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Working Capital Of Alpha Indus. Ltd.
In partial fulfillment of requirement for the award of degree in


Submitted to: Ms. Rekha Handa Assistant Professor

Submitted by: Sahil Sareen MBA HONS FS III Roll No. 1021





Ltd staff for providing me relevant information in completing my project report. Assistant-professor for her guidance. I express my deep regards to Mr. Balwinder Singh. encouragement and valuable suggestions to me for completing this project. SAHIL SAREEN 4 . Akash Marwaha (Director) for his valuable suggestion consistent interest and personal help during my project work. But thanking people who have contributed to project of trainee is little like saying thank you at the academy award. I am also thankful to Alpha Indus. Submitted with regards. I owe a lot to many for the inspiration part. I also express my deep regards to my worthy guide and supervisor Ms. Head of Deptt. I am very grateful to the almighty for whatever we have attained in life is due to his blessings. It would be difficult for me to complete this project without her support and guidance.ACKNOWLEDGEMENT Nothing can be achieved without an optimum combination of inspection & perspiration. . Of CBM who has given me an opportunity and encourage me to do this project. I am always thankful to Mr. At the very first moment. Rekha Handa.


Press Rolls. highly precision and production jobs. at mumbai they are having well stocked warehouse with alfa brand machinery and other gujarat make machines as well as imported machines.e. CI Sole Plates. Vertical Milling Machine. keeping in view the industrial revoliution in india and ever increasing demand of our clients for our range of heavy and extra ordinary type of roll turning and precision lathes.v industries. Vertical Turning Lathe Machine.p marwaha founder of the organisation with industrial background at batala which has grown into a very fine and strong tree over the years. Sugar Mills and other industries across India.milling.radial drills. Paper Mills. horizontal and vertical boring. sugar mills. which is used for manufacturing all types of industrial items and maintainence jobs. besides this they have established a marketing office at mumbai which looks after domestic as well as export demands. Planer machine. .power press. Extra heavy duty lathe machine Radial Drilling machine (Radial Drill). lathe machines upto 50 feet. they started with the manufacturing of 6 feet lathe machine at the initial stage. alfa machinery makers possess massive resources in manufacturing and the entire production work is carried out under one roof. 6 . Their clients include almost all Large and Small Steel rolling mills.grinders. All geared Lathe Machine. South Asia. Middle East. heavy engineering industry and maintainance shops. alfa products are known through the length and breadth of country including overseas market for rigid construction. keeping in view the clients requirements for machines other than lathes we expanded our production activities by heading others industrial machinery. over the years they setup another 3 industrial units known as s. alfa enterprisesand rajesh engineering industries all based at batala(pb. Plano Miller Machine. Our paper mill machinery is being used in almost all the paper mills of India and various paper mills abroad.). They also manufacture machines for paper mills i. Surface Grinder machine. Their main clients in india and abroad are paper mills. steel rolling mills. Universal Milling Machine. COMPANY HISTORY A tiny sapling was planted in 1956 by shree s. Heavy duty lathe machine. Africa. their range of products includes all type of machinery viz-. Heavy Roll Turing lathe machine.INTRODUCTION 1. Stands and allied workshop machinery. plano miller. CI Gears. Power press.1 COMPANY PROFILE Alfa Machinery Makers is engaged since 1956 in the manufacturing & Export of machines.shapers.CI Drying Cylinder.etc. planner machines. like – Lathe Machine.r.hacksaw . mini steel plants. flawless performance. horizontal Boring Machines. Metal Cutting Bandsaw machine. Vertical Boring Machines. Slotting machine. Shaper machine (Shaping Machine).

I. Dynamic Balancing. under one roof. The machines manufactured in factory possess exceedingly improved features and these are known for rigid workmanship and flawless performance. Machining. Hydraulic Testing. Drying Cylinders Slotter Machine Planer Machine Plano Miller Machine Vertical Milling Machine Universal Milling Machine Metal Cutting Band Saw Power Press Surface Grinding Machine Horizontal Boring Machine Vertical Boring Machine COMPANY STRENGHTS We wish to introduce ourselves as one of the leading and renowned manufacturers of ‘ALFA’ Brand Machinery which is backed by 54 years of rich technical expertise. They have so far supplied a large number of machines throughout the length and breadth of the country besides Overseas Market. Grinding. Company possess massive manufacturing facilities viz. COMPANY PRODUCTS • • • • • • • • • • • • • • • • • Heavy Duty Lathe Machine Extra Heavy Duty Lathe Machine All Geared Lathe Machine Vertical turning Lathe Machine Shaper Machines Radial Drilling Machines C. Polishing. 7 . Teeth Cutting etc.apart from this they also have a team of highly qualified engineers and technical staff to ensure excellent workmanship and after sales services. Castings.

There fore a business can not survive in the absence of satisfactory ratio between current assets and current liabilities Before going to deal with various aspects of working capital management it is better to under take definition and concepts of working capital. Working capital management is also known as current assets management. Definitions and concepts of working capital:“Working capital is the excess of current assets over current liabilities” _____ J. 1. Srivastava 8 .2 INRODUCTION TO WORKING CAPITAL MANAGEMENT The prime objective of any management is to make maximum profit. Viz. Mill “Working capital refers to the firm’s investment in the short term assets like cash. receivables and inventories and the administration of current liabilities” ___ James C.1. S. “Working capital management usually is considered to involve the administration of current assets namely cash and marketable serenities. M. For attaining maximum profit which enables the organization to accomplish to other objectives of the business firms. and inventory. Working capital management involves the administration of current assets of a firm namely cash. receivables. Administration of fixed assets comes with in the preview of capital budgeting while the management of working capital is a continuing function which involves controlling of every day ebb and flow of financial resources circulating in the bunnies. Net concept According to the gross concept “working capital refers to sum total of all current assets” ____ R. account receivable and inventories” _____Western and Brigham. Van Horne Working capital concept can be categorized into two categories.

The following are the important types of working capital. The extra working capital need to support the changing production and sales activities is called the fluctuating or variable or temporary working capital.Net working capital rupees to the difference between current assets and current liabilities the net working capital indicates (a) liquidity position of the firm (b) suggests the extents to which working capital need may be financed by permanent sours of funds. 1. strikes and advertisement campaign. Current assets are need because when the sale is not converting into cash immediately. Permanent or regular working capital Permanent or regular working capital is the minimum amount which should always be there in minimum current asset like inventory or cash balance in order to carry out the business smoothly. Operating Cycle 9 . Variable working capital The amount of working capital over and above the permanent working capital is known as variable working capital. Types of working capital Working capital is different types. It may be further divided into two types namely (a) Seasonal working capital. There is always an operating cycle involving in the conversion of sales into cash. Need for working capital The bunnies firm has to invest maximum funds on current assets for the success of sale activity. Seasonal demands Special working capital is required for meeting the contingencies like fire accidents.Gross working capital rupees to the firm’s investments in current assets. (b) Special working capital. 2. Seasonal working capital is a required to meet seasonal demands.

conversion of raw material in to workin-process and working in program to finished product.1. This includes purchase of raw material.The times require to complete the sequence of events in the case of manufacturing firm is called operating cycle. Operating Cycle of the Manufacturing firm The operating cycle consist of 3 phases.2 operation cycle of non manufacturing firm “The operating cycle refers to the length of time necessary to complete the following cycle of events”. Debtors Sales Cash Finessed Product Raw materials Working programs Fig: 1. 10 . In the 1st phase cash gets converted into inventory. In the 2nd phase the stock is converted into receivables it credit sales are made. In the 3rd phase the conversion of receivable into cash after certain period. the operating cycles of a non manufacturing firm is Accounts receivables Cash Stock finished good Fig: 1.

Trade creditors 4. Short term investment 4. Trade debtors 6. Provision for taxation 5. 1. Prepaid payments 8. Table no. proposed dividends 6. Bank over draft 2. Bank balance 3. Cash 2. Unclaimed dividends 7. Bills receivable 5. Advance payments discounts. Outs trading expenses & unexposed Operational Definitions of the Concepts 11 . Bills payable 3. Occurred interest on unexpired discounts. 8.1 Current Assets 1.Working Capital Working capital is the excess of current assets over current liabilities. Short term loans & advances 7. 9. Inventories Current Liabilities 1.

Some times mere cash items such as marketable securities or bank time deposits are also included in cash. Inventories Inventory refers to stock of goods or products of the company. 12 .2 Objectives of the study 1. It may be in the firm of raw material. in the form of current assets to meet its current liabilities. Cash Cash is the money the firm can disburse immediately without any restriction. work-in-progress and finished goods. which a firm holds. 2. They include cash. which is employed in financing its day-to-day operations. cheque held by the firm and balance in bank accounts. To study the various changes in working capital of “Alpha Indus. The basic characteristics of near cash assets are that they readily convertible into cash. Current liabilities Current liabilities are those of outsides that are expected to mature for payment with in an accounting year (or operating cycle). Bills payable and out standing expenses that are the short-term sources. Bill receivable and stock (inventory).Working Capital Working Capital may be regarded as that proportion of a firm’s total capital. It includes coins. short-term securities debtors. Current assets Current assets are those assets which can be converted into cash within an accounting year or within the operational cycle. Net Working Capital (NWC) Net Working Capital is the difference between current assets and current liabilities Gross Working Capital (GWC) Gross working Capital refers to the firm’s total investment in current assets.”. without under going diminution in value of or disrupting operational cycle. It is the amount of funds. They include creditors. currency.

4. 13 .2. Still it has no unique body of knowledge of its own and heavily on economics for its theoretical concepts even today. and inventory of Alpha Indus. it is of recent origin. Though it was a branch of economics till 1890 as a separate activity or discipline. 2.Research Methodology The data were collected from secondary sources. 3. 3. Highlight the need for and a nature of inventory. Emphasis the need and goal of establishing a sound credit policy.4 Limitations The study will be only a provisional or based on the data collected from the published annual reports during 2008-2011. Focus on the proper mix of short term and long term financing for current assets. To study the liquidity position of Alpha Indus. To study the working capital management with regards to cash. Explain the need for holding cash. As our project is based on the data recorded by the company. Explain the principle s of current assets. To study the creditors conversion period of Alpha Indus. investment and financing. 2.3 Scope of the Study Financial management is that the managerial activity which is concerned with the planning and controlling of the firm’s financial resources. The present study aims at the following • • • • • • Highlighting the necessity of current and current liabilities. we face the limitation of extracting that particular data because our access is limited for the sake of confidential information of the company.

The current assets should be large enough to cover its current liabilities in order to ensure a reasonable margin of safety. from 2008-2009 to 2010-2011. Therefore the main them of working capital management. while not keeping too high level of any of one of them. No business can successfully run with out an adequate amount of working capital. inventory turnover ratio. liquidity ratio. inventory.1 WORKING CAPITAL ANALYSIS The goal of working capital management is to manage the firms current assets and current liabilities in such a way that a satisfactory level of working capital is maintained.. The liquidity analysis is done by current ratio. The collecting the data were analyzed by changes in working capital. quick ratio and absolute liquid ratio DATA ANALYSIS AND INTERPRETATION 4. cash. Each of current assets must be managed efficiently in order to maintain the liquidity of the fir. To avoid the shortage of working capital at once. The receivable analysis is done by debtor’s turnover ratio. The inventory analysis is done by percentage of inventory to total current assets.The secondary data were obtained from the published annual reports of Alpha Indus. But estimation of working capital requirements is not an easy task and large number factors have to be taken into consideration while an estimate of working capital requirements Total cost incurred on material. holding period of inventory and changes in sales and inventory. The interaction between assets and current liabilities is. an estimate of working capital requirements should be made in advance so that arrangement can be made to procure adequate working capital. This is so because if the firm cannot maintain a satisfactory level forced into bankruptcy. average collection period and incremental investment in receivables. The cash analysis is done by cash to networking capital ratio. wage and over heads 14 . Accessing working capital management Working capital management is the life blood and controlling never center of business.

The average amount of each cash required making a advance payment.. Hence working capital become an importance portion in the Alpha Working capital management in Alpha Indus. some extra amount generally calculated as fixed percentage of working capital can be aided as a margin of study. if any The average credit period expected to be allowed by The working capital in Alpha Indus.progress conversion of raw material in to finished goods.. to considerable extent Period of Credit The period of credit allowed by the suppliers and purchases and period of credit allowed to customers on sale also have their own influence on working capital requirement of Alpha Indus. The average period of credit allowed to customer.. Sources of finance of Working capital is. The amount of cash required to pay day-to. The length of production cycle or work –in. the cash and bank credit affects the working capital requirements of Alpha Indus.. nearly 60% of total capital Finance Availability of finance that is. the time taken for 15 . From the total amount blocked in current assets estimated on the basis of the first even items given above.. The length of sale cycle during which finished goods are to be kept waiting for sale. Time lag in the payment of wages and other expenses. In order to provide for expense of the business.The length of time for which raw material are to remain in store before they are issued for production.Ltd. Factors of influencing the working capital requirements in Alpha Indus. the total of current liabilities that is the last two items is deducted to find out the requirement of working capital.

ltd. The Working capital in Alpha Indus.97 270155.87 16.11 47. The structure of working capitals is presented in the table for the purpose of effective analysis of current assets :current liabilities and net working capital have been calculated.60 30.1 showing the components of working capital and % for 3 years of Alpha Indus.The working capital requirements is estimated through the preparation of capital and revenue budgets.00 Tax FBT FCCB interest 52.20 7.60 230472.51 12338756.sundry debtors.83 34586.52 47232.13 3101699.57 5.47 48.40 2235442.86 56.80 40.03 288263.08 390948.26 5674513.13 6801693.62 4.40 47813348.74 11. The main source form the Alpha Indus.57 1316779.19 70893. consists of different components like inventory .finances is working capital needs are Realization cash Cash credit from bank Cash credit form financial institutions and trade credit Analysis Changes in working capital in Alpha Indus..34 421214.04 Dues to Director 120458.75 5. current liabilities etc.50 341012.75 Provision for 200.18 31.77 5442604.50 0.19 17.66 .30 28.93 24.18 610003.93 100300. Each component of current assets and current liabilities and expressed as proposition to total assets total liabilities.77 0. Table4.21 464783. limited: Particulars Current Assets Inventory Sundry Debtors Cash& Bank Loans Advance Total Current Assets Current Liabilities Sundry Creditor 383956.Which are show in the following table along with amount invested in each for the period of three years.87 Other liabilities and Advance 225285.57 2. Components of working capital in Alpha Indus.41 12.87 41714.39 6.71 6032.54 38.88 93.64 12. Limited.10 42622.19 2008-09 % (100) 2009-10 % (100) 2010-11 % (100) 11532924. cash and bank balance .19 3098611.87 16 .1.47 3.

19% of total current assets in 2008 –2009 and 11. Loans and advance there is 2.2009 and 56.47 146. and 7.47% in 2010-2011.74% in 2009-2010.1. It shows a gradually decrease in creditors up to 2010-2011.72 17009292. And 38.11% in 2009-2010 And 12. The cash and bank balance are 0.06 11608856. of total current assets during 2008-2009. Capital Trend of Net working Capital 729901. It shows that the Amount of sundry debtors has been decreased during the period 2008-2009. 4.52% Note: The trend of net working capital are calculated by Taking the year 2008 as bases as 100%.98 40. it shows the levels of inventory gradually increased 2008 –05 and decreased from 2009-2010 & 2010-2011..57% of total current assets in 2008 –2009.93%in 2009 .69 of the total liabilities in 2008-2009 and 40. The sundry debtors are 3.1 17 .41% in 2010-2011. Graph no. 24.00% 718730.69% 804055. Analysis: The inventory are 93.77 %.20% in 2009-2010and 12. Graph showing components of Working Capital of Alpha Indus.54% 2010-2011.88 4723873.provision Total Current liability Net W.2010 and 17.18% in 2010-2011 it shows increased from every yearly. The sundry creditors are 52.Ltd.22 100.47%of total current assets during 2008 .13% in 2009-2010 and 31.87% in 200-2011 here we can say that company was taking more loans and advances from the year 2010-2011.

11 729901. 18 . 4.58 2008 11504489.97 270155.62.Ltd.19 70893.21 11608856.21 1157842359 30432.21 571326.51 12338756..Work ing Percentage of Capit al 200% 150% 100% 50% 0% Components of Working Capital Series1 2008-09 2009-10 2010-11 Years The above graph showing changes trend percentage of working capital of Alpha Indus.24 81563.46 3043262 Source Annual reports of Alpha Indus.95 80217.88 -Decrease 11069.88 729901.21 464783.11 1160885621 Increase 28434.2 Showing the Statement of Change in working Capital 2008-2009 Working Capital Current Assets Inventories Sundry Debtors Cash &Bank Loans & Advance Total (A) Current Liabilities Current Liabilities Total (B) A–B Net Increase in Working Capital 11608853.62 2009 11532924.21 199676. Table no.47 189937.80 571326.1. 2008-2009 Analysis Above table shows statement of changing working capital during 2008-2009 which has net increase working capital in Rs.46 373759.63 12149749.50 158574.75 91023.58 199676. ltd.30432.

64 - Source Annual reports of Alpha Indus.88 718730.18 610003.86 718730.21 11608856.51 12338756.3 Showing the Statement of Change in working Capital 2009-2010 Working Capital Current Assets Inventories Sundry Debtors Cash &Bank Loans & Advance Total (A) Current Liabilities Current Liabilities Total (B) A–B Net Decrease in Working Capital 11608856.88 4723873.11 729901.88 729901.23 Increase 851996.79 6884982.64 8434316.19 70893.21 335848.23 Decrease 8434316.57 1316779.11 11608856. ltd.21 2010 3098611.23.34 421214.26 11169.Table 4.15 350320.1. 19 .97 270155.21 464783.77 5442604. 6884982. 2009-2010 Analysis Above table shows statement of changing working capital during 2009-2010 which has net decrease working capital in Rs..98 6884982.64 2009 11532924.21 8434316.

77 5442604.98 12285418.40 2234442.47 17009292.Table no.72 801055.86 718730.79 6380479.40 17813348. 4. Cash is the basic input needed to keep the business running on a continues basis..72 17009292. 2010-2011 Analysis Above table shows statement of changing working capital during 2010-2011 which has net increase working capital in Rs.33 2010 3098611.2 ANALYSIS OF CASH MANAGEMENT Cash is an important component of current assets and is most essential for business operations.88 4723873.49.88 718730.4 Showing the Statement of Change in working Capital 2010-2011 Working Capital Current Assets Inventories Sundry Debtors Cash &Bank Loans & Advance Total (A) Current Liabilities Current Liabilities Total (B) A–B Net Increase in Working Capital 17009292.26 5674513.47 12371143.1.13 6801693.63 Decrease 85324.34 421214. ltd. 4.33 12371143.19 804055.08 5108509. It is also the ultimate output expected to be realized by selling the service and 20 .47 Increase 3091.57 1316779.18 610003. 12285418.83 918662.84 Source Annual reports of Alpha Indus.49 2011 3101699.

Transaction motive 2. Managing the cash flows 3.K. Precautionary motive 3. receivables and cash ____R. 1.Mishra. Blood gives life the strength to the human body.product manufactured by the firm. 1. Kulakarni.V. Minimizing funds committed to cash balances. Investing idle cash. Determining optimum cash balance 4. To meet the payments schedule. Functions of cash management: 1. Motives for holding cash: There are four motives for main training cash balances.LTD Sources of Cash The main sources through with Alpha Indus. Cash Management in Alpha Indus.e. ____ P. Limited CASH MANAGEMENT IN ALPHA INDUS. Speculative motive 4. Its effective management is the key determinates of sufficient working capital management. Cash in the business enterprise may be compared to the blood of the human body. profit and solvency to the business organization. Compensating motive Objectives of cash management: The basic objectives of cash management are as follows. gets Cash are the collection from debtors. advances on Sales and other sources. inventories. and cash imports life and strength. cash. 21 . Cash is both the beginning and the end of the working capital cycles i. Cash planning 2.

4.2. Table no.97 11608856. sales tax.2. payment to creditors .61(times) of net working capital during 2008-2009. expenditure on development. 2008-09 (Amount in Rs) 70893. interest on borrowing.9 (times) during 20092010.18 4723873. The cash and bank balance were 0. 39.98 (times) during 2010-2011. salaries.4. All the payment to creditors is make through cheque and cash even expenses are paid .21 0. Analysis Table 2. income tax.61 2009-10 (Amount in Rs) 421214.26 17009292. Graph No.9 2010-11 (Amount in Rs) 6801693. excise duty .98 Particulars Cash & Bank Balance Net Working Capital Cash to NWC Ratio (Times) Sources Annual reports of Alpha Indus.1 Showing Cash to Net Working Capital Ratio 22 .47 39.1 Showing cash to Networking capital of Alpha Indus. 8. ltd 2008-2011. wages salaries exiles duties is paid monthly . from 20082009 to 2010-2011 as a percentage of net working capital.98 8.Payment of Cash The companies main item of expenditure are wages .1 portrays the size of cash and bank balance in Alpha Indus. bonus . Expenditure salaries .

3 ANALYSIS OF INVENTORY MANAGEMENT Cash to NWC 45 40 35 30 25 20 15 10 5 0 Cash to NWC Series1 2008-09 2009-10 Years 2010-11 23 .61 in 2008-2009and it was increased to 8. It any company holds too low cash and bank balances in the relation to net working capital .Interpretations This ratio indicates the proportion of cash and bank balance maintained by Alpha Indus.. The lower the cash to networking capital the grater may be the profitability of the concern and vice-versa. It is assumes per amount importance of the level of cash balance decides the liquidity Profitability. aspects of the company. Practice of holding cash balance in relation to net working capital indicates good cash management in sales 4.9% in 2009-2010 and 39.. it implies the ability of firm to meet day to day requirement of cash in the present study cash to current ration of Alpha Indus. reveals it was 0. ltd.98 % in 2010-2011respectively.

Meaning The term “inventory” refers to the stock file of the product which a firm is offering for sale and the components that male the product. 2. The various forms in which inventories exist in a manufacturing company. Work-in-process Work in process inventories are semi manufactured products. Raw materials inventories are those units which have been purchased and stored for future productions. Nature of inventories Inventories are stock of the product a company is manufacturing for sale and components that make up the product.Inventory management involves the control of assets being produced for the purposes of sale in the normal courses of the company’s operation. products that need more work before they become finished products for sale. Raw materials Raw materials are basic inputs that are converted in to finished product. They represent 24 . The main goal of effective inventory management is to minimize the total costs direct and indirect that are associated How ever the importance of inventory management to the company depends upon the extent of investment in inventory. while stock of finished goods is required for smooth maturing operation. with holding inventories. 3. work-in-process and finished good inventory. Inventories include raw material. 1. Stocks of raw materials and work-in-process facilitate production. Finished goods Finished goods inventories are those completely manufactured products which are ready for sale. Thus inventories serve as a link between the production and consumption of goods.

Gaining quantity discount 3. This category includes those products which are accessories to the main products produced for the purpose of sale. clamps. 4. Achieving efficient production rum. Purpose of Inventories The purpose of holding inventories is to allow the firm to separate the processes of purchasing. Reducing order cost 4. 25 . Avoid losses of sales Purchasing Gain Quantity discounts Firms holding Inventories Producing Reduce Order Costs Selling Achieve efficient production Fig no.3.1 Purpose of inventory Objectives of Inventory management The main objectives of inventory management as follows 1. Avoiding lost sales 2. Ex: bolts. manufacturing and marketing of its primary products. Ensure a continuous supply of raw materials to facilitate uninterrupted production.A firm also maintains a fourth kind of inventory or stores and spares. nuts. screws etc. The goal is to achieve efficiencies in are as where costs are involved and to achieve sales at competitive prices in the market place. The main purposes are 1.

the firm’s objective should be in Constance with the share holder wealth maximization principle. the obtaining and storing of materials Ordering system of inventories In managing inventories. the firm should determine the optimum level of inventory. Control investment in inventories and keep it at an optimum level. and efficient customer service. Objectives of Inventory control To minimize the possibility of delay in production through regular supply of raw materials. 5. To avoid unnecessary capital locker up in inventories. tools and other equipment and when required. 1. Maintain sufficient stocks of raw materials in periods of short supply and anticipate price changes. answers should be sought to the following two questions like a. Economic order quantity (EOQ) Or 26 . S. Inventory control is concerned with the acquisition storage. When should it be ordered There are three important systems of ordering materials they are 1. 2. Gupta. 3. To achieve this. Maintain sufficient finished goods inventory for smooth sales operation. To mange inventories efficiency.2. handling and use of inventories so as to ensure the availability of inventory when ever needed provide adequate cushion for contingency and derive maximum economy and minimize wastage and losses – R. Minimize the carrying cost and time. 4. stores and spares. Ghosh and G. To exercise economies in ordering. Inventory control A firm needs an inventory control system to effectively mange its inventory. How much should be ordered b. K.

There are many methods of pricing material issues the important A. Current standard price ii. Methods of valuing material issues The stock of given material will. Specific price vi. Single order and scheduled part-deliveries system. Inflated price v. there fore consist of purchases made at different times at different prices.19 27 . Standard price methods I. A current assets 2. Realizable Value C. Fixed period order system or periodic re ordering system or periodic review system. Market price method I. 3. Liquidity lags 4.40 17813348. Lost in first out iii.21 12338756. cost price methods I.88 2009-2010 3098611.86 2010-2011 3101699. 4. Highest in first out B. 1. Circulating activity Table no. Some characteristics are important in the broad context of working capital management including.1 SHOWING INVENTORY TOTAL CURRENT ASSTES Particular Inventories Total current assets 2008-2009 11532924. Replacement Price II. which poses a problems as to what should be the price when the material is issued. First in first out ii.2. Level of liquidity 3.3.57 5442604. Average cost iv. Base stock vii. Basic standard price Role of inventory in working capital management Inventories are components of current assets.

41%.74 7315765.50 the efficiency of inventory management has 28 .41 Published annual reports on Alpha Indus.89 0. gown down from 2009-2010..3. 4.75 2.66 1704388. in the year 2010-2011 Ltd. Particular Sales Average Inventory Inventory Turnover Ratio Sources 2008-2009 288505..41%. limited .25 2010-2011 4265637.46% in the year 2008-2009 it has gown down to 17.51 2009-2010 1879863.93%.21 11518710.93 17.% Of inventory to total current assets Sources 93. in the year 2010-2011 This percentage of inventories to current assets indicates that the inefficiency of inventory management in Alpha Indus.2 Showing inventory Turnover Ratio of Alpha Indus. in the year 2009-2010 56.. Interpretation The total inventory as a percentage of the total current assets as 93. from 2008-2011 Analysis Inventory to total current assets as the percentage of the total current assets in the year 2008-2009 93.84 2. Since there is decreased in the percentage indicates decreased Inventory Turnover Ratio Inventory turnover Ratio indicates the efficiency of the firm in producing and selling in products Sales Inventory turnover Ratio = --------------------------------Average inventory Table no.46 56.

it has 2.3.measure the efficiency of the company selling it s products. and 0.25% in the year 2009-2010 decreased .50 Number of Days 360 360 360 Numberofdays for Inventory 143 Days 120 Days 144 Days 29 . 4.Annual report on Alpha Indus. In the year 2008-2009 it was 2.3.51%. from 2008-2011 Analysis The table shows calculated inventory turnover ratio .1 Inventory Turnover Ratio Times 5 4 3 2 1 0 2008-09 2009-10 Years 2010-11 Interpretation Inventory Turnover ratio measures the velocity and to .3 Showing Holding Period of Inventory Years 2008_2009 2009-2010 2010-2011 Inventory Turnover Ratio 2. Table no. in the year 2009-2010 0 . Graph no.25 2.50%.the firm has not to maintain efficient management of Inventory. in the year 2010-2011 2.25%.51% in the year 2008-2009 .51 0.

. 30 . 4. Graph no. ltd.2008-2011. ltd.21 11532924.74 3098611.3. 120 days in 2009 –2010. ltd.21 100% 100% 2009-2010 1879863.Sources Annual report of Alpha Indus.81% 2..40 147.57 65.68% 2010-2011 4265637.2 Holding Period of Inventory 400 350 300 250 200 150 100 50 0 2008-09 2009-10 Years The above graph showing changes in the holding period of inventories Alpha Indus..4 showing changes in Sales and Inventory: Particular Sales Inventory Changes in Sales Change in Inventory 2008-2009 288505. 144 days 2010-2011.8% 26.66 3101699.3. Interpretation Shows the inventory holding period of through out under the study in the 2009-2010 the inventory was sold with in 120 days it is less period compared to other years. 4. from 2008-2010 Analysis In the year 2008-2009 the holding period was 143 days. Table no.89% Days 2010-11 Sources Annual report on Alpha Indus.

absolute quick ratio Current ratio Current ratio to measure the firm’s short term solvency of indicates the availability of current assets in rupees for every one of current liability. Introduction The liquidity position of Alpha Indus.68% in 2009-2010 26.11 16. inventory was not improved and sales are improved. from 2008-2011.15 Source Annual report of Alpha Indus.4.88 7. This is because. A ratio grater than means that the firm as more current assets the current liability Current Assets Current Ratio = Current Liability Table no.4 ANALYSIS OF LIQUIDITY OF ALPHA INDUS. is analyzed by calculating current ratio .19 Particular Current Assets Current Liability Current Ratio 2008-2009 12338756. quick ration.90 2009-2010 5442604.72 22. 4. the sales as increased in the year 2010-2011.57 2010-2011 17813348.88 729901.4. change in inventory was decreased by2. LTD.89% and 2010-2011 31 .Note: the percentage in sales and inventory or calculated by taking the year 2009 as basis as 100%. Interpretation The study of inventory and change in sales . Analysis Depicts the change in sales and inventory over the period under the study.1Showing of Current Ratio of Alpha Indus.86 718730.

57%in 2009. current ratio indicates sufficient level of investment in current assets in all years. Liquidity Ratio Liquidity ration indicate that a relationship between quick or liquid assets and current liabilities. 7. An assets is liquid if it can be converted in to cash immediately of reasonable soon without a loose of values.22.2010. Interpretation Shows that the firm calculated current ration is grater than standard ratio (2:1) in all years from 2008-2009 to 2010-2011.15%in 2010-2011 since the ratio is grater than its standard in all the year the shot term financial position of the company is very good. Quick (or) Liquid Assets Liquidity Ratio= ----------------------------------Current liabilities Liquid or Quick Assets = Current Assets – (Inventory + Prepaid Exp) 32 . Analysis The calculated current ratios are 16.The calculated current ration indicates the proportion of current assets to current liabilities in all years is below then the standard ratio.90 in 2008-2009.

18 718730.3.097 2009-2010 421214. ltd. 2008-2011 Analysis The calculated liquidity ratio is 1.4.79 804055.58 2010-2011 6801693.2008-2011. Absolute liquid Ratio Since cash is most liquid asset a financial analysis may examine the ration of cash and its equivalent to current liabilities .29% in 200-2011 the company liquid ratio is good. ltd. 2008-2009 805832.10% in 2008-2009. Ltd. 18.. 33 .29% 2010-2011 .72 8.. Particular Liquid Assets Current Liabilities Liquid Ratio Source Annual report of Alpha Indus.2 Showing of Liquidity Ratio of Alpha Indus.26% in 2009-2010.29 718730.29 Interpretation The liquid ratio 1.10% in 2008-2009 .26 2010-2011 14711648.97 729901.4.Table no. 4..10 2009-2010 2343997. Particulars Absolute Liquid Assets Current Liabilities Absolute Liquid Ratio 2008-2009 570893. it maintain sufficient amount of liquid assets. There for may be including in computation of its ratio.11 1.26 804055. in 18.3 Showing of Absolute liquid Ratio of Alpha Indus..88 3.26% in 2009-2010.45 Source Annual reports of Alpha Indus. trade investment on marketable secularity are equivalent to cash.11 0. 4.3.67 729901. Ltd.88 0.72 18. Absolute liquid Asset Absolute liquid Ratio = -----------------------------Current liabilities Table no.

rate 10/.58in 2009-2010 . 8. 5) FINDINGS The following of the findings of the Alpha Indus.20% during 2009-10 there was a decrease in 2010-11.  The amount of sundry debtor has been increased from 3. Ltd with regards to working capital management 2008-2011.  The investment in inventory gradually decreases from 93. 0.45in 2010-2011. 34 .77% of total current assets to 24. The acceptable norm i. current liabilities in time as all creditors or not expected to demand cash at same time and then as may also be realized from debtors and inventory’s Analysis This calculated absolute liquid ratio are 0.54% declined in current assets.worth absolute liquid asset or considered adequate to pay 20 Rs Worth . 12.41 % during 2008-11.097 in 2008-2009.Absolute liquid ratio market cash in hand and at bank and marketable security or temporary investment. Interpretation In the all the years firm calculated cash ratio is higher than the acceptable standard ratio with indicated the firm has been maintain sufficient level cash to meet its data to day obligation.e.47 % to 17.

 Sundry Creditors have been decreased during the period under study from 52.29 in 2010-2011.47% of the total current liabilities  The net increase in working capital during the year 2008-2009 is Rs: 3043262. because in all the year cash ratio is below the standard.26 in 2009-2010.57 in 2009-2010.9 (times) in 39. therefore liquidity position of the origination is satisfactory.10 in 2008-2009.  6) SUGGESTIONS  The cash ratio is of the company is not satisfactory through the period of under study. it indicates poor performance in inventory management this is due to low investment in raw materials and low production. 35 . 3.60% to 12. Hence it is suggested to improve cash and bank balance to meet day to day obligations.  The calculated current ratio 16.15 in 20102011. 18.  The liquid ratio is 1.  The total investment in inventory has been decreased from 2008-2011. Ltd.  Cash and bank balance vary between 0.6 (times) and 8. 7. 22. however the parties of holding cash balance in relation in net working capital indicate good cash management in Alpha Indus. Except 2008-11 the liquid ratio was more than standard ratio.  The net decrease in working capital during the year 2009-2010 is Rs:688498223  The net increase in working capital during the year 2010-2011 is Rs: 1228541849.90 in 2008-2009.98(times) in Alpha Indus.

8)BIBLIOGRAPHY BOOKS 1) Financial Management – I. Gupta Annual reports of the company from the year 2008 till 2011. K.K. Panday 2) Management Accounting . M. It is suggested to make investment in inventories and to improve the performance in inventory management. Sharma & S. WEBSITES 36 .R.

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