CHAPTER I

II

TITLE Executive Summery Introduction i) Introducing about topic ii) Objectives iii) Hypothesis iv) Scope of Study v) Limitation Company Profile i) Name, Address and Location ii) Introduction iii) Future Outlook iv) Company Product v) Report card vi) Annual Report vii) Growth of Last Five Year Research Methodology i) Method of Data Collection ii) Presentation of Data Concept of Study i) Introduction ii) Management of Working Capital iii) Monitoring and control iv) Need of Working capital Data Interpretation and Analysis i)Working Capital Statement ii)Cash Flow Statement iii)Ratio Analysis Finding of Study Conclusion Suggestion Bibliography Annexure

Page No. 4-9 11-13

15-27

III

29-30

IV

32-46

48-53

VI VII VIII IX X

55 57 59 61 63-66

LIST OF TABLE

Sr. No. a. b. c. d. e. f. g.

Contents Growth of last five year Half yearly result Working capital Statement Cash flow statement Ratio management Balance sheet Profit &lose account

Page No. 23 24-25 48 50 52 63-64 65-66

LIST OF CHART a. b. c. Performance chart Earning per share Working capital operating cycle 26 27 34

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

The project is based on a study of working capital management of madhyadesh paper ltd. Madhyadesh paper ltd is one of the best paper manufacturing companies in vidharbha. This company produces high qualitative paper. It is demanded all over the India paper go for print in many cities like nagpur, chandrapur, amravati, Bombay & other state also (M.p, Gujarat, Bihar, Delhi etc). madhyadesh paper ltd is situated in saoner in nagpur district. In this project I studied about working capital of company. How company use their capital and how mobilizing their capital. It is beneficial for study point of you to study of working capital of madhyadesh paper ltd.

INTRODUCTION
Working capital management consists of management of current assets and current liabilities of an organization. Current assets are those assets which get converted into cash within 12 months. Working capital consists of gross working capital and net working capital. The total current assets called as gross working capital. Total current assets (-) total current liabilities of an organization result is net working capital. There are also core current assets in the organization this is a minimum amount of money which is required for financing your business activity. Currently the term of cash cost of working capital has gained tremendous importance cash cost of working capital is that amount of working capital which is arrive as follow {Net working capital (-) depreciation (-) element of debtor}

OBJECIVE
1. The primary objective of study is to analyze the working capital of Madhyadesh papers ltd. 2. To analyze the financial position of company. 3. To understand how perform organization. 4. Exhibit necessary information.

LIMITATION
1. Study was limited to only one paper industry. 2. Study period also short. 3. Company didnt provide necessary information. 4. Company expanded there business in limited area.

SCOPE
This study evaluates the all paper industry of India in respect to madhyadesh paper. This study will be a beneficial for future point of you.

HYPOTHESIS
1. Company utilizes their net working capital in proper way in order to meet the future obligation of firm. 2. Financial position of a firm is better but the fluctuation in the profit of last few years. 3. Company having a cash balance on the basis of their need. 4. Company concentrates to expanding the current assets than fix assets. 5. Company mostly trying to expanding to liquid assets.

METHOD OF DATA COLLECTION

There are to main method of data collection these are as following y Primary data collection y Secondary data collection Primary data collection:These data gather for a specific purpose or for a specific research project. Personal interview is a main tool for the collection of primary data.

Secondary data collection:Secondary data is base on financial aspect of a company. Annual report of organization, memorandum of association,

article of association, trail balance, company profit and lose account etc. internet and company web site also a source of Secondary data collection. Presentation of data:The data is present in the form of

a) Tabular presentation b) Graphical presentation These above are important method of data collection. Many firm collect the data from various sources like interview, questionnaire, company financial data etc.

FINDINGS
1. Company enables to meet the obligation of working capital in current year because it reduce by 28.36% 2. Company cash and cash equivalent increase by 0.73 lacks in current year it show management of liquidity well. 3. From the balance sheet of two year show that the firm invested in fixed assets more than previous year. But slightly decrease in current year. 4. Total debt of the firm decrease in current year it denoted that firm are responsible for paying the debts of creditors. 5. Firm suffer in current year due to low profit because it decrease 91.63%in current year. 6. Earning ratio of affirm also reduce in current year i.e. 0.30 times

SUGGETIONS
1. Company should enhance the working capital of meeting the future obligation. 2. The firm should pay attention on increase the current assets and try to reduce the liabilities. 3. Firm should be concentrating at the financial position of firm because the huge degradation in the profit of current year as compare to last year. i.e.0.26 4. in order to market position company try to improve the quality of their product by adopting new technology.

CONCLUSIONS
1. It can be concluded from the above analysis of paper ltd that the working capital management not only pertains to cash management but also various other assets. 2. Working capital is a management of current assets and current liabilities should be insured for smooth functioning of an organization. 3. Liquidity position of a firm during the year is higher i.e. 2.51 times. It shows that liquidity position of firm is good. 4. Gross turnover is fluctuating in last five year it is not a good sign for organization. 5. Net profit also decreasing in current year. It means degradation in company current assets and fix assets.

I. INTRODUCTION

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i.

INTRODUCING ABOUT TOPIC:-

Working capital management consists of management of current assets and current liabilities of an organization. Current assets are those assets which get converted into cash within 12 months. Current liabilities which are to be repaid within 12 month. Working capital consists of gross working capital and net working capital. The total current assets are called as gross working capital. Total current assets (-) total current liabilities = Net working capital A total current asset less total current liabilities of an organization result is net working capital. There are also a core currents assets in the organization this is a minimum amount of money which require for financing your business activities. Currently the term of cash cost of working capital has gained tremendous importance cash cost of working capital is that amount of working capital which is arrive as follow.

{Net working capital (-) depreciation (-) elements of debtor} One should keep in mind that when we talk of working capital management, it consist of current assets and current liabilities. Hence proper management of all current assets and current liabilities insured proper functioning of an organization.

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II. OBJECTIVE OF STUDY

1. The primary objective of study is to analyze the working capital of Madhyadesh papers ltd. 2. To analyze the financial position of company. 3. To understand how perform organization. 4. Exhibit necessary information.

III. LIMITATION
1. Study was limited to only one paper industry. 2. Study period also short. 3. Company didnt provide necessary information. 4. Company expanded there business in limited area.

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iv. SCOPE
This study evaluates the all paper industry of India in respect to madhyadesh paper. This study will be a beneficial for future point of you to paper manufacturing company.

v. HYPOTHESIS
1. Company utilizes their net working capital in proper way in order to meet the future obligation of firm. 2. Financial position of a firm is better but the fluctuation in the profit of last few years. 3. Company having cash balance on the basis of their need. 4. Company concentrates to expanding the current assets than fix assets. 5. Company mostly trying to expanding in liquid assets.

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II.COMPANY PROFILE

14

i. Name, Address & Location:Managing body:Vinod maheshwari Nimesh maheshwari S.L Keshawani Vinay pansari Kiran Somalwwar _ _ _ _ _ Chairman Managing director Director Director Director

Name:Madhyadesh paper ltd

Address:Village Managaon, Nagpur district, Maharashtra India, Phone 232401, 232398, Fax 232400

Registered office:Navabharat bhavan chatrapati squre, Nagpur- 440015, Maharashtra- India Phone- 2284013, 2284014, Fax- 2284015, Email- mplpaper@nagpur.dot.net.in

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II. INTRODUCTION
Madhyadesh paper ltd incorporated as public limited company on 20th April 1993and the certificate of commencement of business was obtain 7th oct 1993. The company is promoted by shri Ramgopal Maheshwari, Prakash Maheshwari, Vinod Maheshwari, Nimesh Maheshwari and Sameer Maheshwari and their family member, owner of the well established Navbharat group of news paper, being publish in central India. Now the company propose to set up a new plant for manufacture newsprint with an install capacity of 15,180 tpa (46 tpd) at village Manegaon, Tahsil Saoner, District Nagpur, Maharashtra. Madhyadesh paper ltd is one of the best paper manufacturing company in Vidharba. After the establishment company didnt look behind and now leading paper mill in Nagpur district. The company produces high qualitative paper by using better technology and qualitative raw material. Company product demanded in many state like Madhya Pradesh, Delhi, Bihar etc. The paper use for much news paper like Navbharat, Lokmat, Dainik bhaskar, Hitwada and Lokmat samachar.

PRODUCTION SYSTEM
y The company daily production approximately 60 tons. y Company performs 24 hours. y There are 3 ships in a day. y 80 worker work in a ship.

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SHARE HOLDING PATTERN

Share holder Indian promoter Foreign promoter Acting person Mfs/Uti Bank Public cooperative body Indian public other Amount% 58.43 _ _ 0.11 _ 6.99 34.44 0.05

Above table show the share holding pattern of madhyadesh paper ltd. We can examine how company distributed their share to public or private owner. Firm distributed the entire share to Indian investor. Firm did not distribute their share to foreign promoter.

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COMPETETION
Competition is a part of business. every firm are facing a problem of competition. There are many competitors in the market so Mpl also face similar problem because there are lot of paper industry in the market due to that mpl having extra pressure for performing well. The following table shows the competition of the paper industry

company

Capital(cr) Sale(cr)

Net profit(cr)

Total assets(cr) 2239.40 1470.77 1741.43 1104.72 965.84 500.79 562.95 554.29 166.56 165.46 42.10

Ballarpur Ind. Tamil news print West coast page Jk paper Ap paper Rama newsprint Sehasayee page Sirpur paper Pudumjee pulp Star paer M.p paper

1.355 420.36 567.33 431.08 343.86 291.43 285.56 157.73 82.04 78.31 5.35

1.0025 1096.81 623.57 1077.18 633.22 346.34 529.63 348.50 221.35 367.58 50.81

125.39 107.38 90.54 38.01 18.95 -27.27 13.03 -1.63 3.62 17.02 0.14

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III. FUTURE OUTLOOK

The present trend to rising domestic newsprint market is going to continue in the New Year which would augment in improving sale realization and will defiantly mark a substantial increase in operational turnover and profitability of coming year. The company already implementing its plan for major remodification and installation process control system which would enhance the quality of the product and fetch more premium and market share as envisaged earlier, the company is outlaying capital investing to the tune of Rs 50.00 lacks per year to further improve the capacity utilization. In view of reduce profitability and the need for sustaining growth of year. Company, the director has not recommended any dividend for this year.

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IV. COMPANY PRODUCT

Mpl is paper industry is produce qualitative paper and distributed all over India. The major goal of a firm is to fulfilling the market requirement. Thus managing body try to produce qualitative production in order to face the competition in the market. So they use qualitative raw material for the production. There are following raw material uses for the production

y Waste paper y Rice husk y Chemical y Packing material.

V. REPORT CARD
PARTICULER PE ratio EPS Sale (cr) Face value Net profit margin% Return on avg. equity Total share capital(cr) Total assets AMOUNT 40.09 0.19 6.46 10 0.51 1.34 7.19 42.10

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VI. ANNUAL REPORT

The director has pleasure in presenting their fifteenth annual report and audited statement of account for the year ended 31st march 2009.

FINANCIAL RESULT
particular Sale and other income Gross profit Less-financial charge Depreciation 3,15,52,208 2,35,74,561 5,51,26,769 39,07,118 Add- prior period adjustment Profit before tax Less- provision for tax Profit after tax Add- surplus brought forward Balance carry forward 5,56,676 21,21,682 6,17,02,993 6,38,24,674 (12,34,760) 26,72,398 amount amount 41,11,80,548 5,90,33,887

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During the year under review the performance of the company was hampered due to several factor, major one being ratification of problem related turbine rotor assembly resulting in stoppage of operation for more than a month this had an adverse impact an the operation of your company resulting in reduction of production capacity 23543.776 mt in the previous year to 20873.839mt in the current year. Consequentially, the sale tern over of your company also fall from Rs 45.19 crores in the previous year to Rs 40.54 crores I the current year result in reduction in the net profit from Rs 229.21 lacks in the previous to Rs 21.22 lacks in the current year. However your company is evaluating and implementing strategy to sustain its growth both in term production and profitability.

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VII. GROWTH OF 5 YEARS

(Amt in crores) Year:particular Operating profit PBDIT Interest PBDT Depreciation Other written off PBT Extra ordinary item PBT Tax Reported net profit Total value addition Share in issue Earning per share Equity dividend Book value Mar 05 5.14 5.24 3.60 2.64 1.30 0.00 1.34 -0.14 1.20 0.00 1.20 5.53 71.85 1.36 0.00 17.97 Mar 06 6.51 6.52 4.12 2.40 2.35 0.00 0.05 -0.02 0.03 0.01 0.06 4.62 71.85 0.08 0.00 18.03 Mar 07 6.84 6.96 4.24 2.72 2.37 0.00 0.35 -0.01 0.34 0.04 0.32 4.44 71.85 0.44 0.00 18.46 Mar 08 8.50 8.22 3.36 4.86 2.38 0.00 2.48 0.12 2.60 0.30 2.29 5.19 71.85 3.19 0.00 21.65 Mar 09 5.14 5.99 3.16 2.75 2.36 0.00 0.39 -0.12 0.27 0.06 0.21 5.06 71.85 0.30 0.00 21.94

From the above financial report it is concluded that there are fluctuation in net profit of the last five year. It is not grown up in every financial year.

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HALF YEARLY RESULT

PARTICULAR Sales turnover Other income Total income Total expenses Operating profit Profit on sale of assets Profit on sale of investment Other extra ordinary income/expenses total extra ordinary income/expenses Tax on extra ordinary item Gross profit Interest PBDT Depreciation PBT Tax Net profit Dividend

MAR 09 (cr) 24.77 0.14 24.91 21.14 3.63 _ _ _ _ _ 3.77 2.35 1.42 1.25 0.17 0.02 0.15 _

SEP 09 (cr) 16.45 6.29 16.75 15.38 1.07 _ _ _ _ _ 1.36 1.45 -0.09 1.21 -1.30 _ -1.30 _

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Dividend tax Dividend % Earning per share Book value Equity Reserves Face value

_ _ 0.36 _ 7.19 9.05 10

_ _ _ _ 7.19 9.05 10.00

From the above analysis we can find out that company does not perform well at the end of month Sep 09. Firm suffered with lose in six month. The net lose to the firm is -1.30. It means the degradation in the profit of 1.15 crores in just six month so it is not a good sign for the firm to future point of you. The major problem is that degradation in the sale turnover i.e. only 16.45 It reduce by 8.28 crores in last six month.

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net profit per year

2.5 2 sale 1.5 SALE 1 0.5 0 2005 2006 2007 2008 2009 year

1. The above graph show the profit of 2005 is 1.83 but later it reduces by huge margined. i.e. 1.77 cr 2. in 2007 profit slightly gone up. 3. in 2008 huge increment in profit by 1.97 cr. Graph indicate that there are a fluctuation in the profit of last five year

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EARNING PER SHARE

4 EARNING 3 2 1 0 2005 2006 2007 2008 2009 YEAR EARNING%

Above chart show that the company earning did not expanded every year. There is a fluctuation in the earning of every year

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III. RESEARCH METHODOLOGY

28

III. RESEARCH METHODOLOGY

Research is a process which involves the step like defining the problem, identifying research objective, formulating research hypothesis, collecting and interpretation of data, deriving finding, conclusion and identifying the action plan. Research is a well plan activity, which is design and implemented to provide the data for solving important genuine and recurrent problem. Research can also be said as a moment from the know to unknown fact.

There are two main type of data collection. y Primary data collection y Secondary data collection Primary data collection:These data gather for a specific purpose or for a specific research project. Personal interview is a main tool for the collection of primary data.

29

Secondary data collection:Secondary data is base on financial aspect of a company. Annual report of organization, memorandum of association, article of association, trail balance, company profit and lose account etc.internet and company web site also a source of Secondary data collection.

Presentation of data:The data is present in the form of

c) Tabular presentation d) Graphical presentation

These above are important method of data collection. Many firm collect the data from various sources like interview, questionnaire, company financial data etc.

30

IV. CONCEPT OF STUDY

31

I. INTRODUCTION

A firm cash to pay for all their day to day activity. They have to pay on the wages, pay for raw material, pay bill and so on. The money available to them to do this is know as the firm working capital. The main source of working capital is the current assets as these are the short term assets that the firm can use to generate cash. However the firm also has current liabilities and so these have to be taken account of when working out how much working capital affirm has its disposal. It refers to management of working capital or to be more precise, the management of current assets. First existence o f working capital is impressive in any firm. The fix assets is usually require a large chunk of total fund can use at the optimum level only if supported by sufficient working capital, second the working capital involves investment of the fund of the firm.

Working capital is there fore

{Working capital = current assets current liability}

Thus working capital is the same as net current assets, and is an important part of the top half of the firm balance sheet. It is vital to a business to have sufficient working capital to meet the entire requirement. Many businesses have gone under, not because they were unprofitable, but because they suffered from storage of capital. Finally working capital management consists of management of current assets and current liabilities of an organization. Current assets are

32

those assets which get converted in to cash within 12 month. Current liability which are to be repaid within 12 month. Working capital consists of gross working capital and net working capital. The total current assets are called a gross working capital. A total current asset less total current liabilities of an organization result is net working capital. There are also core currents assets in the organization this is a minimum amount of money which require for financing your business activity. Currently the term of cash cost of working capital has gained tremendous importance cash cost of working capital is that amount of working capital which is arrive as follow.

{Net working capital (-) depreciation (-) elements of debtor} One should keep in mind that when we talk of working capital management, it consist of current assets and current liabilities. Hence proper management of all current assets and current liabilities insured proper functioning of an organization.

33

ii. Working capital operating cycle

WIP Raw Material Finish good

Expense

W.C Cycle

Sale

Creditor Cash

Debtor

The working capital requirement of a firm depends; to a great extend upon the operating cycle of the firm. The operating cycle may be defined as the time duration starting from the procurement of good or raw material and ending with the sale realization. The length and nature of operating cycle may differ from one firm to another depending upon the size and nature of the firm. The working capital estimate depends upon the operating cycle of the firm. The different component of a working capital operating cycle is as follow:

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y Current assets:
Cash and bank balance Raw material Work in progress Finish good Debtors

y Current liabilities:
Creditors Expenses

a. Cash & bank balance:Every firm must maintain some minimum cash and bank balance (i.e. immediate liquidity) to meet day to day requirement for petty expenses, general expenses and even for cash purchase. The minimum cash requirement for these transactions can be estimated on basis of past experience. At this stage that the cash and bank balance must be estimated for to reasons: 1. That the cash and bank balance is the least productive of all the current assets hence the minimum balance be maintained. 2. The cash and bank balance provide liquidity to firm.

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b. Raw material:Every manufacturing firm has to maintain some stock of raw material in store in order to meet the requirement of the production process. The number of unit to be kept in store for different type of raw material depend upon the various type of consumption rate, time lag in procuring fresh stock, contingence and other factors.

c. work in progress:In any manufacturing firm, the production process in continuous and is generally consisting of several stages. At any particular point of time, there will be different number of unit in different sages of production. Some of these unit 10% complete, some may be 60% complete and some may be 90% complete. These units, which can neither be defined as raw material nor as finish good, are known as working process or semi finish goods.

d. Finish good:The most of the cases be it a trading concern or a manufacturing concern, the good are not immediately sold after purchase/procurement/completion of the production process. The goods, in fact remain in store for some time before they sold. The cost which is already incurred in purchasing, procuring or production of these units is looked up and hence working capital is required for them.

36

e. Debtors:The term receivable include the debtors and the bills. When the good are sold by the firm on cash basis, the sale revenue is realized immediately and no working capital is required after the sale period. However, in case of credit sale, there is a time lag between sales and collection of sales revenue.

f. Creditors:When the firm procures or purchase of raw material on credit basis. The payment of these purchase may be postponed for a periods of credit allowed by suppliers. So, the suppliers of the firm in fact provide working capital to the firm for the credit period.

g. Expenses:Usually, expenses and wages paid at the end of a month. However, the wages and expenses accumulate in the working progress and finish good on a regular basis. The time lag in payment of wages and other expenses also provide some working capital to the firm. It may be noted that these wages and expenses considered for the valuation of working progress and finish good, but are paid usually at the end of the month, providing working capital to the firm for that period.

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Estimation of working capital

s.no Particular I. Current assets : Cash & bank balance Inventories : R.M W.I.P F.G Receivable : Debtors bills Gross working capital(CA) II. Current liabilities : Creditors for purchase Creditors for wages

amt

amt Xx

amt

xx xx xx Xxx

Xx xx Xxx xxx

xx xx xxx xxx xxx xx xxxx

Creditors for overhead xx Total current liabilities Working capital Add : safety margin Net working capital

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iii. Working capital monitoring and control

It goes without saying that the working capital quantum as well as it financing pattern are subject to constant monitoring and review by the financial manager, care must be taken that the working capital structure remain as intended to be. There are different analytical tool which can help financial manager monitoring, reviewing and control of working capital. Some of which is as follow.

Working capital ratio:Another analytical tool that can used monitor the working capital is the accounting ratio, particularly working capital ratio is follow.

1) Current ratio i.e. to current liabilities ratio 2) Liquid ratio i.e. quick assets to current liabilities ratio 3) Current assets to total assets ratio 4) Current assets to total sale ratio.

There are other ratios also play an important role for monitoring and control the financial position of the firm. These ratios are as follow.

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1. Working capital turnover ratio:This ratio measures the relationship between working capital and sale. The ratio show the number of time the working capital result in sales. Working capital as usual is the excess of current assets over current liabilities. The following formula is use to measure this ratio:

Working capital turnover ratio = net sale/cost of sale Working capital

2. Inventory turnover ratio:This ratio measure how many times the average stock sold during the year. Promptness of sale indicates better performance of business. It also show efficiency of concern immediate sale of good produced require further production, which consequentially activates the productive process and is responsible for rapid development of the business. Higher inventory ratio is always beneficial to the concern. Lower inventory ratio show that the stock is block and immediately sold. The ratio establishes relationship between costs of good sold and average stock. This ratio calculates as under.

Inventory turnover ratio = costs of good sold Average stock Costs of good sold =opening stock+ purchase+ direct expenses- closing stock Average stock = opening stock+ closing stock 2

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3. Earning per share:The ratio measures the return per share receivable by the equity or ordinary shareholder. Equity shareholders are virtually the owner of the company. Dividend payable to them is ascertained after deducting operating and operating expenses and even the interest payable to debenture holder dividend to performance share holder. ratio calculates as under. This

Earning per share = total earning No. of share

4. Fixed assets turnover ratio:Fixed assets are use in a business for producing good to be sold. The effective utilization of fixed assets will result in increase production and reduced cost. It also insures whether investment in the assets have been judicious or not. The following formula is use for the measuring the ratio.

Fixed assets turnover ratio = net sale/cost of sale Fixed assets

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5. Debtor turnover ratio:It is also known as receivable turnover ratio. It establishes relationship between credit sale and average debtors. The following formula is use for the measuring the ratio.

Debtor turnover ratio = Credit sale Avg debtors

6. Debt equity ratio:This ratio is calculate to judje the long term financial policy of business. The ratio establishes the relationship between long term loan and owner fund. Long term loan consisting of

Long term loan= debenture+ loan from bank+ public deposit+ loans & mortgage+ term loan+ secured loan

Shareholder fund= equity/ordinary share+ preference share capital+ surplus+ general reserve. This ratio calculates as under.

Debt equity ratio= Long term loan Shareholder fund or

Debt Equity

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Total debt equity ratio is 2:1, means the long term liabilities of the business should ideally be two time of shareholder funds. In other words shareholders funds should be 0.5 times of long term loans. This ratio indicates to what extend the firm depends on outsiders fund for existence.

Importance of ratio analysis

Accounting ratio is true test of the profitability, efficiency and financial soundness of the company.

 Measurement of profitability.  Judging the operational efficiency of the management.  Assessing efficiency of business.  Fascinating comparative analysis of the performance.  Use in budgeting and forecasting.  Utility to share holder investor.

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IV.FACTOR DETERMINIG WORKING CAPITAL REQUIREMENT

The working capital need of a firm are determined and influenced by various factor. There are the following factor influences the need of working capital.

 Basic nature of business.  Business cycle fluctuation.  Seasonal operation.  Market competitiveness.  Credit policy.  Supply condition.

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V. MANAGEMENT OF CASH
Cash management refers to management of cash balance and the bank balance and also includes the short terms deposits. The cash is obviously the most important current assets as it is the most liquid and can be used to make immediate payments. Insufficiency of cash at any stage may prevent a firm from discharging its a liability or force it to sell its other assets immediately .On the other hand, extreme liquidity may take the firm to make uneconomic investment. This underlines the significance of cash management. Every firm must maintain some minimum cash and bank balance to meet day to day requirement of petty expenses, general expenses and even for cash purchase. The minimum cash requirement for these transactions can be estimated on the base of past experiences. The financial manager is require to manage the cash flow (both inflow & outflow) arising out of the operation of a firm. For this he will have to forecast the cash inflow from sale and outflow from expenses.

Cash

Outflow

Inflow

Payment to creditor Wages and salary Fixed assets purchase Investment

Investment Payment of debt Other expenses

Cash sale Collection from debtors Loan and borrowing Other income

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Cash inflow and outflow:Every firm has to maintain the cash balance because expected the inflows and outflows are not always synchronized. The timing of the cash inflows may not always match with the timing of the outflows. Therefore the cash balance is required to fill up the gap arising out of out of difference in timing of quantum of inflow and outflow. When company paid or invests the money anywhere, it is a out flow of the cash and vice versa.

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V.DATA INTERPRETATION ANALYSIS

&

47

WORKING CAPITAL STATEMENT

PARTICULER Current assets:Stock : R.M & finish good Debtors Cash & bank balance Total current assets Current liabilities:Creditors: Sundry creditor & payable Total current liabilities Total working capital 5.51 5.51 14.51 4.34 4.34 10.31 AMT(cr) AMT(cr)

6.52 13.72 0.12 20.36

4.45 9.19 1.01 14.65

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INTERPRETATION
1. The working capital of current year is decrease as compare to last year by 4.20 crores. So the financial position of the firm not so good in current year. 2. Decrease in current liabilities means managing the creditors well. 3. Decrease in the current assets by 5.71 crores. It means management of current assets is not so good.

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CASH FLOW STATEMENT

PARTICULER Net profit before tax AMT(cr) 2.17 AMT(cr) 0.21

Net cash from operating activity

7.79

11.12

Net cash use in investing activity

(0.28)

(1.15)

Net cash flow from financing activity

(7.48)

(9.18)

Net cash increase/increase in cash &cash equivalent 0.06 Opening cash & cash equivalent 0.16

0.79 0.22

Closing cash & cash equivalent

0.22

0.01

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INTERPRETATION
1. The above cash flow statement has prepared under the indirect set out in as-3 issued by institute of chartered account of India. 2. The amount in bracket show outflow. 3. From above statement cash increase 3.33% than previous year from operating activity. 4. The company invest the cash is more in current year. It means the purchase of fixed assets. 5. Increase in cash equivalent in current year. It shows well management of cash for current year. method

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RATIO MANAGEMENT
S.NO 1 RATIO Current ratio = current assets Current liabilities 2 Liquid ratio = liquid assets Current liabilities 3 Current assets to Total assets ratio = 4 Current assets to Total sale ratio 5 Working capital Turnover ratio = 6 = current assets total assets current assets total sale cost of good sold working capital cost of good sold Avg inventory C.YEAR 20.36/5.54 = 3.70 13.84/5.51 =2.51 P.YEAR 14.65/4.34 =3.38 10.20/4.34 2.35

20.36/47.92 14.65/42.10 0.42 0.35

20.36/44.81 14.65/40.35 0.45 0.36

43.33/14.51 37.5/10.31 2.98 43.33/6.81 =5.40 3.62 37.3/5.48 = 6.80

Inventory turnover ratio =

Earning per share =

total earning No. of share

2.29/0.71 = 3.19

0.21/0.71 = 0.30

Fixed assets turnover ratio =

net sale Fixed assets

44.81/31.84 40.35/29.63 =1.40 =1.36

Debtor turnover ratio =

credit sale Avg. debtor

44.81/13.72 40.35/9.19 =3.27 15.56/7.19 =2.16 =4.39 15.77/7.19 = 2.19

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Debt equity ratio =

long term debt Share holder fund

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INTERPRETATION
1. Current ratio of the firm is 3.38 times. It means the company is able to meet the short term obligation although it is slightly decrease in current year. 2. Liquid ratio of the firm 2.35 times it shows the firm liquidity position is good. 3. Working capital ratio is 3.62 times. It indicates that working capital turnover is lower in current year. 4. The ratio shows the amount of stock holding with respect to turnover of company currently ratio is 6.80. It is indicate that stock is block and not sold immediately. 5. Earning per share measure the profit available to equity shareholder on per share basis. The current year ratio is 0.30 times. It shows very low profit. 6. Debt equity ratio tell us amount invested by outsider and owner in the business. The ratio is 2.16 is equal to standard norm i.e. 1:2.

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VI. FINDING OF STUDY

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FINDING
1. Company enables to meet the obligation of working capital in current year because it reduce by 28.36% 2Company cash and cash equivalent increase by 0.73 lacks in current year it show management of liquidity well. 3. from the balance sheet of two year show that the firm invested in fixed assets more than previous year. But slightly decrease in current year. 4. Total debt of the firm decrease in current year it denoted that firm are responsible for paying the debts of creditors. 5. Firm suffer in current year due to low profit because it decrease 91.63%in current year. 6. Earning ratio of a firm also reduce in current year i.e. 0.30 times

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VII.CONCLUSION

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CONCLUSION
1. It can be concluded from the above analysis of paper ltd that the working capital management not only pertains to cash management but also various other assets. 2. Working capital is a management of current assets and current liabilities should be insured for smooth functioning of an organization. 3. Liquidity position of a firm during the year is higher i.e. 2.51 times. It shows that liquidity position of firm is good. 4. Gross turnover is fluctuating in last five year it is not a good sign for organization. 5. Net profit also decreasing in current year. It means degradation in company current assets and fix assets.

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VIII. SUGGETION

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SUGGETION
1. Company should enhance the working capital of meeting the future obligation. 2. The firm should pay attention on increase the current assets and try to reduce the liabilities. 3. Firm should be concentrating at the financial position of firm because the huge degradation in the profit of current year as compare to last year. i.e.0.26 4. In order to market Position Company tries to improve the quality of their product by adopting new technology.

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XI. BIBLIOGRAPHY

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BIBLIOGRAPHY
Book:Financial management R.P. Rastagi Financial management Khan & Jain Financial management I.M. Panday

Website:Google.com.

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X. ANNEXURE

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Balance sheet of Madhyadesh paper ltd

(Amt in crores) Particular Source of fund: Total share capital Equity share capital Share application money Preference share capital Reserve Revaluation reserve Net worth Secured loan Unsecured loan Total debt Total liabilities 7.19 7.19 0.00 0.00 8.37 0.00 15.56 24.87 7.50 32.37 47.93 7.19 7.19 0.00 0.00 8.58 0.00 15.77 22.98 3.37 26.35 42.12 31 mar 08 31 mar 09

Application of fund Gross block Less: accumulated depreciation Net block Capital work in progress Investment Inventories Sundry debtors 48.18 16.34 31.84 0.00 0.00 6.52 13.72 48.33 18.70 29.63 0.00 0.00 4.45 9.19

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Cash & bank balance Total current assets Loan & advance Fixed deposit Total current assets, loan & advance Current liabilities Provision Total current liabilities & provision Net current assets Misc. expenses Total assets Contingent liabilities Book values

0.12 20.36 1.55 0.10 22.01 5.51 0.42 5.93 16.08 0.00 47.92 0.30 21.65

1.01 14.65 2.74 0.00 17.39 4.34 0.58 4.92 12.47 0.00 42.10 6.27 21.94

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Profit & loss account of Madhyadesh paper ltd.

(Amt in crores) particular Income: Sale turnover Excise duty Net sale Other income Stock adjustment Total income Expenditure: Raw material Power and fuel cost Employee cost Other manufacturing cost Selling & admin exp Misc. exp Total expenses Operating profit PBDIT Interest PBDT Depreciation Other written off PBT 31.04 0.00 2.03 0.47 2.37 0.32 36.23 8.50 8.22 3.36 4.86 2.38 0.00 2.48 30.17 0.00 2.14 0.55 0.02 2.35 35.23 5.14 5.99 3.16 2.75 2.36 0.00 0.39 45.42 0.61 44.81 -0.28 -0.08 44.45 40.58 0.23 40.35 0.77 0.02 41.14 Mar 08 Mar 09

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Extra ordinary item PBT Tax Reported net profit Total value addition Share in issue Earning per share Equity dividend Book value

0.12 2.60 0.30 2.29 5.19 71.85 3.19 0.00 21.65

-0.12 0.27 0.06 0.21 5.06 71.85 0.30 0.00 21.94

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