A LESSONS ON WORKING CAPITAL MANAGEMENT. Department of Management Studies, BIST, BIHER, Bharath University, Chennai.

Transcription

1 Volume 116 No , ISSN: (printed version); ISSN: (on-line version) url: ijpam.eu A LESSONS ON WORKING CAPITAL MANAGEMENT 1 Ramamurthi, 2 R.BharathVajan, 3 C.S.Gowtham Chakravarthi 1,2,3 Assistant Professor Department of Management Studies, BIST, BIHER, Bharath University, Chennai. 1 ramamurthi.thm@bharathuniv.ac.in Abstract: This project is about Ratio Analysis. This project mainly deals with the financial statement of the IT distribution & service industry in India as well as the overseas. By calculating the important key ratios of the company with the help of the financial statement for the year , researcher analyze where the company is standing in the market in order to predict the future of the company, the project deals with the competitors in the market. How they are sustaining in the market. And what will be the opportunities and the threat for the company in the market. The researcher not only considered the key ratios and also the current trend in the market to predict the future. This project deals with the four competitors in the market. These competitors are considered as the upcoming threat for the Remington India ltd. Lots of research have done on this before considering the competitors. The researcher uses the ranking of IT distribution industry by the recent growth and the revenues in the recent years this helps the project to know where the company is exactly standing. The project not only considered the revenues and recent growth, and also the assets, companies past experiences and the rating given by the suppliers. A personal talk with the finance department and with the business accountants has been made. This discussion has helped a lot in the analysis of ratios. 1. Introduction It refers to the firm s investment in short-term assets that is bills receivables and inventory of raw. Working capital = current assets current liabilities Annual Reports of the company Audit Reports Department manuals Brochures main from the balance sheet& Profit and loss account Tools used for analysis: Comparative size balance sheet analysis Ratio analysis. Need For The Study This study helps the organization to identify the area of the problem and suggest way to improve working capital of the company[1-8]. This would help to determine the unnecessary expenditure incurred by the organization. This would also help the organization to identify the working capital position. This study would also help to determine the pattern of raising the fund or finance in future. Objectives of The Study Primary objective: To study on working capital management towards Googolsoft Technologies Secondary Objectives: To learn the liquidity position of the company[9-12]. To find out the receivable management in the company To know how well the company manage its cash. Research Design: Descriptive design Data type: Secondary Data Secondary data is the one which already exit. It includes the following: Method Of Data Collection Secondary Data Since the study mainly focused on Ratio analysis the researchers had given immense importance to collect secondary data from the company annual reports for the year Internal records and the company website is used as a secondary data. From these sources, 107

2 the researcher can gather the information and the research can be conductedsuccessfully[13-15]. Fund Flow Statement: PARTICULARS ASSETS: CURRENT ASSETS Preparations Of Fund Flow Statement For The Year Table 1. Changes In Working Capital INCREASE Cash And Cash Equivalents DECREASE Sundry Debtors Inventory Other Current Assets Loans and Advances TOTAL CURRENT ASSETS LESS: CURRENT LIABILITIES Accounts Payable Bank OD Provisions Total Current Liabilities NET WORKING CAPITAL PARTICULARS Changes In Working Capital = 8, 50,320 Table 2. Preparations Of Fund From Operations Rs In 000 Net Income ADD: Land & Buildings Machineries Preliminary Expenses LESS: Long term debt Retained Earnings TOTAL

3 FUND FROM OPERATIONS Table 3. Fund Flow Statement Sources of Fund Rs Application of Fund Rs Funds from operations Profit and Loss Appropriation Increase in WC TOTAL TOTAL Table 4 Chi -Square Analysis Between Current Asset & Current Liabilities Table value of chi square Calculated value of chi square Since the calculated value of chi square greater than its table value at 5% level (4 df ). Null hypothesis is rejected. There is significant relationship between cash balance & current assets[16-21]. 2. Findings The inventory turnover ratio appears to be high in all the years. The gross profit ratio of the company has been decreasing over the years as it passes through regulatory regime. The trend analysis shows the company s net working capital has decreased by 26% in the year 2009.After 2010 it shows a increasing trend. The debtors turnover ratio is high which indicates management has taken effort for efficient debtors management[26-30]. 3. Suggestions The knowledge of budgetary control should be educated to the various departmental heads, middle level managers and front lines supervisors which may be very effective in the budgetary control processors. In order to maintain the steady gross profit, the company has to take steps to reduce the cost of goods sold. To have an efficient working capital management the short term funds should be used efficiently in the operation of the business[22-25]. The company debt collection period is improved by increasing the debtors turnover ratio so it can maintain the same level. 4. Conclusion From this finding I conclude that Googol soft Technologies should maintain the Liquidity Ratio according to the standard because the liquidity beyond the standard also affects the activities of Googol soft Technologies by holding large amount in hand.if the Liquidity Ratio is maintained as per the standard the holding of cash in hand will be reduced which in turn increases the working capital turnover ratio. The Return on Shareholders Fund of Googol soft Technologies can be increased by reducing the interest and financial charges.the actual expenses can be reduced than the budget by creating awareness and education to the various department heads. References [1] Arun Kumar N., Srinivasan V., Krishna Kumar P., Analysing the strength of unidirectional fibre orientations under transverse static load, International , [2] Srinivasan V., Analysis of static and dynamic load on hydrostatic bearing with variable viscosity and pressure, Indian Journal of Science and Technology, v- 6, i-suppl.6, pp , [3] Srinivasan V., Optimizing air traffic conflict and congestion using genetic algorithm, Middle - East Journal of Scientific Research, v-20, i-4, pp , [4] Praveen R., Achudhan M., Optimization of jute composite as a noise retardant material, International , [5] Raja Kumar G., Achudhan M., Srinivasa Rao G., Studies on corrosion behaviour of borated stainless steel (304B) welds, International Journal of Applied Engineering Research, v-9, i-22, pp ,

4 [6] Ganeshram V., Achudhan M., Design and moldflow analysis of piston cooling nozzle inautomobiles,indian Journal of Science and Technology, v-6, i-suppl.6, pp , [7] Ganeshram V., Achudhan M., Synthesis and characterization of phenol formaldehyde resin as a binder used for coated abrasives, Indian Journal of Science and Technology, v-6, i-suppl.6, pp , [8] Achudhan M., PremJayakumar M., Mathematical modeling and control of an electrically-heated catalyst, v-9, i-23, pp , [9] Anbazhagan R., Satheesh B., Gopalakrishnan K., Mathematical modeling and simulation of modern cars in the role of stability analysis, Indian Journal of Science and Technology, v-6, i-suppl5, pp , [10] Udayakumar R., Kaliyamurthie K.P., Khanaa, Thooyamani K.P., Data mining a boon: Predictive system for university topper women in academia, World Applied Sciences Journal, v-29, i-14, pp-86-90, [11] Kaliyamurthie K.P., Parameswari D., Udayakumar R., QOS aware privacy preserving location monitoring in wireless sensor network, Indian Journal of Science and Technology, v-6, i-suppl5, pp , [12] Kumar J., Sathish Kumar K., Dayakar P., Effect of microsilica on high strength concrete, International , [13] Dayakar P., Vijay Ruthrapathi G., Prakesh J., Management of bio-medical waste, International Journal of Applied Engineering Research, v-9, i-22, pp , [14] Iyappan L., Dayakar P., Identification of landslide prone zone for coonoortalukusingspatialtechnology, International , [15] Swaminathan N., Dayakar P., Resource optimization in construction project, International Journal of Applied Engineering Research, v-9, i-22, pp , [16] Swaminathan N., Sachithanandam P., Risk assessment in construction project, International Journal of Applied Engineering Research, v-9, i-22, pp , [17] Srividya T., Kaviya B., Effect on mesh reinforcement on the permeablity and strength of pervious concrete, International Journal of Applied Engineering Research, v-9, i-22, pp , [18] Sandhiya K., Kaviya B., Safe bus stop location in Trichy city by using gis, International Journal of Applied Engineering Research, v-9, i-22, pp , [19] Ajona M., Kaviya B., An environmental friendly self-healing microbial concrete, International , [20] Kumar J., Sachithanandam P., Experimental investigation on concrete with partial replacement of scrap rubber to granite stones as coarse aggregate, v-9, i-22, pp , [21] Sachithanandam P., Meikandaan T.P., Srividya T., Steel framed multi storey residential building analysis and design, International Journal of Applied Engineering Research, v-9, i-22, pp , [22] Srividya T., Saritha B., Strengthening on RC beam elements with GFRP under flexure, International , [23] Saraswathy R., Saritha B., Planning of integrated Satellite Township at Thirumazhisai, v-9, i-22, pp , [24] Saritha B., Rajasekhar K., Removal of malachite green and methylene blue using low cost adsorbents from aqueous medium-a review, Middle - East Journal of Scientific Research, v-17, i-12, pp , [25] Saritha B., Ilayaraja K., Eqyaabal Z., Geo textiles and geo synthetics for soil reinforcement, v-9, i-22, pp , [26] Ilayaraja K., Krishnamurthy R.R., Jayaprakash M., Velmurugan P.M., Muthuraj S., Characterization of the 26 December 2004 tsunami deposits in Andaman Islands (Bay of Bengal, India), Environmental Earth Sciences, v-66, i-8, pp , [27] Ilayaraja K., Ambica A., Spatial distribution of groundwater quality between injambakkamthiruvanmyiur areas, south east coast of India, Nature Environment and Pollution Technology, v-14, i-4, pp , [28] Ilayaraja K., Zafar Eqyaabal M.D., Study of ground water quality in Cooum belt, Indian Journal of Science and Technology, v-8, i-32, pp--, [29] Sandhiya K., Ilayaraja K., Application of GIS for countering nuclear disaster, International Journal of Applied Engineering Research, v-9, i-22, pp , [30] Ambica A., Ground water quality characteristics study by using water quality index in tambaram area, Chennai, Tamil nadu, Middle - East Journal of Scientific Research, v-20, i-11, pp ,

5 111

6 112