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Introduction:

Working capital management is an integral part of corporate finance. Where many of the corporations failure due to inefficient management of working capital. Significance of working capital as internal and external business analysis of its close relationship with the current day-to-day operation of business organization. Irrespective of the size of the business, The term working capital refers to current assets, which may be defined as those which are convertible into cash or equivalent with in a period of one year. And those which are convertible into cash or equivalent with in a period of one year. And those which are required to meet day-to-day operations such as purchase of raw material and payments of wages etc, the fixed assets as well as the current assets, both requires investment of funds. Working capital is the difference between inflow and out flow of funds. In the other works it is the net cash inflow, financing of short term is termed as working capital management, which forms an important part of corporate sector. The study of working capital is a difficult task. Finance managers can take efficient decisions with regard to capital investment but the need to struggle form funds meet the day-to-day requirements.

Working capital meaning and concept:


Working capital, in simply terms, is the amount of funds which business concerns have to finance its day to day operations. It can also be regarded as that proportion of a company total, which is employed in short term operations. Different concepts of working capital are: Gross concept and Net concept. The gross concept working capital refers to a firms investment in current assets. This is also known as current capital concept or circulating capital concept. The Gross capital is represented by the sum total of all current assets of company of the enterprise. It is also known as circulating capital because, current assets of accompany are changed in the ordinary course of business from one to another as for example, from cash to inventories, to receivable to cash. This concept focuses attention on two aspects of current assets management, viz. a) Optimum investment in current assets, and b) Financing current assets. The Net Working Capital concept is an accounting concept, which refers to the arithmetic difference between current assets and current liabilities of a business concern. It is defined as the difference between the book value of the current assets and current liabilities. The net working capital indicates, a) the liquidity position of the form, and
b) Suggest the extent to witch working capital needs may be financed by

permanent sources of funds. An alternative definition of working capital is that portion of firms current assets financed with long term funds. These two concepts of working capital are not mutually exclusive, rather have equal significance from the management point of view and represent two important facets of the working capital management.

Composition of working capital


The individual composite items of working capital are: Current Assets: Current assets comprise items that would get converted into cash in to short term, within a year the business operations. Current assets include,
1. Inventories: include stocks of raw material and components, working

progress, finished goods and factory supplies, packing and shipment materials, office supplies etc.
2. Loans and advance and other balances: Loans and advance and other

balances include sundry debtors, bills receivable and other including loans and advances, prepaid expenses etc.
3. Marketable

securities: Marketable securities include government

securities and semi government securities.


4. Cash and bank balances.

Current Liabilities: Current liabilities are those, which are expected to all due or mature for payment in short of one year and they represented short-term sources of funds. They include, 1. short term borrowings: short term borrowings include bank borrowings other than those against own debentures and other mortgages,
2. Trade creditors and other liabilities Sunday creditors, out standings expenses

and advances received etc.


3. Provision for taxation dividends and other current provisions.

Importance Of The Study:


The basic objective of financial management is to maximize the shareholders, which is possible only when company can earn sufficient profits the amount at such profit largely depends upon the Magnitude of sales. The firm has to invest enough funds in current assets for generating sales. The current sales are needed because sales to convert into cash instantaneously. There is always a time gap between the sales of goods and receipt of cash. The significance of working capital is felt for those periods in order to sustain the sales activity. Working capital is required because of the time gap between the sales and their actual realization in cash the time gap is technically called Operating Cycle in case of a manufacturing firm the length of operating cycle is small SUDHAKAR POLYMERS being a manufacturing firm requires production. Need For Working Capital Working capital is the amount of funds necessary to cover the cost of operating the enterprise. Working capital in a going is a revolving funds, it consist of cash receipt from sales which are to cover the cost of current operations. The need of working capital arises because of time gap is due to time gaps between. 1. Cash and purchases of raw materials 2. Purchases and production 3. production and sales
4. Sales and Realization of cash.

During these intervals the company should have ready working or operating fund to keep the business going. Thus every business concern should have sufficient liquid funds at its disposal to dry raw materials, stores etc. to pay wages to personal and to meet incident expenses with the installed plant equipment, tools and other fixed assets, the concern would be labor to produce finished goods by spending cash on raw materials intermediate goods labour remuneration, etc. the goods so produced will swell in to inventories or stocks. Soon the stock will take the from of debtors or bills receivables and ultimately cash is realized from debtors or bills receivable on maturity. There is therefore a need for working capital because the production sales and cash payments and realization of cash not instantaneous. The company needs cash to purchase raw material and to meet expenses as there may not be perfect matching between cash flow and out flows. Cash may be carried to meet the demands of the customers on continuous basis and sudden demand. Thus an adequate amount of funds has to be invested in current assets for smooth and uninterrupted production and sales process, which is referred to as operating cycle or cash cycle. The operating cycle determines the need for working capital. The operating cycle represents the period during which investment of one unit of money will remain blocked till recovery out revenue. In other words the operating cycle refers to the length of time necessary to complete,
a) Conversion of cash in to raw material, inventories b) Conversion of raw material in to finished goods c) Conversion of finished goods into cash sales or credit sales and

d) Conversion of credit sales or receivable into cash

Thus it is said management must know the length of time required to convert cash into resources used by the firm, the resources into resources used by the firm, the resource into final product, the final product into receivables and receivables bank into cash. This is the operating cycle of an enterprise. The pattern of operating cycle depends upon the nature of the enterprise. The financial institutions may have a shorter cycle while trading concerns have an extended one. In real business situations, the operating or cash flow cycle is not as simple and smooth going as the depicted above. A going concern by nature undergoes the process of liquidity, i.e., besides. A circular flow among working capital itself, all fixed assets are moving towards liquidity through value added to the products of the firm. Therefore, we can say that, working capital is needed not only for financing current assets but also to meet various other requirements like payment of dividend , interest , etc., Therefore, it is necessary for a prudent financial manager to provide correct amount of working capital at the right time to provide for operating needs.

Phase 3

Phase2 Phase1

Objective Of The Study:


The effective management of any business among other factors depends upon the manner in which its working capital is managed. Working capital is the life blood of a business. Working capital management is concerned with the management of the firms current assets and current liabilities. Thus the working capital management is one of the most important aspects of the firms overall financial management. If the firm cannot maintain a satisfactory level of working capital it is likely to become insolvent and may even be forced in bankruptcy. Thus the firms current assets should be large enough to cover its current liabilities in order to ensure reasonable margin of safety. Statement of the problem: The importance of working capital management in an industrial undertaking needs emphasis. How is working capital managed in an industrial unit? What are the practiced adopted? What are the problems faced? These questions call from an empirical study. This study is an attempt in this direction. This confirmed to the SUDHAKAR PLASTIC LTD., SURYAPET, and NALGONDA.

Objectives:
The specific objectives of this study are: 1. To study the various sources of working capital of Sudhakar Plastic Ltd. 2. To study the pattern of working capital management in this company with specific reference to Balance sheets Profit and loss accounts Management of inventories
3. To identify the problems regarding working capital management in Sudhakar

Plastic Ltd., and give possible suggestions for better management.


4. To study working capital management of the Sudhakar polymer plastic during

the period of 2005-2006 to 2009-2010. 5. To find out the liquidity position of the Sudhakar polymer plastic in order to determine its ability in meeting obligations. 6. To study the impact of the working capital on profitability during the period 2005-2006 to 2009-2010. Reference Period: The period covered under this study is four financial years i.e., from 2006 to 2010. Sources of data: The main sources of data used or restored to are personal interviews with the concerned employees of the company and secondary data i.e., the annual reports provided by the company.

Plan of Analysis: Percentages changes in the analysis of working capital and analysis of current assets and current liabilities, ratios were used. Data And Methodology: The data of SUDHAKAR PLASTIC LTD for the period 2006-2007 to 20092010 has been used in this study the data has been collected from primary and secondary sources. Primary data: has been collected directly from the director of SUDHAKAR POLYMERS PLASTIC LTD Secondary data: collected from annual reports of SUDHAKAR POLYMERS PLASTIC LTD. For assessing the performance of the Working Capital Management simple mathematical tools like percentages, ratio analysis has been used. Limitations Of The Study: The study is based on the financial data provided by the company financial statements therefore limitations of the financial statements are also equally applicable for the study. Only data of four years is taken for the study, which may not be sufficient to measure the financial performance of the firm.
In all the calculations number of days in a year taken as 365 days. Data is collect

from two sources, a) Secondary sources

Company origin: Economically under developed in nalgonda was verified region for industrial sector. This region lures dynamic entrepreneur sir. Meela satyanarayana and his son to setup units which manufactured all plastic pipes industries in suryapet in nalgonda dist., at initial major funds and other constraints posed lot of problems to him but with the support of financial assistants from the commercial bands he could cope up with the situation. As the PVC pipes concept came down to the market Meela Satyanarayana has switched over to the manufacture of PVC pipes, as it was becoming lucrative field with good profit margin and growth. M/S, Sudhakar Plastic Limited is a company, which is located near Suryapet. It is 140km form Hyderabad. Sudhakar Plastic limited is a plastic manufacturing company. It is mainly based for manufacturing plastic products like PVC pipes, HDPE pipes, and LLDPE pipes. M/S. Sudhakar Plastic Limited is one of the units of sudhakar group of industries. This factory is incorporated on 3rd April 1992. But this factory is functioning since from September 1993. This factory is identified as a factory concerned for quality and customer. The factory is headed by managing director and is total authority for factory functions. The factory layout is developed so as to meet all the statutory, and safety requirements. The factory is proud of its state of the art and is using tested and

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proven technology. The machinery has been sources from established equipment supplies. The human resources development at all levels of the factory has been given a high priority. The participation and involvement of employees are being encouraged. M/S. Sudhakar plastic Limited is having agencies in suryapet, Hyderabad, Vijay Wada and so many places. It is widespread in India. The human resources employed for this company is from qualified graduate/diploma engineers, science, and commerce graduate/post graduates/diploma holders in processing and quality/ I.T.I qualified persons. Sudhakar plastics ltd was established in 1992 at suryapet nearly 150km far away from Hyderabad. It was established of partnership firm by Mr. Meela Satyanarayana & Mr. Ananthula Janardhan. The both persons are the managing partners. It is one of the leading and reputed companies in A.P. Basically the company is producing two types of pipes viz. 1. pipes of water 2. pipes of electricity These pipes are producing different sizes with different Brand names for the convenient of different customers. As in our India first place is occupied by Agriculture industry, the requirements of water and electricity is essential. As the requirements are increasing it because essential to introduce new theology in lifting water where there is lack of water, then the lifting water is must. And from old method like using buckets, iron contains and cement pipes is waste of money, time as well as energy, And in the changing area drip irrigation is also introduced for the higher productions for all these requirements a new product was introduced i.e., plastic or vinyl chloride pipes. As the customer satisfied with their products, the sales of the pipes were increased
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tremendously as the sales increased with more thickness and with new technology. By the introduction of new technology requirements of pipes was also increased.

Main objectives:
1. To establish and carry on business of manufacturing, producing, processing,

importing, exporting, buying & selling all kinds of plastic material molded goods. Industry styrene, poly styrene, vinyl chloride, poly vinyl chloride, polythene. Polyolefins vinyl acetate & copolymers of one or more of the above. 2. To established & carry on the business of manufactures, dealers, processing, formulating, buying, selling exporting, importing or otherwise dealing in retail & wholesale all kinds of plastic tubes and tires and films and molded goods of all materials , intermediate compounds necessary for the attainment of all or any of above objects. 3. To provide technical know how, technological consultancy, importers, and exporters to undertake turn key projects involving supply of technical , civil, financial, administrative, training plant& merchandise. 4. To enter into partnership or into any agreement for sharing profits, union of interest cooperation, joint venture, reciprocal concessions or company or companies foreign or otherwise, carrying on engaged in any business or transaction capable of being conducted so directly or indirectly to benefit to the Organization. 5. To establish, appoint, regulate and discontinues offices agents or representative all such places as the company many from time determine for carrying out all any one of the company objects and to cut as agents for others.
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6. To let, sub-let or give on lease, rent or hire, any portion of land, buildings of structure belongings to or leased by the company. 7. To establish and maintain laboratories for purpose of acquire all the necessary scientific and other equipment for the purpose. 8. To make such arrangements as the company may deem fit for the holding of any property of the company in the name of trustee or trustees for the company. 9. To amalgamate with any other company having objects altogether or in part similar to those of this company. 10.Generally to do all such other things as many appear to be incidental and in any way conductive to attainment of the above objects or any of them.
11. To manufacture, import, export, acquire, fabricate and produce

machinery

plant, tools, and implements and other articles, whatever used or required by company and to acquire, erect and construct, establish, operate and maintain factories, workshops and other works to manufacture, sell or deal
12. In machinery, machine tools and implements of every description in relation

to or incidental to the above mentioned main objects or any them. 13.To pay our or companys funds costs and expenses incurred in connection with all matters preliminary and incidental to the formation, promotion and incorporation of the company. 14.To purchase , establish, promote of otherwise acquire factories, mines, foundries, workshops in connection with the business or granites marble or incidental to the fulfillment of the above objects. 15.To invest and deal with funds of the company on securities or otherwise and in such manner as may from time to time be determined.

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16.To draw, make, accept ,endorse discount, execute and issue bills of exchange, promissory, notes, bill of lading, warrants, debentures and other negotiable or transferable instruments, or securities etc., but not to do the business of baking as defined in the banking regulations act of 1949. 17.To procure registration of the company on any country, state, or place outside the union of India and to establish and maintain local registers and branch of business in any of the world.
18. To sell, improve, manage, develop, exchange, enfranchise, lease, Mortgage,

dispose- off turn to account or otherwise deal with, all or any part of the property and rights of the company. 19.To distribute any of the property amongst the members in specie or in kind upon windings up, subject to section 511 of the companies act, 1956.

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Scope Of Sudhakar Plastic Ltd: Sudhakar plastic limited is aimed to 1. Demonstrate the factorys ability to consistently that meets costumers and applicable regulatory requirements. 2. To enhance customer satisfaction through the effective application of the system. Company Growth: Sudhakar Plastic Ltd., is commissioned with the objectives of catering to the agricultural needs, industrial needs and domestic needs of the region, In earlier days tools used for water flow were very ineffective with high percentage of seepage looses. To counter these drawback PVC pipes were favorably welcomed. This has been the mission of Sudhakar Polymers Ltd., the major irritants in agricultural practices like lack if rainfall , ground water lifting water transport with the field has provide a magnificent trust to presently running very well. polymers popes market. These factors helped Sudhakar Polymers Ltd., record an excellent growth from 1995 to 2001 and

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Initially the Sudhakar group of products has stated the industrial unit was that rigid PVC pipes and slowly this sector will hold good image. Thats why this sector will earn good profits. In this stage Sri. Satyanarayana was started another tow units. They are: 1. Sudhakar Polymers Ltd., 2. Sudhakar Irrigation System (p) Ltd. These units are established at suryapet in Nalgonda District. In suryapet these four sectors was established industrial areas. In the industrial areas these sectors occupying very large area. The Sudhakar group of products is maintaining good quality thats why these products are having image in Andhra Pradesh and as well as another states all over the country. Sudhakar group of products is a market leader in Andhra Pradesh. The area occupy by sudhakar polymers. Company provided ESI (Empirical state insurance) and provident fund facilities to all the employees. Uniqueness of worker of the company is the non-indulgence in trade union activities. Manufacturing process: Hot forward extrusion is employed for the manufactured for the PVC pipes. Polymers resins with weighted amounts of other ingredients are carries to chamber. The high temperature of hot chamber melts ingredients and the contents are they given forward thrust to get hollow pipes of equipped dimensions as soon as pipes comes out of the hot chamber. Cool water jet is directed towards to cool the pipe

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immediately, Piped of desired length are cut with the aids like feed and power hacksaw.

Technical details about plastic: k-67 for pipes, k-57 for moulds, calcium carbonate(caco3) T.B,L.S, D.B,L.S,L.S,C.S.,D.B.L.P,Steric acid, H.C Wax, Titanium dioxide, Tin Stabilizer, A.L.A mark -750 , P.V.C, Scrap , plasticizers, Carbon black, C.P.W, D.O.P, GMS/Purosol, mixed stabilizers (DBLP,TBLS,DBLS,LS). Lead time for raw materials acquisition is 4 days. Authority relationship of management: The company has various levels of management. The main significance of levels is that they determine authority, the relationship in the organization on the basis of authority and responsibility; we can identify three levels of management in company. Top Management: Top management, which consists of owners, directors, managing directors established plans and objectives in the sudhakar polymers Ltd. Middle Management:

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This level of management is basically concerned with task of implementing the plans and objectives laid down by top management it works as a specified also. Operating Management: It is lowest level in the hierarchy of management and actual operations are the responsibilities of level management. It consists of clerks workers etc., and various levels of employees.

Directors: The company shall have not less than three and not more than twelve inclusive or all kinds of directors unless otherwise determined by the members at a general meeting. The directors of the company are: 1. Sri.Meela Mahadev 2. Sri. Meela Jayadev 3. Sri. Meela Veeramani 4. Sri. Ananthula Dayakar 5. Sri. Ananthula Sudhakar 6. Smt. Ananthula Indira

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Achievement of sudhakar polymers plastic Ltd. Sri Meela Satyanarayana, the Chairman and the founder of the group is a freedom fighter, teacher turned businessman and industrialist. His contribution to the plastics industry especially in the Southern India is acclaimed by many organizations. President of Andhra Pradesh Plastic Manufacturers Association in 1984 Joint Secretary of All India PVC Pipes Manufacturers Association, New Delhi, India in 1985 He is the first entrepreneur to start a PVC pipe manufacturing unit in Andhra Pradesh, India Municipal Chairmen of Suryapet for the year 1989-92, Andhra Pradesh, India Chairmen and Founder of The Sudhakar Co-Operative Urban Bank Ltd. Suryapet, Andhra Pradesh, India

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He is recipient of many awards such as Bharata Ratna Mokshagundam vishesveshwaraiah Memorial small scale Entrepreneur Award Vijayaratna, HMA small scale Entrepreneur Award Best Industrial Award. Govt of Andhra Pradesh, India. Sri Meela Satyanarayana is a self made Industrialist and is a good manager. His valuable suggestions and advices to the boards of all companies will always enhance the managerial capabilities of the Boards.

SGI has 30 years of commitment in manufacturing high quality Rigid PVC pipes & fittings, SWR pipes & Fittings, uPVC Electrical Conduits & Fittings, HDPE pipes, Telecom Ducts, Blue Casing pipes and Drip Irrigation System. Our mission is to achieve sustainable and profitable growth through innovation world class products and services of exceptional value to our customers.

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ORGANISATIONAL STRUCTURE

Managing Director

ADMINISTRATION Dept

PRODUCTION Dept

FINANCE Dept

MARKETING Dept

Supervisor

Accounts Officer

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Labour

Marketing Executives

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General information about industry:


The industry is equipped with sophisticated laboratory to carry on tests to ascertain out going quality level of the pipes. Sudhakar pipes have got ISI trademark. Which talks for the quality of the pipes? This company is used a lot of technical and statistical quality control technique are used to sustains quality level of product. The company is located in industrial estate in suryapet; it is facilitated with good communication networks, which includes telex and fax machines. Companys main strength is good transpiration facilities. Huge investment is a unique cash flow justifies itself by providing good reputation if the company through improved customer services. Managers of the company are dynamic and highly educated. 1. Telangana region 2. Rayalaseema region 3. Karnataka & Andhra Pradesh 4. Karnataka & Andhra Pradesh & Tamilnadu 5. South India States, Maharastra and some part of west Bengal The Sudhakar plastic administrative office was located in Hyderabad. This office will have one marketing manager and other sales persons. All the purchase activities will be done here itself. The pipes will be sending this office and from here the pipes will be dispatched to various dealers. The sudhakar group of products having its own petrol bunk and also having 40 Lorries and various trucks, These Lorries are loading pipes into various states. The Sudhakar pipes are having efficient transport facility.

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The company is running in very good position. The company main objectives are: 1. To manufacture, process, buy, sell, import and export, and deal with all types of PVC products rigid pipes, fittings. 2. To carry on the business as manufacturers, importers, exporters, buyers dealers, and agents in all kinds of machinery, components and raw materials required manufacturing any of the foregoing.
3. To act as consultants, engineers, contractors for setting up like and other

facilities in India and elsewhere and to do tan conduct every business which in incidental to or ancillary the fore said business. 4. The manufacturing capacity of this company is 5808 tons per annum including PVC pipes and fittings. Personnel management functions Managerial functions Planning Organizing Directing Controlling Maintaining Operative functions Procurement of personnel Development of personnel Compensation of personnel Employees benefit scheme Good industrial relations personnel Planning and evaluation personnel Research and audit.

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SUDHAKAR PVC PRODUCTS.

M/s. Sudhakar PVC Products is a partnership firm and is a Small Scale Industry established in the early 70's to manufacture Rigid PVC conduits. The present capacity of the unit is to manufacture 2000 Metric tons of Rigid PVC pipes of various diameters for various applications. In particular the firm manufactures 16mm to 63mm Electrical Conduits of ISI marked and other non-ISI commercial Electrical Conduits. Apart from them it manufactures Rigid PVC pipes for potable water supply from 20mm to 110mm and Blue color threaded pipes for plumbing application. The brand "Sudhakar PVC Products" and its electrical conduit application is very popular in Andhra Pradesh and the brand is treated as a synonym for PVC Electrical Conduits. The brand has market share of more than 65% in the particular Electrical Conduit segment. The firm has full-equipped laboratory for testing the Electrical Conduits confirming to IS: 9537 Part 3. The firm has ISI accreditation.

RAATHI PIPES & PROFILES LTD. M/s. Raathi Pipes & Profiles Limited is a deemed Limited Company and is a Small Scale Industry established in 1989-90 to manufacture Rigid PVC pipes especially for potable water supplies. The present capacity of the unit is to manufacture 3000 Metric tons of the Rigid PVC pipes of various dia meters for various applications. In particular the firm manufactures 40mm to 180mm Rigid PVC pipes for Irrigation and water supply purpose. The firm has full equipped laboratory for testing the Rigid PVC pipes confirming to IS: 4985:2000. The firm has ISI accreditation for its Rigid PVC pipes.
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SUDHAKAR PLASTIC LTD. A Deemed Limited company incorporated in the year 1992-93. The present capacity of the unit is to manufacture 8000 Metric tons of the Rigid PVC pipes of various diameters for various applications, 1500 Metric Tons of HDPE pipes and permanently lubricated HDPE ducts and Drip Irrigation Systems. The company manufactures 40mm to 250mm Rigid PVC pipes for Irrigation and water supply purpose. Apart from them it manufactures Rigid PVC Blue threaded pipes for plumbing application. It manufactures HDPE pipes for irrigation purpose and permanently HDPE ducts for telecommunication purpose. The firm has full equipped laboratory for testing the Rigid PVC pipes confirming to IS: 4985:2000 and HDPE pipes confirming to IS: 4984. LLDPE Pipes confirming to IS: 12786:92, EMITTERS (DRIPPERS) confirming to IS: 13487. And fabricated PVC FITTINGS confirming to IS: 10124 with Bureau of Indian Standards.

SUDHAKAR POLYMERS LTD. A closely held public limited company incorporated in the year 1995-96 to manufacture 10000 Metric tons of PVC pipes and 2000 Metric tons of PVC fittings for various applications such as pressure pipes and fittings, non pressure pipes and fittings for Soil and Waste discharges. A major Govt. supplier to Andhra Pradesh Panchayat Raj department and other bodies. The present capacity of the unit is to manufacture 10000 Metric tons of the Rigid PVC pipes of various dia meters for various applications, 2000 Metric Tons of Rigid PVC fittings for agriculture and sanitary applications. The company manufactures 40mm to 400mm Rigid PVC pipes for Irrigation, water supply, Casing, and Sanitary purpose. Apart from them it manufactures Rigid PVC Blue threaded pipes for Casing application. The company
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is located near the Industrial Estate of Suryapet town and the total area of the firm is nearly Ac. 6.20. The firm has full equipped laboratory for testing the Rigid PVC pipes confirming to IS: 4985:2000, IS: 12818 and IS: 13592 and fabricated PVC fittings confirming to IS: 10124.The firm has ISI accreditation for above products with Bureau of Indian Standards. The company posses an ISO: 9001 certification. SUDHAKAR IRRIGATION SYSTEMS PVT LTD. A closely held private limited company incorporated in the year 1997 to manufacture Rigid PVC pipes and fittings for various applications. works. It is first of its kind of PVC pipe manufacturing facility in Southern India with vide product range and production capacity. The unit installation capacity is 12000 Metric tons of PVC pipes and 500 Metric tons of PVC fittings for various applications such as pressure pipes and fittings, non pressure pipes and fittings for Soil and Waste discharges and Electrical conduits. The company manufactures 40mm to 400mm Rigid PVC pipes for Irrigation, water supply, Casing, and Sanitary purpose. Apart from them it manufactures Rigid PVC Blue threaded pipes for Casing applications. The company is located near the Industrial Estate of Suryapet town and the total area of the firm is Ac. 10.34 guntas. The firm has full equipped laboratory for testing the Rigid PVC pipes to test the PVC pipes according to IS:4985:2000, IS:12818,IS:13592,IS:9537(PART 3) and IS:10124.

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Introduction:
Every business needs funds for two purposes for its establishment and to carry out its day to day operations. Long term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land and building, furniture etc., Investment in these assets represent that part of firms capital which is blocked on a permanent or fixed basis and is called fixed capital. Funds are also needed for short term purpose for the purpose 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 the part of the firms capital which required for financing short-term of current assets such as cash, marketable securities, debtors and inventories. In the words of ENTERPRISE Concept Of Working Capital: There are two concepts of working capital 1. 2. Gross working capital Net working capital
SHUBI

N WORKNG CAPITAL IS THE AMOUNT OF

FUNDS NECESSARY TO COVER THE COST OF OPERATING THE

In the broad sense the term working capital refers to gross working capital and represents the amount of funds in current assets. Thus the gross working capital is the capital invested in total current assets of the enterprise? Current assets are those Assets, which in the ordinary course of the business can be converted into cash with in a short period of normally on accounting year.

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Examples of the current assets are: Cash in hand Cash at bank Bills receivable Sundry debtors Inventories of stock Pre-paid expenses Out standing incomes In narrow sense the term working capital refers to Net working capital is the excess of current asset over the current liabilities i.e.; the net working capital is positive. Net working capital = current assets current liabilities

Current liabilities are those liabilities, which are intended to do in the ordinary course of business in short period normally of one accounting year. Examples of current liabilities are: Bills payable Sundry creditors Short term loans Out standing expenses Bank over draft Income received in advance etc.,

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Classification Of Working Capital: Working capital may be classified in two ways A. On the basis of concept B. On the basis of time On the basis of concept working capital is classified as Gross working capital and Net working capital On the basis of time working capital may be classified as 1. Permanent or fixed working capital 2. Temporary or variable working capital Permanent of fixed working capital: The minimum amount, which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. This is always a minimum level of current assets. Which is continuously required by the enterprise to carry out normal business operation? Temporary or variable working capital: It is the amount of working capital, which is required to meet the seasonal demand and special exigencies.

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Importance Of Adequate Working Capital: 1. 2. 3. 4. 5. Helps in maintaining solving of the business by providing uninterrupted flow of production. Enable a business concern to make prompt payment and hence help in creating and maintaining goodwill. High solvency and good credit standing can arrange loans from banks and others. Sufficient working capital ensures regular supply of raw material. Regular payment of salaries, wages, and other day-to-day commitments.

The Need Or Objectives Of Working Capital: The need for working capital arises due to the time gap between production and realization of cash as sales follows. 1. 2. 3. 4. 5. 6. For the purpose of the raw material components and spares. To pay wages and salaries. To incurred day-to-day expenses etc. To meet selling cost as packing, advertising etc., To provide credit facilities to the creditors. To maintain the inventories of raw material, work-in-progress, stores and finished stock.

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Factors Determining The Working Capital Requirements:

1.

Nature or characteristic of business: The working capital requirements at a firm basically depend upon the nature of its business. Size of business / Scale of operation: The working capital requirements of a concern or directly influenced by the size of its business which may be the measured in terms of scale of operations.

2.

3.

Production policy: The requirements of working capital in such cases depend upon the production policy. Manufacturing process / Length of production cycle: In manufacturing business, the requirements of working capital increase in direct productions to length of manufacturing process.

4.

5.

Seasonal variations: In certain Industries raw materials are not available through out a year. They have to buy raw materials in bulk during the season to ensure an uninterrupted flow and process them during the entire year.

6.

Working capital cycle: In manufacturing concern the working capital cycle starts with the purpose of raw material and end with realization of cash form the sale of finished goods.

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Working Capital operating cycle


Debtors (Receivable)

Cash

Finished

OPERATING CYCLE

Raw material

Work in- progress

7.

Rate of stock turnover: A firm having a high rate of stock turnover will need lower amount of working capital as compared to a firm having a low rate of turnover.

8.

Credit policy: Credit policy of a concern in its dealings with debtors and creditors influence considerable the requirements of working capital. Business cycle: Business cycle refers to alternate expansion and contractions in general business activity.

9.

Management Of Working Capital


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Management of working capital is concerned with the problems that arise in attempting to mange the current asset and current liabilities and inter-relationship that exist between them. The basic goals of working capital management is to mange the current assets and current liabilities of a firm in such away that a satisfactory level of working capital is manages i.e., its is neither adequate nor excessive. Factors Influencing Consideration While Estimating Working Capital: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Total cost incurred on material wages and overheads The length of time which raw material are to remain in stores before they are issued for production. The length of the production cycle or work in progress. i.e., the time taken. For conversion of raw material into finished goods. The length of sale cycle during which finished goods are kept waiting for sales. The average period of credit allowed to customers. The amount of cash required paying day-to-day expenses of business. The average amount of cash required making advance payment if any. The average credit period expected to be allowed by suppliers. Time lag in the payment of wages and other expenses.

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SOURCES OF WORKING CAPITAL

Permanent or fixed working capital Requirements

Temporary or variable working capital requirements

1. Shares 2. Debentures 3. Public deposits 4. Plugging back of profits 5. Loans from financial institution

1. Commercial bank 2. Indigenous 3. Trade creditors 4. Instilment credit 5. Advances 6. Accounts receivable Credit / Factoring 7.Accrued expenses 8. Commercial paper

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Financial Statement Analysis: It is the process of identifying the financial strengths and weaknesses of a firm from the available accounting data and financial statements. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account. The first task of financial analysis is to determine the information relevant to the decision under consideration from the total information contained in the financial statement. The second step is to arrange information in a way to highlights significant relationship. The final step is interpretation and drawing of inferences and conclusion. Thus financial analysis is the process of selection relating and evaluation of the accounting data information. Ratio Analysis: this analysis establish the numerical or quantitative relationship between two items/variables financial statement so that the strengths and weakness of affirm as well as its historical performance and current financial position can be determine. Classification of Ratios Liquidity Ratio A) Current ratio Liquidity ratio Absolute ratio Internal measure B) Debtor turnover ratio Credit turnover ratio Inventory turnover ratio Solvency Ratio Financial operating composite a) Debt equity ratio b) Debt to total capital ratio c) Interest coverage d) Cash flows/debt e) Capital gaining

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Activity Ratio A) Inventory turnover ratio b) Debtor turnover ratio c) Fixed assets turnover ratio D) Total assets turnover ratio e) Working capital ratio f) Payable turnover ratio g) Capital employed turnover ratio

Profitability Ratio A) In Relation to Sales 1.Gross profit ratio 2.Operating ratio 3.Operating profit ratio 4.Net profit ratio 5.Expenses ratio B) In relation to investment 1. Return on interest 2. Return on capital 3. Return on equity cap 4. Return on total resources 5. Earning per share 6. Price earning ratio

1. Current Ratio: Current ratio is the ratio of current assets to current liabilities. Current assets are assets that are expected to be realized in cash or sold or consumed during the normal operating cycle of the business or with in one year which ever is long run. They include cash in hand and at bank, bills receivable, net sundry debtors, stock of raw materials, finished goods and work in progress, prepaid expenses. Current liabilities are liabilities that are to be repaid with in a period of one year. They include bills payable, sundry creditors, bank over draft, outstanding expenses, and income received in advanced, short term loans and advance repayable with in a year. A current ratio of 2:1 is usually considered as ideal. The higher the current ratio the larger is the amount of rupee available per rupee of current liability. The

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more is the firms ability to meet current obligations and the greater is the safety of funds of short term credit.
2. Quick Ratio

Quick ratio is a ratio of quick assets to quick liabilities. Quick assets are assets that can be converted into cash with out much loss. Quick liabilities are liabilities which must be paid within one year. All Current assets accepts stock and prepaid expenses are also quick assets. All current liabilities except bank overdraft are quick liabilities. Quick assets = current assets (stock + prepaid expenses) Quick liabilities = current liabilities bank overdraft. A quick ratio of 1 usually considered as ideal A quick ratio of less than 1 indicates the inadequate liquidity of the business. A high quick ratio is not advisable.

3. Working Capital Turnover Ratio: Is defined as: Cost of good sold is not known net sales can be taken. Working capital = current assets current liabilities. A high working capital turn over ratio indicates efficient utilization of firm funds.

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4. Debtors turn over ratio: Debtors turn over ratio express the relationship between debtors and sales. A net credit sale implies credit sales after adjusting for sales returns.
In case credit sales is not available sales can be taken as net sales (a high debt

turn over ratio is good for the firms for survival & collecting the debts & payments of credit. A debt turn over ratio of 10-12 is considered as good. Debtors include bills receivable. Debtors should be taken at gross value without adjusting for provision for bad debts) In case average debtors cannot be found closing balance of debt should be taken. 5. Inventory Turn over Ratio: Stock turn over ratio indicates the number of times the stock has turned over into sales in a year. Cost of goods sold = sales= grows profit Avg. stock = (opening stock and closing stock) /2 A stock turn over of 8 is considered ideal a high stock turn over ratio indicates that the stock are fast moving and get converted into sales quickly.

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Statement Of Working Capital Requirement For Manufacturing Concern Particulars Current assets: 1. Inventories a. Stock of raw materials (per month) b. Work in- progress c. Stock of finished goods (per month) 2. Sundry debtors (per month)
3. Bills receivable 4. Cash in hand 5. Cash at bank out standing expenses 6. Expenditures paid in advance

Amount

+XXXXX

XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX

GROSS WORKING CAPITAL Current liabilities: 1. Sundry creditors


2. Bills payable 3. Bank overdraft 4. Debt outstanding expenses 5. Income received in advance 6. Current provision for taxation etc

NET WORKING CAPITAL (CA- CL)

I)

Net working capital analysis

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Net working capital = current assets current liabilities Table showing net working capital for the period of five years PARTICULARS A)CRRENT ASSETS Inventories Sundry debtors Cash & bank Loans & Advance TOTAL 31.03.2006 2,61,78,24 5 4,12,77,19 9 4,85,62 8 1,66,99,92 B)CRRENTLIABILITIES 6
PROVISIONS

31.03.2007 3,08,62,80 3 3,96,94,68 6 11,46,86 2 1,79,55,94 3 8,96,60,29 4

31.03.2008 2,13,66,63 5 4,59,44,89 1 18,77,97 3 1,27,50,84 8 8,19,40,34 7

31.03.2009 3,85,00,09 9 5,46,24,06 9 12,38,71 2 1,41,72,44 6

31.03.2010 2,85,63,014 10,00,09,774 11,55,735 2,06,94,085 15,04,22,607

3,38,89,802 8,46,40,99 10,85,35,32 6 11,65,32,806 2,35,89,61 4 2,35,89,61 4 3,25,74,80 3 3,25,74,80 3 5,70,85,49 1 3,09,56,31 7 3,09,56,31 7 5,09,84,03 0 3,17,05,92 7 3,17,05,92 7 7,68,29,399 3,38,89,802 8

TOTAL
NETWORKING CAPITAL (A B)

6,10,51,38 4 INTERPRETATION:

In the above analysis of net working capital for the year 2006 to 20010.by comparison of all the years, it indicates that in the year 2008 the net working capital

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of the company is decreased. In this year the current assets of the company is not Particulars A) Current Assets Inventories Sundry debtors Cash & Bank balance Loans & Advance Total B) Current Liabilities Provision Total NETWORKINGCAPITAL 2006 2,61,78,245 4,12,77,199 4,85,628 1,66,99,926 8,46,40,998 2,35,89,614 2,35,89,614 6,10,51,384 2007 3,08,62,803 3,96,94,686 11,46,862 1,79,55,943 8,96,60,294 3,25,74,809 3,25,74,809 5,70,85,485 ---------39,65,900 89,85,195 Increase 46,84,558 --------6,61,234 12,56,017 Decrease ---------15,82,513 -----------------

(A-B) -39,65,900 Total 6,10,51,384 6,10,51,384 1,05,67,708 1,05,67,708 satisfactory. In other years net working capital is satisfactory its position is good.

A) Statement Of Changes In Workin Capital (2006 to 2007) INTERPRETATION: In the above analysis of statement of changes in working capital that indicate that flow of net working capital made with the comparison 2006&2007. The net working capital of the company decreased i.e. 39, 65,900 because of a few changes in current assets that is Loans & Advance has decreased when compared to previous year decrease in sundry debtors. Show that the company might have sold its inventory in cash. Provision of the company were also increased because of the flow of net working capital of the company is decreased.
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Particulars A) Current Assets Inventories Sundry debtors Cash & Bank balance Loans & Advance Total B) Current Liabilities Provision Total NETWORKING CAPITAL (A-B) Total

2007

2008 2,13,66,635 4,59,44,891 18,77,973 1,27,50,848 8,19,40,347 3,09,56,317 3,09,56,317 5,09,84,030 -61,01,461 5,70,85,491

Increase --------62,50,205 7,31,111 ---------

Decrease 94,96,168 ------------------52,05,095

3,08,62,803 3,06,94,686 11,46,862 1,79,55,943 8,96,60,294 3,25,74,803 3,25,74,803 5,70,85,491 5,70,85,491

16,18,486 61,01,461

----------

1,47,01,263 1,47,01,263

B) Statement Of Changes In Workin Capital (2007 2008) INTERPRETATION: In the above analysis of statement of changes in working capital that indicate that flow of net working capital made with the comparison 2007&2008. The net working capital of the company decreased i.e. 61, 01,461. The current assets of the company were not satisfactory because of decrease in inventory, loans &advance so this not a good singe from company point of view. This year the company has not consecrated on production, thats why its inventory is decreased or it might have sold their products heavily.

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Provision of the company is made for future and thats the provision were increased Particulars A) Current Assets Inventories Sundry debtors Cash & Bank balance Loans & Advance Total B) Current Liabilities Provision Total NETWORKING CAPITAL (A-B) Total from 2005 to 2006. 2008 2,13,66,635 4,59,44,891 18,77,973 1,27,50,848 2009 3,85,00,099 5,46,24,069 12,38,712 1,41,72,446 Increase 1,71,33,464 86,79,178 ---------14,21,598 Decrease ---------------6,39,261 ---------

8,19,40,347 10,85,35,326 3,09,56,317 3,09,56,317 5,70,85,491 2,58,45,369 7,68,29,399 3,17,05,927 3,17,05,927 7,68,59,399 --------7,49,610 2,58,45,369

7,68,29,399 2,72,34,240

2,72,34,240

C) Statement Of Changes In Workin Capital (2008 2009) INTERPRETATION: In the above analysis of statement of changes in working capital that indicate that flow of net working capital made with the comparison 2008&2009. The net working capital of the company increased i.e. 2, 58, 45,369. The current assets of the company especially cash balance is decreased from 18,77,973 to 12,38,712.thus the company might have used this cash balance for payment of dividend or for paying to creditors or it might have purchased raw material on cash, the other current assets were increased with moderate changes. The current liabilities of the company were only provisions i.e. the company has set up a future needs.

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D) Statement Of Changes In Workin Capital (2009 2010) Particulars A) Current Assets Inventories Sundry debtors Cash & Bank balance Loans & Advance 3,85,00,09 9 5,46,24,06 9 12,38,71 2 1,41,72,44 Total B)Current Liabilities Provision Total NETWORKINGCAPITAL (A-B) 3,17,05,92 7 3,17,05,92 7 7,68,59,39 9 3,97,03,40 Total 7 11,65,32,80 6
:

2009

2010

Increase

Decrease

2,85,63,01 4 10,00,09,77 4 11,55,73 5 2,06,94,08 5 15,04,22,60 7 3,38,89,80 2 3,38,89,80 2 11,65,32,80 5 ---------------4,53,85,70 5 ---------65,21,63 9

99,37,085 ---------82,977

---------

6 10,85,35,32 6

21,83,875 3,97,03,407

11,65,32,80 6

5,19,07,74 4

5,19,07,744

INTERPRETATION:
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In the above analysis of statement of changes in working capital that indicate that flow of net working capital made with the comparison 2009&2010. The net working capital of the company increased i.e. 3, 97, 03,407.Because of increase in loans & advance, sundry debtors. It may be the company policy to sell their products on credit. Thus the current assets position of the company is satisfactory. The current liabilities of the company were increased from 3, 17, 05,927 to 3, 38, 89,802. Because the company might have purchased raw material from suppliers with a short increased in current liabilities and the company can easily dispose its current liabilities Evaluating The Performance By Using Techniques Of Ratio Analysis For Last Five Years(2005-06 to 2009-10) Such as: 1. Current asset ratio 2. Absolute quick ratio / acid test ratio 3. Working capital turn over ratio 4. Debtors turn over ratio 5. Stock turn over ratio / inventory turn over ratio 6. Inventory analysis percentage changes in sales 7. Inventory analysis sudhakar 8. analysis of efficiency current assets management
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Table Shows The Current Ratio For Five Years (2006-2010) YEAR 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
CURRENT ASSETS

CURRENT
LIABILITIES

CURRENT RATIO 3.59 2.75 2.65 3.42 4.44

8,46,40,998 8,96,60,294 8,19,40,347 10,85,35,326 15,04,22,607

2,35,89,614 3,25,74,803 3,09,56,317 3,17,05,927 3,38,89,802

Source (financial statement of Sudhakar polymers plastic Ltd.) Current Assets Current Ratio = Current Liabilities In the above table shows liquidity position of the organization (current ratio) the standard ratio is 2:1, so that it satisfy all the years I.e. ratio was in the year 2005-06 and increase to 4.44 in the year 2009-10. Graph:

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Current Ratio
200000000 150000000 100000000 50000000 0

current assets Current liabilities 2006 2007 2008 2009 2010 Years Current ratio

Table Shows The Quick Ratio For Five Years (2006-2010) YEAR 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
QUICKS ASSETS

CURRENT
LIABILITIES

QUICK RATIO

5,84,62,753 5,87,97,491 6,05,73,712 7,00,35,227 12,18,59,593

2,35,89,614 3,25,74,803 3,09,56,317 3,17,05,927 3,38,89,802

2.48 1.80 1.96 2.21 3.59

Source (financial statement of Sudhakar polymers plastic Ltd.) Quick Assets Quick ratio = Quick Liabilities In the above table shows the quick ratio of the organization .standard ratio is 1:1.so that it satisfactory. it was 2.48 in the year 2005-06 and it slightly decrease next two years, again it increase to 3.59 in the year 2009-10. Graph:

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Quick Ratio
150000000 100000000 50000000 0 2006 2007 2008 Years 2009 2010 Quick assets Current Liabilities Quick Ratio

Table Shows The Working Capital Turnover Ratio For Five Years (2006 2010) Years Sales Networking Capital 6,10,51,385 15,70,85,491 5,09,84,030 7,68,29,399 1,16,53,23,806 Turnover Ratio 3.68 1.33 4.71 3.63 3.02

2005-2006 22,47,34,627 2006-2007 20,96,51,170 2007-2008 23,99,63,500 2008-2009 27,89,88,959 2009-2010 35,24,69,907

Source (financial statement of Sudhakar polymers plastic Ltd.) Cost of good sold or net sales Working capital turnover ratio = Net working capital

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In the above table shows the efficiency of working capital utilization to generate sales revenue of the organization. I.e. ratio is 3.68 times in the year 2005-06 and it decrease 1.33 in the year 2007, again it increase to 3.02 in the year 2009-10. Graph: Working Capital turnover ratio
1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0

Sales Net Working Capital Ratio

2006

2007

2008 Years

2009

2010

Table Shows The Debtors Turnover Ratio For Five Years (2006-2010) YEAR 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 SALES 25,75,78,47 5 24,08,30,16 7 33,44,23,38 4 33,44,23,38 4 41,64,48,69 8 AVG. DEBTORS 4,12,77,199 4,04,85,943 6,57,92,234 5,02,84,480 7,73,26,922 TURNOVER RATIO 6.24 5.95 5.08 6.65 5.39

Source (financial statement of Sudhakar polymers plastic Ltd.) Net credit sales Debtors turn over ratio =
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Average debtors In the above table shows debtors turnover ratio which indicates average credit granted to the customer to generate the sales revenue. It was 6.24 in the year 200506 and it changes to 5.39 in the year 2009-10 with small changes in during the period of study. Graph:
6

Debtors turnover ratio


500000000 400000000 300000000 200000000 100000000 0 SALES AVG. DEBTORS 2006 2007 2008 2009 2010 Years TURNOVER RATIO

Table Shows The Inventory Turnover Ratio For Five Years (2006-2010) YEAR 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 SALES 22,47,34,627 20,96,51,170 23,99,63,500 27,89,88,959 35,24,69,907 AVG. INVENTORY 2,61,78,245 2,85,20,524 2,61,14,719 2,99,33,367 3,35,31,557 RATIO 8.58 7.35 9.19 9.32 10.51

Source (financial statement of Sudhakar polymers plastic Ltd.)


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Cost of goods sold (or) net sales Stock turn over ratio= Avg. Stock In the above table shows the inventory turnover ratio which indicates efficient utilization of inventory to generate sales revenue of the organization. It was 8.58 in the year 2005-06 and it increase to 10.51 in the year 2009-10. Graph:
Inventory turn over ratio
400,000,000 300,000,000 200,000,000 100,000,000 0

SALES AVG. INVENTORY 2006 2007 2008 2009 2010 Years RATIO

Table shows the percentage change in sales For five years (2006-2010) Years 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Sales 22,47,34,627 20,96,51,170 23,99,63,500 27,89,88,959 35,24,69,907 Percentage change (inc/dec) 3.68 1.33 4.71 3.63 3.02

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PERCENTAGE CHANGE SALES = {[(present year sales) _ (previous year sales)] / [previous year sales]} * 100 In the above table shows the sales percentage of present year to previous year. so that changes in sales it was 3.68 in the year 2005-06there fore huge decrease in the year 2009-10 and remaining years was increase like wise 4.71, 3.63, 3.02. Graph:

Percentage change in sales


400,000,000 300,000,000 200,000,000 100,000,000 0 -100,000,000 SALES

2006 2007 2008 2009 2010 Years

Percentage Change (Inc/Dec)

7. Inventory Analysis In Sudhakar Plastic Ltd Under the inventories the following (it also known as stock) components are included.
Raw material

Work in process Stores and spares Finished goods Working capital cycle the inventories tare performing important role.

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The formula for percentage of inventories to total current assets is %change in inventory to current assets = (inventories/total current assets) * 100 years 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Inventories 2,61,78,245 3,08,62,803 2,13,66,638 3,85,00,099 2,85,63,014 Total C/A 8,46,40,998 8,96,60,294 8,19,40,347 10,85,35,326 15,04,22,607 Percentage change in inventory to C/A 30.92 34.42 26.07 35.47 18.98

In the above table shows the inventory analysis with the proportion of inventory in total current assets. The percentage changes in the year 2005-06 and it decrease to 18.98 in the year 2009-10.

Graph:

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Inventory analysis of sudhakar plastic ltd


200000000 150000000 100000000 50000000 0 2006 2007 2008 2009 2010 Years % Change in inventory to C/A Total C/A Inventories

8. Analysis Of Efficiency Of Current Assets Management Particulars 2006 2007 2008 2009 2010

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Current assets Sales Inventory Sundry debtors Percentage of current assets/sales Sales/inventor y Sales/sundry debtors

8,46,40,998 22,47,34,62 7 2,61,78,245 4,12,77,199

8,96,60,294 20,96,51,17 0 3,08,62,803 3,96,94,686

8,19,40,347 23,99,63,50 0 2,13,66,638 4,59,44,891

10,85,35,32 6 27,89,88,95 9 3,85,00,099 5,46,24,069

15,04,22,607 35,24,69,907 2,85,63,014 10,00,09,774

0.43 12.34 3.52

0.38 8.58 5.44

0.43 6.79 5.28

0.34 11.23 5.22 0.39 7.25 5.11

1. In the above table shows current assets to sales which indicate efficient

utilization of current assets to generate sales revenue of the organization. The ratio was 0.38 in the year 2006 and increase to 0.43 in the year 2010.
2. The sales inventory ratio indicates turnover of inventory to generate sales

in the organization it was 8.58 times in the year2006 and increase 12.34.
3. The sales debtor turnover ratio indicates the efficient receivable

management on credit sales it was 5.44 times to 3.52 times in the year 2010.

Graph:
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400,000,000 300,000,000 200,000,000 100,000,000 0 2006 2007 2008 2009 2010 Current assets Sales Inventory Sundry debtors

Findings:

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The following findings are made from the analysis and interpretation working capital management, sudhakar polymer plastic Ltd.
As the company information for the given sources of data i.e. Secondary data.

The period covered under the study was 5years i.e. 2006-2010. The main components of working capital are Cash Bank, sundry debtors, Inventories, Loans.
The working capital turnover ratio of the company has been increasing during

the period of study of the 2007 indicating that improvement in the inventory management.
The liquidity ratio shows increasing trend during the period of study it was

3.59 to 4.44 in the year 2009-2010.which indicates highly satisfaction in current assets management. The quick ratio changes 2.48 to 3.59 which small fluctuation during the period of study and its shows satisfactory level.
The utilization of net working capital shows satisfactory expect in the year

2006-2007 it was 1.33.


The debtors turnover ratio shows 6.24% in the year 2005-2006 its small

fluctuation it was 5.39 in the year 2009-2010.


Inventory turn over shows increasing trend it was 8.58 to 10.51 in expect

2006-2007 it was 7.35.

Suggestion:
The following suggestion is offered to the company based on analysis and findings on working capital management.

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The firm need to improve its working capital because ratio were not that much satisfactory. While preparing cash budget the firm should prepare with care accuracy and has match cash inflows with out flows. The companys debtors increasing trend the company as to consternate speed up of collection receivables. The inventory maintains is satisfactory to meet the features changes sales. The investment of the company in cash and bank maintain optimally the company present position is satisfactory. The company sales has to increasing then the present position and company as to consternate on promotional activates. The companies current assets management high investments in loans & advances, the company as to reduce the investments in loans &advance and try to consternate diverficed of business in uncovered region. According to my knowledge of the working capital management to analyze to all the accounting principles and rules to follow. It can be shared the analytical way to use all tools and techniques to evaluating the working capital analysis is to sudhakar plastic Ltd. Company financial reports. Its make a better achievement of the firm. The company was in very well position to achieve all the goals and objectives and minimize the weakness of the firm and the financial statements was to analyze the suffers from serious inherent limitation of the accounting policies of a firm, accounting concepts and conventions and personal judgment etc.

BIBLIOGRAPHY
TITLE OF THE BOOK AUTHOR

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FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT FINANCIAL ACCOUNTING & ANALYSIS

: : :

KHAN & JAIN PRASANNA CHANDRA S.P.JAIN&K.L. NARANG

FINANCIAL MANAGEMENT

I.M.PANDAY

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