A STUDY ON CASH MANAGEMENT

PROJECT REPORT

Submitted to ST.BEDE’S COLLEGE

In partial fulfillment of the requirements for the award of degree of

BACHELOR OF BUISENSS ADMINISTRATION

SUBMITTED BY

NEHA DHIMAN

ROLL.NO :- 195019

Under the guidance of

Svaita rana prashar

ST.BEDE’S COLLEGE SHIMLA

(2019-2022)
 DECLARATION

I Neha dhiman the undersigned solemnly declare that the project report is based
on my own work carried out during the course of our study under the supervision
of Savita rana prashar .

I assert the statements made and conclusions drawn are an outcome of my

research work. I further certify that

I. The work contained in the report is original and has been done by me
under the general supervision of my supervisor.
II. The work has not been submitted to any other Institution for any other
degree/diploma/certificate in this university or any other University of
India or abroad.
III. III. We have followed the guidelines provided by the college in writing
the report.

Name :- Neha dhiman

(Roll No.):- 195019

 ACKNOWLEDGEMENT

It gives me a great sense of pleasure to present the report of the Project Work
undertaken during BBA Final Year. I owe special debt of gratitude to my Project
Coordinator Ms. Savita rana prashar , Department of BBA in ST. BEDE’s College ,
shimla for her/his constant support and guidance throughout the course of my
work. It is only her/his cognizant efforts that my endeavors have seen light of the
day.

I also do not like to miss the opportunity to acknowledge the contribution of all
faculty members of the department for their kind assistance and cooperation
during the development of my project. Last but not the least, I acknowledge my
friends for their contribution in the completion of the project.

NAME :- Neha Dhiman

ROLL.NO:- 195019
 TABLE OF CONTENTS

CHAPTER PARTICULARS PAGE NO

1
INTRODUCTION 4-21

2 REVIEW OF LITERATURE 21-28

3 RESEARCH 28-35
METHODOLOGY

4 DATA ANALYSIS AND 35-46

INTERPRETATION

5 FINDINGS AND 46-50

SUGGESTIONS

6 CONCLUSION 50-52
CHAPTER :- 1

INTRODUCTION
Finance is the study of how investors allocate their assets over time under
conditions of certainty and uncertainty. A key point of finance, which affects
decision, is the time value of money, which states that a unit of currency today, is
worth more than the same unit of currency tomorrow. Finance aims to price the
assets based on this risk level, and expected rate of return.

Finance can be broken into three different sub categories;

1. Public Finance

2. Corporate finance and

3. Personal Finance

In a business organization finance department is deals with financial activities

Financial management consist Planning, Organizing, Directing, and Controlling of
financial activities such as procurement and utilization of funds of enterprise. It
means applying general management principle of financial resources of the
enterprise financial decision include dividend decision, investment decision and
retained earnings etc. the financial management is generally concerned with
procurement, allocation and control of financial resources of a concern. It ensures
regular and adequate supply of fund of the concern. It ensures optimum
utilization of funds. They should utilize maximum possible way at least cost.

Finance management has to make estimation with regards to capital requirement

of the company. This will depend up on expected cost and profit and future
programmers and policies of a concern it can made in an adequate manner which
increases earning of enterprise.
Finance is the life blood of every business concern. It is an important function of
any business, as finance is required to meet the various activities of it. Cash is the
important current asset for the operations of the business. It is the basic input
needed to kept the business running on a continuous basis. It is also the ultimate
output expected to be realized by selling the services or product manufactured by
the firm. The firm should kept sufficient cash, neither more nor less cash shortage
will disrupt firm’s manufacturing operations while exertive cash will simply
remain idle without contributing anything towards the firm’s profitability. Thus a
major function of the financial manager is to maintain a sound cash position.

Financial management occupies a significant place because it has an impact on all

activities of the firm. Its primary responsibility is to discharge the finance function
successfully. Thus financial management is an appendage of the finance function.
No one can think of any business activity in isolation from its financial
implications. The management may accept or reject a business proposition on the
basis of its financial viabilities. In other words, the live executives who are directly
involved in a decision making process should give supreme impotence for
financial consideration.

The finance function centers round the management of funds raising and using
them effectively. But the dimensions of financial management are much border
than more procurement of funds. Planning is one of the primary activities of the
financial managers. It helps him to obtain funds under the best consideration.
However, financial management should not be taken to be a profit extracting
device. It implies a more comprehensive concept than the simple objective of
profit making. It broader mission should be to protect the interest of the different
sections of the community through maximizing the value of the firm.
The concept of financial management is applicable to an organization irrespective
of its size, nature of ownership and control. They can be applied to any activity or
an organization, which has financial implication. in the words of Raymond
Chambers; “ the term financial management may be applied tom any kind of
undertaking or organization regardless of its aims or constitution.

The term corporate financial management of companies or corporations consists

of the decision relating to (a) investment-concerned with capital budgeting and
current asset management (b) financial-concerned with determining the best
financing mix (c) dividendconcerned with the solution to the decision of dividend
policy.

Cash management is the management of the cash balance of a concern is such a

manner as to maximize the availability of cash not invested in fixed assets or
inventories and to avoid the risk of insolvency. According to Kayner these are
three motives for holding cash: the transactions motives, the precautionary
motive, and the speculative motive. The most useful technique of cash
management is the cash budget.

In simple terms, cash management may be defined as management tool to ensure

that sufficient cash is available to meet current and future liabilities, with any
surplus being safety invested to generate the maximum income. In a business,
anything done financially affect cash eventually. Cash is to a business is what
blood is to a living body. A business can’t operate without its lifeblood cash, and
without cash management, these may carmine no cash to operate. Cash
movement in a business is two way traffic, inflow and outflow.
 Important aspect which is unique to cash management is time dimension
associated with the movement of cash due to non-synchronicity of cash inflow
and Cash management outflow, the inflow may be more than the outflow or the
outflow may be more than the inflow at a particular point of time. This needs
regulations left to itself cash flow is apt to follow monsoonal pattern and shows of
cash may be heavy, scanty or just normal, hence there is a dire need to control its
movement through skillful cash management. The primary aim of cash
management is to ensure that there should be enough cash availability when the
needs arise not too much but never too little.

Cash management is the management of the cash balances of a concern in such a

manager. On to minimize the availability of cash not invested in fixed assets or
inventories and to avoid the risk of insolvency. According to Keygen these are
three motives of bolding cash. The transaction motive, the precautionary motive,
and the speculative motive are the most useful technique of cash management.
Population explosion is the most important cause to from life care companies in
India, which means population explosion is “a pyramiding of number of a
biological population”.

As the number of people in a pyramid increases, so do the problems related to

the increased population that will cause the population changes are the birth
rate, death rate and migration. Population explosion has many reasons like birth
rate, poverty, regions etc. These reasons Are bill fledged in India So a big chance
to born a life care organization in India which is also covered the unemployment
in India.
Cash management, also known as treasury management, is the process that
involves collecting and managing cash flows from the operating, investing, and
financing activities of a company. In business, it is a key aspect of an
organization’s financial stability.

Cash management is important for both companies and individuals, as it is a key

component of financial stability.

Financial instruments involved in cash management contain money market

funds, Treasury bills, and certificates of deposit.

Companies and individuals offer a wide range of services available across the
financial marketplace to help with all types of cash management. Banks are
typically a primary financial service provider. There are also many different cash
management solutions for both companies and individuals seeking to get the best
return on cash assets or the most efficient use of cash.

The Importance of Cash

Cash is the primary asset individuals and companies use regularly to settle their
debt obligations and operating expenses, e.g., taxes, employee salaries, inventory
purchases, advertising costs, and rents, etc.

Cash is used as investment capital to be allocated to long-term assets, such

as property, plant, and equipment (PP&E) and other non-current assets. Excess
cash after accounting for expenses often goes towards dividend distributions.

Companies with a multitude of cash inflows and outflows must be properly

managed to maintain adequate business stability. For individuals, maintaining
cash balances is also a major concern.
Understanding Cash Management

In an organization, chief financial officers, business managers, and corporate

treasurers are usually the main individuals responsible for overall cash
management strategies, stability analysis, and other cash-related responsibilities.
However, many organizations may outsource part or all of their cash
management responsibilities to some service providers.

The cash flow statement is the main component of a company’s cash flow
management. The cash flow statement comprehensively records all of the
organization’s cash inflows and outflows. It includes cash from operating
activities, cash paid for investing activities, and cash from financing activities. The
bottom line of the cash flow statement shows how much cash is readily available
for an organization.

The cash flow statement is divided into three parts: investing, financing, and
operating activities. The operating part of cash activities is based heavily on
the net working capital, which is presented on the cash flow statement as a
company’s current assets minus current liabilities. Businesses strive to make the
current assets balance exceed the current liabilities balance.

The other two parts of the cash flow statement are somewhat more
straightforward with cash inflows and outflows connected to investing and
financing, such as investments into real estate, buying new equipment and
machinery, and originating stock repurchases, or paying out dividends as part of
the financing activities.

There are many internal controls utilized to manage and achieve efficient
business cash flows. Some of a business’s major cash flow considerations
comprise the average length of account receivables, write-offs for uncollected
receivables, collection processes, rates of return on cash equivalent investments,
liquidity, and credit line management.
1. Current assets

 Cash

 Accounts receivable within one year

 Inventory

2. Current liabilities

 Accounts payable due within a year

 Short-term debt payments due within one year

On the cash flow statement, organizations usually report the change in working
capital from one reporting period to the next in the operating section of the cash
flow statement. If the net change in working capital is positive, an enterprise’s
increased its current assets available to cover current liabilities.

If a net change in working capital is negative, an enterprise’s increased its current

liabilities, which reduces its ability to pay the liabilities efficiently. A negative net
change in working capital lowers the total cash on the bottom line as well.

Causes of Problems with Cash Management

Unfortunately, many businesses engage in poor cash management, and there are
several reasons for the problem. Let us look at some of them:
1. Poor understanding of the cash flow cycle

Business management should clearly understand the timing of cash inflows and
outflows from the entity, such as when to pay for accounts payable and purchase
inventory. During rapid growth, a company can end up running out of money
because of over-purchasing inventory, yet not receiving payment for it.

2. Lack of understanding of profit versus cash

A company can generate profits on its income statement and be burning cash on
the cash flow statement.

When a company generates revenue, it does not necessarily mean it already

received cash payment for that revenue. So, a very fast-growing business that
requires a lot of inventory may be generating lots of revenue but not receiving
positive cash flows on it.

3. Lack of cash management skills

It is crucial for managers to acquire the necessary skills despite the understanding
of the abovementioned issues. The skills involve the ability to optimize and
manage the working capital. It can include discipline and putting the proper
frameworks in place to ensure the receivables are collected on time and that
payables are not paid more quickly than is needed.
4. Bad capital investments

A company may allocate capital to projects that ultimately do not generate

sufficient return on investment or sufficient cash flows to justify the investments.
If such is the case, the investments will be a net drain on the cash flow statement,
and eventually, on the company’s cash balance.

Cash Management Services Generally offered

The following is a list of services generally offered by banks and utilised by larger
businesses and corporations:

Account Reconcilement Services: Balancing a checkbook can be a difficult process

for a very large business, since it issues so many checks it can take a lot of human
monitoring to understand which checks have not cleared and therefore what the
company's true balance is. To address this, banks have developed a system which
allows companies to upload a list of all the checks that they issue on a daily basis,
so that at the end of the month the bank statement will show not only which
checks have cleared, but also which have not. More recently, banks have used this
system to prevent checks from being fraudulently cashed if they are not on the
list, a process known as positive pay
Advanced Web Services: Most banks have an Internet-based system which is
more advanced than the one available to consumers. This enables managers to
create and authorize special internal logon credentials, allowing employees to
send wires and access other cash management features normally not found on
the consumer web site.

Armored Car Services: Large retailers who collect a great deal of cash may have
the bank pick this cash up via an armored car company, instead of asking its
employees to deposit the cash.

Automated Clearing House: services are usually offered by the cash management
division of a bank. The Automated Clearing House is an electronic system used to
transfer funds between banks. Companies use this to pay others, especially
employees (this is how direct deposit works). Certain companies also use it to
collect funds from customers (this is generally how automatic payment plans
work). This system is criticized by some consumer advocacy groups, because
under this system banks assume that the company initiating the debit is correct
until proven otherwise.

Balance Reporting Services: Corporate clients who actively manage their cash
balances usually subscribe to secure web-based reporting of their account and
transaction information at their lead bank. These sophisticated compilations of
banking activity may include balances in foreign currencies, as well as those at
other banks. They include information on cash positions as well as 'float' (e.g.,
checks in the process of collection). Finally, they offer transaction-specific - 5 -
details on all forms of payment activity, including deposits, checks, wire transfers
in and out, ACH (automated clearinghouse debits and credits), investments, etc.
details on all forms of payment activity, including deposits, checks, wire transfers
in and out, ACH (automated clearinghouse debits and credits), investments, etc.
Cash Concentration Services: Large or national chain retailers often are in areas
where their primary bank does not have branches. Therefore, they open bank
accounts at various local banks in the area. To prevent funds in these accounts
from being idle and not earning sufficient interest, many of these companies have
an agreement set with their primary bank, whereby their primary bank uses the
Automated Clearing House to electronically "pull" the money from these banks
into a single interest-bearing bank account.

Lockbox services: Often companies (such as utilities) which receive a large

number of payments via checks in the mail have the bank set up a post office box
for them, open their mail, and deposit any checks found. This is referred to as a
"lockbox" service.

Positive Pay: Positive pay is a service whereby the company electronically shares
its check register of all written checks with the bank. The bank therefore will only
pay checks listed in that register, with exactly the same specifications as listed in
the register (amount, payee, serial number, etc.). This system dramatically
reduces check fraud.

Sweep Accounts: are typically offered by the cash management division of a

bank. Under this system, excess funds from a company's bank accounts are - 6 -
automatically moved into a money market mutual fund overnight, and then
moved back the next morning. This allows them to earn interest overnight. This is
the primary use of money market mutual funds automatically moved into a
money market mutual fund overnight, and then moved back the next morning.
This allows them to earn interest overnight. This is the primary use of money
market mutual funds.
 Zero Balance Accounting: can be thought of as somewhat of a hack. Companies
with large numbers of stores or locations can very often be confused if all those
stores are depositing into a single bank account. Traditionally, it would be
impossible to know which deposits were from which stores without seeking to
view images of those deposits. To help correct this problem, banks developed a
system where each store is given their own bank account, but all the money
deposited into the individual store accounts are automatically moved or swept
into the company's main bank account. This allows the company to look at
individual statements for each store. U.S. banks are almost all converting their
systems so that companies can tell which store made a particular deposit, even if
these deposits are all deposited into a single account. Therefore, zero balance
accounting is being used less frequently.

Wire Transfer: A wire transfer is an electronic transfer of funds. Wire transfers

can be done by a simple bank account transfer, or by a transfer of cash at a cash
office. Bank wire transfers are often the most expedient method for transferring
funds between bank accounts. A bank wire transfer is a message to the receiving
bank requesting them to effect payment in accordance with the instructions
given. The message also includes settlement instructions. The actual wire - 7 -
transfer itself is virtually instantaneous, requiring no longer for transmission than
a telephone call.

Controlled Disbursement: This is another product offered by banks under Cash

Management Services. The bank provides a daily report, typically early in the day,
that provides the amount of disbursements that will be charged to the customer's
account. This early knowledge of daily funds requirement allows the customer to
invest any surplus in intraday investment opportunities, typically money market
investments. This is different from delayed disbursements, where payments are
issued through a remote branch of a bank and customer is able to delay the
payment due to increased float time. In the past, other services have been
offered the usefulness of which has diminished with the rise of the Internet. For
example, companies could have daily faxes of their most recent transactions or be
sent CD-ROMs of images of their cashed checks. Cash management aims at
evolving strategies for dealing with various facets of cash management. These
facets includes the following:

Optimum Utilisation of Operating Cash

Implementation of a sound cash management programme is based on rapid

generation, efficient utilisation and effective conversation of its cash resources.
Cash flow is a circle. The quantum and speed of the flow can be regulated through
prudent financial planning facilitating the running of business with the minimum
cash balance. This can be achieved by making a proper analysis of operative cash
flow cycle alongwith efficient management of working capital.

Cash Forecasting:- Cash forecasting is backbone of cash planning. It forewarns a

business regarding expected cash problems, which it may encounter, thus
assisting it to regulate further cash flow movements. Lack of cash planning results
in spasmodic cash flows.

Cash Management Techniques: Every business is interested in accelerating its

cash collections and decelerating cash payments so as to exploit its scarce cash
resources to the maximum. There are techniques in the cash management which
a business to achieve this objective.
Liquidity Analysis: The importance of liquidity in a business cannot be over
emphasized. If one does the autopsies of the businesses that failed, he would find
that the major reason for the failure was their unability to remain liquid. Liquidity
has an intimate relationship with efficient utilisation of cash. It helps in the
attainment of optimum level of liquidity.

Profitable Deployment of Surplus Funds :- Due to non-synchronization of ash

inflows and cash outflows the surplus cash may arise at certain points of time. If
this cash surplus is deployed judiciously cash management will itself become a
profit centre. However, much depends on the quantum of cash surplus and
acceptability of market for its short-term investments.

Economical Borrowings

Another product of non-synchronisation of cash inflows and cash outflows is

emergence of deficits at various points of time. A business has to raise funds to
the extent and for the period of deficits. Raising of funds at minimum cost is one
of the important facets of cash management.
Purpose of Cash Management

Cash management is the stewardship or proper use of an entity‘s cash resources.

It serves as the means to keep an organization functioning by making the best use
of cash or liquid resources of the organization. The function of cash management
at the U.S. Treasury is threefold:

1. To eliminate idle cash balances. Every dollar held as cash rather than used to
augment revenues or decrease expenditures represents a lost opportunity. Funds
that are not needed to cover expected transactions can be used to buy back
outstanding debt (and cease a flow of funds out of the Treasury for interest
payments) or can be invested to generate a flow of funds into the Treasury‘s
account. Minimizing idle cash balances requires accurate information about
expected receipts and likely disbursements.

2. To deposit collections timely. Having funds in-hand is better than having

accounts receivable. The cash is easier to convert immediately into value or
goods. A receivable, an item to be converted in the future, often is subject to a
transaction delay or a depreciation of value. Once funds are due to the
Government, they should be convertedto cash-in-hand immediately and
deposited in the Treasury's account as soon as possible.
3. To properly time disbursements. Some payments must be made on a specified
or legal date, such as Social Security payments. For such payments, there is no
cash management decision. For other payments, such as vendor payments,
discretion in timing is possible. Government vendors face the same cash
management needs as the Government. They want to accelerate collections. One
way vendors can do this is to offer discount terms for timely payment for goods
sold.
 CHAPTER – 2

REVIEW OF LITREATURE
 LITREATURE REVIEW:- A literature review is a survey of scholarly sources
(such as books, journal articles, and theses) related to a specific topic or research
question.

It is often written as part of a thesis, dissertation, or research paper, in order

to situate your work in relation to existing knowledge.

PURPOSE OF LITERATURE REVIEW:- There are several reasons to

conduct a literature review at the beginning of a research project:

 To familiarize yourself with the current state of knowledge on your

topic
 To ensure that you’re not just repeating what others have already done
 To identify gaps in knowledge and unresolved problems that your
research can address
 To develop your theoretical framework and methodology
 To provide an overview of the key findings and debates on the topic

Writing the literature review shows your reader how your work relates to existing
research and what new insights it will contribute.
Nithin balwani describes the cash flow statement help users of financial
statement to evaluate a companies’ ability to have sufficient cash both on a short-
run and a long – run basic for this reason, the cash flow statement is useful
ritually every one interested in the company’s financial health; short and long
term creditors, inventories, management and both current and prospective
competitors. Cash management is concerned with how a firm managers its cash
levels and operations (cash collection and payments) cash investments and dis
investments and cash borrowing and lending.

2. Eije and Westerman cash normally would not be needed if it were not for the
market imperfections and resulting transactions costs of urgently needing cash
and short notice if the need arises and these is no enough cash von.

3. David G. Coderre Ratio analysis identifies potential frauds by computing the

variance in a set of transactions and then calculating the ratios are; the ratio of
the highest value to the lowest value the ratio of the highest value to the next
highest and the ratio of one numerical field to another, such as the current year
to the previous year or one operational area to another.

4. Lakshmanan Sivakunmar Financial reports are the primary means by which

managers communicate company result to investors, creditors and analysis. There
parties user the reports to judge company performance, to assets
creditworthiness, to predict future. Financial performance, and to analyze
possible acquisitions and take – over users of financial statements must be able to
meaning fully interpret financial reports, construct measures of financial
performance and analyze the reporting choice made by companies. Also, since
company managers choose accounting techniques when marketing their reports,
users must learn to undo the effects of this accounting choice. The purpose of this
course is to give foundation for such analysis.

5. Jawahar Lal describes that Financial Statement Analysis an analysis which

highlights important relationship in the financial statement. It focuses on
evaluation of past operations as revealed by the analysis for basic statements.
Financial Statement analysis embraces the methods used in assessing and
interpreting the results of past performance and current financial position as they
related to the particular factor of interest ijn investment decision, it is an
important means of assessing past performance and in forecasting and planning
future performance.

6. S N Maheshwari states that accounting ratios are relationship expressed in

mathematical terms between figures which are connected with each other in
some manner. Obviously, no purpose will be served by comparing two sets of
figures which are not at all connected with cash other. Moreover, absolute figures
are also until for comparison.

7. Jule.Et,al says that the cash flow provide considerable information about what
is really happening business beyond that contained in either be income statement
or the balance sheet. Analyzing this statement should not task, instead it will
quickly become obviously that the benefits of understanding the sources and uses
of a company’s cash for outweigh the costs of undertaking some very straight
forward analysis.
 8. Maynard E.Rafure argues that attempts to improve working capital by
delaying paymant to creditors are counter-productive to individuals and to the
economy as a whole. Claims that attiring debtors and creditors levels for
individual tiers with in a value system will rarely produce any net benefit proposes
that stock reduction generates system wide financial improvements and other
important benefits urgent those organizations seeking concentrated working
capital reduction strategies of focus on stock management strategies based on
“lean supply chain” techniques.

9. Smith and Ashburne , financial statements as the end product of financial

accounting is a set of financial statements that purport to reveal the financial
position of the enterprise, the result of its resent activities and analysis of what
has been done with earning. The financial statements are the outcome of
preparing final accounts and there statements reveal financial position and
profitability of the concern and the utilization of retained earnings

10. N P.Srinivasan and M Sakthivel Murugan describe that cash flow Analysis is
an analysis based on the movement of cash and bank balance. Under cash flow
analysis, all movements of cash, rather than the movement of working capital
would be considered such movements of cash deposited in a statement of
changes in financial position prepared on cash basis.

11. Christian Leuz, he says that the incentives of German firms to voluntary
disclose cash flow statement overtime while cash flow statement are mandated
under many GAAP regimes, its disclosure has been mandatory in Germany until
recently never the les, an increasing number of firms provides cash flow
statement voluntarily there firms are likely to be influenced by recommendations
of the German accounting profession, IAS7 as well as the respective standards of
the other countries. The idea of the paper is to study this influence by looking at
the adaptation pattern over time at the format of the cash flow statement. it
documents the development of voluntary cash flow statement discloser by
German firm with respect to “milestone” in the evaluation of German
professional recommendations and respective international standards. The cross
sectional determinants of voluntary cash flow statements are analyzed using
profit regressions and factor analyzed. The results are generally consistent with
the idea that capital focuses derive the disclosure of cash flow statements that
are in line with international practice.

12. Bolong Cao, Financial Statements analysis is in of the modern financial

analysis. The financial statements from firm provide the information upon the
dynamic and innovative process of contemporary business practice. By analyzing
financial statement, investors, business pertness managers and Government
agencies can infer the efficiency and risks involved in the business of the firm.
Which is extremely important in their decision according shenanigans from
financial statements becomes indispensable in today’s business world.
Researches in modern accounting, corporate finance and investment really
heavily on financial statement analysis techniques. Proteciency in financial
statement analysis is also essential in professional certificate like CPA or CFA-
exams.

13. KGC Nair and Jayan states ratio analysis is an important and useful technique
to check upon the efficiency with which working capital being used in the
enterprise. Some ratios indicate the trend or progress or downfall of the firm. It
help the financial management in evaluating the financial position and
performance of the firm. The trade creditor, bank, lending instructions and
experienced inventor are use ratio analysis as their initial tool in evaluating the
firm as a desirable borrower as a potential investment outlet.

14. Pandey: clearly explain the standards of ratio analysis. The standards of
comparison consist of past ratio; competitor ratios and projecting ratios. For that
he describes the methods under which ratios can be analyzed, cross sectional
analysis and Performa analysis.

15. John.N.Myer – financial statements provide a summary of the accounts of a

business enterprise, the balance sheet reflecting the asset and liabilities and
income statements showing the result of operations during a certain period. It
emphasis the importance of balance sheet and profit and loss account; but
ignores the importance of other financial statements like cash flow statement.
Fund flow statement and statement of retained earnings.
CHAPTER – 3

RESEARCH
METHODOLOGY
Meaning of Research: - Word ‘Research’ is comprises of two words = Re+Search.
It means to search again. So research means a systematic investigation or activity
to gain new knowledge of the already existing facts. Research is an intellectual
activity. It is responsible for bringing to light new knowledge. It is also responsible
for correcting the present mistakes, removing existing misconceptions and adding
new learning to the existing fund of knowledge. Researches are considered as a
combination of those activities which are removed from day to day life and are
pursued by those persons who are gifted in intellect and sincere in pursuit of
knowledge. But it is not correct to say that the research is restricted to such type
of persons, however, it is correct to say that major contribution of research comes
from highly gifted and committed workers. Thus the research is not at all
mysterious and is carried on by hundreds of thousands of average individuals.
Research is also considered as the application of scientific method in solving the
problems. It is a systematic, formal and intensive process of carrying on the
scientific method of analysis. There are many ways of obtaining knowledge. They
are intuition, revelation, and authority, logical manipulation of basic assumptions,
informed guesses, observation, and reasoning by analogy. One of the branches of
research known as empirical research is highly goal-oriented technique.

Definitions of Research:- The following are the important definitions of research:

“Research is an endeavor / attempt to discover, develop and verify knowledge. It
is an intellectual process that has developed over hundreds of years ever
changing in purpose and form and always researching to truth.”
Purpose of Research:- The purpose of research is to discover answers to
questions through the application of scientific procedure. The main aim of
research is to find out the truth which is hidden and which has not been
discovered as yet. Though each research study has its own specific purpose, some
general objectives of research below:

(i) To gain familiarity with a phenomenon or to achieve new insights into it.
(Studies with this object in view are termed as exploratory or formative research
studies).31

(ii) To portray accurately the characteristics of a particular individual, situation or

a group.(Studies with this object in view are known as descriptive research
studies).

(iii) To determine the frequency with which something occurs or with which it is
associated with something else. (Studies with this object in view are known as
diagnostic research studies).

(iv) To test a hypothesis of a causal relationship between variables. (Such studies

are known as hypothesis-testing research studies).

RESEARCH PROCESS:-

(i) Formulation of Research Problem: At the very outset, the researcher must
decide the general area of interest or aspect of a subject matter that he would
like to inquire into and then research problem should be formulated.

(ii) Extensive Literature Survey: Once the problem is formulated the researcher
should undertake extensive literature survey connected with the problem. For
this purpose, the abstracting and indexing journals and published or 231 14
unpublished bibliographies are the first place to go to academic journals,
conference proceedings, government reports, books etc. must be tapped
depending on the nature of the problem.

(iii) Development of Working Hypothesis: After extensive literature survey,

researcher should state in clear terms the working hypothesis or hypotheses.
Working hypothesis is tentative assumption made in order to draw out and test
its logical or empirical consequences. It’s very important or it provides the focal
point for research.

(iv) Preparing the Research Design: After framing hypothesis we have to prepare
a research design i.e. we have to state the conceptual structure within which
research would be conducted. The preparation of such a design facilitates
research to be as efficient as possible yielding maximal information. In other
words, the function of research design is to provide for the collection of relevant
evidence with optimum effort, time and expenditure. But how all these can be
achieved depends mainly on the research purpose.

(v) Determining Sample Design: A sample design is a definite plan determined

before any data is actually collected for obtaining a sample from a given
population.in census inquiry we involve a great deal of time, money and energy so
it it not possible in practice under many circumstances. Sample designs can be
either probability or non-probability. With probability samples each element has a
known probability of being included in the sample but the non-probability
samples do not allow the researchers to determine this probability.32 15

(vi) Collecting the Data: There are several ways of collecting the appropriate data
which differ considerably in context of cost, time and other resources at the
disposal of the researcher. Primary data can be collected either through
experiment or through survey. In case of survey, data can be collected by any one
or more of the following ways; By observation,

 Through personal interview,

 Through telephonic interviews,

 By mailing of questionnaires or

 Through schedules.

(vii) Execution of the Project: Execution of project is a very important step in the
research process. If the execution of the project proceeds on correct lines, the
data to be collected would be adequate and dependable .A careful watch should
be kept for unanticipated factors in order to keep the survey realistic as much as
possible.

(viii) Analysis of Data: The analysis of data requires a number of closely related
operations such as establishment of categories, the application of these
categories to raw data through coding, tabulation and then drawing statistical
inference. Analysis work after tabulation is generally based on the computation of
various percentages; coefficients etc., by applying various well defined statistical
formulae. In the process of analysis, relationships of differences supporting or
conflicting with original or new hypothesis should be subjected to tests of
significance to determine with what validity data can be said to indicate any
conclusions.33 16

(ix) Hypothesis Testing: After analyzing the data, the researcher is in a position to
test the hypothesis, if any, he had formulated earlier. Do the facts support the
hypothesis or they happen to be contrary? This is the usual question which is to
be answered by applying various tests like ‘t’ test, ’F’ test etc. F test have been
developed by statisticians for the purpose .Hypothesis testing will result in either
accepting the hypothesis or in rejecting it. If the researcher had no hypothesis to
start with, generalizations established on the basis of data may be stated.

(x) Generalizations and Interpretation: If a hypothesis is tested and upheld

several times, it may be possible for the researcher to arrive at generalization i.e.
to build a theory. As a matter of fact, the real value of research lies in its ability to
arrive at certain generalizations. If the researcher had no hypothesis to start with,
he might seek to explain his findings on the basis of some theory. It is known as
interpretation.
(xi) Preparation of the Report or the Thesis : Finally, the researcher has to prepare
the report of what has been done by him. The layout of the report should be as
follows; the preliminary pages, the main text and end matter. The preliminary
pages carry title, acknowledgements and forward and then index. The main text
of the report should have introduction, review of literature and methodology.

TOOLS OF DATA COLLECTION:-

A researcher requires many data – gathering tools or techniques. Tests are the
tools of measurement and it guides the researcher in data collection and also in
evaluation. Tools may vary in complexity, interpretation, design and
administration. Each tool is suitable for the collection of certain type of
information. One has to select from the available tools those which will provide
data he seeks for testing hypothesis. It may happen that existing research tools do
not suit the purpose in some situation, so researcher should modify them or
construct his own. Different tools used for data collection may be;

1. Questionnaire: It is list of questions related to one topic. It may be defined

as; “A questionnaire is a systematic compilation of questions that are
submitted to a sampling of population from which information is desired.”
Barr, Davis & Johnson 834 58 “In general, the word questionnaire refers to
a device for securing answers to questions by using a form which the
respondent fills in himself.” W. J. Goode & K. Hall The questionnaire is
probably most used and most abused of the data gathering devices .It is
easy to prepare and to administer. The questionnaire is a form prepared
and distributed to secure responses to certain questions. It is a device for
securing answers to questions by using a form which the respondent will fill
by himself. It is a systematic compilation of questions. It is an important
instrument being used to gather information from widely scattered
 sources. Normally used where one cannot see personally all of the people
from whom he desires responses or where there is no particular reason to
see them personally.

Observation Technique: This is most commonly used technique of evaluation

research. It is used for evaluating cognitive and non-cognitive aspects of a person.
It is used in evaluation performance, interests, attitudes, values towards their life
problems and situations. It is most useful technique for evaluating the behaviors
of children.
 CHAPTER – 4
DATA ANALYSIS AND
INTERPRETATION
RATION ANALYSIS:- Ratio analysis is the one of the most powerful tool of financial
analysis. It aims at making use of quantitative information for decision making. A
ratio is an expression of relationship between two figures or two amounts. It is a
yard – stick which measures relationship between two variables. Ratios are simply
a mean of highlighting in arithmetical terms the relationship between figures
drowns from various financial statements. Robert Antony defines a ratio as
“simply one number expressed in terms of another”

Current ratio :- is the most common ratio for measuring liquidity. It represents
the “ratio of current assets to current liabilities”. It is also called working capital
ratio. It is calculating by dividing current assets by current liabilities

Current assets are those, the amount of which can be realized with in a period of
one year in includes cash in hand, cash at hand etc. Current liabilities are those
amounts which are payable with in a period of one yearcurrent liabilities are
creditors, bills payable etc. The current ratio of the firm measures its short term
solvency, ie, its ability to meet short term obligations. In a sound business a
current ratio of 2:1 is considered an idle one. It provides a margin of safety to the
creditors
INTERPRETATION:-

From the above table and form the above chart 1.2. it can be seen that the
current ratio during the year 2007 was 1.74 and in 2008 it was an increased to
2.01 while during the year 2009 their was a decreases in to 1.64 during the year
2010the current ratio was decreased to 1.61 but in the case of 2011 the final year
it was a slight increase to 1.83 i.e. current assets double the current liability 9is
considered to be satisfactory. But it can be analyzed from the above that except
for the year 2008 the organization did not attained a satisfactory
CASH TO WORKING CAPITAL

The cash to working capital ratio measures how well a company can meet its
short term liabilities using its liquid assets such as cash and cash equivalents and
marketable securities. This ratio will also help un cover situation where the
company may be too heavily spending its cash on inventory that is not being
turned into sales as rapidly as it should be. Decreasing cash to working capital
ratio can indicate the company may be suffering from low cash reserves, and may
not be able to meet its financial obligations. A decreasing ratio may also mean it
has acquired more assets. With more assets, one would hope that it could be
using these additional assets to generate even more cash. Cash and Cash
Equivalents + Marketable Securities Total Current Assets – Total Current Liabilities
GROSS PROFIT RATIO

The gross profit ratio plays an important role in two management areas of
financial management, the ratio serves as a valuable indicator of the firms ability
to utilize effectively out side sources of funds. Gross Profit Ratio = This ratio help
to ascertaining whether the average percentage of mark up on the goods is
maintained or not It also indicate the degree to which selling price per unit may
decline with out resulting in losses from operations to the firm.
INTERPRETATION:

As from the above table it can be seen that the gross profit ratio in 2007 it was
83.59 then it was a decreasing tendency from 2007 to 2010. In 2008 it was
decreased to 75.47 also 2009 and 2010 it was 65.39 and 74.32 but in 2011 it was
an increase to 83.97.how ever the gross profit should be adequate to cover
operating expenses and to provide for fixed charges divineds and building up to
reserve.

NET PROFIT RATIO

This ratio is also called as the net profit to sale or net profit margin ratio. It is
determined by dividing the net income after tax to the net sales for the period
and measures the profit per rupee of sale In this context, the term net profit “net
profit after interest and tax but before dividend” The ratio is used to measure the
overage profitability and hence it is very useful to profitability of the business.
Higher the ratio better is the operational efficiency of the concern
 CHAPTER – 5

FINDINGS AND SUGESSTION

 SUGGESTIONS

1. HLL must maintain apt liquidity position. This indicates that the HLL needs to
improve its short-term financial position.

2. Block funds used properly and profitability.

3. Firm should maintain optimum cash balance throughout the year.

4. Solvency position is to be studied and steps to be taken for improving it.

5. Debt Equity Mix should be maintained optimum level.

6. Fund managers give more importance to utilization of fund.

7. Step to be taken to increase the working capital of the firm to meet short term
obligation.

8. Excess funds invested to diversified projects.

9. Even through the firm is doing well but the bad debts are also increasing so the
management needs to take necessary steps for reducing bad debts.
10. The firm can adopt modern method of cash management.

11. The firm should fix proper working capital and inventory level
CHAPTER – 6
CONCLUSION
The study allowed us get answers regarding the service awareness among people
and the problems it faces. The key findings and analysis of the survey shoed the
following A large number of clients and customers call the branch frequently to
handle banking issues , this shows the keenness of the customers to call the
branch for almost every small issue. The service Straight2bank does provide an
answer to the problem of the customers. The service provided by staright2bank
does offer the main requirements of the customers for which they visit or call the
branch All the respondents wanted to carry out the banking needs at their
convenience. This means the service caters the banking needs that customers
generally require and its main benefit of banking while sitting at office is desired
by one and all, thereby proving that the service does have the potential usage.
Few of the respondents were aware about the service which was desired by 100%
respondents clearly showing that there has been a falter in its promotion and
awareness strategies. - 109 - Customers were not aware that the service was a
free one, this is clear that almost all the attributes of the services are favorable to
the customers still customers are not using the service and are not even aware of
it. Almost all customers once educated about the service readily enrolled for it
whereas a mere portion did not trust the bank and thought that the bank would
have some hidden charges that they are not putting forward Many clients who
enrolled for the staright2bank service would have problems using it as the drop
boxes are not strategically placed many areas do not even have drop box facility;
Standard chartered Bank must look into the policies of installing the drop box.
They should assign it to the regional office or allow branches to put up boxes
where the branch thinks it would be optimally utilized no matter which area of
the city as of now that branches are allowed to put up drop boxes in a radius
which falls in close by areas to the branch. A customer who lives close by to the
branch would not use this service whereas customers who are far of require the
service, however the branch cannot provide them with the facility as they cannot
install the boxes in that area and it is the duty of the local branch of that area to
put up boxes which is not happening they hardly know where customers of the
other branch are located