STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE FINANCIAL

YEAR 2006-07
Table : IV -1 DATA ANALYSIS
Statement of changes in working capital from 2006-07
Particulars

As on
As on
31-03-2006 Amount 31-032007Amount
Rs.
Rs.

Effect on
working
capital
Increase

Current Assets
Inventories
Sundry Debtors
Cash & Bank Balance
Loans, Advance &
Deposits
Total current
Assets (A)

8,00,38,989

5,36,54,395

139,14,87,559

141,52,79,192

2,04,79,270

97,91,407

531,44,66,731

920,20,95,437

680,64,72,549

768,08,20,431

175,03,76,281

220,07,98,208

175,03,76,281

220,07,98,208

505,60,96,268

548,00,22,223

2,37,91,633

88,76,28,706

Current Liabilities
Current Liabilities
Total Current Liabilities
(B)
Net Working Capital (AB)
Increasing in working
capital

42,39,25,955
54,80,22,223

-----54,80,22,223

91,14,20,339

INTERPRETATION:

The Networking capital of the company increases Rs. 42,39,25,955 during the

year 2006 -07.

The main reason for increase in working capital is increasing debtors and

increase in advances and deposits.

Current liabilities are also increased from the year 2005-06 to 2006-07.

The increasing current assets are more than the increasing current liabilities.

STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE FINANCIAL

YEAR 2007-08
Table: IV -2:
Statement of changes in working capital from 2007-08
As oil 3103-2007
Amount

As on
31-03-2008
Amount

Effect on
working capital

Rs.

Rs,

Increase

Inventories

5,36,54,395

1,31,49,191

Sundry Debtors

141,52,79,192

2,03,86,81,691

62,34,02,499

Cash & Bank

Balance

97,91,407

1,46,35,496

48,44,089

Loans,
Advance & Deposits

620,20,95,437

555,87,32,120

Total Current
Assets (A)

768,08,20,431

762,51,98,498

220,07,98,208

186,55,17,674

220,07,98,208

186,55,17,674

548,00,22,223

575,96,80,824

27,96,58,601

575,96,80,824

575,96,80,824

Particulars

Current Assets

Current Liabilities
Current Liabilities
Total Current
Liabilities (B)
Net Working Capital
(A-B)
Increasing in
working capital

33,52,80,534

96,35,27,122

INTERPRETATION:

The Networking capital of the company increases Rs. 27,96,58,601 during the

year 2006-07 to 2007-2008.

The main reason for increase in working capital is increasing in cash and bank

balance and increasing in loans and advances.

The increasing in current assets are more than the increase in current liabilities.

The increase in turnover leads to increase in working capital.

STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE FINANCIAL

YEAR 2008-09
Table : IV -3
Statement of changes in working capital from 2008-2009

Particulars

As on
As on
31-03-2008Amount 31-03-2009Amount

Effect on
working
capital

Rs.

Rs.

Increase

Current Assets
Inventories

1,31,49,191

1,66,45,600

34,96,409

Sundry Debtors

203,86,81,691

190,50,99,364

Cash & Bank Balance

1,46,35,496

15,62,402

Loans, Advance &

Deposits

555,87,32,120

472,51,20,054

Total Current
Assets (A)

762,51,98,498

664,84,29,420

Acceptances

24,57,70,738

24,57,70,738

Sundry Creditors

125,41,16,408

43,77,84,616

81,63,31,792

Other Liabilities

36,38,13,809

36,88,93,264

18,16,719

14,30,994

3,85,725

186,55,17,674

105,38,79,612

575,96,80,824

559,45,49,808

16,51,31,016

16,51,31,016

98,53,44,942

575,96,80,824

575,96,80,824

98,53,44,942

Current Liabilities

Interest Accepted but

not due
Total Current Liabilities
(B)
Net Working Capital (AB)
Decreasing in working
capital

INTERPRETATION:

The Networking capital of the company was decreased Rs. 16,51,31,016/-

during the year 2008-2009.

The main reason for decreasing networking capital is decrease in debtors and

decrease in cash and bank balance. And decrease in advances and deposits.

Another reason for decreasing networking capital is slight increase in current

liabilities in the year 2008-2009.

STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE FINANCIAL

YEAR 2009-10
Table : IV-4
Statement of changes in working capital from 2009-10

Particulars

As on
As on
31-03-2009 Amount 31-03-2010 Amount

Effect on
working
capital

Rs.

Rs.

Increase

Inventories

1,66,45,600

1,55,77,807

Sundry Debtors

190,50,99,364

91,55,13,138

Cash & Bank Balance

15,64,402

23,41,118

Loans, Advance &

Deposits

472,51,20,054

324,11,87,745

7,76,716

Total Current
Assets (A)

664,84,29,420

417,46,19,808

105,38,79,612

92,52,01,624

12,86,77,988

105,38,79,612

105,38,79,612

559,45,49,808

324,94,18,184

234,51,31,624

234,51,31,624

559,45,49,808

559,45,49,808

247,45,86,328

Current Assets

Current Liabilities
Current Liabilities
Total Current Liabilities
(B)
Net Working Capital (AB)
Decreasing in working
capital

INTERPRETATION:

The Networking capital of the company was increases in the year 2009-10,

Rs.234,51,31,624 /-.

The main reason for decreasing in networking capital during the year 2009- 10

is decrease current assets.

Current liabilities are also decrease during the year 2009-10.

Networking capital of the company is decreasing from last two consecutive

years.

STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE FINANCIAL

YEAR 2010-11
Table : IV-5
Statement of changes in working capital from 2010-11
Effect on
working
capital

As on 31-032010.Amount

As on
31-03-2011 Amount

Rs.

Rs.

Increase

Inventories

1,55,77,807

3,89,50,650

2,33,72,843

Sundry Debtors

91,55,13,138

82,13,85,631

Cash & Bank Balance

23,41,118

31,28,147

7,87,029

324,11,87,745

288,68,79,550

417,46,19,808

375,03,43,978

92,52,01,624

97,35,86,165

92,52,01,624

97,35,86,165

324,94,18,184

277,67,57,813

47,26,60,371

47,26,60,371

324,94,18,184

324,94,18,184

49,68,20,243

Particulars

Current Assets

Loans, Advance &

Deposits
Total Current
Assets(A)
Current Liabilities
Current Liabilities
Total Current Liabilities
(B)
Net Working Capital
(A-B)
Decreasing in working
capital

INTERPRETATION:

The Networking capital of the company was decreased during the year 20010-

11 that is Rs. 47, 26, 60,371/-.

The main reason for decreasing networking capital is decrease in loans and

advances and decrease in debtors.

Current liabilities are also increase in 2010-11.

The networking capital of the company is decreasing last three following years.

WORKING CAPITAL ANALYSIS THROUGH RATIO ANALYSIS:

The financial ratio analysis us a tool of financial management to review the effectiveness of the
working capital management. This technique of ratio analysis is applied for analyzing, the performance
and interpretation of financial and operation data connected with working managing.

Current Ratio
Current ratio is a measure of firms liquidity position. It is used to analyze the short-term
financial position of the firm.

Current assets
Current Ratio = --------------------------------------Current Liabilities

Current ratio during the year 2006-11

4.1

Year

Current Liabilities
Current Assets (Rs.)

Ratio

(Rs.)
2006-07

680,64,72,549

220,07,98,208

3.09

2007-08

762,51,98,498

186,55,17,674

4.08

2008-09

664,84,29,420

105,38,79,612

6.30

2009-10

417,46,19,808

92,52,01,624

4.51

2010-11

375,03,43,978

97,35,86,165

3.58

Graphical Representation:

4.1

INTERPRETATION:

The current ratio of the company is 3.4, in the year 2006-07 the ratio is

fluctuating in the following years.

In the year 2007-08 the current ratio is 6.3 this is the highest current ratio entire

study period.

The main reason for the increasing the current ratio is tremendous increase in

the current assets.

The current ratio of the company is above the standard ratio i.e. 2:1.

The overall current ratio of the company is satisfactory.

Quick ratio during the year 2006-11

Quick ratio: Quick ratio is also called Liquid ratio. It is the ratio of quick assets to quick
liabilities. All current assets except stock and prepaid expenses are considered as quick assets.
The ratio shows the available current assets, which are immediately convertible into cash to
meet the short-term obligations of the firm.

Quick Ratio =

Quick Assets
--------------------------------------------Quick or Current Liabilities

4.2

Year

Quick Assets (Rs.)

2006-07
2007-08
2008-09
2009-10
2010-11

762,71,66,036
761,20,49,307
663,17,83,820
415,19,42,001
371,13,93,328

Current Liabilities
(Rs.)
220,07,98,208
186,55,17,674
105,38,79,612
92,52,01,624
97,35,86,165

Quick Ratio
3.46
4.08
6.29
4.49
3.81

Graphical Representation:
4.2

INTERPRETATION:

Quick ratio of the company was 3.46 in the year 2006-07. The ratio is fluctuating in

the years i.e. 2006-07 to 2010-11.

The quick ratio is above standard ratio. The standard ratio is 1:1.

The main reason for above the standard is the percentage increase in the quick assets is

more than the percentage increase in the current liabilities.

The overall quick ratio is in increasing trend and the quick ratio of the company is

satisfactory.
.

Current assets turnover ratio during the year 2006-11

Current Assets Turnover Ration =

Sales
-------------------------Current Assets

4.3
Sales

Current Assets
(Rs.)

Ratio

2006-07

394,84,43,427

768,08,20,431

0.51

2007-08

54,81,54,670

762,51,98,498

0.07

2008-09

10,53,14,137

664,84,29,420

0.01

2009-10

18,60,52,308

417,46,19,808

0.04

2010-11

37,81,63,724

375,03,43,978

0.1

Year

Graphical Representation:
4.3

INTERPRETATION:

Current assets turnover Ratio is 0.51 in the year 2006-11, in the following year the

ratio is gradually decreasing.

The main reason for decreasing in current assets turnover ratio is a continuous decline

in the sales.

Another reason for decrease in the current ratio is the percentage decrease in sales is

more than percentage decrease in current assets.

The overall current turnover ratio is not satisfactory, because the ratio is in decreasing

trend.
.

Fixed assets turnover ratio during the year 2006-11

The ratio explains whether the firm has raised adequate long term
funds to meet its fixed assets requirement and is calculated as under.

Fixed Assets Turnover Ratio

4.4

Sales
-----------------------Net Fixed Assets

Sales

Net Fixed Assets

2006-07

394,84,43,427

71,65,80,554

5.51

2007-08

54,81,54,670

65,58,03,878

0.83

2008-09

10,53,14,137

15,32,56,244

0.68

2009-10

18,60,52,308

13,23,02,310

1.4

2010-11

37,81,63,724

11,41,70,482

3.31

Year

Ratio

Graphical Representation:
4.4

INTERPRETATION:

The fixed assets turnover ratio is 5.51 in the year 2006-07. This is the highest fixed

assets ratio in the entire study period.

After the year 2006-07 the ratio has decreased.

From the year 2009-10 the fixed assets turnover ratio is gradually increased.

The main reason for decrease the fixed assets ratio is decrease in the sales volume.

In the year 2010-11 the fixed assets turnover ratio 3.31 the current year position is

satisfactory.
.

Working capital turnover ratio during the year 2006-11

It is also known as Working Capital Leverage Ratio. This ratio indicates whether or not
working capital has been effectively utilized in making sales. In case a company can achieve
higher plumes of sales with relatively small amount of working capital. It is an indication of the
operational efficiency of the company.

Cost of goods sold

Working Capital Turnover Ratio =
4.5

------------------------Average working capital

Year

Cost of goods
sold

Average Working
Capital

Ratio

2006-07

394,84,43,427

548,00,22,223

0.72

2007-08

54,81,54,670

575,96,80,824

0.09

2008-09

10,53,14,137

559,45,49,808

0.01

2009-10

18,60,52,308

324,94,18,184

0.05

2010-11

37,81,63,724

277,67,57,813

0.13

Graphical Representation:
4.5

INTERPRETATION:

The working capital turnover ratio is 0.72 in the year 2006-07.

In the following years the ratio is decreasing trend.

The main reason for decrease in working capital turnover ratio is decline in sales. And

decrease in networking capital year by year.

The overall working capital turnover ratio is in decreasing trend. So the ratio of the

company is not satisfactory.

Net working capital turnover ratio during the year 2006-11

Net Working Capital Ratio =

Net Working Capital

-------------------------Net Assets

4.6
Year

Net Working

Net Assets

Capital

Ratio

2006-07

548,00,22,223

839,74,00,985

0.65

2007-08

575,96,80,824

828,10,02,376

0.69

2008-09

559,45,49,808

680,16,85,664

0.82

2009-10

324,94,18,184

430,69,22,118

0.75

2010-11

277,67,57,813

386,45,14,460

0.71

Graphical Representation:
4.6

INTERPRETATION:

The networking capital ratio of the company is increasing from the year 2006-07 to

2008-09 later the ratio is gradually decreased.

The main reason for decrease in working capital ratio is decreased in networking

capital and simultaneously decreases is net assets.

The overall networking capital is not satisfactory.

CHAPTER-V

FINDINGS

 SUGGESTIONS
CONCLUSION
FINDINGS
Net working capital as the company are show increasing trend from 2006-07 to 2008-09 and it
decrease in last 2 year
The current ratio of the company is above the standard. The current ratio is 3.4 in the year
2006-07 and 3.85 in the year 2010-11
It is identified that the quick ratio is much more than standard during the year 2006-07to 201011.
Sales have been decreasing too much from 2006-08 and increased in last 2 years
It is identified that working capital turnover ratio is decreasing gradually from the year 2006-07
to 2009-10. The ratio is slightly increased in the year 2010-11.
It is observed that the company closed certain units and divisions.
It is found the manufacturing expenses and operating expenses are increasing greatly.
The operating cycle of the firm have very long period.

SUGGEST