G.

S College of Commerce and Economic, Nagpur

Project Report

on

‘’Working Capital Management of Mahindra and

Mahindra Ltd.’’

Submitted to

G.S. College of Commerce and Economics

Nagpur

In partial Fullfillment for the award of the degree of

Bachelor of Business Administration

Submitted by

Aditya Daharwal

Under the Guidance of

Prof. Kamlesh Thote

G.S. College Of Commerce & Economics, Nagpur

Academic Year 2021 – 22

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 G.S College of Commerce and Economic, Nagpur

G.S. College Of Commerce & Economics , Nagpur

Academic Year 2021 – 22

CERTIFICATE

This is to certify that ’’ Aditya Daharwal‘’ has Submitted the project report titled

‘’ Working Capital Management of Mahindra and Mahindra ltd.’’ , towards

partial fulfillment of BACHELOR OF BUSINESS ADMINISTRATION degree

examination. This has not been submitted for any other examination and does not

form part of any other course undergone by the candidate.

It is further certified that he has ingeniously completed his project as prescribed

by Rashtrasant Tukadoji Maharaj Nagpur University, Nagpur.

Prof. Kamlesh Thote Dr. Afsar Sheikh

(Project Guide) ( Co-Ordinator )

Place:

Date:

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 G.S College of Commerce and Economic, Nagpur

G.S. College of Commerce & Economics, Nagpur

Academic Year 2021 – 22

DECLARATION

I here-by declare that the project with title “Working Capital Management

of Mahindra And Mahindra ltd.’’ has been completed by me in partial

fulfillment of BACHELOR OF BUSINESS ADMINISTRATION degree

examination as prescribed by Rashtrasant Tukadoji Maharaj Nagpur

University, Nagpur and this has not been submitted for any other

examination and does not form the part of any other course undertaken

by me.

Aditya Daharwal

Place:

Date :

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 G.S College of Commerce and Economic, Nagpur

G.S. College Of Commerce & Economics , Nagpur

Academic Year 2021 – 22

ACKNOWLEDGEMENT

With immense pride and sense of gratitude, I take this

golden opportunity to express my sincere regards to

Dr.N.Y.Khandait, Principal, G.S. College of Commerce & Economics,

Nagpur.

I am extremely thankful to my Project Guide Prof. Kamlesh

Thote for his guideline throughout the project. I tender my sincere

regards to Co-Ordinator, Dr. Afsar Sheikh for giving me outstanding

guidance, enthusiastic suggestions and invaluable encouragement

which helped me in the completion of the project.

I will fail in my duty if I do not thank the non-Teaching staff

of the college for their Co-operation.

I would like to thank all those who helped me in making this

project complete and successful.

Aditya Daharwal

Place:

Date:

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Index

PAGE
S.No. PARTICULARS
No.

1. Introduction 6-19

2. Company Profile. 20-23

3. Research Study 24-29

• Objective of the Study 25

• Need of the study 26

• Relevance of the study 27

• Hypothesis of the study 28

• Balance sheet 29

4. Research Methodology 30-36

5. Data Analysis & Interpretation. 37-47

6. Conclusion 48-50

7. Recommendations & Suggestions. 51-52

8. Bibliography 53-54

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CHAPTER 1

INTRODUCTION

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INTRODUCTION

“Working capital means the part of the total assets of the business that change from one form

to form in ordinary course of business operation.”

Concept of Working Capital:-

The word working capital is made of two words

1. Working

2. Capital

The word working means day to day operation of the business, whereas the word capital means

monetary value of all assets of the business.

Working capital:-

Working capital may be regarded as the life blood of business. Working capital is of major

importance to internal and external analysis because of its close relationship with the current

day today operation of a business. Every business needs funds for two purposes.

• Long term funds are required to create production facilities though purchase of fixed

assets such as plants machines, lands, buildings &etc.

• Short term funds are required for the purchase of raw materials, payment of wages, and

other day-to-day expenses. It is otherwise known as revolving or circulating capital it

is nothing but the difference between current assets and current liabilities .i.e.

WORKING CAPITAL = CURRENT ASSET – CURRENT LIABILITIES

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Businesses use capital for construction, renovation, furniture, software, equipment or

machinery. It is also commonly used to purchase inventory, or to make payroll. Capital is also

used often to put a down payment down on a piece of commercial real estate. Working capital

is essential for any to succeed. It is becoming increasingly important to have access to more

working capital when we need it.

Concept of working capital

GROSS WORKING CAPITAL = TOTAL OF CURRENT ASSET

NET WORKING CAPITAL = EXCESS OF CURRENT ASSET OVER CURRENT LAIBILITY

CURRENT ASSET CUREENT LAIBILITY

• Cash in hand / at bank • Bills payable

• Bills receivable • Sundry creditors

• Sundry debtors • Outstanding expenses

• Short term loans • Accrued expenses

• Investors / stock • Bank over drafts

• Temporary investment

• Prepaid expenses

• Accrued incomes

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COMPONENTS OF WORKING CAPITAL

1. Current assets

A major component of working capital is current assets. A shortened definition of current assets

is: a company's cash plus its other resources that are expected to turn to cash within one year.

However, the following is a more complete definition: Current assets include cash (which

is not restricted for a long-term purpose) plus the company's other resources that will turn to

cash or will be used up within one year (of the date shown in the heading of the balance sheet).

However, in the rare situations when a company's normal operating cycle is longer than one

year, the length of the operating cycle is used in place of one year for determining a current

asset. Examples of current assets (listed in the order they are expected to turn into cash) include:

• cash and cash equivalents

• temporary investments

• accounts receivable

• inventory

• supplies

• prepaid expenses

2. Current liabilities

The other major component of working capital is current liabilities. A shortened definition of

current liabilities is: a company's obligations that will be due within one year. However, a more

complete definition is: Current liabilities are a company's obligations (that are the result of a

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past event) that will be due within one year of the balance sheet's date. However, in the rare

situations when a company's normal operating cycle is longer than one year, the length of the

operating cycle is used in place of one year for determining a current liability. Examples of

current liabilities include:

• loan principal amounts that will be due within one year

• accounts payable

• wages payable

• payroll taxes withheld from employees

• Accrued expenses/liabilities (utilities, repairs, interest, etc.)

• customer deposits and deferred revenues

If there is assurance that a current liability will be replaced by a long-term liability, it should

be reported as a long-term liability. (The reason is the liability will not be requiring the use of

the company's working capital.)

3. Operating cycle

The need of working capital arrived because of time gap between production of goods

and their actual realization after sale. This time gap is called “operating cycle” or

“working capital cycle”. The operating cycle of a company consist of time period

between procurement of inventory and the collection of cash from receivables. The

operating cycle is the length of time between the companies’ outlay on raw materials,

wages and other expenses and inflow of cash from sales of goods. Operating cycle is an

important concept management of cash and management of cash working capital. The

operating cycle reveals time that elapses between outlays of cash inflow of cash.

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Quicker the operating cycle less amount of investment working capital needed it

improves probability. The duration of the operating cycle depends on mature of

industries and efficiency working capital management.

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OPERATING CYCLE

RAW
MATERIAL

CASH WORK IN
PROGRESS

DEBTORS
FINISH
AND
GOODS
RECEVIABLE

SALES

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WORKING CAPITAL RATIOS

Ratio analysis can be used by financial executives to check upon the efficiency with which

working capital is being used in the enterprise. The following are the important ratios to

measure the efficiency of working capital.

A. WORKING CAPITAL RATIO

The working capital ratio, also called the current ratio, is a liquidity ratio that measures a

firm’s ability to pay off its current liabilities with current assets. The working capital ratio

is important to creditors because it shows the liquidity of the company.

WORKING CAPITAL RATIO = CURRENT ASSET – CURRENT LIABILITIES

B. WORKING CAPITAL LIQUIDITY RATIO

Two key measures, the current ratio and the quick ratio, are used to assess short term

liquidity. Generally a higher ratio indicates better liquidity.

1) Current ratio

Liquidity ratios tell you about a company’s ability to meet all its financial obligations,

including debt, payroll, payments to vendors, taxes, and so on. The numbers come from

the Balance Sheet. The current ratio is one of the liquidity ratios. It measures a company’s

ability to pay its short-term obligations. The current ratio looks at current assets and current

liabilities.

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𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺
CURRENT RATIO =
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

2) Quick ratio

The quick ratio is an indicator of a company’s short-term liquidity position and measures a

company’s ability to meet its short-term obligations with its most liquid assets. Since it

indicates the company’s ability to instantly use its near-cash assets (that is, assets that can

be converted quickly to cash) to pay down its current liabilities, it is also called the ACID

TEST RATIO.

𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻−𝑰𝑵𝑽𝑬𝑵𝑻𝑶𝑻𝒀
QUICK RATIO =
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

4) Working capital turn over ratio

The working capital turnover ratio measures how well a company is utilizing its

working capital to support a given level of sales. Working capital is current assets

minus current liabilities. A high turnover ratio indicates that management is being

extremely efficient in using a firm's short-term assets and liabilities to support sales.

Conversely, a low ratio indicates that a business is investing in too many accounts

receivable and inventory assets to support its sales, which could eventually lead to an

excessive amount of bad debts and obsolete inventory write-offs.

𝑺𝑨𝑳𝑬𝑺
WORKING CAPITAL =
𝑾𝑶𝑹𝑲𝑰𝑵𝑮 𝑪𝑨𝑷𝑰𝑻𝑨𝑳

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5) The Debtors Turnover Ratio

The Debtors Turnover Ratio also called as Receivables Turnover Ratio shows how

quickly the credit sales are converted into the cash. This ratio measures the efficiency of a

firm in managing and collecting the credit issued to the customers.

DEBTORS TURNOVER RATIO =

𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
𝑨𝑽𝑬𝑹𝑨𝑮𝑬 𝑨𝑪𝑪𝑶𝑼𝑵𝑻𝑺 𝑹𝑬𝑪𝑬𝑰𝑽𝑨𝑩𝑳𝑬

6) The Inventory turnover

The Inventory turnover is a measure of the number of times inventory is sold or used in a

time period such as a year. It is calculated to see if a business has an excessive inventory in

comparison to its sales level. The equation for inventory turnover equals the cost of goods

sold divided by the average inventory.

𝑺𝑨𝑳𝑬𝑺
INVENTORY TURNOVER =
I𝐍𝐕𝐄𝐍𝐓𝐎𝐑𝐘

7) Current Assets Turnover Ratio

Current Assets Turnover Ratio indicates that the current assets are turned over in the form of

sales more number of times. A high current assets turnover ratio indicates the capability of the

organization to achieve maximum sales with the minimum investment in current assets. Higher

the current ratio better will be the situation.

𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
CURRENT ASSET TURNOVER RATIO=
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺

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DETERMINANTS OF WORKING CAPITAL

The amount of working capital is depends upon following factors

• NATURE OF BUSINESS

Some businesses are such due to their very nature, that their requirement of fixed capital

is more rather than working capital. These businesses sell services and not the

commodities and that too on cash basis. As such, no funds are blocked in piling

inventories and also no funds are blocked in receivables. E.g. public utility services like

railways, infrastructure oriented project etc. there requirement of working capital is

less. On the other hand, there are some businesses like trading activity, where

requirement of fixed capital is less but more money is blocked in inventories and

debtors.

• LENTH OF PRODUCTION CYCLE

In some business like machine tools industry, the time gap between the acquisition of

raw material till the end of final production of finished products itself is quite high. As

such amount may be blocked either in raw material or work in progress or finished

goods or even in debtors. Naturally there need of working capital is high.

• SIZE AND GROWTH OF BUSINESS

In very small company the working capital requirement is quit high overhead, higher

buying and selling cost etc. as such medium size business positively has edge over the

small companies. but if the business start growing after certain limit, the working capital

requirements may adversely affect by the increasing size.

• BUSINESS CYCLE

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If the company is the operating in the time of boom, the working capital requirement

may be more as the company may like to buy more raw material, may increase the

production and sales to take the benefit of favourable market, due to increase in the

sales, there may more and more amount of funds blocked in stock and debtors etc.

similarly in the case of depressions also, working capital

may be high as the sales terms of value and quantity may be reducing, there may be

unnecessary piling up of stack without getting sold, the receivable may not be recovered

in time etc.

• TERMS OF PURCHASE AND SALES

Some time due to competition or customs, it may be necessary for the company to

extend more and more credit to consumers, as result which more and more amount is

locked up in debtors or bills receivable which increases the working capital

requirements. On the other hand, in the case of purchase, if the credit is offered by

suppliers of goods and services, a part of the working capital requirement may be

financed by them, but it is necessary to purchase on cash, the working capital

requirement will be higher.

• PROFITABILITY

The profitability of the business may be vary in each and every individual case, which

is in turn its depend on numerous factors, but high profitability will positively reduce

the strain on working capital requirement of the company, because the profits to the

extent that they earned in cash may be used to meet the working capital requirement of

the company.

• OPERATING EFFICIENCY

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If the business is carried on more efficiently, it can operate in profit which may reduce

the strain on working capital; it may ensure proper utilization of existing resources by

eliminating the waste and improved co-ordination etc.

NEED OF WORKING CAPITAL MANGEMENT

The need for working capital gross or current assets cannot be over emphasized. As already

observed, the object of financial decision making is to maximize the shareholder wealth. To

achieve this, it is necessary to generate sufficient profits can be earned will naturally depend

upon the magnitude of the sales among other things but sales cannot convert into cash. There

is a need for working capital in the form of current assets to deals with the problem arising out

of lack of immediate realization of cash against goods sold. Therefore sufficient working

capital is necessary to sustain sales activity. Technically this is referring to operating or cash

cycle. If the company has certain amount of cash, it will be required for purchasing the raw

material may be available on credit basis. Then the company has to spend some amount for

labour and factory overhead to convert the raw material in work in progress and ultimately

finished goods. These finished goods convert in to sales on credit basis in the form of sundry

debtors. Sundry debtors are converting into cash on credit period. Thus some amount of cash

is blocked in raw materials, work in progress, finished goods, and sundry debtors and day to

day cash requirement. However some part of current assets may be financed by the current

liabilities also. The amount required to be invested in this current assets is always higher than

the funds available from current liabilities. This is the precise reason why the needs for the

working capital arise.

GROSS WORKING CAPITAL AND NET WORKING CAPITAL

There are two concepts of working capital management

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• GROSS WORKING CAPITAL

Gross working capital refers to the firm’s investment in current assets. Current assets

are the assets which can be convert in to cash within year includes cash, short term

securities, debtors, bills receivable and inventory.

• NET WORKING CAPITAL

Net working capital refers to the difference between current assets and current

liabilities, Current liabilities are those claims of outsiders which are expected to mature

for payment within an accounting year and include creditors, bills payable and

outstanding expenses. Net working capital can be positive or negative efficient working

capital management requires that firms should operate with amount of net working

capital, the exact Amount varying from firm to firm and depending, among other things;

on nature of industries. Net working capital is necessary because the cash outflow and

inflow do not coincide. The cash outflow resulting from payment of current liabilities

is relatively predictable. The cash inflow is however difficult to predict. The more

predictable the cash inflows are, the less net working capital will be required; the

concept of working capital was, first evolved by Karl Marx. Marx used the term

variable capital' means outlays for payrolls advanced to workers before the completion

work. He compared this with 'constant capital' which according to him is nothing but

'dead labour'. This 'variable capital' is nothing wage fund which remains blocked in

terms of financial management, in working-process along with other operating

expenses until it is released through sale of finished goods. Although Marx did not

mentioned that workers also gave credit to the firm by accepting periodical payment of

wages which funded a portioned of work in progress the concept of working capital, as

we understand today was embedded in his ‘variable capital’.

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TYPES OF WORKING CAPITAL

TYPES OF
WORKING
CAPITAL

ON THE ON THE
BASIS OF BASIS OF
VALUE TIME

GROSS NET REGULAR TEMPORARY

WORKING WORKING WORKING WORKING
CAPITAL CAPITAL CAPITAL CAPITAL

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CHAPTER 2

COMPANY PROFILE

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COMPANY PROFILE

MAHINDRA & MAHINDRA LIMITED

TYPE - PUBLIC

INDUSTRY - AUTOMOTIVE

TRADED AS - BSE: 500520

NSE: M&M

BSE SENSEX CONSTITUENT

FOUNDED - 02 OCTOBER 1945 (77 year ago)

FOUNDERS - J.C.MAHINDRA

K.C. MAHINDRA

M.G. MAHINDRA

HEADQUARTERS - MUMBAI, MAHARASHTRA, INDIA

KEY PEOPLE - ANAND MAHINDRA (Chairman)

PAWAN KUMAR GOENKA (MD)

PRODUCTS - AUTOMOBILES,

COMMERCIAL VEHICLES,

TWO-WHEELERS

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PARENT - MAHINDRA GROUP

WEBSITE - www.mahindra.com

HISTORY OF MAHINDRA & MAHINDRA

Mahindra & Mahindra Limited is an Indian multinational car manufacturing corporation

headquartered in Mumbai, Maharashtra, India. Mahindra & Mahindra was founded as a steel

trading company on October 2, 1945 in Ludhiana as Mahindra & Muhammed by

brothers Harikrishnan and Jayakrishnan and Jagdish Chandra Mahindra along with Malik

Ghulam Muhammad. Anand Mahindra, the present Chairman of Mahindra Group, is the

grandson of Jagdish Chandra Mahindra. After India gained independence and Pakistan was

formed, Muhammad immigrated to Pakistan. Muhammad acquired Pakistani citizenship and

settled in Lahore, and in 1948 become Pakistan's first finance minister. Thereafter, the

company changed its name to Mahindra & Mahindra in 1948. It eventually saw a business

opportunity in expanding into manufacturing and selling larger MUVs, starting with the

assembly under licence of the Willys Jeep in India. Soon established as the Jeep manufacturers

of India, the company later commenced manufacturing light commercial vehicles (LCVs) and

agricultural tractors.

Over the past few years, the company has taken interest in new industries and in foreign

markets. They entered the two wheeler industry by taking over kinetic motors in India. M&M

also has a controlling stake in the reva electric car company and acquired South Korea’s ssang

yong motor company in 2011. In 2010-2011 M&M entered in micro drip irrigation with the

takeover of EPC industries ltd in Nashik.

In October 2014, Mahindra and Mahindra acquired a 51% controlling stake in Peugeot

Motocycles and acquired a 100% controlling stake in October 2019.

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In December 2015, Mahindra and Mahindra Ltd and affiliate Tech Mahindra Ltd, through a

special purpose vehicle (SPV), have agreed to buy a 76.06% stake in Italian car designer

Pininfarina SpA, for €25.3 million (around Rs.186.7 crore).

In January 2017, Mahindra and Mahindra Ltd (M&M) acquired a 75.1 equity stake in Hisarlar

Makina Sanayi ve Ticaret Anonym Şirketi (Hisarlar), a farm equipment company, marking its

entry into Turkey.

In September 2017 Mahindra and Mahindra Ltd acquired Erkunt Traktor Sanayii AS, a Turkish

tractor maker and its foundry business for 800 crore. Its major competitors in the Indian market

include Maruti Suzuki and Tata Motors

SHARE HOLDING

SHAREHOLDERS SHAREHOLDING

PROMOTERS 19.84%

MUTUAL FUNDS 9.59%

FOREIGN INSTITUTIONAL 34.22%

INVESTOR

OTHER INSTITUTIONS 18.46%

PUBLIC 13.49%

OTHER 4.4%

TOTAL 100.0%

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CHAPTER 3

RESEARCH STUDY

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OBJECTIVIES OF THE STUDY

Study of the working capital management is important because unless the working

capital is managed effectively, monitored efficiently planed properly and renewed periodically

at regular intervals to remove bottlenecks if any of the company cannot earn profits and

increase its turnover. With this primary objective of the study, the following further objectives

are framed of a depth analysis.

• To study the working capital management of Mahindra & Mahindra.

• To gain familiarity with various components of working capital in Mahindra &

Mahindra.

• To study the liquidity position through various working capital ratios.

• To offer suitable suggestions based on findings of the study.

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NEED OF THE STUDY

• Well-managed working capital is crucial to the running of a healthy and successful

business.

• An important part of working capital management is a company’s cost structure.

Working capital represents the liquidity available to a business.

• In this background the present study is needed to know the significance of the working

capital is for Mahindra & Mahindra, how the Mahindra & Mahindra managed the

working capital for the smooth running of the business.

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RELEVANCE OF STUDY

A company spends most of their time and effort on day to day working capital

management. Still, due to the inability of financial mangers to properly plan and control the

current assets and current liabilities of their company, the failure of business can be attributed

to the inefficient working capital management. Inadequate working capital leads to company

bankruptcy. On the other hand, too much working capital results in wasting cash and ultimately

the decrease in the profitability. A decrease in profitability can leads to the decrease in the

company share prices. So it is important to for the company to make effective working capital

for the betterment of the company.

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HYPOTHESIS OF THE STUDY

A hypothesis is a tentative statement about the relationship between two or more variables.

Remember, a hypothesis does not have to be correct. While the hypothesis predicts what the

researchers expect to see, the goal of research is to determine whether this guess is right or

wrong.

• Null Hypothesis H0:

1) the firm is facing difficulty in paying short term debt.

2) the current liabilities are increasing than current asets year by year.

• Alternative Hypothesis H1 :

1) the firm is not facing difficulty in paying short term debt.

2) the current liabilities are decreasing than current asets year by year.

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BALANCE SHEET

PARTICULAR MARCH 21 MARCH MARCH MARCH MARCH

20 19 18 17

CURRENT ASSETS

CURRENT 4,488.47 2,189.65 2,983.96 3,937.49 3,606.70

INVESTMENT

Inventories 3,955.47 3,400.91 3,839.27 2,701.69 2,758.01

Trade receivables 2,342.85 2,998.98 3,946.30 3,172.98 2,938.84

Cash And Cash 6,255.42 4,236.51 3,731.66 2,893.73 1,687.48

Equivalents

Short Term Loans And 756.94 512.02 673.40 975.16 506.51

Advances

Other Current Assets 2,513.15 1,803.42 2,896.47 2,793.42 1,110.46

TOTAL CURRENT 20312.30 15,141.49 18,071.06 16,474.47 12,608.00

ASSETS

CURRENT

LIABILITIES

Short Term Borrowings 24.74 900.00 448.54 668.47 538.88

Trade Payables 9,988.16 6,785.83 9,678.15 8,603.40 6,881.08

Other Current Liabilities 4,633.79 2,691.43 3,518.71 3,383.95 1,648.61

Short Term Provisions 486.48 595.56 688.67 667.39 565.48

TOTAL CURRENT 15,133.17 10,972.82 14,334.07 13,323.21 9,634.05

LIABILITIES

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CHAPTER 4

RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY

• Research methodology is a way to systematically solve the research problem.

• It may be understood as a science of studying now research is done systematically.

• In that various steps, those are generally adopted by a researcher in studying his

problem along with the logic behind them.

• It is important for research to know not only the research method but also know

methodology.

• “The procedures by which researchers go about their work of describing, explaining

and predicting phenomenon are called methodology”.

• All this means that it is necessary for the researcher to design his methodology for his

problem as the same may differ from problem to problem.

• Data collection is important step in any project and success of any project will be largely

depend upon now much accurate you will be able to collect and how much time, money

and effort will be required to collect that necessary data, this is also important step.

• Data collection plays an important role in research work. Without proper data available

for analysis you cannot do the research work accurately.

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DATA COLLECTION

TYPES OF DATA COLLECTION

Data can be defined as the quantitative or qualitative values of a variable. Data is plural of

datum which literally means to give or something given. Data is thought to be the lowest unit

of information from which other measurements and analysis can be done. Data can be numbers,

images, words figures, facts or ideas. Data in itself cannot be understood and to get information

from the data one must interpret it into meaningful information. There are various methods of

interpreting data. Data sources are broadly classified into primary and secondary data.

IMPORTANCE OF DATA AND DATA COLLECTION

Data is one of the most important and vital aspect of any research studies. Researchers

conducted in different fields of study can be different in methodology but every research is

based on data which is analyzed and interpreted to get information.

Data is the basis unit in statistical studies. Statistical information like census, population

variables, health statistics, and road accidents records are all developed from data.

Data is important in computer science. Numbers, images and figures in computer are all data.

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TYPES OF DATA

PRIMARY DATA

Primary data is information collected directly from the first-hand experience. This is the

information that you gather for the purpose of a particular research project. Primary data

collection is a direct approach that fits to specific company needs. It can be a long process but

does provide important first-hand information in many business cases. Primary data is original

data – from the first source. It is like raw material.

Most popular examples of primary data sources are:

• Interview (personal interview, telephone, e-mail)

• Self-administered surveys and questionnaires

• Field observation

• Experiments

• Life histories

• Action research

• Case studies

• Diary entries, letters, and other correspondence

• Eyewitness accounts

• Ethnographic research

• Personal narratives, memoirs.

Advantages of primary data:

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• Resolve specific research issues

Performing your own research allows you to address and resolve issues specific to

your own business situation. The collected information is the exact information that

the researcher wants to know and he reports it in a way that benefits the specific

situation in an organization. Marketers and researchers are asked to find data

regarding specific market instead of finding data for the mass market. This is the main

difference from secondary data.

• Better accuracy

Primary data is much more accurate because it is directly collected from a given

population.

• Higher level of control

the marketer can control easily the research design and method. In addition, you have

a higher level of control over how the information is gathered.

• Up-to-date information

the primary market research is a great source of latest and up-to-date information as

you collect it directly from the field in real time. Usually, secondary data is not so up-

to-date and recent.

• You are the owner of the information

Information collected by the researcher is their own and is typically not shared with

others. Thus, the information can remain hidden from other current and potential

competitors.

Disadvantages:

• More expensive – it could be very expensive to obtain primary data collection

because the marketer or the research team has to start from the beginning. It means

they have to follow the whole study procedure, organizing materials, process and etc.

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• Time consuming – it is am matter of a lot of time to conduct the research from the

beginning to the end. Often it is much longer in comparison with the time needed to

collect secondary data.

• Can have a lot of limits - Primary data is limited to the specific time, place or

number of participants and etc. To compare, secondary data can come from a variety

of sources to give more details

What is secondary data?

Secondary data is the data that have been already collected for another purpose but has some

relevance to your research needs. In addition, the data is collected by someone else instead of

the researcher himself. Secondary data is second-hand information. It is not used for the first

time. That is why it is called secondary. Secondary data sources provide valuable

interpretations and analysis based on primary sources. They may explain in details primary

sources and often uses them to support a specific thesis or a point of view.

Most common examples of secondary data sources are:

• Previous research

• Mass media products

• Government reports

• Official statistics

• Web information

• Historical data

• Journal articles

• Biography

• Research analysis

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• Financial sources such as profit and loss statements balance sheets, inventory records,

sales records and etc.

Advantages of Secondary Data:

Time and Cost Effective

Generally, the secondary data can be collected very easily where researchers have to

find the source of that data and then collect it at all. Besides, the time and cost required to

collect this type of data is very lesser as compared to that of primary data. Hence, it can be said

that it is primary advantage of secondary data. This thing helps the researchers to collect the

data easily and without spending much time and financial resources.

Ease of Access

In order to access good secondary data, the marketers visit libraries or the places where the

secondary data can be found easily. Besides, internet has also made the secondary data also

very much easier to access and it can be said as another advantage of the secondary data. As

an example of a research study, the literature review can be said as a secondary data which can

be accessed very easily.

Disadvantages of Secondary Data

The disadvantages of the secondary data can include a number of things. Following are some

of them:

• Not Specific to One’s Needs

In many forms of the secondary research data, it is not specific to the needs of a

researcher. Therefore, the researcher cannot only rely on the secondary research data and it is

not of much use to him. It can be exemplified better by stating a simple scenario. For example,

a person or organization that collected the data for it will be saved as secondary data for future

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researches. However, the future researchers who will use that data as secondary data might not

find it appropriate and specific to their needs.

• Biasness

The secondarily collected data is usually collected by someone else than the one who

uses it. Hence, generally the secondary data is biased in the favour of one who collected it and

might not necessarily meet with the requirements of another researcher. In addition, biasness

can also refer to the disadvantage in terms of the researcher manipulating the secondary data.

• Lack of Availability

This can also be said as other disadvantages where the secondary data might not be available

and accessible easily. Sometimes, it can be the case that researcher may not be able to find the

exactly relevant and appropriate secondary available data. Sometimes, a researcher conducting

a study on a particular topic does not find himself in a position to find the data which addresses

his research question and purpose in a proper manner.

• Time Lag Issues

Information which is collected from secondary sources such as books and historical surveys

might not sync with the times and it can change drastically. Hence, this can emerge as another

disadvantage of the secondary research data where the time lag issue rises and as a result, it

can be highly risky for the business or a project.

In my project report I have used secondary data for analysis of working capital management

of Mahindra & Mahindra.

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CHAPTER 5
DATA ANALYSIS AND INTERPETION

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DATA ANALYSIS AND INTERPRETATION

LIQUIDITY RATIOS:-

• CURRENT ASSET:-

YEAR CURRENT ASSETS

MARCH 17 12608

MARCH 18 16474.47

MARCH 19 18071.0

MARCH 20 15141.49

MARCH 21 20312.30

25000

20132.3
20000 18071
16474.47
15141.49
15000
12608

10000

5000

0
2017 2018 2019 2020 2021

INTERPRETATION

Current assets of the company are increasing continuously from 10128.21 to 18071 from the

year march 2015 to march 2019.

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• CURRENT LIABILITY:-

YEAR CURRENT LIABILITIES

MARCH 17 9634.05

MARCH 18 13323.21

MARCH 19 14334.07

MARCH 20 10972.82

MARCH 21 15133.17

16000 15133.17
14334.07
14000 13323.21

12000 10972.82
9634.05
10000

8000

6000

4000

2000

0
2017 2018 2019 2020 2021

INTERPRETATION

Current liabilities of the company are increasing continuously from 8974.27 to 14334.07 from

the year march 2015 to march 2019. When companies have minimum liabilities it creates a

better goodwill in market. High current liabilities indicate that company is using credit facilities

by creators.

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• CURRENT RATIO:-
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺
CURRENT RATIO = 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

YEAR CURRENT ASSETS CURRENT LIABILITIES RATIOS

MARCH 17 12608 9634.05 1.31

MARCH 18 16474.47 13323.21 1.24

MARCH 19 18071.0 14334.07 1.26

MARCH 20 15141.49 10972.82 1.37

MARCH 21 20132.30 15133.17 1.34

1.4
1.37

1.35 1.34

1.31
1.3
1.26
1.25 1.24

1.2

1.15
2017 2018 2019 2020 2021

INTERPRETATION

Current ratio of the company is increasing continuously from 1.31 to 1.34 from the year march

2017 to march 2019. And it decreases from 1.31 to 1.24 from march 2017 to march 2018 and

it further slightly increase from 1.24 to 1.26 from march 2018 to march 2019. As the current

ratio in slightly decline from March 2017 to march 2019 the company needs to improve its

position.

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• QUICK RATIO:-

𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻−𝑰𝑵𝑽𝑬𝑵𝑻𝑶𝑻𝒀
QUICK RATIO =
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

YEAR CURRENT ASSETS - CURRENT LIABILITIES RATIOS

INVENTORY

MARCH 17 9849.99 9634.05 1.02

MARCH 18 13772.78 13323.21 1.03

MARCH 19 14231.79 14334.07 0.99

MARCH 20 11740.58 10972.82 1.06

MARCH 21 16356.83 15133.17 1.08

1.1
1.08
1.08
1.06
1.06

1.04 1.03
1.02
1.02

1 0.99

0.98

0.96

0.94
2017 2018 2019 2020 2021

INTERPRETATION

Quick ratio of the company is increasing continuously from 1.02 to 1.03 from the year march

2017 to march 2018 but it slightly decreases from 1.03 to 0.99 from March 2018 to March

2019. A company should have quick ratio greater than 1 so that it can pay for its current

liabilities easily. The company has to improve its quick ratio for smooth pay of current

liabilities.

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• WORKING CAPITAL:-

WORKING CAPITAL
= 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺 – 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

YEAR CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL

MARCH 15 12608 96634.05 2973.95

MARCH 16 16474.47 13323.21 3151.26

MARCH 17 18071.0 14334.07 3736.99

MARCH 18 15141.49 10972.82 4168.67

MARCH 19 20312.30 15133.17 5179.13

6000
5179.13
5000
4168.67
4000 3736.99
3151.26
2973.95
3000

2000

1000

0
2017 2018 2019 2020 2021

INTERPRETATION

Working capital of the company is increasing continuously from 2973.95 to 5179.13 from the

year march 2017 to march 2021. From this we can conclude that the current assets of the

company are higher than the current liabilities.

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• INVENTORY TURNOVER RATIO:-

𝑺𝑨𝑳𝑬𝑺
INVENTORY TURNOVER =
𝐈𝐍𝐕𝐄𝐍𝐓𝐎𝐑𝐘

YEAR SALES INVENTORY RATIOS

MARCH 15 43785.36 2758.01 15.97

MARCH 16 48685.55 2701.69 18.02

MARCH 17 53614 3829.27 13.96

MARCH 18 45487.78 3400.91 13.37

MARCH 19 45040.98 3955.47 11.38

20
18.02
18
15.97
16
13.96
14 13.37

12 11.38

10
8
6
4
2
0
2017 2018 2019 2020 2021

INTERPRETATION

Inventory turnover ratio of the company is increasing from 15.97 to 18.02 from the year march

2017 to march 2018. But in March 2018 to march 2019 it slightly decreases from 18.02 to

13.96. The company has to improve its position so that the stocks are frequently sold and less

amount of money is required to finance the inventory

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• WORKING CAPITAL TURNOVER RATIO :-

YEAR NET SALES WORKING CAPITAL RATIOS

MARCH 17 43785.36 2973.95 14.72

MARCH 18 48685.55 3151.26 15.45

MARCH 19 53614 3736.99 14.35

MARCH 20 45487.78 4168.67 11.0

MARCH 21 45040.98 5179.13 8.69

𝑺𝑨𝑳𝑬𝑺
WORKING CAPITAL =
𝑾𝑶𝑹𝑲𝑰𝑵𝑮 𝑪𝑨𝑷𝑰𝑻𝑨𝑳

18

16 15.45
14.72 14.35
14

12 11

10 8.69
8

0
2017 2018 2019 2020 2021

INTERPRETATION

Working capital turnover ratio of the company is decreasing continuously from 14.72 to 8.69

from the year march 2017 to march 2021. This is because the current liabilities are increasing

therefore the working capital turnover ratio is decreasing.

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• CURRENT ASSET TURNOVER RATIO:

𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
CURRENT ASSET TURNOVER RATIO=
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺

YEAR NET SALES CURRENT ASSETS RATIOS

MARCH 15 43785.36 12608 3.76

MARCH 16 48685.55 16474.47 3.00

MARCH 17 53614 18071.06 2.97

MARCH 18 45487.78 15141.49 3.00

MARCH 19 45040.98 20312.30 2.217

4 3.76

3.5
3 2.97 3
3

2.5 2.217
2

1.5

0.5

0
2017 2018 2019 2020 2021

INTERPRETATION

Current assets turnover ratio of the company is decreasing continuously from 3.76 to 2.217

from the year march 2017 to march 2021. High current assets indicate the capability of the

organisation to achieve maximum sales with the minimum investment in current assets. But

the current asset turnover ratio is decreasing so the company needs more source of finance.

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• DEBETORS TURNOVER RATIO:-

𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
Debtors Turnover Ratio =
𝑨𝑽𝑬𝑹𝑨𝑮𝑬 𝑨𝑪𝑪𝑶𝑼𝑵𝑻𝑺 𝑹𝑬𝑪𝑬𝑰𝑽𝑨𝑩𝑳𝑬

YEAR RATIO

MARCH 17 16.17

MARCH 18 15.93

MARCH 19 15.06

16.4
16.17
16.2
16 15.93

15.8
15.6
15.4
15.2 15.06
15
14.8
14.6
14.4
2017 2018 2019

INTERPRETATION

Debtor’s turnover ratio of the company is decreasing from 16.17 to 15.06 from March 2017 to

March 2019. This means that the average collection is taking longer time.

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HYPOTHESIS TESTING

• Null Hypothesis H0:

1) The firm is facing difficulty in paying short term debt.

2) The current liabilities are increasing than current assets year by year.

• Alternative Hypothesis H1 :

1) The firm is not facing difficulty in paying short term debt.

2) The current liabilities are decreasing than current assets year by year.

1. From the above research study it is found that the null hypothesis 1 among HO i.e. the

firm is facing difficulty in paying short term debt found to be correct/ true hence it is

accepted Whereas Alternative hypothesis 1 among H1 the firm is not facing difficulty

in paying short term debt is rejected.

2. From the above research study it is found that the null hypothesis 1 among HO i.e. the

current liabilities are increasing than current assets year by year. difficulty in paying

short term debt found to be correct/ true hence it is accepted Whereas Alternative

hypothesis 1 among H1 i.e. the current liabilities are decreasing than current assets year

by year is rejected.

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CHAPTER 6

LIMITATIONS AND CONCLUSION

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LIMITATIONS OF THE STUDY

• This project has completed with the annual reports; it just constitutes one part of data
collection i.e secondary data.

• This project is based on 5 years annual report. Conculsion and recommendation are

based on such limited data. The trend of last 5 years may or may not reflect the real

working capital position of the company.

• Many facts and data are such that they are not to be disclosed because of the

confidential nature of the same.

• There may be some fractional differences in the calculated ratios.

• Also this project is completely based on secondary data collected from various sources

like internet, books, etc.

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CONCLUSION

• Working capital of the company is increasing and showing positive working capital

per year. It shows goods liquidity position.

• Positive working capital indicates that company has the ability of payment of short

term debts.

• Working capital of the company increases because the current assets of the company

are more than the current liabilities of the company.

• Current ratio of the company is increasing which means company has the ability to

pay the short terms debts.

• Quick ratio is less than 1 in march 2019 which means the company may not able to

fully pay off its current liabilities.

• Current assets turnover ratio of the company is decreasing means the company needs

more finance.

• Debtor’s turnover ratio is decreasing means the average collection is taking longer

time.

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CHAPTER 7

SUGGESTIONS

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SUGGESTIONS

• The company should follow the present working capital.

• The company should maintain the same current ratio.

• The company should increase its quick ratio so that it is able to pay off its current

liabilities.

• The company should increase its current assets turnover ratio.

• Debtor’s turnover ratio should be increase.

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CHAPTER 8

BIBLIOGRAPHY

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BIBLIOGRAPHY

Book preferred:-

• FINANCIAL MANAGEMENT-BY.KHAN&JAIN

• ESSENTIALS OF WORKING CAPITAL MANAGEMENT BY

JAMES S. SAGNER

• MANAGEMENT OF WORKING CAPITAL BY S.P. GUPTA

Magazine:-

• Business Today

• Business world

Newspapers:-

➢ The Time of India

➢ Economics Times

Web Site

✓ www.scribd.com

✓ www.google.com

✓ www.wikipedia.com

✓ www.mahindra&mahindra.com

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