A Study on Cash Management On

A STUDY ON CASH MANAGEMENT ON THE FLAVORS INDIA (P) LTD,PUDUCHERRY SUMMER PROJECT REPORT Submitted by

J.SAKTHIPRIYA REGISTER NO: 27348335 Under the Guidance of

MRS.R.HEMALATHA M.B.A. Faculty, Department Of Management Studies In partial fulfilment for the award of the degree Of

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE PONDICHERRY UNIVERSITY PUDUCHERRY, INDIA SEPTEMBER – 2007

SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE PONDICHERRY UNIVERSITY DEPARTMENT OF MANAGEMENT STUDIES BONAFIDE CERTIFICATE This to certify that the project work entitle “A STUDY ON CASH

MANAGEMENT ON THE FLAVORS INDIA (P) LTD” is a bonafide work done by J.SAKTHIPRIYA [REGISTER NO: 27348335] in partial fulfilment of the requirement for the award of Master Of Business Administration by Pondicherry University during the academic year 2007-2008.

GUIDE

HEAD OF THE DEPARTMENT

Submitted for the viva – voice Examination held on EXTERNAL EXAMINER 1 2

TABLE OF CONTENTS

CHAPTER

TITLE

PAGE NO

ACKNOWLEDGEMENT ABSTRACT LIST OF TABLE LIST OF CHART

I

INTRODUCTION 1.1 Introduction of the Study 1.2 Profile of the Company

1

II

REVIEW OF LITERATURE

8

III

OBJECTIVE OF THE STUDY

29

IV

RESEARCH METHODOLOGY

30

V

DATA ANALYSIS AND INTERPRETATION

31

VI

FINDINGS OF THE STUDY SUGGESTION & RECOMMENDATION

54

VII

CONCLUSION

56

VIII

LIMITATION & SCOPE OF THE STUDY ANNEXURE BIBLOGRAPHIC

57

ACKNOWLEDGEMENT I whole heatedly thank my respected chairman Mr. N. KESAVAN, vice chairman Mr. SUGUMARAN, and beloved M.D Mr. DHANASEKARAN who helped us in all our endeavors and for his blessings on us to make this project a successful one. I would like to express my profound gratitude to all those who have been instrumental on the preparation of the project report I wish to place on deep sense of gratitude to our principal Mr. V.S.K. VENKATACHALAPATHY the keen interest and affection towards as through out the course. I convey my sincere thanks to prof. Mr. S. JAYAKUMAR HOD, Department Of Management Studies for his interest towards us throughout the course. I am sincere thanks to my internal guide MRS. R. HEMALATHA M.B.A. Department Of Management Studies for her valuable guidance and inspiration extended all along the project. I am grateful to my company guide Mr. MURUGAVEL, Accounting Incharge for his valuable guidance and inspiration extended all along the project. I also wish my sincere thank to all the teacher and non-teaching staff of department of MBA, Sri Manakula Vinayagar Engineering College, without whose cooperation this project would not be a success. Lastly, I wish to thank my parents and friends who supported and helped me in completion of this project.

ABSTRACT

The project is titled as “A STUDY ON CASH MANAGEMENT ON THE FLAVORS INDIA (P) LTD”, the aim is to analyses cash position of the company by using the financial tool and techniques. These project is mainly concentrated on cash management is an important factor and it is one of the component of working capital cash can be regarded as a life blood of corporate. Cash either a hand or at bank is the most liquidity of all current assets. The cash and bank balance indicates high liquidity position of a company.

LIST OF TABLE

TABLE NO

LIST OF TABLE

PAGE NO

2.1

CASH FLOW STATEMENT

16

5.1

CASH FLOW STATEMENT(2001-02)

32

5.2

CASH FLOW STATEMENT(2002-03)

33

5.3

CASH FLOW STATEMENT (2003-04)

34

5.4


35

5.5


36

5.6

CASH FLOW STATEMENT

37

5.7

CASH BUDGET

39

5.8

NET WORKING RATIO

42

5.9

CURRENT RATIO

44

5.1

QUICK TEST RATIO

46

5.11

INVENTORY TURNOVER RATIO

48

5.12

DEBTORS TURNOVER RATIO

50

5.13

CREDITORS TURNOVER RATIO

52

LIST OF CHART

TABLE NO

LIST OF TABLE

PAGE NO

5.1

CASH BUDGET

40

5.2

NET WORKING RATIO

43

5.3

CURRENT RATIO

45

5.4

QUICK TEST RATIO

47

5.5

INVENTORY TURNOVER RATIO

49

5.7

DEBTORS TURNOVER RATIO

51

5.8

CREDITORS TURNOVER RATIO

53

BIBLIOGRAPHY

Khan M.Y and P.K. Jani Financial Management, New Delhi, Tata Mc Graw Hill, 1992. Dr.S.N. Maheshwari, Principles of Management Accounting. Prasanna Chandra, Financial Management Theory and Practice

Websites: www.flavorindia.com.

CHAPTER - I

INTRODUCTION 1.1 INTRODUCTION FOR THE STUDY: This study aims in knowing the functions of the financial department of The Flavors India (p) ltd. •

To know about the general functioning of the company.

•

To study the practical work and collect information from the concern.

• To compare the theoretical knowledge gained with practice in real life commercial situation. •

To analysis the balance sheet and profit & loss account of the year.

•

To know the financial position of the company.

1.2 PROFILE OF THE COMPANY

The Flavors India (p) Ltd is a well established and systematically organized company engaged in the manufacture of food flavours, food colours and caramel. The genesis of flavors India dates back to 1975 after an in-depth and intensive market survey to cater to the needs of high demand areas The promoter late shri R.Bramanandam and his team had the business acumen, professional background obtained after serving a long stint in flavors industry, sound business ethics, skills and had brought this to bear in the discipline and systems required to maintain and sustain quality in such a mass production. The Flavors India (p) Ltd operates from puducherry (India) previously a French colony and now the union territory capital, about 120kms from Chennai airport, south India. Garnering and utilizing the skilled low-cost manpower strength that puducherry offer, flavors India has staff strength of 100 personnel headed by the board of directors, who control the different divisions of the organization. 1.2.1Quality: For the Flavors India with 30 years of standing, quality is the day to success. Our plant has fully equipped quality control laboratories where the raw materials, in process and finished products are rigorously tested for their quality standards. Our qualified manufacturing and technical personnel deal with material handling, shop floor and production activities. We maintain stringent quality control measure and hygienic condition as per the specification of Bureau of India Standards. The research and development wing devotes its fulltime towards better product development, cost .effective methods and new products. The Flavors India (p) Ltd is an ISO 9001_2000 certified company ensuring the quality systems practiced .with a commitment towards safe

environment we have development an efficient Effluent Treatment Plant fulfilling the pollution control Board needs. 1.2.2 CUSTOMER BASE: Our motto being “customer is our Boss” a good amount of time and skill is put in and translated into action by formulating new products as demands by the customers. Our products command its reputation in the market for the past 3decades and more in leading food processing companies throughout the country and overseas. Our customer service is always prompt and sure as the” sun –rises and sun set” 1.2.3 AWARDS: The Flavors India (p) Ltd believes in the concepts of “the company as a family “and “working together towards the future” with various welfare programmes for the employees. It was a moment of pride when government of puducherry bestowed on us thrice the Good Industries Relations Award for the consecutive years 2001, 2002and 2003. We promise to march towards the future with the same zeal and motive.

1.2.4 OUR PRODUCTS

TOP SOFT DRINK CONCENTRATES, TOP MIST, TOP LIQUID PRESERVATIVE, TOP CONCENTRATED OILS, TOP FOOD COLOURS WITH ISI MARK, TOP FLAVORS, TOP DRY MIX POWDER FLAVORS, TOP LIQUOR FLAVORS, TOP CARAMEL WITH ISI MARK, TOP CULINARY FLAVORS, TOP FLAVORS, TOP DRY MIX POWDER FLAVORS, TOP ENCAPSULATED FLAVORS, TOP FLAVORS, TOP DUST-ON POWDER FLAVORS, TOP FLAVORS.

1.2.5 ORGANISATIONAL CHART

MANAGING DIRECTOR

FACTORY INCHARGE

PRODUCTION DEPARTMENT

QUALITY CONTROL

FINANCE DEPARTMENT

INCOME TAX

MARKETING DEPARTMENT

ACCOUNTS

SENIOR ASSISTANT

JUNIOR ASSISTANT

1.2.6 FINANCE DEPARTMENT:

The accounts department of The Flavors India (p) ltd functions so as to keep as a system record of the daily events of the business. It maintain records of all financial transaction to find out the profit and loss according during the year and to financial status of the company, which helps them to take quick and correct policy decision. 1.2.7 OBJECTIVE OF FINANCE DEPARTMENT: • To determine the financial status of the company balance sheet, profit and loss accounts. • To help the management to analyses the financial standard of the company so that they can take quick correct decision. • To provide useful information to management. • Analysis the cash flow of the company it will useful for new ventures. 1.2.8 SYSTEM OF ACCOUNTING: All the transaction in the company is enter into to the system. There is more lapse of time in the company to do the other work. The daily transaction of the company is registered under the computer. The invoice, Quotation etc are sending through the system. 1.2.9 FUNCTING FINANCE DEPARTMENT OF THE FIRM The work performed by the account department has follows. 1. Preparation of cash and bank vouchers ( both debtors and creditors) 2. Maintaining cash and bank book. 3. Bank reconciliation statement. 4. Preparing purchasing journal, salaries, wages etc. 5. Preparing debtors and creditors notes. 6. Posting journal to journal books. 7. Maintaining general ledger accounts. 8. Maintaining subsidiary books.

9. Preparing trial balance, profit and loss account and balance sheet. 10. Filling of return of income tax both company and employers to income tax departments

.

CHAPTER-II REVIEW OF LITERATURE

2.1 CASH MANAGEMENT: Cash management is one of the key areas of working capital management. A part from the fact that it is the most liquid current assets, cash is the common denomination to which all current assets can be reduced because the other major liquid assets that are receivables and inventory get eventually converted into cash. 2.2 MOTICES FOR HOLDING CASH: The term cash with reference to cash management is used in the two senses. 2.2.1 NARROW SENSES: To cover currency and generally accepted equivalents of cash, such as cheque, drafts and demand deposits in bank. 2.2.2 BROAD SENSES: It includes near –cash, assets such as marketable securities and time deposits in bank. There are four primary motives for maintaining cash balances. •

Transaction motives.

•

Precautionary motives.

•

Speculative motives.

•

Compensating motives.

A, TRANSACTION MOTIVES: An important reason for maintain cash balance is the transaction motive. This refers to the holding of cash to meet routine cash requirements to finance the transactions which a firm carries on the ordinary course of business.

B, PRECAUTIONARY MOTIVES:

It will clearly determine the cash inflows and outflows in the ordinary course of business, a firm may have to pay cash for purposes which cannot be predicted or anticipated. C, SEPCULATIVE MOTIVE: It refers to the desire of a firm to take advantage of opportunities which present themselves at unexpected moments and which are typically outside the normal course of business. D, COMPENSATIVE MOTIVE: Bank provides a variety of service of business firms, such as clearance of cheque, of credit information, transfer of funds. 2.3 OBJECTIVE OF CASH MANAGEMENT: The basic objective of cash management is two-fold. •

To meet the cash disbursement needs (payment schedule) and.

•

To minimize funds committed to cash balance.

Meet payments schedule: Firms have to make payments of cash on a continuous and regular basis to suppliers of goods, employees. At the same time, there is a constant inflow of cash through collections from debtors. Minimizing funds committed to cash balance: In minimizing the cash balance 2.4 FACTORS DETERMING CASH MEEDS: The factors that determine the required cash balance are. A SYNCHRONIZATION OF CASH FLOWS. The need for maintaining cash balance arises from the non- synchronization of the inflows and outflows of cash. If the receipts and payments pf cash perfectly coincide or balance each other, there would be no need for cash balances. The first consideration in determining the cash need is, therefore, the extent of non – synchronization of cash receipts and disbursements.

For the purpose, the inflows and outflows have to be forecast over a period of time, depending upon the planning horizon which is typically a one-year period with each of the 12months B, SHORT COST. Another general factor to be considered in determining cash needs is the cost associated with a shortfall in the cash needs. The cash forecast presented in the cash budget would reveal periods of cash shortages. In addition, there, may be some unexpected shortfall. Every shortage of cash whether expected or unexpected- involves a cast depending upon the severity, duration and frequency of the shortfall and how the shortage is covered. TRANSACTION COSTS: Transaction costs are associated with raising cash to tide over the shortage. This is usually the brokerage incurred in relation to the sale of some short-tern near-cash assets such as marketable securities. BORROWING COSTS: Borrowing costs associated with borrowing to cover the shortage. These include items such as interest on loan, commitment charge and other expense relating to the loan. C LOST OF CASH –DISCOUNT: Lost of cash-discount a substantial loss because of a temporary shortage of cash. D, COST ASSOCIATED WITH DETERIORATION OF THE CREDIT RATING: Cost associated with deterioration of the credit rating which is reflected in shortage of cash charges on loans, stoppage of supplies, demands for cash payment, refusal to sell, loss of image and the attendant decline in sales and profits. E, PENALTY RATES: Penalty rates by banks to meet a shortfall in compensating balances. F, EXCESS CASH BALANCE COSTS:

The cost of having excessively large cash balances is known as the excess cash balances cost. If large funds are idle, the implication is that the firm has missed opportunities to invest those funds and has thereby lost interest which it would otherwise have earned. This loss of interest is primarily the excess cost. G, PROCUREMENT AND MANAGEMENT: These are the costs associated with establishing and operating cash management staff and activities. They are generally fixed and are mainly accounted for but salary, shortage, handling of securities and so on. H, UNCERTAINTY AND CASH MANAGEMENT: Finally, the impact of uncertainty on cash management strategy us also relevant as cash flows cannot be predicted with complete accuracy. The first requirement is a precautionary cushion to cope with irregularities in cash flows, unexpected delays in collections and disbursements, defaults and unexpected cash needs. The impact of uncertainty on cash management can, however, is mitigated through. •

Improved forecasting of tax payments, capital expenditure, dividends and so on.

•

Increased ability to borrow through overdraft facility.

2.5 DETERMINE CASH NEED: There are two approaches to derive on optimal cash balances, namely •

Minimizing cost cash model,

•

Cash budget.

2.5.1 CASH MANAGEMENT: The following are the analytical model for cash management •

Baumol model

•

Miller-orr model

•

Orgler’s model.

A, BAUMOL MODEL:

The purpose of this model is to determine the minimizing cost amount of cash that a financial manager can obtain by converting securities to cash. They are two elements •

Conversion cost

•

Opportunity cost

CONVERSION COST: Conversion costs are incurred each time marketable securities are converted into cash.

Total conversion cost per period = Tb\c Where, b = cost per conversion. T = total transaction cash need for the period. C = value of marketable security sold to each conversion. OPPORTUNITY COST: Opportunity cost is derived from the cost\forfeited interest rate (i) that could have been earned on the investment of cash balance.

I (c\2) Where, c\2= the average cash balance (i)=interest rate that could have been earned. i(c\2)+(Tb\c) B, MILLER- ORR MODEL: To determine the optimum cash balance level which minimizes the cost of cash management.

C=bE (n)\t+iE (M) Where,

b = the fixed cost per conversion. E (M) = the expected average daily cash balance. E (N) = the expected number of conversion. t = the number of days in the period. (i) = the lost opportunity cost. C = total cash management costs C, ORGLER’S MODEL: According this model, an optimal cash management strategy can be determined through the use of a multiple linear programme model. The construction of the model comprises three sections •

Selection of the appropriate planning horizon.

•

Selection of the appropriate decision variables and

•

Formulation of the cash management strategy itself. The advantage of linear programming model is that it enables coordinates of the optimal

cash management strategy with the other operations of the firm such as production and with less restriction on working capital balances. The model basically uses one year planning horizon with twelve monthly periods because of its simplicity. It has four basic sets of decisions variables which influence cash management of a firm and which must be incorporated into the linear programming model of the firm. These are •

Payment schedules.

•

Short-term financing.

•

Purchase and sale of marketable securities and

•

Cash balance. The formulation of the model requires the financial managers first specify an objective

function and then specify a set of constraints. Orgler’s objectives function is to minimize the horizon value to the net revenues from the cash budget over the entire planning period; using the assumption that all revenues generated are

immediately re-invested and that any cost is immediately financed, the objective function represented the value of the net income from the cash budget at the horizon by adding the net returns over the planning period. Thus, the objective function recognizes each operation of the firm that generated cash inflow or cash outflows as adding pr subtracting profit opportunities for the firm from its cash management operations. In the objective function, decision variables which cause inflows, such as payments on receivables, have positive coefficient.

2.6 TECHNIQUES OR TOOLS OF CASH MANAGEMENT ANALYSIS: The most important techniques of analysis and interpretation of cash management are us follows. •

CASH FLOW STATEMENT.

•

CASH BUDGETING

•

RATIO ANALYSIS.

1 CASH FLOW STATEMENT:

A cash flow statement is used in conjunction with the other financial statements, provides information that enables users to evaluate the change in net assets of an enterprise, its financial structure (including its liquidity and solvency), and its ability to affect the amounts and timing of cash flow in order to adapt to changing circumstance and

opportunities. Cash flow

information is useful in assessing the ability of the enterprises to generate cash and cashequivalents and enables users to develop models to assess and compare the present value of the future cash flows of different enterprises. It also enhances the comparability of the reporting of operating performance by different because it eliminates the effects of using different accounting treatments for the same transactions and events 1.1 MEANING OF CASH STATEMENT: A cash flow statement is a statement depicting change in cash position from one period to another. A proper planning of the cash resource will enables the management to have cash available whenever needed and put it to some profitable or productive use in case there is surplus cash available. 1.2 UTILITY OF CASH FLOW ANALYSIS: A cash flow statement is useful for short-term planning. A business enterprise needs sufficient cash to meet its various obligations in the near future such as payment for purchase of fixed assets, payment of debts maturing in the near future, expenses of the business etc. a cash flow analysis is an important financial tool for the management. Its chief advantage is as follows. •

Helps in efficient cash management.

•

Helps in internal financial management.

•

Discloses the movement of cash.

•

Discloses success or failure of cash.

1.3 LIMITATION OF CASH FLOW STATEMENT: •

Cash flow analysis is a useful tool of financial analysis. However, it has its own

limitation. •

Cash flow statement cannot be equated with the income statement.

•

The cash balance as disclosed by the cash flow statement may not represent the real

liquid position of the business. •

Cash flow statement cannot replace the income statement or the fund flow statement. CASH FLOW STATEMENT TABLE NO 2.1 PARTICULARS OPENING BALANCES Cash in Hand

xxxxxx

SOURCE OF CASH Income Tax Sale of Fixed Assets CASH FROM OPERATION Net Profit ADD Increase in Other Liabilities Decrease in Inventories

Xxxx Xxxx Xxxxx

LESS Decrease in Sundry Creditors Increase in Sundry Debtors

Xxxx Xxxx

TOTAL CASH AVAILABLE APPLICATION OF CASH Loans & Advance Secured Loan Unsecured Loan Central Excise

Xxxxx xxxx

Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx

CLOSING BALANCE Cash in Hand

Xxxxx

TOTAL APPLICATION AVAILABLE

Xxxx

2 RATIO ANALYSES: An analysis of financial statements based on ratios is known as ratio analysis. Ratio analysis involves the process of computing determining and resenting the relationship of items or group of items of financial statements. Ratio analysis is a widely – used tool of financial analysis. It can be used to compare the risk and return relationship of firms of different sizes. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths

and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two items. 2.1 ADVANTAGE OF RATIO ANALYSIS: The advantages of ratio analysis are as follows. 1.

Forecasting.

2.

Managerial control.

3.

Facilitates communications.

4.

Measuring efficiency.

5.

Facilitating investment decisions

6.

Useful in measuring financial solvency.

7.

Inter firm comparisons

2.2 STEPS IN RATIO ANALYSIS: •

Selection of relevant information.

•

Comparison of calculated ratios.

•

Interpretation and reporting.

2.3 LIMITATION OF RATIO ANALYSIS: •

The analyst should have a through knowledge and experience about the firm and

industry. •

Ratios are not an end in themselves but they are means to achieve a particular purpose or

end. •

Ratios are interred- related and therefore a single ratio cannot convey meaning. It has to

be interpreted with reference to other related to draw meaningful conclusions. •

Ratio will be meaningful if they can be compared with standards or norms.

•

Ratio analysis will be fruitful only if the conclusions are conveyed quickly to the

management. •

Ratio analysis becomes redundant during periods of heavy price

•

Fluctuations.

2.4 NET WORKING CAPITAL: MEANING: This ratio establishes the relationship between cost of sales and working capital. SIGNIFICANCE: Working capital measures the effective utilization of working capital. It also measures the smooth running of business. Net working capital represents the excess of current assets over current liabilities. The term current assets refers to assets which in the normal course of business get converted into cash without dimunition in value over a short period ,usually not exceeding one year or length of operation cycle whichever is more. The greater is the amount of net working capital, the greater is the liquidity of the firm, accordingly net working capital is a measure of liquidity, and inadequate working capital is the first sign of financial problem for a firm. COMPONENTS: The components of working capital ratio are current assets and current liabilities. FORMULA: This ratio is calculated with the help of the following formula.

Net Work capital = current assets - Current liabilities

2.5 CURRENT RATIO: MEANINGS: This ratio expresses the relationship between current assets and current liabilities. SIGNIFICANCE:

The liquidity position of any company is easily measured with the help of current ratio. The current ratio is the ratio of total current assets to total current liabilities. It’s calculated by divided current assets by current liabilities. The current assets of a firm, as already stated, represent that asset which can be, in the ordinary course of business, converted into cash within a short period of time normally not exceeding one year. COMPONENTS: The components of currents assets of the firm are cash at bank, deposits, sundry debtors and closing stock. The components of current liabilities are sundry creditors and provision for Income Tax. FORMULA:

Current ratio

=

Current assets

Current Liabilities 2.6 DEBTORS’ TURNOVER RATIO: MEANINGS: This ratio determines the debtors constitute of current assets and therefore the quality of debtors to great extent determines a firm’s liquidity.

SIGNIFICANCE: This ratio helps in cash budgeting since the flow of cash from customers can be worked out on the basis of sales. It is determine by dividing the net credit sales by average debtors outstanding during the year. Thus, net credit sales consist of gross credit sales minus returns, if any, from customer’s average debtors is the simple average of debtors (including bills receivables) at the beginning and at the end of the year

COMPONENTS: The components of Debtors Turnover Ratio are the Credit Sales and the Average Accounts Receivable. FORMULA:

Debtors’ turnover ratio =

Credit sales Average Accounts Receivables

2.7 STOCK TURNOVER RATIO: MEANINGS: This ratio indicates whether investment in inventory is efficiently used or not. It therefore, explains whether investments in inventories is within proper limits B SIGNIFICANCE: The ratio is measure to discover the possible trouble in the form of overstocking or overvaluation. The stock position is known as the graveyard of the balance sheet It is computed by divided the cost of good sold by the average inventory thus, the cost of good sold means sales minus gross profit. The average inventory refers to the simple average of the opening and closing inventory. The ratio indicated how fast inventory is sold.

COMPONENTS: The component of Stock Turnover Ratio is determined by the Cost of Goods Sold during the Year and the Average Inventory. FORMULA:

Stock Turnover Ratio = Cost of Goods Sold During the Year Average Inventory 2.8 LIQUID RATIO: MEANING: The ratio expresses the relationship between liquid assets and current liabilities of the firm. It is otherwise known as absolute liquid ratio or quick ratio. SIGNIFICANCE: It is a measure of judging the immediate ability of the firm to pay – off its current obligations. The quick test ratio is the ratio between quick current ratio and current liabilities and is calculated by dividing the quick assets by the current liabilities. The term quick assets refers to current assets which can be converted into cash immediately or at a short notice without diminution of value COMPONENTS: All the components of current assets are included except stock and prepaid expenses and the various components of currents liabilities are same as the items included in current ratio.

FORMULA: Liquid ratio can be calculated as follows.

Liquid Ratio =

Liquid assets Current Liabilities

Liquid assets - (Stock + Prepaid Expenses) 2.9 CREDITOR’S TURNOVER RATIO: It indicates the speed with which the payment for credit purchase are made to the creditors A low turnover ratio reflects liberal credit terms granted by suppliers, while a high ratio shows that accounts are to be settled rapidly. The creditor’s turnover ratio is an important tool of analysis as a firm can reduce its requirement of current assets by relying on supplier’s credit. The extent to which trade creditors are willing to wait for payment can be approximated by the creditor’s turnover ratio. It is a ratio between net credit purchase and the average amount of creditors outstanding during the year. A low turnover ratio reflects liberal credit terms granted by suppliers, while a high ratio shows that account are to be settled rapidly. The creditor’s turnover ratio is an important tool of analysis as a firm can reduce its requirement of current assets by relying on supplier’s credit.

Creditors turnover ratio =

credit purchase Average account payable.

3 CASH BUDGETING: A firm is well advised to hold adequate cash balance but should avoid excessive balances. The firm has, therefore, to assess its need for cash properly. The cash budget is probably the most important tool in cash management. It is device to help a firm to plan and control the use of cash. It is a statement showing the estimated cash inflows and cash outflows

over the planning horizon. In the other words, the net cash position of a firm as it moves from one budgeting sub period to another is highlighted by the cash budget. The various purposes of cash budgets are •

To coordinates the timings of cash needs. It identifies the periods when there might either

be as shortage of cash or an abnormally large cash requirement. •

It pinpoints the periods when there is likely to be excess cash.

•

It enables a firm which has sufficient cash to take advantage of cash discounts on its

accounts payable, to pay help obligation when due, to formulate dividend policy, to plan financing of capital expansion and to help unify the production schedule during the year so that the firm can smooth out costly seasonal fluctuations. •

It helps to arrange needs funds on the most favorable terms and percents the

accumulation for excess funds. With adequate time to study his needs, the finance manage can select the best alternative avenues of financing, the management would be forced to accept the best terms offered in a difficult situation. These terms will not be as favorable, since the lack of planning indicates to the lender, that there is an organizational deficiency. The firm, therefore, represents a high risk. Cash budgeting or short-term cash forecasting is the principal tool of cash management. •

Estimating cash requirement

•

Planning short-term financing

•

Scheduling payments in connection with capital expenditure projects

•

Planning purchase of materials

•

Developing credit policies and

•

Checking the accuracy of long term forecasting

Firms use multiple short-term forecasts of varying length and detail, suited to meet different needs. The commonly used design for short –term cash forecasts are •

One year divided into quarters or monthly.

•

One quarter divided into months and

•

One month divided into weeks.

3. A RECEIPTS AND PAYMENTS METHODS: The cash budget prepared under this method shows the timing and magnitude of expected cash receipts and payments over the forecast period. It includes all expected receipts and payments irrespective of how they are classified in accounting. 3. B LONG –TERM CASH FORECASTING: Long-term cash forecasting are generally prepared for a period ranging from two to five years and serve to provide a broad brush picture of a firm’s financing needs and availability of invertible surplus in future. Such forecasts are helpful in planning capital investment methods outlays and long-term financing 3. C REPORTS FOR CONTROL: Cash reports, providing a comparison of actual developments with forecast figures, are helpful in controlling and revising cash forecasts on a continual basis. Several types of cash reports may be prepared the important ones are. DAILY CASH REPORT: The daily cash report shows the opening balance, receipts, payments and the closing balance on a daily basis. DAILY TREASURY REPORT: An amplification of the daily cash report, the daily treasury report provides a comprehensive picture of changes in cash, marketable securities, debtors and creditors.

MONTHLY CASH REPORT: This report shows the actual cash receipts and payments on a monthly basis. The actual are compared with the budgeted figures and variances calculated. 3. D CASH COLLECTION AND DISBURSEMENT:

The cash balance shown by a firm on its books is called the book, or ledger, balance whereas the balance shown in its bank account is called the available, or collected, balance. The difference between the available balance and the ledger balance is referred to as the float. There are two kinds of float disbursement float and collection float, cheque issued by a firm create disbursement float. The net float is the sum of disbursement float and collection float. It is simply the difference between the firm’s available balance and its book balance. If the net float is positive (negative) it means that the available balance is greater (lesser) than the book balance.

2.7 BANK ORGANISATION Prior to the project, the billing process was distributed across different product processors like (those handling cross border transfer, non resident yen related, mass payments, through post

office etc). Wipro’s solution aims to implement a centralized billing system that maximizes automation. The transaction details would be pushed from the product processors to the billing system as an end of day offline process, which will then calculate the charges based on the transaction type and generate accounting entries. At the end of the billing cycle, customer invoices would be generated by the system and the customer account debits will take place in the bank host. Customer information and charge information (fixed, transaction and event based) are maintained in the billing system. For transactions that require immediate charge calculation, the billing system's pricing engine would provide the charges in real time.

2.8 CASH MANAGEMENT SYSTEM FOR A NATIONALIZED BANK MC De COM proposed a solution to facilitate information flow between various entities of the Cash Management system. This system enabled a complete Electronic Messaging Solution for their Branch Offices across the country. This project facilitated the Bank to exchange information between its CCC (Cheque Collection Centre), FCC (Fund Collection Centre) and FMC (Fund Management Centre) seamlessly without any delay. The Bank has its Corporate Office in Bangalore and International transaction center at Mumbai. The realization of cheque or any cash transactions required a couple of days. This delay leads to a situation where the Bank was not in a position to get at its head office the transaction happened at each of its branches or extension counters at. The head office and the International transaction office faced numerous problems in terms of managing the cash at various locations. The customers also could not really track the transaction especially if they are more than one transaction at different places. The Bank thought of an ambitious program of offering Cash Management Services to its customers across the country The Customer deposit their cheque at various Cheque Collection Center’s (CCC) across

the country and this information is processed and consolidated at the Fund Management Centre (FMC) located at Mumbai. The FMC will further communicate the processed information to various Fund Collection Centre (FCC). The Customers can contact directly the Fund Collection Centre (FCC) to obtain updated information about their funds position as required

CHAPTER-III

OBJECTIVE OF THE STUDY

•

To determine the overall performance of cash in the concern.

•

To know the credit worthiness of the concern.

•

To assess the liquidity and short term solvency position of the firm.

• firm.

To understand the relationship maintained with the trade creditors and the debtors of the

•

To identify the basic forces influencing the cash management of the firm.

CHAPTER-IV RESEARCH METHODOLOGY

4.1 RESEARCH DESIGN: The research approach used for the study is descriptive. The form of the study is on the financial statement analysis in general and specific to the cash position. 4.2 DATA COLLECTION PRIMARY DATA: The primary data is collected from the personnel interview. SECONDARY DATA: The study has been made using secondary data, which are obtained from annual reports and statements of accounts. The study is period for the annual reports and statements of accounts extended form the year 2001-02 to 2005-06. 4.3 ANALYTICAL TOOLS FOR THE STUDY: The researcher for the purpose of analysis and interpretation of the following tools have been need •

CASH FLOW STATEMENT

•

RATIO ANALYSIS

•

CASH BUDGETING

4.4 PERIOD OF STUDY: The study includes 5 years (2001-02 to 2005-06) financial rates of the firms. The study was conducted for 1 month’s period.

CHAPTER-V DATA ANALYSIS &INTERPRETATION

5.1 CASH FLOW STATEMENT: A cash flow statement is used in conjunction with the other financial statements, provides information that enables users to evaluate the change in net assets of an enterprise, its financial structure (including its liquidity and solvency), and its ability to affect the amounts and timing of cash flow in order to adapt to changing circumstance and

opportunities. Cash flow information is useful in assessing the ability of the

enterprises to generate cash and cash-equivalents and enables users to develop models to assess and compare the present value of the future cash flows of different enterprises. It also enhances the comparability of the reporting of operating performance by different because it eliminates the effects of using different accounting treatments for the same transactions and events.

CASH FLOW STATEMENT (2001-02) TABLE NO: 5.1

PARTICULARS

31-03-2001

31-03-2002

OPENING BALANCES Cash in Hand

61738

SOURCE OF CASH Central Excise

2151

779

1372

Secured Loan

3363880

3406134

42254

247341

206964

40377

3363458

3747384

383926

Increase in Other Liabilities

300217

300466

249

Less Increase in Inventories

7310787

7466168

155381

Increase in Sundry Debtors

2154425

2473039

318614

TOTALCASHAVAILABLE

16742259

17600934

55921

Purchases of Fixed Assets

744630

749327

4697

Loans & Advance

162581

194320

31739

Income Tax

77494

84556

7062

CASHFROMOPERATION Net Profit ADD: Increase in Sundry Creditors

-49443

APPLICATION OF CASH

CLOSING BALANCE Cash in Hand TOTALAPPLICATION AVAILABLE

12423 984705

1028203

CASH FLOW STATEMENT (2002-03) TABLE NO-5.2

55921

PARTICULARS

31-03-2002

31-03-2003


12423

SOURCE OF CASH Income Tax

194320

206000

2650

Sale of Fixed Assets

726292

749327

23035

247341

261547

14206

300466

379275

CASH FROM OPERATION Net Profit ADD Increase Liabilities

in

Other

Decrease in Inventories 7466168 LESS Decrease in Sundry Creditors 3747384

5698609 2470569

78809 176755 9 127681 5

Increase in Sundry Debtors

2651776

178737

2473039

TOTAL CASH AVAILABLE 15155010

405022

12417103

443130

APPLICATION OF CASH Loans & Advance

194320

206000

11680

Secured Loan

3406134

3135484

270650

Unsecured Loan

1255000

1105000

150000

Central Excise

779

5313

4534

CLOSING BALANCE Cash in Hand TOTAL APPLICATION AVAILABLE 4856233

6266 4451797

CASH FLOW STATEMENT (2003-04) TABLE NO: 5.3

443130

PARTICULARS

31-03-2003

31-03-2004


6266


5313

2596

2717

261547

267548

5999

2470569

3553092

1082523

379275

530420

151145

Decrease in Inventories 5698609 LESS Increase in Sundry Debtors 2651776

4378883

1319726

4542399

1890623

TOTAL CASH AVAILABLE

11467089

13274938

677753


726292

991175

264883

Loans & Advance

206000

332424

126424

Secured Loan

3135484

3088824

46660

Unsecured Loan

1105000

900000

205000

Income Tax

81906

107401

25495

CASH FROM OPERATION Net Profit ADD Increase Creditors

in

Sundry

Increase in Other Liabilities

668770

APPLICATION OF CASH


9291 5419824

CASH FLOW STATEMENT (2004-05) TABLE NO-5.4

677753

PARTICULARS

31-03-2004

31-03-2005


9291

SOURCE OF CASH Sale of Fixed Assets

991175

792972

198203

Unsecured Loan

900000

1200000

300000

Net Profit ADD Increase in Other Liabilities

267546

309347

41801

530420

531981

1561

Decrease in Sundry Debtors

4542399

3652395

890004

Decrease in Inventories LESS Decrease in Sundry Creditors

4378883

3950640

428243

3553092

3258702

294390


15163515

13696037

1574713

Loan & Advance

332424

377608

45184

Unsecured Loan

3088824

15892601

1499564

Central Excise

2596

24695

22099

Income Tax

107401

108612

1211

CASH FROM OPERATION

1067219

APPLICATION OF CASH


6655 16403516

CASH FLOW STATEMENT (2005-06) TABLE NO-5.5 PARTICULARS

31-03-2005

31-03-2006

1574713


6655


24695

9867

14828

Secured Loan

1589260

1163089

350000

Net Profit ADD Increase in Other Liabilities

309347

413155

531981

735107

10380 8 20312 6

Decrease in Sundry Debtors LESS Decrease in Sundry Creditors

3652395

3596559

55836

3258702

3250590

8112

Increase in Inventories

3950640

4018625

67985


13317020

13186992

658156


792972

944278

151306

Loans & Advance

377608

432320

54712

Secured Loan

1163089

1589260

426171

Income Tax

108612

114142

5530

CASH FROM OPERATION

286673

APPLICATION OF CASH

CLOSING BALANCE Cash in Hand TOTAL APPLICATION AVAILABLE

20437 2442281

3080000

658156

CASH FLOW STATEMENT TABLE NO-5.6 PARTICULARS OPENING BALANCES

2001-02

2002-03

2003-04

2004-05

2005-06

Cash in Hand SOURCE OF CASH Central Excise Secured Loan Income Tax Sale of Fixed Assets Unsecured Loan CASH FROM OPERATION NET PROFIT ADD Increase in Sundry Creditors Increase in Other Liabilities Decrease in Inventories Decrease in Sundry Debtors LESS Increase in Inventories Increase in Sundry Debtors Decrease in Sundry Creditors TOTAL CASH AVAILABLE APPLICATION OF CASH Purchases of Fixed Assets Loans & Advance Secured Loan Unsecured Loan Central Excise Income Tax CLOSING BALANCE Cash in Hand TOTAL APPLICATION AVAILABLE

0.61

0.124

0.013 0.422

0.06 0.02

0.02 0.23

0.4

0.14

0.05

3.84 0.002

0.78 17.67

10.82 1.51 14

3.18 1.78

0.046 0.31

4.42

0.11 2.7 1.5 0.04

0.07

0.06 0.14

1.98 3

3.5

0.42

1.04

0.015 4.28 8.9

2.03

2.94

0.08

15.7

6.57

0.45

1.51 0.54 4.26

0.56 0.68

18.9

12.76 0.55

0.09

6.76 2.65 1.26 0.46 2.05 0.25

15 0.22 0.012

0.055

0.12

0.06

0.09

0.22

0.2

0.55

4.42

6.76

15.7

6.57

INTERPRETATION: •

The above table explains that the beginning of the (2001-02) opening balance is in0.61 but in the other year it reduced gradually. So the concern should take necessary step to overcome the default.

•

The concern is purchase the fixed assets in the year 2001-02,2003-04,2005-06 at 0.046,2.65 and 1.51. The concern purchase high asset in the year 2003-04 at 2.65 it clearly determine the outflow of cash in the concern.

•

The borrowing of concerns high in the year 2003-04 at 1.26 it indicates that the concern uses more loan. The concern should reduce to borrow the money from the various resources. It leads to take more advantage to the borrowers.

•

The closing balance is not high than the opening balance .it indicates that the cash is not properly managed in the concern.

5.2 CASH BUDGETING: A firm is well advised to hold adequate cash balance but should avoid excessive balances. The firm has, therefore, to assess its need for cash properly. The cash budget is probably the most important tool in cash management. It is device to help a firm to plan and control the use of cash. It is a statement showing the estimated cash inflows and cash

outflows over the planning horizon. In the other words, the net cash position of a firm as it moves from one budgeting sub period to another is highlighted by the cash budget

CASH BUDGET TABLE NO – 5.7

PARTICULARS a OPENING BALANCE

2001-02

2002-03

2003-04

2004-05

2005-06

61738

6266 1992924 4 1966463 1

9291 2052023 2 2025314 9

6655

CASH

b Receipts

16315437

c Payments

16093407

12423 1806471 0 1789247 8

d NET CASH FLOW (b-c)

222030

172232

264613

267083

329980

e Cumulative Net Cash Flow

222030

394262

658875

925958

1255938

f (a+e) 283768 g Minimum Cash Balance Requirement 100000 SURPLUS RELATION TO THE MINIMUM CASHBALANCE REQUIREMENT(F-G) 183768

406685

665141

935249

1262593

100000

100000

100000

100000

306685

565141

835249

1162593

CHART NO –5.1

23938082 23608102

12 10 8 6 4

cash required

2 0

20 20 20 20 20 01- 02- 03- 04- 0502 03 04 05 06

INTERPRETATION: In the above table it clearly determines the availability of the cash balance in the subsequent year. It will clearly determine the minimum cash balance requirement of the concern. In the 2005-06 leads to higher need of cash balance 11.62 lakhs. The cash balance is highly required for the day- to day transaction.

5.3 RATIO ANALYSIS: An analysis of financial statements based on ratios is known as ratio analysis. Ratio analysis involves the process of computing determining and resenting the relationship of items or

group of items of financial statements. Ratio analysis is a widely – used tool of financial analysis. It can be used to compare the risk and return relationship of firms of different sizes. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two items.

5.3.1 NET WORKING CAPITAL: Net working capital represents the excess of current assets over current liabilities. The term current assets refers to assets which in the normal course of business get

converted into cash without dimunition in value over a short period ,usually not exceeding one year or length of operation cycle whichever is more. The greater is the amount of net working capital, the greater is the liquidity of the firm, accordingly net working capital is a measure of liquidity, and inadequate working capital is the first sign of financial problem for a firm. FORMULA: NET WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIES. NET WORKING CAPITAL TABLE NO-5.8

PARTICULARS

2001-02

2002-03

2003-04

2004-05

2005-06

CURENT ASSETS

99.51

83.56

89.30

76.09

76.35

CURRENT LIABILITIES

40.47

28.49

40.83

37.90

39.85

NET WORKING CAPITAL

59.03

55.06

48.47

38.19

36.49

Chart no.5.2 100 90 80 70 60 50 40 30 20 10 0

Current assets Current liabilities Net Working capital 200102

20022003

200304

200405

200506

Interpretation: This ratio indicates there is lower amount required in the working capital. The higher amount is in the year 2001-02 at 59.03. It will clearly determine the firm is in liquidly position but this is reducing gradually. The financial manager should concentrated more on the working capital as it is not satisfactory.

5.3.2 CURRENT RATIO: The current ratio is the ratio of total current assets to total current liabilities. It’s calculated by divided current assets by current liabilities.

The current assets of a firm, as already stated, represent that asset which can be, in the ordinary course of business, converted into cash within a short period of time normally not exceeding one year.

FORMULA: CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES

CURRENT RATIO TABLE NO-5.9

PARTICULARS

2001-02

2002-03

2003-04

2004-05

2005-06

CURRENT ASSETS

99.51

83.56

89.30

76.09

76.35

CURRENT LIABILITIES

40.47

28.49

40.83

37.90

39.85

CURRENT RATIO

2.45

2.93

2.18

2.00

1.9

Chart no.5.3 100 90 80 70 60 50 40 30 20 10 0

Current assets Current liabilities Current ratio 200102

20022003

200304

200405

200506

Interpretation: The company is highly efficient is short – term solvency position. The company should maintain this current ratio. The concern should concentrate on 2005-06 year current ratio position.

5.3.3 QUICK TEST RATIO: The quick test ratio is the ratio between quick current ratio and current liabilities and is calculated by dividing the quick assets by the current liabilities.

The term quick assets refers to current assets which can be converted into cash immediately or at a short notice without diminution of value.

FORMULA: QUICK TEST RATIO = QUICK ASSETS QUICK LIABILITIES

QUICK TEST RATIO TABLE NO-5.10 PARTICULARS

2001-02

2002-03

2003-04

2004-05

2005-06

QUICK ASSETS

24.85

26.58

45.51

36.59

36.16

QUICK LIABILTIES

40.47

29.00

40.83

37.90

39.85

ACID TEST RATIO

0.61

0.93

1.11

0.96 0.90

Chart no.5.4

50 45 40 35 30 25 20 15 10 5 0

Quick assets Quick liabilities Acid test ratio

2001- 2002- 2003- 2004- 200502 2003 04 05 06

Interpretation: The liquidity position is not near to the standard ratio. The concern should clearly determine the various liquidity position of the concern.

5.3.4 INVENTORY TURNOVER RATIO: It is computed by divided the cost of good sold by the average inventory thus, the cost of good sold means sales minus gross profit. The average inventory refers to the

simple average of the opening and closing inventory. The ratio indicated how fast inventory is sold.

FORMULA: INVENTORY TURNOVER RATIO= COST OF GOOD SOLD AVERAGE INVENTORY

INVENTORY TURNOVER RATIO TABLE NO-5.11 PARTICULARS INVENTORY TURNOVER RATIO

2001-02

2002-03

2003-04

2004-05

2005-06

1.16

1.59

2.36

2.81

3.37

COST OF GOOD SOLD

86.04

105.07

118.9

117.05

134.1

AVERAGE INVENTORY

74.00

65.82

50.38

41.65

39.84

Chart no.5.5

140 120 100

Inventory TurnOver ratio Cost of good sold

80 60 40

Average Inventory

20 0 2001- 2002- 2003- 2004- 200502 2003 04 05 06

Interpretation: The inventory turnover is increasing gradually to the period of the year. It will clearly determine the capacity of the concern

5.3.5 DEBTOR’S TURNOVER RATIO:

It is determine by dividing the net credit sales by average debtors outstanding during the year. Thus, net credit sales consist of gross credit sales minus returns, if any, from customer’s average debtors is the simple average of debtors (including bills receivables) at the beginning and at the end of the year.

FORMULA: DEBTOR’S TURNOVER RATIO= NET CREDIT SALES AVERAGE DEBTORS

DEBTOR’S TURNOVER RATION: TABLE NO-5.12 PARTICULARS

2001-02

2002-03

2003-04

2004-05

2005-06

CREDIT SALES

159.8

157.8

155.8

172.62

206.45

AVERAGE DEBTORS DEBTORS TURNOVER RATIO

23.13

25.62

35.97

40.97

36.24

6.90

6.16

4.33

4.21

5.69

Chart no.5.6 250 200 Credit sales

150

Average debtors

100

Debtors turn over ratio

50 0 2001- 200202 2003

2003- 200404 05

200506

Interpretation: The debtor’s turnover ratio is not in the concert way in the concern. The higher ratio is in the year 2001-02 is 6.90. The past performance is clearly determining the various formation of the concern.

5.3.6 CREDITOR’S TURNOVER RATIO:

It is a ratio between net credit purchase and the average amount of creditors outstanding during the year. A low turnover ratio reflects liberal credit terms granted by suppliers, while a high ratio shows that account are to be settled rapidly. The creditor’s turnover ratio is an important tool of analysis as a firm can reduce its requirement of current assets by relying on supplier’s credit. FORMULA: CREDITOR’S TURNOVER RATIO= NET CREDIT PURCHASES AVERAGE CREDITOR’S

CREDITOR’S TURNOVER RATIO TABLE NO-5.13 PARTICULARS

2001-02

2002-03

2003-04

2004-05

2005-06

CREDIT PURCHASE

86.0

105.07

118.91

117.05

134.16

AVERAGES CREDITORS CREDITORS TURNOVER RATIO

35.55

31.08

30.11

34.05

32.54

2.42

3.38

3.94

3.43

4.12

Chart no.5.7 140 120 100

Credit purchase

80

Average creditors

60 40

Creditors Turnover ratio

20 0

2001- 2002- 2003- 2004- 200502 2003 04 05 06

Interpretation: The creditor’s availability of the concern keeps on decrease in the year. It will clearly determine in the year 2001-02 2.42.

CHAPTER-VI FINDINGS AND SUGGESTION OF THE STUDY

6.1 FINDINGS OF THE STUDY 1. The net working capital of the organization is not satisfactory. 2. The current ratio for the four year it is as per the standard norms (2:1) concept for the year 2005-06 which is 1.9:1. On an average current ratio is formed to be satisfactory. 3. Quick ratio of the company is not satisfactory as it is not up to the standard norms (1:1). 4. Inventory turnover ratio is found to be not satisfactory as it is maintain low inventory. 5. Debtor turnover ratio is decline indicates it is not satisfactory. 6. Creditor’s turnover ratio showing increasing ratio indicates that the company is enjoying. Its credit facilities to the possible amount. 7. In the year 2005-06 is leads to higher requirement of cash balance 11.62 lakhs. 8. Cash reflects the liquidity position of the concern is reduced in the year 2005-06 0.06 lakhs decreasing cash position indicated that the company is not managing its cash position satisfactorily.

6.2 SUGGESTION & RECOMMENDATION: The various suggestions are followed after analyzing the main finding of this study.

•

The cash management of the company is failed to strengthen the cash position so the company so required to table steps to improve the cash position by concentrating on receivables, inventories avoiding to much on borrowings.

•

The company failed to manage the receivable in the normal level because of poor performance of the collection procedure and inefficient performance related with managing the receivables.

•

The inventories play a major role in production. So, the concern should take measure to maintain the inventories that are required to in order reduce the e cost, and keep the production flow continuously.

•

In 2005-06 the net profit is increased compare to the other four year. So the concern should maintain the same position to improve the net profit.

•

The cash and bank balance indicate high liquidity position of a company, The Flavors India (p) Ltd maintain cash including bank balance is at a optimum level and it is enough to meet day to day requirement.

CHAPTER-VII CONCLUSION

Analysis and Interpretation of the financial data of The Flavors India (p) ltd, ascertain the cash position of the firm. The results explores that the firm is unable toe meet its short term obligations. The concern should reduced the long term loan and obtain the profit. The concern should take various measures to increase the net profit.

CHAPTER-VIII LIMITATION & SCOPE OF THE STUDY

8.1 LIMITATION OF THE STUDY: •

These studies only concentrated the quantitative method.

•

The study is restricted only to The Flavors India (P) Ltd. being a case study the findings cannot be generalized.

8.2 SCOPE OF THE FURTHER STUDY: •

It helps to take short term financial decision.

•

It indicates the cash requirement needed for plant and equipment expansion programme.

•

It reveals the liquidity position of the firm by highlighting the various sources of cash and its uses.

•

To find strategies for efficient management of cash.

A Study on Cash Management On

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