PROJECT REPORT

ON
WORKING CAPITAL
MANAGEMENT

INDIA YAMAHA PVT. LTD.

FARIDABAD
Submitted by:-
ANKUSH PATHANIA
ROLL NO – B26
REG NO – 10901691

LOVELY PROFESSIONAL UNIVERSITY PHAGWARA (PUNJAB)

INTRODUCTION
India Yamaha Motor Private Limited (IYM) is
100% subsidiary of Yamaha motor corporation
limited (YMC), Japan. Incorporated in August
2001.
Having plants in Faridabad(haryana) and
Surajpur(uttar pradesh).
Having 406 dealers across the country.
Exporting over 50 countries including Argentina,
Mexico, Bangladesh, Sri Lanka, Colombia, Nigeria
and the Ivory Coast.
OBJECTIVES OF THE STUDY
To study the working capital management of INDIA
YAMAHA MOTOR Pvt. Ltd.
 To study the optimum level of current assets and
current liabilities of the company.
To study the working capital components such as
receivables accounts,cash management,
Inventory position.
To study the liquidity position through various
working capital related Ratios.
RESEARCH METHODOLOGY
Research design (Descriptive research design)
Both primary and Secondary data has been used for
the study.
Primary data directly from company finance
department
Secondary data from annual repots.
WORKING CAPITAL
MANAGEMENT
Working Capital management is the management of
assets that, are current in nature. Current assets, by
accounting definition are the assets normally
converted in to cash in a period of one year. Hence
working capital management can be considered as the
management of cash, market securities receivable,
inventories and current liabilities
TYPES OF WORKING CAPITAL
Gross Working Capital
Net working Capital

Gross working capital = total current assets

Net working capital = current assets – current
liabilities
 Efficiency Ratios

2007 2008 2009 Ideal Ratio

1. Working Capital Turnover 4.84 10.23 5.71 -

(times)

2. Current Assets Turnover (times) 1.78 2.98 1.97 -

3. Inventory turnover (times) 9.49 9.20 7.88 -

(B) Liquidity Ratio

1. Current Ratio 2.12 1.80 2.41 2:1

2.AcidTestRatio 1.15 0.98 1.03 1:1
3. Cash Ratio 0.57 0.08 0.05 0:5
 Schedule of Changes in Working Capital

Particulars Amount Changes in Working Capital

Dec 2008 Dec 2009 Increase Decrease
(Debit) (Credit)
Current Assets
Inventories 93.87 146.36 52.48 -
Sundry Debtors 123.22 114.71 - 8.51
Cash and Bank 10.64 5.63 - 5.01

Balances
Other current assets 20.14 21.66 1.52 -

Total current assets 247.87 288.36

Current Liabilities 137.02 116.07 20.95 -
Working capital (CA-CL) 110.85 172.29
Increase in Working Capital 61.44 61.44
172.29 172.29
74.96 74.96
 Size of cash balance (Rs. in Crores)

100

80

60

40

20

0 Cash
Trend
-20

-40

-60

-80

-100
2007 2008 2009
 Size of sales (Rs. in Lacs)

1200

1000

800

600 Sales
Trend

400

200

0
2007 2008 2009
 Current ratio and quick ratio

2.5

1.5

Current Ratio
Quick Ratio
1

0.5

0
2007 2008 2009
 Cash to Current assets ratio

30

25

20

15

10

0
2007 2008 2009
 Cash to Current Liability Ratio (%)

60

50

40

30

20

10

0
2007 2008 2009
LIMITATION OF THE STUDY

The authenticity of the suggestions and

recommendations depend upon the rationality of the
data provided to me.
Have to rely upon the data supplied.
 
FINDINGS
Current assets comprise/a significant portion i.e. 30.89% (average for
three years of study) of total investment in assets of the company. There is
fluctuating and rather increasing trend of this ratio during the period
which shows management in-efficiency in managing working capital in
relation to total investment. Further current assets to fixed assets ratio also
shows on fluctuating trend during the study period which substantiate
above mentioned criterion of in-effectiveness in management of working
capital by the company.
Current assets turnover ratio for the first three years of study shows
fluctuating trend which is due to significant increase in sales. In 2002
current assets turnover ratio is highest one i.e. 2.98 during the study,
reasons being during this year company has achieved sales growth
44.36% over the previous year.
The ratio used for analysis of liquidity position are current ratio and
quick ratio. These ratio reveals that company has sound liquidity
position throughout the period of study. Both the ratio shows
fluctuating trend within reasonable limit but these ratio are higher than
conventionally accepted norms i.e. 2:1 in case of current ratio & 1:1 in
case of quick ratio, which shows ineffectiveness of the management in
managing current/quick assets in relation to current liabilities.
The ratios used for cash management are cash to current assets ratio,
cash to current liabilities ratio. Cash to current liabilities also shows
decreasing trend and cash to current assets ratio also shows decreasing
trend. All these ratios reveals that management has no definite cash
policy.
Inventory turnover ratio depict the fluctuating trend which
indicates the accumulation of inventory in turn which cause
loss to the company by way of deterioration of stock, interest
loss on blockage of stock etc. Further composition of inventory
reveals that portion of individual element of inventory has
fluctuating trend which indicates that management has no
policy in respect of inventory management.
Debtors Turnover ratio reveals an decreasing trend during the
period of study and average collection period ranges from 38 to
46 days. Keeping in view of TWO WHEELER industry trend
credit period of 41 days is quite very higher. It reveals that
management has no specific policy in respect of debtors
management.
Recommendations
The increasing liabilities should be controlled by the
company and adequate measures are to be taken
henceforth .
The company can reduce the cost of production and
try to improve its profitability.
The cash management should be done more
effectively as a major portion comprises of current
assets which are present in the company .
High creditors’ payment period will affect the regular
supply of raw materials, so company can make
necessary steps to pay its creditors at reasonable time
period.
EXTRA WORK

I WORKED ON ERP SOFTWARE PACKAGE IN

INDIA YAMAHA MOTORS PVT. LTD. MORE
THAN ONE MONTH.
THANK YOU