Project 2 Final

A Study on working capital management at rahul enterprises
CHAPTER 1:
INTRODUCTION
Rahul enterprises is an ISO 9002:2008 certified company established in the year 2004 has
today grown to be the foremost engineering company for high quality industrial ovens, heat
treatment, furnaces etc.
Rahul enterprises, since last 9yrs they are supplying furnaces to reputed steel and non-ferrous
industries, both in India and abroad. They have developed wide range of furnaces which are
well suited to particular needs. They manufacture electrically heated as well as oil, gas and
dual fired furnaces with high thermal efficiency. Temperature control is fully automatic with
accurate, desired results. Unfailing quality and service has ensured wide acceptance for their
furnaces in all industries.
Working capital is the difference between the inflow and out flow of funds. In other words, it
is the net cash inflow. It is defined as the excess of current assets over current liabilities and
provisions.
In other words, it is “net current assets or net working capital”.
Working capital may be regarded as lifeblood of a business. Its effective provision can do
much to ensure the success of a business, while its inefficient management can lead not only
to loos of profits but also to the ultimate downfall of a promising concern. The cost increased
by organisations due to wrong planning of working capital is immeasurable
MEANING:
Business organization requires adequate capital to establish and operate their activities. The
total capital of a business can be classified as fixed capital and working capital. Fixed capital
is required for the purpose of fixed assets like building, land, machinery, furniture etc. Fixed
capital is investing in current assets is called working capital.
The capital which is needed for the regular operation of business is called working capital.
Working capital is also called circulating capital or revolving capital or short term capital.
Government First Grade College, vijayanagara, Bangalore Page 1

Working capital is used for regular business activities like for the purchase of raw materials,
for the payment of wages, payments of rents and of other expenses. Working capital is kept in
the form of cash, raw materials inventory, stock of finished goods, bills receivables etc.
Working capital management:
Working capital management refers to the management of working capital with

twin objectives of liquidity and profitability.
Working capital management establish the best possible trade-off between the
profitability or net current assets employed and the ability to pay current
liabilities as they fall due
DEFNIATION;
 According to “Working capital refers to a firm’s investment in short term assets, such
as cash amounts receivables, inventories etc.
-Weston & Brigham
 Working capital is the financing in a small business that helps a company pay its trade
creditors and cash flows –it is the finance that business need for their day–to-day
trading operations.
 Working capital is descriptive of that capital which is not fixed. but the more common
use of working capital is to consider is as the difference between the book value of the
current assets and current liabilities

CHAPTER 2:COMPANY PROFILE

RAHUL ENTERPRISES
Company introduction
RAHUL ENTERPRISES is an ISO 9001:2008 certified company established in the year
2004 has today grown to be the foremost engineering company for high quality Industrial
Ovens, Heat Treatment, Furnaces, Control Panels, Temperature Controllers, Thermocouples,
Oil Fired Furnace, Repairing, Servicing & D C Drives. Accounting, inventory and designing
with its registered office at No.55/1, Raghavendra Nagar, Peenya 3rd Stage, Thigalarapalaya
Main Road, Bangalore – 560 058. Mob : 9845416700.
RAHUL ENTERPRISES, since last 9 years we are supplying furnaces to reputed steel and
non-ferrous industries, both in India and abroad. We have developed wide range of furnaces
which are well suited to particular needs. We manufacture Electrically Heated as well as Oil,
Gas and Dual Fired Furnaces with high thermal efficiency. Temperature control is fully
automatic with accurate, desired results. Unfailing quality & service has ensured wide
acceptance for our furnaces in all industries.

Quick facts
Established in the year 2005

Two units have been setup at peenya industrial area in south India
Working area of 45000 square feet

Employee strength 60 supported by experienced engineers
Cordially, industrial relations
Rahul enterprises specialize in making Industrial ovens
More about us
Rahul enterprise was established in the year 2005 in Bangalore, Karnataka, South India. The
company comprises of totally two units at peenya industrial area with working area of 45000
square feet. We have total strength of 60 employees supported by experienced engineers.
QUALITY
 Satisfied internal and external customers in quality of products and process
 Continual improvement in products, process and quality management system
 Satisfied motivated and committed employers
 Safe and clean working conditions and eco-friendly environment

AWARDS AND RECOGNITIONS
 ISO 9001 2008
 CERTIFIED INDIVIDUAL
 CERIFIED BY INDIAMART TRUST DEAL
 CERTIFIED BY PEENYA INDUSTRIAL ASSOCIATIONS
 OUR PRODUCTS
GENERAL PRODUCTS
FURNACES

BELL FURNACE GAS NITRIDINING SCREW PIT FURNACE
FURNACE CONVEYOR
FURNACE

SMALL FURNACE TEMPERING BOGIE HEARTH

FURNACE FURNACE
CHAPTER-3: RESEARCH DESIGN
Research methodology
The technique used for collection of the financial statement data and other information as
follows. The primary data were collected by interaction and observation. The secondary data
were collected from the published annual reports, budgeted manuals and the audited balance
sheet and profit and loss account, database of the company.
SOURCES OF DATA
Primary Data:
This data has been collected during my Training, Interaction and Observation, collected from
the managers from the respective departments by using the method of discussion and
learning.
Secondary Data:
Some of the data’s has also been collected from the Profile of the company and website of the
company.
Objectives of the study:

● To study working capital management process at Rahul enterprises
● To know the impact of working capital on day to day activities of the organisation
● To study working capital management on efficiency of organisation

Scope of the study:

 Study is restricted on working capital management
 Study is restricted on Rahul enterprises
 Study is restricted to determinants of working capital management
 Study is restricted to operating cycle
Need for the study:
 High return on capital

 Improved credit profile and solvency
 Higher profitability
 Increased business value
 Uninterrupted production

Chapter scheme:
Chapter 1: Introduction – The Rahul enterprises.
Chapter 2: Research Design - will include information Related to various departments

functioning in the organisation.
Chapter 3: Company Profile – Rahul enterprises.
Chapter 4: Data Analysis and interpretation - Thus, the result derived from the analysis
will be validated
Chapter 5: Suggestion and Findings - will include the conclusions which will be based on
the result obtained from the above process of analysis
Cancultion and Annexures – In this will include company balance sheet,P&L A/C Income
statement of post 3years

CHAPTER-4:
Data analysis and interpretation

Current Ratio
The current ratio can be defined as the relationship between current assets and current
liabilities. This ration is a measure of general liquidity and is most widely used to make the
analysis of a short term financial position or liquidity of a firm. It is calculated by dividing
the total of current assets by total of current liabilities.
Current ratio = Current assets

Current liabilities
Table: 4.1: Current Ratio

YEAR Current assets Current liabilities Ratio
2015-16 15925913.95 7066860.52 2.25
2016-17 16758242.52 8251121.00 2.03
2017-18 16978334.3 9270578.11 1.83
Analysis:
In the year 2015-16 the current ratio is 2.25,in the year 2016-17 it was decreased by 2.03,and
in the year 2017-18 also the ratio decreased to 1.83
Chart Title
Current assets Current liabilites Ratio
16758242.52 16978334.3
15925913.95
9270578.11
8251121
7066860.52
2 2.03 1.83
2015-16 2016-17 2017-18
Figure: 4.1: Current Ratio

Interpretation
The above analysis shows that there is an increase in the value of current ratio in the year
2016-17 when compared to 2015-16. But it has decreased 1.83 in 2017-18. But still the value
of current ratio for all three year is more than the standard value which shows that the
liquidity position of the company is strong.
Quick Ratio

An indicator of a company’s short-term liquidity. The quick ratio measures a company’s

ability to meets its short obligation with its most liquid assets. For this reason, the ratio
excludes inventories from current assets, and is calculated as follows:
Quick ratio = Quick assets

Quick liabilities
Year Quick asset Current liabilities Ratio

2015-16 12504422.95 7066860.52 1.76
2016-17 13127350.00 8251121.00 1.59
2017-18 10087115.14 9270578.11 1.08
Table: 4.2: Quick ratio
Analysis
In the year 2015-16 the quick ratio was 1.76. In the year 2014-15 it decreased to 1.59. In the
year 2015-16 also it decreased to 1.08.
Figure:4.2: Quick Ratio
Chart Title
Quick assets Current liabilites Ratio
13127350
12504422.95
10087115.14
9270578.11
8251121
7066860.52
1.76 1.59 1.08
2015-16 2016-17 2017-18

Int
erpretation
The above analysis shows that the quick ration is fluctuating. It slightly improved in
the year 2015-16 and decreases slightly in the year 2016-17 and 2017-18. This shows that
the quick ratio of the company is satisfactory
Inventory Turnover Ratio

A ratio showing how many times a company’s inventory is sold and replaced over a period.
The days in the period can then be divided by the inventory turnover formula to calculate the
days it takes to sell the inventory on hand or “Inventory turnover days”.
Inventory turnover ratio= Sales

Average inventory
Table: 4.3: Inventory turnover Ratio
Year Sales Average Inventory Ratio

2015-16 10698653 5722639.68 1.86
2016-17 8802432 4841298.45 1.81
2017-18 8632398.12 5114881.9 1.68
Analysis
In the year 2015-16 the inventory ratio was 1.86. In the year 2016-17 it decreased to 1.81. In
the year 2017-18 it decreased to 1.68.
Figure: 4.3: Inventory Turnover Ratio
Chart Title
Sales Average inventory Ratio
10698653
8802432 8632398.12
5722639.68
4841298.45 5114881.9
1.86 1.81 1.68
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the inventory turnover ratio is fluctuating. It slightly improved
in the year 2015-16 and decreases slightly in the year 2016-17 and 2017-18. This shows that
the inventory turnover ratio of the company is satisfactory.
Debt equity ratio

Debt Equity ratio is a debt ratio used to measure a company’s financial leverage, calculated
by dividing a company’s total current liabilities by its stockholder’s equity. The D/E ratio
indicates how much debt a company is using to finance its assets relative to the amount of
value represented in shareholder’s equity.
The formula for calculating D/E ratio can be represented in the following way:
Debt equity ratio = Current liabilities
Shareholder funds
Table: 4.4: Debt Equity Ratio
Current Shareholders
Year liabilities fund Ratio
2015-16 7066860.52 10374429.36 0.68
2016-17 8251121.00 8765342.91 0.94
2017-18 9270578.11 8650132.80 1.07
Analysis
In the year 2015-16the debt equity ratio was 0.68. In the year 2016-17 it increased to 0.94. In
the year 2017-18 it increased to 1.07. The above analysis shows that the ratio is showing a
increasing trend.
Figure: 4.4: debt equity ratio
Chart Title
Current liabilites Ratio
9270578.11
8251121
7066860.52
0.68 0.94 1.07
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that there is a increasing trend in the value of debt equity ratio in
which it is dramatically increasing in the year 2017-18 when compared to 2015-16
Capital turnover ratio
Capital turnover ratio indicates the efficiency of the organization with which the capital
employed is being utilized. A high capital turnover ratio indicates the capacity of the

organization to achieve maximum sales with minimum amount of capital employed. Higher
the capital turnover ratio better will be the situation.
Capital turnover ratio = sales

Capital employed
Table: 4.5: Capital Turnover Ratio
year Sales Capital Employed Ratio
2015-16 10698653 11062129.36 0.96
2016-17 8802432 8819966.91 0.99
2017-18 8632398.12 8694756.8 0.99
Analysis
In the year 2015-16the capital turnover ratio was 0.96. In the year 2016-17 it increased to
0.99. In the year 2017-18 it is constant to 0.99. This firms achieves minimum sales with
maximum utilization of capital employed.
Figure: 4.5: Capital Turnover Ratio
Chart Title
Sales Capital employed Ratio
11062129.36
10698653
8819966.91
8802432 8694756.8
8632398.12
0.96 0.99 0.99
Category 1 Category 2 Category 3
Interpretation
This above analysis shows that the capital turnover ratio is fluctuating. It slightly decreased in
the year 2015-16 and also increased in the year 2016-17 and remain constant in the year
2017-18. This shows that the company’s capital turnover ratio is a satisfactory
Inventory Conversion Ratio

It indicates the average time taken for clearing stocks. This can be calculated as follows:

Inventory conversion period = Number of days in year

Inventory turnover ratio
Table: 4.6: Inventory conversion period
No. of days in a Inventory turnover
Year year ratio Ratio
2015-16 365 1.86 196.23
2016-17 365 1.81 201.65
2017-18 365 1.68 217.26
Analysis
In the year 2015-16 the inventory conversion period was 196.23. In the year 2016-17 it
increased to 201.65. In the year 2017-18 it also increased to 217.26.
Figure: 4.6: Inventory conversion period
Chart Title
NO.of days Inventory turnover ratio Period
365 365 365
217.26
196.23 201.65
1.86 1.81 1.68
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the inventory conversion period of Rahul enterprises has
shown a fluctuating trend which implies increase in cost of maintenance which has increased
the profits. It means that the company is taking 217.26 days for the stocks to get converted
into sales where earlier it took 196.23 days
Proprietary ratio

The proprietary ratio (also known as the equity ratio) is the proportion of shareholder’s equity
to total assets, and as such provides a rough estimate of the amount of capitalization currently
used to support a business.
Proprietary Ratio = Shareholder fund

Total assets
Table: 4.7: Proprietary Ratio
Year Shareholder fund Total assets Ratio

2015-16 10374429.36 20695633.95 0.50
2016-17 8765342.91 21421106.52 0.40
2017-18 8650132.80 22614519.40 0.38
Analysis
In the year 2015-16 the proprietary ratio was 0.50. In the year 2016-17 it decreased to 0.40.
In the year 2017-18 it further decreased to 0.38.
Figure: 4.7: proprietary ratio
Chart Title
Share holder fund Total assets Ratio
22614519.4
20695633.95 21421106.52
10374429.36
8765342.91 8650132.8
0.5 0.4 0.38
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the proprietary ratio is fluctuating. It slightly increased in the
year 2015-16 and decreases slightly in the year 2016-17 and 2017-18
Fixed asset turnover ratio

A financial ratio of net sales to fixed assets. The fixed assets turnover ratio measures a
company’s ability to generate net sales from fixed assets investment specifically property,
plants and equipment (PP&E)-net of depreciation. A higher fixed asset turnover ratio shows
that the company has been more effective in using the investment in fixed assets to generate
revenues.
Fixed Assets Turnover Ratio = sales

Fixed assets
Table: 4.8: Fixed asset turnover ratio
Year Sales Fixed assets Ratio
2015-16 10698653 3698870 2.89
2016-17 8802432 3745610.70 2.35
2017-18 8632398.12 4056554.10 2.12
Analysis
In the year 2015-16 the fixed assets turnover ratio was 2.89. In the year 2016-17 it decreased
to 2.35. In the year 2017-18it also decreased to 2.12.
Figure: 4.8: Fixed Assets Turnover Ratio
Chart Title
Sales Fixed assets Ratio
10698653
8802432 8632398.12
3798870 3745610.7 4056554.1
2.89 2.35 2.12
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the fixed assets turnover ratio at Rahul enterprises has shown a
fluctuating trend. It slightly increased in the year 2015-16 and decreased in the year 2015-16
and 2017-18. This shows that the company’s fixed assets turnover ratio is satisfactory
Net Working Capital

Working capital is a measure of both a company’s efficiency and its short term financial
health. Working capital is calculated as: Working capital = Current assets – Current
liabilities. The working capital ratio indicates whether a company has enough short term
assets to cover its short term debt. Anything below 1 indicates negative working capital.
While anything over 2 means that the company is not investing excess assets. Most believe
that a ratio between 1.2 and 2.0 is sufficient. Also known as “net working capital”.
Net working capital = Net Current assets – Net current Liabilities
Tables: 4.9: Net working capital

Net Working
Year Net Current Assets Net Current Liabilities Capital
15925913.95 7066860.52
2015-16 8859053.43
16758242.52 8251121.00
2016-17 8507121.52
16978334.3 9270578.11
2017-18 7707756.19
Analysis
In the year 2015-16 the working capital was Rs.8859053.43In the year 2016-17 it decreased
to Rs. 8507121.52. In the year 2017-18 it decreased to Rs. 7707756.19
Figure:4.9: Net working capital
Chart Title
Net current assets Net current liabilites Net working capital
15925913.95 16758242.52 16978334.3
8859053.43 8507121.52
8251121 9270578.11
7066860.52 7707756.19
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the net working capital at Rahul enterprises shown a
fluctuating trend. It slightly increased every year respectively.
Working Capital Turnover ratio

The working capital turnover ratio is also referred to as net sales to working capital. It
indicates a company’s effectiveness in using its working capital. The working capital
turnover ratio is calculated as follows: net sales annual sales divided the average amount of
working capital during the same 12 month period.
Working Capital Turnover Ratio = Sales

Net Working Capital
Tables: 4.10: Working Capital Turnover Ratio
Year Sales Net Working Capital Ratio

2015-16 10698653 8859053.43 1.20
2016-17 8802432 8507121.52 1.03
2017-18 8632398.12 7707756.19 1.11
Analysis
In the year 2015-16 the working capital turnover ratio was 1.20. In the year 2016-17 it
decreased to 1.03. In the year 2017-18 it increased to 1.11.
Figure: 4.10: Working Capital Turnover Ratio
Chart Title
Sales Net working capital Ratio
10698653
8859053.43 8802432
8507121.52 8632398.12
7707756.19
1.2 1.03 1.11
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the working capital turnover ratio at Rahul enterprises has
shown a fluctuating trend. It slightly decreased in the year 2016-17 and it increased in the
year 2017-16.
Return on Investment Ratio

A performance measure used to evaluate the efficiency of an investment or to compare the

efficiency of a number of different investment. To calculate ROI, the benefits (return) of an
investment is dividend by the cost of the investment; the result is expressed as a percentage or
a ratio.
Return on Investment Ratio = Net profit before Interest and Tax*100

Total capital employed
Table: 4.11: Return on Investment Ratio
Year NPBIT Capital Employed Ratio
2015-16 1198483 11062129.36 10.83
2016-17 968268 8819966.91 10.97
2017-18 1058243 8694756.8 12.17
Analysis
In the year 2015-16 the Return on investment ratio was 10.83. In the year 2016-17 it
increased to 10.97. In the year 2017-18 it increased to 12.17.
Figure: 4.11: Return on Investment Ratio
Chart Title
NPBIT Total capital employed Ratio
11062129.36
8819966.91 8694756.8
1198483 968268 1058243

10.83 10.97 12.17
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the return on investment ratio at Rahul enterprises shown as
fluctuating trend. It continuously increased in all the perspective years
Return on shareholder fund

Return on shareholder’s investment ratio is a measure of overall profitability of the business

and is computed by dividing the net income after interest and tax by average stockholder’s
equity. It is also known as return on equity (ROE) ratio and return on net worth ratio. The
ratio is usually expressed in percentage.
Return of shareholder fund = Net profit after interest and taxes*100

Shareholders fund
Table: 4.12: Return on shareholders’ fund
Year NPAIT Shareholders fund Ratio
2015-16 78527 10374429.36 0.75
2016-17 46186 8765342.91 0.52
2017-18 58123 8650132.80 0.67
Analysis
In the year 2015-16 the return of shareholders’ funds was 0.75. In the year 2016-17 it
decreased to 0.52. In the year 2017-18 it increased to 0.67.
Figure: 4.12: Return on shareholders’ fund
Chart Title
NPAIT Share holder fund Ratio
10374429.36
8765342.91 8650132.8
78527 0.75 46186 0.52 58123 0.67
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the return on shareholders’ fund is fluctuating trend. It slightly
improved in the year 2015-16 it and decreased in the year 2016-17 and improved in the year
2017-18
Operating Ratio

The operating ratio is a financial term defined as a company’s operating expenses as a

percentage of revenue. The financial ratio is most commonly used for industries which
require a large percentage of revenue to maintain operation, such as railroads. The operating
ratio can be used to determine the efficiency of a company’s management by comparing
expenses to net sales. It is calculated by dividing the operating expenses by the net sales.
Operating Ratio= Cost of goods sold + Operating expenses

Net sales
Tables: 4.13: Operating ratio
Cost of goods sold + Operating
Year Expenses Net sales Ratio
2015-16 3543845.83 10698653 0.33
2016-17 8576259.6 8802432 0.97
2017-18 2054379.4 8632398.12 0.23
Analysis
In the year 2015-16 the operating profit ratio was 0.33. In the year 2016-17 it increased to
0.97. In the year 2017-18 it further decreased to 0.23
Figure: 4.13: Operating ratio
Chart Title
CGS+Operating expenses Net sales Ratio
10698653
8576259.68802432 8632398.12
3543845.83
2054379.4
0.33 0.97 0.23
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the operating profit ratio is increasing trend. It slightly
improved in the year 2016-17 and it again decreased in the year 2017-18
Gross profit ratio

The gross profit ratio shows the proportion of profits generated by sale of product or
services, before selling and administrative expenses. It is used to examine the ability of
a business to create sellable product in a cost-effective manner. The ratio is of some
importance, especially when tracked on a trend line, to see if a business can continue to
provide product to the market place for which customer are willing to pay a reasonable
price.
Gross Profit Ratio = Gross profit ×100

Net Sales
Tables: 4.14: Gross Profit Ratio
Year Gross profit Net sales Ratio
2015-16 3237846.95 10698653 30.26
2016-17 2490476.79 8802432 28.29
2017-18 4401792.93 8632398.12 50.99
Analysis
In the year 2015-16 the gross profit ratio was 30.26. In the year 2016-17 it decreased to
28.29. In the year 2017-18 it increased to 50.99.
Figure: 4.14: Gross Profit Ratio
Chart Title
Gross profit Sales Ratio
10698653
8576259.68802432 8632398.12
3237846.95
2054379.4
30.26 28.29 50.99
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the gross profit is at fluctuating trend. It slightly decreased in
the year 2016-17 and increased in the year 2017-18.

Net Profit Ratio

The net profit percentage is the ratio of after tax profit to net sales. It reveals the remaining
profit after all cost of production, administrative, and financing have been deducted from
sales, and income taxes recognized. As such, it is one of the best measures of the overall
results of a firm, especially when combined with an evaluation of how well it is using its
working capital. The measure is commonly reported on a trend line, to judge performance
over time. It is also used to compare the result of a business with its competitors.
Net Profit Ratio = Net profit×100

Net Sales
Tables: 4.15: Net Profit Ratio

Year Net Profit Sales Ratio
2013-14 1198483.19 10698653 11.20
2014-15 968267.88 8802432 11.00
2015-16 996032.26 8632398.12 11.53
Analysis
In the year 2015-16 the net profit ratio was 11.20. In the year 2016-17 it was decreased to
11.00. In the year 2017-18 it was increased to 11.53.
Figures: 4.15: Net Profit Ratio
Chart Title
Netprofit Sales Profit
10698653
8802432
1198483.19 968267.88 996032.26

863239.12
11.2 11 11.53
2015-16 2016-17 2017-18
Interpretation
The above analysis shows that the net profit ratio is fluctuating trend. It slightly decreased in
the year 2016-17 and it increased in the year 2017-18

CHAPTER 5
SUMMARY OF FINDINGS, SUGGESTION AND CONCLUSION
FINDINGS
 The current ratio of the RE for the year 2017-18, is found to be highest.
 The quick ratio showing slight variation in all the four years it was comparatively
more in the year 2015-16.
 The data reveals that the inventory turnover ratio is fluctuating year by year. Highest in the
year 2015-16. Lowest can be observed for the year 2017-18.
 The data reveals that the debt equity ratio is higher in the year 2017-18. Lowest in the
year 2015-16.
 The data reveals that the capital turnover ratio is higher in the year 2016-17and 2107-
18. Lowest in the year 2015-16.
 The inventory conversion period is fluctuating year by year
 Proprietary ratio is consistent only slight variation is reflected.

 The fixed assets turnover ratio is higher for the year 2015-16 and low for the year
2017-18
 The data also reveals that there is a fluctuation in fixed assets turnover ratio.
 The net working capital of the RE is showing a fluctuating trend. In which 2015-16
records the highest that is 8859053.43and lowest in the year 2017-18 that is
7707756.19 compared to other years.
 The working capital turnover ratio of the RE for the year 2016-17 records the lowest.
The financial data reveals that the working capital turnover ratio of the RE is highest
in the year 2015-16.
 The returns on investment ratio is good in the year 2017-18 and low in the years
2015-16 and 2016-17.

 The data reveals that the return on shareholders’ fund showing fluctuating trend.
Highest in the year 2015-16. Lowest in the year 2016-17 and increases in the year
2017-18.
 The operating ratio is increasing in the year 2016-17 and decreases .
 The data shows that the gross profit ratio of RE records highest in the year 2017-18
and lowest in the year 2016-17.
 Net profit ratio of RE is good except for the year 2016-17. For the other years it is
fluctuating.

Suggestion
From the analysis carried out in this study, we can make the following suggestion:
 The company should increase its current assets and decrease its current liabilities in
order to improve its long term and short term liquid position.
 The excess available working capital in the company should be properly enchased in
order to maximize the returns.
 The working capital turnover ratio has dropped drastically in the 2016-17. Hence
proper care should be taken in order to maintain the required working capital.
 The company can try to have future plans as per production and business activities are
concerned and also to forecast the future requirement of working capital so that it can
increase its sales and three by increase profits.
 The company’s overall performance is good and it has ability to make and maintain
better working capital.

Conclusion
The overall liquidity position of the RAHUL ENTERPRISES required is better management.
Therefore, the company needs to increase its current assets and decrease it's current liabilities
in order to improve its liquidity.
RAHUL ENTERPRISES should allocate the excessive working capital available in profitable
activities to increase profits.
RAHUL ENTERPRISES is a company with strong customer based and has an immense
goodwill. The company should capitalize on it to expand its business and increase its
revenue.
A Study on working capital management at RAHUL ENTERPRISES has been undertaken

with the objective to analyze and interpret the company's financial performance. The analysis
of the company was undertaken with help of balance sheet, profit and loss account and ratio
which are important tools of financial analysis. Company has maintained a good current ratio
which is in a position to meet current obligation. To conclude the company is the leader in the
market producing highly qualitative products and earning very good profits and thus,
attracting the customer and investors.

ANEXXURE

Project 2 Final

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Project 2 Final

Uploaded by

Copyright:

Available Formats

A Study on working capital management at rahul enterprises

In other words, it is “net current assets or net working capital”.

Government First Grade College, vijayanagara, Bangalore Page 1

Working capital management:

Working capital management refers to the management of working capital with

-Weston & Brigham

Government First Grade College, vijayanagara, Bangalore Page 2

CHAPTER 2:COMPANY PROFILE

Government First Grade College, vijayanagara, Bangalore Page 3

Established in the year 2005

Working area of 45000 square feet

Cordially, industrial relations

Rahul enterprises specialize in making Industrial ovens

 Continual improvement in products, process and quality management system

 Satisfied motivated and committed employers

 Safe and clean working conditions and eco-friendly environment

Government First Grade College, vijayanagara, Bangalore Page 4

AWARDS AND RECOGNITIONS

 ISO 9001 2008

 CERIFIED BY INDIAMART TRUST DEAL

 CERTIFIED BY PEENYA INDUSTRIAL ASSOCIATIONS

Government First Grade College, vijayanagara, Bangalore Page 5

CHAPTER-3: RESEARCH DESIGN

Objectives of the study:

Government First Grade College, vijayanagara, Bangalore Page 6

Scope of the study:

Need for the study:

 High return on capital

Government First Grade College, vijayanagara, Bangalore Page 7

Chapter 1: Introduction – The Rahul enterprises.

Chapter 2: Research Design - will include information Related to various departments

Chapter 3: Company Profile – Rahul enterprises.

Government First Grade College, vijayanagara, Bangalore Page 8

Data analysis and interpretation

Government First Grade College, vijayanagara, Bangalore Page 9

Current ratio = Current assets

Table: 4.1: Current Ratio

2015-16 2016-17 2017-18

Figure: 4.1: Current Ratio

Government First Grade College, vijayanagara, Bangalore Page 10

An indicator of a company’s short-term liquidity. The quick ratio measures a company’s

Quick ratio = Quick assets

Year Quick asset Current liabilities Ratio

Figure:4.2: Quick Ratio

1.76 1.59 1.08

2015-16 2016-17 2017-18

Inventory Turnover Ratio

Government First Grade College, vijayanagara, Bangalore Page 11

Inventory turnover ratio= Sales

Table: 4.3: Inventory turnover Ratio

Year Sales Average Inventory Ratio

Figure: 4.3: Inventory Turnover Ratio

1.86 1.81 1.68

2015-16 2016-17 2017-18

Debt equity ratio

Government First Grade College, vijayanagara, Bangalore Page 12

Figure: 4.4: debt equity ratio

0.68 0.94 1.07

2015-16 2016-17 2017-18

Capital turnover ratio

Government First Grade College, vijayanagara, Bangalore Page 13

Capital turnover ratio = sales