A STUDY ON WORKING

CAPITAL MANAGEMENT OF
SHANTHI GEARS LTD

MASTER OF COMMERCE
Submitted by
NITHYA N
(Reg. No. 112CM022)
Under the Guidance of
Mrs. M.JANANI, M.Com,
M.Phil., PGDCA.,P.hD

INTRODUCTION

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

role in keeping the wheel of the business running. Every business requires capital,
without it cant be promoted. Investment decision is concerned with investment in
current asset and fixed asset. Working capital is play a key role in a business enterprise
just as the role of heart in human body. It act as grease to run the wheel of fixed asset.

Its effective provision can ensure the success of business wheel its inefficient
management can lead not only to loss but also to the ultimate downfall of what
otherwise might be considered as a promising concern. Efficiency of a business
enterprise depends largely on its ability to its working capital. It is the part, which is
required for the day to day operations of an undertaking.

STATEMENT OF THE PROBLEM

Working capital represents that part of resources of

the business. Which makes the business to work. If
the absence of proper and efficient management of
working capital it would be difficult to achieve the
basic objective of the organization efficiency.
Researcher aims to find out the liquidity and
profitability position, how the components of current
asset are managed and also the companies short
term financial efficiency to meet its obligations.

OBJECTIVE OF THE STUDY

To analyze the working capital position.

To evaluate the profitability and liquidity
position of Shanthi Gears Ltd.
To ascertain the trend position of Shanthi
Gears Ltd.
To make suggestion for the improvement
of the financial efficiency of the company.

PERIOD OF THE STUDY

The period of study was restricted to 5

years from 2007-2008 to 2011-2012.

METHODOLOGY

Analytical Methods Were adopted for

carrying out the study. The secondary
data collected from various sources were
subject to detailed analysis.

SOURCES OF DATA

The source of data for the study is

secondary data. The related information
are collected from published annual
reports Shanthi Gears Ltd. The annual
reports containing the results of past
performance are considered to be the
most important and most reliable source
of financial data of the concern. The data
from the reports have been analyzed by
using various tools and techniques with a
view the working capital of the company.

TECHNIQUES OF ANALYSIS

The data from the reports have been

analyzed to evaluate the working capital
of the company. For analyzed the working
capital of Shanthi Gears Ltd. Ratio
analysis and trend analysis are adopted.

LIMITATION OF THE STUDY

To study is limited to a period of 5 years and

mainly focuses attention on working capital
management.
The data are mainly secondary by nature, any
bias in them reflect over the analysis and the
conclusion of the study.
For determining the growth rate(the percentage
of increase or decreasing) was considering as the
base year.
The tools and techniques used also suffer from
certain limitations by themselves and hence
naturally the same limitations apply to this study.

CHAPTER SCHEME
1. The first chapter deals with the introduction
and design of the study.
2. The second chapter deals with the review of
literature.
3. The third chapter deals with the profile of
Shanthi Gears Ltd.
4. The fourth chapter deals with analysis and
interpretation.
5. The fifth chapter deals with the findings,
suggestions and conclusion.

FINDINGS

The current ratio of the company indicates that

the liquidity position is satisfactory.
The liquidity ratio of the company is very
satisfactory. It indicates that the company has the
ability to meet liquidity liabilities in time.
The absolute liquid is satisfactory. This is due to
increase of cash and decrease of current liabilities.
Expenses ratio implies that the company can take
necessary measure to reduce its expenses.
Operating profit show that fluctuating trend.
Hence the company should improve their
operating profits.

Cont.,

Fixed asset turnover ratio indicates that the company

has been fluctuating trend.
Working capital turnover ratio implies that the
current asset are more than the current liabilities. Its
prove to be satisfactory.
current asset turnover implies that the company has
been reducing trend. Hence the company should
concentrate their current asset.
Ratio of net working capital to current liabilities
implies that the company should reduce the
efficiency in cash turnover ratio.
Debtors turnover ratio show that the company has it
is satisfactory.

SUGGESTIONS

After analyzing the data the following suggestions are

made to improve the working capital of the company.
The company should take necessary step to reduce
their expenses.
Working capital turnover ratio is decreasing
throughout the year. So the company should take
necessary action to improve their working capital.
It is suggested to improve the same inventory level
policy.
The allowed average collection period and the
payment period can be changing throughout the
study period. So the company should concentrate
their collection period.

CONCLUSION

The present study entitled A Study on Working Capital Management

of Shanthi Gears Ltd, Singanallur,Coimbatore was undertaken to
analyze the Working Capital Management of Shanthi Gears Ltd,
Coimbatore. Working capital turnover ratio is decreasing throughout
the year. So the company should take necessary action to improve
their working capital. Hence suggestions are offered to the company
for taking appropriate measures to improve its functional efficiency
so as achieve the optimum productivity. concluding it lies wholly in
the interest of the company to implement the suggestions offered in
the study taking them into consideration in the process of decision
making.