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CHAPTER - 1
INTRODUCTION
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INTRODUCTION:-
1.1 . INTRODUCTIONOFWORKINGCAPITALMANAGEMENT
THEMAJOROBJECTIVEOFTHISSTUDY ISFORTHEPROPERUNDERSTANDINGOFTHEWORKING
CAPITAL OF APNA CIRCLE INFOTECH PVT. LTD. AND TO SUGGESTNECESSARY MEASURES TO
OVERCOMETHESHORTFALLSIFANYINTHEINDUSTRY.
The project undertaken is on Working Capital Management of Apna Circle InfoTech Pvt. Ltd..
It describes about how the company manages its working capital and the various steps that are
required in the management of working capital. Cash is the lifeline of a company. If this lifeline
deteriorates, so does the company's ability to fund operations, reinvest and meet capital
requirements and payments. Understanding a company's cash flow health is essential to making
investment decisions. A good way to judge a company's cash flow prospects is to look at its
Working Capital Management (WCM).
Working capital refers to the cash of a business requires for day-to-day operations or, more
specifically, for financing the conversion of raw materials into finished goods, which the
company sells for payment. Among the most important items of working capital are levels of
inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a
company's efficiency and financial strength.
The working capital is an important yardstick to measure the companys operational and financial
efficiency. Any company should have a right amount of cash and lines of credit for its business
needs at all times. This project describes how the management of working capital takes place at
Apna Circle InfoTech Pvt. Ltd.
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There are numerous instances in the history of business world where inadequacy of working
capital has led to business failures when a firm finds it difficult to meetings day to day affairs.
Operating expenses essential out lays may have to be postponed for want of funds, operating
plans will go out of gear & enterprise objectives on investment slumps the suppliers & creditors
of the firm may have to wait longer to raise their dues & will hesitate to extend further credit to
the firm.
Thus efficient management of working capital in an important prerequisite for successful
working of a business concern it reduces the chances of business failure generates a felling of
security and confidence in the minds of personnel in the organization it assurance solvency of
steady of the organization.
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1.2.IMPORTANCEOFTHESTUDY.
1. This projects is helpful in knowing the companys position of funds maintenance and setting
the standards for working capital inventory levels, current ratio level, quick ratio, current asset
turnover level & size of current liability etc.
2. This project is helpful to the managements for expanding the dualism & the project viability &
present availability of funds.
3. This project is also useful as it combines the present year data with the previous year data and
thereby it shows the trend analysis, i.e. increasing fund or decreasing fund.
4. The project is done as a whole entirely. It will give overall view of the organization and it is
useful in further expansion decision to be taken by management.
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1.3. OBJECTIVES OF THE STUDY
To study the various proportions of working capital of Apna Circle InfoTech Pvt. Ltd...
To find out different ratios related with working capital.
To check the impact of cash flows on working capital of Apna Circle InfoTech Pvt. Ltd..
To know the current trend of Assets and Liabilities.
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1.4. RESEARCH METODOLOGY
The research methodology incorporates all the function which helps a researcher to get their work
more efficiently and effectively. Research Methodology is the important aspect of project in any
field. It has very high place in working capital analysis , While analyzing working capital a
person should be aware in regard with collection and analysis of Data .I have put my all efforts in
collecting the accurate and real data collection. So I have tried my level best to collect the
sources of data collection by the help of my guide and through internet. I have collected data
from the various sources like various year financial data of the company. This kind of
information helps me to analysis the financial position of the company. Data collected from the
primary source and the secondary source of the company.
In the first group I am include those methods which are concerned with the collection of
data. These methods will be used where the data already available are sufficient to arrive
at the required solution.
The second group consists of those statistical techniques which are used to establish
relationships between the data and the unknown.
The third group consists of those methods which are used to evaluate the accuracy of the
obtained results.
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1.5. LIMITATIONS OF THE STUDY
Based on financial statements these statements suffer from certain limitations.
Affected by window dressing.
Company provides only secondary data, so certain type of bias is in study.
Unsuitable for forecasting.
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CHAPTER -2
INRTRODUCTION OF THE TOPIC
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INTRODUCTION OF THE TOPIC:-
2.1. Definition of Working Capital:-
According to C.W. Gestenbergh-
Working capital is ordinarily defined as the excess of the current assets over current liabilities.
According to Lawrence. J. Gitmen
The most common definition of working capital is the difference of the
firms current assets and current liabilities.
Definition of working capital management:-
Working capital management involves the relationship between a firm's short-term assets and its
short-term liabilities. The goal of working capital management is to ensure that a firm is able to
continue its operations and that it has sufficient ability to satisfy both maturing short-term debt
and upcoming operational expenses. The management of working capital involves managing
inventories, accounts receivable and payable, and cash.
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Management of working capital
Guided by the above criteria, management will use a combination of policies and techniques for
the management of working capital. These require managing the current assets - generally cash
and cash equivalents, inventories and debtors. There are also a variety of short-term financing
options which are considered.
Cash management identify the cash balance which allows for the business to meet
day to day expenses, but reduces cash holding costs.
Inventory management - identify the level of inventory which allows for
uninterrupted production but reduces the investment in raw materials and hence increases
cash flow; see Just In Time (JIT) and Economic order quantity (EOQ).
Debtors management - identify the appropriate credit policy, i.e. credit terms which
will attract customers, such that any impact on cash flows and the cash conversion cycle
will be offset by increased revenue and hence Return on Capital (or vice versa); see
Discounts and allowances.
Short term financing - inventory is ideally financed by credit granted by the
supplier; dependent on the cash conversion cycle, it may be necessary to utilize a bank
loan (or overdraft), or to "convert debtors to cash" through "factoring".
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TYPES
Working capital can be classified either on the basis of concept or on the basis of periodicity of
its requirement.
1. ON THE BASIS OF CONCEPT: - On the basis of concept working capital is of 2
types.
Gross working capital - Gross working capital is represented by the total Current
assets.
Gross working capital = Total current assets
Net working capital: - Net working capital is the excess of current assets over
current liabilities.
Net working capital = Current assets Current liabilities
2.
On the basis of requirement working capital is also of 2 types.
Permanent working capital - It is that amount of investment which should always
be there in the fixes or minimum current assets like inventory, accounts receivables or
cash balance etc. to carry out business smoothly. Such an amount cant be reduced if the
firms want to carry on business operations without interruption.
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Variable working capital -The excess amount of working capital over permanent
working capital is known as variable working capital. It may also be subdivided into two
parts.
a) Seasonal working capital - Such capital is required to meet out the
seasonal demands of busy periods occurring at stated intervals.
Special working capital - Such capital is required to meet out the extra-ordinary
needs for contingencies. Events like strike, fire, unexpected competition, rising price
tendencies, or initiating a big advertisement campaign require such capital.
2.2. DETERMINANTS
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1) Nature of business The effect of the general nature of the business on working
capital requirements cant be exaggerated. Rail, roads and other public utility services have
large fixes investment so they have the lower requirements of current assets. Industrial and
manufacturing enterprises, on the other hand, generally require a large amount of working
capital.
2) Production policies if the production is evenly spread over the entire year, working
capital requirements are greater, because the inventories will be unnecessarily accumulated
during of season period. But if the production schedule favours a varying production plan
as per the seasonal requirements, working capital is required to a greater extent during a
specified season only. The production policies are affected by so many factors availability
of raw materials, labour, stocking facility etc & therefore, whatever the productions policies
are, the firm has to arrange its working capital requirements accordingly.
3) Proportion of the cost of raw materials to total cost - In those industries where
cost of proportion is a large proportion of total cost of the goods produced, requirements of
working capital will be comparatively large.
4) Length of period of manufacturing The time which elapses between the
commencement and end of the manufacturing process has an important bearing upon the
requirements of working capital. The manufacturing cycle may be shorter for certain
concerns & longer for others- it depends on the type of the product to be manufactured,
work to be done through machine labour & hand labour, degree of rationalization of
manufacturing procedures through times, motion & fatigue studies etc.
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Main components of working capital are as follows:
1) Cash Cash is the most liquid and important component of working capital. Holding cash
involves cash in the sense that the present worth of cash held for a year is less than the
value of cash on today. During inflationary situations as exist today the cost of holding
includes the deterioration in the value of the cash due to inflation. Cash, therefore, results in
enhanced liquidity, but lower profitability. Despite in the cost involved it is pertinent to
hold cash because it facilitates the attainment of some important motives.
2) Marketable Securities Though marketable securities provides a such lower yield
that the firms operation assets. They serve two useful functions. Firstly, they act as a
substitute for cash, and secondly, are used as temporary investment. Where these securities
are held in lieu of the cash balance, they act as a substitute for transactional or
precautionary balances. Normally, these arent used as speculative balances, but only as a
guard against the possible shortage of bank credit.
Marketable securities (as temporary investment) may be held for one of the following
reasons:
Seasonal or cyclical operations
To meet known financial requirements. Construction of an additional plant.
Immediately after the sale of long-term securities.
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3) Account Receivable - Though accounts receivable are a vital investment of any
business organization, little analytical work as been done to determine credit policies.
Maintaining account receivable has its cost implications in that the firms monetary
resources are tied up. This is of greater significance in the inflationary economy, because of
the depreciation in the value of money. Basically, this is a two-step account. When goods
are shipped, inventories are reduced and accounts receivable is created. When payment is
made, this account is reduced and the cash level increases. Accounts receivables are,
therefore a function of the volume of credit sales and the average length of time between
sales and collections.
4) Inventory Inventories represent a substantial amount of a firms current assets.
Management of inventories should be efficiently carried out so that this investment doesnt
become too large, as it would result in blocked capital which could put to productive use
elsewhere. On the other hand, having too small an inventory could result in loss of sale or
loss of customer goodwill. An optimum level of inventory should therefore be maintained.
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2.4. Working Capital Cycle:
Cash flows in a cycle into, around and out of a business. It is the business's life blood and every
manager's primary task is to help keep it flowing and to use the cash flow to generate profits. If a
business is operating profitably, then it should, in theory, generate cash surpluses.
If it doesn't generate surpluses, the business will eventually run out of cash and expire. Click here
for more information about the vital distinction between profits and cash flow.
The faster a business expands the more cash it will need for working capital and investment. The
cheapest and best sources of cash exist as working capital right within business. Good
management of working capital will generate cash will help improve profits and reduce risks.
Bear in mind that the cost of providing credit to customers and holding stocks can represent a
substantial proportion of a firm's total profits.
There are two elements in the business cycle that absorb cash - Inventory (stocks and work-in-
progress) and Receivables (debtors owing you money). The main sources of cash are Payables
(your creditors) and Equity and Loans.
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Each component of working capital (namely inventory, receivables and payables) has two
dimensions. TIME and MONEY. When it comes to managing working capital - TIME IS
MONEY. If you can get money to move faster around the cycle (e.g. collect monies due from
debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels
relative to sales), the business will generate more cash or it will need to borrow less money to
fund working capital. As a consequence, you could reduce the cost of bank interest or you'll have
additional free money available to support additional sales growth or investment. Similarly, if
you can negotiate improved terms with suppliers e.g. get longer credit or an increased credit
limit; you effectively create free finance to help fund future sales.
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RECEIVABLES MANAGEMENT
INTRODUCTIONThe term receivable is defined as debt owed to the firm by customers arising from sale of goods
or services in the ordinary course of business. When a firm makes an ordinary sale of goods or
services and doesnt receive payment, the firm grants trade credit accounts receivable, which
could be collected in the future. Receivables Management is also called trade credit management.
OBJECTIVE
The objective of receivables management is to promote sales and profits until that point is
reached where the return on investment in further funding receivables is less than the cost of
funds raised to finance that additional credit.
BENEFITS
Investments in receivables involve both benefits and costs. The extension of trade credit has a
major impact on sales, costs and profitability. Other things being equal, a relatively liberal policy
and, therefore, higher investments in receivables, will produce larger sales. However, costs will
be higher with liberal policies than with more stringent measures.
Therefore, accounts receivables management should aim at a trade-off between profit (benefit)
and risk (cost).
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INVENTORY MANAGEMENT
INTRODUCTION
Inventories constitute the principal item in the working capital of the majority of trading and
industrial companies. In inventory we include raw materials, finished goods, work-in-progress,
supplies and other accessories. To maintain the continuity in the operations of business
enterprises, a minimum stock of inventory is required.
Management of inventory is designed to regulate the volume of investment in goods on hand and
the types of goods carried in stock to meet the needs of production and sales while at the same
time, the investment in them is to be kept at a reasonable level.
CONCEPT
The inventory management is used in two ways- Unit Control and Value Control. Production
and purchase officials use this word in term of unit control whereas in accounting this word
is used in term of value control .Investment in inventory is one the largest asset item of
business enterprises particularly those engaged in manufacturing.
The proper management and control of the capital invested in the inventory should be the prime
responsibility of accounting department because resources invested in inventory arent earning a
return for the company. Rather, on the other hand, they are costing the firm money both in terms
of capital costs being incurred and loss of opportunity income that is being foregone.
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OBJECTIVES
The basic managerial objectives of inventory control are two-
1) The avoidance of over-investment or under-investment in inventories.
2) To provide the right quantity of standard raw material to the production department at the right
time.
TECHNIQUES OF INVENTORY CONTROL
1) The Selective Inventory Control or ABC System of Control
2) Maximum Stock Limit
3) Minimum Stock Limit
4) Re-ordering Level
5) Economic Order Quantity
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ABC System of Control
The various inventory items are, according to this system, categorized into three classes-
1) A
2) B
3) C
The item included in-group involve the largest investment. Therefore, inventory control
should be the most rigorous and intensive and the most sophisticated inventory control
techniques should be applied to these items. The C group consists of items of inventory which
involve relatively small investments although the numbers of items is fairly large. These
items deserve minimum attention. The B group stands midway. It deserves less attention than
A but more than C. It can be controlled by employing less sophisticated techniques.
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Maximum Stock Limit
This represents the quantity if inventory above which it should not be allowed to be kept. The
following formula may be applied to calculate the maximum stock-
Maximum Stock = Reorder Level Minimum Consumption during
Minimum Lead Time + Lot Size.
Minimum Stock Limit
This represents the quantity below which stock should not be allowed to fall. The main purpose
of this level is to ensure that production isnt held up due to storage of any material.
Minimum Stock Limit = Re-order Level Normal storage during Lead Time
Re- Ordering Level
It is the point at which if stock of the material in store reaches, the storekeeper should initiate the
purchase requisition for fresh supplies of the material. This level is fixed somewhere between the
maximum and minimum levels in such a way that the difference of quantity of the material
between the reordering level and the minimum level will be sufficient to meet requirements of
production up to the time of fresh supply of the material.
The reorder point = Lead time in days * Average daily usage of inventory
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Economic Order Quantity
It is the quantity of inventory, which can be reasonably ordered at a time and purchased
economically. It is also known as Standard Order Quantity or Economic Lot Size. By definition
Economic Order Quantity is that size or order at which the total cost of ordering and holding are
the minimum. In determining the economic order quantity the problem is one to set a balance
between two opposing costs, namely, namely ordering costs and carrying costs. The ordering
costs are basically the costs of getting an item into the firms inventory.
Carrying costs, sometimes also known as holding costs are the costs of possessing the materials.
These costs are combined known as Associated Costs.
Hence, the management tries to reconcile them and this reconciliation point is economic order
quantity.
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CHAPTER 3
PROFILE OF THE ORGANIZATION
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3.1. INTRODUCTION OF THE COMPANY
ApnaCircle is a Viadeo Group Co. and is Indias first and leading Business and Career
networking site. Professionals can use the network to enhance their career prospects, discover
business opportunities, build relationships with new contacts and create their effective online
identities. Most people familiar with technology-driven businesses of any type will associate the
word ecosystem with technology, solutions, service, and sales partners. This is correct. However,
the concept of ecosystem is much broader and applies to any type of organisation. It covers all
generic groups of people and organizations who, in a way or another, have a direct or indirect
interaction with the company and on any matter. With this definition, a companys business
ecosystem includes; all types of media (print, online, broadcast, as well as blogs), industry and
financial analysts, academics, clients and client associations, sales and technology partners,
industry alliances and associations, standard and regulatory bodies, governments and
administrations, non-governmental organisations, employees and trade unions. In specific cases,
but not rare ones, citizens and associations of citizens must also be taken into consideration.
Communication and Public Affairs professionals use the term of Stakeholders that cover many
parts of the ecosystem, but not all. It does matter because the agenda, opinion, actions and
reactions of each constituency have or can have an impact on the companys business. Below are
presented the most common reasons to engage with specific parts of the ecosystem. This list is by
far not exhaustive.
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In the previous post, we have seen that B2B buyers prefer to take information and advice
from trusted sources, their peers and recognized third parties (journalists, experts, analysts).
Paving the way to sales requires engaging with these influencers. It is or should be the
primary job of marketing. Public Relations and Industry Analyst Relations also play a role
there.
Organisations and people who influence regulations have an impact on the companys
business. It is therefore important to know their plans and be able to explain and defend the
companys agenda, via direct or indirect contacts. It is the space of Public and Regulatory
Affairs and Lobbying.
Listed companies need to manage their relationship with the financial community. This is the
space of Investor Relations.
Many companies have activities that can directly impact citizens and must therefore manage
the opinion and reactions of impacted groups and individuals. For example, a construction
company chartered to build a motorway will face the reactions of people who lose their
property or perceive a loss on their quality of life. Managing such situations is a Public
Affairs and Public Relations matter.
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Companies above a certain size and their leadership team are constantly exposed to the
judgment of public opinion, and must manage their image and reputation. This is or should
be a crucial role for top executives supported by the various communication teams
Last but not least, in almost all industries, companies of all size are competing to attract and
retain talents. This is so crucial that the concept of employers branding has emerged. This is
a role for Human Resources but with implications in terms of Corporate Communication,
Public Relations, and Internal Communication. The critical point is that strength or a
weakness with one constituency will often have a high impact with others constituencies and
this often beyond rational aspects. As a dramatic example, think about the worldwide
negative impact for BP of the platform explosion in the gulf of Mexico in 2010. Many
groups of stakeholders, not all of them located in the impacted area, expressed their concern
and issues and there was a synergetic effect to at least temporarily destroy the companys
image.
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RESEARCH METHODOLOGY
When we talk of research methodology, we not only talk of the research methods but also the
comparison of the logic behind the methods, we used in this context of our research study and
explain why we are using a particular method or technique and why using the others. Research
methodology is a way to systematically solve the research problem. It may be understood as a
science of studying how research is done systematically. In this, we study the various steps that
are generally adopted by researcher in studying his research problem along with the logic behind
them.
The present study is based upon the case study method of research to investigate procedures at
micro level.
As the study is analyzing probing in nature, thus, entirely based on the secondary data gathered
through the annual reports of the industry. Therefore it provides a historical perspective of
decisions.
RESEARCH
Research refers to search for knowledge. Research is an original contribution to the existing stock
of knowledge making for its advancement. It is the pursuit of truth with the help of study,
observation, comparison and experiment. In short, the search for knowledge through objective
and systematic method of finding solution of the problem is research. The advance learners
dictionary of current English gives the meaning of research a careful investigation or inquiry
especially through search for new facts in any branch of knowledge.
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4.1. RESEARCH METHODS
Research methods may be understood as those methods/techniques that are used for conduction
of research. All those methods which are used by the researcher during the course of studying his
research problem are termed as research methods. Keeping in view, the research methods can be
put into following three groups:
In the first group we include those methods which are concerned with the
collection of data. These methods will be used where the data already available are
sufficient to arrive at the required solution.
The second group consists of those statistical techniques which are used to
establish relationships between the data and the unknown.
The third group consists of those methods which are used to evaluate the accuracy
of the obtained results.
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Secondary data
Secondary data are those which have already been collected by someone else and have already
been passed through statistical process. In this project report, both types of data have been used.
Mainly, secondary data is used such as annual reports of last five years of Apna Circle InfoTech
Pvt. Ltd.
4.3. Statistical Tools
Ratio Analysis
Trend Analysis
4.4. Data Representation
Tables
Pie charts
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CHAPTER- 5
Data Analysis & Interpretation
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CURRENT RATIO
Current ratio indicates ability of the company to meet the current obligation i.e., the current
assets must be sufficient to pay as and when the latter matrices. The standard ratio is 2:1, the
current ratio is calculated by using the formula:
Current assets
Current ratio = --------------------------
Current liabilities
YEAR CURRENT ASSETS CURRENTLIABILITIES RATIO
2006-07 23,33,30,395.13 18,90,06,552.17 1.234
2007-08 12,09,66,623.21 14,22,10,762.18 0.85
2008-09 14,13,26,040.41 14,78,60,117.24 0.955
2009-10 32,30,19,288.99 20,38,85,067.19 1.584
2010-11 31,32,95,829.13 21,93,27,902.79 1.428
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Diagram: -
INTERPRETATION:-
The current ratio was 1.234 in the year 2006 2007 and the year 2007-
2008 the current ratio was 0.85 and in the year 2008 -2009 the current ratio was 0.955 this show
the current ratio has increase every year but in the year 2009-2010 the current ratio was
decreased to 1.584 . In the year 2010 2011 the current ratio has increases 1.428.The current
ratio is above the standard of 2: 1 ratio and hence it can be said that there is enough working
capital in the Apna Circle InfoTech Pvt Ltd to meet its current liabilities.
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QUICK RATIO
Quick ratio are acid test ratio ignores less liquidity assets like inventory. This
takes account readily available cash and other assets which are quickly converted into cash. The
standard is ratio is 1:1. The general principle of quick ratio is as follows:
Liquid Assets
Quick ratio = --------------------------------
Current liabilities
YEAR QUICK ASSETS CURRENT LIABILITIES RATIO
2006-07 1,36,67,591.83 18,90,06,552.17 0.072
2007-08 2,44,16,882.94 14,22,10,762.18 0.169
2008-09 2,83,90,812.06 14,78,60,117.24 0.192
2009-10 1,86,38,461.57 20,38,85,067.19 0.091
2010-11 3,39,59,496.91 21,93,27,902.79 0.154
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INVENTORY TURNOVER RATIO
Turnover ratio is also known as stock velocity. This ratio is calculated to consider the adequacy
of the quantum of capital and its institution for investing in inventory.
A firm must have reasonable stock in caparison to sales. It is the ratio of cost of sales and
average inventory of. This ratio helps the financial managers to calculate inventory policy. This
ratio reveals the number of times finished stock is turned over during a given accounting period.
The ratio is used for measuring the profitability. These are the various ways in which stock
turnover ratio may be calculated.
Net sales
Inventory turnover ratio = --------------------------------
Average Inventory
YEAR NET SALES AVERAGE INVENTORY RATIO
2006-07 20,14,86,573.36 23,41,47,889.61 0.86
2007-08 13,05,17,436.90 13,75,97,979.61 0.948
2008-09 9,66,54,360.90 8,31,65,010.43 1.162
2009-10 12,37,19,616.75 10,30,03,384.82 1.201
2010-11 36,88,53,566.89 18,47,71,625.02 1.996
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Diagram: -
INTERPRETATION:-
The Inventory turnover ratio was 0.86 in the year 2006 2007 and the year 2007-2008 the
current ratio was 0.948 and in the year 2008 -2009 the current ratio was 1.162 this show the
current ratio has increase every year but in the year 2009-2010 the current ratio was decreased to
1.201 . In the year 2010 2011 the inventory turnover ratio has increases 1.996.
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CASH POSITION RATIO
Cash in the most liquid asset, a financial analyst may examine the ration of cash and its
equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash,
therefore, they may be included in the computation of cash position ratio.
Cash + marketable securities
Cash Position Ratio = ---------------------------------------------
Current liabilities
YEAR CASH+MARKETABLE
SECURITIES
CURRENT
LIABILITIES
RATIO
2006-07 53,79,219.50 18,90,06,552.17 0.028
2007-08 1,59,03,764.68 14,22,10,762.18 0.111
2008-09 2,00,18,991.55 14,78,60,117.24 0.135
2009-10 79,51,888.86 20,38,85,067.19 0.039
2010-11 4,56,44,654.96 21,93,27,902.79 0.208
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Diagram: -
INTERPRETATION :-
The cash position ratio is inadequate as there are ups and downs during the year. The above ratio
indicates that the company is unable to quickly realize its current liabilities it is not good enough.
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WORKING CAPITAL TURNOVER RATIO
Working capital of a concern is directly related to sales. The current assets like debtors,
bills receivable, cash, and stock etc., change with the increase or decrease in sales. The working
capital is taken as:
Working capital =current assets-current liabilities
This ratio indicates the velocity of the utilization of net working capital. This ratio
indicates the number of times the working capital is turned over in the course of a year. The ratio
measures the efficiency with which the working capital is being used by a firm. A higher ratio
indicates the efficient utilization of working capital and the low ratio indicates inefficient
utilization of working capital.
SALES
WORKING CAPITAL TURNOVER RATIO = -------------------------------
NET WORKING CAPITAL
Year NETSALES NET WORKING CAPITAL RATIO
2006-07 20,14,86,573.36 4,43,23,842.96 4.545
2007-08 13,05,17,436.81 2,12,44,138.97 6.143
2008-09 9,66,54,360.90 1,35,34,076.83 7.141
2009-10 12,37,19,616.75 11,91,34,221.80 1.038
2010-2011 36,88,53,566.89 9,39,67,926.34 3.925
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Diagram: -
INTERPRETATION :-
This ratio indicates the velocity of the utilization of net working capital. This ratio
indicates the number of times the working capital is turned over in the course of a year. The ratio
measures the efficiency with which the working capital is being used by a firm. This ratio
indicates the number of times the net sales met with the working capital for the year. The
turnover of the working capital has highly increasing from 2006-2007 to 2008-09.
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5.2. DATA ANALYSIS
SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2006-07
PARTICULARS 2006 2007 Increase Decrease
CURRENTASSETS:
Cash on hand 42159.91 1283980.24 1241820.33 -------------
Balances with bank 494953.16 4095239.26 3600286.1 -------------
Interest Receivable 1826488.57 1826488.57 ------------ ------------
Closing stock 292692156.2 219662803.7 ------------ 73029352.5
Total current assets
A
295055757.8 226868511.7
LIABILITIES:
Outstanding Interest 4429829.45 6094477.9 ------------ 1664648.45
Total current liabilities-
B
4429829.45 6094477.9
Working Capital
(A-B)
290625928.3 220774033.8
Net decrease in
working Capital
69851894.5 69851894.5
290625928.3 290625928.3 74694000.95 74694000.95
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SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2007-08
Effect of working capital
PARTICULARS 2007 2008 Increase Decrease
CURRENT ASSETS:
Cash on hand 1283980.24 22575.2 ------------ 1261405.04
Balances with bank 4095239.26 15881189.48 11785950.22 ------------
Interest Receivable 1826488.57 1826488.57 ------------ ------------
Closing stock 219662803.7 96849740.27 ------------ 122813063.4
Total current assets -A 226868511.7 114579993.5
LIABILITIES:
Outstanding Interest 6094477.9 27190688.4 ------------ 21096210.5
Total current liabilities -B 6094477.9 27190688.4
Working Capital (A-B) 220774033.8 87389305.1
Net decrease in working
Capital
133384728.7 133384728.7
220774033.8 220774033.8 145170678.9 145170678.9
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SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2008-09
Effect of working capital
PARTICULARS 2008 2009 Increase Decrease
CURRENT ASSETS:
Cash on hand 22575.2 1878931.06 1856355.86 -------------
Balances with bank 15881189.48 18140037.49 2258848.01 -------------
Interest Receivable 1826488.57 1826488.57 ------------ -------------
Closing stock 96849740.27 110043159 13193418.73 -------------
Total current assets -A 114579993.5 131888616.1
LIABILITIES:
Outstanding Interest 27190688.4 40525798.4 ------------ 13335110
Total current liabilities
-B 27190688.4 40525798.4
Working Capital (A-B) 87389305.1 91362817.7
Net Increase in working
Capital 3973512.6 3973512.6
91362817.7 91362817.7 17308622.6 17308622.6
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SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2010-11
PARTICULARS 2010 2011
Effect of working capital
Increase Decrease
CURRENT ASSETS:
Cash on hand
141218.8
0
95082.9
2 ------------ 46135.88
Balances with bank 7254943.1
4
17849583.4
1
10594640.27 ------------
Interest Receivable 1826488.57 1826488.57 ------------ ------------
Closing stock 304641449.50 281582198.30 ------------ 23059251.20
Total current assets -A 313864100.00 301353353.20
LIABILITIES:
Out standing Interest 49024988.90 46928301.64 2096687.26 ------------
Total current liabilities -B 49024988.90 46928301.64
Working Capital (A-B) 264839111.10 254425051.50
Net Decrease in working
Capital
10414059.60 10414059.60
264839111.10 264839111.10 23105387.08 23105387.08
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CHAPTER- 6
FINDINGS, CONCLUSION
SUGGESTION AND
RECOMMENDATION
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6.1. FINDINGS
In the over all evaluation of the Working Capital Management at each and every aspect, the
following are the findings.
1. Working Capital ratio of the Apna Circle InfoTech Pvt Ltd is decreasing in all the years
which indicate poor liquidity position of the company.
2. Inventory turn over ratio of Apna Circle InfoTech Pvt Ltd good in all the 5 years of study,
which indicates the efficient management of inventory.
3. Current ratio of Apna Circle InfoTech Pvt Ltd is highest , which is the management of
effective and efficient utilization
4. The company sales have been decreased in all the year.
5. The reserves and surplus is always accumulating every year. The company can capitalize
the reserves and Surplus.
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6.2. CONCLUSION
The study involves practical and conceptual over view of decisions concerning current assets
like cash and bank balance, inventories (like raw materials, WIP, finished goods), sundry
debtors, loans and advances, other current assets and current liabilities like sundry creditors,
securities and other deposits, other current liabilities and provisions of Apna Circle InfoTech
Pvt Ltd. Was with the objective of maximizing the overall net profit of the bank. And complete
synchronization and co ordination among the working capital components which shall
contribute to optimum level of operations. Mismanagement of each or any of these components
shall be detrimental to the objectives of efficient operation, profitability and maximization of
overall value of the bank. The working capital limits would be considered only after the project
nearing completion and after ensuring control over the inventory. The inventory is a great
concern for Apna Circle InfoTech Pvt Ltd and it needs proper procurement and management.
Eligible working capital limits would be assessed by cash Budget method And
Projected production method depending the market condition, scale of operation, nature of
activity/enterprise and duration/length of operating cycle etc.
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BIBLIOGRAPHY
Financial Management By M.Y. Khan & P.K. Jain
Financial Management By D. K. Goyal
Research Methodology By C.R.Kothari
Annual Reports of the Apna Circle InfoTech Pvt Ltd
www.google.com
www.apn.com/our_sectors/index.htm
http://corporate.apnacircle.com/
Last 5 year annual reports
ARTICLES
http://www.caclubindia.com/articles/working-capital-management-420.asp
http://www.worldaffairsjournal.org/?gclid=CJubjt-Uy7ICFY-6zAodlikAww
http://www.jpmorgan.com/tss/Knowledge_Bank_Index/Articles/1104848723729
56
http://www.google.com/http://www.apn.com/our_sectors/index.htmhttp://corporate.apnacircle.com/http://www.caclubindia.com/articles/working-capital-management-420.asphttp://www.worldaffairsjournal.org/?gclid=CJubjt-Uy7ICFY-6zAodlikAwwhttp://www.jpmorgan.com/tss/Knowledge_Bank_Index/Articles/1104848723729http://www.apn.com/our_sectors/index.htmhttp://corporate.apnacircle.com/http://www.caclubindia.com/articles/working-capital-management-420.asphttp://www.worldaffairsjournal.org/?gclid=CJubjt-Uy7ICFY-6zAodlikAwwhttp://www.jpmorgan.com/tss/Knowledge_Bank_Index/Articles/1104848723729http://www.google.com/7/28/2019 project on wcm
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ANNEXURE
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ANNEXURE
APNA CIRCLE INFOTECH PVT. LTD.
TRADING ACCOUNT FOR THE YEAR 2006
PARTICULARS AMOUNTRs. Ps.
PARTICULARS AMOUNTRs. Ps.
1.OPENING STOCK:
2. PURCHASES:
3. Expendituredebitable to trading a/c
4. Cost of productionTransferred from
Manufacturing a/c
269391356.62
15,120.00
1,75,86,673.28
16,82,44,220.70
---------------------
45,52,37,370.60---------------------
CLOSING STOCK: SALES
Misc. incomeCreditable to
Trading a/c
Gross loss
198904422.6
20,14,86,573.36
1,72,00,316.54
3,76,45,558.10
----------------------
45,52,37,370.60----------------------
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APNA CIRCLE INFOTECH PVT. LTD.
BALANCE SHEET AS ON 2006
LIABILITIES Rs. ASSETS Rs.
1. Share capital2.DEPOSITS &
BORROWINGS:a) Depositsb) Borrowings
3. Out standingInterest payable
4. Adjusting heads Due by
5. Reserves6. U.D.P7. Audit fund8. Reserve fund yet
To be invested9. Vysya bank balance
10. Bank of India11. Canara bank12. Indian bank13. Indian overseas
Bank14. S.V. Grameena
Bank15. State bank of
India16. Union bank of
India17. CDCC bank,
U.p.
18. Corporation bank
LESS:Difference betweenAssets & liabilites
Total
14,09,58,700.00
2,88,36,536.0523,56,16,210.28
60,94,477.90
18,29,12,074.2721,93,57,187.86
64,226.889,695.57
24,702.69- - -
- - -- - -- - -
- - -
- - -
- - -
- - -
- - -
- - -
-----------------------81,38,73,811.50
29,92,13,003.98-----------------------51,46,60,807.52
-----------------------
1. Cash on hand2. BALANCE WITH
BANKS:a) current accountb) savings account
3. Shares in otherCo-op. institutions
4. Deposits withVarious agencies
5. F.Ds with banks6. Loans & advances
To members7. Loans to other
Co-op. sugarFactories
8. ADJ. headsdue to
9. Interest receivable10. Value of assets11. Revaluation of
Assets12. VALUE OF
CLOSING STOCK:a) Stores stocksb) Packing materialc) Stationaryd) raw materiale) raw material process
f) other expensesg) work inprocess
h) FMP rawmaterial & feed
13. Deficits
Total
12,83,980.24
17,15,099.2723,80,139.99
2,28,550.00
12,54,825.772,50,000.00
64,61,883.31
30,00,000.00
5,44,12,361.1518,26,488.57
12,62,06,460.22
9,59,30,271.73
2,02,69,708.931,78,240.45
26,375.5019,19,96,947.80
2,54,382.07
69,07,474.80
9,290.00
20,474.2047,943.52
----------------------51,46,60,807.52
----------------------
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APNA CIRCLE INFOTECH PVT. LTD.
BALANCE SHEET AS ON 2007
LIABILITIES Rs. ASSETS Rs.
1. Share capital2.DEPOSITS &
BORROWINGS:a) Depositsb) Borrowings
3. Out standingInterest payable
4. Adjusting heads Due by
5. Reserves6. U.D.P7. Audit fund8. Reserve fund yet
To be invested
LESS:Difference betweenAssets & liabilites
Total
14,09,60,300.00
2,88,12,456.6822,38,22,462.57
2,71,90,688.40
11,50,20,073.7822,87,27,884.01
64,226.889,695.57
24,702.69
-----------------------76,46,32,490.58
36,18,46,708.05-----------------------40,27,85,782.53
-----------------------
1. Cash on hand2. BALANCE WITH
BANKS:a) current accountb) savings account
3. Shares in otherCo-op. institutions
4. Deposits withVarious agencies
5. F.Ds with banks6. Loans & advances
To members7. Loans to other
Co-op. sugarFactories
8. ADJ. headsdue to
9. Interest receivable10. Value of assets11. Rvaluation of
Assets12. VALUE OF
CLOSING STOCK:a) Stores stocksb) Packing materialc) Stationary
d) raw materiale) raw material process
f) other expensesg) work inprocess
h) FMP rawmaterial & feed
13. Deficits
Total
22,575.20
13,49,421.741,45,31,767.74
2,28,550.00
12,61,225.7722,50,000.00
63,86,629.69
10,00,000.00
5,48,94,708.0818,26,488.57
12,62,06,460.22
9,59,30,271.73
2,01,00,264.621,78,240.45
18,671.007,60,05,445.10
2,34,802.90
2,86,092.00
5,750.00
20,474.2047,943.52
----------------------40,27,85,782.53----------------------
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APNA CIRCLE INFOTECH PVT. LTD.
TRADING ACCOUNT FOR THE YEAR 2008
PARTICULARS AMOUNT
Rs. Ps.
PARTICULARS AMOUNT
Rs. Ps.
1.OPENING STOCK:
2. PURCHASES:
3. Expenditure debitableto trading a/c
4. Cost of productionTransferred fromManufacturing a/c
76291537.1
5,04,000.00
69,45,366.83
11,52,46,375.14
---------------------19,89,87,279.07---------------------
1. OPENING STOCK:a) Sugar
b) Molassesc) Pesticides
2. sales
3. Misc. incomeCreditable toTrading a/c
4. Gross loss
7,88,16,404.20
1,06,60,683.353,62,250.00
9,69,20,394.30
69,04,064.85
5323482.37
----------------------19,89,87,279.07----------------------
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APNA CIRCLE INFOTECH PVT. LTD.
BALANCE SHEET AS ON 2008
LIABILITIES Rs. ASSETS Rs.
1. Share capital2.DEPOSITS &
BORROWINGS:a) Depositsb) Borrowings
3. Out standingInterest payable
4. Adjusting heads Due by
5. Reserves6. U.D.P7. Audit fund8. Reserve fund yet
To be invested
LESS:Difference betweenAssets & liabilites
Total
14,09,61,400.00
2,91,54,179.6126,60,73,587.95
4,05,25,798.40
10,81,07,592.1924,80,88,004.02
64,226.889,695.57
24,702.69
-----------------------83,30,09,187.31
39,71,03,323.03
-----------------------43,59,05,864.28-----------------------
1. Cash on hand2. BALANCE WITH
BANKS:a) current accountb) savings account
3. Shares in otherCo-op. institutions
4. Deposits withVarious agencies
5. F.Ds with banks6. Loans & advances
To members7. Loans to other
Co-op. sugarFactories
8. ADJ. headsdue to
9. Interest receivable10. Value of assets11. Revaluation of
Assets12. VALUE OF
CLOSING STOCK:a) Stores stocksb) Packing materialc) Stationaryd) raw materiale) raw material process
f) other expensesg) work inprocess
h) Pesticidesh) FMP raw
material & feed13. Deficits
Total
18,78,931.06
91,72,861.3689,67,176.13
2,28,550.00
12,71,225.7727,50,000.00
90,85,235.94
10,00,000.00
6,70,56,511.9418,26,488.57
12,66,47,509.22
9,59,30,271.73
2,00,46,520.6493,100.0043,726.65
7,88,16,404.20--------
1,06,60,683.35---------3,62,250.00
20,474.2047,943.52
----------------------43,59,05,864.28----------------------
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APNA CIRCLE INFOTECH PVT. LTD.
BALANCE SHEET AS ON 2009
LIABILITIES Rs. ASSETS Rs.
1. Share capital2.DEPOSITS &
BORROWINGS:a) Depositsb) Borrowings
3. Out standingInterest payable
4. Adjusting heads Due by
5. Reserves6. U.D.P7. Audit fund8. Reserve fund yet
To be invested
LESS:Difference betweenAssets & liabilites
Total
14,11,40,700.00
3,10,24,046.1040,43,40,806.12
4,90,24,988.90
14,09,80,325.3626,43,09,028.13
64,226.889,695.57
24,702.69
-----------------------1,03,09,18,519.75
40,53,03,194.91
-----------------------62,56,15,324.84
-----------------------
1. Cash on hand2. BALANCE WITH
BANKS:a) current accountb) savings account
3. Shares in otherCo-op. institutions
4. Deposits withVarious agencies
5. F.Ds with banks6. Loans & advances
To members7. Loans to other
Co-op. sugarFactories
8. ADJ. headsdue to
9. Interest receivable10. Value of assets11. Revaluation of
Assets12. VALUE OF
CLOSING STOCK:a) Stores stocksb) Packing materialc) Stationaryd) raw materiale) raw material process
f) other expensesg) work inprocess
h) prepaid renth) FMP raw
material & feed13. Deficits
Total
1,41,218.80
1,66,827.1170,83,116.03
2,28,550.90
12,67,225.772,50,000.00
1,06,24,987.20
10,00,000.00
7,32,09,660.3918,26,488.57
12,91,97,586.22
9,59,30,271.73
2,06,58,101.845,87,128.50
28,089.0026,74,59,792.80
78,41,426.47
75,14,240.114,15,715.92
1,16,480.00
20,474.2047,943.52
----------------------62,56,15,324.84
----------------------
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APNA CIRCLE INFOTECH PVT. LTD.
BALANCE SHEET AS ON 2010
LIABILITIES Rs. ASSETS Rs.
1. Share capital2.DEPOSITS &
BORROWINGS:a) Depositsb) Borrowings
3. Out standingInterest payable
4. Adjusting heads Due by
5. Reserves6. U.D.P
7. Audit fund8. Reserve fund yet
To be invested
LESS:Difference betweenAssets & liabilites
Total
14,25,53,600.00
3,52,01,887.0140,57,02,422.76
4,69,28,301.64
22,91,72,904.8226,80,06,835.01
64,226.88
9,695.57
24,702.69
11,27,66,45,76.3849,89,41,043.06
------------------------62,87,23,533.32
------------------------
1. Cash on hand2. BALANCE WITH
BANKS:a) current accountb) savings account
3. Shares in otherCo-op. institutions
4. Deposits withVarious agencies
5. F.Ds with banks6. Loans & advances
To members7. Loans to other
Co-op. sugarFactories
8. ADJ. headsdue to
9. Interest receivable10. Value of assets11. Revaluation of
Assets12. VALUE OF
CLOSING STOCK:a) Stores stocks
b) Packing materialc) Stationaryd) raw materiale) raw material processf) other expensesg) work in
processh) Prepaid expensesh) FMP raw
material & feed13. Deficits
Total
95,082.98
33,80,265.9814,46,93,17.43
2,28,550.00
12,70,225.772,50,000.00
18,17,48,73.00
10,00,000.00
7,55,41,003.33
18,26,488.5713,99,27,312.64
9,59,30,271.73
1,94,14,206.14
14,70,696.5040,532.0024,67,11,289.11
62,98,460.9266,19,002.89
8,01,596.612,05,940.00
20,474.20
47,943.52
----------------------62,87,23,533.32
----------------------
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EVALUATION SHEET FOR SUMMER TRAINING PROJECT REPORT
STUDENTS NAME : ____________________________
ROLL NO. :____________________________
EVALUATORS FEEDBACK : ____________________________
____________________________
____________________________
____________________________
DID THE STUDENT CONTACT YOU REGULARLY FOR DISCUSSION?
: YES/NO (Please tick)
MARKS AWARDED :____________________________
SIGNATURE OF EVALUATOR
NAME:
DATE:
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ATTENDANCE FOR SUMMER TRAINING PROJECT REPORT
NAME OF THE STUDENT : DINESH CHAND
CLASS : M.B.A. IInd YEAR
ROLL NO. : 001
NAME OF THE SUPERVISOR : DR. V. K. AGGARWAL
DR. V. K. AGGARWAL
PROJECT GUIDE
B.P.I.B.S.
S.NO. DATE TIME PROGRESSOF REPORT
(REMARKS)
SIGNATUREOF STUDENT SIGNATUREOF
SUPERVISOR
1
2
3
4
5
6
7
8