WORKING CAPITAL MANAGEMENT

CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

4.1INTRODUCATION
The chapter deals with the data analysis interpretation. The company’s working capital position
is analyzed using various working capital ratios, followed by Trend analysis and correlation
analysis.

4.2 CALCULATION OF WORKING CAPITAL

Net working capital refers to the difference between current assets and current liabilities.
Net working capital is a qualitative concept. It indicates the liquidity position of the firm and
suggests the extent to which working capital needs may be financed by permanent source of
funds. Net working capital can be negative or positive. A negative working capital means a
negative liquidity and may be harmful for the company’s reputation.

Net working capital = Current asset – Current liability

Current asset includes inventories, sundry debtors, cash and bank balance and loans and
advances. Current liability includes sundry creditor’s unclaimed dividend, advances, security
deposit and dividend not paid.

TABLE NO 4.1

CALCULATION OF WORKING CAPITAL(RS.IN CORE)

CURRENT CURRENT NET WORKING

YEAR
ASSETS LIABILITIES CAPITAL
2015-2016 13.99 4.76 9.23
2016-2017 48.29 29.72 18.57
AVERAGE 31.14 17.24 13.9
Source: Annual Reports

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INFERENCE

The net working capital of the company is showing a fluctuating trend for the period
2015-2016 to 2016-2017 In the year 2016-2017 company has the net working capital of 18.57

(in core). Average working capital is 13.9 (in core)

4.3 RATIO ANALYSIS

Ratio analysis is widely used tool for financial analysis. It is defined as the systematic use
of ratio to interpret the financial statements so that the strengths and weakness of a firm as well
as its historical performance and current financial condition can be determined. The term ratio
refers to the numerical or quantitative relationship between two items.

4.3.1 LIQUIDITY RATIOS

Liquidity ratio measures the ability of the firm to meet its obligations.
(A) WORKING CAPITAL RATIO (CURRENT RATIO)
It represents the ratio of current assets to current liabilities. It is also called working capital
ratio. The current ratio is a measure of the firm’s short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. In a sound
business current ratio of 2:1 considered as ideal one.

Working capital ratio = Current assets/ Current liabilities

TABLE NO 4.2

CURRENT RATIO (Rs. In core)

CURRENT CURRENT RATIO

YEAR
ASSETS LIABILITIES
(No. of times)
2015-2016 13.99 4.76 2.93
2016-2017 48.29 29.72 1.62
AVERAGE 31.14 17.24 1.80
Source: Annual Reports

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INFERENCE

The above table no.2 deals with current ratio. The minimum standard for current ratio is

2:1. Though this company records a fluctuating trend in its current ratio, the ratios are near to the

ideal level. The company has not achieved the standard ratio of 2:1 in any of the years. The

average current ratio is 1.80. The ratio is highest in the year 2015-2016 (2.93) and lowest in the

year 2016-2017 (1.62).

B) ACID TEST RATIO (QUICK RATIO)

Quick ratio establishes a relationship between quick or liquid assets and current
liabilities. The term quick asset refers to current assets, which can be converted into cash
immediately. It comprises all current assets except stock and prepaid expenses. An acid test ratio
of 1:1 is considered satisfactory.

Quick Ratio = Quick asset / Current liability

Quick Assets=Current Assets-Stock
TABLE NO 4.3
ACID TEST RATIO (RS.IN CORE)
CURRENT RATIO
YEAR QUICK ASSETS
LIABILITIES (No. of times)
2015-2016 7.89 4.76 1.65
2016-2017 30.35 29.72 1.02
AVERAGE 19.12 17.24 1.10
Source: Annual Reports

INFERENCE

The quick ratio of the company is fluctuating over the years. The average quick ratio is
1.10.The company has achieved the industry standard of 1:1 in the every year .In 2016-2017 it
is 1.02 indicating company’s liquidity position is vary good . If this condition is continued
company will improve and will not face any liquidity crisis in future.

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C) CASH RATIO

Since Cash is the most liquid form of asset, so examination of cash ratio and its
equivalent to current liabilities is very important. Analysis of cash with current liability shows
that whether the company has the ability to pay its current liability on due date.

Cash Ratio = (Cash + Marketable Securities)/ Current liability

TABLE NO 4.4
CASH RATIO(RS. IN CORE)
CURRENT RATIO
YEAR CASH
LIABILITIES (No. of times)
2015-2016 1.15 4.76 0.24
2016-2017 1.20 29.72 0.04
AVERAGE 1.17 17.24 0.06
Source: Annual Reports

INFERENCE

The average cash ratio is 0.06 during the study period which is also showing a increasing
trend, in the year 2015-16 cash in hand has decreased to the lowest extent of 0.04 times. The
cash position of the company is not satisfactory. This may be due to the utilization of cash for
setting down its creditors.

(D) TURNOVER RATIO OR EFFICIENCY RATIO

Turnover ratios are employed to evaluate the efficiency with which the firm manages and utilizes
its assets. Their ratio indicates the speed with which assets are converted in to sales. Activity
ratio involves a relationship between sales and assets.

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a)Inventory Turnover Ratio

It is also called stock turnover ratio. This ratio indicates the number of times inventory
or stock replaced during the year. It measures the relationship between good sold and inventory
level. It indicates whether investment in inventory is efficiently used or not. A right inventory
turnover indicates of good inventory management.

Inventory turnover ratio = Cost of goods sold / Average inventory

Inventory holding period = 360/Inventory turnover ratio

TABLE NO 4.5
INVENTORY TURNOVER RATIO(RS. IN CORE)
INVENTORY
AVG RATIO HOLDING
YEAR SALES
INVENTORY (No. of times) PERIOD
(Days)
2015-2016 31.27 0.98 31.90 11.63
2016-2017 84.13 5.78 14.55 24.74
Average 57.7 3.38 17.07 21
Source: Annual Reports

INFERENCE
The inventory turnover ratio is fluctuating over the year. The average ratio is 17.07.The
average inventory holding period is 21 days..The ratio is maximum (24.74) in the year 2016-
2017 with a minimum inventory holding period of 11 days and the ratio is minimum (31.90)in
the year 2015-2016 with the maximum inventory holding period of 24.74 days.

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b)DEBTORS TURNOVER RATIO

It is also called receivables turnover ratio. It also measures the liquidity of the company.
The purpose of this ratio is to discuss the credit collection period and policy of the firm. It
indicates the number of time debtor’s turnover each year. Higher the ratio lowers the average
debtors to the lower credit sales.

Debtors turnover ratio = Sales/Debtors

Average collection period = 360/Debtors turnover ratio

TABLE NO 4.6
DEBTORS TURNOVER RATIO (RS. IN CORE)
AVERAGE
RATIO COLLECTION
YEAR SALES DEBTORS
(No. of times) PERIOD
(Days)
2015-2016 31.27 3.51 8.90 40.44
2016-2017 84.13 21.94 3.83 93.66
AVERAGE 57.7 12.72 4.53 79.47
Source: Annual Reports

INFERENCE

The debtor’s turnover ratio is varying over the study period. The average ratio is 4.53.

The debtors turnover ratio in 2016-2017 indicates the credit policy of the company is not liberal.

The company collects its amount from debtors.

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c) CREDITORS TURNOVER RATIO

It is the ratio between net credit purchase and the amount of creditors outstanding during
the year. A low turnover ratio reflects liberal credit terms granted by suppliers. The extent to
which trade creditors are willing to wait for payment can be approximated by the creditors
turnover ratio.
Creditors Turnover ratio = Purchases/Creditors
Average collection period = 360/Creditors turnover ratio

TABLE NO 4.7
CREDITORS TURNOVER RATIO(RS. IN CORE)
AVERAGE
RATIO
YEAR PURCHASES CREDITORS COLLECTION
(No. of times)
PERIOD (Days)
2015-2016 29.16 4.75 6.13 58.72
2016-2017 79.57 29.72 2.67 134.83
AVERAGE 54.36 17.23 3.15 114.2
Source: Annual Reports

INFERENCE
The creditor’s turnover ratio indicates that there is more difference over the year. The

average creditor’s turnover ratio is 3.15. In 2015-2016 it is 6.13 and in 2016-2017 it is decreased

to 2.67. The lower ratio indicates that company enjoys a greater credit period to repay the

liability. And by which company will not face any problem in future from its creditor

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d) WORKING CAPITAL TURNOVER RATIO

This is also known as working capital leverage ratio. This ratio indicates whether or not
working capital has been effectively utilized in marketing sales. This ratio indicates the number
of times the working capital is turned over in the course of a year. A big ratio indicates efficient
utilization of working capital.

Working Capital Turnover Ratio = Sales / Net Working Capital

TABLE NO 4.8
WORKING CAPITAL TURNOVER RATIO(RS. IN CORE)
NETWORKING RATIO
YEAR SALES
CAPITAL (No. of times)
2015-2016 31.27 9.23 3.38
2016-2017 84.13 18.57 4.53
AVERAGE 57.7 13.9 4.15
Source: Annual Reports

INFERENCE

The working capital turnover ratio indicates a fluctuating trend in the study period. In 2015-2016
it is 3.38 and in 2016-2017 it is 4.53, there is a increasing trend and it indicates that even though
there is a increase in net working capital it is utilized well. The average ratiois 4.15 and the
company having more then the average in the year 2016-2017 which shows that the company
having a very god financial position for maintaining its working capital requirement.

e) GROSS WORKING CAPITAL TO SALES RATIO

This ratio denotes the amount of working capital employed per rupee of sales. The lower
ratio means more efficient use of funds and vise versa. This is also known as current asset to
sales ratio.

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Gross Working Capital to Sales Ratio = Current asset / Sales

TABLE NO 4.9
GROSS WORKING CAPITAL RATIO(RS. IN CRORE)
CURRENT RATIO
YEAR SALES
ASSETS (No. of times)
2015-2016 13.99 31.27 0.45
2016-2017 48.29 84.13 0.57
AVERAGE 31.14 57.7 0.53
Source: Annual Reports

INFERENCE

Gross working capital ratio is fluctuating over the year. The average gross working

capital ratio is 0.53 this shows efficient usage of current asset for each rupee of sales

F) RAW MATERIAL TURN OVER RATIO

The raw material turnover ratio indicates the efficiency with which the company converts

raw material into work in process. A high ratio indicates efficient usage of raw material.

Raw Material Turnover Ratio= Raw Material Consumed / Average Raw

Material Inventory

Raw Material Holding Period = 360 / Raw Material Turnover Ratio

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TABLE NO 4.10
RAWMATERIAL TURNOVER RATIO(RS. IN CRORE)
RAW
AVERAGE MATERIAL
RAW
RAW RATIO INVENTORY
YEAR MATERIAL
MATERIAL (No. of times) HOLDING
CONSUMED
INVENTORY PERIOD
(Days)
2015-2016 28.00 0.98 28.57 12.60
2016-2017 72.08 5.78 12.47 28.86
AVERAGE 50.04 3.38 14.80 24.32
Source: Annual Reports

INFERENCE
The raw materials turnover shows a fluctuating trend. The average raw material turnover
ratio is 14.80 in the year 2015-16 and 2016-17 indicates inventory of raw material is holding
12.60 days and 28.86 days respectively. High raw material holding period means unnecessary
tie-up of fund. the raw material holding of the remaining years are also fluctuating because of the
same reason. But here we can see that the company having varied minimum Raw material
holding period which is less then one month every year. It showing that company is effectively
using its raw material and with a good timing of holding that.

SOLVENCY RATIO
Solvency ratio is used to test the solvency of a firm. Solvency means the ability to meet
the outside liabilities consisting of long term debt and current liability. Total asset stands for total
of fixed assets and current asset.

Solvency Ratio = Total Asset / Total Outside Liability

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TABLE NO 4.11
SOLVENCY RATIO(RS. IN LAKHS)
TOTAL OUT
RATIO
YEAR TOTAL ASSETS SIDE
(No. of times)
LIABILITIES
2015-2016 40.56 30.67 1.32
2016-2017 80.03 62.73 1.27
AVERAGE 120.59 93.40 1.29
Source: Annual Reports

INFERENCE
The solvency position of the company is declining over the year. The average solvency
ratio is 1.29. In the year 2015-16 it is 1.32. its happening due to increase pressure of sale in
market the company increasing the liabilities in market .but as the ratio in the year 2016-17 went
below the average ration by .7
The company will soon get over it and make a stable ratio of solvency that will ensure the
company ability to set of its liabilities in any emergency time.

III. PROFITABILITY RATIOS

Profitability reflects the final result of business operations. There are two types of
profitability ratios- profit margin ratios and rate of return ratios. Profit margin ratios show the
relationship between profit and sales. Popular profit margin ratios are gross profit margin and net
profit margin ratio. Rate of return ratio reflects the relationship between profit and investment.
The important rates of return measures are: rate of return on total assets and rate in equity.
a) NET PROFIT RATIO
This ratio shows the earnings left for shareholders as a percentage of net sales i.e., profit per
rupee of sales. It measures the overall efficiency, production, administration, selling, financing
and pricing and tax management.
Net profit ratio = (Net profit / Sales) x 100
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TABLE NO 4.12

NET PROFIT RATIO(RS. IN LAKHS)

Ratio (%)
YEAR NETPROFIT SALES

2015-2016 31.27
0.82 2.62
2016-2017 84.13
1.07 1.27
AVERAGE
0.94 57.7 1.62
Source: Annual Reports

INFERENCE

Since the company is running in profit from 2015-2016 to 2016-2017 the ratio also

reflects a positive indication to the overall performance. And in the current year the company

showing increment in its profit ratio. The above data is already shows that the company is

running above the average ration which is 1.62 and in the year 2016-2017 its achieve the profit

ratio 1.27. That is a vary good sing for company performance

b) RETURN ON INVESTMENT
Return on Investment is also called Return on Capital Employed. The term investment may refer
to total assets or net assets. The funds employed in net assets are known as capital employed.

ROI = (Net Profit /Net capital employed) x 100

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TABLE NO 4.13
RETURN ON INVESTMENT(RS. IN CORE)
CAPITAL ROI ( % )
YEAR NET PROFIT
EMPLOYED
2015-2016 35.81
0.82 2.28
2016-2017 50.92
1.07 2.10
AVERAGE 43.36
0.94 2.16
Source: Annual Reports

INFERENCE

The net profit of the company from 2015-2016 to 2016-17 is 0.82 & 1.07 (IN CORE)

.The return on investment ratio is also in good position . This shows return from the investment

is positive. And in the year 2015- to -2016 the company making positive return in its first year.

And showing the best return on investment though it decrees in second year by .18.The ration

showing the company performance at high Laval. And the company will earn more profit in forth

coming year

C) FIXED ASSETS TURNOVER RATIO

It also explains the relationship between fixed assets and the turnover that means sales

FATR = (Net Sales / Net Fixed Asset)

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TABLE NO 4.14

FIXED ASSETS TURNOVER RATIO(RS. IN CORE)

YEAR SALES FIXED ASSETS FATR ( % )

31.27
2015-2016 26.58 1.76
84.13
2016-2017 31.74 2.65
AVERAGE 115.4 58.32 1.97
Source: Annual Reports

INFERENCE

The fixed assets of the company from 2015-2016 to 2016-2017 is fluctuating and

increasing over the year . The FATR ratio is also indicating a fluctuating tendency at a

increasing level . the ratio which is 1.76 in the year 2015-2016 and incensing by o.89 in year

2016-2017, and which is also above from the Average ratio which is 1.97 . Showing that

company Fixedturn over ratio in a stable position.

PERFORMANCE OF ARVIND LIFESTYLE PRIVATE LIMITED

Performance of a company is mainly determined from its profitability position. Given

below is the table, which will help to identify the performance of the firm.

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TABLE NO 4.15
PERFORMANCE OF ARVIND BRAND LIMITED
(Rs. in CORE)
P/L P/L
TOTAL PROVISION
YEAR TURNOVER BEFORE AFTER
EXPENDITURE FOR TAX
TAX TAX
2015-2016 36.05 35.23 0.82 0 0.56
2016-2017 92.61 91.54 1.07 0 0.51
AVERAGE 64.33 63.38 0.94 0 0.53
Source: annual report

INFERENCE

From the above table one can easily identify that performance of the company
shows a positive trend from 2015-16 to 2016-17. It is mainly because of the high sales margin
compared to low cost of production. And also in the present working year the company showing
a positive performance which is more then the past two year profit

COMPONENTS OF WORKING CAPITAL OF THE COMPANY

TABLE NO 4.16
I. ANALYSIS OF COMPONENTS OF GROSS WORKING CAPITAL

The various components of current assets and their values of the company from the year 2015-
2016 to 2016-2017 are disclosed in the following table:

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(RS. IN CORE)
2015-16 2016-17
ITEMS
6.09 17.93
Inventories
3.51 21.94
Sundry Debtors
1.14 1.20
Cash and Bank Balance
3.22 7.20
Loans and Advances
13.96 48.27
TOTAL
Source: Annual Reports

INFERENCE
The table shows that current asset of the company. The components of current assets are
fluctuating through out the period of study.
The following bar diagram shows the structure of current assets during the year from 2015-2016

to 2016-2017

II.ANALYSIS OF COMPONENTS OF CURRENT LIABILITIES

The various components of current liabilities and their value during the period of study are given in the
following table:

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TABLE NO 4.17
COMPONENTS OF CURRENT LIABILITIES(RS. IN CORE)
2015-16 2016-17
ITEMS
4.72 29.67
Sundry Creditors
0.03 0.05
Other Liabilities
0.0024 NIL
Provisions
TOTAL 4.75 29.72
Source: Annual Reports

INFERENCE

The table shows that current liability of the company shows a gradual flctuations. Ii
should affecting the working capital of the company.
The following bar diagram shows the structure of current liabilities during the year from 2015-
2016 to 2016-2017.

TABLE NO 4.18
TREND ANALYSIS OF WORKING CAPITAL(RS. IN LAKHS)

Year(x) Networking X=x-A X*X Xy

capital(y)
9.23 -1 1 9.23
2015-2016
18.57 0 0 0
2016-2017
27.8 -1 1 9.23
TOTAL
Source: Annual Reports

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a = total (y) /N 27.8/2 =13.9

b = total (xy) / ∑(X * X) 9.23/ 1 = 9.23

y = a + b (x)

Working capital for the next five year

Y (2018) =13.9+ (9.23)* 3 = 69.39
Y (2019) = 13.9+ (9.23)* 4 = 92.52
Y (2020) = 13.9+ (9.23)* 5 = 115.65
Y (2021) = 13.9+ (9.23)* 6 = 138.78
Y (2022) = 13.9+ (9.23)* 7 = 161.91

TABLE NO 4.19
TABLE SHOWING EXPECTED WORKING CAPITAL

YEAR AMOUNT(CORE)
2018 69.39
2019 92.52
2020 115.65
2021 138.78
2022 161.91
Source: Annual Reports

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INFERENCE

The forecasted value of working capital shows a increasing of working

capital.requirement in the forth coming year . Company should take necessary steps to increase

working capital otherwise no fund will be available for the day to day workings

TREND ANALYSIS OF SALES

TABLE NO 4.20
TREND ANALYSIS(RS. IN CORE)
Year(x) sales(y) X=x-A X*X Xy

-1 1 -31.27
31.27
2015-2016
0 0 0
84.13
2016-2017
115.4 -1 1 -31.27
TOTAL
a = total (y) /N 115.4/ 2 =57.7

b = total (xy) / ∑(X * X) 31.27/ 1 = 31.27

y = a + b (x)
Expected sale for the next five year
Y (2018) =57.7+ 31.27* 3 =151.51
Y (2019) =57.7+ 31.27* 4 =182.78
Y (2020) =57.7+ 31.27* 5 = 214.05
Y (2021) =57.7+ 31.27* 6 = 245.32
Y (2022) =57.7+ 31.27*7 = 276.59

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TABLE NO 4.21
TABLE SHOWING EXPECTED SALES
YEAR AMOUNT(LAKS)
2018 151.51
2019 182.78
2020 214.05
2021 245.32
2022 276.59
Source: Annual Reports

INFERENCE

The forecasted value of sales shows an increasing trend

TREND ANALAYSIS OF PROFIT

TABLE NO 4.22
TREND ANALYSIS (RS. IN CORE)
Year(x) Profit(y) X=x-A X*X Xy

-1 1 -0.82
2015-2016 0.82
0 0 0
2016-2017 1.07
1 1 -0.82
TOTAL 1.89

a = total (y) /N 1,89/ 2= (0.945)

b = total (xy) / ∑(X * X) -0/82/ 1 = (-0.82)

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y = a + b (x)
Expected profit for the next five year

Y (2018) = (0.945) + (-0.82)* 3 = 1.51

Y (2019) = (0.945) + (-0.82)* 4 = 2.33
Y (2020) = (0.945) + (-0.82)* 5 = 3.155
Y (2021) = (0.945) + (-0.82)* 6 = 3.975
Y (2022) = (0.945) + (-0.82)* 7 = 4.79

TABLE NO 4.23
TABLE SHOWING EXPECTED PROFIT

YEAR AMOUNT(LAKS)
2018 1.51
2019 2.33
2020 3.155
2021 3.975
2022 4.79
Source: Annual Reports

INFERENCE

The forecasted value of profit shows an increasing trend.

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TREND ANALAYSIS OF CURRENT ASSET

TABLE NO 4.24
TREND ANALYSIS (RS. IN CORE)

Year(x) Current X=x-A X*X Xy

asset(y)

13.99 -1 1 -13.99
2015-2016
48.29 0 0 0
2016-2017
62.28 1 1 -13.99
TOTAL

a = total (y) /N 62.28/ 2 = 31.14

b = total (xy) / ∑(X * X) -13.99/ 1 = -13.99

y = a + b (x)

Working capital for the next five year

Y (2018) = 31.14+(-13.99)* 3 = 73.11

Y (2019) = 31.14+(-13.99)* 4 = 87.1
Y (2020) = 31.14+(-13.99)* 5 = 101.09
Y (2021) = 31.14+(-13.99)* 6 = 115.8
Y (2022) = 31.14+(-13.99)* 7 =129.07

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TABLE NO 4.25
TABLE SHOWING EXPECTED CURRENT ASSET

YEAR AMOUNT(CORE)
2018 73.11
2019 87.1
2020 101.09
2021 115,08
2022 129.07
Source: Annual Reports

INFERENCE

The forecasted value of current asset shows an increasing trend

CHART
TREND ANALYSIS OF CURRENT ASSET (RS.IN CORE)

Chart Title
YEAR AMOUNT IN CORE)

115.08 129.1
87.1 101.1
73.11

2017 2018 2019 2020 2021

1 2 3 4 5

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TREND ANALAYSIS OF CURRENT LAIBILITY

TABLE NO 4.26

TREND ANALYSIS(RS. IN LAKHS)

Current
Year(x) X=x-A X*X Xy
liability (y)

4.76 -1 1 -4.76
2015-2016
29.72 0 0 0
2016-2017
34.48 -1 1 -4.76
TOTAL
a = total (y) /N 34.48/ 2 = 17.24

b = total (xy) / ∑(X * X) -4.76/ 1 =-4.76

y = a + b (x)
Expected current liabilities for the next five year

Y (2018) = 17.24+(-4.76) * 3 = 31.52

Y (2019) = 17.24+(-4.76) * 4 = 36.30
Y (2020) = 17.24+(-4.76) * 5 = 41.04
Y (2021) = 17.24+(-4.76) * 6 = 45.80
Y (2022) = 17.24+(-4.76) * 7 = 50.56

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TABLE NO 4.27

TABLE SHOWING ESPECTED CURRENT LIABILITY

YEAR AMOUNT(LAKS)
2018 31,52
2019 36.30
2020 41.04
2021 45.80
2022 50.56
Source: Annual Reports

INFERENCE

The forecasted value of current liability shows an increasing trend. Company

should take necessary steps to reduce current liability. Otherwise it wills harmfully

affecting the working capital of the company

CORRELATION

The Correlation analysis refers to the techniques used in measuring the closeness of the
relationship between the variables. Correlation is the statistical method relates to the analysis of
variable only. The statistical technique that can be used to study the relationship between two
variables is the correlation analysis.

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Two variables are said to be correlated, if the change in one variable results in a corresponding
change in the other variable. That is when two variables move together we say they are
correlated.

Correlation is defined as “the tendency of two or more groups or series of items to vary together
directly or inversely”. Whenever some definite connection exists between the two or more
groups, classes or series or data there is said to be correlation.

Hence, correlation is an analysis of the co-variation between two or more variable. The word

correlation usually implies cause and effect relationship that is mutual interdependence. That is

there exists casual connection between the two variables. Correlation may be either positive or

negative. When the values of two variables move in the same direction, correlation is said to be

positive. On the other hand, the value of two variables moves in opposite direction, the

correlation is said to be negative.

TABLE No 4.28

SHOWING
CORRELATION BETWEEN SALES AND PROFIT

SALES PROFIT
YEAR (Rs. in CORE) (Rs. in CORE)
31.27
2015 0.82
84.13
2016 1.07

CORRELATION 0.59
Source: Annual Reports

INFERENCE

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The correlation between sales and profit is 0.59 which is positive. Whenever

there is an increase in sales, it increases the profit of the company and vice versa

TABLE No 4.29

SHOWING

CORRELATION BETWEEN SALES AND CURRENT ASSETS

CURRENT ASSET
SALES (Rs. in CORE
YEAR (Rs. in CORE) +)
31.27 13.99
2015
84.13 48.29
2016

CORRELATION 0.31
Source: Annual Reports

INFERENCE

The correlation between sales and current asset is 0.31.Hence, there is positive

relationship between sales and current asset. So when sales increases, the current asset will also

increase and vice-versa

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WORKING CAPITAL MANAGEMENT

TABLE No 4.30

SHOWING

CORRELATION BETWEEN WORKING CAPITAL AND

CURRENT ASSETS

WORKING CAPITAL CURRENT ASSET

YEAR (Rs. in lakhs) (Rs. in lakhs)
9.23 13.99
2015
18.57 48.29
2016

CORRELATION 0.79
Source: Annual Reports

INFERENCE

The correlation between working capital and current asset is 0.79. Hence, there is positive

relationship between working capital and current asset. So when current asset increases, the

working capitals will also increase and vice-versa

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ATMA COLLEGE
WORKING CAPITAL MANAGEMENT

TABLE No 4.31

SHOWING

CORRELATION BETWEEN WORKING CAPITAL AND SALES

WORKING CAPITAL SALES

YEAR (Rs. in lakhs) (Rs. in lakhs)

9.23 31.27
2015

18.57 84.13
2016

CORRELATION 0.30
Source: Annual Reports

INFERENCE

The correlation between working capital and sales is 0.30 hence; there is positive

relationship between working capital and sales. So when sales increase, the working capitals will

also increase and vice-versa

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ATMA COLLEGE