0 views

Uploaded by SUBODH DHONGADE

finance notes

- blockholder.pdf
- Apollo Earth Movers Project
- Ratios
- Foundation Broad Cost Leader (2)
- Chapter II
- Anita Paper
- Financial Performance of Dhaka Bank Ltd
- Project Kamlesh Bidkar
- capital management
- SECL Final
- FA Excel
- SEEP Frame Update -Draft for Review 7-2-09
- 2007_May_MS_4305
- Final Ppt ---based on Objectives
- Liquidity Ratios
- Ratios
- 51448234-Acca-F9-Financial-Management-Function (2)
- Introduction Working Capital Management
- Lesson 23
- WP14DL250712

You are on page 1of 15

(figures in Lakhs)

and Advances:

-Inventories

31401.28 46680.37 49764.70 46467.03

-Sundry Debtors

1716.94 20391.85 23497.97 23762.92

Balances

-Other Current

Assets

1386.50 2275.53 2421.75 18147.29

- Loans and

Advances

Gross Working

Capital (a) 60772.53 86300.93 96462.51 110458.44

Current Liabilities

and Provision

-Current Liabilities

(a-b)

Analysis through Chart

All Figures in lakhs

30000

25000

20000

15000

10000

5000

0

2015-16 2016-17 2017-18

Net Working Capital

2015-16

2016-17

2017-18

Advances:

1767.94 20391.85

-Sundry Debtors

1386.50 2275.53

- Cash and Bank Balances

281.50 171.18

-Other Current Assets

10535.31 16782

- Loans and Advances

Sundry Debtors

49057 62473

Provision

9086 11962

Advances:

20391.85 23497.97

-Sundry Debtors

2275.53 2421.75

- Cash and Bank Balances

171.18 159.79

-Other Current Assets

16782 20618

Provision

11962 11222

Advances:

49764.70 46467.03

-Inventories

23497.97 23762.92

-Stock

2421.75 18147.29

159.79 138.20

Provision

11222 16573

For year 2015-16

Sources Amt. Application Amt.

(Rs.) (Rs.)

Sale Of Assets 484.99 working Capital 7631.94

Interest 296.07 Purchase of

Received Fixed Asset 8103.76

Dividend 813.86 Decrease in

Received Short term 16317.63

Sale Of 80.30 Borrowings

Investment Dividend And 6643.51

Trade 3543.97 Corporate Tax 5775.74

Receivables Interest Paid 11668.24

Direct Tax Paid

Total 56141.72 Total 56141.72

For year 2016-17

Sources Amt. Application Amt.

Sale on Asset 966.12 working Capital 9281.51

Sale of Purchase of

Investment 79.03 Fixed Asset 15746.08

Lease rent Repayment of

Received 0.21 Loans 6275.43

Interest 273.41 Decrease in

Received Short term 5745.45

Dividend 723.68 liabilities 7887.45

Received Interest paid

Corporate Tax 11146.13

Paid

Total 55982.45 Total 53940

Statement Showing Fund Flow

For year 2017-18

Sale on Asset 401.35 working Capital 7631.94

Sale of Purchase of Fixed

Investment 102.35 Asset 19758.39

Lease rent Repayment of

Received 0.42 Loans 14298.83

Interest Received 222.43 Decrease in Long

Dividend term Borrowings 1680.20

Received 434.09 Interest paid 6017.40

Corporate Tax

Paid 11657.40

LIQUIDITY

The short term creditors of a company such as suppliers of goods Of credit and

commercial banks short-term loans are primarily interested to know the ability of a firm

to meet its obligations in time. The short term obligations of a firm can be met in time

only when it is having sufficient liquid assets. So to with the confidence of investors,

creditors, the smooth functioning of the firm and the efficient use of fixed assets the

liquid position of the Firm must be strong. But a very high degree of liquidity of the

firm being tied up in current assets. Therefore, it is important proper balance in regard

to the liquidity of the firm. Two types Of ratios can be calculated for measuring short-

term financial position or short-term solvency position of the firm.

• Liquidity ratios.

• Current assets movements 'ratios,

LIQUIDITY RATIOS: -

Liquidity refers to the ability of a Firm to meet its current obligations as and when these

become due. The short-term obligations are met by realizing amounts from current,

floating or circulating assts. The current assets should either be liquid or near about

liquidity. These should be convertible in cash for paying obligations of short-term

nature. The sufficiency or insufficiency of current assets should be assessed by

comparing them with short-term liabilities. If current assets can pay off' the current

liabilities then the liquidity position is satisfactory. On the other hand, if the current

liabilities cannot be met out of the current assets then the liquidity position is had. To

measure the liquidity of a lit in, the following ratios can be calculated:

1. CURRENT RATIO

2. QUICK RA RATIO

CURRENT RATIO

Current Ratio, also known as working capital ratio is a measure or general liquidity and

its most widely used to make the analysis of short-term financial position or liquidity

of a firm. It is defined as the relation between current assets and current liabilities. Thus,

The two component of this ratio are

CURRENT ASSET

CURRENT LIABILITIES

Current Assets include cash, marketable securities, bills receivable, sundry debtors, inventories

and work-in-progress. Current Liabilities include outstanding expenses, bills payable, dividend

payable etc. A relative high current ratio is an indication that the firm is liquid and has the

ability to pay its current obligation in time. On the other hand a low current ratio represents

that the liquidity position of the firm is not good and the firm shall not be able to pay its current

liabilities in time. A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the

liabilities is considered to be satisfactory

Liabilities

5

4.5

4

3.5

3

2.5

2

1.5

1

0.5

0

2015-16 2016-17 2017-18

Interpretation:

A current ratio is an indication that the company's current asset is more than its

current liabilities. The ideal current ratio is 2:1. Company's current ratio is less

than the ideal ratio. This shows that the company may face problems in paying

off its liabilities.

Quick Ratio:

Quick ratio is more rigorous test of liquidity than current ratio. Quick ratio may

be defined as the relationship between quick/liquid asset and current or liquid

liabilities. An asset is said to be liquid if it can be converted into cash with short

period without loss of value. It measures the firms capacity to pay off current

obligations immediately.

OVERDRAFT

Where Quick Asset are:

Marketable Securities

Cash in hand and Cash at bank

Debtors

A high ratio is an indication that the firm is liquid and has the ability to meet its

current liabilities in time and on the other hand a low quick ratio represents that the

firm's liquidity position is not good. As a rule of thumb ratio of 1:1 is considered

satisfactory. It is generally thought that if quick assets are equal to current

liabilities then the concern may be able to meet its short term obligations

However, a firm having high quick ratio may not have a satisfactory liquidity

position if it has low paying debtors. On the other hand, a firm having a low

liquidity position if it has fast moving inventories.

(Amount in Lakhs)

Liabilities

5

4.5

4

3.5

3

2.5

2

1.5

1

0.5

0

2015-16 2016-17 2017-18

INTERPRETATION:

A quick ratio is an indication that the firm is liquid and has the ability to meet

its current liabilities in time. The ideal ratio is 1:1. Company's quick ratio is

less than the ideal ratio. This shows that the company might have some liquidity

problems.

CURRENT ASSETS MOVEMENT RATIOS

Funds are invested in various assets in business to make sales and earn profits

The efficiency with which assets are managed directly affects the volume of sales. The better

the management of assets, large is the amount of sales and profits Current assets movement

ratio measure the efficiency with which a firm manages its resources. These ratios are called

turnover ratios because they indicate the speed with which assets are converted or turned over

into sales Depending upon the purpose, a number of turnover ratios can be calculated. These

are

2. Debtors Turnover Ratio

3. Creditors Turnover Ratio

4. Working Capital Turnover Ratio

The current ratio and quick ratio give misleading results if current assets include

high amount of debtors due to slow credit collections and moreover if the assets include high

amount of slow moving inventories. As both the ratios ignore the movement of current assets,

it is important to calculate the turnover ratio.

of net working capital. This ratio indicates the number of times the working

capital. This ratio indicates the number of times the working capital is turned

over in the course of the year. This ratio measures the efficiency with which the

working capital is used by the firm. A higher ratio indicates efficient utilization

of working capital and a low ratio indicates otherwise But a very high working

capital turnover is not good situation for any firm.

Working Capital Turnover Ratio=Cost of Sales/Net Working Capital

OR

Working Capital Turnover-Sales/Net Working Capital

Years 2015-16 2016-17 2017-18

70000

60000

50000

40000

30000

20000

10000

0

2015-16 2016-17 2017-18

Interpretation:-

effectively working capital is being used in terms of turnover it can help to

generate. It enables to find the structure of working capital cycle of organization.

No ideal values but higher the ratio stronger is the position of working capital.in

2015-16 it was 2.41 times and in 2016-17 it was 1.59 times a slight decrease

- blockholder.pdfUploaded bymkatsotis
- Apollo Earth Movers ProjectUploaded byprajapatimitesh92
- RatiosUploaded bymuneerpp
- Foundation Broad Cost Leader (2)Uploaded byGuisse Mariam
- Chapter IIUploaded byAnkit Shah
- Anita PaperUploaded byAgusSafriTanjung
- Financial Performance of Dhaka Bank LtdUploaded bySharifMahmud
- Project Kamlesh BidkarUploaded bythorat82
- capital managementUploaded byKhan Abdul Rehman
- SECL FinalUploaded byAtharva Jaiswal
- FA ExcelUploaded bymub2527642
- SEEP Frame Update -Draft for Review 7-2-09Uploaded byFinancialServices
- 2007_May_MS_4305Uploaded byLo Mask
- Final Ppt ---based on ObjectivesUploaded byshivani28feb
- Liquidity RatiosUploaded byarhijazi
- RatiosUploaded bySanjib Babu
- 51448234-Acca-F9-Financial-Management-Function (2)Uploaded bySash Malik
- Introduction Working Capital ManagementUploaded byHappy Singh
- Lesson 23Uploaded bySuvaneel Moulick
- WP14DL250712Uploaded byGustavo Rodriguez
- SHTF-20190711-MOSL-AR-PG014Uploaded byDarshit
- The Impact of Liquidity on the Capital StructureUploaded byjai2607
- Bhupen PptUploaded bybhavikpatel_10097879
- Lecture 10 (16.10.2014)Uploaded byZeeshan Abdullah
- 12-08Uploaded byMario Cruz
- 032 HassanUploaded byIftikhar Ahmad
- Feeza Ratios WordsUploaded byEmran Shah
- RiskUploaded bytanimas77
- 706af146-2c2a-487f-83ad-7e675c917689.pdfUploaded byPoonam Aggarwal
- Project FinalUploaded byKushal Todi

- All Out.docxUploaded bySUBODH DHONGADE
- Competitive Advantage of NationUploaded bySUBODH DHONGADE
- ElasticityUploaded bySUBODH DHONGADE
- SubodhUploaded bySUBODH DHONGADE
- subodh.docxUploaded bySUBODH DHONGADE
- Rupesh.docxUploaded bySUBODH DHONGADE
- Amazon operations management case studyUploaded byMarGianna Char-Kyriacou
- bata1-130213005204-phpapp01.docxUploaded bySUBODH DHONGADE
- THEORY.docxUploaded bySUBODH DHONGADE
- Readme EnglishUploaded byAbdee Mloonk Negara

- Revenue Sharing ReportUploaded byThe Maine Heritage Policy Center
- Profits.pdfUploaded byjohnnyh
- GN on Tax audit 2013Uploaded byvramu_ca
- RicoAuto SKUploaded byShashi Kapoor
- ch05 SC_CUploaded bySugim Winata Einstein
- The Dove Health AllianceUploaded byKetan Patel
- China Aquaculture Industry Report, 2015-2018Uploaded byAnonymous XLxGXuIsFM
- Solution Manual12Uploaded byyellowberries
- Case Project Financial AccountingUploaded byZargham Shirazi
- Consolidated Digest of Case Laws Jan 2013 March 2013Uploaded byAnkit Damani
- giai thich'Uploaded byBinh Le Thanh
- Ratio AnalysisUploaded bySaswat Nanda
- IFRS 15Uploaded byNyasha Nduku
- Latest Contractors ApplicationUploaded byVishwas Tripathi
- Pay for Performance PlansUploaded byAbhi Kumar
- Summary of in Come TaxUploaded bySwaapnil Shinde
- Decentralization Discussion Problem.docUploaded byRano Kardo Sinambela
- Franchise Accounting QuizUploaded byElish Luna
- Income Inequality and Elasticity of Personal Income Tax.pdf AggarwalUploaded byAjit Kumar K
- MQP- vi sem bcomUploaded byJustin Renovated
- Wharton Consulting Club Practice Case Interview GuideUploaded byMax Sfnv
- SSRN-id1866008Uploaded byBhuwan
- Financial Ratios Are Mathematical Comparisons of Financial Statement Accounts or CategoriesUploaded byRehanBhagat
- Asian Paints and Nerolac InterpretationUploaded byfebin s mathew
- Iowa Lottery financialsUploaded byGazetteonline
- ar2008Uploaded byHing Bo
- 01-Binalonan2012 Audit ReportUploaded byGrace Jelen
- Tax Expenditure Report 11Uploaded bythisdog
- Definitions Finance TermsUploaded byGonzalo Rivera
- IFRS Illustrative Financial Statements Banks June 2011 : KPMGUploaded bycreditplumber