STUDY ON WORKING CAPITAL

MANAGEMENT OF COMPANY
A Project report
submitted to
RAYAT BAHRA INSTITUTE OF MANAGEMENT, HOSHIARPUR

For the

Partial Fulfillment Of The degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted to:
PUNJAB TECHNICAL UNIVERSITY

Submitted by:
NEERAJ AGGARWAL
MBA 2nd YEAR
2

DECLARATION BY THE STUDENT

I NEERAJ AGGARWAL, Student of RAYAT BAHRA INSTITUTE OF MANAGEMENT

hereby declare that final Research Project Report entitled WORKING CAPITAL
MANAGEMENTis an original work and data provided in the study is authentic to the best
of my knowledge. This report has not been submitted to any other institute for the award of
any other degree.

UNIVERSITY ROLL NO --1436406

DATE:

SIGNATURE
(NEERAJ AGGARWAL)

PLACE:

PREFACE

Businesses face ever increasing pressure on costs and growing Financing requirements as a
result of intensive competition in globalize markets. Many of them are therefore considering
ways of making themselves more efficient. Identifying possible options it is important not to
focus exclusively on income and expense items, but also to take the balance sheet into
account .Improvements to the existing capital structure can free up valuable resources and
bring increased efficiency. Active working capital management is an extremely effective way
to increase enterprise value. Optimizing working capital results in a rapid release of liquid
resources and contributes to an improvement in free cash flow and to a permanent reduction
in inventory and capital costs. My project on
Analysis of Working Capital Management in PIC N FRAMES TECHNOLOGIES
.The attempt is aimed to analyse the various aspects of working capital management of PIC
N FRAMES TECHNOLOGIES and compare it with DOLPHIN TECHNOLOGIES and with
industry standards .By adopting various calculation and analysis and then making
interpretation with the solution of specific problem, best efforts on giving appropriate
suggestion to the company have been made .To this context various methods and techniques
like ratio analysis , statistical tool, Correlation analysis, and working towards the optimal
level of working capital, estimation of working capital and various ratios have been used to
draw an exact picture of company.

ACKNOWLEDGEMENT

A Formal Statement of Acknowledgement will meet the ends of justice in the matter of my deep sense
of gratitude to all those who help me in completion of my project.

I would like to give special thanks to Miss SHAGUN, who was my project guide for guiding me from
time to time, right from giving direction to the research, to the preparation of report. He provides me
with valuable suggestions and information related to the project and really co-operate me a lot during
my project. He was deeply concerned and involved for my wellbeing.

I express my deepest gratitude and reverence to Dr BP Gupta, principal, RBIM and heartily thankful
to all my faculty members MBA Dept. for their kind consideration, painstaking efforts, constant
encourages and valuable advice throughout the study of the present research problem as well as
preparation of the research project report

(NEERAJ AGGARWAL)

INDEX
2

Contents
Declaration
Preface
Acknowledgement
Chapter 1: Introduction of Organization
1.1Company profile
1.2 What we do?
1.3Strengths
1.4Directors Desk
Chapter 2: Introduction of Project
2.1 Scope
2.2 Objectives
2.3 Classification Of Capital
2.4 Advantages & Disadvantages
of Adequate Working Capital
2.5 Working Capital Analysis

Page Number
I
II
IV
(Page Numbers)
1
2

2.6 Limitations

Chapter 3:
3.1 Review of Literature
Chapter 4: Research Methodology
4.1 Research design
4.2 Data Collection methods
4.3 Data analysis Techniques
Chapter 5: Analysis and Interpretations
Chapter 6: Findings & Suggestions
5.1 Findings of the Study
5.2 Suggestions
5.3 Conclusion of the Study
Chapter 7: Bibliography
Annexure
Questionnaire

INTRODUCTION
OF
ORGANISATION

COMPANY PROFILE
We PIC N FRAME TECHNOLOGIES are pleased to introduced ourselves as professionally
managed software products & web development company having a workforce of over 75+,
highly skilled designers, developers and other advanced technologies We PIC N FRAMES
TECHNOLOGIES are pleased to introduce ourselves, as a professionally managed software
products professionals, to provide better solutions for all your web based needs. We cater to
all the web based needs of our clients with powerful web solutions right from the conception
to the completion of the project. The internet promotion services make sure that the websites
rank well on the popular search engines and gets maximum exposure over the internet. This is
the reason why PIC N FRAMES Technologies is called the 'One Stop Shop' for all your
business needs. When PIC N FRAMES Technologies web professionals do their job, results
speak themselves. Feel free to check our web site design portfolio and see the quality
yourself. We do web sites which make your visitors think about you: "Those guys are good!"
Our competent graphic designers provide creative designs for your logos, brochures,
corporate identity and presentations to your utmost satisfaction. You'll never interact with
automated support systems. Managers and customer care representatives will contact you
personally making sure they understand your needs. You'll communicate with people who are
able to get inside your problem and find the proper solution.

WHAT WE DO?
Our work begins by understanding thoroughly what our clients want. Then, with the perfect
blend of web and internet marketing services, we strive to provide customized solutions that
surpass our clients expectations. Be it custom web design, content, web 2.0 programming,
custom database applications, mobile application development, 3D flash animation or
interactive multimedia business presentations, PIC N FRAMES TECHNOLOGIES delivers
comprehensive solutions in all sectors of web development domain.

Website Design and Development

A website is a companys online salesperson working 24X7. And understanding this fact to
its core, at PIC N FRAMES TECHNOLOGIES we provide the unique combination of
graphic design, informative content and clean code to make websites that gives users an
appealing contemporary look and feel, clear message about your firm and interactive
experience.Our team of creative graphic designers, developers, who are never shy of
introducing new programming paradigms ranging from Microsoft to open source
technologies, and expert marketers make your website:
Optimized for the newest browsers and search engine data
More engaging
Scalable with robust backend applications
Highly functional
Easily finable on the web
Mobile Application Development
The world has not just gone online, but mobile as well. And today there is hardly any major
(and even minor) firm, IT or non-IT, that isnt using a mobile app to engage with its
customers. At PNF, creating an app is just the beginning of the process of attracting and
engaging the customer. Therefore, we focus on building apps that are not just highly
functional, but provide an unparalleled user experience. We offer cutting edge mobile
application development as well as a mobile game developer in Houston for all the mobile
devices of the current generation. We develop applications for all the major mobile platforms,
which are in trend today, namely; IOS, Android and Blackberry

Our Strengths
One-Stop Internet Solutions Vendor
From custom web designing to developing complex web and mobile applications, PNFs
team has the expertise to use all the latest technology paradigms effectively and deliver
quality solutions that meet latest industry trends.
Full-Cycle Development Services
We ensure that every stage of Software Development Life Cycle gets the time and attention it
deserves. From defining the requirements to post deployment support, PNF provides end-toend solutions for application development.
Experience and Expertise
With the credit of providing effective solutions in countless scenarios under our belt, over
years our team has acquired exceptional skill sets and built a knowledge base that enable us
to provide the best possible solutions tailor-made to our clients specific needs.
Quality Standards
At PIC N FRAMES, our three-pronged approach of hiring the best talent, using proven
processes and ensuring seamless communication, helps us create solutions that wow the end
user and bring faster returns for our clients.
Vast Pool of IT Professionals
From top IT Professionals with expertise in a particular domain to teams with diverse skill
sets, PIC N FRAMES TECHNOLOGIES is haven to some of the best IT minds, who can
cater to the needs of projects of any size and complexity.
Complete Transparency
At PIC N FRAMES TECHNOLOGIES, we believe in providing our clients complete
satisfaction with our solutions, and that is why we take our clients through each phase of the
proposed solution so that both teams understand the process and outcome.

From DIRECTORs Desk

PIC N FRAMES TECHNOLOGIES INC. is striving to become one of the leading web
solution and service providers in the country. Our focus remains on bridging the skill gap,
whether it for our clients or for the IT industry at large. Our commitment to delivering worldclass digital solutions enables our clients to get the IT edge, they were looking for, and our
comprehensive training for budding IT professionals ensures that they are industryready and
taking the right steps to a successful career. This way, we are also contributing to the IT
industry by giving its young and promising talent. Knowledge of different APIs and specific
tools are enough to develop websites and applications; however, developing a product that
not only meets the clients requirements but surpasses their expectations as well, requires a
great deal of experience and dedication. At PNF we work on principles; and with high
standards that we have set for our services, we strive to work with the utmost professionalism;
and our products speak the rest.
- SUMIT KUMAR SETHI

CHAPTER-2
INTRODUCTION TO PROJECT
A measure of both a company's efficiency and its short-term financial health. The working
capital is calculated as:
The working capital ratio (Current Assets/Current Liabilities) indicates whether a company
has enough short term assets to cover its short term debt. Anything below 1 indicates negative
W/C (working capital). While anything over 2 means that the company is not investing
excess assets. Most believe that a ratio between 1.2 and 2.0 is sufficient.Also known as "net
working capital

If a company's current assets do not exceed its current liabilities, then it may run into
trouble paying back creditors in the short term. The worst-case scenario is bankruptcy.
A declining working capital ratio over a longer time period could also be a red flag
that warrants further analysis. For example, it could be that the company's sales
volumes are decreasing and, as a result, its accounts receivables number continues to
get smaller and smaller .Working capital also gives investors an idea of the company's
underlying operational efficiency. Money that is tied up in inventory or money that
customers still owe to the company cannot be used to pay off any of the company's
obligations. So, if a company is not operating in the most efficient manner (slow
collection), it will show up as an increase in the working capital. This can be seen by
comparing the working capital from one period to another; slow collection may signal
an underlying problem in the company's operations.

Things to Remember

If the ratio is less than one then they have negative working capital.

A high working capital ratio isn't always a good thing, it could indicate that they have
too much inventory or they are not investing their excess cash

2.1 SCOPE OF THE STUDY

The study is on working capital management of selected Public enterprises. The study
furnishes the management of idea about the performance of working capital of the
company. Management of working capital refers to management of current assets, current
liabilities and relationship between them. The basic goal of working capital is to maintain the
satisfactory level of working capital. A sound working capital policy ensures higher
profitability and proper liquidity of a firm. Every business needs funds for two purposes: for
its establishment and to carry out its day to day operations. For this purpose it is important
for the company to manage its short term assets and liability.
Working capital is quite essential for the working of any business. For a good
manufacturing company, some basic capital for producing the goods is required before it
starts selling them. It has to take care of production expenses, administration expenses as
well as selling expenses. Moreover, since business is usually done on credit, there is a time
lag between the date of sale and date of receipt of revenues, which can be as high as 90 days
at times. Considering all these, it is essential that a company has sufficient capital to keep it
going before it coverts its purchases into goods and then finally into cash.
Each and every study has its own scope. This project intends to study the working capital
position of the Public enterprises. This study helps to identify the areas that could be
improved. Further suggestions were quoted which the company could use it in the future
program enhancing better utilization of all resources.

2.2 OBJECTIVES OF THE STUDY

The primary objective of working capital management is to ensure that sufficient cash is
available to:

meet day-to-day cash flow needs

pay wages and salaries when they fall due

pay creditors to ensure continued supplies of goods and services

pay government taxation and providers of capital, dividends; and

ensure the long term survival of the business entity.

2.3 CLASSIFICATION OF CAPITAL

Capital required for a business can be classified under two main categories via,

1)

Fixed Capital

2)

Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- today operations. Long terms funds are required to create production facilities through purchase
of fixed assets such as plant & machinery, land, building, furniture, etc. Investments in these
assets represent that part of firms capital which is blocked on permanent or fixed basis and is
called fixed capital. Funds are also needed for short-term purposes for the purchase of raw
material, payment of wages and other day to- day expenses etc.

These funds are known as working capital. In simple words, working capital refers to that
part of the firms capital which is required for financing short- term or current assets such as
cash, marketable securities, debtors & inventories. Funds, thus, invested in current assts keep
revolving fast and are being constantly converted in to cash and this cash flows out again in
exchange for other current assets. Hence, it is also known as revolving or circulating capital
or short term capital.

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1.

Gross working capital

2.

Net working capital

The gross working capital is the capital invested in the total current assets of the enterprises
current assets are those

Assets which can convert into cash within a short period normally one accounting year.

CONSTITUENTS OF CURRENT ASSETS

1)

Cash in hand and cash at bank

2)

Bills receivables

3)

Sundry debtors

4)

Short term loans and advances.

5)

Inventories of stock as:

a.

Raw material

b.

Work in process

c.

Stores and spares

d.

Finished goods

6. Temporary investment of surplus funds.

7. Prepaid expenses

8. Accrued incomes.

9. Marketable securities.

In a narrow sense, the term working capital refers to the net working. Net working capital is
the excess of current assets over current liability, or, say:

NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES.

Net working capital can be positive or negative. When the current assets exceeds the current
liabilities are more than the current assets. Current liabilities are those liabilities, which are
intended to be paid in the ordinary course of business within a short period of normally one
accounting year out of the current assets or the income business.

CONSTITUENTS OF CURRENT LIABILITIES

1.

Accrued or outstanding expenses.

2.

Short term loans, advances and deposits.

3.

Dividends payable.
2

4.

Bank overdraft.

5.

Provision for taxation , if it does not amt. to app. Of profit.

6.

Bills payable.

7.

Sundry creditors.

The gross working capital concept is financial or going concern concept whereas net working
capital is an accounting concept of working capital. Both the concepts have their own merits.

The gross concept is sometimes preferred to the concept of working capital for the following
reasons:

1.

It enables the enterprise to provide correct amount of working capital at correct time.

2. Every management is more interested in total current assets with which it has to operate
then the source from where it is made available.

3. It take into consideration of the fact every increase in the funds of the enterprise would
increase its working capital.

4. This concept is also useful in determining the rate of return on investments in working
capital. The net working capital concept, however, is also important for following reasons:

It is qualitative concept, which indicates the firms ability to meet to its operating
expenses and short-term liabilities.

IT indicates the margin of protection available to the short term creditors.

It is an indicator of the financial soundness of enterprises.

It suggests the need of financing a part of working capital requirement out of the
permanent sources of funds.

CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways:

On the basis of concept.

On the basis of time.

On the basis of concept working capital can be classified as gross working capital and net
working capital. On the basis of time, working capital may be classified as:

Permanent or fixed working capital.

Temporary or variable working capital

PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to ensure effective
utilization of fixed facilities and for maintaining the circulation of current assets. Every firm
has to maintain a minimum level of raw material, work- in-process, finished goods and cash
balance. This minimum level of current assts is called permanent or fixed working capital as

this part of working is permanently blocked in current assets. As the business grow the
requirements of working capital also increases due to increase in current assets.

TEMPORARY OR VARIABLE WORKING CAPITAL

Temporary or variable working capital is the amount of working capital which is required to
meet the seasonal demands and some special exigencies. Variable working capital can further
be classified as seasonal working capital and special working capital. The capital required to
meet the seasonal need of the enterprise is called seasonal working capital. Special working
capital is that part of working capital which is required to meet special exigencies such as
launching of extensive marketing for conducting research, etc.

Temporary working capital differs from permanent working capital in the sense that is
required for short periods and cannot be permanently employed gainfully in the business.

2.4 IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING

CAPITAL

SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the

solvency of the business by providing uninterrupted of production.

Goodwill: Sufficient amount of working capital enables a firm to make prompt

payments and makes and maintain the goodwill.

Easy loans: Adequate working capital leads to high solvency and credit standing can
arrange loans from banks and other on easy and favourable terms.

Cash Discounts: Adequate working capital also enables a concern to avail cash discounts
on the purchases and hence reduces cost.

Regular Supply of Raw Material: Sufficient working capital ensures regular supply of
raw material and continuous production.
2

 Regular Payment Of Salaries, Wages And Other Day TO Day Commitments: It leads to
the satisfaction of the employees and raises the morale of its employees, increases their
efficiency, reduces wastage and costs and enhances production and profits.

Exploitation Of Favourable Market Conditions: If a firm is having adequate working

capital then it can exploit the favourable market conditions such as purchasing its
requirements in bulk when the prices are lower and holdings its inventories for higher prices.

Ability To Face Crises: A concern can face the situation during the depression.

Quick And Regular Return On Investments: Sufficient working capital enables a concern
to pay quick and regular of dividends to its investors and gains confidence of the investors
and can raise more funds in future.

High Morale: Adequate working capital brings an environment of securities, confidence,

high morale which results in overall efficiency in a business.

EXCESS OR INADEQUATE WORKING CAPITAL

Every business concern should have adequate amount of working capital to run its business
operations. It should have neither redundant or excess working capital nor inadequate nor
shortages of working capital. Both excess as well as short working capital positions are bad
for any business. However, it is the inadequate working capital which is more dangerous
from the point of view of the firm.

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING

CAPITAL

1. Excessive working capital means ideal funds which earn no profit for the firm and
business cannot earn the required rate of return on its investments.

2. Redundant working capital leads to unnecessary purchasing and accumulation of

inventories.

3. Excessive working capital implies excessive debtors and defective credit policy which
causes higher incidence of bad debts.

4.

It may reduce the overall efficiency of the business.

5. If a firm is having excessive working capital then the relations with banks and other
financial institution may not be maintained.

6.

Due to lower rate of return n investments, the values of shares may also fall.

7.

The redundant working capital gives rise to speculative transactions

2.5 DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business needs some amounts of working capital. The need for working capital arises
due to the time gap between production and realization of cash from sales. There is an
operating cycle involved in sales and realization of cash. There are time gaps in purchase of
raw material and production; production and sales; and realization of cash.

Thus working capital is needed for the following purposes:

For the purpose of raw material, components and spares.

To pay wages and salaries

To incur day-to-day expenses and overload costs such as office expenses.

To meet the selling costs as packing, advertising, etc.

To provide credit facilities to the customer.

To maintain the inventories of the raw material, work-in-progress, stores and spares
and finished stock.

For studying the need of working capital in a business, one has to study the business under
varying circumstances such as a new concern requires a lot of funds to meet its initial
requirements such as promotion and formation etc. These expenses are called preliminary
expenses and are capitalized. The amount needed for working capital depends upon the size
of the company and ambitions of its promoters. Greater the size of the business unit,
generally larger will be the requirements of the working capital.

The requirement of the working capital goes on increasing with the growth and expensing of
the business till it gains maturity. At maturity the amount of working capital required is called
normal working capital.

There are others factors also influence the need of working capital in a business.

FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS

1. NATURE OF BUSINESS: The requirements of working is very limited in public utility

undertakings such as electricity, water supply and railways because they offer cash sale only
and supply services not products, and no funds are tied up in inventories and receivables. On

the other hand the trading and financial firms requires less investment in fixed assets but have
to invest large amt. of working capital along with fixed investments.

2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the requirement of
working capital.

3. PRODUCTION POLICY: If the policy is to keep production steady by accumulating

inventories it will require higher working capital.

4. LENTH OF PRDUCTION CYCLE: The longer the manufacturing time the raw material
and other supplies have to be carried for a longer in the process with progressive increment of
labor and service costs before the final product is obtained. So working capital is directly
proportional to the length of the manufacturing process.

5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger
working capital than in slack season.

6. WORKING CAPITAL CYCLE: The speed with which the working cycle completes one
cycle determines the requirements of working capital. Longer the cycle larger is the
requirement of working capital.

7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the

question of working capital and the velocity or speed with which the sales are affected. A firm
having a high rate of stock turnover will needs lower amt. of working capital as compared to
a firm having a low rate of turnover.

8. CREDIT POLICY: A concern that purchases its requirements on credit and sales its
product / services on cash requires lesser amt. of working capital and vice-versa.

9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is need
for larger amt. of working capital due to rise in sales, rise in prices, optimistic expansion of
business, etc. On the contrary in time of depression, the business contracts, sales decline,
difficulties are faced in collection from debtor and the firm may have a large amt. of working
capital.

10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require large
amt. of working capital.

11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more earning
capacity than other due to quality of their products, monopoly conditions, etc. Such firms
may generate cash profits from operations and contribute to their working capital. The
dividend policy also affects the requirement of working capital. A firm maintaining a steady
high rate of cash dividend irrespective of its profits needs working capital than the firm that
retains larger part of its profits and does not pay so high rate of cash dividend.

12. PRICE LEVEL CHANGES: Changes in the price level also affect the working capital
requirements. Generally rise in prices leads to increase in working capital.

Others FACTORS: These are:

Operating efficiency.

Management ability.

Irregularities of supply.

Import policy.

Asset structure.

Importance of labor.

Banking facilities, etc.

MANAGEMENT OF WORKING CAPITAL

Management of working capital is concerned with the problem that arises in attempting to
manage the current assets, current liabilities. The basic goal of working capital management
is to manage the current assets and current liabilities of a firm in such a way that a
satisfactory level of working capital is maintained, i.e. it is neither adequate nor excessive as
both the situations are bad for any firm. There should be no shortage of funds and also no
working capital should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a
firm has a great on its probability, liquidity and structural health of the organization. So
working capital management is three dimensional in nature as

1. It concerned with the formulation of policies with regard to profitability, liquidity and
risk.

2.

It is concerned with the decision about the composition and level of current assets.

3.

It is concerned with the decision about the composition and level of current liabilities.

2.6 WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business. Adequate amount
of working capital is very much essential for the smooth running of the business. And the
most important part is the efficient management of working capital in right time. The
liquidity position of the firm is totally effected by the management of working capital. So, a
study of changes in the uses and sources of working capital is necessary to evaluate the
efficiency with which the working capital is employed in a business. This involves the need
of working capital analysis.

The analysis of working capital can be conducted through a number of devices, such as:

1.

Ratio analysis.

2.

Fund flow analysis.

3.

Budgeting.

1.

RATIO ANALYSIS

A ratio is a simple arithmetical expression one number to another. The technique of ratio
analysis can be employed for measuring short-term liquidity or working capital position of a
firm. The following ratios can be calculated for these purposes:

1. Current ratio.

2. Quick ratio

3. Absolute liquid ratio

4. Inventory turnover.

5. Receivables turnover.

6. Payable turnover ratio.

7. Working capital turnover ratio.

8. Working capital leverage

9. Ratio of current liabilities to tangible net worth.

2.

FUND FLOW ANALYSIS

Fund flow analysis is a technical device designated to the study the source from which
additional funds were derived and the use to which these sources were put. The fund flow
analysis consists of:

a.

Preparing schedule of changes of working capital

b.

Statement of sources and application of funds.

It is an effective management tool to study the changes in financial position (working capital)
business enterprise between beginning and ending of the financial dates.

3. WORKING CAPITAL BUDGET

A budget is a financial or quantitative expression of business plans and polices to be pursued

in the future period time. Working capital budget as a part of the total budge ting process of a
business is prepared estimating future long term and short term working capital needs and
sources to finance them, and then comparing the budgeted figures with actual performance
for calculating the variances, if any, so that corrective actions may be taken in future. He
objective working capital budget is to ensure availability of funds as and needed, and to
ensure effective utilization of these resources. The successful implementation of working
capital budget involves the preparing of separate budget for each element of working capital,
such as, cash, inventories and receivables etc.

ANALYSIS OF SHORT TERM FINANCIAL POSITION OR TEST OF LIQUIDITY

The short term creditors of a company such as suppliers of goods of credit and commercial
banks short-term loans are primarily interested to know the ability of a firm to meet its
obligations in time. The short term obligations of a firm can be met in time only when it is
having sufficient liquid assets. So to with the confidence of investors, creditors, the smooth
functioning of the firm and the efficient use of fixed assets the liquid position of the firm
must be strong. But a very high degree of liquidity of the firm being tied up in current
assets. Therefore, it is important proper balance in regard to the liquidity of the firm. Two

types of ratios can be calculated for measuring short-term financial position or short-term
solvency position of the firm.

1.

Liquidity ratios.

2.

Current assets movements ratios.

A) LIQUIDITY RATIOS

Liquidity refers to the ability of a firm to meet its current obligations as and when these
become due. The short-term obligations are met by realizing amounts from current, floating
or circulating assts. The current assets should either be liquid or near about liquidity. These
should be convertible in cash for paying obligations of short-term nature. The sufficiency or
insufficiency of current assets should be assessed by comparing them with short-term
liabilities. If current assets can pay off the current liabilities then the liquidity position is
satisfactory. On the other hand, if the current liabilities cannot be met out of the current assets
then the liquidity position is bad. To measure the liquidity of a firm, the following ratios can
be calculated:

1.

CURRENT RATIO

2.

QUICK RATIO

3.

ABSOLUTE LIQUID RATIO

1. CURRENT RATIO

Current Ratio, also known as working capital ratio is a measure of general liquidity and its
most widely used to make the analysis of short-term financial position or liquidity of a firm.
It is defined as the relation between current assets and current liabilities. Thus,

CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITES

The two components of this ratio are:

1)

CURRENT ASSETS

2)

CURRENT LIABILITES

Current assets include cash, marketable securities, bill receivables, sundry debtors,
inventories and work-in-progresses. Current liabilities include outstanding expenses, bill
payable, dividend payable etc.

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay
its current obligations in time. On the hand a low current ratio represents that the liquidity
position of the firm is not good and the firm shall not be able to pay its current liabilities in
time. A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the current
liabilities is considered to be satisfactory.

CALCULATION OF CURRENT RATIO

(Rupees in crore)
e.g.
Year

2011

2012

2013

Current Assets

81.29

83.12

13,6.57

Current Liabilities

27.42

20.58

33.48

Current Ratio

2.96:1

4.03:1

4.08:1

Interpretation:-

As we know that ideal current ratio for any firm is 2:1. If we see the current ratio of the
company for last three years it has increased from 2011 to 2013. The current ratio of
company is more than the ideal ratio. This depicts that companys liquidity position is sound.
Its current assets are more than its current liabilities.

2. QUICK RATIO

Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be defined
as the relationship between quick/liquid assets and current or liquid liabilities. An asset is said
to be liquid if it can be converted into cash with a short period without loss of value. It
measures the firms capacity to pay off current obligations immediately.

QUICK RATIO = QUICK ASSERS/CURRENT LIABILITES

Where Quick Assets are:

1)

Marketable Securities

2)

Cash in hand and Cash at bank.

3)

Debtors.

A high ratio is an indication that the firm is liquid and has the ability to meet its current
liabilities in time and on the other hand a low quick ratio represents that the firms liquidity
position is not good.

As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if quick
assets are equal to the current liabilities then the concern may be able to meet its short-term
obligations. However, a firm having high quick ratio may not have a satisfactory liquidity
position if it has slow paying debtors. On the other hand, a firm having a low liquidity
position if it has fast moving inventories.

CALCULATION OF QUICK RATIO

e.g.

(Rupees in Crore)

Year

2011

2012

2013

Quick Assets

44.14

47.43

61.55

Current Liabilities

27.42

20.58

33.48

Quick Ratio

1.6 : 1

2.3 : 1

1.8 : 1

Interpretation :

A quick ratio is an indication that the firm is liquid and has the ability to meet its current
liabilities in time. The ideal quick ratio is 1:1. Companys quick ratio is more than ideal
ratio. This shows company has no liquidity problem.

3. ABSOLUTE LIQUID RATIO

Interpretation :

Although receivables, debtors and bills receivable are generally more liquid than inventories,
yet there may be doubts regarding their realization into cash immediately or in time. So
absolute liquid ratio should be calculated together with current ratio and acid test ratio so as
to exclude even receivables from the current assets and find out the absolute liquid assets.
Absolute Liquid Assets includes :

ABSOLUTE LIQUID RATIO =

LIABILITES

ABSOLUTE LIQUID ASSETS/ CURRENT

ABSOLUTE LIQUID ASSETS = CASH & BANK BALANCES.

e.g.

(Rupees in Crore)

Year

2011

2012

2013

Absolute Liquid Assets

4.69

1.79

5.06

Current Liabilities

27.42

20.58

33.48

Absolute Liquid Ratio

.17 : 1

.09 : 1

.15 : 1

Interpretation :
These ratio shows that company carries a small amount of cash. But there is nothing to be
worried about the lack of cash because company has reserve, borrowing power & long term
investment. In India, firms have credit limits sanctioned from banks and can easily draw cash.

B) CURRENT ASSETS MOVEMENT RATIOS

Funds are invested in various assets in business to make sales and earn profits. The efficiency
with which assets are managed directly affects the volume of sales. The better the
management of assets, large is the amount of sales and profits. Current assets movement
ratios measure the efficiency with which a firm manages its resources. These ratios are called
turnover ratios because they indicate the speed with which assets are converted or turned over
into sales. Depending upon the purpose, a number of turnover ratios can be calculated. These
are :

1.

Inventory Turnover Ratio

2.

Debtors Turnover Ratio

3.

Creditors Turnover Ratio

4.

Working Capital Turnover Ratio

The current ratio and quick ratio give misleading results if current assets include high amount
of debtors due to slow credit collections and moreover if the assets include high amount of
slow moving inventories. As both the ratios ignore the movement of current assets, it is
important to calculate the turnover ratio.

1.) INVENTORY TURNOVER OR STOCK TURNOVER RATIO :

Every firm has to maintain a certain amount of inventory of finished goods so as to meet the
requirements of the business. But the level of inventory should neither be too high nor too
low. Because it is harmful to hold more inventory as some amount of capital is blocked in it
and some cost is involved in it. It will therefore be advisable to dispose the inventory as soon
as possible.

INVENTORY TURNOVER RATIO =

INVENTORY

COST OF GOOD SOLD /AVERAGE

Inventory turnover ratio measures the speed with which the stock is converted into sales.
Usually a high inventory ratio indicates an efficient management of inventory because more
frequently the stocks are sold ; the lesser amount of money is required to finance the
inventory. Where as low inventory turnover ratio indicates the inefficient management of
inventory. A low inventory turnover implies over investment in inventories, dull business,
poor quality of goods, stock accumulations and slow moving goods and low profits as
compared to total investment.
AVERAGE STOCK = OPENING STOCK + CLOSING STOCK
(Rupees in Crore)
Year

2011

2012

2013

Cost of Goods sold

110.6

103.2

96.8

Average Stock

73.59

36.42

55.35

1.5 times

2.8 times

1.75 times

Inventory Turnover Ratio

Interpretation :

These ratio shows how rapidly the inventory is turning into receivable through sales. In
2012 the company has high inventory turnover ratio but in 2013 it has reduced to 1.75 times.
This shows that the companys inventory management technique is less efficient as compare
to last year.

2.)

INVENTORY CONVERSION PERIOD:

INVENTORY CONVERSION PERIOD = 365 (net working days)

INVENTORY TURNOVER RATIO

e.g.

Inventory conversion period shows that how many days inventories takes to convert from
raw material to finished goods. In the company inventory conversion period is decreasing.
This shows the efficiency of management to convert the inventory into cash.

3).

DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO = TOTAL SALES(CREDIT)/ AVERAGE DEBTORS

Year

2011

2012

2013

Sales

166.0

151.5

169.5

Average Debtors

17.33

18.19

22.50

9.6 times

8.3 times

7.5 times

Debtor Turnover Ratio

Interpretation :

A concern may sell its goods on cash as well as on credit to increase its sales and a liberal
credit policy may result in tying up substantial funds of a firm in the form of trade debtors.
Trade debtors are expected to be converted into cash within a short period and are included in
current assets. So liquidity position of a concern also depends upon the quality of trade
debtors. Two types of ratio can be calculated to evaluate the quality of debtors.

a)

Debtors Turnover Ratio

b)

Average Collection Period

Debtors velocity indicates the number of times the debtors are turned over during a year.
Generally higher the value of debtors turnover ratio the more efficient is the management of
debtors/sales or more liquid are the debtors. Whereas a low debtors turnover ratio indicates
poor management of debtors/sales and less liquid debtors. This ratio should be compared with
ratios of other firms doing the same business and a trend may be found to make a better
interpretation of the ratio.
AVERAGE DEBTORS= OPENING DEBTOR+CLOSING DEBTOR

Year

2011

2012

2013

Days

365

365

365

Debtor Turnover Ratio

9.6

8.3

7.5

38 days

44 days

49 days

Average Collection Period

Interpretation: The average collection period measures the quality of debtors and it helps in
analyzing the efficiency of collection efforts. It also helps to analysis the credit policy
adopted by company. In the firm average collection period increasing year to year. It shows
that the firm has Liberal Credit policy. These changes in policy are due to competitors credit
policy.

5) WORKING CAPITAL TURNOVER RATIO :

Working capital turnover ratio indicates the velocity of utilization of net working capital. This
ratio indicates the number of times the working capital is turned over in the course of the
2

year. This ratio measures the efficiency with which the working capital is used by the firm. A
higher ratio indicates efficient utilization of working capital and a low ratio indicates
otherwise. But a very high working capital turnover is not a good situation for any firm.

Working Capital Turnover Ratio =

Cost of Sale /Net Working Capital

OR

Working Capital Turnover

Sales / Net working Capital

e.g
Year

2011

2012

2013

Sales

166.0

151.5

169.5

Networking Capital

53.87

62.52

103.09

Working Capital Turnover

3.08

2.4

1.64

Interpretation :

This ratio indicates low much net working capital requires for sales. In 2013, the
reciprocal of this ratio (1/1.64 = .609) shows that for sales of Rs. 1 the company requires 60
paisa as working capital. Thus this ratio is helpful to forecast the working capital requirement
on the basis of sale.

CASH BANK BALANCE :

(Rs. in Crores)
Year
Inventories

2010-2011

2011-2012

2012-2013

37.15

35.69

75.01

Interpretation :

Cash is basic input or component of working capital. Cash is needed to keep the business
running on a continuous basis. So the organization should have sufficient cash to meet
various requirements. The above graph is indicate that in 2011 the cash is 4.69 crores but in
2012 it has decrease to 1.79. The result of that it disturb the firms manufacturing operations.
In 2013, it is increased upto approx. 5.1% cash balance. So in 2013, the company has no
problem for meeting its requirement as compare to 2012.

DEBTORS :
Year
Debtors

2010-2011

2011-2012

2012-2013

17.33

19.05

25.94

Interpretation :

Debtors constitute a substantial portion of total current assets. In India it constitute one
third of current assets. The above graph is depict that there is increase in debtors. It represents
an extension of credit to customers. The reason for increasing credit is competition and
company liberal credit policy.

CURRENT ASSETS :

(Rs. in Crores)
Year
Current Assets

2010-2011

2011-2012

2012-2013

81.29

83.15

136.57

Interpretation :

This graph shows that there is 64% increase in current assets in 2013. This increase is
arise because there is approx. 50% increase in inventories. Increase in current assets shows
the liquidity soundness of company.

CURRENT LIABILITY :

(Rs. in Crores)
Year
Current Liability

2010-2011

2011-2012

2012-2013

27.42

20.58

33.48

Interpretation :

Current liabilities shows company short term debts pay to outsiders. In 2013 the current
liabilities of the company increased. But still increase in current assets are more than its
current liabilities.

NET WORKING CAPITAL :

(Rs. in Crores)
Year
Net Working Capital

2010-2011

2011-2012

2012-2013

53.87

62.53

103.09

Interpretation :

Working capital is required to finance day to day operations of a firm. There should be an
optimum level of working capital. It should not be too less or not too excess. In the company
there is increase in working capital. The increase in working capital arises because

ANALYSIS OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS:
Financial statement is a collection of data organized according to logical and consistent
accounting procedure to convey an under-standing of some financial aspects of a business
firm. It may show position at a moment in time, as in the case of balance sheet or may reveal
a series of activities over a given period of time, as in the case of an income statement. Thus,
the term financial statements generally refers to the two statements
(1) The position statement or Balance sheet.
(2) The income statement or the profit and loss Account.

OBJECTIVES OF FINANCIAL STATEMENTS:

The following objectives of financial statements: 1. To provide reliable financial information about economic resources and obligation of a
business firm.
2. To provide other needed information about charges in such economic resources and
obligation.
3. To provide reliable information about change in net resources (recourses less obligations)
missing out of business activities.
4. To provide financial information that assets in estimating the learning potential of the
business.

LIMITATIONS OF FINANCIAL STATEMENTS:

Though financial statements are relevant and useful for a concern, still they do not present a
final picture a final picture of a concern. The utility of these statements is dependent upon a
number of factors. The analysis and interpretation of these statements must be done carefully
otherwise misleading conclusion may be drawn.
Financial statements suffer from the following limitations: 1. Financial statements do not given a final picture of the concern. The data given in these
statements is only approximate. The actual value can only be determined when the business is
sold or liquidated.
2. Financial statements have been prepared for different accounting periods, generally one
year, during the life of a concern. The costs and incomes are apportioned to different periods
with a view to determine profits etc. The allocation of expenses and income depends upon the
personal judgment of the accountant. The existence of contingent assets and liabilities also
make the statements imprecise. So financial statement are at the most interim reports rather
than the final picture of the firm.
3. The financial statements are expressed in monetary value, so they appear to give final and
accurate position. The value of fixed assets in the balance sheet neither represent the value for
which fixed assets can be sold nor the amount which will be required to replace these assets.
The balance sheet is prepared on the presumption of a going concern. The concern is
expected to continue in future. So fixed assets are shown at cost less accumulated
deprecation. Moreover, there are certain assets in the balance sheet which will realize nothing
at the time of liquidation but they are shown in the balance sheets.
4. The financial statements are prepared on the basis of historical costs Or original costs. The
value of assets decreases with the passage of time current price changes are not taken into
account. The statement are not prepared with the keeping in view the economic conditions.
the balance sheet loses the significance of being an index of current economics realities.
Similarly, the profitability shown by the income statements may be represent the earning
capacity of the concern.
5. There are certain factors which have a bearing on the financial position and operating
result of the business but they do not become a part of these statements because they cannot
be measured in monetary terms. The basic limitation of the traditional financial statements
comprising the balance sheet, profit & loss A/c is that they do not give all the information
regarding the financial operation of the firm. Nevertheless, they provide some extremely
useful information to the extent the balance sheet mirrors the financial position on a particular
data in lines of the structure of assets, liabilities etc. and the profit & loss A/c shows the result
of operation during a certain period in terms revenue obtained and cost incurred during the
year. Thus, the financial position and operation of the firm.

FINANCIAL STATEMENT ANALYSIS

It is the process of identifying the financial strength and weakness of a firm from the
available accounting data and financial statements. The analysis is done
CALCULATIONS OF RATIOS
Ratios are relationship expressed in mathematical terms between figures, which are
connected with each other in some manner.

CLASSIFICATION OF RATIOS
Ratios can be classified in to different categories depending upon the basis of classification

The traditional classification has been on the basis of the financial statement to which
the determination of ratios belongs. These are:
Profit and Loss A/c ratios
Balance sheet ratios
Composite ratios

2.7 LIMITATIONS OF PROJECT

1. The firm is unable to take advantages of new opportunities or adapt to change.

2. Trade discounts are lost. A firm with sufficient working capital is able to finance larger
stocks and can therefore place large orders.
3. Cash discounts are lost. Some firms will try to persuade their debtors to pay early by
offering cash discounts.
4. The advantages of being able to offer a credit line to customers are forgone.
5. Financial reputation is lost due to non-payment of trade creditors on time.
6. Creditors may apply to the court for winding up if the firm fails to pay their obligations on
time.

CHAPTER-3
REVIEW OF LITERATURE

REVIEW OF LITERATURE
The firms profitability and liquidity are affected by working capital management in his analysis.
Pooled data are selected for carrying out the research
for the era of 2006-2008 for assessing the companies listed in stock market of Vietnam. He
focused on the variables that include profitability, conversion cycle and its related elements
and the relationship that exists between them. From his research it was found that the
relationships among these variables are strongly negative. This denote that decrease in the
profitability occur due to increase in cash conversion cycle. It is also found that if the number
of days of account receivable and inventories are diminished then the profitability will
increase numbers of days of accounts receivable and inventories

CHAPTER-4
RESEARCH METHODOLOGY

RESEARCH METHODOLOGY
The methodology, I have adopted for my study is the various tools, which basically analyse
critically financial position of to the organization:

COMMON-SIZE P/L A/C

COMMON-SIZE BALANCE SHEET

COMPARATIVE P/L A/C

COMPARTIVE BALANCE SHEET

TREND ANALYSIS

RATIO ANALYSIS

Research is the systematic process of collecting and analyzing data in order to increase our
understanding of the phenomenon about which we are concerned or interested. It is
indepth search for knowledge. It is a careful investigation or inquiry especially through
for new facts in any branch of knowledge. The study exhibits both descriptive and analytical
character. Regarding the theoretical concept it is descriptive since it interprets and analysis
the secondary data in order to arrive at appropriate conclusion, it is also analytical in
character. The interpretation of data is done based on ratio and percentage

4.1 RESEARCH DESIGN

Research Design is the strategy for the study and the plan by which the strategy is to be
carried out. It is the set of decisions that make up the master plan specifying the methods
and procedures for the collection, measurement and analysis of data.
Research has used descriptive research. Descriptive studies are fact finding investigation
with adequate interpretation. It focuses on particular aspects of in the study. It is designed
to gather descriptive information and provides information for formulating more
sophisticated studies.

4.2 DATA COLLECTION METHODS

PRIMARY DATA
Primary data has been obtained through personal discussions with managers and senior
officials of the organization.

SECONDARY DATA

Secondary datas has been obtained from published reports like the annual reports of the
company, balance sheets, and profit and loss account, booklets, records such as files, reports
maintained by the company. Mainly the annual report consists of two parts;
1) Profit and Loss Account
2) Balance Sheet
Profit and loss account reveals the income and expenditure of the company. Balance Sheet
reveals the financial position of the organization. Those two statements are prepared by the
highly qualified and experts with the help of available information or data.

SAMPLE SIZE
The sample size taken for the study of project is considered to be 50, which will help me to
analyze the project situation for working capital of the company.

4.3 TOOLS USED FOR THE ANALYSIS

1. Trend Analysis
2. Ratio Analysis
3. Operating Cycle Analysis
4. Working Capital Leverage Analysis
5. Schedule of changing in working capital

The above parameters are used for critical analysis of financial position. With the evaluation
of each component, the financial position from different angles is tried to be presented in well
and systematic manner. By critical analysis with the help of different tools, it becomes clear
how the financial manager handles the finance matters in profitable manner in the critical
challenging atmosphere, the recommendation are made which would suggest the organization
in formulation of a healthy and strong position financially with proper management system.

I sincerely hope, through the evaluation of various percentage, ratios and comparative
analysis, the organization would be able to conquer its in efficiencies and makes the desired
changes.

CHAPTER-5

DATA ANALYSIS
&
INTERPRETATIONS

1) Designation in the company

INTERPRETATION:--

From the above analysis we come to know that out of 50 respondents 50% of employees are
at upper level, 30% of respondents are finance officer and 20 % are procurement officer.

2) How long have you served in the current

position?

INTERPRETATION:-From the above analysis we come to know that out of 50 respondents, 35%of members
served for 0-2 years .And 30% of members served for 2-4 years.10%of the members served
for 8-10 years.15%of members served for 4-6 years on its current position .And 10% of
members served for 6-8 years.

3)Leading source of your receivables

INTERPRETATION:-Out of 50 respondents, 40% of respondents said that their receivables come from sales, 20%
of receivables come from loan and interest, 10% of receivables come from other
sources,15%of receivables come from return from investment, & 15% of receivables come
from subscriptions.

4) Days you allow prior to actual receipts from

date of notice?

INTERPRETATION:-Out of 50 respondents, 45 %of respondents said that their actual receipts come within 30-45
days, 25 %of respondents said that their actual receipts come within 15-30 days, 10%of
respondents said that their actual receipts come within 15 days, 5 %of respondents said that
their actual receipts come within 0 day, 5 %of respondents said that their actual receipts come
within 60-75days, 5 %of respondents said that their actual receipts come within 45-60days.

5) Classify the company in terms of its credit

uptake?

INTERPRETATION:-Out of 50 respondents, 35%of respondent said that company give credit to low credit
consumer, 15%of respondent said that company give credit to moderate credit consumer,
20%of respondent said that company give no credit at all, 30%of respondent said that
company give credit to high credit consumer.

6) Creditors depending on their credit volume

advancement to company.

INTERPRETATION:-Out of 50 respondents, 30% respondents said that company advances credit from lending
institutions. 35% respondents said that company advances credit from suppliers, 3%
respondents said that company advances credit from others, 32% respondents said that
company advances credit from members.

7)What is the companys preferred period for

credit payment?

INTERPRETATION:-Out of 50 respondents, 20% of respondent said that companys preferred period for credit
payment is 30-45 days, 25% of respondent said that companys preferred period for credit
payment is 15-30 days, 10% of respondent said that companys preferred period for credit
payment is 15 days, 5% of respondent said that companys preferred period for credit
payment is 0 day, 10% of respondent said that companys preferred period for credit payment

is 60-75 days, 30% of respondent said that companys preferred period for credit payment is
45-60 days.

CHAPTER-6

FINDINGS
SUGGESTIONS
CONCLUSION

6.1 FINDINGS--:

From the above analysis we have concluded that designation of the members is
50% of procurement officer .And served for the organisation as for its current
position is maximum for 0-2years which is also considered as higher %age
also. The maximum companies leading sources of receivables are sales which
is 40%. The company receives actual receipts within 30-45 days which is 45%
of its total receipts. And company gives more credit to low credit consumer. The
company advances loan of maximum %age of 35% from its suppliers. The last
is that the company does payment within 45-60days for its credit purchases
which is 30%.

6.2 SUGGESTIONS:--

After having analysed the data, we have come to know that companies credit payment
period is good
Their term of their actual receipts from their customers is also scheduled as per their
terms and conditions .
As it is advised to company that all members should be informed regarding day to day
business transactions so that it will help them in smooth flow of their business
activities
Generally company gives credit to low credit consumer. Because if company lends
credit to high credit consumer then they may have fear of their bad debts also.
As after calculating various ratios it is advised to company that it should check their
workings so that if any changes are needed it should be done .
The company should also maintain their financial statements for their smooth working
of their business
The company should also advised to prepare quarterly, half yearly, yearly profit and
loss account which helps them to know whether firm runs in profit or loss.

6.3 CONCLUSION:--

A study conducted in PIC N FRAMES TECHNOLOGIES enable to get practical touch to the
topic WORKING CAPITAL MANAGEMENT of the company. The management of working
capital plays an important role in maintaining the financial health of the company during
normal course of business. Shortage of working capital leads to lower capacity utilization.
To maintain the solvency of the business , it is necessary that adequate funds be available to
pay the bills and other expenses and cost of doing the business .From the study undertaken it
is clear that various components of working capital are interrelated. An increase in one
component will decrease the amount of other, leading to maintain level of working capital.
The goal of working capital management is to ensure that a firm is able to continue its
operations and it has sufficient ability to satisfy both short term debts and upcoming
operational expenses .To conclude the project work has been a great experience and exposure
to the real fixed experience and actual working of an organisation.

CHAPTER-7
BIBLIOGRAPHY

BIBLIOGRAPHY

1. Pandey,Financial Management

2.

Sharma, Working capital Management

3. Dr. Prasana Chandra, Financial Management Theory and Practice

4. www.google.com

5. www.slideshare.net

6. www.allprojects.com

7. www.managementparadise.com

8. www.camstvm.org

9. www.projects99.com
10.www.seminarprojects.org

ANNEXURE

QUESTIONNAIRE of WORKING CAPITAL

MANAGEMENT of PIC N FRAMES
TECHNOLOGIES:
The questionnaire aims at finding out the working capital management of PIC N
FRAMES TECHNOLOGIES.Kindly support by providing unbiased answers to
the following questions.

1. What is your Designation in the company?

[ ] Upper level management
[ ] Finance Officer/Accountant
[ ] Procurement Manager/Officer

2. How long have you served in the current position?

[ ] Less than 2 years
[ ] 2 4 years
[ ] 4 6 years
[ ] 6 8 years
[ ] More than 8 years

3. What is the companys current asset base?

..

4. What is your leading source of your receivables?

[ ] Loans and interests
[ ] Sales
[ ] Subscriptions and fines
[ ] Return from other investments
[ ] Others

5. How many days do you allow prior to actual receipts from day of
notice/invoice?
[ ] 0 days
[ ] 15 days

[ ] 15 30 days
[ ] 30 45 days
[ ] 45 60 days
[ ] More than 60 days

6. What are the companys outstanding annual debts in the last five years, each
ending 31 St December?
Year 2008 2009 2010 2011 2012
_____________________________________

7. How would you classify the company in terms of its credit uptake?
[ ] High credit consumer
[ ] Moderate credit consumer
[ ] Low credit consumer
[ ] No credit at all

8. Rank the following creditors depending on their credit-volume advancement

to the company.
[ ] Suppliers
[ ] Lending Institutions
[ ] Members
[ ] (Specify)

9. What is the companys preferred period (days) for credit payment?

[ ] 0 days
[ ] 15 days
[ ] 15 30 days

[ ] 30 45 days
[ ] 45 60 days
[ ] More than 60 days

10. What proportion of your current assets is held in form of cash?

%
Justification?

11. What proportion of your current assets is invested in short-term securities?

..%
Justification?

12. How has the company performed in the last five years on net profits and
total assets?
(Complete the table below)
Year 2008 2009 2010 2011 2012
Net Profit _______________________________________
Total Assets _____________________________________

13. From your experience, what hinders Software technology Companies from
optimizing their returns through management of their working capital?

14. What would be your advice to finance practitioners in the company

regarding working capital management?