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Interpretation
The gross operating cycle is capital invested in total current assets and the
net operating cycle is the excess of current assets over current liabilities. The
net operating cycle may be positive or negative. hen the current assets
exceed the current liabilities the operating cycle is positive and the negative
operating cycle results when the current liabilities are more than the current
assets. So in the current year the current liabilities is more than the current
assets so the operating cycle results is negative and it is bad for the
company.
V Accruals
V Accounts Receivable Ginancing
V Gactoring
V Inventory Ginancing
V Term Loan
V Commercial Paper
V In current ratio is continuously increasing over the period because
decreasing in current liabilities and current assets are increasingly in more
number in Banas dairy. So it is good sign for the company. The quick ratio is
little bit good and the current year absolute liquidity ratio is lowest so we are
not able to pay our liabilities.
V The inventory turnover ratio indicates that Company should compare the
cogs with the net sales and try to reduce the cost as it decreases the profits
and net income for the company.
V The debtor·s turnover ratio indicates that credit management team·s
efficiency of the company is reducing. Credit period should be expanded to
have more liquidity in business.
V The working capital turnover ratio indicates that the company is better able
to generate sales from its working capital.
V The sale of Banas dairy is continuously increasing from last four years. The
highest sale is 1926.36 crore in the year 2010.
V The cash and bank balance is widely fluctuating. In 2006-07 the cash and
bank balance is 68.49 crore while in 2009-10 its increases to 497 crore.
V The operating cycle is duration required to convert sales after the conversion
of resources into inventories into cash. So in the year operating cycle is minus
and decrease creditor deferred period.
V Ginancial analysis is analysis of financial statements of
an enterprise.
V Ginancial statement reorganized collection of data
according to logical and constituent accounting
procedures.
V Overall project work done during 6 weeks, it can be
said that the project was a good learning
experience.
V I learned how to interpret working capital by using
ratio analysis, net operating cycle and inventory
management
V Overall it is good experience for getting the practical
knowledge of the company.
V Try to reduce inventory consumption period and
debtor·s collection period as high internal accruals
V If inventory holding is reduced there will be more
working capital.
V There is an increase in the debtors then it shows the
inefficiency of the collection department
V Company should focus on operating cycle, and try
to improve it we see that high fluctuating is very
bad for any company.
V It is only a study of ANN=AL report.
V orking capital study is only based upon
monetary information and non monetary factors
are ignored.
V It does not consider change in price level
V As working capital is prepared on the basis of
going concern, it does not give extract position.
Thus accounting concept and conventions
causes a serious limitation to financial analysis.
V Analysis is only a mean and not an end in itself.
Different people may interpret same analysis in
different ways.
V It is study as per guidelines provided to me and
as per my knowledge.