A STUDY ON CASH MANAGEMENT IN THE FLAVORS INDIA (P) LTD

INTRODUCTION
COMPANY PROFILE The Flavors India is well established and systematically organized company. Manufacture of food flavours,food colours & caramel. Product are 400 varieties of flavours,50 varieties of food colours &shades of caramel. Good industrial relations award for the year2001,2002,2003.

ISO 9001-2000 certified company.

OBJECTIVE OF STUDY
PRIMARY OBJECTIVE

Evaluate the efficiency of cash management.

SECONDARY OBJECTIVE

Overall performance of cash in the concern. Credit worthiness of the concern. Assess the liquidity position. Relationship maintained with the trade creditors & debtors. Identify the basic forces influencing the cash management.

RESEARCH METHODOLOGY
RESEARCH DESIGN: The research approach used for the study is descriptive. The form of the study is on the financial statement analysis in general and specific to the cash position. DATA COLLECTION PRIMARY DATA: The primary data is collected from the personnel interview. SECONDARY DATA: The study has been made using secondary data, which are obtained from annual reports and statements of accounts. The study is period for the annual reports and statements of accounts extended form the year 2001-02 to 2005-06.

ANALYTICAL TOOLS FOR THE STUDY: The researcher for the purpose of analysis and interpretation of the following tools have been need CASH FLOW STATEMENT RATIO ANALYSIS CASH BUDGETING PERIOD OF STUDY: The study includes 5 years (2001-02 to 2005-06) financial rates of the firms. The study was conducted for 1 months period.

REVIEW OF LITERATURE

CASH MANAGEMENT
Cash management is one of the key areas of working capital management. A part from the fact that it is the most liquid current assets, cash is the common denomination to which all current assets can be reduced because the other major liquid assets that are receivables and inventory get eventually converted into cash.

MOTICES FOR HOLDING CASH: The term cash with reference to cash management is used in the two senses. NARROW SENSES: To cover currency and generally accepted equivalents of cash, such as cheque, drafts and demand deposits in bank. BROAD SENSES: It includes near cash, assets such as marketable securities and time deposits in bank. There are four primary motives for maintaining cash balances. Transaction motives. Precautionary motives. Speculative motives. Compensating motives.

TRANSACTION MOTIVES: An important reason for maintain cash balance is the transaction motive. This refers to the holding of cash to meet routine cash requirements to finance the transactions which a firm carries on the ordinary course of business. PRECAUTIONARY MOTIVES: It will clearly determine the cash inflows and outflows in the ordinary course of business, a firm may have to pay cash for purposes which cannot be predicted or anticipated. SEPCULATIVE MOTIVE: It refers to the desire of a firm to take advantage of opportunities which present themselves at unexpected moments and which are typically outside the normal course of business. COMPENSATIVE MOTIVE: Bank provides a variety of service of business firms, such as clearance of cheque, of credit information, transfer of funds.

FINDINGS OF THE STUDY

The net working capital of the organization is not satisfactory. The current ratio for the four year it is as per the standard norms (2:1) concept for the year 2005-06 which is 1.9:1. On an average current ratio is formed to be satisfactory. Quick ratio of the company is not satisfactory as it is not up to the standard norms (1:1). Inventory turnover ratio is found to be not satisfactory as it is maintain low inventory.

Debtor turnover ratio is decline indicates it is not satisfactory. Creditors turn over ratio showing increasing ratio indicates that the company is enjoying. Its credit facilities to the possible amount.

In the year 2005-06 is leads to higher requirement of cash balance 11.62 lakhs.
Cash reflects the liquidity position of the concern is reduced in the year 2005-06 0.06 lakhs decreasing cash position indicated that the company is not managing its cash position satisfactorily.

SUGGESTION & RECOMMENDATION

The various suggestions are followed after analyzing the main finding of this study. The cash management of the company is failed to strengthen the cash position so the company so required to table steps to improve the cash position by concentrating on receivables, inventories avoiding to much on borrowings. The company failed to manage the receivable in the normal level because of poor performance of the collection procedure and inefficient performance related with managing the receivables. The inventories play a major role in production. So, the concern should take measure to maintain the inventories that are required to in order reduce the e cost, and keep the production flow continuously.

In 2005-06 the net profit is increased compare to the other four year. So the concern should maintain the same position to improve the net profit. The cash and bank balance indicate high liquidity position of a company, The Flavors India (p) Ltd maintain cash including bank balance is at a optimum level and it is enough to meet day to day requirement

CONCLUSION
Analysis and Interpretation of the financial data of The Flavors India (p) ltd, ascertain the cash position of the firm. The results explores that the firm is unable toe meet its short term obligations. The concern should reduced the long term loan and obtain the profit. The concern should take various measures to increase the net profit.

SCOPE OF THE FURTHER STUDY

It helps to take short term financial decision. It indicates the cash requirement needed for plant and equipment expansion programme. It reveals the liquidity position of the firm by highlighting the various sources of cash and its uses. To find strategies for efficient management of cash

LIMITATION OF THE STUDY

These studies only concentrated the quantitative method. The study is restricted only to The Flavors India (P) Ltd. being a case study the findings cannot be generalized.

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