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CHAPTER 1
INTRODUCTION
Finance:
Finance is regarded as the lifeblood of business enterprises. This
is because; in the modern money oriented economy finance is one of the basic
foundations of all kinds of all kinds of economy.
Finance is the allocation of assets and liabilities over time under conditions of
certainty and uncertainty. A key point in finance is the time value of money,
which states that a unit of currency today is worth more than the same unit of
currency tomorrow. Finance aims to price assets based on their risk level, and
expected rate of return. Finance can be broken into three different sub
categories: public finance, corporate finance and personal finance.
Personal finance may also involve paying for a loan, or debt obligations. The
six key areas of personal financial planning, as suggested by the Financial
Planning Standards Board, are:
• From this analysis, the financial planner can determine to what degree
and in what time the personal goals can be accomplished.
• Tax planning: typically the income tax is the single largest expense
in a household. Managing taxes is not a question of if you will pay
taxes, but when and how much. Government gives many incentives in
the form of tax deductions and credits, which can be used to reduce the
lifetime tax burden. Most modern governments use a progressive tax.
Typically, as one's income grows, a higher marginal rate of tax must be
paid. Understanding how to take advantage of the myriad tax breaks
when planning one's personal finances can make a significant impact.
• Public finance,
• Personal finance.
Financial accounting
An organization's inventory can appear a mixed blessing,
since it counts as an asset on the balance sheet, but it also ties up money that
could serve for other purposes and requires additional expense for its
protection. Inventory may also cause significant tax expenses, depending on
particular countries' laws regarding depreciation of inventory, as in Thor Power
Tool Company v. Commissioner.
Businesses that stock too little inventory cannot take advantage of large orders
from customers if they cannot deliver. The conflicting objectives of cost
control and customer service often pit an organization's financial and operating
INVENTORY
Inventory or stock refers to the goods and materials that a business holds for
the ultimate purpose of resale (or repair).
• Time - The time lags present in the supply chain, from supplier to user
at every stage, requires that you maintain certain amounts of inventory
to use in this lead time. However, in practice, inventory is to be
maintained for consumption during 'variations in lead time'. Lead time
itself can be addressed by ordering that many days in advance.
• To ensure that the supply of raw materials and finished goods will
remain continuous so that production process is not halted and demands
of customers are duly met.
• To facilitate furnishing of data for short term and long term planning and
control of inventory.
Applications:
The technique of inventory proportionality is most appropriate for
inventories that remain unseen by the consumer, as opposed to "keep full"
systems where a retail consumer would like to see full shelves of the product
they are buying so as not to think they are buying something old, unwanted or
stale; and differentiated from the "trigger point" systems where product is
reordered when it hits a certain level; inventory proportionality is used
effectively by just-in-time manufacturing processes and retail applications
where the product is hidden from view.
cash sunk (literally) into the ground. Inventory proportionality minimizes the
amount of excess inventory carried in underground storage tanks.
This application for motor fuel was first developed and implemented
by Petrol Soft Corporation in 1990 for Chevron Products Company. Most
major oil companies use such systems today.
Hence, high-level financial inventory has these two basic formulas, which
relate to the accounting period:
The benefit of these formulas is that the first absorbs all overheads of
production and raw material costs into a value of inventory for reporting. The
second formula then creates the new start point for the next period and gives a
figure to be subtracted from the sales price to determine some form of sales-
margin figure.
This ratio estimates how many times the inventory turns over a
year. This number tells how much cash/goods are tied up waiting for the
process and is a critical measure of process reliability and effectiveness.
So a factory with two inventory turns has six months stock on hand,
which is generally not a good figure (depending upon the industry),
whereas a factory that moves from six turns to twelve turns has probably
improved effectiveness by 100%. This improvement will have some
negative results in the financial reporting, since the 'value' now stored in
the factory as inventory is reduced.
• Specific Identification
• Moving-Average Cost
For example, organizations in the U.S. define inventory to suit their needs
within US Generally Accepted Accounting Practices (GAAP), the rules defined
by the Financial Accounting Standards Board (FASB) (and others) and
enforced by the U.S. Securities and Exchange Commission (SEC) and other
federal and state agencies. Other countries often have similar arrangements but
with their own accounting standards and national agencies instead.
It is intentional that financial accounting uses standards that allow the public to
compare firms' performance, cost accounting functions internally to an
organization and potentially with much greater flexibility. A discussion of
inventory from standard and Theory of Constraints-based (throughput) cost
accounting perspective follows some examples and a discussion of inventory
from a financial accounting perspective.
exist, there is a market for the goods created, which establishes an independent
market value for the good. Today, with multistage-process companies, there is
much inventory that would once have been finished goods which is now held
as 'work in process' (WIP). This needs to be valued in the accounts, but the
valuation is a management decision since there is no market for the partially
finished product. This somewhat arbitrary 'valuation' of WIP combined with
the allocation of overheads to it has led to some unintended and undesirable
results.
When a merchant buys goods from inventory, the value of the inventory
account is reduced by the cost of goods sold (COGS). This is simple where the
CoG has not varied across those held in stock; but where it has, then an agreed
method must be derived to evaluate it. For commodity items that one cannot
track individually, accountants must choose a method that fits the nature of the
sale. Two popular methods that normally exist are: FIFO and LIFO
accounting (first in - first out, last in - first out). FIFO regards the first unit that
arrived in inventory as the first one sold. LIFO considers the last unit arriving
in inventory as the first one sold. Which method an accountant selects can have
a significant effect on net income and book value and, in turn, on taxation.
Using LIFO accounting for inventory, a company generally reports lower net
income and lower book value, due to the effects of inflation. This generally
results in lower taxation. Due to LIFO's potential to skew inventory value, UK
GAAP and IAS have effectively banned LIFO inventory accounting.
National accounts:
Inventories also play an important role in national accounts and the analysis of
the business cycle. Some short-term macroeconomic fluctuations are attributed
to the inventory cycle.
Distressed inventory:
Stock Rotation;
Inventory credit:
Cost of goods sold or COGS refer to the carrying value of goods sold
during a particular period.
Costs are associated with particular goods using one of several formulas,
including specific identification, first-in first-out (FIFO), or average cost. Costs
include all costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition. Costs of goods
made by the business include material, labor, and allocated overhead. The costs
of those goods not yet sold are deferred as costs of inventory until the
inventory is sold or written down in value.
Stock management:
Stock management is the function of understanding the stock mix of a
company and the different demands on that stock. The demands are influenced
by both external and internal factors and are balanced by the creation
of purchase order requests to keep supplies at a reasonable or prescribed level.
Stock management in the retail supply chain follows the following sequence:
The management of the inventory in the supply chain involves managing the
physical quantities as well as the costing of the goods as it flows through the
supply chain.
In managing the cost prices of the goods throughout the supply chain, several
costing methods are employed:
• Retail method
AVERAGE total cost by total qty to arrive at the Average Cost of Goods for
the period.
This Average Cost Price is applied to all movements and adjustments in that
period.
Ending stock in qty is arrived at by Applying all the changes in qty to the
Available balance.
Multiplying the stock balance in qty by the Average cost gives the Stock cost at
the end of the period.
Using the perpetual method, the calculation is done upon every purchase
transaction.
Thus, the calculation is the same based on the periodic calculation whether by
period (periodic) or by transaction (perpetual).
In practice, the daily averaging has been used to closely approximate the
perpetual method. 6. Bottle neck method ( depends on proper planning support)
Business models:
JIT is a model that attempts to replenish inventory for organizations when the
inventory is required. The model attempts to avoid excess inventory and its
associated costs. As a result, companies receive inventory only when the need
for more stock is approaching.
VMI and CMI are two business models that adhere to the JIT inventory
principles. VMI gives the vendor in a vendor/customer relationship the ability
to monitor, plan and control inventory for their customers. Customers
relinquish the order making responsibilities in exchange for timely inventory
replenishment that increases organizational efficiency.
CMI allows the customer to order and control their inventory from their
vendors/suppliers. Both VMI and CMI benefit the vendor as well as the
customer. Vendors see a significant increase in sales due to increased inventory
turns and cost savings realized by their customers, while customers realize
similar benefits.
CHAPTER 2
RESEARCH DESIGN
"FRANCIS RUMMEL"
“ROBERT ROSS”
After deciding the basic aspects of research project (i.e. formulating research
problem, objectives of research, data requirement, sample design, etc) and
before the commencement of work of research project, the researcher has to
prepare research design. It is a major step in the research process /procedure.
The research work will be conducted (i.e. data collection, etc) as per the
research design prepared. Research design means to prepare detailed plan and
procedures for the conduct of the research project. It is like preparing a master
plan/blue print for the conduct of formal investigation. It is the basic plan that
guides researcher in the execution of the research project undertaken. It is like
road map which enables the researcher to conduct various activities for the
completion of research project.
The primary objective of this study was to determine and compare the
extent of vocational training, satisfaction in employment/careers, and socio-
economic improvement of the project-assisted institute graduates and non-
assisted institute graduates. The second objective was to determine and
compare educational development of the project-assisted and non-assisted
institutes as perceived by teachers, administrators, and current students. A final
objective was to identify employers’ skill requirements for today’s work, their
use of current technology, and their planning for perceived future trends.
So, this Study provides a wider scope for us to gain an insight into practical of
an Inventory management of an organization and also increased our managerial
skill.
RESEARCH METHODOLOGY:
To conduct the studies different methodologies have been
adopted. The study was undertaken by visiting the plant for a period of 10
weeks. Both primary and secondary data are used.
DATA COLLECTION.
PRIMARY SOURCES
SECONDARY SOURCES
The secondary sources of data are
• Organizations/Company Broachers
• Annual Reports.
FIELD WORK:-
This was undertaking individually to collect various information
regarding the study by following sections.
• Stores Departments.
• Finance Departments
• The Time allocated for completing the whole project was only 10weeks.
It’s not enough for understanding the over all operations of Organization
in detail.
• Discussion with all related officials was not possible. The Study is
completely based on Secondary data given by company.,
CHAPTER SCHEME
Chapter-6: Annexure
This chapter includes resources of Data. i.e. is Profit and Loss Account,
Balance Sheet of Co., for the 3 years., i.e is taken for Project Study and its
Analysis.
Chapter-7: Bibliography
This chapter includes name of the author, Title of the book, source of Internet
and websites.
CHAPTER 3
COMPANY PROFILE
Telephone : +(91)-(80)-22276269
Fax No : +(91)-(80)-41426920
Vision Statement
• To be a force to reckon with facilitating us to reach the pinnacle of success
and be a leader in manufacturers and exports of pressed components an
into assemblies by incorporating the state of art Technologies for
manufacturing.
Mission Statement
• To become a leading manufacturer and exporter of stamped components
and sub assemblies.
SCOPE
Manufacturing and supply of precision pressed components and silk
dresses. The company product ranges does not call for any post delivery
services activities and hence sectional sub elements have not been addressed.
NUMBERS OF BRANCHES
There are 2 branches in avenue road as below:-
NUMBERS OF DIRECTORS
Numbers of Employees
25 employees [skilled] 10 contract employees
• Item
• Handling
• Storing
• Packing
• Protection
• Delivery.
• Raw material
• Customers supply
• In process items
• Finished goods
Offer wide variety of designer silk fabrics that are used for manufacturing
garments and home furnishing items. These fabrics are available in various
stripes, colors, prints etc to cater to the varied requirements of our customers.
Silk Yarns
We offer silk that is rough, crisp, uneven texture and a dull luster. We offer this
silk fabric in number of colors other than natural color or white. It is highly
durable due to its tight and plain weaves. This silk is high in demand in indian
as well as overseas market.
Handwoven Fabric
These hand-woven silk fabrics are developed by the agile hands of our talented
workers by putting in their best effort. These fabrics showcase the magical
blend of softness of silk and charm of trendy patterns.
We perform a lot of hand work on our embroidered silk fabrics. Having a team
of trained and qualified craftsmen, we are able to embellish the plain fabrics
using a lot of thread embroidery work that enhances their appearance.
Silk Fabric
We offer our range of superior quality of Silk Fabric that is made from
requisite grade of raw material. Having excellent and smooth finish, we also
have capabilities to provide customization to our entire range as per the needs
and demands of our clients.
A cream base designer silk fabric that has beautiful small maroon flowers thus
making it look attractive. The fabric is made of pure and original silk thus
adding a good shelf life to it. The silk fabric finds application in varied
applications.
Embroidery Dripery
This fabric includes hand embroidery and heavy craft work of our dexterous
craftsmen. Dull-gloss sequins are done on refined and suave silk, which makes
them beautiful and delightful.
A cream base designer silk fabric that has beautiful small maroon flowers thus
making it look attractive. The fabric is made of pure and original silk thus
adding a good shelf life to it. The silk fabric finds application in varied
applications.
·
·
Due to our specialization in the domain, we offer a wide range of Saree Yarn
which is extensively used in the manufacturing of Sarees. This Saree Yarn is
tested at various levels as per the international quality norms and parameters.
We keep the various demands and requirements of the clients in our mind
while developing the range.
We offer a range of Spun Silk Yarn, where in we do not extract the noil.
It is made available in 1/40'Nm k, 1/60'Nm k and 2/60'Nm k
specifications. Being highly economical than the others, this yarn applies
very well for Carpets, and weft fillings. Our range of combed spun silk
yarn is available in the specifications of 2/60'Nm C, 2/140'Nm C and
2/210'Nm C. It is extremely suitable for blouse material, saree borders
and drape fabrics. Spun silk when used on fabrics will give smooth wear
unlike
Silk fabric
Beaded Fabric
Beautiful and sparkling beads have been used to give life to this beautiful metal
thread embroidery that adds to the grace of the salwar kameez. The design is a
combination of geometrical and floral patterns that are unique. Silk thread of
premium quality has been used to make the design look graceful.
INFORMATION TECHNOLOGY
• Has helped in planning the move into the market more efficiently.
Disadvantage:-
• Very costly.
CHAPTER -4
DATA ANALYSIS AND INTERPRETATION
8.6
8.5
8.4
8.3
8.2 2015
8.1
2016
8
2017
7.9
7.8
7.7
ANALYSIS
The above statement reveals that ratio of gross profit in the year 2015 is 8.04,
in the year 2016 it has increased to 8.53. i.e is indicating gross profit for the
year and in the year 2017 it indicating Gross profit Ratio of 8.54.
INTERPRETATION
This Gross Profit Ratio for the year 2015 is 8.04 and for the next year i.e 2016,
company has incurred a Gross profit of 8.53 Ratio. In the year 2017, it has
Ratio of 8.54, it indicating company’s positive growth towards Gross profit.
Current Ratio
1.35
1.05
1.4
1.2 1.02
1
0.8
0.6
0.4
0.2
0
Current ratio
ANALYSIS
The graph shows the growth in current ratio is 1.02 in the year 2015, 1.05 in
the year 2016, and it has increased in the year 2017 for 1.35.
INTERPRETATION
The ratio is indicating the company has a good positive growth in current ratio.
It is increasing its capability to payment of its current liabilities. But current
liability indicates idle funds and lack of enthusiasm for the work of the
company. Hence this ratio is not significant.
6.12
7 4.06
6
5
4 2.73
3
2
1
0
ANALYSIS
The ratio for 2015 is 2.73 and for the year 2016 is 4.06, it is increased when
compared to 2015 and in the next year I e 2017 it is increased for 6.12.
INTERPRETATION
This ratio indicates that the company has increased its ratio to 6.12 in the year
2017. It is observed that the company, has effectively utilized its fixed assets
during 2017. And due to increase in profit it is indicating Business expansion.
50 47.75
37.64
37.51
40
30
20
10
Inventory Ratio
ANALYSIS
The above graph reveals that the Inventory /STOR is 37.64 in the
year 2015, 37.51 in the year 2016 and 47.75 in the year 2017
INTERPRETATION
The Inventory Turnover Ratio is decreased in the year 2016, i.e.
37.64 to 37.51. And in the year 2017 the Ratio has been increased to
47.75.
87.34
90
80
70
60
50
35.31
40
30
20
10 7.17
0
ANALYSIS
The ratio in the year 2015 is 87.34, and it increased to 35.31 in 2016. And in
the year 2017, the ratio decreased to 7.17.
INTERPRETATION
The working capital for the year 2015 is 87.34, and for the next year i.e 2016,
company has incurred a working capital of 35.31 ratio. In the year 2017, the
working capital of the company is decreased to 7.17 ratios.
Table – 6
11.58
12
10 7.46
8 5.78
0
Working capital turnover ration
ANALYSIS
The Ratio indicates that the operating Net profit Ratio is increases from the
year 2015 i.e 5.78, for the year 2016 slide changes i.e 7.46 and in the year 2017
it has 11.58.
INTERPRETATION
The Ratio is increasing from year 2015,i.e is to 2016 and 2017. It shows the
company has good profit level for the next preceding years. i.e 5.78 for 2015,
7.46 for 2016 for 2017 i.e 11.58.
2.83
2.85
2.8
2.75
2.7
2.65
2.6 2.52
2.5
2.55
2.5
2.45
2.4
2.35
2.3
Working capital turnover ration
ANALYSIS
The ratio of Net profit to Net sales for the year 2015 is 2.83% and for the
next year i.e. 2016 it is decreased to 2.50%, for the year 2017 it is indicating
ratio of 2.52%.
INTERPRETATION
The ratio is indicating relationship between Net Profit and Net Sales. The
above graph shows that the ratio for the year 2015 is 2.83% for 2016 2.50%
and for 2017 i.e. 2.52%. It is indicating that the Company is decreasing its sales
at the same time its Net Profit
This ratio establishes the relationship between Net sales and Current
assets, and it is calculated ac below-
1.89
2.2 2.11
2.1 1.83
2
1.9
1.8
1.7
1.6
ANALYSIS
The graph shows that the current asset turn over ratio in the year 2015 is 2.11
and in the year 2016 it is 1.83 and 1.89 is in the year 2017.
INTERPRETATION
The reveals of the statement, there varies between year to year that is in the
year 2015 the ratio is 2.11 , and in the next year i.e 2016 it is decreased to 1.83.
and in the year 2017 it is 1.89. it shows the availability of the current asset
turnover Ratio and it shows the current position of the concern.
The ratio establishes the relationship between cash in hand and current
liabilities, it is calculated as below.
0.02
0.02
0.015
0.01
0.01
0.006
0.005
ANALYSIS
The graph shows that the Absolute liquid Ratio in the year 2015 is 0.02 and
0.01 in 2016 and in the liquid ratio of the company in the year 2017 is 0.006.
INTERPRETATION
The reveals of statement, there varies between year to year the ratio in the year
2015 is 0.02, in the next year 2016, the ratio is decreased to 0.01. and in the
2017 the liquid ratio of the company is 0.006. it shows the profitability position
between year to year.
2.5 2.13
1.5
0.86
1
0.5
0.13
0
ANALYSIS
The above statement reveals that the Ratio for the year 2015 is 2.13, and 0.86
in the year 2016 and in the year the inventory ratio is 0.13.
INTERPRETATION
The ratio in the year 2015 is 2.13, and in the year 2016 & 2017 the
Turnover Ratio is decreased to 0.86 & 0.13. Hence it indicates that
Inventory is not locked up at a large scale. It is a good situation for
the company.
GOVERNMENT FIRST GRADE COLLEGE, VIJAYNAGAR Page 68
A STUDY ON INVENTORY MANAGEMENT AND CONTROL AT
This ratio explains the relationship between Net profit and Total Assets
of the concern.
It is calculated as below.
4.08
4.32
4.4
4.2
3.63
4
3.8
3.6
3.4
3.2
ANALYSIS
The above statement reveals that the Return on Total Ratio is 4.32 in the year
2015, 3.63 in the year 2016, and in the next year the ratio is 4.08.
INTERPRETATION
The Return on Total ratio for the year 2015 is 4.32, in the next year the ratio is
decreased to 3.63, and in the year 2017 the return on total ratio is decreased to
4.08. it shows the profitability position of the company.
CHAPTER -5
FINDINGS, SUGGESTIONS AND
CONCLUSIONS
FINDINGS
1. The SB Silk Industry Gross Profit Ratio is increased in year to year. So it
shows the quit satisfactory position of the industry.
6. The SB Silk Industry Net Profit Ratio is decreased in the year 2016 &
2017, but in the year 2015 the Net Profit Ratio is increased. It indicates that
the company has decreased its sales at the same time its Operating Profit.
8. The SB Silk Industry Absolute Liquid Ratio is decreased in the year 2016
& 2017. But in the year 2015 the Absolute Liquid Ratio of the industry is
increased.
9. The SB Silk Industry Return on Total Ratio is decreased in the year 2016.
In the year 2015 & 2016 the ratio has been increased. It shows the financial
position of the company.
GOVERNMENT FIRST GRADE COLLEGE, VIJAYNAGAR Page 71
A STUDY ON INVENTORY MANAGEMENT AND CONTROL AT
10. The products are not designed favour of the organization but it is just
made as per the requirement of the client.
SUGGESTIONS
1. It is suggested that company has to reduce it's overall cost production to
improve its competitive strength and profitability.
CONCLUSIONS
CHAPTER 7
ANNEXURE
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2015
Particulars Amount Particular Amount
To Opening Stock 385,750.00 By Sales 11,237,721.95
To Purchase 10,110,743.50
By Closing Stock 163,250.00
To Gross Profit C/O 904,478.45
11,400,971.95 11,400,971.95
904.942.45 904,942.45
319,166.40
Less: Drawings 1,467,113.72
Closing Balance Current Assets
Deposits Loan &
Loans: Advance
Secured Loans 323,352.00
Unsecured Loans 500,000.00
Stock in hand 163,250.00
Current Liabilities &
Provisions: Sundry Debtors 5,147,288.61
Sundry Creditors 4,819,232.70
(List Enclosed)
Advance from Deposits:
Customers VAT Deposit 1,000.00
To Net Profit
1,183,675.50 1,183,675.50
12,000.00
To Account Fee
14,700.00
To Advertisement Charges
15,000.00
To Audit Fee
36,872.18
To Bank Charges
61,435.00
To Bank OD Interest
15,562.00
To Electricity Charges
315,781.00
To Freight Outward
24,828.00
To Car Loan Interest
4,857.00
To Insurance
2,500.00
To Professional Tax
3,415.00
To Postage & Couriers
15,412.00
To Printing & Stationary
32,295.00
To Repairs & Maintain
59,860.00
To Shop Rent
336,000.00
To Staff Salaries
88,458.00
To Travelling & Conveyance
82,495.00
To Sundry Expenses
54,430.00
To Telephone & Mobile
71,216.00
To Depreciation
103.45
To discount Allowed
To net Profit Transferred to
521,866.87
Capital A/c
1,769,086.50 1,769,086.50
CHAPTER 7
BIBLIOGRAPHY
WWW.Google.Com
WWW.SBSilks.Com
WWW.Saniasilkfabric.Com
WWW.Wikepedia.Com