SUMMER TRAINING REPORT

ON
“CASH FLOW MANAGEMENT”
IN

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE

REQUIREMENT
OF THE DEGREE OF B. B. A. (CAM)

UNDER THE GUIDANCE OF: SUBMITTED BY:

Mrs. RITA DAGAR Naman Arora

BBA (cam)5th sem
Roll No. 30945
Regn. No.
Univ. Roll No.

D.A.V CENTENARY COLLEGE

FARIDABAD
 ACKNOWLEDGEMENT

I would like to express my gratitude to everyone who helped me out directly

and indirectly in completing this project work successfully. I convey
heartfelt thanks to all respondents who assisted politely, cooperatively
and respectively in collecting the vital information needed for the
project work.

My project guide Mrs. RITA DAGAR (Faculty Member for their inspiration and
timely support in sucessfully completion of his project work).

I am very grateful to Mr. M.L.Aggrawal of ESCORTS AGRI MACHINERY

GROUP for everlasting cordial support and continous endeavour to bring the best
project work.

I am thankful to all the faculty member of BBA department for their valuable
support in the completion of this project work.

I show the gratitude to the author of various authentic literature and

management for providing the best study material needed for the project work.

(NAMAN ARORA)
 PREFACE

The following is a report of Summer Training at ESCORTS AGRI

MACHINERY GROUP done in partial fulfillment of my BBA (CAM) course from
D.A.V. CENTENARY COLLEGE, M.D.U University.

The summer training was completed at ESCORTS AGRI MACHINERY GROUP.

under the guidance of Mr. M.L AGGARWAL (FINANCE HEAD). This training is
a part of my three years course. During the stipulated time period, my aim was to
gain as much as knowledge and information possible and to be well familiar with
the working conditions of the Organization. In this report, also, are the details of
the project work allotted to me.

(NAMAN ARORA)
 TABLE OF CONTENT

Chapter No. Topic Page No.

1 Introduction 6-18

2 Company Profile 19-34

3 Research Methodology 35-37

4 Data analysis & Interpretation 38-49

5 Findings & Conclusions 50-52

6 Suggestions & 53-55

Recommendations

7 56-57
Bibliography

8 Annexure 58-60
Questionnaires……..
CHAPTER 1

INTRODUCTION
OF THE

TOPIC
 INTRODUCTION

CASH
Cash is the important current asset for the operation of the business. Cash is a
medium of exchange to purchase the goods and services and to discharge the
liabilities. Cash is the basic input needed to keep the business running on a
continuous basis; it is also the ultimate output expected to be realized by selling the
service or product manufactured by the firm. The firm should keep sufficient cash,
neither more nor less. Cash shortage will disrupt the firm’s manufacturing
operations while excessive cash will simply remain idle, without contributing
anything towards the firm’s profitability. Thus a major function of the financial
manager is to maintain a sound cash position.

Cash is the money which a firm can disburse immediately without any
restriction. The term cash includes coins, currency and cheques held by the firm,
and balances in its bank accounts. Sometimes near cash terms, such as marketable
securities or bank time deposits, are also included in cash. The basic characteristic
of near cash asset is that they can readily be converted into cash. Generally, when a
firm has excess cash, it invests it in marketable securities. This kind of investment
contributes some profit to the firm.

CASH MANAGEMENT

Meaning:

It is a summary of firm’s cash receipts and cash payments during

period of time.
The purpose of cash flow statement is to report a firm’s cash inflows and outflows,
during a period of time, segregated into three categories: operating, investing and
financing activities.

The statement of cash flow explains changes in cash and cash equivalent such as
treasure bill and the activities that increase and decrease cash. The cash flow
statement may be presented using either a direct method (which is encouraged by
financial accounting standards board) or an “Indirect Method (which is likely to be
the method followed by good majority of firms). The only difference between the
direct and indirect method of presentation concern the reporting of operating
activities; the investing and financing activities section would be identical under
either method. Under the direct method, operating cash flow reported directly by
major classes of operating cash receipts (from customers) and payment (to suppliers
and employees). A separate indirect reconciliation of Net income to Net cash flow
from operating activities must be provided.

Operating Activities:

It shows impact of transactions not defined as investigation or financing activities.

These cash flows are generally the cash effects or transaction that enter into the
determination of net income. Thus, we see items that not all statement users might
think of as operating flows-items such as dividends and interest received, as well as
interest paid.

Investing Activities:

It shows impact of buying and selling fixed assets or equity securities of other

entities.

Financing Activities:

It shows impact of all cash transactions with shareholders and the borrowing and
repaying transactions with lenders.
 CASH FLOW MANAGEMENT

Cash flow management is a process of monitoring, analyzing, and adjusting one’s

business cash flows. The most important aspect of cash flow management is
avoiding extended cash shortages, caused by having too great a gap between cash
inflows and outflows. Therefore, one needs to perform a cash flow analysis on a
regular basis, and use cash flow forecasting so that one can take the steps necessary
to head off cash flow problems.

Cash management involves the efficient collection, disbursement and temporary

investment of cash. The treasurer department of a company is usually responsible
for the firm’s cash management system. A cash budget, instrumental in the process,
tell us how much cash we likely to have it, and for how long.

In cash flow management, I studied many statements like as follows:

Cash flow Statement, Cash Budget.

CASH MANAGEMENT SYSTEM

With timely information reporting a firm can generate significant income by properly
managing collections, disbursement cash balance and cash equivalents investment.

Collection Disbursement

Cash
 Cash Equivalents

Control Through Information Report

OBJECTIVES

 Cash and non-cash investing and financing transaction.

 A manager can assess the reason for differences between net income and net
cash flow from operating activities.
 It is also helpful for a company to generate future net cash inflows from
operations to pay debts, interest and dividends.
 It gives indication to a company’s need for external financing.
 A cash flow statement is straight forward and easy to understand.
 It gives a strong indication of how viable the company will be over time.
 The extent of success or failure of cash planning can be known by
comparing the actual cash statement with the budgeted cash flow statement
and remedial measures can be taken.
 It discloses the volume and the speed at which cash flows in different
segments of the business.
COMPANY
PROFILE
HISTORY OF ESCORTS

The genesis of Escorts goes back to 1944 when two brothers, Mr. H. P. Nanda and Mr.

Yudi Nanda, launched a small agency house, Escorts Agents Ltd. in Lahore. Over the

years, Escorts has surged ahead and evolved into one of India's largest conglomerates.

In this journey of six decades, Escorts has had the privilege of being associated with

some of the world leaders in the engineering manufacturing space like Minneapolis

Moline, Massey Ferguson, Goetz, Mahle, URSUS, CEKOP, Ford Motor Company, J C

Bam ford Excavators, Yamaha, Claas, Carraro, Lucky Gold star, First Pacific Company,

Hughes Communications, Jeumont Schneider, and Dynapac. These valued relationships

be it technological or marketing, are its highly cherished experiences treasures, which

have helped inculcate best in class manufacturing practices and to emerge as a

technologically independent world class engineering organization.

Trusted leaders in the business with over 20 years of experience in supply chain,
warehousing, distribution, logistics and handling sensitive and heavy equipment

 Pan- Indian presence and growing network.

 Strong presence in 'Challenging Regions' - Bihar, Assam, North East India,

North Bengal, West Bengal and Kerala.

 Qualified and highly experienced team with the experience of managing SMEs,
MNCs and large corporations.

 Operational experience in -Telecom, FMCG, Retail, Chemicals,

Pharmaceuticals and E-Commerce
 OUTLINE ORANISATION ESCORTS GROUP

Chairman & Managing Director - Sh. Rajan Nanda

Secretariat

Flagship Operating Division

Escorts Limited Faridabad

Agri Machinery Engineering International

Business

Corporate Center Faridabad Escorts Research Institute of

Farm
Center, Faridabad
Mechanization,
Bangalore

Personnel Finance Project Escorts Heart Research Escorts

Medical
Institute, New Delhi Center,
Faridabad

Administration and Law Export and

Security Communication

Associates Companies Subsidiary Companies

Escorts Employees Welfare Trust

Faridabad
BANKERS OF ESCORTS

IDBI BANK.

ABN AMRO BANK N.V.

BANK OF BARODA.

CITIBANK, N.A.

DEUTSCHE BANK AG.

HONGKONG & SHANGHAI BANKING CORPORATION LIMITED.

HDFC BANK LIMITED.

PUNJAB NATIONAL BANK.

STATE BANK OF INDIA.

BRAND AND PRODUCTS

Escorts AMG has three recognized and well-accepted tractor brands, which are on

distinct and separate technology platforms.

Farmtrac: World Class Premium tractors, with single reduction and epicyclical

reduction transmissions from 34 to 75 HP.

Powertrac: Utility and Value-for-money tractors, offering straight-axle and hub-

reduction tractors from 34 to 55 HP. India’s No.1 economy range engineered to give

spectacular diesel economy.

Escort: Economy tractors having hub-reduction transmission and twin-cylinder

engines from 27 to 35 HP. Pioneering brand of tractors introduced by Escorts with

unbeatable advantages.
Various Farmtrac Models are:

- FT HERO

- FT CHAMPION

- FT 50 EPI

- FT 60 etc.

Various Powertrac Models are:

- PT 434

- PT 445

- PT 455
Various ESCORTS Models are:

- Escort Jawan MPT

- Escorts 335 Josh

MANUFACTURING

Escorts - AMG has Tractor manufacturing capacity of 98,940 trs / annum which is the

highest in Asia at one location. Its manufacturing operations are divided in three plants

as:

1. Component Plant:

It consists of Machine shops in which all major castings such as Engine blocks, Gear

Box housings, Differential housings are being machined along with Gears & Shafts.

Machine shop consists of State of the Art machines such as CNC Horizontal Machining

Centers, CNC Turning Centers and variety of other precision machines, including Gear

Hobbing and Shaving machines, etc. It is important to note that all critical components

are machined in house.

2. Tractor Assembly Plant:

Tractor Assembly Plant is divided into two lines as Farmtrac Line and the Powertrac

Line. Farmtrac Line is a composite line that has machining as well as assembly

activities of Engine, Transmission & Tractor whereas on Powertrac line only Assembly

activities of Engine, Transmission & Tractor are being carried out. It has State of the

Art Paint Shop that has CED paint shop facilities. Engine Shop has State of the Art

testing facilities that includes AVL make Eddy Current Dynamometers in Engine Test

House.
3. Crankshaft & Hydraulic Plant:

It is divided into two parts as Crankshaft Line and Hydraulics Line. Crankshaft line

consists of machine shop where crankshafts of all Tractor models are being machined.

It has State of the Art machines such as Rotary Miller, Pin Grinder, Journal Grinder, etc.

Hydraulic line consists of Machining as well as Assembly activities where critical parts

of tractor hydraulics such as Distributor, Hydraulic Cylinder, etc are being machined

and assembled. It has State of the Art Honing and other precision machines.
 REVIEW

OF

LITERATURE
CASH

Cash is the important current asset for the operation of the business. Cash is a
medium of exchange to purchase the goods and services and to discharge the
liabilities. Cash is the basic input needed to keep the business running on a
continuous basis; it is also the ultimate output expected to be realized by selling the
service or product manufactured by the firm. The firm should keep sufficient cash,
neither more nor less. Cash shortage will disrupt the firm’s manufacturing
operations while excessive cash will simply remain idle, without contributing
anything towards the firm’s profitability. Thus a major function of the financial
manager is to maintain a sound cash position.

Cash is the money which a firm can disburse immediately without any
restriction. The term cash includes coins, currency and cheques held by the firm,
and balances in its bank accounts. Sometimes near cash terms, such as marketable
securities or bank time deposits, are also included in cash. The basic characteristic
of near cash asset is that they can readily be converted into cash. Generally, when a
firm has excess cash, it invests it in marketable securities. This kind of investment
contributes some profit to the firm.

CASH MANAGEMENT

Meaning:

It is a summary of firm’s cash receipts and cash payments during

period of time.

The purpose of cash flow statement is to report a firm’s cash inflow and outflows,
during a period of time, segregated in to three categories: operating, investing and
financing activities.
The statement of cash flow explains changes in cash and cash equivalent such as
treasure bill and the activities that increase and decrease cash. The cash flow
statement may be presented using either a direct method (which is encouraged by
financial accounting standards board) or an “Indirect Method (which is likely to be
the method followed by good majority of firms). The only difference between the
direct and indirect method of presentation concern the reporting of operating
activities; the investing and financing activities section would be identical under
either method. Under the direct method, operating cash flow reported directly by
major classes of operating cash receipts (from customers) and payment (to suppliers
and employees). A separate indirect reconciliation of Net income to Net cash flow
from operating activities must be provided.

Operating Activities:-

It shows impact of transactions not defined as investigation or financing activities.

These cash flows are generally the cash effects or transaction that enter into the
determination of net income. Thus, we see items that not all statement users might
think of as ‘operating’ flows-items such as dividends and interest received, as well
as interest paid.

Investing Activities :-

It shows impact of buying and selling fixed assets or equity securities of other

entities.

Financing Activities:-

It shows impact of all cash transactions with shareholders and the borrowing and
repaying transactions with lenders.
 CASH FLOW MANAGEMENT

Cash flow management is a process of monitoring, analyzing, and adjusting one’s

business cash flows. The most important aspect of cash flow management is
avoiding extended cash shortages, caused by having too great a gap between cash
inflows and outflows. Therefore, one needs to perform a cash flow analysis on a
regular basis, and use cash flow forecasting so that one can take the steps necessary
to head off cash flow problems.

Cash management involves the efficient collection, disbursement and temporary

investment of cash. The treasurer department of a company is usually responsible
for the firm’s cash management system. A cash budget, instrumental in the process,
tell us how much cash we likely to have it, and for how long.

In cash flow management I studied many statements like as follows:

Cash flow Statement, Cash Budget

 VARIOUS STEPS OF CASH FLOW

MANAGEMENT

Cash management is also important because it is difficult to predict cash flows

accurately, particularly the inflows, and there is no prefect coincidence between the
inflows and outflows of cash. During some periods, cash outflows will exceed cash
inflows, because payments for taxes, dividends, or seasonal inventory buildup. At other
times, cash inflow will be more than cash payments because there may be large cash
sales and debtors may be realized in large sums promptly.

Further, cash management is significant because cash constitutes the smallest portion of
the total current assets, yet management’s considerable time is devoted in managing it.
In recent past, a number of innovations have been done in cash management
techniques. An obvious aim of the firm these days is to manage its cash affairs in such a

way as to keep cash balance at a minimum level and to invest the surplus cash in
profitable investment opportunities.

In order to resolve the uncertainty about cash flow prediction and lack of
synchronization between cash receipts and payments, the firm should develop
appropriate strategies for cash management. The firm should evolve strategies for cash
management.

The firm should evolve strategies regarding the following four facets of cash
management:-

 CASHPLANNING:

Cash inflows and outflows should be planned to project cash surplus or deficit for
each period of the planning period. Cash budget should be prepared for this
purpose.

 MANAGING THE CASH FLOWS

The firm should decide about the properly managed. The cash inflows should be
accelerated while, as far as possible, the cash outflows should be decelerated.

 OPTIMUM CASH LEVEL:

The firm should decide about the appropriate level of cash balances. The cost of
excess cash and danger of cash deficiency should be matched to determine the
optimum level of cash balances.

 INVESING SURPLUS CASH:

The surplus cash balances should be properly invested to earn profits. The firms
should decide about the division of such cash balances between alternative short-
term investment opportunities such as bank deposits, marketable securities, or inter-
corporate lending.

 OBJECTIVES OF CASH FLOW MANAGEMENT

 Cash and non-cash investing and financing transaction.

 A manager can assess the reason for differences between net income and net
cash flow from operating activities.
 It is also helpful for a company to generate future net cash inflows from
operations to pay debts, interest and dividends.
 It gives indication to a company’s need for external financing.
 A cash flow statement is straightforward and easy to understand.
 It gives a strong indication of how viable the company will be over time.
 The extent of success or failure of cash planning can be known by
comparing the actual cash statement with the budgeted cash flow statement
and remedial measures can be taken.
 It discloses the volume and the speed at which cash flows in different
segments of the business.
SCOPE OF CASH FLOW MANAGEMENT

Cash management is concerned with the managing of:

(i) Cash flows into and out of the firm,

(ii) Cash flows within the firm, and
(iii) Cash balances held by the firm at a point of time by financing deficit or
investing surplus cash.

 MOTIVE OF CASH FLOW MANAGEMENT

The firm’s need to hold cash has been attributed to the following three motives. The
firm has to take care of these three motives which they have maintained to raise the
standard of their company.
Also they have to list their company’s name in the Securities Exchange Board Of India,
that’s why they have maintained their motives.
Those three motives have been discussed below:-

 The transactions motive,

 The precautionary motive,
 The speculative motive

TRANSACTION MOTIVE
The transactions motive requires a firm to hold cash to conduct its business in the
ordinary course. The firm needs cash primarily to make payments for purchases,
wages and salaries, other operating expenses, taxes, dividends etc. The need to hold
cash would not arise if there were perfect synchronization between cash receipts
and cash payments, i.e., enough cash is received when the payment has to be made.
But cash receipts and payments are not perfectly synchronized. For those periods,
when cash payments exceed cash receipts, the firm should maintain some cash balance
to be able to make required payments. For transactions purpose, a firm may invest its
cash in marketable securities. Usually, the firm will purchase securities whose maturity
corresponds with some anticipated payments, such as dividends or taxes in the future.
Notice that the transactions motive mainly refers to holding cash to meet anticipated
payments whose timing is not perfectly matched with cash receipts.

PRECAUTIONARY MOTIVE
The precautionary motive is the need to hold cash to meet contingencies in the future. It
provides a cushion or buffer to withstand some unexpected emergency. The
precautionary amount of cash depends upon the predictability of cash flows. If cash
flows can be predicted with accuracy, less cash will be maintained for an emergency.
The amount of precautionary cash is also influenced by the firm’s ability to borrow at
short notice when the need arises. Stronger the ability of the firm to borrow at short
notice, less the need for precautionary balance. The precautionary balance may be
kept in cash and marketable securities. Marketable securities play an important role
here. The amount of cash set aside for precautionary reasons is not expected to earn
anything; the firm should attempt to earn some profit on it. Such funds should be
invested in high-liquid and low-risk marketable securities. Precautionary balances
should, thus, be held more in marketable securities and relatively less in cash.

SPECULATIVE MOTIVE
The speculative motive relates to the holding of cash for investing in profit-making
opportunity to make profit may arise when the security prices change. The firm will
hold cash, when it is expected that interest rates will rise and security prices will fall.
Securities can be purchased when the interest rate is expected to fall; the firm will
benefit by the subsequent fall in interest rates and increase in security prices. The firm
may also speculate on materials prices. If it is expected that materials prices will fall,
the firm can postpone materials purchasing and make purchases in future when price
actually falls.Some firms may hold cash for speculative purposes. By and large,
business firms do not engage in speculations. Thus, the primary motives to hold cash
and marketable securities are the transactions and the precautionary motives.

ADVANTAGES OF CASH FLOW MANAGEMENT

A Cash flow analysis is an important financial tool for the management. Its chief
advantager are as follows.

1. HELPS IN EFFICIENT CASH MANAGEMENT

Cash flow analysis helps in evaluating financial policies and cash position. Cash is
the basis for all operation and hence a projected cash flow statement will enable the
management to plan and co-ordinate the financial operations properly. The
management can know how much cash is needed from which source it will be
derived, how much can be generated, how much can be utilized.

2. HELPS IN INTERNAL FINANCIAL MANAGEMENT

Cash flow analysis information about funds, which will be available from
operations. This will helps the management in repayment of long-term debt,
dividend policies etc.

3. DISCLOSES THE MOVEMENT OF CASH

Cash flow statement discloses the complete picture of cash movement. The increase
in and decrease of cash and the reasons therefore can be known. It discloses the
reasons for low cash balance in spite of heavy operation profits on for heavy cash
balance in spite of low profits.

4. DISCLOSES SUCCESS OR FAILURE OF CASH

PLANNING
 The extent of success or failure of cash planning be known by comparing the
projected cash flow statement with the actual cash flow statement and necessary
remedial measures can be taken.

 LIMITATION OF CASH FLOW MANAGEMENT

Management of cash can be a nightmare, if one does not have the right tools in place.
Therefore, as cash is king, so is the plan to manage it, and this includes a whole suite of
plans (read as forecasts), tools (decision support systems such as MS Excel, Cash and
Treasury management software) and last but not the least, competent talent!

As history would have it, 99% of corporate failures are attributed to financial
mismanagement. Cash management is a significant part of financial management and
therefore is a significant aspect of the corporate treasury function. Commonly made
mistakes in managing cash include over capitalization and under capitalization –
technical terms used when corporates try to achieve too much with too little resources
(as an example – Swissair, folded up for good in 2002, due to unmanageable debt) and
vice versa with the cascading effect of a liquidity crunch.

Liquidity crunch is the result of mismatched timings in cash flows. It is almost always a
result of lack of dynamic plans and tools, and management attitude. Soaring profits
often tend to motivate over capitalization, and vice versa up to a certain extent, when
corporates fail to recognize opportunities and build cash reserves without adequate
investment plans (an example - Amazon, in the 1990’s, sitting on $2b). Jac Nasser,
Chairman of BHP Billiton, quoted said “there are more projects than the cash flow can
afford them” is a classic example of over capitalization.

Even cash rich companies could at some point be faced with a liquidity crunch because
of distributed holdings (such as Apple Corporation’s case) entailing restricted access
due to cross border restrictions, or domestic legislation seeking to tax built up cash
wealth.
Also, cash flow management does not make a distinction between capital and revenue
outlay, as these are accounting concepts. This leads us to believe that the concept often
misunderstood is what constitutes good cash management. For some, good cash
management is just about collecting debts (receivables) and delaying a payment
(payables), which causes the company to accumulate cash, often called the spread or
float. We seek to explain this situation by an indirect approach by elaborating upon
what would constitute cash mismanagement; failure to do any of the following would
constitute cash mismanagement:
 Be clear about accrual based profit and cash flow
 Determine cash flow cycle (also known as operating cycle in manufacturing
industries)
 Formulate and work towards budgets
 Maintain an adequate cash balance
 Accelerate debtor collection and delay (within imposed credit limits of course)
creditor payments i.e. fully avail credit limits and periods in a bid to fully utilize
float
 Report, monitor & control
 Make well considered use of leverage

Also, confusion in understanding “Cash flow” as a term adds to the problem;

the terms earnings / profit and cash flow are frequently used interchangeably
even though they are quite different in their connotation. Earnings (profit or net
income) are an accounting concept measured by application of accounting
convention. Cash flow, on the other hand, connotes the timing between actual
receipts and disbursements of cash.

Having now discerned this concept, it is easy to infer that while a company may
always have revenues, they may not always return a profit.

How is it possible then, that some companies can’t meet their obligations and
end up failing even when returning a profit? The reason lies in their
 fundamental misunderstanding of good cash management.

It is easy to think of a company making a profit if it successfully sells a

significant number of products to customers and it collects the fees and charges
for those sales. But there are a few reasons that can cause a business to fail even
in this scenario.

CASH MANAGEMENT STRATEGIES

The firm should develop appropriate strategies for cash management. The firm
should evolve strategies regarding the following four facets of cash management:

Cash planning:

Cash inflow and outflow should be planned to project cash surplus or deficit for
each period for each period of the planning period. Cash budget should be prepared
for this purpose.

Managing the cash flows :

The flow of cash should be properly managed. The cash inflows should be
accelerated while, as far as possible, the cash outflows should be decelerated.

Optimum cash level:

The firms should decide about the appropriate level of cash balances. The cost of
excess cash and danger of cash deficiency should be matched to determine the
optimum level of cash balances.

Investing surplus cash:

The surplus cash balances should be properly invested to earn profits. The firm
should decide about the division of such cash balance between short-term
 investment opportunities such as bank deposits, marketable securities, or inter-
corporate lending.

IMPORTANCE OF CASH
MANAGEMENT

Cash management assumes more important than other current assets because cash is
the most significant and the least productive asset that a firm holds. It is significant
because it is used to pay the firms obligations. However cash is unproductive. Unlike
fixed assets or inventories, it does not produce goods for sale. Therefore, the aim of
cash management is to maintain adequate control over cash position to keep the firm
sufficiently liquid and to excess cash in some profitable way.

Cash management is also important because it is difficult to predict cash flow

accurately, particularly the inflows and there is no perfect coincidence between the
inflows or outflows of cash. During some periods, cash outflows will exceed cash
inflows, because payments for taxes, dividends, or seasonal inventory build up. At other
times, cash inflows will be more than cash payments because there will be large cash
sales and debtors may be realized in large sums promptly.

Cash management is significant because cash constitutes the smallest portion of the
total current assets, yet management’s considerable time is devoted in managing it.

CASH OUTFLOW

For cash management, the control of cash outflows, which is directly related to
organizational arrangements for budget execution, can pose more difficulties than the
control of cash inflows. However, issues related to cash management should not be
confused with issues related to the distribution of responsibilities for accounting control
and administration of the payment system. The major purpose of controlling cash
outflows is to ensure that there will be enough cash until the date payments are due and
to minimize the costs of transactions, while keeping cash outflows compatible with

cash inflows and fiscal constraints. The first condition for ensuring that cash outflows
fit fiscal constraints is good budget preparation and budget implementation covering
both cash and obligations. However, during budget implementation, cash outflows must
also be regulated through cash plans to smooth cash outflows

CASH INFLOW

It is necessary to minimize the interval between the time when cash is received and the
time it is available for carrying out expenditure programs. Collected revenues need to
be processed promptly and made available for use. When tax collection is done by the
tax administration offices (or by Treasury offices) the administrative organization of
these offices may have to be reviewed and their equipment modernized.

Commercial banks by virtue of the banking sector infrastructure are often able to
collect revenues more efficiently than tax offices, which should therefore focus instead
on tracking taxpayers. When revenues are collected by commercial banks,
arrangements must be defined to foster competition and ensure prompt transfer of
collected revenues to government accounts. Systems of bank remuneration through
float, which consists of authorizing the banks to keep the revenues collected for a few
days, present inconveniences. Stringent rules to ensure prompt transfers must be
established. Moreover, bank remuneration through fees is more transparent and
promotes competitive bidding. An appropriate system of penalties for taxpayers is also
an important element in avoiding delays in revenue collection.
 DAILY CASH FLOW REPORT

The Daily Cash Flow report is prepared with an objective to keep incessant check on
the cash flows of the firm, which includes both inflow and outflow cash. The cash
flows are planned to project cash surplus or deficit for each period i.e daily, monthly,
quarterly, semi-annual & annual basis. The framework of report highlights all the
effects, which lead to cash surplus or deficit. It is a measure, which calculates the

details of daily transaction in terms of sale and purchase, which further includes the
means through which they take place.

At Escorts-AMG, the daily cash flow report is designed in a format suiting their
requirements .The sales of tractors is their primary goal which includes exports as well.
The bills are presented for desired collection from various channels i.e. dealers,
stockiest, distributors through which the tractors are supplied in the market. Besides
tractors they also deal in engines, backend, implements which are included in the
category of other receipts. The receipts are other than collections as they aren’t
generated through sales. Next come the payments, which are made in discharge of
financial obligation towards various suppliers, bank payments, excise duty, salary &
wages etc.

Through the various collections, receipts and payment, we are now in a position to
derive the surplus or deficit which is the result of above transactions. The surplus
balance shows that the collections & receipts are more than payments and vice-a-versa
in case of deficit. Though surplus is an indicator of sound financial position and deficits
the other way round, but excess surplus is also not considered healthy which has
reasons to it like inventory pile up and so on.

The last component of the cash flow report is the outstanding debtors, which is
calculated by subtracting billing & collection from opening o/s of debtors in domestic,
export and other categories. This way the day to day cash transactions are maintained
through the cash flow report which leads to proper functioning of an organization’s
resources both men & material.
 CASH MANAGEMENT, WHY SOME
PROBLEM

Management of cash can be a nightmare, if one does not have the right tools in place.
Therefore, as cash is king, so is the plan to manage it, and this includes a whole suite of
plans (read as forecasts), tools (decision support systems such as MS Excel, Cash and
Treasury management software) and last but not the least, competent talent!

As history would have it, 99% of corporate failures are attributed to financial
mismanagement. Cash management is a significant part of financial management and
therefore is a significant aspect of the corporate treasury function. Commonly made
mistakes in managing cash include over capitalization and under capitalization –
technical terms used when corporates try to achieve too much with too little resources
(as an example, Swissair, folded up for good in 2002, due to unmanageable debt) and
vice versa with the cascading effect of a liquidity crunch.

Liquidity crunch is the result of mismatched timings in cash flows. It is almost always a
result of lack of dynamic plans and tools, and management attitude. Soaring profits
often tend to motivate over capitalization, and vice versa up to a certain extent, when
corporates fail to recognize opportunities and build cash reserves without adequate
investment plans (an example - Amazon, in the 1990’s, sitting on $2b). Jac Nasser,
Chairman of BHP Billiton, quoted said “there are more projects than the cash flow can
afford them” is a classic example of over capitalization.

Even cash rich companies could at some point be faced with a liquidity crunch because
of distributed holdings (such as Apple Corporation’s case) entailing restricted access
due to cross border restrictions, or domestic legislation seeking to tax built up cash
wealth.
Also, cash flow management does not make a distinction between capital and revenue
outlay, as these are accounting concepts. This leads us to believe that the concept often
misunderstood is what constitutes good cash management. For some, good cash
management is just about collecting debts (receivables) and delaying a payment
(payables), which causes the company to accumulate cash, often called the spread or
float. We seek to explain this situation by an indirect approach by elaborating upon
what would constitute cash mismanagement; failure to do any of the following would
constitute cash mismanagement:
 Be clear about accrual based profit and cash flow
 Determine cash flow cycle (also known as operating cycle in manufacturing
industries)
 Formulate and work towards budgets
 Maintain an adequate cash balance
 Accelerate debtor collection and delay (within imposed credit limits of course)
creditor payments i.e. fully avail credit limits and periods in a bid to fully utilize
float
 Report, monitor & control
 Make well considered use of leverage

Also, confusion in understanding, Cash flow as a term adds to the problem;

the terms earnings / profit and cash flow are frequently used interchangeably even
though they are quite different in their connotation. Earnings (profit or net income) are
an accounting concept measured by application of accounting convention. Cash flow,
on the other hand, connotes the timing between actual receipts and disbursements of
cash.

Having now discerned this concept, it is easy to infer that while a company may always
have revenues, they may not always return a profit.

How is it possible then, that some companies can’t meet their obligations and end up
failing even when returning a profit? The reason lies in their fundamental
misunderstanding of good cash management.
It is easy to think of a company making a profit if it successfully sells a significant
number of products to customers and it collects the fees and charges for those sales. But
there are a few reasons that can cause a business to fail even in this scenario.

Let’s take a look at some of them and see how bad cash management can make all the
difference:

COMPONENTS

The annual cash flow statement at Escort- AMG is prepared for the fiscal period
commencing from 01/10/20XX to 31/09/20XX. They are also maintaining the daily
cash flow report with a purpose of keeping constant check on the daily flow of cash i.e.
cash inflow and cash outflow, for different products categories, their parts and other
miscellaneous.

The main products at ESCORTS AMG are tractors which are available in three
major categories:

 Farmtrac

 Powertrac

 Escorts

These products are sold into the market through intermediaries like dealers, stockiest
and distributors, these parties charge a commission for the services provided by them.

Among these parties dealers are given priority over the stockiest & distributors for the
delivering the product to the end customer and the commission also varies in the same
manner.

The following are the transactions that take place in the daily cash flow report under the
following main heads:

 Particulars,
  Year to date i.e. the very first day of the financial year till the previous
months end (in which the daily report is being made),

 The previous month,

 Plan for the ongoing month,

 The particular day for which the report is being made,

 Month to date (from the beginning of the current month till the day for
which report is being made).

SALES – This includes the number of tractors sold in the domestic boundaries as
well as overseas.

BILLING – It is the process of sending accounts to customers for goods or

services. The document used is called an invoice; the invoice may be attached to
the goods or forwarded separately.

CASH BUDGET COMPANY

MEANING:
A forecast of estimated cash receipts and disbursements for a specified period of
time. A cash budget is arrived at through a projection of future cash receipts and
cash disbursements of the firm over interval of time, it reveals the timing and
amount of expected cash inflows and outflows over the period. With this, the firm
will be able to determine its future cash needs, and exercise control over the cash
and liquidity of the firm. Though the cash budget may be prepared almost any
interval of time, its monthly projection are most common.

In short, we can say that cash budget is a forecast of a firms future cash flows
arising from collection and disbursement, usually on a monthly basis..
 The key to the accuracy of most cash budgets is the sales forecast. This forecast can
be either internal or external analysis, in internal approach, sales representatives are
asked to project sales for the forthcoming period, We can then consolidate these
sales estimates for the product line. The estimates for the various product lines are
then combined in to an overall sales estimate for the firm. The basic problem with
an internal approach is that it can be too myopic, often significant trends in the
economy and in the industry are overlooked.

Many companies use an external analysis as well, in external approach economic

analysts make forecast of the economy and of industry sales for several years to
come. They may use regression analysis to estimate the association between
industry sales and the economy in general. After these basic predictions of business
conditions and the industry are made. The next step is to estimate the market share
by individual products, price that are likely to prevail and the expected reception of
new product. By this way we can prepare an external forecast.

MISSION

Escort missions: They're like Take Your Child to Work Day, only your job
involves getting shot at and your child is a mental deficient with a lousy sense of
direction and giant target painted on his back.

In theory, escort missions are your - as the hero/protagonist of a game - chance to

demonstrate your ability to do more than simply kill everything in sight. Sometimes,
there really are people who can't defend themselves, yet need to venture forth into
dangerous lands, and if you can save a world, you can surely save one person.

Unfortunately, no matter how much story is piled on top of these scenarios, the
missions rarely feel like more than a chore, leaving you feeling less like the savior of
the universe and more like a hired thug with little else to do but watch other people do
more interesting, less violent work; the Blackwater mercenary of the videogame land,
escorting pencil pushers to the Green Zone.
CHAPTER-3

RESEARCH
METHODOLOGY
RESEARCH
Research is a process in which the researchers wish to find out the end result for a given
problem and thus the solution helps in future course of action. The research has been
defined as “A careful investigation or enquiry especially through search for new facts in
branch of knowledge.”

Knowledge of research not only helps one to look at the available information, but this
knowledge also helps in other ways.

Research comprises defining and redefining problems, formulating hypothesis or

suggested solutions, collecting, organizing and evaluating data, making deductions and
reaching conclusions.

Research compromises “creative work undertaken on a systematic basis in order to

increase the stock of knowledge, including knowledge of man, culture and society, and
the use of this stock of knowledge to devise new applications.”

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. The
research methodology included various methods and techniques for conducting a
research. “Marketing Research is a systematic design, collection, analysis, and
reporting of data and finding relevant solution to a specific marketing situation or
problem.”

Sciences define research as “ the manipulation of things, concepts or symbols for the
purpose of generalizing to extend, correct or verify knowledge, whether that knowledge
aids in construction of theory or in practice of an art.”Research is thus, an original
contribution to the existing stock of knowledge marketing for its advancement, the
purpose of research is to discover answers to the questions through the application of
scientific procedure.
  RESEARCH DESIGN:
The Research problem has been formulated in clear-cut terms; the Researcher will

require preparing a Research design i.e. he will have to state the conceptual structure

with in which Research would conduct. The preparation of such a design facilitates

Research to be as an efficient as possible yielding maximal information.

1. Exploration,

2. Description,

3. Diagnosis,

4. Experimentation.

1) EXPLORATORY STUDY

An exploratory study is undertaken when no information is available on how

similar problems or research issues have been solved in the past. In such cases,
extensive interviews have to be undertaken with many people to understand and
handle the problem.

2)Descriptive Design:-

Descriptive Research studies are those studies which are concerned with describing the

characteristics of a particular individual, or a group. Studies concerned with specific

prediction, with narration of facts and characteristics concerning individual, group, or

situation are all examples of descriptive Research studies. In a descriptive study, the
first step is to specify the relevant. The design must be rigid and not flexible and must

focus attention on the following:

1. Formulating the objective of study,

2. Designing the methods of data collection,

3. Selecting the sample,

4. Collecting the data,

5. Processing and analyzing the data,

6. Report the findings.

 Collection of Data

The task of data collection begins after a Research problem has been defined and

Research design/plan checked out. The collection of data is done to support your

findings and interpret the result whether the result have found is according to your

hypothesis or not. The data can be collected by various methods. These are broadly

classified into two ways, as follows:

o Primary data,

o Secondary data.

Primary data:-

Primary data are those which are collected as fresh and for the first time and thus

happen to be original in character. We collect primary data during the course of doing

experiments in an experimental Primary research. It is the first hand Primary data and
no one else has collected this before .There is various ways of collecting primary data,

they are as follows:

 Observation method,

 Interview method,

 Questionnaires.

 Secondary data:-

Secondary data means the data which is already available i.e., it refer to the data which

has already been collected and analyzed by someone else. When the researcher utilizes

the secondary data, then he has to look into various sources form where he can obtain

it. In this case, he is not confirmed with the problem that is usually associated with

collection of original data.

1. Management Information System (MIS),

2. Other material and report published by company

3. Annual report.

TOOLS OF DATA COLLECTIONS

The managing collections of the cash management have been discussed below:-
A) PROMPT BILLING
By preparing and sending the bills promptly, without a time log between the dispatches
of goods and sending the bills, a firm can ensure earlier remittance.

B) EXPEDITIOUS COLLECTION OF CHEQUES

An important aspect of efficient cash management is to process the cheques receives
very promptly.

C) CONCENTRATION BANKING
Instead of a single collection center located at the company headquarters, multiple
collection centers are established. The purpose is to shorten the period between the time
customers mail in their payments and the time when the company has use of the funds
are then to a concentration bank – usually a disbursement account.

D) LOCK-BOX SYSTEM
With concentration banking, a collection center receives remittances, processes them
and deposits them in a bank. The purpose is to lock-box system is to eliminate the time
between the receipt of remittances by the company and their deposit in the bank. The
company rents a local post office box and authorizes its bank in each of these cities to
pick up remittances in the box. The bank picks up the mail several times a day and
deposits the cheque in the company’s accounts. The cheques are recorded and cleared
for collection. The company receives a deposits the cheque in the company’s accounts.
The cheques are recorded and cleared for collation. The company receives a deposit slip
and a lift of payments. This procedure frees the company from handling a depositing
the cheques.

CASH MANAGEMENT STRATEGIES

The firm should develop appropriate strategies for cash management. The firm
should evolve strategies regarding the following four facets of cash management:
 Cash planning

Cash inflow and outflow should be planned to project cash surplus or deficit for
each period for each period of the planning period. Cash budget should be prepared
for this purpose.

Managing the cash flows

The flow of cash should be properly managed. The cash inflows should be
accelerated while, as far as possible, the cash outflows should be decelerated.

Optimum cash level

The firms should decide about the appropriate level of cash balances. The cost of
excess cash and danger of cash deficiency should be matched to determine the
optimum level of cash balances.

Investing surplus cash

The surplus cash balances should be properly invested to earn profits. The firm
should decide about the division of such cash balance between short-term
investment opportunities such as bank deposits, marketable securities, or inter-
corporate lending.

DECISION AREAS
CREDIT POLICIES:

The credit policy of a firm provides the framework to determine whether or not to
extend credit to a customer and also how much credit to extend. It has two broad
dimensions; the first is credit standard and second is the credit analysis. Credit
standards represent the basic criteria for the extension of credit to customers. The
trade- off with reference to credit standards covers collection costs, average
collection period, level of bad debts losses and level of sales.

CREDIT TERMS
The second decision area in accounts receivable management is the credit terms.
After the credit standards have been establish and the credit worthiness of the
customers is assessed, the management of a firm must determine the terms and
conditions on which trade credit will be made available. Credit terms have three
components: credit period, cash discount and cash discount period. Credit period is the
duration of time for which trade credit is extended whereas cash discount is the amount
by which the over the due amount will be reduced thus benefiting the customer. The
credit terms like the credit standard affect the profitability as well as the cost of the firm
therefore a firm should determine the credit terms on the basis of cost-benefit trade- off.

CHANNEL FINANCE FACILITIES

The company arranges these facilities with various bankers for the company dealers to
support their cash needs. The goods are sold on credit against hundis. Hundis can be
drawn for 50 or 75 or 90 days subject to qualifying criteria of bank.

CREDIT FACILITIES

Escort provides thirty days interest free credit to the dealers. For this in respect of all
hundis the company bears 30 days interest and the remaining cost of interest, delayed
payment charges are borne by the dealers.

PENALTY ON BOUNCING OF HUNDIES / CHEQUES

Bouncing of hundis / cheques drawn in favor of the company is viewed very strongly
and usually following actions are taken.

 Tractor supplies are suspended and restored only after all dues are cleared.

 All charges debited by the bank such as collection charges, penal interest are
debited to the dealer.

 The bank extending channel financing policy have clearly stated that if a
dealer has two or more bouncing he will be black listed and his limit will be
withdrawn with immediate effect. Company also makes sales to such dealers
only against letter of credit or demand draft.
 CHAPTER 4

DATA ANALYSIS
&
INTERPRETATION
 CASH RATIOS

MEANING

Cash ratios are also important tool of cash control. There are various ratios which
explain the efficiency of cash management or vice-versa. They are the acids test
ratio, cash ratio, receivables turnover ratio, inventory turnover ratio, cash turnover
ratio etc.

These are calculated as –

LIQUIDITY RATIOS –

Liquidity ratio measures the ability of the firm to meet its current obligations. It is
necessary to strike a proper balance between high liquidity and lack of liquidity. A
high degree of liquidity means that a firm’s fund will be unnecessarily tied up in
current assets. Whereas lack of liquidity, implies failure of a company to meet its
obligations due to lack of sufficient liquidity.

The ratios, which are used for the analysis of Escorts liquidity position in this
report, are:

 Current Ratio

 Quick Ratio
CURRENT RATIO

Current ratio is calculated by dividing current assets by current liabilities

Current ratio = Current Assets

Current Liabilities

2015-16 2015-16

Current Ratio 1.12 1.16

From the above table it can be interpreted that Escorts liquidity position is not
constant. As a conventional rule a current ratio of 2:1 or more is considered
satisfactory because in a worse situation, even if the value of current assets becomes
half, the firm will be able to meet its obligations. Current ratio refers to a margin of
safety for creditors therefore higher the current ratio, the greater the margin of
safety.

QUICK RATIO

Quick ratio establishes a relationship between quick or liquid assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or
reasonably soon without a loss of value. Inventories are considered to be less liquid
therefore calculating quick ratio they are deducted from current assets.

Quick Ratio = Current Assets – inventory

Current liabilities

2015-16 2015-16

Quick Ratio 0.90 0.99

Escorts quick ratio in the current year has decreased in comparison to previous year,
yet it can be considered to be satisfactory, as it is 1:1 times of current liabilities.
Although quick ratio is more penetrating test of liquidity than current ratio. Yet it
should be used cautiously, as all debtors may not be liquid and cash may be
immediately needed to pay operating expenses.

The value of quick ratio is decreasing every year. The satisfactory level of the quick
ratio is 1:1. This shows the worse situation of the company. The current liabilities are
more than the quick assets.

ACTIVITY RATIOS –
Activity Ratios are used to evaluate the efficiency with which the firm manages and
utilizes its assets. The ratios are called Turnover Ratios as they indicate the speed
with which the firm manages and utilizes its assets.

Activity ratios, which are used to analyze Escorts effectiveness in Asset utilization,
are

 Inventory Turnover Ratio

 Fixed Assets Turnover Ratio

 Working Capital Turnover Ratio

 Debtors Turnover Ratio

 Creditors Turnover Ratio

INVENTORY TURNOVER RATIO

It indicates the efficiency of the firm in producing and selling its product. It is
calculated by dividing sales by avg. inventory. In a manufacturing company
inventory of finished goods is used to calculate inventory turnover.
 Inventory Turnover = Cost of goods sold

Avg. Inventory

2015-16 2015-16

Inventory turnover 14.42 15.10

If the company is comfortably meeting the customer needs with 9.73 days inventory of
finished goods, all India basis.

It is a good achievement for the Escorts Limited.

FIXED ASSETS TURNOVER RATIO

A firm’s ability to produce a large volume of sales for a given amount of net assets
is the most important aspect of its operating performance. Unutilized or underutilized
assets increase the firm’s need for costly financing as well as expenses for maintenance
and upkeep. Fixed assets turnover is calculated by dividing net sale by net fixed assets.

Fixed Assets Turnover =Sales

Fixed Assets
2015-16 2015-16

F.A.T 2.29 2.35

Escorts fixed asset turnover have increased in 2009-10. The fixed asset turnover of
2.78 implies that it is producing Rs.2.78 of sales for one rupee of capital employed.
The higher the ratio, more it is satisfactory…

It should be interpreted very cautiously because the denominator of the ratio

includes fixed asset net of depreciation. Thus old assets with lower book value may
create a misleading impression of high turnover without any improvement in sales

DEBTORS TURNOVER RATIO

Debtor’s turnover indicates the number of times debtors’ turnover each year. Higher
the value of Debtors turnover, the more efficient is the management of credit. The
liquidity position of the firm depends on the quality of the debtors to a great extent.

Debtors Turnover = Credit Sales /Avg. Debtors

2015-16 2015-16

Debtors Turnover 4.44 4.29

Escorts debtors turnover is quite lower. The debtor’s turnover ratio is high at 2009-10.
The ratio is decreasing. Also the debt collection period has its own importance. The
debt collection period of Escorts was 76 days in 2009-10 but it has increased to 95
days. This does not show the satisfactory level. The shorter the collection period, the
better the quality of debtors, since a short collection period implies prompt payment
by debtors.

A too low collection period is also not necessarily favorable as it may indicate a
very restrictive collection and credit policy. Because of the fear of bad debt loses
the firm may be selling to those only whose financial conditions are sound and who
are very prompt in making the payments.

CREDITOR TURNOVER RATIO

Creditors Turnover = Total Purchases

Creditors

2015-16 2015 -16

Creditors Turnover 3.55 3.45

Though the days are very high and apparently appears to substitute right collection,
this extended credit has its own drawback like:

 High interest inbuilt in cost system.

 Sub-quality creditors may be accepted.

 Quality of material may be accepted.

The payment period of Escorts Limited is 90 days in 2009-10, which is more

reasonable than previous years. This helps to make good quality product and also
better relationship with suppliers.

WORKING CAPITAL TURNOVER RATIO

Working capital turnover ratio has its own significance in the business
organizations. It shows the efficiency of the firm. How much sale that the company
get with the utilization of the limited working capital.
Working Capital Turnover = Net Sales

Net Working Capital

2015-16 2015-16

Working Capital Turnover ratio 113.45 28.30

In the case of working capital turnover ratio Escorts is significantly going very
downward. This is a very dangerous point of the firm. The company should try to
improve it earlier. It shows that the company requires more money to generate sales.

Analysation of liquid assets of different year in the firm.

Year as on 2013 as on 2014 as on 2015

Current 20255 35255 45155

Assets
Interpretation of findings:

Liquid assets in 31march 2013 is 20255.

Liquid assets in 31 march 2014 is 35255.
Liquid assets in 31 march 2015 is 45155.
This shows that firm liquid assets is increase year by year.

 . Annual Liability percentage of the firm in different year.

YEAR 31/3/14 31/3/15 31/3/16

CURRENT
LIABILITY 80 20 0
 

Interpretation of findings:
In 2014 the firm has 80% liability on his total revenue.

In 2015 the firm has 20% liability on his total revenue.

In 2016 the firm has no liability

This show the reduction in the level of liability percentage

 CASH IN HAND ANALYSATION OF DIFF. YEAR IN THE FIRM.

Year As on 31 march 2015 As on 31 march 2014

CASH 75000 95000

IN
HAND
INTERPRETATION
 CASH IN HAND OF THE COMPANY ON 31 MARCH 2014 IS 95000.
 CASH IN HAND OF THE COMPANY ON 31 MARCH 2015 IS 75000.
 IT MEANS THE COMPANY NON CASH IN HAND CAPACITY IS
DECREASES FROM THE PREVIOUS YEAR.

 GOODWILL

Year As on 31 march 2015 As on 31 march 2014

GOODWILL 50000 20000

INTERPRETATION
 GOODWILL OF THE COMPANY ON 31 MARCH 2014 IS 20000
 GOODWILL OF THE COMPANY ON 31 MARCH 2015 IS 50000
 IT MEANS THE COMPANY GOODWILL IS INCREASES FROM THE
PREVIOUS YEAR

 CURRENT INVESTMENT

Year As on march 31 2015 As on 31 march 2014

Current investment 150000 100000

Interpretation
 CURRENT INVESTMENT OF THE COMPANY ON 31 MARCH 2014 IS
100000
 CURRENT INVESTMENT OF THE COMPANY ON 31 MARCH 2015 IS
150000
 IT MEANS THE COMPANY INVESTMENT IS INCREASES FROM THE
PREVIOUS YEAR

 CASH AT BANK

Year As on 31 march 2015 As on 31 march 2014

Cash at Bank 19,563 1,655

INTERPRETATION
 CURRENT CASH AT BANK OF THE COMPANY ON 31 MARCH 2014 IS
1,655
 CURRENT CASH AT BANK OF THE COMPANY ON 31 MARCH 2015 IS
19,563
 IT MEANS THE COMPANY CASH IS INCREASES FROM THE
PREVIOUS YEAR

 CURRENT LIABILITY

Year As on 31 march 2015 As on 31 march 2014

SHOR 75,000 1,00,000

 INTERPRETATION
 SHORT TERM BORROWING OF THE COMPANY ON 31 MARCH 2014 IS
1,00,000
 SHORT TERM BORROWING OF THE COMPANY ON 31 MARCH 2015 IS
19,563
 IT MEANS THE COMPANY BORROWINGS IS DECREASES FROM THE
PREVIOUS YEAR
 IT MEANS COMPANY PAY THEIR LIABLITY

GOODWILL
Year As on 31 march 2015 As on 31 march 2014

GOODWILL 55000 15000

INTERPRETATION
 GOODWILL OF THE COMPANY ON 31 MARCH 2014 IS 15000
 GOODWILL OF THE COMPANY ON 31 MARCH 2015 IS 55000
 IT MEANS THE COMPANY GOODWILL IS INCREASES FROM THE
PREVIOUS YEAR

 . Is cash flow management system is better than traditional

method of cash handling method .

Strongly agree Agree Neutral Disagree Strongly disagree

60 40 0 0 0
Interpretation of findings:
40% employee feels that cash flow management system is beneficial for the firm.
whereas 60% strongly agree and 0% is neutral, disagree and strongly disagree with
this condition.80% employees are satisfied with current job whereas 20% are neutral
on this matter. 0% is strongly agree, disagree and strongly disagree with this condition.
CHAPTER 5

SUGGESTIONS
&
CONCLUSIONS
 SUGGESTIONS

As absenteeism of workman is a matter of concern before shop managers, as it effects

adversely in smooth production. Though, absenteeism is related to personal reasons of

workman, but it becomes necessary on the part of the management to put efforts to

reduce absenteeism in a planned manner. Thus I also talked to the junior managers in

order to assess their perception about worker’s absenteeism. The junior managers gave

the following suggestions:-

1. In order to control the high rate of absenteeism, the management should do

home visits of the habitual absentee.

2. The management should do counseling of family members.

3. The management should introduce some social recognition programmes.

4. The management should give them awards for being punctual. Management

can motivate them in this way. Also it can inspire others to be punctual.

5. The management should not be scared of the Union, and should take

disciplinary action against the absentees. Management’s position is very

pathetic because of the dominance of Union.

6. In the case of working capital turnover ratio Escorts is significantly going

very downward. This is a very dangerous point of the firm. The company

should try to improve it earlier. It shows that the company requires more

money to generate sales.

7. Escorts liquidity position is not constant. As a conventional rule a current

ratio of 2:1 or more is considered satisfactory because in a worse situation,

even if the value of current assets becomes half, the firm will be able to

meet its obligations.

8. It should be interpreted very cautiously because the denominator of the ratio

includes fixed asset net of depreciation. Thus old assets with lower book

value may create a misleading impression of high turnover without any

improvement in sales.

9. Escorts inventory turnover ratio has increased in comparison to previous

year, It is a good achievement for the Escorts Limited.

10. Escorts debtors turnover is quite lower. The ratio is decreasing. The debt

collection period of Escorts was 76 days in 2007-08 but it has increased to

95 days . This does not show the satisfactory level. The shorter the

collection period, the better the quality of debtors, since a short collection

period implies prompt payment by debtors.

 CONCLUSIONS

It is clear from the above study that the salary & wages are the main reasons for

labour turnover. Career is also playing an important role. Workers are not fully aware

about Health Insurance.

Besides these company policies, working conditions, reward system& work load have

also significance.

Company must provide world-class training and promotional opportunities to their

workers to better perform & stay in the same company.

 Rankly tell his problems or the reasons for taking leave, and the management

can try to work upon those reasons.

 List of absentees should be displayed on the notice board

Management should issue the show cause notice

CHAPTER 7

BIBLIOGRPHY
 BIBLIOGRPHY

Financial Management- S.K. Gupta

Management Accountancy-D.K. Goel

Cost and Management Accountancy- S.N.Maheshwari

Financial Management And Policy- James C.Van Horne

WORLD WIDE WEB

www.escortsagri.com

www.economictimes.com