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DATA ANALYSIS & INTERPRETATION

ANALYSIS AND INTERPRETATITON OF DATA

Calculation of Working Capital

(figures in Lakhs)

Particular 2014-15 2015-16 2016-17 2017-18

Current Asset, Loans


and Advances:

-Inventories
31401.28 46680.37 49764.70 46467.03
-Sundry Debtors

- Cash and Bank


1716.94 20391.85 23497.97 23762.92
Balances

-Other Current
Assets
1386.50 2275.53 2421.75 18147.29
- Loans and
Advances

218.50 171.18 159.79 138.20

10535.31 16782 20618 21943

Gross Working
Capital (a) 60772.53 86300.93 96462.51 110458.44
Current Liabilities
and Provision

-Current Liabilities

-Provision 49057 62473 64093 65107

Total (b) 58143 74435 75315 81680

Net Working Capital 2629.53 11865 21146.51 28778.44


(a-b)

 Net Working Capital


Analysis through Chart
All Figures in lakhs

Net Working capital

30000

25000

20000

15000

10000

5000

0
2015-16 2016-17 2017-18
Net Working Capital

2015-16
2016-17
2017-18

Statement Showing Changes in Working Capital

Particular 2014-15 2015-16

Current Asset, Loans and

Advances:

-Inventories 31401.28 46680.37

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

Total(a) 60772.53 86300.93

Net Current Liability

Sundry Debtors
49057 62473
Provision
9086 11962

Total(b) 59143 74435

Working capital(a-b) 2629.53 11865.93

Increase in working capital 9236.4 ---------

Statement Showing Changes in Working Capital

Particular 2015-16 2016-17

Current Asset, Loans and

Advances:

-Inventories 46680.37 49764.70

20391.85 23497.97
-Sundry Debtors
2275.53 2421.75
- Cash and Bank Balances
171.18 159.79
-Other Current Assets
16782 20618

- Loans and Advances

Total(a) 86300.93 96462.51

Net Current Liability

Sundry Debtors 62473 64093


Provision
11962 11222

Total(b) 74435 75315

Working capital(a-b) 11865.93 21146.51

Increase in working capital 9281.51 ------------

Statement Showing Changes in Working Capital

Particular 2016-17 2017-18

Current Asset, Loans and

Advances:

49764.70 46467.03
-Inventories
23497.97 23762.92
-Stock
2421.75 18147.29

- Cash and Bank Balances


159.79 138.20

-Other Current Assets 20618 21943

- Loans and Advances

Total(a) 96462.51 110458.44

Net Current Liability

Sundry Debtors 64093 65107


Provision
11222 16573

Total(b) 75315 81680

Working capital(a-b) 21146.51 28778.44

Increase in working capital 763.94 ------

Statement Showing Fund Flow


For year 2015-16
Sources Amt. Application Amt.
(Rs.) (Rs.)

Operative Profit 50922.53 Increase in


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

Statement Showing Fund Flow


For year 2016-17
Sources Amt. Application Amt.

Operative Profit 53940 Increase in


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

Sources Amt. Application Amt.

Operative Profit 59903 Increase in


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

Total 61063.64 Total 61063.64

ANALYSIS OF SHORT-TERM FINANCIAL POSITION OR TEST OF


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,

Current Ratio Current Assets/Current Liabilities


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

CALCULATION OF CURRENT RATIO:

Year 2015-16 2016-17 2017-18

Current Asset 86300.93 96462.51 110458.44

Current 74435 75315 81680

Liabilities

Current Ratio 1.16:1 1.3:1 1.35:1

Analysis through Chart:-


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.

QUICK RATIO QUICK ASSETS/CURRENT LIABILITIES-BANK


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.

CALCULATION OF QUICK RATIO:-

(Amount in Lakhs)

Year 2015-16 2016-17 2017-18

Quick Asset 39449.38 46537.72 63853.21

Current 62473 64093 65107


Liabilities

Quick Ratio 0.63:1 0.72:1 0.98:1

Analysis through chart:-

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

1. Inventory Turnover Ratio


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.

WORKING CAPITAL TURNOVER RATIO:

Working capital turnover ratio indicates the velocity of utilization


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

Cost of Goods Sold 28710.7 33819.45 36042.91

Net Working Capital 11865.93 21146.51 28778.44

Working Capital Turnover 2.41 times 1.59times 1.25 times

70000

60000

50000

40000

30000

20000

10000

0
2015-16 2016-17 2017-18

Interpretation:-

It is a relationship between turnover and working capital. It highlights how


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