Case Stud v

? v /lc sIn da e

? tttlia ..,

1 (1 n 0

Impact of \k orking Capita'

Management on the Profitabili
DSCE, Bangalore (Karn.

T ' -,

Trivedi SaN i i

savitatrivedi@yahou.cu.iu

A bstract

Finance is regarded as the lifeblood of any • Working capital management is that the company should business organization. The Financial always he in a position to meet its current obligations management deals vv hich should be properly be supported by the current asset
with the process of procuring of financial resources and

reduce the locking up of funds in working capital and can improve the return on capital employed in the business;

its judicious utilization with a view to maximizing the Shareholders wealth. Efficient management of every business enterprise is largely dependent on the efficient
m anagem ent m anagem ent of its finance. is Financial

available with the firm. But maintaining excess funds in \\orking capital means locking of funds without return;
i, niana, c the firm's current assets in such a way that the

managerial activity which is concerned with planning and controlling of the firm's .financial resources. Most of the businesses fail as they are unable to meet their w orking capital requirem ents. If the firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent.
Keywords: Working capital, Concept, Ratio analysis.

Introduction
In accounting "W orking capital is the difference between the inflow and out flow of funds." It other words it is the net cash inflow. It can be defined as excess of current assets over current liabilities and provision. It is net current asset or net working capital. The Concepts of Working Capital: There are two concepts of working capital-Gross and Net. The gross w orking capital is the investments in the current assets. The Net Working Capital (NWC) is the difference between the current assets and the current liabilities. The NWC is a yardstick in comparing the liquidity position of a business concern over a time. So, this is quite useful for internal control. Objective of the Working Capital Management: The basic ihjectives of the working capital management are as follows: To optimize the investment in current asset and to reduce the level of current liabilities so that the company can

marginal return on investment in these assets is not less than the cost of capital employed to finance the current assets. Working Capital Management - What for? Management of working capital is an extremely important area of financial management as current assets represent more than half of the total assets of a business. Fixed assets though essential for a business organization, do not by itself produce revenue or income. Fixed assets act with current assets to generate revenue or income. Therefore, working capital is necessary for utilizing the productive capacity of fixed capital. For shortage of working capital, the enterprise would suffer reduction in earnings because productive capacity remains unutilized. Excess working capital leads to extra cost for want of productive capacity. Thus, the amount of working capital in every enterprise whether manufacturing or non-manufacturing, should be neither more nor less than what is actually required. Like human blood, the proper circulation of fug (working/circulating capital) is utmost necessary to conti business. If the circulation of working capital becomes wC, the businesses can hardly prosper. An enterprise shoo maintain optimum amount of working capital so as to ca on the productive and distributive activities smoothly. Whi the determination of optimum level of working capir., involves fundamental decisions to an organization's liquidity w hich in turn are influenced by a tradeoff betw een profitability and liquidity. Sagnar James' in his article "cut cost using working capital management" wrote that managing working capital involves organizing your company's shortterm resources to sustain ongoing activities, mobilize funds

and optim liquidity. Banos Banos-Caballero ize et a16 examined that how the determinants of cash conversion cycle (CCC) play a important role on utilization of working capital. Bauer, Dennis' believes that organizations can levera' innovative methods to utilize working capital while balanci the needs of suppliers, procurem finance, ent, AP a treasury.

Methodology
Data used for analysis have been take balance sheet and P/L statement of the comp, ? ,

2824.ldr'ances In 11anagenictzl received immediately and therefore no receivables arc calculations have been carried out through Microsoft Excel _ '007 worksheet.32%. then went up again in 2009. therefore consider-C osts. work-in-process and finish goods. Motive) (Speculative Inventories represent investment of a firms funds and that is why management of inventory is necessary for the maximization of the value of the firm The firm should . 2294. Evaluation of Inventory Management Performance: Ratio analysis has been used for making evaluation of Inventory management performance. T here are at least three m otives for holding inventories. then increased in 2009 by 36. The company took an average of 51 days to convert the inventory to sales in 2005 and in 2006 and _ '007. The data from public limited company are analyzed and presented in the form of tables and graphs. Interpretation (Graph 2): The chart indicates that the current assets are fluctuating i.19 million. it increased slightly to 53 days and it reduced to 46 days in the year 2009.75%. then increased by 35.In 2008 in went down to Rs. As the raw material used in the company is pig iron. 2377.e. Management of Receivables W hen firm sell goods for cash. Interpretation (Graph 1): The net working capital showed a upward trend from 2005 to 2007 and then decreased in 2008. proper planning and handling is required purpose of achieving the right quality of output. in 2005 it was 0. • To facilitate sm ooth production and sales operation (Transaction motive) • To guard against the risk of unpredictable changes in usage rate and delivery time (Precautionary Motive) • To take advantage of price fluctuations.81%. for the Interpretation (Graph 4 a and 4 b): The chart shows that the inventory turnover was 7.91 million in 2007.84 %.5 and 8 in 2008 and 2009.56 million in '005 and then increased to Rs. The m anufacturing companies hold inventories in the form of raw material. 3040.2 in the year 2005. went slightly down to 6.9 and in 2006 and 2007 and then increased to 7. It was Rs. 4 9 ) of Management of Inventory Inventory constitute major portion of current asset of public lim ited com panies in India.94 million and in 2009 in went up to Rs.But in 2008 it showed a negative growth -6. paym ents arc . Return and Risk Factors in establishing its inventory policy.

8%. M anagem of cash: The firm should keep sufficient ent call. However when a firm sells goods or services oi credit.7% from 2005 to 2009 im plies that the debtor collection period is at a Ilurut. Cash management involves followinI.c the lcvcls of cash. 4 (tO) (201 i created. it was . • It im plies futurity. Total Sales Receivable turnover Ratio = Average I)chtor. It is used to measure liquidity the receivables or to find out period over which receivables 2.e. 1101 facRR i. It is an essential marketing tool modern business trade. W hen firm extends credit to its customers.isli cot. � • n ii . Cash shortage will disrupt the firm'.iLuicr end of remain uncollected. A firm grants credit to its customers so that its sales are its customers so that its sales are not lost to com petitors. a major function of the Inanncial nr. • It is based on econom value.0% and 3.5 which %. 4. Credit creates receivables which the i f rm is expected to collect in near future.. manufacturing operation while excessive cash will simple remain idle.uiawYi is to maintain a sound financial position.of. white the seller expects an equivalcnt value to be received later on. D ebtors turn-over ratio: This is also called "D ebtors velocity" or "Receivable Turnover". T the buyer.2%. A firm sells goods on credit and cash basis. profitability. receivables are created. payments are received only at a future date an.ttin � rate. A ccount receivable constitutes a significant portion of the total current assets of the business after inventories. without contributing anything towards firm'. book debts are created in firms A/c debtors expected to convert in to cash over short period and thus included in current assets.trollin. The receivables arising out of credit has three characteristics: • It involves an element of risk which should be caretull\ analyzed. Thus.nrn C in . 365 Debt collection period = Receivable turnover ratio Interpretation (Graph 5 a and 5 b): The chart indicates that the debtors turnover ratio shows a fluctuating trend i. A scertain en o th m t f e �. the ic o economic value goods or services pass immediately at the time of sale. 2. neither more or less. T custom fromw he ers hom receivables have to collect in future are called debtors and represent the firm's claim or asset. 3.

It is more useful in knowing the liquidity of firm . A relatively low current ratio represents that the liquidity position of the firm is not good and the firmshall not be able to pay its current liabilities in time without facing difficulties. The 5 year ratio shows a fluctuating trend which indicates that the company is not using its cash effectively. Analysis through Working Capital Ratios Current Ratio: It is most common measure for measuring liquidity. A cu rr ent ratio of 2:1 is considered satisfactory. • Cash turnover Ratio. • Holding period of cash. A relatively high cu rr ent ratio is an indication that the firm is liquid and has the ability to pay its cu rr ent obligation in time as and when it becomes due." It expresses relationship between cu rr ent assets and current liabilities. total current and current liabilities for the year 2005 to 2009 are given in the table 1 Interpretation (Graph 6 c): T quick ratio show a he s fluctuating rate where in the year 2005 shows the highest of 69. a decrease in cu rr ent ratio indicates that there has been deterioration in the liquidity position. Cash is required to meet a firm's transactions and precautionary needs.8 which means the company can pay 69. Quick Ratio: It is also known as liquid ratio or acid test ration. •C R ash atio.Advances In Manage mr • • Controlling cash in flows Controlling cash outflows • Optimum utilization of surplus cash. It is a relation betw een quick assets and quick liabilities. It is also called "W orking Capital Ratio. than current ratio.8% of its current liabilities by cash. Some firms maintain cash for taking advantages of speculative changes in price of input and output. E valuation of C ash M anagem ent Perform ance: The following ratios have been used to evaluate different aspects management. assets of cash ( S O ) The figures of cash and bank balance. The cash turnover ratio in the year 2009 was comparatively less satisfactory than the year 2008. Current Ratio Current Assets = Current Liabilities Interpretation (Graph 7): The company's current ratio is going down as the year is going by. It keeps additional funds to meet any emergency situation. A firm needs cash to make payment for acquisition of resources and services for the normal conduct of business.

Though the company at present is able to meet its short term liabilities but at later years it may not able to meet its liabilities.Quick Assets = Quick Rat. excess funds have been invested to that extent. Interpretation (Graph 10): The gross working capital ratio is showing a fluctuating trend i.98. C. Increase in the volume of sales requires increase in the size of inventory. But from a sound point of view.53. It is circulated as: Circulation of Gross Working Capital Net Sales = Total Gross W. Working capital is the excess of current asset over current liabilities. Current Liabilities. A quick asset means current assets excluding stock and prepaid expenses. These ratios indicate in which components of current assets. inventory should not exceed amount of working capital.79. during the year 2005 it was 0. The ratio is computed as follows: Circulation of Net Working Capital Net Sales = ----------------------------------------------Net Working Capital Interpretation (Graph 11): The working capital turnover ratio was less from the year 2005 to 2007 and in the year 2008 it increased to 2. Then in 2007 it went down to 0. Composition of gross working capital: The structure of gross working capital is evaluated by finding out the ratio of each component of current assets with the total current assets. Gross working capital ratio: The method is used to examine the effectiveness of gross working capital.e. The reason for increase is because of increase of sales in 2008 and 2009. Interpretation (Graph 8): The quick ratio of the firm is showing a downward trend which indicates that the company is not sound well. Inventory to Working Capital Ratio: In order to ascertain that there is no overstocking. W orking capital turnover ratio: The m ethod used to measure the effectiveness of net working capital is to divide net sales by net working capital. Inventory to Working Capital Ratio Inventory = --------------------------------------------Working Capital . The year 2008 showed the highest ratio of' I I compared to other years. the ratio of inventory to working capital should be calculated. then it increases to 1 14 in 2006.78 and in the year 2009 in decreased slightly to 2.

The quick ratio shows the company is not liquid.71 in 2009 which indicates higher overall efficiency of the business. The net profit ratio can he calculated by using the following formula: Net Profit Net 1 'iol it Ratio -------------. .raph d(.5 1.x 100 Net Sales Interpretation (Graph 1 ): T n p fit sh w a 3 he et ro o s downward trend from 2005 to 2007 and then increases from a necative ratio to 13. 0. The reason for increase is because of increase of stock in 2008 and 2009. This is a measure of os erall profitability.41.x 100 Net fixed assets on fixed (51 ) Net proit) alter tax = - 14): The year 2007 and 2008 showed ery less return because of very low profits.79% Join then increased highly by 36. During the the t\return on fixed assets was 27% and in 2006 it went to 1 8.84% in 2009. Net Profit Ratio: Net profit ratio establishes the relationship between net profits after tax and sales. The financial position of the business shows normal..Advances In M anagem ent Interpretation (Graph 12): The inventory to working capital turnover ratio was less from the year 2005 to 2007 and in the dear 2008 it increased to 0. Interpretation (Graph 15): During the year 2006 the ratio of current assets to total assets show the highest of ed 0. It can he calculated as Return on Fixed Assets ----------------------------.32. Findings • • • • The gross working capital decreased in 2008 by 6. better utilisation of lim ited retiources and reasonable return to owners. wn Current assets to total assets ratio: The ratio brings out the percentage of current assets to total net assets of the business.54. It indicates the efficien o th m cy f e anag en in m factu .314. Intr-rpretatiun ((. It indicates what portion of sales is left to the owners after all expenses have been met.34 and 0.2007 2008 and 2009 the ratio of current assets to total assets was 0.21% which indicates that the firm earned high prods that year.1 1 %.366 and in the year 2009 in decreased slightly to 0. em t anu ring administrating and selling the products. Return on Fixed Assets Ratio: This ratio indicates a return asset. 0. 1 he liquidity position is not satisfactory. I his ratio indicates the extent of liquidity nature of assets repaired in comparison with total net assets as in table 20. In 2(X)9 the return on fixed assets was the highest at 31.whereas in 2005.

Conclusion The primary goal of working capital management in a firm is to manage short term funds required for day to day business activity of a firm. edi(ilui 5'h McGraw Hill (2011) 3. G p K S ash an u ta . m working capital to support the grovxin ore the L needs of operation. There is an increasing trend in the sales turnover of the company. h i ti (inpta N eelu. This is also made clear by the current ratio which is greater than I in all these years. This indicates the compan\ . 1 1773. "Cut costs using working capital manager . good liquidity position. Boston. 55 (20051 5. 3-7 F Ile e .19. 9616. in n .M. 10695. ni jo rn l o C rp ra A o iliiwA u a f o o te re w 22 0).55. Irwin Inc. • The inventory turnover is increasing over the inventory holding period is satisfactor\ • The receivables management of the cony better • The projected sales of the company from 2010 to 2014 are 8538. The company requires effective w orking capital m anagem ent policy for a sm ooth uninterrupted production and sale activity. be most important factor for the running of the business enterprise with normal profits. Financial Management. ( 2011) • The com pany . 4 (10) Oct. Corporate Finance. The company has a positive working capital durint all the years of its operation. The study of working capital management in a limited company reveals that the management of working capital is greatly responsible for level of profits earned by the firm along with the tremendous expansion activity. Sagner James S.Vol. I inancial M cii em� anx it Kalyani publishers (2009) 2. Financial Management. Y. References 1. 6'h edition (2005) 4. Rechard D... and 12851.91. future it may not be sufficient enough to pay its short term liabilities.47. It means that the investment in current asset is sufficient at present but in M pr. Pandey I. ar/A ( -.K. and Jain P.. The turnover of current assets employed by the company is not efficiently used by the working capital funds which happen t( .ales turnover is increasing' rapidly • The average current ratio of the firm is 2. The basic objective of working capital management is to have a balanced liquidity position..24 • The cash turnover ratio is fluctuating over the s car.fill ) . Khan M.83. The company is expanding its operation and need.

97 \OI.53 2353.44 292.7113.91 1.58 2124.51 157. 4 (l0 O i (2011) 2008 2009 869.59 41.3 -777.45 1654.81 (52) 2008 2009 5073.60 35.79 2.03 2084.25 260.66 5442.82 2005 2006 502.98 44.32 17.54 1 .31 2695.35 549.48 1 1 1 3.77 2824.19 Net Working Capital 30 50 34.55 1 542.79 36.4 2075.84 .94 3040.97 1 649. 9 00 1 30 00 20 50 29.84 1 63.27 921.7 2617.27 778.11 3901.28 3597.09 Advances received from customers Provisions Total current liabilities (B) Net Working Capital [A-B] 85.01 4007.86 16.69 3.97 -6.03 0.91 300. 4 37 9 ?000 L0 50 L0 00 So o 0 20 05 20 06 20 07 20 08 20 09 Graph 1: Gross Working Capital Table 2 Gross Working Capital Growth in five years Year 2005 2006 2007 Gross working capital 3408.4 1206.48 1283.68 1687.Advances In M anagem ent P artcu l ars i Current assets Inventories Sundry debtors Unbilled revenues Cash and bank balances Loans and advances Total Current Assets (A) Current Liabilities Sundry creditors Unclaimed dividend Accrued interest Other liabilities Working Capital Statement from 2005 to 2009 Table I 4.01 4007.71 955.78 2377.24 6.13 709.93 49.69 3408.67 24.05 6941.05 6941. YEARS 2007 722.66 748.29 2294.73 1 176.56 36.82 313.49 5442.84 14.07 1 241.83 315.15 1 695.78 638.61 560. 6 24 5 2? R4 0t 27.09 1.33 1 9.17 1 669.92 1 662.59 1255.85 5073.68 Growth (%) 0.57 0.

00 ° 0.00 0.321 17.00 A"IF -20.20.60% -6 '% 2005 2000 2007 2008 2000 Graph 2: Growth in Gross Working Capital .

Advances In .69 4 2008 97.82 83.3 1 2309.t„r.75 2782.43 84 2008 600.%Iu.19 12 Average Stock of Work-in-Process Cost of Production Work-in-Process Conversion Period (Days) 1 1 Average finished stock inventory 1= Finished Stock Storage period = Average cost of goods sold per day Table 5 Finished Stock Conversion Period Particulars Years 2005 37.85 66 52 Average Work-in-progress inventory W= Work-in-progress period = Average cost of production per day Table 4 Work-in-Process Conversion Period PARTICULARS YEARS 2005 69.1 542.04 4473.59 4727.65 63 Average Stock of Raw Material Average Consumption of Raw Materials Raw Material Holding Period (Days) 640.uit. 'men/ Table 3 Raw Material Holding Period Particulars 2005 279.53 3913.36 71 \oi.33 1 3464.4 2418.15 5966. I. ( 4 ( l0) C>ut_ 2(tl 1 ) Years 2007 553.62 4 2007 49.05 2501.9 1 2823. nl le t inn prrio 1= Average credit sales per day fable 6 Debtors Collection Period .09 7296.52 5 9 2006 2009 39.34 535.1 6 1 Average Finished Stock Cost of Goods Sold Finished Stock Conversion Period (Days) Average debtors l )_ I >.04 20 14 2006 2009 67.1 2006 2009 463.7 2378.64 88.97 240.25 1 2007 76.16 6 2008 98.

'cithiil Working Capital i . 511 ( ( 20101 2 118 1 7.)'i .im .07 6801.84 2716.42 163 2006 2009 1437. Working capital manar' r1 in ')111:<.44 3473. I I-�27 (2011 ) (53) .l / Management: iun Lt (21. 1 I m.Particulars Years 2005 1210.t 14' I 31.49 Average Debtors Average Credit Sales Debtors Collection Period (Days) 1 6. Pedro J. Driving .95 2079. . . Bauer Dennis. Scl.01 5161. and MartrnezAdditior.75 153 2008 1663. jlu.ti Solano Pedro. Garcia-Teruel. Banos Caballero Sonia.72 4176.79 126 2007 1455.

2 6.61 2782.2009 Particulars Inventory Storage period Raw material Work-in-progress Finished Stock Debtor Collection Period Total (A) Creditors Payment Period (B) Operating Cycle Period (A-B) 66 20 5 163 254 141 113 71 16 4 126 217 144 72 2005 2006 Grap h 3: Oper ating Cycl e Peri od (54) Table 9 Inventory Ratios ITEM (1) Average Inventory (2) Total Current Assets (3) Cost of Goods Sold Ratio ( a) Inventory to Gross Working Capital (1/2) b) Inventory Turnover (3/I) c) Inventory Conversion Period [(365/h) days] 2005 386.)I 41111) ( ) ( 2011 ( 2008 2009 1 668.25 4743.9 53 1 1.1 (lrnncc.02 1016.7 225 \.66 3913.54 3408.54 4007.33 2408.3 7.c In Managem ent Particulars Average Creditors Average Credit Purchases Creditors Payment Period Creditors payment period = Table 7 Creditors Payment Period 2005 2006 666.03 1 718.73 2569.34 1 887.2 51 150 100 50 0 2005 2006 a 2007 72 27 0 2008 30 2009 .62 14.68 141 144 Average creditors Years 2007 1485.75 171 145 Average credit purchase per day Table 8 Operating Cycle Period From 2005 .25 3568.09 %) 2006 570.

7 1 3.52 12.Years 2007 2008 2009 84 12 4 153 252 225 27 0 63 52 14 1 1 69 118 112 201 184 1 71 145 (In 111011m)") 2007 2008 2009 680.5 8.69 566.97 4727.68 5073.89 912.37 5442.19 795.0 49 46 .1 7.0 53 15.1 7296.05 6941.5 7.

00 40.5 7.00 15. Graph 4 (a) Inventory Conversion Period 8.00 { 20.00 1 10.0 7.00 6. 50 13 I 85 106 2000 2007 2008 2009 2005 2006 2007 200' 2 0 1 1 RATIO Graph 5 (a) Debtor Collection Period 147 132 115 YaNt er e 92 99 Graph 6 (c) Table 10 Receivables Ratios Average R atioC ollection Period Graph S (b) 1 .1 20 07 20 08 20 09 2005 2006 2007 2008 20.00 25.2 7.0 8.0 65 w Cash Ratio Graph 6 (a) Cash Turnover Ratio 45.2 Holding Period of Cash 7 150 100 i.00 5.ldrances In M anagem ent 54 52 50 48 46 4 4 42 4 0 20 05 20 06 Inventory Turnover Ratio 53 693 Quick Ratio V 4(10)O ol. (2011 ) t 6. 2000 2007 2008 2009 z Collection Period .00 0.00 35.0 1005 2006 2007 2008 2009 2005 2006 2007 2005 2i_nl0 Graph 4 (b) Graph 6 (b) Debtor Turnover Ratio 1. 1 (lLi.00 30.

84 1210.33 4.88 3.1 .8 1 32 2006 1437.sales debtors (: ) (days) 2005 3337.2 4312.01 92 2009 99 1079.0 7694.74 147 2008 1 663.95 2.72 4550.5 6621.42 7 1 15 2007 1735.8.48 2.

88 1 1 1 3.4 (10) (Kt.33 7694.42 2695.079 1 77° 3 2. 36.8 9.91 85 1 3 48.82 313. ( 2011) In million s (Rs I 2008 2009 1 63.C)0) ) ()C) v V N IN 'E T )R " < I1 .52 9 15 Quick Ratio (1/3) Cash Turnover Ratio (2/1) Holding Period of Cash (3 65/b) days Current Ratio 061 2. R ol.Advances In M anagem ent Particulars Cash & Bank Balance Net Sales Current Liabilities R tio% a Cash Ratios 2005 2006 777.0 3..0 7 4 3 .92 4312. ?002 ?nn� 2 .31 69.43 1 06 2007 1255.29 28.78 6.84 4550.i � 2.51 1 57.5 4.8 .42 24.4 8 51 .1 8.77 Table 11 V o �l .40 3337.48 2617.609 Q114".11 3901.^23 2.03 2006 2007 2008 2009 2005 Graph 7 2006 2007 G rapi.45 1 654.82 6621.0 40. 000 O C) C ) w1C)P T [)RY[)EEi 1OI'' 1C).00 S.C).

G raph 9 .

71 3369.66 2.t (h'anees In Management YearCurrent AssetsCurrent Liabilities 111 2005 3408. 2011) 11 ( 1654.68 803 5073.48 6621.39 0.34 1654.81 27.45 1 .61 1 3.88 4312. 4 (10) ()it.45 2006 2007 2008 2009 4007.84 4550.93 1.1' Net working capital 2294.00 955.35 2824.19 0.423 2.91 2377.31 2617.77 2695.97 'f'able 12 Current Ratio 3.04 100.314 (57 ) Inventories Sundry debtors Unbilled revenues Cash and bank balances Loans and advances T otal (% ) Table 15 Year 2005 1006 2 007 _ 2008 2009 Net sales 3337.75 35.53 2.07 869.05 .48 6621.61 4203.33 700 l.31 2617.79 1 31 1.11 3901.037 5442.061 2005 2905.97 Ratio 0.00 22.56 2353.98 1 14 0.45 2.56 Ratio 0.11 2353.94 Ratio 1 .78 Working capital 2294.33 7694.36 4720.366 Table 13 Vol.42 Gross working capital 3408.77 2695.78 1 1 2009 P i l artcu ars 2005 1 4.53 300) Table 17 19 Years 2005 Inventory 502.05 6941.84 4550.03 3040.271 0.78 2.91 2377. 1 1 Fable 16 Year 2005 2006 2007 2008 'U(I > Net sales 3337.35 2824.079 1 882 1 .219 .68 5073.88 4312.01 4007.779 2006 2007 2008 Table YearLiquid assetsCurrent liabilitiesQuick ratio 3.94 0.66 5442.3 722.560 6941.256 0.609 2.23 2006 2007 2008 638.

09 29.00 3.89 15.35 1055.84 1 3.81 4550.48 -26.14 3337.27 22.76 41.65 0.08 30.5001 94 30 ().93 41.00 3.00 1.52 23.00 2005 2006 2007 Graph Table IS YearNet profit /(loss) after taxNet salesNet profit ratio 2005 2006 2007 2008 2009 461.42 1 3.81 1 0.31 )0 i0 )0 2005 2006 2007 2008 2009 Graph 10 Working Capital Turnover Ratio 3.4 Years 2006 1 5.19 51.00 2008 2009 1 7.14 61.49 100.00 0.33 0.23 4.00 2007 13.71 .72 6621.001 2.55 100.0) 0 -- Gross Working Capital Ratio i0 1.30 23.95 4312.93 7694.93 38.88 7.83 1 0 .09 361.84 -1 1 52.0 1 00. 1 7R 1 531 1.14 1 3.35 0.

366 0171 0.51 7449.84 -1 1 52.45 (1.13 3066.11 2377.05 1 2206.100 1104 0.00 -30.00 2005 -20.48 2695.21) 20.68 5073.66 5442.00 0.97 Total assets 6706.25 I o1al 3040.85 2421.72 NET PROFIT RATIO Graph 13 Table 19 YearNet profit /(loss) after taxNet fixed assetsRatio 2005 2006 2007 2008 2009 461.73 0.14 61.19 2656.95 13.71 "x.02 3381.31 Table 20 Year Ratio 2005 2006 2007 2008 2009 Current assets 3408.82 1 50 3597.16 (1.35 1 055.71 2084.33 3901.314 10.13 778.00 81 Net Profit Ratio 1 111i t ? i 2u1 I 7.34 21601 68 0.19 85.28 6941.Advances In Management Inventory to workine capital ratio 0.4 9.27 63.27 1 998.97 985.84 1 11 5073.57 662.07 0.82 76.15 695.34 1 986.00 0200 0.32 313. 93 2006 2009 2007 <72008 2007 Graph 12 2008 2009 -26.54 1 3346.14 1 707.71 ( .89 .78 3040.54 0.84 778.61 4007.45 0.19 2009 Increase 955.94 662.41 14840.09 361.71 0.96 220.03 2075.00 -10.05 6941.25 3040.18 2160.300 0.32 Table 21 Statement of changes in working capital for the year 2008 -2_(1(19 Particulars Current Assets a) Inventories h) Sundry debtors cc) Unbilled revenues (1) Cash & bank balances r) Loans and advances I otal Current Assets Less: Current liabilities & Provisions a) Current liabilities h) Provisions Total current liabilities Net working capital i )ifference 2008 Decrease 869.3 709.

07 -2008 2008 Increase 2007 Decrease 722.89 Table 22 Statement of Changes In Working Capital for Particulars Current Assets ( Inventories 'll tlu 1 c.64 71) .i.07 I 11 0. rd:htofti .2656.71 �r)d 1_I 147.1 869. '1..

4004000 Email: conference@managein. INDORE 452 010. INDIA Phone: 2552837.70 2617.92 1 662.45 V ol.07 292.97 446.91 416. Scheme 54. 150 100 o. 21)1 1 ( 1 994. m aq so 0 2005 2006 2007 2OW ? 2 (10 1 3 L-j 2007 2008 2009 Graph 14 Graph 15 (Received 28th July 2011.84 218.1 1 176.82 1092.68 2325.org www.77 2824.05 1 985.25 163.49 5442.76 1994.11 709.4(10)(h 1. Organizers: International Society of Management and Monthly Journal "ADVANCES IN MANAGEMENT" Contact: "Advances in Management" AG-80.96 339.91 2824. Vijaynagar.76 Return on Fixed Assets Ratio 300 40 250 Current Assets to Total Assets Ratio TOTAL ASSETS ■ U R N A [T C R E T SS .91 778.15 2695.21 5073.94 446. accepted I 201 )" September We are pleased to announce First International Management Conference ISM-2012 Focal Them Strategic M e: anagem ent Please send your Abstracts / Papers on above focal theme or papers related to all the aspects of Management at your earliest.net Fax: 0731-2552837 Website: Our Peer Reviewed Journal "Advances In Management" is indexed in .28 486.managein.59 1 255.11 2377.:tdrances In M anagem ent c) Unbilled revenues ( 1) Cash & bank balances e) Loans and advances "Total Current Assets Less: Current liabilities & Provisions a) Current liabilities h) Provisions Total current liabilities Net working capital Difference Total 560.o 2::)O r.97 2824. 200 18.

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