WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD SL.NO . CONTENTS PAGE NO. 1 CHAPTER 1 EXECUTIVE SUMMERY INDUSTRY PROFILE. COMPANY PROFILE NEED FOR STUDY OBJECTIVE OF THE STUDY RESERCH METHDOLOGY FINDING SUGGESTION CONCLUSION 3 TO 7 2 CHAPTER 2 INTRODUCTION OF INDUSTRY INDUSTRY PROFILE 8 TO 14 3 CHAPTER 3 INTRODUCTION OF COMPANY COMPANY PROFILE VISION, MISSION AND GOAL. BOARD OF DIRECORS. OBJETIVE OF SDT&TPL. PRODUCT & SERVICE PROFILE ORGANIZATION FLOW CHART OF SDT&TPL. DEPARTMENT STUDIES OF SDT&TPL 15 TO 34 4 CHAPTER 4 RESEARCH METHDOLOGY SCOPE OF STUDIES. OBJECTIVE OF STUDIES 35 TO 39 Babasabpatilfreepptmba.com 1
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
SL.NO. CONTENTS PAGE NO.
1 CHAPTER 1
EXECUTIVE SUMMERY
INDUSTRY PROFILE. COMPANY PROFILE NEED FOR STUDY OBJECTIVE OF THE STUDY RESERCH METHDOLOGY FINDING SUGGESTION CONCLUSION
3 TO 7
2 CHAPTER 2
INTRODUCTION OF INDUSTRY
INDUSTRY PROFILE
8 TO 14
3 CHAPTER 3
INTRODUCTION OF COMPANY
COMPANY PROFILE VISION, MISSION AND GOAL. BOARD OF DIRECORS. OBJETIVE OF SDT&TPL. PRODUCT & SERVICE PROFILE ORGANIZATION FLOW CHART OF SDT&TPL. DEPARTMENT STUDIES OF SDT&TPL
15 TO 34
4 CHAPTER 4
RESEARCH METHDOLOGY
SCOPE OF STUDIES. OBJECTIVE OF STUDIES METHDOLOGY
35 TO 39
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
5CHAPTER 5
WORKING CAPITAL MANAGEMENT
INTRODUCTION MEANIG OF CAPITAL. FORM OF CAPITAL MEANING OF WORKING CAPITAL NEED OF WORKING CAPITAL NATURE OF WORKING CAPITAL FACTORS DETERMINING WORKING CAPITAL
REQUIREMENTS. FINANCING OF WORKING CAPITAL WORKING CAPITAL COMPOSITION.
40 TO 52
6 CHAPTER 6
DATA ANANLYSIS AND INTERPRETATION53 TO 70
7 CHAPTER 7 FINDINGS SUGGESTIONS CONCLUSIONS
ANNEXURE
BALANCE SHEET
BIBLOGROPHY
71TO 77
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
EXECUTIVE SUMMARY
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
Objectives of the study :
To study the working capital requirement of a company.
To know the progress of working capital in a company
To study the efficiency of cash, and receivables management of the company
To know the solvency of the company & how the company is managing working
capital.
The objective of study to analyzed the liquidity position of the company.
THE WORKING CAPITAL NEED ARISES FOR THE FOLLOWING PURPOSE.
For purchasing of Tickets.
For paying wages and salaries
To increase day-to-day expense and overhead costs like power and office expense etc.
To meet selling costs of packages, advertising etc…
To provide credit facilities to customers.
SCOPE FOR THE STUDY :-
This project acts as a reference guide or as a source of information. It gives the
idea about the financial analysis and working capital of the firm. The main scope of the
study was to put into practical the theoretical aspect of the study into real life work
experience. The study deals with analysis and interpretation of the data collected through
the sources of primary and secondary data for a period of five financial years. I.e. 2004-
2005, 2005-2006, 2006-2007, 2007-2008 and 2008-2009 Graphs, diagrams and tabulation
methods are used to analyze and interpret the data collected. It will help to understand the
company’s liquidity position.
LIMITATION OF THE STUDY
This study deals only with the data made available. Hence the result of this study
cannot judge the business of the firm in general
The study have been influenced by the limitation of the ratio analysis
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
The study extensively uses the data provided is the financial reports of the firm which
may also have their own limited perspective
The analysis made on the working capital management is for a particular period of
time the current assets and current liabilities will change for an analysis made at any
other of time.
METHODOLOGY:
. In preparing of project the information collected from the two sources.
Primary Sources:
Primary sources include information collected through discussion with the concerned
departmental persons i.e. Mr. Parihar and Mr. Manoj.R
Secondary Sources:
I was used secondary sources also for collecting the data. They are:
Information from the text sources
Information form the internet sources
Information from the materials provided by the concern
SAMPLING DESIGN
Sampling unit : Financial Statements
Sampling Size :Last five years financial statements
Finding and Suggestion :
Finding:-
The net working capital has declined in the year 2007-2008 and but the profit of the
company was increased in the year 2007-2008
The Shree dayal tours & Travels Pvt Ltd has abled to repay the liability & loan of the creditors or not.
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
Suggestion:-
In the year 2007-2008 the current assets of the Shree Dayal tours and travels Pvt Ltd has
declined and current liability of the company has increases there for the net working capital
declined. There for the current ratio has declined. The net working capital of the company
has increased remaining year .But profit has increased because the sales has increased in the
year 2007-2008.
The company has abled to repay the liability of the creditors because of the current
ratio of SDT&TPL is above the standard of current ratio i.e. 2:1. The profit of the
company has increased every year.
Conclusion:-
The Shree Dayal tours & travels Pvt Ltd has profit orient company and
company has to able to the repay of his lability.The company have sufficient reserve and
surplus and reserve and surplus has increases every year. After going through the
different aspects of the industry departments and the awards it has received in different
fields. There is good relationship between the directors and employee. The management
concerned about employees complete health and wealth.
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
INDUSTRY PROFILE.
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INDUSTRY PROFILE
.
HISTORY:-
Littleton area first began to be settled in 1862, there were two principal forms of transportation available: walking and either riding or being pulled by a horse. There were no roads to speak of, only old Indian trails which had been widened and packed hard by the increased usage of white men. This did not change for nearly a decade. As farfetched as it may sound, the early South Platte valley settlements had a legacy of steamboat travel. The Rocky Mountain News regularly published the arrivals and departures of various river boats, and saw to it that major east coast newspapers reprinted them. Was the South Platte River deeper then? No. This was just one of many schemes dreamed up by News editor William Byers to boost settlement in Colorado Territory -- by the time greenhorns discovered the deception, they were in St. Louis, more than half-way here. The only "real" traffic on the South Platte, then or since, were shallow-draft barges and canoes carrying beaver and buffalo hides to Missouri markets. Steam-powered transportation did reach Littleton in 1871, when tracks of the Denver and Rio Grande Railroad were completed to a siding at Richard little’s farm. On August 24, the engine Montezuma brought the Mayor of Denver and assorted dignitaries to the end of the line. The striking beauty of the area elicited such enthusiasm that the railroad added a public excursion two days later, a Sunday, and sold out at $2.50 for the round trip. This began a long relationship between the citizens of Denver and the "resort" community of Littleton.Three years later, the Denver, South Park and Pacific Railroad laid tracks on the west bank of the South Platte River, putting Littleton on the most direct route to the Leadville mining district. In 1887 the Atchison, Topeka and Santa Fe pulled into town from Pueblo, joining several smaller and/or short-lived lines. In 1889, one observer along the tracks wrote, "...we counted twelve trains as they passed to and fro inside an hour. No one has any idea of the monster traffic on these two roads until they go and look for themselves." At its peak, Littleton boasted twenty-four scheduled stops a day for passengers and freight.
WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
The star of the railroads was the D&RG's Uncle Sam, a special excursion between Denver and Littleton, with a stop at Fort Logan that ran as many as six trips a day. Begun in 1888 and terminated in 1924, it was considered one of the country's finest passenger operations, and was the D&RG's most profitable route, despite a round-trip fare of just 25 cents. Between 1906 and 1923 the Uncle Sam boasted a "Theater Train" once or twice a week.
In the 1890s, during the height of railroad popularity, another transportation craze swept the country -- bicycling. Although bicycles, or velocipedes as they were originally called, had been around since the 1860s, the invention of pneumatic rubber tires and friction brakes made it a household item. Denver led the craze, boasting the highest per capita bicycle ownership in the country. Among the many popular bike paths constructed was south from Denver along the city ditch to Littleton. Once there, many cyclists picnicked in the shade surrounding the Sunshine and Shadow Inn or watched the bike races around the Inn's track, while the more adventurous continued south to Palmer Lake and back, completing a "century" ride, or 100 miles in a day.
The next improvement was the electric trolley car, which was extended from Denver into Littleton in 1907. The line came down south Broadway, went cross-country at Big Dry Creek to enter the town on Prince Avenue and then turned onto Main. Eventually, the line was extended across the South Platte River, south of Bowles Avenue. For a time, the Littleton route included the famous "Cherrelyn" street car on south Broadway, where a horse assisted the motors going up a steep grade, then climbed aboard and rode on the car during the descent. The streetcar line was abandoned in 1926 in favor of cheaper o run and more flexible buses.
The final improvement in personal transportation began just after the turn of the century and continues to today. In 1904, Rude Chandler's "benzine buggy" automobile cruised onto Littleton's streets. Within two years there were eight of the infernal contraptions buzzing about and the city was besieged by calls to license the machines and ticket those exceeding "an immoderate speed". The city responded with a speed limit for all conveyances of 8 miles an hour. Now, of course, Littletonites could hardly imagine their city without wide boulevards, super highways and the automobile.
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D. & R.G. "Uncle Sam," c. 1916.
Littleton's street car, c. 1910.
Dr. and Mrs. Crysler in their firstautomobile, 1909.
WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
Object of Shree Dayal Tours & Travels Pvt Ltd
The main Objects of the Company as set out in the Memorandum of Association
of the Company are as follows:
To run manage or carry on the business of taxi cars, deluxe coaches ,lorries , cars ,trucks,
airships wagons ,rail , motors vessels, ferries ,boats and other vehicles propelled by
electricity, gas ,gasoline compressed air steam ,manned power ,mechanized power,
oil ,crude oil, automatic or other energy or by whatsoever means and from any place or
another whether within India or otherwise for the purpose of carrying
conveying ,transportation goods , materials produce ,machinery ,animals passengers,
merchandise , mail ,freight ,and all such things which may be conveniently carried on
with the aforesaid object of the company.
To insure with any persons or company, against losses, damages, risks and liability of
any kind which may effect the company either wholly or partially and if thought fit to
effect any such insurance by joining or becoming members of any mutual insurance,
protection or indemnity association federation or society and to accept any such
insurances or any thereof for the account of the company.
To procure information for as to the standing and responsibility of parties with whom
they propose to transact business.
To provide clear ,comfortable and inexpensive sleeping accommodation for workmen
and others and in connection their with to the afford to such persons facilities and
convenience for washing ,bathing ,cooking , reading, writing , and finding employment
and for the purchase ,sale and consumption of provisions both liquidity and solid.
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Product & Service Profiles
The Shree Dayal Tours and Travels Pvt Ltd have provided many tours product to the people .The company has also provided service to the people. The totally honest policy, excellent service and perfect tours planning are the hallmarks of company success. The company has perfected our tour itineraries to meet the special needs of the discerning tourist.
Product Profile: - (Tour Products)
1. Second Innings Tours
2. Educational Tours.
3. Honeymoon Tours.
4. Holiday after Holiday Tours.
5. Sports Tours.
6. Chillax Tours.
7. Business Tours.
8. Thrillax Tours.
1) Second Inning Tours :-
An exclusive tour for senior citizens is fully of masti mazz & magic .its a
great way to discover a holiday experience that is truly unique and great opportunity
to meet seniors from different walks of life.
2) Educational Tours:-
Educational tours take teaching out of the textbooks. its gives wonderful
opportunity to learn about various historic event and key location.
3) Honeymoon Tours:-
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Honeymoon tours will give the wonderful happy moment for life time and that make happy to the life partner.
4) Holiday after Holiday Tours :- Holiday after holiday tours will give advance tours information to the people those who again enjoy to holiday.
5) Sports Tours:- Sport tours just for the vacationer who want s to combine holiday cheer with edge of the seat sporting encounter.
6) Chillax Tours :- This tour is perfect respite from work stress and the daily grind. Specially tailored to put the spring back into your stride, itsyour chance to let your hair down and indulge in the unexpected. Just make sure your boss hasn’t.
7) Business Tours :- This tours facility sports enthusiasts this one will have you cheering SDT&TPL introduces sports tours tailored just for the vacationer who want to combine holiday cheer with edge of the seat sporting encounter.
8) Thrill ax adventure tours:- Thrill ax vacation a new SDT&TPL special tours product and life will never be the same again. Feel your adrenaline pumping as you hurtle over white water Rapides. The discovery skill you never knew you possessed, climbing rock faces because it’s about time you stopped existing and started living.
SERVICE PROFILE:-
Domestic and international Flight booking services.
Hotel Booking services.
Provided Bus facility services.
Provided Car facility services.
Provided Cruises services.
Railways ticket booking services.
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Foreign exchange services.
Provide tours & travels services
DEPARTMENT STUDIES
Finance Department.
Marketing Department.
Air Ticket Booking Department.
Hotel Booking Department.
Billing Department.
Forex Department.
1) Finance Department
Finance is an essential component of the business to maintain its operations effectively.
This dept. is concerned with day-to-day activities like purchases, sales salary etc. and proper
management and maintenance of accounts of concerned year.
Factions
Day to day/ bank transactions.
Bill passing and payment
Recovering all transactions in books of accounts
Preparations of cash Balance statement.
Bank Reconciliation.
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Preparation of Inflow and out flow of cash statement.
Providing various types of management Information system reports required by management
from time to time
Carry out auditing.
2) Marketing Department :-
Among all the functional areas of management marketing are play vary important t role for selling product of the company. The with marketing Department the company can sold product to the customer or public.
Factions
Selling of Tours Product.
Increasing sales of the company.
Awareness about product and service to the customer.
Advertising of company product.
3) Air Ticket Booking Department:-
The main function of air ticket booking department is to flight ticket booking .The
Company has ticket booking as per the order of the customer. The department is booking of
national as well as international ticket of flight.
Factions
Booking of Ticket.
To give the information regarding the Air lines.
To give the information regarding the fair price or low price airlines.
4) Hotel Booking Department :-
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Hotel booking department is important because the people booking through the tours &
travels company .The hotel booking department has given full information regarding the hotel to
the customer .Hotel booking department has knowledge about each hotel and which types of
service provide to the customer.
Factions
Booking of Hotel as per order.
To give the information regarding the Hotel.
To give the information regarding the fair price and better service providing hotel.
5) Billing Department:-
Billing department has prepared a bill of airline & hotel. The billing department has
prepared the day to day booking of airline, hotel and other service provided by company .to the
customer.
Factions
Preparing Bill of airline ticket booking per day.
Preparing Bill of hotel booking per day.
6) Forex Department:-
Forex department is doing transaction of foreign exchange. The forex department is handling day to day transaction of foreign exchange .The forex department has prepared the visa and also change the currency of tourist those who want go other country for tourism purpose. Factions
Exchange currency with bank.
Day to Day rate fluctuation record of each country.
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
Working of a firm should neither be too large, too small. If the working capital is large,
the liquidity position would improve, but profitability would be advertise affected, as funds will
remain idle conversely, if the working capital is too small, the overall profitability, position &
make the firm more risky working capital management therefore at aim at striving a balance,
such that an enterprise is able to.
1. Generate cash in sufficient quantities at the right time &
2. Extract fullest use from each shot term resources used in business.
This involves planning & controlling all the items, which drains or augment liquidity.
The working capital is the lifeblood business, which circulates through the naves as short-term investment in aforesaid areas. It is also regarded as a heart of business. If it becomes weak the business can hardly prosper & survive. This brightness the opportunity for achieving highs of success.
Type of Working capital
Introduction
The financial concept of working capital equates it with current assets. According
to this view the total of the working capital is the total value of the current assets of the
company. This is known as the ‘Gross working capital’.
According to the excess of current assets, over current liabilities. In other words, it
is the difference between current assets and current liabilities. This concept of working
capital is called the Net Working Capital.
Hence there two concepts of working capital.
1. Gross Working capital and
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2. Net Working Capital
1. Gross Working Capital
The Gross Working Capital (also known as circulating capital, operating capital or
current capitals) represent the quantitative aspect of Working capital since it concerns with the
total value of current assets to be held by the company. The management of Gross working
capital is a short-term phenomenon involving a continuous study of the fluctuation in investment
in current assets. The aim is to neither maintain the level of current assets at proper level neither
at a high level involving unnecessary costs nor at a low level threatening. Production needs.
Current assets include cash in hands, bank balance, bills receivables, sundry debtors, short-term
loans advances, inventories and marketable seventies.
Advantages of working capital.
a) Financial managers are profoundly concerned with current assets.
b) Gross Working Capital provides the current amount of working capital at the right times.
c) It enables a firm to realize the greatest retime on it investment.
d) It helps the fixation of various areas of financial responsibility.
NET WORKING CAPITAL
The net working capital is the difference between current assets and current liabilities. The
concept of net working capital enables a firm to determine how much amount is left for
operational requirements. The net working capital is financed from long term sources which may
includes barrowed funds in the form of term loans, debentures etc. or own funds like plough-
back profits, etc, or both. The management of net working capital is a long-term phenomenon
current liabilities include bills payable, sundry creditors, short-term loans advances and bank
OD.
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Needles to say that the firm aims at maximizing the wealth of shareholders wealth .They
should earn sufficient return from its operations. To earn sufficient amt of profit it requires
successful sales utilized to their fullest capacity for this purpose proper management of working
capital is essential because fixed assets can’t work without working capital.
Various research studies suggest. The Gujarat study team, Gujarat the SBI study team has
confirmed that inadequacy of working capital and improper management of working capital has
contributed enormously for the ailment of industrial enterprises.
Working capital management refers to the administration of all aspects of current assets. If has
been observed that a creation of financial manager time is utilized in the management of working
capital. It is devoted for raising working capital and managing it efficiently.
Factors determining working capital Requirements
Factors Determining Working capital Requirements
Nature of Business Seasonality of operations Market Condition Supply condition C.A C.L
.
Financing of working capital
Introduction: -
This chapter put forth the discussion on the sources available for financing the
working capital of an organization.
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
Funding of working capital is continuous problem for all management. Basically
sources of financing working capital are broadly bifurcated into two sources they are as follows.
Sources of financing of working capital
1. Short Term Finance 2.Long Term Finance
Trade Credit Share Capital
Bank Credit Borrowing from Bank Bank Financing of Accounts Public Deposits. Receivables
Factoring
Bank Financing of Inventory
Working Capital Financing
COMPONENTS OF WORKING CAPITAL
The components of working capital are:
Cash management
Receivables management
CASH MANAGEMENT Cash is the liquid form of an asset. It is the ready money available in the firm or with the business, essential for its operations. A firm needs the cash for the following three purposes:
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Transaction Motive: The firm must and should keep the funds for transactions like purchase, sales etc. These activities, which are not known in advance, are not considered while preparing a cash budget.
Precautionary motive: The firm also keeps funds for the safeguard against uncertainties, which are an integral part of business operations.
Speculative Motive: To tap profits from opportunities arising from fluctuations in
commodity prices, security prices, interest rates etc. The company with surplus cash is in
a better position to exploit such situations.
RECEIVABLES MANAGEMENT
Receivable represents amounts owed to the firm as a result of sale of goods or
services on the ordinary course of business. These are claims of the firm against its
customers and form part of its current assets. These receivables are carried for the
customers. The period of credit and extent of receivables depends upon the credit policy
followed by the firm. The main purpose of maintaining or investing in receivables is to
meet competitors, to increase sales, and to maintain a cordial relationship with the clients.
Receivables management is the process of making decisions relating to investment in trade debtors. However, at the same time, investment in this current asset involves cost considerations also. Therefore, there is always a risk of bad debts too.
Credit EvaluationThere are three approaches used for credit evaluation. These are:
Traditional Credit analysis
Numerical Credit Scoring
Working capital composition
Introduction: - This part unfolds the discussion on the composition of the working capital i.e. the
proportion different current assets is determined by the trade of between the two seemingly
opposite objectives of liquidity and portability.
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Liquidity refers to the ability of an asset get convert into cash at short period and
without loss in value .A Company is said to liquid when they arise. This ability is also known as
technical solvency of the company. The creditors and other lenders of the company would like to
have the ability of meet their dues on their due dates this means much of the current assets
should be held in the form of cash and near near-cash items like marketable. Securities, But cash
is a non-earning asset and yield on marketable seethes will affect the profitability of the concern.
The consideration of the profitability requires that the level of current assets is
kept low and also such a form as will aid production and generate surplus. Thus the objectives of
liquidity (solvency) and profitability seem to operate in opposite to directions. While liquidity
requires large we current assets to be kept and of that mostly in cash and near-cash form
profitability requires that the current assets should be kept at low levels and that too in form,
which will contribute to production. By proper planning the opposing objectives can be
recognized and made to compliment each other.
Keeping liquidity at adequate levels helps the managers to concentrate on
production in a congenial atmosphere and by increase the efficiency of functioning. This leads to
greatly profitability, since the profits ultimately constitute the sources of repayment of the
company’s dues, higher profits increase the liquidity of the concern.
Conclusion:-
Thus the chapter states that the objectives of liquidity and profitability seem to
operate in opposite directions, while liquidity requires large current assets to be kept and
profitability requires the current assets should be kept at low levels, which will contribute to
production.
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WORKING CAPITAL MANAGEMENT OF SHREE DAYAL TOURS & TRAVELS PVT LTD
Ratio Analysis1) Net Working Capital:-
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Net working capital is the difference between current assets and current
Liabilities.
Years Current Asset Current Liabilities NWC
2004-05 26352381.81 6122630.12 20229751.69
2005-06 30087971.00 6843164.00 23244807.00
2006-07 46858833.00 9979106.00 36879727.00
2007-08 44389218.00 12123368.00 32265850.00
2008-09 62495041.00 11527167.00 50967874.00
Ratio
0.00
10000000.00
20000000.00
30000000.00
40000000.00
50000000.00
60000000.00
2004-05 2005-06 2006-07 2007-08 2008-09
year
NW
C
Ratio
INTERPRETATIO:-
In The year 2004-05 the company has 20229751.69 N.W.C. In the
year 2005-06 the N.W.C is 23244807.00 and in the year 2006-07 the company has
36879727.00.NW.C But in the year 2007-08 the company has 32265850.00 N.W.C but
the N.W.C has decline drastically compared to the previous years, but in the year 2008-
09 the company has 50967874.00 N.W.C that means the company in a favorable position
& N.W.C has improved vary fast as compared to the previous years which show liquidity
Position of the Shree Dayal Tours & Travels Pvt Ltd has always more & sufficient
working capital available to pay off its current liabilities.
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2. Current Ratio:-
Current ratio is a measure of firm’s short-term solvency. This ratio is also known as
working capital Ratio. Current ratio is a measure of general liquidity and is most widely used to
check the relationship of the current assets and current liability. The standard current ratio is 2:1.
Current Ratio = Current Assets Current Liabilities
Years Current Asset Current Liabilities Ratio
2004-05 26352381.81 6122630.12 4.304
2005-06 30087971.00 6843164.00 4.397
2006-07 46858833.00 9979106.00 4.696
2007-08 44389218.00 12123368.00 3.661
2008-09 62495041.00 11527167.00 5.422
Diagram:
Ratio
0
1
2
3
4
5
6
2004-05 2005-06 2006-07 2007-08 2008-09
year
Rati
o
Ratio
I NTERPRETATION :-
The current ratio was 4.304 in the year 2004 – 2005 and the year 2005-2006 the current ratio was 4.397 and in the year 2006 -2007 the current ratio was 4.696 this show the current ratio has increase every year but in the year 2007-2008 the current ratio was decreased to 3.661.in the year 2008 – 2009 the current ratio has increases 5.422 .The current ratio is above the standard of 2: 1 ratio and hence it can be said that there is enough working capital in Shree Dayal Tours & Travels Pvt Ltd to meet its current liabilities.
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3. Absolute Liquidity Ratio:-
Concept: -
Absolute liquidity ratio is a ratio of cash in hand and cash at bank to current liabilities. The standard ratio is 0.5: 1.
Absolute liquidity Ratio = Cash in hand + Cash at bank Current Liabilities
Years Cash in hand Cash at bank Current Liabilities Absolute Liquidity Ratio
2004-05 322305.70 600000.00 6122630.12 0.15
2005-06 151478.00 600000.00 6843164.00 0.10
2006-07 125254.00 600000.00 9979106.00 0.07
2007-08 95663.00 600000.00 12123368.00 0.05
2008-09 64627.00 600000.00 11527167.00 0.05
Diagram: -
Absolute Liquidity Ratio
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2004-05 2005-06 2006-07 2007-08 2008-09
Year
AB
R
Absolute Liquidity Ratio
I NTERPRETATION:-
The absolute liquidity ratio was 0.15 in the year 2004-2005 and decreased to 0.10 in the year 2005 – 2006 and it does not increase further up to 2008-2009.But in the year 2007 -2008 and 2008-2009 it was same. The absolute liquidity ratio is below the standard of 0.5: 1 ratio. It shows that the liquidity position of the concern is unsatisfactory
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4. Liquidity Ratio or Liquid ratio:-
Concept: -
This ratio indicates very short term or immediate or very instant financial position.
Liquidity Ratio = Quick Assets Quick Liabilities
Years Current Assets Current Liabilities Liquidity Ratio
2004-05 26352381.81 6122630.12 4.30
2005-06 30087971.00 6843164.00 4.40
2006-07 46858833 9979106.00 4.70
2007-08 44389218.00 12123368.00 3.66
2008-09 62495041.00 11527167.00 5.42
Diagram: -
Liquidity Ratio
0
1
2
3
4
5
6
2004-05 2005-06 2006-07 2007-08 2008-09
year
liq
ud
ity
ra
tio
LiquidityRatio
INTERPRETATION:- The absolute liquidity ratio was 4.30 in the year 2004-2005 and increases to 4.40 in the
year 2005 – 2006 and 4.70 in the year 2006-07, 3.66 in the year 2007-2008 it was decrease due
to increase of labilities.But in the year 2008 -2009 the L.R has increased 5.42 because the C.L
has decreased. The liquidity ratio is above the standard of 1: 1 ratio. It shows that the liquidity
position of the company is satisfactory.
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5. Return on Current Assets:-
Concept: -
This ratio indicates the amount of current assets employed in the working capital of the
assets employed in the working capital of the firm as to run the day to day operations of the firm
which helps the firm for its easy flow of goods in the trading activity.
Return on Current Assets = Profit after Tax Current Asset
Year Profit After Tax Current Asset Ratio2004 – 2005 437894.00 26352381.81 0.016
2005 – 2006 423298.00 30087971.00 0.014
2006 – 2007 592576.00 46858833.00 0.012
2007-2008 843910.00 44389218.00 0.019
2008-2009 1039889.00 62495041.00 0.016
Diagram: -Ratio
00.0020.0040.0060.0080.01
0.0120.0140.0160.0180.02
2004-05 2005-06 2006-07 2007-08 2008-09
Year
Retu
rn o
n A
ssets
Ratio
INTERPRETATION:- The Returns on current assets was 0.016 in the year 2004-2005 and it
decreased to 0.12 in the year 2006-2007. It further increased to 0.019 in the year 2007-2008 and
further decreased 0.016 in the year 2008-2009 .It shows that profit will increase then asset
turnover ratio will decline then C.A will increase but in the year 2007-2008 asset ratio was
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increased 0.19 because C.A has fall that year. Company has profit transferred to the reserve and
surplus Account shown in balance sheet..
6. Current Asset Ratio:-
Concept: - This ratio measures sales per rupee of investment in current assets. This ratio
measures the efficiency with which current assets are employed a high ratio indicates a high
degree of efficiency is asset utilization and a low ratio reflects inefficient use of current assets.
Current Asset Ratio = Net Sales Average Current Assets
Year Sales Average Current Asset
Ratio
2004 – 2005 102199181.00 19967762.36 5.11 time
2005 – 2006 132858985.00 28220176.41 4.70 time
2006 – 2007 171671451.00 38473402.00 4.46 time
2007-2008 221246824.00 45624025.5 4.84 time
2008-2009 286246257.00 53442129.5 5.35 time
Diagram: -
Ratio
4
4.2
4.4
4.6
4.8
5
5.2
5.4
5.6
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
Year
C.A
.R
Ratio
INTERPRETATION:-
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The current asset ratio was 5.11 times in the year 2004-2005 and 4.70 in
the year 2005-06 and 4.46 in the year 2006-2007 it was decreased. It further increased to 4.48 in
the year 2007-08 & 5.35 in the year 2008-2009. It shows that the current assets are not utilized
properly.
7 .Debtors Turnover Ratio:-
Concept: - Debtors are expected to be converted into cash over a short period of time and
therefore are included in current assets. It shows how many times debtors are converted into cash
in a year.
Debtors Turnover Ratio = Net credit sales Average Debtors
Year Credit sales Average Debtors Ratio
2004 – 2005 102199181.00 19080194.95 5.35 times
2005 – 2006 132858985.00 27192101.00 4.88 times
2006 – 2007 171671451.00 36302837.00 4.72 times
2007-2008 221246824.00 42584634.5 5.19 times
2008-2009 286246257.00 50516905.00 5.66 times
Diagram: -
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Ratio
4.2
4.4
4.6
4.8
5
5.2
5.4
5.6
5.8
2004-05 2005-06 2006-07 2007-08 2008-09
Year
Deb
tors
Ratio
INTERPRETATION:-
The debtor’s turnover ratio was very less in the year 2006-07 at 4.72
times, but them it has increased to 5.19, 5.66 times in the year 2007-08 and 2008-09. This shows
that the company is making all the offers to speed up the collection process.
8. Creditors Turnover Ratio :-
Concept: - Creditors’ turnover ratio establishes relationship between not credit purchases and
average trade creditors and accounts payable. The ratio indicates the velocity with which the
creditors are turned over in relation to purchases.
Creditors Turnover Ratio = Net Credit Purchases Average creditors
Year Credit Purchases Average Creditors Ratio
2004 – 2005 96724469.00 82074994.50 1.17 times
2005 – 2006 127553879.00 112554635.00 1.13 times
2006 – 2007 165680148.00 146617013.50 1.13 times
2007-2008 213323185.00 189501666.50 1.12 times
2008-2009 276775674.00 245049429.50 1.12 times
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Diagram: -Ratio
1.09
1.11.11
1.12
1.131.14
1.15
1.161.17
1.18
2004-05 2005-06 2006-07 2007-08 2008-09
Year
cred
ito
r
Ratio
INTERPRETATION:- The creditors turnover ratio was 1.17 times in the year 2004-05 & it decreased to 1.13 times in the year 2006-2007 but creditor turnover will be remain same two year 2005-06 and 2006-07.Thean it was again declined 1.12 in the Year 2007-08. But it was remain same in the year 2007-08 and 2008-09. Generally lower the ratio better is the liquidity position of the firm and vice versa
9. Net Profit Ratio:- Net profit ratio indicates the relation ship between net profit & sales .It is also known as margin on sales ratio.
Net Profit Ratio: - Net profit after Tax x 100
Sales
Year Net Profit After Tax Sales Ratio
2004 – 2005 437894.00 102199181.00 0.43 %
2005 – 2006 423298.00 132858985.00 0.32 %
2006 – 2007 592576.00 171671451.00 0.35 %
2007-2008 843910.00 221246824.00 0.38 %
2008-2009 1039889.00 286246257.00 0.36 %
Diagram:
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Ratio
00.050.1
0.150.2
0.250.3
0.350.4
0.450.5
2004-05 2005-06 2006-07 2007-08 2008-09
Year
pro
fit
Ratio
INTERPRETATION:- The Net profit of the company 0.43% in the year 2004-05,0.32 in the year 2005-06 , 0.35 in the year 2006-07 ,0.36 in the year 2008-09. Net profit ratio was show the net profit after tax in the year 437894 in 04-05 but it was fall in the year 2005-2006 there for net profit ratio is falling.
10. Debt / Equity Ratio:- This Ratio indicate how much of the total funds employed
are our owned & how much are borrowed there is no standard fixed for this ratio
but financial institute favors a ratio of 2:1.
Debt / Equity Ratio: - Long Term Borrowing Share holder fund
Year Long Term Borrowing Share holder fund Ratio
2004 – 2005 17020534.74 3281899.00 5.19
2005 – 2006 18599175.00 4705197.00 3.95
2006 – 2007 30650881.00 6297773.00 4.87
2007-2008 25230306.00 7141683.00 3.53
2008-2009 43831794.00 8181572.00 5.36
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Diagram:
Ratio
0
1
2
3
4
5
6
2004-05 2005-06 2006-07 2007-08 2008-09
Year
Deb
t
Ratio
INTERPRETATION:-
In The year 2004 -2005 debt equity ratio was 5.19 and 3.59 ,4.87 in the year 2005-06 and 2006-07 .in the year 2005 debt equity ratio fall because shareholder fund was increased. But long term borrowing slow increasing .But in the year debt ratio has decreased 3.53 in the year 2007-08.but in the year 2008-09 the debt equity ratio has increased 5.36. Because long term borrowing and shareholder fund also increases.
11. Working Capital Turnover Ratio:- It is taken as one of the primary indicators of the
short-term solvency of the business. It establishes the relationship with the net sales. It
measures the efficiency with which the working capital is being used by the firm.
WORKING CAPITAL TURNOVER RATIO = Net Sales
Net Working Capital
Year Net Sales Net Working Capital
Ratio
2004 – 2005 102199181.00 20229751.69 5.05 TIME
2005 – 2006 132858985.00 23244807.00 5.72 TIME
2006 – 2007 171671451.00 36879727.00 4.65 TIME
2007-2008 221246824.00 32265850.00 6.86 TIME
2008-2009 286246257.00 50967874.00 5.62 TIME
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Diagram:
Ratio
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
2004-05 2005-06 2006-07 2007-08 2008-09
Year
W.C
Ratio
INTERPRETATION:
In The year 2004-05 working capital t/o ratio was5.05 time ,5.72 time in the year 2005-2006.In the year 2005-06 the working capital has increases because sales of the company has increases. in the year 2006-07it was 4.65, 6.86,5.62 in the year 2007-2008 and 2008-09.it show the newly established company because the working capital up and down year to year.
. Statement of changes in working Capital for the year 2004-05