WORKING CAPITAL IN MCRB&MSLtd

CONTENTS

Chapter-I INTRODUCTION

 Working capital management and policy

 Importance of working capital
 Objectives of the study
 Methodology
 Scope of the study
 Limitations of the study

Chapter-II PROFILE OF THE ORGANISATION

Chapter-III DATA ANALYSIS

 Advantages of working capital

 DETERMINANTS OF WORKING CAPITAL

 WORKING CAPITAL MANAGEMENT

 TYPES OF working capital

 WORKING CAPITAL CYCLE

Chapter-IV CONCLUSIONS & SUGGESTIONS

Chapter-V BIBLIOGRAPHY
 INTRODUCTION

Working capital management is an integral part of overall

corporate management. Many finance managers, who are quite at
home and competent in dealing with long term decisions, such as
capital investments experience difficulties when they have to scout for
funds to meet the day to day working needs. With bank finance getting
increasingly scare, regulated and expensive the emphasis has shifted to
closer attention to internal generation of funds and the development of
the enterprises ability to raise funds in the market.

WORKING CAPITAL MANAGEMENT AND POLICY

Working capital can be defined as the amount at funds, which a

Company must have to finance tits day-to-day operations. It can also
be regarded as that proportion of the companies’ total capital, which is
employed in “current liabilities” which are short term assets that are
normally expected to get converted into cash with in a year. Current
liabilities are short term liabilities maturing for the payment with in a
short period say one year, and they partly support the investment in
current assets. In other words they serve as a source of working
capital.

• Net working capital is defined as the difference between current assets

and
current liabilities, and represents the extent to which current assets are
financed by long-term funds.
• Working capital management is the process of administration of current
assets
 and Current liabilities within the policy guidelines of the company.
• Working capital policy is concerned with basic policy decisions
regarding.
• The target levels each category of current assets.
• The methods of financing the current assets.

Current assets in many cases constitute more than half of the total
Assets employed In business and therefore, it is essential to evolve an
appropriate working capital policy to suit the specific needs of the firm an
manage its working capital accordingly.

Current liabilities that are specifically financing current assets come

under the preview of working capital policy. These are distinct from current
liabilities which are consequences of past long term financing decisions,
such as current maturates of long term debt or those in nature of temporary
financing of capital projects which will be subsequently funded by long term
sources off finance.

The aim in working capital management and policy is to maintain a

proper balance between the magnitude of working capital and the general
scale of operations of the company and to determine, with reference
therefore, the appropriate levels of components of current assets to be
maintained and the pattern of financing them.
 IMPROTANCE OF WORKING CAPITAL MANAGEMENT

The importance of working capital management can be. Traced to the

following main considerations.
 Current assets constitute the dominant segment of the total assets
employed in most business and, therefore, require more intense and careful
managerial attention.

 The investment in current assets and level of current liabilities

are very sensitive to changes in sale and the funds requirements shifts
rapidly, demanding quick short-term decisions to sustain smooth
operations.

 Through profitability and proper selection of investments are essential

for the long fun prosperity of the business, its short-term survival depends on
its liquidity or ability to meet short-term obligations fully and promptly. The
precondition for liquidity is efficient management of the elements of working
capital and the ability to raise sufficient short and long-term finance. The
finance managers of companies will have to devote considerable time and
energy in arranging short term financing obtaining favorable credit terms
from the suppliers of goods and services, deciding on credit policies for
credit sales, keeping n check on the funds blocked in inventories and
monitoring and directing the movement of cash in the business.
 OBJECTIVES OF THE STUDY:

• The objective of the study is to know the short term financial position

of the Mulkanoor Co-operative Rural Bank with Working Capital

Management.

• To, identify the limitations in management of the Mulkanoor Co-

operative Rural Bank and suggestions to overcome those limitations.

• To provide a conceptual frame work and theoretical perception about

the performance of Mulkanoor Co-operative Rural Bank.

• To provide credit facilities to the customers

• To pay wages and salaries to the employees working in the

organization.

• To know the day-to-day expenses.

 METHODOLOGY

For the purpose of the study, the data collected from primary and
Secondary has sanitized edited and presented in the from of tables and
statements. The analysis of the data has been made with the help of certain
mathematical techniques lie percentages etc. Where ever feasible and
opportiate graphs and diagrams are used.
The collection of data is done through two principles sources viz
1. Primary Data
2. Secondary Data

PRIMARY DATA:-

It is the information collected directly without any reference. In the study,

it mainly interviews with concerned officers and staff either individually or
collectively. Some of the information had been verified or supplemented with
personal observation, the data collected through conducting personal
interview with the officer of the Mulkanoor Co-operative Rural Bank.

SECONDARY DATA:-

When an investigator uses the data which is already been collected by

other, that data is called secondary data. Such as pamphlets annual reports,
return and internal records.
The data includes:
1. Collection of required data from annual report of Mulkanoor Co-
operative Rural Bank, Mulkanoor.
2. Reference from text book and journals relating to financial management.
3. Articles published in business dailies like economic times, Business
world, and etc
SCOPE OF THE STUDY

The Mulkanoor Co-operative Rural Bank is the present study however

was able to cover Mulkanoor Co-operative Rural Bank financing services.
Moreover it is a case study about Mulkanoor Co-operative Rural Bank the
financing activities at Mulkanoor Co-operative Rural Bank level were
covered.

LIMITATIONS OF THE STUDY

The limitations of present study are as follows:

1. Due to the time constraint the study is confined to the assessment of

working capital management only.
2. Data collected for 5 years which is limited.
3. The study is confined to the secondary source of data and figures are
taken from the annual reports and suggestions of various accountants.
4. The data which is used in this project are taken from the annual
reports, published at the end of the year.
5. The study is limited to the period of 2002-2007.
 ORGANIZATIONAL PROFILE

Profile of the Mulkanoor Co-operative Rural Bank & Marketing Society

Limited.

This chapter is devoted to present the historical aspects of the bank.

The objectives of the bank, the organizational structure of the bank,

and area of the operation.

The Mulkanoor Co-operative Rural Bank is situated in Mulkanoor

Village of Bheemadevarapally Mandal of Karimnagar district in Andhra
Pradesh.

It was registered as primary agricultural credit society under

Hyderabad Co-operative Society act XVI of 1952, it was started in the year
of 1956 with paid-up Share capital of Rs.2792.And authorized share capital
of Rs.25000.The authorized share capital enhanced Rs. 2 crore on 30th
June, 1994 and the paid up share capital in the year was Rs. 1 crore, the
paid of share capital 2.8 crores in the year 2007-2008. The initial
membership of Mulkanoor Co-operative Rural Bank was only 373 but, it
increased to 6257 in the year 2007-2008.

CO-OPERATIVE BANKING PRINCIPLE:

A Co-operative bank has been defined as an agency which is in a

position to deal with small men’s on his own terms accepting the security
he has without drawing on the protection of the rich. The agency must not be
a channel for pouring charity or subsidizing the small man out of public
funds instead of the material help must be backed by moral improvement
and strengthening the fiber.
 AREA OF OPERATION:

The area operation of Mulkanoor Co-operative rural Bank confined to

the following 14 villages are as follows:

Mulkanoor,Mutharam,Mallaram,Bheemadevarapally,Errabelli,Mustafapo
or, Gopalpoor, Jeelugula, Kothakonda, Vangara, Gatlanarsingapoor, Koppur,
Rathnagiri and Kothapalli.

All these villages are situated around five miles distance from the head
Quarters of the MCRB i.e., Mulkanoor up to 1969-70.The Karimnagar district
co-operative central bank was the financing bank to the MCRB. According to
the guidelines of the Reserve Bank of India, presently the State Bank of
Hyderabad is its financing bank.

ESTABLISHMENTOF MULKANOORCO-OPERATIVE RURAL BANK &

MARKETING SOCIETY LIMITED:

Mulkanoor and marketing society limited was established in the

year1956 with a view to serve the small traders, middle class families,
different professionals and backward class people of Mulkanoor and hear
villages by lending loans on Co-operative principles. The following members
are nominated in the meeting for the managing Committee to look after the
establishment of the Bank and Marketing Society Limited.
 Sarvasri:-

1) A.K. Praveen Reddy Garu PRESIDENT

2) P.V. Gadha Komuraiah Garu VICE-PRESIDENT
3) A. Raji Reddy Garu TREASURER
4) A. Papaiah Garu DIRECTOR
5) D. Venkat Rao Garu DIRECTOR
6) M. Prakash Rao Garu DIRECTOR
7) Y. Srinivas Raj Garu DIRECTOR
8) P. Prathap Reddy Garu DIRECTOR
9) P. Chandraiah Garu DIRECTOR

Co-operative Department Member

Block Development officer or village level workers

10) P.Chandraiah Garu PROMOTER

11) Narayana Garu
ACCOUNTANT
12) Krishna Garu STATIONARY
13) Veera Reddy Garu WATCH MAN
14) V. Illaiah ATTENDER
15) K. Venkateshwarlu ATTENDER
16) M. Yadagiri ATTENDER
17)

The Mulkanoor Co-operative Rural Bank has been a successful multi

Co-operative society in India and got a lot of appreciation from leading
national and international authorities on co-operatives. The BBC has taken a
film on the various function of the society. It was one of the best multi-co-
operatives in the Asian region. The president of the MCRB was the recipient
of the best manager award in the year of 1981 from the Hyderabad
Management Association .The performance of the MCRB by covering the
functions such as credit and non-credit.
 Funds: Funds may be raised by the following means:

I. The funds of the co-operative shall consist of the following.

1) Share capital from members and nominal members.

2) Deposits from members and others.
3) Loans and borrowings from members and others.
4) Grants and donations from members and others.
5) Reserves and surplus from members and others.
6) Donations, grants & subsides

II. The funds shall be mobilized and managed in accordance

with the policies of the board.

Maximum share holding

No member may hold shares worth.

Members:

When a bank is said to be called as a regional rural bank by

fulfilling the following conditions as follows. The rural sector in any place
which has
1) Population not exceeding 5000 members.
2) Density of population not more than400 per square kilo meter.
3) At least 75%of the mall working populations engaged in
Agriculture.
 ELEGIBILITY FOR MEMBERSHIP:

 Agriculturists involved in agriculture and allied activities who are

cultivators, who are competent to contract and who reside in one of the
villagers mentioned in the “Area of operation” shall be eligible for admission as
members. Subject to the by Laws, any person who is desirous of utilizing the
services of co-operative shall express his/ her willingness to accept the
responsibilities of membership and fulfill Such other conditions as may be
required to by the board of general body and there Upon she /he may be
admitted as a member, subject to condition that the co - operative is in a
position to extend its services to the applicant.

The members of the co-operative shall be drawn from the 14 revenue

villages as mentioned the “area of operation” And their hamlets in
Elkathurthy mandal of Karimnagar district.

Normal member:

The following may be admitted as nominal members.

1. A minor who is the legal heir of member and on whose behalf the
members
May have to execute a mort age deed in favor of the co-operative.

2. Persons who are residing the villages of Saidapoor,Husnabad,

Elkathurthy, Bheemadevarapally, Dharmasagar, and Ghanpur

3. Any commercial bank or any other agency which intends to financially

Support the Co-operative.

4. Nominal members shall have no voting rights and shall be entitled

only to
Nominal shares which do not carry any interest.
 Services:

The co-operative shall provide the following services to members and

Conduct the following activities in order to fulfill its aims.

1. Financial services
2. Produce marketing services
3. Consumer services
4. Welfare services
5. General services

Financial services:

 Loans for various crops

 Medium term loan - deepening of wells, installation of
pump sets, laying of
pipe line, orchards , poultry, diary, sheep rearing, tractor, personal
loans 18
kinds of loans .
 Member funds - voluntary funds
Fixed deposits
Self imposed deposits
Share capital

Inputs supply services:

 Supply of fertilizers, pesticides, seeds, sprayers, pump sets,

Accessories,
pipe lines, seedlings of orchards, poultry feed and medicines, diesel.
 Technical services to farmers by our Agricultural officers.
 MARKETING SERVICES: _ VALUE ADDITION TO PRODUCE

 Purchase of paddy produce from its members.

 Processing of paddy and selling rice in its market.
 Purchase of cotton and ginning of cotton.
 Purchase of maize.
 Production of paddy seed, processing & marketing.

Consumer services:

 Cloth, cosmetics, food grains edible& non edible articles

 Fair price shops (PDS)

 Supply of cooking gas of Bharath petroleum’s.

Welfare Services:

 Providing drinking water by bore wells

 Conduct of family planning camps, eye camps
 Insurance services through L.I.C.,N.I.C.
 Mutual family welfare fund up to Rs.25000
 Funeral expenses Rs.1500
 Janatha accident policy Rs.50000
 Life insurance of Rs.20000
 Merit scholar ships to students of Rs.30000
 Electric motors insurance
 Loan insurance schemes to the extend of crop loans
 Scholar ship to students of Rs.16,90,800 through L.I.C
 Electrifying the village
Conditions prevailed:

 Lack of irrigation facilities.

 Lack of finance
 High rate of interest
 Lack of inputs
 Remunerative price for Agriculture produce
 Lack of self confidence among farmers.

The Mulkanoor Cooperative Rural Bank & Marketing Society Ltd.,

Mulkanoor, Mandal: Bheemadeverapally, District: Karimnagar.

Year of established : 1956

No. of members it started with : 373
No. of villages : 14
Total share capital collected : Rs.2,300
No. of employees : 1
Short term loan given : Rs.32, 000

Primary Objective:

 Timely available of finance

 Increase their production for high returns from his production
 To stop migration
 Structure:

Registered under A.P. act 1964 in the year 1956

Converted through APMACS act 1995 in the year 1995
General body consist of 6,202 members
Managing committee consist of 15
President
General manger and employees-106

FINANCE:

1. Main sources
2. Our members
3. State Bank of Hyderabad National co-operative
Development Corporation
4. Government of ANDHRA PRADESH
5. After 1969 we are ceded to State Bank of Hyderabad

STATEMENT SHOWING MEMBERSHIP FOR LAST 5-YEARS

This is a co-operative. They believe in the will of their members.

Experience has shown, too that in the last 50 years. The decisions of the
members have been on the whole, wise and reasonable. They made some
mistakes, but then they are the people.
 They had two years of trauma – but that was when our democratic
Structure was not allowed to function when our members were not making
decisions. Constant increases of members were there in the bank year to
year.

Table No: 1

(Rupees in Lakhs)

S.No Period Members Share Capital Rs.

2003-2004 6048 182.10

1
6077 194.94
2 2004-2005
6166 221.95
3 2005-2006
4 2006-2007 6202 238.05

5 2007-2008 6251 280.01

 OBJECTIVES OF THE BANK

The objectives of the co-operative shall be to achieve the economic

and social development of its members, on the basis of mutual help and
cooperation in accordance with the following 6 co-operative principles.

1. Membership of the cooperative shall be voluntary &available with out

restrictions of any social, political, racial or religious discrimination, to all
persons who can make use of its services & are willing to take
responsibilities of membership.
2. Co-operative societies are democratic organizations. Their shall be
Administered to the persons elected or appointed in a manner agreed
by the members and accountable to them. Members of primary
cooperative societies shall enjoy equal Rights of voting (1 member, 1
vote) and participation in decision affecting their Cooperative societies
in other than primary cooperative societies. The administration shall be
conducted on a democratic basis in a suitable form.
3. Share capital shall only receive a strictly limited rate of interest, if any.
4. The economic results arising out of the operation of a cooperative
society, belong to the members of that cooperative society and shall be
distributed in such a manner as would avoid one member gaining at the
expense of others which shall be achieved.

• By provision for development of the business of the cooperative society.

• By provision of common services .
 • By distribution among the members in proportion to their
transactions with the cooperative society .

5. All co-operative societies shall make provision for the education of their
members, office bears & employees and of the general public in the
principles and techniques of cooperation, both economic and
democratic.

6. All cooperative societies in order to best serve the interest of their

member and their Communities, shall actively cooperate in every
practical way with other cooperatives at local, national &international
levels, having as their aim the achievement of unity of action by
cooperators through out the world.

ORGANISATION STRUCTURE OF THE MCRB AND MSLtd

The Mulkanoor cooperative rural bank and marketing society limited

don’t has no Branches till 31-3-2008.General body consists of all the user
members they have 6251 of them all from the 14 villages and all agriculturists.

They elect 15 members as managing committee including the president

with a term of 5 years and once in every 20 months there will be election to 5
seats in staggered term. We believe that the owners of any enterprise must
understand that enterprise it is to bee sensitive to them and be viable. Our
managing committee makes the policy decisions. While the posts of president
and committee members are honorary. We expect our president to put several
hours in week at the cooperative and our committee members to available for
consultations in their villages. The organization structure of the bank is as
shown in chart.
 ORGANIZATIONAL CHART

GENERAL BODY

BOARD OF DIRECTORS

CHAIR MAN

VICE CHAIR MAN

CHIEF EXECUTIVE OFFICER

ACCOUTANT

CLERKS

CLERK CUM TYPIST CLERK-COM-CASHIER

SUPPORTING STAFF
 COMPOSITION OF BOARD OF DIRECTORS

The management of the co-operative shall be vest in the Board of

Directors
Consisting of 15 members as indicated below

Scheduled castes 2

Scheduled Tribes 1
1

Back ward classes 3

Women 2

Open to all 7

GENERAL BODY:

Subject to the provision of the act and rules, the final authority
of the bank shall vest in the general body. General body meeting shall,
be of 3
kinds viz,.

1. Annual general body meeting

2. Special body meeting
3. Requisition general body meeting
1. GENERAL BODY MEETING:-

This type of meeting is held once in a year in the month

September this meeting shall be held with in 6 months of closure
of the financial year.

2. SPECIAL BODY MEETING:-

Held when there is an urgency or necessary of all the members.

This meeting may be convent by the board at any time during the
year.

3. REQUISITIONED GENERAL BODY MEETING:-

This meeting may be convened by the board with in 30 days of

requisition signed by at least 1/10 of the members. A requisition as
mentioned above shall be addressed to the general manager &
shall state the need for the meeting & the proposed agenda

IMPORTANT OBJECTIVES OF THE MCRB & MSL IN

 MOBILIZATION DEPOSITS:

The MCRB &MSL are as follows :

1. To promote the economic interests of the members as per the co

– operative Principles.

2. To borrow or to rise funds to lent out to it members at a moderate

rate of interests Mainly for their agriculture needs To grant loans

or pity loans to members against the mortgage of gold and

approved securities etc.

3. To provide fertilizers and seeds, other agricultural implements to

the members To supply basic consumer goods and daily

requirements such as sugar, kerosene, oil, cloths, cosmetics etc.,

to the members.

4. To inculcate the habits of thrift self help through their own outlets

among its Members. To arrange for the sale of agricultural

produce milk, milk products, eggs & other products.

5. To open marketing (thrift society) branches in suitable centers

with he permission of deputy registered of co-operatives of A.P.

(INDIA).
 WORKING CAPITAL

The term working capital refers to the capital required for day to
day operations of a business enterprise. It is represented by excess of
current assets, over Current liabilities. It is necessary for any
organization to run successfully its affairs, to provide for adequate
working capital.

ADVANTAGES OF ADEQUATE WORKING CAPITAL

Working capital is the lifeblood and nerve center of business.

Just as circulation of blood is essential in the human body for
maintaining life, working capital is very essential to maintain the
smooth running of a business. No business can run successfully
without an adequate amount of working capital. The main
advantages of maintaining adequate amount of working capital
are as follows:

1. Solvency of the business: Adequate working capital helps in

maintaining solvency of the business by providing uninterrupted
flow of production.

2. Goodwill: sufficient working capital enables a business

concern to make prompt payments and hence helps in creating
and maintaining goodwill.

3. Easy loans: a concern hacking adequate working capital,

high solvency and good credit standing can arrange loans from
banks and others on easy and favorable terms.
4. Cash Discounts: Adequate working capital also enables a
concern to avail cash discounts on the purchases and hence it
reduces costs.

5. Regular payments: Regular payments of salaries, wages and

other day-to-day commitments company which has sample working
capital can make regular payment of salaries. Wages and other day-
to-day commitments which raises the morale of its employees,
increase their efficiency reduces wastage’s and costs and enhances
production and profits.

6. Regular supply of raw materials: Sufficient working capital

ensures regular supply of raw materials and continues production.

7. Ability to face Crisis: Adequate working capital enables a

concern to face business crisis in emergencies such as depression
because during such periods. Generally, there is much pressure on
working capital.

8. Quick and Regular return on Investments: Every investor wants

a quick and regular return on investments. Sufficient of working
capital enables a concern to pay quick and regular dividends to its
investors, as their may not be much pressure to plough back profits.
This gains the confidence of its investors and creates a favorable
market to raise additional funds in the future.

9. High morale: Adequacy of working capital creates an

environment of security, confidence and high morale creates over all
efficiency in a business.
 DISADVANTAGES OF EXCESSIVE WORKING CAPITAL

Every business concern should have adequate working capital to

run its business operations. It should have neither redundant or
excessive working capital nor inadequate nor shortage of working
capital. Both excessive as well as short working capital positions are
bad for any business.

1. Excessive working capital means idle funds which earn no profits for
the
Business and hence the business cannot earn a proper rate of return
on its
Investments.
2. When there is redundant working capital, it may lead to unnecessary
Purchasing and accumulation of inventories causing more chances of
Theft, waste and losses.
3. Excessive working capital implies excessive debtors and defective
credit
Policy, which may cause higher incidence of bad debts.

 It may result into overall inefficiency in the organization.

 When there is an excessive working capital relation with the
banks
and other financial institutions may not be maintained.
 Due to low rate of return on investments the value of shares may
also fall.
DISADVANTAGES OF INADEQUATE WORKING CAPITAL

1. A concern, which has inadequate working capital, cannot pay its

short-termliabilities in time. Thus it will loose its reputation and
shall not be able to get good credit facilities.
2. It cannot buy its requirements in bulk can cannot avail of
discounts etc.
3. It becomes difficult for the firm to exploit favorable market
conditions and undertaken profitable due to lack of working
capital.
4. The firm cannot pay day-to-day expenses of its operations and it
creates inefficiencies, increase costs and reduces the profits of
the business.
5. It becomes impossible to utilize efficiently the fixed assets due to
non- availability of liquids funds.
6. The rate of return on investments also falls with the shortage of
working capital.

DETERMINANTS OF WORKING CAPITAL

In determining the working capital requirements of a concern, the

following are to be considered.
1. Nature and size of Business
2. Manufacturing cycle
3. Sales Growth
4. Production Policy
5. Price Level Changes
6. Firms Credit Policy
7. Availability of Credit
1. Formative phase:

The Start up of a new project years from the most crucial phase
planning and provisioning of working capital funds. By neglecting
this, many ventures run into financial difficulties in their early
operating years, the rather casual approach to assessment of
working capital needs during the periods when industry and business
functioned in a sellers market could be understand as at the banker
was willing to absorb all shock of fluctuations in project operations by
providing ready funds to meet emergency needs. The position has
undergone radical change. The banker can no longer be taken for
granted and in the absence oil proper estimation of working capital
needs, the project may have to face serious financial problems.

2. Position of Business Cycle:

Movements of the business cycle bring about shifts in working

capital position. The upward swing is associated with spurt in sales
and increase in levels of inventories and book debts. There could be
a cash shortage and borrowing may become necessary. On the
otherhand, when there is a downswing, the level of inventories and
book debts may fall, but revenues also fall, while certain categories
of costs remain fixed and cash shortage right still be felt.

3. Nature of Business:

The nature of business has an important bearing on its working

capital needs, some ventures like retail stores, construction
companies etc. require an abundance of working capital. In other
cases such as power generations and supply, the current assets
playa minor and secondary role.
1. The manufacturing Cycle:S

A longer manufacturing cycle between the raw material purchase

and the completion of he manufacturing process will obviously mean
larger tie up of funds to meet increased working capital needs. In
such cases management should try to increase the rate of
production and reduce the cycle time and thus cut down working
capital requirement. This can be achieved through process changes
or through effective organization and coordination at all levels of
enterprise activity. Frequent changes in setups, waiting for materials,
tools or instructions and accumulations of working progress result
inn extending the time cycle and blocking more funds. Organised
negotiations with suppliers for attractive credit terms and retention of
their continued confidence by the settlement of bills on agreed dated
can also help reduce working capital requirements.

1. Credit Terms to Customers:

The credit terms to customers influence the working capital level

by determining the level of investment in book debts. Management
has to decide on suitable credit policy relevant to each customer
based on the merits of his case.
Unduly liable credit policies and permissive attitude in the matter
of collections of outstanding can lock up funds that would be other
wise be available for operating needs.

2. Vagaries in supply of Raw Materials

The sources of certain raw materials are few and irregular and
pore problems in the matter of procurement and holding, using up
more funds. Materials that are available only in certain seasons have
to be obtained and stored in advance. The working capital
requirements in such instances will show seasonal fluctuations.
3. Shifts in Demand for Products:

Some manufactured products are subject to seasonal fluctuations

in sales. In order to utilize the capacity to the maximum possible
extent, steady production may have to be maintained, through the
demand for finished products may very from time to time. Finished
goods inventories will therefore accumulate during off season,
requiring increased amounts of working capital to support higher
levels of inventory. Financial planning will have to provide for these
funds, requirements associated with steady, production and
seasonal sales.

4. Production Polices:

To tackle the problem of having to find funds to support the

increasing finished goods inventory levels until they are sold during
the peak seasons, some companies diversify and produce other
products that are in demand, enabling manufacture of the main
product to follow the seasonal pattern of its demand.

5. Competitive Conditions:

In a competitive market, winnings and maintaining customers

goodwill will involve additional costs and present a variety of working
capital problems. To offer the customer the benefit of choice, a
variety of products will have to be manufactured and stocked. This
would mean higher levels of inventories in all stages and, therefore,
additional working capital funds. More generous credit terms may
have to be extended and the investments in accounts receivables
may have to be higher, requiring additional funds. The degree of
completion is thus an important factor influencing working capital
requirements.
6. Growth and Expansion Programs:

As business grows, additional working capital has to be found. In

fact, the need for increased working capital does not follow the
growth in business activity, but preceded it. Advance planning of
working capital is thus a continuing necessity for example Owing
concern. Or else, the company may have substantial earnings but
little cash. With fast growth, they may be under constant pressure
for raising external funds in addition to the internal generation.
Forward planning and continuous review, therefore, are very
essential for such companies.

7. Profit Levels:

By the very nature of things, some enterprises generate high

margins compared to others. The product category and the firm’s
position in the market may have given this advantages. Others have
to struggle in a highly competitive environment. But, profits cannot
be considered as available cash at the end of the period. Even as
the companies operations are in progress, cash is used up for
augmenting stocks, book debts and fixed assets. Elaborate planning
and projections of expected activities and cash flows, at short
intervals, assume importance. To meet anticipated deficits, sources
of funds will have to be identified and where surpluses are
expected, suitable applications will have to be planned.
8. Taxation:

Tax liability is an inescapable element in working capital planning.

It is a short term liability payable in cash. Advance taxes may have
to be remitted in installment’s, on the basis of estimated profits.
Periods of high taxation impose additional strain on working capital.
To able to get the best out of the available tax incentives, the
finance manager has to draw up the operating plans of the company
in advance and utilize the resources for research and development,
exports or other purposes which promise tax benefits and promote
the companies earnings.

9. Dividend Policy:

Management has to preserve cash resources but at the same

time, it can not fail to satisfy investor expectations. Market prestige
for the shares of the company has also lobe nurtured and
maintained in its long run interests. During periods of low profits,
maintenances of steady dividends will involve draining of resources
but may be needed to preserve the companies image.

10.Reserves Policy:

One of the cherished goal of enterprise management is to build

up adequate reserves out of profits the urge to retain profits may act
as a major constraint on the dividend policy. The funds position
being given higher priority over dividend policy.
11.Depreciation Policy:

Depreciation policy determines the amount to be provided as,

depreciation on the various categories of Fixed Assets. The
depreciation charges do not in any cash outflow. Enhanced rated of
depreciation have the effect of reducing profits correspondingly,
which in turn can help in holding back of dividends. This process
conserves cash depreciation policies.

12. Price level changes:

Rapidly raising prices creates the need for more funds for
maintaining the present volume of activity for same levels of
inventories, higher cash outlays are needed. In an inflationary set
up, even operating expenses will grow for given levels of activity.
Some companies may be able to compensate part of these cost
increases through increases in prices for their products. The
implications of changing price levels on working capital position will
vary from company to company depending on the nature of the
company.

13. Operating Efficiency:

This is a close relationship between the operating efficiency of a

company and its working capital position. Waste elimination,
improved coordination 19 cut delays higher efficiency in operations
and full utilization of resources are among the initiatives taken to
prevent erosion of profits. They also have the effect of getting more
out of given volume of working capital or obtaining the current levels
of out puts with a reduced volume of working capital. Efficiency of
operation accelerates the place of the cash cycle, and improves the
working capital turnover.
 WORKING CAPITAL MANAGEMENT

Working capital management involves the relationship between a

firms short term assets and its short term liabilities. The goal of working
capital management is to ensure that a firm is able to continue its
operations and that it has sufficient ability to satisfy both maturing short-
term debt and upcoming operational expenses. The management of
working capital involves managing inventories, accounts receivable and
payable and cash.

Why firms hold cash:

The finance profession recognizes the three primary reasons

offered by economist JOHN Maynard Keynes to explain why firms hold
cash. The three reasons are for the purpose of speculation, for the
purpose of precaution, and for making transactions. All three of these
reasons from the need for companies to process liquidity.

CONCEPTS OF WORKING CAPITAL

There are two concepts of working capital:

(i) Gross Working Capital
(ii) Net Working Capital
 In the broad sense, the term working capital refers to the gross
working capital and represents the amount of funds invested in current
assets. Current assets are those assets, which in the ordinary course of
business can be converted into cash within a short period of normally
one accounting year.

In a narrow sense, the term working capital refers to the net

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

Working Capital = Current Assets – Current Liabilities

Net working capital may be positive or negative. When the current

assets exceed the current liabilities, the working capital is positive and
the negative working capital results when the current liabilities are more
than the current assets.

The Gross working capital concept in financial or going concern

concept whereas net working capital is an accounting concept of
working capital. These two concepts of working capital are not
exclusive; rather both have their own merits.

Gross concept is very suitable to the company form of

organization where there is divorce between ownership, management
and control. The net concept of working capital may be suitable only for
proprietary form of organizations such as sole-trader or partnership
firms. However, it may be made clear that as per the general practice
net working capital is referred to simply as working capital.
 TYPES OF WORKING CAPITAL

There are varying concepts or perceptions of working capital,

which have relevance to specific situations.

WORKING
CAPITAL

ON THE BASIS ON THE BASIS

OF CONCEPT OF TIME

PERMANENT
GROSS OR FIXED TEMPORARY
NET WORKING
WORKING
CAPITAL WORKING OR VARIABLE
CAPIAL
CAPITAL

REGULAR SEASONAL
WORKING WORKING
CAPITAL
CAPITAL

RESERVE SPECIAL
WORKING WORKING
CAPITAL CAPITAL
1. GROSS WORKING CAPITAL:

Gross working capital represents by the sum total of all current

assets of the enterprise. Enough funds will have to be provided to
sustain the movement of raw materials through the work.

But short term financing is more risky than long term financing. In
process to the finished goods stage and then to accounts receivables
and up to the realization of cash. In other words, the funds needed
would total up to the constituent components, namely stock of raw
materials and minimal cash and bank balances, constituting working
capital. In managing gross working capital, the shifts in investment in
current assets are under constant review, close attention and prompt
correction. Excessive investment in current assets is to be carefully
avoided, as otherwise profits would be adversely affected.

2. NET WORKING CAPITAL:

Net working capital is the difference between the current assets

and current liabilities. While current assets are short term assets that
are expected to get converted into cash with in one year, current
liabilities are short-term liabilities that are expect to fall due or mature for
payment in a short period, generally within a year, and represent short
term sources of funds. The concept of net working capital, as the
excess of current assets over current liabilities, highlights the character
of he Sources from which the funds have been obtained to support that
portion of current assets in excess of current liabilities. This part of
working capital may be provided by way of share capital, from internal
sources such as reserves or plough back of profits or from external
sources in the form of long term borrowings. There are two implications.
The management has to examine what proportion of the current assets
has to be financed by permanent capital and long term borrowings.
Then there is the eagerness of short – term creditors to verify whether
the total current assets,

representing ultimate source of funds for the recovery of their

dues, maintains a convincing level above the total current liabilities or
obligations. A judicious

policy of mixing long term and permanent as distinct from short

term sources should be formulate to finance investment in current
assets.

3. PERMANENT WORKING CAPITAL:

Permanent or fixed working capital is the minimum amount, which

is required to ensure effective utilization of fixed facilities and for
maintaining the circulation of current assets. There is always a
minimum.

Level of current assets, which are continuously required by the

enterprise to carry out its normal business operations. For example.
Every firm has to maintain a minimum level of raw materials, work-in-
progress, finished goods and cash balance. This minimum level of
current assets is called fixed working capital.

TEMPORARY WORKING CAPITAL:

Any amount over and above the permanent level of working

capital is temporary, fluctuating or variable working capital. This portion
of the required working capital is needed to meet fluctuations in demo
consequent upon changes in production and sales because of seasonal
changes.
 WORKING CAPITAL CYCLE

Cash flows in a cycle into, around and out of a business. It is the

business’s lifeblood and every manager’s primary task is to help keep it
flowing and to use the cash flow to generate profits. If a business is
operating profitably, then it should , in theory, generate cash surpluses.
If it doesn’t generate surpluses, the business will eventually run out or
cash and expire.

The faster a business expands the more cash it will need for
working capital and investment. The cheapest and best sources of cash
exist as working capital right within business. Good management of
working capital will generate cash will help improve profits and reduce
risks. Bear in mind that the cost of providing credit to customers and
holding stocks can represent a substantial proportion of a firm’s total
profits.

There are two elements in the business cycle that absorb cash –
Inventory (stocks and work-in-progress) and Receivables (debtors
owing you money). The main sources of cash are payables (your
creditors) and Equity and Loans.

Each component of working capital (namely inventory,

receivables and payables) has two dimensions … TIME ……. And
MONEY. When it comes to managing working capital – TIME IS
MONEY. If you can get money to move faster around the cycle (e.g.
collect monics due from debtors more quickly) or reduce the amount of
money tied up (e.g. reduce inventory levels relative to sales). The
business will generate more cash or it will need to borrow less money to
find working capital.
 Consequently, you could reduce the cost of bank interest or you
will have additional free money available to support additional sales
growth or investment. Similarly, if you can negotiate, improved terms
with suppliers e.g. get longer credit or an increased credit limit; you
effectively create free finance to help fund future sales.
 If you… Then…..

• Collect receivables • You release cash from the

(debtors) faster cycle
• Collect receivables
(debtors) shower • Your receivables soak up
• Get better credit (in terms of cash
duration or amount) from
suppliers • You increase your cash
• Shift inventory (stocks) resources
faster
• Move inventory (stocks) • You free up cash
slower • You consume more cash

It can be tempting to pay cash, if available, for fixed assets e.g.

computers, Plant, vehicles etc. if you do pay cash, remember that this is
now longer available for working capital. Therefore, if cash is tight,
consider other ways of financing capital investment – loans, equity,
leasing etc. Similarly, if you pay dividends or increase drawings, these
are cash outflows and, like water flowing down a plughole, they remove
liquidity from the business.
More business fail for lack of cash than for want of profit.
The third area in the account receivable management is collection
policies. These policies cover two aspects.
• Degree of effect to collect overdue
 • Type of collection effects.

The collection policy should aim at accelerating collections from slow

payees and reducing bad debt.
 STATEMENT SHOWING THE CHANGES IN WORKING
CAPITAL
(In Rupees 000)
PARTICULARS 2003 2004 INCREASE DECREASE CHANGE
Rs Rs. IN %

Current Assets

Advance 1,25,753 1,34,977 9,224 73.3

Stock 35,902 54,276 18,374 51.17

Receivables 18,830 28,730 9,900 52.57

Cash 414 563 149 35.99

Debtors 1,28,464 1,10,603 17861 13.90

Bank 2,732 5,346 2614 95.68

Total(a) 3,12,095 3,34,495

Current
Liabilities

Borrowing 20,000 37,464 17464 87.32

Payables 12,388 12,545 157 1.26

Surplus 10,155 9,813 342 3.36

Dividends 2,544 2,731 187 7.35

Total(b) 45,087 62,553

Networking 2,67,088 2,71,942
capital
Increase in 4,934
working capital

Total: 2,71,942 2,71,942 40,603 40,603

INTERPRETATIONS:-

1. By observing the above table we can notice that the Gross

Working capital has increased during the year 2003-2004.

2. From the above table there has been increase in Current

Assets from Rs. 3,12,095 in the year 2003 to Rs. 3,34,495
in year 2004 showing an overall increase. And Current
Liabilities increased from 45,087 in year 2003 to Rs. 62,553
in year 2004 showing an overall increase. Understudy of
above table working capital overall increase 4,934 in 2003-
2004.

3. There it is to be noticed that greater the net Working Capital

higher liquidity, there is found 1year of Mulkanoor Co-
operative Rural Bank
 STATEMENT SHOWING THE CHANGES IN WORKING
CAPITAL
(In Rupees 000)

INCREASE DECREASE CHANGE

PARTICULARS 2004 2005
Rs Rs. IN %

Current Assets

Advance
1,34,977 1,46,047 11,070 8.20
Stock
54,276 57,676 3,400 6,026
Receivables
28,730 52,759 24,029 83.63
Cash
563 1,382 819 145.47
Debtors
1,10,603 1,30,622 20,019 21.71
Bank
5,346 5,961 615 11.50
Total(a)
3,34,495 3,94,447
Current
Liabilities

Borrowing
37,464 53,858 16,394 43.75
Payables
12,545 12,658 513 1.36
Surplus
9,813 10,555 742 7.56
Dividends
2,731 2,924 193 7.03
Total(b)
62,553 79,995
Networking
capital 2,71,942 3,14,452
Increase
inworking 42,110 42,110
capital
Total:
3,14,452 3,14,452 59,952 59,952

INTERPRETATIONS:-

1. By observing the above table we can notice that the Gross

Working capital has increased during the year 2004-2005

2. From the above table there has been increase in Current Assets
from Rs. 3,34,495 in the year 2003 to Rs. 3,94,447 in year 2004
showing an overall increase. And Current Liabilities increased
from 45,087 in year 2003 to Rs. 62,553 in year 2004 to Rs.
79,995 in the year 2005 showing an overall increase. Understudy
of above table working capital overall increase 42,111 in 2004-
2005.

3. There it is to be noticed that greater the net Working Capital

higher liquidity, there is found 1year of Mulkanoor Co-operative
Rural Bank
 STATEMENT SHOWING THE CHANGES IN WORKING
CAPITAL
(In Rupees 000)

INCREASE DECREASE CHANGE

PARTICULARS 2005 2006
Rs Rs. IN %
Current Assets

Advance 1,46,047 1,68,135 22,088 15.12

Stock 57,676 81,341 23,665 41.03

Receivables 52,759 77,171 24,412 46.27

Cash 1,382 448 934 67.58

Debtors 1,30,622 2,09,649 79,027 60.50

Bank 5,961 4,630 1,331 22.33

Total(a) 3,94,447 5,41,374

Current
Liabilities

Borrowing 53,858 1,60,694 1,06,836 198.36

Payables 12,658 21,544 8,886 70.20

Surplus 10,555 10,973 418 3.96

Dividends 2,924 3,329 405 13.89

Total(b) 79,995 1,96,54

0
Networking 3,14,452 3,44,834
capital

Increase in 30,382 30,382

working capital

Total: 3,44,834 3,44,834 1,49,192 1,49,192

INTERPRETATIONS:

1. By observing the above table we can notice that the Gross

Working capital has increased during the year 2005-2006.

2. From the above table there has been increase in Current

Assets from Rs. 3,94,447 in the year 2005 to Rs. 5,41,374
in year 2006 showing an overall increase. And Current
Liabilities increased from 79,995 in year 2005 to Rs.
1,96,540 in year 2006 showing an overall increase.
Understudy of above table working capital overall increase
30,381 in 2005-2006.

3. There it is to be noticed that greater the net Working

Capital higher liquidity, there is found 1year of Mulkanoor
Co-operative Rural Bank
 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL
(In Rupees 000)

INCREASE DECREASE CHANGE

PARTICULARS 2006 2007
Rs Rs. IN %

Current Assets

Advance 1,68,135 2,09,200 41,065 15.12

Stock 81,341 1,36,93 55,594 41.03

5
Receivables 77,171 54,219 22,952 46.27

Cash 448 1,21 762 67.58

0
Debtors 2,09,649 3,20,344 1,10,695 60.50

Bank 4630 11,91 7288 157.41

9
Total(a) 5,41,374 7,33,826

Current
Liabilities

Borrowing 1,60,694 2,08,818 48,124 198.36

Payables 21,544 21,053 491 70.20

Surplus 10,973 10,431 542 3.96

Dividends 3,329 3,571 242 7.27

Total(b) 1,96,540 2,43,873

Networking 3,44,834 4,89,953
capital

Increase in 1,45,119 1,45,119

working capital

Total: 4,89,953 4,89,953 2,16,43 2,16,437

7

INTERPRETATIONS:

1. By observing the above table we can notice that the Gross

Working capital has increased during the year 2006-2007.

2. From the above table there has been increase in Current

Assets from Rs. 5,41,374 in the year 2006 to Rs. 7,33,826
in year 2007 showing an overall increase. And Current
Liabilities increased from 1,96,540 in year 2006 to Rs.
2,43,873 in year 2007 showing an overall increase.
Understudy of above table working capital overall increase
1,45,119 in 2006-2007.

3. There it is to be noticed that greater the net Working

Capital higher liquidity, there is found 1year of Mulkanoor
Co-operative Rural Bank
 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL
(In Rupees 000)

INCREASE DECREASE CHANGE

PARTICULARS 2007 2008
Rs Rs. IN %
Current Assets

Advance 2,09,200 2,38,435 29,235 13.97

Stock 1,36,9352 69,10 67,831 49.54

4
Receivables 54,219 41,01 13,203 24.35
6
Cash 1210 1,55 347 28.68
7
Debtors 3,20,344 3,06,167 14,177 4.43

Bank 11,918 33,56 21,64 81.63

5 7

Total(a) 7,33,826 6,89,844

Current
Liabilities

Borrowing 2,08,818 1,98,96 9,850 4.72

8
Payables 21,053 24,057 3004 14.27

Surplus 10,431 12,11 1,682 16.12

3
Dividends 3,571 4,200 629 17.61

Total(b) 2,43,873 2,39,33

8
Networking 4,89,953 4,50,506
capital

Increase in 39,447 39,447

working capital

Total: 4,89,953 4,89,953 1,00,526 1,00,526

INTERPRETATIONS:

1. By observing the above table we can notice that the Gross

Working
capital has increased during the year 2007-2008

2. From the above table there has been decrease in Current Assets
from
Rs 7,33,826 in the year 2007 to Rs. 6,89,844 in year 2008 showing
an overall decrease. And Current Liabilities decreased from
Rs.2,43,873 in year 2007 to Rs. 2,39,338 in year 2008.Showing an
overall decrease. Understudy of above table working capital
overall increase 4,535 in 2007-2008.

3. There it is to be noticed that greater the net Working Capital

higher liquidity, there is found 1year of Mulkanoor Co-operative
Rural Bank.
 RATIOS OF WORKING CAPITAL IN MCRB&MS Ltd

MEASUREMENT OF CURRENT RATIO MCRB&MS Ltd

MEASUREMENT OF CURRENT RATIO’S

a) CURRENT RATIO:

Current ratio is the relationship between current assts and current

liabilities. This ratio’s is a measure of general liquidity and is must
widely used to make the analysis or a short-term financial position or
liquidity of a company is calculated by dividing the total current assets
by total current liabilities.

CURRENT RATIO = CURRENT ASSETS /CURRENT LIABILITIES

The Ideal ratio of current ratio is= 2:1

(a) CURRENT RATIO

(b) QUICK RATI

 A) CURRENT RATIO ANALYSIS

YEAR/PARTICULARS 2003- 2004- 2005- 2006- 2007-

04 05 06 07 08
(Rs) (Rs) (Rs) (Rs) (Rs)
CURRENT ASSETS 334495 394447 541374 733826 689271

CURRENT 62553 79995 196540 243873 237560

LIABILITIES

RATIO 5.35 4.93 2.75 3.01 2.90

Relatively high current ration is on indication of the companies liquidity

position and has the ability to pay its obligation in time as and when they
become due on the other hand a relating low current ratio represent that the
liquidity position of the company is not good and the company shall not be
able to pay its current liabilities in time without facing difficulties. An
increase in current ratio’s represents the improvement in the liquidity position
of a company while a decrease in current ratio indicated that there has been
a deterioration in the liquidity position of company as a convention. The
current ratio of 2:1 is considered to be satisfactory. But in case of firms in
India this is about 1.3:1 is rather than 2:1 during to strict monetary policy of
Reserve Bank of India.
 It can be observe from the above graph that the current ratio of the bank
moves 5.36to 2.90 during the study perform from 2003-04 to 2007-
08.Generally consider satisfactory ratio 2:1 the ratio of bank less than the
consider satisfactory ratio, this ratio indicate that the cushion over able to short-
term creditors are relatively lower. An average its standards at 2:1 which is
less than the consider satisfactory ratio of 2:1 that is every one rupee of current
liabilities minimum 2 Rupees are available as margin of set.
B) QUICK RATIO:

Quick Ratio also known as Acid Test or Liquid ratio is a more vigorous
quick assets and current Liabilities. Quick ratio can be calculated by dividing the
total quick assets by total current liabilities.

QUICK RATIO = QUICK ASSETS / CURRENT LIABILITIES

Usually a high quick ratio is an indication that the company is liquid and has
the ability to meet its current or liquidity liabilities in time and on the other hand
a low quick ratio represents that the company liquidity position is not good. An
increase in the quick ratio reveals the liquidity position of the company
improved. As a general rule a quick ratio of 1:1 is considered to be
satisfactory. But the acceptable ratio for Indian firms may 0.80:1 instead of 1:1.

QUICK ASSETS = CURRENT ASSETS – (STOCK+PREPAID EXPENSES)

II.QUICK RATIO:-

YEAR/PARTICULARS 2003- 2004- 2005- 2006- 2007-

04 05 06 07 08
(RS) (Rs) (Rs) (Rs) (Rs)

QUICK ASSETS 20219 336771 460033 596891 620167

CURRENT 62553 79995 196540 243873 237560

LIABILITIES

RATIO 4.48 4.21 2.34 2.45 2.61

Interpretation:

By the above table we can observe the quick ratio of the bank at 2006-
07 is 2.45 but idle quick ratio is 1:1.
These ratios are used to know the liquidity positions of organizations.
The ideal ratio for Quick ratio is 1:1.The above graph shows the changes in
quick ratio from the year 2003-04 to 2007-08.In the year 03-04 the quick ratio
is 4.48,it is decreased to 4.21 in 2004.
In the year 2005-06 it is decreased to 2.34, in the year 2006-07 if we
compare with to 05-06 it is increased to 2.45, in the year 2007-08 it is
increased to 2.61.
C) DEBT EQUITY RATIO = LONG TERM DEBTS / SHARE HOLDERS
FUNDS

YEAR/PARTICULARS 2003- 2004-05 2005-06 2006- 2007-

04 (Rs) (Rs) 07 08
(Rs) (Rs) (Rs)
LONG TERM DEBTS 2951 3233 1870 2529 12796
SHRE HOLDERS 160602 183979 211604 239850 302103
FUNDS

RATIO 0.02 0.017 0.008 0.011 0.04

SHARE HOLDERS FUND = SHARE CAPITAL + PREFERENCE SHARES

+GENERAL RESERVES
Interpretation:

From the above graph it can be observe that in the year 2003-04 the debt
equityratio is 0.02, which is decreased to 0.017 in the year 2004-05. in the year
05-06 it is decreased to 0.008, in 2006-07 it is 0.011, in the year 2007-08 it is
increased to 0.04.
D) Absolute Cash Ratio=Absolute assets / Current Liabilities

YEAR/PARTICULARS 2003- 2004- 2005- 2006- 2007-

04 05 06 07 08
Absolute assets 58895 64094 99753 121380 163814

Current Liabilities 62553 79995 196540 243873 237560

Ratio 0.941 0.801 0.507 0.497 0.589

Absolute Assets= C.H + C.B + Short Term Investment+ Market securities

Interpretation:

From the above graph we can observe that the absolute cash ratio is
decreased compared to 2003-04 to 2004-05 is 0.941 to 0.801, in the year
2005-06 is 0.507 which is decreased to 0.497 in 2006-07.

In the year 2007-08 ratio is increased compared to 2006-07 is 0.689.

 CONCLUSIONS & SUGGESTIONS:

 In the 5 years of this project work of working capital from

2003-2004 to 2007-2008. there is a highly increase in working
capital in 2005-2006 to 2006-2007. It is a highlights of two years.
But in 2007-2008 year there is a decrease in working capital.
 Items, which our co-operative sells, our families must buy
only from the co-operative if we need to buy after co-operative shop
is close for the day, then we must learn to do with it till tomorrow. On
account may be buying from other shops. If co-operative sells the
same item.
 It is better to see at reasonable rates and later to return to
surplus to members or add the services being provided to them.
 Continuous internal audit by members / staff, appointed by
managing committee is must for every co-operative because it
exposes flaws early enough for rectifications.
 Elections to co-operative must be contested and only those
who members have confidence in must be allowed to managed the
co-operative any attempt by a group of leaders to arrive at an
understanding of compromise will mean denying members the right
to decide who they wish to have at helm of affairs.
 Individual who have not bother to approach to the co-
operative for using its services it part has no business demanding
membership at the time of election.

FINDINGS:
In this chapter attempt is made to performs suitable suggestion to improve the
financial performance of “Mulkanoor Co-operative Rural Bank And Marketing Society
Ltd
They are as follows
 The society should take some remedial measures to control its productive cost
to increase its profits.

 The society should decrease its unrecovered percentage of loans and

advances. It should study the credit worthiness for the members and based on
this should advanced loan.

 If the society starts recording its non performing assets (MPA). It could
understand the current financial positions of its at the end of the year and it
could take necessary to control NPA’S as this are productive

 The society should decrease its long term borrowing (deposits) to decrease the
interest payment as it pays more EPS.

 The ROI of society was recorded poor when compare to other financial
institutions.

 it is due to rendering services to its members, even than it has to increase the
interest percentage slightly to survive and grow and serve its members .
BIBLIOGRAPHY
NAME OF THE BOOKS, PUBLISHERS AND AUDITORS

 MANAGEMENT ACCOUNTING

 KALYANI PUBLISHERS, 8th  R.K. SHARMA &

EDITION
 SHASHI K. GUPTA

 COST ACCOUNTING

 KALYANI PUBLISHERS, 8th

EDITION  S.P. JAIN & K.L. NARANG

 FINANCIAL MANAGEMENT PRINCIPLES AND PRACTICE

 S.M. MAHESWARI

 FINANCE MANAGEMENT

 GALGOTIA PUBLICATIONS  R.P. RUSTAGI

www.mcrbms.com