4.

FINANCE
4.2 Organizations History
Jaipur ceramics private limited was established in the year 1996. It started with the initial capital of Rs.3cr and they took the loan from Punjab national bank and mortgaged land consisting of 20 bighas. It is not yet listed in the stock exchange. This company manufactures crockeries, potteries, supplies,to organization and as well as individuals viz,5 star hotels,restaurants and to general public. It sells in domestic as well as international market. This company pays several kinds of taxes like Central Sales Tax, VAT, excise duty and custom duty. It exports in Europe, Korea , Australia,Russia, Turkey, USA, Dubai and Egypt.

Finance

is often defined simply as the management of money or funds management. Modern finance, however is a family of business activity that includes the origination, marketing and management of cash and money revolves around a variety of capital accounts. Finance is a set of activities dealing with the management of funds. More specifically, it is the decision of collection and use of funds. It is a branch of economics that studies the management of money and other assets. Finance is also the science and art of determining if the funds of an organisation are being used properly. Through financial analysis, companies and businesses can take decision and corrective actions towards the sources of income and the expenses and investment that need to be made in order to stay competitive.

4.3 Capital turnover ratio =6 times

It is calculated by taking the total of the companies annual sales and dividing it by average stock holder security.Progressive in operations, increasing generation of revenue.

4.1 Importance
Finance is very important for business organisation. Finance includes planning of financial resources, making of optimum capital structure and effective utilisation of financial structure and effective utilisation of financial resources. It is the life blood of business. It helps the organisation to achieve objective. It ensures adequate cash flow. Finance department prepares financial document and final accounts for managers to use and for reporting purpose. Through, thepreparation of final accounts the position of the organization can be known.

4.4 Stock turnover ratio = 70 days

Here the stock clearance is in 70 days that indicates generation of sales. It helps to maintain a proper amount of stock to fulfil the requirements of the concern. A proper inventory turnover makes the business to earn a reasonable margin of profit.

4.5 Debtors turnover ratio= 90 days

It determines the efficiency with which the trade debtors are managed. 90 days means that the amount of money will be blocked for 3 months i.e.; 90 days. Weknow that the amount of money is to be

cleared by the debtors as early as possible so it is not good for the company.

4.6 Creditors turnover ratio= 90days

It indicates the speed with which the payments are made to the creditors. It establishes the relationship between net credit purchases and average accounts payable. Higher payable turnover ratio may indicate less period of credit enjoyed by the business. It may be due to the fact that either business has better liquidity position. Here the creditors turnover ratio is 90 days so we can easily pertain the above conclusion on this regard.

shows high value of the company shows high value of assets. At a glance it has positive impact.

4.9 Diminishing Method:-

Balance

4.7 Deprecation:It is a method of allocating the cost of tangible assets over its useful life. It reduces the value of an asset as a result of wear and tear, obsolescence. In this company JCPL, straight line method is used.

Under diminishing balance method, a fixed percentage of the assets is deducted from the book value of the assets and in the next year that same percentage is deducted from the residual value of the assets. Suppose JCPL has a machinery worth Rs.100000, under this method they are charging depreciation @10%. So after the first year amount of depreciation will be Rs.100000*10% = Rs.10000. In the second year they have to charge this 10% on Rs.90000 (100000-10000). So the value of the assets is diminishing year after year. As JCPL does not follow diminishing balance method, the value of assets does not decrease year after year. So, the balance sheet of the company does not show a less amount of assets.

4.8 Straight Line Method:Straight line depreciation is the most often used technique in which the company estimates the salvage value of the assets at the end of the period during which it will be used to generate revenues and will expense a portion of original cost in equal increments over the period. Annual depreciation expenses= cost of fixed assets- residual value / useful life of assets. As they are following straight line method, the fixed assets remain constant year after year end the amount of depreciation is transferred to provision for depreciation a/c.So the balance sheet of the company They use Tally Software. Vijay Dinesh & Co. , Jaipur is their statutory auditor. Their goodwill is around Rs.10-15 crore. They pays Excise duty= 10.8%, Central Sales tax= 2%, VAT= 14% , Income tax= 13%. They have total assets of Rs.15 crores approx.