5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 1/94

1

COMPANY PROFILE

Introduction of the company

Super Cassettes industries Ltd. Is the largest producer and publisher of music and video in India

under world famous trade mark T-series. Whether it is original soundtrack from the movies or

the ever-popular remix, old devotional bhajan or new age item numbers ,melodies from the 60,s

or pop hits of 90,s glamorous music videos and big budget films, T-Series is the largest producer

of them all. It is no wonder; the company has entered itself no. one recall in the Indian markets.

This fact has been re enforced by AC Nielsen ORG-Marg consumer study.

T-series music is heard, played and performed throughout India and other parts of the world by

way of our sound recordings, videos or by performers. Today t-series controls more than 60%

share of the Indian music market. Even in the international market t-series enjoys a turnover in

excess of $4.2 million, and exports to 24 countries across six continents. Combined with India’s

largest distribution network of over2500 dealers, our support system make us to take on the

future.

T-series 

TYPE: private

FOUNDED: 1983

HEADQUARTERS: Noida, India

FOUNDER: Lt Mr. Gulshan kumar

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 2/94

2

KEY PEOPLE :

Mr. Bhushan kumar (chairman & M.D)

Madam Sudesh kumara (director)

Mr.Darshan kumar (director)

Mr. Ved Channa (Directors)

Mr. A.N Sehgal (Director)

Mr. Vijay sachdeva (director)

INDUSTRY: Music and entertainment

PRODUCTS: Music and entertainment

PARENTS: Super Cassettes industries Ltd.

WEBSITE OF COMPANY: www.t-series

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 3/94

3

ABOUT FOUNDER

Gulshan kumar,(August,12) was an Indian bollywood movie producer.

He founded super Cassettes industries, a small video cassette pirating operation which soon grew

to be very big. Later he started a music production company in noida, near Delhi. He is said to

start the practice of exploiting a loophole in the Indian copyright law, and creating cover versions

of popular songs.

To counter exorbitantly priced poor-quality audio tapes which use to marketed by reputed music

companies, Gulshan kumar brought out in the late 1970,s very reasonably priced music cassettes

with adequate quality. He exported quality music cassettes when his business grew.

Gulshan also introduced religious music cassettes at highly subsidized prices with the idea of 

promoting religion among fellow Hindus. He produced some movies and TV serials which

covered Hindu Mythology.

The Indian music industry use to be controlled by a few high profiled singers. Gulshan

introduced young talented singers to the music world, Sonu Nigam, Anuradha paudwal and

Kumar sanu being the prominent ones among them. He also introduced some new actors and

music directors.

Gulshan established a bhandara , serving a free style food to pilgrims who hiked to the hindu

shrine of shree mata vaishnodevi. He become an example for Indian businessmen by sharing his

wealth the community.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 4/94

4

T-SERIES IN INDIAN FILM & MUSIC INDUSTRIES

42 HINDI FILMS ON THE FLOOR WHICH T-series holds the audio/video copyright. T-series

counts among the biggest film release for 2004-05 and 2006. Big banner films production and

theatrical distribution. Merchandising & big budget promotions. 1,482 exclusively signed

artists.35000+audio tittles/ 2000 video tittles. Hindi film music -5800 film/ combination tittles.

Extensive captive talent pool of author’s composers and performance artists –  himesh

reshammiya, Adnan Sami, Jagjeet sing, Lata mangeshkar, Asha Bhosle, Udit Narayan, Sonu

Nigam Bombay Viking etc,

New tittles of music are added almost every day in our already existing vast catalogue.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 5/94

5

Super cassette industries are diversified group of companies having a great deal of interest in the

consumer electronics, appliances and electronic components.

T-series main products lines are classified into-

1-consimer electronic (CE)

2-consumer appliances (CA)

It includes small appliances classified as utilized. Consumer electronics includes color T.V,

audio/video system and audio/video pre-recorded & blank cassettes

& C,D.

A technical collaboration with Hyundai digital courier has already started to bear fruits VCD

players, introduced in India under T-series Hyundai brand, have established a strong presence in

the market.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 6/94

6

DIVISION

MEDIA DIVISION

CD DIVISION

Super cassettes India ltd. The CD division was started with sole aim to provide high class at

competitive prices. It has high end system for CD replication, with machines from NETSTAL

(Switzerland).LEYOLD (Germany), and UUBIT (France). It has capability to produce 12 million

CD,s annually or 70 CD,s/ minute, give the company a competitive advantage in these fact

changing the market situation.

AUDIO/VIDIO DIVISION

It has 65% for itself. This division of super cassette industry limited has the feature of sourcing

all the components in- house. 190 million audio/video cassettes per annum.

CONSUMER ELECTRONIC DIVISION

The kind of infrastructure allows this company to offer consumer electronics. SCI LTD. Is the

first company to introduce CD players with built-in- amplifier.

PLASTIC MOLDING DIVISION

T-series is the organization that is able to all the components in the house. CHONHSONG (Hong

Kong). JSM (Japan) and WINDSOR machines of t-series injection molding division.

EXPORT DIVISION 

The list of exports are :

Pre- recorded Audio/video cassettes

Audio/video CD,s

Television sets

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 7/94

7

Music deck 

Mobile phone’s 

The products of t- series group of industries available. Across Australia , Bangladesh, Singapore,

Nepal, Hong Kong, srilanka, UAE, USA, Kenya, Japan.

CINE PRODUCTION DIVISION

Four full fledged studios, two in Mumbai and noida (Golden chariot studio, Sudeep studio,

Laxmi studio, film center )are equipped with the 6-DXC-30P Sony camera set-ups, 32 channels,

Mackie audio mixer, professional wireless communication system (Drake)and broadcast record.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 8/94

8

AWARDS

NATIONAL CITIZEN AWARD(1990)

For the sterling contribution for the promotion of music and developing new twlents in the film

industry.

MOTHER INDIA NATIONAL AWARD

It was presented by NRI institute, in the recognigation of the field of outstanding social

achievements of Mr. Gulshan Kumar in all woks of life.

LIMCA BOOKS OF RECORD AWARD(1992)

For the phenomenal contribution of the field of music.

VIJAY RATAN AWARD

Given by the international friendship society of India.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 9/94

9

Departmental profile

(Finance and accounting department)

The finance & accounts departments works as a judicious manager in distribution of available

funds in an optimal manner for the organization as a whole on daily, month and annual basis and

also a conscious book keeper for the company going through every transaction having financial

implication with complete thoroughness without acceptance of liability. It is also look after the

information requirements of the company and various statutory authorities in compliance of the

applicable statutory provisions. The onus of ensuring company’s provisions. The onus of 

ensuring company’s various assets adequately insured is also with this department. 

FINANCE AND ACCOUNTING DEPARTMENTS

GENERAL ACCOUNTS

This section is divided into two different subsection, viz.

Raw material and stores accounting

Personal related accounting

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 10/94

10

LITERATURE REVIEW

Working capital

Funds needed for short term purposes for the purchase of raw material, payment of wages, and

other day to day expenses, etc. These funds are known as working capital. ―Working capital also

known as net current assets, it is the amount of funds necessary to cover the cost of operating the

enterprises‖. It is the excess of current assets over current liabilities. All organization has to carry

working capital in one form or the other. The efficient management of working capital is

important from the point of both liquidity and profitability. Poor management of working capital

means that funds are unnecessarily tied up in idle assets hence reducing the ability to invest in

productive assets such as plant and machinery, so affecting the profitability.

―Working capital is the part of the fir m capital which is required for financing short term or

current assets such as cash marketable securities, inventories etc‖. So working capital is the

amount of funds necessary to cover the cost of operating the enterprise.

Thus working capital is the funds of capital, which are needed for short term purposes of raw

material, payment of wages and other day to day expenses.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 11/94

11

Working capital management

Working capital in general practice refers to the excess of current assets over current liabilities.

Management of working capital therefore, is concern with problems that arise in attempting to

manage the current assets, the current liabilities and the inter-relationship that exists between

them. In other words it refers to all aspects of administration of both current assets and current

liabilities.

The basic goal of working capital management is to manage the current assts and current

liabilities of a firm in such a way that a satisfactory level of working capital is maintained means

it is neither inadequate nor excessive. This is so because both inadequate as well as excessive

working capital position is bad for any business. Inadequacy of working capital may lead the

firm to insolvency and excessive working capital implies idle funds which earn no profit for the

business.

NEED OR OBJECT OF WORKING CAPITAL

Working capital is required to sustain the sales activity. In case adequate working capital is not

available the company will not be in position to sustain he sales since it may not be in position to

purchase the raw material, components and spares, to pay wages and salaries, to incur day to day

expenses and overhead costs such as fuel, power and office expenses, to meet the selling costs as

packing, advertising, etc. to provide credit facilities to the customers and to maintain the

inventories of raw material, work-in-progress, stores and spares and finished stock 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 12/94

12

TYPES OF WORKING CAPITAL

Working capital is classified as Gross working capital and net working capital this classification

is important from the point of view of financial manager.

Gross working capital: the term working capital refers to the gross working capital and

represents the amount of funds invested in current assets. Thus the gross working capital is the

capital invested in total current assets of the enterprise.

Net working capital: the term working capital refers to the net working capital. Net working

capital is the excess of current assets over current liabilities. Or say

Net working capital= current assets – current liabilities

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 13/94

13

IMPORTANCE OF WORKING CAPITAL

Solvency of the business

Adequate working capital helps in maintaining solvency of the business by providing

uninterrupted flow of production.

Goodwill 

Sufficient working capital enables a business concern to make prompt payments and hence helps

in creating and maintain goodwill.

Easy loans 

A concern having adequate working capital, high solvency and good credit standing can arrange

loan from banks and others on easy and favorable terms.

Regular payments of salaries, wages and other day to day commitments

A company which has ample working capital can make regular payments of salaries, wages and

other day to day commitments which raises the morale of its employee, increase their efficiency,

reduces wastages and costs and enhances production and profits.

Ability to face crises 

Adequate working capital enables a concern to face business crises in emergencies such as

depression because during such period, generally, there is much pressure on working capital.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 14/94

14

ANALYSIS OF WORKING CAPITAL AND MEASURING THE EFFICIENCY IN THE

MANAGEMENT WORKING CAPITAL

As pointed out earlier, the working capital magnitude of concern should neither be too

inadequate nor to excessive as compared to its requirements. Maintaining adequate level of 

working capital ensures the improvements of profitability. Thus financial manager all the time

strive to strike a balance between working capital requirements and the working capital

magnitude. This is done by analyzing and examining the changes in individual components of 

working capital, i.e., item of CA and CL. When we make a deep examination of various

components of working capital with an objective to ensure its adequacy or otherwise, it is known

as ―analyzing of working capital‖ for such an analysis, the following techniques are used.

  schedule changes in working capital

  fund statement

  ratio analysis

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 15/94

15

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank 

2) Bills receivables

3) Sundry debtors

4) Short term loans and advances.

5) Inventories of stock as:

a. Raw material

b. Work in process

c. Stores and spares

d. Finished goo

6) Temporary investment of surplus funds.

7) Prepaid expenses

8) Accrued incomes.

9) Marketable securities. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 16/94

16

CONSTITUENTS OF CURRENT LIABILITIES

1. Accrued or outstanding expenses.

2. Short term loans, advances and deposits.

3. Dividends payable.

4. Bank overdraft.

5. Provision for taxation , if it does not amt. to app. Of profit.

6. Bills payable.

7. Sundry creditors

The gross working capital concept is financial or going concern concept whereas net working

capital is an accounting concept of working capital. Both the concepts have their own merits.

The gross concept is sometimes preferred to the concept of working capital for the following

reasons:

1. It enables the enter price to provide correct amount of working capital at correct time

2. Every management is more interested in total current assets with which it has to operate then

the source from where it is made available.

3. It take into consideration of the fact every increase in the funds of the enterprise would

increase its working capital.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 17/94

17

4. This concept is also useful in determining the rate of return on investments in working .

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL

  Excessive working capital means ideal funds which earn no profit for the firm and business

cannot earn the required rate of return on its investments.

  Redundant working capital leads to unnecessary purchasing and accumulation of inventories.

  Excessive working capital implies excessive debtors and defective credit policy which causes

higher incidence of bad debts.

  It may reduce the overall efficiency of the business.

  If a firm is having excessive working capital then the relations with banks and other financial

institution may not be maintained.

  Due to lower rate of return n investments, the values of shares may also fall.

  The redundant working capital gives rise to speculative transactions.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 18/94

18

DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business needs some amounts of working capital. The need for working capital arises due

to the time gap between production and realization of cash from sales. There is an operating

cycle involved in sales and realization of cash. There are time gaps in purchase of raw material

and production; production and sales; and realization of cash.

Thus working capital is needed for the following purposes:

  For the purpose of raw material, components and spares.

  To pay wages and salaries

  To incur day-to-day expenses and overload costs such as office expenses.

  To meet the selling costs as packing, advertising, etc.

  To provide credit facilities to the customer.

  To maintain the inventories of the raw material, work-in-progress, stores and spares and

finished stock.

For studying the need of working capital in a business, one has to study the business under

varying circumstances such as a new concern requires a lot of funds to meet its initial

requirements such as promotion and formation etc.

These expenses are called preliminary expenses and are capitalized. The amount needed for

working capital depends upon the size of the company and ambitions of its promoters. Greater

the size of the business unit, generally larger will be the requirements of the working capital.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 19/94

19

The requirement of the working capital goes on increasing with the growth and expensing of the

business till it gains maturity. At maturity the amount of working capital required is called

normal working capital.

There are others factors also influence the need of working capital in a business.

MANAGEMENT OF CASH

Cash is the most liquid assets, is of vital importance to the daily operation of business firms.

Cash is the basic input needed to keep the business running on a continuous basis. It is also the

ultimate output expected to the realized by selling the service or the product manufactured by the

firm.

In views of its importance it is retrieved as the “Life blood of a business enterprise”. 

The firm needs cash for two primary reason.

  To meet the needs of day-to-day transaction.

  To protect the firms again uncertainties characterizing its cash flows.

The firms should keep sufficient cash neither more nor less. Shortage of cash will disrupt the

firms manufacturing operations, while excessive. Cash will simply remain idle without

contributing towards firm profitability.

Thus a major function of a finance manager is to maintain a sound cash position cash

manage is concern with the managing of :

  Cash flow in and out of the firm

  Cash balance held out by the firm at a point of time financing deficit or investing surplus

cash.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 20/94

20

Instruments used for collection

The main instruments used : 

  Cheques

  Draft

  Letter of credit

Motives for holding cash

  Transaction motives

  Precautionary motives

  Speculative motives

  Compensation motives

RECEIVABLES MANAGEMENT

Receivables management is the process of making decision relating to investment in trade

debtors. Certain investment in receivables is necessary to increase the sales and the profit of a

firm. But at the same time investment in these assets involves costs considerations also. Further,

there is always a risk of bed debts too.

Thus, the objective of receivables management is to take sound decision as regards investment in

debtors.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 21/94

21

Dimensions of receivables management

Forming of credit policy

For efficient management of receivables, a company must adopt a credit policy.

  Credit standards

  Length of credit period

  Discount period

1.  Executing credit policy:

After formulating the credit policy, its proper execution is very important. The evaluation of 

credit application and findings out the credit worthiness of customers should be undertaken.

  Collection credit information

  Credit analysis

  Credit decision

  Financing investments in receivables and factoring

2.  Formulating and executive collection policy:

The collection of amount due to the customer is very important. The concern should device

procedures to be followed when account. Become due after the expiry. A collection policy

should be strict or consent. A strict collection policy involves more efforts on collection This

early collection of dues and will reduce bad debts losses.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 22/94

22

Management of inventory

Inventory constitutes a significance of current assets. About 26% of the companies capital us tied

up form of inventories effective and efficiently in order to invite unnecessary.

Inventory includes the following things

  Raw material

  Work in progress or semi finished goods

  Consumables

  Finished goods

  Spares etc.

Nature of inventory

Inventories are stock of  the products of a firm is manufacturing for sale and components that’s

make up the products.

The purpose of inventory management is to keep the stock in such a way that neither there is

overstocking nor under stocking.

Inventory management is determine.

  What to produce

  How much to produce

  From where to produce

  Where to store etc.

Inventory control

Inventory control can be mainly done by these tools and techniques.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 23/94

23

Determination of stocks levels

  Max level

  Min level

  Re-order level

  Danger level

  Average stock level

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 24/94

24

ABC analysis

This technique is based on this assumption that a firm should not exercise the same degree of 

control on items which are more costly as compared to those items which are less costly.

This can be applied as follows:

Class no.of items value of items

A 10 70

B 20 20

C 70 10

ABC analysis categorization at t-series

The classification of material into A,B,C is based on the following demarcation.

  A .category- cost above Rs.500/-piece

  B . category-cost above Rs.100/-piece

  C. category- cost less than Rs.100/-piece

This classification is arbitrary.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 25/94

25

Working capital policy followed at t- series

There are three types of working capital policies which a firm may adopt I,e.

  Moderate working capital policy

  Conservative working capital policy

  Aggressive working capital policy.

These policies are describe the relationship between sales and the level of current assets.

FIGURE1: RELATIONSHIP BETWEEN SALES & LEVEL OF CURRENT ASSETS

T-series follows the aggressive working capital policy.

CURRENT

ASSET

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 26/94

26

FINANCIAL RATIOS

A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values

taken from an enterprise's financial statements. Often used in accounting, there are many

standard ratios used to try to evaluate the overall financial condition of a corporation or other

organization. Financial ratios may be used by managers within a firm, by current and potential

shareholders (owners) of a firm, and by a firm's creditors. Security analysts use financial ratios to

compare the strengths and weaknesses in various companies.[1]

 If shares in a company are traded

in a financial market, the market price of the shares is used in certain financial ratios.

Ratios can be expressed as a decimal value, such as 0.10, or given as an equivalent percent value,

such as 10%. Some ratios are usually quoted as percentages, especially ratios that are usually or

always less than 1, such as earnings yield, while others are usually quoted as decimal numbers,

especially ratios that are usually more than 1, such as P/E ratio; these latter are also called

multiples. Given any ratio, one can take its reciprocal; if the ratio was above 1, the reciprocal

will be below 1, and conversely. The reciprocal expresses the same information, but may be

more understandable: for instance, the earnings yield can be compared with bond yields, while

the P/E ratio cannot be: for example, a P/E ratio of 20 corresponds to an earnings yield of 5%.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 27/94

27

Purpose and types of ratios

Financial ratios quantify many aspects of a business and are an integral part of the financial

statement analysis. Financial ratios are categorized according to the financial aspect of the

business which the ratio measures. Liquidity ratios measure the availability of cash to pay

debt.[2]

  Activity ratios measure how quickly a firm converts non-cash assets to cash assets.[3]

 

Debt ratios measure the firm's ability to repay long-term debt.[4] Profitability ratios measure

the firm's use of its assets and control of its expenses to generate an acceptable rate of return.[5]

 

Market ratios measure investor response to owning a company's stock and also the cost of 

issuing stock .[6]

 These are concerned with the return on investment for shareholders, and with the

relationship between return and the value of an investment in company’s shares. 

Financial ratios allow for comparisons

  between companies

 between industries

  between different time periods for one company

  between a single company and its industry average

Ratios generally hold no meaning unless they are benchmarked against something else, like past

performance or another company. Thus, the ratios of firms in different industries, which face

different risks, capital requirements, and competition are usually hard to compare.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 28/94

28

" Working capital is an excess of current assets over current liabilities. In other words, The

amount of current assets which is more than current liabilities is known as Working Capital. If 

current liabilities are nil then, working capital will equal to current assets. Working capital shows

strength of business in short period of time . If a company have some amount in the form of 

working capital , it means Company have liquid assets, with this money company can face every

crises position in market. "

Formula of Calculating Working Capital 

Working Capital = Current Assets - Current Liabilities 

Current Assets 

Current assets are those assets which can be converted into cash within One year or less then one

year . In current assets, we includes cash, bank, debtors, bill receivables, prepaid expenses,

outstanding incomes .

Current Liabilities 

Current Liabilities are those liabilities which can be paid to respective parties within one year or

less than one year at their maturity. In current liabilities, we includes creditors, outstanding bills,

bank overdraft, bills payable and short term loans, outstanding expenses, advance incomes .

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 29/94

29

Important things about Working Capital 

1. Working Capital can be negative. At that time, We add one word " deficiency" in the back of 

working capital . It means if Current Liabilities are more than current assets, it is known as

working capital deficiency or inverse working capital or negative working capital.

2. Working capital can be easily adjusted, if Accounts manager knows different techniques of 

managing working capital . He can try to get short term loan or he can increase working capital

by proper management of inventory and outstanding incomes and debtors .

3. Working capital can also change by Changing in Cash Conversion period. Cash conversion

period is a period in which company changes current assets into cash or bank.

4. Working capital can also positive by increasing growth rate of company. If company does not

invest more money and increase profit, the same amount will increase in the cash position of 

company and with cash company can increase their working capital position.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 30/94

30

Importance of Working Capital 

Some time, If creditors demands their money from company, at this time company's high

working capital saves company from this situation . You know that selling of current assets are

easy in small period of time but Company can not sell their fixed assets with in small period of 

time. So, If Company have sufficient working capital , Company can easily pay off the creditors

and create his reputation in market . But If a company have zero working capital and then

company can not pay creditors in emergency time and either company becomes bankrupt or

takes loan at higher rate of Interest . In both condition , it is very dangerous and always

Company's Account Manager tries to keep some amount of working capital for creating goodwill

in market .

Positive working capital enables also to pay day to day expenses like wages, salaries, overheads

and other operating expenses. Because sufficient working capital can not only pay maturity

liabilities but also outstanding liabilities without any more delay.

One of advantages of positive working capital that Company can do every risky work without

any tension of self security.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 31/94

31

Introduction of Working Capital Management 

Working capital management is the device of finance. It is related to manage of current assets

and current liabilities. After learning working capital management, commerce students can use

this tool for fund flow analysis. Working capital is very significant for paying day to day

expenses and long term liabilities.

Meaning and Concept of Working Capital and its management 

Working capital is that part of company’s capital which is used for purchasing raw material and

involve in sundry debtors. We all know that current assets are very important for proper working

of fixed assets. Suppose, if you have invested your money to purchase machines of company and

if you have not any more money to buy raw material, then your machinery will no use for any

production without raw material. From this example, you can understand that working capital is

very useful for operating any business organization. We can also take one more liquid item of 

current assets that is cash. If you have not cash in hand, then you can not pay for different

expenses of company, and at that time, your many business works may delay for not paying

certain expenses. If we define working capital in very simple form, then we can say that working

capital is the excess of current assets over current liabilities.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 32/94

32

Types of Working Capital

1. Gross working capital 

Total or gross working capital is that working capital which is used for all the current assets.

Total value of current assets will equal to gross working capital.

2. Net Working Capital 

Net working capital is the excess of current assets over current liabilities.

Net Working Capital = Total Current Assets – Total Current Liabilities 

This amount shows that if we deduct total current liabilities from total current assets, then

balance amount can be used for repayment of long term debts at any time.

3. Permanent Working Capital 

Permanent working capital is that amount of capital which must be in cash or current assets for

continuing the activities of business.

4. Temporary Working Capital 

Sometime, it may possible that we have to pay fixed liabilities, at that time we need working

capital which is more than permanent working capital, then this excess amount will be temporary

working capital. In normal working of business, we don’t need such capital. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 33/94

33

In working capital management, we analyze following three points 

Ist Point

What is the need for working capital? 

After study the nature of production, we can estimate the need for working capital. If company

produces products at large scale and continues producing goods, then company needs high

amount of working capital.

2nd Point 

What is optimum level of Working capital in business? 

Have you achieved the optimum level of working capital which has invested in current assets?

Because high amount of working capital will decrease the return on investment and low amount

of working capital will increase the risk of business. So, it is very important decision to get

optimum level of working capital where both profitability and risk will be balanced. For

achieving optimum level of working capital, finance manager should also study the factors which

affects the requirement of working capital and different elements of current assets. If he will

manage cash, debtor and inventory, then working capital will automatically optimize.

3rd Point 

What are main Working capital policies of businesses? 

Policies are the guidelines which are helpful to direct business. Finance manager can also make

working capital policies.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 34/94

34

1st Working capital policy 

Liquidity policy 

Under this policy, finance manager will increase the amount of liquidity for reducing the risk of 

business. If business has high volume of cash and bank balance, then business can easily pays his

dues at maturity. But finance manger should not forget that the excess cash will not produce and

earning and return on investment will decrease. So liquidity policy should be optimized.

2nd Working Capital Policy 

Profitability policy 

Under this policy, finance manger will keep low amount of cash in business and try to invest

maximum amount of cash and bank balance. It will sure that profit of business will increase due

to increasing of investment in proper way but risk of business will also increase because liquidity

of business will decrease and it can create bankruptcy position of business. So, profitability

policy should make after seeing liquidity policy and after this both policies will helpful for

proper management of working capital.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 35/94

35

Corporate finance is the area of  finance dealing with monetary decisions that business

enterprises make and the tools and analysis used to make these decisions. The primary goal of 

corporate finance is to maximize shareholder value while managing the firm's financial risks. 

Although it is in principle different from managerial finance which studies the financial

decisions of all firms, rather than corporations alone, the main concepts in the study of corporate

finance are applicable to the financial problems of all kinds of firms.

The discipline can be divided into long-term and short-term decisions and techniques. Capital

investment decisions are long-term choices about which projects receive investment, whether to

finance that investment with equity or debt, and when or whether to pay dividends to

shareholders. On the other hand, short term decisions deal with the short-term balance of current

assets and current liabilities; the focus here is on managing cash, inventories, and short-term

borrowing and lending (such as the terms on credit extended to customers).

The terms corporate finance and corporate financier are also associated with investment

banking. The typical role of an investment bank is to evaluate the company's financial needs and

raise the appropriate type of capital that best fits those needs. Thus, the terms ―corporate finance‖

and ―corporate financier‖ may be associated with transactions in which capital is raised in order 

to create, develop, grow or acquire businesses.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 36/94

36

Capital investment decisions

Capital investment decisions are long-term corporate finance decisions relating to fixed assets

and capital structure. Decisions are based on several inter-related criteria. (1) Corporate

management seeks to maximize the value of the firm by investing in projects which yield a

positive net present value when valued using an appropriate discount rate in consideration of 

risk. (2) These projects must also be financed appropriately. (3) If no such opportunities exist,

maximizing shareholder value dictates that management must return excess cash to shareholders

(i.e., distribution via dividends). Capital investment decisions thus comprise an investment

decision, a financing decision, and a dividend decision.

The investment decision

Management must allocate limited resources between competing opportunities (projects) in a

process known as capital budgeting. Making this investment, or capital allocation, decision

requires estimating the value of each opportunity or project, which is a function of the size,

timing and predictability of future cash flows. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 37/94

37

Project valuation

In general, each project's value will be estimated using a discounted cash flow (DCF) valuation,

and the opportunity with the highest value, as measured by the resultant net present value (NPV)

will be selected (applied to Corporate Finance by Joel Dean in 1951; see also Fisher separation

theorem, John Burr Williams#Theory). This requires estimating the size and timing of all of the

incremental cash flows resulting from the project. Such future cash flows are then discounted to

determine their present value (see Time value of money). These present values are then summed,

and this sum net of the initial investment outlay is the NPV. See Financial modeling. 

The NPV is greatly affected by the discount rate. Thus, identifying the proper discount rate  –  

often termed, the project "hurdle rate" – is critical to making an appropriate decision. The hurdle

rate is the minimum acceptable return on an investment — i.e. the project appropriate discount

rate. The hurdle rate should reflect the riskiness of the investment, typically measured by

volatility of cash flows, and must take into account the project-relevant financing mix. Managers

use models such as the CAPM or the APT to estimate a discount rate appropriate for a particular

project, and use the weighted average cost of capital (WACC) to reflect the financing mix

selected. (A common error in choosing a discount rate for a project is to apply a WACC that

applies to the entire firm. Such an approach may not be appropriate where the risk of a particular

project differs markedly from that of the firm's existing portfolio of assets.)

In conjunction with NPV, there are several other measures used as (secondary) selection criteria

in corporate finance. These are visible from the DCF and include discounted payback period, 

IRR, Modified IRR, equivalent annuity, capital efficiency, and ROI. Alternatives (complements)

to NPV include MVA / EVA (Joel Stern, Stern Stewart & Co) and APV (Stewart Myers).

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 38/94

38

Valuing flexibility

In many cases, for example R&D projects, a project may open (or close) various paths of action

to the company, but this reality will not (typically) be captured in a strict NPV approach.

[6]

 

Management will therefore (sometimes) employ tools which place an explicit value on these

options. So, whereas in a DCF valuation the most likely or average or scenario specific cash

flows are discounted, here the ―flexible and staged nature‖ of the investment is modelled, and

hence "all" potential payoffs are considered. The difference between the two valuations is the

"value of flexibility" inherent in the project.

The two most common tools are Decision Tree Analysis (DTA) and Real options analysis

(ROA); they may often be used interchangeably:

DTA values flexibility by incorporating possible events (or states) and consequent management

decisions. (For example, a company would build a factory given that demand for its product

exceeded a certain level during the pilot-phase, and outsource production otherwise. In turn,

given further demand, it would similarly expand the factory, and maintain it otherwise. In a DCF

model, by contrast, there is no "branching" – each scenario must be modelled separately.) In the

decision tree, each management decision in response to an "event" generates a "branch" or "path"

which the company could follow; the probabilities of each event are determined or specified by

management. Once the tree is constructed: (1) "all" possible events and their resultant paths are

visible to management; (2) given this ―knowledge‖ of the events that could follow, and assuming

rational decision making, management chooses the actions corresponding to the highest value

path probability weighted; (3) this path is then taken as representative of project value. See

Decision theory#Choice under uncertainty. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 39/94

39

ROA is usually used when the value of a project is contingent on the value of some other asset or

underlying variable. (For example, the viability of a mining project is contingent on the price of 

gold; if the price is too low, management will abandon the mining rights, if sufficiently high,

management will develop the ore body. Again, a DCF valuation would capture only one of these

outcomes.) Here: (1) using financial option theory as a framework, the decision to be taken is

identified as corresponding to either a call option or a put option; (2) an appropriate valuation

technique is then employed  –  usually a variant on the Binomial options model or a bespoke

simulation model, while Black Scholes type formulae are used less often; see Contingent claim

valuation. (3) The "true" value of the project is then the NPV of the "most likely" scenario plus

the option value. (Real options in corporate finance were first discussed by Stewart Myers in

1977; viewing corporate strategy as a series of options was originally per Timothy Luehrman, in

the late 1990s.)

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 40/94

40

Quantifying uncertainty

Further information: Sensitivity analysis, Scenario planning, and Monte Carlo methods in

finance

Given the uncertainty inherent in project forecasting and valuation, analysts will wish to assess

the sensitivity of project NPV to the various inputs (i.e. assumptions) to the DCF model. In a

typical sensitivity analysis the analyst will vary one key factor while holding all other inputs

constant, ceteris paribus. The sensitivity of NPV to a change in that factor is then observed, and

is calculated as a "slope": ΔNPV / Δfactor. For example, the analyst will determine NPV at

various growth rates in annual revenue as specified (usually at set increments, e.g. -10%, -5%,

0%, 5%....), and then determine the sensitivity using this formula. Often, several variables may

be of interest, and their various combinations produce a "value-surface", (or even a "value-

space"), where NPV is then a function of several variables. See also Stress testing. 

Using a related technique, analysts also run scenario based forecasts of NPV. Here, a scenario

comprises a particular outcome for economy-wide, "global" factors (demand for the product, 

exchange rates,  commodity prices, etc...) as well as for company-specific factors (unit costs, 

etc...). As an example, the analyst may specify various revenue growth scenarios (e.g. 5% for

"Worst Case", 10% for "Likely Case" and 25% for "Best Case"), where all key inputs are

adjusted so as to be consistent with the growth assumptions, and calculate the NPV for each.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 41/94

41

Note that for scenario based analysis, the various combinations of inputs must be internally

consistent (see discussion at Financial modeling), whereas for the sensitivity approach these need

not be so. An application of this methodology is to determine an "unbiased" NPV, where

management determines a (subjective) probability for each scenario – the NPV for the project is

then the probability-weighted average of the various scenarios.

A further advancement is to construct stochastic or probabilistic financial models – as opposed to

the traditional static and deterministic models as above. For this purpose, the most common

method is to use Monte Carlo simulation to analyze the project’s NPV. This method was

introduced to finance by David B. Hertz in 1964, although it has only recently become common:

today analysts are even able to run simulations in spreadsheet based DCF models, typically using

an add-in, such as @Risk or Crystal Ball. Here, the cash flow components that are (heavily)

impacted by uncertainty are simulated, mathematically reflecting their "random characteristics".

In contrast to the scenario approach above, the simulation produces several thousand random but

possible outcomes, or "trials"; see Monte Carlo Simulation versus ―What If‖ Scenarios. The

output is then a histogram of project NPV, and the average NPV of the potential investment – as

well as its volatility and other sensitivities  –  is then observed. This histogram provides

information not visible from the static DCF: for example, it allows for an estimate of the

probability that a project has a net present value greater than zero (or any other value).

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 42/94

42

Continuing the above example: instead of assigning three discrete values to revenue growth, and

to the other relevant variables, the analyst would assign an appropriate probability distribution to

each variable (commonly triangular or beta), and, where possible, specify the observed or

supposed correlation between the variables. These distributions would then be "sampled"

repeatedly  –   incorporating this correlation  –  so as to generate several thousand random but

possible scenarios, with corresponding valuations, which are then used to generate the NPV

histogram.

The resultant statistics (average NPV and standard deviation of NPV) will be a more accurate

mirror of the project's "randomness" than the variance observed under the scenario based

approach. These are often used as estimates of the underlying "spot price" and volatility for the

real option valuation as above; see Real options valuation: Valuation inputs. A more robust

Monte Carlo model would include the possible occurrence of risk events (e.g., a credit crunch) 

that drive variations in one or more of the DCF model inputs.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 43/94

43

The financing decision

Achieving the goals of corporate finance requires that any corporate investment be financed

appropriately. The sources of financing are, generically, capital self-generated by the firm as well

as debt and equity financing sourced form outside investors. As above, since both hurdle rate and

cash flows (and hence the riskiness of the firm) will be affected, the financing mix will impact

the valuation of the firm (as well as the other long-term financial management decisions). There

are two interrelated decisions here:

 Management must identify the "optimal mix" of financing — the capital structure that results in

maximum value. (See Balance sheet,  WACC,  Fisher separation theorem; but, see also the

Modigliani-Miller theorem.) Financing a project through debt results in a liability or obligation

that must be serviced, thus entailing cash flow implications independent of the project's degree of 

success. Equity financing is less risky with respect to cash flow commitments, but results in a

dilution of share ownership, control and earnings. The cost of equity is also typically higher than

the cost of debt (see CAPM and WACC), and so equity financing may result in an increased

hurdle rate which may offset any reduction in cash flow risk.

  Management must attempt to match the long-term financing mix to the assets being financed as

closely as possible, in terms of both timing and cash flows. Managing any potential asset liability

mismatch or duration gap entails matching the assets and liabilities according to maturity pattern

("Cashflow matching") or duration ("immunization"); managing this relationship in the short-

term is a major function of working capital management, as discussed below. Other techniques,

such as securitization, or hedging using interest rate- or credit derivatives, are also common. See

Asset liability management; Treasury management; Credit risk; Interest rate risk. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 44/94

44

One of the main theories of how firms make their financing decisions is the Pecking Order

Theory, which suggests that firms avoid external financing while they have internal financing

available and avoid new equity financing while they can engage in new debt financing at

reasonably low interest rates. Another major theory is the Trade-Off Theory in which firms are

assumed to trade-off the tax benefits of debt with the bankruptcy costs of debt when making their

decisions. An emerging area in finance theory is right-financing whereby investment banks and

corporations can enhance investment return and company value over time by determining the

right investment objectives, policy framework, institutional structure, source of financing (debt

or equity) and expenditure framework within a given economy and under given market

conditions. One last theory about this decision is the Market timing hypothesis which states that

firms look for the cheaper type of financing regardless of their current levels of internal

resources, debt and equity.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 45/94

45

The dividend decision

Whether to issue dividends, and what amount, is calculated mainly on the basis of the company's

unappropriated profit and its earning prospects for the coming year. The amount is also often

calculated based on expected free cash flows i.e. cash remaining after all business expenses, and

capital investment needs have been met.

If there are no NPV positive opportunities, i.e. projects where returns exceed the hurdle rate, then

 – finance theory suggests – management must return excess cash to investors as dividends. This

is the general case, however there are exceptions. For example, shareholders of a " growth stock",

expect that the company will, almost by definition, retain earnings so as to fund growth

internally. In other cases, even though an opportunity is currently NPV negative, management

may consider ―investment flexibility‖ / potential payoffs and decide to retain cash f lows; see

above and Real options. 

Management must also decide on the form of the dividend distribution, generally as cash

dividends or via a share buyback. Various factors may be taken into consideration: where

shareholders must pay tax on dividends, firms may elect to retain earnings or to perform a stock 

buyback, in both cases increasing the value of shares outstanding. Alternatively, some companies

will pay "dividends" from stock rather than in cash; see Corporate action. Today, it is generally

accepted that dividend policy is value neutral  –  i.e. the value of the firm would be the same,

whether it issued cash dividends or repurchased its stock (see Modigliani-Miller theorem).

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 46/94

46

Working capital management

Decisions relating to working capital and short term financing are referred to as working capital

management. These involve managing the relationship between a firm's short-term assets and its

short-term liabilities. In general this is as follows: As above, the goal of Corporate Finance is the

maximization of firm value. In the context of long term, capital investment decisions, firm value

is enhanced through appropriately selecting and funding NPV positive investments. These

investments, in turn, have implications in terms of cash flow and cost of capital. The goal of 

Working Capital (i.e. short term) management is therefore to ensure that the firm is able to

operate, and that it has sufficient cash flow to service long term debt, and to satisfy both

maturing short-term debt and upcoming operational expenses. In so doing, firm value is

enhanced when, and if, the return on capital exceeds the cost of capital; See Economic value

added (EVA).

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 47/94

47

Decision criteria

Working capital is the amount of capital which is readily available to an organization. That is,

working capital is the difference between resources in cash or readily convertible into cash

(Current Assets), and cash requirements (Current Liabilities). As a result, the decisions relating

to working capital are always current, i.e. short term, decisions. In addition to time horizon, 

working capital decisions differ from capital investment decisions in terms of  discounting and

profitability considerations; they are also "reversible" to some extent. (Considerations as to Risk 

appetite and return targets remain identical, although some constraints  – such as those imposed

by loan covenants – may be more relevant here).

Working capital management decisions are therefore not taken on the same basis as long term

decisions, and working capital management applies different criteria in decision making: the

main considerations are (1) cash flow / liquidity and (2) profitability / return on capital (of which

cash flow is probably the more important).

  The most widely used measure of cash flow is the net operating cycle, or cash conversion cycle. 

This represents the time difference between cash payment for raw materials and cash collection

for sales. The cash conversion cycle indicates the firm's ability to convert its resources into cash.

Because this number effectively corresponds to the time that the firm's cash is tied up in

operations and unavailable for other activities, management generally aims at a low net count.

(Another measure is gross operating cycle which is the same as net operating cycle except that it

does not take into account the creditors deferral period.)

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 48/94

48

  In this context, the most useful measure of profitability is Return on capital (ROC). The result is

shown as a percentage, determined by dividing relevant income for the 12 months by capital

employed; Return on equity (ROE) shows this result for the firm's shareholders. As above, firm

value is enhanced when, and if, the return on capital, exceeds the cost of capital. ROC measures

are therefore useful as a management tool, in that they link short-term policy with long-term

decision making.

Management of working capital

Guided by the above criteria, management will use a combination of policies and techniques for

the management of working capital. These policies aim at managing the current assets (generally

cash and cash equivalents, inventories and debtors) and the short term financing, such that cash

flows and returns are acceptable.

  Cash management. Identify the cash balance which allows for the business to meet day

to day expenses, but reduces cash holding costs.

  Inventory management. Identify the level of inventory which allows for uninterrupted

production but reduces the investment in raw materials  – and minimizes reordering costs  – and

hence increases cash flow; see Supply chain management; Just In Time (JIT); Economic order

quantity (EOQ); Economic production quantity (EPQ).

  Debtors management. Identify the appropriate credit policy, i.e. credit terms which will

attract customers, such that any impact on cash flows and the cash conversion cycle will be

offset by increased revenue and hence Return on Capital (or vice versa); see Discounts and

allowances. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 49/94

49

  Short term financing. Identify the appropriate source of financing, given the cash

conversion cycle: the inventory is ideally financed by credit granted by the supplier; however, it

may be necessary to utilize a bank  loan (or overdraft), or to "convert debtors to cash" through

"factoring".

Relationship with other areas in finance

Investment banking

Use of the term ―corporate finance‖ varies considerably across the world. In the United States it

is used, as above, to describe activities, decisions and techniques that deal with many aspects of a

company’s finances and capital. In the United Kingdom and Commonwealth countries, the terms

―corporate finance‖ and ―corporate financier‖ tend to be associated with  investment banking  –  

i.e. with transactions in which capital is raised for the corporation. These may include

  Raising seed, start-up, development or expansion capital

  Mergers, demergers, acquisitions or the sale of private companies

  Mergers, demergers and takeovers of public companies, including public-to-private deals

  Management buy-out, buy-in or similar of companies, divisions or subsidiaries  –  

typically backed by private equity

  Equity issues by companies, including the flotation of companies on a recognised stock 

exchange in order to raise capital for development and/or to restructure ownership

  Raising capital via the issue of other forms of equity, debt and related securities for the

refinancing and restructuring of businesses

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 50/94

50

  Financing joint ventures, project finance, infrastructure finance, public-private

partnerships and privatizations

  Secondary equity issues, whether by means of private placing or further issues on a stock 

market, especially where linked to one of the transactions listed above.

  Raising debt and restructuring debt, especially when linked to the types of transactions

listed above

Financial risk management

Risk management is the process of measuring risk  and then developing and implementing

strategies to manage that risk. Financial risk management focuses on risks that can be managed

("hedged") using traded financial instruments (typically changes in commodity prices,  interest

rates,  foreign exchange rates and stock prices). Financial risk management will also play an

important role in cash management.

This area is related to corporate finance in two ways. Firstly, firm exposure to business and

market risk  is a direct result of previous Investment and Financing decisions. Secondly, both

disciplines share the goal of enhancing, or preserving, firm value. 

It is common for large corporations to have risk management teams. While it is impractical for

many small firms to have formal risk management teams, many still practice risk management

principles through informal teams. There is a fundamental debate on the value of "Risk 

Management" and shareholder value that questions a shareholder's desire to optimize risk versus

taking exposure to pure risk (a risk event that only has a negative side, such as loss of life or

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 51/94

51

limb). The debate links value of risk management in a market to the cost of bankruptcy in that

market.

Derivatives are the instruments most

 

commonly used in financial risk management. Because

unique derivative contracts tend to be costly to create and monitor, the most cost-effective

financial risk management methods usually involve derivatives that trade on well-established

financial markets or exchanges. These standard derivative instruments include options,  futures

contracts,  forward contracts, and swaps. More customized and second generation derivatives

known as exotics trade over the counter aka OTC. 

Personal and public finance

Corporate finance utilizes tools from almost all areas of finance. Some of the tools developed by

and for corporations have broad application to entities other than corporations, for example, to

partnerships, sole proprietorships, not-for-profit organizations, governments, mutual funds, and

personal wealth management. But in other cases their application is very limited outside of the

corporate finance arena. Because corporations deal in quantities of money much greater than

individuals, the analysis has developed into a discipline of its own. It can be differentiated from

personal finance and public finance. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 52/94

52

Alternate Approaches

A standard assumption in Corporate finance is that shareholders are the residual claimants and

that the primary goal of executives should be to maximize shareholder value. 

Recently, however, legal scholars (e.g. Lynn Stout) have questioned this assumption, implying

that the assumed goal of maximizing shareholder value is inappropriate for a public corporation.

This criticism in turn brings into question the advice of corporate finance, particularly related to

stock buybacks made purportedly to "return value to shareholders," which is predicated on a

legally erroneous assumption.

Ratio-analysis is a concept or technique which is as old as accounting concept. Financial

analysis is a scientific tool. It has assumed important role as a tool for appraising the real worth

of an enterprise, its performance during a period of time and its pit falls.

Financial analysis is a vital apparatus for the interpretation of financial statements. It also helps

to find out any cross-sectional and time series linkages between various ratios.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 53/94

53

Unlike in the past when security was considered to be sufficient consideration for banks and

financial institutions to grant loans and advances, nowadays the entire lending is need-based and

the emphasis is on the financial viability of a proposal and not only on security alone.

Further all business decision contains an element of risk. The risk is more in the case of decisions

relating to credits. Ratio analysis and other quantitative techniques facilitate assessment of this

risk.

Ratio-analysis means the process of computing, determining and presenting the relationship of 

related items and groups of items of the financial statements. They provide in a summarized and

concise form of fairly good idea about the financial position of a unit.

They are important tools for financial analysis.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 54/94

54

Table1:

Balance Sheet

Ratio

P&L Ratio or Income/Revenue

Statement Ratio

Balance Sheet and Profit & Loss Ratio

Financial Ratio Operating Ratio Composite Ratio

Current Ratio

Quick Asset

Ratio

Proprietary

Ratio

Debt Equity

Ratio

Gross Profit Ratio

Operating Ratio

Expense Ratio

Net profit Ratio

Stock Turnover Ratio

Fixed Asset Turnover Ratio,

Return on Total Resources Ratio,

Return on Own

Funds Ratio,

Earning per Share Ratio,

Debtors’ Turnover Ratio 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 55/94

55

Table2:

LIABILITIES ASSETS

NET WORTH/EQUITY/OWNED

FUNDS

Share Capital/Partner’s

Capital/Paid up Capital/ Owners

Funds

Reserves ( General, Capital,

Revaluation & Other Reserves)

Credit Balance in P&L A/c

FIXED ASSETS : LAND & BUILDING, PLANT &

MACHINERIES

Original Value Less Depreciation

Net Value or Book Value or Written down value

LONG TERM

LIABILITIES/BORROWED

FUNDS : Term Loans (Banks &

Institutions)

Debentures/Bonds, Unsecured

Loans, Fixed Deposits, Other Long

Term Liabilities

NON CURRENT ASSETS

Investments in quoted shares & securities

Old stocks or old/disputed book debts

Long Term Security Deposits

Other Misc. assets which are not current or fixed in

nature

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 56/94

56

CURRENT LIABILTIES

Bank Working Capital Limits such

as CC/OD/Bills/Export Credit

Sundry /Trade

Creditors/Creditors/Bills Payable,

Short duration loans or deposits

Expenses payable & provisions

against various items

CURRENT ASSETS : Cash & Bank Balance,

Marketable/quoted Govt. or other securities, Book

Debts/Sundry Debtors, Bills Receivables, Stocks &

inventory (RM,SIP,FG) Stores & Spares, Advance

Payment of Taxes, Prepaid expenses, Loans and

Advances recoverable within 12 months

INTANGIBLE ASSETS

Patent, Goodwill, Debit balance in P&L A/c,

Preliminary or Preoperative expenses

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 57/94

57

Current Ratio : It is the relationship between the current assets and current liabilities of a

concern.

Current Ratio = Current Assets/Current Liabilities

If the Current Assets and Current Liabilities of a concern are Rs.4,00,000 and Rs.2,00,000

respectively, then the Current Ratio will be : Rs.4,00,000/Rs.2,00,000 = 2 : 1

The ideal Current Ratio preferred by Banks is 1.33 : 1

Net Working Capital : This is worked out as surplus of Long Term Sources over Long Tern

Uses, alternatively it is the difference of Current Assets and Current Liabilities.

NWC = Current Assets – Current Liabilities

ACID TEST or QUICK RATIO : It is the ratio between Quick Current Assets and Current

Liabilities. The should be at least equal to 1.

Quick Current Assets : Cash/Bank Balances + Receivables upto 6 months + Quickly realizable

securities such as Govt. Securities or quickly marketable/quoted shares and Bank Fixed Deposits

Acid Test or Quick Ratio = Quick Current Assets/Current Liabilities

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 58/94

58

RESEARCH

METHODOLOGY

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 59/94

59

The conceptual framework of the summer training project. It has been explained under the

following subhead:

  Objective of selection of this topic

  Source of data

  Instruments and methods of data collection

  Tabulation, processing and trend analysis of data

Objective

  To know the working capital management of t-series.

  To know the earning capacity and efficiency of t-series company.

  To know the performance efficiency and managerial ability by the management of the

t- series company.

  To know the short term and long term solvency of the t-series company.

  To know about the financial position and ability to pay of the concern seeking loans and

credits.

  To know the profitability and future prospectus of the t- series company.

  To know the future potential of the t-series company.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 60/94

60

Research Method Used:

Descriptive Method

Source of data

Secondary data: collected from the following ways :

  Studying and analyzing the data obtained from the organization which include the

financial statement , different literature and its website.

  Studying the annual reports, prepared by the organization.

  Use of external sources of information such as reference on working capital management.

Related website on the internet, etc.

  Applying various ratio analysis techniques.

  Data analysis based on the study carried.

  Study would be mainly focused on the analysis and use of secondary data. Extensive use

of various journals, magazines and different online resources would be used to construct the

analysis pattern. Various analysis tools are used to generate report.

Resource used

  Technical resource

  Computer software(ms office)

  Human resource

Data analysis

The data collected through annual report of the company, balance sheet was further analyzed

using the financial data as gross profit, net profit ,share holders funds etc.

Then the Trend analysis is done.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 61/94

61

METHOD OF LEAST SQUARES:

The method of least square is very useful for fitting mathematical function to a given set of data.

The method is objective, and therefore gives correct and accurate estimation of trend, once the

form of eqation representing trend is determined.

An examination of graphical plot of the time series often provides an adequate basis for deciding

the functional form of the trend. Some of the common curves used for representing trend are:

(1)  Y= a+bx , Linear or straight line trend

(2)  Y=a+bx+cx2 ,

Parabolic or quadratic trend

(3)  Y=abx , Exponential trend

Fitting linear or straight line trend

The simplest type of trend equation is the linear equation of the form

Y= a + b x …………………(1) 

Where x represents time and y the value of the variable. Here y is the dependent and x is an

independent variable.

Now for the set of given data (x1, y1), (x2, y2)….., ( xN , yN)the constant a and b are determined

by solving simultaneously the equations:

∑y = Na + b ∑x 

∑x y =a ∑x + b ∑x2

  …………(2) 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 62/94

62

The equation in (2), called normal equation for the least square line in (1), gives

A= (∑y)( ∑x2)-( ∑x) ( x y )/N ∑x)2 .............(3)

B=N ∑x y - ( ∑x)( ∑y)/N ∑x2-( ∑x)2 ………….(4) 

If the values of x are equidistant, the calculation involved in the estimation of a and b can be

further simplified by shifting the origin to the appropriate mid- point in time, so that ∑x=0.

Obviously, the normal equation in (2) becomes.

∑y = Na 

∑x y = ∑x

2

………………(5)

Therefore, a = ∑y/y and b = ∑x y/ ∑x2 ………………..(6) 

Substituting the estimated values of a and b in (1), the fitted linear trend will be

Y = a + b x. ……………..(7) 

We can find the trend values, say, y by putting different values of x in (7). When writing the

trend equation, the origin and unit of time must be clearly specified, as an equation without such

specification will be useless.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 63/94

63

LIMITATIONS

Every scientific study has certain limitations and the present study is no more

exception. These are: -

1.   Interviewing of the executive of top echelon position who are making

recruitment is busy in the Organization State of affair. So it is not possible

to contact all of those every busy executives.

2.   The terminology used in the subject is highly technical in nature and creates

a lot of ambiguity.

3.   Confidentiality of the management is the strongest hindrance to the

collection of data and scientific analysis of the study.

4.   All the secondary data are required were not available.

In spite of all these limitations, the investigator has made an humble attempt

to present an analytical picture of the study with some suggestion for the

long run implementation.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 64/94

64

ANALYSIS

&

INTERPRETATION

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 65/94

65

RATIO ANALYSIS

Working capital analysis with the help of ratio’s may be undertaken with an objective to

examine the following.

a)  Efficiency in the use of working capital

b)  Liquidity of working capital elements

c)  Structure health of working capital

LIQUIDITY RATIO

Liquidity refers to the ability of a concern to meet its current obligations as and when these

become due. Liquidity ratios are calculated to measure short term financial soundness of the

business. The short term obligation is met by realizing amounts from current, floating or

circulating assets.

To measure the liquidity of a firm, the following ratio’s can be calculated. 

1-  Current ratio or working capital ratio

2-  Quick or acid test or liquid ratio

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 66/94

66

SCHEDULE OF WORKING CAPITAL CHANGES

This technique is based on current item, i.e., current assets and current liability only. As

mentioned earlier net working capital is defined using only current items as excess of current

assets over current liability. Thus,

Net working capital= current assets – current liability

Significance:

Accounting point of view working capital represents the excess of current assets over current

liability.

Net working capital of the t-series-

Table3(a) (Rs. In crore )

Particulars FY-2006 FY-2007 FY-2008 FY-2009 FY-2010

Net

working

capital

28 38 60 80 96

INTERPRETATION:

Over the years the net working capital of the t- series is increasing and this is good for the

company.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 67/94

67

Table3(b)

Year

X

Net working

capital(in

crores) Y

x=(X-2008)/1 xY x2

Values

bx

= 60.4 + 17.8 x

2006

28 -2 -56 4 24.8

2007

38 -1 -38 1 42.6

2008

60 0 0 0 60.4

2009

80 1 80 1 78.2

2010

96 2 192 4 96

N=5 ∑Y=302  ∑x=0  ∑xY= 178  ∑x2=10

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 68/94

68

Let the trend line to be fitted be Y = a + bX

For suitably shifting the origin, we use the transformation

x=(X-2008)/1

Thus, the transformed trend line becomes

Y = a + bx

The normal equations giving the values of a and b are

∑Y=  Na + b∑x 

∑xY = a∑x + b∑x2

Putting the values from the table in above equations , one gets

302=5a

a = 60.4

178= 10b

b = 17.8

Thus the fitted trend line is obtained by putting the values of a and b in

Y= a + b x

Y= 60.4 + 17.8 x

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 69/94

69

Graph1.1 Trend of working capital

0

20

40

60

80

100

120

2006 2007 2008 2009 2010

actual data Linear (actual data)

X axis: time in years

Y axis: net working capital in crores

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 70/94

70

EFFICIENCY OF OVERALL WORKING CAPITAL

Two accounting ratio which may be used for causing the efficiency in the use of overall working

capital are:

working capital turnover= cost of sales or sales net/working capital

SIGNIFICANCE:

Accounting point of view working capital turnover indicates the rate of working capital

utilization in the company.

.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 71/94

71

(Table: 4a)

Working capital turnover of t-series

INTERPRETATION

Over the years the working capital turnover of T-SERIES limited raising 

No. of years Sales Working capital

Working capital

turnover=net

sales/working capital

2006 56 28 56/28=2

2007 95 38 95/38=2.5

2008 180 60 180/60=3

2009 220 80 220/80=2.75

2010 336 96 336/96=3.5

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 72/94

72

Table4(b)

YearX

w.capital

turnoverY

x=(X-

2008)/1

xY x2

Trend Values

Y= a+bx

Y= 2.75 + 0.325 x

2006

2.0 -2 -4 4 2.1

2007

2.5 -1 -2.5 1 2.425

2008

3.0 0 0 0 2.75

2009

2.75 1 2.75 1 3.075

2010

3.5 2 7.0 4 3.4

N= 5 ∑Y= 13.75  ∑x=0  ∑xY=3.25

∑x2=10

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 73/94

73

Let the trend line to be fitted be Y = a + bX

For suitably shifting the origin, we use the transformation

x=(X-2008)/1

Thus, the transformed trend line becomes

Y = a+bxThe normal equations giving the values of a and b are

∑Y= Na + b∑x 

∑xY= a∑x + b∑x2

Putting the values from the table in above equations , one gets

13.75=5a

a = 2.75

3.25= 10b

b = 0.325

Thus the fitted trend line is obtained by putting the values of a and b in

Y= a + b x

Y= 2.75+ 0.325 x

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 74/94

74

X axis: time in years

Y axis: working capital turnover

0

0.5

1

1.5

2

2.5

3

3.5

4

2006 2007 2008 2009 2010

graph2 Trend of working capital turnover

Actual data Linear (Actual data)

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 75/94

75

CURRENT ASSETS TURNOVER= COST OF SALES OR SALES NET

CURRENT ASSETS

SIGNIFICANCE:

A higher ratio is generally considered as indicator of better efficiency and a lower ratio may be

indicative of efficiency or poor efficiency.

Current assets turnover ratio of t- series-

Table:5a

Current assets turnover of t-series 

No. of years Sales Current asset

Current asset

turnover=net

sales/current asset

2006 56 37 56/37=1.5

2007 95 48 95/48=1.9

2008 180 84 180/84=2.1

2009 220 122 220/122=1.8

2010 336 153 336/153=2.1

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 76/94

76

INTERPRETATION

Over the years the current assets turnover ratio is fluctuated during the year 2009 it was low. So

we can say that it is not satisfactory.

Table5(b)

YearX

Current assets

turnoverY

x = (X-

2008)/1

xY x2

Trend Values

Y= a+bx

Y= 1.88 + 0.11 x

2006

1.5 -2 -3 4 1.66

2007

1.9 -1 -1.9 1 1.77

2008

2.1 0 0 0 1.88

2009

1.8 1 1.8 1 1.99

2010

2.1 2 4.2 4 2.1

N=5 ∑Y=9.4  ∑x=0  ∑xY= 1.1  ∑x2=10

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 77/94

77

Let the trend line to be fitted be Y = a + bX

For suitably shifting the origin, we use the transformation

x=(X-2008)/1

Thus, the transformed trend line becomes

Y = a+bx

The normal equations giving the values of a and b are

∑Y= Na + b∑x 

∑xY= a∑x + b∑x2

Putting the values from the table in above equations , one gets

9.4 =5a

a = 1.88

1.1= 10b

b = 0.11

Thus the fitted trend line is obtained by putting the values of a and b in

Y= a + b x

Y= 1.88 + 0.11 x

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 78/94

78

X axis: time in years

Y axis: current assets turnover

0

0.5

1

1.5

2

2.5

2006 2007 2008 2009 2010

graph3 Trend of current assets turnover

Actual data Linear (Actual data )

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 79/94

79

QUICK RATIO

Quick ratio represents the ratio between quick assets to the current liability. It is

rigorous measure and superior to the current ratio.

Quick ratio = Quick Assets or current assest-stock

Quick Liability overdraft

The ideal quick ratio is said to be 1:1

OBJECTIVE

The objective of computing this ratio is to measure the ability of the firm to meet its short

term obligation as and when due its without relying upon the realization of stock.

SIGNIFICANCE

The quick ratio or acid teat ratio takes into consideration the liquidity level of the components of the

current assets. It can also be used by establishing the relationship between quick assets and quick 

liability. Quick assets mean current assets reduced by inventories and prepaid expenses. 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 80/94

80

Table: 6a

Quick ratio of t-series

INREPRETATION

The quick ratio of the t-series group shows that the financial condition of the enterprise is

round and very good. As it continued to increase but during the year 2007 it is found

maximum. But it also represent that more liquid assets are blocks within the company

which should be avoided.

No. of years stock Over draft

Quick ratio = current assets-

stock /current liabilities-over

draft

2006 2,59,00000 27,00000 34,41,00000/8,73,00000=3.94

2007 3,36,00000 30,0000044,64,00000/9,70,00000=4.6

2008 5,88,00000 72,00000

78,12,00000/23,28,00000=3.35

2009 8,54,00000 1,26,00000113,46,00000/40,74,00000=2.78

2010 10,72,00000 1,71,00000

142,28,00000/55,29,00000=2.57

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 81/94

81

Table6(b)

Year

X

Quick ratio

Y

x = (X-

2008)/1

xY x2

Trend Values

Y=a+bx

Y= 3.448 -0.456 x

2006

3.94 -2 -7.88 4 4.36

2007

4.6 -1 -4.6 1 3.904

2008

3.35 0 0 0 3.448

2009

2.78 1 2.78 1 2.992

2010

2.57 2 5.14 4 2.536

N=5 ∑Y= 17.24  ∑x=0  ∑xY = -

4.56

∑x2=10

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 82/94

82

Let the trend line to be fitted be Y = a + bX

For suitably shifting the origin, we use the transformation

x=(X-2008)/1

Thus, the transformed trend line becomes

Y = a+bx

The normal equations giving the values of a and b are

∑Y= Na + b∑x 

∑xY= a∑x + b∑x2

Putting the values from the table in above equations , one gets

17.24=5a

a = 3.448

-4.56= 10b

b = -0.456

Thus the fitted trend line is obtained by putting the values of a and b in

Y= a + b x

Y= 3.448 -0.456 x

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 83/94

83

X axis: time in years

Y axis: quick ratio

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2006 2007 2008 2009 2010

graph4 Trend of quick ratio

Actual data Linear (Actual data)

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 84/94

84

Current ratio

This ratio establishes a relationship between current assets and current liability Objective-

the objective of computing this ratio is to measure the ability of the firm to meet its short

term obligations and to reflect the short term financial strength/solvency of a firm. In other

words the objective is to measure the safety margin available for short term creditors.

Current ratio= Current assets 

Current liability

As a general rule which is internationally accepted that the relationship between current

assets and current liability must be 2:1.

SIGNIFICANCE

A satisfactory current ratio indicates a firm’s ability to meet its obligation, even if the value of 

the current assets declines. It is however a quantitative index of liquidity, as it does not

differentiate between the components of current assets, such as cash and inventories (which are

not equally liquid).

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 85/94

85

Table: 7a

Current ratio of t-series

INTERPRETATION

The current ratio of the t-series shows the situation of the company is good and favorable

because company has better liquidity to pay its current liabilities.

No. of years Current assets Current liabilities

Current

ratio=current assets

 /current liabilities

2006 37 9 37/9=4.1

2007 48 10 48/10=4.8

2008 84 24 84/24=3.1

2009 122 42 122/42=2.9

2010 153 57 153/57=2.6

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 86/94

86

Table7(b)

Year

X

Current ratio

Y

x =(X-

2008)/1

xY x2

Trend Values

Y= a+bx

Y=3.598-0.476

x

2006

4.11 -2 -8.22 4 4.55

2007

4.8 -1 -4.8 1 4.074

2008

3.5 0 0 0 3.598

2009

2.9 1 2.9 1 3.122

2010

2.68 2 5.36 4 2.646

N=5 ∑Y=17.99  ∑x = 0 ∑xY =

-4.76

∑x2=

10

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 87/94

87

Let the trend line to be fitted be Y = a + bX

For suitably shifting the origin, we use the transformation

x=(X-2008)/1

Thus, the transformed trend line becomes

Y = a+bx

The normal equations giving the values of a and b are

∑Y= Na + b∑x 

∑xY= a∑x + b∑x2

Putting the values from the table in above equations , one gets

17.99=5a

a = 3.598

-4.76= 10b

b = -0.476

Thus the fitted trend line is obtained by putting the values of a and b in

Y= a + b x

Y= 3.598 -0.476 x

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 88/94

88

X axis: time in years

Y axis: current ratio

0

1

2

3

4

5

6

2006 2007 2008 2009 2010

Actual data Linear (Actual data)

Graph 5 Trend of Current Ratio

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 89/94

89

FINDINGS

o  T-series has an appropriate working capital.

o  The company can pay the current debts because its have optimum level of the current

assets.

o  The length of the manufacturing cycle of firm’s is short term, so it is not demand more

working capital because the time gap or interval between production and sales is not take

more time.

o  The cost of financial through current liabilities is less than the cost of financing through

long term funds, so as such the profitability point of view, the proportion of current

liabilities in total liabilities is higher.

o  The liquidity position of the company is good by this Company can easily evaluate the

risk and save the loss of risk.

Thus it can be said that t-series enjoys a round financial position. The company has an

appropriate working capital and the management of the working capital is good the overall

performance of the company is satisfactory and it will further improve when the facilities at the

disposal of the company are fully utilized however the management must remain cautions

towards the financial position of the company. The management should take all possible steps in

the near future to improve the financial position of the company.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 90/94

90

Table8: SWOT ANALYSIS

STRENGTH

  Has appropriate working capital.

  Has optimum level of current assets.

  Liquidity position is good.

  Large brand basket.

WEAKNESS

  Wide brand- basket which might lead

to conflicts of interest unless effectively

managed.

OPPORTUNITIES

  Avenues for expansion in the untapped

market for mobile phones/tv displays in

India.

  Acquisitions/ tie-ups with other MNCs

in the consumer electronics segment

looking to enter the Indian market.

THREATS

  From competitors

  From technology advancements.

  Fall in market demand due to economic

recession.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 91/94

91

SUGGESTIONS

  The management should try to improve more working capital which is beneficial for the

future.

  The company should take the advantage of financial position very carefully as it also

increase financial risk.

  Company has better liquidity so company can take risk.

  Company can improve the manufacturing cycle of the production cycle and sales

company can increase the sales volume and turnover of the working capital.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 92/94

92

CONCLUSION

o  T-Series has an effective working capital management strategy. The trend analysis show an

increasing trend. Thus the company has better liquidity so company can take risk.

o  The length of the manufacturing cycle of firm’s is short term, so it is not demand more

working capital because the time gap or interval between production and sales is not take

more time.

o  The cost of financial through current liabilities is less than the cost of financing through long

term funds, so as such the profitability point of view, the proportion of current liabilities in

total liabilities is higher.

o  The liquidity position of the company is good by this Company can easily evaluate the risk 

and save the loss of risk.

Thus it can be said that t-series has a round financial position. The company has an appropriate

working capital and the management of the working capital is good the overall performance of 

the company is satisfactory and it will further improve when the facilities at the disposal of the

company are fully utilized however the management must remain cautions towards the financial

position of the company. The management should take all possible steps in the near future to

improve the financial position of the company.

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 93/94

93

BIBLIOGRAPHY

BOOKS REFERRED

Financial Management --- I.M PANDAY

Financial Management --- A.K RUSTOGI

Financial Management --- KHAN & JAIN

Ratio Analysis --- S.P GUPTA

WEBSITE REFERRED

www.t-series.com 

5/16/2018 retail banking service - slidepdf.com

http://slidepdf.com/reader/full/retail-banking-service 94/94

94

―Thanking you‖