BHARAT FORGE LTD.

cost of goods sold cost of goods sold net credit purchase operating income sales 2010 20131.68 3406.43 828.28 20959.86 2009 20446.1 2942.81 758.98 23940.78

Inventory turnover period:

average inventory/ (cogs/365)

51.29112153 63.67240836

Inventory turn over period

This shows how much time the company takes to churn over their inventories to cash. Here the companys inventory turnover shows that the company is churning their stocks at a good pace.

Debtors turnover period:

debtors turonver period

average debtors / (annual sales/365)

104.7556126 89.52636882

This shows the time that you allow your debtors and the period in which you receive the amount given.

Creditors turnover period:

creditors turnover period

average creditors/ (credit purchases/365)

93.24808524 91.98519442

This shows the time allowed by the suppliers to the company to pay off the amount taken.

operating cycle cash cycle

2010 2009 168.428021 140.8174903 75.1799358 48.83229593

The cash cycle i.e. inventory turnover days + debtors turnover days creditors turnover days for bharat forge ltd for the three years shows that the inventory turnover days is relatively high which means that they are churning their inventories very slowly and they are receiving from their debtors at a slower pace but the creditors turnover period is low compared to the other two i.e. inventory turnover period and the debtors turnover period. This mean that they are paying out to their creditors much sooner and there is a little time lag between operating cycle and the cash cycle which implies that the company could have invested some portion of the amounts received from the debtors and the amount churned in the inventories to invest in some other activities. With the projected working capital requirement the company will have to approach a moderate working capital policy wherein the company has kept sufficient cash with them and increasing the inventories there in. The company has been following a moderate working capital over the past three years which means that the company has sufficient cash to meet their requirements. WORKING CAPITAL REQUIREMENTS working capital requirement current assets inventories sundry debtors cash and bank balances other current assets loans and advances total current assets current liabilities sundry creditors other current liab. provisions total current liabilities net current assets or working capital 4899.37 4781.84 4033 899 3153 17766.21 2011

8.34 3364.73 2710.32 6083.39

11682.82

Taking the calculated closing figures of inventories, debtors for the year 2012 in the current assets and keeping other things constant and taking the calculated closing figure of creditors for the year 2012 and other things constant, the current assets minus the current liabilities will give the working capital for the year 2012.