WORKING CAPITAL MANAGEMENT

In

Liberty Shoes Pvt Ltd.

Presented By: Pankaj Kumar Roll No:M-1116

Liberty Group began its operations 50 years ago in 1954, the city of Karnal, Haryana. More than 5,000 employees work there. Liberty Shoes produces more than 50,000 pairs in a day, leading footwear manufacturer today. The group has an annual turnover of Rs.600 crores approximately. Liberty mainly export market in Germany, U. K, France, Spain, Hungary.

The goal of working capital management is to manage the firms current assets and current liabilities in such way that the satisfactory level of working capital is mentioned.
Concepts of working capital
Gross working capital Net working capital

Types of working capital

Permanent working capital
Temporary working capital

Long term sources Short term sources

A combination of them.

To study the working capital management of company.

To study the optimum level of current assets and current liabilities of the Company. To study the liquidity position through various working capital related Ratio
To evaluate the performance of the Liberty Shoes Ltd with the help of debtors, cash and inventory position.

properly defined research methodology is a requirement for carrying out the successful research which in turn demands clear objectives. Research problem: to analyze the financial data of Liberty Shoes Ltd. Research Design: Research design in this project is Descriptive in nature, as it seeks to discover facts, ideas, insight and to bring out new relationship among the data items already existing. METHODS OF DATA COLLECTION: Secondary Data-Secondary data are those data which are collected and which has been passed through statistical research.

Sample Design: non probability convenient sampling has been used because sample is selected by own view Sample Universe: Sample Universe of the study is Liberty Shoes Ltd. Sample Population: Sample Population is the financial statement of Liberty Shoes Ltd. Sample Size: sample is taken for the purpose of my study is the financial statement of last 3 years of the company.
TECHNIQUES USED : Ratio Analysis is used for analysis the Performance of the company.

DATA ANALYSIS AND INTERPRETATIONS

CURRENT RATIO
YEAR
Current Assets Current Liabilities

2009-10 180.59 54.75 3.29

2010-11 182.60 57.94 3.15

2011-12 229.31 96.78 2.36

Current Ratio

3.5 3 2.5

3.29

3.15 2.36

2
1.5 1 0.5 0 2009-10 2010-11 2011-12

QUICK RATIO
YEAR Quick Assets Current Liabilities Quick Ratio 2009-10 104.4 54.75 1.90 2010-11 106.43 57.94 1.83

2011-12
126.51 96.78 1.30

1.9

1.83 1.3

1 0 2009-10 2010-11

2011-12

CASH RATIO
YEAR Cash & bank Current Liabilities Cash ratio 2009-10 2010-11 2011-12

5.15 53.37
.096

4.13 54.75
.075

10.05 96.78
.103

0.12 0.1 0.08 0.06 0.04 0.02 0 2009-10 0.096 0.075 0.103

2010-11
2011-12

Cash ratio

INVENTORY TURNOVER RATIO

YEAR Cost of Goods Sold Average Inventory Inventory Turnover Ratio

2009-10 160.19 71.73 2.23 times

2010-11 138.02 76.18 1.81 times

2011-12 303.20 102 2.97 times

2.23 1.81

2.91

0 2009-10 2010-11 2011-12 Inventory Turnover Ratio

DEBTORS TURNOVER RATIO

YEAR Credit Sales Average Debtors Debtors Turnover Ratio 2009-10 149.27 71.42 2.09 times 2010-11 133.45 72.25 1.84 times

2011-12
138.02* 66.79 2.06 times

2.1 2 1.9

2.09 2.06

1.84 1.8 1.7 2009-10 2010-11 2011-12 Debtors Turnover Ratio

WORKING CAPITAL TURNOVER RATIO

Year Net Sales Net Working Capital W C turnover ratio

2009-10 240.44 125.46 1.91

2010-11 260.66 124.50 2.09

2011-12 296.94 144.75 2.05

3 2.5 2 1.5 1.91 2.09

2.05

1
0.5 2009-10

2010-11
2011-12 W C turnover ratio

Short term liquidity of the company is not good because current & quick ratio is decrease in 2012. The cash ratio has increased .075 to .103 in year 2012 but it is not in sound condition for company. Inventory turnover shows that the company start efficient used in generating the inventory into sales in 2012. Debtor management system is efficient because its start increase in 2012, timely payment received from debtors. Working capital management system start decrease in 2012 but overall it is not bad. But overall company is in a stronger position because profits have increased with 10,08,27,126 in 2012 which is 9,20,30,760 in 2011.

Short term liquidity of the company is not good because current & quick ratio is decrease in 2012. It should improve The company should improve cash ratio which is increased .075 to .103 in year 2012 but it is not in sound condition for the company. Working capital management system is not quite efficient in 2012 because its ratio is also decrease in 2012. So, it should also improve in next years.