FINAL
FINAL
FINAL
Capital Efficiency
Agriculture and Food Industry of India
1. Working Capital Efficiency
2. Industry Overview
3. Objective and Contribution of the study
OUTLINE 4. Methodology
5. Data Analysis
6. Discussion and Conclusions
Working Capital •
•
Concept
Wo r k i n g c a p i t a l c o m p o n e n t s
DRO The average time (in days) a company takes to collect payment after a sale has been made.
DPO The average time (in days) a company takes to pay its bills and invoices to its trade creditors.
OC The length of time between the purchase of inventory and the cash collected from the sale of the
inventory
NOC The length of time between paying for inventory and the cash collected from the sale of the
inventory
Sales Growth Ratio It is percentage change in net sales for the current year relative to net sales for preceding year.
●
To summarize data and ●
To find degree and direction of ●
To find relation between two
find patterns and deviation. relation among all variables. variables.
• Descriptive Analysis
Data Analysis •
•
Correlation Analysis
Regression Analysis
GWC
180000
160000
Outlier
140000
120000
100000
80000
60000
40000
20000
0
0 20 40 60 80 100 120
GWC
120000
100000
80000
60000
40000
20000
0
0 20 40 60 80 100 120
Statistics
Valid 100 100 100 100 100 100 100 100 100
N
Missing 0 0 0 0 0 0 0 0 0
Median 2169 206 15% 131 84 33 45 146 86
Std. Deviation 17593 9250 55% 6061 97 41 51 114 96
Minimum 142 -8781 -228% 3 13 0 4 16 -95
Maximum 159207 86006 78% 51595 561 237 330 694 498
Due to presence of outlier and high standard deviation; median is used as measure of central location
in this sample.
Statistics
Valid 100 100 100 100 100 100 100 100 100
N
Missing 0 0 0 0 0 0 0 0 0
Median 9463 1032 2.75% 1308 57 88 71 146 75
Std. Deviation 16340 6037 104.54% 2772 50 101 64 103 73
Minimum 22 -39491 -721.77% 0 0 0 0 16 -80
Maximum 108811 23852 98.80% 15867 182 656 388 678 302
Due to presence of outlier and high standard deviation; median is used as measure of central location
in this sample.
Profit Leaders
2.5
143.94-243.94 343.94-443.94
443.94-543.94 543.94-643.94
643.94-743.94 743.94-843.94
843.94-943.94 1043.94-1143.94
2 1243.94-1343.94 1543.94-1643.94
1643.94-1743.94 1743.94-1843.94
1943.94-2043.94 2043.94-2143.94
2143.94-2243.94 2343.94-2443.94
2543.94-2643.94 2643.94-2743.94
1.5 2943.94-3043.94 3443.94-3543.94
3643.94-3743.94 5143.94-5243.94
5343.94-5443.94 5943.94-6043.94
6743.94-6843.94 7543.94-7643.94
7643.94-7743.94 8443.94-8543.94
1 10243.94-10343.94 10343.94-10443.94
1
10843.94-10943.94 11143.94-11243.94
12443.94-12543.94 12643.94-12743.94
14543.94-14643.94 20043.94-20143.94
21643.94-21743.94 23943.94-24043.94
0.5 25543.94-25643.94 40643.94-40743.94
159143.94-159243.94
0
Above Average Below Average (blank)
Sales Leaders
4.5
141.58-241.58 341.58-441.58
4
441.58-541.58 541.58-641.58
641.58-741.58 741.58-841.58
3.5 941.58-1041.58 1041.58-1141.58
1241.58-1341.58 1341.58-1441.58
1441.58-1541.58 1541.58-1641.58
3 1641.58-1741.58 2041.58-2141.58
2141.58-2241.58 2241.58-2341.58
2541.58-2641.58 2841.58-2941.58
2.5 2941.58-3041.58 3441.58-3541.58
3641.58-3741.58 3841.58-3941.58
4141.58-4241.58 5341.58-5441.58
2 6741.58-6841.58 7441.58-7541.58
7541.58-7641.58 8441.58-8541.58
10241.58-10341.58 10841.58-10941.58
1.5
11141.58-11241.58 14541.58-14641.58
16941.58-17041.58 21641.58-21741.58
1 23941.58-24041.58 25641.58-25741.58
1 159141.58-159241.58
0.5
0
Above Average Below Average
Growth leaders
7
6
352.42-852.42
852.42-1352.42
1352.42-1852.42
5
1852.42-2352.42
2352.42-2852.42
3352.42-3852.42
4 5352.42-5852.42
8352.42-8852.42
9852.42-10352.42
10852.42-11352.42
3
14352.42-14852.42
21352.42-21852.42
23852.42-24352.42
2 25352.42-25852.42
1
1
0
Above Average Below Average
GROWTH LEADER
1.2
0.8
8078
13350
15506
0.6 18008
53335
55387
0.4 108811
0.2
0
ABOVE AVERAGE BELOW AVERAGE
SALES LEADER
1.2
5385
0.8 8078
8107
13350
15506
18008
0.6 31717
33038
38017
38544
0.4 53335
55387
108811
0.2
0
ABOVE AVERAGE BELOW AVERAGE
PROFIT LEADER
1.2
3660
8078
0.8 9388
13237
13350
0.6 15506
18008
35461
47811
0.4 53335
55387
108811
0.2
0
ABOVE AVERAGE BELOW AVERAGE
Regression Analysis
Model Summaryb
R Adjusted Std. Error Change Statistics
Model R Square R Square of the R Square F Chang df1 df2 Sig. F
Estimate Change e Change
1 .835a .697 .648 137.914% .697 14.426 7 44 .000
a. Predictors: (Constant), NOC, C&B, DPO, DRO, NWC/GWC, GWC, NWC
b. Dependent Variable: Avg_S_G
Avg_S_G= f (DIO, DPO, DRO, GWC, NWC, NWC/GWC, C&B, OC, NOC)
Avg_S_G = β0 + β1 DIO + β2 DPO + β3 DRO + β4 GWC + β5 NWC + β6 (NWC/GWC) + β7 (C&B) + β8 OC
+ β9 NOC
Model Summary
Change Statistics
Adjusted R Std. Error of R Square
Model R R Square Square the Estimate Change F Change df1 df2 Sig. F Change
1 .610a .372 .283 6.63046% .372 4.151 3 21 .019
Avg_S_G= f (DIO, DPO, DRO, GWC, NWC, NWC/GWC, C&B, OC, NOC)
Avg_S_G = β0 + β1 DIO + β2 DPO + β3 DRO + β4 GWC + β5 NWC + β6 (NWC/GWC)
GWC NWC NWC/ C&B DIO DRO DPO OC NOC Avg_ Avg_
GWC S_G NPM
Pearson -.053 .134 .233 .778** -.138 -.162 .062 -.184 -.203 -.272 1
Correlation
Avg_NPM Sig. (2-
tailed) .801 .524 .263 .000 .512 .438 .767 .379 .331 .188
N 25 25 25 25 25 25 25 25 25 25 25
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
Coefficientsa
DRO 44 39 40
DPO 56 56 47
NOC 107 89 92
Source Of Financing
DIO 49 59 66
DRO 53 41 43
DPO 59 68 77
NOC 42 31 32
Source Of Financing
2015 7% 93%
2016 5% 95%
2017 9% 91%
Cash Policy 7% 5% 8%
The study finds out 35 Profit leaders, 35 Sales leaders and 20 Growth leaders out of sample.
It is found that efficiency of working capital management effects Benchmarking measures such as
NPM and Growth Rate.
In correlation analysis it is found that among all growth leaders, only Cash and Bank balance had
significant positive relation with net profit ratio. Sales growth could not establish any significant
correlation with any of the variables.
Out of 25 companies in the list of growth leader, 20 has maintained higher cash and bank balance
than industry average which is 131 Million in Indian Rupees.
As a Net Profit Ratio could not be established in any regression model to relate with working capital
components.
In regression analysis, taking growth rate as dependent variable it was found that DPO and NOC is
closely related to dependent variable, contributing to high dependability.
The study finds out 14 Profit leaders, 13 Sales leaders and 10 Growth leaders out of the sample.
The present study through the descriptive analysis showed very high standard deviation in variables of working capital. It
was found that efficiency of working capital management affects Benchmarking measures.
In Pearson correlation analysis, significant positive correlation of Return on Asset with NWC, NWC/GWC, NPM, Sales
growth and negative correlation with DRO and DE Ratio @1% significance and at @5% significance a positive strong
correlation with Size and a negative strong correlation with DPO. Though some of the variables which were used as
independent variables in regression, are found to be significantly correlated. These variables are DIO, DRO, NOC and sales
growth.
In regression analysis, taking Return on Asset (ROA) as dependent variable, it was found that Sales growth is closely related
to dependent variable, contributing to high dependability.
In case of ANOVA, the p-value in both the models is below the alpha value i.e. 0.05. Hence, both the model are significant.
Thank You!
WHOLESALE 1. Wholesale and retail industry is an
important pillar in Indian Economy and
AND RETAIL
account for about 10 percent of its GDP and
expected to grow 25% by 2025 and
estimated to be US$ 60 billion by 2020 with
●
To summarize data and find ●
To find degree and direction of ●
To find relation between two
patterns and deviation. relation among all variables. variables.
DESCRIPTIVE STATISTICS
Variables Mean Std.Deviation Min. Max. Skewness Kurtosis Count
9463.5 16340.0 22.2 108811.4 3.3 14.0 100
GWC
1032.0 6037.3 -39491.3 23852.2 -2.2 22.3 100
NWC
0.0 0.8 -5.1 1.0 -3.9 21.2 100
NWC/GWC
1308.4 2772.5 0.2 15866.9 3.4 13.2 100
C&B
57.5 49.8 0.0 182.5 0.9 -0.2 100
DIO
88.2 100.6 0.2 656.4 3.4 14.6 100
DRO
71.1 63.9 0.0 388.0 2.5 8.2 100
DPO
145.7 103.3 15.7 678.3 2.4 8.4 100
OC
74.6 72.8 -79.6 302.2 1.0 1.2 100
NOC
CORRELATION ANALYSIS
NWC/ Sales_
GWC NWC GWC C&B DIO DRO DPO OC NOC NPM ROA DE ratio Size growth ROE
ROA Pearso -0.062 0.050 0.157 0.091 0.122 -.333 **
-.214 *
-.265** -0.189 0.164 1 -.203* 0.037 0.023 0.026
n Cor.
Sig. (2- 0.538 0.622 0.119 0.366 0.227 0.001 0.033 0.008 0.060 0.103 0.043 0.718 0.822 0.797
tailed)
Model Summary REGRESSION ANALYSIS
Model R R Square Adjusted R Square Std. Error of the Estimate
.380a 0.144 0.089 0.063665712372067
1
.275a 0.076 0.037 0.065470172697335
2
a. Predictors: (Constant), Sales growth, NOC, Size, DE ratio
H0: β1 = β2 = β3 = β4 = 0
H1: β1 = β2 = β3 = β4 = β5 = β6 = 0
Coefficientsa
Unstandardized Coefficients Standardized
Model Coefficients t Sig.
B Std. Error Beta
(Constant) 0.073 0.045 1.649 0.103
NOC 0.000 0.000 -0.243 -2.491 0.015
1. DE Ratio -0.004 0.001 -0.931 -4.754 0.000
Size 0.003 0.006 0.076 0.552 0.582
Sales Growth -0.003 0.003 -0.060 -0.790 0.432
2. (Constant)
-0.425 0.135 -3.143 0.002
NOC
-9.603E-07 0.000 0.000 -0.003 0.997
DE ratio
0.028 0.001 0.854 20.969 0.000
Size
0.039 0.018 0.134 2.174 0.033
Sales growth
0.011 0.011 0.035 0.989 0.326
DIO
0.000 0.000 -0.024 -0.577 0.566
DPO
0.000 0.000 0.036 0.942 0.349
a. Dependent Variable: ROA
ANOVA
Sum of
Total
0.440 99
Regression
18.702 16 1.169 50.712 .000b
2.
Residual
1.913 83 0.023
Total
20.615 99
DIO 49 59 66
DRO 53 41 43
DPO 59 68 77
NOC 42 31 32
Source Of Financing
2015 7% 93%
2016 5% 95%
2017 9% 91%
Cash Policy 7% 5% 8%
WHOLESALE 1. Wholesale and retail industry is an
important pillar in Indian Economy and
AND RETAIL
account for about 10 percent of its GDP and
expected to grow 25% by 2025 and
estimated to be US$ 60 billion by 2020 with
•To summarize data and •To find degree and •To find relation between two
find patterns and deviation. direction of relation among variables.
all variables.
DESCRIPTIVE STATISTICS
Variables Mean Std.Deviation Min. Max. Skewness Kurtosis Count
9463.5 16340.0 22.2 108811.4 3.3 14.0 100
GWC
1032.0 6037.3 -39491.3 23852.2 -2.2 22.3 100
NWC
0.0 0.8 -5.1 1.0 -3.9 21.2 100
NWC/GWC
1308.4 2772.5 0.2 15866.9 3.4 13.2 100
C&B
57.5 49.8 0.0 182.5 0.9 -0.2 100
DIO
88.2 100.6 0.2 656.4 3.4 14.6 100
DRO
71.1 63.9 0.0 388.0 2.5 8.2 100
DPO
145.7 103.3 15.7 678.3 2.4 8.4 100
OC
74.6 72.8 -79.6 302.2 1.0 1.2 100
NOC
CORRELATION ANALYSIS
NWC/ Sales_
GWC NWC GWC C&B DIO DRO DPO OC NOC NPM ROA DE ratio Size growth ROE
ROA Pearso -0.062 0.050 0.157 0.091 0.122 -.333 **
-.214 *
-.265** -0.189 0.164 1 -.203* 0.037 0.023 0.026
n Cor.
Sig. (2- 0.538 0.622 0.119 0.366 0.227 0.001 0.033 0.008 0.060 0.103 0.043 0.718 0.822 0.797
tailed)
Model Summary REGRESSION ANALYSIS
Model R R Square Adjusted R Square Std. Error of the Estimate
.380a 0.144 0.089 0.063665712372067
1
.275a 0.076 0.037 0.065470172697335
2
a. Predictors: (Constant), Sales growth, NOC, Size, DE ratio
H0: β1 = β2 = β3 = β4 = 0
H1: β1 = β2 = β3 = β4 = β5 = β6 = 0
Coefficientsa
Unstandardized Coefficients Standardized
Model Coefficients t Sig.
B Std. Error Beta
(Constant) 0.073 0.045 1.649 0.103
NOC 0.000 0.000 -0.243 -2.491 0.015
1. DE Ratio -0.004 0.001 -0.931 -4.754 0.000
Size 0.003 0.006 0.076 0.552 0.582
Sales Growth -0.003 0.003 -0.060 -0.790 0.432
2. (Constant)
-0.425 0.135 -3.143 0.002
NOC
-9.603E-07 0.000 0.000 -0.003 0.997
DE ratio
0.028 0.001 0.854 20.969 0.000
Size
0.039 0.018 0.134 2.174 0.033
Sales growth
0.011 0.011 0.035 0.989 0.326
DIO
0.000 0.000 -0.024 -0.577 0.566
DPO
0.000 0.000 0.036 0.942 0.349
a. Dependent Variable: ROA
ANOVA
Sum of
Total
0.440 99
Regression
18.702 16 1.169 50.712 .000b
2.
Residual
1.913 83 0.023
Total
20.615 99
DIO 49 59 66
DRO 53 41 43
DPO 59 68 77
NOC 42 31 32
Source Of Financing
2015 7% 93%
2016 5% 95%
2017 9% 91%
Cash Policy 7% 5% 8%
FINDINGS
The study finds out 12 Profit leaders, 13 Sales leaders and 7 Growth leaders out of sample.
Pearson Correlation Analysis and P value in correlation shows the significance. At 1% significance
level Return on Asset has positive relation with NWC, NWC/GWC, NPM, Sales growth and
negative relation with DRO and OC. At 5% significance level it shows positive relationship with
DE ration and negative relation with DRO.
In descriptive analysis, with the wide variability in standard deviation value from 63 to 16340
shows it affects company Benchmark through working capital management.
In regression NOC and Size is closely related with ROA with the value 0.015 and 0.033 which
contributing high dependability.
P value in ANOVA of both the model taken ROA as dependent variable shows significant relationship with the
value .000.
In terms of Source of Finance, Profit Leader has comparatively better than the growth and sales leader.
FINDINGS
The study finds out 12 Profit leaders, 13 Sales leaders and 7 Growth leaders out of sample.
Pearson Correlation Analysis and P value in correlation shows the significance. At 1% significance
level Return on Asset has positive relation with NWC, NWC/GWC, NPM, Sales growth and
negative relation with DRO and OC. At 5% significance level it shows positive relationship with
DE ration and negative relation with DRO.
In descriptive analysis, with the wide variability in standard deviation value from 63 to 16340
shows it affects company Benchmark through working capital management.
In regression NOC and Size is closely related with ROA with the value 0.015 and 0.033 which
contributing high dependability.
P value in ANOVA of both the model taken ROA as dependent variable shows significant relationship with the
value .000.
In terms of Source of Finance, Profit Leader has comparatively better than the growth and sales leader.