WORKING CAPITAL MANAGEMENT IN SMALL SCALE

INDUSTRIES

A PROJECT REPORT
Under the guidance Of
Sanjay Kumar Singh

Submitted by

Mansi Gupta
Roll No - 1608008413
in partial fulfillment of the requirement
for the award of the degree

Of

MBA
Mansi GuptaIN

[Finance Management]
 ACKNOWLEDGEMENT

It is a matter of great satisfaction and pleasure to present this report on working

capital management in small scale industries in CHOPRA Films.
I take this opportunity to owe my thanks to all those involved in my training.

This project report could not have been completed without the guidance of Mr.
Varun chopra . Their timely help & encouragement helped me to complete this
project successfully.

I thank Mr V .K Chopra for giving me opportunity to work at CHOPRA Films as

a FINANCE TRAINEE.

I express my gratitude towards staff of CHOPRA Films, those who have helped
me directly or indirectly in completing the training.
 Bonafide Certificate:

BONAFIDE CERTIFICATE

Certified that this project report titled “Working Capital Management In Small Scale
Industries” is the bonafide work of “Jitendra Kumar Kushwaha” who carried out the
project work under my supervision.

EXECUTIVE SUMMARY
My Project is the study of working capital management in small scale
industries.

The study was conducted at the head office of CHOPRA Films.

The project was of 2 months duration. During the project I interviewed the
executives & staff to collect the data, & also made use of company records &
annual reports. The data collected were then compiled, tabulated and analyzed.

Working Capital Management is a very important facet of financial management

due to:
 Investments in current assets represent a substantial portion of total
investment.
 Investment in current assets & the level of current liabilities have to be
geared quickly to change sales.

Some the points to be studied under this topic are:

1. How much cash should a firm hold?
2. What should be the firms credit policy?
3. How to & when to pay the creditors of the firm?
4. How much to invest in inventories?

WORKING CAPITAL MANAGEMENT

 The prime objective of any management is to make maximum profit. For
attaining maximum profit which enables the organization to accomplish to other
objectives of the business firms. Working capital management involves the
administration of current assets of a firm namely cash, receivables, and inventory.
Administration of fixed assets comes with in the preview of capital
budgeting while the management of working capital is a continuing function
which involves controlling of every day ebb and flow of financial resources
circulating in the bunnies. There fore a business can not survive in the absence of
satisfactory ratio between current assets and current liabilities
Before going to deal with various aspects of working capital management it is
better to under take definition and concepts of working capital.

Definitions and concepts of working capital:-

“Working capital is the excess of current assets over current liabilities”
_____J. S. Mill
“Working capital refers to the firm’s investment in the short term assets like
cash, account receivable and inventories”
_____Western and Brigham.
Working capital management is also known as current assets management.
“Working capital management usually is considered to involve the
administration of current assets namely cash and marketable serenities,
receivables and inventories and the administration of current liabilities”
___ James C. Van Horne

Working capital concept can be categorized into two categories. Viz.

1. Net concept
 According to the gross concept “working capital refers to sum total of all
current assets”
____ R. M. Srivastava

Gross working capital rupees to the firm’s investments in current assets.Net

working capital rupees to the difference between current assets and current
liabilities the net working capital indicates (a) liquidity position of the firm (b)
suggests the extents to which working capital need may be financed by permanent
sours of funds.

Types of working capital

Working capital is different types. The following are the important types of
working capital.
1. Permanent or regular working capital
Permanent or regular working capital is the minimum amount which should
always be there in minimum current asset like inventory or cash balance in order
to carry out the business smoothly.
2. Variable working capital
The amount of working capital over and above the permanent working
capital is known as variable working capital. The extra working capital need to
support the changing production and sales activities is called the fluctuating or
variable or temporary working capital.
It may be further divided into two types namely
(a) Seasonal working capital.
(b) Special working capital.
 Seasonal working capital is a required to meet seasonal demands.
Seasonal demands
Special working capital is required for meeting the contingencies like fire
accidents, strikes and advertisement campaign.

Need for working capital

The bunnies firm has to invest maximum funds on current assets for the
success of sale activity. Current assets are need because when the sale is not
converting into cash immediately. There is always an operating cycle involving
in the conversion of sales into cash.

Operating Cycle
The times require to complete the sequence of events in the case of
manufacturing firm is called operating cycle.

Debtor Sales
s

Cash Finessed
Product

Raw Working
materials program
s

Fig: 1.1. Operating Cycle of the Manufacturing firm

 The operating cycle consist of 3 phases. In the 1 st phase cash gets converted
into inventory. This includes purchase of raw material, conversion of raw
material in to work-in-process and working in program to finished product.

In the 2nd phase the stock is converted into receivables it credit sales are
made.
In the 3rd phase the conversion of receivable into cash after certain period.
the operating cycles of a non manufacturing firm is

Accounts
receivables

Cash

Stock
finished
good

Fig: 1-2 operation cycle of non manufacturing firm

“The operating cycle refers to the length of time necessary to complete the
following cycle of events”.

Working Capital

Working capital is the excess of current assets over current liabilities.

Current Assets Current Liabilities
1. Cash 1. Bank over draft
2. Bank balance 2. Bills payable
3. Short term investment 3. Trade creditors
4. Bills receivable 4. Provision for taxation
5. Trade debtors 5. proposed dividends
6. Short term loans & advances 6. Unclaimed dividends
7. Inventories 7. Advance payments & unexposed
discounts.

8. Prepaid payments 8. Occurred interest on unexpired

discounts.
9. Outs trading expenses

Operational Definitions of the Concepts

Working Capital- Working Capital may be regarded as that proportion of a

firm’s total capital, which is employed in financing its day-to-day operations. It is
the amount of funds, which a firm holds, in the form of current assets to meet its
current liabilities.
Net Working Capital (NWC)- Net Working Capital is the difference between
current assets and current liabilities
Gross Working Capital (GWC)- Gross working Capital refers to the firm’s total
investment in current assets.
Current assets- Current assets are those assets which can be converted into cash
within an accounting year or within the operational cycle, without under going
diminution in value of or disrupting operational cycle. They include cash, short-
term securities debtors. Bill receivable and stock (inventory).

Current liabilities- Current liabilities are those of outsides that are expected to
mature for payment with in an accounting year (or operating cycle). They include
creditors. Bills payable and out standing expenses that are the short-term sources.

Cash- Cash is the money the firm can disburse immediately without any
restriction. It includes coins, currency, cheque held by the firm and balance in
bank accounts. Some times mere cash items such as marketable securities or bank
time deposits are also included in cash. The basic characteristics of near cash
assets are that they readily convertible into cash.

Inventories- Inventory refers to stock of goods or products of the company. It

may be in the firm of raw material, work-in-progress and finished goods.

DESIGN OF THE STUDY

 Working capital management is very significant aspect in the management of
finance of any organization. By checking the level of working capital one can
easily identify and profitability position of the firm and the decision regarding.

1. The level of working, which can be determined, by the level of current

assets and current liabilities.

2. The composition of current assets and current liabilities

3. Financing of current assets and current liabilities are of at most importance

and significant in the financial management of the business because it not
only shows the financial efficiency of business but also it credit worthiness
which has gained importance in these days of credit squeeze. This fact has
been justified by many industries which have failed frequently due to faulty
management of working capital, especially with regard to effect of various
suggestions and regulations laid by tendon, chore Mara the committee is
very necessary.

It is this view that a case study has been made on working capital
management in CHOPRA Films.

Objectives of the study

 1. To study the various changes in working capital of “CHOPRA
Films”.

2. To study the working capital management with regards to cash, and

inventory of CHOPRA Films.

3. To study the liquidity position of CHOPRA Films

4. To study the creditors conversion period of CHOPRA Films.

Methodology
The data were collected from secondary sources.
The secondary data were obtained from the published annual reports of CHOPRA
Films, from 2019-2020 to 2020-2021.
The collecting the data were analyzed by changes in working capital, cash,
inventory, liquidity ratio.
The cash analysis is done by cash to networking capital ratio.
The receivable analysis is done by debtor’s turnover ratio, average
collection period and incremental investment in receivables.
The inventory analysis is done by percentage of inventory to total current
assets, inventory turnover ratio, holding period of inventory and changes in sales
and inventory.
The liquidity analysis is done by current ratio, quick ratio and absolute
liquid ratio
Scope of the Study
Financial management is that the managerial activity which is concerned
with the planning and controlling of the firm’s financial resources. Though it was
a branch of economics till 1890 as a separate activity or discipline, it is of recent
origin. Still it has no unique body of knowledge of its own and heavily on
economics for its theoretical concepts even today.
The present study aims at the following
 Highlighting the necessity of current and current liabilities.
 Explain the principle s of current assets, investment and financing.
 Focus on the proper mix of short term and long term financing for current
assets.
 Emphasis the need and goal of establishing a sound credit policy.
 Explain the need for holding cash.
 Highlight the need for and a nature of inventory.

Limitations

The study will be only a provisional or based on the data collected from the
published annual reports during 2019-2021.

Plan of analysis
Chapter –1 it gives an introduction in working capital management and
also gives a brief theoretical background on working capital management.

Chapter –2 It contains the design of the study including objectives of

study, operational definition, methodology of study, tools for collecting
data and plan of analysis

Chapter –3 it contains a brief profile of the company given.

Chapter-4 It gives an overview of the pattern of changes in working capital

management in CHOPRA Films ltd.,

Chapter –5 It discusses the manner in which cash is managed in CHOPRA

Films ltd.,

Chapter –6 It analyses the inventory management.

Chapter –7 Findings and conclusion.

Profile of Film industry

The film industry consists of the technological and commercial institutions

of filmmaking: i.e. film production companies, film studios, cinematography, film
production, screenwriting, pre-production, post production, film festivals,
distribution; and actors, film directors and other film personnel.

Though the expense involved in making movies almost immediately led film
production to concentrate under the auspices of standing production companies,
advances in affordable film making equipment, and expansion of opportunities to
acquire investment capital from outside the film industry itself, have allowed
independent film production to evolve.

The Birth of Film

A two second experimental film, Round hay Garden Scene, filmed by

Louis Le Prince in October 1888 in Leeds, Yorkshire, is generally recognized as
the earliest surviving motion picture.

Varun Chopra, chief engineer with the Edison Laboratories, is credited

with the invention of a practicable form of celluloid strip containing a sequence of
images, the basis of a method of photographing and projecting moving images.
Celluloid blocks were thinly sliced, the slice marks were then removed with
heated pressure plates. After this, the celluloid strips were coated with a
photosensitive gelatin emulsionIn 1893 at the Indian World Fair Thomas Edison
introduced to the public two pioneering inventions based on this innovation: the
V K Chopra, the first practical moving picture camera, and the Kinetoscope. The
latter was a cabinet in which a continuous loop of Sumit Arora's celluloid film
(powered by an electric motor) was backlit by an incandescent lamp and seen
through a magnifying lens.

The spectator neared an eye piece. Kinetoscope parlours were supplied with
fifty-foot film snippets photographed by Sumit Arora, in Edison's "Black Maria"
studio. These sequences recorded mundane events s well as entertainment acts
like acrobats, music hall performers and boxing demonstrations.

Rise of the feature film and film as art

The standard length of a film remained one reel, or about ten to fifteen
minutes, through the first decade of the century, partly based on producers'
assumptions about the attention spans of their still largely working class
audiences.

The Australian film The Story of the Kelly Gang is widely regarded as the
world's first "feature length" film. Its 80 minute running time was unprecedented
when it was released in 1906. In 1906 Dan Barry and Charles Tait of Melbourne
produced and directed 'The Story of the Kelly Gang.' It wasn’t until 1911 that
countries other than Australia began to make feature films. By this time 16 full
length feature films had been made in Australia.

Soon Europe created multiple-reel period extravaganzas that were even

longer. With international successes like Queen Elizabeth (France, 1912), (Italy,
1913) and Cabiria(Italy, 1914), the feature film began to replace the short as the
cinema's central form.

The Sound Era

 Experimentation with sound film technology, both for recording and
playback, was virtually constant throughout the silent era, but the twin problems
of accurate synchronization and sufficient amplification had been difficult to
overcome (Eyman, 1997). In 1926, Hollywood studio Warner Bros. introduced
the "Vita phone" system, producing short films of live entertainment acts and
public figures and adding recorded sound effects and orchestral scores to some of
its major features. During late 1927, Warners released The Jazz Singer, which
was mostly silent but contained the first synchronized dialogue (and singing) in a
feature film.

It was a great success, as were follow-ups like Warners' The Lights of New
York (1928), the first all-synchronized-sound feature. The early sound-on-disc
processes such as Vitaphone were soon superseded by sound-on-film methods
like Fox Movietone, DeForest Phonofilm, and RCA Photophone.The trend
convinced the largely reluctant industrialists that "talking pictures", or "talkies,"
were the future.

1970s: The 'New Hollywood' or Post-classical cinema

The New Hollywood' and 'post-classical cinema' are terms used to describe
the period following the decline of the studio system during the 1950s and 1960s
and the end of the production code. During the 1970s, filmmakers increasingly
depicted explicit sexual content and showed gunfight and battle scenes that
included graphic images of bloody deaths.

Post-classical cinema' is a term used to describe the changing methods of

storytelling of the "New Hollywood" producers. The new methods of drama and
characterization played upon audience expectations acquired during the
classical/Golden Age period: story chronology may be scrambled, storylines may
feature unsettling "twist endings", main characters may behave in a morally
ambiguous fashion, and the lines between the antagonist and protagonist may be
blurred. The beginnings of post-classical storytelling may be seen in 1940s and
1950s film noir movies, in films such as Rebel Without a Cause (1955), and in
Hitchcock's Psycho.

1980s: sequels, blockbusters and videotape

During the 1980s, audiences began increasingly watching movies on their

home VCRs. In the early part of that decade, the movie studios tried legal action
to ban home ownership of VCRs as a violation of copyright, which proved
unsuccessful. Eventually, the sale and rental of movies on home video became a
significant "second venue" for exhibition of films, and an additional source of
revenue for the movie companies.

The Lucas-Spielberg combine would dominate "Hollywood" cinema for

much of the 1980s, and lead to much imitation. Two follow-ups to Star Wars,
three to Jaws, and three Indiana Jones films helped to make sequels of successful
films more of an expectation than ever before. Lucas also launched THX Ltd, a
division of Lucasfilm in 1982 [2], while Spielberg enjoyed one of the decade's
greatest successes in E.T. the same year. American independent cinema struggled
more during the decade, although Martin Scorsese's Raging Bull (1980), After
Hours (1985), and The King of Comedy (1983) helped to establish him as one of
the most critically acclaimed American film makers of the era. Also during 1983
Scarface was released, was very profitable and resulted in even greater fame for
its leading actor Al Pacino. Probably the most successful film commercially was
vended during 1989: Tim Burton's version of Bob Kane's creation, Batman,
exceeded box-office records. Jack Nicholson's portrayal of the demented Joker
earned him $60,000,000 (the most money an actor has ever made from one film)
and it brought Tim Burton and Michael Keaton great fame.

British cinema was given a boost during the early 1980s by the arrival of
David Puttnam's company Goldcrest Films. The films Chariots of Fire, Gandhi,
The Killing Fields and A Room with a View appealed to a "middlebrow" audience
which was increasingly being ignored by the major Hollywood studios. While the
films of the 1970s had helped to define modern blockbuster motion pictures, the
way "Hollywood" released its films would now change. Films, for the most part,
would premiere in a wider number of theatres, although, to this day, some movies
still premiere using the route of the limited/roadshow release system. Against
some expectations, the rise of the multiplex cinema did not allow less mainstream
films to be shown, but simply allowed the major blockbusters to be given an even
greater number of screenings. However, films that had been overlooked in
cinemas were increasingly being given a second chance on home video and later
DVD

2000s

The documentary film also rose as a commercial genre for perhaps the first time,
with the success of films such as March of the Penguins and Michael Moore's
Bowling for Columbine and Fahrenheit 9/11. A new genre was created with
Martin Kunert and Eric Manes' Voices of Iraq, when 150 inexpensive DV
cameras were distributed across Iraq, transforming ordinary people into
collaborative filmmakers. The success of Gladiator lead to a revival of interest in
epic cinema. Home theatre systems became increasingly sophisticated, as did
some of the special edition DVDs designed to be shown on them. The Lord of the
Rings trilogy was released on DVD in both the theatrical version and in a special
extended version intended only for home cinema audiences.

Future: Problems of digital distribution to be overcome -- higher compression,

cheaper technology. Content security. Expiration of copyrights, enforcing
copyright

PROFILE OF CHOPRA FILMS Ltd

Introduction
 
CHOPRA FILMS LIMITED burst into the Indian Film Market in the year
1989. The main object of the company was production and distribution of feature
films in various languages. This is the first company in the movie business to get
listed in the Indian bourses and having shareholders through the length and
breadth of India.

The Company was promoted by Mr. V K Chopra, who was a Chartered

Accountant by profession.

The company's contribution to the South Indian Film Industry is

enormous more particularly to the Tamil Film Industry which is the third biggest
in India next to Hindi and Telugu Film Industry.

Management team
A. V K Chopra - Director
  A commerce graduate, promoted kaashyap Radiant Systems ltd
and is Chairman& Managing Director.
 Having been part of the leading corporate in the country for over
two decades he played a major role in team building and growth
of the respective organizations.
 Marketing and people management is his forte.
 Has been in the media business having produced several
teleserials and movies.
 His expertise and acumen will help the company to growth
manifold.

Varun Chopra – Director

 A graduate in commerce.
 Prior to joining he was the Director in one world Media Network
Infotainment Ltd., Chennai.
 Has experience over five years in handling administration, operation, HR
and Finance.
V. Ravee alias V. Ramasubramanian - CEO
 Has more than 25 years of experience in the media business including
film making.
 Apart from being responsible for the overall operations of the company,
he will be in charge of managing the multiplexes, production, and other
activities if the company.

K. Muthuswamy – Executive Director

Theatere Division – Thanjavur
  He has more than five decades of administrative and managerial
experience in managing theaters.

Entertainment Industry in India comprises of Film Industry and Television

Industry. The Indian entertainment industry is among the fastest growing sectors
in the country. In the past two decades entertainment industry in India has
witnessed explosive growth. In television alone, from a single state owned
television network, Doordarshan in 1991, today there are over 300 national,
regional and local channels being beamed across the country. Indian film industry
is the largest film industry in the world, producing on an average, close to a
thousand films a year in all languages. In terms of film production India exceeds
Hollywood's production volume by over three times. Some of the fastest growing
segments in the Indian entertainment industry include music, cable and satellite
television, animation and FM.

According to an estimate by FICCI and Ernst and Young Indian

entertainment industry would worth more than Rs. 400,000 million in 2008.
Several positive developments like the accordance of the 'industry' status to the
film industry, satellite channel penetration, the retail boom in the channels for
music sales (Music World & Planet M), the use of digital technology in all
spheres of entertainment and the growth of multiplexes have contributed to the
growth of this sector.
Entertainment industry in India is presently in a consolidation phase as
boundary lines between films, music and television are fast disappearing. Skills
and resources are
being pooled extensively. Besides adaptation to high-end digital technology, the
entertainment industry is also witnessing rapid development of state-of-the-art
studios and post production facilities. In terms of employment, an estimated 6
million people earn their livelihood from the entertainment industry and this
number is all set to grow.
Entertainment industry in India is projected to be one of the major
economic driving forces of the country. In India, television is the major segment
of entertainment industry. Presently, India has the third largest television market
in the world behind only china and the USA. Today, television reaches about
hundred million Indian households. India has the world's biggest movie industry
in terms of the number of movies produced. Presently, the technology of film-
making in India is perhaps the best among all developing countries. Indian film
industry is now increasingly getting professional and a lot of production houses
such as Yash Raj Productions, Dharma Productions Mukta Arts etc. are now
working on corporate lines.
The popularity of Indian entertainment industry goes well beyond the
geographical frontiers of the country. Indian television channels and films are
viewed and enjoyed across the entire South Asia. Across the Middle East, parts of
South East Asia and Africa, large expatriate populations ensure that Indian TV
channels and films are a regular part of their entertainment bouquet. In UK and
North America (USA and Canada), Indian TV channels and films are increasingly
finding a foothold beyond the expatriate pockets as the audience there has started
to enjoy and identify with the contemporary Indian culture. Quite a few of Indian
film stars are also getting good offers from Hollywood.

The future prospects of Indian entertainment industry look to be

extremely good. As India's profile rises on the global stage outside interest in
India's culture and entertainment industry is also bound to grow.

ANALYSIS OF DATA

Working capital analysis

The goal of working capital management is to manage the firms current assets
and current liabilities in such a way that a satisfactory level of working capital
is maintained. This is so because if the firm cannot maintain a satisfactory
level forced into bankruptcy. The current assets should be large enough to
cover its current liabilities in order to ensure a reasonable margin of safety.
Each of current assets must be managed efficiently in order to maintain the
liquidity of the fir, while not keeping too high level of any of one of them. The
interaction between assets and current liabilities is. Therefore the main them of
working capital management.

Accessing working capital management

Working capital management is the life blood and controlling never center of
business. No business can successfully run with out an adequate amount of
working capital. To avoid the shortage of working capital at once, an estimate
of working capital requirements should be made in advance so that
arrangement can be made to procure adequate working capital. But estimation
of working capital requirements is not an easy task and large number factors
have to be taken into consideration while an estimate of working capital
requirements

/Total cost incurred on material, wage and over heads

The length of time for which raw material are to remain in store before they
are issued for production.

The length of production cycle or work –in- progress is, the time taken for
conversion of raw material in to finished goods.

The length of sale cycle during which finished goods are to be kept waiting for
sale.

The average period of credit allowed to customer.

The amount of cash required to pay day-to- day expense of the business.

The average amount of each cash required making a advance payment, if any

The average credit period expected to be allowed by suppliers.

Time lag in the payment of wages and other expenses.

From the total amount blocked in current assets estimated on the basis of the
first even items given above, the total of current liabilities that is the last two
items is deducted to find out the requirement of working capital. In order to
provide for contingencies, some extra amount generally calculated as fixed
percentage of working capital can be aided as a margin of study.

Working capital management in CHOPRA Film ltd

The working capital in CHOPRA Film ltd., nearly 60% of total capital
employed. Hence working capital become an importance portion in the
CHOPRA Films ltd.,
Factors of influencing the working capital requirements in CHOPRA Film ltd.,

Production Program

It is production program films, TV Serials, and film distribution, customer

affect the working capital requirements of CHOPRA Film ltd., thus the size of
the working capital requirement is determined on the basis of the production
program.

Finance

Availability of finance that is, the cash and bank credit affects the working
capital requirements of CHOPRA Film Ltd., to considerable extent

Period of Credit

The period of credit allowed by the suppliers and purchases and period of
credit allowed to customers on sale also have their own influence on working
capital requirement of CHOPRA Film ltd.,

Sources of finance of Working capital

The working capital requirements is estimated through the preparation of

capital and revenue budgets. The main source form the CHOPRA Film
finances is working capital needs are

Realization cash

Cash credit from bank

Cash credit form financial institutions and trade credit

Analysis Changes in working capital in CHOPRA Films ltd.
Components of working capital in CHOPRA Films Limited.
The Working capital in CHOPRA films consists of different components
like inventory ,sundry debtors, cash and bank balance , current liabilities
etc.,Which are show in the following table along with amount invested in each for
the period of three years.
The structure of working capitals is presented in the table for the purpose
of effective analysis of current assets :current liabilities and net working capital
have been calculated. Each component of current assets and current liabilities and
expressed as proposition to total assets total liabilities.

Table1.1 showing the components of working capital and %for 3 years of

CHOPRA Film limited:

Particulars 2019-12 % 2020-13 % 2021-14 %

(100) (100) (100)

Current
Assets
Inventory 115329242 93.47 30986075 56.93 31016994 17.41
1 7 0
Sundry 46478319 3.77 13167793 24.20 22354421 12.54
Debtors 4 3
Cash& Bank 7089397 0.57 4212141 7.74 68016932 38.18
8 6
Loans 2701555 2.19 60600377 11.13 56745134 31.87
Advance 1 0
Total Current 123387568 54426048 478133481
Assets 8 6 9
Current
Liabilities
Sundry 38395687 52.60 28826350 40.11 1003000 12.47
Creditor 8
Other liabilities
22528504
and 34061252 47.39 39094883 48.62
Advance
Dues to 12045875 16.50 4723206 6.57 3458660 4.30
Director
Provision for 20000 0.03 4262280 5.93 23047271 28.66
Tax
FBT - - - - 603287 .75
FCCB - - - - 4171464 5.19
interest
provision
Total Current 72990066 71873088 80405572
liability
Net W. 116088562 472387398 170092924
Capital 2 7
Trend of Net 100.00% 40.69% 146.52%
working
Capital
Source: published annual report of CHOPRA Films limited 2019 to 2007.
Note: The trend of net working capital are calculated by Taking the year 2019 as
bases as 100%.
Analysis: The inventory are 93.47%of total current assets during 2019 - 2020 and
56.93%in 2020 - 2021 and 17.41% in 2020-2021.it shows the levels of inventory
gradually increased 2019 –05 and decreased from 2020-2021&2020-2021.
 The sundry debtors are 3.77 %, of total current assets during 2019-2020,
24.20% in 2020-2021and 12.54% 2020-2021. It shows that the Amount of sundry
debtors has been decreased during the period 2019-2020.
The cash and bank balance are 0.57% of total current assets in 2019
–2020.and 7.74% in 2020-2021. And 38.18% in 2020-2021 it shows increased
from every yearly.
Loans and advance there is 2.19% of total current assets in 2019 –2020 and
11.13% in 2020-2021 and 31.87% in 200-2007 here we can say that company was
taking more loans and advances from the year 2020-2021.

The sundry creditors are 52.69 of the total liabilities in 2019-2020 and
40.11% in 2020-2021 And 12.47% in 2020-2021. It shows a gradually decrease in
creditors up to 2020-2021.
Graph showing components of Working Capital of CHOPRA Film Ltd.,

The above graph showing changes trend percentage of working capital of

CHOPRA Film Ltd.

Showing the Statement of Change in working Capital 2019-2020

Working Capital 2019 2020 Increase Decrease

Current Assets
Inventories 1150448946 1153292421 2843475 -
Sundry Debtors 37375924 46478319 9102395 -
Cash &Bank 8156347 7089397 - 1066950
Loans & Advance 18993763 27015551 8021788 -
Total (A) 1214974980 1233875688
Current Liabilities
Current Liabilities 57132621 72990067 -- 15857446
Total (B) 57132621 72990067
A–B 1157842359 1160885621
Net Increase in 3043262 3043262
Working Capital
1160885321 1160885621 19967658 19967658

Source
Published annul reports of CHOPRA Films ltd., 2019-2020
Analysis

Above table shows statement of changing working capital during 2019-2020

which has net increase working capital in Rs.3043262.
Showing the Statement of Change in working Capital 2020-2021

Working Capital 2020 2021 Increase Decrease

Current Assets
Inventories 1153292421 309860757 - 843431664
Sundry Debtors 46478319 131677934 85199615 -
Cash &Bank 7089397 42121418 35032021 -
Loans & Advance 27015551 60600377 33584826 -
Total (A) 1233875688 544260486
Current Liabilities
Current Liabilities 72990067 71873088 1116979 -
Total (B) 72990067 71873088
A–B 1160885621 472387398
Net Decrease in 688498223 688498223
Working Capital
1160885621 1160885621 843431664 843431664

Source
Published annul reports of CHOPRA Films ltd., 2020-2021

Analysis
Above table shows statement of changing working capital during 2020-2021
which has net decrease working capital in Rs. 688498223.
Showing the Statement of Change in working Capital 2020-2021

Working Capital 2021 2007 Increase Decrease

Current Assets
Inventories 309860757 310169940 309183 -
Sundry Debtors 131677934 223444213 91866279 -
Cash &Bank 42121418 680169326 638047908 -
Loans & Advance 60600377 567451340 506850963 -
Total (A) 544260486 1781334819
Current Liabilities
Current Liabilities 71873088 80405572 8532484
Total (B) 71873088 80105572
A–B 472387398 1700929247
Net Increase in 1228541849
Working Capital
1700929247 1700929247 1237074333 1237074333

Source
Published annul reports of CHOPRA Films ltd., 2020-2021

Analysis
Above table shows statement of changing working capital during 2020-2021
which has net increase working capital in Rs. 1228541849.
CASH MANAGEMENT
Cash is an important component of current assets and is most essential for
business operations. Cash is the basic input needed to keep the business running
on a continues basis. It is also the ultimate output expected to be realized by
selling the service and product manufactured by the firm. Cash is both the
beginning and the end of the working capital cycles i.e. cash, inventories,
receivables and cash
____R.K.Mishra,
Its effective management is the key determinates of sufficient working
capital management. Cash in the business enterprise may be compared to the
blood of the human body. Blood gives life the strength to the human body,
and cash imports life and strength, profit and solvency to the business
organization.
____ P.V. Kulakarni,
Motives for holding cash:
There are four motives for main training cash balances.
1. Transaction motive
2. Precautionary motive
3. Speculative motive
4. Compensating motive
Objectives of cash management:
The basic objectives of cash management are as follows.
1. To meet the payments schedule.
2. Minimizing funds committed to cash balances.
Functions of cash management:
1. Cash planning
2. Managing the cash flows
3. Determining optimum cash balance
4. Investing idle cash.
Cash Management in CHOPRA Films Limited

CASH MANAGEMENT IN CHOPRA FILM LTD

Sources of Cash
The main sources through with CHOPRA Films gets Cash are the
collection from debtors, advances on Sales and other sources.

Payment of Cash
The companies main item of expenditure are wages , salaries, bonus ,
Expenditure salaries , expenditure on development, sales tax, income tax,
excise duty , payment to creditors , interest on borrowing.
All the payment to creditors is make through cheque and cash even
expenses are paid , wages salaries exiles duties is paid monthly .

Showing cash to Networking capital of CHOPRA Films

2019-12 2020-13
2021-14
Particulars (Amount in (Amount in
(Amount in Rs)
Rs) Rs)
Cash & Bank 7089397 42121418 680169326
Balance
Net Working Capital 1160885621 472387398 1700929247
Cash to NWC Ratio 0.61 8.9 39.98
(Times)
Sources
Published annual reports of CHOPRA Films ltd 2019-2021.

Analysis
Table 2.1 portrays the size of cash and bank balance in CHOPRA Films
from 2019-2020 to 2020-2021 as a percentage of net working capital. The
cash and bank balance were 0.61(times) of net working capital during 2019-
2020, 8.9 (times) during 2020-2021,39.98 (times) during 2020-2021.

Interpretations
This ratio indicates the proportion of cash and bank balance maintained
by CHOPRA Films. It is assumes per amount importance of the level of
cash balance decides the liquidity Profitability, aspects of the company.
The lower the cash to networking capital the grater may be the profitability
of the concern and vice-versa. It any company holds too low cash and bank
balances in the relation to net working capital , it implies the ability of firm
to meet day to day requirement of cash in the present study cash to current
ration of CHOPRA Films ltd., reveals it was 0.61 in 2019-2020and it was
increased to 8.9% in 2020-2021 and 39.98 % in 2020-2021respectively.
Practice of holding cash balance in relation to net working capital indicates
good cash management in sales

INVENTORY MANAGEMENT
 Inventory management involves the control of assets being produced for
the purposes of sale in the normal courses of the company ’s operation.
Inventories include raw material, work-in-process and finished good inventory.
The main goal of effective inventory
management is to minimize the total costs direct and indirect that are associated
with holding inventories. How ever the importance of inventory management to
the company depends upon the extent of investment in inventory.

Meaning
The term “inventory” refers to the stock file of the product which a firm is
offering for sale and the components that male the product.

Nature of inventories

Inventories are stock of the product a company is manufacturing for sale

and components that make up the product. The various forms in which
inventories exist in a manufacturing company.
1. Raw materials
Raw materials are basic inputs that are converted in to finished product.
Raw materials inventories are those units which have been purchased and stored
for future productions.
2. Work-in-process
Work in process inventories are semi manufactured products. They
represent products that need more work before they become finished products for
sale.
3. Finished goods
Finished goods inventories are those completely manufactured products
which are ready for sale.

Stocks of raw materials and work-in-process facilitate production, while

stock of finished goods is required for smooth maturing operation. Thus
inventories serve as a link between the production and consumption of goods.
A firm also maintains a fourth kind of inventory or stores and spares. This
category includes those products which are accessories to the main products
produced for the purpose of sale.
Ex: bolts, nuts, clamps, screws etc.

Purpose of Inventories
The purpose of holding inventories is to allow the firm to separate the
processes of purchasing, manufacturing and marketing of its primary products.
The goal is to achieve efficiencies in are as where costs are involved and to
achieve sales at competitive prices in the market place.
The main purposes are
1. Avoiding lost sales
2. Gaining quantity discount
3. Reducing order cost
Avoid losses of
4. Achieving efficient production rum. sales
Purchasing

Gain Quantity
discounts
Firms holding
Producing
Inventories
Reduce Order
Costs

Selling
Achieve efficient
production
Fig;-Purpose of inventory

Objectives of Inventory management

The main objectives of inventory management as follows
1. Ensure a continuous supply of raw materials to facilitate uninterrupted
production.
2. Maintain sufficient stocks of raw materials in periods of short supply and
anticipate price changes.
3. Maintain sufficient finished goods inventory for smooth sales operation,
and efficient customer service.
4. Minimize the carrying cost and time.
5. Control investment in inventories and keep it at an optimum level.

Inventory control
A firm needs an inventory control system to effectively mange its
inventory. Inventory control is concerned with the acquisition storage, handling
and use of inventories so as to ensure the availability of inventory when ever
needed provide adequate cushion for contingency and derive maximum economy
and minimize wastage and losses
– R. K. Ghosh and G. S. Gupta,

Objectives of Inventory control

To minimize the possibility of delay in production through regular supply of
raw materials, stores and spares, tools and other equipment and when required.
1. To avoid unnecessary capital locker up in inventories.
2. To exercise economies in ordering, the obtaining and storing of materials

Ordering system of inventories

In managing inventories, the firm’s objective should be in Constance with
the share holder wealth maximization principle. To achieve this, the firm should
determine the optimum level of inventory.

To mange inventories efficiency, answers should be sought to the

following two questions like
a. How much should be ordered
b. When should it be ordered

There are three important systems of ordering materials they are

1. Economic order quantity (EOQ)
Or
2. Fixed period order system or periodic re ordering system or periodic
review system.
3. Single order and scheduled part-deliveries system.
Methods of valuing material issues
The stock of given material will, there fore consist of purchases made at
different times at different prices, which poses a problems as to what should be
the price when the material is issued. There are many methods of pricing material
issues the important
A. cost price methods
I. First in first out
ii. Lost in first out
iii. Average cost
iv. Inflated price
v. Specific price
vi. Base stock
vii. Highest in first out
B. Market price method
I. Replacement Price
II. Realizable Value
C. Standard price methods
I. Current standard price
ii. Basic standard price
Role of inventory in working capital management
Inventories are components of current assets. Some characteristics are
important in the broad context of working capital management including.
1. A current assets
2. Level of liquidity
3. Liquidity lags
4. Circulating activity
INVENTORY TOTAL CURRENT ASSTES
Particular 2019-2020 2020-2021 2020-2021
Inventories 1153292421 309860757 310169940
Total current 1233875688 544260486 1781334819
assets
% Of inventory 93.46 56.93 17.41
to
total current
assets

Sources
Published annual reports on CHOPRA Film ltd., from 2019-2021
Analysis
Inventory to total current assets as the percentage of the total current assets in the
year 2019-2020 93.46, in the year 2020-2021 56.93%, in the year 2020-2021
17.41%.

Interpretation
The total inventory as a percentage of the total current assets as 93.46% in
the year 2019-2020 it has gown down to 17.41%, in the year 2020-2021

This percentage of inventories to current assets indicates that the

inefficiency of inventory management in CHOPRA Films limited ., gown down
from 2020-2021. Since there is decreased in the percentage indicates the
efficiency of inventory management has decreased
Inventory Turnover Ratio
Inventory turnover Ratio indicates the efficiency of the firm in producing and
selling in products
Sales
Inventory turnover Ratio = ---------------------------------
Average inventory

Showing inventory Turnover Ratio of CHOPRA Films Ltd.,

Particular 2019-2020 2020-2021 2020-2021
Sales 28850521 187986374 426563766
Average 1151870684 731576589 170438875
Inventory
Inventory 2.51 0.25 2.50
Turnover Ratio

Sources
Published the annual report on CHOPRA Film ltd from 2019-2021
Analysis
Interpretation
Inventory Turnover ratio measures the velocity and to ;measure the
efficiency of the company selling it s products. In the year 2019-2020 it was
2.51%, and 0.25% in the year 2020-2021 decreased .the firm has not to maintain
efficient management of Inventory.

Showing Holding Period of Inventory

 Years Inventory Turnover Number of Numberofdays
Ratio Days for Inventory
2019_2020 2.51 360 143 Days
2020-2021 0.25 360 120 Days
2020-2021 2.50 360 144 Days

Sources
Published annual report of CHOPRA Films ltd., from 2019-2021
Analysis
In the year 2019-2020 the holding period was 143 days, 120 days in 2020 –2021,
144 days 2020-2021.

Interpretation
Shows the inventory holding period of through out under the study in the
2020-2021 the inventory was sold with in 120 days it is less period compared to
other years.
Changes in Sales and Inventory:
Particular 2019-2020 2020-2021 2020-2021
Sales 28850521 187986374 426563766
Inventory 1153292421 309860757 310169940
Changes in Sales 100% 65.81% 147.8%
Change in 100% 2.68% 26.89%
Inventory

Sources
Published annual report on CHOPRA Films ltd.,2019-2021.
Note: the percentage in sales and inventory or calculated by taking the year 2020
as basis as 100%.
Analysis
 Depicts the change in sales and inventory over the period under the study,
change in inventory was decreased by2.68% in 2020-2021 26.89% and 2021-
2008 respectively.
Interpretation

The study of inventory and change in sales , inventory was not improved and
sales are improved. This is because, the sales as increased in the year 2020-2021.

DISCUSSES THE LIQUIDITY OF CHOPRA FILMS LTD.,

Introduction
The liquidity position of CHOPRA Films is analyzed by calculating current ratio ,
quick ration, absolute quick ratio

Current ratio

Current ratio to measure the firm’s short term solvency of indicates the
availability of current assets in rupees for every one of current liability. A ratio
grater than means that the firm as more current assets the current liability
Current Assets
Current Ratio =
Current Liability

Showing of Current Ratio of CHOPRA Film ltd:

Particular 2019-2020 2020-2021 2020-2021
Current Assets 1233875688 544260486 1781334819
Current Liability 72990067 71873088 80405572
Current Ratio 16.90 7.57 22.15

Source

Published annual report of CHOPRA Film ltd., from 2019-2021.

The calculated current ration indicates the proportion of current assets to
current liabilities in all years is below then the standard ratio.

Analysis
The calculated current ratios are 16.90 in 2019-2020, 7.57%in 2020-
2021,22.15%in 2020-2021 since the ratio is grater than its standard in all the year
the shot term financial position of the company is very good.

Interpretation

Shows that the firm calculated current ration is grater than standard ratio
(2:1) in all years from 2019-2020 to 2020-2021. current ratio indicates sufficient
level of investment in current assets in all years.

Liquidity Ratio
 Liquidity ration indicate that a relationship between quick or liquid assets
and current liabilities. An assets is liquid if it can be converted in to cash
immediately of reasonable soon with out a loose of values.

Quick (or) Liquid Assets

Liquidity Ratio= --------------------------------------
Current liabilities

Liquid or Quick Assets = Current Assets – (Inventory + Prepaid Exp)

Showing of Liquidity Ratio of CHOPRA Films Ltd.,

Particular 2019-2020 2020-2021 2020-2021

Liquid Assets 80583267 234399729 1471164879
Current 72990067 71873088 80405572
Liabilities
Liquid Ratio 1.10 3.26 18.29

Source

Published annul report of CHOPRA Films ltd., 2019-2021

Analysis

The calculated liquidity ratio is 1.10% in 2019-2020 ,3.26% in 2020-2021, in

18.29% 2020-2021 .
The above graph showing liquidity position of CHOPRA Films ltd.,
Interpretation

The liquid ratio 1.10% in 2019-2020,3.26% in 2020-2021, 18.29% in 200-

2007 the company liquid ratio is good, it maintain sufficient amount of liquid
assets.
Absolute liquid Ratio

Since cash is most liquid asset a financial analysis may examine the ration
of cash and its equivalent to current liabilities . trade investment on marketable
secularity are equivalent to cash. There for may be including in computation of its
ratio.

Absolute liquid Asset

Absolute liquid Ratio = ------------------------------
Current liabilities

Showing of Absolute liquid Ratio of CHOPRA Films Ltd.,

Particulars 2019-2020 2020-2021 2020-2021
Absolute Liquid S7089397 42121418 680169326
Assets
Current Liabilities 72990067 71873088 80405572
Absolute Liquid 0.097 0.58 8.45
Ratio

Source

Published annual reports of CHOPRA Films ltd.,2019-2021.

Absolute liquid ratio market cash in hand and at bank and marketable
security or temporary investment. The acceptable norm i.e. rate 10/- worth
absolute liquid asset or considered adequate to pay 20 Rs Worth . current
liabilities in time as all creditors or not expected to demand cash at same time and
then as may also be realized from debtors and inventory’s

Analysis

This calculated absolute liquid ratio are 0.097 in 2019-2020, 0.58in 2020-
2021 ,8.45in 2020-2021.

Interpretation
 In the all the years firm calculated cash ratio is higher than the acceptable
standard ratio with indicated the firm has been maintain sufficient level cash to
meet its data to day obligation.

FINDINGS
The following of the findings of the CHOPRA Films Ltd with regards to
working capital management 2019-2021.
 The investment in inventory gradually decreases from 93.47 % to 17.41 %
during 2019-14.

 The amount of sundry debtor has been increased from 3.77% of total
current assets to 24.20% during 2020-13 there was a decrease in 2021-14,
12.54% declined in current assets.

 Sundry Creditors have been decreased during the period under study from
52.60% to 12.47% of the total current liabilities

 The net increase in working capital during the year 2019-2020 is Rs:
3043262.

 The net decrease in working capital during the year 2020-2021 is

Rs:688498223

 The net increase in working capital during the year 2020-2021 is Rs:
1228541849.
  The calculated current ratio 16.90 in 2019-2020, 7.57 in 2020-2021, 22.15
in 2020-2021.
 The liquid ratio is 1.10 in2019-2020, 3.26 in 2020-2021, 18.29 in 2020-
2021.

 Except 2019-14 the liquid ratio was more than standard ratio, therefore
liquidity position of the origination is satisfactory.

 Cash and bank balance vary between 0.6 (times) and 8.9 (times) in
39.98(times) in CHOPRA Films how ever the parties of holding cash
balance in relation in net working capital indicate good cash management
in CHOPRA Film Ltd.

 The total investment in inventory has been decreased from 2019-2021,it

indicates poor performance in inventory management this is due to low
investment in raw materials and low production.

SUGGESTIONS

 The cash ratio is of the company is not satisfactory through the period of
under study, because in all the year cash ratio is below the standard. Hence
it is suggested to improve cash and bank balance to meet day to day
obligations.
 It is suggested to make investment in inventories and to improve the
performance in inventory management.