This document analyzes the working capital management of a company that manufactures wind turbines and cooling towers. It provides background on the company and examines various financial ratios to assess the company's liquidity, asset efficiency, debt levels, and profitability over multiple years. The analysis finds that the company has some liquidity issues, high debt levels, and low cash holdings. Inventory turnover and interest coverage ratios have also declined in recent years.

1. A STUDY ON
WORKING CAPITAL MANAGEMENT

2. Company profile

 Incorporated in June 12 2000
 HQ in Chennai
 other offices in Mumbai, New Delhi, Kolkata and Beijing
 categorized into two segments engineering, procurement and
construction ('EPC') projects and development, sale and
maintenance of WTGs
 WTG & Cooling tower factories in Pondicherry, Chennai and
Umbergaon (Gujarat).
 Joint Venture Partners with Leitwind

3. 
MUNICIPAL
SERVICES
PROCESS AND
METALLURGY
POWER
PLANTS
MINERAL
PROCESSING

4. A study on WORKING CAPITAL
MANAGEMENT

 Objective
 Limitations
 Data sources
 Concept of WC
- Gross Working capital
- Net Working capital
 The need of Working capital management

5. Financial analysis

 Tools are ,
1. Ratio analysis
2. Trend analysis
3. Fund flow analysis
 Classification of Ratio analysis,
1. Balance sheet ratio
2. Revenue Statement ratio
3. Mixed Ratio

6. Current ratio: Current asset / Current
liabilities

Current ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
3.5
3
2.5
2
1.5
1
0.5
0
Current ratio 1.07 1.02 3.18 2.05 1.81

7. Quick ratio: Quick asset / Current
liabilities.

Quick ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
3.5
3
2.5
2
1.5
1
0.5
0
Quick ratio 0.91 0.91 2.92 1.79 1.64

8. Cash holding ratio: Cash / Current
liabilities.

Cash holding ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Cash holding ratio 0.04 0.13 0.66 0.26 0.07

9. Debt equity ratio: Debt / Equity

Ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
6
5
4
3
2
1
0
Ratio 5.52 3.53 2.48 1.5 0.7

10. Inventory turnover ratio : Cost of goods sold

Inventory Turnover Ratio
-----------------------
Avg inventory
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
25
20
15
10
5
0
ratio 1.3 10.7 19.66 13.21 4.19

11. Working capital turnover ratio:
Sales
-------------------------
Net working capital

Net working capital ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
4
3.5
3
2.5
2
1.5
1
0.5
0
Net working capital ratio 3.464655085 2.825140521 0.988901715 1.531023778 2.408260004

12. Fixed asset turnover ratio:
Fixed assets
---------------------
Shareholder’s 
fund
Fixed asset turnover ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
4
3.5
3
2.5
2
1.5
1
0.5
0
Fixed asset turnover ratio 1.66 2.24 2.78 3.36 2.8

13. Net profit ratio :
Net profit after tax x 100
Sales

Net Profit Ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
10%
5%
0%
-5%
-10%
-15%
-20%
Ratio -15% 2% 5% 4% 4%

14. Return on equity:
Net income / Share holder’s equity

ROE
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
-120%
ROE -107% 5.02% 14.26% 10.59% 10.55%

15. Interest coverage ratio : EBIT / F I

Interest coverage ratio
2012-2013 2011-2012 2010-2011 2009-2010 2008-2009
12
10
8
6
4
2
0
Interest coverage ratio 0.96 1.44 2.1 3.12 10.7

16. 
 company has some liquidity problem.
 The company’s interest coverage ratio is below the ideal ratio,
this was due to increase in debts.
 A quick ratio is an indication that the firm is liquid and has the
ability to meet its current liabilities in time
 Cash holding ratio ratio shows that company carries only small
amount of cash.
FINDINGs

17. FINDINGs

 the inventory turnover ratio has come down because the
company has spent less in the purchases when compared
with the previous year.
 The funds are not sufficient to finance the fixed assets &
the firm has to depends upon outside to finance fixed
assets.

18. 