MAHAKAL INSTITUTE FOR TECHNOLOGY & SCIENCE

UJJAIN
SUMMER INTERNSHIP PROJECT
ON
COMPARETIVE STUDY FOR WORKING CAPITAL MANAGEMENT AND RATIO
ANALYSIS
A REASEARCH PROJECT SUBMITTED TO ADD VALUE IN THE
DEGREE FOR MASTER FOR BUSINESS ADMINISTRATION
(2010-2012)

SUBMITTED BY: SUBMITTED TO:
KU ARCHANA MOURYA DRNAMITA SONI

CERTIFICATE FROM FACULTY & COMPNY
GUIDE
This is to certify that ku. ARCHANA MOURYA for MBA (full
time) i mahakal istitute for techolo!y U""ai has carrie# out a
summer itershi$ $ro"ect title# comparative study for working
capital management.% The &ork #oe 'y her is !euie a#
authetic.
The &ork carrie# out 'y the stu#et &as fou# satisfactory. (e
&ish him all the success i career.
F!"#$%& '#()* C+,-!.& '#()*
P/0+/ N!,(%! 1+.( M/ M!.)!$
(HOD)
CERTIFICATE FROM FACULTY & COMPNY
GUIDE
This is to certify that ku. ARCHANA MOURYA for MBA (full
time) i mahakal istitute for techolo!y U""ai has carrie# out a
summer itershi$ $ro"ect title# comparative study for working
capital management.% The &ork #oe 'y her is !euie a#
authetic.
The &ork carrie# out 'y the stu#et &as fou# satisfactory. (e
&ish him all the success i career.
F!"#$%& '#()* C+,-!.& '#()*
P/0+/ N!,(%! 1+.( M/ M!.)!$
(HOD)
DECLARATION
) archana mourya a stu#et for school for maa!emet * mahakal
istitute for techolo!y + sciece*u""ai here'y #eclare that the &ork #oe
'y me to #o summer itershi$ $ro"ect title# comparative study for
working capital management. is genuine and authentic.
KU. ARCHANA MOURYA
(MBA)
ACKON2LEGEMENT
T) ), TH- MAT-R .OR /R-AT 01-A,UR- AN2 0R)3)1A/- TO B- AB1- TO
0-R,-NT TH), 0RO4-CT R-0ORT -50ORT 0ROC-2UR- AN2
2OCUM-NTAT)ON.
TH- COM0)1AT)ON .OR TH- 0RO4-CT ), A M)1-,TON- )N TH- 1).-
.OR TH- MANA/-M-NT ,TU2-NT AN2 )T, -5-CUT)ON ),
)N-3)TAB1- ()TH TH- CO6 O0-RAT)ON .OR TH- 0RO4-CT /U)2-. )
(),H TO R-COR2 A 2--0 ,-N,- 0R.OR.NAM)TA ,ON) .OR TH-)R
-NCOURA/-M-NT TO COUR,- .OR MY (OR7. )T ), 2U- TO TH-
-N2UR)N/ -..ORT AN2 /U)2ANC-.OR MY /U)2- THAT U1T)MAT-1Y
MA2- )T ,UCC-,.
) CANNOT 4U,T CON2ON- TH- 3A1UAB1- O00ORTUN)TY /)3- TO
M- BY TH- 3)7RAM UN)3-R,)TY U44A)N .OR COM0)1)N/ AN2
,UBM)TT)N/ TH- 0RO4-CT* (H)CH ) .--1 ), AN A00ORTUN)TY TO
-50R-,, MY 3)-(, ABOUT -50OT 0ROC2UR- AN2
2OCUM-NTAT)ON8
)T ), 0ROU2 0R)3)1A/- TO -50R-,, MY 2--0 ,-NC- .OR
A00R-NC)AT)ON AN2 /RAT)TU2- TO MY 0AR-NT, AN2 .R)-N2, .OR
TH-)R ,U00ORT AN2 CO6O0RAT)ON )N TH- COUR,- .OR TH- 0RO4-CT
-)TH-R 2)R-CT1Y OR )N2)--CT1Y )N3O13-2 )N T)M- ()TH TH-)R
3A1UAB1- COTR)BUT)ON.
THANKS ARCHANA MOURYA
(MBA ))) ,-M)
TABLE FOR CONTENTS
2-C1ARAT)ON8888888888888..888888888888888
AC7ON(1-/-M-NT88888888888888888888888888
A'out 9i$$y i#ustrylt#.
OB4-CT)3-,
3isio.
Missio 888888888888888888888888888... 8.
Motto8888888888888888888888888..................
,TRUCTUR- O. TH- 3)00Y ,OYA 888888888888888..........
.O3-R3)-( 888888888888888888888888888..
.TO0 T-N ,OYA O)1 -50ORT- 888888888888888..
,(OT ANA1Y,), 888888888888888888888.
)NTRO2UCT)ON 888888888888888888888888
MAT-R)A1 AN2 M-THO2, 8888888888888888888
.)NANC- 2-0ARTM-NT .OR 3)00Y )N2U,TRY
TH-ROY888888888888888888888888888.
(OR7)N/ CA0)TA1 C1A,,).)CAT)ON 88888888888..
(AY, .OR CA1CU1AT)ON 88888888888888888
MANA/-M-NT .OR (OR7)N/ CA0)TA188888888888
A23ANTA/-, .OR (O7)N/ CA0)TA1888888888888.
-5C-,, .OR (OR7)N/ CA0)TA18888888888888......
.ACT-R, 2-T-RM)N)N/ A2-:UAT- (OR7)N/ CA0)TA1 88.
R-,U1T, OBTA)-2 AN2 2),CU,,)ON,
RT)O ANA1Y,), 8888888888888888888888
CURR-NT RAT)O8888888888888888888.
AC)2 RA)TO 888888888888888888888.
2-BT-R TURNO3-R 88888888888888888..
A3/. CO11-CT)ON 0-R)O2 88888888888888.
)N3-NTORY TURNO3-R RAT)O 888888888888.
(OR7)N/ CA0)TA1.TURNO3-R RAT)O 888888888
CR-2)TOR TURNO3-R RAT)O 8888888888888..
A3/ 0AYM-NT 0-R)O2 8888888888888888.
O0-RAT)N/ CYC1- 88888888888888888888..
.)NANC)A1 Y-AR ;<<= 8888888888888888..
.)NANC)A1 Y-AR ;<>< 8888888888888888...
.)NANC)A1 Y-AR ;<>>
CONC1U,)ON, 888888888888888888888888
)M0)CAT)ON .OR .UTUR- R-,-ARCH 8888888888888.
1)M)TAT)ON8888888888888888888888888
R-.-R-NC- 8888888888888888888888888
LIST FOR FIGURES
.i!ure>? !ra$h for curret ratio88888888888888;@
.i!ure;? !ra$h for aci# ratio888888888888888;A
.i!ureB? !ra$h for #e'tor turo9er ratio8888888888...;C
.i!ure@? !ra$h for a9!. $aymet $erio#88888888888;D
.i!ureE? !ra$h for i9etory turo9er ratio 888888888..;=
.i!ureA? !ra$h for &orki! ca$ital turo9er ratio8888888.B<
.i!ureC? !ra$h for cre#itorsF turo9er ratio8888888888B>
.i!ureD? !ra$h for a9!. collectio $erio#88888888888B;
.i!ure=? !ra$h for o$erati! cycle for the year ;<<=888888.BB
.i!ure><? !ra$h for o$erati! cycle for the year ;<><888888.BE
.i!ure>>? !ra$h for o$erati! cycle for the year;<>>888888.BC
Com$ay $rofile6 9i$$y i#ustry limite#
3i$$y i#ustry is a iteratioal marketi! com$ay the eG$ort to more
tha BE coutries all o9er the &orl#. -sta'lishe# i >=CB* its mai lie of
'usiess are ,oya oil a# ,oya $ro#uct.
The com$ay has a &orl#&i#e reach for sourci! as &ell as marketi!* &ith
a &ell6ite!rate# et&ork that s$as !lo'al tra#e 'locs. )t &orks !lo'al
'ra#s a# has #e9elo$e# same key iteratioal alliace for sustaii!
future !ro&th. )ts ma"or markets are -uro$e* the Asia coutries* the mi##le
east* the .ar -ast Africa 4a$a Thaila#.
COM0ANY NAM- ? 3)00Y ,OYA
Nature of 'usiess ? ,oya oil a# ,oya $ro#uct eG$ort
? 1ecithi
Year of esta'lishmet ? >=CB
Num'er of em$loyees ? E<<
Mai market ? -aster -uro$e* south east* Asia Africa* mi##le
-ast easter Asia
Busiess ty$e ? maufacturer

Turo9ers (;<><6;<>> ? com$ay a# its o9erseas su'si#iaries com'ie#
Turo9er &as
0ro#uctH ser9ice ? ,oya meal* #efalte# ,oya flour* ,oya lecithi*
-Iyme acti9e fulfalsoya flour* ,oya hulls* ,oya
Chuks* ,oya oil* ,oya mice* ,oya mice*
,oya Nu!!ets* t9$
A 'out is 9i$$y i#ustries lt# is o& of the lar!est $ro#ucer a# eG$orter of
&i#e ra! of o /MO ,oya $ro#ucts a# $ioeer i soy'ea $rocessi!
i#ustry i )#ia. (e are the )#ia ,oya com$ay to 'e a&ar#e#
&ith),O=<<; 'y ,/, yarsley certificatio a!ecy. U7 +curretly ),O
=<<>?;<<< 'y B3:).&e are a !o9ermet reco!iIe# !ol#e eG$ort house
a# is successfully eG$orti! 9alue a##e# o /MO ,oya $ro#ucts to B;
coutries &orl# &i#e. A$art from ),O &e #o ha9e other certificates like
hacek J kosher etc. our ma"or $ro#ucts are?
,oya lecithi
2eflate# ,oya flour (toste#H uteste#)
-Iyme acti9e
.ulfat ,oya flour
,oya meal (fee# !ra#e)

Main Areas of business:
Soya bean oil:
The com$ay is )#iaFs lea#i! ,oya oil a# ,oya
$ro#uct eG$orter a# su$$ly chai ite!rator. )ts 9alue chai ecom$asses
!lo'al sourci!* &orl#6class $ro#uci! i )#ia.
eoil!a"e:
The #eoilcake is i9ol9e# i iteratioal marketi!*
!lo'al sourci!* #istri'utio a# chai maa!emet i the #eoilcake*
iclu#i! the ,oya flour u!!ets* itFs 'aicly use i foo# a# fee#.
Le!i#$in:
The lecithi is use i the $aits chocolates.
These are the mai $ro#ucts are the 9i$$y ,oya i#ustry lt#. They eG$ort the
all $ro#ucts eGce$t the ,oya oil. They eG$ort i the 'ulk. They $ro#uce i
mass $ro#uctio.
They use the hi!h techolo!yFs machies a# eKui$mets for the $ro#uctio.
They ha9e the 9ery !oo# refiery sectio for the check the Kuality a# the
$erceta!e of the utritio i the ,oya oil a# other $ro#ucts.
Ob%e!#i&es
Vision:
To 'e a io9ati9e socially res$osi'le* 9alue creati! or!aiIatio
!eerati! E lakh ta $er year.
Mission:
T< 'e a ite!rate# a# syer!iIe# or!aiIatio* focusi! o huma
resources to $ro9i#e &orl# class $ro#uct.
Core values:
>. ite!rity
;. s$irit of etre$reeurshi$
B. a!ility
@. $assio for eGcellece
E. uity
Motto of vippy industry ltd.:

A Customer is the most im$ortat 9isitor o our $remises.
He is ot #e$e#et o us* &e are #e$e#et o him.
He is ot a iterru$tio o our &ork
He is the $ur$ose of it.
He is ot a outsi#er <o our 'usiess.
He is $art of it.
(e are ot #oi! him a fa9or 'y ser9i! him.
He is #oi! us fa9ors 'y !i9i! us a o$$ortuity to #o so.
Structure of the vippy Soya industry:
The ,oya i#ustry is s$rea# i#ifferet se!mets* oil* u!!ets* lecithi* soya
flour* #eoilcake* etc.

The estimate# $ro#uctio ca$acity i #ifferet se!mets is as u#er
soy'ea $rocessi! ? >D<< tosH #ay
&ater #e!ummi! ? B<< tosH #ay
e#i'le oil refiery ? >CE tosH #ay
,oya lecithi $lat ? ; tosH #ay
HaGe ($etroleum oil)? ;L of soy'ea.
This is the eG$orter com$ay .they eG$ort our all $ro#uct i out si#e of )#ia
i 'ulk. They are $ro#uci! the all $ro#uct i the 'ulk. They are ot
itereste# to sale his $ro#uct i the )#ia a# his local market.
The su$$lier of ma"or $lat a# machiery are
7ru$$ maschietachik /MBH /ermay
&est falia se$arators
Buhler lt# ,&itIerla#
(ell eKui$met as la's a# RJ2 sectio to moitor
Olie $rocess
Characteristic of the $ro#ucts
Micro'iolo!ical aalysis
2e9elo$met of e& $ro#ucts
:uality assurace acti9ities
Committe# techical + commercial &ork force
Raw material supplier:-
There eGists lar!e ra& material 'ase. They use the >E<<6;<<< ta
soy'eas $er #ay
A# the haGe ($etroleum oil) ;L of the ,oya 'ea. M

They are the $urchase the soy'ea #irect form the farmers so the
!et the
,oy'ea as ra& material 9ery lo& cost &ith lo& tras$ortatio char!es i
sessio a# other time they $urchase the ro& material form the local
markets.
-G$ort $otetial
This ,oya i#ustry oe of the ma"or forei! eGcha!e earers of the
coutry recor#e# si!ificat !ro&th sice the 'e!ii! of the #eca#e.
To#ay the share or the 9alue a##e# fiishe# $ro#uct i the total eG$ort
from D<L as a!aist ;<E i >=C<s.
Soya oil in'us#ry in 'e(as
>. Ruchi soya i#ustry lt#.
;. kriti utriets lt#.
B. 9i$$y i#ustry i#ustry lt#.
@. #e&as soya lt#.
E. ks oil lt#.
A. sa&ariya a!ro oil lt#.
C. a#ai !rou$ of i#ustry
S)OT Analysis of #$e &i**y in'us#ry l#'+
Strengths
Rea#y a9aila'ility of hi!hly skille# a# chea$ ma$o&er.
1ar!e ra& material 'ase.
0olicy iitiati9e take 'y the !o9ermet
Ca$a'ility to assimilate e& techolo!ies a# ha#le lar!e $ro"ect.
Cotiuous em$hasis o $ro#uct #e9elo$met a# #esi! !ra#atio.


Weaknesses
1ack of &arehousi! su$$ort from the !o9ermet.
)teratioal $rice fluctuatio.
Hu!e la'our force resulti! i hi!h la'our char!es.
Ua&areess of iteratioal sta#ers 'y may $layers.
pportunities
Risi! $otetial i the #omestic market.
Use of the iformatio techolo!y a# su$$ort soft&are to hel$
elimiate the le!th of the $ro#uctio cycle for #ifferet $ro#uct.
Use of e6commerce i #irect marketi!.
2ifficulty i o'taii! 'ak loas resulti! i hi!h cost of $ri9ate
'orro&i!
,tricter iteratioal sta#ar#s
Hi!h com$etitio from -ast -uro$ea coutries a# other Asia
coutries.
!hreats
Ma"or $art of the i#ustry is uor!aiIe#.
1imite# sco$e for mo'iliIi! fu#s throu!h $ri9ate $lacemet a#
$u'lic issues.

,NTROUCAT,ON
T$e *ro%e!# a-is #o:

2e9elo$ a 'etter u#ersta#i! a# clarity of &orki! ca$ital
maa!emet.
,tu#y o &hat ste$s are take to cut the cost i tryi! situatios.
U#ersta# i9etory maa!emet &he #ema# for $ro#uct is lo&.
Com$ariso of fiacial health of the com$ay as com$are# to other
i#ustries i same sector.
T$ese are #$e follo(in. *roble-s ($i!$ are s#u'ie' 'o #$a# #$e
un'ers#an'in. of #$e #o*i! !an be 'e&elo*e'+
These the ratios are aalyIe# &ith other i#ustries of the same so that 'asic
$icture ca 'e o'taie#. The ratio aalysis !i9e a 'rief a o9er9ie& of the
,oya i#ustry. .urther aalysis is cotiue# &ith stu#yi! of 'asic
com$oets of &orki! ca$ital maa!emet that iclu#es maily cre#itor
turo9er* #e'tors a# i9etory maa!emet. Com$ariso o9er the $erio# of
three years !a9e a si!ificat $icture of cha!es of the $olicies as #e'tor
turo9er N cre#itor turo9er a# i9etory turo9er ha9e 9arie# si!ificatly
o9er the last to& year . the stu#y of $olicy cha!es u#ertake to re#uce the
cast &as of si!ificatio im$ortace as isi!hts o'taie# o metho# to cut
#o& the cost.
The traii! has 'ee Kuite istrumetal* leari! erichi! eG$eriece. )t
has sho& the &ays of miimiIi! &orki! ca$ital i a or!aiIatio &hich
is mostly #e$e#e# o the &ester coutries for its re9eues. The #ema#
for soya i coutries has re#uce# cosi#era'ly #ue to the slo&#o& a#
maa!i! the re9eues is thus a ar#uous task.
Materials and methods
The #ata collecte# 'y me &as seco#ary i ature. Most of the #ata has 'ee
o'taie# from the fiace a# marketi! #e$artmet of the com$ay as &as
cofie# to 9i$$y iteratioal lt#. (hich #eals &ith the ,oya oil eG$ort of
)#ia com$ay mauals a# refereces use# a##itioal hel$.
The aalysis of collecte# #ata ca 'e #oe &ith the hel$ of 9arious tools.
The #ata is aalyIe# &ith the hel$ of aalysis tool like tre# i Microsoft
eGcel.
!heory involved

)or"in. !a*i#al :
) the &or#s of shu'i (orki! ca$ital is the amout of fu#s ecessary to
co9er the cost of o$erati! the eter$rise%

Accor#i! to !eeste'er!* circulati! ca$ital meas curret assets of a
com$ay that are cha!e# i the or#iary course of 'usiess from oe form
to aother* i.e* form cash to i9etories to recei9a'les* recei9a'les ito cash.
-9ery 'usiess ee#s fu#s for t&o $ur$oses 6 for the esta'lishmet a# to
carry out its #ay to #ay o$eratios. .i#s are ee#e# for short term $ur$oses
for the $urchase of ra& materials $aymet of &a!es a# other #ay to #ay
eG$eses. These fu#s are ko& as (orki! ca$ital* (orki! ca$ital* also
ko& as et &orki! ca$ital* a# are a fiacial metric &hich re$resets
o$erati! liKui#ity a9aila'le to a 'usiess. Alo! &ith fiGe# assets such as
$lat a# eKui$met* &orki! ca$ital is cosi#ere# a $art or o$erati!
ca$ital .it is calculate# as curret assets mius curret lia'ilities .if curret
are less the curret lia'ilities* a etity has a (orki! ca$ital #eficiecy
.also a (orki! ca$ital #eficit.
A com$ay ca 'e e#o&e# &ith assets a# $rofita'ility 'ut short of
liKui#ity if its assets caot rea#ily 'e co9erte# ito cash. 0ositi9e (orki!
ca$ital is reKuire# to esure that a firm is a'le to cotiue its o$eratio a# it
has sufficiet fu#s to satisfy 'oth maturi! short6term #e't a# o$eratioal
eG$eses. The maa!emet of &orki! ca$ital i9ol9es maa!i!
i9etories* accouts recei9a'le a# $aya'le a# cash.
) sim$le &or#* &or#s &orki! ca$ital refer to that $art of the firmFs ca$ital
&hich is reKuire# for fiaci! short term or curret assets as cash *
marketa'le securities * #e'tors a# i9etories. .u#s thus i9este# i
curret assets thus re9ol9e fast a# are 'ei! costatly co9erte# ito cash
flo&s out a!ai i eGcha!e of other. Currets assets. Hece it is also ko&
as re9ol9i! or circulati! ca$ital or short term ca$ital.
(orki! ca$ital may 'e classifie# as?
a) o the 'asis of coce$t
') o the 'asis of time
o the 'asis of coce$t * (orki! ca$ital is classifie# as !ross (orki!
ca$ital a# et (orki! ca$ital. O the 'asis of time* (orki! ca$ital may
'e classifie# as $ermaet or fiGe# (orki! ca$ital
a# tem$orary or 9aria'le (orki! ca$ital.
(ay of calculati!?

By #efiitio* (orki! ca$ital maa!emet etails short term #ecisios O
!eerally* relati! to the eGt oe year $erio# O &hich is re9ersi'le%. These
#ecisio are therefore ot take o the same 'asis as ca$ital i9estmet
#ecisios are therefore ot take o the same 'asis ca$ital i9estmet
#ecisios (N03 or relate#* as a'o9e rather they &ill 'e 'ase# o cash flo&s
a# H or $rofita'ility.
O measure of cash flo& is $ro9i#e# 'y the cash co9ersio cycle6 the
et um'er of #ays from the outlay of cash for ra& material to
recei9i! $aymet from the customer.
) the coteGt the most useful measure of $rofita'ility is retur o ca$ital
(ROC).the result is sho& as a $erceta!e* #etermie# 'y #i9i#i! rele9at
icome for the >; moths 'y ca$ital em$loye#N retur o eKuity(ROC)
sho&s this result for the firmFs sharehol#ers . firm 9alue is ehace# &he*
a# if the retur o ca$ital * &hich result from (orki! ca$ital
maa!emet * eGcee#s the cost of ca$ital * &hich result form ca$ital
i9estmet #ecisios as a'o9e. ROC measures are therefore useful as a
maa!emet tool* i that they lik shor6term $olicy &ith lo! term #ecisios
maki!.
Maa!emet of (orki! ca$ital

Maa!emet &ill use a com'iatio of $olicies a# techiKue for the
maa!emet of (orki! ca$ital. These $olicies aim at maa!i! the curret
assets (!eerally cash a# cash eKui9alets* i9etories a# #e'tors) a# the
short term fiaci!* such that cash flo& a# retur are acce$ta'le.
cash maa!emet ?6
)#etify the cash 'alace &hich allo&s for the
'usiess to meet #ay to #ay eG$eses* 'ut re#uce cash hol#i! cost.
)9etory maa!emet ?6
)#etify the le9el of i9etory &hich allo&s
for uiterru$te# $ro#uctio 'ut re#uce the i9estmet i ra& material O
a# miimiIes reor#eri! cost6 a# hece icreases cash flo&.
2e'tors maa!emet ?6
)#etify the a$$ro$riate cre#it $olicy* i.e
.cre#it terms &hich &ill attract customers* such that ay im$act o cash
flo&s a# the cash co9ersio cycle &ill 'e offset 'y icrease# re9eue
a# hece retur o ca$ital.


,hort term fiaci! ?6 )#etify the a$$ro$riate source of fiaci! *
!i9e the cash co9ersio cycle? the i9etory is i#eally fiace# 'y
cre#it !rate# 'y the su$$lierN ho&e9er* it may 'e ecessary to utiliIe
'ak loe ( or o9er#raft) * or to co9ert #e'tors to cash% throu!h
factori!%
O$erati! cycle
#e'tors
.iishe#
!oo#s
,ales
Cash
Ra&
material
&i$
A#9ata!es of a#eKuate (orki! ca$ital ?6
>. ,ol9ecy of the 'usiess.
;. /oo#&ill.
B. -asy loe.
@. Cash #iscout.
E. Re!ular su$$ly of ra& material.
A. Re!ular $aymet of salaries* &a!es a# other #ay to #ay
commitmets.
C. -G$loitatio of fa9ora'le market co#itios.
D. A'ility to face crisis.
=. :uick a# re!ular retur o i9estmets.
><. Hi!h moral.

-Gcess of (orki! ca$ital?

>. -Gcessi9e &orki! ca$ital meas i#le fu#s &hich ear o $rofile for
the 'usiess.
;. )t may lea# to uecessary $urchasi! a# accumulatio of
i9etories causi! more cha!es of theft* &aste a# losses.
B. )t im$lies eGcessi9e #e'tors a# #efecti9e cre#it $olicy.
@. )t may result ito o9erall iefficiecy i the or!aiIatio.
E. (he there is eGcessi9e &orki! ca$ital* relatio &hit 'aks a#
other fiacial istitutios may ot 'e maitaie#.
A. 2ue to lo& rate of retur o i9estmet* the 9alue of share may also
fall.
C. The re#u#at &orki! ca$ital !i9es rise to s$eculati9e trasactio.

.actors #etermii! the (orki! ca$ital reKuiremets?
>. Nature or character of 'usiess.
;. ,iIe of 'usiess Hscale of o$eratios.
B. 0ro#uctio $olicy.
@. Maufacturi! $rocessH le!th of 0ro#uctio cycle.
E. seasoal 9ariatios
A. (orki! ca$ital cycle.
C. Rate of stock turo9er.
D. Cre#it $olicy.
=. 'usiess cycle
><.Rate of !ro&th of 'usiess.
>>. -ari! ca$acity a# #i9i#e# $olicy.
>;. 0rice le9el cha!es.
R-,U1T, OBTAN)N-, AN2 2),CU,,)ON,
RAT)O ANA1Y,),?
Assum$tios?6
>. The um'er of &orki! #ays i the year is take as BAE.
;. )#ustry a9era!e has 'ee arri9e# 'y cosi#eri! four com$aies i
same se!met6 9i$$y ,oya oil a# other i#ustry.


Curret ratio?6



Note? o #ata
is a9aila'le
for i#ustry
a9era!e for
the year ;<><6
;<>>

The curret ratio is the measure of !eeral liKui#ity a# is most &i#ely use#
to make the aalysis of a short term fiacial $ositio or liKui#ity of a firm
Curret ratioP curret assetsH curret lia'ilities
As a co9etio the miimum curret ratio of to& to oe ratio% is referre#
as sta#ar# of liKui#ity for a firm.
Althou!h the sta#ar# 9alue of curret is take to 'e ;?> The 9alue of
curret ratio of 9i$$y i#ustry lt# is the mo#erate ra!e a# lo&er as
com$are# to i#ustry. Thus the liKui#ity $ositio of the com$ay is 9ery
!oo# has the a'ility to $ay to its curret o'li!atios i time as a# &he they
'ecome #ue. The stocks are ot mo9i! slo&ly a# the cash 'ak 'alace
utiliIe# $ro$erly.
The ratio icrease# cosi#era'ly for the ;<><6;<>> cosi#eri! the rise i
the ra& material i9etory #ue to the lack of #ema#. This $heomeo may
'e attri'ute# to icrease i stock to !lo'al slo&#o&. The com$ay has also
'ou!ht a##itioal ra& material so as to take 'uyi! o$$ortuity a# store
ra& material at lo&er cost.
:uick ratio
:uick ratio or aci# test ratio is a more ri!orous test of liKui#ity the the
curret ratio. The term liKui#ity refers to a'ility of firm to $ay its term
o'li!atio as a# &he they 'ecome #ue. )9etories caot 'e terme# to 'e
liKui# assets as they caot 'e co9erte# ito cash imme#iately &ithout a
sufficiet loss of 9alue.
Aci# test ratio P Kuick or liKui# assets H curret lia'ilities
As a rule of thum' or as a co9etio Kuick ratio >?> is cosi#ere#
satisfactory. The aci# test ratio at 9i$$y i#ustry is 9ery close to oe. This
sho&s the Kuality of #e'tors has 'ee !oo# a# the liKui#ity $ositio of the
com$ay has Kuite &ell. The Kuality a# a!e of #e'tors has carefully
u#ertake so that liKui#ity is o affecte#.
The com$ay has trie# to maitai a $ro$er miG of liKui#ity has icrease# so
that ra& material ca 'e o'taie# at lo&er cast as cre#itors are &ary of
!i9i! &ell o the sale. The com$ay is 'uyi! ra& material o cash to take
a#9ata!e form the #ecrease i cost of ra& material.

2e'tors turo9er ratio?6
Note ? o #ata is a9aila'le for i#ustry a9era!e for the year ;<><6;<>>
)t i#icate# the um'ers of time a9era!e #e'tors are turo9er #uri! a year.
2e'tors turo9erP et cre#it aual sale H a9!. tra#e #e'tors
There is i#eal ratio for it this ratio 9aries !reatly &ith the i#ustry to i#ustry
..MC/ com$aies ha9e lo&er #e'tors turo9er 9elocity &hile cosumer
#ura'les ha9e hi!her 9alue. This ratio therefore shoul# 'e com$are# &ith
ratios of other #oi! similar 'usiess.
The 9alue of #e'tor turo9er is lo&er as com$are# to leather i#ustry. There
has 'ee cosi#era'ly i the ratio o9er the $erio# of B year &ith i#ustry
a9era!e mo9i! u$ almost >= L i .Y ;<><. This may attri'ute to faster sale
a# cosum$tio 'y the customer.
A9era!e collectio $erio# ?6
Note? o #ata is a9aila'le for i#ustry a9era!e for the year ;<><6;<>>
The a9era!e collectio $erio# re$reset the a9era!e um'er of #ays &hich a
firm has to &ait 'efore their recei9a'les are co9erte# to cash.
The a9era!e collectio $erio# P (a9era!e tra#e #e'torsQBAE)H et sales
/eerally* the shorter the a9era!e collectio $erio# the 'etter is the Kuality
of #e'tor as a short collectio $erio# im$lies Kuick $aymet 'y #e'tors. The
collectio $erio# of 9i$$y i#ustry has icrease# i the year ;<<=&hich is
the 'oom $erio# a# there is lar!e #ema#. )t has ho&e9er re#uce#
si!ificatly 'y >> #ays i the year ;<><* &hich sho&s a re!ular follo& u$
&ith the customer. The $aymet terms are mostly 'ase# o the letter of
cre#it &hich is !eerally fiGe# thus there are o lar!e 9ariatio.
)9etory turo9er ratio
Note? o #ata is a9aila'le for i#ustry a9era!e for the year ;<><6;<>>
)9etory turo9er ratioP cost of !oo# sol#H a9era!e i9etory at cost
This ratio shoul# 'e o the hi!her si#e a# #e$e#s o i#ustry. The
)9etory turo9er ratio at 9i$$y i#ustry is lo&er as com$are# to i#ustry*
&hich meas 9i$$y i#ustry maitais hi!her i9etory the the i#ustry*
ho&e9er cosi#eri! the sales fi!ure of 9i$$y i#ustry * it may 'e a ri!ht
#ecisio as it has 9olume of sales &hich is icreasi! year o year * thus the
i9etory turo9er ratio also kee$ o icreasi!.
Ho&e9er i the year .Y ;<><* the i9etory turo9er ratio has sho& a
#ecrease. This may 'e attri'ute# to the i#ustry 'ei! affecte# 'y slo&#o&.
)t sho&s that i#ustry has slo& !oo# mo9emet a# hece i9etory
turo9er has re#uce#. Althou!h com$ay has 'ou!ht ra& material i eGcess
so as to 'uy it at lo&er cost* co9ersio to fiishe# !oo# has oly 'ee #oe
as $er or#er. The stock of fiishe# !oo#s is ke$t as lo& as $ossi'le.
(orki! ca$ital turo9er?6
(orki! ca$ital turo9er ratio P salesH et (orki!
(orki! ca$ital turo9er ratio i#icate# the 9elocity of the utiliIatio of et
(orki! ca$ital. This ratio i#icates the um'er of time the (orki! ca$ital
is ture# o9er i the course of a year. This ratio measures the efficiecy &ith
&hich the (orki! ca$ital is use# 'y the firm. A hi!her i#icates a
utiliIatio of (orki! ca$ital.
There has 'ee a #i$ i the (orki! ca$ital turo9er of the (orki!
ca$ital turo9er of the or!aiIatio* &hich mi!ht mea that (orki! ca$ital
has ot 'ee sufficietly rotate#. This mi!ht 'e a 'a# si! as the (orki!
ca$ital has to 'e ke$t as miimum as $ossi'le i the slo&#o&. -Gcess of
(orki! ca$ital thus shoul# 'e a9oi#e# at ay cost. The o$erati! cycle of
9i$$y i#ustry is lo!er as ra& materials are im$orte#. 2ue to #ecrease i
#ema#* the !oo# ha9e ot mo9e# at the s$ee# it shoul# ha9e mo9e#.
Cre#itors turo9er ratio?6
The cre#itors turo9er ratio i#icates the um'er of times Cre#itors are
rotate# i year a# i#icati9e measure of or!aiIatioFs &orki!.
The Cre#itors turo9er 'ee icreasi! stea#ily o9er the $erio# &hich may
'e attri'ute# to lar!e icreasi! sales each year &hich esure that Cre#itors
Are rotate# fast o9er the year a# (orki! ca$ital is also ke$t miimum as
$ossi'le. There has ho&e9er 'ee si!ificat icrease i the Cre#itorFs
turo9er the .Y ;<>< &hich may 'e attri'ute# to slo&#o& as Cre#itors are
ot 9ery comforta'le !i9i! cre#it sales of hi!h 9olume es$ecially &he
#ema# for ,oya $ro#uct has !oe #o& si!ificatly i the last toe Kuarters
As ma"ority of sales is throu!h eG$ort* the $aymet terms are $re
#eci#e# a# &ork o letter of cre#it. The terms 9ary &ith each of the
$urchase or sale a# #e$e# o 'oth 'uyer a# the seller.
A9era!e $aymet $erio#?6
A9era!e $aymet $erio# is the time for &hich the $aymet for the !oo#s
take o cre#it is #oe. A9era!e $aymet $erio# of com$aies e"oyi!
'ra# ame is !eerally hi!h. This is 'ecause cre#itors are sure a'out the
recei9i! of $aymet as 'i! 'ra# com$aies #o ot !eerally #efault o
their terms.
1ike the tre# i the collectio $erio# the $aymet $erio# has sho& the
similar tre#. The a9era!e $aymet $erio# &as a'out C; #ays i year ;<><
&hich has icrease# to D< #ays #uri! the year;<<=. The slo&#o& i the
year ;<>< 'rou!ht it 'ack to almost le9els of year ;<<D. )t is almost
2ayFs re#uctio.
O$erati! cycle ?
(orki! ca$ital O$erati! cycle ?6


.Y ;<<D
The fiacial year ;<<D that is ;<<D6;<<= has a total o$erati! cycle $erio#
of >< #ay. AalyIi! it further &e o'ser9e that?
Ra& material to &ork i $rocess?
(ork i $rocess to fiish !oo#?
()0
CR-2)TOR
,
RA(
MAT-R)A1
./
,A1-,
2-BTOR,
CA,H
.iishe# !oo#s to eG$ort
2e'tors to cash? B< #ays
Cash to cre#itors? ;E #ays
This makes it a total of > to ; #ays. The ra& material &hich iclu#es ,oya
'ea. Most of the ra& materials are im$orte# form all area of m.$ a#
$rocesse# here to co9ert to fiishe# !oo# &hich iclu#e ,oya oil* #eoilcake
u!!ets a# lecithi. as the ra& material are im$orte#* the i9etory has to
'e ke$t for a lo!er $erio# of time i stock.
The co9ersio of &ork i $rocess to fiishe# !oo# has take a total of ; to
B hours &hich sho&s hi!hly efficiet $lat cosi#eri! the fact that ,oya oil
has to u#er!o lar!e um'er of $rocesses 'efore it 'ecome usa'le.
The co9ersios of fiishes !oo# to sale has take a total of ; hours #ays
&hich is a !oo# si! a# si!ifies the Kuality of #eoilcake $ro#uce at 9i$$y
i#ustry lt# at #e&as a# #ema# for it i a'roa#. This may also 'e
attri'uti! to icrease i #ema# for leather $ro#uct.
2e'tors ha9e 'ee realiIi! after the $erio# of B< &hich is hi!her as
com$are# to i#ustry i the same se!met. The collectio $erio# has 'ee
take out earlier. But there is ot much to &orry cosi#eri! the fact 9i$$y
eG$ort its $ro#ucts oly to re$ute# 'ra# of -ast Asia a# sice the #ema#
for the $ro#uct has 'ee !oi! u$ there are lesser cha!e of 'a# #e'ts.
Cre#itors ha9e 'ee realiIi! after $erio# of B< #ays &hich is Kuite ormal
as most of the ra& material is im$ort form m.$. a# $rocesse# here . the ra&
material are ke$t for $erio# of D6= #ays oly &hich im$lies cre#itors are $ai#
oly &he $rocessi! of material start. A#9ace recei9e# form the customer
&oul# 'e a##itioal hel$ to the the $aymet to cre#itors . the also cre#itors
ha9e faith i the 'ra# ame a# are &illi! to !i9e lar!e cre#it terms as
com$are# to other i#ustries to other i the same sector.
.Y ;<<=
The fiacial year ;<<D that is ;<<D6;<<= has a total o$erati! cycle $erio#
of; to B hours . AalyIi! it further &e o'ser9e that?
()0
CR-2)TOR
,
RA(
MAT-R)A1
./
,A1-,
2-BTOR,
CA,H
Ra& material to &ork i $rocess?
(ork i $rocess to fiish !oo#?
.iishe# !oo#s to eG$ort
2e'tors to cash? B< #ays
Cash to cre#itors? ;E #ays
This makes it a total of > to ; #ays. But icrease the $ro#uct Kuality. The
ra& material $urchase this year has !oe u$ 'y almost >B L as com$are# to
year ;<<D i atici$atio for hi!her #ema#. Most of the ra& materials are
im$orte# from the m.$ a# $rocesse# hear to co9ert to fiishe# !oo# &hich
iclu#e ,oya oil a# #eoil cake. As the ra& materials are im$orte#* the
i9etory has to 'e ke$t for a lo!er $erio# of time i stock. As the
i9etory or#ere# is lar!e as com$are# to last year* the ra& material
i9etory has laste# for more !oo# the the last year. The com$ay also
$laces the or#er. for ra& material i 'ulk so as to o'tai tra#e #iscout a#
cash #iscout. The ra& materials are $erisha'le.
The co9ersio of fiishe# !oo# to sales has take a total of ; to B hours
#ays &hich sho& that there is hi!h #ema# for the ,oya $ro#uct i the
coutries &here 9i$$y has 'ee eG$orti!. The $ro#uce# &ere i lar!er
Kuatity as com$are# to $re9ious year 'ut &ere sol# i lesser um'er of
#ays.
2e'tors ha9e 'ee realiIe# after the $erio# of B< #ays &hich is hi!her as
com$are# to i#ustries i the same se!met. The collectio $erio# has 'ee
take out earlier. )t may 'e cosi#ere# reasoa'le as most of the 9i$$y
i#ustrial $ro#ucts are for the iteratioal cosum$tio a# thus realiIatio
of $aymet takes time as $aymet is #oe o recei9i! the cosi!met.
Ho&e9er #e'tors are of !oo# Kuality a# esta'lishe# 'ra#s so #e'torFs
realiIatio &ill ot 'e much $ro'lem.
Cre#itors ha9e allo&e# !reater cre#it $erio# as com$are# to last year* same
of &hich may 'e cotri'ute# to hi!her $urchases. The #ema# for the ,oya
$ro#ucts has !oe u$* so the com$ay is i 'etter $ositio to e!otiate for
the $rice. Also com$ay has icrease the a#9ace $aymet so that ra&
material ca 'e #eli9ere# faster a# more 9olume of ra& material ca
actually 'ou!ht cosi#eri! cash #iscout 'ei! !i9e to the com$ay.
())))
.Y ;<><
The fiacial year ;<>< that is ;<<=6;<>< has a total o$erati! cycle $erio#
of C= #ay. AalyIi! it further &e o'ser9e that?
()0
CR-2)TOR
,
RA(
MAT-R)A1
./
,A1-,
2-BTOR,
CA,H
Ra& material to &ork i $rocess?
(ork i $rocess to fiish !oo#?
.iishe# !oo#s to eG$ort
2e'tors to cash? B< #ays
Cash to cre#itors? ;E #ays
The makes it a total of > to ; #ays . The ra& material $urchase# this year has
!oe u$ 'y almost >@.EL as com$are# to ;<<= i atici$atio for hi!her
#ema#. The co9ersio $erio# has !oe u$ 'y fiftee #ays &hich may 'e
attri'ute# to icrease i ra& material $urchase.
The co9ersio of &ork i $ro!ress to fiishe# !oo# has ; to B hours &ith
hi!h le9el of the Kuality of $ro#ucts &hich is Kuit less as com$are# to last
year. )ts may 'e attri'ute# to $olicy of com$ay to $ro#uce oly as $er the
#ema# i the market. The ra& materials are $rocesse# as a# &he or#er
arri9es.
The co9ersio of fiishe# !oo# to sales has take a total of EC &hich sho&s
that there is still #ema# for the ,oya $ro#ucts i the coutries &here 9i$$y
has 'ee eG$orti!. ,ales as $er the or#er ha9e hel$e# the uit to cut #o&
the cost of stocki! fiishe# !oo# i the &ere houses.
2e'tors ha9e 'ee realiIe# after $erio# of @D #ays &hich is lo&er as
com$are# to time offere# 'y 9i$$y its #e'tors. The collectio $erio# has
'ee take out earlier. the cha!e may 'e attri'ute# to the $olicy a#o$te# 'y
9i$$y i or#er to #eal &ith !lo'al slo&#o&. )t has take a cautioary
a$$roach as #ema# for the soy'eas $ro#ucts is $lummeti! throu!hout the
!lo'e a# it may result i #ro$ of sales of esta'lishe# $ro#uct * &hich may
make $aymet realiIatio 'y it much more com$leG task. ) or#er to $re9et
the #e'tors form #efaulti! the $aymet* 9i$$y has re#uce# the cre#it $erio#
allo&e# to B< #ays .as 9i$$y i#ustries #eal &ith all ty$es of com$ay * 'a#
#e'ts must ot 'e a 9ery freKuet affair.
Cre#itorFs $aymet $erio# has a!ai come 'ack to miimum B< #ays* same
as i year;<<D. The $heomea may 'e attri'ute# to the a#9ace !i9e 'y
the com$ay. There is @<L rise i the a#9ace !i9e &hich is 9ia'le to the
occur as #ema# for $ro#ucts has !oe #o&. Ho&e9er* a iteresti! thi!
&orth othi! is that ra& material $urchase has !oe u$. This is a strate!y
a#o$te# 'y the com$ay to com'at slo&#o&. The $rices of ra& materials
ha9e !oe #o& #ue to re#uctio a# com$ay is seei! its as a
o$$ortuity to 'uy ra& material at chea$est of cost. Ra& material is o
$erisha'le so this chea$ material ca 'e use# later.
Coclusios #ra&?
>. ha# there 'ee o slo&#o&* the com$ay coul# ha9e easily
sur$asse# the last yearFs $rofit of ;*<=E laces as it ha# alrea#y eare#
a $rofit of >E;E laces i first to& Kuarters of year ;<><.
;. The sales fi!ure of the com$ay ha9e #ro$$e# to a certai eGte#
from @E.>D; laces to @B=@@ laces &hich may 'e cosi#ere# a effect
of slo&#o&.
B. The a#9ace o'taie# from the customers has icrease# stea#ily o9er
the last three year. )t has icrease# for @BBlaces to AC; laces &hich is a
si! of !oo# $olicy. They are stri9i! to make its more a# more
a#9ace form the customers so as to re#uce the #e$e#ecy 9alue of
le9el of customerFs cofi#ece o the $ro#uct.
@. Ne!otiatio form 'ak !as also come #o& i &hich 'ill #iscouti!
is #oe 'y the 'ak. The com$ay is tryi! to make its o& $aymets
rather the 'orro&i! it from the 'ak o short term. )ts has come
#o& from ;;C laces to @> laces
E. (ork i $rocess from ;<CB laces to >ED< laces &hich is a si!ificat
#eclie. The com$ay has ma#e a $olicy to $ro#uce oly as $er or#er
a# re#uce the fiishe# !oo# stock to miimum $ossi'le le9el.
A. Cash a# 'ak 'alaces ha9e icrease# maifol# form C.@E laces to
@<D laces. This su##e cha!e i strate!y is a measure to re#uce cost
of $ro#uctio. This cle9er strate!y 'y the com$ay is o$$ortuity
'uyi! as ,oya ra& material ca store# o9er lo! $erio# of time
&ithout ay effect o it. This i9estmet is set to !i9e to the 'eefit to
the com$ay i the future.
C. the maufacturi! a# o$erati! cost rise si!ificatly from @A<<
laces to E;DC laces &hich may ot 'e !oo# si! . The cost of
$ro#uctio has !oe u$ a# com$ay is take measures to re#uce it.
D. As com$are# to first half of year ;<>< ;=<B laces to seco# half of the
year (;BDBlaces) there is a si!ificat ree#ucatio.
=. .iishe# !oo#s stock has also re#uce# form BB>>@ laces i first t&o
Kuarters of ;<>< to ;BB< laces i last t&o Kuarters.
><.The fiGe# assets acKuire# 'y the com$ay ha9e icrease# !ra#ually
o9er the $erio# from @=C= laces i ;<<= to ED<< laces. This sho&s the
com$ayFs assessmet of the future reKuiremets.
O the &hole * as $er my 9ie& the com$ay is seei! this $hase of
slo&#o& as a o$$ortuity of 'uyi! thi!s at lo&er i other &or# is ?
o$$ortuity 'uyi!% the com$ay is i9esti! kee$i! future i the mi#
a# is ho$eful of situatio im$ro9i! i the ear future. ,ice the i9estmet
are lo! term* this is a calculate# risk may rea$ hu!e 'eefits for the
com$ay i future.
)M01)CAT)ON, .OR .UTUR- R-,-ARCH?6
The #ata use# 'y me &as collecte# from the com$ay sources form the ,oya
oil a# ,oya $ro#ucts #i9isio. This $ro"ect ca further 'e im$ro9e# 'y
taki! the mothly sales #ata form marketi! #e$artmet a# o'ser9i! the
tre#. The tre# aalysis &oul# sho& the cha!es taki! $lace .also
i9etory maa!emet ca 'e stu#ie# more i #e$th as there is a lar!e
i9etory &hich ca actually #e9elo$ Kuite a !oo# u#ersta#i!.
1)M)TAT)ON O. TH- 0RO4-TCT?6
The $ro"ect has limitatio for use of oly seco#ary #ata. 2ue to the ature
of the $ro"ect* there &as o ee# for the collectio of the $rimary #ata.
R-.-R-NC-,?6
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