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Assessment of Working Capital

Particulars 2006-2007 2007-2008 2008-09


Current Assets: -
Inventory 569,371,982 637,199,150 620,930,765
Sundry Debtors 1,314,635,202 1,945,489,760 2,092,044,503
Cash and Bank Balances 426,489,588 580,140,930 371,338,793
Other Current Assets 296,941,966 386,932,188 381,608,172
Loans & Advances 305,211,648 352,261,574 469,495,151
(A) Total Current Assets 2,912,650,386 3,902,023,603 3,935,417,384

Current Liabilities 1,119,447,128 1,475,607,850 1,445,581,037


Provision 25,983,062 42,144,659 55,810,623
Working Capital Loans 72,230,152 70,978,692 65,392,745
(B) Total Current Liabilities 1,217,660,342 1,588,731,201 1,566,784,405

(A-B) Net Increase/ Decrease in 1,694,990,044 2,313,292,402 2,368,632,979


Working Capital

v Findings

Ø The net working capital is increasing every year. It shows that every year increase
in current assets is greater than increase in current liabilities and it shows that the
company has sufficient fund to meet its short-term obligation as they become due.
Ø Current assets are increased in 3 yrs and current liabilities increasing in 2007-08
and decreasing in 2008-09 but still net working capital was increased, this is due to the %
change in C.A. is more then % change in C.L.
Ø From 2007-08 to 2009 provision is increasing and cash in hand & bank balance is
increasing in 2006-07 to 2007-08 but decreased in 2009.

RATIOS ANALYSIS
S.No.Particulars 31.03.2007 31.03.2008 31.03.2009
1 LIQUIDITY RATIOS :

A. Current Ratio :-
a) Current Assets 2,930,441,701 3,929,313,783 3,953,029,167
b) Current Liabilities 1,145,430,190 1,517,752,509 1,501,391,990
* Current Ratio 2.5:1 2.6:1 2.6:1
(a/b)

B. Liquid Ratio :-
a) Current Assets 2,930,441,701 3,929,,313,783 3,953,029,167
b) Inventory 569,371,982 637,199,150 620,930,765
c) Prepaid Nil nil Nil
Expenses
d) Current Liabilities 1,145,430,190 1,517,752,509 1,501,391,990
* Liquid Ratio [(a – b – 2.06:1 2.17:1 2.22:1
c)/d]

C. Cash Ratio: -
a) Cash 426,489,588 580,140,930 371,338,793
b) Current Liabilities 1,145,430,190 1,517,752,509 1,501,391,990
* Cash Ratio (a/b) 0.37:1 0.38:1 0.25:1

2. ACTIVITY RATIOS:

A. Inventory Turnover
Ratio (Times):
a) Cost of Goods Sold 2,407,333,880 2,599,016,0203,054,313,481
b) Average Stock 296,232,589 310,803,214 303,731,885
*Inventory Turnover 8.12:1 8.36:1 10.05:1
Ratio
(a/b)

B. Debtors Turnover
Ratio (Times): -
a) Annual Credit Sales ,2,175,688,7892,312,630,045 2,425,244,460
b) Average Debtors 1,187,517,251 1,630,062,481 2,018,767,132
c) Average Bills nilnnilNil Nil Nil
Receivables
*Debtors Turnover 1.1.83 1.41 1.20
Ratio
[a/(b+c)]

C. Receivable Collection 199 days 258 days 304 days


Period (365/DTR)
D. Working Capital
Turnover Ratio :-
a) Net Sales 2,175,688,789 2,312,630,045 2,425,244,460
b) Working Capital 1,785,011,511 2.411,561,274 2,451,637,507
* Working Capital 1.21:1 0.95:1 0.99:1
Turnover Ratio (a/b)

E. Current Assets
Turnover Ratio :-
a) Cost of Goods Sold 2,407,333,880 2,599,016,020 3,054,313,481
b) Current Assets 2,930,441,701 3,929,313,783 3,953,029,167
* Current Assets 0.82:1 0.66:1 0.77:1
Turnover Ratio (a/b)

F. Fixed Assets Turnover


Ratio :-
a) Net Sales 2,175,688,789 2,312,630,045 2,425,244,460
b) Fixed Assets 124,745,380 118,474,771 113,609,991
* Fixed Assets 17.44:1 19.52:1 21.34:1
Turnover Ratio (a/b)

G. Total Assets Turnover


Ratio :-
a) Net Sales 2,175,688,789 2,312,630,045 2,425,244,460
b) Total Assets 3,072,644,371 4,065,245,844 4,098,604,158
* Total Assets 0.71:1 0.57:1 0.59:1
Turnover Ratio (a/b)

H. Capital Employed
Turnover Ratio :-
a) Net Sales 2,175,688,789 2,312,630,045 2,425,244,460
b) Capital Employed 1,909,756,891 2,530,036,045 2,565,247,498
* C.E.TOR (a/b) 1.14:1 0.92:1 0.95:1

3. STRUCTURAL
RATIOS:

A. Current Assets To
Total Assets: -
a) Current Assets 2,930,441,701 3,929,313,783 3,953,029,167
b) Total Assets 3,072,644,371 4,065,245,844 4,098,604,158
* Current Assets To 0.95:1 0.97:1 0.96:1
Total Assets (a/b)
B. Cash To Current
Assets: -
a) Cash 426,489,588 580,140,930 371,338,793
b) Current Assets 2,930,441,701 3,929,313,783 3,953,029,167
* Cash To Current 0.15:1 0.15:1 0.093:1
Assets (a/b)

C. Inventory to Current
Assets :-
a) Inventory 569,371,982 637,199,150 620,930,765
b) Current Assets 2,930,441,701 3,929,313,783 3,953,029,167
* Inventory to Current 0.19:1 0.16:1 0.16:1
Assets (a/b)

4. PROFITABILITY
RATIOS :

A. Profit Margin :-
a) Profit Before Interest & (231,645,091) (286,385,975) (629,069,021)
Tax
b) Net Sales 2,175,688,789 2,312,630,045 2,425,244,460
* Profit Margin Ratio (10.65) (12.38) (25.94)
[(a/b)*100]

B. Return on Investment
(ROI) :-
a) Profit Before Interest & (231,645,091) (286,385,975) (629,069,021)
Tax
b) Capital Employed 1,909,756,891 2,530,036,045 2,565,247,498
* ROI [(a/b)*100] (12.13) (11.32) (24.52)

5. SOLVENCY RATIO :-
a) Total Assets 3,072,644,371 4,065,245,844 4,098,604,158
b) Total Debts
* Solvency Ratio (a/b)