Mar-11 12 mths

Mar-12 12 mths

Cash & bank balance Inventories Receivables Current assets Sundry creditors Acceptances Deposits & advances from customers,etc Interest accrued but not due Other current liabilities Provisions Current liabilities & provisions Working Capital Sales W.C. Turnover Ratio = Sales/ Working Capital Current Assets Turnover Ratio= Sales/ CA

96,301.50 109,630.40 284,729.30 490,661.20 84,365.80 428.4 208,839.60 2.5 19,829.40 159,289.80 472,755.50 17,905.70 440,028.10 24.57474994 0.90

66,719.80 135,487.30 366,480.90 568,688.00 107,781.40 1,109.30 205,295.20 6.5 21,491.90 167,927.40 503,611.70 65,076.30 502,563.90 7.722687061 0.88

Operating expenses Raw materials, stores & spares Power, fuel & water charges Compensation to employees Total Creditors Turnover Average Inventory Inventory Turnover Ratio = Sales / Average Inventory Days of Inventory Holding = 365 / Inventory Turnover Ratio Raw Material Cycle Debtors

337,673.00 198,189.40 4,028.60 53,967.10 593,858.10 7.415634494 101278.1 4.344750741 84.00942235 186.5211081 208.8279254

409,119.70 250,090.10 5,102.50 54,658.30 718,970.60 718,630.30 7.479997627 122558.85 4.100592491 89.01152719 178.8714557 234.7866649

Inventory Management:
Mar-11 12 mths Sales
Debtors Average debtors

Mar-12 12 mths 502,563.90

440,028.10

281,598.50 251753.85
109,630.40

364,951.10 323274.8
135,487.30

Inventory
Average inventory

101278.1
4.344750741

122558.85
4.100592491

Inventory Turnover Ratio = Sales / Average Inventory Days of Inventory Holding = 365 / Inventory Turnover Ratio

84.00942235

89.01152719

Inventory Turnover Ratio = Sales / Average Inventory

Interpretation:
This ratio indicates the effectiveness and efficiency of the inventory management. The ratio shows how speedily the inventory turned into account receivables through sales. The higher the inventory to sales ratio, the more efficiently the inventory is said to be managed and vice-versa. By observing the above ratio we find that the company is able to manage the inventory efficiently as the year progresses. It was 4.34 the previous year Mar 2011& 4.10 in March 2012. The organization should try to maintain the highest on the above ratio. Days of Inventory Holding = 365 / Inventory Turnover Ratio

Interpretation:
From the above table we can see that the days of inventory holding in the year 2012 has increased to 89 days from 84 days in the previous year 2011.As there is increase in turnover i.e. 502,563.90 in march 2012 from 440,028.10 in march 2011, the days of inventory holding has also increased. This indicates that the company is should use effective strategy to bring down its inventory level. It is in the interest of every organization to minimize its inventory level.

Following is the process through which the company can achieve the optimum inventory level
STANDARD INVENTORY LEVEL TAKING ACTUAL INVENTORY LEVEL COMPARISION OF ACTUAL WITH STANDARD

TAKE CORRECTIVE ACTIONS

ANALYSING REASON OF VARIATION/DEVIATION

VARIATION/ DEVIATION

Receivables management:
Mar-11 12 mths Sales Debtors Average debtors Debtors Turnover ratio = Net credit sales/ Average Debtors Average Collection Period = 365 / Debtors Turnover Ratio 440,028.10 12 mths 502,563.90 Mar-12

281,598.50 251753.85
1.75

364,951.10 323274.8
1.55

208.83

234.79

Debtor Turnover Ratio = Net Credit sales / Average Debtors

Interpretation:
It indicates the speed with which the debtors turnover an average each year. In general a high ratio indicates the shorter collection period which implies prompt payments by debtors and a low ratio indicates a long collection period which implies delayed payment by debtors. So we can see from the table above that from the last year the company debtors turnover ratio has declined. In March 2011 it is 1.75 but it has reduced to 1.55 in March. It depicts that how inefficiently debtors are collected.

Average Collection Period = 365 / Debtors Turnover Ratio Interpretation:

We can check the managerial efficiency with the help of this ratio by the comparison of average collection period and credit policy of the company. Form the table we can clearly see that in the year 2011 it is 209 days, but in year 2012 there was an increase in it as it is 235 days. This indicates that the company is following liberal policy in recent years. If the days are increasing it indicates that the bad debts are also increasing. It is difficult to lay down a standard collection period; it depends upon the nature of the business. As a general rule the receivables should not exceed 4 to 5 months of credit sales.

Working Cycle:
Mar-10 12 mths Sales Sundry debtors, outstanding less than six months Sundry debtors, outstanding over six months 346,136.90 108,504.60 113,404.60 12 mths 440,028.10 116,563.40 165,035.10 Mar-11 12 mths 502,563.90 168,113.00 196,838.10 Mar-12

Debtors(days)
Total expenses Depreciation Write-offs Prior period and extra-ordinary expenses Provision for direct tax Fund based financial services expenses Provisions 349,087.80 4,580.10 370.2 67.2 23,192.10 335 16,433.80

208.8279254 234.7866649
401,068.00 5,441.20 209.4 23 30,756.90 547.3 35,857.10 467,635.00 8,000.00 227.3 238.4 38,943.00 512.8 22,199.00

Net expenses Sundry creditors Acceptances Deposits & advances from customers,etc Other current liabilities 75,798.00 423 196,249.30 7,761.70

328,233.10 84,365.80 428.4 208,839.60 19,829.40

397,514.50 107,781.40 1,109.30 205,295.20 21,491.90

Creditors(days)

348.575656

308.221202