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The need for Cash to run the day-to-day business activities cannot be overemphasized. One can hardly find a business firm, which does not require any amount of Cash. Indeed, firms differ in their requirements of the Cash.

A firm should aim at ma imizin! the wealth of its shareholders. In its endeavor to do so, a firm should earn sufficient return from its operation. "arnin! a steady amount of profit requires successful sales activity. The firm has to invest enou!h funds in current asset for !eneratin! sales. Current asset are needed because sales do not convert into cash instantaneously. There is always an operatin! cycle involved in the conversion of sales into cash. The ob#ectives are to analyze the Cash mana!ement and to determine efficiency in cash, inventories, debtors and creditors. $urther, to understand the liquidity and profitability position of the firm. These ob#ectives are achieved by usin! ratio analysis and then arrivin! at conclusions, which are important to understand the efficiency % inefficiency of Cash. It was noticed in the study that the company had utilized its Cash efficiently and can also try to !et more effective values by wor&in! on it. The cash required to meet out the current liabilities is maintained at a normal level that shows the company follows an avera!e policy.

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Name of the Table Cash from operation Cash flow statement Inventories -undry debtors Cash%ban& /oans 0 Advances Current liabilities Current Assets Current Asset to $i ed Asset Current Asset to Total Asset 3et wor&in! capital 4atio Inventories to Current Asset 4atio -undry 5ebtors to Current Asset 4atio /oans 0 Advances to Current Asset 4atio Cash to Current Asset 4atio Cash to 7or&in! Capital 4atio Cash to -ales 4atio Cash 4atio Current 4atio /iquidity 4atio -uper 8uic& 4atio 7or&in! Capital Turnover 4atio Inventory Turnover 4atio 5ebtors Turnover 4atio 5ebt Collection 9eriod Cash Interval :easure 4atio

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LIST OF CHARTS

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Name of the &harts

Page

Current Asset to $i ed Asset Current Asset to Total Asset 3et wor&in! capital 4atio Inventories to Current Asset 4atio -undry 5ebtors to Current Asset 4atio /oans 0 Advances to Current Asset 4atio Cash to Current Asset 4atio Cash to 7or&in! Capital 4atio Cash to -ales 4atio Cash 4atio Current 4atio /iquidity 4atio -uper 8uic& 4atio 7or&in! Capital Turnover 4atio Inventory Turnover 4atio 5ebtors Turnover 4atio 5ebt Collection 9eriod Cash Interval :easure 4atio

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Cash is the important current asset for the operations of the business. Cash is the basic input needed to &eep the business runnin! on a continuous basisB it is also the ultimate output e pected to be realized by sellin! the service or product manufactured by the firm. The firm should &eep sufficient cash, neither more nor less. Cash shorta!e will disrupt the firmCs manufacturin! operations while e cessive cash will simply remain idle, without contributin! anythin! towards the firmCs profitability. Thus, a ma#or function of the financial mana!er is to maintain a sound cash position. Cash is the money which a firm can disburse immediately without any restriction. The term cash includes coins, currency and cheques held by the firm, and balances in its ban& accounts. -ometimes near-cash items, such as mar&etable securities or ban& times deposits, are also included in cash. The basic characteristic of near-cash assets is that they can readily be converted into cash. <enerally, when a firm has e cess cash, it invests it in mar&etable securities. This &ind of investment contributes some profit to the firm.

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-tandard polymer is its ori!inal form and structure was founded and started in the year (**, by its founder :r. $rancis, father of the present inactive partner :r. :arie susai ra#. The company was then manufacturin! only mono-layer films and printed pouches for ordinary hand-pac&in! of day-to-day sellin! commodities. The company faced problems in the initial two years in achievin! its turnover tar!ets. It then !radually pic&ed up when bul& orders from tamilnadu dairy sectors could be established. The company possessed a monolayer e trudsion plant and a fle o-!raphic printer. -littin! and pouchin! were done by manual processes. Contemporarily another company under the name :ylon plastics was functionin!. It was founded and run by the present production mana!er :r. 3atara#anCs father, who was a thorou!h &nowled!ed person in industrial sector. =efore havin! started his own venture, he was a depute of 9ondicherry !overnment and was entrusted to investi!ate the possibilities of enhancin! the industrial infrastructure of 9ondicherry. ;e could !ain lot of e perience in this field durin! his service, which motivated him to start an industry of his own. The industry he chose was pac&in! industry, where pac&in! materials li&e multi-layer polythene films and pouches made from these films for pac&in! of food products were in !reat demand. ;e was also convinced about the increasin! future potential for the demand of this type of pac&in! and hence his decision to start this industry. The company was then en!a!ed in the manufacture of multi-layer polythene films and )-. colour printed pouches. In the year ),,. mylon plastics was facin! financial problems to run the company further. The aidin! =an& was unwillin! to forward funds for the maintenance and functionin! of the company. -o there arose a compulsion, when mylon plastics have to see& financin! partners. It was also decided for the fusion of both the companies. i.e., :ylon plastics and standard polymers. Thin!s were re-or!anized in deputation and functional responsibilities of personals.

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:%s. -tandard polymers private limited can be declared as a medium scale industry and as it stands today was or!anized and re-established in the year ),,' with five partners, amon! whom three are active and the rest two are inactive. The three active partners have ta&en char!e and handlin! of the departments. :r. T. Chandrase&aran - Administration, 9urchase 0 Overall inchar!e. :r. 3atara#an :r. -enthil Dumar - 9roduction and ;uman 4esources. - :ar&etin! and -ales.

:r. :arie -usai 4a# and :r. -elvanaya!am and other miscellaneous duties.

TodayCs profile of :%s -tandard 9olymers private limited posses a picture of a well established and pro!ressively functionin! company. The company with a production volume of 1, tonnes a month in the year ),,. has reached a capacity of (1, metric tones as per today. The production ta&es place in three shifts and even then the volume of pendin! orders has raised to its brim. The company is capable of manufacturin! pac&in! covers of hi!h standards for industrial pac&in!. The present financial turnover ran!es upto two crores a month. The companyCs merits are well e posed and its reputation respectfully reco!nized by its customers and =an&ers. The ma#or customers areB

:4$ /td., Derala, Tiruvothiyur and 9ondicherry.

9arrys confectionery /imited.

3utrine confectionary company E9F /imited.

7inner 5airy E9F /imited.

-39 5airy mil&, :adurai.

Aiswariya :il& products, @irudhachalam.

-arva -eva dairy federation /imited. E-eva :il&F.

-arva seva dairy federation E-arvodaya :il&F.

<.D 5airy, Than#avur E5istrictF Durichi.

=ala#i Oil :il&, @anur E/ion =rand 5ouble !roundnut oilF.

-outh India flour mills /imited, Chennai.

-.: 5eter!ents E9F /imited, Coimbatore.

Dovilpatti la&shmi roller flour mills /imited, <an!ai&ondan.

:eena&shni foods India private /imited, Chennai.

@e!a mar&etin! E9F /imited, 5indu!al.

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The company with its subsidiary units of production. Administration and other facilities are placed to!ether in a comple , located at Odiampet, a villa!e lyin! on the outs&irts of 9ondicherry and about () Dms form 9ondicherry centre. The company is situated amidst a!ricultural lands and well accessible by that road. =us service from and to 9ondicherry is available twice a day. The comple is well planned and placed in an area of about ).' acres of land. The administrative premises face the road side and its architectural desi!n presents a well established company. The fronta!e upto road is !ardened with flower plants and !reenery. Also a par&in! area inside the premises is provided. The production units are placed behind and ad#oinin! the administration buildin!s. ;ousin!s for production units are well desi!ned to comply with factory requisites. The housin!s are spacy for the installation of machines and free movements of the wor&ers. Adequate numbers of windows provide free circulation of air and facilitate for adequate li!ht and ventilation. Access to different units is also not complicated. @ehicle approaches for the purposes of loadin! and unloadin! area unhindered. The bac&yard is empty and lar!e enou!h to accommodate further buildin!s. 9lantation of many trees all around !ives enou!h shade and flow of pleasant breeze, not only for the employees but also for those visitin! the comple . 7ater availability is from =ore-wells, installed in the premises itself. 9ower supply is tapped from the electrical mains runnin! alon! the road.

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It was understand durin! our conversations with the :ana!in! 5irector that the company in the present circumstances requires neither to alter nor to advance the e istin! production technolo!y and structure. The technolo!y adopted fulfills the requirements of todayCs pac&in! industry. The company is able to manufacture even the most sophisticated forms of pac&in! covers. The volume of continuin! orders, in spite of competitors tends not to decrease. The company has adopted itself to suit the size, or!anization structure and production capacity. The continuin! monthly turnover of 4s. ( crore and above and the increasin! demand for its products puts :%s -tandard 9olymers in a comfortable position of maintainin! the company without much hazards. The quality of products is in par with hi!h standards and well accepted by its customers. There is no scarcity in the availability of raw-material. Accordin!ly there is no

necessity in see& of other technolo!ies. Thou!h shorta!e of labour force arises now and then, the mana!ement is able to master this problem throu!h labour a!encies. In accordance to Indian labour laws and in consideration of hu!e manpower, there is also no necessity to !o in for further automatisation. Only in consideration of increasin! demand, the administration has decided to put up another production unit, whose housin! is under construction. 9recisely spea&in!, the company aims at maintainin! its reputation of servin! its customers to their satisfaction and free the company at the earliest from its e istin! financial encumbrance.

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=oth the companies, :ylon 9lastics and previous standard polymers were re-or!anized and formed into one company, which is todayCs -tandard 9olymers. The funds invested for the establishment was + crores, composin! ofB aF partner share of ( crore and bF ban& finance of further ) crores =esides, the company when established possessed 4s. ) crores in machineries, buildin!s and others as capital asset. The share capital of 4s. )', ,,,,,, of each partnership is constituted of )',,,, equity share of 4s. (,, each, with powers to increase, classify, divide, subdivide and consolidate the same with the power of attachin! such ri!hts of preferential, deferred or otherwise as the case may be, determined from time to time. The =an& for business activities of :%s -tandard 9olymers is Indian Overseas =an& at 4eddiearpalayam, 9uducherry.

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.eneral +9ecuti:es

Administrative

-ales

9roduction

Accounts

Auditor :ana!er -alesman 5ata "ntries ;uman 4esource Collection -upervisor -ecurity
+ " truder operators + printer operators + -litter operators

-upervisor

Cashier

;elpers

/.; N++0 *)% T,+ $T103

The importance of Cash mana!ement in any industrial concern cannot be overstressed. >nder the present inflationary condition, mana!ement of Cash is perhaps more important than even mana!ement of profit and this requires !reatest attention and efforts of the finance mana!er. It needs vi!ilant attention as each of its components require different types of treatment and it throws constant attention on e ercise of s&ill and #ud!ment, awareness of economic trend etc, due to ur!ency and complicacy the vital importance of Cash. The anti-inflationary measure ta&en up by the <overnment, creatin! a ti!ht money condition has placed wor&in! capital in the most challen!in! zone of mana!ement and it requires a unique s&ill for its mana!ement. Today, the problem of mana!in! Cash has !ot the reco!nition of separate entity, so its study and mana!ement is of ma#or importance to both internal and e ternal analyst to #ud!e the current position of the business concerns. ;ence, the present study entitled G"n "nalysis on &ash -anagement< has been ta&en up.

CHAPTER II REVIEW OF LITERATURE

-eaning:
Cash is the money which a firm can disburse immediately without any restriction. The term cash includes coins, currency and cheques held by the firm, and balances in its ban& accounts. -ometimes near-cash items, such as mar&etable securities or ban& times deposits, are also included in cash. The basic characteristic of near-cash assets is that they can readily be converted into cash.

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&ash management is concerned with the mana!in! ofH EiF Cash flows into and out of the firm, EiiF Cash flows within the firm, and EiiiF Cash balances held by the firm at a point of time by financin! deficit or investin! surplus cash. It can be represented by a cash mana!ement cycle. -ales !enerate cash which has to be disbursed out. The surplus cash has to be invested while deficit this cycle at a minimum cost. At the same time, it also see&s to achieve liquidity and control. Cash mana!ement assumes more importance than other current assets because cash is the most si!nificant and the least productive asset that a firmCs holds. It is si!nificant because it is used to pay the firmCs obli!ations. ;owever, cash is unproductive . >nli&e fi ed assets or inventories, it does not produce !oods for sale. Therefore, the aim of cash mana!ement is to maintain adequate control over cash position to &eep the firm sufficiently liquid and to use e cess cash in some profitable way. Cash mana!ement is also important because it is difficult to predict cash flows accurately, particularly the inflows, and there is no prefect coincidence between the inflows and outflows of cash. 5urin! some periods, cash outflows will e ceed cash inflows, because payments for ta es, dividends, or seasonal inventory build up. At other times, cash inflow will be more than cash payments because there may be lar!e cash sales and debtors may be realized in lar!e sums promptly. $urther, cash mana!ement is si!nificant because cash constitutes the smallest portion of the total current assets, yet mana!ementCs considerable time is devoted in mana!in! it. In recent past, a number of innovations have been done in cash

mana!ement techniques. An obvious aim of the firm these days is to mana!e its cash affairs in such a way as to &eep cash balance at a minimum level and to invest the surplus cash in profitable investment opportunities. In order to resolve the uncertainty about cash flow prediction and lac& of synchronization between cash receipts and payments, the firm should develop appropriate strate!ies for cash mana!ement. The firm should evolve strate!ies for cash mana!ement. The firm should evolve strate!ies re!ardin! the followin! four facets of cash mana!ement. &ash planning: Cash inflows and outflows should be planned to pro#ect cash surplus or deficit for each period of the plannin! period. Cash bud!et should be prepared for this purpose. -anaging the cash flows: The firm should decide about the properly mana!ed. The cash inflows should be accelerated while, as far as possible, the cash outflows should be decelerated. )ptimum cash le:el: the firm should decide about the appropriate level of cash balances. The cost of e cess cash and dan!er of cash deficiency should be matched to determine the optimum level of cash balances. (n:esting surplus cash: The surplus cash balances should be properly invested to earn profits. The firms should decide about the division of such cash balances between alternative short-term investment opportunities such as ban& deposits, mar&etable securities, or inter-corporate lendin!.

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The firmCs need to hold cash may be attributed to the followin! three motivesH The transactions motive The precautionary motive The speculative motive

T%"N$"&T()N -)T(7+ The transactions motive requires a firm to hold cash to conduct its business in the ordinary course. The firm needs cash primarily to ma&e payments for purchases, wa!es and salaries, other operatin! e penses, ta es, dividends etc. The need to hold cash would not arise

if there were perfect synchronization between cash receipts and cash payments, i.e., enou!h cash is received when the payment has to be made. =ut cash receipts and payments are not perfectly synchronized. $or those periods, when cash payments e ceed cash receipts, the firm should maintain some cash balance to be able to ma&e required payments. $or transactions purpose, a firm may invest its cash in mar&etable securities. >sually, the firm will purchase securities whose maturity corresponds with some anticipated payments, such as dividends or ta es in the future. 3otice that the transactions motive mainly refers to holdin! cash to meet anticipated payments whose timin! is not perfectly matched with cash receipts. P%+&"1T()N"%3 -)T(7+ The precautionary motive is the need to hold cash to meet contin!encies in the future. It provides a cushion or buffer to withstand some une pected emer!ency. The precautionary amount of cash depends upon the predictability of cash flows. If cash flows can be predicted with accuracy, less cash will be maintained for an emer!ency. The amount of precautionary cash is also influenced by the firmCs ability to borrow at short notice when the need arises. -tron!er the ability of the firm to borrow at short notice, less the need for precautionary balance. The precautionary balance may be &ept in cash and mar&etable securities. The amount of cash set aside for :ar&etable securities play an important role here.

precautionary reasons is not e pected to earn anythin!B the firm should attempt to earn some profit on it. -uch funds should be invested in hi!h-liquid and low-ris& mar&etable securities. 9recautionary balances should, thus, be held more in mar&etable securities and relatively less in cash.

$P+&1'"T(7+ -)T(7+ The speculative motive relates to the holdin! of cash for investin! in profit-ma&in! opportunity to ma&e profit may arise when the security prices chan!e. The firm will hold cash, when it is e pected that interest rates will rise and security prices will fall. -ecurities can be purchased when the interest rate is e pected to fallB the firm will benefit by the

subsequent fall in interest rates and increase in security prices. The firm may also speculate on materials prices. If it is e pected that materials prices will fall, the firm can postpone materials purchasin! and ma&e purchases in future when pric.e actually falls. -ome firms may hold cash for speculative purposes. =y and lar!e, business firms do not en!a!e in speculations. Thus, the primary motives to hold cash and mar&etable securities areH the transactions and the precautionary motives.

&"$, P'"NN(N. Cash flows are inseparable parts of the business operations of firms. A firm needs cash to invest in inventory, receivable and fi ed assets and to ma&e payment for operatin! e penses in order to maintain !rowth in sales and earnin!s. It is possible that firm may be ma&in! adequate profits, but may suffer from the shorta!e of cash as its !rowin! needs may be consumin! cash very fast. The Ipoor cashC position of the firm cash is corrected if its cash needs are planned in advance. At times, a firm can have e cess cash may remain idle. A!ain, such e cess cash outflows. -uch e cess cash flows can be anticipated and properly invested if cash plannin! is resorted to. Cash plannin! is a technique to plan and control the use of cash. It helps to anticipate the future cash flows and needs of the firm and reduces the possibility of idle cash balances E which lowers firmCs profitability F and cash deficits Ewhich can cause the firmCs failureF. Cash plannin! protects the financial condition of the firm by developin! a pro#ected cash statement from a forecast of e pected cash inflows and outflows for a !iven period. The forecasts may be based on the present operations or the anticipated future operations. Cash plans are very crucial in developin! the overall operatin! plans of the firm. Cash plannin! may be done on daily, wee&ly or monthly basis. The period and frequency of cash plannin! !enerally depends upon the size of the firm and philosophy of mana!ement. /ar!e firms prepare daily and wee&ly forecasts. :edium-size firms usually prepare wee&ly and monthly forecasts. -mall firms may not prepare formal cash forecasts because of the non-availability of information and small-scale operations. =ut, if the small firms prepare cash pro#ections, it is done on monthly basis. As a firm !rows and business operations become comple , cash plannin! becomes inevitable for its continuin! success.

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(. ":ailability of short-term creditH To avoid holdin! unnecessary lar!e balances of cash, most firms attempt to ma&e arran!ements at borrow money is case of une pected needs. 7ith such an a!reement, the firm normally pays interest only durin! the period that the money is actually used. ). -oney market ratesH If money will brin! a low return a firm may choose not to invest it. -ince the loss or profit is small, it may not be worth the trouble to ma&e the loan. On the other hand, if interest rates are very hi!h, every e tra rupee will be invested. +. 7ariation in cash flowsH -ome firms e perience wide fluctuation in cash flows as a routine matter. A firm with steady cash flows can maintain a fairly uniform cash balance.

.. &ompensating balanceH If a firm has borrowed money from a ban&, the loan a!reement may require the firm to maintain a minimum balance of cash in its accounts. This is called compensatin! balance. In effect this requires the firm to use the services of ban& a !uaranteed deposit on which it pays no interest. The interest free deposit is the ban&Cs compensation for its advice and assistance.

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The mana!ement should, after &nowin! the cash position by means of the cash bud!et, wor& out the basic strate!ies to be employed to mana!e its cash.

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The cash cycle refers to the process by which cash is used to purchase materials from which are produced !oods, which are them sold to customers. Cash cycleJAvera!e a!e of firmCs inventory

K5ays to collect its accounts receivables -5ays to pay its accounts payable. The cash turnover means the numbers of times firmCs cash is used durin! each year. +1, Cash turnover J ---------------Cash cycle The hi!her the cash turnover, the less cash the firm requires. The firm should, therefore, try to ma imize the cash turn.

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aF Prompt #illing: =y preparin! and sendin! the bills promptly, without a time lo! between the dispatch of !oods and sendin! the bills, a firm can ensure earlier remittance.

bF +9peditious collection of che?uesH An important aspect of efficient cash mana!ement is to process the cheques receives very promptly. cF &oncentration #ankingH Instead of a sin!le collection center located at the company headquarters, multiple collection centers are established. The purpose is to shorten the period between the time customers mail in their payments and the time when the company has use of the funds are then to a concentration ban& L usually a disbursement account. dF 'ock-#o9 $ystemH 7ith concentration ban&in!, a collection center receives remittances, processes them and deposits them in a ban&. The purpose is to loc&-bo system is to eliminate the time between

the receipt of remittances by the company and their deposit in the ban&. The company rents a local post office bo and authorizes its ban& in each of these cities to pic& up remittances in the bo . The ban& pic&s up the mail several times a day and deposits the cheque in the companyCs accounts. The cheques are recorded and cleared for collection. The company receives a deposits the cheque in the companyCs accounts. The cheques are recorded and cleared for collation. The company receives a deposit slip and a lift of payments. This procedure frees the company from handlin! a depositin! the cheques.

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a! $tretching "ccounts Payable A firm should pay its accounts payables as late as possible without dama!in! its credit standin!. It should, however, ta&e advanta!es of the cash discount available on prompt payment.

b! &entralized 0isbursement One procedure for ri!htly controllin! disbursements is to cenrealise payables in to a sin!le account, presumably at the companyCs headquarters. -uch an arran!ement would enable a firm to delay payments and can serve cash for several reasons. $irstly, it increases transit time. -econdly, if a firm has a centralized ban& account, a relatively smaller total cash balances will be needed. c! #ank 0raft >nli&e an ordinary cheque, the draft is not payable on demand. 7hen it is presented to the issuerCs ban& for collection, the ban& must present it to the issuer for acceptance. The funds then are deposited by the issuin! firm to cover payments of the draft. =ut suppliers prefer cheques. Also, ban& imposes a hi!her service char!e to process them since they require special attention, usually manual.

d! Playing the float The amount of cheques issued by the firm but not paid for by the ban& is referred to as the Gpayment floatM. The differences between Gpayment floatM and Gcollection floatM are the net float. -o, if a firm en#oys a positive Gnet floatM, it may issue cheques even if it means havin! an ever drown account in its boo&s. -uch an action is referred to as Gplayin! the floatM, within limits a firm can play this !ame reasonably safely. Thus mana!ement of cash becomes essential and it should be seen to, that neither e cessive nor inadequate cash balances are maintained.

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The cash flow analysis is done with the help of cash flow statement. A cash flow statement is a statement depictin! chan!es in cash position from one period to another. It is an important plannin! tool. Cash flow statement !ives a clear picture of the source of cash, the uses of cash and the net chan!es in cash. The primary purpose of cash flow statement is to show that as to where from the cash to be acquired and where to use them.

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A Cash flow analysis is an important financial tool for the mana!ement. Its chief advanta!es are as follows. /. ,elps in efficient cash management Cash flow analysis helps in evaluatin! financial policies and cash position. Cash is the basis for all operation and hence a pro#ected cash flow statement will enable the mana!ement to plan and co-ordinate the financial operations properly. The mana!ement can &now how

much cash is needed from which source it will be derived, how much can be !enerated, how much can be utilized. 2. ,elps in internal financial management Cash flow analysis information about funds, which will be available from operations. This will helps the mana!ement in repayment of lon!-term debt, dividend policies etc., ;. 0iscloses the mo:ements of &ash Cash flow statement discloses the complete picture of cash movement. The increase in and decrease of cash and the reasons therefore can be &nown. It discloses the reasons for low cash balance in spite of heavy operation profits on for heavy cash balance in spite of low profits.

A. 0iscloses success or failure of cash planning The e tent of success or failure of cash plannin! be &nown by comparin! the pro#ected cash flow statement with the actual cash flow statement and necessary remedial measures can be ta&en.

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One of the primary responsibilities of the financial mana!er is to maintain a sound liquidity position of the firm so that the dues are settled in time. The firm needs cash to purchase raw materials and pay wa!es and other e penses as well as for payin! dividend, interest and ta es. The test of liquidity is the availability of cash to meet the firmCs obli!ations when they become due. A firm maintains the operatin! cash balance for transaction purposes. It may also carry additional cash as a buffer or safety stoc&. The amount of cash balance will depend on the ris&-return trade-off. If the firm maintains small cash balance, its liquidity position wea&ens, but its profitability improves as the released funds can be invested in profitable opportunities Emar&etable securitiesF. 7hen the firm needs cash, it can sell its &eeps hi!h

cash balance, it will have a stron! liquidity position but its profitability will be low. The potential profit fore!one on holdin! lar!e cash balance is an opportunity cost to the firm. The firm should maintain optimum L #ust to enou!h, neither too much nor too little L cash balance. ;ow to determine the optimum cash balance if cash flows are predictable and if they are not predictable.

)ptimum cash balance under certainty #"1-)'5$ -)0+'

The =aumol model of cash mana!ement provides a formal approach for determinin! a firmCs optimum cash balance under certainty. It considers cash mana!ement similar to an inventory mana!ement problem. As such, the firm attempts to minimize the sum of the cost of holdin! cash Einventory of cashF and the cost of convertin! mar&etable securities to cash.

The baumolCs model ma&es the followin! assumptionsH The firm is able to forecast its cash needs with certainty. The firmCs cash payments occur uniformly over a period of time. The opportunity cost of holdin! cash is &nown and it does not chan!e over time. The firm will incur the firm sells securities and starts with a converts securities to cash.
Cash balance

C%)

Avera!e Time , T( T) T+

=aumolCs model for cash balance

Cost trade-offH =aumolCs model

)ptimum &ash #alance under uncertainty: The -iller-)rr -odel

The limitation of the =aumol model is that it does not allow the cash flows to fluctuate. $irms in practice do not use their cash balance uniformly nor are they able to predict do not use their cash inflows and outflows. The :iller-Orr model overcomes this shortcomin! and allows for daily cash flow variation. It assumes that net cash flows are normally distributed with a zero value of mean and a standard deviation. The :O model provides for two control limits-the upper control limit and the lower control limit as well as a return point. If the firmCs cash flows fluctuate randomly and hit the upper limit, then it buys sufficient mar&etable securities to come bac& to a normal level of cash balance Ethe return pointF. -imilarly, when the firmCs cash flows wander and hit the lower limit, it sells sufficient mar&etable securities to brin! the cash balance bac& to the normal level Ethe return pointF

/. The Latest Trends in North American Cash Management

-teve 7ilder, -enior @ice 9resident and A9:or!an Chase Treasury -ervices 7estern ;emisphere Corporate and $inancial Institutions -ales " ecutive

The

Drive

towards

Efficiency,

Transparency,

Standardization and Integration

Fragmentation is a key driver of corporate inefficiency. This has long been the case in the movement of paper checks and related remittance documents within the U.S. payments system, and the flow of goods, trade-related documents and funds within the broader global supply chain. As corporate treasurers pursue end-to-end automation for treasury and supply-chain activities, they understand that to achieve straight-through processing and the subse!uent optimi"ation of working capital globally they must integrate the payment and information components of a transaction. #ased on this drive for efficiency, three interrelated trends are shaping $orth America%s cash management landscape today. First, corporate treasurers and their banks are driving the convergence towards electronic payments to better integrate money and information flows. Second, there is a parallel convergence in international trade towards open account, electronic payment and the automation of information flows, as treasury pushes to integrate the physical and financial supply chains. &n both fronts, solutions are emerging to digiti"e paper wherever it persists. Third, as companies continue to e'pand globally and information and money flows follow treasury is focused on standardi"ing

processes and strengthening internal controls. The ob(ective is to create transparency across a range of business activities to manage risk and ensure financial reporting integrity in compliance with Sarbanes&'ley.

2. &"$, -"N".+-+NT "N0 &"P(T"' #10.+T(N. P%"&T(&+$

@ir!inia department of transportation 4ichmond, @ir!inia.

Our review has found that Transportation has made si!nificant pro!ress or completed most of the recommendations made in our ),,) special report. Complete implementation of these chan!es will ta&e at least four to five years. Over the last two years, TransportationCs mana!ement has started not only implementin! recommendations, but more importantly be!un implementin! a chan!e in the corporate and cultural structure of the or!anization. The success of chan!e with Transportation will depend on whether a true structural chan!e in or!anization ta&es place. The measure of success will require a substantial lon!-term commitment by mana!ement to not only ma&in! the chan!e, but to prevent bac&slidin! into TransportationCs old approaches. In some ways, the accomplishments to date are the easy part of chan!e. The harder part lays ahead in fundin! and implementin! new systems, continuin! to ma&e the chan!es to !et closer to capital bud!etin! process, and overcomin! TransportationCs corporate and cultural structure to improve pro#ect mana!ement. The success of this effort is hi!hly dependent on mana!ement !uidance and direction, and current mana!ement has demonstrated their dedication towards this effort. If any mana!ement chan!e occurs, it is essential that they have the same commitmentB otherwise, pro!ress may be ne!atively impacted.

Transportation is restorin! fiscal accountability by implementin! several bud!etary and financial chan!es, includin! adoptin! a debt mana!ement policy and model. Additionally, they are establishin! a methodolo!y to identify statewide transportation priorities and developin! pro#ect mana!ement policies. Transportation has completed several bud!etary and financial chan!es, includin! attempts to ma&e the -i -?ear Improvement 9ro!ram a realistic mana!ement tool and reduce the pro#ects with a deficit status. ;owever, to ensure accurate matchin! on cash inflows and outflows, Transportation must be!in estimatin! the cost of pro#ects by fiscal year. Transportation does not currently have sufficient controls and processes in place to mana!e the rate at which they spend funds. $or ma#or pro#ects, Transportation has be!un assi!nin! a pro#ect mana!ement team that follows a pro#ect from its inception to its completion. ;owever, it is still too early in the process to determine if the policies put into place will provide Transportation with better pro#ect mana!ement. ;owever, the actions to date are those considered best practices in both the private and public for lar!e or!anizations. :aintenance is still an area of concern at Transportation. The !rowin! maintenance requirements and the limited ability to bud!et on a needs-based approach increases the ris& of inappropriately applied fundin!. Once the asset mana!ement system is fully implemented a needs-based approach will be possible and Transportation will be able identify and prioritize maintenance pro#ects.

;. -s. 8atherine -. 'andmann &ontroller @ashington 1ni:ersity in $t. 'ouis &ampus.

This final report presents the results of our audit of the cash mana!ement procedures used by 7ashin!ton >niversity in -t. /ouis E>niversityF to control the funds paid by the 9ayment :ana!ement -ystem E9:-F durin! the three years ended Aune +,, ),,,. 7e found that the >niversity did not have adequate policies and procedures in place to monitor daily cash balances and to precisely calculate interest earned on positive daily cash balances. In monitorin! the daily cash balances, the >niversity did not consider E(F outstandin! chec&s and E)F overhead costs as incurred. In addition, the >niversity did not use the appropriate interest rates when calculatin! the interest remitted to the $ederal !overnment. 7e determined that the amount of e cess interest remitted by the >niversity was comparable to the amount of interest that should have been remitted if appropriate procedures had been used. 7e believe that this occurrence was a coincidence due to off settin! factors in the >niversityCs calculation of the amount to be remitted. 7e are recommendin! that the >niversity revise its written policies and procedures to effectively monitor the daily cash balance and to accurately compute the $ederal remittance. 7e made four specific recommendations for improvin! the >niversityCs cash mana!ement procedures. The >niversity concurred with two and is still evaluatin! the third. ;owever, they did not accept our fourth recommendation. The >niversityCs response is included in its entirety as Appendi A.

..

&ash -anagement by +nid #e:erly 6ones

It is a Financial Overview for School Administrators is a succinct overview of public

school finance, presentin! concepts of importance to both site-based and central-office leaders. A pra!matic blend of theoretical concepts and factual information provides readers with an e cellent synopsis of public school finance.
The economics and politics of education are discussed in the conte't of human capital and the role of public education in the United States as an investment in human capital. Author )nid *ones, who is an associate professor of school finance at Fayetteville State University, stresses the importance of investment in human capital and its necessity for an educated, productive workforce. The chapter on ade!uacy and e!uity provides an understanding of the two concepts so fre!uently debated in school finance. As more states struggle with funding issues, this sub(ect matter is timely and useful. +ash ,anagement seems intended for use nationwide with information on basic school business procedures, including budgeting and financing of school facilities. The use of lay terminology and relevant e'amples make the book valuable both in graduate school classes on educational leadership and in the hands of practicing administrators.

ECash :ana!ementH A $inancial Overview for -chool Administrators , by "nid =everley Aones, -carecrow 9ress, /anham, :d., ),,(F

&,"PT+% (((

)#6+&T(7+$ )* T,+ $T103 Primary )bjecti:e:

To analyze the cash mana!ement of -tandard 9olymers .

$econdary )bjecti:e:
To find out the liquidity position of the concern throu!h ratio analysis. To study the !rowth of standard polymers in terms of cash flow statement. To ma&e su!!estion and recommendation to improve the cash position of standard polymers.

C;A9T"4-I@ RESEARCH METHODOLOGY

4.1 RESEARCH

4esearch is a process in which the researchers wish to find out the end result for a !iven problem and thus the solution helps in future course of action. The research has been defined as GA careful investi!ation or enquiry especially throu!h search for new facts in branch of &nowled!eM

4.2 RESEARCH DESIGN

The research desi!n used in this pro#ect is Analytical in nature the procedure usin!, which researcher has to use facts or information already available, and analyze these to ma&e a critical evaluation of the performance.

4.3 DATA COLLECTION

Primary o!rces (. 5ata are collected throu!h personal interviews and discussion with $inance" ecutive. ). 5ata are collected throu!h personal interviews and discussion with :aterial 9lannin!- 5eputy :ana!er. Secondary Source (. $rom the annual reports maintained by the company. ). 5ata are collected from the companyCs website. +. =oo&s and #ournals pertainin! to the topic.

A.A T))'$ 1$+0 (N T,+ "N"'3$($ Cash flow statement Trend analysis 4atio analysis.

A.B Period of study

The present study has ta&en into account $ive years viz., ),,)-),,+ to ),,1-),,6.

&,"PT+% 7

0"T" "N"'3$($ C (NT+%P%+T"T()N

B./ &"'&1'"T()N$ )* *1N0$ *%)- )P+%"T()N "N0 &"$, *%)- )P+%"T()N *)% T,+ 3+"% +N0+0 (%s in Thousand!
Particulars 3et 9rofit 5epreciation durin! the year **)(*')! A55H -undry debtors 9repaid " penses -undry creditors Outstandin! liabilities =an& O%5 /"--H -toc& =an& O%5 Outstandin! liabilities -undry 5ebtors -undry Creditors &*)(&')! *2'.))* +.)*1+ ('(1,), (.*61+. '16,6+ )*',.1. 616(+( *'1)+*+ ++.).. *(,6.1 (1**+'. 2*',6*6 (6'''61 ((,1*(+ 6+1)*) .+),, .6+((+, (,,*'+. )*',.1. (6(,)(, (,1.+),+ *(2.( (,2,(+'+ )*+*1) (22().+ )1)+.'* ),*2*.' )),,6,( 2DD;-2DDA 1)(,2) ()1,(1( 2DDA-2DDB ((2+)6' (..,(2. 2DDB-2DDE .626+2 (1),),6 2DDE-2DDF .,,.6, (2,,)+(

B.2 &"$, *')@ $T"T+-+NT

(nflow Openin! balance Cash from operation Increase in loan funds -ales of Asset 6*6).. ),,+-),,. (.'1. *2'.))* ),,.-),,' 1.162 +.)*1+ ),,'-),,1 (,.'.' ('(1,), ).(,6*2 ),,1-),,6 1+'2) 2*',6*6

Increase capital Total )utflows

in

share *2126*+ (),.22'

)2,,,,, 12+(+1+ *,(.+6*

Cash outflow from operation 9urchase of Asset 5ecrease funds 5ecrease in in *661.(( loan )66,. share 1.162 *2126*+ *,,+., ),,,,, (,.'.' (),.22' 1+'2) 12+(+1+ )62.(, *,(.+6* 161662( 6,,.2)' (6+((..

capital Closin! balance Total

(nference:
This table shows that the cash flow statements of -TA35A45 9O/?:"4- are to be efficient. The cash inflow of the company is to be increased for year after year. The fund from operation is also to differ from every year. The company should increase their share capital from ),,1-),,6 for 4s. )2, ,,,,,,. Its must be used as efficient for the ne t year for decrease their loan amount.

B.; T%+N0 "N"'3$($ ? J a K bN 7here a J O? n B.;./ (N7+NT)%(+$

(n:entories 3+"% G G2 (%s in lakhs! G3

b J ON? ON)

C,) L I,+ C,+ L I,. C,. L I,' C,'L I,1 C,1 L I,6 TOTA/ a

-) -( , ( )

. ( , ( . (, J (, .), ,*,(,2 '

3 )6,61,,6) (),62,.+2 (2,.','(( +1,,(,,26 .6,,2,,,, (,.),,*,(,2 J

(%s in lakhs! -'','),(.. -(),62,.+2 , +1,,(,,26 *.,(1,,,, 1(,21,','

), 2.,(2).1

1(, 21,',' (,

1, (2,1',.'

(nference:
This table indicates that the volume of inventory has been increased every year. Its must be increased for the last year ((, ,1,*(+. Inventories value in ),,2 will be about

)(, .,,(+..( B.;.2 $1N0%3 0+#T)%$

$undry 3+"% G G2 0ebtors (%s! C,) L I,+ C,+ L I,. C,. L I,' C,' L I,1 C,1 L I,6 TOTA/ -) -( , ( ) . ( , ( . (, 3 ),,1*,'(+ )2,,',2,' )',((,2.) (,),,6.,)+1 (,)*,2.,*2) +,).,.1,+62 G3 (%s! -.(,+*,,)1 -)2,,',2,' , (,),,6.,)+1 ),'*,1*,*1. +,(,,**,+1*

a J

+, )., .1,+62 '

1., 2*,)6'.1

J +, (,, **,+1* (,

+(, ,*,*+1.*

(nference:
This table shows that the -undry 5ebtors has been more every year. It must be increased more than 1 times from the be!innin! of the period of the study. -undry 5ebtors

value in ),,2 will be about (, '2, (*,,21.+.

B.;.; &"$, 4 #"N8

&ash 4 #ank 3+"% C,)L I,+ C,+ L I,. C,. L I,' C,' L I,1 C,1 L I,6 TOTA/ G -) -( , ( ) G2 . ( , ( . (, (%s! 3 (.,'1. 1.,16* 1(,2'2 1+,'2) ),62,.(, .,2+,,*+ G3 (%s! -)*,()2 -1.,16* , 1+,'2) ','1,2), ',)1,'*+

., 2+,,*+ '

*1,1(2.1

', )1,'*+ (,

'),1'*.+

(nference:

The cash value of the -TA35A45 9O/?:"4- has been increased and the estimated it should be decreased for the previous year. Cash value in ),,2 will be about

)'.'*1.'.

B.;.A ')"N$ C "07"N&+$

'oans 3+"% G G2 "d:ances (%s! C,) L I,+ C,+ L I,. C,. L I,' C,' L I,1 C,1 L I,6 TOTA/ -) -( , ( ) . ( , ( . (, 3 (,,,,,1' 2,)1,+66 +,1,,(+2 )6,6,,*+6 ',1),2+6 .1,),,+'. C G3 (%s! -),,,,(+, -2,)1,+66 , )6,6,,*+6 ((,)',16. )2,6,,(,.

.1, ),,+'. '

*, ).,,6,.2

)2, 6,,(,. (,

), 26,,(,..

(nference:
The table indicates that the loans and advances of -TA35A45 9O/?:"4- will be reduced from the year ),,1-),,6. /oans 0 Advances value in ),,2 will be about

(6, 2',(,).

B.;.B &1%%+NT '("#('(T(+$

&urrent 3+"% G G2 'iabilities (%s! C,) L I,+ C,+ L I,. C,. L I,' C,' L I,1 C,1 L I,6 TOTA/ -) -( , ( ) . ( , ( . (, 3 )),'2,'61 '6,.',..) +2,'1,++2 (,..,6+,(,) (,)',22,),+ +,2*,)(,11( G3 (%s! -.',(6,(') -'6,.',..) , (,..,6+,(,) ),'(,61,.,1 ),*+,21,*(.

+, 2*, )(,11( '

66, 2.,++).)

), *+, 21,*(. (,

)*, +2,1*(..

(nference:
The table shows that the companyCs current liability will be increased from the every year.

Current /iabilities value in ),,2 will be about (, 11, ,,,.,1...

B.;.E &1%%+NT "$$+T

&urrent asset G 3+"% C,) L I,+ C,+ L I,. C,. L I,' C,' L I,1 C,1 L I,6 TOTA/ -) -( , ( ) G2 . ( , ( . (, (%s! 3 )(,)6,)66 .(,.2,*)( '*,6.,*++ (,2',,*,2.) ),,+,',,)., ',((,((,)(+ G3 (%s! -.),'.,''. -.(,.2,*)( , (,2',,*,2.) .,,6,,,,.2, ',,2,,1,*.6

',((,((,)(+ '

(,,),)),).).1

',,2,,1,*.6 (,

',,2,,1*..6

(nference:
This table shows that the current asset of the company will be !rown at *times. 7hen compared to the be!innin! of the period of study its must be increased. Current Asset value in ),,2 will be about ), '.,1.,+)1.6.

%"T() "N"'3$($:

4atio Analysis is a powerful tool of financial analysis. A 4atio is defined as Gthe indicated quotient of two mathematical e pressionsM and as Gthe relationship between two or more thin!sM. In financial analysis, a ratio is used as a benchmar& for evaluatin! the financial position and performance of a firm.

4atio helps to summarize lar!e quantities of financial data and to ma&e qualitative #ud!ment about the firmCs financial performance.

B.A %"T() "N"'3$($ B.A./ &urrent "ssets to *i9ed "ssets %atio

The formula for the ratio is

Current Assets $i ed Assets

&urrent "ssets to *i9ed "ssets %atio

(ncrease4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 . (nference: The level of Current Assets can be measured by usin! this Current Asset to $i ed Assets 4atio. The level has been fluctuatin! every year. RATIO ,.*.H( ,.6)H( (.''H( (.)2H( (.1)H( 0ecrease -,.)) ,.2) -,.)6 ,.+.

1.# 1." 1.4 1.2 1 !.# !." !.4 !.2 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!'

Curren( A Ra()o

e( (o F)*ed A

e(

B.A.2 &urrent "ssets to Total "ssets %atio

The formula for the ratio is

Current Assets Total Assets

&urrent "ssets to Total "ssets %atio

(ncrease4 3+"% RATIO 0ecrease

),,) - ,+ ),,+ - ,. ),,. - ,' ),,' - ,1 ),,1 - ,6

,.)1H( ,..2H( ,.1)H( ,.'*H( ,.'*H(

,.)) ,.(. -,.,+

(nference:
The Table shows the Current Assets to Total Assets ratio of the company, which re!istered a fluctuatin! trend throu!hout the study period. This ratio varied from ,.)1 to ,..2 times durin! the study. There is no chan!e for last year.

!.' !." !.& !.4 !.3 !.2 !.1 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' Curren( A e( (o To(a+ A e( Ra()o

B.A.; Net @orking &apital %atio

The formula for the ratio is 3et 7or&in! Capital 3et Assets

Net @orking &apital %atio

(ncrease4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.)6H( ,.()H( ,.('H( ,.)(H( ,.))H( 0ecrease - ,.(' ,.,+ ,.,1 ,.,(

(nference:

3et 7or&in! Capital is used as a measure of a firmCs liquidity and the firmCs potential reservoir of funds. It can also be relate to net assets. The 3et 7or&in! Capital 4atio from the table shows a fluctuatin! trend and the avera!e 3et 7or&in! Capital 4atio is ,.)( times of 3et 7or&in! Capital to 3et Assets. ;ence it shows that -TA35A45 9O/?:"4- has an avera!e liquidity position.

!.3 !.2& !.2 !.1& !.1 !.!& ! $!2%$!3 $!3%$!4 !4%$!& $!&%$!" $!"%$!' Ne( ,or-)n. Ca/)(a+ Ra()o

B.;.A (n:entories to &urrent "ssets %atio

The formula for the ratio is Inventories Current Assets

(n:entories to &urrent "ssets %atio

(ncrease4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO (.+,H( ,.+(H( ,.+(H( ,.(*H( ,.)+H( 0ecrease -,.** -,.() ,.,.

(nference:

$rom the table it is &nown that the Inventories to Current Assets 4atio also re!ister a fluctuatin! trend durin! the entire study period. The avera!e ratio is ,.+( times and thus it is found that the investment in inventories Ebein! one of the important Current AssetsF is &ept at the considerable level.

1.4 1.2 1 !.# !." !.4 !.2 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' In0en(or)e (o Curren( A e( Ra()o

B.A.B $undry 0ebtors to &urrent "ssets %atio

The formula for the ratio is -undry 5ebtors Current Assets

$undry 0ebtors to &urrent "ssets %atio

(ncrease4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.*6H( ,.12H( ,..)H( ,.1'H( ,.1+H( 0ecrease -,.)* - ,.)1 ,.)+ -,.,)

(nference:
$rom the table the -undry 5ebtors to Current Assets 4atio shows a fluctuatin! trend throu!hout the study period from ),,)-,+ to ),,1-,6. The avera!e ratio is ,.1' times. ;ence it implies the credit policy followed by -TA35A45 9O/?:"4- is moderate.

1 !.# !." !.4 !.2 ! Sundry De1(or (o Curren( A e( Ra()o

$!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!'

B.A.E 'oans and "d:ances to &urrent "ssets %atio

The formula for the ratio is /oans and Advances Current Assets

'oans and "d:ances to &urrent "ssets %atio

(ncrease4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.,)H( ,.(*H( ,.,1H( ,.('H( ,.,)H( 0ecrease ,.(6 -,.(+ ,.,* - ,.(+

(nference:
$rom the table it is noted that the /oans and Advances to Current Assets 4atio have re!istered a fluctuatin! trend. It implies that a quarter positions of the Current Assets are &ept in for /oans and AdvancesB thereby it is found that -TA35A45 9O/?:"4- value of /oans and Advances is considerable.

!.2 !.1& !.1 !.!& ! Loan 2 Ad0ance (o Curren( A e( Ra()o

$!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!'

B.A.F &ash to &urrent "ssets %atio

The formula for the ratio is Cash Current Assets

&ash to &urrent "ssets %atio

(ncrease4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.,,1H( ,.,('H( ,.,(H( ,.,,+H( ,.,(+H( 0ecrease ,.,* -,.(. - ,.,,6 ,.,(

(nference:
The table shows the details of Cash to Current Assets 4atio and re!istered a fluctuatin! trend throu!hout the study period from ),,)-,+ to ),,1-,6. ;ence we find that -TA35A45 9O/?:"4- had maintained a moderate level of cash in proportion to Current Assets.

!.!1" !.!14 !.!12 !.!1 !.!!# !.!!" !.!!4 !.!!2 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!'

Ca 3 (o Curren( A

e( Ra()o

B.A.H &ash to @orking &apital %atio

The formula for the ratio is Cash 7or&in! Capital

&ash to @orking &apital %atio

(ncrease4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.((H( ,.,.H( ,.,+H( ,.,6H( ,.,1H( 0ecrease - ,.,6 - ,.,( ,.,. -,.,(

(nference:
The Cash to 7or&in! Capital 4atio re!istered a fluctuatin! trend durin! the study period this is noted from the table. It was ,.(( times in ),,.-,', which sharply increased to ,.,. times in the ne t year and later for the followin! years it is fluctuatin!. ;ence it is found that .P of the 7or&in! Capital ratio is mana!ed by usin! the cash 0 ban& balance available in the company. The policy re!ard financin! the 7or&in! Capital in -TA35A45 9O/?:"4- can be said as a!!ressive policy.

!.12 !.1 !.!# !.!" !.!4 !.!2 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' Ca 3 (o ,or-)n. Ca/)(a+ Ra()o

B.A. &ash to $ales %atio

The formula for the ratio is Cash -ales

&ash to $ales %atio

(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.,,,6H( ,.,,)1H( ,.,,)2H( ,.,,1*H( ,.,,1.H( 0ecrease ,.,,(* ,.,,,) ,.,,.( - ,.,,,'

(nference:
This is one of the important ratios of controllin! cash. A study of cash to sales ratio will provide a deep insi!ht into the cash balances held in the concerns. "vident from the table shows Cash to -ales re!istered a fluctuatin! trend throu!hout the study period.

!.!!' !.!!" !.!!& !.!!4 !.!!3 !.!!2 !.!!1 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' Ca 3 (o Sa+e Ra()o

B.A./D &ash %atio

The formula for the ratio is Cash Current liabilities

&ash %atio
(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.,,1.H( ,.,(()H( ,.,(1,H( ,.,,..H( ,.,))(H( 0ecrease ,.,,.2 ,.,,.2 -,.,((1 ,.,(66

(nference:
$rom the table it is noted that the cash position of the -TA35A45 9O/?:"4- is satisfactory. It is found that the cash required to meet out the current liabilities is maintained at a normal level.

!.!2& !.!2 !.!1& !.!1 !.!!& ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' Ca 3 Ra()o

B.A.// &urrent %atio

The formula for the ratio is Current Assets Current liabilities

&urrent %atio
(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.*.H ( ,.6)H ( (.''H ( (.)6H ( (.1)H ( 0ecrease -,.)) ,.2+ -,.)2 ,.+'

(nference:
This ratio is an indicator of the firmCs commitment to meet its short L term liabilities. $rom the table it is clear that the Current 4atio of -TA35A45 9O/?:"4- has been fluctuatin! from the startin! of the study period, later for last year it has been increasin!B hence the Current 4atio is quite satisfactory. Thus the Current 4atio shows that the company has sufficient funds to meet its shortterm obli!ations.

1.# 1." 1.4 1.2 1 !.# !." !.4 !.2 !

Curren( Ra()o

$!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!'

B.A./2 'i?uidity %atio

The formula for the ratio is /iquid Assets Current liabilities

'i?uidity %atio
(ncrease 4

(nference:

3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6

RATIO ,.*.H ( ,.',H ( (.,6H ( (.,+H ( (.).H (

0ecrease

-,... ,.'6 -,.,. ,.)(

This ratio helps the mana!ement to measure short-term solvency. The ideal liquid ratio is (H( $rom the table it is clear that -TA35A45 9O/?:"4- liquid ratio is more than the ideal ratio durin! the startin! of the study period and later in ),,. - ,' it had reduced sli!htly, yet for the rest of the period current liabilities were fully secured by liquid assets because the liquid assets were more than the current liabilities and hence the companyCs liquidity is satisfactory.

1.4 1.2 1 !.# !." !.4 !.2 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' L)4u)d)(y Ra()o

B.A./; $uper Iuick %atio

The formula for the ratio is -uper 8uic& Assets 8uic& liabilities

$uper Iuick %atio

(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ,.1'H( ,.+)H( ,.'2H( ,.1)H( ,.1.H( 0ecrease -,.++ ,.)1 ,.,. ,.,)

(nference:
-uper 8uic& 4atio is the healthy measure of the firmCs liquidity position. $rom the table ..)( it is noted that the liquidity of -TA35A45 9O/?:"4- had a steep slope in between durin! the year ),,+-,., yet it was able to have a slow increase in the rest of the study period and able to maintain its position. ;ence it shows that -TA35A45 9O/?:"4- is able to meet its current obli!ations EliabilitiesF.

!.' !." !.& !.4 !.3 !.2 !.1 ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' Su/er 5u)c- Ra()o

B.A./A @orking &apital Turno:er %atio

The formula for the ratio is sales 7or&in! Capital

@orking &apital Turno:er

(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO ().+1H ( (6.6,H ( ((.''H ( +(.''H ( '..'H ( 0ecrease '.+. -)'.(' ),.,, -)1.('

(nference:
This ratio indicates whether 7or&in! Capital has been effectively utilized in ma&in! sales or not. $rom the table it is noted that 7or&in! Capital had some fluctuation in the middle of the study period, yet the company was able to increase it in the later years. ;ence the turnover indicates that -TA35A45 9O/?:"4- had utilized its 7or&in! Capital efficiently and the company can also try to wor& on this to !et more effective values.

3& 3! 2& 2! 1& 1! & ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' ,or-)n. Ca/)(a+ (urno0er Ra()o

B.A./B (n:entories Turno:er %atio

The formula for the ratio is Cost of <oods -old Avera!e -toc&

(n:entories Turno:er
3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO (.+1H ( (.,)H ( (.,)H ( (.,)H ( (.'+H ( (ncrease 4 0ecrease -,.+. , , ,.'(

(nference:
This ratio indicates whether investment in inventory is efficiently used or not and whether the investment is within proper limits. $rom the table it is found that the Inventory turnover 4atio of -TA35A45 9O/?:"4- had some fluctuations in the startin! of the study period then it had a !rowth in it. ;ence the efficiency of inventory control in -TA35A45 9O/?:"4- shows a satisfactory position.

1." 1.4 1.2 1 !.# !." !.4 !.2 !

In0en(or)e (or Ra()o

$!2% $!3

$!3% $!4

$!4% $!&% $!& $!"

$!"% $!'

B.A./E 0ebtors Turno:er %atio

The formula for the ratio is -ales -undry 5ebtors

0ebtors Turno:er
(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO 6.2.H ( 2.'.H ( 2..*H ( +.+,H ( +.)1H ( 0ecrease ,.6, -,.,' -'.(* -,.,.

(nference:
This is one of the techniques employed by the company with re!ard to the collection of the receivables throu!h effective mana!ement of collection policy with the help of factorin! services. $rom the table it shows that the 5ebtorsC turnover 4atio had satisfactory increase in the startin! of the study period. ;owever, in middle of the study period it had sli!ht fluctuations, the company was able to raise it in the ne t year.

6 # ' " & 4 3 2 1 !

De1(or (urno0er Ra()o

$!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!'

B.A./F 0ebt &ollection Period %atio

The formula for the ratio is 5ays in a :onth -undry 5ebtors turnover

0ebt &ollection Period %atio

(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO .1.' .).6 2(.)* ((,.1 (((.* 0ecrease -+.2 +*.6* )*.+( (.+

(nference:
This ratio indicates the e tent to which the debts have been colleted in time. It !ives the avera!e debt collection period. -TA35A45 9O/?:"4- use this ratio to find out whether their borrowers are payin! on time. $rom the table it is found that throu!hout the study period the collection period is fluctuatin! and is within the avera!e.

12! 1!! #! "! 4! 2! ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' De1( Co++ec()on 7er)od Ra()o

B.A./H &ash (nter:al -easure %atio

The formula for the ratio is Current Assets L Inventories Av!. 5aily Operatin! " p.

&ash (nter:al -easure %atio

(ncrease 4 3+"% ),,) L ,+ ),,+ L ,. ),,. L ,' ),,' L ,1 ),,1 L ,6 RATIO (+'.(. (,..)6 (+1... (...6) (.1.(+ 0ecrease -+,.2* +).(6 2.)2 (..(

(nference:
This ratio e amines the firmCs ability to meet its re!ular cash e penses. The defensive interval measures the time period for which a firm can operate on the basis of present liquid assets without resortin! to the ne t yearCs revenue. This ratio of -TA35A45 9O/?:"4-, from the table shows that the company can meet its operatin! cash requirements within a period of (,' to (.1 days without resortin! to ne t yearCs income.

1"! 14! 12! 1!! #! "! 4! 2! ! $!2%$!3 $!3%$!4 $!4%$!& $!&%$!" $!"%$!' De1( Co++ec()on 7er)od Ra()o

&,"PT+% 7( E./ *(N0(N0$

The cash mana!ement of -TA35A45 9O/?:"4 has been wor&in! well in the or!anization. The $unds from operations of a company has been increased from year by year. The cash from operations has been find that it used as efficient. The cash inflow and outflow of cash flow statement have a cash balance will be increased ..) times when compared to last year balance. Current 4atio shows that the company has sufficient funds to meet its short-term obli!ations. The companyCs /iquidity 4atio shows a satisfactory trend. -uper 8uic& 4atio shows that -TA35A45 9O/?:"4 is able to meet its current obli!ations EliabilitiesF.. The efficiency of inventory control in -TA35A45 9O/?:"4 shows a satisfactory position.. The Cash 4atio shows that the cash required to meet out the current liabilities is maintained at a normal level hence, it shows that -TA35A45 9O/?:"4 follows an avera!e policy.

 Interval :easure 4atio shows that the company can meet its operatin! cash requirements within a period of (,' to (.1 days without resortin! to ne t yearCs income. The Current Assets to Total Assets 4atio implies that -TA35A45 9O/?:"4 is maintainin! a considerable level of Current Assets in proportion to Total Assets. The avera!e Cash to Current Assets is maintained at ,.,,* times. ;ence, it is found that the company had maintained a moderate level of cash in proportion to Current Assets. The avera!e ratio of Inventories to Current Assets is ,..1 times and thus it is found that the investment in inventories. The avera!e ratio of -undry 5ebtors to Current Assets is ,.16 times. ;ence it implies that the credit policy followed by -TA35A45 9O/?:"4- is moderate. The loans and Advances to Current Assets ratio of the company imply that a quarter positions of the Current Assets are &ept in for loans and advances, which is considerable. The policy re!ard financin! the 7or&in! Capital in -TA35A45 9O/?:"4 can be said as A!!ressive policy accordin! to the Cash to 7or&in! Capital 4atio. The avera!e cash to sales ratio is ,.,,. times and which indicates that only ,..P of sales has been maintained as cash with the business.

E.2 $1..+$T()N$ C %+&)--+N0"T()N$

-TA35A45 9O/?:"4 should try to match their Cash with the sales. In case of surplus Cash, it should be invested either in securities or should be used to repay borrowin!s. The company should try to prepare a proper a!ein! schedule of debtors. This will help them to reduce the bad debts and speed up collection efforts. The company should be prompt in ma&in! payments so as to en#oy cash discount opportunities The company should determine the optimum cash balance to be &ept. The company followed an a!!ressive policy of financin! wor&in! capital should try to finance ',P of their wor&in! capital usin! lon! term source and improve their status. The current 4atio of )H( is considered normally satisfactory. -TA35A45 9O/?:"4 should try to improve the current ratio. -o it should invest lar!e amount in current ratio, in order to maintain liquidity and solvency position of the concern. The company should try to follow a matchin! policy for financin! current Assets Ei.e.F usin! both lon! term and short-term sources of finances.

&,"PT+% 7((

&)N&'1$()N
The Cash :ana!ement Analysis done on the financial position of the company has provided a clear view on the activities of the company. The use of the ratio analysis, trend analysis, Cash $low -tatement and other accountin! and financial mana!ement helped in this study to find out the financial soundness of the company. This pro#ect was very useful for the #ud!ment of the financial status of the company from the mana!ement point of view. This evaluation proved a !reat deal to the mana!ement to ma&e a decision on the re!ulation of the funds to increase the sales and brin! profit to the company. =efore I conclude I wish to convey my than&fulness in re!ard to the trainin! !iven to me in -TA35A45 9O/?:"4. It !ave me e treme satisfaction and practical &nowled!e of the financial activities carried out in the company. The &indness, attention, and immense co-operation e tended to me buy all the officials in the company made my pro#ect easy and comfortable. 4eally it was a very pleasant e perience in -TA35A45 9O/?:"4.

&,"PT+% 7((( H./ $&)P+ )* T,+ $T103

It helps to ta&e short term financial decision. It indicates the cash requirement needed for plant or equipment e pansion pro!rammes. To find strate!ies for efficient mana!ement of cash. It helps to arran!e needed funds on the most favourable terms. It helps to meet routine cash requirement to finance the transaction. It reveals the liquidity position of the firm by hi!hli!htin! the various sources of cash and its uses.

H.2 '(-(T"T()N$ )* T,+ $T103

The study is restricted only to -TA35A45 9O/?:"4-. =ein! a case study, the findin!s cannot be !eneralized. The study does not ta&e into account the inflation. The study ta&es into account only the quantitative data and the qualitative aspects were not ta&en into account

#(#('().%"P,3

#))8$:

-.3. :aheshwari, $inancial mana!ement, "leventh "dition ),,1, -ultan Chaqnd 0 -ons, "ducational 9ublishers. 3ew 5elhi. I.: 9andey, $inancial mana!ement, 3inth "dition, @i&as publishin! house pvt /td. :.? Dhan- 9.D Aain, :ana!ement Accountin!, Third edition, Tata :c <raw-;ill 9ublishin! co. /td =./. <upta, :ana!ement of /iquidity and 9rofitability, Arihant 9ublishin! ;ouse, Aaipur.

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