A

PROJECT REPORT ON

“TO STUDY OF WORKING CAPITAL MANAGEMENT OF

AMBUJA CEMENT DEALER, CHANDRAPUR”

Submitted for the partial fulfilment of the requirement for

the award of Degree in

Master of Business Administration

Specialization in Financial Management
(Gondwana University Gadchiroli)

Submitted By Under the Guidance of

Mr. Dipak B. Rahangdale Dr. Farukh Ahemad
M. B. A. (Final Year) M.com , M.B.A , Ph.D
2023-2024 LKMIMSR, Kosara, Chandrapur

Sarvodaya Shikshan Mandal’s

Sau. Leena Kishor Mamidwar Institute of
Management Studies & Research, Kosara,
Chandrapur
2023 – 2024
 A
PROJECT REPORT ON

“TO STUDY OF WORKING CAPITAL MANAGEMENT OF

AMBUJA CEMENT DEALER, CHANDRAPUR”

Submitted for the partial fulfilment of the requirement for

the award of Degree in

Master of Business Administration

Specialization in Financial Management
(Gondwana University Gadchiroli)

Submitted By Under the Guidance of

Mr. Dipak B. Rahangdale Dr. Farukh Ahemad
M. B. A. (Final Year) M.com , M.B.A , P.hd
2023-2024 LKMIMSR, Kosara, Chandrapur

Sarvodaya Shikshan Mandal’s

Sau. Leena Kishor Mamidwar Institute of
Management Studies & Research, Kosara,
Chandrapur
 Sarvodaya Shikshan Mandal’s
Institute of Management Studies and
Research, Kosara, Chandrapur

Certificate

This is to certify that, Mr. Dipak B. Rahangdale is a

bonafied MBA (Final Year) Student of Sau. Leena Kishor Mamidwar
Institute of Management Studies & Research, Kosara, Chandrapur for
the session 2023 - 2024 completed his project entitiled “ To Study of
Working Capital Management of Ambuja Cement Dealer,
Chandrapur.” Under the guidance of Dr. Farukh Ahemad.

The Project is being submitted to Gondwana University,

Gadchiroli in the partial fulfillment of the requirement for the Degree
of Master of Business Administration.

Date :
Place : Chandrapur Dr. J. N. Chakravorty
(PRINCIPAL)
LKMIMSR, Kosara, Chandrapur
 Sarvodaya Shikshan Mandal’s
Institute of Management Studies and
Research, Kosara, Chandrapur

Certificate Guide

This is to certify that, Mr. Dipak B. Rahangdale is a

bonafied MBA (Final Year) Student of Sau. Leena Kishor Mamidwar
Institute of Management Studies & Research, Kosara, Chandrapur for
the session 2023 - 2024 completed his project entitiled “To Study the
Working Capital Management of Ambuja Cement Dealer,
Chandrapur.” Under the guidance of Dr. Farukh Ahemad.

1. The candidate has satisfactory conducted research for not less then
academic session.

2. The project is the result candidates own work and is of sufficiently

high Standard to warrants presentation to Gondwana university
Gadhroli in partial fulfilment of requirement for the Master of
Business Administration.

Date :
Place : Chandrapur Dr. Farukh Ahemad
(PROJECT GUIDE)
LKMIMSR, Kosara, Chandrapur
 Declaration

This work presented in this project was conducted

during 2023-2024 under the supervision of Dr. Farukh Ahemad

Institute of Management Studies And Research, Kosara, Chandrapur.

This work has not been submitted to any other degree

or diploma to any other University or institute.

Date : Mr. Dipak B. Rahangdale

Place : M.B.A (Final year)
LKMIMSR Chandrapur
 Acknowledgement

I take this opportunity to express my profound gratitude

Dr.J.N.Chakravorty (Principal) for giving me the permission to take

this project work at Institute of Management Studies and Research,

Kosara, Chandrapur.

I am greatly indebted to Dr. Farukh Ahamadh

(Project Guide ) who always encourages and guided me for this project

work . I take this opportunity to thank him for his valuable suggestions

and constant encouragement given to me from time to time .

During the preparation of this project many people

have helped me immensely.

Last but not least my heartily thanks to my parents

those of my friends who have, helped me so much in completion of this

project.

Mr. Dipak B. Rahangdale

M.B.A. (Final year)
LKMIMSR Chandrapur
 Index

Sr. No. Chapters Pg. No.

1. Introduction 01-16

2. Company Profile 17-21

3. Objective Of Working Capital 22

4. Objective Of Study 23

5. Scope of Study 24

6. Limitation Of Study 25

7. Hypothesis 26

8. Research Methodology 27-28

9. Method Of Working Capital 29-33

10. Review of Literature 34

11. Data Analysis and Interpretation 35-61

12. Conclusion 62

13. Suggestion 63

Bibliography
 Chapter 1

INTRODUCTION
 Chapter 1
INTRODUCTION TO FINANCE
Finance is a term for the management, creation, and study of money
and investments. Specifically, it deals with the questions of how an individual,
company or government acquires money – called capital in the context of a
business – and how they spend or invest that money. Finance is then often divided
into the following broad categories: personal finance, corporate finance, and
public finance.
At the same time, and correspondingly, finance is about the overall
"system" i.e., the financial markets that allow the flow of money, via investments
and other financial instruments, between and within these areas; this "flow" is
facilitated by the financial services sector. Finance therefore refers to the study
of the securities markets, including derivatives, and the institutions that serve as
intermediaries to those markets, thus enabling the flow of money through the
economy.
A major focus within finance is thus investment management – called
money management for individuals, and asset management for institutions – and
finance then includes the associated activities of securities trading and stock
broking, investment banking, financial engineering, and risk management.
Fundamental to these areas is the valuation of assets such as stocks, bonds, loans,
but also, by extension, entire companies. Asset allocation, the mix of investments
in the portfolio, is also fundamental here. Although they are closely related, the
disciplines of economics and finance are distinct. The economy is a social
institution that organizes a society's production, distribution, and consumption of
goods and services, all of which must be financed.

1.
 As above, the financial system consists of the flows of capital that take
place between individuals (personal finance), governments (public finance), and
businesse (corporate finance). "Finance" thus studies the process of channeling
money from savers and investors to entities that need it. Savers and investors have
money available which could earn interest or dividends if put to productive use.
Individuals, companies and governments must obtain money from some external
source, such as loans or credit, when they lack sufficient funds to operate. In
general, an entity whose income exceeds its expenditure can lend or invest the
excess, intending to earn a fair return. Correspondingly, an entity where income
is less than expenditure can raise capital usually in one of two ways: (i) by
borrowing in the form of a loan (private individuals), or by selling government or
corporate bonds; (ii) by a corporation selling equity, also called stock or shares
(which may take various forms: preferred stock or common stock). The owners
of both bonds and stock may be institutional investors – financial institutions such
as investment banks and pension funds – or private individuals, called Private
investors or retail Investors.
The lending is often indirect, through a financial intermediary such
as a bank, or via the purchase of notes or bonds (corporate bonds, government
bonds, or mutual bonds) in the bond market. The lender receives interest, the
borrower pays a higher interest than the lender receives, and the financial
intermediary earns the difference for arranging the loan. A bank aggregates the
activities of many borrowers and lenders.
A bank accepts deposits from lenders, on which it pays interest.
The bank then lends these deposits to borrowers. Banks allow borrowers and
lenders, of different sizes, to coordinate their activity. Investing typically entails
the purchase of stock, either individual securities, or via a mutual fund for
example.
2.
 Stocks are usually sold by corporations to investors so as to raise
required capital in the form of "equity financing", as distinct from the debt
financing described above. The financial intermediaries here are the investment
banks. The investment banks find the initial investors and facilitate the listing of
the securities, typically shares and bonds. Additionally, they facilitate the
securities exchanges, which allow their trade thereafter, as well as the various
service providers which manage the performance or risk of these investments.
These latter include mutual funds, pension funds, wealth managers, and stock
brokers, typically servicing retail investors (private individuals).
Inter-institutional trade and investment, and fund-management at this scale, is
referred to as "wholesale finance". Institutions here extend the products offered,
with related trading, to include bespoke options, swaps, and structured products,
as well as specialized financing.

In simple word, Financial management is all about efficient

and effective management of the monetary resources of an organization. The
objectives of financial management are profit maximization (including
maximization of shareholders wealth), financial decision making (future proof)
and maintaining proper cash flow. Financial Planning is the process of estimating
the capital required and determining it’s competition. It is the process of framing
financial policies in relation to procurement, investment and administration of
funds of an enterprise. Financial Planning helps in ensuring a reasonable balance
between outflow and inflow of funds so that stability is maintained to ensures that
the suppliers of funds are easily investing in companies which exercise financial
planning and helps in making growth and expansion programmes which helps in
long-run survival of the company it reduces uncertainties with regards to
changing market trends which can be faced easily through enough funds.

3.
 Working capital management

Working capital management is a vital issue in financial

decision making since it is a part of investment in current assets and current
liabilities which directly affect the liquidity and profitability of the company.
Working capital management involves planning and controlling current assets
and current liabilities in a manner that eliminates the risk of inability to meet short
term obligations on the one hand and avoid excessive investment in these assets
on the other hand (Eljelly,2004). Efficient management of working capital plays
an important role of overall corporate strategy in order to create shareholder
value. Working capital is regarded as the result of the time lag between the
expenditure for the purchase of raw material and the collection for the sale of the
finished good.
A firm may exist without making profits but cannot survive
without liquidity. The function of working capital management in an organization
is similar that of the heart in a human body. Also it is an important function of
financial management. The financial manager must determine the satisfactory
level of working capital funds and also the optimum mix of current assets and
current liabilities. He must ensure that the appropriate sources of funds are used
to finance working capital and should also see that short term obligation of the
business are met well in time
In an ordinary sense, working capital denotes the amount of funds
needed for meeting day-to-day operations of a concern. This is related to short-
term assets and short-term sources of financing. Hence it deals with both, assets
and liabilities—in the sense of managing working capital it is the excess of
current assets over current liabilities. In this article we will discuss about the
various aspects of working capital.

4.
❖ Meaning :- Working capital means management of current assets:
namely, cash in hand, cash at bank, bills receivable, closing stock,
and debtors. It also means management of current liabilities, including sundry
creditors, bills payable, outstanding creditors, bank overdraft, and so on.

❖ Definitions:- The term woing capital refers to the portion of

total capital that is used to run a business efficiently and regularly. It is also
known as short-term capital, circulating capital, or liquid capital.

Working Capital defined by authors and researchers are:

• Need Molottand Field: “Working capital means current assets.”

• J.S. Mill: “The sum of the current assets is the working capital of a
business.”
• C.W. Gutenberg: “Working capital is the excess of current assets over
current liabilities.”
• Bonneville and Dewey: “Any acquisition of funds that increases the
current assets increases working capital.”

❖ Formula for Working Capital :-

Working capital can also be viewed as the current assets minus

the current liabilities of an organization. It is also known as the net current
assets.

The following formula is used to calculate working capital:

Working capital = Current assets – Current liabilities

5.
❖ Types of Working Capital

WORKING CAPITAL

BASIS OF CONCEPT BASIS OF TIME

GROSS NET PERMANENT TEMPORARY

WORKING WORKING WORKING WORKING
CAPITAL CAPITAL CAPITAL CAPITAL

REGULAR SEASONAL
WORKING WORKING
CAPITAL CAPITAL

RESERVE SPECIAL
WORKING WORKING
CAPITAL CAPITAL

6.
❖ Types of Working Capital
According to the needs of business, the working capital may be classified into
following two basis:

1. On the basis of Concept

2. On the basis of Time

1. On the basis of Concept:

On the basis of concept working capital is divided into two categories as under:

(a) Gross working capital and

(b) Networking capital.

(a) Gross Working Capital:

Gross working capital refers to the amount of funds invested in various
components of current assets. It converted to cash in one year. It consists of raw
materials, work in progress, debtors, finished goods, etc.

In simple words, The sum total of all current assets of a business concern is
termed as gross working capital.

So, Gross working capital = Stock + Debtors + Receivables + Cash.

(b) Net Working Capital:

The excess of current assets over current liabilities is known as Net working
capital. The principal objective here is to learn the composition and magnitude of
current assets required to meet current liabilities.

Formula :- Current Assets - Current Liabilities

7.
In simple words, The difference between current assets and current liabilities of
a business concern is termed as the Net working capital.

Hence, Net Working Capital = Stock + Debtors + Receivables + Cash – Creditors

– Payables.

2. On the basis of Time:

The requirements of working capital are continuous. More working capital is
required in a particular season or the peck period of business activity. On the basis
of periodicity working capital can be divided under two categories as under:

(a) Permanent or Fixed Working Capital

(b) Temporary or Variable Working Capital

(a) Permanent or Fixed Working Capital:

The minimum amount of working capital which even required during the dullest
season of the year is known as Permanent working capital. Fixed working capital
can further be divided into two categories as under:

• Regular Working capital: Minimum amount of working capital required

to keep the primary circulation. Some amount of cash is necessary for the
payment of wages, salaries etc.

• Reserve Margin Working capital: Additional working capital may also

be required for contingencies that may arise any time. The reserve working
capital is the excess of capital over the needs of the regular working capital
is kept aside as reserve for contingencies, such as strike, business
depression etc.

8.
(b) Temporary or Variable Working Capital:
It represents the additional current assets required at different times
during the operating year to meet additional inventory, extra cash, etc.
The variable working capital may also be subdivided into following two sub
groups;

• Seasonal Variable Working capital: Seasonal working capital is the

additional amount which is required during the active business Seasons of
the year. Raw Materials like Raw Cotton or jute or sugarcane are purchased
in particular season. The industry has to borrow funds for short period. It
is particularly suited to a business of a seasonal nature. In short, seasonal
working capital is required to meet the seasonal liquidity of the business.
• Special variable working capital: Additional working capital may also be
needed to provide additional current assets to meet the unexpected events
or special operations such as extensive marketing campaigns or carrying of
special job etc.

3. Others Working Capital :-

Some others types of working capital are as follow;

(a) Negative Working Capital :

Negative working capital is closely tied to the current ratio, which is
calculated as a company's current assets divided by its current liabilities. If a
current ratio is less than 1, the current liabilities exceed the current assets and
the working capital is negative. Working capital can be negative if current
liabilities are greater than current assets. Negative working capital can
come about in cases where a large cash payment decreases current assets or a
large amount of credit is extended in the form of accounts payable.
9.
(b) Cash Working Capital :
Cash working capital is one which is calculated from the items appearing in
the profit and loss accounting. Its show the real flow of money or value at a
particular time and is considered to be the most realistic approach in working
capital management . It is the basis of the operation cycle concept which has
assumed a great importance in fianancial management in recenet years. The
reason is that the cash working capital indicates the adequacy of the cash flow,
which is an essential pre-requistite of a busines.

(c) Balance Sheet Working Capital :

The balance sheet working capital is one which is calculated from the items
appearing in the balance sheet. Gross working capital, which is represented by
the excess of current assets over current liabilities, are examples of the balance
sheet working capital.

❖ Components of Working Capital :-

Working capital is composed of various current assets and current liabilities,

which are as follows:
(A) Current Assets:
These assets are generally realized within a short period of time, i.e. within
one year.

(B) Current Liabilities:

Current liabilities are those which are generally paid in the ordinary course
of business within a short period of time, i.e. one year.

10.
Current assets include: Current liabilities include:

(a) Inventories or Stocks (a) Sundry Creditors

(i) Raw materials (b) Bills Payable

(ii) Work in progress (c) Accrued Expenses

(iii) Consumable Stores (d) Bank Overdrafts

(iv) Finished goods (e) Bank Loans (short-term)

(b) Sundry Debtors (f) Proposed Dividends

(c) Bills Receivable (g) Short-term Loans

(d) Pre-payments (h) Tax Payments Due

(e) Short-term Investments

(f) Accrued Income and

(g) Cash and Bank Balances

❖ Factor Determine Working Capital :-

The following factor determine the amount of working capital

1. Nature of Companies 8. Business Cycle

2. Demand of Creditors 9. Production Cycle
3. Cash Requirements 10. Liquidity and Profitability
4. Nature and Size of Business 11. Seasonal Fluctuations
5. Time
6. Volume of Sales
7. Terms of Purchases and Sales
11.
1. Nature of Companies : The composition of an asset is a function of the size
of a business and the companies to which it belongs. Small companies have
smaller proportions of cash, receivables and inventory than large corporation.
This difference becomes more marked in large corporations. A public utility, for
example, mostly employs fixed assets in its operations, while a merchandising
department depends generally on inventory and receivable.

2. Demand of Creditors: Creditors are interested in the security of loans. They

want their obligations to be sufficiently covered. They want the amount of
security in assets which are greater than the liability.

3. Cash Requirements: Cash is one of the current assets which are essential for
the successful operations of the production cycle. A minimum level of cash is
always required to keep the operations going. Adequate cash is also required to
maintain good credit relation.

4. Nature and Size of Business: The working capital requirements of a firm are
basically influenced by the nature of its business. Trading and financial firms
have a very less investment in fixed assets, but require a large sum of money to
be invested in working capital. Retail stores, for example, must carry large stocks
of a variety of goods to satisfy the varied and continues demand of their
customers.

5. Time: The level of working capital depends upon the time required to
manufacturing goods. If the time is longer, the size of working capital is great.
Moreover, the amount of working capital depends upon inventory turnover and
the unit cost of the goods that are sold.

6. Volume of Sales: This is the most important factor affecting the size and
components of working capital. A firm maintains current assets because they are
needed to support the operational activities which result in sales.

12.
7. Terms of Purchases and Sales: If the credit terms of purchases are more
favourable and those of sales liberal, less cash will be invested in inventory. With
more favourable credit terms, working capital requirements can be reduced. A
firm gets more time for payment to creditors or suppliers. A firm which enjoys
greater credit with banks needs less working capital.

8. Business Cycle: Business expands during periods of prosperity and declines

during the period of depression. Consequently, more working capital required
during periods of prosperity and less during the periods of depression.

9. Production Cycle: The time taken to convert raw materials into finished
products is referred to as the production cycle or operating cycle. The longer the
production cycle, the greater is the requirements of the working capital. An
utmost care should be taken to shorten the period of the production cycle in order
to minimize working capital requirements.

10. Liquidity and Profitability: If a firm desires to take a greater risk for bigger
gains or losses, it reduces the size of its working capital in relation to its sales. If
it is interested in improving its liquidity, it increase the level of its working
capital. However, this policy is likely to result in a reduction of the sales volume,
and therefore, of profitability. A firm, therefore, should choose between liquidity
and profitability and decide about its working capital requirements accordingly.

11. Seasonal Fluctuations: Seasonal fluctuations in sales affect the level of

variable working capital. Often, the demand for products may be of a seasonal
nature. Yet inventories have got to be purchased during certain seasons only. The
size of the working capital in one period may, therefore, be bigger than that in
another.

13.
❖ Principle of Working Capital Management :-

1. Principle of Risk Variation

Risk here refers to the inability of a firm to meet its obligations as and when
they become due for payment. Larger investment in current assets with less
dependence on short-term borrowings increases liquidity, reduces dependence on
short-term borrowings increases liquidity, reduces risk and thereby decreases the
opportunity for gain or loss.

2. Principle of Cost of Capital:

The various sources of raising working capital finance have different cost of
capital and the degree of risk involved. Generally, higher the risk lower is the cost
and lower the risk higher is the cost. A sound working capital management should
always try to achieve a proper balance between these two.

3. Principle of Equity Position:

This principle is concerned with planning the total investment in current
assets. According to this principle, the amount of working capital invested in each
component should be adequately justified by a firm’s equity position. Every rupee
invested in the current assets should contribute to the net worth of the firm.

4. Principle of Maturity of Payment:

This principle is concerned with planning the sources of finance for working
capital. According to this principle, a firm should make every effort to relate
maturities of payment to its flow of internally generated funds. Maturity pattern
of various current obligations is an important factor in risk assumptions and risk
assessments.

14.
❖ Sources of Working Capital :
The sources of short-term funds used for financing variable part of
working capital mainly include the following:

1. Loans from Commercial Banks:

Small-scale enterprises can raise loans from the commercial banks with or
without security. This method of financing does not require any legal formality
except that of creating a mortgage on the assets. Loan can be paid in lump sum
or in parts.

2. Public Deposits:
Often companies find it easy and convenient to raise short- term funds by
inviting shareholders, employees and the general public to deposit their savings
with the company. It is a simple method of raising funds from public for which
the company has only to advertise and inform the public that it is authorised by
the Companies Act 1956, to accept public deposits.

3. Trade Credit:
Just as the companies sell goods on credit, they also buy raw materials,
components and other goods on credit from their suppliers. Thus, outstanding
amounts payable to the suppliers i.e., trade creditors for credit purchases are
regarded as sources of finance.

4. Factoring:
Factoring is a financial service designed to help firms in managing their book
debts and receivables in a better manner. The book debts and receivables are
assigned to a bank called the ‘factor’ and cash is realised in advance from the
bank. For rendering these services, the fee or commission charged is usually a
percentage of the value of the book debts/receivables factored.

15.
5. Discounting Bills of Exchange:
The term ‘discounting of bills’ is used in case of time bills whereas the term,
‘purchasing of bills’ is used in respect of demand bills. The rate of discount to be
charged by the bank is prescribed by the Reserve Bank of India (RBI) from time
to time. It generally amounts to the interest for the period from the date of
discounting to the date of maturity of bills.

6. Bank Overdraft and Cash Credit:

Overdraft is a facility extended by the banks to their current account holders
for a short-period generally a week. A current account holder is allowed to
withdraw from its current deposit account upto a certain limit over the balance
with the bank. The interest is charged only on the amount actually overdrawn.
The overdraft facility is also granted against securities.

7. Advances from Customers:

One way of raising funds for short-term requirement is to demand for advance
from one’s own customers. Examples of advances from the customers are
advance paid at the time of booking a car, a telephone connection, a flat, etc. This
has become an increasingly popular source of short-term finance among the small
business enterprises mainly due to two reasons.

8. Accrual Accounts:
Generally, there is a certain amount of time gap between incomes is earned
and is actually received or expenditure becomes due and is actually paid. Salaries,
wages and taxes, for example, become due at the end of the month but are usually
paid in the first week of the next month. Thus, the outstanding salaries and wages
as expenses for a week help the enterprise in meeting their working capital
requirements. This source of raising funds does not involve any cost.

16.
 CHAPTER 2

COMPANY PROFILE
 CHAPTER 2
COMPANY PROFILE

Ambuja Cements Ltd. is among the leading cement companies in

India. It is a member of the Adani Group - the largest and fastest-growing
portfolio of diversified sustainable businesses. Ambuja Cement is known for its
hassle-free, home-building solutions. Its unique products tailor-made for Indian
climatic conditions, sustainable operations and initiatives that advance the
company's philosophy of contributing to the larger good of the society have made
it the most trusted brand in the Indian cement industry.
Ambuja Cement aspires to be the most competitive and sustainable
company in the cement manufacturing industry. Acting in a sustainable manner
is not only a business imperative but also provides the company with a
competitive advantage. We believe that a company is not measured only through
its profits; its True Value lies in what it gives back to the people and the
environment. The core of our sustainability philosophy is based on shareholder
benefit, safe operations, environment conservation and social well-being.

Ambuja Cement at a glance

Ambuja Cements Ltd is India’s foremost cement company known for
its hassle-free, home-building solutions. Unique products tailor-made for Indian
climatic conditions, sustainable operations and initiatives that advance the
company’s philosophy of contributing to the larger good of the society, have
made it the most trusted cement brand in India.
Ambuja Cements Ltd. is among the leading cement companies in India.
It is a member of the Adani Group - the largest and fastest-growing portfolio of
diversified sustainable businesses.

17.
 Ambuja Cement has provided hassle-free, home-building solutions with
its unique sustainable development projects and environment-friendly practices
since it started operations. Currently, Ambuja Cement has a cement capacity of
31 million tonnes with six integrated cement manufacturing plants and eight
cement grinding units across the country.

The company has many firsts to its credit – a captive port with four
terminals that has facilitated timely, cost-effective, cleaner shipments of bulk
cement to its customers. To further add value to our customers, the company has
launched innovative products like Ambuja Plus, Ambuja Cool Walls, Ambuja
Kawach and Ambuja Cement Compocem. The new products not only fulfil
important customer needs but also help in significantly reducing carbon
footprints.

Ambuja Cement is the industry leader in responsible use of resources, both

natural and man-made. The company has been certified over eight times water
positive, a feat achieved through conservation efforts and increasing water
efficiency in its plants. It is also plastic negative, by burning as much as over
1,26,000 tonnes of plastic waste in its kilns, equivalent to 3.5 times of total plastic
used. The company also generated 2.7% of its power needs from renewable
resources.

Sustainable profitable growth is ingrained in the company’s DNA. Ambuja

Cement’s multi-pronged strategy, including triple bottom line accounting
method; True Value; good corporate governance practices; overarching corporate
environment policy; and sustainable supply chain policy have helped cement the
company's credentials as a sustainable manufacturer.

18.
 Ambuja Cement's Sustainable Development Ambition 2030 provides
strategic direction to the company's long-term sustainability vision. All Ambuja
Cement plants are ISO 14001 certified. Ambuja Knowledge Centres (AKCs), a
unique initiative by the company, serves as a knowledge sharing platform for
construction professionals that includes practical workshops on mix design and
quality supervision. Currently, 19 AKCs are functional across India. The
company also works closely with communities that live around its plants, through
its CSR arm, the Ambuja Cement Foundation (ACF). ACF implements need-
based and participatory programmes in the thematic areas of water resource
development, health and sanitation, women empowerment, rural infrastructure,
education and agro-based/skill-based livelihood creation.

The company's most distinctive attribute is its approach to business.

Ambuja Cement follows a unique homegrown philosophy that gives
people the authority to set their own targets and the freedom to achieve their
goals. Its focus has been consistent on two major building blocks that has
resonated through its daily operations – Quality (of products) and Safety (of all
those involved in the creation of its products). The company's
quintessential spirit has ensured a product that embodies Giant Strength.

Products
Ambuja Cement :- Known for its high strength, high performance cement caters
to each of its three customer segments – Individual Home Builders (IHBs),
Masons and Contractors, and Professionals

Ambuja Kawach :- Ambuja Kawach is a specially formulated cement with high

quality water-repellent properties and is a one-of-its-kind product.

19.
Ambuja Plus :- Ambuja Plus is a special quality PPC cement with advanced SPE
technology.

Ambuja Cool Walls :- Can Cement keep your house cool? Of course.. with
Ambuja's temperature resistant concrete blocks.

Ambuja Compocem :- At Ambuja we’ve always looked to create the strongest

cement, with the lightest carbon footprint. By creating an innovative product line,
Ambuja is bringing sustainability to people’s homes.

Ambuja Buildcem :- Ambuja developed an innovative way of using fly ash to

produce high strength Portland Pozzolana Cement

Ambuja Powercem :- Ordinary Portland cement is the most common type of

cement and is a basic ingredient of concrete & mortar. Ambuja branded it as
Powercem.

Ambuja Railcem :- Ambuja Railcem (OPC 53-S) is a high Blaine Portland

cement, useful for making concrete Railway sleepers. Apart from its main usage
of concrete sleepers manufacturing

Ambuja Knowledge Initiative

Foundations – An Ambuja Knowledge Initiative, endeavours to enhance and
expand the knowledge base of the Architects, Engineers and Construction (AEC)
professionals. Ambuja Knowledge Centres, a bespoke initiative, aims to advance
the knowledge of construction professionals through sharing.

20.
 Foundations – an Ambuja Knowledge Initiative, endeavours to enhance
and expand the knowledge base of Architects, Engineers and Construction (AEC)
professionals. The initiative serves as a platform to share information, create
interaction and provide inspiration to the AEC community. It also seeks to evolve
an experiential and exhaustive understanding of cement, and encourage
innovation within the field.

National learning and training initiatives :- Another initiative aimed at the

AEC community is the National Learning and Training Initiative. This will help
professionals expand their knowledge about concrete and the innovative ways it
can be put to use. Through a series of lectures, studios and workshops, training
sessions, and interactions with experts in the field, AEC professionals can learn
about innovative new products and technologies. An interaction with world
renowned engineer William Frazier Baker, also known as Bill Baker, was
organised by Ambuja Knowledge Centre - Mumbai.

Ambuja Knowledge Centre :- Ambuja Knowledge Centres (AKC) serve as a

knowledge sharing platform for construction professionals. Currently, over 30
AKCs are operational in various parts of the country. AKCs help in advancing
the knowledge of professionals through practical workshops and also function as
experience centres that promote and offer solutions for cement and concrete
applications.

Contact us :- Ambuja Cement has strong footprints in the northern, western and
eastern regions of India. Cement manufacturing and grinding units located at
strategic locations across the country, and a network of over 28,000 dealers and
retailers have helped Ambuja Cement become the preferred building material
supplier even in remote parts of India.

21.
 CHAPTER 3

OBJECTIVE OF WORKING CAPITAL

 CHAPTER 3
OBJECTIVE OF WORKING CAPITAL

Few of the importance objectives of working capital management are listed

below:

1. Optimization of Working Capital Operating Cycle: In simple terms,

working capital cycle starts from the day raw materials are acquired and
completes when the finished products are sold. One of the major objectives of
working capital management is to ensure that there is no hindrance during the
above-mentioned process.
2. Balance Working Capital: The good net working capital is required to stay
in a stable equilibrium. The ratio of current assets and current liabilities should
be optimized. Because the lower value of this ratio implies that company is not
financially stable to clear its current debts, higher value is also not an indication
of prosperity, it suggests that company has too many inventories and they are not
investing in excess cash.
3. Minimize Cost of Capital: Working capital management focuses on
minimizing cost of capital, rate of interest in some special cases. It is only when
the cost of capital will be lesser than revenue, one can earn profit. Utilization of
long-term funds (in proper mix) is one way of minimizing capital cost.
4. Assists the Business to Avoid Over-borrowing: Over-borrowing is among
the quickest techniques towards business growth as well as business failure. The
objectives of working capital management out of over-borrowing leads to
mismanagement of finance as well as assets.
5. Optimal Return on Current Asset Investment: The return on the investment
infused on short term assets must exceed the average cost of capital to ensure
wealth maximization.

22.
 CHAPTER 4

OBJECTIVES OF STUDIES
 CHAPTER 4
OBJECTIVES OF STUDIES

1) To study the working capital management of Ambuja Dealer in

Chandrapur. Using various financial ratio.

2) To analyse data related profitability of last few Year and analysis the past
and present financial performance of Company.

23.
 CHAPTER 5

SCOPE OF STUDIES
 CHAPTER 5
IMPORTANCE AND SCOPE OF STUDY

IMPORTANCE :- The need for working capital cannot be over emphasized.

Every business needs some amount of working capital. The need for working
capital arises due to the time gap between production and realization of cash from
sales. There is an operating cycle involved in sales and realization of cash. There
are time gaps in purchase of raw materials and production; production and sales;
and sales and realization of cash.

Thus, working capital is needed for the following purposes:

• For the purchase of raw materials, components and spares.

• To pay wages and salaries.
• To maintain the inventories of raw materials, work in progress, stores and spares
and finished stock.

SCOPE :- The study is on Working Capital Management of AMBUJA

CEMENT LIMITED.
➢ Management of Working Capital refers to management of current asset,
current liability and relationship between them.
➢ The basic goal of working capital is to maintain the satisfactory level.
➢ A sound working capital policy ensures higher profitability and proper
liquidity of a firm.
➢ Business is usually done on credit; there is a time lag between the date of
sale and date of receipt of revenues, which can be as high as 90 days at
times.

24.
 CHAPTER 6

LIMITATIONS OF THE STUDY

 CHAPTER 6
LIMITATIONS OF THE STUDY

1) The analysis is limited to only three years of data.

2) The study is purely based on secondary data and primary data ONLY

for the study.

3) The study gives only limited data for further study.

4) Some Executives were over busy with their official work and

terefore they could not spare requisited time for me.

25.
CHAPTER 7

HYPOTHESIS
 CHAPTER 7
HYPOTHESIS

An hypothesis is a preparation or principles which assumed

perhaps without belief in other to draw its logical consequences and also by
method to test its accord with fact, which are know or may be determine. In view
of this study, the researcher formulate Null hypothesis and Alternate hypothesis
to test the research work.

Null Hypothesis

1. There is no relation between Average Collection Period and Return on

Assets.
2. There is no relation between Average Payment Period and Return on Assets.

Alternate Hypothesis

1. There is significant relation between Average Collection Period and Return

on Assets.

2. There is significant relation between Average Payment Period and Return on

Assets.

26.
 CHAPTER 8

RESEARCH METHODOLOGY
 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research

problem and an approach in management research to achieve pre-defined

objectives. It comprises the procedures used for generating, collecting and

evaluation of data method. It helps a researcher to guide during the course of

research work and also to proceed to conduct the study as per the objectives

❖ COLLECTION OF DATA

(a) Primary Data

(b) Secondary Data

a) Primary Data :-

The information is collected through the primary sources like:

➢ Personal Interview : Collecting data through Unstructured Interviews of

the executive and Discussion with (Team Leader) of the Finance

department of Ambuja Cement Dealer, Chandrapur.

➢ By Observations : The information obtained relates to what is Currently

happening and is not complicated by either the part behaviour or future

intensicity.

27.
 b) Secondary Data :-
There was numerous source of secondary data. Each year quantity of
secondary data source material expands at a tremendous rate. Examination of
secondary data is te simplest and easiest procedure of research. The secondary
data source is important in the earlier process of investigation.

➢ Data required was collected from the annual reports, records and other
financial statements published by the company.
➢ The major sources of data for this project were collected from the proceeding
websites, balance sheet and profit and loss account through annual reports of
three years.
➢ After the complilation of these information & data, they were tabulated for
better understanding then justified whenever necessary & deviation if any.

❖ TOOLS USED FOR THE STUDY

➢ FINANCIAL TOOLS

• Ratio analysis

• Statement of changes in working capital

• Balance Sheet

28.
 CHAPTER 9

METHODS OF WORKING CAPITAL

 CHAPTER 9

METHODS OF WORKING CAPITAL

1. Percentage of Sales Method:

This method of estimating working capital requirements is based on the
assumption that the level of working capital for any firm is directly related to its
sales value. If past experience indicates a stable relationship between the amount
of sales and working capital, then this basis may be used to determine the
requirements of working capital for future period.

2. Regression Analysis Method:

This method of forecasting working capital requirements is based upon the
statistical technique of estimating or predicting the unknown value of a dependent
variable from the known value of an independent variable. It is the measure of
the average relationship between two or more variables, i.e.; sales and working
capital, in terms of the original units of the data.

3. Cash Forecasting Method:

This method of estimating working capital requirements involves forecasting of
cash receipts and disbursements during a future period of time. Cash forecast will
include all possible sources from which cash will be received and the channels in
which payments are to be made so that a consolidated cash position is determined.

4. Projected Balance Sheet Method:

Under this method, projected balance sheet for future date is prepared by
forecasting of assets and liabilities by following any of the methods stated above.
The excess of estimated total current assets over estimated current liabilities, as
shown in the projected balance sheet, is computed to indicate the estimated
amount of working capital required.

29.
5. Operating Cycle Method:
This method of estimating working capital requirements is based upon the
operating cycle concept of working capital. The cycle starts with the purchase of
raw material and other resources and ends with the realization of cash from the
sale of finished goods. It involves purchase of raw materials and stores, its
conversion into stock of finished goods through work-in-process with progressive
increment of labour and service costs, conversion of finished stock into sales,
debtors and receivables, realization of cash and this cycle continues again from
cash to purchase of raw material and so on.

The following formula can be used for calculating the operating cycle:

operating cycle = inventory period + accounts receivable period

❖ Four major components of operating cycle of an manufacturing

company.

1. The cycle start with free capital in and other services.

2. Production phase.

3. Storage of finished products terminating at the time finished product is sold.

4. Cash or accounts receivable collection period., which results in and ends at

the point of, dis-investment of the free capital originally committed.

30.
 Finished
Goods

Accounts Work – in
Receivable - Progress

Wages, Salaries
Factory O.H.

Raw
Materials

Cash Suppliers

OPERATING CYCLE
❖ Approaches to financing the working capital

1. Conservation approach: This approach suggests that in addition to fixed

assets and permanent current assets, even a part of variable current assets
should be financed from long-term sources. The short-term sources are used
only to meet the peak seasonal requirements. During the off season, the
surplus fund is kept invested in marketable securities. Surplus current asset
enable the firm to absorb sudden variation in sales, production plans, and
procurement time without destructing production plans. Additionally the
higher liquidity level reduces the risk of insolvency. But lower risk translates
into lower returns. Large investment in current asset lead to higher interest and
carrying cost and encouragement for efficiency. Under this strategy, long term
financing covers more than the total requirement of capital.

Conservation

Current Assets

31.
2. Aggressive Approach : This approach depends more on short-term funds.
More short-term funds are used particularly for variable current assets and a
part of even permanent current assets, the funds are raised from short term
sources. Under this approach current assets are maintained just to meet the
current liabilities without keeping cushions for the variation in working capital
needs.
The companies working capital is financed by long-term source of
capital and seasonal variation are met through short-term borrowing. Adoption
of this strategy will minimize the investment in net working capital and
ultimately it lowers the cost financing working capital needs. The main
drawback of this strategy is that it necessitates frequent financing and also
increase, as the firm is variable to sudden shocks.

Current Assets Aggressive

Sale

32.
3. Moderate/Hedging or Matching approach : The moderate strategy is one
of those approaches of working capital management which lies in between the
above two approaches, i.e., aggressive and conservative approach. In this
strategy, a balance between risk and return is maintained in order to benefit
more by more effective use of the funds.
This approach classifies the requirements of total working capital into
permanent and temporary. Permanent or fixed working capital is the minimum
amount required to perform normal business operations, whereas temporary
or seasonal working capital is required to satisfy specific requirements. Under
this approach, the core/permanent working capital is financed from long-term
capital sources, and short-term funding/borrowing is used to meet seasonal
variations or temporary working capital needs.

33.
 CHAPTER 10

REVIEW OF LITERATURE
 CHAPTER 10

REVIEW OF LITERATURE

HAMASALAKSHI & Mr. MANICKAM (2005) “A Cross Section Study of the

Measurement of Liquidity and Profitability” Researcher examined liquidity,
profitability and leverage position of thirty-four software companies during the
period 1997-1998 to 2001- 2002 by using ratios, correlation and multiple
regression analysis. The study revealed favourable liquidity and working capital
position. They concluded that the companies rely on the internal financing and
overall profitability position of the software companies showed a moderately
increasing trend.

SUDHANSU MOHAN SAHOO & GOM KARNATH (2005) “Operating

Cycles, Working Capital Finance and Tandon Formula” the study analysed the
capital structure of the Indian corporate sector and the factors that determine the
debt-equity of the firms during the period 1980-81 to 2003-04. The study
concluded that the firm is significantly and positively to debt-equity ratio, asset
structure and profitability are the most significant factors deciding the capital
structure.

Cote, et.al, (1999) argued the management of receivables, inventory and

accounts payable have tremendous impact on cash flows, which in turn affect the
profitability of firms. Each of the Working capital items (i.e., cash, receivables
and inventories) helps in the management of firms in its own particular way.

Padachi (2006) found that high investment in inventories and receivables is

associated with lower profitability. He used return on total assets as a measure of
profitability for a sample of 58 small selected units In Automobile Industry in
Mauritius for the period 1998 -2003.

34.
 CHAPTER 11

DATA ANALYSIS AND

INTERRETATION
 CHAPTER 11

DATA ANALYSIS AND INTERRETATION

❖ STATEMENT OF CHANGES IN WORKING CAPITAL

Working capital means the excess of current assets over current liabilities.
Statement of changes in working capital is calculated for comparing the figure of
two consecutive years.

THE GENERAL RULE

a) An increase in current asset will increases working capital

b) A decrease in the current asset will decreases working capital

c) An increase in current liabilities will decreases working capital

d) A decrease in current liabilities will increases working capital.

The change in the amount of any current asset or current liability in the current
balance sheet as compared to that of previous balance sheet either results in
increase or decrease in working capital. The difference is recorded for each
individual current asset and current liability.

In case, current assets in the current period are more than in the previous
period, the effect is an increase in working capital and it is recorded in the
increase column. If a current liability in the current period is more than in the
previous period, the effect is decrease in working capital and it is recorded in the
decrease column.

35.
 STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE
YEAR 2021-22

Particulars 31/3/2021 31/3/2022 Increase Decrease

Current assets
Closing Stock 49329 60952 11623
Deposite 328566 497091 168525
Sundry debtors 544202.1 546352 2149.89
Cash in hand 19507.29 13720.18 5787.11
Bank account 850937.2 1075527 224590
TDS A/C 104669 124965 20296
Value added tax A/C 4377.13 5900.81 1523.68
A = Total current assets 1807386 2324508
Current liabilities
Duties & taxes 27061 31659.07 4598.07
Sundry creditors 465493.3 535808 70413.72
B = Total current 398352 567467.1
liabilities
NET WORKING 1409034 567467.1 428707.6 80699.9
CAPITAL (A-B)

Increase or decrease in 348007.7 348007.7

working capital
1757041 1757041 428707.6 428707.6

INTERPRETATION
The above table clearly shows the increase in the working capital for the year
2021 to 2022. All the Current assets except cash in hand have decreased in year
2022 as compared to year 2021. The end result of the statement of changes in
working capital after comparing all the increases and decreases is the net increase
in the amount of working capital. The above table focuses on the fact that the
increase in working capital is Rs. 348007.7
36.
 STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE
YEAR 2022-23

Particulars 31/3/2022 31/3/2023 Increase Decrease

Current assets
Closing Stock 60952 90485 29533
Deposite 497091 1193568 696477
Sundry debtors 546352 549272 2919.79
Cash in hand 13720.18 31116.68 17396.5
Bank account 1075527 669936.3 405591
TDS A/C 124965 146221 21256
Value added tax A/C 5900.81 5883.24 17.57
A = Total current assets 2324508 2686482
Current liabilities
Duties & taxes 31659.07 5000 26659.07
Sundry creditors 535808 256890 278918
B = Total current 567467.1 261890
liabilities
NET WORKING 17757041 2424592 1073159 405608.6
CAPITAL (A-B)

Increase or decrease in 667550.8 667550.8

working capital
2424592 2424592 1073159 1073159

INTERPRETATION
The above table clearly shows the increase in the working capital for the year
2022 to 2023. All the Current assets except bank account and value added tax
A/C have decreased in year 2023 as compared to year 2022. The end result of the
statement of changes in working capital after comparing all the increases and
decreases is the net increase in the amount of working capital. The above table
focuses on the fact that the increase in working capital is Rs.667550.8
37.
 STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE
YEAR 2023-24

Particulars 31/3/2023 31/3/2024 Increase Decrease

Current assets
Closing Stock 90485 78143 12342
Deposite 1193568 2290545 1096977
Sundry debtors 549272 565969 16697
Cash in hand 31116.68 5787.29 25329.39
Bank account 669936.3 811997.8 142061.5
TDS A/C 146221 169068.8 22847.8
Value added tax A/C 5883.24 12249.33 6365.09
A= Total current assets 2686482 3933760
Current liabilities
Duties & taxes 5000 4500
Sundry creditors 256890 327989 71099
B= Total current 261890 332489
liabilities
NET WORKING 2424592 3601271 1285448 106770.4
CAPITAL (A-B)

Increase or decrease in 11176679 1176678

working capital
3601271 3601271 1285448 1285448

INTERPRETATION
The above table clearly shows the increase in the working capital for the year
2023 to 2024. All the Current assets except stock and cash in hand have decreased
in year 2024 as compared to year 2023. The end result of the statement of changes
in working capital after comparing all the increases and decreases is the net
increase in the amount of working capital. The above table focuses on the fact
that the increase in working capital is Rs.11176679.
38.
 RATIO ANALYSIS

A ratio is a relationship expressed in mathematical terms between two

individual groups of data connected with each other in some logical manner.
Ratio analysis is widely used tool of financial analysis. This systematic method
helps to interpret the financial statement so that the strengths and weakness of a
firm as well as the historical performance and current financial condition can be
determined.

A ratio can be used as a yardstick for evaluating the financial position

and performance of a concern, because the absolute accounting data cannot
provide meaningful understanding and Interpretation. Ratio analysis helps the
analyst to make quantitative judgment with regard to concern's financial position
and performance.

Purpose of the ratio analysis

To study the short term solvency of the firm- liquidity of the firm.

To study the long term solvency of the firm- leverage position of the firm.

To interpret the profitability of the firm- profit earning capacity of the firm.

To identify the operating efficiency of the firm- turnover of the ratios.

STEPS INVOLVED IN RATIO ANALYSIS

STEP 1

Calculation of ratios from the information obtained from financial statements

according to the requirement of decision.

STEP 2

Compare the calculated ratios with pre-determined standard ratios. They may be
a past ratio of the same organization average ratio or a projected ratio or the ratio
of the most successful organization in the industry.
39.
 RATIO ANALYSIS

❖ LIQUIDITY RATIO

▪ CURRENT RATIO

Current ratio may be defined as a relationship between current assets and

current liabilities. It is a measure of general liquidity and is most widely used
to make the analysis of short term financial position of a firm.
• The ideal value of current ratio is 2:1

Current Ratio = Current Assets / Current Liabilities

Year Current Current Current

assets liabilities ratio

2021 – 2022 12220002 504148.9 2.41

2022 - 2023 1307987 261890 4.99

2023 - 2024 2089140 332489 6.28

ANALYSIS

From the above table, we can observed that current ratio in 2021-2022 it is 2.41,
in 2022-2023 it is 4.99, in 2023-2024 it is 6.28. This is higher than ideal ratio.

The ideal value of current ratio is 2:1

40.
CURRENT RATIO

Current ratio
7

6.283334216
6

4.99441254
5
Current ratio

3 Current Ratio
2.41992389

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that current ratio in 2021-2022 is 2.41, in 2022-2023 it is

4.99 and in 2023-2024 it is 6.28. The current ratio of all the above three years is
above the standard, so the it can meet its short term obligation. The company is
able to generate enough from operations to pay for its current obligations with
current assets.

41.
▪ LIQUID OR QUICK RATIO

The liquidity ratios are a result of dividing cash and other liquid assets by the
short term borrowings and current liabilities. They show the number of times the
short term debt obligations are covered by the cash and liquid assets. If the value
is greater than 1, it means the short term obligations are fully covered.

Liquidity refers to the ability of a concern to meet its current obligations and
when these become due.

• The ideal value of quick ration is 1:1.

Liquid Ratio = Liquid Assets / Current Liabilities

OR
Quick Ratio = Quick Assets / Quick Liabilities
Quick assets = Current assets – (stock + prepaid expenses)

Quick liabilities = Current liabilities – Bank overdraft

Year Quick Quick Quick ratio

assets liabilities
2021 – 2022 1159050 504148.9 2.29

2022 - 2023 1217502 261890 4.64

2023 - 2024 2010997 332489 6.04

ANALYSIS
From the above table, we can observed that Liquid or quick ratio in 2021-2022 it
is 2.29, in 2022-2023 it is 4.64, in 2023-2024 it is 6.04
Above all the value of that Liquid or quick ratio is greater than standard form of
absolute liquid ratio.

42.
LIQUID OR QUICK RATIO

Quick Ratio
7

6.048309869
6

5
4.648904884
Quick ratio

3 Quick Ratio
2.299023822
2

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that that Liquid or quick ratio in 2021-2022 is 2.29, in
2022-2023 it is 4.64, and in 2023-2024 it is 6.04. The Liquid or quick ratio of all
the above three years is above the standard, so the society can meet its short term
obligation. The company is able to generate enough from operations to pay for
its current obligations with current assets.

43.
▪ ABSOLUTE LIQUID RATIO

Absolute Liquid Assets include cash in hand and at bank and marketable
securities or temporary investments.

• The acceptable norm for this ratio is 50% or 0.5: 1 or 1: 2

Absolute Liquid Ratio = Absolute Liquid Assets / Current Liabilities

Year Absolute Current Absolute

Liquid assets liabilities Liquid ratio

2021 – 2022 2132690 504148.9 4.23

2022 - 2023 2443892 261890 9.33

2023 - 2024 3674299 332489 11.05

ANALYSIS

From the above table, we can observed that Absolute Liquid Ratio in 2021-2022
it is 4.23, in 2022-2023 it is 9.33, in 2023-2024 it is 11.05

Above all the value of Absolute Liquid Ratio is greater than standard form of
absolute liquid ratio.

44.
ABSOLUTE LIQUID RATIO

Absolute quick ratio

12
11.05088815

10
9.331750964
Absolute quick ratio

6
Quick Ratio
4.230278164
4

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that Absolute quick ratio in 2021-2022 is 4.23, in 2022-
2023 it is 9.33, and in 2023-2024 it is 11.05. The Absolute quick ratio of all the
above three years is above the standard, so the it can meet its short term
obligation. The company is able to generate enough from operations to pay for
its current obligations with current assets.

45.
▪ PROFITABILITY RATIOS
➢ GROSS PROFIT RATIO

Gross profit is a financial metric used to assess a company's financial health and
business model by revealing the proportion of money left over from revenues
after accounting for the cost of goods sold (COGS).

It is a popular tool to evaluate the operational performance of the business.

Gross profit ratio = (Gross profit / Net sales) × 100

Year Grooss Net sale Gross profit Gross

profit ratio profit ratio
( in % )

2021 – 2022 532999.8 1293793 0.411967 41.1 %

2022 - 2023 471627.3 1474486 0.319859 31.9 %

2023 - 2024 407400.3 1717079 0.237264 23.7 %

ANALYSIS

From the above table, we can observed Gross profit ratio in 2021-2022 it is
41.1%, in 2022-2023 it is decrease to 31.9%, and in 2023-2024 it is decrease to
23.7%.

There is no norm or standard to interpret gross profit ratio (GP ratio). Generally,
a higher ratio is considered better.

46.
GROSS PROFIT RATIO

Gross Profit Ratio

45
41.1
40

35
31.9
30
Percentage ( % )

25 23.7

20 Gross Profit Ratio

15

10

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that Gross profit ratio in 2021-2022 it is 41.1%, in 2022-
2023 it is decrease to 31.9%, and in 2023-2024 it is decrease to 23.7%. Therefor
by comparing all the three years ratio, the chart shows that its keep decreasing
from 2021-22 to 2023-24 The ratio can be used to test the business condition by
comparing it with past years ratio. The gross profit ratio from the chart, over the
past three years is the indication that there is no improvement in this firm.

47.
 ➢ OPERATING PROFIT RATIO

Operating profit ratio is a profitability ratio that measures what percentage

of total revenues is made up by operating income. This ratio shows what
proportion of revenues is available to cover non-operating costs like interest
expense. This ratio is important to both creditors and investors because it helps
show how strong and profitable a company's operations are.

Operating profit ratio = (Operating profit / Net sales) × 100

Operating profit= Net sales - (Cost of goods sold + Administrative and

office expenses + Selling and distribution exp.)
OR
Operating profit = Net sales - Operating cost

Year Operating Net sale Operating Operating

profit profit ratio profit ratio
( in % )

2021 – 2022 102427.8 1293793 0.079169 7.91 %

2022 - 2023 215355.3 1474486 0.146054 14.6 %

2023 - 2024 238442 1717079 0.138865 13.88 %

ANALYSIS

From the above table, we can observed operating profit ratio in 2021-2022 it is
7.91%, in 2022-2023 it is increase to 14.6%, and in 2023-2024 again it is decrease
to 13.88% . A higher operating margin is more favorable compared with a lower
ratio.

48.
OPERATING PROFIT RATIO

Operating Profit Ratio

16
14.6
13.88
14

12
Percentage ( % )

10

7.91
8
Operating Profit Ratio
6

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that operating profit ratio in 2021-2022 it is 7.91%, in

2022-2023 it is increase to 14.6%, and in 2023-2024 again it is decrease to
13.88%. A higher operating margin is more favorable compared with a lower
ratio. The graph shows that last two years operating profit ratio is higher than
2021-22 year ratio. But it is also shows that 2023-24 operating profit ratio is less
than 2022-23. Also 2022-23 operating ratio is highest compare to 2021-22 and
2023-24. Therefore operating profit is more favorable in 2022-23.

49.
 ➢ NET PROFIT RATIO

It is the ratio that shows relationship between net profit after tax and net
sales. It is computed by dividing the net profit (after tax) by net sales. The
measure is commonly reported on a trend line, to judge performance over time.

It is also used to compare the results of a business with its competitors.

Net profit is not an indicator of cash flows, since net profit incorporates a number
of non-cash expenses, such as accrued expenses, amortization, and depreciation.

The formula for the net profit ratio is to divide net profit by net sales, and then
multiply by 100. The formula is:

Net profit ratio = ( Net profit / Net sales ) x 100

Year Net profit Net sale Net profit Net profit

ratio ratio × 100

2021 – 2022 624187.8 1293793 0.482448 48.24 %

2022 - 2023 713099 1474486 0.483625 48.36 %

2023 - 2024 967525.8 1717079 0.563472 56.34 %

ANALYSIS
From the above table, we can observed Net profit ratio in 2021-2022 it is 48.24%,
in 2022-2023 it is increase to 48.36%, and in 2023-2024 again it is increase to
56.34 % .

50.
NET PROFIT RATIO

Net Profit Ratio

58

56.34 %
56

54
Percentage ( % )

52

50 Net Profit Ratio

48.24 % 48.36 %
48

46

44
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that net profit ratio in 2021-2022 it is 48.24%, in 2022-
2023 it is increase to 48.36%, and in 2023-2024 again it is increase to 56.34%. A
higher net profit ratio is more favorable compared with a lower ratio. The graph
shows that last year net profit ratio is higher than both 2021-22 and 2022-23 year
ratio. So it is satisfactory to the society.

51.
▪ ACTIVITY RATIOS

➢ INVENTORY TURNOVER RATIO

The Inventory turnover is a measure of the number of times inventory is

sold or used in a time period such as a year. The equation for inventory turnover
equals the cost of goods sold or net sales divided by the average inventory.

Inventory turnover ratio = Cost of goods sold / Average inventory

Usually, a higher inventory turnover ratio is preferred, as it indicates that

more sales are being generated given a certain amount of inventory.

Sometimes a very high inventory ratio could result in lost sales, as there is
not enough inventory to meet demand. It is always important to compare the
inventory turnover ratio to the industry benchmark to asses if a company is
successfully managing its inventory.

Year Cost of good Average Inventory

sold inventory turnover ratio

2021 – 2022 760793.3 60952 12.48184

2022 - 2023 1002858 78143 12.83364

2023 - 2024 1309679 90485 14.47399

ANALYSIS
From the above table, we can observed Inventory turnover ratio in 2021-2022 it
is 12.48, in 2022-2023 it is increase to 12.83, and in 2023-2024 again it is increase
and reached to 14.47. Last year (2023-24) inventory ratio is higher, satisfactory
to the society.

52.
INVENTORY TURNOVER RATIO

Inventory Turnover Ratio

15

14.47
14.5

14
Inventory Turnover Ratio

13.5

13 12.83

12.48 Inventory Turnover Ratio

12.5

12

11.5

11
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that inventory turnover ratio in 2021-2022 it is 12.48, in

2022-2023 it is increase to 12.83 and in 2023-2024 again it is increase to 14.47.
A higher inventory turnover ratio is more favorable compared with a lower ratio.
The graph shows that last year net profit ratio is higher than both 2021-22 and
2022-23 year ratio. So it is satisfactory to the society.

53.
 ➢ FIXED ASSETS TURNOVER RATIO

Fixed-asset turnover is the ratio of sales to the value of fixed assets. It

indicates how well the business is using its fixed assets to generate sales. This
ratio measures the efficiency with which a firm is utilizing its fixed assets in
generating sales.

Fixed assets turnover ratio = Net sales / Fixed assets (Net)

Year Net sale Fixed assets Fixed assets

turnover ratio

2021 – 2022 1293793 929879 1.391356

2022 - 2023 1474486 1288061 1.144733

2023 - 2024 1717079 1267558 1.354635

ANALYSIS

From the above table, we can observed Fixed-asset turnover ratio in 2021-2022
it is 1.39, in 2022-2023 it is decrease to 1.14, and in 2023-2024 again it is increase
and reached to 1.35.

54.
FIXED ASSETS TURNOVER RATIO

Fixed Asstes Turnover Ratio

1.6

1.391356295
1.4 1.354635449

1.2 1.144733052
Fixed Assets Turnover Ratio

0.8
Fixed Assets Turnover Ratio
0.6

0.4

0.2

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that Fixed-asset turnover ratio in 2021-2022 it is 1.39, in

2022-2023 it is decrease to 1.14 and in 2023-2024 again it is increase and reached
to 1.35. A higher Fixed-asset turnover ratio is more favorable compared with a
lower ratio. Analysis of fixed assets turnover ratio reveals that it is increasing in
the last year signifying that there is an improvement in the utilization of resources,
so it is satisfactory.

55.
 ➢ CURRENT ASSETS TURNOVER RATIO

Current assets turnover ratio is the relationship between sales or cost of

goods sold and current assets employed in the business. This ratio measures the
efficiency with which a firm is utilizing its current assets in generating sales.

Current assets turnover ratio = ( Net sales / Current asset )

Year Net sale Current assets Current assets

turnover ratio

2021 – 2022 1293793 1220002 1.060484

2022 - 2023 1474486 1307987 1.127294

2023 - 2024 1717079 2089140 0.821907

ANALYSIS

From the above table, we can observed current asset turnover ratio in 2021-2022
it is 1.06, in 2022-2023 it is increase to 1.12, and in 2023-2024 it is decrease to
0.82.

56.
CURRENT ASSETS TURNOVER RATIO

Current Asstes Turnover Ratio

1.2
1.127294337
1.060483979

1
Current Assets Turnover Ratio

0.821907293
0.8

0.6
Current Assets Turnover Ratio

0.4

0.2

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that current asset turnover ratio in 2021-2022 it is 1.06, in
2022-2023 it is increase to 1.12, and in 2023-2024 it is decrease to 0.82. Analysis
of current assets turnover ratio reveals that it is increasing during 2022-23 and a
decreasing in the 2023-24. A higher ratio is always more favorable. Higher
turnover ratios mean the company is using its assets more efficiently. This chart
shows that the company isn't using its assets efficiently.

57.
 ➢ WORKING CAPITAL TURNOVER RATIO

The working capital turnover ratio is also referred to as net sales to

working capital. It indicates a company's effectiveness in using its working
capital. The working capital turnover ratio is calculated as follows.

A high working capital turnover ratio shows a company is running

smoothly and has limited need for additional funding. Money is coming in and
flowing out on a regular basis, giving the business flexibility to spend capital on
expansion or inventory. A high ratio may also give the business a competitive
edge over similar companies.

However, an extremely high ratio, typically over 80%, may indicate a

business does not have enough capital supporting its sales growth. Therefore, the
company may become insolvent in the near future.

Working capital turnover ratio = Sales / Working capital

Year Sale Working Working capital

capital turnover ratio

2021 – 2022 1293793 715853.5 1.807343

2022 - 2023 1474486 1046097 1.409512

2023 - 2024 1717079 1756651 0.977473

ANALYSIS

From the above table, we can observed that working capital turnover ratio in
2021-2022 it is 1.80, in 2022-2023 it is decrease to 1.40, and in 2023-2024, again
it is decrease to 0.97.

58.
WORKING CAPITAL TURNOVER RATIO

Working Capital Turnover Ratio

2
1.80
1.8

1.6
Working Capital Turnover Ratio

1.40
1.4

1.2

1 0.97
Working Capital Turnover Ratio
0.8

0.6

0.4

0.2

0
2021 - 22 2022 - 23 2023 - 24

Year

INTERPRETATION

The chart shows that working capital turnover ratio in 2021-2022 it is 1.80,
in 2022-2023 it is decrease to 1.40, and in 2023-2024, again it is decrease to 0.97.
A low ratio shows that this business is investing in too many accounts receivable
(AR) and inventory assets for supporting its sales. This may lead to an excessive
amount of bad debts and obsolete inventory. This chart shows that the company
isn't using its working capital efficiently, so it isn‘t satisfactory.

59.
 FINDINGS

▪ The end result of the statement of changes in working capital after comparing
all the increases and decreases is the net increase in the amount of working
capital is Rs.348007.7 during year 2021-22.
▪ The end result of the statement of changes in working capital after comparing
all the increases and decreases is the net increase in the amount of working
capital is Rs.667550.8 during year 2022-23.
▪ The end result of the statement of changes in working capital after comparing
all the increases and decreases is the net increase in the amount of working
capital is Rs.11176679 during year 2023-24.
▪ Current ratio in 2021-2022 is 2.41, in 2022-2023 it is 4.99 and in 2023-2024
it is 6.28. The current ratio of all the above three years is above the standard
current ratio, which is 2:1.
▪ Liquid or quick ratio in 2021-2022 is 2.29, in 2022-2023 it is 4.64, and in
2023-2024 it is 6.04. The Liquid or quick ratio of all the above three years is
above the standard liquid or quick ratio, which is 1:1.
▪ Absolute quick ratio in 2021-2022 is 4.23, in 2022-2023 it is 9.33, and in
2023-2024 it is 11.05. The Absolute quick ratio of all the above three years is
above the standard absolute quick ratio, which is 0.5:1 or 2:1.
▪ Gross profit ratio in 2021-2022 it is 41.1%, in 2022-2023 it is decrease to
31.9%, and in 2023-2024 it is decrease to 23.7%. Comparing all the three years
ratio, the chart shows that its keep decreasing from 2021-22 to 2023-24. That
indicates there is no improvement in this firm.
▪ Operating profit ratio in 2021-2022 it is 7.91%, in 2022-2023 it is increase to
14.6%, and in 2023-2024 again it is decrease to 13.88%. A higher operating
margin is more favorable compared with a lower ratio.

60.
▪ Net profit ratio in 2021-2022 it is 48.24%, in 2022-2023 it is increase to
48.36%, and in 2023-2024 again it is increase to 56.34%. A higher net profit
ratio is more favorable compared with a lower ratio.
▪ Inventory turnover ratio in 2021-2022 it is 12.48, in 2022-2023 it is increase
to 12.83 and in 2023-2024 again it is increase to 14.47. A higher inventory
turnover ratio is more favorable compared with a lower ratio.
▪ Fixed-asset turnover ratio in 2021-2022 it is 1.39, in 2022-2023 it is decrease
to 1.14 and in 2023-2024 again it is increase and reached to 1.35. A higher
Fixed-asset turnover ratio is more favorable compared with a lower ratio.
▪ Current asset turnover ratio in 2021-2022 it is 1.06, in 2022-2023 it is increase
to 1.12, and in 2023-2024 it is decrease to 0.82. Analysis of current assets
turnover ratio reveals that it is increasing during 2022-23 and a decreasing in
the 2023-24. A higher ratio is always more favorable.
▪ Working capital turnover ratio in 2021-2022 it is 1.80, in 2022-2023 it is
decrease to 1.40, and in 2023-2024, again it is decrease to 0.97. it shows that
the company isn't using its working capital efficiently, so it isn‘t satisfactory.

61.
CHAPTER 12

CONCLUSION
 CHAPTER 12
CONCLUSION

The study has been conducted on the working capital system of Ambuja
Cement Dealer with the help of various Ratios and Statement of Changes in
Working Capital.

During the period of study, there were a few up and downs in the
working capital and ratio analysis it will affect the operations of the company but
it is observed that the overall financial position is good. In 2021 company was
making good profit but in 2022 company’s profitability ratio was decreased later
on 2023 the business was extremely increased as Company launched new
segments of Products and new business strategies which is help to increased as
a result dealers made good profit, therefore profitability is good.
Based on the analysis and interpretation I tried to give my findings and
suggestions for the company as per my best knowledge.

62.
CHAPTER 13

SUGGESTION
 CHAPTER 13

SUGGESTION

The company should concentrate on the current ratio by utilizing current asset for
productive purpose in order to achieve the standard ratio.

The dealer should take necessary steps to make use of the quick asset for the
development of the firm and should balance with the standard ratio.

Current assets turnover ratio is fluctuating. It‘s not good for showroom so in order
to increase the current assets turnover ratio a society need to increase its sales.

Gross profit ratio is not stable. So in order to increase the gross profit the dealer
wants to increase the production.

The working capital turnover ratio is decreasing year by year. It is not good for
the society so in order to increase the working capital turnover the society needs
to increase its sales.

63.
BIBLIOGRAPHY
 BIBLIOGRAPHY

1) Ahamed Ayub, (2011). - A Comparative Study on Working Capital

Management of Selected Pharmaceutical Companies of India. International
Journal of Commerce, Business and Management (IJCBM).

2) Ghosh , S. K. – Working Capital of Management Efficiency : The Study

Of Cost and Works Accountants of India.

REFERENCE WEBSITE :

• www.google.com

• www.managementparadise.com

• www.wikipedia.org