1.

1 INTRODUCTION Many Indian companies are caught in financial crisis of varying deg ree because of the less efficient working capital management. The objective of C orporate Excellence viz., Quality products, Satisfied Customers, Employees and I nvestors, High profitability and Comfortable funds position etc., can be achieve d through increased productivity of capital, particularly the working capital. Your business has been reaping huge profits for years now, when al l of sudden you find yourself in need of fast cash. If you have tried several so lutions without success, you may be interested in learning more about accounts r eceivable management. ACCOUNTS RECEIVABLE MANAGEMENT: An account receivable is the money owed to a company by a consume r for products and services purchased on credit. This is usually treated as a cu rrent asset of accounts receivable after the customer is sent an invoice. Accoun ts receivable are known by various names, such as accounts receivable aging, acc ounts payable, days receivable, accounts receivable turnover and invoice factori ng. According to the experts, accounts receivable or invoice factorin g is one of a series of accounting transactions. These accounting transactions d eal with the billing of customers who owe money to a person, company or organiza tion for goods and services purchased. If you are seriously considering using ac counts receivable as a method of obtaining a more liquid asset, then it is wise to hire accounts receivable management specialists. Accounts receivable management specialists can help you in a varie ty ways: It It It It It It can can can can can can cut and maintain your average collection delay or DSO lessen your direct and indirect expenses considerably reduce your bad debt tell you various ways to take advantage of your cash-flow help you capitalize on your internal resources maximize your interventions on sales, service and market share.

Hiring the best accounts receivable management will clear up the co mmon misconception that the selling of accounts receivable is a loan. Accounts r eceivable are the amounts that customers owe a business; this is clearly shown o n a company's balance sheet. Some also call accounts receivable trade receivables and try to clas sify them as current assets. Accounts receivable managements main goal is to take care of all these debts and to record sales of accounts; one must debit a recei vable and credit a revenue account. Accounts receivable management also looks in to issues such as recognizing accounts receivable, valuing accounts receivable, and disposing of accounts receivable. CREDIT MANAGEMENT: Trade credit creates amount receivables or trade debtors also referre d to as book debts in India that the firm is expected to collected in near futur e. The customers from whom receivables or book debts have to be collected in the future are called trade debtors. A credit sale has 3 characteristics: Involves an element of risk that should be carefully analyzed.

Based on economic value. Implies futurity. Credit policy: Nature and Goals: A firm investment in accounts receivables depends on: The volume of credit sales The collection period. There is only one way in which the financial management can affect the volume of credit sales and collection period, consequently invest in accounts r eceivables that is through the change in credit policy is sure to refer to the c ombination of decision variables. Credit standards: Credit standards which have criteria to decide the types of customers which have criteria to decide the types of customers to whom goods could be sold on cr edit. If a firm has more slow playing customers its invest in account receivables will increase. The firm will also be exposed to higher risk of default. Credit terms: Credit terms specify duration of credit payment by customers. Investment in account receivables will be high if customers are allowed extended time period f or making payments. Collection efforts: Collection efforts determine the actual collection period. The l ower the collection period is, the lower the investment in account receivables & vice versa. Goals of credit policy: A firm may follow a lenient or a stringer credit policy. The firm following a lenient credit policy tends to sell on credit to customers on very liberal te rms and standards credit is granted for longer periods over to those customers w ho credit worthiness is not fully known or whose financial position is doubtful.

1.2 COMPANY PROFILE GTC (P) LTD. (General Trading Company) was established on 23.12.04 by Mr. S. Khaja Alimudeen and Mr. M.B. Habeeb Rahman. GTC (P) LTD. (General Trading Company) is dealing with imported coa l and processed coal. The coal is mainly imported from Indonesia, China and Sout h Africa. The company is supplying coal to Steel Industries, Rolling mills, Spon ge iron mills, Power plants, sugar Industries and Brick chambers etc... GTC (P) Ltd. (General Trading Company) earned a remarkable and renow ned name in the Coal Industries, in the span of Five Years, with its Quality, Pr ompt Delivery and Service. By taking this as challenge, delivering the finest im ported coal from South Africa, Indonesia, China and other countries to all over India to become a leader of this field. Its achievements in this past five years paved the way towards it. B y the Hard work and Corporate Vision all put in together, it is heading to a sha

rp lead in the market to become number one in the short time. The company is delivering all varieties of Coal to all over South Ind ia and supporting Cement industries, Steel industries, Tea industries etc... GTC is also playing a vital Role in Brick Industries. Major Chambers in and around South India and Hundreds of Large and small scale Industries are already in our list. Products: Supplies and imported of Lignite coal, Sub- Biuminous coal, Anthracite coal, Bituminous coal, Coke coal, Matallurgical coke coal, Pet coke coal to all steel, tea, brick industries etc.,

Vision: It is leading to a sharp lend is the market to become number one i n the short time Our value: We shared value is the way we want our company to be run and to be perceived by others. We also constitute the basic and style for interaction with each other within the company and outside. GTC has inherited value and this has become the basic for the way we run our business and people transactions. SWOT Analysis of GTC Strengths: Strong and Growing economy Low labour cost and High productivity Flexibility of adopting innovative technologies Large consumer base Rich geological resource base Weakness: Deficit infrastructure Socio political interventions High cost of finance Opportunities: Strengthening of logistics in coal distribution - In India, the logistics infras tructure such as ports and railways are overburdened and costly and act as bottl enecks in development of free market. Privatization of ports may bring the needed efficiencies and capacities. In addi tion, capacity addition by the Indian Railways is necessary to increase freight capacity from the coal producing regions to demand centers in the northern and c entral parts of the country. On the Indian rail network, freight trains get a lo wer priority than passenger trains, a problem that promotes delays and inefficie ncy. Special freight corridors would raise speeds, cut costs, and increase the s ystem's reliability. Considerable potential exists for setting up manufacturing units for value added products. There exists considerable opportunities for future discoveries of sub-surface de

posits with the application of modern techniques. Current economic mining practices are generally limited to depths of 300 meters and 25 percent of the reserves of the country are beyond this depth. In India demand for coal is 90%. Coal is used in all the power plants Instead of Furnace oil coal is used in many industries. Threats: The coal is very cyclical product with sharp swings in its price. Downward movem ent in the coal prices would adversely affect the margins of the company. The high level of integration in operation, wide range of product mix location a dvantages are the inherent strength of our company to pass through the cycles su ccessfully. Company with its dynamic tycoons: M/s ETA Dubai M/s. Coastal Energy M/s. Stat Coal India M/s. Bhatia Internationals M/s. Star Coal India Pvt ltd. GTC valuable Customers: Cement Giant M/s Associated Cement Company (ACC) Madukkarai Plant Tea Companies like M/s. AVT Naturals Products India and so on. Sugar Companies like, M/s. EMPEE Sugars & Distilleries and many others. Steel Companies like, M/s. Insha Steel Rolling Mill, Coimbatore M/s. Kamatchi steels,HKT Bellari M/s. Premium Ferro Alloys, Cochin M/s. Jaisankar Steels Pvt. Ltd., Ernakulum M/s. Alwaye Metals, Alwaye M/s. S.R. Steels. Dindikal M/s. Amman steels, Trichy Paper Mills like M/s. Venkateshwara Paper Mill M/s. Prime Traders Playing a vital role in Brick Industries, whom our major customers are The Tamil nadu Brick and Tile Manufacturers Industrial Service Co-operative Society Limite d and Brick Association of Tharapuram and Major Chambers in and around south India.

1.3 PRODUCT PROFILE Products: Supplies and imported of Lignite coal, Sub- Biuminous coal, Anthracite coal, Bituminous coal, Coke coal, Matallurgical coke coal, Pet coke coal to all steel, tea, brick industries etc.,

Coal types: Types of coal Lignite coal Subbituminous coal Anthracite coal Coke Metallurgical coke Petcoke Coal Type Depth of Burial Maximum Content Fixed Carbon Content Lignite 0.2-1.5km 25-45C 30-50% Sub bituminous 1.5-2.5Km 45-75C Bituminous 2.5-6km 75-180C 5-10% Anthracite >6km >180C <5% temperature during burial 20-35% 10-30% 35-45% 45-80% 80-96% Moisture

FACILITY: Lignite coal: Lignite coal is the lowest rank of coal, often referred to as brown coal, used almost exclusively as fuel for steam-electric power generation. It is brownish-black and has a high inherent moisture content, sometimes as high as 4 5 percent. The heat content of lignite ranges from 9 to 17 million Btu/ton (10 t o 20 MJ/kg) on a moist, mineral-matter-free basis. The heat content of lignite c onsumed in the United States averages 13 million Btu/ton (15 MJ/kg), on the as-r eceived basis (i.e., containing both inherent moisture and mineral matter). Subbituminous coal: Subbituminous coal is a coal whose properties range from those of l ignite to those of bituminous coal and is used primarily as fuel for steam-elect ric power generation. It may be dull, dark brown to black, soft and crumbly at t he lower end of the range, to bright, jet-black, hard, and relatively strong at the upper end. Subbituminous coal contains 20 to 30 percent inherent moisture by weight. The heat content of subbituminous coal ranges from 17 to 24 million Btu per ton on a moist, mineral-matter-free basis. The heat content of subbituminou s coal consumed in the United States averages 17 to 18 million Btu/ton (20 to 21 MJ/kg), on the as-received basis (i.e., containing both inherent moisture and m ineral matter). Bituminous coal is a dense coal, usually black, sometimes dark brown, o ften with well-defined bands of bright and dull material, used primarily as fuel in steam-electric power generation, with substantial quantities also used for h eat and power applications in manufacturing and to make coke. Bituminous coal is the most abundant coal in active U.S. mining regions. Its moisture content usua lly is less than 20 percent. The heat content of bituminous coal ranges from 21 to 30 million Btu/ton (24 to 35 MJ/kg) on a moist, mineral-matter-free basis. Th e heat content of bituminous coal consumed in the United States averages 24 mill ion Btu/ton (28 MJ/kg), on the as-received basis (i.e., containing both inherent moisture and mineral matter). Anthracite coal: Anthracite coal is the highest rank of coal; used primarily for resi

dential and commercial space heating. It is hard, brittle, and black lustrous co al, often referred to as hard coal, containing a high percentage of fixed carbon and a low percentage of volatile matter. The moisture content of fresh-mined an thracite generally is less than 15 percent. The heat content of anthracite range s from 22 to 28 million Btu/ton (26 to 33 MJ/kg) on a moist, mineral-matter-free basis. The heat content of anthracite coal consumed in the United States averag es 25 million Btu/ton (29 MJ/kg), on the as-received basis (i.e., containing bot h inherent moisture and mineral matter). Note: Since the 1980s, anthracite refus es or mine waste has been used for steam electric power generation. This fuel ty pically has a heat content of 15 million Btu/ton (17 MJ/kg) or less. Coke: Coke is a solid carbonaceous residue derived from low-ash, low-sulf ur bituminous coal from which the volatile constituents are driven off by baking in an oven at temperatures as high as 2,000 F (1,000 C) so that the fixed carbo n and residual ash are fused together. Coke is used as a fuel and as a reducing agent in smelting iron ore in a blast furnace. Coke from coal is grey, hard, and porous and has a heating value of 24.8 million Btu/ton (29 MJ/kg). Byproducts o f this conversion of coal to coke include coal-tar, ammonia, light oils, and "co al-gas". (Coke can also be made from petroleum). Metallurgical coke: Metallurgical coke, also known as Met coke, is a carbon material manufactured by the destructive distillation of various blends of bituminous coal. Met coke has a very low volatile content. However, the ash constituents remain encapsulated in the resultant coke. Typical purities range from 88-92% fixed carbon. Metallurgi cal coke is used where a high quality, tough, resilient, wearing carbon is requi red. Applications include but are not limited to conductive flooring, friction m aterials, foundry coatings, foundry carbon raiser, corrosion materials, drilling applications, reducing agents, heat-treatment, ceramic packing media, electroly tic processes, and oxygen exclusion. Blast furnace coke is used in the blast fur naces of steel mills. It is the largest traded coke by volume and is produced in several countries with China being the largest producer and exporter. Petcoke: Petcoke is a solid carbonization by-product of high-boiling hydrocarbo n fractions obtained in petroleum processing. There are many different variation s and consistencies of petroleum from which the coke is derived. It is the gener al term for all special petroleum coke products such as green, calcined and need le petroleum coke. There is over 60 Million tons of petcoke produced around the world annually. INDIAN COAL India is the world's third largest coal producer (after China and the Un ited States), so most of the country's coal demand is satisfied by domestic supp lies. Indian coal generally has a high ash content and low calorific value, so m ost coking coal must be imported. Major Indian coal fields are found in Bihar, W est Bengal, and Madhya Pradesh. The Indian government controls almost all coal production. Nearly all of India's 390 mines are under Coal India Ltd. (CIL), which accounts for about 90% of the country's coal production. India has seven per cent of the worlds proven coal reserves. Coal meets app roximately 63 % of the countrys total energy requirements. By current estimates t he reserves are enough to meet Indias needs for at least another 100 years. Coal (hard coal and Lignite) is the predominant primary commercial energy source in India. Its share in total commercial energy since 1970-71 is more or l ess consistent around 62% in spite of increasing share of Natural Gas. The ash/m ineral matter of Indian Coal is of inherent nature i.e. intimately mixed with co al mass at the time of formation resulting in different cleaning characteristics . Indian Coal, in spite of the handicap of high ash, has many positive char

acteristics particularly with respect to environmental aspects and end-use. Thes e are: Low Sulphur content High Ash Fusion Temperature Low Iron Content in Ash Refractory Nature of Ash Low chlorine content Low Toxic Trace Elements In 1972-73, the Indian government nationalized the coal industry, primarily to d evelop the sector, since it was considered to be of strategic importance for rap id industrial development. Coal India Ltd (CIL) was incorporated as a holding co mpany for seven coal producing subsidiaries and a planning and design-focused co mpany. Indian coal is of mostly sub-bituminous rank, followed by bituminous and lignite (brown coal). The ash content in Indian coal ranges from 35% to 50%. PRODUCT RANGE FOR INDUSTRIES: PRODUCT 1. Imported Steaming Coal (Indonesia) Chennai Port Gross Calorie Value 6300 +/- 50 Kcal/kg Total Moisture 17-18 % Inherent Moisture 10-11% Ash Content 06-07% Volatile Matter 40-42 % Fixed Carbon By Difference Total Sulphur < 1% Size 0-50mm PRODUCT 2. Imported Steaming Coal (Indonesia) Chennai Port Gross Calorie Value 6100 +/- 50 Kcal/kg Total Moisture 13-14 % Inherent Moisture 05-06% Ash Content 14% Volatile Matter 40-42 % Fixed Carbon By Difference Total Sulphur < 0.8% Size 0-50mm PRODUCT 3. Imported Steaming Coal (Indonesia) Chennai Port Gross Calorie Value 5650 +/- 50 Kcal/kg Total Moisture 26% Inherent Moisture 12% Ash Content 04% Volatile Matter 42 % Fixed Carbon By Difference Total Sulphur < 0.8% Size 0-50mm

PRODUCT 4. Imported Steaming Coal (Indonesia) Chennai Port Gross Calorie Value 5500 +/- 50 Kcal/kg Total Moisture 30 % Inherent Moisture 14% Ash Content 05% Volatile Matter 42 %

Fixed Carbon By Difference Total Sulphur < 1% Size 0-50mm PRODUCT 5. Imported Steaming Coal (Indonesia) Tuticorin Port Gross Calorie Value 5900 +/- 50 Kcal/kg Total Moisture 24 % Inherent Moisture 14% Ash Content 04% Volatile Matter 38-40 % Fixed Carbon By Difference Total Sulphur < 0.9% Size 0-50mm

PRODUCT 6. Imported Steaming Coal (Indonesia) Tuticorin Port Gross Calorie Value 5650 +/- 50 Kcal/kg Total Moisture 26% Inherent Moisture 12% Ash Content 04% Volatile Matter 42% Fixed Carbon By Difference Total Sulphur < 0.8% Size 0-50mm PRODUCT 7. Imported Steaming Coal (Indonesia) Tuticorin Port Gross Calorie Value 5500 +/- 50 Kcal/kg Total Moisture 30% Inherent Moisture 14% Ash Content 05% Volatile Matter 42 % Fixed Carbon By Difference Total Sulphur < 1% Size 0-50mm

PRODUCT 8. Processed Coal Tuticorin Port Gross Calorie Value 5800 +/- 50 Kcal/kg Total Moisture 24% Inherent Moisture 16% Ash Content 04% Volatile Matter 38-40 % Fixed Carbon By Difference Total Sulphur 0.9% max Size Above 25mm Contents: Coal contains many trace elements, including arsenic and mercury, whic h are dangerous if released into the environment. Coal also contains low levels of uranium, thorium, and other naturally-occurring radioactive isotopes. Chemica

l composition of the coal is defined in terms of its proximate and ultimate (ele mental) analysis. The parameters of proximate analysis are moisture, volatile ma tter, ash, and fixed carbon. Elemental or Ultimate analysis encompasses the quan titative determination of carbon, hydrogen, nitrogen, sulfur, and oxygen. Calorific Value: The calorific value or heat of combustion or heating value of a sample of fuel is defined as the amount of heat evolved when a unit weight ( or volume in the case of a sample of gaseous fuels ) of the fuel is completely burnt and the products of combustion cooled to a standard temperature of 298 degree K. The quality of coal depends upon its rank and grade. The coal rank arranged in a n ascending order of carbon contents is Lignite sub bituminous coal bituminous c oal anthracite. Consumption: Coal is the dominant commercial fuel in India, satisfying more than ha lf of India's energy demand. Power generation accounts for about 70% of India's coal consumption, followed by heavy industry. Coal consumption is projected in t he International Energy Annual 2004 to increase to 430 million short tons (Mmst) in 2010, up from 359 million short tons (Mmst) in 2000. Demand has been rising at an annual rate of 5 per cent since 1992-93. Demand from the power sector, whi ch accounts for over 70 per cent of coal off take, was 214 million tons in 199798. Other users include iron and steel mills, cement plants, foundries, fertiliz ers producers, paper manufacturers, brick kilns etc. Coal consuming sectors comprising: Thermal power plants accounting for nearly 68% of the total coal off-take. Steel plants, cement plants, railway, fertilizer plants etc. accounting for over 14% of the total coal off-take Textiles, refractorys, foundries, paper mills, chemical industries etc. numbering over 20,000 units. Over a 100,000 brick-kilns, tobacco growers, tea garden and millions of househol ds. ELECTRICITY: India is trying to expand electric power generation capacity, as current generat ion is seriously below peak demand. Although about 80% of the population has acc ess to electricity, power outages are common, and the unreliability of electrici ty supplies is severe enough to constitute a constraint on the country's overall economic development. The government had targeted capacity increases of 100,000 megawatts (MW) over the next ten years. As of January 2002, total installed Ind ian power generating capacity was 120,000 MW. Owing to population growth and eco nomic development, India's energy consumption has been increasing at one of the fastest rates in the world. Why Coal as Fuel? Worldwide, coal is enormously important. It is the world's most abund ant and widely distributed fossil fuel. It is economic. Coal is the major fuel for generating electricity worldwide. More than 45 percen t of the world's electricity is generated from coal. Coal is used in at least three-quarters of all steel making and it has o ther industrial uses as well. Around four thousand million tons of coals are min ed every year in more than proved environment in the developed world or an impro ved standard of living in the developing world, the fact is that 87% or more of

the world's primary energy is derived at present from fossil fuels, oil, gas and coal. And the greatest of these three energy, coal is expected to continue its primary role in the world scenario in the near future also. Advanced coal-fired power generation technologies should be developed w orldwide to generate at minimum economic coal, improve thermal efficiency and me et environmental requirements. World Coal Reserves: Coal is one of the most significant natural resources in the world, with extensive reserves in almost 100 countries, estimated in 1996 at around one tho usand billion (1 x 1012) tones of coal reserves economically accessible using cu rrent mining technology. The worlds major hard coal producers are China, the USA, India, South Africa, Australia, Russia, Poland, Kazakhstan and the Ukraine. Coa l is mostly used in the region it is produced but about 12% is traded between co untries. Australia, the USA and South Africa are the largest exporters of coal. At current production levels, there is enough coal to last over 20 0 years, not taking in account other reserves which might be proved by on-going exploration or become accessible through improvements in mining technology. Know n world oil and gas reserves will be largely exhausted within 45 to 60 years tim e. Growth in demand for coal for energy and steel making is expected to drive in creased worldwide coal use from around 5.3 billion tons per annum (btpa) at pres ent to 7.6 btpa by 2020.

2.1 NEED FOR THE STUDY Business activity is dynamic in character and subject to wid firms treat account receivables as marketing tool to promot Every firm has a set of credit terms and policies under whi credit and every policy has a cost and benefit associated w attempts as to how to manage the accounts receivable and th

e fluctuations. Most e sales and profits. ch goods are sold on ith it. This project e impact of it.

In a competitive environment sometimes the firms are compelled

and sometimes the firms desire to adopt liberal credit policies for pushing up the sales and the factoring has been done. So a careful analysis of various aspe cts of the credit policy is required. That is why Appraisal of Receivable Managem ent is done.

2.2 OBJECTIVE OF THE STUDY Primary Objective: To study the effectiveness of managing accounts receivables and t he impact of the same. Secondary Objective: To analyze the receivable management performance of the GTC for a period of thre e years from 2006 2009 through ratio analysis. To find out the efficiency of collection performance comparative statement analy sis. To analyze the receivable of major dealers by segregating the outstanding into v arious categories. To find out the trend analysis of the company, correlation co-efficient of the c ompany.

2.3 SCOPE OF THE STUDY

Receivables means Collecting the debt owed to the company, by the customers arising from the sale of goods or services in the ordinary course of business money owned by customers/ individuals/ corporation to another entit y in exchange for goods and services that have been delivered or used by not yet paid for receivable usually come in the form of operating lines of credit and a re usually due within a relatively short time period. The sale of goods on credit is an essential part of any modern a nd competitive economic system like India. Credit sale and therefore receivables are treated as marketing tools to aid the sale of goods. The study aims at anal yzing the debtors and outstanding or amount of its company. It is hoped that thi s study will help the company in reducing its investment in Accounts Receivables .

2.4 LIMITATION OF THE STUDY The study has taken into account only three years for comparative analysis. Time and other resources have proved to be a constraint. It has always not been possible to get the full information. Since the study is based only on secondary data, so the reliability of informati on may not be ensured. No primary data is used for the study.

2.5 REVIEW OF LITERATURE MEANING OF ACCOUNTS RECEIVABLES: Accounts receivable is one of a series of accounting transactions de aling with the billing of customers who owe money to a person, company or organi zation for goods and services that have been provided to the customer. In most b usiness entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called credit or payment terms. While booking a receivable is accomplished by a simple accounting tra nsaction, the process of maintaining and collecting payments on the accounts rec eivable subsidiary account balances can be a full time proposition. Depending on the industry in practice, accounts receivable payments can be received up to 10 - 15 days after the due date has been reached. These types of payment practices are sometimes developed by industry standards, corporate policy, or because of the financial condition of the client. OBJECTIVE OF RECEIVABLE MANAGEMENT: From creation of receivables the firm gets a few advantages & it ha s to bear bad debts, administrative expenses, financing costs etc. In the manage ment of receivables financial manager should follow such policy through which ca sh resources of the firm can be fully utilized. Management of receivables is a p rocess under which decisions to maximize returns on the investment blocked in th em are taken. Thus, the main objectives of management receivable are to maximize th e returns on investment in receivables & to minimize risk of bad debts etc. Beca use investment in receivables affects liquidity and profitability, it is, theref ore, significant to maintain proper level of receivables. Efficient credit manag ement helps to increase the sales of the firm. To optimize the amount of sales. To minimize cost of credit. To optimize investment in receivables. To establish a balance between profitability and risk (cost). A business can afford to invest in its receivables unless the marginal costs and marginal profits are the same. Although the level of receivables is affected by various external factors like standards of industry, economic conditions, seaso nal factors, rate of competition etc, management can control its receivables. Th ough credit policies, credit terms, credit standards and collection procedures. FACTORING: Factoring is the sale of invoices or Accounts Receivable at a discount. I t is a way for the business to generate cash and improve cash flow without takin g on additional debt. Traditionally, factoring was a financing service used by the textile and furniture industries. Today however, factoring has become a financing standard i n just about any industry that created Accounts Receivable by extending terms to its customers.

Why do companies factor their Accounts Receivable? Simply put, to generate cash flow. Factoring provides immediate working c apital for companies facing a short term cash constraint. Most companies that ch oose factoring are not currently able to qualify for a traditional loan from the ir bank or companies who are growing faster than their bank is willing to extend credit. Due to credit policies and regulatory constraints, banks typically need t o see 2 years of profits, minimal leverage and a certain amount of cash flow for debt coverage. Companies that do not meet these characteristics and does not ha ve any real estate to pledge as collateral can many times find itself on the out side looking in. However, companies with Accounts Receivable (a current asset bu t not cash) can use them to generate cash for their day to day working capital n eeds. When a company sells its product or service on terms, it typically creates an invoice. This outstanding invoice for completed work can be called an Accoun ts Receivable. Instead of waiting to receive the cash when the customer remits p ayment, the business may decide to factor the receivable and immediately receive the cash. In order to have instant access to funds, the company is charged a no minal fee. In GTC factoring done by GLOBAL TRADERS Tuticorin and the commission paid for them is half of the receivables. BENEFITS Although every business is different and their reasons for Factoring may not be the same, the following benefits are representative of most situations: Additional cash is immediately available Quick and easy to set up It is temporary (no long term contracts required) and flexible (frequency and am ount of funding is optional) No additional debt is created as it is "Off Balance Sheet" financing Owner avoids giving up equity or control of the company Unlimited source of Working Capital - the funds available grows as the company's sales grow THE BANKER OF GTV.PVT/LDS: 1. 2. 3. Punjab National Bank Limited Indian Bank HDFC Bank Limited

Immediate cash requirement: The immediate cash requirements of the company are met through the Tem porary Bank Overdrafts and Bills Discounting. Bank Overdrafts: GTC pvt ltd makes use of the temporary O.D facilities offered by its bankers to meet its immediate cash requirement. Under this facility, the company is allowed to withdraw funds in excess of the balance in its current account up to certain specified limit during a stipulated period. The borrowing power will be the difference between the current assets and current liabilities i.e., work ing capital after deducting the margin amount. Bills discounting:

Bills discounting is the another sources, in addition to bank overd raft, by which the company meets its immediate cash requirements. In this proces s, the company draws bills of exchange for products on buyers, and then discount s it with its bankers for a charge. The banker will give an account, discounting the charge of the bank from the full amount of the bill, and collects the full amount on maturity. The amount provided by the bank is covered within the overal l credit limit. Though the banker becomes the owner of the bill, he holds them a s a security of the credit. In this case, the transaction is between the compani es and the bankers and if the dealer fails to pay the amount within the stipulat ed period, the company has to pay back the money. The company, GTC pvt ltd also handles the discounting of bills or Hundies rose by its suppliers. CREDIT MANAGEMENT: Trade credit is considered as an essential tool, acting as a bridge f or the movement of the products through production and distribution stages to cu stomers. When the firm sells its product or services and do not receive the cash for it immediately the firm is said to have granted trade credit to the custome rs. Trade credit thus, creates receivables or book debts which the firm is expec ted to collect in the near future. Receivables constitute a substantial portion of current assets of s everal firms. In India debtors, after the inventories, are the major components of the current assets. They form one-third of the current assets in India. Gran ting credit and creating debtor amount to the blocking of funds. The internal be tween the date of the sale and the date of payments has to be financed out of th e working capital. Thus, trade debtors represent investment. As substantial amou nts are tied up in trade debtors, it needs careful analysis and proper managemen t. CREDIT POLICY AND PRACTICES AT GTC PVT LIMITED The sales of the company GTC pvt Limited, goes on cash and as well as credit terms. The trading division of the GTC Pvt Limited sells its products, which it receives from the factories on a credit period o 45 days, through the branches of the company located all over the country. The branches in turn, will sell these products to the dealers of the company all over the country. CREDIT POLICY: The company GTC Pvt Limited extends a credit period of 21 days to i ts dealers. It waits for a period of 45 days for the payments from the customers . CASH DISCOUNT Cash discount is a reduction in payment offered to the customers t o induce them to repay credit obligation within a specified period of time, whic h will be less than the normal credit periods. It is usually expressed as a perc entage of sales. Cash discount terms indicate the rate of discount and the perio d for which it is available. ANALYSIS OF DEALERS: One of the main strengths of the company is its good dealer network, spreading throughout the country. It has around 5000 dealers all over south Ind ia. The company looks for the following factors in granting the credit to its de alers. Looks for the period of presence of the dealer in the business Looks for the character of the dealer i.e., his willingness to pay. The moral fa ctor is of considerable importance in credit Evaluation.

Looks for his ability to pay. This is evaluated by his financial position and th e bank guarantee given by him. Based on the above factors the company analyses the customers and determine the credit limit to them every six months, the company goes for the review of the cu stomers. When a dealer is found to be regular in playing the dues within 21 days, the company may go for increase in credit limit for the dealer. In the small wa y, new dealer are taken into consideration and given the credit. The company gives a margin of Three Percentage to its dealers. COLLECTION PROCEDURES: The company follows a system of centralized control and decentralized c ollection. The company does not employ and collection agency for its collection activities. The trading division receives statements of sales and outstanding da ily from all the branches in the country, to initiate appropriate actions. The s ales officers are engaged in collections activity at the branch level. The sales branch deposits the payments from the dealers in the banks, insisted by the tra ding division of the company. MONITORING BOOK DEBTS The company classifies its debts on the number of outstanding ways in the follow ing way. OUTSTANDING DAYS More than 90 days Between 45 to 90 days Less than 45 days DEBTS CATEGORY Disputes Doubtful Good

The company prepares the Aging schedule to monitor the control the books debts. Th e monthly aging schedule is prepared according to the outstanding days classific ation as given below with the corresponding due amount. OUTSTANDING PERIOD 0-21 Days 22-45 Days 46-90 Days Over 90 Days The company will go for the cash in advances or cash on demand terms for the repeate d promise breakers. FINANCIAL RATIOS: Financial ratios are useful indicators of a firm's performance and fin ancial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to com pare the firm's financials to those of other firms. In some cases, ratio analysi s can predict future bankruptcy. Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used: Liquidity ratios Asset turnover ratios Use and Limitations of Financial Ratios Attention should be given to the following issues when using financial ratios: A reference point is needed. To be meaningful, most ratios must be compared to h istorical values of the same firm, the firm's forecasts, or ratios of similar fi rms. Most ratios by themselves are not highly meaningful. They should be viewed as in dicators, with several of them combined to paint a picture of the firm's situati on.

 Year-end values may not be representative. Certain account balances that are use d to calculate ratios may increase or decrease at the end of the accounting peri od because of seasonal factors. Such changes may distort the value of the ratio. Average values should be used when they are available. Ratios are subject to the limitations of accounting methods. Different accountin g choices may result in significantly different ratio values.

3.1 RESEARCH METHODOLOGY This project study is aimed at analyzing the receivable managem ent and its impact at GTC (P) Ltd. RESEARCH: Systematic and organized effort to investigate a scientific problem. Identify the problem. Gather information. Analyze the data. Take corrective action and solve the problem. RESEARCH METHODOLOGY: It is the way to systematically solve the research problem. This stu dy on Receivable Management is an analytical study because the facts and informa tion that is readily available are being used to make critical evaluation of rec eivable Management at GTC (P) Ltd. RESEARCH DESIGN: Research design is a blue print or a planned procedure for conducti ng research program. RESEARCH DESIGN USED IN THE STUDY:

ANALYTICAL RESEARCH: The researcher has to use facts or information already available a nd analyze those facts to make a critical evaluation of the Receivable Managemen t. DATA COLLECTION METHOD: Nature of Data The data collected is secondary in nature. This is due to the nature of analysis, which only call for secondary data. Source of Data The source of data is the various years balance sheet, profit and loss ac count and statements provided by the GTC (P) Ltd. They were used for the anal ysis and for preparing reports. The records maintained by the company where refe rred to get the required information. TOOLS AND TECHNIQUIES FOR ANALYSIS: Various tools and techniques are used for the analysis are as follows. FINANCIAL ANALYSIS: Trend Projection Comparative Statement Ratio Analysis Ageing schedule STATISTICAL ANALYSIS: Trend Analysis Correlation Analysis PERCENTAGE ANALYSIS: Is this study is used to find the variation percentage i.e., t he increase and decrease which is helpful to have a look over in the trend.

COMPARATIVE STATEMENT: Comparative financial statement is a statement of the financial Position of a business, which are prepared in such a way as to provide, at a tim e perspective to the various element embodied in such a statements. These statem ents mainly include two types of analytical statement namely Comparative balance sheet Comparative income statement They facilitate comparison among two or more similar firms, preferab le in the same industry. Comparison may be regarding profitability and financial position. Comparative financial statement shows the following information for a nalytical purposes: Actual data in absolute money, as given in the financial statement for the perio d under consideration Increase or decrease in various items in money value Increase or decrease in various items in terms of percentage.

RATIO ANALYSIS: Ratio: The term ration refers to the numerical or quantitative rel ationship between two figures. A ratio is the relationship between two figures, and obtained by dividing the former by the latter. Ratios are designed to show h ow one number is related to another. It is worked out by dividing one number by another. Percentage If 100 multiply the quotient obtained, the unit of expres sion is termed as percentage. Ratio can be expressed in two ways Times Percentage Times: When another divides one value, the unit used to express the quotie nt is termed as Time. CURRET RATIO: Current Ratio current liabilities. It is related to working capital . The current ratio is the is expresses relationship between current assets and the most common ratio for measuring liquidity. Being analysis, it is also called the working capital ratio ratio of total current assets to current liabilities.

The current ratio of a firm measures its short-term solvency. It i s ability to meet short-term obligations. As a measure of short-term financial l iquidity, it indicates the rupees of current sales available for each rupees of current liability or obligation. The higher the current ratio, the larger the am ount of rupees available per rupee of current liability, the more the firms abili ty to meet current obligations and the greater the safety of funds of short-term creditors. Formula Current Assets Current Ratio= Current Liabilities Current Assets Which assets are easy to converted cash or which assets are easy to rea lized within one year, is called current assets. The currents assets of a firm r epresent those assets, which can be in the ordinary course of business converted onto cash within period not exceeding one year. Examples Cash in hand Cash at bank Debtors Bills Receivable Prepaid Expenses Stock Current Liabilities Current liabilities are those amounts which are payable within a period of

one year. Examples Creditors Bills payable Bank Overdraft Outstanding Expenses QUICK RATIO Quick ratio is also known as liquid ratio or acid test ratio or near money ratio. It is the ratio between quick or liquid assets and quick liabiliti es. It indicates the relation between strictly liquid assets whose value is almo st certain on the hand, and strictly liquid liabilities one the other. Formula Liquid Assets Liquid ratio = Current Liabilities Liquid Assets Liquid assets means, which assets are immediately convertible into cas h without much loss. Liquid Assets = Current Assets (Stock and Prepaid Expenses) Liquid Liabilities Liquid liabilities means liabilities which are payable within a short pe riod. Liquid Liabilities = Current liabilities Bank Overdraft DEBTORS TURNOVER RATIO This is also called Debtor Velocity or Receivable Turnover. A firm se lls goods on credit and cash basis. When the firm extends credits to its custome rs, book debts (Debtors or Account Receivable) are created in the firms account. Debtors expected to be converted into cash over short period and thus included in current assets. A debtor includes the amount of Bills Receivable and Book Deb ts at the end of accounting period. It is most essential that a reasonable quant itative relationship not been able to collect within a reasonable time its funds are unnecessarily locked up in receivables. In such case short term loans have to be arranged for paying off its current liabilities. The liquidity position of the firm depends on the quality of debtors to a great extent. The purpose of this ratio is to measure the liquidity of the rece ivables or to find out the period over which receivables remain uncollected. Financial analysts to judge the liquidity of a firm use two ratios . They are Debtors turnover ratio Debt collection period ratio Formula Net Credit Sales Debtors Turnover ratio= Average Accounts Receivables Account Receivable = Debtors + Bills Receivables

Average Account Receivable = Opening Stock + Closing Stock 2 DEBT COLLECTION PERIOD This ratio indicates the extent to which the debts have been coll ected in time. It gives the average debt collection period. The ratio is very he lpful to the lenders because it explains to them whether their borrowers are col lection money within a reasonable time. An increase in the period will result in greater blockage of funds in debtors. Formula Days in the year Debt collection period = Debtors Turnover Ratio CREDITORS TURNOVER RATIO This is also known as Account payable or Creditor Velocity. A bus iness firm usually purchases on credit goods, raw material and services from oth er firm. The amount of total payables of a business concern depends upon the pur chases policy of the concern, the quantity of purchases and suppliers credit pol icy. Longer the period of outstanding payables is, lesser is the problem of work ing capital of the form. But when the firm does not pay of its creditors within time, it may have adverse effect on the business. Credit turnover indicates the speed with which the payments for cr edit purchases are made to the creditors. It signifies the credit period enjoyed by the firm paying creditors.

Formula Net Purchase Credit Turnover Ratio = Average Accounts Payable

Account payable = Creditors + Bills Payable Opening Stock + Closing Stock Average Account Payable = 2 DEBT PAYMENT PERIOD This ratio gives the average credit period enjoyed from the creditors. Formula Debt payment period = Days in the year Creditors Turnover Ratio AGEING SHEDULE: The company monthly prepares the Ageing Schedule to monitor and control

its book debts. The monthly ageing schedule is prepared according to the outsta nding days. These ageing schedules have been analyzed to come out with average o utstanding days of the book debts of the company.

CORRELATION CO - EFFICIENT ANALYSIS A measure of the strength of linear association between two variab les. Correlation will always between -1.0 and +1.0. If the correlation is positi ve, we have a positive relationship. If it is negative, the relationship is nega tive. Use the Correlation transformer to determine the extent to which changes in the value of an attribute (such as length of employment) are associa ted with changes in another attribute (such as salary). The data for a correlati on analysis consists of two input columns. Each column contains values for one o f the attributes of interest. The Correlation transformer can calculate various measures of association between the two input columns. You can select more than one statistic to calculate for a given pair of input columns. The data in the input columns also can be treated as a sample obt ained from a larger population, and the Correlation transformer can be used to t est whether the attributes are correlated in the population. In this context, th e null hypothesis asserts that the two attributes are not correlated, and the al ternative hypothesis asserts that the attributes are correlated. The Correlation transformer calculates any of the following correla tion-related statistics on one or more pairs of columns. Formula r = NXY (X) (Y) [NX2 - (X) 2] [NY2 - (Y) 2]) N= Number of values or elements X = First Score Y = Second Score XY = Sum of the product of first and Second Scores X = Sum of First Scores Y = Sum of Second Scores X2 = Sum of square First Scores Y2 = Sum of square Second Scores TREND ANALYSIS The procedure by which the time related factors that influence the valu es observed in the time series are identified and segregated is called Time seri es Analysis.The general long term movement, which increases or decreases in the time series values over an extended period of years, is called Trend or Secular Trend. It is a set of observation taken at specified time interval, usually at Equal Intervals from a sufficiently long period of time. They help in making esti mates of futures. The estimate made for the future period is forecasts. This is the best method for obtaining the trend values. It provides a convenient basis for obtaining the line of best fit in a series. Line of the bes t fit is a line from which the sum of the deviation of various points on either side in zero. Further the sum of the squares of these deviations would be the le ast as compared to the sum of squares of the deviations obtained by using other lines. For this reason the sum of squares of the deviations of various points fr om the line of the Best Fit is the least.

The straight line trend has an equation of the type Y = a+bX Where Y Estimated values of the trend X Deviation in time period a & b Constraints Merits: This method gives the trend values for the entire time period. It can be used to forecast future trend because trend line establishes a functio nal relationship between the values and the time. This method is a completely objective method. 3.2 ANALYSIS AND INTERPRETATION 3.2.1 TABLE SHOWING TREND PROJECTION OF SALES IN GTC FOR 3 YEARS

YEAR SALES 2006 2007 2008 43309826.56 47767544.17 110848043.20

FINDINGS: From the above table it is found that the sale in 2006 is 43309826.56; 2007 is 47767544.17 and in 2008 is 110848043.20. INFERENCES: It can therefore be inferred that the sales and its percentage increas es from year to year.

3.2.2.1CHART SHOWING TREND PROJECTION OF SALES IN GTC FOR 3 YEARS

3.2.2 TABLE SHOWING TREND PROJECTION OF PROFITS IN GTC FOR 3 YEARS

Year Net Profit 2006 2007 2008 20000.53 28643.91 74685.07

FINDINGS: From the above table it is found that the profit in 2006 is 20000.53 ; 2007 is 28643.91 and in 2008 is 74685.07. INFERENCES: It can therefore be inferred that the profits and its percentage inc reases from year to year.

3.2.2.2 CHART SHOWING TREND PROJECTION OF PROFITS IN GTC FOR 3 YEARS

3.2.3 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF GTC (P) LTD Comparative income Statement of GTC for the year ended 31march of 2006 & 2007 PARTICULARS 2006 2007 % OF INCREASE / DECREASE OF 2006 AMT. % OF INC REASE / DECREASE OF 2007 AMT. Net sales (-) cost of sales

Gross profit (A) Operating expenses Administrative & selling expenses Total operate expenses (B) Operating profit (A - B)= C

Non operating incomes:Commission Total non. Operate income (D) Net profit C+D 43309826.56 42247554.16 47007544.17 45930126.30 (+)3697717.61 (+)3682572.14 (+) 8.54 (+) 8.72

1062272.40 1077417.87 (+) 15145.47 (+) 1.43

1050271.87

1048773.96 (-) 1497.91

(-) 0.14 1050271.87 1048773.96

(-) 1497.91 (-) 0.14 12000.53 28643.91 (+) 16643.38 (+) 138.69 8000.00 (-) 8000.00 (-) 100.00

8000.00 (-) 8000.00 (-) 100.00 20000.53 28643.91 (+) 8643.38 (+) 43.22

FINDINGS: From the above table it is found that the Administrative & selling e xpenses and commission are in negative. In 2006 is 20000.53and in 2007 is 28643. 91. INFERENCES: It can therefore be inferred that the company has increased percentag e in profits when compared to 2006 2007, it has 43.22%.

3.2.4 TABLE SHOWING COMPARATIVE BALANCE SHEET OF GTC (P) LTD Comparative Balance Sheet of UTC as on 31st march of 2006 & 2007 PARTICULARS 2006 2007 AMT. % F INC IN 2006 & 2007 Current Assets: Cash on Hold Cash at Bank Closing Stock Sundry Debtors Sundry Loan & Advances Sundry Deposits Total CA (A) Fixed Assets:Fixed Assets Total FA(B) Total (A+B) assets Current Liabilities Provisions Sundry Creditors Total CL(A) Loans & Liabilities Loans

Total Loans (B)

5990.00 1851197.28 50361.51 15538192.45 287632.75 22500.00

61640.08 390577.90 414682.66 1060672.42 333720.67 25000.00

+55650.08 -146023.38 +364321.15 +4931430.03 +46087.92 +2500.00 929.5 (-)78.90 723.41 31.74 16.02

11.11 17755873.99 11832379.73 -5923494.26 -33.36 209189.55 233315.42 +24125.87 11.53 209189.55 17965063.54 114996.33 17060430.42 91867.00 10847992.25 -23129.33 -6212438.17 -20.11 -36.41 17175426.75 1093989.25 -6235567.5 -36.31

233315.42 1206569515

+24125.87 -5899368.39

11.53 -32.88

426626.00 426626.00 426626.00 426626.00 -

Total (A+B) Capital & Reserves Share Capital 17602052.75 11366485.25 -6235567.5 -35.43 363010.79 699209.89 +336199.10 92.61 Total Shareholders Funds (O) Total Capital & Liabilities (C+B)

363010.79 699209.89 +336199.10 92.61 17965063.54 12065695.15 -5899368.39 -32.83 FINDINGS: From the above table it is found that the cash at bank, provision and s undry creditors are in negative. INFERENCES: It can therefore be inferred that the company financial performance is good.

3.2.5 TABLE SHOWING INCOME STATEMENT OF GTC (P) LTD Comparative Income Statement if GTC for the year ended 31march of 2007 & 2008 PARTICULARS 2007 2008 % OF INCREASE / DECREASE OF 2007 AMT. % OF INC REASE / DECREASE OF 2008 AMT. Net sales (-) cost of sales Gross profit (A) Operating expenses :Administrative & sending expenses Total operating exp. (B) Operative net profit (A - B)

Non operative income

Net profit

47007544.17 45930126.30 110848043.20 2380555.44 110848043.20 - 62537361.45 + 135.81 (-) 136.16 1077417.87 2380555.44

(+)1303137.57 + 120.95 1048773.96

2305870.37 (+)1257096.41

(+) 119.86 1048773.96 2305870.37 (+)1257096.41 (+) 119.86 28643.91 74685.07 (+) 146041.46 (+) 160.74 -

28643.91

74685.07

(+) 46041.46

(+) 160.74

FINDINGS: From the above table it is found that the cost of sales is in negativ e. In 2007 is 28643.91and in 2008 is 74685.07. INFERENCES: It can therefore be inferred that the company has increased percentag e in profits when compared to 2007 2008. It has 160.74%.

3.2.6 TABLE SHOWING BALANCE SHEET OF GTC (P) LTD Comparative Balance Sheet of UTC as on 31st march 2007 & 2008 PARTICULARS Assets:Cash on hand 2007 2008 % ON INC/AMT.

Cash at bank Closing stock Sundry debtors Sundry loans & advances Sundry deposits Total (A(A) Fixed Assets:Total FA (B) Total assets:-(A+B) Current liabilities:provisions sundry creditors TDS payable Total (C(A) Loans & liabilities:Loans Total loan (B) Total (A+B)=C Capital & reserves:Share capital Total share holders fund(D) Total capital & liabilities (C+D) 61640.08 390573.90 414682.66 10606762.42 333720.67 25000.00 61297.49

552487.38 2867186.82 16976976.46 669353.44 92654.00 -342.59 +161913.48 +2452504.16 +6370214.04 +335632.77 +67654 -0.56 +41.46 +591.42 +60.56 +100.57 +270.62 11832379.73 21219955.59 +938757.86 +79.34 23331.42 826991.50 +593676.08 +254.45 23331.42 826991.50 +593676.08 +254.45 12065695.15 22046947.09 +9981251.99 +82.72

91867.00 10847992.25 30000.00 20863692.42 81772.00 -618767.00 +10015700.17 +81772 -67.34 +92.33 10939859.25 20975464.42 +10036505.17 +91.73

426626.00 237297.00 -189329 -44.38 426626.00 237297.00 -189329 -44.38 11366485.25 21212761.42 +9846276.17 +86.63

699209.89 834185.67 +134975.78 +19.30 699209.89 834185.67 +134975.78 +19.30 12065695.15 22046947.09 +9981251.94 +82.72 FINDINGS: From the above table it is found that the cash on hand, provision and lo an are in negative. INFERENCES: It can therefore be inferred that the company financial performance is go od.

3.2.7 TABLE SHOWING CURRENT RATIO OF GTC (P) LTD FOR 3 YEARS:

YEARS

CURRENT ASSETS CURRENT LIABILITIES 2006 2007 2008

RATIO

17755873.99 11832379.73 21219955.59 17175426.75 10939859.25 20975464.42 1.03 1.08 1.01 FINDINGS: Current Ratio = Current assets Current Liabilities From the above table it is found that the current ratio in 2006 is 1.03; 2007 is 1.08 and in 2008 is 1.01. INFERENCES: Current ratio should be around 2 but the company has 1. So the company has t o maintain its current position.

3.2.2.3 CHART SHOWING CURRENT RATIO OF GTC (P) LTD FOR 3 YEARS:

3.2.8 TABLE SHOWING QUICK RATIO OF GTC (P) LTD FOR 3 YEARS

YEARS LIQUID ASSETS 2006 2007 2008 CURRENT LIABILITIES RATIO

17705512.48

11417697.07 18352768.77 17175426.75 10939859.25 20975464.42 1.03 1.04 0.87 FINDINGS: Quick Ratio = Current assets - Stock Current Liabilities From the above table it is found that the quick ratio in 2006 is 1.03; quick ratio in 2007 is 1.04 and quick ratio in 2008 is 0.87. INFERENCES: Quick ratio should be around 1 but the company has 1 & 0.87. So the company has to maintain its quick ratio.

3.2.2.4 CHART SHOWING QUICK RATIO OF GTC (P) LTD FOR 3 YEARS

3.2.9 TABLE SHOWING DEBTORS TURNOVER RATIO OF GTC (P) LTD FOR 3 YEARS

YEARS CREDIT SALES 2006 2007 2008 AVERAGE RECEIVABLES RATIO

43309826.56 47007544.17 110848043.20 15538192.45 10606762.42 16976976.46 2.78 times

4.43

times

6.53 times FINDINGS: DTR = Net Credit Sales Average Receivables

From the above table it is found that the Debtors Turnover Ratio in 2006 is 2.78; 2007 is 4.43 and in 2008 is 6.53. INFERENCES: It can therefore be inferred that the DTR is increases year by year.

3.2.2.5 CHART SHOWING DEBTORS TURNOVER RATIO OF GTC (P) LTD FOR 3 YEARS

3.2.10 TABLE SHOWING DEBTORS COLLECTION PERIOD OF GTC (P) LTD FOR 3 YEARS

YEAR DAYS IN A YEAR DEBTORS TURNOVER RATIO DAYS

2006 2007 2008

365 365 365

2.78 4.43 6.53

131 82 56

FINDINGS:

Debtors Collection Period tio

Days in a year Debtors Turnover Ra

From the above table it is found that the debtors collection period in 2006 is 131days; 2007 is 82days and in 2008 is 56days. INFERENCES: It can therefore be inferred that the debtors collection period is les s year by year. The company has higher turnover ratio and shorter the average co llection period.

3.2.2.6 CHART SHOWING DEBTORS COLLECTION PERIOD OF GTC (P) LTD FOR 3 YEARS

3.2.11 TABLE SHOWING CREDITORS TURNOVER RATIO OF GTC (P) LTD FOR 3 YEARS

YEAR PURCHASE 2006 AVERAGE CREDITORS RATIO

2007

2008

4027053.16

46294463.39

110418622.62

17060430.42

10847992.25

2086369.42 2.36

4.27

5.29 FINDINGS: CTR = Net Credit Purchase Average Accounts Payable

From the above table it is found that the creditors turnover ratio i n 2006 is 2.36; 2007 is 4.27 and in 2008 is 5.29. INFERENCES: It can therefore be inferred that the creditors turnover ratio incre ases year by year.

3.2.2.7 CHART SHOWING CREDITORS TURNOVER RATIO OF GTC (P) LTD FOR 3 YEARS

3.2.12 TABLE SHOWING CREDITORS COLLECTION PERIOD OF GTC (P) LTD FOR 3 YEARS

YEAR DAYS IN A YEAR CREDITORS TURNOVER RATIO 2006 DAYS

2007 2008

365 365 365 2.36 4.27 5.29 155 85 69 FINDINGS: Creditors Collection Period io From the above table it is found that the creditors collection period i n 2006 is 155days; 2007 is 85days and in 2008 is 69days. INFERENCES: It can therefore be inferred that the collection period decreases year by year. = Days in a year Creditors Turnover Rat

3.2.2.8 CHART SHOWING CREDITORS COLLECTION PERIOD OF GTC (P) LTD FOR 3 YEARS

3.2.13 TABLE SHOWING AGEING SHEDULE OF GTC (P) LTD: OUTSTANDING DAYS 0-21 46 22-45 18 46-90 15 More than 90 21 PERCENTAGE

3.2.14 TABLE SHOWING CORRELATION COEFFICIENT BETWEEN SALES AND WORKING CAPITAL YEAR X Y X2 2005 to 2006 43309826 580447 1875741076657281 2006 to 2007 47007544 892520 2209709208894500 2007 to 2008 110848043 244491 Y2 XY 25139069291630 41955173170880

336919015837 796592807219

TOTAL

12287288681269066 201165413 1717459 33252738966820847

59775932207 1193287755263

27101348881113 94195591343623

Where X Sales, Y Working Capital, N

= Number of Values

Working Capital = Current Asset Current Liabilities N = 3 X = 201165413 Y = 1717459 X2 = 33252738966820847 Y2 = 1193287755263 XY = 94195591343623 Formula r = NXY (X) (Y) [NX2 - (X) 2] [NY2 - (Y) 2] 3(94195591343623) (201165413)( 1717459) [(3*33252738966820847) (201165413)2][(3*1193287755263) (1717459)2] r = -0.85198 FINDINGS: From the above it is found that the correlation co-efficient between sales and working capital is -0.85198. INFERENCES: It can therefore be inferred that there is a negative correlation bet ween sales and working capital.

r =

3.2.15 TABLE SHOWING CORRELATION COEFFICIENT BETWEEN SALES AND DEBTORS

YEAR X Y X2 Y2 XY 2005 to 2006 43309826 15538192 1875741028150276 2006 to 2007 47007544 10606762 2209709192911936 2007 to 2008 110848043 16976976 12287288636929849 TOTAL 201165413 43121930 16372738857992061

241435410628864 672956391874592 112503400124644 498597831412528 288217714104576 1881864565657968 642156524858084 3053418788945088

Where X Sales, Y Debtors, N N = 3 X = 201165413 Y = 43121930 X2 = 16372738857992061 Y2 = 642156524858084 XY = 3053418788945088 Formula r =

= Number of Values

NXY (X) (Y) [NX2 - (X) 2] [NY2 - (Y) 2]

r = 3(3053418788945088) (201165413)( 43121930) [(3*16372738857992061) (201165413)2][(3*642156524858084) (43121930)2] r = 0.63802 FINDINGS: From the above it is found that the correlation co-efficient between s ales and debtors is 0.63802. INFERENCES: It can therefore be inferred that there is a positive correlation bet ween sales and debtors.

3.2.16 TABLE SHOWING TREND ANALYSIS FOR SALES OF GTC (P) LTD YEAR(X) SALES(y) 2006 43309826 -1 1 2007 2008 TOTAL 47007544 0 0 110848043 1 1 201165413 x = X-A x2 -43309826 0 110848043 0 2 67538217 Xy

Y = a+ bx Where a = a = 201165413 3 a = 67055137.67 FINDINGS: Sales in 2005 2006 Y = 67055137.67 + (33769108.5*-1) = 33286029.17 Sales in 2006 2007 Y = 67055137.67 + (33769108.5*0) = 67055137.67 Sales in 2007 2008 Y = 67055137.67 + (33769108.5*1) = 100824246.17 INFERENCES: It can therefore be inferred that the sales increased year by year. b = 33769108.5 y N b = 67538217/2 b = xy x2

3.2.2.9 CHART SHOWING TREND ANALYSIS FOR SALES OF GTC (P) LTD

3.3 FINDINGS The company net sales were increased during the three years. The company profit was increased year by year due to sales increased and efficie nt management. The cost of sales was increased during the period 2007. When compared to previou s year. It shows the company is spending more for expenses. There was no non-trading income during the year2007 & 2008. The cost of sales was increased during the period 2008. When compared to previou s year. It shows the company is spending more for expenses. The current liabilities were sufficiently decreased during the year 2007. The current assets were sufficiently decreased during the year 2007. The loans and liability was decreased during the year 2008. During the period 2006 to 2008 the cost of sales increased percentage. This incr ease may due to rise in raw material price and inefficiency of the purchasing de partment. The net working capital of the company shows the fluctuating trend. During the year 2008 the quick ratio is very low 0.87compared with standard rati

o(1:1) During the period 2006 to 2008 the Debtor turnover ratio is high and the company takes less days for collecting debtors. During the period 2006 to 2008 the Creditors turnover ratio is high and the comp any takes more periods to pay creditors.

3.4 SUGGESTIONS The Company may concentrate to increase current assets to meet the obligations ( liabilities) The Company may concentrate to increase the quick assets to meet the liquid liab ilities because of meeting liquidity position of the organization. The Company may concentrate to utilities the current assets effectively The Company can maintain (decrease) current liabilities properly in year by year . The Company can maintain cash position it will increase the liquidity Position o f the company. Even though sales increases but debtor collection policy should be strict so tha t the inflow will be increased. Motivate the dealers and sales representatives through various promotional activ ities. The company can prepare collection experience statement for each dealer. Collection experience matrix to monitor its book debts. Company can maintain structured frame work for bank guarantee limits determinati on.

3.5 CONCLUSION During the project study period, major department are covered. T he receivable management is the key area of the working capital management. The main purpose of the project is to analysis the financial performance of the comp any. The detailed observations are presented in the form of analysis in the prev ious chapter. The major financial performance indicators of GENERAL TRADING CO MPANY PRIVATE LIMITED for the three year period in terms of ratios like liquidit y ratios, creditors turnover ratio, debt turnover ratio of the company and so man y datas used in this project work. The study concludes by saying that the performance of the overa ll Receivable Management has improved when compared to the previous year. It is found from the survey that the companys credit management is not very strict.