geetha finance mba project in mini

8/2/2019 Geetha Finance Mba Project in Mini

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1. INTRODUCTIONFinance is regarded as the life blood of a business enterprise. This is because in

the modern money-oriented economy, finance is one of the basic foundations of all

kinds of economic activities. It is the master key which provides access to all sources

for being employed in manufacturing and merchandising activities. It has rightly been

said that business needs money to make more money. However it is also true that

money begets more money, only when it is properly managed. Hence, efficient

management of every business enterprise is closely linked with efficient management

of its finance.

DEFINITIONS OF FINANCE:

According to Howard, finance is that administrative are of set of

administrative function in an organisation which relate with the arrangement of

cash and credit; so that the organisation may have the means to carry out its

objectives as satisfactorily as possible.

Finance refers to the management to flows of money through an

organisation. It concern with the application of skills in the manipulation use and

control of money.


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There are three main approaches of finance

1. The first approach views finance as to providing of funds needed by a businesson more suitable terms.

2. The second approach relates finances to cash.3. The third approach views finance as being concerned with raising of funds and

their effective utilization.

BUSINESS FINANCE:

In general, finance may be defined as the provision of money at the time it is

wanted. However as a management it has a special meaning. Finance function may be

defined as the procurement of funds and their effective utilisation.

DEFINITIONS OF BUSINESS FINANCE:

Business finance is that business activity which is concerned with the

acquisition and conservation of capital funds in meeting financial needs overall

objectives of a business enterprise

Business finance can broadly be defined as the activity concerned with

planning .raising, controlling and administering of the funds used in the business.


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FINANCIAL MANAGERS ROLE:

Financial manager is a person who is responsible, in a significant way, to carryout the finance functions.

He or she is one of the members of the top management team, and his or herrole, day-by-day, is becoming more pervasive, intensive and significant in

solving the complex funds management problems.

The finance manger is now responsible for shaping the fortunes of theenterprise, and is involved in the most vital decision of the allocation of capital.

The financial manager has not always been in the dynamic role of decision-making.

ANALYSIS OF FINANCIAL STATEMENT:

Financial statement is formal and original statements prepared by a business

concern to disclose its financial details.

AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTS

(AICPA) says financial statement are prepared for the purpose of presenting a

periodical review or report on the progress by the management and dealt with:


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1. The status of investment in the business and2. The result achieved during the period under review.

The word financial statement have been widely used to represent two statement

prepared by accounts at the specific time period. They are:

1. Profit and loss account or income statement,2. Balance sheet or statement of financial position,3. A surplus statement or retained earnings statement.

MEANING OF FINANCIAL STATEMENT:

A financial statement is an organised collection of data according to logical and

consistent accounting procedures. Its purpose is to convey an understanding of some

financial aspects of a business firm.

DEFINITION OF FINANCIAL STATEMENTS:

Hampton J.J. the statement disclosing status of investment is known as

balance sheet and the statement showing the result is known as profit and loss

account.


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1.1 OBJECTIVE OF STUDY

To interpret the profitability and efficiency of various business activities withthe help of profit and loss account,

To measure managerial efficiency of the firm, To ascertain earning capacity in future period, To determine future potential of the concern, To measure the financial stability of the business,

FUNCTION OF FINANCIAL STATEMENT:

For Management, For Creditors, For Owners, For Employee, For Government Etc


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1. FOR MANAGEMENT:

Now a days financial statement are used to management for decision making.

Reliable information and effectiveness are extracted by management from financial

statements.

2. FOR CREDITORS:

Trade creditor is another class for whom financial statements are important

.trade credit implies extending facilities of deferred payments for credit purchase by

seller or buyer.

3. FOR OWNERS

It reveals the sound position of business and whether the funds supplied by

them in the form of capital and also the undistributed profit.

4. FOR EMPLOYEE

Financial statement care for all categories of employees in an organization. The

success or failure of the firm is linked with financial statements.


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5. FOR GOVERNMENT:

The performances of the government, central, state and local are derived with

preparation of financial statements.

1.2SCOPE OF FINANCIAL STATEMENTS:

Financial statements are prepared to check the nature of investment in a

business and result achieved during the specific time period.

The accuracy of the data shown in the financial statement are affected by the

following facts:

(1) Based on recorded facts,(2) Accounting conventions(3) Postulates

(4)

Personal judgements

(1)Based on recorded facts:

The transactions affecting the business are recorded in the books and shown in

the financial statement at the same values.


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Recently such facts are mentioned as footnotes tablemates the financial

statement more meaningful and useful.

(2) Accounting conventions:

The financial statements are prepared by following certain accounting

convention and principles. Accounting itself is a dynamic science and accountants

have developed, from time to time, a number of conventions on the basis of

experience.

(3) Postulates:

In simple words, accounting transactions are recorded on certain assumption

such as going concern, stable value of money, profit accrual etc. These postulates

or assumptions are reflected in the financial statements.

(4) Personal judgement:

Financial statement prepared by two different persons of the same concern give

dissimilar result and this is due to different personal judgement in using or applying

particular conventions.


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TYPES OF FINANCIAL ANALYSIS STATEMENT:

Types of financial analysis statement:

On the basis of information used on the basis of modus operandi of

analysis

1. External analysis 1.Horizontal analysis

2. Internal analysis 2.Vertical analysis

EXTERNAL ANALYSIS:

This analysis is based on published financial statements of a firm.

Outsiders have limited access to internal records of the concern.

Ex: creditors, suppliers, investors.

INTERNAL ANALYSIS:

This analysis is done on the basis of internal and unpublished records. It is

done by executives or other authorised officials.

Ex: employees, management.


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HORIZONTAL ANALYSIS:

This analysis is also known as dynamic or trend analysis. The analysis

is done by analysing the statements of a number of years.

If the years is taken as basis to calculate the percentage of increase or

decrease. Some analysts prefer to choose earlier year as basis, while some others

prefer to take just the preceding year as basis.

Ex: Trend ratio

VERTICAL ANALYSIS:

Vertical analysis is also known as static analyses or structural analyses. This

analysis is made on the basis of a single set of financial statement prepared at a

particular date.

Ex: common-size statement


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1.3 TECHNIQUES OF FINANCIAL ANALYSIS STATEMENTS:

RATIO ANALYSIS:

An analysis of financial statements based on ratios is known as ratio analysis.

A ratio is a mathematical relationship between two or more items taken from the

financial statements. It is the process if computing, determine, and presenting the

relationship of items.

TECHNIQUES OFFINANCIAL ANALYSIS

Trendanalysis

workingcapital

analysis

commonsize

statement

comparativefinancial

statements

Ratioanalysis

fundsflow

analysis

cashflow

analysis


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CASH FLOW ANALYSIS:Cash flow analysis depicts the inflows and outflows of cash. Cash flow statement

is the device for such analysis. It highlights causes which bring changes in cash

position between two balance sheet dates.

FUNDS FLOW ANALYSIS:

Funds flow statement signifies the sources and applications of funds. The term

funds refers to working capital. Funds flow analysis clearly shows internal and

external sources of working capital and the way funds have been used.

Funds flow analysis is helpful in judging credit worthiness, financial planning

and budget preparation.

COMPARATIVE FINANCIAL STATEMENTS:

This is yet another techniques used in financial statement analysis. These

statements summarise and present related data for a number of years incorporating

therein changes (absolute and relative) in individual items of financial statements.

These statements help in making inter-period and inter-firm comparisons and also

highlight the trends in performance efficiency and financial position.


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COMMON SIZE STATEMENTS:

Common size statements indicate the relationship of various items with some

common items,(expressed as percentage of the common item). The percentages so

calculated are compared with corresponding percentages in other periods or other

firms and meaningful conclusions are drawn. Generally, a common size income

statement and common size balance sheet is prepared.

WORKING CAPITAL ANALYSIS:

Working capital statement or schedule of changes in working capital is

prepared to disclose net changes in working capital on two specific dates. It is

prepared from current assets and current liabilities on the specified dates to show net

increase or decrease in working capital

TREND ANALYSIS:

Trend signifies a tendency and as such the review and appraisal of tendency in

accounting variables are nothing but trend analysis. Trend analysis is carried out by

calculating trend ratios (percentage) and plotting the accounting data on graph paper

or chart.Trend analysis is significant for forecasting and budgeting. Trend analysis

discloses the changes in financial and operating data between specific periods.


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BENEFITS OF FINANCIAL STATEMENTS ANALYSIS:

Credit worthiness , Financial planning, Budget preparation,, The efficient business cash management, Diagnose financial health of a business concern, Measuring profitability, Determining solvency and activity if the firm, Trend analysis is significant for forecasting and budgeting, Trend analysis discloses the changes in financial and

operating data between specific periods.

LIMITATION OF FINANCIAL STATEMENT ANALYSIS:

Historical nature of financial statement, Different interpretation, Change in accounting methods, Price level changes.


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1.4 COMPANY PROFILE:

Ashok Leyland has six manufacturing plants - the mother plant at Ennore near

Chennai, two plants at Hosur (called Hosur I and Hosur II, along with a Press shop),

the assembly plants at Alwar and Bhandara. The total covered space at these six plants

exceeds 450,000 sqms and together employs over 11,500 personnel.

Spread over 135 acres, Ashok Leyland Ennore is a highly integrated Mother

Plant accounting for over 40% of ALL production. The plant manufactures a wide

range of vehicles and house production facilities for important aggregates such as

Engines, Gear Box, Axles and other key in-house components. Number of employees

in ennore plant are 4146 and number of models manufactured are 132.

Ashok Leyland is the flagship company of the hinduja group and is the

second largest manufacturer of commercial vehicles in India.

Ashok motor was set up in 1948 for the assembly of Austin cars. The company

name and objective changed with equity participation by British Leyland and Ashok

Leyland commenced manufacturer of commercial vehicles in 1955. It has since then

grown as a reputed manufacturer of quality automotive products ranging from light

commercial vehicles to heavy duty vehicles and for automotive, industrial and marine

applications. In 1987, the overseas hold by Land Rover Leyland International


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The company has the corporate office register at Chennai.

The marketing headquarter is at Chennai and the sales and services network,

dealer network and spare parts warehouse spread throughout India with regional sales

office and services centre located in all major cities and towns in the country. The

products are also exported to a range of overseas countries.

The marketing personal maintain constant interaction with customers for

application development and feedback for continuous improvement of the products.

The services function is carried out by qualified personal whose skills are

continuously upgraded through training to meet the servicing requirements of newer

or improved products. The design function is carried out by the product Development

Division operating through 4 centres viz. Product Development (Ennore) for R&D

related to Ashok Leyland engines, Technical centre vellivoyalchavadi for design,

proto-type developments of vehicle, vehicles and components testing; Engine R&D

(Hosur) for design and development of Hino engines and Advanced Engineering

(Chennai) for research related to future products.

The manufacturing units of the company are located at Ennore (TN), Hosur

(TN), Alwar (Rajasthan) and Bhandara (MR). The Ennore , Hosur (plant - 1),


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Hosur (plant-ii), Ambattur , Alwar and Bhandara manufacturing units are certified

ISO 9001:2000 and QS 9000:1998 certification by Indian register Quality system.

The company is also certified to ISO 14001:2000 Environmental

Management System for all the manufacturing units. The Bhandara unit of the

company has won the Golden Peacock Environmental Award 2002 of the world

Environmental Foundation in the Large/manufacturing category.

Ashok Leyland is also the 1st auto mobile company to receive the ISO/TS

16949 corporate certification in June 2006. TS 16949 reckon the nuances of

automobile Industry and is more customer centric. It integrates the salient concepts of

all the QMS standards has been accepted recognized and followed by all automobiles

manufactures in USA , Europe and Asia.

Ashok Leyland has also obtained ISO 27001 certificates for its Ennore Data

canter and Advanced Engineering group located in Chennai. Ennore data centre

obtained the certificate in May 2005 and advanced engineering in April 2007.


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HISTORY AND ORIGIN:

The origin of Ashok Leyland can be traced to the urge for self-reliance, felt by

independent India. Pandit Jawaharlal Nehru, India's first Prime Minister persuaded

Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. In 1948,

Ashok Motors was set up in what was then Madras, for the assembly of Austin Cars.

The Company's destiny and name changed soon with equity participation by British

Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955

Since then Ashok Leyland has been a major presence in India's commercial vehicle

industry with a tradition of technological leadership, achieved through tie-ups with

international technology leaders and through vigorous in-house R&D.

In 2003, Leyland has reported a 70% increase in its sales. Ashok Leyland set to

increase HINO engine platform through in-house product development, to deliver

higher horsepower in tune with improving road infrastructure. Ashok Leyland Ltd has

supplied 25 buses to Afghanistan which is a part of Indian Governments Assistance

to the war-ravaged Afghanistan. Leyland bagged $46 million truck supply contract

from the United Nations.

In 2004, Ashok Leyland unveils new range of buses and trucks in a bid. It

launches Ecomet, a light commercial vehicle, in the Andhra Pradesh market. Ashok


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Leylands Hosur unit bags CIIs awards in safety, health and environment. Ashok

Leyland Ltd (ALL) and Indian Oil Corporation (IOC) have joined hands to offer

freight management services across the country. Ashok Leyland Ltd signs a

collaboration agreement with ZF of Germany local manufacturing of ZFs 9-speed

synchromesh gearbox. Now, Wipro InfoTech has signed up with Ashok Leyland for

strategic cost reduction.

Ashok Leyland vehicles have built a reputation for reliability and

ruggedness. The 5, 00,000 vehicles we have put on the roads have considerably eased

the additional pressure placed on road transportation in independent India.

In the populous Indian metros, four out of the five State Transport Undertaking

(STU) buses come from Ashok Leyland. Some of them like the double-decker and

vestibule buses are unique models from Ashok Leyland, tailor-made for high-

density routes.

In 1987, the overseas holding by Land Rover Leyland International Holdings

Limited (LRLIH) was taken over by a joint venture between the Hinduja Group, the

Non-Resident Indian transnational group and IVECO. (Since July 2006, the Hinduja

Group is 100% holder of LRLIH).


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The blueprint prepared for the future reflected the global ambitions of the

company, captured in four words: Global Standards, Global Markets. This was at a

time when liberalisation and globalisation were not yet in the air. Ashok Leyland

embarked on a major product and process up gradation to match world-class standards

of technology.

In the journey towards global standards of quality, Ashok Leyland reached a

major milestone in 1993 when it became the first in India's automobile history to

win the ISO 9002 certification. The more comprehensive ISO 9001 certification

came in 1994, QS 9000 in 1998 and ISO 14001 certification for all vehicle

manufacturing units in 2002. It has also become the first Indian auto company to

receive the latest ISO/TS 16949 Corporate Certification (in July 2006) which is

specific to the auto industry


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VISION:

Achieving leadership in the medium/heavy duty segments of the domestic

commercial vehicle market and a significant presence in the world market through

transport solutions that best anticipate customer needs, with the highest value to cost.

Be among the top Indian corporations acknowledged nationally and internationally for

Excellence in quality of its products. Excellence in customer focus and service.

MISSION:

Be a leader in the business of commercial vehicles, excelling in technology,

quality, value to customer, fully supported by customer service of the highest order

and meeting national and international environment and safety standards.

Identifying with the customer

Being the lowest cost manufacturer

Global benchmarking our products, processes & people against the best in the

industry.


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1.5 INDUSTRY PROFILE:

The automobile industry in India is the tenth largest in the world with an annual

production of approximately 2 million units is expected to become one of the major

global automotive industries in the coming years. A number of domestic companies

produce automobiles in India and the growing presences of multinational investment,

too has led to an increase in overall growth following the economic reforms of 1991

the Indian growth as a result of increased competiveness and relaxed restrictions.

History:

In 1953, the Govt of India and the Indian private sector initiated manufacturing

processes to help develop the automobile industry, which had emerged by the 1940s

in a nascent form. Between 1940 to the economic liberalization of 1991, the

automobile industry continued to grow at a slow pace due to many govt restrictions.

Japanese manufacturers entered the Indian market ultimately leading to the

establishment of Maruti udyog. A number of foreign firms joint ventures with Indian

companies.


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Indian Automobile Companies:

1. Ashok Leyland ltd2. Force motors3. Hindustan motors4. Mahindra & Mahindra ltd5. Maruthi Suzuki6. Tata motors

Market Share:

Table:

COMPANY MARKET SHARE

1.Tata Motors 62.4

2.Ashok Leyland Ltd 20.3

3.Volvo Eiecher 9.8

4. Others 7.5


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Chart:

Multinational Companies in India

1. Fiat2. Ford motors3. General motors4. Honda5. Hyundai6. Mercedes-Benz7. Mitsubishi motors

62.4%

20.3%

9.8%

7.3%

Tata motors

Ashok Leyland

Volvo Eicher

Others


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1.6 PRODUCT PROFILE:

1. Buses

2. Trucks

3. Engines

4. Defence & Special Vehicles

1. BUSES:

Leaders in the Indian bus market, offering unique models such as CNG, Double

Decker and Vestibule bus.

S.NO PRODUCT FIGURE S.NO PRODUCT FIGURE

1.Viking BS -

II

2.Viking BS -

III


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3. Viking BS

II

4. Viking SLF

BS-III

5. Viking

CNG BS-III

6. 12 M Bus -

BS II

7. Cheetah BSII 8.

12 M Bus BS-

II

9. Cheetah BS - II 10. Panther BSII

11. Lynx BS-II 12. Vestibule Bus

BSIII


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13. Double Decker 14.

Airport Tarmac

coach

15. Stag BS - II 16. Cheetah BS - II

2.TRUCKS:

Pioneers in multi axle trucks and tractor-trailers.

S.NO. PRODUCT FIGURE

1.4 X 2 Haulage Models


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2.

4 X 2 and Multi-axle Tippers

3.

Multi-axle Vehicles

4.

Tractors

5.

Ecomet

3.ENGINES:

S.NO PRODUCT FIGURE APPLICATIONS

1. Genset

Application

Engines ranging from 15KVA

to 250KVA

Industrial Segment Hospitals / Clinics


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Commercial /Residential Complexes

Theatres Shopping mall / Offices Rice Mills Hotels / Restaurants

2. Industrial

Application

Engines with power rating

from 40PS to 200PS.

Front End Loaders Excavators Compactors Pavers Road Sweepers Harvestor Combines Compressors Cranes Pumps

3. Engines with power rating


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Marine

Application

from 58PS to 193PS

Trawlers, Pure -Seiners,Gillnetters

Sailing Vessels Marine generating sets Pavers Speed Boats Passenger Launches Ferries Auxiliary drive in Vessels

4.

DG Sets for

exports

Diesel and Natural Gas

gensets trom 15KVA -

250KVA

Industrial SegmentHospitals / ClinicsCommercial /

Residential Complexes

Theatres


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Shopping mall / OfficesRice MillsHotels / Restaurants

4.DEFENCE & SPECIAL VEHICLES:

Largest provider of logistic vehicles to the Indian army.

S.NO PRODUCT FIGURE

1.

Special Vehicles

2.

Defence Vehicles
http://defenceproducts.ashokleyland.com/http://www.ashokleyland.com/productsdyn.jsp?CATId=4&subcatavail=y&subcatid=17http://defenceproducts.ashokleyland.com/http://www.ashokleyland.com/productsdyn.jsp?CATId=4&subcatavail=y&subcatid=17http://defenceproducts.ashokleyland.com/http://www.ashokleyland.com/productsdyn.jsp?CATId=4&subcatavail=y&subcatid=17


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CHAPTER-II

REVIEW OF LITERATURE

Working Capital Meaning :- Capital required for a business can be classified under

two main categories via,

1) Fixed Capital

2) Working Capital

Every business needs funds for two purposes for its establishment and to carry

out its day- to-day operations. Long terms funds are required to create production

facilities through purchase of fixed assets such as plant & machinery, land, building,

furniture, etc. Investments in these assets represent that part of firms capita l which is

blocked on permanent or fixed basis and is called fixed capital. Funds are also needed

for short-term purposes for the purchase of raw material, payment of wages and other

day to-day expenses etc.

These funds are known as working capital. In simple words, working capital

refers to that part of the firms capital which is required for financing short- term or

current assets such as cash, marketable securities, debtors & inventories. Funds, thus,

invested in current assts keep revolving fast and are being constantly converted in to


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cash and this cash flows out again in exchange for other current assets. Hence, it is

also known as revolving or circulating capital or short term capital.

NEED OF WORKING CAPITAL MANAGEMENT

For effective running of the day to day business transaction the working capital is

necessary. There is no such a business for which working capital is needed.

The main aim of every firm is to maximize shareholders wealth. Firm must earn

sufficient returns to increase the shareholder wealth. To earn steady amount of profit,

a successful sales activity is necessary. Firm can generate sales is sufficient amount is

invested in current assets. The need of current assets is necessary because sales do not

convert in to cash immediately. There is always in operating cycle involved in the

conversion of sales into cash.

CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways:

o On the basis of concept.

o On the basis of time.


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On the basis of concept working capital can be classified as gross working

capital and net working capitalOn the basis of time, working capital may be classified

as:

Permanent or fixed working capital.

Temporary or variable working capital

GROSS WORKING CAPITAL AND NET WORKINGCAPITAL

There are two concepts of working capital management

Gross Working Capital:

Gross working capital refers to the firms investment I current assets. Current

Assets are the assets which can be convert in to cash within year includes cash, Short

term securities, debtors, bills receivable and inventory.

Net Working Capital:

Net working capital refers to the difference between current assets and current

Liabilities. Current liabilities are those claims of outsiders which are expected to

mature for payment within an accounting year and include creditors, bills

payable and outstanding expenses. Net working capital can be positive or negative.


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Types of Working Capital:

The operating cycle creates the need for current assets (working capital).

However the need does not come to an end after the cycle is completed to

explain this continuing need of current assets a destination should be drawn

between permanent and temporary working capital.

Permanent Working Capital:

The need for current assets arises, as already observed, because of the

cash cycle. To carry on business certain minimum level of working capital is

necessary on continues and uninterrupted basis. For all practical purpose, this

requirement will have to be met permanent as with other fixed assets. This

requirement refers to as permanent or fixed working capital.

Temporary Working Capital:

Any amount over and above the permanent level of working capital is

temporary, fluctuating or variable, working capital. This portion of the required

working capital is needed to meet fluctuation in demand consequent upon

changes in production and sales as result of seasonal changes


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Graph shows that the permanent level is fairly constant; while temporary

working capital is fluctuating in the case of an expanding firm the permanent working

capital line may not be horizontal. This may be because of changes in demand for

permanent current assets might be increasing to support a rising level of activity

DETERMINANTS OF WORKING CAPITAL:

The amount of working capital is depends upon following factors:

1) Nature Of Business:

Some businesses are such, due to their very nature, that their requirement

of fixed capital is more rather than working capital. These businesses sell services and

not the commodities and that too on cash basis. As such, no founds are blocked in

piling inventories and also no funds are blocked in receivables. E.g. public utility

services like railways, infrastructure oriented project etc. There requirement of

working capital is less. On the other hand, there are some businesses like trading

activity, where requirement of fixed capital is less but more money is blocked in

inventories and debtors.


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2) Length Of Production Cycle:

In some business like machine tools industry, the time gap between the

acquisition of raw material till the end of final production of finished products itself

is quite high. As such amount may be blocked either in raw material or work

in progress or finished goods or even in debtors. Naturally there need of working

capital is high.

3) Size And Growth Of Business:

In very small company the working capital requirement is quit high due to high

overhead, higher buying and selling cost etc. As such medium size business

positively has edge over the small companies. But if the business start growing after

certain limit, the working capital requirements may adversely affect by the increasing

size.

4) Business/ Trade Cycle:

If the company is the operating in the time of boom, the working capital

requirement may be more as the company may like to buy more raw material, may

increase the production and sales to take the benefit of favourable market, due to

increase in the sales, there may more and more amount of funds blocked in stock and


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debtors etc. similarly in the case of depressions also, working capital may be

high as the sales terms of value and quantity may be reducing, there may be

unnecessary piling up of stack without getting sold, the receivable may not be

recovered in time etc.

5) Terms Of Purchase And Sales:

Some time due to competition or custom, it may be necessary for the company to

extend more and more credit to customers, as result which more and more

amount is locked up in debtors or bills receivables which increase the working capital

requirement. On the other hand, in the case of purchase, if the credit is offered by

suppliers of goods and services, a part of working capital requirement may be

financed by them, but it is necessary to purchase on cash basis, the working capital

requirement will be higher.

6) Profitability:

The profitability of the business may be vary in each and every individual case,

which is in turn its depend on numerous factors, but high profitability will

positively reduce the strain on working capital requirement of the company,

because the profits to the extent that they earned in cash may be used to meet the

working capital requirement of the company.


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7) Operating Efficiency:

If the business is carried on more efficiently, it can operate in profits

which may reduce the strain on working capital; it may ensure proper

utilization of existing resources by eliminating the waste and improved coordination

etc.

8) Seasonal Variations:

Generally, during the busy season, a firm requires larger working capital than in

slack season.

9)

Working Capital Cycle:

The speed with which the working cycle completes one cycle determines the

requirements of working capital. Longer the cycle larger is the requirement of

working capital.


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CHAPTERIII

RESEARCH METHODOLOGY

METHODOLOGYOFTHESTUDY

RESEARCH

Research can be defined as the search for knowledge, or as any systematic

investigation, with an open mind, to establish novel facts, solve new or existing

problems, prove new ideas, or develop new theories, usually using a scientific method.

The primary purpose for basic research (as opposed to applied research) is

discovering, interpreting, and the development of methods and systems for the

advancement of human knowledge on a wide variety of scientific matters of our world

and the universe.

RESEARCH DESIGN

This research design is a comprehensive master plan of the research study to be

undertaken, giving a general statement of the methods to be used. The function of a

research design is to ensure that requisite data in accordance with the problem at hand

is collected accurately and economically. Simply stated, it is the framework, a

blueprint for the research study which guides the collection and analysis of data. The

research design, depending upon the needs of the researcher may be a very detailed


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statement or only furnish the minimum information required for planning the research

project.

DATA COLLECTION

Primary Data:

The primary data is that data which is collected fresh or first hand, and for first

time which is original in nature. Primary data can collect through personal interview,

questionnaire etc. to support the secondary data.

Secondary Data:

The secondary data are those which have already collected and stored.

Secondary data easily get those secondary data from records, journals, annual reports

of the company etc. It will save the time, money and efforts to collect the data.

Secondary data also made available through trade magazines, balance sheets, books

etc

TOOLS FOR DATA ANALYSIS

Ratio analysis, Comparative balance sheet and Comparative income and expenditure


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Collection of information

The annual report and other records of Ashok Leyland were used for study of

working capital management. The information were collected from the reports of

Ashok Leyland.

PERIOD OF THE STUDY

The data were collected for five years from 2006-07 to 2010-11

CHAPTER SCHEME:

Chapter 1 deals with the introduction, objective, scope, need, company profile,industry profile and product profile.

Chapter 2 relates to the review of literature. Chapter 3 covers complete research methodology. Chapter 4 deals with analysis of the data which is being collected from the

company, and also about the inference of the data.

Chapter 5 relates to the findings from the data, and deals with suggestionsgiven by the researcher. The conclusion, which gives the ultimate result of the

study.

Chapter 6 deals with Bibliography, it includes the various sources from whichinformation is collected and Annexure.


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EXPECTATION FROM STUDY:

To be able know the financial position of the company. To be able know the working capital requirement of the company. To be capable to help the company in making better de

CHAPTER - IV

DATA ANALYSIS AND INTERPRETATIONS

WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business.

Adequate amount of working capital is very much essential for the smooth running of

the business. And the most important part is the efficient management of working

capital in right time. The liquidity position of the firm is totally effected by the

management of working capital. So, a study of changes in the uses and sources of

working capital is necessary to evaluate the efficiency with which the working capital

is employed in a business. This involves the need of working capital analysis.

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

such as:

1. Ratio analysis.


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45

2. Fund flow analysis.

3. Budgeting.

RATIO ANALYSIS

A ratio is a simple arithmetical expression one number to another. The

technique of ratio analysis can be employed for measuring short-term liquidity or

working capital position of a firm.

FUND FLOW ANALYSIS

Fund flow analysis is a technical device designated to the study the source from which

additional funds were derived and the use to which these sources were put. The fund

flow analysis consists of:

a. Preparing schedule of changes of working capital

b. Statement of sources and application of funds.

It is an effective management tool to study the changes in financial position (working

capital) business enterprise between beginning and ending of the financial dates.

WORKING CAPITAL BUDGET


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A budget is a financial and / or quantitative expression of business plans and

polices to be pursued in the future period time. Working capital budget as a part of the

total budge ting process of a business is prepared estimating future long term and short

term working capital needs and sources to finance them, and then comparing the

budgeted figures with actual performance for calculating the variances, if any, so that

corrective actions may be taken in future. He objective working capital budget is to

ensure availability of funds as and needed, and to ensure effective utilization of these

resources. The successful implementation of working capital budget involves the

preparing of separate budget for each element of working capital, such as, cash,

inventories and receivables etc.

ANALYSIS OF SHORT TERM FINANCIAL POSITION OR TEST OF

LIQUIDITY

The shortterm creditors of a company such as suppliers of goods of credit and

commercial banks short-term loans are primarily interested to know the ability of a

firm to meet its obligations in time. The short term obligations of a firm can be met in

time only when it is having sufficient liquid assets. So to with the confidence of

investors, creditors, the smooth functioning of the firm and the efficient use of fixed


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47

assets the liquid position of the firm must be strong. But a very high degree of

liquidity of the firm being tiedup in current assets. Therefore, it is important proper

balance in regard to the liquidity of the firm.

LIQUIDITY RATIOS

Liquidity refers to the ability of a firm to meet its current obligations as and when

these become due. The short-term obligations are met by realizing amounts from

current, floating or circulating assets. The current assets should either be liquid or near

about liquidity. The sufficiency or insufficiency of current assets should be assessed

by comparing them with short-term liabilities. On the other hand, if the current

liabilities cannot be met out of the current assets then the liquidity position is bad. To

measure the liquidity of a firm, the following ratios can be calculated:

CURRENT RATIO:

The ratio of current assets to current liabilities is called current ratio. In order to

measure the short term liabilities or solvency of the concern, comparison of current


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48

assets an current liabilities is inevitable. Current ratio indicates the ability of the

concern to meet its current obligation as and when they are due for payment.

Current assets include cash, marketable securities, bill receivables, sundry

debtors, inventories and work-in-progresses. Current liabilities include outstanding

expenses, bill payable, dividend payable etc.

A relatively high current ratio is an indication that the firm is liquid and has the

ability to pay its current obligations in time. On the hand a low current ratio represents

that the liquidity position of the firm is not good and the firm shall not be able to pay

its current liabilities in time. A ratio equal or near to the rule of thumb of 2:1 i.e.

current assets double the current liabilities is considered to be satisfactory


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TABLE NO:1

THE TABLE SHOWING THE CURRENT RATIO OF THE WORKING

CAPITAL

CALCULATION OF CURRENT RATIO(RS IN MILLION)

YEAR

CURRENT

ASSETS

CURRENT

LIABILITIES

RATIO

INDUSTRY

AVERAGE

2006-2007 26974.14 17558.55 1.54 1.55


50/120

50

2007-2008 28752.58 22719.39 1.27 1.55

2008-2009 31656.16 21369.46 1.48 1.55

2009-2010 41396.84 29607.57 1.39 1.55

2010-2011 43672.45 35282.74 1.24 1.55

INFERENCE:

1. Here industry ratio is 1.55.2. Except in 2007-08 & 2010-11 remaining all years companys current ratio is

almost near to industry average ratio.

3.

The current ratio is high in 2006-2007 very nearest to the industry average.

CHART:CURRENT RATIO


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51

INVENTORY MANAGEMENT RATIOS:

INVENTORY TURNOVER RATIO = NET SALES

AVERAGE INVENTORY

TABLE:2

THE TABLE SHOWING INVENTORY TURNOVER RATIO:

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

current assetscurrent liabilities

current ratio

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011


52/120

52

YEAR NET SALES

AVG

INVENTORYITR

2006-07 71681.76 9864.41 7.27

2007-08 77425.80 11471.17 6.75

2008-09 59810.73 12769.64 4.68

2009-10 72447.10 14841.27 4.88

2010-2011 111177.09 22089.03 5.03

CHART NO:2

Chart showing inventory turnover ratio

INFERENCE:

0

2

4

68

INVENTORY TURNOVER RATIO



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53

The company inventory turnover ratio is high 7.27 in 2006-2007when compared to

other year.

Inventory turnover ratio is slowly decreased from 2007-2008. In 2009-2010 it started increasing.

INVENTORY TURNOVER PERIOD:

INVENTORY TURNOVER PERIOD =DAYS OR MONTHS IN THE YEAR


THE TABLE SHOWING INVENTORY TURNOVER PERIOD

TABLE NO :3

YEAR DAYS ITR

INV HOLDING

PERIOD

2006-07 365 7.27 50

2007-08 365 6.75 54

2008-09 365 4.68 77

2009-10 365 4.88 75


54/120

54

2010-11 365 5.03 73

INFERENCE:

The highest inventory turnover period is 77 days in 2008-2009 The inventory turnover period is increased from 2006-2011 The lower inventory turnover period is 50 days in 2006-2007

CHART SHOWING INVENTORY TURNOVER PERIOD:

CHART NO :3

01020

30

40

50

60

70

80

INVENTORY TURNOVER PERIOD

INVENTORY TURNOVER

PERIOD


55/120

55

WORKING CALCULATION:

NET WORKING CAPITAL = CURRENT ASSETS CURRENT

LIABILITIES

CURRENT ASSETS:

INVENTORIES

SUNDRY DEBTORS

BLLS RECEIVABLE

CASH AND BANK BALANCE

SHORT-TERM INVESTMENT

LOANS AND ADVANCE

CURRENT LIABILITIES:

CREDITORS

BANK OVERDRAFT

BILLS PAYABLE

OUTSTANDING EXPEES

INCOME RECEIVED IN ADVANCE


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OTHER LIABILITY

SCHEDULE OF CHANGES IN THE WORKING CAPITAL STATEMENT AS PER THE

YEAR 2006-07

TABLE NO:4 (Rs. IN MILLIONS)

PARTICULARS 2006 2007 INCREASE DECREASE

CURRENT

ASSETS


57/120

57

Inventories 9025.61 10703.21 1677.06

sundry debtors 4243.37 5228.75 985.38

cash and bank

balances

6028.76 4349.39 1679.37

loan & advances 3026.39 6695.79 3669.04

(A) 22324.13 26977.14

CURRENT

LIABILITIES

liabilities 11468.95 16516.25 5047.30

provisions 2616.21 1042.30 1573.91

(B) 14085.16 17558.55

(A-B) WORKING

CAPITAL

8238.97 9418.59

INCREASE in WC 1179.62 1179.62

TOTAL 9418.59 9418.59 7906.29 7906.29


58/120

58

INFERENCE:

In the above the statement showing changes in working capital of the ashok

Leyland Ltd, for the year ending 31st march has show the working capital in the year

2006-2007 has increase by 1179.62 million

CHART NO:4

CHANGES IN WORKING CAPITAL AS PER THE YEAR 20062007


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59

2006

20070

5000

10000

15000

20000

25000

30000

CURRENT

ASSETS CURRENT

LIABILITIESNET

WORKING

CAPITAL

2006

2007


60/120

60

TABLE NO : 5


YEAR 2007-08 (Rs IN MILLIONS)


CURRENT ASSETS

Inventories 10703.21 12239.14 1535.93

sundry debtors 5228.75 3758.35 1470.40

cash and bank

balances

4349.39 4513.70 164.31

loan & advances 6695.79 8241.38 1545.59

(A) 26977.14 28752.58

CURRENT

LIABILITIES

liabilities 16516.25 19267.08 2750.83

provisions 1042.30 3452.31 2410.01


61/120

61

(B) 17558.55 22719.39

(A-B) WORKING

CAPITAL

9418.59 6033.19

DECREASE in WC 3385.40 3385.40

TOTAL 9418.59 9418.59 6631.23 6631.23

INFERENCE:

In the above the statement showing changes in working capital of the

Ashok Leyland Ltd, for the year ending 31

st

march has show the working capital in the

year 2007-2008 has decrease by 3385.4 million

CHART NO:5



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62

(RS IN MILLION)

TABLE NO : 6

2007

20080

5000

10000

15000

20000

25000

30000

35000

CURRENT ASSETSCURRENT

LIABILITIES NET WORKING

CAPITAL

2007

2008


63/120

63


YEAR 2008-09

(Rs. IN MILLIONS)


CURRENT

ASSETS

Inventories 12239.14 13300.14 1061.00

sundry debtors 3758.35 9579.74 5821.39

cash and bank

balances

4513.70 880.83 3632.86

loan & advances 8241.38 7895.44 346.25

(A) 28752.58 31656.14

CURRENT

LIABILITIES

liabilities 19267.08 18688.64 5784.43

provisions 3452.31 2680.82 771.49


64/120

64

(B) 22719.39 21369.46

(A-B) WORKING

CAPITAL

6033.19 10286.67

INCREASE in WC 4253.50 4253.50

TOTAL 10286.68 10286.68 8232.32 8232.32

INFERENCE:

In the above the statement showing changes in working capital of the ashok

Leyland Ltd, for the year ending 31

st

march has show the working capital in the year

2008-2009 has increase by 4253.5 million

CHART NO:6


( RS IN MILLION)


65/120

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TABLE NO : 7

0

5000

10000

15000

20000

25000

30000

35000

current assets current liabilities net working capital

2008

2009


66/120

66


YEAR 2009-2010

Particulars 2009 2010 Increase Decrease

Current assets

Inventories 13300.14 16382.40 3082.26

Sundry debtors 9579.74 10220.61 640.87

Cash and bank

Balance

880.83 5189.20 4308.37

Loan and

Advances

7895.43 9604.62 1709.19

A 31656.14 41396.83

Current

liabilities

Liabilities 18688.64 25920.65 7232.01

Provisions 2680.81 3686.91 1006.10

B 21369.45 29607.56

(A-B) 10286.69 11789.27


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67

WORKING

CAPITAL

Increasing in

WC

1502.58 1502.58

TOTAL 11789.27 11789.27 9740.69 9740.69

INFERENCE:

In the above the statement showing changes in working capital of the Ashok Leyland

Ltd, for the year ending 31st march has show the working capital in the year 2006-

2007 has increase by 1502.58 million

CHART NO:7


( RS IN MILLION)


68/120

68

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

current assets current liabilities net working capital

2009

2010


69/120

69

TABLE NO : 8


YEAR 2010-2011

Particulars 2010 2011 Increase Decrease

Current assets

Inventories 16382.4 22089.03 5706.63

Sundry debtors 10220.61 11852.13 1631.52

Cash and bank

Balance

5189.20 1795.27 3393.75

Loan and

Advances

9604.62 7936.01 1668.61

A 41396.83 43672.44

Current

liabilities

Liabilities 25920.65 30379.47 4458.82


70/120

70

Provisions 3686.91 4903.62 1216.71

B 29607.56 35282.74

(A-B)

WORKING

CAPITAL

11789.27 8389.70

Decrease in

WC

3399.57 3399.74

TOTAL 11789.27 11789.27 10737.89 10737.89

INFERENCE:

In the above the statement showing changes in working capital of the Ashok Leyland

Ltd, for the year ending 31st march has show the working capital in the year 2010-

2011 has decrease by 3399.74 million


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71

CHART NO:8


( RS IN MILLION)

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

current assets current liabilities Net working

capital

2010

2011


72/120

72


73/120

73

WORKING CAPITAL TURNOVER RATIO:

W.C TURNOVER RATIO=SALES

NET WORKING CAPITAL

THE TABLE SHOWING WORKING CAPITAL TURNOVER RATIO


74/120

74

TABLE NO:8

YEAR SALES NET.WORKING

CAPITAL

TURNOVER

RATIO

2006-07 71681.76 9418.59 7.61

2007-08 77425.80 6,033.19 12.83

2008-09 59810.73 10,286.70 5.81

2009-10 72447.10 11789.27 6.10

2010-11 111177.09 11789.27 9.43

THE CHART SHOWING WORKING CAPITAL RATIO:

CHART NO :8

INFERENCE:

0

20000

40000

6000080000

100000

120000

salesnet working

capital w.c turnover

ratio

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011


75/120

75

The working capital turnover ratio is high in 2007-2008 12.83

The ratio is decreased from 2008-2009.

In 2009-2010 the turnover ratio is start increasing as 6.1

In 2010-2011 the turnover ratio is slightly increased to 9.43

ANNEXURES

BALANCESHEET AS PER THE YEAR 2006-2007

TABLENO:9

ASHOK LEYLAND LTD

Balance Sheet as at 31st

March 2006 and 2007

A.

B.

C.

Sources of funds

Shareholders Funds

Share capital

Reserve and surplus

Loans and funds

As at march 31, 2007 As at march 31, 2006

Rs. Rs. Rs. Rs.

1323.87

17621.81

18945.68

1221.59

12902.94

14124.53


76/120

76

D.

Secured loans

Unsecured loans

Deferred tax liability-net

3602.16

2801.82

6403.98

1969.29

1846.91

5072.37

6919.28

1796.89

Total 27318.95 22840.70

A.

B.

C.

Application of funds

Fixed assets

Gross block

Less: Depreciation

Net block

Capital work in progress

Investments

Current assets, loans and

advances

Inventories

26201.97

13131.64

15445.24

2210.94

21384.99

11952.28

10846.88

3681.78

13070.91

2374.91

9432.28

1414.17

10703.21

5228.75

4349.39

9025.61

4243.37

6028.76


77/120

77

D.

Sundry debtor

Cash and bank balance

Loans and advances

Less:

Current liabilities:

Liabilities

Provisions

Net current assets

Miscellaneous expenditure

6695.79

26977.14

17558.55

9418.59

244.18

3026.39

22324.13

14085.16

8238.97

73.07

16516.25

1042.30

11468.95

2616.21

Total 27318.95 22840.70


78/120

78

COMPARATIVEBALANCESHEETASAT31ST

MARCH2007AND2008

TABLENO:10

ASHOK LEYLAND LTD


March 2007 and 2008

Sources of funds As at march 31, 2008 As at march 31, 2007


79/120

79

A.

B.

C.

D.

Shareholders Funds

Share capital

Reserve and surplus

Loans and funds

Secured loans

Unsecured loans

Deferred income-net

Rs. Rs. Rs. Rs.

1330.34

20159.48

21489.82

8875.01

2538.20

1323.87

17621.81

18945.68

6403.98

1969.29

1902.40

6972.61

3602.16

2801.82

Total 32903.03 27318.95

A.


Fixed assets

Gross block

Less: Depreciation

Net block


29424.38

14168.88

20547.95

26201.97

13131.64

15445.24

15255.50

5292.45

13070.33

2374.91


80/120

80

B.

C.

D.

Investments


advances

Inventories

Sundry debtor


Loans and advances

Less:


Liabilities

Provisions

Net current assets


6099.00

28752.56

5033.16

222.92

2210.94

26977.14

9418.59

244.18

12239.14

3758.35

4513.70

8241.37

10703.21

5228.75

4349.39

6695.79

19267.09

3452.31

22719.40

16516.25

1042.30

17558.55


81/120

81

Total 32903.03 27318.95


82/120

82

TABLE NO : 11


MARCH2008AND2009

ASHOK LEYLAND LTD


March 2008 and 2009

A.

B.

C.

D.

Sources of funds

Shareholders Funds

Share capital

Reserve and surplus

Loans and funds

Secured loans

Unsecuredloans


Foreign currency monetary


Rs. Rs. Rs. Rs.

1330.34

33408.64

34738.99

19581.43

2634.36

384.11

1330.34

20159.48

21489.82

8875.01

2538.19

3044.13

16537.30

1902.40

6972.61


83/120

83

item

Total 56993.20 32903.03

A.

B.

C.


Fixed assets

Gross block

Less: Depreciation

Net block


Investments


advances

49532.72

15541.55

43974.05

2635.57

29424.38

14168.87

20547.94

6098.98

33991.16

9982.89

15255.50

5292.44

13300.14

9579.74

12239.14

3758.35


84/120

84

D.

Inventories

Sundry debtor


Loans and advances

Less:


Liabilities

Provisions

Net current assets


880.83

7895.43

31656.15

10286.69

968.82

4513.70

8241.37

28752.56

6033.16

222.92

18688.64

2680.81

21369.45

19267.09

3452.31

22719.40

Total 56993.20 32903.03


85/120

85

TABLE NO : 12


MARCH2009AND2010

ASHOK LEYLAND LTD


March 2009 and 2010

A.

Sources of funds

Shareholders Funds

Share capital


Rs. Rs. Rs. Rs.

1330.34 1330.34


86/120

86

B.

C.

D.

Reserve and surplus

Loans and funds

Secured loans

Usecured loans

Deferred liability



item translation difference-

net

35357.23

7115.66

14923.25

36687.58

22038.91

765.48

3845.36

(124.50)

33408.64

3044.13

16537.30

34738.99

19581.43

2634.36

384.11

Total 63212.85 56993.20

A.


Fixed assets

Gross block

Less: Depreciation

60186.33

17690.74

49389.48

15398.31


87/120

87

B.

C.

D.

Net block


Investments


advances

Inventories

Sundry debtor


Loans and advances

Less:


Liabilities

Provisions

Net current assets

42495.59

5614.69

48110.28

3261.54

41396.84

29607.57

11789.27

33991.16

9982.89

43974.05

2635.57

31656.15

21369.45

10289.69

16382.40

10220.61

5189.20

9604.62

1330.01

9579.74

880.83

7895.43

25920.65

3686.91

18688.64

2680.81


88/120

88

Miscellaneous expenditure 51.74 96.88

Total 63212.85 56993.20

TABLE NO : 13


MARCH2010AND2011

ASHOK LEYLAND LTD


March 2009 and 2010

A.

B.

C.

Sources of funds

Shareholders Funds

Share capital

Reserve and surplus

Loans and funds


Rs. Rs. Rs. Rs.

13303.42

38299.27

39629.21

13303.42

35357.23

36687.58


89/120

89

D.

Secured loans

Usecured loans

Deferred liability



item translation difference-

net

11822.97

13859.67

25682.64

899.26

4438.86

-

7115.66

14923.25

22038.91

765.48

3845.36

(124.50)

Total 70650.40 63212.85

A.


Fixed assets

Gross block

Less: Depreciation

Net block


66918.88

20580.96

46337.91

3579.66

60186.33

17690.74

42495.59

5614.69


90/120

90

B.

C.

D.

Investments


advances

Inventories

Sundry debtor


Loans and advances

Less:


Liabilities

Provisions

Net current assets


22089.34

11852.13

1795.72

7936.01

49917.57

12299.96

8389.71

431.45

16382.40

10220.61

5189.20

9604.62

48110.28

3261.54

11789.27

51.74

43672.45 41396.84

30378.47

4903.26

35282.74

25920.65

3686.91

29607.57


91/120

91

Total 70650.40 63212.85


92/120

92


93/120

93


94/120

94

COMPARATIVE INCOME STATEMENT FOR THE YEAR 2006-2007

particular 2006 2007 Increase/decrease

Amount

%

Sales

Less:

Excise duty

NET SALES

ADD:Other

income

60531.08

8054.51

83047.17

11365.41

22516.09

3310.90

37.19

41.10

52476.57 71681.76 19205.19 36.60

329.74 708.03 378.29 114.72


95/120

95

(A)

521806.31 72389.79 19583.48 37.08

Less:

Manufacturing

expenses

depreciation

Financial

expenses

47075.87

1260.06

164.53

64654.91

1505.74

53.32

17579.04

245.68

(111.21)

37.34

19.50

(208.57)

(B)

48500.46 66213.97 17713.51 36.52

PBIT=C(A-B) 4305.85 6175.82 1869.97 43.43

LESS:

VRS

compensation

scheme

84.51

(301.66)

130.76

0

46.25

301.66

54.73


96/120

96

Profit on sale on

undertaking

(D)

217.15 130.76 347.91 160.22

PBT=E(C-D) 4523.00 6045.06 1522.06 33.65

LESS:

Current tax

Deferred tax

Fringe benefit

tax

1130.50

72.30

47.00

1350.50

230.20

51.50

220.00

157.90

4.50

19.46

218.39

9.57

(F)

1249.80 1632.20 382.40 30.60

PAT=G(E-F) 3273.20 4412.86 1139.66 34.82



97/120

97

Particular 2007 2008

Increase/Decrease

Amount

%

Sales

Less:

Excise duty

NET SALES

ADD:Other

income

53047.17

11365.41

89336.90

12045.67

6289.73

680.26

7.57

5.98

71681.76 77291.23 5609.47 7.83

708.03 739.99 31.96 4.51

(A) 72389.79 78031.22 19583.00 27.10

Less:


98/120

98

Manufacturing

expences

depriciation

Financial

expences

64654.91

1505.74

53.32

69251.34

1773.61

497.40

17579.04

245.68

(111.21)

27.18

16.30

(208.57)

(B)

66213.97 71522.35 17713.51 26.75

PBIT=C(A-B) 6175.82 6508.87 1869.97 30.27

LESS:

VRS

compensation

scheme

Profit on sale on

undertaking

130.76

0

127.37

0

46.25

0

35.37

0

(D)

130.76 127.37 347.91 266.06


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PBT=E(C-D) 6045.06 6381.50 1522.06 25.17

LESS:

Current tax

Deferred tax

Fringe benefit

tax

1350.50

230.20

51.50

1014.00

604.40

70.00

220.00

157.90

4.50

16.29

68.59

8.74

(F)

1632.20 1688.40 382.40 23.43

PAT=G(E-F) 4412.86 4693.10 1139.66 25.82



Increase/Decrease

Amount

%

Sales

Less:

78725.97 66666.40 12059.57 15.32


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100

Excise duty

NET SALES

ADD:Other

income

12045.67 6855.66 5190.01 43.09

66680.30 59810.74 6869.56 10.30

739.99 492.62 247.37 33.43

(A) 67420.29 60303.36 7116.93 10.56

Less:

Manufacturing

expenses

depreciation

Financial

expenses

69251.34

1773.61

497.40

6465.91

1505.74

53.32

4596.43

267.87

444.08

15.10

89.28

71522.35 66213.97 5308.38 7.42


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(B)

PBIT=C(A-B) 6508.87 6175.82 333.05 6.64

5.12

LESS:

VRS

compensation

scheme

Profit on sale

on

undertaking

130.76

0

127.37

0

3.39

0

2.59

0

(D)

130.76 127.37 3.39 2.59

PBT=E(C-D) 6045.06 6381.50 336.44 5.56

LESS:

Current tax 1,350.50 1,014.00 336.50 24.92


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Deferred tax

Fringe

benefit tax

230.20

51.50

604.40

70.00

374.20

18.50

162.55

35.92

(F)

1632.20 1688.40 56.20 3.44

PAT=G(E-F)

4,412.86 4,693.10 280.24 6.35



Increase/Decrease

Amount

%


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Sales

Less:

Excise duty

NET SALES

ADD:Other

income

66,666.40

6,855.66

78,725.97

6,278.87

12,059.57

576.59

18.09

8.41

59,810.74 72,447.10 12,636.36 21.13

492.62 704.45 211.83 43.00

(A)

60,303.36 73,151.56 12,848.20 21.31

Less:

Manufacturing

expences

depriciation

Financial

64,654.91

1,505.74

53.32

64,818.71

2,041.11

811.30

163.80

535.37

757.99

0.25

35.55

1421.99


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expences

(B)

66,213.97 67,671.10 1457.13 2.20

PBIT=C(A-B)

6,175.82 5,480.46 695.36 11.26

LESS:

VRS

compensation

scheme

Profit on sale on

undertaking

127.37

0

32.71 1240.66 974.05

(D)

127.37 32.71 1240.66 974.05

PBT=E(C-D) 6,381.50 5,447.75 933.75 14.63

LESS:


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Current tax

Deferred tax

Fringe benefit

tax

1,014.00

604.40

70.00

1,211.00

1014.00

606.60

70

100.00

100.36

100.00

(F)

1688.40 1211.00 477.40 28.28

PAT=G(E-F) 4,693.10 4,236.75 456.35 9.72



Increase/Decrease

Amount

%

Sales

Less:

Excise duty

78,725.97

6,278.87

120936.06

9758.97

42210.09

3480.10

53.61

55.42


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NET SALES

ADD:Other

income

72,447.10 111177.09 38729.99 53.45

704.45 153.34 551.11 78.23

(A)

73,151.56 111330.43 38178.87 52.19

Less:

Manufacturing

expences

depriciation

Financial

expences

64,818.71

2,041.11

811.30

99001.51

2674.31

1636.61

3418.28

633.2

825.31

52.73

31.02

101.72

(B)

67,671.10 103312.44 35641.34 52.66


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PBIT=C(A-B)

5,480.46 8017.99 2537.53 46.30

LESS:

VRS

compensation

scheme

Profit on sale on

undertaking

32.71

0

0- 32.71 100

(D)

32.71 0 32.71 100

PBT=E(C-D) 5,447.75 8017.99 2570.24 47.17

LESS:

Current tax

Deferred tax

Fringe benefit

tax

1,211.00

1111.50

593.50

1111.50

617.5

100

50.99


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108

(F)

1211.00 1705 494 40.79

PAT=G(E-F) 4,236.75 6312.99 2076.24 49


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CHAPTER-V

FINDINGS AND SUGGESTION

The current ratio of ASHOK LEYLAND LTD, the maximum level of ratio is1.54

in(2006-2007) and the minimum level of ratio is1.27 in(2007-2008)

The inventory turnover ratio is decreasing from 2007 to 2009 7.27,6.75,4.68 and its

was continuous decline in the year 2010 is 4.88.

The working capital turnover ratio is high in 2007-2008 is 12.83.the ratio is decreased

from 2008-2009 is 5.81.In 2009-2010 .It starts increasing as 6.1.

Net working capital of the company 2006-2007(in millions 1179.62) was increased

In 2007-2008 Net working capital was decreased as(in millions 3385.4)

Net working capital of the company 200-82009(in millions 4253.50) was increased


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Net working capital of the company 2009-2010(in millions 1502.58) was increased.

SUGGESTIONS:

The company has to take steps to improve the management of working capital to meet

its short term obligations.

The has to take of better and proper utilization of assets for improving the efficiency

Working capital is the life blood of business. No firm can run its business

successfully without sufficient working capital

The company should increase the current assets in future to raise the profit of the

company

Conclusion:

Overall it to be concluded that the financial position of ashok Leylandlimited is good

Working capital of the company was increasing and showing positiveworking capital per year. It shows good liquidity position.


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Positive working capital indicates that company has the ability of paymentsof short terms liabilities.

Working capital increased because of increment in the current assets ismore than increase in the current liabilities.

BIBLIOGRAPHY:

BOOKS REFERRED:

M.Y. KHAN AND P.K. JAIN --FINANCIAL MANAGEMENT;--Tata McGraw-Hill Publication

I. M. PANDEYFINACIAL MANAGEMENT;--Vikas Publishing

House Pvt Ltd.

PRASANNA CHANDRAFINANCIAL MANAGEMENT--Tata

McGraw-Hill Publication


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WEBSITES:

WWW.ASHOKLEYLAND.COM

WWW.MENTORMYPROJECT.COM

WWW.SCRIBD.COM

WWW.MANAGEMENTPARADISE.COM

WWW.BIZSTATS.COM

WWW.FINDARTICLES.COM

WWW.BRITANNICA.COM

WWW.INDIAINFOLINE.COM

WWW.BIZRESEARCHPAPERS.COM


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WWW.OPPAPERS.COM

WWW.ALLBUSINESS.COM

WWW.DOCSTOC.COM

BALANCE SHEET:

(Rs.IN MILLIONS)

PARTICULARS 2006-07 2007-08 2008-09 2009-10 2010-11

Source Of Funds

Shareholders

Fund

Capital

1,323.87 1,330.34 1,330.34 1330.34 1330.34

Reserves And 17,621.81 20,159.48 33,408.65


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Surplus

18,945.68 21,489.83 34,738.99

Loan Funds

Secured Loans 3,602.16 1,902.40 3,044.13

Unsecured Loans 2,801.82 6,972.61 16,537.31

6,403.98 8,875.01 19,581.44

Deferred Tax

Liability-Net

1,969.29 2,538.20 2,634.37

Foreign Currency

Monetary Item

Translation

Difference-Net

Total 27,318.95 32,903.03 56,993.21

Application Of

Funds

Fixed Assets

Gross Block 26,201.97 29,424.38 49,532.72

Less Depreciation 13131.64 14,168.88 15,541.56


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Net Block 13070.33 15,255.50 33,991.16

Capital Work-In-

Progress

2374.91 5,292.45 9,982.89

15445.24 20,547.95 43,974.06

Investments 2210.94 6,098.99 2,635.57

Current Assets,

Loans And

Advances

Inventories 10703.21 12239.14 13,300.14

Sundry Debtors 5228.75 3758.35 9,579.74

Cash And Bank

Balances

4349.39 4513.7 880.836

Loans And

Advances

6695.79 8241.39 7,895.44

26977.14 28752.58 31,656.14

Less Current

Liabilities And

Provisions


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Liabilities 16516.25 19267.08 18,688.64

Provisions 1042.3 3452.31 2,680.82

17558.55 22,719.39 21,369.46

Net Current Assets 9418.59 6033.187 10,286.68

Miscellaneous

Expenditure

244.18 222.91 96.88

Total 27,318.95 32,903.03 56,993.21

(Source: annual reports of the company)


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geetha finance mba project in mini

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