Trusteeship  Customer Focus  Respect For People  Excellence  Innovation  Nation Orientation

 

VISION-Sustain ITC's position as one of India's most

valuable corporations through world class performance,creating growing value for the Indian economy and the Companys stakeholders

     

CIGARETTES & CIGAR PAPERBOARDS PAPER AND PACKING FMCG AGRI BUSINESS HOTELS AND OTHERS

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NAME

FORMULA

AMT(09)

AMT(10)

RATIO(09)

RATIO(10)

CURRENT RATIO C.A/C.L

2339.45/ 1473.80

1979.34/ 1741.09

1.58

1.14

QUICK RATIO

L.A/C.L

1400.73/ 1473.80

1296.1/ 1741.09

0.95

0.75

CURRENT RATIO:The current ratio of ITC Ltd has decreased to 1.14 : 1 in 2010 as compared to 1.58 : 1 in 2009. The main cause was reduction in current assets and increase in current liabilities. As the standard ratio should be 2:1 the current ratio is not satisfactory. QUICK RATIO:This ratio is the best measure of a firms ability to serve short-term liability. The usefulness of this ratio lies in the fact that it is widely accepted as the best test of the liquidity position of a firm. the standard quick ratio is 1:1. The quick ratio in both the years is less than 1. It means that the liquidity position of the company is satisfactory but due care is required on the part of management to increase liquid asset.

NAME

FORMULA

AMT(09)

AMT(10)

RATIO(09)

RATIO(10)

WORKING CAPITAL TURNOVE R RATIO INVENTOR Y TURNOVE R RATIO

NET SALES/ WORKING CAPITAL

6220.27/ 865.65

7076.87/ 238.25

7.18

29.70

NET 6220.27/ SALES/ 938.72 INVENTOR Y

7076.87/ 683.24

6.63 times

10.35 times

Inventory turnover ratio :-

This ratio tells us with what frequency the inventory is sold. High ratio is good for the company and low liquidity ratio signifies that the inventory was stored in warehouse for long time. Inventory turnover ratio measures the velocity of conversion of stock into sales. It can seen from the data that inventory turnover ratio was 10.35 times in the years 2010 as compared to 6.63 times in 2009.
Working capital turnover ratio:A high ratio indicates the efficient use of working capital and viceversa. The chart shows that the ratio In 2010 is 29.7:1 which is high from 2009. This shows that working capital of the company is efficiently utilized.

Name

formula

Amt(09)

Amt(10)

Ratio (09)

Ratio (10)

Gross profit

G.P/ NET SALES

2229.60/ 6220.27

2100.29/ 7076.87

35.84%

29.67%

Net profit

N.P AFTER TAX/ NET SALES

1402.27/ 6220.27

1218.37/ 7076.87

22.54%

17.22%

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GROSS PROFIT RATIO:A high ratio of gross profit of sale is a sign of good management as it implies that the cost of production of the firm is relatively low. It may also be indicative of a higher sale price without a corresponding increase in the cost of a good sold. The gross profit margin of the company is 35.84% in the year 2009 and 29.67% in the year 2010 respectively.

NET PROFIT RATIO:`

A high net profit margin would ensure adequate return to the owners as well as enables firm to withstand adverse economic condition when selling price is declined ,cost of production is rising and demand for the product is falling .the net profit of the company is shown by the financial statement is not very high. The net profit ratio of the AMBUJA unit shows that it was in good position in 2009 after which it decreased in the year 2010.in the year 2009 and 2010 companys net profits were 22.54% and 17.22% respectively .the reduction in profits is mainly due to increase in raw material prices and manufacturing cost during the year 2010.
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