A PROJECT REPORT

ON
WORKING CAPITAL
ANALYSIS
OF
M/S ORISSA PLASTIC
LIMITED
In Partial Fulfillment of Final Degree Commerce
Examination
Session-2007-2008

F. M Autonomous college,
Balasore

SUBMITTED BY
BHARAT CHANDRA MAHAL
B. Com Final Year Commerce UNDER
GUIDANCE OF
Accounting (H) DR. N. K. SWAIN
Exam Roll No-05C50010 DEPT. OF
COMMERCE
Class Roll No- 05DC056 F.M. (AUTO)
COLLEGE
BALASORE

DECLARATION
I do here by undertake to state that I, SRI BHARAT
CHANDRA MAHAL a student of B.com final year,
have prepared this project on the study of
“WORKING CAPITAL” of M/s Orissa plastic
limited to fulfill the partial requirement to complete
the course of B. Com taken of in F.M. (Auto) College,
Balasore.

I also further state that the project has been

prepared of my own with the primary & secondary
data provided by the company, which are required
essential for the completion of the project. The report
presented now to F.M. (Auto) College, Balasore is
purely genuine and it has not been presented earlier
anywhere for any purpose.

BHARAT CHANDRA
MHAL
B.Com final year
{Accounting (H)} Place-
Exam Roll No- 05C50010
Date- Class Roll No-
05DC056
F. M. (Auto)
College,
Balasore, Orissa

I
GUIDE CERTIFICATE

This is to certify that SRI BHARAT

CHANDRA MAHAL has prepared the project on
WORKING CAPITAL ANALYSIS of M/S
ORISSA PLASTIC ltd. on the basis of the
information and explanations provided by the
company with considered to fulfill the partial
requirement for course completion of Bachelor of
commerce taken up in F.M.(Auto) College,
Balasore.

I further add on the words that SRI

MAHAL is a sincere and hard working student
who has prepared this project by his own with
high dignity and diligence.

DR. N. K. SWAIN
DEPARTMENT OF
COMMERCE
F. M. (AUTO.) COLLEGE,
BALASORE

II
ACKNOWLEDGEMENT
A study on working capital analysis of M/s Orissa
plastic limited is definitely a good experience to expand
the exposure in the field of finance. This project not only
helpful to complete the partial requirement for B. com
syllabus presented to Fakir Mohan (Auto) College,
Balasore but it helped to get practical experience in the
actual work area.
I convey my gratitude and thanks to M/s Orissa
plastic limited and all the staffs of it who have provide
support in giving information and explanation to complete
this project.

Last but not least, I convey my sincere thanks and

gratitude to Dr. N.K. Swain, Dept. of Commerce, Fakir
Mohan (Auto) College, Balasore, Who was given his most
valuable time and effort in guiding me to complete this
project in due time with out which it would not have been
possible.

Bharat Chandra mahal

B.com final year
Accounting (H)
Exam Roll No-
05C50010
Class Roll No-05DC056
F. M. (Auto) College
Balasore, Orissa
III
 CONTENTS
Page no.
Declaration
Gudicertificate
Acknowledgement
CHAPTER 1
1. Introduction
1.1 Meaning of working capital
1.2 Concept of working capital
1.3 Basic of study
1.4 Analysis of the study
CHAPTER 2
2. Methodology
2.1Scopeof the study
2.2Objective of the study
2.3 Data source
2.4Tools of data analysis
2.5Limitations of the study
CHAPTER 3
3. Company
3.1 history of the company
3.2 Financial of highlights
CHAPTER 4
4. Analysis and interpretation
4.1 Introduction
4.2 Analysis and calculation of ratio
CHAPTER 5
Comment, suggestions, & conclusion of ratio
 CHAPTER-1
1. INTRODUCTION
1.1 Meaning of working Capital:-
Capital is the liable blood of a business. As a man can’t live without
blood such as a business can’t survive without capital required for a
business can be classified into two categories :-
 Fixed capital
 Working capital
Every business needs funds for the purposes of its day-to-day
operations. Investments in fixed assets like plant and machinery, land
etc. is called fixed capital. On the other hand, funds required for
financing short term or current assts such as cash, debtors, marketable
securities & inventories are known as working capital. it is also known
as revolving or circulating capital as the funds thus invested in current
assts keep revolving fast and are being constantly converted into cash &
this cash flows out again in exchange for other current assets. In other
words working capital is the difference between resources in cash or
readily convertible in to cash (current assets) & other organizational
commitments for which cash will soon be required (current liabilities).
Thus: working capital =current assets – current liabilities
Management of working capital refers to the management of current
assets as well as current liabilities. The important of working capital
management stems for two reasons.
 Investment in currents represents a substantial portion of total
investment.
Investment in current assets & level of current liabilities to be geared
quickly to change in sales.
 The importance of working to manufacturing concern is such that
the failure or success of a firm is determind by the availability of
adequate working capital. This is reason why the financial manager
spends a great deal of time in managing current assets and current
liabilities. That is why it is said, “working capital is the life blood &
controlling never centre of a business.”
Page-01
1.2 Concept of working capital (Gross, Net)
There are two types of working capital, via,
(A) Gross working capital
(B) Net working capital
The amount invested in current assets is gross working
capital and when the current liabilities are subtracted from current assets,
the resulting amount is called net working capital. Most of the business
requires the net working capital to manage the day-to-day business
operation. Since working capital is temporarily required in the business,
working capital represents the amount needed to complete one operating
cycle. Once one operating cycle is completed, money would be
generated to set off the subsequent fund required to manage the next
working capital requirement. Therefore, working capital cycle length
determines the size of working capital. The following diagram represent
the working capital cycle

Debtors (receivable)

Cash
Finished goods

Raw material
Work-in-progress

The above diagram indicates the following aspects

  Estimated working capital raised from bank in the form of cash.
 Cash is converted in to purchase of raw materials.
 Raw material is converted in to work-in-progress.
 Work-in-progress is converted in to finished goods.
 Finished goods are converted in to account receivables.
 Account receivables are converted in to cash.

Page-02
1.3 .Basis of study
(i)Secondary data from the financial statement of the company.
(ii)Primary data from the companies official by explanation as and when
needed without questionnaire, on fact based.
(iii)Help of recommended books (Detail given under bibliography)
1.4. Analysis of the study:
The total analysis of the study of working capital is based on
four steps:-
 Determination of working capital available.
 Ratio analysis.
 Interpretation.
 Conclusion of the study.
 Page-

CHAPTER-2
2. METHODOLOGY
2.1. Scope of the study
Due to constraint of time and resources, we are going to
utilize the data available from the annual report of the company. Our
study is concerned with the working capital analysis of the company our
study covers a period of 3 years.
2.2. Objective of the study
Following are the main objectives of the study.
 To find out the gross working capital and net working capital of the
organisation.
 To analyses different sources of working capital and application of
the organisation.
 To examine the fluctuation of in flow of working capital in to the
organisation
 To examine the fluctuation of out flow of working capital into
organisation
 To suggest appropriate means to improve the flow of working
capital
  To examine the abilities or inabilities of the business to pay
creditors in time.
 To examine the efficiencies of the business to collect money from
the debtors to avoid the bad debts.
 To examine the abilities or inabilities of the business to meet day-
to-day business recurring expenditure
 To examine the efficiencies of the business to make salary payment
to workers in time.
 To examine the efficiencies of the business to make prompt stock
turn over.
 To suggest the financial abilities of the business to improve the
quality of goods produced with the help of hi-fi technology.
 To suggest the efficiencies of the business to replace the fixed
assets on its expiry out of funds available from current assets.
 To suggest the proper utilization of the funds to achieve the
common desired goal. Page- -
 Efficiencies of the business to repay short term loans taken from the
financial institutions within the time bound limit.
 To suggest the strength of the business to face the business
competition of price war.
2.3. Data sources-In our study; we are going to use the annual report of
the company. Due to constraint of time, we have considered a period of
years. In addition, our out study is exclusively based on secondary data.
2.4. Tools of data analysis-
In our analysis, ratios, percentages, charts, diagrams, etc will be
used as the basic tools. In appropriate situations, different kinds of bar
diagrams, graphs and charts will be used. In our analysis, following are
the important ratios used by us in our analysis-
(1) Current ratio.
(2) Liquid ratio.
(3) Absolute liquid ratio.
(4) Stock turn over ratio.
 (5) Debtors turn over ratio.
(6) Creditors turn over ratio.
(7) Working capital turn over ratio.
2.5. Limitations of the study:
Since our study is based on the annual report of the
organisation, the significance of the study is restricted. The comment,
suggestion and conclusion of our study hold good in similar situation.

.
.
.

Page-
CHAPTER -3
3. COMPANY PROFILE
3.1. History of the company
3.1.1. Introduction
We introduce ourselves as a 36-years-old company
pioneering in the manufacturing of plastic pipes and based
at Balasore, Orissa, India ours in an ISO 9002 certified
organisation with a reputation of total commitment to
wards satisfying our customers with best quality products.
The Oriplast group today is a big conglomerate in the
plastic
.processing industry, with a combined turn over of Rs.
70crores per annum today the group has more then 12crorer
plastic products to its name & more then 15 other products
lines manufactured from time to time depending on the
market demand & need . Oriplast has an entire range of
plastic pipes & fittings made from PVC, HDPE, & MDPE,
which confirms to the Indian & world standards like IS,
ISO, BS, DIN & ASTMD. Today our pipes cater to every
conceivable
such as plumbing, irrigation system, tube well system,
chemical & ash slurries, affluent disposal lines, optical
fiber cabling & LPG transportation. Oriplast has been
accepted as a quality manufacturer of products for different
use by UNICEF, ONGC, IGL, RITES, NTPC, SAIL and
PORTS. Mines & other leading & famed institutions like
Tata consulting Engineers, India limited etc. the group now
has 17 extruders for PVC pipes, 10 injection-
molding machines one rational molding machine & a host
of ancillary equipments. It provides 1000 families direct &
indirect employment
3.1.2. ABOUT ORI-PLAST FACTORY AT
BALASORE
The Balasore plant was started in the year 1965-66. We
are an ISO 9002certified organisation with a reputation of
total commitment towards satisfying our customers with
best quality products headed by the president Mr. H.K Das,
today it has 17 PVC extruders, 5 HDPE extruders, 10
injection molding machine, our independent building for
R&D & quality control, one administrative office building
of about 3000sqft, stores go downs for raw material &
chemicals, and open space for finished products, own tool
room for maintenance, compressors, ERP with total data
and documentation by computers. It has a production
capacity of 15000 M. tones of UPVC and 6000 M. tones of
HDPE pipes & fittings per annum.
It provides direct employment to 300 people with indirect
employment
To about 1000 individuals. Together the Oriplast group has
a combined capacity of 21000 M.T of plastic pipe
processing.
Word for R&D 
The Oriplast R&D facility located in a separate 3-storied building in
the Oriplast campus is a state-of-the –art laboratory. The laboratory is
well equipped and capable of carrying out various tests under the
guidance of experienced Dr. Jena & his team of engineers. The
equipments a massed from world re-mowed manufactures. Also such as
the prowess of Oriplast laboratory that external agencies have not only
certified it but also do not hesitate to use our laboratory if the situation so
demands.

3.1.2. CLIENTS
 Tata hydropower Ltd.
 ONGC lakwa, Assam
 (Water treatment plant)
 NTPC-Tuticorin
 NTPC-Ghaziabad
 Manila petrochemicals, Manila (effluent
discharge line from plant to sea with difference
at the end.)
 Dredging phosphates, paradeep (for Gypsum
Transportation )
 SAIL, Rourkela
 UNICEF, New Delhi
 UNICEF, Copenhagen
 Bridge& Roof Co.
 Uranium Corporation
 Alfa Trading Co. Bangladesh
 Far east trading & Logistiscs Company limited,
Bangkok, Thailand.

CHAPTER-4
ANALYSIS & INTERPRETATION
 4.1. INTRODUCTION
In this chapter, we are going to analyze working capital
of the organisation by the help of suitable charts, diagrams
& ratios.
4.1.1. Determination of Working Capital

Current assets 2004-05 05-06 06-07

Cash in hand 3.29 6.14 4.77
Cash at bank 84.79 145.69 106.02
STOCK
raw-materials 361.92 209.64 326.34
work –in- progress 3.61 2.32 1.58
finished goods 392.19 143.43 167.31
others 389.65 591.47 364.61
SUNDRY DEBTORS
Debt more then 6 months 186.32 140.46 156.95
Debt less then 6 months 303.56 472.07 441.21
Marketable securities 39.80 46.34 74.14

Gross working capital 1665.13 1757.56 1642.93

Current liability
Sundry creditors 405.23 555.33 409.02
Cash credit 514.87 404.41 515.02
Letter of credit 395.00 364.50 418.50
1315.10 1324.24 1343.32
350.00 433.32 299.61
Net working capital
Net increase/(decrease) in _____ 83.29 (133.71)
working capital
 4.2. ANALYSIS AND CALCULATION OF
RATIOS
4.2.1. CURRENT RATIO:-
This is the ratio, which represents the relationship
between current assets and current liabilities. This is the
symptom, which indicates whether the business is capable
to justify the claim of sundry creditors in time with ready
payment.
Current Assets
Ratio=--------------------------
Current Liabilities
Table-4.2.1 (Rs. in lakhs)
YEARS C.A. C.L. RATIO
20004-05 1665.13 1315.10 1.27
2005-06 1757.56 1324.24 1.33
2006-07 1642.93 1343.32 1.22
(Source: Annual Report of Oriplast, 2006-07)
4.2.2. LIQUID RATIO:-
This ratio, which bridge the relationship between liquid
assets current liabilities. There may be the situation where
the stocks may be slow moving or may be out dated due to
introduction of hi-fi technology and the customers may not
be willing to purchase the stocks. This ratio discloses the
efficiencies of the business to pay the creditors without
considering the realised value of stock. Therefore, when the
stocks are not considered as a valued current assets and it is
substracted from the current assets, the residual current
assets will amount to liquid assets.

Liquid Assets
RATIO= ----------------------------
Current Liabilities

Table-4.2. (Rs. In lakhs)

Years L.A. C.L. Ratio
2004- 1007.41 1315.1 0.77
05 0
2005- 1402.17 1324.2 1.05
06 4
2006- 1147.70 1343.3 0.85
07 2
(Source: Annual Report of Oriplast, 2006-07)

4.2.3. ABSOLUTE LIQUID RATIO:-

This is the ratio, which establishes the relationship
between absolute liquid assets and current liabilities. Cash
in hand and cash at bank with marketable securities
constitute the absolute liquid assets. The ratio indicates,
what would be the ability of the business to pay creditors
considering only ready cash available and can be arranged
without any difficulties. Therefore, when stocks and sundry
debtors are ignored to include in the list of current assets,
the residual amount is the absolute liquid asset.
Absolute Liquid Asset
RATIO= -------------------------------
Current Liabilities

Table-4.2.3 (Rs. In Lakhs)

Years A.L.A. C.L. Ratio
2004- 127.88 1315.10 0.08
05
2005- 198.17 1324.24 0.15
06
2006- 184.93 1343.32 0.14
07
(Source; Annual Report of Oriplast, 2006-07)
4.2.4. STOCK TURNOVER RATIO :-
Inventory turnover measures the relative size of
inventory and influences the amount of cash available to
pay the liability. A smaller and faster-moving inventory
means that the company has less cash tied up in inventory
means that a recession or some other factor is preventing
sales from keeping pace with purchasing and production.
Ideally, inventory should be maintained at an optimum
level to support production and sales. Inventory turnover
ratio is calculated by using the following formula-
Cost of Goods Sold
Inventory Turnover Ratio=
-----------------------------
Average Inventory
Table-4.2.4 (Rs. In lakhs)
Years Cost of Average Ratio
goods Inventor
Sold y
2004-05 3053.59 665.59 4.59
2005-06 3305.83 361.79 9.14
2006-07 3728.61 498.98 7.47
(Source; Annual Report of Oriplast, 2006-
07)

4.2.5. DEBTOR TURNOVER RATIO:-

The ratio establishes the relationship between credit
sales and account receivable from the debtors. This ratio
indicates the ability of a company to collect for credit sales
in a timely way. Therefore, the debtor turnover determines
the liquidity of one item of current assets and find out how
faster the debts are being collected. In other words, this
ratio shows how many times on an average, the receivable
were turned in to cash during the period. A high debtor
turnover ratio shows shorter time span between credit sales
and cash collection.
Credit Sales
Debtor Turnover Ratio = ------------------
Average Debtors
Table-4.2.5 (Rs. In lakhs)
Years Credit Average Ratio
Sales Debtors
2004- 489.88 480.00 1.02
05
2005- 412.51 600.00 0.69
06
2006- 498.16 580.00 1.03
07
( Source; Annual Report of Oriplast, 2006-07)
4.2.6. CREDITORS TURNOVER RATIO:-
This ratio is establishes the relationship between credit
purchase and creditors. This ratio being the position of a
business to show how quickly the creditors are paid. A
higher ratio indicates, more cash available with the
business and working capital requirement can be easily
met. Creditors can assess the paying capacity of a business
with reference to this ratio. This ratio can be calculated
with the help of
the following formula-
Credit Purchase
Creditors Turnover Ratio = -----------------------
Trade Creditors
Table-4.2.6 (Rs. in lakhs)
Years C.P. T.C. Ratio
2004-05 44895.0 405.2 110.7
0 3 9
2005-06 45710.0 555.3 82.31
0 3
2006-07 47315.0 409.0 115.6
0 2 8
(Source-Annual report of Oriplast, 2006-07)

4.2.7. WORKING CAPITAL TURNOVER

RATIO:-
Working capital of a business is the excess of current
assets over current liabilities. Mathematically this is
computed by subtracting current liabilities from the current
assets. The resulting working capital figure is taken as one
of the primary indications of the short-term solvency of the
business. The working capital formula is a follow-
Working Capital = Current Assets—Current
Liabilities
 The working capital amount should be compared with
the past amount to reasonable. Caution must be exercised,
because the relative size of the firm may be expanding or
contracting. Further, the absolute amount of working
capital is difficult to use in comparing the companies of
different size or in comparing such amounts with industry
figure.

The working capital turnover ratio is predominately

used to ascertain the relative strength of the company to
meet day-to-day
business expenditure as well as in payment of short-term
obligation. This ratio establishes the relationship between
costs of goods sold and average working capital. The ratio
can be calculated with the following formula—
Cost of goods sold
Working capital Turnover Ratio =
-------------------------------
Average working
capital

Table-4.2.7 (Rs. In lakhs)

Years C.G.S. A.W.C. Ratio
2004- 3053.59 256.59 11.90
05
 2005- 3305.83 288.06 11.48
06
2006- 3728.61 265.85 14.02
07
(Source; Annual Report of Oriplast, 2006-07)

CHAPTER-5
COMMENT, SUGGESTION AND CONCLUSION OF
RATIOS 5.1. Current Ratio: 04-05 05-06 06-07
1.27 1.33 1.22
COMMENT:
This indicates that in all the three years much less
than the accepted rule of thump i.e. The rules tells when
against Re.1 of current liabilities, there would be Rs.2
current assets available, it would be considered that the
business will have the sound financial position to meet the
short term obligation . In the year 04-05,there is
development of ratio shifted from 1.27 to 1.33 . However,
in the current year 06-07 again there is determination of
current ratio as the current assets again reduced from last
year 05-06 by Re. 0.11 against every Re.1 of current
liabilities.
SUGGESTION:
If this situation to be continued, the creditors will
loose their reliance on the company for payment of their
dues in time and hence they may stop supplying material to
the company on credit considering their security point. It is
therefore necessary for the company to raise current ratio to
confirm the standard rule is either by increasing current
asset or by reducing current liabilities. This can be achieved
by the company declaring more trade discount to attract
credit as well as cash customers.
5.2. Liquid Ratio: 04-05 05-06 06-07
0.77 1.05 0.85

COMMENT:
The liquid ratio in the year 04-05 is 0.77 and in the
current year 06-07 is 0.85, which are less than accepted rule
thump 1:1. However, in the year 05-06 the ratio is above
the rule of thump. When the stocks are ignored from the
current assets considering the slow realization, the liquidity
position of the company is little improved as compared to
current ratio. In the year 05-06, the position was quite
satisfactory as the ratio was 1.05:1 which is just above the
standard norms 1:1. The situation in other years is not so
worst because the ratios are in and around 1:1.
SUGGESTION:
Liquid ratios are not even satisfactory through not
worst. There would be feelings in the minds of creditors,
bankers and other claimants that the business may not be
able to pay their dues at time of depression. The employees
may feel insecurity as regards their increments and job
continuity. Therefore, the management should think to
make some investment in marketable security to strengthen
the liquid ratio.

5.3. Absolute liquid ratio: 04-05 05-06 06-07

0.08 0.15 0.14
COMMENT:
Absolute liquid ratios of all the three years are less
than the accepted rule of thump 0.5:1. Ratios are much less
than the standard

norms. This ratio shows the cash availability to pay the

creditors and hence this is called cash ratio. For every Re.1
of current liability, there should be at least Re.0.5 cash
available. The actual cash position is 0.08, 0.15 and 0.14
against Re.1 of current liabilities in the year 04-05, 05-06
and 06-07 respectively. Therefore, the situation is not
satisfactory from the point of view of short term creditors.
SUGGESTION:
Looking to the absolute liquid ratio, creditors, bankers
and even employees will feel insecurity to get their dues in
time from the business. Creditors will stop supplying goods
on credit, bankers will refuse to finance and employees will
search for better opportunity to swish over. The continuity
of the business may be at stake. Therefore, the management
of the company should try their best to reach the ratio at
least 0.5:1 to satisfy all the parties having interest in the
company. This can be done by increasing the cash sales as
well as making short-term investment in marketable
securities. Cash sales can be increased either by reducing
the sales price or by increasing cash discount and which
should be accepted would be look out of the management.
5.4. Stock turnover ratio: 04-05 05-06 06-07
4.59 9.14 7.47
COMMENT:
The ratio in the year 2004-05 is satisfactory as it is
around 5 times of average stock. However, in the year
2005-06 and 2006-07 the ratio are not satisfactory. In the
year 05-06, the stock is converted in to sales in 10 times
and it is 8 times in the current year 2006-07.
It is therefore observed that the stocks are slow moving
which will have the reparations to lower down the
availability of cash. Lower the ratio, faster would be the
stock moving.
Suggestion:-
As the ratio shows that the stocks are slow moving, it
will lead to damage the stock as well as the chance is there
that the stocks may be out dated. This will create the great
loss to the company which may destroy the liquidity
position of the company. Therefore, the company manager
should take care to make faster stock turnover to increases
the cash position as well as to reduce the stock
obsolescence. Faster sock turn over may be achieved
through continuous market review, granting the dealer
more discounts and allowing the customers to purchase the
goods at a competitive price with quality guarantee.
5.5 debtor turn over ratio:-
04-05 05-06 06-07
1.02 0.69 1.03

Comment :-
The ratio shows that for every rupee one of trade debtor,
there is Rs. 1.02 credit sales in the year 04-05, 0.69 in the
year 05-06 and 1.03 in the year of 06-07. it implies that in
the year 04-05, only Re.0.02 is collected . in the year 05-06,
total credit sales 0.69is not collected as well as last year
credit sales not collected till the year end 05-06. in the
current year 06-07, only Re.0.03 is collected against Rs.
1.03
Sales. Therefore, it is evident that the credit policy of the
business is not satisfactory.
Suggestion:-
The ratio shows that the liquidity position of the business
is not satisfactory as the credit policy of the business is not
up to mark. This may create severe loss to the business due
to badebt. The management of the business should revise
the credit policy to recover the credit amount from the
customers. The policy should include the declaration of
more cash discount to quick up the customer to pay the
amount at the earliest. At the same time the legal action
should be initiated against the customer whose debts have
become more than two years to avoid the time barred.
5.6 creditor turnover ratio:- 04-05 05-06 06-07
110.79 82.31 115.68

Comment;-
The ratio shows that the business is prompt in making
payment to creditors. It is a good indication for continuous
supply of material by the creditors in the year 04-05, when
there is credit purchase of Rs. 110.79, the sundry creditors
have the dues only Re. 1 accordingly in years 05-06, the
sundry creditors have the dues of Re. 1 against Rs. 82.31
credit purchase the position has been improved in the
current year 06-07, because the creditors has the dues of
Re. 1 against credit purchase of Rs. 115.68.

Suggestion:
Since the company is very particular in payment to
creditors, it can be suggested that if the payment can be
made slow, the business can have the funds available to
utilized in most profitably project or the money gets
blocked for payment to creditors ratio, liquid ratio and
absolute liquid ratio.
5.7 Working capital turn over ratio: 04-05 05-06 06-
07
11.90 11.48
14.02
Comments
The ratio shows that the position of working capital as not
satisfactory in the business. In the year 04-05, when there is
Rs.11.90 sales, only Re. 1working capital remain available.
In the year 05-06, Re. 1 working capital remains available
in every Rs.11.48 sales while it is at Rs. 14.02 sales in the
current year
06-07.
Suggestion
Since the situation is not satisfactory, it is important for
the management to improve the working capital standard to
ensure the smooth and uninterrupted production process.
To improve the strength of working capital, the
management of the business should increase the level of
current assets or decrease the level of current liabilities.
This can be achieved with increase of sales both cash and
credit with offering of discount to the customer for both
cash and credit. The management should revise the system
of credit sales and credit policy to avoid the chances of
badebt. At the same time, the management should take
steps to make the stock fast moving which
Will directly increase the level of working capital.

CHAPTER 6
BIBLIOGRAPHY
Management accounting: Shashi k Gupta & R.K
Sharma
Cost accounting: S.P. Jain & K.L. Narang
Management accounting: M.Y. Khan & P.K. Jain
THE END