ANALYSIS OF WORKING CAPITAL MANAGEMENT

At

Project Report
In partial fulfilment of the fourth semester requirements
for the award of the Degree of
Master of Business Administration
Mahatma Gandhi University, Kottayam.
Submitted by
SANDRA NINAN
Reg. No. 22114090
Under the Guidance of
Ms. Sherry Ritha Antony

Assistant Professor, MBA Department

2021-2023
 DECLARATION

I do hereby declare that this Project Report on “Analysis of working capital management” at
Camino Infotech Private Limited, Ernakulam submitted to Mahatma Gandhi University in
partial fulfilment of the requirements of fourth semester of Master of Business Administration,
was carried out by me during the period of my study, 2021-2023 at Berchmans Institute of
Management Studies, Changanachery under the guidance of Ms. Sherry Ritha Antony

The Project report is a record of the original work done by me and no part of it has been
submitted earlier for award of any Degree, Post-Graduation or similar title of any other
University or Institution.

Place: Changanachery Sandra Ninan

Date:
ACKNOWLEDGEMENT

First of all, I thank God almighty for his abundant grace and mercy which enabled us in the
finalization of this project study. The support and help of a few people not only enabled us to
complete my project successfully, but also made it a worthwhile experience. I thank the
management for providing all the infrastructure and facilities. I am grateful to Fr. Reji P
Kurian, Principal, BIMS, and Dr. Thomas Varghese, Director, Berchmans Institute of
Management Studies for providing us the best facilities and atmosphere for the development
and implementation of our project. I thank Mr. Sony Joseph, HOD for his encouragement and
support, also I thank my guide Ms Sherry Ritha Antony for his valuable suggestions and
support.

I express my deep sense of gratitude to Mr. Vysakh k B, managing director at CAMINO

INOTECH for giving me an opportunity to do the project in the company.

I record my sincere thanks to my parents and my classmates for their encouragement at various
stages of the study

Sandra Ninan
 TABLE OF CONTENTS

CHAPTERS TOPIC PAGE

NO
Chapter-1 INTRODUCTION
1.1 General introduction
1.2 Statement of the problem
1.3 Significance of the study
1.4 Scope of the study
1.5 Objectives of the study
1.6 Limitations of the study
Chapter-2 REVIEW OF LITERATURE
2.1 Theoretical review
2.2 Conceptual review
Chapter-3 INDUSTRY AND ORGANIZATIONAL
PROFILE
3.1 Industry profile
3.1.1-3.1.4 Industrial performance- global, national and
regional
3.1.5 Prospects and challenges
3.2 Organizational profile
3.2.1 Mission, vision and quality statement
3.2.2 Product profile
Chapter-4 RESEARCH METHODOLOGY
4.1 Research design
4.2 Background of the topic
4.3 Methods of data collection
4.4 Tools and techniques of analysis
 Chapter-5 DATA ANALYSIS AND
INTERPRETATION
5.1.1 Calculation of current asset
5.1.2 Calculation of current liabilities
5.1.3 Calculation of working capital
5.1.4 Calculation of current ratio
5.1.5 Calculation of quick ratio
5.1.6 Calculation of working capital turnover ratio
5.1.7 Calculation of gross profit ratio
5.1.8 Calculation of net profit ratio

List of Tables
List of Tables Topic Page no

Table 1 Current asset

Table 2 Current liabilities
Table 3 Working capital
Table 4 Current ratio
Table 5 Quick ratio
Table 6 Working capital turnover ratio
Table 7 Gross profit ratio
Table 8 Net profit ratio
 LIST OF FIGURES
List of TOPIC Page no
Figures
Figure 1 Current asset
Figure 2 Current liabilities
Figure 3 Working capital
Figure 4 Current ratio
Figure 5 Quick ratio
Figure 6 Working capital turnover ratio
Figure 7 Gross profit ratio
Figure 8 Net profit ratio
 CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
The life or death of any business enterprise depends upon the availability of cash. A Business
firm / enterprise incurring losses still survive because of sufficiency of cash. Similarly, lack of
cash can give rise to failure in the face of actual or prospective earnings. Efficient cash planning
through a relevant and timely cash budget may enable a firm to obtain optimum working capital
and ease the strains of a cash shortage, facilitating temporary investment of cash and proving
funds for funds for normal growth. Many company/ factories are interested in increasing their
profits. However, very few companies worry about managing their working capital. Many
companies fail due to bad management of working capital. They may be profitable, but they
are not able to pay their bill. Working capital management involves the relationship between a
company’s short-term assets and its short-term liabilities. The goal of working capital
management is to ensure
thatacompanyisabletocontinueitsoperationandthatithassufficientabilitytosatisfyboth maturing
short-term debt and upcoming operational expenses. The management of working capital
involves managing inventories, accounts receivable and payable and cash management
Working capital refers to the amount of capital that is readily available to an organization.
Organization needs both-terms and short-term fund, Funds are needed for long-term purposes
of fixed assets, such as plant and machinery, land building, furniture. Funds are also required
for short-term purpose like purchases of raw materials, payment of wages and other day-to-day
expenses.

Working capital Managements takes place at two levels:

1. Ratio Analysis can be used to monitor overall trends in working capital and to identify areas
requiring management.

2. The individual components of working capital can effectively managed by using various
techniques and strategies. When considering these techniques and strategies, company needs
to recognize that each department has a unique mix of working capital components. The
emphasis that needs to be placed on each component varies according to the department.

Liquidity and profitability are two more important and major aspects of corporate business life.
No firms can survive, if it has no liquidity. A firm may exist without making profits but cannot
survive without liquidity may soon meet with its downfall and ultimately die. Working capital
management is thus a basic and broad measure of judging the performance of a business.
Furthermore, working capital management is not an end in itself. It is an integral part of a
company’s overall management. The needs of efficient working capital management must be
considered in relation to other aspects of the company’s financial and non-financial
performance.

1.2 STATEMENT OF THE PROBLEM

A study on ‘Analysis of Working Capital Management’ at ‘CAMINO INFOTECH PVT LTD’

is undertaken in order to know the relationship between the working capital management and
financial performance of the company and also to know the strength and weakness and to assess
the profitability of the company. Working Capital is the backbone of an organization. Under
the present inflationary condition, management of Cash is perhaps more important than even
management of profit and this requires greatest attention and efforts of the finance manager It
needs vigilant attention as cash of its components require different types of treatment and it
throws constant attention on exercise of skill and judgment, awareness of economic trend etc,
due to urgency and complicacy the vital importance of Working Capital Management Hence,
the present study entitled “Analysis of Working Capital Management has been taken up.

1.3 SIGNIFICANCE OF THE STUDY:

• This study makes an attempt (0 understand the working capital at short span of time.
• The study helps to understand the financial performance of the company.
• It also provides suggestions for the improvement and development of company.

A study on “Analysis of Working Capital Management with reference to CAMINO

INFOTECH PVT LTD” is very significant in the improvement company present scenario.
Company wants to control the overall cost and maximization of their profit.
1.4 SCOPE OF THE STUDY:

The topic covered under this study is “Analysis of Working Capital Management at CAMINO
INFOTECH PVT LTD”.

1. This study shows the relationship between working capital and company

financial performance.

2. This study will show the liquidity position of the company and also show

how do they maintain a particular liquidity position.

3. The study was done using annual reports, company manual etc. during

the period from 2018.

4. This study gives the brief information about the components of the

working capital management.

1.5 OBJECTIVES OF THE STUDY

1. To examine the relationship between working capital management and financial

performance.
2. To study how the company maintain its components of the working capital for the past
5 years.
3. To analyse the trend in working capital management of the company for the past 5
years.
4. To study the liquidity position of the company
1.6 LIMITATIONS OF THE STUDY
1. Only the printed data about the company will be available and not the
back-end details.
2. Due to shortage of time, it is not possible to cover all the factors and
details regarding the subject of study.
3. This study is based on secondary data.
4. The study was restricted to CAMINO INFOTECH PVT LTD Only.
 CHAPTER 2

REVIEW OF LITERATURE
2.1 THEORETICAL REVIEW

Working capital management is best described as the administration of all aspects of current
assets and current liabilities. It is concerned with the problems that arise in the management of
current assets, current liabilities and the interrelationships that exist between them. The primary
objective of working capital management is to manage the firm's current assets and current
liabilities in such a way that the satisfactory amount of working capital is maintained i.e., it is
neither inadequate nor excessive. Both inadequate and excessive working capital are
dangerous. Inadequate working capital may lead to stoppage of production. ‘Working capital
management refers to the management of current assets and current liabilities. Working capital
management is a managerial strategy of maintaining efficient levels of components of working
capital current assets & current liabilities, The term current assets refer to those assets, which
in the ordinary course of business, turns into cash, working capital management is concerned
with maintaining an adequate amount of working capital, which is neither excessive or
inadequate. Both excess and inadequate working capitals are not good for proper functioning
of any business concern. Both excess and inadequate working capitals are dangerous to
business. Therefore, a business concern should maintain an adequate amount of working
capital.

Working capital differs from fixed capital in terms of time required to recover the investment
in a given asset. In case of fixed capital or long-term asset such as land, building and equipment,
a firm usually needs several years or more to recover the initial, investment in contrast, working
capital is turned over or circulated at a relatively repaid rate. There are two concept of working
capital gross and net working capital. Generally, the working capital has its significance in two
perspectives. There are gross working capital and net working capital are called “Balance sheet
Approach” of working capital.

2.1.1 GROSS WORKING CAPITAL:

The terms ‘gross working capital” refers to the firm's investment in current asset, The amount
of current liabilities is not deducted from total of current asset.
2.1.2 NET WORKING CAPITAL:

The term ‘net working capital’ refers to the excess of current assets over current liabilities. It
refers to the difference between current assets and current liabilities. the net working capital is
qualitative concept which indicates the liquidity position of a firm and the extent to which
working capital needs may be financed by permanent source of fund. The ‘positive net working
‘represents the excess of current assents over current liabilities. The networking capitals turn
to be negative when current liabilities are exceeding the current asset. The negative ‘working
capital’ position will adversely affect the operation of the firm and its profitability. Working
capital is also to of permanent and temporary working capital. Working capital management
aims at more efficient use of a company's resources by monitoring and optimizing the use of
current assets and liabilities. The goal is to maintain sufficient cash flow to meet its short-term
operating costs and short-term debt obligations and maximize profitability. Working capital
management is key to the cash conversion cycle (CCC), or the amount of time a firm uses to
convert working capital into usable cash.

2.1.3 Requirement for Maintaining an Adequate Amount of Working Capital

1. Smooth supply of raw materials:

Raw material is essential for production and an adequate amount of Working Capital
ensures sufficient amounts of funds to carry day-to-day operations and hence raw materials
supply can be ensured on a regular basis.
2. Benefit during purchase:
Optimum amount of Working Capital ensures sufficient amounts of cash to meet the daily
expense. If raw materials can be purchased in bulk and most importantly in cash then
facilities of cash discount can be obtained.
3. Continuity in production:
The optimum amount of working Capital ensures continuity in production without any
interruption due to fund crisis.

4. Regularity in wage payment:

Sufficient amount of Working Capital ensures regularity in payment of wages to

employees which also prevent any sort of discontent among employees.
5. Regularity in payment of other expenses:

Overhead cost is also another important element of cost of production. Ample amount
of Working Capital ensures regularity in payment of overhead expenses other than materials
and labour.

6. Creating goodwill:

Adequate Working Capital assures timely payment of debt and all expenses, which helps in
creating goodwill in the market.

7. Solvency:

Repaying short-term obligations at the right time indicates a good solvency position of the
business.

8. Easy availability of loan:

Adequate Working Capital facilitates easy availability of loans from banks and other financial
institutions since sufficient Working Capital indicates a solvent position of the business with a
good debt-repaying capacity.

9. Helps to tide over the situation of crisis:

Adequate or sufficient amount of Working Capital helps to tide over the situation of crisis if it
arises during the recession period of an economy. Strong and healthy Working Capital base
ensures availability of funds for meeting day-to-day expenses.

10. Ensuring assured Return on Investment:

Adequate Working Capital ensures smooth availability of day-to-day funds. Sufficient

Working Capital helps to procure raw materials easily and helps to make payments easily
thereby making the production process smooth. Fast rotation of Working Capital ensures higher
profit and less inventory level, which thereby ensures higher payment of dividend to
shareholders and interest to fund providers.

11. Gaining confidence of third parties and creditors:

Smooth and strong Working Capital base assists in gaining the confidence of third parties and
creditors by making their payments timely.
12. Optimum utilisation of fixed assets:

Sufficient Working Capital ensures optimum utilisation of fixed assets. Fixed assets should be
utilised optimally, i.e., to obtain higher return at a minimum cost. Strong Working Capital base
ensures optimum utilisation of fixed assets thereby helping to absorb the other charges relating
to the fixed assets.

13. Increase in efficiency:

Adequate Working Capital helps to make payments at the right time, facilitates the purchase
of raw materials, meeting expenses at the right time, thereby ensuring smooth production which
in turn helps to increase the morale of employees and hence the overall efficiency of the
business.

Working Capital indeed has a significant role in maintaining a smooth and uninterrupted flow
of production. The importance of Working Capital cannot be ignored by a business; hence
every business should try to ensure that a strong base of Working Capital is maintained.

2.1.4 OPERATING CYCLE

The operating cycle is the average period of time required for a business to make an initial
outlay of cash to produce goods, sell the goods, and receive cash from customers in exchange
for the goods. This is useful for estimating the amount of working capital that a company will
need in order to maintain or grow its business.

A company with an extremely short operating cycle requires less cash to maintain its
operations, and so can still grow while selling at relatively small margins. Conversely, a
business may have fat margins and yet still require additional financing to grow at even a
modest pace, if its operating cycle is unusually long. If a company is a reseller, then the
operating cycle does not include any time for production - it is simply the date from the initial
cash outlay to the date of cash receipt from the customer.

2.1.5 FACTORS DETERMINING WORKING CAPITAL:

• Nature or Character of Business:

The working capital requirements of a firm basically depend upon the nature of its business.
Public utility undertakings like Electricity, Water Supply and Railways need very limited
working capital because they offer cash sales only and supply services, not products, and as
such no funds are tied up in inventories and receivables.

On the other hand, trading and financial firms require less investment in fixed assets but have
to invest large amounts in current assets like inventories, receivables and cash as such they
need large amount of working capital.

• Size of Business/Scale of Operations:

The working capital requirements of a concern are directly influenced by the size of its business
which may be measured in terms of scale of operations. Greater the size of a business unit,
generally larger will be the requirements of working capital.

However, in some cases even a smaller concern may need more working capital due to high
overhead charges, inefficient use of available resources and other economic disadvantages of
small size.

• Production Policy:

In certain industries the demand is subject to wide fluctuations due to seasonal variations. The
requirements of working capital, in such cases, depend upon the production policy.

The production could be kept either steady by accumulating inventories during slack periods.
with a view to meet high demand during the peak season or the production could be curtailed
during the slack season and increased during the peak season. If the policy is to keep production
steady by accumulating inventories it will require higher working capital.

• Manufacturing Process/Length of Production Cycle:

In manufacturing business, the requirements of working capital increase in direct proportion to

length of manufacturing process. Longer the process period of manufacture, larger is the
amount of working capital required. The longer the manufacturing time, the raw materials and
other supplies have to be carried for a longer period in the process with progressive increment
of labour and service costs before the finished product is finally obtained. Therefore, if there
are alternative processes of production, the process with the shortest production period should
be chosen.
 • Seasonal Variations:

In certain industries raw material is not available throughout the year. They have to buy raw
materials in bulk during the season to ensure an uninterrupted flow and process them during
the entire year. A huge amount is, thus, blocked in the form of material inventories during such
season, which gives rise to more working capital requirements. Generally, during the busy
season, a firm requires larger working capital than in the slack season.

• Working Capital Cycle:

In a manufacturing concern, the working capital cycle starts with the purchase of raw material
and ends with the realization of cash from the sale of finished products. This cycle involves
purchase of raw materials and stores, its conversion into stocks of finished goods through work-
in- progress with progressive increment of labour and service costs, conversion of finished
stock into sales, debtors and receivables and ultimately realization of cash and this cycle
continues again from cash to purchase of raw material and so on.

• Rate of Stock Turnover:

There is a high degree of inverse co-relationship between the quantum of working capital and
the velocity or speed with which the sales are affected. A firm having a high rate of stock
turnover will need lower amount of working capital as compared to a firm having a low rate of
turnover.

• Credit Policy:

The credit policy of a concern in its dealings with debtors and creditors influence considerably
the requirements of working capital. A concern that purchases its requirements on credit and
sells its products/services on cash requires lesser amount of working capital.

On the other hand, a concern buying its requirements for cash and allowing credit to its
customers, shall need larger amount of working capital as very huge amount of funds are bound
to be tied up in debtors or bills receivables.
2.2 CONCEPTUAL REVIEW

(Mosa Ahmadi, 2012)This study has investigated the relationship between working capital
management and profitability at companies of food industry group member at Tehran Stock
Exchange. 33 companies were selected for a period of five years from 2006-2011 and the effect
of various variables of working capital management including average accounts collection
cycle, inventory turnover, medium-term debt payment and the cash conversion cycle on
operational net profit of companies. The findings of the research proved that managers can
create a positive value for stockholders by decreasing collection cycle, debt payment period,
inventory turnover, and cash conversion cycle to the lowest possible level.

(Olufisayo, 2012)The article examines the relation between working capital management and
profitability for a sample of 66 Nigerian non-financial firms for the period 1997–2007. Trade
credit policy and inventory policy are measured by number of days accounts receivable,
accounts payable and inventories; and the cash conversion cycle (CCC) is used as a
comprehensive measure of working capital management. The results suggest that firm’s
profitability is reduced by lengthening the number of days accounts receivable, number of days
of inventory and number of days accounts payable. The result shows that shortening the CCC
improves the profitability of the firms.

(Bhunia, 2012)This study aims at providing an idea about the and vice versa. The findings
show that there is a bidirectional causal relationship between working capital management and
profitability, and a unidirectional causal relationship running from liquidity to profitability.
Accordingly, the paper concludes, in its attempt to investigate the directional long run
relationship between gross operating profit, cash conversion cycle and current ratio, that
managers should concentrate on managing working capital efficiently in order to generate cash
and profits to their firms, besides mangers of profitable firms tend to manage their working
capital efficiently. For policy makers, this study, confirms the necessity of future researches
about efficiency of working capital management, trade-off between liquidity and profitability,
and directional relationship of components of working capital management on profitability.

(frank kabuye, 2019) The purpose of this paper is to examine the contribution made by the
internal control systems and working capital management on financial performance of
supermarkets. Contrary to previous thinking internal control systems do not significantly
predict financial performance. Therefore, once organizations have appropriate working capital
management, they are also likely to have adequate internal control systems that enhance
financial performance. The results are important for internal control and working capital policy
development, for example, in terms of prescribing the internal control systems and working
capital requirements for the organizations to enhance financial performance.

(Venancio tauringanga, 2013) This paper aims to report the results of an investigation of the
relative importance of working capital management, measured by the cash conversion cycle
(CCC), and its components (inventory, accounts receivable and accounts payable) to the
profitability of SMEs. Panel data analysis results show that the management of accounts
payable (AP) and accounts receivable (AR) is important for SMEs profitability. However, AP
management is relatively more important than AR management. Inventory and CCC
management is not important for SMEs profitability. Questionnaire results suggest that
management of CCC and all its components is perceived as important for SMEs profitability.
In terms of relative importance, AR management is most important, followed by AP, INV and
CCC respectively.

(Rimo, 2010)This study investigates the effect of company characteristics on the working
capital management. In this study researchers used quantitative method to examine the
relationship between company characteristics and the cash conversion cycle as a measure of
working capital management in Swedish listed companies. The company characteristics
include profitability, operating cash flow, company size, sale growth, current ratio and debt
ratio. The sample consists of 40 companies in the large cap investment segment listed on
NASDAQ OMX Stockholm Exchange. Financial data are extracted from companies’ annual
reports of year 2007 and 2008 in order to calculate financial ratios used in the study. there is a
significant positive association between profitability and the cash conversion cycle. And the
cash conversion cycle have significant negative relationship with operating cash flow,
company size and sale growth.

(padachi, 2006) The purpose of this paper is to examine the trends in working capital
management and its impact on firms’ performance. The trend in working capital needs and
profitability of firms is examined to identify the causes for any significant differences between
the industries. The dependent variable, return on total assets is used as a measure of profitability
and the relation between working capital management and corporate profitability is
investigated for a sample of 58 small manufacturing firms, using panel data analysis for the
period 1998 – 2003. The regression results show that high investment in inventories and
receivables is associated with lower profitability. The findings also reveal an increasing trend
in the short-term component of working capital financing.

(kandpal, 2015) this paper to study the working capital components and the effect of working
capital management policies on the profitability of 10 Infrastructure companies. The paper also
tries to study the correlation between liquidity, profitability and Profit before Tax (PBT) of
selected Infrastructure companies. The study is based on secondary data collected from annual
reports of different Infrastructure companies and PROWESS (CMIE Database) for the period
2007 to 2012. In this paper, there is an application of correlation and regression analysis to
identify the significant effects of Working capital management on profitability. The
Management of operating capital is indispensable as it might induce a direct impact on
profitability and liquidity.

(Kabethi, 2013) This paper analyses whether SMEs in Kenya carry out working capital
management and the effect of Working Capital Management (WCM) on the financial
performance of SMEs in Kenya. The study employed a quantitative research design which was
useful in establishing the relationship of working capital management and financial
performance. The WCM components used for the purpose of this study were, Accounts
Payable Period (APP), Inventory Conversion Period (ICP) and Average Collection Period
(ACP). Return on Assets (ROA) was used as the proxy for financial performance. The results
of the study indicate that 62.9% of the SME’s in Kenya do not have a written policy on WCM.

(thimmaiah, 2016) in their paper titled working capital management its impact on liquidity and
profitability a study of coal India ltd makes an attempt to give a conceptual insight on working
capital management and assess its impact on liquidity and profitability of coal India ltd the
liquidity and profitability trade of has becomes an important aspect for all the organization the
attempt also has been made to test the liquidity and profitability position by using correlation
and spearman’s rank method the correlation spear man ranking method indicates weak
correlation and negative relationship between liquidity and profitability the total’s test has also
been applied to test the liquidity performance.

(Ayneshet, 2019) The purpose of this study is to investigate the effect of working capital
management on profitability. The study aims to examine the statistical significance between
component of working capital management and
firm’s profitability. In light of this objective the study adopted quantitative method of researc
h approaches to test a series research hypothesis. Specifically, the study used survey of
documentary analysis of companies audited financial statements. companies’ managers can
create profits or value for their companies and shareholders by handling correctly the cash
conversion cycle and keeping each different component of working capital to a
possible optimum level. There searcher found that there is a significant negative relationship
between liquidity and profitability. Moreover, the study finds that there is a significance
positive relationship between size and firm profitability. Meanwhile the study found that there
is positive relationship between firm’s growths and firm’s profitability.

(caballero, 2010) This paper analyses the determinants of Cash Conversion Cycle (CCC) for
small- and medium-sized firms. It has been found that these firms have a target CCC length to
which they attempt to converge, and that they try to adjust to their target quickly. The results
also show that it is longer for older firms and companies with greater cash flows. In contrast,
firms with more growth opportunities, and firms with higher leverage, investment in fixed
assets and return on assets have a more aggressive working capital policy.

(Bhatt, 1972) widely touches upon a method of appraising working capital finance applications
of large manufacturing concerns. It states that similar methods need to be devised for other
sectors such as agriculture, trade etc. The author is of the view that banks while providing short-
term finance, concentrate their attention on adequacy of security and repayment capacity. On
being satisfied with these two criteria they do not generally carry out any detail appraisal of the
working of the concerns.

(Smith, 1973) believes that Research which concerns shorter range or working capital decision
making would appear to have been less productive. The inability of financial managers to plan
and control properly the current assets and current liabilities of their respective firms has been
the probable cause of business failure in recent years. Current assets collectively represent the
single largest investment for many firms, while current liabilities account for a major part of
total financing in many instances. This paper covers eight distinct approaches to working
capital management. The first three – aggregate guidelines, constraints set and cost balancing
are partial models; two other approaches - probability models and portfolio theory, emphasize
future uncertainty and interdepencies while the remaining three approaches -mathematical
programming, multiple goals and financial simulation have a wider systematic focus.

(Natarajan Sundar 1980) is of the opinion that working capital is important at both, the nation
al and the corporate level. Control on working capital at thenational level is exercised
primarily through credit controls. The Tandon Study Group has provided a comprehensive
operational framework for the same. In operational terms, efficient working capital consists of
determining the optimum level of working capital, financing it imaginatively and exercising
control over it. He concludes that at the corporate level investment in working capital is an
important as investment in fixed assets. And especially for a company which is not growing,
survival will be possible only so long as it can match increase in operational cost with improved
operational efficiency, one of the most important aspects of which is management of working
capital.

(Raokv, 1991) observe the strong and weak points of conventional techniques of working
capital analysis. The result has been obviously mixed while some of the conventional
techniques which could comprehend the working capital behaviour well; others filed in doing
the job properly. The authors have attempted to evaluate the efficiency of workingcapital
management with the help of conventional techniques i.e., ratio analysis. The article concludes
prodding future scholars to search for a comprehensive and decisive yardstick in evaluating the
working capital efficiency.

(Hossain, 1997)emphasise
the basic objective of working capital management i.e., to arrange the neededworking capital
funds at the right time, at right cost and from right source with a view to achieving a trade-off
between liquidity and profitability. The analysis reveals that BTMC had followed an aggressive
working capital financing policy taking the risk of liquidity. There was uninterrupted increasing
trend in negative net working capital throughout the period of the study which suggested that
BTMC had exploited the entire short-term sources available to it without considering the actual
needs.

(Singaravel, 1999) focuses on the interdependency among working capital, liquidity and
profitability, of which sufficiency of liquidity comes in the
first preference followed by sufficiency of working capital and profitability. Thearticle is an
in-depth analysis of liquidity and its interrelationship with working capital and profitability. As
the working capital, liquidity and profitability are in triangular position, none is dispensable at
the satisfaction of the other. Excess of stock-in-trade over bank over-draft and excess of liquid
assets over current liabilities other than bank over-draft generate working capital for the
business. Alternatively working capital requirements are made for long-term funds which
affect the profitability.
(pawan, 1999) focuses on the study of working capital trend and liquidity analysis in the
selected public sector enterprises of Haryana. The study suggests forecasting of working capital
requirement confined mainly to various components of working capital. After considering the
facts the author realized the need for proper assessment and forecasting of working capital in
the public sector undertaking. For this purpose, he has suggested the analysis of production
schedule, sales trend, labour cost etc., should be taken into consideration. He further suggested
the need for better management of components of working capital.

(Batra, 1999)gives an overview of working capital and its determinants. According to the
author working capital management involves deciding upon the amount and composition of
current assets and how to finance them. He emphasizes on the hedging approach to finance
current assets. He also adds that a management can use ratio analysis of working capital as a
means of checking upon the efficiency with which working capital is being used in the
enterprises.
 CHAPTER 3
INDUSTRY AND ORGANIZATIONAL PROFILE
 3.1 INDUSTRY PROFILE

Information Technology (IT) enterprises in India have performed a key function in placing
India on the worldwide map. IT enterprise in India has been one of the maximum massive
boom participants in the Indian financial system. The enterprise has performed a massive
function in reworking India's image from a sluggish shifting bureaucratic financial system to a
land of revolutionary marketers and a worldwide participant in offering international elegance
era answers and commercial enterprise services. The enterprise has helped India remodel from
a rural and agriculture-primarily based financial system to a known- how primarily based
financial system. Information Technology has made feasible statistics get admission to at
gigabit speeds. It has made a splendid effect on the lives of hundreds of thousands of
individuals who are poor. marginalized, and living in rural and a long way flung topographies.
The Internet has made modern adjustments with possibilities of e-authorities measures like e-
health, e-education, agriculture, etc. Today, whether or not it's submitting Income Tax returns,
making use of passports online, or railway e-ticketing, it simply needs a few clicks of the
mouse. India's IT capacity is on a consistent march closer to global competitiveness, enhancing
protection abilities and assembly up power and environmental demanding situations among
others. The IT-ITeS region in India, with the primary recognition of growing generation
adoption, and development of new transport platforms, has aggregated sales of USD 88.1
billion in FY2011, even as producing direct employment for over 2.5 million people. Out of
88.1 billion, export sales (along with Hardware) reached USD 5.9 four billion in FY2011 even
as home sales (along with Hardware) of approximately USD 2.8 eight billion.

3.1.1 INDUSTRIAL PERFORMANCE-GLOBAL, NATIONAL AND REGIONAL:

Industrial performance of an IT company refers to the efficiency and productivity of a specific

IT company in the global, national, or regional context.

3.1.2 GLOBAL INDUSTRIAL PERFORMANCE:

Global industrial performance of an IT company is a measure of the company's productivity

and efficiency compared to other IT companies globally. It takes into account factors such as
revenue, market share, research and development investment, and the number of employees. A
strong global industrial performance of an IT company can indicate that it is a leader in its
industry and has a robust global presence.
3.1.3 NATIONAL INDUSTRIAL PERFORMANCE:

National industrial performance of an IT company is a measure of the company's efficiency

and productivity within a specific country. It is influenced by factors such as government
policies, the availability of resources, infrastructure, and the education and skill level of the
workforce. A strong national industrial performance of an IT company can lead to increased
economic growth and job creation within the country.

3.1.4 REGIONAL INDUSTRIAL PERFORMANCE:

Regional industrial performance of an IT company refers to the company's efficiency and

productivity within a specific region within a country. Regional industrial performance can
vary depending on factors such as the availability of resources, infrastructure, and the education
and skill level of the workforce within the region. A strong regional industrial performance of
an IT company can lead to economic growth and job creation within the region.

3.1.5 PROSPECTS & CHALLENGES IN THE INDUSTRY

FUTURE PROSPECTS:

Globalization has had a major impact on the formation of India's information technology
industry. For many years, industries such as manufacturing, telecommunications, insurance,
banking, finance, and more recently retail have been the growth drivers for this sector.
However, it will soon become apparent that future growth in IT and IT-enabled services will
be driven by climate change, mobile applications, healthcare, energy efficiency, and the
sustainable energy industry. As more and more service providers in both India and the world
target new segments and provide their customers with cost-effective and flexible solutions, the
share of technology spending in the Indian IT industry will increase significantly shortly. Is
expected. By 2015, the IT sector is expected to generate $ 130 billion (NASSCOM) in revenue,
which will have a transformative impact on the economy as a whole. IT spending is expected
to increase significantly in areas such as automotive and healthcare, but the government is
focused on electronic governance and will continue to spend large amounts. However, to
achieve this growth, the sector must continue to reform itself and strive for more miles through
new business models, global delivery, partnerships, and transformation. Coordinated efforts by
all stakeholders are needed to ensure the future growth of India's ITITeS sector. We face new
challenges and need to devote ourselves to providing our customers with more and more end-
to-end solutions.
CHALLENGES:

Cybersecurity and quality control are some of the key areas of today's information age. To
address these concerns in today's global IT scenarios, more and more ITBPO companies in
India are focusing on quality and global standards such as ISO 9001 (for quality control) and
ISO 27000 (for information security). Is to be adopted. Today, India-based centres represent
the maximum number of quality certifications achieved in a single country. India has set the
goal of transforming India into a truly developed and competent society by 2020. However, to
achieve this growth, the sector must continue to reform itself and strive for more miles through
new business models, global delivery, partnerships, and transformation. Coordinated efforts by
all stakeholders are needed to ensure the future growth of India's ITITeS sector. We face new
challenges and must make dedicated efforts to provide our customers with more and more end-
to-end solutions to maintain momentum. India today is one of the largest IT capitals in the
modern world and has the presence of all major players in the world's IT sector. HCL, Wipro,
Infosys, and TCS are some of the well-known names of Indian IT companies.
3.2 ORGANIZATIONAL PROFILE

CAMINO Infotech Private Limited is an unlisted private company incorporated on 02

march,2020 It is classified as a private limited company and is located in Ernakulam, Kerala.
Camino is a leading global information technology, business process, and services company.
The company employs the power of hyper-automation, robotics, cloud, analytics. and emerging
technologies to help clients to modify the digital world and make them successful. Together, it
discovers ideas and connects the dots to build a better and bold new future. CAMINO is a
bunch of technology enthusiasts, and fun-loving people, with happily growing customers and
staff, building advanced tools, services, and interfaces for data. The organization always
believes in three important factors which are quality, value, and time. CAMINO is a pro-
business, efficient organization. The company believes that IT infrastructure is the system of
all modern organizations that connects the various systems and functions. The company will
help to build a robust IT infrastructure that gives a big advantage in the modern market
environment. They provide end-to-end consulting and solutions to clients. A friendly attitude
towards the clients always helps in more comfortable and powerful communication. The
company focus on the client's satisfaction. Their philosophy is to have the client at the focus
point of all discussions and planning so that the product/service will be essentially client
oriented. These policies make the one of the best software companies referred by their clients.
The company provides a great variety of products and services. Join their team and you'll take
on projects that continuously sharpen your technical skills. your talent for solving problems
and your entrepreneurial spirit. They are a team of qualified, well-trained professionals who
are always up to the task. They are aggressive and competent. And they respect deadlines.
Unless extreme conditions prevailed. they never cross a deadline or lamed an excuse which is
rare with Camino infotech. Camino infotech is the best business process outsourcing company
in Kerala. Camino infotech is one of the best business outsourcing IT companies

in Kera/a which makes its operations and earnestly caters to the requirements of
organisation clients to provide them immense support by adhering to international
standards. As a business outsourcing company, it ensures that companies
customers get delivered properly and satisfied accordingly.
Camino Infotech private limited has some sister organizations also, they are;

➢ Darshana E-learning platform:

Darshana E-learning Platform is an education tutoring app that runs on a freemium model with
free access to content after registration. It has been offering educational content for all classes
and trains students for examinations in India such as IT-JEE, NEET, KEAM, and International
Exationer GRE and GMAT. 19 of 60 Academic subjects and concepts are explained with 12–
20-minute digital animation videos. Special tutors are appointed for each subject. Darshana E-
learning Platform also introduces the Early Learn App for studying kindergarten students
mainly aims to cross the bridge from passive to active learning with an interactive learning
platform blended with coding and other subjects like Maths, Science, English, Music, and Fine
arts through storytelling.

As the world is moving towards the digital age and more and more universities are trying to
maximize the use of technology in education, one must consider both the advantages and
disadvantages of doing so. Although the use of technology in the field of education has
revolutionized the way we learn there are still some downsides to relying completely on
technology to learn.

➢ Camino designers and developers:

The company has a well-established, conventional, and steadfast name in the Construction
Industry serving the customers with the timely delivery of the assigned projects keeping the
check of high-quality controls in the most assuring manner for a decade. They offer an end-
toend client experience that includes seamless communication, budgeting. staffing, on-site
organization, and solid, quality handiwork every time. The company works with architects and
designers to produce beautiful, functional structures. Budgets are of the lowest costs, stay on
top of schedules for timely delivery and work closely with the design team to create your vision.
Working with trusted subcontractors, the company keeps them accountable throughout the
entire build. The last step in any build. This phase includes site clean-up, systems training, final
inspections, and move-in coordination.

➢ Udyog Consultancy Services:

Udyog Consultants is a preferred talent acquisition partner to multinationals and leading Indian
businesses. This combined with the company's role as a trusted consultant for Indian
professionals translates into the core capability Building Careers. Building organizations. The
company's mantra is: to analyze, identify, advise, and execute. The company's mission is to
create relationships, not transactions. The company's team is a group of accountants, analysts,
advocates, and strategists that thrive on sharing our experience and knowledge to help to make
a success of the business. The service includes a comprehensive consult to help identify gaps
and opportunities, a comprehensive report that includes a project plan with timelines and
milestones, a cost analysis, and a schedule. They also offer a suite of quality products that will
help to get there quickly and smoothly. That's how they ensure success.

3.2.1 MISSION, VISION STATEMENT AND QUALITY POLICY

FOLLOWED:

The mission is to deliver customer success through people, processes, technology,

infrastructure, and innovation.

The vision is to become the strategic IT partner for our customers worldwide; a one- stop shop
for all technological support required for our client's business needs. We aim to become a
globally renowned corporation with a highly competent and passionate team delivering best
in-class, reliable, and scalable IT solutions for businesses. The company believes in four pillars
of influence that drives their growth. It is engraved in every activity of the organisation. From
their hiring practices to their work culture. Camino is a quality-based company not a fear-based
company

3.2.2 BUSINESS PROCESS OF THE ORGANISATION – PRODUCT

PROFILE:

Camino provides various products to boost the business growth

➢ DevOps

Dev stands for Software Development, and Ops stands for information technology operations.
Adopting DevOps aims to reduce the system's development life cycle and provide perpetual
delivery with high-quality software. Moreover, it helps to fix business objectives and keep the
features and updates frequently in close alignment. It helps build cross-functional operations
and supports various tools. It evolves and enhances products at a quickening speed. The
organization speed gets better with DevOps software and offers more effectively in the market.
The DevOps toolchain is a compressive tool that improves the system in the development life
cycle. Modifying the software consumes time because of multiple tools, dynamic changes,
technologies, practices, etc. The impression is larger than other software development. It
provides a reliable environment with faster collaboration between operations and
developments.

➢ Robotics

The company’s flagship system (above) is a sophisticated robotic material handling

technology. The system consists of robots that travel around a warehouse like intelligent
forklifts, moving shelves stacked with various products to a floor assistant, who then scans a
bar code to confirm that the right items have been picked.

➢ Internet marketing

Have you opened a new location, redesigned your shop, or added a new product or service?
Don't keep it to yourself, let folks know.

➢ Embedded technologies

New location, redesigned your shop, or added a new product or service? Don't keep it to
yourself, let folks know.

➢ Cloud services

This includes general information on cloud computing, and a variety of learning paths dealing
with big data, security, and networking. Students will learn the fundamental technical
knowledge of AWS Cloud computing and its supporting infrastructure, AWS services and how
to utilize existing, or develop new core business solutions.

➢ Marketing plan

Every business needs a sound marketing plan in order to survive. Starting from an
understanding of your target market, the company will develop a plan with easy-to-follow
steps.
 ➢ E – Learning

Camino E - Learning Application consultation, the company can get you on the right track of
programming, computation in mathematical skill developments using live video presentations
and hands own trials.

➢ Tutoring

Our experts will make you furnished to fill the gap between your dream and success. We can
make you attain more. We have seen that lots of students who are confused after their
graduation regarding their first IT Job. We thought of starting this process to help these young
ones who are intending their first job in IT industry. Our training will be handled by
experienced developers from Camino infotech who are experts and keen in team building and
technology sharing.

➢ Internships

Project based learning, live project experience benefits students from college learning to
industrial environment. When you completed your graduation without a placement from
college a technology training from any institute can't help you to find your first IT job. After
the training you have to go through an internship under company which is moving on a hostile
step, Here Camino infotech gives you an enormous internship. Our training will be handled by
experienced developers.
 CHAPTER 4

RESEARCH METHODOLOGY
4.1 Research design

The research design used in this project is analytical in nature the procedure using, which
researcher has to use facts or information already available, and analyse these to make a critical
evaluation of the performance.

4.2 Background of the topic

An organization is a social unit which is deliberately constructed and reconstructed to seek
specific goals. One of the main objectives of management is cost control. Cash is the lifeline
of a company. If this lifeline deteriorates, so does the company's ability to fund operations,
reinvest and meet capital requirements and payments. Understanding a company's cash flow
health is essential to making investment decisions. This requires that business must be run both
efficiently and profitability. A good way to judge a company's cash flow prospects is to look
at its working capital management (WCM). A firm is required to maintain a balance between
liquidity and profitability while conducting its day-to-day operations. Liquidity is a
precondition to ensure that firms are able to meet its short-term obligations and its continuing
flow can be guaranteed from a profitable venture. Working capital is a financial metric which
represents operating liquidity available to a business, organization or other entity. Along with
fixed assets such as plant and equipment, working capital is considered a part of operating
capital. Working capital refers to the cash a business requires for day-to-day operations or,
more specifically, for financing the conversion of raw materials into finished goods, which the
company sells for payment. Among the most important items of working capital are levels of
inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of
a company's efficiency and financial strength. Decision 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 liabilities. The goal of working capital
management is ensured that the firm is able to continue its operations and that it has sufficient
cash flows to satisfy both maturing short-term debt and upcoming operational expenses.
4.3 Methods of data collection

Sources of data

Primary data

Data are collected through personal interviews and discussion with finance executives.

Secondary data

• From the annual reports maintained by the company.

• Data are collected from company website.
• Books and journals are used for the study.

4.4 Tools and Techniques of analysis

Total current assets

Total current liability

Net working capital

Current ratio

Quick ratio

Working capital turnover ratio

Gross profit ratio

Net profit ratio

4.5 Duration of the Study

The period of the study is from 3rd April to 12th May

 CHAPTER 5
DATA ANALYSIS AND INTERPRETATION
 5.1 POSITION OF CURRENT ASSET
Table No 5.1.1

Particulars 2018 2019 2020 2021 2022

Trade receivable 35,606.82 - 47,449.23 - -

23,006.43 56,679.43 34,622.90 45,668.69 3,677.78

Inventories

Cash and cash 3,504.30 20,737.86 5,304.02 29,954.05 3,362.10

equivalents
8,78,359.00 2,16,610.00 2,26,137.00
Other current asset
- -

Total 940476.55 294027.29 313513.15 75622.74 7039.88

Source: Annual report of Camino Infotech
Table 1: current assets
CHART NO: 5.1.1

CURRENT ASSETS
1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
2018 2019 2020 2021 2022

Figure 5.1.1 CURRENT ASSETS

Figure 1: current assets
 Interpretation
In this table shows current Asset in 2018 is Rs 940476.55. The current Asset decreased in 2019
is Rs 294027.29 and increased in 2020 is Rs 313513.15. In 2021 and 2020 current asset again
decreased in Rs 75622.74 and Rs 7039.88.

5.1.2 POSITION OF CURRENT LIABILITIES

TABLE NO: 5.1.2

Particulars 2018 2019 2020 2021 2022

2,46,118.82 56,679.43 82,072.13 45,668.69 3,677.78

Trade payables

Short term 23,006.43 - - 93,909.05 76,660.10

provisions

Other current 2,53,401.00 4,19,451.00 2,94,901.00 - -

liabilities

Total 522526.25 476130.43 376973.13 139577.74 80337.88

Source: annual report of Camino Infotech
Table 2: Current liabilities
 CHART NO: 5.1.2

CURRENT LIABILITIES
600000

500000

400000

300000

200000

100000

0
2018 2019 2020 2021 2022

Figure 5.1.2: current liabilities

Figure 2: Current liabilities

Interpretation
In this table shows current liabilities are decreased in each year. In 2018 is Rs 522526.25, In
2019 is 476130.43, In 2020 is 376973.13 and in 2021 and 2022 is 139577.74 and 80337.88
The current liabilities decreased at Rs. 46395.82, Rs 99157.3, Rs 237395.43, and Rs 59239.86.

5.1.3 STATEMENT SHOWING WORKING CAPITAL REQUIREMENTS.

Table No: 5.1.3

Particulars 2018 2019 2020 2021 2022

Current asset (A) 940476.55 294027.29 313513.15 75622.74 7039.88

Current liabilities (B) 522526.25 476130.43 376973.13 139577.74 80337.88

Net working capital 417950.3 -182103.14 -63459.98 -63955. -73298

(A-B)
Source: annual report of Camino infotech.
Table 3: working capital
CHART NO: 5.1.3

WORKING CAPITAL
500000

400000

300000

200000

100000

0
2018 2019 2020 2021 2022
-100000

-200000

-300000

Figure 5.1.3
Figure 3: working capital
Interpretation
In this table 2018shows Rs 417950.3 working capital required.
In 2019 shows Rs -182103.14 working capital required.
In 2020 shows Rs -63459.98 working capital required.
In 2021 and 2022 shows Rs -63955. and -73298 working capital required.
 5.1.4 Current Ratio

A current ratio that is in line with the industry average or slightly higher is
generally considered acceptable. A current ratio that is lower than the
industry average may indicate a higher risk of distress or default. Similarly,
if a company has a very high current ratio compared to their peer group, it
indicates that management may not be using their assets efficiently.
Current ratio may be defined as the relationship between current assets and
current liabilities. This ratio also known as working capital management
ratio is a measure of general liquidity and is most widely used to make the
analysis of a short-term financial position or liquidity of a firm. It is
calculated by dividing the total of current assets by total of the current
liabilities. The current ratio is used to measure the firm’s short – term
solvency. It measures the ability of the firm to meet it current obligations.

Current ratio = 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭

𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞s

TABLE NO 5.1.4
Particulars 2018 2019 2020 2021 2022

Current assets 940476.55 294027.29 313513.15 75622.74 7039.88

Current liabilities 522526.25 476130.43 376973.13 139577.74 80337.88

Ratio 1.79 0.61 0.83 0.54 0.08

Source: annual report of Camino Infotech

Table 4: current ratio

Chart no 5.1.4

CURRENT RATIO
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2018 2019 2020 2021 2022

Figure 5.1.4: current ratio

Figure 4: current ratio

Interpretation
Above table shows proportion of current asset to current liabilities. In the year 2018 the ratio
is 1.79, in 2019 the ratio is 0.61 in 2020 the ratio is 0.83, in 2021 and 2022 ratio is 0.54 and
0.08 In year 2018 ratio shows satisfactory figure. A higher current ratio has better liquidity.
The standard ratio is 1.79 company tries to increase. Then every year Current Ration is
decreased.
5.1.5 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 (assets that can be converted quickly to cash) to pay down its current
liabilities, it is also called the acid test ratio. An "acid test" is a slang term for a
quick test designed to produce instant results—hence, the name. Quick ratio
establishes ratio between liquid asset and current liabilities. An asset is liquid if
it can be converted into cash immediately without a loss of value. Quick Ratio is
known as Acid test ratio. The firm liquidity of a firm to pay its short – term
obligation as and measure of liquidity, are current assets and current liabilities is
said to be liquid if it can be converted into cash within a short period without loss
of value.

Acid Test Ratio = 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭 – 𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐢𝐞𝐬

𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

Table no 5.1.5
Particulars 2018 2019 2020 2021 2022

Quick asset (current 917470.12 237347.86 278890.25 29954.05 3362.1

asset - Inventories)
Current liabilities 522526.25 476130.43 376973.13 139577.74 80337.88

Ratio 1.75 0.49 0.73 0.21 0.04

Source: annual report of Camino Infotech

TABLE 5: quick ratio

Chart no 5.1.5

QUICK RATIO
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2018 2019 2020 2021 2022

Figure 5.1.5
Figure 5: quick ratio
Interpretation
Usually, a high acid test ratio is an indication that the firm has the ability to make payment of
its current liabilities in time. Low quick ratio is not good in favours of firm. Above table shows
proportion of quick assets to current liabilities. In year 2018 the ratio is 1.75, 2019 the ratio is
0.49, 2020 the ratio is 0.73 and the year 2021 and 2022 is 0.21 and 0.04 due to Ratio resalable
the lower side.
 5.1.6 Working Capital Turnover Ratio

This ratio establishes a relationship between net sales and working capital. This
ratio is to determine the efficiency with which the working capital is utilized.
Thus, it calculated as follows.

Working Capital Turnover ratio = 𝐬𝐚𝐥𝐞𝐬

𝐰𝐨𝐫𝐤𝐢𝐧𝐠 𝐜𝐚𝐩𝐢𝐭𝐚l

Table no 5.1.6

Particulars 2018 2019 2020 2021 2022

Sales 633592.00 1423821.64 326620.94 151972.00 320525.00

Working capital 417950.3 -182103.14 -63459.98 -63955 -73298

Ratio 1.51 -7.81 -5.10 -2.37 -4.37

Source: annual report of Camino Infotech

Table 6: working capital turnover ratio

Chart no 5.1.6

WORKING CAPITAL TURNOVER RATIO

2

0
2018 2019 2020 2021 2022
-2

-4

-6

-8

-10

Figure 5.1.6

Figure 6: working capital turnover ratio

Interpretation
This measure to understand the firm’s ability to meet its short-term obligation. Higher the ratios
better the result. The higher ratio better is utilization of working capital. But this figure shows
that the company have lower ratios, this will indicate the company’s risk level. In the year 2018
ratio is 1.51, in 2019 is -7.81, in 2020 is -5.10 the ratio in 2021 and 2022 is -2.37 and -4.37.

5.1.7 Gross Profit Ratio

The ratio is an important indicator of profitability, shows the profit potential

before charging financial, administrative and selling expenses. The gross profit
margin reflects the efficiency with which management produce each unit of
product. A high ratio of gross profit to sale is a sign of good management as it
implies that the cost of production of the firms is relatively low. It may also be
indicative in the cost of goods sold.

Gross Profit Ratio = 𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 /𝐒𝐚𝐥𝐞𝐬×100

Table no 5.1.7

Particulars 2018 2019 2020 2021 2022

Gross profit 585259.91 1185084.3 146313.32 121508.5 267520.1

Sales 633592.00 1423821.64 326620.94 151972.00 320525.00

Total 92.3 83.2 44.7 79.9 83.4

Source: annual report of Camino Infotech

Table 7: gross profit ratio

Chart no 5.1.7

GROSS PROFIT RATIO

100
90
80
70
60
50
40
30
20
10
0
2018 2019 2020 2021 2022

Figure 5.1.7
Figure 7 gross profit ratio

Interpretation
Above table shows proportion of gross profit to sales. In the year 2018 the ratio is 92.3, in 2019
the ratio is 83.2, in the year 2020, 2021 and 2022 is 44.7, 79.9, 83.4.
It measures overall profitability. This is net profit after tax to net sales. This ratio explains the
profit generating capacity of the sales. These ratios are based on the premise that a firm should
earn sufficient profit on each rupee of sales. Lower net profit ratio indicates higher non-
operating expenses.
5.1.8 Net profit ratio

It measures overall profitability. This is net profit after tax to net sales. This ratio
explains the profit generating capacity of the sales. These ratios are based on the
premise that a firm should earn sufficient profit on each rupee of sales. Net profit
ratio is the overall measure of the firm’s ability to turn each rupee sales into net
profit. It is guiding ratio for determining the dividend pay-out per. Share. It also
determines the market price of the shares. Lower net profit ratio indicates higher
non-operating expenses.

Net Profit Ratio = Net Profit × 100 /Sales

Table no 5.1.8

Particulars 2018 2019 2020 2021 2022

Net profit 1464714.38 317634.60 491370.03 119418.50 62347.90

Sales 633592.00 1423821.64 326620.94 151972.00 320525.00

Total 231.1 22.3 150.4 78.5 19.4

Source: annual report of Camino Infotech

Table 8: net profit ratio

Chart no 5.1.8

NET PROFIT RATIO

250

200

150

100

50

0
2018 2019 2020 2021 2022

Figure 5.1.8
Figure 8: net profit ratio

Interpretation
This ratio measures overall efficiency of all the function of a business-like production,
administration, selling, financing, pricing, tax management.

Above table shows proportion of net profit in the year 2018 the ratio is 231.1, in the year 2019
the ratio is 22.3, in the year2020, 2021 and 2022 the ratio is 150.4, 78.5, 19.4.
 CHAPTER 6
FINDINGS, SUGGESTIONS AND CONCLUSION
6.1 FINDINGS
1. It is found that the CAMINO INFOTECH PVT LTD. The passion of current Asset is
decreased in 2019 is Rs 294027.29 and increased in 2020 is Rs 313513.15. In 2021 and
2020 current asset again decreased in Rs 75622.74 and Rs 7039.88.
2. It is found that the passion of current liabilities decreased in every year. In 2018 is Rs
522526.25, In 2019 is 476130.43, In 2020 is 376973.13 and in 2021 and 2022 is
139577.74 and 80337.88 The current liabilities decreased at Rs. 46395.82, Rs 99157.3,
Rs 237395.43, and Rs 59239.86.
3. Statement Showing Working Capital Requirements, the working capital is decreased as
compared to the previous year.
4. Every year current ratio is decreased. So, the company have no better liquidity.
5. Every year quick ratio is decreased. This indicate that the firm does not pay the current
liabilities regularly or on time. Low quick ratio is not good in favours of the firm.
6. It is found that the working capital turnover ratio is also decrease in every year.
7. The statements showing gross profit ratio, In the year 2018 the ratio is 92.3, in 2019 the
ratio is 83.2, in the year 2020, 2021 and 2022 is 44.7, 79.9, 83.4.
8. Net profit ratio statements show the ratios are decreased every year as compared to
previous year. So, the position of the company is very bad.
9. It is founded that the company is not trying to maintain proper working capital. The
statement of working capital requirements shows that the working capital is decreased
in every year. So that will be affect the profitability of the firm. Better management of
working capital always provide better financial performance for the firm.
10. Company does not properly maintain the components of the working capital. Because
the statement of net working capital shows the negative result.
6.2 SUGGESTIONS

1. Company should try to increase the current asset by the way of selling the products and
services for more than it cost and create profits. When you lose money by selling
products and services for less than it costs you, equity goes down and assets go down.
2. Company should maintain large amount of working capital required by Reduce
inventory and increase inventory turnover, pay vendors on time and manage
debtors effectively etc…
3. Current ratio is decreased in every year, so company should try to increase the liquidity
position by reduce debt, avoid high-interest financing, Reduce overheads etc.
4. Every year quick ratio is decreased. So, company should try to pay the current liabilities
regularly.
5. working capital turnover ratio is decrease in every year, A low ratio could indicate that a
company is investing too much on accounts receivable and inventory to support sales.
So, Company should try to Limit the number of inventories, fulfil your debt obligations,
Analyse your business spendings etc. A higher working capital turnover ratio is better,
and indicates that a company is able to generate a larger number of sales.
6. Net profit ratios are decreased every year as compared to previous year. Low net profit
ratio means that a company uses an ineffective cost structure and/or poor pricing
strategies. So, company should try to maintain the management, expenses, pricing
strategies.
7. The statement of working capital requirements shows that the working capital is
decreased in every year. So company should try to maintain the inventories, Pay
vendors on time and manage debtors effectively etc.
8. Should try to maintain the components effectively, that will help the company to
improve liquidity, profits, efficiency of operations, effective management of debtors
etc.
6.3 CONCLUSION

While undergoing the project on the analysis of working capital management at Camino
Info Tech Pvt L td, I had the opportunity to understand the significant role of working
capital in the development and profitability of the businesses in the economy by reducing
risks of business. The working capital gives a business a strong foundation, flexibility, and
strength to undertake business opportunities in the market despite the competition. However
different ratios are used to analyse the working capital management of the company,
Company does not properly maintain the components of the working capital. Because
the statement of net working capital shows the negative result.
In conclusion, the working capital is hugely significant in business, and it improves the
development and the profitability of the business in the market.
To conclude I would like to mention here that this project work out is very helpful to
me. This is a unique opportunity to discuss the concept of text book with an
organization. This is provided a break through to apply theoretical knowledge in
practical corporate word. And this experience will be helpful for future performing.
BIBLIOGRAPHY
• Filbeck, G., & Krueger, T. M. (2005). An analysis of working capital
management results across industries. American journal of business.
• Bhalla, V. K. (2014). Working capital management. S. Chand Publishing.
• Morshed, A. (2020). Role of working capital management in profitability
considering the connection between accounting and finance. Asian Journal of
Accounting Research, 5(2), 257-267.
• Bhattacharya, H. (2021). Working capital management: Strategies and
techniques. PHI Learning Pvt. Ltd.
• Akbar, A., Akbar, M., Nazir, M., Poulova, P., & Ray, S. (2021). Does working
capital management influence operating and market risk of firms? Risks, 9(11),
201.
• Talonpoika, A. M., Kärri, T., Pirttilä, M., & Monto, S. (2016). Defined
strategies for financial working capital management. International Journal of
Managerial Finance, 12(3), 277-294.
• Haralayya, B. (2021). Working capital management at TVS motors,
Bidar. Iconic Research And Engineering Journals, 4(12), 255-265.
• Pandey I M (2009), Financial Management, 9th edition, New Delhi: Vikas
Publishing House Pvt. Ltd.
APPENDIX