Short, practical observations on issues commonly encountered by manufacturing promoters and finance teams.
A manufacturing company can report profit while cash remains tied up in receivables, inventory, GST credits and capital expenditure. Working-capital days should therefore be reviewed alongside EBITDA.
Discuss a related matter →Revenue and EBITDA totals are not enough. A useful MIS should explain changes in material cost, conversion cost, customer mix, price revisions and working capital.
Discuss a related matter →Lenders typically look beyond turnover growth. The quality of projections, current ratio, debt service, inventory levels and receivable ageing can materially affect the assessment.
Discuss a related matter →Two customers with similar revenue can generate very different returns after freight, tooling, rejection costs, credit periods and material escalation are considered.
Discuss a related matter →Plant expansion should be tested against debt service, ramp-up assumptions, working-capital absorption and the timing of customer programs—not only accounting profitability.
Discuss a related matter →Job work, supplies, related-party transactions, incentives and financing arrangements can have connected accounting and tax implications that should be evaluated together.
Discuss a related matter →