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TO
THROUGH
(IBMR)
2005-2006
Acknowledgement:
guidance & most valued knowledge during the study of ratio analysis
Nitin S.
Kaulgud.
I N D E X
I. Title
V. Company Profile
VIII. Methodology
IX. Suggestions
X. Conclusions
TITLE
TITLE
the firm. Users of these statements can get further insight about financial
their best use and to be able to spot out financial weaknesses of the firm
to take suitable corrective actions. The future plans of the firm should be
laid down in view of the firms financial strength and weaknesses. Thus,
future.
IMPORTANCE
IMPORTANCE
relationships between the items of the Balance Sheet, Trading and Profit
1. Creditors:
claims over a very short period of time. Their analysis will, therefore,
Moneylenders, etc. They analyze the firms profit ability over time, its
ability to generate cans to be able to pay interest and repay principle and
3. Investors:
shares, are most concern about the firm's earnings. They restore more
that the resources of the firm are used most effectively and efficiently
RATIO ANALYSIS
OBJECTIVE OF RATIO ANALYSIS
1. With help of various ratios, one can get the information about the
get the information about long term solvency against the funds
borrowed.
PROFILE
COMPANY PROFILE:
Dist. Pune.
projects, etc. The entire staff of the company is been in the heavy
kms from Pimpri / Chinchwad industrial belt and 20 kms from Pune, on
between the staff and the management has created a very congenial work
capacity.
The company is in the process of establishing in-house
equipment.
Office Staff are working. The fabrication workers include skilled, semi-
1. Current Ratio:
formula:
Current Assets
Current Ratio = -------------------------
Current Liabilities
indicates the availability of current assets in rupees for every one rupee
of current liability. A ratio of greater than one means the firm has more
The difference between the current assets and the current liabilities
excluding short term bank borrowings is called net working capital. Net
is considered that, between firms, the one having the larger net working
capital has the greater ability to meet its current obligations. The Net
Several debt ratios may be used to analyse the long term solvency
compute debt ratio by dividing the total debt by capital employed or net
assets. Total debt will include short term and long term borrowings from
for buying capital equipments, bank borrowings, public deposits and any
other interest bearing loans. The formula for finding the debt ratio is as
under:
Total Debt
Debt Ratio = -----------------------
Capital Employed
4. Gross Profit Ratio:
The Gross Profit Ratio reflects the efficiency with which the
average spread between the cost of goods sold and the sales revenue.
When we subtract the gross profit margin from 100%, we obtain the
ratio of cost of goods sold to sales. The formula for the calculation will
be as follows.
Gross Profit
Gross Profit Ratio = ----------------
Sales
5. Net Profit Ratio:
are subtracted from the gross profit. The formula for calculating the net
Suggestion
s
Suggestions