A PROJECT REPORT

ON

A STUDY ON WORKING CAPITAL

MANAGEMENT
(MANMUL)
Submitted in partial fulfillment of the requirement for the
Award of degree in bachelor of business management
Of Bangalore university
Submitted by

VARUNASHREE.G.
(REG. NO. 07AQC08036)
Under the guidance of

Mrs. SHOBHA.C.
M.Com., M.B.A., M.Phil., (Ph.D.)

Dept. of commerce and Management.

2009-2010
GOVERNMENT ARTS, COMMERCE & MANAGEMENT
COLLEGE

AMBEDKAR VEEDHI, NEAR KR CIRCLE, BENGALURU

-560001
GOVERNMENT ARTS, COMMERCE AND MANAGEMENT
COLLEGE
AMBEDKAR VEEDHI, NEAR KR CIRCLE, BENGALURU
-560001
NAAC ACCREDITATION: B
Date:
Ref:

CERTIFICATE
This is to certify that VARUNASHREE.G. of final year
Bachelor of Business Management studying in GOVERNMENT ARTS,
COMMERCE AND MANAGEMENT COLLEGE has successfully completed
his project titled A STUDY ON WORKING CAPITAL MANAGEMENT
Has prescribed by the Bangalore University under our supervision and
Guidance.
This is to state that this project report in submitted in partial
fulfillment of the requirement for the degree of Bachelor of Business
Management, Bangalore University and not submitted for the award of
any degree or any other similar title or prize.
The matter in this project report has not been submitted
earlier to the best of our knowledge.

Mr.RAJASHEKARAPPA.K.
GAONKAR
M.Com., M.Phil.
Ph.D.
Head of the of
Commerce department

Dr. DEVANANDA RAM

M.sc.,
Principal

Mrs. SHOBA.C.
M.Com., M.B.A., M.Phil., (Ph.D)
Dept. of commerce and Management.

GUIDE CERTIFICATE

This is to declare that this dissertation titled A

STUDY ON WORKING CAPITAL MANAGEMENT. Is my original

work under the guidance of Mrs. SHOBA.C, lecturer of

Commerce and Management.

The project report partial fulfillment of Requirement

for the Bachelor of Business Management course of Bangalore
University during the VI semester. This has not been submitted
in part or full for any Diploma or Degree Or any other University.

Mrs.

Date:

SHOBHA.C.
PROJECT GUIDE

Place:

M.Phil., (Ph.D.)

Management

M.Com., M.B.A.,

Commerce &
DEPARTMENT

DECLERATION
This is to declare that this dissertation titled A
STUDY ON WORKING CAPITAL MANAGEMENT . Is my original

work under the guidance of Mrs. SHOBHA.C. Lecturer of

Commerce and Management towards partial fulfillment of
Requirement for the Bachelor of Business Management course of
Bangalore University during the VI semester.

I further declare that the project has not

been submitted in part or full for any Diploma or Degree Or any
other University.

Date:
Place:

VARUNASHREE.G

(07AQC08036)

ACKNOWLEDGEMENT
I express my immense thanks to
Dr.DEVANANDA RAM GOANKAR, Principal of GOVERNMENT
ARTS, COMMERCE AND MANAGEMENT COLLEGE, Mr.
RAJASHEKARAPPA.K. HOD of Commerce & Management who
gave me this opportunity to work on this project.
My wholehearted thanks to Mrs. SHOBHA.C
M.Com., M.B.A., M.Phil., (Ph.D.) Lecture of Commerce &
Management for being my guide during this project and
assisting me from the being till the completion of the project. I
am really successful mainly because of her guidance, support &
encouragement throughout the project and for successfully
completing this project.
I am also thankful to ************ Deputy Manager-Human
Resource, for giving me the opportunity to do my project work. It
has indeed being a very enriching and fruitful experience
throughout the project.
I extend my thanks to my family members and friends for
there and support in completing this project successfully.

Date:
Place:

VARUNASHREE.G.
(REG. NO.

07AQC08036)

CONTANTS

CHAPTER
NO

TOPIC DISCRIPTION

INTRODUCTION

RESEARCH METHODOLOGY

COMPANY PROFILE

ANALYSES AND
INTERPRETATION

SUMMARY OF FINDING
CONCLUSION & SUGESTION

ANNEXURE
BIBLOGRAPHY
QUESTIONNAIR

LIST OF TABLE

PAGE
NO

SL NO
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
Table 12
Table 13
Table 14
Table 15

PAGE
NO
Table showing current assets and current
liabiliies
Table showing quick ratio for the period of
2006-07 to 2008-09
Table showing debt equity ratio for he period of
2006-07 to 2008-09
Table showing gross profit ratio for the period
of 2006-07 to 2008-09
Table showing cost of goods sold ratio
Table showing the net profit ratio of the
organization from 2006-07 to 2008-09
Table showing the operating profit of the
organization from 2006-07 to 2008-09
Table showing the cash profit ratio from 200607 to 2008-09
Table showing operating expenses ratio
Inventory turn over ratio for the year 2006-07
to 2008-09
Showing the debtor turnover ratio
Table showing working capital turnover ratio
Table showing fixed assets turnover ratio for
the year 2006-07 to 2008-09
Balance sheet for the year 2008-09
Profit and loss account for the year 2008-09

LIST OF GRAPH
SL NO
GRAPG1

PAGE
NO
Graph showing current assets and current

GRAPH2
GRAPH3
GRAPH4
GRAPH5
GRAPG6
GRAPH7
GRAPH8
GRAPH9
GRAPH10
GRAPH11
GRAPH12
GRAPH13
GRAPH14

liabilities
Graph showing quick ratios for the period
of 2006-07 to 2008-09
Graph showing gross profit ratio for the
period of 2006-07 to 2008-09
Graph showing debt equity ratio for the
period of 2006-07 to 2008-09
Graph showing cost of goods sold ratio
Graph showing the net profit ratio of the
organization from 2006-07 to 2008-09
Graph showing the operating of the
organization profit of the organization
from 2006-07 to 2008-09
Graph showing the cash profit ratio from
2006-07 to 2008-09
Graph showing operating expenses ratio
Inventory turn over ratio for the year
2006-07 to 2008-09
Showing the debtor turnover ratio
Graph showing working capital turnover
ratio
Graph showing working capital turnover
ratio
Graph showing fixed assets turnover ratio
for the year 2006-07 to 2007-08

Chapter-5 Contents
FINANCIAL ANALYSIS STATEMENT

CURRENT RATIO
QUICK RATIO
DEBT EQUITY RATIO
GROSS PROFIT RATIO
COST OF GOODS SOLD RATIO
NET PROFIT RATIO
OPERATING PROFIT RATIO
CASH PROFIT RATIO
OPERATING EXPENSES RATIO
INVENTORY TURNOVER RATIO
DEBTOR TURNOVER RATIO
WORKING CAPITAL TURNOVER RATIO
FIXED ASSETS TURNOVER RATIO
COMPARITIVE INCOME STATEMENT
COMPARITIVE BALANCE SHEET

CRITERIA FOR JUDGING THE EFFIENCY OF WORKING

CAPITAL MANAGEMENT

The efficiency of working capital management can be judging through

accounting ratios that could be used for judging the efficiency of working
capital management are;
Current ratio;
This is the ratio between current assets and current liabilities. This ratio should
be preferable to2;1 it means that there will be adverse effect on business
operations, where the payments of current liabilities are made.
1. current assets; inventories
such as

sundry debtors
cash and bank loans and advances.
And other current assets.

2. current liabilities; liabilities and provisions.

Such as
Current assets
Cash ratio =------------------------------------CURRENT LIABILITIES

year
2006-07
2007-08
2008-09

Current assets
186562667.25
258899015.57
231914823.43

Current liabilities
100791733.95
158271470.34
122189847.15

Current ratio
1.850971
1.63570
1.8979876

ANALYSIS AND INTERPRETATIONS

The current ratio of manmul organization from 2006-2007 to 2008-09
revealed that the short term financial position of the organization is
not sound because this current ratio is less then the standard that is
2:1 in the above 3 years; company has not reached this
standard.further the current ratio is declining year by year; hence the
short term financial position is deteriorating.

QUICK RATIO:

It is also known as ACID TEST RATIO. It determined by most liquid

assets i.e, assets, which can be convert in to cash immediately by current
liability. This quick ratio of1:1 is generally considered favourable.

Quick ratio =

Liquid assets
______________________
Liquid liability

Quick assets such as

Cash
Debtors
Bills
Marketable securities
CURRENT liabilities
creditors
provision
TABLE2: TABLE SHOWING QUICK RATIOS FOR THE
PERIOD OF 2006-07 TO 2008-09
year
2006-07
2007-08
2008-09

Quick assets
124940589.12
207573971.82
172127899.28

Current liability
100791733.93
158271470.34
122189847.15

Quick ratio
1.239591
1.311505
1.408692

GRAPH SHOWING QUICK RATIOS FOR THE PERIOD

OF 2006-07 TO 2008-09

ANALYSIS AND INTERPRETIONS

Quick ratio: the quick ratio of manmul organization revealed that the
companys short term financial position is sound and company may
be in a position to pay its day obligations because the quick ratio is
increase

DEBT EQUITY RATIO:

Debt equity ratio is the ratio shows the relationship between external equity and
internal equity.

EXTERNAL EQUITY
DEBT EQUITY RATIO= -------------------------------------------INTERNAL EQUITY

TABLE3: TABLE SHOWING DEBT EQUITY RATIO FOR THE PERIED

OF 2006-07 TO 2008-09
YEAR
2006-07
2007-08
2008-09

EXTERNAL
EQUITY
100791733.95
158271470.34
122189847.15

INTERNAL
EQUITY
69928943.94
95511841.47
104240887.56

DEBT EQUITY
RATIO
1.441345
1.667087
1.1721873

GRAPH SHOWING DEBT EQUITY RATIO FOR THE PERIED

OF 2006-07 TO 2008-09

ANALYSIS AND INTERPREATIONS

The analysis of debt equity ratio revealed that the companys trading
equity is increasing year by year. It indicates the external debt of the
company is increase.

GROSS PROFIT RATIO

It is the ratio between gross profit and sales and expressed in

percentage.

GROSS PROFIT RATIO =

GROSS PROFIT
_____________________________ 100
SALES

TABLE 4: TABLE SHOWING GROSS PROFIT RATIO FOR THE PERIED OF

2006-07 TO 2008-09
YEAR

GROSS PROFIT

2006-07
2007-08
2008-09

165277457.45
186111422.06
186869907.47

SALES
1635547988.81
2125561574.19
2493292270.22

GROSS PROFIT
RATIO
10.11534
8.755870
7.4944905

GRAPH SHOWING GROSS PROFIT RATIO

ANALYSIS AND INTERPRETATION

The gross profit of the company is also declining it was 8.75 in 200708 and it is reduce to 7.49 in 2008-09

COST OF GOODS SOLD RATIO

Cost of goods sold ratio is the ratio which express the relation
ship between cost of goods sold and the sales. It can be express
by using following formulas.

COST OF GOODS SOLD

COST OF GOODS SOLD RATIO = ------------------------------------------------- 100
SALES

TABLE5: TABLE SHOWING COST OF GOODS SOLD RATIO.

YEAR
2006-07
2007-08
2008-09

COST OF GOODS
SOLD
1470270531.36
1939450152.13
2306422362.75

SALES
1.635547988.81
2125561574.19
2493292270.22

COST OF GOODS
SOLD RATIO
89.89467
91.24412
92.50509

GRAPH SHOWING COST OF GOODS SOLD RATIO FROM

2006-07 TO 2008-09

ANALYSIS AND INTERPRETATION

The cost of goods sold is increasing year by year that affects the
profitability of the organization.

NET PROFIT RATIO

It expresses the relationship between the net profits and sales it can be
express by using the following formula.

NET PROFIT
NET PROFIT RATIO = ----------------------------------------- 100
SALES

TABLE6: TABLE SHOWING THE NET PROFIT RATIO OF

THE ORGANIZATION FROM 2006-07 TO 2008-09
YEAR

NET PROFIT

2006-07
2007-08
2008-09

4730453.83
1739613.95
20050314.36

SALES
1635547988.81
2125561574.19
2493292270.22

NET PROFIT
RATIO
0.289227
0.081842
0.8041702

GRAPH SHOWING THE NET PROFIT RATIO

OF THE ORGANIZATION FROM 2006-07 TO 2008-09

ANALYSIS AND INTERPRETATION

The net profit of the organization is very low it is less then 1% in the majority of
he proceeding years hence the company can not declare the dividend therefore the
share holder can not get the return on their investment.

OPERATING PROFIT RATIO

It express the relationship between operating profit and it can be express by

using the following formula.

OPERATING PROFIT
OPERATING PROFIT RATIO = _________________________________ 100
SALES

TABLE7: TABLE SHOWING THE OPERATING PROFIT OF THE

ORGANIZATION FROM 2006-07 TO 2008-09
YEAR
2006-07
2007-08
2008-09

OPERATING
PROFIT
1557697451.93
2068409286.95
2443325537.08

SALES
1635547988.81
2125561574.19
2493292270.22

OPERATING
PROFIT RATIO
95.240094
97.311911
97.99595

GRAPH SHOWING THE OPERATING PROFIT OF THE ORGANIZATION

FROM 2006-07 TO 2008-09

ANALYSIS AND INTERPRETATION

Operating profit is also increasing and the percentage of operating
profit to sales is high.

CASH PROFIT RATIO

It is the combination of operating profit and depreciation and

sales it can be express by using the following formula

DEPRECIATION+ OPERATING PROFIT

CASH PROFIT RATIO = _________________________________________ 100
SALES

TABLE8: TABLE SHOWING THE CASH PROFIT RATIO

FROM 2006-07 TO 2008-09
YEAR

CASH PROFIT

2006-07
2007-08
2008-09

1562877144.88
2088941867.62
2461197918.08

SALES
1635547988.81
2125561574.19
2493292270.22

CASH PROFIT
RATIO
95.55678
98.27717
98.71772

GRAPH SHOWING THE CASH PROFIT RATIO

FROM 2006-07 TO 2008-09

ANALYSIS AND INTERPRETATION:

The cash profit is also increasing year by year this indicates the
liquidity position of the company.

OPERATING EXPENSES RATIO

It expresses the relationship between operating

expenses and sales.

OPERATING EXPENSES
OPERATING EXPENSES RATIO = ------------------------------------------- 100
SALES

TABLE9: TABLE SHOWING OPERATING EXPENSES RATIO

YEAR
2006-07
2007-08
2008-09

OPERATING
EXPENSES
77850536.88
57152287.24
49966733.14

SALES
1635547988.81
2125561574.19
2493292270.22

OPERATING
EXPENSES RATIO
4.759905
2.688808
2.004046

GRAPH SHOWING OPERATING EXPENSES RATIO

ANALYSIS AND INTERPRETATION

The operating expanses ratio decreasing year by year. It shows the clear
picture of operating expenses of the company.

INVENTORY TURN OVER RATIO

Inventory turnover ratio is the ratio which indicates the number
of times the stock is turned over during the period

COST OF GOOD SOLD

INVENTORY TURNOVER RATIO = --------------------------------------------- 100
AVERAGE STOCK

TABLE10: INVENTORY TURNOVER RATIO FOR

THE YEAR 2006-07 TO 2008-09
YEAR

COST OF GOODS
SOLD

AVERAGE STOCK

2006-07
2007-08
2008-09

1470270531.36
1939450152.13
2306422362.75

53865900.31
56473560.94
55555983.95

INVENTORY
TURNOVER
RATIO
27.395014
34.342621
41.51528

GRAPH SHOWING INVENTORY TURN OVER RATIO FOR THE

YEAR 2006-07 TO 2008-09

ANALYSIS AND INTERPRETATION

In the above figure it could be seen that peck from 2006-2007 due
to lease average stock is deteriorated .

DEBTOR TURNOVER RATIO:

Debtor turnover ratio an important element of the current assets and there
fore the quality of debtors to a grate extent determines the liquidity of a
firm. Debtor turn over ratio which shows the relationship between the
debtors to turnover

TABLE11: SHOWING THE DEBTOR TURNOVER RATIO

YEAR

NET SALES

2006-07
2007-08
2008-09

1635547988.81
2125561574.19
2493292270.22

AVERAGE
DEBTORS
24566600.71
66910335.57
93600752.96

DEBTORS TURN
OVER RATIO
66.576080
31.767313
26.637523

GRAPH SHOWING THE DEBTOR TURNOVER RATIO

ANALYSIS AND INTERPRETATION

Debtors turnover indicates the efficiency of the staff in change in

collection of books debts. The higher value of the debtors turnover ratio.
The more efficient is the management receivable so in the figure the
highest debtors turm over ratio in 2006-07. i.e. 66.57 times.

Working capital turnover ratio

Working capital turnover ratio are measures the ratio of the working
capital utilization. It indicates as following

NET SALES
WORKING CAPITAL TURNOVER RATIO = -------------------------------- 100
SALES

TABLE12: TABLE SHOWING WORKING CAPITAL

TURNOVER RATIO
YEAR

NET SALES

2006-07
2007-08
2008-09

1635547988.81
2125561574.19
2493292270.22

SALES
85770933.30
100627545.23
109724976.28

NET WORKING
CAPITAL
19.07
21.12
22.72

GRAPH SHOWING WORKING CAPITAL TURNOVER RATIO

ANALYSIS AND INTERPRETATION

From the figure it could be seen that the company had a
gradual increasing working capital turn over ratio.

FIXED ASSETS TURNOVER RATIO:

This ratio measure efficiency, which the firm utilized its investment in
assets such as land, building, plant and machinery etc. it is calculated
dividing cost of goods sold by total assets i.e.duplicated value of fixed
assets.

SALES
FIXED ASSETS TURNOVER RATIO = ----------------------------------- 100
FIXED ASSETS

TABLE13: TABLE SHOWING FIXED ASSETS TURNOVER RATIO FOR

THE YEAR 2006-07 TO 2008-09
YEAR
2006-07
2007-08
2008-09

SALES
1635547988.81
2125561574.19
2493292270.22

FIXED ASSETS
81323296.27
80296821.44
110587540.44

FIXED ASSETS
TURNOVER
RATIO
20.116784
26.471304
22.545869

GRAPH SHOWING FIXED ASSETS TURNOVER RATIO FOR

THE YEAR 2006-07 TO 2008-09

ANALYSIS AND INTERPRETATION

In 2006-07 the fixed assets turnover ratio is 20.116 times which is more
than the ideal ratio and after 2007-08 the ratio was fluctuating in 200809 it more than the ideal ratio so we can say that the fixed assets of the
company are proper utilized.

FINDINGS

FINDINGS:
with the analysis and my experience with the manmul in the short period of one month, I
could make out the following findings.

1. the current ratio for the company from 2006-07 to 2008-09 is declining this
indicates the sound short term financial position of the company.
2. the liquid ratio for the above period is also increases but the rate of decline
is not constant there is a fluctuations in the liquidity position of the
company this is due to increase in inventory position.
3. the companys trading on equity is diminishing for the funds, depends on
own capital.
4. the working capital position of the company is declining from year to year
it indicates the funds available is not sufficient to meet its day to day
obligations.
5. gross profit ratio is very low because of increase in cost of goods sold.
6. the operating cost of the company is also increasing thats why the
operating profit is very low.
7. the net profit is very low company could not declare the dividend to its
share holders.
8. the cash position of the company is also increase
9. there is a repayment of long term loan liability of the company
10.

the deffered expenses areincreasing.

Suggestion and recommendation

Company profile

COMPANY PROFILE-3 CONTENTS

INTRODUCTION
OBJECTIVES
BACKGROUND
ORGANISATIONAL STATUS
MILK PROCUREMENT
LIQUID MILK MARKETING
TYPES OF MILK PRODUCTS MARKETING BY MANMUL
INFRASTRUCTURE DEVELOPMENT.
SWOT ANALYSIS

INFRASTRUCTURE DEVELOPMENT
The strategy of mandya milk union is procure more, sell more& serve more
and reaping the benefits of economies of scale. In order to realize this stratery,
the union has implemented the following projects so that more and more milk
can be procured and processed. This will help us to serve our producer member
by passing on the maximum benefits, we are consciously adopting the growthoriented strategy of helping our producers to grow by ourselves growing
constantly.

The mandya district co- operative milk procures societies union limited
established in 1987 with its headquarters at gejjalagere, milk plant of 2.5 lakh
litres capacity and a power plant of 10 MTs per day
The union is certified with an ISO9001:2008.
The district is under cauvery basin, perennial green are available to the cattle, the
cattle management by the women farmers is highly organized, coupled with
existence of good number of crossbred milch animals with lactation period. The
union procures on an average 4.24 lakh kgs. Per day and sell 1.71 lakh litres per
day. There are 23 bulk milk coolers,260 automatic milk collection in the union.

The union sells TM, FCM, DTM& HCM variants of milk and also manufactures
ghee. Curds, butter, skimmed milk powder, peda, spiced butter milk, burfi and
khova.

Suggestion and recommendations

The company should arrange the brand awareness campigns and exhibitions.
Retailers sales margin should be increased to motivate them to push the NANDINI
products more.
Advertisements in local newspapers, cable television network should be effectively used.
Business to business and business to consumers website should be created to enhance
online marketing.
Separate HR manager should be appointed to know the problem of workers and to solve
them.
Training should be given to retailers in marketing and relationship building activities.
Still better promotional stratery should be used to position the products in the market.
To provide sign boards within the dairy to facilitate the easy identification of the
departments.
Job rotation should be done frequently to workers especially in the plant, so that they
arerealized from boredom of work, and which also motivates them to acquire additional
skills.
To build the teams of empowered employees.
To provide employees with special training such as job enlargement, job enrichment and
empowered teams, so that the productivity is increased.
To stay competitive should adapt new advanced technologies.

CONCLUSION

CONCLUSION
Indian dairy sector contribute a large in agriculture Gross Domestic Products,
since milk is one of the basic need for the people. Mandya dairy. A service
oriented organization as entered households of mandya city and some parts of
Bangalore rural& urban areas with efficient products and services.
The customers can take into confidence so that it helps dairy with the
better insights even though KMF is facing a very strict competition from the
competitors like Heritage, Arogya, Dodla and Swastik. It has strong brand image
and also better distribution network. This study clearly inducts retailers opinion,
this is no stage complement towards the milk marketing of MANMUL and how
services can be improved.