Description
This is an SVG vector image of a registered trademark or a copyright-protected logo, seal or computer icon. This image should not be rendered any larger than is required for the purposes of identification and/or critical commentary.
WORKING CAPITAL MANAGEMENT
BHARAT HEAVY ELECTRICALS LIMITED,TIRUCHIRAPPALLI
COMPANY PROFILE
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Bharath Heavy Electricals Limited is the larges engineering and manufacturing entreprise of its king in India. The first plant of BHEL was set up at Bhopal in 1956. BHEL, Trichy unit was establish in1963 and is situated in Trichy-tanjore highway road. 12000 EMPLOYEES- permanent basis 4000 EMPLOYEES – contract basis
OBJECTIVES
Evaluate the working capital of the company during the period of study. ? Analysis of working capital with various tools. ? Analysis of various components of working capital. ? To study the adequacy of working capital and suggest improvement to overcome deficiencies if any.
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RESEARCH METHODOLOGY
TOOLS OF ANALYSIS Ratio analysis Trend analysis SECONDARY DATA It is derived from the annual reports,magazines,web sites and internal auditing books of BHEL.
FINDINGS OF STUDY
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The working as per trend analysis current asset, current liability and working capital is also in the upward trend during the period of study. In this analysis of various components in working, in current asset, in inventory sundry debtors in loan and advances and other current assets are downward trend. Then cash and bank balance only upward trend. In current liabilities, liabilities downward trend and provision are upward trend during the period of study. In sundry debtors value are fluctuating during the period of study. Analysis of each component in working capital sundry creditors is upward manner during the period of study
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Working capital turnover ratio was downward year by year. It clears shows firm reduced to use networking capital for sales. Inventory turnover ratio was 3.57 in 2005-2006. It is upward while comparing from 2001-2002. Current ratio was fluctuating. An ideal current ration is 2.so the creditors will be able to get their payment full. The debtor turnover ratio in the year 2001-2002 was 1.48 and get increased in the year 2005-2006 was 1.87. Quick ratio was fluctuating. so the company can be pay the liabilities within short period. Cash ratio was fluctuating. It clearly indicates firm’s debt borrowing power from financial institutions. The average collection period is high in 2001-2002 that is 107 days and 2005-2006 is 102 days in this reduce collection period. it shows firms liberal debt collection policy.
SUGGESTION
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Apart from present technique of age wise analysis, reason wise analysis to be done periodically and suitable actions to be taken. While collecting dues from customer collecting focus on customer irrespective of production unit, division and products to be followed. automatic storage and retrieval system (ASRS) presently implementing in components stores of BHEL, trichy may also be introduce in others stores or units. Periodic review on non moving and slow moving items of inventory may be done. All suppliers are to be educated on the requirement of various document so that delay in processing of bills and payment may be reduced/avoided. Working capital position is moderate. the company can raised additional funds raised are investment in fixed assets instead providing necessary working capital.
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CONCLUSION
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The over all working capital management of BHEL is effective and satisfactory.however,effective steps may be taken to reduce sundry creditors and inventory by using latest tools and techniques. In debt collection period as increase from 2001-2005.it reveals firms infancies to collect the money from debtors. it affects present and future firms activities. so firms has to take great care in handling debt. Out of 5 components of current assets, cash has placed fourth level in all the 5 years. basically BHEL is producing the industrial goods, so very difficult to sell the products in cash and also BHEL is buying their raw materials only on credit. this exchange activities reduces the importance of cash in the firm. this level clearly shows, cash has low position in the firm.
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LIMITATION
Only secondary data collected from BHEL trichy is used for the study, hence the accuracy of the findings and conclusion of the statement will depend upon the accuracy of the given data. ? Only five years financial statement of BHEL are used for this schedule. ? The limitations of the tools and techniques used in the study will also reflect in the outcome of the study.
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doc_116313675.ppt
This is an SVG vector image of a registered trademark or a copyright-protected logo, seal or computer icon. This image should not be rendered any larger than is required for the purposes of identification and/or critical commentary.
WORKING CAPITAL MANAGEMENT
BHARAT HEAVY ELECTRICALS LIMITED,TIRUCHIRAPPALLI
COMPANY PROFILE
?
? ?
?
?
Bharath Heavy Electricals Limited is the larges engineering and manufacturing entreprise of its king in India. The first plant of BHEL was set up at Bhopal in 1956. BHEL, Trichy unit was establish in1963 and is situated in Trichy-tanjore highway road. 12000 EMPLOYEES- permanent basis 4000 EMPLOYEES – contract basis
OBJECTIVES
Evaluate the working capital of the company during the period of study. ? Analysis of working capital with various tools. ? Analysis of various components of working capital. ? To study the adequacy of working capital and suggest improvement to overcome deficiencies if any.
?
RESEARCH METHODOLOGY
TOOLS OF ANALYSIS Ratio analysis Trend analysis SECONDARY DATA It is derived from the annual reports,magazines,web sites and internal auditing books of BHEL.
FINDINGS OF STUDY
?
The working as per trend analysis current asset, current liability and working capital is also in the upward trend during the period of study. In this analysis of various components in working, in current asset, in inventory sundry debtors in loan and advances and other current assets are downward trend. Then cash and bank balance only upward trend. In current liabilities, liabilities downward trend and provision are upward trend during the period of study. In sundry debtors value are fluctuating during the period of study. Analysis of each component in working capital sundry creditors is upward manner during the period of study
?
?
? ?
?
?
? ? ? ?
?
Working capital turnover ratio was downward year by year. It clears shows firm reduced to use networking capital for sales. Inventory turnover ratio was 3.57 in 2005-2006. It is upward while comparing from 2001-2002. Current ratio was fluctuating. An ideal current ration is 2.so the creditors will be able to get their payment full. The debtor turnover ratio in the year 2001-2002 was 1.48 and get increased in the year 2005-2006 was 1.87. Quick ratio was fluctuating. so the company can be pay the liabilities within short period. Cash ratio was fluctuating. It clearly indicates firm’s debt borrowing power from financial institutions. The average collection period is high in 2001-2002 that is 107 days and 2005-2006 is 102 days in this reduce collection period. it shows firms liberal debt collection policy.
SUGGESTION
? ? ?
?
?
Apart from present technique of age wise analysis, reason wise analysis to be done periodically and suitable actions to be taken. While collecting dues from customer collecting focus on customer irrespective of production unit, division and products to be followed. automatic storage and retrieval system (ASRS) presently implementing in components stores of BHEL, trichy may also be introduce in others stores or units. Periodic review on non moving and slow moving items of inventory may be done. All suppliers are to be educated on the requirement of various document so that delay in processing of bills and payment may be reduced/avoided. Working capital position is moderate. the company can raised additional funds raised are investment in fixed assets instead providing necessary working capital.
?
CONCLUSION
?
The over all working capital management of BHEL is effective and satisfactory.however,effective steps may be taken to reduce sundry creditors and inventory by using latest tools and techniques. In debt collection period as increase from 2001-2005.it reveals firms infancies to collect the money from debtors. it affects present and future firms activities. so firms has to take great care in handling debt. Out of 5 components of current assets, cash has placed fourth level in all the 5 years. basically BHEL is producing the industrial goods, so very difficult to sell the products in cash and also BHEL is buying their raw materials only on credit. this exchange activities reduces the importance of cash in the firm. this level clearly shows, cash has low position in the firm.
?
?
LIMITATION
Only secondary data collected from BHEL trichy is used for the study, hence the accuracy of the findings and conclusion of the statement will depend upon the accuracy of the given data. ? Only five years financial statement of BHEL are used for this schedule. ? The limitations of the tools and techniques used in the study will also reflect in the outcome of the study.
?
doc_116313675.ppt