A

PROJECT REPORT
ON
“WORKING CAPITAL ANALYSIS OF BERKELEY GAINS”
SUBMITTED TO:
KURUKSHETRA UNIVERSITY, KURUKSHETRA
IN THE FACULTY OF COMMERCE
(SESSION: 2010-11)
In the partial fulfillment of
MASTER OF DEGREE BUSINESS ADMINISTRATION

UNDER GUIDANCE: SUBMITTED BY:

MS. PARVEEN NARANG MS. SUMAN JOSHI
[Link], [Link], ROLL NO. 3309818
MS- FINANCE Regd. No.
LECTURER

Institute Of Science And Technology Kalawad (Yamunanagar-135001)

(AFFILIATED TO KURUKSHETRA UNIVERSITY, KURUKSHETRA
AND APPROVED BY A.I.C.T.E. DELHI)
 DECLARATION

I suman Joshi hereby declared that ,the project report entitled “ WORKING CAPITAL
ANALYSIS OF BERKELEY FINANCE IN CHANDIGARH” submitted by me in the
partial fulfillment of the requirement for the master of degree business Administration to
kurukshetra university, kurukshetra is the original work conducted by me and all data and
facts contained in this report are original to the best o f my knowledge.
I have not submitted this report to any other institute for the award of any degree or diploma.

Suman joshi
Roll no. 3309818
 ACKNOWLEDGEMENT

Project is like a bridge between the theoretical and practical working of this I joined this
particular project. It is a matter of great pleasure for me to submitted a project report on
“working capital analysis.”
No matter how much enterprising and entrepreneurial one’s thinking is, yet nobody can do
everything all by himself without help and guidance, it’s inhumane if the concerned persons
assistance goes without appreciation and thanks.
I take this opportunity to express my profound sense of gratitude and respect to all those who
helped me through the duration of project.
First and foremost I would like to express my thanks to supreme power of almighty god and
to Ms. Parveen narang (Lect. Institute of science and technology Kalawad) who helped me
time to time in completing my project work successfully and to the principal of who provide
me relavant books facility.

Suman joshi
Roll no. 3309818
 PREFACE

This report entitled “working capital analysis” has been undertaken for the partial
fulfillment of course of “master of business administration” presented in “Kurukshetra
university, kurukshetra”. The study properly equipped with page no. cauterization, starting to
end part to assist the viewer in the described manner.
It is well known fact that today is the age of computer, the major achievement of science and
technology. Now a day everybody is realizing the importance of computers. So realizing the
fact and according to the time demand, computers. So realizing the fact and according to the
time demand, computers are important and necessary achievements in this banking sector.
 EXECUTIVE SUMMARY

Primary objectives of this report is to analyze the financial position of the company which is
helpful in decision making as well as help to analyze the performance of the company in past.
I have analyzed various key ratios and make graph of every ratio through which we can easily
analyze that the company performance is improving every year and future of company is
promising.

For preparing this report, I have gone through annul report of company, magazines, journal
and data is collected from various sites, which are given in references below. I have also
identified the problem, which exist the company and have given recommendation so the
company can take that effectives step.
In short all efforts which was made to make this report explains

“WORK IS WORSHIP”
 TABLE OF CONTENT
Chaprer1: Introduction
• Introduction to company
• Introduction to Industry
• Introduction to project

Chapter 2: Justification of Study

Chapter 3: literature Review

Chapter 4: Objectives of study

Chapter 5: Limitations of study

Chapter 6: Research Methodology

• Methods of data collection
• Research design
• Analysis and interpretation of data

Chapter 7: Findings of study

Chapter 8: Suggestion

Chapter 9: Conclusion

Chapter 10: Bibliography

Chapter 11: Annexure

INTRODUCTION
OF
COMPANY
 INTRODUCTION TO COMPANY

Introduction to Berkeley Group !

Berkeley group since its launch in 1994 has proved that hard work and dedication naturally
bring success which gets reflected in the trust and faith reciprocated by public. The group’s
passionate performance and action oriented approach has won their patrons’ full support and
confidence be it genre of automobile, insurance, financing or Real estate.
The group has been involved in diverse activities like Berkeley Automall, first of its kind in
the region which dealt in the sale of reconditioned cars. Berkeley also started the concept of
multi-model workshop in 2002, wherein all types of cars were being undertaken for the
service, mechanical repairs and accidental jobs. Presently, Berkeley Automobiles is the most
favored and well reckoned Maruti Suzuki Dealer in North India. Our 15 years of experience
the service industry has resulted in a collection of more than 1,00,000 customer related
database.
Berkeley Group indulges in providing many significant and momentous services related to
car purchase. Berkeley Insurance Services Limited and Berkeley Finance Limited is another
milestone in the successful journey of Berkeley Group. Their success is shaped by the way
the whole team is geared up to give their best in everything every time.
Berkeleygains has been founded with the aim of providing world class investing experience
to hitherto underserved investor community. The technology today has made it possible to
reach out to the last person in the financial market and give him the same level of service
which was available to only the selected few.

We give personalized premium service with reasonable commissions on the NSE, BSE &
Derivative market through our Equity broking arm Berkeley Securities Ltd. With our
sophisticated technology you can trade through your computer and if you want human touch
you can also deal through our Relationship Managers out of our branches.
The Group’s clarity of vision and honesty of intent will definitely make Berkeley Gains a
granite foundation of your wise investment dreams

Corporate Office :
Berkeley Commodities Ltd.
Berkeley Securities Ltd.
SCO 42, Madhya Marg, Sector 26
Chandigarh, India.
Phone +91-172-5030000
Email :- Info@[Link]
Branch Office :
Berkeley Commodities Ltd.
Berkeley Securities Ltd.
SCO 350, Sector 9, Panchkula.
Phone +91-172-5064070
Department Contacts:
Accounts Deptt. : 0172 –5029973
Customer Care: 0172 –5029956
Back Office: 0172 –5029967
Risk Mgmt.: 0172 –5029970
Emails customercare@[Link]
Regional Office:
Hisar
SCO 56, First Floor, Near Hotel Regency,
Red Square Market, Hissar, India.
Phone +91-1662-645107
Mobile : +91-92157-77775
Patiala
SCF 104, Ground Floor, Chotti Baradari, Patiala 147001
Ph. 0175-5061081-85
Mobile: 99145-75707, 98557-65707
Email: infopatiala@[Link]
PRODUCT & SERVICE

Browser based trading terminal that can be accessed by a unique ID and password. This
facility is available to all our online customers the moment they get registered with us.

Features:
Trading at NSE,BSE and Derivatives on single screen.
Add multiple scrips on the market watch.
Greater exposure for trading on the available margin.
Common window for display of market watch and order execution.
Real time updating of exposure and portfolio while trading.
Offline order placement facility.
Stop-loss feature.
Competitive Brokerages.
Banking integration with ICICI Bank, HDFC Bank & Axis Bank.
Proxy link to enable trading behind firewalls.

Application based terminal for active traders. It provides better speed, greater
analytical features & priority access to Relationship Managers.

Modex:
Trading at NSE,BSE and Derivatives on single screen.
Add any number of scrips in the Market Watch.
Tick by tick live updation of Intraday chart.
Greater exposure for trading on the margin available
Common window for market watch and order execution.
Key board driven short cuts for punching orders quickly.
Real time updation of exposure and portfolio.
Facility to customize any number of portfolios & watch lists.
Market depth, i.e. Best 5 bids and offers, updated live for all scripts.
Facility to cancel all pending orders with a single click.
Instant trade confirmations.
Banking integration with ICICI Bank, HDFC Bank & Axis Bank,& Bank of
India,& Corporation Bank, & Karnataka Bank, & Oriental bank of Commerce,
& South Indian Bank, & Vijay Bank and Yes Bank.
Stop-loss feature.

COMMODITY
[Link] offers a unique feature of a single screen trading platform in MCX and
NCDEX. Berkeley offers both Offline & Online trading platforms. You can Walk in or place
your orders through telephone at any of our branch locations
Online Commodity Internet trading Platform.
Live Market Watch for commodity market (NCDEX, MCX) in one screen.
Add any number of scrips in the Market Watch.
Tick by tick live updation of Intraday chart.
Greater exposure for trading on the margin available
Common window for market watch and order execution.
Key board driven short cuts for punching orders quickly.
Real time updation of exposure and portfolio.
Facility to customize any number of portfolios & watchlists.
Market depth, i.e. Best 5 bids and offers, updated live for all scripts.
Facility to cancel all pending orders with a single click.
Instant trade confirmations.
Stop-loss feature.

EQUITY

Browser based trading terminal that can be accessed by a unique ID and password. This
facility is available to all our online customers the moment they get registered with us.

Features:
Trading at NSE,BSE and Derivatives on single screen.
Add multiple scrips on the market watch.
Greater exposure for trading on the available margin.
Common window for display of market watch and order execution.
Real time updating of exposure and portfolio while trading.
Offline order placement facility.
Stop-loss feature.
Competitive Brokerages.
Banking integration with ICICI Bank, HDFC Bank & Axis Bank.
Proxy link to enable trading behind firewalls.

Application based terminal for active traders. It provides better speed, greater
analytical features & priority access to Relationship Managers.

Features:
Trading at NSE,BSE and Derivatives on single screen.
Add any number of scrips in the Market Watch.
Tick by tick live updation of Intraday chart.
Greater exposure for trading on the margin available
Common window for market watch and order execution.
Key board driven short cuts for punching orders quickly.
 Real time updation of exposure and portfolio.
Facility to customize any number of portfolios & watch lists.
Market depth, i.e. Best 5 bids and offers, updated live for all scripts.
Facility to cancel all pending orders with a single click.
Instant trade confirmations.
Banking integration with ICICI Bank, HDFC Bank & Axis Bank,& Bank of
India,& Corporation Bank, & Karnataka Bank, & Oriental bank of Commerce,
& South Indian Bank, & Vijay Bank and Yes Bank.
Stop-loss feature.

MUTUAL FUNDS
Berkeleygains Provides expert advice to its clients for their investments in equity &
debt markets through Mutual Funds.

Our experts advice you the best investment solutions that suit you and help you to
reach your financial goals.
We help you ascertain your risk profile & guide you with the right product mix which
reduce your tax liability, increase your savings & enhance your wealth. Whether you
have a conservative, medium or aggressive investment risk appetite, our experts would
guide you to build a portfolio to optimize the return of interest.
Classification of mutual fund :
1. By structure
Open-ended scheme

Closed-ended scheme
Interval schemes
2. By investment objective
Growth schemes
Income schemes
Balanced schemes
Money market schemes
[Link] Other Schemes
Tax saving schemes
Special schemes
Index Schemes
Sector specific schemes
INTRODUCTION
TO
INDUSTRY
 INTRODUCTION TO INDUSTRY

In the U.S., the public securities markets can be divided into primary and secondary markets.
The distinguishing difference between the two markets is that in the primary market, the
money for the securities is received by the issuer of those securities from investors, typically
in an initial public offering transaction, whereas in the secondary market, the securities are
simply assets held by one investor selling them to another investor (money goes from one
investor to the other). An initial public offering is when a company issues public stock newly
to investors, called an "IPO" for short. A company can later issue more new shares, or issue
shares that have been previously registered in a shelf registration. These later new issues are
also sold in the primary market, but they are not considered to be an IPO but are often called
a "secondary offering". Issuers usually retain investment banks to assist them in
administering the IPO, obtaining SEC (or other regulatory body) approval of the offering
filing, and selling the new issue. When the investment bank buys the entire new issue from
the issuer at a discount to resell it at a markup, it is called a firm commitment underwriting.
However, if the investment bank considers the risk too great for an underwriting, it may only
assent to a best effort agreement, where the investment bank will simply do its best to sell the
new issue.
For the primary market to thrive, there must be a secondary market, or aftermarket that
provides liquidity for the investment security—where holders of securities can sell them to
other investors for cash. Otherwise, few people would purchase primary issues, and, thus,
companies and governments would be restricted in raising equity capital (money) for their
operations. Organized exchanges constitute the main secondary markets. Many smaller issues
and most debt securities trade in the decentralized, dealer-based over-the-counter markets.
In Europe, the principal trade organization for securities dealers is the International Capital
Market Association. In the U.S., the principal trade organization for securities dealers is the
Securities Industry and Financial Markets Association, which is the result of the merger of
the Securities Industry Association and the Bond Market Association. The Financial
Information Services Division of the Software and Information Industry Association
(FISD/SIIA) represents a round-table of market data industry firms, referring to them as
Consumers, Exchanges, and Vendors.

Public offer and private placement

In the primary markets, securities may be offered to the public in a public offer.
Alternatively, they may be offered privately to a limited number of qualified persons in a
private placement. Sometimes a combination of the two is used. The distinction between the
two is important to securities regulation and company law. Privately placed securities are not
publicly tradable and may only be bought and sold by sophisticated qualified investors. As a
result, the secondary market is not nearly as liquid as it is for public (registered) securities.
Another category, sovereign bonds, is generally sold by auction to a specialized class of
dealers.
Listing and OTC dealing
Securities are often listed in a stock exchange, an organized and officially recognized market
on which securities can be bought and sold. Issuers may seek listings for their securities to
attract investors, by ensuring there is a liquid and regulated market that investors can buy and
sell securities in.
Growth in informal electronic trading systems has challenged the traditional business of stock
exchanges. Large volumes of securities are also bought and sold "over the counter" (OTC).
OTC dealing involves buyers and sellers dealing with each other by telephone or
electronically on the basis of prices that are displayed electronically, usually by commercial
information vendors such as Reuters and Bloomberg.
There are also eurosecurities, which are securities that are issued outside their domestic
market into more than one jurisdiction. They are generally listed on the Luxembourg Stock
Exchange or admitted to listing in London. The reasons for listing eurobonds include
regulatory and tax considerations, as well as the investment restrictions.
Market
London is the centre of the eurosecurities markets. There was a huge rise in the eurosecurities
market in London in the early 1980s. Settlement of trades in eurosecurities is currently
effected through two European computerized clearing/depositories called Euroclear (in
Belgium) and Clearstream (formerly Cedelbank) in Luxembourg.
The main market for Eurobonds is the EuroMTS, owned by Borsa Italiana and Euronext.
There are ramp up market in Emergent countries, but it is growing slowly.

Physical nature of securities

Certificated securities
Securities that are represented in paper (physical) form are called certificated securities. They
may be bearer or registered.
Bearer securities
Bearer securities are completely negotiable and entitle the holder to the rights under the
security (e.g. to payment if it is a debt security, and voting if it is an equity security). They
are transferred by delivering the instrument from person to person. In some cases, transfer is
by endorsement, or signing the back of the instrument, and delivery.
Regulatory and fiscal authorities sometimes regard bearer securities negatively, as they may
be used to facilitate the evasion of regulatory restrictions and tax. In the United Kingdom, for
example, the issue of bearer securities was heavily restricted firstly by the Exchange Control
Act 1947 until 1953. Bearer securities are very rare in the United States because of the
negative tax implications they may have to the issuer and holder.
Registered securities
In the case of registered securities, certificates bearing the name of the holder are issued, but
these merely represent the securities. A person does not automatically acquire legal
ownership by having possession of the certificate. Instead, the issuer (or its appointed agent)
maintains a register in which details of the holder of the securities are entered and updated as
appropriate. A transfer of registered securities is effected by amending the register.
Non-certificated securities and global certificates
Modern practice has developed to eliminate both the need for certificates and maintenance of
a complete security register by the issuer. There are two general ways this has been
accomplished.
Non-certificated securities
In some jurisdictions, such as France, it is possible for issuers of that jurisdiction to maintain
a legal record of their securities electronically.
In the United States, the current "official" version of Article 8 of the Uniform Commercial
Code permits non-certificated securities. However, the "official" UCC is a mere draft that
must be enacted individually by each of the U.S. states. Though all 50 states (as well as the
District of Columbia and the U.S. Virgin Islands) have enacted some form of Article 8, many
of them still appear to use older versions of Article 8, including some that did not permit non-
certificated securities. [1]
In the U.S. today, most mutual funds issue only non-certificated shares to shareholders,
though some may issue certificates only upon request and may charge a fee. Shareholders
typically don't need certificates except for perhaps pledging such shares as collateral for a
loan.
Global certificates, book entry interests, depositories
To facilitate the electronic transfer of interests in securities without dealing with inconsistent
versions of Article 8, a system has developed whereby issuers deposit a single global
certificate representing all the outstanding securities of a class or series with a universal
depository. This depository is called The Depository Trust Company, or DTC. DTC's parent,
Depository Trust & Clearing Corporation (DTCC), is a non-profit cooperative owned by
approximately thirty of the largest Wall Street players that typically act as brokers or dealers
in securities. These thirty banks are called the DTC participants. DTC, through a legal
nominee, owns each of the global securities on behalf of all the DTC participants.
All securities traded through DTC are in fact held, in electronic form, on the books of various
intermediaries between the ultimate owner, e.g. a retail investor, and the DTC participants.
For example, Mr. Smith may hold 100 shares of Coca Cola, Inc. in his brokerage account at
local broker Jones & Co. brokers. In turn, Jones & Co. may hold 1000 shares of Coca Cola on
behalf of Mr. Smith and nine other customers. These 1000 shares are held by Jones & Co. in
an account with Goldman Sachs, a DTC participant, or in an account at another DTC
participant. Goldman Sachs in turn may hold millions of Coca Cola shares on its books on
behalf of hundreds of brokers similar to Jones & Co. Each day, the DTC participants settle
their accounts with the other DTC participants and adjust the number of shares held on their
books for the benefit of customers like Jones & Co. Ownership of securities in this fashion is
called beneficial ownership. Each intermediary holds on behalf of someone beneath him in
the chain. The ultimate owner is called the beneficial owner. This is also referred to as
owning in "Street name".
Among brokerages and mutual fund companies, a large amount of mutual fund share
transactions take place among intermediaries as opposed to shares being sold and redeemed
directly with the transfer agent of the fund. Most of these intermediaries such as brokerage
firms clear the shares electronically through the National Securities Clearing Corp. or
"NSCC", a subsidiary of DTCC.

Other depositories: Euroclear and Clearstream

Besides DTC, two other large securities depositories exist, both in Europe: Euroclear and
Clearstream.
Divided and undivided security
The terms "divided" and "undivided" relate to the proprietary nature of a security.
Each divided security constitutes a separate asset, which is legally distinct from each other
security in the same issue. Pre-electronic bearer securities were divided. Each instrument
constitutes the separate covenant of the issuer and is a separate debt.
With undivided securities, the entire issue makes up one single asset, with each of the
securities being a fractional part of this undivided whole. Shares in the secondary markets are
always undivided. The issuer owes only one set of obligations to shareholders under its
memorandum, articles of association and company law. A share represents an undivided
fractional part of the issuing company. Registered debt securities also have this undivided
nature.
Fungible and non-fungible security
The terms "fungible" and "non-fungible" relate to the way in which securities are held.
If an asset is fungible, this means that if such an asset is lent, or placed with a custodian, it is
customary for the borrower or custodian to be obliged at the end of the loan or custody
arrangement to return assets equivalent to the original asset, rather than the specific identical
asset. In other words, the redelivery of fungibles is equivalent and not in specie [disambiguation
needed]
. In other words, if an owner of 100 shares of IBM transfers custody of those shares to
another party to hold for a purpose, at the end of the arrangement, the holder need simply
provide the owner with 100 shares of IBM identical to those received. Cash is also an
example of a fungible asset. The exact currency notes received need not be segregated and
returned to the owner.
Undivided securities are always fungible by logical necessity. Divided securities may or may
not be fungible, depending on market practice. The clear trend is towards fungible
arrangements.
Regulation
In the United States, the public offer and sale of securities must be either registered pursuant
to a registration statement that is filed with the U.S. Securities and Exchange Commission
(SEC) or are offered and sold pursuant to an exemption therefrom. Dealing in securities is
lightly regulated by both federal authorities (SEC) and state securities departments. In
addition, the brokerage industry is supposedly self policed by Self Regulatory Organizations
(SROs), such as FINRA (the Financial Industry Regulatory Authority), formerly the National
Association of Securities Dealers (or NASD) or the MSRB.
Due to the difficulty of creating a general definition that covers all securities, Congress
attempts to define "securities" exhaustively (and not very precisely) as: "any note, stock,
treasury stock, security future, bond, debenture, certificate of interest or participation in any
profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-
trust certificate, preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security, any put, call, straddle,
option, or privilege on any security, certificate of deposit, or group or index of securities
(including any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to foreign
currency, or in general, any instrument commonly known as a 'security'; or any certificate of
interest or participation in, temporary or interim certificate for, receipt for, or warrant or right
to subscribe to or purchase, any of the foregoing; but shall not include currency or any note,
draft, bill of exchange, or bankers' acceptance that has a maturity at the time of issuance that
does not exceed nine months, exclusive of days of grace, or any renewal thereof the maturity
of which is likewise limited." - Section 3a item 10 of the Securities Act of 1934.
With respect to investment schemes that do not fall within the traditional categories of
securities listed in the definition of a security (Sec. 2(a)(1) of the 33 act and Sec. 3(a)(10) of
the 34 act) the US Courts have developed a broad definition for securities that must then be
registered with the SEC. When determining if there a is an "investment contract" that must be
registered the courts look for an investment of money, a common enterprise and expectation
of profits to come primarily from the efforts of others. See SEC v. W.J. Howey Co. and SEC
v. Glenn W. Turner Enterprises, Inc.
INTRODUCTION
TO
PROJECT
 INTRODUCTION TO PROJECT

FINANCIAL MANAGEMENT
Finance is the life of any business. No business can run properly unless it maintains its cash.
Blood is essential for human being alive. In case of business finance take the position of
blood. Now the question arises what is finance. Simply finance is known as cash and
monetary terms but finance means more of it. Finance means measure the financial
requirement and allocate cash in different heads for proper working of each department.
The word management refers to manage-men-t. It means manage the men tactfully.
Here the word men mean all those person who are working in the organization.
“Financial management is that managerial activity which is concerned with the
planning and controlling of the firm’s financial resources”
According to Howard & Upton “ Financial Management is the application of
planning and controlling function to the finance function”.
Thus financial management means manage the financial activity of the company. There are
different approaches regarding financial management.

Traditional Approach
Under this approach financial management refers to rising of funds through various
sources according to current need of the company. This approach is mainly concentrate on
rising of fund. Through different sector in this approach the main thing is raising of capital.

Transactional Approach
Under this approach financial management refers to inflow and outflow of cash in
operating activity. Operating activity means purchase and sale of material.

Modern Approach
Modern approach is rising of funds through different sources and utilizes them effectively.
Capital budgeting and cost of capital must be kept in mind while raising the funds. Capital
budgeting means the investment in capital goods in such a way so that we can get back our
invested money easily and quickly. Cost of capital means what is the cost of raising capital.
The return demanded by preference shareholders, the interest rates demanded by debenture
holders, dividend requirement of equity capital holders is considered as cost of capital.
Utilization of funds means effective utilization of funds in inflow-outflow; allocate the cash
to different department in such a way so that business can run successfully. Thus financial
management means rising of funds through different sources and utilizes them effectively.

SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Financial Statements

The Financial statements have been prepared under the historical cost convention, in
accordance with applicable Accounting Standards and provisions of the companies Act, 1956
as adopted consistently by the Company.

2. Recognition of Income/Expenditure
All incomes & expenditures having a material bearing on the financial statement are
accounted for on an accrual basis and provision is made fore all known losses and
liabilities.

3. Fixed Assets
Fixed assets are stated at cost, net of Modvat/Cenvat/Vat, less accumulated
depreciation. Cost of fixed assets comprises purchase price, duties, levies borrowing
cost, net charges on forward exchange contracts and exchange rate variations and any directly
attributable cost of bringing the assets to its working condition for the intended use.
Machinery spares that can be used only in connection with an item of fixed asset and their
use is expected to be irregular are capitalized. Replacement of such spares is charged to
revenue. Intangible assets acquired on or after 1st April 2003 satisfying the qualifying
conditions prescribed under Accounting Standard 26- Intangible assets, issued by Institute of
Chartered Accountants of India are capitalized.

4. Capital Work in Progress

Advance paid towards acquisition of fixed assets and the cost of assets not ready to
put to use before the year end, are disclosed under capital work in progress.
5. Impairment of Assets
Carrying amount of cash generating units/assets is reviewed for impairments,
Impairment, if any, is recognized where the carrying amount exceeds the recoverable
amount being the higher of net realizable price and value in use.

6. Inventories
Inventories are valued at lower of cost and net realizable value. The cost of raw
material is determined by using First-In-First Out (FIFO) method. However, scrap is
valued at Net realizable value. Cost of finished goods and work in progress includes
cost of conversion and other cost incurred in brining the inventories to their present
location and condition.

7. Sales
Sales are recognized on dispatch of goods from the factory and are net of discounts
but exclude sales tax.

8. Depreciation
Depreciation on fixed assets is provided on written down value basis at the rate and in the
manner prescribed in schedule XIV to the Companies Act, 1956. Depreciation is charged on
pro-rata basis for assets purchased/sold during the year. Individual assets costing Rs. 5000 or
less is depreciated in full in the year of purchase. Depreciation on incremental cost arising on
account of translation of foreign currency liabilities for acquisition of fixed assets is provided
as aforesaid over the residual life of the respective assets. Costs of intangible assets are
amortized over five years.

9. Foreign Exchange Transactions

Transactions denominated in foreign currencies are normally recorded at the
exchange rate prevailing at the time of transaction. Monetary items denominated in
foreign currencies outstanding at the year-end are translated at exchange rate
applicable as on that date. Non-monetary items denominated in foreign currency are
valued at the exchange rate prevailing on the date of transaction. Any income or
expenses on account of exchange difference either on settlement r on translation is
recognized in the profit and loss account except in cases where these relate to the
acquisition of fixed assets.

10. Borrowing Cost

Borrowing Cost that is attributable to the acquisition or construction of qualifying
Assets is capitalized as part of the cost of such assets. A qualifying asset is one that
necessarily takes substantial period of time to get ready fore intended use. All other
borrowing costs are charged to revenue.

11. Claims
Claims receivable are accounted for on the certainty of receipt & claims payable are
accounted at the time of acceptance.

12. Excise Duty

Excise duty is accounted on the basis of both payments made in respect of goods
cleared as also provision made for goods lying in bonded warehouse. Cenvat claimed on
Capital goods is credited to capital Assets/capital work in process. Cenvat claimed on
purchase of raw and other materials are deducted from
cost of such material

13. Retirements Benefits

Contribution to Provident fund are made to the Employees Provident fund schemes
administered through Provident fund Commissioner and company’s contributions is
charged to revenue. The Gratuity is funded through payment to Life Insurance Corporation of
India. Company’s contribution paid/payable to said fund is charged to
Profit & Loss Account. Provision is made for the value of unutilized leave due to
employees as at the year on the basis of actuarial valuation.

14. Miscellaneous Expenditure

Preliminary Expenses are amortized over a period of ten years.

15. Dividend
Provision is made in the financial statements of dividend proposed for approval at the
subsequent Annual General meeting.
16. Income Tax
Provision for current Income Tax is made after taking credit for allowances and
exemptions. In case of matters under appeal, due to disallowance or otherwise, the
same is considered for provision when company accepts the said liabilities. In accordance
with Accounting Standard 22- Accounting for Taxes on Income, issued
by the Institute of Chartered Accountants of India, the deferred tax for timing differences
between the book and tax profits for the year is accounted for using the
tax rates and the tax laws that have been enacted or subsequently enacted as of the
date of balance sheet.
Deferred tax assets arising from temporary timing differences are recognized to the
extent there is virtual certainty that the sufficient future taxable income will be
available against which such deferred tax assets can be realized and are reviewed at
each balance sheet date to reassure the realization.
 WORKING CAPITAL MANAGEMENT

Introduction
Every business needs funds for two purposes for its establishment and to carry out day-to-day
operations. Long term funds are required to create production facilities through purchase of
fixed assets such as plant and machinery, land building, furniture [Link] in these
assets represent that part of firm’s capital, which is blocked on a permanent or fixed basis is
called fixed capital. Funds are also needed for short-term purposes of raw materials, payment
of wages and other day-to-day expenses etc. these funds are known as working capital.

MEANING OF WORKING CAPITAL

Working capital refers to that part of firm’s capital, which is required for financing short term
or current assets such as cash, marketable securities, debtors and inventories.

DEFINITIONS OF WORKING CAPITAL

In the words of Shubin, “working capital is the amount of funds necessary to cover the
cost of operating the enterprise.”
According to Genestenberg “ Circulating capital means current assets of a
company that are changed in ordinary course of business from one form to another as
for example, from cash to inventories, inventories to receivables, receivables into cash”.

NATURE OF WORKING CAPITAL

Working Capital management is concerned with the problems that arise in attempting to
manage the current assets, the current liabilities and the inter-relationship that exists between
them. The term current assets refer to these assets which in the ordinary course of business
can be, or will be, Converted into cash within one year without undergoing the diminution in
value and without disrupting the operating of the firm, whereas the current liabilities are
those liabilities which are intended, at there inception, to be paid in the ordinary course of
business, within a year out of current assets or earning of the concern. Thus the goal of
working capital management is to manage the firm’s assets and liabilities in such a way that a
satisfactory level of working capital is maintained. The interaction between current assets and
liabilities in such a way that optimum level of current assets, the trade off between
profitability and risk which is associated with the level of current liabilities and assets, better
financing mix strategies and other short term goals are attained.

There are two concepts of working capital: Gross and Net

1. The term gross working capital, also referred to as working capital, means the total current
assets.
2. The term net working can be defined in two ways.

Difference between current assets and current liabilities.

The task of the financial manager in managing working Capital efficiency is to ensure
efficiency liquidity in the operations of the enterprise. The basic three measures of a
firm’s overall liquidity are: Current ratios, Acid test ratio, Net Working Capital. For the
purpose of working capital management Therefore, NWC Can be said to measure the
liquidity of the firm. In other words, the goal of working capital management is to
manage the current assets and liabilities in such a way that an acceptable level of NWC
is maintained.

IMPORTANCE OF ADEQUATE WORKING CAPITAL

Working Capital is very essential to maintained the smooth running of the business. It is
lifeblood and nerve center of a business. No business can run successfully with out adequate
amounts of working capital.
1. Adequate working capital helps in maintaining solvency of the business by providing
uninterrupted flow of production.
2. It also enables a concern to avail each discount on the purchases and hence it reducescasts.
3. Sufficient working capital enables a business to make prompt payments and helps in
creating and maintaining goodwill.
4. A concern having adequate working capital enables and high solvency can average loans
from banks and others on easy and favorable terms.
5. Adequate working capital ensures regular supply of raw materials.
6. A concern can also pay quick and regular dividends to its investors, as there may not be
much pressure to plough back profits because of adequacy of working capital.
7. Sufficiency of working capital creates an environment of security, confidence, and
high morale and creates overall efficiency of a business.
Adequacy of working capital also enables a firm to make regular payments of
salaries, wages and other day-to-day commitments, which raises the morale of its
employees, increase their efficiency reduces wastages and costs and enhances
production and profits.

WORKING CAPITAL REQUIREMENT

“WORKING CAPITAL IS THE LIFE BLOOD AND CONTROLLING NERVE
CENTRE OF A BUSINESS.” No business can be successfully run without an adequate
amount of working capital. To avoid the shortage of working capital at once, an estimate of
working capital requirements is not an easy task and a large number of factors have to be
considered before starting this exercise. The following factors have to be considered for this:
-
1. The length of sales cycles during which inventory is to be kept waiting for sales.
2. The average period of credit allowed to customers.
3. The amount of cash required paying day-to-day expenses.
4. The average amount of cash required making advance payments, if any.
5. The average credit period expected to be allowed by suppliers.
6. Time lag in payment in wages and in other expenses.
From the total amount blocked in current assets estimated on the basis of first for items given
above, the total current liabilities i.e. the last two items is deducted. In order to provide for
contingencies, some extra amount calculated as a fixed percentage of WC may be added as
safety margin.

NEED OF WORKING CAPITAL

The need for the working capital (gross) or current assets cannot be over [Link]
the objectives of financial decision making to maximize the shareholder’s wealth, it is
necessary to generate sufficient profits. The extent to which profits can be earned will
naturally depend, among other things. Open the magnitude of sales. A successful sales
program is necessary for earning profits by any business enterprise. There is a need of
working capital in firm of current assets to deal with the problem arising out of the lack of
immediate realization of cash against goods sold. Thus sufficient working capital is necessary
to sustain sales activity. Technically, this is referred to as the operating or cash cycle.
CONCEPT OF WORKING CAPITAL
There are two concepts of working capital:
1. Gross 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. Thus, gross
working capital is the capital invested in the total current assets of the enterprise. Current
assets are those assets, which in the ordinary course of business can be converted in to cash
with in a short period of normally one accounting year. Constitutes of current assets are:
Current Assets

2. Net working capital: 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. So,
Net 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 current assets. Current liabilities are those
liabilities, which are intended to be paid in the ordinary course of business with in a short
period of normally one accounting year out of the current assets or the incomes of the
business. Constitutes of current liabilities:
Current Liabilities
CLASIFICATION OF WORKING CAPITAL
.
1. On the basis of concept:
On the basis of concept working capital may be divided into two parts i.e.
A) Gross working capital: Gross working capital is the capital invested in total current
assets of the enterprise.
B) Net working capital: Net working capital is the excess of current assets over current
liabilities, so,
Net working capital = current assets –current liabilities

2. On the basis of time, it may be classified as:

A) Permanent or fixed working capital : It 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 is 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 process, finished goods and cash
balance. This minimum level of current assets is called permanent or fixed working capital as
this part of capital is permanently blocked in current assets. As a business grows, the
requirements of permanent working capital also increase due to the increase in current assets.
It can be further divided into two parts:

Regular working capital: It is that part of the working capital which is required to ensure
the circulation of current assets from cash to inventories, from inventories to receivables and
from receivables to cash and so on.

Reserve working capital: It is the excess amount over the requirement for regular working
capital, which may be provided for contingencies that may arise at unstated periods such as
strikes, rise in prices, depression.

B) Temporary or variable working capital: It is the amount of working capital,

which is required to meet the seasonal demands and some special exigencies. Variable
working capital can be further divided into two:
Seasonal working capital: It is that part of the working capital, which is required to
meet the seasonal needs of the enterprise.
Special working capital: It is that part of the working capital which is required to meet
special exigencies such as launching of extensive marketing campaigns for conducting
research

Importance or advantages of adequate working capital

1. Solvency of business
2. Goodwill
3. Easy loans
4. Cash discounts
5. Regular supply of raw material
6. Regular payment of salaries, wages and other day-to-day commitments.
7. Exploitation of favorable market conditions
8. Ability to face crisis
9. Quick and regular return on investment
10. High morale.

Sources of Working Capital

1) Long- term sources: -
a) Issue of shares
b) Issue of debentures
c) Long –term loans
d) Retained earning
e) Sale of any old asset

2) Short –Term Sources: -

a) Internal sources: -
i) Provision for tax
ii) Depreciation funds
iii) Outstanding expanses
b) External sources: -
i) Normal trade credit
ii) Bills payable
iii) Overdraft
iv) Public deposit
v) Advance from customers

WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales. Working capital turnover
ratio indicates the velocity of the utilization of net working capital.
Formula:
Net Working Capital = Current Assets – Current Liabilities

OPERATING CYCLE &WORKING CAPITAL NEEDS

As for as the requirement of working capital is concern we can say that this amount
is completely depends upon the nature of business as well as the size of business.
Here we discuss only about two types of firms:
1) Trading firms
2) Manufacturing firms

OPERATING CYCLE PERIOD : The operating cycle of any firm is consist of the
time required for the completion of the phonological order of some or all of the following:
1) Procurement of raw material
2) Conversion of raw material into work in progress
3) Conversion of work in progress into finished goods
4) Sale of finished goods (cash / credit)
5) Conversion of receivable (credit into cash)
LENGTH: The length of any operating cycle depends on the duration of any firm to
complete its processing as all appoints mentioned above. There are two operating cycles,
which we have to calculate:
1) Total operating cycle period
2) Net operating cycle
INVENTORY CONVERSION PERIOD: It is the time which any firms takes to convert
the raw material to sales of finished goods in manufacturing firms. The ICP is consist raw
material conversion period, work in progress conversion period and finished goods
conversion period.
RECEIVABLE CONVERSION PERIOD: When any company sold the goods in market
the sale can be made by cash or credit .In case of cash the company gets the return
immediately on the other hand if it is an credit sale means the company has to recover the
amount of cash after a time gap and how much time the firms takes to convert the credit or
receivables into cash are known as receivable conversion period. The total of ICP& RCP is
also known as total operating cycle period (TOCP). Finished goods but in case of trading unit
the company needs the less amount of working capital only for purchasing the goods and to
maintain the credit policy.
NET OPERATING CYCLE = TOCP – DEFFEREL PERIOD

FACTORS AFFECTING THE REQUIREMENT OF WORKING CAPITAL

1) Size of business: This is very clear that if there is any big concern means it need maximum
of working capital to run the business smoothly but the requirement of working capital will
be reduced if we will reduced the size of business as we do not have the sufficient long
operating cycle to invest the higher rate of working capital.
2) Nature of business: Here we will discuss on the major part of firms -
i) The manufacturing unit
ii) The trading unit
Means we can easily understand that in case of manufacturing unit the firm required
maximum working capital to complete its operating cycle.
3) Seasonal operation: The seasonal operation also effect the requirement of working
capital because the sale can be increased or decreased if they is any concern which is
manufacturing the seasonal goods.
Example: If any manufacturing unit which is producing garments requires less amount of
working capital during the summer season but on the other hand in the winters they require
more working capital to produce the woolen clothes.
4) Credit policy: This policy normally takes an important place to impact on the
requirement of working capital means any company having a good credit policy for a shorter
period may required the less working capital on the other hand the lenient credit policy may
generate the risk of doubtful debts. In this case the company requires more working capital
during this period this takes place to convert the credit into cash.
5) Marketable competition: As per the present synerio of the market we can find the
toughest competition between every two company which are dealing with the same time of
product to reduce the competitiveness and to win the gain the company gives or provides the
some special offers to the buyer and to the seller and these offers are not related with the
operating cycle of the company so the company needs exist amount of working capital to
manage the amount of these offers.
6) Growth and expansion: As for as the growth and expansion is concerned it is very
clear it will increase the size of business we require some extra money for this purpose. In the
same condition if any company going to launch a new product they again required exist
amount of working capital to complete the operating cycle of that particular [Link]
increment in the size is known as growth and the establishment in the new sector or segment
is called expansion.
7) Shortage of raw material: The requirement of working capital is also depends on the
aviability of the raw material in the market. At the time of shortage of raw material the price
may also be high due to higher demand and less aviability in this case the firm has to
purchase the raw material on higher price and required some extra amount for the increment
of cost. It means the company has to invest more money for purchasing.
8) Dividend policy: This factor is important because it is directly impact on the financial
position of the firm because the higher dividend rate makes the company enable to get a
strong position in the market. So to fulfill the requirement of the dividend the company may
use the retained earning or profit or they have to generate the funds for dividend from other
sources. So this will impact on the operating cycle as well as this will degrees the cash
balance of the company, which the company is used to fulfill requirement of temporary
working capital.
9) Depreciation policy: Depreciation policy also is treated as a source of working capital
because we can use the depreciation funds for the timing of fulfill the requirement of
temporary working capital. If the company is not maintaining the depreciation policy in this
case the company has to generate the funds from the long term sources or any other source
which can be increase the liability of the firm.

Financing of temporary, variable or short term working capital

1. Indigenous:
2. Trade credit
3. Installment credit
4. Advances
5. Factoring or account receivables credit
6. Accrued expenses
7. Deferred incomes
8. Commercial paper
9. Working capital finance by commercial banks:
a) Loans
b) Cash credits
c) Overdrafts
d) Purchasing and financing of bills.

How to finance fixed assets or working capital

There are three approaches for this: _
(1) Matching Approach:- The firm can adopt a financial plan which matches the
expected life of assets with the expected life of the source of funds raised to finance
assets. Thus, a ten-year loan may be raised to finance a plant with an expected life of ten
years. The justification for the exact matching is that, since the purpose of financing is to Pay
for assets, the source of financing and the assets should be relinquished simultaneously.
When the firm follows matching approach (also known as hedging approach), long term
financing will be needed to finance fixed assets and permanent current assets and short term
financing to finance temporary current assets. It is shown in the diagram:-
(2) Conservative Approach:-A firm in practice may adopt a conservative approach
in financing its current and fixed assets. The financing policy of the firm is said to be
conservative when it depends more on long-term funds for financing needs. Under this
policy, the firm finances its permanent assets and also a part of temporary current assets with
long term financing. In the periods when the firm has no need for temporary current assets,
the idle long-term funds can be invested in the tradable securities to conserve liquidity. This
is shown in the following figure.
(3) Trade of Approach:-
Under this approach the firm finances a part of its permanent current assets with
short term financing. It means under this approach rely more on short term financing.
Short term financing may be preferred over long term financing for two reasons: -
(1) The cost advantage.
(2) Flexibility.
But short term financing is more risky than long term financing. Thus, there is conflict
between long term and short term financing. Short term financing is less expensive than long
term financing but at the same time, short term financing involves greater risk than long term
financing. The choice between long term and short term financing involves a trade off
between risk and return.
WORKING CAPITAL FINANCING
The financing of working capital are done by from different sources of financial
distribution here we will discuss about the short term sources of finance which are
directly related to business or the finance policy of Indian commercial bank. Every
financial managers has to analyses the situation and create the funds accordingly. Every firms
the action which is easily available and normally do not increase the long term liabilities of
the company from the above we can explain the financing for working capital into two parts:
-
1) Direct sources of financing working capital
2) Role of commercial bank in financing of working capital

1) Direct sources of financing working capital: here the direct source means any
option for credit which is related to the business and do not impact on the liabilities of the
business for long term that’s why these are treated as trade liabilities and current liabilities.
There are two direct sources in relation of any business: -
a) Trade credit: Trade credit means any credit, which is directly related to the goods or the
services, which is use, by the firm.
Example: a supplier of raw material can provide you the raw material today and you may
request for the payment of these goods after sometime. The gap between the purchasing and
the payment can be treated as trade credit. In trade credit normally there is no factor of
interest and this is very easily available and helps the firm to maintain its operating cycle.
There are two types of trade credit normally used in India, which are as follows:
i) Open account: in open account the credit facility provided by the seller on the basis of
mutual understanding with the buyer. In this process there is not legal obligation to sign or to
promise for the repayment of the credit amount. That’s why the credit limit in open account
depends upon the goodwill and healthy relationship between the buyer and seller.
ii) Bills payable: bills payable normally related with the negotiable instrument as described
in Negotiable Instrument Act .It is the kind of promissory note. In bills payable the buyer or
the seller provides some terms and conditions from the payment. In this case the buyer has to
sign on the bill and has to repay the amount to the seller on the date of maturity.
b) Accrued expanses: In routine life of business we can find the different expanses of these
types of expenses. Normally the accrued expenses are those expanses for which we have
available the service or goods from the persons or supplier and has to pay the amount for the
service after a fixed period.
Example: The salaries of the employees. In case of salaries the employees works for the firm
for a fixed period say one month and after the completion of this period the firm will pay this
amount to the employees.
Other example: Post paid connection etc.
2) Role of commercial banks in working capital financing: In India most of the
commercial banks provide the credit facilities to the firm to meet the working capital
requirement. The commercial banks are important source of short term financing. The
commercial banks provides credit to the extend limit and is known as “Credit Limits”.
The bank can finance the working capital by the following ways:
i) Cash credit / Overdraft
ii) Loans
iii) Letter of credit
iv) Purchasing and discounting of bills

CASH CREDIT / OVERDRAFT: This is basic facility of credit provided by the

commercial banks of India. In overdraft facilities the current account holder can withdraw the
moreover and axis of available balance in its current account. The bank will fix the limit for
this credit one time at starting and the account holder can use the credit till its limit. The
advantage of overdraft or cash credit is the firm has to pay only the interest to the bank for
the period for which we cash over drawn.
PURCHASING AND DISCOUNTING OF BILLS: Now days most of the firms
wants
to increase the sale so that they do a liner credit. In this process the buyer or the seller makes
an advance bills and promise to pay the amount as mentioned in bill account to the maturity
of the order. In this case the seller firm may required some amount to complete this order, so
the contact to there bank and ask for the required money on the basis of the available bill
which they have to handover to the bank as guarantee of security. If thebank provide the total
amount after deducting the charges, commissions, fees etc. is known as “purchasing of bills”.
In other hand if the bank provides some percentage (%)of the total amount of the bill then the
banks has to wait till its maturity date to get the payment from the buyer and when the bank
collects the payment from the buyer and deduct the amount which has been already paid to
seller fir and deduct other expenses. Which has been born by the bank for collection of the
payment and the remaining amount deposited in the seller’s current account and this process
is known as “discounting of bills”.
CONSTITUENTS OF WORKING CAPITAL
No matter how, we define working capital, we should know what constitutes current assets
and current liabilities. Current Assets: The following are listed by the Company as current
assets:
1) Inventories:
a) Raw materials and packing materials
b) Work-in-progress
c) Finished/Traded goods
d) Stores, Spares and fuel
2) Sundry Debtors:
a) Debts outstanding for a period exceeding six months
b) Other debts
3) Cash and Bank balances:
a) With Scheduled Banks
i) in Current accounts
ii) in Deposit accounts
b) With others
i) in Current accounts
4) Loans and advances:
a) Secured Advances
b) Unsecured (considered good)
i) Advances recoverable in cash or kind for value to be received
ii) Deposits
iii) Balances with customs and excise authorities
Current liabilities: The following items are included under this category.
1) Current Liabilities:
a) Sundry creditors
b) Unclaimed dividend warrants
c) Unclaimed debenture interest warrants
2) Short term credit:
a) Short term loans
b) Cash credit from banks
c) Other short term payables
 SWOT
ANALYSIS
1. STRENGHTS:

 Dedicated, accountable & sincere group of people.

 Maximum variety of part and high quality.
 Good employer-employee relationship.
 Efficient management.
 Totally computerized
 Team building.
 Fulfilling social responsibility by keeping environment clean.

2. WEAKNESS:

 Shortage of funds.
 Unnecessary blockage of funds.
 Flow of funds controlled by head office.

3. OPPORTUNITIES:

 Berkeley has reached in growth stage.

 To convert customer into client.
 Equity &commodity you become a member of our Berkeley gains.

4. THREATS:

 High Demand for capital goods in Indian economy.

 Human resources continue to remain scarce and their costs are also rising
significantly.
 An increase in the turnover in the coming year .
 We are facing increased competitive from new supplier.
JUSTIFICATION
OF
STUDY
 JUSTIFICATION OF STUDY

Ratio Analysis is prepared primarily for decision-making. They plat a document role in
setting the framework of managerial decisions. But the information in the financial statement
is not an end in itself as no meaningful can be drawn from these statements alone.

The information provided in the ratio analysis is of immense use in making decisions through
analysis and interpretation of ratio analysis the ratio analysis is the process of identifying the
financial strength and weaknesses of the firm by properly establishing relationship between
the items of the balance sheet and P&L a/c.

The purpose of ratio analysis is to diagnose the information contained in financial statements
so as to judge the profitability and financial soundness of the firm. The analysis and
interpretation of ratio analysis is essential to bring out the mystery behind the figures in
financial statement.
LITERATURE
REVIEW
 LITERATURE REVIEW

• Jain [Link] for M.B.A., page no.1-15,281-284,301-305(Second part),second

edition:2006-2007,V.K.(India)eneterprice,New Delhi: these pages help me to
understand the meaning of my statistical tools and also help in applying them.

• Goel D.K Management accounting and financial management, page no.4.1 to 4.83,
third edition2004, avis Hal publishing company, New Delhi: this text book helps me
out to understand the meaning of Ratio.

• Gupta Shashi K. & Sharma R.k Financial Management and page no. 88- 110, Second
edition V.K publication Delhi: from this book I have the objectives and Risk
associated with finance.

• Maheshwari S.N. management accounting and financial control, page no.206-219,

third edition, Avichal publication: from the above pages I got light on some analytical
tools.

• Kothari C.R. quantitative technique, page no.168-174, and vikas publishing house
[Link] New Delhi, 2005: this book helps me to know meaning of various steps in the
marketing research.

• Beri G.C Marketing Research, page no.1-13, third edition Tata McGraw Hill, New
Delhi: this book gives me the knowledge of basic meaning of research that what it
means and what are its limitations.

• Gupta S.P. statistical methods, page no.221-249,321-356, and fifth edition, V.K.
publication: his book helps me understanding the meaning and application of
statistical tools.
 • Sharma R.K. Management and Business Finance, page no.77-89, second edition, and
kalyani publication: help me to clear the meaning of various terms in the financial
statements.
• [Link] in this how analysis of inventory of organization is done and on the basis
of that comment upon the financial position of the organization.

• Honda R.P. (209-212): calculation of a trend analysis and its interpretation.

• Mittal R.K. (28-30): it explains the preparing of comparative Balance sheet and way
of interpreting it.

WEBSITES:
• [Link]:This website provides me balance sheet and profit loss account of
BERKELY GAINS.

• [Link]: This website helps in theory about analysis of financial

statement
OBJECTIVE
OF
THE STUDY
 OBJECTIVES

The objectives of this unit are to:

· Explain the various types of working capital and their behaviour.
· Examine the cyclical flow and characteristics of working capital.
· Discuss the significance and tools of planning for working capital.
· Find out the impact of inflation on working capital and finally.
· Analyze the trends in working capital in Indian companies.
LIMITATIONS
OF
STUDY
 LIMITATIONS

Following Limitations faced by me during the Study of the Project as: -

1. Time Limitations
2. Unavailability Of Proper Material
3. Lack Of Guidance
4. Organizational Restrictions

An Explanation of the Above: -

Time Limitation
The time was a limitation during completion of the report. The time was not enough to cover
all the points about the topic. Also it was a tough job to understand all the
recruitment and selection in this short period. It brings the eagerness in completion of the
report. The time raise as a big difficulty in the preparation of the report. This time limitation
enables to better understanding the policies of the company.

Unavailability Of Proper Material

The lack of proper material was also a limitation when developing the report. There was not
adequate availability of material in developing the report. Some of the material
available was not available. The material available was not sufficient.

Lack Of Guidance
There was lack of guidance at some of the stages. The supervisors sometimes were not able
to give proper guidance because of his own job responsibilities and lack of time. So it was a
little lack of guidance.
Organizational Restrictions
There were restrictions on the supervisor and on the respondents to very much clear all the
policy and process. No organization discloses all the recruitment and selection policy to the
outsides. Nobody in the organization is authorized to disclose all the policies it is because of
some certain principles made by the top management of the organization.
 RESEARCH
METHODOLOGY
 RESEARCH METHODOLOGY
Research methodology is a systematic plan or schedule or program of the research done. It
describes all the procedures of the research.
Research Design
Research design can be described as an out line of a research project working or a pattern. In
a research design there are series of prior decision that together provide a master plan for
completing a research project. Research design is proved to be a
bridge between what has been established and what is to be done in conduct of the studies.
Research design should be compressive and it should provide which
method to be used and what work to be done. Research design describes as a master plan a
series of key decisions that serves a model for conducting a research project. There are the
main components of research design.
 Objective of research
 Data inputs
 Analysis of data collected
The research design was exploratory type and the focus was on getting mutual fund’s
employees views for various products, expectations from market.
Exploratory Research:
Exploratory study goes beyond description and attempts to explain the reasons for the
phenomenon that the descriptive study only observed. The researcher uses theories or at least
hypotheses to account for the forces that caused a certain phenomenon to occur.
Sources of Data
The gathering of data may range from a simple observation at one location to a grandiose
survey of multinational corporations at sites in different parts of the world. The method
selected will largely determine how the data are collected. DATA is the facts presented to the
researcher from the study’s environment. Characteristics of the data are as follows:
 Data are more metaphorical than real
 Data are processed by our senses-often limited in comparison to the senses of other living
organisms.
 Capturing data are said to be trustworthy because they may be Verified.
 Data classify their verity by closeness to the phenomena
There are two kinds of data that can be collected for research purpose. Based on the
requirement in the research appropriate data is collected.
1) Primary data source
Primary data are collected and gathered for the first time. Primary data are sought for their
proximity to the truth and controls over error. Advantages of primary data are:
 Researchers can collect precisely the information they want.
 They usually can specify the operational definitions used and can eliminate, or at least
monitor and record the extraneous influences on the data as they are gathered.
2) Secondary data source
Someone else collects secondary data. So, it becomes secondary information for the research.
Secondary data have had least one level of interpretation inserted between the event and its
recording. Reasons for using the secondary data are listed below:
 They fill a need for specific reference or citation on some point
 Secondary data are an integral part of a larger research study
 Secondary data may be used as the sole basis for a research study, since
In many research situations one cannot conduct primary research Because of physical, legal,
or cost influences. Analyzing the requirement of data, it was found that primary data is more
important for achieving Research Objective. Primary data is collected with the help of
interviews .

Sampling Plan
Collecting the required information from the right source is very important. Sources from
which the data are collected differ as per the required of researcher.
Basically there are two types of data collection sources:
1) Sampling Unit:
The sampling unit primarily consisted of investors like businessman, professionals, salaried
employees and others.
2) Sample Size:
Though large sample give more reliable results than small samples but increases the cost,
time and non-sampling error.

METHODS
OF
DATA
COLLECTION
 DATA COLLECTION METHOD

“This step involves making a very specific plan about how you will conduct your research
and collect your data.”
1) Surveys & Observation
Survey The means by which quantitative research is conducted.
I used survey method for data collection. Information was collected by personal
interviews.

The research involves the following steps:

 Define the problem and research objective: The problem and objective is to
assess the services offered by the various service providers and what the customer
wants.

 Developing the research plan: The second stage of the research methodology is
to develop a research plan. The research plan designed to take the decision on the data
sources, research approaches, research instruments, sampling plan and contact
methods.

 Survey research: It was a descriptive research.

 Research instrument: The use of an effective research instrument is very

important because through this instrument we collect data in this project through
observations and personal interview were conducted.

 Personal interview: as we were doing direct selling we interacted with my

customers and asked about their views in selecting a service and what are their wants
and expectations from a service provider.
 Sampling plan: After finalizing the research approach and instruments a sampling
must be designed.

 Sampling unit: Data have been collected from security.

 Sampling size: It has been collected from four securities.

 Sampling procedure: what process should be used to collect the sample. So,
representation sample, convenience sampling is used.

 Collect the information: After completing all the steps, the data are collected
from different sources.

 Analyze the information: After the data is collected they are analyzed to know
the findings. The data is then tabulated to develop the frequency distribution.

 Present the findings: As the last step, the findings are presented that are relevant
to the major marketing decisions.
 ANALYSIS
AND
INTERPRETATION
 DATA ANALYSIS
WORKING CAPITAL ESTIMATION
INVENTORIES
In the context the major increase in the present three financial years has been of the
inventory.

DEBTORS AND AVERAGE RECEIVABLES

The debtors are increasing heavily in the financial year 06-07 because of a sales boom that
has accounted for huge accounts receivables increase.

CASH AND BANK BALANCES

Cash and bank balance as per the balance sheet it is seen to be increasing but from the above
chart it is seen to be decreasing. This discrepancy can be attributed to the fact that balance
sheet figures carry additional cash balance of unutilized FCCB issue proceeds which amount
to long term liability as well. Thus the actual figures are distorted because the money from
FCCB issue has to be returned and it is a kind of long term loan which the company has
sought for expansion purpose. As a result to find the actual outlay of cash the unutilized
money has been subtracted. Also we should take note of the fact that the FCCB money can
only be used for expansion purpose and not as money for usual application of working
capital.

LOANS AND ADVANCES

Loans & advances are increasing on the part of increased advances that are given to pile up
inventory when the company went for the expansion mode

CURRENT ASSETS
It includes cash & those assets which can be easily converted into cash within a short period
generally one year such as marketable securities , bills receivables, sundry debtors,
inventories, work in progress, prepaid expenses etc .The total current assets are the sum of
below contingency i.e.
Current Assets = Stock/ Inventory + Sundry Debtors + Advances +
Cash and bank balances + other current assets
Interpretation: The trend of the current assets in throughout the period from 2005-08 are
shown in the pie-chart .it is evident from the table the current assets has increased except in
year 2006-07.

CURRENT LAIBILITIES
These are those obligations which are payable within a short period of generally one year and
includes outstanding expenses, bills payable, sundry creditors, accrued expenses, bank
overdraft, short term advances, income tax payable.
Interpretation:
The trend of Current Liabilities throughout the period from 2005-2008 are shown in the table.
It is evident from the table that it shows increasing trends in the year 2005 to 2008. It shows
the stability in trends of Current Liabilities.

CREDITORS AND CREDITORS OF CAPITAL EXPENDITURE

SUGGESTION
 SUGESSTIONS

After undergone training for a limited period in this organization, I found during my training
some suggestions but these suggestions merely my own opinion. I hope these suggestions
will help at least to some extent if implemented. Following are the suggestions that are based
on my observations of the different departments of the company:

1. Company is having huge loans which results in the financial expenses, so proper
trategies and techniques of budgeting should be used which results in the proper
utilization of borrowed money.

2. Company should use Management Information System (MIS) as it provides very

effective information, which ultimately helps in decision-making. This results in the
proper future projections effectively.

3. Net Profits is going low. Effective efforts should be taken for this the company must
reduce indirect expenses and to control unnecessary costs.

4. Company should use new techniques.

5. Improve co-operation and co-ordination among the departments.

6. Proper market survey should be conducted to know consumers/dealers buying

behavior.

7. It has the maximum market share in domestic market. But as far as international market is
concerned, it is needed to increase.

8. The company needs to improve a lot in advertisements. Advertisements are the best way to
enhance the sales and ultimately the revenues. But the company is not able to advertise its
products properly, due to which the customer is unaware of any brand. It is a common saying
that “out of sight is out of mind”.
Therefore the company must make attempts to use proper advertising media so as to set their
brands in the minds of the consumers. It should be more consumers oriented rather than being
customer oriented.
CONCLUSION
 CONCLUSION

Finance is the basic pillar on which the structure of industrial undertaking is based. This pillar
should be properly placed. A good working environment and attractive incentives for the
achievement of targets has obviously created ideal conditions in Berkely Gains Pvt. Ltd. for
the both management and workers. Not a single day of production has been lost this shows
efficiency in management. Moreover, solvency position or long-term liquidity of the
company was satisfactory.
To conclude, any reduction in operation cost as a result of effective and efficient management
of finance would improve the profitability, liquidity and solvency of the organization.
BIBLIOGRAPHY
 BIBLIOGRAPHY

• M. Pandey - Financial Management Vikas-2010

• Prassana chandra - Financial management Tata McGraw Hill 2010
• Philip Cotler - Marketing Management PHI-2010
• Annual reports – Berkeley Gains Private Ltd.
• Company website - [Link]
• Websites - [Link]
ANNEXURE
 ANNEXURE

1. NWC - Net working capital

2. GWC - Gross working capital

3. PWC - Permanent Working Capital

4. TWC - Temporary Working Capital

5. LTS - Long -Term Sources of Finance

6. STS - Short -Term Sources of Finance

7. CMA - Credit Monitoring Arrangement, (under this data The Reserve

bank of India reviews the sanction of term loans and working capital
limits.)

8. CRISIL - Credit Rating and Information Services of India Limited

9. C C (Hyp) - Cash Credit (hypothecation)

10. Cp - Commercial paper ICP - Inventory Conversion Period

11. RCP - Receivable Conversion Period

12. TOCP - Total Operating Cycle Period

13. NOC - Net Operating Cycle

14. MIS - Management Information System