answer the ff.

FINANCIAL MANAGEMENT 1

PROBLEM :

ASIAN ELECTRIC COMPANY (AEC) is an electricity generation company. It commence operations on December 28, 2009 after unbundling the activities relating to Generation, Transmission and Distribution of Power. The installed capacity increases as on January 1, 2011 is 8384.9 MW comprising 4382.50 MW Thermal, 3790.40 MW Hydro and 2 MW Wind power stations. It is the Third Largest Power Utility in the country and Second highest Hydel Installed Capacity. Apart from operation & Maintenance of the power plants, it has undertaken the execution of the ongoing & new power projects scheduled under capacity addition programme and is taking up renovation & modernization works of the old power stations. AEC COMPANY has 11,000 dedicated employees as on March 6, 2010.

The data of the COMPANY has been availed from secondary sources such as annual reports of the company and database for the period of 2014 to 2019.

VARIABLES

In the study, working capital ratios such as current ratio, Liquid ratio, working capital turnover ratio, Inventory turnover ratio, receivables turnover ratio, cash turnover ratio and Return on Investment ratio has been used. The Ratio used are stated below.

Current Ratio	= Current asset/Current liabilities
Liquid Ratio	= Quick asset/Current liabilities
Working capital Turnover	= Cost of Goods sold/Net Working Capital
Inventory turnover Ratio	= Cost of goods sold/ average Inventory
Debtor turnover Ratio	= Total Sales/Average Receivables
Cash Turnover Ratio	= Cost of Goods Sold (excluding depreciation)/Cash
Return on Investment	= Net Profit x 100 / Capital employed
Capital employed	= Net fixed assets + Working capital

DATA ANALYSIS: COMPOSITION OF GROSS WORKING CAPITAL

The variable wise analysis of gross working capital will enable to examine in which each element the gross working capital funds are locked in. The Table - 1 exhibit the share of each variable calculated in percentages for each year of the study period and the averages of the six year time period are calculated for each component of gross working capital.

FIGURE 1: COMPOSITION OF GROSS WORKING CAPITAL 12.16% I Inventory I Debtor l cash I Loans & Advances