SPR 1

A STUDY ON WORKING CAPITAL MANAGEMENT
CHAPTER – 1
EXECUTIVE SUMMARY: -
PAGE NO. 1
EXECUTIVE SUMMARY: -
This study is undertaken to know the working capital management of Western Coalfields Limited
(WCL). This project report gives information about the tools for effective and efficient utilisation.
The working capital management is the most important tool to measure the liquidity position of
the company. This study is undertaken to observe the management of working capital through ratio
analysis technique, because ratio analysis is the important tool to measure the working capital
management. So I have taken the three years annual reports to measure the working capital of
western coalfields limited.
India is currently among the top three fastest growing economies of the world. As India's energy
needs are fast expanding with its increased industrialisation and capacity addition in power
generation. This is where 'coal steps in. In India coal is the critical input for major infrastructure
industries like power, steel and cement. Coal is the most dominant energy source in India's energy
scenario.
So To study the various components of working capital of WCL, analyze the liquidity trend. To
appraise the utilization of current asset and current liabilities and find out short-comings this study
was undertaken
On the basis of data analysis and findings the company has maintained its performance
with strong top line Gross Revenue of Rs.18600.34 Crores amid global economic slowdown due
to Covid 19 pandemic. The net working capital of the company was positive and satisfactory and
subsequently increasing from last couple of years. Positive working capital means that the
company is able to pay off its short term liabilities, however, there is a need for improvement in
some ratios like Quick Ratio, Return on Net Worth, Return on Net Asset and Return on Equity in
order to enhance the liquidity and profitability position to the prominent level.
This study helped to analyses the liquidity and efficiency of the business and the
management of the fans. The position of the company is average. But still it can improve the
position. So the financial performance is satisfactory but there is a further scope for improvement.
PAGE NO. 2
CHAPTER – 2
INTRODUCTION
PAGE NO. 3
WORKING CAPITAL MANAGEMENT: -
Working capital may be regarded as the life blood of the business. Working capital is major
importance for internal and external analysis because of its close relationship with the current day
to day operation of business.
Funds collected from different sources are invested in the business for the acquisition of assets.
These funds are applied for earning revenue. Working capital management comes under the scope
of financial management. Financial management principles to particulars financial operation.
Cash is the life of company. If this lifeline deteriorates, so does the companies’ ability to found its
operation, reinvest and meet capital requirement and payment. Understanding a company’s cash
flow prospects is look its working capital management.
Working capital refers to the cash a business requires for a day to day operations, or more
specifically for the conversion raw material into finished goods, which The company sells to
generate revenue. Among the most important items of working capital are levels of inventory,
accounts receivables, and accounts payables. Analysis look at these items for signs of a company’s
efficiency and financial strengths.
The better a company manages its working capital, the less the company needs to borrow. Even
companies with surplus cash need manage working capital to insure that this surplus is invested in
ways that will generate suitable returns for investors.
The goal of working capital management is to manage the firm’s current assets and liabilities in
such a way that a satisfactory levels of working capital is maintained. The term current assets refer
to those assets which in the ordinary course of business be, or will be, converted into those cash
within one year without undergoing a diminution in value and without Disrupting the operation of
the firm.
PAGE NO. 4
THE MAJOR CURRENT ASSETS ARE:
 Inventory
- Raw materials, stores and spares
- Working in progress
- Finished goods
 Receivables
 Short term advance
 Prepaid expenses
 Temporary investment
 Cash and bank balance
The current liabilities are those liabilities which intended, at their inception, to be paid the ordinary
course of business. Within a year, out of the assets are earning of the concern.
THE MAJOR CURRENT LIABILITIES:
 Accounts payable
 Bills payable
 Bank overdraft
 Outstanding expenses
 Creditors
 Taxes and divided payable
PAGE NO. 5
CONCEPTS AND DEFINITION OF WORKING CAPITAL
DEFINITION:
“Working capital is the amount of funds necessary to cover the cost of operating the enterprise.”
CONCEPTS:
There are two concepts of working capital:
1. Gross working capital:-

It is the total of current assets of a business firm. Current assets are that assets which can
be converted into cash within an accounting year or an operating cycle. The Current assets
include cash and bank balances, debtors, bills receivables, inventories, Pre paid expenses
and short terms investments.
2. Net working capital:-

It is the difference between current assets and current liabilities. The net working capital
can be positive or negative. If current assets exceed current liabilities, the difference is
positive net working capital and when current liabilities exceed current assets the
difference is negative working capital.
PAGE NO. 6
 FACTORS DETERMINING WORKING CAPITAL
The factors determining working capital in details:-
1) NATURE OF BUSINESS
The requirement of working capital is very limited in public utility undertakings
Such as electricity, water supply and railways because the offer cash sale only and supply services
not products, and no funds are tied up in inventories and receivables. On the other hand financial
firms requires less investment in fixed assets but have to invest large amount of working capital
along with investment.
2) SIZE OF THE BUSINESS

Greater the size of business, greater is the requirement of working capital.
3) PRODUCTION POLICY
If the policy is to keep production steady by accumulating inventories it will require higher
working capital.
4) SEASONAL VARIATIONS
Generally, during busy season, a firms requires larger working capital than in slack season.
5) WORKING CAPITAL CYCLE

The speed with which the working cycle completes one cycle determines the requirement of
working capital, longer the cycle larger is the requirement of working capital.
6) CREDIT POLICY
A concern that purchases its requirement on credit and sales its products/ services on cash requires
lesser amount of working capital.
PAGE NO. 7
7) RATE OF STOCK TURNOVER

There is an inverse co –relationship between the question of working capital and the velocity or
speed with which the sales are affected. A firm having a high rate of stock turnover will needs
lower amount of working capital as compared to a firm having a low rate of turnover.
8) RATE OF GROWTH OF BUSINESS

In faster growing concern, we shall require large amount of working capital.
OBJECTIVE OF WORKING CAPITAL MANAGEMENT:
The basic objectives of working capital management are as follows
1. By optimizing the investment in current assets and by reducing the level of current liabilities,
the company can reduce the locking up of funds in working capital there by; it can improve the
return on capital employed in the business.
2. The second important objective of working capital management is that the company should
always be in a position to meet its current obligation which should properly be the current
assets available with the firm. But, maintaining excess funds in working capital means locking
of funds without returns.
3. The firm should manage its current assets in such a way that the marginal return on investment
in these assets is not less than the cost of capital employee to finance the current assets.
4. The firm should be maintaining proper balance between current assets and current liabilities to
enable the firm to meet its day to day financial obligation.
PAGE NO. 8
NEED OF WORKING CAPITAL
Working capital is significant because of
1. It is essential to run the day to day business activities.

2. Greater volume of working capital required investing in current assets for success of sale
activities.
3. To ensure the maximizing the wealth of the firm.
4. To enable to increase the rate of return on investment.
5. To meet the short term obligation of a business enterprise.
6. To increase the operational efficiency of a firm.
7. To earn considerable profit.
8. Working capital needs are more often financed through outside sources, so it is necessary to
utilized them in the best way possible.
9. The management of working capital is more important for small units because they scarcely
rely on long term capital market.
SIGNIFICANCE OF WORKING CAPITAL MANAGEMENT
The management of working capital is important for several reasons:
 For one thing, the current assets of a typical manufacturing firm account for half of its total assets.
For a distribution company, they account for even more.
 Working capital requires continuous day to day supervision. Working capital has the effect on
company's risk, return and share prices,
 There is an inevitable relationship between sales growth and the level of current assets. The target
sales level can be achieved only if supported by adequate working capital Inefficient working
capital management may lead to insolvency of the firm if it is not in a position to meet its
liabilities and commitments.
PAGE NO. 9
SOURCES OF WORKING CAPITAL
The financial executives are always interested in obtaining the working capital at the right time,
at a reasonable cost and at the best possible favourable terms.
1) Long term working capital:-

Long term working capital is required to create production facilities through purchase of
fixed assets such as plant & machineries, land & building, furniture etc.
2) Short term working capital:-

Short term working capital is required for purchase of raw material, payment of wages, and
other day to day expenses. It is otherwise known as evolving and circulating capital.
IMPORTANCE OR ADVANTANGES OF ADEQUATE WORKING CAPITAL:
1. Solvency of the Business:
Adequate working capital helps in maintaining solvency of the business by providing

uninterrupted flow of production
2. Goodwill:
Sufficient working capital enables a business concern to make prompt payments and bence helps
in creating and maintaining goodwill.
3. Easy Loans:
Banks do not hesitate to advance even the unsecured loon to a firm which lus the sufficient working
capital. This is because the excess of current assets over current liabilities itself is a good security
PAGE NO. 10
4. Cash Discount:
A firm having the adequate working capital can avail the cash discount by purchasing the goods
for cash or by making the payment before the due date.
5. Regular Supply of Raw Material:
Adequacy of working capital makes it possible for a firm to pay the suppliers of raw materials on
time. As a result, it will continue to receive regular suppliers of raw materials and thus there will
be no disruption in production process.
DISADVANTAGE OF EXCESSIVE WORKING CAPITAL:
1. Excessive Inventory:
Excessive working capital will result in unnecessary accumulation of large inventory. It increases
the chances of misase, waste, theft ee
2. Excessive Debtors:
Excessive working capital will result in liberal credit policy which, in turn, will results in higher
amount tied up in debtors and higher incidence of bad debts
3. Adverse Effect on Profitability:
Excessive working capital means idle funds in the business which adds to the cost of capital but
earns no profits for the firm. Hence it has a bad effect on profitability of the firm.
PAGE NO. 11
4. Inefficiency of Management:
Management becomes careless, due is excessive resources at their command. It results in laxity of
control on expenses and cash resources
DISADVANTAGE OF INADEQUATE WORKING CAPITAL:
1. Difficulty in Availability of Raw Material:
Adequacy of working capital results in non-payment of creditors on time. As a result. the credit
purchase of goods on favourable terms becomes increasingly difficult. Also, the firm cannot avail
the cash discount.
2. Full Utilization of Fixed Assets Not Possible:
Due to the frequent interruption in the supply of raw materials and paucity of stock, the firm cannot
make full utilization of its machines etc.
3. Decrease in Credit Rating:
Because of inadequacy of working capital, firm is unable to pay its short-term obligations on time.
It decays the firm's relations with its bankers, and it becomes difficult for the firm to borrow in
case of need.
4. Decrease in Sales:
Due to the shortage of working capital, the firm cannot keep sufficient stock of finished goods. It
results in the decrease in sales. Also, the firm will be forced to restrict in in its credit sales. This
will further reduce the sales.
PAGE NO. 12
CHAPTER – 3
OBJECTIVES
PAGE NO. 13
OBJECTIVES OF RESEARCH:
The purpose of search is to discover answers to questions through the application of scientific v
 To study the various components of working capital.
 To analyze the liquidity trend.
 To analyze the working capital trend.
 To appraise the utilization of current asset and current liabilities and find out short-comings
if any.
 To know the credit worthiness of the company.
 To suggest measure for effective management of working capital.
SCOPE OF RESEARCH:
1. The scope of the study is limited to collecting financial data published in the annual reports
of the company every year.
2. The study is carried out for 3 years from financial year 2019 to financial year 2021.
3. Using the working capital management, firms past, present and future performance can be
analysed.
4. The firm should generate enough profits not only to meet the expectations of owner, but
also to meet their day-to-day requirement and short-term obligations.
PAGE NO. 14
CHAPTER – 4
COMPANY PROFILE
PAGE NO. 15
COMPANY PROFILE
Western Coalfields Limited
CIN U10100MH1975GOI018626
Registration Date 29th October 1975
Category/Sub-category Private/Government Company
Type Public Sector Undertaking
Industry Mining
Products Coal
Key people Manoj Kumar (Chairman & MD)
Owner Government of India
Headquarter Nagpur, Maharashtra, India
Address of the registered Coal Estate, Civil Lines,
Office and contact details Nagpur- 44000, Maharashtra, Contact No- 0712-2511216;
Fax No- 0712-2511216
Email Id- companysecretary.wcl@coalindia.in
Website www.westerncoal.in
PAGE NO. 16
CORPORATE INFORMATION: -
 Western Coalfields Limited (WCL), a Mini Ratna (Category-1) Company with

headquarters at Nagpur, Maharashtra, is a wholly owned subsidiary of Coal India Limited
(CIL).
 WCL came into existence after Nationalization of Coal Mines and was incorporated on
29th October, 1975 upon take-over of assets and liabilities as at 1st November, 1975 vested
with the Western Division of Coal Mines Authority Limited.
 The Company is mainly engaged in mining and production of Coal and also operates Coal
washery.
 The major consumers of the company are power and steel sectors.
 Consumers from other sectors include cement, fertilisers, brick kilns etc.
 WCL is having 10 (Ten) coal producing Areas and 1 (one) service unit (Central Workshop)
spread over 2 states (Maharashtra & Madhya Pradesh) in India.
PAGE NO. 17
CORPORATE STRUCTURE AND SUBSIDIARIES COMPANIES: -
Coal India is a holding company with seven wholly owned coal producing
subsidiary companies and one mine planning & Consultancy Company. It encompasses the whole
gamut of identification of coal reserves detailed exploration followed by design and
implementation and optimizing operations for coal extraction in its mines. The producing
companies are
1. Eastern coalfields Limited (ECL), Sanatoria West Bengal
2. Bharat coking coal Limited (BCCL), Dhanbad Jharkhand
3. Central coalfields Limited (CCL) Ranchi, Jharkhand
4 South Eastern Coalfields Limited (SECL) Bilaspur, Chhattisgarh
5 Northern Coalfields Limited (NCL)
6 Western coalfields Limited (WCL), Nagpur, Maharashtra
7. Mahanadi coalfields Limited (MCL) Sambalpur, Orissa
8. Coal India Africana Limited, Mozambique
9. The consultancy company is central mite planning and Design institute Limited (CMPDIL),
Ranchi, Jharkhand.
North Eastern coalfields (NEC) a small coal producing unit operating in

Margherita.
Assam is under direct operational control of CIL Coal India's major consumers are power
and steel sectors. Others include cement. Fertilizers, Brick kilns and small-scale industries.
PAGE NO. 18
COAL INDIA LIMITED AT A GLANCE: -
 Coal India limited (CIL) as an organized state-owned coal mining corporate came into
being November 1975 with the government taking over private coal mines.
 With a modest production of 19 Million Tonnes (MT) at the year of its inception CIL today
is the single largest coal producer in the world.
 Operating through mining areas CIL is an apex body with 7 wholly owned coal producing
subsidiaries and mine planning and Consultancy Company spread over & provincial states
of India, CIL also fully owns a mine company in Mozambique christened as 'coal India
Africana Limited like workshops, hospitals etc.
 Further, it also owns 26 technical & management training institutes and 102 vocational
Training institutes canters India institute of coal management (ICM) as a state-of-the-art
management. "Training centre of Excellence the largest corporate Training institute in
India operates under CIL, and conducts multi-disciplinary management development
programme.
 CIL having fulfilled the financial and other prerequisites was granted the Maharatna
recognition in April 2011. It is a privileged status conferred by Government of India to
select state owned enterprises in order to empower them to expand their operations and
emerge as global giants. So far, the select club has only five members out of 217 central
public sector Enterprises in the country.
PAGE NO. 19
PERFORMANCE:
During the financial year 2021-22, WCL has attained stellar performance in all the Physical and
Financial Parameters. It gives me immense pleasure to present before you the summarized
highlight of the achievement during the concluded fiscal:
HIGHLIGHTS:
• Highest ever Coal Production- 57.71 Million Te.

• Highest ever OB removal- 273.24 Million CuM.
• Highest ever Offtake – 64.17 Million Te
• Highest ever Rail Despatch (2021-22)- 37.99 Million Te
• Highest ever road mode Despatch (2021-22)- 24.10 Million Te
• Highest ever Stock liquidation (2021-22)- 6.46
FINANCIAL PERFORMANCE:
The Company has earned a Profit before Tax of ` 1259.73 crores in 2021-22 as against ` 352.56
crores in the previous year 2020-21. Total Comprehensive Income for the current year is ` 956.94
crores as against ` 167.59 crores in the previous year.
CORPORATE GOVERNANCE:
“Excellent” rating was accorded by DPE in the field of Corporate Governance to your Company
for the year 2020-21. For FY 2021-22 also, as per self-evaluation, company’s Corporate
Governance compliance stood at 100% (Excellent Rating)
PAGE NO. 20
AWARDS AND ACCOLADES:
It is my pleasure to share with you that WCL was bestowed with following awards during the year
2021-22:
1. “09 National Safety Awards” for 8 Mines in different categories for the contest year
2017, 2018, 2019 and 2020 during the National Safety Award function 06th of March,
2022
2. 2nd Prize for “Corporate Safety” during the 47th Foundation Day celebration of CIL on
01.11.2021.
3. 2nd Prize for “Rehabilitation & Resettlement” during the 47th Foundation Day
celebration of CIL on 01.11.2021.
4. “N Kumar Innovation Award” during the 47th Foundation Day celebration of CIL on
01.11.2021.
5. 2nd Prize for “Implementation of Rajbhasha” by Town Official Language

Implementation Committee (Off- 2), Nagpur.
PAGE NO. 21
COAL PRODUCTION (Million Tonnes)
57.64 57.71
58
56
MILLION TONNES
54
52 50.27
50
48
46
2019-20 2020-21 2021-22
YEAR
TURNOVER (Rs. Crores)
18600
20000
13466 13411
15000
MILLION TONNES
10000
5000
0
2019-20 2020-21 2021-22
YEAR
PAGE NO. 22
VISION
 To emerge as a global player in the primary energy sector committed to provide energy
security to the country by attaining environmentally & socially sustainable growth through
best practices from mine to market.
MISSION
 To produce and market the planned quantity of coal and coal products efficiently and
economically in an eco-friendly manner with due regard to safety, conservation and
quality.
VALUES
 Our core values include equality, justice, transparency and accountability. These are
practiced in all spheres of our business activities.
PAGE NO. 23
STRENGTH
 Experienced personnel, productive work culture, participating management, good

industrial relation provider’s organizational support.
 Geological support for developing business verticals.
WEAKNESSES
 Expansion and operation of semi-mechanical Underground Mines are not economical.

 Opencast Mines with high stripping conditions.
 Reserve not amenable to highly mechanized opencast or mass production in UG.
 Financial soundness with adequate reserves/ surplus to support growth plan and enhance
infrastructure facilities.
 Heavy dependence on import of spares and services for large HEMMs.
OPPORTUNITIES
 WCL is centrally located hence it can meet the demand of Maharashtra, Karnataka, Gujarat
etc.
 Consistent Thermal power generation to meet base power demand.
 In adequate infrastructure to meet base power demand.
 Concentrated location of major opencast projects will provide opportunity to install pithead
power plants integrated with mining projects.
 Potential for diversification in allied and non-allied mining activity.
PAGE NO. 24
THREATS
 Coal mining projects are mostly affected by time and cost overruns.
 Commercial mining may bring stiff competition.
 Stringent Environment and Conservation Laws may create operational difficulties.
 Decline in core competency due to outsource operations.
 Renewable energy source
PAGE NO. 25
CHAPTER – 5
RESEARCH METHODOLOGY
PAGE NO. 26
Research
It is a framework or blueprint for conducting the research project. The design should be conceived
keeping in mind the objectives and should clearly define the activities needed to be understand
while conducting the study. It helps the researcher to foresee various research operations. So in
my research there are different methods or steps which are used by me for taking a good research.
Research Design
In view of the objects of the study listed above an exploratory research design has been
adopted. Exploratory research is one which is largely interprets and already available information
and it lays particular emphasis on analysis and interpretation of the existing and available
information.
 To know the financial status of the company.
 To know the credit worthiness of the company.
 To offer suggestions based on research finding.
Period
The study covers a period of 5 years’ data from
 Financial Year 2019-20

PAGE NO. 27
Primary Data
1. Data are collected through discussion with Finance Executives and finance Department
Manager.
Secondary Data
1. Company balance sheet and profit and loss account.

2. The present study has taken into account
 Annual report 2019-20
3. From the annual reports maintained by the company.
4. Data are collected from the company’s website.
5. Books, newspaper and journals pertaining to the topic.
6. Some more information collected from internet.
Data Collection Tools
1. Working Capital Management

2. Accounting Ratios
3. Financial Statements of the Company
Limitations of the study
1. The study was limited to only three years’ financial data.

2. The study is purely based on secondary data which were taken primarily from Published
annual reports of Western Coalfield Limited.
3. There is no set industry standard for comparison and hence the inference is made on
general standard.
PAGE NO. 28
CHAPTER – 6
DATA ANALYSIS AND INTERPRETATION
PAGE NO. 29
1. GROSS WORKING CAPITAL:
It is the general concept which determines the working capital concept. Thus, the gross
working capital is the capital invested in total current assets of the business concern. Gross
Working Capital is simply called as the total current assets of the concern.
Gross Working Capital = Current Assets
Graph 6.1
CURRENT RATIO
8184.96
9000
6702.84
8000 4850.89
7000
CURRENT RATIO
6000
5000
4000
3000
2000
1000
0
2019-20 2020-21 2021-22
YEAR
Table: 6.1
Table Showing Gross Working Capital:
Sr. No Year Current Assets Gross Working

Capital
3 2019-20 4,850.89 4,850.89
4 2020-21 6,702.84 6,702.84
5 2021-22 8,184.96 8,184.96
PAGE NO. 30
Interpretation: -
• Total Current Asset is increasing positively consecutively for 3 years i.e. 2019-20, 2020-
21, 2021-22.
• Total Current Assets are increasing by
a. 0.66% in the year 2019
b. 0.72% in the year 2020
c. 0.83% in the year 2021
• It means that company has huge amount of current assets which can be liquidated within
one year whenever its required.
2. NET WORKING CAPITAL:
Not working capital is defined as the difference between the current assets and current liabilities
of a business. It is that part of the current asset which is left after paying off all the current
liabilities. Positive net working capital represents the ability of the business to pay off liabilities.
On the other hand, negative net working capital is a concern.
Net Working Capital = Current Assets - Current Liabilities
Table: 6.2
Table Showing Net Working Capital:
PAGE NO. 31
Sr. No Year Current Assets Current Liabilities Net Working
Capital
1. 2019-20 4,850.89 4,822.90 27.99
2. 2020-21 6,702.84 6,476.67 226.17
3. 2021-22 8,184.96 5,871.26 2,313.7
Graph 6.2
Net Working Capital

9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2019-20 2020-21 2021-22
Current Assets (A) Current Liabilities (B) Net Working Capital (A-B)
INTERPRETATION
• Net working capital indicates whether the company has sufficient funds to meet its short
term financial obligations.
• In the year 2019-20 and 2020-21 the company had positive net working capital i.e.
Rs.27.99 Crore and Rs.226.17 Crore respectively, which indicates good liquidity position
of the company.
• Currently the net working capital of the company is Rs.2,313.7 Crore which indicated a
healthy liquidity and solvency position.
PAGE NO. 32
RATIO ANALYSIS
 INTRODUCTION:
Ratio Analysis is the powerful tool of financial analysis. A ratio is defined as “the indicated
quotient of two mathematical expressions” and as “the relationship between two or more things”.
In financial analysis, a ratio is used as a benchmark for evaluating the financial position and
performance of a firm.
Ratio helps to summarize large quantities of financial data and to make qualitative
judgement about the firm’s financial performance. This study is undertaken to observe the
management of working capital through ratio analysis technique, because it is an important tool to
measure the working capital management. So I had taken the three financial annual reports to
measure the working capital management.
The present study ascertained with the help of following ratios:
3. CURRENT RATIO
The ratio between all current assets and all current liabilities; another way of expressing liquidity.
It is a measure of the firm’s short-term solvency. It indicates the availability of current assets in
rupees for every one rupee of current liability. A ratio of greater than one means that the firm has
more current assets than current claims against them.
Current Ratio = Current Assets

Current liabilities
PAGE NO. 33
Table: 6.3
Table Showing Current Ratio:
Sr. No Year Current Assets Current Liabilities Current Ratio (in times)
1. 2019-20 4,850.89 4,822.90 1.01
2. 2020-21 6,702.84 6,476.67 1.03
3. 2021-22 8,184.96 5,871.26 1.39
Graph 6.3
CURRENT RATIO
1.39
1.4
1.01 1.03
1.2
CURRENT RATIO
1
0.8
0.6
0.4
0.2
0
2019-20 2020-21 2021-22
YEAR
Interpretation:
• A liquidity ratio that measures a company’s ability to pay short term obligation usually one
year.
• The higher the current ratio the more capable the company is of paying its obligation.
• The general norm for the current ratio in India is 1.33 internationally it is 2.
PAGE NO. 34
• Hence we can meet the short term obligation of WCL.
4. QUICK RATIO:
Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An
asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of
value.
Quick Ratio = Quick Assets

Current liabilities
Table: 6.4
Table Showing Quick Ratio:
Sr. No Year Quick Assets Current Liabilities Quick Ratio (in times)
1. 2019-20 2314.99 4,822.90 0.48
2. 2020-21 3756.47 6,476.67 0.58
3. 2021-22 4462.16 5,871.26 0.76
PAGE NO. 35
Graph 6.4
QUICK RATIO
0.76
0.8
0.58
0.7 0.48
0.6
RATIO
0.5
0.4
0.3
0.2
0.1
0
2019-20 2020-21 2021-22
YEAR
Interpretation: -
 The quick ratio is below the standard ratio and it is not good from company’s point of view.
 It shows that company’s liquidity position is not good.
 But the company’s quick ratio is progressing as compared to its previous years.
5. CASH RATIO
The cash ratio is the ratio that measures the ability of the company to repay the short-term debts
with the cash or cash equivalents, and it is calculated by dividing the total cash and the cash
equivalents of the company with its total current liabilities.
Cash Ratio = Cash and Cash Equivalents

Current liabilities
PAGE NO. 36
Table: 6.5
Table Showing Cash Ratio:
SR NO Year Cash and Cash Current Liabilities Cash Ratio (in times)
Equivalents
1. 2019-20 229.04 4822.90 0.04

2. 2020-21 462.69 6,476.67 0.07
3. 2021-22 567.43 5,871.26 0.10
Graph 6.5
CASH RATIO
0.1
0.1
0.07
0.08 0.04
RATIO
0.06
0.04
0.02
0
2019-20 2020-21 2021-22
YEAR
Interpretation: -
 The ideal cash ratio is greater than 1.

 Ratio is less than 1 over 3 financial years it indicates that WCL has utilized the cash
effectively and has not made enough sales to have more cash.
PAGE NO. 37
 Over the 3 financial years Cash & Cash Equivalents is less than Current liabilities
because the company has utilized its assets well to earn profit.
 Though the ratio is less than the ideal ratio but the company has grown and the ratio
increases over the years.
6. PROPRIETARY RATIO:
The ratio illustrates the relationship in between the owners’ contribution and the total volume of
assets. In simple words, how much funds are contributed by the owners in financing the assets of
the firm. Greater the ratio means that greater contribution made by the owners’ in financing the
assets.
It may be expressed as:
Proprietary Ratio = Proprietary /Shareholder's Fund

Total Assets
Table: 6.6
Table Showing Proprietary Ratio:
SR NO Year Shareholder’s fund Total assets RATIO
1. 2019-20 381.29 13,787.56 0.027

2. 2020-21 548.88 16,160.95 0.034
3. 2021-22 1505.82 17226.05 0.087
PAGE NO. 38
Graph 6.6
PROPRIETARY RATIO
0.087
0.09
0.08
0.07 0.034
RATIO
0.027
0.06
0.05
0.04
0.03
0.02
0.01
0
2019-20 2020-21 2021-22
YEAR
Interpretation: -
 The proprietary ratio establishes the relationship between shareholders’ funds to total
assets.
 It determines the long-term solvency of the firm.
 This ratio indicates the extent to which the assets of the company can be lost without
affecting the interest of the company.
 The proprietary
PAGE NO. 39
7. GROSS PROFIT RATIO

Gross profit ratio as a percentage of revenue from operations is computed to have an idea about
gross margin.
It indicates gross margin on products sold. It also indicates the margin available to cover
operating expenses, non-operating expenses, etc. A low ratio may indicate unfavourable
purchase and sales policy. Higher gross profit ratio is always a good sign.
It may be expressed as:
Gross Profit Ratio = Gross Profit *100

Net Sales
Table: 6.7 .
0i
Table Showing Gross Profit Ratio:
SR NO Year Gross profit Net sales RATIO
1. 2019-20 81.31 9139.22 0.89
2. 2020-21 459.97 9216.68 4.99
3. 2021-22 1334.44 12918.96 10.33
PAGE NO. 40
Graph 6.7
GROSS PROFIT RATIO

10.33
12
10
4.99
RATIO
8
0.89
6
0
2019-20 2020-21 2021-22
YEAR
Interpretation: -
In the year 2019-20 the company earned 0.89% of gross profit from its total sales.
In year 2021-22 the gross profit ratio is 10.33% which is average.
But the company’s gross profit ratio is progressing as compared to its previous years which is a
good sign.
The ratio implies that the firm has earned good profits out of sales over the years.
8. ASSET TURNOVER RATIO

This ratio ensures whether the capital employed has been effectively used or not. This is also the
test of managerial efficiency and business performance. Higher capital turnover ratio is always
required in the interest of the company.
Total Asset Turnover Ratio = Net Sales
Average Total Assets
PAGE NO. 41
Table: 6.8
Table Showing Asset Turnover Ratio:
SR NO YEAR NET SALES AVERAGE TOTAL ASSETS RATIO
1. 2019-20 9139.22 13317.6 0.69
2. 2020-21 9216.68 14974.25 0.62

3. 2021-22 12918.96 16693.5 0.77
Graph 6.8
GROSS PROFIT RATIO

0.77
0.8 0.69
0.62
0.7
0.6
RATIO
0.5
0.4
0.3
0.2
0.1
0
2019-20 2020-21 2021-22
YEAR
Interpretation: -
If the asset turnover ratio is greater than 1 it is good. The company’s asset turnover ratio is
decreasing from 2017-18 0.97 to 2021-22 0.45 which is not a good sign as company cannot
generate revenue by itself.
PAGE NO. 42
9. RETURN ON EQUITY SHAREHOLDER'S FUND:

The return on equity shareholders fund explains about the return of shareholders with they get
on their investment.
Return on equity shareholders’ fund Ratio = Net profit X 100

1.
Equity shareholder’s fund
Table: 6.9
Table Showing Return on Equity Shareholder’s Fund Ratio:
SR NO YEAR PROFIT AFTER TAX SHAREHOLDER’S EQUITY RATIO
1. 2019-20 528.28 381.29 1.38
2. 2020-21 234.29 548.88 0.43
3. 2021-22 942.41 1505.82 0.63
Graph 6.9
RETURN ON EQUITY SHAREHOLDER'S FUND

1.38
1.4
1.2
RATIO
1
0.63
0.8
0.43
0.6
0.4
0.2
0
2019-20 2020-21 2021-22
YEAR
PAGE NO. 43
Interpretation: -
From the company’s data it can be seen that the return in 2019-20 was good but significantly
decreased in 2020-21. It has slightly increased in 2021-22 at 0.63.
10.CAPITAL EMPLOYED TURNOVER RATIO
The capital employed turnover ratio shows how efficiently the sales are generated from the
capital employed by the firm. This ratio helps the investors or the creditors to determine the
ability of a firm to generate revenues from the capital employed and act as a key decision factor
for lending more money to the asking firm.
Capital Employed Turnover Ratio = Net sales

Capital Employed
Table: 6.10
Table Showing Capital Employed Turnover Ratio:
SR NO Year Net Sales Capital Employed Capital Employed

Turnover Ratio
1. 2019-20 9139.22 5405.25 1.69
2. 2020-21 9216.68 5935.36 1.55
3. 2021-22 12918.96 7619.17 1.69
PAGE NO. 44
Graph 6.10
CAPITAL EMPLOYED TURNOVER RATIO

1.69 1.69
1.7
RATIO
1.65
1.6 1.55
1.55
1.5
1.45
2019-20 2020-21 2021-22
YEAR
Interpretation: -
The capital employed turnover ratio is significantly ideal which a good sign is as company is not
in difficult situation.
11. RETURN ON NET WORTH:
This ratio is similar to Return on equity share capital ratio, the only difference is that the
denominator should not be restricted to paid up capital alone. It should include Reserves and
surplus as well.
Return on net worth = Profit after tax

Net worth
PAGE NO. 45
Table: 6.11
Table Showing Capital Employed Turnover Ratio:
SR NO YEAR PROFIT AFTER TAX NET WORTH RATIO
1. 2019-20 (528.28) 381.29 (1.38)
2. 2020-21 234.29 548.88 0.43
3. 2021-22 942.41 1505.82 0.62
Graph 6.11
RETURN ON NET WORTH RATIO
0.62
1 0.43
RATIO
0.5
0
2019-20 2020-21 2021-22
-0.5
-1
-1.5
-1.38 YEAR
Interpretation: -
According to analysis the company’s return on net worth decreased at greater extent in 2019-20
The company’s return on net worth was greater 2021-22.
PAGE NO. 46
12. RETURN ON ASSET (ROA): -

This ratio portrays the relationship in between the earnings and total assets employed in the
business enterprise. It highlights the effective utilization of the assets of the firm through the
determination of return on total assets employed.
Return on Asset Ratio = Net Income *100

Total Assets
Table: 6.12
Table Showing Return on Asset Ratio:
SR NO YEAR NET INCOME TOTAL ASSETS RATIO
1. 2019-20 (743.60) 13787.56 (0.05)
2. 2020-21 167.59 16160.95 0.01
3. 2021-22 956.94 17226.05 0.06
Graph 6.12

0.06
0.06 0.05
0.05
RATIO
0.04
0.03
0.01
0.02
0.01
0
2019-20 2020-21 2021-22
YEAR
PAGE NO. 47
Interpretation: -
This profitability indicator helps to determine how company generates its earnings.
The higher the ROA number, the better, because the company is able to earn more money with a
smaller investment.
Higher ROA means more asset efficiency so the ROA is increasing over the years.
13. RETURN ON EQUITY (ROE): -
This ratio is calculated to know the firm's profitability from the perspective of shareholders.
Return on Equity Ratio = Net Income

Shareholder’s Equity/ Shareholder’s Fund
Table: 6.13
Table Showing Return on Equity Ratio:
SR NO YEAR NET INCOME SHAREHOLDER’S FUND RATIO
1. 2019-20 (743.60) 381.29 (1.95)
2. 2020-21 167.59 548.88 0.30
3. 2021-22 956.94 1505.82 0.63
PAGE NO. 48
Graph 6.13
0.3
0.5 0.06
RATIO
0
2019-20 2020-21 2021-22
-0.5
-1
-1.5
-2 -1.95 YEAR
Interpretation: -
This ratio is helpful for making inter- firm comparison. It can also be used for comparing
performance over a period of time.
This ratio helps in determining whether a firm is performing well in comparison to its peers. It also
determines whether the shareholders are earning adequate return on their investment.
PAGE NO. 49
PREPARATION OF STATEMENT OF CHANGES IN WORKING

CAPITAL: -
The ultimate purpose of preparing the schedule of changes in the working capital illustrates the
changes in the volume of net working capital which envisages either sources or application of
fund. The schedule of changes is focused as follows:
Increase in Current Assets Increase in Working Capital
Decrease in Current Assets Decrease in Working Capital
Increase in Current Liabilities Decrease in Working Capital
Decrease in Current Assets Increase in Working Capital
PAGE NO. 50
TABLE 6.14: STATEMENT OF CHANGES IN WORKING CAPITAL

MANAGEMENT: -
Effect on Working Capital

As on As on
Particulars 31-03-2019 31-03-2020 Increase Decrease
(Rs. In (Rs. In
Crores) Crores)
CURRENT ASSSETS
i. Inventory
Inventory of coal 791.22 1342.12 550.9 ___

Inventory of Stores & 70.80 72.51 1.71 ___
Spares
Other Inventories 21.02 22.78 1.76 ___
ii. Financial Assets
Investments 5.11 ___ ___
Trade Receivables 360.17 1349.94 989.77

Cash & Cash Equivalents 76.65 229.04 152.39
Other Bank Balance 907.26 740.21 167.05
Other Financial Assets 70.02 117.89 47.87
iii. Current Tax Assets 242.65 204.27 38.38
(Net)
iv. Other Current 586.16 772.13 185.97
Assets
PAGE NO. 51
(A) Total Current 3231.06 4850.89

Assets
CURRENT LIABILITIES
v. Current Financial
Liabilities
Borrowings ___ ___ ___
Trade Payables 1193.49 970.17 223.32
Other Financial 344.67 931.44 586.77
Liabilities
vi. Other Current 2042.83 1787.69 255.14
Liabilities
vii. Provisions 1186.24 1133.60 52.64
(B) Total Current 4767.23 4822.90
Liabilities & Provisions
(A)-(B) Net Working (1536.17) 27.99
Capital
Increase or Decrease in 1508.18 1508.18
Working Capital
TOTAL 27.99 27.99
INTERPRETATION: -
In the above table, it is seen that during the year 2019-20 there was a net increase in working
capital of ₹1508.18.
It indicates an adequate working capital in Western Coalfields Limited.
PAGE NO. 52

MANAGEMENT: -
As on As on
Increase Decrease
Particulars 31-03-2020 31-03-2021
(Rs. In (Rs. In
Crores) Crores)
CURRENT ASSSETS
i. Inventories
Inventory of coal 1342.12 1711.21 369.09 ___

Spares
Other Inventories 22.78 19.98 2.8
ii. Financial Assets
Investments ___ 0.04 ___ ___


iii. Current Tax Assets 204.27 107.34 96.93

(Net)
PAGE NO. 53
iv. Other Current 772.13 884.69 112.56

Assets
(A) Total Current Assets 4850.89 6702.84 1851.95
CURRENT LIABILITIES
v. Current Financial
Liabilities
Borrowings ___ 1080.00 ___ ___
Trade Payables 1193.49 1280.77 87.28

Other Financial Liabilities 344.67 1077.22 732.55
vi. Other Current 2042.83 2034.58 8.25

Liabilities
vii. Provisions 1186.24 1004.10 182.14
(B) Total Current 4767.23 6476.67 1709.44
(A)-(B) Net Working 27.99 226.17

Capital
Working Capital
TOTAL 226.17 226.17
INTERPRETATION: -
PAGE NO. 54

MANAGEMENT: -
As on As on
Increase Decrease
Particulars 31-03-2021 31-03-2022
(Rs. In (Rs. In
Crores) Crores)
CURRENT ASSSETS
viii. Inventories
Inventory of coal 1711.21 1158.23 552.98

Spares
Other Inventories 19.98 22.31 2.33 ___

ix. Financial Assets
Investments 0.04 837.50 837.46 ___


x. Current Tax 107.34 137.33 29.99

Assets (Net)
PAGE NO. 55
xi. Other Current 884.69 1128.50 243.81

Assets
(A) Total Current 6702.84 8184.96 1482.12

Assets
CURRENT LIABILITIES
xii. Current
Financial
Liabilities
Borrowings 1080.00 ___ ___
Trade Payables 1280.77 1060.17 220.16

Other Financial 1077.22 803.52 273.7
Liabilities
xiii. Other Current 2034.58 2837.88 803.3
Liabilities
xiv. Provisions 1004.10 1169.69 165.59
(B) Total Current 6476.67 5871.26 605.41
(A)-(B) Net Working 226.17 2313.70 2087.53

Capital
Working Capital
TOTAL 2313.70 2313.70
INTERPRETATION: -
PAGE NO. 56
CHAPTER 7
FINDINGS
PAGE NO. 57
FINDINGS
1. The company’s current ratio is not good during year 2019-20 to 2021-22. But the company
is progressing to obtain ideal current ratio to meet short term liabilities.
2. Company’s offtake was greatest in2021-22 as compared to previous four years. Its turnover
as well has increased in 2021-22 at 18600 crores as compared to previous years.
3. Its profit before tax has been greatly increased in 2021-22 as in 1259.73 crores as compared
to previous significant years
4. After thoroughly analysing working capital of company it can be seen that the company
was in good financial position before 2020 and is greatly affected during Covid pandemic
situation and are recovering their situation.
5. The net working capital of the company was positive and satisfactory and subsequently
increasing from last couple of years. Positive working capital means that the company is
able to pay off its short term liabilities.
PAGE NO. 58
CHAPTER 8
RECOMMENDATION
PAGE NO. 59
RECOMMENDATION
The overall performance of western coalfields limited shows satisfactory position although they
are suffering last few years. Hence it is not easy to recommend suggestion to the organization to
enhance its performance.
1. The current ratio of the company doesn't reach standard ratio so company need to
concentrate on increasing the current ratio by increasing in current assets.
2. The company needs to maintain good capital employed turnover ratio by increasing the
sales.
3. They should minimize their financing expenses to make profit. Provision for the training
of officers and employees in modern management techniques.
PAGE NO. 60
CHAPTER 9
CONCLUSION
PAGE NO. 61
CONCLUSION
The company's overall position is good. Particularly the current year's position is well due to
increase in the profit level as compared to last 3 year. Financial Analysis plays a very important
role in providing facts and figures for the decision makers. In the same way ratios, will act
analysis kit in the hands of financial analyst, these ratios will help is and in answering the basic
question why, how what of these statements.
Now a day's financial analysis in very much in consideration for decision making in deciding
what to do and what not to do is required to analyse the data as per their requirements.
Thus, in my project I try brief outline of ratio analysis how to analyse the facts and figures given
in the financial statements.
Throughout my project, I have analysed Organization's financial position and pros and cons of
the situations and I have also interpreted the data.
Despite some Imitation, I try to analyse and interpreted the facts and figures with accuracy.
.
PAGE NO. 62
CHAPTER 10
REFERENCES
PAGE NO. 63
REFERENCES:-
 Books Referred
1) I.M. Panday, "Financial Management", Vikas Publication Pvt. Ltd. 10th Edition. (Page
no.517-540).
2) Management Accounting edited by Manpreet Kaur (Page no.44-75)
3) Advanced Financial Management, Thakur Publication Pvt. Ltd. (Page no. 165-177)
4) Previous three years annual reports of Western Coalfields Limited from 2020 to 2022
 Websites Visited
1) https://www.investopedia.com/terms/w/workingcapitalmanagement.asp
2) http://www.westerncoal.in/index1.php
3) https://www.coalindia.in/
4) https://en.wikipedia.org/wiki/Working_capital
PAGE NO. 64
CHAPTER 11
ANNEXURE
PAGE NO. 65
PAGE NO. 66
PAGE NO. 67
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A STUDY ON WORKING CAPITAL MANAGEMENT

WORKING CAPITAL MANAGEMENT: -

THE MAJOR CURRENT ASSETS ARE:

THE MAJOR CURRENT LIABILITIES:

CONCEPTS AND DEFINITION OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital:-

2. Net working capital:-

 FACTORS DETERMINING WORKING CAPITAL

The factors determining working capital in details:-

2) SIZE OF THE BUSINESS

5) WORKING CAPITAL CYCLE

7) RATE OF STOCK TURNOVER

8) RATE OF GROWTH OF BUSINESS

OBJECTIVE OF WORKING CAPITAL MANAGEMENT:

The basic objectives of working capital management are as follows

NEED OF WORKING CAPITAL

Working capital is significant because of

1. It is essential to run the day to day business activities.

SIGNIFICANCE OF WORKING CAPITAL MANAGEMENT

The management of working capital is important for several reasons:

SOURCES OF WORKING CAPITAL

1) Long term working capital:-

2) Short term working capital:-

IMPORTANCE OR ADVANTANGES OF ADEQUATE WORKING CAPITAL:

1. Solvency of the Business:

Adequate working capital helps in maintaining solvency of the business by providing

5. Regular Supply of Raw Material:

DISADVANTAGE OF EXCESSIVE WORKING CAPITAL:

3. Adverse Effect on Profitability:

DISADVANTAGE OF INADEQUATE WORKING CAPITAL:

1. Difficulty in Availability of Raw Material:

2. Full Utilization of Fixed Assets Not Possible:

3. Decrease in Credit Rating:

 To study the various components of working capital.

 To analyze the liquidity trend.

 To analyze the working capital trend.

 To know the credit worthiness of the company.

 To suggest measure for effective management of working capital.

Western Coalfields Limited

Registration Date 29th October 1975

Category/Sub-category Private/Government Company

Type Public Sector Undertaking

Key people Manoj Kumar (Chairman & MD)

Owner Government of India

Headquarter Nagpur, Maharashtra, India

Address of the registered Coal Estate, Civil Lines,

Fax No- 0712-2511216

Email Id- companysecretary.wcl@coalindia.in

 Western Coalfields Limited (WCL), a Mini Ratna (Category-1) Company with

CORPORATE STRUCTURE AND SUBSIDIARIES COMPANIES: -

1. Eastern coalfields Limited (ECL), Sanatoria West Bengal

2. Bharat coking coal Limited (BCCL), Dhanbad Jharkhand

3. Central coalfields Limited (CCL) Ranchi, Jharkhand

4 South Eastern Coalfields Limited (SECL) Bilaspur, Chhattisgarh

5 Northern Coalfields Limited (NCL)

6 Western coalfields Limited (WCL), Nagpur, Maharashtra

7. Mahanadi coalfields Limited (MCL) Sambalpur, Orissa

8. Coal India Africana Limited, Mozambique

North Eastern coalfields (NEC) a small coal producing unit operating in

COAL INDIA LIMITED AT A GLANCE: -

• Highest ever Coal Production- 57.71 Million Te.

AWARDS AND ACCOLADES:

5. 2nd Prize for “Implementation of Rajbhasha” by Town Official Language