE OF TECHNOLOGY COIMBATORE -35 Department of Management Studies
PROJECT WORK JUNE 2012 This is to certify that the project report entitled

A STUDY ON WORKING CAPITAL MANAGEMENT WITH SPECIAL REFERENCE TO COIMBATORE MURUGAN MILLS, COIMBATORE.
Is the bonafide record of project work done by

R.KOKILA Register No: 108001140021

of MBA during the year of 2010-2012.

---------------Project guide

----------------------------Head of the Department

Submitted for the Project Viva-voce examination held on _______

------------------------Internal examiner

--------------------External Examiner

DECLERATION

I affirm that the project work titled ‘A STUDY ON WORKING CAPITAL MANAGEMENT WITH SPECIAL REFERENCE TO COIMBATORE MURUGAN MILLS, COIMBATORE’ being submitted in practical 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 any other university.

(Signature of the candidate) R.KOKILA Register No: 108001140021

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

(Signature of the Guide)

With Name & Designation

ACKNOWLEDGEMENT My first and foremost acknowledgement is to my beloved Parents who extended all guidance. I also thank all the members of staff of the organization who cooperated with me for the successful completion of this project. Dr. Mrs.L. encouragements and cooperation throughout my education career.T.KOKILA Register No: 108001140021 .Shanthi Thangavelu for providing encouragement to undertake this project. Mr. I owe my sincere thanks to the management of Coimbatore Murugan Mills. I would go to my profound gratitude to our Chariman. freely given by the Head of the Department of Department of Management Studies. R.Thangavelu and Correspondent.Rajkumar for his cooperation. I wish to express my warmest appreciation of the courtesy and assistance.P. PPG Institute of Technology.Devasenathipathi during this period. I wish to express my deep gratitude to all other faculty members of the department. valuable guidance and assistance for completing this project work successfully.S. I wish to place a record my profound feelings of gratitude to my faculty guide Mr. Coimbatore for providing me the opportunity to carry out this project study.

5 3.7 4.5 2.6 3.3 2.4 1.2 3.1 5.1 3.1 4.2 4.1 2.4 2.3 3.6 3.1 1.Chapter No.2 5.3 76 78 79 80 6 .2 1 1 4 5 6 2 7 9 10 11 12 13 17 17 17 17 18 18 19 22 57 67 74 2.4 3.3 1. I II IV 1 1.5 2.2 1.4 3 4 5 5. CONTENTS Particulars List of tables List of charts Abstract Working Capital Management Introduction to the study Kinds of working capital Determinants of working capital Advantages of working capital Sources of working capital Industry profile & company profile Industry profile Structure of Indian textile industry Company profile History of Coimbatore Murugan Mills Objectives of the mill Product profile Manufacturing process Research methodology Research design Data collection Analysis of data Tools for analysis Objectives of the study Limitations of the study Review of literature Analysis and interpretation Ratio analysis Trend analysis Comparative balance sheet Motaal’s comprehensive test Findings and suggestions Findings Suggestions Conclusions Appendices Bibliography Page No.3 4.

24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 59 60 61 .LIST OF TABLES Table no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Description /Name of the table Current ratio Liquid ratio Absolute Liquid ratio Inventory turnover ratio Debtors turnover ratio Creditors turnover ratio Working capital turnover ratio Fixed assets turnover ratio Total assets turnover ratio Gross profit ratio Net profit ratio Expenses ratio Return on share holders investment ratio Return on equity capital Fixed assets to net worth ratio Current assets to proprietors fund Proprietory ratio Sales percentage Inventory percentage Sundry debtors percentage Bank loans percentage Page No.

1 2 3 4 5 6 7 8 9 10 11 Description/name of the chart Current ratio Liquid ratio Absolute liquid ratio Inventory turnover ratio Debtors turnover ratio Creditors turnover ratio Working capital turnover ratio Fixed assets turnover ratio Total assets turnover ratio Gross profit ratio Net profit ratio Page no. 24 26 28 30 32 34 36 38 40 42 44 .22 23 24 25 26 27 28 29 30 Fixed assets percentage Loans & advances percentage Cash & bank balance percentage Current liabilities percentage Current assets percentage Comparative balance sheet 2007-2008 Comparative balance sheet 2008-2009 Comparative balance sheet 2009-2010 Motaal’s comprehensive test 62 63 64 65 66 68 70 72 75 LIST OF CHARTS Chart no.

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Expenses ratio Return on share holders investment ratio Return on equity capital Fixed assets to networth Current assets to proprietors fund Proprietory fund ratio Sales percentage Inventory percentage Sundry debtors percentage Bank loans percentage Fixed assets percentage Loans & advances percentage Cash & bank balance percentage Current liabilities percentage Current assets percentage 46 48 50 52 54 56 58 59 60 61 62 63 64 65 66 ABSTRACT .

or precisely to the management of current assets. The data analyses through 1] Ratio Analysis 2] Trend Analysis 3] Comparative balance sheet 4] Motaal’s comprehensive test The project was focused on making a financial overview of the company by conducting a Working Capital Management analysis of Coimbatore Murugan Mills. The present study deals with to know how efficiently the Working Capital is managed in the company as it is the key and significant part of the every business. A firm’s working capital consists of its investments in current assets.The working capital management refers to the management of working capital. researcher has undertaken a project work titled “A study on working capital management with special reference to Coimbatore Murugan Mills. The study was designed in analytical in nature. CHAPTER-I . Primary data collected through discussions with the staffs of the Mill and secondary data in the form of annual reports and reports. Coimbatore”. receivable and marketable securities. This project tries to evaluate how the management of working capital is done in Coimbatore Murugan Mills. which includes short-term assets— cash and bank balance.for the years 2007 to 2011. inventories.In partial fulfillment of the requirements for Master degree in Business Administration. The sources of data for the study are primary data and secondary data.

budgeting. maintaining liquidity. In the early half of the 20th century the job of financial management was largely confined to the acquisition of funds. Working capital is also revolving or circulating capital or short-term capital. land. But as business firms continued to expand their markets and became larger and more diversified. and so on.2 KINDS OF WORKING CAPITAL Working capital may be classified into two ways: • On the basis of concepts • On the basis of time . Thus the scope of financial management is very wide and it is not merely restricted to raising of capital.INTRODUCTION 1. 1. raising sufficient amount of funds. cost of financing. funds are also needed for short term purpose for the purchase of raw materials. The subject is of recent origin. greater control of financial operation became highly essential. These funds are also known as working capital. lending and borrowing policies. payment of wages and other day to day expense etc. Every business needs funds for two purposes. dividend policy. machinery. as money is required to meet the various activities of it. building etc. WORKING CAPITAL MANAGEMENT Working capital may be regarded as the lifeblood of business. It draws heavily on “Economics” for its theoretical concepts. It also covers other aspects of financing such as assessing the needs of capital. such as plant. Long term funds are required to create production facilities through purchase of fixed assets.1 INTRODUCTION TO THE STUDY Finance is an important function of any business. It has given birth to “Financial Management” as a separate subject. It inefficient management can lead not only to loss of profit but also to the downfall of business.

Current liabilities are those liabilities which are intended to be paid in the ordinary course of business within the short period of normally one accounting year out of the current assets or the income of the business. Thus. working capital is the capital invested in the total current assets of the gross. . NET WORKING CAPITAL It is the excess of current assets over current liabilities.GROSS WORKING CAPITAL It represents the amount of funds invested in current assets. Net working capital may be positive or negative. Current assets are those assets which in the ordinary course of business can be converted into cash within a short period of normally one accounting year. When the current assets exceed the current liabilities the working capital is positive & the negative working capital results when the current liabilities are more than the current assets.

TEMPORARY OR VARIABLE WORKING CAPITAL It is that amount of working capital which is required to meet the seasonal demand & some special exigencies. REGULAR WORKING CAPITAL It is the minimum amount of working capital required to ensure circulation of current assets. There is always a minimum level of current assets which is continuously required by the enterprise to carry out its normal business operations. SEASONAL WORKING CAPITAL It is the capital required to meet the seasonal needs of the enterprise. which may be provided for contingencies that may arise at unstated periods such as strikes. rise in price etc. . Variable working capital can further be classified as seasonal working capital & special working capital. The minimum level of current assets is called fixed or permanent working capital as this part of working capital is permanently blocked in current assets. RESERVE WORKING CAPITAL It is the excess amount over the requirement for regular working capital. SPECIAL WORKING CAPITAL It is required to meet special exigencies such as launching of extensive marketing campaigns for conducting research etc.PERMANENT OR FIXED WORKING CAPITAL It is the minimum amount which is required to ensure effective utilization of fixed facilities & for maintaining the circulation of current assets.

Trading. Nature of Business Working capital requirement is considerably influenced by the nature of business. 6. Longer the length of manufacturing cycle.4 ADVANTAGES OF ADEQUATE WORKING CAPITAL . Volume of Business For a small-scale business the working capital requirement is less whereas for large scale operation the working capital requirement is more. Some importance factors. 2. are given below.1. 3. publicity service requires more. Speed and stock turnover If the inventory or stock turnover is high the working capital requirement is less and vice versa. 4. credit terms are to be extended. manufacturing. 1. 5. which influence working capital. 1. working capital requirement is more and vice versa.3 FACTORS DETERMINING THE WORKING CAPITAL Determination of working capital requirements is not so easy because it requires careful analysis of various factors. Condition of supply of raw materials Regular supply of raw materials reduces the working capital Requirement and irregular supply increases the working capital requirement. moderate less working capital respectively. Market conditions If the degree of competition is more. the requirement of working capital will be more if the degree competition is less working capital requirement is also less. Length of Manufacturing Process It is the gap between the input of raw materials and output of finished goods.

5 SOURCES OF WORKING CAPITAL The financial managers are always interested in obtaining the working capital at the right time. 5. 3.1. . It helps to utilize the favorable market conditions i. Fixed assets can be required on lease but there is no alternative for current assets. An increase in the sale of product requires a corresponding increase in current assets.purchase at cheaper rate reduces the cost of production It helps for maintaining the solvency of business IMPORTANCE OF WORKING CAPITAL MANAGEMENT The importance of working capital management can be judged from the following facts. by purchasing in bulk at cheaper price It helps for reduction of cost i. at a reasonable cost and at the best favorable terms. 2. 1.e. It helps for continuous supply of raw materials. Investment in current assets can in no way be avoided. Working capital needs are generally financed through outside sources. There is direct and positive correlation between Sales and working capital needs of the firm. salaries and other day-to-day expenses and it also increase the goodwill of the firm 3. 1. So continuous care is necessary to utilize them in the best way. 4.e. Hence current assets are to be managed properly and efficiently.. which leads for uninterrupted production It helps for prompt payment of wages. A part of the working capital investment . 2.

Credit paper. 2. Public deposits. Accrued expenses. Sale of fixed assets 5. Provision for taxation. 4. 6. Issue of debentures 3. Term loans. Retained earnings 4. 3. 2. Bank credit. Security from employee and from customers. 4. 5. CHAPTER-II INDUSTRY PROFILE AND COMPANY PROFILE . Trade credit. 1. Customer credit. Governmen t assistance . Depreciatio n of funds.is permanent investment in fixed asset. The valuable source of working capital available to a firm is: Source of Working Capital Long Term Source Short Term Source 1. Issue of share. 3. 2. 1.

2006. Types include: . 1991.Cotton buying and selling from Mumbai to china 1853.5 lacks mill employees went on work stoppage opposed to Bombay Mill Owner Association demanding wage increase.Mumbai gets its first mill referred to as Bombay Spinning Mill famous for Producing cotton textile to be exported to Britain.State government announced Development Control Rule 58 which Confirmed.2. 1870.About 2. Textile mill A textile mill is a factory producing textiles of one or more kinds.Rail link to Thana 1854.1 INDUSTRY PROFILE A short History of Textile Industry in India 1700.There were about 13 mills 1875. mill Lands could be sold to others with some terms and conditions applied 2005.Total count of mills in Mumbai was about 70 1915-Total count of mills in Mumbai goes up to 138 1982.NTC made decision to start 3 of the old mills.National Textile Corporation (NTC) who owned 25 mills in the city started selling few Mills to private businesses.

Mohan thread mill.manufacturer and exporter of good quality woolen and synthetic Blankets.2 Structure of the Indian textile industry The textile sector in India is one of the worlds largest. In 1832. 2.manufacturer of high quality embroidery yarn and threads. Textiles are formed after the process of spinning. Textile refers to a flexible material comprising of a network of natural or artificial fibers known as yarn. knitting. Few leading Indian textile mills 1. knotting and pressing fibers together. Aroon mill.pioneer in manufacturing the heavy woolen yarn and Largest manufacture of fabric. Mill for spinning worsted yarn. Cotton mill 2. A factory in which woven fabrics are manufactured. Amritsar swadeshi woolen mill. are widely applied and greatly improved in the fire safety of the mills. These design criteria.manufacturer of textile auxiliaries 4. Adarsh textile mill. many early mills were located near a source of power for operating the machinery. Textile mill refers to manufacturing plants for making textile fabric and products. Textile mill industry is one of the largest industries in India textile mill industries went through a process of phenomenal growth for the past four decades. 2. most were of timber construction and in constant danger of being consumed by fire. weaving. 3. Silk mill 3.1. The textile industry today is divided into three segments: . a significant advance in fire safety occurred with the construction of a mill in Rhode Island that was especially designed to resist fire (and to burn slowly if ignited) by using thick floor planking by minimizing the number of timber beams and by maximizing the cross sectional area of each beam. crocheting.

New Delhi. spinning and hand sophisticated and highly mechanized mill sector on one hand loom sector. Conditions in the Indian textile mills For the past few years the sickness and consequent closure of textile mills has been a matter of great concern in our country. All segments have their own place but today cotton textile continue to dominate with 73% share. Low productivity due to lack of adequate modernization. Inability to produce newer products as per market requirements 5. Increase in cost of inputs 6. Inadequate working capital. COMPANY PROFILE Coimbatore Murugan Mills. 4. silk and jute etc. 3. Cotton textiles 2. The structure of the textile industry is extremely complex with the modern.existence of oldest technologies of hand spinning and hand weaving with the most sophisticated automatic spindles and looms. Power looms in decentralized sector have greater cost effectiveness than the composite units. Other textiles like wool. (A unit of National Textile Corporation Ltd. Synthetic textiles 3. 2. The sickness is due to inadequate structural transformation leading to composite units losing ground to specialized units. The structure of cotton textile industry is very complex with co.1.) weaving(handloom sector) on the other which in between falls the decentralized small scale power .Coimbatore. Stagnation in demand for traditional products. The primary reasons behind this are: 1.

Germany. New Delhi. Were during the beginning stage of mill totally 1500employees worked. The well trained employee alone permitted to operate the machinery. Subsequently. The labor strength of this mill is 674 workers. 2. Continuous losses are the main reasons of closure of the mills in the year 1968. The mill remained closed for 3 year from May 1968 and it was taken over by the government of Tamil Nadu with effect from 1971 under Industrial development and regulation Act. This is the only composite mill in Tamil Nadu which is having Spinning and Weaving. Coimbatore CMM was established in the year 1936 by Angappa chettiyar with a spindle age of 11480. after Modernization it reduced to 500. The installed capacity of spindles at the time of Nationalization was 28680 and all these spindles were renovated under the approved modernization scheme. PF. .4 Objectives of the company  To provide employment to thousands of workers who were rendered of unemployed due to the closure of the textile mills. Insurance. Belgium. ESI. The mill was making good progress until it was caught in the vicious cycle of higher Raw Material Cost. The progress of the unit since nationalization in different spheres is enumerated.2. The mill is running with 3 shift based.generating capacity to the tune of 2720 KVA to meet out power requirement to the extent of 100% and hence achievement of maximum utilization is possible even during 100% power-cut. Medical benefits. during the year 2004. The mills have obtained ISO 9001-2000 certification from TUV RHEINLAND (INDIA) Pvt Limited. Sakomoto Automatic Looms were added during the 1952.3 History of Coimbatore Murugan Mills. The installed capacity of looms machines are import from Japan. The mills have adequate self. the mill was nationalized under the sick textile undertaking (Nationalization) Act 1974 and became one of the units of National Textile Corporation Limited. The mill provide the economic and facilitating benefits to the employee like Canteen. Lower Yarn Prices and higher cost of Production resulting in huge loss. 1951. Coimbatore Murugan mill is a composite textile mill situated in Mettupalayam Road Coimbatore. The mill which was once considered a sick mill has now recovered from the initial sickness and poised for growth.

 Augmentation of production of different varieties of yarn and cloth  Distributors of the yarn and cloth at fair prices to consumers power loom manufactures defence personnel and uniform materials to employees of other public sector units.000 employees. 530crores. National textile corporation ltd.55lakh spindles.5 PRODUCT PROFILE 100% Cotton Yarn . with 9. So far 55. Out of these 22 mill modernization Scheme is being implemented in 15 mills.13crores have been paid as VRS compensation to all the employees of closed unviable mill and surplus employees of viable mill. 638 crores. NTC is modernizing 22mill with the latest state of art technology on its own. The annual turnover of the company in the year 2004-05 was approximately Rs.818 employed in 52 textile mill (after closure of 67mills). As per the approved Modified Voluntary Retirement Scheme. The strength of the group is around 22.1951. The headquarters of the holding company is at New Delhi. 577 looms producing 400lakh kgs of yarn and 185lakh meters of cloth annually. As on 30-09-2007 there are 16. 2. Reorganize and rehabilitees such undertaking with a view to protect the interest of the general public. (NTC) National textile corporation (NTC) is the single largest textile central public sector and enterprise under ministry of textiles managing 52 textile mill through its subsidiary companies spread all over India. the total cost of modernization of 22 mills was estimated at Rs.642 employees have opted for voluntary retirement under the Modified Voluntary Retirement Scheme (MVRS) and Rs.

sheets and towel.Cotton is a soft. a shrub native to the tropical and subtropical regions of Europe and America. Count Range: Ne 2/1 to Ne 140/1. Each fiber is made up of twenty to thirty layers of cellulose coiled in a neat series of natural springs. ability to dry quickly. abrasion . shape retention in garments. The example is tread or yarn which is formed by weaving or knitting as in textiles. The fiber is not spun into thread and used to make a soft. exquisiteness and longevity. used to make blue jeans. 100% Polyester It is a type of fabric which is a synthetic. from the finest gossamer fabrics to study canvas sail cloths. Socks. Some of them are discussed below. underwear. Fabric has several definitions. clothes made using grey fabric are ruling the international market. staple fiber that grows in a form known as a boll around the seeds of the cotton plant. Bed sheets often as made from cotton. Cloth is mostly used in the manufacturing of clothing and household furnishing etc. and cotton twill. Cotton is used to make a number of textile products. Cotton also is used to make yarn used in crochet and knitting. Showcasing immense aesthetics and revealing a tendency of glamour. Grey Fabric Fabric or cloth is a flexible artificial material that is made by a network of natural or artificial fibers. Due to its cost effectiveness. absorbent and breathable textile used for making clothing. seersucker. high strength. in single. and most T-shirts are made from cotton. grey fabric has been widely used for cloth manufacturing. double and multiple ply. These include terrycloth. chambray. Clothes made out of grey fabric can simply be termed as stunning in each and every aspect. This interlocked form is ideal for spinning it into a fine year. denim. Some of its features crease resistance. Uniquely woven grey fabric has become increasingly popular in appreciation of increased market demand. Cloth is made in many varying strengths and degrees of durability. man-made fiber produced. popularly used in the manufacture of blue work shirts (from which we get the term “blue – collar”). and corduroy. used to make highly absorbent bath towels and robes.

Polyester and cotton blends are well suited for fabrics to be given a permanent press resin finish. 2. Application: Knitting. fabrics for rainwear. slicker hand. a 50/50 blend is preferable. A 50/50 blend of polyester and cotton is also satisfactory for effective permanent press finishes. Cotton will provide absorbency and consequent comfort. wrinkle resistance. and sport shirts usually have a blended of at least 65 percent polyester with the cotton. blends of as much as 80/20 of polyester and cotton. unless properly constructed and properly cared for. easy-care synthetic fabric made from petroleum by products. including clothing. Strength. will have a somewhat stiffer. Polyester Cotton Blend For satisfactory was and wear purposes. Polyester is a durable. On the other hand. tailored clothing. It can be manufactured in variety of weights and textures.6 Manufacturing Process Spinning process . and shape retention will be increased but absorbency will be reduced. It is very important fiber in upholstery fabrics. Where greater absorbency and softer hand are desired. dress shirts. Count Range: Ne 6/1 to Ne 80/1 in single double and multiple ply. which is often used in warps due to its strength and inexpensiveness. Polyester will provide wrinkle resistance and shape retention. However. and minimum care requirement. respectively. home furnishings and industrial fabrics.resistance. a fabric of a polyester and cotton blend may pucker and lose its shape if the cotton should shrink or if cotton thread is used in sewing. but there will be a corresponding strength loss of as much as 20 percent as well as a slight loss in resilience. weaving and sewing yarns. Polyester is used for a wide range of applications.

In best varieties of there will be a lot o differences. It is a machine which is used to clean and improve the cotton and it gives the output in the lap form. Before the raw stock can be made into yarn. Carding The laps received from Blow Room is further opened and cleaned and a clean rope like material.. Blow room The cotton is well opened and cleaned to remove the foreign matter such as seed. This is necessary for all staple fibers. Hence it is the practice to mix several bale. the remaining impurities must be disentangled and they must be straightened.Mixing Cottons of different varieties in different proportion are hand opened and laid into different layers according to the quality of cotton and depending on the end use ( yarn quality requirement). its. in the quality within cotton bale a well as from bale to bale in lot of cotton. otherwise it would be impossible to produce fine yarns from what is originally a tangled mass. and a thin uniform sheet of 40 ° width and rolled in length of about 40 meters known as Lap. Combing . before feeding it to the blow room. leaf bits etc. known as card Silver is produced and stored in cans.

The roving on bobbins is placed in the spinning frame. For very fine yarns. neps etc. where further drawing out and twisting take places until the cotton stock is about the diameter of a pencil lead. Simplex The drawing silver is thinned and made to a strand of required size known as ROVE and wound into bobbins of 1 to 1. The combining of several slivers for drawing or drafting. The thinning process is known as drafting. The ring spinning frame completes the manufacture of yarn Cone winding . etc. in order to improve the quality of yarn. These bobbins are placed on the placed on the roving frame. from the card silver to improve the quality of yarn in order to produce combed yarn. Roving is the final product of several drawing out operations. The ring frame is faster process but produces a relatively coarse yarn.5 kg weight. the mule frame is required because of its slow intermittent operation. Spinning The roving bobbins received from the simplex is fed in Ring Spinning frames where the material is further thinned down. In this operation. fine combs continue straightening the fibers until they are arranged with such a high degree of parallelism that short fibers called noils are combed out and completely separated from the long fiber. such as worsted yarn. from the card silver to improve the quality of yarn in order to produce combed yarn. It is an optional special process to remove short fibers. process eliminates irregularities that would cause too much variation if the silvers were put through singly. where it passes through several sets of rollers running at successively higher rates of speed and is finally drawn out to yarn of the size desired. twisted and yarn is formed which is wound on small cops of 50 to 60 gms. Spinning machines are of two kinds: ring frame and mule frame. The machine which converts lap form into silver form is known as combing.It is an optional special process to remove short fibers. neps. Drawing The card silvers or combed silvers (8 to 8 nos) are passed through this machine to make the fibers in the silver parallel and more even.

500 cones. The warping Machines are having the various forms like 450 cones. Sizing Sizing is the process of improve the cotton threat quality with the help of starch and straighten. Warping contain covert the more than 500 cones into one babin with the help of warping machine. Weaving Weaving is the process of weave the threat into cloth from the looms.The yarn in small cops is wound into bigger packages known as cones of required weight (1. Finally the threats are fold into babin again. The automatic looms are not having the human need while the looms are broken but in hand loom machines are need the human while broken the looms to rectify the looms broken.25kg) after cleaning the impurities from Ring Spinning Yarn. The starching is helps to improve the threat straightness and it dry. CHAPTER-III . and 750 cones converter. The loom machines are available at two types there are: automatic looms and hand loom machines. Weaving process Warping Warping is the initial process of weaving. it helps to improve the cotton quality.

3. It is a statement of only essential elements of study.5 Objectives of the study .2 Data Collection Primary as well as secondary data is used for the project. Analysis of working capital performance is done with the help of percentages by showing graphs. 3.RESEARCH METHODOLOGY 3. 3.4 Tools for analysis The main tools and techniques used were: Ratio Analysis. The research vehicle for primary data collection is unstructured interview with the managers to get information regarding all variables for working capital management. ratios etc.Coimbatore. The present study is being conducted followed by analytical Research Design.3 Analysis of Data The information gathered are the policies & practices regarding management of the working capital. Analysis is done in terms of theoretical concepts.1 Research design The research design is a pattern or an outline of research project working. Secondary data is collected from Annual Report. those that provide basic guidelines for the details of the project. 3. relevant files & records of Coimbatore Murugan Mills.  Trend analysis  Comparitive balance sheet  Motaal’s comprehensive test It is found that liquidity position and debtor’s collection of the company was satisfactory and the working capital requirement of the company was increasing which showed the firm is expanding its activities.

To determine the amount of working capital of the company for another two years.  Due to inadequate time it is not possible to analyze all aspects relevant to the study. 2. Analysis and interpretation of financial statement and working capital is very useful for short-term management of funds. The following are the main objectives of the study: 1. To analyze the components of working capital of the company. To assess the impact of working capital on profitability. To understand the solvency position of the company. 5. 3.6 Limitations of the study The study is restricted for a period of two months. 3. To analyze and evaluate liquidity position of the company. 4. 3.Working capital management is very important in modern business.7 Review Of Literature .  The findings of the study cannot be generalized.  The analysis is based on annual reports of the company.

The major findings of the study were the return on capital of the company was satisfactory.Nandhini (1997) in her study attempted to analyze the working capital management in Siv industries Ltd. The objective of the study was to analyze and evaluate the Working Capital Management. Coimbatore”.T (2002) made an analysis of “Working Capital Management with special reference to Elgi Ltd. the Working Capital was effectively used and overall it is satisfactory.Cherian Joseph (1998) conducted “A study on Working Capital Management in textile industry in India under taken by Cherian Joseph for a period of ten years from 1978 – 1988”. Anisha Lashmy Sam. The decreasing Working Capital ratio indicates the effective utilization funds. R.Swaminathan (1998) made “A study on Working Capital Management of the Lakshmi Mills Company Limited. The conclusion from his analysis is Working Capital Management was very poor and below average.” for the period of six years from 1995-1996 to 2000-2001 with the following objectives. To evaluate and compare the inventory receivables and cash management performance of the company. The cash and bank balance of those companies were very meager. to find out the management of each component of working capital in respect of inventories. The main objectives of the study were to analyze the liquidity position of the company. The objective of the study was to find the structure and utilizations of Working Capital in textile mills around twenty mills were taken for study. The major findings from his analysis say that in the year 1995-1996. The quick ratio was also not satisfying the norm. Santhosh.” from 1997-1998 to 2001-2002. Coimbatore” for the period of six years from 1990-91 to . K (2000) attempted to analyze the “Working Capital Management of Hosiery Industries of Tirupur Knitting Units”. N. They are the current ratio of those companies stood below the standard norm 2:1.A (2003) made “A study on the Working Capital Management with reference to Steel Industries Kerala Ltd. The major findings of the unit were as follows.. receivables and cash balance. The Working Capital of the two companies was very low and another stands low during his study period. Byju. K. V. The conclusion was it blocked amount of cash in current asset was utilized at right time to purchase the inventory shortage won’t affect the day to day production process will increase the profit and reduced risk in 1978 -1987.

a growing number of colleges. profitability. Coimbatore. Amit . B.. He suggested that the mill have to reduce its investment in receivables as well as inventories. and other non-profit .1995-96. Debasish Sur (1999) made a case study on “Working Capital Management of Hindustan Lever Limited” for the period of ten years from 1987-1996. The general performance regarding the Working Capital Management in HLL was very much encouraging during the study period. the company had enjoyed payment period for creditors and it did not find any difficulty in collecting the debts from the customer. It is found that liquidity position. Hema Priya (1998) made “A study on Working Capital Management of M/s. The coefficients are also highly significant. Vijayakumar and A.K. For the analysis of the data. Venkatachalam (1996) in the study made an attempt to “Estimate the demand for working capital in Private Sector Sugar Industries of Tamil Nadu”. universities. Kent John Chabotar(1989). This study is attempted to measure the performance of Working Capital with reference to Sri Sarada Mills. Mallik. to measure the efficiency and performance and to analyze the source and uses of the funds of the company. The regression results of the study suggested strongly that the demand for working capital and their hiding costs.Veejay Lakshmi Engineering Company” for a period of nine years from 1988-89 to 1996-97 with the objective of examining the solvency position. To evaluate their financial health.Financial Ratio Analysis Comes to Nonprofits. Uma Maheshwari (1996-1997) made “A study on Working Capital Management in Raja Lakshmi Mills” for a period of ten years from 1996-1997 to 1999-2000. The tools and techniques of ratio analysis and least square test are used to know the Working Capital forecasting of Raja Lakshmi Mills. and the working capital requirement of the company was increasing which showed the firm is expanding its activities. simple mathematical tools like percentages. debtors collection of the company was satisfactory. and statistical techniques like Pearson’s simple correlation analysis. and multiple regression analysis were used.. The main objectives of the study were to examine the impact of Working Capital on liquidity and profitability of the company. The study found that the solvency position was better in the year 1992 and during the last three years. ratio analysis. averages etc. Spearman’s rank correlation analysis.

Most theorizing on the relationship between corporate social/environmental performances (CSP) and corporate financial performance (CFP) assumes that the current evidence is too fractured or too variable to draw any generalizable conclusions. To provide historical benchmarks for forecasting. Soenen L. this article assesses the strengths and weaknesses of ratio analysis and suggests how nonprofits can use it most effectively. Investigates the relationship between the firm's efficiency of working capital management and its profitability. a technique used in business for many years.-H. Efficiency of Working Capital Management and Corporate Profitability. Marc Orlitzky. (1998).Nicholas Wilson(1996). Rynes(2003). typical values for ratios are documented for the period 1963–1999. .Frank L.. Michael J. Penman (2001). Peel..organizations are using financial ratio analysis. Financial statement analysis has traditionally been seen as part of the fundamental analysis required for equity valuation.Working Capital and Financial Management Practices in the Small Firm Sector . Measures of working capital management efficiency. Doron Nissim and Stephen H. Association between the net trade cycle and corporate profitability. Corporate Social And Financial Performance. Schmidt. In general. Ratio Analysis and Equity Valuation. Background on efficient working capital. This meta-analysis establishes a greater degree of certainty with respect to the CSP-CFP relationship than is currently assumed to exist by many business scholars. Shin H. along with their cross-sectional variation and correlation. Primarily through a review of the literature and a case study.Sara L. the results of the survey indicated that a relatively high proportion of small firms in the sample claimed to use quantitative capital budgeting and working capital techniques and to review various aspects of their companies' working capital.

The following types of ratios frequently are used: • • • • Liquidity ratio Activity ratio Solvency ratio Profitability ratios LIQUIDITY RATIOS Liquidity ratios provide information about a firm's ability to meet its short-term financial obligations.1 RATIO ANALYSIS Ratio analysis is widely used tool for financial analysis. In some cases. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weakness of a firm as well as its historical performance and current financial condition can be determined. • . ratio analysis can predict future bankruptcy. The term ratio refers to the numerical or quantitative relationship between two items. They are of particular interest to those extending short-term credit to the firm. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. • • Current ratio Quick or Liquid ratio Absolute liquid ratio. DEFINITION According to Kennedy.CHAPTER-IV ANALYSIS AND INTERPRETATION 4. ratio may be defined as “the indicated quotient of two mathematical expressions and as the relationship between two or more things” TYPES OF RATIOS Financial ratios are useful indicators of a firm's performance and financial situation.

CURRENT RATIO Current ratio may be defined as the relationship between current assets and current liabilities. that is current assets double the current liabilities is considered as satisfactory. This ratio is the One of the most universally known ratios. which reflects the Working Capital situation. indicates the ability of a company to pay its short-term creditors from the realization of its current assets and without having to resort to selling its fixed assets to do so. A ratio equal or near to the rule of thumb of 2:1. Current Assets Current Ratio = ---------------------Current Liabilities TABLE NO: 1 .

TABLE SHOWING CURRENT RATIO Year 2007 2008 2009 2010 2011 Current Assets 245912771.4 266774351.9 232646852 313558130.2 446152569.2 Current Liabilities 137200613.1 138652496.2 152522085.8 158368476.4 360867293.6 Arithmetic Mean (Source: Annual Reports) The current ratio of the Murugan Mills in the year 2007,2008,2009,2010 is more than 1.50. It is less than the standard norm of 2:1; this shows that the mill’s liquidity position is not good. In the year 2011 the current ratio was not satisfactory in the mill because it was too low compare to previous years. CHART NO: 1 CHART SHOWING CURRENT RATIO Ratio 1.79 1.92 1.53 1.98 1.24 1.69

LIQUID RATIO

This ratio indicates the ability of a company to pay its debts as they fall due. It is generally considered a more accurate assessment of a company's financial health than the current ratio as it excludes stock, thus reducing the risk of relying on a ratio that may include slow moving or redundant stock. The liquid assets are bills receivable, sundry debtors, marketable securities and the short term or temporary investments. Liquid or Quick assets Liquid ratio = ------------------------------Current liabilities The rule of thumb for liquid ratio is 1:1, that is Liquid assets equal to the current liabilities is considered as satisfactory.

TABLE NO: 2 TABLE SHOWING LIQUID RATIO Year 2007 2008 2009 2010 2011 Quick Assets 87610322.43 139879453.1 87602892.79 88622542.38 74579547.73 Current Liabilities 137200613.1 138652496.2 152522085.8 158368476.4 360867293.6 Arithmetic Mean (Source: Annual Reports) In the year 2008 the liquid of the company is equal to the rule of thumb that is 1:1, so the liquid ratio was satisfactory in this year. In 2007,2009,2010,2011 the liquid ratio was not satisfactory in the mill because it is less than the standard norm. CHART NO: 2 CHART SHOWING LIQUID RATIO Ratio 0.64 1.01 0.57 0.56 0.21 0.60

ABSOLUTE LIQUID RATIO

Absolute liquid assets exclude sundry debtors from liquid assets it includes cash in hand, cash at bank and short term investments. Absolute liquid assets Absolute liquid ratio = -----------------------------Current liabilities The standard norm of this ratio is 0.5:1 that is double the Current liability than Absolute liquid assets.

TABLE NO: 3 TABLE SHOWING ABSOLUTE LIQUID RATIO Year 2007 2008 2009 2010 2011 Absolute Liquid Assets 5866874.49 35446357.15 3469216.9 6809474.76 1502516.14 Current Liabilities 137200613.1 138652496.2 152522085.8 158368476.4 360867293.6 Arithmetic Mean (Source: Annual Reports) The standard norm of this ratio is 0.5:1, in the year 2008 it was nearer to the standard norm so it was satisfactory. In the other years 2007, 2009, 2010 and in 2011 the ratio was not satisfactory in the mill. CHART NO: 3 CHART SHOWING ABSOLUTE LIQUID RATIO Ratio 0.04 0.26 0.02 0.04 0.00 0.07

ACTIVITY RATIOS OR TURNOVER RATIOS

Activity ratios measure the effectiveness of the firm’s use of resources or assets. The high ratio indicates quick movement of stock and vice versa. These ratios are also called as turn over ratios because they indicate the speed with assets are converted or turned into sales. Cost of goods sold Inventory turnover ratio = ------------------------Average inventory Usually high inventory turnover ratio indicates the efficient management of inventory because more frequently the stocks are sold. The various types of activity ratios are: • • • • • • Inventory/ stock turnover ratio Debtors turnover ratio Creditors turnover ratio Working capital turnover ratio Fixed assets turnover ratio Total assets turnover ratio INVENTORY TURN OVER RATIO This ratio indicates the number of times stock is turned over during a year. . the lesser amount of money is required to finance the inventory.

6 118890973.1 200261287.1 413379369.5 339755870. In the years 2007.32 2.1 Average Inventory 118682914.65 4.01 .94 3. CHART NO: 4 CHART SHOWING INVENTORY TURNOVER RATIO Ratio 2.1 Arithmetic Mean (Source: Annual Reports) The inventory turnover ratio was high in the years 2010.5 543137730.5 110576719.07 2.TABLE NO: 4 TABLE SHOWING INVENTORY TURN OVER RATIO Year 2007 2008 2009 2010 2011 Cost Of Goods Sold 348790279.5 125599392. 2009 and 2011 the ratio was not satisfactory.06 3. 2008 this shows that the sales are great extent than the stock.2 314931857.

Net annual credit sales Debtors Turnover Ratio = ------------------------------Average trade debtor’s Accounts receivable turnover ratio or debtors turnover ratio indicates the number of times the debtors are turned over a year. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm. In simple words. low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. Similarly. The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. It is the reliable measure of the time of cash flow from credit sales. .DEBTORS TURNOVER RATIO Debtor’s turnover ratio indicates the velocity of debt collection of firm. it indicates the number of times average debtor’s are turned over during a year.

22 6.TABLE NO: 5 TABLE SHOWING DEBTOR’S TURNOVER RATIO Year 2007 2008 2009 2010 2011 Net Annual Credit Sales 292086224.89 3.62 73077031.57 2. In the year 2010 the debtor’s turnover ratio was high.3 336804641.4 Average Trade Debtors 81743447. The ratio was very low in the year 2008.89 81813067.61 4. CHART NO: 5 CHART SHOWING DEBTOR’S TURNOVER RATIO Ratio 3.08 .11 4.8 500281853.59 Arithmetic Mean (Source: Annual Reports) This table shows the fluctuating trend in debtor’s turnover ratio. This shows the firm has very less chance for bad debts.1 270834342. in 2011.1 302330088. 2007 and 2009 it was decreased.94 104433096 84133675.

However a very favorable ratio to this effect also shows that the business is not taking the full advantage of credit facilities allowed by the creditors. This situation enhances the credit worthiness of the company. on an average. A higher ratio indicates quick settlement of dues and lower ratio reflects liberal credit terms granted by suppliers. Net Credit Annual Purchases Trade creditors = ----------------------------------------Average Trade Creditors This ratio shows. The average payment period ratio represents the number of days by the firm to pay its creditors. . A high creditor’s turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. the number of times creditors are turned over during a year.CREDITORS TURNOVER RATIO Creditors turnover ratio is used to find out how much time the firm is taken to repay its trade creditors.

78 13.8 Arithmetic Mean (Source: Annual Reports) The creditor turnover ratio was fluctuating over the years of the study. In the years 2008 and 2010 the firm had utilize the credit period effectively.6 249483050.4 Average Trade Creditors 44417051.92 238062455. The ratio has decreased in the remaining years.83 74674704.12 1.3 83251122.41 158330069.65 2.71 89647582.10 5.51 2. CHART NO: 6 CHART SHOWING CREDITORS TURNOVER RATIO Ratio 1.4 75952393.16 .01 42144862.TABLE NO: 6 TABLE SHOWING CREDITORS TURNOVER RATIO Net Annual Credit Year 2007 2008 2009 2010 2011 Purchases 67180430.

higher level of production and sales. it is being used more intensively. Increasing ratio indicates that working capital is more active.WORKING CAPITAL TURNOVER RATIO Working capital turnover ratio indicates the number of times the working capital is turned over in the course of a year. This ratio measures the efficiency with which the working capital is being used by a firm. A higher ratio indicates efficient utilization of working capital. it is supporting. Sales Working Capital Turnover Ratio = ---------------------------Net Working Capital Interpretation of this ratio should be done when inter-firm or inter-period comparison is being done. comparatively. .

8 500281853.3 336804641.95 15.22 3.4 Net Working Capital 108712158.36 3.1 302330088. there is a better utilization of working capital.51 Arithmetic Mean Ratio 2.4 128121855.7 80124766.38 3.69 2.6 (Source: Annual Reports) In the years 2007 and 2010 the ratio was very low so there is no better utilization of the working capital.22 155189653. CHART NO: 7 CHART SHOWING WORKING CAPITAL TURNOVER RATIO .8 85285275.TABLE NO: 7 TABLE SHOWING WORKING CAPITAL TURNOVER RATIO Year 2007 2008 2009 2010 2011 Sales 292086224.1 270834342. In the year 2011 the working capital turnover ratio was high.

Net sales Fixed Assets Turnover Ratio = ----------------Fixed assets . On the other hand a low ratio indicates that fixed assets are not being efficiently utilized. The higher is the ratio the better is the performance.FIXED ASSETS TURNOVER RATIO This ratio shows how well the fixed assets are being used in the business. This ratio is important in case of manufacturing concern because sales are produced not only by use of current assets but also by amount invested in fixed assets.

4 Fixed Assets 285535710.3 336804641. In the year 2008.84 0. CHART NO: 8 CHART SHOWING FIXED ASSETS TURNOVER RATIO Ratio 1.97 .5 Arithmetic Mean (Source: Annual Reports) In the years 2007 and 2010 the ratio was very high so the company has been more effective in using the investment in fixed assets to generate revenues.1 302330088.70 1.TABLE NO: 8 TABLE SHOWING FIXED ASSETS TURNOVER RATIO Year 2007 2008 2009 2010 2011 Net Sales 292086224. 2009 and 2011 the fixed assets turnover ratio was low.7 386733705.02 0.1 371278680.35 0.1 365785416.92 0. there is no better utilization of investments in fixed assets.8 500281853.4 361556752.1 270834342.

Net sales Total Assets Turnover Ratio = ----------------Total assets . The higher is the ratio the better is the performance.TOTAL ASSETS TURNOVER RATIO This ratio shows how well the fixed assets are being used in the business.e total assets. On the other hand a low ratio indicates that assets are not being efficiently utilized. This ratio is important in case of manufacturing concern because sales are produced by the use of current assets and also amount invested in fixed assets i.

3 811937985.1 302330088.6 Arithmetic Mean (Source: Annual Reports) In the years 2010 the ratio was very high so the company has been more effective in using the investment in total assets to generate revenues. CHART NO: 9 CHART SHOWING TOTAL ASSETS TURNOVER RATIO Ratio 0.48 0.7 628495626.44 0. there is no better utilization of investments in total assets.48 0. 2008.73 0.8 619380557. 2009 and 2011 the total assets turnover ratio was low.3 336804641.4 Total Assets 606504698.1 270834342.1 684836810.51 .41 0. In the year 2007.TABLE NO: 9 TABLE SHOWING TOTAL ASSETS TURNOVER RATIO Year 2007 2008 2009 2010 2011 Net Sales 292086224.8 500281853.

even with smaller margins.PROFITABILITY RATIOS Profitability ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return. is going to be much harder to put out of business when the economy turns down than one that has razor-thin margins. for instance. A firm that has high gross profit margins. Likewise. These financial ratios measure the return earned on a company’s capital and the financial cushion relative to each dollar of sales. Overall profitability ratio • • Return on share holders investment Return on equity capital GENERAL PROFITABILITY RATIO GROSS PROFIT RATIO . The types are: I. a company with high returns on capital. General profitability ratio • • • Gross profit ratio Net profit ratio Expenses ratio II. is going to have a better chance of survival because it is so much more profitable relative to the shareholders’ contributed investment.

06 -44097514. TABLE NO: 10 TABLE SHOWING GROSS PROFIT RATIO Year 2007 2008 2009 2010 2011 Gross Profit -56704055.16 -0.×100 Net Sales There is no standard norm of gross profit ratio it differs from the business to business but gross profit should adequate to cover the operating expenses.19 -0.Gross profit ratio measures the relationship of gross profit to net sales and is usually represented as a percentage.81 -76574727.3 336804641.1 302330088. the gross profit ratio was not satisfactory in the Coimbatore Murugan Mills.8 500281853.81 -42855876.12 -0.84 Net Sales 292086224.1 270834342.31 . CHART NO: 10 CHART SHOWING GROSS PROFIT RATIO Ratio -0.4 Arithmetic Mean (Source: Annual Reports) From 2007-2011 the gross profit ratio was low and it is not adequate to cover all the operating expenses.09 -0. Gross Profit Gross Profit Ratio = ------------------------.23 -0.38 -37425782.

low demand. But while interpreting the ratio it should be kept in minds that the performance of profits also is seen in relation to investments or capital of the firm and not only in relation to sales. the firm shall not be able to achieve a satisfactory return on its investment.NET PROFIT RATIO Net profit ratio measures the relationship of net profit to net sales and is usually represented as a percentage. The ratio is very useful as if the net profit is not sufficient. higher the ratio the better is the profitability. This ratio also indicates the firm's capacity to face adverse economic conditions such as price competition.×100 Net Sales Net profit ratio is used to measure the overall profitability and hence it is very useful to proprietors. Net Profit Net Profit Ratio = ------------------------. . etc. Obviously.

2008.29 .23 -0. 2010 and 2011.1 270834342. CHART NO: 11 CHART SHOWING NET PROFIT RATIO Ratio -0.26 -13503728.4 Arithmetic Mean (Source: Annual Reports) The mill was suffered by a loss in the years 2007.TABLE NO: 11 TABLE SHOWING NET PROFIT RATIO Year 2007 2008 2009 2010 2011 Net Profit After Tax -263581429.03 -47625854.8 500281853.10 -0. 29 still it is negative.3 336804641. The average of the net profit ratio is -0.23 Net Sales 292086224.1 -28967966.18 -78511342.1 302330088.90 -0.03 -0. 2009.18 -0.

selling expense ratio. etc. The lower the operating ratio. expense ratios are calculated by dividing each item of expenses or group of expense with the net sales to analyze the cause of variation of the operating ratio. administrative expense ratio. materials consumed ratio. lower is the profitability. . Hence.While interpreting expense ratio. the ratio in proportion to sales shall remain nearly the same. the ratio will fall if the sales increase and for a variable expense.EXPENSES RATIO Expense ratios indicate the relationship of various expenses to net sales. the larger is the profitability and higher the operating ratio. it must be remembered that for a fixed expense like rent. But some of the expenses may be increasing while some may be falling. The operating ratio reveals the average total variations in expenses. Particular expenses Expenses Ratio = -----------------------------×100 Net Sales . The ratio can be calculated for individual items of expense or a group of items of a particular type of expense like cost of sales ratio.

8 Net Sales 292086224.41 .4 Arithmetic Mean (Source: Annual Reports) In the year 2009 and 2011 the expenses ratio is high.8 500281853. Administrative.32 0.3 336804641.TABLE NO: 12 TABLE SHOWING EXPENSES RATIO Manufacturing.1 302330088. selling & distribution expenses. Selling & Year 2007 2008 2009 2010 2011 Distribution Expenses 102172857 112761865 142321447.1 270834342.53 0. administrative.48 0. But the sales volume is very low compare to remaining years.35 0.9 162787806.1 157667806.37 0. It indicates the Mill invest more funds in the manufacturing. In the remaining three years the expenses ratio is normal level and the sales volume also in good position. CHART NO: 12 Ratio 0.

higher the ratio. better are the results. Net profit Return on share holders investment ratio = ------------------------------×100 Share holders investment . This ratio is one of the most important ratios used for measuring the overall efficiency of a firm. As the ratio reveals how well the resources of the firm are being used. As the primary objective of business is to maximize its earnings.CHART SHOWING EXPENSES RATIO RETURN ON SHARE HOLDERS INVESTMENT RATIO It is the ratio of net profit to share holder's investment. this ratio indicates the extent to which this primary objective of businesses being achieved. This ratio is of great importance to the present and prospective shareholders as well as the management of the company. The inter firm comparison of this ratio determines whether the investments in the firm are attractive or not as the investors would like to invest only where the return is higher. It is the relationship between net profit (after interest and tax) and share holder's/proprietor's fund.

04 -0.11 .11. Still the average returns was negative that is -0.8 749710396.1 -28967966.1 Arithmetic Mean (Source: Annual Reports) Return on share holders investment was negative in all the years 2007.TABLE NO: 13 TABLE SHOWING RETURN ON SHARE HOLDERS INVESTMENT RATIO Net Profit (After Year 2007 2008 2009 2010 2011 Interest &Tax) -263581429. CHART NO: 13 CHART SHOWING RETURN ON SHARE HOLDERS INVESTMENT RATIO Ratio -0.36 -0. It was negative in all the years because the company is suffered from loss.3 860131233 853220181.09 -0.18 -78511342.7 856507988.26 -13503728. 2009.02 -0.06 -0.03 -47625854.23 Share Holders Fund 732890964. 2010 and 2011. 2008.

Net Profit Return on equity capital = --------------------------------Equity Share Capital . Return on equity capital which is the relationship between profits of a company and its equity.RETURN ON EQUITY CAPITAL This ratio is more meaningful to the equity shareholders who are interested to know profits earned by the company and those profits which can be made available to pay dividends to them.

TABLE NO: 14 TABLE SHOWING RETURN ON EQUITY CAPITAL Net Profit (After Year 2007 2008 2009 2010 2011 Interest &Tax) -263581429. 2008.23 Equity Share Capital 305251000 305251000 305251000 305251000 305251000 Arithmetic Mean (Source: Annual Reports) Return on equity capital was negative in the years 2007.04 -0.26 -0.26 -13503728.28.18 -78511342. 2009. 2010 and 2011 because the company was suffered from loss.09 -0. CHART NO: 14 CHART SHOWING RETURN ON EQUITY CAPITAL RATIO Ratio -0.1 -28967966.16 -0.28 .03 -47625854.86 -0. Still the average returns was negative that is -0.

the purchase of fixed assets should be financed by shareholder's equity including reserves. By comparing shareholders funds to total assets we can produce a confidence factor for unsecured creditors to the business. indicating a possible over dependency on outside sources for long-term financial support. repayment of the principal amount at the maturity and the security of their loans. FIXED ASSETS TO NETWORTH RATIO The ratio is calculated by dividing the total fixed assets by the amount of shareholders fund. Fixed Assets Fixed Assets to net worth ratio = -------------------------Shareholders Fund The ratio of fixed assets to net worth indicates the extent to which shareholder's funds are sunk into the fixed assets. This ratio measures if the total liabilities of a business (both secured and unsecured) are too high. surpluses and retained earnings. Generally. The long term creditors of a firm are primarily interested in knowing the firms ability to pay regularly interest on long term borrowings. If the ratio is less than .SOLVENCY RATIO The term ‘solvency’ refers to the ability of a concern to meet its longterm obligations.

so we can identify the outsiders fund is not properly utilized for fixed assets.48 0.44 0.44 .1 365785416. it implies that owners funds are not sufficient to finance the fixed assets and the firm has to depend upon outsiders to finance the fixed assets.3 860131233 853220181.1 Arithmetic Mean (Source: Annual Reports) From the year 20007-11 the ratio was 0. it implies that owners funds are more than fixed assets and a part of the working capital is provide by the shareholders.44.7 386733705.39 0.45 0.8 749710396. CHART NO: 15 CHART SHOWING RATIO OF FIXED ASSETS TO NETWORTH RATIO Ratio 0.5 Share Holders Fund 732890964. When the ratio is more than the 100%.100%.7 856507988.43 0. TABLE NO: 15 TABLE SHOWING RATIO OF FIXED ASSETS TO NETWORTH RATIO Fixed Assets(After Year 2007 2008 2009 2010 2011 Depreciation) 285535710.1 371278680.4 361556752. There is no rule of thumb to interpret this ratio by 60 to 65 percent is considered to be a satisfactory ratio in case of industrial undertakings.

Different industries have different norms and therefore. this ratio should be studied carefully taking the history of industrial concern into consideration before relying too much on this ratio. Current Assets Ratio of Current Assets to Proprietors Fund = --------------------------Shareholders Fund Current Assets to Proprietors' Fund Ratio establish the relationship between current assets and shareholder's funds.RATIO OF CURRENT ASSETS TO PROPRIETORS FUND The ratio is calculated by dividing the total current assets by the amount of shareholders fund. The purpose of this ratio is to calculate the percentage of shareholders funds invested in current assets. .

34 0. so we can identify the outsiders fund is not utilized for current assets.37 .9 232646852 313558130. CHART NO: 16 CHART SHOWING RATIO OF CURRENT ASSETS TO PROPRIETORS FUND Ratio 0.2 Share Holders Fund 732890964.TABLE NO: 16 TABLE SHOWING RATIO OF CURRENT ASSETS TO PROPRIETORS FUND Year 2007 2008 2009 2010 2011 Current Assets 245912771.4 266774351.2 446152569.37.36 0.1 Arithmetic Mean (Source: Annual Reports) From the year 20007-11 the ratio was 0.7 856507988.37 0.52 0.3 860131233 853220181.8 749710396.27 0.

The ratio of proprietors fund to total assets is an important ratio for determining long term solvency of a firm.PROPRIETORY RATIO Proprietory ratio establishes the relationship between shareholders fund to total assets of the firm. Shareholders Fund Proprietory Ratio = -------------------------Total Assets Proprietory ratio indicates the proportion of shareholders funds in total assets. A high proprietary ratio indicates less danger and risk to creditors in the event of winding up. .

1 Total Assets 606504698.7 628495626.TABLE NO: 17 TABLE SHOWING PROPRIETORY RATIO Year 2007 2008 2009 2010 2011 Share Holders Fund 732890964.19 1.6 Arithmetic Mean (Source: Annual Reports) In the year 2009 the ratio was high that is the shareholders are contributed for total assets.22 .3 860131233 853220181. so the ratio was satisfactory. 2008.1 684836810.21 1.3 811937985. 2010 and 2011 the ratio was declining so the ratio was not satisfactory.8 619380557.05 1.39 1.8 749710396.7 856507988. CHART NO: 17 CHART SHOWING PROPRIETORY FUND Ratio 1. In the year of 2007.25 1.

× 100. = -------------------------.4. Base Year .2 TREND ANALYSIS Trend percentage which plays significant role in analyzing the financial stature of the enterprise through base years’ performance ratio computation. This not only reveals the trend movement of the financial performance of the enterprise but also highlights the strengths and weaknesses of the enterprise The following ratio is being used to compute the trend percentage CurrentYear.

4 Trend Percentage 100. CHART NO: 18 CHART SHOWING SALES PERCENTAGE Amount 292086224.51 92.3 336804641.28 115.1 302330088. In 2009 the sales trend was decreased and in the year 2010 the sales trend was increased again.1 270834342.00 103.8 500281853. In the year of 2011 the sales trend was again decreased.31 .TABLE NO: 18 TABLE SHOWING SALES PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) The trends of sales had consistently increased in the years 2007 to 2008.72 171.

83 168.1 200261287.74 .18 105.5 110576719.5 125599392. CHART NO: 19 CHART SHOWING INVENTORY PERCENTAGE Amount 118682914. The inventory percentage is very high in the year 2011.1 Trend Percentage 100. It shows the fluctuating trend in inventory trend percentage.00 93.6 118890973.17 100.TABLE NO: 19 TABLE SHOWING INVENTORY PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) This table shows the increasing trend except in the year 2008.

00 127.59 Trend Percentage 100.09 89.62 73077031. CHART NO: 20 CHART SHOWING SUNDRY DEBTORS PERCENTAGE Amount 81743447. In the year 2008 the debtor’s percentage was increased. in 2009.94 104433096 84133675.92 100. 2011 it was decreased. 2010. it shows the fluctuating trend.TABLE NO: 20 TABLE SHOWING SUNDRY DEBTORS PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) The above table shows the fluctuating trend in debtor’s percentage.40 .76 102.89 81813067.

3 Trend Percentage 100.6 203483596.TABLE NO: 21 TABLE SHOWING BANK LOANS PERCENTAGE Year 2007 2008 2009 2010 2011 Amount 186664164.00 109.01 168.2 313904432.It was decreased in the year of 2010 and again it was increased in the year of 2011. CHART NO: 21 CHART SHOWING BANK LOANS PERCENTAGE .9 248749192.9 241176975.17 129.26 (Source: Annual Reports) This table shows the fluctuating trend in bank loans percentage. It was increased in the year of 2008 and 2009.20 133.

7 386733705.00 126.1 365785416. In the year 2010 and 2011 the fixed asset’s percentage was decreased.TABLE NO: 22 TABLE SHOWING FIXED ASSETS PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) This table shows the fluctuating trend in fixed assets.4 361556752.62 135.03 128. In the year 2008 and 2009 the fixed asset’s percentage was increased.44 130. CHART NO: 22 CHART SHOWING FIXED ASSETS PERCENTAGE Amount 285535710.5 Trend Percentage 100.1 371278680.10 .

56 4270606. In the year 2008.88 101.00 7. 2009 and 2010 the trend percentage was too low and in the year 2011 it was increased. CHART NO: 23 CHART SHOWING LOANS AND ADVANCES PERCENTAGE Amount 30768789.87 31202411.38 1995932.14 6.TABLE NO: 23 TABLE SHOWING LOANS &ADVANCES PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) The above shown table shows the fluctuating trend in loans and advances.49 13.8 Trend Percentage 100.84 2197552.41 .

10 116. In the year 2009 it was decreased. In the year of 2010 again it was increased.TABLE NO: 24 TABLE SHOWING CASH &BANK BALANCE PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) The above shown table shows the fluctuating trend in cash and bank balances.76 1497166.54 . And in the year of 2011 again it was decreased too low.08 25.12 3463866. CHART NO: 24 CHART SHOWING CASH AND BANK BALANCE PERCENTAGE Amount 5861424.65 59.49 35441007.9 6804124.14 Trend Percentage 100. In the year 2008.00 604. the trend percentage was too high.

CHART NO: 25 CHART SHOWING CURRENT LIABILITIES PERCENTAGE Amount 81822725.81 46452388. It shows the fluctuating trend in current liabilities.8 Trend Percentage 100.2 78505703.69 . In the years 2009 to 2011 it was increased.63 91389781.77 111.00 94.TABLE NO: 25 TABLE SHOWING CURRENT LIABILITIES PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) The current liability trend is very high in the year 2011.31 95. It was decreased in the year of 2008 and 2010.95 56.08 77170095.

43 . In the year 2009 the current asset’s percentage was decreased.4 266774351.61 127. CHART NO: 26 CHART SHOWING CURRENT ASSETS PERCENTAGE Amount 245912771.00 108.51 181. In the year 2008.2 446152569.48 94.2 Trend Percentage 100.TABLE NO: 26 TABLE SHOWING CURRENT ASSETS PERCENTAGE Year 2007 2008 2009 2010 2011 (Source: Annual Reports) This table shows the fluctuating trend in current assets. 2010and 2011 the current asset’s percentage was increased.9 232646852 313558130.

• • . group of items and computed items in two or more balance sheets of the same business enterprise on different dates. Comparative statements can also be used to compare the performance of the firm with the average performance of the industry between different years.3 COMPARATIVE BALANCE SHEET STATEMENTS The comparative balance sheet analysis is the study of the trend of the same items. Balance sheets as on two or more different dates are used for comparing the assets. The changes can be observed by comparison of the balance sheet at the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise. liabilities and the net worth of the company. It helps in identification of the weakness of the firm and remedial measures can be taken accordingly. Advantages • Comparative statements help the analyst to evaluate the performance of the company.4. Comparative balance sheet analysis is useful for studying the trends of an undertaking. The changes in the periodic balance sheet items reflect the conduct of a business.

24 64271187.Unsecured loans 3.00 16819431.56 10.41 75056216.34 626677770.Reserves & surplus 2.Fixed Assets A.26 1129347.00 0.00 240975800.19 0.share holders funds a.Loan funds a.25 -3.62 76021042.41 341142060.19 0.05 329392205.62 -99.00 732890964.38 361556752.00 285535710. Less: Depreciation C. Capital b.53 Change % 0.COMPARATIVE BALANCE SHEET (2007-2008) Particulars Sources of funds 1.00 749710396. Net Block D.00 0.67 164522.8 .62 0.00 240975800.Secured loans b.01 0.00 0.00 9. Gross Block B.00 16819431.44 26.29 305251000.81 305251000. Capital Wip 2007 2008 Absolute change 0.00 2.64 -11749854.15 0.Deferred tax liability Total Application of funds 1.00 0.00 203483596.00 186664164.94 690948958.53 0.

08 55377888. Investments Interest accrued on inv.91 5350 112696857.73 1129347.56 -100 -6528182.64 lakhs (10%).85 4652629.00 30.89 30768789.81 749710396.38 7986370.36 28847950.28 81743447.71 292617201.83 -5.00 0.00 245912771.39 179394152.10 361721274.53 lakhs (2. This fact depicts that the policy of the company is to purchase fixed assets from the long term sources of finance thereby not affecting the working capital.Less Current Liabilities a .39 42193539.1 -28571237.36 263581429. Other Current Assets e. Profit & loss A/C 5450 119225040.75%).6528182.94 5861424.Assets.46 7986370.63 0.00 137200613.Current Liabilities b.88 61045113 40741656.64271187.360591927. Deffered Rev.16819431.34 16819431.36 274760722.28847950. This depicts that fixed assets are not only financed from long term sources but part of working capital has also been financed from long term sources.84 0.95 35441007.73 5.27 11.51 13345588. Long Term Financial Position There is an increase in fixed assets of Rs.35 2.Net CA/CL(A-B) 6.75 12.85 0.Sundry Debtors c.53 2.86 lakhs (11. 3.08 108712158.48 27.686 11.20 61482401.3 77170095.22689648 lakhs (27.79 22689648.63 3691770.01 29579582.12 12005838. Cur. Inventories b.64 44.Exps. On the other hand there has been a decrease in inventories amounting to Rs.02 0. There is an increase in loaned funds than the share capital so this increases the interest liability for the company. There is also an increase in long term loans of Rs.02 Total 732890964. Inter Sub Office Current A/C Total Current Assets(A) 4.40 -92.00 11. Loans & Advances f.29%).49 104433095. Cash &Bank Balances d.99 2197552.00 40741656.31 -1.73%) and sundry debtors have increased by Rs. Provisions c.6 95366569.29 (Source: Annual Reports) Current Financial Position and Liquidity Position The current assets have increased by Rs. . Inter Subunit current A/C Total Current liabilities(B) 5.65 29035772.44 818227258.49 8314068.79 lakhs.75 504.Loan & Adv a.

26 0. Capital Wip 2008 2009 Absolute change 0.72 305251000.19 0.00 313904432.19 6.7 0.00 14.share holders funds a.19 0.24 5.43 13787221 25176952.15 0.00 0.10 0.00 240975800.Profitability of the Concern There is no change in the reserves and surplus of the company.43 -164522.7 Change % 0.Unsecured loans 3.00 110420836. COMPARATIVE BALANCE SHEET (2008-2009) Particulars Sources of funds 1.00 0.96 -100 .00 203483596.00 38964173.00 860131233.Secured loans b.38 361556752. Net Block D. Less: Depreciation C.00 54.Loan funds a.Fixed Assets A.00 240975800.34 305251000.Deferred tax liability Total Application of funds 1.00 0.00 0. Gross Block B.05 329392205.00 110420836.00 749710396.38 386733705.Reserves & surplus 2.67 164522.85 0.48 343179426. Capital b.04 690948958.63 4.24 729913131.

36 274760722.89 3463866. This fact depicts that the policy of the company is to purchase fixed assets from the long term sources of finance thereby not affecting the working capital.38 7986370.12 12005838.18 39.39 179394152. Long Term Financial Position There is an increase in fixed assets of Rs. This depicts that fixed assets are not only financed from long term sources but part of working capital has also been financed from long term sources.32 201259665.8 1335608.73 20.00 23476136.38964173.04 25012430.73 749710396.71 292617201.62 12.77 84133675.20299420 lakhs (19.27 14.56 101761935.Exps. Inter Subunit current A/C Total Current liabilities(B) 5. There is also an increase in long term loans of Rs.10 5350 136172993.08 -201619.18%).4%).59648065 lakhs (22%) and sundry debtors have decreased by Rs. Inventories b.63%).43 -90. .61 16.29 47625854.95 35441007.Sundry Debtors c.26 110420836.5 37782552. Inter Sub Office Current A/C Total Current Assets(A) 4.5lakhs (12.81 74016382. Cash &Bank Balances d.38 19. On the other hand there has been a increase in inventories amounting to Rs.00 20.69 59648064. Loans & Advances f.73 Total (Source: Annual Reports) Current Financial Position and Liquidity Position The current assets have increased by Rs.19 0.17 1174.00 40741656.23476136.00 48737579.Loan & Adv a.1 78505703.19 -9.83 -19.99 860131233.22 -42.28 -20299420.19 21.93 21865512.Net CA/CL(A-B) 6.43 lakhs (5.Assets.22 -5125456.361721274. Other Current Assets e.6 95366569.Less Current Liabilities a .70 1.110420837 lakhs (15%). Profit & loss A/C 5350 112696857. The current liabilities have increased by Rs.1 133149122.0 340243055. Provisions c. 3. Investments Interest accrued on inv.21865512.05 334408787.90 6880382.20 61482401.82 93775564.06 -31977140.34 386733705.91 1995932.28 lakhs.91 2.49 104433095.3 77170095.61 12533981 7995922.Current Liabilities b.99 2197552.7 6. Cur. Deffered Rev.91 0.

11 4.00 25.75 .98 359495199.Fixed Assets A.00 302507795.00 313904432. Profitability of the Concern There is no change in the reserves and surplus of the company.00 -23. Gross Block B.48 343179426. COMPARATIVE BALANCE SHEET (2009-2010) Particulars Sources of funds 1.5 0.53 0.93 0.Unsecured loans 3.81 4284410.5 16315773.19 0.There is an increase in loaned funds than the share capital so this increases the interest liability for the company.00 -0.16 0.00 240975800.04 305251000.00 860131233.38 730773879.Secured loans b. Less: Depreciation 2009 2010 Absolute change 0.00 241176975.00 -72727456.Loan funds a.62 4284410.00 853220181.85 0. Capital b.80 729913131.00 61531995.88 860748.22 0.00 -6911051.Deferred tax liability Total Application of funds 1.share holders funds a.31 Change% 305251000.73 0.Reserves & surplus 2.

18 -6911051.73 22040531.76 5792763. 3.99 81813067. Provisions c. Inter Subunit current A/C Total Current liabilities(B) 5. Capital Wip 2.00 -21866965.82 326746497.87 14091009. Cur.00 334408787.66 0.80%).28 3340257.32 -42891188.10 0.75 96.11%).56 101761935.31 16.0 0.96 -86.Loan & Adv a. On the other hand there has been an decrease in inventories amounting to Rs.Inter Sub Office Current A/C d.15 0. Cash &Bank Balances d.5212347.Exps.40 155189653.00 0. Net Block D.Net CA/CL(A-B) 6.55 -3.32 201259665.5 lakhs (0.31 69825912. This further confirms that the company has improvement in the liquidity position.00 -1.00 -3.00 48737579.42891188.91 1995932.18 16032740.73 -15455025.8 -1087619.Assets.735lakhs (21.00 -3.860748.00 371278680.77 0.82 -13496558.232060827 lakhs (2.78 -2320608.00 158368476.63 90049122.1 133149122. Investments Interest accrued on inv.208506568 lakhs (6. The current liabilities have decreased by Rs.00 -6.90 6880382.99 0.96 -0. This surplus that fixed assets are not only financed from long term sources but part of working capital has also been financed from long term . Profit & loss A/C Total 386733705. Long Term Financial Position There is an increase in fixed assets of Rs.23 -40.0 0. Inventories b.1 78505703. There is a decrease in long term loans of Rs.00 4270606.43 -15.31%).71 69825912. Loans & Advances f.91 2274674.05 0.00 -21.Less Current Liabilities a .77 -48737579.89 3463866.10 5350 136172993.31 -87670925.88 -32053315.Deffered Rev.78 lakhs.22 46452388.81 853220181.75%).82 21.00 21866965.27 313558130.23%) and sundry debtors have decreased by Rs.81 74016382.80 (Source: Annual reports) Current Financial Position and Liquidity Position The current assets have decreased by Rs.00 386733705.6911051.99 860131233. Inter Sub Office Current A/C g. Other Current Assets e.10 0.0 340243055.27 -20850656.04 371278680.00 -15455025.Inter Sub Unit Current A/C Total Current Assets(A) 4.99 0.C.Sundry Debtors c.31 -3.31 lakhs (0.Current Liabilities b.77 84133675.10 5350 130960645.62 6804124.80 113.82 -2.00 -5212347.

53%).615319956 lakhs (25. On the other hand. a method of ranking has been applied to reach at a more comprehensive assessment of liquidity in which four different ratios viz. Coimbatore during the period under study. In this test. Profitability of the Concern There is an increase in the reserves and surplus of the company of Rs. Also it is clear that there is some addition of fixed assets. inventory to current assets ratio.. Motaal’s Comprehensive Test is applied.4 MOTAAL’S COMPREHENSIVE TEST In order to evaluate the overall liquidity position of Coimbatore Murugan Mills. There is a decrease in loaned funds. networking capital to current assets ratio. liquid assets to current assets ratio and loan and advances to current assets ratio have been computed and combines in a points score.sources. a low inventory to current assets ratio indicates more favorable liquidity position and . 4. This fact depicts that there is a increase in the profitability of the concern. A high value of net working capital to current assets ratio or liquid assets to current assets ratios shows greater liquidity and accordingly ranking has been done in that order.

therefore. ranking has been done on the basis that the lower the total of individual ranks.39 Rank Loan & advances to current asset ratio % 12.45 2 13.03 2 41.51 Rank Total of rank Ultimate rank year 2007 3 4 2 1 10 3 2008 48.21 Rank % 48. MOTAAL’S COMPREHENSIVE TEST TABLE SHOWING LIQUIDITY POSITION OF THE COIMBATORE MURUGAN MILLS Net working Inventory to capital to current asset current asset ratio ratio % 44.29 1 0.82 5 10 3 . the more favorable is the liquidity position of the concern and vice versa.26 Rank Liquid asset to current asset ratio % 2.

 The inventory turnover ratio is fluctuating over the year.99 3 2 8 15 5 2 (Source: Annual Reports) The table furnishes that in Coimbatore Murugan Mills the year 2009 &2011 marked the most sound liquidity position and it was followed by 2007.89 1 3 2.10 5 1.06 44. CHAPTER-V FINDINGS AND SUGGESTIONS 5.17 0.01.34 3 5 1.  The debtor’s turnover ratio is varying over the study period.49 4 0.2009 34. The average ratio is 4. 2008.from the study it is inferred that the current ratio of the firm is not satisfying the standard norm and from the working capital ratio itself we can find that the company’s working capital management is insufficient. and 2010. The liquidity position of the mill has no changes in the year 2008 and 2009. . It shows the mill has good liquidity position.44 4 51.60.1 FINDINGS  The standard norm for the current ratio is 2:1.08.  From the study it is inferred that the quick ratio of the company is declining over the years. The average ratio is 3.12 1 5 40.49 19. The average quick ratio is 0. So the company is not satisfying the standard norm.36 6.86 4 17 1 2010 2011 49.

The average gross working capital ratio is -0.  From the study it can be easily identify that performance of the company shows a negative trend year after year. The lower ratio indicates that company enjoys a greater credit period to repay the liability.  In the year 2008-2009 higher working capital turnover ratio shows that there is low investment in working capital and there is more profits. and 2009-2010. In 2007-08 there is a decrease in the same ratio because of the decrease in working capital compared to net sales.  The fixed assets of the company from 2007-2011 is fluctuating.  The Motaal’s comprehensive test applied in the study shows that the company enjoyed most sound liquidity position in the year’s 2009. This means outside liabilities are increased.  The solvency position of the company is declining over the year. . For all the years it shows a negative figure. 2008-2009.31 this shows insufficient usage of current asset for each rupee of sales.  Gross working capital ratio is declining over the year. financial position and profitability of the Mill in the years 2007-2008.  The working capital turnover ratio indicates a fluctuating trend in the study period. The FATR ratio is also indicating a fluctuating tendency. This shows return from the investment is negative. It is mainly because of the low sales margin compared to high cost of production. The creditor’s turnover ratio indicates that there are fluctuations over the years.  Comparative balance sheet statements is used to analyze the liquidity position.  The return on investment ratio is also indicating a negative ratio. 2011 and 2008. It is finding by working capital turnover ratio.  It can be inferred from the study that current asset of the company shows a gradual increase in current asset for the two years 2008 and 2010 and remaining three years it shows a decrease in trend.  Since the company is running under loss from 2007-2011 the ratio also reflects a negative indication to the overall performance.

 In the year 2007-2008 and 2008-2009 there is an increase in loaned funds than the share capital so this increases the interest liability for the company. Therefore the company should reduce the holding period as much as possible. .  The debtors of the company is fluctuating over the years. Increasing debtors is a solution to overcome the liquidity problem. High creditor’s payment period will affect the regular supply of raw materials so company can make necessary step to pay its creditors at a reasonable time period. company should adopt a competent credit policy to attract the customers. 5.2 SUGGESTIONS  The amount of working capital of the company is increasing since 2008.  Inventory management of the company is not satisfactory. So the company should keep the current assets by increasing its cash and bank balance. There is a decrease in loaned funds in the year of 2009-2010.  Creditor’s turnover ratio shows that the payment period enjoyed by the company is high. The raw materials and work-inprogress inventory holding periods are high.

The analysis and interpretation of data relating to working capital management of Mill helped to reach a conclusion that working capital management efficiency of Coimbatore Murugan Mills. rather than providing it to its subsidiary free of cost. reliability. to improve profitability along with liquidity. If all the policies will adopt by a company in a proper way and to utilize the resources .  The Company is not adopting proper inventory systems like A. V.  The surplus fund of the unit should be invested in some short marketable securities. The financial statements of the company was analyzed and interpreted. 5.B. analysis etc. analysis. So the company must take necessary steps to improve the net working capital. Coimbatore is not up to the level.E. Coimbatore to formulate certain policies to keep a well monitored working capital for better profitability. Coimbatore.  The company can reduce the cost of production and try to improve its profitability.3 CONCLUSION The study was conducted to analyze the working capital management in Coimbatore Murugan Mills. There has been decreasing trend in the financial soundness of the company in the all years effective steps should be taken to find the root cause and control it. consistency. this inventory system can make the inventory management more result oriented. It is right time for Coimbatore Murugan Mills.C.D.

.K.  P. New Delhi. Jain. Tata Mc-Graw Hill (P) Limited. Pandey. 10th Edition.  Satish Inamdar.R.S.Maheswari. 8th Edition Kalyani Publication.  Khan M.  R. suitable method to manage the working capital effectively. Principles of Financial Management.Y.  K.  C. Khan and P.S. Financial management. Financial management.K.Kothari. Business Mathematics and Statistics. New Delhi. New Age International (P) Ltd.  M. Ninth Edition. The company should adopt a APPENDICES BIBLIOGRAPHY REPORTS Annual reports of Coimbatore Murugan Mills.  M. Margham Publications. New Delhi.Vittal.Maheswari. 2nd Edition. Vikas publishing house.K.Maheswari and SHARAD K Maheswari. and Jain P. Sultan Chand & sons publishers New Delhi.effectively then it will sure that the company will reach its zenith.  Dr. Research Methodology. Coimbatore for the Year 2007 to 2011. . 6th Edition.Accounting for Management. Ltd. Management Accounting Principles & Practices.K.N. Financial Management.Gupta. Smith.Mc-Grow-Hill.Y.R. Financial Management Principles and Practices. 2nd Edition. Dr.Sharma and S.K. Vikas Publishing House Pvt. Vikas Publishing house ltd.V.S. BOOKS  Dr.N. New York.. Chennai.Everest Publishing House.Management of Working Capital.

Yahoo.WEBSITE REFERENCES  www.Google.com .com  www.

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