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COMPANY PROFILE

Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals.

With annual revenues of approximately $50 billion, the combined company is the world's second largest food company, making delicious products for billions of consumers in more than 160 countries. We employ approximately 140,000 people and have operations in more than 70 countries.

In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai.

Our core purpose "make today delicious" captures the spirit of what we are trying to achieve as a business. We make delicious foods you can feel good about. Whether watching your weight or preparing to celebrate, grabbing a quick bite or sitting down to family night, we pour our hearts into creating foods that are wholesome and delicious.

Currently, Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate Confectionery business, Cadbury has 1

maintained its undisputed leadership over the years. Some of the key brands in India are Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations.

Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world! Our billion-dollar brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian consumer.

In the Milk Food drinks segment our main product is Bournvita - the leading Malted Food Drink (MFD) in the country. Similarly in the medicated candy category Halls is the undisputed leader. We recently entered the gums category with the launch of our worldwide dominant bubble gum brand Bubbaloo. Bubbaloo is sold in 25 countries worldwide.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, we have worked with the Kerala Agriculture University to undertake cocoa research and released clones, hybrids that improve the cocoa yield. Our Cocoa team visits farmers and advise them on the cultivation aspects from planting to harvesting. We also conduct farmers meetings & seminars to educate them on Cocoa cultivation aspects. Our efforts have increased cocoa productivity and touched the lives of thousands of farmers. Hardly surprising then that the Cocoa tree is called the Cadbury tree!

Today, as a combined company with an unmatched portfolio in confectionery, snacking and quick meals, we are poised in our leap towards quantum growth. We are the world's No.1 Confectionery Company. And we will continue to “make today delicious”!

Cadbury Fun Facts:-

The total weight of Dairy Milk produced worldwide in one year is equivalent to 7230 elephants!

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CADBURY WORLDWIDE:-

Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals. We are currently the world's No.1 confectionery and biscuit company. We are also the world‟s second-largest food company with sales in approximately 160 countries. We employ approximately 140,000 people.

With an incredible brand portfolio, we contrive to make a delicious difference, today and everyday.

Heritage: We have come a long way since J.L Kraft started selling cheese from a horse drawn wagon in 1903. Hard work, imagination and commitment to bring the world its favorite foods has helped us grow into a company that touches more than a billion people in 160 countries. Everyday. One at a time.

Some fast facts on the combined company:

Our Global Reach

rkets

Our Brand Portfolio

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The award recognizes Cadbury India as a national leader in the area of Human Resource Management. most comprehensive and respected workplace study worldwide. in its fifth year in India .AWARDS:- Asian Marketing Effectiveness Awards 08 Asian Marketing Effectiveness Awards 2008 for Bournvita Folk/Fusion campaign . This is the fourth time we have featured amongst the Great Places to Work in India . and were among the top 25 in 2004 and 2005. Business World along with Grow Talent has been carrying out the 'Great Place to Work' survey for the past 4 years. by the Great Place to Work Institute. and aim to uncover the campaigns that show results through innovative spirit and combining creativity with effectiveness to build world class brands. 1 FMCG Company Cadbury India has been ranked as the 7th Great Place to Work and the No. has a presence in 30 countries and is the oldest. Cadbury India ranked 7th Great Place to Work in India No. 1 FMCG company in India in 2008. which measured the degree of satisfaction of employees with their place of work and picked out the best working environments.GOLD award for the "Best Insights and Strategic Thinking" and SILVER award for the 'Most Effective Use of Advertising'. They are designed to set the standard for effective marketing within the region. Great Place to Work 2007 'Cadbury India' has been awarded the "Bronze Award for Excellence in People Management" in the 'Great Place to Work 2007' survey conducted by Grow Talent Company Limited and Businessworld. The Asian Marketing Effectiveness Awards are the region's most prestigious awards that celebrate resourceful Asian marketing. Over two hundred companies throughout India participated in the survey. This award is based on the ranks received in top 25 list of the Great Place to Work India studies conducted in the last four years 4 . We were ranked 10th in 2003. This study.

Cadbury Dairy Milk & Bournvita have been declared a `Consumer Superbrand' for 2006-7 by Superbrands India ry won the Emmvie Gold for the Best Media Innovation . for brand Bournvita. for the entry Physical symbol of Confidence. in a India's most respected companies by sector conducted by Business World magazine in 2007 Cadbury wins the Effies 2006 Pappu does it again! 5 .TV. For the second time running. This year Cadbury also sponsored the new 'Young ABBY' Award.ABBY Award wins for India. recognise creative excellence in the Indian Advertising Industry. also won a Silver Award. Cadbury. held in March. The Ulta Perk campaign won four Silver Awards in total and the Cadbury Dairy Milk Campaign. Miss Palampur. The prestigious ABBY awards.TV. Cadbury Dairy Milk & Bournvita crowned as Consumer Superbrands Cadbury Dairy Milk & Bournvita have done it again.Ranked among India's most respected companies Cadbury survey on India has been ranked 5th in the FMCG sector. Bournvita won the Emmvie Gold for the Best Media Innovation .

477 116 Madhya Pradesh India 6 . Tehsil Gohad Gwalior .Gold in the Consumer Products category and Silver in the Integrated advertising campaign category Cadbury India roars at Cannes Cadbury India received a bronze award at the Cannes Lions International Advertising Festival for partnering with a mobile phone operator in 2005 to provide exam results via SMS to school children. our 'Pappu Pass Ho Gaya' advertising campaign bagged two more awards . Company Address: Cadbury India Ltd Plot No 25 Malanpur Industrial Area Village Gurikha.At the recent Effie 2006 awards organized by The Advertising Club of Mumbai.

it is the amount of funds used for financing the day-to day operation. In other words. the capital invested and locked up in various current assets . inventories to bills receivable and bills receivable to cash. Working Capital is also known as Revolving or Circulating Capital. work in progress . working capital can be classified into the following types: 7 .THEORETICAL ASPECT MEANING OF WORKING CAPITAL Working capital refers to the management of current assets. such as stocks of raw material. Working capital refer to that part of total capital which is used for carrying out the routine or regular business operation. “Working Capital is the amount of funds necessary to cover the cost of operating the enterprise”. > According to shoo-in. In short. > According to Genesterberg. Thus. it is the capital with which the business is worked over. Concept of working capital There are five concepts of working capital :o Gross Working Capital o Net Working Capital o Negative working capital o Permanent working capital o Variable working capital On the basis of the components or items comprised in working capital. Example: From cash to inventory. stocks of finished goods account receivable and cash and bank balances constitutes the working capital. Working capital may be regarded as life blood of a business. “Circulating Capital means current assets of a company that are changed in the ordinary cause of business from one to another form. Its effective provision can do much to ensure the success of a business while its in provision can do much to ensure the success of a business while its in efficient management can lead not only to loss of profits but also to the ultimate downfall of what otherwise might be considered as a promising concerns.

which are expected to mature for payment with in a year and include creditors. Bills receivable and stock (inventory) . Bills payable and outsider‟s expenses. Company has some cash in the beginning. Negative working capital or working capital deficit: means the excess of current liabilities over the current assets. debtors. Current assets which can be converted in to cash with in the accounting year (or operating cycle) and includes cash. In other words . short term securities.Gross Working capital: Simply called as working capital. NEED FOR WORKING CAPITAL Every business undertaking requires funds for two purposes. It accurse when the current liabilities exceed the current assets Permanent working capital or fixed working capital: refer to the minimum amount of investment in current assets required throughout the year for carrying out the business. It describes in mathematical terms the quantitative relationship that exists between two numbers. refers to the firms investment in current assets. Net Working Capital: Refers to the difference between current assets and current liabilities. Ratios : The term ratio simply means one number expressed in terms of another. it is the amount of working capital which remains in the business permanently in one form or other. this cash may be the source of raw 8 . investments in fixed assets & investment in current assets. debtors & other current assets keep changing in shape & volume. Funds required for investing in inventory. Variable working capital or fluctuating working capital: refer to the amount of working capital which goes on fluctuating or changing from time to time with the change in the volume of business activities. Current liabilities are those claims of outsiders.

patents. maintaining) the sales activities. These three combined would generate work in progress. Hence the initial investment of cash as working capital for this specific purpose has to be continued until the sales revenue commences flowing in substantially & in a regular way. 9 . NATURE OF WORKING CAPITAL In ordinary parlance. A part of the working capital investment are permanent investments is fixed assets. Land & buildings. the firm may generate cash. Working capital is needed for sustaining (i.material. which are kept in the business or for a long period for the purpose of earning profit. The flow of revenue is expected to continue to replace the cost lost in its day-to-day out flow for the generation of the revenue mentioned above..the firm will not be able to sustain or maintain the sales . which will be converted into finished goods on the completion of the production process into debtors & when the debtor pay. These costs occur gradually in a flow & do not come into being abruptly at a given moment. furniture & fitting & intangibles like goodwill. SOURCE OF WORKING CAPITAL The financial manager is always interested in obtaining the working capital at the right time. The following is snapshot of various source of working capital. These cost usually lead to production & sales in case of manufacturing concerns & sales alone in others.e. Working Capital is taken to be the fund available for meeting day-to-day requirements of enterprises. This Working Capital generates the important element of cost viz. wages & expenses. trademarks & long-term investment. Material. plant & machinery. From this stage the business is found to acquire a momentum of its own. at a reasonable cost and at the best possible favorable terms. If adequate working capital is not maintain for this period . keeping the labor cost & other overheads. Another part of permanent capital left in the business for supporting the day-to-day normal operation is known as the “Working Capital”. since it may not be in a position to purchase raw material and pay wages and other expenses ands produce the goods required for the sales. It cannot be denied that a part of the fixed or permanent capital is invested in assets. These are usually known as fixed assets viz.

Assistances • Loans from director • Security of employees 10 .Sources of working capital divided into two • Long –term • Short –term Sources of long term working capital • Issue of shares • Floating of debentures • Ploughing back of profit • Loans • Public deposit Sources of short-term working capital Internal sources • Depreciation • Taxation • Accured expenses External sources • Trade credit • Credit papers • Bank credit • Customer‟s credit • Govt.

wages and overheads . The cash may be used by the concern for the purpose of purchase of raw material. finished goods into debtors and debtors into cash again is called the operating cycle or working capital cycle of the firm. Once again the cash will be used for the purchase of materials and / or payments to suppliers and the whole cycle is termed as working capital or operating cycle repeats itself. For this purpose the company has to make payments towards wages. in other words.. Payments to suppliers have to be made on purchases in the case of cash purchases and on the expiry of the credit purchases. the work. 11 . accounts receivable and gets back cash along with profit on expiry of credit period. it will pass through one more stage. These materials will be converted into finished goods after undergoing various stages of workin-process. it is period between the date raw material are purchased and the date the sale proceeds of finished goods are realized by concern. INTER-DEPENDENCE OPERATING CYCLE : AMOUNG COMPONENTS OF WORKING CAPITAL A company starting with cash purchase raw materials. a concern may have some cash in the beginning.in-progress during the process of manufacture. components etc. the company has to meet other operating costs such as selling and distribution costs.WORKING CAPITAL CYCLE:- The working capital of a concern goes on changing in shape and volume. salaries and manufacturing costs. raw material . This process indicates the dependents of each stage or components of working capital on its previous stage or component. For Instance. viz. payment of wages and other expenses‟. Meaning The length of time involved in this cycle of conversion of cash into raw material.in – progress becomes finished goods. These elements of cost or items of expenses. general administration costs and nonoperating costs described as financial costs (interest on borrowed capital). will result in work. In case the company sells its finished goods on cash basis. work-in-progress into finished goods. On the in compilation of the production process. on a cash or credit basis. Further. raw material into work-in progress.

but the liquidity position of the firm would be adversely affected.e. • It helps in maintaining solvency of the business. 12 .. improve. profitability of the firm may improve.e. Conversely.. i. • It can arrange loans from banks and others on easy and favorable terms. if the working capital is too small. confidence. currents assets and currents liabilities.e. the current liabilities and the inter-relationship that exists between them”. but its profitability would be adversely affected.WORKING CAPITAL MANAGEMENT Introduction Working capital management is one of the most important aspects of financial management. no doubt.. if the working capital is excessive or large. Advantages of working capital: • It helps the business concern in maintaining the goodwill. Meaning : Working capital management means management or administrating of all aspect of working capital. the liquidity position of the firm would. In other words of Smith. currents assets and currents liabilities) in such a way that a satisfactory level of working capital (i. as funds would remain idle. • It enables a concern to face business crisis in emergencies such as depression. the. • It creates an environment of security. BASIC OBJECTIVE OF WORKING CAPITAL MANAGEMENT : The basic objective of working capital management is to manage the firm‟s working capital (i. and over all efficiency in a business. “working capital management is concerned with the problems that arise in attempting to manage the current assets. It forms a major function of the finance manager. This is necessary because. neither excessive nor inadequate working capital) is maintained.

• Inadequate working capital can not pay its short term liabilities in time. 2) Through the net profit ratio & other profitability ratio. • Excess working capital means idle funds which earn no profits. 13 . 3) Evaluating company s performance relating to financial statement analysis. understand the profitability of the company.Disadvantages of working capital: • Rate of return on investments also fall with the shortage of working capital. • Excess working capital may result into over all inefficiency in organization. OBJECTIVES OF THE PROJECT 1) To identify the financial strengths & weakness of the company. 4) To know the liquidity position of the company with the help of current ratio. 5) To find out the utility of financial ratio in credit analysis & determinig the financial capacity of the firm.

Current assets Current ratio = _______________________________ Current liability STATEMENT SHOWING CURRENT RATIO Rs in lakhs YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 1.32 2005-06 1633078 1032002 2006-2007 2106400 1442000 2007-2008 2770400 2002230 2008-09 3690107 2833290 2009-10 4293481 3244172 14 .30 1. It is also known as banker‟s ratio or working capital ratio.46 1. CURRENT RATIO : The relationship of current assets to current liabilities is known as current ratio.PRACTICAL ASPECT 1.38 1.58 1. It is relationship between firm‟s current assets and current liability.

04 1032002 1442000 2002230 2833290 3244172 2005 -2006 1258640 2006-2007 1684600 2007-2008 2216978 2008-09 2906405 2009-10 3369935 15 . QUICK RATIO It is relationship between liquid assets and current liabilities.17 1. Liquid assets Quick ratio = _________________________ Liquid Liabilities STATEMENT SHOWING QUICK RATIO Rs in lakhs YEAR LIQUID ASSETS LIQUID LIABILITIES LIQUID RATIO 1.2.22 1.10 1.03 1.

CTM is a commonly followed procedure in most of the companies. Now we see the cash ratio / quick ratio in CADBURY PVT.40 0. LTD. LTD.3. Cash Management in CADBURY PVT.36 0.30 2005 -2006 413398 1032002 2006-2007 580900 1442000 2007-2008 838600 2002230 2008-2009 1031467 2833290 2009-2010 979008 3244172 16 .40 0. Cash Cash ratio = _______________________ Current liabilities Rs in lakhs YEAR CASH CURRENT LIABILITIES CASH RATIO 0.42 0. CASH RATIO It is relationship between cash and current liabilities.: The cash management is carried out in seaways by CTM (Corporate Treasury Management).

4.61 1.59 716806 969582 1197487 1597550 2068875 2005 -2006 1337403 2006-2007 1723753 2007-2008 1930464 2008-2009 2621233 2009-2010 3286144 17 .78 1. Generally the higher value of debtor‟s turnover shows high efficiency to manage the credit management. the DTR is a test of the liquidity of the debtors of a firm. In other words.64 1. It indicates the number time debtors turned over each year. Total sales Debtors turnover ratio = ______________________________ Debtors STATEMENT SHOWING DEBTORS TURNOVER RATIO Rs in lakhs YEAR TOTAL SALES DEBTORS DEBTOR TURNOVER RATIO 1. The liquidity of firm‟s receivables can be examined in two ways they are DTR and Average Collection Period.87 1. DEBTORS TURNOVER RATIO: Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firm‟s liquidity. It shows how quickly receivables or debtors are converted into cash.

Credit purchase Creditors turnover ratio = ________________________ Average creditors Rs in lakhs YEAR DAYS DEBT RATIO DEBT PERIOD COLLECTION TURNOVER 2005 -2006 365 1.87 2006-2007 365 1.78 2007-2008 365 1.61 2008-2009 365 1.59 195 205 227 223 230 18 . CREDITORS TURNOVER RATIO The ratio shows on an average the number of times creditors turned over during the year.5.64 2009-2010 365 1.

01 2. Days/months in a year Debt collection period = _______________________________ Debtor‟s turnover ratio Rs in lakhs YEAR CREDIT PURCHASE SUPPLIERS / CREDITORS CREDITORS TURNOVER RATIO 2005 -2006 709940 2006-2007 1018186 2007-2008 1182087 2008-2009 1762005 2009-2010 2067232 280409 353895 442400 585285 757980 2.6.73 19 . the less risk from bad debts. A speed collection reduces the length of operating cycle and vice versa.53 2.67 3. It indicates the speed with which debts are collected. DEBT COLLECTION PERIOD Debtor‟s collection period is nothing but the period required to collect the money from the customers after the credit sales. The more quickly the customers pay. the lower the expenses of collection and more liquid the nature of of this asset.88 2.

The working capital turnover ratio is calculated as follows: net annual sales divided by the average amount of working capital during the same 12 month period. WORKING CAPITAL TURNOVER RATIO The working capital turnover ratio is also referred to as net sales to working capital.7. Working Capital Turnover Ratio = Cost of Sales Net Working Capital Rs in lakhs YEAR CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL 2005 -2006 1633078 2006-2007 2106297 2007-2008 2770472 2008-2009 3690107 2009-2010 4293481 1032002 1442011 1982084 2833290 3244172 601076 664286 788388 856817 1049309 20 . It indicates a company’s effectiveness in using its working capital.

journals. Descriptive research is concerned with describing the characteristics of a particular individual or a group.3 SOURCES OF DATA Data are the raw materials in which marketing research works. Descriptive studies aims at portraying accurately the characteristics of a particular group or situation. 5. memorandums of settlements. It deals with the objective of a research study. method used for data collecting and analyzing the data etc.RESEARCH METHODOLOGY Research methodology is a way to systematically solve the research problem. Here the researcher attempts to present the existing facts by collecting data. which provides guidelines for the rest of research process. TYPE OF RESEARCH DESCRIPTIVE RESEARCH The study follows descriptive research method. the research is to be conducted. the type of data collected. The methodology includes collection of primary and secondary data. and from library books Sample Size : Nil 21 . websites. Research design is prepared after formulating the research problem. Data collected are classified into primary data and secondary data  PRIMARY DATA Questionnaires were used for collecting primary data  SECONDARY DATA Secondary data were collected from the company‟s annual publications. The task of data collection begins after research problem has been defined and research design chalked out. the type of hypothesis formulated. newspapers. The research design specifies the method of study. It is the map of blueprint according to which. the method of defining the research problem. 5.2 RESEARCH DESIGN A research design is a basis of framework.

38 1.2 0 2005-06 2006-07 2007-08 2008-09 2009-10 YEARS INTERPRETATION The current ratio is a test of the short term solvency of the business enterprise since this ratio assumes current assets could be converted into cash to meet current liabilities. PERCENTAGE 22 .30 1. LTD.8 1.6 1.58 1.2 1 0.DATA ANALYSIS. PRESENTATION AND INTERPRETATION TABLE – 1 STATEMENT SHOWING CURRENT RATIO Rs in lakhs YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 1.32 2005-06 1633078 1032002 2006-2007 2106400 1442000 2007-2008 2770400 2002230 2008-09 3690107 2833290 2009-10 4293481 3244172 SOURCE: SECONDARY DATA FROM CADBURY PVT.4 1.8 0.4 0. ANNUAL REPORTS CHART – 1 current ratio 1.46 1.6 0.

10) and 2008-2009 get decreased 0.15 1.9 2005. The standard norm for this ratio is 1:1.04).1 1. The quick ratio in the year 2005-2006 was 1.03) and its get increase in slightly on 2009-2010 at 0.2007.200906 07 08 09 10 YEARS PERCENTAGE Liqui… INTERPRETATION It is in fact the measure of the “Instant” debt paying ability of the business enterprise.17) and in 2007-2008 get decreased 0.063% (1.2006.QUICK RATIO: TABLE –2 STATEMENT SHOWING QUICK RATIO YEAR LIQUID ASSETS LIQUID LIABILITIES LIQUID RATIO SOURCE: SECONDARY DATA FROM CADBURY PVT.17 1.10 1. company must have 1 rupee of quick assets.06% (1. LTD. ANNUAL REPORTS CHART –2 1.2008.05 1 0.04% at 2006 and 2007 (1. means for every 1 rupee of current liability.95 0.2 1.001%(1.25 1.04 1032002 1442000 2002230 2833290 3244172 2005 -2006 1258640 2006-2007 1684600 2007-2008 2216978 Rs in lakhs 2008-09 2009-10 2906405 3369935 1.22 1.03 1.22 and its decreased 0. 23 .

2009 2006 2007 -2008 2009 2010 YEARS CASH 0 CASH INTERPRETATION The Cash ratio of CADBURY PVT. From the above table the firms not maintain the sufficient level of quick assets because of the day-to-day expenses . in the 2005-2010 was fluctuation in 20092010 it was 0.5:1.30 SOURCE: SECONDARY DATA FROM CADBURY PVT.2006 .4 0.30 times and in 2005-2006 it was 0.2007 2008 .40 0.2 2005 .3 CASH RATIO 0.42.40 0. ANNUAL REPORTS CHART.42 0. 24 .36 0.40 times and 2007-2008 it was reduced to 0.YEAR CASH CURRENT LIABILITIES CASH RATIO STATEMENT SHOWING CASH RATIO TABLE – 3 Rs in lakhs 2005 -2006 2006-2007 2007-2008 2008-2009 413398 1032002 580900 1442000 838600 2002230 1031467 2833290 2009-2010 979008 3244172 0.It is fluctuating between the standard norms for this ratio is 1:2 means for every 2 rupees of current Liabilities. LTD. The standard norms of absolute quick ratio are 0. LTD.6 PERCENTAGE 0.

Purpose of receivables: Accounts receivables are created because of credit sales. the payments are postponed to future dates and receivables are created. Increasing profits. The purpose of receivables is directly connected with the objectives of making credit sales. Credit period. Costs of maintaining receivables: The costs with respect to maintenance of receivables are as follows- 25 . Meeting competition. The objectives of credit sales are as follows   Achieving growth in sales. Factors affecting the size of Receivables: The main factors that affect the size of the receivables are   Level of sales.RECEIVABLES MANAGEMENT Introduction: Receivables constitute a significant portion of the total assets of the business. Meaning: Receivable are asset accounts representing amounts owed to the firm as a result of sale of goods or services in the ordinary course of business. If they sell for cash no receivables created. When a firm seller goods or services on credit. Cash discount.

creation of receivables is beneficial as well as dangerous. cost of capital).. therefore to arrange for additional funds to meet its obligations. The firm has.Capital costs: This is because there is a time lag between the sale of goods to customers and the payment by them. Finally management of accounts receivable means as the process of making decisions relating to investment of funds in this asset which result in maximizing the overall return on the investment of the firm. Thus.e. Collection costs: The firm has to incur costs for collecting the payments from its credit customers. Defaulting costs: The firm may not able to recover the over dues because of the inability of customers. Administrative costs: Firm incur this cost for manufacturing accounts receivables in the form of salaries to the staff kept for maintaining accounting records relating to customers. Receivables management and Ratio Analysis: Ratio Analysis is one of the important techniques that can be used to check the efficiency with which receivables management is being managed by a firm. Receivables management: Receivables are direct result of credit sale. Such debts treated as bad debts. The most important ratios for receivables management are as follows- 26 . Increase in receivables also increases chances of bad debts. The main objective of receivables management is to promote sales and profits until that point is reached where the ROI in further funding of receivables is less than the cost of funds raised to finance that additional credit (i.

2010 the debt is 1. the DTR is a test of the liquidity of the debtors of a firm. the better it is.61 1. LTD.59 2005 -2006 1337403 716806 2006-2007 1723753 969582 2007-2008 1930464 1197487 2008-2009 2621233 1597550 2009-2010 3286144 2068875 SOURCE: SECONDARY DATA FROM CADBURY PVT.The higher the ratio. In other words.64 1. In the year 2009 . 27 DEBTO… .TABLE –4 STATEMENT SHOWING DEBTORS TURNOVER RATIO Rs in lakhs YEAR TOTAL SALES DEBTORS DEBTOR RATIO TURNOVER 1.59 comparing to the previous year came downwards. .4 DEBTOR TURNOVER RATIO 2 PERCENTAGE 1. It shows how quickly receivables or debtors are converted into cash. ANNUAL REPORTS CHART.78 1.87 1. since it would indicate that debts are being collected promptly.5 1 2005 2006 2007 2008 YEARS 2009 2010 INTERPRETATION Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firm‟s liquidity. The liquidity of firm‟s receivables can be examined in two ways they are DTR and Average Collection Period.

64 2009-2010 365 1. in the 2005-2006 was 195 days and in goes to 2009 . But.87 2006-2007 365 1. 28 DTCP 240 220 No.2010 it was increased in (0.61 2008-2009 365 1. of Days 200 180 160 DTCP .TABLE – 5 Rs in lakhs YEAR DAYS DEBT RATIO DEBT PERIOD COLLECTION TURNOVER 2005 -2006 365 1.78 2007-2008 365 1.59 195 205 227 223 230 SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. Standard Debt Collection Period of a firm is less than 90 days. LTD. above tables consists of increased of DCP in rapidly.18%) 230 days. ANNUAL REPORTS CHART – 5 DEBT COLLECTION PERIOD 2005 2006 2007 2008 YEARS 2009 2010 INTERPRETATION The debt collection period of CADBURY PVT.

2 3 2.73 2005 -2006 709940 2006-2007 1018186 2007-2008 1182087 2008-2009 1762005 2009-2010 2067232 280409 353895 442400 585285 757980 PERCENTAGE 3.73 times. LTD. was fluctuating during the year 2005 – 2010.01 2.01 times and it was downward in 2009 – 2010 is 2.67 3.2007 2007 .88 2.2008 2008 .8 2.4 2.2 2005.53 2. 29 . LTD.2006 2006 . It was upward in (2008– 2009) was 3.TABLE – 6 Rs in lakhs YEAR CREDIT PURCHASE SUPPLIERS / CREDITORS CREDITORS TURNOVER RATIO SOURCE: SECONDARY DATA FROM CADBURY PVT.2009 2009 .6 2.2010 CTR YEARS INTERPRETATION: The Creditors turnover ratio of CADBURY PVT. ANNUAL REPORTS CHART -6 CREDITORS TURNOVER RATIO 2. Greater the CTR the more time firm has to pay to their creditors.

2006. Current liability is also increased during the period of study.2008. And working capital is also increasing. LTD. ANNUAL REPORTS VALUES 5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 2005. 30 .7 Rs in lakhs YEAR CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL 601076 664286 788388 856817 1049309 2005 -2006 1633078 2006-2007 2106297 2007-2008 2770472 2008-2009 3690107 2009-2010 4293481 1032002 1442011 1982084 2833290 3244172 SOURCE: SECONDARY DATA FROM CADBURY PVT..2007.WORKING CAPITAL TURNOVER RATIO Table .200906 07 08 09 10 YEARS CA WC CL INTERPRETATION In this current asset is increasing during the period of study.

CADBURY PVT. 2) Acid test ratio is more than one but it does not mean that company has excessive liquidity & firm quick ratio is declining from 2005-06 to 2009-10 3) Debtors of the company were high. LTD.increase in ratio is beneficial for the company because as ratio increases the number of days of collection for debtors decreases.33:1. 4) Debtors turnover ratio is fluctuating from 2005-06 to 2009-10. 5) Inventory turnover ratio is improving from 2001-02 to 2005-06. which means inventory is not utilized in better way so it is not a good sign for the company. they were increasing year by year. 6) Working capital turnover ratio is continuously increasing that shows increasing needs of working capital. so more funds were blocked in debtors. ratio satisfactory. 7) Production capacity is not utilized to the full extent 31 .FINDINGS 1) Standard current ratio is 2:1 and for industry it is 1. But now recovery is becoming faster.

As far as cash ratio is concerned the firms not maintain the sufficient level of quick assets because of the day-to-day expenses . Current ratio is also below the standard norm. NET PROFIT growth rate is 13.10% in 2009-10.The firm should maintain the adequate level of current assets in order to discharge its current liabilities. The GROSS PROFIT of CADBURY PVT. is having an appropriate working capital management of the organizations. LTD. 32 . Company must have 1 rupee of cash and bank balance and marketable securities. LTD.CONCLUSION The study is basically done to have a deep knowledge about WORKING CAPITAL of the CADBURY PVT.32. it is showing a nominal increase in net profit as compared to last year. more or less is maintaining same margin of profit.87times now it has drop down to 1. DTR is also decreasing in 2005-06 it was 1.58 now it has decreased upto 1. in the financial year 2005-06 it was 1. The firm DCP is rising every year which is major concern for firm as larger the DCP greater the chances of bad debts. It is fluctuating between the standard norms for this ratio is 1:2 means for every 2 rupees of current Liabilities.59times.

e. We are committed to total customer satisfaction by providing producers and services which meet or exceed the customer expectation. LTD. 3) Company should stretch the credit period given by the suppliers.. stress on technological innovation and training of employees at all levels shall be continuous process in CADBURY PVT. 2) Net operating cycle is increasing that means there is a need to make Improvements in receivables/debtors management. we at CADBURY PVT. 33 . Modernization of the manufacturing facilities. profitability and liquidity so the company can raise its fund. Company should not forget its „Quality Policy‟ i. 5) Company should try to increase Volume based sales so as to stand in the competition. 4) Company should not rely on Long-term debts.. LTD. should aim to achieve and sustain excellence in all our activities. administrative & non productive expense. Since the CADBURY PVT. LTD.SUGGESTIONS 1)It can be said that overall financial position of the company is normal but it is required to be improved from the point of view of profitability. is a profit making company and the interests of the investors are also safe so for making more profit and for increasing the net profit as well as gross profit the organization should curtail its operating. Company is having good marketability.

com 34 .Cadbury. Page No.BIBLIOGRAPHY Reports    Books   Basic corporate accounting – CA Dr. Girish Ahuja. 110 Financial Management – R.P Rustagi. Page No. 56 Annual Report (2005-2010) Bonus issue bulletin 2005 Websites www.