COMPREHENSIVE PROJECT

1 TOPIC : Study the Operational Efficiency of Neelam

Detergent Soap (With GST)

OBJECTIVES OF THE PROJECT

The main objectlves of my project are that I will be able:
To judge the performance of the firm.
To judge the overall profitability position.
To check the financial soundness.
To judge the effectiveness with which the fixed assets have been used.
To identify Investing and Financing activities and prepare Cash Flow Statement.
TOOLS OF ANALYSIS
()) Ratios
(ii) Cash Flow Statement
SOURCE MATERIAL
Project Statement:
'Neelam Detergent Soap'
On January 1. 2021 National Small Industries Corporation (NSIC) organised a Camp for those who wanted to start
a small business, The NSIC displayed 1500 small business projects which could be started with an investment of
R2,00,000., The NSIC also promised to buy the entire production of the first year. It promised to supply the required
machinery at a very subsidised rates. It also had a scheme to give loans upto 50% of the working capital requirement.
Alarge number of people visited the camp. There were project demonstrations by the NsIC advisers and experts.
Neelam was very impressed by the demonstration of the small business project on Detergent Powder. The project
was economically viable. She was convinced that she will definitely succeed in carrying out the project. She entered
into an apgreement with the NSIC who agreed to supply the necessary plant for 60,000 (GST @ 18%) on turnkey
basis. She had sufficient open space at her residence in a village. She got the machine fixed, and the down payment of
7 20,800 was made. The balance was to be paid equally over a period of five years. She went through the literature
provided by the NSIC to know the addresses of the suppliers of the raw materials. She placed necessary orders for
the raw material and arranged for workers who will operate the machine and do other necessary production work. She
set up a small workable office and decided to do all office work herself. All supplies were on a credit for two weeks.
She formally inaugurated the production on April 1, 2021. She invited all the villagers on the very first day. Neelam
Detergent powder was very reasonably priced. The price was very much lower than other brands in the market. She
visited ten other villages around her village. She told the people there, as to how her detergent powder is better and
cheaper than others. Her product was really good and was accepied by all those who used it. Within two months she
could sell whatever she produced every week.
Project Work in Accountancy (Class-XII) 71
Her initial investment was 80,000 out of which she paid the first instalment (down payment) of plant on April 1, 2021.
She opened a Bank Account with 49,200 on the same date. She had an old scooter worth 20,000which she decided to
use in her business. She also purchased furniture for 12,000 (GST @12%). Thus, her total investment was ?1,00,000. The
payments to suppliers were made on the 15th and the 30" of each month. The salaries and wages were paid only on the 7à
of cach month. The Sales were mostly for Cash. The Cash Sale was deposited in the Bank the next day. The sale to local
customers was on credit for one week. Allthe customers were honest and paid the amount as and when due.
The following expenses were incurred and revenue realised during the year ended March 31, 2022.
)
1. Raw material purchased on credit (GST (@ 12%) 12,00,000
11,24,000
2. Cash paid to the (suppliers) creditors
5,00,000
3. Cash Sales (GST @ 18%)
4. Credit Sales (GST @ 18%) 16,00,000
5. Cash received from customers 15,25,000
6. Wages paid for eleven months 2,31,000
7. Office expenses 19,000
8. Power bills paid 25,000
9. Packing expenses (GST @ 12%) 10,000
2,52,000
10. Drawings
Other balances as on March 31, 2022 were as follow:
25,000
(i) Closing Stock
(ii) Plant 60,000
(iii) Furniture 12,000
75,000
(iv) Debtors
20,000
(v) Scooter
are outstanding for
Depreciation was charged @ 10% p.a on both plant and furniture and @ 20% on Scooter. Wages
one month.

Required
(i) Neelam wants to judge her performance.
(ii) Calculate necessary ratios to find out her overall profitability and production efficiency.
(iii) Evaluate her liquidity position at the end of the year.
activities.
(iv) ldentify her main financing and investing
Statement
(v) Prepare Cash Flow
(vi) Can she get a loan from a bank?