PROJECT REPORT

(Submitted for the Degree of B. Com Honours in Accounting &

Finance under the University of Calcutta)

Title of the Project

WORKING CAPITAL MANAGEMENT

SUBMITTED BY
Name of the Candidate:
Registration No:
Name of the College:
C.U ROLL NO :
College Roll No:

SUPERVISED BY
Name of the Supervisor:
Name of the College:

Month & Year of Submission:

 CONTENTS

Particulers Page No

CHAP - 1 INTRODUCTION 1-7

1.1 BACKGROUND 1
1.2 REVIEW OF LITERATURE 4
1.3 OBJECTIVE OF STUDY 5
1.4 METHODOLOGY 5
1.5 LIMITATION OF STUDY 6
1.6 CHAPTER PLANNING 7
CHAP - 2 CONCEPTUAL FRAMEWORK 8 - 14
CONCEPT OF WORKING CAPITAL 8
2.1 COMPANY PROFILE 13
CHAP – 3 ANALYSIS OF WORKING CAPITAL 15 - 26
3.1 RATIO ANALYSIS & FINDINGS 15
CHAP – 4 CONCLUSION AND RECOMMENDATION 27
CHAP – 5 BIBLIOGRAPHY 28
ANNEXURES BALANCE SHEET OF LG COMPANY 29
Annexure – IA
Supervisor’s Certificate

This is to certify that (**Name**) a student of B.Com Honours in

Accounting & Finance of (**College name**) under the University
Of Calcutta has worked under my supervision and guidance for his
Project Work and prepared a Project Report with the title
WORKING CAPITAL MANAGEMENT which he is submitting, is his
genuine and original work to the best of my knowledge .

Signature :
Place : Kolkata Name :

Name of the College :

Date :
Annexure – IB
Student’s Declaration

I hereby declare that the Project Work with the title WORKING
CAPITAL MANAGEMENT submitted by me for the partial
fulfillment of the degree of B.Com Honours in Accounting &
Finance under the University of Calcutta is my original work and
has not been submitted earlier to any other University / Insitution
for the fulfillment of the requirement for any course of study .
I also declare that no chapter of this menu script in whole or in
part has been in corporated in this report from any earlier work
done by others or by me . However , extract of any literature
which has been used for this report has been duely acknowledged
providing details of such literature in the references .

Signature :
Place : Kolkata Name :

Address :

Date :
ACKNOWLEDGEMENT:

I would like to deepest gratitude to professor (**Professor

name**) and all other professors for their continues help and
guidance during the completion of my project . I am also thankfull
to my classmates for their help and cooperation for the complete
on of the project .

(**Name**)
 Page No -1

CHAPTER-1

1. INTRODUCTION:

Business organization requires adequate capital to establish business and

oparete their activities.The total capital of a business can be classified as fixed
capital and working capital.Fixed capital required for the purchase of Fixed
Asstes like building,land,machinery,furniture etc.Fixed Capital is invested for
long period therefore it is known as long term capital.Similarly the capital
which is needed for investing in Current Assets is called Working Capital.The
capital which is needed for the regular operation of business is called Working
Capital.Working Capital is also called circulating capital or revolving or short
term capital.Working Capital is used for regular business activites like for
purchase of raw-material,for the payment of wages,payment of rent and of
other expencess.Working Capital is kept in the form of cash,debtors,raw-
materilas,inventory,stock of finished goods,bills receivable etc.

1.1. BACK GROUND OF WORKING CAPITAL MANAGEMENT:

Historically working capital manegment has passed though different stages
mainly the control,optimization and value measurement.Working Capital
Manangment originally started as a systematic approach of controlling the
incoming,outgoing and remaining balance of cash,receivables and
inventories.At this stage the main objectives is that working capital is not
misappropriated for personal benefits of those who are interested with its
management.
To this end researches developed various control measures over the
receipts and collections of cash,receipts and issuance of inventories as wll as
the increase of recivables through credit sells and decreses of recivables
through cas collectins.
 Page No -2

DEFINATION OF WORKING CAPITAL MANAGEMENT:

Working Cpital Management is significant in financial management.Every

business requires working capital.Working Capital plays a kye role in a business
enterprise just as the role of heart in the humam body. Woking Capital
Management is concerned with the problems arise in attempting to manage
the curret assets,the current liabilities,and the inter relationship that exsied
between them.The trem current asstes refers those asstes which in ordinary
course of business will be turned into cash with in one year without under
going a diminution in value and without disrupting the oparetion at the firm.
Current libilities are those libilities which intended at their inseption to be paid
in ordinary course of business with in a year,out of current asstes or earnings at
the concern.The besic current libilities are accounts payble,bills payble,bank
overdraft,outstanding expenses.

The goal of working capital management is to manage the firms

current assets and current libilities in such way that the satisfactory level of
working capital is maintained.The current assets should be large enough to
cover its current libilities in order to ensure a reasonable margine of the safty.
 Page No -3

MANAGEMENT OF WORKING CAPITAL :

Management of working cpital is corcerned with the problem arises in

attempting to manage the curret asstes,current libilities.The basic goal of
working capital management is to manage current asstes ans current libilities
of a firm in such a way that a satisfactory level of working capital is maintained,
i.e, it is neither adequate nor excessive as both the situations are bad for any
firm. So working capital management is three dimensional in nature as:

1) It concerned with the formulation of policies with regured to

profitibilty,liquidity and risk.
2) It is concerned with the decision about the composition and level of
current assets.
3) It is concerned with the decision about the composition and the level of
current libilities.

CASH MANAGEMENT: Identify the cash balance which allows for the
business to meet day to day expenses,but reduses cash holding costs.

INVENTORIES MANAGEMENT: Identify the level of inventory which allows

for uninterrupted production but reduces the investment is raw-materials
and minimizes reordering costs and hence increase cash flow.

DEBTORS MANAGEMENT: Indentify the appropriate credit policy i.e,;

credit terms which will attract customers,such that any impact of cash
flowes and the cash convertion cycle will be offset by increaded revenue
and hense Return On Capital(or vice versa).

SHORT TERM MANAGEMENT: Identify the appropriate sources of

financing; given the cash onvertion cycle,the inventory is ideally financed
by credit granted by the supplier
 Page No -4

MEANING OF WORKING CAPITAL:

Working capital means the funds(i.e, capital)available & used for day to
day operation(i.e;working of an enterprise).It consistes broadly of that
portion of asstes a business which are used in or related to its current
oparations.It refers to fund which are used during an accounting period to
generate a current income of a type which is consistent with major
purposes of firm existence.

1.2. REVIEW OF LITERATURE:

Workung capital is the amount of capital which is readily available to an

organization.That is working capital is the diffrents between resources in
cash or readily convertible into cash(CURRENT ASSTES),and cash
requirements(CURRENT LIBILITIES).As a result,the decisions relating to
working capital are always current,i.e; short term,decisions.Inaddition to
time horizon,working capital decisions deffer from capital investmet
decisions in terms of discounting and profitability considerations;the are
also “reversible”to some extent.(Considaretions as to Risk appetite ans
return tergets remain identical,although some constraints- such as those
imposed by lone covenants- maybe more relevant here).
 Page No -5

1.3. OBJECTIVE OF THE STUDY:

Study of working capital is important because unless the working capital is

managed effectively,yhe cannot earn profit and increase its turnover.With this
primary objectives of study,the following further objectives are required:
1) To understand the structure of working capital.
2) To study the working capital management with references to liquidity
and solvency of the company.
3) To annalise the financial efficiency of the company through ratio
annalises.
4) To study various sources and application of working capital of the
company.
5) To suggest the management on effective working capital management.

1.4. RESEARCH METHODOLOGY:

Research methodology is a way to systematically solve the research problem.It

maybe understood as a science of studying.It is important for research to know
not only the reaserch method but also known as methodology.The procedures
by which researchers go about their work of describing,explaining and
predicting phenomenone are called methodology.Method comprises the
procedures used for generating,collecting and evauliting data.
 Page No -6
There are two types of data collection method:

a) Primary data collection: The data which is collected fresh or frist hand
and for frist timewhich is original in nature.Primary data collection can be
collected through personal interview,questionnaire etc.

b) Secondary data collection: The data which is collected from recoreds,

annual repots of the company books, journal website is know as secondary
data.

1.5. LIMIITATION OF STUDY:

The scope of the study is identified after and during the study is conducted .
The study of working capital is based on trend analysis and ratio analysis ,
operating cycle etc .
The study is based on last 5 years annual reports of the company .
Limitations of the study are as follows :

1) The study is based on the result of limited period i.e. 5 years .

2) The analysis and interpreatation are based on secondery data taken from
financial reports .
3) Ratio will not completely show the companies good or bad financial
position .
4) The figures from the financial statement for analysis were historical in
nature and the time value of money is not consider .
1.6. CHAPTER PLANNING : Page No-7

❖ INTRODUCTION
➢ Background of workimngs capital management
➢ Defination of working capital management
➢ Management of working capital management
➢ Meaning of working capital management
❖ REVIEW OF LITERATURE
❖ OBJECTIVE OF STUDY
❖ RESEARCH METHODOLOGY
❖ LIMITATION OF STUDY

❖ CHAPTER PLANNING
❖ CONCEPT
➢ Concept of working capital
➢ Importance of working capital
➢ Advantages & Disadvantages of working capital
➢ The main components of working capital
➢ Important things of working capital

❖ COMPANY PROFILE
❖ WORKING CAPITAL MANAGEMENT
❖ RATIO ANALYSIS
❖ CONCLUSION & RECOMMENDATION
❖ BIBILOGRAPHY
❖ ANNEXURES
 Page No-8

CHAPTER 2 :

CONCEPTUAL FRAMEWORK / NATIONAL AND INTERNATIONAL SCENARIO:

CONCEPT OF WORKING CAPITAL :

Working capital is the life blood and never center of business .Working
capital is very essential to maintain smooth running of a business . No business
can run successful without an adequate amount of working capital .

There are two concepts of working capital :

1) Gross working capital

2) Net working capital
3) The gross working capital is the capital invested in the total current assets
of the enterprises current assets are those .
4) Assets which can convert in to cash within a short period normally one
accounting year .
 Page No-9
TYPES OF WORKING CAPITAL:

CLASSFICATION OF WORKING CAPITAL

ON CONCEPT BASIS ON TIME BASIS

GROSS NET PERMANENT TEMPORARY

WORKING WORKING WORKING WORKING
CAPITAL CAPITAL CAPITAL CAPITAL

The concept of working capital can also be explained through two angels :
A) Concept Basis
According to net concept working capital is the excess of current assets over
current liablities . Inother words , the difference between current assets and
current liabilities is called net working capital .
Net working capital = Current Assets – Current liablities .

B) TIME BASIS
GROSS WORKING CAPITAL

According to gross concept , working capital refers to all the current assets
&represents the amount of funds invested in Current Assets . Current Assets
are those assets which can be converted into cash within the short time
period.

Gross Working Captial = Total Current Assets

 Page No-10
In this way , Gross working capital refers to the firm’s invested in current assets
. We represent total of current assets which includes cash in hand , cash at
bank , prepaid expences , bills receivable etc .

NET WORKING CAPITAL :

From , the point of view of time , the working can be divided in to two
categories namely Fixed and Temporary .

PERMANENT WORKING CAPITAL : It refers to the hardcore working

capital . It is that minimum level of investment in the current assets that is
carried by the business at all times to carry out minimum level of its activities .

TEMPORARY WORKING CAPITAL : It refers to that part of total working

capital , which is required by a business over and above permanent working
capital . It is also called variable working capital .

IMPORTANCE OF WORKING CAPITAL :

Sometimes , if creditors demands their money from company , at this time

company’s high working capital save company from this situations . You know
that selling of current assets are easy in small period of time but company
cannot sell their fixed assets with in small period of time .
But if a company has zero working capital and then company cannot pay
creditors in emergency time and either company becomes bankrupt or takes
loans at higher rate of interest
In both conditions , it is very dangerous and always company’s Account
Manager tries to keep some amount of working capital for creating goodwill in
market .
 Page No-11

ADVANTAGES AND DISADVANTAGES OF WORKING CAPITAL:

A) ADVANTAGE OF WORKING CAPITAL :

1. Solvency Of The Buisness : Adequate working capital helps in maintaining
the solvency of the business by providing uninterrupted of production .
2. Easy Loans : Adequate working capital leads to high solvency and credit
standing can arrange loans from bank and other on easy and favorable terms .
3. Cash Discounts : Adequate working capital also enables a concern to avial
cash discounts on the purchases and hence reduces cost .
4. Regular Supply of Raw Material : Sufficient working capital ensures
regular supply of raw material and continuous production .

B) DISADVANTAGES OF WORKING CAPITAL :

1. Exercise working capital means ideal fundnds which earn no profit for the
firm and business cannot earn the required rate of return on its
investmentsunnecessary purchasing and accumulation of inventories .
2. If a firm having excessive working capital then the relations with banks and
other financial institution may not be maintained .
3. It may reduce the overall efficiency of the business .
4. Due to lower rate of return in investments , the values of shares may also
fall .
5. Excessive working capital implies excessive debtors and defective credit
policy which causes higher incidence of bad debts .
 Page No-12
THE MAIN COMPONENTS OF WORKING CAPITAL ARE :

CASH : Cash is one of the most liquid and important components of working
capital . Holding cash involves cost because the worth of cash held , after a year
will be use than the value of cash as on today . Excess of cash balance should
not be kept in business because cash is a non – earning assets . Hence ; a
proper and judicious cash management is of utmost importance in business .

MARKETABLE SECURITIES :
These securities also don’t give much yield to the business because of two
reasons :
A) Marketable securities act as a substitute for cash .
B) These are used are temporary investments . These are held not for
speculative balances , but only as a guard against possible shortage of bank
credit .

ACCOUNTS RECEIVABLE : Too many debtors alwys look up the firm’s

resources especially during inflationary tendencies . Thia is a two steps account
. When goods are sold , inventories are reduced and accounts receivable
credited . When payment is made , debtors reduce and cash level increases .
Thus , quantam of debtors depends on two things , (1) volume of credit sales ,
(2) average length of time between sales and conditions .

INVENTORIES : Inventories represents a substantial amount of firm’s assets .

Inventories must be properly managed so that this investment doesn’t became
too larger , as it would result in blocked capital which could be put to
productive use elsewhere on the other hand , having too little or small
inventory could result in loss of sales or loss of customer goodwill .
 Page No-13

IMPORTANT THINGS ABOUT WORKING CAPITAL :

1) Working Capital can be negative . At the time , we add one word “deficiency
“ in the back of working capital. It means if current liablities are more than
current assets . It is known as working capital deficiency or inverse working
capital or negative working capital .
2) Working capital can be easily adjusted , if accounts manager knows different
techniquies of managing working capital . He can try to get short trem loan or
he can increase working capital by prop[er management of inventory and
outstanding incomes and debtors .
3) Working capital can also change by changing in cash conversion period .
Cash conversion period is a period in which company changes current assets
into cash or bank .
4) Working capital can also positive by increasing growth rate of company . If
company does not invest more money and increase profit , the same amount
will increase in the cash position of company and with cash company can
increase their working capital position .

2.1. COMPANY PROFILE:

Name of the company - LG COMPANY

The LG Group is South Korea’s largest conglomerate , producing a range of

products in three specific industries , spanning professional and consumer
electronics to industrial and household chemicals , with one houndred and
forty- nine subsidiaries operating in over eighty countries Today they employ
thousands of people and their assets consists of a total of fifty-one companies,
with nine in electronics , eight in chemicals and thirty-fore in
telecommunications with locations all around the world .
 Page No-14

The company moved into electronics with a new brand name in 1958 . In 1959 ,
the company produced South Korea’s first radio . For some time , electronics
were produced under the lebel , while chemicals , especially household items
like toothpaste and detergent , continued to be marketed under the brand
Recently , the company has associated its marketing sloganwhich has become
well known . In January 2009 they become one of only a handful of companies
to own a two – lettered domain name in the internet .

Today their company is the world’s second largest producer of television sets
and third largest manufacturer of mobile phones . Interestingly , while many
smart phone makes are trying to diversify their software platforms and creat
handsets , they have decidedto continue using the original operating systems
for the foreseeable future so as to provide forcustom –tailored devices . The
company hasn’t ruled out others , bur expects the orinial oerating system to be
its primary platform for the vast majority of its models .
 Page No-15
CHAPTER 3 :
WORKING CAPITAL ANALYSIS :

As we know working capital is the life blood and the centre of a business .
Adequate amount of working caital is very essential for the smooth running of
the business . And the most important part is the efficient management of
working capital in right time . 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
2) Fund Flow Analysis
3) Budgeting

3.1 RATIO ANALYSIS :

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

technique of ratio analysis can be employed for measuring short-timee liquidity
or working capital position of a firm . The following g ratios can be calculated
for these purposes :
1) Current ratio
2) Quick ratio
3) Absolute liquid ratio
4) Inventory turnover
5) Receivablres turnover
6) Payable turnover ratio
7) Working capital turnover ratio
8) Working capital leverage
 Balance Shhet of last 5 years of LG Company : Page No-16
Particulers Mar’19 Mar’18 Mar’17 Mar’16 Mar’15
12 months 12 months 12 months 12 months 12 months
Sources of funds :
Total share capital 7.85 7.85 7.85 7.85 7.85
Equity share capital 7.85 7.85 7.85 7.85 7.85
Share application money 0.00 0.00 0.00 0.00 0.00
Preference share capital 0.00 0.00 0.00 0.00 0.00
Reserves 221.35 187.57 150.88 132.40 135.20
Revalution Reserves 1.39 1.39 1.39 1.39 1.79
Net worth 230.59 196.81 160.12 141.64 144.84
Secured Loans 95.86 107.17 101.75 149.83 230.04
Unsecured Loans 17.37 9.43 5.17 1.71 6.61
Total debt 113.23 116.60 106.92 151.54 236.65
Total Liabilities 343.82 313.41 267.04 293.18 381.49

Mar’19 Mar’18 Mar’17 Mar’16 Mar’15

12 months 12 months 12 months 12 months 12 months
Application of funds :
Gross Block 360.44 346.58 293.55 280.24 386.97
Less:Accumdep 169.63 159.43 145.99 126.43 158.42
Net Block 190.81 187.15 147.56 153.81 228.55
Capital work in progress 4.99 4.43 3.29 3.95 12.67
Investment 16.51 16.51 12.25 9.67 2.76
Inventories 191.33 162.91 122.24 108.87 131.93
Sunndry Debtors 104.98 82.18 78.31 75.79 105.42
Cash & Bank balance 4.47 3.36 3.26 4.21 4.34
Total current assets 300.78 238.45 203.81 188.87 241.69
Loans & Advances 32.79 49.52 50.38 58.22 44.59
Fixed Deposits 0.75 1.46 1.37 33.43 0.95
Total CA ,Loans & Advances 334.32 289.43 255.56 280.52 287.23
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 189.84 152.72 125.51 127.55 132.30
Provissions 12.96 31.39 26.11 27.21 17.41
Total CL & Provisions 202.80 184.11 151.62 154.76 149.71
NET CA 131.52 105.32 103.94 125.76 137.52
Miscellaneous Exp 0.00 0.00 0.00 0.00 0.00
Total Assets 343.83 313.41 267.04 293.19 381.50
Contingent Liablities 99.51 97.76 111.98 18.97 19.71
Book Value (Rs) 292.05 249.00 202.26 17.87 18.23
 Page No-17
STATEMENT OF WORKING CAPITAL (Rs.In Crores) :

CURRENT ASSETS 2015 2016 2017 2018 2019

INVENTORIES 131.93 108.87 122.24 152.91 191.33
SUNDRY DEBTORS 105.42 75.79 78.31 82.18 104.98
CASH & BANK 4.34 4.21 3.26 3.36 4.47
TOTAL 241.69 188.87 203.81 238.45 30.78
CURRENT LIABLITIES 132.30 127.55 125.51 152.72 189.84
PROVISIONS 17.41 27.21 26.11 31.39 12.96
TOTAL 149.71 154.76 151.62 184.11 202.80
WC (CA-CL) 91.98 34.11 52.19 54.34 97.98
INCREASE /DECREASE NIL -57.87 18.08 2.15 43.64
IN WC

STATEMENT OF WORKING CAPITAL

16
14
12
10
8
6
4
2
0

2015 2016 2017

Comment : The above table shows that In the first year the working capital
has been decreased but in the next years the working capital has been
increased year after year . This means a company is in a good position .
 Page No-18
CURRENT RATIO (Rs. In Crores ) :

CURRENT ASSETS 2015 2016 2017 2018 2019

INVENTORIES 131.93 108.87 122.24 152.91 191.33
DEBTORS 105.42 75.79 78.31 82.18 104.98
CASH & BANK 4.34 4.21 3.96 3.36 4.47
TOTAL 214.69 188.87 203.81 238.45 300.78
CURRENT LIABLITIES 132.30 127.55 125.51 152.72 189.84
PROVISIONS 17.41 27.21 26.11 31.39 12.96
TOTAL 149.71 154.76 151.62 184.11 202.8
CURRENT RATIO 1.614 1.220 1.344 1.295 1.483

INVENTORIES TO CURRENT ASSETS

7

0
INVENTORIES CURRENT ASSETS IN
INVENTORIES/CA*100

2015 2016 2017 20172 2018

Comment : The above table shows that the inventories of the company are
gradually increasing year after year . It means the turnover of the company is
not good . The sale of the company is gradually decreasing .
 Page No-19

INVENTORIES TO CURRENT ASSETS ( Rs.InCrores):

PARTICULERS 2015 2016 2017 2018 2019

INVENTORIES 131.93 108.87 122.24 152.91 191.33
CURRENT ASSETS 241.69 188.87 203.81 238.45 300.78
INVENTORIES/CA*100 54.59% 57.64% 59.68% 64.13% 63.61%

INVENTORIES TO CURRENT ASSETS

6

0
INVENTORIES CURRENT ASSETS INVENTORIES/CA*100

2015 2016 2017 2018 2019

Comment: The above table shows that the inventories of the company are
gradually increasing year after year . It means the turnover of the company is
not good . The sale of the company is gradually decreasing .
 Page No-20

DEBTORS TO CURRENT ASSETS (Rs. In Crores) :

PARTICULERS 2015 2016 2017 2018 2019

DEBTORS 105.42 75.79 78.31 82.18 104.98
CURRENT ASSETS 241.69 188.87 203.81 238.45 300.78
DEBTORS /CA*100 43.62% 40.13% 38.42% 34.46% 34.90%

DEBTORS TO CURREST ASSETS

DEBTORS
28%

CURRENT ASSETS
72%

DEBTORS CURRENT ASSETS

Comment : The above table shows that the debtors of the company is
decreasing year after year but slightly increasing in the last year . It means that
either the states company is selling good in cash or the credit sale is going
down every year .
 Page No-21

CASH & BANK TO CURRENT ASSETS ( Rs. In Crores) :

PARTICULERS 2015 2016 2017 2018 2019

CASH & BANK 4.34 4.21 3.96 3.36 4.47
CURRENT ASSETS 241.69 188.87 203.81 238.45 300.78
CASH & BANK /CA*100 1.80% 2.23% 1.60% 1.41% 1.49%

CASH AND BANK TO CURRENT ASSETS

CASH & BANK/CA*100

CURRENT ASSETS

CASH & BANK

0 5 10 15 20 25

2015 2016 2107 2018 2019

Comment : The above table shows that cash & bank balance of the company
has increased in the second year but in the last years it is continuously going
down and that is not also good for the company .
 Page No-22

CAPITAL EMPLOYED ( FIXED ASSETS + WORKING CAPITAL ) ( Rs.In

Crores ):

PARTICULERS 2015 2016 2017 2018 2019

FIXED ASSETS 220.55 153.81 147.56 187.15 190.81
WORKING CAPITAL 91.98 34.11 52.19 54.34 97.98
CE ( FA + WC ) 320.53 187.92 199.75 241.49 288.79

CAPITAL EMPLOYED (FIXED ASSETS + WORKING CAPITAL )

CE ( FA+WC)

WORKING CAPITAL

FIXED ASSETS

0 5 10 15 20 25

2015 2016 2017 2018 2019

Comment : The above chart shows that the capital employed of the company
in the year 2016 has decreased but from 2017 to 2019 capitals employed is
going up . It means the fixed assets and working capital of the company is
increasing and that is a good sign for the company .
 Page No-23

WORKING CAPITAL TO CAPITAL EMPLOYED (Rs.In Crores ):

PARTICULERS 2015 2016 2017 2018 2019

WORKING CAPITAL 91.98 34.11 52.19 54.34 97.98
CAPITAL EMPLOYED 321.53 187.92 199.75 241.49 285.79
WC/CE*100 28.61% 18.15% 26.13% 22.50% 33.93%
2015 2016 2017 2018 2019
WORKING CAPITAL 91.98 34.11 52.19 54.34 97.98
CAPITAL EMPLOYED 321.53 187.92 199.75 241.49 285.79
WC/CE*100 28.61% 18.15% 26.13% 22.50% 33.93%

WORKING CAPITAL TO CAPITAL EMPLOYED

0
WORKING CAPITAL CAPITAL EMPLOYED WC/CE*100

2015 2016 2017 2018 2019

Comment : In the year 2015 the ratio of working capital to capital employed
is 28.61 % & in the year 2016 the ratio is 18.15% it means the fixed assets of
the company has increased in 2016 but in 2017 ,2018 ,2019 the result is 26.13%
,22.5% & 33.9 respectively and it means the working capital has increased in
these 3 years .
 Page No-24

CURRENT ASSETS TO FIXED ASSETS ( Rs.In Crores):

PARTICULERS 2015 2016 2017 2018 2019

CURRENT ASSETS 241.69 188.87 203.81 238.81 23.45
300.78FIXED ASSETS 228.55 153.81 147.56 187.15 190.81
(CA/FA)*100 105.75% 122.79% 138.12% 127.41% 157.63%

2015 2016 2017 2018 2019

0
CURRENT ASSETS 300.78FIXED ASSETS (CA/FA)*100

Comment : The above table shows that the current assets to fixed assets in
the year 2015 ,2016 ,2017 ,2018 ,2019 are 105.75% ,122.79% ,138.12%
,127.41% ,157.63% respectively it means current assets are increasing in every
year than fixed assets .
 Page No-25

SHARE CAPITAL TO CURRENT ASSETS (Rs.In Crores):

PARTICULERS 2015 2016 2017 2018 2019

SHARE CAPITAL 7.85 7.85 7.85 7.85 7.85
CUREENT ASSETS 241.69 188.87 203.81 208.45 300.78
SHARE CAPITAL / CA*100 3.25% 4.16% 3.85% 3.29% 2.61%

SHARE CAPITAL TO CURRENT ASSETS

7

0
SHARE CAPITAL CRRENT ASSETS SHARECAPITAL/CA*100

2015 2016 2017 2018 2019

Comment : The above table shows that in the year of 2015 the current assets
of the company has decressed and as a result share capital to current assets
percentage has increased . But from the year 2016 to 2018 current assets has
increased and as a result of that the share capital to current assets ratio has
decreased.
 Page No-26

LOAN TO CURRENT ASSETS ( Rs.InCrores ):

PARTICULERS 2015 2016 2017 2018 2019

SECURED LOAN 230.04 149.83 101.75 107.17 95.86
UNSECURED LOAN 6.61 1.71 5.17 9.43 17.37
TOTAL LOAN 236.65 151.54 106.92 116.60 113.23
CURRENT ASSETS 241.69 188.87 203.81 238.45 300.78
LOAN/CA*100 97.91% 80.24% 52.46% 48.90% 37.65%

LOAN TO CURRENT ASSETS

5
4.5
4
3.5
3
2.5
2 2017
1.5
2016
1
0.5 2015
0
SECURED LOAN UNSECURED LOAN TOTAL LOAN CURRENT ASSETS LOAN/CA*100

2015 2016 2017

Comment : The above table shows that the company’s secured and
unsecured loan is contionusly decreasing in respect of current assets of this
company & therefore the loan to current assets percentage is decreasing in
every year .
 Page No-27

CHAPTER 4 :

CONCLUSION AND RECOMMENDATION :

In the earlier discussions I have tried to access the working capital of LG

Company Ltd of 2015 ,2016 ,2017 ,2018 ,2019 constituents of working capital
and financing working capital through different sources .

I have discussed only about LG Company Ltd And its 5 years working capital
with all possible ratio analysis . I have taken its Balance Sheet from where we
get all the data about its current assets and current liabilities .

This is a small effort by me on working capital management . This study will

provide a better scope to draw the trends of working capital .
 Page No-28

CHAPTER 5 :

BIBLIOGRAPHY

TEXT BOOKS :

1) Shukla , Grewal ,Gupta : Advanced Accountancy : Vol2

2) Hanif & Mukherjeee : Corporate Accounting
3) B.Banerjee : Regulation of Corporate Accounting & Reporting in
India
4) Sehgal & Sehgal : Advance Volume2
5) Accounting Standards issued by ICAI

WEBSITES :

WWW.GOOGLE.COM

WWW.WIKIPEDIA.COM
 ANNEXURE Page No-29

Balance Sheet of Last 5 Years of LG Company :

Particulers Mar’15 Mar’16 Mar’17 Mar’18 Mar’19
12months 12months 12months 12months 12months
Source of Funds
Total share Capital 7.85 7.85 7.85 7.85 7.85
Equity share Capital 7.85 7.85 7.85 7.85 7.85
Share application money 0.00 0.00 0.00 0.00 0.00
Preference share capital 0.00 0.00 0.00 0.00 0.00
Reserves 221.35 187.57 150.88 132.40 135.20
Revaluation reserves 1.39 1.39 1.39 1.39 1.79
Net worth 230.59 196.81 160.12 141.64 144.84
Secured loans 95.86 107.17 101.75 149.83 230.04
Unsecured loans 17.37 9.43 5.17 1.71 6.61
Total debt 113.23 116.60 106.92 151.54 236.65
Total liablities 343.82 313.41 267.04 293.18 381.49

Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

12months 12months 12months 12months 12months
Application of funnds
Gross Block 360.44 346.58 293.55 280.24 386.97
Less : AccumDep 169.63 159.43 145.99 126.43 158.42
Net Block 190.81 187.15 147.56 153.81 228.55
Capital work in progress 4.99 4.43 3.29 3.95 12.67
Investments 16.51 16.51 12.25 9.67 2.76
Inventories 191.33 162.91 122.24 108.87 131.93
Sundry Debtors 104.98 82.18 78.31 75.79 105.42
Cash & Bank balance 4.47 3.36 3.26 4.21 4.34
Total current assets 300.78 238.45 203.81 188.87 241.69
Loans & Advances 32.79 49.52 50.38 58.22 44.59
Fixed Deposits 0.75 1.46 1.37 33.43 0.95
Total CA ,Loans & 334.32 289.43 255.56 280.52 287.23
Advances
Deferred credit 0.00 0..00 0..00 0.00 0.00
Current Liablities 189.84 152.72 125.51 127.55 132.30
Provisions 12.96 31.39 26.11 27.21 17.41
Total CL & Provissions 202.80 184.11 151.62 154.76 149.71
Net CA 131.52 105.32 103.94 125.76 137.52
Miscellaneous Exp 0.00 0.00 0.00 0.00 0.00
Total Assets 343.83 313.41 267.04 293.19 381.50
Contingent liabilities 99.51 97.76 111.98 18.97 19.73
Book value (Rs.) 292.05 249.00 202.26 17.87 18.23