A

Project Report

On

Working Capital

Submitted for the Partial Fulfillment of

Requirement for the award of degree
Of
Master of Business Administration

Of

2016-2017

Supervision By Submitted By

Kirandeep kaur
Ms.shweta
 DECLARATION

I the undersigned solemnly declare that the report of the project work entitled Working
Capital is based on my own work carried out during the course of my study under the
supervision of Prof. Ramandeep Singh.

I assert that the statements made and conclusions drawn are an outcome of the project
work. I further declare that to the best of my knowledge and belief that the project report
does not contain any part of any work which has been submitted for the award of any
other degree/diploma/certificate in this University or any other University.

Kirandeep kaur
 ACKNOWLEDGEMENT

“ Acknowledgement” is an art; one can write glib stanza without meaning a word on
the other hand one can make a single expression of gratitude”.

It gives me a great pleasure to submit this project to Punjab institute of

mangement & technology. I take this opportunity with great pleasure to present
before this project on “ Working Capital of mangement” which is result of co-
operation, hard work & good wishes of many people. The most pleasant part of any
project is to express the gratitude towards all those who have contributed to the success
of my project.

I would like to thanks ms.shweta who has been my mentor for this project. It was
only through her excellence assistance & good suggestions that I have been able to
complete this project.

I am thankful to Miss. Kusum chauhan & Amrinder singh and other members of
ThinkNext Technologies who have given me valuable information in the part of my
project. Above all, I would like to thank all contacted persons of firm who took out their
valuable times to answer my queries & give me full information related to my project.

I extent my sincere gratitude towards my parents who have always encouraged me &
give suggestion as how to work on project .they always stand by me in solving all my
enquiries. Their support has always motivated me.
LIST OF CONTENTS
CHAPTERS TOPICS

CHAPTER 01 INTRODUCTION

1.1 Introduction about it industry

1.2 Company profile
1.2.1 Services

1.2.2 Vision

1.2.3 Mission:

1.2.4 Quality Policy

1.3 Management of Think NEXT

1.4 Some of our clients:

1.5 Placements

1.6 Programs offered

1.7 Think NEXT Edge
1.8 Think NEXT Cloud Campus Advantages
CHAPTER 02 INTRODUCTION TO PROJECT
2.1 Introduction of working capital
2.2 Concept of working capital
2.3 Nature of working capital
2.4 Importance of working capital
2.5 Excess or inadequate working capital
2.6 Disadvantages of redundant
2.7 Disadvantages of inadequate working capital
2.8 Factors determining the w c requirements
2.9 Management of working capital
CHAPTER 03 Objectives and scope of the study
 3.1 Objectives of the study
3.2 Scope of the Study
CHAPTER 04 RESEARCH METHODOLOGY
4.1 Research
4.2 Research Design
4.3 Research methodology
4.4 Limitations of the study
CHAPTER 05 ANALYSIS AND INTERPRETATION OF STUDY

5.1 Financial analysis

5.2 Ratio analysis
5.3 Classification of Ratios
CHAPTER 06 FINDINGS
6.1 Findings
CHAPTER 07 SUGGESTIONS
7.1 Suggestions
CHAPTER 08 BIBLIOGRAPHY
ANNEXURES
CHAPTER-1

Introduction
 1.1 INTRODUCTION ABOUT IT INDUSTRY

Information Technology covers a broad spectrum of hardware and software solutions

that enable organizations to gather, organize, and analyze data that helps them achieve
their goals. It also details technology-based workflow processes that expand the
capacity of an organization to deliver services that generate revenue. The four main
focuses of IT personnel are business computer network and database management,
information security, business software development, and computer tech support.
As the IT industry evolves to meet the technology demands of today ’s workplace,
different challenges are arising and IT professionals are striving to meet them.
Network security is by far the greatest concern for many companies and they rely on
their IT staff to prevent or stop these system breaches. Data overload is becoming an
increasingly important issue since many businesses are processing large amounts of
data on a daily basis, with many of them not have the processing power to do so. Last,
but not least, two of the most essential skills needed from IT professionals are
teamwork and communication skills. Systems are complex and people are needed to
help translate that task. Therefore, IT professionals are the ones responsible for helping
others get their work done efficiently without the complex jargon of the technology
world.
Let’s talk about careers for a moment. Employment for information technology and
related services are projected to grow rapidly over the next decade, outpacing similar
professional, scientific, and technical industries, as well as the economy as a whole.
According to the Bureau of Labor Statistics (BLS), “output in computer systems
design and related services is expected to grow at an average annual rate of 6.1 percent
[between 2010 and 2020], compared with 3.6 percent for the broad industry
category—professional, scientific, and technical services —and 2.9 percent for all
industries.” Compared to 2.6 percent for professional, scientific, and technical services
and 1.3 percent for all other industries, that ’s a huge demand coming up! Why is this
happening
Because the necessity for information technology is king. With the emerging
popularity of the Cloud technology, many organizations are taking this up as an
alternative to actual hardware using up space. Cloud computing service providers
manage IT infrastructure and platforms, and provide businesses with access to remote
data storage and software packages.
Another reason for the rise of IT careers is the need to defend our information systems
from countless attacks. Just in the past few years alone, the BLS reports “there is a 17-
fold increase in the number of cyber-attacks on U.S. infrastructure between 2009 and
2011.”Security companies also have produced reports that show large increases in
security breaches on private businesses in those years as well.
With the increasing need for IT professionals, this seems to be one of the more stable
careers for the next decade. One of the first steps to becoming an IT professional is to
obtain a degree or certification in computer or management information systems. Then
you must decide which field to go into, as there are many in the IT universe.
Here are some of the most popular positions for people interested in Information
Technology:
1. Computer Systems Analyst.
In this position, analysts design and develop computer systems and are an expert at
every facet of hardware, software, and networks. Analysts also evaluate the systems
and research the industry for better products to enhance their existing system.

2. Cloud Specialist.
Cloud specialists organize and give configuration to the information infrastructure in
the sky. Because this is still an emerging technology, these architects are highly sought
after and one of the top-paying professions in the industry.

3. Computer Forensic Investigator.

These investigators are computer crime detectives that search for, identify, and
evaluate information from computer systems.

4. Health IT Specialist.
Health IT is booming, especially with Affordable Care Act coming on and transition
from paper to electronic health records. Health IT specialists will mix computer
knowledge will record-keeping skills, medical coding, and billing.

5. Database Administrator.
Database administrators create, upgrade, and test for databases.

6. Web Developer.
Web developers are in high demand because they have a great understanding of what
makes a good operating system. They create web pages, web applications and web
content with their knowledge of what the average surfer finds visually stimulating and
how to optimize sites for mobile tech, among numerous other skills.

7. IT Manager.
These managers are the contact pros when your email won ’t send or Microsoft Word
doesn’t open. As the head of the IT department, they ensure that a company ’s network
is operating smoothly and that dangerous threats like malware are minimized.
8. Information Technology Vendor Manager.
Slightly more hands-off compared to some tech positions, vendor managers oversee
supply when it comes to software and hardware. This can mean anything from
Microsoft’s latest word processor to health IT programs for hospitals.

9. Computer Systems Administrator.

The expertise of network and computer systems administrators is essential to every
office. Aside from maintaining a healthy computer network, they also lend their tech
knowledge to managing telecommunication networks. This profession is expected to
add 96,600 new positions by 2020!

10. Mobile Application Developer.

Because of our highly-mobile lifestyle, mobile application developers are and will be
in high demand for years to come, especially as mobile devices and technology
becomes increasingly sophisticated.
 1.2 COMPANY PROFILE
THINK NEXT Technologies Private Limited (Formerly Brilliant Software Solutions) is
an ISO 9001:2008 certified software development company founded in August 2009 and
it is approved from Ministry of Corporate Affairs which deals in
University/College/School ERP Solutions, Android /iPhone Applications development,
Web designing, Web development, Discount Deals (www.thinknextcard.com,
www.tricitydeal.com), Bulk SMS, Voice SMS, Bulk Email, Biometric Time Attendance,
Access Control, SEO/SMO, Database Solutions, Payment Gateway Integration, E-Mail
Integration, Industrial Training, Corporate Training and Placements etc. THINKNEXT
Technologies provides software solutions using latest technologies e.g. Smart Card, NFC,
Biometrics, GPS, Barcode, RFID, SMS, Auto SMS (Short code), Android, iPhone, Web,
Windows and Mobile based technologies

THINKNEXT has wide expertise in .NET, Crystal Reports, Java, PHP, Android, iPhone,
Databases (Oracle and SQL Server), Web Designing, Networking, Web Server
configurations, various RAID Levels etc.

THINKNEXT Technologies has also setup its offices in USA, Delhi, Shimla and
Bathinda for its software support. THINKNEXT has its own multiple Smart Card
printing, encoding and barcode label printing machines to provide better and effective
customer support solutions. THINKNEXT has also setup its own placement consultancy
and is having numerous placement partner companies to provide best possible placements
in IT industry.

THINKNEXT Technologies has developed for the first time in northern region cloud
computing based Cloud Campus 4.0 to facilitate knowledge and placement centric
services. It is a unique concept for effective and collaborative learning.

 THINKNEXT deals exclusively in campus automation through Smart Campus

ERP Solutions. Therefore we have better experience in handling large group of
institutions through proper time-tested policies and procedures.
 First Company of India who has Launched NFC Technology (The Future) for
Smart Campuses through NFC Smart Cards.
  First Company of India who has launched Android Version of Smart Campus ERP
Solutions for Mobiles and Tablet PCs.
 First company of India who has developed SMS Opt-In Technology so that
Institutes/Colleges can send Transactional SMS with SMS Sender ID and without
SMS Template approval.
 First company of Punjab, Haryana, Himachal, J&K (Northern region) who
launched Smart Cards (Contact Type), Smart Cards (Contactless) in Punjab for
campus automation.
 First company of India which has launched its THINKNEXT Smart Card as
Discount Card in more than 120 enterprises.
 Established own multiple Smart Card Designing, Smart Card Printing, Smart Card
Lamination and Oyster Barcode Printing Units.
 Multiple SMS Gateway Support.

1.3 SERVICES:
We provide Software Solutions using latest technologies or features:

 NFC
 Biometrics (Fingerprint with Automated Online)
 Smart Card
 Barcode
 RFID
 SMS
 Short code 56767 (Auto SMS)
 Android
 ions (phone)
 GPS
 WAP (For WAP Enabled Mobile Phones)
 Multiple SMS Gateway Support
 Web based Technologies (365x24x7 services)
 Windows based Technologies
 Mobile based Technologies
 Webcam support for various operations
 Parallel Internet, Intranet and Wi-Fi Support
1.4 Vision:
THINKNEXT Technologies Pvt. Ltd. are already very flexible and scalable. Still, we
always take care of specific requirements of our clients. Our highly committed R&D
team makes our software feature rich, dynamic and future tuned everyday so that our
clients always maintain the lead over their competitors. The development of the software
is being done and the purpose full customization of the package is carried out in the
THINKNEXT lab.

1.5 Mission:
THINKNEXT is pioneer in Smart Campus ERP Solutions for
Universities/Colleges/Schools using latest technologies and features. We provide
software solutions using .NET, PHP, Android, iphone, Java technologies with
three tier-architecture support. We provide back-end solutions using MS SQL
Server, Oracle, and MySQL.

1.6 Quality Policy:

We have wide experience working with eminent Educationists, Managements,

Directors, Principals, Head of Departments, other Staff Members, Parents and
students. Therefore we do not sell only software Modules but an innovative
system which has more importance than just ERP software modules. Today Smart
Campus solutions are a need of hour for every University/Group of Colleges or an
Institution to make edge over others and maintain a lead over their competitors.
Our Research and Development team is committed to make your institute(s) to
maintain lead over their competitors.

More Services:

 Think NEXT offers various industry-ready programs so that student needs

not to struggle for jobs. Think NEXT offers 6 weeks/2 Months/6 Months
training programs to make students industry.

 Think NEXT is pioneer in providing best placements in Industry. We offer

minimum five job interviews for each student and provide 100%
Placement Assistance.
  Think NEXT Offers Life-Time Validity Learning and Placement Card.
Students undergoing six months training will have advantage to learn free
of cost anything against that training program for life-time.

 Think NEXT offers Part-Time/Full Time Job Offer for each student during
training so that students can earn while they learn. Student can bear their
food, accommodation and other expenses on.

1.7 MANAGEMENT OF THINKNEXT TECHNOLOGIES PVT.LTD.

BOARD OF DIRECTOR

 Sunil Jindal

 Munish Mittal

 Ghansham Das

MANAGING DIRECTOR

 Sunil Jindal

MARKETING MANAGER

 Deepak Kumar
IT HEAD

 Mukesh Kumar

1.8 SOME OF OUR CLIENTS:

1.9 PLACEMENTS

Company List



1.10 PROGRAMS OFFERED BY THINKNEXT TECHNOLOGIES
PVT.LTD.

COMPUTER /IT
 .NET
 JAVA
 Android
 iPhone
 PHP / MySQL
 Web Designing
 Software Quality Testing
 Hardware & Networking
 CCNA
 MCITP
 SEO, SMO & Bidding
 C/C++
 Online Bidding (Freelancing)
 Oracle / SQL Server
 Animation & Multimedia
 SAP
 Cloud Computing
2. Electronics/ communication
 Embedded System + Industrial Automation + Industry Training
 Embedded System & Robotics + Industry Training
 Android + Industry Training
 Networking + Telecom + Industry Training
 CCNA + Industry Training
 MCITP + Industry Training
 Advance Industrial Automation + Industry Training
 Advance Embedded System + Industry Training
3. MANAGEMENT
 Industry Training in Finance
 Industry Training in Marketing
 Industry Training in HR
4. CIVILENGENEERING
 Instrumentation Design Training + Industry Training
 Industrial Automation Training + Industry Training
5. CHEMICAL ENGENEERING
  Chemical Process Design + Industry Training
 Piping Design + Industry Train

6 CIVIL ENGENEERING
 Civil Structural Design Training + Industry Training
 STAADPro + Industry Training
 AutoCad 2D/Isometric/3D + Industry Training
 Autodesk Revit + Industry Training
 Primavera + Industry Training 3Ds MAX + Industry Training

1.11ThinkNEXT Edge
 Industrial Training and Certificates from Software/Electronics Company not just
from an institute
 Free Interview Preparation, Spoken English and Personality Development
Programmers.
 Opportunity to get placed in ThinkNEXT and numerous other companies.
 Life-Time Validity Learning and Placement Card.
 Part-Time/Full-Time Job Offer for each student during Training.
 ThinkNEXT Cloud Campus advantage not only during training, even after
completion of training for life time.
 One-to-one PC and Corporate Environment.
 Learn from Developers/Industry experts rather than Trainers/Teachers.
 Direct interaction with Developers/Industry Experts.
 Industrial training programmers are designed to make students industry-ready.
 Large Display LEDs in each Class-Room/Lab, Wi-Fi Labs.
 Guest Lectures/Seminars by Industry Experts.
 Every Student is provided with “Live Projects” mentored by Software/
Electronics/Industry Experts.
 100% Placement assistance.

1. 12 Think NEXT Cloud Campus Advantages

 Each Student will have Unique User ID and Password to Login to ThinkNEXT
Cloud Campus 4.0 anytime…anywhere…
 View Numerous Technical, Personality Development Videos anytime…anywhere…
 Students will be able to download e-Books, e-Journals, Class Notes, Important Links
and other study material.
 Think NEXT Smart Campus is a step towards not only 100% placements but also
better job offers even after placements.
 Student Profile, Instant Technical Updates, Class Notes, Project Report Submitted,
Attendance, Performance, Notice-Board, Class Timings etc. Everything online.
 Communication with industry experts, Technologists through cloud Campus
anytime…anywhere….
 Regular SMS and E-mail for Related Job Offers.
 Access through PCs, Laptops, Tablet PCs, Mobiles via internet.
 CHAPTER-2

INTRODUCTION OF WORKING CAPITAL

 2.1 INTRODUCTION OF WORKING CAPITAL

Working capital management is significant in financial management. It plays a vital role

in keeping the wheel of the business running. Every business requires capital, without
it can’t be promoted. Investment decisions is concerned with investment in current assets
and fixed assets .Working capital plays a key role in a business enterprise just as the role
of heart in human body. It acts as grease to run the wheels of fixed assets Its effective
provision can ensure the success of business while its inefficient management can
lead not only to loss but also to the ultimate downfall of what otherwise might be
considered as a promising concern. Efficiency of a business enterprise depends largely
on its ability to its working capital. Working capital management is one of the important
facts of a firms overall financial management.
For increasing shareholder’s wealth a firm has to analyze the effect of fixed assets and
current assets on its return and risk. Working capital management of current assets. The
management of current assets on the basis of the following points:

Current assets are for short period while fixed assets are for more than one year.
 The large holding of current assets ,especially cash, strengthens liquidity position
but also reduce overall profitability ,and to maintain an optimal level of liquidity
and profitability, risk return tradeoff is involved holding current assets.
 Only current assets can be adjusted with sales fluctuating in the short run. Thus
the firm has greater degree of flexibility in managing current assets. The
management of current assets help a firm in building a good market reputation
regarding its business and economic conditions.
2.2 CONCEPT OF WORKING CAPITAL:

The concept of working capital includes current assets and current liabilities both. There
are two types of working capital they are gross and net working capital.

1. Gross working capital: Gross working capital refers to the firm’s investment in current
assets .Current assets are the assets, which can be converted into cash within an
accounting year or operating cycle. It includes cash, short term securities, debtors
(account receivables or book debts), bills receivables and stock (inventory).

2. Net working capital: Net working capital refers to the difference between current assets
and liabilities are those claims of outsiders, which are expected to mature for payment
within an accounting year. It includes creditors or accounts payables bills payable and
outstanding expenses. Networking copulate can be positive or negative. A positive
working capital will arise when current assets exceed current liabilities and vice versa.

2.3 NATURE OF WORKING CAPITAL

Working capital management is concerned with the problems that arise in attempting to
manage the current assets, the current liabilities and the inter-relationship that exists
between them. The term current refers to those assets which in the ordinary course of
business can be, or will be converted into cash within one year without undergoing a
diminution in value and without disrupting the operation of the firm. The major current
assets are cash, marketable securities, accounts receivables and inventory. Current
liabilities are those liabilities, which are intended at their inception, to be paid in the
ordinary course of business, within a year out of the current or the earning of the
concern .The basic current liabilities are accounts payable, bills payable, bank overdrafts
and outstanding expense. The goal of working management is to manage the firm’s assets
and liabilities in such a way that a satisfactory level of working capital is maintained.
This is because if the firms cannot maintain a satisfactory level of working capital, it is
likely to become insolvent and may even be forced into bankruptcy. The current assets
should be large enough to cover its current liabilities in order to ensure a reasonable
margin of safety. Each of the short term sources of financing must be continuously
managed to ensure that they are obtained and used in the way. Interaction between
current liabilities is, therefore the main theme of the management of working capital.
2.4 IMPORTANCE OF WORKING CAPITAL

 SOLVENCY OF THE BUSINESS: Adequate working capital helps in

maintaining the solvency of the business by providing uninterrupted of
production.
 Goodwill: Sufficient amount of working capital enables a firm to make prompt
payments and makes and maintain the goodwill.
 Easy loans: Adequate working capital leads to high solvency and credit standing
can arrange loans from banks and other on easy and favorable terms.
 Cash Discounts: Adequate working capital also enables a concern to avail cash
discounts on the purchases and hence reduces cost.
 Regular Supply of Raw Material: Sufficient working capital ensures regular
supply of raw material and continuous production.
 Regular Payment of Salaries, Wages and Other Day TO Day Commitments: It
leads to the satisfaction of the employees and raises the morale of its employees,
increases their efficiency, reduces wastage and costs and enhances production and
profits.
 Exploitation of Favorable Market Conditions: If a firm is having adequate
working capital then it can exploit the favorable market conditions such as
purchasing its requirements in bulk when the prices are lower and holdings its
inventories for higher prices.
 Ability to Face Crises: A concern can face the situation during the depression.
 Quick And Regular Return On Investments: Sufficient working capital enables a
concern to pay quick and regular of dividends to its investors and gains
confidence of the investors and can raise more funds in future.
 High Morale: Adequate working capital brings an environment of securities,
confidence and high morale.

2.5 EXCESS OR INADEQUATE WORKING CAPITAL

Every business concern should have adequate amount of working capital to run its
business operations. It should have neither redundant or excess working capital nor
inadequate nor shortages of working capital. Both excess as well as short working capital
positions are bad for any business. However, it is the inadequate working capital which is
more dangerous from the point of view of the firm.
2.6 DISADVANTAGES OF REDUNDANT OR EXCESSIVE
WORKING CAPITAL

1. Excessive working capital means ideal funds which earn no profit for the firm and
business cannot earn the required rate of return on its investments.
2. Redundant working capital leads to unnecessary purchasing and accumulation of
inventories.
3. Excessive working capital implies excessive debtors and defective credit policy which
causes higher incidence of bad debts.
4. It may reduce the overall efficiency of the business.
5. If a firm is having excessive working capital then the relations with banks and other
financial institution may not be maintained.
6. Due to lower rate of return n investments, the values of shares may also fall.
7. The redundant working capital gives rise to speculative transactions

2.7 DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business needs some amounts of working capital. The need for working capital
arises due to the time gap between production and realization of cash from sales. There is
an operating cycle involved in sales and realization of cash. There are time gaps in
purchase of raw material and production; production and sales; and realization of cash.
Thus working capital is needed for the following purposes:
• For the purpose of raw material, components and spares.
• To pay wages and salaries
• To incur day-to-day expenses and overload costs such as office expenses.
• To meet the selling costs as packing, advertising, etc.
• To provide credit facilities to the customer.
• To maintain the inventories of the raw material, work-in-progress, stores and spares
and finished stock.
For studying the need of working capital in a business, one has to study the business
under varying circumstances such as a new concern requires a lot of funds to meet its
initial requirements such as promotion and formatioSSn etc. These expenses are called
preliminary expenses and are capitalized. The amount needed for working capital
depends upon the size of the company and ambitions of its promoters. Greater the size of
the business unit, generally larger will be the requirements of the working capital.
The requirement of the working capital goes on increasing with the growth and expensing
of the business till it gains maturity. At maturity the amount of working capital required is
called normal working capital.
There are others factors also influence the need of working capital in a business.

2.8 FACTORS DETERMINING THE WORKING CAPITAL

REQUIREMENTS

 NATURE OF BUSINESS: The requirements of working is very limited in public

utility undertakings such as electricity, water supply and railways because they
offer cash sale only and supply services not products, and no funds are tied up in
inventories and receivables. On the other hand the trading and financial firms
requires less investment in fixed assets but have to invest large amt. of working
capital along with fixed investments.

 SIZE OF THE BUSINESS: Greater the size of the business, greater is the
requirement of working capital.

 PRODUCTION POLICY: If the policy is to keep production steady by

accumulating inventories it will require higher working capital.

 LENGTH OF PRDUCTION CYCLE: The longer the manufacturing time the

raw material and other supplies have to be carried for a longer in the process with
progressive increment of labor and service costs before the final product is
obtained.

 SEASONALS VARIATIONS: Generally, during the busy season, a firm requires

larger working capital than in slack season.

 WORKING CAPITAL CYCLE: The speed with which the working cycle
completes one cycle determines the requirements of working capital. Longer the
cycle larger is the requirement of working capital.

 RATE OF STOCK TURNOVER: There is an inverse co-relationship between

the question of working capital and the velocity or speed with which the sales are
affected. A firm having a high rate of stock turnover will needs lower amt. of
working capital as compared to a firm having a low rate of turnover.
 CREDIT POLICY: A concern that purchases its requirements on credit and sales
its product / services on cash requires lesser amt. of working capital and vice-
versa.

 BUSINESS CYCLE: In period of boom, when the business is prosperous, there

is need for larger amt. of working capital due to rise in sales, rise in prices,
optimistic expansion of business, etc. On the contrary collection from debtor and
the firm may have a large amt. of working capital. In time of depression, the
business contracts, sales decline, difficulties are faced in.

 RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall

require large amt. of working capital.

 EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more

earning capacity than other due to quality of their products, monopoly conditions,
etc. Such firms may generate cash profits from operations and contribute to their
working capital. The dividend policy also affects the requirement of working
capital. A firm maintaining a steady high rate of cash dividend irrespective of its
profits needs working capital than the firm that retains larger part of its profits and
does not pay so high rate of cash dividend.

 PRICE LEVEL CHANGES: Changes in the price level also affect the working
capital requirements. Generally rise in prices leads to increase in working capital.
 Others FACTORS: These are:
 Operating efficiency.
 Management ability.
 Irregularities of supply.
 Import policy.
 Asset structure.
 Importance of labor.
 Banking facilities, etc.
 2.9 MANAGEMENT OF WORKING CAPITAL

Management of working capital is concerned with the problem that arises in attempting
to manage the current assets, current liabilities. The basic goal of working capital
management is to manage the current assets and current liabilities of a firm in such a way
that a satisfactory level of working capital is maintained, i.e. it is neither adequate nor
excessive as both the situations are bad for any firm. There should be no shortage of
funds and also no working capital should be ideal.

WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its

probability, liquidity and structural health of the organization. So working capital
management is three dimensional in nature as
 It concerned with the formulation of policies with regard to profitability, liquidity
and risk.
 It is concerned with the decision about the composition and level of current assets.
 It is concerned with the decision about the composition and level of current
liabilities
 CHAPTER-3
OBJECTIVES AND SCOPE OF THE
STUDY
3.1OBJECTIVES OF THE STUDY
Working capital is the most widely used and powerful technique of financial analysis
.The main objective of the present study is to know the financial condition of the
company.

 To know the overall operational efficiently and performance of the Think NEXT
Technologies Pvt. Ltd. Mohali

 To interpret the financial position of company is appropriate (or) not.

 To assess the long term financial viability of company and to know whether the
management is constantly concerned about the overall profitability of the
company (or) not.

 To disclose to the extent possible other information related to the financial

statements users.

3.2 Scope of the Study

The study is at micro level and examines working capital management system in Think
NEXT Technologies PVT.LTD. Metalworking Capital Management includes
management of both Current Assets and Current Liabilities.
Working Capital Management is a huge area by itself in the area of Finance. In evaluating
the working capital management of this company, limited parameters have been used.
They are:

 Ratio Analysis
 Approach followed in utilizing the resources.
 Variance Analysis

CHAPTER 4
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY

4.1 Research

Research in common parlance refers to a research for knowledge. It is also defined as a

scientific and systematic search for pertinent information collection on a specific topic. In
fact it is an art of scientific investigation. Research is not only concerned to the decision
of the fact but also building up to date knowledge and to discover the new facts involved
through the process of dynamic change in the society.

4.2 Research Design

A research design is the arrangement of conditions for collection and analysis of data in
manner that aims to combine relevance to the research purpose with economy in
procedure. In fact the research design is the conceptual structure within which research is
conducted; it constitutes the blueprint for the collection, measurement and analysis of the
data. As such the design includes an outline of what the researcher will do from writing
the hypothesis and its operational implications to the final analysis of the data.
• Descriptive Research: Descriptive research includes surveys and fact-finding
enquiries of different types. The major purpose of descriptive research is description of
the state of affairs as it exists at present. The main characteristic of this method is that the
researcher has no control over the variables: he can only report what has happened or
what is happening.
• Conclusion Oriented Research: While doing conclusion oriented research a
researcher is free to pick up a problem, redesign the enquiry as he proceeds and is
prepared to conceptualize as he wishes.
Under this project the research design is descriptive in nature. Study is a part of
conclusive research design under which we make a design, which would provide us some
relevant result in regard to question or the problem At hand. In our research statistical are
used to a large number of responders. The emphasis of this project is to “A study on ratio
analysis”. Information was received from the respondents through questionnaires
containing structured as well as un-structured questions. Initially a try-out was prepared
which was pre-tested on a small sample of respondents to identify problems if any.
Relevant changes were made in the questionnaire before it was finalized. Questionnaires
was developed and used for the collection of the data for the subjects in the feedback
process.

4.3 RESEARCH METHODOLOGY

Research methodology is the process used to collect the data and others types of
information for use in making business decisions. Examples of these types of
methodology include interviews, surveys and research of publications. All of these types
include the use of present and historical information.
Data collection:-
The methodology, I have adopted secondary data collection for my study and the various
tools for secondary data collection are:-
1. Consolidated Balance Sheets of two financial years
2. Consolidated P/L Accounts of two financial years
3. Ratio Analysis
4. Fund Flow Analysis
The above parameters are used for critical analysis of financial position. With the
evaluation of each component, the financial position from different angles is tried to be
presented in well and systematic manner. By critical analysis with the help of different
tools, it becomes clear how the financial manager handles the finance matters in
profitable manner in the critical challenging atmosphere, the recommendation are made
which would suggest the organization in formulation of a healthy and strong position
financially with proper management system.

4.4 LIMITATIONS OF THE STUDY

The study conducted and done is analytical, subject to the following limitations

1) The study is mainly carried out based on the secondary data provided in the financial
statements.

2) This study is based on the historical data and information provided in the annual
reports therefore it may not be a future indicator.

3) There may be some fractional differences in the calculated ratios.

As the study was for short span and due to lack of time other areas could not be well
focused.

CHAPTER-5
ANALYSIS AND INTERPRETATION
OF STUDY
 THINKNEXT TECHNOLOGIES PRIVATE Limited
SCF 112, SECOND FLOOR, PHASE 11, MOHALI
BALANCESHEET
FOR THE YEAR ENDED 31ST MARCH 2015

Note Figures for the

Particulars
No current year
31.03.2015

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(a) Share Capital 1 13,297,794.79
(b) Reserves and Surplus 2 3,527,706.47
(c) Money received against share warrants
(2) Share application money pending allotment -

(3) Non-Current Liabilities

(a) Long-term borrowings 3 3,194,007.9
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions

(4) Current Liabilities

(a) Short-term borrowings
(b) Trade payables 4 3,170,087.95
(c) Other current liabilities 5 55,000.00
(d) Short-term provisions
Total 23244597.11
II.Assets
(1) Non-current assets
(a) Fixed assets
 (i) Tangible assets 6 10303136.87
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long term loans and advances
(e) Other non-current assets -

(2) Current assets

(a) Current investments -
(b) Inventories (as certified by directors) 5021261.47
(c) Trade receivables 7 6842000.09
(d) Cash and cash equivalents 8 445,000.00
(e) Short-term loans and advances 9 633,198.68
(f) Other current assets
Total 23244597.11
 THINKNEXT TECHNOLOGIES PRIVATE Limited
SCF 112, SECOND FLOOR, PHASE 11, MOHALI
BALANCESHEET
FOR THE YEAR ENDED 31ST MARCH 2016

Note Figures for the

Particulars
No previous year
31.03.2016

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(a) Share Capital 1 11,435,668.23
(b) Reserves and Surplus 2 2,617,147.69
(c) Money received against share warrants
(2) Share application money pending allotment -

(3) Non-Current Liabilities

(a) Long-term borrowings 3 2,312,481.2
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions

(4) Current Liabilities

(a) Short-term borrowings
(b) Trade payables 4 4,506,981.23
(c) Other current liabilities 5 65,100.00
(d) Short-term provisions
Total 20937378.35
II. Assets
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets 6 11,177,144.87
(ii) Intangible assets
 (iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long term loans and advances
(e) Other non-current assets -

(2) Current assets

(a) Current investments -
(b) Inventories (as certified by directors) 4066300.85
(c) Trade receivables 7 5,442,695.42
(d) Cash and cash equivalents 8 218,038.53
(e) Short-term loans and advances 9 33198.68
(f) Other current assets
Total 20937378.35
 THINKNEXT TECHNOLOGIES PRIVATE LIMITED

SCF 112, SECOND FLOOR, PHASE 11, MOHALI

FINANCIALANALYSIS

Effects on Working Capital

Particulars Previous year Current Year Increase Decrease

2014-2015 2015-2016
Current Assets:
Cash in Hand 445000 218038.53 - 226961.47
Trade Receivables 6842000 5442695.42 - 1399304.67
Inventories 5021261.47 4066300.85 - 954960.62
Total Current Assets 12308261.56 9727037.8

Current Liabilities:
Trade Payable 3170087.95 4506981.23 - 1336893.28
Other Current Liabilities 55000 65100 - 10100

Total Current Liabilities 3225087.95 4572081.23

Working Capital 9083173.61 5154953.57 3928220.4

Net Decrease in Working - 3928220.4

Capital
5.2 RATIOANALYSIS
Several ratios calculated from the accounting date, can be grouped into various classes
according to financial activity or function to be evaluated. As stated earlier, the parties
interested in financial analysis are short and short and long-term creditors, owners and
management.

 Classification of Ratios

 Liquidity Ratio:
Liquidity refers to the ability of a concern to meet its current obligations and when
these become due. The short-term obligations are met by realizing amounts from
current, floating or circulating assets. The current assets should either be liquid or
near liquidity. These should be convertible into cash for paying obligations of short
term nature. To measure liquidity of a firm, following ratios can be calculated.

 Current Ratio

 Quick or Acid test or Liquid ratio

  Current Ratio:

Current Ratio = Current Assets

Current Liabilities

Year Current assets Current liabilities Current Ratio

2014-2015 12941460.24 3225087.95 4:1

2015-2016 9760233.48 3225087.95 2.1:1

Interpretation: A ratio equal to the rule of thumb of 2:1 i.e. current asset double the
current liabilities is considered to be satisfactory. As per the above table current ratio of
Think NEXT is not satisfactory as it is more than 2:1 for the year 2014-2015. In 2015-
2016 the ratio is on satisfactory level.

 Quick / liquid / acid test ratio:

Quick ratio as known as acid test or liquid ratio is more rigorous test of liquid than the
current ratio. The term ‘liquidity’ refers to the ability of a firm to pay short-term
obligations as and when they become due. An asset is said to be liquid if it can be
converted into cash within a short period without loss of value. Quick ratio can be
calculated with the help of following formula:

Quick ratio = Quick or liquid assets

Current liabilities

Year Quick assets Current liabilities Quick ratio

2014-2015 7920198.77 3225087.95 2.5:1
 2015-2016 5693932.63 4572081.23 1.2:1

Interpretation: As a rule of thumb or as a convention quick ratio 1:1 considered

satisfactory. Above table shows that quick ratio of Think NEXT for the year 2014-2015
and 2015-2016 i.e. not at satisfactory level. 2015-2016 ratio is nearby the thumb rule.

Working Capital Turnover: Working capital turnover is a measurement comparing the

depletion of working capital used to fund operations and purchase inventory, which is
then converted into sales revenue for the company. The working capital turnover ratio is
used to analyze the relationship between the money that funds operations and sales
generated from these operations.

Working capital turnover = sales/ working capital

Working capital = current assets – current liabilities

Year Sales Working capital Working capital

turnover

2014-2015 11900000 9716372.29 1.22

2015-2016 10100000 5188152.25 1.94

CHAPTER-6
FINDINGS
6.1 FINDINGS

 Think NEXT Technologies PVT.LTD. Mohali has a current ratio in the year 2014-
2015 was recorded 4:1 and in and in the year 2015-2016 it was 2.1:1.

 The quick ratio of Think NEXT in the years 2014-2015 and 2015-2016 is
respectively 2.5:1 and 1.2:1

 Working Capital Turnover in 2014-2015 was 1.22 and in 2015-2016 is 1.94

 All these figures show that the operations of co. are not under the control because
these would not fulfill the conditions of successful thumb rules of the company.
CHAPTER-7

SUGGESTIONS
7.1 SUGGESTIONS

 Suggested the company should follow the present working capital and take steps
to control the loosing points.

 The company spends reasonable amount on inventory so that it should be

followed.

 The current ratio is maintained at a satisfied level. So that company peruses this
much of current assets to meet the objective of the firm.

 Company is maintaining high quick assets to overcome current liabilities for

better results.

 For better results company has to maintain cash inflows to overcome current
liabilities of the firm.

 To gain good profits company has to improve the sales and cash deliveries
through inventory management.

 The company should make arrangement of receivables and cash.

CHAPTER-8

BIBLIOGRAPHY
 BIBLIOGRAPHY

 The source of data regarding Think NEXT Technologies PVT.LTD. Mohali

Profile Details is collected from the annual reports of Think NEXT and some part
of the profile is also taken from the following websites:

 www.thinknet.co.in

 WWW.thinknexttraining.com

 www.smartsheet.com

 www.prenhal.com

 http;//www.wikipedia.com

 The of data is also collected from the books :

 Gupta, Shashi K, Management Accounting; Kalyani Publishers, Ed. 2003

 Kothari, C.R.,Research Methodology; WishwaParkashan, Ed. 2004

 Moyer, R. C., Mcguigan, J. R., &Kretlow, W. J. (2003). Contemporary

Financial Management (Ninth Ed.). United States of America: Thomson.

 Annual General Report of the company

 Documents & files of Think NEXT Technologies PVT.LTD. Mohali

 Magazine of the company.

Annexure
 THINKNEXT TECHNOLOGIES PRIVATE LIMITED
SCF 112, SECOND FLOOR, PHASE 11, MOHALI

PROFIT AND LOSS STETEMENT

FOR THE YEAR ENDED 31ST MARCH 2015

Figures for the

Particulars Note No Previous year
31.03.2015

I. Revenue from operations 10 11,900,000.00

II. Other Income 64,685.97
III. Total Revenue (I +II) 11,964,685.97
IV. Expenses:
Cost of materials consumed 11 5,750,000.00
Purchase of Stock-in-Trade
Changes in inventories of finished
goods, work-in-progress and Stock-in-
Trade
Employee benefit expense 12 1,262,000.00
Financial costs 13 571,791.50
Depreciation and amortization expense 805,188.00
Other expenses 14 48,000.00
Total Expenses 8,436,979.50

V. Profit before exceptional and

extraordinary items and tax (III - IV) 3,527,706.47

VI. Exceptional Items

VII. Profit before extraordinary items and tax

(V - VI) 3,527,706.47

VIII. Extraordinary Items -

IX. Profit before tax (VII - VIII) 3,527,706.47

X. Tax expense:
(1) Current tax
(2) Deferred tax
 XI. Profit/(Loss) from the period from
continuing operations (VII - VIII) 3,527,706.47

XII. Profit/(Loss) from discontinuing operations -

XIII. Tax expense of discounting operations -

XIV. Profit/(Loss) from Discontinuing

operations (XII - XIII) -

XV. Profit/(Loss) for the period (XI + XIV) 3,527,706.47

THINKNEXT TECHNOLOGIES PRIVATE Limited

SCF 112, SECOND FLOOR, PHASE 11, MOHALI
BALANCESHEET
FOR THE YEAR ENDED 31ST MARCH 2015

Note Figures for the

Particulars
No current year
31.03.2015

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(a) Share Capital 1 13,297,794.79
(b) Reserves and Surplus 2 3,527,706.47
(c) Money received against share warrants
(2) Share application money pending allotment -

(3) Non-Current Liabilities

(a) Long-term borrowings 3 3,194,007.9
(b) Deferred tax liabilities (Net)
 (c) Other Long term liabilities
(d) Long-term provisions

(4) Current Liabilities

(a) Short-term borrowings
(b) Trade payables 4 3,170,087.95
(c) Other current liabilities 5 55,000.00
(d) Short-term provisions
Total 23244597.11
II. Assets
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets 6 10303136.87
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long term loans and advances
(e) Other non-current assets -

(2) Current assets

(a) Current investments -
(b) Inventories (as certified by directors) 5021261.47
(c) Trade receivables 7 6842000.09
(d) Cash and cash equivalents 8 445,000.00
(e) Short-term loans and advances 9 633,198.68
(f) Other current assets
Total 23244597.11
 THINKNEXT TECHNOLOGIES PRIVATE LIMITED
SCF 112, SECOND FLOOR, PHASE 11, MOHALI

PROFIT AND LOSS STETEMENT

FOR THE YEAR ENDED 31ST MARCH 2016

Note Figures for the

Particulars
No Previous year
31.03.2016

I. Revenue from operations 10 10,100,000.00

II. Other Income 46,127.19
III. Total Revenue (I +II) 10,146,127.19
IV. Expenses:
Cost of materials consumed 11 4,956,000.00
Purchase of Stock-in-Trade
Changes in inventories of finished
goods, work-in-progress and Stock-in-
Trade -
Employee benefit expense 12 1,151,000.00
Financial costs 13 571,791.50
Depreciation and amortization expense 805,188.00
Other expenses 14 45,000.00
Total Expenses 7,528,979.50

V. Profit before exceptional and

extraordinary items and tax (III - IV) 2,617,147.69

VI. Exceptional Items

VII. Profit before extraordinary items and tax

(V - VI) 2,617,147.69

VIII. Extraordinary Items

IX. Profit before tax (VII – VIII) 2,617,147.69

 X. Tax expense:
(1) Current tax
(2) Deferred tax

XI. Profit/(Loss) from the period from

continuing operations (VII - VIII) 2,617,147.69

XII. Profit/(Loss) from discontinuing operations

XIII. Tax expense of discounting operations

XIV. Profit/(Loss) from Discontinuing

operations (XII - XIII)

XV. Profit/(Loss) for the period (XI + XIV) 2,617,147.69

THINKNEXT TECHNOLOGIES PRIVATE Limited

SCF 112, SECOND FLOOR, PHASE 11, MOHALI
BALANCESHEET
FOR THE YEAR ENDED 31ST MARCH 2016

Note Figures for the

Particulars
No previous year
31.03.2016

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(a) Share Capital 1 11,435,668.23
(b) Reserves and Surplus 2 2,617,147.69
(c) Money received against share warrants
(2) Share application money pending allotment -

(3) Non-Current Liabilities

(a) Long-term borrowings 3 2,312,481.2
 (b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions

(4) Current Liabilities

(a) Short-term borrowings
(b) Trade payables 4 4,506,981.23
(c) Other current liabilities 5 65,100.00
(d) Short-term provisions
Total 20937378.35
II. Assets
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets 6 11,177,144.87
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long term loans and advances
(e) Other non-current assets -

(2) Current assets

(a) Current investments -
(b) Inventories (as certified by directors) 4066300.85
(c) Trade receivables 7 5,442,695.42
(d) Cash and cash equivalents 8 218,038.53
(e) Short-term loans and advances 9 33198.68
(f) Other current assets
Total 20937378.35