bbm working capital 2008-09

A Study of

A PROJECT REPORT

ON

A STUDY ON WORKING CAPITAL MANAGEMENT(MANMUL)Submitted in partial fulfillment of the requirement for the

Award of degree in bachelor of business management

Of Bangalore university

Submitted by

VARUNASHREE.G.(REG. NO. 07AQC08036)

Under the guidance of

Mrs. SHOBHA.C.

M.Com., M.B.A., M.Phil., (Ph.D.)

Dept. of commerce and Management.

2009-2010

GOVERNMENT ARTS, COMMERCE & MANAGEMENTCOLLEGE

AMBEDKAR VEEDHI, NEAR KR CIRCLE, BENGALURU -560001

GOVERNMENT ARTS, COMMERCE AND MANAGEMENT COLLEGE

AMBEDKAR VEEDHI, NEAR KR CIRCLE, BENGALURU -560001

NAAC ACCREDITATION: B

Date:

Ref:CERTIFICATE

This is to certify that VARUNASHREE.G. of final year Bachelor of Business Management studying in GOVERNMENT ARTS, COMMERCE AND MANAGEMENT COLLEGE has successfully completed his project titled A STUDY ON WORKING CAPITAL MANAGEMENT Has prescribed by the Bangalore University under our supervision and Guidance.

This is to state that this project report in submitted in partial fulfillment of the requirement for the degree of Bachelor of Business Management, Bangalore University and not submitted for the award of any degree or any other similar title or prize.

The matter in this project report has not been submitted earlier to the best of our knowledge.

Mr.RAJASHEKARAPPA.K. Dr. DEVANANDA RAM GAONKAR M.Com., M.Phil. M.sc., Ph.D.

Head of the of Principal

Commerce department

Mrs. SHOBA.C.

M.Com., M.B.A., M.Phil., (Ph.D)

Dept. of commerce and Management.

GUIDE CERTIFICATE This is to declare that this dissertation titled A STUDY ON WORKING CAPITAL MANAGEMENT. Is my original work under the guidance of Mrs. SHOBA.C, lecturer of Commerce and Management.

The project report partial fulfillment of Requirement for the Bachelor of Business Management course of Bangalore University during the VI semester. This has not been submitted in part or full for any Diploma or Degree Or any other University.Date: Mrs. SHOBHA.C. Place: PROJECT GUIDE M.Com., M.B.A., M.Phil., (Ph.D.)

Commerce & Management

DEPARTMENT

DECLERATION

This is to declare that this dissertation titled A STUDY ON WORKING CAPITAL MANAGEMENT. Is my original work under the guidance of Mrs. SHOBHA.C. Lecturer of Commerce and Management towards partial fulfillment of Requirement for the Bachelor of Business Management course of Bangalore University during the VI semester.

I further declare that the project has not been submitted in part or full for any Diploma or Degree Or any other University.Date:Place: VARUNASHREE.G (07AQC08036)ACKNOWLEDGEMENT

I express my immense thanks to Dr.DEVANANDA RAM GOANKAR, Principal of GOVERNMENT ARTS, COMMERCE AND MANAGEMENT COLLEGE, Mr. RAJASHEKARAPPA.K. HOD of Commerce & Management who gave me this opportunity to work on this project.

My wholehearted thanks to Mrs. SHOBHA.C M.Com., M.B.A., M.Phil., (Ph.D.) Lecture of Commerce & Management for being my guide during this project and assisting me from the being till the completion of the project. I am really successful mainly because of her guidance, support & encouragement throughout the project and for successfully completing this project.

I am also thankful to ************ Deputy Manager-Human Resource, for giving me the opportunity to do my project work. It has indeed being a very enriching and fruitful experience throughout the project.

I extend my thanks to my family members and friends for there and support in completing this project successfully.

Date:

Place:

VARUNASHREE.G.

(REG. NO. 07AQC08036)CONTANTSCHAPTER NOTOPIC DISCRIPTION

PAGE NO

1INTRODUCTION

2RESEARCH METHODOLOGY

3COMPANY PROFILE

4ANALYSES AND INTERPRETATION

5SUMMARY OF FINDING CONCLUSION & SUGESTION

6ANNEXURE BIBLOGRAPHY

QUESTIONNAIR

LIST OF TABLE

SL NOPAGE NO

Table 1Table showing current assets and current liabiliies

Table 2Table showing quick ratio for the period of 2006-07 to 2008-09

Table 3Table showing debt equity ratio for he period of 2006-07 to 2008-09

Table 4 Table showing gross profit ratio for the period of 2006-07 to 2008-09

Table 5Table showing cost of goods sold ratio

Table 6 Table showing the net profit ratio of the organization from 2006-07 to 2008-09

Table 7Table showing the operating profit of the organization from 2006-07 to 2008-09

Table 8Table showing the cash profit ratio from 2006-07 to 2008-09

Table 9 Table showing operating expenses ratio

Table 10Inventory turn over ratio for the year 2006-07 to 2008-09

Table 11 Showing the debtor turnover ratio

Table 12Table showing working capital turnover ratio

Table 13Table showing fixed assets turnover ratio for the year 2006-07 to 2008-09

Table 14 Balance sheet for the year 2008-09

Table 15Profit and loss account for the year 2008-09

LIST OF GRAPHSL NOPAGE NO

GRAPG1Graph showing current assets and current liabilities

GRAPH2Graph showing quick ratios for the period of 2006-07 to 2008-09

GRAPH3Graph showing gross profit ratio for the period of 2006-07 to 2008-09

GRAPH4Graph showing debt equity ratio for the period of 2006-07 to 2008-09

GRAPH5Graph showing cost of goods sold ratio

GRAPG6Graph showing the net profit ratio of the organization from 2006-07 to 2008-09

GRAPH7Graph showing the operating of the organization profit of the organization from 2006-07 to 2008-09

GRAPH8Graph showing the cash profit ratio from 2006-07 to 2008-09

GRAPH9Graph showing operating expenses ratio

GRAPH10Inventory turn over ratio for the year 2006-07 to 2008-09

GRAPH11Showing the debtor turnover ratio

GRAPH12Graph showing working capital turnover ratio

GRAPH13Graph showing working capital turnover ratio

GRAPH14Graph showing fixed assets turnover ratio for the year 2006-07 to 2007-08

Chapter-5 Contents

FINANCIAL ANALYSIS STATEMENT

CURRENT RATIO

QUICK RATIO

DEBT EQUITY RATIO

GROSS PROFIT RATIO

COST OF GOODS SOLD RATIO

NET PROFIT RATIO

OPERATING PROFIT RATIO

CASH PROFIT RATIO

OPERATING EXPENSES RATIO

INVENTORY TURNOVER RATIO

DEBTOR TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO

FIXED ASSETS TURNOVER RATIO

COMPARITIVE INCOME STATEMENT

COMPARITIVE BALANCE SHEET

CRITERIA FOR JUDGING THE EFFIENCY OF WORKING CAPITAL MANAGEMENT

The efficiency of working capital management can be judging through accounting ratios that could be used for judging the efficiency of working capital management are;

Current ratio;

This is the ratio between current assets and current liabilities. This ratio should be preferable to2;1 it means that there will be adverse effect on business operations, where the payments of current liabilities are made.

1. current assets; inventories

such as

sundry debtors

cash and bank loans and advances.

And other current assets.

2. current liabilities; liabilities and provisions.

Such as

Current assets

Cash ratio =-------------------------------------

CURRENT LIABILITIES

yearCurrent assetsCurrent liabilitiesCurrent ratio

2006-07186562667.25100791733.951.850971

2007-08258899015.57158271470.341.63570

2008-09231914823.43122189847.151.8979876

ANALYSIS AND INTERPRETATIONSThe current ratio of manmul organization from 2006-2007 to 2008-09 revealed that the short term financial position of the organization is not sound because this current ratio is less then the standard that is 2:1 in the above 3 years; company has not reached this standard.further the current ratio is declining year by year; hence the short term financial position is deteriorating.

QUICK RATIO:

It is also known as ACID TEST RATIO. It determined by most liquid assets i.e, assets, which can be convert in to cash immediately by current liability. This quick ratio of1:1 is generally considered favourable.

Liquid assets

Quick ratio = ______________________

Liquid liability

Quick assets such as

Cash

Debtors

Bills

Marketable securities

CURRENT liabilities

creditors

provision

TABLE2: TABLE SHOWING QUICK RATIOS FOR THE PERIOD OF 2006-07 TO 2008-09

yearQuick assetsCurrent liabilityQuick ratio

2006-07124940589.12100791733.931.239591

2007-08207573971.82158271470.341.311505

2008-09172127899.28122189847.151.408692

GRAPH SHOWING QUICK RATIOS FOR THE PERIOD OF 2006-07 TO 2008-09

ANALYSIS AND INTERPRETIONS

Quick ratio: the quick ratio of manmul organization revealed that the companys short term financial position is sound and company may be in a position to pay its day obligations because the quick ratio is increase

DEBT EQUITY RATIO:Debt equity ratio is the ratio shows the relationship between external equity and internal equity.

EXTERNAL EQUITY

DEBT EQUITY RATIO= --------------------------------------------

INTERNAL EQUITY

TABLE3: TABLE SHOWING DEBT EQUITY RATIO FOR THE PERIED OF 2006-07 TO 2008-09

YEAREXTERNAL EQUITYINTERNAL EQUITYDEBT EQUITY RATIO

2006-07100791733.9569928943.941.441345

2007-08158271470.3495511841.471.667087

2008-09122189847.15104240887.561.1721873

GRAPH SHOWING DEBT EQUITY RATIO FOR THE PERIED OF 2006-07 TO 2008-09

ANALYSIS AND INTERPREATIONS

The analysis of debt equity ratio revealed that the companys trading equity is increasing year by year. It indicates the external debt of the company is increase.

GROSS PROFIT RATIO

It is the ratio between gross profit and sales and expressed in percentage.

GROSS PROFIT

GROSS PROFIT RATIO = _____________________________ 100

SALES

TABLE 4: TABLE SHOWING GROSS PROFIT RATIO FOR THE PERIED OF 2006-07 TO 2008-09

YEARGROSS PROFIT SALESGROSS PROFIT RATIO

2006-07165277457.451635547988.8110.11534

2007-08186111422.062125561574.198.755870

2008-09186869907.472493292270.227.4944905

GRAPH SHOWING GROSS PROFIT RATIO

ANALYSIS AND INTERPRETATION

The gross profit of the company is also declining it was 8.75 in 2007-08 and it is reduce to 7.49 in 2008-09

COST OF GOODS SOLD RATIO

Cost of goods sold ratio is the ratio which express the relation ship between cost of goods sold and the sales. It can be express by using following formulas.

COST OF GOODS SOLD

COST OF GOODS SOLD RATIO = ------------------------------------------------- 100

SALES

TABLE5: TABLE SHOWING COST OF GOODS SOLD RATIO.

YEARCOST OF GOODS SOLD SALESCOST OF GOODS SOLD RATIO

2006-071470270531.361.635547988.8189.89467

2007-081939450152.132125561574.1991.24412

2008-092306422362.752493292270.2292.50509

GRAPH SHOWING COST OF GOODS SOLD RATIO FROM 2006-07 TO 2008-09

ANALYSIS AND INTERPRETATIONThe cost of goods sold is increasing year by year that affects the profitability of the organization.

NET PROFIT RATIO

It expresses the relationship between the net profits and sales it can be express by using the following formula.

NET PROFIT

NET PROFIT RATIO = ----------------------------------------- 100

SALESTABLE6: TABLE SHOWING THE NET PROFIT RATIO OF THE ORGANIZATION FROM 2006-07 TO 2008-09

YEARNET PROFIT SALESNET PROFIT RATIO

2006-074730453.831635547988.810.289227

2007-081739613.952125561574.190.081842

2008-09 20050314.362493292270.220.8041702

GRAPH SHOWING THE NET PROFIT RATIOOF THE ORGANIZATION FROM 2006-07 TO 2008-09


The net profit of the organization is very low it is less then 1% in the majority of he proceeding years hence the company can not declare the dividend therefore the share holder can not get the return on their investment.

OPERATING PROFIT RATIOIt express the relationship between operating profit and it can be express by using the following formula.

OPERATING PROFIT

OPERATING PROFIT RATIO = _________________________________ 100

SALES

TABLE7: TABLE SHOWING THE OPERATING PROFIT OF THE ORGANIZATION FROM 2006-07 TO 2008-09

YEAROPERATING PROFIT SALESOPERATING PROFIT RATIO

2006-071557697451.931635547988.8195.240094

2007-082068409286.952125561574.1997.311911

2008-092443325537.082493292270.2297.99595

GRAPH SHOWING THE OPERATING PROFIT OF THE ORGANIZATIONFROM 2006-07 TO 2008-09

.ANALYSIS AND INTERPRETATIONOperating profit is also increasing and the percentage of operating profit to sales is high.

CASH PROFIT RATIO

It is the combination of operating profit and depreciation and sales it can be express by using the following formula

DEPRECIATION+ OPERATING PROFIT

CASH PROFIT RATIO = _________________________________________ 100 SALES

TABLE8: TABLE SHOWING THE CASH PROFIT RATIO FROM 2006-07 TO 2008-09

YEARCASH PROFIT SALESCASH PROFIT RATIO

2006-071562877144.881635547988.8195.55678

2007-082088941867.622125561574.1998.27717

2008-092461197918.082493292270.2298.71772

GRAPH SHOWING THE CASH PROFIT RATIO FROM 2006-07 TO 2008-09

ANALYSIS AND INTERPRETATION:

The cash profit is also increasing year by year this indicates the liquidity position of the company.

OPERATING EXPENSES RATIO It expresses the relationship between operating expenses and sales.

OPERATING EXPENSES

OPERATING EXPENSES RATIO = ------------------------------------------- 100

SALES

TABLE9: TABLE SHOWING OPERATING EXPENSES RATIO

YEAROPERATING EXPENSES SALESOPERATING EXPENSES RATIO

2006-0777850536.881635547988.814.759905

2007-0857152287.242125561574.192.688808

2008-0949966733.142493292270.222.004046

GRAPH SHOWING OPERATING EXPENSES RATIO


The operating expanses ratio decreasing year by year. It shows the clear picture of operating expenses of the company.

INVENTORY TURN OVER RATIO

Inventory turnover ratio is the ratio which indicates the number of times the stock is turned over during the period

COST OF GOOD SOLD

INVENTORY TURNOVER RATIO = --------------------------------------------- 100

AVERAGE STOCK

TABLE10: INVENTORY TURNOVER RATIO FORTHE YEAR 2006-07 TO 2008-09

YEAR COST OF GOODS SOLDAVERAGE STOCKINVENTORY TURNOVER RATIO

2006-071470270531.3653865900.3127.395014

2007-081939450152.1356473560.9434.342621

2008-092306422362.7555555983.9541.51528

GRAPH SHOWING INVENTORY TURN OVER RATIO FOR THEYEAR 2006-07 TO 2008-09


In the above figure it could be seen that peck from 2006-2007 due to lease average stock is deteriorated .

DEBTOR TURNOVER RATIO:

Debtor turnover ratio an important element of the current assets and there fore the quality of debtors to a grate extent determines the liquidity of a firm. Debtor turn over ratio which shows the relationship between the debtors to turnoverTABLE11: SHOWING THE DEBTOR TURNOVER RATIO

YEARNET SALESAVERAGE DEBTORS DEBTORS TURN OVER RATIO

2006-071635547988.8124566600.7166.576080

2007-082125561574.1966910335.5731.767313

2008-092493292270.2293600752.9626.637523

GRAPH SHOWING THE DEBTOR TURNOVER RATIO


Debtors turnover indicates the efficiency of the staff in change in collection of books debts. The higher value of the debtors turnover ratio. The more efficient is the management receivable so in the figure the highest debtors turm over ratio in 2006-07. i.e. 66.57 times.

Working capital turnover ratioWorking capital turnover ratio are measures the ratio of the working capital utilization. It indicates as following

NET SALES

WORKING CAPITAL TURNOVER RATIO = -------------------------------- 100

SALES

TABLE12: TABLE SHOWING WORKING CAPITAL TURNOVER RATIO

YEARNET SALES SALESNET WORKING CAPITAL

2006-071635547988.8185770933.3019.07

2007-082125561574.19100627545.2321.12

2008-092493292270.22109724976.2822.72

GRAPH SHOWING WORKING CAPITAL TURNOVER RATIO


From the figure it could be seen that the company had a gradual increasing working capital turn over ratio.

FIXED ASSETS TURNOVER RATIO:

This ratio measure efficiency, which the firm utilized its investment in assets such as land, building, plant and machinery etc. it is calculated dividing cost of goods sold by total assets i.e.duplicated value of fixed assets.

SALES

FIXED ASSETS TURNOVER RATIO = ----------------------------------- 100

FIXED ASSETS

TABLE13: TABLE SHOWING FIXED ASSETS TURNOVER RATIO FOR THE YEAR 2006-07 TO 2008-09

YEAR SALESFIXED ASSETSFIXED ASSETS TURNOVER RATIO

2006-071635547988.8181323296.2720.116784

2007-082125561574.1980296821.4426.471304

2008-092493292270.22110587540.4422.545869

GRAPH SHOWING FIXED ASSETS TURNOVER RATIO FORTHE YEAR 2006-07 TO 2008-09


In 2006-07 the fixed assets turnover ratio is 20.116 times which is more than the ideal ratio and after 2007-08 the ratio was fluctuating in 2008-09 it more than the ideal ratio so we can say that the fixed assets of the company are proper utilized.

FINDINGS

FINDINGS: with the analysis and my experience with the manmul in the short period of one month, I could make out the following findings.

1. the current ratio for the company from 2006-07 to 2008-09 is declining this indicates the sound short term financial position of the company.

2. the liquid ratio for the above period is also increases but the rate of decline is not constant there is a fluctuations in the liquidity position of the company this is due to increase in inventory position.

3. the companys trading on equity is diminishing for the funds, depends on own capital.

4. the working capital position of the company is declining from year to year it indicates the funds available is not sufficient to meet its day to day obligations.

5. gross profit ratio is very low because of increase in cost of goods sold.

6. the operating cost of the company is also increasing thats why the operating profit is very low.

7. the net profit is very low company could not declare the dividend to its share holders.

8. the cash position of the company is also increase

9. there is a repayment of long term loan liability of the company

10. the deffered expenses areincreasing.

Suggestion and recommendation

Company profile

COMPANY PROFILE-3 CONTENTS

INTRODUCTION

OBJECTIVES

BACKGROUND

ORGANISATIONAL STATUS

MILK PROCUREMENT

LIQUID MILK MARKETING

TYPES OF MILK PRODUCTS MARKETING BY MANMUL

INFRASTRUCTURE DEVELOPMENT.

SWOT ANALYSIS

INFRASTRUCTURE DEVELOPMENT

The strategy of mandya milk union is procure more, sell more& serve more and reaping the benefits of economies of scale. In order to realize this stratery, the union has implemented the following projects so that more and more milk can be procured and processed. This will help us to serve our producer member by passing on the maximum benefits, we are consciously adopting the growth-oriented strategy of helping our producers to grow by ourselves growing constantly.

The mandya district co- operative milk procures societies union limited established in 1987 with its headquarters at gejjalagere, milk plant of 2.5 lakh litres capacity and a power plant of 10 MTs per day

The union is certified with an ISO9001:2008.

The district is under cauvery basin, perennial green are available to the cattle, the cattle management by the women farmers is highly organized, coupled with existence of good number of crossbred milch animals with lactation period. The union procures on an average 4.24 lakh kgs. Per day and sell 1.71 lakh litres per day. There are 23 bulk milk coolers,260 automatic milk collection in the union.

The union sells TM, FCM, DTM& HCM variants of milk and also manufactures ghee. Curds, butter, skimmed milk powder, peda, spiced butter milk, burfi and khova.

Suggestion and recommendations

The company should arrange the brand awareness campigns and exhibitions.

Retailers sales margin should be increased to motivate them to push the NANDINI products more.

Advertisements in local newspapers, cable television network should be effectively used.

Business to business and business to consumers website should be created to enhance online marketing.

Separate HR manager should be appointed to know the problem of workers and to solve them.

Training should be given to retailers in marketing and relationship building activities.

Still better promotional stratery should be used to position the products in the market.

To provide sign boards within the dairy to facilitate the easy identification of the departments.

Job rotation should be done frequently to workers especially in the plant, so that they arerealized from boredom of work, and which also motivates them to acquire additional skills.

To build the teams of empowered employees.

To provide employees with special training such as job enlargement, job enrichment and empowered teams, so that the productivity is increased.

To stay competitive should adapt new advanced technologies.

CONCLUSION

CONCLUSION

Indian dairy sector contribute a large in agriculture Gross Domestic Products, since milk is one of the basic need for the people. Mandya dairy. A service oriented organization as entered households of mandya city and some parts of Bangalore rural& urban areas with efficient products and services.

The customers can take into confidence so that it helps dairy with the better insights even though KMF is facing a very strict competition from the competitors like Heritage, Arogya, Dodla and Swastik. It has strong brand image and also better distribution network. This study clearly inducts retailers opinion, this is no stage complement towards the milk marketing of MANMUL and how services can be improved.

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bbm working capital 2008-09

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