Académique Documents
Professionnel Documents
Culture Documents
INTRODUCTION
In the financial Management the analysis of financial activity of the firm is one of the major
objectives of financial management. The financial analysis is the evaluation and interpretation of
a firms financial position and operations. And it involves a comparison and interpretation
accounting data. The financial manager has to interpret different statement and use a large
number of ratios to analyze the financial status of an activity of the firm. The management
measures its liquidity determining its profitability and assets overall performance in financial
terms.
Ratio is among the best known and most widely used tools of financial analysis. Ratio is a simple
arithmetical expression of the relationship of one number to another number. A Ratio is an
expression of quantitative relationship between two numbers. The relationship between various
items of financial statements expressed as ratios, reveals the profitability, liquidity and solvency
as well as the over all financial position of the enterprise.
Ratio analysis revel the profitability, liquidity, solvency of the enterprise. It helps analyze and
understand the financial health and trend of a business. Its past performance and makes it
possible to have core cost about future state of affaires of the business. Inter firm and comparison
becomes easier though the analysis. Past performance future projection could review though
ratio analysis. Management users the ratio analysis an exercising control in various areas,
Budgeting control, Inventory control, financial control etc.
The study covers all the information that is provided by the firm.
It covers the
accounting information, the study help full for taking financial decisions.
The study touches different types of financial performance ratios within its scope which
are helpful for decision making.
CHAPTER-2
THEORETICAL STUDY
Ratios simply means one number expressed in terms of another. A ratio is a statistical yardstick
by means of which relationship between two or various figures can be compared or measured.
Definition of Accounting Ratios:
The term "accounting ratios" is used to describe significant relationship between figures shown
on a balance sheet, in a profit and loss account, in a budgetary control system or in any other part
of accounting organization. Accounting ratios thus shows the relationship between accounting
data.
Ratios can be found out by dividing one number by another number. Ratios show how one
number is related to another. It may be expressed in the form of co-efficient, percentage,
proportion, or rate. For example the current assets and current liabilities of a business on a
particular date are $200,000 and $100,000 respectively. The ratio of current assets and current
liabilities could be expressed as 2 (i.e. 200,000 / 100,000) or 200 percent or it can be expressed
as 2:1 i.e., the current assets are two times the current liabilities. Ratio sometimes is expressed in
the form of rate. For instance, the ratio between two numerical facts, usually over a period of
time, e.g. stock turnover is three times a year.
Classification of Accounting Ratios:
Ratios may be classified in a number of ways to suit any particular purpose. Different kinds of
ratios are selected for different types of situations. Mostly, the purpose for which the ratios are
used and the kind of data available determine the nature of analysis. The various accounting
ratios can be classified as follows:
(A)
Traditional Classification or
Statement Ratios
Functional Classification or
Classification According to
Tests
(C)
Significance Ratios or Ratios
According to Importance
Profitability ratios
Primary ratios
ratios
Liquidity ratios
Secondary ratios
revenue/income
Activity ratios
statement ratios
or
Composite/mixed ratios
or inter statement ratios
Profitability ratios:
Profitability ratios measure the results of business operations or overall performance and
effectiveness of the firm. Some of the most popular profitability ratios are as
following formula is used to calculate gross profit ratios:
[Gross Profit Ratio = (Gross profit / Net sales) 100]
Net Profit Ratio
The two basic components of the net profit ratio are the net profit and sales. The net
profits are obtained after deducting income-tax and, generally, non-operating expenses and
incomes are excluded from the net profits for calculating this ratio. Thus, incomes such as
interest on investments outside the business, profit on sales of fixed assets and losses on sales of
fixed assets, etc are excluded.
Operating ratio:
The two basic components for the calculation of operating ratio are operating cost (cost
of goods sold plus operating expenses) and net sales. Operating expenses normally include (a)
administrative and office expenses and (b) selling and distribution expenses. Financial charges
such as interest, provision for taxation etc. are generally excluded from operating expenses
Operating Ratio = [(Cost of goods sold + Operating expenses) / Net sales] 100
Return on shareholder's investment or net worth Ratio:
The two basic components of this ratio are net profits and shareholder's funds.
Shareholder's funds include equity share capital, (preference share capital) and all reserves and
surplus belonging to shareholders. Net profit means net income after payment of interest and
income tax because those will be the only profits available for share holders.
[Return on share holder's investment = {Net profit (after interest and tax) / Share holder's
fund} 100]
Return on equity capital or common stock:
Equity share capital should be the total called-up value of equity shares. As the profit used for the
calculations are the final profits available to equity shareholders as dividend, therefore the
preference dividend and taxes are deducted in order to arrive at such profits.
Formula of return on equity capital ratio is:
Return on Equity Capital = [(Net profit after tax Preference dividend) / Equity share
capital] 100
Or
[Current Assets: Current Liabilities]
Liquid or Liquidity or Acid Test or Quick Ratio:
Liquid ratio is also termed as "Liquidity Ratio", "Acid Test Ratio" or "Quick Ratio". It is the
ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay
its short term obligations as and when they become due.
The two components of liquid ratio (acid test ratio or quick ratio) are liquid assets and liquid
liabilities. Liquid assets normally include cash, bank, sundry debtors, bills receivable and
marketable securities or temporary investments. In other words they are current assets minus
inventories (stock) and prepaid expenses. Inventories cannot be termed as liquid assets because it
cannot be converted into cash immediately without a loss of value. In the same manner, prepaid
expenses are also excluded from the list of liquid assets because they are not expected to be
converted into cash. Similarly, Liquid liabilities means current liabilities i.e., sundry creditors,
bills payable, outstanding expenses, short term advances, income tax payable, dividends payable,
and bank overdraft (only if payable on demand). Some time bank overdraft is not included in
current liabilities, on the argument that bank overdraft is generally permanent way of financing
and is not subject to be called on demand. In such cases overdraft will be excluded from current
liabilities.
Liquidity Ratio / Acid Test Ratio:
[Liquid Ratio = Liquid Assets / Current Liabilities]
Absolute Liquid Ratio:
Absolute liquidity is represented by cash and near cash items. It is a ratio of absolute liquid
assets to current liabilities. In the computation of this ratio only the absolute liquid assets are
compared with the liquid liabilities. The absolute liquid assets are cash, bank and marketable
securities. It is to be observed that receivables (debtors/accounts receivables and bills
receivables) are eliminated from the list of liquid assets in order to obtain absolute4 liquid assets
since there may be some doubt in their liquidity.
8
(a) [Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost]
Generally, the cost of goods sold may not be known from the published financial statements. In
such circumstances, the inventory turnover ratio may be calculated by dividing net sales by
average inventory at cost. If average inventory at cost is not known then inventory at selling
price may be taken as the denominator and where the opening inventory is also not known the
closing
inventory
figure
may
be
taken
as
the
average
inventory.
Stock turn over ratio and inventory turn over ratio are the same. This ratio is a relationship
between the cost of goods sold during a particular period of time and the cost of average
inventory during a particular period. It is expressed in number of times. Stock turn over ratio /
Inventory turn over ratio indicates the number of time the stock has been turned over during the
period and evaluates the efficiency with which a firm is able to manage its inventory. This ratio
indicates whether investment in stock is within proper limit or not.
The ratio is calculated by dividing the cost of goods sold by the amount of average stock at
cost.
(a) [Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost]
Generally, the cost of goods sold may not be known from the published financial statements. In
such circumstances, the inventory turnover ratio may be calculated by dividing net sales by
average inventory at cost. If average inventory at cost is not known then inventory at selling
price may be taken as the denominator and where the opening inventory is also not known the
closing
inventory
figure
may
be
taken
as
the
average
inventory.
short period of time and are included in current assets. Hence, the liquidity position of concern
to pay its short term obligations in time depends upon the quality of its trade debtors.
[Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors]
The two basic components of accounts receivable turnover ratio are net credit annual sales and
average trade debtors. The trade debtors for the purpose of this ratio include the amount of Trade
Debtors & Bills Receivables. The average receivables are found by adding the opening
receivables and closing balance of receivables and dividing the total by two. It should be noted
that provision for bad and doubtful debts should not be deducted since this may give an
impression that some amount of receivables has been collected. But when the information about
opening and closing balances of trade debtors and credit sales is not available, then the debtors
turnover ratio can be calculated by dividing the total sales by the balance of debtors (inclusive of
bills receivables) given. And formula can be written as follows.
[Debtors Turnover Ratio = Total Sales / Debtors]
Working Capital Turnover Ratio:
Working capital turnover ratio indicates the velocity of the utilization of net working capital.
This ratio represents the number of times the working capital is turned over in the course of year
and is calculated as follows:
Following formula is used to calculate working capital turnover ratio
[Working Capital Turnover Ratio = Cost of Sales / Net Working Capital]
The two components of the ratio are cost of sales and the net working capital. If the information
about cost of sales is not available the figure of sales may be taken as the numerator. Net
working capital is found by deduction from the total of the current assets the total of the current
liabilities.
Creditors / Accounts Payable Turnover Ratio:
11
This ratio is similar to the debtors turnover ratio. It compares creditors with the total credit
purchases.
It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include
both sundry creditors and bills payable. Same as debtors turnover ratio, creditors turnover ratio
can be calculated in two forms, creditors turnover ratio and average payment period.
Following formula is used to calculate creditors turnover ratio:
[Creditors Turnover Ratio = Credit Purchase / Average Trade Creditors]
Average Payment Period:
Average payment period ratio gives the average credit period enjoyed from the creditors. It can
be calculated using the following formula:
[Average Payment Period = Trade Creditors / Average Daily Credit Purchase]
[Average Daily Credit Purchase= Credit Purchase / No. of working days in a year]
Or
[Average Payment Period = (Trade Creditors No. of Working Days) / Net Credit
Purchase]
(In case information about credit purchase is not available total purchases may be assumed to be
credit purchase.)
Long Term Solvency or Leverage Ratios:
Long term solvency or leverage ratios convey a firm's ability to meet the interest costs and
payment schedules of its long term obligations. Following are some of the most important long
term solvency or leverage ratios.
Proprietary Ratio or Equity Ratio:
12
This is a variant of the debt to equity ratio. It is also known as equity ratio or net worth to total
assets ratio.
This ratio relates the shareholder's funds to total assets. Proprietary / Equity ratio indicates the
long-term or future solvency position of the business.
Proprietary/Equity Ratio:
Proprietary or Equity Ratio = Shareholders funds / Total Assets
Shareholder's funds include equity share capital plus all reserves and surpluses items. Total assets
include all assets, including Goodwill. Some authors exclude goodwill from total assets. In that
case the total shareholder's funds are to be divided by total tangible assets. As the total assets are
always equal to total liabilities., the total liabilities, may also be used as the denominator in the
above formula.
Fixed Assets to Proprietor's Fund Ratio:
Fixed assets to proprietor's fund ratio establishes the relationship between fixed assets and
shareholders funds.
The purpose of this ratio is to indicate the percentage of the owner's funds invested in fixed
assets.
[Fixed Assets to Proprietors Fund = Fixed Assets / Proprietors Fund]
The fixed assets are considered at their book value and the proprietor's funds consist of the same
items as internal equities in the case of debt equity ratio.
Current Assets to Proprietor's Fund Ratio:
13
Current Assets to Proprietors' Fund Ratio establishes the relationship between current assets
and shareholder's funds.
The purpose of this ratio is to calculate the percentage of shareholders funds invested in current
assets.
[Current Assets to Proprietors Funds = Current Assets / Proprietor's Funds]
CHAPTER-3
INDUSTRY PROFILE
HISTORY OF INDIAN CEMENT INDUSTRY
By stating productions in 1914 the story of Indian Cement is a stage of continuous
growth. Cement is derived from the Latin word Cementam.
Egyptians and Romans found the process of manufacturing cement. In England during
the first century the hydraulic cement has become more versatile building material. Later on,
Portland cement was invented and the invention was usually attributed to Joseph Aspdin of
Enland.
India is the worlds 4th largest cement produced after China, Japan and U.S.A. The South
Industries have produced cement for the first time in 1904. The company was setup in Chennai
with the installed capacity of 30 tonnes per day. Since then the cement industry has progressing
leaps and bounds and evolved into the most basic and progressive industry. Till 1950 1951, the
capacity of production was only 3.3 million tones. So far annual production and demand have
been growing a pace at roughly 78 million tones with an installed capacity of 87 million tones.
In the remaining two years of 8 th plan an additional capacity of 23 million tones will
actually come up.
India is well endowed with cement grade limestone (90 billion tones ) and coal (190
billion tones). During the nineties it had a particularly impressive expansion with growth rate of
10 percent.
The strength and vitality of Indian Cement Industry can be gauged by the interest shown
and support give by World Bank, considering the excellent performance of the industry in
14
utilizing the loans and achieving the objectives and target. The World Bank is examining the
feasibility of providing a third line of credit for further upgrading the industry in varying areas,
which will make it global. With liberalization policies of Indian Government. The industry is
posed for a high growth rates in nineties and the installed capacity is expected to cross 100
million tones and production 90 million tones by 2003 A.D.
The industry has fabulous scope for exporting its product to countries like the U.S.A.,
U.K., Bangladesh, Nepal and other several countries. But there are not enough wagons to
transport cement for shipment.
15
patent for this cement called it PORTLAND CEMENT because it had resemblance in its color
after setting to a variety of sandstone, which is found a abundance in PortlandEngland.
The manufacture of Portland cement was started in England around 1825. Belgium and
Germany started the same 1855. America started the same in 1872 and India started in 1904. The
first cement factory installed in Tamilnadu in 1904 by South India limited and then onwards a
number of factories manufacturing cement were started. At present there are more than 150
factories producing different types of cements.
Composition of Cement:
The ordinary cement contains two basic ingredients, namely, argillaceous and calcareous.
In argillaceous materials the clayey predominates and in calcareous materials the calcium
carbonate predominates.
A good chemical analysis of ordinary cement along with desired range of ingredients.
Ingredients
Percent
Range
Lime (CaO)
62
62 67
Silica (SiO2)
22
17 25
Alumina (Al2O3)
38
34
34
Magnesia (MgO)
13
Sulphur (S)
13
Alkalies
0.2 1
With a capacity of 115 million tones of large cement plants, Indian cement industry is the
fourth largest in the world. However per capita consumption in our country is still at only 100
Kgs against 300 Kgs of developed countries and offers significant potential for growth of cement
consumption as well as addition to cement capacity. The recent economic announcement by the
government in respect of housing, roads, power etc., will increase cement consumption.
Opportunities and Threats
In view of low per capita consumption in India, there is a considerable scope for growth
in cement consumption and creation of new capacities in coming years.
The cement industry does not appear to have adequately exploited cement consumption
in rural segment where damaged where damaged growth is possible.
Landed cost of cement (with import duty) continues to be higher than home market prices
but with reduced import duty, increasing imports, may pose a serious threat to the domestic
cement industry.
Outlook
The recent change in the budget 2001 2002 relating to fiscal incentives for individual
housing and reduction in borrowing cost for this purpose and with the government reaffirmation
to accelerate the reform process, infrastructure development should logically get priority leading
to increase in demand of cement in coming years. The addition capacity of cement in the pipeline
is limited and therefore the demand and supply situations is expected to be more favorable and
cement prices are likely to firm up.
17
steel, in other words, cement is one of the basic construction materials and therefore it is one of
the vital elements for the economic development of the nation.
Indiainspite of being the 4th biggest produces of cement in the world has still a very low
per capital consumption of cement.
Cement Companies
51 Nos
Cement Plants
99 Nos
Installed Capacity
64.8 mt
Total Manpower
Management Award of the Government of Andhra Pradesh. Ultra Tech is also conscious
of its social responsibilities. Its rural and community development programmes include adoption
of two nearby villages, running an Agricultural Demonstration Farm, a Model Dairy Farm etc.,
Impressed by these activities, FAPCCI chose Ultra Tech to confer the Award for Best efforts of
an Industrial Unit in the State to Develop Rural Economy twice, in the year 1994 as well as in
1998. Ultra Tech also has to its credit the National Award (Shri. S.R. Rangta Award for Social
Awareness) for the year 1995 1996, for the Best Rural Development Efforts made by the
Company. In the same year Ultra Tech got the First Prize for Mine Environment and Pollution
Control for year 1999 too, for the 3rd year in succession in July, 2001 Ultra Tech annexed the
VanaMithra Award from the Government of Andhra Pradesh.
Quality conscious and progressive in its outlook, Ultra Tech Cement is an OHSAS 08001
Company and also joined the select brand of ISO9001-2000 Companies.
History
The first unit was installed at TADIPATHRI AT ANATHAPUR DIST with a capacity of
2.5 lack TPA (tones per annum) incorporating humble supervision, preheated system, during the
year 1969.
The second unit followed suit with added a capacity of 2 lack TPA in 1971.
The plant was further expanded to 9 lack by adding 2.5 lack tones in August, 1978, 1.13
lack tones in January, 1981 and 0.87 lack tones in September, 1981.
Power
18
Singareni Colleries makes the supply of coal for this industry and the power was obtained
from AP TRANSCO. The power demand for the factory is about 21MW. Ultra Tech has got 2
diesel generator sets of 4MW each installed in the year 1987.
Ultra Tech cement now has a 15 KW captive power plant to facilitate for uninterrupted
power supply for manufactured of cement.
COMPANY PROFILE
ULTRATECH CEMENT:
UltraTech Cement Limited has an annual capacity of 18.2 million tonnes. It manufactures and
markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana
Cement. It also manufactures ready mix concrete (RMC).
UltraTech Cement Limited has five integrated plants, six grinding units and three terminals
two in India and one in Sri Lanka.
UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span
countries around the Indian Ocean, Africa, Europe and the Middle East.
UltraTechs subsidiaries are Dakshin Cement Limited and UltraTech Ceylinco (P) Limited.
The roots of the Aditya Birla Group date back to the 19th century in the picturesque town of
Pilani, set amidst the Rajasthan desert. It was here that Seth Shiv Narayan Birla started trading in
cotton, laying the foundation for the House of Birlas.
Through India's arduous times of the 1850s, the Birla business expanded rapidly. In the early part
of the 20th century, our Group's founding father, Ghanshyamdas Birla, set up industries in
critical sectors such as textiles and fibre, aluminium, cement and chemicals. As a close
19
confidante of Mahatma Gandhi, he played an active role in the Indian freedom struggle. He
represented India at the first and second round-table conference in London, along with Gandhiji.
It was at "Birla House" in Delhi that the luminaries of the Indian freedom struggle often met to
plot the downfall of the British Raj.
Ghanshyamdas Birla found no contradiction in pursuing business goals with the dedication of a
saint, emerging as one of the foremost industrialists of pre-independence India. The principles by
which he lived were soaked up by his grandson, Aditya Vikram Birla, our Group's legendary
leader.
The Group is also the largest producer of aluminium in the private sector, the lowest first cost
producers in the world and the only producer of linen in the textile industry in India.
At the time of his untimely demise, the Group's revenues crossed Rs.8,000 crore globally, with
assets of over Rs.9,000 crore, comprising of 55 benchmark quality plants, an employee strength
of 75,000 and a shareholder community of 600,000.
Most importantly, his companies earned respect and admiration of the people, as one of India's
finest business houses, and the first Indian International Group globally. Through this
outstanding record of enterprise, he helped create enormous wealth for the nation, and respect for
Indian entrepreneurship in South East Asia. In his time, his success was unmatched by any other
industrialist in India.
That India attains respectable rank among the developed nations, was a dream he forever
cherished. He was proud of India and took equal pride in being an Indian.
Under the leadership of our Chairman, Mr. Kumar Mangalam Birla, the Group has sustained and
established a leadership position in its key businesses through continuous value-creation.
Spearheaded by Grasim, Hindalco, Aditya Birla Nuvo, Indo Gulf Fertilisers and companies in
Thailand, Malaysia, Indonesia, the Philippines and Egypt, the Aditya Birla Group is a leader in a
swathe of products viscose staple fibre, aluminium, cement, copper, carbon black, palm oil,
insulators, garments. And with successful forays into financial services, telecom, software and
BPO, the Group is today one of Asia's most diversified business groups.
Awards won
Year
2012-2013
2011-2012
2010-2011
2010-2011
2010
2010
2010
Award
Asociated with Govrmnent projects & Business World FICCI-SEDF CSR
Award
ASSOCHAM CSR Excellence Award for its "truly outstanding" CSR
activities
Subh Karan Sarawagi Environment Award
Business World FICCI-SEDF CSR Award
Greentech Environment Excellence Gold Award
IMC Ramkrishna Bajaj National Quality Award
Asian CSR Award
21
2009-2010
2009-2010
2009-2010
Group companies
:: Grasim Industries Ltd.
:: Hindalco Industries Ltd.
:: Aditya Birla Nuvo Ltd.
:: UltraTech Cement Ltd.
Indian companies
:: Aditya Birla Minacs IT Services Ltd.
:: Aditya Birla Minacs Worldwide Limited
:: Essel Mining & Industries Ltd
:: Idea Cellular Ltd.
:: Aditya Birla Insulators
:: Aditya Birla Retail Limited
:: Aditya Birla Chemicals (India) Limited
UltraTech is India's largest exporter of cement clinker. The company's production facilities are
spread across eleven integrated plants, one white cement plant, one clinkerisation plant in UAE,
fifteen grinding units, and five terminals four in India and one in Sri Lanka. Most of the plants
have ISO 9001, ISO 14001 and OHSAS 18001 certification. In addition, two plants have
received ISO 27001 certification and four have received SA 8000 certification. The process is
currently underway for the remaining plants. The company exports over 2.5 million tonnes per
annum, which is about 30 per cent of the country's total exports. The export market comprises of
countries around the Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in
the company's strategy for growth.
UltraTech's products include Ordinary Portland cement, Portland Pozzolana cement and Portland
blast furnace slag cement.
22
be carried out, and a corporate can truly say it is contributing to the preservation of the
environment. UltraTech takes its responsibility to conserve the environment very seriously, and
its eco-friendly approach is evident across all spheres of its operations. Its major thrust has been
to identify alternatives to achieve set objectives and thereby reduce its carbon footprint. These
are done through:
::
::
::
::
::
::
Waste management
Energy management
Water conservation
Biodiversity management
Afforestation
Reduction in emissions
Importantly, UltraTech has set a target of 2.96 per cent reduction in CO2 emission intensity, at a
rate of 0.5 per cent annually, up to 2015-16, with 2009-10 as the baseline year. This will also
include CO2 emissions from the recently acquired ETA Star Cement and upcoming projects.
PRODUCT PROFILE
ULTRA TECH CEMENTS manufactures and distributes its own main product lines of
cement .We aim to optimize production across all of our markets, providing a complete solution
for customer's needs at the lowest possible cost, an approach we call strategic integration of
activities.
Cement is made from a mixture of 80 percent limestone and 20 percent clay. These are
crushed and ground to provide the "raw meal, a pale, flour-like powder. Heated to around 1450
C (2642 F) in rotating kilns, the meal undergoes complex chemical changes and is
transformed into clinker. Fine-grinding the clinker together with a small quantity of gypsum
produces cement. Adding other constituents at this stage produces cements for specialized uses.
QUALITY
Six strong benefits that make 43, 53 Grade, Super fine, Premium and Shakti the ideal
cement
Reduced construction time with a superior and wide range of cement catering to every
conceivable building need, ULTRA TECH CEMENTS is a formidable player in the
cement market.
Here just a few reasons why ULTRA TECH CEMENTS chosen by millions of India.
Greater finenes
25
CHAPTER-4
Gross profit ratio
This ratio gives the relation ship between the gross profit and sales
Gross Profit = Gross profit
---------------- * 100
Sales
TABLE 4.1
Year
Gross profit
Net sales
Ratio
4386.36
13349.58
33.8576
5322.93
16224.43
33.8081
6440.28
19300.04
33.3692
7301.05
21355.04
34.1874
8177.79
23143.53
35.3350
2010-11
2011-12
2012-13
2013-14
2014-15
26
CHART 4.1
Interpretation
The above table shows that the gross profit ratio was constant from 2010-11.i.e 33% .
From 2014-15 the ratio was increased i.e. 35% respectively. due to increase in sales.
27
= Net Profit
------------- *100
sales
TABLE 4.2
Year
Net sales
ratio
2191.40
13349.58
16.42
2235.35
16224.43
13.78
2299.97
19300.04
13.99
3120.10
21355.94
14.61
3263.59
23143.53
14.10
2010-11
2011-12
2012-13
2013-14
2014-15
28
CHART 4.2
Interpretation
The above table shows that the net profit ratio was decreased in the year 2010-11 when
compared to 2011-12, in the year 2012-13 it was increased to 14.16 in the year 2013-14 net
profit ratio.
Return on asset
29
Net profit
Ratio
2191.40
8140
26.92
2235.35
9181
24.35
2299.97
10637
25.38
3120.10
12272
25.42
3263.59
13912
33.46
2010-11
2011-12
2012-13
2013-14
2014-15
CHART 4.3
30
Interpretation
The above table shows that the return on the asset ratio was decreased to 24.35 in the year
2010-11 when comparing to 2011-12. Last three years was increasing position when compared to
the 2014-15.
Return on equity
31
*100
Net profit
Ratio
2191.40
7895.61
0.28
2235.35
9061.48
0.25
2299.97
10437.08
0.26
3120.10
12057.67
0.26
3263.59
13735.08
0.24
2010-11
2011-12
2012-13
2013-14
2014-15
CHART 4.4
32
Interpretation
The above table shows that the return on equity was increased trend in the year 2011-12
and the decreasing the year 2010-11. From 2012-13 constant and the year 2013-14 decreasing
trend in the return on equity. Share holders fund was increase.
* 100
Current liabilities
TABLE 4.5
Year
Current asset
Current liabilities
Ratio
3746.56
3617.18
1.04
5396.12
4137.05
1.30
6556.65
4597.27
1.43
7319.02
5277.12
1.39
8462.87
5873.96
1.44
2010-11
2011-12
2012-13
2013-14
2014-15
34
CHART 4.5
Interpretation:
The above table shows that the current asset ratio was constant during the year 200914.It is less than the standard ratio. i.e. 2:1
Inventory ratio
Inventory ratio = Cost of goods sold
----------------------Average Inventory
35
TABLE 4.6
Year
Avg. inventory
Ratio
8963.22
2002.99
4.47
10901.50
2636.29
4.41
12859.76
3354.03
3.83
14054.89
4050.52
3.83
14965.74
4599.72
3.25
2010-11
2011-12
2012-13
2013-14
2014-15
CHART 4.6
36
Interpretation:
The above table shows that the inventory ratio was increased during the period 2010-11,
and 2014-15 years was in decreasing position of inventory ratio.
Working capital turnover ratio :
Working capital turnover ratio :
Sales
-----------Working capital
TABLE 4.7
Year
Working capital
ratio
8963.22
129.30
69.32
10901.50
1259.07
8.67
12859.76
1959.28
6.56
14054.89
2041.90
6.88
14965.74
2588.91
5.78
2010-11
2011-12
2012-13
2013-14
2014-15
37
CHART4.7
Interpretation
The above table shows that the working capital turnover ratio decreasing position during
the period from 2010-11 to 2014-15 .cost of goods sold was increased more than the increase in
working capital position.
38
Credit purchases
Bills payable
ratio
8594
1108.18
7.76
10562
1389.04
7.06
12596
1472.84
8.56
13457
1645.33
8.17
14832
1740.49
8.52
2010-11
2011-12
2012-13
2013-14
2014-15
39
CHART 4.8
Interpretation
The above table shows that the creditors turnover ratio was decreased to 7.06 in the year
2010-11 , then it was increased position during the period of 2011-12 to 2013-14 credit
purchases was increased.
40
Fixed assets
Proprietor funds
Ratio
5746.27
7895
0.7278
6227.17
9061
0.6872
7134.31
10437
0.6836
8959.70
12057
0.7431
10558.65
13735
0.7687
2010-11
2011-12
2012-13
2013-14
2014-15
41
CHART 4.9
Interpretation
The above table shows that the fixed assets to proprietor funds ratio was in increased
position during the period from 2010-15 due to increase in proprietary funds.
42
Year
Current assets
Proprietary fund
Ratio
8140
7895
1.03
9181
9061
0.01
10637
10437
1.02
12272
12057
1.02
13912
13735
1.01
2010-11
2011-12
2012-13
2013-14
2014-15
43
CHART 4.10
Interpretation
The above table shows that the current asset to proprietary fund ratio was fluctuating
trend during the period from 2010-11 to 2014-15 i.e. from 0.01 to 1.02.
44
Liquid ratio
Liquid assets
-------------------------Current liabilities
TABLE 4.11
Year
Liquid asset
Current liabilities
Ratio
1743.57
3617
0.5
2759.83
4137
0.7
3202.52
4597
0.7
3268.50
5277
0.6
3863.15
5873
0.7
2010-11
2011-12
2012-13
2013-14
2014-15
45
CHART 4.11
Interpretation
The above table shows that the liquid ratio position was fluctuating trend during the
period from 2010-11 to 2014-15 i.e. from 0.5 to 0.7. This is less than the standard ratio i.e. 1:1.
46
Operating Ratio
Operating expenses
------------------------ *100
sales
TABLE 4.12
Year
Net Sales
Ratio
2010-11
3391.07
13349.58
25.40
2011-12
3577.61
16224.43
22.05
2012-13
4305.66
19300.04
22.31
2013-14
5048.02
21355.94
23.64
2014-15
5422.8
23143.53
23.43
47
CHART 4.12
Interpretation
The above table shows that the operating ratio was Fluctuating trend during the period
from 2010-11 to 2014-15 i.e. from 22.31 to 25.40
48
CHATER-5
FINDINGS
A comparison of the operating ratio will indicate weather the cost component is increased
in the figure of sales.
Inventory position of the company was decreased, it is good sign of the company.
because the cost of the goods sold was decreased to converting finished goods.
The fixed asset proportion in equity funds was increased during the period .it indicates
that the company is to be purchased fixed assets by taking long term liabilities.
The short term financial position of the company was i.e 0.70. it was less than the
standard ratio that 2:1.
The profitability position of the company was increased year by year from 13.42 to
14.61..
49
SUGGESTIONS
1. Operational efficiency with which the business is being carried. The operating ratio should
be low enough to leave a portion of sales to give a fair return to the investors.
2.
The fixed assets turnover for next two or three years must also be seen before
commenting on judiciousness or other wise of increase in investments in the fixed assets.
5. Current ratio excessive dependence on long term sources of raising funds. Long term
liabilities are costlier than current liabilities.
6. The turnover ratio signifies the liquidity; cost of goods sold and inventory measures to
discover the possible in form of overvaluation. The stock position as the graveyard of the
balance sheet.
7. The creditors turnover ratio and debt payment period enjoyed ratio indicate about
promptness or otherwise in making payment of credit purchase. The creditors are being
paid promptly, thus enhancing the credit worthiness of the company.
50
CONCLUSION
It may, therefore, be concluded that ratio analysis, if done mechanically, is not only
misleading but also dangerous. It is indeed a double edged sword which requires a great deal of
understanding and sensitivity of the management process rather than mechanical financial skill.
It has rightly been observed, The ratio analysis is an aid to management in taking correct
decisions, but as a mechanical substitute for thinking and judgment, it is worse than useless.
The ratios discriminately calculated and wisely interpreted can be a useful tool of financial
analysis.
51
Bibliography
; FINANCIAL ACCOUNTING
IM PANDEY
: FINACIAL MANAGEMENT
S.N. MAHESWARI
52
Mar
Mar
2011
2010
376.22
375.52
249.43
11680.81
10060.86
8685.96 7646.18
13735.08
12057.67
10437.08
9061.48 7895.61
Secured Loans
11.63
5.57
60.78
25.91
88.69
Unsecured Loans
165.92
208.86
140.10
93.82
156.67
Total Debt
177.55
214.43
200.88
119.73
245.36
Total Liabilities
13912.63
12272.10
10637.96
9181.21 8140.97
Gross Block
10558.65
8959.70
7134.31
6227.17 5746.27
3286.74
2790.87
2389.54
2065.44 1795.51
Net Block
7271.91
6168.83
4744.77
4161.73 3950.76
1214.06
1126.82
866.14
243.40
Investments
2837.75
2934.55
3067.77
3517.01 3874.68
Inventories
4599.72
4050.52
3354.03
2636.29 2002.99
Sundry Debtors
680.55
748.96
648.11
559.02
537.66
1032.39
570.25
900.16
855.82
55.66
2150.21
1949.29
1654.25
1344.99 1150.25
8462.87
7319.02
6556.55
5396.12 3746.56
Current Liabilities
4133.47
3631.79
3124.43
2748.01 2509.00
Provisions
1740.49
1645.33
1472.84
1389.04 1108.18
5873.96
5277.12
4597.27
4137.05 3617.18
2588.91
2041.90
1959.28
1259.07 129.38
0.00
0.00
0.00
0.00
Particulars
Mar 2014
Mar 2013
Share Capital
377.44
376.86
13357.64
Mar 2012
SOURCES OF FUNDS :
APPLICATION OF FUNDS :
186.15
53
0.00
Total Assets
13912.63
12272.10
10637.96
9181.21 8140.97
Contingent Liabilities
292.00
314.53
190.35
163.14
149.76
Particulars
Mar 2014 Mar 2013 Mar 2012 Mar 2011 Mar 2010
Sales Turnover
23143.53
Other Income
557.48
635.24
349.96
295.02
599.19
Stock Adjustments
630.30
32.46
266.30
145.86
115.03
Total Income
24331.31
Raw Materials
6570.47
6022.39
5390.67
4124.90
2840.07
Excise Duty
8262.03
7435.18
7206.16
6438.09
5754.64
394.12
309.90
253.00
245.17
218.54
369.42
320.22
276.23
235.32
265.00
Employee Cost
886.57
728.51
628.00
539.40
464.99
1705.17
1408.81
1110.88
868.92
Miscellaneous Expenses
636.99
567.00
490.29
409.72
287.04
72.55
112.75
42.52
15.78
26.47
5422.80
5048.02
4305.66
3577.61
3391.07
47.65
37.79
16.04
21.10
50.80
5375.15
5010.23
4289.62
3556.51
3340.27
Depreciation
549.41
438.46
362.92
332.34
312.87
4825.74
4571.77
3926.70
3224.17
3027.40
Tax
1562.15
1451.67
1226.73
988.82
836.00
3263.59
3120.10
2699.97
2235.35
2191.40
3.97
0.00
0.00
-0.02
-1.27
724.45
647.53
562.06
611.41
387.84
Appropriations
3133.87
3043.18
2614.50
2284.68
1966.56
Less:
Preoperative
Expenditure
Capitalized
Profit before Interest, Depreciation &
Tax
54
858.14
724.45
647.53
562.06
611.41
Equity Dividend
1396.53
1319.01
1166.29
995.12
773.25
Preference Dividend
0.00
0.00
0.00
0.00
0.00
237.34
224.17
198.21
139.56
108.45
370.00
350.00
310.00
265.00
310.00
8.02
7.68
6.65
5.58
83.92
Book Value
36.24
31.85
27.59
23.97
315.63
Extraordinary Items
27.18
10.36
4.66
-40.44
353.88
55