Ppt Roll No.50,A Study on Working Capital Management

7/31/2019 Ppt Roll No.50,A Study on Working Capital Management

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WORKING CAPITAL

MANAGEMENTBHARAT HEAVY ELECTRICALS

LIMITED,TIRUCHIRAPPALLI


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COMPANY PROFILE

Bharath Heavy Electricals Limited is the largesengineering and manufacturing entreprise of itsking in India.

The first plant of BHEL was set up at Bhopal in1956.

BHEL, Trichy unit was establish in1963 and issituated in Trichy-tanjore highway road.

12000 EMPLOYEES- permanent basis

4000 EMPLOYEES contract basis


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OBJECTIVES

Evaluate the working capital of thecompany during the period of study.

Analysis of working capital with various

tools.Analysis of various components of working

capital.

To study the adequacy of working capitaland suggest improvement to overcomedeficiencies if any.


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RESEARCH METHODOLOGY

TOOLS OF ANALYSIS

Ratio analysisTrend analysis

SECONDARY DATA

It is derived from the annualreports,magazines,web sites and internalauditing books of BHEL.


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FINDINGS OF STUDY

The working as per trend analysis current asset, current liability andworking capital is also in the upward trend during the period of study.

In this analysis of various components in working, in current asset, ininventory sundry debtors in loan and advances and other current assetsare downward trend. Then cash and bank balance only upward trend.

In current liabilities, liabilities downward trend and provision are upwardtrend during the period of study.

In sundry debtors value are fluctuating during the period of study.

Analysis of each component in working capital sundry creditors is upwardmanner during the period of study


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Working capital turnover ratio was downward year by year. Itclears shows firm reduced to use networking capital for sales.

Inventory turnover ratio was 3.57 in 2005-2006. It is upwardwhile comparing from 2001-2002.

Current ratio was fluctuating. An ideal current ration is 2.so the

creditors will be able to get their payment full. The debtor turnover ratio in the year 2001-2002 was 1.48 and getincreased in the year 2005-2006 was 1.87.

Quick ratio was fluctuating. so the company can be pay theliabilities within short period.

Cash ratio was fluctuating. It clearly indicates firms debt

borrowing power from financial institutions. The average collection period is high in 2001-2002 that is 107

days and 2005-2006 is 102 days in this reduce collection period. itshows firms liberal debt collection policy.


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SUGGESTION

Apart from present technique of age wise analysis, reason wise analysis to bedone periodically and suitable actions to be taken.

While collecting dues from customer collecting focus on customer irrespectiveof production unit, division and products to be followed.

automatic storage and retrieval system (ASRS) presently implementing in

components stores of BHEL, trichy may also be introduce in others stores orunits.

Periodic review on non moving and slow moving items of inventory may bedone.

All suppliers are to be educated on the requirement of various document sothat delay in processing of bills and payment may be reduced/avoided.

Working capital position is moderate. the company can raised additionalfunds raised are investment in fixed assets instead providing necessaryworking capital.


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CONCLUSION

The over all working capital management of BHEL is effective andsatisfactory.however,effective steps may be taken to reduce sundrycreditors and inventory by using latest tools and techniques.

In debt collection period as increase from 2001-2005.it reveals firms

infancies to collect the money from debtors. it affects present andfuture firms activities. so firms has to take great care in handlingdebt.

Out of 5 components of current assets, cash has placed fourth levelin all the 5 years. basically BHEL is producing the industrial goods,so very difficult to sell the products in cash and also BHEL is buyingtheir raw materials only on credit. this exchange activities reducesthe importance of cash in the firm. this level clearly shows, cash haslow position in the firm.


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LIMITATION

Only secondary data collected from BHEL trichyis used for the study, hence the accuracy of thefindings and conclusion of the statement will

depend upon the accuracy of the given data. Only five years financial statement of BHEL are

used for this schedule.

The limitations of the tools and techniques usedin the study will also reflect in the outcome ofthe study.


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Ppt Roll No.50,A Study on Working Capital Management

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