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CHAPTER-8

BILLS RECEIVABLE MANAGEMENT AND BILLS PAYABLE MANAGEMENT


CHAPTER - 8 PAGE 302

CAHPTER - 8

BILLS RECEIVABLE MANAGEMENT AND BILLS PAYABLE

MANAGEMENT

8.1 INTRODUCTION OF RECEIVABLE MANAGEMENT

8.2 MEANING OF RECEIVABLES

8.3 NEED OF MAINTAINING RECEIVABLES

8.4 COST OF MAINTAINING RECEIVABLES

8.5 OBJECTIVES OF RECEIVABLES MANAGEMENT

8.6 PRINCIPLES OF CREDIT ADMINISTRATION

8.7 ALLOCATION OF AUTHORITY

8.8 OPTIMUM CREDIT POLICY

8.9 ASPECTS OF CREDIT POLICY

8.10 DEBTORS TURNOVER RATIO

8.11 AVERAGE COLLECTION PERIOD

8.12 INTRODUCTION OF PAYABLE MANAGEMENT

8.13 TRADE CREDIT BETWEEN FIRMS

8.14 TERMS OF TRADE CREDIT

8.15 OBTAINING TRADE CREDIT

8.16 THE PAYABLE MANAGEMENT EFFICIENCY OF

ANALYSIS

8.17 CREDITOR’S TURNOVER RATIO / ACCOUNT

PAYABLES TURNOVER RATIO

8.18 AVERAGE PAYABLES PERIOD

8.19 RERERENCES

8.20 CONCLUSION



CAHPTER - 8

BILLS RECEIVABLE MANAGEMENT AND BILLS PAYABLE

MANAGEMENT

8.1 INTRODUCTION OF RECEIVABLE MANAGEMENT

The receivable management represent an important component of the current

assets of a firm. The amount of investment in accounts receivable for most firms also

represents a very substantial portion of current assets.

According to I. M. Pandey

“Trade credit is the most prominent force of the mordent business. It is

considered as an essential marketing tool, acting as a bridge for the movement of

goods from production and distribution stages to customers finally. A f8.irm grants

trade credit to protect its sales from the competitors and attract potential customers to

buy its products on favourable terms. Granting credit and creating receivables amount

to the blocking of the firm’s fund. The interval period between the date of sale and the

date of receipt of payment has to be financed out working capital funds. Thus, trade

debtors represent investment. As substantial amounts are tied-up in trade debtors or

receivables, it needs careful analysis and proper management.”

8.2 MEANING OF RECEIVABLES

The term ‘receivables’ has been defined by Emarson As:

“When goods or services are sold under an arrangement permitting the

customers to pay for them at a later date, the amount due from the customers is

recorded as accounts receivable”.

This is an asset account, representing claim to future payments of cash from

the customer.

According to Robert N. Anthony:

“Accounts receivable are amounts owed to the business firm, usually by its

customers. Sometimes this is broken down into trade accounts receivable and other

accounts receivable, the former refers to amounts owed by customers, and the later

refers to amounts owed by employees and others”.



The receivables arising out of credit has three characteristics. Firstly it

involves an element of risk which should be carefully analysed. Cash sales are totally

riskless, but not the credit sales, as the cash payment have yet to be received.

Secondly, it is based on economic value in goods or services passes immediately at

the time of sales, while the seller expects an equivalent value to be received later on.

Thirdly, it implies futurity. The cash payment for goods or services received by the

buyer will be made by him in a future period.

8.3 NEED OF MAINTAINING RECEIVABLES

The firm grants trade credit because it expects the investment in receivable to

be profitable. The immediate impact of granting trade credit shows up in the firm’s

sales level, and the motivation for investment in receivables may be either oriented

toward sales expansion or sales retention. Sales expansion motivated investment in

receivables refers to granting more trade credit to enable sales to present customers to

increase and or to attract new customers.

This need for account receivable is growth-oriented. Sales retention motivated

investment in receivable refers to granting trade credit to protect the firm’s sales from

compactors sales programmes.

8.4 COST OF MAINTAINING RECEIVABLES

The maintenance of receivable involves a credit sanction which means that the

funds of the tie up with it. The cost of maintaining receivable is incurred because of

the following factors:

Financing receivables:

The use of credit invariably involves the tying up of capital.

Receivables may be financed from existing capital or long term debt, or by

using additional capital or long term debt, as the case may be.

Administrative expenses:

The maintenance of receivables calls for the use of an administrative

machinery ways. A firm have to conduct investigations to find out the

creditworthiness or otherwise of its customers. Administrative expenses are

therefore, incurred on the maintenance of receivables.

Cost of collection:



An effective maintenance of receivables depends ultimately upon the

effective collection receivables. A firm may be constrained to appoint several

persons or engage collection agencies to remind and even call on delinquent

customers make payments. A number of collection letters and reminders

usually follow. This eventually increases the cost of collection.

Default cost:

After making all the attempts to recover the money, the firm may not

be able to do so because of the inability of the customers. Such debts are

treated as bed debts and have to be written off as they cannot be recovered.

Such costs are known as default costs with receivables.

8.5 OBJECTIVES OF RECEIVABLES MANAGEMENT

The basic objective of receivable management is to maximise the value of the

firm by achieving a trade off between liquidity and profitability. In fact, the firm

should manage its credit in such a way that sales are expanded to an extent to which

risk remains within an acceptable limit. Thus, to achieve the objective to maximising

the value, the firm should manage its trade credit:

To obtain optimum value of sales.

To control the cost of credit and keep it at minimum.

To maintain investment in debtors at optimum level.

The purpose of credit management is not sales maximisation. But efficient and

effective credit management does help to expand sales and can prove to be an

effective tool of marketing. It helps to retain old customer’s ad win new customers.

Well administrative credit means profitable credit amount. Thus, the objective of

receivable management is to promote sales and profit until that point is reached where

the return on investment in further finding or receivable is less than the cost of funds

raises to finance that additional credit.

8.6 PRINCIPLES OF CREDIT ADMINISTRATION

According to Joseph L. Wood:

“The purpose of any commercial enterprise is the earning of profit. Credit is

itself is utilised to increase sales, but sales must return a profit.”

In the words of R. K. Mishra:



“To make receivables management sound and effective, a business should

follow certain well recognised and established principles of credit and collection

policies. The first of these principles relates to allocation of authority pertaining to

credit and collection to some specific department. The second principle puts stress on

the selection of proper credit terms. The third principle of credit and collection

policies emphasizes a is taken. And the last principle touches upon the establishment

of sound collection policies and procedures.”

8.7 ALLOCATION OF AUTHORITY

The size of receivables in any firm fluctuates according to the efficacy of its

credit and collection policies. The effectiveness with which credit and collection

policies are formulated and executed, in turn, depends upon the location of the credit

department in the organizational structure of a firm. The credit and collection function

is generally viewed either as a finance function, which places it under the direct

responsibility of the chief finance officer, or it is viewed as an integral part of the

sales function, and in that case it is located in the sales organisation.

An argument which favour the former position in that this function is

fundamentally financial in nature since it directly affects the flow of funds.

Furthermore, credit affects the solvency of the firm. For these reason, credit and

collection functions should be placed under the direct supervision of the individuals

who are responsible for the firm’s financial position. There are others who suggested

that business firms should enforce upon their sales departments strictly the principles

that sales are incomplete until the value thereof is realised.

The exponents of this view also plead that since the objective of this function

is credit maximum sales with minimum bed debt losses, the function should be the

chief sales officer since the sales force is an a better position to evaluate the credit

capacity of the firm’s customers that the finance officer. Opposing this argument, it is

adduced that sales managers in their enthusiasm for sales volume often grant credit

department from achieving its true objectives. Thus, it may be concluded that the

sound administration of credit with the view that the working capital position is least

strained, requires that authority in this regard be allocated to the sales or finance

department.



8.8 OPTIMUM CREDIT POLICY

The term credit policy refers to those decision variables that influence the

amount of trade credit, i.e., the investment in receivables. The firm’s investment in

receivables are affected by some uncontrollable factors like economic conditions,

industry norms, competitions etc., but it can certainly influence the level of trade

credit through its credit policy within these constraints imposed externally. Further,

whenever some external factors change, the firm can accordingly adapt its credit

policy.

Tight or Loose Credit policy:

The credit policy of any firm may broadly be classified as ‘tight’ credit policy

or ‘loose’ credit policy. Firms with tight credit policies tend to sell on credit only to

those customers who have the highest quality credit ratings. On the other hand, array

of customers, including customers with relatively low credit ratings. In fact, firms

follow credit policies which range between tight and loos credit policies. Credit

policies differ in their effects on the firm’s sales costs and profits.

Generally, firms pursuing loose credit policies will have higher sales and

profits as compared to similar firm following tight credit policies. Loose credit

policies stimulate sales because the potential customer’s base is broadened. But firms

with loose credit policies can incur higher bad debt losses and face the problem of

liquidity as compared to the firms with tight credit policies. A tight credit policy

follows tight credit standards and terms and as a result, minimise costs and chances of

bed debts. Such policies do not pose the serious problems of liquidity. But they

restrict sales and profit margins. The objective of credit management, therefore,

should be the achievement of a balance that maximises the overall return of the firm.

Thus, the decision to grant trade credit involves a trade-off. Certain benefits

will accrue to the firm from establishing a particular trade credit policy and certain

costs will be incurred. The firm’s problem is to compare the costs and benefits

involved to determine its best level of receivables. The costs and benefits to be

compared are marginal costs and benefits.

Cost-Benefits Trade-off:

The determination of optimum investment in receivables involves a trade-off

between costs and benefits. The major considerations in costs are liquidity and



opportunity costs. Liquidity consideration concerns the possibility of receivables

being collected in time and at full value. As the firm’s policy become loose, the

chances of the bed debts increase and collection period gets extended. This poses a

problem of liquidity. Loose credit policy also involves large investment in receivables

and thus, adds to opportunity costs. On the other hand, profitability is expected to

improve when credit policy is relaxed. Loose policy tends to expand sales and the

increased revenue results. The optimum credit policy will be determined by the trade

off between liquidity and profitability.

It is indicated that the firm becomes less liquid as its credit policy relaxes. But

profitability increase as the credit policy becomes more and more liberal. The

optimum credit policy should occur at a point where there is a trade off between

liquidity and profitability.

8.9 ASPECTS OF CREDIT POLICY

The success or failure of a business depends to a large extent on its level of

sales as a rule, the higher the sales volume, the grater the profit and the healthier the

firm. Sales, in turn, depend on a number of factors, some of which are controllable by

the firm. The major controllable variable which affects sales or sales price are product

quality, advertisement and firm’s credit policy. Credit policy, in turn, consists of these

three elements

Credit Terms

Credit Standards

Collection Policy

Credit Terms

The stipulation under which the firm sells on credit to its customers is called

terms. A firm should carefully decide upon the terms of credit. The decision of the

terms on which credit will be granted may cover the various aspects of a credit policy,

namely, selection of credits customers, approval of credit periods, acceptance of sale

discount and provision regarding the instruments of security for credits to be

accepted. The terms should be determined in the light of the needs of the firm and the

established practices of concern in this regard. This selection of credit customers

should be made on the basis of the amount of bed debt losses which a firm can absorb



in any given period. The amount funds tied up in receivables is directly related to the

limits of credit granted to customers.

Beckman Says:

“These limit should never be ascertained on the basis of the subject’s own

requirements; they should be based upon the debts paying power of customer and his

ledger record of the orders and payment.”

The time duration for which credit is extended to the customers is referred to

as credit period. It is generally stated in terms of net date. Usually the credit period of

the firm’s governed by the industry norms, but firms can extend credit for longer

duration to stimulate sales. If the firm’s bed debts built up it may tighten up its credit

policy as against the industry norms.

Cash discount is another aspect of credit terms. Many firms offer cash

discount as inducements for customers to pay their bills early. If payment is made by

a certain date the buyer can pay less than the full amount of the invoice. The cash

discount terms indicate the rate of discount and the period for which discount has

been offered. If a customer does not avail himself of this offer, he is expected to

make the payment by the stipulated date.

“To make cash discount an effective tool of credit control, a firm should also

see that it is allowed to only those customers rho make payments of due date”

Credit terms can be used as an investment to push sales. The most desirable

credit terms, which increase the overall profitability of the firm, should be offered to

customers. The financial manager should compare costs and benefits f alternate credit

terms to find out the most desirable credit terms, finally, the credit terms of a firm

should lay stress upon the receipt of securities for the credits to be granted. Credit

sales may be got secured by being furnished with instruments such as trade

acceptance, promissory notes, or bank guarantees.

Credit Standards

The credit standard followed by the firm has an impact on sales and

receivables. The sales and receivable levels are likely to be high, if the credit

standards of the firm are relatively loose. Liberal credit standards tend to push sales

up by a higher incidence to bad debts loss, a larger investment in receivables, and a

higher cost of collection. Stiff credit standards have opposite effects. They tend to

depress sales, reduce the incidence of bad debts loss, decreases the investment in



receivables, and lower the collection cost. The firm’s credit standards are influenced

by “Five C’s” of credit:- character, capacity, capital, collateral and conditions.

Character refers to the profitability that a customers will try to honour his

obligations. This factor is of considerable importance, because every credit

transaction implies a promise to pay.

Capacity is gauged by his past record, supplemented by physical observation

of the customer’s plant or store and business methods.

Capital is measured by the general financial position of the firm as indicated

by a financial ratio analysis, with special emphasis on the tangible net worth of the

firm.

Collateral is represented by assets that the customer may offer as a pledge for

security of the credit extended to him.

Condition refers to the impact of general economic trends on the firm or to

special developments in certain areas of economy that may affect the customer’s

ability to meet his obligations.

Normally, a firm should lower its credit standards to the extent profitability of

increased sales exceeds the associated costs. The extent to which credit standards can

be liberalised should depend upon the matching between the profits arising due to

increased sales and the costs to be incurred on the increased sales.

Collection Policy:

A collection policy is required because all customers do not pay the firm’s

bills in time. The collection programme of the firm, aimed at timely collection of

receivables. It may consist of the following:

Monitoring the state of receivables.

Despatch of latter to customers whose due date is approaching.

Telegraphic and telephonic advice to customers around the due date.

Threat of legal action to overdue accounts.

Legal action against overdue accounts.

The basic idea underlying formulation of collection policy is to ensure the

earliest possible payment on receivables without any customer losses through ill will.

Prompt collection of accounts tends to reduce investment required to carry receivable

and the cost associated with it. Percentage of bad debts is very likely to decrease.



The most important variable of credit policy is the expenditure on collection of

accounts. Other things being equal, greater the amount spent on collection efforts, the

lower the percentage of bad debts losses and shorter is the average collection period

and vice-versa. However, the relationship between collection expenditures and bad

debts losses is not as linear as it appears. In determining the most suitable collection

policy for the firm, the financial manager must strike balance between the costs and

benefits of different collection policies.

8.10 DEBTORS TURNOVER RATIO:

Meaning :

This Ratio establishes a relationship between net credit sales and

average debtor’s + Bills Receivable.

Objective :

The objective of computing this ratio is to determine the efficiency

with which the trade debtor’s are converted into cash

Components :

1. Net credit sales which mean gross credit sales minus sales return.

2. Average Debtor’s and Bill Receivable

Computation and interpretations :

This ratio is computed by dividing the Net Credit sales by the Average

Debtor’s and Bill Receivable. This ratio is usually express as a ‘x’ number of

times. In the form of a formula, this ratio may be express as follows:

𝐃𝐞𝐛𝐭𝐨𝐫𝐬 𝐓𝐫𝐮𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 = 𝐍𝐞𝐭 𝐂𝐫𝐞𝐝𝐢𝐭 𝐒𝐚𝐥𝐞𝐬

𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐃𝐞𝐛𝐭𝐨𝐫′𝐬

This ratio indicates both the quality of Debtor’s and the credit collection

efforts of the enterprise. It’s also the speed with which the Debtor’s are converted into

cash in the year. In general, a high ratio indicates the shorter collection period which

implies prompt payments by Debtor’s and a low ratio indicates a longer collection

period which implies delayed payment by Debtor’s. Thus, an enterprise should have

neither a very high nor a very low ratio; it should have a satisfactory ratio. To judge

whether the ratio is satisfactory or not, it should be compare with its own past ratio or

with the ratio of similar firm in the same industry or with the industry average.



The Debtor’s Turnover Ratio of selected companies of Automobile Industry in

India is given in the Table No- 8.1 as follows: on the next page

Table :- 8.1

Debtor Turnover Ratio in Times From 2005 –’06 to 2011 –‘12

COMPANY NAME

YEAR

IAP

PM

BIL

td

JK

PM

OP

IL

SP

BL

SP

ML

SIP

L

SP

M L

td

TN

NP

L

WC

PM

L

2005-'06 16.89 6.62 5.67 75.32 8.52 9.60 5.86 28.61 6.05 13.49

2006-'07 13.96 6.11 7.05 8.87 8.21 14.99 5.95 42.17 8.11 12.72

2007-'08 12.62 5.05 5.47 9.51 9.14 10.38 6.44 39.64 9.52 13.60

2008-'09 16.21 4.86 10.05 10.68 10.03 5.75 5.95 37.65 6.28 14.28

2009-'10 13.98 4.60 10.58 8.78 11.32 6.86 7.66 23.56 5.14 18.22

2010-'11 14.19 4.34 11.41 8.17 10.87 6.76 8.81 27.36 5.75 14.55

2011-'12 18.96 4.63 9.21 7.18 6.10 6.23 8.56 32.49 4.18 17.92

Average 15.26 5.17 8.49 18.36 9.17 8.66 7.03 33.07 6.43 14.97

S.D. 2.19 0.85 2.41 25.14 1.78 3.30 1.29 6.95 1.81 2.20

C.V. 14.33 16.52 28.42 136.93 19.41 38.07 18.34 21.03 28.17 14.69

Min 12.62 4.34 5.47 7.18 6.10 5.75 5.86 23.56 4.18 12.72

Max 18.96 6.62 11.41 75.32 11.32 14.99 8.81 42.17 9.52 18.22

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Graph - 8.1

Debtors Turnover Ratio In Times From 2005 -'06 to

2011 -'12

2005-'06

2006-'07

2007-'08

2008-'09

2009-'10

2010-'11

2011-'12



The above mentioned Table No- 8.1 and Graph No- 8.1 show the indicated a

fluctuating trends of the Debtor’s turnover ratio of selected paper companies in India

from 2005-2006 to 2011-2012.

1. International Andhra Pradesh Paper Mills Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the

International Andhra Pradesh Paper Mills Limited during the study period form

2005 –’06 to 2011 –’12, the highest debtors turnover ratio is 18.96 times in the

year 2011 –’12 and the lowest debtors turnover ratio is 12.62 times in the year of

2007 –’08.

In the year 2005 –’06 the debtor’s turnover ratio has been shown as 16.89

times, which has been decreased in 2006 –’07 to 2007 –’08 has been 13.96 times

and 12.62 times which is shown above in the table no - 8.1. But in the year 2008

–’09 the debtor’s turnover ratio has been increased and reached 16.21 times and

in 2009 –’10 it has been decreased and reached at 13.98 times, than after debtor’s

turnover ratio has been increased in 2010 –’11 and reached at 14.19 times in

selected study period. But the last year of the study period it has been increased

and reached at 18.96 times in 2011 –‘12. It has been also shown in graph – 8.1.

So, the average (AVG.) debtor’s turnover ratio is 15.26 times, the standard

deviation (S.D) is 2.19 times and co-efficient variance (C.V) is 14.33% which is

show in table no - 8.1. Which solvency of International Andhra Pradesh Paper

Mills limited because the average debtor’s turnover ratio shows satisfactory ratio

during the study period.

2. Ballarpur Paper Mills Limited

The table no - 8.1 shows that the debtors turnover ratio of the Ballarpur

Paper Mills Limited during the study period form 2005 –’06 to 2011 –’12, the

highest debtor’s turnover ratio is 6.62 times in the year 2005 –’06 and the lowest

debtor’s turnover ratio is 4.34 times in the year of 2010 –’11.

In the years from 2005 –’06 to 2010 –‘11 to the debtor’s turnover ratio has

been continuously decreased as 6.62 times, 6.11 times, 5.05 times, 4.86 times,

4.60 times and 4.34 times respectively. But at the end of the study period it has

been increased as 4.63 times in 2011 –’12. It has been also shown in graph – 8.1.





shown in table no - 8.1. Which solvency of Ballarpur Paper Mills limited because

the average debtor’s turnover ratio shows satisfactory ratio during the study

period.

2. JK Paper Mills Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the J. K. Paper

Mills Limited during the study period form 2005 –’06 to 2011 –’12, the highest

debtor’s turnover ratio is 11.41 times in the year 2010 –’11 and the lowest


In the year 2005 –’06 the debtor’s turnover ratio has been 5.67 times and it

has been increased in 2006 –’07 as 7.05 times, but it has been decreased 5.47

times in 2007 –’08. In the year from 2008 –’09 to 2010 –’11, it has been also

increased to 10.05 times, 10.58 times and 11.41 times. But, it has been decreased

in 2011 –’12 as 9.21 times. It has been also shown in the graph - 8.1.



shown in table no - 8.1. Which solvency of J. K. Paper Mills Limited because the

average debtor’s turnover ratio shows satisfactory ratio during the study period.

3. Orient Paper and Industries Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the Orient

Paper and Industries Limited during the study period form 2005 –’06 to 2011 –

’12, the maximum debtor’s turnover ratio is 75.32 times in the year 2005 –’06 and

the minimum debtor’s turnover ratio is 7.18 times in the year of 2011 –’12.

In the present the table no - 8.1 shows the debtor’s turnover ratio of Orient

Paper and Industries Limited is fluctuating in the whole study period. In 2005 –

’06 debtor’s turnover ratio has been shown as 75.32 times and it has been

decreased 8.87 times in 2006 –’07. But, then after the next two year it has been

increased as 9.51 times and 10.68 times from 2007 –‘’08 to 2008 –’09. In the last

three years from 2009 –’10 to 2011 –’12 it has been continuously decreased as

8.78 times, 8.17 times and 7.18 times respectively. It has been also shown in

graph – 8.1.



a show in table no - 8.1. Which solvency of Orient Paper and Industries Limited



because of the average debtor’s turnover ratio shows satisfactory ratio during the

study period.

4. Seshasayee Paper and Boards Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the Seshasayee

Paper and Boards Limited during the study period form 2005 –’06 to 2011 –’12,

the maximum debtor’s turnover ratio is 11.32 times in the year 2009 –’10 and the

minimum debtor’s turnover ratio is 7.18 times in the year of 2011 –’12.

In the table no - 8.1 shows the debtor’s turnover ratio of Seshasayee Paper

and Boards Limited is zigzag trend. It has been 8.52 times in 2005-’06 and it has

been decreased as 8.21 times. The debtor’s turnover ratio has been continuously

increased as 9.14 times, 10.03 times, and 11.32 times. But it has been decreased as

10.87 times and 6.10 times from 2010 –’11 and 2011 –’12. It has been also shown

in graph – 8.1.


deviation (S.D) is 1.78 times and co-efficient variance (C.V) is 19.41 % which is a

show in table no - 8.1. Which solvency of Seshasayee Paper and Boards Limited

because of the average debtor’s turnover ratio shows satisfactory ratio during the

study period.

5. Sirpur Paper Mills Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the Sirpur

Paper Mills Limited during the study period form 2005 –’06 to 2011 –’12, the

maximum debtor’s turnover ratio is 14.99 times in the year 2006 –’07 and the

minimum debtor's turnover ratio is 5.75 times in the year of 2008 –’09.

In the year 2005 –’06 the debtor’s turnover ratio has been shown as 9.60

times. Debtor’s turnover ratio has been increased 14.99 times in 2006 –’07 and it

has been decreased as 10.38 times and 5.75 times from 2007 –’08 to 2008 –’09.

Then after shows the fluctuating trend in debtor’s turnover ratio as 6.86 times,

6.76 times and 6.23 times from 2009 –’10 to 2011 –’12. It has been also shown in

the graph – 8.1.


deviation (S.D) is 3.30 times and co-efficient variance (C.V) is 38.07% which is a

show in table no - 8.1. Which solvency of Sirpur Paper Mills Limited because the




6. South India Paper Mills Limited

The table no - 8.1 and graph – 8.1 shows that the debtor’s turnover ratio of

the South India Paper Mills Limited the study period form 2005 –’06 to 2011 –

’12, the maximum debtor’s turnover ratio is 8.81 times in the year 2010 –’11 and

the minimum debtor’s turnover ratio is 5.86 times in the year of 2005 –’06.

In the table no - 8.1 and graph – 8.1 shows the debtor’s turnover ratio of

South India Paper Mills Limited form 2005 – ’06 to 2011 –’12. It is fluctuated

during the study period have been as 5.86 times, 5.95 times, 6.44 times, 5.95

times, 7.66 times, 8.81 times and 8.56 times respectively.


deviation (S.D) is 1.29 times and co-efficient variance (C.V) is 18.34 % which is

shown in table no - 8.1. Which solvency of South India Paper Mills Limited

because the average debtor’s turnover ratio shows satisfactory ratio during the

study period.

7. Star Paper Mills Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the Star Paper

Mills Limited the study period form 2005 –’06 to 2011 –’12, the maximum

debtor’s turnover ratio is 42.17 times in the year 2006 –’07 and the minimum


The table no - 8.1 and graph – 8.1 shows the debtor’s turnover ratio has

been shown as 28.61 times in 2005 –’06. It has been increased when reached

highest point as 42.17 times in year 2006 –’07. But, it has been decreased from

2007 – ’08 to 2009 –’10 as 39.64 times, 37.65 times and 23.56 times. But lat two

year of the study period from 2010 –’11 to 2011 –’12 it has been increased as

27.36 times and 32.49 times respectively.



shown in table no - 8.1. Which solvency of Star Paper Mills limited because the


8. T. N. Newsprint Paper Mills Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the T. N.

Newsprint Paper Mills Limited the study period form 2005 –’06 to 2011 –’12, the



maximum debtor’s turnover ratio is 9.52 times in the year 2007 –’08 and the

minimum debtor’s turnover ratio is 4.18 times in the year of 2011 –’12.

The above table no - 8.1 shows fluctuated in debtor’s turnover ratio trend

from 2005 – ’06 to 2011 –’12. In 2005 –’06 the debtor’s turnover ratio has been

shown as 6.05 times. It has been increased in the year 2006 –’07 at 8.11 times. But

then after it has been increased in 2007 –’08 at 9.52 times. But it has been

decreased again in the year 2008 –’09 to 2009 –‘10 as 6.28 times and 5.14times.

For the next year in 2010 -11 it has been increased as 5.75 times. At the last year

2011 –’12 it has been decreased and reached at lowest point as 4.18 times in 2011

–’12. It has been also shown in graph – 8.1.



shown in table no - 8.1. Which solvency of T. N. Newsprint Paper Mills Limited


study period.

9. West Coast Paper Mills Limited

The table no - 8.1 shows that the debtor’s turnover ratio of the West Coast

Paper Mills Limited the study period form 2005 –’06 to 2011 –’12, the maximum

debtor’s turnover ratio is 18.22 times in the year 2009 –’10 and the minimum

debtor’s turnover ratio is12.72 times in the year 2006 –’07.

In the West Coast Paper Mills Limited debtor’s turnover ratio has been

shown as 13.49 times in 2005 –’06. But, it has been decreased in year 2006 –’07

as 12.72 times. In the study period from 2007 – ’08 to 2009 –’10, a debtor’s

turnover ratio has been increased as 13.60 times 14.28 times, and 18.22 times. But

then after the debtor’s turnover ratio has been decreased at 14.55 times in 2010 –

’11. But again it has been increased in as 17.92 times in 2011 –’12. It has been

also shown in the graph - 8.1.



shown in table no - 8.1, which solvency of West Coast Paper Mills Limited


study period.



ANOVA TEST OF DEBTOR’S TURNOVER RATIO :

Hypothesis:

Ho: Null Hypothesis:

There is no significant difference in Debtor’s turnover ratio of

selected paper companies in India.

H1: Alternative Hypothesis:

There is significant difference in Debtor’s turnover ratio of


Level of Significance: 5%

The calculation of ANOVA test calculated in Microsoft excel programme.

Table :- 8.1.1

Debtor Turnover Ratio - ANOVA: Single Factor

SUMMARY

Groups Count Sum Average Variance

IAPPM 7 106.79235 15.25605012 4.781639

BILtd 7 36.213793 5.173399066 0.730147

JKPM 7 59.455684 8.493669188 5.826732

OPIL 7 128.52173 18.36024756 632.0084

SPBL 7 64.1878 9.169685727 3.168841

SPML 7 60.588699 8.655528392 10.86088

SIPL 7 49.225325 7.032189218 1.66365

SPM Ltd 7 231.49566 33.07080809 48.36076

TNNPL 7 45.042475 6.434639332 3.286334

WCPML 7 104.78179 14.96882744 4.835341

Table :8.1.2

ANOVA ( F- Test Result) of Debtor Turnover Ratio

Source of

Variation

SS D.F MS F P-value F crit

Between Groups 4432.52 9 492.5021 6.8831 9.8118 2.0401

Within Groups 4293.14 60 71.5522

Total 8725.66 69

Degree of freedom = 70-1= 69

Table Value of ‘F’ =2.0401

Calculate Value of ‘F’ = 6.8831



F calculate > F table

6.8831 > 2.0401


Table No-8.1.2 indicates the calculate value of ‘F’ is 6.8831 and the table

value of ‘F’ at 5% level of significance is 2.0401 so, the calculate value of ‘F’ which

is greater then the table value. It indicates that the Null Hypothesis is rejected and

Alternate Hypothesis is accepted. It indicates that there is significant in debtor’s

turnover ratio of selected paper companies in India

8.11 AVERAGE COLLECTION PERIOD

Meaning :

This Ratio establishes a relationship between Average Debtor’s, net Credit

sales and no of days in the year.

Objective :

The objective of computing this ratio is to determine the period shows an

average period which the credit sales.

Components :

1. Average Debtor’s which refer to Trade Debtor’s

2. Net Credit Sales which refers gross credit sales- sales return

3. No of Days =365 days

Computation and interpretations :

This ratio is computed by dividing the Average debtor’s by the net credit

sales multiplied by 365 days. This ratio is usually express as days. In the form of a

formula, this ratio may be express as follows:

𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐂𝐨𝐥𝐥𝐞𝐜𝐭𝐢𝐨𝐧 𝐏𝐞𝐫𝐢𝐨𝐝 = 𝐃𝐞𝐛𝐭𝐨𝐫𝐬

𝐍𝐞𝐭 𝐂𝐫𝐞𝐝𝐢𝐭 𝐒𝐚𝐥𝐞𝐬 𝐗 𝐍𝐨. 𝐨𝐟 𝐃𝐚𝐲𝐬(𝟑𝟔𝟓)

This ratio indicates an average period for which the credit sales remain

outstanding or the average credit period actually enjoyed by the debtors. It measures

the quality of debtors it indicates the rapidity or slowness with which the money is

collected form debtors. To judge whether the ratio is satisfactory or not, it should be

compare with its own past ratio or with the ratio of similar firm in the same industry



or with the industry average. The Average Collection period of selected companies of

Automobile Industry in India is given in the Table No-8.2 as follows:

Table:- 8.2

Average Collection Period Ratio (in Days) From 2005 –’06 to 2011 –‘12

COMPANY NAME

YEAR IA

PP

M

BIL

td

JK

PM

OP

IL

SP

BL

SP

ML

SIP

L

SP

M L

td

TN

NP

L

WC

PM

L

2005-'06 22 55 64 5 43 38 62 13 60 27

2006-'07 26 60 52 41 44 24 61 9 45 29

2007-'08 29 72 67 38 40 35 57 9 38 27

2008-'09 23 75 36 34 36 63 61 10 58 26

2009-'10 26 79 34 42 32 53 48 15 71 20

2010-'11 26 84 32 45 34 54 41 13 63 25

2011-'12 19 79 40 51 60 59 43 11 87 20

Average 24 72 46 37 41 47 53 11 60 25

S.D. 3 11 14 15 9 14 9 3 16 3

C.V. 14 15 31 41 23 31 17 22 27 14

Min 19 55 32 5 32 24 41 9 38 20

Max 29 84 67 51 60 63 62 15 87 29

The above mentioned Table No- 8.2 and Graph No- 8.2 show the indicated

fluctuated trends of the Average collection period of selected paper companies in

India from 2005-2006 to 2011-2012.

0

10

20

30

40

50

60

70

80

90

100

Graph: -8.2

Average Collection Period Ratio (in Days), From 2005 -

'06 to 2011 -'12

2005-'06 2006-'07 2007-'08 2008-'09 2009-'10 2010-'11 2011-'12




The table no - 8.2 shows that the average collection period of the International

Andhra Pradesh Paper Mills Limited during the study period form 2005 –’06 to 2011

–’12, the highest average collection period is 29 days in the year 2007 –’08 and the

lowest average collection period is 19 days in the year of 2011 –’12.

In the year 2005 –’06 the average collection period of 22 days, which has been

increased in 2006 –’07 to 2007 –’08 as 26 days and 29 days which is shown in above

table - 8.2. But in the year 2008 –’09 the average collection period has been

decreased and reached as 23 days and in 2009 –’10 it has been increased and reached

at 26 days in 2009 –’10 and, then after average collection period has no change in

2010 –’11 and reached at 26 days in selected study period. But the last year of the

study period it has been decreased and reached as 19 days in 2011 –‘12. It has been

also shown in graph – 8.2.

So, the average (AVG.) average collection period is 24 days, the standard

deviation (S.D) is 3 days and co-efficient variance (C.V) is 14% which is shown in

table no - 8.2. Which solvency of International Andhra Pradesh Paper Mills limited

because the average collection period shows satisfactory ratio during the study period.


The table no - 8.2 shows that the average collection period of the Ballarpur

Paper Mills Limited during the study period form 2005 –’06 to 2011 –’12, the highest

average collection period is 84 days in the year 2010 –’11 and the lowest average

collection period is 55 days in the year of 2005 –’06.

In the years from 2005 –’06 to 2010 –‘11 to the average collection period has

been continuously increased as 55 days, 60 days, 72 days, 75 days, 79 days and 84

days respectively. But at the end of the study period it has been decreased at 79 days

in 2011 –’12. It has been also shown in graph – 8.2.


deviation (S.D) is 11 days and co-efficient variance (C.V) is 15.00% which is shown

in table no - 8.2. Which solvency of Ballarpur Paper Mills limited because the average

collection period shows satisfactory ratio during the study period.


The table no - 8.2 shows that the average collection period of the J. K. Paper




average collection period is 67 days in the year 2007 –’08 and the lowest average


In the year 2005 –’06 the average collection period was as 64 days and it has

been decreased in 2006 –’07 as 52 days, but it has been increased as 67 days in 2007

–’08. In the year from 2008 –’09 to 2010 –’11, it has been also decreased to 36 days,

34 days and 32 days. But, it has been increased in 2011 –’12 as 40 days. It has been

also shown in the graph - 8.2.


deviation (S.D) is 14 days and co-efficient variance (C.V) is 31.00 % which is shown

in table no - 8.2. Which solvency of J. K. Paper Mills Limited because the average



The table no - 8.2 shows that the average collection period of the Orient Paper

and Industries Limited during the study period form 2005 –’06 to 2011 –’12, the

maximum average collection period is 21 days in the year 2011 –’12 and the

minimum average collection period is 5 days in the year of 2005 –’06.

In the present the table no - 8.2 shows the average collection period of Orient

Paper and Industries Limited is fluctuating in the whole study period. In 2005 –’06

average collection period was 5 days and it has been increased as 41 days in 2006 –

’07. But, then after the next two year it has been decreased as 38 days and 34 days

from 2007 –‘’08 to 2008 –’09. In the last three years from 2009 –’10 to 2011 –’12 it

has been continuously increased as 42 days,45 days and 51 days respectively. It has

been also shown in graph – 8.2.

So, the average (AVG.) debtor’s turnover ratio is 37 days, the standard

deviation (S.D) is 15 days and co-efficient variance (C.V) is 41.00% which is shows

in table no - 8.2. Which solvency of Orient Paper and Industries Limited because of

the average debtor’s turnover ratio shows satisfactory ratio during the study period.


The table no - 8.2 shows that the average collection period of the Seshasayee

Paper and Boards Limited during the study period form 2005 –’06 to 2011 –’12, the





In the table no - 8.2 shows the average collection period of Seshasayee Paper

and Boards Limited is like zigzag trend. It was 43 days, 44 days, 40 days, 36 days,32

days,34 days and 60 days from 2005-’06 to 2011 –’12. It has been also shown in

graph – 8.2.



in table no - 8.2. Which solvency of Seshasayee Paper and Boards Limited because of

the average collection period shows satisfactory ratio during the study period.


The table no - 8.2 shows that the average collection period of the Sirpur Paper

Mills Limited during the study period form 2005 –’06 to 2011 –’12, the maximum

average collection period is 63 days in the year 2008 –’09 and the minimum average


In the year 2005 –’06 the debtors’ turnover ratio was 38 days. Average

collection period has been decreased as 24 days in 2006 –’07 and it has been

increased as 35 days and 63 days from 2007 –’08 to 2008 –’09. Then after shows the

fluctuated trend in average collection period as 53 days, 54 days and 59 days from

2009 –’10 to 2011 –’12. It has been also shown in the graph – 8.2.



in table no - 8.2. Which solvency of Sirpur Paper Mills Limited because the average,

average collection period shows satisfactory ratio during the study period.


The table no - 8.2 and graph – 8.2 shows that the average collection period of

the South India Paper Mills Limited the study period form 2005 –’06 to 2011 –’12,

the maximum average collection period is 62 days in the year 2005 –’06 and the


In the table - 8.1 and graph – 8.2 show the average collection period of South

India Paper Mills Limited form 2005 – ’06 to 2011 –’12. It is fluctuated during the

study period as 62 days ,61 days, 57 days, 61 days, 48 days, 41 days and 43 days

respectively.


deviation (S.D) is 9 days and co-efficient variance (C.V) is 17.00% which is shown in



table no - 8.2. Which solvency of South India Paper Mills Limited because the



The table no - 8.2 shows that the average collection period of the Star Paper

Mills Limited the study period form 2005 –’06 to 2011 –’12, the maximum average

collection period is 15 days in the year 2009 –’10 and the minimum average

collection period is 9 days in the years of 2006 –’07 & 2007 –‘08.

The table no - 8.2 and graph – 8.2 shows the average collection period was 13

days in 2005 –’06. It has been decreased and reached as 9 days in year 2006 –’07 and

2007 –‘08. But, it has been increased from 2008 – ’09 to 2009 –’10 as 10 days, 15

days. But lat two year of the study period from 2010 –’11 to 2011 –’12 it has been

decreased as 13 days and 11 days respectively.



table no - 8.2. Which solvency of Star Paper Mills limited because the average



The table no - 8.2 shows that the average collection period of the T. N.




The above table no. - 8.2 indicated fluctuated in average collection period

trend from 2005 – ’06 to 2011 –’12. In 2005 –’06 the average collection period was

60 days. It has been decreased in the year 2006 –’07 at 45 days. But then after it has

been again decreased in 2007 –’08 at 38 days as a lowest. But it has been increased in

the year 2008 –’09 to 2009 –‘10 as 58 days and 71 days. For the next year in 2010 -

11 it has been decreased as 63 days. At the last year 2011 –’12 it has been increased

and reached lowest point as 87 days in 2011 –’12. It has been also shown in graph –

8.2.



in table no - 8.2. Which solvency of T. N. Newsprint Paper Mills Limited because the





The table no - 8.2 shows that the average collection period of the West Coast


average collection period is 29 days in the year 2006 –’07 and the minimum average

collection period is 20 days in the year 2009 –’10.

In the West Coast Paper Mills Limited average collection period was 27 days

in 2005 –’06. But, it has been increased in year 2006 –’07 as 29 days. In the study

period from 2007 – ’08 to 2009 –’10, A average collection period has been decreased

as 27 days, 26 days, and 20 days. But then after the average collection period has been

increased at 25 days in 2010 –’11. But again it has been decreased as 20 days in 2011

–’12. It has been also shown in the graph - 8.2.



table no - 8.2 Which solvency of West Coast Paper Mills Limited because the average


ANOVA TEST OF AVERAGE COLLECTION PERIOD :


There is no significant difference in Average collection period of



There is significant difference in Average collection period of selected

paper companies in India.


Table :- 8.2.1

Average Collection Period Ratio - ANOVA: Single Factor

SUMMARY


IAPPM 7 170.3063 24.32947736 10.99772

BILtd 7 504.4329 72.06184229 114.6791

JKPM 7 325.192 46.45600411 209.8983

OPIL 7 255.5877 36.51252323 221.7749

SPBL 7 289.2819 41.32599194 87.13276

SPML 7 326.6929 46.67041715 204.2005

SIPL 7 373.4341 53.34772398 84.87901

SPM Ltd 7 80.37645 11.48235038 6.261005

TNNPL 7 423.4486 60.49265621 261.7684

WCPML 7 173.6308 24.80439344 11.22388



Table:- 8.2.2

ANOVA ( F- Test Result) of Average Collection Period Ratio

Source of

Variation


Between Groups 20897.31 9 2321.9224 19.14489 1.3785 2.0401

Within Groups 7276.89 60 121.2815

Total 28174.20 69





19.14489 > 2.0401




is greater than the table value. It indicates that the Null Hypothesis is rejected and

Alternate Hypothesis is accepted. It indicates that there is significant in average

collection period of selected paper companies in India.

8.12 INTRODUCTION OF PAYABLE MANAGEMENT

The current assets of a firm are supported by a combination of long term and

short term sources of financing. The long-term sources of finance provide support for

a small part of current assets requirement, which is called the working capital margin.

Working capital are present the difference between current assets and current

liabilities. The short term sources of finance, referred to also as current liabilities

consists of

I. Accruals and provisions

II. Trade credit

III. Short term bank finance

IV. Public deposits

According to Weston and Brigham:



The main sources of short term finance are: (i) Trade credit between firms (ii)

Loan from commercial banks and (iii) Commercial paper.

8.13 TRADE CREDIT BETWEEN FIRMS

Trade credit is a form of short term financing common to almost all business.

In fact, it is the largest sources of short term funds for business firms collectively. In

an advance economy, most buyers are not required to pay for goods upon delivery but

are allowed a short deferment period before payment is due. During this period, the

seller of goods extends credit to the buyer. Because suppliers generally are more

liberal in the extension of credit than financial institution, small companies in

particulars realy on trade credit.

According to Solomon and Pringle:

“Trade credit arises from the firm’s normal operations, specifically from the

time lag between receipt of goods purchased and payment. The sum total of a firm’s

obligations to its trade creditor’s at any point in times normally is called ‘accounts

payable’ on the balance sheet.”

In the words of O. M. Joy:

“Trade credit refers to the credit that sellers grant their customers during the

ordinary course of business. Most purchases made by the firm do not have to be paid

immediately, and this deferral of payment is a short term source of funds called trade

credit.” Trade credit tantamount to a loan of goods instead of money.

8.14 TERMS OF TRADE CREDIT

There are two aspects of trade credit which warrant discussion :

Trade cash discount

The payment period

Trade cash payment:

A cash discount is a reduction in price based on payment within a specified

period. The cost of not taking cash discount often exceed the rate of interest at which

the buyers cash borrow, so it is important that a firm be cautions in its use of trade

credit as a source of financing – it could be quite expensive. If the firm borrows and

takes the cash discount, the period during which accounts payable remain on the book



is reduced. The effective length of credit is thus influenced by the size of discount

offered.

The payment period

Credit terms regarding payment period may be categorised in several groups

according to the net period within which payment is expected and according to the

terms of the cash discount.

1. Cash before delivery:

These terms involves no credit at all since the customer is required to

make payment for the goods before the supplier ships them. These terms are

imposed when the supplier either knows nothing about the customers or he

knows too much about the customer’s unreliability in managing his business

affairs.

2. Cash on delivery:

Under these terms the supplier ships the goods by mail or express but

the customers must pay for them before taking possession. These terms do not

involve credit. The only risk involved in these terms is that the customers may

refuse the shipment and the supplier will have to pay the costs of shipping the

merchandise both ways.

3. Net terms, No cash discount:

Where net terms are quoted, the seller specifics the period within

which full payment must be made. These terms involve extension of credit.

4. Net term with cash discount:

These terms contain the provision of grant of cash discount if the

payment is made within the specified period. Under most circumstances a cash

discount is offered as an incentive to the buyer to pay early.

5. Seasonal dating:

Seasonal dating sometimes is used in connection with goods that have

seasonal sales patterns. By offering seasonal terms, the manufacture is able to

judge the size of the market more accurately and to maintain level production

over the year. The buyers obtain the goods for sale, but it is not obligated to

pay until the arrival of the peak selling season.

8.15 OBTAINING TRADE CREDIT



The confidence of suppliers is the key to securing trade credit. What do

suppliers look for in granting trade credit? Among the things that suppliers consider

are:

A. Earning record over a period of time:

If the firm has a fairly good earnings record with a portion of it ploughed back

in the business, it is looked upon favourably.

B. Liquidity position of the firm:

Suppliers naturally look at the ability of the firm to meet its obligations in the

short run. Such ability is usually measured by the current ration and aced test

ratio.

C. Record of payment:

If the firm has been prompt and regular in paying the bulk of the suppliers in

the past, it is deemed to be creditworthy.

8.16 ANALYSIS OF THE EFFICIENCY OF PAYABLE

MANAGEMENT

The most important factor in determining the volume of payable is the level of

a firm’s credit purchases. It may be assumed that with an increase in size of

purchases, there will be a proportionate increase in the size of payable. The analysis

of growth rate in annual purchase and payable, in addition to comparison of

percentage of payable to total current liabilities, will provide a meaningful picture of

the situation increase in account payable in the natural outcome of growth in

purchases and it is mainly dependent on the extension of credit.

In the present study the following criteria have been adopted to evaluate the

performance of payable management in the selected paper companies in India.

1. Account payables turnover ratio or creditor’s ratio

2. Average payable period

8.17 CREDITOR’S TURNOVER RATIO / ACCOUNT PAYABLES

TURNOVER RATIO

The account payable turnover shows relationship between net purchases and

average account payable of a company. It is expressed as follows:



𝑨𝒄𝒄𝒐𝒖𝒏𝒕𝒔 𝑷𝒂𝒚𝒂𝒃𝒍𝒆𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =𝑵𝒆𝒕 𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆𝒔

𝑨𝒗𝒂𝒓𝒂𝒈𝒆 𝑨𝒄𝒄𝒐𝒖𝒏𝒕𝒔 𝑷𝒂𝒚𝒂𝒃𝒍𝒆𝒔

Net purchases consist of gross purchases mines returns, if any, to suppliers.

An average account payable is the simple average of creditor’s at the beginning and at

the end of the year. The ratio is calculated to determine whether the company is

making payment to creditor’s in time.

According to Singh and Poul:

“The ratio is relationship between trade creditor’s or payables and the credit

purchase is not available, figure of net purchases may be used”

In calculation of this ratio the same steps as in the case of debtors’ turnover

ratio are involved. The accounts payable turnover ratio in the selected paper

companies in India for the period of study from 2005 –’06 to 2011 –’12, as presented

below table no – 8.3.

Table:- 8.3

Creditor Turnover Ratio In Times Period From 2005 –’06 To 2011 –‘12

COMPANY NAME

YEAR

IAP

PM

BIL

td

JK

PM

OP

IL

SP

BL

SP

ML

SIP

L

SP

M L

td

TN

NP

L

WC

PM

L

2005-'06 1.33 0.47 5.66 1.94 0.18 1.30 4.70 3.70 20.80 2.22

2006-'07 1.98 0.25 4.44 2.06 1.88 1.38 5.99 2.55 70.22 1.93

2007-'08 1.78 0.70 3.58 2.21 1.68 1.31 6.27 2.43 62.92 1.45

2008-'09 1.40 0.77 7.80 2.21 2.04 1.31 8.34 2.32 5.46 1.08

2009-'10 1.49 0.36 5.96 2.52 2.51 1.56 6.59 6.48 4.28 1.22

2010-'11 2.52 0.44 6.78 3.22 2.64 3.07 10.19 5.41 1.62 5.34

2011-'12 3.52 3.61 5.06 3.34 1.73 2.81 6.77 0.21 1.42 7.41

Average 2.00 0.94 5.61 2.50 1.81 1.82 6.98 3.30 23.82 2.95

S.D. 0.78 1.19 1.42 0.56 0.81 0.77 1.78 2.10 30.02 2.45

C.V. 39.13 125.77 25.32 22.37 44.55 42.57 25.55 63.75 126.03 82.95

Min 1.33 0.25 3.58 1.94 0.18 1.30 4.70 0.21 1.42 1.08

Max 3.52 3.61 7.80 3.34 2.64 3.07 10.19 6.48 70.22 7.41



.

The above mentioned Table No- 8.3 and Graph No- 8.3 show on the next page

indicated a fluctuating trends of the Creditor’s turnover ratio of selected paper

companies in India from 2005-2006 to 2011-2012.


The table no - 8.3 shows that the creditor’s turnover ratio of the International


–’12, the highest creditor’s turnover ratio is 3.52 times in the year 2011 –’12 and the

lowest creditor’s turnover ratio is 1.35 times in the year of 2005 –’06.

In the year 2005 –’06 the creditor’s turnover ratio was 1.35 times, it has been

increased in 2006 –’07 as 1.98 times. But it has been decreased from 2007 –’08 to

2008 –’09 as 1.78 times and 1.40 times. Last three year of study period it has been

continuously increased from 2009 –’10 to 2011 –’12 as 1.49 times, 2.52 times and

3.52 times respectively. It has been also shown in graph no – 8.3.

So, the average (AVG.) creditor’s turnover ratio is 2.06 times, the standard


shown in table – 8.3. Which solvency of International Andhra Pradesh Paper Mills

limited because the average creditor’s turnover ratio shows satisfactory ratio during

the study period.


2005-'06

2007-'08

2009-'102011-'12

0.00

20.00

40.00

60.00

80.00

Graph :-8.3

Creditor Turnover Ratio in Times period from 2005 –’06

to 2011 –‘12

2005-'06

2006-'07

2007-'08

2008-'09

2009-'10

2010-'11

2011-'12



The table no - 8.3 shows that the creditor’s turnover ratio of the Ballarpur


creditor’s turnover ratio is 3.61 times in the year 2011 –’12 and the lowest creditor’s

turnover ratio is 0.25 times in the year of 2006 –’07.

The above table no -8.1shows the fluctuated trends of creditor’s’ turnover ratio

of Ballarpur Paper Mills Limited as .47 times in 2005 –’06. It has been decreased in

2006 –’07 as 0.25 times reached at lowest point of the study period. Next two year of

the study period it has been increased as 0.70 times and 0.77 times form 2007 –’08 to

2008 –’09. It has been decreased in year 2009 –’10 as 0.36 times. But last two year of

the study period it has been increased form 2010 –’11 to 2011 –’12 as 0.44 times and

3.61 times respectively. It has been also shown in graph no – 8.3.



shown in table – 8.3. Which solvency of Ballarpur Paper Mills limited because the

average creditor’s turnover ratio shows satisfactory ratio during the study period.


The table no - 8.3 shows that the creditor’s turnover ratio of the J. K. Paper


creditor’s turnover ratio is 7.80 times in the year 2008 –’09 and the lowest creditor’s


In the year 2005 –’06 the creditor’s turnover ratio was 5.66 times and it has

been decreased in 2006 –’07 as 4.44 times, but it has been again decreased 2.58 times

in 2007 –’08. In the year 2008 –’09 it has been increased as 7.80 times and reached

highest point in the above table – 8.3. In the year 2009 –’10 it has been decreased as

5.96 times and it has been increased as 6.78 times in 2010 –’11 and at the last year of

the study period it has been decreased as 5.06 times in 2011 –’12. It has been also

shown in the graph - 8.3.



shown in table – 8.3. Which solvency of J. K. Paper Mills Limited because the





The table no - 8.3 shows that the creditor’s turnover ratio of the Orient Paper


maximum creditor’s turnover ratio is 3.34 times in the year 2011 –’12 and the

minimum creditor’s turnover ratio is 1.94 times in the year of 2005 –’06.

In the present the table – 8.3 shows the creditor’s turnover ratio of Orient

Paper and Industries Limited has been increased in the whole study period from 2005

–’06 to 2011 –’12 as 1.94 times, 2.06 times, 2.21 times, 2.21 times, 2.52 times, 3.22

times and 3.34 times respectively. It has been also shown in graph no. – 8.3.



shown in table no – 8.3. Which solvency of Orient Paper and Industries Limited

because of the average creditor’s turnover ratio shows satisfactory ratio during the

study period.


The table no - 8.3 shows that the creditor’s turnover ratio of the Seshasayee




In the table – 8.3 shows the creditor’s turnover ratio of Seshasayee Paper and

Boards Limited is like zigzag trend. It has been shown 0.18 times in 2005-’06 and it

has been increased as 1.88 times in 2006 –‘07. But, it has been decreased as 1.68

times in 2007 –’08. The creditor’s turnover ratio has been continually increased as

2.04 times, 2.51 times, and 2.64 times from 2008 –’09 to 2010 –‘11. But it has been

decreased as 1.73 times in 2011 –’12. It has been also shown in graph no – 8.3.



shown in table – 8.3. Which solvency of Seshasayee Paper and Boards Limited

because of the average creditor turnover ratio shows satisfactory ratio during the study

period.


The table no - 8.3 shows that the creditor’s turnover ratio of the Sirpur Paper




creditor’s turnover ratio is 3.07 times in the year 2010 –’11 and the minimum

creditor’s turnover ratio is 1.30 times in the year of 2005 –’06.

In the year 2005 –’06 the creditor’s’ turnover ratio was 1.30 times. Creditor’s

turnover ratio has been increased 1.38 times in 2006 –’07 and it has been decreased as

1.31 times and 1.31 times from 2007 –’08 to 2008 –’09. Then after next two year it

has been increased as 1.56 times and 3.07 times from 2009 –’10 to 2010 –’11. But,

last year of the study period it has been decreased as 2.81 times in 2011 –’12. It has

been also shown in the graph no – 8.3.



shows in table no – 8.3. Which solvency of Sirpur Paper Mills Limited because the



The table no - 8.3 and graph no – 8.3 show that the creditor’s turnover ratio of


the maximum creditor’s turnover ratio is 10.19 times in the year 2010 –’11 and the


In the table - 8.3 and graph – 8.3 show the creditor’s turnover ratio of South

India Paper Mills Limited form 2005 – ’06 to 2008 –’09 has been increased 4.70

times, 5.99 times, 6.27 times and 8.34 times. It has been decreased as 6.59 times in

year 2009 –’10. In the year 2010 –’11 it has been increased and reached at highest

point as 10.19 times. At last year of the study period in 2011 –’12 it has been

decreased as 6.77 times.



shown in table – 8.3. Which solvency of South India Paper Mills Limited because the



The table no - 8.3 shows that the creditor’s turnover ratio of the Star Paper

Mills Limited the study period form 2005 –’06 to 2011 –’12, the maximum creditor’s

turnover ratio is 6.48 times in the year 2010 –’11 and the minimum creditor’s




The table no – 8.3 shows the creditor’s turnover ratio has been decreased from

2005 –’06 to 2008 –’09 as 3.70 times, 2.55 times, 2.43 times and 2.23 times

respectively. But in the year 2009 –’10 it has been increased as 6.48 times reached as

highest point. It has been decreased as 5.41 times in year 2010 –’11. But, last year of

the study period it has been decreased as .021 times at lowest point in 2011 –’12. It

has been also shown in the graph no – 8.3.



shown in table no – 8.3. Which solvency of Star Paper Mills limited because the



The table no - 8.3 shows that the creditor’s turnover ratio of the T. N.




The above table no – 8.3 shows fluctuate trend in creditor’s turnover ratio

from 2005 – ’06 to 2011 –’12. In 2005 –’06 the creditor’s turnover ratio was 20.70

times. It has been increased in the year 2006 –’07 at 70.22 times. But then after it has

been decreased from 2007 –’08 to 2011 –’12 as 62.92 times, 5.46 times, 4.28 times,

1.62 times and 1.42 times respectively. It has been also shown in graph no – 8.3.



shown in table – 8.3. Which solvency of T. N. Newsprint Paper Mills Limited because

the average creditor’s turnover ratio shows satisfactory ratio during the study period.


The table no - 8.3 shows that the creditor’s turnover ratio of the West Coast


creditor’s turnover ratio is 7.41 times in the year 2011 –’12 and the minimum

creditor’s turnover ratio is 1.08 times in the year 2008 –’09.

In the West Coast Paper Mills Limited creditor’s turnover ratio has been

decreased from 2005 –’06 to 2008 –’09 as 2.22 times, 1.93 times, 1.45 times and 1.08

times respectively. But last three year of the study period it has been continuously



increased as 1.22 times, 5.34 times and 7.41 times from 2009 –’10 to 2011 –’12. It

has been also shown in the graph no - 8.3.



shown in table no – 8.3 which is solvency of West Coast Paper Mills Limited because

the average creditor’s turnover ratio shows satisfactory ratio during the study period.

ANOVA TEST OF CREDITOR’S TURNOVER RATIO :

Hypothesis:


There is no significant difference in Creditor’s turnover ratio of



There is significant difference in Creditor’s turnover ratio of



Table: 8.3.1

Creditor Turnover Ratio - ANOVA: Single Factor

SUMMARY


IAPPM 7 14.01659 2.00237 0.613912

BILtd 7 6.614466 0.944924 1.412259

JKPM 7 39.27939 5.611342 2.018323

OPIL 7 17.50385 2.50055 0.312764

SPBL 7 12.66832 1.80976 0.650032

SPML 7 12.74004 1.820006 0.600333

SIPL 7 48.84636 6.978051 3.17852

SPM Ltd 7 23.10843 3.301204 4.429454

TNNPL 7 166.7178 23.81683 900.9204

WCPML 7 20.64165 2.948807 5.983556

Table: 8.3.2

ANOVA ( F- Test Result) of Creditor Turnover Ratio

Source of Variation SS D.F MS F P-value F crit

Between Groups 2919.832 9 324.4258 3.5259 0.001462 2.0401

Within Groups 5520.717 60 92.01195

Total 8440.549 69







3.5259 > 2.0401





Alternate Hypothesis is accepted. It indicates that there is significant in creditor’s’

turnover ratio of selected paper companies in India.

8.18 AVERAGE PAYABLES PERIOD

This ratio is, in fact, inter- related with the dependent upon, the payables

turnover ratio. It is calculated by dividing the days in a year by the payables turnover.

It is expressed as follows:

𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑷𝒂𝒚𝒂𝒃𝒍𝒆𝒔 𝑷𝒆𝒓𝒊𝒐𝒅 =𝟑𝟔𝟓

𝑷𝒂𝒚𝒂𝒃𝒍𝒆𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓

Creditor’s, especially trade creditor’s, are interested in how promptly a firm its

bills. From a creditor’s point of view it is desirable to obtain an aging of accounts

payable or a conversion matrix for payables.

According to Singh and Poul: “The ratio shows that period will be required

to pay the current liabilities.

They further say: “The ratio indicates the number of days the company takes

an average to pay its creditor’s. By calculating this ratio the creditor’s or suppliers can

know whether they will get the payment in time. The lower the ratio better it is from

the creditor’s point of view.

The ratio also measures the credit allowed by the suppliers”. The average

payables period of the selected paper companies in India for the study from 2005 –’06

to 2011 –’12 are presented as below table no – 8.4.



Table : - 8.4

Average Payable Period Ratio In Days from 2005 –’06 to 2011 –‘12

COMPANY NAME

YEAR

IAP

PM

BIL

td

JK

PM

OP

IL

SP

BL

SP

ML

SIP

L

SP

M L

td

TN

NP

L

WC

PM

L

2005-'06 274 776 64 188 1986 282 78 99 18 164

2006-'07 184 1446 82 177 194 264 61 143 5 189

2007-'08 205 519 102 165 217 278 58 150 6 252

2008-'09 261 471 47 165 179 280 44 157 67 339

2009-'10 245 1003 61 145 146 233 55 56 85 299

2010-'11 145 826 54 114 138 119 36 67 225 68

2011-'12 104 101 72 109 211 130 54 1716 258 49

Average 203 735 69 152 439 227 55 341 95 194

S.D. 63 429 19 31 683 72 13 607 105 110

C.V. 31 58 27 20 156 32 24 178 111 57

Min 104 101 47 109 138 119 36 56 5 49

Max 274 1446 102 188 1986 282 78 1716 258 339

The above mentioned Table No- 8.4 and Graph No- 8.4 show the indicated

fluctuating trends of the Average payable period of selected paper companies in India

from 2005-2006 to 2011-2012.

0200400600800

100012001400160018002000

Table : - 8.4

Average Payable Period Ratio In Days

from 2005 –’06 to 2011 –‘12

2005-'06 2006-'07 2007-'08 2008-'09 2009-'10 2010-'11 2011-'12




The table no - 8.4 shows that the average payable period of the International


–’12, the highest average payable period is 274 days in the year 2005 –’06 and the

lowest average payable period is 104 days in the year of 2011 –’12.

In the year 2005 –’06 the average payable period was 274 days, which has

been decreased in 2006 –’07 as 184 days is shown in above table no - 8.4. But in the

year from 2007 –’08 to 2008 –’09 the average payable period has been increased as

205 days and 261 days. In 2009 –’10 to 2011 –’12 it has been decreased as 245 days,

145 days and 104 days respectively. It has been also shown in graph – 8.4.

So, the average (AVG.) average payable period is 203 days, the standard


in table no - 8.4. Which solvency of International Andhra Pradesh Paper Mills limited

because the average payable period shows satisfactory ratio during the study period.


The table no - 8.4 shows that the average payable period of the Ballarpur


average payable period is 1446 days in the year 2006 –’07 and the lowest average

payable period is 101 days in the year of 2011 –’12.

The above table no – 8.4 shows that the average payable period of Ballarpur

Paper Mills Limited was 776 days in 2005-’06. It has been increased in year 2006 –

’07 as reached at highest point as 1446 days. the average payable period of Ballarpur

Paper Mills Limited has been decreased as next two year from 2007 –’08 to 2008 -09

as 519 days and 471 days respectively. The average payable period of Ballarpur Paper

Mills Limited has been increased in year 2009 –’10 as 1003 times. In the last two year

of the study period from 2010 –’11 to 2011 –’12 it has been decreased as 826 days

and 101 days. It has been also shown in graph no – 8.4.



in table no - 8.4. Which solvency of Ballarpur Paper Mills limited because the average

payable period shows satisfactory ratio during the study period.




The table no - 8.4 shows that the average payable period of the J. K. Paper


average payable period is 102 days in the year 2007 –’08 and the lowest average


In the year 2005 –’06 the average payable period was 64 days and it has been

increased in 2006 –’07 as 82 days, but it has been increased 102 days in 2007 –’08. In

the year from 2008 –’09 it has been decreased as 47 days. In the year 2009 –’10 it has

been increased as 61 days. Next year of the study period the average payable period

has been decreased as 54 days. But, it has been increased in 2011 –’12 as 72 days. It

has been also shown in the graph no - 8.4.



in table no - 8.4. Which solvency of J. K. Paper Mills Limited because the average

payable period shows satisfactory ratio during the study period.


The table no - 8.4 shows that the average payable period of the Orient Paper


maximum average payable period is 188 days in the year 2005 –’06 and the minimum

average payable period is 109 days in the year of 2005 –’06.

In the present the table no - 8.4 shows the average payable period of Orient

Paper and Industries Limited has been decreased whole study period from 2005 –’06

to 2011 –’12 as 188 days, 177 days, 165 days, 165 days, 145 days, 114 days and

109days respectively. It has been also shown in graph no – 8.4.

So, the average (AVG.) debtor’s turnover ratio is 152 days, the standard


in table no - 8.4. Which solvency of Orient Paper and Industries Limited because of

the average debtor’s turnover ratio shows satisfactory ratio during the study period.


The table no - 8.4 shows that the average payable period of the Seshasayee


maximum average payable period is 1986 days in the year 2005 –’06 and the

minimum average payable period is 138 days in the year of 2010 –’110.



In the table no - 8.4 shows the average payable period of Seshasayee Paper

and Boards Limited in 2005 –’06 as 1986 days. It has been decreased as 194 in year

2006 –’07. The average payable period has been increased in year 2008 –’09. But, the

next three of the study period from 2008 –’09 to 2010 –’11 it has been decreased as

179 days, 146 days and 138 days respectively. But, the last year of the average

payable period of the Seshasayee Paper and Boards Limited has been increased as

211 days in 2011 –’12. It has been also shown in graph no – 8.4.


deviation (S.D) is 683 days and co-efficient variance (C.V) is 156.00 % which is

shown in table no - 8.4. Which solvency of Seshasayee Paper and Boards Limited

because of the average payable period shows satisfactory ratio during the study

period.


The table no - 8.4 shows that the average payable period of the Sirpur Paper


average payable period is 282 days in the year 2005 –’06 and the minimum average


The above table no - 8.4 show the year 2005 –’06 the average payable period

was 282 days. Average payable period has been decreased 264 days in 2006 –’07 and

it has been increased as 278 days and 280 days from 2007 –’08 to 2008 –’09. Then

after the table no – 8.4 shows the decreasing trend in average payable period as 233

days, and 119 days from 2009 –’10 to 2010 –’11. The last year of the study period it

has been increased as 130 days in 2011 –’12. It has been also shown in the graph no –

8.4.



in table no - 8.4. Which solvency of Sirpur Paper Mills Limited because the average,

average payable period shows satisfactory ratio during the study period.


The table no - 8.4 and graph no – 8.4 shows that the average payable period of


the maximum average payable period is 78 days in the year 2005 –’06 and the

minimum average payable period is 36 days in the year of 2010 –’11.



In the table no - 8.4 and graph no – 8.4 show the average payable period of

South India Paper Mills Limited form 2005 – ’06 to 2008 –’09 it has been decreased

as 78 days, 61 days, 58 days and 44 days respectively. The average payable period of

the South India Paper Mills Limited has been increased in year 2009 –’10 as 55 days.

But it has been decreased in 2010 –’11 as 36 days. In the last year of the study period

2011 –’12 the average payable period of the South India Paper Mills Limited has been

increased as 54 days.



in table no - 8.4. Which solvency of South India Paper Mills Limited because the



The table no - 8.4 shows that the average payable period of the Star Paper

Mills Limited the study period form 2005 –’06 to 2011 –’12, the maximum average

payable period is 1716 days in the year 2011 –’12 and the minimum average payable

period is 56 days in the years of 2009 –’10.

The table no - 8.4 and graph no – 8.4 shows the average payable period of the

Star Paper Mills Limited has been increased for the first four years of the study period

from 2005 –’06 to 2008 –’09 as 99 days, 143 days, 150 days and 157 days. The

average payable period of the Star Paper Mills Limited has been deceased as 56 day

in year 2009 –’10 which has at lowest point. At end of the study period the average

payable period of the Star Paper Mills Limited is 1716 days in 2011 –’12.


deviation (S.D) is 607 days and co-efficient variance (C.V) is 178.00% which is

shown in table no - 8.4. Which solvency of Star Paper Mills limited because the



The table no - 8.4 shows that the average payable period of the T. N.


maximum average payable period is 258 days in the year 2011 –’12 and the minimum

average payable period is 5 days in the year of 2006 –’07.

The above table no - 8.4 shows the average payable period of the T. N.

Newsprint Paper Mills Limited was 18 days in year 2005 – ’06. It has been decreased



as 5 days in year 2006 –’07. The average payable period of the T. N. Newsprint Paper

Mills Limited from 2007 –‘08 to 2011 –’12 has been increased as 6 days, 67 days, 85

days, 225 days and 258 days respectively. It has been also shown in graph no – 8.4.


deviation (S.D) is 105 days and co-efficient variance (C.V) is 111.00% which is

shown in table no - 8.4. Which solvency of T. N. Newsprint Paper Mills Limited

because the average payable period shows satisfactory ratio during the study period.


The table no - 8.4 shows that the average payable period of the West Coast


average payable period is 339 days in the year 2008 –’09 and the minimum average

payable period is 49 days in the year 2011 –’12.

The above table no – 8.4 shows that the West Coast Paper Mills Limited

average payable period has been increased from 2005 –’06 to 2008 –’09 as 164 days,

189 days, 252 days and 339 days respectively . But, it has been decreased from 2009

–’10 to 2011 –’12 as 299 days, 68 days and 49 days. It has been also shown in the

graph no - 8.4.



in table no - 8.4 Which solvency of West Coast Paper Mills Limited because the


ANOVA TEST OF AVERAGE PAYABLE PERIOD :

Hypothesis:


There is no significant difference in Average payable period of selected

paper companies in India.


There is significant difference in Average payable period of selected paper

companies of India under study.




Table:- 8.4.1

Average Payable Period Ratio - ANOVA: Single Factor

SUMMARY


IAPPM 7 1418.01 202.5729 3960.975

BILtd 7 5142.335 734.6192 184240.3

JKPM 7 482.7375 68.96249 346.7941

OPIL 7 1062.394 151.7705 931.5307

SPBL 7 3070.502 438.6431 466567.6

SPML 7 1585.776 226.5394 5152.784

SIPL 7 385.7599 55.10855 176.0428

SPM Ltd 7 2388.663 341.2376 368903.5

TNNPL 7 664.0284 94.86121 11073.23

WCPML 7 1360.715 194.3879 12142.54

Table:- 8.4.2

ANOVA ( F- Test Result) of Average Payable Period Ratio

Source of

Variation


Between Groups 2723879 9 302653.2 2.872848 0.006911 2.040098

Within Groups 6320971 60 105349.5

Total 9044850 69





2.872848 > 2.0401





Alternate Hypothesis is accepted. It indicates that there is significant in average

payable period of selected paper companies in India.

8.19 CONCLUSION

Chapter – 8 deals with the concept of bills receivable management and bills

payable management. In this chapter researcher discussed basic theoretical concept of



bills receivable management and bills payable management and also calculated

related ratios like as debtor turnover ratio, average collection period, creditor turnover

ratio and average payable period. Use one Way ANOVA test for testing hypotheses

and all the null hypotheses had been rejected.



8.20 REFERENCES

1. I. M. Pandey, Financial Management, (New Delhi, Vikash Publishing House

Pvt. Ltd., 1983) p. 319.

2. Henk O. Emerson, Introducing Accounting, I ed., (New York:

Petrocelli/Chapter, 1974) p. 74.

3. Robert N. Anthony, Management Accounting – Text and Cases, (Homewod:

Richard D. Irwin, Inc., 1964) p. 45.

4. V.E. Ramamoorthy, Working capital Management, (Madrash: Institute of

Finacial Management and Research, 1976) p. 183.

5. O. M. Joy, Introduction of Financial Management. (Homewood Illinois:

Richard D. Irwin, Inc, 1977) p. 457.

6. P. V. Kulkarani, Financial Management, (Bombay : Himalaya Publishing

House, 1983) p. 377.

7. I. M. Pandey, op.cit. pp.319.

8. S. E. Bolten, Managerial Finance, (Boston: Houghton Mittin Co., 1976) p.

446.

9. Wood L. Joseph “ Credit and Collections” in Doris Lillian (ed.) Business

Finance Handbook, (New York: Prentice Hall, 1953) p. 243.

10. R. K. Mishra, Problems of working capital – with reference to selected public

undertakings in India, (Bombay: Somaiya Publications Pvt. Ltd., 1975) p. 123

11. C. R. Cook, Credit Policies –Impact of Sales and Profit Cost and

Management, (Canada: Hamilton, Ontario, Vol. 37., 1963) p. 387

12. The Institute of Chartered Accountants of India, Eighth All India Seminar on

Management Accounting , Summary and Proceedings, New Delhi, 1968, p.

49.

13. E. W. Walker, and William H. Baughn, Financial Planning and Policy, (New

York: Harper and Borthers, 1961) p. 192 -193.

14. I. M. Pandey, op.cit. pp.320

15. O. M. Joy, op.cit. p. 457.

16. I. M. Pandey, op.cit. pp.321

17. O. M. Joy, op.cit. p. 458.

18. I. M. Pandey, Financial Management, (New Delhi, Vikash Publishing House

Pvt. Ltd., 1983) p. 322.



19. Eugene F. Brigham, Fundamentals of Financial Management, (Holt-Sounders

Japan: The Dryden Press, 1983) p. 531.

20. R. K. Mishra, op. Cit., p. 323.

21. Theodore N. Becjman, Credits and Collections – Management and Theory,

(New York: McGraw Hill, 1962) pp. 605 -622.


23. Cuthbert Greig, Commercial Credit and Accounts Collection, ( London: The

urniture Record, 1952) p. 26.

24. Prasanna Chandra, Financial Management – theory and Practice (New Delhi;

Tata McGraw Hill publishing Company Ltd. 1987) p. 292.

25. Richard P. Ettinger and Devid E. Golieb, Credit and Collection’s III ed., (New

York : Prentice – Hall, 1950,) pp. 9 -22.


27. J. Fred Weston and F. Brigham, Managerial Finance VI ed., (Hinsdale Illinois

: The Dryden Press: 1977) pp. 183 – 184.

28. Prasanna Chandra, op.cit. pp.295.

29. Prasanna Chandra, Financial Management – theory and Practice (New Delhi;

Tata McGraw Hill publishing Company Ltd. 1987) p. 335.


: The Dryden Press: 1977) pp. 346.

31. Jamce C. Van Horne, Financial Management And Policy, (New Delhi:

Prentice Hall of India Pvt. Ltd., 1983) p. 435.

32. Ezar Solomon and John J. Pringle. An Introduction to Financial Management,

(New Delhi: Prentice Hall of India Pvt. Ltd., 1977) p. 487.

33. O. M. Joy, Introduction of Financial Management. (Homewood Illinois:

Richard D. Irwin, Inc, 1977) p. 487.

34. R. M.. Srivastava, Essentials of Business Finance, (Bombay: Himalaya

Publishing House, 1986) p. 349.


: The Dryden Press: 1977) pp. 171.

36. R. M.. Srivastava, op.cit. pp.351.

37. Ezar Solomon and John J. Pringle. op.cit. pp.153.

38. Prasanna Chandra, op.cit. pp.336.



39. Jagwant Singh and Rantej Poul, Management Accounting, (Allahabad: Kitab

Mahal, 1982) p. 65

40. Ezar Solomon and John J. Pringle. op.cit. pp.96.

41. Jamce C. Van Horne, op.cit. pp.678.

42. Jagwant Singh and Rantej Poul, op.cit. pp.65.

43. Annual report of The Andhra Pradesh Paper Mills Limited from 2005 –’06 to

2011 – ’12 and www.andhrapaper.com

44. Annual report of Ballarpur Industries Limited from 2005 –’06 to 2011 – ’12

and www.bilt.com

45. Annual report of J. K. Paper mills limited from 2005 –’06 to 2011 – ’12 and

http://www.jkpaper.com

46. Annual report of Orient Paper and Industries from 2005 –’06 to 2011 – ’12

and http://www.orientpaperindia.com

47. Annual report of Seshasayee Paper and Boards from 2005 –’06 to 2011 – ’12

and http://www.spbltd.com

48. Annual report of Sirpur Paper Mills from 2005 –’06 to 2011 – ’12 and

http://www.sirpurpaper.com

49. Annual report of South India Paper Mills from 2005 –’06 to 2011 – ’12 and

http://www.sipaper.com

50. Annual report of Star Paper Mills from 2005 –’06 to 2011 – ’12 and

httpw://ww.starpapers.com

51. Annual report of Tamil Nadu Newsprint and Papers from 2005 –’06 to 2011 –

’12 and http://www.tnpl.com

52. Annual report of West Coast Paper Mills from 2005 –’06 to 2011 – ‘12 and

http://www.westcoastpaper.com

http://www.andhrapaper.com/

http://www.bilt.com/

http://www.jkpaper.com/

http://www.orientpaperindia.com/

http://www.spbltd.com/

http://www.sirpurpaper.com/

http://www.sipaper.com/

http://www.starpapers.com/

http://www.tnpl.com/

http://www.westcoastpaper.com/

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