project on wcm

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CHAPTER - 1

INTRODUCTION

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INTRODUCTION:-

1.1 . INTRODUCTIONOFWORKINGCAPITALMANAGEMENT

THEMAJOROBJECTIVEOFTHISSTUDY ISFORTHEPROPERUNDERSTANDINGOFTHEWORKING

CAPITAL OF APNA CIRCLE INFOTECH PVT. LTD. AND TO SUGGESTNECESSARY MEASURES TO

OVERCOMETHESHORTFALLSIFANYINTHEINDUSTRY.

The project undertaken is on Working Capital Management of Apna Circle InfoTech Pvt. Ltd..

It describes about how the company manages its working capital and the various steps that are

required in the management of working capital. Cash is the lifeline of a company. If this lifeline

deteriorates, so does the company's ability to fund operations, reinvest and meet capital

requirements and payments. Understanding a company's cash flow health is essential to making

investment decisions. A good way to judge a company's cash flow prospects is to look at its

Working Capital Management (WCM).

Working capital refers to the cash of a business requires for day-to-day operations or, more

specifically, for financing the conversion of raw materials into finished goods, which the

company sells for payment. Among the most important items of working capital are levels of

inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a

company's efficiency and financial strength.

The working capital is an important yardstick to measure the companys operational and financial

efficiency. Any company should have a right amount of cash and lines of credit for its business

needs at all times. This project describes how the management of working capital takes place at

Apna Circle InfoTech Pvt. Ltd.

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There are numerous instances in the history of business world where inadequacy of working

capital has led to business failures when a firm finds it difficult to meetings day to day affairs.

Operating expenses essential out lays may have to be postponed for want of funds, operating

plans will go out of gear & enterprise objectives on investment slumps the suppliers & creditors

of the firm may have to wait longer to raise their dues & will hesitate to extend further credit to

the firm.

Thus efficient management of working capital in an important prerequisite for successful

working of a business concern it reduces the chances of business failure generates a felling of

security and confidence in the minds of personnel in the organization it assurance solvency of

steady of the organization.

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1.2.IMPORTANCEOFTHESTUDY.

1. This projects is helpful in knowing the companys position of funds maintenance and setting

the standards for working capital inventory levels, current ratio level, quick ratio, current asset

turnover level & size of current liability etc.

2. This project is helpful to the managements for expanding the dualism & the project viability &

present availability of funds.

3. This project is also useful as it combines the present year data with the previous year data and

thereby it shows the trend analysis, i.e. increasing fund or decreasing fund.

4. The project is done as a whole entirely. It will give overall view of the organization and it is

useful in further expansion decision to be taken by management.

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1.3. OBJECTIVES OF THE STUDY

To study the various proportions of working capital of Apna Circle InfoTech Pvt. Ltd...

To find out different ratios related with working capital.

To check the impact of cash flows on working capital of Apna Circle InfoTech Pvt. Ltd..

To know the current trend of Assets and Liabilities.

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1.4. RESEARCH METODOLOGY

The research methodology incorporates all the function which helps a researcher to get their work

more efficiently and effectively. Research Methodology is the important aspect of project in any

field. It has very high place in working capital analysis , While analyzing working capital a

person should be aware in regard with collection and analysis of Data .I have put my all efforts in

collecting the accurate and real data collection. So I have tried my level best to collect the

sources of data collection by the help of my guide and through internet. I have collected data

from the various sources like various year financial data of the company. This kind of

information helps me to analysis the financial position of the company. Data collected from the

primary source and the secondary source of the company.

In the first group I am include those methods which are concerned with the collection of

data. These methods will be used where the data already available are sufficient to arrive

at the required solution.

The second group consists of those statistical techniques which are used to establish

relationships between the data and the unknown.

The third group consists of those methods which are used to evaluate the accuracy of the

obtained results.

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1.5. LIMITATIONS OF THE STUDY

Based on financial statements these statements suffer from certain limitations.

Affected by window dressing.

Company provides only secondary data, so certain type of bias is in study.

Unsuitable for forecasting.

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CHAPTER -2

INRTRODUCTION OF THE TOPIC

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INTRODUCTION OF THE TOPIC:-

2.1. Definition of Working Capital:-

According to C.W. Gestenbergh-

Working capital is ordinarily defined as the excess of the current assets over current liabilities.

According to Lawrence. J. Gitmen

The most common definition of working capital is the difference of the

firms current assets and current liabilities.

Definition of working capital management:-

Working capital management involves the relationship between a firm's short-term assets and its

short-term liabilities. The goal of working capital management is to ensure that a firm is able to

continue its operations and that it has sufficient ability to satisfy both maturing short-term debt

and upcoming operational expenses. The management of working capital involves managing

inventories, accounts receivable and payable, and cash.

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Management of working capital

Guided by the above criteria, management will use a combination of policies and techniques for

the management of working capital. These require managing the current assets - generally cash

and cash equivalents, inventories and debtors. There are also a variety of short-term financing

options which are considered.

Cash management identify the cash balance which allows for the business to meet

day to day expenses, but reduces cash holding costs.

Inventory management - identify the level of inventory which allows for

uninterrupted production but reduces the investment in raw materials and hence increases

cash flow; see Just In Time (JIT) and Economic order quantity (EOQ).

Debtors management - identify the appropriate credit policy, i.e. credit terms which

will attract customers, such that any impact on cash flows and the cash conversion cycle

will be offset by increased revenue and hence Return on Capital (or vice versa); see

Discounts and allowances.

Short term financing - inventory is ideally financed by credit granted by the

supplier; dependent on the cash conversion cycle, it may be necessary to utilize a bank

loan (or overdraft), or to "convert debtors to cash" through "factoring".

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TYPES

Working capital can be classified either on the basis of concept or on the basis of periodicity of

its requirement.

1. ON THE BASIS OF CONCEPT: - On the basis of concept working capital is of 2

types.

Gross working capital - Gross working capital is represented by the total Current

assets.

Gross working capital = Total current assets

Net working capital: - Net working capital is the excess of current assets over

current liabilities.

Net working capital = Current assets Current liabilities

2.

On the basis of requirement working capital is also of 2 types.

Permanent working capital - It is that amount of investment which should always

be there in the fixes or minimum current assets like inventory, accounts receivables or

cash balance etc. to carry out business smoothly. Such an amount cant be reduced if the

firms want to carry on business operations without interruption.

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Variable working capital -The excess amount of working capital over permanent

working capital is known as variable working capital. It may also be subdivided into two

parts.

a) Seasonal working capital - Such capital is required to meet out the

seasonal demands of busy periods occurring at stated intervals.

Special working capital - Such capital is required to meet out the extra-ordinary

needs for contingencies. Events like strike, fire, unexpected competition, rising price

tendencies, or initiating a big advertisement campaign require such capital.

2.2. DETERMINANTS

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1) Nature of business The effect of the general nature of the business on working

capital requirements cant be exaggerated. Rail, roads and other public utility services have

large fixes investment so they have the lower requirements of current assets. Industrial and

manufacturing enterprises, on the other hand, generally require a large amount of working

capital.

2) Production policies if the production is evenly spread over the entire year, working

capital requirements are greater, because the inventories will be unnecessarily accumulated

during of season period. But if the production schedule favours a varying production plan

as per the seasonal requirements, working capital is required to a greater extent during a

specified season only. The production policies are affected by so many factors availability

of raw materials, labour, stocking facility etc & therefore, whatever the productions policies

are, the firm has to arrange its working capital requirements accordingly.

3) Proportion of the cost of raw materials to total cost - In those industries where

cost of proportion is a large proportion of total cost of the goods produced, requirements of

working capital will be comparatively large.

4) Length of period of manufacturing The time which elapses between the

commencement and end of the manufacturing process has an important bearing upon the

requirements of working capital. The manufacturing cycle may be shorter for certain

concerns & longer for others- it depends on the type of the product to be manufactured,

work to be done through machine labour & hand labour, degree of rationalization of

manufacturing procedures through times, motion & fatigue studies etc.

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Main components of working capital are as follows:

1) Cash Cash is the most liquid and important component of working capital. Holding cash

involves cash in the sense that the present worth of cash held for a year is less than the

value of cash on today. During inflationary situations as exist today the cost of holding

includes the deterioration in the value of the cash due to inflation. Cash, therefore, results in

enhanced liquidity, but lower profitability. Despite in the cost involved it is pertinent to

hold cash because it facilitates the attainment of some important motives.

2) Marketable Securities Though marketable securities provides a such lower yield

that the firms operation assets. They serve two useful functions. Firstly, they act as a

substitute for cash, and secondly, are used as temporary investment. Where these securities

are held in lieu of the cash balance, they act as a substitute for transactional or

precautionary balances. Normally, these arent used as speculative balances, but only as a

guard against the possible shortage of bank credit.

Marketable securities (as temporary investment) may be held for one of the following

reasons:

Seasonal or cyclical operations

To meet known financial requirements. Construction of an additional plant.

Immediately after the sale of long-term securities.

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3) Account Receivable - Though accounts receivable are a vital investment of any

business organization, little analytical work as been done to determine credit policies.

Maintaining account receivable has its cost implications in that the firms monetary

resources are tied up. This is of greater significance in the inflationary economy, because of

the depreciation in the value of money. Basically, this is a two-step account. When goods

are shipped, inventories are reduced and accounts receivable is created. When payment is

made, this account is reduced and the cash level increases. Accounts receivables are,

therefore a function of the volume of credit sales and the average length of time between

sales and collections.

4) Inventory Inventories represent a substantial amount of a firms current assets.

Management of inventories should be efficiently carried out so that this investment doesnt

become too large, as it would result in blocked capital which could put to productive use

elsewhere. On the other hand, having too small an inventory could result in loss of sale or

loss of customer goodwill. An optimum level of inventory should therefore be maintained.

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2.4. Working Capital Cycle:

Cash flows in a cycle into, around and out of a business. It is the business's life blood and every

manager's primary task is to help keep it flowing and to use the cash flow to generate profits. If a

business is operating profitably, then it should, in theory, generate cash surpluses.

If it doesn't generate surpluses, the business will eventually run out of cash and expire. Click here

for more information about the vital distinction between profits and cash flow.

The faster a business expands the more cash it will need for working capital and investment. The

cheapest and best sources of cash exist as working capital right within business. Good

management of working capital will generate cash will help improve profits and reduce risks.

Bear in mind that the cost of providing credit to customers and holding stocks can represent a

substantial proportion of a firm's total profits.

There are two elements in the business cycle that absorb cash - Inventory (stocks and work-in-

progress) and Receivables (debtors owing you money). The main sources of cash are Payables

(your creditors) and Equity and Loans.

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Each component of working capital (namely inventory, receivables and payables) has two

dimensions. TIME and MONEY. When it comes to managing working capital - TIME IS

MONEY. If you can get money to move faster around the cycle (e.g. collect monies due from

debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels

relative to sales), the business will generate more cash or it will need to borrow less money to

fund working capital. As a consequence, you could reduce the cost of bank interest or you'll have

additional free money available to support additional sales growth or investment. Similarly, if

you can negotiate improved terms with suppliers e.g. get longer credit or an increased credit

limit; you effectively create free finance to help fund future sales.

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RECEIVABLES MANAGEMENT

INTRODUCTIONThe term receivable is defined as debt owed to the firm by customers arising from sale of goods

or services in the ordinary course of business. When a firm makes an ordinary sale of goods or

services and doesnt receive payment, the firm grants trade credit accounts receivable, which

could be collected in the future. Receivables Management is also called trade credit management.

OBJECTIVE

The objective of receivables management is to promote sales and profits until that point is

reached where the return on investment in further funding receivables is less than the cost of

funds raised to finance that additional credit.

BENEFITS

Investments in receivables involve both benefits and costs. The extension of trade credit has a

major impact on sales, costs and profitability. Other things being equal, a relatively liberal policy

and, therefore, higher investments in receivables, will produce larger sales. However, costs will

be higher with liberal policies than with more stringent measures.

Therefore, accounts receivables management should aim at a trade-off between profit (benefit)

and risk (cost).

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INVENTORY MANAGEMENT

INTRODUCTION

Inventories constitute the principal item in the working capital of the majority of trading and

industrial companies. In inventory we include raw materials, finished goods, work-in-progress,

supplies and other accessories. To maintain the continuity in the operations of business

enterprises, a minimum stock of inventory is required.

Management of inventory is designed to regulate the volume of investment in goods on hand and

the types of goods carried in stock to meet the needs of production and sales while at the same

time, the investment in them is to be kept at a reasonable level.

CONCEPT

The inventory management is used in two ways- Unit Control and Value Control. Production

and purchase officials use this word in term of unit control whereas in accounting this word

is used in term of value control .Investment in inventory is one the largest asset item of

business enterprises particularly those engaged in manufacturing.

The proper management and control of the capital invested in the inventory should be the prime

responsibility of accounting department because resources invested in inventory arent earning a

return for the company. Rather, on the other hand, they are costing the firm money both in terms

of capital costs being incurred and loss of opportunity income that is being foregone.

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OBJECTIVES

The basic managerial objectives of inventory control are two-

1) The avoidance of over-investment or under-investment in inventories.

2) To provide the right quantity of standard raw material to the production department at the right

time.

TECHNIQUES OF INVENTORY CONTROL

1) The Selective Inventory Control or ABC System of Control

2) Maximum Stock Limit

3) Minimum Stock Limit

4) Re-ordering Level

5) Economic Order Quantity

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ABC System of Control

The various inventory items are, according to this system, categorized into three classes-

1) A

2) B

3) C

The item included in-group involve the largest investment. Therefore, inventory control

should be the most rigorous and intensive and the most sophisticated inventory control

techniques should be applied to these items. The C group consists of items of inventory which

involve relatively small investments although the numbers of items is fairly large. These

items deserve minimum attention. The B group stands midway. It deserves less attention than

A but more than C. It can be controlled by employing less sophisticated techniques.

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Maximum Stock Limit

This represents the quantity if inventory above which it should not be allowed to be kept. The

following formula may be applied to calculate the maximum stock-

Maximum Stock = Reorder Level Minimum Consumption during

Minimum Lead Time + Lot Size.

Minimum Stock Limit

This represents the quantity below which stock should not be allowed to fall. The main purpose

of this level is to ensure that production isnt held up due to storage of any material.

Minimum Stock Limit = Re-order Level Normal storage during Lead Time

Re- Ordering Level

It is the point at which if stock of the material in store reaches, the storekeeper should initiate the

purchase requisition for fresh supplies of the material. This level is fixed somewhere between the

maximum and minimum levels in such a way that the difference of quantity of the material

between the reordering level and the minimum level will be sufficient to meet requirements of

production up to the time of fresh supply of the material.

The reorder point = Lead time in days * Average daily usage of inventory

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Economic Order Quantity

It is the quantity of inventory, which can be reasonably ordered at a time and purchased

economically. It is also known as Standard Order Quantity or Economic Lot Size. By definition

Economic Order Quantity is that size or order at which the total cost of ordering and holding are

the minimum. In determining the economic order quantity the problem is one to set a balance

between two opposing costs, namely, namely ordering costs and carrying costs. The ordering

costs are basically the costs of getting an item into the firms inventory.

Carrying costs, sometimes also known as holding costs are the costs of possessing the materials.

These costs are combined known as Associated Costs.

Hence, the management tries to reconcile them and this reconciliation point is economic order

quantity.

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CHAPTER 3

PROFILE OF THE ORGANIZATION

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3.1. INTRODUCTION OF THE COMPANY

ApnaCircle is a Viadeo Group Co. and is Indias first and leading Business and Career

networking site. Professionals can use the network to enhance their career prospects, discover

business opportunities, build relationships with new contacts and create their effective online

identities. Most people familiar with technology-driven businesses of any type will associate the

word ecosystem with technology, solutions, service, and sales partners. This is correct. However,

the concept of ecosystem is much broader and applies to any type of organisation. It covers all

generic groups of people and organizations who, in a way or another, have a direct or indirect

interaction with the company and on any matter. With this definition, a companys business

ecosystem includes; all types of media (print, online, broadcast, as well as blogs), industry and

financial analysts, academics, clients and client associations, sales and technology partners,

industry alliances and associations, standard and regulatory bodies, governments and

administrations, non-governmental organisations, employees and trade unions. In specific cases,

but not rare ones, citizens and associations of citizens must also be taken into consideration.

Communication and Public Affairs professionals use the term of Stakeholders that cover many

parts of the ecosystem, but not all. It does matter because the agenda, opinion, actions and

reactions of each constituency have or can have an impact on the companys business. Below are

presented the most common reasons to engage with specific parts of the ecosystem. This list is by

far not exhaustive.

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In the previous post, we have seen that B2B buyers prefer to take information and advice

from trusted sources, their peers and recognized third parties (journalists, experts, analysts).

Paving the way to sales requires engaging with these influencers. It is or should be the

primary job of marketing. Public Relations and Industry Analyst Relations also play a role

there.

Organisations and people who influence regulations have an impact on the companys

business. It is therefore important to know their plans and be able to explain and defend the

companys agenda, via direct or indirect contacts. It is the space of Public and Regulatory

Affairs and Lobbying.

Listed companies need to manage their relationship with the financial community. This is the

space of Investor Relations.

Many companies have activities that can directly impact citizens and must therefore manage

the opinion and reactions of impacted groups and individuals. For example, a construction

company chartered to build a motorway will face the reactions of people who lose their

property or perceive a loss on their quality of life. Managing such situations is a Public

Affairs and Public Relations matter.

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Companies above a certain size and their leadership team are constantly exposed to the

judgment of public opinion, and must manage their image and reputation. This is or should

be a crucial role for top executives supported by the various communication teams

Last but not least, in almost all industries, companies of all size are competing to attract and

retain talents. This is so crucial that the concept of employers branding has emerged. This is

a role for Human Resources but with implications in terms of Corporate Communication,

Public Relations, and Internal Communication. The critical point is that strength or a

weakness with one constituency will often have a high impact with others constituencies and

this often beyond rational aspects. As a dramatic example, think about the worldwide

negative impact for BP of the platform explosion in the gulf of Mexico in 2010. Many

groups of stakeholders, not all of them located in the impacted area, expressed their concern

and issues and there was a synergetic effect to at least temporarily destroy the companys

image.

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RESEARCH METHODOLOGY

When we talk of research methodology, we not only talk of the research methods but also the

comparison of the logic behind the methods, we used in this context of our research study and

explain why we are using a particular method or technique and why using the others. Research

methodology is a way to systematically solve the research problem. It may be understood as a

science of studying how research is done systematically. In this, we study the various steps that

are generally adopted by researcher in studying his research problem along with the logic behind

them.

The present study is based upon the case study method of research to investigate procedures at

micro level.

As the study is analyzing probing in nature, thus, entirely based on the secondary data gathered

through the annual reports of the industry. Therefore it provides a historical perspective of

decisions.

RESEARCH

Research refers to search for knowledge. Research is an original contribution to the existing stock

of knowledge making for its advancement. It is the pursuit of truth with the help of study,

observation, comparison and experiment. In short, the search for knowledge through objective

and systematic method of finding solution of the problem is research. The advance learners

dictionary of current English gives the meaning of research a careful investigation or inquiry

especially through search for new facts in any branch of knowledge.

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4.1. RESEARCH METHODS

Research methods may be understood as those methods/techniques that are used for conduction

of research. All those methods which are used by the researcher during the course of studying his

research problem are termed as research methods. Keeping in view, the research methods can be

put into following three groups:

In the first group we include those methods which are concerned with the

collection of data. These methods will be used where the data already available are

sufficient to arrive at the required solution.

The second group consists of those statistical techniques which are used to

establish relationships between the data and the unknown.

The third group consists of those methods which are used to evaluate the accuracy

of the obtained results.

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Secondary data

Secondary data are those which have already been collected by someone else and have already

been passed through statistical process. In this project report, both types of data have been used.

Mainly, secondary data is used such as annual reports of last five years of Apna Circle InfoTech

Pvt. Ltd.

4.3. Statistical Tools

Ratio Analysis

Trend Analysis

4.4. Data Representation

Tables

Pie charts

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CHAPTER- 5

Data Analysis & Interpretation

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CURRENT RATIO

Current ratio indicates ability of the company to meet the current obligation i.e., the current

assets must be sufficient to pay as and when the latter matrices. The standard ratio is 2:1, the

current ratio is calculated by using the formula:

Current assets

Current ratio = --------------------------

Current liabilities

YEAR CURRENT ASSETS CURRENTLIABILITIES RATIO

2006-07 23,33,30,395.13 18,90,06,552.17 1.234

2007-08 12,09,66,623.21 14,22,10,762.18 0.85

2008-09 14,13,26,040.41 14,78,60,117.24 0.955

2009-10 32,30,19,288.99 20,38,85,067.19 1.584

2010-11 31,32,95,829.13 21,93,27,902.79 1.428

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Diagram: -

INTERPRETATION:-

The current ratio was 1.234 in the year 2006 2007 and the year 2007-

2008 the current ratio was 0.85 and in the year 2008 -2009 the current ratio was 0.955 this show

the current ratio has increase every year but in the year 2009-2010 the current ratio was

decreased to 1.584 . In the year 2010 2011 the current ratio has increases 1.428.The current

ratio is above the standard of 2: 1 ratio and hence it can be said that there is enough working

capital in the Apna Circle InfoTech Pvt Ltd to meet its current liabilities.

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QUICK RATIO

Quick ratio are acid test ratio ignores less liquidity assets like inventory. This

takes account readily available cash and other assets which are quickly converted into cash. The

standard is ratio is 1:1. The general principle of quick ratio is as follows:

Liquid Assets

Quick ratio = --------------------------------

Current liabilities

YEAR QUICK ASSETS CURRENT LIABILITIES RATIO

2006-07 1,36,67,591.83 18,90,06,552.17 0.072

2007-08 2,44,16,882.94 14,22,10,762.18 0.169

2008-09 2,83,90,812.06 14,78,60,117.24 0.192

2009-10 1,86,38,461.57 20,38,85,067.19 0.091

2010-11 3,39,59,496.91 21,93,27,902.79 0.154

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INVENTORY TURNOVER RATIO

Turnover ratio is also known as stock velocity. This ratio is calculated to consider the adequacy

of the quantum of capital and its institution for investing in inventory.

A firm must have reasonable stock in caparison to sales. It is the ratio of cost of sales and

average inventory of. This ratio helps the financial managers to calculate inventory policy. This

ratio reveals the number of times finished stock is turned over during a given accounting period.

The ratio is used for measuring the profitability. These are the various ways in which stock

turnover ratio may be calculated.

Net sales

Inventory turnover ratio = --------------------------------

Average Inventory

YEAR NET SALES AVERAGE INVENTORY RATIO

2006-07 20,14,86,573.36 23,41,47,889.61 0.86

2007-08 13,05,17,436.90 13,75,97,979.61 0.948

2008-09 9,66,54,360.90 8,31,65,010.43 1.162

2009-10 12,37,19,616.75 10,30,03,384.82 1.201

2010-11 36,88,53,566.89 18,47,71,625.02 1.996

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Diagram: -

INTERPRETATION:-

The Inventory turnover ratio was 0.86 in the year 2006 2007 and the year 2007-2008 the

current ratio was 0.948 and in the year 2008 -2009 the current ratio was 1.162 this show the

current ratio has increase every year but in the year 2009-2010 the current ratio was decreased to

1.201 . In the year 2010 2011 the inventory turnover ratio has increases 1.996.

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CASH POSITION RATIO

Cash in the most liquid asset, a financial analyst may examine the ration of cash and its

equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash,

therefore, they may be included in the computation of cash position ratio.

Cash + marketable securities

Cash Position Ratio = ---------------------------------------------

Current liabilities

YEAR CASH+MARKETABLE

SECURITIES

CURRENT

LIABILITIES

RATIO

2006-07 53,79,219.50 18,90,06,552.17 0.028

2007-08 1,59,03,764.68 14,22,10,762.18 0.111

2008-09 2,00,18,991.55 14,78,60,117.24 0.135

2009-10 79,51,888.86 20,38,85,067.19 0.039

2010-11 4,56,44,654.96 21,93,27,902.79 0.208

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Diagram: -

INTERPRETATION :-

The cash position ratio is inadequate as there are ups and downs during the year. The above ratio

indicates that the company is unable to quickly realize its current liabilities it is not good enough.

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WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales. The current assets like debtors,

bills receivable, cash, and stock etc., change with the increase or decrease in sales. The working

capital is taken as:

Working capital =current assets-current liabilities

This ratio indicates the velocity of the utilization of net working capital. This ratio

indicates the number of times the working capital is turned over in the course of a year. The ratio

measures the efficiency with which the working capital is being used by a firm. A higher ratio

indicates the efficient utilization of working capital and the low ratio indicates inefficient

utilization of working capital.

SALES

WORKING CAPITAL TURNOVER RATIO = -------------------------------

NET WORKING CAPITAL

Year NETSALES NET WORKING CAPITAL RATIO

2006-07 20,14,86,573.36 4,43,23,842.96 4.545

2007-08 13,05,17,436.81 2,12,44,138.97 6.143

2008-09 9,66,54,360.90 1,35,34,076.83 7.141

2009-10 12,37,19,616.75 11,91,34,221.80 1.038

2010-2011 36,88,53,566.89 9,39,67,926.34 3.925

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Diagram: -

INTERPRETATION :-

This ratio indicates the velocity of the utilization of net working capital. This ratio

indicates the number of times the working capital is turned over in the course of a year. The ratio

measures the efficiency with which the working capital is being used by a firm. This ratio

indicates the number of times the net sales met with the working capital for the year. The

turnover of the working capital has highly increasing from 2006-2007 to 2008-09.

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5.2. DATA ANALYSIS

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2006-07

PARTICULARS 2006 2007 Increase Decrease

CURRENTASSETS:

Cash on hand 42159.91 1283980.24 1241820.33 -------------

Balances with bank 494953.16 4095239.26 3600286.1 -------------

Interest Receivable 1826488.57 1826488.57 ------------ ------------

Closing stock 292692156.2 219662803.7 ------------ 73029352.5

Total current assets

A

295055757.8 226868511.7

LIABILITIES:

Outstanding Interest 4429829.45 6094477.9 ------------ 1664648.45

Total current liabilities-

B

4429829.45 6094477.9

Working Capital

(A-B)

290625928.3 220774033.8

Net decrease in

working Capital

69851894.5 69851894.5

290625928.3 290625928.3 74694000.95 74694000.95

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Effect of working capital


CURRENT ASSETS:

Cash on hand 1283980.24 22575.2 ------------ 1261405.04

Balances with bank 4095239.26 15881189.48 11785950.22 ------------


Closing stock 219662803.7 96849740.27 ------------ 122813063.4

Total current assets -A 226868511.7 114579993.5

LIABILITIES:

Outstanding Interest 6094477.9 27190688.4 ------------ 21096210.5

Total current liabilities -B 6094477.9 27190688.4

Working Capital (A-B) 220774033.8 87389305.1

Net decrease in working

Capital

133384728.7 133384728.7

220774033.8 220774033.8 145170678.9 145170678.9

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CURRENT ASSETS:

Cash on hand 22575.2 1878931.06 1856355.86 -------------

Balances with bank 15881189.48 18140037.49 2258848.01 -------------

Interest Receivable 1826488.57 1826488.57 ------------ -------------

Closing stock 96849740.27 110043159 13193418.73 -------------


LIABILITIES:

Outstanding Interest 27190688.4 40525798.4 ------------ 13335110

Total current liabilities

-B 27190688.4 40525798.4


Net Increase in working

Capital 3973512.6 3973512.6

91362817.7 91362817.7 17308622.6 17308622.6

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PARTICULARS 2010 2011


Increase Decrease

CURRENT ASSETS:

Cash on hand

141218.8

0

95082.9

2 ------------ 46135.88

Balances with bank 7254943.1

4

17849583.4

1

10594640.27 ------------


Closing stock 304641449.50 281582198.30 ------------ 23059251.20


LIABILITIES:

Out standing Interest 49024988.90 46928301.64 2096687.26 ------------

Total current liabilities -B 49024988.90 46928301.64


Net Decrease in working

Capital

10414059.60 10414059.60

264839111.10 264839111.10 23105387.08 23105387.08

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CHAPTER- 6

FINDINGS, CONCLUSION

SUGGESTION AND

RECOMMENDATION

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6.1. FINDINGS

In the over all evaluation of the Working Capital Management at each and every aspect, the

following are the findings.

1. Working Capital ratio of the Apna Circle InfoTech Pvt Ltd is decreasing in all the years

which indicate poor liquidity position of the company.

2. Inventory turn over ratio of Apna Circle InfoTech Pvt Ltd good in all the 5 years of study,

which indicates the efficient management of inventory.

3. Current ratio of Apna Circle InfoTech Pvt Ltd is highest , which is the management of

effective and efficient utilization

4. The company sales have been decreased in all the year.

5. The reserves and surplus is always accumulating every year. The company can capitalize

the reserves and Surplus.

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6.2. CONCLUSION

The study involves practical and conceptual over view of decisions concerning current assets

like cash and bank balance, inventories (like raw materials, WIP, finished goods), sundry

debtors, loans and advances, other current assets and current liabilities like sundry creditors,

securities and other deposits, other current liabilities and provisions of Apna Circle InfoTech

Pvt Ltd. Was with the objective of maximizing the overall net profit of the bank. And complete

synchronization and co ordination among the working capital components which shall

contribute to optimum level of operations. Mismanagement of each or any of these components

shall be detrimental to the objectives of efficient operation, profitability and maximization of

overall value of the bank. The working capital limits would be considered only after the project

nearing completion and after ensuring control over the inventory. The inventory is a great

concern for Apna Circle InfoTech Pvt Ltd and it needs proper procurement and management.

Eligible working capital limits would be assessed by cash Budget method And

Projected production method depending the market condition, scale of operation, nature of

activity/enterprise and duration/length of operating cycle etc.

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BIBLIOGRAPHY

Financial Management By M.Y. Khan & P.K. Jain

Financial Management By D. K. Goyal

Research Methodology By C.R.Kothari

Annual Reports of the Apna Circle InfoTech Pvt Ltd

www.google.com

www.apn.com/our_sectors/index.htm

http://corporate.apnacircle.com/

Last 5 year annual reports

ARTICLES

http://www.caclubindia.com/articles/working-capital-management-420.asp

http://www.worldaffairsjournal.org/?gclid=CJubjt-Uy7ICFY-6zAodlikAww

http://www.jpmorgan.com/tss/Knowledge_Bank_Index/Articles/1104848723729

56
http://www.google.com/http://www.apn.com/our_sectors/index.htmhttp://corporate.apnacircle.com/http://www.caclubindia.com/articles/working-capital-management-420.asphttp://www.worldaffairsjournal.org/?gclid=CJubjt-Uy7ICFY-6zAodlikAwwhttp://www.jpmorgan.com/tss/Knowledge_Bank_Index/Articles/1104848723729http://www.apn.com/our_sectors/index.htmhttp://corporate.apnacircle.com/http://www.caclubindia.com/articles/working-capital-management-420.asphttp://www.worldaffairsjournal.org/?gclid=CJubjt-Uy7ICFY-6zAodlikAwwhttp://www.jpmorgan.com/tss/Knowledge_Bank_Index/Articles/1104848723729http://www.google.com/


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ANNEXURE

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ANNEXURE

APNA CIRCLE INFOTECH PVT. LTD.

TRADING ACCOUNT FOR THE YEAR 2006

PARTICULARS AMOUNTRs. Ps.

PARTICULARS AMOUNTRs. Ps.

1.OPENING STOCK:

2. PURCHASES:

3. Expendituredebitable to trading a/c

4. Cost of productionTransferred from

Manufacturing a/c

269391356.62

15,120.00

1,75,86,673.28

16,82,44,220.70

---------------------

45,52,37,370.60---------------------

CLOSING STOCK: SALES

Misc. incomeCreditable to

Trading a/c

Gross loss

198904422.6

20,14,86,573.36

1,72,00,316.54

3,76,45,558.10

----------------------

45,52,37,370.60----------------------

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BALANCE SHEET AS ON 2006

LIABILITIES Rs. ASSETS Rs.

1. Share capital2.DEPOSITS &

BORROWINGS:a) Depositsb) Borrowings

3. Out standingInterest payable

4. Adjusting heads Due by

5. Reserves6. U.D.P7. Audit fund8. Reserve fund yet

To be invested9. Vysya bank balance

10. Bank of India11. Canara bank12. Indian bank13. Indian overseas

Bank14. S.V. Grameena

Bank15. State bank of

India16. Union bank of

India17. CDCC bank,

U.p.

18. Corporation bank

LESS:Difference betweenAssets & liabilites

Total

14,09,58,700.00

2,88,36,536.0523,56,16,210.28

60,94,477.90

18,29,12,074.2721,93,57,187.86

64,226.889,695.57

24,702.69- - -

- - -- - -- - -

- - -

- - -

- - -

- - -

- - -

- - -

-----------------------81,38,73,811.50

29,92,13,003.98-----------------------51,46,60,807.52

-----------------------

1. Cash on hand2. BALANCE WITH

BANKS:a) current accountb) savings account

3. Shares in otherCo-op. institutions

4. Deposits withVarious agencies

5. F.Ds with banks6. Loans & advances

To members7. Loans to other

Co-op. sugarFactories

8. ADJ. headsdue to

9. Interest receivable10. Value of assets11. Revaluation of

Assets12. VALUE OF

CLOSING STOCK:a) Stores stocksb) Packing materialc) Stationaryd) raw materiale) raw material process

f) other expensesg) work inprocess

h) FMP rawmaterial & feed

13. Deficits

Total

12,83,980.24

17,15,099.2723,80,139.99

2,28,550.00

12,54,825.772,50,000.00

64,61,883.31

30,00,000.00

5,44,12,361.1518,26,488.57

12,62,06,460.22

9,59,30,271.73

2,02,69,708.931,78,240.45

26,375.5019,19,96,947.80

2,54,382.07

69,07,474.80

9,290.00

20,474.2047,943.52

----------------------51,46,60,807.52

----------------------

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To be invested


Total

14,09,60,300.00

2,88,12,456.6822,38,22,462.57

2,71,90,688.40

11,50,20,073.7822,87,27,884.01

64,226.889,695.57

24,702.69

-----------------------76,46,32,490.58

36,18,46,708.05-----------------------40,27,85,782.53

-----------------------








8. ADJ. headsdue to

9. Interest receivable10. Value of assets11. Rvaluation of

Assets12. VALUE OF

CLOSING STOCK:a) Stores stocksb) Packing materialc) Stationary

d) raw materiale) raw material process


h) FMP rawmaterial & feed

13. Deficits

Total

22,575.20

13,49,421.741,45,31,767.74

2,28,550.00

12,61,225.7722,50,000.00

63,86,629.69

10,00,000.00

5,48,94,708.0818,26,488.57

12,62,06,460.22

9,59,30,271.73

2,01,00,264.621,78,240.45

18,671.007,60,05,445.10

2,34,802.90

2,86,092.00

5,750.00

20,474.2047,943.52

----------------------40,27,85,782.53----------------------

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TRADING ACCOUNT FOR THE YEAR 2008

PARTICULARS AMOUNT

Rs. Ps.

PARTICULARS AMOUNT

Rs. Ps.

1.OPENING STOCK:

2. PURCHASES:

3. Expenditure debitableto trading a/c

4. Cost of productionTransferred fromManufacturing a/c

76291537.1

5,04,000.00

69,45,366.83

11,52,46,375.14

---------------------19,89,87,279.07---------------------

1. OPENING STOCK:a) Sugar

b) Molassesc) Pesticides

2. sales

3. Misc. incomeCreditable toTrading a/c

4. Gross loss

7,88,16,404.20

1,06,60,683.353,62,250.00

9,69,20,394.30

69,04,064.85

5323482.37

----------------------19,89,87,279.07----------------------

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To be invested


Total

14,09,61,400.00

2,91,54,179.6126,60,73,587.95

4,05,25,798.40

10,81,07,592.1924,80,88,004.02

64,226.889,695.57

24,702.69

-----------------------83,30,09,187.31

39,71,03,323.03

-----------------------43,59,05,864.28-----------------------








8. ADJ. headsdue to


Assets12. VALUE OF



h) Pesticidesh) FMP raw

material & feed13. Deficits

Total

18,78,931.06

91,72,861.3689,67,176.13

2,28,550.00

12,71,225.7727,50,000.00

90,85,235.94

10,00,000.00

6,70,56,511.9418,26,488.57

12,66,47,509.22

9,59,30,271.73

2,00,46,520.6493,100.0043,726.65

7,88,16,404.20--------

1,06,60,683.35---------3,62,250.00

20,474.2047,943.52

----------------------43,59,05,864.28----------------------

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To be invested


Total

14,11,40,700.00

3,10,24,046.1040,43,40,806.12

4,90,24,988.90

14,09,80,325.3626,43,09,028.13

64,226.889,695.57

24,702.69

-----------------------1,03,09,18,519.75

40,53,03,194.91

-----------------------62,56,15,324.84

-----------------------








8. ADJ. headsdue to


Assets12. VALUE OF



h) prepaid renth) FMP raw


Total

1,41,218.80

1,66,827.1170,83,116.03

2,28,550.90

12,67,225.772,50,000.00

1,06,24,987.20

10,00,000.00

7,32,09,660.3918,26,488.57

12,91,97,586.22

9,59,30,271.73

2,06,58,101.845,87,128.50

28,089.0026,74,59,792.80

78,41,426.47

75,14,240.114,15,715.92

1,16,480.00

20,474.2047,943.52

----------------------62,56,15,324.84

----------------------

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5. Reserves6. U.D.P

7. Audit fund8. Reserve fund yet

To be invested


Total

14,25,53,600.00

3,52,01,887.0140,57,02,422.76

4,69,28,301.64

22,91,72,904.8226,80,06,835.01

64,226.88

9,695.57

24,702.69

11,27,66,45,76.3849,89,41,043.06

------------------------62,87,23,533.32

------------------------








8. ADJ. headsdue to


Assets12. VALUE OF

CLOSING STOCK:a) Stores stocks

b) Packing materialc) Stationaryd) raw materiale) raw material processf) other expensesg) work in

processh) Prepaid expensesh) FMP raw


Total

95,082.98

33,80,265.9814,46,93,17.43

2,28,550.00

12,70,225.772,50,000.00

18,17,48,73.00

10,00,000.00

7,55,41,003.33

18,26,488.5713,99,27,312.64

9,59,30,271.73

1,94,14,206.14

14,70,696.5040,532.0024,67,11,289.11

62,98,460.9266,19,002.89

8,01,596.612,05,940.00

20,474.20

47,943.52

----------------------62,87,23,533.32

----------------------

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EVALUATION SHEET FOR SUMMER TRAINING PROJECT REPORT

STUDENTS NAME : ____________________________

ROLL NO. :____________________________

EVALUATORS FEEDBACK : ____________________________

____________________________

____________________________

____________________________

DID THE STUDENT CONTACT YOU REGULARLY FOR DISCUSSION?

: YES/NO (Please tick)

MARKS AWARDED :____________________________

SIGNATURE OF EVALUATOR

NAME:

DATE:

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ATTENDANCE FOR SUMMER TRAINING PROJECT REPORT

NAME OF THE STUDENT : DINESH CHAND

CLASS : M.B.A. IInd YEAR

ROLL NO. : 001

NAME OF THE SUPERVISOR : DR. V. K. AGGARWAL

DR. V. K. AGGARWAL

PROJECT GUIDE

B.P.I.B.S.

S.NO. DATE TIME PROGRESSOF REPORT

(REMARKS)

SIGNATUREOF STUDENT SIGNATUREOF

SUPERVISOR

1

2

3

4

5

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7

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