A STUDY ON CASH MANAGEMENT IN JK PLASTICS

MANUFACTURING COMPANY

PROJECT REPORT

Submitted by

PRATHIKSHA.K
(Registration No. 212222410081)

in partial fulfillment for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

FACULTY OF MANAGEMENT SCIENCES

ANNA UNIVERSITY: CHENNAI 600 025

APRIL 2024
A STUDY ON CASH MANAGEMENT IN JK PLASTICS
MANUFACTURING COMPANY

PROJECT REPORT

Submitted by

PRATHIKSHA.K
(Registration No. 212222410081)

in partial fulfillment for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

FACULTY OF MANAGEMENT SCIENCES

ANNA UNIVERSITY: CHENNAI 600 025

APRIL 2024
 BONAFIDE CERTIFICATE

This is to certify that the summer Internship report entitled “A study on cash management in JK
plastics manufacturing company” submitted by PRATHIKSHA K (Registration Number:
202222410081), Department of Management Studies, Saveetha Engineering College, Chennai for the
award of the degree of Master of Business Administration, is a record of bonafide work carried out
by him under my supervision during the period, 08.01.2024 to 29.03.2024, as per the college code of
academic and research ethics. The contents of this report have not been submitted and will not be
submitted either in part or in full, for the award of any other degree or diploma in this institute or any
other institute or university. The thesis fulfills the requirements and regulations of the University and
in my opinion meets the necessary standards for submission.

Supervisor Head of the Department

Submitted to Project Viva Voice held on………………..

Internal Examiner External Examiner

 Declaration

I here by declare that the summer internship report entitled “A Study on cash management
in jk plastics manufacturing company " submitted by me, for the award of the degree of Master of
Business Administration to Saveetha Engineering College, Chennai is a record of bonafide work
carried out by me under the supervision of Prof. P. Rajkumar. I further declare that the work reported
in this thesis has not been submitted and will not be submitted, either in part or in full, for the award
of any other degree or diploma in this institute or any other institute or university.

Place : Chennai Prathiksha K

Date
 ACKNOWLEDGEMENT

I am gratitude to numerous people who have helped me in completing this project. I

take this privilege to express my sense of gratitude to my beloved parents who have
helped and guided me throughout the project.

I would like to express my deep thanks to ‘Saveetha Engineering College’

management for helping me in the successful completion of my project. Many thanks
also go to our Director Dr. S. Rajesh for his invaluable support

I am grateful to our principal Dr V. Vijaya Chamundeeswari and Dr. P. Rajkumar,

the Head of the Department of Management Studies for providing the required
platform for successful completion of our project.

I am thankful to our project coordinator Dr. M. Deepa, Assistant Professor,

Department of Management Studies, and project guide Dr. P. Rajkumar,
Professor, Department of Management Studies, for being instrumental in making my
project a successful one, his valuable assistance was present in all the steps of my
work.

I am thankful to “JK Plastics Manufacturing Company, Chennai” and all teaching

and non-teaching staff members of the Department of Management Studies for their
constant encouragement.

Prathiksha K
 CONTENTS
Page No.
Abstract i
List of Figures ii
List of Tables iii
Abbreviations, Symbols and Notations

1. INTRODUCTION
1.1 Introduction 1

1.2 Objectives of the study 2

1.3 Statement of the Problem 2

1.4 Significance of the Study 3

1.5 Scope of the study 3

1.6 Company / Organization Profile 4

2. LITERATURE REVIEW
2.1 Review of Literature 5

2.2 Study Gap 11

3. RESEARCH METHODOLOGY
3.1 Nature of Study 12

3.2 Research Design 12

4. DATA ANALYSIS AND INTERPRETATIONS 13

5. FINDING AND CONCLUSIONS

5.1 Finding 35

5.2 Suggestions 36

5.3 Limitation of the study 37

5.4 Conclusion 38

REFERENCES 39
APPENDIX 40
 ABSTRACT

Cash management is vital for both individuals and businesses, ensuring financial stability and
effective resource utilization. This study delves into the cash management practices of JK Plastics, a
manufacturing firm, aiming to understand its operations, sources of cash flow, and areas for
improvement. Analyzing financial data reveals fluctuating ratios and cash flow trends over the years.
Suggestions include investigating factors influencing ratios and evaluating profitability and asset
management efficiency. Despite limitations like focusing solely on cash movements and ignoring
non-cash transactions, the study offers insights applicable to similar industries. Overall, JK Plastics
demonstrates sound financial management, robust liquidity, and promising performance in both
domestic and global markets, positioning itself as a rising entity with innovative strategies and
balanced cash flows.

i
 LIST OF TABLES

Table Title Page No

1 Table 4.1 14
2 Table 4.2 16
3 Table 4.3 18
4 Table 4.4 20
5 Table 4.5 22
6 Table 4.6 24
7 Table 4.7 26
8 Table 4.8 28
9 Table 4.9 30
10 Table 4.10 32
11 Table 4.11 33
12 Table 4.12 34

ii
 LIST OF FIGURES

Table Title Page No

1 Chart 4.1 15
2 Chart 4.2 17
3 Chart 4.3 19
4 Chart 4.4 21
5 Chart 4.5 23
6 Chart 4.6 25
7 Chart 4.7 27
8 Chart 4.8 29
9 Chart 4.9 31

iii
 CHAPETR-1

1.1 INTRODUCTION :

The term cash management refers to the process of collecting and managing cash
flows. Cash management can be important for both individuals and companies. It is a
key component of a company's financial stability in business. Cash is also essential
for people's financial stability while also usually considered as part of a total wealth
portfolio. Individuals and businesses have different options to help them with their
cash management needs, including banks to hold their cash assets. Cash management
solutions are also available for anyone who wants the best return on cash assets or the
most efficient use of cash comprehensively.

 Cash management is the process of managing cash inflows and outflows.

 There are many cash management considerations and solutions available in
the financial marketplace for both individuals and businesses.
 Individuals can use options like banks and financial institutions for their cash
management needs.
 For businesses, the cash flow statement is a central component of cash flow
management.
 The cash flow statement is a central component of corporate cash flow
management.

Corporate cash management involves the use of business managers, corporate

treasurers, and chief financial officers (CFOs). These professionals are mainly
responsible to implement and oversee cash management strategies and stability
analysis. Many companies may outsource part or all of their cash management
responsibilities to different service providers. Regardless, there are several key
metrics that are monitored and analyzed by cash management executives on a daily,
monthly, quarterly, and annual basis.

1
1.2 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES:

 To study the cash management in JK Plastics manufacturing company

SECONDARY OBJECTIVES:

 To study about cash management operations at JK Plastics manufacturing

company.
 To study the sources of Cash Inflow and uses of Cash Outflow in JK Plastics
manufacturing company.
 To show the actual scenario of cash management department on yearly basis.
 To suggest methods for improving cash management in JK Plastics
manufacturing company.

1.3 STATEMENT OF PROBLEM :

 Cash management is something all the companies need to consider.

 There is extra money to earn by managing the liquidity the right way.
 The reason is because the company does not have any employee that is
managing the liquidity at the moment.
 There is a big opportunity to see if the company’s liquidity will be more
efficient through cash management Thinking. Since, I believe there are some
areas that can be improved through cash management thinking.

Causes of Problems with Cash Management:

 Poor understanding of the cash flow cycle.

 Lack of understanding of profit versus cash.
 Lack of cash management skills.
 Bad capital investments.

2
1.4 SIGNIFICANCE OF THE STUDY
 To Study the cash management in a plastic manufacturing company is crucial
due to its significant impact on financial health.
 To study Efficient management can optimize liquidity, reduce costs, and
increase profitability.
 To Understanding the cash flow cycle, differentiating between profit and
cash, improving cash management abilities, and making wise capital
expenditures could be important areas of concentration.
 To study the organization can improve operational efficiency and seize
development possibilities by addressing these aspects.

1.5 SCOPE OF THE STUDY :

 The scope of this study is to provide an insight into concept of cash

management and illustrate it by actually cash management of JK Plastics
manufacturing company.
 The scope of the study covers the effect of cash management strategy on the
liquidity and profitability of firms.
 The scope of this study covers the cash management strategy on the liquidity
and profitability of construction company.
 Cash management is the corporate process of collecting and managing cash,
as well as using it for (short-term) investing.
 It is a key component of ensuring a company’s financial stability and
solvency.

3
1.6 COMPANY PROFILE :

Jk Plastic is a 4 years 8 months old Partnership Firm incorporated on 24-Oct-

2018, having its registered office located at Plot No 29 30, Kurinji Nagar,
Thirumazhisai, Kaval Cherri Road, Chennai, Tamil Nadu.

The Udyam registration number of Jk Plastic is UDYAM-TN-02-0064288.The

major activity of Jk Plastic is Manufacturing, Sub-classified into Manufacture of
rubber and plastics products and is primarily engaged in the Manufacture of molded
industrial accessories of plastics including electrical insulating fitting of plastics.

Jk Plastic is classified as Micro enterprise in the financial year 2020-21. It has its
unit situated at Chennai, Tamil Nadu.

Ensuring a positive customer experience, making available goods and services that
are of top-notch quality is given prime importance.

India’s leading B2B marketplace, Jd Mart ensures engaging in business activities

is a seamless process for small and medium enterprises as well as large businesses. In
a wake to enable these businesses to reach their audience, this portal lets them
showcase their offerings in terms of the products and services through a digital
catalogue. This business has a wide range of product offerings, and the
product/catalogue list includes Plastic etc.

4
 CHAPTER-2

2.1 REVIEW OF LITERATURE :

1. Faque, M. (2021) Cash(liquidity) management is at the heart of a firm’s

financial management. It is a silver lining between the bankruptcy and the success
story of a company. Therefore, this study intends to contribute some insights into
cash management practices and how firms can use them to achieve sound financial
performance. This study provides a comprehensive literature review on existing
theories and cash management practices that are useful in decision making. After the
analysis of the available literature, the study highlights important theories including
trade-off theory (TOT), transaction model, precautionary measures, financial
hierarchy, and cash flow theory. Furthermore, management practices such as
stochastic cash management model, speeding up cash collections, centralization &
decentralization of management, asset portfolio diversification, and cash
disbursement are discussed. The study suggests that a sound financial performance
can be achieved through a hybrid approach and through adaptation and embracing
innovations in cash management systems.

2. Udoh, S. (2022) Financial management is a complex body of knowledge that is

still evolving without any successful template for its practice, especially in private
firms. This paper reviews research on actual financial management in private firms to
see if cash management models critical to working capital management are
incorporated. The approach is to review all the models in extant literature used for
cash management, itself a component of working capital. However, search results
show that only Pugmire (1952) outlines the activities involved in actual financial
management practice for local schools in the United States. He identified the
generalizable constituents of the financial management process, including budgeting,
accounting, auditing, records and reports, and cost analysis. The choice of cash as the
review focus is because it is the essence of financial management in private firms:
determining and sourcing capital as cash and utilizing it by allocation process to
generate more cash and maximize the firm's value to stakeholders.

5
3. Salas-Molina, F., Rodriguez-Aguilar, J. A., Pla-Santamaria, D., & García-
Bernabeu, A.(2021)

Cash management aims to find a balance between what is held in cash and what is
allocated in other investments in exchange for a given return. Dealing with cash
management systems with multiple accounts and different links between them is a
complex task. Current cash management models provide analytic solutions without
exploring the underlying structure of accounts and its main properties. There is a
need for a formal definition of cash management systems. In this work, we introduce
a formal approach to manage cash with multiple accounts based on graph theory. Our
approach allows a formal reasoning on the relation between accounts in cash
management systems. A critical part of this formal reasoning is the characterization
of desirable and non-desirable cash management policies. Novel theoretical results
guide cash managers in the analysis of complex cash management systems.

4. Srinivasan, V., & Kim, Y. H. (1986) Cash flow management has attracted the
increasing attention of both academicians and practitioners in recent time. There is
increasing emphasis on cash management as a vital organizational function and
evidence indicates that the role and responsibilities of cash managers are expanding
beyond conventional boundaries. In an earlier article, Gregory presented an excellent
review of a limited class of cash management models. This paper attempts to review
the rather large body of deterministic cash flow models that were not reviewed by
Gregory. The review places the models in proper perspective by identifying the
underlying decision processes and points out the somewhat narrow focus of these
models.

5. Moraes, M. B. D. C., & Nagano, M. S. (2013). This work aims to apply genetic
algorithms (GA) and particle swarm optimization (PSO) to managing cash balance,
comparing performance results between computational models and the Miller-Orr
model. Thus, the paper proposes the application of computational evolutionary
models to minimize the total cost of cash balance maintenance, obtaining the
parameters for a cash management policy, using assumptions presented in the
literature, considering the cost of maintenance and opportunity for cost of cash. For
such, we developed computational experiments from cash flows simulated to

6
implement the algorithms. For a control purpose, an algorithm has been developed
that uses the Miller-Orr model defining the lower bound parameter, which is not
obtained by the original model.

6. Augustine, N., & Jacob, I. (2017) This study is set to examine cash
management and performance of listed firms in Nigeria. The study used ex post
factor research design, the secondary data gathered were analyzed using descriptive
statistics, correlation matrix, and Pool Ordinary Least Square Regression. In the
return on assets model, the result shows a significant positive relationship between
cash conversion cycle, Cash holding and return on assets of firms while, cash flow
and firm size has a negative relationship with the return on assets. In the model of
Return on Equity, the variables of firm size, firm growth and cash flow indicated a
negative relationship with the variable of firm performance. However, only the
variable of firm size showed a significant negative relationship at 5% level with the
dependent variable.

7. Alvarez, F., & Argente, D. (2022) The incidence of COVID-19 has

systematically decreased households’ use of cash as means of payment as well as the
average size and frequency of cash withdrawals. We argue that the structure of
Baumol–Tobin type inventory theoretical models and their extensions can be used to
separate the confounding factors, such as the desired level of consumption and the
choice of the fraction of consumption paid in cash, from the cash management
behavior, i.e. the size and frequency of cash withdrawals. Using this insight we argue
that the observed cash management is consistent with COVID-19 increasing the fixed
cost of withdrawing cash. We use detailed data on ATM cash disbursements in
Argentina, Chile, and the US to estimate how much the pandemic has changed the
transaction cost of using cash.

8. Bell, P. C., & Parker, D. C. (1985) The operational research management

science journals contain an extensive literature that addresses the corporate cash
management problem; yet few, if any, companies make use of any of this published
work in their daily cash-management decision making. A review of the literature
suggests that the reason for this lack of applications may well be poor problem
formulation—the problems that are solved in the literature as ‘cash management’

7
problems evolve from a ‘hard systems’ view of real-world cash management. We
therefore decided to approach the cash management problem as an experiment in the
use of a novel visual interactive problem solving (VIPS) methodology. The aim of
the experiment was to develop an implementable, visual interactive model to support
daily cash management decision making.

9. Mouline, B. (2021) There has been a growing interest in the issue of treasury and
cash holdings as its purpose has overgone several important changes within
companies over time. It has evolved from a simple function of comparing accounting
and banking information to a function that is at the heart of the strategic sphere of the
company. However, in spite of this growing interest, the phenomenon of holding
cash has been the subject of rare research, yet to satisfy all the theoretical doubts and
curiosity related to this subject. Based on theories explaining the liquidity-
accumulating behavior of firms, this research reviews the role of different financial
theories such as, trade off theory, pecking order theory and agency theory in the
decision making of corporate cash management practices.

10. Luo, M. (2011) This paper tests whether financial constraints play a disciplinary
role in cash dissipation in the presence of agency problems. We hypothesize that
when firms have difficulty raising external funds, empire-building managers of cash-
rich firms will be less likely to spend cash on negative NPV projects as compared to
unconstrained managers. Empirically, we examine firm performance after cash
dissipation and associate it with the degree of financial constraints. We find that cash
spending by managers in financially constrained firms is associated with higher
future profitability and stock returns compared to cash spending by managers in
unconstrained firms. Further tests reveal that the positive effect of financial
constraints on firm performance is not driven by differences in corporate governance

11. San-Jose, L., Iturralde, T., & Maseda, A. (2008). Using a database of
Spanish companies, this paper analyses the treasury management responsibilities
assumed by financial departments and develops a model to confirm those
responsibilities. We have developed an explanatory model that brings together the
main functions of the treasurer by means of two concepts: (i) basic cash
management, which groups the management of collections and payments, liquidity
monitoring in banking operations, short-term treasury forecasts, the management of
8
banking balances on value date and negotiation with financial organizations; and (ii)
advanced cash management, which includes the management of the financing of
treasury deficits, the management of the positioning of treasury peaks and the
management of financial risks. In this way, the definition of cash management is
empirically corroborated.

12. Soenen, L. A. (1986) Little information is available on the current practices of

cash and foreign-exchange management by companies—especially outside the
United States. The purpose of this survey was to investigate responsibilities and
practices of international cash management. Although the survey had a much broader
scope, this article addresses six important issues with regard to cash and foreign-
exchange management: policy and responsibility, centralization versus
decentralization, cash-flow planning and foreign-exchange forecasting, banking
relationships and cash management services, hedging translation and transaction
exposures, conflicts with other departments. Although the size of the sample is too
small to permit statistically significant conclusions, some interesting findings can be
drawn from this study.

13. Hinderer, K., & Waldmann, K. H. (2001) We study a cash management

system, in which the distribution of the cash flow Xn in period n=1,2,… depends on
the state In of a randomly varying environment. Sufficient conditions are found for
the optimality of a simple transfer rule, generalizing and partially improving the well-
known results for the classical case with i.i.d. cash flows. These and further structural
results obtained for the cash balance are shown to reduce the computational effort
drastically in determining an optimal transfer rule. In addition, structural and
computational results w.r.t. the environment are derived. Finally, some examples are
given for economic and statistical environments and their interactions with the cash
flow process.

14. de Mingo-López, D. V., Matallín-Sáez, J. C., & Soler-Domínguez, A. (2020)

This study expands the extant literature analyzing cash management in the mutual
fund industry. More specifically, the analyses focus on index fund portfolios that
replicate a specific benchmark, given that their performance differences should not
be related to the market evolution but to the factors derived from the fund
management and other exogenous issues. These findings are of interest to managers
9
and investors willing to improve their risk-adjusted returns while investing as
diversified as a stock market index.

15. PAUDEL, S. (2018) Firstly, collected data are tabulated under various heading
and then tabulated data are analyzed using various financial and statistical tools and
compared these values with the help of different figure. The sales revenue
achievement of NTC is highly satisfactory, which is itself a good signal for the
company, which shows that the Nepal Telecom has clear guidelines of selling and
revenue collection. The relationship between budgeted and actual sales is positive.
Therefore, it can be concluded that the actual sales revenue in future will be
increased. Nepal Telecom prepares revenue reports monthly which shows the
revenue planning is quiet effective. Few investments are made into debenture
purchase and hydro-electricity business to diversify other investments by NTC.

16. Davidson (1992) defined cash management as a term which refers to the
collection concentration and disbursement of cash. It encompasses a company’s level
of liquidity, management of cash balance and short term strategies. After the analysis
of the available literature, the study highlights important theories including trade-off
theory (TOT), transaction model, precautionary measures, financial hierarchy, and
cash flow theory.

17. Ross (2000) say’s that, it is only natural that major business expenses are
incurred in the production of goods or the provision of services. In most cases, a
business incurs such an expenses before the corresponding payment is received from
customers. In addition, employee salaries and other expenses drain considerable
funds from most business. There is a need for a formal definition of cash
management systems. In this work, we introduce a formal approach to manage cash
with multiple accounts based on graph theory. Our approach allows a formal
reasoning on the relation between accounts in cash management systems.

18. Lyroudi & Lazaridis,2000 use food industry Greek to examined the cash
conversion cycle (CCC) as a liquidity indicator of the firms and tries to determine its
relationship with the current and the quick ratios, with its component variables, and
investigates the implications of the CCC in terms of profitability, in debtless and firm
size. The aim of the experiment was to develop an implementable, visual interactive

10
model to support daily cash management decision making. Working closely with a
corporate cash manager, we first developed a visual model of his daily decision
problem and then agreed on the feasible options and the interactive requirements.

2.2RESEARCH GAP :

The specific opportunities and problems connected to sustainability within the plastic
manufacturing industry are not well addressed in the body of research on cash
management methods in manufacturing. Research may be conducted to determine
how cash flow and liquidity management are affected in plastic manufacturing
companies by implementing sustainable practices, such as cutting waste, maximizing
energy use, and using recycled materials. For businesses looking to strike a balance
between environmental responsibility and financial performance, knowing the
financial implications of sustainability programs could be very helpful. Furthermore,
examining the differences between sustainable cash management techniques in the
plastics manufacturing sector and other manufacturing domains may provide industry
experts and regulators with useful benchmarks and optimal app

11
 CHAPTER -3
RESEARCH METHODOLOGY

3.1 NATURE OF STUDY :

A Study of Financial Performance involves analyzing and evaluating the financial
health and efficiency of a particular entity, such as a company, organization, or even
a government agency. This study often includes examining financial ratios are
current ratio, quick ratio, cash ratio, Fixed turnover ratio, working capital turnover
ratio, Net profit ratio, Total assets turnover ratio, capital turnover ratio and overall
financial well-being. The goal is to gain insights into how effectively the entity is
managing its financial resources and making informed decisions based on the
findings.

3.2 RESEARCH DESIGN:

A research design is simply a structural framework of various research methods
as well as techniques that are utilised by a researcher. The research design used for
this ratio analysis. The study is based on the secondary data .

TOOLS FOR DATA COLLECTION

The report will be prepared mainly using secondary data.

SECONDARY DATA
The secondary data are those which have already collected and stored. Secondary
data can be easily acquired from the records, annual reports of the company etc.

It will save the time, money and efforts collect the data .

STATISTICAL TOOLS
The tools used for analyzing the data are

 Percentage Analysis

 Ratio Analysis

12
 CHAPTER -4
DATA ANALYSIS AND INTERPRETATIONS

4.1 LIQUIDITY RATIO:

Liquidity ratios are financial ratios that measure a company's ability to meet its
short-term financial obligations. The liquid ratio, also known as the acid-test ratio, is
a type of liquidity ratio that measures a company's ability to pay off its short-term
obligations using its most liquid assets, such as cash, marketable securities, and
accounts receivable. It excludes inventory from current assets because it is less liquid
than other assets.

The formula for the liquid ratio is:

Liquid Ratio = (Current Assets - Inventory) / Current Liabilities

A higher liquid ratio indicates better liquidity and a greater ability to pay off short-
term debts. A ratio of 1:1 is considered a good indication of a company's ability to
meet its current liabilities.

a. Current ratio

b. Quick ratio

c. Cash ratio

13
4.2 CURRENT RATIO
The current ratio is a financial ratio that measures a company's ability to pay off
its short-term obligations using its current assets. It is one of the most common
liquidity ratios used to assess a company's short-term financial health.

A current ratio of 1:1 indicates that a company's current assets are equal to its
current liabilities. This means that the company is able to pay off its short-term
obligations using its current assets.

FORMULA:

Current ratio is calculated by dividing current assets by current liabilities.

TABLE 4.1 CURRENT RATIO

YEAR CURREN CURRENT CURRENT

RATIO
ASSETS LIABILITY
(RS IN CR) (RS IN CR)

2018 2,94,42,53,603 1,64,50,99,483 1.79

2019 3,42,67,87,115 1,71,26,37,960 2.00

2020 3,62,50,25,589 1,82,11,51,025 1.99

2021 3,41,27,24,290 2,08,51,13,785 1.64

2022 3,31,17,56,367 1,44,44,54,421 2.29

14
CHART 4.1 CURRENT RATIOS

2.5

1.5
Current Ratio

0.5

0
2018 2019 2020 2021 2022

Years

INTERPRETATION:
In the year of 2018 current ratio would be 1.79% and later it has been increased from
2% in 2019 and 1.99% in 2020, in 2021 decreased to 1.64% and 2022 it has been
increased to 2.92%.

15
4.3 QUICK RATIO

The quick ratio, also known as the acid-test ratio, is a financial ratio that measures a company's
ability to pay off its short-term obligations using its most liquid assets, such as cash, marketable
securities, and accounts receivable. It is a more conservative measure of liquidity than the current
ratio because it excludes inventory from current assets.

FORMULA:

The formula for the quick ratio is:

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

TABLE 4.2 QUICK RATIO

LIQUID
YEAR CURRENT CURRENT RATIO
ASSETS
LIABILITY
(RS IN CR) (RS IN CR)

2018 3,407,520,819 2,085,113,785 1.63

2019 2,929818,057 1,64,099,483 1.78

2020 3,409,413,144 1,712,637,960 1.99

2021 3,607,651,096 1,821,151,025 1.98

2022 3,288,599,211 1,444,454,421 2.27

16
CHART 4.2 QUICK RATIO

2.5

1.5
Quick Ratio

0.5

0
2018 2019 2020 2021 2022

Years

INTERPRETATION:

In the year of 2018 Quick ratio would be 1.63% and later it has been increased from 1.78% in 2019
and 1.99% in 2020, and 2021 decreased to 1.98% and 2022 it has been decreased to 2.27%.

17
4.4 CASH RATIO

The cash ratio is calculated by dividing a company's cash and cash equivalents by its current
liabilities. Cash equivalents are highly liquid investments that can be quickly converted to cash,
suchas short-term government bonds, money market funds, and highly rated commercial paper.

The cash ratio is calculated by dividing a company's total cash and cash equivalents by its
current liabilities.

FORMULA

Cash Ratio = (Cash and Cash Equivalents) / Current Liabilities

TABLE 4.3 CASH RATIO

YEAR CASH AND CURRENT

CASH RATIO
CASH LIABILITY
EQUIVALENT (RS IN CR)
(RS IN CR)

2018 39,17,55,935 2,085,113,785 0.18

2019 29,32,09,145 1,64,099,483 0.17

2020 27,79,45,862 1,712,637,960 0.16

2021 29,41,55,983 1,821,151,025 0.16

2022 18,76,71,480 1,444,454,421 0.13

18
CHART 4.3 CASH RATIO

0.2

0.18

0.16
CASH RATIO

0.14

0.12

0.1

0.08

0.06

0.04

0.02
2018 2019 2020 2021 2022
0
YEARS

INTERPRETATION:
In the year of 2018 cash ratio would be 0.18% and later it has been decreased from 0.17% in 2019
and 0.16% in 2020, and in 2021 decreased to 0.16% and 2022 it has been decreased to 0.12% .

19
4.5 FIXED ASSETS TURNOVER RATIO

The fixed asset turnover ratio is a financial ratio that measures how efficiently a
company uses its fixed assets to generate sales revenue. Fixed assets include property,
plant, and equipment (PP&E) that a company owns and uses to generate revenue over a
period of time.

FORMULA

Fixed Assets Turnover ratio is calculated by dividing cost of goods sold by Net Fixed
Assets.

TABLE 4.4 FIXED ASSETS TURNOVER RATIO

YEAR COST OF NET FIXED FIXED ASSETS

GOODS SOLD ASSETS TURN OVER

(RS IN CR) RATIO

(RS IN CR)

2018 2,500,188,000 560,268,196 4.46

2019 3,386,516,000 485,689,896 6.97

2020 2,665,919,000 42,91,13,720 6.21

2021 1,654,226,000 37,02,30,024 4.46

2022 1,002,600,000 31,68,17,256 3.16

20
 CHART 4.4 FIXED ASSETS TURNOVER RATIO

7
Fixed Assets Turnover Ratio

0
2018 2019 2020 2021 2022
Years

INTERPRETATION:

In the year of 2018 Fixed Assets Turnover ratio would be 4.46% and later it has been
increased to 6.97% in2019 and decreased to 6.21% in 2020, in 2021 decreased to 6.46%
and 2021 it has 2022 decreased to 3.16%.

21
4.6 WORKING CAPITAL TURNOVER RATIO

The working capital turnover ratio is a financial ratio that measures how efficiently a
company uses its working capital to generate revenue. Working capital is the difference
between a company's current assets and its current liabilities, and it represents the funds
that a company has available for its day-to-day operations.

FORMULA

Working capital Turnover ratio is calculated by dividing total revenue by working

capital.

TABLE 4.5 WORKING CAPITAL TURNOVER RATIO

YEAR TOTAL WORKING WORKING CAPITAL

REVENUE CAPITAL TURNOVER RATIO

(RS IN CR) (RS IN CR)

2018 2,500,188,000 1,327,610,505 1.88

2019 3,386,516,000 1,299,154,120 2.6

2020 2,665,919,000 1,714,149,155 1.56

2021 1,654,226,000 3,625,025,589 0.46

2022 1,002,600,000 1,867,301,946 0.54

22
 CHART 4.5 WORKING CAPITAL TURNOVER RATIO

3
WORKING CAPITAL TURNOVER RATIO

2.5

1.5

1
2018 2019 2020 2021 2022

YEARS

0.5

INTERPRETATION:
0
In the year of 2018 working capital Turnover ratio would be 1.88% and later it has been
increasedfrom 2.6% in2019 and decreased to 1.56% in 2020, in 2021 decreased to 0.46% and
2022 it has been increased to 0.54%.

23
4.7 NET PROFIT RATIO

Net Profit Ratio, also known as net profit margin, is a financial ratio that measures the
profitability of a company by comparing its net profit to its total revenue. It is expressed as a
percentage and is calculated by dividing the net profit of a company by its total revenue and then
multiplying the result by 100.

FORMULA

Net Profit Ratio = (Net Profit / Total Revenue) x 100%

TABLE 4.6 NET PROFIT RATIO

YEAR NET PROFIT NET SALES NET PROFIT RATIO

(RS IN CR) (RS IN CR)

2018 38,882,485 2,500,188,000 1.55

2019 55,659,788 3,386,516,000 1.64

2020 10,348,244 2,665,919,000 0.39

2021 10,348,244 1,654,226,000 0.63

2022 (39,260,966) 1,002,600,000 -3.9

24
CHART 4.6 NET PROFIT RATIO

INTERPRETATION:

In the year of 2018 net profit ratio would be 1.55% and later it has been increased from 1.64%
in2019 and decreased 0.39% in 2020, in 2021 increased to 0.63% and 2022 it has been
decreased to -3.9%.

25
4.8 TOTAL ASSETS TURNOVER RATIO

Total Assets Turnover Ratio is a financial ratio that measures a company's efficiency in using its
assets to generate revenue. The ratio indicates how much revenue a company can generate for each
dollar of assets it has. It is calculated by dividing a company's total revenue by its average total assets.

FORMULA

Total Assets Turnover Ratio = Sales / Total Assets

TABLE 4.7 TOTAL ASSETS TURNOVER RATIO

YEAR SALES TOTAL ASSETS TOTAL ASSETS

(RS IN CR) (RS IN CR) TURNOVER RATIO

2018 2,500,188,000 4,431,689,821 0.56

2019 3,386,516,000 3,889,610,347 0.87

2020 2,665,919,000 4,249,199,225 0.63

2021 1,654,226,000 4,332,676,374 0.38

2022 1,002,600,000 3,959,941,957 0.25

26
 CHART 4.7 TOTAL ASSET TURNOVER RATIO

0.9
TOTAL ASSET TURNOVER RATIO

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1
2018 2019 2020 2021 2022
0
YEARS

INTERPRETATION:

In the year of 2018 total asset turnover ratio would be 0.56% and later it has been increased to 0.87% in
2019 and decreased to 0.63% in 2020, in 2021 decreased to 0.38% and 2022 it has been 1increased to
0.25%.

27
4.9 CAPITAL TURNOVER RATIO

Capital Turnover Ratio is a financial ratio that measures a company's efficiency in using its capital
to generate revenue. It is a measure of how much revenue a company can generate for each dollar of
capital employed. Capital employed refers to the total amount of long-term capital invested in the
business, including both debt and equity.

FORMULA:

Capital Turnover Ratio = sales/capital employed.

TABLE 4.8 CAPITAL TURNOVER RATIO

YEAR SALES CAPITAL CAPITAL TURNOVER

(RS IN CR) EMPLOYED RATIO
(RS IN CR)

2018 2,500,188,000 2,346,576,036 1.06

2019 3,386,516,000 2,244,510,864 1.51

2020 2,665,919,000 2,536,561,265 1.05

2021 1,654,226,000 2,511,525,349 0.66

2022 1,002,600,000 2,515,487,536 0.40

28
CHART 4.8 CAPITAL TURNOVER RATIO

1.6

1.4
CAPITAL TURNOVER RATIO

1.2

0.8

0.6 2018 2019 2020 2021 2022

YEARS
0.4

0.2

INTERPRETATION:
0

In the year of 2018 Capital turnover ratio would be 1.06% and later it has been increased to 1.51%
in 2019 and decreased to 1.05% in 2020, in 2021 decreased to 0.38% and 2022 it has been decreased

to 0.40%.

29
4.10 RESERVES & SURPLUS TO CAPITAL RATIO

Reserves and Surplus to Capital Ratio is a financial ratio that measures the proportion of a company's
profits that have been retained in the business as reserves and surplus compared to the amount of
capital invested in the business.

FORMULA:

Reserves and Surplus to Capital Ratio = (Reserves and Surplus / Capital) x 100%

TABLE 4.9 RESERVES & SURPLUS TO CAPITAL RATIO

YEAR SALES CAPITAL RESERVES & SURPLUS

(RS IN CR) EMPLOYED TO CAPITAL RATIO
(RS IN CR)

2018 2,500,188,000 2,346,576,036 1.06

2019 3,386,516,000 2,244,510,864 1.51

2020 2,665,919,000 2,536,561,265 1.05

2021 1,654,226,000 2,511,525,349 0.66

2022 1,002,600,000 2,515,487,536 0.40

30
CHART 3.9 RESERVES & SURPLUS TO CAPITAL RATIO

1.6
RESERVE & SYRPLUS TO CAPITAL RATIO

1.4

1.2

0.8
2018 2019 2020 2021 2022

YEARS
0.6

INTERPRETATION:
0.4

In the year of 2018 Reserves & Surplus to Capital Ratio would be 0.12% and later it has been
0.2 from 0.10% in 2019 and same in 2020, in 2021 decreased to 0.05% and 2022 it has been
increased
decreased to -0.04%.
0

31
 Table: 4.10 Cash flow statement for the year ended 31st march 2020

Particulars 31-March- 2020 (RS IN CR)

Cash flow from Operating Activities:
103.48
Net Profit/ (Loss) before Taxation
Adjustments:
744.24
Depreciation & Amortization Expenses
(161.65)
Interest Income
407.65
Interest Expenses
227.25
Loss on sale of Asset
(215.00)
Profit on sale of Asset
(616.00)
Dividend Paid
Cash Flow Before Working capital Changes 477.87
(Increase) / Decrease in Current Asset (1,820.28)
Increase / (Decrease) in Current Liabilities 1,085.13
Less : Tax Paid / Provision 439.54
Net Cash Flow From Operating Activities 6,96.82
Cash Flow from Investing Activities
161.65
Interested Received
(407.65)
Interest Paid
(162.12)
Purchase of Fixed Assets
657.51
Sale of Fixed Assets
1,16.75
Investment made/ (Sold) during the year
675.53
(Increase) / Decrease in non-Current Asset
521.70
Increase / (Decrease) in Non-Current Liabilities
Net Cash Flow used in Investing Activities 6,789.27
Cash Flow from financing Activities
1,800.00
Proceeds on Issue of Preference Shares
Net Cash flow used in financing Activities
1,800.00
Net Increase / (Decrease) in cash and cash equivalents
2,779.45
Opening Balance
1,621.01
Net Cash Flow during the year
Closing Balance 2,941.55

32
 Table: 4.11 Cash flow statement for the year ended 31st march 2021

Particulars 31-March- 2021 (RS IN CR)

Cash flow from Operating Activities:
392.60
Net Profit/ (Loss) before Taxation
Adjustments:
724.37
Depreciation & Amortization Expenses
(135.88)
Interest Income
523.96
Interest Expenses
2.49
Loss on sale of Asset
7.76
Profit on sale of Asset
-
Dividend Paid
Cash Flow Before Working capital Changes 714.57
(Increase) / Decrease in Current Asset 2,067.84
Increase / (Decrease) in Current Liabilities 3,766.96
Less : Tax Paid / Provision -
Net Cash Flow From Operating Activities 984.54
Cash Flow from Investing Activities
135.88
Interested Received
(523.96)
Interest Paid
(317.87)
Purchase of Fixed Assets
126.90
Sale of Fixed Assets
20.32
Investment made/ (Sold) during the year
46.20
(Increase) / Decrease in non-Current Asset
432.23
Increase / (Decrease) in Non-Current Liabilities
Net Cash Flow used in Investing Activities 80.30
Cash Flow from financing Activities
-
Proceeds on Issue of Preference Shares
Net Cash flow used in financing Activities
-
Net Increase / (Decrease) in cash and cash equivalents
2,941.55
Opening Balance
1,064.84
Net Cash Flow during the year
Closing Balance 1,876.71

33
 Table: 4.12 Cash flow statement for the year ended 31st march 2022

Particulars 31-March- 2022 (RS IN CR)

Cash flow from Operating Activities:
464.45
Net Profit/ (Loss) before Taxation
Adjustments:
696.22
Depreciation & Amortization Expenses
86.67
Interest Income
533.26
Interest Expenses
12.16
Loss on sale of Asset
34.14
Profit on sale of Asset
-
Dividend Paid
Cash Flow Before Working capital Changes 656.10
(Increase) / Decrease in Current Asset 278.66
Increase / (Decrease) in Current Liabilities 3,044.35
Less : Tax Paid / Provision -
Net Cash Flow From Operating Activities 2,666.90
Cash Flow from Investing Activities
86.67
Interested Received
533.26
Interest Paid
138.04
Purchase of Fixed Assets
190.99
Sale of Fixed Assets
16.56
Investment made/ (Sold) during the year
198.11
(Increase) / Decrease in non-Current Asset
3,152.83
Increase / (Decrease) in Non-Current Liabilities
Net Cash Flow used in Investing Activities 2,577.63
Cash Flow from financing Activities
-
Proceeds on Issue of Preference Shares
Net Cash flow used in financing Activities
-
Net Increase / (Decrease) in cash and cash equivalents
1,876.71
Opening Balance
89.27
Net Cash Flow during the year
Closing Balance 1,787.44

34
 CHAPTER-5
5.1 FINDINGS

 Based on the given data, we can see that the company's current ratio has been fluctuating over
the years, with an increase from 2018 to 2019 and then a decrease in 2021 before a significant
increase in 2022. The same trend can be observed in the quick ratio and cash ratio.

 In terms of asset turnover ratios, the Fixed Assets Turnover Ratio has been fluctuating but
generally trending downwards since 2019. The working capital turnover ratio has increased
steadily from 2018 to 2019 before decreasing in 2020 and 2021 before a slight increase in 2022.

 The proprietary ratio has been generally increasing over the years, indicating that the company
is relying more on equity financing rather than debt. However, the net profit ratio has been
fluctuating over the years, with a significant decrease in 2020 and 2022.

 The capital turnover ratio has been fluctuating over the years, with a decrease in 2021 and 2022.
Finally, the Return on Total Shareholder's Fund and Reserves & Surplus to Capital Ratio have
both been decreasing over the years.

 Overall, the company's financial performance has been fluctuating over the years, with some
positive trends in terms of asset turnover and proprietary ratio but negative trends in terms of
net profit ratio.

 The overall cash flow statement of the company it increases 2% by year by year.

 The net cash flow the ups and down of the company in cash flow statement

35
5.2 SUGGESTIONS

 Analyze the impact of changes in the current ratio on the company's financial performance.
Determine the reasons behind the fluctuations in the current ratio and evaluate how it affected
the company's liquidity.

 Investigate the reasons behind the decline in the net profit ratio in 2022. Identify the factors
that contributed to the decrease and evaluate the impact of these factors on the company's
overall profitability.

 Examine the changes in the fixed assets turnover ratio and evaluate how it impacted the
company's asset management efficiency. Determine the reasons behind the fluctuations in this
ratio and assess whether the company is efficiently utilizing its fixed assets.

 Evaluate the impact of working capital turnover ratio changes on the company's financial
performance. Determine the reasons behind the fluctuations in this ratio and assess whether the
company's working capital management practices are effective.

 We can conclude that the company’s profitability has increased over the years. The Ratios of
the company are satisfactory and the company enjoys a balance of liquidity and profitability.
Based on the analysis, we can further conclude that the overall management and overall
performance is sound.

 The company’s overall position is at a good position. Particularly the current year’s position is
well due to raise in the profit level from the last year position. It is better for the organization
to diversify the funds to different sectors in the present market scenario.

36
5.3 LIMITATION OF STUDY

 The study covers or concentrate on the information concerning the movement of cash or cash
flows in an industry’s reference to JK Plastics manufacturing company.
 The main focus of the study is proper management of cash inflow and outflow over a
particular period of time.
 The study can be generalized to other related companies for investment in their cash flow
management
 Cash management ignores the accrual concept of accounting.

 It rearranges the current information provided in the profit and loss statement and the balance
sheet.It is not a substitute for a profit and loss statement.
 It ignores non-cash transactions.

37
5.4 CONCLUSION

The company is performing exceptionally well due to the up wising in the global market followed
by the domestic market. It is an upcoming one with good and innovative ideas and believed in
improving all the areas of its operations. The company has a good liquidity position and does not
delay its commitment in cash of both its creditors and debtors. The company being mostly dependent
on the working capital facilities, it is maintaining very good relationship with their banks and their
working capital management is well balanced. The cash flow of the company was good and well
balanced.

38
 BIBLIOGRAPHY

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6. Augustine, N., & Jacob, I. (2017). Cash management and performance of listed firms in
Nigeria. Journal of Economics, Management and Trade, 18(1), 1-13.
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Macroeconomics, 22(1), 89-129.
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10. Luo, M. (2011). A bright side of financial constraints in cash management. Journal of Corporate
Finance, 17(5), 1430-1444.

11. San-Jose, L., Iturralde, T., & Maseda, A. (2008). Treasury management versus cash
management. Available at SSRN 1088015.
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549-565.

15. PAUDEL, S. (2018). REVENUE PLANNING AND CASH MANAGEMENT (Doctoral dissertation,
Tribhuvan University).

39
 ANNEXURE:
BALANCE SHEET FOR THE YEAR 2018 - 2022

PARTICULARS AS ON AS ON AS ON AS ON AS ON
31.3.2018 31.3.2019 31.3.2020 31.3.2021 31.3.2022

I. EQUITIES AND
LIABILITIES
1)SHAREHOLDER
'S FUNDS
a) Share Capital 1,529,618,000 1,529,600,000 1,655,934,000 1,673,934,000 1,673,934,000

b) Reserves and 180,424,388 158,748,302 169,620,833 89,146,759 64,836,224

Surplus
2) NON-CURRENT
LIABILITIES
a) Long Term 365,100,079 353,078,302 282,029,759 297,443,409 428,758,149
Borrowings
b) Deferred Tax 63,079,894 52,270,943 43,046,702 28,314,187 13,363,757
Liabilities [Net]
c) Other Long Term 208,353,673 150,813,316 385,929,972 422,686,994 334,594,407
Liabilities
3) CURRENT
LIABILITIES
a) Short Term 21,890,603 48,820,029 50,813,625,79 61,139,425 70,332,065
Borrowings 9

b) Trade Payables 825,829,235 733,949,976 799,335,487 608,524,044 638,604,278

c) Other Current 1,048,495,107 649,771,940 642,435,041 724,562,044 630,525,349

Liabilities
d) Short Term 188,829,844 212,557,539 220,053,807 426,924,854 104,992,729
Provisions
TOTAL EQUITY 4,431,689,821 3,889,610,347 4,249,199,225 4,332,676,374 3,959,941,957
& LIABILITIES

40
II. ASSETS
1) NON-CURRENT
ASSETS
a) Fixed Asset
 Tangible 560,268,196 485,689,896 417,927,130 361,280,752 311,305,302
Asset
 Intangible - - 11,186,590 8,949,272 6,111,954
Assets.
b) Non-Current 26,342,042 26,334,042 41,263,382 52,939,087 50,907,044
Investments
c) Other Non-Current 432,355,295 433,324,806 352,035,009 284,481,674 279,861,290
Assets
2) CURRENT
ASSETS
a) Inventories 5,203,471 14,435,546 17,373,971 17,374,493 23,157,156
b) Trade Receivables 886,350,660 908,647,436 870,772,901 687,253,786 573,839,624
c) Cash And Cash 391,755,935 293,209,145 277,945,862 294,155,983 187,671,480
Equivalents
d) Short Term Loans 558,556,090 316,692,060 304,293,343 252,585,860 251,355,569
And Advances
e) Other Current 1,570,858,134 1,411,269,416 1,956,401,038 2,373,655,467 2,275,732,539
Assets
TOTAL ASSETS 4,431,689,821 3,889,610,347 4,249,199,225 4,332,676,374 3,959,941,957

41
 STATEMENT OF PROFIT AND LOSS ACCOUNT IN JK PLASTIC
MANUFACTURING COMPANY

PARTICULAR 2020 2021 2022

16,542.26 10,026.00 8,819.19

I. Revenue From Operations

II. Other Income 390.53 177.46 216.05

Total Revenue 16,932.79 10,203.45 9,035.24

( I + II )
III. a) Project Expenses
 Consumption of Material, erection
and engineering expenses 12,914.50 7,016.35 6,457.85
 Change in inventories of work in
progress and finished goods. 13.25 14.63 62.89

b) Employee benefit expenses 2,154.96 1,854.90 1,356.81

c) Financial Costs
522.53 705.36 689.47
d) Depreciation and Amortization 744.26 724.38 696.22
expenses
16,829.31 10,596.06 9,499.69
Total Expenses
IV. Profit / (loss) before exceptional items 103.48 392.61 464.45
and extraordinary items and tax

V. Exceptional Items - - -

VI. Tax Expense:

1) Current Tax 136.34 - -
2) Deferred Tax 147.32 149.50 216.72
IX. Profit (Loss) For the Period From 114.45 243.11 247.72
continuing operations

X. Profit (Loss) For the Period From - - -

discontinued operations

XI. Profit (Loss) For the Period 114.45 243.11 247.72

XII. Earning Per Equity Share

1) Basic 0.09 0.18 0.19
2) Diluted 0.09 0.18 0.19

42
43