Pelwatte milk food brand is a high quality, freshly produced dairy product in Sri Lanka. Pelwatte Diary Industries Pvt Ltd produces delicious and healthy.
Pride of Cows is a dairy brand owned by Parag Milk and is focused on quality and innovation. The document discusses research conducted on Pride of Cows' customer response and brand awareness in Pune. The research found low brand awareness but high customer satisfaction with quality and service. It suggests Pride of Cows increase promotions and offer more products and schemes to improve availability and grow their customer base.
This document provides a brief feasibility report on starting a pickles production unit. It discusses the history and production methods of pickles, as well as the Indian market for processed fruits and vegetables including production capacities, leading processors, market size, exports, and key success factors. Pickles are one of the oldest processed foods and an important food preservation method. Small and micro enterprises can start small pickles production units depending on needs.
This document discusses banana production, demand, supply, marketing and export potential in Pakistan. Some key points:
- Pakistan is a major banana producer, with most production occurring in Sindh province. However, production and exports face challenges like poor crop management, lack of cold storage and an inefficient price mechanism.
- There is potential to increase banana exports to nearby markets in the Middle East and Central Asia, as these regions currently import large volumes of bananas. However, Pakistan will need to address post-harvest handling and quality issues to compete internationally.
- Improving infrastructure for transportation, storage, and implementing quality standards could help make the banana industry more efficient and open new export opportunities.
The document is an internship report submitted by Muhammad Nabeel Bhutta about his internship at Agro Food Processing (AFP) Facilities in Multan, Pakistan. The report provides an overview of AFP, which was established in 2009 as a common facility center to process fruits and vegetables from local growers and provide value-added products. It aims to empower farmers through technical assistance and provides processing facilities for pulp extraction from fruits like mango, guava, and apple. AFP has been certified for food safety and quality standards and provides processing services to multinational companies. The report details AFP's operations, processes, facilities and the author's experience during the 6-week internship.
The document summarizes Sonia Hassan's internship report submitted for her Bachelor of Sciences degree in Agronomy. It includes sections dedicated to the introduction of Ayub Agricultural Research Institute and the Agronomic Research Institute where she completed her internship. It also briefly describes the Vegetable and Oil Seeds Section and outlines the experiment she conducted for her assigned research.
Risk analysis of shoppers stop presentationAkshat Kapoor
I have prepared this project on Shopper Stop Limited.
This project contains the risk analysis of Shopper Stop Ltd. for the Financial Year 2011-12.
Hope you like it and find it interesting.
I would be delighted hear your thoughts on the same.
The letter welcomes parents and students to the 2012-2013 school year at Irving School. It explains that fifth grade is an important year of responsibility and being role models for younger students. Success will depend on respect for all members of the school community. The teacher looks forward to providing an exciting year of learning and preparation before students graduate in 2020.
Pelwatte milk food brand is a high quality, freshly produced dairy product in Sri Lanka. Pelwatte Diary Industries Pvt Ltd produces delicious and healthy.
Pride of Cows is a dairy brand owned by Parag Milk and is focused on quality and innovation. The document discusses research conducted on Pride of Cows' customer response and brand awareness in Pune. The research found low brand awareness but high customer satisfaction with quality and service. It suggests Pride of Cows increase promotions and offer more products and schemes to improve availability and grow their customer base.
This document provides a brief feasibility report on starting a pickles production unit. It discusses the history and production methods of pickles, as well as the Indian market for processed fruits and vegetables including production capacities, leading processors, market size, exports, and key success factors. Pickles are one of the oldest processed foods and an important food preservation method. Small and micro enterprises can start small pickles production units depending on needs.
This document discusses banana production, demand, supply, marketing and export potential in Pakistan. Some key points:
- Pakistan is a major banana producer, with most production occurring in Sindh province. However, production and exports face challenges like poor crop management, lack of cold storage and an inefficient price mechanism.
- There is potential to increase banana exports to nearby markets in the Middle East and Central Asia, as these regions currently import large volumes of bananas. However, Pakistan will need to address post-harvest handling and quality issues to compete internationally.
- Improving infrastructure for transportation, storage, and implementing quality standards could help make the banana industry more efficient and open new export opportunities.
The document is an internship report submitted by Muhammad Nabeel Bhutta about his internship at Agro Food Processing (AFP) Facilities in Multan, Pakistan. The report provides an overview of AFP, which was established in 2009 as a common facility center to process fruits and vegetables from local growers and provide value-added products. It aims to empower farmers through technical assistance and provides processing facilities for pulp extraction from fruits like mango, guava, and apple. AFP has been certified for food safety and quality standards and provides processing services to multinational companies. The report details AFP's operations, processes, facilities and the author's experience during the 6-week internship.
The document summarizes Sonia Hassan's internship report submitted for her Bachelor of Sciences degree in Agronomy. It includes sections dedicated to the introduction of Ayub Agricultural Research Institute and the Agronomic Research Institute where she completed her internship. It also briefly describes the Vegetable and Oil Seeds Section and outlines the experiment she conducted for her assigned research.
Risk analysis of shoppers stop presentationAkshat Kapoor
I have prepared this project on Shopper Stop Limited.
This project contains the risk analysis of Shopper Stop Ltd. for the Financial Year 2011-12.
Hope you like it and find it interesting.
I would be delighted hear your thoughts on the same.
The letter welcomes parents and students to the 2012-2013 school year at Irving School. It explains that fifth grade is an important year of responsibility and being role models for younger students. Success will depend on respect for all members of the school community. The teacher looks forward to providing an exciting year of learning and preparation before students graduate in 2020.
Moms+Tweens came together for the first ever Moms+Tweens+SocialGood event to talk about social good, technology and global citizenship on August 3, 2013 in McLean Virginia.
This document proposes a system to automatically recharge mobile phones through microwave transmission as the phone is being used. The system would transmit microwave signals from an antenna along with voice signals. Mobile phones would require minor additions like a sensor, rectenna, and filter to receive the microwave energy and use it to charge the phone battery. This would eliminate the need for separate chargers and allow the phone to charge as it is being used through voice calls. Manufacturers could remove talk time and battery life from phone specifications as a result.
This document provides an overview of the electrical equipment industry and BHEL. The global electrical equipment industry is fragmented but dominated by a few large players. It manufactures products like motors, lighting, HVAC systems, and power equipment. Emerging markets have provided growth opportunities. BHEL is a large Indian public sector company and a dominant player in the domestic power and energy sectors. It has major manufacturing facilities across India and produces boilers, turbines, generators, and other equipment. The company faces competition from other global players but has a strong position in India.
The document discusses global citizenship and what it means to be a global citizen. It defines a citizen as a member of a state or nation who owes allegiance to its government. Good citizenship involves being law-abiding, paying taxes, voting, and contributing to the community. A global citizen understands our interconnected world, respects diversity, and takes action against injustice on a global scale. The document suggests ways to begin becoming a global citizen such as understanding our place in the world and standing up for global causes.
A project on analysis of working capital managementBabasab Patil
The document analyzes the working capital management of Dharwad Milk Union over the past 5 years. It discusses the company background, objectives of studying its working capital, methodology, findings and suggestions. The key findings are that inventory turnover ratio was better in 2008-09 than the past 5 years, and creditors payment ratio has improved recently. Suggestions include increasing debt turnover ratio and reducing the operating cycle to maintain sufficient working capital.
Working capital management of Tata steel ltd T HARI KUMAR
This document summarizes a study on the working capital management of Tata Steel Ltd. It finds that the company's working capital position is unsatisfactory. The study analyzes Tata Steel's current assets and current liabilities from 2008-2009 to 2012-2013. It calculates key metrics like average collection period, average payment period, raw materials storage period, and cash conversion cycle to evaluate the company's working capital management.
This document summarizes a research report on the relationship between working capital management and profitability. The report analyzes data from 60 Pakistani textile companies over 2001-2006. The results show a statistically significant negative relationship between profitability (measured by return on assets) and the number of days accounts receivable, inventory, and accounts payable are outstanding. Proper management of working capital through optimizing current assets and liabilities can thus improve company profits. The report also acknowledges the importance of balancing liquidity and profitability in working capital management.
Working capital management project report mbaBabasab Patil
This document provides an index and executive summary of a study on the working capital management of Bahety Chemicals & Minerals Pvt Ltd, located in Dandeli, India. The study examines the company's working capital over a five year period from 2006-2010. Key findings include that the company's working capital and profits have increased each year, and it maintains current and quick ratios above standard requirements, indicating a satisfactory level of working capital management and liquidity. The document outlines the objectives, scope, limitations and methodology of the study.
Financial analysis for juhayna & domty co . graduation project zagzig uni...Eslam Fathi
Financial Analysis is the process of selecting, evaluating, and identifying the financial
strength and weaknesses of the firm by properly establishing relationship between
items of financial statements. Firms, bank, loan officers and business owners all use
Financial analysis to learn more about a company’s current financial health as well as its
potential.
1) The document discusses working capital management strategies and how they can impact return on capital employed (ROCE). It analyzes data from annual working capital surveys.
2) While a shorter cash conversion cycle should theoretically increase ROCE by reducing capital tied up, the survey data does not show a clear relationship between changes in the cash conversion cycle and changes in ROCE.
3) The document then examines a company that has seasonal demand and discusses strategies for maintaining flexible working capital levels to maximize equity value across seasons while balancing cash availability and opportunity costs.
Working capital represents a company's liquidity and is calculated as current assets minus current liabilities. It reflects a company's ability to pay off short-term debt obligations and covers operational expenses. Positive working capital is needed to ensure companies can continue operating without issues. The management of working capital involves managing inventory levels, accounts receivable, accounts payable, and cash to optimize current assets and liabilities and free up cash flow. Companies aim to reduce their working capital cycle by collecting from customers quicker or stretching out payments to suppliers in order to free up more cash.
Management of Working Capital- Britannia Industries Ltd.Nikita Jangid
The document discusses working capital and its management. It defines working capital as the capital required for financing day-to-day business operations. Shortage of working capital can cause business failures while sufficient working capital is important for business success and liquidity. The document also discusses different types of working capital like permanent working capital and temporary working capital. It outlines the goals of working capital management as ensuring sufficient cash flow and balancing current assets and liabilities. Key factors that determine working capital requirements include the nature of industry, sales volume, inventory and receivables turnover, and the production cycle.
Falcon is one of the leading P2P Invoice Discounting platforms in India where we connect blue chip companies with investors. We aim to revolutionize the investment market in India by creating a one-stop shop for all borrowers & investors with varied profiles and needs who can have access without any risk. Unlike banks and financial institutions Falcon increases investor's yields by eliminating mediators like commercial banks, depository institutions etc
The document provides a comparative financial evaluation of O'Donnell & Associates for internal management purposes. It analyzes the company's liquidity, profits/profit margins, turnover, borrowing, assets, and employees based on financial data over the past 12 months. Overall the company has strong profitability and liquidity, though profit margins have declined slightly which could become a concern if not addressed by better expense management going forward.
Ratios and Formulas in Customer Financial AnalysisFinancial stat.docxcatheryncouper
Ratios and Formulas in Customer Financial Analysis
Financial statement analysis is a judgmental process. One of the primary objectives is identification of major changes in trends, and relationships and the investigation of the reasons underlying those changes. The judgment process can be improved by experience and the use of analytical tools. Probably the most widely used financial analysis technique is ratio analysis, the analysis of relationships between two or more line items on the financial statement. Financial ratios are usually expressed in percentage or times. Generally, financial ratios are calculated for the purpose of evaluating aspects of a company's operations and fall into the following categories:
· Liquidity ratios measure a firm's ability to meet its current obligations.
· Profitability ratios measure management's ability to control expenses and to earn a return on the resources committed to the business.
· Leverage ratios measure the degree of protection of suppliers of long-term funds and can also aid in judging a firm's ability to raise additional debt and its capacity to pay its liabilities on time.
· Efficiency, activity or turnover ratios provide information about management's ability to control expenses and to earn a return on the resources committed to the business.
A ratio can be computed from any pair of numbers. Given the large quantity of variables included in financial statements, a very long list of meaningful ratios can be derived. A standard list of ratios or standard computation of them does not exist. The following ratio presentation includes ratios that are most often used when evaluating the credit worthiness of a customer. Ratio analysis becomes a very personal or company driven procedure. Analysts are drawn to and use the ones they are comfortable with and understand.
1. Liquidity Ratios
Working Capital
Working capital compares current assets to current liabilities, and serves as the liquid reserve available to satisfy contingencies and uncertainties. A high working capital balance is mandated if the entity is unable to borrow on short notice. The ratio indicates the short-term solvency of a business and in determining if a firm can pay its current liabilities when due.
Formula
Current Assets - Current Liabilities
Acid Test or Quick Ratio
A measurement of the liquidity position of the business. The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than its current ratio. It is a stringent test of liquidity.
Formula
Cash + Marketable Securities + Accounts Receivable
Current Liabilities
Current Ratio
provides an indication of the liquidity of the business by comparing the amount of current assets to current liabilities. A business's curren ...
Ratio AnalysisFinancial ratios can be used to examine various as.docxcatheryncouper
Ratio Analysis
Financial ratios can be used to examine various aspects of the financial position and performance of a business and are widely used for planning and control purposes.
They can be used to evaluate the financial health of a business and can be utilised by management in a wide variety of decisions involving such areas as profit planning, pricing, working-capital management, financial structure and dividend policy.
Ratio analysis provides a fairly simplistic method of examining the financial condition of a business.
A ratio expresses the relation of one figure appearing in the financial statements to some other figure appearing there.
Ratios enable comparison between businesses.
Differences may exist between businesses in the scale of operations making comparison via the profits generated unreliable.
Ratios can eliminate this uncertainty.
Other than comparison with other businesses, it is also a valuable tool in analysing the performance of one business over time.
However useful ratios are not without their problems.
Figures calculated through ratio analysis can highlight the financial strengths and weaknesses of a business but they cannot, by themselves, explain why certain strengths or weaknesses exist or why certain changes have occurred.
Only detailed investigation will reveal these underlying reasons. Ratios must, therefore, be seen as a ‘starting point’.
Financial ratio classification
The following ratios are considered the more important for decision-making purposes:
Ratios can be grouped into certain categories, each of which reflects a particular aspect of financial performance or position.
The following broad categories provide a useful basis for explaining the nature of the financial ratios to be dealt with.
Profitability.Businesses come into being with the primary purpose of creating wealth for the owners. Profitability ratios provide an insight to the degree of success in achieving this purpose. They express the profits made in relation to other key figures in the financial statements or to some business resource.
Efficiency.Ratios may be used to measure the efficiency with which certain resource have been utilised within the business. These ratios are also referred to as active ratios.
Liquidity.It is vital to the survival of a business that there be sufficient liquid resources available to meet maturing obligations. Certain ratios may be calculated that examines the relationship between liquid resources held and creditors due for payment in the near future.
Gearing.This is the relationship between the amount financed by the owners of the business and the amount contributed by outsiders, which has an important effect on the degree of risk associated with a business. Gearing is then something that managers must consider when making financing decisions.
Investment.Certain ratios are concerned with assessing the returns and performance of shares held in a particular business.
Profitabi ...
The document discusses ratio analysis, which involves calculating and interpreting various financial ratios to evaluate aspects of a company's performance and financial position. It defines key ratios including liquidity ratios, activity ratios, profitability ratios, and leverage ratios. It provides formulas and examples for specific ratios like current ratio, inventory turnover, debt-to-equity ratio, and return on equity. The purpose of ratio analysis is to help assess a company's liquidity, profitability, financial stability, and management quality.
This document provides definitions and explanations of various ratios used in ratio analysis. It discusses ratios that measure activity, liquidity, solvency, profitability, and leverage. For inventory turnover, it notes that a high ratio could indicate effective inventory management but could also mean inadequate inventory levels. It explains that receivables and payables turnover ratios high compared to peers could mean stringent credit terms that reduce sales. Profitability ratios like ROE are discussed as measuring management effectiveness.
This document discusses ratio analysis and various types of ratios used to analyze a company's financial performance and health. It begins by explaining that ratio analysis compares financial statement figures to provide useful insights beyond absolute numbers. It then covers several categories of ratios:
1. Liquidity or short-term solvency ratios measure a firm's ability to pay short-term debts and include the current ratio and quick ratio.
2. Capital structure or long-term solvency ratios assess financial leverage and include the debt ratio and interest coverage ratio.
3. Asset management or turnover ratios evaluate efficiency in deploying assets and include total asset turnover, fixed asset turnover, and inventory turnover.
4. Profitability
Ratios and formulas are important analytical tools for evaluating a company's financial statements. Ratio analysis involves calculating relationships between financial data to assess aspects of a company's operations, such as liquidity, profitability, leverage, efficiency and creditworthiness. Common financial ratios are grouped into categories like liquidity ratios, which measure ability to meet current obligations, and profitability ratios, which evaluate expenses and returns. A standard list of ratios does not exist, as analysts choose those most relevant and understandable for the situation.
This document discusses working capital, which refers to the capital required for financing short-term operations like raw materials, wages, expenses. It is important for businesses to maintain adequate working capital to pay debts and support daily operations. The document outlines different types of working capital, sources of funding, and how ratios can assess working capital management efficiency. Maintaining the right level of working capital is essential for business liquidity, profitability and reducing risk of insolvency.
Moms+Tweens came together for the first ever Moms+Tweens+SocialGood event to talk about social good, technology and global citizenship on August 3, 2013 in McLean Virginia.
This document proposes a system to automatically recharge mobile phones through microwave transmission as the phone is being used. The system would transmit microwave signals from an antenna along with voice signals. Mobile phones would require minor additions like a sensor, rectenna, and filter to receive the microwave energy and use it to charge the phone battery. This would eliminate the need for separate chargers and allow the phone to charge as it is being used through voice calls. Manufacturers could remove talk time and battery life from phone specifications as a result.
This document provides an overview of the electrical equipment industry and BHEL. The global electrical equipment industry is fragmented but dominated by a few large players. It manufactures products like motors, lighting, HVAC systems, and power equipment. Emerging markets have provided growth opportunities. BHEL is a large Indian public sector company and a dominant player in the domestic power and energy sectors. It has major manufacturing facilities across India and produces boilers, turbines, generators, and other equipment. The company faces competition from other global players but has a strong position in India.
The document discusses global citizenship and what it means to be a global citizen. It defines a citizen as a member of a state or nation who owes allegiance to its government. Good citizenship involves being law-abiding, paying taxes, voting, and contributing to the community. A global citizen understands our interconnected world, respects diversity, and takes action against injustice on a global scale. The document suggests ways to begin becoming a global citizen such as understanding our place in the world and standing up for global causes.
A project on analysis of working capital managementBabasab Patil
The document analyzes the working capital management of Dharwad Milk Union over the past 5 years. It discusses the company background, objectives of studying its working capital, methodology, findings and suggestions. The key findings are that inventory turnover ratio was better in 2008-09 than the past 5 years, and creditors payment ratio has improved recently. Suggestions include increasing debt turnover ratio and reducing the operating cycle to maintain sufficient working capital.
Working capital management of Tata steel ltd T HARI KUMAR
This document summarizes a study on the working capital management of Tata Steel Ltd. It finds that the company's working capital position is unsatisfactory. The study analyzes Tata Steel's current assets and current liabilities from 2008-2009 to 2012-2013. It calculates key metrics like average collection period, average payment period, raw materials storage period, and cash conversion cycle to evaluate the company's working capital management.
This document summarizes a research report on the relationship between working capital management and profitability. The report analyzes data from 60 Pakistani textile companies over 2001-2006. The results show a statistically significant negative relationship between profitability (measured by return on assets) and the number of days accounts receivable, inventory, and accounts payable are outstanding. Proper management of working capital through optimizing current assets and liabilities can thus improve company profits. The report also acknowledges the importance of balancing liquidity and profitability in working capital management.
Working capital management project report mbaBabasab Patil
This document provides an index and executive summary of a study on the working capital management of Bahety Chemicals & Minerals Pvt Ltd, located in Dandeli, India. The study examines the company's working capital over a five year period from 2006-2010. Key findings include that the company's working capital and profits have increased each year, and it maintains current and quick ratios above standard requirements, indicating a satisfactory level of working capital management and liquidity. The document outlines the objectives, scope, limitations and methodology of the study.
Financial analysis for juhayna & domty co . graduation project zagzig uni...Eslam Fathi
Financial Analysis is the process of selecting, evaluating, and identifying the financial
strength and weaknesses of the firm by properly establishing relationship between
items of financial statements. Firms, bank, loan officers and business owners all use
Financial analysis to learn more about a company’s current financial health as well as its
potential.
1) The document discusses working capital management strategies and how they can impact return on capital employed (ROCE). It analyzes data from annual working capital surveys.
2) While a shorter cash conversion cycle should theoretically increase ROCE by reducing capital tied up, the survey data does not show a clear relationship between changes in the cash conversion cycle and changes in ROCE.
3) The document then examines a company that has seasonal demand and discusses strategies for maintaining flexible working capital levels to maximize equity value across seasons while balancing cash availability and opportunity costs.
Working capital represents a company's liquidity and is calculated as current assets minus current liabilities. It reflects a company's ability to pay off short-term debt obligations and covers operational expenses. Positive working capital is needed to ensure companies can continue operating without issues. The management of working capital involves managing inventory levels, accounts receivable, accounts payable, and cash to optimize current assets and liabilities and free up cash flow. Companies aim to reduce their working capital cycle by collecting from customers quicker or stretching out payments to suppliers in order to free up more cash.
Management of Working Capital- Britannia Industries Ltd.Nikita Jangid
The document discusses working capital and its management. It defines working capital as the capital required for financing day-to-day business operations. Shortage of working capital can cause business failures while sufficient working capital is important for business success and liquidity. The document also discusses different types of working capital like permanent working capital and temporary working capital. It outlines the goals of working capital management as ensuring sufficient cash flow and balancing current assets and liabilities. Key factors that determine working capital requirements include the nature of industry, sales volume, inventory and receivables turnover, and the production cycle.
Falcon is one of the leading P2P Invoice Discounting platforms in India where we connect blue chip companies with investors. We aim to revolutionize the investment market in India by creating a one-stop shop for all borrowers & investors with varied profiles and needs who can have access without any risk. Unlike banks and financial institutions Falcon increases investor's yields by eliminating mediators like commercial banks, depository institutions etc
The document provides a comparative financial evaluation of O'Donnell & Associates for internal management purposes. It analyzes the company's liquidity, profits/profit margins, turnover, borrowing, assets, and employees based on financial data over the past 12 months. Overall the company has strong profitability and liquidity, though profit margins have declined slightly which could become a concern if not addressed by better expense management going forward.
Ratios and Formulas in Customer Financial AnalysisFinancial stat.docxcatheryncouper
Ratios and Formulas in Customer Financial Analysis
Financial statement analysis is a judgmental process. One of the primary objectives is identification of major changes in trends, and relationships and the investigation of the reasons underlying those changes. The judgment process can be improved by experience and the use of analytical tools. Probably the most widely used financial analysis technique is ratio analysis, the analysis of relationships between two or more line items on the financial statement. Financial ratios are usually expressed in percentage or times. Generally, financial ratios are calculated for the purpose of evaluating aspects of a company's operations and fall into the following categories:
· Liquidity ratios measure a firm's ability to meet its current obligations.
· Profitability ratios measure management's ability to control expenses and to earn a return on the resources committed to the business.
· Leverage ratios measure the degree of protection of suppliers of long-term funds and can also aid in judging a firm's ability to raise additional debt and its capacity to pay its liabilities on time.
· Efficiency, activity or turnover ratios provide information about management's ability to control expenses and to earn a return on the resources committed to the business.
A ratio can be computed from any pair of numbers. Given the large quantity of variables included in financial statements, a very long list of meaningful ratios can be derived. A standard list of ratios or standard computation of them does not exist. The following ratio presentation includes ratios that are most often used when evaluating the credit worthiness of a customer. Ratio analysis becomes a very personal or company driven procedure. Analysts are drawn to and use the ones they are comfortable with and understand.
1. Liquidity Ratios
Working Capital
Working capital compares current assets to current liabilities, and serves as the liquid reserve available to satisfy contingencies and uncertainties. A high working capital balance is mandated if the entity is unable to borrow on short notice. The ratio indicates the short-term solvency of a business and in determining if a firm can pay its current liabilities when due.
Formula
Current Assets - Current Liabilities
Acid Test or Quick Ratio
A measurement of the liquidity position of the business. The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than its current ratio. It is a stringent test of liquidity.
Formula
Cash + Marketable Securities + Accounts Receivable
Current Liabilities
Current Ratio
provides an indication of the liquidity of the business by comparing the amount of current assets to current liabilities. A business's curren ...
Ratio AnalysisFinancial ratios can be used to examine various as.docxcatheryncouper
Ratio Analysis
Financial ratios can be used to examine various aspects of the financial position and performance of a business and are widely used for planning and control purposes.
They can be used to evaluate the financial health of a business and can be utilised by management in a wide variety of decisions involving such areas as profit planning, pricing, working-capital management, financial structure and dividend policy.
Ratio analysis provides a fairly simplistic method of examining the financial condition of a business.
A ratio expresses the relation of one figure appearing in the financial statements to some other figure appearing there.
Ratios enable comparison between businesses.
Differences may exist between businesses in the scale of operations making comparison via the profits generated unreliable.
Ratios can eliminate this uncertainty.
Other than comparison with other businesses, it is also a valuable tool in analysing the performance of one business over time.
However useful ratios are not without their problems.
Figures calculated through ratio analysis can highlight the financial strengths and weaknesses of a business but they cannot, by themselves, explain why certain strengths or weaknesses exist or why certain changes have occurred.
Only detailed investigation will reveal these underlying reasons. Ratios must, therefore, be seen as a ‘starting point’.
Financial ratio classification
The following ratios are considered the more important for decision-making purposes:
Ratios can be grouped into certain categories, each of which reflects a particular aspect of financial performance or position.
The following broad categories provide a useful basis for explaining the nature of the financial ratios to be dealt with.
Profitability.Businesses come into being with the primary purpose of creating wealth for the owners. Profitability ratios provide an insight to the degree of success in achieving this purpose. They express the profits made in relation to other key figures in the financial statements or to some business resource.
Efficiency.Ratios may be used to measure the efficiency with which certain resource have been utilised within the business. These ratios are also referred to as active ratios.
Liquidity.It is vital to the survival of a business that there be sufficient liquid resources available to meet maturing obligations. Certain ratios may be calculated that examines the relationship between liquid resources held and creditors due for payment in the near future.
Gearing.This is the relationship between the amount financed by the owners of the business and the amount contributed by outsiders, which has an important effect on the degree of risk associated with a business. Gearing is then something that managers must consider when making financing decisions.
Investment.Certain ratios are concerned with assessing the returns and performance of shares held in a particular business.
Profitabi ...
The document discusses ratio analysis, which involves calculating and interpreting various financial ratios to evaluate aspects of a company's performance and financial position. It defines key ratios including liquidity ratios, activity ratios, profitability ratios, and leverage ratios. It provides formulas and examples for specific ratios like current ratio, inventory turnover, debt-to-equity ratio, and return on equity. The purpose of ratio analysis is to help assess a company's liquidity, profitability, financial stability, and management quality.
This document provides definitions and explanations of various ratios used in ratio analysis. It discusses ratios that measure activity, liquidity, solvency, profitability, and leverage. For inventory turnover, it notes that a high ratio could indicate effective inventory management but could also mean inadequate inventory levels. It explains that receivables and payables turnover ratios high compared to peers could mean stringent credit terms that reduce sales. Profitability ratios like ROE are discussed as measuring management effectiveness.
This document discusses ratio analysis and various types of ratios used to analyze a company's financial performance and health. It begins by explaining that ratio analysis compares financial statement figures to provide useful insights beyond absolute numbers. It then covers several categories of ratios:
1. Liquidity or short-term solvency ratios measure a firm's ability to pay short-term debts and include the current ratio and quick ratio.
2. Capital structure or long-term solvency ratios assess financial leverage and include the debt ratio and interest coverage ratio.
3. Asset management or turnover ratios evaluate efficiency in deploying assets and include total asset turnover, fixed asset turnover, and inventory turnover.
4. Profitability
Ratios and formulas are important analytical tools for evaluating a company's financial statements. Ratio analysis involves calculating relationships between financial data to assess aspects of a company's operations, such as liquidity, profitability, leverage, efficiency and creditworthiness. Common financial ratios are grouped into categories like liquidity ratios, which measure ability to meet current obligations, and profitability ratios, which evaluate expenses and returns. A standard list of ratios does not exist, as analysts choose those most relevant and understandable for the situation.
This document discusses working capital, which refers to the capital required for financing short-term operations like raw materials, wages, expenses. It is important for businesses to maintain adequate working capital to pay debts and support daily operations. The document outlines different types of working capital, sources of funding, and how ratios can assess working capital management efficiency. Maintaining the right level of working capital is essential for business liquidity, profitability and reducing risk of insolvency.
This document provides an overview of financial statement analysis and key metrics used to analyze companies. It defines the key financial statements - the income statement, balance sheet, and statement of cash flows. It then explains various ratios used to evaluate a company's liquidity, leverage, asset utilization, profitability, and market performance, including definitions of ratios like the current ratio, debt-to-equity ratio, inventory turnover, return on assets, and price-to-earnings ratio. Industry averages from sources like RMA and Dun & Bradstreet are also discussed for comparison purposes.
This document provides an overview of financial statement analysis and ratio analysis. It defines key financial statements like the income statement, balance sheet, and statement of cash flows. It also explains the purpose of ratio analysis is to evaluate a firm's performance, liquidity, profitability, and financial stability by calculating and comparing various financial ratios over time and against industry benchmarks. Common ratios covered include liquidity, leverage, activity, and profitability ratios. Ratio analysis is a useful tool but requires comparing ratios to standards and accounting for company and industry differences.
The document discusses various types of ratios used to evaluate companies, including efficiency ratios, liquidity ratios, leverage ratios, and profitability ratios. Efficiency ratios measure how effectively a company uses its assets. Liquidity ratios evaluate a company's ability to meet short-term obligations. Leverage ratios assess how much debt a company has relative to equity. Profitability ratios provide information on a company's margins and returns. Comparing ratios over time and across peers can provide insights into a company's performance and financial health.
Working capital is the amount of a company's current assets minus the amount of its current liabilities.
The overall success of the company depends upon its working capital position. So it should be handled properly because it shows the efficiency & financial strength of a company.
The document analyzes the financial performance of British Land Company from 2005-2008 across several key metrics:
- Liquidity was positive as the company was able to pay short-term debts from operating cash flows and liquidity reserves.
- Solvency ratios were strong with low net debt and high operating coverage.
- Profitability as measured by ROA and ROE was lower than peers but consistent over time due to the company's differentiation strategy.
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1. PROJECT ON WORKING CAPITAL
MANAGEMENT
Submitted By
Navdeep Singh Momi(2013164)
Navneet Singh (2013165)
Nikita Agarwal(2013171)
Poulami Sarkar(2013201)
2. Abstract
Efficient management of working Capital is one of the pre-conditions for the success of an enterprise.
To reach optimal working capital management firm manager should control the trade-off between
profitability and liquidity accurately. The purpose of this study is to investigate the relationship
between working capital management and firm’s profitability.
In this study, we have selected a sample of 5 top notch Electricals firms and taken their financial data
for a period of 6 years from 2008 – 2013 and studied the effect of different variables of working
capital management including the Cash conversion cycle and Current ratio on the profitability of the
firms.
The study shows that there is a negative significant relationship between cash conversion cycle &
firm’s profitability and positive relationship between Current Ratio & profitability of firms. This
reveals that reducing cash conversion period and increasing the current ratio results into profitability
increase. Thus, in purpose to create shareholder value, firm manager should concern on shorten of
cash conversion cycle till accomplish optimal level.
3. DATA AND METHODOLOGY USED
DATA: The study is based on secondary data collected from the audited Profit & Loss A/c
and Balance Sheet associated with schedules and annexure available in the published annual
reports of Electricals firm. For the purpose of the study, public enterprise survey reports,
government publications etc. have been used. Journals, conference proceedings and other
relevant documents have also been consulted to supplement the data.
METHODOLGY: The available data have been analyzed by using various financial ratios
as a managerial tool.
Maximizing Profitability
The term 'Profitability' means the ability to earn profits by an enterprise on its static resources
(i.e. invested capital). The profitability acts as a yardstick to measure the operating efficiency
of the enterprise. The profitable investment of excess cash, minimization of inventories,
speedy collection of receivables and avoidance of unnecessary and costly short-term
financing all contribute to the maximization of profitability. The profitability of the enterprise
is popularly measured with the help of financial ratios conveying quantitative relationship
between two variables considered for the purpose.
Adequate Liquidity
The term 'liquidity' refers to the capability of a firm to meet short term financial obligations
[i.e. Current Liabilities (CL)] by converting the short term assets [i.e. Current Assets (CA)]
into cash without suffering any loss. Here current assets refer to those which are readily
convertible into cash within one accounting period. Current liabilities, on the other hand, are
those, which are to be met within one accounting period. The liquidity of a firm actually
depends on the effective management of the composition of CAvis-à-vis CL The liquidity
position of a firm is generally analyzed with the help of some important ratios computed on
the basis of different constituents of working capital either in isolation or in aggregate or
both.
The important ratios reflecting the liquidity and profitability position of a firm are as follows:
1. Current Ratio – Useful for Managers and working capital fund providers. Measures the
company’s liquidity and also the margin of safety ,the company has in order to meet any
emergency arising out of uneven flows of funds through current assets and current liabilities
account. It expresses the extent to which the current liabilities of a business ( i.e liabilities due
to be settled in 12 months) are covered by its current assests (i.e assets expected to be realized
within 12 months) . A current ratio of 2 would mean that current assests are sufficient to
cover for the twice the amount of a company’s short term liabilities. As per the calculation
above calculated for 5 years its clearly visible that its been decreased from 1 so decreasing
trend in the current ratio suggests a deteriorating liquidity position of the business .
Current Ratio = Current Assets / Current Liabilities
4. 2. Working capital - Working capital is a measure of liquidity of a business. It equals
current assets minus current liabilities. If current assets of a business at the point in time are
more than its current liabilities the working capital is positive, and this tells that the company
is not expected to suffer from liquidity crunch in near future and from calculations we can see
that it has happened only in year 2008. However, if current assets are less than current
liabilities the working capital is negative, and this communicates that the business may not be
able to pay off its current liabilities when due.
Working Capital = Current Assets – Current Liabilities
3. COGS - COGS is the costs that go into creating the products that a company sells;
therefore, the only costs included in the measure are those that are directly tied to the
production of the products. cost of goods sold is the primary component in calculating gross
profit, and it affects nearly every other profit measure. Calculating COGS is the primary
reason most companies take inventory every month. It is important to understand that
different inventory methods typically generate different costs of goods sold for identical
companies, and it is therefore necessary to study a company's inventory valuation disclosure
when evaluating cost of goods sold. When comparing companies, it is also important to note
that some industries tend to have higher COGS than others. This is why comparisons are
generally most meaningful among companies using the same inventory method within the
same industry, and the definition of "high" or "low" cost should be made within this context.
Cost of Goods Sold (COGS) = Net Sales – Operating Profit
4. Day sales inventory - A financial measure of a company's performance that gives
investors an idea of how long it takes a company to turn its inventory (including goods that
are work in progress, if applicable) into sales. Generally, the lower the DSI the better, but it is
important to note that the average DSI varies from one industry to another. Since inventory
carrying costs take significant investment, a business must try to reduce the level of
inventory. Lower level of inventory will result in lower days' inventory on hand ratio.
Therefore lower values of this ratio are generally favorable and higher values are
unfavorable.
DSI = 365 * Average Inventory / COGS
5. Day Sales Outstanding - Days' sales outstanding ratio (also called average collection
period or days' sales in receivables) is used to measure the average number of days a
business takes to collect its trade receivables after they have been created. It is an activity
ratio and gives information about the efficiency of sales collection activities. Since it is
profitable to convert sales into cash quickly, which means that a lower value of Days Sales
Outstanding is favourable whereas a higher value is unfavourable. However it is more
meaningful to create monthly or weekly trend of DSO. As per the calculation it is clear that
5. there is significant increase in the trend is unfavourable and indicates inefficiency in credit
sales collection.
DSO = 365* Average Receivables / Net Sales
6. Days Sales Payable - Days Sales payables outstanding (DSP) is the average number of
days in which a company pays its suppliers. It is also called number of days of payables a low
DPO highlights good working capital management because the company is availing early
payment discounts. However, the DPO should be corroborated by other ratios, particularly
the liquidity ratios. When a company's liquidity position is good, a high days payables
outstanding most likely tells that the company is delaying payments to its creditors till the last
possible date to shorten its cash conversion cycle.
DSP = 365 * Average Trade Payables / COGS
7. Cash Conversion Cycle - Cash conversion cycle is the time it takes a company to convert
its resource inputs into cash. It measures how effectively a company is managing its working
capital. Shorter the cash conversion cycle the better the company is off because it has to lock
up cash for a relatively smaller period of time.
Cash Conversion Cycle (CCC) = DSI + DSO – DSP
Relationship between Profitability and Liquidity of a Firm:
Liquidity-Profitability tangle: The relationship between liquidity and profitability can be
explained with the help of return on capital employed ratio expressing it in the following
form:
P = PBIT / (FA+NWC)
Where,
P= Profitability, EBIT=Earnings before interest and taxes, and NWC= Net working capital.
This ratio indicates that other things remaining unchanged, continuous reduction in
NWC (i.e. liquidity) improves the profitability (P) of a firm with the simple passage of time.
This suggests that there always exists a negative relation between liquidity and profitability.
But in reality it is seen that unless there is a minimum level of investment in CA, which could
provide a promising vehicle for increasing profitability, the required amount of output and
sales cannot be maintained. Therefore, upto a certain level liquidity and profitability are
complementary to each other. In this connection James E. Gentry hypothesized that upto a
certain level, increase in liquidity will lead to a corresponding increase in profitability.
Beyond that, profitability remains constant with an increase in liquidity within a specified
domain. Therefore, any further investment in CA will lead to decline in profitability. Thus,
6. the shape of the curve showing the relationship between liquidity and profitability seem to be
an inverted teacup. This is shown in the following exhibit:
Figure 1. Relationship between Profitability and Liquidity (Gentry’s Curve)
Sector Chosen and Companies
The sector chosen is Electrical and the companies chosen are Bajaj Electricals Ltd,Bharat Heavy
Electricals Ltd, Brook Crompton Grooves Ltd , ECE Industries Ltd , Khaitan Electricals Ltd.
Ratios Analysis
When it comes to analysing financial statement information, ratio analysis is one of the fundamental analysing
processes. Following are the calculated values for the selected companies:
7.
8.
9. Regression Analysis
Year
Bajaj
Electricals
Ltd.
Brook Crompton Greaves
Ltd. E C E Industries Ltd.
CCC (X)
Profitability
(Y) CCC (X)
Profitability
(Y) CCC (X)
Profitability
(Y)
2008 94.20291713 1609.4 94.20291713 96.8 72.4271254 423.1
2009 81.85619258 2017.2 210.6855708 16.3 86.10021026 220.2
2010 80.92934138 2531.4 203.4773616 1.4 99.5051503 145.4
2011 97.38862552 2728.1 81.34697963 11 85.57863085 81.5
2012 111.1487477 2638.3 25.81699812 20.3 72.98882102 141.6
2013 118.2723294 1933.7 67.46428643 36.1 45.27595395 173.8
Co-eff of Det. 0.000495 0.094017326 0.03344226
Year
Bharat Heavy Electricals Ltd. Khaitan Electricals Ltd.
Electrical Industry
AVERAGE
CCC (X)
Profitability
(Y) CCC (X)
Profitability
(Y) CCC (X)
Profitability
(Y)
2008 133.7564006 61936.8 187.1129229 340.3 90.95545256 12881.28
2009 120.9434863 73220.4 249.4516419 141.3 108.8919759 15123.08
2010 128.7787721 88017.6 221.1609611 303.2 107.8605652 18199.8
2011 117.1438732 132923.9 183.0625973 369.2 87.66012189 27222.74
2012 153.5576608 134180 212.7687189 248.7 81.97916751 27445.78
2013 204.2398056 136704 190.1403684 512 85.93694052 27871.92
Co-eff of Det. 0.267990966 0.672930429 0.474520025
Initial Hypothesis-The profitability of the electrical companies are directly dependent on cash
conversion cycle.
Cash Conversion Cycle
The cash conversion cycle is a measure of working capital efficiency, often giving valuable clues
about the underlying health of a business. The cycle measures the average number of days that
working capital is invested in the operating cycle. It starts by adding days inventory outstanding
(DIO) to days sales outstanding (DSO). This is because a company "invests" its cash to acquire/build
inventory, but does not collect cash until the inventory is sold and the accounts receivable are finally
collected.
Receivables are essentially loans extended to customers that consume working capital; therefore,
greater levels of DIO and DSO consume more working capital. However, days payable outstanding
(DPO), which essentially represent loans from vendors to the company, are subtracted to help offset
working capital needs. In summary, the cash conversion cycle is measured in days and equals DIO +
DSO – DPO:
10. Coefficient of Determination-We calculated coeff of determination as coeff of relation
won’t be true statistically if CCC is negative. In the analysis part we have found out the coefficient of
determination which indicates how well data points fit a statistical model – sometimes simply a line or
curve. It is a statistic used in the context of statistical models whose main purpose is either the
prediction of future outcomes or the testing of hypotheses, on the basis of other related information. It
provides a measure of how well observed outcomes are replicated by the model, as the proportion of
total variation of outcomes explained by the model. The below data is for the year 2008-13:
Year
Electrical Industry AVERAGE
CCC (X) Profitability (Y)
2008 90.95545256 12881.28
2009 108.8919759 15123.08
2010 107.8605652 18199.8
2011 87.66012189 27222.74
2012 81.97916751 27445.78
2013 85.93694052 27871.92
Co-eff of Det. 0.474520025
The coefficient of determination comes out to be greater than 0.45 so we can accept the hypothesis
and conclude that the efficient management of working capitals directly affects the profitability of the
sector.
12881.28
15123.08
18199.8
27222.7427445.7827871.92
0
5000
10000
15000
20000
25000
30000
0 20 40 60 80 100 120
Profitability
Cash Conversion Cycle
COEFFICIENT OF DETERMINATION
11. Conclusion
Working Capital Management has its effect on liquidity as well on profitability of the firm. In this
paper a sample of the 5 Indian firms, listed on BSE including firms from different sectors of our
economy for a period which extends to five years starting from 2008 to 2013 has been taken. An
attempt has been made to examine the effect of different variables of working capital management
including the Debt ratio, Average collection period, Inventory turnover in days, Average payment
period, Cash conversion cycle and Current ratio on the Net operating profitability of sample firms.
The results show that there is a strong positive relationship between variables of the working capital
management and profitability of the firm.