Professional Documents
Culture Documents
Working Capital Management
Working Capital Management
Working Capital Management
EXECUTIVE SUMMARY
The project has been under taken under as the part of master of business
administration course as per the direction of Karnataka university dharwad. The
second year MBA students will take part in this project were the summer inplant
project for the period of two months and the project is related to finance and the topic
of this project is “The study of working capital management”
The Gadag co-operative textile mill ltd established in 1972 by late
shri.K.H.Patil at Hulkoti in Gadag district. It is producing main product as yarn. The
company started with a production cost of RS.220lakhs.It is started producing yarn in
the year 1973.
A G.C.T.M has an arrangement of different department of the dependent parts
of functions and their interrelation in the structure form to provide the necessary efforts
of groups of individuals will be directed towards a common objective. So as to identify
the problems of such a title and give suggestions and conclusions. In addition to this
concept studying the over all organization role of different department functions of their
respective departments, procedures and policies.
The project is mainly focuses on the industry profile, company profile, SWOT
analysis, annual report and about working capital and ratios. this project studies
different department at the Gadag co-operative textile mill ltd. The functions of each
department and the organization in the company along with it covers the duties and
responsibilities of all the staff members type of decision making followed by the mill
and it also includes quality policy export oriented unit etc of the mill.
BABASAB PATIL 1
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
METHODALOGY
BABASAB PATIL 2
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
BABASAB PATIL 3
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
INDUSTRY PROFILE
From growing its own raw material (cotton, jute, silk and wool) to
providing value added products to consumers (fabrics and garments), the textile
industry covers a wide range of economic activities, including employment generation
in both organized and unorganized sectors. Manmade fibers account for around 40 per
cent share in a cotton dominated Indian textile industry. India accounts for 15% of
world's total cotton crop production. And it is the second largest employer after the
agriculture sector in both rural and urban areas. India has a large pool of skilled low-
cost textile workers, experienced in technical skills. Almost all sectors of the textile
industry have shown significant achievement. India's cotton textile industry has a high
export potential. Cost competitiveness is driving the penetration of Indian basic yarns
and grey fabrics in international commodity markets. Besides natural fibers such as
cotton, jute and silk, synthetic raw material products such as polyester staple fiber,
polyester filament yarn, acrylic fiber and viscose fiber are produced in India.
From 1st January 2005, all textile and clothing products would be
traded internationally without quota-restrictions. And this impending reality brings the
issue of competitiveness to the fore for all firms in the textile and clothing sectors,
BABASAB PATIL 4
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
including those in India. With the dismantling of quotas in 2004 under mandate from
the Agreement in Textile and Clothing of the WTO, the focus has clearly shifted to the
future of the Indian textile and clothing exports. It is imperative to understand the true
competitiveness of Indian textile and clothing firms in order to make an assessment of
what lies over a period of time.
BABASAB PATIL 5
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
And this trend is likely to deepen, as Clothing retailers consolidate, and Outward
Processing Trade (OPT) traffic increases. The Opportunity clearly lies much more in
clothing, though the caveat is the exporting.
Country would have to achieve the ‘preferred’ status, and integrate its manufacturing
with that of an importing country in order to continue exporting to the restricted
markets. The pressure to export would intensify in the years to come since 80% of
additional output during 1995-2005 is expected to be located in developing countries.
On the other hand, only 50% of the additional fibre consumption would originate in
developing countries.
COMPANY PROFILE
COMPANY DETAILS:
BABASAB PATIL 6
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Establishment : - 08-07-1972
BABASAB PATIL 7
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The village hulkoti comprises of various sections of people and since long it has
been the cradle of co-operative movement in having the first primary credit co-
operative society established in the erstwhile Bombay state. The occupation of the
village is mainly agriculture. The farmer and farm laborers form a nucleus of this rural
area. The main crops grown around hulkoti are jowar, cotton, groundnut, chilly and
other pluses.
Since there are no other major irrigation projects, dry land cultivation is the only
way for the farming community. Agriculture produce particularly cotton, groundnut,
jowar etc. were being marketed to the tune of Rs/90 to 100 crores per annum in and
around gadag. Prior to the emergence of the Gadag Co-operative cotton sale Society
Ltd., Gadag farming community was exploited by private traders and commission
agents.
It is at this juncture, realizing the need for upliftment of mach neglected farmers
community and to improve the lot of rural area, Late Shri K.H.Patil, a son of soil and
veteran co-operator devoted he time fully for the establishment of
a co-operative network around hulkoti providing various amenities and scope for
development of farmers which went ahead against all odds both traditional and political
till he transformed a vision into a reality. This Endeavour had transformed into worthy
institution located on either side of highway no 63 between hulkoti and Gadag
After successful setting up of Ginning and pressing unit by the Gadag Co-operative
cotton sale society, the next ambition of our Co-operator, was to establish a spinning
Mill of 25,000 spindles capacity which would consume the main agriculture produce by
paying remunerative prices to cotton growers and to save the farming community from
the cluthes of private traders
It is with this ideal background The Gadag Co-operative mill was established in
the year 1972 with the project cost of Rs 220 lakhs and commenced its trail production
in April 1973 we have a feather in the cap for having installed 25000 spindles capacity
mill in a record time in the entire country.
MODERNIZATION PROGRAM
BABASAB PATIL 8
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
To meet the standards of the quality yarn in demand, both in domestic as well as in
International markets, the Management of the Mills thought it inevitable to launch
another Modernization Programme covering Machinery from blow room to Spinning
was planned. This programme, with an estimated cost of Rs. 920 Lakhs was approved
by the national Co-operative Development Corporation (N.C.D.C.) and the Government
of Karnataka.
BABASAB PATIL 9
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
BABASAB PATIL 10
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
To sustain a mill of able and committed employees and provide opportunities for
growth and development.
To improve the process of managing mill affairs through proper planning, timely
improvement of plan and performance review.
To faster culture innovation with the application of new ideas and methods to solve
the business problems.
BABASAB PATIL 11
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The first step the company purchases the raw material i.e. cotton from the farmers
then it mixes it with different quality of cotton according to the quality of yarn they
needed.
The next step is cleaning the minor part and spraying the water to it. Then it kept
one day in cool place. Next step it goes to the major cleaning part it goes to all the
cleaning of the cotton.
The next process is carding here the cotton will become smoothly and white.
Next goes to the simplex method in this method cotton becomes big layers and it makes
the group of layers
The next process is procedure is rolling and grilling here the big layers are rolled
and it is separated from the group and comes in the form of loose thread and next
process is drafting and twisting and the thread becomes strong and it comes layer by
layer in the form of thin yarn. The next is nothing here if thread goes into two parts the
machine will join it and it is called noting process.
Finally after all these process the raw material is converted into the finished
goods which are in the form of yarn.
MISSION: To purchase the creation of values for all its customers, share holders,
employees and society at large
BABASAB PATIL 12
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
QUALITY POLICY: The company will give main importance to the satisfaction
of the customers by producing good quality yarn and produce yarn to meet with the
market position the company will not see with the quality of raw material. The company
is also having a quality control department to check out the yarn quality in overall
stages to take any corrections required immediately.
PRODUCT PROFILE
The following table indicates the production performances/ progress since 2003-04 to
2007-08
sl Particulars 2003-04 2004-05 2005-06 2006-07 2007-08
A. Production
1. Cotton consumed 33.37 35.20 32.31 32.49 32.39
kgs in lakhs
2. Value in lakhs Rs. 1894.90 1812.25 1375.00 1460.90 165615
3. Yarn produced in lakhs 28.01 29.57 26.80 27.53 27.83
kgs
BABASAB PATIL 13
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
OWNERSHIP PATTERN
The G.C.T.M. ltd is situated in the village hulkoti of Karnataka. Shri D.R.Patil and
H.M.Soppin are the chairman and vice chairman of the G.C.T.M. hulkoti.
BABASAB PATIL 14
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
General Manager
District Industries center Gadag Director
Joint Registrar of
Co-operative societies Director
Shri T. Shantaveerappa
Managing Director Director
COMPETITORS INFORMATION
BABASAB PATIL 15
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
INFRASTRUCTURE FACILITY
Head office: The head office of G.C.T.M is located in hulkoti the function of finance,
marketing and raw material procurement are carried by head office only it doesn’t have
its branch.
Land: The mill is established in the rural area near gadag at village hulkoti with
approval of the site selection committee. The total area covered is of 90528.25 sq ft out
of which build up area is 643.45 sq mt. there is the beautiful garden plantations
pollution free and healthy environment in the mill area.
Other facilities: The mill has provided an quarters facilities to the workers and there
is an rest room for workers and drinking water facility and also cultural activities in
independence day, republic day, and workers day will be held and there is also an
canteen facility provided by the mill
AWARDS
BABASAB PATIL 16
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The mills has got an some awards for continuously three years in the year 1978-79,
1979-80, 1980-81, the mill has ranked first for India and second for Asia.
The two awards were pretend to the mill as per the techno-economic data
presentation which is made by the mill in the Pune on 10 th April 2005 the award for the
operating net profit per installed spindle and operating cash profit per installed spindle
has got
MIXING: Bales of different counts are mixed along with usable wastes, on
different percentage in the mixing bins, cotton bales of different quality are opened and
stacked, called stock mixing, 24 Hours for conditioning before it is process further.
BLOW ROOM: Cotton in losses form is spending on mixing bale openers and
taken further of different cleaning points where the cotton is beaten and trash is
extracted. Finally converted into Lap form of different length, weigh per yard,
depending on the count.
CARDING: Lap form Blow room feed to Cards where the cotton is converted from
Lap form to sliver form. During this process trash, short fibers and other impurities are
extracted the different cleaning points, like licker in, Flats section Units. The sliver is
produced of different Hank depending on the counts.
PREPARATORY: Cards sliver is drawn through different drafting Rollers and the
sliver is elongated and increasingly the length of the sliver and radiating in the cross
section by passing through different drafting rollers and convert into a suitable package
by giving little twist to the material called Rove and wound on a Bobbin.
BABASAB PATIL 17
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
SPINNING: The bobbins from the Preparatory process are feed to the drafting rollers
as final treatment to the material and further increasing the length and reduction the
cross section of the material. This process the material process through Ring and
Traveler and would on the bobbin to form a suitable package the giving optimum of the
twist depending on count of the yarn.
CONE WINDING: Here the yarn spun is cleaned by passing through cleaning
devise called slub catcher and would through suitable package of required length and
weight in the form of a Cone.
DOUBLING: Here two yarn of the same count are doubled by giving necessary
twist in the form of package called bobbins.
REELING: Here single yarn or doubled yarn are wound on the swifting of the
machine called Reel in the form of Hank and are make in the form of Knots. There are
two types, a Plain or Cross Reel.
BUNDLING & BALING: Here the number of knots plain or cross is in a press
depending on the count and weight of the boundless are as per requirements. Bundles
are pressed in the form of Bale depending on the count, Plain or Cross as per the
requirement from the market.
BABASAB PATIL 18
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
DEPARTMENTAL STUDY
FINANCE DEPARTMENT
Finance department is the department which looks after the financial position of the
mill and takes over the investment decision, finance decision the mill has started with
its project cost of Rs.220 lakhs which contributed of Rs. 40 lakhs from members share,
Rs. 80 lakhs is of government share and remaining of Rs 100 lakhs is of term
loan(I.F.C.I)
BABASAB PATIL 19
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
1) By issue of Shares
3) By raising loans
4) By entrance fees
6) By commercial institutions.
After starting of mill after the 18 years the mill has been modernized at cost of
Rs. 429 lakhs the leading institutions has sanctioned of Rs.236.69 lakhs and remaining
balance of Rs.192.31 is from the mill itself and 2 nd time modernization has done of Rs
920 lakhs which the amount is given by the N.C.D.C.( national co-operative
development co-operation) and government of Karnataka as the part N.C.D.C has
sanctioned Rs.736 lakhs and 136 lakhs by govt of Karnataka and rest of amount Rs. 46
lakhs is from members of society
The mill is invested of Rs 1771.45 lakhs and of Rs. 40 lakhs share capital to the state
government and paid the loan amount of Rs.100 lakhs of Rs. I.F.C.I term loan and also
paid the first modernization loan of Rs. 236.69 lakhs
The mill will be raised its fund by issuing of share, receiving deposit from members
by taking loans and debentures and also accepting subsidies and donations and the
sources of finance for the mill is from the K.C.C bank, N.C.D.C. loan, and bijapur
D.C.C. bank ltd.
The human resource department of the mill is recruiting, selecting seeing welfare of
the employees and providing necessary facilities for the workers. Were as in the Gadag
BABASAB PATIL 20
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
co-operative textile mill there are 744 workers here 85 are staff members, 650
workers and 9 are securities
The facilities for the worker are transportation, medical, canteen, provident fund,
gratuity There are 3types of workers are there first selected (fresh) workers will be
taken as a trainee and in trainee there are two stages first stage trainee and second stage
trainee and after trainee they will be treated as badli and then as permit.
The mill works for 24 hours which is in 3 shifts no women workers are permitted
for night shift and the labour turnover is of 30 to 35 the over time duty is also there and
will be paid in double as per there working hours
The salary for the workers are paid in as the basic salary + ESI (employee state
insurance) + provident fund of 12% and bonus of 8.33% will be given and salary for 1 st
stage trainee is Rs.60 and for 2nd stage trainee Rs.65 and for badlis it depend on there
work which is of Rs.75-103 and for permits also depend on there work load and shift
allowance of Rs.250 for 26 days and of Rs 312 is attendance allowance for 26
attendance per month. The recruiting of staff will be done by managing director, general
manager, asst manager and H.R. manager and other workers will be selected by the H.R
department
The G.C.T.M also provided quarters for workers with rent of Rs.20 per month and
has a transportation facility from Gadag to hulkoti and in the G.C.TM. the cultural
activities also be held on independence day republic day, and on workers day.
PRODUCTION DEPARTMENT
The G.C.T.M. is the mill which produces the yarn which are in of two types one
is in cone and another as hank .The product has been done from cotton to final product
i.e yarn. In the mill it has purchased machines from m/s lakshmi from coimbatore
The mill works 24hour of its production and it has 3shifts the first shift is handled
by production manager and 2nd shift by deputy spinning master and 3 rd shift is handled
by spinning supervisor and the has 7500kg of daily production
BABASAB PATIL 21
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
PROCESS OF PRODUTION
MIXING: Bales of different counts are mixed along with usable wastes, on
different percentage in the mixing bins, cotton bales of different quality are opened and
stacked, called stock mixing, 24 Hours for conditioning before it is process further.
BLOW ROOM: Cotton in losses form is spending on mixing bale openers and
taken further of different cleaning points where the cotton is beaten and trash is
extracted. Finally converted into Lap form of different length, weigh per yard,
depending on the count.
CARDING: Lap form Blow room feed to Cards where the cotton is converted from
Lap form to sliver form. During this process trash, short fibers and other impurities are
extracted the different cleaning points, like licker in, Flats section Units. The sliver is
produced of different Hank depending on the counts.
PREPARATORY: Cards sliver is drawn through different drafting Rollers and the
sliver is elongated and increasingly the length of the sliver and radiating in the cross
section by passing through different drafting rollers and convert into a suitable package
by giving little twist to the material called Rove and wound on a Bobbin.
BABASAB PATIL 22
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
SPINNING: The bobbins from the Preparatory process are feed to the drafting rollers
as final treatment to the material and further increasing the length and reduction the
cross section of the material. This process the material process through Ring and
Traveler and would on the bobbin to form a suitable package the giving optimum of the
twist depending on count of the yarn.
CONE WINDING: Here the yarn spun is cleaned by passing through cleaning
devise called slub catcher and would through suitable package of required length and
weight in the form of a Cone.
DOUBLING: Here two yarn of the same count are doubled by giving necessary
twist in the form of package called bobbins.
REELING: Here single yarn or doubled yarn are wound on the swifting of the
machine called Reel in the form of Hank and are make in the form of Knots. There are
two types, a Plain or Cross Reel.
BUNDLING & BALING: Here the number of knots plain or cross is in a press
depending on the count and weight of the boundless are as per requirements. Bundles
are pressed in the form of Bale depending on the count, Plain or Cross as per the
requirement from the market.
The mill has 32.39 lakh kg of cotton has consumed in 2007-08 and 27.86 lakh kgs
of yarn is produced and 69.81% of spindle has been utilized
BABASAB PATIL 23
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
PURCHASE DEPARMENT
STORE DEPARTMENT
BABASAB PATIL 24
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The mills storage has divided in 2 sub department which one is of material store and
general stores and there are 11000 items are maintained in these department and the mill
has an 7500 metric ton of storage capacity and stock of 2000 metric ton of capacity in
godown. The store department’s construction costs of Rs 13.18 crores and the
department is using two ledgers one is material receipt ledger and material issued
ledger.
Cleaning efficiency
Wrapping checking
Naps study
Uniformity checking
Idle spindle
Rewinding study
Knot inspection
BABASAB PATIL 25
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
This is the department which checks out the quality of the cotton and the
produced yarn in the mill. The department which checks quality before purchasing of
cotton by taking sample from supplier. the G.C.T.M has its laboratory for testing of the
cotton and the lab has installed of 1.25 crore worth of machines which is of
computerized machines the quality control also helps in minimizing cost and improves
in working condition it also helps the G.C.T.M to know the cost of there product
The cotton testing is having some steps of testing of cotton the cotton testing is
made on H.V.I (high volume instrument) the testing of material is made out of one bale
half kg will be taken testing is made of its length, strength (grass per tex), informative
ratio, maturity ratio the mill is using 26mm type of cotton for coarser, 28mm for 30s,
34s, and 40s yarn, and 31mm for 60s and above.
In blow room lap weight checking its speed and settings cleaning efficiency and
next in carding department checking of the waste and C.V%(coefficient variation)
unevenness testing 120mtrs of sliver and variation of length is made by oster testing
monthly there will be wheel checking and next drawing is made and in drawing
wrapping checking is made it is of weight checking and study of breakage and setting of
an weight is by automation and next in simplex department spindles are checks hanks
are also checks and its stretching percentage is tested and in spinning department
checking of single yarn strength and double yarn strength and checks yarn fast per kms
and next is of winding which in winding it is made of rewinding of auto counts and
makes cone weight checking and next is reeling were as knot has been tested which is
of starting end to finishing end has been checked and next is doubling in this checking
for the covering of doubling and lastly baling and packing which checks the bale
weight, packet weight, bundle weight and tare weight checking is made
MARKETING DEPARTMENT
BABASAB PATIL 26
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The marketing department has kept an long relationship with its customers from
purchasers and suppliers. The mill manufacture hank yarn and cone yarn as per the
market demands the sale of hank yarn and cone yarn is of 40:60 the daily production of
yarn is about 7500 kgs
Were mill works 24 hours for all seven days a weak
The selling of yarn is given to the weavers co-operative apex organization and
Karnataka handloom development corporation the mill gets order by phones by there
own sales depot and by local agents. The marketing department fixes the price of yarn
before fixing of price the department look after the total cost of production and market
demand and checking competitors price rate and quality and customers ability of
purchasing
The mill has direct and indirect channels of distribution were as in the direct channel
is from direct mill to the traders and indirect channel it is from mill to the agents and
then to the customers
ADMINISTRATIVE DEPARTMENT
The administrative department is the department which looks after the payment
of salaries, income tax purchasing and the department which maintains the files and
records etc. up to the date and collecting and presenting data of record and the
department which maintains office and provides the necessary required facilities
The administration department which decides on giving yearly bonus and to
provide the finance to all department and the department which conducts the meeting,
implementing the polices, controlling of different department and finally it is a
department which controls over all the activity of the mill.
MAINTENANCE DEPARTMENT
BABASAB PATIL 27
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
and make repairs and maintain and look over all machines daily the department keeps
the stock of important spare parts of machine and it maintains.
The department which looks over the blow rooms its new lines, pre opener,
mbo, mono-cylinder, unimix, ERM, VXL, in blow room these all machines will make
cleaning for every 10 days and while cleaning if there is any repair then it that part will
make repair if it is need of replacement it will be replaced. In carding room half setting
is done for once in 15 days and full setting is done once in 3 months and larrikin wire
changing has been done for every 9 months
In the simplex department the general cleaning will be done for every 15 days
and in spinning department there is also general cleaning will be done for every 10 days
and spindle oil changing for every 6 months and spindle gauge also for 6 months and in
winding general cleaning has been done once in a week and spindle servicing is done
once in 30 days and in reeling oiling will been made once in a month and in packaging
cleaning once in a month will be done like these the maintenance department will
maintain the all department of the G.C.T.M.
SWOT ANALYSIS
STRENGTHS
BABASAB PATIL 28
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
WEAKNESSES
OPPORTUNITIES
BABASAB PATIL 29
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
THREATS
WORKING CAPITAL
BABASAB PATIL 30
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Working capital is the amount of funds which a company has to finance its day to
day operations it can be regards as the part of capitals which the capitals is basically
classified into fixed and working.
Fixed capital is normally invested in fixed assets and working capital in current
assets. It is used in day to day operations. These are the funds that are invested in
current assets. The form of these current assets keeps on changing. Ex: Raw material to
work in progress to finished product. , so it is also called circulating capital.
A study of working capital is of major part of the external and internal analysis
because of its close relationship with the current day to day operation of the business.
Working capital consists of broadly for that the assets of a business that are used at
related current operation and is represented by raw material, stores, work in progress,
and finished goods merchandise, bills receivable.
Gerstenberg
“working capital means current assets of company that are changed in the
ordinary course of business from one form to another, ex: from cash to inventories,
inventories to receivables, receivables into cash”
BABASAB PATIL 31
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Shubin
“ Working capital is the amount of funds necessary to the cost of operating the
enterprise. Operating expenses involve investment in current assets, payment towards
overhead and expenses. Investment made in these heads is classified as working
capital”.
J. smith
“ The sum of the current assets is the working capital of the business”
’’WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITY”
BABASAB PATIL 32
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Working capital as per this defined in terms of current assets and current liabilities.
Balance sheet concept further classifies working capital into a) gross and b) net working
capital.
a) Gross working capital: it refers to total investment made in current assets. It is also
called circulating rotating from one head to another. Ex. Cash to raw material, raw
material to finished products, finished products to debtors, and debtors to cash. This
concept stresses on quantity aspect; i.e. to refer to total investment made in different
current assets. Bonneville and beway have defined gross working capital as ’’ any
fund received which increases the current assets”.
b) Net Working capital: as per this concept working capital is the difference between
current assets and current liabilities. This concept stresses on quality aspect of
working capital. The difference between current assets highlights on liquidity aspect
and quality of current assets. A firm that has excess of current assets over liabilities is
said to possess adequate liquidity. On the contrary firm that has excess of current
liability over current assets means it does not have adequate liquidity. It means that
part of current assets of such firm are financed through fixed assets.
This operating cycle differs from firm to firm. Longer the operating cycle greater
will be the amount of Working Capital required and vice versa. Thus it plays an
important role in determining the Working Capital needs of a firm.
BABASAB PATIL 33
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Debtors
Operating Cycle is the time duration required to convert sales, after the
conversion of resources into inventories, into cash. The operating cycle of a G.C.T.M
involves three phases.
1. Acquisition of resources such as raw material, labour, power and
fuel etc.
2. Manufacture of the product which includes conversion of raw
material into work-In- progress into finished goods.
3.Sales of the product either for cash or on credit. Credit sales creates
book Debts for collection.
BABASAB PATIL 34
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
called as cash conversion cycle, production cycle etc. It involves the purchase of raw
materials and stores, its into stocks of finished goods through the work-in-Progress
with the progressive increment of labor and service costs, conversion of finished
goods (Yarn Products) into sales, Debtors and receivables and ultimately realization
of cash and this cycle continuous again from cash to purchases of raw material and so
on.
BABASAB PATIL 35
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
KINDS OF
WORKING
CAPITAL
1. ON THE 2. ON THE
BASIS OF BASIS OF
CONCEPT TIME
BABASAB PATIL 36
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
b) Reserve: reserve working capital refers to some portion of working capital that is
kept as reserve to meet any contingency.
BABASAB PATIL 37
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Requirement of working capital differs from one firm to other. This is because of
business conditions and policies of conducting business differ. Working capital required by
each from is determined by following factors.
1) Nature of business: important factor that determines requirement of working capital is
nature of business a firm is undertaking. Firm that are engaged in production and marketing
need more working capital compared to the firm that are in trading or service oriented
business. This is because manufacturing units need more current assets compared to service
oriented units.
2) Size of business: Size of the business obviously determines the requirement of the
working capital bigger the size more is the requirement of the working capital. Larger the
scale of operations, larger the investment required in current assets.
3) Operating cycle: Operating cycle means period from which investment is locked
up in different operations. Longer the period of inventory holding, work in progress, finished
goods etc more is the investment needed in the operations. This necessities more investment
in current assets.
4) Stock turn over: stock turnover refers to number of times stock is turned over that
is it refers to sales. Quicker the stock turn over (quick sales) less is the working capital. Slow
pace of stock turnover demands more investment is locked up in operation.
5) Credit policy: Credit policy of the firm will influence requirements of working
capital. Firms that offer liberal credit to the debtor have make more investment in production
operations. Such firms need more working capital to keep their production operation
continuous. Requirement of working capital will be much more if the firm buys on cash and
sells on credit. On the contrary firms that buy on credit and sell on cash basis need less
working capital.
6) Production policy: Firms that undertakes all production operations within the
organization need more working capital. Such firms have to make investment to manufacture
every component or part. On the contrary, firms which undertake outsourcing that is buying
some of the components or parts from out side agencies need less working capital.
7) Growth of business: Firms that are experiencing growth need more working
capital. Such firms have to constantly increase their production levels. To meet rising needs
of sales targets. They need to continuously increase investment in current assets.
8) Earning capacity and its appropriation: firms that earn sufficient profits and invest
a portion of profit in business needs less working capital. Ploughing back of profits and
accumulated reserves will minimize dependency on external capital for working capital
BABASAB PATIL 38
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
needs. On the contrary firms that follow liberal divided policy are firms that do not have
adequate surplus need to borrow more to meet regular working capital needs.
The need for working capital to run the day-to-day business activities cannot
be overemphasized. We will hardly find a business firm which does not required any
amount of working capital. Indeed, firms differ in their requirements of the working
capital.
The firm’s aim is that maximizing the wealth of shareholders. Earning a steady
amount of profit requires successful sales activity. The firm has to invest enough
funds in current assets for generating of sales activity. Current assets are needed
because sales do not convert into cash instantaneously. There is always an operating
cycle involved in the conversion of sales into cash. Therefore Working Capital
required for:
1) To meet the cost of inventories including total of raw materials purchased parts,
operating
Supplies, work in progress, finished goods.
2) To pay wages, salaries, for indirect labor, clerical staff, managerial and
supervision staff.
3) To meet overhead costs, including those of maintenance services activities, fuel,
power charges, taxes and general expense administration.
4) To bear the expansion (with regard to promotion of sales) e.g. expenses on
packing, advertisement, salesmanship, Sales Servicing, After requires, Credit
Facilities, Delivery Services, etc.
Even though the skills for maintaining the working capital are somewhat
unique, the goals are the same-viz. to make an efficient use of funds for minimizing
the risk of loss to attain profit objectives.
BABASAB PATIL 39
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Firstly, the adequate of working capital contributes a lot in raising the credit-standing
of a corporation in terms of favorable rates of interest on bank loan, better terms on
goods purchased, reduced cost of production on account of the receipt of cash
discounts, etc.
Secondly, a company with sufficient working capital is always in a position to take the
advantage of any favorable opportunity either to purchase raw materials or to execute
a special order or to wait for better market position.
In the third place, the ability to meet all reasonable demands for cash without
inordinate delay is a great psychological factor to improve the all rounds efficiency of
the business.
Lastly, during slump the demand for working capital, instead of coming down, shoots
up. A good amount of working capital is locked up in the inventories and book debts.
Concerns having ample resources can tide over that period of depression.
Thus, working capital is regarded as one of the conditioning factors in the long run
operations of the firm, which is often inclined to treat it as an issue of short run
analysis and decision making.
A) Current Assets:
Components of Current Assets are as follows:
1. Cash & Bank Balance
2. Stock of Raw Material at cost- work in process and Finished
Goods.
3. Advanced Recoverable in Cash or kind or kind or for value to
BABASAB PATIL 40
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
be received.
4. Deposits under the company scheme.
5. Advanced payment of income takes credit certificates..
6. Outstanding debts for a period exceeding six months.
7. Balance with central excise authorities.
B) Current Liabilities:
Components of Current Liabilities are as follows:
1. Sundry Creditors for the goods and expenses.
2. Income tax deducted at sources from contractors.
3. Expenses Payable.
4. Unclaimed Dividend.
5. Security Deposits.
6. Liabilities for bills discounted.
7. Bank Overdraft Acceptance.
1. Cash Management:
Cash is the important current asset for the operation of the business. cash is
the basic input needed to keep the business running on a continuous basis; it is also
the ultimate output expected to be realized by selling the service or product
manufactured by the firm. The firm should keep sufficient cash, neither more nor less.
Cash is the liquid form of an asset. It is the ready money available in the
firm or with the business, essential for its operations. A firm needs the cash for the
following three purposes:
(a) The Transaction Motive:
(b) The Precautionary Motive:
(c) The Speculative Motive:
2. Receivables Management:
BABASAB PATIL 41
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
3. Inventory management:
Every enterprise needs inventory for smooth running of its activities. It
serves as a link between production and distribution process. There is, generally a
time lag between the recognition of a need and its fulfillment. The greater the time
lag, the higher the requirements for inventory. The unforeseen fluctuations in
demand and supply of goods necessitate the need for inventory. Moreover, it
provides a cushion for future price fluctuations.
Particulars As @ As @ Effect
decrease
31/3/05 31/3/06 of wc
Increase
A. Current assets 15143
Cash on hand 5027449 41550 26407
Cash at bank 16051822 4634497 392952
F.D with bank 4628150
Deposits 35371142 246822 15805000
Sundry debtors 255296 4630150
Pre university college 8500000 51579031 2000
Loan to FCSM 1616172 255296 16207888
Advances 633633 8500000
Other receivables 52948390 4062468
Closing stock 631633
125047200 53043163
Total current assets 2446296
BABASAB PATIL 42
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
25896588 25896558
INTERPRETATION
The statement shows that the changes in working capital in the year 2004-05 and
2005-06. It shows how the current assets and current liabilities are changes in two
years the different between current asset and current liabilities i.e. net working capital
of two years 2004-05 and 2005-06 is Rs 81651878 and Rs 74532655 respectively it
shows the working capital decreases of Rs 7119223 in 2005-06 which compare to
2004-05. Here due to decrease the firm is not satisfactory with its working capital
In current assets
1. cash in hand increases of Rs 26407
2. cash at bank is decreasing of Rs 392953
3. F.D with banks is also decreased Rs 15805000
4. deposits has increased of Rs 2000
5. sundry debtors has increased of Rs 16207888
BABASAB PATIL 43
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
In current liabilities
1. bonus provision is increasing of Rs 25794
2. other payables is increasing of Rs 623252
3. other liabilities are increased to Rs 9047589
Particulars As @ As @ Effect
Decrease
31/3/06 31/3/07 of wc
Increase
A. Current assets 41550
Cash on hand 21020
4634497 20530
Cash at bank 13811952
F.D with bank 18446450
246822
Deposits 4630150 18256
Sundry debtors 265078
51579031
Pre university college 255296
Loan to FCSM ltd 4630150 4258597
8500000 47320434
Advances 4062468
Other receivables 631633
Closing stock 255297
53043163 8500000
Total current assets 1088953
B. Current liabilities 127624611 5151421 131633
Current liabilities 500000
BABASAB PATIL 44
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
10082999
24232454 24232454
84615654
INTERPRETATION
This statement shows that the changes in working capital in the year 2005-06
and 2006-07. it shows the current assets and current liabilities i.e net working capital
of two years is 2005-06 and 2006-07 is rs 74532655 and rs 84615654 respectively. It
shows the working capital increases Rs 10082999 in the year 2006-07 compare to
2005-06 by increasing the firm is satisfactory with its working capital.
In current assets
1. cash in hand has decreased by Rs 21020
2. cash at bank is increased to Rs 13811952
3. F.D with bank is increasing of Rs 18256
4. there is no increase or decrease in deposits
5. sundry debtors is decreased to Rs 4258597
6. advances paying increased to Rs 1088953
7. other receivables has decreased to r 131633
BABASAB PATIL 45
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
In current liabilities
1. bonus provision is increased of Rs 115837
2. other payable is also increased of Rs 258457
3. other liabilities is increased to Rs 9363912
Particulars As @ As @ Effect
decrease
31/3/07 31/3/08 of wc
Increase
A. Current assets
Cash on hand 20530 19930
Cash at bank 40460 2217724
18446450
Fd with bank 16228726
Deposits 265078 10000
Sundry debtors 275078
Pre university college 198684
4630150
Loan to fcsm ltd hulkoti 47320434 4431466 4389509
Advances 51709943
Other receivables 255297
Closing stock 8500000 255297
Recvd from NCDC 8500000
Total current assets 5151421 535958
B. Current liabilities 500000 5687379 35374
Current liabilities 535374
Bonus provision payable 4284700
62356456
Other payables - --------------------------
58071755 1319412
NCDC payable 1319412
Total current liability 147445816
Net current assets(A-B) 147054890
BABASAB PATIL 46
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Increase or decrease in
58462247 49593596 8868651 168121
working capital
1395879 1564000
Total working capital
2972036 2971114 922 1319412
1319412
62830162 55448122
84615654 91606768 8188641
15179756
6991114
6991114
91606768 15179756
91606768 15179756
INTERPRETATION
The statement shows that the changes in working capital in the year 2006-07
and 2007-08 it shows how the current assets and current liabilities are changes in the
two years the difference between current assets and current liabilities i.e. net working
capital of the two years is 2006-07 and 2007-08 is Rs 84615654 and 91606768
respectively. It shows the working capital increases of Rs 6991114 in the year 2007-
08 compare to 2006-07 by the increase in the net working capital firm is satisfactory
with its working capital
In current asset
1. cash in hand increased of Rs 19930
2. cash at bank increased of Rs 2217724
3. F.D. with bank has increased of Rs 10000
4. deposits has decreased to Rs 198684
5. sundry debtors has increased to Rs 4389509
6. advances paying is increased to Rs 535958
7. other receivables also increases of Rs 35374
8. closing stock has decreased of Rs 4284700
9. there is a receivables from NCDC of Rs 1319412
BABASAB PATIL 47
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
In current liability
1. bonus provision has increased of Rs 168121
2. other payable has decreased of Rs 922
3. payable of received of NCDC of Rs 131912
4. other liabilities has decreased to Rs 8868651
Particulars As @ As @ Effect
decrease
31/3/08 31/3/09 of wc
Increase
A. Current assets
Cash on hand 40460
Cash at bank 16228726 277094 13366
Fd with bank 19346310 3117584
Deposits 275078
Sundry debtors 4431466 275078
Pre university college 4052950 378516
Loan to fcsm ltd hulkoti 51709943
Advances 51003132 706810
Other receivables 255297
Closing stock 8500000 255297
Recvd from NCDC 8500000
Total current assets 5687379
B. Current liabilities 535374 4858428 828951
Current liabilities 58071755 1021508 486134
Bonus provision payable 1319412 46289123 11782632
Other payables ----------- 1319412
NCDC payable 147054890
Total current liability 135628920
Net working capital (A-B)
49593596
Increase or decrease in 1564000 52486226 2892630
1227535 336465
working capital 2971114
Total working capital 4744789 1773675
BABASAB PATIL 48
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
1319412 1319412
55448122 58458550
91606768 77170370
5259595 19695992
14436398
14436398
91606768 91606768
19695992 19695992
INTERPRETATION
The statement shows that the changes in working capital in the year 2007-08 and
2008-09 it shows how the current assets and current liabilities are changes in the two
years the difference between current assets and current liabilities i.e. net working
capital of the two years 2007-08 and 2008-09 is Rs 91606768 and Rs 77170370
respectively it shows the decreasing of Rs 14436398 in 2008-09 which compare to
2007-08 by decreasing in net working capital the firm is not satisfactory with its
working capital
In current assets
1. cash in hand has decreased of Rs 13366
2. cash at bank is increased of Rs 3117584
3. F.D with bank has no changes
4. deposits has been decreased of Rs 378516
5. sundry debtors has decreased to Rs 706810
6. advances is decreased of rs828951
7. other receivables has increased of Rs 486134
8. closing stock is decreased to Rs 11782632
9. received from NCDC of Rs 1319412 is decreased
In current liability
1. bonus provision is decreased to Rs 336465
2. other payables is increases of Rs 1773675
3. NCDC payables in decreased of Rs 1319412
4. other liabilities has increased of Rs 2892630
BABASAB PATIL 49
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The firm begins with the purchase of raw material which are paid for after a
delay which represent the account payable period. The firm converts the raw material
into finished goods and then sells the same. The time lag between the purchase of raw
materials and sale of finished goods is the inventory period customers pay there bills
some time after the sales. The period that elapses between the date of sales and date of
collection of receivable is the accounts payable period.
The time that elapses between the purchase of raw materials and the
collection of cash for sales is referred to as the operating cycle. Where as the time
length between the payment for raw material purchases and the collection of cash for
sales is referred to as the cash cycle. The operating cycle is the sum of the inventory
period and the accounts receivable period, whereas the cash cycle is equal to the
operating cycle less the accounts payable period.
From the financial statement of the firm we can estimate the inventory period,
the accounts receivable period and accounts payable period.
BABASAB PATIL 50
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
= 46596794
BABASAB PATIL 51
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
206149519/365
= 46596794
564793
= 82.50
= 632633
231390442/365
= 632633
633946
= 0.99
= 1267145
206149519/365
= 1267145
56479320
= 2.24
= 82.50 + 0.99
= 83.49
BABASAB PATIL 52
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
= 83.49 – 2.24
= 83.49
= 48529839
21519439/365
= 48529839
BABASAB PATIL 53
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
589568
= 82.31
= 565816
254655866/365
= 565816
697687
= 0.81
= 2126039
215192439/365
= 2126039
589568
= 3.60
= 82.31 + .81
= 83.12
BABASAB PATIL 54
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
= 83.12 – 3.60
= 79.52
= 106674908/2
244014252/365
= 53337454
668532
BABASAB PATIL 55
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
= 79.78
= 2354786/2
274253348/365
= 1177393
751379
= 1.56
= 7262562/2
244014252/365
= 3631281
668532
= 5.43
= 79.78 + 1.56
= 81.34
BABASAB PATIL 56
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
= 89971229/2
231802183/365
= 44985614
635074
= 70.83
BABASAB PATIL 57
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
= 2876294/2
256739185/365
= 1438147
703395
= 2.04
= 10262849/2
231802183/365
= 5131424
635074
= 8.08
= 70.83 + 2.04
= 72.87
BABASAB PATIL 58
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
INTERPRETATION :
BABASAB PATIL 59
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Here the firm’s operating cycle has continuously decreased from 83 days
during 2005-06 to 73 days during 2008-09. The operating cycle of the firm is
satisfactory because it has come down by 10 days. The firm’s cash cycle is also
satisfactory as it has decreased from 82 days to 65 days during 2005-06 to 2008-09.
However it is also observed that the debtor’s collection period has increased from
0.99 days to 2.08 days during the same time period.
BABASAB PATIL 60
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
RATIO ANALYSIS
INTRODUCTION
The ratio analysis is one of the most important and powerful tools of financial
analysis. It is the process of establishing and interpreting various ratios. It is with
the help of ratios that the ratios that the financial statement can be analyzed more
clearly and decisions made from such analysis.
CONCEPT OF RATIO
RATIO ANALYSIS
BABASAB PATIL 61
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
CURRENT RATIO
The current ratio of a unit measures firm’s short-term solvency, that is, its
ability to meet short-term obligations. It is the ratio of total current assets to total
current liabilities.
The current ratio measures the ability of the firm to meet its current liabilities-
current assets get converted into cash in the operating cycle of the firm and provide
the funds needed to pay current liabilities.
BABASAB PATIL 62
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
INTERPRETATION:
The standard for current ratio is 2:1 but the firm’s current ratios are more than the
standard the highest ratio is 2.88 in the year 2004-05 and the lowest ratio is 2.31 in the
year 2008-09. And also it found that there is an excess amount in current assets its
shows that the firm is not utilizing the funds from current assets properly the firm
need to concentrate on its excess amount.
BABASAB PATIL 63
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
QUICK RATIO
BABASAB PATIL 64
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
INTERPRETATION:
The standard ratio for quick ratio is 1:1 but the firms quick ratio are more than the
standard the highest quick ratio is 2.33 and lowest quick ratio is 1.35 so it found that
there is quick ratio is more than the standard by having more the ratio it shows that th.
So the has to concentrate for collection of funds.
BABASAB PATIL 65
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
Inventory turnover ratio is the ratio, which indicates the number of times
the stock is turned over i.e., sold during the year. In other words, it is the ratio
between the cost of goods sold and closing stock. This ratio can be calculated as
follows.
INTERPRETATION:
BABASAB PATIL 66
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The inventory turnover ratio shows how the inventory is turning into
receivables through sales. Here in the firm highest inventory turnover is 5.53 in 2004-
05. it indicates that there was a good inventory management in 2004-05 whereas in
the year 2006-07 there is low inventory turnover which implies that in 2006-07 there
was excessive inventory levels than warranted by production and sales activity. In the
year 2008-09, the inventory turnover is 5.15.
The gross profit ratio reflects the efficiency with which management
produces each unit of product. This ratio indictes the average spread between the cost
of goods sold and the sales revenue
BABASAB PATIL 67
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
INTERPRETATION:
. The gross profit ratio is not satisfactory because this ratio is not stable it is
fluctuating widely by year by year from the year 2004-05 to 2008-09. the highest
ratio is 10.71 and the lowest ratio is 0.93 here the firm has higher the sales in 2006-07
so the ratio is high and due to lower the sales or higher the cost of good so in the year
2004-05 it is low.
BABASAB PATIL 68
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
The ratio, which expresses the relationship between the working capital and
sales, is called as Working capital turnover ratio. It is calculated as follows
BABASAB PATIL 69
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
INTERPRETATION:
1. The current ratio of the firm is not satisfactory because the firm is not utilizing
available recourses properly. The highest ratio is 2.88 recorded in the year
2004-05 and the lowest ratio is 2.31 recorded in the year 2008-09. So the
current ratio is not satisfactory. The firm needs to concentrate on current
assets. By utilizing the available resources properly the firm may improve the
current ratio.
2. The quick ratio of firm is not satisfactory because in the firm’s quick assets
there excess amount than requirement it shows that the company is not
utilizing available resources properly. The highest quick ratio is 2.33 recorded
in the year 2004-05 and the lowest ratio 1.35 recorded in the year 2006-07.
The company needs to concentrate on quick assets. By utilizing quick assets
properly the firm may improve this ratio.
BABASAB PATIL 70
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
3. the inventory turnover ratio is satisfactory because from the year 2004-05 it is
go on decreasing but in the year 2008-09 it increased to 5.15 from 4.57 in the
year 2007-08 so this ratio is satisfactory. The highest ratio 5.53 recorded in the
year 2004-05 and lowest is 4.21 recorded in the year 2006-07.
4. .The gross profit ratio is not satisfactory because this ratio is not stable it is
fluctuating widely by year by year from the year 2004-05 to 2008-09. the
highest ratio is 10.71 and the lowest ratio is 0.93 here the firm has higher the
sales in 2006-07 so the ratio is high and due to lower the sales or higher the
cost of good so in the year 2004-05 it is low.
BABASAB PATIL 71
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
10. the changes in working capital of 2007-08 and 2008-09 is 91606768 and
77170370 respectively it shows the working capital decreased of 14436398 in
the year 2008-09 compare to 2007-08. By decreasing net working capital the
firm is satisfactory with its working capital.
SUGGESTIONS
1. To improve the current ratio and quick ratio the company need to concentrate
on current assets by utilysing available resources in the current assets the
company may improve its current ratio and quick ratio
2. The gross profit ratio is not satisfactory because there is more fluctuating in
the ratios so company need to concentrate in its profits
3. during the year 2005 and 2006 the companies working capital is decreased due
to less current assets and more liability so it has to make proper use of its
current assets and to make improve.
4. during the year 2008 and 2009 the companies working capital again decreased
so the firm has to has to concentrate on its current assets to maintain the
business transaction .
BABASAB PATIL 72
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
CONCLUTION:
This study helps to know that the companies financial position. The
sale of the company is decline in the year 2009. There is an increases cost in
some years so it is needs to reduce its costs.
As the study helps to know that the changes in financial statements
i.e. increase or decrease in the liabilities and assets. By the ratio analysis we
come to know that the companies solvency. The company have to take some
measures to control the costs. By working capital we comes to know its
working capital management
BABASAB PATIL 73
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.
BIBLIOGRAPHY
BOOKS :
FINANCIAL MANAGEMENT : KHAN AND JAIN
FINANCIAL MANAGEMENT : I.M.PANDEY
BABASAB PATIL 74