LIST OF CONTENTS

Chapter No
List Of Tables List Of figures.

Title

Page no

1.
General Company Profile Industry Profile

Introduction

2.
2.1 2.2 2.3 2.4 2.5 2.6 2.7

Research Methodology
Statement of Objectives Need of the Study Scope of the Study Period of the Study Tools applied in the Study Methodology Limitations of Study

3.
3.1 3.2 3.3 3.4 3.5

Data Analysis And Interpretation

working Capital Ratios statement Changes In Working Capital Operating Cycle Liquidity Ranking Analysis of Current Assets And Current Liabilities

4. 5.

Findings And Suggestions Bibliography

CHAPTER-1 1.1 INTRODUCTION 1.2 INDUSTRY PROFILE 1.3. COMPANY PROFILE

1.3.1. CORPORATE GOAL :1.3.2. CORPORATE POLICY :1.3.3. SELLING POLICY:1.3.4.PRODUCT LINE:1.3.5.1. AWARDS RECEIVED: 1.3.5.2. ENVIRONMENTAL PROGRAMMES:1.3.5.3. SOCIAL PROGRAMMES:1.3.5.4. PLANS:-

1.3.6. GROUP OF COMPANIES

1.3.7. PRODUCTS:-

1.3.12. BUSINESS PROFILE

Name , Affiliated to ,Regd.Office & Factory, Commencement of Production Line of Activity-Manufacturing of, Man Power ,Factory Staff:Paid up Capital Net Worth Turn Over Auditors Bankers

CHAPTER-2 RESEARCH METHODOLOGY

2.1. STATEMENT OF OBJECTIVES:

Primary objective Secondary objective

2.2. NEED OF THE STUDY: Working capital management plays a vital role in any organization and one should have a thorough knowledge about the working capital position. In view of this context, I have undertaken this study and it would be a great advantage to the company also, to know its working capital position. 2.3. SCOPE OF THE STUDY: The scope of the study is confined to the analysis of solvency & profitability position of the company. The data collected from both primary and secondary data. Primary data Primary data has been collected through personal interviews with finance department and the executive Secondary data Secondary data collected from the records like B/S, income statement and necessary records. Disclosed fully. This is set back while drawing the conclusion. The study is based on 5 annual financial reports only. The information from annual reports is insufficient to calculate few ratios. Limited time does not allowed to do more analysis. 2.4. PERIOD OF THE STUDY:3

The period of the study was four months from January to April 2008, During the period all the required data was collected through secondary sources and analyzed with the help of financial tools of analysis. It includes data collection analysis of data and interpretation. 2.5. TOOLS APPLIED IN THE STUDY: Working capital ratios Liquidity ranking Operating cycle Analysis of current assets and current liabilities. 2.6. METHODOLOGY:The objective of the study is to analyze the working capital position of the company for the past five years from methodology was adopted. Firstly to find out liquidity and solvency position of the company through working capital ratios. Secondly to study the Liquidity position of the company by using liquidity ranking method. Thirdly to estimate the working capital requirement of the company by using Operating cycle. Finally Analysis of current assets and current liabilities. 2.7. LIMITATAIONS OF THE STUDY:1. The analysis was confined to a period of five years during 2. Financial statement of prepare on the basis of certain accounting concepts in conventions any change in methods are procedures of accounting will limit the utility of financial statements. . from and to achieve those objective the following

CHAPTER-3 DATA ANALYSIS AND INTERPRETATION

DEFNITION OF WORKING CAPITAL CONCEPTS OF WORKING CAPITAL 1. GROSS WORKING CAPITAL 2. NET WORKING CAPITAL PROPRIETORS FUNDS CASH

CASH FROM DEBTORS

CREDITORS

DEBTORS NEED FOR WORKING CAPITAL Business firms aim at maximizing the wealth of shareholders. In its endeavor to

maximize shareholders wealth a firm should earn sufficient return from its operation earning a steady amount of profits required successfully sales activity. The firm has to invest enough funds in current assets for the success of sales activity current assets are needed because sales dont convert into cash instantaneously there is always an operating cycle involved in the conversion of sales into cash.

Level of working capital is necessary on a continuous and uninterrupted basis. This requirement is referred to as permanent of fixed working capital. Any amount over and above the permanent level of working capital is temporary, fluctuating or variable working capital. This is portion of the required working capital is needed to meet fluctuating in demand consequent upon changes in production and sales as a result of seasonal changes PERMANENT AND TEMPORARY WORKING CAPITAL Both kinds of working capital are necessary to facilitate the sale process through the operating cycle. Temporary working capital is created to meet liquidity requirements that are purely transient in nature. .CHANGES IN WORKING CAPITAL 1. CHANGES IN SALES AND OPERATING EXPENSES:2. POLICY CHANGES:3. TECHNOLOGICAL CHANGES:. FACTORS INFLUENCE IN WORKING CAPITAL REQUIREMENT

1. NATURE OF BUSINESS: 2. FORM OF OPERATIONS: 3. CHANGE IN PRICE: 4. CREDIT POLICY: 5. LEVEL OF PRODUCTION:6. PROFIT LEVEL:7. PRODUCTION POLICY: 8. MARKET CONDITIONS:9. CONDITIONS OF SUPPLY:-

10. SALES GROWTH:. PERMANENT AND TEMPORARY WORKING CAPITAL

PROBLEMS OF WORKING CAPITAL MANAGEMENT THE DANGERS OF EXCESSIVE WORKING CAPITAL INADEQUATE WORKING CAPITAL ROLE OF FINANCIAL MANAGER IN WORKING CAPITAL MANAGEMENT: 1. Working capital management requires must of the finance manager time as it represent a large position of investment is assets 2. Working capital management requires much of the finance management time as it represent larger position of investment in assets. 3. 4. Action should be taken to curtail unnecessary investment in current assets. All precaution should be taken for the effective and efficient management of working capital. 5. Larger firms have to manage their current assets and current liabilities very carefully and should see that the work should be done properly in order to achieve predetermined organizational goals. 6. The financial manager should pay special attention to the management of Current assets on continuing basis. FUNDS FLOW STATEMENT CONCEPT OF FUND USES AND SIGNIFICANCE OF THE FUND FLOW STATEMENT

OBJECTIVES OF FUNDS FLOW ANALYSIS

CASH MANAGEMENT:CASH MANAGEMENT STRATEGIES:MOTIVE OF HOLDING CASH 1. TRANSACTIVE MOTIVE 2. PRECAUTIONERY MOTIVE:3. SPECULATIVE MOTIVE:. FACTS OF CASH MANAGEMENT MANAGING THE CASH FLOWS: OPTIMUM CASH LEVEL:INVESTING SURPLUS CASH:-

RECEIVABLES MANAGEMANT
COLLECTIONS POLICIES

CALCULATION AND INTERPRETATION

3.1 CURRENT RATIO: CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES For the calculation this ratio Current assets include inventories, sundry debtors, cash and bank balances and loans & advances Current liabilities include Current liabilities and provisions.

3.2. QUICK RATIO (OR) ACID TEST RATIO: This is the ratio of liquid assets to current liabilities. Is shows a firms ability to meet current liabilities with its most liquid or quick assets. The standard ratio 1:1 is considered ideal ratio for a concern. Liquid assets are those, which can be easily converted in to cash within a short period of time without loss of value. This ratio can be calculated by using the formula: LIQUID RATIO = LIQUID ASSETS / CURRENT LIABILITIES For the calculation of this ratio A liquid asset of quick asset includes Sundry Debtors, Cash and Bank balance and Loan & Advances. Current liabilities include Current Liabilities and Provisions. 3.3. CASH RATIO:Generally receivables are more liquid the inventories, but there may be dough regarding their reliability in time. Hence only absolute liquid assets such as Cash in hand, Cash at bank, Marketable Securities are ideal taken into consideration 1:2 is considered as ideal ratio. This ratio also called absolute Liquid Ratio. This ratio is shown as :CASH RATIO = ABSOLUTE LIQUID ASSETS / CURRENT LIABITIES

3.4. INTERNAL MEASURE:Yet another ratio, which assets a firms ability to meet its regular cash expenses, the internal measure relates liquid assets to average daily operating cash out flows. The daily operating expenses will be equal to cost of goods sold plus selling administrative and general expenses less depreciation divided by number of days in the year. INTERNAL MEASURE = CURRENT ASSETS INVENTORY / AVERAGE DAILY OPERATING EXPENCES. 3.5. NET WORKING CAPITAL RATIO:-

The difference between current assets and current liabilities including short term bank borrowing is called Net Working Capital or Net Current Assets. Net Working Capital in sometimes used as a measure of a firms liquidity. It is considered that, between two firms, the one having the larger Net Working Capital has the greater the ability to meet its current obligation. This is not necessarily so the measure of liquidity is a relationship, rather than the difference between Current Assets and Current Liabilities. Net Working Capital how ever, measure the firms potential reservoir of funds. It can be related to net assets. NET WORKING CAPITAL = NET WORKING CAPITAL / NET ASSETS. 3.6. INTEREST COVERAGE RATIO:This ratio indicates whether the earnings of a firm are sufficient to pay interest charges periodically or not. In other words, it is calculated to know whether the creditors are secured or unsecured, in respect of their periodical interest income it is also called as Debt Secure Ratio or fixed charges cover. INTEREST COVERAGE RATIO = NET PROFIT BEFORE INCOME TAX / INTEREST CHARGES. 3.7. INVENTORY TURNOVER RATIO: This ratio, also known as Stock Turnover Ratio, establishes relationship between cost of goods sold during a given period and the average amount of inventory held during that period. This ratio reveals the number of items finished stock is turned over during a given accounting period. Higher the ratio the better it is because it shows that finished stock rapidly turned over. On the other hand, a low stock turnover ratio is not desirable because it reveals the accumulation of obsolete stock, or the carrying of too much stock. This ratio is calculated as follows: INVENTORY TURNOVER= COST OF GOODS SOLD / AVERAGE STOCK For the calculation of this ratio COST OF GOODS COLD = OPENING STOCK + PURCHASES +

MANUFACTURING EXPENSES - CLOSING STOCK AVERAGE STOCK = OPENING STOCK + CLOSING STOCK /2 SIGNIFICANCE 10

If this ratio is high, it indicates the efficient of management in converting stock into cash quickly, sound liquidity position and liquidity of goods maintained

3.8. DEBTORS TURNOVER RATIO: When a firm sells goods on credit, book debts are created. Debtors are expected to be converted into cash over a short period. To a great extent, the amount and quality of debtors determine the liquidity position of the firm. Debtors Turnover Receivables Turnover is calculated by dividing credit sales by average debtors. This ratio indicates the number of times, on an average the debtors or receivables turnover each year. Generally, the higher the value of debtors turnover, the more efficiency is the management of assets. Sometimes, data relating to credit sales, opening balance and closing balance of debtors may not be available. Then the debtors turnover can be calculated by dividing total sales by closing balance of debtors. DEBTORS TURNOVER RATIO = CREDIT SALES / AVERAGE DEBTORS (OR) AVERAGE TRADE DEBTORS = TOTAL SALES / CLOSING DEBTORS (OR) AVERAGE TRADE DEBTORS = (OPENING TRADE DEBTORS + BILLS PAYABLE) + (CLOSING TRADE DEBTORS + BILLS RECIEVABLES) / 2 SIGNIFICANCE:Higher D.T.O Ratio indicators more efficient collection of debtors and signifies the more liquidity of debts and lower D.T.O Ratio, indicates more inefficient collection of debts and signifies less liquidity of debts. 3.9. COLLECTION PERIOD:The average number of days for which Debtors remain outstanding is called the average collection period and can be computed as follows. AVERAGE COLLECTION PERIOD = DEBTORS / SALES * 360

11

3.10. FIXED ASSETS TURNOVER RATIO:Fixed Assets turn over ratio is calculated to measure the adequacy or otherwise of shown as Investment in Fixed Assets. This ratio is shown as. FIXED ASSETS TURN OVER RATIO = COST OF GOODS SOLD (OR) SALES / NET FIXED ASSETS. SIGNIFICANCE:This ratio is very significant for the manufacturing concerns. High ratio indicates efficiency in work performance where as low ratio means inadequate investment in fixed assets. 3.11. NET ASSETS TURN OVER RATIO:The firm can compute net assets turnover simply by dividing sales by net assets NET ASSETS TURNOVER = SALES / NET ASSETS It may be recalled that net assets (or) net fixed assets and net current i.e. current assets equal capital liabilities. Since net assets equal to net capital employed, net assets turnover may also be called capital employed turnover. 3.12. RETURN ON EQUITY:This ratio is also known as Net Worth ratio or Return on Share Holders Funds. ROE established relationship between Net Profit after Tax and Share Holders Funds. It is expressed as ROE = NET PROFIT (after tax) / SHAREHOLDERS FUND * 100 SHAREHILDERS: - EQUITY SHARE CAPITAL + PREFERANCE SHARE CAPITAL + ACCUMULATED.PROFITS ACCUMULATED LOSES SIGNIFICANCE:R.O.E is very significant in measuring the overall profitability or operational efficiency of a company. It enables the management to know whether the basic objective of the business maximization of profits is achieved or not and the shareholders to decide 12

whether their investment is safe and remunerative of a company can also be measured by means of a trend ratios calculated for several number of years. CURRENT ASSETS TURNOVER RATIO: This ratio measures the contribution of current assets to sales generation. If we get higher ratio, it indicates that there is more contribution of Current Assets in generating sales. On the other hand, if we get lower ratio, it indicates that there is not much contribution of Current Assets in generating of sales. It is calculated by dividing the Net Sales value by the Current Assets Value.

CURRENT ASSETS TURNOVER RATIO = NET SALES / CURRENT ASSETS

For the calculation of this ratio Net Sales included all Sales during the particular year. Current Assets included inventories, Sundry Debtors, Cash & Bank Balance

and Loans & Advances.

3.1.1. CURRENT RATIO: Current ratio is the relation ship between current assets and current liabilities. It is expressed as Current ratio = {current assets / current liabilities}

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Current assets (Rs)

Current liabilities(Rs)

Ratio 2.60 3.81 4.06 3.67 3.54

13

Current Ratio
5 4 Ratio 3 2 1 0
2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2.6
ratio

3.81

4.06

3.67

3.54

years

INTERPRETATION:During 2002-2007, the current ratio of the company was 2.60, 3.81 4.06 3.67 and 3.54. This indicates that for every rupees of Current Liability,company has more that 2 rupees to pay for it for all years of study the current ratio is more than the standard ratio of 2:1

3.1.2. QUICK RATIO: Quick ratio is the relationship between quick assets and current assets and current assets means current assets-stock-prepaid expenses. Quick ratio is also means Liquid ratio or Acid test ratio. This ratio may be expressed as follows. Quick ratio = Quick assets Current liabilities

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Quick assets(RS)

Current liabilities(RS)

Ratio 1.85 2.29 2.83 2.79 2.68

14

QUICK RATIO
3 2.5 2 RATIO 1.5 1 0.5 0 2002-2003 2003-2004 2004-2005 YEARS 2005-2006 2006-2007 1.85 RATIO 2.29 2.83 2.79 2.68

INTERPRETATION:-

standard ratio is 1:1

During 2002-2007, the quick ratio of the company was 1.85, 2.29, 2.83, 2.79, 2.68 times. It was more than the standard ratio of 1:1

3.1.3. CASH RATIO:Cash ratio = Absolute Liquid Ratio / Current Ratio

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Absolute Liquid Assets

Current liabilities(RS)

Ratio 0.22 0.40 0.39 0.69 0.59

15

0.8 0.7 0.6

CASH RATIO 0.69 0.59 0.4 0.22 0.39

RATIO

RATIO

0.5 0.4 0.3 0.2 0.1 0

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

YEARS

INTERPRETATION:-

During 2002-2007, the Cash Ratio of the company was 0.22, 0.44, 0.39, 0.69, and 0.59. times. During 2000-2007 on an average company has 0.45 times of current liabilities.

3.1.4. INTERNAL MEASURE:Internal measure = {Current Assets Inventory / Average Daily Operating Expenses}.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Current assets Inventory

Average Daily Operating Expenses

Ratio 193.43 154.16 234.13 213.01 165.95

16

INTERNAL MEASURE
234.13

250 200
RATIO

193.43 154.16

213.01 165.95

150 100 50 0
2002-2003 2003-2004 2004-2005
YEARS RATIO

2005-2006

2006-2007

INTERPRETATION:During 2002-2003 Internal Measure was 193.43 days. This indicates that company will be able to run the business without cash for about 193.43 days. During 2003-2007 the measure was 154.16, 234.13, 213.01, 165.95, days. During the period of study 2002-2003 ratio has reduced i.e. 193.43 days to 56 days.

3.1.5. NET WORKING CAPITAL RATIO:Net working capital = Net Working capital / Net Assets.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Net Working Capital

Net Assets

Ratio 0.89 0.83 0.83 0.82 0.84

17

1 0.9 0.8 0.7 0.6 0.5

0.89

NET WORKING CAPITAL

0.83 0.83 0.82

0.84

RATIO

0.4 0.3 0.2 0.1 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

YEARS

INTERPRETATION:During 2002-2007, The Net Working Capital Ratio of the Company was 0.89, 0.83, 0.83, 0.823 and 0.84 times. For all the years of Analysis, for one rupee of Net assets with the company, it has less than one rupee of Net Working Capital.

3.1.6. INTEREST COVERAGE RATIO:Interest coverage ratio = Earning Before Income Tax / Interest charges.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Earning Before Income Tax

Net Assets

Ratio 2.69 2.02 -2.12 3.68 8.69

18

10 8 6 4 RATIO 2 0 -2
2.69

INTEREST COVERAGE RATIO

6.68

8.69

2.02

RATIO
-2.12

-4
2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

YEARS

INTERPRETATION:During 2002-2007, the interest coverage ratio of the company was 2.69, 2.02, -2.12, 3.68, 8.69 times. During 2002-2004 and 2005-2007, it has a satisfactory interest coverage ratio. Bit During 2004-2005, it showed a negative rate; indicate the inefficient operation of the company.

3.1.7. INVENTORY TURNOVER RATIO:Inventory Turnover Ratio = Cost Of Goods Sold / Average Inventory.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Cost Of Goods Sold

Average Inventory

Ratio 3.78 2.05 2.25 3.52 2.45

Reciprocal Days 95.23 175.06 160 102.2 146.93

19

INVENTORY TURNOVER RATIO

4 3.5 3 3.52 2.25 2.45 3.78

RATIO

2.5 2 1.5 1 0.5 0

2002-2003

2.05

ratio

2003-2004

2004-2005

2005-2006

2006-2007

YEARS

INTERPRETATION:During 2000-2007 the company was turning its inventory of finished goods into sales 7.5 times, 3.09, 2.45, 1.456, and 1.154, times in a year. It has shown a decreasing trend during the period of study. The reciprocal of inventory turnover which gives the average inventory holdings in a year shows that company was holding inventory for 48, 115, 147, 247, and 312 days in a year. From past two years it was very high, indicating the poor management of sales affairs.

3.1.8 DEBTORS TURNOVER RATIO:Debtors Turnover Ratio = Credit Sales / Average Trade Debtors.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Credit Sales

Average Trade Debtors

Ratio 2.87 1.78 0.96 1.25 1.72

20

DEBTORS TURNOVER RATIO

3.5 3 2.5 2.87

TIMES

2 1.5 1 0.5 0

1.78 1.25 0.96

1.72 Ratio

2002-2003

2003-2004

2004-2005 YEARS

2005-2006

2006-2007

INTERPRETATION:During 2002-2003 the Debtors Turnover Ratio was around 2.87 times. This indicates that the collection of debt is good in this year also indicates that debtors that debtors are being connected into cash 2times in a year. During 2003-2004, 2004-2005, 2006-2007 the ratio was 1.78, 0.96, 1.25 1.72 times

3.1.9. Debtors Collection Period:

Collection Period = Debtors / Sales * 100.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Debtors

Credit Sales

Ratio 2.18 2.88 1.79 2.57 3.16

Days 165.16 125.08 200.59 140.06 114.03

21

3.5 3 2.5

COLLECTION PERIOD 2.88

2.57 2.18 1.79

3.16

RATIO

2 1.5 Ratio 1 0.5 0

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

YEARS

INTERPRETATION:During 2002-2007 the company was turning its debtors 165, 125, 200, 140, and 114 times in a year. During 2002-2005, it was high indicating the poor quality of debtors. But during 2004-2007, it has shown declining trend indicating the improvement of quality of debtors.

3.1.10. FIXED ASSETS TURNOVER RATIO:Fixed Assets Turnover Ratio = Sales / Net Fixed Assets.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Sales

Net Fixed Assets

Ratio 17.38 8.82 6.54 8.85 13.02

Reciprocal Days 0.06 0.11 0.15 0.112 0.08

22

17.38 18 16 14 RATIO IN TIMES 12 10 8 6 4 2 0

2002-2003

FIXED ASSETS TURNOVER RATIO

13.02

8.82 6.54

8.85
Ratio

2003-2004

2004-2005

2005-2006

2006-2007

YEARS

INTERPRETATION:During 2002-2007, the FAT Ratio was 17.38, 8.82, 6.54, 8.85, and 13.02 times. The reciprocal of this ratio was 0.06, 0.11, 0.15, 0.112, and 0.08. The Current Assets Turnover Ratio was 2.19, 1.83, 1.33, 1.90, and 2.47, times. The reciprocal of this ratio was 0.46, 0.54, 0.75, 0.58, and 0.40 times. This indicates that for every one rupee of sales company needs respective 0.06 invested in FAs and 0.46 invested in CAs.

3.1.11. NET ASSETS TURNOVER RATIO:Net Assets Turnover Ratio = Sales / Net Assets.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Sales

Net Assets

Ratio 1.95 1.53 1.11 1.56 2.08

23

NET ASSETS TURNOVER RATIO

2.5 2 1.5 1 0.5 0
2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

1.95 1.53 1.11 1.56

2.08

RATIO(%)

Ratio

YEARS

INTERPRETATION:During 2002-2003 the Net Assets Turnover Ratio of the company was 1.95 times it implies the company is producing Rs 1.95 of sales for 1 rupee of capital employed in Net Assets. During 2003-2007 the Net Assets Turnover Ratio of the Company was 1.53, 1.11, 1.56, 2.08 times.

3.1.12. RETURN ON EQUITY:Return on Equity = Net Profit / Share Holders Funds * 100.

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Net Profit

Share Holders Funds

Ratio 24.31 12.17 -10.53 16.80 29.37

24

RETURN ON EQUITY
30 25 20 15 10 R.O.E(%) 5 0 -5 -10 -15 2002-2003 2003-2004 2004-2005 YEARS 2005-2006 -10.53 12.17 24.31 16.8

29.37

Ratio

2006-2007

INTERPRETATION:During 2002-2007 the return on equity of the company was 24031, 12.17, -10.53, 16.80, and 29.37 %. It was very low during 2004-2005, where as 2006-2007 showed an improvement by 29.37 %.

3.1.13 CURRENT ASSETS TURN OVER RATIO:

Current Assets Turnover Ratio = {Sales / Net Current Assets}

Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Sales

Net current Assets

Ratio 2.19 1.85 1.33 1.90 2.47

Reciprocal Ratio(Times) 0.46 0.54 0.75 0.53 0.40

25

Current Assets Turnover Ratio

2.5 2 2.19 1.85 1.33 1.9

2.47

Ratio(times)

1.5 1 0.5 0 2002-2003 2003-2004

ratio

2004-2005

2005-2006

2006-2007

years

Interpretation:The Current Assets Turnover ratio was 2.19, 1.85, 1.33, 1.90, and 2.47 times. The reciprocal of this ratio was 0.46, 0.54, 0.75, 0.53, and 0.40 times. This indicates that for every One Rupee of sales company needs respectively 0.06 investments in FAs and Rs 0.46 investment.

26