A STUDY ON

WORKING CAPITAL MANAGEMENT

AT
ZUARI CEMENT PVT. LTD

UNDER THE GUIDANCE OF: SUBMITTED BY:

MRS. K. SUJATHA, N. SUVARNA ANJALI,

ASSISTANT PROFESSOR, 182P1E0037.
DEPARTMENT OF MBA.
 MEANING

• Working capital is the lifetime Ordinarily, the term

“working capital” stands for the part of the capital, which
is required for the of every concern. Whether it is
manufacturing or non-manufacturing one without
adequate working capital, there can be no progress in the
industry.
• The working capital of the firm is not managed. The
term describes a category of management decisions
affects specific types of current assets and current
liabilities. In turn, those decisions should be rooted in the
overall Valuation.
 DEFINITIONS
• According to I M Pandey “Working capital
is defined as the difference between current
assets and current liabilities.”
• According to Hoagland “Working capital is
descriptive of that capital which is not fixed.
But the more common use of the working
capital is to consider it as the difference
between the book value of the current assets
and the current liabilities.
 NEED FOR THE STUDY
The need for working capital arises due to
the time gap between production and
realization of cash from sales. There is an
operating cycle involved in the sales and
realization of cash. Hence there is a need to
study the importance of working capital
management in “ZUARI CEMENT LIMITED”.
 SCOPE OF THE STUDY
The basic scope of the study was to put into
practical and theoretical aspect into real life
work experience. It is based on tools like ratio
analysis, statement of changes in working
capital and it also includes an observation of
different years working capital of ZUARI
CEMENT LIMITED
 OBJECTIVES
• To find out the changes of working capital in Zuari
cement.
• To analyze the liquidity position of the Zuari cement.
• To analyze the working capital turnover of Zuari
cement.
• To examine the impact of working capital
management on profitability of zuari cement.
• To know the position of current assets and current
liabilities.
 DATA ANALYSIS
AND
INTERPRETATION
 Statement showing changes in working capital as on
2015(Rs.In lakhs)
Effect on
Particulars working capital  
As on 31-12-2014 As on 31-12-2015 Increase Decrease
A)Current assets        
Inventories 2503.20 3114.57 611.37  
Sundry Debtors 2467.39 934.79  1532.6
Cash & Bank 1290.71 1383.35   92.64
Loans and Advances 1906.20 5284.23 3378.03  
Total(A) 8167.5 101716.94    
         
B)Current liabilities        
Current liabilities 3381.69 3758.62   376.93
Provisions 127.90 289.62   161.72
Total(B) 3509.59 4048.24    
         
Working Capital(A-B) 4657.91 6668.7    
Net decrase in working capital   2010.79  2010.79
Total 6668.7 6668.7 4082.04 4082.04
         

Interpretation : This analysis shows that Net working capital is increased in the year
2014-15.When compared with 2013-14.Due to decrease in current assets like stock ,cash
&Bank , loans and advances.
 Statement showing changes in working capital as on
31-03-2016(Rs.In
Effect on
lakhs)
Particulars working capital  
As on 31-12-2015 As on 31-12-2016 Increase Decrease
A)Current assets        
Inventories 3114.57 3971.01 856.44
Sundry Debtors 934.79 2531.00 1596.21
Cash & Bank 1383.35 12012.16 10628.81
Loans and Advances 528403 8821.93 3537.7
Total(A) 10716.94 27336.10
 
B)Current liabilities
Current liabilities 3758.62 131132.52 127373.9
Provisions 289.62 1373.63 1084.01
Total(B) 4048.24 132506.63
  -105170.05
Working Capital(A-B) 6668.7
Net decrase in working capital 111838.05 111838.75
128457.9
Total 105170.05 105710.05 128457.91 1
 

Interpretation : This analysis shows that Net working capital is increased in the year
2015-16.When compared with 2014-15.Due to decrease in current assets like stock ,cash
&Bank , loans and advances.
 Statement showing changes in working capital as on
31-03-2017(Rs.In
Effect on
lakhs)
Particulars working capital  
As on 31-12-2016 As on 31-12-2017 Increase Decrease
A)Current assets        
Inventories 3971.01 6071.35 2100.34
Sundry Debtors 2531.00 2640.09 109.09
Cash & Bank 12012.16 4773.47 7238.69
Loans and Advances 8821.93 10803.09 1981.16
Total(A) 27336.10 24288.00
 
B)Current liabilities
Current liabilities 131132.52 22479.86 108652.66
Provisions 1373.63 2731.18 1360.55
Total(B) 132506.15 25211.04
 
Working Capital(A-B) 105170.05 -926.04
104244.0
Net decrase in working capital 104244.01 1
Total 105170.05 105170.05 12843.25 12843.25
 

Interpretation : This analysis shows that Net working capital is decreased in the year
2016-17.When compared with 2015-16.Due to decreased in current assets like stock ,ca
&Bank , loans and advances.
 Statement showing changes in working capital as on
31-03-2018(Rs.In lakhs)
Effect on
Particulars working capital  
As on 31-12-2017 As on 31-12-2018 Increase Decrease
A)Current assets        
Inventories 6071.35 4378.43 1692.92
Sundry Debtors 2640.09 3922.79 1282.7
Cash & Bank 4773.47 21081.89 16308.42
Loans and Advances 10803.09 7482.89 3320.2
Total(A) 24288.00 36866.00
 
B)Current liabilities
Current liabilities 22479.86 19445.18 3034.68
Provisions 2743.18 4921.17 2186.99
Total(B) 25214.04 24366.35
 
Working Capital(A-B) -926.04 12499.65
Net decrase in working capital 13425.69
Total 12499.65 12499.65 20625.8 20625.8
 

Interpretation : This analysis shows that Net working capital is increased in the year
2017-18.When compared with 2016-17.Due to increase in current assets like stock ,cash
&Bank , loans and advances.
 Statement showing changes in working capital as on
31-03-2019 Effect on
Particulars working capital  
As on 31-12-2018 As on 31-12-2019 Increase Decrease
A)Current assets        
Inventories 4378.43 9061.61 4683.18  
Sundry Debtors 3922.79 4123.75 200.96  
Cash & Bank 21081.89 4550.46   16531.43
Loans and Advances 7482.89 11510.12 4027.23  
Total(A) 36866 29245.94    
         
B)Current liabilities        
Current liabilities 19445.18 29522.36   10077.18
Provisions 4921.17 2595.8 2325.37  
Total(B) 24366.35 32118.16    
         
Working Capital(A-B) 12499.65 -2872.22    
Net decrase in working capital   15371.87 15371.87  
Total 12499.65 12499.65 26608.61 26608.61
         

Interpretation : This analysis shows that Net working capital is decreased in the year
2018-19.When compared with 2017-18.Due to decrease in current assets like stock ,cash
&Bank , loans and advances.
Current Ratio:
Current Ratio= current Assets/Current Liabilities

Year Current Current Current Ratio

Assets Liabilities

2014-15 10716.94 4048.24 2.64

2015-16 27336.10 132506.15 0.20
2016-17 24288.00 25214.04 0.96
2017-18 36866.00 24366.35 1.51
2018-19 29245.94 32118.16 0.91
 Current Ratio
3

2.5

2
Current Ratio
1.5

0.5

0
2014-152015-162016-172017-182018-19

Interpretation:
The Current Ratio of the company is gradually decreasing throughtout
the study period. Except in the 2014-15 i.e., 2.64 ,that means the organization had not
made proper investment in current assets, with this organization faces liquidity
Problems and it affects production also. The standard form of current ratio is 2:1.
Quick Ratio:
Quick Ratio= Quick Assets/Current Liabilities

Year Quick Assets Current Quick Ratio

Liabilities

2014-15 7602.37 4048.24 1.87

2015-16 23365.09 132506.15 0.17
2016-17 18216.65 25214.04 0.72
2017-18 32487.57 24366.35 1.33
2018-19 20184.33 32118.16 0.62
 Quick Ratio
2
1.8
1.6
1.4
1.2 quick Ratio
1
0.8
0.6
0.4
0.2
0
2014-15 2015-16 2016-17 2017-18 2018-19

Interpretation:
Quick Ratio of the organization is decreasing trend throughtout the study period .
Except in the year 2014-15 i,e., 1.8.The standard form of Quick Ratio is 1:1. The
Organization has invested higher amount in quick assets, due to the quick assets
become ideal, ideal investment doesn’t fetch any returns
Cash Ratio:
Cash Ratio= Absolute liquid Assets/Current Liabilities

Year Absolute Current Cash Ratio

liquid Assets Liabilities

2014-15 1383.35 4048.24 0.34

2015-16 12012.16 132506.15 0.09
2016-17 4773.47 25214.04 0.18
2017-18 21081.89 24366.35 0.86
2018-19 4550.46 32118.16 0.14
 cash Ratio
1
0.9
0.8
0.7
0.6 cash Ratio
0.5
0.4
0.3
0.2
0.1
0
2014-15 2015-16 2016-17 2017-18 2018-19

Interpretation:
The Cash Ratio is increased only one year . That year is 2017-18
i.e., 0.86.Remaining years are decreasing ,with this cash proportions company
may not meet its immediate short term of the company.
Working capital Turn over Ratio:
WTOR =Cost of goods sold /Average working capital

Year Cost of goods Average Working

sold working capital capital
turnover ratio
2014-15 16825.32 6668.70 2.52
2015-16 36172.58 -105170.05 -0.34
2016-17 46374.89 -926.04 -50.07
2017-18 40613.42 12499.65 3.24
2018-19 45948.33 -2872.22 -15.99
 Working capital Turn Over Ratio
10
0
-10 4-1
5
-16 -17 -18 -19
01 015 016 017 018 Working capital
-202 2 2 2 2
Turn Over Ratio
-30
-40
-50
-60

Interpretation :
The Working capital Ratio is fluctuating trend during the 2014-15,2015-16,2017-18,
2018-19.It is also recorded negative figure which is not anticipated by the organization.
Stock Turn over Ratio:
Stock Turnover Ratio =Cost of goods sold Sales /Average Stock

Year Cost of goods Average Stock Stock Turnover

sold Sales Ratio
2014-15 16825.32 2808.88 5.99
2015-16 36172.58 3542.79 10.21
2016-17 46374.89 5021.18 9.23
2017-18 40613.42 5224.89 7.77
2018-19 45948.33 6720.02 6.83
 Stock Turn Over Ratio
12
10
8
6 Stock Turn Over
Ratio
4
2
0
-15 -16 -17 -18 -19
014 015 016 017 018
2 2 2 2 2

Interpretation:
The stock turn over ratio is continuously decreased from 2016-19 .
The organization not maintains the proper manner of stock.
Debtors Turn over Ratio:
Debtors Turn over Ratio =Net Credit Sales /Average Debtors

Year Net Credit Average Debtors

Sales Debtors Turnover Ratio

2014-15 3187.96 1701.09 1.87

2015-16 12829.95 1732.89 7.40
2016-17 926.04 2585.54 0.35
2017-18 12499.65 3281.44 3.80
2018-19 2872.22 4023.23 0.71
 Debtors turn over ratio
8
7
6
5
4 Debtors turn over
3 ratio
2
1
0
-15 -16 -17 -18 -19
014 015 016 017 018
2 2 2 2 2

Interpretation:
The Debtors turn over ratio is gradually decreased over the years
2015,2017,2018,2019.Except the year 2016 the ratio is 7.40.
Current Asset Turn over Ratio:
Current Asset Turnover Ratio =Sales /Net current asset

Year Sales Net current Current asset

assets turnover ratio
2014-15 47905.48 3187.96 15.02
2015-16 116900.24 12829.95 9.11
2016-17 137728.95 926.04 148.72
2017-18 120946.74 12499.65 9.67
2018-19 116737.13 2872.22 40.64
 Current asset turnover ratio
160
140
120
100
80 Current asset
60 turnover ratio
40
20
0
-15 -16 -17 -18 -19
014 015 016 017 018
2 2 2 2 2

Interpretation: The Current asset Turnover ratio is gradually decreased through the study
Period .Except the year 2016-17 is increases.
Gross Profit Ratio:
Gross Profit Ratio=Gross profit /Net sales *100

Year Gross Profit Net sales Gross Profit

Ratio
2014-15 31080.16 41516.72 74.86
2015-16 80727.66 99378.92 81.23
2016-17 91354.06 117521.84 77.73
2017-18 80333.32 108728.55 73.88
2018-19 70788.80 101677.84 69.62
 Gross Profit Ratio
85

80

75
Gross Profit Ratio
70

65

60
-15 -16 -17 -18 -19
014 015 016 017 018
2 2 2 2 2

Interpretation : The Gross Profit Ratio is decreased through out the study period from
2017-19.The organization has not efficient.
Net Profit Ratio:
Net Profit Ratio=Net profit /Net sales *100

Year Net Profit Net sales Net Profit

Ratio
2014-15 124434.82 41516.72 29.95
2015-16 14666.56 99378.92 14.75
2016-17 18736.32 117521.84 15.94
2017-18 15401.63 108728.55 14.16
2018-19 10000.88 101677.84 9.83
 Net profit ratio
35
30
25
20
15 Net profit ratio
10
5
0
-15 -16 -17 -18 -19
014 015 016 017 018
2 2 2 2 2

Interpretation:
The Net Profit Ratio is gradually decreases throughtout the year . They have less return
so the net profit is decreases.
 LIMITATIONS
• Time is one of the limiting factor of the study the
duration of training was 2 months which was too
short period to study the whole organization.
• Second limiting factor is the busy schedule of the
executives. As a result of this it is very difficult to
get minute information about the organization.
• Some aspects of financial information were not
available because of the confidentiality of ZUARI
CEMENTS.
 FINDINGS
• Current ratio was decreased from year to year. The standard form of current
ratio is 2:1 and is reached in the year 2015 and it was continuously decreased
in 2016, 2017 and in 2018 it was increased but it not reach the standard
ratio.
• Net profit ratio is gradually decreases through out the year from 2015 to
2019
• Current assets are more in the year 2018 when compare to the previous
years.
• Changes in working capital was increased continuously in the years of 2015
and 2016 as 6668.7 and 105170.05 and it was decreased in the year 2017,
2018, and 2019 as -926.04, 12499.65 and -2872.22 when compare to the
previous years.
• Gross profit ratio is decreased continuously from 2016 to 2019 but except in
2015.
 SUGGETIONS
• The company need to increase the net profit
ratio by increasing in their cash balance.
• The company need to increase the gross profit
ratio by increasing the sales of the
organization.
• The company working capital turnover ratio
have to be maintained stable because it was
fluctuating from year to year.
 CONCLUSION
To ensure higher profitability and financial growth of the
organization working capital is essential The study of working
capital management as it shown importance in financial
management it studied the change in net working capital and
working capital Ratio in which I observed and suggested to
improve the cash balance.
In some areas special care should be required
management should fake initiation in rectifying in adequate
working capital because adequate working capital will help in
solving the short term debts. The working capital management
system followed in ZUARI CEMENT shows a satisfactory.