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Published on November 24, 2017

Author: SNEH91


PowerPoint 演示文稿: PROJECT REPORT ON WORKING CAPITAL MANAGEMENT OF H.E.C LTD. PRESENTED BY, SNEHLATA SNSIBM, RANCHI PowerPoint 演示文稿: INTRODUCTION OF H.E.C OVERVIEW Heavy Engineering Corporation Ltd., is one of the leading suppliers of capital equipment in India for steel, mining, railways, power, defense, space research, nuclear and strategic sectors. Set-up in the year 1958. HEC is headquartered at Ranchi.HEC is one of the largest integrated engineering complex. Sprawling in an area of around 2100,000 sq.m, HEC has facilities starting from steel melting, casting, forging, fabrication, machining, assembly and testing. MISSION AND VISION To be a market leader in Heavy Engineering industry in India providing quality products and services to the Steel, Mining, Railways and other Strategic Sectors. To achieve growth of 20% in Turnover after completion of modernization / upgradation of Plant/Facilities. PowerPoint 演示文稿: STATEMENTS USED FOR MEASURING WORKING CAPITAL OF HEC LTD ARE: 1) BALANCE SHEET 2) PROFIT AND LOSS ACCOUNT PowerPoint 演示文稿: WORKING CAPITAL Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Working capital is considered a part of operating capital. Working capital is a measure of both a company's efficiency and its short-term financial health. Working capital is calculated as: Working Capital = Current Assets - Current Liabilities WORKING CAPITAL MAMAGEMENT Managing the corporation's working capital position to sustain ongoing business operations is referred to as working capital management.[32][33] These involve managing the relationship between a firm's short-term assets and its short-term liabilities. PowerPoint 演示文稿: CONSTITUENTS OF CURRENT ASSETS 1) Cash in hand and cash at bank 2) Bills receivables 3) Sundry debtors 4) Short term loans and advances. 5) Inventories of stock as: a. Raw material b. Work in process c. Stores and spares d. Finished goods 6) Temporary investment of surplus funds. 7)Prepaid expenses 8) Accrued incomes. 9) Marketable securities. PowerPoint 演示文稿: CONSTITUENTS OF CURRENT LIABILITIES 1. Accrued or outstanding expenses. 2. Short term loans, advances and deposits. 3. Dividends payable. 4. Bank overdraft. 5. Provision for taxation , if it does not amt. to app. Of profit. 6. Bills payable. 7. Sundry creditors. PowerPoint 演示文稿: CURRENT ASSETS AND CURRENT LIABILITIES OF H.E.C LTD. CURRENT ASSETS NOTE NO. 2016(IN LACS) 2015(IN LACS) (a)Inventories 17 16323.48 23610.83 (b)Trade Receivables 18 1991.23 18490.30 (c)Cash & Cash Equivalents 19 9776.82 8439.72 (d) Short Term Loans & Advances 20 4667.82 3665.20 (e) Other Current assets 21 89.56 28.12 CURRENT LIABILITIES NOTE NO. 2016(IN LACS) 2015(IN LACS) (a)Short Term Borrowings 7 20951.30 13890.56 (b)Trade Payables 8 27075.39 20924.28 (c)Other Current Liabilities 9 38348.22 31123.26 (d)Short Term Provisions 10 4824.05 5572.75 PowerPoint 演示文稿: WORKING CAITAL= CURRENT ASSETS -CURRENT LIABILITIES WORKING CAPIAL FOR YEAR 2015-16 = (32848.09-91198.96) LACS =RS -58350.87 LACS WORKING CAPITAL FOR THE YEAR 2014-15 = (54234.17-71510.85) LACS = RS - 17276.68 LACS INTERPRETATION: This means the company is not in a positive position & N.W.C has disimproved vary fast as compared to the previous years which show non-liquidity Position of the H.E.C. Ltd has always unsufficient working capital available to pay off its current liabilities. PowerPoint 演示文稿: B] RATIO ANALYSIS INTRODUCTION: Ratio Analysis is a powerful tool of financial analysis. Alexander Hall first presented it in 1991 in Federal Reserve Bulletin. Ratio Analysis is a process of comparisonof one figure against other, which makes a ratio and the appraisal of the ratios of the ratiosto make proper analysis about the strengths and weakness of the firm’s operations. Note: I have used the ratio analysis in this project in order to substantiate the managing of working capital. For this, I used some of the ratios to get the required output. 1.CURRENT RATIO CURRENT ASSETS CURRENT LIABILITIES A standard ratio between them is 2:1 YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 2014-15 54234.17 71510.85 0.758 2015-16 32848.09 91198.96 0.360 PowerPoint 演示文稿: INTRPRETATION: The current ratio is below the standard ratio i.e., 2:1.Hence it can be said that there is not enough current assets in HEC Ltd to meet its current liability. 2. ACID TEST RATIO / QUICK RATIO / LIQUIDITY RATIO:- Quick Ratio = Quick Assets (current assets - Inventory) Current Liabilities The standard quick ratio is 1:1. Is considered satisfactory. YEAR CURRENT ASSETS INVENTORIES QUICK ASSETS CURRENT LIABILITIES QUICK RATIO 2014-15 54234.17 23610.83 30623.34 71510.85 0.428 2015-16 32848.09 16323.48 16524.61 91198.96 0.181 PowerPoint 演示文稿: INTERPRETATION: The acid test ratio is below standard i.e.,1:1,which is dissatisfactory. 3.CASH RATIO CASH RATIO = CASH+ MARKETABLE SECURITIES CURRENT LIABILITIES YEAR CASH (1) MARKETABLE SECURITIES (2) (1)+(2) CURRENT LIABILITIES CASH RATIO 2015 8439.72 60607.88 69047.60 71510.85 0.965 2016 9776.82 60607.88 70384.7 91198.96 0.771 PowerPoint 演示文稿: INTERPRETATION: The cash ratio is below standard ,which is dissatisfactory. 4.ABSOLUTE LIQUID RATIO:- Absolute Liquidity Ratio = Cash & Bank Balance CURRENT LIABILITIES YEAR CASH & BANK BALANCE CURRENT LIABILITIES ABSOLUTE LIQUIDITY RATIO 2015 8439.72 71510.85 0.118 2016 9776.82 91198.96 0.107 PowerPoint 演示文稿: INTERPRETATION: Absolute liquidity ratio is also not satisfactory. More analysis are taken place which are as follows: Inventory turnover ratio debtor turnover ratio creditor turnover ratio working capital turnover ratio Result of all this analysis are nagative which is not a good sign for the company. PowerPoint 演示文稿: FINDINGS: Working capital of the H.E.C. Ltd. was decreasing and showing negative working capital per year. The H.E.C Ltd has lower current and quick ratios . Inventory turnover ratio is very low in the year 2015-16. Debtor’s turnover ratio is very low in the year 2015-16. Creditor’s turnover ratio has decreased in the year of 2015-16. Working capital turnover ratio is very low in the year 2015-16. SUGGESTIONS : Working capital of the company has decresing every year. Profit also decreasing every year this is bad sign for the company. It has to maintain it further, to run the business long term. The Current and quick ratios are not up to the standard requirement. Working capital of H.E.C. Ltd. is not satisfactory and it has not to maintain it further. PowerPoint 演示文稿: CONCLUSIONS. The study on working capital management conducted in H.E.C.Ltd. to analyze the financial position of the company. The company’sfinancial position is analyzed by using the tool of annual reports .The financial status of H.E.C. Ltd. is not good.In the last year the inventory turnover has decreased, this is not a good sign for the company.The company’s liquidity position is not very good With regard to the investments in current assets there are inadequate funds invested in it. Care should be taken by the company not to make further investments in current assets, as it would block the funds. On the whole, the company is not moving forward with systematic management. PowerPoint 演示文稿: THANK YOU

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