A STUDY BENCHMARKING OF WORKING CAPITAL

EFFICIENCY

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE

POST GRADUATE DIPLOMA IN MANAGEMENT

CHANDRAGUPT INSTITUTE OF MANAGEMENT PATNA

BY

SHILPA KUMARI

(09/07/2020)

CHANDRAGUPT INSTITUTE OF MANAGEMENT PATNA

 DECLARATION

I hereby declare that the Summer Internship Project entitled “A Study on Benchmarking of working
capital efficiency” submitted to Chandragupta Institute of Management Patna in partial fulfilment of
the requirements for the award of Post Graduate Diploma in Management is my original work and
has been prepared by me under the general supervision of my Faculty Supervisor (Proof Ramjet
Tiwari). I have not submitted the work earlier, either to any other Institute or University for the
award of any diploma, degree or certificate. I have followed the CIMP guidelines to prepare the
report.

Place: Date: ...../....../……… Shilpa kumari

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 120045

CERTIFICATE BY FACULTY GUIDE

This is to certify that the work incorporated in this Summer Internship project entitled “A study on
Benchmarking of Working Capital Efficiency", by Miss Shilpa kumari bearing roll no 120045
comprises the result of his/her independent and original investigation carried out under my
supervision and guidance in partial fulfilment of the requirements for the award of Post Graduate
Diploma in Management. To the best of my knowledge, the work has not been submitted earlier,
either to any other Institute or University for the award of any diploma, degree of certificate.

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Place
Date: ....../....../...... Proof Ramjet Tiwari

ACKNOWLEDGEMENT

I am thankful to the placement in charge and faculty members of CIMP for providing me the
opportunity to do my 2 months internship project on topic “A study on Benchmarking of working
capital efficiency”.
I am also thankful to my batch mates and friends for helping me during this internship duration.
I am also thankful to my group members who helped in accomplishing this project successfully and
within the time frame.
I am very thankful to my faculty guide Proof Ramjet Tiwari who guides me throughout my
internship period.

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SHILPA KUMARI

CONTENT
AKNOWLEDGEMENT 1
List of Tables 2
Table of Figures 3
Abstract 4
1. Introduction 6
1.1. Wholesale and Retail Industry- An Introduction 7
1.2. Working capital and wholesale, Retail trade industry 8
1.3. Role of wholesale and retail industry in Indian economy 8
1.4. Future prospect 10
1.5 objective of the study
2. Literature Review 13
3. Research Methodology 14
3.1 Components 15
3.2 Data 16
4. Data Analysis 17
4.1 Descriptive Analysis 17
4.2 Quantitative Analysis 18
Profit, sales, growth Leader (operating cycle) 19
Profit, sales, growth Leader (source of Finance) 20
Profit, sales, growth Leader (Current Assets by net sales) 21
5. Working Capital Efficiency 22
6. Measures 23
7. Analysis 24
8. Discussion and Analysis 24
9. References 25

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Abstract
Benchmarking is a practice of comparing business process and performances to industry best’s
practices from other companies.
It is also used to measure the performance by specific indictor like cost, productivity per unit cycle
time.
This is used in management in organisation by which organisation evaluate various their process
usually within a group defined for comparison purpose.
It will allow the organization to develop plans to make improvements.
It is a continuous process in which organisation continually use to improve their practices.
Benchmarking practices is the best, in identifies best firm in their industry by comparing result,
process of studies, to own result and their processes.
Their types helps to identify performance gaps, making approach to gather and compare qualitative
information such as mapping and make point to understand the current standard of businesses, also
allow organisation to set baseline and goals for improvement.
Another word benchmarking is enough to admit that others are better at something and being wise to learn
how match or surpass.
1. INTRODUCTION
Benchmarking is the process of finding who the best, who sets the standard, is and what that standard
is.
If we were to benchmark that is what objective measures would we use to compare. If we make
standard we can compare against it. We can also have to know where our competitors stand.
Benchmarking is the tool that is applied everywhere, if we decide what to benchmark, and how to
measure it, the next step is to determine what we have to do.
By definition Benchmarking is the process of identifying best practices in relation to both product
and the process.
The objective of benchmarking is to understand and evaluate the current position of a business or
organisation and identify the areas of performance improvement.
Technically benchmarking is design staff to determine the capabilities of products and services,
majorly to the services or products for leading competitors. How do rank the properties of his
organisation, scale on number or ranks, and being best select. It means how well the organisations
doing with respect with other competitor especially with respect to attributes which are important.
They consider inadequate resources to understand the effort involved in planning, must understand
its own process and under control, also require significant investment of manpower and time so
management must champion the process all through.
Collect information directly from partner organizations. Collect both process description and
numeric data, using questionnaires, telephone interviews, and/or site visits.

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Compare the collected data, both numeric and descriptive.
Determine gaps between your performance measurements and of your partners. The differences in
practices that cause the gaps. Develop goals for organization’s process. Develop action plans to
achieve those goals. Implement and monitor plans, Carleton University’s department of housing
began a project to improve the process by which students apply for and are assigned housing. This
project had three main goals: Reduce residence vacancy rates to below 1% Improve student
satisfaction levels to make the best possible use of employee time and effort.

1.1Wholesale and Retail Industry- An Introduction

The retailing and wholesaling industries (Distributive trades sector) represent the intermediate steps
in the distribution of merchandise between producers and consumers of goods. Wholesale and retail
trade services are crucial to the efficient and effective flow of goods from producer to consumer.
Together the wholesaling and retailing industries account for significant portions of economic output
and global employment.
Wholesalers act as marketing intermediaries that neither produce nor consume the finished product,
but instead sell to retailers, other merchants, and/or to industrial, institutional, and commercial users.
Retailers are organised to sell merchandise (generally without transformation) in smaller quantities
to the general public for personal or household consumption, and to other business and institutional
clients. There are two main types of retailers: store and non-store.
Both the wholesale and the retail services price indices strive to measure the change in the price of
the service and not the price of the product. Wholesale and retail services price indices can also be
used to evaluate different aspects of a product value chain, for example by allowing for the
measurement of value added by wholesale distribution and retailing to the final consumer.

1.2. Role of wholesale and retail industry in India:

Retail industry reached US$ 950 billion in 2018 at CAGR of 13 per cent and is expected to reach
US$ 1.1 trillion by 2020. Online retail sales were forecast to grow 31 per cent y-o-y to reach US$
32.70 billion in 2018. Revenue generated from online retail is projected to reach US$ 60 billion by
2020.
Revenue of India’s offline retailers, also known as brick and mortar (B&M) retailers, is expected to
increase by Rs10, 000-12,000 crore (US$ 1.39-2.77 billion) in FY20.
India is expected to become the world’s fastest growing E-commerce market, driven by robust
investment in the sector and rapid increase in the number of internet users. Various agencies have
high expectations about growth of India’s E-commerce market.

Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the
entry of several new players. Total consumption expenditure is expected to reach nearly US$ 3,600
billion by 2020 from US$ 1,824 billion in 2017. It accounts for over 10 per cent of the country’s
gross domestic product (GDP) and around eight per cent of the employment. India is the world’s
fifth-largest global destination in the retail space.

Modern wholesale buyer’s expectation are high. They’re unimpressed by experiences that aren’t
personalized in at least near-real time. They have no patience for referrals or handoffs to other
business functions and they are typically click away just from choosing a competitor. Additionally,
when the quality of the customer experience varies across channels, they lose interest fast

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1.3Working capital and wholesale, Retail trade industry
Business divert a fixed component of their revenue toward working capital and on the basis of their
financial need they anticipate. When it outmatches the available reserve, retail outlet has to turn
toward supply chain based merchant credit to avail the order. Few tech- driven platforms have begun
extending merchant credit with an unmatched flexibility. They digitally avail free loan product.
These platforms have been quite successful in transforming the scenario and empowering capital
retail outlets in counting the negative impact of unavailability of capital.
They upgrade the technology by remodelling shopping for customer experience for both customer as
well as for retailers. By doing to achieve greater customer touchpoint to speed up the decision
making, penetrate market online and to boost their workforce skill.
High turnover & margins is access to increase the working capital, small retailers can increase the
category spread retailer can increase their category spread resulting in high turnover. Being power
equipped with the desired capital also enables retailers to negotiate higher margins with the
distributor.
An operating business, extended credit to its patrons, can offer special discount to them on early. By
paying your distributor on time can have multiple, merits on time can have multiple merits besides
having superlative supply chain management. Retail business can discover online procurement
marketplace that offer quality products at rate that affordable and provide goods discount on bulk
ordering. Also extending credit has always has been feature of conventional. Today, retailer need to
ensure availability of working capital, including credit leading platform are help to others.
Working capital management on the performance of public listed wholesale industry properly
industry is employed by using two measures namely performance return to assets (ROA) as the
dependent variable. Working capital management components include current liabilities to total
assets ratio with three three control variables. It is very large extent indicate that positive.

1.4Future prospect and Relevance of the study

A new level of competition in the retail and consumer products industries. There is no further than
Nike; under its new D2C strategy, the retail down its number of distribution partners from 30,000 to
focus on 40. Another, economic indicators for wholesale distribution aren’t as bullish as they used to
be. Its current 12-month growth rate is 7.5%, but the quarterly growth rate is a smaller 4.7%. This
change suggests that the industry is on the back side of the business cycle.  It’s not surprising that
wholesale distributors are looking for every edge they can get. Yet growth opportunities are hard to
find; they’ve already squeezed every drip of efficiency from warehousing, distribution, and
transportation logistics.

Opportunities for wholesale and distributors to leverage countries manufacturing such as China, there
are good reasons for C-level executive investors to contemplate investment in other countries buying
offices or to strengthening relationship with buying agents in countries. Investment require visibility
and efficiency across the supply chain, as margins will continue to be pressure. As a result of

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consolidate and increased prevalence of retail chains for direct relationship with the same potential
and market power to lower pricing to drive. The smaller organisation with less revenue do to address
this challenge. Focusing on enhancing logistics operations, and even looking to offer outsourced and
services. By an average 30 percent over 10 years technology and others in their regions or industries.

Foreign direct investment equity has received by Indian retail trading inflow during 10 years
according to department for promotion of internal trade and industry. India retail sector attracted
millions from various private equity funds. Many companies have invited in the Indian Retail.
Foreign Direct Investment rule Government may change in food processing in a bid to permit E-
commerce companies and Made in India consumer products foreign retailers to sell foreign retailers.
A 100 per cent FDI in online retail of goods and services allowed by Government of India through
the automatic route, by providing clarity on the existing businesses of E-commerce companies
operating in India.

1.5 Objective of Study

To find benchmarking most profitable companies in wholesale and retail industry of India and
correlate their performance with working capital components.

2. Literature Review

The research paper review related to Working Capital management and its relation with Profitability
on the topic Benchmark the Working Capital Efficiency in wholesale and retail industry in India.

A Comparative Analysis of Working Capital Management Among Top 5 NSE Listed Indian Steel
Companies. Important tool used to measure the working capital of these companies. Positive
relationship is found between two variables. The different analyses have identified efficiency of
working capital management practices and are expected to assist managers in identifying areas where
they might improve the financial performance of their operation. The companies have to improve
effective handling of inventory, accounts receivables, and accounts payables. Because these are
important factor to increasing the profitability of the companies.
The purpose of the study was to examine the effect of working capital management on firm’s
performance and explore those factors that affect the profitability of nonfinancial firms listed on KSE
in Pakistan. Data from financial statements of non-financial firms listed on KSE is used for analysis.
Pooled Ordinary least square technique is used to estimate the relationship between profitability and
key explanatory variables such as average collection period, found a positive and insignificant
relationship of average collection period and profitability indicating that greater the average
collection period, greater will be the profitability while a negative and insignificant relationship is
found between profitability and average age of inventory showing that greater the average age of
inventory, lower will be the profits of the firm.
The study of Shailendra Sabena used aggressive investment policy and aggressive investment policy as
measuring variables of working capital management. Through panel data regression models between working

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capital policies and profitability. We found a negative relationship between the profitability measures of firms
and degree of aggressiveness of working capital investment and financing policies. The firms yield negative
returns if they follow an aggressive working capital policy. By examining the impact of aggressive working
capital policies. Investors in the stock markets are giving more value to the firms through q if they are more
aggressive in managing their current liabilities

The present study of Rd. Yellaswamy Ambati aims to explore the impact of specific components of
working capital management including; the average age of accounts payable, the average age of
accounts receivable, the average age of inventory and cash conversion cycle on the financial
performance. Efficient management of working capital is an important tool for achieving
organizational profitability. The purpose of the present study was to test the performance of
working capital management for measuring firm`s profitability. Findings of the present study
support the work of prior researches. This study indicated that ROA as is a poor indicator of firm`s
profitability, moreover GOI is a better explanatory measure for organizational performance. Result
of the current study will help organizations to improve their effectiveness by managing their
working capital.
This study of Target enterprise by Joti Mahato and Uday Kumar Jagannathan was a Hungarian
process focussed industrial company. We will refer to it as ORG.The self-evident question that can
be raised at this point is: should or should not the management of ORG gain a solid foundation for its
short-term estimates Firstly measures of the Customer to Cash, Purchase to Pay and Forecast to
Fulfil cycles’ efficiency based on the benchmarking analysis, then, the predicted values of DWC
should be adjusted to the targeted gradual changes. Secondly, it is meaningful to compare the actual
values to the forecasted values of DWC Thirdly, because of the seasonal patterns in the time series,
the forecasted values should be averaged. This aggressive financing strategy would result in lower
costs and more profit, however it involves more risk.
Mr.V.VENKATACHALAM Working capital management is of crucial importance in corporate
financial management decision. The optimal of working capital management is could be achieve by
company that manage the trade-off between profitability and working capital management. The
rationale of this study is to explore the working capital management efficiency and profitability
association. A descriptive statistics divulges that liquidity and solvency position in terms of debt is
very satisfactory and reasonably efficient working capital management is found but liquidity position
has no impact on profitability. The study furthermore illustrates there is no association between debt
financing and profitability. The study moreover illustrates a stumpy relationship between WCM
including working capital cycle and profitability but WCM and working capital cycle has no impact
on profitability. Multiple regression tests confirm a lower degree of association between the working
capital management and profitability.

3. Research Methodology
The data is taken from Prowess CMIE database with the purpose to extract relevant information by
using descriptive analysis, correlation analysis and regression analysis to analyse the data. The data
is used to benchmark wholesale and retail industry of India for their efficiency in Working Capital
Management.

3.1 Components

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The data is used to find the profit leaders, sales leaders, and growth leaders to of the companies to
measure Working Capital Management and then correlate all parameters with leading companies.
These DPO, DIO, DRO, OC, NOC, NPM Profit leader, sales leader, growth leader all these variables
are used to calculate relevant data.
Days sales Outstanding (DSO) = Receivable/ (sales/365)
Days inventories Outstanding (DIO) = Inventories/ (sales/365)
Days payable Outstanding (DPO) = payable/ (sales/365)
Working capital (WC) = DSO + DIO - DPO
Current ratio (CR) = current asset/ current liability
Cash conversion cycle = cash flow from operations/ sales
Day’s inventory outstanding (DIO) is the average number of days that a company holds
its inventory before selling it. The day’s inventory outstanding calculation shows how quickly a
company can turn inventory into cash. It is an indicator of a company’s operational and financial
efficiency and a liquidity metric and also a Days inventory outstanding is also known as “inventory
days of supply,” “days in inventory,” or “the inventory period.
Days payable outstanding (DPO) is a financial ratio that indicates the average time in a days. It takes
company to pay its bills and trade creditors to invoices it’s, which include suppliers, vendors or other
companies. Annual basis ratio or quarterly the ratio is calculated, and it indicates how well the
company’s cash outflows are being managed.
Day’s receivables outstanding, or DRO, in the accounting lexicon, measures the average number of
days it takes a business to collect on its accounts receivable, which is the money customers owe for
purchases they made on credit. DRO is also known as day’s sales outstanding or average collection
period
The operating cycle is the average period of time required for a business to make an initial outlay of
cash to produce goods, receive cash sell the goods, from customers in exchange for the goods. Then
the operating cycle does not include any time for production 
Working Capital. Current Assets – Current Liabilities = Working Capital.
Net operating income (NOI) is a calculation used to analyse the profitability of income-generating
real estate investments. Minus all reasonably necessary operating expenses and NOI equals all
revenue from the property. NOI is a before-tax figure, appearing on a property’s income and cash
flow it is referred to as “EBIT”, which stands for “earnings before interest and taxes”, this metric is
used in other industries
Profit leaders are the companies whose non-profit ratio is a greater than the industry average. Sales
leaders are the companies whose five year industry average ear growth leader is greater than
Sales leadership is very different from sales management. Then the sales leader empowers
their sales managers to drive the sales team to succeed. As a result, the Sales Leader is the person
who leads the sales organization to generate predictable and repeatable revenue for the company.

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Growth leaders make growth the central focus of everyone in the business by creating a common
belief and language. For example, they concrete growth goals and metrics with their leadership teams
and then help translate them into metrics for every individual at every level.

WORKING CAPITAL EFFICIENCY:

Working capital management is the short-term funds and used for day to day operations of an
enterprises. It is required for financing short-term or current assets (cash, marketable securities,
debtors, and inventories). It realize maximum revenue by minimizing the working capital
requirements. The efficient working capital is the most crucial factor in maintaining liquidity,
profitability of the business organisation.
Organization should determine the requirement of working capital and maintain even throughout the
operating cycle. Even the firms are focused on long term capital budgeting and capital structure, the
company must focus on working capital management efficiency.

MEASURES:
The efficiency of working capital management is measured in terms of the ‘Days of Working
Capital’ (DWC). It is based on receivable, inventory, and account payable. It represent the time
period between purchase of material from supplier until the sale of finished product to the customer,
the collection of receivables and payment receipt.
It reflect the company ability to finance its operation with vendor credit.
The profitability of the company is measured by operating income to total assets which indicate the
earning power of the company assets.
Another measure is Operating Income to sales which indicate the profit margin on sales.
To measure the liquidity of the company the Cash conversion Cycle and current ratio are used, is the
cash which is generated from operating activities to the sales.

3.2 Data
Data collection is the process of gathering information on targeted variables by 100 companies of 5
years from 2014 to 2019 and data is conditioned by availability data. Data collection is a component
of research in all fields business. While methods vary by discipline, the emphasis on ensuring
accurate and honest collection remains the same. Data collection goal is to capture quality evidence
that allows analysis to lead to the formulation of convincing and credible answers to the questions
that have been posed. Retail and wholesale is huge industry in Indian economy for the purpose of
Annual standard details with sales, inventories, receivable, cash, bank balance, net sales, current
assets, current liability, trade payable, PBDITA, PBIT, profit after tax, debt to equity, cost of goods
sold are the components used.

4. Data Analysis
4.1 Descriptive Analysis
To test this analysis the data is of wholesale and retail industry based companies of India extracted
from SPSS. Out of 100 data 25 is extracted for descriptive statistics. It gives Median as a measures
off minimum, maximum values for the variable of interest. These data use to run summaries the

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statistics that describe or summarize features from collection of information in the process of using
and analysing those data or statistics. Its broken into central tendency and measures of variability.

Variables Mean Std. Deviation Min. Max.

GWC 9463.5 16340.0 22.2 108811.4

NWC 1032.0 6037.3 -39491.3 23852.2

C&B 1308.4 2772.5 0.2 15866.9

DIO 57.5 49.8 0.0 182.5

DRO 88.2 100.6 0.2 656.4

DPO 71.1 63.9 0.0 388.0

OC 145.7 103.3 15.7 678.3

NOC 74.6 72.8 -79.6 302.2

The mean is the lowest amount of error from all value other values in the data set. The fluctuation in
the data set shows that company is performing well that is from 5 percent to above than 100 percent.
Large gap between lowest and highest and also between average and below and above average.
Standard deviation measure the average or expected value and disperse between lowest and highest
value which shows companies performance well.
In profit leader figure, industry average is between 1.5 to 3.5. Number of companies is 12 out of 100.
Gross working capital is above industry average.

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 PROFIT LEADER

1 2 3 4 5 6 7 8 9 10 11 12

Sales leader:

SALES LEADER

1 2 3 4 5 6 7 8 9 10 11 12 13

Same as Profit leader out of 100 there is 12 companies whose gross working capital is above industry
average as shown in figure and also in excel chart. It shows that in wholesale and retail industry India
depends on the working capital.
Growth Leader

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 GROWTH LEADER

1 2 3 4 5 6 7 8 9 10 11 12

Gross working capital maintain by many industries which represent that profitability of the industry
measured in Net Profit ratio and Growth rate is related to efficient working capital management.

4.2 Quantitative Analysis

Working Capital
Minimu Maximu
    Mean St dev.
m m
GWC 8645 17146 8 126034
NWC 747 7078 -46541 36881
2015 NWC/GW
7% 59% -283% 98%
C
C&B 1224 2817 0 14129
GWC 9475 18976 30 147858
NWC 1581 9285 -47284 61512
2016 NWC/GW
5% 73% -372% 99%
C
C&B 1376 3476 0 21849
GWC 9124 14943 27 78016
NWC 961 6736 -46571 25903
2017 NWC/GW
9% 61% -226% 99%
C
C&B 1349 3017 0 18821

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 GWC 9609 15898 9 94017
NWC 797 5087 -33594 18002
2018 NWC/GW
11% 60% -273% 100%
C
C&B 1287 3094 0 25182
GWC 10465 18046 6 98132
NWC 1074 5588 -23466 34613
2019 NWC/GW
-18% 270% -2454% 98%
C
C&B 1307 4162 0 37623
GWC 9463 17002 16 108811
NWC 1032 6755 -39491 35382
AVERAG -
NWC/GW
E 11% 40% 249314 33%
C
%
C&B 1308 3313 0 23521

The company has huge net working capital to meet all short term financial obligation. It also shows
that company has excess Gross Working Capital that is idle excess cash and other assets rather than
investing its available capital in expanding in company business. The value of mean, standard
deviation, minimum and maximum of each year from 2015 to 2019 for Gross working Capital, Net
Working Capital, cash & balance. Average of gross working capital of the year 2015 to 2019 is 9463,
17002, 16,108811. Another net working capital average of the year2014 to 2019 is 1032, 6755,-
39491, 35282, cash and bank balance is 1308, 3313,0,23521. It can be interpreted as out of selected
companies for working capital companies has enough cash and bank balances in an average.
Operating Cycle:
Minimu Maximu
    Mean Stdev
m m
DIO 54 50 0 214
DRO 69 57 0 308
2015 DPO 57 47 0 214
OC 123 69 1 319
NOC 67 65 -119 222
DIO 55 58 0 315
DRO 80 95 0 615
2016 DPO 64 61 0 332
OC 136 112 6 781
NOC 72 93 -149 647
DIO 54 48 0 184
DRO 85 114 0 755
2017 DPO 66 74 0 458
OC 139 118 15 813
NOC 73 77 -112 355
DIO 59 64 0 446
2018
DRO 107 170 0 970

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 DPO 86 110 0 642
OC 166 169 10 988
NOC 80 105 -82 811
DIO 64 67 0 451
DRO 100 122 0 638
2019 DPO 82 85 0 421
OC 164 130 1 649
NOC 82 88 -106 572
DIO 57 58 0 322
DRO 88 111 0 657
AVERAG
DPO 71 76 0 413
E
OC 146 169 0 979
NOC 75 93 0 566

Given data of operating cycle the average period of time required for a business in Days Inventory
Outstanding as mean is 57 that is average time its take and maximum is 322, operating cycle mean is
146 and maximum is 979. It can be explain in a way that inventory outstanding is well that is only
322 days, but as comparison to receivable and payable, receivable days is more than payable days
which show for performing well companies must reduce its receivable and increase its payable so
that it can use capital. Cash collection that is operating cycle is more than net operating income
which shows cash collecting from sales of inventory is huge than Net Operating Cycle.

Table 3: Working capital financing policy

Long Short
term term
sourc sourc
Year es es
2015 7% 93%
2016 5% 95%
2017 9% 91%
2018 11% 89%
2019 -18% 118%
5 year average 3% 97%

Working capital financing policy deals with the source and the amount of working capital that
company should maintain. Differences in short term sources and long term sources that on an
average short term is 97% and long term is 3% which is good maintain. With the huge short term
sources company is maintained well.
PROFIT, SALES, GROWTH LEADER (OPERATING CYCLE)

Profit leaders: Operating cycle (5 years average)          

Company Name DIO DRO DPO OC NOC
G A I L (India) Ltd. 15 42 29 57 28
Petronet L N G Ltd. 7 16 14 23 9
Adani Enterprises Ltd. 40 122 155 163 8
Chambal Fertilisers & Chemicals Ltd. 51 156 35 207 172

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 Gujarat Gas Ltd. 3 24 29 27 -2
Gokul Refoils & Solvent Ltd. 20 13 30 33 3
C E S C Ltd. 27 69 38 96 58
Avenue Supermarts Ltd. 36 1 11 37 25
Indraprastha Gas Ltd. 6 23 49 29 -20
Deepak Fertilisers & Petrochemicals Corpn. Ltd. 44 120 61 164 103
Future Lifestyle Fashions Ltd. 181 29 145 211 66
Bata India Ltd. 154 14 110 168 58
Average 49 53 59 101 42

Sales leaders: Operating cycle (5 years average)          

Company Name DIO DRO DPO OC NOC
G A I L (India) Ltd. 15 42 29 57 28
M M T C Ltd. 35 33 29 67 38
Adani Enterprises Ltd. 40 122 155 163 8
P T C India Ltd. 0 85 61 85 25
Redington (India) Ltd. 36 50 47 85 38
C E S C Ltd. 27 69 38 96 58
Avenue Supermarts Ltd. 36 1 11 37 25
Indraprastha Gas Ltd. 6 23 49 29 -20
Shoppers Stop Ltd. 63 4 73 67 -6
Future Lifestyle Fashions Ltd. 181 29 145 211 66
Future Retail Ltd. 141 7 98 148 50
Compuage Infocom Ltd. 33 49 45 82 37
Bata India Ltd. 154 14 110 168 58
Average 59 41 68 100 31

Growth leaders: Operating cycle (5 years

average)          
Company Name DIO DRO DPO OC NOC
G A I L (India) Ltd. 15 42 29 57 28
Adani Enterprises Ltd. 40 122 155 163 8
C E S C Ltd. 27 69 38 96 58
Avenue Supermarts Ltd. 36 1 11 37 25
Indraprastha Gas Ltd. 6 23 49 29 -20
Future Lifestyle Fashions Ltd. 181 29 145 211 66
Bata India Ltd. 154 14 110 168 58
Average 66 43 77 109 32

From the table of profit, sales, and growth leader with the components of DIO, DRO, DPO, OC and
NOC the of operating cycle as compare to DIO of all three profit leader has very less inventory
outstanding, but day Receivable of sales leader is very less. Payable outstanding of profit is not well
that is very less. Operating cycle of sales leader is well that is very less. Net operating cycle of sales
leader is less comparison to profit and growth leader.

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PROFIT, SALES, GROWTH LEADER (SOURCES OF FINANCING)

Profit leaders: Sources of financing (5 years average)    

Long term
Company Name (NWC/GWC) Short term (1-long term)
G A I L (India) Ltd. 19% 81%
Petronet L N G Ltd. 38% 62%
Adani Enterprises Ltd. -85% 185%
Chambal Fertilisers & Chemicals Ltd. 9% 91%
Gujarat Gas Ltd. -149% 249%
Gokul Refoils & Solvent Ltd. -514% 614%
C E S C Ltd. 22% 78%
Avenue Supermarts Ltd. 44% 56%
Indraprastha Gas Ltd. -20% 120%
Deepak Fertilisers & Petrochemicals Corpn. Ltd. -37% 137%
Future Lifestyle Fashions Ltd. 10% 90%
Bata India Ltd. 63% 37%
Average -50% 150%

Sales leaders: Sources of financing (5 years average)    

Long term
Company Name (NWC/GWC) Short term (1-long term)
G A I L (India) Ltd. 19% 81%
M M T C Ltd. -17% 117%
Adani Enterprises Ltd. -85% 185%
P T C India Ltd. 34% 66%
Redington (India) Ltd. 21% 79%
C E S C Ltd. 22% 78%
Avenue Supercars Ltd. 44% 56%
Indraprastha Gas Ltd. -20% 120%
Shoppers Stop Ltd. -90% 190%
Future Lifestyle Fashions Ltd. 10% 90%
Future Retail Ltd. -27% 127%
Compuage Infocom Ltd. 6% 94%
Bata India Ltd. 63% 37%
Average -2% 102%

Growth leaders: Sources of financing (5 years

average)    
Long term
Company Name (NWC/GWC) Short term (1-long term)
G A I L (India) Ltd. 19% 81%
Adani Enterprises Ltd. -85% 185%
C E S C Ltd. 22% 78%
Avenue Supercars Ltd. 44% 56%
Indraprastha Gas Ltd. -20% 120%

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 Future Lifestyle Fashions Ltd. 10% 90%
Bata India Ltd. 63% 37%
Average 8% 92%

In overall source of finance of growth leader, sales leader, profit leader in short and long term, based
on average. Profit leader long term finance is in negative that shows substantial increase in its
account payable that is large purchase of product. Same as sales leader long term finance is also in
negative growth leader. Comparing to each other short term and long term finance sales leader has
highly maintained, then profit leader then growth leader.
PROFIT, SALES, GROWTH LEADER (CURRENT ASSET BY NET SALES)

Profit leaders: Current assets policy (5 years average)  

Company Name CA/NS
G A I L (India) Ltd. 20%
Petronet L N G Ltd. 11%
Adani Enterprises Ltd. 49%
Chambal Fertilisers & Chemicals Ltd. 56%
Gujarat Gas Ltd. 14%
Gokul Refoils & Solvent Ltd. 32%
C E S C Ltd. 75%
Avenue Supermarts Ltd. 12%
Indraprastha Gas Ltd. 19%
Deepak Fertilisers & Petrochemicals Corpn. Ltd. 57%
Future Lifestyle Fashions Ltd. 46%
Bata India Ltd. 51%
Average 37%

Sales leaders: Current assets policy (5 years average)  

Company Name CA/NS
G A I L (India) Ltd. 20%
M M T C Ltd. 21%
Adani Enterprises Ltd. 49%
P T C India Ltd. 25%
Redington (India) Ltd. 23%
C E S C Ltd. 75%
Avenue Supermarts Ltd. 12%
Indraprastha Gas Ltd. 19%
Shoppers Stop Ltd. 14%
Future Lifestyle Fashions Ltd. 46%
Future Retail Ltd. 29%
Compuage Infocom Ltd. 24%
Bata India Ltd. 51%
Average 31%

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 Growth leaders: Current assets policy (5 years
average)  
Company Name CA/NS
G A I L (India) Ltd. 20%
Adani Enterprises Ltd. 49%
C E S C Ltd. 75%
Avenue Supermarts Ltd. 12%
Indraprastha Gas Ltd. 19%
Future Lifestyle Fashions Ltd. 46%
Bata India Ltd. 51%
Average 39%

Its shows that how much the business is using its assets to generate funds by using these two
variables (current asset and net sales). Growth leader is generating huge sales form its assets than
profit leader then sales leader.

Profit leaders: Cash policy (5 years average)  

Company Name CB/NS
G A I L (India) Ltd. 3%
Petronet L N G Ltd. 5%
Adani Enterprises Ltd. 3%
Chambal Fertilisers & Chemicals Ltd. 1%
Gujarat Gas Ltd. 7%
Gokul Refoils & Solvent Ltd. 10%
C E S C Ltd. 11%
Avenue Supermarts Ltd. 4%
Indraprastha Gas Ltd. 11%
Deepak Fertilisers & Petrochemicals Corpn. Ltd. 5%
Future Lifestyle Fashions Ltd. 1%
Bata India Ltd. 19%
Average 7%

Sales leaders: Cash policy (5 years average)  

Company Name CB/NS
G A I L (India) Ltd. 3%
M M T C Ltd. 1%
Adani Enterprises Ltd. 3%
P T C India Ltd. 1%
Redington (India) Ltd. 1%
C E S C Ltd. 11%
Avenue Supermarts Ltd. 4%
Indraprastha Gas Ltd. 11%
Shoppers Stop Ltd. 0%
Future Lifestyle Fashions Ltd. 1%
Future Retail Ltd. 1%
Compuage Infocom Ltd. 3%

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 Bata India Ltd. 19%
Average 5%

Growth leaders: Cash policy (5 years average)  

Company Name CB/NS
G A I L (India) Ltd. 3%
Adani Enterprises Ltd. 3%
C E S C Ltd. 11%
Avenue Supermarts Ltd. 4%
Indraprastha Gas Ltd. 11%
Future Lifestyle Fashions Ltd. 1%
Bata India Ltd. 19%
Average 8%

From the table of growth, sales, and profit leader, growth leader is the highest ration that is
management of cash asset is well maintained.

Current assets policy (Number of companies)

Details 2015 2016 2017 2018 2019
Aggressive (less than 35%) 57 51 52 47 43
Moderate (between 35% to 60%) 30 35 26 32 32
Conservative (above 60%) 13 14 22 21 25

T T K Healthcare Ltd.
DIO 52
DRO 36
Operating
DPO 72
Cycle
OC 88
NOC 22
Source of NWC/GWC 27%
Financing 1-(NWC/GWC) 73%
Current Asset CA/NS 20%
Policy Policy Aggressive
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 Cash Policy CB/NS 3%
Working GWC 450
Capital NWC 582

T T K HEALTHCARE Ltd. is a company who nor in a top 25 companies or neither

in list of sales, profit, and growth leader. So to find the lack or reason behind why the
company is not in the list of top companies. Company has accepted aggressive policy
with 20% current asset by net sale and cash and bank balance by net sales with 3%.
With working capital 450 and Net working capital 582.

Correlations
  DIO DRO DPO OC NOC ROA D/E size SG ROE
DIO P. 1 -0.192 0.053 .295** .373** 0.122 -0.138 0.020 -0.030 -0.122
Corr.
DRO P. -0.192 1 .710** .881** .627** -.333** 0.123 0.028 -0.132 .231*
Corr.
DPO P. 0.053 .710** 1 .717** 0.139 -.214* 0.022 0.118 -0.098 0.077
Corr.
OC P. .295** .881** .717** 1 .790** -.265** 0.053 0.037 -0.143 0.166
Corr.
NOC P. .373** .627** 0.139 .790** 1 -0.189 0.056 -0.051 -0.118 0.169
Corr.
ROA P. 0.122 -.333** -.214* -.265** -0.189 1 -.203* 0.037 0.023 0.026
Corr.
D/E P. -0.138 0.123 0.022 0.053 0.056 -.203* 1 0.114 -0.058 .838**

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 Corr.
size P. 0.020 0.028 0.118 0.037 -0.051 0.037 0.114 1 0.057 .206*
Corr.
SG P. -0.030 -0.132 -0.098 -0.143 -0.118 0.023 -0.058 0.057 1 0.003
Corr.
ROE P. -0.122 .231* 0.077 0.166 0.169 0.026 .838** .206* 0.003 1
Corr.
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).

Correlation is used to find the significant relation between the variables, and its shows
that DPO and DRO has a significant relation, OC and NOC has significant relation,
ROE and size growth is strongly correlated

REGRESSION MODEL:

Model Summary

Std. Error of the

Model R R Square Adjusted R Square
Estimate

1 .380a 0.144 0.089 0.063665712372067

2 .275a 0.076 0.037 0.065470172697335

a. Predictors: (Constant), Sales growth, NOC, Size, DE ratio

b. Predictors: (Constant), Sales growth, NOC, Size, DE ratio, DPO, DIO

COEFFICIENT
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
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 B Std. Error Beta
(Constant) 0.073 0.045  
NOC 0.000 0.000 -0.243
1. DE Ratio -0.004 0.001 -0.931
Size 0.003 0.006 0.076
Sales Growth -0.003 0.003 -0.060

(Constant) -0.425 0.135  

NOC -9.603E-07 0.000 0.000

DE ratio 0.028 0.001 0.854

2. Size 0.039 0.018 0.134

Sales growth 0.011 0.011 0.035

DIO 0.000 0.000 -0.024

DPO 0.000 0.000 0.036

a. Dependent Variable: ROA

Analysis
Calculate:-Gross working capital and Net working capital
Calculate working capital cycle
Calculate profit leaders, sales leaders and growth leaders

STEPS:

1). On the basis of given data

i) Companies with the missing values are removed.

ii) Companies with the negative net sales values are removed.

iii) Companies with negative COGS values are removed.

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 iv) Companies are sorted based on net sales and first 100 companies are considered for
analysis.

Out of 650 data, by applying these above steps we get 210 data.

2). Finding year 2015, 2016, 2017, 2018, 2019.

i) Gross working capital = current asset

ii) Net working capital = current asset – current liability

iii) cash and bank balance

iv) Days inventory outstanding =

(Inventories/ (average of last year and current year COGS))*360

v) Days receivable outstanding =

(Receivable/ (average of last year and current year Net sales))*360

vi) Day payable outstanding =

(Trade payable/ (average of current year and last year COGS))*360

vii) Operating cycle = Day inventory outstanding subtracted Day receivable outstanding
(DIO-DRO)

viii) Net operating cycle = operating cycle subtracted Day payable outstanding (OC – DPO)

3). Selected top 100 data on the basis of Net Sales

Calculated the net profit margin of all six years by diving the profit after tax by net sale.

Then finding the average value of NPM of 5 year (2015, 2016, 2017, 2018, and 2019).

4). Calculating the average of all

i) Gross working capital = average of all 5 years (2015, 2016, 2017, 2018, 2019)

ii) Net working capital = average of all 5 years (2015, 2016, 2017, 2018, 2019)

iii) NWC/GWC

iv) cash and bank balance = average of all 5 years (2015, 2016, 2017, 2018, 2019)

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 v) Days inventory outstanding = average of all 5 years (2015, 2016, 2017, 2018, 2019)

vi) Days receivable outstanding = average of all 5 years (2015, 2016, 2017, 2018, 2019)

vii) Day payable outstanding = average of all 5 years (2015, 2016, 2017, 2018, 2019)

viii) Operating cycle = sum of average of DIO + DRO

ix) Net operating cycle = operating cycle subtracted by day payable outstanding.

Applying descriptive statistics i.e.

 MEAN = by applying AVERAGE function key on calculated Gross working capital, Net
working capital, cash and bank balance, Day inventory outstanding, Day payable outstanding,
Day receivable outstanding, operating cycle and Net operating cycle on all 5 years
( 2015,2016,2017,2018,2019).

 STANDARD DEVIATION = by applying function key STDEV on Gross working capital,

Net working capital, cash and bank balance, Day inventory outstanding, Day payable
outstanding, Day receivable outstanding, operating cycle and Net operating cycle on all 5
years ( 2015,2016,2017,2018,2019).

 MINIMUM = = by applying function key MIN on Gross working capital, Net working
capital, cash and bank balance, Day inventory outstanding, Day payable outstanding, Day
receivable outstanding, operating cycle and Net operating cycle on all 5 years
( 2015,2016,2017,2018,2019).

 MAXIMUM = = by applying function key MAX on Gross working capital, Net working
capital, cash and bank balance, Day inventory outstanding, Day payable outstanding, Day
receivable outstanding, operating cycle and Net operating cycle on all 5 years
( 2015,2016,2017,2018,2019).

 COUNT = by applying function key COUNT on Gross working capital, Net working capital,
cash and bank balance, Day inventory outstanding, Day payable outstanding, Day receivable
outstanding, operating cycle and Net operating cycle on all 5 years
( 2015,2016,2017,2018,2019).

5). Calculating the average of Net sale of six years of top 100 companies by applying final year
subtracted current year divide by current year.

6). Calculated the INDUSTRY AVERAGE by taking the average value of Net profit margin and
average of Net sales.

8. Discussion and Conclusion

The study found that in wholesale and retail industry, out of 100 companies only 12 companies has
maintained its cash & bank balance. The companies in profit leader, sales leader and growth leader
then reduced by 13, 12, 7. Applying filter that is by deleting all negative net sales, blank cell so that

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it filter all useless data. Then top 100 data used for extracting information. Then finding the average
value of all working capital components of the year 2014, 2015, 2016,2017,2018,2019( GWC, NWC,
GWC/NWC, DIO, DRO, DPO, OC, NOC). Then applied descriptive statistics (mean, standard
deviation, minimum, maximum). Finding the average with working capital cycle of GWC, NWC,
GWC/NWC, C&B. short and long term working capital financing policy shows that companies had
huge short term financing than long term. Short term source or long term source of funding in each
year less than 35% of the companies are aggressive, between 35% to 60% companies are moderate,
60% and above companies are conservative. Descriptive statistics shows very high standard
deviation in variables of working capital. Finding is NPM and growth rate of working capital
management effects benchmarking measures.

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