Cash Management HLL Life Care

CHAPTER IINTRODUCTION

Finance is the study of how investors allocate their assets over time under conditions of certainty and uncertainty. A key point of finance, which affects decision, is the time value of money, which states that a unit of currency today, is worth more than the same unit of currency tomorrow. Finance aims to price the assets based on this risk level, and expected rate of return. Finance can be broken into three different sub categories; 1. Public Finance2. Corporate finance and 3. Personal FinanceIn a business organization finance department is deals with financial activitiesFinancial management consist Planning, Organizing, Directing, and Controlling of financial activities such as procurement and utilization of funds of enterprise. It means applying general management principle of financial resources of the enterprise financial decision include dividend decision, investment decision and retained earnings etc. the financial management is generally concerned with procurement, allocation and control of financial resources of a concern. It ensures regular and adequate supply of fund of the concern. It ensures optimum utilization of funds. They should utilize maximum possible way at least cost.Finance management has to make estimation with regards to capital requirement of the company. This will depend up on expected cost and profit and future programmers and policies of a concern it can made in an adequate manner which increases earning of enterprise.

Finance is the life blood of every business concern. It is an important function of any business, as finance is required to meet the various activities of it. Cash is the important current asset for the operations of the business. It is the basic input needed to kept the business running on a continuous basis. It is also the ultimate output expected to be realized by selling the services or product manufactured by the firm. The firm should kept sufficient cash, neither more nor less cash shortage will disrupt firms manufacturing operations while exertive cash will simply remain idle without contributing anything towards the firms profitability. Thus a major function of the financial manager is to maintain a sound cash position.Financial management occupies a significant place because it has an impact on all activities of the firm. Its primary responsibility is to discharge the finance function successfully. Thus financial management is an appendage of the finance function. No one can think of any business activity in isolation from its financial implications. The management may accept or reject a business proposition on the basis of its financial viabilities. In other words, the live executives who are directly involved in a decision making process should give supreme impotence for financial consideration.The finance function centers round the management of funds raising and using them effectively. But the dimensions of financial management are much border than more procurement of funds. Planning is one of the primary activities of the financial managers. It helps him to obtain funds under the best consideration. However, financial management should not be taken to be a profit extracting device. It implies a more comprehensive concept than the simple objective of profit making. It broader mission should be to protect the interest of the different sections of the community through maximizing the value of the firm. The concept of financial management is applicable to an organization irrespective of its size, nature of ownership and control. They can be applied to any activity or an organization, which has financial implication. in the words of Raymond Chambers; the term financial management may be applied tom any kind of undertaking or organization regardless of its aims or constitution.The term corporate financial management of companies or corporations consists of the decision relating to (a) investment-concerned with capital budgeting and current asset management (b) financial-concerned with determining the best financing mix (c) dividend-concerned with the solution to the decision of dividend policy.Cash management is the management of the cash balance of a concern is such a manner as to maximize the availability of cash not invested in fixed assets or inventories and to avoid the risk of insolvency. According to Kayner these are three motives for holding cash: the transactions motives, the precautionary motive, and the speculative motive. The most useful technique of cash management is the cash budget.In simple terms, cash management may be defined as management tool to ensure that sufficient cash is available to meet current and future liabilities, with any surplus being safety invested to generate the maximum income.In a business, anything done financially affect cash eventually. Cash is to a business is what blood is to a living body. A business cant operate without its lifeblood cash, and without cash management, these may carmine no cash to operate. Cash movement in a business is two way traffic, inflow and outflow. Important aspect which is unique to cash management is time dimension associated with the movement of cash due to non-synchronicity of cash inflow and outflow, the inflow may be more than the outflow or the outflow may be more than the inflow at a particular point of time. This needs regulations left to itself cash flow is apt to follow monsoonal pattern and shows of cash may be heavy, scanty or just normal, hence there is a dire need to control its movement through skillful cash management. The primary aim of cash management is to ensure that there should be enough cash availability when the needs arise not too much but never too little. Cash management is the management of the cash balances of a concern in such a manager. On to minimize the availability of cash not invested in fixed assets or inventories and to avoid the risk of insolvency. According to Keygen these are three motives of bolding cash. The transaction motive, the precautionary motive, and the speculative motive are the most useful technique of cash management.Population explosion is the most important cause to from life care companies in India, which means population explosion is a pyramiding of number of a biological population. As the number of people in a pyramid increases, so do the problems related to the increased population that will cause the population changes are the birth rate, death rate and migration.Population explosion has many reasons like birth rate, poverty, regions etc. These reasons Are bill fledged in India So a big chance to born a life care organization in India which is also covered the unemployment in India. HLL life care limited commenced its journey to serve the nation in the area of health care, on March 1, 1966 with its incorporation as a corporate entity under the ministry of health and family welfare of the Government of the India. HLL was setup in the natural rubber rich state of Kerala, for the production of male contraceptive sheets.HLL Life Care is the only company world manufacturing and marketing the widest range of contraceptives. Today it is the leading marketing organization in the country in area of contraceptives with a market share of over 65 percentage in the rural and semi urban markets including the highly populated states to up, Bihar, Madyapradesh etc.

Cash management HLL Life Care, Akkulam1. Introduction to the study:HLL is a Mini Ratna and upgrade as a scheduled B Central Public Sector Enterprise. HLL Life Care Limited is the only company in the world manufacturing and marketing the widest range of contraceptives. It is unique providing range condoms steroidal, and Tubal Rings etc. HLL produces today 1.316 billion condoms annually marketing it one of the worlds leading manufacturer of condoms accounting for nearly 10 percentage of the global production capacity.Cash management is concerned with how a firm managers its cash levels and operations (cash collection and payments) cash investments and dis- investments and cash borrowing and lending. It is very essential for a business for long run and short run process.In HLL Life Care their cash management was efficiently done. The cash management of past years was good.

2. Statement of the problemFinance is the life blood of every business concern. It is an important function of any business, as finance is required to meet the various activities of it. Cash is the important current asset for the operations of the business. It is the basic input needed to kept the business running on a continues basic. It is also the ultimate output expected to be realized by selling the services or product manufactured by the firm. The firm should kept sufficient cash, neither more nor less cash shortage will disrupt firms manufacturing operations while exertive cash will simply remain idle without contributing anything towards the firms profitability. Thus a major function of the financial manager is to maintain a sound cash position.HLL Life Care is the leading business in India. It is a very big company .HLL has five places so it must have an efficient finance management. In HLL an intelligent system of accounting is followed. The finance department is meant for the effective utilization of funds. The account and the financial statement are prepared will in time. Usually, transaction is recorded as they occur book keeping in the recording business transaction in a systematic way.

3. Objective of the studyGeneral objective To evaluate the efficiency of the cash management of HLL.Specific objective To identify the cash efficiency on the basis of available data. To analyze liquidity position of the firm. To evaluate cash flow position of the firm. To study on cash management techniques of the firm.4. Methodology of the studyThe study involves use of secondary data; the balance sheet and cash flow statement are the data for the study. The study is analytical nature study.5. Reference periodThis study was conducted during 15 years commerce from November 25 to December 10 of 20126. Organization of the studyProposed study consists of six chapters;First chapter will be the Introduction of the study.Second chapter will be the Profile of the company.Third chapter will be the Review of literature.Forth chapter contains Data analysis and interpretation.Fifth chapter is Findings and Suggestions.Sixth chapter is Conclusion and Bibliography.7. Proposed period of completion of the studyReview of literature-1 dayCollection of data-2 dayAnalysis of data-3 dayInterpretation of data-2 dayPreparation of drafting thesis-5 dayCompletion of the work-2 days 15 days

CHAPTER IICOMPANY PROFILE

HLL is a Mini Ratna and upgrade as a scheduled B Central Public Sector Enterprise. HLL Life Care Limited is the only company in the world manufacturing and marketing the widest range of contraceptives. It is unique providing a range condoms steroidal, and Tubal Rings etc. HLL produces today 1.316 billion condoms annually marketing it one of the worlds leading manufacturer of condoms accounting for nearly 10 percentage of the global production capacity.HLL s Health Care product include: Blood collection bags, Surgical structure, Auto Disable Syringes, Vaccines, In-Vitro Diagnostic Test Kits, Pharmacy products for women, Natural products, Hydrocephalus shunt, Tissue expanders, Surgical and Examination Gloves, Blood banking equipment, Neonatal equipment, Blood Transfusion and intravenous sets, Vending machines, iron and Folic Acid Tablets, Sanitary Napkins oral rehydration Sults and Medical plants.Over the years each of the initiatives taken up by HLL are targeted at reaching quality health care at the courtship of every family Associate Institute of HLL namely HLFPPT and Life Spring Hospitals have nursed this to nations under served and vulnerable populace, at an affordable cast. With vast array of innovative for Healthy Generation.Over the past sixteen years, HLL has steadily setup a strong and sound infrastructure for marketing. HLL has put in place a vast distribution network covering. It is the leading marketing organization in the country in the area of contraceptives-with a market share of over 65% in the rural and semi urban markets including the highly polluted states of UP, Madya pradesh Bihar etc. HLL has today, five stages of art manufacturing facilities two at Thiruvananthapuram one at Kanangala near Belguam another at Kochi and the fifth one at Manerar in Haryana.In HLL Life Care there have a strong governing body;Board of Directors Shri M Ayyappan Chairman & Managing Director. Shri Raghubir Singh Addl. Secretary & FA, Min. Of Health &Family Welfare Shri Braj Kishore Prasad Joint Secretary Min. Of Health &Family Welfare Shri R.P Kahandewal Director (Finance) Shri K K Suresh Kumar Director(Marketing) Dr. K Mohan Das Director (Sree Chitha Thirunal Institute For Medical Science & Technology Medical College Thiruvananthapuram) Shri V Meenekshi Sundaram Senior Chartered Accountant Shri V. Sanjeevi Managing Director & Chief Executive Officer

Corporate Objective Maximize utilization of existing plants capacity. Raise the profitability of the company. Taking up profitability of the company. To explore possibilities for strategic alliance for diversification. To make continues effort for up gradation of technology and quality to be internationally competitive. To improve substantially direct marketing for all products. To maximize cost reduction.Organizational policies Provide product and services, conforming to international standards in the health care area to the complete satisfaction of all the customers and to building healthy generations. Achieve a high standard of personal, corporate and business excellence through continual improvement, human resources development and team work. Market the product and services of the company globally on the strength of innovation quality, cost and development. Melt all statutory and regulatory requirements and be an organization with good corporate Governance and social responsibility. HLL committed to quality by mandating that all manufacturing facilities are certified to a quality system standard.Corporate Social ResponsibilityHindustan Latex setup Hindustan Latex Family Planning Promotion Trust (HLFPPT) an organizational mainly for reaching health care and contraceptive aids to the poor and marginalized in the country. The trust has been undertaking well co-ordinates efforts in population stabilization and HIV AIDS control.The company renovated and provided an attractive landscaping at the Kowdiar Park located near the heart of Thiruvananthapuram city. The company also added recreational facilities.

Department of Hindustan Latex Limited, Akkulam Plant Human resource Finance IT Production Stores Sales Purchases Engineering Quality Control R & DFinance DepartmentIn HLL an intelligent system of accounting is followed. The finance department is meant for the effective utilization of funds. The account has the financial statement are prepared with precision accuracy well on time usually, transaction are recorded on the occur book keeping in recording business transaction in a systematic way.The finance department at HLL is divided into five section, they are1. Ledger2. Party Bills3. Payroll, Cash and Computer4. Costing 5. Finalization of accounts1. Ledger sectionThe ledger section has to perform the function of passing and setting of all fright advantages in HLL of bill related to electricity, water charges etc.2. Party Bill SectionThe party bill section deals with the service bill for rendering services such as phone, typewriter etc. It certifies the bill and prepare for cash or cheque payment accordingly. 3. Payroll, Cash and Computer SectionIn patrol selection, the salary computation is done. The cash section deals with the payment of salaries of employees. HLL has got a well integrated M/s. All departments are computerized.4. Costing SectionThe costing section deals with preparation of quarterly financial reports, preparation of monthly profitability statement, budget preparation etc.5. Finalization of Account Section This section has perform the function of assisting the statutory of government auditor in connection with audit and accounts of HLL and the preparation, assisting the coordination of all works with the finalization of accounts of HLL.The main functions of HLL Akkulam finance department.i. The facilitate all finance aspects of the unit activities.ii. To record and report on all financial aspects on the unit activities.iii. To capture and record the cost of production of various products of the unit.iv. To analyze and report on various expenditure of the unit a view to control the same.v. The report on revenue and capital expenditure viz Budget.vi. To control and manage all personnel related activities.vii. To ensure statutory complaints of the financial related activities.viii. To manage the working capital requirement with in the funds provided by the head office.

CHAPTER IIIREVIEW OF LITERATURE

1. Nithin balwani describes the cash flow statement help users of financial statement to evaluate a companies ability to have sufficient cash both on a short- run and a long run basic for this reason, the cash flow statement is useful ritually every one interested in the companys financial health; short and long term creditors, inventories, management and both current and prospective competitors.Cash management is concerned with how a firm managers its cash levels and operations (cash collection and payments) cash investments and dis investments and cash borrowing and lending. 2. Eije and Westerman cash normally would not be needed if it were not for the market imperfections and resulting transactions costs of urgently needing cash and short notice if the need arises and these is no enough cash von.3. David G. Coderre Ratio analysis identifies potential frauds by computing the variance in a set of transactions and then calculating the ratios are; the ratio of the highest value to the lowest value the ratio of the highest value to the next highest and the ratio of one numerical field to another, such as the current year to the previous year or one operational area to another.4. Lakshmanan Sivakunmar. Financial reports are the primary means by which managers communicate company result to investors, creditors and analysis. There parties user the reports to judge company performance, to assets creditworthiness, to predict future. Financial performance, and to analyze possible acquisitions and take over users of financial statements must be able to meaning fully interpret financial reports, construct measures of financial performance and analyze the reporting choice made by companies. Also, since company managers choose accounting techniques when marketing their reports, users must learn to undo the effects of this accounting choice. The purpose of this course is to give foundation for such analysis.5. Jawahar Lal describes that Financial Statement Analysis an analysis which highlights important relationship in the financial statement. It focuses on evaluation of past operations as revealed by the analysis for basic statements. Financial Statement analysis embraces the methods used in assessing and interpreting the results of past performance and current financial position as they related to the particular factor of interest ijn investment decision, it is an important means of assessing past performance and in forecasting and planning future performance.6. S N Maheshwari states that accounting ratios are relationship expressed in mathematical terms between figures which are connected with each other in some manner. Obviously, no purpose will be served by comparing two sets of figures which are not at all connected with cash other. Moreover, absolute figures are also until for comparison.7. Jule.Et,al,says that the cash flow provide considerable information about what is really happening business beyond that contained in either be income statement or the balance sheet. Analyzing this statement should not task, instead it will quickly become obviously that the benefits of understanding the sources and uses of a companys cash for outweigh the costs of undertaking some very straight forward analysis.8. Maynard E.Rafure argues that attempts to improve working capital by delaying paymant to creditors are counter-productive to individuals and to the economy as a whole. Claims that attiring debtors and creditors levels for individual tiers with in a value system will rarely produce any net benefit proposes that stock reduction generates system wide financial improvements and other important benefits urgent those organizations seeking concentrated working capital reduction strategies of focus on stock management strategies based on lean supply chain techniques.9. Smith and Ashburne, financial statements as the end product of financial accounting is a set of financial statements that purport to reveal the financial position of the enterprise, the result of its resent activities and analysis of what has been done with earning. The financial statements are the outcome of preparing final accounts and there statements reveal financial position and profitability of the concern and the utilization of retained earnings10. N P.Srinivasan and M Sakthivel Murugan describe that cash flow Analysis is an analysis based on the movement of cash and bank balance. Under cash flow analysis, all movements of cash, rather than the movement of working capital would be considered such movements of cash deposited in a statement of changes in financial position prepared on cash basis.11. Christian Leuz, he says that the incentives of German firms to voluntary disclose cash flow statement overtime while cash flow statement are mandated under many GAAP regimes, its disclosure has been mandatory in Germany until recently never the les, an increasing number of firms provides cash flow statement voluntarily there firms are likely to be influenced by recommendations of the German accounting profession, IAS7 as well as the respective standards of the other countries. The idea of the paper is to study this influence by looking at the adaptation pattern over time at the format of the cash flow statement. it documents the development of voluntary cash flow statement discloser by German firm with respect to milestone in the evaluation of German professional recommendations and respective international standards. The cross sectional determinants of voluntary cash flow statements are analyzed using profit regressions and factor analyzed. The results are generally consistent with the idea that capital focuses derive the disclosure of cash flow statements that are in line with international practice.12. Bolong Cao, Financial Statements analysis is in of the modern financial analysis. The financial statements from firm provide the information upon the dynamic and innovative process of contemporary business practice. By analyzing financial statement, investors, business pertness managers and Government agencies can infer the efficiency and risks involved in the business of the firm. Which is extremely important in their decision according shenanigans from financial statements becomes indispensable in todays business world. Researches in modern accounting, corporate finance and investment really heavily on financial statement analysis techniques. Proteciency in financial statement analysis is also essential in professional certificate like CPA or CFA-exams.13. KGC Nair and Jayan states ratio analysis is an important and useful technique to check upon the efficiency with which working capital being used in the enterprise. Some ratios indicate the trend or progress or downfall of the firm. It help the financial management in evaluating the financial position and performance of the firm. The trade creditor, bank, lending instructions and experienced inventor are use ratio analysis as their initial tool in evaluating the firm as a desirable borrower as a potential investment outlet.14. Pandey: clearly explain the standards of ratio analysis. The standards of comparison consist of past ratio; competitor ratios and projecting ratios. For that he describes the methods under which ratios can be analyzed, cross sectional analysis and Performa analysis.15. John.N.Myer financial statements provide a summary of the accounts of a business enterprise, the balance sheet reflecting the asset and liabilities and income statements showing the result of operations during a certain period. It emphasis the importance of balance sheet and profit and loss account; but ignores the importance of other financial statements like cash flow statement. Fund flow statement and statement of retained earnings

CHAPTER IVANALYSIS AND INTERPRETATION

RATIO ANALYSIS

Ratio analysis is the one of the most powerful tool of financial analysis. It aims at making use of quantitative information for decision making. A ratio is an expression of relationship between two figures or two amounts. It is a yard stick which measures relationship between two variables. Ratios are simply a mean of highlighting in arithmetical terms the relationship between figures drowns from various financial statements. Robert Antony defines a ratio as simply one number expressed in terms of another

CURRENT RATIO

Current assetCurrent liabilitiesCurrent ratio is the most common ratio for measuring liquidity. It represents the ratio of current assets to current liabilities. It is also called working capital ratio. It is calculating by dividing current assets by current liabilities Current ratio = Current assets are those, the amount of which can be realized with in a period of one year in includes cash in hand, cash at hand etc.Current liabilities are those amounts which are payable with in a period of one year-current liabilities are creditors, bills payable etc.The current ratio of the firm measures its short term solvency, ie, its ability to meet short term obligations. In a sound business a current ratio of 2:1 is considered an idle one. It provides a margin of safety to the creditors Table 1yearCurrent AssetsCurrent Liability

Ratio

200721850.1112550.121.74

200824244.9112011.382.01

200928303.917225.81.64

201025968.6816109.81.61

201139406.4521440.461.83

The graph represents of current asset and current is as follows.

Chart 1.1

The following chart shows the ratios of the past five years

Chart 1.2

INTERPRETATIONFrom the above table and form the above chart 1.2. it can be seen that the current ratio during the year 2007 was 1.74 and in 2008 it was an increased to 2.01 while during the year 2009 their was a decreases in to 1.64 during the year 2010the current ratio was decreased to 1.61 but in the case of 2011 the final year it was a slight increase to 1.83 i.e. current assets double the current liability 9is considered to be satisfactory. But it can be analyzed from the above that except for the year 2008 the organization did not attained a satisfactory.ABSOLUTE LIQUID RATIO The ratio is obtained by dividing cash (of course cash in hand and cash at bank) and marketable securities by current liabilities. It is also known as cash position ratio.

Cash + marketable securities Current liabilities Absolute liquid ratio =

Table 2 YEARCURRENT LIABILITIES

ABSOLUTE LIQUID RATIO

Ratio

200712550.12

3246.12

0.258

200812011.38

1644.8

0.136

200917225.8

5504.47

0.319

201016109.8

3981.92

0.247

201121440.46

5092.95

0.237

The Current liabilities and Absolute Liquid Ratio can be expressed in this chartChart 2.1

The following chart shows the ratio of the past five yearsChart 2.2

INTERPRETATIONWe have to seen from the above table and from the above chart that the absolute liquid ratio during the year 2007 was 0.258 and the subsequent year 2008 the ratio has a slight decrease to 0.136. While during the year 2009 the ratio has its maximum in last five years to 0.319 but in 2012 it has decreases to 0.247 in 2011 also it have a slight decreases to .237

CASH TO WORKING CAPITALThe cash to working capital ratio measures how well a company can meet its short term liabilities using its liquid assets such as cash and cash equivalents and marketable securities. This ratio will also help un cover situation where the company may be too heavily spending its cash on inventory that is not being turned into sales as rapidly as it should be.Decreasing cash to working capital ratio can indicate the company may be suffering from low cash reserves, and may not be able to meet its financial obligations. A decreasing ratio may also mean it has acquired more assets. With more assets, one would hope that it could be using these additional assets to generate even more cash.Cash and Cash Equivalents + Marketable Securities Total Current Assets Total Current Liabilities

Table 3YEARCASHWORKING CAPITAL

RATIO

20073246.12

9299.99

0.349

20081644.5

12233.53

0.134

20095504.47

11078.1

0.496

20103891.92

9859.08

0.403

20115092.95

17965.99

0.283

The cash and working capital relation can be expressed in this chartChart 3.1

The following chart shows the ratio of cash and working capitalChart 3.2

INTERPRETATIONIt can be seen from the above table and from the above chart that the cash to working capital ratio during the year 2007 was 0.349 in 2008. It was decreases to .0134 in 2009 it have increases to 0.496 it is the biggest value in past five years in 2010 it have a decreases to 0.403 also 2011 it have a decreases to 0.283. A higher the ratio indicates the efficient utalisaction of work.

GROSS PROFIT RATIOThe gross profit ratio plays an important role in two management areas of financial management, the ratio serves as a valuable indicator of the firms ability to utilize effectively out side sources of funds.

Gross Profit X 100 Net salesGross Profit Ratio = This ratio help to ascertaining whether the average percentage of mark up on the goods is maintained or not It also indicate the degree to which selling price per unit may decline with out resulting in losses from operations to the firm. Table 4 YEARGROSS PROFIT

SALES

RATIO

200720353.62

24348.17

83.59

200823816.11

31556

75.47

200923959.35

36641.2

65.39

201032704.97

44006.29

74.32

201143276.38

51564.33

83.97

The gross profit and sales relation can be expressed in the chart

Chart 4.1

The following chart shows the ratio of sales and gross profit ratio

Chart 4.2

INTERPRETATION

As from the above table it can be seen that the gross profit ratio in 2007 it was 83.59 then it was a decreasing tendency from 2007 to 2010. In 2008 it was decreased to 75.47 also 2009 and 2010 it was 65.39 and 74.32 but in 2011 it was an increase to 83.97.how ever the gross profit should be adequate to cover operating expenses and to provide for fixed charges divineds and building up to reserve.

NET PROFIT RATIO

Net Profit X 100 Sales This ratio is also called as the net profit to sale or net profit margin ratio. It is determined by dividing the net income after tax to the net sales for the period and measures the profit per rupee of sale

In this context, the term net profit net profit after interest and tax but before dividend The ratio is used to measure the overage profitability and hence it is very useful to profitability of the business. Higher the ratio better is the operational efficiency of the concern Table 5YEARNET PROFIT

SALES

RATIO

20072724.03

24348.17

11.18

20082189.11

31556

6.93

20091689.32

36641.2

4.61

20102230.31

44006.29

5

20112726.81

51564.33

5.2

The net profit and sales can be expressed in the chartChart 5.1

The following chart shows the ratio of net profit and sales in chart 5.2Chart 5.2

INTERPRETATION

From the above table, it can be seen the highest value in the past five years 11.18. It have a decreasing tendency to 6.93 in 2009 it was decreased to 4.61 in 2010 it was a slight increase to 5.00 in 2011. It was also an increase to 5.2

CASH TO OTHER INCOME Table 6YEARCASH

OTHER INCOME

RATIO

20073246.12

3207.13

1.012

20081644.8

3448.89

0.476

20095504.47

1879.47

2.928

20103891.92

2041.89

1.95

20115092.95

2555.52

1.99

The cash and other income can be expressed in the chart 6.1

Chart 6.1

The ratio of cash and other income can be expressed in the chart 6.2

Chart 6.2

INTERPRETATIONAs from the above table and from the above it can be seen the ratio of cash to other income during the year 2007 was 0.012 and for the year 2008 the same was 0.476. it can be further analyzed that during the year 2009 the ratio had been increased to 2.928 and during this year the ratio is at its maximum while for the year 2011 the value of the ratio was 1.99 the ration shows that while the amount in the other income increases the cash position of the organization also increases and vice versa

CASH TO SALESTable 7 YEARCASH

SALES

RATIO

20073246.12

24348.17

1.33

20081644.8

31556

0.052

20095504.47

36641.86

0.15

20103891.92

44006.29

0.09

20115092.95

51564.33

0.098

The cash and sales can be expressed in the chart 7.1

Chart 7.1

The ratio of cash and sales can be expressed in the chart 7.1Chart 7.2

INTERPRETATIONHaving regarded the ratio of cash to sale it can be seen from the above that during the year 2007 the ratio of cash to sales was 1.33 and for the year 2008 the same was 0.052. While during the year 2009 the ratio of cash of sales was 0.150 for the year 2012 the same 0.190. It can be also analyzed that during the year 2011 the ratio of cash and sales was 0.098 the above ratio indicates that indicates that when the sales increases that cash position also increases and thus the organization can achieve the better liquidity position

TREND ANALYSISThe trend method determines the direction upwards or downwards and involves the computation of the percentage relationship that cash statement item hears to the same item in have year. Trend analysis of ratio indicates the direction of change. This kind of analysis of particularly applicable to the particular item of profit and loss account. The ratio analysis will reveal the financial condition of the firm more reliable when trends in ratios over time are analyzed. The trend analysis of ratio considerable significance to financial analysis because is studies ratios several years and isolates to financial analysis because it studies ratio of several years and isolates the exceptional instances occurring in one or two periods.

CASH IN HANDTable 8YEARCASH IN HANDTREND RATIO

20073246.12

100

20081644.8

50.669

20095504.47

169.57

20103981.92

122.66

20115092.95

165.89

Chart 8

INTERPRETATIONAs from the above table and from the above chart it can be seen that trend in cash in hand shows an increasing trend in expect for the year 2008 companied to the base year 2007. During the year 2008 the trend ratio had been decreased by 49.331.it can be also analyzed that during the year 2009 the trend ratio had been increased by 69.57. While for the year 2010 the trend had been increased by 22.66 it can be also analyzed that for the last year 56.89. It can be also analyzed that for the last year 56.89. It can be also analyzed that the increase in trend in cash is a favorable situation and vice versa.

TREND ON OTHER INCOMETABLE 9YEAROTHER INCOME

TREND RATIO

20073207.13

100

20083448.89

107.538

20091879.47

58.6

20102041.89

63.667

2011255.52

79.68

CHART 9

INTERPRETATION As from the above table and from the above chart it can be seen that the trend on other income shows a decreasing trend expect for the year 2008.it can be also analyzed that during the year 2008 the trend had been increased by 7.538 while for the year 2009 the trend had been decreased by 41.4, during the year 2010 the decreases was 36.333 during the last year 2011 the trend had been 20.32 the decrees in other income is not a favorable situation to the business as it renders a liquidity position

TREND ON WORKING CAPITAL

TABLE 10YEARWORKING CAPITAL

TREND RATIO

20079299.99

100

200812233.53

131.54

200911078.08

119.11

20109859.08

106.01

201117965.99

193.18

Chart 10

INTERPRETATION It can be seen from above table and from the above chart that the trend on working capital shows an increasing trend when compared to the base year 2007. During the year 2008 the trend had been increased by 31.54 and for the year 2009 the increase was 19.11 while for the year 2010 the increase was 6.01 during the last year 2011 the increase was 93.18.

TREND ON SALES Table 11YEARSALES

TREND RATIO

200724348.17

100

200831556

129.6032

200936641.86

150.491

201044006.29

180.7376

201151564.33

211.779

Chart 11

INTERPRETATION

It can be seen from the above table and from the above chart that the trend on sales shows increasing trends when compared to the base year 2007. During the year 2008 the trend had been increased by 29.60 and for the year 2009 the increase was 50.49 while for the year 2010 the increase was 80.73 during the last year 2011 the increase was 111.77

TREND ON TOTAL INCOMETable 12YEARTOTAL INCOMETREND RATIO

200728906.99

100

200833968.22

117.5087

200998188.29

132.1

201046548.03

161.02

201154119.85

187.22

CHART 12

INTERPRETATION It can be seen from the above table and from the above chart that the trend on total income always shows an increasing trend. During the year 2008 the trend had been increased by 17.5087and for the year 2009 the same had been increased by 32.10 while during the year 2010. The same had been increased by 61.02 and for the year 2011 the same had been increased by 87.22

TREND ON VARIABLE COST Table 13YEARVARIABLE COSTTREND RATIO

200720417.71

100

200824284.87

118.94

200926957.16

132.02

201033117.83

162.201

201139488.15

193.4

Chart 13

INTERPRETATION It can be seen from the above table and from the above chart that the trend on variable cost always shows an increasing trend. During the year 2008 the trend had been increased by 18.94 and for the year 2009 the same had been increased by 32.03. while during the year 2010 the same had been increased by 62.201 and for the year 2011 the same had been increased by 93.40

CO-EFFICIENT OF CORRELATIONCo-Efficient of Correlation is an algebraic method of measuring the correlation. Under this method, we measure correlation by finding a value known as co- efficient of correlation using an appropriate formula. Correlation co-efficient is a numerical value. It shows the degree on the extent of correlation between two variables. This is no association between cash position and net profit.Ho: There is no association between cash position and net profit.H1: There is no association between cash position and net profit.Table 14 CORRELATION BETWEEN CASH AND NET PROFITYEARCASHNET PROFIT(Y)XYX2Y2

2006-073246.12

2724.03

8842528.264

10537295

7420339

2007-081644.8

2189.11

3600648.128

2705367

4792203

2008-095504.47

1689.32

9298811.26

30299190

2853802

2009-103981.92

2230.31

8880915.995

15855687

4974283

2010-115092.95

2726.81

13887506.99

25938140

7435493

TOTALX=19470.26

Y=11559.58

XY=44510410.64

X2=85335679

Y2=27476120

= -.1881

INTERPRETATIONHere the value of r is -.1881 which shows a negative correlation. There for we accept the null hypothesis.There for there is no association between cash position expenses and net profit.Table 15 CORRELATION BETWEEN CASH POSITION AND TOTAL INCOME

YEARCASHTotal Income(Y)XYX2Y2

2006-073246.12

28906.99

93835558.38

10537295

835614070.9

2007-081644.8

33968.22

55870928.26

2705367

1153839970

2008-095504.47

38188.29

210206296.7

30299190

1458345493

2009-103981.92

46548.03

185350531.615855687

2166719097

2010-115092.95

54119.85

275629690.1

25938140

2928958164

TOTALX=19470.26

Y=201731.4

XY=820893005

X2=85335679

Y2=8543476795

= 0.56

INTERPRETATIONHere is the value of r is 0.569 which shows a positive correlation. Therefore accept the null hypothesis. This is no association between cash position and income.Ho: There is no association between cash position and total expenses.H1: There is no association between cash position and net profit.Table 16CORRELATION BETWEEN CASH POSITION AND TOTAL SALES

YEARCASHTotal expenses (Y)XYX2Y2

2006-073246.12

26182.96

84993030.12

10537295

685547394.4

2007-081644.8

31779.11

52270280.13

2705367

1009911832

2008-095504.47

36498.97

200907485.4

30299190

1332174811

2009-103981.92

44317.72

176469615.615855687

1964060306

2010-115092.95

51393.04

261742183.1

25938140

2641244560

TOTALX=19470.26

Y=190171.8XY=776382594.3

X2=85335679

Y2=7632938904

= 0.581

INTERPRETATIONHere the value of r is 0.581 which shows a positive correlation. Therefore accept the null hypothesis.There is no relationship between cash position and sales.

STATEMENT OF CHANGES IN CASH FLOW STATEMENT FOR THE YEAR 2008-09particulars

20082009Change% of Changes

Cash flow from operating activitiesProfits for the year Adjustment for:Depreciation & amortization Interest paidProfit or Loss on AssetInterest received

Operating profitBefore working capital changesIncrease or Decrease in sundry debtorIncrease or decrease in other receivableIncrease or decrease in inventoryIncrease or decrease in trade and other payables

Cash generate from operationIncome tax paidNet cash fromInvesting activitiesCash flow from financing activitiesProceeds from long term borrowingsProceeds from other borrowingsInterest paidDividend paidDividend tax paidReserve and surplusNet cash used in financing ActivitiesNet Increase or decrease in cash equivalentCash and cash equivalent at the beginning of periodCash and cash equivalent at the end of the paymentCash and cash equivalent compriseCash in handBalance with schedule bank2142.95

733.07

447.10

305.75

(174.01)

2843.36

(4597.43)

(68.21)

739.07(364.18)

(1447.39)

(823.80)(2271.19)(2510.12)(134.15)376.91

174.01

(308.45)

(2401.8)1468.69

2351.69

(447.1)

(257.8)

(43.81)

3071.67

(1601.32)

3246.121644.8074.481570.32

1654.43

899.59

420.64

1.34

(100.37)

3375.63

(281.42)

12227

(1785.96)8928.70

8359.22

(815.86)7543.36(2669.87)(2702.39)74.37

100.37

5395.77

1466.72

1332.51

920.64

155.00

26.53

15.02

1712.08

3859.671644.805504.4728.185476.29

-488.52

166.52

473.54

307.09

73.64

532.27

4316.01

190.48

-2525.037292.88

9806.61

7.5945272.17-159.75-2568.24-302.54

-73.64

-506.7-7797.57-1.97-1019.18-473.54

102.8

17.28

-3056.65

3313.4

613.55

0

5429.99-1542.14

3831.49

-22.79

22.71

105.91

-100.43

-42.31

18.71

-93.87

-279.250

-341.65-2002.55

-677.537

-0.963232.136.6341914.454-80.268

-42.31

-164.273-324.655-0.134-43.33105.91

-39.87

-99.511-206.917

18.90

0

-7290.534

0-98.20232.94

STATEMENT OF CHANGES IN CASH FLOW STATEMENT FOR THE YEAR 2008-09

20092010Change% of Changes

Cash flow from operating activitiesProfits for the year Adjustment for:Depreciation & amortization Interest paidProfit or Loss on AssetInterest received

Operating profitBefore working capital changesIncrease or Decrease in sundry debtorIncrease or decrease in other receivableIncrease or decrease in inventoryIncrease or decrease in trade and other payables

Cash generate from operationIncome tax paidNet cash fromInvesting activitiesCash flow from financing activitiesProceeds from long term borrowingsProceeds from other borrowingsInterest paidDividend paidDividend tax paidReserve and surplusNet cash used in financing ActivitiesNet Increase or decrease in cash equivalentCash and cash equivalent at the beginning of periodCash and cash equivalent at the end of the paymentCash and cash equivalent compriseCash in handBalance with schedule bank1654.43

899.59

420.64

1.34

(100.37)

3375.63

(281.42)

12227

(1785.96)8928.70

8359.22

(815.86)7543.36(2669.87)(2702.39)74.37

100.37

5395.77

1466.72

1332.51

920.64

155.00

26.53

15.02

1712.08

3859.671644.805504.4728.185476.29

2661.40

1279.07

756.05

1.53

197.89

4100.17

1459.05

1332.33

823.961091.72

3959.14

831.723127.426417.823311.12172.83

197.89

278.72

3014.70

191.82

1505.63

756.05

155.35

26.40

1635.26

1522.545504.473981.9227.133954.923981.92

606.97

379.48

-164.59

0.49

-97.52

824.54

1740.47

-1454.62609.92-8020.42-4400.08

-15.86

-4415.94-3747.95-608.7398.4697.52

-80.47

2381.07

-1658.54

-1838.14

164.59

-0.35

0.13

-15.02

-3347.34

-5382.213859.67-1527.55-1.05-1494.37

36.68

42.18

-17.87

14.17

97.16

21.46

-618.46

-1189.66-146.13-115.756-52.63

1.94

-58.54140.3722.52132.3997.16

40.59

-44.12

-113.07

-137.07

-17.87

0.725

-0.49

-100

195.51

-139.447234.65-27.66-3.72-27.288

LEAST SQUARE METHOD

It is widely used statistical employed to study trends in revenue, costs, production and other data and other data and to investigate the relationship among accounting and financial variables. Method of least squares is a method of drawing regression line by principle of least squares. The principal least squares is that principle which states that the line of best fit should be drawn in such a manner that the sum of the squares of difference between the known value of the dependent variables and the corresponding values of it obtained from the line of best fit should be the least. TREND VALUE OF CURRENT ASSETS FOR FUTURE YEARS Table 18 YEARCURRENT ASSET Y XXYX2TREND

2005-0613486.07-2-26972.14416486.898

2006-0721850.11-1-21850.11119628.839

2007-0824244.9100022770.78

2008-0928303.88128303.9125912.721

2009-1025968.88251937.76429054.662

TOTAL113853.9031419.4110

y = a + bxa = y = 112061.4 = 22770.78b = xy = 34008.79 = 3141.941x2Trend value of profit Trend value in 2012 = 35338.544Trend value in 2013 = 38480.485Trend value in 2014 = 41622.426Trend value in 2015 = 44764.367Trend Value of Current Assets for Future Years Table 18 YEAR PROFIT Y XXYX2TREND

2005-063114.87-2-6229.9442945.56

2006-072750.88-1-2750.8812665.23

2007-082142.950002384.9

2008-091654.4311654.4312104.57

2009-102261.4024522.841824.24

TOTAL11924.530-2803.3910

y = a + bxa = y = 11924.53 = 2384.906b = xy = -2803.39 = -280.339x2Trend value of profit 2012 = 2384.906+-280.339 X 4 = 1263.552013 = 2384.906+-280.339 X 5 = 983.252014 = 2384.906+-280.339 X 6 = 702.922015 = 2384.906+-280.339 X 7 = 422.54

CHAPTER V FINDINGS AND SUGGESTIONS

FINDINGS

The major findings of the study are the following.By studying Ratio analysis it has been found the current ratio of the firm is not attain a satisfactory expected level expect for one year of the study period. The Absolute Liquid Ratio, cash to other income and cash to working capital shows a satisfactory level in the year 2009 which means at this year company have shown a good solvency position.It has found from the ratio analysis of gross profit and net profit the company has shown a good increasing rate of profit for the last consecutive years.From trend analysis it has been found that trend on working capital, sales, total income and variable cost shown an increasing trend throughout the analysis period were as trend on cash in hand and other income shown a fluctuating trend throughout the study period.By seeing the co-efficient correlation it has been found that the relation between cash position and net profit shows a negative correlation were as cash and sales, cash and total income, cash and total expenses shows a positive correlation. For positive correlation there will be positive relationship for both the variables and vice versa.From least square method it has been found that there an increasing trend on current asset as well as decreasing trend on profit for coming 5 years.

SUGGESTIONS

1. HLL must maintain apt liquidity position. This indicates that the HLL needs to improve its short-term financial position.2. Block funds used properly and profitability.3. Firm should maintain optimum cash balance throughout the year.4. Solvency position is to be studied and steps to be taken for improving it.5. Debt Equity Mix should be maintained optimum level.6. Fund managers give more importance to utilization of fund.7. Step to be taken to increase the working capital of the firm to meet short term obligation.8. Excess funds invested to diversified projects.9. Even through the firm is doing well but the bad debts are also increasing so the management needs to take necessary steps for reducing bad debts.10. The firm can adopt modern method of cash management.11. The firm should fix proper working capital and inventory level.

CHAPTER VICONCLUSION

CONCLUSION

In this study, an analysis on Efficiency of Cash Management of HLL was done. The Efficiency of the firm during last five years is taken up for study. The Efficiency of fund has been analyzed on the basis o0f the data collected from the Annual report of HLL. The Efficiency of Cash Management in HLL was analyzed with the help of Ratio Analysis and Correlation Co- efficient.

The study conducted in HLL was successful. The study also guides to get knowledge regarding actual functioning of the Firm. Cash Flow Statement of the firm reveals that overall performance of cash management of the firm is above average level. So cash managers give more importance to utilization of cash through using profitable pattern.

BIBLIOGRAPHY

BIBLIOGRAPHY Adesh Sharma, Investment and Financing in Pesticides Industry in India, Indian Journal of Finance and Research, Vol.V. No.2 July 1999,p.67-83 Agrawal N.K.: Analysis of Financial Management, New Delhi, National Publiting House, 2001. Vijaykumar and A. Venkathachalam, Working capital and Profitability- An Empirical Analysis, The Management Accountant, October 1995 p. 748-750 Bari R.R.( Ed.): Selected Reading in Cash Management, Delhi Triveni Publication 200. Reports and Journals Annual report of HLL Life Care Accounting review Project Report of SENTHIL.EWebsites1. www.accounting4management.com2. www.wikipedia.org3. www.lifecarehll.com4. www.ec-finance.com5. www.seribid.com6. www.businessknowhow.com

ANNEXURE

ANNEXUREBALANCE SHEET AS AT 31STMARCHParticulars2005-062006-072007-082008-092009-2010

SOURCES OF FUNDSShareholdersShare capitalReserves &surplus

LOAN FUNDSSecured loanGrants/liability payable as per contract

APPLICATION OF FUNDSFixed assetsGross blockLess: Depreciation

Net block Capital work-in-progress

CURRENT ASSETS, LOANS & ADVANCESInvestments current asset, loan & advancesInventoriesSundry debtorsCash &bank balancesOther current assetsLoan &advances

Less: current liability &provisionCurrent liabilities PROVISION

Net current assetDeferred tax liability(Net)

1553.508174.22

1461.520.00

1553.509442.66

2849.56375.02

1553.5010688.95

6669.94100.14

1553.501124.99

94699.17143.36

1553.5012470.75

8771.72327.58

11189

14220.74

19012.5322416.0223123.55

10907.367054.46

11608.047688.67

13967.9283336.52

16293.749004.05

22422.4310173.79

3852.9036.683919.37705.005631.40839.157289.693541.5312248.64230.41

3889.584624.376470.5510831.2212479.05

0.00

3153.485726.642187.35173.602245.000

0.00

5083.538356.953246.12580.614582.90

308.45

4338.3212954.381644.80426.574880.84

506.70

6130.5113235.805504.47373.623059.50

785.42

5312.0011776.753981.921912.592985.62

13486.0721850.1124244.9128303.9025968.88

4382.771620.23

9991.642558.48

409.152602.23

16554.99670.81

15370.20739.60

6003.0012550.1212011.3817225.8016109.80

7483.07

(183.41)9299.99

296.3812233.53

0.00

11078.10

0.009859.08

0.00

11189.2414220.7419012.5322416.0223123.55

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCHParticulars

2005-2006

2006-20072007-20082008-20092009-2010

IncomeSales & servicesLess : Excise duty

Net sales other incomeLess/ Add: increase or decrease in stock and work in progressExchange Fluctuations

Total

ExpenditureMaterial consumedFinished goods & stock in progress Power & Fuel chargesWater chargesEmployee salary and benefitsOther production expenses Administrative expenses Marketing expensesInsurance chargesFinance chargesDepreciationValue of finished goods purchasedPay revision arrearsExchange rate fluctuationVoluntary retirement Contract expenses

Profit For The YearProfit period adjustmentProfit For The Year Before TaxProvision for income tax-current yearDeferred taxProvision for income tax-previous yearFringe benefit tax-current yearFringe benefit tax-previous yearProvisions written backProfits Available For Appropriation

AppropriationInterim dividend Tax on interim dividend Proposed dividendTax on proposed dividendTransfer to general reserveBalance carried to Balance sheet

Earnings per share(basic)Earnings per share(Diluted)21406.60118.0224492.34144.1731709.17153.1736760.48118.6244177.90171.61

21288.581427.47

(170.39)

-

24348.173207.13

1351.69 -

31556.003448.89

(1036.67) -

36641.861879.56

-

-

44006.292041.89

-

499.85

22545.6628906.9933968.2238521.4246548.03

5709.22-

1168.4238.464408.36

825.29

1735.56

2904.4654.6049.25613.78

1886.99--

42.07-

7217.47-

1280.6855.224812.76

912.62

1995.54

3548.9761.33272.50661.18

5345.88-

-18.81

8662.52-

1431.8057.796314.07

1147.66

2777.51

5017.9052.09447.10733.07

5137.60-

--

10593.02(1581.64)

1934.7492.677216.90

1471.90

3029.80

3631.9753.91920.64899.59

7377.68

504.68

326.24

11142.28723.79

1980.73145.158645.44

1618.76

4009.65

4663.0566.30756.051279.07

8691.36519.63--76.46

19436.4626182.9631779.1136832.1044317.72

3109.195.68

2724.0326.852189.11(46.16)1689.32(34.89)2230.3131.09

3114.872750.882142.951654.432261.40

1103.56

(155.35)26.06

76.72

-

1103.56

(155.35)26.06

76.72

-842.15

(274.89)8.07

105.2034.89-

707.53

43.22

75.38

89.89-(19.41)789.77

184.22

(214.98)

0.00-0.00

2063.881746.781427.82757.831493.39

232.5034.89

180.3025.29

1590.91

155.0021.73

257.8043.81

1268.44

155.0026353

--

1246.29

0.000.00

155.3526.40

576.07

--

233.03.39.60

1220.76

Nil

NilNilNilNil

-

--

-

919.10

919.10487.82

487.82961.31

961.31

DCMS. PMSA PTM ARTS & SCIENCE COLLEGE 2