Working capital and ratio analysis: BHEL Hyderabad

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Working capital and ratio analysis: BHEL Hyderabad

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Abstract

GROWTH : To ensure a steady growth by enhancing the competitive edge of BHEL in existing business, new areas and international operation so as to fulfill national expectations from BHEL.

PROFITABILITY: To provide a reasonable and adequate return on capital employed, primarily through improvements in operational efficiency, capacity utilization and productivity and generate adequate internal resources to finance the companies growth.

CUSTOMER FOCUS: To build a high degree of customer confidence by providing increased value for this money through international standards of product quality, performance and superior customer service.

PEOPLE ORIENTATION: To enable each employee to achieve his potential, improve his capabilities, perceive his role and responsibilities and participate and contribute positively to the growth and success of the company. To invest in human resources continuously and be alive to there needs.

OBJECTIVES OF BHEL: To achieve and maintain a leading position as supplies of Quality Equipment, Systems and Services to serve the National and International Markets in the field of energy. The areas of interest would be Conversion, Transmission and Utilization and Market Leadership.

Company profile.
1. Mission.
2. Vision.
3. Value.
4. Objectives.
5. SWOT analysis.
Product profile.
Working capital theory.
1. Reasons for using working capital.
2. Issues in working capital.
3. Risk return trade off.
4. Cash management.
Working capital tables.
1. Profit and loss statement.
2. Balance sheet.
3. Operating result.
4. Operating cycle.
5. Working capital.
Ratio analysis.
1. Liquidity ratios.
2. Activity ratios.
Suggestions.
Bibliography.

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[...] in Million) EARNINGS customers erection & services contract use divisions Total : OUTGOINGS divisions & Benefits Total : forward from last year LESS: to unit Reserve Reserve to Balance Sheet 5 YEAR WORKING CAPITAL OF BHEL HYDERABAD DIVISION (Rs. in Million) CURRENT ASSETS BALANCE CURRENT LIABILITIES CUSTOMERS RATIO ANALYSIS Ratio Analysis is the technique of interpretation of financial statements with the help of various meaningful ratios. Ratios do not add to any information that is already available, but they show the relationship between two items in a more meaningful way which helps us to draw certain conclusions. [...]

[...] Sales and demand conditions: The working capital needs of a firm are related to its sales. It is difficult to precisely determine the relationship between volume of sales and working capital needs. In practice current assets will have to be employed before growth takes place. It is therefore necessary to make advance planning of working capital for a growing firm on a continuous basis. Sales depend on demand conditions. Most firms experience seasonal and cyclical fluctuations in the demand for their products and services. [...]

[...] BHEL AN OVERVIEW BHEL is the largest engineering and manufacturing enterprise in India in the energy related/ infrastructure sector today. BHEL was established more than 40 years ago when its first plant was set up in Bhopal ushering in the indigenous Heavy Electrical Equipment industry in India, a dream which has been more than realized with a well recognized track record of performance of Rs crores with a profit before tax of Rs crores in 2002- 03. BHEL caters to core sectors of the Indian Economy viz., Power Generation & Transmission, Industry Transportation, Telecommunication, Renewable Energy, Defense, etc. [...]

[...] Execution of overseas projects has also provided BHEL the experience of working with world renowned Consulting Organizations and Inspection Agencies. In addition to demonstrated capability to undertake turnkey projects on its own, BHEL possesses the requisite flexibility to interface and complement with the international companies for large projects by supplying complementary equipment and meeting their production needs for intermediate as well as finished products. TECHNOLOGY UPGRADATION, RESEARCH & DEVELOPMENT To remain competitive and meet customer's expectations, BHEL lays great emphasis on the continuous up gradation of products and related technologies, and development of new products. [...]

[...] TURNOVER WORKING CAPITAL Capital WORKING CAPITAL TURNOVER RATIO ratio INTERPRETATION A higher Working Capital Turnover Ratio indicates the efficient utilization of the firm's funds. The Working Capital Turnover Ratio is decreasing from 1.87 to This is due to increase in inventory i.e., mainly due to P inventory. COST OF GOODS SOLD CURRENT ASSETS assets CURRENT ASSETS TURNOVER RATIO ratio INTERPRETATION The higher the Current Assets Turnover Ratio is considered good, as an indication of better efficiency of current assets. The ratio is increasing from the year 1998-99 to 2001-02 and the value is getting decreased. [...]

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