CHAPTER 1

EXECUTIVE SUMMARY

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 EXECUTIVE SUMMARY
Title of the study:

“The study of working capital management”

As a part of curriculum, every student studying M.COM has to undertake a

project on a particular subject assigned to him/her. Accordingly I have been
assigned the project work on the study of working capital management of cashew
industries, Dodamarg.
Decisions relating to working capital (Current assets-Current liabilities) and
short term financing are known as working capital management. It involves the
relationship between a firm’s short-term assets and its short term liabilities.
The goal of working capital management is to ensure that the firm is able to
continue its operation and that it has sufficient cash flow to satisfy both maturing
short term debt and upcoming operational expenses.
Working capital is used in Dodamarg cashew industries., for the following
purpose:-
Raw material, work in progress, finished goods, inventories, sundry debtors, and
day to day cash requirements.in Dodamarg there are 2 cashew industries
1) Janaki cashew factory (Kalane)
2) Matane cashew factory
3) Maneri cashew Factory
The Both Factory, keep certain funds which is automatically available to
finance the current assets Requirements.The various information regarding
“Working Capital Management” such as classification, determinants, sources have
been discussed relating to Dodamarg Cashew industries. Ratio Analysis has been
Carried out using Financial Information for last five accounting years i.e. from
2006 to 2010 Ratios like Working capital Turnover Ratio, Quick Ratio, Current
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Ratio, Inventory Turnover Ratio, Debtor Turnover Ratio, Creditors turnover rario
have also been analyzed. A Statement of Changes in Working Capital has also
been analyzed.
At Dodamarg cashew Industries the working capital management has
shown increase in the period of study. This shows working capital is managed
effectively and all the other departments are working in perfect co-ordination to
ensure the progress of Dodamarg cashew Industries private ltd., but I have given
some Suggestions & Conclusions on the basis of my Project Study.

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 CHAPTER- 2
INTRODUCTION

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 INTRODUCTION
INTRODUCTION OF WORKING CAPITAL:
Working capital is the life blood and nerve centre of a business. Just as

circulation of blood is essential in the human body for maintaining life, working

capital is very essential to maintain the smooth running of a business. No business

can run successfully without an adequate amount of working capital.

There is operative aspects of working capital i.e. current assets which is

known as funds also employed to the business process from the gross working
capital Current asset comprises cash receivables, inventories, marketable securities
held as short term investment and other items nearer to cash or equivalent to cash.
Working capital comes into business operation when actual operation takes place
generally the requirement of quantum of working capital is determined by the
level of production which depends upon the management attitude towards risk and
the factors which influence the amount of cash, inventories, receivables and other
current assets required to support given volume of production.
Working capital management as usually concerned with administration of
the current assets as well as current liabilities. The area includes the requirement of
funds from various resources and to utilize them in all result oriented manner. It
can be stated without exaggeration that effective working capital management is
the short requirement of long term success.
The importance of working capital management is indisputable; Business
liability relies on its ability to effective management of receivables, inventory, and
payables. By minimizing the amount of funds tied up in current assets. Firms are
able to reduce financing costs or increase the funds available for expansion.

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MEANING OF WORKING CAPITAL

Working capital means the funds (i.e.; capital) available and used for day to day

operations (i.e.; working) of an enterprise. It consists broadly of that portion of assets of a

business which are used in or related to its current operations. It refers to funds which are

used during an accounting period to generate a current income of a type which is

consistent with major purpose of a firm existence.

In Accounting:

DEFINITIONS:

Many scholars’ gives many definitions regarding term working capital some of

these are given below.

According to Weston & Brigham

“Working capital refers to a firm’s investment in short-term assets cash, short

term securities, accounts receivables and inventories .

Bonnerille”

.Positive working capital means that the company is able to pay off its short-term

liabilities companies that have a lot of working capital will be more successful since they

can expand and improve their operations.

Negative working capital means that a company currently is unable to meet its

short-term liabilities with its current assets

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OBJECTIVES OF WORKING CAPITAL MANAGEMENT

Effective management of working capital is means of accomplishing the

firm’s goal of adequate liquidity. It is concerned with the administration of current

assets and current liabilities. It has the main following objectives -

1. To maximize profit of the firm.

2. To help in timely payment of bills.

3. To maintain sufficient current assets.

4. To ensure adequate liquidity of the firms.

5. It protects the solvency of the firm.

6. To discharge current liabilities .

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THE NEEDS OF WORKING CAPITAL MANAGEMENT
The need for working capital arises due to the time gap between production and

realization of cash from sales. Working capital is must for every business for purchasing

raw-materials, semi finished goods, stores & spares etc and the following purposes.

1. To purchase raw materials, spare parts and other component.

A manufacturing firm needs raw-materials and other components parts for the

purpose of converting them in to final products, for this purpose it requires working

capital. Trading concern requires less working capital.

2. To meet over head expenses.

Working capital is required to meet recurring over head expenses such as cost
of fuel, power, office expenses and other manufacturing expenses.
3. To hold finished and spare parts etc.

Stock represents current asset. A firm that can afford to maintain stock of

required finished goods, work in progress & spares in required quantities can

operate successfully. So for that adequate quantity of working capital is required.

4. To pay selling & distribution expenses.

Working capital is required to pay selling & distribution expenses. It includes

cost of packing, commission etc.

5. Working capital is required for repairs & maintenance both machinery as well as

factory buildings.

6. Working capital is required to pay wages, salaries and other charges.

7. It is helpful in maintain uncertainties involved in business field.

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WORKING CAPITAL MANAGEMENT

Working Capital Management refers to management of current assets and current

Liabilities. The major thrust of course is on the management of current assets .This
Is understandable because current liabilities arise in the context of current assets.
Working Capital Management is a significant fact of financial management. Its
Importance stems from two reasons:-
 Investment in current assets represents a substantial portion of total investment.
 Investment in current assets and the level of current liabilities have to be geared
quickly to change in sales. To be sure, fixed asset investment and long term financing ar e
responsive to variation in sales.
CLASSIFICATION OF WORKING CAPITAL

WORKING CAPITAL

On The Basis of On The Basis of Time

Concepts

Gross Working Net Working Permanent / Temporary /

Capital Capital Fixed Working Fluctuating
Capital Working Capital

Initial Working Regular Working

Capital Capital

Seasonal Special Working

Working Capital Capital Page | 9
I. On The Basis of Concepts
1) Gross Working Capital
Gross working capital is the amount of funds invested in various components of current

assets. Current assets are those assets which are easily / immediately converted into cash within a

short period of time say, an accounting year. Current assets includes Cash in hand and cash at

bank, Inventories, Bills receivables, Sundry debtors, short term loans and advances.

This concept has the following advantages:-

i. Financial managers are profoundly concerned with the current assets.

ii. Gross working capital provides the correct amount of working capital at the right time.

iii. It enables a firm to realize the greatest return on its investment.

iv. It helps in the fixation of various areas of financial responsibility.

v. It enables a firm to plan and control funds and to maximize the return on investment.

For these advantages, gross working capital has become a more acceptable concept in financial

management.

2) Net Working Capital

This is the difference between current assets and current liabilities. Current liabilities are
those that are expected to mature within an accounting year and include creditors, bills payable
and outstanding expenses.
Working Capital Management is no doubt significant for all firms, but its significance is
enhanced in cases of small firms. A small firm has more investment in current assets than fixed
assets and therefore current assets should be efficiently managed.
The working capital needs increase as the firm grows. As sales grow, the firm needs to
invest more in debtors and inventories. The finance manager should be aware of such needs and
finance them quickly.

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II. On The Basis of Concepts
1) Permanent / Fixed Working Capital
Permanent or fixed working capital is minimum amount which is required to ensure
effective utilization of fixed facilities and for maintaining the circulation of current assets. Every
firm has to maintain a minimum level of raw material, work- in-process, finished goods and cash
balance. This minimum level of current assts is called permanent or fixed working capital as this
part of working is permanently blocked in current assets. As the business grow the requirements
of working capital also increases due to increase in current assets.
a) Initial working capital
At its inception and during the formative period of its operations a company must have
enough cash fund to meet its obligations. The need for initial working capital is for every
company to consolidate its position.

b) Regular working capital

Regular working capital refers to the minimum amount of liquid capital required to keep
up the circulation of the capital from the cash inventories to accounts receivable and from
account receivables to back again cash. It consists of adequate cash balance on hand and at
bank, adequate stock of raw materials and finished goods and amount of receivables.

2) Temporary / Fluctuating Working Capital

Temporary / Fluctuating working capital is the working capital needed to meet seasonal as
well as unforeseen requirements. It may be divided into two types.
a) Seasonal Working Capital
There are many lines of business where the volume of operations are different and
hence the amount of working capital vary with the seasons. The capital required to meet the
seasonal needs of the enterprise is known as seasonal Working capital.

b) Special Working Capital

The Capital required to meet any special operations such as experiments with new
products or new techniques of production and making interior advertising campaign etc, are also
known as special Working Capital.

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IMPORTANCE OF WORKING CAPITAL:

1. Solvency of the business: Adequate working capital helps in maintaining the solvency of

the business by providing uninterrupted of production.

2. Goodwill : Sufficient amount of working capital enables a firm to make prompt

payments and makes and maintain the goodwill.

3. Easy loans: Adequate working capital leads to high solvency and credit standing can

arrange loans from banks and other on easy and favorable terms.

4. Cash discounts: Adequate working capital also enables a concern to avail cash

discounts on the purchases and hence reduces cost.

5. Regular Supply of Raw Material: Sufficient working capital ensures regular supply of

raw material and continuous production.

6. Regular payment of salaries, wages and other day to day commitments : It leads to

the satisfaction of the employees and raises the morale of its employees, increases their

efficiency, reduces wastage and costs and enhances production and profits.

7. Exploitation of favorable market conditions: If a firm is having adequate working

capital then it can exploit the favorable market conditions such as purchasing its

requirements in bulk when the prices are lower and holdings its inventories for higher

prices.

8. Ability to Face Crises: A concern can face the situation during the depression.

9. Quick and regular return on investments: Sufficient working capital enables a

concern to pay quick and regular of dividends to its investors and gains confidence of the

investors and can raise more funds in future.

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ESTIMATION OF WORKING CAPITAL REQIUREMENTS

Managing the working capital is a matter of balance. The firms must have

sufficient funds on hand to meet its immediate needs. The Bahety chemicals & minerals

(pvt) Limited is manufacturing oriented organization.

The following aspects have to be taken into consideration while estimating the working
capital requirements.
They are:

1. Total costs incurred on material, wages and overheads.

2. The length of time for which raw material are to remain in stores before they

are issued for production.

3. The length of the production cycle or work-in-process, i.e., the time taken for

conversion of raw material into finished goods.

4. The length of sales cycle during which finished goods to be kept waiting for

sales.

5. The average period of credit allowed to customers.

6. The amount of cash required paying day-today expenses of the business.

7. The average amount of cash required to make advance payments.

8. The average credit period expected to be allowed by suppliers.

9. Time lag in the payment of wages and other expenses.

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OPERATING CYCLE OF WORKING CAPITAL:
The working capital cycle reserves to the length of time between the firm paying cash for

materials etc., this working capital also known as operating cycle. Working capital cycle or

operating cycle indicates the length or time between companies paying for materials entering

into stock and receiving the cash from sales of finished goods. The operating cycle (Working

Capital) consists of the following events. Which continues throughout the life of business?

CASH

RAW
DEBTORS MATERIALS

FINISHED STOCK WORK-IN-

PROGRESS

 Conversion of cash into raw materials.

 Conversion of raw materials into work in progress.

 Conversion of work in progress into finished stock.

 Conversion of finished stock into accounts receivables(Debtors)through sale and

 Conversion of account receivables into cash.

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DETERMINANTS OF WORKING CAPITAL REQUIREMENTS
Nature of Business:

The Nature of the business effects the working capital requirements to a

great extent. For instance public utilities like railways, electric companies, etc. need very
little working capital because they need not hold large inventories and their
operations are mostly on cash basis, but in case of manufacturing firms and trading
firms, the requirement of working capital is sufficiently large as they have to invest
substantially in inventories and accounts receivables .
1. Production Policies:

The production policies also determine the Working capital requirement. Through the

production schedule i.e. the plan for production, production process etc.

The Dodamarg Cashew industries has small production process.

2. Credit Policy:

The credit policy relating to sales and affects the working capital.

The credit policy influence the requirement of working capital in two ways:

1. Through credit terms granted by the firm to its customers/buyers.

2. Credit terms available to the firm from its creditors.

In Dodamarg cashew industries materials are purchased with a credit or cash and finished goods

are sold on cash basis and also credit basis.

4. Changes in Technology:

Technology used in manufacturing process is mainly determined need of working capital.

Modernize technology needs low working capital, where as old and traditional technology needs

greater working capital.

5. Size of the Business Unit:

The size of the business unit is also important factor in influencing the working capital

needs of a firm.

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6. Growth and Expansion:

The growth in volume and growth in working capital go hand in hand, however, the

change may not be proportionate and the increased need for working capital is felt right from the

initial stages of growth.

7. Dividend Policy:

Another appropriation of profits which has a bearing on working capital is dividend

payment. Payment of dividend utilizes cash while retaining profits acts as a source as working

capital Thus working capital gets affected by dividend policies.

The Dodamarg cashew industies follows liberal dividend policy will require more working

capital than company that follows a strict dividend policy.

8. Supply Conditions:

If supply of raw material and spares is timely and adequate, the firm can get by with a
comparatively low inventory level. If supply is scarce and unpredictable or available during
particular seasons, the firm will have to obtain raw material when it is available. It is essential to
keep larger stocks increasing working capital requirements.
9. Market Conditions:

The level of competition existing in the market also influences working capital

requirement. When competition is high, the company should have enough inventories of finished

goods to meet a certain level of demand.

10. Business Cycle:

The working capital requirements are also determined by the nature of the business cycle.

Business fluctuations lead to cyclical and seasonal changes which, in turn, cause a shift in the

working capital position, particularly for temporary working capital the variations in the business

conditions may be in two directions:

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 CHAPTER 3

INDUSTRY PROFILE

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 INDUSTRY PROFILE
The Cashew industry is one of the oldest domestic industries in India,
contributing significantly to both the industrial and economic growth of the country since
it achieved independence in 1947.The Indian cashew Industry forms the backbone of the
industrial and agricultural development of India and provides building blocks for
downstream industries.
In India, cashew was first introduced in Goa from where it spread to other parts of
the country. In the beginning it was mainly used for soil binding to check erosion.
Commercial cultivation began in the early 1960s and, over the years, cashew has become
a crop of high economy and attained the status of an export-oriented commodity, earning
considerable foreign exchange for the country.
The cashew industry is a traditional agro-based industry in India. It is considered
traditional mainly because of the low level of technology involved in the processing of
cashewnut. Though Cashewnut was brought to India in the 16th century, it gained
economic importance only in 1920 with the export of 10,160 tonnes of nuts to the U.S.A.
Until 1920, cashewnuts were collected from the markets in villages and distributed
among small-scale processors. Cashewnuts were mixed with sand and roasted in open
pots (Chattis) by the people of those days.
Cashew processing on commercial basis was initially started in Mangalore in the
present Karnataka State.' But by 1925 the business was started in Kollam in Kerala State
which later became the centre of the trade. The credit goes to Mr.Swaminathan, a native
of Tamil Nadu, for starting the first cashew processing industrial unit in Kollam.2
Cashew (Anacardium occidentale L.), a tree native of Eastern Brazil, was
introduced in India by the Portuguese nearly five centuries ago. In India, cashew was first
introduced in Goa, from where it spread to other parts of the country. Initially, it found
use in soil binding to check erosion. Commercial cultivation began in the early 1960s
and, over the years, cashew became a crop with high economic value and attained the
status of an export-oriented commodity, earning considerable foreign exchange for the
country.

Cashew Cultivation in India

 India is one of the leading producers, processors and exporters of cashews in the
world
 Currently, India has approximately 0.97 million hectares under cashew cultivation
with productivity of 770 kilograms per hectare.
 Maharashtra, Kerala and Karnataka are the primary producers of cashew along
the western coast of the country, while Andhra Pradesh (AP), Odisha, Tamil
Nadu (TN) and West Bengal (WB) are primary producers along the eastern coast
 In addition, cashew is also grown in Chhattisgarh, Goa, Gujarat and the
Andaman and Nicobar Islands
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KEY MARKETS AND EXPORT DESTINATIONS

 Export of cashew nut shell liquid/Cardanol from India stood at 8,325 MT, valued
at Rs 326.3 million (US$ 5.06 million) during 2017-18, while exports of cashew
kernels stood at 84,352 MT, valued at Rs 58.71 billion (US$ 910.94 million)
during the same period.
 India accounts for about 65 per cent of global cashew exports.
 India exports cashew kernels to over 60 countries. Its major markets are the US,
the Netherlands, Japan, Spain, France, Germany, the UK as well as Middle East
countries such as the UAE and Saudi Arabia.

CASHEW EXPORT PROMOTION COUNCIL OF INDIA

The Cashew Export Promotion Council of India (CEPCI) works to promote the
export of cashew kernels and CNSL. The council serves as an intermediary between
importers of cashew kernels and exporters who are members of the council. It also deals
with disputes on exports/imports arising due to quality standards and breach of
contractual obligations, among others. It undertakes numerous activities, such as
organising global buyer-seller meets as well as studies on nutritional aspects of cashew,
and providing support to cashew processors and exporters for improving infrastructure .

History
The Portuguese introduced cashew into India

ket for cashew is relatively new. Cashew started appearing on global

markets towards the middle of the 1920s

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 CHPTER 4
COMPANY PROFILE

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 COMPANY PROFILE
Dodamarg Cashew Industry is a small-scale industry. Dodamarg is a rural Region. It
is a last part of sindhudurg district. It is a also border in goa and Karnataka State. So
Dodamarg Cashew Industry is market is mostly depended on Goa.

In Dodamarg there are 3 cashew production factory. There are the Following

1) Janaki Cashew Factory

2) Matane Cashew factory

3) Maneri Cashew Factory

So I have Studied about the and personally visit the Janaki Cashew
Factory.And this Project Report All about the Janaki Cashew Factory.

The Factory purchased and constructed building in the year 1998. It started
production in the year 2000. It is a private Factory situated in the Rural village of ,
Ambewadi. On the outskirts of Dodamarg city which is enjoying all the required
facilities like water, power, transport, labors and good environment and materials.

The Factory is achieving its sales target with some ups and downs. The Factory has
been receiving good response from customers and expected to achieve better sales in
coming years .The Factory has its nature of business.
The Factory has not accepted any deposits from public as per the provisions of
section 58A of the company Act, 1956.

Three main cashew products are traded on the international market:

Cashew nut shell liquid (CNSL). A fourth product

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PROFILE OF JANAKI CASHEW FACTORY

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 Janaki .Cashew Factory
Name of the Factory

Year of establishment 2000.

Chairman Mrs. Sampada Ganpat Desai

Type of Factory Private Limited.

Janaki Cashew Factory,
Area of operation
AT Post- Kalane 416512
Tal- Dodamarg, Dist- Sindhudurg
Maharashtra State. Tel:-02363 - 232342.

Nature of Business Production and Sale of Cashew Nuts

Export places Sawantwadi, Kankavli, Kudal, Kolhapur, Mumbai,

Ratnagiri, mapusa(Goa), Panaji(Goa), Madgaun(Goa),
Assnora(Goa), Bicholim(Goa), Belgaum(Karnataka),
Chandgad(Karnataka).
.

No. of departments 6 [Six] Departments.

Number of employees 60

Number of working 6 days in a week.

days

Production capacity 15000 Kg Cashew Nuts) per month as per the 2018-
2019 report.

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CAPITAL STRUCTURE JANAKI CASHEW FACTORY

SHARE CAPITAL:-

1. Authorized capital Rs. 8,00,000

8000 equity shares of Rs. 100 each.
2. Subscribed/ paid-up share capital Rs.8,00,000
8,000 equity shares of Rs .100 each.
BORROWED FUND:-

The Company has taken long term loans from Sindhudurg District Bank. It has also taken

unsecured loans. The company has also received government subsidy of 25% on capital

investments.

TABLE SHOWING THE LONG TERM LOANS TAKEN BY BCM.CO.LTD

Loan
Year
Secured Loan Unsecured Loan

2015-2016 1251599.00 115000.00

2016-2017 1442360.00 1264000.00

2017-2018 1438845.00 1151471.00

2018-2019 1174672.00 849192.00

INVESTMENT IN FIXED ASSETS IS SOWN BELOW

SL.NO Fixed Assets Total Investment (Rs.)

1 Land and Building 30,00,000.00

2 Machinery 12,00,000.00

3 Adjacent Building 8,00,000.00

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 VISION AND MISSION OF JANAKI CASHEW FACTORY

“VISION”

“To fulfill the growing demand of Cashew Nuts and increasing the

production” Janaki Family is continuously going to pay their respect & rededicate

themselves to further fulfill the vision of the founder of Janaki Cashew Factory to

make humble contribution to Country, industry, rural society & their company

through innovative technology & through individual & collective Endeavour. In

todays Spirited & economical business environment without mission vision & its

principle no organization can manage to survive in the long run business.

Satisfaction of their shareholder, customers, their own people, Suppliers,

Institutions, Investors, Society & Community is paramount to them, They will

make whole hearted efforts for the Fullfillment of these objectives through their

interactions & interdependence with them, They have been at the forefront of

cashew & Agro based

They have a responsibility not only towards induetry but also towards

community also. They are acting as a friend & Contributors to well being of both

industrial & Rural community. They will be of assistance to community & industry

not only through their product & services but also through their knowledge &

expertise

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 “MISSION”

1. To provide employment.

2. Quality product,

3. Maximum satisfaction to customers.

4. To ensure enterprise growth.

5. To create clean and healthy environment.

6. To develop the establishing the organization in the city.

OBJECTIVES OF JANAKI CASHEW FACTORY

 To expand their market into other states.
 To modernize the organization by using the hi-tech machines in the
production process.
 To increase the productivity.
 To produce chemical into different area.
 To know the customer attitude towards alum Chemical.

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PRODUCT PROFILE:-

Cashew nut processing allows for the development of an important by-

product, which can increase its added value. The liquid inside the shell (CNSL)
represents 15 percent of the gross weight and has some attractive possible
medicinal and industrial uses. Cashew is a good crop for smallholder farmers. In
Mozambique cashew is considered by smallholder farmers to be one of their most
lucrative crops. Thus cashew has the potential to increase the incomes of poor
producers, to create employment opportunities during harvesting and processing
and to increase exports

Quality

First quality W210, W240, W320, W450, WB, WS,

LWP, SWPF
Second quality LBW210, LBW240, LBW320, LBW,
SW210, SW2440, SW320, SW, SB, SS,
LP, SP
Third quality DW320, DW350, DW
Fourth quality DW2, DW3F
Fifth quality SW2, SW3, DW, DWT
Sixth quality CS, SK, SK2, TPN, TPN2, TPB, DW4

Grading
 Cashew Kernels are graded into white/scorched wholes, pieces, splits, butts etc..
depending on the shape, size & color of the kernel.
 The Govt. of India Act prescribes 33 different grades of cashew kernels. Only
26 grades are commercially available and exported.
 W - 180, is the ' King of Cashew ' - They are larger in size and very expensive

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MAJOR TYPES
 W - 210, are popularly known as ' Jumbo ' nuts.
 W - 240, it is an attractive grade which is reasonably priced.
 W - 320, are the most popular among cashew kernels and highest in terms of
availability, worldwide.
 W - 450, are the smallest and cheapest white whole kernels and hence the
favorite among low priced whole grades.

Product description :

 WHITE WHOLES 240

Designation: W – 240
Trade Name: White Wholes
Color/ characteristics: White/pale ivory/light ash, Characteristic shapes
Count/454 gms size description: 220 – 240
M ax Moisture %: 5
Broken Max %: 5
NLSG NLG max %: 5 (NLSG & SW together

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 PRODUCT DISCRIPTION

 WHITE WHOLES 320

Grade Designation: W – 320

Trade Name: White Wholes
Colour/ characteristics: White/pale ivory /light ash, Characteristic
shapes
Count/454 gms size description: 300 - 320C
Max Moisture %: 5
Broken Max %: 5
N LSG NLG max %: 5 (NLSG & SW together

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 PRODUCT DISCRIPTION

 WHITE WHOLES 450:

Grade Designation: W – 450

Trade Name: White Wholes
Colour/ characteristics: White/pale ivory/light ash,
Characteristic shapes
Count/454 gms size description: 400 - 450C
M ax Moisture %: 5
Broken Max %: 5
N LSG NLG max%: 5 (NLSG & SW together

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 PRODUCT DISCRIPTION

 SCORCHED WHOLES 320

Grade Designation: SW – 320

Trade Name: Scorched Wholes
Colour/characteristics: Kernels may be scorched/ slightly
darkened due to over - heating while roasting or drying in
drier/borma
Count/454 gms size description: 300 - 320C
Max Moisture %: 5
Broken Max %: 5
NLSG NLG max%: 7.5 (NLSG & SSW together

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 PRODUCT DISCRIPTION

 SCORCHED WHOLES 450

Grade Designation: SW – 450

Trade Name: Scorched Wholes
Colour/ characteristics: Kernels may be scorched/ slightly
darkened due to over - heating while roasting or drying in
drier/borma
Count/454 gms size description: 400-450
Max Moisture %: 5
Broken Max %: 5
NLSG NLG max %: 7.5 (NLSG & SSW together

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 PRODUCT DISCRIPTION

 SCORCHED WHOLES SECOND:

Designation: SSW
Trade Name: Scorched Wholes Seconds
Colour/ characteristics: Kernels may be over - scorched,
immature, shrivelled (Pirival), speckled (Karaniram),
discoloured and light blue
Count/454 gms size description: N.A
Max Moisture %: 5
Broken Max %: 5
NLSG NLG max %: 7.5 (DW

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PRODUCT DISCRIPTION

 BABY BITS

Designation: BB
Trade Name: Baby Bits
Colour/ characteristics: White/ Pale ivory or light ash
Plemules and broken kernels
Count/454 gms size description: smaller than those described
as SWP but not passing through a 10 mesh 24 SWG Sieve / 1.70
mm I.S. Sieve
Max Moisture %: 5
Broken Max %: 5
NLSG NLG max %: 1% (Cashew powder)

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SWOT ANALYSIS OF JANAKI CASHEW FACTORY
 STRENTHS
1. Availability of manpower.

2. High quality product.

3. Low price high quality.

4. Availability of raw materials.

 WEAKNESS
1. Heavy transport charges.

2. Major consumption in paper industries but limited paper industries in

Karnataka.

 OPPORTUNITIES
1. Technological up gradation.

2. Foreign market expansion.

3. Online ordering process.

4. Product expansion.

5. Market expansion.

 THREATS
1. Entry of competitors.

2. Product substitution.

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DEPARTMENTAL STUDIES SOF JANAKI CASHEW FACTORY

 PURCHASE DEPARTMENT.

 ADMINISTRATION DEPARTMENT.

 PRODUCTION DEPARTMENT.

 FINANCE DEPARTMENT.

 MARKETING DEPARTMENT

 PURCHASE DEPARTMENT:

The purchase officers and assistance head the purchase department. The
clearly take the requisition from various departments and forward to the purchase
offices and then the purchase officer arranges to the purchase required materials
from the best seller available in the market.The purchase department plays a very
important role in the Factory where the dealing made between the purchase
officers and sellers is convenient then it can be help in reduction of the price of the
materials and their by which will also result in increase of profit.

FUNCTIONS

 Purchase the good quality materials.

 Have a better dealing at present and future with the supplier.

 Purchase only and required materials.

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 PRODUCTION DEPARTMENT:

The Production department is one of the important department in the

company. It is the department that produces the product on which the company is
established. Special care is taken in this department on production.

Processing Steps:
1. Preliminary cleaning to remove twings, stones and other debris
2. Calibration to grade the nuts into different sizes
3. Humidifying the nuts to 16% moisture level to facilitate ease of shelling
4. Roasting to remove the CNSL and, depending on the process used, make the
shell brittle and easier to crack
5. Second cleaning and cooling in mechanized processes the nuts are
centrifuged to remove any remaining CNSL on the surface
6. Second calibration, where the nuts are to be cut mechanically, they
must be accurately graded before submission to the cutting process
7. Shelling

Page | 37
 8. Separation to remove remaining bits of shell
9. Pre-grading to separate the wholes from the broken kernels
10. Drying for better storage and easier peeling of the testa which shrivels when
dry
11. Peeling to remove the testa
12. Grading to international specifications. 26 different grades are exported.
They rauge from whitw wholes through butts splits pieces and baby bits
depending upon the size of the piece.
13. Re-humidifying to 5% moisture otherwise the kernels are too brittle
14. Packing

Labour Required:

 Women

 Semi skilled labor.

 The industry is dominated by smallscale, single-owner or family-owned

businesses.

 ADMINISTRATION DEPARTMENT:

Administration Department takes care of the whole activities happening in and

around the company. The personal manager heads the department and personal managers
is responsible for the man power in the whole factory. Personal Manager is concerned
with the most efficient use of people to achieve organization and individual goals. It is
the way of managing people at work so that they give the best to the organization.

Page | 38
 Administration department also takes care of the planning, organizing, directing,
controlling, procuring and developing and integrating of the Factory and human resources
to the end. It also looks after the financial matters of the Factory.

FUNCTIONS:

 Maintenance of files, records etc.,

 Collecting and presenting the data in the form of useful information from the
records.
 Maintenance of time management in the company.
 Good relation between the employer and employee.
 Maintaining the financial matters of the company.
 Good relations with supplier and customers.
 Maintenance of salary, wages records.
 Keeping all the records of all the departments .

 FINANCE DEPARTMENT:

Finance is an essential component of the business to maintain its operations

effectively. This dept. is concerned with day-to-day activities like purchases, sales salary
etc. and proper management and maintenance of accounts of concerned year.

Since Janaki Cashew Factory is the small scale industry it maintains very good
accounting system,The whole financial matter is mainly dealt by the separate dept called
finance dept.

The Major sources of finance are,

1. Shares ( Equity Shares)

2. Loan from corporation banks.

Page | 39
FUNCTIONS:

 Recording day to day transactions in a systematic manner.

 Maintaining proper accounts of purchases and sales.
 Maintaining profit & loss A/c and Preparing the Balance sheet of Janaki Cashew
Factory systematically.
 Paying the interest on loans at right time.
 Maintain & paying the tax’s & insurance.
 Make use of available finance resources properly.
 Maintain liquidity of assets properly to earn the maximum profit.

 MARKETING DEPARTMENT :

Marketing Department is also a one of the important department in the Factory.

This department is important because it gives a clear picture of how much to produce?
Which will also help in the investment to he made and to purchase department to
purchase raw materials.
The marketing department has a procedure, by which it is done i.e., fit receives the
order from the buyers and forwards the order to the production department and as per the
order production department produces the required production and it makes the packing
of materials and sends it to the buyers as per the order.
Marketing department also take care of the time given to it by the buyer to
produce the product. If there is any default in the order such as product not as per order or
not at time or minimum product supplied the party will send back the sample to the
organization and the organization gives certain percentage of discount for the default but
no replacement is made

Page | 40
CHAPTER 5

OBJECTIVES

Page | 41
 OBJECTIVES OF THE STUDY

 To study the sources and uses of the working capital.

 To study the liquidity position through various working capital related ratios.

 To study the working capital components such as receivables accounts,

Cash management, Inventory management.

 To make suggestions based on the finding of the study.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The

main scope of the study was to put into practical the theoretical aspect of the study into

real life work experience. The study of working capital is based on tools like Ratio

Analysis, Statement of changes in working capital. Further the study is based on last 5

years Annual Reports of Bahety Chemicals & minerals pvt ltd.

STATEMENT OF THE PROBLEM

This project deals with the study about “Working Capital Management” in
Dodamarg Cashew Industry with Special Referance to janaki Cashew Factory.

Page | 42
BACKGROUND OF STUDY

"Cash is the lifeblood of business" is an often repeated maxim amo ngst

financial managers. Working capital management refers to the management of current or

short-term assets and short-term liabilities. Components of short-term assets include

inventories, loans and advances, debtors, investments and cash and bank balances. Short-

term liabilities include creditors, trade advances, borrowings and provisions. The major

emphasis is, however, on short-term assets, since short-term liabilities arise in the context

of short-term assets. It is important that companies minimize risk by prudent working

capital management.

LIMITATIONS OF THE STUDY

 The study duration (summer in plant) is short.

 The analysis is limited to just five years of data study (from year 2006 to year 2010)

for financial analysis.

 Limited interaction with the concerned heads due to their busy schedule.

 The findings of the study are based on the information retrieved by the selected unit.

Page | 43
IMPORTANCE OF THE STUDY

There are numerous aspects of working capital management that makes it an important
topic for the study.
The management of assets in any organization is an essential part of
overall management. The enterprise, at the time of formation attaches great importance to
fixed assets management, as a part of investment decision-making. However, in the
overall day-to-day financial management, after the initial investment, the management
gives more importance to managing working capital. If we look at any financial statement
it will be evident that the investment in fixed assets remains more or le ss static but the
working capital is constantly changing. A healthy working capital position is the sine -
qua-non of a successful business. This is reflected in adequate inventories, lowest level of
debtors, minimum utilization of bank facilities for working capital, etc. thus the study of
working capital management occupies an important place in financial management.

Page | 44
 CHAPTER 6
RESEARCH METHODOLOGY & DATA
COLLECTION

Page | 45
 RESEARCH METHODOLOGY & DATA COLLECTION
Research methodology is a way to systematically solve the research problem. It
May be understood as a science of studying now research is done systematically. In that
various steps, those are generally adopted by a researcher in studying his problem along
with the logic behind them “The procedures by which researcher go about their work of
describing, explaining and predicting phenomenon are called methodology”
Research Methodology is the provision of information on methods & techniques
used conducting research. It includes information on research design, Methods of data
collection, use of sampling, field work, organization, analysis & interpretation of data
collection etc.

TYPE OF RESEARCH:

This project “A Study on Working Capital Management of Dodamarg Cashew Industry

with special Referance Janaki Cashew Factory Kalane,is considered as an analytical research.
Analytical Research is defined as the research in which, researcher has to use facts or
information already available, and analyze these to make a critical evaluation of the facts,
figures, data or material.

SOURCE OF RESEARCH DATA:

Primary Sources Secondary Sources

Presentations & Other documents

Observation Books & Annual Reports

Discussion Website

Page | 46
PRIMARY DATA:

. The primary data is that data which is collected fresh or first hand, and for

first time which is original in nature.

In this study the Primary data has been collected from Personal Interaction

with Owner i.e., Mrs. Sampada Desai and other staff members.

The Primary Data is a data specifically generated to meet the data needs of

the problem on hand. It is also called as quantitative data because it relates to

human behavior & motivation. Primary data are created data & obtained by asking

questions to respondents or by observing or through experimental research.

Respondents can be interviewed personally, or on telephone or through mail

questionnaire. I have collected the information and data through formal and

informal discussions with our professional guide in the organization, and through

personal, interviews, questionnaire, observation etc. which are methods available

for Primary data collection.

 Observation: With the help of observation method I observed

inventory structure., Inventory keeping, & the Factory;’s internal

environment.

 Discussion: With the help of discussion method I discussed with the

executive officer of the concern department & I collected Some information

about the inventory management of the Factory

Page | 47
 SECONDARY DATA:

The secondary data are those which have already collected and stored.

Secondary data easily get those secondary data from records, annual reports of the

Factory’s etc. It will save the time, money and efforts to collect the data.

The major source of data for this project was collected through annual
reports, profit and loss account of 5 year period from 2015-2019 & some more
information collected from internet and text sources.
The Secondary data is the published data collected by someone else for
purposes other than the researcher problem under investigation. Information which
is already available in published form & collected for research purpose is termed
as Secondary data. It is Like a library or readymade source of information which
can be used by any one for any purpose. It is also called as quantitative data. I have
also collected Some Secondary data from Factory’s website, annual report, Factory
presentation, & other company documents.
 Factory website- With the help of factory website I got Lot of
information. About Factory’s missions, principles, about their EHS,
award & their products
 Factory’s Paper Presentation- with the help of this Presentation I got
information
About Factory’s domestic and foreign customers suppliers,
products& other all type of inventory maintained by Company

Page | 48
SAMPLING DESIGN:

Sampling unit : Financial Statements.

Sampling Size : Last five years financial statements.

Tool Used for calculations: - MS-Excel.

TOOLS USED FOR ANALYSIS OF DATA

The data were analyzed using the following financial tools. They are

 Ratio analysis.

 Statement of changes in working capital.

Page | 49
 CHAPTER 7

DATA ANALYSIS & INTERPRETATION

Page | 50
 ANALYSIS OF WORKING CAPITAL MANAGEMENT

A] NET WORKING CAPITAL

An analysis of the net working capital will be very help full for knowing the
operational efficiency of the company. The following table provides the data relating to
the net working capital of Janaki Cashew Factory

NET WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIS

Years Current Asset Current Liabilities NWC

2014-2015 2563099.00 1241543.00 1321556.00
2015-2016 4199646.00 1987765.00 2221881.00
2016-2017 4277617.00 1429079.00 2848538.00
2017-2018 5003428.00 2089899.00 2913529.00
2018-2019 5246666.00 2165659.00 3081007.00

Chart showing
900000

800000

700000

600000
NWC

500000

400000
NWC

300000

200000

100000

0
2014-15 2015-16 2016-17 2017-18 2018-19

Yea

Page | 51
INTERPRETATION:-
The above chart shows that during the year 2014-2015 the company has
1321556.00 N.W.C. In the year 2015-2016 huge increase in the N.W.C is 2221881.00
and in the year 2016-2017 the company has 2848538.00 N.W.C in the year 2017-2018
the company has 2913529.00 N.W.C the N.W.C of the company is increasing compared
to the previous years, in the year 2018-19 the company has 3081007.00 N.W.C this
means the company in a positive position & N.W.C has improved vary fast as compared
to the previous years which show liquidity Position of the Janaki Cashew Factory Kalane
has always more & sufficient working capital available to pay off its current liabilities

B] RATIO ANALYSIS

INTRODUCTION:
Ratio Analysis is a powerful tool of financial analysis. Alexander Hall first
presented it in 1991 in Federal Reserve Bulletin. Ratio Analysis is a process of
comparison of one figure against other, which makes a ratio and the appraisal of the
ratios of the ratios to make proper analysis about the strengths and weakness of the firm’s
operations. The term ratio refers to the numerical or quantitative relationship between
two accounting figures. Ratio analysis of financial statements stands for the process of
determining and presenting the relationship of items and group of items in the statements.

Note: I have used the ratio analysis in this project in order to substantiate the
managing of working capital. For this, I used some of the ratios to get the required output

Various working capital ratios used by me are as follows:

1. LIQUIDITY RATIOS:
Liquidity refers to the ability of a firm to meet its current obligations as and
when these become due. The short-term obligations are met by realizing amounts
from current, floating or circulating assets. Following are the ratios which can help
to assess the ability of a firm to meet its current liabilities.

1. Current ratio
2. Acid Test Ratio / Quick Ratio / Liquidity Ratio
3. Absolute liquid ratio

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2. TURNOVER/ACTIVITY RATIOS:
These are the ratios which indicate the speed with which assets are converted or turned
over into sales.
1. Inventory Turnover Ratio.
2. Debtors/ Accounts receivables Turnover Ratio.
3. Creditors/Accounts Payables Turnover Ratio.
4. Working Capital Turnover Ratio.

1. CURRENT RATIO:-
It is a ratio, which express the relationship between the total current Assets and current
liabilities. It measures the firm’s ability to meet its current liabilities. It indicates the availability
of current assets in rupees for every one rupee of current liabilities. A ratio of greater than one
means that the firm has more current assets than current liabilities claims against them. A
standard ratio between them is 2:1.

Current Ratio: Current Assets

Current Liabilities
Year Current Assets Current Liabilities Current Ratio
2014-15 2563099.00 1241543.00 2.06
2015-16 4199646.00 1987765.00 2.11
2016-17 4277617.00 1429079.00 2.99
2017-18 5003428.00 2089899.00 2.39
2018-19 5246666.00 2165659.00 2.42

It is seen from the above chart that during the year 2014-15the current ratio was
2.06, during the year 2015-16 it was 2.11 and in the year 2016-17 it was 2.99. This shows
the current ratio increases every year but in the year 2017-18 the current ratio was dropped
to 2.39 due to increase in current liabilities. In the year 2018-19 the current ratio has
increases 2.42. The current ratio is above the standard ratio i.e., 2:1. Hence it can be said
that there is enough current assets in Janaki Cashew Factory Kalane to meet its current
liabilities.

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 2. ACID TEST RATIO / QUICK RATIO / LIQUIDITY RATIO:-
This ratio establishes a relationship between quick/liquid assets and current liabilities. It
measures the firms’ capacity to pay off current obligations immediately. An asset is liquid if it
can be converted in to cash immediately without a loss of value; Inventories are considered to be
less liquid. Because inventories normally require some time for realizing into cash. This ratio is
also known as acid-test ratio. The standard quick ratio is 1:1. Is considered satisfactory.

Quick Ratio = Quick Assets (current assets - Inventory)

Current Liabilities

Year Current Assets Inventories Quick Assets Current Liabilities Quick Ratio
2014-15 2563099.00 732455.00 1830644.00 1241543.00 1.47
2015-16 4199646.00 1061071.00 3138575.00 1987765.00 1.57
2016-17 4277617.00 1636430.00 2641187.00 1429079.00 1.84
2017-18 5003428.00 1322901.00 3680527.00 2089899.00 1.86
2018-19 5246666.00 1160611.00 4086055.00 2165659.00 1.88

INTERPRETATION:-
During the year 2014-15 the quick ratio was 1.47, in the year 2015-16 it increases to
1.57 This shows the Factory maintains satisfactory quick ratio, in the year 2016-17 the
quick ratio increases to 1.84, in the year 2017-18 it increases 1.86, in the year 2018-19 it
increases 1.88, due to increase in quick assets. The quick ratio is above the standard ratio
i.e., 1:1. Hence it shows that the liquidity position of the Factory is adequate

3. ABSOLUTE LIQUID RATIO:-

Absolute liquid ratio may be defined as the relationship between Absolute liquid assets
and current liabilities. Absolute liquid assets include cash in hand and cash at bank.
The standard ratio is 0.5: 1.

Absolute Liquidity Ratio = Cash & Bank Balance

Current Liabilities

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 Years Cash & Bank Balance Current Liabilities Absolute Liquidity Ratio
2014-15 243742.00 1241543.00 0.19
2015-16 605660.00 1987765.00 0.30
2016-17 483152.00 1429079.00 0.33
2017-18 920815.00 2089899.00 0.44
2018-19 978938.00 2165659.00 0.45

INTERPRETATION:
During the year 2014-15 the Absolute liquidity ratio was 0.19, during the year 2015-16 it
was 0.30 and in the year 2016-17 it was 0.33, in the 2017-18 it was 0.44 This shows the
Absolute liquidity ratio increases every year but it is below the standard ratio. In the year 2018-
19 the Absolute liquidity ratio has increases 0.44.
Hence it shows that the liquidity position of the Factory is satisfactory.

1. INVENTORY TURNOVER RATIO:-

Inventory turnover ratio is the ratio, which indicates the number of times the stock is turned
over i.e., sold during the year. This measures the efficiency of the sales and stock levels of a
company. A high ratio means high sales, fast stock turnover and a low stock level. A low stock
turnover ratio means the business is slowing down or with a high stock level.
Inventory Turnover Ratio = Net Sales
Closing Inventory
Year Net Sales Closing inventory Inventory Turnover ratio
2014-15 7042081.00 732455.00 9.61 Times
2015-16 7421229.00 1061071.00 6.99 Times
2016-17 7594285.00 1636430.00 4.64 Times
2017-18 7296046.00 1322901.00 5.51 Times
2018-19 7845651.00 1160611.00 6.75 Times

Page | 55
INTERPRETATION:
It is seen from the above chart that During the year 2014-15 the Inventory t/o ratio is 9.61
times, in the year 2015-16 it decreased to 6.99 times, But in the year 2016-17 it decreased to
4.64 times . There was a subsequent increase in the year 2017-18 and 2018-19 to 5.51 times and
6.75 times respectively.
This shows the Factory has more sales

2. INVENTORY HOLDING PERIOD :-

This period measures the average time taken for clearing the stocks. It indicates that how
many days’ inventories take to convert from raw material to finished goods.

Inventory Holding Period = Days in a year

Inventory turn over ratio

Year Days in a Year Inventory Turnover Ratio Inventory Holding Period

2014-15 365 9.61 Times 37.98 Days
2015-16 365 6.99 Times 52.21 Days
2016-17 365 4.64 Times 78.66 Days
2017-18 365 5.51 Times 66.24 Days
2018-19 365 6.75 Times 54.07 Days

INTERPRETATION:
Inventory holding period fluctuating over the years. It was 37.98 days in the year
2014-15. It Increased to 52.21days in the year 2015-16, it increased to 78.66 days in the
year 2016-17, there was a subsequent decrease in the year 2017-18and 2018-19 to 66.24
days and 54.07 days respectively.
This shows the company is minimizing these inventory-holding days thereby to increase
the sales.

Page | 56
3. DEBTORS / ACCOUNTS RECEIVABLES TURNOVER RATIO:-
Debtor’s turnover ratio indicates the speed of debt collection of the firm. This ratio
computes the number of times debtors (receivables) has been turned over during the
particular period.
Debtors Turnover Ratio = Net Sales
Average Debtors

Note: in Janaki Cashew Factory, we have taken the total net sales instead of the credit
sales, because the credit sales information has not available for the calculation of DTR.

Year Net Sales Average Debtors Debtors Turnover Ratio

2014-15 7042081.00 793027.00 8.88 Times
2015-16 7421229.00 1174245.00 6.32 Times
2016-17 7594285.00 491857.00 15.44 Times
2017-18 7296046.00 718114.00 10.16 Times
2018-19 7845651.00 807165.00 9.72 Times

INTERPRETATION:
It is clear that debtor turnover ratio fluctuating over the years. It was 8.88 times in
the year 2014-15 It decreased to 6.32 times in the year 2015-16, It again increased to
15.44 times in the year 2016-17 but it decreased to 10.16 times and 9.72 Times in the
year 2017-18 and 2018-19 respectively. This shows the company is not collecting debt
rapidly.

4. DEBTORS COLLECTION PERIOD :-

Debtors collection period measures the quality of debtors since it measures the
rapidity or the slowness with which money is collected from them a shorter collection
period implies prompt payment by debtors. It reduces the chances of bad debts. A longer
collection period implies too liberal and inefficient credit collection performance.

Page | 57
Average Collection Period = Days in a Year
Debtors Turnover Ratio

Year Days in a Year Debtors Turnover Ratio Debtors Collection Period

2014-15 365 8.88 Times 41.10 Days
2015-16 365 6.32 Times 57.75 Days
2016-17 365 15.44 Times 23.64 Days
2017-18 365 10.16 Times 35.92 Days
2018-19 365 9.72 Times 37.55 Days
INTERPRETATION:
Debt collection period changing over the years. It was 41.10 days in the year 2014-15. It
increased to 57.75 days in the year 2015-16 but in the year 2016-17 it decreased to 23.64 days.
There was a subsequent increase in the year 2017-2018 and 2009-10 to 35.92 days and 37.55
days respectively.
This shows the inefficient credit collection performance of the Factory.

5. CREDITORS/ACCOUNTS PAYABLES TURNOVER RATIO:-

Creditor’s turnover ratio is the ratio, which indicates the number of times the debts are paid
in the year. This ratio is calculated as follows.

Creditors Turnover Ratio = Net Purchases

Average Creditors
Note: In the Janaki Cashew Fsctory, we have taken the total Purchases instead of the credit
purchases, because credit purchases information has not available for the calculations of CTR.

Year Net Purchases Average Creditors Creditors Turnover Ratio

2014-15 4003134.00 573515.00 6.98 Times
2015-16 4540926.00 892127.00 5.09 Times
2016-17 463293800 649781.00 7.13 Times
2017-18 4963911.00 558999.00 8.88 Times
2018-19 4953699.00 557849.00 8.88 Times

Page | 58
INTERPRETATION:
It is clear that creditor turnover ratio changing over the years. It was 6.98 times in the
year 2014-15. It decreased to 5.09 times in the year 2015-16 there was a subsequent
increase in the year 2016-17 and 2017-18 to 7.13 times and 8.88 times respectively. In
the year 2018-19 it is same as compared to 2017-18 shows that company has making
prompt payment to the creditors.

6. CREDITORS PAYMENT PERIOD:-

The Creditors Payment Period represents the average number of days taken by
the firm to pay the creditors and other bills payables.

Average Payment Period = Days in a Year

Creditors Turnover Ratio

Year Days in a Year Creditors Turnover Ratio Average Payment Period

2014-15 365 6.98 Times 52.29 Days
2015-16 365 5.09 Times 71.71 Days
2016-17 365 7.13 Times 51.19 Days
2017-18 365 8.88 Times 41.10 Days
2018-19 365 8.88 Times 41.10 Days

INTERPRETATION:
Average payment period changing over the years. It was 52.29 days in the year
2014-15 It increased to 71.71 days in the year 2015-16, But in the year 2016-17 and
2017-18 it decreased to 51.19 days and 41.10 days respectively. In the year 2018 -19 it is
same as compared to 2017-18. It indicates that the company has taken the steps to prompt
payment to the creditors.

Page | 59
7. WORKING CAPITAL TURNOVER RATIO:-
This ratio indicates the number of times the working capital is turned over in the
course of the year. This ratio measures the efficiency with which the working capital is
used by the firm.
A higher ratio indicates efficient utilization of working capital and a low ratio indicates
otherwise. But a very high working capital turnover is not a good situation for any firm.

Working Capital Turnover Ratio = Net Sales

Net Working Capital

Year Net Sales Net Working Capital WCTR

2014-15 7042081.00 1321556.00 5.32 Times
2015-16 7421229.00 2221881.00 3.34 Times
2016-17 7594285.00 2848538.00 2.66 Times
2017-18 7296046.00 2913529.00 2.50 Times
2018-19 7845651.00 3081007.00 2.54 Times

INTERPRETATION:
The working capital t/o ratio is fluctuating year to year that was high in the year
2014-15, 5.32 times; there was a subsequent decrease in the year 2015 -16 and 2016-17 to
3.34 times and 2.66 times. But it decreases in the year 2017-18 for 2.50 times and
Increase in the year 2018-19 for 2.54 times This shows the company is utilizing working
capital effectively.

Page | 60
C] FUND FLOW STATEMENTS

Principles of working capital for calculation purpose

CURRENT ASSETS

If the current assets increase as a result of this, working capital also increases.
If the current assets decreases as a result of this working capital decreases.

CURRENT LIABILITIES

If the current liabilities increases as a result of this working capital decreases.

If the current liabilities decreases as a result of this working capital Increase.

Statement of Changes in Working Capital:

The purpose of preparing this statement is for finding out the increase or decrease in working
capital and to make a comparison between two financial years.

Page | 61
Statement of Changes in Working Capital for the Year 2018-19

Particulars As on 31-3- As on 31-3-

2018 2019
Increase Decrease
CURRENT ASSETS
Inventories 1322901.00 1160611.00 __ 162290.00
Sundry debtors 718114.00 807165.00 89051.00 __
Cash & Bank balance 920815.00 978938.00 58123 .00 __
Other current assets 375366.00 133785.00 __ 241581.00
Loans and Advances 1666232.00 2166167.00 499935.00 __

(A)Total Current Assets 5003428.00 5246666.00

CURRENT LIABILITIES
Sundry creditors 558999.00 557849.00 1150.00 _
Provisions 1530900.00 1607810.00 76910.00 __

(B)Total Current Liabilities 2089899.00 2165659.00

(A)-(B) Net Working Capital 2913529.00 3081007.00

Increase in Working Capital 167478.00* __ __ 167478.00*

TOTAL 3081007.00 3081007.00 724019.00 572499.00

INTERPRETATION:
In the above table, it is seen that during the year 2017-18 and 2018-19 there was also net increase
in working capital by Rs 167478.00 As compare to 2016-17 and 2017-18
This is because
1. There is Increase in current assets such as Sundry debtors by Rs 89051.00, Cash & Bank
balance by Rs 58123.00 Loans and Advances by Rs 499935.00 and decrease in Inventories by
Rs 162290.00, other current assets by Rs 241581.00.

2. There is Increase in current liabilities such as Sundry creditors by Rs 1150.00 and Increase
in Provisions by Rs 76910.00.

Page | 62
 FINANCIAL STATEMENT 2009-2010

PROVISIONAL BALANCE SHEET AS AT 31 st MARCH, 2019

LIABILITY AMOUNT ASSETS AMOUNT

SOURCES OF FUNDS FIXED ASSETS

Share capital 800000.00 Gross block 4213360.00

Reserves and surplus 3827210.00 Less: Depreciation 1735959.00

LOAN FUNDS Net Block 2477401.00

Secured Loans 1074672.00 Capital WIP 1693764.00

Unsecured Loans 1349192.00 CURRENT ASSETS

Deferred tax liability 201098.00 Inventories 1160611.00

CURRENT LIABILITIES Sundry debtors 807165.00

Sundry creditors 557849.00 Cash & bank balance 978938.00

Provisions 1607810.00 Other current assets 133785.00

Loans and Advances 2166167.00

TOTAL 9417831.00 9417831.00

Page | 63
 CHAPTER 8

OBSERVATION

Page | 64
 OBSERVATION
 The Study of Working Capital Management Conducted in Dodamarg Cashew
Industry W.S.R.T Janaki Cashew Factory Analyzed Changes in working Capital
of the Factory. This is analyzed with the help of various ratios
 Janaki Cashew Factory has good control on their management
 The Factory is Providing good quality of Products and services through committed
team of employees
 The sale of the Factory increased year by year
 The Profit of Janaki Cashew Factory was increased over the years
 The overall growth of the factory is much better than last Years
 The Current assets are more than current liabilities
 The liquidity position of the Factory is Satisfactory
 The Factory sale its products to its local as well as international customers

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CHAPTER 9

FINDINGS

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 FINDINGS.

 Working capital of the Janaki Cashew Factory. was increasing and showing positive
working capital per year.

 The Janaki Cashew Factory has higher current and quick ratios are i.e., 2.42 and 1.88
respectively.

 Inventory turnover ratio is very low in the year 2016-17. In the year 2017-18 it has
increased by 6.32 times as compared to 2016-17and in the last year 2018-19 it has again
increased by 3.26 times as compared to 2017-18

 Debtor’s turnover ratio is very high in the year 2016-17. In the year 2017-18 it has
decreased by 5.28 times as compared to 2016-17 and in the last year 2018-19 it has again
decreased by 0.44 times as compared to 2017-18.

 Creditor’s turnover ratio has increased in the years of 2016-17 and 2017-18. It is same
in the last year 2018-19 as compared to 2017-18

 Working capital turnover ratio is very low in the year 2016-17. In the year 2017-18 it
has increased by 0.95 times as compared to 2016-17 and in the last year 2018-19 it has
again increased by 0.03 times.

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CHAPTER 10
SUGESTIONS

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 SUGGESTIONS.

 Working capital of the Factory has increasing every year. Profit also increasing
every year this is good sign for the Factory. It has to maintain it further, to run the
business long term.

 The Current and quick ratios are almost up to the standard requirement. So the
Working capital management. Janaki Cashew Factory. is satisfactory and it has to
maintain it further.

 The Factory has sufficient working capital and has better liquidity position. By
efficient utilizing this short-term capital, then it should increase the turnover.

 The Factory should take precautionary measures for investing and collecting funds
from receivables and to reduce the bad debts.

 The Factory has sufficient working capital and has better liquidity position. By
efficient utilizing this short-term capital, then it should increase the turnover.

 Creditor’s turnover ratio has increasing from 2016-17 to 2017-18 and in the last year
2018-19 it is same as compared to 2017-18. Company is making prompt payment to
its creditors. This is good sign for the company. On-time payment to suppliers will
increase the credibility of the firm. It has maintain it further to survive in the market.

The Factory is utilizing working capital effectively this is good for the Factory. It has to
maintain it further

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CHAPTER 11
CONCLUSIONS

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 CONCLUSIONS.
The study on working capital management conducted in Dodamarg Cashew
Industry W.S.R.T. Janaki Cashew Factory. to analyze the financial position of the
company. The company’s financial position is analyzed by using the tool of annual
reports from 2014-15 to 2018-19.

The financial status of Janaki Cashew Factory. is good. In the last year the inventory
turnover has increased, this is good sign for the company.The Factory’s liquidity position
is very good With regard to the investments in current assets there are adequate funds
invested in it. Care should be taken by the Factory not to make further investments in
current assets, as it would block the funds, which could otherwise be effectively utilized
for some productive purpose. On the whole, the Factory is moving forward with excellent
management.

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 CHAPTER 12

BIBILOGRAPHY

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 BIBLIOGRAPHY

TEXT BOOKS

 M.Y.Khan / P.K Jain, Financial Management Text, Problem’s Cases, 5 TH

Edition,Tata McGraw –Hill Publishing Company Limited, New Delhi, 2007.

 Prasanna Chandra, Financial Management Theory and Practice, 5 TH Edition,

Tata McGraw –Hill Publishing Company Limited, New Delhi, 2001.

 George Foster, “Financial Statement Analysis”, 2 nd Edition, 57-94

 Susan Ward , Financial Ratio analysis for Performance Check, p.132

 Pandey I M, “A Management Guide for Managing Company’s Funds and Profits,

6th Edition, 1-58

 Annual Report of Janaki Cashey Factory.

WEB SITE VISITED

www.google.com
www.wikipedia.org
www.transtutors.com

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