muthuselvan project
TRANSCRIPT
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EXECUTIVE SUMMARY
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The accuracy of ratio su$ject to the validity of information provided throu%h
alance sheet, !rofit and #oss &/c and interactions with ana%ement.
&s this an academic efforts, it is limited $y time, cost ( covera%e.
This study covers only a part of V.+..
The presents report covers only the 0 consecutive recent year-s data.
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INDUSTRY PROFILE
INTRODUCTION
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India has the hi%hest livestock population in the world with 012 of the
$uffaloes and 312 of the world-s cattle population, most of which are milk of cows
and $uffaloes. +airy development in India has $een acknowled%ed the world over as
one of modern India-s most successful developmental pro%ramme. Today, India is thelar%est milk producin% country in the world.
#ate +'.Ver%hese4urien, the man who $rou%ht milk revolution in the country,
was a renowned Indian social entrepreneur and also known as 5Father of the 6hite
'evolution5, for his 7illion8#itre Idea7 the world7s $i%%est a%ricultural development
pro%ramme.
#ate +'. Ver%hese4urien was instrumental in layin% the foundation of
democratic enterprises at the remote villa%es and far flun% hamlets which ensured
economic justice. The operation took India from $ein% a milk8deficient nation, to the
lar%est milk producer in the world. One of the %reatest proponents of the cooperative
movement in the world, his work has alleviated millions out of poverty not only in
India $ut also outside. 9ailed as the 5ilkman of India5
+airy Cooperatives account for the major share of processed liuid milk
marketed in the India. ilk is processed and marketed $y :;1 ilk !roducers-
Cooperative "nions, which federate into :0 )tate Cooperative ilk arketin%
Federations. Over the years, several $rands have $een created $y cooperatives like
&mul ,Vijaya
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Amul
&mul is an Indiandairy cooperative, $ased at &nandin the state of ?ujarat,
India.The word &mulis derived from the )anskritword &mulya, meanin% invalua$le.
Vijaya dairy mil was formed in :AB, which is a $rand mana%ed $y a cooperative
$ody, the ?ujarat Co8operative ilk arketin% Federation #td. Today &mul is the
#ar%est I#4 !'O+"CD' in the 6orld.
+rVer%hese4urien, founder8chairman of the ?ujarat Co8operative ilk
arketin% Federation #td. credited with the success of &mul. The idea $ehind the
6hite 'evolution which led to the $irth of &"# Evijaya dairy milk wasGthe power
in the idea of co8operatin% all milk producers and poolin% their resources to $uild a
$etter life and achievin% what they could never achieve aloneH.
&mul is located in the town Vijaya which is in tirchy and it has setup itself a
model for development in the rural areas. &mul has around 3.A million producer
mem$ers coverin% :0,@33 villa%e societies and the total capacity of handlin% milk is
around :@.1; million liters every day. The $rand capacity of milk dryin% is aroundB; ts each day and its capacity for cattle field manufacturin% is a$out @;B1 ts
each day.
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Anandhttp://en.wikipedia.org/wiki/Gujarathttp://en.wikipedia.org/wiki/Sanskrithttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Dr_Verghese_Kurienhttp://en.wikipedia.org/wiki/Anandhttp://en.wikipedia.org/wiki/Gujarathttp://en.wikipedia.org/wiki/Sanskrithttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Dr_Verghese_Kurienhttp://en.wikipedia.org/wiki/India -
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T!" mai# $u#%&i'#( '$ &!" Amul ar")
Collection of surplus milk from the milk producers of the villa%e, and payment
$ased on uality and uantity,
!rovidin% support services to the mem$ers like veterinary first aid, artificial
insemination services, cattle8feed sales, mineral mi*ture sales, fodder and fodder
seed sales, conductin% trainin% on animal hus$andry and dairyin%.
)ellin% liuid milk for local consumers of the villa%e,
)upplyin% milk to the +istrict ilk "nion.
The Amul brand
The lar%est distri$ution network for any FC? company. It has nearly 01 sales
offices spread all over the country, more than 0111 wholesale dealers and more than
;11111 retailers.
&mul $ecame the world7s lar%est ve%etarian cheese and the lar%est pouched8milk
$rand.
&"# is also the lar%est e*porter of dairy products in the country. V+ is
availa$le today in over B1 countries of the world. Vijaya dairy milk is e*portin% a
wide variety of products which include whole and skimmed milk powder, cotta%e
cheese
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R"*ula&'ry E#+ir'#m"#& i# &!" Dairy Pr'%"((i#*S"%&'r i# I#dia
The Indian processed dairy industry has %rown anddiversified enormously in
the last few years. To ensure theproper development and %rowth of this industrial
sector,the ?overnment of India has instituted various laws andre%ulations. The
various re%ulations that %overn the dairyprocessin% industry can $roadly $e classified
into
C'm,ul('ry L"*i(la&i'#Pr"+"#&i'# '$ F''d Adul&"ra&i'# A%&- ./01
This &ct is the $asic statute that is intended to protect thecommon consumer
a%ainst the supply of adulterated food.This specifies different standards for various
food articles.The standards are in terms of minimum uality levelsintended for
ensurin% safety in the consumption of thesefood items and for safe%uardin% a%ainst
harmful impuritiesand adulteration. The Central Committee for Food)tandards, under
the +irectorate ?eneral of 9ealth )ervices,inistry of 9ealth and Family 6elfare, is
responsi$le forthe operation of this &ct. The provisions of the &ct aremandatory and
contravention of the rules can lead to $othfines and imprisonment.
Mil a#d Mil Pr'du%& Ord"r 2MMPO3 .//4
The ilk and ilk !roduct Order
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The Certificate also specifies the milk shed area, which,under the order is
defined as a %eo%raphical areademarcated $y the 'e%isterin% &uthority for
thecollection of milk $y the re%istered unit.
aintenance of specified hy%ienic conditions in thepremises where milk and
milk products are handledprocessed, manufactured or stored.The collection,
transportation and processin% of milknormally centres around the operations of
a processin% plant.
The re%ion from which the marketa$le surplus of milkproduction finds its way
to a processin% plant is called aLmilkshed-. The concept of milkshed areas is
pivotal to the!O. For an orderly development of the dairy industry,
aproper assi%nment/allocation of milkshed is critical.
S&a#dard( '# 6"i*!&( a#d M"a(ur"(2Pa%a*"d C'mm'di&i"(3 Rul"(- ./77
These 'ules lay down certain o$li%atory conditions for allcommodities that are
packed form, with respect todeclarations on uantities contained. These 'ules
areoperated $y the +irectorate of 6ei%hts and easures, underthe inistry of Food
and Civil )upplies.
a3 V'lu#&ary S&a#dard(
There are two or%anizations that deal with voluntarystandardization and certification
systems in the foodsector. The ureau of Indian )tandards looks afterstandardization
of processed foods andstandardization of raw a%ricultural produce is underthe
purview of the +irectorate of arketin% andInspection.
83 Bur"au '$ I#dia# S&a#dard( 2BIS3
The activities of I) are twofold, the formulation ofIndian standards in the processed
foods sector andthe implementation of standards throu%h promotionand throu%h
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voluntary and third party certificationsystems. I) has on record, standards for most
ofprocessed foods. In %eneral, these standards cover rawmaterials permitted and their
uality parameters,hy%ienic conditions under which products aremanufactured and
packa%in% and la$elin% reuirements. anufacturers complyin% withstandards laiddown $y the I) can o$tain and GI)IHmark that can $e e*hi$ited on product
packa%es. I)has identified certain items like food colors/additives,vanaspati,
containers for packin%, milk powder andcondensed milk, for compulsory
certification.
%3 Dir"%&'ra&" '$ Mar"&i#* a#d I#(,"%&i'# 2DMI3
The +I enforces the &%ricultural !roducts
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cleared on case to case $asis.?overnment may allow 0:2 without enforcin% theold
limit of B12 applica$le under Forei%n D*chan%e'e%ulations &ct at its discretion.
9ujara& C'',"ra&i+" Mil Mar"&i#* F"d"ra&i'#
In :A;@, +r. Vijaya set up to market the products produced $y the dairies which
was jointly owned $y @.1@ million milk producers in ?ujarat. &fter the key invention
of milk powder from $uffalo milk there was no stoppin% to the %rowth in dairy sector
$ecause in India most of the milk came from $uffalo unlike other countries which
primarily depended on milk. It focused on low pricin% strate%y with superior uality
in order to attract consumers $y %uaranteein% the value for their money.
National Dairy Development Board
The Na&i'#al Dairy D"+"l',m"#& B'ardis an institution of national
importance set up $y an &ct of !arliamentof India. The >ational +airy +evelopment
oard ++= was created in :A0 $y #&TD +r. Ver%hese4urien to fulfill the
desire of the then !rime inister of India 8 the late #alahadur)hastri8 to e*tend the
success of the 4aira Cooperative ilk !roducers7 "nion ++ has now inte%rated
A,111 dairy co8operatives in what it calls the A#a#d Pa&&"r#, linkin% the villa%e
society to the state federations in a three8tier structure.>++ launched its
!erspective !lan 31:1 with four thrust areas Muality &ssurance, !roductivity
Dnhancement, Institution uildin% and >ational Information >etwork.
AMUL PATTRN !N D!""RNT #TAT# O" !ND!A
http://en.wikipedia.org/wiki/Indian_Parliamenthttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Verghese_Kurienhttp://en.wikipedia.org/wiki/Lal_Bahadur_Shastrihttp://en.wikipedia.org/wiki/Amulhttp://en.wikipedia.org/wiki/Indian_Parliamenthttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Verghese_Kurienhttp://en.wikipedia.org/wiki/Lal_Bahadur_Shastrihttp://en.wikipedia.org/wiki/Amul -
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system. oreover at that time milk was $ein% sold in $ottles and for the first time in
India he introduced milk in N liter sachets. 9e had a prototype machine for
packa%in% milk in sachets installed in Thiruvananthapuram. From :AK: onwards
under the advice of +r. V. 4urien, $y formin% cooperative societies!rayar?opalakrishnan and others were a$le to introduce I#& to the whole of
4erala.
V"ra 2P"ram8alur3
The !unja$ )tate Cooperative ilk !roducers Federation #imited popularly
known as I#4FD+ !unja$ with $rand name Verka came into e*istence in :A;@
with a twin o$jective of providin% remunerative milk market to the ilk !roducers in
the )tate $y value addition and marketin% of produce on one hand and to provide
technical inputs to the milk producers for enhancement of milk production on the
other hand.!unja$ is the second lar%est milk producin% state in India, producin%
around :12 of the country-s ilk !roduction i.e. K million tons annually.
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COMPANY PROFILE
VIJAYA MIL: UNION
VijayaCo8operative milk producers "nion #td.
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;To Dnhance ilk !roduction &nd !rocurment &nd a*imizereturns To ilk
!roducers yFindin% #ucrative arket For ilk &nd There$y Towards Via$ility Of
ilk "nion.H
Vi(i'
To march forward with a missionary zeal which will make VF a trail$lazer of
e*emplary performance and achievements $eckonin% other ilk Federations in
the country in pursuit of total emulation of its %ood deedsP
To ensure prosperity of the rural ilk producers who are ultimate owners of the
Federation. To promote producer oriented via$le cooperative society to impart an impetus to
the rural income, dairy productivity and rural employment.
To $rid%e the %ap $etween price of milk procurement and sale price.
To develop $usiness acumen in marketin% and tradin% disciplines so as to serve
consumers with uality milk, %ive a fillip to the income of milk producers.
OBJECTIVES
To provide remunerative market for the milk produced $y the farmers.
To provide %ood ( $est uality to its customers.
To $rid%e the %ap $etween masses of rural producers ( millions of consumers.
To achieve socio8economic of the revolution hinterland of the state.
To ensure ma*imum returns to the milk producers.
To provide milk at reasona$le rates to the consumers.
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HISTORY
& %roup of e*perience officers, appointed $y the 4arnataka ilk Federationsurveyed the whole of Vijaya+istricts. Further they found out there is need for a milk
dairy. They surveyed the surroundin% villa%es educated. The villa%es a$out milk and
milk products and the $enefits they would %et from the milk dairy.
The overwhelmin% response received and untapped resources and the hu%e
market. The federation decided to set up the milk union in :AKB, known as the
Vijayadistrict.
Further in :AKK, the 'aipur diary and chillin% center setup in :AK, also came
under the union. In :AKA the trainin% center which was controlled $y 4arnataka ilk
Federation came underVijayailk "nion. Vijayailk "nion was 's. ; crores of the
projects of which ?overnment has 's. 3 croreso f share capital and authorized capital
of +" is 's. 0 crores.
Vijayailk "nion formed 00: ilk !roducers Co8operative societies in
Vijaya, production capacity of Vijayailk "nion is 3 lakhs liters ilk per day and
also has the capacity to produce :3 tons of ilk !owder, :1 tones of $utter, tones of
?hee per day. F" collectin% K18K0 thousand liters of milk per day from its societies
and sells a$ove 0 thousand liters per day and the remainin% milk is used for produce milk
products.
VMU 8uild( a#d ru#( u#d"r &!" %'
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MIL: CHILLIN9 CENTER AND CAPACITY
?ada% 31111 #!+.
9averi 31111 #!+.
9irekerur 31111 #!+.
>ara%unda K111#!+.
'on :1111 #!+.
)irsi 31111 #!+.
DEPARTMENTS IN DMU)
&dministrative +epartment
Finance ( &ccounts +epartment
!rocurement ( Input +epartment
Muality Control +epartment
!roduction +epartment
Dn%ineerin% ( Civil +epartment
arketin% +epartment
Finished ?oods +epartment
!urchase +epartment
)tore +epartment )ecurity +epartment
Canteen +epartment
Time Office +epartment
COMPETITORS
The >andini milk is facin% lot of competition in the milk market. The
primeCompetitors are private players like,
:.harat
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3.)iddhi Vinayak
@.ayour
B.?opal
0.&ditya
.+atta
6ELFARE FACILITIES
I= S&a&u&'ry Fa%ili&i"(
Canteen facility
!ayment to provident fund contri$ution.
'estroom sittin%s
#eave facilities.
I. Casual #eave :0days
II. )ick #eaves :1days.
III. Darned #eaves @1days
"niforms are provided.
!rovision of wash $asins. edical $enefits
II=N'# S&a&u&'ry Fa%ili&i"(=
Factory arran%es cultural pro%rams at the time of ?anesh Chaturthi, workers day and
+eepavali.
Factory often conducts demonstration throu%h social workers in respect of family
plannin%, &I+)awareness, etc.
)taff mem$er-s children will $e provided with %ift for scorin% in ))#C, !"C.
ilk su$sidy for i. :1 months Q ltr free
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III= Fi#a#%ial S%!"m"
Dmployee %ratuity scheme.
Dmployee-s %roup savin%s linked insurance scheme.
Dmployee-s death cum %ratuity scheme.
Dmployees provided fund and pension scheme
S6OT ANALYSIS
STREN9TH
any products are marked.
ajor market share ;12(arket leader in milk products. Competitive price.
The $est uality products.
D*cellent $rand ima%e( distri$ution channels.
Consistency in demand for product thou%ht out the year.
6ide distri$ution network leads re%ular and timely supply.
'educe the transportation cost.
6EA:NESS
ore manpower.
&ll the products are perisha$le products.
!oor retail servin% and consumer %rievance handlin%.
'ecurrin% uality pro$lem
#owest payin% $rand i.e. commission %iven $y the company is less compare to other
$rands
Inadeuate sales promotional activity. +ue to $ad smell that persists low sale
OPPORTUNITIES)
&vaila$ility of $uffalo milk improves market milk uality
!redominant of loose milk se%ment R divide appropriate strate%ies
!henomenal scope for innovation in product development packa%in% and presentation.
)tep should $e taken to introduce value added products like srikhands, ice8cream
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THREATS
>o entry $arriers for private players.
#ow level of consumer awareness.
!ersuade $enefits of competin% $rand.
Increase in ta* and service rate. Increase of competitors.
!'O+"CT)
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CONCEPTUAL FRAME 6OR:
+espite of tou%h competition from various manufacturers of milk and milk
products, Vijayailk "nion still stand to $e one of the most reputed companies in
4arnataka. The Vijayailk "nion aims at providin% health and toned milk to its
customers at a $etter and reasona$le price. Dvery company has to maintain %ood
mana%ement for smooth runnin% of its activities. This study is undertaken to o$serve
the V"performance throu%h ratio analysis techniue $ecause ratio analysis is the
important tool used to o$tain a uick indication of a firm7s financial performance in
several key areas.
RATIO ANALYSIS
It refers to the systematic use of ratios to interpret the financial statements in
terms of the operatin% performance and financial position of a firm. It involves
comparison for a meanin%ful interpretation of the financial statements.
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In view of the needs of various uses of ratios the ratios, which can $e
calculated from the accountin% data are classified into the followin% $road cate%ories
et another factor which influences the usefulness of ratios is that there is
difference of opinion re%ardin% the various concepts used to compute the ratios.
There is always room for diversity of opinion as to what constitutes shareholders
euity, de$t, assets, and profit and so on. +ifferent firms may use these terms in
different senses or the same firm may use them to mean different thin%s at different
times.
'eliance on a sin%le ratio, for a particular purpose may not $e a conclusive
indicator. For instance, the current ratio alone is not asaadeuate measure of short
term financial stren%thS it should $e supplemented $y the acid test ratio, de$tors
turnover ratio and inventory turnover ratio to have real insi%ht into the liuidity
aspect.
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Finally, ratios are only a post mortem analysis of what has happened $etween
two $alance sheet dates. For one thin%, the position in the interim period us $it reveal
ed $y ratioanalysis. oreover, they %ive no clue a$out the future.
In $rief, ratio analysis suffers from some serious limitations. The analyst
should not $e carried away $y its oversimplified nature, easy computation with a hi%h
de%ree of precision. The relia$ility and si%nificance attached to ratios will lar%ely
depend upon the uality of data on which they are $ased. They are as %ood as the data
itself. >evertheless, they are an important tool of financial analysis.
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DATA ANALYSIS AND INTERPRETATION
LI>UIDITY RATIOS
.= Curr"#& Ra&i'
The current ratio measures the short8term solvency of the firm i.e. a$ility to meet
short term o$li%ations.It esta$lishes the relationship $etween current assets and
current lia$ilities.
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Curr"#& Ra&i' Current &sset
Current #ia$ilities
Ta8l" N'=. T!" Ta8l" S!'5i#* Curr"#& Ra&i'(=
Y"ar Curr"#& a(("&( Curr"#&
lia8ili&i"(
Curr"#& a(("& ra&i'
311A831:1 ;0,@A,K1 0K,1;A,@33 :.3A
31::831:3 AK,0@A,1A3 ;0,00,3@ :.@1
31:3831:@ :;3,BB,33B :0@,@1;,BK :.:@
31:@831:B :01,3@1,;K :B3,K@,0@K :.10
31:@831:B :A3,@0@,;1 :A:,K1A,K3; :.1131:B831:0 33:,@B0,KAK :A:,@KA,AK; :.:
9ra,! N') < .=
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0
0.2
0.4
0.6
0.8
1
1.2
1.4 1.29 1.3
1.131.05
1
1.16
$urrent asset ratio
Current asset ratio
I#&"r,r"&a&i'#
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&s per industry norm a Current 'atio of 3: is considered satisfactory. In the
311A8::firm has fair ratio of :.3A: ( :.@:. ut in further years ratios are diluted
sli%htly i.e. :.:@, :.10, :. It indicates firm delays in payments of operatin% e*penses.
4= >ui% Ra&i'
It has $een an important indicator of the firm-s liuidity position and is used as
acomplementary ratio to the current ratio. It esta$lishes the relationship $etween
uick assets and current lia$ilities.
A%id T"(& Ra&i' Muick &ssets
Current lia$ilities
>ui% A(("&( Current &ssets R )tock.
Ta8l" N'=4 T!" Ta8l" S!'5i#* >ui% Ra&i'=
Y"ar >ui% A(("&( Curr"#& lia8ili&i"( >ui% Ra&i'(311A831:1 BK,1KB,;@; 0K,1;A,@33 1.K@
31:1831:: ;;,@B0,@B1 ;0,00,3@ :.13
31::831:3 A@,@;@,A: :0@,@1;,BK 1.:
31:3831:@ K;,B:,K3 :B3,K@,0@K 1.:
31:@831:B KK,130,1;3 :A:,K1A,K3; 1.B
31:B831:0 A:,131,3:3 :K;,;KA,@0 1.BK
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9ra,! N')
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I#&"r,r"&a&i'#
?enerally, a Muick 'atio of :: is considered to represent a satisfactory current
financial condition. From the a$ove company has low ratio in year 311;81K
compared to 311A8:1 i.e. 1.K@: ( :.13:. Firm has satisfactory financial
conditiononly in the year 311A8:1.ut in the year 31:18::,31::8:3firm has constant
ratio
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31:3831:@ :01,3@1,;K :B3,K@,0@K ;,0B;,3BK
31:@831:B :A3,@0@,;1 :A:,K1A,K3; 0B@,KB3
31:B831:0 33:,33@,@B0 :A@,@BB,@@3 3;,K;A,1:@
9ra,! N')
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0
5!000!000
10!000!000
15!000!000
20!000!000
25!000!000
30!000!000
1"!290!538
22!883!469
19!336!"56
"!54"!248
543!842
2"!8"9!013
Net(or'ing &apital
#et$orkin% ca&ital
I#&"r,r"&a&i'#
From the a$ove analysis the >et workin% Capital was fluctuatin% from year
311A8:: to 31::8:@. )o here current asset is more than current lia$ilities. Firm had
a$ility to meet its o$li%ation. In 31:38:0amount of workin% capital has decreased
drastically comparin% to previous years. It indicates that firm stru%%les to meets it
current o$li%ation.
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ACTIVITY @ TURNOVER RATIOS
1= I#+"#&'ry Tur#'+"r Ra&i'
This ratio indicates the num$er of times the inventory has $een
converted into sales durin% the period.
Cost of %oods sold
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9ra,! N')
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0= A(("&( Tur#'+"r Ra&i'
&sset turnover ratios, also called efficiency ratios.The relationship $etween
assets and sales is known as assets turnover ratio. This ratio shows the firm-s
a$ility to %enerate sales from all financial resources committed to total assets.
Total asset turnover Total )ales@Total &ssets
Ta8l" N'=0 T!" Ta8l" S!'5i#* A(("& Tur#'+"r Ra&i'(
Y"ar Sal"( A(("&( Ra&i'(
311A831:1 1;,A3,@K0 :;A,@KK,;AB @.@A
31:1831:: ;@;,AA,K31 :A,;@;,B;; @.;0
31::831:3 AK,:B,AK3 3KA,:AB,3A: @.@031:3831:@ :,3@1,3;K,1A3 3;,:33,K0@ 1.B
31:@831:B :,B@K,:01,K1 @33,KAA,0;@ B.B0
31:B831:0 :,@B0,@B3,K0A 3KA,ABB,;00 B.@
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= D"8&'r( Tur#'+"r Ra&i'
This indicates the num$er of times avera%e de$tors have $een converted intocash
durin% a year.
+e$tor Turnover 'atio >et Credit )ales/ &vera%e 'eceiva$le. >et Credit
)ales ?ross Credit )ales 8 )ales 'eturn.
&vera%e 'eceiva$les
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0
10
20
30
40
50
60
"0
80
30.93
55.91
48.5
"2.09
60.08
4".55
De)tors turnover Ratios
*ebtors turno(er
atios
I#&"r,r"&a&i'#
From a$ove it portrays that in year 311A8:1firm was collectin% its de$ts
slowly compared to311A8::
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7= A+"ra*" C'll"%&i'# P"ri'd
It is a period reuired to collect the outstandin% amount from the
customers.
&vera%e Collection !eriod
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= Cr"di&'r( Tur#'+"r Ra&i'=
& creditor7s turnover ratiois a reflection of how uickly a company pays
its creditors. This is also known as a paya$le turnover ratio. It is calculated to jud%e
the reuirements of cash for payin% sundry creditors.
Creditor Turnover 'atio >et Credit !urchases
&vera%e !aya$le
>et Credit !urchases ?ross Credit !urchases 8 !urchase 'eturn
&vera%e !aya$les
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9ra,! N')<
0
10
20
30
40
50
6045.38
53.94
42.043".53 3".81 35.6"
$reditors turnover Ratios
Creditors turno(er
atios
I#&"r,r"&a&i'#
The%raph shows ups ( downs in the ratio of Creditors Turnover.The
ratios for years were B0.@K times, [email protected] times, B3.1B times, @;.0@ times, @;.K:
times, and @0.; times. y o$servin% these ratios, it may $e interpreted that company
is takin% lon%er time to repay its creditors.
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/= 6'ri#* Ca,i&al Tur#'+"r Ra&i'
& hi%her ratio is an indicator of $etter utilization of current assets and
workin% capital and vice8versa et )ales
>et 6orkin% Capital
6orkin% Capital Current &ssets 8 Current #ia$ilities.
Ta8l" N'=/ T!" Ta8l" S!'5i#* 6'ri#* Ca,i&al Tur#'+"r Ra&i'
Y"ar N"& Sal"( N"& 6'ri#*
Ca,i&al
Ra&i'(
311A8:1 1;,A3,@KB :;,3A1,0@K @0.:
31:18:: ;@;,AA,K31 33,KK@,BA @3.3@
31::8:3 AK,:B,AK3 :A,@@,;0 01.1A
31:38:@ :,3@1,3;K,1A3 ;,0B;,3BK :@
31:@8:B :,B@K,:01,K10 0B@,KB3 3BB.B3
31:B8:0 :,0B@,@@,KBK 3@B,B0 0A.0B
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9ra,! N')
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FINDIN9SANDSU99ESTIONS
FINDIN9S
The current ratio is $elow the industry norm 3: which discloses that
company-s position is not %ood to meet its short term o$li%ations.
The firm does not maintain the ideal uick ratio ::. Its 1.B: in the year
31:@8:B
&mount of workin% capital has decreased drastically which indicates that firm
stru%%les to meets it current o$li%ation. The inventory turnover ratio is :0 times which is a$ove the industry norm K
times which shows that firm is efficient in mana%in% its inventory.
The de$tor-s turnover ratios are increasin% drastically from year to year which
shows how efficiently a company is collectin% its credit sales.
&vera%e collection period is increased in 31:@8:B which shows that company
is improvin% in collectin% de$t.
The company is takin% lon%er time to repay its creditors which is the result of
poor liuidity.
The study reveals that there is drastic increase in workin% capital turnover ratio
which shows that a company does not have enou%h capital to support its sales
%rowth.
Firm should use its asset efficiently and effectively to %enerate adeuate sales.
SU99ESTIONS
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It is e*amine that company should improve its current ratio in order to meet its
o$li%ation ( increase the ar%in of )afety for creditors.
The firm should %enerate cash in order to repay its creditors as possi$le as
possi$le.
It is su%%est that the firm has to maintain ideal uick ratio ::.
The study reveals that 6orkin% Capital is Over8#evera%ed. )o it advised to
V" to adopt )cientific Inventory ana%ement to improve G6orkin%
Capital.H
V" should appoint skilled la$ours in order to increase the efficiency of firm.
V" should adopt innovative technolo%y in order to increase the productivity.
V" should take precautionary measures to increase its sales.
CONCLUSION
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The study on )hort8term Finance in the +" is satisfactory. The study of 0
years reveals that liuidityposition of the +" is fair.
Firm is facin% financial crisis ( less uantity of milk supply in the previous
years. It shows that firm is facin% difficulties to meet its current o$li%ation. Company
should %enerate cash to meet its current o$li%ations.
V" should improve its financial conditions $y increasin% its workin% capital
to earn more profits.
The activity position of the V" is %ood as the company is efficient in
mana%in% its inventory :0 times which is more than industry norm K times. Firm is
also collectin% its de$t uickly in days.