Inventory Management - Harish Hakki

METAL CRAFTS
DECLARATION
Harish.S.Hakki of 5thsemester B.B.A studying in GOGTE COLLEGE OF COMMERCE

Belagavi, hereby declare that is project is genuine and original work of study prepared by me
it is based on the data and information collected by me .To my best knowledge and brief, the
matter presented in the report has been not copied from any report to the Rani Channamma
University Belagavi to get the award of Bachelor in Business Administration or any other
courses offered by, Rani Channamma University, Belgavi or any other University.
PLACE :-BELAGAVI Harish.S.Hakki
Date :-
GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 1

METAL CRAFTS
ACKNOWLEDGEMENT
This project is a great opportunity to express my heartily thanks to those people

who timely supported me a long way to completion of project report.
First and foremost I Mr.Harish.S.Hakki would like to express my sincere

thanks to SHRI.. HARISH..NAYAK HR MANAGER of METAL CRAFTS.
For his kind guidance and valuable suggestions permission for my project.
I acknowledge gratefully, the assistance and co-operation of the management

and employees of METAL CRAFTS.
I thank principal of our college Dr. H.H.Veerapur for helping me in preparing

the report.
My special thank to my coordinator Prof. Nayana Raichur and internal guide

Prof. Harshad Ail for their cooperation and guidance provided to me while
carrying out the project.
I also express my sincere thanks and dedicate my work to parents, family

members and my friends who have always been a moral support and strong
pillars at all the stage of my life and at every stage a cheer enthusiasm.
Sincerely
Harish.S.Hakki

METAL CRAFTS
EXECUTIVE SUMMARY
The project was undertaken in,. as a part of BBA Department . METAL

CRAFTS agree with objective to study “INVENTORY MANAGEMENT” In
the company.
This report gives information about ‘’INVENTORY MANAGEMENT”.
This report also involves the company profile, history, and the information and
the training and development levels of the company .
The study was conducted systematically according to the requirements of the

subject. The primary data required for study was obtained from the employee
with the structures questionnaires and personal interviews which was given
employees randomly .The secondary data was collected through internet ,
company handbook.
The study was limited 30 days the study is intended to evaluation of training
given to the employees in the organization. A good training evaluation process
or design is very essential for the efficiency of the activities of organization to
achieve the goal of the organization .
Harish.S.Hakki

METAL CRAFTS
SL. NO. TITLES PAGE NO
1. Introduction
2. Company profile
3. Organization chart
4. Case study : theoretical

& Analysis and
interpretation
5. Findings
6. Suggestion
7. Conclusion
8. Balance sheet and

Annexure
9. Bibliography

METAL CRAFTS
INDUSTRY
PROFILE

METAL CRAFTS
COMPANY HISTORY
In the year 1977 Mr. Sadanand T Macha and his partner Mr. V.B Inambar established their
company. After the immense struggle in the year 1979, they got industrial plot of 10 gunta
from KSSIDC Ltd and also took financial assistance from state bank.
In a span of 2 to 3 years their business increased multifold. Capacity reached a staturated

point and they where not meet in position of high demands and they had to add some higher
capacity of hydraulic presses converting the same into double acting and triple acting.
Company Profile

METAL CRAFTS
Name of the metal crafts

organization
Ownership Partnership firm

partners
Types of Manufacturers of sheetmetal pressed components and fabricated parts of

industries automotive industries.
Nature of Steel Metal Pressed components

business
Address Plant I
metal crafts M-15, industrial estate , udayambag,Belgaum -590008

(Karnataka)INDIA
Plant II
RS No 664/2, Plant 2, Waghwade Road, Machhe,
Belgaum – 590014
Partners Ashwin .S. Macha
Kranti. S.Macha
Established 1977
Factory 08/02/015/69/PMT/SSI/79-80s
license No
Banker State bank of India , industrial estate , udyambag , Belgaum
Employees 55(staff-15 and workers-40)
E-mail address Ashwin.macha@metalcrafts.com
metcraft@gmail.com
Web- site www. metalcrafts.com

METAL CRAFTS
Working hours 8.30 am to 5.00 pm
(lunch break 12.30 pm-1pm)
Weekly holiday Sunday
Phone number +91831-2440805, 2440505,2440804.
Annual 6.75 Crores

turnover
Company vision
To invest the technology and business process capabilities and to build trust and relationship
with customers to become THE BEST PREFERRED supplier in sheet metal processing .
Company mission
1) We at METAL CRAFTS shall strive to continuously exceed the expectations of our

customers . We shall achieve the with product services that in quality , cost and
delivery shall be among the best in the industry .
2) To be among the best ,we shall commit ourselves to excellence in technology and
engineering .
3) We shall Endeavour to be an employer of choice by promoting a culture of team work
continues leaning and transparency in all activities .
4) We shall religiously follow and future develop the core values of simplicity ,
frugality, integrity, respect and harmony ourselves and all our employees.
5) To be corporate social citizen by guiding our principles towards protection of
environment and service to society

METAL CRAFTS
Quality policy
We at “METAL CRAFTS” aim for, total customer satisfaction is organizational goal.

By continual improvement and development of product , process and by timely
reviewing of all objectives and plans defined to improve the effectiveness of quality
management system.
This we aim to achieve with discipline and by involving every employee in

effectively practicing and improving the quality management system.
PRODUCT PROFILE

METAL CRAFTS
FAN COVER BRACKET BOTTOM VIEW
BREAK LEVER TOP VIEWCANOPY
COVER DISK BIG
EXTERNAL COVER 4DS2 EXTERNAL COVER DFF

METAL CRAFTS
FUEL TANK FUEL TANK COVER
GEAR COVER PLATE TOP VIEW EXTERNAL COVER DFF
Organizational Chart

METAL CRAFTS
Managing Partner 1 Managing

Partner 2
\\
HR & Maintenance In
charge Purchase Head
Stores In Developme Production Chief Quality Head

charge nt Head Accountant
Engineerin
g
PDI Supervisor
Asst. Asst. Supervisor Security

Stores Engineer
GST Incharge Accountant Cum
Admin
Packing
Tool Fitter Workers
Asst.
Marketing
Area of Operation :-

METAL CRAFTS
Area of operation:
*LIST OF MAJOR CUSTOMERS:
A).Automotive Customer
1).TATA Macropolo motors limited, Dharwad
B).Non Automotivecutomers
2)Andrew telecommunication India pvt.ltd, GOA.
3) Telesmart SCS Ltd, Goa
4) Vardenchi Motorcycles Pvt Ltd, Mumbai
5) ABB limited, Bangalore
6) Crompton greaves Ltd, Ahmednagar
7) Kirloskar electric company, Hubli, Bangalore,Tumkur
8)OTIS Elevator company India Limited Bangalore
9)Hi-tech engineering , belgaum
*LIST OF MAJOR SUPPLIERS:

METAL CRAFTS
A)Row Material Suppliers:
1)Hindalco industries Limited.Mumbai
2)Bhushan steel Limited,Mumbai
3)KSSIDC limited Belgaum
4)Shankara infrastructure material Limited, Belgaum
5)L& G steel and commodities Pvt Ltd, Belgaum
B ) Hardware & consumables & points
1)Captive fasteners corporation, USA
2)Xinkai precision fasteners company Ltd, Chaina
3)Global techno soft Pvt. Ltd, Singapore
4)Grand polycot india Pvt Ltd, Gujarat
5)Aqua tech engineers, Mumbai
6)R D enterprises, Belgaum
Infrastructure Facilities:

METAL CRAFTS
*Rock solid infrastructure consisting of advance have strengthened metal crafts

hold in the industry.
*mechanical presses having capacity in the range of 10T to 80T along with
hydraulic presses ranging from 10T to 25T capacity and double acting presses
are owned by metal crafts.
*Latest sharing machine with 3.0mm *2500mm and 10mm*2000mm helps in

manufacturing precise products.
*Beside metal crafts have high-tech machines like, wielding transformers, spot
wielding, grinding and cutting machines.
*In the event of power failure 62 KVA generators support metal crafts.
DEPARTMENTS AT AKASH METAL FORMING:-

METAL CRAFTS
1) MARKETING DEPARTMENT:-
Marketing activity involves a body of activities related to identifying a new

customer, perusing them to ensure that orders are received. It also involves
conducting market research in the field of our business to get information about
new business opportunities. It involves handling customer relations and to
ensure that customer is always happy with our service.
 Identify and develop new customers.

 Ensuring submission of quotation in time.
2) PURCHASE DEPARTMENT:-
The Purchase Department At Metal Crafts Plans & Procures Raw Materials,
Brought-Out Components, Spares, Consumables Items As Per The Specification
From Approved Indigenous / Foreign Vendors, So That The Component
Produced At Akash Metal Crafts Perform With Consistency In Quality,
Reliability & Safety.
 Approve quotations for new suppliers & sub contractors.

 Approve purchase order in case of Raw materials, capital goods.
3) DEVELOPMENT DEPARTMENT

METAL CRAFTS
Design & development activity involves a body of activities related to new

product development & process improvements continuously, It also concentrate
over
improvement in the continuous running product.
 Assign & Administer day to day design development &

maintenance activities.
 Handle New Product Development in coordination to MP I.
4) DEPARTMENT PRODUCTION
Production planning is done based on the customer schedule/Requirements
 Preparation of production schedule as per planning

 Monitor Day-to-Day Production Activities.
 Maintain daily production plan and review its effectiveness.
 Responsible for product quality at all time.
5) QUALITY ASSURANCE DEPARTMENT

METAL CRAFTS
Quality Assurance is a customer representing department which assures the

quality of product at different stages of production process. It’s a key
department in the organization which aims on improvement of production
process such that organization can satisfy the customer requirement with better
quality product.
 Carry out Inspection and Testing of Incoming Materials, In

process Products and Finished Products.
 Prepare Inspection and Test Plans for Incoming Materials
and Finished Products.
 Take action against the rejections.
6) STORES DEPARTMENT
Stores constitutes the body of integrated activities that focuses on storing &
accounting of raw material, consumables, issuing etc which is required for
organization.
 Handling, Identifying, and issue of materials to production.

 Monitoring & maintaining stock as per Re-order level.
 Issue Purchase order and follow up of material in
coordination to MP II, Purchase manager & Production
Head.
 Carry out Periodic Verification of Stock
7) MAINTAINENCE DEPARTMENT
METAL CRAFTS
Planning & carrying out the Preventive Maintenance of machinery’s & equipment for better
performance without any interruption in the production.
 Preparation of preventive maintenance schedule for all equipments.

 Responsible for all activities relating to maintenance of plant and
machinery.
 Ensure that operators are carrying out daily and
preventivemaintenance of all machinery.
 Carry out Break down machine maintenance
8) HUMAN RESOURCE DEPARTMENT
HRD is a core department in the organization which aims to fulfill the resource requirement
of the firm.It is also responsible for continuous growth of the firm by providing the necessary
training for the employees to upgrade there skills.
 To hire and fulfill the manpower requirements as per required skills.

 To implement training & induction programme.
9) FINANCE / ACCOUNTS DEPARTMENT
The part of an organization that manages its money. The business functions of a finance

department typically include planning, organizing, auditing, accounting for and
controlling its company's finances. The finance department also usually produces the
company's financial statements.
 Controlling expenditures and obligations (including operating expenses, debt, payroll)

 Receipting and depositing all revenues.
 Managing the investment of all monies.
SWOT Analysis:

METAL CRAFTS
StrengthWeakness
ThreatsOpportunity
1) Strength:
 Large production capacity

 High quality delivery
 Relatively low cost of production
 Large number of orders
 Large product line
 International demand and orders
 Low rate of rejections
 Reasonable labor available.
 Well trained employees
Weakness :

METAL CRAFTS
 Excess tax regime.

 Transportation cost.
2) Opportunity :
 Increasing demand / order.

 Existing and new customers
 Expansion of business
 Research and development initiatives.
 Growing domestic markets.
3) Threats :
 Governmentcontrol, rules and regulation and changing policies

 Environmental problems and environmental policy regarding
pollution and waste.
 Tough competition from the internal market.

METAL CRAFTS
CONCEPTUAL BACKGROUND AND LITERATURE REVIEW
GENERAL INTRODUCTION
In modern competitive one of the burning of every business that of cost control and reduction
. an all pervasive effort for cost control and cost reduction is of paramount, importance for
survival and growth of every industrial enterprises. This is why inventory management as a
scientific device for controlling inventory costs and eliminating wastage, is now regarded as
an integral part of industrial management. Inventory management does not involve any
human factor, as it concerns itself now with men but with inventory.
Inventories constitute the most significant part of the current assets of a large majority of
companies in india. Because of the large inventories maintained by firm, a considerable
amount of funds is required to be committed to them. It is therefore absolutely imperative to
manage inventories efficiently and effectively in order to avoid unnecessary and may fail
ultimately. The reduction in ‘excessive’ inventories carries a favorable impact on a
company’s profitability.
MEANING OF INVENTORY
Inventory is the physical stock of goods maintained in an organization for its smooth running.
In accounting language it may mean stock of finished goods only. In a manufacturing
concern, it may include raw materials, work in progress and stores etc. in the from of
materials or supplies to be consumed in the production process or in the rendering of services.
In brief, inventory is unconsumed or unsold goods purchased or manufactured

METAL CRAFTS
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 inventory exist in a manufacturing
company are raw materials, work in progress and finished goods.
1) Raw Materials :-
These represents inputs purchased and store to be converted In to finished products in
future by making certain manufacturing process on the same.
2) Work In Process :
These presents’ semi-manufacturing products which need future processing before
they can be treated as finished products.
3) Finished Goods :
These are completely manufactured products and are ready for sale. These are the
products ready for consumers/ retailers/ wholesalers.
The area of inventory management covers the following individual phases:

 Determining the size of inventory to be carried.
 Establishing the timing schedules
 Procedures
 Lot sizes for new orders.
 Ascertaining minimum safety levels.
 Providing proper storage facilities.
 Determining the economic order quantity.

METAL CRAFTS
OBJECTIVES OF INVENTORY MANAGEMENT
 To avoid over investment and under investment in inventories

 To provide the right quantity of goods of right quality at proper time
and at proper value.
 To meet the customer requirement smoothly, efficiently, timely,
effectively and satisfactorily.
 To maximize excessive investment in inventory and the increase the
profitability.
FUNCTION OF INVENTORY MANAGEMENT
 To meet anticipated demand.

 To protect against stock outs.
 To smooth production requirement.
 To decouple operation.
IMPORTANTS OF INVENTORY MANAGEMENT:-
 The firm has to maintain adequate inventory for smooth production and
selling activity.
 Inventory reduces product cost.
 Inventory provides services to the customer immediate.
 It has to minimize the investment in inventory to enhance firm’s
profitability.
 To enhance and improve customer services.

METAL CRAFTS
TECHNIQUES OF INVENTORY CONTROL :-
Efficient inventory management basically aims at reducing the cost of

production and maintaining steady flow of manufacturing process or trading
activity. Large inventory ensures continuous and in-interrupted flow of
production. But, it requires heavy investment, higher carrying cost, and high
risk of obsolescence. Low inventory requires lower investment, lower carrying
cost and low risk of obsolescence. But results in stop page or interruption in the
production process .Therefore finance manager is required to determine an idle
quantity of materials to be carried in stock, which neither increases the cost of
holding the inventory techniques are widely used to better control over the
inventories.
DETERMINATIONOF STOCK LEVEL
1) Maximum Stock Level :
This is that level above which stock should not be allowed to raise. In other
words the maximum stock level indicates the maximum quantity of an item of
material which can held in stock at any time.
Maximum Stock Level = Re-order Level + Re-order Quantity – (Maximum

Consumption * Minimum Re-order Period)
This level is fixed after taking in to account the following factors –
1) Rate of consumption.
2) Availability of storage place.
3) Coat of storage and insurance.
4) Economy in price.

METAL CRAFTS
2) Minimum Stock Level:
This level indicates lowest possible quantity of materials to be held in stock. It

is lower limit of inventory. While fixing this level the following factors are
taken in to consideration-
1 )Nature of materials whether perishable or durable.
2) Lead time which mean maximum possible time require to obtain from the
date of placing an order for them.
3) Rate of consumption of materials.
Minimum Stock Level = Re-order Level – ( Normal Consumption * Normal Re-

order Period
3) Re-order Level :
This level is an indication for re-establishment of stock. At this level, steps for
purchasing materials are to be initiated. This levels lies between maximum and
minimum stock level, at re-order level, arrangement should be made place the
orders for materials with suppliers. It is signal an indication that a new order
must be placed.
Re-order Level = Maximum Consumption * Maximum Re-order Period

METAL CRAFTS
4) Danger Level :
This level is below the minimum level. When the stock reaches this level,
materials have to be purchased urgently so as to avoid the stoppage of
production. Stock position should not be allowed to reach danger level under
any circumstances.
Danger Level = Minimum Rate of Consumption * Emergency Delivery

Period
5) Economic Order Quantity (EOQ):
Economic order quantity is an ideal quantity of materials to be ordered at a

time to keep the ordering cost carrying cost at minimum, but at the same time to
ensure steady supply of required materials.
Buying in small quantities means lower average inventory and less carrying
cost. But ordering cost will be more and there is risk of production stoppages. If
purchases are made in smaller quantities frequently, the cost of ordering will be
more.
Therefore, EOQ model locate at the point where trade –off between carrying
cost and ordering cost is reached.
Economic Order Quantity = √2AO / C

METAL CRAFTS
Where as ‘A’ = Annual Demand
‘O’ = Ordering Cost
‘C’= Carrying Cost
EOQ Model is based on the following Assumptions
1) The firm knows exactly the annual consumption of the inventory.

2) The rate at which the firm uses inventory is steady and uniform over time
3) The orders placed to replenish inventory are received at exactly that point
of time when inventories reach zero.
4) Ordering cost and carrying costs are constant over the range of possible
inventory levels being considered.
6) ABC Analysis :
ABC approach is also known as always better control .This approach to the
inventory management determines degree of control to be exercise on materials.
In large organization materials are classified in to a number of categories
according to their value, importance, frequency in use and replenishment.
Category ‘A’ Items may constitute a small percentage of total inventories in

items of quantity but the value of such items may constitute major portion of
total stock holding of the inventories
Category ‘B’ may consists of such items which may be less important, less
costly and slow moving.
In category ‘C’ least important items may be placed. This group consists lrge
quantity of low value.

METAL CRAFTS
Two Bin System:-
Under this system the inventory items are grouped in to two categories. In one
group or bin, sufficient quantity is kept to meet the current needs over a
designated period of time. In another bin a safety stock is maintained to meet
the requirement of inventory at times when the stock in the first bin is exhausted
occurs.
Order Cycling System:-
In this system a periodic review of each item of the inventory is made and
orders are placed to restore the stock to a predetermined level of inventory.
The stores record can broadly be classified in to two.
1) The bin card and

2) The stores ledger.
When the stores keeper issues materials to any department or job against the
materials requisition, a copy of material requisition is sent to the stores ledger
clerk. He makes entry in the “issue” section of the card, specifying the date,
requisition number, the department or job, the
quantity, the unit costs and the total cost. Finally the new balance is calculated and entered in
the balance column.

METAL CRAFTS
Methods of Pricing Material Issues:-
The various methods are used for pricing the materials issue, which are based
on different principles. The following are the important methods of pricing the
materials issues:
1) First In First Out(FIFO)

2) Last In First Out (LIFO)
3) Base Stock Method
4) Highest In First Out (HIFO)
5) Next In First Out (NIFO)
6) Weighted Average Price Method
1)FIRST IN FIRST OUT :
Under this method material received first are issued first. after the first 10% of
materials purchased is over or exhausted the next lot is taken up for issue. The
pricing of issue of the first it is done at the rate of purchase of first 20%.
Merits :
1) It is simple
2) It is based on realistic assumption that materials are issued in the order of
their receipt.
3) There are no changes of over or under recovery of cost.
4) This method is good where the price is failing.

METAL CRAFTS
Demerits :
1)Cost fluctuation indifferent jobs.
2)In period of raising prices the FIFO method gives more profits and result in
higher tax liability.
2)LAST IN FIRST OUT :
This method is opposite to FIFO method. Under this, the latest purchased
materials are issued first tot the production.
Merits :
1) No danger of over or under recovery of cost.
2) Update profit picture.
3) It helps in reducing the tax burden.
4) It is boom to stock pillars.
Demerits :
1) It leads to mere decrial mistake.
2) Job cost will differ.
3) Balance sheet fails to give true picture.

METAL CRAFTS
3) BASE STOCK METHOD :
Minimum stock is maintained in all the enterprises this minimum stock is

known as base stock. The quantity beyond the minimum stock is issued to
production materials are priced at the actual cost.
Merits :
1) Guaranteed minimum stock.
2) Inventory valuation is very easy.
Demerits :
1) Unnecessary capital locks up.
2 )Deflated profit and financial position.
4. HIGHEST IN FIRST OUT (HIFO)
Under this method highest priced materials are issued first when the highest
priced materials lot is exhausted. Then next highest priced material is issued
and so on.
Merits:
1)Materials are issued at the actual cost price.
2)Closing stocks are value at lowest prices.
Demerits:
1) Comparison among similar jobs is difficult.

2) It involves more calculations and cost of production is overstated.

METAL CRAFTS
5.NEXT IN FIRST OUT (NIFO):
Under this method, a material issued to production department is charged at the

price the material next to be received.
Merits:
1)It is forecasting method.
2)Cost of production nearest to the market price.
Demerits:
1)Calculation becomes difficult.
2)Comparison among job becomes difficult.
6)Weighted average price method:
This method is based on the presumption that once the materials are put in to
a common bin they lose their identity. The materials are priced on the basis of
average prices paid for the materials, weighted according to the quantity
purchased at a price.
Merits :
1) It is simple
2) Average price calculation will be more meaningful.
Demerits :
1) There is danger of over recovery or under recovery of cost.

METAL CRAFTS
Literature Review:-
In today’s world business organization tries to affect a balance in inventory

what is demand, need the major components or of the cost reduction. It is also
known inventory control or inventory management.
Inventory management focus on the capacity of the stock. It is deals with

forecasting, the demand, assets and raw materials management carry cost
predict demand of future validation of goods. It is helps manager to understand
and co-ordinate with supply chain management and quality management.
Kotler :-
Inventory management means to include all the activities in developing and

managing the inventories of raw materials, work in progress and finished goods
so that supplies are presented and the costs of over or under stocks are low.
Timothy L. Urban:-
The effect of displayed inventory on retail sales is recognized in logistic,

marketing and operation management literature. It has been verified marketing
literature and operation literature are appropriated model. Analyzing the
problems developing and utilizing model to illustrate. The model are the extend
to multi case..
Keith Howard :
Inventory management is recognized to be improve along with areas of

distribution function. The major components of inventory are distribution
analysis the person responsible for taking decision.

METAL CRAFTS
Financial Ratio Analysis :-
An analysis of financial statement with the help of ‘ratio’ is called ‘ratio

analysis’.
RATIO ANALYSIS:-
It is controlling tool of financial analysis. This ratio defined as “the indicating

proportion of two mathematical expression “and as the relationship between two
or more things. This ratio is used as a benchmark for analyzing position and
performance of organization. It helps to make qualitative judgment about to
firm and judgment focus to financial analysis and key figures.
Meaning of Ratio :
The ratio refers to numerical or quantitative relationship between two

items.

METAL CRAFTS
INVENTARY MANAGEMENT RATIOS:
Liquidity Ratio:-
Liquidity means the firms ability to pay its current liabilities. Adequate liquidity
of a firm to meet its current that is short term obligations.
1) Current Ratio or Working Capital Ratio :
It is calculated by dividing current assets by current liabilities. So current ratio

expresses relationship between current assets and current liabilities. It is also
called current working capital ratio. It matches the total current assets of the
firm to its current liability.
Current Ratio :- Current Assets / Current Liabilities
2) Quick Ratio :
It is calculated by dividing the total of the quick assets and total of current liabilities. It
express the relationship between quick assets and quick liabilities.
Quick Ratio = Quick Assets / Quick Liabili
3) Inventory to Working Capital Ratio :
The inventory to working capital ratio is a ratio that measures firms capabilities
to finance its inventories. What portion of a company’s inventories is financed
from its available cash, is essential to businesses which hold inventory and
survive on cash supplies.
Inventory to Working Capital Ratio :- Inventory / Gross Working Capital * 100

METAL CRAFTS
4) Inventory to sales ratio :
The inventory to sales ratio is a ratio that measures the account of inventory that the company
is carrying compared to the number of sales orders being fulfilled. It shows the ratio of in-
stock items versus the amount of sales orders the company is currently filling.
Inventory to Sales Ratio = Average Inventory / Sales * 100
5)Inventory to Total Assets Ratio
The inventory to total assets ratio is a ratio that measures inventory as a percentage of total
assets and to help you monitor your inventory level. Assets of company resources such as
inventory, cash, accounts receivable and equipments. It shows the inventory and total assets
which helps the management to decide upon utilization of remaining resources profitability
Inventory to total assets ratio = Inventory / Total assets * 100
6) Inventory to Current Assets Ratio
The inventory to current assets ratio is a ratio that measure average inventory as
a percentage of current assets. It shows the inventory raw materials, work
materials, work-in-progress, finished goods which are part of goods current
assets.
Inventory to current assets ratio : Average inventory /Current assets *

100
7) Inventory Turnover Ratio :
The inventory turnover ratio is an efficient ratio that shows how effectively inventory is
managed. It shows how many times a company’s inventory is sold (sales) divided by the
average inventory.
Inventory Turnover Ratio = Cost of Goods Sold / Average Profit
Cost of Goods Sold = Sales – Gross Profit

METAL CRAFTS
8) Inventory Conversion Period Ratio :-
Inventory conversion period is a ratio shows the higher ratio is good from the view point of
liquidity. A high inventory period implies good inventory management. The low ratio should
signify that inventory does not sell fast and stay in the warehouse for a long time, low
inventory ratio is very dangerous.
Inventory Conversion Period Ratio : Annual Day / Inventory Turnover Ratio

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DATA ANALYSIS

METAL CRAFTS
Analysis and Interpretation of the Data :

I. Following are the Inventory Management Ratio:-
II. Statement Showing Current Ratio :-
Current Assets Current liabilities Current ratio
2016 2,60,83,298.4 1,30,52,532.9 1.99:1

2017 1,67,18,914.27 1,62,35,518.19 1.02:1
2018 12,46,08,042.95 12,17,38,201.33 1.02: 1
Current Ratio :- Current Assets / Current Liabilities
140000000
120000000
100000000
80000000
Current Assets
Current Liabilities
60000000 Current Ratio
40000000
20000000
0
2016 2017 2018
Analyses :-
the ideal current ratio of 2:1, which will tell us sound liquidity position of the firm to meets
its current obligations. In the year 2016 the ratio is 1.99:1 which is good compare to next two
years. In 2017 the ratio has slightly decreased to 1.02:1 and in 2018the ratio has been
decreased.
Interpretation
In the year 2017 & 2018the ratio is decreased which shows that liquidity position of the
company is not satisfactory.

METAL CRAFTS
2) Statement Showing Quick Ratio
Quick Ratio = Quick Assets / Quick Liabilities

Quick Assets = Current Assets – Inventories
Year Current assets Inventories Quick assets
2016 21683298.4 3491400 22591898.4
2017 16718914.27 2537300 14181614.27
2018 124608042.95 103783917.87 20824125.1
Year Quick assets Quick liabilities Quick ratio
2016 22591898.4 13052532.9 1.73:1
2017 14181614.27 16235518.19 0.87:1
2018 20824125.1 90731384.97 0.22:1

METAL CRAFTS
100000000
90000000
80000000
70000000
60000000
quick assets
50000000
quick liabilities
40000000 quick ratio
30000000
20000000
10000000
0
2015-16 2016-17 2017-18
Analysis :-
The ideal ratio is 1:1. In the year 2016, 2017 the ratio is 1.73:1 and 0.87:1 respectively which
show that the company has a strong liquidity position as compared to 2018 with the ratio of
0.22:1.
Interpretation :-
Reason behind the decrease of the ratio is that inventory raises and current assets decreases,
which resulted in lower ratio.

METAL CRAFTS
3)Statement Showing Inventory to Working Capital Ratio :-
Inventory to Working Capital Ratio : Inventory / Gross Working Capital
Inventory to Working Capital Ratio : Inventory / Gross Working Capital
Year Inventory Gross working Inventory to working

capital capital ratio
2016 3491400 26083298.4 0.13:1
2017 2537300 16718914.24 0.15:1
2018 103783917.87 124608042.95 0.83:1
140000000
120000000
100000000
80000000 Inventory
Gross working capital
60000000 Inventory to working capital
ratio
40000000
20000000
0
2016 2017 2018
Analysis :
In the above graph in the year 2016, the ratio is 0.13:1 In the year 2017 the ratio is 0.15:1. In
the year 2018 the ratio is 0.83:1, which is increased compare to previous year.
Interpretation
In the graph in the year 2018 the ratio has increased so that ithelps the firm in holding the
inventory and survive on cash supplies.

METAL CRAFTS
4)Statement Showing Inventory to Sales Ratio:-
Inventory to Sales = Average Inventory / Sales *100
Year Average Inventory Sales Inventory To Sales

Ratio
2016 5260700 52164069.10 7.27:1
2017 3014350 72354433.69 5.18:1
2018 4200000 58153505.04 8.05:1
Chart Title
80000000
70000000
60000000
50000000
40000000
30000000
20000000
10000000
0
2016 2017 2018
Inventory Total Assets Inventory to Sales Ratio
Analysis :
In the above graph in the year 2016, the ratio is 7.27:1. In the year 2017 the ratio is 5.18:1
which is slightly decreased compare to previous year .in the year 2018 the ratio is 8.05:1
which has increased .
Interpretation :
The reason behind increasing in ratio is decreasing of stock which result in the firm in
maintaining sales.

METAL CRAFTS
5)Statement Showing Inventory to Total Assets Ratio :-
Inventory to Total Assets Ratio = Inventory / Total Assets *100
Year Inventory Total Assets Inventory to Total

Assets Ratio
2016 3491400 32450623.32 10.75:1
2017 2537300 33813392.19 7.50:1
2018 103783917.87 168435151 61.61:1
Chart Title
180000000
160000000
140000000
120000000
100000000
80000000
60000000
40000000
20000000
0
2016 2017 2018
Inventory Total Assets Inventory to Total Assets Ratio
Analysis :
In the year 2016 the ratio is 10.75:1, In the year 2017 the ratio is 7.50:1, in the year 2018 The
ratio has increased that is 61.61:1 respectively.
Interpretation:
In the above table which resulted and helped the firm management to take an appropriate
decision of utilization in profitability.

METAL CRAFTS
6)Statement Showing Inventory to Current Assets Ratio
Inventory to Current Assets Ratio = Average Inventory / Current Assets

*100
Year Average inventory Current assets Inventory to

current assets ratio
2016 5260700 26083298.4 20.16:1
2017 3014350 16718914.27 18.02:1
2018 4200000 124608042.95 3.37:1
Chart Title
140000000
120000000
100000000
80000000
60000000
40000000
20000000
0
2016 2017 2018
Average Inventory Current Assets Inventory to current assets ratio
Analysis :
In the year 2016 the ratio is 20.16:1, inyear 2017 it has slightly decreased to 18.02:1 and in
the year 2018 it was again decreased 7.50 compared to previous year.
Interpretation: In the above table we can see that 2017& 2018 slighlty decreased as
compare to 2016.

METAL CRAFTS
7)Statement Showing Inventory Turnover Ratio :-
Inventory Turnover Ratio = Cost Of Goods Sold / Average Inventory
Cost of Goods Sold = Sales – Gross Profit
Average Inventory = Opening Inventory + Closing Inventory
Year Opening Inventory Closing Inventory Average Inventory
2016 7030000 3491400 5260700
2017 3491400 2537300 3014350
2018 4200000.00 4200000 4200000
Year COGS Average inventory Inventory turnover

ratio
2016 58538114.09 5260700 11.13:1
2017 45250063.38 3014350 15.01:1
2018 47964069 4200000 11.42:1
70000000
60000000
50000000
40000000
COGS
average inventory
30000000 inventory ratio
20000000
10000000
0
2016 2017 2018

METAL CRAFTS
Analysis :
In the above graph in the year 2016 the ratio is 11.13:1, in the year 2017 the
ratio is 15.01:1, which is slightly increased compare to previous year . in the
year 2018 the ratio is 11.42:1,
Interpretation:
The reason behind decreased in the ratio because of not using efficiently
inventory management teqnique.

METAL CRAFTS
8)Statement Showing Inventory Conversion Period Ratio :
Inventory Conversion Period Ratio =Annual Day / Inventory Turnover Ratio
Years 365 Days Inventory Turnover Inventory

Ratio Conversion Period
2016 365 11.1274 32.08:1
2017 365 15.0115 24.31:1

2018 365 11.4200 31.96:1
Chart Title
400
350
300
250
200
150
100
50
0
2016 2017 2018
365 Days Inventory Turnover Ratio Inventory Conversion Period
Analysis :-
In the above graph in the year 2016 the ratio is 32.80:1,inthe year 2017 ratio is 24.31:1,which
is slightly decreased . in the 2108 the ratio is 31.96:1, has been increased compare to the
previous year .
Interpretation :
This shows the efficiency of management to convert the inventory into cash within a short
period of time as compared to the year 2016

METAL CRAFTS
BALANCE SHEET

METAL CRAFTS
Trading & profit and loss account as on (1/04/2015 to 31/03/2016)
Particular Amount Particular Amount
opening stock 70,30,000 Sales account 7,23,54,433.69
purchase account 4,64,60,336.45 Sales returns _
purchase return _ Closing stock 34,91,400
direct expenses 85,39,177.64
gross profit 1,38,16,319.60
Total 7,58,45,833.69 Total 7,58,45,833.69
indirect expenses 1,22,36,018.53 Gross profit b/d 1,38,16,319.60
net profit 17,80,187.07 Income (revenue) 1,99,886
Total 1,40,16,205.60 Total 1,40,16,205.60

METAL CRAFTS
Liabilities Amount Assets Amount
Partners capital 1,87,75,353.42 Fixed assets 62,81,182.92
Reserve and surplus _ Investment _
Secured loan 6,13,178 Current assets _
Unsecured loans _ Receivables 12,945
Current liabilities Inventories 34,91,400
sundry creditors 48,20,198.50 Deposits 7,70,778
barrowing 72,66,410.09 Sundry debtors 1,44,74,764.53
other liabilities 9,65,924.31 Cash & bank 73,33,410.87
profit and loss account 9,559 Misc expenses 86,142
Total 3,24,50,623.32 Total 3,24,50,623.32

METAL CRAFTS
Trading & profit and loss account as on (1/04/2015 to 31/03/2016)
opening stock 70,30,000 Sales account 7,23,54,433.69
purchase account 4,64,60,336.45 Sales returns _
purchase return _ Closing stock 34,91,400
direct expenses 85,39,177.64
gross profit 1,38,16,319.60
Total 7,58,45,833.69 Total 7,58,45,833.69
indirect expenses 1,22,36,018.53 Gross profit b/d 1,38,16,319.60
net profit 17,80,187.07 Income (revenue) 1,99,886
Total 1,40,16,205.60 Total 1,40,16,205.60

METAL CRAFTS
Balance sheet as for the year ending 1/04/2015 to 31/03/2016
Partners capital 1,87,75,353.42 Fixed assets 62,81,182.92
Reserve and surplus _ Investment _
Secured loan 6,13,178 Current assets _
Unsecured loans _ Receivables 12,945
Current liabilities Inventories 34,91,400
sundry creditors 48,20,198.50 Deposits 7,70,778
barrowing 72,66,410.09 Sundry debtors 1,44,74,764.53
other liabilities 9,65,924.31 Cash & bank 73,33,410.87
profit and loss account 9,559 Misc expenses 86,142
Total 3,24,50,623.32 Total 3,24,50,623.32

Trading and profit and loss account as on 1/04/2016 to 31/03/2017

METAL CRAFTS
Opening stock 34,91,400 Sales account 5,81,53,505.04
Purchase account 3,64,65,423.01 Sales return _
Purchase return _ Closing stock 25,37,300
Direct expenses 78,30,540.37
Gross profit 1,29,03,441.66
Total 6,60,90,805.04 Total 6,60,90,805.04
Indirect expenses 1,20,73,510.61 Gross profit b/d 1,29,03,441.66
Net profit 11,74,000 Income (revenue ) 3,44,068,.95
Total 1,32,47,510.61 Total 1,32,47,510.61

METAL CRAFTS
Partners capital 2,00,22,882 fixed assets 2,15,13,872.92
Reserve surplus _ investment _
Secured loan 20,54,992 current assets _
Unsecured loan _ receivables 1,40,022
Current liabilities inventories (closing stock) 25,37,300
Sundry creditors 11,49,139.60 deposits 30,94,200
Borrowing 1,40,59,812.19 sundry debtors 1,07,18,295.95
Other liabilities 10,26,566.40 cash & bank 2,29,096.32
Profit and loss account _ misc. expenses 80,605
Total 3,38,13,392.19 Total 3,38,13,392.19

METAL CRAFTS
Opening stock 42,00,000.00 Sales account 5,21,64,069.10
Purchase account 4,36,24,333.71 Sales return _
Purchase return _ Closing stock 42,00,000.00
Direct expenses 50,91,032.02
Gross profit 34,48,703.37
Total 5,63,64,069.1 Total 5,63,64,069.1
Indirect expenses 58,64,835.47 Gross profit b/d 34,48,703.37
Income (revenue ) 16,698.40
Net loss 23,99,433.70
Total 58,64,835.47 Total 58,64,835.47

METAL CRAFTS
Partners capital 27,72,34,77.55 fixed assets 4,11,99,273.38
Reserve surplus _ investment _
Secured loan 1,89,73,472.00 current assets
Unsecured loan _ receivables 4,012.96
Current liabilities inventories (closing stock) 10,37,83,917.87
Sundry creditors 36,28,929.99 deposits 5,92,862.00
Borrowing 2,03,50,093.19 sundry debtors 1,90,92,459.33
Other liabilities 73,813.55 cash & bank 11,34,790.79
Profit and loss account 9,76,85,364.60 misc. expenses 26,27,834.53
Total 16,84,35,150.88 Total 16,84,35,150.88

METAL CRAFTS

METAL CRAFTS
FINDING, SUGGESTON AND CONCLUSION
Findings:-
 company is not maintain good inventory.

METAL CRAFTS
 Company don’t have better production planning.

 Inventory current assets ratio is decreasing every year.
 Inventory sales ratio is continuously decreasing.
 Inventory conversion period is decreasing per year.
 Company is taking less period to convert inventory into finished goods.
 Work in progress ratio is decreasing
Suggestions :-
 The company should more focus on the increasing the profit hence it is developing

METAL CRAFTS
 Company should make better planning of productions.

 Company should focus on increasing the inventory sales ratio by maintain adequate
planning and inventory techniques.
 Company should maintain good inventory ratio.
 company should focus on increasing sales ratio rather than stock.
Conclusion:-

METAL CRAFTS
Today inventory management is considered to be an important tool or aspect for the progress.
Management plans different techniques which play a significant role in assisting the
management in decision making. metal Crafts is a well managed company which is
maintaining adequate inventory system and is implementing the efficiency of managing funds
in a systematic way. The inventory is being reduced in order to avoid blockage
Inventory management helps the organization in observing raw materials, work in progress
and finished goods.
Every business undertakes and understand the financial performance of the organization
under the financial statement but, utilizing the funds is difficult at some point of time the
organization. Metal Crafts has been doing well in this area.
The study implies that the firm is functioning very well and is adopting new techniques in
order to increase its efficiency in management.
BIBLIOGRAPHY:

METAL CRAFTS
 company record
 internet
 working capital book
Website:
www. metalcrafts.com

Inventory Management - Harish Hakki

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METAL CRAFTS

Harish.S.Hakki of 5thsemester B.B.A studying in GOGTE COLLEGE OF COMMERCE

PLACE :-BELAGAVI Harish.S.Hakki

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 1

This project is a great opportunity to express my heartily thanks to those people

First and foremost I Mr.Harish.S.Hakki would like to express my sincere

I acknowledge gratefully, the assistance and co-operation of the management

I thank principal of our college Dr. H.H.Veerapur for helping me in preparing

My special thank to my coordinator Prof. Nayana Raichur and internal guide

I also express my sincere thanks and dedicate my work to parents, family

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 2

The project was undertaken in,. as a part of BBA Department . METAL

This report gives information about ‘’INVENTORY MANAGEMENT”.

The study was conducted systematically according to the requirements of the

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 3

SL. NO. TITLES PAGE NO

4. Case study : theoretical

8. Balance sheet and

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 4

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 5

In a span of 2 to 3 years their business increased multifold. Capacity reached a staturated

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 6

Name of the metal crafts

Ownership Partnership firm

Types of Manufacturers of sheetmetal pressed components and fabricated parts of

Nature of Steel Metal Pressed components

metal crafts M-15, industrial estate , udayambag,Belgaum -590008

RS No 664/2, Plant 2, Waghwade Road, Machhe,

Partners Ashwin .S. Macha

Banker State bank of India , industrial estate , udyambag , Belgaum

Employees 55(staff-15 and workers-40)

E-mail address Ashwin.macha@metalcrafts.com

Web- site www. metalcrafts.com

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 7

Working hours 8.30 am to 5.00 pm

(lunch break 12.30 pm-1pm)

Weekly holiday Sunday

Phone number +91831-2440805, 2440505,2440804.

Annual 6.75 Crores

1) We at METAL CRAFTS shall strive to continuously exceed the expectations of our

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 8

We at “METAL CRAFTS” aim for, total customer satisfaction is organizational goal.

This we aim to achieve with discipline and by involving every employee in

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 9

FAN COVER BRACKET BOTTOM VIEW

BREAK LEVER TOP VIEWCANOPY

COVER DISK BIG

EXTERNAL COVER 4DS2 EXTERNAL COVER DFF

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 10

FUEL TANK FUEL TANK COVER

GEAR COVER PLATE TOP VIEW EXTERNAL COVER DFF

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 11

Managing Partner 1 Managing

Stores In Developme Production Chief Quality Head

Asst. Asst. Supervisor Security

GOGTE COLLEGE OF COMMERCE BBA DEPT BELAGAVI Page 12

*LIST OF MAJOR CUSTOMERS:

1).TATA Macropolo motors limited, Dharwad

2)Andrew telecommunication India pvt.ltd, GOA.

3) Telesmart SCS Ltd, Goa

4) Vardenchi Motorcycles Pvt Ltd, Mumbai

5) ABB limited, Bangalore

6) Crompton greaves Ltd, Ahmednagar

Latest sharing machine with 3.0mm 2500mm and 10mm*2000mm helps in