Documente Academic
Documente Profesional
Documente Cultură
REPORT
ON
WORKING CAPITAL
MANAGEMENT
IN
DECLARATION
I SUNIL KUMAR, student of MBA session 2013-2015, hereby declare that my
work
Pvt. Ltd. is
guidance
the
of
submitted to
outcome of
genuine efforts
MR. MAHESH
done by me
under
and
in
an able
been
partial
been
made in
original
work
and
due
material
toan acknowledgement
used.
Date:
(SUNIL KUMAR)
ACKNOWLEDGEMENT
4
gratitude
toward
indirectly
during
We
would
Controller)
all
those
the
development
like to thank
who was
my
full
proof. We
are
to
express
my
directly
or
supervisor
criticism
wish
of this training
always there
who
really
report.
to
kept
very
thankful
we
and valuable
(Finance
to him for
all
enriching
the value
additions and enhancement done to me. I also thanks to our Assist. Professor
(Mr.Ankit Saxena) of GLA University.
No
words
parents, whose support helps me in all the way. Above all we shall thank our
colleagues
who
constantly
encouraged
EXECUTIVE SUMMERY
5
The
company. Cash
is the
lifeblood
of
the
company
this
capital
the
in
the
secondary data also. We use the descriptive method of the research methodology. To
complete this summer training report in a short time my supervisor and my
colleagues also help to me.
INDEX
6
SR
NO.
PARTICULARS
PAGE
NO.
Front Page
II
Declaration
ii
III
Company certificate
Iii
IV
Acknowledgement
iv
Executive Summery
VI
Index
vi
Chapter 1
1 10
Chapter 2
11 19
Chapter 3
20 25
Chapter 4
26 47
Chapter 5
48 50
51
Appendices
vii xi
CHAPTER 1
INTRODUCTION
&
ABOUT
THE COMPANY PROFILE
COMPANY PROFILE
8
Marathon Electric India Pvt. Ltd. Was established in 1913. Since 1913, Marathon
Electric has been dedicated to providing customers with quality products for targeted
applications.
Headquartered:
Faridabad (Haryana)
Product:
Motors
Nature of business:
Website:
www.marathonelectric.in
INTRODUCTION
Our Brands
Marathon in India is also well known for its brands Genteq, AUE & Cool Home.
11
Our Products
AC motors, single / Three phase
Cooler motors and Fans
Air Circulator
Wet Rice Grinder
Cage Induction Motors
Roller Table Motors
ECM Motors
Fitness Equipment Motors
12
Our Vision
We will clearly differentiate our products and services as the best value to our
customers, as measured by our customers. We will maintain a sustainable, competitive
advantage through the excellence of our people and our processes creating value for
all our stakeholders.
Our Mission
We will live our values, demonstrating integrity in all our actions. We will function
with a high level of personal energy, energizing those around us. We will have the
courage to make difficult decisions and execute to accomplish our vision.
13
ISO 9001:2000
Stand top quartile performance in the diversified industrial sector with respect
to revenue growth, profitability, and cash flow.
Factors of Success
Wide range of motors.
Well advanced manufacturing plant and localization.
Brand value and excellent service after sales.
A developer in FHP motors and hasa major export marketof India.
80 percent market of market share in India for FHP motors.
20 percent market share in IHP motors.
SWOT Analysis
Strength
Innovative products
Largest manufacturing unit in
India
Best technology
Customized product
Indigenous technology
Opportunities
Power sector growth in India
Global opportunities
Weakness
Lack of HRD measure to
retain skilled professional
Complex organization
structure
Pricing of products
Threats
Flood of imports from china
New competitors
SME built duplicate products
16
17
CHAPTER 2
INTRODUCTION,
OBJECTIVE AND SCOPE OF STUDY
INTRODUCTION
Meaning of Capital
In the ordinary sense of the word capital means an initial investment invested by a
businessman or owner at the time of commencing the business.
18
Cash is the lifeline of a company. If this lifeline deteriorates, so does the companys
ability to fund operations, reinvest, and meet capital requirements and payments.
Understanding a companys cash flow prospects is to look at its Working Capital
Management.
Thus, in very simple words, working capital may be defined as capital invested in
current assets. Here current assets are those assets, which can be converted into cash
within a short period of time and the cash received is again invested in these assets.
Thus, it is constantly receiving or circulating. Hence, working capital is also known as
circulating capital or floating capital.
On the basis of
concept
Gross
working
capital
Regular
working
capital
Net
working
capital
Reserve
working
capital
Permanent/
Fixed working
capital
Temporary
/Variable
working capital
Seasonal
working
capital
Special
working
capital
According to concepts, there are two types of working capital these are Gross working capital
Net working capital
capital is significant in the context of financing of working capital, the short term
liquidity aspects of the business, and the like.
Net working capital may be positive or negative. A positive net working capital arises
when current assets exceed current liabilities and a negative working capital occurs
when current liabilities are in excess of current assets. It shows bad liquidity position.
This is a qualitative concept which highlights the character of the sources from which
the funds have been procured to support that portion of the current assets which is in
excess of current liabilities.
According to time there are two kinds of working capital. These are Permanent working capital.
Temporary/varying working capital.
Initial Working Capital:In the initial period of its operation, a firm must
need enough money to pay certain expenses before the business profits. In the
initial years the banks may not funding loans or overdrafts, sales may have to
be made on credit and it may be necessary to pay the creditors immediately.
Therefore the owners themselves have to provide the necessary funds in the
initial period, which may be known as initial working capital.
up and down like tides. Temporary working capital is defined as the amount of
current assets that varies with seasonal requirements. Temporary working capital
can be financed through short term funds, i.e. current liabilities. When the level of
temporary working capital moved up, the business might use short-term funds and
when the level of temporary working capital recedes, the business might retire its
short term loans.
factors are of different importance and also an important change for the firm over
time. Therefore, an analysis of the relevant factors should be made in order to
determine the total investment in working capital. Generally the following factors
influence the working capital requirements of the firm:
Nature and size of the business
Seasonal fluctuations
Production policy
Taxation
Depreciation policy
Reserve policy
Dividend policy
Credit policy:
Growth and expansion
Price level changes
Operating efficiency
Issues of share
24
Floating of debenture
Public deposit
Loans
Internal source
Depreciation
Taxation
Accrued expense
Ploughing back of profit
External source
Bank credit
Trade credit
Government assistance
Loan from Director
Security of employee
25
Current Liabilities
Current Assets
Bank Overdraft
Creditors
Outstanding Expenses
Inventories: Raw-Materials
Work-in-progress
Finished Goods
Spare Parts
Bills Payable
Accounts Receivables
Short-term Loans
Bills Receivables
Proposed Dividends
Accrued Income
Prepaid Expenses
Short-term Investments
26
CHAPTER 3
OBJECTIVE, SCOPE
AND
METHODOLOGY
27
well as the goodwill of the company. So that company has to maintain its cash to run
the business and accomplishing their day to day expenses.
To study the Working Capital position of Marathon Electric India Pvt. Ltd.
last four years, i.e. 2009-2010 to 2012-2013 annual report of Marathon Electric India
Pvt. Ltd.
INTRODUCTON
The research methodology is a way to systematically solve the research problem. It
may be understood as a science of studying new research is done systematically. In
that various steps, those are generally adopted by a researcher in studying his problem
along with the logic behind them.
29
Research Design
A research design is an arrangement of condition for collection at analysis of data in a
manner that combines relevance to the research purpose with the economy in the
process.
Process of Research
Formulating the objective of the study(What the study is about and why it is
being made)
Designing the method of data collection (What technique of gathering data will
be adopted)
Selecting the sample (How much material will be needed)
Collecting the data (Where can be required data can be found and with what
time period should the data be related)
Processing and analysis the data
Reporting and finding
Sampling Design
A sample design is a definite plan for obtaining a sample from a given population. It
refers to the technique or the procedure adopted in selecting items for the sample. The
main constituents of the sampling design below Sampling unit
Sample size
30
Sampling unit
A sampling framework, i.e. developed roe the target population that will be sampled,
i.e. who is to be surveyed
Sample size
It is the substantial portions of the largest population that are sampled achieve reliable
results.
Sample size the last four years, i.e. 2009-2010 to 2012-2013 financial
statements of the company.
Primary data
Primary data are the data which is collected from first hand, for the first time which is
original in nature.
Secondary data
Secondary data are those data which have already collected and stored. Secondary
data easily get those secondary data from records annual reports of the company, etc.
It will save the time, money and to collect the data.
31
The major source of data of this project was collected through annual reports, profit
and loss account of the four year period of company, i.e. from 2009-2010 to 20122013 and some more information collected from the internet and text source.
32
CHAPTER 4
DATA ANALYSIS
AND
INTERPRETATION
Year
Current Assets
Current Liabilities
2009-2010
20,915.61
4,930.54
15,985.07
2010-2011
20,743.18
5,678.34
15,064.84
2011-2012
22,775.58
10,459.17
12,316.41
2012-2013
28,195.36
11,337.50
16,858.86
8000
6000
4000
2000
0
2009-2010
2010-2011
2011-2012
2012-2013
(Amount in lakh)
Interpretation
The above chart shows that during the financial year 2009-2010 the company had Net
Working Capital about Rs.15, 985.07 lakh. Duringthe next year, i.e.2010-2011 it
decreased by Rs.920.23lakh. It was Rs.15, 064.84lakh in the year 2010-11.And in the
year 2011-2012 it was Rs.12, 316.41lakh which again decreased by Rs.2, 748.43 lakh
as compared to last year, i.e. 2011-1012. The above chart interprets that the company
iscontinuingdecrease in the NWC till 2011-2012. But in the year 2012-2013it was
34
increased by Rs.4, 542.45 lakh. Duringthis year NWC was about Rs.16, 858.86 lakh.
This means that the company is in a positive position in the year 2012-2013 and it
hassufficient capital to pay off its current liabilities.
Introduction
Ratio analysis is a powerful tool financial analysis. Ratio analysis is a process of
comparison of one figure against another, which makes a ratio and the appraisal of the
ratios to make a proper analysis about the strengths and weakness of the firms
operations. The term ratio refers to the numerical or quantitative relationship between
two accounting figures. Ratio analysis of financial statement stands for the process of
determining and presenting the relationship of items and group of items in the
statements.
1. Liquidity Ratios
Liquidity refers to the ability of a firm to meet its current obligations as and when
these become due. The short term obligations are met by realizing amounts of current,
floating, or circulating assets.
Following are the ratios which can help to assess the ability of a firm to meet its
current liabilities
35
1. Current Ratio
2. Acid Test Ratio /Quick Ratio / Liquidity Ratio
3. Absolute Liquidity Ratio
1.1Current Ratio
The Current ratio is a ratio, which express the relationship between the total current
assets and current liabilities. It measures the firms ability to meet its current
liabilities. It indicates the availability of current assets in rupees for every one rupee
of current liabilities. A ratio of greater than one means that the firms has more current
assets in the comparison of current liabilities. A standard ratio between them is 2: 1.
Current Ratio =
Current Assets
Current Liabilities
Table showing the current ratio
Year
Current Assets
Current Liabilities
Current Ratio
2009-2010
20,915.61
4,930.54
4.24
2010-2011
20,743.18
5,678.34
3.65
2011-2012
22,775.58
10,459.17
2.17
2012-2013
28,195.36
11,337.50
2.48
36
Current Ratio
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Current Ratio
2009-2010
2010-2011
2011-2012
2012-2013
(Amount in lakh)
Interpretation
The above chart shows that during the financial year2009-2010 the company had a
current ratio of 4.24:1.During the nextyear, i.e.2010-2011 it decreased by 0.59. It was
about3.65:1 in the year 2010-2011. And in theyear 2011-2012 it was again decreased
by 1.48. During this year, i.e. 2011-2012 it was about 2.17:1. These show that the
current ratio was decreased every year.But in the last year,i.e. 2012-2013 the current
ratio was increased to 2.48:1, due to increase in current assets. The current ratio is
greater to the standard ratio, i.e. 2:1. Hence it can be said that there are enough current
assets in Marathon Electric India Pvt. Ltd. to meet its current liabilities.
Quick Ratio =
Year
CurrentAssets
Inventories
Quick Assets
2009-2010
20,915.61
4,213.05
16,702.56
Current
Liabilities
4,930.54
Quick Ratio
2010-2011
20,743.18
5,759.21
14,983.97
5,678.34
2.63
2011-2012
22,775.58
5,875.76
16,899.82
10,459.17
1.61
2012-2013
28,195.36
5,240.57
22,954.79
11,337.50
2.02
3.38
Quick Ratio
4
3.5
3
2.5
Quick Ratio
2
1.5
1
0.5
0
2009-2010
2010-2011
2011-2012
2012-2013
(Amount in lakh)
Interpretation
The above chart shows that during the financial year 2009-2010 the company had a
Quick ratio of 3.38:1. In the next year, i.e.2010-2011 it decreasesby 0.75. It was about
2.63:1 in the year 2010-2011. During the year 2011-2012 the quick ratiowas
againdecreasedby1.02. And it was about1.61:1 in the year 2011-2012 due to increase
in current liabilities and decrease in Quick assets. But in the last year 2012-2013 the
quick ratio increased by 0.41. And it was increased to 2.02:1. The quick ratio of the
38
company is greater to the standard ratio, i.e., 1:1. Hence it shows that the liquidity
position of the company is adequate.
Current Liability
2009-2010
4,516.04
4,930.54
0.91
2010-2011
396.01
5,678.34
0.06
2011-2012
1,607.07
10,459.17
0.15
2012-2013
5,098.44
11,337.50
0.44
39
2009-2010
2010-2011
2011-2012
2012-2013
(Amount in lakh)
Interpretation
The above chart shows that during the financial year 2009-2010 the absolute liquidity
ratio of the company was about 0.91:1.In the next year 2010-2011 it decreased by
0.85.It was about 0.06:1, in the year 2010-2011.In the year2011-2012 absolute
liquidity ratio increased by 0.09, and it was about0.15:1, in the year 2011-2012. In the
last year,i.e. 2012-2013 it increased by 0.29, and it was about0.44:1. After 2010-2011
the absolute liquidity ratio of the company is increasingevery year. But besides of
2009-2010 the absolute liquidity ratio of the company is less thanto the standard rate
i.e., 0.5:1. Hence it shows that the liquidity position of the company is satisfactory.
Net sales
Closing Inventory
40
Net Sales
Closing Inventory
2009-2010
37,102.41
4,213.05
8.80 Times
2010-2011
49,374.65
5,759.21
8.57 Times
2011-2012
52,052.91
5,875.76
8.85 Times
2012-2013
55,254.01
5,240.57
10.54 Times
6
4
2
0
2009-2010
2010-2011
2011-2012
2012-2013
(Amount in lakh)
Interpretation
The above chart shows that during the financial year 2009-2010, 2010-2011, and
2011-2012 in all three years there is no major differencein the inventory turnover
ratio, which is in all three years, the inventory turnover ratio was about 8.80
times,8.57 times, and 8.85 times, respectively.But in the last year, i.e. 2012-2013 it
increased by 1.69 times as compared to the previous year, i.e. 2011-2012. And it was
about 10.54 times in the year 2012-2013. It shows that in all three years the company
had general sales, but in the last year 2012-2013 the company increased in its sales as
compared to last three previous years i.e. 2009-2010, 2010-2011, and 2011-2012.
41
Net sales
Average Debtors
Note: In MEIPL, we have taken the total net sales instead of the credit sales, because
the credit sales information has not available for the calculation of Debtors Turnover
Ratio.
Net Sales
Average Debtors
2009-2010
37,102.41
6,433.77
5.76 Times
2010-2011
49,374.65
7,653.72
6.45 Times
2011-2012
52,052.91
8,461.06
6.15 Times
2012-2013
55,254.01
10,904.96
5.06 Times
3
2
1
0
2009-2010
2010-2011
2011-2012
2012-2013
42
(Amount in lakh)
Interpretation
The above chart shows that the debtor turnover ratio is fluctuating over the years. It
was about 5.76 times in the year 2009-2010. It increased by 0.69 times in the year
2010-2011. It was about 6.45 times in the year 2010-2011. But in the year 2011-2012
it was decreased by0.30 times, and it was about 6.15 times in the year 2011-2012.
During the next year, i.e. 2012-2013 it was 5.06 which again decreased by 1.09 times
as compared to the last year i.e. 2011-2012. This graph is showing that the company is
not collecting debt rapidly.
Net Purchases
Average Creditors
Note: In the MEIPL, we have taken the cost of materials consumed instead of credit
purchases, because the credit purchase information has not available for the
calculation of Creditors Turnover Ratio.
Net Purchases
Average Creditors
2009-2010
21,711.73
4,022.49
5.39 Times
2010-2011
30,560.39
4,416.68
6.91 Times
2011-2012
30,864.81
6,048.81
5.10 Times
2012-2013
30,195.25
4,616.96
6.54 Times
43
4
3
2
1
0
2009-2010
2010-2011
2011-2012
2012-2013
(Amount in lakh)
Interpretation
The above chart shows that the creditors turnover ratio is fluctuating over the years.
It was about 5.39 times in the year 2009-2010.During the next year, i.e. 2010-2011 it
was increased by 1.52 times.During that year the creditors turnover ratio was about
6.91 times. But in the next year 2011-2012 it was decreased by 1.81 times and it was
about 5.10 times in the year 2011-2012. During the last year, i.e. 2012-2013 it was
about 6.54 times, which due to decreasein creditors. This chart is showing that the
company has made prompt payment to the creditors.
Net Sales
Net Working Capital
Year
Net Sales
2009-2010
37,102.41
15,985.07
2.32 Times
2010-2011
49,374.65
15,064.84
3.27 Times
2011-2012
52,052.91
12,316.41
4.22 Times
2012-2013
55,254.01
16,858.86
3.27 Times
2.5
2
1.5
1
0.5
0
2009-2010
2010-2011
2011-2012
2012-2013
(Amount in lakh)
Interpretation
The above chart shows that the working capital turnover ratio is fluctuating year to
year that was minimum in the year 2009-2010,about 2.32 times. There was a
subsequent increase in the year 2010-2011 from 0.95 times, and it was about 3.27
times. It was again increased in the year 2011-2012 from0.95 times, due to decrease in
net working capital.It was about 4.22 times in the year 2011-2012. But in the last year
i.e. 2012-2013 it was decreased by 0.95 times, due to increase in net working capital.
During that year the working capital turnover ratio was about 3.27 times. This chart
shows that the company is utilizing working capital effectively.
45
Current Assets
If the current assets increase as a result of this, working capital also increases. If the
current assets decrease as a result of this, working capital also decreases.
Current liabilities
If the current liabilities increase as a result of this, working capital also decreases. If
the current liabilities decrease as a result of this, working capital also increases.
46
Table 1:
Statement of Change in Working Capital of the Year
2009-2010
AS on
AS on
31-03-2009
31-03-2010
Increase
Inventories
3,728.40
4,213.05
484.65
Sundry Debtors
6,397.39
6,433.77
36.38
7,473.83
4,516.04
2,957.79
6,421.70
5,752.73
668.97
Particulars
Decrease
CURRENT
ASSETS
(A) Total
Assets
Current 24,021.34
20,915.61
CURRENT
LIABILITIES
Current Liabilities
7,444.64
4,099.77
3,344.87
Provisions
796.29
830.83
34.54
15,985.07
6,416.06
6,416.06
32,262.27
6,971.63
6,971.63
(B)
Total
Liabilities
current 8,240.93
32,262.27
4,930.54
47
Interpretation
In the above table, it is seen that during the financial year 2009-2010 there was a net
decrease in working capital of Rs.6, 416.06 lakh which indicates that there is not an
adequate working capital in Marathon Electrical India Pvt. Ltd.
This is because of:-
Table 2:
48
AS on
31-03-2010
31-03-2011
Increase
Inventories
4,213.05
5,759.21
1,546.16
Sundry Debtors
6,433.77
7,653.72
1,219.95
4,516.04
396.01
4,120.03
5,752.73
6,934.21
1,181.48
20,915.61
20,743.18
Current Liabilities
4,099.77
4,717.48
617.71
Provisions
830.83
960.86
130.03
575.37
26,421.52
4,695.33
4,695.33
Particulars
Decrease
CURRENT ASSETS
CURRENT
LIABILITIES
(B)
Total
Liabilities
(A)-(B)
Capital
Net
Increase
Capital
in
current 4,930.54
5,678.34
Working
15,985.07
Working 575.37
26,421.52
15,064.84
TOTAL
Source: Financial statement (Amount in lakh)
Interpretation
49
In the above table, it is seen that during the financial year 2010-2011 there was a net
increase in working capital of Rs.575.37 lakh. It indicates that an adequate working
capital in Marathon Electrical India Pvt. Ltd.
This is because of:-
Table 3:
Statement of Change in Working Capital of the Year
2011-2012
50
AS on
AS on
31-03-2011
31-03-2012
Increase
Inventories
5,759.21
5,875.76
116.55
Trade Receivables
7,653.73
8,461.06
807.33
396.01
1,607.07
1,211.06
5,258.50
5,223.86
34.64
1,675.73
1,607.83
67.90
20,743.18
22,775.58
Trade Payables
4,313.68
4,616.96
303.28
3,265.20
3,265.20
Provisions
960.86
154.64
806.22
403.80
2,422.37
2,018.57
current 5,678.34
10,459.17
Particulars
Decrease
CURRENT ASSETS
CURRENT
LIABILITIES
(B)
Total
Liabilities
(A)-(B)
Capital
Net
Working 15,064.84
12,316.41
Increase
Capital
in
Working 6,813.23
6,813.23
33,234.75
7,721.99
7,721.99
33,234.75
TOTAL
Interpretation
In the above table, it is seen that during the financial year 2011-2012 there was a net
increase in working capital of Rs.6, 813.23 lakh. It indicates that an adequate working
capital in Marathon Electrical India Pvt. Ltd.
51
This is because of: Increase in Current Assets such as Inventories by Rs.116.76 lakh, Trade
Receivable by Rs.807.33 lakh, and Loans and advances by Rs.1, 211.06 lakh.
Decrease in Cash and bank balance of Rs.34.64 lakh, and other Current Assets
by Rs.67.90 lakh.
Increase in Current Liabilities, such as Trade Payables by Rs.303.28 lakh,
short-term Borrowing by Rs.3, 265.20 lakh, and other Current Liabilities by
Rs.2, 018.57 lakh.
Decrease in Provisions by Rs.806.22 lakh.
Note:
According to Company Law, there were some changes in Schedule VI. These changes
were effective from 01 April11. Some changes in Balance Sheet for the financial year
2011-2012 such as:
In Current Assets, current assets are divided into two parts such as Current
assets and Non-Current assets. Loans and Advances are divided in two parts
such as Short-term loans and advances and Long term loans and advances.
Short-term loans and advances include in Current Assets and Long-term loans
and advances include in noncurrent assets. And added some entries such as
other current assets.
In Current Liabilities added some entries such as Short-term Borrowing and
other current liabilities.
Table 4;
Statement of Change in Working Capital of the Year
2012-2013
52
AS on
AS on
31-03-2012
31-03-2013
Increase
Inventories
5,875.76
5,240.57
635.19
Trade Receivables
8,461.06
10,904.96
2,443.90
1,607.07
5,098.44
3,491.37
5,223.86
4,592.60
631.26
1,607.83
2,358.79
750.96
22,775.58
28,195.36
Trade Payables
4,616.96
6,048.81
1,431.85
3,265.20
3,530.58
265.38
2,422.37
1,521.16
901.21
Provisions
154.64
236.95
82.31
current 10,459.17
11,337.50
Particulars
Decrease
CURRENT ASSETS
CURRENT
LIABILITIES
(B)
Total
Liabilities
(A)-(B)
Capital
Net
Working 12,316.41
16,857.86
Increase
Capital
in
Working 6,298.11
6,298.11
39,532.86
8,465.77
8,465.77
39,532.86
TOTAL
Interpretation
In the above table, it is seen that during the financial year 2012-2013 there was net
increasing in working capital of Rs.6, 298.11 lakh. It indicates that an adequate
working capital in Marathon Electrical India Pvt. Ltd.
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CHAPTER 5
FINDINGS
AND
CONCLUSIONS
FINDINGS
Working capital of Marathon Electric India Pvt. Ltd was decreasing every
year showing the negative working capital, besides of 2012-2013. After that
the company is higher than standard rate, i.e. 2:1, and the position of the
company is satisfactory.
55
The Marathon Electric India Pvt. Ltd. hada higher Current ratio being 4.24:1
and Quick ratio was 3.38:1.
The MEIPL hadan Absolute liquidity ratiovery low in the year 2010-2011.
During the next year, it was increased by 0.09 times as compared to 20102011. And in the last year, i.e. 2012-2013 it was again increased.
The MEIPL had an inventory turnover ratio very low in the year 2010-2011.
During the next year, it was increased by 0.28 times as compared to 20102011.And in the last year, i.e. 2012-2013 it was again increased.
The MEIPL had Debtors turnover ratio very high in the year 2010-2011.
During the next year, it was decreased by 0.30 times as compared to 20102011.And in the last year, i.e.2012-2013 it was again decreased.
The Creditors turnover ratio of MEIPL was fluctuating year to year. It was
very high in the year 2010-2011. During the next year, i.e. 2011-2012 it was
decreased by 1.81 times as compared to 2010-2011. And in the last year 20122013 it was again increased.
The MEIPL hada working capital turnover ratio very low in the year 20092010. During the next two years, i.e. 2010-2011 & 2011-2012, it was
increased by 0.95 & 0.95 times respectively, as compared to the previous year,
i.e.2009-2010. And in the last year, i.e. 2012-2013 it was decreased by 0.95
times as compared to the previous year, i.e. 2011-2012.
CONCLUSIONS
The study on working capital management conducted in Marathon Electric
India Pvt. Ltd. to analyze the financial position of the company. The
companys financial position is analyzed by using the tool of financial
statements from 2009-2010 to 2012-2013.
The financial status of Marathon Electric India Pvt. Ltd is good. In the last
year i.e., 2012-2013 the inventory turnover ratio has increased, this is a good
sign for the company.
56
The companys liquidity position is not good with regard to the investment in
current assets as there are adequate funds invested in it.
The company is managing its financial position in a better way. There is a
balance between Current assets and current liabilities and also current ratio is
always above the standard rate.
Further, Companys creditors turnover ratio is not so good because of this
company may face the shortage of the funds to pay off its debts. To avoid such
situation, companies should use their funds in a productive way and there
should be timely payment of creditors.
Company net working capital is decreasing, but in the last year i.e., 2012-2013
it was increased, still the company is in a better management position, and the
company present status of maintaining current liabilities and current assets is
satisfactory.
They are able to manage their cash, funds, and debts. By adopting better
management practices, the company may attain a sound financial position in
the future and will be able to manage its working capital very effectively and
efficiently.
The financial data sensitive in nature the same could not acquire easily.
Every personhas its own preparation to analyze the financial data so maybe it
varies from person to person.
The companyhas not provided their financial data properly because of it is
confidential in nature.
APPENDICES
Balance sheet and
Profit and loss account of the company
Marathon Electric India Pvt. Ltd.
Provisional Balance sheet as at 31st March 2012
SOURCES OF
FUNDS
CURRENT
YEAR
(2012)
PREVIOUS
YEAR
(2011)
Equity and
Liabilities
Shareholders
Funds
Share capital
332.00
312.00
Reserves and
surplus
27614.01
24630.37
27946.01
24942.37
Non-current
liabilities
58
Long-term
borrowings
Long-term
provisions
4.00
916.34
823.20
916.34
827.20
Current
liabilities
Short-term
borrowings
Trade payables
3265.20
5314.36
4616.96
4313.68
Other current
liabilities
Short-term
provisions
Total current
liabilities
2422.37
415.54
154.64
137.66
Total funds
employed
Assets
10459.17
10181.24
39321.52
35950.81
Non-current
assets
Fixed assets
Tangible assets
14107.94
14117.31
Intangible assets
112.64
14220.58
14117.31
442.57
96.39
Capital work in
progress
14663.15
14213.70
1760.02
799.88
1739.84
1968.14
3499.86
2768.02
Current Assets
Inventories
5875.76
5759.21
Trade receivable
8461.06
7653.73
59
1607.07
396.01
3606.79
3484.41
1607.83
1675.73
Net Current
Assets
Total
application of
Funds
21158.51
18969.09
39321.52
35950.81
SOURCES OF
FUNDS
CURRENT
YEAR
(2013)
PREVIOUS
YEAR (2012)
Equity and
Liabilities
Shareholders
Funds
Share capital
332.00
332.00
Reserves and
surplus
31360.10
27614.01
31692.10
27946.01
Non-current
liabilities
60
Long-term
provisions
994.90
916.34
994.90
916.34
Current
liabilities
Short-term
borrowings
Trade payables
3530.58
3265.20
6048.81
4616.96
Other current
liabilities
Short-term
provisions
Total current
liabilities
1521.16
2422.37
236.95
154.64
Total funds
employed
Assets
11337.50
10459.17
44024.50
39321.52
Non-current
assets
Fixed assets
Tangible assets
13589.42
14107.94
Intangible assets
71.06
112.64
13660.48
14220.58
531.52
442.57
Capital work in
progress
14192.00
14663.15
1409.50
1760.02
2132.65
1739.84
3542.15
3499.86
Current Assets
Inventories
5240.57
5875.76
Trade receivable
10904.96
8461.06
61
5098.44
1607.07
2687.59
3606.79
2358.79
1607.83
Net Current
Assets
Total
application of
Funds
26290.35
21158.51
44024.50
39321.52
BIBLIOGRAPHY
Following sources have been sought for the preparation this project report-
Company profile
Annual reports of the company from 2009-2010 to 2012-2013
Direct interaction with the employees of the company.
Internet
www.marathonelectric.in
www.google.com
www.wikipidea.org
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