By REVATHY.R Register N! "#$%##"&#'&( A PRO)ECT REPORT Submitted to the *ACULTY O* MANAGEMENT STUDIES In partial fulfilment of the requirements for the award of the degree Of MASTER O* BUSINESS ADMINISTRATION ANNA UNIVERSITY CHENNAI 600 025 )UNE +$'#& BONA*IDE CERTI*ICATE Certified that this project report titled ,A STUDY ON WORKING CAPITAL MANAGEMENT IN OIL PALM INDIA LTD, KOTTYAM- is the bonafide or! of "s# REVATHY.R .Reg.N!"#$%##"&#'&(/ ho carried out the research under m$ super%ision# Certified further& that to the best of m$ !noled'e the or! reported here is does not form part of an$ other project report or dissertation on the basis of hich a de'ree or aard as conferred on an earlier occasion on this or an$ other candidate# (((((((((((((((((((((((((((((((( (((((((((((((((((((((((((((((( )roject *uide Head of the +epartment Submitted for the project ,i%a(,oice e-amination held on .......................... (((((((((((((((((((((((((((((((((((( (((((((((((((((((((((((((((((((( Internal E-aminer E-ternal E-aminer DECLARATION I REVATHY.R .Reg.N!"#$%##"&#'&(/& hereb$ declare that this project report& entitled ,A St01y 2 3r4i2g 567it68 9626ge9e2t i2 i8 7689 I21i6 8t1,4tty69- submitted to the Anna /ni%ersit$& Chennai in )artial fulfillment of the re0uirements for the aard of the +e'ree of MASTER O* BUSINESS ADMINISTRATION is a record of ori'inal project or! done b$ me durin' 1une(2023 under the super%ision and 'uidance of Mr.P.K696r6:, M.B.A,MP;i88,P;D Pr<essr, ,i%e!ananda Colle'e of En'ineerin' for 4omen and it has not formed the basis for the aard of an$ +e'ree 5 +iploma 5 Associate ship 5 6elloship or other similar title to an$ candidate of an$ /ni%ersit$# +ate 7 Si'nature of the Student )lace 7 89E,A:H;#9<
I certif$ that the declaration made abo%e b$ the candidate is true# Si'nature of the *uide "r#)#=amaraj& "#>#A&")hill&)h+ )rofessor ACKNOWLEDGEMENT I e-press m$ sincere than!s and 'ratitude to ,idh$a 9athna 9ashitra 9athna C;6ir962 = Se5ret6ry, Dr. M. K6r0262i1;i, B.P;6r9., M.S., P;.D., D.Lit., ,i%e!ananda Educational Institutions& for his support in all our endea%ors# I render m$ heartiest than!s to the +irector& Dr.A.P.K6>i862, M.E., P;.D., for 'i%in' me a onderful opportunit$ to carr$ out this project successfull$# I e-tent m$ heartfelt than!s to the principal& Dr.P.M0rt;i, M.E., P;.D., for the constant support 'i%en in all our acti%ities# I ish to e-press m$ sincere than!s to Dr. M.L6t;6 N6t6r6:62, MBA., P;.D., and Head of the +epartment of "ana'ement studies for the help and !ind support rendered b$ her# I e-press m$ profound than!s to Mr.P.K696r6:, M.B.A,MP;i88,P;D Pr<essr +epartment of "ana'ement studies& 6acult$ 'uide& for her encoura'ement& super%ision and 'uidance throu'hout the project# I ould li!e to e-press m$ sincere than!s for m$ parents and friends for their unbounded support to ma!e this project a realit$# I also e-press m$ heartfelt than!s to all the respondents ho ha%e pro%ided information re0uired for the stud$#
CONTENT CHAPTER NO TITLE PAGE NO ABSTRACT LIST O* TABLES LIST O* CHART # INTRODUCTION 2#2 Introduction to the stud$ 2#2 Industr$ profile 2#3 Compan$ profile 2#? )roduct profile
2
@ 2? 22
$ MAIN THEME O* THE PRO)ECT 2#2 Abjecti%es 2#2 Bimitations 2#3 9esearch methodolo'$ 2#? Biterature re%ie 2#5 +ata anal$sis and interpretation 23 2? 25 2C 32 & *INDINGS, SUGGESTIONS, CONCLUSION 3#2 6indin's 3#2 Su''estion 3#3 Conclusion 5@ 5D 60 ? SCOPE RESEARCH *OR THE *UTURE ?#2 Scope or! for the future ?#2 >iblio'raph$ 62
62 LIST O* TABLES
LIST O* CHART :able No :itle )a'e No 02 Schedule of chan'es in or!in' capital 33 02 Current ratio of the compan$ 36 03 Bi0uidit$ ratio 3@ 0? Absolute li0uid ratio ?0 05 )roprietar$ ratio ?2 06 :rend anal$sis of current liabilities and pro%ision ?? 0C :rend anal$sis of assets ?C 0@ :rend anal$sis of net profit 50 0D Comparati%e balance sheet 53 ABSTRACT :he main objecti%e of the stud$ is to anal$Ee the %arious 4or!in' capital mana'ement in%ol%ed in the compan$ for the period 200@ to 2022# :able No :itle )a'e No 02 Current ratio of the compan$ 3C 02 Bi0uidit$ ratio 3D 03 Absolute li0uid ratio ?2 0? )roprietar$ ratio ?3 05 :rend anal$sis of current liabilities and pro%ision ?6 06 :rend anal$sis of assets ?D 0C :rend anal$sis of net profit 52 :he stud$ is based on the secondar$ data# :he data hich are collected from the compan$Fs annual report and balance sheet# :he first chapter deals ith the introduction about stud$& introduction about stud$ industr$& introduction about the compan$ :he second chapter deals ith the research methodolo'$ hich includes statement of the problem& objecti%es& limitation& data collection and anal$sis and interpretation process methods& table& and chart& statement chan'es in or!in' capital and ratio anal$sis& :rend Anal$sis tools for used# :he third chapter deals ith findin's& recommendations and conclusion of the stud$# :he last chapter is Appendices and biblio'raph$# :he o%erall performance is 'ood# It is hope that the compan$ ill ta!e ade0uate steps for stated in su''estions to earn ma-imum profits& and ill become one of the best compan$# CHAPTER -I CHAPTER +# #.# INTRODUCTION ABOUT THE STUDY INTRODUCTION :he stud$ of or!in' capital mana'ement occupies an important place in financial mana'ement# :he earlier emphasis of financial mana'ement as more on a lon'(term financial decision# 4or!in' capital mana'ement& hich is concerned ith short term financial decision& appears to ha%e been relati%el$ ne'lected in the literature of finance# "ana'ers& :a- Authorities and other interested 'roups see! ansers to the folloin' important 0uestions about a firm7 hat is the financial position of the firm at a 'i%en point of timeG Ho did the firm perform financiall$ o%er a 'i%en period of timeG :o anser the abo%e 0uestions& one has to prepare to major financial statements ( the balance sheet and the income statement# :he balance sheet shos the financial position or condition of the firm at a 'i%en point of time# In income statement or profit and loss account reflects the performance of the firm o%er a period of time# A firm communicates financial information to the users throu'h financial statements and reports# >alance sheet and profit and loss accounts& as these statements are used b$ in%estors and financial anal$sis to e-amine the firms performance in order to ma!e in%estment decisions# MANAGEMENT O* WORKING CAPITAL "ana'ement of or!in' capital is concerned ith the problem that arises in attemptin' to mana'e the current assets& current liabilities# :he basic 'oal of or!in' capital mana'ement is to mana'e the current assets and current liabilities of a firm in such a a$ that a satisfactor$ le%el of or!in' capital is maintained& i#e# it is neither ade0uate nor e-cessi%e as both the situations are bad for an$ firm# :here should be no shorta'e of funds and also no or!in' capital should be ideal# 4or!in' capital mana'ement polic$ of a firm has a 'reat on its probabilit$& li0uidit$ and structural health of the or'aniEation# So or!in' capital mana'ement is three dimensional in nature as 2# It concerned ith the formulation of policies ith re'ard to profitabilit$& li0uidit$ and ris!# 2# It is concerned ith the decision about the composition and le%el of current Asset 3# It is concerned ith the decision about the composition and le%el of current Biabilities# *INANCIAL MANAGEMENT 6inancial mana'ement is %er$ important to e%er$ t$pe of or'aniEation# It refers to that part of mana'erial acti%it$ concerned ith the procurement and utiliEation of funds the for business purposes# In the ords of Hoard and /pton7 6inancial mana'ement in%ol%es the application of 'eneral mana'ement principles to financial operations# :hus financial mana'ement is concerned ith7 Estimation of the fi-ed and or!in' capital re0uirements& 6ormulation of capital structure& )rocurement of fi-ed and or!in' capital& and "ana'ement of earnin's OB)ECTIVES O* *INANCIAL MANAGEMENT! 6inancial mana'ement is concerned ith the efficient use of capital funds# It e%aluates ho funds are used and procured# In all cases& financial mana'ement in%ol%es sound jud'ments& combined ith a lo'ical approach to decision( ma!in'# +ifferent implication ha%es to are a%ailable to a business enterprise in the process of decision ma!in'# :hese alternati%es ha%e to be e%aluated on the basis of some anal$tical frameor! and commercial strate'ies of an enterprise# IMPORTANCE O* *INANCIAL MANAGEMENT 6inancial mana'ement is application to e%er$ t$pe of or'anisation irrespecti%e of its siEe& !ind or nature# :hus its is important and useful for all t$pe of onership or'aniEation here there is a use of financials financial mana'ement is helpful e%er$ mana'ement aims to utiliEe lit fund in a best possible and profitable a$# It is indispensable in an$ or'aniEation as it help in7 6inancial plannin' and successful promotion of an enterprise# )roper use and allocation of fund# :a!in' sound financial decision# Impro%in' the profitabilit$ throu'h financial controls# *INANCIAL STATEMENT 6inancial statements 'enerall$ refer to four basic statements(the income statements& the balance sheet& the statement of retained earnin's and the sources and uses of funds statements# :he financial statements& ta!en to'ether& 'i%e the accountin' picture of the firms operation and financial position# :he pac!a'e of financial statements include such schedules as those relatin' to fi-ed assets& lon' term in%estments lon' term debts& accrued liabilities& cost of 'oods manufactured& sellin' e-pensed and administrati%e and 'eneral e-penses# :hese schedule mainl$ supplements the information contained in the financial statements and considered essential for the purpose of anal$sis# MA)OR TOOLS O* *INANCIAL ANALYSIS! ,arious tools or techni0ues are used in the financial anal$sis# :he main objecti%e of an$ anal$tical method is simplification and presentation of data in a more comprehensi%e manner# Hoe%er& no one t$pe of anal$sis is sufficient to support o%erall findin's& or to ser%e all t$pe of users# :he most important tools of financial anal$sis are as follos7 2# Comparati%e financial statements 2# :rend ratios or percenta'es# 3# 9atio anal$sis# ?# 6unds flo anal$sis# 5# cash flo anal$sis# COMPARATIVE *INANCIAL STATEMENT!+ Comparati%e statement mainl$ shos the folloin' information for anal$tical pure poses# 2# Actual data in absolute mone$ %alues& as 'i%en in the financial statement for the period under consideration# 2# Increases or decreases in %arious items in mone$ %alues& and 3# Increases or decreases in %arious items in terms of percenta'es# *UND *LOW STATEMENT!+ HA statement of source and application of fund is a technical de%ice is desi'ned to anal$sis the chan'es in the financial condition of a business enterprises beteen to dateI# In the ords of Anthon$I the fund flo statement describes the sources from hich additional funds flo statements describe the source from hich additional funds ere deri%ed and the use hich these chan'es of sources ere putI# CASH *LOW ANALYSIS!+ Cash deposit cash on hand and demand deposits ith ban!s# Cash e0ui%alents are short term& hi'hl$ li0uid in%estment that are readil$ con%ertible into !no amount of cash and hich are subjecti%e to an insi'nificant ris! of %alues# Cash flo are inflos and out flos of cash and cash e0ui%alents#
:he cash floin' are the e-amples of cash flo arisin' from in%estin' acti%ities# Cash pa$ment to ac0uire fi-ed assets# 9eceipt from disposal of fi-ed assets# Cash ad%ances and loan made to third parties# Cash receipt on account of interest and di%ided on in%estments# Cash receipt from future contracts forard contracts etc#& Cash flo from financin' acti%ities: Cash receipt from the issue of shares# Cash repa$ment of amounts borroed Cash pa$ment to redeem preference shares Cash pa$ment of di%idend Cash pa$ment of interest on debentures and loans# TREND ANALYSIS :rend anal$sis calculates the percenta'e chan'e for one account o%er a period of time of to $ears or more# Per5e2t6ge 5;62ge :o calculate the percenta'e chan'e beteen to periods7 2# Calculate the amount of the increase58decrease< for the period b$ subtractin' the earlier $ear from the later $ear# If the difference is ne'ati%e& the chan'e is a decrease and if the difference is positi%e& it is an increase# 2# +i%ide the chan'e b$ the earlier $earJs balance# :he result is the percenta'e chan'e# INDUSRTY PRO*ILE #.# COMPANY PRO*ILE
CHAPTER -II CHAPTER +$ $.#OB)ECTIVES O* THE STUDY :o stud$ the or!in' capital mana'ement practices in Ail palm India Btd# :o carr$out ratio anal$sis to stud$ the effecti%eness of or!in' capital mana'ement practices :o e-amine the impact of cash flos on the or!in' capital of Ail palm India Btd# :o forecast the or!in' capital re0uirements of the compan$ for the ne-t fi%e $ears# :o su''est suitable measures to brin' impro%ement in the or!in' capital mana'ement practices of Ail palm India Btd $.$ LIMITATIONS O* THE STUDY :he project or! has been completed successfull$ a fe limitations has obser%ed# Hoe%er ade0uate measures ha%e been ta!en to o%ercome the impact of limitations on the stud$# :he stud$ is conducted ith a%ailable data 'athered from the annual report and the anal$sis as made accordin'l$# :he )redictions ere made b$ a%ailable data of fi%e $ears 8200@ (2022< :his research is mainl$ based on ratio anal$sis and or!in' capital other tools to certain e-tent# It deals ith 4or!in' Capital "ana'ement and findin' and 'eneraliEation are confined to Ail palm India Btd# $.& RESEARCH METHODOLOGY MEANING O* RESEARCH 9esearch is a s$stematic critical careful search for all anser to a 0uestion or solution to a problem is called search# 9E search SEA9CH for the !noled'e or fact# DE*INITION O* RESEARCH 9esearch is the process of s$stematic plannin' anal$sis of an$ particular topic or subject of area of in%esti'ation in%ol%in' colletin' comparison presentation interpretation of element detail or data hich should be useful for sol%in' problem of impro%in' e-istin' sol%in' to problem# RESEARCH METHODOLOGY Research methodology is a way to systematically solve the research problem it may be understood as a science of stud$in' ho research is done scientificall$ it include o%erall desi'n the samplin' procedure& data collection& methods and anal$sis# RESEARCH DESIGN!+ 9esearch desi'n used in the stud$ is anal$tical research# :he research as carried out b$ to anal$sis the balance sheet& hich is a historical data and deri%e conclusion from it# NATURE O* DATA7( :he nature of data used for the stud$ is secondar$ data# PERIOD O* THE STUDY!+ :he stud$ as made beteen 1anuar$ 2023 and "a$ 2023 #:he financial performance of Ail palm India Btd beteen 200@ and 2022 as anal$ses durin' this period SECONDARY DATA!+ Secondar$ data that are alread$ a%ailable i#e#& the$ refers to the data hich ha%e alread$ been collected b$ someone else# Here& secondar$ data ere collected from the compan$ brochures& manuals and other records# TOOLS USED *OR THE ANALYSIS 4or!in' capital anal$sis 9atio anal$sis :rend anal$sis Comparati%e balance sheet Assessment
$.? LITERATURE REVIEW 4or!in' capital mana'ement can be considered as an important source of profitabilit$ of a firm# "an$ researchers in%esti'ated the impact of or!in' capital mana'ement on profitabilit$# :his past research demonstrated that efficient or!in' capital mana'ement leads to 'reater profitabilit$# S9it; 82D@0< conducted a stud$ on )rofitabilit$ and Bi0uidit$ and su''ested that or!in' capital mana'ement directl$ influence ris! and profitabilit$ of a firm# Hence it can be inferred that effecti%e or!in' capital mana'ement can increase the financial stren'th of a business. Se2e2 82DD3< also performed an anal$sis of or!in' capital mana'ement and its relationship ith financial performance# His stud$ as based on /S firms and after the stud$ he su''ested that if the len'th of net trade c$cle increases then it affects the return on in%estment ne'ati%el$# :he 4or!in' Capital mana'ement is re'arded as an essential part of financial mana'ement of a firm 8)s;i, #%%(/. L69>ers2 82DD5< obser%ed the impact of economic acti%it$ on the 4or!in' Capital "ana'ement )olic$# 6or this he too! a sample of 50 small firms of /S for a time period of 22 $ears i#e# 2D@0(2DD2# He found that economic e-pansion do not cause an increase in the in%estment of or!in' capital durin' a specific period# 6inall$ he su''ested that there e-ists a sli'ht impact of an$ chan'e in economic acti%it$ on or!in' capital mana'ement of these firms#Some other researchers namel$& )se, L6256ster, 621 Ste@e2s 82DD6< carried out a detailed anal$sis on the association of cash con%ersion c$cle and financial returns# :he$ located an in%erse association of profitabilit$ ith cash con%ersion c$cle#
S;i2 621 Se2e2 82DD@< conducted an e-panded stud$ b$ ta!in' a lar'e sample of 5@D@5 firms of /S# :heir stud$ as based on a lon'er time phase of 2DC5(2DD?# :he$ su''ested that for 'eneratin' 'reater %olume of ealth for the shareholders of a firm& it is %er$ crucial to mana'e the or!in' capital of that firm effecti%el$ and in an efficient manner# :he$ also recommended that profitabilit$ and net trade c$cle both are in%ersel$ related to each other# Lyr01i 621 L6A6ri1is 82000< in%esti'ated the relationship of li0uidit$ and cash con%ersion c$cle for the food industr$ of *reece# :he$ concluded that a considerable positi%e relationship e-ists amon' Cash Con%ersion C$cle and current ratio& a%era'e a'e of in%entor$ and a%era'e collection period# Also the$ located an in%erse relationship beteen CCC and a%era'e pa$ment period# :he$ concluded that there as no statisticall$ si'nificant relationship beteen %ariables used for li0uidit$ measurement and that used for profitabilit$ measurement# Also the$ su''ested that cash con%ersion c$cle had no si'nificant relationship ith debt ratio# 4or!in' capital mana'ement and profitabilit$ relationship has been e-plored b$ man$ other researchers as ell# De8< 82003< anal$Eed 200D non(financial firms of >el'ium# He found that 'ross operatin' profit of a firm is ne'ati%el$ related to in%entor$ turno%er and a%era'e collection period# Hence& he recommended that financial mana'ers can tr$ to impro%e profitabilit$ b$ enhancin' a%era'e pa$ment period and b$ curbin' in%entor$ turno%er and a%era'e collection period# He also recommended that profitabilit$ is stron'l$ related to or!in' capital mana'ement of a business#:hrou'h a stud$ on Saudi Arabian companies& E8:e88y 8200? disco%ered that the profitabilit$ and cash 'ap ha%e a si'nificant ne'ati%e relationship ith each other# M688i4, S0r, 621 R64s;it 82005< e%aluated Indian pharmaceutical industr$# :he$ disco%ered that profitabilit$ and li0uidit$ do not ha%e an$ si'nificant relationship for these firms#:o researchers namel$ MesAe4 621 P8e3s4i 82006<anal$Eed the construction sector# :heir or! tar'eted mainl$ the strate'ies hich should be used for the or!in' capital mana'ement in construction sector# :he$ ha%e not or!ed to e%aluate the o%erall or!in' capital mana'ement effecti%eness and financial performance of construction sector#
:he stud$ of S.M.A9ir S;6; 621 S626 82006< as based on a period of fi%e $ears i#e# 2002(2005# :he$ used or!in' capital ratios to determine the effect of or!in' capital mana'ement on financial performance# :hese or!in' capital ratios include in%entor$ turno%er& current ratio& 0uic! ratio& a%era'e collection period and a%era'e pa$ment period# :he$ used correlation anal$sis and ABS method to reach the results# 6inall$ the$ re%ealed that *ross profit is ne'ati%el$ associated ith all or!in' capital ratios e-cept number of da$s pa$able# In a stud$ on H+6C S:AN+A9+ BI6E INS/9ANCE 8200@< anal$Eed or!in' capital mana'ement and its relation ith profitabilit$ b$ e-aminin' a sample of manufacturin' firm of "auritius# )eriod of the stud$ as si- $ears i#e# 2000(2005# He used da$s of recei%ables& in%entor$ turno%er& cash con%ersion c$cle and da$s of pa$ables as e-planator$ %ariables& and return on total assets 89AA< as dependent %ariable# :he$ used re'ression anal$sis to find out the results# :he$ found that paper and printin' industr$ shoed 'reater scores for different or!in' capital components amon'st the o%erall manufacturin' industr$# :hese 'reater scores affect the profitabilit$ of this industr$ positi%el$# 6inall$ the$ concluded that if a firm ill in%est hea%il$ in its in%entor$ and accounts recei%ables then the profitabilit$ of that firm ould be loer#Vis;262i 621 S;6; 8200D< from their stud$ on Indian consumer electronic industr$ disco%ered that profitabilit$ for the o%erall industr$ had no reco'niEed relationship ith li0uidit$& but majorit$ of the companies belon'in' to this industr$ shoed a positi%e association for profitabilit$ and li0uidit$# G62es62 8200D< conducted a stud$ on :elecommunication K e0uipment industr$ b$ ta!in' 3?D firms of this sector# :he time period of this stud$ as C $ears i#e# 2003(200D# He declared that in this industr$ effecti%e or!in' capital mana'ement and financial performance do not ha%e an$ si'nificant in%erse relationship ith each other# He also indicated that there e-ists a stron' and in%erse association beteen financial performance and li0uidit$# R6;e962 621 N6sr 8200D< performed an anal$sis on D? firms listed at =SE& based on a time span of 6 $ears from 2002 to 2006# :he$ ha%e ta!en different or!in' capital ratios such as Net Aperatin' )rofitabilit$& +ebt ratio& current assets to total assets ratio& cash con%ersion c$cle& a%era'e collection period& in%entor$ turno%er& a%era'e pa$ment period& current ratio# A<A6 621 N6Air 8200D<studied 263 firms of )a!istan for a time phase of si- $ears i#e# 2000( 2005# :he$ stated that adoptin' inefficient or!in' capital mana'ement policies affects the profitabilit$ ne'ati%el$#A<A6 621 N6Air 82020<re%ieed their per%ious stud$ to estimate the impact of different t$pes of or!in' capital mana'ement policies on financial performance of firms in different sectors# 6or this the$ used a sample of 263 non(financial firms belon'in' to 2C different sectors listed at =SE from2000 to 2005# :he secondar$ data as collected from the financial reports of selected companies and also from the publications of State >an! of )a!istan# :here are to t$pes of or!in' capital mana'ement policies namel$ a''ressi%e or!in' capital mana'ement polic$ and conser%ati%e or!in' capital mana'ement polic$# In a''ressi%e or!in' capital mana'ement polic$ a firm places less amount of capital in current assets to earn more profit from fi-ed assets& hereas in conser%ati%e or!in' capital mana'ement polic$ firms use more capital as current assets# 6or the measurement of the de'ree of a''ressi%eness the$ used current liabilities to total assets ratio 8CB:A9< and current assets to total assets ratios 8CA:A9<# :o locate the impact of these policies on the performance of firms the$ used 9eturn on E0uit$ 89AE< and 9eturn on Assets 89AA<# 9esults ere found b$ usin' re'ression anal$sis# :he$ found an in%erse relationship beteen de'ree of a''ressi%eness of these policies and profitabilit$# Uy6r 82022< too! a sample of 266 :ur!ish companies to predict the nature of relationship of profitabilit$ and siEe of the firms ith Cash Con%ersion c$cle# :he result demonstrated that profitabilit$ and siEe of the firms both are ne'ati%el$ related ith Cash Con%ersion C$cle# :he stud$ of Bi2ti M;6961 621 M;1 S661 82022< as based on secondar$ data of 2C2 firms of "ala$sia# :he$ e%aluated the impact of %arious components of or!in' capital on profitabilit$ and mar!et %alue of the firms# :he stud$ co%ered a time span of fi%e $ears from 2005 to 200D# 6or this purpose the$ used different or!in' capital components namel$ cash con%ersion c$cles 8CCC<& debt ratio 8+9<& current assets to total assets ratio 8CA:A9<& current liabilities to total assets ratio 8CB:A9<and current ratio 8C9<&# :o see the effect of these or!in' capital components on financial performance the$ used :obinLs M 8:M<& return on in%ested capital 89AIC< and return on assets 89AA< as a measurement of financial performance of the selected firms# :o deduce the results the$ used correlations and multiple re'ression anal$sis#
ANALYSIS AND INTERPRETATION WORKING CAPITAL ANALYSIS
&.# SCHEDULE O* CHANGES IN WORKING CAPITAL
TABLE NO! # .A902t i2 5rre/
SOURCE! Annual 9eport of Ail palm India B:+ :he or!in' capital of Ail palm India ltd has increased to 9s# 3#3 crore in the $ear 200@(200D# :he current asset and current liabilities increased 9s#22#2 crore and 2@#D crore respecti%el$ in the $ear 200D(2020 YEAR CURRENT ASSET CURRNT LIABILITIES NET WORKING CAPITAL 200@(200D ?D#? 2?#2 35#3 200D(2020 C2#6 33#0 3@#6 CHAN*ES 22#2 2@#D 3#3
TABLE NO! $ .A902t i2 5rre/ YEAR CURRENT ASSET CURRNT LIABILITIES NET WORKING CAPITAL 2020(2022 65#0 26#@ 3@#2 2022(2022 C0#@ 3C#C 33#2 CHAN*ES 5#@ 20#D (5#C SOURCE! Annual 9eport of Ail palm India B:+ :he or!in' capital of Ail palm India ltd has decreased to 9s# 5#C crore in the $ear 2020(2022# :he current asset and current liabilities increased 9s#5#@ crore and 20#D crore respecti%el$ in the $ear 2022(2022 TABLE NO! & .A902t i2 5rre/ YEAR CURRENT ASSET CURRNT LIABILITIES NET WORKING CAPITAL 2022(2022 C0#@ 3C#C 3@#2 2023 C2#2 32#5 33#2 CHAN*ES 2#3 (5#2 (5#2 SOURCE! Annual 9eport of Ail palm India B:+ :he or!in' capital of Ail palm India ltd has dereased to 9s# 5#2 crore in the $ear 2022(2022# :he current asset as increased 9s#2#3 crore and current liabilities decreased 9s#5#2 crore in the $ear 2022(2023# &.$ RATIO ANALYSIS &.$.#CURRENT RATIO :hus the to basic components of current ratio are current asset and current liabilities# Current asset7 debtors& bills recei%able& in%entor$& cash in hand& cash at ban!& prepaid e-penses and short term in%estment& ra material or! in pro'ress finished 'oods and stores and spares# Current liabilities7 current liabilities include creditors& bill pa$able& ad%ance recei%ed& ban! o%er draft& outstandin' liabilities for e-penses and interest accrued but not due# Current asset Current ratio N (((((((((((((((((((((((((( - 200 Current liabilities TABLE NO! ? THE TABLE SHOWS CURRENT RATIO O* THE COMPANYB BETWEEN $''%+$'#& .A902t i2 5rres/ YEAR CURRENT ASSET CURRENT LIABILITIES CURRENT RATIO 200D ?D#? 2?#2 3#?D 2020 C2#6 33#0 2#2C 2022 65#0 26#@ 2#?2 2022 C0#@ 3C#C 2#@C 2023 C2#2 32#5 2#22 INTERPRETATION :he abo%e table shos that the current ratio of the firm beteen 200@ and 2022& and it is fluctuatin' considerabl$# :he ma-imum current ratio of 3#?D is obser%ed durin' 200@ and the least 2#@C is reported durin' 2022# It is concluded that there e-ist an abnormal %ariation in current asset and current liabilities beteen 200@ and 2022# CHART! # CURRENT RATIO &.$.$ LICUID RATIO Bi0uid ratio ma$ be defined as the ratio of li0uid assets to li0uid liabilities or current liabilities# It is concerned ith the relationship beteen li0uid assets and li0uid or current liabilities# :he other terms used for li0uid ratio are F0uic! ratioL and FAcid test ratioL for the purpose of computation& the current assets and current liabilities could be classified as follos7 Current assets7 8a< li0uid assets& and 8b< +eferred Assets Current liabilities7 8a< Bi0uid liabilities and 8b< +eferred liabilities *r9086! Bi0uid assets Bi0uid assets Bi0uid ratio N or Bi0uid liabilities Current liabilities TABLE NO! ( THE TABLE SHOWS LICUIDITY RATIO O* THE COMPANY BETWEEN $''D+$'#$ .A902t i2 5rre/ YEAR CUICK ASSET CURRENT LIABILITY CUICK RATIO 200@ ??#D 2?#2 3#26 200D 6D#2 33#0 2#0D 2020 62#C 26#@ 2#30 2022 6C#2 3C#C 2#C@ 2022 63#@ 2D#? 2#2C INTERPRETATION :he abo%e table shos the li0uidit$ ratio of the firm beteen 200@(2022# :he ma-imum li0uidit$ ratio of 3#26 is obser%ed durin' 200@ K the least 2#C@ is reported durin' 2022#It is obser%ed that there e-ist an abnormal %ariation in li0uidit$ asset and current liabilities beteen200@ to 2022 CHART! $ CUICK RATIO &.$.& ABSOLUTE LICUIDITY RATIO It is relationship beteen absolute li0uate asset and current liabilities #absolute li0uid assets consists of cash in hand and mar!etable securities or temporar$ in%entor$# Absolute li0uidit$ ratio Absolute li0uidit$ ratio N (((((((((((((((((((((((((((((((((( Current liabilities TABLE NO! " THE TABLE SHOWS ABSOLUTE LICUID RATIO O* THE COMPANY BETWEEN $''D+$'#$ .A902t i2 5rre/ YEAR ABSOLUTE LICUID ASSETS CURRENT LIABILITIES ABSOLUTE LICUID RATIO 200@ 3@#3 ?#? @#6@ 200D ?3#0 5#3 @#22 2020 ?2#6 ?#2 D#@5 2022 ?2#D D#5 ?#3C 2022 ?0#5 D#2 ?#?5 INTERPRETATION It is obser%ed from the abo%e table that the absolute li0uidit$ ratio of the firm beteen 200@(2022 is decreasin'# :he ma-imum absolute li0uidit$ ratio of D#@5 is obser%ed durin' 2020 and the least ?#3C is reported durin' 2022#An increase or decreases in the absolute li0uid ratio represent impro%ement in the li0uidit$ position# :his indicates that the short term sol%enc$ position of the compan$ is satisfactor$# CHART! & ABSOLUTE LICUID RATIO &.$.? PROPRIETORES *UND :he ratio of current asset to the proprietors fund establishes the relationship beteen the current asset and shareholders fund# Share holder fund )roprietorLs ratio N (((((((((((((((((((((((((((( -200 :otal assets TABLE NO! F THE TABLE SHOWS PROPRIETARY RATIO O* THE COMPANY BETWEEN $''D+$'#$ .A902t i2 5rres/ YEAR SHARE HOLDER *UND TOTAL ASSETS RATIO 200@ 55#2 ?D#? 2#22 200D 5@#C C2#6 0#@2 2020 60#? 65#0 0#D3 2022 63#C C0#@ 0#@D 2022 65#2 6@#6 0#D5 INTERPRETATION It could be obser%ed from the abo%e table that the proprietar$ ratio of the firm beteen 200@( 2022 is fluctuatin' considerabl$# :he ma-imum proprietar$ ratio of 2#22 is obser%ed durin' 200@ and the least 0#@2 is reported durin' 200D# It is concluded that there e-ist a major %ariation in total asset and share holders fund beteen200@ to 2022 CHART! ? PROPRIETARY RATIO &.&TREND ANALYSIS 4or!in' capital trend anal$sis in an important techni0ue of or!in' capital mana'ement# :rend percenta'e constitutes an important tool of interpretati%e anal$sis of financial position of a compan$# It indicates die chan'es& hich ha%e been ta!in'& place from time to time in indi%idual items of current assets& current liabilities and net or!in' based on some standard $ear and its effect on or!in' capital position# #. C0rre2t 8i6>i8ities = 7r@isi2 TABLE NO!D YEAR G GH$ Y Li6>i8ities I2 .5rre/ GY I2 .5rre/ 200@ (2 ? 2?#2 (2@#3 200D (2 2 33#0 (33#0 2020 0 0 26#@ 0 2022 2 2 3C#C 3C#C 2022 2 ? 32#5 220#0 TOTAL O GI' O GH$I#' OYI#??.# OGYI?#.? OPN0 O PQ2 N 20 a N O$5n b N O-$5O-Q2 $ N aRb- a N2@#@2 crores b N ?#2? crores $ N2@#@2R?#2?8-<8in crore< SL YEAR Tre21 @680e < 50rre2t 8i6>i8ities .I2 5rres/ 2 200@ 20#5? 2 200D 2?#6@ 3 2020 2@#@2 ? 2022 32#?2 5 2022 3C#0@ 6 2023 ?2#2? C 202? ?5#3@ @ 2025 ?D#52 D 2026 53#66 20 202C 5C#@0 INTERPRETATION It is obser%ed from the abo%e table that the current liabilities has been increasin' consistentl$ from 200@ to 202C #:he %alue of current liabilities durin' 200@ as 20#5? crores and it has 'ron to 3C#0@ crores at the end of the $ear 2022#In order to predict the current liabilit$ re0uirement for the financial $ear beteen 2023(202C a trend anal$sis as e-ecuted and it is projected that a sum of 9s#8 in crore< ?2#2?& ?5#3@&?D#52&53#66&5C#@ are re0uired durin' the respecti%e $ears#
CHART ! ( TREND RATIO O* CURRENT LIABILITY $. Tre21 6268ysis < C0rre2t 6ssets TABLE NO! % YEAR G GH$ Y C0rre2t 6ssets I2 .5rre/ GY I2 .5rre/ 200@ (2 ? ?D#? (D@#D 200D (2 2 C2#6 (C2#6 2020 0 0 65#0 0 2022 2 2 C0#@ C0#@ 2022 2 ? C2#2 2??#2 TOTAL O GI' OGH$I#' OYI&$D.% OGYI??.( OPN0 OPQ2 N 20 a N O$ 5 n b N O-$ 5 O-Q2 $ N a R b- a N 65#C5crores b N ?#?5crores 0 10 20 30 40 50 60 70 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Trend Ratio Year Trend ratio 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $ N 32@#DR?#?5 8-<8in crore<
SI.N. YEAR Tre21 @680e < 50rre2t 6sset .I2 5rres/ 2 200@ 320#00 2 200D 32?#?5 3 2020 32@#D0 ? 2022 333#35 5 2022 33C#@0 6 2023 3?2#25 C 202? 3?6#C @ 2025 352#25 D 2026 355#6 20 202C 360#05 INTERPRETATION It is obser%ed from the abo%e table that the current asset has been increasin' consistentl$ from 200@ to 2022 #:he %alue of current asset durin' 200@ as 320#00 crores and it has 'ron to 33C#@0 crores at the end of the $ear 2022#In order to predict the current asset re0uirements for the financial $ears from 2023 to 202C a trend anal$sis as e-ecuted and it is projected that a sum of 9s# 8in crore< 3?2#25& 3?6#C& 352#25& 355#6& 360#05 are re0uired for the respecti%e $ears CHART! " TREND RATIO O* CURRENT ASSET &. Tre21 6268ysis < Net 7r<it TABLE NO! #' YEAR G GH$ Y Net 7r<it I2 .864;s/ GY I2 .864;s/ $''D +$ ? $#'.D +?$#.D $''% +# # "F.F +"F.F $'#' ' ' ##F.# ' $'## # # #"?.# #"?.# $'#$ $ ? $'#.$ ?'$.? TOTAL O GI' O GH$I#' OYIF"'.% OGYIFF.'# OPN0 O PQ2 N 20 a N O$5n b N O-$5O-Q2 $ N aRb- a N 252#2@ la!hs b N C#C0 la!hs $ N252#2@RC#C08-<8in la!hs< SL YEAR Tre21 @680e < 7r<it I2 864;s 2 200@ 236#C@ 2 200D 2??#?@ 3 2020 252#2@ ? 2022 25D#@@ 5 2022 26C#5@ 6 2023 2C5#2@ C 202? 2@2#D@ @ 2025 2D0#6@ D 2026 2D@#3@ 20 202C 206#0@ INTERPRETATION It is e%ident from the abo%e table that the net profit has been increasin' hea%il$ from 200@ to 2022# :he %alue of profit durin' 200@ as 236#C@la!hs and it has 'ron to 26C#5@ at the end of the $ear 2022#In order to calculate the profit for the financial $ear 2023(202C a trend anal$sis e-ecuted and it is projected that a sum of 2C5#2@ &2@2#D@&2D0#6@&2D@#3@&206#0@ are re0uired for the respecti%e $ears CHART !F TREND RATIO O* PRO*IT 0 50 100 150 200 250 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Trend Value Year Trend value in lakhs 2008 2009 2010 2011 2012 2013 2014 2015 2016 ? . Tre21 6268ysis < S68es TABLE NO! ## YEAR G GH$ Y S68es I2 .5rre/ GY I2 .5rre/ $''D +$ ? $F.' +(?.' $''% +# # $?.' +$?.' $'#' ' ' &#.% ' $'## # # $$.$ $$.$ $'#$ $ ? &#.' "$.# TOTAL O GI' O GH$I#' OYI#&".& OGYI".$ OPN0 O PQ2 N 20 a N O$5n b N O-$5O-Q2 $ N aRb- a N 2C#2 crores b N 62 la!hs $ N 2C#2 crores R 62 la!hs8-< SL YEAR Tre21 @680e i2 s68es .I2 5rres/ 2 200@ 26#0 2 200D 26#6 3 2020 2C#2 ? 2022 2C#@ 5 2022 2@#5 6 2023 2D#2 C 202? 2D#C @ 2025 30#3 D 2026 30#D 20 202C 32#5 INTERPRETATION It is ob%ious from the abo%e table that the sales has been small %ariation from 200@ to 2022 #:he %alue of sales durin' 200@ as 26#0 crores and it has 'ron to 2@#5 crores at the end of the $ear 2022#In order to estimate the re0uirement for the financial $ear 2023(202C a trend anal$sis e-ecuted and it is projected that a sum of 2D#2& 2D#C&30#3&30#D&32#5 respecti%el$# CHART! D TREND RATIO O* SALES ?. COMPARITIVE BALANCESHEET O* OIL PALM INDIA LTD BETWEEN $''D+$'#$ TABLE NO !#$ P6rti5086rs C;62ges I2 $''F+'D .I2 864;s/ C;62ges I2 $''D+'% .I2 864;s/ C;62ges I2$''%+#' .I2 864;s/ C;62ges I2 $'#'+## .I2 864;s/ 6i-ed asset8A< (2?#3 (?C6#6 R2036#2 (6C#3 Wr4i2g 567it68 Current asset82< R?@6#C R222#2 (66@#@ R5@C#2 Current liabilit$82< (23#D R2@D#0 (623#2 R20@?#6 R?62#@ R332#D (22D2#0 R26C2#@ 4or!in' capital8><2(2 Capital emplo$ed8AR>< R??@#? (2??#2 RC??#2 R220?#5 Share holders fund Share capital 0 0 0 0 9eser%e and surplus R523#C R3?C#5 R2C3 R32? Share holders fund R523#C R3?C#5 R2C3 R32? INTERPRETATION 6rom the abo%e comparati%e balance sheet it is obser%ed that the fi-ed asset has been fluctuatin' consistentl$ from 200Cto 2022#Hea%$ chan'e in the fi-ed asset as obser%ed in the $ear 200D(20 and also the %alue of current asset decreased hea%il$ in the $ear 200D(208R2036#2<crore# It is also obser%ed that the chan'e in the %alue of current liabilit$ is fluctuatin' from 200C to 2022# :he minimum current liabilit$ as reported durin' 200C(0@# Increased %alue of chan'e in the or!in' capital as obser%ed durin' the $ear 2020(22 hich amounts R26C2#@ crore# 4hile stud$in' the chan'es in the capital emplo$ed it is ob%ious that a ma-imum of R220?#5 Crore as injected durin' 2020(22 #:he chan'es in the %alue of share holders fund is also fluctuatin' from 200C(22#
CHAPTER -III CHAPTER +? ?. *INDINGS, SUGGESTIONS AND CONCLUSION ?.# *INDINGS 4ith the help of trend anal$sis and financial performance measures the collected data ere anal$sed and the folloin' are the major findin's of the stud$ :he schedule of chan'es in the or!in' capital of Ail palm India Btd is increased 9s#5#5 crore in the $ear 200@ to 200D hen comparin' to 200@(200D# :he Current ratio for the $ear 200@ is 3#?D hich is hi'hest hile comparin' to rest of the $ears# :he Absolute Bi0uidit$ ratio for the $ear 2022 is ?#3C hich is loest than comparin' to rest of the $ears# :he li0uid ratio for the $ear 200@ is 3#26 hich is hi'hest than comparin' to rest of the $ears# :he proprietorLs ratio for the $ear 200D is 0#@2 hich is loest than comparin' to rest of the $ears# :he trend %alue of current liabilities increased in the $ear 2022 is 3C#0@ crore hich is hi'her than comparin' to other $ears# :he trend ratio of current asset increased in $ear 2022 the %alue is 33C#@0 hich is hi'her than comparin' to rest of the $ears# :he trend ratio of profit decreased for the $ear 200@ the %alue is 236#C@ hich is loer than comparin' to rest of the $ears :he trend %alue of sales increased in the $ear 2022 the %alue is 2@#5 hich is hi'her than comparin' to rest of the $ears :he comparati%e balance sheet shos the chan'es in the %alue of share holders fund is also fluctuatin' from 200C(22
?.$ SUGGESTIONS Bi0uidit$ position of the compan$ can be impro%ed b$ sound financial plannin'# :he current and 0uic! ratios are almost up to the standard re0uirement so the or!in' capital mana'ement of Ail palm India ltd is satisfactor$ and it has to be maintained # A%ailin' more credit from its suppliers ill help to ensure efficient of or!in' capital It is su''ested to impro%e the in%entor$ con%ersion period &mainl$ reduction in or!in' pro'ress
?.& CONCLUSION :his stud$ briefl$ conducted in Ail palm India Btd under the title of Ha stud$ on or!in' capital mana'ement in Ail palm India Btd& !otta$amI# :he profit le%el of the compan$ !non from its accountin' record is encoura'in' #:he mana'ement of or!in' capital is also maintain ell# :he o%erall position of the compan$ is in a 'ood positionS the compan$ needs to maintain the in%entor$ le%el# It is hoped that the compan$ ill ta!e ade0uate steps as stated in su''estion to earn ma-imum profit and ill become one of the best compan$# Annexure-i BALANCESHEET SCOPE *OR *UTURE WORKS
P6rti5086rs M6r 'D M6r '% M6r #' M6r ## M6r #$ Sources of funds :otal share capital 22#C@ 22#C@ 22#C@ 22#C@ 22#C@ 9eser%es ?3#?@ ?6#D5 ?@#6D 52#D3 5@#C5 :otal 55#2C 5@#C? 60#?@ 63#C2 C0#5? A778i56ti2 < <021s 6IPE+ ASSE: *ross bloc! 2D#62 30#2@ 33#?0 33#5? 33#5? Bess7 accum# +epreciation 2D#60 20#63 22#@2 22#63 22#3@ Net bloc! 20#02 D#5? 22#5@ 20#D0 20#D0 +e%elopment of propert$ 6#C0 6#D2 6#D2 C#5C 6#@C Capital or! in pro'ress C66C@ C2520@#06 2?CC?3D#03 C@#D2 20#26 In%estments 2#00 2#00 2#00 2#00 2#00 +eferred ta- asset8net< 2#25 2#62 2#5D 3#2C 3#CC CA&Boans K Ad%ances In%entories ?#56 2#?5 3#22 3#C0 3#@6 Sundr$ debtors 623@2? 62C30D#00 63?525#00 2?D@2C 22@005 Cash and ban! balance 3@#3D ?3#03 ?2#6C ?2#D5 ?2#02 Boans and ad%ances 6#?5 26#23 20#05 25#20 25#3? :A:AB ?D#?C C2#6D 65#00 C0#@C 220#2D Bess7Cl And )ro%isions Current liabilities ?#?2 5#30 ?#22 D#5D D#22 )ro%isions D#C6 2C#C@ 22#63 2@#20 20#3C :otal CB K pro%isions 2?#2@ 33#0D 26#@5 3C#C0 3C#C0 net current assets 35#2@ 3@#60 3@#2? 33#2C 33#2C TOTAL 55#2C 5@#C? 60#?@ 63#C2 63#C2 ANNEXURE-II Bibliography BIBILOGRPHY BOOKS Chandra >ose# +#& 6undamentals of 6inancial "ana'ement& Second Edition& )HI Bearnin' )ri%ate Bimited& Ne +elhi& 2020# Sharma#9#=#Shasi& *upta#=& "ana'ement accountin' =al$ani publishers& Ne +elhi# =othari C#9#9esearch "ethodolo'$ 4isha )ra!asam Ne +elhi# A#6# )eed& Corporate Cash "ana'ement As 9eproduced In 9#9#>ariLs >oo! Selected 9eadin' In Cash "ana'ement& :ri%eit )ublishin'& +elhi 2D@2& A'aral N#=#& "ana'ement of 4or!in' Capital& Sterlin' )ublishers )%t Btd# Ne +elhi 2D@3# American Institute Af Certified )ublic Accounts 7 Accordin' 9esearch and :erminolo'$ >ulled Ne ;or! 82D62< >#>#Hoard and "#/pton& Introduction to >usiness Enterprise# 8Ne ;or! "c'ra Hill& 2D53<# >lac! Champion /# "iller& Accountin' In >usiness +ecisions( :heor$ "ethod And /se& En'leood Cliffs Ne 1erse$& )rentice Hall& Inc#& 82D62< >ha$ani S#1# H)ractical 6inancial Statements Anal$sisI& 9aj >oo! Enterprise& 1aipur