Working capital management in Forex

WORKING CAPITAL MANAGEMENT Page: 1
and Research on:
WORKING CAPITAL MANAGEMENT
&
BALANCE SHEET ANALYSIS OF THE COMPANY:
MULTIMONEY FOREX LIMITED
OF MULTICON GROUP
Kolkata
Report submitted in partial fulfilment of the requirement
For the award of degree of
BACHELOR OF BUSINESS ADMINISTRATION
(BBA)
BY:
RUPANJAN NAYAK
DOON BUSINESS SCHOOL, DEHRADUN
Under the esteemed guidance of:
Mr. VIKASH JAJODIA (Account & Finance)

ACKNOWLEDGEMENT
“It is not possible to prepare a project report without the
assistance & encouragement of other people. This one is
certainly no exception.”
I am using this opportunity to express my gratitude to
everyone who supported me throughout the course of this
MBA project. I am thankful for their aspiring guidance,
invaluably constructive criticism and friendly advice during
the project work. I am sincerely grateful to them for sharing
their truthful and illuminating views on a number of issues
related to the project.
I express my warm thanks to Mrs. SONIKA SAXENA for their
support and guidance at DOON BUSINESS SCHOOL.
I would also like to thank my project external guide Mr.
VIKASH JAJODIA of the MULTIMONEY FOREX LIMITED and
all the people who provided me with the facilities being
required and conductive conditions for my BBA project.
Thank you,
RUPANJAN NAYAK

DECLARATION
I, RUPANJAN NAYAK ,do hereby declare that this project
has been completed by me at MULTIMONEY FOREX
LTD. KOLKATA solely for the purpose of partial
fulfilment for the degree of BBA. Though various articles,
journals and books were referred, attempt was made to
maintain the originality of the project.
(Rupanjan Nayak)

INDEX
PART. TITLE Page no
From To
A INDUSTRY PROFILE 5 6
COMPANY PROFILE 6 14
Background and inception of the company.
Vision, Mission and quality policy.
Nature of the business carried.
Area of operation –global/national/regional.
Ownership pattern.
Products/Services profile
Competitors’ information.
Infrastructural facilities.
Achievement/awards if any.
Work flow model (end to end).
6
7
8
8
9
10
12
13
13
14
6
7
8
8
9
12
12
13
13
14
SWOT Analysis 15 15
Student’s Own Evaluation 16 16
B General Introduction
 Statement of the problem.
 Scope of the study.
 Objectives of the study.
 Methodology.
 Limitations of the study
17
17
17
18
18
18
18
17
17
18
18
18
Project Rationale 19 19
Analysis/Design, Interpretation of results, findings,
observations and suggestions
19 60
C. Conclusion and recommendations 62 63
Bibliography. 64 64

INDUSTRY PROFILE
Forex Market
he market in which participants are able to buy, sell, exchange and speculate on currencies.
The forex markets is made up of banks, commercial companies, central banks, investment
management firms, hedge funds, and retail forex brokers and investors. The currency
market is considered to be the largest financial market in the world, processing trillions of dollars’
worth of transactions each day.
The foreign exchange markets aren’t dominated by a single market exchange, but involve a global
network of computers and brokers from around the world. Central banks use their massive buying
and selling capabilities to alter exchange rates through their open market activities and in many
cases will do so not with profit in mind, but rather for any number of policy reasons. Forex brokers
act as market makers as well, and may post bid and ask prices for a currency pair that differs from
the most competitive bid in the market.
The foreign exchange market in India started in earnest less than three decades ago when in 1978
the government allowed banks to trade foreign exchange with one another. Today over 70% of the
trading in foreign exchange continues to take place in the inter-bank market. The market consists
of over 90 Authorized Dealers (mostly banks) who transact currency among themselves and come
out “square” or without exposure at the end of the trading day. Trading is regulated by the Foreign
Exchange Dealers Association of India (FEDAI), a self-regulatory association of dealers. Since 2001,
clearing and settlement functions in the foreign exchange market are largely carried out by the
Clearing Corporation of India Limited (CCIL) that handles transactions of approximately 3.5 billion
US dollars a day, about 80% of the total transactions. The liberalization process has significantly
boosted the foreign exchange market in the country by allowing both banks and corporations
greater flexibility in holding and trading foreign currencies. The Sodhani Committee set up in 1994
recommended greater freedom to participating banks, allowing them to fix their own trading limits,
interest rates on FCNR deposits and the use of derivative products. The growth of the foreign
exchange market in the last few years has been nothing less than momentous. In the last 5 years,
from 2000-01 to 2005-06, trading volume in the foreign exchange market (including swaps,
forwards and forward cancellations) has more 3 than tripled, growing at a compounded annual rate
exceeding 25%. Figure 1 shows the growth of foreign exchange trading in India between 1999 and
2006. The inter-bank forex trading volume has continued to account for the dominant share (over
77%) of total trading over this period, though there is an unmistakable downward trend in that
proportion. (Part of this dominance, though, results from double-counting since purchase and sales
is added separately, and a single inter-bank transaction leads to a purchase as well as a sales
entry.) This is in keeping with global patterns
T

COMPANY PROFILE
ultimoney Forex Ltd.(erstwhile Medpat Finance Ltd), a part of the Multicon Group, is
one of the top 10 foreign exchange dealers of India.Spearheaded by the group
chairman, Mr. Dileep Singh Mehta, the Division was setup in early 2004 with a
single branch and it has rapidly grown to become one of the major players in the forex
market in India.
 Within short span Multimoney Forex Limited boasts of a nationwide
network of 25 branches with presence in all metros and major cities
and had expanded the number of branches to 35 by 2015 and 50 by
2017.
 Apart from selling all types of foreign currencies, it also deals in Amex
Travelers’ Cheques and Travel Cards from HDFC Bank and Axis Bank.
Backed by a thoroughly professional and dedicated team, Multimoney
Forex Ltd. has become one of the top 10 FFMCs in India.
 It got its ADII licence approved by RBI in August 2014.
MOTTO:
The motto of Multimoney Forex Limited is Any Money - Any
Time; and their diligent and committed team ensures that you get
the best rates and the best service for all your forex needs.
A BRIEF HISTORY:
The foreign exchange division of the Multicon Group was setup in early
2004with a single branch and it has been steadily taking rapid strides forward
to become one of the major players in the forex market in India. To
accommodate diversified portfolio, and make website navigation easy, Medpat
Finance Limited has changed it name to Multimoney Forex Limited on:
Mission Vision and Policies
M

Vision, Mission and Policies
Vision:
The vision for Multimoney is to create the most valuable financial
solution in India through foreign exchange. They strive to make a
huge contribution to the improvement of Peoples’ and Corporates’
way of business dealing that will transform the way people live.
Mission
The mission of Multimoney is to transform into a one-stop, solution provider for
money-changing, for travel, work, leisure, retail, health, education, finance, industry
and more. They look forward to develop and deliver easy, high quality services with
processes that are consistent with industry standards to create true value for their
customers across all segments.
Policies:
In Multimoney Forex Ltd they have clearly defined policies
and principles which govern their efforts to create customer
value.
 To have total transparency in all interactions and dealings
 To not merely meet but to surpass customer expectations
 To fulfil tomorrow’s need... today

AREA OF OPERATION: National.
Branches:
Nature of the business carried:
Deals in Foreign Exchange business as Authorised Dealer category II
under the licence given by Reserve Bank of India.
 KOLKATA (Camac Street) (HEAD
OFFICE)
 Kolkata (Salt Lake)
 MUMBAI
 PUNE
 NEW DELHI
 BHUBANESHWAR
 RACHI, JHARKHAND
 SILIGURI
 ASSAM
 VISHAKHAPATNAM
 BHOPAL
 BARODA
 VARANASI
 ARUNGABAD
 HYDERABAD
 CHENNAI
 KARINGANJ
 JAIPUR
 BANGALORE
 COIMBATORE, TAMILNADU
 KANPUR
 NAGPUR
 COCHIN
 KHAJURAHO
 RAIPUR, CHATTISGARH
 NASHIK
 JALANDHAR
 FORT MUMBAI

OWNERSHIP Pattern:
Name of the shareholders No. of Shares
held
% to
total
paid up
capital
i) Shares held by Promoters & their relatives
Jai Singh Mehta (HUF) 11,02,062 13.86
Dileep Singh Mehta 2,60,967 3.28
Kalyan Kumar Shroff 27,000 0.34
Sangeeta Mehta 1,04,358 1.31
Arjun Singh Mehta 10,500 0.13
Aneesha Mehta 24,000 0.3
D.S. Mehta (HUF) 10 0
Ganesh Chandra Mehta 10 0
Shanta Mehta 10 0
G.C.Mehta (HUF) 10 0
ii) Shares held by Group Companies:
--Calcutta Amenities Development (P) Ltd. 1,12,772 1.42
-- Casuarina Confectioners (P) Ltd. 250000 3.14
-- J.D.M. Udyog (P) Ltd. 14,81,469 18.63
-- Montane Constructions (P) Ltd. 10000 0.13
-- Orbit Towers (P) Ltd. 5,39,000 6.78
-- Multicon Realty Ltd. 29,63,000 37.26
iii) Others 10,66,712 13.42
Total 79,51,880 100

PRODUCTS
Multimoney Forex Limited offers a Mixed Travel Money Wallet including foreign currency
banknotes, American Express Travelers Cheques and Travel Cards of HDFC, Axis and ICICI Banks
which are accepted at thousands of locations worldwide including banks, selected hotels and money
changers.
Multimoney Forex Limited offers various other services in the foreign exchange domain including
Western Union Money transfer, Foreign University Demand Drafts, Foreign Telegraphic Transfers,
etc.
Foreign currency:
Multimoney Forex Limited offers extremely competitive rates for all your foreign
currency exchange transactions and deals in all major currencies.
Cash is the oldest, commonest and the most convenient method of carrying foreign
exchange overseas.
Carrying small amount of local currency or internationally acceptable currency
variants in your wallet when you travel overseas is reassuring and convenient -
especially to make payments for the services you may require on your arrival at the
destination.
Travel Card:
Travel Cards of HDFC, Axis and ICICI Banks, AMEX Travel Card is a secure, convenient and
hassle free way to carry money and make payments when traveling abroad.
With the Travel currency Card you can pay directly at all Visa enabled merchant outlets
(shops, restaurants, hotels, grocery stores etc.)
Multimoney Forex Limited offers prepaid Travel Cards issued by Axis Bank which is
currently available in denominations of US Dollars, Euro, Great Britain Pound, Australian
Dollar, Canadian Dollar, Singapore Dollar, Swiss Francs, Swedish Kroner, Japanese Yen,
Dirhams (AED) and Saudi Riyals (SAR).

ADVANTAGES OF TRAVEL CARDS:
o Convenience:
You can withdraw cash from an ATM or shop for very small amounts and you need not
carry loose change anymore that you are left with when you en-cash your Traveller’s
Cheques. You don't have to waste precious time looking for moneychangers to en-cash your
Traveller’s Cheque. With the Travel Currency Card you can pay directly at all Visa enabled
merchant outlets (shops, restaurants, hotels, grocery stores etc.)
o Security:
A secure 4 digit PIN helps to secure all your cash withdrawal transactions. If your card is
lost or misplaced all you need to do is call on the 24-hour Customer Service Number. Your
card will be immediately blocked to secure your money and a replacement card will be sent
to you upon request.
o Travellers’ Cheque
Travellers Cheques are a safe and easy way to carry money when you travel giving you complete
peace of mind.
Multimoney Forex Limited offers American Express Travellers Cheques in major currencies like
USD, GBP, Euro, CAD, AUD and JPY, are available in various denominations to suit your needs.
You can encash them only when you need to and only against your signature, unlike cash which
can be stolen and misused by anybody, immediately. Loss of Travellers Cheque can be reported
anywhere in the world by making a single phone and the prefixed amount on the cheques are
made refundable.
They are widely accepted at Merchant Establishments and Financial Institutions in more than 200
countries.
Other Services:
Other than Foreign Currency, Travellers’ Cheques and Travels Cards, Multimoney Forex Ltd provides
a host of allied services pertaining to foreign exchange and travel.
 Wire Transfer(SWIFT)
 Foreign Currency Drafts
 Overseas Travel Insurance
 International Calling cards Like Matrix,Uniconnectetc
 DD – Foreign University Demand Draft
 TT – Foreign Telegraphic Transfer
 Bulk Transactions in Foreign Exchange

AD-II license holder can do the following business:
 Remittance for:
 a) Tour operators /travel agents to overseas agents /principals/hotels
 b) Film shootings
 c) Medical treatment
 d) Disbursement of crew wages
 e) Overseas Education
 f) Fee for participation in global conferences and specialized training
 g) Participation in International Events/competitions
 h) Remittance under educational tie up arrangements with universities
abroad
INFRASTRUCTURAL FACILITIES:
 3500sq.ft Office in 2 floor fully air conditioned own office Kolkata
 35 branch offices
 Own Encrypted Server with specialist constantly monitoring
 Approx. 110 employees
 Fully computerised
 Used ERP system Exchange on Net (Eon) to coordinate, control foreign
exchange business.

COMPETITORS:
ESSEL FINANCE VKC FOREX LIMITED
One of the Major Competitors with good potential:
 Have 60 branches pan India.
 Does Inward Money Transfer to India
 Has a toll free number
Weizmann Forex Ltd
A competitor compared to whom, Multimoney provides a much better host of
services.
 Does not have insurance service or SIM cards facilities for foreign travellers.
 Multimoney has Western Union money transfer which Weizmann Forex Ltd
doesn’t have
Walstreet forex ltd
 Provides similar facilities
 Have 37 branches 2 branches more than Multimoney.
ACHIEVEMENT & AWARDS:
 Plaque received from Banks
 Rewards and recognition received by various employees from
various institutions.
Future Plans:
 The company wants to expand its wings by increasing
its presence by augmenting the number of Branches to
50 by 31/03/2017.
 Planning to implement Export and Import business.
 As plan to introduce own Pre-paid Travel cards.

WORK FLOW MODEL:
Purcha-
se from
FFMC
Banks
Retail
clients
Blank
cardpur
chase
Customer
pays
Blank card
sold to
customer
Banks
sends
blank card
Successful
negotiation
Big amount more
than 50,000 INR
Small amount
upto 50,000 INR
CUSTOMER
WANTS TO BUY
FOREIGN
CURRENCY
TRANSACTION
AMOUNT
Card/ cheque/
draft
CASH
CUSTOMER’S
DECISION
STOP
Customer returns
from foreign country
Purchase
(Settlement)
SALE TO
CUSTOMER/
OTHER RETAIL
BRANCHES
Customer
paysEncashment of unused
amount
Unsuccessful
negotiation

SWOT ANALYSIS:
WEAKNESSES
o No customer helpline toll-free number
o Slight less branches compared to its
competitors.
THREATS
 Vagaries of the market
 Increased trade barriers
 New regulations.
 Day to day increase in competition
 Distress sale.
STRENGTHS
 Dedicated workforce with centralised well
coordinated system
 Uses an ERP to monitor all the transaction
real-time.
 Has well reputed partners like AXIS,
HDFC, ICICI, AMEX.
 Brand name.
OPPORTUNITIES
 Own pre-paid travel card
 Export import business
 Loosening of regulations.
 Removal of International trade
barriers, which may open new
dimensions.

STUDENTS EVALUATION:
 Multimoney Forex Ltd under Multicon Group has a very progressive
outlook.
 The company started from scratch and did a good overall progress
setting up 35 branches all over India in a quick succession.
 It has achieved ADII licence which enables it to provide host of services
above FFMC to its customers.
 It products are well tuned to market requirements with very
competitive pricing.
 With a strong vision of making to the top and a very supporting mission
to provide all types of services to its customer’s Multimoney is always a
step ahead towards its objectives.
 Excellent friendly work culture where a man don’t work like a machine
but works as a social being.

CHAPTER: 02
General introduction
Finance is defined as the provision of money when it is required. Every enterprise
needs finance to start and carry out its operation. Finance is life blood of an
organisation. So finance should be managed effectively.
Financial statement is prepared primarily for decision making. Financial statement
analysis refers to the process of determining financial strength and weakness of the
firm by properly establishing strategic relationship between the items of the balance
sheet and profit and loss accounts. There are various methods and techniques used
in analysing financial statements, such as fund flow analysis, common sized
statement analysis, trend analysis, cost volume relationship and ratio analysis, and
other operative data analysis of financial statement is used for decision making.
• First task is to analyse and select the information which is required taking
decision.
• Second task is to arrange the information in a way to highlight significant
relationship.
• Final task is the interpretation and drawing of inferences and conclusions.
Purpose of study
1. To know the financial position of the Multimoney forex limited.
2. The company has the strength to fulfil its obligations or not.
3. Find out strength and weakness of the company.
4. Performance of the company for granting credit and providing loan and making
investments.
5. Growth rate of Multimoney forex limited.
6. Know the liquidity position of Multimoney Forex limited
7. To know the operating efficiency of Multimoney Forex limited
8. To know the overall profitability of Multimoney Forex limited
Place of Study
All the activities are carried out in Multimoney Forex ltd. Kolkata
Scope of Study
 The data and information are gathered during internship and training.
 The scope is limited to the secondary data only.
 The scope is delimited to the year 2014.

Objective of study
The role and objective of the project is to help management of the organisation in decision making
regarding the subject matter.
Calculation of financial statement and ratio is only the clerical task while implementation of its
needs immense skill and intelligence and foresightedness.
One of the earliest and most popular ways of evaluating performance of the organisation is to
compare its present ratios and past once. It gives an indication of the direction of change and
reflects whether the organisation's financial position and predominance has improved, deteriorated
or remain constant over period of time.
Here much emphasis is given to historical comparison and on forecasting the immediate future
trends.
Data collection
The whole study is based on secondary data of Multimoney Forex Ltd. (Kolkata). I have not taken any
primary data for my study because primary data would not have been helpful to my study. During
the tenure of my study I have taken help of the following secondary data.
 Balance sheet of Multimoney forex Lid 2012-2013
 Balance sheet of Multimoney forex Lid 2013-2014
 Profit Loss statements.
 Cash Flow statements.
Tools
There are some of the analysis tools I used are:
1. Ratio analysis
2. Comparative balance sheet analysis and
3. Cash flow statements
Limitation
1. It is only based on mathematical interpretation and ignores the factors such as
management style, motivation of worker, leadership and other aspects of
management.
2. It is affected by price level changes
3. It does not give any clue for the future.
PROJECT RATIONALE
The project I have created in Summer Internship deals with how working capital
management affects the performance of the company. This project helped me to
understand each aspect of working capital and how it affects the performance of the
company. I have included ratio analysis, graphs and comparison to highlight its effect and
for clear understanding from multiple intelligences.

Analysis and Interpretation
Introduction to Financial statements
Financial statements are prepared primarily for decision making. Financial
statement analysis refers to the process of determining financial strength and
weakness of the firm by properly establishing strategic relationship between
the items of the balance sheet and profit loss account. There are various
methods and techniques used in analysing financial statements such as
comparative statements, trend analysis common sized statements, schedule of
changes in working capital etc. The analysis of financial statement is used for
decision making by various parties.
Applications
1. Judging credit worthiness
2. Forecasting bankruptcy
3. Valuing equity shares
4. Predicting bonds ratings
5. Estimating market risk
6. Assessing the corporate excellence
Limitation of Financial statement
1. It is only study of interim reports
2. Financial analysis is based upon only monetary information and non-
monetary factors are ignored
3. It does not consider changes in price levels
4. Changes in accounting procedures of the firm may often make financial
analysis misleading.

Definition of Ratio Analysis
Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is
based on line items in financial statements like the balance sheet, income statement and cash flow
statement; the ratios of one item – or a combination of items - to another item or combination are
then calculated. Ratio analysis is used to evaluate various aspects of a company’s operating and
financial performance such as its efficiency, liquidity, profitability and solvency. The trend of these
ratios over time is studied to check whether they are improving or deteriorating. Ratios are also
compared across different companies in the same sector to see how they stack up, and to get an
idea of comparative valuations. Ratio analysis is a cornerstone of fundamental analysis.
While there are numerous financial ratios, most investors are familiar with a few key ratios,
particularly the ones that are relatively easy to calculate. Some of these ratios include the current
ratio, return on equity, the debt-equity ratio, the dividend payout ratio and the price/earnings (P/E)
ratio.
For a specific ratio, most companies have values that fall within a certain range. A company whose
ratio falls outside the range may be regarded as grossly undervalued or overvalued, depending on
the ratio.
As well, ratios are usually only comparable across companies in the same sector, since an acceptable
ratio in one industry may be regarded as too high in another. For example, companies in sectors
such as utilities typically have a high debt-equity ratio, but a similar ratio for a technology company
may be regarded as unsustainably high.
Ratio analysis can provide an early warning of a potential improvement or deterioration in a
company’s financial situation or performance. Analysts engage in extensive number-crunching of the
financial data in a company’s quarterly financial reports for any such hints.
Successful companies generally have solid ratios in all areas, and any hints of weakness in
one area may spark a significant sell-off in the stock. Certain ratios are closely scrutinized
because of their relevance to a certain sector, as for instance inventory turnover for the
retail sector and days sales outstanding (DSOs) for technology companies.

CURRENT RATIO
Current Ratio, also known as working capital ratio is a measure of general liquidity
and its most widely used to make the analysis of short-term financial position or
liquidity of a firm. It is defined as the relation between current assets and current
liabilities
Formula
Value (as extracted from the Balance Sheet)
CALCULATION
2012-2013
= .
= .
= .
2013-2014
= .
= .
= .
GRAPHICAL REPRESENTATION
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
Current assets 2205.75 2796.17
Current Liabilities 2090.09 2749.90
1.06:1 1.02:1
0
500
1000
1500
2000
2500
3000
Current Assets Current Liabilities
2012-2013
2013-2014

Observation
1. Decrease in Liquidity,
2. Paid off the liability
3. Near to ok situation,
Inference
 The ideal ratio is 2:1; the company possess a ratio of
1.06:1which is less than the ideal ratio so company has
less liquidity for payment of current liabilities
Impact
 The company although has paid off its liabilities and
has liquidity greater than 1:1 still it is lying very close to
the boundary and can face a sticky situation if there is a
slump in the market.

QUICK RATIO
Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be
defined as the relationship between quick/liquid assets and current or liquid liabilities. An
asset is said to be liquid if it can be converted into cash with a short period without loss of
value. It measures the firms’ capacity to pay off current obligations immediately.
Formula
QUICK ASSET INCLUDES:
1. MARKETABLE SECURITIES
2. DEBTORS
3. CASH IN HAND
Calculation
2012-2014
= .
= .
= .
2013-2014
= .
= .
= .
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
CASH IN HAND 635.84 506.57
DEBTORS 987.39 1435.98
Marketable
securities
0 0
TOTAL
(quick assets)
1623.23 0.78 1942.55 0.71

Observation
1. Decrease in Liquidity,
Inference
1. Decrease in ease of payment of current liabilities
2. Fund is getting locked in accounts like inventory and sundry
debtors.
Impact
Here the inventory holding may be good for the company if there
is favourable market condition and high fluctuating demand thus
holding inventory is positive for the company.
0
200
400
600
800
1000
1200
1400
1600
2012-2014 2013-2014
CASH
DEBTORS
SHARES AND MARKETABLE
SECURITIES

ABSOLUTE LIQUID RATIO
Although receivables, debtors and bills receivable are generally more liquid than
inventories, yet there may be doubts regarding their realization into cash immediately
or in time. So absolute liquid ratio should be calculated together with current ratio
and acid test ratio so as to exclude even receivables from the current assets and find
out the absolute liquid assets.
QUICK ASSET INCLUDES:
1. CASH
2. BANK BALANCE
Calculation
2012-2014
= .
= .
= .
2013-2014
= .
= .
= .
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
Cash in hand 635.84 506.57
0.30:1 0.18:1

Observation
 Decrease in Liquidity,
Inference
 More stocking of funds in debtors and inventories
Impact
1. Here the inventory is good for the company due to favourable market condition and
high fluctuating demand thus holding inventory is positive for the company.
2. Debtors is increasing so chance of default is also increasing but turnover is
increasing which is overall positive for the company
0
500
1000
1500
2000
2500
3000
2012-2013 2013-2014
Absolute liquid assets
Current Liabilities

INVENTORY TURNOVER RATIO
Every firm has to maintain a certain amount of inventory of finished goods so as to
meet the requirements of the business. But the level of inventory should neither be
too high nor too low. Because it is harmful to hold more inventory as some amount of
capital is blocked in it and some cost is involved in it. It will therefore be advisable to
dispose the inventory as soon as possible.
Formula
( )
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
Opening stock 148.50 277.19
Closing stock 277.19 512.73
Purchases 41013.67 38848.02
Average Inventory 212.845 394.05
COGS 41439.36 38612.48
194.7:1 98:1
=
( + )
COGS= Opening stock + Purchases - Closing stock

Calculation
2012-2013
= .
= .
= .
2013-2014
= .
= .
= .
Graph: 1: Comparison of Opening stock, closing stock, and average inventory between 2012-13
and 2013-14:
=
( = . + = . )
= .
COGS= Opening stock(148.50) + Purchases(41013.67) - Closing stock(277.19)= 41439.36
7
=
( = . + = . )
= .
COGS= Opening stock(277.19) + Purchases(38848.02) - Closing stock(512.72)= 38612.48
0
100
200
300
400
500
600
Opening stock Closing stock Average Inventory
2012-2013
2013-2014

Graph 2: Comparison between Cost of goods sold and purchases in two years
Observation
1. Decrease in inventory turnover ratio
Inference
 More stock has been purchased in the during march which were not sold
due to unfavourable rates
Impact
1. This inventory can be easily be sold during favourable market conditions
2. The inventory which has been purchased at low price and will be sold at a
greater price which will fetch more profit on strong expectation that price
will increase
41013.67
41439.36
38848.02
38612.48
37000
37500
38000
38500
39000
39500
40000
40500
41000
41500
42000
Purchase COGS
2012-2013 2013-2014

INVENTORY CONVERSATION PERIOD
Inventory conversion period shows that how many days’ inventories take to convert
from raw material to finished goods. In the company inventory conversion period is
decreasing. This shows the efficiency of management to convert the inventory into
cash.
Formula
.
Calculation
2012-2014
. =
=
= .
2013-2014
=
=
= .
Year April 12-
March 13
No. of days April 13-
March 14
No. of days
No of days 365 365
Inventory
Turnover ratio
194.4:1 98:1
2 days 4 days

Observation
 Increase in inventory turnover days
 Value to high
Inference
 Debtor’s collection is taking more time than the expectation which has
increased inventory turnover days a bit more than normal days.
 The firm is replenishing inventory with short lots which results in frequent
stock outs.
Impact
 Blockage of liquid funds in inventories and debtors which can result in non-
payment of current liabilities instantly.
 Loss of customers due to shortage of funds
 Too many small replenishment is costly.

DEBTORS TURNOVER RATIO
A concern may sell its goods on cash as well as on credit to increase its sales and a liberal
credit policy may result in tying up substantial funds of a firm in the form of trade debtors.
Trade debtors are expected to be converted into cash within a short period and are included
in current assets. So liquidity position of a concern also depends upon the quality of trade
debtors.
Formula
( )
Calculation
2012-2013
( ) = .
= .
= .
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
Opening debts 488.85 987.36
Closing debts 311.74 1435.98
Sales (credits) 41601.88 39385.46
Average debts 400.3 1211.7
104:1 32.5:1
=
( + )
=
( = . + = . )
= .

2013-2014
( ) = .
= .
= .
YEARWISE COMPARISION OF AVERAGE DEBT AND CREDIT SALES
Observation
1. Decrease in debtors turnover ratio but also too high
Inference
 Downturn in the economy or in a particular industry
 Market going through trouble times because of this the company is facing difficulty is
recovering money from its debtors.
 Company follows a very restrictive credit policy.
Impact
 Turnover is increasing but the funds lying in debtors so there is a chance (roughly 10%)
going to bad debts.
 Liquidity is affected as funds are getting locked (decreasing the liquidity)
 Loss of sales due to inflexible credit policy. It only gives to those who are very sound in
there financial strength.
=
( = . + = . )
= .
201
2-
20…
201
3-
20…
0
200
400
600
800
1000
1200
1400
AVERAGE DEBT2012-2013 2013-2014
38000
38500
39000
39500
40000
40500
41000
41500
42000
SALES CREDIT
2012-2013 2013-2014

DEBTORS COLLECTION PERIOD
The average collection period ratio represents the average number of days for which
a firm has to wait before its receivables are converted into cash. It measures the
quality of debtors. Generally, shorter the average collection period the better is the
quality of debtors as a short collection period implies quick payment by debtors and
vice-versa.
Formula
.
Calculation
2012-2014
. =
= .
= .
2013-2014
=
= .
= .
Year April 12-
March 13
March 14
No. of days
No of working
days
285 285
Debtors Turnover
ratio
103.928 30.504
2.74 days 3 days 8.76 days 9 days

Observation
 Increase in debtors conversation days
Inference
 Downturn in the economy or in a particular industry
 Market going through trouble times because of this the company is facing
difficulty is recovering money from its debtors.
Impact
 Turnover is increasing but the funds lying in debtors so there is a chance (roughly
10%) going to bad debts
 Liquidity is affected as funds are getting locked (decreasing the liquidity)

WORKING CAPITAL TURNOVER RATIO
Working capital turnover ratio indicates the velocity of utilization of net working capital. This ratio
indicates the number of times the working capital is turned over in the course of the year. This ratio
measures the efficiency with which the working capital is used by the firm. A higher ratio indicates
efficient utilization of working capital and a low ratio indicates otherwise. But a very high working
capital turnover is not a good situation for any firm
Formula
( )
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
Current Assets 2205.75 2796.17
Current liabilities 2090.09 2749.90
Net working
capital
115.66 46.27
COGS 40884.94 38612.48
353.5:1 834.5:1
Net working capital= Current assets – Current liabilities

Calculation
2012-2013
= .
= .
= .
2013-2014
= .
= .
= .
GRAPHICAL REPRESENTATION OF NET WORKING CAPITAL
Net working capital= Current assets (2205.75) – Current liabilities (2090.09) =115.66
Net working capital= Current assets (2796.17) – Current liabilities (2749.90) =46.27
0
20
40
60
80
100
120
140
Net working capital
2012-2013
2013-2014

WORKING CAPITAL TURNOVER
Formula
‘SALES’ include:
Sale of foreign currencies Profit Loss statement 1 of
Balance-sheet 2013-2014
Part (a)
Sale and surrender of travellers cheque (T.C s) Profit Loss statement 1 of
Balance-sheet 2013-2014 Part
(b)
Sale and surrender of Visa travel money
(V.T.M) cards
Profit Loss statement 1 of
(c)
Service charge received Profit Loss statement 1 of
(e)
Income from Western Union and other Money
transfers
Profit Loss statement 1 of
(g)
Year April 12-
March 13
RATIO April 13-
March 14
RATIO
Sales 41480.66 39236.77
Net working
capital
115.66 46.27
358.6:1 848:1

Calculation
2012-2014
= .
= .
= .
2013-2014
= .
= .
= .
Observation
 Very high working capital ratio
Inference
 As this is a Foreign exchange company there is continuous inflow of currency due to
which such a high turnover
Impact
 Influences a positive impact on the company.

INTERPRETATION
 Working capital
YEAR 2011-2012 2012-2013 2013-2014
SALES 40929.39 41480.66 30236.77
Net working capital (558.38) 115.66 46.27
Working capital
turnover
(73.30) 358.64 848
Net Working capital is required to finance day to day operations of a firm. There
should be an optimum level of working capital. It should not be too less or not too
excess. In the company there is increase in an overall working capital. The
increase in working capital arises because the company has expanded its
business.
-800
-600
-400
-200
0
200
400
600
800
1000
2011-2012 2012-2013 2013-2014
NET WC WC TURNOVER

DEBTORS
YEAR 2011-2012 2012-2013 2013-2014
DEBTORS 488.85 987.39 1435.98
Debtors constitute a substantial portion of total current assets. In India it
constitute one third of current assets. The above graph is depicting that
there is increase in debtors. It represents an extension of credit to
customers. The reason for increasing credit is competition and company
liberal credit policy.
0
200
400
600
800
1000
1200
1400
1600
2011-2012 2012-2013 2013-2014
DEBTORS
DEBTORS

INVENTORIES
YEAR 2011-2012 2012-2013 2013-2014
Inventories 185.44 314.08 512.73
Inventories are a major part of current assets. If any company wants to manage its
working capital efficiency, it has to manage its inventories efficiently. The graph
shows that inventory in 2011-2012 is 45%, in 2011-2012 is 12% and in 2012-2013 is
14% and in 2013-2014 is 18% of their current assets. This shows the efficiency in
inventory management policies of the company.
The company does not follow any specific Inventory Control Techniques. They
mainly follow JIT concept and buy whenever necessary from it fixed number of
vendors.
185.44
314.08
512.73
0
100
200
300
400
500
600
2011-2012 2012-2013 2013-2014
INVENTORIES
INVENTORIES

CURRENT ASSETS and CURRENT LIABILITIES
YEAR 2011-2012 2012-2013 2013-2014
CA 1438.39 2205.75 2796.17
CL 1996.77 2090.09 2749.90
This graph shows that there is 35% and 21% increase in current assets in 2013 and
2014 respectively. This increase is arising because there is approx. 50% increase in
inventories. Increase in current assets shows the liquidity soundness of company.
Current liabilities shows company short term debts pay to outsiders. In 2013 the
current liabilities of the company increased. But still increases in current assets are
more than its current liabilities.
0
500
1000
1500
2000
2500
3000
2011-2012 2012-2013 2013-2014
CA CL

CASH AND BANK BALANCE
YEAR 2011-2012 2012-2013 2013-2014
Cash & Bank Blc 625.75 635.84 506.57
Cash and Bank balance is basic input or component of working capital. Cash is
needed to keep the business running on a continuous basis. So the organization
should have sufficient cash to meet various requirements. The above graph is
indicate that in 2011-2012 the cash is 625.75 lakhs, in 2012-2013 it has increased to
635.84 but 2013-2014 it decreased to 506.57 lakhs.
625.75 635.84
506.57
0
100
200
300
400
500
600
700
2011-2012 2012-2013 2013-2014
Cash & Bank Blc
Cash & Bank Blc

PAYBLE TURNOVER RATIO
A short-term liquidity measure used to quantify the rate at which a company pays off
its suppliers. Accounts PAYBLE turnover ratio is calculated by taking the total
purchases made from suppliers and dividing it by the average accounts PAYBLE
amount during the same period.
Formula
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
Opening credit 614.05 506.66
Closing credit 506.66 285.27
Supplier
Purchases
41013.67 38848.02
Average credit 560.355 395.965
73.2:1 98.1:1
=
( + )

Calculation
2012-2013
= .
= .
= .
2013-2014
= .
= .
= .
Graph: 1: Comparison of average debtors between 2012-13 and 2013-14:
=
( = . + = . )
= .
=
( = . + = . )
= .
2012-2013
2013-2014
0
100
200
300
400
500
600
AVERAGE credit 2012-2013 2013-2014

ACCOUNT PAYBLE DAYS
Formula
.
Calculation
2012-2014
. =
= .
= .
2013-2014
=
=
= .
Observation
 Increase in PAYBLE turnover ratio
 Company is paying its supplier at faster rate
Inference
 More inflow of funds from the debtors. Efficient payment collection
system. Debtors are paying at a faster rate.
 Healthy economic and market condition
Impact
 Due to availability of banks liability has paid off which decreases
the liability of the company and increased the credit rating of the
company
Year April 12-
March 13
March 14
No. of days
No of days 285 285
Inventory
Turnover ratio
73.2 98:1
4 days 3 days

WORKING CAPITAL LEVERAGE
Leverage refers to the employment of assets or sources of fund bearing fixed payment to
magnify EBIT or EPS respectively. So it may be associated with investment activities or
financing activities.
Formula
+
Calculation
2012-2013
= .
= . + = ( . )
= .
Year April 12-
March 13
Ratio April 13-
March 14
Ratio
Opening CA 1438.39 2205.75
Closing CA 1530.10 2796.17
 CA (91.91) (590.42)
TOTAL ASSETS 3485.31 4106.83
0.45 0.6
 Current assets= Opening Current assets- Closing current assets.
 CA= Opening CA (1438.39) - Closing CA (1530.10) = -91.91

2013-2014
= .
= . + = .
= .
YEARWISE COMPARISION OF WORKING CAPITAL LEVERGE AND CHANGE (INCREASE) IN CURRENT
ASSETS.
Observation
 Working capital leverage has increased
Inference
 Risk factor has increased which might affect the profitability
Impact
 Therefore as risk increases, profitability of firm tends to increase. Thus Working
Capital Leverage (WCL) may be defined as the ability of the firm to magnify the
effects of change in current assets—
Assuming current liabilities remain constant—on firm’s Return on Investment (ROI)
.
 CA= Opening CA (2205.75) - Closing CA (2796.17) = -590.42
2012-2013
2013-2014
0
0.1
0.2
0.3
0.4
0.5
0.6
WC
Leverage
2012-2013
2013-2014
2012-2013
2013-2014
0
100
200
300
400
500
600
∆CA
2012-2013
2013-2014

PARTICULARS BALANCE ON 31ST MARCH
2012-13 2013-14 INCREASE DECREASE
CURRENT ASSETS Rs. In lakh Rs. In lakh
CASH + BANK
BALANCE 635.84 506.57 129.27
BILL RECEIVABLE 0 0 0 0
TRADE RECEIVABLES 987.39 1435.98 448.008
STOCKS/ INVENTORIES 314.08 512.73 198.65
PREPAID EXPENCES 0.04 0.54 0.5
TOTAL (A) 1937.35 2455.82 647.158 129.27
CURRENT LIABILITIES 2012-13 2013-14 INCREASE DECREASE
Rs. In lakh Rs. In lakh
SUNDRY CREDITORS 506.66 285.27 221.39
BILLS PAYABLES 0 0 0 0
BANK OVERDRAFT 191.92 200.91 8.99
OUTSTANDING
EXPENSES 145.73 364.63 218.9
PROVISIONS FOR
TAXES 49.27 48.53 0.7
TOTAL (B) 893.58 899.34 227.89 222.09
(A)-(B)= 1043.77 1556.48
875.048 351.36
NET
WORKING
CAPITAL 523.688
F UN D F L OW ST AT EME NT

OBSERVATION
1. Current asset > current liabilities
INFERENCE
1. Chance of making profit
2. Debtors are realisable which means less chance of bad
debts
3. Can easily pay-out its liabilities
4. Effective funds management
5. Inventories are readily saleable
SOURCES AND APPLICATION OF FUNDS
SOURCES CASH + BANK BALANCE
BILL RECEIVABLE
TRADE RECEIVABLES
STOCKS/ INVENTORIES
PREPAID EXPENCES
APPLICTION OF
FUNDS SUNDRY CREDITORS
BILLS PAYABLES
BANK OVERDRAFT
OUTSTANDING EXPENSES
PROVISIONS FOR TAXES

Definition: A balance sheet that displays both the numeric value of all entries and the
percentage each entry is relative to the total value of related entries. On a common
size balance sheet, an asset is compared to total assets, a liability to total liabilities
and stockholder equity to total stockholder equity
Rs IN lakh Rs IN lakh
LIABILITIES 2013-14 TOTAL % 2012-13 TOTAL %
A NON CURRENT LIABILITIES 46.32 1.656522 107.32 4.883932
A) LONG TERM BORROW 0.29 62.01
B) DEFERRED TERM LIABILITY 46.03 45.51
B CURRENT LIABILITIES 2749.9 98.34348 2090.09 95.11607
A) SHORT TERM LIABILITIES 2051.67 1388.43
B) TRADE PAYABLES 285.27 506.66
C) OTHER CURRENT LIABILITIES 364.43 145.27
D) SHORT TERM PROVISIONS 48.53 49.27
TOTAL 2796.22 100 2197.41 100
COMPARITIVE COMMON SIZED BALANCE
SHEET
LIABILITIES:

Rs IN lakh Rs IN lakh
ASSETS 2013-14 TOTAL %
2012-
13 TOTAL %
A NON CURRENT ASSETS 1310.66
31.9
1
1279.5
6
36.7
1
A) FIXED ASSETS 110.78
116.9
7
B) NON CURRENT INVESTMENTS 287.01 41.28
C)
LONG TERM LOANS AND
ADVANCES 912.8
1121.
17
D) OTHERS 0.07 0.17
B CURRENT ASSETS 2796.17
68.0
9
2205.7
5
63.2
9
A) INVENTORY 512.73
314.0
8
B) TRADE RECEIVABLES 1435.98
987.3
9
C) CASH 506.57
635.8
4
D)
SHORT TERM LOAN AND
ADVANCES 119.32
112.2
2
E) OTHERS 221.17
156.2
2
TOTAL 4106.83
3485.3
1 100
ASSETS:

Observation and INFERENCE
1. Decrease in non-current liabilities.
2. Deferred long term liability contains deferred tax that is calculated
using different tax laws which need to be paid
Reasons:
 We can see that the long term loans has been paid off thus we can
conclude that the
 Company is in good financial condition. It is a profitable situation as
there is no burden on its assets.
 Inflow of funds
3. Increase in current liabilities
4. Company other liabilities has increased
Reasons:
 Credit purchases does not dilute cash
 Lots of unsettled liability dues which decreases the credit worth of
the company
 Increase in Advance Income
5. Decrease in non-current assets
Reasons
 Overall noncurrent assets have decreased due to depreciation
 Due to purchase of more fixed assets the value has increased
6. Increase in current assets
Reasons:
 More blockage of funds in stocks and debtors
 More credit sales
 Easy Credit facility

SUMMARY:
The study report focuses on working capital management of Multimoney
Forex Ltd. by analysis of the Balance sheet of the company from 2012-2013
and 2013-2014.
This study report is divided into three chapters, Introduction, presentation and
analysis of data and conclusions and recommendations.
First chapter:
In this chapter, we have discussed briefly about the foreign exchange in India
and introduction to Multimoney Forex ltd, its head office, branches,
organisational structure,
Shareholder pattern, products and services offered and SWOT analysis of the
company.
Second chapter:
In the second chapter we include the analysis part with the help of the data
collected from Balance Sheet/Annual report of Multimoney Forex Ltd 2012-
2013 and 2013-2014. The analysis has been done using tools like Ratio
analysis, Fund flow statement and Comparative common sized balance sheet.
Third chapter:
In the third chapter includes the summary, conclusion and recommendations.
In this chapter the full analysis of the annual report is explain in the
Conclusion section and recommendation is provided.

CONCLUSION:
By analysing the financial statements of the Multimoney Forex Limited we find that:
 The ideal CURRENT RATIO is 2:1; the company possess a ratio of 10.2:1
which is higher than the ideal ratio so company has more liquidity for payment
of current liabilities
Thus there is a Decrease in ease of payment of current liabilities
 The company holds a good amount of inventory. Here the inventory is good
for the company due to favourable market condition and high fluctuating
demand thus holding inventory is positive for the company.
The company does not follow any specific Inventory Control Techniques.
They mainly follow JIT concept and buy whenever necessary from it fixed
number of vendors.
 Debtor’s collection is taking more time than the expectation which has
increased inventory turnover days a bit more than normal days but in this
market condition it is quite healthy. Moreover as this is a Foreign exchange
company there is continuous inflow of currency due to which such a high
turnover
 This graph shows that there is 35% and 21% increase in current assets in
2013 and 2014 respectively. This increase is arising because there is approx.
50% increase in inventories. Increase in current assets shows the liquidity
soundness of company.
 Due to availability funds of banks liability has paid off which decreases the
liability of the company and increased the credit rating of the company
 As risk increases, profitability of firm tends to increase. Thus Working Capital
Leverage (WCL) may be defined as the ability of the firm to magnify the
effects of change in current assets—
assuming current liabilities remain constant—on firm’s Return on Investment
(ROI)
 It has wide scope in increasing it turnover above its competitors by using
untapped potentials lying within like Advertising, Extensive campaigning, retail
stores in Airports.

RECOMMENDATIONS
 Sweep accounts: Use sweep accounts through your financial institution.
This will allow you to earn interest on any excess cash balances by
"sweeping" or transferring the funds into an interest-bearing account
when the funds aren't needed and sweeping them back to your operating
account when you do need them
 If you have unproductive assets that the business is just storing, then
it's time to get rid of them. The only reason you should spend money on
assets such as buildings, equipment and vehicles is to generate revenue.
 The company now doesn’t follow in inventory control techniques but
they follow the trend of the market to decide when to hold inventory
which sometimes causes a low inventory turnover , thus it can follow
JIT (just-in-time) so that inventory does not lie utilised
 The company absolute ratio status show that company has lot of funds
locked with its debtors so can improve the speed to Debtors collection
system.
 Negotiate longer payment terms with your vendors whenever possible
to keep your money longer.
 It has wide scope in increasing it turnover above its
competitors by using untapped potentials lying within like
Advertising, Extensive campaigning, retail stores in Airports.
 It can start In-ward transfer to generate more revenue and turnover.
 The company should incorporate a toll-free helpline number for much
better reach to its customers.

BIBLIOGRAPHY:
1. Balance-sheet of Multimoney Forex Ltd. 2012-2013
2. Balance-sheet of Multimoney Forex Ltd. 2013-2014
3. Profit –loss statements of Multimoney Forex Ltd. 2012-2013
4. Profit –loss statements of Multimoney Forex Ltd. 2013-2014
WEBLIOGRAPHY:
1. Small Business choron http://smallbusiness.chron.com/
2. Entrepreneur http://www.entrepreneur.com/
3. Investopedia http://www.investopedia.com/
4. Wikipedia https://en.wikipedia.org/wiki/Main_Page
5. Moneycontrol.com http://www.moneycontrol.com/financials/
6. Rediff.money http://money.rediff.com/companies/

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