Rayon Design Project Report PDF

WORKING CAPITAL MANAGEMENT
PART - A
ABOUT INDUSTRY
INTRODUCTION. (1.1)
INTRODUCTION OF TEXTILE INDUSTRY

The textile industry is primarily concerned with the design and production of yarn,
cloth, clothing, and their distribution various segments like embroidery, apparel, etc.
The raw material may be natural, or synthetic using products of the chemical industry.
There are some indications that weaving was already known in the Palaeolithic. An
indistinct textile impression has been found at Pavlov, Moravia. Neolithic textiles
were found in pile dwellings excavations in Switzerland and at El Fayum, Egypt at a
site which dates to about 5000 BC.The main steps in the production of cloth are
producing the fibre, preparing it, converting it to yarn, converting yarn to cloth, and
then finishing the cloth. The cloth is then taken to the manufacturer of garments. The
preparation of the fibres differs the most, depending on the fibre used. Flax requires
retting and dressing, while wool requires carding and washing. The spinning and
weaving processes are very similar between fibres, however.
EMBROIDERY
Embroidery is a handicraft of decorating a fabric or other materials with needle and
thread, experts believe that craft made on cloth lasts lang and make fabric look
attractive
HISTORY AND ORIGIN OF EMBROIDERY

Embroidery is the craft of decorating fabric or other materials using a needle to apply
thread or yarn Embroidery may also incorporate other materials such as pearls, beads,
quills, and sequins. In modern days, embroidery is usually seen on caps, hats, coats,
blankets, dress shirts, denim, dresses, stockings, and golf shirts. Embroidery is
available with a wide variety of thread or yarn color.Some of the basic techniques or
stitches of the earliest embroidery are chain stitch, buttonhole or blanket stitch,
RNS First Grade College 1

running stitch, satin stitch, cross stitch. Those stitches remain the fundamental
techniques of hand embroidery today.
ORIGIN OF EMBROIDERY
The process used to tailor, patch, mend and reinforce cloth fostered the development
of sewing techniques, and the decorative possibilities of sewing led to the art of
embroidery. Indeed, the remarkable stability of basic embroidery stitches has been
noted:It is a striking fact that in the development of embroidery there are no changes
of materials or techniques which can be felt or interpreted as advances from a
primitive to a later, more refined stage. On the other hand, we often find in early
works a technical accomplishment and high standard of craftsmanship rarely attained
in later times.The art of embroidery has been found worldwide and several early
examples have been found. Works in China have been dated to the Warring States
period (5th–3rd century BC).In a garment from Migration period Sweden, roughly
300–700 AD, the edges of bands of trimming are reinforced with running stitch, back
stitch, stem stitch, tailor's buttonhole stitch, and whip-stitching, but it is uncertain
whether this work simply reinforced the seams or should be interpreted as decorative
embroidery.
Ancient Greek mythology has credited the goddess Athena with passing down the art
of embroidery along with weaving, leading to the famed competition between herself
and the mortal Arachne.
Historical applications and technique.

Depending on time, location and materials available, embroidery could be the domain
of a few experts or a widespread, popular technique. This flexibility led to a variety of
works, from the royal to the mundane.Elaborately embroidered clothing, religious
objects, and household items often were seen as a mark of wealth and status, as in the
case of Opus Anglicanum, a technique used by professional workshops and guilds in
medieval England.In 18th-century England and its colonies, samplers employing fine
silks were produced by the daughters of wealthy families. Embroidery was a skill
marking a girl's path into womanhood as well as conveying rank and social standing.
Conversely, embroidery is also a folk art, using materials that were accessible to non

professionals. Examples include Hardanger from Norway, Merezhka from Ukraine,

Mountmellick embroidery from Ireland, Nakshi kantha from Bangladesh and West
Bengal, and Brazilian embroidery. Many techniques had a practical use such as
Sashiko from Japan, which was used as a way to reinforce clothing.
Concepts of computerized embroidery

Although advanced home user software such as the free Stitch Era universal is pretty
smart in converting vector drawings to stitchable sections and the latter to stitch
commands, you may have to intervene manually and/or at least set a few parameters
in order to get a decent enough result. Read our pieces on Stitch Era if you need to see
some more practical examples that deal with beginner's embroidery projects.the "big
three" (problems) of embroidery are puckering, poor fabric coverage or poor
registration and “correct stabilization, correct hooping and correct tension on your
embroidery machine” will make your embroidery much more successful.
THREADS
Most popular embroidery threads are made from Viscose (also known as rayon) or
Polyester. Other materials include cotton, wool and metalized.
Thickness
There exist several metrics for thickness and none is really intuitive to understand
(like thickness of threads as for climbing ropes). Thread thickness measures are
standardized weights (standardized in the sense of statistics). For example:
 In the most popular metric numbering system (Nm or No), higher means
finer and lower means thicker. Nm is measured as number of 1000 metre
hanks per kilo.

 In the so-called Denier or Tex systems (used for stockings), the opposite is
true. Tex is weight in grams of 1000 metres of yarn and Denier is weight
in grams of 9000 meters of yarn.
We use Madeira Rayon 40, a so-called "classic" Viscose (artificial silk) thread type
that is appropriate for beginners. It can be used both on fine fabrics like silk and
rougher/thicker fabrics like jeans or leather.
Some standard weights (Nm/No):
 80 very fine, e.g. for monograms on silk ties

 60 fine, e.g. for delicate fabrics and small letters)
 50 medium-fine, for medium weight fabrics
 40 is medium, standard fabric, the most popular weight
 30 medium-thick, for filling larger surfaces, quilts, cross-stitches
 15 thick
 6 very thick (not suitable for a machine)
How a stitch is formed
The formation of a stitch begins when the needle penetrates the fabric and descends to
its lowest point. The bobbin hook then slides by the needle’s scarf, catching the upper
thread, and carries it around the bobbin and bobbin thread.

Choose regular needle size by fabric weight
When selecting a needle for regular sewing, start with needle size. European needles
range in size from 60 to 120, which refers to the diameter taken on the shaft right
above the eye. American needles are sized from 8 to 19 in an arbitrary numbering
system, and paired with corresponding European sizes: for example, 60/8 or 70/10;
the larger the number, the larger the needle.
Determine needle size by fabric weight. Choose a size 60/8 needle for lightweight
fabrics similar to georgette or organdy; a 70/10 or 80/12 needle for medium-weight
jersey, Lycra, linen, or calf leather; a 90/14 and 100/16 for heavy fabrics like jeans,
vinyl, upholstery or canvas; and 110/18 or 120/19 for very heavy fabrics. After
choosing needle size, match the needle point to your fabric. The needle type and name
is usually determined by the characteristics of the needle’s point. How smoothly the
thread pulls through the needle’s eye is also a factor in producing even, regular
stitches. So if you have trouble threading the needle and problems with the stitches,
the thread and needle aren’t matched correctly. Lay your thread in the needle’s front
groove; it should “snuggle”.In the end, most sewers just want to get professional-
looking results. Knowing more about needles brings you closer to that goal, since

needle choice greatly affects your outcome. For every correctly chosen, new needle
you put into your machine, you should have eight to 12 continuous hours of trouble-
free sewing.
Embroidery in India
Embroidery in India includes dozens of embroidery styles that vary by region and
clothing styles. Designs in Indian embroidery are formed on the basis of the texture
and the design of the fabric and the stitch. The dot and the alternate dot, the circle, the
square, the triangle, and permutations and combinations of these constitute the design.
Aari
Aari work involves a hook, plied from the top but fed by silk thread from below with
the material spread out on a frame. This movement creates loops, and repeats of these
lead to a line of chain stitches. The fabric is stretched on a frame and stitching is done
with a long needle ending with a hook such as a crewel, tambour (a needle similar to a
very fine crochet hook but with a sharp point) or Luneville work. The other hand
feeds the thread from the underside, and the hook brings it up, making a chain stitch,
but it is much quicker than chainstitch done in the usual way: looks like machine-
made and can also be embellished with sequins and beads - which are kept on the
right side, and the needle goes inside their holes before plunging below, thus securing
them to the fabric.

Banjara embroidery
Practiced by the Lambadi gypsy tribes of Andhra Pradesh, Banjara embroidery is a

mix of applique with mirrors and beadwork. Bright red, yellow, black and white
coloured cloth is laid in bands and joined with a white criss-cross stitch. The Banjaras
of Madhya Pradesh who are found in the districts of Malwa and Nimar have their own
style of embroidery where designs are created according to the weave of the cloth,
and the textured effect is achieved by varying colours and stitches of the geometric
patterns and designs. Motifs are generally highlighted by cross-stitch.
Banni or Heer Bharat (Gujarat)
he Banni or Heer Bharat embroidery originates in Gujarat, and is practiced mainly by

the Lohana community. It is done with silk floss (Heer means "silk floss") and it is
famous for its vibrancy and richness in color pallets & design patterns, which include
shisha (mirror) work. Bagh and phulkari embroidery of the Punjab region has
influenced Heer Bharat embroidery in its use of geometrical motifs and stitchery.

PART - B
ABOUT THE SUBJECT. (1.2)
Meaning of Finance
If we trace the origin of finance, there is evidence to prove that it is as old as human
life on earth. The word finance was originally a French word. In the 18th century, it
was adapted by English speaking communities to mean “the management of money.”
Since then, it has found a permanent place in the English dictionary. Today, finance is
not merely a word else has emerged into an academic discipline of greater
significance. Finance is now organized as a branch of Economics. Finance is
“EXCHANGE." Finance is nothing but an exchange of available resources. Finance is
not restricted only to the exchange and/or management of money. A barter trading
system is also a type of finance. Thus, we can say, Finance is an art of managing
various available resources like money, assets, investments, securities, etc.
Hence, Finance has now become an organic function and inseparable part of our day-
to-day lives. Today, it has become a word which we often encounter on our daily
basis.
Definition of Finance
Finance is defined in numerous ways by different groups of people. Though it is
difficult to give a perfect definition of Finance following selected statements will help
you deduce its broad meaning. In General sense, "Finance is the management of
money and other valuables, which can be easily converted into cash."
According to Experts, "Finance is a simple task of providing the necessary funds

(money) required by the business of entities like companies, firms, individuals and
others on the terms that are most favourable to achieve their economic objectives."

FEATURES OF FINANCE
1. Investment Opportunities. In Finance, Investment can be explained as a

utilisation of money for profit or returns. Investment can be done by Creating
physical assets with the money (such as development of land, acquiring
commercial assets, etc.), Carrying on business activities (like manufacturing,
trading, etc.), and Acquiring financial securities (such as shares, bonds, units
of mutual funds, etc.).Investment opportunities are commitments of monetary
resources at different times with an expectation of economic returns in the
future.
2. Profitable Opportunities. In F inance, Profitable opportunities are considered

as an important aspiration (goal). Profitable opportunities signify that the firm must
utilize its available resources most efficiently under the conditions of cut-throat
competitive markets.Profitable opportunities shall be a vision. It shall not result in
short-term profits at the expense of long-termgains.
For example, business carried on with non-compliance of law, unethical ways of
acquiring the business, etc., usually may result in huge short-term profits but may also
hinder the smooth possibility of long-term gains and survival of business in the future.

3. Optimal Mix of Funds. Finance is concerned with the best optimal mix of
funds in order to obtain the desired and determined results respectively. Primarily,
funds are of two types, namely, Owned funds (Promoter Contribution, Equity shares,
etc.), and Borrowed funds (Bank Loan, Bank overdraft, Debentures, etc).The
composition of funds should be such that it shall not result in loss of profits to the
Entrepreneurs (Promoters) and must recover the cost of business units effectively and
efficiently.
4. System of Internal Controls. Finance is concerned with internal controls

maintained in the organisation or workplace. Internal controls are set of rules and
regulations framed at the inception stage of the organisation, and they are altered as
per the requirement of its business. However, these rules and regulations are
monitored at various intervals to accomplish the same which have been consistently
followed.
5. Future Decision Making. Finance is concerned with the future decision of the
organisation. A "Good Finance” is an indicator of growth and good returns. This is
possible only with the good analytical decision of the organisation. However, the
decision shall be framed by giving more emphasis on the present and future
perspective (economic conditions) respectively.
SCOPE OF FINANCE
The academic discipline of finance includes the following specialized areas in its
scope.
1. Public Finance. Like business organizations, governments (local, state or federal)

raise and spend large sum of money, but unlike business organizations, they pursue
non-profit goals. To deal with governmental financial matters, a separate and
specialized field of finance has emerged as public finance.

2. Securities and Investment Analysis. this area is of interest to individuals and

institutional investors. It covers mainly measurement of risk and return on investment
in securities.
3. Institutional Finance. Institutional finance deals with issues of capital formation

and the organizations that perform the financing function of the economy. Therefore,
it mainly studies saving and capital formation and institutions involved in this process
such as banks, insurance companies, provident and pension funds, etc.
4. International Finance. International finance studies economic transactions among

nations, corporations and individually internationally. It is concerned with flows of
money across international boundaries.
5. Financial Management. Business firms face problems dealing with acquisition of

funds and optimum methods of employing the funds. Thus, financial management
studies financial problems in individual firms, seeks low-cost funds and seeks
profitable business activities.
Conclusion on Finance
Owned funds (promoter contribution),

Raised funds (equity share, preference share, etc.), and
Borrowed funds (loans, debentures, overdrafts, etc.).At the same time,
Finance also encompasses wider perspective of managing the business generated
assets and other valuables more efficiently.

Working capital (abbreviated WC) is a financial metric which represents operating
liquidity available to a business, organisation or other entity, including governmental
entity. Along with fixed assets such as plant and equipment, working capital is
considered a part of operating capital. Gross working capital is equal to current assets.
Working capital is calculated as current assets minus current liabilities. If current

assets are less than current liabilities, an entity has a working capital deficiency, also
called as working capital deficit.
A company can be endowed with assets and profitability but short of liquidity if its
assets cannot readily be converted into cash. Positive working capital is required to
ensure that a firm is able to continue its operations and that it has sufficient funds to
satisfy both maturing short-term debt and upcoming operational expenses. The
management of working capital involves managing inventories, accounts receivable
and payable, and cash. The basic calculation of the working capital is done on the
basis of the gross current assets of the firm.
Definition: Working capital, also called net working capital, is a liquidity ratio that
measures a company’s ability to pay off its current liabilities with its current assets.
Working capital is calculated by subtracting current liabilities from current assets.
Working capital management

Decisions relating to working capital and short-term financing are referred to as
working capital management. These involve managing the relationship between a
firm's short-term assets and its short-term liabilities. The goal of working capital
management is to ensure that the firm is able to continue its operations and that it has
sufficient cash flow to satisfy both maturing short-term debt and upcoming
operational expenses. A managerial accounting strategy focusing on maintaining
efficient levels of both components of working capital, current assets and current
liabilities, in respect to each other. Working capital management ensures a company
has sufficient cash flow in order to meet its short-term debt obligations and operating
expenses. There are a few calculations we have to discuss in regards to working
capital management. To calculate working capital, a company would take current
assets and subtract current liabilities
Need for Working Capital:

In order to earn sufficient profits, a firm has to depend on its sales activities apart
from others. We know that sales are not always converted into cash immediately, i.e.,
there is a time-lag between the sale of a product and the realization of cash.So, an

adequate amount of working capital is required by a firm in the form of different

current assets, for its activities to continue uninterrupted and to tackle the problems
that may arise because of the time-lag.
Classification of Working Capital:

The working capital admits of two broad classifications,
(a) Regular or Fixed or Core or Permanent Working Capital;
(b) Variable or Seasonal or Temporary Working Capital.
(a) Regular or Fixed or Core or Permanent Working Capital:

The amount of current assets which are kept by a firm in hand day-in and day
out, i.e., throughout the year is designated as Regular or Fixed Working
Capital. In other words, in order to maintain the normal day-to-day activities, a
certain minimum level of working capital is required on a continuous and
uninterrupted basis which will have to be met permanently along with other
fixed assets; they are considered as fixed working capital. On the other hand,
due to seasonal variation/fluctuation, investment in raw materials, W-I-P,
finished products will fluctuate or fall In consequence, this portion of the
working capital is required in order to meet such fluctuation. It can also be
stated that any amount over and above the permanent level of working capital
is Variable or Seasonal or Temporary Working Capital. We know that both
fixed and variable working capital is required to maintain the production and
sales activities. Practically, variable working capital is required to meet the
liquidity requirements for short-term obligation.
difference between the fixed and variable working capital

(a) Permanent and Temporary Working Capital.
It is quite clear from the that permanent working capital is constant but
variable working capital fluctuates i.e., sometimes increasing or sometimes
decreasing according to seasonal demands of the product.

For a growing/expanding firm, the permanent working capital line may not be
horizontal since demand for permanent current assets is increasing or
decreasing.
(b) Variable or Seasonal or Temporary Working Capital.

The firms which are seasonal in character in their business need a large
amount of working capital for holding inventory during the peak period. But,
as soon as the peak period is over, their working capital becomes idle.In the
circumstances, such firms do not prefer to finance working capital by long-
term sources as this exposes them to cost with no return therefore - during the
slack session. Therefore, firms having seasonality in their business find it
convenient to meet their working capital requirements by resorting to short-
term sources, such as:
 Bank Loan;
 Public Deposits;
 Trade Credit and Other Payables;
 Provision for Taxation;
 Depreciation Provisions, etc.
Determinants of Working Capital:
(a) Nature and Size of Business: The requirements of working capital of a firm
are widely related to the nature and size of the business unit. For example,
trading and financial firms require a large amount of investment in working
capital but a significantly smaller amount of investment in fixed
assets.Similarly, a service oriented firm, e.g., transport or electricity
generation, needs a modest working capital requirement since it has a very
short operating cycle and sales are made on cash basis.
But in the case of manufacturing concern which sells its product on credit
basis and has a long operating cycle, needs a large amount of working capital.

(b) Production/Manufacturing Cycle: production cycle involves the time lag

which require from the manufacture of goods to the finished product. Here,
time-lag includes from the procurement of raw materials (including processing
time) to the production of finished goods and thus funds are blocked in
materials, labour and overhead till the finished products are come out. There is
a time-lag or gap between the procurement of raw materials and the
production/sale of finished goods. For this purpose, working capital is
absolutely required. Thus, the longer the time-lag either in the storage of raw
material, or in the processing period or in the finished product, the more will
be the requirements of working capital and vice-versa in the operations.
(c) Business Fluctuation/Cycle: The requirements of working capital of a firm

are largely affected by the seasonal and cyclical fluctuations which have a
direct impact, particularly on the temporary working capital.
(d) Production Policy: The requirements of working capital are also largely
affected by the production policy of the firm. Because in the case of a seasonal
product, the firm has to concentrate on the two options — viz., either to
purchase raw materials for manufacturing finished products for certain months
of the year when the market is ready for sale, or, to produce articles
throughout the year.
(e) Growth and Expansions: It is needless to say that if a firm extends its
production capabilities, more additional funds are required by way of fixed
capital investments and current assets investments as well although it is really
difficult to ascertain precisely the relationship between the production volume
and the needs of working capital.
(f) Credit Policy of the Firms: We know amount of book-debts depend on the
credit period allowed by the firm to its customer. If more credit period is
allowed, the more will be the requirement of working capital. From the start-
point of liquidity and financial strength, we should grant always less credit
period i.e., the firm should be prompt in making collections. Industry average

norms should be followed although it may be varied from the customer to

customer depending on their personal behaviour and trend.
Components of Working Capital:
There are two components of working capital; viz., Current Assets and Current
Liabilities.
(a) Current Assets:
Asset is termed as current asset when it is acquired either for the purpose of selling or
disposing of after taking some required benefit through the process of manufacturing
or which constantly changes in form and contributes to transactions take place with
the operation of the businesses, although such asset does not continue for long in the
same form As for instance. is often parted with in exchange of goods or services or in
repayment of certain liability, say Creditor. Similarly, Debtors as asset yield place to
Cash on realization or Stock-in-trade is replaced by Cash or Debtors on its sale, the
former in case of cash sales and the latter is case of credit sales. So, they are not only
short lived but also change their form and one type of assets can easily be converted
into another, say Cash is converted into Raw Materials, Raw Materials into Work-in-
Progress, Work-in-Progress into Finished Products and Finished Products into
Debtors in case of credit sales and Debtors into Cash. That is why, they are also
defined as circulating assets. Time required for ultimate conversion of any
component of current assets into cash is normally taken to be one year or less. Now-a-
days, this concept has suffered a little bit of change. It is not essential that current
assets should always be converted into cash immediately. It may also be lost or
consumed. For example, when salaries and wages are paid in cash, a part of cash is
consumed and does not create any current asset through transformation directly. But
when Cash is received from Debtors, Debtors are converted into Cash, Debtors here
are not consumed but transformed or rather converted. The period of conversion in
this case is also reckoned to be one operating cycle of the business instead of one
year.

The list of current assets comprises:
Inventories (including Raw Materials, Work-in-Progress and Finished Goods and

Spares), Sundry Debtors including Receivables (but net of provisions), Readily
Realizable Securities and Tax Reserve Certificates, Short-term Investments, Accrued
Incomes, Prepaid Expenses (not in the nature of ‘deferred charge’) Cash at Bank and
Cash in hand.
(c) Current Liabilities: Current liabilities are those which are repayable or
liquidated within a short period of time by the use of the existing resources of
current assets or by the creation of similar current liabilities. The short-period
concerned is used to refer to a period not exceeding one year from the Balance
Sheet date. But accountants at present, as in the case of current assets, are
inclined to assess current liabilities also with reference to the normal operating
cycle of the business so far as the time period is concerned. Liabilities which
fall due after a comparatively long period are known as fixed or long-term
liabilities. As distinguished from current liabilities, fixed liabilities are,
therefore, those which are not repayable within one year of the Balance Sheet
date’, or normal operating cycle of the business.
Management of working capital
Management will use a combination of policies and techniques for the management of
working capital. The policies aim at managing the current assets (generally cash and
cash equivalents, inventories and debtors) and the short-term financing, such that cash
flows and returns are acceptable.
 Cash management. Identify the cash balance which allows for the
business to meet day to day expenses, but reduces cash holding costs.
 Inventory management. Identify the level of inventory which allows for
uninterrupted production but reduces the investment in raw materials-and
minimizes reordering costs-and hence increases cash flow. Besides this,
the lead times in production should be lowered to reduce work in progress
(WIP) and similarly, the finished goods should be kept on as low level as

possible to avoid overproduction—see supply chain management,just in

time (JIT); economic order quantity(EOQ); Economic quantity
 Debtors management. Identify the appropriate credit policy i.e. credit
terms which will attract customers, such that any impact on cash flows and
the cash conversion cycle will be offset by increased revenue and hence
Return on Capital (or vice versa); see discounts and allowances
 Short-term financing. Identify the appropriate source of financing, given
the cash conversion cycle: the inventory is ideally financed by credit
granted by the supplier; however, it may be necessary to utilize a bank
loan (or overdraft), or to "convert debtors to cash" through factoring
Importance of working capital
Working capital is a vital part of a business and can provide the following advantages
to a business:
(a) higher return on capital Firms with lower working capital will post a higher
return on capital so shareholders will benefit from a higher return for every dollar
invested in the business.
(b) Improve credit profile and solvency. The ability to meet short-term obligations
is a prerequisite to long-term solvency and often a good indication of counterparty
credit risk. Adequate working capital management will allow a business to pay on
time its short-term obligations which could include raw materials, salaries, and other
operating expenses.
(c) high profitability. According to a research conducted by Tauringana and

Adjapong Afrifa, the management of account payables and receivables is an important
driver of small businesses’ profitability.
(d) high liquidity. A large amount of cash can be tied up in working capital, so a
company managing it efficiently could benefit from additional liquidity and be less
dependent on external financing. This is especially important for smaller businesses as

they typically have a limited access to external funding sources. Also, small
businesses often pay their bills in cash from earnings so an efficient working capital
management will allow a business to better allocate its resources and improve its cash
management.
(e) increased business value. Firms with more efficient working capital management
will generate more free cash flows which will result in a higher business valuation and
enterprise value.
(f) favourable financing condition. A firm with a good relationship with its trade
partners and paying its suppliers on time will benefit from favorable financing terms
such as discount payments from its suppliers and banking partners.
Receivable Management
Trade credit arises when a firm sells its product or services on credit and does not
receive cash immediately. It is an essential marketing tool, acting as a bridge for the
movement of goods through production and distribution stages of customers. A firm
grants trade credit: To protect its sales from the competitors and, To attract the
potential customers to buy its product at favourable terms. Trade credit creates
account receivable. The customers from whom receivables or book debt have to be
collected in near future are called as trade debtors or simply as debtors and represent
the firm‟s claim or asset. The credit sales have three characteristics:-
It involves an element of risk that should be carefully analyzed

Credit sales is based on economic value The buyer will make the cash payment for
good or services received by him in a future period
Debtors constitute a substantial portion of current assets of several firms. Trade

debtors are the major part of current assets. The interval between the date of sale and
the payment has to be financed out from working capital of an organization. This
necessitates the firm to get funds from banks or other sources. Thus, trade debtors

represent investment. If substantial amounts are tied-up in trade debtors; it needs

careful analysis and proper management.
Inventory Management
“Inventory refers to the stockpile of the products a firm is offering for the sale and the
components that make up the product”. In other words, inventory management is a
process of maintaining the raw materials when entered in the company till it is
converted into finished goods. The importance of keeping the right level of inventory
lies in the fact that a maximum proportion of working capital remains blocked in the
inventory until it is completely sold off and debtors realized.
Objectives:
To minimize investments in inventory
To meet a demand for the product by efficiently organizing the production and sales
operation Thus the objective of the inventory management is to maintain an optimum
level of inventory at right place with minimum of cost to avoid a stock out option.
Maintaining optimum level of inventory also has other benefits like: Meeting the
market demand when it arises Meeting the unexpected demand when it
arises Handling seasonal or cyclical fluctuations Customer satisfaction Minimizing
cost of sales so that affordability of sales remains
Cost of holding inventory:
Those cost that arise due to storing of inventory (Carrying Cost) The opportunity
cost of fund olding costs are the costs associated with storing inventory that remains
unsold, and these costs are one component of total inventory costs, along with
ordering costs and shortage costs. A firm’s holding costs include the cost of goods
damaged or spoiled, as well as the cost of storage space, labor and insurance.
Minimizing inventory costs is an important supply chain management strategy.

!--break--Inventory and accounts receivable are two asset accounts that may require a
large amount of cash, and decisions about inventory spending reduce the amount of
cash available for other purposes. For example, increasing the inventory balance by
$10,000 means that less cash is available to operate the business each month. This
situation is considered an opportunity cost.
Factoring in Inventory Turnover
One way to ensure a company has sufficient cash to operate is to sell inventory and
collect payments quickly. The sooner cash is collected from customers, the less total
cash the firm must come up with to continue operations. Businesses measure the
frequency of cash collections using the inventory turnover ratio, which is (cost of
goods sold) / (inventory). For example, a company that has $1 million in cost of
goods sold and an inventory balance of $200,000 has a turnover ratio of 5. The goal is
to increase sales and reduce the required amount of inventory, so that the turnover
ratio increases.
Examples of Holding Costs

Assume that ABC Manufacturing produces furniture that is stored in a warehouse and
then shipped to retailers. ABC must either lease or purchase warehouse space, and
pay for utilities, insurance and security for the location. The company must also pay
staff to move inventory into the warehouse, and then load the sold merchandise onto
trucks for shipping. The firm incurs some risk that the furniture may be damaged as it
is moved into and out of the warehouse.
Another important strategy to minimize holding costs and other inventory spending is
to calculate a reorder point, or the level of inventory that alerts the company to order
more inventory from a supplier. An accurate reorder point allows the firm to fill
customer orders without overspending on inventory. Companies that use a recorder
point avoid shortage costs, which is the risk of losing a customer order due to low
inventory levels. The reorder point considers how long it takes to receive an order
from a supplier, and the weekly or monthly level of product sales. A reorder point
also helps the business compute the economic order quantity (EOQ), or the ideal
amount of inventory that should be ordered from a supplier. EOQ can be calculated
using inventory software.

Benefits of holding inventory:
There are various benefits of holding inventory-

Benefits in Purchasing Benefits in Production Benefits in Work in Process Benefits
in Sales Inventory includes all types of stocks. For effective working capital
management, inventory needs to be managed effectively. The level of inventory
should be such that the total cost of ordering and holding inventory is the least.
Simultaneously, stock out costs should also be minimized. Business, therefore, should
fix the minimum safety stock level, reorder level and ordering quantity so that the
inventory cost is reduced and its management becomes efficient. The basic
responsibility of the finance manager is to make sure the firms cash flows are
managed efficiently. Efficient management of inventory should ultimately result in
the maximization of the owner‟s wealth. In order to minimize cash requirements,
inventory should be turned over as quickly as possible, avoiding stock-outs that might
result in closing down the production line or lead to loss of sales.
Liquidity and Cash Management

Cash is the lifeline of an organization. A sustained growth of an organization
depends on the cash ability of the profit, not the profit per se as reflected in the
income statement. The rising profit curve of an organization may mislead managers
into high rates of growth, which are unsustainable due to the actual cash position of
the company. This leads to continuous erosion of liquidity and may even make a
company sick. There has not been much of cash management in Indian enterprises
due to easy availability of working capital finance from banks. However, recently,
cash management as a discipline is emerging in the country.
Three main activities contribute to the cash flow.

CHAPTER 2:-
RESEARCH DESIGN
Introduction. (2.0)
Research design is a logical and systematic plan prepared for directing a research
study. It is the conceptual structure within the research would be conducted. Research
design constitutes the blueprint for the collection, measurement and analysis of data.
Research design is the program that guides the investigator in the process of
collecting, analysing and interpreting data. It provides a systematic plan of procedure
for the researcher to follow.
 Research design is the arrangement of conditions for collection and analysis of
data in a manner that aims to combine relevance to the research purpose with
economy in procedure.
 Research design is master plan containing everything how to start and how to
finish effectively. It specifies pattern of framework for controlling the
collection of data accurately and economically and specifies method and
procedure.
Definition of research
According to Ker linger defines research as a “Systematic, controlled, empirical, and
critical investigation of hypothetical propositions about the presumed relations among
natural phenomena”
“A framework or blue print for conducting a research project, it specifies the detailed
of the procedures necessary for obtaining the information needed to structure and or
solve research projects”.
Meaning of research design

A research design is the basic plan that guides the collection of data interpretation of
data and analysis phase of the project. It is the framework which specifies the types of
information to be collected, the source of data collection procedure and methods.

TITLE OF THE STUDY. (2.1)

A STUDY ON WORKING CAPITAL MANAGEMENT REFERENCE TO RAYON
DESIGN, Bangalore.
STATEMENT OF THE PROBLEM. (2.2)

The study is focused on the working capital management. Management RAYON DESIGN,
Bangalore. to provide suitable remedies to improve the performance of the company
regarding working capital and its management, it is mainly undertaken to overcome the
hindrance like idleness of funds, impairing of firms profitability, which ultimately make yield
less return to the firm.
NEEDS OF THE STUDY. (2.3)

 Proper management of working capital is very essential for the smooth functioning of
the business. The working capital management is done to manage the firms’ current
assets and current liabilities. The following can be stated as the need for the study
assets and liabilities. The following can be stated as the need for the study.
 To determine the working capital position of the firm To know the progress of the
firm To know the average collection of the firm related to working capital and their
effects.
Objectives of the study. (2.4)

 To study the actual scenario of working capital management of Rayon design
 To study the various components of working capital at Rayon design
 To examine the techniques for analysis and interpretation of working
Capital management and find out the factors influencing working capital.
 Analyse the financial system and liquidity management process practiced at Rayon
design
 To know the strength of financial ratios in identifying financial efficiency of the
Rayon design
 To identify problems related to working capital management and find out suitable
ways of solving them.

SCOPE OF THE STUDY. (2.5)

The study was done at Rayon design in Bangalore. The study helps to know the liquidity
position as well as maintain the profitability of the company.
METHODOLOGY OF THE STUDY. (2.6)

Research design Methodologies say how this study came to certain theories to work with.
The study is a Descriptive study. The employees were restricted to interact with us and my
guide gave The periodicals and manuals of the company and asked me to go through it.
Research design of the methodology Research design is purely the framework of plan for a
study guides the collection and Analysis of data.
There are three types of research design. They are
1. Exploratory Research
2. Casual Research
3. Diagnostic Research
TYPES OF RESEARCH. (2.7)

Sources of data collection This part of the report describes the gathering of the data. Its
content depends on the Selected design. The collection is an interesting aspect of the study.
The research task Depends on the type and source of the data that may yield the desired result
while Deciding about the method of collection used for the study.
1. Primary data
Data originally collected for an investigation are known as primary data.
2. Secondary data
Information obtained from published or unpublished source is secondary data. It’s chief
Material based on which statistical work is carried out in many investigations. This study
Totally belongs to the secondary data. Secondary data is obtained through the reference of
company’s periodicals, annual reports, text books, websites etc.
 Analytical tool
 Statistical analysis Tables, graphs & charts
 Ratio analysis is the main tool used in the study.
 Statement of changes in working capital.
 The variations in the ratios are shown through various graphs.
LIMITATIONS OF THE STUDY. (2.8)

 The study of the working capital in rayon design, Bangalore has some limitation, as
every study has its own limitations.
 The research conducted was for a short of time, which was a limitation to the
study. This project is just for a brief study of the firm’s working capital management.
It is not exhaustive.
 Conclusions, drawn from the information may not be applicable to similar concerns.
As every employee in the organization was in their work schedules, so there was no
Interaction with them, the periodicals were giving and guided me to go through it.
 In spite of the above limiting factors, an attempt has been made to compile the report
to them possible extent.
Analytical tool
Statistical analysis Tables, graphs & charts
Tools and techniques used

Ratio analysis is the main tool used in the study. Statement of changes in working
capital. The variations in the ratios are shown through various graphs.
Limitations of the study

 The study of the working capital in rayon design, Bangalore has some limitations as
every study has its own limitations.
 The research conducted was for a short of time, which was a limitation to the
study. This project is just for a brief study of the firm’s working capital management.
It is not exhaustive.
 Conclusions, drawn from the information may not be applicable to similar
concerns. As every employee in the organization was in their work schedules, so
there was no interaction with them, the periodicals were giving and guided me to go
through it.
 In spite of the above limiting factors, an attempt has been made to compile the report.

CHAPTER 3
COMPANY PROFILE
HISTORY RAYON DESIGN. (3.1)
They are a Bangalore based firm established in the year 2002, promoted by
Mr.Rangaswamy.R. to offer total solutions in the field of COMPUTERISED
EMBRODIERY. We are a technology driven company with progressive growth every
year and having made a strong impact in the relevant field in the market, we have
emerged as a "Dependable Source" in this field. RAYON DESIGN has tie-up with
many companies for creation of textile designs with a niche in the Fashion Industry.
RAYON DESIGN Computerised Embroidery on Export Garments & Silk
Fabrics
From a modest beginning in 2005 as job workers of Computerised Embroidery on

Export Garments & Silk Fabrics. As a business owned & managed by family
members with support from qualified personal importance of good relationship is the
at most priority in the company. This is reflected in the deep involvement with
customers & the efforts taken to understand their requirement which is teem are
conveyed. We got lot of new developments are in pipelines. We need good quality of
designs for our customer requirements.
They have concentrated on tremendous expansion due to the favourable market and
hence have a good management team .in 2006-07 the company started generating
more and more revenue , we satisfies our customer by providing good quality of
goods and services

VISION, (3.2)
General Description of the Business
Computerised Embroidery provides machine embroidery to businesses and

individuals. This business operates out of a residence with most of the customer-
contact taking place over the phone or at the customer’s site. This business is in a start
up phase with the intent to settle in a “new” location by March 2005 and become
more active in contacting potential customers over the next year.
Vision
To manufacture products comparable to international standards, to be customer-

focused and globally competitive through better quality, latest technology and
continuous innovation
MISSION STATEMENT. (3.3)
This is an independently owned business that will provide honest, dependable and
quality embroidery service to businesses and individuals. This business will operate in
a clean well-maintained environment that will welcome its customers. The focus will
be on personal contact with the customer, providing a second-to-none service!
Mission
1. To provide employment.
2. Quality product,
3. Maximum satisfaction to customers.
4. To ensure enterprise growth.
5. To create clean and healthy environment.
6. To develop the establishing the organization in the city.

Objectives
1. To determine capacity of all embroidery design departments and to plan

systematically to meet sales requirements.
2. To find ways through which product manufacturing requirements such as

materials, machines and so on are available in right quality and quantity at the
right time.
3. To co-ordinate a number of different departmental groups so that a fine

balance of activities may be maintained.
4. To minimize the employment of production facilities with the general purpose

in view of minimizing operating costs and meeting delivery schedules.
5. To ensure that a number of jobs are erected which have already been specified
in the light or the production requirements.
6. To prepare management beforehand for tacking any difficulty arising in the

way achieving production targets.
7. To reap a reasonable project prescribed beforehand.
8. To increase concentration on modern production techniques and supervision

on the firemen and supervisors to achieve outstanding result (such as
manufacturing products of high quality and quantity) at the right time and at
the most economic cost, which may win the consumers.
9. To promote maximum utilization of plants.
10. To assist labour towards right and greater earnings.
11. To maintain progress records to show actual against planned production and
take necessary action to correct deviation and advice the sales department
accordingly.
12. Answer enquires form customers as to the progress of their orders,

remembering that good delivery, and the honoring of delivery promises is an
important part of company’s reputation and manufacturing policy.

13. To maintain accurate record of all material and component stock and
movements in and out of stories in such a way so as to anticipate future
requirements and always to have material available for production to
consumer’s requirements.
14. Re-train staff in the effective performance of their duties.
15. Adhere to company’s personnel policy and ensure that subordinates do so.
16. Keep abreast with developments in modem production planning techniques
Our values
 Customer's satisfaction and delight.
 Superior quality of performance.
 Concern for the environment and the community.
 Passionate about excellence.
 Fair to all.
 To provide a safe workplace and promote healthy work habits.
PROMOTERS OF RAYON DESIGN. (3.4)
A Bangalore based firm established in the year 2002a young company headed by a
highly experienced team, Provide total solution in the field of computerized
Embroidery. Well-equipped firm with updated technology have made it possible to
sustaine in the competitive business market, have created its niche in the field.

PROMOTER Sri.RangaSwamy.R
Mr.Rangaswamy R Promoter and Managing Director of the firm, hails from

Bangalore. He has done his Graduation on Textile Engineering, specialization in
computers. Are You Sourcing Embroidery Job Works On Garment , Sarees , Dress,
Salwar Kameez , Duppata , Top and punjabi salwar suits Firm ( Embroidery Unit or
Factory) in Surat , Ahmedabad , Chennai , Mumbai and Delhi. We will Provide
Embroidery Job Works company database, Phone Numbers, Addresses , Profile and
Email list to our Textile Portal.
Mr. Rangaswamy.R started his career as a Design Engineer in a small company based
in Bangalore based company specialized in Computerized Embroidery. He has
worked in various level of Designing, processing & quality check methods,
CAD/CAM systems in this last three years.
Later he joined M/s Aditya Designs and worked as Marketing head of marketing and
technical support of Embroidery for over 6 years. The company has grown
progressively, as Managing Partner Mr.Rangaswamy.R is responsible for overall
management of the company and under his leadership RAYON is growing every year
progressively with a Motto
TOGETHER WE GROW
TOGETHER WE GLOW.

THE ORGANISATION STRUCTURE . (3.5)
Well-qualified and experienced employees at all levels are supporting the

management.
INFRASTRUCTURE
The factory is equipped with 15 heads 9 colors 3 machines, 18 heads 9 colors 2

machines, state of the art machines SWF brand imported from Japan fully
computerized with a stitching capacity of 500 stitches per minute, sampling machine
supported by uninterrupted power supply to ensure the optimum production & to
abide by strict delivery schedules with a investment above ONE Crore. The Fixed
assets value stands at Rs.76.96 Lakhs after depreciation as on 31/03/2008. The
machinery will have a life span of 15 years with optimum production level with low
maintenance cost as spare are available locally.

SCOPE & HURDLES:
With the present Global Crisis many small timers have closed down and in this lean
period it is the right time to capture the market share. Even though we have the
production capacity we are unable to run more than one shift. This is due to the short
fall in Working Capital. With the present trend & adequate funding, we can enhance
the production by 1 Crore and better profit proposition.
CREDIT PERIOD:
It is a General practice & also the Clients expect credit terms of minimum 30 days &
maximum 60 days in this sector. This has hit us hard and we are unable to withstand
this pressure due to high investment cost.
DESIGN WEAVING
From conceptualizing to customizing a design, from improvising to implementing

weave structures and techniques, our design team will work closely with you to create
fabrics that capture the essence of your brand. With a team that is consistently trained
to keep their talents at par with global aesthetics, you can be assured of achieving
your design goals through uncompromising artistry and technical quality.
The expertise of our technicians and versatility of our looms in Mysore enables us to
use various natural, man-made and synthetic fibers creating an expansive range of
velvets, taffetas, satins, dupions , jacquards, and fancy fabrics. Our raw silk qualities
of tussah’s and matka’s are products of our handlooms in Bhagalpur.
EMBROIDERY SCOPE & HURDLES
Rayon Design has been a pioneer in bringing embroidered fabrics to the world of
furnishings and fashion from their factories in Bangalore. We specializing in both
hand and machine embroidered fabrics with repeat sizes. In addition to the creating
uniquely different stitches, our embroidered fabrics showcase various techniques like
patch work, cut velvets, embellishments, and Ikats. With the present Global Crisis
many small timers have closed down and in this lean period it is the right time to
capture the market share. Even thought we have the production capacity we are
unable to run more than one shift. This is due to the short fall in Working Capital.

With the present trend & adequate funding, we can enhance the production by 3 Crore
and better profit proposition.
TRAINING SCHEME AND FACILITIES
The staffs handling the operation are highly skilled and trained by the Japanese Team.
There are required to have high hand and eye co-ordination with a Zero Tolerance
level of quality maintenance. The staffs are also imparted skill, safety, health and
hygiene training, Team building, parenting, motivational and other brain storming
sessions on a regular basis.
They are also taken out for vacations during Dasara Holidays to check the team spirit
to develop the understanding level not only between them but also between there
families tos4m ( ietwit.11.e bonding between employees and even given opportunities
to display there talent among themselves in the field of Art and Sports. The Best
employee of the year award is given annually with a Citation and Cash Award.
QUALITY POLICY
RAYON is committed to provide Technical advancements and Services in the field of

Computerized Embroidery that suit the requirements of its customers world-wide and
increase the market share through continuous improvement in the business process.
With a ZERO TOLERANCE level.
QUALITY OBJECTIVES
Increase the customer satisfaction level .To impart knowledge and develop skills to all
categories of employees for improved Operational efficiency. On time delivery of the
products and services.Reduce the cycle time by avoiding errors and improving
productivity.

PODUCTS PROCESSED IN RAYON DESIGN, (3.6)
 Kurtis
Indian designer Kurtis are all the way comfortable, stylish and easy to wear. Indian
Kurtis impart elegance to any girl’s wardrobe. It surely gives striking and decent look
to a woman. Designer Kurtis are the newest trend in Indian fashion. Kurtis became a
fashion statement in today’s realm. It is comfortable and the combination of splendour
and style. Kurtis give a decent look which is versatile and modest too.
Textile Infomedia is a leading classified for Kurtis Suppliers, Traders, Wholesalers,

and Exporters in India. Here you can find comprehensive Catalogues of Kurtis, with
far-reaching information about enterprise profile and contact details. It allows you to
view numerous business and merchandise types associated to Kurtis. . Our solution
helps to promote your business so that you can entice in new clients. We invite all the
producers, manufacturers, suppliers, vendors of the products to come and endorse the
products through our directory and maximize their ROI. At Textile Infomedia you can
find all the merchants and makers of Kurtis, Designer Kurtis, Leggings, Printed
Kurtis, Fancy Kurtis, Chicken Kurtis, Long Sleeves Kurtis, Digital Printed Kurtis and
Georgette Kurits.
 Saree design
India as a country produced spectacular dresses and costumes. The Saree is a fine
instance of Indian brilliance and style sense. It is too graceful and stylish that one can
drape it in different styles. There are almost 80 ways to adorn a saree. It is Ethnic and
considered as the traditional outfit. It is the legacy of our India. It encompasses the
everlasting charm of proud to Indian women. It symbolizes the rich culture of India. It
has been the trend setter and has set a new standard.
But in this challenging world all the allied field in divergent sectors demand the role
of a common intermediator to act as link between buyers and sellers, importers and
exporters and the same. This service facilitates the business world to come under a
common platform that turns the global world into a tiny village. Textile infomedia is a
major entity to bring up this platform for the diverse sectors of textile industries and
linked all the saree manufacturers, suppliers, traders, wholesalers, exporters in India at

just one place. At textile Infomedia you can find all primary manufacturers, suppliers
and exporters, who are involved in providing the handpicked eminence Sarees. All
these sarees are designed with skin friendly fabric and formed by professionals using
latest weaving technologies.
 Appeals and dress material design
India is known for its culture and heritage. And what make India unique is its dresses
because of elegance and ethnicity. Indian fashion is too much influenced by the
culture and tradition of the people. There are distinctive varieties of clothing in India.
For instance Salwar and Kameez is the ethnic wear of woman in Punjab and Punjab is
also known for its phulkari embroidery in its traditional costumes. Phiran is the
popular attire of woman in Jammu and Kashmir, Rajasthan is famous for its Bandhani
rings. Mekhla Chadar is the traditional outfit of Assamese woman. This all
symbolizes the rich culture of India.
But there is a need of platform to exhibit these amazing dresses at one place. Textile
Infomedia allow Dress Manufacturers, Supplier, Traders, wholesalers, Exporters in
India to showcase their products at their state-of-art we b portal. At Textile Infomedia
you can find details of all the Suppliers, Merchants, Dress Manufacturers,
Wholesalers and Exporters of designer suits, anarkali suits, embroidered salwar
kameez, printed dress, dress material, Punjabi dress and more.
 Fabric material design
abric essentially important for the textile industries. Textile growth is totally
depending on the supply chain of the fabrics it requires. If quality products have to be
manufactured the first priority is the cautious selection of fabrics. It means the
productions of different goods need different kinds of fabrics. Fabrics includes Bags
fabric, Apparel fabrics, Clothing fabrics, Hosiery fabrics, Industrial fabrics and so on.
We Textile Infomedia is one of the finest online B2B market place that connect
thousands of suppliers in just one podium. We serve our services to all textile
fraternity. We connect all the Manufacturers, Suppliers, Traders, Wholesalers, and
Exporters of Fabrics to the buyers of the products through our website directory.
Directory lists the Fabric Manufacturers, Suppliers, Traders, Wholesalers, Exporters

of Fabrics such as Fancy fabric, Cotton fabric, Printed fabric, Net fabric, Chiffon
Dupatta fabric, Indo fabric, Georgette fabric, Pc Cotton fabric, Satin fabric and more.
Job work with tied up with associate companies
Textile mills, textile production mills and apparel manufacturing are the regions
where the experienced people from textile industry can apply for job work.In textile
industries jobs are earned according to the experience people hold in various
departments. Such as textile designing has a great career in textile businesses. It
explores the color, texture and form with the properties of yarn, fibres, dyers and
fabric. Designer design their own sketches, pattern and combine them with the color
and fabric. Many of the similar jobs are offered by textile companies.
Searching for those jobs are made easy by our portal. Textile InfoMedia is the largest
online directory for companies that are offering textile jobs to the appropriate
candidates. We are providing information on Textile job work provider in India that
are offering opportunities in Computerized embroidery, lace work, stone work,
zardosi work and more.
companies associated with rayon design for job work. (3.7)
 Oscar Apparels
 Soshee Boutique
 SRI SAI Embroidery Concepts
 Roman Tailors Textile Matching Centre
 Diva Boutique
 Sri Bhairava Silk Udyog
 Diana Shree Embroidery Works

SWOT analysis (3.8)
STRENTHS WEAKNESS
1. Availability of manpower. 1. Heavy transport charges.
2. High quality product. 2. Major consumption in embroidery

design industries but limited scope in
3. Low price high quality textile industries in Karnataka
. 4. Availability of raw materials
OPPORTUNITIES THREATS
1. Technological up gradation. 1. Entry of competitors.
2. Foreign market expansion 2. Product substitution
3. Online ordering process.
4. Product expansion.
5. Market expansion.

MAJOUR DEPARTMENTAL STUDIES IN RAYON DESIGN. (3.9)
 PURCHASE DEPT
 PRODUCTION DEPT
 ADMINISTRATION DEPARTMENT.
 PRODUCTION DEPARTMENT.
 FINANCE DEPARTMENT.
 MARKETING DEPARTMENT.
1. PURCHASE DEPARTMENT:
The purchase officers and assistance head the purchase department. The clearly take
the requisition from various departments and forward to the purchase offices and then
the purchase officer arranges to the purchase required materials from the best seller
available in the market.
The purchase department plays a very important role in the company where
the dealing made between the purchase officers and sellers is convenient then it can
be help in reduction of the price of the materials and their by which will also result in
increase of profit.
FUNCTIONS

2. ADMINISTRATION DEPARTMENT:
Administration Department takes care of the whole activities happening in and around
the company. The personal manager heads the department and personal managers is
responsible for the man power in the whole factory. Personal Manager is concerned
with the most efficient use of people to achieve organization and individual goals. It is
the way of managing people at work so that they give the best to the organization.
Administration department also takes care of the planning, organizing, directing,
controlling, procuring and developing and integrating of the company and human
resources to the end. It also looks after the financial matters of the company.
FUNCTIONS:
 Maintenance of files, records etc.,

 Collecting and presenting the data in the form of useful information from the
records.
 Maintenance of time management in the company.
 Insuring smooth running of the office files by interacting with external
agendas as required.
 Good relation between the employer and employee.
 maintaining the financial matters of the company.
 Good relations with supplier and customers.
 Maintenance of salary, wages records.
 Keeping all the records of all the departments
3. 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.
Since BCM is the small scale industry it maintains very good accounting system, The
whole financial matter is mainly dealt by the separate dept called finance dept.

The Major sources of finance are,
1. Owners fund
2. Loan from corporation banks.
FUNCTIONS:
 Recording day to day transactions in a systematic manner.
 Maintaining proper accounts of purchases and sales.
 Maintaining profit & loss A/c and Preparing the Balance sheet of BCM
systematically.
 Paying the interest on loans at right time.
 Maintain & paying the tax’s & insurance.
 Make use of available finance resources properly.
 Maintain liquidity of assets properly to earn the maximum profit.
4 MARKETING DEPARTMENT
Marketing Department is also a one of the important department in the company. This
department is important because it gives a clear picture of how much to produce?
Which will also help in the investment to he made and to purchase department to
purchase raw materials.
The marketing department has a procedure, by which it is done i.e., fit receives the
order from the buyers and forwards the order to the production department and as per
the order production department produces the required production and it makes the
packing of materials and sends it to the buyers as per the order.
Marketing department also take care of the time given to it by the buyer to produce
the product. If there is any default in the order such as product not as per order or not
at time or minimum product supplied the party will send back the sample to the
organization and the organization gives certain percentage of discount for the default
but no replacement is made

RULES AND REGULATIONS IN RAYON DESIGN
All the staff and workers have a common set of rules and regulations. There is no
scope of any kind of indiscipline at any level. They have to adhere to strict set of rules
which is imposed from time to time as per the Government Factory Act and Wages
Act.
PERFORMANCE OF THE COMPANY-WORK RESULTS
The Organizations started with annual production of Rs.30 Lakhs now with optimum
utilization of the setup and improvement of skill level of the employees the company
has increased level of the employees the company has increased its production
capacity to Rs. 1.41 Crores for the year 07-08 & a projected turnover of Rs.2.00
Crores for the financial year 2008-2009. The Global recession has made no impact on
the Industry as a whole and on Rayon in particular as we stand by our Commitment of
Quality without compromising. This has given rise to confidence in the heart of the
clients which is bringing more Clientele & Client Satisfaction.
FUTURE PLANS
The company plans to increase its share in the Global Market 2 folds in the next 5
years, by increasing the production capacity and also enter in the Fashion industry of
textile designing which has got a very high potential of profitability.
SAFETY PROGRAMMIES
The Organization believes in total safety of the Staff and Equipment’s. All the staffs
are covered under Group insurance and the
Factory is covered for any loss, theft and by the act of god under the General
Insurance Policy. For any eventualities of Fire and other emergencies the staff are
given mock Drill, First Aid Training for safe evacuation and timely medical attention
in case of emergency.

QUALITY POLICY
RAYON is committed to provide Technical advancements and Services in the field of

Computerized Embroidery that suit the requirements of its customers world-wide and
increase the market share through continuous improvement in the business process.
With a ZERO TOLERANCE level.
QUALITY OBJECTIVES
· Increase the customer satisfaction level.
· To impart knowledge and develop skills to all categories of employees for
improved potentials
· On time delivery of the products and services.
· Reduce the cycle time by avoiding errors and improving productivity.
As an extension to the business philosophy, RAYON endorses and practices a culture

that is committed to promoting an entrepreneurial spirit among its employees.
Encouraging team work, World class infrastructure, achieving global levels of
productivity, focus on the client, rewards and recognition based on contribution to the
company and Society, mutual cooperation and thereby ensuring that whatever we do
is going to benefit the society at large. The emphasis is being given to the
development of the Rural employees, which has got lot of unemployment ratio in
India
CORPORATE PRINCIPLE. (3.9)
1. Service rules all.
2. Employee-cantered management.
3. Encouragement of ideas at all levels.
4. Complete Job- accountability.
5. Recognition of achievements.
6. Team spirit.
7. Performing for results.

8. To err is human.
9. TOGETHER WE GROW- TOGETHER WE GLOW.
10. ELITE CLIENTELE
11. Mulberry silk pvt. ltd,
12. Universal Textiles mills
13. Zenith Exports
14. Pramod International
15. Ethnic Exports
16. Shashi Exports
COMPETITORS
As for as the competition is concerned we invite stiff competition, which actually

motivates us to strive hard to bring in the best of our talents, we stand apart due to our
commitment, designs and quality. Adithya Designs, Deco Designs are few to
name.We at Rayon always are committed to quality, deliverance, drive to keep in
pace with the latest trends in the market, Global technology, with a human dimension.
We always strive to give our best; this is the success

DATA ANALYSIS AND INTERPRATION
Current assets position
Current assets of rayon design are as fallows
 Inventories
 Sundry debtors
 Cash & Bank balance
 Other current assets
 Loans and Advances
RATIO ANALYSIS OF WORKING CAPITAL
INTRODUCTION:
Ratio Analysis is a powerful tool of financial analysis. Alexander Hall first presented
it in 1991 in Federal Reserve Bulletin. Ratio Analysis is a process of comparison of
one figure against other, which makes a ratio and the appraisal of the ratios of the
ratios to make proper analysis about the strengths and weakness of the firm’s
operations. The term ratio refers to the numerical or quantitative relationship between
two accounting figures. Ratio analysis of financial statements stands for the process of
determining and presenting the relationship of items and group of items in the
statements.
Note: I have used the ratio analysis in this project in order to substantiate the
managing of working capital. For this, I used some of the ratios to get the required
output.

Various working capital ratios used by me are as follows:
1. LIQUIDITY RATIOS:
Liquidity refers to the ability of a firm to meet its current obligations as and when
these become due. The short-term obligations are met by realizing amounts from
current, floating or circulating assets. Following are the ratios which can help to
assess the ability of a firm to meet its current liabilities.
 Current ratio
 Acid Test Ratio / Quick Ratio / Liquidity Ratio
 Absolute liquid ratio
2. TURNOVER/ACTIVITY RATIOS:
These are the ratios which indicate the speed with which assets are converted or
turned over into sales.
 Inventory Turnover Ratio.
 Debtors/ Accounts receivables Turnover Ratio.
 Creditors/Accounts Payables Turnover Ratio.
 Working Capital Turnover Ratio.
3. Statement of change in working capital (2012-2017)

INVENTORY LEVEL. (4.2)
Inventory is the raw materials, work-in-process products and finished goods that are
considered to be the portion of a business's assets that are ready or will be ready for
sale. Inventory represents one of the most important assets of a business because the
turnover of inventory represents one of the primary sources of revenue generation and
subsequent earnings for the company's shareholders.
Table showing Inventory position of company from past 5 years
Year Inventory
2012-13 1532455.00
2013-14 2161071.00
2014-15 3336430.00
2015-16 2622901.00
2016-17 2360611.00

4000000
3500000
3000000
2500000
2000000 inventory
1500000
1000000
500000
0
2012-13 2013-14 2014-15 2015-16 2016-17
Interpretation
Inventory holding in rayon design for 5 year show the show the inventory position in
the organisation. During their 2013 the inventory was Rs 1532455.00 , and in year
2014it has been increased to rs 2161071.00, the growth goes on increasing for the
next year also of rs 3336430.00 it was in the increasing trend. Suddenly there was a
decrease in inventory holding with organisation worth rs 2622901.00 and it come
down in coming years of rs 2360611.00
Inventory level effect the cash holding position in the organisation, as inventory is
less the cash holding position will be high

Cash and bank balance level. (4.3)
The main concern in this area is to establish the existence of the balances and more
recently due to failures in several financial institutions in Kenya valuation of these
balances. The client will produce a reconciliation of the cash book and the bank
statement. These are checked by the auditor paying particular attention to the
reconciling items. These should be genuine reconciling items. Unpresented cheques
and uncleared lodgements should appear on the bank statements early in the new year,
say within two weeks of the year end. If they do not appear, then these should be
investigated as manipulation or fraud could be indicated. Material unpresented
cheques could indicate that the bank balance is being distorted for balance sheet
purposes as a high balance is indicated of poor utilisation of cash and may reflect
adversely upon the directors. Uncleared lodgements present a more serious threat of
fraud or distortion. Banks normally clear lodgements within a week, therefore if after
a week we have uncleared lodgements that are not up country, cheques, then the
position displayed may be probably fictitious. They could have been inserted by
management to conceal a shaky liquidity position or by an employee to conceal a
misappropriation elsewhere.
Table showing the cash and bank position of rayon design of 5 years
Years Cash & Bank Balance
2012-13 493742.00
2013-14 1205660.00
2014-15 1033152.00
2015-16 1720815.00
2016-17 1978938.00

2500000
2000000
1500000
Cash & Bank Balance

1000000
500000
0
2012-13 2013-14 2014-15 2015-16 2016-17
Interpretation
Cash and bank balance in rayon design for 5 year show the show the cash liquidity
position in the organisation. During their 2013 the inventory was Rs 493742.00 , and
in year 2014it has been increased to rs 1205660.00, the decrease in cash possition for
the next year come of rs 1033152.00 it was in the increasing trend. Suddenly there
was a increase in cash liquidity with organisation worth rs 1720815.00 and it come
increasing in coming years of rs 1978938.00
The cash holding position is increasing year to year because inventory holding
position in organisation decreasing from past 3 years, so the cash holding position is
high in the organisation

OTHER CURRENT ASSETS POSITION. (4.4)
Current assets is a balance sheet account that represents the value of all assets that can
reasonably expect to be converted into cash within one year. Current assets include
cash and cash equivalents, accounts receivable, inventory, marketable securities,
prepaid expenses. and other liquid assets that can be readily converted to cash.
Table showing current assets position of rayon design past 5 years
Years Current Assets
2012-13 148822.00
2013-14 78260.00
2014-15 189683.00
2015-16 206206.00
2016-17 185585.00

Chart Title
250000
200000
150000
100000
50000
0
2012-13 2013-14 2014-15 2015-16 2016-17
Current Assets Column1 Column2
Interpretation
The other current assets of rayon design denotes the liquidity of working capital of
company in the year 2013 the current assets of company are rs 148822.00 and we can
show tremendous decrease in the year 2014 of rs 78260.00 and in next year 2015
there was tremendous increase in other current assets of rs 189683.00 and increasing
trends continues in next year 2016 of rs 206206.00and in year 2017 there is a site
decrease in other current assets position of rs 185585.00, hence the current assets
position is not stable in rayon design

Debtors level. (4.5)
A debtor is a company or individual who owes money. If the debt is in the form of a
loan from a financial institution, the debtor is referred to as a borrower, and if the debt
is in the form of securities, such as bonds, the debtor is referred to as an issuer.
Legally, someone who files a voluntary petition to declare bankruptcy is also
considered a debtor.
Table showing debtors of rayon design of last 5 years
Years Debtors
2012-13 2201381.00
2013-14 4958527.00
2014-15 1805948.00
2015-16 3787274.00
2016-17 4355365.00

6000000
5000000
4000000
3000000
debtors
2000000
1000000
0
2012-13 2013-14 2014-15 2015-16 2016-17
Interpretation
In rayon design the debtors position is not stable, there must not be stable in debtors
position in organisation in the year 2013the debtors of the organisation was rs
2201381.00, and in the next year there is a tremendous increasing holding high no of
debtors in 2014 there was an increase of rs 4958527.00, and there is a sudden
decrease in debtors position in the organisation ,in 2015 the debtors position stand in
rs 1805948.00, and in next future year the debtors position grows on increasing of rs
3787274.00 and 4355365.00 in the year 2016 and 2017

NET WORKING CAPITAL. (4.6)
An analysis of the net working capital will be very help full for knowing the
operational efficiency of the company. The following table provides the data relating
to the net working capital of rayon design
NET WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIS
Years Current Asset Current Liabilities NWC
2012-13 4563099.00 2041543.00 2521556.00
2013-14 9599646.00 3887765.00 5711881.00
2014-15 9077617.00 2829079.00 6248538.00
2015-16 11003428.00 3889899.00 7113529.00
2016-17 11946666.00 4165659.00 7781007.00

net working capital
7781007
7113529
6248538
5711881
2521556
2012-13 2013-14 2014-15 2015-16 2016-17
NWC
Interpretation
The above chart shows that during the year 2012-13the Company has 2521556.00
N.W.C. In the year 2013-14 huge increase in the N.W.C is 5711881.00 and in the year
2014 -15 the company has 6248538.00 N.W.C in the year2015-16 the company has
7113529.00 N.W.C the N.W.C of the company is increasing compared to the previous
years, in the year 2016-17 the company has 7781007.00 N.W.C this means the
company in a positive position & N.W.C has improved vary fast as compared to the
previous years which show liquidity Position of the RAYON DESIGN, has always
more & sufficient working capital available to pay off its current liabilities.

CURRENT RATIO. (4.7)
It is a ratio, which express the relationship between the total current Assets and
current liabilities. It measures the firm’s ability to meet its current liabilities. It
indicates the availability of current assets in rupees for every one rupee of current
liabilities. A ratio of greater than one means that the firm has more current assets than
current liabilities claims against them. A standard ratio between them is 2:1.
Current Ratio: = CURRENT ASSETS

CURRENT LIABLITY
YEAR CURRENT ASSETS CURRENT LIABLITY Current Ratio
2012-13 4563099.00 2041543.00 2.23
2013-14 9599646.00 3887765.00 2.47
2014-15 9077617.00 2829079.00 3.21
2015-16 11003428.00 3889899.00 2.83
2016-17 11946666.00 4165659.00 2.87

current ratio
3.21
2.83 2.87
2.47
2.23
2012-13 2013-14 2014-15 2015-16 2016-17
Current Ratio
Interpretation
It is seen from the above chart that during the year2012-13 the current ratio was 2.23,
during the year 2013-14 it was 2.47 and in the year 2014-15 it was 3.21. This shows
the current ratio increases every year but in the year 2015-16 the current ratio was
dropped to 2.83 due to increase in current liabilities. In the year2016-17 the current
ratio has increases 2.87. The current ratio is above the standard ratio i.e., 2:1. Hence it
can be said that there is enough current assets in RAYON DESIGN to meet its current
liabilities.

ACID TEST RATIO / QUICK RATIO / LIQUIDITY RATIO. (4.8)
This ratio establishes a relationship between quick/liquid assets and current liabilities.
It measures the firms’ capacity to pay off current obligations immediately. An asset is
liquid if it can be converted in to cash immediately without a loss of value;
Inventories are considered to be less liquid. Because inventories normally require
some time for realizing into cash. This ratio is also known as acid-test ratio. The
standard quick ratio is 1:1. Is considered satisfactory.
Quick Ratio = QUICK ASSETS (CURRENT ASSETS - INVENTORY)

CURRENT LIABILITIES
Year Current Inventories Quick Current Quick

Assets Assets Liabilities Ratio
2012-13 4563099.00 1532455.00 3030644.00 2041543.00 1.48
2013-14 9599646.00 2161071.00 7438575.00 3887765.00 1.91
2014-15 9077617.00 3336430.00 5741187.00 2829079.00 2.03
2015-16 11003428.00 2622901.00 8380527.00 3889899.00 2.15
2016-17 11946666.00 2360611.00 9586055.00 4165659.00 2.30

quick ratio
2.3
2.15
2.03
1.91
1.48
2012-13 2013-14 2014-15 2015-16 2016-17
Quick Ratio
Interpretation
During the year 2012-13 the quick ratio was 1.48, in the year 2013-14 it increases to
1.91 This shows the company maintains satisfactory quick ratio, in the year 2014-15
the quick ratio increases to 2.03, in the year 2015-16 it increases 2.15, in the year
2016-17 it increases 2.30, due to increase in quick assets. The quick ratio is above the
standard ratio i.e., 1:1. Hence it shows that the liquidity position of the company is
adequate.

ABSOLUTE LIQUID RATIO. (4.9)
Absolute liquid ratio may be defined as the relationship between Absolute liquid
assets and current liabilities. Absolute liquid assets include cash in hand and cash at
bank.
The standard ratio is 0.5: 1.
Absolute Liquidity Ratio = CASH & BANK BALANCE

CURRENT LIABILITIES
Years Cash & Bank Current Liabilities Absolute Liquidity Ratio
Balance
2012-13 493742.00 2041543.00 0.24
2013-14 1205660.00 3887765.00 0.31
2014-15 1033152.00 2829079.00 0.36
2015-16 1720815.00 3889899.00 0.44
2016-17 1978938.00 4165659.00 0.47

absolute liquid ratio
0.47
0.44
0.36
0.31
0.24
2005-06 2006-07 2007-08 2008-09 2009-10
Absolute Liquidity Ratio
Interpretation:
During the year 2012-13 the Absolute liquidity ratio was 0.24, during the year
2013-14 it was 0.31 and in the year 2014-15 it was 0.36, in the year 2015-16 it was
0.44 This shows the Absolute liquidity ratio increases every year but it is below the
standard ratio. In the year 2016-17 the Absolute liquidity ratio has increases 0.47.
Hence it shows that the liquidity position of the company is satisfactory.

INVENTORY TURNOVER RATIO. (4.10)
Inventory turnover ratio is the ratio, which indicates the number of times the stock is
turned over i.e., sold during the year. This measures the efficiency of the sales and
stock levels of a company. A high ratio means high sales, fast stock turnover and a
low stock level. A low stock turnover ratio means the business is slowing down or
with a high stock level.
Inventory Turnover Ratio = Net Sales

Closing Inventory
Year Net Sales Closing inventory Inventory Turnover ratio
2012-13 19542081.00 1532455.00 12.75 Times
2013-14 31321229.00 2161071.00 14.49 Times
2014-15 27894285.00 3336430.00 8.36 Times
2015-16 38496046.00 2622901.00 14.68 Times
2016-17 42345651.00 2360611.00 17.94 Times

inventory turnover ratio
17.94
14.49 14.68
12.75
8.36
2012-13 2013-14 2014-15 2015-16 2016-17
Inventory Turnover ratio
Interpretation:
It is seen from the above chart that During the year 2012-13 the Inventory t/o ratio is
12.75 times, in the year 2013-14 it increased to 14.49 times, But in the year 2014-15
it decreased to 8.36 times . There was a subsequent increase in the year 2015-16 and
2016-17 to 14.68 times and 17.94 times respectively.
This shows the company has more sales.

INVENTORY HOLDING PERIOD. (4.11)
This period measures the average time taken for clearing the stocks. It indicates that
how many days’ inventories take to convert from raw material to finished goods.
Inventory Holding Period = Days in a year

Inventory turn over ratio
Year Days in a Year Inventory Turnover Ratio Inventory Holding Period
2012-13 365 12.75 Times 28.63 Days
2013-14 365 14.49 Times 25.19 Days
2014-15 365 8.36 Times 43.66 Days
2015-16 365 14.68 Times 24.86 Days
2016-17 365 17.94 Times 20.34 Days

inventory holding period
43.66
28.63
25.19 24.86
20.34
2012-13 2013-14 2014-15 2015-16 2016-17
Inventory Holding Period in days
Interpretation:
Inventory holding period fluctuating over the years. It was 28.63 days in the year
2005-06. It decreased to 25.19 days in the year 2006-07, it increased to 43.66 days in
the year 2007-08, there was a subsequent decrease in the year 2008-09 and 2009-10 to
24.86 days and 20.34 days respectively.
This shows the company is minimizing these inventory-holding days thereby to

increase the sales.

DEBTORS / ACCOUNTS RECEIVABLES TURNOVER RATIO. (4.12)
Debtor’s turnover ratio indicates the speed of debt collection of the firm. This ratio
computes the number of times debtors (receivables) has been turned over during the
particular period.
Debtors Turnover Ratio = Credit Sales

Average Debtors
Year Credit Sales Average Debtors Debtors Turnover Ratio
012-13 19542081.00 2201381.00 8.88 Times
2013-14 31321229.00 4958527.00 6.32 Times
2014-15 27894285.00 1805948.00 15.44 Times
2015-16 38496046.00 3787274.00 10.16 Times
2016-17 42345651.00 4355365.00 9.72 Times

debtars turnover ratio
15.44
10.16 9.72
8.88
6.32
2012-13 2013-14 2014-15 2015-16 2016-17
Debtors Turnover Ratio
Interpretation:
It is clear that debtor turnover ratio fluctuating over the years. It was 8.88 times in the
year 2012-13. It decreased to 6.32 times in the year 2013-14, It again increased to
15.44 times in the year 2014-15 but it decreased to 10.16 times and 9.72 Times in the
year 2015-16 and 2016-17 respectively. This shows the company is not collecting
debt rapidly.

DEBTORS COLLECTION PERIOD. (4.13)
Debtors collection period measures the quality of debtors since it measures the
rapidity or the slowness with which money is collected from them a shorter collection
period implies prompt payment by debtors. It reduces the chances of bad debts. A
longer collection period implies too liberal and inefficient credit collection
performance.
Average Collection Period = Days in a Year

Debtors Turnover Ratio
Year Days in a Year Debtors Turnover Ratio Debtors Collection Period
2012-13 365 8.88 Times 41.10 Days
2013-14 365 6.32 Times 57.75 Days
2014-15 365 15.44 Times 23.64 Days
2015-16 365 10.16 Times 35.92 Days
2016-17 365 9.72 Times 37.55 Days

57.75
41.1
37.55
35.92
23.64
2012-13 2013-14 2014-15 2015-16 2016-17
Debtors Collection Period IN DAYS
Interpretation:
Debt collection period changing over the years. It was 41.10 days in the year 2012-13.
It increased to 57.75 days in the year 2013-14, but in the year 2014-15 it decreased to
23.64 days. There was a subsequent increase in the year 2015-16 and 2016-17 to
35.92 days and 37.55 days respectively. This shows the inefficient credit collection
performance of the company.

CREDITORS / ACCOUNTS PAYABLES TURNOVER RATIO. (4.14)
Creditor’s turnover ratio is the ratio, which indicates the number of times the debts are
paid in the year. This ratio is calculated as follows.
Creditors Turnover Ratio = Net Purchases

Average Creditors
Note: In the RAYON DESIGN, we have taken the total Purchases instead of the
credit purchases, because the credit purchases information has not available for the
calculations of CTR
Year Net Purchases Average Creditors Creditors Turnover Ratio
2012-13 11691090.00 1673515.00 6.98 Times
2013-14 17778675.00 3492127.00 5.09 Times
2014-15 18896828.00 2649781.00 7.13 Times
2015-16 23605773.00 2658999.00 8.88 Times
2016-17 27146639.00 3057849.00 8.88 Times

Creditors turnover ratio
8.88 8.88
6.98 7.13
5.09
2012-13 2013-14 2014-15 2015-16 2016-17
Creditors Turnover Ratio in times
Interpretation:
It is clear that creditor turnover ratio changing over the years. It was 6.98 times in the
year 2012-13. It decreased to 5.09 times in the year 2013-14, there was a subsequent
increase in the year 2014-15 and 2014-15 to 7.13 times and 8.88 times respectively. In
the year 20115-16 it is same as compared to 2016-17. It shows that company has
making prompt payment to the creditors.

CREDITORS PAYMENT PERIOD. (4.15)
The Creditors Payment Period represents the average number of days taken
by the firm to pay the creditors and other bills payables.
Average Payment Period = Days in a Year

Creditors Turnover Ratio
Year Days in a Year Creditors Turnover Ratio Average Payment Period
2012-13 365 6.98 Times 52.29 Days
2013-14 365 5.09 Times 71.71 Days
2014-15 365 7.13 Times 51.19 Days
2015-16 365 8.88 Times 41.10 Days
2016-17 365 8.88 Times 41.10 Days

creditars payment period
71.71
52.29 51.19
41.1 41.1
2012-13 2013-14 2014-15 2015-16 2016-17
Average Payment Period in days
Interpretation:
Average payment period changing over the years. It was 52.29 days in the year 2012-
13. It increased to 71.71 days in the year 2013-14, But in the year 2014-15 and 2015-
16 it decreased to 51.19 days and 41.10 days respectively. In the year 2016-17 it is
same as compared to 2015-16. It indicates that the company has taken the steps to
prompt payment to the creditors.

WORKING CAPITAL TURNOVER RATIO. (4.16)
This ratio indicates the number of times the working capital is turned over in the
course of the year. This ratio measures the efficiency with which the working capital
is used by the firm. A higher ratio indicates efficient utilization of working capital and
a low ratio indicates otherwise. But a very high working capital turnover is not a good
situation for any firm.
Working Capital Turnover Ratio = Net Sales

Net Working Capital
Year Net Sales Net Working Capital WCTR
2012-13 19542081.00 2521556.00 7.75 Times
2013-14 31321229.00 5711881.00 5.48 Times
2014-15 27894285.00 6248538.00 4.46 Times
2015-16 38496046.00 7113529.00 5.41 Times
2016-17 42345651.00 7781007.00 5.44 Times

working capital turnover ratio
7.75
5.48 5.41 5.44

4.46
2012-13 2013-14 2014-15 2015-16 2016-17
WCTR in times
Interpretation:
The working capital t/o ratio is fluctuating year to year that was high in the year 2012-
13, 7.75 times; there was a subsequent decrease in the year 2013-14 and 2014-15 to
5.48 times and 4.46 times. But it increases in the year 2015-16 and 2016-17 to 5.41
and 5.44 times respectively. This shows the company is utilizing working capital
effectively

STATEMENT OF CHANGE IN WORKING CAPITAL
CURRENT ASSETS
If the current assets increase as a result of this, working capital also increases.
1If the current assets decreases as a result of this working capital decreases.
CURRENT LIABILITIES
If the current liabilities increases as a result of this working capital decreases.
If the current liabilities decreases as a result of this working capital Increase.
Statement of Changes in Working Capital:
The purpose of preparing this statement is for finding out the increase or decrease in
working capital and to make a comparison between two financial years

Table 1 showing statement of change in working capital 2012-13. (4.17)
As on As on Effect on working capital

Particulars
31-3- 2012 31-3-2013 Increase Decrease
CURRENT ASSETS
Inventories 2001305.00 1532455.00 __ 468850.00
Sundry debtors 1438810.00 2201381.00 762571.00 __
Cash & Bank balance 503667.00 493742.00 __ 9925.00
Other current assets 134364.00 148822.00 14458.00 __
Loans and Advances 193081.00 186699.00 __ 6382.00
(A)Total Current Assets 4271227.00 4563099.00
CURRENT LIABILITIES
Sundry creditors 1606195.00 1673515.00 __ 67320.00
Provisions 511561.00 368028.00 143533.00 __
(B)Total Current Liabilities 2117756.00 2041543.00
(A)-(B) Net Working Capital 2153471.00 2521556.00
Increase in Working Capital 368085.00* __ __ 368085.00*
TOTAL 2521556.00 2521556.00 920562.00 930487.00

Interpretation:
In the above table, it is seen that during the year 2011-12 and 2012-13 there was a
net increase in working capital of Rs 368085.00. It indicates an adequate working
capital of RAYON DESIGN This is because of
1. Increase current assets such as Sundry debtors by Rs 762571.00, other

current assets by Rs 14458.00. And decrease in Inventories by Rs 468850.00,
Cash & Bank balance by Rs 9925.00, Loans and Advances by Rs 6382.00.
2. Increase in current liabilities such as in Sundry creditors by Rs

67320.00 and decrease in Provisions by Rs 143533.00.

Table 2: Statement of Changes in Working Capital for Year 2013-2014. (4.18)
As on 31-3- As on Effect on working capital

Particulars
2013 31-3-2014 Increase Decrease
CURRENT ASSETS
Inventories 1532455.00 2161071.00 628616.00 __
Sundry debtors 2201381.00 4958527.00 2757146.00 __
Cash & Bank balance 493742.00 1205660.00 711918.00 __
Other current assets 148822.00 78260.00 __ 70562.00
Loans and Advances 186699.00 1196128.00 1009429.00 __
CURRENT LIABILITIES
Provisions 368028.00 395638.00 __ 27610.00
TOTAL 5711881.00 5711881.00 5107109.00 5107109.00

Interpretation:
In the above table, it is seen that during the year 2012-13 and 2013-14 there was huge
net increase in working capital by Rs 3190325.00 as Compare to 2011-12 and 2012-
13. This is because
1. There is Increase in current assets such as Inventories by Rs

628616.00, Sundry debtors by Rs 2757146.00, Cash & Bank balance by Rs
711918.00, Loans and Advances by Rs 1009429.00. And decrease in other
current assets by Rs 70562.00.
2. There is Increase in current liabilities such as Sundry creditors by Rs

1818612.00, Provisions by Rs 27610.00.


Particulars
CURRENT ASSETS
Inventories 2161071.00 3336430.00 1175359.00 __
Sundry debtors 4958527.00 1805948.00 __ 3152579.00
Cash & Bank balance 1205660.00 1033152.00 __ 172508.00
CURRENT LIABILITIES
Sundry creditors 3492127.00 2649781.00 842346.00 __
Provisions 395638.00 179298.00 216340.00 __
Increase in Working Capital 536657 -------- ---------- 536657
Total 6248538.00 6248538.00 3861744.00 3861744.00

Interpretation:
In the above table, it is seen that during the year 2013-14 and 2014-15 there was also
net increase in working capital by Rs 536657.00. As compare to 2011-12 and 2012-13
This is because
1. There is Increase in current assets such as Inventories by Rs

1175359.00, other current assets by Rs 111423.00, Loans and Advances by Rs
1516276.00 and decrease in Sundry debtors by Rs 3152579.00, Cash & Bank
balance by Rs 113618.00.
2. There is Decrease in current liabilities such as Sundry creditors by Rs

842346.00, Provisions by Rs 216340.00.


Particulars
CURRENT ASSETS
Inventories 3336430.00 2622901.00 __ 713529.00
Sundry debtors 1805948.00 3787274.00 1981326.00 __
Cash & Bank balance 1033152.00 1720815.00 687663.00 __
Loans and Advances 2712404.00 2666232.00 __ 46172.00
CURRENT LIABILITIES
Provisions 179298.00 1230900.00 __ 1051602.00
TOTAL 7113529.00 7113529.00 2667512.00 2667512.00

Interpretation:
net increase in working capital by Rs 864991.00 As compare to 2012-13 and 2013-14
This is because
1. There is Increase in current assets such as Sundry debtors by Rs

1981326.00, Cash & Bank balance by Rs 687663.00, Other current assets by Rs
16523.00 and decrease in Inventories by Rs 713529.00, Loans and Advances by
Rs 46172.00.

9218.00, Provisions by Rs 1051602

Table 5 statement of change in working capital for year 2016-17. (4.21)
As on As on Effect on working capital

Particulars
31-3-2016 31-3-2017 Increase Decrease
CURRENT ASSETS
Inventories 2622901.00 2360611.00 __ 262290.00
Sundry debtors 3787274.00 4355365.00 568091.00 __
Cash & Bank balance 1720815.00 1978938.00 258123 .00 __
Other current assets 206206.00 185585.00 __ 20621.00
(A)Total Current Assets 11003428.0 0 11946666.0 0
CURRENT LIABILITIES
Provisions 1230900.00 1107810.00 123090.00 __
TOTAL 8270981.00 8270981.00 1349239.00 1349239.00

Interpretation:
net increase in working capital by Rs 1157452.00 As compare to 2013-14 and
2014-15.
This is because
1. There is Increase in current assets such as Sundry debtors by Rs

568091.00, Cash & Bank balance by Rs 258123.00 Loans and Advances by Rs
399935.00 and decrease in Inventories by Rs 262290.00, other current assets by
Rs 20621.00.

398850.00 and Decrease in previous year by 123090

SUMMARY OF FINDING AND CONCLUSION
FINDINGS. (5.1)
 Working capital of the RAYON DESIGN. was increasing and showing

positive working capital per year.
 The RAYON DESIGN has higher current and quick ratios are i.e., 2.87 and
2.30 respectively.
 Inventory turnover ratio is very low in the year 2014-15 In the year 2015-16 it
has increased by 6.32 times as compared to 2014-15 and in the last year 2016-17 it
has again increased by 3.26 times as compared to 2015-16.
 Debtor’s turnover ratio is very high in the year 2014-15. In the year 2015-16 it
has decreased by 5.28 times as compared to 2014-15 and in the last year 2016-17
it has again decreased by 0.44 times as compared to 2015-16.
 Creditor’s turnover ratio has increased in the years of 2014-15 and 2015-16. It
is same in the last year 2016-17 as compared to 2015-16.
 The current assets of company is in increasing trend it shows the growth of the
company, the liquidity position in the organisation is in effective way, it leads
to growth of organisation, and easy to meet short term debt.
 The sales of the company is in the good position it leads to growth and
development of organisation, as the sales increases the company assets
position and goodwill also increases
 The company is trying its level best to decrease the cost of production and to
reduce the expenditure incurred in the organisation by providing good quality
service to clients

 The bad debts of the company are nil because the company adopted the
concept payment and dispatch so the bad debts position is less in in the
organisation
 The company credit policy is very strong because it gives credit only to the
trustworthy customers and customers who can ability to pay at right time
 Working capital turnover ratio is very low in the year 2014-15. In the year
2015-16 it has increased by 0.95 times as compared to 2014-15 and in the last year
2016-17 it as been again increased by 0.03 times
 The maintains of inventory in rayon design is following concept of FIFO first

in first out. Help maintain the inventory effective way

CONCLUSIONS. (5.2)
The study on working capital management conducted in rayon design

bangalore. to analyze the financial position of the company. The company’s financial
position is analyzed by using the tool of annual reports from 2012-13 to 2016-17.
The financial status of Rayon design, Bangalore. is good.
In the last year the inventory turnover has increased, this is good sign for the
company. The company’s liquidity position is very good With regard to the
investments in current assets there are adequate funds invested in it. Care should be
taken by the company not to make further investments in current assets, as it would
block the funds, which could otherwise be effectively utilized for some productive
purpose. On the whole, the company is moving forward with excellent management.

SUGGESTION ANNEXURE, BIBLIOGRAPHY
SUGGESTIONS . (6.1)
 Working capital of the company has increasing every year. Profit also
increasing every year this is good sign for the company. It has to maintain it
further, to run the business long term.
 The Current and quick ratios are almost up to the standard requirement. So the
Working capital management. Of rayon design. is satisfactory and it has to
maintain it further.
 The company has sufficient working capital and has better liquidity position.
By efficient utilizing this short-term capital, then it should increase the turnover.
 The company should take precautionary measures for investing and collecting
funds from receivables and to reduce the debts.
 The company has sufficient working capital and has better liquidity position.
By efficient utilizing this short-term capital, then it should increase the turnover.
 Creditor’s turnover ratio has increasing from 2014-15 to 2015-16 and in the
last year 2016-17 it is same as compared to 2015-16. Company is making prompt
payment to its creditors. This is good sign for the company. On-time payment to
suppliers will increase the credibility of the firm. It has maintain it further to
survive in the market.
 The company is utilizing working capital effectively this is good for the
company. It has to maintain in future

ANNEXURE (6.2)
FINANCIAL STATEMENT 2016-17
PROVISIONAL BALANCE SHEET AS AT 31st MARCH, 2017
LIABILITY AMOUNT ASSETS AMOUNT
SOURCES OF FUNDS FIXED ASSETS
Owners fund 10000000 Gross block 12833179
Reserves and surplus 10711360 Less: Depreciation 611103
LOAN FUNDS Net Block 12222075
Secured Loans 3574672 Capital WIP 10872142
Unsecured Loans 3849192 CURRENT

ASSETS
Deferred tax liability 2740000 Inventories 2360611
CURRENT Sundry debtors 4555365

LIABILITIES
Sundry creditors 3057849 Cash & bank balance 1978938
Provisions 1107810 Other current assets 185585
Loans and Advances 3066167
TOTAL 35040883 35040883


ASSETS

LIABILITIES
TOTAL 32935109 32935109


ASSETS

LIABILITIES
TOTAL 23356289 23356289

6.3 Bibliography
Name of the author Title of the book Edition
H.R. Appannaiah Financial management Fourth

P.N. Reddy
B.G. Satyaprasad
M.N. Arora Management Accounting Fourth
Shashi .K. Gupta Cost and Financial Analysis Second

Neethi Gupta
Anu Putney
Shashi. K. Gupta Advanced Financial Fifth

R.K. Sharma Management
Neeti Gupta
WEBSITES:
www.Rayondesign.in
www.investopedia.com

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WORKING CAPITAL MANAGEMENT

INTRODUCTION OF TEXTILE INDUSTRY

HISTORY AND ORIGIN OF EMBROIDERY

RNS First Grade College 1

Historical applications and technique.

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professionals. Examples include Hardanger from Norway, Merezhka from Ukraine,

Concepts of computerized embroidery

RNS First Grade College 3

Some standard weights (Nm/No):

 80 very fine, e.g. for monograms on silk ties

RNS First Grade College 4

Choose regular needle size by fabric weight

RNS First Grade College 5

RNS First Grade College 6

Practiced by the Lambadi gypsy tribes of Andhra Pradesh, Banjara embroidery is a

Banni or Heer Bharat (Gujarat)

he Banni or Heer Bharat embroidery originates in Gujarat, and is practiced mainly by

RNS First Grade College 7

ABOUT THE SUBJECT. (1.2)

According to Experts, "Finance is a simple task of providing the necessary funds

RNS First Grade College 8

1. Investment Opportunities. In Finance, Investment can be explained as a

2. Profitable Opportunities. In F inance, Profitable opportunities are considered

RNS First Grade College 9

4. System of Internal Controls. Finance is concerned with internal controls

1. Public Finance. Like business organizations, governments (local, state or federal)

RNS First Grade College 10

2. Securities and Investment Analysis. this area is of interest to individuals and

3. Institutional Finance. Institutional finance deals with issues of capital formation

4. International Finance. International finance studies economic transactions among

5. Financial Management. Business firms face problems dealing with acquisition of

Owned funds (promoter contribution),

WORKING CAPITAL MANAGEMENT

RNS First Grade College 11

Working capital management

Need for Working Capital:

RNS First Grade College 12

adequate amount of working capital is required by a firm in the form of different

Classification of Working Capital:

(a) Regular or Fixed or Core or Permanent Working Capital:

difference between the fixed and variable working capital

RNS First Grade College 13

(b) Variable or Seasonal or Temporary Working Capital.

Determinants of Working Capital:

RNS First Grade College 14

(b) Production/Manufacturing Cycle: production cycle involves the time lag

(c) Business Fluctuation/Cycle: The requirements of working capital of a firm

RNS First Grade College 15

norms should be followed although it may be varied from the customer to

Components of Working Capital:

RNS First Grade College 16

The list of current assets comprises:

Inventories (including Raw Materials, Work-in-Progress and Finished Goods and

Management of working capital

RNS First Grade College 17

possible to avoid overproduction—see supply chain management,just in

Importance of working capital

(c) high profitability. According to a research conducted by Tauringana and

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It involves an element of risk that should be carefully analyzed

Debtors constitute a substantial portion of current assets of several firms. Trade

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