ABSTRACT

This study investigates A STUDY ON WORKING CAPITAL MANAGEMENT AT

HINDUSTAN UNILEVER LIMITED VADAMANGALAM, PUDUCHERRY by
analysing financial data and management practices the research aims to uncover how
effective working capital management influence the company’s ability to maintain optimum
liquidity levels achieve higher profitability. The study examine the key components of
working capital, liquidity ratios, account payable, receivable and assess their role in shaping
the financial performance of Hindustan Unilever Company. Findings are expected to provide
insights into the relationship between working capital strategies and financial outcomes,
offering valuable recommendations for improving liquidity in the company’s operations.

TABLE OF CONTENTS

PAGE NO.
PARTICULARS
CHAPTER
NO
 1 INTRODCTION 1-5

1.1 Introduction of the study

1.2 Need of The Study

1.3 Objectives of the study
1.4 Scope of the study

2 REVIEW OF LITERATURE 6-8

3 RESEARCH METHODOLOGY 9-11

4
DATA ANALYSIS & INTERPRETATAION 12-31

5 32-36
FINDINGS, SUGGESTIONS & CONCLUSTION

5.1 Findings
5.2 Suggestions
5.3 Conclusion

Annexure
REFERENCES 37
S.NO
TABLE NAME PAGE
NO

4.1 TABLE SCHEDULING THE CHANGES IN WORIKNG CAPITAL 14

FOR THE YEAR 2018-2019

4.2 TABLE SHOWING THE STATEMENT IN WORIKNG CAPITAL 15

FOR THE YEAR 2019-2020

4.3 TABLE SHOWING THE STATEMENT WORIKNG CAPITAL FOR 16

THE YEAR 2020-2021

4.4 17
TABLE SHOWING THE STATEMENT IN WORIKNG CAPITAL
FOR THE YEAR 2021-2022

18
4.5 TABLE SHOWING THE STATEMENT IN WORIKNG CAPITAL
FOR THE YEAR 2022-2023

4.6 20
TABLE SHOWING THE STATEMENT IN CURRENTRATIOS
ANALYSIS

4.7 21
TABLE SHOWING THE STATEMENT IN LIQUIDITY RATIOS
ANALYSIS

4.8 TABLE SHOWING THE STATEMENT IN ABSOLUTE 22

LIQUIDITY
RATIOS ANALYSIS
4.9 23
TABLE SHOWING THE STATEMENT IN GROSS PROFIT
RATIOS ANALYSIS

4.10 TABLE SHOWING THE STATEMENT IN NET PROFIT RATIOS 24

ANALYSIS

4.11 25
TABLE SHOWING THE STATEMENT IN OPERATING RATIOS
ANALYSIS

4.12 TABLE SHOWING THE STATEMENT IN RETURN RATIOS

ANALYSIS
26

27
TABLE SHOWING THE STATEMENT IN RETURN ON
4.13 INVERSTMENT ANALYSIS

29

4.14 TABLE SHOWING THE STATEMENT IN CORRELATION

 CHAPTER -I

INTRODUCTION

CHAPTER – I

INTRODUCTION

1.1 INTRODUCTION TO THE STUDY:

Working capital is a financial metric that is the difference between a company's

current assets and current liabilities. As a financial metric, working capital helps plan for
future needs and ensure the company has enough cash and cash equivalents meet short-term
obligations,
such as unpaid taxes and short-term debt.

Working capital is calculated by subtracting current liabilities from current assets, as

listed on the company’s balance sheet. Current assets include cash, accounts receivable and

inventory. Current liabilities include accounts payable, taxes, wages and interest owed.

Working capital is a financial metric calculated as the difference between current

assets and current liabilities. Positive working capital means the company can pay its bills
and invest to spur business growth. Working capital management focuses on ensuring the
company can meet day-to-day operating expenses while using its financial resources in the
most productive and efficient way.
Finance teams that want to know whether their companies can withstand an
unexpected downturn or crisis need a handle on two metrics: working capital and cash flow.

These two metrics illustrate different aspects of a company’s financial health.

While cash flow measures how much money the company generates or consumes in
a given period, working capital is the difference between the company’s current assets —
including cash and other assets that can be converted into cash within a year — and its
current liabilities, such as payroll, accounts payable and accrued expenses. A business that
maintains positive working capital will likely have a greater ability to withstand financial
challenges and the flexibility to invest in growth after meeting short-term obligations.

Working capital management is a business strategy designed to ensure that a

company operates efficiently by monitoring and using its current assets and liabilities
to their most effective use. Working capital management involves calculating various
ratios, including the profitability ratio, liquidity ratio, and the inventory ratio.

The study on the impact of sales on working capital is of major importance to internal
and external analysis because of its relationship with the current day to day operations of
business. In order to maintain flow of revenue from operations, every firm needs certain
amount of current assets. The funds required either to pay for expenses or to meet obligations
for service received or goods purchased etc. by a firm. These funds are known as working
capital. Working capital refers to that part of firm’s capital which is required for financing
short term requirements or current assets such as cash, marketable securities, debtors and
inventories. If the satisfactory level of working capital is not maintained the firm is likely to
become insolvent and maybe forced into bankruptcy. To maintain the margin of safety
current asset should be larger than current liability.
 Proper working capital is essential to a company’s fundamental financial health and its
operational success. A hallmark of good business management is the ability to utilize
working capital management to maintain a solid balance between growth, profitability and
liquidity. Working capital serves as a metric for how efficiently a company is operating and
how financially stable it is in the short-term. The working capital ratio, which divides
current assets by current liabilities, indicates whether a company has adequate cash flow to
cover
short-term debts and expenses.
Secondary objectives are to optimize the level of working capital and minimize the cost
of such funds. The superior objective of financial management is wealth maximization and
that can be gained by profit maximization accompanied by sustainable growth and
development. For sustainable growth and development, the objectives of all the stakeholders
including customers, suppliers, employees, etc. should be aligned to the growth of the
organization.
ON THE BASIS OF CONCEPT:
On the basis of concept working capital is divided into two categories as under:

1) Gross Working Capital: Gross working capital refers to total investment in current
assets. The current assets employed in business give the idea about the utilization of
working capital and idea about the economic position of the company. Gross
working capital concept is popular and acceptable concept in the field of finance.

2) Net Working Capital: Net working capital means current assets minus current
liabilities. The difference between current assets and current liabilities is called the
net working capital. If the net working capital is positive, business is able to meet
its current liabilities. Net working capital concept provides the measurement for
determining the creditworthiness of company.

COMPANY PROFILE:

HINDUSTAN UNILEVER LIMITED is a British owned Indian final goods company

headquartered in Mumbai. It is a subsidiary company Unilever. Its products include
foods, beverages, cleaning agents, personal care products, and other fast moving

consumer goods. India has come a long way from a small and humble beginning in
 2003... From 3 machines to 15 machines from a turnover of 60 lakhs to 460 corers...It
has been a journey we are proud of and we dreamed of Established in 2002,
Automotive India, have grown facing lots of hurdles on the way to be The leader in,
Automotive India interior and exterior industry today. HUI Gained wisdom by facing
endless challenges that lie ahead of us and Knowledge with creativity. HUI are
determined to march forward with our consistent efforts by supplying to our customers
delights, harmonizing a balance between man, Nature and Technology to the best
efficiency.

1.2 NEED FOR STUDY

• By managing the working capital, current liabilities are paid in time.

• The management of working capital helps to manage all the factors affecting the
working capital in the most profitable manner

• An effective working capital management system helps business not only covers
their financial obligations but also boost their earnings

1.3 OBJECTIVES OF THE STUDY

To find the working capital of the Hindustan Unilever limited.

To analyse the working capital of the HUL.

To evaluate the liquidity position of HUL.

1.4 SCOPE OF THE STUDY

o Researcher knows how much essential for working capital management in manufacturing
industry through ratios and schedule of changes in working capital.
o This study will be helpful for further researcher. o The study aims at assessing the working
capital position and liquidity position of company.
 CHAPTER-2

REVIEW OF LITERATURE

CHAPTER – 2

REVIEW OF LITERATURE

Dr Panigrahi Ashok Kumar (2021) studied the relationship between working capital
management and profitability of ACC Cement Company, the leading cement
manufacturer of the country. The study assessed the impact of working capital
management on profitability during the period 1999-2000 to 2009-10. The study was
based on secondary data. The main aim of the study was to find whether the working
capital management affects the performance of the firm. It was concluded that there is
a moderate relationship between the firm’s profitability and working capital
management.
Dinesh M. (2019) in his study explicates the concepts of working capital, the
different challenges being faced by the business firms in managing working capital
and the strategies to be adopted for its prudent management. The author concluded
with the view that most of the businesses failed not for want of profit but for lack of
cash.
Ganesan Vedavinayagam (2016) studies the impact of working capital management
on profitability through ANOVA test where the financial statements of 349 telecom
units or enterprises are analyzed. In the study the relationship between working
capital
management efficiency and profitability and the impact of working capital
management on the same has been tested. At the end of the study the author has
minutely observed that the working capital management efficiency in
telecommunication industry is poor.
Joshi Lalitkumar and Ghosh Sudipta (2015) conducted a study on the performance
of working capital of Cipla Ltd during the period 2004-05 to 2008-09. Financial ratios
were used to measure the working capital performance. Econometric and statistical
techniques were also used. The study concluded that the ratios selected showed a
satisfactory performance. A significant negative relationship between liquidity and
profitability was also found to exist.
(b) applications of funds. In the end, the changes in working capital were analyzed
with the help of the changes in working capital and funds flow statement. He believed
that the changes in quantum of working capital were to be ascertained and
analyzed.Rao Govinda D. (2014) had attempted to find out the causes of the changes
in the size of working capital in the sample companies during the period under
study. He found several causes of changes in working capital, mainly (a) sources of
funds
Chandra Bihas, Chouhan Vineet and Goswami Shubham Chandra Bihas, (2012)
conducted a study on the trends, profitability and working capital of some selected
Information Technology organizations in India. It was concluded that the increased
requirement of working capital in IT companies was significantly established. It was
further observed that there exists a positive relationship between working capital and
profitability of all the selected companies, with the exception of Patni Computer
Systems. The positive direction of relationship indicates that increase in working
capital leads to increase in profitability.
Chandra H. and Selvaraj A. (2012) analyzed the working capital management of
selected Steel Companies in India for the period from 2000-01 to 2009-10. Operating
cycle and cash conversion cycle were used to measure the effective utilization of
working capital. The Kieschnick model was used to measure the determinants of cash
conversion cycle. The study concluded that the size of a company plays a vital role in
determining the efficiency of its working capital management. The working capital
ratios across the small, medium and large sized steel companies have played a vital
role in determining the working capital management of the selected Indian steel
companies. Manjhi Rakesh Kumar and Kulkarni S. R. (2012) carried out a study
of the working capital structure and liquidity analysis of Gujarat Textiles
Manufacturing Industry. The study aimed to analyze working capital structure of
Gujarat Textiles Manufacturing Industry and the liquidity position of the industry. It
also aimed to analyze the working capital turnover position of the industry. It was
concluded that the variation between current assets turnover and working capital
turnover was quite high across the industry. It was observed that Arvind Ltd. and Shri
Dinesh mills Ltd. achieved lower sales over their working capital and current assets
as compared to the other companies. However, the sample companies had good
current ratio, which also implies their sound liquidity position.
Ramadu Janaki P. and Parasuraman N. R. (2012) in their study revealed that the
growth rate in profits was disproportional to the sales and working capital
components like inventory and debtors. The study focus on the growth and sales
compared with the changes in profitability and in working capital of Indian
Pharmaceutical Industries.
Ray Sarbapriya (2012) conducted a study on the relationship between liquidity and
profitability in the manufacturing industry. A sample of 311 manufacturing firms for a
period of 14 years were taken. The writer studied the effect of different variables of
working capital management. The study observed a strong adverse relationship
between measures of working capital management and corporate profitability. An
insignificant negative relationship between firm size and its net operating profit ratio
was detected in the end.
Arunkumar O. N. and Jayakumar S. (2010) in their study explained how working
capital is considered to be the lifeblood and controlling nerve centre of the business.
Profitability and solvency are two vital aspects of working capital management. In the
study the authors have concentrated on the analysis of liquidity and solvency position
of the major Public Sector Electrical Industries in Kerala such as Kerala Electrical
and Allied Engineering Company Ltd (KEL) and Transformers and Electrical Kerala
Ltd (TELK) for the financial years 1997-98 to 2007-08 and 1997- 98 to 2005-06
respectively.
 Chapter-3

RESEARCH METHODOLOGY

CHAPTER - 3
RESEARCH MEDTHODOLOGY:
A research methodology describes the techniques and procedures used to identify and analyses
information regarding a specific research topic. It is a process by which researchers design
their study so that they can achieve their objectives using the selected research instruments. It
includes all the important aspects of research, including research design, data collection
methods, data analysis methods, and the overall framework within which the research is
conducted. While these points can help you understand what is research methodology, you also
need to know why it is important to pick the right methodology.

3.1 RESEARCH DESIGN

Descriptive research used in this study because it will ensure the

minimization of bias and Maximization of reliability of data collected. The
researcher had to use fact and information already Available through financial
statement of earlier years and analyses is to make critical evaluation of available
material. Hence by making the type of research conducted to be both descriptive
and analytical in nature.
SOURCES OF DATA

Secondary data refers to data that is collected by someone other than the primary
user. Common sources of secondary data for social science include censuses,
information collected by government departments, organizational records and
data that was originally collected for other research purposes.
Secondary data was collected from:
• Balance sheet of the company for past 5 years (2018-2019 to 2021-2023).

• Profit and loss account of the company of the past 5 years (2018-2019 to
20212023).

• Website of the company and other sites.

The final result and conclusion is find on the 5 years financial statement data that extracted
from the annual report of the Hindustan Unilever limited from their official webpage.

3.2 DATA ANALYSIS TOOLS AND TECHNIQUES

Various tools used For analyze and interpret the financial statements of the company
like:
o Ratio analysis: Ratio analysis is referred to as the study or analysis of the line items
present in the financial statements of the company. It can be used to check various
factors of a business such as profitability, liquidity, solvency and efficiency of the
company or the business.

o Current ratio: The current ratio, also known as the working capital ratio, measures
The capability of a business to meet its short-term obligations that are due within a
Year. The ratio considers the weight of total current assets versus total current
Liabilities.

Current ratio= current assets Current liabilities

o Liquidity ratio: Liquidity ratios are a measure of the ability of a company to pay

Off its short-term liabilities. Liquidity ratios determine how quickly a company can
Convert the assets and use them for meeting the dues that arise. The higher the ratio,
The easier is the ability to clear the debts and avoid defaulting on payments.

Liquidity ratio= liquid assets Current liabilities

o Absolute liquid ratio: Cash ratio is a measure of a company’s liquidity in which It is
measured whether the company has the ability to clear off debts only using the
Liquid assets (cash and cash equivalents such as marketable securities).
Absolute liquid ratio= cash+marketable securities
Current liability
o Inventory turnover ratio: Inventory turnover is the rate that inventory stock is Sold,
or used, and replaced. The inventory turnover ratio is calculated by dividing The cost
of goods by average inventory for the same period. A higher ratio tends To point to
strong sales and a lower one to weak sales.
Inventory turnover ratio=cost of goods sold
Average inventory or selling price
o Trade receivable turnover ratio: A financial indicator called the trade Receivables
turnover ratio is used to assess how successfully a business collects Payment from its
clients for credit sales. The effectiveness of a company’s credit And collection
practices is calculated by the trade receivables turnover ratio.

Trade receivable turnover ratio= net credit sales

 Average account receivable

o Working capital turnover ratio: Working capital turnover ratio is the ratio Between
the net revenue or turnover of a business and its working capital. For Instance, if a
business’s annual turnover is Rs. 20 lakh and average working capital Rs. 4 lakh, the
turnover ratio is 5, i.e. (20,00,000/ 4,00,000).
Working capital turnover ratio= cost of goods sold
Net working capital

o Average debt collection period: Average collection period is calculated by Dividing

a company’s average accounts receivable balance by its net credit sales For a specific
period, then multiplying the quotient by 365 days.
Average debt collection period= days or month in a year
Debtors turnover ratio

o Trend analysis of inventory: It means that you can focus on the front-facing
Aspects of your business instead of worrying about your inventory and stock. It’s
Also a great way to spot any trends and helps you to calculate your future orders
Based on customer demand.
Percentage change= current year amount – base year amount

Base year amount

o Trend analysis of cash: Cash flow analysis typically begins with the statement Of
cash

flows, which breaks down cash flows into sections for

operating,Financing,aninvesting activities. Analysis includes looking for trends, areas
of Strong performance, cash flow problems, and opportunities for improvement
Percentage change= current year amount – base year amount

Base year amount

o Schedule of changes in working capital: Schedule of changes in working capital

is prepared to measure the increase or decrease in individual items of current
assets or current liabilities. It also shows the net increase or decrease in working
capital during the accounting period.
o Graphs: A graph can be defined as a pictorial representation or a diagram that
represents data or values in an organized manner.

o Bar graph: A bar chart is used when you want to show a distribution of data
points Or perform a comparison of metric values across different subgroups of
your data. From a bar chart, we can see which groups are highest or most
common, and how Other groups compare against the others.

o Line graph: A line graph is a graphical display of information that changes

Continuously over time. A line graph may also be referred to as a line chart.
Within A line graph, there are points connecting the data to show a continuous
change.
The Lines in a line graph can descend and ascend based on the data.
o Trend Analysis: Trend Analysis is a technique used to examine and predict
movements of an item based on current and historical data. Trend analysis is used
to improve the business using trend data for decision-making.
 CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

 CHAPTER - 4

SCHEDULE OF CHANGES IN WORKING CAPITAL OF HINDUSTAN UNILEVER

LIMITED

4.1 SCHEDULE OF CHANGES IN WORKING CAPITAL

4.1.1 SCHEDULE OF CHANGES IN WORKING CAPITAL (2018 and 2019)

PARTICULARS 2018 2019 INCREASE DECREASE

A. CURRENT
ASSESTS
Current Investments

Inventories 2362 2359 3

Investment 3519 2855 664
Trade Receivables 928 1147 219
Cash And Cash 572 573 1
Equivalents
Bank Balance Other 1099 2800 1701
Than Cash And Cash
Equivalents

Other Financial Assets 306 829 523

Other Current Assets 507 560 53
Assets Held For Sale 72 16 56

TOTAL (A) 9365 11139

B. CURRENT
LIABILITIES

Trade Payables
Dues To Micro And - -
Small Enterprises
Dues To Other 6006 7013 1007

OTHER FINANCIAL 181 203 22

LIABLITIES

Other Current 628 769 141

Liabilities
Provisions 387 651 264

TOTAL(B) 7202 8636

NET WORKING 2163 2503

CAPITAL (A-B)
NET INCREASE 340 340
IN WORKING
CAPITAL

TOTAL 2503 2503 2497 2497

Source: Secondary Data

INTERPRETATION

Form the above table, we infer that the working capital of 2018 was 2163cr and for 2019
was 2503cr.The working capital has increased by 340cr from 20178to 2019. In the year
2018-19, there is increase in Trade receivables by Rs.219cr, other financial assets by
Rs.523cr, other current assets by Rs.53cr and decrease in current assets such as
inventories by Rs.3cr, investments by Rs.664cr and assets held for sale by Rs.56cr. There
was an increase in current liabilities such as other financial liabilities by Rs.22cr, other
current liabilities by Rs.141cr and provisions by Rs.264cr.
 4.1.2 SCHEDULE OF CHANGES IN WORKING CAPITAL (2019 and 2020)

PARTICULARS 2019 2020 INCREASE DECREASE

A. CURRENT
ASSESTS
Current Investments

Inventories 2359 2422 63

Investment 2855 2693 162
Trade Receivables 1127 1673 526
Cash And Cash 573 574 1
Equivalents

Bank Balance Other 2800 3113 313

Than Cash And Cash
Equivalents
Other Financial Assets 829 542 287
Other Current Assets 560 352 208
Assets Held For Sale 16 4 12

TOTAL (A) 11139 11373

B. CURRENT
LIABILITIES

Trade Payables

Dues To Micro And

Small Enterprises
Total Outstanding dues 7013 7070 57
for creditors then micro
enterprises and small
enterprises

Other financial liabilities 203 276 73

Other Current 769 506 263

Liabilities
Provisions 651 501 150

TOTAL(B) 8636 8353

NET WORKING 2503 3020

CAPITAL (A-B)
NET INCREASE 517 517
IN WORKING
CAPITAL

TOTAL 2503 1316 1316

SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that the working capital of 2019 was Rs.2503cr and for
2020 was Rs.3020cr. The working capital has increased by Rs.517cr from 2019 to 2020. In
the year 2019-2020, there is increase in Trade receivables by Rs.526cr, inventories by
Rs.63cr, bank balance other than cash and cash equivalents by Rs.313cr and decrease in
current assets such as investments by Rs.162cr, other financial assets by Rs.287cr, other
current assets by Rs.208cr and assets held for sale by Rs.12cr.
There was an increase in current liabilities such as other financial liabilities by Rs.73cr and
decrease in other current liabilities by Rs.263cr and provisions by Rs.150cr.
 4.1.3 SCHEDULE OF CHANGES IN WORKING CAPITAL (2020 and 2021)

PARTICULARS 2020 2021 INCREASE DECREASE

A. CURRENT
ASSESTS
Current Investments

Inventories 2422 2636 214

Investment 2693 1248 1445
Trade Receivables 1673 1046 627
Cash And Cash 574 3130
Equivalents

Bank Balance Other 3113 1887 2556 1226

Than Cash And Cash
Equivalents

Other Financial Assets 542 1410 868

Other Current Assets 352 533 181
Assets Held For Sale 4 18 14

TOTAL (A) 11373 11908

 B. CURRENT
LIABILITIES

Trade Payables

Total outstanding dues

of micro and small
enterprises

Total outstanding dues 7070 7399 329

of creditors other than
micro enterprises and
small enterprises

Other financial 276 869 593

liabilities

Other Current 506 418 88

Liabilities

Provisions 501 418 83

TOTAL(B) 8353 9104

NET WORKING 3020 2804

CAPITAL (A-B)
NET DECREASE 216 216
IN WORKING
CAPITAL

TOTAL 3020 3020 4220 4220

SOURCE: SECONDARY DATA

INTERPRETATION
 Form the above table, we infer that the working capital of 2020 was Rs.3020cr and for 2021
was Rs.2804 cr. The working capital has decreased by Rs.216cr from 2019 to 2020. In the year
202021, there is decrease in Trade receivables by Rs.627cr, increase in other financial assets by
Rs.868cr, increase in other current assets by Rs.181cr and increase in inventories by Rs.214cr,
decrease in investments by Rs.1445cr and increase in assets held for sale by
Rs.14 cr. There was an increase in current liabilities such as other financial liabilities by
Rs.593cr, decrease in other current liabilities by Rs.88cr and provisions by Rs.83cr.

4.1.4 SCHEDULE OF CHANGES IN WORKING CAPITAL (2021 and 2022)

PARTICULARS 2021 2022 INCREASE DECREASE

A. CURRENT
ASSESTS
Current Investments

Inventories
2636 3383 747
Investment
1248 2683 1435
loans
- 34 34
Trade Receivables
1046 1648 602
Cash And Cash 3130 1740 1390
Equivalents
Bank Balance Other 1887 2581 694
Than Cash And Cash
Equivalents

Other Financial Assets 1410 1116 294

Other Current Assets 533 438 95
Assets Held For Sale 18 17 1

TOTAL (A) 11908 13640

B. CURRENT
LIABILITIES

Lease liabilities 264 264

Trade Payables

Total outstanding dues 64 64

of micro and small
enterprises

Total outstanding Dues 7399 8563 1164

of creditors other than
micro enterprises and
small enterprises

Other financial liabilities 869 894 23

Other Current 418 567 149

Liabilities
Provisions 418 491 73

TOTAL(B) 9104 10841

NET WORKING 2804 2799

CAPITAL (A-B)
NET DECREASE 5 5
IN WORKING
CAPITAL

TOTAL 2804 2804 3517 3517

SOURCE: SECONDARY DATA

INTERPRETATION
Form the above table, we infer that the working capital of 2021 was Rs.2804cr and for
2022 was Rs.2799cr. The working capital has decreased by Rs.5cr from 2020 to 2021. In
the year 2021-22, there is increase in Trade receivables by Rs.602cr, inventories by
Rs.747cr, bank balance other than cash and equivalents by Rs.694cr and investments by
Rs.1435cr, and decrease in current assets such as cash and cash equivalents by Rs.1390cr,
other financial assets by Rs.294cr, other current assets by Rs.95cr and assets held for sale
by Rs.1cr.
There was an increase in current liabilities such as other financial liabilities by Rs.23cr,
other current liabilities by Rs.149cr and provisions by Rs.73cr.

4.1.5 SCHEDULE OF CHANGES IN WORKING CAPITAL (2022 and 2023)

PARTICULARS 2022 2023 INCREASE DECREASE

 A. CURRENT
ASSESTS
Current Investments

Inventories 3383 3890 507

Investment 2683 3510 827

Loans 34 34
Trade Receivables 1648 1932 284
Cash And Cash 1740 988 752
Equivalents

Bank Balance Other 2581 2630 49

Than Cash And Cash
Equivalents

Other Financial Assets 1116 1070 142 46

Other Current Assets 438 580
Assets Held For Sale 17 13 4

TOTAL (A) 13640 14647

B. CURRENT
LIABILITIES

Lease liabilities 264 285 21

Trade Payables

Total outstanding Dues 64 56 8

To Micro And Small
Enterprises
Total outstanding dues 8563 8808 245
for creditors other than
micro and small
enterprises.

Other financial 892 823 69

liabilities.

Other Current 567 638 71

Liabilities
Provisions 491 334 157

TOTAL(B) 10841 10944

NET WORKING 2799 3703

CAPITAL (A-B)
NET INCREASE 904 904
IN WORKING
CAPITAL

TOTAL 3703 3703 2043 2043

SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that the working capital of 2021 was Rs.2799cr and for
2022 was Rs.3703cr. The working capital has increased by Rs.904cr from 2022 to
2023. In the year 2022-23, there is increase in Trade receivables by Rs.284cr,
inventories by Rs.507cr, bank balance other than cash and cash equivalents by Rs.49cr,
 investments by Rs.827cr and other financial assets decreased by Rs.46cr. Other current
assets increased by Rs142cr and assets held for sale decreased by Rs.4cr.
There was a decrease in current liabilities such as other financial liabilities by Rs.69cr,
increase in other current liabilities by Rs.71cr and decrease in provisions by Rs.157cr.

I. LIQUIDITY RATIOS

4.2.1 CURRENT RATIOS

5.2.1 TABLE CURRENT RATIOS

YEAR CURRENT CURRENT

CURRENT
LIABILITY
ASSET RATIO

2018- 11139 8636 1.29

2019

2019- 11373 8353 1.36

2020

2020- 11908 9104 1.31

2021

2021- 13640 10841 1.26

2022

2022- 14647 10944 1.34

2023

4.2.1 GRAPH FOR CURRENT RATIO

CURRENT RATIO
1.38

1.36
1.34
 1.32

1.3

1.28

1.26
1.24
1.22 1.2

2018

- 2019-2020 2020-2021 2021-2022 2 022-

201 2023
9 CURRENT RATIO

SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that in the year 2018-2019, the current ratio was 1.29
which increased to 1.36 in 2019-2020.In 2020-2021 the ratio decreased slightly to 1.31.
It further decreased to 1.26 in 2021-22.In 2022-23 the ratio showed a rise to 1.34.The
ideal current ratio is 2:1. Since the current ratio is below the ideal ratio in all the years, it
indicates that the company doesn’t have enough current assets to cover its short term
liabilities.
4.2.2 LIQUID RATIO
4.2.2 TABLE LIQUID RATIO

YEAR LIQUID CURRENT QUICK

LIABILITY RATIO/LIQUID
ASSETS
RATIO

2018- 8780 8636 1.02

2019

2019- 8952 8353 1.07

2020

2020- 9272 9104 1.02

2021

2021- 10257 10841 0.95

2022

2022- 10757 10944 0.98

2023

4.2.2 GRAPH FOR LIQUID RATIOS

 SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that the ideal liquid ratio is 1:1. The liquid ratio of HUL is satisfactory
for all the years except for the years 2021 and 2022. Liquid ratio of 0.95 and 0.98 indicates the poor
liquidity position of the company. Higher liquid ratio indicates that the company is able to pay its

current liabilities with quick assets.

4.2.3 ABSOLUTE LIQUID RATIO

4.2.3 TABLE ABSOLUTE LIQUID RATIOS

YEAR ABSOLUTE ABSOLUTE

CURRENT
LIQUI ASSETS LIQUID RATIO
LIABILITY

2018- 573 8636 0.07

2019

2019- 575 8353 0.07

2020

2020- 3130 9104 0.34

2021

2021- 1740 10841 0.16

2022
 2022- 988 10944 0.09
2023

4.2.3

GRAPH FOR ABSOLUTE LIQUID RATIO SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that the ideal absolute liquid ratio is 1:2 or 0.5:1. A
business with an absolute liquidity ratio of 0.5 or over 0.5 indicates that it is thriving.
All the ratios of HUL are below the standard of the ideal ratio.

II. TURNOVER RATIOS

A. INVENTORY TURNOVER RATIO

4.2.4 TABLE INVENTORY TURNOVER RATIO

 YEAR COST OF AVERAGE INVENTORY
INVENTORY
REVENUE TURNOVER
FROM RATIO
OPERATIONS

2018- 34619 2360.5 14.67

2019

2019- 37660 2390.5 15.75

2020

2020- 38273 2529 15.13

2021

2021- 45311 3009.5 15.06

2022

2022- 50336 3636.5 13.84

2023

4.2.4 GRAPH FOR INVENTORY TURNOVER RATIO

SOURCE: SECONDARY DATA

 INTERPRETATION

Form the above table, we infer that the table shows that the inventory turnover ratio of
HUL was highest in the financial year 2018-2019 which was 15.75 and lowest in the
financial year 2021-2022 which was 13.84. The inventory turnover ratio was 14.67 in
the financial year 2017-2018 and then slightly increased to 15.13 in the year 2019-2020
and decreased to 15.06 in the year 2020-2021.

B. TRADE RECIEVABLES TURNOVER RATIO

4.2.5 TABLE TRADE RECIEVABLES TURNOVER RATIOS

YEAR NET CREDIT AVERAGE TRADE

REVENUE TRADE RECIEVABLES
FROM RECEIVABLES TURNOVER
OPERATIONS RATIO

2018-19 35218 1037.5 33.95

2019-20 38224 1410 27.11

2020-21 38785 1359.5 28.53

2021-22 45996 1347 34.15

2022-23 51193 1790 28.59

4.2.5 GRAPH FOR TRADE RECIEVABLES TURNOVER RATIOS

SOURCE: SECONDARY DATA

INTERPRETATION
Form the above table, we infer that the trade receivables turnover ratio of HUL was
highest in the year 2020-21. It was lowest in the year 2018-19. A high receivables turnover
ratio indicates that the company’s collection on accounts receivable is efficient and that the
business has a high proportion of customers who make their payments quickly in order to
write off the debts.

AVERAGE DEBT COLLECTION PERIOD

4.2.6 TABLE AVERAGE DEBT COLLECTION PERIOD

YEAR NO OF DAYS DEBTORS AVERAGE

TURNOVER DEBT
RATIO COLLECTION
PERIOD

2018-2019 365 33.95 11 days

2019-2020 365 27.11 13 days

2020-2021 365 28.53 13 days

 2021-2022 365 34.15 11 days

2022-2023 365 28.59 13 days

4.2.6 GRAPH FOR AVERAGE DEBT COLLECTION PERIOD

AVERAGE DEBT COLLECTION PERIOD
13.5

13

12.5

12

11.5

11

10.5 10

2018 2022-
-2019 2019-2020 2020-2021 2021-2022
2023

SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that this table indicates the number of days the customers
take on an average to pay their invoices for credit sales. A high debt collection period
could indicate trouble with cash flows. The average debt collection period of HUL is 13
days in the years2018-2019, 2019-2020 and 2021-2022.

C.WORKING CAPITAL TURNOVER RATIO

4.2.7 TABLE WORKING CAPITAL TURNOVER RATIOS
 YEAR REVENUE NET WORKING WORKING
FROM CAPITAL CAPITAL
OPERATIONS TURNOVER
RATIO

2018-2019 35218 2503 14.07

2019-2020 38224 3020 12.65

2020-2021 38785 2804 13.83

2021-2022 45996 2799 16.43

2022-2023 51193 3703 13.82

4.2.7 GRAPH FOR WORKING CAPITAL TURNOVER RATIOS

SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that this table indicates the number of days the customers
take on an average to pay their invoices for credit sales. A high debt collection period
could indicate trouble with cash flows. The average debt collection period of HUL is 13
days in the years2018-2019, 2019-2020 and 2021-2022.
 C.WORKING CAPITAL TURNOVER RATIO

4.2.8 TABLE WORKING CAPITAL TURNOVER RATIOS

YEAR REVENUE NET WORKING WORKING

FROM CAPITAL CAPITAL
OPERATIONS TURNOVER
RATIO

2018-2019 35218 2503 14.07

2019-2020 38224 3020 12.65

2020-2021 38785 2804 13.83

2021-2022 45996 2799 16.43

4.2.8 GRAPH FOR WORKING CAPITAL TURNOVER RATIOS

SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that in the above graph we can see that the current assets
show an upward trend. It gradually kept increasing from 100 in the year 2017-18 to 107
in the year 2019-20. It was followed by a sharp increase to 122 in the year 2020-21 which
again increased to 131 in the year 2021-22.

A. TREND ANALYSIS OF INVENTORY

4.2.9 TABLE TREND PERCENTAGES OF INVENTORY (BASE YEAR – 2018)

YEAR INVENTORY TREND PERCENTAGE

2018-2019 2359 100

2019-2020 2422 102

2020-2021 26361 112

 2021-2022 3383 143

2022-2023 3890 165

4.2.9 GRAPH FOR TREND PERCENTAGE OF INVENTORY

SOURCE: SECONDARY DATA

INTERPRETATION

Form the above table, we infer that from the graph it can be seen that the inventory hasn’t
shown drastic fluctuations during the first three years. In the year 2020-21 it showed a
sharp increase from 112 to 143 which further increased to 165 in 2021-22.

B. TREND ANALYSIS OF CASH

4.2.10 TABLE TREND PERCENTAGES OF CASH (BASE YEAR – 2018)

+- CASH TREND
PERCENTAGE
 2018-2019 573 100

2019-2020 574 100.1

2020-2021 3130 546

2021-2022 1740 304

2022-2023 988 172

SOURCE: SECONDARY DATA

4.2.10 GRAPH FOR TREND PERCENTAGE OF CASH

INTERPRETATION

Form the above table, we infer that from the graph we can say that the cash has not
increased during the first two years after which it drastically increased from 100 % to
546% in the year 2019-20. The cash level declined in the year 2020-21 from 546% to
304% which further declined to 172% in 2021-22.
 D.TREND ANALYSIS OF CURRENT LIABILITIES

4.2.11 TABLE TREND PERCENTAGES OF CURRENT LIABILITIES (BASE YEAR –

2018)

YEAR CURRENT TREND PERCENTAGE

LIABILITIES

2018-2019 8636 100

2019-2020 8353 97

2020-2021 9104 105

2021-2022 10841 126

2022-2023 10944 128

4.2.11 GRAPH OF TREND PERCENTAGE OF CURRENT LIABILITIES

SOURCE: SECONDARY DATA

INTERPRETATION
Form the above table, we infer that from a fall in the year 2018-19, the graph the current
liabilities show a steady increase in the last three years.

CHAPTER- 5
FINDINGS, SUGGESTIONS AND CONCLUSIONS
 CHAPTER – 5

FINDINGS, SUGGESTIONS AND CONCLUSIONS

5.1 FINDINGS
The study was about the working capital management of Hindustan Unilever
Limited. The study was undertaken with the objective to analyze and interpret
efficiency of the company in the management of its working capital. Ratio analysis
and its interpretation, preparation of statement of changes in working capital and
trend analysis was done for the purpose of this study. The important findings of this
study are stated below:

• The working capital has increased from 2018 to 2019. In the year 2018-19, there
is increase in trade receivables, other financial assets, other current assets and
decrease in inventories, investments and assets held for sale.
There was an increase in current liabilities such as other financial liabilities by,
other current liabilities and provisions.

• The working capital has increased from 2019 to 2020. In the year 2019-20, there
is increase in trade receivables, inventories, bank balance other than cash and
cash equivalents and decrease in investments, other financial assets, other current
assets
and assets held for sale. There was an increase in current liabilities such as other
financial liabilities and decrease in other current liabilities and provisions.
• The working capital has decreased from 2020 to 2021. In the year 2020-21, there
is decrease in trade receivables, increase in other financial assets, increase in
other current assets and increase in inventories, decrease in investments and
increase in assets held for sale. There was an increase in current liabilities such as
other financial liabilities, decrease in other current liabilities and provisions.

• The working capital has decreased from 2021 to 2022.In the year 2021-22, there
is increase in trade receivables, inventories, bank balance other than cash and
equivalents and investments, and decrease in cash and cash equivalents, other
financial assets, other current assets and assets held for sale. There was an increase
in current liabilities such as other financial liabilities, other current liabilities and
provisions.

• The working capital has increased from 2022 to 2023. In the year 2022-23, there
is increase in trade receivables, inventories, bank balance other than cash and
cash equivalents, investments and other financial assets decreased. Other current
assets increased and assets held for sale decreased. There was a decrease in
current liabilities such as other financial liabilities, increase in other current
liabilities and decrease in provisions.

• It was found that the current ratio of HUL in all the years are below the standard
of 2:1. Since the current assets are greater than current liabilities then the ratio is
greater than 1:1 which is a desirable situation to be in. Therefore, the position of
the company is satisfactory but not safe. 2018-19 showed the highest current ratio
which was 1.36.

• The liquid ratio of HUL is satisfactory for all the years except for the years 2020-
21 and 2021-22. The liquid ratio of these years indicates the poor liquidity
position of the company.
• The ideal absolute liquid ratio is 0.5:1. Since, the absolute liquid ratio of HUL for
all the years are below the standard, the position of the company is not safe at all.
 • Inventory turnover ratio of HUL was highest in the financial year 2018-19 and
lowest in the year 2021-22. Generally, a low ratio indicates bad sales or surplus
inventory and higher ratio indicates better sales.

• The trade receivables turnover ratio of HUL was highest in the year 2020-21 and
lowest in 2018-19. A higher ratio is more favorable. A low ratio is a sign of bad
debt collecting methods.

• The average debt collection period of HUL is 13 days in the years 2018-19, 2019- 20,
and 2021-22 which was the highest. The lowest is 11 days which was seen in the year
2018-19 and 2020-21. High debt collection period indicates trouble with cash flows.

• There haven’t been any drastic changes in the working capital ratio of HUL
during the 5 years. It was highest in the year 2021, which implies better
utilization of working capital

• Current assets of HUL shows an upward trend during the five years.

• Inventory of HUL hasn’t shown drastic fluctuation during the first three years
which later showed a sharp increase in the consequent years.

• Cash has not increased during the first two years after which it drastically
increased. Later it declined.

• Current liabilities if HUL showed a steady increase in the last three years.

5.2 SUGGESTIONS

• The current ratio of the company was below the standard of 2:1 in all the years. In
order to maintain the standard, the company has to either increase the current asset or
 decrease the current liability. For example, by increasing current investments, settling
trade payables etc.

• The liquid ratio of the company attained the ideal ratio in the last two years. But, in
the first three years the ratio was not satisfactory. Therefore, the company should
either increase its quick assets or decrease its current liabilities.

• The absolute liquid ratio of HUL is below the standard of 0.5:1 in all the years.
Therefore, the company should decrease current assets or improve its cash position.

• The cash position of the company can be improved by selling off unproductive assets
which will lead to better liquidity position.

• The inventory turnover can be increased through sales forecasting, trying a new
marketing strategy, improving the accuracy of demand forecasting etc.

• Working capital is important for meeting day to day expenses. There is a net increase
in working capital in all the years except in the years 2019-20 and 2020-21.

5.3 CONCLUSION

Working capital is the life blood of a company. It is the prime and most essential
requirement for carrying out the day-to-day operations of the business. It ensures liquidity
in the business. From the study we conclude that there is consistent growth in company’s
financial position. Company maintained their working capital in proper manner and it
improves their financial stability of company. The working capital management is most
prominent function of the company because it boost up firms operations for long term
and short purpose.
 BIBLIOGRAPHY
WEBSITES

https://www.hul.co.in/ https://www.hul.co.in/investor-relations/annual-reports/
https://en.m.wikipedia.org/wiki/Hindustan_Unilever https://www.hul.co.in/our-
company/introduction-to-hul/ https://www.hul.co.in/our-company/
https://www.investopedia.com/terms/w/workingcapitalmanagement.a sp
#:~:text=What%20Is%20Working%20Capital%20Management,be%20
quantified%20using%20ratio%20analysis

BOOKS
Management Accounting by Dr. Jayan