A

Project Report

On

“STUDY OF WORKING CAPITAL MANAGEMENT”

AT

"RAYMOND LTD. JALGAON"

Submitted By
ABHINAV VERMA

Under the guidance of

Prof. Shreekala P. Bachhav

Submitted to
“University OF Pune"

IN THE PARTIAL FULFILMENT OF

POST GRADUATION DIPLOMA IN FINANCIAL SERVICES

Sinhgad Management School, Kondhapuri,

Pune-412208

2010-2011

I
 ACKNOWLEDGEMENT
I would like to express my profound gratitude to the Prof. Shreekala
P.Bachhav) and management Raymond Ltd & Raymond Outerwear Ltd. for
providing an opportunity to do project on“ Study Of Working capital
Management ” as a part of curriculum management study for Management in
Business Administration.
My sincere thanks go to Mr. Krishnendu Munda (Dy. General Manager- HR)
for his valuable guidance & co-operation. Also I would specially like to thank
Mr. Nilesh Patil (Officer – HR) for his guidance. I am really thankful to Mr.
Yatesh suratwala (ASST. Manager - Accounts), Mr. Pankaj pakhale (ASST.
Manager - Accounts) for their help & their advice in preparing the project
report & giving all the necessary information and contents about the project.
I would not complete this project In spite of inspiration given by my guide and
faculty member Prof. Reena Daulatram Chanchalani. She imparted
guidance of her command. I am over ridden by the sense of gratitude for him,
because of her guidance only; this study could reach the present stage.
Finally I wish to thank all my dear friends & all those who have supported me
& helped me directly or indirectly throughout the project work.

PLACE: - Pune
Date Mr. ABHINAV VERMA
(P.G.D.F.S)

2
 Declaration
I hereby declare that dissertation entitled “Study of Working Capital

Management.” in Raymond Ltd, Jalgaon is the result of my original

research work and the same has not been previously submitted to this

university. I shall be responsible if the above information is false.

Date:- 22/07/2010 Mr. ABHINAV VERMA

P.G.D.F.S
Place: - Jalgaon

3
 INDEX
Sr. No. Name of Title Page
number
1) Introduction to Organization 05 - 15

2) Executive Summry

2) Objective, scope and methodology of the 16 - 20

study
3) Introduction to working capital 21 - 28
management
4) Working capital trends and liquidity 29 - 35
analysis
5) Inventory management 36 - 41

6) Receivables management 42 - 44
7) Cash management 45 - 50

8) Payable Management 51 - 53

9) Conclusion and Suggestions 54 - 57

10) Bibliography 58.

Chapter-1
Introduction to organization

4
1.1 History of RYMOND Ltd.

Incorporated in 1925, the Raymond group is Rs.1400 crores plus

conglomerate having business in Textiles.

Raymond’s capacity of producing 33 million meters of wool & Wool-

blended fabrics, Readymade Garments, Engineering files & Tools,
Prophylactics and Toiletries.

The group is the leader in textiles, apparel, & files & tools in India and enjoys a
pronounced position in the international market. Raymond believes in excellence, quality
and Leadership. Mr. Gautam Hari Singhania is a chairman cum Managing Director of
this company.

Excellence is a way of a life at Raymond that has been manifested in all of their
endeavors over 78 years. These endeavors have been translated into designing and
developing products of international standards delivering enhanced value though brand
building, distribution, and customer relationship. Raymond today is a culmination of
untiring human efforts based on the fabric of values. People are there prime resource in
establishing market leadership. The Raymond’s Ltd Value integrity and the long-term
association shared with their people. It also believe in the continue professional and
personal development of the employees.

Raymond division: -
Textiles: -

5
Produces world-class pure wool blended & polyester viscose fabrics and blankets and
ranks among the top 3 integrated procedures in the world. Also produces a wide range of
furnishing fabrics.
Files & Tools: -
Files & tools division manufactures complete range of Engineer’s steel files & drills and
is the world’s largest producer of steel files.

Aviation:-
Million Air wad launched in 1996 to provide air charter services and
enjoys a reputation for high quality reliable services.

Groups Of Raymond Ltd.

 Raymond Ltd.

Raymond Ltd. is among the largest integrated manufacturers of worsted fabrics in

the world.

 Raymond Apparel Ltd.

Raymond Apparel Ltd. has in its folio some of the most highly regarded apparel
brands in India – Raymond Finely Crafted Garments, Manzoni, Park Avenue for
Men & Women, Color Plus for Men & Women, Parx, Be: and Zapp! and Notting
Hill.

 Color Plus Fashions Ltd.

Color Plus is among the largest smart casual brands in the premium category. The
company was acquired by Raymond to cater to the growing demand for a high
end, casual wear brand in the country for Men & Women.

 Silver Spark Apparel Ltd.

A garmenting facility that manufactures formal suits, trousers and jackets.

6
  Ever Blue Apparel Ltd.

A state-of-the-art denim garmenting facility.

 Celebrations Apparel Ltd.

A facility set-up for the manufacture of formal shirts.

 J.K. Files & Tools

A leading player in the Engineering Files & Tools segment and the largest
producer of steel files in the world.

 Ring Plus Aqua Ltd.

A leading manufacturer in the engineering automotive components.

 J.K. Helene Curtis Ltd.

A leading player in the grooming, accessories and toiletries category.

 J.K. Investo Trade (India) Ltd.

JKIT is an investment company registered with Reserve Bank of India as Non-

Banking Financial Company.

Raymonds Joint Venture

 Raymond UCO Denim Pvt. Ltd.

The manufacturers and marketers of denim fabrics.

 Raymond Zambaiti Pvt. Ltd.

A Greenfield facility manufacturing high value cotton shirting.

 Gas Apparel Pvt. Ltd.

7
 Our Joint venture with Grotto S.p.A launched the highly successful 'GAS' brand
in India.

 J.K. Ansell Ltd.

The manufacturers and marketers of Kama Sutra condoms and surgical gloves.

 J.K. Talabot Ltd.

Our Joint venture with MOB Outillage SA, manufacturing files and rasps for
international markets.

Industrial Profile

Raymond Ltd.

Raymond textile is India’s leading producer of worsted suiting fabric with over 60%
market share with a capacity of 33 million meter of wool and wool-blended fabrics,
Raymond textile is the world’s third largest integrated manufacturer. The company
exports it’s suiting to more than 50 countries including USA, Canada, Europe, Japan and
the middle East. Over the years, Raymond textile has developed strong in-house skills for
research and development, which has resulted in path-breaking new products.
Recognized as the most respected textile company of India. Raymond Limited is amongst
the first three fully integrated manufacturers of worsted suiting in the world. As the flag-
bearer of the multi-product, multi-divisional Raymond group, it enjoys over 60 share of
India worsted suiting market.
It produce 33 million meters of high-value pure-wool, wool blended and premium
polyester viscose suiting in addition to half a million blankets and shawls, all marketed
under the flagship brand “Raymond” a worldwide trusted name since 1925. It also
produces and markets plush-velvet furnishing fabric in wide array of designs and colors
including carpeting for the niche markets of India and Middle East.
Manufacturing facilities include three world class fully integrated plant in India,
employing state of the art technology from wool securing to finishing stage and modern
quality management (ISO 9001) as well as environment control system (ISO 14001). All

8
the plant is self sufficient in term of providing educational, housing recreation and
spiritual support system for the employee and connected township.
Product are distributed through about 300 exclusive retail shops in India and surrounding
countries, 30000 multi-brand retail outlets and over 100 wholesale distributors.
In addition to Middle East and SAARC countries its products are sold to discerning
customers in over 60 countries including premium Fashion Labels all over the world.

Location of Raymond Ltd in India:-

In India Raymond is located most of generally in Maharashtra state and some are in other
state. In the Maharashtra state there were 8 plants and remaining 7 in other state.
Maharashtra is the state of which are centralized in India so, most of resources are easily
available are there. In Thane, Nasik, Jalgaon, Aurangabad, Yavatmal, Chiplun, Ratnagiri,
Kolhapur these are the city where as Raymond build up their business in Maharashtra.

9
ADMIRED BRANDS

Raymond, Park Avenue, Parx, Manzoni, Be, Kama sutra, Premium, Color plus.

Raymond: -

The largest and most respected textile brand in India for “The Complete Man” addressing
the innate need of men to look good and at the same time posses strength of character.

Park Avenue:-

Formal readymade garments & accessories for men it has recently bagged the “Most
Admired Brand” and “Most Admired Trouser brand” awards.

Parx:-

The semi formal and casual range of cottons, blends and denim wear catering to the
smart, fashionable and comfortable clothing segment.

Manzoni:-

The Luxury range of men’s shirts and ties acknowledged for its high quality and
international styling.

Be:-

An exclusive prêt-a-porter line ready-to-wear designer for women and men in western,
ethnic and fusion styles.

Kama Sutra:-

10
The premium condoms brand with the unique ‘for the pleasure of making love’
positioning in textured and flavored variants.

Premium:-

The range of cosmetic & toiletries including after shaves, shampoos, cologne, shaving
cream, soaps, deodorants, room fresheners, etc.

Color plus:-

Premium casual wear brand in high quality natural fibers like cotton and linen, in
superior mixed and performance oriented weaves.

THE RAYMOND SHOP

The Raymond shop is a premium retail store offering complete wardrobe solutions for
men’s, which included top-of-the line brands – Raymond, Pak Avenue, Parx, Manzoni &
now Colorplus.

The Raymond shop has been a pioneer in organized retailing in the country starling
around five decades ago. The Raymond’s shop’s wide reach and range of products,
makes it the largest one stop retail network in the country. This chain of shops has over
the year’s become yardstick by which other retails stores are judged. The retail chain

11
constantly sets new standards and creates environment that makes shopping pleasure.
Now we have 350 shops in the country.

About Jalgaon Plant

The JALGAON Unit is one of the three production Divisions of the Textile Division
located at Jalgaon on Nagpur-Mumbai rail and road route in MLDC Industrial Estate on
Ajanta Road.

The Division commenced production in March 1979. JALGAON Unit has worsted plant.
The Worsted Plant produces high quality gray fabrics in polyester-wool and polyester-
viscose blends. Total Production is 15000-meter fabric/day. Total Workmen in the
company is about 1301.

For the worsted plant, the min inputs are the polyester Wool All Wool blended tops
received from Chhindwara Unit and than e Unit of Raymond Limited. The JALGAON
Unit supplies all the gray mended fabrics to the Chhindwara / thane Unites for further
procession. The production is planned on basis of yearly / monthly targets and
programmers received. The JALGAON Unit is Committed to protection environment
especially air, water, and land. In pursuit of this goal, the JALGAON Unit is focusing on
protection of environment through features like effluent. Treatment plants and creating
12
Green Area all around the plant and water harvesting and conservation. The JALGAON
Unit has its own well-equipped laboratory for carrying out the various tests of in-coming,
in-process and finished products. The setting up of JALGAON Unit hassled to the
development of the colony in the vicinity of the mill. The management is giving thrust to
areas like safety, health and welfare aspects including workers education about
Raymond-Fedora Pvt. Ltd.

The Joint Venture product-Between Raymond Limited, India & Lanificio Fedora, Italy is
situated at Jalgaon Railway station, which is connected, to several major railway lines
and a national highway, NH-6connecting it to all the major cities of the country.

Company Short Resume

Location Raymond Limited, 5 km from Jalgaon railway station in, E-

1/11, MIDC, Ajanta Road, Jalgaon-425003
Maharashtra
Plant or Production 1) Worsted Plant (in 1979)
Unit Raymond Textile Limited
2) Woolen Plant (in 2005)
Raymond Outerwear Limited
Area of the Plot Worsted plant: - 70960 sq mts.
Woolen plant :- 52,775 sq mts
Production Capacity Worsted plant = Fabric – 5 million meter
(In year) Woolen Plant = Fabric – 2 million meter
No. of Shift Timing General 8:00 to 5:00
First 7:00 to 3:00
Second 3:00 to 11:00
Third 11:00 to 7:00
Registered Office Plot no. 156/11 No.2
Village Adgaon,
Ratnagiri,
Maharashtra- 415 612

13
Corporate Office Mahindra Towers,
‘B’ Wings,
Pandurang Butbhkhar Marg,
Worli ,Mumbai-400 018
Chairman Shri. Gautam Hari Singhania
(Raymond)
Works Director Shri. K.S. Nagraja.
(Jalgaon)
Production In Worsted:- worsted Suiting fabric with Polyester-
wool And Polyester viscose blends
In Woolen:-blankets, shawls, woolen throws, flannel,
billiard cloth (for Export), woolen fabric,
outer ware fabric (for Export)
Work Force Mgt Staff 107
Supervisor 30
Clerk 14
Operator 671
Helper 169
Other 122

Various Departments in Raymond

14
The organizational structure thus plays an important role in the manufacturing
process. There are two plants in Raymond Ltd, Jalgaon. They are namely woolen
plant and worsted plant.

1) Woolen Plant 2) Worsted Plant

No Dept. Name
.
1 R/M –Godown No Dept. Name
2 Carding .
1 Spinning
3 Spinning
2 Weaving
4 Dyeing
3 New Spinning (5700)
5 Weaving 4 Mending

6 Mending 5 Engineering

7 Finishing 6 Warping

7 Steaming
8 Folding
8 Roving
9 Warehouse
9 Gilling
10 RAG Tearing
10 Twisting
11 Blending

12 Winding
Chapter 2
13 Warping

14 Healding

Objective, Scope and

Methodology of the study

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 2.1 Objective of the Study

2.2 Scope of the Study

2.3 Research Methodology

2.4 Analysis and Interpretation of Data for the

Study

2.5 Hypothesis

2.6 Utility of Study

2.1 Objectives of the Study: -

To review the history, growth and development of Raymond

Ltd., Jalgaon.

To examine the pattern of management of working capital and

to analyze the working capital trends.

To evaluate inventory manage management in Raymond Ltd.

Jalgaon.

To evaluate efficiency and liquidity of working capital

Management in Raymond Ltd Jalgaon.

16
 To analyze receivable management in Raymond Ltd. Jalgoan.

To examine cash management practice in Raymond Ltd.

Jalgaon.

2.2 Scope of the Study: -

Temporal Scope: -
The scope of the study broadly covers the period from 2002-05 to 2006-08. However,
while studying the history of the organization the period from 1963 i.e. the date of
formation of the organization is also covered.

Functional scope: -
There are various managerial aspects of Raymond Ltd, Jalgaon such as marketing, sales,
human resource management are available for study. Considering the requirement of the
course and significance of subject only aspect of Working Capital Management of the
organization is selected for the study.
Geographical Scope:-
There are various organizations working in Jalgaon area. It is not possible to study
Working Capital Management of all such organization within a period of one year. So
only Raymond Ltd., Jalgaon is selected for study.

2.3 Research Methodology:-

Sources of Information
There are mainly two sources of data and information i.e.
a) Primary Sources and
b) Secondary Sources.

a) Primary Sources: -
17
 There are various methods of collecting the primary data i.e. Interview Method,
Questionnaire Method, Observation Method, etc. In this case it is the study of a single
organization, so personal interview method is used for collecting the necessary
information and data. For this purpose, at the time of every visit personal interview
of the Chairman, Managing Director, Secretary, Accounts Officer are taken, through
which points like requirement of working capital, sources of working capital, history
of organization etc. And other relevant issues are discussed and the required
information is collected and inserted at appropriate places in this project report.

b) Secondary Sources: -
This study is baser on facts land figures for which secondary sources are also used for
collecting the data and information for this project. The secondary sources of data
consists of-
ii) Published Annual Reports of Raymond Ltd., Jalgaon.
iii) Theoretical base regarding working capital management in various books
available in library.

2.4 Analysis and Interpretation of Data for the Study: -

Data and information collected for the study through primary and secondary source
are arranged and tabulated properly, while tabulating the data bare amounts, figures
and information of percentages, index number, proportions and ratios are used. For
effective presentation of data, the technique of graphs is also used in the project repot.
In this way various statistical tools are used in this study.
On the basis of presentation of information and data as above, Necessary comments
are made on the basis of trends shown by the Figures inserted in the tables.
Accordingly appropriate remarks are drawn.

2.5 Hypothesis: -
The study is based on the following hypothesis: -

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 Raymond Ltd., Jalgaon. Board of Directors consists of persons possessing good
experience of particular field, which is helpful for qualitative progress of
organization.
The organization is raising finance for meeting the working capital requirements.
The well experienced and qualified staff is working in organization. There is major
impact; of provisions and rules in the companies Act 1956.

2.6 Utility of the Study: -

This study is useful to the various factors as under-

To Directors: -
The members of Board of Directors will be able to study the details regarding
management of working capital in the organization. They will study the trends of
working capital during the last five years. It is helpful for them while financial
planning and polity making for the future period.
To the staff: -
The officers and employees working in the organization use the study for
implementing the financial policies and making optimum use of financial sources.

To Students and Researchers: -

The persons who are interested in studying the management of working capital in
Raymond Ltd., Jalgaon can refer the data and information included in this projects
report and the conclusions made in the study.

To Government Departments: -
The personnel for government departments may also get valuable information
from this report while framing the schemes and plans related with such
organizations

19
.

Chapter – 3

Introduction to working capital Management

3.1 Introduction of Working Capital

3.2 Meaning and Definition

3.3 Concept of Working Capital

20
 3.4 Importance of Working Capital

3.5 Types of Working Capital

3.6 Operating Cycle of Working Capital

3.7 Determinant of Working Capital

3.1 INTRODUCTION:-

The financial management of business firms involves: the management of long term
assets, fixed assets, management of capital and management of short term assets and
liabilities. The first of three functions is the capital budgeting, the second is the
management of capital structure and the last but not the least is the management of
working capital.
Working capital is one of the most fundamental measures of a firm’s financial
strength. If a firm possesses a significant value of liquid assets, it can easily fund its
day-to-day business obligations.

3.2 Meaning & Definition: -

21
 Working capital management is the process of planning and controlling the level and
mix of the current assets of the firm as well as financing these assets.
“The portion of firm’s current assets which are financed with long term funds”
- L.G. Gitamann
Working capital is defined as the excess of current assets over. The current liabilities
and provision that is, the amounts of surplus of current assets, which remain after
deducting current liabilities from, total current assets. This amount is equal to the
amount invested in working capital.
“Working capital is the amount of funds necessary for the cost of operating the
enterprise.”
- Shubin

3.3 Concepts of Working Capital: -

The concept of working capital has been a matter of great controversy among the
financial experts.
There are two concepts of working capital i.e.
a. Gross Concepts
b. Net Concepts

a. Gross Concepts: -
The Gross concept of working capital deals with firms current assets. The sum total
of current assets of firm is termed as working capital.
From the perspective of working capital needs, Gross concept of working capital is –
the investment in circulating assets or in inventory and accounts receivables,
comprising the operating cycle of a manufacturing firm. Investment in assets which
be converted in cash within an accounting year, which includes cash, short term
securities, debtor, bills receivable and inventories.
In short, according to gross concept working capital refers to the sum total of all
current assets of the firm employed in the business process.

b. Net Concept: -

22
 Net concept of working capital refers to current assets less current liabilities. That
means, working capital is the difference between resources in cash or readily
convertible into cash i.e. current assets land organization commitments for which
cash will soon be required i.e. current liabilities.
Formula

Working Capital = Current Assets – Current Liabilities

Current liabilities are those claims of outsiders, which are expected to mature for
payment within an accounting year and include creditors, bills payable, bank
overdraft and outstanding expenses.
Thus, according to net concepts of worming capital that is accepted widely. Some
have made it quite simple stating it is the difference between current assets and
current liabilities. Others consider it as being equal to the total of current assets.

3.4 Importance of Working Capital: -

The management of working capital plays an important role in to maintain the
financial health of the firm during the normal course of business
A study of working capital is of major importance of internal and external analysis
because of its relationship with the current day to day operations of business.
The study of management of working capital covers areas like cash management,
Accounts receivables, inventory and other concerned areas. Thus, working capital is
of paramount importance to a firm’s financial performance.

3.5 Types of Working Capitals: -

The term working capital is broadly classified under two heads as under: -
a) On the basis of concepts.
b) On the basis of time.

a) On the basis of concepts: -

On the basis of concepts the working capital is divided in two types. They are: -
i. Gross Working capital –

23
 The gross working capital refers to investment in all the current assets taken
together. The total of investment in all current assets is known as gross working
capital.
ii. Net working capital –
The term net working capital refers to excess of total current assets over total
current liabilities

b) On the basis of time: -

From the point of view of time, the working capital can be divided into two
categories: -

i. Permanent working capital –

It also refers to Hard core working capital. It is that minimum levels of
investment in the current assets that is carried by the business at all the times to
carry over minimum level of its activities.

ii. Temporary working capital –

It refers to that part of working capital, which is required by a business over &
above permanent working capital. It is also called variable working capital.
Since the volume of temporary working capital keeps on fluctuating from time
to Time-to-time according to business activities it may be financed from short-
term sources.

3.6 Operating Cycle of Working Capital:

The term operating cycle is also known as ‘Cash Cycle’. The term capital cycle or
operating cycle refers to the length of time between the Firms paying cash for raw
materials, applying those materials into production process, stock and inflow of cash
from debtors.
The operating cycle is the average time between purchasing or acquiring inventory
and receiving cash proceeds from the sale of finished products.
The operating cycle consists of the following events which continues throughout the
life of business-

Conversion of cash into raw materials;

24
 Conversion of raw materials into work in progress;

Conversion of work in progress into finished products;

Conversion of Finished product account receivables through sales:

Conversion of Account receivables into cash

Cash finished products Raw materials Work in process Operating cycle of working
capital Thus there is complete cycle form cash to cash to cash wherein cash gets
converted into raw materials, work-in-progress, finished products, debtors and finally
into cash again.
The operating cycle of working capitals will repeat again and again over the period
depend upon the nature of business. The determination of operating cycle help’s in
forecast control and management if working capital.

3.7 Determinants of working capital: -

The total working – capital requirement is determined by a wide variety of factors. It
C
S
W
P
R
M
h
ls
should be noted that these factors affect different enterprises differently. The following is

25
k
g
o
r
w
e
t
a
the description of the factors, which generally influence the working capital requirements
of the firms.

Internal Factors: -
1) Nature of Enterprise –
The working capital requirements of a firm basically influenced by the nature of it’s
firm. For example, trading and financial firms require a lower investment in working
capital but in the case of manufacturing concern have to invest substantially in
working capital.

2) Production Cycle-
Longer the manufacturing process the higher would be the requirements of working
capital. This is the reason why highly capital-intensive industries a large amount of
working capital to run their sophisticated and long production process.

3) Credit Policy-
The level of working capital is also determined by credit policy, which relates to sales
and purchases. The credit policy influences the requirement of working capital in two
ways:
i) Credit allowed by firm to its customers.
ii) Credit given to firm by its suppliers.
The credit terms granted to customers have a bearing on the magnitude of working
capital by determining the level of books debts. On the other hand, if liberal credit
terms are available to firm by its suppliers, the requirements of working capital will
be less.
4) Growth and Expansion Activities-
It is obvious that, as business expands, it requires more working capital in terms of
sale or fixed assets. In the case of growth, there will be an all round increase in
investment. That is to say, with the increase in fixed assets for increasing sales the
requirement of working capital will be expanded not only for financing increased
volume of raw materials but also to finance maintenance of inventory stock and grant
credit to customers.

26
External Factors: -
1) Business Cycle Fluctuations-
Business fluctuations lead to cyclical and seasonal change in production and sales and
affect the working capital requirement. Most firms experience seasonal and cyclical
fluctuation in the demand for their products and services. These business variations
affect specially the temporary working capital requirements of the firm.

2) Supply Conditions –
The inventory of raw materials, spares and stores depends on the condition of supply.
If the supply is prompt and adequate the firm can manage with small inventory hence
the firm can manage with small inventory hence the lower requirements of working
capital. If the supply is unpredictable and carry the inventory for longer period. This
policy is followed when the raw material is available only seasonally.

3) Technological Development –
Changes in technologies may lead to improvements in processing raw materials,
minimizing wastages, greater productivity, more speed of production. All these
improvements may enable the firm to reduce investments in inventory .Thus changes
in technology affect the requirements of working capital.

4) Government Policies –
The police and decision of government also affect working capital. Government
controls and regulates the prices and supply of some essential products, which are
very important from the point of view of general public.

27
 Chapter – 4
Working Capital Trends and Liquidity Analysis

4.1 Working Capital Trends: An Introduction

4.2 computation of working capital

28
 4.3 Size of working capital

4.4 Liquidity Analysis

4.5 Current Ratio

4.6 Quick Ratio

4.1 Working Capital Trends: An Introduction

Working capital is the life blood of an organization so it needs to be managed with care
in an effective way by having a good internal control. In working capital analysis the
direction of change over a period of time is of crucial importance. Working capital is one
of the important fields of management. It is therefore very essential for the analyst to
make a study about the trend and direction of the working capital. The working capital
trend analysis represents a picture of variation in current assets, current liabilities and its
effect on the working capital position.

29
In the words of S.P. Gupta: “The term ‘trends’ is very commonly used in day-to-day
conversation. Trends, also called secular or long term trend, is the basic tendency of
population, sales, income, current assets and current liabilities etc., to grow or decline
over a period of time”
According to R.C. Gulezian, “The trend is defined as a smooth irreversible movement in
the series. It can be increasing or decreasing.” Pointing out the factors responsible for
secular trend, D.N. Elhance observes: “Secular trend is the effect of such factors, which
are more or less constant for a long time or which changes very gradually or slowly.
Such factors are changes in population or tastes and habits of people etc”. However, it
depends on the nature of data, whether it can be regarded as long-term or short-term. It is
also not necessary that the rise and fall continue in the same direction throughout a very
long period of time.
Emphasizing the importance of analysis of working capital trends, “Analysis of working
capitals trends provides a base to judge whether the practice and prevailing policy of the
management with regard to working capital is good enough or an improvement is to be
made in managing the working capital funds. Further, any one trend by itself is not very
information and, therefore comparison with illustrated their idea in these words: “An
upward trend for inventories, bills receivables, and sundry debtors coupled with a
downward trends of sales, accompanied by a marked increase in plant investment
especially if the increase in plant investment by incurring fixed interest obligation”.

4.2 Computation of working capital

Statement of Working Capital in Rupees

(2007-08 to 2009-10)
Particular 2007-08 2008-09 2009-10

30
 Current Assets
Inventories 28366.36 32974.18 34040.36

Sundry Debtors 26877.07 28988.56 30447.61

Cash and Bank Balances 2561.40 2182.48 4679.94

Other Current Assets

Loan and Advances 2969.90 5775.49 5066.34
21715.86 24421.59 23931.08

Total A 82490.59 94342.30 98165.33

Current Liabilities
Current liabilities 29083.90 28245.53 35044.23

Provisions 8063.66 7553.73 5966.62

Total B 37147.56 35799.26 41010.85

Working Capital (A-B) 45343.03 58543.04 57154.48

Inference
 Current Assets increase to 19.00% in the year of 2009-2010 as Compare to in the
year 2007-2008.

 Current Liabilities increase to 10.39% in the year of 2008-2009 As compared to

the year 2007-2008.

 In the year 2009-2010 the growth in working capital was 26.04% as compare to
the year 2007-2008.

4.3 Size of working capital

Working Capital Indices
Particular 2007-08 2008-09 2009-10
Working capital 45343.03 58543.04 57154.48
Indices 100 129.11 126.04

31
 W.C.Indices
140
129.11 126.04
120
100
100

80 W.C.Indices

60

40

20

0
2007-08 2008-09 2009-10

Working Capital Indices

From the above chart it can be seen that from the year 2008-09 there is increasing
working capital by 29.11%. In the year 2009-10 by 26.04% as compare 2007-08 but
not increasing compare to year 2007-08. This is again not a good sign.

4.4 Liquidity Analysis

A sound liquid position is of primary concern to management from the point of view
of meeting current liabilities as and when they mature as well as for answering
continuity of operations. Thus liquidity is the base of continuous business
operations. The important of adequate liquidity in the sense of the ability of a firm to
meet current or short-term obligations when they become due for payment can hardly
be over stressed. In fact liquidity and profitability is required for efficient financial
management. The liquidity ratios measure the ability of a firm to meet its short-term
obligations and reflect the short-term financial strength of a firm.
4.5 Current Ratio
The most widely used measure of liquid position of a firm is the current ratio. This
ratio is also known as the ratio of current assets to current liabilities or working
capital ratio. The current ratio is computer by dividing current assets by current

32
liabilities. Current assets include cash and these assets, which can be converted into
cash within a year, such as marketable securities, debtors and inventories etc.
The current ratio gives the analyst a general picture of the adequacy of the working
capital of a company and of the company’s ability to meet its day-to-day payment
obligations. It likewise, measures the margin of safety provided for paying current
debts in the event of a reduction in the value of current assets. The current ratio can
be computer as follows:

Current Assets
Current Ratio =
Current Liabilities

A relatively high value of the current ratio is considered as an indication that the firm
is liquid and has the ability to pay its bills. On the other hand, a relatively low value
of the current ratio is considered as an indication that the firm will find difficulty in
paying its bills. As a conventional rule a current ratio of 2:1 or more is considered to
be satisfactory.

Current Ratio
Particular 2007-08 2008-09 2009-10
Current Asset 82490.59 94342.30 98156.33
Current Liabilities 37147.56 35799.26 41010.85
Current Ratio 2.22 2.63 2.39

33
 Current Ratio
2.7
2.63
2.6

2.5

2.39 Current Ratio

2.4

2.3
2.22
2.2

2.1

2
2007-08 2008-09 2009-10

The current ratio in “Raymond” Ltd. has been showing a fluctuating trend. In the year of
2007-08 Current ratio shown an increasing tendency and was 2.22 times. In the year of
2008-09 Current ratio also increasing 2.63 time, but In the last year 2009-10 study
Current ratio decreases to 2.39 times (compare to 2008-09). The condition “Raymond”
Ltd is satisfactory as regards the current ratio. (As a conventional rule a current ratio of
2:1 or more is considered to be satisfactory.)

4.6 Quick Ratio:-

The quick ratio is another widely used device for judging the short-term debts repaying
ability of the business in the near future. The ratio is designed to show the amount of
cash available for meeting immediate payment. The quick ratio is the ratio between
quick assets and quick liabilities and it is calculated by dividing the quick assets by the
quick liabilities.
The formula for calculating this ratio is as follows-

Quick Assets
Quick Ratio =
Quick Liabilities

34
 The term quick assets refer to current assets, which can be converted into, cash
immediately or at a short notice without diminution of value. It includes cash and bank
balance, marketable securities and debtors.
Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial
position. When it is not it implies that the quick assets do not cover current liabilities,
and therefore steps should be taken for additional cash. The fundamental object of
calculating this ratio is to enable the finance officer to ascertain as to what would
happen if the current creditors pressed for immediate payment.

Quick Ratio
2007-08 2008-09 2009-10
Particular
(Rs. In Lakhs) (Rs. In Lakhs) (Rs. In Lakhs)
A) Quick Assets
Loan and Advances
Debtors 21,715.86 24421.59 23931.08
Cash & Bank 26,877.07 28988.56 30447.61
Balance 2,561.40 2182.48 4679.94

Total A 51154.33 55592.63 56058.63

B) Quick Liabilities
Current Liabilities 29083.90 28245.53 35044.23
Provisions 8063.66 7553.73 5966.62
Total B 37147.56 35799.26 41010.85
Quick Ratio (A/B) 1.38 (approx.) 1.55 1.37 (approx.)

Generally a quick ratio 1:1 is considered to represent a satisfactory liquid position. The
quick ratio of ‘Raymond’ Ltd has been showing a fluctuating trend through the period of
study. In the years 2007-08 it increased to 1.37 times. In the year 2008-09 it increased to
1.55 times. But in the last year (2009-10) of study Quick Ratio decreased to 1.36 times.
But this condition “Raymond” Ltd is satisfactory as regards the Quick Ratio. (Generally
a quick ratio 1:1 is considered to represent a satisfactory liquid position.)

Chapter-5

35
 Introduction to Inventory Management

5.1 Objectives of Inventory Management

5.2 Characteristics of Good Inventory Management

5.3 Components of Inventory

5.4 Size of Inventory

5.5 Inventory Turnover Ratio

5.7 Observation of Inventory Turnover Ratio

Inventory Management
Introduction:-
36
The dictionary meaning of the word Inventory is “a detailed list of goods, furniture, Stock
of goods.” Many understand the word ‘Inventory as stock of goods.’ But the stock of
finished good only. In a manufacturing firm, however in addition to stock of finished
goods, raw materials and stores. The collective name for all these items is ‘Inventory’.
Inventory measured in term of money, constitutes an important element in the working
capital of most business firms except financial ones. Their size and rate of turnover,
therefore, influence greatly the size and rate of turnover of working capital and, through
them, the income and profit of a business. Thus, inventory management is having
considerable significance to all business firms.
L.R. Howard observed that, “The proper management and control of inventory not only
solves the problem of liquidity but also increases annual profits and causes substantial
reduction link the working capital of a firm.” Inventories form a link between production
and sale of a product. Therefore, it is essential to have a sufficient level a sufficient level
of investment in inventories. The basic financial problems are to determine the proper
level of investment in inventories and to decide how much inventory must be acquired
during each period to maintain that level.

5.1 Objectives of Inventory Management

The objective of inventory management consist of two counterbalancing parts: (i) To
minimize the firm’s investments in inventory and (ii) To meet a demand for the product
by efficiently organizing the firm’s production and sales operations. According to M.
Pandey: “Both excessive and inadequate inventories are not desirable. Therefore
optimum level of inventory will lie between two danger points of excessive and
inadequate inventories to a considerable degree e.g. 10 to20 percent, without any adverse
affect on production and sales, by using simple inventory planning and control
techniques. Thus the aim of inventory management should be to avoided excessive and
inadequate levels of inventory and to maintain sufficient inventory for the smooth
production and sales operations efforts should be made to place an order duty with the
right source acquire the right quantity at right price and quality
5.2 Characteristics of Good Inventory Management
An effective management should:-

37
 1) Ensure a continuous supply to facilitate uninterrupted production.
2) Maintain sufficient stocks of raw materials in the period of short supply and
anticipate price changes
3) Maintain sufficient finished good inventory for smooth sales operating and
efficient customer service
4) Minimize the carrying cost and time and
5) Control inventories and keep it an optimum level

5.3 Components of Inventory

The structure of inventory is usually affected by each component in the total
inventory varies from industry .however; a proper level has to be maintained
among all these components to exercise an effective control over inventories.
Following are the various components of inventory
a) Raw materials
Raw materials are purchased material or goods requires for product ion
manufacturing process transforms raw materials into a finished product.
b) Work in progress
Work in progress otherwise known as semi finished products manufactured
at various stages during the production cycles in other words it consists of
items which are currently in the process of production.
c) Finished product
Finished goods inventories are final or completed products ready to send
away to the market or consumers these products have been fabricated or
manufactured assembled from production.

d) Store and spares

These are held as an after sales service for products supplied to customers. It
is important to differentiate their management from that of finished good so
that they may not be used for production .spares for maintenance of the firms
equipment may be held in a site stores or be held on call by the supplier.
5.4 Size of Inventory

38
 The structure of inventory is usually affected by the
Size of inventory
Particular 2007-08 2008-09 2009-10
Inventory 28366.36 32974.18 34040.36
Indices 100 116.24 120.00

Indices
125
120
120
116.24
115
110 Indices

105
100
100
95
90
2007-08 2008-09 2009-10

Size of inventory
The indices analysis and graph shows that the size of inventory in ‘Raymond’ Ltd has
increasing trend, in the year 2007-08 Size of Inventory is 100.00 in the year 2008-09 size
of inventory is 116.24 in the year 2009-10 size of inventory is 120.00
5.6 Inventory Turnover Ratio
Inventory turnover ratio is also known as stock turnover ratio it establishes a relationship
between the cost of goods sold during a period and the average amount of inventory it is
one method of reviewing performance and controlling inventories periodically to check
the inventory turnover of each type of raw material supply and finished goods .
It is calculated as follows-

Sales
Inventory Turnover Ratio =
Average Inventory

39
Inventory turnover ratio acts as an indicator of the liquidity of the inventory. In other
words, this ratio helps in determining the liquidity of a concern in as much as it gives the
rate at which inventories are converted into sales rather than into cash.
A low inventory turnover ratio suggests poor inventory management.

Particular 2007-08 2008-09 2009-10

Sales 129962.75 133756.33 139325.37
Average 28366.36 32974.18 34040.36
Inventory
Inventory 4.58 4.05 4.09
Turnover Ratio
Inventory Turnover Ratio

Inventory Ratio
4.7
4.6 4.58

4.5
4.4
4.3
Inventory Ratio
4.2
4.09
4.1 4.05
4
3.9
3.8
3.7
2007-08 2008-09 2009-10

Inventory Turnover Ratio

The inventory ratio had an erratic trend throughout the period. In the year 2007-08
Inventory Turnover Ration is 4.58 times. In the year 2008-09 Inventory Turnover Ratio
is 4.05 times. In the year 2009-10 Inventory Turnover Ratio is 4.09 times.

Note: Cost of good sold is not available, so figures of net sales are taken for calculation
of ratio.

40
5.7 Observation of Inventory Turnover Ratio:-
Every firm has to maintain a certain level of inventory of finished good so as to be able to
meet the requirements of the business. But the level of inventory should neither to be
high not to be low. It to high inventory means higher carrying cost and higher risk of
stocks becoming obsolete whereas to low inventory may mean the loss of business
opportunities. It is very essential to keep sufficient stock in business.

It is express in number of time. Stock turnover ratio or inventory turn over ratio indicates
the no. of times the stock has been turned over during the period and evaluates the
efficiency with which a firm a able to manage its inventory. This ratio indicates whether
investment in stock is with in proper limit or not.

HIGHER RATIO INDICATES:-

 Stock is sold out fast.

 Same volume of sales from less stock or more sales from
Same stock
 Too high ratio shows stock outs or over trading.
 Less working capital requirement.

LOWER RATIO REVEALS:-

 Stock a sold out at a slow speed.

 Same volume of sale for more stock or less sale from same stock.
 More working capital requirement.
 Too low ratio show obsolete stock or under trading.

41
 Chapter-6

Receivable Management

6.1 Meaning of Receivable

6.2 Objectives of Receivable Management

6.3 Size of Receivable

42
 6.1 Meaning of Receivables:-
Emerson as has defined the term ‘receivables’:- “when goods or services are sold under
an arrangement permitting the customers to pay for them at a letter date, the amount due
from the customer is recorded receivable”. This is an asset account, representing claim to
future payment of cash from the customer.

6.2 Objectives of Receivables Management:-

The basic objective of receivables management is to maximize the value of the firm by
achieving a trade off between liquidity and profitability. In fact, the firm should manage
its credit in such a way that sales are expanded to an extent to which risk remains within
an acceptable limit. Thus, to achieve the objective to maximizing the value, the firm
should manage its credit:
(i) To obtain optimum volume of sales.
(ii) To control the cost of credit and keep it at minimum.
(iii) To maintain investment in debtors at optimum level.
The purpose of credit management is not sales maximization. But efficient and effective
credit management does help to expand sales and can prove to be an effective credit
management does help to expand sales and can improve to be an effective tool of
marketing, thus, the objective of receivables management is to promote sales and profits
until that pint is reached where the return on investment in further funding of receivables
is less than the cost of funds raised to finance that additional credit.

6.3 Size of Receivables:-

The size of receivables is closely linked with a firm’s trade terms, which includes the
period of credit, the rate of discount and collection policies etc. But the most important
factor in determining the volume of receivables is the level of a firm’s credit sales. With
an increase in the size of sales, it may decide to bring about a proportionate increase in
the magnitude of receivables.

43
 Size of Receivables
Particular 2007-08 2008-09 2009-10
Receivables 412.75 516.82 695.43
Indices 100 125.21 168.48

Series 2
180 168.48
160
140
125.21
120
100 Series 2
100
80
60
40
20
0
2007-08 2008-09 2009-10

Size of Receivables

In ‘Raymond’ Ltd has been showing a fluctuating trend through the period of study. In
the years 2007-08 it increased to 125.21 in the year 2008-09 it increased to 168.48 this
increase trend of size of receivables shows that it consists of important part of current
assets.

44
 Chapter-7

Cash Management

7.1 Introduction to cash management

7.2 Motives of Holding Cash

7.3 Function of Cash Management

7.4 Size of Cash

7.5 Cash Turnover Ratio

7.6 Cash Position Ratio

45
7.1 Introduction:-
Cash is an important component of current assets and is most essential for business
operations. Cash is the basic input needed to keep the business running on a
continuous basis. It is also the ultimate output expected to be realized by selling the
service and product manufactured by the firm.
Cash is both the beginning and the end of the working capital cycle i.e. cash,
inventories, receivables and cash. While the management of all the firms should
strive hard to secure larger cash at the end of the working capital cycle than what
had been invested into; it at its beginning, they must also make it a best possible
minimum. This is required to optimally utilize the cash and to avoid the situation of
idea cash balances.
Its effective management is the key determinant of sufficient working capital. In the
key determinant of sufficient working capital. In the words “Cash in the business
enterprise may be compared to the blood of the human body; blood gives life and
strength – profits and solvency to the business organization.” Hence, every
enterprise has to hold to hold necessary cash for is existence.
In a business firm, ultimately, a transaction results in either an inflow or outflow of
cash. In an efficient managed business, static cash balance situation generally does
not exit. A firm should keep sufficient cash, neither more nor less. Cash shortage
will disrupt the firms manufacturing operation; while excessive cash will simply
remain idle. Therefore, for its smooth running and maximum in a business is of
paramount importance.

7.2 Motive For Holding Cash:-

J.M. Keynes a prominent economist pointed out three primary motives for holding
cash
(i) The transaction motive;
(ii) The precautionary motive; and
(iii) The speculative motive; these motive are explained as under-

46
 (i) The Transaction Motive-
The transaction motive requires a firm to hold cash to conduct its business in the
ordinary course. The firm needs cash primarily to make payment for purchases,
wages, operating expenses, taxes etc. A firm needs a pool of cash because its
receipts and payment are not perfectly synchronized. A pool of cash is also
known as ‘transaction balance’.

(ii) The Precautionary Motive-

The precaution motive is to hold cash to meet any contingencies in future. It
provides a cushion or buffer to withstand some unexpected emergency. The
precautionary amount of cash depends upon the predictability of cash flows. If
cash flows can be predicted with accuracy, less cash will be maintained against an
emergency. On other hand, unpredicted the cash flows, the larger the need for
such balances.

(iii) The Speculative Motive –

The financial manager would like to take advantage of unexploited opportunities.
Some reserve of money is always essential to enable the firm to take advantaged
of cash when such opportunities arise.

7.3 Functions of Cash Management:-

Efficient cash management receipts and disbursement, and an efficient control and
review mechanism. The firm should develop strategies the following four function
of cash management:

a) Cash Planning-
Cash planning can help anticipate future cash flows and needs of firm and reduces
the possibility of idle cash balances and cash deficits. Cash planning may be done
on daily, weekly or monthly basis.

47
 b) Managing the Cash Flows-
The twin objective managing the cash flows are: cash flows and cash outflows.
The inflow of cash should be accelerated while, as far as possible, the out flows of
the cash should be decelerated.

c) Determining the Optimum Cash Balance-

One of the primary responsibilities of there financial manager is to maintain a
sound liquidity position of the firm so that dues may be settled in time. The test
of liquidity is really the availability of cash to meet the firm’s obligations when
they become due.

d) Investing Idle Cash –

The idle cash or precautionary cash should be properly and profitably invested.
The firm should decide about the division of cash balances between marketable
securities and securities and bank deposits.

7.4 Size of Cash

Cash is an important component, Cash is both the beginning and the end of the
working capital cycle i.e. cash, inventories, receivables and cash. That’s why
Cash size is most important.

Particular 2007-08 2008-09 2009-10

Cash Balance 2561.40 2182.48 4679.94
Indices 100.00 85.20 182.71
Size of
cash
Indices shows that size of cash had a fluctuating trend. The graph shows that in year
2007-08 size of cash is 100.00 but in the year 2008-09 size of cash is decrease (means
85.20). In the year 2009-10 size of cash is heavy increase in indices 182.71

7.5 Cash Turnover Ratio:-

48
 A study of cash to sales ratio will provide a deep insight into the cash balance held
in undertaking. This is and important ratio of controlling cash. Cash to sales ratio is
calculated by dividing the figures of total sales by figures of total cash available at
the end of the year. Greater cash to sales ratio indicates the effective and better
utilization of cash resources.

7.6 Cash Position Ratio:-

It may be defined as the ratio of cash to current liabilities or the ratio of liquid funds
to the company to control cash balances. In order to analyze the level of liquid funds
in relation to current liabilities. In this context, liquid funds include cash and bank
balance and marketable securities.

Cash Position Ratio

Particular 2007-08 2008-09 2009-10
Cash 2561.40 2182.48 4679.94
Current 37147.56 35799.26 41010.85
Liabilities
Ratio (%) 6.89 6.09 11.41

49
 Ratio (%)
12 11.41

10

8
6.89
6.09 Ratio (%)
6

0
2007-08 2008-09 2009-10

Cash Position Ratio

The cash position ratio in “Raymond” Ltd had a fluctuating trend throughout the period
of study. In first three years it has continuously decreased. In 2007-08 the Cash Position
ratio is 6.89 %. In the year 2008-09 Cash Position Ratio is 66.90 %. In the year 2009-10
Cash Position ratio is 11.41% it shows that the variations were very high in the cash
position of this concern.

Chapter- 8

Payable Management

8.1 Introduction to Payable Management

8.2 Trade Credit between Firms

50
 8.3 Terms of Trade Credit

8.1 Introduction:-

The current assets of a firm are supported by a combination of long-term and short-
term sources of financing. The long-term sources of finance provide support for a
small part of current assets requirement, which is called the working capital margin.
Working capital margin represents the difference between current assets and current
liabilities. The short-term sources of finance, referred to also as current liabilities
consist of accrual and provisions, trade credit, short- term bank finance, public
deposits. According to Weston and Brigham: “The main sources of short term
finance are;

51
 a) Trade credit between firms
b) Loans from Bank and
c) Commercial paper.”

8.2 Trade Credit between firms:-

Trade credit is a form of short-term financial common to almost all business. In fact,
it is the largest source of short-term funds for business firms collectively. In an
advanced economy, most buyers are not required to pay for goods upon delivery but
are allowed a short deferment period before payment is due. During this period, the
seller o fetch goods extend credit to the buyer. Because suppliers generally are more
liberal in the extension of credit than financial institutions, small companies in
particular rely on trade credit. According to Solomon and Pringle, “Trade credit
arises from the firm’s normal operations, specifically form the time lag between
receipts of goods purchased and payment. The sum total of a firm’s obligations to its
trade creditors at any point in times normally is called ‘accounts payable’ on the
balance sheet.”
Most purchases made by the firm do not have to be paid immediately, and this
deferral of payment is a short-term source of funds called ‘trade credit’.

8.3 Terms of Trade Credit:-

Broadly speaking, there are two aspects of trade credit i.e.
(i) The Cash Discount and
(ii) The Payment Period

(i) The Cash Discount –

A cash discount is a reduction in price based on payment within a specified
period. The cost of not taking cash discounts often exceed the rate of interest at
which the buyer can borrow, so it is important that a firm be cautions in its use
of trade credit as a source of financing- it could be quite expensive. If the firm

52
 borrow and takes the book is reduced. The effective length of credit is thus
influenced by the size of discount offered.

(ii) The Payment Period-

Credit terms regarding payment period may be categorized several groups
according to the net period within which payment is expected and according to
the terms of cash discount.
a) Cash before Delivery:-
These terms involve no credit at all since the customer is required to make
payment for the goods before the supplier ships them. These terms are
imposed when the supplier either knows nothing about the customer or he
knows too much about the customer’s unreliability in managing his business
affairs.
b) Cash on Delivery-
Under these terms the supplier ships the goods by mail or express but the
customer must pay for them before taking possession. These terms also do
not involve credit.

Chapter-9

Conclusion and Suggestion

9.1 Conclusion

9.2 Suggestion

53
9.1 Conclusion:-

a) Regarding Working Capital Trends and Liquidity:-

During the first three years the working capital of the company is showing up-
down trend while in last three years it is showing increasing trend and the rate
of this increase is very fast. The current assets and current liabilities are
showing increasing trend. The working capital turnover ratio is showing
increasing trend except the fourth year. The current ratio is in the range of 2.22

54
 to 2.39, the generally accepted for which is 2. As well as quick ratio of
‘RAYMOND’ ltd is very good.

b) Regarding Inventory Management:-

‘RAYMOND’ Ltd. is showing trend. Inventory turnover ratio is fluctuating in

the range of 4.58 to 4.09. The analysis shows that the inventory management in
‘RAYMOND’ Ltd is very efficient throughout the period of study.

c) Regarding Receivable Management:-

In ‘Raymond’ Ltd has been showing a fluctuating trend through the period of
study. In the years 2007-08 it increased to 25.21% in the year 2008-09 it
increased to 68.48% this increase trend of size of receivables shows that it
consists of important part of current assets.

d) Regarding Cash Management :-

Cash and bank balances showing a fluctuating trend during the period of study.
In year 2006-07 size of cash is 100.00 (base) but in the year 2007-08 size of
cash is decrease (means 85.20). In the year 2008-09 size of cash is heavy
increase in 182.71 It shows that the variations were very high in the cash
Management position ( in Increasing ) and this is very important as well as
Increasing growing process in future.

e) Cash Position Ratio:-

The cash position ratio in “Raymond” Ltd had a fluctuating trend throughout the
period of study. In first three years it has continuously decreased. In 2006-07
the Cash Position ratio is 6.89 %. In the year 2007-08 Cash Position Ratio is
6.09 %. In the year 2008-09 Cash Position ratio is 11.41% it shows that the
variations were very high in the cash position of this concern.

55
9.2) Suggestions:-

The present study observed that the position of Raymond Ltd is satisfactory except
in cash management. Considering the significant role of Raymond Ltd In the
economic life of Jalgaon area, the study recommends the following suggestions:

56
 a) The variations were very in the cash position o f Raymond Ltd. and the
cash resources are not use properly. So the study suggests that the cash
resources must be used effectively and by better way.

b) The study suggests that the other factor of working capital management is
running effectively in Raymond Ltd. So the efforts must be given to maintain
the current trend in future.

Chapter 10
Bibliography

 Web Sites
- www.raymondindia.com

57
- www.scribd.com
- www.wikipedia.com
- www.allbusiness.com

 Annual report of 2007-08 to 2009-10 of Raymond ltd Jalgaon.

58