six weeks summer training report
TRANSCRIPT
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SIX WEEKS SUMMER TRAINING REPORT
on
( WORKING CAPITAL MANAGEMENT )
Submitted by ( Deepika Kumari )
Registration No…11402612
Programme & Section …MBA, Q1405A19
Under the Guidance of
( MR. PARMOD VERMA-EXECUTIVE ACCOUNTANT )
School of Business
Lovely Professional University, Phagwara
(June-July, 2015)
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DECLARATION
I hereby declare that I have completed my six weeks summer training at Naxpar Pharma Pvt.
Ltd. , Baddi,Himachal Pradesh from 01-06-2015 to 15-07-2015 under the guidance of Mr.
Parmod Varma-Executive Accountant. I have declare that I have worked with full dedication
during these six weeks of training and my learning outcomes fulfill the requirements of training
for the award of degree of MBA, Lovely Professional University, Phagwara.
DEEPIKA KUMARI DATE: 03 Aug 2015
Reg no: 11402612 PLACE: Pagwara, Punjab
MBA (3501)
LOVELY PROFESSIONAL UNIVERSITY
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PREFACE
Businesses face ever increasing pressure on costs and growing Financing requirements as a result
of intensive competition in globalize markets. Many of them are therefore considering ways of
making themselves more efficient. In identifying possible options it is important not to focus
exclusively on income and expense items, but also to take the balance sheet into account.
Improvements to the existing capital structure can free up valuable resources and bring increased
efficiency. Active working capital management is an extremely effective way to increase
enterprise value. Optimizing working capital results in a rapid release of liquid resources and
contributes to an improvement in free cash flow and to a permanent reduction in inventory and
capital costs.My project on “Analysis of Working Capital Management in Naxpar Pharma Pvt.
Ltd.”The attempt is aimed to analyze the various aspects of working capital management of
Naxpar and compare it with two years balance sheet industry standards. By adopting various
calculation and analysis and then making interpretation with the solution of specific problem,
best efforts on giving appropriate suggestion to the company have been made.To this context
various methods and techniques like comparative analysis , cash flow statement, trend analysis
and working towards theoptimal level of working capital, estimation of working capital and
variousratios have been used to draw an exact picture of company.
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ACKNOWLEDGEMENT
It is a matter of great satisfaction and pleasure to present this report on Working Capital
Management of Naxpar Pharma Pvt. Ltd. I take this opportunity to owe my thanks to all those
involved in my training.
Firstly I would like to thank Naxpar Pharma Pvt. Ltd for giving the opportunity to complete
my project in the organization. I put on record my sincere thanks to my college, Lovely
Professional University, Phagwara, for giving me such an opportunity. I am extremely grateful
to Mr. Parmod Varma for the encouragement, discussions and critical assessment of the
project.
It was a good experience for me to work with Naxpar Pharma Pvt Ltd, a pioneer in the
pharmaceutical industry. I am greatly obliged to Mr. Parmod Varma my industry guide, and
Mr. Anil Kumar, Mr. Kuldeep Sharma who have shared their expertise and knowledge with
me without which the completion of project would not have been possible.
I would like to express my sincere thanks to my institutional mentor Miss. Manju Ast
(Assistant Professor) for her valuable time and guidance.
I express my gratitude towards staff of Naxpar Pharma Pvt Ltd, those who have helped me
directly or indirectly in completing the training.
DEEPIKA KUMARI
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ABSTRACT
This project is based on the study of working capital management in Naxpar Pharma Pvt. Ltd.
An insight view of the project will encompass – what it is all about, what it aims to achieve, what
is its purpose and scope, the various methods used for collecting data and their sources, including
literature survey done, further specifying the limitations of our study and in the last, drawing
inferences from the learning so far.
Naxpar Pharma Pvt. Ltd , is a pharmaceuticals company. Naxpar engaged in selling
manufactured ( like orals,capsules, liquid and tablets) . It also offers support services to existing
clients through annual maintenance contracts, network consulting and facilities management.
The working capital management refers to the management of working capital, or precisely to
the management of current assets. A firm’s working capital consists of its investments in current
assets, which includes short-term assets—cash and bank balance, inventories, receivable and
marketable securities.
This project tries to evaluate how the management of working capital is done in Naxpar Pharma
Pvt. Ltd through cash flow statement , trends, computation of cash, and short term financing.
ss
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TABLE OF CONTENTS
CONTENTS
Page no.
Preface
Acknowledgement
Abstract
3
4
5
Chapter 1: INDUSTRY ANALYSIS 8-9
Chapter 2: ORGANISATION OVERVIEW 10-18
1.1 Introduction of NPL
1.2 Management of NPL
1.3 Vision & Mission of NPL
1.4 Objectives of NPL
1.5 Strength of NPL
1.6 Decision Making Process
1.7 Product of NPL
1.8 Section of finance department
11-12
12
12
13
13-14
14
15-16
17-18
Chapter 3: WORKING CAPITAL MANAGEMENT 19-36
2.1 Working capital
2.2 Operating Cycle
2.3 Working Capital Management
2.4 Concept of Working Capital
2.5 Sources of working capital
2.6 Determinants of working capital
2.7 Problem Analysis
Chapter 4 : RESEARCH METHEDOLOGY 37-39
3.1 Scope & Limitations of study
3.2 Objectives of the study
3.3 Literature Review
Chapter 5: PROJECT ANALYSIS 40-51
5.1 Methods of working capital analysis
5.11comparative statement
5.12 cash flow analysis
5.13 Trend analysis
Chapter :6
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Internship Assessment 52-54
Chapter :7 CONCLUSION 55-56
6.1 Findings
6.2 Recommendation
REFERENCES
Sr.no LIST OF TABLES : Page no.
1 Comparative P/L account 43
2 Trend Analysis ( liability side) 44
3 Trend Analysis ( assets side) 45
4 Cash flow analysis 46-47
5 Cash flow statement 48-49
6 P/L account 50
7 Balance sheet 51
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CHAPTER-1
INDUSTRY
ANALYSIS
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Industry Definition “The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available
to the vast population of this sub-continent.” Richard Gerster The Indian Pharmaceutical Industry
today is in the front rank of India’s science-based industries with wide ranging capabilities in
the complex field of drug manufacture and technology. Facts about the Role of Pharmaceutical
Industry in Indian Gross Domestic Product (GDP):
• Indian Pharmaceutical Industry ranks fourth in the world, pertaining to the volume of sales.
• The estimated worth of the Indian Pharmaceutical Industry is US$ 6 billion.
• The growth rate of the industry is about 13% per year.
• Almost most 70% of the domestic demand for bulk drugs is catered by the Indian Pharma
Industry.
• The Pharma Industry in India produces around 20% to 24% of the global Generic drugs.
• The Indian Pharmaceutical Industry is one of the biggest producers of the Active Pharmaceutical
Ingredients (API) in the international arena.
• The Indian Pharma sector leads the science-based industries in the country.
• Around 40% of the total pharmaceutical produce is exported.
• 55% of the total exports constitute of formulations and the other 45% comprises of bulk drugs.
• The Indian Pharma Industry includes small scaled, medium scaled, large scaled players, which
totals nearly 300 different companies.
• As per the present growth rate, the Indian Pharma Industry is expected to be a US$ 20 billion
industry by the year 2015.
• The Indian Pharmaceutical sector is also expected to be among the Top Ten Pharma based markets
in the world in the next ten years Globalization
The country is committed to a free market economy and globalization. Above all, it has a 70 million
middle class market, which is continuously growing. Consolidation: For the first time in many
years, the international pharmaceutical industry is finding great opportunities in India. The process
of consolidation, which has become a generalized phenomenon in the world pharmaceutical
industry, has started taking place in India. THE GROWTH SCENARIO India US$ 3.1 billion
pharmaceutical industry is growing at the rate of 13 percent per year. It is one of the largest and
most advanced among the developing countries.
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CHAPTER-2
ORGANISATION
OVERVIEW
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NAXPAR COMPANY
NAXPAR LAB PVT LTD /
PARNAX LAB PVT LTD NAXPAR PHARMA PVT. LTD.
Silvassa (Gujarat) Baddi (Himachal Pradesh)
Naxpar Lab Pvt Ltd was founded in the year 1985 and was a result strong will and undisturbed
perseverance of two brothers, Mr. Prakash M. Shah & Mr.Baiju M. Shah. Their sons, Mr. Mihir
P. Shah and Mr. Binoy B. Shah are now a part of the driving force of the company. It is
headquartered in Mumbai, India.
The company is driven by a team of professionals and highly skilled technocrats fostering the
growth and achieving milestones such as ISO 9002 status from RWTUV, Germany for the
following Good Quality Systems in manufacturing and marketing of formulations for domestic
and International markets.
Since its establishment, Naxpar Lab has grown in scope and stature to its current status as a leading
manufacturer of quality formulations. The company has two state of the art WHO/ cGMP accredited
manufacturing facilities in Silvassa (India) christened.The plant covers an area of 120,000 sq.ft. and is
situated on the outskirts of Baddi, which is about 55 km, north from Chandigarh and well connected
with road, railways as well as airport.
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The factory is located in a green belt and clean area far away from the polluting industries. The
surrounding atmosphere is free from dust & smoke. The factory building is surrounded in the east,
west, north & south by grassland.
Mission
“To become a Research based International pharmaceutical company”
Vision
2018 Achieve significant business in Proprietary prescription products by 2018 With a strong
presence in developed markets Aspirations-2012 Aspire to be a$5 billion company. Become a
top 5 global generics player significant income from Proprietary products.
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OBJECTIVES OF NAXPAR PHARMA PVT. LTD.
1. To be a leader in the Pharmaceutical industry.
2. To be a profitable company with a steady growth in earnings.
3. To set an example as a socially responsible company.
4. To diversify in health care related areas.
5. To strive for excellence and continuous improvement in all spheres.
6. To improve the quality of life of people by providing better services and quality products.
MANAGEMENT
Name Designation
Baiju M Shah Whole Time Director & CFO
Manharbhai N Jhavari Ind. Non-Executive Director
Prakash M Shah CEO & Compliance Officer
Prakash M Shah CEO
Prakash M Shah Whole Time Director & CEO
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Decision Making Process:
The decisions making process of IOCL follows the following Channel:
Overall management of the Company is vested with the Board of Directors of the Company.
The Board of Directors is the highest decision making body within the company.
As per the provisions of the Companies Act, 1956 certain matters require the approval of the
shareholders of the Company in General Meeting.The day-to-day management of the Company is
entrusted on the Chairman and the Functional Directors and other Officers of the Company. The
Chairman, Functional Directors and other officers exercise their decision-making powers as per
this delegation of powers. The Chairman, Functional Directors and other Executives are
accountable to Board of Directors for proper discharge of their duties & responsibilities. The powers,
which are not delegated, are exercised by the Board of Directors subject to the restrictions and
provisions of the Companies Act, 1956.
BOARD OF DIRECTORS
CHAIRMAN
FUNCTIONAL DIRECTORS
EXECUTIVES
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Strength
Naxpar Lab's key strength is manufacturing finished formulations for multinationals in India.
Over the last few years, it has expanded its horizons and exports its products to emerging pharma-
ceutical markets globally such as Nigeria, Kazakhstan, Kenya, Mauritius etc. It is now poised to
venture into markets such as South East Asia, CIS, Latin American countries etc. Naxpar Group
with over 30 years of experience of Manufacturing (backed by strong R&D) of Pharmaceutical,
Cosmetic and Herbal Products. The company is specialized for Contract Manufacturing and almost
all the major companies get their products & manufacturing. The plants are located at Baddi, Silvassa
in India and one plant in Nigeria.
The major clients includes Pfizer, Cipla, Himalaya, Gleenmark, FDC, Dabur etc.
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PRODUCTS OF NPL
Naxpar Pharma Pvt. Ltd. is engaged in the manufacture of formulations of Liquid
Orals, Capsules, Ointments, External Powders & Tablets.
LIQUID
CAPACITY:
The total manufacturing capacity is 13KL to 15KL per shift with batch sizes
varying from 500 ltrs. To 6000 ltrs.
MACHINERIES:
Equipped with 4 fully automatic monoblock liquid filling lines and 1 volumetric
automatic filling line which consist of empty bottle inspection, bottle washing,
washed bottle inspection, filling and sealing, filled bottle inspection ,labeling &
cartoning and shrink packing.
A separate dedicated area for AYURVEDIC formulations is also available.
TABLETS
CAPACITY
Batch size : 400 kg in Parnax Lab Pvt. Ltd . & 350 kg in Naxpar Lab Pvt. Ltd.
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PACKING:
Blister
Strip
Alu-Alu
Bulk Packing
CAPSULES
CAPACITY:
Batch size : 400 kg in Parnax Lab Pvt. Ltd . & 350 kg in Naxpar Lab Pvt. Ltd.
MACHINERIES:
2-Head Semi-Automatic Machines and Over-printing facility provided.
External Preparations
CAPACITY:
1 Ton manufacturing for cream/Ointments/ Gels.
MACHINERIES:
Filling machines capable of filling ALUMINIUM , LAMI as well as PLASTIC
TUBES ranging from 5 gm to 50 gm.
POWDER
CAPACITY:
350Kg Bulk.
MACHINERIES: Single Head Filling and FFS Machines.
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The functioning of different sections of the Finance Department of NPL
1. MAIN ACCOUNTS:
The main accounts section is entrusted with the responsibility of the following:
1. Preparation of Balance sheet
2. Preparation of Tax Audit
3. Physical Asset verification.
2.PURCHASE ACCOUNT:
Generally this section deals with the payment of purchase items only. After purchase, the
material is delivered to the stores department. The Stores Department makes Goods Receipt Note
(GRN) and sends it to the purchase section. Here the GRN is checked with the purchase order (PO)
and payment is made through e-banking.
The purchases section is responsible for:
1. Scrutiny of purchase proposals.
2. Deposit and advance payments to suppliers.
3. Passing of bill for supplies received.
4. Pricing of goods receipts notes.
3. WORKS/PROJECTS:
The work section mainly deals with capitalization of CWIP (Capital Work In Progress) and
payment of running contracts. It considers only plants maintenance, roads, painting, welding,
water etc. First and final payments are made on the basis of work completion.
The works/project section is responsible for:
1. Payment of Bill.
2. Creation of Assets Master.
3. Capitalization of Assets.
4. Issue of TDS certificate.
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4. PAYROLL:
This section mainly deals with the payment to employees for their work. Rules for pay and
allowance are prescribed by head office from time to time. The eligibility for special type
of allowance such as special allowances, shift allowance etc. is determined by personnel
department and intimations are sent to the finance department giving the details of employees
those who are eligible for such allowance.This section also maintains the data of transfer and new
recruitment of employees and adds it to master information. If a person is transferred to another
unit, the LPC (last pay certificate) is required to be added into master information.
5. TA/LTC/MEDICAL:
This section maintains in-transfer and out-transfers accounting for claim settlement and also
handles the bill payment of official tour of employees. HO. The Claim of Leave Travel Concession
(LTC), Leave Fair Assistance (LFA) and the claim of the foreign tours is controlled by this section.
This section also deals with the payment of medical related issues.
The main functions of this section are:
1. Scrutiny and Payment of bills related to Leave Fair Assistance (LFA), and Leave Travel
Concession (LTC).
2. Bill payment of official tours of employees.
3. Scrutiny of orders and bill payment to Panel Doctors and Panel Hospital.
6. MISCELLANEOUS SECTION:
The expense which cannot be accounted and beard by any other section is done by this section.
The function of the Miscellaneous Section includes the following:
1. Passing of bills of miscellaneous nature such as expenses of Auditor.
2. Miscellaneous recoveries from outsiders.
3. Payment of Electricity Duty.
4. Payment for expenditure of Canteen and Training
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CHAPTER-3
WORKING
CAPITAL
MANAGEMENT
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Management is an art of anticipating and preparing for risks, uncertainties and overcoming
obstacles. An essential precondition for sound and consistent assets management is establishing
the sound and consistent assets management policies covering fixed as well as current assets. In
modern financial management, efficient allocation of funds has a great scope, in finance and
profit planning, for the most effective utilization of enterprise resources, the fixed and current
assets have to be combined in optimum proportions.
Working capital in simple terms means the amount of funds that a company requires for
financing its day-to-day operations. Finance manager should develop sound techniques of
managing current assets.
WHAT IS WORKING CAPITAL?
Working capital refers to the investment by the company in short terms assets such as cash,
marketable securities. Net current assets or net working capital refers to the current assets less
current liabilities.
Symbolically, it means,
Net Current Assets = Current Assets- Current Liabilities.
In accounting,” Working capital is the difference between the inflow and outflow of funds”. It is
defined as the excess of current assets over current liabilities and provisions. In other words, it is
net current assets or net working capital.
Gross working capital represents the total of all current assets. In other words it is the Gross
working capital , it is also known as Circulating capital or Current capital for current assets are
rotating in their nature.
A study of working capital is of major importance to internal and external analysis because of its
close relationship with the day-to-day operations of a business. Working Capital is the portion of
the assets of a business which are used on or related to current operations, and represented at any
one time by the operating cycle of such items as against receivables, inventories of raw
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materials, stores, work in process and finished goods, merchandise, notes or bill receivables and
cash.
Working capital comprises current assets which are distinct from other assets. In the first
instance, current assets consist of these assets which are of short duration.
Working capital may be regarded as the life blood of a business. Its effective provision can do
much to ensure the success of a business while its inefficient management can lead not only to
loss of profits but also to the ultimate downfall of what otherwise might be considered as a
promising concern.
The funds required and acquired by a business may be invested to two types of assets:
1. Fixed Assets.
2. Current Assets
Fixed assets are those which yield the returns in the due course of time. The various decisions
like in which fixed assets funds should be invested and how much should be invested in the fixed
assets etc. are in the form of capital budgeting decisions. This can be said to be fixed capital
management.
Other types of assets are equally important i.e. Current Assets.
These types of assets are required to ensure smooth and fluent business operations and can be
said to be life blood of the business. There are two concepts of working capital — Gross and Net.
Gross working capital refers to gross current assets. Net working capital refers to the difference
between current assets and current liabilities. The term current assets refers to those assets held
by the business which can be converted into cash within a short period of time of say one year,
without reduction in value. The main types of current assets are stock, receivables and cash. The
term current liabilities refer to those liabilities, which are to be paid off during the course of
business, within a short period of time say one year. They are expected to be paid out of current
assets or earnings of the business. The current liabilities mainly consist of sundry creditors, bill
payable, bank overdraft or cash credit, outstanding expenses etc.
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NEED FOR WORKING CAPITAL
Working capital may be regarded as the lifeblood of the business. Without sufficient working
capital, any business organization cannot run smoothly or successfully. In the business the
Working capital is comparable to the blood of the human body. Therefore the study of working
capital is of major importance to the internal and external analysis because of its close
relationship with the current day to day operations of a business. The inadequacy or
mismanagement of working capital is the leading cause of business failures.
The need of gross working capital or current assets cannot be overemphasized. The object of any
business is to earn profits. The main factor affecting the profits is the magnitude of sales of the
business. But the sales cannot be converted into cash immediately. There is a time lag between
the sale of goods and realization of cash. There is a need of working capital in the form of
current assets to fill up this time lag. Technically, this is called as operating cycle or working
capital cycle, which is the heart of need for working capital. This working capital cycle can be
described in the following words. If the company has a certain amount of cash, it will be required
for purchasing the raw material though some raw material may be available on credit basis. Then
the company has to spend some amount for labour and factory overheads to convert the raw
material in work in progress, and ultimately finished goods. These finished goods when sold on
credit basis get converted in the form of sundry debtors. Sundry debtors are converted in cash
only after the expiry of credit period. Thus, there is a cycle in which the originally available cash
is converted in the form of cash again but only after following the stages of raw material, work in
progress, finished goods and sundry debtors. Thus, there is a time gap for the original cash to get
converted in form of cash again. Working Capital needs of company arise to cover the
requirement of funds during this time gap, and the quantum of working capital needs varies as
per the length of this time gap.
Thus, some amount of funds is blocked in raw materials, work in progress, finished goods,
sundry debtors and day-to-day requirements. However some part of these current assets may be
financed by the current liabilities also. E.g. some raw material may be available on credit basis,
all the expenses need not be paid immediately, workers are also to be paid periodically etc..
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From the Financial management point of view, the nature of fixed assets and current assets differ
from each other--
1. The fixed assets are required to be retained in the business over a period of time and they yield
the returns over their life, whereas the current assets loose their identity over a short period of
time, say one year.
2. In the case of current assets, it is always necessary to strike a proper balance between the
liquidity and profitability principles, which is not the case with fixed assets. E.g. If the size of
current assets is large, it is always beneficial from the liquidity point of view as it ensures smooth
and fluent business operations. Sufficient raw material is always available to cater to the
production needs, sufficient finished goods are available to cater to any kind of demand of
customers, liberal credit period can be offered to the customers to improve the sales and
sufficient cash is available to pay off the creditors and so on.
However, if the investment in current assets is more than what is ideally required, it affects the
profitability, as it may not be able to yield sufficient rate of return on investment. On the other
hand, if the size of current assets is too small, it always involves the risk of frequent stock out,
inability of the company to pay its dues in time etc. As such, the investment in current assets
should be optimum. Hence, it is necessary to manage the individual components of current assets
in a proper way. Thus, working capital management refers to proper administration of all aspects
of current assets and current liabilities. Working Capital Management is concerned with the
problems arising out of the attempts to manage current assets, current liabilities and inter-
relationship between them. The intention is not to maximize the investment in working capital
nor is it to minimize the same. The intention is to have optimum investment in working capital.
In other words, it can be said that the aim of working capital management is to have minimum
investment in working capital without affecting the regular and smooth flow of operations. The
level of current assets to be maintained should be sufficient enough to cover its current liabilities
with a reasonable margin of safety. Moreover, the various sources available for financing
working capital requirements should be properly managed to ensure that they are obtained and
utilized in the best possible manner.
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Working Capital Cycle
Working capital cycle indicates the length of time between a firm’s paying for materials entering
into stock and receiving the cash from sale of finished goods. In a manufacturing firm, the
duration of time required to complete the sequence of events is called operating cycle.
In case of a manufacturing company, the operating cycle is the length of time necessary to
complete the following cycle of events –
1. Conversion of cash into raw materials
2. Conversion of raw materials into work-in-progress
3. Conversion of work-in-progress into finished goods
4. Conversion of finished goods into accounts receivables
5. Conversion of accounts receivable into cash
The above operating cycle is repeated again and again over the period depending upon the nature
of the business and type of product etc. the duration of the operating cycle for the purpose of
estimating working capital is equal to the sum of duration allowed by the suppliers.
Working capital cycle can be expressed as
R+W+F+D+C
Where,
R - raw material storage period = avg. stock of raw material / avg. cost of production per day
W – work in progress holding period = avg. work in progress inventory / avg. cost of production
per day
F – finished goods storage period = avg. stock of finished goods / avg. cost of goods sold per day
D – debtors collection period = avg. book debts / avg. credit sales per day
C – credit period availed = avg. trade creditors avg. credit purchases per day.
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WORKING CAPITAL MANAGEMENT
To start any business, First of all we need finance and the success of that business entirely
depends on the proper management of day-to-day finance and the management of this short term
capital or finance of the business is called Working Capital Management.
Working Capital is the key difference between the long term financial management and short
term financial management in terms of the timing of cash. Working capital management is a
short term financial management. Working capital management is concerned with the problems
that arise in attempting to manage the current assets, the current liabilities & the inter
relationship that exists between them. The current assets refer to those assets which can be easily
converted into cash in ordinary course of business, without disrupting the operations of the firm.
Working capital management or short-term financial management
It is a significant facet of financial management. It is important due to 2 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
changes in sales.
Working capital involves activities such as arranging short-term finance, negotiating favorable
credit terms, controlling the movement of cash, administrating accounts receivables, and
monitoring the investment in inventories also take a great deal of time.
Management of working capital is concerned with the problem that arises in attempting to
manage the current assets, current liabilities. The basic goal of working capital management is to
manage the current assets and current liabilities of a firm in such a way that a satisfactory level
of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations
are bad for any firm. There should be no shortage of funds and also no working capital should be
ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its
probability, liquidity and structural health of the organization. So working capital management is
three dimensional in nature as
1. It concerned with the formulation of policies with regard to profitability, liquidity and risk.
2. It is concerned with the decision about the composition and level of current assets.
3. It is concerned with the decision about the composition and level of current liabilities.
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Composition of working capital--
Major Current Assets
1) Cash in hand and cash at bank
2) Bills receivables
3) Sundry debtors
4) Short term loans and advances.
5) Inventories of stock as:
a. Raw material
b. Work in process
c. Stores and spares
d. Finished goods
6) Temporary investment of surplus funds.
7) Prepaid expenses
8) Accrued incomes.
9) Marketable securities.
Major Current Liabilities
1) Accrued or outstanding expenses.
2) Short term loans, advances and deposits.
3) Dividends payable.
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4) Bank overdraft.
5) Provision for taxation , if it does not amt. to app. Of profit.
6) Bills payable.
7) Sundry creditors.
The gross working capital concept is financial or going concern concept whereas net working
capital is an accounting concept of working capital. Both the concepts have their own merits.
CLASSIFICATION OF WORKING CAPITAL
Working capital may be classified in two ways:
On the basis of concept.
On the basis of time.
On the basis of concept working capital can be classified as gross working capital and net
working capital. On the basis of time, working capital may be classified as:
Permanent or fixed working capital.
Temporary or variable working capital
PERMANENT OR 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 assets 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.
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TEMPORARY OR VARIABLE WORKING CAPITAL
Temporary or variable working capital is the amount of working capital which is required to
meet the seasonal demands and some special exigencies. Variable working capital can further be
classified as seasonal working capital and special working capital. The capital required to meet
the seasonal need of the enterprise is called seasonal working capital. Special working capital is
that part of working capital which is required to meet special exigencies such as launching of
extensive marketing for conducting research, etc.
The extra working capital needed to support the changing production and sales
activities, is called variable or functioning or temporary working capital.
Temporary working capital differs from permanent working capital in the sense that is required
for short periods and cannot be permanently employed gainfully in the business.
IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL
Solvency of the business: Adequate working capital helps in maintaining the solvency of the
business by providing uninterrupted of production.
Goodwill: Sufficient amount of working capital enables a firm to make prompt payments and
makes and maintain the goodwill.
Easy loans: Adequate working capital leads to high solvency and credit standing can arrange
loans from banks and other on easy and favorable terms.
Cash Discounts: Adequate working capital also enables a concern to avail cash discounts on
the purchases and hence reduces cost.
Regular Supply of Raw Material: Sufficient working capital ensures regular supply of raw
material and continuous production.
Ability to Face Crises: A concern can face the situation during the depression.
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EXCESS OR INADEQUATE WORKING CAPITAL
Every business concern should have adequate amount of working capital to run its business
operations. It should have neither redundant or excess working capital nor inadequate nor
shortages of working capital. Both excess as well as short working capital positions are bad for
any business. However, it is the inadequate working capital which is more dangerous from the
point of view of the firm.
DISADVANTAGES OF INADEQUATE WORKING CAPITAL
Every business needs some amounts of working capital. The need for working capital arises due
to the time gap between production and realization of cash from sales. There is an operating
cycle involved in sales and realization of cash. There are time gaps in purchase of raw material
and production; production and sales; and realization of cash.
Thus working capital is needed for the following purposes:
· For the purpose of raw material, components and spares.
· To pay wages and salaries
· To incur day-to-day expenses and overload costs such as office expenses.
· To meet the selling costs as packing, advertising, etc.
· To provide credit facilities to the customer.
· To maintain the inventories of the raw material, work-in-progress, stores and spares and
finished stock.
PURPOSE OF STUDING THE WORKING CAPITAL MANAGEMENT
The major purpose of the study is to analyze the working capital management of Naxpar
Pharma Pvt. Ltd by considering the annual report of two years. The financial statement
explains the trend analyzes along with the comparative balance statements.
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Working capital is one of the most difficult financial concepts to understand for the small-
business owner. In fact, the term means a lot of different things to a lot of different people. By
definition, working capital is the amount by which current assets exceed current liabilities. It
involves the relationship between a firm’s short term assets and its short term liabilities.
Funds needed for short term needs for the purpose like payment of wages and other day to day
expenses are known as working capital. 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 primarily
concerned with inventories management, receivable management, cash management and payable
management.
The study involved few personal interviews with the financial heads of the company and through
observation methods. Company annual reports were being evaluated and working capital
management was being analyzed from it. For the purpose of the study convenience sampling
technique has been used.
The study has shown that the working capital of the company has improved as the current asset
is more than that of the current liabilities.
Sources of Working Capital:
The current assets which are used in running daily operation of a business is called working
capital. Working Capital may be classified as Fixed working capital and Variable working
capital. Both types of working capital help in running firm’s daily operation. Fixed working
capital should be financed from long-term sources & variable working capital from short term
source. So variable from the following sources are as financed:
1. Short term Bank Loan (STBL):--It is a big source of working capital Usually firms finance
through STBL to meet the need of variable WC and need in excess of FWC. Commercial banks
give bank O/D, cash credit etc.
Naxpar Pharma Pvt. Ltd. Take the STBL from
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Apna Sahakari Bank Ltd. ( Co-Operative bank)
First Leasing Company ( Hire Purchase Machinary)
2. Non Bank short term loan: Relatives, Bankers, Govt. Institute are the non bank S.T. Loan. But,
Naxpar take the loan from financial institution & sundry creditors.
3. Internal Source: One of the main sources w. Cap for a firm in Internal sources. This is also
called Self-financing. Naxpar internal sources capital are own capital, own saving (Bank money)
, Gold.
4. Long Term Sources (LTS): Sometimes W. Cap is financed through LTS. Usually fixed
working capital are share, debenture LT loan etc. Naxpar long term sources is fixed assets,
company infrastructure & Goodwill & also Apna Sahkari bank ltd. :- it give the loan in limit just
like a credit card. It may be 1 crore , 10 crore, 50 crore.
5. Money Lenders: When firms can’t finance short-term need of w.cap from anywhere, they take
loan form moneylenders. For e.g. Financial Institution.
6. Trade Credit: When firms purchase on credit & pay the money according to credit term, it is
called Trade Credit. Normally Trade credit is used as a source of variable W. Cap.
7. Selling out Excess of Fixed asset: If any fixed asset is considered as extra than need, then that
idle fixed asset is sold for working capital.
Naxpar selling of old cars , old machinery etc. it sell
Maruti Zen - 20000
Scorpio - 100000
Indigo - 150000
Maruti Oneni -30000
Company use these finance on working capital for petty cash.
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Determinants of Working Capital:
i. Nature of Business
ii. Length of period of production
iii. Terms of purchase and sales.
iv. Seasonal variations in Business
v. Average stock required
vi. Price level changes
1. Nature of Business:-
Naxpar is a pharmaceuticals company and it produces pharmaceuticals products. It is a
manufacturing unit of pharmaceutical products, engaged in job work.
i. LL Parties ( Loan License)
ii. Third Party Product
i. LL Parties :
In LL Parties, all the material whether raw material or packing material is arranged
by the parties themselves, Naxpar only convert them into finished goods.
ii. Third Party Product :
In case of third party, maximum material is procured by the party. Naxpar arranges few
of the material themselves depending upon the need of products or time.
The company is engaged in manufacturing of following products:
Shampoo
Face wash
Hair colors
Powder
Ointments
Liquid etc.
Naxpar has also the facility of manufacturing company ayurvedic products, cosmetics, &
liquids.
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2. Length of period of production :
It depends upon the batch size. for e.g.:-if batch size is 3000 of 100 ml tube then duration
is 7 hours & if batch size is 3000 of 50 ml tube then duration is 11 hours because number
of tube is more.
3. Terms of purchase & sales :
It ma be 1 month, 45 days & 2 month maximum.
4. Seasonal variations in business:
Naxpar is a pharmaceuticals company and he produce the shampoo, face wash,liquid
syrup etc.so. it also affect by the season.
5. Average stock required:
In Naxpar Pharma Pvt. Ltd average stock requirement is very large process, since
company is engajed in job work & producing product for other companies/ parties. Stock
depends upon the plan given by the parties.
6. Price Level Changes:
Changes in the price level also affect the working capital requirements. Generally rise in
prices leads to increase in working capital
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WORKING CAPITAL CYCLE OF NAXPAR
Fig: The Working Capital Cycle
CASH INFLOW
CASH
OUTFLOW
FINISED GOODS
SALE CREDIT
CASH SALES
SUNDRY
DEBTORS
PAYMENT
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DEFINING THE PROBLEM
Areas of working capital has different problems and these are discussed separately in the following
sections:
1. Stock control Problem
If too much stock is held, the organisation wastes money through a variety of factors:
• Money is tied up in stock when it could be put to better use.
• There are superfluous warehousing and storage costs.
• Stock may deteriorate.
• There is a potentially greater risk of theft.
On the other hand, too little stock can lead to stock-outs which can:
• Halt activity
• Lose income
• Cause discomfort or distress to clients However, finding the correct level of stock for any
one particular item is complex. This is because there are many influencing factors including
the anticipated demand for the items and the cost-efficient use of the organisations resources.
The aim is to find the right balance.
2. Debtor Control Problem
“It is better to have cash in your bank account than in your customers ” Commercial organisations
normally give credit to their customers in order to encourage sales. In the case of charities it is less
likely that you are encouraging additional sales by giving credit and more likely that your clients
will want credit and will wish to dictate the terms on which they will pay. Therefore, for voluntary
organisations, management is more about dealing with credit than deciding on a control policy.
• If you get the money in quickly you can use it for other purposes which will advance the
organisations objectives.
• Giving credit costs money, even if it is only a small amount of interest foregone. If you have an
overdraft, the costs rise sharply.
• If a large client demands an unreasonable amount of credit you may have to simply walk away
from the contract. You cannot afford to risk running out of cash.
• If stage payments are delayed, you may perhaps have to say, for example, that you will be
unable to complete the contract; this may help with neogitations.
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3.Cashflow Management
Cash flow management is about achieving maximum effectiveness of cash receipts and
payments. The aim is to strike a balance between:
• Putting money to work for the charity so it returns a satisfactory yield from deposit accounts
or short-term investments
• Ensuring cash is available when needed to pay the day-to-day running expenses of the organisation, and
also the fairly predictable "lump-sum" amounts - replacement of computing equipment, for example.
Managing your cash balances is the most important part of working
capital management. If an organisation runs out of cash resources it will have to stop operating
immediately. There may not even be the money to pay the salaries at the end of the month,
and the banks might have started dishonouring cheques. Furthermore, the trustees or directors
could stand charged with wrongful or fraudulent trading, which could entail personal liability
or even imprisonment.
3. Creditor control
Creditor control is managing your relationship with organisations or people you owe money to, such as
suppliers. It forms part of working capital management. It is, unfortunately the area over which not-for
profit organisations have least control. If you are dealing with an industrial giant or a big local authority,
they generally dictate the terms of trade.
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CHAPTER-4
RESEARCH
METHEDOLOGY
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Objective of the study
To study the various proportions of working capital of Naxpar Pharma Pvt. Ltd
To check the impact of cash flows on working capital of Naxpar Pharma Pvt. Ltd
To know the current trend of Assets and Liabilities
Target
Working capital of Naxpar Pharma Pvt. Ltd
Sampling Unit
Working capital of Naxpar Pharma Pvt. Ltd at Baddi, Himachal Pradesh.
Sampling Area
Naxpar Pharma Pvt. Ltd at Baddi, Himachal Pradesh
Sampling Size
Accounts of 2 years
Sampling Technique
Convenience Sampling
Limitations of the study
Department heads were busy so time for interaction was less.
The entire financial position of the company cannot be disclosed.
Company provides only secondary data, so certain type of bias is in study.
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SOURCES OF INFORMATION
Primary Data
The personal interview with senior officials and various members of finance and accounts
department and also with other departments and collected the data.
Secondary Data
Necessary for the study was available within the company itself. Other sources-
Website
Textbooks
LITERATURE REVIEW
Peterson and Rajan, 1997
Working capital policy refers to the firms policies regarding target levels for each category
of current operating assets and liabilities, and how current assets will be financed.
Generally good working capital policy (i.e. under conditions of certainty) is considered to be
one in which holdings of cash, securities, inventories, fixed assets, and accounts payable are
minimized. The level of accounts receivables should be used as a means of stimulating sales
and other income. Previous literature on working capital management has found a negative
association, overall, between level of working capital and operating performance as measured
by operating returns and operating margins .
Brigham and Houston, 2000
Under conditions of certainty (i.e. sales, costs, lead times, payment periods, and so on, are
known), firms have little reason to hold more working capital than a minimum level. Larger
amounts would increase the level of operating assets, increase the need for external funding
resulting in lower return on assets and a lower return on equity, without any increase inprofit.
However the picture changes when uncertainty (i.e. uncertain growth) is introduced.
41 | P a g e
Peterson and Rajan , 1997
This study provides further evidence that good working capital management is positively
associated with better operating performance. Higher levels of accounts receivable are associated
with higher operating performance, in all three of the growth rate categories. The study also finds
that maintaining control over levels of cash, securities, inventory, fixed assets, and accounts
payables is associated with higher operating performance. We find that firms which are
experiencing very high growth will hold higher levels of cash, securities, inventory, fixed assets,
and accounts payable to support the high growth. The study suggests that these firms are
sacrificing operating performance (accepting lower operating returns) to support the high growth.
Ritter , 1991
This, in turn, increases financial and operating risk for these firms. Perhaps IPO firms should
stay more focused on their operating performance, while maintaining more moderate growth
levels another aspect of this study is that it fills a void in the initial public offerings literature.
Recent literature finds that new public companies underperform the market after going public.
Ritter in his 1991 paper reports substantially lower stock returns for IPO firms between 1975 and
1984 than for a size-and-industry-matched sample of seasoned firms. Since then there is a
growing literature explaining IPO underperformance as related to agency cost (Smith, 1990),
institutional holdings (Field, 1995), venture capital (Jain and Gompers, 1997; Jain and Kini,
2000), market timing of IPO (Benninga, 2004), and earnings management (Teho et al., 1998;
Ahmad-zaluki et al., 2008).
Vijaya kumar (2002)
in his study on “Determinants of Profitability” – A Firm Level Study of the Sugar Industry in Tamil
Nadu”, developed various determinants of profitability viz., growth rate of sales, vertical integration and
leverage. Apart from these three variables he had selected current ratio, operating expenses to sales ratio
and inventory turnover ratio. Econometric models were used to test the various hypotheses relating
profitability with other variables. The researcher noted in his conclusion that efficiency in inventory
management and current assets are important to improve profitability
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CHAPTER-5
PROJECT
ANALYSIS
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METHODS OF WORKING CAPITAL ANALYSIS
There are so many methods for analysis of financial statements used in companies. Here the
following techniques are being used to analysis the working capital management of Naxpar
Pharma Pvt Ltd-
Comparative size statement
Trend analysis
Cash flow statement
A detail description of these methods is as follows-
COMPARATIVE SIZE STATEMENT
When two or more than two years figures are compared to each other we call them comparative
size statements in order to estimate the future progress of the business, it is necessary to look at
the performance of the company. These statements show the absolute figures and also show the
change from one year to another.
Benefits of this method to the company-
To indicate the trends, these statements show the change in production, sales and
expenses.
To make the data simple and more understandable
TREND ANALYSIS
To analyse many years financial statements, this method is used. This indicates the direction on
movement over the long time and help in the financial statements.
Procedure for calculating trends-
1. Previous year is taken as the base year
2. Figures of the base year are taken as 100
3. Trend % are calculated in relation to base year.
Benefits-
It is beneficial to find out the long run changes
It is helpful in future forecasting.
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CASH FLOW STATEMENT
Cash flow statements are the statements of changes in the financial position prepared on the basis
of funds defined in cash or cash equivalents. In short cash flow statement summaries the cash
inflows and outflows of the firm during a particular period of time.
Benefits for the company-
To prepare the cash budget
To compare the cash budgets
To show the position of the cash and cash equivalent
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TABLE 1
COMPARATIVE P&L ACCOUNT
(For the year 2013-2014)
(Rs. in Crores)
FY 2014 FY 2013 % change
Net turnover 14095.2 10224.0 38
Other income 317.7 267.9 19
Total expenditure 10122.8 8155.3 24
Operating profit (PBIT) 4290.1 2336.6 84
Interest 228.6 218.3 5
Depreciation 610.0 563.1 8
Exceptional items - 4.1 -
Profit before tax 3451.5 1559.3 121
Total tax expenses 1092.1 402.7 171
Net profit after total tax 2359.4 1156.6 104
Minority share 391.9 116.0 238
Net profit 1967.5 1040.6 89
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TABLE-2
TREND ANALYSIS
(For the liability side of 2013-2014)
Particulars 2014 2013 Base Trend % Current Tend %
Current liability
Liability 1266.86 969.15 100 130.73
Provisions 183.20 304.22 100 60.21
Total (A) 1450.06 1273.37 100 113.87
Fixed liability
Share capital 91.69 91.69 100 100
Reserves &
surplus
6138.35 4890.39 100 125.5
Loans 2951.56 1979.67 100 149.09
Def. tax liability 582.55 584.38 100 99.68
Total (B) 9764.15 7546.13 100 129.39
Total liability
(A+B)
11214.21 8819.50 100 127.15
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TABLE 3
TREND ANALYSIS
(For assets side of 2013-2014)
Particulars 2014 2013 Base trend % Current trend
%
Fixed assets
Fixed assets 4582.79 3298.27 100 138.94
Fixed assets held
for disposable
14.33 12.76 100 112.30
Investments 4274.70 3481.71 100 122.79
Total (A) 8871.82 6792.74 100 130.60
Current assets
Stock 824.14 750.73 100 109.77
Interest accrued .70 1.46 100 47.94
Debtors 576.48 413.45 100 139.43
Cash 116.38 155.58 100 74.80
Loans 824.69 705.54 100 116.88
Total (B) 2342.39 2026.76 100 115.59
Total assets
(A+B)
11214.21 8819.50 100 127.15
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TABLE 4
CAH FLOW ANALYSIS
(For 2013-2014)
(Rs in Crores)
Particulars FY 2014 FY 2013
SOURCES OF CASH
Cash from operations 1816.0 1077.1
Increase in debts 947.6 -
Non operating cash flow 114.0 67.1
Decrease in cash and cash equivalent 39.2 -
Decrease in working capital - 205.2
2916.8 1349.4
USES OF CASH
Net increase in investments 647.1 549.2
Net capital expenditure 1598.2 399.5
Decrease in debts - 53.3
Interest 109.4 112.7
Dividend 478.8 165.8
2916.8 1349.4
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TABLE 5
CASH FLOW STATEMENT
(For year 2013 – 2014)
(Rs in Crores)
Cash flow from operating
activities
2014 2013
Net profit before tax 2189.26 1201.90
Depreciation 317.91 291.64
Interest expenses 111.84 103.38
Interest income (31.84) (29.48)
Dividend income (81.43) (38.04)
Profit / loss on sale of fixed
assets (Net)
(4.62) 3.99
Profit on sale of long term
investments(Net)
(2.70) (62.57)
Profit on sale of current
investments (Net)
(49.41) (7.27)
Operating profit before
working capital changes
2449.01 1330.06
Trade and other receivables (314.56) (116.66)
Inventories (73.41) (72.41)
Assets held for disposal (1.57) 0.97
Trade payables 306.17 159.70
Cash generated from
operations
2365.64 1668.74
Direct taxes paid(Net) (632.97) (380.42)
Net cash from operating
activities
1732.67 1288.32
Cash flow from investing
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activities
Purchase of fixed assets 326.4 410.5
Sale of fixed assets (354.13) (388.73)
Purchase of investments (150.11) (173.66)
Sale of investments (128.19) (91.57)
Investments / advances in joint
ventures, subsidiaries & others
(16.77) (11.75)
Interest received (322.8) (255.21)
Net cash from investing
activities
(301.75) (231.24)
Cash flow from financing
activities
19.71 5.65
Proceeds from borrowings (75.41) (792.83)
Repayments of borrowings 666.13 53.64
Interest paid (1294.15) 24.74
Dividends paid 3.37 1.79
Corporate dividend tax 74.29 55.28
Dividend received 39.37 86.32
Net cash from financing
activities
(868.44) (796.65)
Net increase / decrease in
cash & cash equivalent
(140.78) 117.37
At beginning of year 227.48 110.11
At end of year 86.7 227.48
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TABLE 6
PROFIT & LOSS A/C
of the year ending 2013-2014
(Rs. in Crores)
2014 2013
INCOME
Gross sales
Less- Excise Duty
9607.97
986.29
7638.41
985.80
Net sales 8603.59 6652.61
Interest & dividend income 113.27 67.53
Other income 168.49 152.41
Increase / decrease in stock (16.44) (43.48)
868.91 6829.07
EXPENDITURE
Raw material consumed 2219.32 1822.69
Manufacturing expenses 1744.33 1580.34
Purchases of finished & other products 321.16 240.15
Payments to & provisions for employees 459.40 407.64
Selling, distribution, administration & other expenses 1505.69 1181.33
Interest 111.84 103.38
Depreciation 317.91 291.64
6679.65 5627.17
Profit before tax & exceptional items 2189.26 1201.90
Surplus on pre-payment of sales tax loan - 4.13
Write back of provision for diminution 37.10 -
Profit before tax 2226.36 1206.03
Provision for current tax (692.38) (369.82)
Deferred tax 1.83 27.00
Profit after tax 1535.81 863.21
Debenture redemption reserve no longer required 38.56 8.62
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Investment allowance reserve no longer required 0.05 0.25
Balance brought forward from previous year 878.37 815.35
Profit available for appropriation 2452.79 1687.43
Appropriations-
Interim dividend 252.10 -
Proposed dividend - 183.35
Corporate dividend tax 35.36 25.41
General reserve 1200.00 600.00
Balance carried to balance sheet 965.33 878.37
2452.79 1687.43
TABLE 7
BALANCE SHEET
For the year ended 2014
(Rs in Crores)
SOURCES OF FUNDS
SHAREHOLDERS FUND
FY(2013-2014) FY(2012-
2013)
Share capital 91.69 91.69
Reserve & surplus 6138.35 4890.39
Loan funds
Secured loans 2291.00 1386.12
Unsecured loans 660.56 593.55
2951.56 1979.67
Deferred tax liabilities 582.55 584.38
TOTAL 9764.15 7546.13
APPLICATIONS OF FUNDS
Fixed assets
Gross block 6770.97 6114.12
Less – depreciation 3380.53 3109.49
Net block 3390.44 3004.63
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Capital work-in-progress 1192.35 293.64
4582.79 3298.27
Fixed assets held for disposal 14.33 12.76
Investments 4274.70 3481.71
Current assets, loans & advances
Interest accrued on investments 0.70 1.46
Inventories 824.14 750.73
Sundry debtors 576.48 413.45
Cash and bank balances 116.38 155.58
Loans and advances 824.69 705.54
2342.39 2026.76
Less-
Current liabilities & provisions
Liabilities 1266.86 969.15
Provisions 183.20 304.22
1450.06 1273.37
Net current assets 892.33 753.39
TOTAL 9764.15 7546.13
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CHAPTER-6
INTERNSHIP
ASSESSMENT
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Internship has helped a lot to understand the practical side of job, which is different from the
textbook theories. It has also helped me to improve my communication skills. Customer handling
was one of the important learning that I gained from my internship. From the customer point of
view, it is easy. But not so when in the position of a staff or employee. Was also able to maintain
a good relationship with the employees on and off the shop floor. I did my internship on
‘working capital management’. It helped me to know how the analysis is being done by
comparing the Balance Sheets of 2subsequet years.
During the period of internship, I was supposed to thoroughly go through the financial
statements of the company and understand the aspects and concepts involved in it. In the
meanwhile, I also contributed in the sales department and helped in the billing session, which
gave me a very different experience.
Having done my internship in the finance sector my interest for it has increased which will help
me in my coming semesters.
It is very well said that “Finance always need a theory backup”. One needs to really know what
finance is all about and how much it is important for the company’s smooth functioning.
56 | P a g e
CHAPTER-7
CONCLUSION
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FINDINGS
In 2014 there is increase in current assets by 24% than 2013 and there is increase in current
liability by 17%, because of greater increase in current assets than in current liabilities, the
position of Working Capital has improved.
The % of fixed assets has come down in 2014 from 2013
Gross profit and net profit have increased from previous year
Cash flow statement indicates outflow of cash in comparison to past year
Due to better long term and short term financial conditions firm’s working capital is
better than that of previous year.
RECOMMENDATIONS
The company must concentrate on the percentage of fixed assets in the coming years.
The company must keep on maintaining the firms’ debt and equity and debt to total fund
so as to maintain the working capital.
The company should try to use more proprietors fund in current assets, so that they can
improve current assets to proprietors fund.
By using proprietors fund properly, the company can increase return on capital employed.
REFERENCES
BOOKS REFERRED
Khan, M.Y. and Jain, P.K., 2011, Financial Management, Tata McGraw-Hill, New Delhi.
Sekaran, U. and Bougie, R., 2010, Research Methods for Business, New Delhi, Wiley-
India Edition, 5th edition.
Kothari, C.R., 1985, Research Methodology- Methods and Techniques, New Delhi,
Wiley Eastern Limited
Company website www.naxparlab.co.in