Cash Management Project
Cash Management Project
Cash Management Project
(INTRODUCTION)
INTRODUCTION
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crucial in figuring out your company's financial situation. This sum is derived by
subtracting the business's capital expenditures from the cash from operating activities.
To keep your business afloat, you should always have growing cash flows.
Checking account
Savings account
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Long term low-risk savings instrument
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NEED FOR THE STUDY
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SCOPE OF THE STUDY
The study covers advances, loans, payables, receivables, income, and cash
management system of BAJAJ CAPITAL LTD and overall aspect of cash flow.
The study covers cash size, components of cash balance, control of cash flows,
operating cash flow and cash flow statement of BAJAJ CAPITAL LTD.
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PERIOD OF THE STUDY
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LIMITATIONS OF THE STUDY
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CHAPTER II
(REVIEW OF LITERATURE)
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REVIEW OF LITERATURE
Waltson and Head (2017) has described the notion of cash management, which focuses
on increasing the amount of cash accessible, increasing the interest gained on excess
money not immediately needed, and minimising losses brought on by delays in the
transmission of funds.
Zimmerer etal (2018) However, some businesses keep an excessive quantity of cash on
hand in case any unforeseen problems materialise. Owners are neglecting the income-
earning potential of this dormant wealth, which limits a company's growth and
diminishes its profitability.
Jeffrey P. Davidson etal (2019) Cash management is crucial for startups and expanding
businesses. stated in their book that a small firm might still experience cash flow issues
even if it has a large customer base, a top-notch product to sell, and a stellar reputation
in its field.
Westerfield etal (2020) It was noted that it is important to distinguish between actual
cash management and the more general idea of liquidity management. The distinction
could be unclear since the word "cash" is used in practise in two different ways.
Mwila Mulenga (2016) Based on the assertion made by the Financial Accounting Standard Board
(FASB), which states that earnings and its components have a better predictive power than cash
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flow itself, research on the relative ability of accounting information aims to examine the ability
of accounting information to predict future cash flow and earnings (FASB,1978 para 44).
Anton Stigo etal (2018) The goal of cash management, which is also known as
management of cash flow, is to accept inflows as soon as feasible and to
postponeoutflows for as long as possible without incurring additional costs. Without
cash, companies might not be able to pay for current expenses, which increases the risk
of non-payment. Therefore, the ability to handle cash flows effectively is fundamental
to any successful firm.
Filbeck G. etal. (2018) examined the data from 26 industries using information from
970 companies between 1996 and 1999. They discovered that by reducing the amount
of money tied to current assets, businesses can lower financing costs and/or increase the
funds available for development.
Sayaduzzaman MD. (2019) By analysing five years of data from 1999-2000 to 2002-
2003, it was determined that British American Tobacco's management is extremely
reasonable as a result of the positive cash inflows and intended method in running the
key components of working capital. Ganesan (2007) employed a sample of 349 telecom
equipment manufacturers for the years 2001–2007. Current ratio, day's receivable, day's
inventory, day's payable, day's working capital, and cash conversion efficiency were the
independent variables employed.
Lazaridis and Tryfonidis (2018) Accounts payable and relationships are good. There is
no disagreement between the authors regarding the negative association between debt
financing and leverage. The variable cash conversion efficiency, which was only
employed by one author (Ganesan, 2007), shows absolutely no correlation with
profitability. Raheman and Nasr (2007) chose a sample of 94 listed Pakistani businesses
from various economic sectors across an 8-year period, from 1999 to 2004.
Current ratio, day's receivable, day's inventory, day's payable, and cash conversion
cycle were the independent variables employed. The empirical association between the
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two variables was also presented by Teruel and Martinez-Solano (2007). They selected
8872 small to medium-sized Spanish businesses as their sample, which ranged in size
from 1996 to 2002.
In Christopher and Kamalavalli (2016) They used panel data analysis to look into a
sample of 14 corporate hospitals in India from 1996–1997 to 2005–2006. Current ratio,
quick ratio, inventory turnover ratio, working capital turnover ratio, debtor's turnover
ratio, ratio of current asset to total asset, ratio of current asset to operating income,
comprehensive liquidity index, size of net liquid balance, leverage, and growth were the
independent variables used.
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RESEARCH GAP
A review of literature indicates that cash management plays an important role in the
success and continuity. A number of research studies were undertaken in order to
explain the cash management in financial markets. Besides, the available literature on
cash management practices of financial markets in the local context has certain
limitations. Firstly, majority of these studies have focused on five common aspects such
as size of cash, components of cash balance, control of cash flows, operational
adequacy cash assessment, But in this project the researcher has identified cash
management as gap where no further studies were taken up. This study intends to
address the above potential research gaps by answering following research questions;
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CASH
FORECASTING
ACCOUNT
SALES
PAYABLES
Cash management:-
Cash management is also known as treasury management, refers to the process of
collection, management, and usage of cash flows for the purpose of maintaining a
decent level of liquidity, and it involves financial instruments such as treasury bills,
certificate of deposit, and money market funds making the same substance for not just
individuals but organizations too.
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goods and services that the customer has ordered. These may be distinguished from notes
receivable, which are debts created through formal legal instruments called promissory notes.
Accounts payable:-
Accounts payable (AP) is an accounting term used to describe the money owed to vendors or
suppliers for goods or services purchased on credit.
Accounts payable (AP) is money owed by a business to its suppliers shown as a liability
on a company's balance sheet. It is distinct from notes payable liabilities, which are
debts created by formal legal instrument documents. An accounts payable department's
main responsibility is to process and review transactions between the company and its
suppliers and to make sure that all outstanding invoices from their suppliers are
approved, processed, and paid. Processing an invoice includes recording important data
from the invoice and inputting it into the company's financial, or bookkeeping, system.
After this is accomplished, the invoices must go through the company's respective
business process in order to be paid.
Cash collection:-
Cash collection is a function of[clarify] Accounts receivable. It is the recovery of cash from a
business or individual with which you have issued an Invoice.
It is the aim of the Cash collection function of a business to collect Monies for all
outstanding invoices before they become overdue and to mediate payment arrangements
to ensure that invoiced debts do not become doubtful or bad.
Cash forecasting:-
Cash flow forecasting is the process of obtaining an estimate or forecast of a company's
future financial position; the cash flow forecast is typically based on anticipated
payments and receivables. See Financial forecast for general discussion re
methodology.
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CHAPTER III
(RESEARCH METHODOLOGY)
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RESEARCH METHODOLOGY
Primary data
Primary data is the first hand information that the researcher collects. It helps in
collecting useful and most accurate information that is needed for the researcher to do
his research.
Sources:
Questionnaires
Interview schedule
Secondary data
Secondary data is what the researcher collects from the different sources like
Magazines, Annual reports, Internet, text books. It also helps researcher to get elaborate
information to do his research.
Size of cash
Components of cash balance
Control of cash flow
• Cash to total current assets ratio
• Cash to sales ratio
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• Cash to debt service ratio
• Cash to current liabilities ratio
Operational adequacy of cash
• Interval measure ratio
• Cash turnover ratio
• Cash no of days holding period
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CHAPTER-IV
1. SIZE OF CASH
FORMULA:
Amount (Rs) % Amount (Rs) % Amount (Rs) % Amount (Rs) % Amount (Rs) %
Cash at bank 4650000 23.77 4285841 23.69 2396737 20.18 2715535 19.1 2423567(Rs) 18.96
Sundry creditors 8193631 41.89 6831412 37.8 5125948 42.75 8425023 59.13 6582462(Rs) 51.52
Cash at Bajaj 5274479 26.97 5713231 31.58 1736122 19.62 188750 13.25 1813566(Rs) 14.2
capital
Loans & advances 1437163 7.35 1256961 6.95 2665231 22.45 12211 8.56 1958125(Rs) 15.32
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Interpretation: -
During the year 2016-2017 the sundry creditors is 41.89% and there is increasing in the year
2017-2018, 2018-2019, 2019-2020, 2020-2021.
2. COMPONENTS OF CASH BALANCE
FORMULA:
COMPONENTS OF CASH BALANCE: CURRENT ASSETS /TOTAL ANNUAL CASH*100
Cash in hand 32424 0.61 62277 1.09 91498 5.12 112311 6.33 135624 7.48
Cash at scheduled 5242005 99.39 5650954 98.91 1694624 94.88 1775189 93.67 1677942 92.52
Bajaj capital
Total 5274479 5713231 1786122 1887500 1813566
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120 99.39 98.91 94.88 93.67 92.52
100
80
60
40
20
7.48
Cash in hand Cash at scheduled bajaj capital
0.61 1.09 5.12 6.33
Interpretation; -
In the year 2016-2017 the Cash in hand was 0.61% and cash at scheduled Bajaj capital
was 99.39% . The cash in hand is increasing yearly wise and cash at scheduled bajaj
capital is decreasing yearly wise.
3. CONTROLS OF CASH FLOWS
The twin goals of cash management are to decrease cash moulding while also
maintaining liquidity. This suggests that cash holdings should be maximised without
compromising the company's overall liquidity requirements. By maintaining strict
control over monetary flows, this goal might be accomplished. The following ratios are
developed to determine how well cash controls are operating at the aforementioned
Bajaj Capital.
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D. Cash To Current Liabilities Ratio.
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A. CASH TO TOTAL CURRENT ASSETS RATIO: -
FORMULA:
Cash to total current assets = cash & Cash equivalents / total current assets * 100
35 31.59
26.97
30
25
20 15.04
13.25
15 11.59
10
RATIO
Interpretation: -
From the above graph the cash to current assets of Bajaj Capital Ltd. is good in the year
2017-2018 when compared with remaining four years.
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B. CASH TO SALES RATIO:-
FORMULA:
Cash to sales = cash & cash equivalents / net sales * 100
Graph:
25 22.372
20
15.476
15
10 7.48
5.18 5.09
RATIO
Interpretation: -
From the above graph the cash to sale ratio of Bajaj Capital Ltd. is good in the year 2017-2018
when compared with remaining four years.
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C. CASH TO DEBT SERVICE RATIO:-
FORMULA:
Cash to Debt service = Annual cash flows before interest & tax / Interest
Graph:
2.6
2.5
1.94
1.3 1.22
1.5
0.58
0.5
2016- 2017- 2018- 2019- 2020-
2017 2018 2019 2020 2021
RATIO
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Interpretation; -
From the above graph the cash to debt service ratio of Bajaj Capital Ltd. is good in the year
2020-2021 when compared with remaining four years.
D. CASH TO CURRENT LIABILITY RATIO:-
FORMULA:
Cash to current liability = Cash & cash equivalents / Total current liabilities
YEAR CASH CURRENT RATIO
LIABILITIES
1.4 1.18
1.2
0.7
0.8
0.6
0.31 0.29 0.26
0.4
0.2
RATIO
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Interpretation: -
From the above graph the cash to current liabilities of Bajaj Capital Ltd. is good in the year
2017-2018 when compared with remaining four years.
4. OPERATIONAL ADEQUACY OF CASH
The Operational adequacy of Cash Ratio, a liquidity ratio, is a measure of how well a
company can pay off its current liabilities with the cash flow generated from its core
business operations. These financial metric shows how much a company earns from its
operating activities, per rupee of current liabilities the following ratios are calculated.
Average daily cash operating expenses= Total operating cash expenses for the year
Total operating expenses for the year = Cost of goods sold + Admin. exp & office exp + Sell
& Dis exp
Cost of goods sold = purchases + opening stock – closing stock – man. exp.
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A. INTERVAL MEASURE RATIO
FORMULA:
Interval measure: liquid assets / Average daily cash operating expenses
RATIO
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FORMULA:
Interpretation: -
From the above graph the interval measure ratio of Bajaj Capital Ltd. is good in the year
2017-2018 when compared with the remaining four years.
B. CASH TURNOVER RATIO
FORMULA:
Cash Turnover: Revenue (sales) / cash & cash equivalents
YEAR SALES CASH RATIO
Graph:
25
19.3 19.65
20
15 13.37
10 6.46
4.47
RATIO
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Interpretation: -
From the above graph the cash turnover ratio of Bajaj Capital Ltd. is good in the year
2020-2021 when compared with remaining four years.
C. CASH NO OF DAY’S HOLDING PERIOD
Graph:
90 80.74
80
70 55.73
60
50
26.73
40 18.65 18.32
30
20
2016- 2017- 2018- 2019- 2020-
2017 2018 2019 2020 2021
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FORMULA:
Interpretation: -
From the above graph the Cash number of days holding period of Bajaj Capital Ltd.
Is good in the year 2017-2018 when compared with remaining four years.
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CHAPTER-V
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FINDINGS
1. During the year 2016-2017 the sundry creditors is 41.89% and there is
increasing in the year 2017-2018, 2018-2019, 2019-2020, 2020-2021.
2. In the year 2016-2017 the Cash in hand was 0.61% and cash at scheduled Bajaj
capital was 99.39% . The cash in hand is increasing yearly wise and cash at
scheduled bajaj capital is decreasing yearly wise.
3. Cash to current assets of Bajaj Capital Ltd. is good in the year 2017-2018 when
compared with remaining four years.
4. Cash to sale ratio of Bajaj Capital Ltd. is good in the year 2017-2018 when
compared with remaining four years.
5. Cash to debt service ratio of Bajaj Capital Ltd. is good in the year 20202021
when compared with remaining four years.
6. Cash to current liabilities of Bajaj Capital Ltd. is good in the year 20172018
when compared with remaining four years.
7. Interval measure ratio of Bajaj Capital Ltd. is good in the year 2017-2018 when
compared with the remaining four years.
8. Cash turnover ratio of Bajaj Capital Ltd. is good in the year 2020-2021 when
compared with remaining four years.
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9. The Cash number of days holding period of Bajaj Capital Ltd. Is good in the
year 2017-2018 when compared with remaining four years.
SUGGESTIONS
The CASH TO TOTAL ASSETS RATIO has been declining over the years. So,
it helps with organisation.
During the period 2010–2021, the cash to debt service ratio was 2.6.
The CASH TURNOVER RATIO has been rising over the years. Therefore, it
benefits the organisation.
The CASH TO CURRENTS LIABILITIES RATIO has been declining over the
years. As a result, the organisation suffers.
Cash flow statements are an essential analytical tool in the hands of the financial
management, hence Bajaj Capital should generate them on a regular basis. It
aids management in carrying out efficient cash management.
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CONCLUSIONS
Cash Management is the prime & most important requirement for carrying out
day to day operations of the business. Cash Management gives much needed
liquidity to the business. Cash management reduces the overall fund
requirement, required to build up the Current Assets, which in turn help the
company to improve the turnover ratios. Hence, I conclude that Bajaj Capital
Limited is very good at managing its debts and maintaining its assets. It is also
focusing on investing in current assets, so that those assets generate returns
which will be helpful in controlling the cost of short term debts & also
meeting short term expenses.
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INDUSTYRY PROFILE INDUSTYRY
PROFILE
INTRODUCTION
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks
(also called shares), which represent ownership claims on businesses; these may include
securities listed on a public stock exchange, as well as stock that is only traded privately, such as
shares of private companies which are sold to investors through equity crowdfunding platforms.
Investment is usually made with an investment strategy in mind.
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SIZE OF THE MARKET
The total market capitalization of all publicly traded securities worldwide rose from US$2.5
trillion in 1980 to US$93.7 trillion at the end of 2020.
As of 2016, there are 60 stock exchanges in the world. Of these, there are 16 exchanges with a
market capitalization of $1 trillion or more, and they account for 87% of global market
capitalization. Apart from the Australian Securities Exchange, these 16 exchanges are all in
North America, Europe, or Asia.
By country, the largest stock markets as of January 2021 are in the United States of America
(about 55.9%), followed by Japan (about 7.4%) and China (about 5.4%).
HISTORY
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The history of the share market of India dates back to 1875. The name of the first share trading
association in India was “Native Share and Stock Broker's Association” which later came to be
known as Bombay Stock Exchange (BSE). This association began with 318 members.
STOCK EXCHANGE
A stock exchange is an exchange (or bourse) where stockbrokers and traders can buy and sell
shares (equity stock), bonds, and other securities. Many large companies have their stocks listed
on a stock exchange. This makes the stock more liquid and thus more attractive to many
investors. The exchange may also act as a guarantor of settlement. These and other stocks may
also be traded "over the counter" (OTC), that is, through a dealer. Some large companies will
have their stock listed on more than one exchange in different countries, so as to attract
international investors.
Stock exchanges may also cover other types of securities, such as fixed-interest securities
(bonds) or (less frequently) derivatives, which are more likely to be traded OTC.
National Stock Exchange of India Limited (NSE) is the leading stock exchange of India, located
in Mumbai, Maharashtra. It is the world’s largest derivatives exchange in 2021 by number of
contracts traded based on the statistics maintained by Futures Industry Association (FIA), a
derivatives trade body. NSE is ranked 4th in the world in cash equities by number of trades as
per the statistics maintained by the World Federation of Exchanges (WFE) for the calendar year
2021. It is under the ownership of some leading financial institutions, banks, and insurance
companies. NSE was established in 1992 as the first dematerialized electronic exchange in the
country. NSE was the first exchange in the country to provide a modern, fully automated
screenbased electronic trading system that offered easy trading facilities to investors spread
across the length and breadth of the country. Ashishkumar Chauhan is the Managing Director
and Chief Executive Officer of NSE. The Indian stock exchange BSE and NSE has been
engulfed in series of corruption scandals such as 1992 Indian stock market scam and others.
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National Stock Exchange has a total market capitalization of more than US$3.4 trillion, making
it the world's 10th-largest stock exchange as of August 2021.NSE's flagship index, the NIFTY
50, a 50 stock index is used extensively by investors in India and around the world as a
barometer of the Indian capital market. The NIFTY 50 index was launched in 1996 by NSE.
However, Vaidyanathan (2016) estimates that only about 4% of the Indian economy / GDP is
actually derived from the stock exchanges in India.
BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange
located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand
Roychand, a Jain businessman, it is the oldest stock exchange in Asia, and also the tenth oldest
in the world. The BSE is the 8th largest stock exchange with an overall market capitalisation of
more than ₹276.713 lakh crore, as of January 2022. The Indian stock exchange BSE and NSE
has been engulfed in series of corruption scandals such as 1992 Indian stock market scam and
others.
Unlike countries like the United States where nearly 70% of the country's GDP is derived from
large companies in the corporate sector, the corporate sector in India accounts for only 12–14%
of the national GDP (as of October 2016). Of these only 7,400 companies are listed of which
only 4000 trade on the stock exchanges at BSE and NSE. Hence the stocks trading at the BSE
and NSE account for only around 4% of the Indian economy, which derives most of its
incomerelated activity from the so-called unorganized sector and household spending.
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COMPANY PROFILE COMPANY PROFILE
INTRODUCTION
Mission
Provide need-based solutions at the right value, gaining lifetime client relationships through a
happy team & service excellence.
Vision
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India's most admired & recommended wealth creation & protection brand.
History
The Bajaj Group of Companies was founded by Jamnalal Bajaj.
Kamalnayan Bajaj (1915–1972)
Kamalnayan Bajaj, the elder son of Jamanalal Bajaj, after completing his education from
University of Cambridge, England to assist his father both in business and in social service. He
expanded the business by branching into manufacture of scooter, three-wheeler, cement, alloy
casting and electricals. In 1954, Kamalnayan took over active management of the Bajaj Group
companies.
AWARDS
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Bajaj Capital Wins Indian Family Business Award 2021
Recently at the Indian Family Business Awards 2021, Bajaj Capital was conferred with the
honour of being the Most Innovative, Disruptive and Transformational Business, complementing
the organization for its contribution of being an Industry leader in the financial services arena
and coming up with need-based as well as time suitable solutions for the clients.
CNBC-TV18 Financial Advisors Awards 2012 in association with UTI Mutual Fund were
instituted to honour and felicitate individuals and institutions that have worked silently behind
the scenes to ensure wealth creation for the Indian investor.
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Best Wealth Management Company 2009
Bajaj Capital has won prestigious Best Wealth Management Company award for the year
20082009 (Source: Business Sphere)
Great Place to Work® Institute is a global research, consulting and training firm that helps
organisations identify, create and sustain great workplaces through the development of high-trust
workplace cultures. We serve businesses, non-profits and government agencies in 45 countries
on all six continents.
Some of the services that Bajaj Capital offers for securing the financial future of
millions of families are:
• Choose from the best Insurance Options- The Clients get to know the best Insurance
options that they can choose from and safeguard their Life, Health, and other important
assets. RM-assisted services are rendered to make the experience seamless.
• Online Mutual Funds Platform- Investment in Mutual Funds is made easy with a
convenient and easy-to-operate online platform where anyone can start with their
investment journey by opening a free account.
• Edge Report for Investments- Bajaj Capital offers the industry’s most comprehensive
Edge Reports that tracks and analyze an individual’s investment portfolio.
• NPS Dashboard for NPS Investments - The first of its kind platform to track your
Investment through a ‘Single View Dashboard.’
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• Retirement Plan for 100 Years of Life - Bajaj Capital is India’s first fully focused
retirement planning organization. Retirement is the most important of life goals is often
overlooked by most individuals. A 100-year Cash Flow Planning and Retirement Planning
is made possible through proper guidance of right investments to be done for the Golden
years.
• Investor Education- and awareness through The FINtastic Talks with Sanjiv Bajaj- A new
generation talk show hosted by Mr. Sanjiv Bajaj, Jt. Chairman & M.D. Bajaj Capital,
hosting the top voices in the finance sector.
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