A SUMMER TRAINING PROJECT

FINANCIAL STATEMENT ANALYSIS OF PEPSICO

B Y CHANDESHWAR KUMAR

COURCE MBA 3rd ROLL NO. - 1120103060

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr. CHANDESHWAR KUMAR, student of INVERTIS UNIVERSITY , BAREILLY, studying in 3rd semester MBA, has successfully completed his project on Financial Statement analysis of Pepsico, as part of his study in our company, from 20.07.2012 to 05.09.2012. We wish him all the best for his bright future.

PREFACE

As training is an integral part of MBA Program for the partial fulfillment of the course. I got the opportunity to Complete my summer training under .in bareilly I have done The study of FINANCIAL STATEMENT ANALYSIS OF PEPSICO globaly As such I hereby present my project for evaluation, which gives an insight over the current potential, prevailing in ..

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ACKNOWLEDGEMENT

I take the opportunity to express our gratitude to all the concerned people who have directly or indirectly contributed towards completion of this project. I extend my sincere gratitude towards for providing the opportunity and resources to work on this project. I am extremely grateful to my mentor in ..For his guidance and invaluable advice during the projects. Also to my guide, Mr. NITIN SARIN whose insight encouraged me to go beyond the scope of the project and this broadened me learning on this project.FINANCIAL ANALYSIS OFPEPSI-CO. I also want to show my gratitude to Mr. VISHNU SHARMA whose insight helped me to complete this project.

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CONTENTS
SL.NO. CHAPTERS PAGE NO. 1-20

1.

Introduction 1.1 Introduction to Soft Drink Industry 1.2 Introduction to Marketing 1.3 Marketing management and Marketing Mix 1.4 Consumer behaviour 1.5 Consumer buying behaviour process 1.6 Objectives of the study 1.7 Scope of the study

1.8 Limitations of the study 1.9 Summary

2. Company Profile 2.1 Brief overview of the company 2.2 Mission and Vision of the company 2.3 Product profile
21-27

2.4 SWOT analysis

3. Research Methodology 3.1 Research Design 3.2 Methodology of the study
28-31

3.3 Tools for data collection

4. 5. Analysis and Interpretation Summary of Findings
32-68 69

6.

Conclusion and Recommendations Annexure

70-71

Bibliography

LIST OF TABLES
Sl.No. 4.1 4.2 Table showing classification of respondents on the basis of age. Table showing classification of respondents on the basis of gender. Table showing classification of respondents on the basis of occupation. Table showing classification of respondents on the basis of annual income of family. Table showing classification of respondents on the basis of percentage of soft drink consumers. Table showing classification of respondents on the basis of their reason for purchasing soft drinks. Table representing the awareness of respondents towards different brands of cola drinks. Table representing the media influencing the respondents awareness towards the brand Pepsi. Table showing the percentage of respondents who are loyal towards a particular brand of soft drink. Table showing the intention of respondents to choose from a

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

substitute brand when their preferred brand is unavailable. 4.11 Table showing the percentage of respondents who have seen the television advertisements of the cola drink Pepsi. Table showing the classification of respondents on the basis of their views on television advertisements of Pepsi-Cola.

4.12

LIST OF CHARTS
Sl.No. 4.1 4.2 Chart showing classification of respondents on the basis of age. Chart showing classification of respondents on the basis of gender. Chart showing classification of respondents on the basis of occupation. Chart showing classification of respondents on the basis of annual income of family. Chart showing classification of respondents on the basis of percentage of soft drink consumers. Chart showing classification of respondents on the basis of their reason for purchasing soft drinks. Chart representing the awareness of respondents towards different brands of cola drinks.

4.3

4.4

4.5

4.6

4.7

4.8

Chart representing the media influencing the respondents awareness towards the brand Pepsi. Chart showing the percentage of respondents who are loyal towards a particular brand of soft drink. Chart showing the intention of respondents to choose from a substitute brand when their preferred brand is unavailable. Chart showing the percentage of respondents who have seen the television advertisements of the cola drink Pepsi. Chart showing the classification of respondents on the basis of their views on television advertisements of Pepsi-Cola. Chart showing the classification of respondents on the basis of the rank given to different brands as per their preference.

4.9

4.10

4.11

4.12

4.13

EXECUTIVE SUMMARY

Name of the student: CHANDESHWAR KUMAR Course with specialization: MBA Marketing and Finance Project Title: Financial statement analysis of PepsiCo Project guide: Mr Nitin Sarin Name of the organization: PepsiCo Private Limited Objectives:

Roll No. : 1120103060

1. To study the various factors and their influence which effect the selection of soft drinks. 2. To study the customers attitudes towards soft drinks.

3. To ascertain the attributes consumers look for in an ideal soft drink. 4. To know the most effective media for advertising the product that has greatest influence on the respondents. 5. To identify the brand of soft drink the customer prefers and regularly uses and also their satisfaction with their chosen brand. 6. To gain knowledge from consumers about their satisfaction towards pricing strategies of soft drinks. Methodology: Sources of Information: A. Secondary source: Company reports, Manuals and Brochures

Observations: 1) 2) Majority of student respondents consume soft drinks than any other age group. Respondents of all income groups can afford to consume soft drinks of PepsiCo

3)

Maximum numbers of respondents have seen the television advertisement of Pepsi Cola and it is the media which influences their purchase than any other media.

4)

The study reveals that maximum number of respondents has ranked Cola drink of Pepsi as number one Cola brand.

5)

Maximum percentage of respondents opinion about price of soft drinks of Pepsi is reasonable.

6)

Friends and relatives of respondents play a major role in persuading the purchase of a soft drink. Therefore, they should be treated as opinion leaders who can bring in more sales to Pepsi by their word of mouth.

7)

The study reveals that maximum number of respondents prefer to purchase or consume soft drinks at Restaurants/ Canteens.

Suggestions: 1) A large section of consumers are not strictly brand loyal. They can be influenced by the shopkeepers and salesmen with good promotional tools adopted by other soft drink Companies. For this reason the company should make soft drinks of PepsiCo available at each and every shop or outlet and increase retailers profit margin so that they can concentrate on sale of Pepsi brands more than the rival brands. 2) The Company should concentrate more on R&D. It has to be considered as one of the top agendas to overcome the threat of competitors within and even outside India so that more variety of soft drinks with superior quality can be manufactured and brought into the market at regular intervals. 3) Change the style of bottling to make its packing unique from that of its competitors and try repositioning the cola brand Pepsi. 4) Regular meetings should be held with the dealers/ retailers so that the company gets first hand information as the dealers are those who are in contact with the

final consumers more than the distributors. The company should send a representative at least once a month to the retailers shops or outlets to enquire about the problems faced by them from the Company. Conclusion: The data obtained is enough to understand the attitude of consumers towards the soft drink brands of Pepsi. The consumers of soft drinks of Pepsi are highly satisfied with its reputation, brand image, availability and quality as they have rated. It is also affordable by all segments with different incomes. No doubt that PepsiCo is a market leader in all its business units, at the same time it is ranked as number one brand in India. The brand loyalty of the company brands is maintained and is attracting consumers through different promotion and advertising tools thus prospecting in the business.

1.1 INTRODUCTION TO SOFT DRINK INDUSTRY

Non-alcoholic soft drinks beverage market can be divided into fruits drinks and soft drinks. Soft drinks can further be divided into carbonated and non-carbonated drinks. Cola, lemon and oranges are carbonated drinks while mango drinks come under noncarbonated category. The soft drinks market till early 1990s was in hand of domestic players like Campa, Thumps up, Limca etc but with the opening up of economy and coming of MNC players like Pepsi and Coke the market has come totally under their control. Indians have traditionally favored tea, coffee and other beverages for refreshment, over the soft drinks available in the market. The Indian soft drink industry today is at a stage in which every major soft drink manufacturer in the world is trying to get a foothold. In this region where the oppressive summer continues for more than 6 months of the year, the market demand for soft drinks is quite substantial. The Indian soft drink industry shot into world fame when the well known manufacturer Coca-Cola was shown the gate and circle turned a full round when Pepsi was allowed to enter India. However, the industry is poised for a take off stage with increasing urban population, more outdoor eating habits, higher literary levels and hence greater awareness and media reach contributing tremendously to the growth of the soft drink industry. This factor has attracted the Cola giants. Pepsi and Coca-Cola are making a foray into the Indian market. They see tremendous potential for expansion of soft drink market in India and have spent a large account of money and effort in setting up their operations in the country. Pepsi took positive steps to persuade the Indian government to allow it to do business in the industry on reasonable terms. Pepsi used mega marketing in its attempt to enter the huge Indian market.

Pepsi worked with an Indian business group to seek approval for its entry. Both domestic soft drinks companies and anti-multinational legislators objected to letting Pepsi into India. So Pepsi had to make an offer, which Indian government would find hard to refuse. Therefore Pepsi offered to help India export enough of its agricultural products to more than offset the outlay for importing soft drink syrup. Pepsi also promised to focus a good deal of selling effort on rural areas to help in their economic development. The company further offered to construct an agricultural research center and to give food processing, packing and water treatment technology to India. After three years of haggling, the Indian bureaucracy finally approved Pepsis extensive proposal, Pepsi is leading the Indian soft drink market. Organized sector contributes to about 70% of total market share. There are about 60 units turning out 250 brands of soft drinks and fruit drinks in India. While worldwide Coke is the leader in carbonated drinks market, in India it is Pepsi which scores over Coke but this difference is fast decreasing because of huge ad- spending by both the players. Pepsi entered the Indian market in 1991 whereas Coke-reentered (after they were thrown out in 1977 by the central government) in 1993. Pepsi has been targeting its products towards the youth and it has struck the market in the right chord. The market and sales of Pepsi has have been doing well by sticking to this youth band wagon. Coke on the other hand struggled initially in establishing itself in the market. In the span of 10 years of its operations in the country it has changed its CEO four times but finally they seem to have started understanding the pulse of Indian consumers. Now the two giants Coca-Cola and Pepsi are fighting for capturing the soft drink market. Soft drinks are available in glass bottles, aluminum cans and pet bottles for home consumption.

The soft drink market is continuously developing. More people are drinking soft drinks, and new beverages are continuously introduced in the market place. This is a large industry, having a significant impact on several sectors of chemical manufacturing. Drinking soft drinks not only fulfills physiological needs, but also provides social satisfaction as well. A few multinational producers like Pepsi and Coke are aggressively active alongside numerous local producers. Drinking habits vary around the world, from an annual consumption of one or two liters per capita, to more than half a liter per day. People drink it cold or warm, morning, noon or night, summer or winter from bottle, can and at fountain counters. They like the way the bubbles tickle their noses. The product and market potential of carbonated soft drinks is such that it is largely consumed by people of all age, especially during summer to quench the thirst. These are normally available in bottled form and consumed in the cold/chilled condition. Various types of soft drinks including orange, cola, lime and lemon based drinks as well as soda water fall in this category of aerated soft drinks. The soft drinks industry calculates the morning soft drink consumption that accounts for 12-15% of total soft drinks consumption in a day. Different countries have different attitudes towards the safety aspects related to the use of different additives. Local economic considerations bring governments to issue regulations for using (or rather - not using) certain additives. And beyond all these factors, the market in developed countries seems to be bored with the traditional beverages, and new types of soft drinks are entering the market. PepsiCos initial foray into the Indian Soft drink industry dates way back to 1956. However, it withdrew from the country in 1961 due to bottling problems. Its second attempt into the Indian market was much better planned. On Nov 9th 1987 the Government of Indias Project Approval Board (PAB) approved PEPSICO second proposal to enter the country. The then Government regulations forbid the company from setting up a 100% owned subsidiary, hence it entered the market in collaboration with VOLTAS INDIA and PUNJAB AGRO.

Later with the economic liberalization in the country, PEPSICO was allowed to acquire the stakes of both of its collaboration. Since then, Pepsi has gone to become the largest selling soft drink brand in the country. Indian business unit has an annual sales turnover of Rs.1100 Crores. The Government of India while allowing the entry of Pepsi had put forth a series of stringent conditions like introduction of latest food processing technologies, high quota of exports, local partnership, use of indianised brand names etc. Pepsi, whose basic intention was to consolidate its entry into the Indian market decided to cope with the demand and approached the entire issue strategically and finally succeeded in its mission. Pepsi dispatched over 100 videocassettes to key political personality across all major political parties. The cassettes contain recordings of the companys initial operations in the states economic growth. In building political support, Pepsi pledge equity and fairness and to be judged on the fact and merit. PepsiCo Inc. was founded in 1965 through the merger of Pepsi-Cola Company and Frito-Lay. Tropicana was acquired in 1998. In 2001, Pepsi Company merged with the Quaker Oats Company. Pepsi Companys success is the result of superior products, high standard of performance, distinctive competitive strategies and the high level of integrity of their people. The Indian Soft drink market has been growing rapidly from a billion in 1997 to about 8 billion bottles in 2008. Another thing, which needs not to be forgotten, is that Indias middle class is much large than China. Furthermore, many observers have predicted that India will eventually become an economic giant, thus growing incomes should support more sales. PepsiCo has two key industries: beverages, defined as non-alcoholic and non-dairy, and snacks, defined as salty, sweet, and grain-based. The company consists of the snack business of Frito-Lay North America and the beverage and food businesses of PepsiCo Beverages and Foods, PepsiCos worldwide beverage operations include Pepsi-Cola North America (PCNA), Gatorade/Tropicana North America (GTNA), and PepsiCo

Beverages International (PBI). Frito-Lay is PepsiCos operating division in the snack food industry. PepsiCo has an operating division, Quaker Oats, which competes in the ready-to-eat cereal and other convenient food markets. Quaker Oats is the smallest division and contributed less than 10% of the revenues to PepsiCo. As such it has not been analyzed in depth as the beverage and snack food divisions and industries have been for this report. PepsiCo brands are available in nearly 200 countries and territories. Many of PepsiCo's brand names are over 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001. PepsiCos success is the result of superior products, high standards of performance, distinctive competitive strategies and the high integrity of the company people. The Companys overriding objective is to increase the value of their shareholders investment through integrated operating, investing and financing activities. The companys strategy is to concentrate on their resources in growing their business, both through internal growth and carefully selected acquisitions. The companys strategy is continually fine tuned to address the opportunities and risks of the global marketplace.

2.2 MISSION AND VISION MISSION The Company mission is to be the worlds premier consumer Products Company focused on convenient foods and beverages. To build an Exceptional consumer focus sales team this will consistently exceed customer Expectation by delivering executional excellence in the market place through best systems and processes. VISION To be the best consumer products company in the eyes of our suppliers, customers, consumers, employees and shareholders. QUALITY POLICY To be the best consumer products company in the eyes of our suppliers, customers, consumers, employees and shareholders. SAFETY POLICY We shall design, construct, maintain and operate our plants so that they are safe for the people working in the factory, the assets of the company, the environment in and around the company. RESEARCH AND DEVELOPMENT An innovator in the snacks and beverages industries, Frito-Lay continually leads the development of unique preservatives, additives, and packaging technologies. As a result, it is likely that they will be the developers of future disruptive products. However as in other industries, large companies like Frito-Lay are often marred to existing methods of doing business and are vulnerable to disruptive technologies. To mitigate this vulnerability, it is important that Frito-Lay continues investing in R&D and incorporating new potentially disruptive technologies into its products.

2.3 PRODUCT PROFILE The company consists of the snack business of Frito-Lay North America and the beverage and food business of PepsiCo Beverages and Foods, which includes PepsiCo Beverages North America and Quaker Foods North America. PepsiCo International includes the snack businesses of Frito-Lay International and beverage businesses of PepsiCo Beverages International.

SNACK FOODS FRITO-LAY PepsiCos snack food operations had their start in 1932 when two separate events took place in San Antonio Texas, Elmer Doolin bought the recipe for an unknown food product- a corn chip- and started an entirely new industry. The product was Fritos brand corn chips, and his firm became the Frito Company. Today, Frito-Lay brands account more than half of the U.S. snack chip industry. PepsiCo began its international snack food operations in 1966. Today, with operations in more than 40 countries, it is the leading multinational snack chip company, accounting for more than one quarter of international retail snack chip sales. Products are available in some 120 countries. Frito-Lay North America includes Canada and the United States. Major Frito-Lay International markets include Australia, Brazil, Mexico, the Netherlands, South Africa, the United Kingdom and Spain.. Maintaining or lowering product costs allows PepsiCo/Frito-Lay to further gain a competitive advantage and increase operating profits.

BEVERAGES

PEPSI-COLA PepsiCos beverage business was founded at the turn of the century by Caleb Bradham, a New born, North Carolina druggist, who first formulated Pepsi-Cola. Today consumers spend about $3.3 billion on Pepsi-Cola beverages. Brand Pepsi and other Pepsi-Cola products including Diet Pepsi, Pepsi-One, Mountain Dew, Slice, Sierra Mist and Mug brands- account for nearly one-third of total soft drink sales in the United States. Each of PepsiCos beverage operation units contributed to the overall growth of the company. Pepsi-Cola also offers a variety of non-carbonated beverages, including Aquafina bottled water. In 1992 Pepsi-Cola formed a partnership with Thomas J. Lipton Co. Today Lipton is the biggest selling ready-to-drink tea brand in the United States. Pepsi-Cola also markets Frappuccino ready-to-drink coffee through a partnership with Starbucks. Pepsi-Cola beverages are available in about 160 countries and territories. FOODS

QUAKER FOODS The Quaker Oats Company was formed in 1901 when several American pioneers in oat milling came together to incorporate. In Ravenna, Ohio, Henry D. Seymour and William Heston had established the Quaker Mill Company and registered the now famous trademark. Seymour wanted his product to be a symbol of honesty, integrity and strength. The figures of a man in Quaker clothes became the first registered trademark for breakfast cereal and remain the hallmark for Quaker Oats today.

JUICES

GATORADE & TROPICANA Tropicana was founded in 1947 by Antony Rossi as a Florida fruit packaging business. The company entered the concentrate orange juice business in 1949, registering Tropicana as a trademark. In 1954 Rossi pioneered a pasteurization process for orange juice. The juice, Tropicana Pure Premium, became the companys flagship product. In 1957 the name of the company was changed to Tropicana Products, headquartered in Bradenton, Florida. PepsiCo acquired Tropicana, in August 1998. Today the Tropicana brand is available in 63 countries. Gatorade sports drinks were acquired by the Quaker Oats Company in 1983 and became a part of PepsiCo with the merger in 2001. Gatorade is the first isotonic sports drink. Created in 1965 by researchers at the University of Florida for the schools football team, The Gators, Gatorade is now the worlds leading sports drink.

SWOT ANALYSIS

STRENGTHS

WEAKNESS

1. PepsiCo has high technological equipment. 2. The company finds out the taste that the Indians are fond of and introduces a new taste for their fulfillment of their existing need. 3. PepsiCo is committed to providing safe and healthy work environments and to being and environmentally responsible corporate citizen.

1. The sales are dependent on the monsoons. 2. The company can be started only where there is sufficient supply of water. 3. There will be a large breakage of glass bottles during the production process.

OPPORTUNITIES

THREATS

1. There is a huge market for soft drinks in India. 2. Brand Pepsi will be used as an engine for driving the other brands of Pepsi.

1. High competitions from the other soft drink companies like Coca-cola. 2. Decline in quality of taste may seriously hamper the share of PepsiCo in the soft drinks market.

Assets :Cash Marketable Securities Account Receivable Inventories Rawmaterial Inventories ,Work in progress Inventories Finish goods Prepaid Exp TOTAL CURRENT ASSETS

2009
3943 192 4624 1274 165 1179 1194

2010
5943 426 6323 1654 128 1590 1505

2011
4067 358 6912 1883 207 1737 2277

12571 Land and Improvements Building Improvement Machinary,furniture and Equipment Construction in Progress Fixed Assets Total ( -)Accumulated Depreciation Net Fixed Assets Intangible Non Current Deferred income Taxes Other Fixed Assets 1208 5080 17183 1441 24912 12241 12671 2623 6534 5449

17569 1976 7054 22091 1920 33041 13983 19058 13808 14661 3057

17441 1951 7565 23798 1826 35140 15442 19698 16445 16800 2498

TOTAL FIXED ASSETS

27277 39848 2009

8127 464 165 8756 7400 659 5487

50584 68153 2010

3865 4898 3620 3509 15892 19999 4057 6579

55441 72882 2011

4083 6205 3686 4180 18154 20568 4995 8109

TOTAL ASEETS
LIABILITIES :Account Payable Short Term Debts Accrued Liabilities Other Current Liabilities Total Current Liabilities Long Term debts Deferred Tax Other Fixed Liabilities

Minority Interest

638

312

311

TOTAL FIXED LIABILITIES TOTAL LIABILITIES

Prefferd Share holder equities Common Share Holder's Equities Common par Additional Paid in Capital Retain Eranings (-)Treasury Stock (-) Other Equities Adjustment Total Capitalization

14184 22940
41 19867 30 250 33805 13528 3690 24308

30947 46839
41 21273 31 4527 37090 16745 3630 41313

33983 52137
41 20704 31 4461 40316 17875 6229 41313

TOTAL EQUITY TOTAL LIABILITIES & SHAREHOLDER EQUITIE'S

16908

21314

20745

39848

6815 3

72882

Profit & Loss Account Of Pepsico 201 2009 0

Net revenue Cost of sales Gross profit Selling, general and administrative expenses Amortization of intangible assets Operating profit Bottling equity income Interest expense Interest income and other Income before income taxes 66,504 -31,593 34,911 -25,145 -133 9,633 -856 57 8,834 57,838 -26,575 31,263 -22,814 -117 8,332 735 -903 68 8,232

2011
43,232 -20,099 23,133 -15,026 -63 8,044 365 -397 67 8,079

Provision for income taxes Net income Net income attributable to noncontrolling interests Net income attributable to PepsiCo

-2,372 6,462 -19 6,443

-1,894 6,338 -18 6,320

-2,100 5,979 -33 5,946

-: RATIO ANALYSIS :CURRENT RATIO = Current Assets/Current Liabilities 2009 Current Assets Current Liabilities 12571 8756 2009 1.4357012 Tim 33 es 2010 17569 15892 2010 1.1055 Tim 25 es 2011 17441 18154 2011 0.960724 9
Time s

Current Ratio

Interpretation: - It appears from the above table that the current assets turnover has increased form 0.96 times to 1.105 times. In 2010 the current turnover ratio was 1.105 times while in the next year that is in 2011 it has become 1.4357 times. The increase in current assets turnover is due to increase in sales and increasing in current assets.

Current Ratio
1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2009 2010 2011 Current Ratio

Liquid/Quick/Acid Ratio = Liquid Assets/Current Liabilities 2009 Liquid Aseets 6960 2010 12692 2011 11337

Current liabilities

8756

15892

18154

Liquid/Quick/Acid Ratio =

2009 0.79488350 Time 8 s

2010 0.79864 Time 08 s

2011 0.6244904 Time 7 s

Quick Ratio- This ratio is also as acid test ratio or liquidity ratio. This ratio is ascertained by comparing the liquid assets to current liability. The idle ratio is 1:1.This ratio is also an indicator of short-term solvency of the company. A comparison of current ratio to quick ratio will indicate the inventory hold-ups. For example, if two units have same current ratio but different liquidity ratio, it indicates over stocking by the concern having low liquidity ratio as compared to the concern, which has a higher liquidity ratio.

Liquid/Quick/Acid Ratio =
0.8 0.6 0.4 0.2 0 2009 2010 2011 Liquid/Quic k/Acid Ratio =

Debt Equities Ratio

LongTerm Debt/Share Holder Fund 2009 14184 20745 2010 30947 21314 2011 33983 20745

Long Term Debts Shareholder Fund'S

2009

2010

2011

Debt Equities Ratio

Time 0.68373102 s

1.45195 Time 65 s

1.6381296 Time 7 s

Interpretation: - This Ratio is calculated to assess the ability of the firm to meet its long term liabilities. Generally, debt equity ratio of is considered safe . If the debt equity ratio is more than that, it shows a rather risky financial position from the longterm point of view, as it indicates that more and more funds invested in the business are provided by long-term lenders. It appears from the above table that Debt. Equity ratio for the year 2009 was 0.683:1 and for year 2010 is 1.41:1. And in 2011 it became 1.64 From the above data it is clear that the amount of internal equity is lower after 2009, It indicate risky financial position

Debt Equities Ratio =

2 1.5 1 0.5 0 2009 2010 2011 Debt Equities Ratio =

Gross Profit Ratio = /Sales*100

Gross Profit 2009 2010 2011

Gross profit

23133

31263

34911

Sales

43232

57838

66504

Gross Profit Ratio =

2009 53.5089748 3

2010 54.0526 99

2011 52.494586 79

Interpretation:

As we know that This ratio measures the margin of profit available on sales. The higher the gross profit ratio, the better it is. But here G.P.Ratio is decressing year by year ,only in 2010 this ratio has incresed. If we look at the turnover of the company we find that it is increasing with huge amount since 2009 and 2011. This shows that the company is not able to earn higher profitability in proportion to its turnover.

Gross Profit Ratio =

54.5 54 53.5 53 52.5 52 51.5 2009 2010 2011 Gross Profit Ratio =

Operatig Ratio = Cost Of Goods Sold + Operating Exp /Sales*100 2009 Cost Of Goods Sold + Operating Exp 35125 2010 49389 2011 56738

Sales

43232

57838

66504

Operatig Ratio =

2009 81.2476869

2010 85.3919 57

2011 85.315169 01

As we know that Operating Ratio is a measurement of the efficiency and profitability of the business enterprise. And we can see that here Operating Ratio is increaseing year by year and we know that higher the operating ratio is not good for the company.

Interpretation:

Operatig Ratio =
86 85 84 83 82 81 80 79 2009 2010 Operatig Ratio =

Expenses Ratio =Total Expenses/Total sales Total exp Net Sales

2009 35188 43232

2010 49606 57838

2011 57670 66504

Expenses Ratio=

2009 81.3934122 9

2010 85.7671 43

2011 86.716588 48

Interpretation: - Expenses ratio when compared with the same ratios of the previous year give a very important indication whether these expenses in relation to sales are increasing, decreasing or remain stationary. If the expenses ratio is lower, the profitability will be greater and if the expenses ratio is higher, the profitability will be lower.

Expenses Ratio=
88 87 86 85 84 83 82 81 80 79 78 2009 2010 2011

Expenses Ratio=

Net Profit Ratio = Net Profit/Net Sales*100 2009 43232 4946 2009 11.4405995 6 2010 57838 6320 2010 10.9270 72 2011 66504 6443 2011 9.6881390 59

Sales Net Profit

Net Profit Ratio =

Interpretation: - This ratio measures the rate of net profit earned on sales. It helps in
determining the overall efficiency of the business operations. An increase in the ratio over the previous year shows improvement in the overall efficiency and profitability of the business. But here the rotio is decreasing countinously that show inefficiency of org. in 2011

Net Profit Ratio =

12 11 10 9 8 2009 2010 2011 Net Profit Ratio = Net Profit Ratio =

Working Capital Turn Over Ratio = Cost of Goods Sold/ W.C 2009 Cost of Goods Sold 20099 Net Working Capital 3815

2010 26575 1677

2011 31593 -713

2009 5.26841415 5

2010 15.8467 5

Working Capital Turn Over Ratio =

2011 44.309957 9

Interpretation: -This ratio is of particular importance in non-manufacturing concerns where current assets play a major role in generating sales. It shows the number of times working capital has been rotated in producing sales. A high working capital turnover ratio shows efficient use of working capital and quick turnover of current assets like stock and debtors. In 2011 - 44.31% working capital ratio indicate under-utilisation of working capital A low working capital turnover ratio indicates. under-utilisation of working capital

Working Capital Turn Over Ratio =

20 10 0 -10 2009 2010 -20 -30 -40 -50 2011 Working Capital Turn Over Ratio =

Stock Turn Over Ratio = Cost of Goods Sold/ Avg Stock 2009 20099 Cost of Goods Sold Avg Stock 2570 2010 26575 2995 2011 31593 3599.5

Stock Turn Over Ratio =

2009 7.82062256 8

2010 8.87312 19

2011 8.7770523 68

Interpretation: - This ratio indicates whether stock has been used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year. The higher the ratio, the better it is, since it indicates that stock is selling quickly. In a business where stock turnover ratio is high, goods can be sold at a low margin of profit and even than the profitability may be quit high.

9 8.8 8.6 8.4 8.2 8 7.8 7.6 7.4 7.2

Stock Turn Over Ratio =

Stock Turn Over Ratio =

2009

2010

2011

Fixed Assets Turn Over Ratio = Cost of Goods Sold / Fixed Assets 2009 Cost of Goods Sold 20099

2010 26575

2011 31593

TOTAL FIXED ASSETS

27277

50584

55441

Fixed Assets Turn Over Ratio =

2009 0.73684789 4

2010 0.52536 38

2011 0.5698490 29

Interpretation :- This ratio is particular importance in manufacturing concerns where the investment in fixed asset is quit high. Compared with the previous year, if there is increase in this ratio, it will indicate that there is better utilization of fixed assets. If there is a fall in this ratio, it will show that fixed assets have not been used as efficiently, as they had been used in the previous year.

Fixed Assets Turn Over Ratio =

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2009 2010 2011

Fixed Assets Turn Over Ratio =