Académique Documents
Professionnel Documents
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ON
To
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Certificate
ASSOCIATES” is done by me and it is an authentic work carried out by me. The matter embodied
in this project work has not been submitted earlier for the award of any degree or diploma to the best
Countersigned
Director/Project Coordinator
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ACKNOWLEDGEMENT
I would like to thank the employees of “ROHIT GOYAL & ASSOCIATES”for constant
guidance to conduct the present arduous project and untiring cooperation which they extended to
Getting a project ready requires the work and effort of many people. I would like all those who
have contributed in completing this project. I would like to take an opportunity to thank all the
people who helped me in collecting necessary information and making of the report. I am
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CONTENTS
1 Certificate (s)
2 Acknowledgements
3 List of Abbreviations
4 Chapter-1: Introduction
8 References/Bibliography
9 Appendices
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CHAPTER-1
INTRODUCTION
Objectives of Study
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1.1 Profile of Industry/Organisation/Company
registered with The Institute of Chartered Accountants of India since 2004. We provide services
in the field of Accounting, Auditing & Assurance, Internal Audit, Tax Audit, Management
Audit, Statutory Audit, Income Tax, Tax Planning, Direct Taxes, Service Tax, Value Added Tax,
Our Team
The firm comprises of three Partners - CA. Rohit Goyal, CA. Nidhi Garg & CA. Mini Goel and
qualified team of staff which includes Chartered Accountants, Company Secretary & Advocates
among others. The firm from its very beginning has been working under the able guidance of Sh.
I.D Garg, Sr. Advocate who has nearly 45 years of experience in the field of taxation, appeals,
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Our Mission
Client's satisfaction is our sole aim and to maintain long term relationship and faith amongst
them we work with full sincerity, honesty and dedication. Each & every work is invariably
supervised and finalized by a partner. Professionalism through the extensive use of information
technology is the key area in which the firm has believed in as one of the means to attain
Services
Statutory Audits required under various applicable Indian laws such as Income Tax Act,
Tax Audits.
Due-diligence.
Drafting of Agreements under various laws such as Indian Partnership Act, Wills,
Conveyance, etc.
Tax Planning.
individuals,
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E-Return filing of domestic companies and other entities as per guidelines issued by
Compliance with law relating to Service tax laws, VAT laws, Central Sales tax laws,
Corporate and personal tax advisory and compliance services including assessments,
returns etc.
Companies.
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Accounts Writing Management
Payroll processing.
such as budgets, cash flow reports, fund flow analysis, financial projections, etc.
Tax Advisory Services and filing of income tax and wealth tax returns (including E-
filling).
Business Consultancy.
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Assisting in Capital Investment and Restructuring Decisions.
Life Insurance.
1. To analyse the financial statements of the corporation to it’s true financial position by the
use of ratios.
3. To identify the financial strengths & weakness of the Rohit Goyal & Associates.
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CHAPTER-II:
RESEARCH METHODOLOGY
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2.1 THEORETICAL FRAMEWORK:
Ratio analysis is the comparison of line items in the financial statements of a business. Ratio
analysis is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of
operations, and profitability. We aim at finding out the ratios of past three years. The ratio
includes of Profitability ratios, Liquidity ratios, Capital structure analysis ratio, Activity analysis
ratio, and so on. Once all these ratios are found out for all the three years. We compare them with
each other. By doing this we can tell whether the company is in profit or loss. We can make
statements whether the company is doing good or not. We can answer all such question i.e. is
the company growing, dowe need to make any amendments. It helps then customers,
stakeholders, investors. All these people can see whether the company is in profit or loss. This
helps them in taking any decision in reference to the company. Every company’s financial report
should be disclosed. And if we compare them with the previous years, it’s more appropriate. It
even helps the company as the comparison can be helpful for them. They can judge whether they
have to make any changes. This is the main objective of this study. That is to find out all the
ratios and compare them with the previous year. This is important because it gives a clear
picture of what is the company’s financial position is. And according to that the company takes
further decisions. It is easy and more convenient for all, i.e. the customers, thestakeholders, and
the shareholders. So, this is the main objective. We can state our aim according to the financial
statements and the comparison. Our aim should be appropriate. It is very necessary for a
company to compare its financial positions. Our aim is to provide the customers and the
stakeholders with the comparison for them to take decision accordingly. It helps to know the
areas which need more attention, areas that need improvement, to provide deeper analysis of
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profitability, liquidity, solvency and efficiency of business. If properly done, improves the user’s
A financial statement (or financial report) is a formal record of the financial activities and
of revenue & expense, P&L or profit and loss report, reports on a company's income,
expenses, and profits over a period of time. A profit and loss statement
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providesinformation on the operation of the enterprise. These include sales and the
retained earnings, reports on the changes in equity of the company during the stated
period.
4. A cash flow statement reports on a company's cash flow activities, particularly its
For large corporations, these statements may be complex and may include an extensive set of
footnotes to the financial statements and management discussion and analysis. The notes
typically describe each item on the balance sheet, income statement and cash flow statement in
further detail. Notes to financial statements are considered an integral part of the financial
statements.
"The objective of financial statements is to provide information about the financial position,
performance and changes in financial position of an enterprise that is useful to a wide range of
reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly
Financial statements are intended to be understandable by readers who have "a reasonable
knowledge of business and economic activities and accounting and who are willing to study the
information diligently." Financial statements may be used by users for different purposes:
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Owners and managers require financial statements to make important business decisions
that affect its continued operations. Financial analysis is then performed on these
These statements are also used as part of management's annual report to the stockholders.
Employees also need these reports in making collective bargaining agreements (CBA)
with the management, in the case of labor unions or for individuals in discussing their
Prospective investors make use of financial statements to assess the viability of investing
in a business. Financial analyses are often used by investors and are prepared by
professionals (financial analysts), thus providing them with the basis for making
investment decisions.
Financial institutions (banks and other lending companies) use them to decide whether to
grant a company with fresh working capital or extend debt securities (such as a long-term
Consolidated financial statements are defined as "Financial statements of a group in which the
assets, liabilities, equity, income, expenses and cash flows of the parent (company) and its
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Government financial statements
The rules for the recording, measurement and presentation of government financial statements
may be different from those required for business and even for non-profit organizations. They
may use either of two accounting methods: accrual accounting, or cost accounting, or a
combination of the two (OCBOA). A complete set of chart of accounts is also used that is
Personal financial statements may be required from persons applying for a personal loan or
financial aid. Typically, a personal financial statement consists of a single form for reporting
personally held assets and liabilities (debts), or personal sources of income and expenses, or
both. The form to be filled out is determined by the organization supplying the loan or aid.
It is performed by professionals who prepare reports using ratios that make use of information
taken from financial statements and other reports. These reports are usually presented to top
management as one of their bases in making business decisions. Financial analysis may
Acquire or rent/lease certain machineries and equipment in the production of its goods;
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Issue stocks or negotiate for a bank loan to increase its working capital;
Make other decisions that allow management to make an informed selection on various
Goals
1. Profitability - its ability to earn income and sustain growth in both the short- and long-term.
A company's degree of profitability is usually based on the income statement, which reports on
2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;
3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;
Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition
4. Stability - the firm's ability to remain in business in the long run, without having to sustain
significant losses in the conduct of its business. Assessing a company's stability requires the use
of both the income statement and the balance sheet, as well as other financial and non-financial
indicators. etc.
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Method
Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):
Past Performance - Across historical time periods for the same firm (the last 5 years for
example),
Future Performance - Using historical figures and certain mathematical and statistical
techniques, including present and future values, This extrapolation method is the main
source of errors in financial analysis as past statistics can be poor predictors of future
prospects.
These ratios are calculated by dividing a (group of) account balance(s), taken from the balance
Asset Management Ratios gauge how efficiently a company can change assets into sales.
Comparing financial ratios is merely one way of conducting financial analysis. Financial ratios
They say little about the firm's prospects in an absolute sense. Their insights about
relative performance require a reference point from other time periods or similar firms.
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One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least
two ways. One can partially overcome this problem by combining several related ratios to
Seasonal factors may prevent year-end values from being representative. A ratio's values
may be distorted as account balances change from the beginning to the end of an
accounting period. Use average values for such accounts whenever possible.
Financial ratios are no more objective than the accounting methods employed. Changes
Fundamental analysis.
Financial analysts can also use percentage analysis which involves reducing a series of figures as
a percentage of some base amount. For example, a group of items can be expressed as a
percentage of net income. When proportionate changes in the same figure over a given time
analysis, reduces all items on a statement to a “common size” as a percentage of some base value
which assists in comparability with other companies of different sizes.[4] As a result, all Income
Statement items are divided by Sales, and all Balance Sheet items are divided by Total Assets.
Another method is comparative analysis. This provides a better way to determine trends.
Comparative analysis presents the same information for two or more time periods and is
Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a
company's financial statements to make better economic decisions. These statements include the
income statement, balance sheet, statement of cash flows, and a statement of changes in equity.
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Financial statement analysis is a method or process involving specific techniques for evaluating
It is used by a variety of stakeholders, such as credit and equity investors, the government, the
public, and decision-makers within the organization. These stakeholders have different interests
and apply a variety of different techniques to meet their needs. For example, equity investors are
interested in the long-term earnings power of the organization and perhaps the sustainability and
growth of dividend payments. Creditors want to ensure the interest and principal is paid on the
Common methods of financial statement analysis include fundamental analysis, DuPont analysis,
horizontal and vertical analysis and the use of financial ratios. Historical information combined
with a series of assumptions and adjustments to the financial information may be used to project
future performance. The Chartered Financial Analyst designation is available for professional
financial analysts.
RATIO ANALYSIS
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as "the indicated
quotient of two mathematical expression" and as" the relationship between two or more things".
In financial analysis, a ratio is used as an index or yardstick for evaluating the financial position
and performance of a firm. The absolute accounting figures reported in the financial statements
do not provide a meaningful understanding of the performance and financial position of a firm.
An accounting figure conveys meaning when it is related to some other relevant information.
financial ratio (or simply as a ratio). Ratios help to summaries the large quantities of financial
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data and to make qualitative judgment about the firm's financial performance. The investors who
are interested in investing in the company’s shares will also get benefited by going through the
study and can easily take a decision whether to invest or not to invest in the company’s shares.
Ratio analysis is a technique of analysing the financial statement of industrial concerns. Now a
day this technique is sophisticated and is commonly used in business concerns. Ratio analysis is
not an end but it is only means of better understanding of financial strength and and weakness of
a firm. Ratio analysis is one of the most powerful tools of financial analysis which helps in
analysing and interpreting the health of the firm. Ratios are proved as the basic instrument in the
control process and act as back bone in schemes of the business forecast. With the help of ratio
we can determine the ability of the firm to meet its current obligation.
MEANING OF RATIO
RATIO ANALYSIS
Ratio Analysis is the process of determining and presenting the relationship of items and group
According to Batty J. Management Accounting “Ratio can assist management in its basic
It is helpful to known about the liquidity, solvency, capital structure and profitability of an
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EXPRESSION OF RATIO ANALTSIS
1. PERCENTAGE (%):
2. PROPORTION (:):
3. Times (5 times):
In this type, It is calculated how many times a figure is in comparison to another figure for
example:
If firm’s credit sales during the year/Debtor at the end of year = 2,00,000/40,000 = 5 Times.
Classification of Ratios can be classified into different categories depending upon the basis of
classification.
1. Profit & Loss account ratios. E.g.Gross Profit Ratio, Net Profit Ratio, Operating Ratio etc
2. Balance sheet ratio. E.g. Current Ratio, Debt Equity Ratio, Working Capital Ratio etc
3. Composite/ Mixed ratio. E.g. Stock Turnover Ratio, Debtors Turnover Ratios, Fixed Assets
Turnover Ratio
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Liquidity ratio: - It refers to the ability of the firm to meet its current liabilities. The liquidity
ratio, therefore, are also called ‘Short-term solvency Ratio’. These ratios are used to assess the
short-term financial position of the concern. They indicate the firm’s ability to meet its current
1. LIQUIDITY RATIOS
2. ACTIVITY RATIOS
3. PROFITABILITY RATIOS
LIQUIDITY RATIOS:
a) Current Ratios = This ratio explains the relationship between current assets and current
liabilities of a business.
Current Assets: - ‘Current assets’ includes those assets which can be converted into cash with in
a year’s time.
+ B/R+ Short Term Investment+ Debtors (Debtors- provision) + Stock (Stock of Finished Goods
Current Liabilities: -‘Current liabilities’ include those liabilities which are repayable in a year’s
time.
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Significance: -According to accountingprinciples, a current ratio of 2:1 is supposed to be an
ideal ratio.
It means that current assets of a business should, at least, be twice of its current liabilities. The
higher ratio indicates the better liquidity position; the firm will be able to pay its current
liabilities more easily. If the ratio is less than 2:1, it indicates lack
Current Asset/Current Liability, standard 2:1. It means ratios is less than 2:1 it indicate lack of
a. Quick ratios = Quick Assets/Current Liability, Standard = 1:1. It is more than it is considered
to the better.
This ratio is a better test of short term financial position of the company.
b. Absolute Liquidity Ratio = Absolute Liquid Assets/Current Liabilities, Absolute Liquid Assets
= Cash + Bank + Short term securities, Standard = 0.5:1. Even though super quick ratio is more
vigorous in measuring the liquidity position of the firm. It is not widely used in practice.
These ratios are calculated on the bases of ‘cost of sales’ or sales, therefore, these ratio are also
called as ‘turnover ratio’ turnover indicates the speed or number of times the capital employed
Higher turnover ratio indicates the better use of capital or resources and in turn lead to higher
profitability.
This ratio indicates the number of times the stock has been turned over during the period and
evaluates the efficiency with which a firm is able to manage its inventory.
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Stock turnover ratio: –
This ratio indicates the relationship between the cost of goods during the year and average stock
Significance: - 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
Stock turn over ratios = cost of goods sold/Average stock. Here the higher the ratio, the better it
In a business where stock turnover ratio is high, goods can be sold at a low margin of profit and
Debtor’s turnover ratio – This ratio indicates the relationship between credit sales and average
While calculating this ratio, provision for bad and doubtful debts is not debuts from the debtors,
so that it may not give a false impression that debtors are collected quickly,
Significance: - This ratio indicates the speed with which the amount is collected from debtors,
The higher the ratio, the better it is, since it indicates that amount from debtors is being collected
more quickly.
The more quickly the debtors pay, the less the risk from bad – debts, and so the lower the
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By comparing the debtor’s turnover ratio of the current year with the previous year, it may be
Fixed assets turnover ratio – This ratio reveals how efficiently the fix assets are being utilized.
This ratio is particular importance in manufacturing concerns where the investment in fixed asset
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.
Working capital turnover ratio: - This ratio reveals how efficiently working capital has been
Here, cost of Goods sold = opening stock + purchases + carriage + wages + other Direct
Significance: - This ratio isof particular importance in non- manufacturing concerns where
It shows the number of times working capital has been rotated in producing sales.
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A high working capital turnover ratio shows efficient use of working capital turnover of current
Alow working capital turnover ratio indicates under- utilization of working capital.
Cost of Sales/Average Working Capital. This ratio measures the efficiency with which the
working capital is being used by a firm. A higher ratio indicates efficient utilization of working
PROFITABILITY RATIOS:
A business must be able to earn adequate profits in relation to the risk and capital invested in it.
The efficiency and the success of a business can be measured with the help of profitability ratio.
Gross Profitability ratio = This ratio shows therelationship between gross profit and sales.
Significance: - This ratio measures the margin of profit available on sales, the higher the gross
profit ratio, the better it is. No ideal standard is fixed for this ratio, but gross profit ratio should
be adequate enough not only to cover the operating expenses but also to provide for deprecation
Here gross profit = Sales – Cost of goods sold and Net sales = Total Sales – Sales Return. It
indicated higher the gross profit ratio, better the result. And low gross profit ratio, indicates high
2. Net Profit ratio = this ratio shows the relationship between net profit and sales. It may be
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Formula: - Net profit ratio = Net profit / Net sales*100 operating Net profit = operating Net
Here, Operating Expenses, such as office and Administrative expenses, selling and distribution
Significance: - This ratio measures the rate of net profit earned on sales,
An increase in the ratio over the previous year shows improvement in the overall efficiency and
Net profit x 100/Net Sales. This ratio indicates the firm’s capacity to face adverse economy
Operating ratio = this ratio measures the proportion of an enterprise cost of sales and operating
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Classificationof Ratios
Balance Sheet Ratio P&L Ratio Balance Sheet and Profit &
Loss Ratio
Debtors’ Turnover
Ratio
Structural Classification
This is a conventional mode of classifying ratios where the ratios are classified on the basis of
information given in the financial statements, i.e. balance sheet and profit and loss account to
which the determinants of the ratios belong. On this basis, all ratios are grouped as follows:
1. Balance Sheet Ratio: The components for computation of these ratios are draws from
balance sheet. These ratios are called financial ratios. Examples of such ratios are:
current ratio, liquid ratio, proprietary ratio, capital gear ratio, fixed assets ratio etc.
2. Profit and Loss Account Ratios: The figures used for the calculation of these ratios are
usually taken out from the profit and loss account. These ratios are also called ‘income
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statement ratios’. Examples of such ratios are: gross profit ratio, net profit ratio,
3. Balance Sheet and Profit & Loss Ratio: The information required for the computation
of these ratios is normally drawn from both the balance sheet and profit and loss account.
Examples of such ratios are: return on capital employed, return on owners’ fund, return
on total investment, debtor’s turnover ratio, creditors turnover ratio, fixed assets turnover
FUNCTIONAL CLASSIFICATION
Now-a-days, it is the most popular mode of classifying the ratios. Accordingly, the ratios may be
grouped on the basis of certain tests which satisfy the needs of the parties having financial
interest in the business concern. For example, creditors or banks have interest in the liquidity of
the firm, debenture holders in the long-term solvency and shareholders in the profitability of the
firm. The ratios may be grouped as per different interests or objectives as under:
1. Liquidity Ratios: These ratios are used to measure the ability of the firm to meet its
short-term obligations out of its short-term resources. Such ratios highlight short-term
I. Current Ratio
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2. Activity or Efficiency Ratio: These ratios enable the management to measure the
effectiveness or the usages at the command of the firm. Following ratios are included in
this category:
3. Profitability Ratio: These ratios are intended to measure the end result of business
expressed in relation to the sales or investments, and as such the following ratios are
Based on Sales
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Based on Capital or Investments
These ratios play a key role in analyzing the short-term financial position of a business Liquidity
refers to a firm’s ability to meet its current financial obligations as they arise. Commercial banks
and other short-term creditors i.e. suppliers of goods and services are generally interested in such
ratios. However, the management can use these ratios to ascertain how efficiently it has utilizing
the working capital. Some of the principal liquidity ratios are described below:
Current ratio:
Current ratio is one of the important ratios used in testing liquidity of a concern. This is a good
measure of the ability of accompany to maintain solvency over a short-run. This is computed by
dividing the total current assets by the total current liabilities and is expressed as:
Current Assets
Current Liabilities
The current assets of a firm represent those assets, which can be in the ordinary course of
business, converted into cash within one accounting year. The current liabilities are defines as
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obligation maturing within a short period (usually one accounting year). Excess of current assets
over current liabilities is known as working capital and since these two (Current assets and
current Liabilities) are used in current ratio therefore, this ratio is also know as working capital
ratio.
QUICK RATIO
The solvency of the company is better indicated by quick Ratio. The fundamental object of
calculating this Ratio is to enable the financial management of a company to ascertain that would
happen if current creditors press for immediate payment and either not possible to push up the
sales of closing or it is sold; a heavy loss is likely to be suffered. This problem arises because
closing stock is two steps away from the cash and their price is more or less uncertain according
to market demand.
The term quick assets include all current assets expect inventories and prepaid expenses. It
shows the relationship of quick assets and current liabilities. The Ratio is calculated as
following:
Quick Assets
Current Liabilities
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2.2 RESEARCH METHODOLOGY
Research Design
consisting of enunciating the problem formulating a hypothesis, collection of the facts or data
analyzing the fact and reaching certain conclusions either in the form of solutions towards the
concerned problems or in certain generalization for some theoretical formulation. In short, search
for through objectives and systematic method of finding solution to the problem in research.
understood as a science of studying how research is done scientifically. In it we study the various
steps, the research process that is generally adopted to study the research problem and basic
A research design is the arrangement of condition and analysis of data in a manner that aims to
combine relevance to research purpose with economic in procedure. It is the overall operational
pattern or framework of the project. What information is to be collected from which sources by
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• Exploratory Research
• Descriptive Research
• Experimental Research
1. Exploratory Research to gain familiarity with a phenomenon or to achieve new insight into its
studies.
of a group.
3. Experimental Research to determine the frequently with which something occur or with it is
Information was collected from secondary sources such as customer survey, newspapers
Beside these the use of internet was also made in collecting relevant information. The data
collected from the abovementioned sources has been adequately structured and used at
• pamphlets.
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• newsletters.
• pictures.
• exchange schemes.
Research Methodology is a way to systematically study and solve the research problems.
Sampling Techniques
Here the ‘non-probability’ technique was selected. Mainly through ‘judgement sampling’
process.
Judgmental sampling: Sample was taken on judgmental basis. The advantage of sampling are
that it is much less costly, quicker and analyse will become easier.
Bar chart (Bar charts will be used for comparing two or more values that will be taken
frequencies)
As no study could be successfully completed without proper tools and techniques, same with my
project. For the better presentation and right explanation I used tools of statistics and computer
very frequently.
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CHAPTER-III:
AND INTERPRETATION
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DATA ANALYSIS
1] Current Ratio:
Formula:
Current assets
Current ratio
1.6
1.38
1.4
1.23
1.14 1.16
1.2
0.8
0.6
0.4
0.2
0
2013-2014 2014-2015 2015-2016 2016 -2017
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Comments:
In Rohit Goyal & Associates the current ratio is 1.23:1 in 2016-2017. It means that for one rupee
of current liabilities, the current assets are 1.23 rupee is available to the them. In other words the
Almost 4 years current ratio is same but current ratio in 2015-2016 is bit higher, which makes
company sounder. The consistency increase in the value of current assets will increase the ability
of the company to meets its obligations & therefore from the point of view of creditors the
Thus, the current ratio throws light on the company’s ability to pay its current liabilities out of its
current assets. The Rohit Goyal & Associateshas a goody current ratio.
2] Quick Ratio:
Formula:
Quick assets
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Quick ratio
0.8
0.78
0.78
0.76 0.75
0.74
0.72
0.7 0.69
0.68 0.67
0.66
0.64
0.62
0.6
2013-2014 2014-2015 2015-2016 2016 -2017
Comments:
The liquid or quick ratio indicates the liquid financial position of an enterprise. Almost in all 4
years the liquid ratio is same, which is better for the company to meet the urgency. The liquid
ratio of the Rohit Goyal &Associates has increased from 0.67 to 0.78 in 2016-2017 which
shows that company follow low liquidity position to achieve high profitability.
This indicates that the dependence on the long-term liabilities & creditors are more & the
Liquid ratio of Company is not favorable because the quick assets of the company are less than
the quick liabilities. The liquid ratio shows the company’s ability to meet its immediate
obligations promptly.
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3] Proprietary Ratio:
Formula:
Proprietor’s fund
OR
Shareholders fund
Proprietary ratio
0.78 0.77
0.76
0.74 0.73
0.72
0.72
0.7
0.68
0.66
0.66
0.64
0.62
0.6
2013-2014 2014-2015 2015-2016 2016 -2017
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Comments:
The Proprietary ratio of the company is 0.66 in the year 2016-2017. It means that the for every
one rupee of total assets contribution of 66 paisa has come from owners fund & remaining
balance 34 paisa is contributed by the outside creditors. This shows that the contribution by
owners to total assets is more than the contribution by outside creditors. As the Proprietary ratio
is very favorable of the company. The Company’s long-term solvency position is very sound.
Formula:
Stock
capital ratio
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Stock working capital ratio
3.5
3.21
3 2.78
2.5
1.5 1.39
1.13
1
0.5
0
2013-2014 2014-2015 2015-2016 2016 -2017
Comments:
This ratio shows that extend of funds blocked in stock. The amount of stock is decreasing from
the year 2013-2014 to 2016-2017. However in the year 2016-2017 it has increased a little to. In
the year 2015-2016 the sale is increased which affects decrease in stock that effected in increase
Formula:
40
YEAR 2013-2014 2014-2015 2015-2016 2016 -2017
Capital gearing
16% 15% 8.2% 8.5%
ratio
14
12
10
8.2 8.5
8
0
2013-2014 2014-2015 2015-2016 2016 -2017
Comments:
Gearing means the process of increasing the equity shareholders return through the use of debt.
Capital gearing ratio is a leverage ratio, which indicates the proportion of debt & equity in the
For the last 2 years [i.e.2015-2016 TO 2016-2017] Capital gearing ratio is all most same which
indicates, near about 8.5% of the fund covering the secured loan position. But in the year 2013-
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2014 the Capital-gearing ratio is 16%. It means that during the year 2013-2014 company has
Formula:
63,967.13
Shareholders fund 49,804.26 81,448.60 126,372.97
0.5 0.45
0.44 0.44
0.4
0.3
0.2
0.1
0
2013-2014 2014-2015 2015-2016 2016 -2017
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Comments:
The debt equity ratio is important tool of financial analysis to appraise the financial structure of
the company. It expresses the relation between the external equities & internal equities. This
ratio is very important from the point of view of creditors & owners.
The rate of debt equity ratio is increased from 0.44 to 0.59 during the year 2013-2014 to 2016-
2017. This shows that with the increase in debt, the shareholders fund also increased. This
shows long-term capital structure of the company is sound. The lower ratio viewed as favorable
Formula:
Gross profit
43
Gross profit ratio
25
22.7 22.7 22.4
20 18.14
15
10
0
2013-2014 2014-2015 2015-2016 2016 -2017
Comments:
The gross profit is the profit made on sale of goods. It is the profit on turnover. In the year 2013-
2014 the gross profit ratio is 22.7%. It has decreased to 18.14% in the year 2016-2017 due to
It is continuously declined from 2013-2014 to 2016-2017 due to high cost of purchases &
overheads. Although the gross profit ratio is declined during the years 2013-2014 to 2016-2017.
The net sales and gross profit is continuously increasing from the year 2013-2014 to 2016-2017.
8] Operating Ratio:
Formula:
Operating Profit
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YEAR 2013-2014 2014-2015 2015-2016 2016 -2017
COGS +
expenses
Operating ratio
85 84.75
84.5
84
83.5 83.28
83
82.5 82.31
82 81.8
81.5
81
80.5
80
2013-2014 2014-2015 2015-2016 2016 -2017
Comments:
The operating ratio shows the relationship between costs of activities & net sales. Operating ratio
over a period of 4 years when compared that indicate the change in the operational efficiency of
the company.
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The operating ratio of the company has decreased in 3 year and increase a little in last year. This
is due to increase in the cost of goods sold, which in 2013-2014 was 84.75%, in 2014-2015 was
82.31%, in 2015-2016 was 81.80% & in 2016-2017 it is 83.28%. Though the cost has increased
in 2014-2015 as compared to 2013-2014, it is reducing continuously over the next two years,
indicate downward trend in cost but upward / positive trend in operational performance.
Formula:
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Net profit ratio
16
14.54
14
12 11.21 10.78
10.69
10
0
2013-2014 2014-2015 2015-2016 2016 -2017
Comments:
The net profit ratio of the company is high in all year but the net profit is increasing order from
this ratio of 4 year it has been observe that the from 2013-2014 to 2015-2016 the net profit is
Profitability ratio of company shows considerable increase in 3 years and decreased in the last
year. Company’s sales have increased in 3 years and decreased in the last year. At the same time
company has been successful in controlling the expenses i.e. manufacturing & other expenses.
Formula:
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YEAR 2013-2014 2014-2015 2015-2016 2016 -2017
Stock Turnover
3.4 3.6 4.20 3.73
Ratio
2.5
1.5
0.5
0
2013-2014 2014-2015 2015-2016 2016 -2017
Comments:
Stock turnover ratio shows the relationship between the sales & stock it means how stock is
The stock turnover ratio is 2013-2014 was 3.4 times which indicate that the stock is being turned
into sales 3.4 times during the year. The inventory cycle makes 3.4 rounds during the year. It
helps to work out the stock holding period, it means the stock turnover ratio is 3.4 times then the
stock holding period is 3.5 months [12/3.4=3.5months]. This indicates that it takes 3.5 months
for stock to be sold out after it is produced. For the last 4 years stock turnover ratio is lower than
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the standard but it is in increasing order. Inurn the year 2013-2014 to 2016-2017 the stock
turnover ratio has improved from 3.4 to 3.73 times, it means with lower inventory the company
has achieved greater sales. Thus, the stock of the company is moving fast in the market.
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CHAPTER-IV:
Limitations
Suggestions
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4.1 RESULTS OF THE STUDY:
1. The current ratio has shown non-fluctuating trend as 1.14, 1.16, 1.38 and 1.23 during 2014,
2. The quick ratio is also in non-fluctuating trend throughout the period 2013 – 17 resulting as
0.67, 0.69, 0.75, 0.78. The Company believes in high profitability and low liquidity position.
3. The proprietary ratio has shown a non-fluctuating trend. The proprietary ratio is decreased
4. The stock working capital ratio decreased from 3.21 to 1.39 in the year 2013 – 17.
5. The capital gearing ratio is decreased form 2006 – 08 (0.16, 0.15 and 0.82) and increased in
207 to 0.85.
7. The gross profit ratio is in fluctuation manner. It decreased in the current year compared with
8. The net profit ratio is also decreased in the current year compared with the previous year from
14.54% to 10.78%.
9. The operating ratio is increased in the current year compared with the previous year from
81.8% to 83.28%.
10. The return on capital employed is increased in the year 2013 and 2015 while it decreased in
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4. 2. Limitation
As said a basic research was conducted at the company to enable the company to assess how far
the customers are satisfied with product and services of Rohit Goyal & Associates During the
The method lacks flexibility. In case of inadequate or incomplete information the result
may deviate. Ratios are not predictive, as they are usually based on historical information
However they do not reflect the future perspectives of a company, as they ignore future
action by management.
They can be easily manipulated by window dressing or creative accounting and may be
Inflation should be taken into consideration when a Ratio Analysis is being applied as it
Comparisons with industry averages is difficult for a conglomerate firm since it operates
Seasonal factors may distort ratios and thus must be considered when making ratios are
Not always easy to tell that a ratio is good or bad. Must be always used as an additional
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4.3 CONCLUSION
The company’s overall position is at a very good position. The company achieves sufficient
profit in past four years. The long-term solvency position of the company is very good. The
company maintains low liquidity to achieve the high profitability. The company distributes
dividends every year to its shareholders. The profit of the company decreased in the last year due
to maintaining the comparatively high liquidity. The net working capital of the company is
1. The network of Rohit Goyal & Associates.is lagging behind a little than its competitors.
2. It can be distilled from data that Rohit Goyal & Associateshas good market share as
compared to its competitors considering the amount of resources deployed by them in the
market.
3. Consumers of Saharsa have good awareness level about Rohit Goyal & Associates as
4. The advertising campaign has successfully been able to increase the market share of
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5.4 SUGGESTIONS
1. Liquidity refers to the ability of the concern to meet its current obligations as and when these
2. The company should make the balance between liquidity and solvency position of the
company.
3. The profit ratio is decreased in current year so the company should pay attention to this
4. The cost of goods sold is high in every year so the company should do efforts to control it.
5. The long term financial position of the company is very good but it should pay a little
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BIBLIOGRAPHY
INTERNET
http://www.ashishidg.com/resource/home.aspx
http://profit.ndtv.com
https://en.wikipedia.org/wiki/Financial_ratio
https://www.investopedia.com/university/ratio-analysis/using-ratios.asp
https://www.aaii.com/journal/article/16-financial-ratios-for-analyzing-a-companys-
strengths-and-weaknesses.touch
https://www.dynamiclevels.com/en
http://www.moneycontrol.com/financials
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