INTRODUCTION

WORKING CAPITAL:

Working capital management is significant in Financial Management due to the fact

that it plays a pivotal role in keeping the wheels of a business enterprise running. Working
capital management is concerned with short-term financial decisions.

Shortage of funds for working capital has caused many businesses to fail and in
many cases, has retarded their growth. Lack of efficient and effective utilization of
working capital leads to earn low rate of return on capital employed or even compels to
sustain losses.

The need for skilled working capital management has thus become greater in recent
years. A firm invests a part of its permanent capital in fixed assets and keeps a part of it for
working capital i.e., for meeting the day-to-day requirements. We will hardly find a firm
which does not require any amount of working capital for its normal operations.

The requirement of working capital varies from firm to firm depending upon the
nature of business, production policy, market conditions, seasonality of operations,
conditions of supply etc. Working capital to a company is like the blood to human body. It
is the most vital ingredient of a business.

Working capital management if carried out effectively, efficiently and consistently,

will ensure the health of an organization. A company invests its funds for long-term
purposes and for short-term operations. That portion of a company’s capital, invested in
short-term or current assets to carry on its day-to-day operations smoothly, is called the
‘working capital’.

Working capital refers to a firm’s investment in short-term assets viz., cash, short-
term securities, amounts receivables and inventories of raw materials, work-in-process and
finished goods.
 It refers to all aspects of current assets and current liabilities. The management of
working capital is no less important than the management of long-term financial
investment. Sufficient liquidity is necessary and must be achieved and maintained to
provide that funds to pay off obligation as they arise or mature. The adequacy of cash and
other current assets together with their efficient handling virtually determine the survival
of the company.

The efficient working capital management is necessary to maintain a balance of

liquidity and profitability. If the funds are tied- up in idle current assets represent poor and
inefficient working capital management which affects the firm’s liquidity as well as
profitability.

MEANING OF WORKING CAPITAL:

Working capital is defined as ‘the excess of current assets over current liabilities.
All elements of working capital are quick moving in nature and therefore, require constant
monitoring for proper management.

For proper management of working capital, it is required that a proper assessment

of its requirement is made. Working capital is also known as ‘circulating capital,
fluctuating capital and revolving capital’.

The magnitude and composition keep on changing continuously in the course of

business. If the working capital level is not properly maintained and managed, then it may
result in unnecessary blockage of scarce resources of the company. Therefore, the Finance
managers should give utmost care in management of working capital.

DEFINITION OF WORKING CAPITAL:

“Circulating capital means current assets of a company that are changed in the
ordinary course of business from one form to another, as for example, from cash to
inventories, inventories to receivables, receivables into cash”.

“Gerestenburg”
 “Any acquisition of funds which increases the current assets, and which increases
the working capital for they are one and the same.”

“Bonneville”

“The sum of the current assets is the working capital of business.”

“J.S. Mill”

OBJECTIVES OF WORKING CAPITAL MANAGEMENT:

(1) To minimize the amount of capital employed in financing the current assets. This will
also lead to an improvement in the “Return on Capital employed”.

(2) To manage the current asset in such a way that the marginal return on investment in
these assets is not less than the cost of capital acquired to finance them. This will ensure
the maximization of the value of the business unit.

(3) To maintain the proper balance between the amount of current assets and liabilities in
such a way that the firm is always able to meet its financial obligations whenever due. This
will ensure the smooth working of the unit without any production held ups due to paucity
of funds.

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital i.e., gross working capital and net
working capital. Gross working capital is the amount of funds which are invested in current
assets. Current assets are those assets which are converted into cash within a short period
of time generally in one year. Current liabilities are those liabilities which can be payable
within a short period of time generally in one year.
 1. Current Assets:

 Cash in hand
 cash at bank
 sundry debtors
 bills receivables
 short term investments
 inventories
 marketable securities
 prepaid expenses
 accrued incomes etc.

2. Current Liabilities:

 Sundry creditors
 bills payable
 outstanding expenses
 accrued expenses
 short term advances and deposits
 dividends payable
 bank overdraft etc.

FACTORS DETERMINING WORKING CAPITAL:

The working capital requirements of an enterprise depend on a variety of factors.

These factors affect different enterprises differently and vary from time to time.

These factors are:

1. Nature of Business:

The working capital requirements of a firm is basically influenced by the nature of

business undertaken by it. The ratio of current assets to total assets of a firm measures the
requirements of working capital of various firms. The need for working capital is depend
on operating cycle period i.e., shorter the operating cycle period, smaller the working
capital requirements, larger the operating cycle period, larger the working capital
requirements.

E.g., Public utilities, hotels, restaurants etc. need small working capital
requirements. Trading firms’ financial firms, Construction Companies Manufacturing firms
etc. need larger working capital.

2. Size of Business:

The size of a business firm affects the working capital requirements. The size
indicates the scale of operation. Larger the scale of operation larger will be the working
capital requirements. Smaller the scale of operation, smaller will be the working capital
requirements.

3. Manufacturing Cycle:

Manufacturing cycle is the time gap between the purchase of raw materials and the
production of finished goods. Shorter the manufacturing cycle, smaller will be the working
capital requirements and larger the manufacturing cycle, larger will be the working capital
requirements.

E.g., a distillery needs larger working capital whereas a bakery requires smaller
working capital.

4. Business Cycle:

The working capital requirements depend upon the supply and demand for the
goods and services produced. The demand for the products will be expected well in
advance and working capital requirements decided accordingly.

5. Firm’s Credit Policy:

 The credit policy of the firm influences the requirement of working capital and it is
based on credit allowed to the debtors and credit allowed by the creditors.

6. Operating Efficiency of the Firm:

The efficiency of the business operation improves the pace of the cash cycle,
thereby strengthens the working capital turnover.

7. Profit Margin and Dividend Policy:

A higher the net profit margin reduces the working capital requirements because it
contributes towards working capital resources. Again, the policy of the management
towards dividend strengthens the base for working capital requirements. If more will be the
retained earnings there will be more cash available for working capital necessity of a firm.

8. Expansion and Growth of Business:

If the company goes for growth and expansion of business, it will require more
working capital in terms of sales and fixed assets. Increasing sales require more working
capital in the form of more stock of raw materials, inventory of work- in- progress and
finished goods.

9. Suppliers’ Credit:

The purchasing policy of the business decides the working capital necessity. If the
purchases on a cash basis only, more working capital required. If the purchases on credit
basis, the period of credit allowed by the creditor decides the size of working capital
requirements.

10. Loans and Credit Facilities Available:

 The working capital requirements of the firm depends upon access to the money
market. The firms with readily available credit from banks and from other financial
institutions at liberal terms, will be able to manage with less working capital.

11. Taxation Policy:

The industries which will be required to pay heavy taxes to the Government need
larger working capital.

12. Level of Automation:

By adopting higher level of technology in the industry reduces employees, hence

lesser working capital is needed. The industries which are more labour intensive require
more working capital.

COMPONENTS OF WORKING CAPITAL:

Management of working capital means managing different components.

These are discussed hereunder:

1. Management of Cash:

Every enterprise irrespective of its scale requires a certain amount of cash to meet
its day-to-day obligations. Hence, the enterprise needs to decide carefully how much
should be carried in cash. Management of cash aims at striking a balance between two
contradictory objectives of meeting the cash disbursement needs and minimizing the
amount locked up as cash balance.

For this purpose, cash management addresses to the following four problems:

I. Controlling the level of cash.

II. Controlling inflows of cash.

 III. Controlling outflows of cash.

IV. Optimum use of surplus cash.

2. Management of Inventory:

Inventories refer to raw material, work-in-progress and finished goods. These

constitute a major portion, about 60%, of total current assets. There are three major
motives for holding inventories in a firm, namely, transaction motive, precautionary
motive and speculative motive. But, holding inventories involves costs, i.e., ordering costs
and carrying costs.

Hence, inventories need to be maintained at an optimum size inventory management

is a trade-off between cost of acquiring and cost of holding inventories. Among various
models evolved for managing inventories, the commonly used model is Economic
Ordering Quantity (EOQ) Model based on Baumol’s cash management model.

The other model of inventory management is ABC Analysis also known as Control
by Importance and Exception (CIE). This method controls expensive inventory items more
closely than less expensive items.

3. Management of Accounts Receivable:

Accounts receivable represent the amount of goods sold on credit with a view to
increase the volume of sales. Accounts receivable constitute a major portion of current
assets. According to the Indian Chamber of Commerce and Industry (ICCI) study of 417
companies, the ratios of accounts receivable to total assets, current assets and sales were,
on average, 17%, 30% and 14-15% respectively.

The main objective of maintaining accounts receivable are achieving growth in

sales, increasing profits and meeting competition. Like inventories, maintaining accounts
receivable also involves certain costs such as – capital costs, administrative costs,
collection costs and defaulting costs, i.e., bad debts.

4. Management of Accounts payable:

Accounts payable are just reverse to accounts receivable. Accounts payable emerge
due to credit purchase. This refers to a learning of goods and inventories to the buyer. This
is also called ‘buy-now, pay-later’. The underlying objective of accounts payable is to slow
down the payments process as much as possible.

But it should be noted that the saving of interest cost should be offset against loss of
credit standing of the enterprise. The enterprise has, therefore, to ensure that the payments
to the creditors are made at the stipulated time periods after obtaining the best credit terms
possible.

COMPANY PROFILE

Tasa Foods Private Limited is a Private Company incorporated on 24 March 1999. It is

classified as Indian Non-Government Company and is registered at Registrar of Companies,
Bangalore. Its authorized share capital is Rs. 40,000,000 and its paid-up capital is Rs.
16,624,400

Tasa foods is one of the leading manufacturer and exporters of high-quality Processed
fruit Products. Tasa Foods is committed to provide high quality processed products to its
customers globally. It is located at Muthukurpalle Village, Chittoor District, and Andhra
Pradesh. As the Chittoor District is famous in production of various types of fruits the sources
of raw material are more and more beneficial for our company.

We are producing the tropical fruit pulps like Mango, Guava, papaya pulps etc. We take
pleasure in introducing ourselves as one of the moderate manufacturers of
Mango/Guava/papaya pulp etc. using modern technology and adhering to strict quality control
measures. We have capacity to produce 8400 MT per annum, keeping quality and customer
need in mind. We are catering from CHITTOOR (INDIA) to various Industrial units and
exporters we are patronized by our clients for our competitive prices, Impeccable Quality and
timely schedules. Further, kindly be noted that we are fruit pulp manufactured we have 7Ton
per hour capacity of 215kg Aseptic sterilizer and filler Production capacity. We are happy to say
that our plant has the manufacturing capacity of EIGHTTHOUSUND FOUR HUNDRED
TONS PER ANNUM we run the plant for 24 Hrs.

Quality Maintenance We have dedicated quality department which headed by quality

managers and sub ordinates taking care of the production quality as per the norms of HCCP
AND ISO standard. Our strength and object we have potential management, qualified and
skilled employees over all a strong dedicated team to achieve the customer satisfaction Source
of Raw Material: Mango: Totapuri mango is the lead variety for Mango Pulp production.
Chittoor is one of the major Totapuri producing area in the country and is known as Mango
basin for Totapuri and is the best location for Mango pulp industries. Processing unit is located
in the centre point with radius of 20 to 25 km Major Totapuri producing areas such as
Damalcheruvu, Bangarupalem, Chittoor and Tirupati Farmers in surrounding area (with the
radius of 25km) can supply mangoes. Directly to the company, it will cover almost 60% to 70%
of the requirement and This also helps to get good quality fruit eventually producing best
quality pulp.

Infrastructure Area:

16 Acers within a good atmosphere. Distance to Near Towns and Cities Chittoor 201(m,
Tirupati 60Km, Bangalore 185Km, Chennai 1701(m, From National Highway 4Km. Process
Hall Length -260Width-65Height -18Area 16900 Sq. Feets Warehouse Length - 260Width-
130Height -18Area, 33800 Sq. feet Ripening chambers: 6 Chambers Each Chamber Capacity:
240MT Length -260Width-130Height -18.

Machinery Details:

Sterilizer and filler capacity: 7 M.T/hr. (pulp output)

1. Sterilizer Make CFT- Sigmanzan, Italy. Good performance and Leader in food processing
machinery supply.

2. Pre-Heater: Make: Surjan Fenco Best service and best performance compare with other
suppliers of pre-Heater.

3. Decanter Make: Alfa-Level Decanter from Alfa-level is the best performer Compare with any
brands of Decanter.

4. De-stoners Wastage Screw Conveyor, Pulp holding and collection tanks, Pulper s, Fruit
cutting conveyor, Fruit washing Machine, Fruit feeding screw Conveyor Make: M/s.Nazeer
Industries. The best option for S.S works and located in Chittoor,

Best service Boiler: Make Max-Term with capacity of 4ton Best Performance, Best
service Chiller: Make: Thermax Best Performance DG Sets - Powerica (450 KVA) Air
Compressors - Hi-Tech Air ETP Design- and M/c - Universal Environ Associates Total
Machinery selected according to their performance and Service. Feedback has taken from
leading food industries like Jain, Food and inns, Fruit Ripening System Fruits ripening using
Ethylene in Ripening Chambers under Controlled temperature and humidity to get best quality
pulp Design & Make: Sri Sai Fibers Ripening chambers designed to provide 250Ton/day of
ripened fruits Total 6 chambers, helps to get the fruit daily without break Fruits are stored /
ripened in plastic crates. Ethylene Generators used in each chamber according to Standards for
uniform ripening Advantages.

Ripening Chambers: Uniform Ripening Very less damage Easy for sorting Easy to shift
to Feeding area Easy to Feeding Helps to get good quality product output Plant Capacity:
Output Capacity per hour: 7 MT Per day: 120-140 MT (Considering 20 Hours/Day) Process
Related: We will maintain standards according to ISO 9001-2008 auditable Standards and we
will go for ISO 9001-2008 certification. We will maintain the company according Guidelines of
HACCP Applying Good manufacturing practices (GMP), good housekeeping practices (GHP)
 according to international standards Specifications: according to the Customer focused and
suggested international standards Good Laboratory Facilities with best Equipment to analyze
quality.

Parameters product storage:

Constructing the warehouse with standards to maintain the room temperatures, which is
preferable to store the product we are going for contractbasic agreement with PCI (Pest Control
of India) Treatments like Termiseal service (Termite management Solutions) Pied Piper Service
(Rodent Management Solutions) Sim Service (Stored-product Insect Monitoring) IFM Service
(Fly management solutions) etc. Dispatch plans and transportation.

Facilities:

Pre- Dispatch schedule from customer packing as per customer instructions Dispatches
according to the schedule Easy for transportation, exiting road to the plant attached to NH18 at
4th KM.

Tasa foods PVT. Limited is company producing fruit pulp/puree, aromas and processed
food and is one of the leading supply mango pulp or puree to the fruit juice, soft drink and
beverages industries The company is the premier mango pulp/puree producer in both volume
and quantity. It is the district of Chittoor south of India that Tasa foods have installed its agro
industry located 160 KM from port of Chennai the complex is very convenient placed for
exporting the produced products.

PRODUCTION:

With 3 state-of-the-art processing facilities in Chittoor, Andhra Pradesh, Tasa has the
capacity to produce 65,000 MT of mango puree in a single season. Our workforce is one of our
biggest strengths with 120 permanent employees and around 1,000 contractual employees
during the mango season. We also focus greatly on developing the skills of our employees for a
brighter future for them and a better product output for our clients.

 Processing facilities include canning and aseptic.

 4 aseptic filling lines with filling capacity of 7MT/Hr., 8MT/Hr., and two 11MT/Hr., of single
strength puree production. The combined capacity is 37MT/Hr., of single strength puree.
 All 3 facilities have a water evaporation system with the capacity of 3MT/Hr., 3MT/Hr., and
two 6MT/Hr., for double strength concentrate production. The combined capacity is 18MT/Hr.,
of double strength concertante

INDUSTRY PROFILE
Fruit pulp refers to the unconcentrated pulpy food product derived by means of
appropriate technological process, consisting majorly of total solids from the edible part of fruit.
Pulp is mushy in texture and may contain traces of fruits. Fruits pulps are generally used to
manufacture jams, jellies, cake fillings, and marmalades.
 There is an increase in the consumption of fruit pulp because of shift of preference of
the consumers toward healthy eating habits. Consumers prefer food products which are
prepared using natural and organic raw materials instead of artificial flavoring. This factor
majorly drives the growth of the fruit pulp market. In addition, fruit pulps have a longer shelf
life as compared to the fruit’s natural form, which thus leads to lesser transportation and storage
costs for manufacturers. The use of fruit pulp to make a product, augments not only the color
but also enhances the taste of the finished product. It is thus widely used in food products such
as yogurts, baby food, and juices. However, the use to synthetic pesticides and sewage sludge
for cultivating fruits may get reflected in the fruit pulp. Hence, necessary measures to maintain
the quality of fruits must be taken by producers and exporters both.

The fruit pulp market is segmented based on fruit type, application, distribution channel,
and region. Based on fruit type, it is classified into mango, strawberry, apple, guava, berries,
citrus fruits, and others. Based on application, it is bifurcated into food and beverages. The food
segment is further divided into baking, confectionary, baby food, dairy products, and others.
The beverages segment is further divided into juices, mocktails, cocktails, and others. Based on
distribution channel, it is categorized into online retail, convenience stores,
supermarkets/hypermarkets, and others. Based on region, it is studied across North America,
Europe Asia-Pacific, and LAMEA.

Major players in the fruit pulp market include Keventer Group, Trop Juice, Pursuit,
Paradise Juice Private Limited, Harvestime, Iprona the Fruit Company, Doehler, Tropicana, and
Shimla hills.

Key Benefits for Stakeholders:

 The report provides an in-depth analysis of the current trends, drivers, and dynamics of the fruit
pulp market to elucidate the prevailing opportunities and tap the investment pockets.

 It offers qualitative trends as well as quantitative analysis of the global market from 2018 to
2025 to assist stakeholders to understand the market scenario.
  In-depth analysis of the key segments demonstrates the fruit pulps used for various food
products.

 Competitive intelligence of the industry highlights the business practices followed by key
players across geographies as well as the prevailing market opportunities.

 Key market players are profiled to understand the competitive outlook of the market.

Fruit Pulp Market Report Highlights:

Aspects Details

Mango
Strawberry
Apple
By Fruit Type Guava
Berries
Citrus Fruits
Others
Food
Banking
Confectionary
Baby Food
Dairy Products
By Application Others
Beverages
Juices
Mocktails
Cocktails
Others
Online Retail
By Distribution Convenience Stores
Channel Supermarkets or Hypermarkets
Others PRODUCT
PROFILE
 Papaya

 Tomato

 Mango

 Guava
 Papaya:
Papayas are tropical fruit high in vitamin C and antioxidants. Certain compounds in papayas
may have anticancer properties and improve heart health, among other health benefits.

Benefits of papaya:
 Delicious and Loaded with Nutrients
 Has Powerful Antioxidant Effects
 Has Anticancer Properties
 May Improve Heart Health
 May Fight Inflammation
 May Improve Digestion
 Protects Against Skin Damage
 Delicious and Versatile

 Mango:

The mango, a tropical fruit with hundreds of varieties has been named "the king of
fruits," and with good reason The mango is scientifically known as Mangifera indica L., is
luscious, sweet, and fragrant, and packed with nutrients like vitamins A and C.
 The fruit also has the potential to offer health benefits such as heart and eye health
support. What's more, mangoes are versatile as they can be used during breakfast, as a snack,
and in desserts.

Benefits of mangoes:
 May Product Against some diseases

 May support heart health

 Improve skin health

 Support eye health

 Guava:

Guava is a common tropical fruit cultivated in many tropical and subtropical regions.
The common guava Psidium guajava is a small tree in the myrtle family, native to Mexico,
Central America, the Caribbean and northern South America.

The name guava is also given to some other species in the genus Psidium such as
strawberry guava (Psidium cattleya Num) and to the pineapple guava, Feijoa sellowiana. In
2019, 55 million tonnes of guavas were produced worldwide, led by India with 45% of the
total. Botanically, guavas are berries.

Benefits of guava:

 Guava helps boost your immunity

 May reduce the risk of developing cancer
 Helps to manage blood sugar levels
 Guavas help in keeping your heart healthy
 Helps in better eye sight
 Guava is an anti-stress agent
 Guava helps women during pregnancy

REVIEW OF LITERATURE

Conceptual review:
INTRODUCTION:
Over the past four decades, capital structure and capital budgeting being an important
component of long-term investment gained attention by researchers and firms. While working
capital (WC) being a short-term indicator has received less attention (Talonpoika et al., 2016).
This less attention is due to various factors such as managers considers management of WC as a
routine matter, are more frequent in nature and the decisions related to WC are reversible.
 In today’s vibrant business environment, the survival of profitable firms remains
uncertain unless they are able to fulfil their short-term obligations. The global financial crisis of
2008 (2008 GFC) has been the focus of immense importance in academia and the decision
discussions.

However, the focus has been only on determining the causes, damages to the economy
and spills over the causes, damages to the economy and spills over the macroeconomic gauges.
The major cause for this crisis was liquidity shortages but working capital management (WCM)
gains little academic attention.

Generally, chief financial officers have a simple and straight forward perception
regarding WCM. They believe WCM to be a firm’s ability to manage the difference between
short term assets and short-term liabilities (Harris, 2005). WCM is one of the characteristics of
corporate finance in three broader areas. The rest of the two, capital structure and capital
budgeting are associated with the management and financing of investments over a long-353
term period

However, WCM is an important feature of corporate finance dealing with short-term

management of investment and financing decisions. It includes maintaining an optimum level
of WC components, such as cash, receivables, payables and inventory. The optimization of WC
aims to reduce the reliance on the requirement of WC and to realize the maximum available
revenues (Chandra, 2011; Roy, 2016).

The 2008 GFC hit almost all part of the financial world and resultantly many businesses
were closed down. This 2008 GFC once again attracted the interest of managers towards WCM.
The major development after 2008 GFC in field of WCM was to examine the empirical effect
of WCM on firm performance (FP). Many researchers attempted to examine the empirical
relationship between WCM and firm profitability.

However, the least attention was given towards the systematic literature review (SLR).
The curiosity of researchers for knowing about literature review on the topic of WCM creates
the need for this study.

 capital and working capital management:

 Mann (1918) defines WC as money required to perform the existing operations of
an entity. 355 This is also known as the net WC, i.e., the amount required to keep the business
running while schaal and Haley (1991) considers WCM as the management of current assets
and current liabilities. Tables II summarizes the published definitions and concepts of WC and
WCM, respectively.

 Working capital policies

The practices followed by firms while making WCM decisions are termed as WC
practices. Firms through their WC investment policy make investments in their current assets
and use current liabilities to finance their assets through the WC financing policy (Chiou et al.,
2006). Theoretically, a firm can either adopt an aggressive working capital policy or a
conservative working capital policy based on the strategy adopted by the investor (Narender et
al., 2008).

The different policies affect the value, performance level and risk of firms. It is at the
discretion of firms to adopt either an aggressive or conservative WC policy (Afzal and Nazir,
2007). According to Kaddumi and Ramadan (2012), firms adopt a less aggressive policy in WC
and a conservative policy for investment.

For an aggressive policy, a firm may opt for a low level of current assets or may use a
high level of liabilities. In an aggressive policy, if a firm opts for a higher level of current assets
it may lead towards a negative performance; a low level of current assets may generate issues of
liquidity and inventory stock-outs (Banos Caballero et al., 2012). Thus, it becomes difficult to
achieve a smooth operation of the business (Van Horne and Wachowicz, 2004).

Various researchers such as Juan García-Teruel and Martinez-Solano (2007) and

Mathuva (2015) have documented that firms normally make their financial decisions based on
more conservative WC policies. In such a situation, firms adopt higher current assets and avail
lower risk.

Hence, these firms expect lower returns because of the lower risk. Higher risk and
higher returns are linked to firms with more aggressive policies (Gardner et al., 1986; Weinraub
and Visscher, 1998). WC practices and policies change significantly within industries over time.
 While no significant relationship between WC policies and returns trade-off is reported by
Bratland and Horn brink (2013) and Weinraub and Visscher (1998).

TABLE-2 Published definitions of WC and WCM:

Authors Definitions of working capital and working capital

management
Van Horne and Wachowicz  Working capital management is the optimum
(2004) level of current assets and current liabilities.
 A firm’s investment in short-term assets, such as
Besley and Brigham cash, accounts receivables, accounts payable
(2007) and inventory is termed as working capital.
Arnold (2008)  Working capital management is a tool to create
a balance between its components.
Thachappilly (2009)  Working capital management is the
management of the flow of funds.
 Working Capital Management is a part of the
Dong and Su financial management of an organization that
(2010) affects its performance and liquidity.
Preve and Sarria-Allende  Working Capitals Management is a decision
(2010) related to current assets and current liabilities.
Panda (2012)  Working Capitals is a difference between
current assets and current liabilities.

 Working capital management components

WCM is an important feature in making corporate strategies and policies. It is the

backbone of the financial decisions of firms taken by business managers on a daily basis.
According to Banos-Caballero et al. (2010), the most vital issue in managing WCM is the
effective use of its components: inventory, cash conversion cycle, accounts receivable and
accounts payable. Similarly, Yadav (1986) argues that WCM is a situation in which a balance
between current assets and current liabilities is maintained. WCM is divided into following four
components in the literature: cash conversion cycle, accounts receivables, accounts payable and
inventory (Brigham and Ehrhardt, 2013)
 APPLIED REVIEW
1) Bhatt V. V. (1972) widely touches upon a method of appraising working capital finance
applications of large manufacturing concerns. It states that similar methods need to be devised
for other sectors such as agriculture, trade etc. The author is of the view that banks while
providing short-term finance, concentrate their attention on adequacy of security and repayment
capacity. On being satisfied with these two criteria they do not generally carry out any detail
appraisal of the working of the concerns.
2) Kaveri V. S. (1985) has based his writing on the RBI‟s studies on finances of large public
limited companies. This review of working capital finance refers to two points of time i.e., the
 accounting years ending in 1979 and 1983 and is based on the data as given in the Reserve
Bank of India on studies of these companies for the respective dates. He observes that the
Indian industry has by and large failed to change its pattern of working capital financing in
keeping with the norms suggested by the Chore Committee. While the position of working
capital management showed some investment between 1975-79 and 1979-83, industries have
not succeeded in widening the base of long-term funds to the desired extent.

The author concludes with the observation that despite giving sufficient time to the
industries to readjust the capital structure so as to shift from the first method to the second
method, progress achieved towards this end fell short of what was desired under the second
method of working capital finance.
3) Bhattacharyya Hrishikes (1987) tries to develop a comprehensive theory and tool of working
capital management from the systems point of view. According to this study, capital is often
used to refer to capital goods consisting of a great variety of things, namely, machines of
various kinds, plants, houses, tools, raw materials and goods-in-process. A finance manager of a
firm looks for these things on the assets side of the balance sheet. For capital he turns his
attention to the other side of the balance sheet and never commits a mistake. His purpose is to
balance the two sides in such a way that net worth of the firm increases without increasing the
riskiness of the business.

This balancing is financing, i.e., financing the assets of the firm by generating streams
of liabilities continuously to match with the dynamism of the former. The study is an
improvement of the concept of Park and Glad son who were not able to capture the entire
techno financial operating structure of a firm.
4) Rao K.V. and Rao Chinta (1991) observe the strong and weak points of conventional
techniques of working capital analysis. The result has been obviously mixed while some of the
conventional techniques which could comprehend the working capital behavior well; others
failed in doing the job properly.

The authors have attempted to evaluate the efficiency of working capital management
with the help of conventional techniques i.e., ratio analysis. The article concludes prodding
future scholars to search for a comprehensive and decisive yardstick in evaluating the working
capital efficiency.
5) Garg Pawan Kumar (1999) focuses on the study of working capital trend and liquidity
analysis in the selected public sector enterprises of Haryana. The study suggests forecasting of
working capital requirement confined mainly to various components of working capital. After
considering the facts the author realized the need for proper assessment and forecasting of
working capital in the public sector undertaking. For this purpose, he has suggested the analysis
of production schedule, sales trend, labor cost etc., should be taken into consideration. He
further suggested the need for better management of components of working capital.
6) Jain P. K. and Yadav Surendra S. (2001) study the corporate practices related to management
of working capital in India, Singapore and Thailand. In this paper the authors have tried to
understand the working capital management and current assets and current liabilities, and their
inter-relationship. Further the authors have shown an aggregative analysis of current assets and
current liabilities in terms of major liquidity ratios. It also states working capital position in
terms of these ratios pertaining to various industries.

From the paper one can infer that the available data in respect of the sample companies
from the three countries confirm the wide inter-industry variations in liquidity ratios. Towards
the end, the authors suggest that serious consideration needs to be given by the respective
governments as well as industry groups in these three countries in order to take corrective
measures to take care of and rectify the areas of concern.

7) Ganesan Vedavinayagam (2007) studies the impact of working capital management on

profitability through ANOVA test where the financial statements of 349 telecom units or
enterprises are analyzed. The relationship between working capital management efficiency and
profitability and the impact of working capital management on the same has been tested.

At the end of the study the author has minutely observed that the working capital
management efficiency in telecommunication industry is poor. And he suggests that the
telecommunication industry should improve working capital management efficiency.
8) Dr. Khatik S. K. and Jain Rashmi (2009) state that the management of working capital is one
of the most important and key resources of an organization for its day-to-day operations.
 Working capital can be taken as funding resources for routine activities of business. It is the
most vital and important part of fund management and profitability for business.

The writer has analyzed the working capital position of MPSEB (Madhya Pradesh State
Electricity Board) by ratio analysis technique and it was found that the position of current ratio,
quick ratio, acid-test ratio, working capital ratio, inventory turnover ratio are not up to the
standard benchmark.
9) Rahman Mohammad M. (2011) focuses on the co-relation between working capital and
profitability. An effective working capital management has a positive impact on profitability of
firms. From the study it is seen that in the textile industry profitability and working capital
management position are found to be up to the mark.
10) Singh D. P. (2012) presents the relationship between the working capital management and
profitability in the IT and Telecom industry in India. The purpose of the study is to investigate
the relation between components of working capital ratios and profitability. To attain the above
objective the author theories the relationship between different components of working capital
management and profitability.

The study shows that the telecom industry is operating below average so far as working
capital management is concerned. The profitability was 40% when compared with the all India
all manufacturing average. In the IT and the Telecom industry, working capital turnover,
current ratio, sales to total asset ratio were positively related to profitability. However, days
inventory was negatively related to profitability.

REFERENCES:
 Bhatt, V. V., (1972), Working Capital Finance: Criteria of Appraisal, Economic and Political
Weekly, Vol. 7 No. 17, pp. 842-845
 Kaveri, V. S., (1985), Financing of Working Capital in Indian Industry, Economic and Political
Weekly, Vol. 20. No.35, pp. M123-M128
 Bhattacharyya, Hrishikes, (1987), Towards a Comprehensive Theory of Working Capital: A
Techno-Financial Approach, Economic and Political Weekly, Vol. 22 No. 35, pp. M101-M110
 Rao, K.V. and Rao, Chinta. (1991), Evaluating Efficiency of Working Capital Management –
Are the Conventional Techniques Adequate? Decision, Vol.18 No. 2, pp. 81-97
 Garg Pawan Kumar, (1999), Working Capital Trend and Liquidity Analysis of the State
Industrial Enterprises in India – A Case Study, Working Capital Management, Edited by Rao
Mohana D and Prama Nik Alok Kumar, Deep and Deep Publications Pvt. Ltd., New Delhi, pp.
26-42
 Jain, P. K., and Yadav, Surendra S., (2001), Management of Working Capital: A
Comparative Study of India, Singapore and Thailand, Management and Change, Vol. 5, No. 2,
pp. 339-355
 Ganesan Vedavinayagam, (2007), An Analysis of Working Capital Management Efficiency in
Telecommunication Equipment Industry, Rivier Academic Journal, Vol. 3, No. 2, pp. 1-10
 Dr. Khatik S. K. and Jain Rashmi, (2009), Working Capital Analysis of Public State
Undertaking (A Case Study of Madhya Pradesh State Electricity Board, Indian Journal of
Finance, Vol. 3, No. 5, pp. 31-38
 Rahman Mohammad M., (2011), Working Capital Management and Profitability: A study on
Textiles Industry, ASA University Review, Vol. 5, No. 1, pp. 115-132
 Singh D. P., (2012), Working Capital Management and Profitability in the IT and Telecom
Industry in India, Indian Journal of Finance, Vol. 6, No. 3, pp. 54-61

STATEMENT OF THE PROBLEM

Working capital is the operating capital that is the essence of any Organisation. Effective

management of working capital will improve financial efficiency of that company. But it is

affected by the internal and external forces which can be brought into light through a

comparative analysis of working capital during different period.

 OBJECTIVES OF THE STUDY

 To compare the efficiency of working capital management for the past five years.
 To analyze the comparative statement of working capital.
 To analyze the current ratio, liquidity ratio, working capital turnover ratio by comparison over
five years.
 To analyze the trend of working capital.
 To suggest for improvement in working capital position of the organisation.
 NEED FOR THE STUDY

Working capital is a daily necessity for businesses, as they require a regular amount of
cash to make routine payments, cover unexpected costs, and purchase basic materials used in
the production of goods.

Efficient working capital management helps maintain smooth operations and can also
help to improve the company's earnings and profitability. Management of working capital
 includes inventory management and management of accounts receivables and accounts
payables.

The main objectives of working capital management include maintaining the working
capital operating cycle and ensuring its ordered operation, minimizing the cost of capital spent
on the working capital, and maximizing the return on current asset investments.

Working capital is an easily understandable concept, as it is linked to an

individual’s cost of living and, therefore can be understood in a more personal way.
Individuals need to collect the money that they are owed and maintain a certain amount on a
daily basis to cover day-to-day expenses, bills, and other regular expenditures.

Working capital management is essentially an accounting strategy with a focus on the

maintenance of a sufficient balance between a company’s current assets and liabilities. An
effective working capital management system helps businesses not only cover their financial
obligations but also boost their earnings.

Managing working capital means managing inventories, cash, accounts payable and
accounts receivable. An efficient working capital management system often uses key
performance ratios, such as the working capital ratio, the inventory turnover ratio and the
collection ratio, to help identify areas that require focus in order to maintain liquidity and
profitability.

RESEARCH METHODOLOGY

RESEARCH:
Research is defined as human activity based on intellectual application in the investigation of
matter. The primary purpose for applied research is discovering, interpreting, and the development
of methods and systems for the advancement of human knowledge on a wide variety of scientific
matters of our world and the universe.
DEFINITION OF RESEARCH:
M Stephenson and D Slesinger defined research in the Encyclopedia of Social Sciences as “The
manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or
verify knowledge, whether that knowledge aids in construction of theory or in the practice of an
art.”

RESEARCH METHODLOGY:
Research methodology is a way to systematically solve the research problem. It May be
understood as a science of studying now research is done systematically. In that various steps,
those are generally adopted by a researcher in studying his problem along with the logic behind
them. “The procedures by which researchers go about their work of describing,
explaining and predicting phenomenon are called methodology”

RESEARCH DESIGN:
Research is a careful and detailed investigation into a particular issue, concern, or issue
utilizing the logical strategy. This is usually verified by doing a lot of comparisons and doing tests
in order to make sure that the results are valid. And finding the answers to the questions by doing
research on various things.

A research study is a logical approach to enhance or grow new strategies for human
services. Research studies are imperative since they add to the information and advance on
diseases and disarranges. Research is the fastest and most secure approach to discover the ideas or
the ways that work.
TYPES OF RESEARCH:

Descriptive
research

Qualitative Analytical
research research

Types of
research

Quantitative Applied
research research

Fundamental
research

ANALYTICAL RESEARCH:
Analytical research is a specific type of research that involves critical thinking skills
and the evaluation of facts and information relative to the research being conducted. A variety of
people including students, doctors and psychologists use analytical research during studies to find
the most relevant information. From analytical research, a person finds out critical details to add
new ideas to the material being produced.

Research of any type is a method to discover information. Within analytical research

articles, data and other important facts that pertain to a project is compiled; after the information is
collected and evaluated, the sources are used to prove a hypothesis or support an idea. Using
critical thinking skills (a method of thinking that involves identifying a claim or assumption and
deciding if it is true or false) a person is able to effectively pullout small details to form greater
assumptions about the material.
Some researchers conduct analytical research to find supporting evidence to current research being
done in order to make the work more reliable. Other researchers conduct analytical research to
form new ideas about the topic being studied. Analytical research is conducted in a variety of
ways including literary research, public opinion, scientific trials and Meta-analysis.

TYPES OF DATA:

There are two types of data:

 Primary data

 Secondary data

Primary data:

Primary data is not collected in this study.

Secondary data:

Secondary data is use for the data.

SECONDARY DATA COLLECTION:

Secondary data is research data that has previously been gathered and can be accessed by
researchers. The term contrasts with primary data, which is data collected directly from its source.
TOOLS USED:

The following ratios and models are used in the study

1. Liquidity ratio
2. Current ratio
3. Quick ratio
4. Cash ratio
5. Working capital turnover ratio
1. Liquidity ratio:
Liquidity ratios are a measure of the ability of a company to pay off its short-term
liabilities. Liquidity ratios determine how quickly a company can convert the assets and use
them for meeting the dues that arise. The higher the ratio, the easier is the ability to clear the
debts and avoid defaulting on payments.

TYPES OF LIQUIDITY RATIO:

 Current ratio

 Quick ratio

 Cash ratio

2. Current ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay short-
term obligations or those due within one year. It tells investors and analysts how a company
can maximize the current assets on its balance sheet to satisfy its current debt and other
payables.
Current ratio =current liabilities/current assets
3. Quick ratio:
Quick ratio is also known as Acid test ratio is used to determine whether a company or a
business has enough liquid assets which are able to be instantly converted into cash to meet
short term dues. It is calculated by dividing the liquid current assets by the current liabilities.
Quick ratio=current assets-inventories/current liabilities
4. Cash ratio:
Cash ratio is a measure of a company’s liquidity in which it is measured whether the
company has the ability to clear off debts only using the liquid assets (cash and cash
equivalents such as marketable securities). It is used by creditors for determining the relative
ease with which a company can clear short term liabilities.

Cash ratio=Cash and Cash Equivalent/Current liabilities

5. Working Capital Turnover ratio:

The working capital turnover ratio is the ratio which express the relationship between
sales and working capital is called working capital turnover ratio. Working Capital Turnover
Ratio is an efficiency ratio that measures the efficiency with which a company is using its
working capital in order to support the sales and help in the growth of the business.

Working capital is very essential for the business. It is defined as the difference
between the current assets and current liabilities and working capital turnover ratio establishes
a relationship between the working capital and net sales generated by the business.

Working capital turnover ratio=sales/working capital

 LIMITATIONS OF THE STUDY

The following are the limitation of the study

 The study was limited to only five years financial data.
 The secondary data used in the study represents the past. It may not be the exact predictor
of the future.
 The approach may differ on calculation of certain items & analysis & interpretation of the
ratio.
 The ratio analysis as a tool for financial analysis has certain limitations which is applicable
to the study.
 SCOPE OF THE STUDY
 The study covers a period of 2018 to 2022.

 The study is based on current ratio, quick ratio, cash ratio, working capital turnover ratio.

 The study is based on trend analysis.

 CHAPTER SCHEME

Chapter – 1: INTRODUCTION
This chapter deals with introduction about the concept, review of literature, objectives of the study
and methodology used, limitations of the study, scope of the study etc. The review of literature
includes conceptual and applied review. Statement of the problem is mentioned. The methodology
includes research design, data collection.

Chapter – 2: AN OVERVIEW OF INDUSTRY

This chapter deals with the industry profile and company profile. A brief introduction about
company and industry is provided in this chapter.

Chapter – 3: DATA ANALYSIS AND INTERPRETATION

This chapter focuses on secondary data using charts. It explains about price changes for one year
in top five companies and deals with technical tools used to forecast the future prices using past
data.

Chapter – 4: FINDINGS AND SUGGESTIONS

In this the resultant outcome of analysis made using technical tools findings, suggestions are
provided.

Chapter – 5: CONCLUSIONS
This chapter includes conclusion of the study and references used for collection of information
and data collected from various sources is attached.
 DATA ANALYSIS AND INTERPRETATION

STATEMENT OF CHANGES IN WORKING CAPITAL OF TASA FOODS

PVT.LTD
(2018&2019)
Changes in working
capital
PARTICULARS 2018 2019 Increase Decrease
CURRENT ASSETS:
Current investment
Inventories 335.90 492.98 157.08
Trade receivables 1357.82 1563.45 205.62
Cash and cash equivalents 18.04 47.66 29.62
short term loans and advance 257.29 228.77 28.52
Other current assets
Total current assets - (A) 1969.05 2332.86
CURRENT LIABILITIES:
Short term borrowing 1645.90 2526.25 880.35
Trade payables 1364.67 704.76 659.91
Other current liabilities 214.94 355.00 140.06
Short term provisions 7.80 20.95 13.15
Total current liabilities - (B) 3233.31 3606.97
Net Working capital - (A-B) -1264.26 -1274.11 1052.23 1062.08
Increase in working capital 9.85 -9.85

INTERPRETATION:

From the above table is observed that the networking capital of the company shows increasing trend.
In current assets the short-term loans and advances has been decreased with 28.52lakhs and the total
current assets have been increased in – 364lakhs and also in current liabilities the trade payables have
been decreased with 659.91lakhs and the total current liabilities have been increased in – 374lakhs.
The net working capital for the year 2018-19 is increased in 9.85Lakhs.

STATEMENT OF CHANGES IN WORKING CAPITAL OF TASA FOODS

PVT.LTD
 (2019&2020)
Changes in working
capital
PARTICULARS 2019 2020 Increase Decrease
CURRENT ASSETS:
Current investment
Inventories 492.98 343.99 148.99
Trade receivables 1563.45 1958.27 394.82
Cash and cash equivalents 47.66 90.46 42.8
short term loans and advance 228.77 606.00 377.23
Other current assets
Total current assets - (A) 2332.86 2998.71
CURRENT LIABILITIES:
Short term borrowing 2526.25 2326.15 200.1
Trade payables 704.76 1759.21 1054.45
Other current liabilities 355.00 347.03 7.97
Short term provisions 20.95 69.68 48.73
Total current liabilities - (B) 3606.97 4502.07
Net Working capital - (A-B) -1274.11 -1503.36 1022.92 1252.17
Increase in working capital 229.25 -229.25

INTERPRETATION:

From the above table, is observed that the net working capital of the company shows increasing trend.
In the current assets the inventory has been decreased with 148.99Lakhs and the total current assets
have been increased with -666Lakhs and also in current liabilities the short-term borrowings and other
current liabilities have been decreased with 200.1Lakhs and 797 Lakhs. The total current liabilities
have been increased with Rs. – 895.1Lakhs. The net working capital for the year 2019-20 is increased
in 229.25Lakhs.

STATEMENT OF CHANGES IN WORKING CAPITAL OF TASA FOODS

 PVT.LTD

(2020&2021)

Changes in working
capital
PARTICULARS 2020 2021 Increase Decrease
CURRENT ASSETS:
Current investment
Inventories 343.99 805.63 461.64
Trade receivables 1958.27 1325.67 632.59
Cash and cash equivalents 106.16 54.05 52.10
short term loans and advance 606.00 809.42 203.42
Other current assets
Total current assets - (A) 3014.41 2994.77
CURRENT LIABILITIES:
Short term borrowing 2572.59 2990.50 417.91
Trade payables 694.52 570.88 123.64
Other current liabilities 116.29 69.81 46.49
Short term provisions 69.68 105.87 36.18
Total current liabilities - (B) 3453.08 3737.05
Net Working capital - (A-B) -438.68 -742.28 835.19 1138.79
Increase in working capital -303.60 303.60

INTERPRETATION:

From the above table, is observed that the networking capital of the company shows increasing trend.
In current assets the trade receivables and cash and cash equivalents have been decreased with
632.59Lakhs and 52.10Lakhs and the total current assets have been decreased with 19.37Lakhs and
also in current liabilities the short-term borrowings and short-term provisions have been increased
with 417.91Lakhs and 36.18Lakhs. The total current liabilities have been increased with –
283.97Lakhs. The net working capital for the year 2020-21 is increased in 303.60Lakhs.

STATEMENT OF CHANGES IN WORKING CAPITAL OF TASA FOODS

PVT.LTD

(2021&2022)
 Changes in working
capital
PARTICULARS 2021 2022 Increase Decrease
CURRENT ASSETS:
Current investment
Inventories 805.63 1302.43 496.8
Trade receivables 1325.67 1364.47 38.8
Cash and cash equivalents 54.05 73.33 19.28
short term loans and advance 809.42 1641.33 831.91
Other current assets
Total current assets - (A) 2994.77 4381.56
CURRENT LIABILITIES:
Short term borrowing 4111.92 3417.44 694.48
Trade payables 720.57 895.65 175.08
Other current liabilities 69.81 119.96 50.15
Short term provisions 105.86 133.86 28
Total current liabilities - (B) 5008.16 4566.91
Net Working capital - (A-B) -2013.39 -185.35 2081.27 253.23
Decrease in working capital -1828.04 1828.04

INTERPRETATION:

From the above table is observed that the networking capital of the company shows decreasing trend.
In current assets the list of items has been increased. The total current assets have been increased with
1386.79Lakhs and also in current liabilities the other current liabilities and short-term provisions has
been increased with 50.15Lakhs and 28 the total current liabilities have been decreased with
441.25Lakhs. The net working capital for the year 2021-22 is decreased in 1828.04Lakhs.

CURRENT RATIO:

TABLE NO -1 CALCULATION OF CURRENT RATIO

CURRENT RATIO
 CURRENT CURRENT CURRENT
YEARS ASSETS LIABILITIES RATIO
2018 1969.05 3233.31 0.6
2019 2332.86 3606.97 0.6
2020 3014.42 3453.08 0.9
2021 2994.77 5008.16 0.6
2022 4381.56 4566.91 1.0

CURRENT RATIO = CURRENT LIABILITIES/CURRENT ASSETS

GRAPH NO -1 GRAPHICAL PRESENTATION OF CURRENT RATIO

CURRENT RATIO
1.2

1.0 1.0
0.9
0.8
0.6
0.6 0.6
0.6

0.4

0.2

0.0
2018 2019 2020 2021 2022

INTERPRETATION:

 The current ratio for the year 2018 is 0.6

  The current ratio for the year 2019 is 0.6

 The current ratio for the year 2020 is 0.9

 The current ratio for the year 2021 is 0.6

 The current ratio for the year 2022 is 1.0

QUICK RATIO:

TABLE NO -2 CALCULATION OF QUICK RATIO

 QUICK RATIO
QUICK CURRENT QUICK
YEARS ASSETS LIABILITIES RATIO
2018 1633.15 3233.31 0.51
2019 1839.88 3606.97 0.51
2020 2670.42 3453.08 0.77
2021 2189.14 5008.16 0.44
2022 3079.13 4566.91 0.67

QUICK RATIO=CURRENT ASSET-INVENTORIES/CURRENT LIABILITIES

GRAPH NO -2 GRAPHICAL PRESENTATION OF QUICK RATIO

QUICK RATIO
0.90
0.80 0.77

0.70 0.67

0.60
0.51 0.51
0.50 0.44
0.40
0.30
0.20
0.10
0.00
2018 2019 2020 2021 2022

INTERPRETATION:

 The Quick ratio for the year 2018 is 0.51

 The quick ratio for the year 2019 is 0.51

 The Quick ratio for the year 2020 is 0.77

 The Quick ratio for the year 2021 is 0.44

 The Quick ratio for the year 2022 is 0.67

CASH RATIO:

TABLE NO -3 CALCULATION OF CASH RATIO

 CASH RATIO
CURRENT
YEARS CASH LIABILITIES CASH RATIO
2018 18.04 3233.31 0.006
2019 47.66 3606.97 0.013
2020 106.16 3453.08 0.031
2021 54.05 5008.16 0.011
2022 73.33 4566.91 0.016

CASH RATIO=CASH AND CASH EQUIVALENT/CURRENT LIABILITIES

GRAPH NO -3 GRAPHICAL PRESENTATION OF CASH RATIO

CASH RATIO
0.035
0.031
0.030

0.025

0.020
0.016
0.015 0.013
0.011
0.010
0.006
0.005

0.000
2018 2019 2020 2021 2022

INTERPRETATION:

 The Cash ratio for the year 2018 is 0.006

  The Cash ratio for the year 2019 is 0.013

 The Cash ratio for the year 2020 is 0.031

 The Cash ratio for the year 2021 is 0.011

 The Cash ratio for the year 2022 is 0.016

WORKING CAPITAL TURNOVER RATIO:

TABLE NO -4 CALCULATION OF WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL TURN OVER RATIO

WORKING WORKING CAPITAL
YEARS SALES CAPITAL TURN OVER RATIO
2018 7465.47 -1264.26 -5.91
2019 5964.11 -1274.11 -4.68
2020 8562.06 -438.68 -19.52
2021 7696.94 -2013.39 -3.82
2022 14050.32 -185.35 -75.80

WORKING CAPITAL TURNOVER RATIO=SALES/WORKING CAPITAL

GRAPH NO -4 GRAPHICAL PRESENTATION OF WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL TURN OVER RATIO
0.00
2018 2019 2020 2021 2022
-4.68 -3.82
-10.00 -5.91

-20.00
-19.52
-30.00

-40.00

-50.00

-60.00

-70.00

-80.00 -75.80

INTERPRETATION:

 The Working Capital Turnover ratio for the year 2018 is -5.91
  The Working Capital Turnover ratio for the year 2019 is -4.68

 The Working Capital Turnover ratio for the year 2020 is -19.52

 The Working Capital Turnover ratio for the year 2021 is -3.82

 The Working Capital Turnover ratio for the year 2022 is -75.80

TREND ANALYSIS
TABLE NO-5 CALCULATION OF TREND ANALYSIS ON CURRENT ASSETS

CURRENT ASSETS
 TRADE CASH AND SHORT TERM
YEAR INVENTORI
RECEIVABL CASH LOANS AND
S ES
ES EQUIVALENT ADAVANCE
2018 335.9 1357.82 18.04 257.20
2019 492.98 1563.45 47.66 228.77
2020 343.99 1958.27 106.16 606.00
2021 805.63 1325.67 54.05 809.42
2022 1302.43 1364.47 73.33 1641.33
TREN
1329.899 1446.592 94.939 1713.217
D

CURRENT
GRAPH NO-5: GRAPHICAL PRESENTATION ASSETSANALYSIS ON CURRENT ASSETS
OF TREND
2500

1958.27
2000
1641.33 1713.217
1563.45
1500 1446.592
1357.82 1325.67 1364.47
1302.43 1329.899

1000
809.42
805.63
606
492.98
500 335.9 343.99
257.2 228.77
47.66 106.16 54.05 73.33 94.939
18.04
0
2018 2019 2020 2021 2022

INVENTORIES TRADE RECEIVABLES

CASH AND CASH EQUIVALENT SHORT TERM LOANS AND ADVANCCES

INTERPRETATION:
From the above chart shows that inventories are 1329.899, trade receivable is 1446.592, cash and cash
equivalent is 94.939 and short-term loans and advances is 1713.217 in the year 2023.

TABLE NO-5 CALCULATION OF TREND ANALYSIS ON CURRENT LIABILITIES

CURRENT LIABILITIES
YEAR SHORT TERM TRADE OTHER CURRENT SHORT TERM
 S BORROWING PAYABLES LIABILITIES PROVISIONS
2018 1645.9 1364.67 214.94 7.8
2019 2526.25 704.76 355.00 20.95
2020 2572.59 694.52 116.29 69.68
2021 4111.92 720.57 69.81 105.86
2022 3417.44 895.65 119.96 133.86
TREN
4393.445 599.365 32.655 168.739
D

GRAPH NO-5: GRAPHICAL PRESENTATION

CURRENTOF TREND ANALYSIS ON CURRENT LIABILITIES
LIABILITIES
5000
4500 4393.445
4000 4111.92
3500 3417.44
3000
2500 2526.25 2572.59
2000
1500 1645.9
1364.67
1000 895.65
704.76 694.52 720.57 599.365
500
0 7.8 20.95 69.68 105.86 133.86 168.739
2018 2019 2020 2021 2022

SHORT TERM BORROWING TRADE PAYABLES

OTHER CURRENT LIABILITIES SHORT TERM PROVISIONS

INTERPRETATION:

From the above chart shows that short-term borrowing is 4393.445, Trade payables is 599.365, Other
current liabilities is 32.655, and Short-term provisions is 168.739 in the year 2023.

FINDINGS

 The working capital position of the company has improved in the year 20218-19,
 compared to the year 2018-19.

 The current liabilities have decreased by ( -373.66) and the current assets has increased
by (-363.81) which is the positive improvement.

 The working capital position of the company has improved in the year 2019-20,
compared to the year 2019-20.

 The current liabilities have increased by (-895.1) and to compare the previous year there
is a problem.

 The working capital position of the company has improved in the year 2020-21,
compare to the year 2020-21.

 The current liabilities have increased by (-283.97) and the current asset has decreased by
(19.64) to compare the pervious year the working capital is decreased.

 The working capital position of the company has improved in the year 2021-22,
compared to the year 2021-22.

 The current liabilities have increased and the current assets also increased more when
compared to the current liabilities.

 The standard ratio is 2:1 this will be not maintained end of the five years. This only up
to 1 the maximum is 1 during the year 2022. hances you have to improve your
performance of working capital.

 The quick ratio is 1 should be 1 and somewhat near to 1 but it should be reaching
standard level 1:1 and the ratio is (0.67).

 The cash position should be managing defective cash inflows and outflows will be
mange defective.

 By observing the working capital turnover ratio, assets and liabilities are not properly
managed.

 The trend analysis shows that current assets for the year 2023, the inventories
(1329.899), trade receivables (1446.592), cash and cash equivalent (94.939), short-term
 loans and advance (1713.217).

 The trend analysis shows that current liabilities for the year 2023, the short-term
borrowing (4393.445), trade payables (599.365), other current liabilities (32.655), short
term provisions (168.739).

 The current assets should be increased in trend analysis.

 The working capital position further improve and the working capital should become
positive by increasing the sales investment and cash position.

 Short-term borrowing needs to be controlled and provisions should be reduced.

SUGGESTIONS
 CONCLUSION
Finally, I conclud that the working capital position is not good.