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Project Report

(Submitted For the Degree Course Of B.Com. Honours in Accounting & Finance Under The
University Of Calcutta)

A study on Working Capital Management of Asian Paints Limited


Submitted by

Name

Debasish Roy

C.U. Registration No. :


C.U. Roll No.

College Roll No.

CH-101

Name of the College

: DINABANDHU ANDREWS COLLEGE

Supervised by

Name of the Supervisor: Prof. Toseema Dey


Name of the College

: DINABANDHU ANDREWS COLLEGE

Date of submission
February, 2016

ACKNOWLEDGEMENT

Words are indeed inadequate to convey my deep sense of gratitude to all those who have helped me
in completing this project to the best of my ability. Being a part of this project has certainly been a
unique and a very productive experience on my part.I take the privilege to acknowledge and extend
my heartfelt gratitude to prof. Sharmishta dasgupta for helping me to solve all kinds of queries
rgarding the project work.The books and project material given to me were of great use in building
the project. Lastly i would like to thank my private tutor miss. Sudipta mitra and friends who
encouraged me to do this research work and all those who contributed directly or indirectly in
completing this project.

TABLE OF CONTENTS

CHAPTER-1
INTRODUCTION

PAGE NO.

1.1Background of the study...................................................................................4


1.2Review of Literature..4
1.3Need of Project Work5
1.4 Objective of the study.......................................................................................5
1.5 Methodology....................................................................................................... 5-7
1.6 Limitations of the study.....................................................................................7
1.7 Chapter Planning................................................................................................8
CHAPTER-2
CONCEPTUALFRAMEWORK..........................................................................9- 17
CHAPTER-3
PRESENTATION OF DATA, ANALYSIS AND FINDINGS
3.2 Analysis of data and Findings.......................................................................18-26
CHAPTER-4
CONCLUSION AND RECOMMENDATION
4.1 Conclusion.....................................................................................................27-28
4.2 Recommendation.................................................................................................28
BIBLIOGRAPHY.............................................................................................29
3

CHAPTER-1
INTRODUCTION
1.1BACKGROUND OF STUDY
A project entitled A study on working capital management of Asian Paints Ltd. was carried out with
an intention to analyze the utilization of working capital. The study helps to know the level of current
asset and current liability. Various analytical tools is been used to analyze and to make inference.
Findings are based on the analysis; the major finding was that the company has a good liquidity
position and profit percentage. Based on the findings various suggestions have been given for the
further improvement of the effective utilization of the working capital.

1.2REVIEW OF LITERATURE:
Article Published;
Author:
BELT B.&SMITH K.V.:-IN 1991,Working capital management practices of Australian firms, in
the last 15 years have seen a substaintial increasein the study of working capital
management.Published article on working capital management (also known as short term financial
management)have progressed from articles that described What we do in our shopto broader
treatises that look at how working capital management is integrated into the overall operations of the
firm and specifically, how working capital decisions contribute to the financial objective of
maximizing firm value[14:34-57]

JOSE M.L.,LANCASTER C.& STEVEN J.L.:-IN 1996,this study examine the


relationship between profitability measures & working capital management on going liquidity needs
for a large cross section of the firm over a 20 years period .Long run equilibrium relationship between
the cash conversion cycle, a measures of on going liquidity management & alternative measures of
profitability are tested using both nonparametric & multiple regression analysis.

D.M. MATHUVA:-IN 2010,Working capital management component & profitability in Kenyan


listed firms, this study provides evidence supported the central bank of kenyans move to gradually

raise bank capital level by 2012 & to tightly monitor the operations of banks so as to ensured that
Kenyan banks are more efficient in their operation while at the same time begin profitable.

1.3 THE NEED OF PROJECT:According to C.U guidelines relating to project work for B.Com (HONS) degree course.I have chosen
the project containing the title of Working Capital and it is gladly approved by my supervisor. The
need of the project to develop the different learning skill of a student. This project work will help a
student to develop their thinking and analyzing power, communication skill, research skill,
interpretation skill, public relationship skill while collecting secondary data, information &
technology skill, time management skill and this will also help to develop knowledge in different
aspect of learning process.

1.4 OBJECTIVE OF THE STUDY:- Study of working capital management is important


because unless the Working capital is managed effectively, monitored efficiently planed properly and
reviewed periodically at regular intervals to remove bottlenecks if any the Company following further
objectives are framed for a depth Analysis.

To study the working capital management of Asian Paints Ltd.


To study the optimum level of current assets and current liabilities of the Company.
To study the liquidity position through various working capital related Rations.
To study the working capital components such as receivables accounts, Cash

Management.
To estimate the working capital requirement of Asian Paint Ltd.
the operating and cash cycle of the Company.

1.5 RESEARCH METHODOLOGY:Research methodology is a way to systematically solve the research problem. It may be understood as
a science of studying now research is done systematically. In that various steps, those are generally
adopted by a researcher in studying his problem along with the logic behind them.
It is important for research to know not only the research method but also know methodology. The
procedures by which researcher goes about their work of describing, explaining and predicting
phenomenon are called methodology. Methods comprise the procedures used for generating,
5

collecting and evaluating data. All this means that it is necessary for the researcher to design his
methodology for his problem as the same may differ from problem to problem. Data collection is
important step in any project and success of any project will be largely depend upon now much
accurate you will be able to collect and how much time, money and effort will be required to collect
that necessary data, this is also important step. Data collection plays an important role in research
work. Without proper data available for analysis you cannot do the research work accurately.

1.5.1 Types of data collections


There are two types of data collection methods available.

A) Secondary data collection:The secondary data are those which have already collected and stored. Secondary data easily
get those secondary data from records, journals, annual reports of the company etc. It will save the
time, money and efforts to collect the data. Secondary data also made available through trade
magazines, balance sheets, books etc.

This project is based on secondary data collected through internet but primary data collection had
limitation such as matter confidential information thus project is based on secondary information
collected through three years annual report of Asian Paints Ltd., supported by various books and
internet sides. The data collection was aimed at study of working capital management of the co.
Project is based on:

Annual report of Asian Paints Ltd 2010-11


Annual report of Asian Paints Ltd 2011-12
Annual report of Asian Paints Ltd 2012-13
Annual report of Asian Paints Ltd 2013-14
Annual report of Asian Paints Ltd 2014-15

b) COVERAGE COMPANY: ASIAN PAINTS LTD


1.6 LIMITATION OF THE STUDY
6

Following limitation was encountered while preparing this project:

Limited data: - This project has completed with annual reports ; it just constitutes one part of data
collection i.e. secondary .There were limitation for primary data collection because of confidentiality.

Limited period: - This project is based on five year annual reports. Conclusion and
Recommendations are based on such limited data. The trend of last five year May or may not reflect
the real working capital position of the company.

Limited area: - Also it was difficult to collect the data regarding the competitors and their
financial information. Industry figures were also difficult to get.

1.7 Chapter Planning:

Chapter 1: The first chapter is an introductory chapter. It addresses the research problem and
focuses on the research methodology adopted. It also undertakes literature review, justified/need,
objective and indicates the limitations of the study.

Chapter 2: In this chapter the theoretical aspects of Working Capital is discussed, with particular
emphasis on details of the subject matter. It also contain the theoretical underpinning of Working
Capital.

Chapter 3: In this chapter the main focus is on the data analysis of the Asian paints limited of
different years of Working capital and of that particular industry, through Ratio Analysis and Trend
Analysis.

Chapter 4: This chapter includes the conclusion and recommendation of this particular project.

CHAPTER -2
CONCEPTUAL FRAMEWORK
2.1 What is working capital?
Apart from financing for investing in fixed assets,every business also requires funds on a continual
basis for carrying on its operations. These include amounts expenses incurred for purchase of raw
material,manufacturing,selling, and administration until such goods are sold and the monies
realized.Business transactions are generally carried on credit with a number of days elapsing
subsequent to the sale being affected for realization of proceeds1.While part of the raw material may
be purchased by credit, the business would still need to pay its employees, meet manufacturing &
selling expenses (wages, power, supplies, transportation and communication) and the balance of its
raw material purchases. Working capital refers to the source of financing required to by business
entities. On a continual basis for meeting these needs.
Thus the need for working capital from the prevalence of credit in business transactions, need to fund
manufacturing and to account for the variations in the supply of raw material and demand for finished
goods.

2. Gross working capital:


Gross working capital refers to the firms investments in current assets. Current assets are the assets
which can be converted into cash within an accounting year and include cash, short-term securities,
debtor, bills receivable and stock (inventory).

3. Net working capital:


Net working capital refers to the difference between current assets and liabilities. Current liabilities
are those claims of outsiders which are expected to nature for payment within an accounting year and
include creditors, bills payable and outstanding expenses.

Net working capital can be positive or negative. A positive net working capital would arise
when current assets exceed current liabilities. A negative net working capital occurs when current
liabilities are in excess of current assets.

4. Characteristics of working capital:

It is continually required for a going concern.


However, the quantum of working capital fluctuates depending on the level of activity.
Working capital is impacted by numerous transactions on a continual basis.

The above characteristics render limit based financing from banks ideal for working capital financing.
This is because the client is charged interest only on the average outstanding utilized and is saved
with the bother of reinvesting short term surpluses arising out of low working capital utilization at a
point in time.
Further since the transactions of the business are generally routed through a current account with a
bank, availing a credit limit from the same bank is really convenient. Thus , working capital
requirements are generally financed through limit based financing by banks.

5. Source of working capital:


The typical sources of working capital are summarized as below:
1. Funds from operations (adjusted net income)
2. Sale of non current assets:
Sale of long term investment (shares, bonds/debentures etc.)
Sale of tangible fixed assets like land, building,plant,or equipments
Sale of intangible fixed assets like goodwill patents or copyright.
3. Long term financing:
Long term borrowings
Issuance of equity and preference shares.
10

4. Short term financing such as bank borrowings.


6. Appraisal of Bank Finance:
The appraisal of bank finance for working capital involves the
(1)
(2)
(3)
(4)
(5)

following steps:

Estimation of the level of Gross Working Capital.


Estimation of the level of Current Liabilities.
Computation of Net Working Capital Gap.
Computing the share of NWC Gap required to be brought by the borrower as Margin.
Computation of the level of Bank Finance.

7. Estimation of gross working capital:


For a systematic and proper estimation of the gross working capital requirements of a firm, it is
essential to identify its various components and analyze them in detail and for that it is important to
understand the operating cycle.

8. Operating Cycle Theory:


To estimate the gross working capital requirements, the understanding of the operating cycle is very
important. The function of any trading unit is to procure materials, process the same, sell the finished
goods and realize money and utilize the money so received, to procure material again and to continue
the cycle all over again. Thus, the process starts with purchase of materials required for the trading.
The process of purchase of material may take sometime due to the number and nature of materials
transportation, etc. One the goods are produced,it may not be sold immediately and it may have to be
stored in a go down for some days before they are sold.Storing of such finished goods involves cost
of material used in such finished products,labour and other manufacturing expenses incurred in
producing them,etc.
Some goods will be sold on credit.Till such time sale proceeds are not realized,funds are blocked 127
days in such receivales.Finally ,when the sales proceeds are realized,the funds are again used to
procure materials,etc. as above and the whole process/cycle starts all over again.

11

D
E
B
T
O
R
S

F
N
S
E
G
O
O
D

C
A
S
H

W
.
I
.
P

I
H
D

R
A
W
M
A
E
R
A
L

T
I

OPERATING CYCLE
Here the total operating cycle will be the summation of the entire period,for trading house
procurement of raw materials and production would not be include into the operating cycle.
For a trading house as well as a producer is very important to understand as to how many times the
operating cycle repeats itself, this is quiet important while calculating the limit for raising finance
especially working capital finance.

9. Working Capital Management


9.1) Inventory Management:
Inventories consist of stocks-raw materials, work in progress of finished goods waiting to be
consumed in production or to be sold. The total balances of inventory are the sum of the value of each
individual stock line. Stock records are needed to provide an account of activity within each stock
line as evidence to support the balances used in financial reports. A department also needs a system of
internal controls to efficiently manage stocks and to ensure that stock records provide reliable
information. Departmental financial reports show only the total inventory balance. Analysts from
12

outside the department can examine this balance by using ratio analysis or other techniques.
However, this gives only a limited assessment of inventory and is not adequate for internal
management. Good financial management necessities the careful analysis of individual inventory
lines. Inventory management is an important aspect of working capital management because
9neventories themselves do not earn any revenue. Holding either too little or too much inventory
incur costs.

9.2) Account Receivable Management


Debtors (Accounts Receivable) are customers who have not yet made payment for goods or services
which the department has provided. The objective of debtor management is to minimize the timelapse between completion of sales and receipt of payment. The costs of having debtors are :
Opportunity costs (cast is not available for other purposes);
Bad debts.
Debtor management includes both pre-sale and debt collection strategies.

Pre-sale strategies include:

Offering cash discounts for early payment and/or imposing


Penalties for late payment;
Agreeing payment terms in advance;
Requiring cash before delivery;
Setting credit limits;
Setting criteria for obtaining credit;

Post sale strategies include:


Placing responsibility for collecting the debt on centre that made the sale.
Identifying long overdue balances and doubtful debts by regular analytical reviews
Having an established procedure for late collections, such as;
1. A reminder; letter;
2. Cancellation of further credit;
3. Telephone calls;
4. Use of a collection agency;
5. Legal action.

13

9.3) Cash Management:


Good cash management can have a major impact on overall working capital management. The key
elements of cash management are:

Cash forecasting ;
Balance management;
Administration;
Internal control.

Cash Forecasting
Good cash management requires regular forecasting in order for these to be martially accurate; they
must be based on information provided by those manager responsible for the amounts and timing of
expenditure. Capital expenditure and operating expenditure must be taken into account. It is also
necessary to collection information about impending cash transactions from other financial systems,
such as creditor and payroll.

The Importance of Good Working Capital Management :


Working capital constitutes part of the Crowns investment in a department Associated with this is an
opportunity cost to the Crown. (Money invested in one area may cost opportunities for investment
in other areas). If a department is operating with more working capital than is necessary, this overinvestment represents an unnecessary cost to the Crown.

Approaches to Working Capital management:


The objective of working capital management is to maintain the optimum balance of each of the
working capital components. This includes making sure that funds are held as cash in bank deposits
for as long as and in the largest amounts possible, thereby maximizing the interest earned. such cash
may more appropriately be invest in other assets or in reducing other liabilities.
Working capital management takes place on two levels:
Ratio analysis can be used to monitor overall trends in working capital and to identify area requiring
closer management.
The individual components of working capital can be effectively managed by using various
techniques and strategies.
14

The individual components of working capital can be effectively managed by using various
techniques and strategies.
When considering these techniques and strategies, departments need to recognize that each
department has a unique mix of working capital components. The emphasis that needs to be placed on
each component varies according to department. For example, some departments have significant
inventory levels; others have little if any inventory.
Furthermore, working capital management is not an end in itself. It is an integral part of the
departments overall management. The needs of efficient working capital management must be
considered in relation together aspects of the departments financial and non-financial performance.

9.4) Balanced Working Capital


The dangers of excessive working capital:
It results in unnecessary accumulation of inventories. Thus chances of inventory mishandling, waste
theft and losses increase.

It is an indication of defective credit policy and slack collection period. Consequently, higher

incidence of bed debts results which adversely affects the profit.


Excessive working capital makes management complacent which degenerate into managerial
inefficiency.

The dangers of inadequate working capital:

It stagnates growth. It becomes difficult for the firm to undertake profitable projects for non

availability of working capital funds.


It becomes difficult to implement operating plans and achieve the firms operating target.
Operating inefficiencies creep in it when it becomes difficult even to meet day to day

commitments.
Fixed assets are not efficiently utilized for the lack of working capital funds. Thus the firms

profitability would deteriorate.


Paucity of working capital fund render the firm unable to avail attractive credit opportunities

etc.
Paucity of working capital funds render the firm unable to avail attractive credit opportunities

etc.
The firm loses its reputation when it is not in a position to honor its short term obligations. As
a result, the firm faces tight credit terms.
15

An enlightened management should, therefore , maintain the right amount of working capital
on a continuous basis.

10. IMPORTANCE OF WORKING CAPITAL:

SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the

solvency of the business by providing uninterrupted of production.


GOODWILL: Sufficient amount of working capital enables a firm to make prompt payments

and makes and maintain the goodwill.


EASY LOANS: Adequate working capital leads to high solvency and credit standing can

arrange loans from banks and other on easy and favorable terms.
CASH DISCOUNTS: Adequate working capital also enables a concern to avail cash

discounts on the purchases and hence reduces cost.


REGULAR SUPPLY OF RAW MATERIAL: Sufficient working capital working capital

endures regular supply of raw materials and continuous production.


REGULAR PAYMENT OF SALARIES: Wages and Other Day To Day Commitments : It
leads to the satisfaction of the employees and raises the morale of its employees, increases

their efficiency, reduces wastage and cots and enhances production and profits.
ABILITY TO FACE CRISES: A concern can face the situation during the depression.
HIGH MORALE: Adequate working capital brings an environment of securities,
confidence , high morale which results in overall efficiency in a business.

11. Company Profile:Asian paints are Indias largest paint company in India and asias third largest paint company with a
turnover of 54.63 billion. The company operates in 20 countries and has 28 manufacturing facilities
in the world servicing consumers in over 65 countries. Besides Asian paints the group operates
around the world through its subsidiaries Berger International Limited,Apco Coatings ,SCIB Paints
and Taubmans.Forbes Global magamize USA ranked Asian Paints among the 200 bests small
16

companies in the world for 2002 and 2003 and presented the best under a Billion award,to the
company .The present MD and CEO of the company P.M. Murty.

17

CHAPTER 3
DATA ANALYSIS
CURRENT RATIO: CURRENT ASSET
CURRENT LIABILITIES

CURRENT
ASSETS
CURRENT
LIABILITIE
S
CURRENT
RATIO

2010-11
1730.44

2011-12
2777.59

YEAR
2012-13
3041.26

1745.98

2290.08

2358.66

2783.84

2757.82

0.99

1.21

1.28

1.43

1.51

2013-14
3982.41

2014-15
4169.27

CURRENT RATIO
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2010-11

2011-12

2012-13

2013-14

2014-15

INTERPRETATION
Current ratio of Asian paints was good in the year 2010-11. Again it was slowly increasing in
the year 2011-12, 2012-13, 2013-14. Again it increased a lot in the year 2014-15.
.It presents current ratio positioning is good.

18

LIQUID RATIO:

CURRENT ASSETS STOCK

CURRENT LIABILITIES- BANK OVERDRAFT

CURRENT
ASSETS
LESS:
STOCK
QUICK
ASSETS
CURRENT
LIABILITIES
LESS: BANK
OVERDRAF
T
QUICK
LIABILITIES
LIQUID
RATIO

2010-11
1730.44

2011-12
2777.59

YEAR
2012-13
3041.26

1071.76
658.68

1264.62
1512.97

1480.79
2317.36

1665.05
2317.36

1802.18
2367.09

1745.98

2290.08

2358.66

2783.84

2757.82

NIL

NIL

NIL

NIL

NIL

1745.98

2290.08

2358.66

2783.84

2757.82

0.37

2.19

2.05

2.39

1.51

2013-14
3982.41

2014-15
4169.27

LIQUID RATIO
3
2.5
2
1.5
1
0.5
0
2010-11

2011-12

2012-13

2013-14

INTERPRETATION:

19

2014-15

It indicates quick repayment capacity of short term loans and also creates safety measure for
the purpose of repayment of creditors.
In comparison to other years, 2013-14 liquid ratio being higher than year 2014-15 and
therefore it indicates liquidity condition mean to say not so satisfactory.

CASH RATIO: CASH+CASHEQUIVALENT+MARKETABLESECURITIES


CURRENT ASSET

2010-11
RATIO 0.01

2011-12
0.22

2012-13
0.18

YEAR
2013-14
0.18

CASH RATIO
0.25
0.2
0.15
0.1
0.05
0
2010-11

2011-12

2012-13

INTERPRETATION

20

2013-14

2014-15

2014-15
0.01

Cash ratio implies that sufficient cash to meet the dues in time. In the year 2011-12 , high ratio
never to mean high profitability. Generally, it meets up short term cash commitment and not
for investment.

CREDITORS TURNOVER RATIO: TOTAL SUPPLIER PURCHASES


AVERAGE ACCOUNTS PAYABLE
2010-11
TOTAL SUPPLIER NIL
PURCHASES
AVERAGE
TRADE
PAYABLES

NIL

AVERAGE
ACCOUNT
PAYABLES
CREDITORS
TURNOVER
RATIO

NIL

YEAR
2011-12
4722.74

2012-13
5125.48

2013-14
5758.71

2014-15
6191.72

(NIL
+1069.06)/
2
=534.53
534.53

(1069.06 + (1214.12 + (1498.84 +


1214.12)/2 1498.84)/2 1313.08)/2
=1141.59
=1356.48
=1405.96
1141.59

1356.48

1405.96

8.83

4.48

4.24

4.40

21

CREDITOR'S TURNOVER RATIO


10
9
8
7
6
5
4
3
2
1
0
2011-12

2012-13

2013-14

2014-15

INTERPRETATION
Creditors turnover ratio is gradually decreasing. In comparison to the year 2011-12. The level
of creditors turnover ratio remained more or less same in the respective three years that is
2012-13, 2013-14 and 2014-15.

22

WORKING CAPITAL TO TOTAL ASSET RATIO: WORKING CAPITAL


TOTAL ASSETS
2010-11
WORKING 15.94
CAPITAL
TOTAL
2115.68
ASSETS
WORKING 0.07
CAPITAL
TO TOTAL
ASSET
RATIO

2011-12
487.5

YEAR
2012-13
682.6

2013-14
1198.57

2014-15
1411.45

4980.03

5648.28

6681.71

7273.20

0.09

0.12

0.17

0.19

WORKING CAPITAL TO TOTAL ASSET RATIO


0.2
0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2010-11

2011-12

2012-13

2013-14

2014-15

INTERPRETATION:

Working capital to total asset ratio is constantly increasing for last 5 years.

23

YEAR
2011-12
2012-13
7964.16
8921.13

2013-14
10300.22

2014-15
11485.67

(NIL+
500.24)/2
=250.12

(500.24+
633.88)/2
=567.06

(633.88+
712.36)/2
=673.12

(712.36+
728.87)/2
=720.61

NIL

NIL

NIL

NIL

NIL

NIL

250.12

567.06

673.12

720.61

NIL

31.84

15.73

15.30

15.93

2010-11
NIL

NET CREDIT
SALES
AVERAGE
NIL
TRADE
RECEIVABLES
AVERAGE
BILLS
RECEIVABLE
AVERAGE
ACCOUNT
RECEIVABLE
DEBTORS
TURNOVER
RATIO

DEBTORS TURNOVER RATIO: NET CREDIT SALES


AVERAGE ACCOUNT RECEEVABLE

DEBTOR'S TURNOVER RATIO


35
30
25
20
15
10
5
0
2011-12

2012-13

2013-14

INTERPRETATION:
24

2014-15

Debtors turnover ratio is gradually decreasing in comparison to 2011-12.

INVENTORY TURNOVER RATIO:

COST OF GOODS SOLD


AVERAGE INVENTORY

COST OF
GOODS
SOLD
AVERAGE
INVENTO
RY
INVENTO
RY
TURNOVE
R RATIO

2010-11
3947.32

2011-12
5064.37

YEAR
2012-13
5530.07

917.45

1168.09

1372.60

1572.92

1733.61

4.30

4.33

4.02

3.96

3.92

2013-14
6241.14

2014-15
6798.66

INVENTORY TURNOVER RATIO


4.4
4.3
4.2
4.1
4
3.9
3.8
3.7
2010-11

2011-12

2012-13

2013-14

INTERPRETATION:
25

2014-15

The present inventory turnover ratio in the year 2011-12 it has increased, thereafter it has
been constantly decreasing.

26

CURRENT ASSET TO TOTAL ASSET RATIO: CURRENT ASSET


TOTAL ASSET

CURRENT
ASSET
TOTAL
ASSET
CURRENT
ASSET TO
TOTAL
ASSET
RATIO

2010-11
1730.44

2011-12
2777.59

YEAR
2012-13
3041.26

2115.68

4980.03

5648.28

6681.71

7273.20

0.81

0.55

0.53

0.59

0.58

2013-14
3982.41

2014-15
4169.27

CURRENT ASSET TO TOTAL ASSET RATIO


0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2010-11

2011-12

2012-13

2013-14

2014-15

INTERPRETATION:
Current asset to total asset ratio was increasing in the year 2010-11. Then it gradually started
decreasing in the following next 4 years.
27

WORKING CAPITAL ANALYSIS

PARTICULA
RS
CURRENT
ASSET
INVESTMEN
T
SUNDRY
DEBTORS
CASH AND
BANK
BALANCE
OTHER
CURRENT
ASSET
TOTAL
CURRENT
LIABILITIES
TOTAL
NET
WORKING
CAPITAL

201213
3041.2
6
1480.7
9
633.88

201314
3982.4
1
482.00

2014-15

712.00

728.87

566.86

201.54

61.81

105.65

176.10

252.92

5828.4
4
2358.6
6
2358.6
6
3469.7
8

5554.0
5
2783.8
4
2783.8
4
2770.2
1

5330.93

4169.27

INCREAS DECREAS
E
E

118.06

2757.82
2757.82

2573.11

INTERPRETATION
1. Here cash balance of Asian paints ltd.Gradually decreasing.
2. Net working capital decrease in 2013-14 than 2012-13. Again slowly decreasing in 2014-15.

28

CHAPTER 4
CONCLUSION & RECOMMENDATION
CONCLUSION:
1. Current ratio was slowly increasing upto 2013-14. There after very good increase was
noticed in the year 2014-15.
2. Liquid ratio increased in the year 2011-12, 2013-14 and it was slowly decreasing in the year
of 2014-15.
3. The present cash ratio in the year 2014-15 is decreasing.
4. The present creditors turnover ratio in the year 2014-15 is slowly increasing.
5. Working capital to total asset ratio in the year 2014-15 is increasing and in the previous year it
was slowly decreasing.
6. Debtors turnover ratio in the year 2014-15 is decreasing and in the previous year it was
slowly increasing.
7. The present inventory turnover ratio 2014-15 is decreasing and in the previous year it was
slowly increasing.
8. Current asset to total asset ratio in the year 2014-15 is slowly increasing.
9. Working capital analysis in the year 2014-15 slowly decreasing and net working capital
decreased in 2013-14 than 2012-13.

29

Recommendation
1. As the current asset ratio is gradually decreasing, therefore the short term solvency of the
company gradually declined, therefore the company has to improve the current ratio.
2. As the inventory turnover ratio is gradually decreasing. Therefore working capital blocked in
current asset of the company, to increase the stock turnover ratio has improved.the company
has to reconsider its selling policy.
3. As the debtor turnover ratio is gradually decreasing as a result laging in collection from debtor
and bill recivable increases. To improve debtors turnover ratio the company has to moderate
its receivable collection policy collection.
4. It cannot be said that overall financial position of the company is normal but it is required to
be improved from the point of view of profitability.

30

BIBLIOGRAPHY

www.economictimes.com

www.business standards.com
www.moneycontrol.com
www.wikipedia.com
www.realmarket.com
www.google.com

31

ANNEXURE 1A

SUUPERVISORS CERTIFICATE
This is to certify that Mr. Debasish Roy a student of B.Com Honours In Accounting & Finance /
Marketing /Taxation /Computer Application in Business of DINABANDHU ANDREWS
COLLEGE Under the University Of Calcutta has worked under my supervision and guidance for
his/her Project Work and prepared a project report with the title THE STUDY OF WORKING
CAPITAL MANAGEMENT OF ASIAN PAINTS LIMITED.
The project report, which he/she is submitting, is his/her genuine and original work to the best of my
knowledge.
Place: Kolkata
Date:

Signature:
Name: Toseema Dey
Name of the college: Dinabandhu Andrews College

32

Annexure 1B:
STUDENTS DECLARATION

I hereby declare that the Project Work with the title THE STUDY OF WORKINGCAPITAL
MANAGEMENT OF ASIAN PAINTS LIMITED Submitted by me for the partial fulfillment of
the degree of B.Com Accounting & Finance under the University Of Calcutta is my original work and
has not been submitted earlier to any other University/ Institution for the fulfillment of the
requirement for any course of study. I also declare that no chapter of this manuscript in whole or in
part has been incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has been duly acknowledged
providing details of such literature in the references.

Place: Kolkata
Date:

Signature:
Name: Debasish Roy
Registration no:
Roll no:

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