A

Project Report On
“WORKING CAPITAL MANAGEMENT AT S & S HORECA
PRODUCT PVT. LTD”
Submitted By

“MISS. YOGITA KHADE”

Under The Guidance Of

“DR. AVINASH GHADAGE”

Submitted To The

“SAVITRIBAI PHULE PUNE UNIVERSITY”

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR

THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA)

NBN SINHGAD SCHOOL OF MANAGEMENT STUDIES, PUNE-

411041.

2017-2019
 DECLARATION

I the undersigned, hereby declare that the project title “Working Capital Management At S &
S Horeca Product Pvt. Ltd.” is an original piece of research work carried out by me under the
guidance and supervision of Dr .Avinash Ghadage.  The information has been collected from
genuine and authentic sources. The work has been submitted in partial fulfillment of the
requirement of MBA to Savitribai Phule Pune University.

Date Yogita Khade

Place: PUNE ( Research Student)
 CERTIFICATE OF GUIDE
This is to certify that the Project Report titled “Working Capital Management At S& S
Horeca Product Pvt. Ltd.” is a bonafide work carried out by “Miss. Yogita Khade” of MBA-
II of NBN Sinhgad School of Management Studies, Ambegaon (Bk.) for fulfillment of MBA
degree of Savitribai Phule Pune University. He  has worked under our guidance and Direction.

         Signature of HOD                                      Signature of Guide

         Date:                                                          Date:

        Place:                  Place:        

 ACKNOWLEDGEMENT
This project report could not have been completed without the guidance  & support of Hon.
HOD Dr. Nutan Samdani and class coordinator Prof. Jyoti Howale project Guide Prof. Dr.
Avinash Ghadage.

I express my sincere thanks and gratitude to Working Capital Management at S & S Horeca
Product Pvt. Ltd the above stated persons who have helped me directly and also who have
indirectly helped me.

Once again I express my gratitude to for kind Co-operation.

Signature

Yogita khade
 INDEX

Chapter Page
Particular
No. No.
Executive Summery

1 Introduction

2 Profile Of Organization

3 Research Design And Methodology

4 Conceptual Background

5 Data Analysis And Interpretation

6 Findings And Conclusion

7 Bibliography
Annexure
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY

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

management is very significant in financial management due to the fact that it plays a pivotal

role in keeping the wheels of business enterprise running. It is concern with short term financial

decisions. The requirement of working capital varies from company to company. It is the most

vital ingredient of the business. Interaction between current assets and current liabilities is the

main theme of the theory of working capital management and this project

The project starts with the objective of the study and methodology. The project contains the

analysis of three years data of S & S Horeca product pvt. Ltd. Commencing from the year 2014

to 2017. Most of the researcher found that degree of efficiency of administration of working

capital largely determines the success or failures of overall operations.

The project is intend to examine the working capital management at S & S Horeca Products Pvt.

Ltd. Since the efficiency of working capital is determined by efficient administration of its

various components like inventory, cash, receivables and payables. An attempt is made to

determine the efficient management of each component with the help of ratio analysis relating to

working capital.
 CHAPTER 1
INTRODUCTION
Introduction To The Study

Working Capital Management Definition & Meaning :

“Management is principally a task of planning, coordinating, motivating and controlling efforts

of towards objective.”

-James Lundy.

Working capital management comes under the scope of financial management. Financial

management involves the application of general management principals to particular financial

operations

Working capital refers to the cash a business requires for the day to day operations, or more

specifically for financing the conversion of raw material into finished goods, which the company

sell to generate the revenue. Among the most important items of working capital are levels of

inventory, accounts receivables and accounts payables. Analysts look at these items for signs of

company’s efficiency and financial strength.

The better the company manage its working capital, the less the company needs to borrow. Even

company with cash surplus needs to borrow. Even company with cash surplus need to manage

working capital to ensure that this surplus invested in ways that will generate suitable revenue

for the investors.

Working Capital = Current Assets – Current Liabilities

Working capital is defined as excess of current assets over current liabilities.

“Working capital is the amount of funds necessary to cover the cost operating the enterprise.”
1.1Objectives Of Study

In the current scenario there is great potential in the company to grow. The research aims to

study the financial strength and weaknesses of the company with special reference to working

capital mangement.

1. To study how the company will manage its current assets to maintain better financial position.

2. To know the reasons of deviations in the working capital position of the company.

3. To study the liquidity management of the company.

4. To study inventory management of the company.

5. To study the receivables management of the company.

1.2 Need Of The Study

Every business needs some working capital. The need for working capital arises due to the gap

between the production and realization of cash from sales. These re time gap in between the

production realization of cash from sales. These are time gap in purchase of raw material and

production sales and realization of sales. Thus working capital is needed for the following

purpose.

1. For the purchase of raw material, components and spares.

2. To pay wages and salaries.

3. To incur day to day expenses and overhead cost such as fuel, power etc.

4. To meet selling costs as packing, advertising etc.

5. To provide credit facilities to customers.

6. To maintain the inventory of raw material, work in progress, stores and finished stocks.
 1.3 Scope Of The Study

1. To study working capital management of the company by working with the accounts department

of the company.

2. Calculation of changes in working capital consists of current assets and current liability for the

three financial years 20014-20017.

3. To understand strategic relationship between the components of working capital with the help of

ratio analysis.

4. To find out how the company effectively finance its day to day operations.

It involves not only managing the different components of current assets but also managing the

current liabilities
 1.4 Limitations Of The Study

1. The topic working capital management is itself a very vast topic yet very important also. Due to

time restraints it was not possible to study in depth in get knowledge what practices are followed

at S & S Horeca product pvt. Ltd.

2. The project was limited to S & S Horeca Products Pvt. Ltd. with a special focus on working

capital management of company and ratio analysis.

3. Many facts and data are such that they not to be disclosed because of the confidential nature of

the same.

4. Since the financial matters are sensitive in nature the same could not acquired easily.
 CHAPTER 2

COMPANY PROFILE
Company profile

2.1 About The Company

S & S HORECA PRODUCTS PVT. LTD

Plot No 143, Pranav Industrial Estate, Lagad Mala, Sinhgad Road,

Pune, Maharashtra, 411018, India

Company was promoted by founder chairman Mr. SHRINIWAS JOSHI & Mr. RAMESH

KADABA and managed by the same.

The company was established as a partnership firm by name S & S internationals on 21 st

February 1996. Through its R&D efforts the company developed and established indigenous

process for manufacturing products of stainless steel & other ferrous & non ferrous metals,

plastic & other metals. Based on this technology a fully integrated stainless steel unit was

established.

In the year 2006 the company started its operations by name S & S HORECA

PRODUCTS PVT. LTD. The firm plant capacity was further augmented in the year 2006.

The company is promoted by professionals. Who have 2 decades of experience in Designing,

Developing, Manufacturing and Exporting house wares & horeca range of products in stainless

steel and aluminums. The ability to develop products as per customer’s need and high quality

has made us a leading exporter of such products.

Due to the high quality of our products and timely deliveries the firms enjoys a good reputation

with all our overseas buyers. The firm is making export to 5 to 6 countries viz. Holland

Australia, Italy, Germany, Canada, Netherland.

2.2 Mission

Firms mission aims at providing best quality materials and products to the customer. To supply

high – quality steel products, providing related services and solutions to a worldwide client base

while utilizing innovative technologies within an environment of motivated employees focused

on continues improvement, highest business standard and work ethics leading to added value to

customers and sustained return on investment to shareholders.

2.3 Vision

Firms vision in developing the products has always been based on innovation. Innovation can be

in style, design, function, application, economics etc. We aim to be one of the most reliable and

trusted manufacturer of stainless steel products.

 CHAPTER 3
RESEARCH MHETHODOLOGY
 3.1 Definition Of Research:

The systematic investigation into and study of materials and sources in order to establish facts

and reach new conclusions.

3.2 Research Methodology:

Research methodology is a way to systematically solve the research problem. In it the researcher

studies the various steps that are generally adopted by a researcher in studying his research

problem along with the logic behind them.

In this research methodology, researcher requires the proper data from the annual reports of S &

S Horeca product pvt. Ltd. in order to analyze the Income Statement, Balance Sheet, Cash Flow

Statement, Working Capital, Net Profit Ratio, Current Ratio, Operating Ratio, Profitability Ratio

etc.

3.3Types Of Research

 Exploratory Research

 Descriptive Research

 Casual Research

The type of this research is Descriptive Research

 Descriptive research

Descriptive research is used to describe characteristic of a population or phenomenon being

study. It does not answer questions about how/when/why the characteristic occurred. The

characteristic used to describe the situation or population are usually some kind of categorical

scheme also known as descriptive categories.

 3.4 Data Collection

Data collection is the process of gathering and measuring information on targeted variables in an

established systematic fashion, which enables one to answer relevant questions and evaluate

outcomes.

The task of data collection begins after a research problem has been defined and research

design/plan chalked out. The researcher would have to decide which sort of data he would be

using (thus collecting) for his study and accordingly he will have to select one or the other

method of data collection.

3.5. Sources Of Data Collection

 Secondary Data Sources

1. The secondary data are those which have already been collected by someone else and which

have already been passed through the statistical process.

2. The study is based on secondary data. The data required for the study is extracted from the

annual reports of S& S Horeca Pvt. Ltd. This study covers a period of 3 years from 2014-2017.

3. It is based on various aspects of financial performance and mainly focuses on the following,

components of financial performance, Income Statement, Balance Sheet and Cash Flow

Statement. It will help the researcher to interpret the financial position of both the companies

after the study of annual reports of both automobile companies.

 3.6 Tools Used For Data Collection:

 Bar Diagram:

A bar diagram is a chart that uses to show comparisons between categories

of data. The bars can be either horizontal or vertical

 CHAPTER 4

CONCEPTUAL BACKGROUND
 4.1 Working Capital – Overall View

Working capital management is the management of net current asset. Current assets, by

accounting definition are the assets normally converted in to cash in a period of one year. Hence

working capital management can be considered as the management of cash, market securities

receivables, inventories less current liabilities. In fact, the management of current assets is

similar to that of fixed assets the sense that is both in cases the firm analyses their effect on its

profitability and risk factors, hence they differ on three major aspects:

1. In managing fixed assets, time is an important factors discounting and compounding aspects of

time play an important role in capital budgeting and a minor part in the management of current

assets.

2. The large holdings of current assets, especially cash, may strengthen the firms liquidity position,

but is bound to reduce profitability of the firm as ideal car yield nothing.

3. The level of fixed assets as well as current assets depends upon the expected sales, but it is only

current assets that add fluctuation in the short run to a business.

4.1.1Types Of Working Capital

A) Gross Working Capital

B) Net Working Capital

C) Permanent Working Capital

D) Variable Working Capital

A) Gross Working Capital:

Gross working capital, which is also simply known as working capital, refers to the firms

investment in current asset. Another aspect of gross working capital points out the need of

arranging the funds to finance the current asset.

B) Net Working Capital:

The term net working capital refers to the difference between the current asset and the current

liabilities. Net working capital can be positive as well as negative. Positive working capital refers

to the situation where current assets exceed current liabilities and negative working capital refers

to the situation where a current liability exceeds current assets.

Table Showing Net Working Capital.

Year Net Working Capital

2014-2015 2435525.36

2015-1016 1864011.79

2016-1017 446761.47

C) Permanent Working Capital:

It refers to the irreducible minimum reserves to be kept for maintaining the normal levels of

stock of row materials, work in progress, finished goods and for paying wages, salaries during

the year. It is permanently up in current assets.

The Permanent working capital is of two kinds:

 i. Regular working capital

ii. Initial working capital

i. Regular Working Capital:

It means the amount needed to keep the operation in continuity. It refers of current assets over

current liability so that the process of conversion of cash into stock, stock into shares, receivables

and collections is maintained without break. Some minimum stock of raw materials, finished

goods has to be kept upon the shells of company to ensure its healthy working capital through

unpunctured flow in the circulating system of current assets.

ii. Initial Working Capital:

At inspection of company and during formative off period of its operations, it should set up

sizable cash funds to meet its obligations. In the initial period its revenue may not be regular and

adequate, credit arrangement may not be available from banks etc. till company established its

credit standing, and credit may have to be granted on sales to attract the company to consolidate

its position. It is the amount of cash need to start the circulation of capital and keep it moving till

cash returned way of receivable (collection from sales) its greater than cash

outgo(payment).Hence amount to raised by the owner themselves at the beginnings of career of

the company.

D) Variable Working Capital:

Most of the business enterprises will have to meet seasonal and special needs. The amount varies

according to the extent of extra demand manifesting in the market and according to the

exigencies of urgent circumstance.

Variable working capital is of two kinds:

 i. Seasonal working capital

ii. Special working capital

i. Seasonal Working Capital:

When the season approaches, industries will have to set up their purchases of raw materials ,

have more people to process them into finished stock and it may have to borrow money from

banks

ii. Special Working Capital:

All business enterprises have to be prepared to meet unforeseen risk that may arise in the course

of operations. These should have extra funds at unstated periods to meet contingencies. The

following are the circumstances:

 To meet the sudden demand of the products

 Depression leads to declines in demand, prices, and incomes.

 Rising process to may spell out the need for special funds to keep up or set up the inverts and

avail the opportunity of enhancing the profits.

 4.3 Importance Of Adequate Working Capital

 Goodwill: Adequate working capital enables a firm to make prompt payment. Making prompt

payment is a base to create and maintain goodwill.

 Creditworthiness: It enable firm to operate its business more efficiently because there is no

delay in getting loans from banks and others on easy and favorable terms.

 Productivity Of The Organization: Fixed assets of the firm can’t work without adequate

capital because the fate of large scales investment in fixed assets is largely determined by the

manner in which its current assets are managed.

 Regular Supply Of Raw Material: It permits the carrying of investors at levels that would

enable a business to serve satisfactorily the needs of its customers i.e.it ensures supply of raw

materials and continuous production.

 High Morals: Adequacy of working capital creates an environmental of security, confidence,

high morals etc. and creates overall efficiency in business.

 Cash Discounts: Adequate working capital enables organization to offer cash discounts which

help them their sales.

 Reducing Cost Of Interest: Adequate working capital reduces borrowings of the organization

so it to decrease in cost of interest and increase in profits.

 Expansion Plan: If organization its short terms funds very well then they can use outside source

of finance for future expansion plans.

Therefore we may conclude that capital management needs to be considered as an integral part

of overall corporate management. As Louise Bernard pointed out, “We need to know, when we

look for working capital funds, how to use them and how to measure plan and control them.”
 4.4 Dangers Of Excessive Working Capital

The dangers of excessive working capital are as follows:

 It results in unnecessary accumulation of inventories. Thus chances of inventory mishandling,

waste, theft and losses increase.

 It is an indication of defective credit policy and slack collection period

 Excessive working capital makes management complacent, which degenerated into managerial

inefficiency

 Tendencies of accumulating inventories tend to make policy liberal and difficult to cops with in

future when the firm is unable to makes speculative profits.

4.5 Dangers Of Inadequate Working Capital

Inadequate working capital is also bad and has the following dangers:

 It stagnates growth. It becomes difficult for the firm to undertake profitable projects for non

availability of working capital funds.

 It becomes difficult to implement operating plans and achieve firms profitable targets

 Operating inefficiencies creep in when it becomes difficult even to meet day to day

commitments

 Fixed assets are not efficiently utilized for the lack of working capital funds. Thus the firms

profitability would deteriorate.

 The firm losses its reputation when it is not in a position to honor its short term obligation. As a

result the firm faces tight credit terms.

 4.6 Symptoms Of Poor Working Capital

 In general, the following cases are seen in inefficient management of working capital.

 Excessive carriage of inventory over the normal level results in increase in trade creditors.

 Slow down in collection of debtors in another area of problem.

 Sometimes working capital funds are used for purchasing capital goods.

 Unplanned production schedules are another cause by which more funds are lock and these are

not used for generating profits.

 Inefficiency in using potential trade credits requires more funds for financing working capitals.

 Overtrading cause shortage of working capital.

 Inefficiency in cash management causes embezzlement of cash.

 Inability to get working capital limits will cause serious concern to the company.

4.7 Determinants Of Working Capital

 Nature Of Business: The shorter manufacturing process, lower is the requirement of working

capital. Longer the manufacturing process, higher would be the requirement of working capital.

A trading concern requires lower working capital than a manufacturing concern.

 Size Of Business: Size is usually measured in terms of scale of operating cycle. The amount of

working capital needed is directly proportional to the scale of operating cycle i.e. the larger the

scale of operating cycle the large will be the amount working capital and vice versa.

 Business Fluctuation: Most business experience cyclical and seasonal fluctuation in demand

for their goods and services. This fluctuation affects the business with respect to working capital
 because during the time of boom, due to an increase in business activity the amount of working

capital requirement increase and the reverse is true in the case of recession.

 Production Policy: The need of working capital will pay according to the production plans. In a

labour intensive process, requirement of working capital will be higher. In case of highly

automated plan requirement of working capital would be greater.

 Firm’s Credit Policy: Liberal credit policy affects the working capital. Amount of money

locked up into accounts receivable has its impact of working capital.

 Availability Of Credit: creditworthiness is the precondition for assured accessibility to credit.

Accessibility in banks depends on the flow of credit i.e. the levels of working capital.

 Growth And Expansion Activities: Growth and diversification of the business call for larger

volume of working funds.

 Operating Efficiency: Efficient and coordination utilization of capital reduce the amount

required to be invested in working capital.

 Supply Situation: In easy and stable supply situations, no contingency plan is necessary and

precautionary steps in investment can be avoided. But in case of supply uncertainties, lead time

may be longer necessitating larger basic inventory, higher carrying cost & working capital need

for the purpose.

4.8 Financing Of Working Capital

Funds availability for the period of one year or less than one year are called as short term

financing. In India short term funds are used to finance working capital the source of finance that

are used to finance current assets are as follows.

 The Company’s Main Sources Of Financing Its Working Capital Are:

 Trade Credit: Trade credit refers to the credit that a customer gets from supplier of goods in the

normal course of business.

 Cash Credit: This type of credit in provided mainly individual or enterprise engaged in

manufacturing to enable them to carry on their activities. The amount of cash credit facility to be

sanctioned to a unit is need and in worked out as per well defined parameters in each bank.

 Letter Of Credit: a letter of credit is the guarantee provided by the buyers banker to the seller

that in the case of default or failure of the buyer, the bank shall the payment to the seller.

 Working Capital Demand Loans: In compliance of RBI directors, banks presently grant only a

small portion of the fund-based working capital facilities to a borrower by the way of running

cash credit accounts; a major portion is in the form of working capital demand loan. This

arrangement is presently applicable to borrowers capital of Rs.10crore and above.

 Advance Against Export: The Company takes the money due in advance before actual export

takes place in care of some overseas customers. It is quite significant since a major portion of the

company’s product in dependent on overseas market.

One thing that has to be noted here in that the company complies to all the provision by various

committees, and around 80%. of its working capital in financed through bank.

4.9 Components Of Working Capital Management

1. Cash Management: cash management is rapidly emerging as a vital area in any business

organization. ‘cash management’ implies making sure that sure that all the business generated
revenues are affectively controlled and utilized in the best possible manner to results in gains for

the organizations.

The fundamental objectives of cash management is optimization of liquidity through improved

flow of funds all companies in advanced countries are planning to use the services of banks to

help them collect payments on monthly bills they issue to customers and other types of cash

management services.

Cash management has gained importance due to uptrend in interest rate that increased the

opportunity cost of holding cash. This encouraged finance manager to search for more efficient

ways of managing cash. Another reason is the technological development, particularly

computerized electronic funds transfer mechanism changed the way of cash management.

2. Receivable Management: A typical manufacturing company has receivables to total assets

ratio in the region 20% to 25%. This represents a considerable investment of funds and so the

management of this asset can have significant effects on the profits performance up the

company.

To increase the sales volume, generally the credit facility will be offered to customers

who results in investment in receivables who maximize returns on capital employed. The number

of customers, length of credit determined the balance in receivables account, amount of credit

allowed teach customers etc.

To achieve growth in sales and to meet competition in industry, a firm may resort to

credit sales. A retail trader will do his business mainly on cash basis where as a manufacturing

concern will have heavy balance in receivables. Firms offer credit to customers to attract more

business, and the increase turn over will resulting increase profit to the firm. The market in
 which the firm is doing business is the ultimate determinant in credit sales and receivables

balance.

Sound credit collection policies enable the finance manager in minimizing investment in

working capital in the form of book debts. The firm should be discretionary in granting credit

terms to its customers. In order to see that the receivables conversion period is not increased, the

firm should follow a nationalized credit policy base on the credit standing of customers and the

relevant facts. The firm should be prompt in making collection. Slack collection policy will tied

up funds for long period increasing cycle.

3. Inventory Management: In manufacturing unit usually about 20% to 30% of the assets are in

the form of inventory and efforts in inventory control will bring major benefits for the enterprise.

An efficient management of inventory is an essential requirement for the success of enterprise.

The inventory of manufacturing concern is classified into following types:

 Raw material: It includes direct material used in the manufacture of product and it’s also

includes the components, fuel etc. used in the manufacture.

 Work in progress: It includes partly finished goods and material, sub assemblies etc held

between manufacturing stages. Stock of work in progress is in process of production.

 Finished goods: The goods ready for sales of distribution will come under this category.

The production manager and finance manager of a manufacturing company should

know the items of inventory, classification of inventory and cost related to each items of

inventory before taking any step for efficient management of inventory. The efficiency shown in

inventory will have direct impact in profitability of a business enterprise.

There are number of techniques, which play an important role in the inventory control

programmed. These techniques are very helpful in rationalization of inventory control approach
 and assists in formulation of inventory control policies. Some of techniques forming part of the

inventory control programmed are:

 Best Order Quality

 ABC Analysis

 VED Analysis

 HML Analysis

 FSN Analysis

 Codification

 standardization

 classification of item for strategic review

 CHAPTER 5
DATA ANALYSIS
 5.1 Circulation System Of Working Capital

5.1.1 Working Capital Turnover Ratio:

Formula: Sales/Working Capital

Year Sales(Cr.) Working capital(Cr.) Ratio

2014-1015 4,69,95,713.77 24,35,525.36 19.29

2015-2016 4,44,11,668.16 18,64,011.79 23.82

2016-2017 4,40,23,284.60 14,17,250.12 31.06

Table No. 5.1.1 Working Capital Turnover Ratio

35
30
25
ratio

20
15
10
5
0
2014-2015 2015-2016 2016-2017
years

Graph No. 5.1.1 Working Capital Ratio

Interpretation:

The working capital ratio shows a increasing trend during the 3 years of study which indicates

overutilisation & efficient use of available resources.

Higher ratio indicates better efficient is the management & utilisation of the capacity. On other

hand lower ratio indicates the utilisation of soucres.

5.1.2 Current Assets Turnover Ratio:

Formula: Sales/ Current Assets

Year Sales(Cr.) Current Assets(Cr.) Ratio(In Times)

2014-1015 4,69,95,713.77 1,51,26,496.75 3.10

2015-2016 4,44,11,668.16 1,62,93,796.17 2.72

2016-2017 4,40,23,284.60 2,01,77,530.89 2.18

Table No. 5.1.2 Current Assets Turnover Ratio

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2014-2015 2015-2016 2016-2017

Graph No. 5.1.2 Current Assets Turnover Ratio

Interpretation:
The ratio indicates the efficiency with which current assets turn into sales. A higher ratio implies

by and large a more efficient use of funds. Thus high turnover rate indicate reduced lock-up of

funds in current assets. An analysis of this ratio over a period of times reflects working capital

management of firm

5.2 Liquidity Management:

5.2.1 Current Ratio:

Formula: Current Assets/ Current Liabilities

Year Current Assets (Cr.) Current liabilities(Cr.) Current Ratio

2014-2015 1,51,26,496.75 1,26,90,971.39 1.19

2015-2016 1,62,93,796.17 14,42,29,784.38 1.13

2016-2017 2,01,77,530.89 1,87,60,280.77 1.07

Table No. 5.2.1 Current Ratio

1.2
1.18
1.16
R 1.14
a 1.12
t
i 1.1
o 1.08
1.06
1.04
1.02
1
2014-2015 2015-2016 2016-2017

Graph No. 5.2.1 Current Ratio

Interpretation:

As we know that ideal current ratio for any firm is 2:1. In the above graph the current ratio of

the company for last three years it has decreased from 2014-2015 to 2016-2017. The current ratio

of the company is less than ideal ratio. This despite the company’s liquidity position is not

sound.

5.2.2 Quick ratio:

Formula: Quick Assets/ Quick Liabilities

Year Quick assets (Cr.) Quick liabilities (Cr.) Ratio

2014-2015 1,42,65,346.75 1,26,90,971.39 1.12

2015-2016 1,41,66972.85 1,44,29,784.38 0.98

2016-2017 1,68,74,370.89 1,87,60,280.77 0.90

Table No. 5.2.2 Quick Ratio

1.2
1
0.8
ratio

0.6
0.4
0.2
0
2014-2015 2015-2016 2016-2017
years

Graph No. 5.2.2 Quick Ratio

Interpretation:

Quick ratio is more refined tool to measures the liquidity of an organization. It is a better test of

financial strength than the current ratio, because it excludes very slow moving inventory and the

items of current assets which cannot be converted into cash easily. A quick ratio 1:1 is usually

considered satisfactory though it is again the rule of thumb only.

5.2.3 Size Of Cash Balance:

Year Cash (In Rs.)

2014-2015 5,58,966.64

2015-2016 10,41,876.67

2016-2017 9,88,859.26

Table No. 5.2.3 Size Of Cash Balance

 12
10
8
cash 6
4
2
0
2014-2015 2015-2016 2016-2017
years

Table No. 5.2.3 Size Of Cash Balance

Interpretation

cash is a basic input or component of working capital. So the organization should have sufficient

cash to meet various requirements. The above graph is indicate cash is increased in 2015-2016

but again decreased in 2016-2017. The result of that it disturb the firms manufacturing oprations.

5.2.4 Size Of Sales

Year Sales

2014-2015 4,69,95,713.77

2015-2016 4,44,11,668.16

2016-2017 4,40,23,284.60

Table No. 5.2.4 Size Of Sales

 47000000
46500000
46000000
45500000
45000000
sales
44500000
44000000
43500000
43000000
42500000
2014-2015 2015-2016 2016-2017

Graph No. 5.2.4. Size Of Sales

Interpretations

In the above graph in the year 2014-2015 sales of the company is in good condition but it is

decreased in 2015-2016 and again decreased in 2016-2017.

5.2.5 Cash To Current Assets Ratio:

Formula: Cash/ Current Assets

Years Cash to Current Assets Ratio

2014-2015 0.36

2015-2016 0.63
 2016-2017 0.49

Table No. 5.2.5 Cash To Current Assets Ratio

0.7

0.6

0.5

0.4
Cash to Current Assets
0.3

0.2

0.1

0
2014-2015 2015-2016 2016-2017

Graph No. 5.2.5 Cash To Current Ratio

Interpretation

The Cash to Current Assets ratio measures a company’s liquidity, basing how liquid a

company is by its Cash and Cash Equivalents and Marketable Securities alone. In the

above graph cash to current ratio decreasing in the year 2016-2017

5.3 Inventory Management

5.3.1 Inventory Turnover Ratio:

Formula: Sales/ Inventory

Year Sales(Cr.) Inventory(Cr.) Ratio

 2014-2015 4,69,55,713.77 1,26,85,628.00 3.70

2015-2016 4,44,11,668.16 1,25,83,540.00 3.53

2016-2017 4,40,23,284.60 1,49,28,976.00 2.95

Table No. 5.3.1 Inventory Turnover Ratio

4
3.5
3
2.5
ratio

2
1.5
1
0.5
0
2014-2015 2015-2016 2016-2017
years

Graph No. 5.3.1 Inventory Turnover Ratio

Interpretation:

This ratio indicates the efficiency and effectiveness of inventory management. The ratio shows

how speedily the inventory is turned into accounts receivables through sales. The higher the

ratio, more efficiently the inventory is said to be managed And vice versa.

5.3.2 Days Of Inventory Holdings:

Formula: ( Inventory/Sales)*365

Years Sales(Cr.) Inventory(Cr) Days

 2014-2015 4,69,55,713.77 1,26,85,628.00 98

2015-2016 4,44,11,668.16 1,25,83,540.00 103

2016-2017 4,40,23,284.60 1,49,28,976.00 123

Table No. 5.3.2 Days Of Inventory Holdings

Days

140
120
100
days

80
60
40
20
0
2014-2015 2015-2016 2016-2017
years

Graph No. 5.3.2 Days Of Inventory Holdings

Interpretation:

Days of inventory holdings means the period within the inventory turn into sales. When the

period of holding is too long is slow moving and it will increase the carrying cost and inverse to

this when period of holding is too small, inventory is fast moving and it will results into early

stock outs and increase in the ordering cost.

5.4 Schedules Of Changes In Working Capital 2016-2017

Particular Amount(Cr.) Changes in working capital

 Mar2016 Mar2017 Increase Decrease

Current assets

Inventories 12583540.00 14928976.00 2345436

Trade Receivable 2126823.00 3303160.00 1176336.68

Cash & cash equivalents 1041876.00 988859.26 53017.41

Short term loans 477890.00 886804.60 408914.6

Other current assets 88668.32 69731.03 6964.85

Current liabilities

Short term borrowings 10397434.35 14808532 4411097

Trade payable 3761354.03 3735795.57 25558.46

Short term provision 270996.00 215953.00 55043

Working capital(CA-CL) 1864011.82 1417232.32

Increase in working capital 446761.47 446761.47

Total 1864011.82 1864011.82 4464115 4464115

 Total Current Assets And Liabilities Of 2016 And 2017

25000000

20000000

15000000

10000000

5000000

0
2016 2017

Graph No. 5.4 Total Current Assets And Liabilities Of 2016-2017

Interpretation:

Working capital is the excess of current assets over current liabilities. In the year 2016 and 2017

current assets excess over current liabilities. If current assets are greater than current liabilities,

the company has positive working capital, meaning it has extra cash on hand to fund growth

project.
 Chapter 6
FINDING AND CONCLUSION
 6.1 Findings:

1. The company’s net working capital has been decreased by Rs. in the 446761.47 year 2016-2017.

2. Debtors turn over ratio is very good because receivable management is very prompt and active.

As a result of efficiency debtors management company is running without any bad debts.

3. Inventory management of the company is very good which results in increase in the profit of the

company. This is because company maintains inventory for optimum days.

4. Balance sheet statement shows that loans are greater than funds from operations which is not

good.

5. The company’s liquidity position in terms current ratio & quick ratio has not been maintained at

comfortable position.

6.2 Suggestions:

1. The company should have separate finance department with qualified employee and their job

profile should be:

 To work in functional areas

 To take and implement financial decisions.

2. The company should create and maintain proper organizational structure to reduce barriers in the

smooth flow of business.

3. The company should reduce the amount of loan up to maximum extent to increase the

profitability.

4. Investment in current assets will be fruitful if it is increased little bit along with their utilization.

As a results company’s liquidity position will improve.

6.3 Learning From Study

From this study researcher learned financial strength and weaknesses of the company. The

researcher found that degree of efficiency of administration of working capital largely

determines the success overall operations

Researcher understood the reasons of deviations in the working capital position of the company.

Researcher studied annual reports of S & S Horeca pvt. Ltd. to learn various aspects of financial

performance. Researcher also learned how to analyze the Balance Sheet, Income Statement and

Cash Flow Statements of a company.

6.4 Contribution To Organization

Researcher had helped for analyzing the financial statements of S & S Horeca pvt. ltd. and

interpreting the various profitability, liquidity and turnover ratios to analyze the financial and

profitability position of the firm.

Researcher had helped for analyzing current position of net working capital of the firm by

calculating three years of balance sheet of the firm.

6.5 Conclusion

Net working capital has been decreased over the years, which has decreased the liquidity.

The company’s liquidity position in terms current ratio & quick ratio has not been maintained at

a comfortable position. The current ratio in the period of 3 years is well below the normally

acceptable ratio 2:1. The quick ratio has also ranged from 0.41 to 0.63 this has been also below

the conventionally acceptable ratio 1:1.

The analysis of financial data reveals that the company has very sound position regarding &

solvency as shown by the current and quick ratio. The cash to current liabilities ratio shows

decreasing trend shows the efficiency in operation.

Inventory turn over ratio is generally regarded as indicator of inventory efficiencies. It

established a relationship between the sales during a period and average inventory hold to meet

that quantum at 6.34 times, that indicate the high moving inventory.

\
 Bibliography

1. Financial Management:- M. Y. Khan., P.K. Jain

2. Financial Management:- ICAI

3. Financial Management:- I.M. Pandey.

4. Annual Report:- S & S Horeca Products Pvt. Ltd.

5. Financial Management:- P.V. Kulkarni.