The western india plywoods ltd project report

The above trend analysis of expenses shows that the outflow of cash has been maintained a balance in the past 5 years. The difference of a particular expense has not been fluctuated at a higher frequency. Hence we can understand that that expenses has maintained a balance.

Anova is a statistical method of measuring relationship between variables. Cash Conversion Cycle (CCC) is a common measure of cash management which is a combined cash position value of accounts receivable, inventory and accounts payables. Similarly, profitability is measured taking the variables such as Return on Equity (ROE), Return on Assets (ROA), Sales growth rate, debtor’s turnover ratio and Creditors turnover. In this calculation Cash conversion cycle is taken as an independent variable and ROA, ROE, sales growth, debtor’s turnover ratio, are taken as dependent variables.

In order to study the relationship between variables the following hypothesis has been formulated. Cash conversion cycle is independent variable and Return on Equity, Return on Assets, Debtors turnover ratio, creditors turnover ratio, sales growth are taken as dependent variable which shows the profitability of the firm.

H0 = There is no significant relationship between cash management and profitability.

H1= There is a significant relationship between cash management and profitability.

The result of the Anova test shows that there is no significant relationship between cash management and profitability. Since the P-value is near to zero null hypothesis has been accepted. It indicates that cash management prevailing in the company has to be re-engineered. A sound cash management process can increase the profitability of business.

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  Liquidity ratio indicates that the company is improving their liquid assets to meet their short-term obligations.
  
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  All over the five years the company is having less liquid ratio which is lesser than the benchmark. So, it should be given much attention to increase company’s liquid assets to solve short term contingencies.
  
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  Debt equity ratio reveals that the company concentrates more on owned fund than outsider’s fund, so it is less risky to creditors and investors.
  
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  Inventories cover a major part of the current assets, because of restrictions are existing against tree cutting, whenever good quality timbers are available at reasonable price, they are imported and kept in storage space.
  
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  Anova test shows there is no significant relationship between prevailing cash management and profitability of the firm so cash management practices has to be re arranged to increase the profitability.
  
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  Trend analysis shows that the cash outflows of the organization have maintained a balance in past 5 years.
  
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  The EPS of the company is gradually decreasing year by year. So proper attention should be given to improve the profitability to attract investments.
  
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  The profitability ratio shows a declining trend over the years. Operating cost of the company is more than the operating profit. So profit is to be increases to cover operating costs and interest expenses.
  
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  Company is having higher creditor’s turnover ratio which implies prompt payment to suppliers for the goods purchased on credit.
  
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  The current ratio of the company is maintained at a satisfactory level that is more than one to cover current liabilities by its current assets.
  

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  Existing cash management of the company is not performing well, so the company should take steps to improve the cash management by concentrating on the receivables, inventories, and converting them into cash.
  
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  Nearly 70% of the current assets are inventory, so companies should take necessary steps to convert the inventories to sales. Once sales increase, profit also increases.
  
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  Company is having higher credit turnover ratio so it can invest cash for short term by taking full advantage of credit period allowed by creditors.
  
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  To stimulate sales company can go for developing new products.
  
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  The cash balance of the company for the period is showing downward trend, so there should be given proper attention to increase and strengthen the cash position.
  
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  Company can increase its sales by optimum utilization of its assets which can cut down the operating costs.