TABLE OF CONTENTS

CHAPTERS TITLE PAGE

NO
ABSTRACT I
LIST OF TABLE II
LIST OF CHART III
INTRODUCTION
1.1 INTRODUCTION OF THE STUDY 01
1.2 INTRODUCTION OF THE INDUSTRY 06
I 1.3 ABOUT THE COMPAY PROFILE 11
1.4 OBJECTIVES OF THE STUDY 19
1.5 SCOPE OF THE STUDY 20
1.6 LIMITATIONS OF THE STUDY 21
II REVIEW OF LITERATURE 22
III RESEARCH METHODOLOGY 27
IV DATA ANALTSIS AND INTERPRETATION 31
CONCLUSION
5.1 FINDINGS 66
V 5.2 SUGGESTION 69
5.3 CONCLUSION 70
BIBLIOGRAPHY 71
APPENDIX 72
 ABSTRACT

In this paper an attempt is made to study the impact of Receivables Management on

working capital. To accomplish this research objective data have been collected from the annual
reports of select our firm for the study period of five years from 2017 to 2021. Cash is the life blood
of a business firm; it is needed to acquire supplies, resources, equipment and other assets used in
generating the product and services provided by the Supreme Steel Industry. More fundamentally,
cash is the medium of exchange which allows management to carry on the various activities of the
business firm from day to day. Without cash or at least access to it, bankruptcy becomes a grim
possibility the ratios which highlight the efficiency of receivables management this, the size of
Receivables and average collection period have been computed, ratio analysis, trend analysis and
comparative balance sheet were also used to know the impact of Receivables Management. The size
of receivables and receivables turnover Ratio were considered as dependent variables. The
investigation reveals that the receivables management across cement industries is efficient and
showing significant impact on size of receivables and receivables turnover Ratio.
 LIST OF THE TABLES

NO OF THE PARTICULAR PAGE NO

TABLES
4.1 WORKING CAPITAL TURNOVER RATIO 33
4.2 INVENTORY TURNOVER RATIO 35
4.3 INVENTORY CONVERSION PERIOD 37
4.4 DEBTORS TURNOVER RATIO 39
4.5 DEBTORS COLLECTION PERIOD 41
4.6 GROSS PROFIT RATIO 43
4.7 NET PROFIT RATIO 45
4.8 CUREENT RATIO 47
4.9 CREDITORS TURNOVER RATIO 49
4.10 CREDITOR COLLECTION PERIOD 51
4.11 CURRENT ASSEST TURNOVER RATIO 53
4.12 FIXED ASSET TURNOVER RATIO 55
4.13 FIXED ASSEST RATIO 57
4.14 TREND ANALYSIS OF CASH AND BANK 59
4.15 TREND ANALYSIS 61
4.16 CASH CYCLE FOR THE YEAR 2017 – 2021 63
4.17 CASH FLOW STATEMENT 65
 LIST OF THE CHARTS

NO OF THE PARTICULAR PAGE NO

CHARTS
4.1 WORKING CAPITAL TURNOVER RATIO 34
4.2 INVENTORY TURNOVER RATIO 36
4.3 INVENTORY CONVERSION PERIOD 38
4.4 DEBTORS TURNOVER RATIO 40
4.5 DEBTORS COLLECTION PERIOD 42
4.6 GROSS PROFIT RATIO 44
4.7 NET PROFIT RATIO 46
4.8 CUREENT RATIO 48
4.9 CREDITORS TURNOVER RATIO 50
4.10 CREDITOR COLLECTION PERIOD 52
4.11 CURRENT ASSEST TURNOVER RATIO 54
4.12 FIXED ASSET TURNOVER RATIO 56
4.13 FIXED ASSEST RATIO 58
4.14 TREND ANALYSIS OF CASH AND BANK 60
4.15 TREND ANALYSIS 62
 CHAPTER – 1

INTRODUCTION

Finance is one of the most primary requisites of a business and the modern management
obviously depends largely on the efficient management of the finance. Financial statements are
prepared primarily for decision making. They play a dominant role in setting the framework of
managerial decisions. At the right time to preserve solvency from the right sources and at the
right cost of capital.

The term financial analysis is also known as analysis and interpretation of financial
statements’ refers to the process of determining financial strength and weakness of the firm by
establishing strategic relationship between the items of the Balance Sheet, Profit and Loss
account and other operative data. The purpose of financial analysis is to diagnose the
information contained in financial statements so as to judge the profitability and financial soundness of
the firm.

Receivable Management is a strategy that involves the process of designing and

monitoring the policies that govern how a company extends credit to its customer base. The idea
behind this process is to minimize the amount of bad debt that the company will eventually incur
due to customers failing to honour their commitments to repay the total amount of the credit
purchases. Typically, the process of Receivable Management begins with evaluating potential
customers in terms of credit worthiness, identifying a credit limit that carries a level of risk that the
company is willing to assume, and then monitoring how well the customer makes use of that
available credit, including making regular payments within the terms and provisions associated
with the credit account.

Definition

A way of that a company will manage all aspects of the financial end of the business,
Such as the collection of revenue as well as the investing of the company's cash and other
assets. This helps businesses to stay afloat financially.

1
Introduction to Financial Management

Financial Management can be defined as

According to Howard & Upton, “Financial Management is the application of the

planning & control functions of the finance functions”.

Taking a commercial business as the most common organisational structure, the key
objectives of financial management would be to:

1. Create wealth for the business

2. Generate cash,
3. Provide an adequate return on investment bearing in mind the risks that the
business is taking and the resources invested

2
ABOUT THE INDUSTRY

INTRODUCTION
The Indian textile industry is one of the largest in the world with a massive raw
material and textiles manufacturing base. Our economy is largely dependent on the textile
manufacturing and trade in addition to other major industries. About 27% of the foreign
exchange earnings are on account of export of textiles and clothing alone. The textiles and
clothing sector contributes about 14% to the industrial production and 3% to the gross domestic
product of the country. Around 8% of the total excise revenue collection is contributed by the
textile industry.

So much so, the textile industry accounts for as large as 21% of the total employment
generated in the economy. Around 35 million people are directly employed in the textile
manufacturing activities. Indirect employment including the manpower engaged in agricultural
based raw-material production like cotton and related trade and handling could be stated to be
around another 60 million.

A textile is the largest single industry in India (and amongst the biggest in the world),
accounting for about 20% of the total industrial production. It provides direct employment to
around 20 million people. Textile and clothing exports account for one-third of the total value of
exports from the country. There are 1,227 textile mills with a spinning capacity of about 29
million spindles. While yarn is mostly produced in the mills, fabrics are produced in the
powerloom and handloom sectors as well. The Indian textile industry continues to be
predominantly based on cotton, with about 65% of raw materials consumed being cotton. The
yearly output of cotton cloth was about 12.8 billion m (about 42 billion ft).

The manufacture of jute products (1.1 million metric tons) ranks next in importance to
cotton weaving. Textile is one of India’s oldest industries and has a formidable presence in the
national economy inasmuch as it contributes to about 14 per cent of manufacturing value-
addition, accounts for around one-third of our gross export earnings and provides gainful
employment to millions of people. They include cotton and jute growers, artisans and weavers
who are engaged in the organized as well as decentralized and household sectors spread across
the entire country.

3
INDIAN TEXTILE INDUSTRY STRUCTURE AND GROWTH

India’s textile industry is one of the economies largest. In 2000/01, the textile and
garment industries accounted for about 4 percent of GDP, 14 percent of industrial output, 18
percent of industrial employment, and 27 percent of export earnings (Hashim). India’s textile
industry is also significant in a global context, ranking second to China in the production of
both cotton yarn and fabric and fifth in the production of synthetic fibers and yarns.

In contrast to other major textile-producing countries, mostly small-scale, nonintegrated

spinning, weaving, cloth finishing, and apparel enterprises, many of which use outdated
technology, characterize India’s textile sector.

Some, mostly larger, firms operate in the “organized” sector where firms must comply
with numerous government labor and tax regulations. Most firms, however, operate in the
small-scale “unorganized” sector where regulations are less stringent and more easily evaded.

The unique structure of the Indian textile industry is due to the legacy of tax, labor, and
other regulatory policies that have favored small-scale, labor-intensive enterprises, while
discriminating against larger scale, more capital-intensive operations. The structure is also due
to the historical orientation towards meeting the needs of India’s predominately low-income
domestic consumers, rather than the world market.

Policy reforms, which began in the 1980s and continued into the 1990s, have led to
significant gains in technical efficiency and international competitiveness, particularly in the
spinning sector. However, broad scope remains for additional reforms that could enhance the
efficiency and competitiveness of India’s weaving, fabric finishing, and apparel sectors.

Structure of India’s Textile Industry

Unlike other major textile-producing countries, India’s textile industry is comprised

mostly of small-scale, nonintegrated spinning, weaving, finishing, and apparel-making
enterprises. This unique industry structure is primarily a legacy of government policies that
have promoted labor-intensive, small-scale operations and discriminated against larger scale
firms:

4
 • Composite Mills. Relatively large-scale mills that integrate spinning, weaving and,
sometimes, fabric finishing are common in other major textile-producing countries. In India,
however, these types of mills now account for about only 3 percent of output in the textile
sector. About 276 composite mills are now operating in India, most owned by the public sector
and many deemed financially “sick.”

• Spinning. Spinning is the process of converting cotton or manmade fiber into yarn to
be used for weaving and knitting. Largely due to deregulation beginning in the mid-1980s,
spinning is the most consolidated and technically efficient sector in India’s textile industry.
Average plant size remains small, however, and technology outdated, relative to other major
producers. In 2002/03, India’s spinning sector consisted of about 1,146 small-scale independent
firms and 1,599 larger scale independent units.

• Weaving and Knitting. Weaving and knitting converts cotton, manmade, or blended
yarns into woven or knitted fabrics. India’s weaving and knitting sector remains highly
fragmented, small-scale, and labor-intensive. This sector consists of about 3.9 million
handlooms, 380,000 “power loom” enterprises that operate about 1.7 million looms, and just
137,000 looms in the various composite mills. “Power looms” are small firms, with an average
loom capacity of four to five owned by independent entrepreneurs or weavers. Modern shuttle
less looms account for less than 1 percent of loom capacity.

• Clothing. Apparel is produced by about 77,000 small-scale units classified as

domestic manufacturers, manufacturer exporters, and fabricators (subcontractors).

Growth Industry of Textile

India has already completed more than 50 years of its independence. The analysis of the
growth pattern of different segment of the industry during the last five decades of post-
independence era reveals that the growth of the industry during the first two decades after the
independence had been gradual, though lower and growth had been considerably slower during
the third decade. The growth thereafter picked up significantly during the fourth decade in each
and every segment of the industry.

5
 The peak level of its growth has however been reached during the fifth decade i.e., the
last ten years and more particularly in the 90s. The Textile Policy of 1985 and Economic Policy
of 1991 focusing in the direction of liberalization of economy and trade had in fact accelerated
the growth in 1990s. The spinning spearheaded the growth during this period and man-made
fiber industry in the organized sector and decentralized weaving sector.

ROLE OF INDIAN TEXTILE INDUSTRY IN THE ECONOMY

Textile industry plays a significant role in the economy. The Indian textile industry is
one of the largest and most important sectors in the economy in terms of output, foreign
exchange earnings and employment in India. It contributes 20 per cent of industrial production,
9 per cent of excise collections, 18 per cent of employment in industrial sector, nearly 20 per
cent to the country’s total export earnings and 4 per cent ton the GDP.

The sector employs nearly 35 million people and is the second highest employer in the
country. The textile sector also has a direct link with the rural economy and performance of
major fiber crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which
employ millions of farmers and crafts persons in rural and semi-urban areas. It has been
estimated that one out of every six households in the country depends directly or indirectly on
this sector.

INDIAN TEXTILE INDUSTRY

Indian Textiles Overview

Indian Textile Industry contributes about 11 percent to industrial production, 14 per cent
to the manufacturing sector, 4 percent to the GDP and 12 per cent to the country's total export
earnings. It provides direct employment to over 35 million people, the second largest provider
of employment after agriculture. Besides, another 54.85 million people are engaged in its allied
activities.

6
 The fundamental strength of this industry flows from its strong production base of wide
range of fibres / yarns from natural fibres like cotton, jute, silk and wool to synthetic /man-made
fibres like polyester, viscose, nylon and acrylic. We can just track the strong multi-fibre strong
base by highlighting the following important positions reckon by this industry across globe are:

 Cotton – Second largest cotton and cellulosic fibres producing country in the world.
 Silk – India is the second largest producer of silk and contributes about 18% to the total
world raw silk production.
 Wool –India has 3rd largest sheep population in the world, having 6.15 crores sheep,
producing 45 million kg of raw wool, and accounting for 3.1% of total world wool
production. India ranks 6th amongst clean wool producer countries and 9th amongst
greasy wool producers.
 Man-Made Fibres- the fourth largest in synthetic fibres/yarns globally.
 Jute – India is the largest producer and second largest exporter of the jute goods.

In textile Scenario

In exports Cotton yarns, fabric, made ups etc made largest chunk with US$ 3.33
Billion or 26.5% in textiles category, and Ready Made garments (RMG)-cotton including
accessories made largest chunk with 4.67 Billion US $ or 37.1 % of total exports. Whereas,
manmade yarn and fabrics in textiles group and RMG–Man made fibers constituted second
position in the two categories, respectively. Carpets and woolen garments are other items
exported from India.

In global scenario

Developed countries' exports declined from 52.2% share in 1990 to 37.8 % in 2002.
And that of developing countries increased from 47.8% to 62.2 % in the same period. In
2003 the exports figures in percentage of the world trade in Textiles Group (for select
countries) were:

7
 COMPANY PROFILE
RBR Garments Private Limited is a Private Company incorporated on 20 May 2005. It
is classified as Indian Non-Government Company and is registered at Registrar of Companies,
Coimbatore. Its authorized share capital is Rs. 55,000,000 and its paid up capital is Rs.
50,308,072.
RBR Garments Private Limited's Annual General Meeting (AGM) was last held on 30
September 2017 and as per records from Ministry of Corporate Affairs (MCA), its balance sheet
was last filed on 31 March 2016.
Directors of RBR Garments Private Limited are Balasubramaniam Senthilkumar,
Balasubramaniam Shanmugasundaram and Arunasala Gounder Rathinasamy.
RBR Garments Private Limited's Corporate Identification Number is (CIN)
U18101TZ2005PTC011823 and its registration number is 11823.Its Email address is
ananthv25@gmail.com and its registered address is 284RAMAPIRAN COLONY
DHARAPURAM ROAD, TIRUPUR - , Tamil Nadu INDIA.
The Town of Export Excellence. This is how the Export Import Policy of 2002-2007
pays tribute to the enterprising town of Tirupur, South India. One of the largest foreign
exchange earning towns, it forms the major chunk of total knitwear exports from India (56%).
With an export turnover grossing more than Rs.5000 Crores (Rs.50 billion) in the last financial
year, it provides employment opportunities to close to one million people.
In this burgeoning town of exports, RBR Garments (P) LTD., is weaving a special place for
itself, with its extensive range of garments for men, women and children, of all ages.

8
About The Company

Indubitably it's the dynamic entrepreneurial spirit, found in the hosiery town of Tirupur
that has pushed it to a prominent position on the export map of India. RBR Garments (P) LTD.,
situated in this quintessential town of Tirupur, started operations in 1987 and later began the
export of garments in 1992. In the last decade and a half, RBR has become a leading player in
the export of knitted garments. What started in a small scale is today a Government Recognized
Export House producing nearly 500,000 pieces per month with the latest imported machineries.
At present the company has touched a group turnover of around $ 18 million and by 2006 it is
expected to touch $ 25 million.

Undoubtedly the world of apparels is a very exciting and challenging one given
the economic factors at play and the dynamic fashion scenario of a global market.

The people

The growth of RBR can be attributed to keep the commitment towards high
standards of quality, both in the production process and the end products. Undoubtedly
the management and the employees are a well-knit team dedicated to deliver quality.
The result of devote hard work and acumen in selecting the right person to the right job
has capitulated good results. The scrupulous planning for expansion and improvement
demands an equally meticulous implementation by the personnel.
The HR Department of RBR Garments takes every care to keep all employed in
the best morale. Training is a continuous process to keep productivity, in sync with
changing market demands.

Infrastructure

The quest for perfection and quality starts right from the raw material stage and
continues to the finished product. The entire production is managed in-house, to ensure that all
specifications and quality requirements are met promptly and accurately.

9
 All production facilities available at RBR come under the strict supervision of the
Quality Assurance Department. An elaborate system to control and monitor all orders is done
through an Order Management System, which tracks the status of each order in production.

Quality

Several tests are done to maintain quality of yarn such as

1. The black board test for yarn appearance.

2. The wrap block - for sliver testing

3. The wrap reel- for yarn count testing.

4. The Lea strength tester for yarn strength & CSP.

Fabric

The fabric undergoes quality control test at the Quality Control Laboratory that has all

facilities, to ensure that our garments meet the requirements and specifications. Tests are done

as per international standards.

10
The tests include

1. Colour fastness to mechanical wash

2. Colour fastness to rubbing

3. Perspiration test

4. Testing dimensional shrinkage stability

5. Garment Twist checking

Exports

Understanding the needs of clients, Quality and Timely delivery makes RBR a success
story in various countries. Serving to the latest trends with up gradation in technology, RBR
caters to a variety of clientele in U.S, Canada, Europe and Australia

Wind Power

The need to generate “green power” motivated RBR to set up its own Wind Mills to
produce Electric Power for internal consumption.

11
Knitting

The very latest 16, 20, 24 & 28 Gauge Circular Knitting Machines are engaged in the
production floor like Mayer & Cie from Germany, Italian Orizio Paulo A variety of knitted
fabrics are produced starting from the basic jersey, pique to the trendiest jacquards to texture
knits of all kinds.

Dyeing & Compacting

Dyeing
Dilmenler yarn dyeing machines are used for uniform, best and reproducible shades.
This is supported further by Mesdan-Italy wet splicing for a smooth knotless knitted stripes and
checks. The yarn dyeing capacity at present is 5 tons with added scope for expansion. Dilmenler
fabric dyeing machines are used for fabric of high handle, retaining all the natural
characteristics.

Eco friendly dyes ensure social accountability. The plant capacity at present is 10 tons
with more scope for expansion due to the fore-thought infrastructure. Yarn and fabric dyeing
facilities are fully supported by a most modern lab with Infra-Red dyeing machines and
automatic tubeless dispensers with testing procedures.

12
COMPACTING
The washed and laundered cloth is sent through the latest Tube-tex USA compacting
machine to control shrinkage. All processed fabric is pre-shrunk, so that the garments always
retain shape.

Garment Production

RBR has in its production line the best and truly sophisticated machinery capable of

producing productivity and quality. To minimize the wastage in fabric, the planning of cut

layout is done with the help of CAD Investronica. To utilize resources of men & machinery

machine more efficiently, the Production Monitoring is done with Barcode systems.

PRODUCT PROFILE

Kids Wear

The diverse collection of garments is focused on not just men & women, but children as

well. The Kids Wear comes in the most attractive of colours & designs for children of all ages.

13
Casual Wear

The casual collection guarantees a cool and trendy look that will surely make a Fashion

Statement.

Sports Wear

The spectacular Sports Wear will definitely make one stand out from the crowd. The

distinct sweatshirts are winners all the way. Assorted collections, for both men & women.

14
ADDRESS

RBR Garment Private Limited

M. Shanmugamasundaram

Door No. 284, Ramapiran Colony, Dharapuram Road

Tiruppur - 641608

Tamil Nadu, India

15
OBJECTIVES OF THE STUDY

1. To know the cash management in RBR Garments.

2. To determine how short term / Current obligations of the Company are met by the
Liquidity Ratio.
3. To know the Short term Solvency Position and the trend.
4. To identify the Cash Disbursement needs.
5. To understand the proportion of the components of current assets.
6. To know the effective utilization of assets in day-to-day activities.
7. To know the cash position of the company.

16
SCOPE OF THE STUDY

1. The study only analyze the cash and Receivable management

2. It helps to take short term financial decision.

3. It analyses the concern RBR Garments in Tiruppur only. It would not be applicable to
the industry

4. It indicates the cash requirement needed for plant or equipment expansion

programmers.

5. It helps to meet routine cash requirement to finance the transaction.

6. It reveals the liquidity position of the firm by highlighting the various sources of cash
and its uses.

17
LIMITATIONS OF THE STUDY

 The study is made for certain period only i.e. 2016 – 2021.

 Difficulty of getting access to some important data due to its sensitivity and secretive
nature.

 The non- uniformity in the accounting periods of the years under study made it difficult
to interpret the data concisely.

 It took time to collect data from the finance departments.

 The ratios are only financial indicators; they cannot be taken as final regarding financial
position of the firm.

 The data was approximated where ever necessary.

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 CHAPTER–II

REVIEW OF LITERATURE

Amalendu Bhunia (2015)1 studied on liquidity management, analyzed the short term
financial strength through the analysis of the working capital management of selected iron and
garments companies in India. The study revealed that actual values of working capital have
been found to be lower than the estimated values of working capital for the companies, such as
Garments industries and Indian Garments industries. There was a poor liquidity performance
existed in case of both, inefficient inventory management in case of and inefficient receivable
management in case of both the enterprises. It suggested that increase in additional investment
in raw materials, reduction in the burden of current liabilities were necessary in order to
improve the inventory management and liquidity position of these garments companies

Ramakrishnan (2015)2 has analyzed the liquidity performance of Company. During the
selected period of the study, it was found that the liquidity position of the company, on the basis
of current ratio as well as quick ratio, was not satisfactory. It indicated that the share of current
assets in total assets of the company, on an average, was 29.1 percent during the period of
study. It was suggested that to maintain overall control of liquidity position, the company
should give special attention to the management of current assets. He found that the degree of
influence of liquidity on its profitability was low and insignificant.

Pandey (2016)3 found that the firm may gain adequate profits, but may suffer from
shortage of cash because its growing needs may be consuming cash very first so that
management should look to ways of increasing cash inflows in the firm and minimizing cash
outflows reducing operating expenses then the surplus cash may be managed into an investment
portfolio.

Saleemi (2016)4 found that organizations that have ineffective cash management cannot
achieve desired levels of profits and these firms unfortunately will end up because of failing to
achieve the said main objective. Researcher further elaborated that if cash management is
properly monitored, it becomes easier to estimate profits to be generated by these firms.

Dr. Radhakrishnan (2017)5 has deeply analyzed short term liquidity management of
two market leader garments companies of India. The study reveals that lack of working capital

19
management with specific reference to receivables and inventory management, both giant
company’s profitability is highly affected with the help of regression model, relationship of
profitability with current ratio, absolute liquid ratio, age of inventory and age of debtors had
been established indicates that there is nearly cent percent relationship between profitability in
terms of return on capital employed and short term liquidity factors in case of Garments
industries Limited. It further reveals that increase in liquid ratio, debt equity ratio and age of
creditors having negative relationship with the profitability of the firm in case of Garments
industries Limited. In case of Garments industries Limited only one co-efficient was associated
with profitability of the firm positively which is current ratio. Inverse relationship has been
found between profitability and increase in liquid ratio, absolute liquid ratio, debt equity ratio,
age of inventory, age of debtors and age of creditors. Inventory management as well as
receivable management affects overall short term liquidity of the firm which creates acute
shortage of cash which ultimately results into overall reduction in the profit.

Kakuru (2017)6 indicated that SMEs in any period was both cash receipts and cash
disbursement with the net balance either a surplus or a deficit and to ensure that if cash receipts
and disbursement are synchronized the management should aim at a zero balance that is to say
in investing the surplus cash for profitability. Researcher further explained that if, in case of a
deficit, the firm aims at increasing the cash inflows in the firm that helps to settle debts in time,
reduce period for payment from its clients that increases the availability of cash in the firm.
Such surplus cash can finally be invested to maximize profit.

Kam C. Chan (2018)7 We study the effect of shareholding on corporate cash

management in China. We document that for state-owned enterprises (SOEs) with some of their
shares owned by garments industry, the market value of cash holdings is less, and the
overinvestment of free cash flow is more than those SOEs without shareholding. For non-SOEs,
we do not find such an adverse impact. We also find that the adverse impact of garments
shareholding is confined to state-owned banks owning SOE shares and stronger for pyramidal
structure than those of non-pyramidal structure SOEs. The Chinese environment offers lessons
that can help other emerging markets to review their garments industry shareholding
regulations.

Zeeshan Hafeez et al (2018)8 Besides their basic nutritional role, dietary contain
bioactive peptides which are encrypted in their sequence and may modulate different body

20
functions such as digestive, cardiovascular, immune and nervous systems, and therefore
contribute in maintaining consumer health. Currently, Garments are considered to be the major
source of bioactive peptides. The occurrence of these peptides has already been reported in
fermented Garments products such as yogurt, sour Garments or kefir and some of them have
been shown to confer health benefits. This review focuses on different strategies that could be
employed to enhance the production of bioactive peptides from the Garments that will be
consequently used to functionalize the fermented Garments products. Three types of strategies
are developed. The first exploits the proteolysis system of lactic acid bacteria (LAB) or
Garments grade enzymes or combination of both to release the functional peptides from the
Garments directly in the fermented Garments products. The second concerns the
supplementation of the fermented Garments products with the bioactive peptides obtained
outside of the product through the hydrolysis of the purified by the same enzyme sources.
Finally, the last consists in the production of the bioactive peptides, initially identified from the
milk-proteins, by microorganisms using recombinant DNA technology.

Darand L. Borneman (2019)9 The objective of this study was to determine if a

correlation exists between standard plate count (SPC) and somatic cell count (SCC) monthly
reported results for Wisconsin dairy producers. Such a correlation may indicate that Wisconsin
producers effectively controlling sanitation and Garments temperature (reflected in low SPC)
also have implemented good herd health management practices (reflected in low SCC). The
SPC and SCC results for all grade A and B dairy producers who submitted results to the
Wisconsin Department of Agriculture, Trade, and Consumer Protection, in each month of 2012
were analyzed. Grade A producer SPC results were less dispersed than grade B producer SPC
results. Regression analysis showed a highly significant correlation between SPC and SCC, but
the R2 value was very small (0.02–0.03), suggesting that many other factors, besides SCC,
influence SPC. Average SCC (across 12 mo) for grade A and B producers decreased with an
increase in the number of monthly SPC results (out of 12) that were ≤25,000 cfu/mL. A chi-
squared test of independence showed that the proportion of monthly SCC results
>250,000 cells/mL varied significantly depending on whether the corresponding SPC result was
≤25,000 or >25,000 cfu/mL.

Conor J. Doyle et al (2019)10 Spore forming bacteria are a significant concern for the
international dairy industry. Spores present in Garments survive heat treatments and can persist
during downstream processing. If they are present in sufficient numbers in dairy products they

21
can cause spoilage or lead to illness as a result of toxin production. While many reviews have
highlighted the threat posed by spores of aerobic bacteria to the dairy industry, few have
focused on problems caused by the array of different species of anaerobic spore formers
(Clostridium and related genera) that can be found in milk. This is despite of the fact that
members of these bacteria are found throughout the dairy farm environment, and can be
toxigenic, neurotoxigenic or spoilage bacteria. This makes the possible presence of Clostridium
and related spores in bulk tank Garments (BTM) important from both a financial and a public
health perspective. In this review dairy associated anaerobic sporefromers are assessed from a
number of perspectives.

Kwang-SookHuh (2020)11 This study investigates the impact of acquisitions on the

garments maker's performances including PER and technical efficiency in the world garments
industry over the period 1992–2011. The study classifies the acquiring firms into two types,
garments makers and financial institutions, to capture the differences of the effect of
acquisitions depending on the type of acquirers. In this context, the study examines whether
acquisitions by financial institutions result in bubbles in the garments industry. Empirical results
demonstrate that garments makers acquired by financial institutions have achieved relatively
poor or insignificant operating performances, although there is a statistically significant increase
of PER.

Kolos Cs.Ágoston (2020)12 Improving the cash management techniques have already
received significant attention in the literature as a separate optimisation problem for banks and
the independent firms that supply cash. This article concentrates instead on a further possibility
of cost reduction: optimising the cash management problem as one single problem. Doing so,
contractual prices between banks and the cash in transit firms can be in general modified
allowing for further cost reduction relative to individual optimisations. In order to show the
pertinence of this procedure, we have determined possible Pareto-improvement re-contracting
schemes based on a Baumol-type cash demand forecast for a Hungarian commercial bank
resulting in substantial cost reduction.

JingWang (2021)13 We explore theoretically and empirically the relationship between

firm productivity and liquidity management in the presence of financial frictions. We build a
dynamic investment model and show that, counter to basic economic intuition, more productive

22
firms could demand less capital assets and hold more liquid assets compared to less productive
firms when financing costs are sufficiently high. We empirically test this prediction using a
comprehensive dataset of Chinese manufacturers and find that more productive firms indeed
hold less capital and more cash. We do not, however, observe this for US manufacturers. Our
study suggests a larger capital misallocation problem in markets with significant financing
frictions than previously documented.

David.R.S (2021)14 The study concluded that proper composition of net current assets
should be sustained by the means of indexes of Indian Garments Companies as well as any
short term finance obtained should be paid-out within short period of time otherwise it dents out
operating profit. However, best management team could not create any impact on the
profitability through better working capital management. The examination of the said research
has ignored seasonal impact on profitability as well as working capital management. The
researcher has not taken into account benchmark ratio of Garments Industries in deriving any
conclusion as well as any changes in the organization which are highly affecting short term
liquidity are ignored

23
 CHAPTER-III

RESEARCH

METHODOLOGY

Research Methodology

Methodology is the systematic, theoretical analysis of the methods applied to a field of

study, or the theoretical analysis of the body of methods and principles associated with a branch
of knowledge. It, typically, encompasses concepts such as paradigm, theoretical model, phases
and quantitative or qualitative techniques.

Research Design

The Research approach used for the study is descriptive. The form of the study is on the
cash management in general and specific to the final position. A research design is concerned
with turning question into a testing project. The best design depends on the research questions.

The research design has been considered as a “Blue print” for research, dealing with at
least four problems: What question to study, what data are relevant, what data to collect, and
how to analyze the results.

Although some people dismiss descriptive research as `mere description' good

description is fundamental to the research enterprise and it has added immeasurably to our
knowledge of the shape and nature of our society. Descriptive research encompasses much
government sponsored research including the population census, the collection of a wide range
of social indicators and economic information such as household expenditure patterns, time use
studies.

24
Data Collection

Data collection is the process of gathering and measuring information on variables of

interest, in an established systematic fashion that enables one to answer stated research
questions, test hypotheses, and evaluate outcomes. Data collection is a term used to describe a
process of preparing and collecting data, for example, as part of a process of improvement or
similar project.

The purpose of data collection is to obtain information to keep on record, to make

decisions about important issues to pass information on to others. Primarily, data are collected
to provide information regarding a specific topic. The required data for the study are basically
secondary in nature and the data are collected from the audited reports of the company.

Secondary Data

The study has been made using secondary data, which are obtained from the data
collected from the audited annual reports of the company.

Period of the Study

The sources of data are from the annual reports of the company from the year 2016 to
2021.

Analytical Tools for the study

During the course of research for the researcher for analysis and interpretation of data is
given below has applied various tools.

 Ratio analysis

 Cash from operation

25
RATIO ANALYSIS

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are categorized as
Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios, Profitability
Ratios, and Market Value Ratios.

Ratio Analysis as a tool possesses several important features. The data, which are
provided by financial statements, are readily available. The computation of ratios facilitates the
comparison of firms which differ in size. Ratios can be used to compare a firm's financial
performance with industry averages. In addition, ratios can be used in a form of trend analysis
to identify areas where performance has improved or deteriorated over time.

26
CASH FROM OPERATION

A firm is well advised to hold adequate cash balance but should avoid excessive
balances. The firm has, therefore, to assess its need for cash properly. The cash budget is
probably the most important tool in cash management. It is device to help a firm to plan and
control the use of cash. It is a statement showing the estimated cash inflow and cash outflows
one budgeting sub period to another is highlighted by the cash budget.

27
 CHAPTER- IV

DATA ANALYSIS AND INTERPRETATION

ANALYSIS OF DATA

The analysis of data requires a number of closely related operations such as

establishment of categories, the application of these categories to raw data through coding,
tabulation and then drawing inferences. The unwieldy data should necessarily condense into a
manageable groups and tables for further analysis.

Thus, researcher should classify the raw data into some purposeful and usable
categories. Analysis work after tabulation is generally based on the computation of various
percentages, coefficients, etc., by applying various well defined statistical formulae.

INTERPRETATION OF DATA

The real value of research lies in its ability to arrive at certain generalizations. If the
researcher had no hypothesis to start with, he might seek to explain his findings on the basis of
some theory. It is known as interpretation. The process of interpretation may quite often trigger
off new questions which in turn may lead further researches.

RATIOANALYSIS

TURNOVER RATIOS

The turnover ratios or activity ratios indicate the efficiency with which the capital
employed is rotated in the business. The overall profitability of the business depends on two
factors: (i) the rate of return of capital employed; and (ii) the turnover, i.e., the speed at which
the capital employed in the business rotates.

28
WORKING CAPTIAL TURNOVER RATIO

Working capital of a concern is directly related to sales (i.e.) the current assets like
debtors, bills receivables, cash, stock etc., and change with the increase (or) decrease in sales.

Working capital =Current assets-Current liabilities

This excess of current assets over current liabilities is referred to as net working capital.
Working capital turnover ratio indicated the velocity of the utilization of net working capital.
This ratio indicated the number of times the working capital is turned over in the course of a
year. A higher ratio indicates efficient utilization of working capital and a low ratio indicated
otherwise.

Sales
WORKING CAPITAL TURNOVER RATIO = --------------------------
Working capital

29
 TABLE: 4.1
WORKING CAPITAL TURNOVER RATIO

Year Sales Networking capital Ratio

2016-17 316.00 35.81 8.82

2017-18 592.99 97.99 6.05

2018-19 773.40 101.23 7.64

2019-20 844.47 188.72 4.47

2020-21 654.39 164.32 3.98

Sources: Secondary data

INTERPRETATION:
The above table shows that the working capital turnover ratio is 8.82 in the year 2016-
2017 and decreased to 6.05 in the year 2017-18 and then it is increased to 7.64 in the year 2018-
19 and then it is decreased to 4.47 in the year 2019 - 2020 and then it is decreased to 3.98. This
shows working capital turnover ratio is decrease level.

30
CHART –- 4.1
WORKING CAPITAL TURNOVER RATIO

8.82
9
8 7.64
7
6 6.05
5
4 4.47
RATIO

3.98
3
2
1
0

2016-172017-18 2018-19 2019-20 2020-21

YEAR

31
INVENTORY TURNOVER RATIO
Inventory turnover ratio implicates the number of times the stock has been turned over
during the period and evaluates the efficiency with which a firm is able to manage its inventory.

Cost of goods sold

INVENTORY TURN OVER RATIO = ---------------------------------
Average stock

Opening stock + closing Stock

Average Stock = ---------------------------------------------
2

TABLE: 4.2
INVENTORY TURNOVER RATIO

Year Cost of goods sold Average stock Ratio

2016-17 20.17 15.67

316.00

2017-18 592.99 22.78 26.03

2018-19 773.40 28.60 27.04

2019-20 28.92 29.20

844.47

2020-21 654.39 47.35 13.82

Sources: Secondary data

INTERPRETATION:
The above table shows the inventory turnover ratio. From this it is inferred that in the
year 2016-17 the ratio is 15.67, in the year 2017-2018 the ratio is 26.03, in the year 2018-2019
the ratio is 27.04, in the year 2019-2020 the ratio is 29.20, in the year 2020-2021 the ratio is
13.82. From this it is inferred that in the year 2020-2021 it has decreased to 13.38.

32
 CHART – 4.2
INVENTORY TURNOVER RATIO

29.2
30 27.04
26.03
25

20
15.67
RATIO

13.82
15

10

0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR

33
 TABLE: 4.3
INVENTORY CONVERSION
PERIOD

Year No. Of Days Inventory

Inventory Conversion
turnover ratio period
(in days)

2016-17 365 15.67 23

2017-18 365 26.03 14

2018-19 365 27.04 13

2019-20 365 29.20 12

2020-21 365 13.82 26

Sources: Secondary data

INTERPRETATION:
The above table shows that the inventory conversion period. From that in the year 2016-
2017 in the conversion period is 23days, in the year 2017-2018 ,2020-21. The period shows
increasing trend by every year. The highest period is 26 days in the year 2020-21 and lowest
period is 12 days in the year 2019-20.

34
 CHART – 4.3
INVENTORY TURNOVER RATIO

30
26
25 23

20
14
RATIO

15 13 12

10

0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR

35
DEBTORS TURNOVER RATIO

The liquidity position of a concern to pay its short term obligations in time depends
upon the quality of its debtors. Debtors turn ratio indicates the velocity of debtors collection
firm (i.e.) it indicates the number of times average debtors are turned over during a year.

Sales
DEBTORS TURN OVER RATIO = ---------------------------------------------------
Average Debtors + Bills Receivable

TABLE: 4.4
DEBTORS TURNOVER RATIO

Year Sales Average Debtors Ratio

2016-17 64.57 4.89

316.00

2017-18 592.99 80.62 7.35

2018-19 773.40 128.9 6.00

2019-20 153.77 5.49

844.47

2020-21 654.39 161.39 4.05

Sources: Secondary data

INTERPRETATION:
The above table shows the Debtors turnover ratio. From this it is inferred that in the year
2016-2017 the ratio is 4.89, in the year 2017-2018 the ratio is 7.35, in the year 2018-2019 the
ratio is 6.00, in the year 2019-2020 the ratio is 5.49 in the year 2020-2021 the ratio is 4.05.
Finally inferred that the debtors turnover ratio is decreased to 4.05 in the year 2020-2021.

36
 CHART – 4.4
DEBTORS TURNOVER RATIO

8 7.35
7
6
6 5.49
4.89
5
4 4.05
RATIO

3
2
1
0

2016-172017-18 2018-19 2019-20 2020-21

YEAR

37
DEBTORS COLLECTION PERIOD
Debtor’s conversion period or Debtor Collection Period is the average time taken to
convert debtors into cash.

Debtors Collection Period = Days in Year

Receivable Turnover Ratio

TABLE NO 4.5
DEBTORS COLLECTION
PERIOD

YEAR NO.OF.DAYS IN RECEIVABLE DEBTORS

YEAR TURNOVER RATIO COLLECTION
PERIOD
(in days)
2016-17 365 4.89 75

2017-18 365 7.35 50

2018-19 365 6.00 61

2019-20 365 5.49 66

2020-21 365 4.05 90

Sources: Secondary Data

INTERPRETATION
The above table shows the Debtor Collection Period. From this it is inferred that
in the year 2016-2017 the ratio is 4.89 the period is increased in 75 days, in the year 2017-2018
the ratio is 7.35 the period is decreased in 50 days, in the year 2018-2019 the ratio is 6.00 the
period is increased in 61 days, in the year 2019-2020 the ratio is 5.49 the period is increased in
66 days, in the year 2020-2021 the ratio is 4.05 the period is increased in 90 days.

38
 CHART NO 4.5
DEBTORS COLLECTION
PERIOD
90
90
80 75
70 66
60 61
50 50
40
RATIO

30
20
10
0

2016-172017-18 2018-19 2019-20 2020-21

YEAR

39
GROSS PROFIT RATIO
The gross profit ratio is also known as gross margin ratio, trading margin ratio etc., it is
expressed as a “percent ratio”. The different between net sales and cost of goods sold is known
as gross profit.

Gross profit / Loss

GROSS PROFIT RATIO = -------------------------------------
Net Sales

TABLE – 4.6
GROSS PROFIT RATIO

Year Gross Profit / Loss Net Sales Ratio

2016-17 1.65 0.52

316.00
2017-18 2.94 592.99 0.49

2018-19 4.00 773.40 0.52

2019-20 5.61 0.66

844.47
2020-21 -8.03 654.39 -1.23

Sources: Secondary data

INTERPRETATION:
The above table shows the gross profit ratio. From this it is inferred that in the year
2016-2017 the ratio is increased to 0.52, in the year 2017-2018 the ratio is decreased to 0.49, in
the year 2018-2019 the ratio is increased to 0.52, in the year 2019-2020 the ratio is increased to
0.66, in the year 2020-2021 the ratio is decreased to -1.23.

40
 CHART – 4.6
GROSS PROFIT RATIO

0.8 0.66
0.6 0.52 0.49 0.52
0.4
0.2
0
-0.2
-0.4 2016-17 2017-18 2018-19 2019-20 2020-21
RATIO

-0.6
-0.8
-1
-1.2
-1.4

-1.23
YEAR

41
NET PROFIT RATIO
It establishes a relationship between net profit (after tax) and sales. It is determined by
dividing the net income after tax to the sales for the period and measures the profit per rupee of
sales.
Net profit / Loss
NET PROFIT RATIO = -------------------------------------------------- X 100
Net Sale

TABLE – 4.7
NET PROFIT RATIO

Net Profit / Loss Net Sales

Year Ratio (%)

2016-17 1.04 316.00 0.32

2017-18 1.81 592.99 0.30

2018-19 2.64 773.40 0.34

2019-20 3.63` 844.47 0.43

2020-21 -8.35 654.39 -1.27

Sources: Secondary data

INTERPRETATION:
The above table shows the Net profit ratio for the period of 2016-17 to 2020-21. The
ratio shows that (0.32) at 2016-17 and increased to (0.34) at 2017-18 and then it was increased
to -0.43 in 2019-20 and then Decrease to -1.27 in 2020-21. So the Net Profit Ratio is fluctuated
trend and decreasing trend.

42
 CHART – 4.7
NET PROFIT RATIO

0.6 0.43
0.4 0.32 0.3 0.34
0.2
0
-0.2
-0.4 2016-17 2017-18 2018-19 2019-20 2020-21
-0.6
RATIO

-0.8
-1
-1.2
-1.4

-1.27
YEAR

43
CURRENT RATIO:
Current ratio is the most common ratio for measuring liquidity. The current ratio is the
ratio of total current assets to total current liabilities. Current ratio of affirm measures its term
solvency i.e. ability to meet short term obligations. Current assets mean assets that will either be
used up or converted into cash within a year’s time or during the normal operating cycle of the
business, whichever is longer.

Current assets
Current assets ------------------------------
= Current liabilities

TABLE – 4.8
CURRENT RATIO

Year Current Assets Current liabilities Ratio

2016-17 57.48 21.67 2.65

2017-18 164.86 66.87 2.46

2018-19 157.11 55.88 2.81

2019-20 217.11 28.39 7.65

2020-21 211.95 47.63 4.45

Sources: Secondary data

INTERPRETATION:
The above table shows the current ratio is an indicator of the firm’s ability to meet its
current obligations. The lowest ratio (2.46) was obtained during the period 2017-18 and the
highest ratio (7.65) value obtained during the period 2019-20. The current asset ratio is above
than the Fluctuated in year by year. Therefore the current ratio is considered not satisfactory.

44
 CHART – 4.8
CURRENT RATIO

7.65
8
7
6
5
4 4.45
3
RATIO

2
1 2.65 2.81
2.46
0

2016-17 2017-18 2018-19 2019-20 2020-21

YEAR

45
CREDITOR TURNOVER RATIO
The accounts payable turnover ratio is a short term liquidity measures used to quantify
the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated
by taking purchases and purchase made from the suppliers and dividing it by the average trade
debtors.

Creditor Turnover Ratio = Purchase

Average Creditors

TABLE NO: 4.9

CREDITORS TURNOVER
RATIO

YEAR PURCHASE AVERAGE CREDITORS

(in thousand) CREDITORS TURNOVER RATIO
(in thousand)
2016-17 308.18 35.14 8.77

2017-18 581.00 43.58 13.33

2018-19 747.62 60.37 12.38

2019-20 767.35 41.57 18.46

2020-21 586.01 38.01 15.42

Source: Secondary Data

INTERPRETATION
The table shows creditor turnover ratio. Higher payable turnover ratio may
indicate the less period of credit enjoyed by the business and the business has a better liquidity
position. In the financial year 2019-20 creditor turnover ratio is high when compared to other
years. Then the creditor turnover ratio is decreased in the year 2020-21. Currently, the company
has 15.42 of creditor turnover ratio and ratio level is decreased when compared to previous
years.

46
 CHART NO: 4.9
CREDITORS TURNOVER
RATIO

20 18.46
18
15.42
16
13.33
14 12.38
12
RATIO

10 8.77
8
6
4
2
0

2016-172017-18 2018-19 2019-20 2020-21

YEAR

47
 CREDITOR COLLECTION PERIOD
Creditor Collection Period is the average time taken by the firm in paying its suppliers.

Creditors Collection Period = Days in Year

Creditor Turnover Ratio

TABLE NO: 4.10

CREDITOR COLLECTION
PERIOD

YEAR NO.OF.DAYS IN CREDITORS CREDITOR

YEAR TURNOVER RATIO COLLECTION
PERIOD
2016-17 365 8.77 42

2017-18 365 13.33 27

2018-19 365 12.38 29

2019-20 365 18.46 20

2020-21 365 15.42 24

Sources: Secondary data

INTERPRETATION
The above table shows the creditor collection period. From this it is inferred that
in the year 2016-2017 the ratio is 8.77 the period is increased to 42, in the year 2017-2018 the
ratio is 13.33 the period is decreased to 27, in the year 2018-2019 the ratio is 12.38 the period is
increased to 29, in the year 2019-2020 the ratio is 18.46 the period is increased to 20, in the year
2016-2017 the ratio is 15.42 the period is increasing.

48
 CHART NO: 4.10
CREDITOR COLLECTION
PERIOD

45 42
40
35
30 29
25 27
24
20
RATIO

20
15
10
5
0

2016-172017-18 2018-19 2019-20 2020-21

YEAR

49
 CURRENT ASSET TURNOVER RATIO:
The ratio between sales and the current assets is call current assets turnover ratio.

Current Asset Turnover Ratio = Sales / Current Asset

TABLE – 4.11
CURRENT ASSET TURNOVER RATIO

Year Sales Current asset Ratio

2016-17 316.00 57.48 5.50

2017-18 592.99 164.86 3.60

2018-19 773.40 157.11 4.92

2019-20 844.47 217.11 3.89

2020-21 654.39 211.95 3.09

Source: Annual Report

INTERPRETATION
The above table it is inferred that in the year 2016-2017 the current asset turnover
ratio 5.50, in the year 2017-2018 the current asset turnover ratio 3.60, in the year 2018-2019 the
current asset turnover ratio 4.92 in the year 2019-2020 the current asset turnover ratio 3.89, in
the year 2020-2021 the current asset turnover ratio 3.09

50
CHART – 4.11
CURRENT ASSET TURNOVER RATIO

6 5.5
4.92
5
3.89
4 3.6
3.09
RATIO

0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR

51
 FIXED ASSETS TURNOVER RATIO
This ratio determines efficiency of utilization of fixed assets and profitability of a
business concern. Higher the ratio more is the efficiency in utilization of fixed assets. A lower
ratio is the indication of underutilization of fixed assets.
Formula
Sales
Fixed assets turnover ratio = -------------------------------
Net fixed assets

Where net fixed assets = Fixed assets – Depreciation

TABLE – 4.12
FIXED ASSET TURNOVER RATIO

Year Fixed asset Sales Ratio

2016-17 0.87 316.00 0.003

2017-18 1.01 592.99 0.002

2018-19 0.88 773.40 0.001

2019-20 0.91 844.47 0.001

2020-21 0.92 654.39 0.001

Source: Annual Repor

INTERPRATATION
The above table shows the Fixed Asset Turnover Ratio for the period 2016 to 2021. In the
year 2016 – 2017 it is 0.003, and further 4 years it is been decreased to 0.002 and 0.001.so the
fixed asset turnover ratio is fluctuating and it is in decreasing trends.

52
CHART– 4.12
FIXED ASSET TIRNOVER RATIO

0.0035
0.003
0.003
0.0025
0.002
0.002
RATIO

0.0015
0.001 0.001 0.001
0.001
0.0005
0

2016-172017-18 2018-19 2019-202020-21

YEAR

53
 FIXED ASSET RATIO
The ratio establishes the relationship between fixed assets and long-term funds. The
objective of calculating this ratio is to ascertain the proportion of long-term funds invested in
fixed assets. The ratio is calculated as given below:

Formula
Fixed assets
Fixed assets ratio ----------------------------
= Long – term funds

The ratio should not generally be more than ‘1’. If the ratio is less than one it indicates
that a portion of working capital has been financed by long – term funds. It is desirable in that
part of working capital is core working capital and it is more or less a fixed item.
An ideal fixed assets ratio is 0.67

TABLE NO 4.13
FIXED ASSETS RATIO

Year Fixed Assets Long Term Funds Ratio

2016-17 0.87 0.00 0

2017-18 1.01 17.97 0.06

2018-19 0.88 30.62 0.03

2019-20 0.91 23.96 0.04

2020-21 0.92 27.36 0.03

Source: Secondary data

INTERPRETATION
The above table shows the fixed asset ratio for the period 2016-2021. In the year 2016 –
2017 the fixed asset ratio is 0.00, in the year 2017 – 2018 it is been increased to 0.06, in the last
three years it is been increased to 0.03, 0,04, 0,03

54
 CHART NO 4.13
FIXED ASSETS
RATIO
0.06
0.06

0.05
0.04
0.04
0.03 0.03
RATIO

0.03

0.02

0.01
0
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR

55
4.16 CASH CYCLE

Flow of cash those beings with payment for raw materials and ends with receipt of cash
on goods sold. Shorter then number of the days in the cycle, more then the amount of available
cash and lesser then the need to borrow, and also ‘called as cash conversion cycle or cash flow
cycle’.

TABLE NO: 4.16

CASH CYCLE FOR THE YEAR 2017-2021

Year Inventory Debtor Conversion Creditor Cash Cycle

Conversion Period Period (B) Conversion Period (A+B+C)
(A) (C)
23 75 42 140
2016-17

14 50 27 91
2017-18

13 61 29 103
2018-19

12 66 20 98
2019-20

26 90 24 140
2020-21

56
FORMULA
Cash Cycle = Inventory Conversion Period + Debtor Conversion Period +
Creditor Conversion Period
TURNOVER = No. of Working Days / Cash Cycle
2016-2017 = 365 / 140 = 2.61 times
2017-2018 = 365 / 91 = 4.01 times
2018-2019 = 365 / 103 = 3.54 times
2019-2020 = 365 / 98 = 3.72 times
2020-2021 = 365 / 140 = 2.61 times
AVERAGE TURNOVER = 2.61+4.01+3.54+3.72+2.61
= 16.49 / 5
= 3.30 TIMES

INTERPRETATION
The cash position in the year 2018 and 2019 is low and it is upward process on
during the year 2020 and 2021. In 2021 the cash position is 3.30 times.

57
 TABLE NO: 4.17
CASH FLOW
STATEMENT

Cash flow from operations:

Net earnings 654.39
Additions to cash:
Depreciation 0.36
Decrease in Account receivable 17.77
Increase in account payable 19.24 37.37
Increase in taxes payable -
691.76
Subtractions from cash:
Increase in inventories 12.65
Net cash from operations -7.32 5.33
Cash flow from investing:
Equipment 586.01 586.0
591.34
Cash flow from financing
Notes payable -
Cash flow for year ended 31 mar. 2022 100.42

58
 CHAPTER – V
FINDINGS, SUGGESTION AND CONCLUSION

FINDINGS

 The working capital turnover ratio is 8.82 in the year 2016-2017 and decreased to 3.98
in the year. This shows working capital turnover ratio is decrease level.
 The inventory turnover ratio in the year 2016-17 is 15.67 and in the year 2020-2021 it
decreased to 13.38.
 The Debtors turnover ratio was highest in the year 2017-2018 the ratio is 7.35 and
decreased to 4.05 in the year 2020-2021.
 The gross profit ratio - increased to 0.66, in the year 2020-2021 the ratio is decreased to
-1.23
 The Net profit ratio increased to (0.34) at 2017-18 and then it was increased to -0.43 in
2019-20.

59
 The current asset ratio is an indicator of the firm’s ability to meet its current obligations.
The ratio (2.46) was obtained during the period 2017-2018 and the highest ratio (7.65)
value obtained during the period 2019-2020. The current asset ratio is above than the
fluctuated in year by year. Therefore the current ratio is considered not satisfied.
 Then the creditor turnover ratio is decreased in the year 2021 – 2021. Currently, the
company has 15.42 of creditor turnover ratio and is ratio level is decreased when
compared to previous years.
 The creditor collection period. From this it is inferred that in the year 2016-2017 the
ratio is 8.77 the period is increased to 42, in the year 2017-2018 the ratio is 13.33 the
period is decreased to 27, in the year 2018-2019 the ratio is 12.38 the period is increased
to 29, in the year 2019- 2020 he ratio is 18.46 the period is increased to 20, in the year
2016-2017 the ratio is 15.42 the period is increasing.
 The current assets turnover ratio it is inferred that in the year 2016-2017 current turnover
ratio is 5.50, in the year 2017-2018 the current asset ratio 3.60, in the year 2018-2019
the current asset turnover ratio 4.92 in the year 2019-2020 the current asset turnover
ratio 3.89, in the year 2020-2021 the current asset turnover ratio 3.09.
 In the financial years the fixed asset turnover ratio for the period 2016-2021. I9n the
year 2016 – 2017 it is 0.003, and further 4 years it is been decreased to 0.002 and 0.001.
80 the fixed asset turnover ratio is fluctuating and it is in decreasing trends.
 Fixed assets ratio during the period 2016-17 to 2020-21. The table indicates that the
company has 0.00 in the year of 2016-17 Then next year Increased to 0.06 in 2017-18.
The last year Decreased 0.03 in the year of 2020-21. The Fixed asset ratio is Fluctuating
trend.
 The fixed asset ratio for the period 2016 – 2021. In the year 2016 – 2017 the fixed asset
ratio is 0.00, in the year 2017 – 2018 if is been increased to 0.06, in the last three year it
is been increased to 0.03, 0.04, 0.03.
 Cash and Bank value in the year 2020 will be Rs. -11.77 (in thousands) and in the year
2021 will be Rs. -13.57 (in thousands). It is negative in the company.

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 The Current assets have increased to 368.72% over the Five‐years period while the
current liabilities have increased to 219.80 and the working capital is 458.87. These
trend percentages reflect an unfavourable impact on net income because cost increased
at a faster rate than sales.
 The cash position in the year 2018 and 2019 is low and it is upward process on during
the year 2020 and 2021. In 2021 the cash position is 3.30 times.

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SUGGESTIONS

1. The company needs to minimize its cash expenses in order to increase its cash in hand,
cash at bank and other short term securities.
2. There is a need to maintain balance between profitability and liquidity which is only
possible if the company is having adequate cash balance.
3. The company should plan to maximize its net income after tax which in turn will help
the company to have adequate cash balance.
4. The company should have a check on its cash conversion cycle so that it can have proper
flow of cash throughout the year.
5. The company may try to improve its working capital position through long term sources.
It will create free flow of funds. So that the cash management and the company
performance will be in a good position.
6. The company should provide more credit facilities to the customer’s sales and also to
yield a good profit.
7. The company should concentrate on local sales over sales by export sales and
profitability of the concern.

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 CONCLUSION

The study shows that the firm needs to further streamline its cash management system
and also needs to frame better cash management policies. Mere cash balance in excess of
requirement will not add anything to the concern. If it is not being put to use in proper manner,
it definitely have an adverse effects in its profitability.

The surplus cash which is at the disposal of the firm should be invested in various
financial instruments or it can be utilized in other purpose. If the firm takes proper care about its
cash management system and manage its excess liquidity (i.e. over the optimum cash balance
level) by having proper investment policies, it will definitely enhance its profitability and also
help in enriching its capital base.

63
 BIBLIOGRAPHY

Books

1. Marfo-Yiadom, E. A Survey of Cash Management Practices of Selected Firms in

Accra-Tema Metropolitan area of Ghana, The Oguaa Journal of Social Studies, Vol.3,

(June), pp.165-182.

2. Richards, N.D. and Laughlin, E.L. A Cash Conversion Cycle Approach to Liquidity

Analysis, Financial Management (Spring), pp.32-38

3. John K. M. “Cash Management Practices of Small Business Owners in the Cape Coast

Metropolitan Area of Ghana”. Asian Economic and Financial Review, Vol.2,

No.1,pp.40 – 58.

4. W.J. Baumol, The Transactions Demand for Cash: An Inventory Theoretical Approach,

“Quarterly Journal of Economics, Vol. 66, No. 4, pp. 545-556.

5. R.R. Bari Cash Planning & Management, (New Delhi: Triveni Publications,), P.2

6. Surendra S. Singhri & John A. Kaupisch: Review of Management, Economic &

Political Weekly, "Cash Management in a Developing Economy.” Vol 5, No.35,

(August 29,), P.95.

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PROFIT AND LOSS ACCOUNT OF RBR GARMENTS INDUSTRIES ON
MARCH 2017-2021
Particulars 2017 2018 2019 2020 2021
Income
Sales Turnover 316.00 592.99 773.40 844.47 654.39
Net Sales 316.00 592.99 773.40 844.47 654.39
Other Income 0.93 1.89 1.65 1.14 0.87
Stock Adjustments 0.00 0.00 0.00 24.22 12.66
Total Income 316.93 594.88 775.05 869.83 667.92
Expenditure
Raw Materials 308.18 581.00 747.62 767.35 586.01
Power & Fuel Cost 0.00 0.00 0.00 0.03 0.19
Employee Cost 0.63 1.40 1.63 2.45 3.10
Miscellaneous Expenses 6.06 7.53 14.58 83.03 75.19
Total Expenses 314.87 589.93 763.83 852.86 664.49
Operating Profit 1.13 3.06 9.57 15.83 2.56
PBDIT 2.06 4.95 11.22 16.97 3.43
Interest 0.41 2.01 7.22 11.36 11.46
PBDT 1.65 2.94 4.00 5.61 -8.03
Depreciation 0.10 0.26 0.27 0.43 0.36
Profit Before Tax 1.55 2.68 3.73 5.18 -8.39
PBT (Post Extra-ord Items) 1.55 2.68 3.73 5.18 -8.39
Tax 0.51 0.87 1.11 1.54 -0.04
Reported Net Profit 1.04 1.81 2.64 3.63 -8.35
Total Value Addition 6.69 8.94 16.21 85.51 78.47
Per share data (annualised)
Shares in issue (lakhs) 77.50 77.50 77.50 77.50 77.50
Earning Per Share (Rs) 1.34 2.33 3.40 4.69 -10.77
Book Value (Rs) 19.60 21.95 25.35 29.89 18.93

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 BALANCE SHEET OF RBR GARMENTS INDUSTRIES AS ON
MARCH 2017-2021
Particular 2017 2018 2019 2020 2021
Sources Of Funds
Total Share Capital 7.60 7.61 7.61 7.61 7.61
Equity Share Capital 7.60 7.61 7.61 7.61 7.61
Reserves 7.59 9.40 12.04 15.56 7.06
Net worth 15.19 17.01 19.65 23.17 14.67
Secured Loans 0.00 17.97 30.62 23.96 27.36
Unsecured Loans 21.49 64.02 51.84 142.49 123.20
Total Debt 21.49 81.99 82.46 166.45 150.56
Total Liabilities 36.68 99.00 102.11 189.62 165.23
Application Of Funds
Gross Block 1.73 2.13 2.27 2.69 3.05
Less: Accum. Depreciation 0.86 1.12 1.39 1.78 2.13
Net Block 0.87 1.01 0.88 0.91 0.92
Inventories 5.16 40.40 16.81 41.03 53.68
Sundry Debtors 40.77 120.54 137.26 170.28 152.51
Cash and Bank Balance 0.07 -6.75 -7.89 -9.95 -7.32
Total Current Assets 46.00 154.19 146.18 201.36 198.87
Loans and Advances 11.48 10.67 10.93 15.75 13.08
Total CA, Loans & Advances 57.48 164.86 157.11 217.11 211.95
Current Liabilities 21.17 65.99 54.75 28.39 47.63
Provisions 0.50 0.88 1.13 0.00 0.00
Total CL & Provisions 21.67 66.87 55.88 28.39 47.63
Net Current Assets 35.81 97.99 101.23 188.72 164.32
Total Assets 36.68 99.00 102.11 189.63 165.24
Contingent Liabilities 0.00 0.23 0.23 0.23 0.00
Book Value (Rs) 19.60 21.95 25.35 29.89 18.93

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