A Report: Working Capital Management of

A REPORT
On
WORKING CAPITAL MANAGEMENT OF
JOCIL LIMITED
By
M.SHILPA , 020-05-110,MBA
NAVA BHARATHI COLLEGE OF P.G STUDIES
BOLARUM
ORGANISATION
Jocil Limited
Dokiparru, Guntur, AP
A REPORT ON
WORKING CAPITAL MANAGEMENT IN

JOCIL LIMITED
DOKIPARRU
GUNTUR
SUBMITTED BY
M. SHILPA
020-05-110
PROJECT REPORT SUBMITTED TO OSMANIA UNIVERSITY
HYDERABAD
IN PARTIAL FULFILLMENT OF THE REQURIMENTS FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
NAVA BHARATHI COLLEGE OF P.G STUDIES
2005-2007
Copies marked list :
1. Company Guide
2. Faculty Guide
3. SIP Trainer
4. Regional SIP Coordinator
CERTIFICATE
This is to certify that project work title “WORKING CAPITAL MANAGEMENT IN JOCIL
LIMITED” submitted in Partial fulfillment for
the award of MBA class of 2005-2007 is submitted to NAVA BHARATHI COLLEGE was carried
by. M.SHILPA bearing.rollno 020-05-110
under my guidance This has not been submitted to any other University or Institution for the of any
degree/diploma/certificate.
FACULTY GUIDE COMPANY GUIDE
MD NASEERUDDIN AHMED G.RAMA THEERTHA
DECLARATION
I here by declare that the project work titled “WORKING CAPITAL MANAGEMENT IN JOCIL
LIMITED”, submitted by me to the Department of NAVA BHARATHI COLLEGE, is a bonafide
work undertaken by me and it is not submitted to any other University or Institution for the award
of any degree/diplomacertificate .
M.SHILPA
ABSTRACT
The project entitled “Working Capital management” at Jocil
Limited,Guntur has been done by me in the month of May and June 2006.
Aims of study:
1.How to analyse cash management policies and practices?
2.To examine operating cycle of the company.
3.Coordinate with production department,quality control and despath system for
planning of production,supply of the
right product at right time to customer.
4.To view the limited growth of growth of industry,
maintaining the market share.
5.To enable the working capital to be required for the smooth and uninterrupted
functioning of normal business
operating of the company.
6.To analyse working capital management which is needed to balance the
liquidity and profitability criteria while taking attitude of management towards
risks.
7.How to analyse the working capital needs of manufacturing
which fall between two extreme requirements of trading firms and public utilities.
8.How are constraints imposed by bank sector while providing short term credit
in form of cash credit/bank overdraft.
METHODOLOGY:
The methology adopted from the following reports:

a. Industry annual reports.
b. Industry websites
Acknowledgements
At the outset, I am grateful to Mr. J. Murali Mohan, Managing Director of Jocil Limited for
permitting to take up the project and providing all necessary assistance and moral support.
I thank my Head of department MD NASEERUDDIN AHMED for coordinating the

project work and giving me the necessary guidance and support.I thank my facuty guide
V.SMITHA for giving nessesary
guidance.
I thank the company guide, Mr. G. Ramatheertha, Manager-Finance, Jocil Limited for all
his support, encouragement and sparing his valuable time and providing the necessary data and
material.
I thank the Managers, vidhya sagar (cashier), M. Krishna Mohan and Staff of Jocil
Limited who have also helped me during the course of my training for successful completion of the
project work.
I would like to convey my special thanks to Mr M.GHOSH Director for giving me the
opportunity to work on this project and all the faculty members of NAVA BHARATHI COLLEGE for
their valuable cooperation.
M.SHILPA
020-05-110
Summary
Chapter I Introduction
Objectives
Methodology
Limitations
Chapter II Industry Profile

Fatty Acid Industry
Stearic Acid Industry
Soap Industry
Biomass Power
Chapter II Company Profile
Chapter III Working Capital
Elements of Working Capital
Importance of Working Capital

Inventory management
Receivables management
Cash management
Chapter IV Data Analysis and
Interpretation
Financial Statements of Jocil
statement of changes in working capital
Computation of Financial Ratios of Jocil
Chapter VI Conclusion
Management Feedback
Observations and Recommendations
References
Summery
Good financial control is essential for any business and working capital can be viewed as the
amount of capital required for the smooth and uninterrupted functioning of the normal business
operations of as company ranging fro the procurement of raw materials, converting the same into
finished products for sale and realizing cash along with profit from the accounts receivables that
arise from the sale of finished goods on credit.
Jocil Limited, located at Dokiparru near Guntur, a process industry involved in the manufacture
of Fatty Acids, Stearic Acid Flakes, Toilet Soap, Soap Noodles, Glycerine and in the
generation of Power was identified for carrying out the project.
The following areas were identified for in-depth study of the project “A Study on working
capital management of Jocil Limited and also used ratio Analysis Technique”.
• Working Capital Management

• Inventory Management
• Receivables Management
• Cash Management
• Analysis of financial data of Jocil and study of working capital management.
• Informing Jocil all the study details and offering suggestions if any
A detailed On the Job Training (OJT) has been provided to enable proper understanding of the
Company’s Operatons which in turn would help the study and presentation of the project. The
OJT covered Profile of the Company, Industry Profile, Plant Visits, Interaction with the Heads
of the Departments concerned and Personnel of the Finance Department, Study of Financial
Statements, Study of Annual Reports of Jocil Limited for last 5 years and Collection of all
required data.
The data has been analyzed and the results were discussed with the Management. The
Management in turn has given its views regarding the present position and the future outlook
of the Company. Finally, the observations made and various suggestions to improve further
the performance of the Company have been given in the report.
CHAPTER 1
 Objectives
 Methods
 Limitations
OBJECTIVES OT THE STUDY:
Primary objective:
To examine the policies & procedures of the working capital management in Jocil limited.
Specific objectives:
To analyze and examine the following:
 Utilization of current assets and management of inventory receivables

 Cash management policies and practices
 Liquidity position of the Company
 To examine the working capital policies and its management.
 To analyze and evaluate working capital requirements of jocil limited.
 To examine the operating cycle of the company.
LIMITATIONS TO THE STUDY

 The time allotted for the study is not sufficient considering the size of the company,
volume of the transactions and detailed investigation may not be possible.
 The study, which is based on working capital ratios is mostly quantitative analysis and
does not reflect the qualitative aspects.
METHODOLOGY OF THE STUDY
Data collection:
Primary Data:
This is collected through discussions and interviewing the personnel concerned within the
Company.
Secondary Data:
This information is collected mainly from published information viz., annual reports, journals,
books, magazines, Internet available on the subject.
Period of Study:
Data for the past 5 years has been considered for the study.
Chapter II
Fatty Acid Industry
Soap Industry
Biomass Power
Industry Profile
Jocil is in the business of manufacture and sale of Fatty Acids, Toilet Soap, Soap Noodles &
Glycerine which fall into the category of Oleo chemicals. It is also having Co-generation Biomass
Power Plant to meet its steam and power requirements and exports surplus power for sale.
Oleo chemicals:
These are made from vegetable and animal oils & fats and / or petrochemicals feedstock. They
range from fatty acids, glycerine, alcohols and metallic soaps to fatty nitriles and their derivatives.
Oleo chemical feedstock is converted into a wide range of chemical products.
User Industry of Oleo chemicals

Fats containing
USE aR
high
I Nproportion
D U S T R Yof O
saturated
F OLEO fatty
C Hacids
E M I are
C A solid
L S at room temperature. These
are commonly known as saturated fats and are usually derived from animal sources e.g. lard,
suet and butter. Most plant fats are high in either polyunsaturated or monounsaturated fats
Lubricants Soaps & Detergents Cosmetics
except palm and coconut fat which is highly saturated.
Pharmaceuticals Food additives Leather
One of&the
Paints most welcome
Coatings features
Printing inks of present times is the growing availability of vegetable fats at
Rubber
a pace greater than that
Plastics of population growth. This is largely
Metal-working due to the development of Palm Oil
other industries
on a massive scale in Malaysia and Indonesia. Palm oil is already the largest internationally
traded oil.
Palm oil has a composition similar to that of animal tallow and palm kernel oil that of coconut oil.
Thus, one crop offers two oils whose features are sufficient to meet a large proportion of industry’s
demands.
Fatty Acid Industry
These are compounds of Carbon, Oxygen and Hydrogen. In the fatty acid molecule the carbon
atoms are linked together in the form of a long chain commonly referred to as a hydrocarbon
chain.
According to scientific data and nomenclature, long straight chain organic acids with carbon atoms of
more than 4 are called fatty acids, because they are obtained from natural vegetable / animal oils / fats.
However, most of the commonly used fatty acids are with carbon chain 6-24. These fatty acids are
mainly grouped into two categories viz., Saturated and Un-saturated fatty acids.
A BRIEF NOTE ON FATTY ACIDS INDUSTRY IN AP
The fatty acid industry is dependent on the availability of oils and oil seeds for extraction and
further processing as mutton tallow is banned in India. The industry found that rice
bran oil is one such source have chosen rice bran oil as their raw material and rice ban oil
extraction units found their place meant near the raw material source rice bran even through the
customers are well spread all over the country.
The consumption pattern of rice bran oil depends on the level of free fatty acid content available
as industry grade varies from time to time because the rice bran availability is seasonal having
direct relation to the rice cropping and harvesting schedules there fore fluctuations are observed
in the rice bran oil prices which are almost fixed in their pattern how ever at times due to climatic
conditions and temperature variations the status of the rice bran oil changes from industrial grade
to edible grade and vice versa.
In India rice bran oil extraction is mostly available in the major rice growing states of AP and
Punjab fatty acids manufacturing units have been situated in these states as they are nearer to
the rematerialize source Tamilnadu
Fatty Acids for commercial uses are produced by hydrolising oils and fats to fatty acid and glycerol; and
then further purified and modified to suit different industrial applications. India is rich in non-edible oils
resources and production of fatty acids from these oils upgrades them suitable for manufacture of all
sorts soaps and greases. This would ease the situation of edible oils for human consumption thereby
helping reduce the shortage of edible grades in India.
Types of Fatty Acids:

1) Saturated : Lauric Acid
Myristic Acid
Palmitic Acid
Stearic Acid
2) Unsaturated : Oleic Acid
Linoleic Acid
The above classification is done on the basis of molecular composition.

Raw materials that constitute fatty acids include the following:
i) Animal fats (usage of animal fats is banned in India)
a) Tallow
b) Lard
c) Inedible grease
ii) Vegetable Oils
a) Neem Oil
b) Palm Oil
c) Rice bran
d) Castor Oil
e) Coconut Oil

Stearic Acid is a saturated fatty acid having diversified applications in various industries like
textiles, tyres, plastics, paints, rubber, cosmetics, food, surfactants, pharmaceuticals, etc. Major
players in Indian Stearic Acid industry in India are Godrej, Jocil, VVF. The average consumption
by different industries is in the range of 60000 TPA. Rubber and PVC industry constitutes
approximately 40%.
Stearic acid user industry is aware of the changes in raw material scenario to quickly adopt
and change their input material base to the cheaper one. This has increased pressure on
manufacturers of stearic acid to be more alert and adept for sustaining the changing
environment.
More than a third of the consumption of fatty acids / Stearic Acid in India comes from Gujarat and
Maharashtra States. This could be an advantage to the fatty acid manufacturers, who are located in
and around Mumbai as transportation cost has become a major input cost for any industry.
Soap Industry
The per capita consumption of Toilet Soap in India at present is low as compared to many
developing countries. The overall growth rate of the industry in the recent years has been in the
neighbourhood of 2% per annum.
The total turnover of toilet soap industry is Rs.4500 crore. The overall consumption of toilet
soaps in the country has been increasing at the rate of 2% and at more than 5% per annum in
rural areas. The gap between demand and supply of oils for production of toilet soap is a
matter of serious concern.
The soap market is divided into Sub-popular, Popular & Premium on the basis of fatty matter.
But for the purpose of market study, the market is categorised into Popular and Premium. The
popular segment constitutes about 87% while the premium soap makes up the remaining 13%.
Segmentation of the Toilet Soap Market:

Price Range Soap Segment
Rs. 6-8 (for 75 gms) Sub-Popular
Rs. 8-12 (for 75 gms) Popular
Rs.12 + (for 75 gms) Premium
Market share of Premium, Popular, Sub-Popular.
Segment Market Share Growth Rate
(%) (%)
Premium 24 3
Popular 45 1
Sub-Popular 31 8
Biomass Power
Biomass is plant matter such as trees, grasses, agricultural crops, and other material derived from
living matter. These materials are renewable and sustainable. A biomass fuel is converted to
heat energy in a highly controlled reactor (boiler or gasifier). The heat is converted to mechanical
energy in either a steam or gas turbine, and the mechanical device turns a generator that
produces electricity. With regard to feedstock, residues are the most economical biomass fuels
for generating electricity. These are the organic byproducts of food, fiber, agricultural wastes, rice
husk etc.
Jocil has a 6 MW Biomass Cogeneration Power Plant. It consits of a steam turbine of BHEL
make and a 30 tons/hr boiler of Thermax Babcock Wilcox make. The main fuels used in Jocil
are agricultural wastes like cotton stalks and chili stalks, rice husk and woody biomass like
juliflora. Coal is also used as a supporting fuel. Hitherto, agricultural wastes like cotton and
chili stalks were being burnt in the open by farmers. This activity was involving unproductive
labour cost for removing the stalks from the field after the harvest. Moreover, the burning in the
open has been contributing to environmental pollution.
Since inception of the power plant by Jocil, farmers belonging to the villages in and around
Guntur have been benefited immensely by selling their agricultural waste to the Company.
This has also resulted in huge reduction of environmental pollution, as the biomass fuel is
converted to heat energy in a controlled reactor.
Jocil utilises the steam from the boiler to drive the turbine for generating power while
simultaneously extracting some steam from the turbine for its plant operations. Jocil uses
approximately half the power generated for captive use and the remaining power is sold to AP
Transco at a predetermined price.
Chapter III
STATUS OF JOCIL
PRODUCTS OF JOCIL
PROCESS FLOW CHARTS

Profile of Jocil
 A Public Limited Company incorporated in February 1978 as “Andhra Pradesh Oil and
Chemical Industries Ltd”
 Renamed as “Jayalakshmi Oil and Chemical Industries Limited” in 1982
th
 Became a Subsidiary of “The Andhra Sugars Ltd” on 27 October 1988
 Renamed once again as “Jocil Limited” in 1992
 25 years of experience in the filed of manufacture of Stearic Acid Flakes, Fatty Acids,
Toilet Soap, Soap Noodles and Glycerine
 Stearic Acid Flakes are available in various grades for use in Pharmaceutical, Cosmetics,
Textiles, Paints, Plastics, Tyres, Tread Rubber, Metal Polish and other industries
 A 6 Mw Biomass Cogeneration Power Plant commissioned in 2001 to meet captive
requirements of Steam & Power
 Exports surplus Power to AP Transmission Corporation
 Continuous unbroken dividend paying record since 1990.
 Sales and processing turnovers as on 31-03-2004 are Rs.71.52 crores and Rs.20.43
crores respectively
 Listed in Madras and Hyderabad Stock Exchanges
 Celebrated Silver Jubilee in the year 2003
 ISO 9001:2000 Certification by DNV in the year 2004
BOARD OF DIRECTORS
Dr. Mullapudi Harischandra Prasad Chairman
J. Murali Mohan Managing director
P. Narendranath Chowdary Director
Mullapudi Thimmaraja Director
Y. Narayanarao Chowdary Director

V.S. Raju Director
K. Srinivasa Rao Director
M. Gopalakrishna Director
Subba Rao V. Tipirneni Director
VICE PRESIDENT & SECRETARY
P. Kesavulu Reddy
M.Com, LL.B., F.I.C.W.A., A.C.S.
Status of Jocil:
Andhra Pradesh is predominantly a Rice growing State and location of Jocil is very close to the
rice-bowl of Andhra Pradesh i.e., Krishna and Godavari Districts. There are about 70 Rice Bran
processing units in and around Guntur, the location of Jocil. It is for this reason the place has
been chosen during 1978.
Rice Bran Oil has been used by most of the industries until recently. However, the industry at
present is using products made out of CPS, Palm products like PFAD, which have become
much less expensive.
Jocil’s present capacity utilisation is as under:
Installed Production Capacity

Product Capacity 2004-05 Utilisation
(tons/day) (tons) (%)
Fatty Acids 200 tpd 35475 59
Toilet Soap 60 tpd 6804 38
Soap Noodles 150 tpd 31358 70

Glycerine 4.5 tpd 818 61
Jocil is able to service its customers to their total satisfaction, as it is aware of the quality that is
required for individual customers, the type of material that should be supplied consistently, on
time. That is, right product for the right customer at the right time.
Keeping in view the changes that are taking place globally, the Company is in constant touch
with its customers, dealers & agents to pass on the information available for the benefit of the
customers and the industry.
Products of Jocil:
A process flow chart is presented for clear understanding of Jocil’s manufacturing activity.
Jocil manufactures Fatty Acids for manufacture of Toilet Soap and other Soap products like
Soap Noodles etc. Another important product under Fatty Acids is Stearic Acid for application
by different industries manufacturing rubber, rubber tyres, PVC, metallic stearates, cosmetics,
specialty chemicals for leather, textile etc.
Some of the prominent customers of Jocil are Hindustan Lever, Reckitt Benckiser,
Johnson&Johnson, MRF, Clariant, BASF etc.
Refined Glycerine manufactured by Jocil finds application in manufacturing of paints, medicinal

preparations like cough syrup. Other by-product viz., Pitch Oil is used mostly in metal polish
buffing bars and the Industrial Oxygen is used largely in gas welding etc.
Jocil is in the business of Power Generation also both for captive use and sale to AP Transco,
using biomass as the chief fuel.
Raw Materials:
Jocil uses indigenously available vegetable oils like rice bran oil, coconut oil and also imports
palm fatty acid, palm kernel oil etc., mostly from Malaysia.
Product Marketing
Jocil markets its products throughout the country through:
Own depots : at Delhi, Mumbai
C & F agents : at Chennai, Pondicherry, Kottayam, Kozhikode, Coimbatore,
Bangalore, Kanpur, Baroda & Faridabad
Direct sales : from factory without involving agents or dealers
Contract manufacturing : Jocil also undertakes third party manufacturing of Toilet Soap,
Soap Noodles & related products for which it deals directly
with the corporate customers.
Prominent customers : Some of the prominent customers of Jocil are Hindustan Lever,
Reckitt Benckiser, Clariant, Johnson&Johnson, Henkel SPIC,
MRF, BASF, Century Pharma, Nestle etc.
Logistics : Jocil stores buffer stocks at Guntur and also manages
warehouses at all points where depots / agents are present.
Supplies are made both by road & rail transport.
Process flow charts & Organisation chart:
In order to get a better understanding of the production process and the organization structure,
various process flow charts and organization chart are appended .

Functions of Heads of Departments in Jocil
The following are Functions of the Heads of Departments that are mostly relevant to the
project.
Functions of Manager Finance:

 He looks after day-to-day accounting and financial operations in the Accounts Department
 He is closely associated in completion of statutory audit of the Company under Companies

Act 1956 and also in connection with the annual Tax Audit under Income-tax Act
 He is independently responsible for submitting working capital renewal application to

Banks. Also furnishes required information under Quarterly Information System
 Further, he provides information to Board Meetings relating to Profit and Loss Account,
Balance Sheet, Turnover particulars and Un-audited results etc., for each quarter
Apart from the above he looks after sales tax matters of the Company and attends before Sales
Tax Department for completion of Assessments
Functions of Marketing Manager

 He coordinates with production department, quality control & dispatch section for planning
of the production, supply of right product and at the right time to the customers
 He continuously explores new markets and customers
 In order to promote the products of the organisation regular customer contacts are
maintained
 In view of the limited growth of the industry, maintaining the market share is one of the
important functions
 He keeps an eye on the competitor’s strategies by analysing the market situation in order
to retain the customers
 Monitoring the overall performance of sales organisation is also one of the functions
Functions of Production Manager:
 He is in-charge of the Production Department
 He prepares requirement of raw materials as per the indents given by the Marketing
Department
 He plans production schedules in Fatty Acid Plant and Glycerin Plant
 He takes total responsibility from the stage of processing raw material to the stage of
packing of finished products

 His efforts include minimising the labour cost, inventory and wastage in order to achieve
high productivity
His responsibility includes advising the Management with respect to capacity utilization and
further requirements
Accounting Policies of Jocil
1. General:
The Accounts are prepared on historical cost convention and in accordance with normally
accepted accounting practices.
2. Fixed Assets:
Fixed Assets are capitalized at acquisition cost, net of Cenvat and shown at less of accumulated
depreciation. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing
the assets to their working condition for the intended use.
3. Depreciation:
Depreciation is provided under the written down value method at the rates and in the manner
specified in Schedule XIV of the Companies Act, 1956.
4. Investments:
Long-term investments are stated at cost and income thereon is accounted for on accrual. A
provision for diminution is made to recognise a decline, other than temporary in the value of long
term investments.
5. Inventories:
Valuation of inventories is made as under:
Raw materials, work-in-process, finished goods and stores and spares at cost or net realisable
value whichever is lower.
Cost of inventories is ascertained on the weighted average basis. Work-in-process and

finished goods are valued on absorption cost basis.
6. Sales:
Sales are inclusive of Excise Duty & Packing Charges and net of rebates & Sales Tax.
Power sold by the Power Unit of the Company to its other units is accounted at the rate fixed
for payment for sales to AP Transco.
7. Taxes on income:
Current tax is determined as per the provisions of Income Tax Act 1961 in respect of taxable
st
income for the year ended 31 March 2005.
Deferred tax liability is recognized, subject to the consideration of prudence on timing
differences, being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more subsequent periods.
8. Segment reporting:
The accounting policies adopted for segment reporting are in line with the accounting policies of
the Company with the following additional policies for segment reporting.
a. Inter segment revenue has been accounted for based on the market related prices.
b. Revenue and expenses have been identified to segments on the basis of their relationship to
the operating activities of the segment. Revenue and expenses which relate to the enterprise
as a whole and are not allocable to segments on a reasonable basis, have been included
under “unallocated expenses”.
9. Retirement benefits:
The Company provides retirement benefits in the form of Provident Fund, Superannuation and
Gratuity.
Contributions to the Provident Fund are made at prescribed rates to the Provident Fund
Commissioner and absorbed in the Profit and Loss Account. Premium for liability in respect of
Superannuation benefits extended to certain employees is contributed by the Company to Life
Insurance Corporation of India against a Master Policy at 15% of the basic salary of such
employees. The Company has taken a Group Gratuity Insurance Policy with Life Insurance
Corporation of India to secure gratuity liability. The premium on policy and the difference
between the amount of gratuity paid on retirement, and recovered from the Life Insurance
Corporation of India are debited to Profit and Loss Account.
Liability for Leave encashment on retirement is accounted on accrual as if all the eligible
employees retire as at the Balance Sheet date.
10. Research & Development expenditure:

Revenue expenditure is charged to Profit & Loss Account and Capital Expenditure is added to
the cost of Fixed Assets in the year in which it is incurred.
Chapter III
Review of literature
Working Capital
OBJECTIVES
SIGNIFICANCE OF WORKING CAPITAL

ELEMENTS OF WORKING CAPITAL
Working capital management
An enterprise whether industrial, trading or other acquires two types of assets to run its
business. They are fixed assets, which are necessary for carrying the production \ business
and current assets which are floating in nature and keep changing during the course of
business. It is there current assets which are generally referred to as ‘working capital’.
In managing fixed assets the time factor is very important that’s why discounting and
compounding play a very important role in any capital budgeting decision. But because the
time frame of current assets is only one accounting period the time value of money is
significant in the management of current assets.
Any short run immediate need of the company whether that be need for cash or adjustments to
fluctuations in sales can be made only through adjusting the levels of the various components
of the current assets. This calls for efficient management of current assets, which forms part of
working capital.
Working capital management involves not only managing the components of current assets
but also the managing the current liabilities.
A set-financing pattern is evolved to meet the requirement of a unit for acquisition of fixed
assets and current assets and current assets. Fixed assets are to be financed by owned funds
and long term liabilities raised by a unit while current assets are partly financed by current
liabilities and other short term loans arranged by the unit from the bank.
Working capital management involves not only managing the different components of current
assets, but also managing current liabilities, or to be more precise, the financing aspect of
current assets. It is therefore appropriate to provide brief description of current assets and
liabilities.
The total current assets with the firm is gross working capital whereas net working with the unit
is calculated as follows:
Net working capital = current assets-current liabilities
Objectives:
The basic objective of working capital is to provide adequate support for the smooth
functioning of the normal business operations of a company.
The objective of working capital management is to balance the liquidity and profitability criteria
while taking into consideration the attitude of management toward risk and the constraints
imposed by banking sector while providing short-term credit in the form of cash credit/ bank
over draft.
Working capital can be viewed as the amount of capital required for the smooth and
uninterrupted functioning of the normal business operations of a company ranging from
procurement of raw material converting the same into finished goods for sale and realizing
cash along with profit from the accounts receivables that arise from the sale of finished goods
on credit.
Significance of working capital:
Working capital may be regarded as lifeblood of a business. Its effective provision can do
much to ensure the success of a business while its inefficient management can lead not only
to loss of profits but also to the ultimate downfall of what other wise might be considered as a
promising concern.
A study of working capitol is of major importance to internal and external analysis because of
its close relationship with the current day to day operations of a business.
DETERMINANTS OF WORKING CAPITAL:

A large number of factors influence working capital needs of the firms. The following is the
description of factors, which generally influence the working capital requirements of firms.
Nature and size of business:-
Working capital needs of the most manufacturing concerns fall between two extreme
requirements of trading firms and public utilities. Such concerns have to make adequate
investment in current assets depending upon the total assets structure and other variables. A firm
with larger scale of operations will need more working capital than a small firm.
Nature of raw material used:-
The nature of major raw material used in the manufacture of finished goods will greatly influence
the quantum of raw material inventory
Ex :- if the raw material is an agricultural product whose pronouncedly seasonal in character the
proportion of raw material inventory to total current assets will be quite high.
Manufacturing cycle:-
The manufacturing cycle comprises of the purchase and use of raw materials and the production
of finished goods. Longer the manufacturing cycle, larger the firm's working capital requirements.
Production Policy: -
The production policies are different for different firms depending on circumstances of individual
firms and their working capital requirements keep changing with the production policies.
Nature of finished goods: -
The nature of finished goods greatly influences the amount of finished goods inventory.
Ex :- if the finished goods have what is called a short span of ‘shelf-life’ as in the case of
cigarettes the finished goods inventory will constitute a very low percentage of total current
assets.
Sales growth: -
The working capital needs of the firm increase as its sales grow. So proper planning should be
done to the growing firms.
Demand Conditions: -
Most firms experience seasonal and cyclical fluctuations in the demand for their products and
services. These business variations affect the working capital requirements specially the
temporary working capital requirements of the firm.
Price Level Changes: -
Generally rising prices will require a firm, to maintain higher amount of working capital.
Operating Efficiency and Performance: -
The operating efficiency of the firm relates to the optimum utilization of resources at minimum
costs. The contribution towards working capital would be affected by the way in which profits are
appropriated and operating efficiency of the firm is well operated by the firm.
Firms Credit Policy: -
The Credit policy of the firm affects working by influencing the level of book debts. A high
collection period will mean tie up of funds in book debts. Stock collection proceedings can
increase the chance of bad debts.
Availability of Credit: -
A firm will need less working capital if liberal credit terms are available to it. The available credit
from banks also influences the working capital needs of the firm.
Permanent and Variable Working Capital:
There is always a minimum level of current assets, which is continuously maintained by the
firm to carry on its business operations. This minimum level of current assets -
a) Indicates the liquidity position of the firm

(b) Suggests the extent to which working capital needs may be financed by permanent sources
of funds.
Operating Cycle:
Operating cycle is the time duration required to convert sales, after the conversion of
resources into inventories, into cash. The operating cycle of a manufacturing company
involves 3 phases.
 Acquisition of resources such as raw material, labor, power and fuel etc.
 Manufacture of the product which includes conversion of raw material into work-in-progress
into finished goods.
 Storage of finished goods awaiting sales.
 Sale of products either for cash or on credit creates book debts for collection.
All these steps put together from an operating cycle, which can also be represented as under:
Operating cycle
Realization cash raw material
Stores and spares
Semi finished goods
Bills receivable\ sales finished goods

Sundry
The intervening period required for completion of this entire process is the ‘operating cycle’. The
operating cycle may thus be defined as the intervening period from the time the goods or services
enter the business till their realization in cash. The study of this operating cycle is obviously very
important, as the actual requirement of the unit may be limited to the funds required to complete
an operating cycle.
Operating cycle formulae:
The length of the operating cycle of a manufacturing firm is the sum of :
Inventory conversion period (ICP)

Debtor’s conversion period (DCP)
The inventory conversion period is the total time needed for producing and selling the product.
The debtor’s conversion period is the time required to collect the outstanding amount from the
customers. The total of inventory conversion period and debtor’s conversion period is referred to
as gross operating cycle (GOC).
Raw material conversion period (RMCP) =
Raw material inventory * 360
Raw material consumed
Work-In-progress conversion period (WIPCP) =
Work-In-progress inventory * 360
Cost of production
Finished goods conversion period (FMCP) =
Finished goods inventory * 360

Cost of goods sold
Debtors conversion period (PDP)=

Debtors * 360
Credit sales
Payables deferral period (PDP) =

Creditors * 360
Credit purchases
Net operating cycle (NOC) =
Gross operating cycle – payables
Inventory Management
Inventories constitute the most significant part of current assets. It is therefore absolutely
imperative to manage inventories efficiently and effectively in order to avoid unnecessary
investment. A firm neglecting the management of inventories will be jeopardizing its long-run
profitability and may fail ultimately.
Nature of Inventories:
Inventories are stock of the product a company is manufacturing for sale and components that
make up the product. The various forms in which inventories exist in manufacturing company
are raw materials, work-in-process, and finished goods.
Raw Materials:-
Raw materials are those basic inputs that are converted into finished products through the
manufacturing process. Raw material inventories are those units which have been purchased
and stored for future production.
Work-in-process:-
Inventories are semi-manufactured products. They represent products that need more work
before they become finished products for sale.
Finished Goods:-
Inventories are those completely manufactured products which are ready for sale.
Need to Managing Inventories:

The question of managing inventories arises only when the company holds inventories.
Maintaining inventories involves tying up of the company's funds and incurrence of storage and
handling costs. If it is expensive to maintain inventories, why do companies hold inventories?
There are three general motives for holding inventories.
Transactions Motive - emphasizes the need to maintain inventories to facilitate smooth
production and sales operations.
Precautionary motive - necessitates holding of inventories to safeguard against the risk of

unpredictable changes in demand and supply forces and other factors.
Speculative Motive - influences the decision to increase or reduce inventory level to take advantage of
price fluctuations.
Objectives of Inventory Management:

In the context of inventory management, the firm is faced with the problem of meeting two
conflicting needs;
To maintain a large size of inventory for efficient and smooth production and sales operations.
To maintain a minimum investment in inventories to maximize profitability.

Both excessive and inadequate inventories are not desirable. These are two danger points
within which the firm should operate. The objective of inventory management should be to
determine and maintain optimum level of inventory investment. The optimum level of inventory
will lie between the two danger points of excessive and inadequate inventories.
Inventory Management Techniques:

In managing inventories, the firm's objectives should be in consonance with the shareholders
wealth maximization principle. To achieve this, the firm should determine the optimum level of
inventory. Efficiently controlled inventories make the firm flexible. Inefficient inventory control
results in unbalanced inventory and inflexibility - the firm may sometimes run out of stock and
sometimes may pile up unnecessary stocks. This increases the level of investment and makes
the firm unprofitable.
To manage inventories efficiency, answers should be sought to the following two questions.
1. How much should be ordered?
2. When should it be ordered?

The first question, how much to order, relates to the problem of determining economic order
quantity, and is answered with an analysis of cost of maintaining certain level of inventories.
The second question, when order arises because of uncertainty and is a problem of
determining the re-order point.
Economic Order Quantity (EOQ):

One of the major inventory management problems to be resolved is how much inventory should be ad
inventory is replenished. Determining an optimum inventory level involves two types of costs; (a
costs, (b) carrying costs; the economic order quantity is that inventory level which minimizes th
ordering and carrying costs.
O = Ordering Cost
C = Carrying Cost
A = Total required units.

ABC Analysis:
ABC analysis tends to measure the significance of each item of inventories in terms of its
value. The high-value items are classified as 'An' items and would be under the tight control.
‘C’ items represent relatively least value and would be under simple control. 'B' items fall in
between these two categories and require reasonable attention of management. The ABC
analysis concentrates on important items and is also known as Control by Importance and
Exception (CIE). As the items are classified in the importance of their relative value. This
approach is also known as Proportional Value Analysis (PVA).
RECEIVABLES MANAGEMENT
Business firms generally sell gods on credit, to facilitate sales especially from those customers
who can not borrow from other sources, or find it very expensive or difficult to do so. Finished
goods sold on credit get converted In to receivables which when realized, generate cash.
Receivables management refers to the decisions a business makes regarding its overall credit
and collection policies and the evaluation of individuals arising out of credit, which has 3
characteristics. It involves an element of risk which should be carefully analyzed. Cash sales
are totally risk less, but not the credit sales as the cash payment is yet to be received.
It is based on economic value to the buyer, the economic value in goods or services passes
immediately at the time of sale, while the seller expects an equivalent value to be received
later on. It implies futurity. The cash payment for goods or services received by the buyer will
be made by him in a future period.
The purpose of receivables can be understood if we can grasp the basic objective of
receivables management. The objective of receivables management is to promote sales and
profits until that point is reached where the returns that the company gets from funding of
receivables is less than the cost that the company has to incur in order to fund these
receivables.
The purpose of receivables is directly connected with the company’s objectives of making
credit sales, which are:
 To increase total sales.

 To increase profits.
 To meet increasing competition.
Establishing Optimum Credit Policy:
A firm's investment in accounts receivables depends on (a) the volume of credit sales (b) the
collection period. The term credit policy is used to refer to the combination of three decision
variables, (I) Credit standards, (ii) Credit terms, (iii) Collection efforts, on which the Financial
Manager has influence.
Goals of Credit Policy:-

A firm may follow a liberal or a stringent credit policy. The firm following a liberal credit policy
tends to sell on credit to customers on very liberal terms and standards. A firm following a
stringent credit policy sells on credit on a highly selective basis only to those customers who
have proven credit worthiness and who are financially strong.
Credit policy helps to retain old customers and create new customers by wearing them away
from competitors. In practice companies may grant credit for several other reasons such as
the company position, buyer’s status and requirements, dealer’s relationship, transit delays,
industrial practice etc.
Credit Policy Variables:-

The major controllable decision variables include the credit standards, credit terms and
collection efforts. The most difficult part of the analysis of impact of change in the credit policy
variables is the estimation of sales and costs. The impact of change in the major decision
variables of credit policy are discussed below.
Credit Standards: -
Credit standards are the criteria which a firm follows in selecting customers for the purpose of
credit extension. The firm may have tight credit standards. Such standards will result in no
bad debt losses. If credit standards are loose, the firm will have to carry large receivables
which may lead to bad-debt losses. Thus, the choice of optimum credit standards involves a
trade-off between incremental return and incremental costs.
Credit Terms:-
The stipulations under which the firm sells on credit to customers are called credit terms. These
stipulations include (a) credit period, and (b) cash discount.
(a) Credit Period:
The length of time for which credit is extended to customers is called the credit period. A
Firm's credit period may be governed by the industry norms. Also the firm may tighten its
credit period if customers are defaulting too frequently and bad-debt losses are building up.
With increased sales and extended credit period investment in receivables would increase.
Two factors cause this increase (a) incremental sales result into incremental receivables, and
(b) existing customers will take more time to repay credit obligations.
(b) Cash Discount:
Cash discount is a reduction in payment offered to customers to induce them to repay credit
obligations within a specific period of time, which will be less than the normal credit period. A
firm uses cash discount as a tool to increase sales and accelerate collections from customers.
Collection Efforts:-
Prompt collection is needed for fast turnover of working capital, keeping collection costs and
bad debts within limit and maintaining collection efficiency regularity in collections keep debtors
alert, and they tend to pay their dues promptly.
First, a polite letter reminding the customers about the payment is necessary. If it does not work,
then letters with strong-worded, telephone, telegram or personal visit will help in collection. These
are different types of collection efforts.
Monitoring Book Debts:-
A firm needs to continuously monitor and control its book debts to ensure the success of
collection efforts.
The following methods are used :

1) Average Collection Period (ACP)
2) Aging Schedule
3) Collection experience Matrix.
1) Average Collection Period: -

The Average Collection Period can be calculated as follows:
ACP = Debtors x 360
Credit Sales
The Average Collection Period measures the quality of book debts since it indicates the speed
of their collect ability.
2) Aging Schedule:-
A significant amount of book debts remains uncollected much longer than the firm’s credit period.
Thus aging schedules provide more information about the collection experience. It suffers from
the problem of aggregation and does not relate receivables to sales of the same period.
3) Collection Experience Matrix:-

When sales over a period of time are shown horizontally and associates book debts vertically in a
tabular form, a matrix constructed. O this method of evaluating book debts is called "collection
experience matrix".
CASH MANAGEMENT
Cash, the most liquid asset and also referred to as life blood of a business enterprise is of vital
importance to the daily operations of business firms. Its efficient management is crucial to the
solvency of the business because cash is the focal point of the fund flows in a business.
There are two ways of viewing the term ‘cash’. In a arrow sense it includes actual cash in the form
of notes and coins and bank drafts held by a firm and the deposits withdraw able on demand. And
in a broader sense, it includes even marketable securities which can be immediately sold or
converted into cash.
We have seen earlier that cash is embedded in different forms of current assets ranging from raw
material inventory to accounts receivables and comes back in the form of cash again along with
profit after completing one round of the company’s operating cycle. In view of the ‘flow of cash’
through successive phases of the operating cycle, cash can be regarded as the life blood of a
body corporate.
The objective of cash management can be regarded as one of making short- term forecasts of
cash position, finding avenues for financing during periods when cash deficits are anticipated and
arranging for repayment/ investment during periods when cash surpluses are anticipated with a
view to minimizing idle cash as far as possible.
Cash management is concerned with the managing of (i) Cash flows into and out of the firm,
(ii) Cash flows within the firm and (iii) Cash balances held by the firm at a point of time by
financing deficit or investing surplus cash.
Cash management cycle can be represented as follows:
Motives for holding Cash:

The firms need to hold cash may be attributed to the following three motives:
1) Transaction Motive
2) Precautionary Motive
3) Speculative Motive
Transaction Motive: -
The transaction motive requires a firm to hold cash to conduct its business in the ordinary course.
For those periods, when cash payments exceed cash receipts, the firm should maintain some
cash balance to be able to make required payments.
Precautionary Motive:-
The precautionary motive is the need to hold cash to meet contingencies in future. The amount
of precautionary cash depends upon the predictability of cash flows and influenced by the firms
ability to borrow at short notice when the need arises.
Speculative Motive:-
The speculative motive relates to the holding of cash for investing in profit making opportunities
as and when they arise. Securities can be purchased when the interest rate is expected to fall.
Also the firm may speculate on material prices.
Managing the Cash Flows:
The two objectives in managing the cash flows should be to accelerate cash collections as
much as possible and to accelerate or delay cash disbursements as much as possible.
Accelerating Cash Collections:

A firm can conserve cash and reduce its requirements for cash balances if it can speed up its
cash collections. Cash collections can be accelerated by reducing the lag or gap between the
time a customer pays bill and the time the cheques are collected and funds become available
for the firms use. An efficient financial manager will attempt to reduce firms deposit float by
speeding up the mailing, processing and collection times.
Decentralized Collections:
Decentralized collection procedure is a system of operating through a number of collection
centers instead of a single collection centre centralized at the firms head office. Under
decentralized collections, the firm will have a large number of bank accounts operated in the
areas where the firm has its branches. Decentralized collection system saves mailing and
processing time and thus reduces the financing requirements.
Lock-box System:
In a lock-box system, the firm establishes number of collection centres, considering customer locations
and volume of remittances. At each centre, the firm hires a post office box and instructs its customers
to mail their remittances to the box. Thus lock-box system eliminates the period between the time
cheques are received by the firm and the time they are deposited in the bank for collections. But lock-
box system involves cost.
Instruments used for Collection:

The major instruments of collection used in India are (i) cheques (ii) drafts (iii) documentary
bills (iv) trade bills, and (v) Letter of credit.
Investment in Marketable Securities:

Investment in marketable securities is an important financial management responsibility
because of the close relationship between cash and marketable securities.
Selecting Securities:
In choosing among alternative securities, the firm should examine three basic features of
security i.e. safety, maturity and marketability.
Safety:
The higher return yielding securities are relatively more risky. So the firm should invest in very
safe securities as the transaction or precautionary balance invested in them are needed in
near future.
Maturity:
Maturity refers to the time period on which interest and principal are to be made. The price of
long term security fluctuates more widely than the price of short term security. Therefore, for
safety reasons, short term securities are preferred by the firm for the purpose of investing
excess cash.
Marketability:
Marketability refers to convenience and speed, with which a security can be converted into cash.
If the security can be sold quickly without loss of price, it is highly liquid or marketable. The
securities which have low marketability usually have higher yields in order to attract investment.
Types of Marketable Securities:

The marketable securities portfolio are divided into two groups.
(i) Governmental issues, and
(ii) Non-governmental issues

A firm can deposit its excess cash with the commercial banks for some fixed
maturity. Purchasing the fixed deposit certificates from the banks is very safe short-term
investment. The firm regularly gets the interest and gets back its original investment at
maturity. Inter corporate deposits are quite popular short-investments in India. Companies
can also issue short term commercial papers.
Determining optimum cash balance:
The finance manager has to maintain a sound of liquidity position so the obligation may settled
well in time .small cash balance may result in a investment of cash else where .a high level of
cash balance will enable the firm to have sound liquidity position but will have to forego the
opportunities to earn interest . Therefore the firm should have optimum cash balance a trade
off between risk and return.
Cash reports:
Thus cash reports provide a comparative picture of actual with fore cased figures and help in
controlling and revising cash forecasts continuously. Cash reports can be prepared in 2 ways
they are :
1) Daily cash report

2) Monthly cash reports.
Daily cash report:

1. opening cash balance *******
2. Receipts ******
Cash sales ****
Collection on credit ****
Loans ****
Other receipts *****
3. Payments ***
Cash purchases ****
Payments to creditors ****
Repayment of loans ****
Other payments
4. net cash flow (2-3) ****

5. closing cash balance (1+4) ****
This monthly cash report, shows the cash position on a monthly basis.
Cash report for month
This month year to date

Actual budget variance actual budget variance
Cash receipts
Cash sales
Collections on credit sales
Interest and dividend
Receipts
Short-term borrowings
Long-term borrowings
Issue of long term securities
Sale of assets
Total
Cash payments
Cash purchases
Payment for credit purchases
Wages and salaries
Manufacturing expenses
General, administration and
selling expenses
Interest dividends
Taxes
Capital equipment purchases
Repayment of loans
Redemption of long term
securities
Total
Chapter IV
Statement of changes in working capital
Computation of Financial Ratios of
Jocil
Chapter IV
Working Capital Management in Jocil Limited

Working Capital plays the most important role in managing any business. It refers to the part
of firm’s capital. Capital is required for financing short term or current assets such as Cash,
Marketable Securities, debts and Inventories. Working Capital is life blood of a business.
The management of working capital in a business is carried on in these areas.
Cash Management in Jocil Limited

Cash management means usage of cash in several ways. Usage of cash includes expenses
and commission and the amount spent by the company for running into profits.
Cash management in Jocil is done by preparing a cash budget availing the information from
the pay order books, which will in turn help to eliminate over keeping of cash. To reduce the
delay of clearing the cheques, Jocil Provides the facility of electronic fund transfer. The cash
management in Jocil helps to estimate the cash requirements and other day-to-day payments.
Inventory management in jocil limited
Inventory management is done in an intermittent system. The goods are

manufactured specially to fulfill orders made by the customers. Here the production facilities are
flexible enough to handle a wide variety of products with varied sizes.
It manufactures products like toilet soap. Mixed fatty acids etc on intermittent basis for
various companies. It also manufactures stearic acid, which occupies 60% of overall production
on order basis only.
The customers supply the raw materials for production of products on job work contract. In
such cases there is no need for the company to finance the raw materials. The inventory
management in JOCIL is done effectively.
Receivables Management in Jocil Limited:
The collection procedure for the receivables has been classified in two ways.
1. Bills Discounting Procedure
2. Bills Collection Procedure
Bills Discounting Procedure:

After dispatch of goods a bill is drawn in the name of the debtor. After acceptance by the
debtor, the bill is discounted instantly with the bank and the debtor is required to send the
amount on due date which in turn will be credited to OCC account of the company after
adjusting the charges. If the bill is cleared beyond the due date the debtors are charged 16%
interest per annum for the delayed period.
Bills Collection Procedure:

In this procedure the documents are sent to the banker of the party who is required to present the
documents to the party on payment. If the party fails to retire the documents within a grace
period of seven days he is subjected to an interest rate of 16% p.a. After collection of the amount
the Banker of the party is required to send the same to the account of Jocil
The credit period given to the parties of Jocil Limited differs with product to product. The
details of credit period given to different products are given below:
Satiric Acid - 60 days, 45 days, 30 days, 15 days.
Glycerin - Advance payment - 20 days
Pitch - Advance payment - 20 days
Toilet Soap - 15 days
Soap Noodles - 15 days
Generally there are two factors affecting the credit period given to the customer:
1. Quality of account is good and the party is a regular one.
2. Credit period also differs with the quantity purchased

A financial statement is a collection of data organised according to logical and consistent
accounting procedures. Its purpose is to convey an understanding of some financial aspects
of a business firm. It may show a position at a moment in time, as in the case of a balance
sheet or reveal a series of activities over a given period of time, as in the case of an income
statement. Thus the term ‘Financial Statements’ generally refers to two statements: (i) the
position statement or the balance sheet, and (ii) the income statement or the profit and loss
account. These statements are used to convey to management and others concerned the
profitability and financial position of a firm.
Financial statements are also called financial reports. In the words of Anthony, “financial
statements, essentially, are interim reports, presented annually and reflect a division of the life
of an enterprise in to more or less arbitrary accounting period – more frequently a year”.
Objectives of Financial Statements

Financial statements are the sources of information on the basis of which conclusions are
drawn about the profitability and financial position of a concern. They are the major means
employed by firms to present their financial situation to owners, creditors and the general
public. The primary objective of financial statements is to assist in decision making.
Types of Financial Statements

Financial statements primarily comprise of two basic statements: (i) Balance Sheet or the
Position Statement and (ii) Profit and Loss Account or the Income Statement. However,
(Generally Accepted Accounting Principles (GAAP) specify that a complete set of financial
statements must include:
1. Balance Sheet or the Position Statement

2. Profit and Loss Account or the Income Statement
3. Statement of changes in owners accounts, and
4. Statement of changes in financial position.
Balance Sheet or the Position Statement :
It is a statement that shows the financial position of the Company at a specific point in time. The
report lists the assets of the Company, such as cash, accounts receivable, inventory and
equipment – and the liabilities such as accounts payable, loans and mortgages. The difference
between the assets and liabilities is the owner or stockholders’ equity.
Profit and Loss Account or the Income Statement :
Income Statement is prepared to determine the operational position of the concern. It is a
statement of revenues earned and the expenses incurred for earning that revenue. If there is
excess of revenues over expenditures it will show a profit and if the expenditures are more
than the income then there will be a loss. The income statement is prepared for a particular
period, generally a year. When income statement is prepared for the year ending, then all
revenues and expenditures falling due in that year will be taken in to account irrespective of
their receipt or payment.
Statement of changes in Financial Position :

This statement may take any of the following two forms.
a. Funds Flow Statements: The funds flow statement is designed to analyse the
changes in the financial conditions of a business enterprise between two periods. The
word ‘Fund’ is used to denote working capital.
b. Cash Flow Statements: A statement of changes in the financial position of a firm
on cash basis is called Cash Flow Statement. It summarises the causes of changes in
cash position of a business enterprise between states of two balance sheets.
Characteristics of Ideal Financial Statements

The financial statements are prepared with a view to depict financial position of the concern. A
proper analysis and interpretation of these statements enables a person to judge the
profitability and financial strength of the business. The financial statements should be
prepared in such a way that they are able to give a clear and orderly picture of the concern.
The ideal financial statements have the characteristics like depicting the True Financial
Position, Effective Presentation, Relevance, Attractiveness, Ease, Comparability, Analytical
representation, Brevity and Promptness.
Limitations of Financial Statements

Though financial statements are relevant and useful for the concern, they still do not present a
final picture of the concern. The utility of these statements is dependent upon a number of
factors. The analysis and interpretation of these statements should be done very carefully
otherwise misleading conclusions may be drawn, the financial statements suffer from the
following limitations:
• The data given in these statements is only approximate

• The financial statements do not give exact position
• The financial statements are prepared on the basis of historical costs or original costs. The
value of assets decreases with the passage of time as current price changes are not taken in to
account
• There are certain factors, which have a bearing on the financial position and operating results
of the business but they do not become a part of these statements because they cannot be
measured in monetary terms.
The precision of financial statement data is not possible because conventional procedure is
followed over the years.
Five years BALANCE SHEET of Jocil Limited
Years
Item
2000-01 2001-02 2002-03 2003-04 2004-05
Equity Share Capital 44410500 44410500 44410500 44410500 44410500
Reserves & Surplus 477578445 519236233 577559443 637239115 717863339
Net Worth 521988945 563646733 621969943 681649615 762273839
Term Loan 88000000 73320000 56701000 42033000 0
Interest Free Sales Tax Loan 11016620 11016620 11016620 11016620 11016620
Debt 99016620 84336620 67717620 53049620 11016620
Deferred Tax Liability 0 66300000 61360000 61360000 54170942
Current Liabilities:
Due to Banks for Working Capital 5341331 7307468 23782854 23736244 2072957
Fixed Deposits 2500887 2643248 2417726 2307327 3799744
Current Liabilities 40638786 33601687 50589753 36427045 52990750
Provisions 95678554 79644522 134233742 174411546 117705280
Total Current Liabilities 144159558 123196925 211024075 236882162 176568731
Total Outside Liabilities 243176178 273833545 340101695 351291782 241756293
Total Liabilities 765165123 837480278 962071638 1032941397 1004030132
Fixed Assets & WIP (Gross Block) 539124999 617031308 678456204 761149613 774850765
Prov. for Depreciation 203269457 256420925 310589757 365401716 397415418

Net Block 335855542 360610383 367866447 395747897 377435347
Investments 6043800 2123800 2123600 2133500 2133500
Current Assets:
Sundry Debtors(opening) 61127426 70345332 85441343 109921593 113730833
Sundry Debtors(closing) 70345332 85441343 109921593 113730833 136188751
Cash and Bank Balances 13514915 20447689 15109765 7400120 43780275
Other Current Asets 42416 195122 110282 117320 307761
Loans and Advances 257888881 267899248 310760746 324924790 312779468
Total Quick Assets 341791544 373983402 435902386 446173063 493056255
Inventories:
Finished Goods(opening) 40271876 31428295 21306408 46734175 49906963
Finished Goods(closing) 31428295 21306408 46734175 49906963 33464972
R.M.,WIP.,& Stores and Spares 50045942 79456285 109445030 138979974 97940058
Total Inventories 81474237 100762693 156179205 188886937 131405030
Total Current Assets 423265781 474746095 592081591 635060000 624461285
Total Assets 765165123 837480278 962071638 1032941397 1004030132
Interest Bearing Debt 95842218 83270716 82901580 68076571 5872701
Capital Employed 621005565 714283353 751047563 796059235 827461401

PROFIT AND LOSS A/c of Jocil Limited
YEARS
Item
2000-01 2001-02 2002-03 2003-04 2004-05
5764465 8027114 8151312 9195391 8523074

Gross Sales
96 17 18 22 23
5175341 7527180 7724222 8755421 8004604

Statement of changes in working capital during the period 2000-01
Particulars 2000 2001 Increase in Decreasein

WC WC
Current assets, Loans
And Advances
amount amount amount amount
cash on hand 410917 387508 23409
cash at bank 45773039 13127407 32645632
sundry debtors 61127426 70345332 9217906
closing stock 92267935 81474237 10793698
other current assets 188589814 250336022 61746208
Total (A) 388169131 415670506 70964114 43462739

Current liabilities &
provisions
current liabilities 52292172 40638786 11653386
Provisions 105934370 95678554 10255816
W.C from banks 7182841 5341331 1841510
Total (B) 165409383 141658671 23750712
Net working capital 222759748 274011835 94714826 43462739

(A-B)
Increase in W.C 51252087
Total 94714826 94714826
Interpretation:
During the period 2000 to 2001there is an increase in the working capital of the company.

Particulars 2001 2002 Increase in Decrease in
WC WC
Current assets, Loans amount amount amount amount
And Advances
cash on hand 387508 219210 168298
cash at bank 13127407 20228479 7101072
sundry debtors 70345332 85441343 15096011
closing stock 81474237 100762693 19288456
Total (A) 415670506 468289410 52787202 168298

provisions
Provisions 95678554 79644522 16034032
W.C from banks 5341331 7307468 1966137
Total (B) 141658671 120553677 23071131 1966137
Total 75858333 75858333
Interpretation:
During the period 2001 to 2002 there is an increase in working capital of the company.

WC WC
And Advances
cash on hand 219210 603551 384341
cash at bank 20228479 14506214 5722265
sundry debtors 85441343 109921593 24480250
closing stock 100762693 156179205 55416512
Total (A) 468289410 587038086 124470941 5722265

provisions
Provisions 79644522 134233742 54589220
W.C from banks 7307468 23782854 16475386
Total (B) 120553677 208606349 -------- 88052672
Net working capital (A- 347735733 37843173 124470941 93774937

B)
Total 124470941 124470941
Interpretation:
During the period 2002-2003 there is an increase in working capital of the company.

WC WC
And Advances
cash on hand 603551 603109 442
cash at bank 14506214 6797011 7709203
sundry debtors 109921593 113730833 3809240
closing stock 156179205 188886937 32707732
Total (A) 587038086 631113065 51784624 7709645

provisions
Provisions 134233742 174411546 40177804
W.C from banks 23782854 23736244 46610
Total (B) 208606349 234534881 14249272 40177804

(A-B)
Total 66033896 66033896
Interpretation:

WC WC
And Advances
cash on hand 603109 1206318 603209
cash at bank 6797011 42573957 35776946

sundry debtors 113730833 136188751 22457918
closing stock 188886937 131405030 57481907
Total (A) 631113065 620964023 58838073 68987115

provisions
Provisions 174411546 117705280 56706266
W.C from banks 23736244 2072957 21663287
Total (B) 234534881 172768987 78369553 16603659

(A-B)
Total 137207626 137207626
Interpretation:
Statement of changes in working capital of jocil limited
year Current Current Working Changes in

assets liabilities capital working capital
2001 415670506 141658671 274011835 51252087
2002 468289410 120553677 347735733 73723898
2003 587038086 208606349 37843173 30696004

2004 631113065 234534881 396578184 18146447
2005 620964023 172768987 448195036 51616852
statement of changes in working
capital
80000000
working capital
70000000
60000000
50000000 year
40000000
30000000 Changes in
working
20000000 capital
10000000
0
1 2 3 4 5
years
Interpretation:
There is an increase in working capital of jocil during the period 2001-02 after it was decreased
2003and 04.
In 2005 working capital was increased
Current Ratio;
The Current Ratio is a measure of firm’s short-term solvency. It indicates the availability of current
assets in rupees for every one rupee of current liability.
Total Current Assets

Current Ratio =
Total current Liabilities
Current Assets Current Liabilities

Year Ratio
(Rs.) (Rs.)
2000-01 42,32,65,781 14,41,59,558 2.94
2001-02 47,47,46,095 12,31,96,925 3.85
2002-03 59,20,81,591 21,10,24,075 2.81
2003-04 63,50,60,000 23,68,82,162 2.68
2004-05 62,44,61,285 17,65,68,731 3.54

Current Ratio
5.00
3.85
4.00 3.54
2.94 2.81
3.00 2.68
Ratio
2.00
1.00
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
A Current Ratio of 2:1 or more is considered satisfactory. Current Ratio of Jocil is more than 2.50, which
indicates its creditors are having a very high margin of safety.
Quick Ratio
Quick Ratio establishes a relationship between quick or liquid assets and current liabilities. An asset is
liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is
the most liquid asset.
Quick Assets
Quick Ratio = ; ideal ratio = 1:1
Current Liabilities
Quick Assets CurrentLiabilities
Year Ratio
(Rs.) (Rs.)
2000-01 34,17,91,544 14,41,59,558 2.37
2001-02 37,39,83,402 12,31,96,925 3.04
2002-03 43,59,02,386 21,10,24,075 2.07
2003-04 44,61,73,063 23,68,82,162 1.88
2004-05 49,30,56,255 17,65,68,731 2.79

Quick Ratio
3.50
3.04
3.00 2.79
2.37
2.50 2.07
1.88
2.00
Ratio
1.50
1.00
0.50
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
From the above table, it is evident that Jocil Quick Ratio is more than 2.00 in all years except in
the year 2003-04 which indicates it can very well meet its current obligations without any funds
crunch.
Stock Turnover Ratio
This ratio indicates the efficiency of the firm in producing and selling its product. The average inventory
is the average of opening and closing balances of inventory. In a manufacturing company, inventory of
finished goods is used to calculate this ratio.
Cost of Goods Sold

Stock Turnover Ratio =
Average Inventory
Cost of Goods Opening Closing Average
Year sold Inventory Inventory Inventory Ratio
(Rs.) (Rs.) (Rs.) (Rs.)
2000-01 34,81,57,163 4,02,71,876 3,14,28,295 3,58,50,086 9.71
2001-02 49,00,14,131 3,14,28,295 2,13,06,408 2,63,67,352 18.58
2002-03 53,73,06,469 2,13,06,408 4,67,34,175 3,40,20,292 15.79
2003-04 62,69,75,086 4,67,34,175 4,99,06,963 4,83,20,569 12.98
2004-05 57,65,55,039 4,99,06,963 3,34,64,972 4,16,85,968 13.83
20.00 18.58
18.00
16.00 15.79
13.83
14.00 12.98
12.00
10.00 9.71 Ratio
8.00
6.00
4.00
2.00
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
If the Turnover Ratio is high, it means that the Company can rotate its turnover for more number
of times. During the year 2000-01, the Stock Turnover Ratio stood at 9.71. Later during the year
2001-02, this ratio shot up to 18.58. The reason being that though the Company has installed
Power Plant on 26-3-2001, it has become fully operative during 2001-02 and the turnover of
Power Plant was included in cost of goods sold for which there was no closing stock. Further,
during last three years 2002-03, 2003-04 and 2004-05, the ratio has declined due to holding
higher inventory of finished goods.
Stock Conversion Period:
Stock Conversion Period shows the average time taken for clearing the stock through sales. The
formula is to divide the No. of Days in a year with the Stock Turnover Ratio.
365 Days
Stock Conversion Period =
Stock Turnover Stock Conversion
Year Days
Ratio Period (Days)
2000-01 365 9.71 38
2001-02 365 18.58 20
2002-03 365 15.79 23
2003-04 365 12.98 28
2004-05 365 13.83 26

Stock Conversion Period
40.00
38
35.00
30.00 28
26
25.00
23
20.00 20 Days
15.00
10.00
5.00
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
If the Stock Conversion Period is low, it means that the Company can rotate its stocks so fast and
more number of times in a year. During the year 2000-01, the Stock Conversion Period was at 38
days. Later during the year 2001-02, the Conversion Period has come down to 20 days. The
reason being that though the Company has installed Power Plant on 26-3-2001, it has become
fully operational during 2001-02 and the turnover of Power Plant was included in cost of goods
sold for which there will not be any closing stock of inventory. Further, during last three years
2002-03, 2003-04 and 2004-05, the Conversion Period has increased due to holding higher
inventory of finished goods.
Debtors Turnover Ratio
When the firm extends credit to its customers, debtors are created in the firm’s books. Debtors are
convertible into cash over a short period and therefore, are included in current assets. Financial
Analysts apply two ratios to judge the quality or liquidity of debtors:
(a) Debtors Turnover Ratio

(b) Collection Period
Gross Sales
Debtors Turnover Ratio =
Average Debtors
Opening Closing Average

Gross Sales
Year Debtors Debtors Debtors Ratio
(Rs.)
(Rs.) (Rs.) (Rs.)
2000-01 57,64,46,596 6,11,27,426 7,03,45,332 6,57,36,379 8.77
2001-02 80,27,11,417 7,03,45,332 8,54,41,343 7,78,93,338 10.31
2002-03 81,51,31,218 8,54,41,343 10,99,21,593 9,76,81,468 8.34
2003-04 91,95,39,122 10,99,21,593 11,37,30,833 11,18,26,213 8.22
2004-05 85,23,07,423 11,37,30,833 13,61,88,751 12,49,59,792 6.82

12.00
10.31
10.00
8.77 8.22
8.34
8.00
6.82
6.00 Ratio
4.00
2.00
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
Debtors represent the credit sales of the organization. If the Debtors Turnover Ratio is high, it is a
positive sign. The Debtors Turnover Ratio of Jocil was almost constant in the years 200-01, 2002-
03 and 2003-04. The ratio was high in the year 2001-02 due to maintenance of debtors at a lower
level compared to hike in turnover. However, the ratio has declined to 6.82 during the year 2004-
05 due to considerable increase in the volume of debtors without corresponding increase in
turnover.
Average Collection Period
Average Collection Period tells us how and in what time the debtors are collected. The
Debtors Turnover Ratio tells about how many times the debtors are to that of sales. These two
are reciprocative at each other.
365 Days
Average Collection Period =
Debtors Turnover Average Collection
Year Days
Ratio Period (Days)
2000-01 365 8.77 42
2001-02 365 10.31 35
2002-03 365 8.34 44
2003-04 365 8.22 44
2004-05 365 6.82 54

Average Collection Period
60.00
54
50.00
44
42 44
40.00
35
30.00 Days
20.00
10.00
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
Generally, the higher the value of debtors turnover, the more efficient is the management of credit.
From the above table, it is evident that the Average Collection Period of debtors was constant
during the years 2000-01, 2002-03 and 2003-04. The Average Collection Period was low in the
year 2001-02 due to maintenance of debtors at a lower level compared to hike in turnover.
However, the period has increased to 54 days during the year 2004-05 due to considerable
increase in the volume of debtors without corresponding increase in turnover.
Working Capital Turnover Ratio
A firm may also like to relate net current assets to sales. Net current assets are nothing but
the difference between current assets and current liabilities. The result of this ratio indicates
how many times the working capital has rotated for generating the sales.
Sales
Working Capital Turnover Ratio =
Net Current Assets
Current Net Current
Sales Current Assets
Year Liabilities Assets Ratio
(Rs.) (Rs.)
(Rs.) (Rs.)
2000-01 52,46,93,181 42,32,65,781 14,41,59,558 27,91,06,223 1.88
2001-02 72,74,39,608 47,47,46,095 12,31,96,925 35,15,49,170 2.07
2002-03 73,78,88,994 59,20,81,591 21,10,24,075 38,10,57,516 1.94
2003-04 83,19,84,907 63,50,60,000 23,68,82,162 39,81,77,838 2.09
2004-05 77,22,61,376 62,44,61,285 17,65,68,731 44,78,92,554 1.72
Working Capital Turnover Ratio
2.50
2.09
2.07
2.00 1.88 1.94
1.72
1.50
Ratio
1.00
0.50
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
If Working Capital Turnover Ratio is high, it is better to the organization. In the year 2000-01,
1.88 times working capital has rotated to that of sales. It has an improvement in the next three
years. Later, in the year 2004-05, the level of current assets have gone up substantially due to
which the ratio has fallen down to 1.72 times.
Debt Equity Ratio

This ratio establishes a relationship between the lenders contribution for each rupee of the owners
contribution. Any financial institution will look at this ratio before taking a decision for sanctioning any
term loans for ongoing concerns.
Total Debt
Debt Equity Ratio =
Net Worth
Total Debt Net Worth
Year Ratio
(Rs.) (Rs.)
2000-01 9,58,42,218 52,19,88,945 0.18
2001-02 8,32,70,716 56,36,46,733 0.15
2002-03 8,29,01,580 62,19,69,943 0.13
2003-04 6,80,76,571 68,16,49,615 0.10
2004-05 58,72,701 76,22,73,839 0.01
Debt Equity Ratio
0.20
0.18
0.18
0.16 0.15
0.14 0.13
0.12 0.10
0.10 Ratio
0.08
0.06
0.04
0.02 0.01
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
The total debt during the year 2000-01 includes Rs.880.00 lakhs of Term Loan taken from Andhra Bank for
st
its Power Project. The loan was being paid in equal quarterly installments till 31 March, 2004 and it is
evident from the above table that Debt Ratio has been coming down from 0.18 to 0.10 up to the year 2003-
04. The entire balance Term Loan has been repaid during the year 2004-05. Hence, the ratio has fallen to
0.01 in the year 2004-05.
Debt Ratio
Several Debt Ratios may be used to analyse the long-term solvency of a firm. The firm may be
interested in knowing the proportion of the interest-bearing debt in the capital structure. Total debt will
include short-term and long-term borrowings from financial institutions, debentures, deferred payment
arrangements, bank borrowings, public deposits and any other interest-bearing loan. Capital employed
will include total debt and net worth.
Total Debt
Debt Ratio =
Capital Employed
Total Debt Capital mployed
Year Ratio
(Rs.) (Rs.)
2000-01 9,58,42,218 62,10,05,565 0.15
2001-02 8,32,70,716 71,42,83,353 0.12
2002-03 8,29,01,580 75,10,47,563 0.11
2003-04 6,80,76,571 79,60,59,235 0.09
2004-05 58,72,701 82,74,61,401 0.01
Debt Ratio
0.16 0.15
0.14
0.12
0.12 0.11
0.10 0.09
0.08 Ratio
0.06
0.04
0.02 0.01
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
The total debt during the year 2000-01 includes Rs.880.00 lakhs of Term Loan taken from Andhra
st
Bank for its Power Project. The loan was being paid in equal quarterly installments till 31 March, 2004
and it is evident from the above table that Debt Ratio has been coming down from 0.15 to 0.09 up to the
year 2003-04. The entire balance Term Loan has been repaid during the year 2004-05. Hence, the ratio has
fallen to 0.01 in the year 2004-05.

Net Profit (PAT) Ratio
Net Profit is obtained when operating expenses, interest and taxes are subtracted from the Gross
Profit. It establishes a relationship between Net Profit and Sales and indicates management’s
efficiency in manufacturing, administering and selling the products. This ratio is the overall measure of
the firm’s ability to turn each rupee sales into Net Profit. This ratio also indicates the firm’s capacity to
withstand adverse economic conditions.
Profit After Tax (PAT)

Profit after Tax Ratio =
Sales
Sales PBT Income Tax Other
Year PAT Ratio
(Rs.) (Rs.) Prov. Adjust.
2000-01 52,46,93,181 13,47,90,634 1,85,00,000 1,10,285 11,61,80,349 0.22
2001-02 72,74,39,608 16,97,08,437 3,65,00,000 23,92,774 10,92,85,663 0.15
2002-03 73,78,88,994 12,92,36,213 5,13,40,000 -54,74,615 8,33,70,828 0.11
2003-04 83,19,84,907 13,26,49,179 4,00,00,000 -46,01,921 9,72,51,100 0.12
2004-05 77,22,61,376 14,70,66,853 4,30,00,000 -69,37,565 11,10,04,418 0.14
Profit After Tax Ratio
0.25
0.22
0.20
0.15
0.14
0.15
0.12
0.11 Ratio
0.10
0.05
0.00
2000-01 2001-02 2002-03 2003-04 2004-05
Interpretation:
In the above table, Jocil is having Profit After Tax Ratio of 0.22 in the year 2000-01 and it has
fallen to 0.15 in the year 2001-02. The reason for the drop of the profit is due to increase of higher
provision for income tax and providing for deferred tax liability of Rs.208.75 lakhs which was not
there in the year 2000-01. The ratio has further declined to 0.11 in the year 2002-03 due to fall
in profits altogether. However, the ratio has increased to 0.12 and 0.14 in the years 2003-04 and
2004-05 respectively due to increase in profits and corresponding withdrawal of provision for
deferred tax made in earlier years.
Chapter VI
FINDINGS
SUGGETIONS
REFERENCES
FINDINGS:
1. Schedule of changes in working capital showed increase in working capital from 2000 to
2005
2. Quick ratio is also increasing from 2.37 on 31-3-01 to 3.04 on 2002 and decreased to
1.88 as on 31-3-04 again it is increasing to 2.79 on 2005
3. Raw material conversion period has been decreased from 38 days to 20 days during the
period 2001-02
4. Current ratio of the company is increased from 2.94 to 3.54during the period 2001 to
2005.
5. The Debt Ratio and Debt Equity Ratio are less than 0.18 as against normally
permitted level of up to 2 in the manufacturing companies. It indicates that the
Company has repaid the term loans and is almost debt free.
6. company always maintaining high liquidity to meet daily operations. And also
maintaining good cash management. The excess in banks always converted in to
fixed deposits
7. In 2001 net profit ratio 0.22 it is decreased to 0.11 in 2003 again it is increased to 0.14
in 2005
8. Cash ratio showed decreasing balance between the period 2001-04 after it is showed
increasing balance.
9. During the period 2001to 2005 working capital of the company showed an increasing
balance.
10. Finally company showed higher working capital.

CONCLUSIONS:
Quick ratio of the company is more than standard 1:1 this shows high liquidity position of the
company. It is keeping more idle cash.
Inventory turnover ratio indicates the efficiency of the firm in producing and selling its products.
Here the company is maintaining low inventory turnover ratio in last 2 years. This is because
they are holding high inventory.
The debt equity ratio is very less.In 2001 i.e., 0.18 it is decreasing to 0.01 in 2005
The net profit margin is increasing from 2003 (i.e., from 0.11 to 0.14)
SUGGESTIONS:
1. Working capital turnover ratio should be high. To increase this ratio JOCIL has to reduce
its net working capital. Net working capital can be reduced when inventory level is
minimum. At present the raw material holding period is 15 days. This can be reduced to a
maximum of 7 days, as the raw materials are available at nearby places. When an order
is placed they can have the required material within 2 to 3 days.
2. Inventory turnover ratio indicates the efficiency of the firm in producing and selling its
products. At JOCIL this ratio is gradually decreasing. In 2003 it is 15.79 whereas in 2002
it was 18.58 In order to increase this ratio, sales should be increased. To increase the
sales company has to concentrate in capturing the foreign markets. This is easily
possible as they are linked with multi-nationals and reputed business houses. Through
them they can enter into the foreign market by sending some samples of their products.
Once they are able to attract foreign customers they can utilize their licensed capacity
which is 67500 TPA. At present it is utilizing only 35227 TPA.
3. Industrial oxygen is being produced in the company. It is 98% purified and mainly utilized
in industries. The company can make it 100% pure by utilized the idle cash and
purchasing the machinery for purification. This can be useful for human consumption, as
it has high demand. Through small investment it can get huge profits.
References:
Books & other Supplementary Material
Financial Management Theory and practice by Prasanna Chandra,Tata McGraw Hill,2001.Referred page no:61-84.
Financial Management by Khan and Jain,Tata McGraw Hill,

2001 edition.Referred page no:55-102
Financial Management by I.M.Pandey,Vikas Publishers,1999

Edition.Referred page no:38-73.
Financial Decision Making by John J Hampton,Practice Hall India,1992.Referred page no:82-105.
Annual Reports of Jocil Limited.
www.onlinewbc.gov
www.creditman.biz
Journals
The Economic Times

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A REPORT

NAVA BHARATHI COLLEGE OF P.G STUDIES

WORKING CAPITAL MANAGEMENT IN

Copies marked list :

LIMITED” submitted in Partial fulfillment for

by. M.SHILPA bearing.rollno 020-05-110

FACULTY GUIDE COMPANY GUIDE

MD NASEERUDDIN AHMED G.RAMA THEERTHA

The project entitled “Working Capital management” at Jocil

1.How to analyse cash management policies and practices?

2.To examine operating cycle of the company.

3.Coordinate with production department,quality control and despath system for

planning of production,supply of the

right product at right time to customer.

4.To view the limited growth of growth of industry,

maintaining the market share.

functioning of normal business

operating of the company.

6.To analyse working capital management which is needed to balance the

liquidity and profitability criteria while taking attitude of management towards

7.How to analyse the working capital needs of manufacturing

in form of cash credit/bank overdraft.

The methology adopted from the following reports:

I thank my Head of department MD NASEERUDDIN AHMED for coordinating the

Chapter II Industry Profile

Stearic Acid Industry

Chapter II Company Profile

Chapter III Working Capital

Elements of Working Capital

Importance of Working Capital

Financial Statements of Jocil

statement of changes in working capital

Computation of Financial Ratios of Jocil

Observations and Recommendations

• Working Capital Management

OBJECTIVES OT THE STUDY:

To analyze and examine the following:

 Utilization of current assets and management of inventory receivables

 Liquidity position of the Company

 To examine the working capital policies and its management.

 To analyze and evaluate working capital requirements of jocil limited.

 To examine the operating cycle of the company.

LIMITATIONS TO THE STUDY

METHODOLOGY OF THE STUDY

Fatty Acid Industry

Stearic Acid Industry

User Industry of Oleo chemicals

A BRIEF NOTE ON FATTY ACIDS INDUSTRY IN AP

Types of Fatty Acids:

The above classification is done on the basis of molecular composition.

Stearic Acid Industry

Segmentation of the Toilet Soap Market:

PROCESS FLOW CHARTS

Dr. Mullapudi Harischandra Prasad Chairman

J. Murali Mohan Managing director

P. Narendranath Chowdary Director

Mullapudi Thimmaraja Director

Y. Narayanarao Chowdary Director

K. Srinivasa Rao Director

Subba Rao V. Tipirneni Director

VICE PRESIDENT & SECRETARY

M.Com, LL.B., F.I.C.W.A., A.C.S.