Asian Paints Limited is India's largest paint company based in Mumbai. The document analyzes Asian Paints' working capital management and profitability ratios from 2009 to 2013. It finds that while the company's sales have increased, it has been able to manage its daily operations with decreasing working capital. Asian Paints has maintained strong liquidity and profitability ratios over this period, demonstrating efficient working capital management despite sales growth.

1. WORKING CAPITAL
MANAGEMENT
ASIAN PAINTS LIMITED
BY-Gopal Kumar
13DM041
IMIS,Bhubaneswar

2.  Asian Paints Limited is an
Indian chemicals company
headquartered in Mumbai, India. Asian
Paints Ltd is India's largest paint
company and Asia's third largest paint
company with a turnover of Rs 96.32
billion. Operations in 22 countries .

3. As we see in above graph that current asset & current liability has an
increasing trend. Which shows that company’s current ratio is
increasing. Company should aim to keep the current ratio minimum
of 0.6:1,for an uninterrupted production. Above graph also depicts
that the company’s liquidity position is good due to its increasing
current ratio

4. Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Total
Current
Assets
3,563.15 2,937.79 1,994.24 1,591.29 1,547.71
Current
Liabilitie
s
2,466.85 2,262.21 1,759.27 1,469.08 1,105.72
WC 1,096.30 675.58 234.97 122.21 441.99

5. The working capital first decreased in the FY 09-10
then there has been an increasing trend in working
capital with the increasing trend in sales. Which shows
that company is good position.

6. Return On Assets=Net Earning/Total Assets

7. LIQUIDITY RATIOS:-
QUICK RATIOS=(Cash & Equivalent+Short Term
Investment+Account Recivables)/CL
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
QUICK RATIO
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Series1 0.82 0.75 0.92 0.86 0.78
Axis Title
Quick Ratio

8. Cash Ratio=Cash & Equivalent/CL
0.42
0.40
0.58
0.49
0.26
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Cash Ratio
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Series1 0.42 0.40 0.58 0.49 0.26
Axis Title
Cash Ratio

9. Current Ratio=CA/CL
Current Ratio
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Current Ratio
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Series1 1.44 1.30 1.13 1.08 1.40
Axis Title
Though the company’s sales has shown an increasing trend . There
is a fall in liquidity position . Which shows that company is able to
manage its day to day activities with less cash balance . Which of
course can be taken as company has a goodwill in the market

10. PROFITABILITY RATIO:
Return On Assets=Net Earning/Total
Assets
Return On Assets
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Return On Assets
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Series1
Series2 0.31 0.32 0.35 0.44 0.27
Axis Title
The return on asset has first shown an increasing trend 2009-
2010,then it has shown an decreasing trend

11. Return On Equity=Net Earning/Owner's
Equity
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Return On Equity
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
Series1 12.09 10.64 9.19 9.22 4.37
Axis Title
Return On Equity
The return on equity has shown an increasing trend which shows
that the company is in good position.

12. Gross Margin=(Sales-
COGS)/Sales
Gross Margin
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Gross Margin
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
Series1 0.13 0.13 0.14 0.16 0.12

13. Return On Sales=Net
Earning/Sales
Return On Sales
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Return On Sales
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
Series1 0.10 0.10 0.11 0.13 0.07
The overall profitability position of th company is good with a
increasing sales and is able to manage the company with less
working capital

14. AGGRESSIVE
Advantages:
i) 
Less chance of bad debts
ii) Recover money more quickly and thereby
reducing the Cash Conversion Cycle.
Disadvantages:
i) Customers may object and the firm may lose
sales/customers
ii) Expensive Strategy as we have to call
customers again and again or send them letters
several times.

15. CONCLUSION
As per the study of different ratios .we
can conclude that Asian paints is a
profit making company with a very less
working capital . Though the company
sales is increasing , the company is
able to manage its day to day activities
with less working capital which shows
that the company is able to purchase its
raw material in credit . This shows that
company has built its good goodwill in
the market.

16. THANK YOU