CHAPTER-1

INTRODUCTION

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1.1 INTRODUCTION TO THE INDUSTRY

METAL FABRICATION INDUSTRY

The fabrication industry is centered on manufacturing components that can be used to create
larger machines and structures. Comprised of metal, plastic and wood fabrication, the fabrication
industry can range from mining and lumber mills to chemical engineering and welding and
fabrication. The main objective of the fabrication industry is to produce the components that can
be assembled to create a larger finished component, building or machine. Beginning with the
mining of ore and minerals, the metal fabrication industry produces many grades of steel and
alloy materials that can be assembled by welders and workers using blueprints as guides. The
drafting of the blueprints are one of the most important and critical steps in the fabrication
industry.
Metal fabrication is the process of building machines and structures from raw metal materials.
The process includes cutting, burning, welding, machining, forming, and assembly to create the
final product. Metal fabrication projects include everything from hand railings to heavy
equipment and machinery.

HISTORY OF FABRICATION INDUSTRY

Following the Stone Age, human engineering evolved considerably. During the Bronze Age
circa 2,300-700 BCE, metal pots and pans and the chariot were invented. The Bronze Age is also
notable for innovations in writing and the design of the first wheel. Bronze was the first known
hard metal and oldest alloy to be designed into swords and armor.
While the humans continued to manufacture and manipulate the use of bronze, the Iron Age
emerged circa 1,500 BCE, which used smelting processes to transform iron into weapons, armor,
and infrastructure. Thus began the age of metal fabrication. Metal fabrication began to develop
as an industry through advanced techniques and processes during the 1400s. For example,
Leonardo da Vinci envisioned the first rolling mill used later to standardize and roll gold sheets
into currency (coins).

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 Fabrication is the construction of items from different parts using at least one of a range of
processes and materials such as metal, laminates, wood and other solid surface materials.
Frequently used in relation to metal fabrication, the steps involved can include stamping,
welding, cutting, bending, and assembling processes.
As with other manufacturing processes, fabrication can be done manually, but the processes are
often automated these days with the use of computer aided designs (CAD) that can be
programmed into computer numerical control (CNC) technologies that can communicate directly
with machines on the shop floor, reducing lead times, costs and material usage while improving
accuracy and quality.

THREE TRENDS SETTING THE PACE OF INDIAN METAL

FABRICATION:-

 Automation-
Automation is one of the aspects that have transformed the structure of several industries and the
sector of metal fabrication is no exception. Major metal fabricators across India have put this
technology to use in their manufacturing units thus increasing productivity with decreased
manpower.

 Growth in manufacturing-
Led by the impact in the growth of the rapidly growing manufacturing sector, the metal
fabrication industry of the country is seeing new light. It is not only discovering newer scopes
for innovation, but also making existing services better by the integration of advanced and
modern technologies.

 3D Printing-
The concept of 3D Printing has also been a major facilitator for the Indian metal fabrication
industry. There are several steel detailing service companies which are making use of this
technology in the pre-engineering sector to provide accurate virtual intelligence to metal
fabricators.

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 FACTORS RESPONSIBLE FOR WOOING THE INVESTORS IN
INDIAN FABRICATION INDUSTRY:-
The size of the fabrication in India is quite big.
Performance of this industry has been consistent right from the start of the new illennium.
Availability of the skilled labor in India is comparatively cheap in relation to the same in other
parts of the world.
The policies related to the Foreign Direct stock in India are comparatively lenient and are
transparent in nature among all the developing countries.
Various government projects have been initiated in order to bring about developments in
infrastructure and construction. Also, the growing adaptability of pre-engineering services has
diversified the scope for metal fabricators.

INDUSTRY PROFILE
Metal fabrication is the process of building machines and structures from raw metal materials.
The process includes cutting, burning, welding, machining, forming, and assembly to create the
final product.
Metal fabrication projects include everything from hand railings to heavy equipment and
machinery. Specific subsectors include cutlery and hand tools; architectural and structural
metals; hardware manufacturing; spring and wire manufacturing; screw, nut, and bolt
manufacturing; and forging and stamping.
The main benefit of metal fabrication shops is the centralization of these many processes that are
often required to be performed in parallel via a collection of vendors. A one-stop metal
fabrication shop helps contractors limit their need to work with multiple vendors to complete
complicated projects.
Metal fabrication industry has broad applications across a great many industries and consumer
products. Standard raw materials used include plate metal, fittings, castings, formed and
expanded metal, sectional metal, flat metal, and welding wire.

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According to the Bureau of Labor Statistics, approximately 1.425 million workers are employed
in metal fabrication. Among them are cutting, punching, and press machine setters and operators;
first-line supervisors; managers; machinists; team assemblers; welders, cutters, and brazers.
Because demand is driven by the economy, the profitability of the metal fabrication industry
relies on economic growth to thrive. Since the economic rebound after the last recession, metal
fabrication has become a strong and intense business that continues to recalibrate itself and
flourish. Current adjustments include a shift from leaning on a few large projects to maintain a
yearly profit to attempting to maintain steady sales volumes by diversifying and continuing to
follow the successful template of previous years.
Most companies in the metal fabrication business work primarily to fortify their organization’s
strategy in a manner that can best help them make it through changes in the global economy.
When the local economy thrives, these boosts tend to cause consumers to loosen their purse
strings and purchase bigger-ticket items such as cars, boats, and houses. And as the population
continues to grow, new construction picks up, requiring additional agricultural and commercial
machinery.

HISTORICAL PERSPECTIVE OF METAL FABRICATION INDUSTRY :-

The history of industrial metal fabrication
spans over centuries and represents one of the oldest elemental skills known to man. Working
and understanding metal was once a revered, almost spiritual skill honed by the ancients. The
oldest known
industrial metal mining and working operation has been dated to the discovery of a copper
pendant in northern Iraq from about 8,700 BCE. In the Americas, copper mining has been
documented as early as 4000-5000 BCE near Lake Michigan. Ancient civilizations knew of
seven metals: Iron, Tin, Lead, Copper, Mercury, Silver and Gold. These seven metals were
interestingly paired with seven celestial bodies as well.

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 Skills in metal ore extraction from the earth became more complex and early metalsmiths
became more knowledgeable with respect to how to work primitive metals into jewelry and
industrial applications. General metalworking techniques like forming, cutting and joining
became common practice as metalsmiths became more important members of society.
The Bronze Age begins around 3,300 BC in India, wherein metals are combined to gain new and
advanced properties. Metals are melted down in a furnace, in the case of bronze – copper and tin.
Bronze became the first hard metal, resulting in swords, and armor.
Metal soon became a political material – influencing the rise and fall of civilizations as it was
used as a symbol of the elite, and was used in crafting other weapons of war.
Metal fabricating, as we know it now, is the manipulation of one thing into another. In the word
of metal fabrication, this means joining, bending, cutting and forming metals into many
industrial applications.
Standard raw materials and processes used by modern metal fabricators include plate metal,
expanded metals, tube stock, welding rod and casting.
One of the oldest metal joining processes in industrialization is riveting, which uses a two-
headed bolt which joins the pieces together.

LEADING METAL FABRICATION COMPANIES :-

 Amada
 Atlas Copco
 BTD Manufacturing
 Colfax
 Defiance Metal Equipment
 DMG Mori
 Hindustan Machine Tools
 Interplex Holdings Pvt. Ltd.
 Kapco
 Lancer Fabtech Pvt. Ltd.
 Matcor Matsu Group Inc.

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 COMMON METALS USED IN METAL FABRICATION:-
o Aluminum
o Steel
o Iron
o Carbon Steel
o Stainless steel
o Gold
o Silver
o Bronze
o Brass
o Copper
o Magnesium

INDIAN METAL FABRICATION EQUIPMENT MARKET

DYNAMICS:-
Rapid growth in the metal and manufacturing industry, growing demand for aluminium and
increasing growth in aviation and automobiles market are factors driving the India metal
fabrication equipment market. Metal fabrication has a huge market in India, however, lack of
skilled workforce, the growth of 3D printers, and issues with raw material availability are
restraining the market growth. Metal fabrication equipment market is expected to grow at a
remarkable rate, as the India is moving toward industrialization, urbanization owing to the
growing population.
Introduction of advanced versions of electric vehicle by 2022 accelerate the growth of
automotive industry. Automotive industry in India is one of the largest in the world. Automobile
industry accounts for 7.1 % of the country's gross domestic equipment (GDP). Government is
taking lots of initiatives & putting effort to moderate the stringent rules and push for more
production of electric vehicle. This initiative has positively affected the automotive industry
thereby fueling the metal fabrication equipment market. Geographically, India metal fabrication
equipment market is divided into North India, South India, West India and East India.

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 1.2 INTRODUCTION TO COMPANY
The company, G.B. Enterprises Pvt. Ltd, is renowned for its quality products and business ethics
in uPVC industry as well as other related industries. It was started in the year 2003 with a
capacity of 10 to 20 MT. Today they can produce over 1000 MT with a capacity of 2000MT.
They have 22 machine lines in our plant, extending over 1 Lakh Sq ft, with five overhead cranes
having 5 MT to 25 MT capacities. The company is headed by three directors - Mr. Pradeep Jain,
Mr. Nikhil Gupta and Mr. Rahul Jain.Previously the factory was situated in Bahadurgarh, but
after analysing better scope in future, owners decided to expand their business and thus more
machinery and resources were introduced with a lot more bigger space in Sampla (Rohtak),
Haryana. G. B. Enterprises (P) Ltd. is one of the leading engineering organizations in India
renowned for providing global innovative engineering solutions. An epitome of quality,
precision, and perfection for manufacturing cold roll formed metal sections, employing state-of-
the-art techniques to meet customer's demand for quality, accuracy and reliability. They are
reckoned for offering the best quality cold forming roll sections, since inception in the year
2003. They have developed a modern production base in NCR located over an area of 1,00,000
sq. ft. They have been supplying standard and tailored-made solutions to pan India and overseas
clients.

PRODUCT LINE
• uPVC Doors and Windows
• Solar Energy
• Pre-Engineering Building
• Green House Section
• uPVC Aluminium Track
• Solar Panel Street Structure
• Roof Sheet And Deck Sheet
• Cable Tray And Raceway
• Purlins And Channels
• Cement Board Prefab House Sections

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CONTACT DETAILS

G.B. ENTERPRISES PVT. LTD.

OFFICE: 05 km Stone, Sampla -Beri

Road,
Post Kultana, Ismaila 11b- 124517, Sampla Distt. Rohtak, Haryana.

PHONE: 91-7056705012

E-MAIL: [email protected]

WEBSITE: www.gbroll.com

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 VISION
• G.B’S to become the largest producers in the world by leveraging on strength of
innovation and harnessing technology to provide better solutions.
• They give best shape to metal but they also form and shape relationship with their
customers, suppliers, employees, government and general Public. The advent of liberalization
gave them the much needed impetus to expand their business horizon. Their market presence is
spread all over India as well as International Markets. Some of their philosophies include the
following:
• Convert the clients' requirements into defined end products.
• Timely delivery of products to the desired destination.
• Maintain a balance between demand and supply chain and other business aspects.

 MISSION
To conduct business in a healthy working environment with the highest ethics and integrity
while adhering to international safety regulations while focusing on customer delight by
ensuring timely delivery of high quality products.

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 AIM
• To provide best products at lower prices compared to competitors.

• To provide employment opportunities to local people.

• Development of skill among workers.

• Serving over 50% of the leading importers among the world.

• Building a brand

 CULTURE AT G.B. ENTERPRISES

• There is supportive, healthy work culture where everyone is treated equally.

• G.B. Enterprises has also made a successful effort to cut down stress levels.

Metal fabrication Market is expected to reach USD 29.46 billion by 2029, registering a CAGR of
4.7% during the forecast period of 2022-2029.

 STRENGTH
 In – house production capacity engraves its performance and gives it capacity to produce
more.
 Production of products of export quality.
 Lower prices compared to competitors.
 Latest machined and technologies used.
 Extra strong- Metal is harder and stronger than plastic.
 Resistant to heat.
 Cost efficient.

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 WEAKNESS
 Tools are more expensive.

 Competitors can offer similar products easily.

 High transportation cost.

 Limited flexibility in pricing.

 Less promotional activities is the drawback of this organisation.

 OPPORTUNITIES
 The advancements made in the field of automation tools and robotics will further expand
the future growth of the metal fabrication market.

 Shifting trends in finance and manufacturing sectors and the adoption of

automated fabrication processes further enhance product applications and extend profitable
opportunities to the market players in the forecast period of 2022 to 2029.

 Ability to develop more stores.

 G.B. Enterprises all the required resources to expand and internationalize and become a
removed brand all over the world as all the products are produced In house and strict check is
kept on production and quality management.

 THREATS
 Constantly changing government taxes on various raw materials.

 Instability in political environment.

 Also, the fluctuations in the prices of raw materials will prove to be a demerit for the
metal fabrication market. Therefore, this will challenge the metal fabrication market growth rate.

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 PRODUCT AND ITS APPLICATION
Their scope of work ranges from manufacturing of cold roll formed metal sections, punching
sections as per requirements, fabrication of steel structures, trading of aluminium sections and
items.

 Roll forming- To form sheet metal strip along straight, longitudinal, parallel bend

lines with multiple pairs of contoured rolls without changing the thickness of the material at

room temperature having some exceptions too. Roll forming is a flexible process

where both the fundamental riles and the exceptions can be utilized. Several

times, even seemingly impossible roll forming tasks can be accomplished, although it may take
a longer time and more money. They are roll forming experts. As far as the thickness of the
profile is concerned it shows the good quality of profile but actual strength is the steel re-
enforcement that gives strength to the structure and grip for holding the hardware so here come
role of GB products.

 Ribbed strut channel

This is made to increase the strength. Customizable strut channels are available with different

height and shapes. (manufactured strut channel with Angular Base for higher stiffness and load

capacity.) Continuous

improvement with technology is their prime moto.

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 Punched reinforcement

It is customised for door and window hardware. This provides higher resistance on the market.

Benefits for fabricator:

 Time saving

 Power saving

 Manpower saving

 Increase in productivity

 Reinforcement wastage control

 Multi-level car parking platform This is the new section which is developed. Under

this system cars

are parked in steel pallets that move up or down multiple levels for parking and retrieval.

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 INFRASTRUCTURE
G.B’S state of the art manufacturing unit is just nearby National Capital located at Sampla
District Rohtak, Haryana with highly Performances Machines such as 21 no’s of Cold Rolled
Mills & Slitting line .3 mm to 3.5 mm & well equipped Tool room, overhead Cranes i.e. 10 MT,
15 MT & 25 MT capacities, and Automatic Punching Systems makes their quality best. They
process all type of Cold Forming Metal Sections by High quality of Raw Material from HR,
CR, Galvanized Steel, and Color Coated Steel. They also make all type of Job work light @
Heavy in MS Fabrications.
Infrastructure Area: 125,000 square feet
Covered Area: 90,000 square feet

QUALITY
G.B’S main motto is Best Quality Manufacturing Cold Rolled Form Products, Galvanized with
Zinc and Coated Pre-Coated, Painted best quality Steel Products. They assure that their every
products in are great aesthetic appeal as well as safe & sturdy.
They complete National, International statutory and legal requirements for safety, health and
environment in manufacturing process.
For Quality improvement they accept customer suggestion by understanding their requirements,
needs and make them satisfied as soon as possible on high level. Their sources of best raw
material of HR, CR & Galvanized Material from Zinc, C.C
Sheet/Coils form reputed companies i.e. Bhushan Steel, Essar Steel, Uttam Galva Steel Ltd.,
SAIL, etc.

CERTIFICATE OF REGISTRATION
• ISO 9001:2010
• NSIC
• SSI unit
• Factory Act

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QUALITY CONTROL CHECKS
Quality Control is taken care of at all stages of working right from purchase of raw materials,
production, dyeing, packing and logistics

Samples are made in time by meeting technical parameters.

Production is controlled at every step vulnerable to mistake and day to day production status
is intimated on line if required.

Finally all efforts are made to meet the order delivery and shipping date /window date.
Engineering a design based on safety regulatory standards.

Reviewing the design with the customer and the metal fabrication team to make sure everyone’s
on the same page.

Ordering materials that satisfy applicable OSHA codes and quality standards, such as material
thickness, ASTM specification, etc.

Maintaining performance qualification files for each welder, tacker, and welding operator.

Making sure each completed piece is properly handled, stored, or shipped to prevent damage that
could lead to a safety hazard.

Implementing quality control early in the process prevents mistakes and avoids costly downtime
and material handling expenses. So G.B. enterprises doing everything in efficient manner.

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COMPETITORS

SALASAR TECHNO ENGINEERING LTD

In the year 2006, Salasar started out as a tower manufacturer with the vision of transforming the
industry. Tower manufacturers rarely provided multiple solutions under one roof. Salasar sought
to fill this gap by aspiring to become a one-stop shop for India’s telecom giants by carrying out
engineering, designing, procurement, fabrication, galvanization and EPC under one roof.

KIRBY BUILDING SYSTEMS

Kirby building systems was established in 2006 with 1000 employee and they are the
manufacturer of pre engineered steel building, prefabricated steel buildings, pre engineered
building systems, light building pre-engineered systems, pre engineered steel structure. The
company maintains a strong reputation for delivering customer- designed and cost- effective
solutions for steel buildings that are manufactured to the highest quality standards, and a
committment to providing top class service to its customers.

ISGEC TITAN METAL FABRICATORS PVT LTD.

Isgec TITAN Metal Fabricators Pvt. Ltd. is a joint venture between Isgec Heavy Engineering
Ltd., India & Titan Metal Fabricators., USA. It caters to the global demands of the largest
chemical, petrochemical and pharmaceutical companies with top-tier; custom fabricated
corrosion-resistant process equipment.
Isgec Heavy Engineering Ltd. has an 85-year history as a diversified engineering company with
interests in multiple process.

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1.3 INTRODUCTION TO TOPIC

Ratio Analysis is a form of financial statement analysis that is used to obtain a quick indication
of a firm’s financial performance in several key areas. The ratios are categorised as Short-term
Solvency Ratio. Debt Management Ratio. Asset Management Ratio. Profitability Ratio. And
Market Value Ratio.
Ratio Analysis as a tool possesses several important features. The data, which are provided
by financial statements, readily available.
The computation of ratios facilitates the comparison of firms which differ in size. Ratios can
be used to compare a firm’s financial performance with industry averages. In addition, ratios
can be used in a form of trend analysis to identify area where performance has improved or
deteriorated over time.
Earning capacity. Creditors are concerned primarily with liquidity and ability to pay interest and
redeem loan within a specified period. Management is interested in evolving analytical tools that
will measure costs, efficiency, liquidity and profitability with a view to make intelligent
decisions. Ratio analysis is the process of determining and interpreting numerical relationships
based on financial statements. A ratio is a statistical yardstick that provides a measure of the
relationship between two variables or figures.
This relationship can be expressed as a percent or as a quotient. Ratios are simple to calculate
and easy to understand. The persons interested in the analysis of financial statements can be
grouped under three heads,
I. Owners or investors
II. Creditors and
III. Financial executives.
Although all these three groups are interested in the financial conditions and operating results, of
an enterprise, the primary information that each seeks to obtain from these statements differs
materially, reflecting the purpose that the statement is to serve.
Investors desire primarily a basis for estimating.
According to accountant hand book by wixon, kell and Bedford, a ratio is an
expression of the quantitative relationship between two numbers.

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Ratios are comparison points for companies. They evaluate stocks within an industry. Likewise,
they measure a company today against its historical numbers. In most cases, it is also important
to understand the variables driving ratios as management has the flexibility to, at times, alter its
strategy to make its stock and company ratios more attractive. Generally, ratios are typically not
used in isolation but rather in combination with other ratios.

Ratio may be expressed in the following three ways:

1. Pure ratio or simple ratio: - it is expressed by the simple division of one number by another.
For example, if the current assets of a business are Rs.200000 and its current liabilities are Rs.
100000, the ratio of current assets to current liabilities will be 2:1.

2. Rate or so many times: - in this type, it is calculated how many times a figure is, in
Comparison to another figure. For example, if a firm’s credit sales during the year are rs.200000
and its debtors at the end of the year are Rs. 40000, its debtors turnover ratio is 200000/40000 = 5
times. It shows that the credit sales are 5 times in comparison to debtors.

Percentage:
3) - in this type, the relation between two figures is expressed in hundredth. For
example, if a firm’s capital is rs.1000000 and its profit is rs.200000 the ratio of profit capital, in
term of percentage, is 200000/1000000*100 = 20%

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 IMPORTANCE AND ADVANTAGES OF RATIO ANALYSIS
Ratio analysis is an important tool for analyzing the company's financial performance. The
following are the important advantages of the accounting ratios.

1. Analyzing financial statements

Ratio analysis is an important technique of financial statement analysis. Accounting ratios are
useful for understanding the financial position of the company. Different users such as investors,
management, bankers and creditors use the ratio to analyze the financial situation of the
company for their decision making purpose.

2. Judging efficiency

Accounting ratios are important for judging the company's efficiency in terms of its operations
and management. They help judge how well the company has been able to utilize its assets and
earn profits.

3. Locating weakness

Accounting ratios can also be used in locating weakness of the company's operations even
though its overall performance may be quite good. Management can then pay attention to the
weakness and take remedial measures to overcome them.

 Financial statement analysis

 Performance

 Benefits

 Highlights

4. Formulating plans

Although accounting ratios are used to analyze the company's past financial performance, they
can also be used to establish future trends of its financial performance. As a result, they help
formulate the company's future plans.

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5. Comparing performance
It is essential for a company to know how well it is performing over the years and as compared
to the other firms of the similar nature. Besides, it is also important to know how well its
different divisions are performing among themselves in different years. Ratio analysis facilitates
such comparison.

LIMITATION OF RATIO ANALYSIS

Despite usefulness, financial ratio analysis has some disadvantages. Some key demerits of
financial ratio analysis are:
1. Different companies operate in different industries each having different environmental
conditions such as regulation, market structure, etc. Such factors are so significant that a
comparison of two companies from different industries might be misleading.
2. Financial accounting information is affected by estimates and assumptions. Accounting
standards allow different accounting policies, which impairs comparability and hence ratio
analysis is less useful in such situations.

3. Ratio analysis explains relationships between past information while users are more concerned
about current and future information.

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 RATIO ANALYSIS OF G.B. ENTERPRISES

The tools and techniques of financial ratio are employed for the analysis and interpretation of
financial and operational data connected with Working Capital Management
A ratio is a simple arithmetical expression one number to another. The technique of ratio analysis
can be employed for measuring short-term liquidity or Working Capital Management position of
a firm. The following ratios can be calculated for these purposes:

1. Current ratio.
2. Quick ratio
3. Absolute liquid ratio
4. Inventory turnover.
5. Receivables turnover.
6. Payable turnover ratio.
7. Working Capital Management turnover ratio.
8. Working Capital Management leverage
9. Ratio of current liabilities to tangible net worth.
10. Cash to current liability
11. Fixed asset to proprietary ratio
12. Debt equity ratio
13. Interest coverage ratio
14. Proprietary ratio
15. Gross profit ratio
16. Net profit ratio
17. Earning per share
18. Dividend per share
19. Earning yield ratio

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Current ratio:
Current Ratio, also known as Working Capital Management ratio is a measure of general
liquidity and its most widely used to make the analysis of short-term financial position or
liquidity of a firm. It is defined as the relation between current assets and current liabilities.
Thus,

CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITES

The two components of this ratio are:

1. CURRENT ASSETS
2. CURRENT LIABILITES

Current assets include cash, airable securities, bill receivables, sundry debtors, inventories and
work-in-progresses.
Current liabilities include outstanding expenses, bill payable, dividend payable etc. A relatively
high current ratio is an indication that the firm is liquid and has the ability to pay its current
obligations in time. On the hand a low current ratio represents that the liquidity position of the
firm is not good and the firm shall not be able to pay its current liabilities in time. A ratio equal
or near to the rule of thumb of 2:1 i.e. current assets double the current liabilities is considered to
be satisfactory.

Quick ratio:
Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be defined as
the relationship between quick/liquid assets and current or liquid liabilities. An asset is said to be
liquid if it can be converted into cash with a short period without loss of value. It measures the
firms’ capacity to pay off current obligations immediately.

As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if quick
assets are equal to the current liabilities then the concern may be able to meet its short-term
obligations. However, a firm having high quick ratio may not have a satisfactory liquidity

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position if it has slow paying debtors. On the other hand, a firm having a low liquidity
position if it has fast moving inventories

Working Capital Management turnover ratio:

Working Capital Management turnover ratio indicates the velocity of utilization of net Working
Capital Management. This ratio indicates the number of times the Working Capital Management
is turned over in the course of the year. This ratio measures the efficiency with which the
Working Capital is used by the firm. A higher ratio indicates efficient utilization of Working
Capital and a low ratio indicates otherwise. But a very high Working Capital Management
turnover is not a good situation for any firm.

Working Capital Turnover Ratio: Sales

Net Working Capital Inventory Turnover Ratio =Cost of

Goods Sold / Inventory

This ratio indicates whether stock has been efficiently used or not. It shows the speed with which
stock is rotated into sales for the number of times the stock is turn into sale during the year. The
higher the ratio, better it is, since it is indicates that stock is selling quickly. This Ratio indicates
the relationship between the cost of Goods sold during the year and stock kept during the year.

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Cash Turnover Ratio:

This ratio indicates the relationship between the net sale during the year and cash and bank
balance during the year.

Cash Turnover Ratio= Net Sale / Cash and Bank Balance

This ratio indicates whether cash has been efficiently used or not. It shows the speed with which
the cash is rotating the sale. The higher the ratio the better it is, since it indicates that cash is used
efficiently.

If there is cash is used efficiently show that there is need of WORKING CAPITAL
MANAGEMENT for dealing with daily operation of the company. By comparing cash turnover
ratio of current year with previous years the management can accessed whether cash has been
more efficiently used or not.

Cash to Current Assets:

This ratio indicates the relationship between the cash and bank balance during the year with the
current assets during a year.
Cash to Current Assets = Cash & Bank Balance/Current Assets
This ratio indicates whether cash has been the important and major part of current assets or not.
Higher the ratio the cash is important part of current assets it results into less WORKING
CAPITAL MANAGEMENT is required.

Cash to Current Liability:

This ratio indicates the relationship between the cash and bank balance and current liability
during the year.
Cash to Current Liability = Cash & Bank Balance / Current Liability

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This ratio indicates whether company is able to pay current obligation higher the ratio shows that
inefficient use of cash resources and inefficiency of management lower the ratio shows that there
is better control on the cash resources and management works efficiently and effectively. So
there is more WORKING CAPITAL MANAGEMENT is needed to dealing with day to day
operations of the company.

Fixed Assets to Proprietor’s Fund Ratio: - This ratio is also known as fixed assets to net worth
ratio.

Formula:
Fixed Asset to Proprietor’s Fund Ratio = Fixed Assets/Proprietor’s Funds (i.e., Net Worth)

Significance: - The ratio indicates the extent to which proprietor’s (Shareholder’s) funds are
sunk into fixed assets. Normally, the purchase of fixed assets should be financed by proprietor’s
funds. If this ratio is less than 100%, it would mean that proprietor’s fund are more than fixed
assets and a part of working capital is provided by the proprietors. This will indicate the long-
term financial soundness of business.

Capital Gearing Ratio: -This ratio establishes a relationship between equity capital (including
all reserves and undistributed profits) and fixed cost bearing capital.

Formula:

Capital Gearing Ratio = Equity Share Capital+ Reserves + P&L Balance/ Fixed cost Bearing
Capital

Whereas, Fixed Cost Bearing Capital = Preference Share Capital + Debentures + Long Term
Loan

Significance: - If the amount of fixed cost bearing capital is more than the equity share capital
including reserves an undistributed profits), it will be called high capital gearing and if it is less,
it will be called low capital gearing.

26
The high gearing will be beneficial to equity shareholders when the rate of interest/dividend
payable on fixed cost bearing capital is lower than the rate of return on investment in business.

Thus, the main objective of using fixed cost bearing capital is to maximize the profits
available to equity shareholders.

Interest Coverage Ratio:- This ratio is also termed as debt Service Ratio. This ratio is
calculated as follows:
Formula:

Interest Coverage Ratio = Net Profit before charging interest and tax / Fixed Interest Charges
profits available to pay interest charges. This ratio measures the margin of safety for long-term
lenders.

This higher the ratio, more secure the lenders is in respect of payment of interest regularly. If
profit just equals interest, it is an unsafe position for the lender as well as for the company also,
as nothing will be left for shareholders. An interest coverage ratio of 6 or 7 times is considered
appropriate

Debt Equity Ratio:- This ratio can be expressed in two ways:

First Approach: According to this approach, this ratio expresses the relationship between
long term debts and shareholder’s fund. Formula:

Debt Equity Ratio = Long term Loans/Shareholder’s Funds or Net Worth

Long Term Loans:- These refer to long term liabilities which mature after one year. These
include Debentures, Mortgage Loan, Bank Loan, and Loan from Financial institutions and Public
Deposits etc.

27
Shareholder’s Funds:- These include Equity Share Capital, Preference Share Capital, Share
Premium, General Reserve, Capital Reserve, Other Reserve and Credit Balance of Profit & Loss
Account.

Second Approach: According to this approach the ratio is calculated as follows:- Formula:

Debt Equity Ratio=External Equities/internal Equities

Debt equity ratio is calculated for using second approach.

Significance: - 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 long-
term point of view, as it indicates that more and more funds invested in the business are provided
by long-term lenders.

The lower this ratio, the better it is for long-term lenders because they are more secure in that
case. Lower than 2:1 debt equity ratio provides sufficient protection to long-term lenders.

Proprietary Ratio: - This ratio indicates the proportion of total funds provide by owners or
shareholders.

Formula:

Proprietary Ratio = Shareholder’s Funds/Shareholder’s Funds + Long term loans

Significance: -This ratio should be 33% or more than that. In other words, the proportion
of shareholder’s funds to total funds should be 33% or more.

A higher proprietary ratio is generally treated an indicator of sound financial position from long-
term point of view, because it means that the firm is less dependent on external sources of
finance.

28
Gross Profit Ratio: This ratio shows the relationship between gross profit and sales.

Formula:

Gross Profit Ratio = Gross Profit / Net Sales *100 Here, Net Sales = Sales -Sales Return

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 the gross profit ratio
should be adequate enough not only to cover the operating expenses but also to provide for
depreciation, interest on loans, dividends and creation of reserves.

Net Profit Ratio: -This ratio shows the relationship between net profit and sales. It may be
calculated by two methods:

Formula:

Net Profit Ratio = Net Profit / Net sales *100

Operating Net Profit = Operating Net Profit / Net Sales *100

Here, Operating Net Profit = Gross Profit - Operating Expenses such as Office and
Administrative Expenses, Selling and Distribution Expenses, Discount, Bad Debts, Interest on
short-term debts etc.

Significance: -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.

29
Earning Per Share (E.P.S.) :- This ratio measure the profit available to the equity shareholders
on a per share basis. All profit left after payment of tax and preference dividends are available to
equity shareholders.

Formula: Earning Per Share = Net Profit -Dividend on Preference Shares / No. of Equity Shares

Significance:- This ratio helpful in the determining of the market price of the equity share of the
company. The ratio is also helpful in estimating the capacity of the company to declare dividends
on equity shares.

Dividend Per Share (D.P.S.):- Profits remaining after payment of tax and preference dividend
are available to equity shareholders.
But of these are not distributed among them as dividend. Out of these profits is retained in the
business and the remaining is distributed among equity shareholders as dividend. D.P.S. is the
dividend distributed to equity shareholders divided by the number of equity shares.

Formula:

D.P.S. = Dividend paid to Equity Shareholder’s / No. of Equity Shares *100

Dividend Payout Ratio or D.P. :- It measures the relationship between the earning

available to equity shareholders and the dividend distributed among them Formula:

D.P. = Dividend paid to Equity Shareholders/ Total Net Profit belonging to Equity

Shareholders*100

OR

D.P. = D.P.S. / E.P.S. *100

30
Earning and Dividend Yield: - This ratio is closely related to E.P.S. and D.P.S. While the
E.P.S. and D.P.S. are calculated on the basis of the book value of shares, this ratio is calculated
on the basis of the market value of share.

Price Earning (P.E.) Ratio:- Price earning ratio is the ratio between market price per equity
share & earnings per share. The ratio is calculated to make an estimate of appreciation in the
value of a share of a company & is widely used by investors to decide whether or not to buy
shares in a particular company.

Significance: -This ratio shows how much is to be invested in the market in this company’s
shares to get each rupee of earning on its shares. This ratio is used to measure whether the
market price of a share is high or low

31
 CHAPTER-2
LITERATURE REVIEW

32
2.1 REVIEW OF LITERATURE
Nissim & Penman (2012) in his research report on financial result he has noted that this paper
summarizes a financial statement analysis for use in equity estimate. Standard profitability
analysis is integrated, and extended, and is complemented with an analysis of expansion. The
point of view is one of predication payoffs to equities. So financial statement analysis is reported
first as a matter of Performance analysis of the forthcoming, with forecasted ratios viewed as
building blocks of forecasts of payoffs.

Kennedy and Muller (2013) in his research report on financial result he has found that the
inquiry and understanding of financial Statements are an seek to find the significance and
meaning of financial statements data So that the forecast may be made of the prospects for
forthcoming earnings, ability to pay interest and Debt maturates (both current and long term) and
profitability and sound dividend policy.

Duncan and Elliott (2013) in his research report on financial performance he has said that he
had indicated that the paper in the heading of adequacy , department lengthways through
financing efficiency betwixt financial organization provide that All financial performance
calculates as return on assets, interest margin and capital adequacy are Positively related with
customer service quality scores.

Elmerraji (2014) in his research report on financial performance he has pointed that he see if
you can say that ratios can be an inestimable tool for producing an Investment choice. Though
so, numerous modern investors would rather leave their judgment to fate than try to agreement
with the terrifying of financial ratios. The right is that ratios aren't that terrifying, Even if you
don't have a degree in business or finance. Ratios to make informed decisions about an
investment make a perfect sense, once you know how use them.

Subramanyam & Halsey (2014) in this report on financial performance pointed that he the
financial Statement investigation is the application of analytical tools and capabilities to general-
purpose financial statements and related data to derive evaluate and inferences useful in business
Analysis. It reduces reliance on hunches, conjectures, and intuition for Business decisions. It
decreases the uncertainty of business analysis.

33
Pandey (2014) in his research article on financial performance he has pointed that the financial
statements include information about the financial aftermath and origins and uses of financial
resources, one should be able to tell whether the financial condition of a firm is excellent or
rotten; whether it is greater or declining. It can correlate the financial parameters given in
financial statements in a purposeful way which will give the actions which one may have to
initiate to upgrading the firm’s financial condition.

Ward (2015) in his research article on financial performance he has underline that financial
analysis using ratios between key values assist the Investors cope with the massive amount of
numbers in company financial statements. For Example, they can calculate the percentage of
net/gross loss/profit a company is generating on the funds it has deployed. All other things
remaining the same to same, a company that gains a higher percentage of Profit as compared to
other companies is a better investment option.

Minaxi A (2015), in his research article on financial performance he has pointed & suggested
that the financial statement analysis includes analyzing the financial statements to extract
information that can provide decision making. It is the process of finding the relationship
between various component parts of the financial statements to obtain a higher understanding of
an entity’s position and performance.

Priyaaks (2016), in his research article on financial performance he has pointed that Financial
statement analysis is the method of examining relationships among financial statement elements
and building comparisons with relevant information. It is a techniques in decision-making
processes related to share, stocks, bonds, and other financial instruments.

Banerjee & Sah (2016) in his research article on financial performance he has pointed &
suggested that it is the method and process of finding the significant operating and financial
characteristics from the accounting data with a view to getting an insight into the activities of an
enterprise. “Financial Statement analysis is highly a study of relationship among the many
financial factors in a business as disclosed by a single set of statements, and a survey of the trend
of these element and factors as provide in a series of statements.

34
Sushmita (2016) in her research article on financial performance he has pointed & suggested
that An analysis of financial statements with the use of ‘ratio’ is known as ratio analysis .In other
words, it is a method of calculation of a number of ratios from the data contained in the financial
statements, the comparison of the accounting ratios with those of the previous years or with other
businesses concerns engaged in similar line of activities or with those of standard or ideal ratios
and the interpretation of the comparison.

Vigneshwaran (2017) in his research article on financial performance he has pointed &
suggested that Marketing strategy is a set of target, policies and rules that leads the company's
marketing measures. In bunch marketing, the seller engaged in the huge production, mass
distribution and huge promotion of one product for all buyers. Through this the option of
communication channels & distribution channels become much easier. The positioning requires
that every tangible aspect of price, place, product and promotion must support the chosen
positioning strategy. Company should maintain a unique selling proposition (USP) for each
brand and stick to it, PPL consistently promotes it’s DAP fertilizer by Higher yield at lower cost.

Mittal and Kamakura (2017) in his research article on financial performance he has pointed &
suggested that the link between satisfactions and repurchase behaviour. Primarily searching find
that notwithstanding identical rating on satisfaction, due to person characteristics such as marital
status, sex, age, education, and area of residence, important difference was observed in
repurchase behavior. Over the past decade, manufacturer building to generate consumer interest,
patronage and loyalty in a store.

Nikhita Narendran (2017) in her research article on the real estate industry in India to find out
the differences in residential property prices across different cities in India. Volatile prices have
led to mushrooming property pricewise in cities. As the thing, there has been academic discourse
about existence of housing bubble in modern years. Her inquiry about the city fixed effect on
expansion in house prices across different 15 cities. The different models suggests difference
finding about this. In Delhi the growth in house prices for period of 2009-2013..

35
D Eraker, AM Dougherty, EM Smith and S Eraker (2018) in this research article of Online
market place for real estate transaction, paradigm of invention of web site system maintain a real
estate webpage. In this Web page has a image map of geographic region that can be operate by
user. This system provides an online alliance for real estate transaction. When the user registers,
the system creates a user account for real estate information.

Edward Glaeser, Wei Huang, Yueran Ma and Andrei Shleifer (2018) according to their
research due to some reason Chinese housing prices by over 10% the construction cost of
apartment has been increased which lead to large number of vacant houses. This boom turned
into number followed by a crash. Due to strong real estate the current price is might be
sustainable .Therefore government must compare the advantage of price stability against the cost
of restricting urban growth.

Omid Poursaeed, MateraSerge and Belongie (2018) in this research article according to their
research since the arrival of online real estate. The problem of automatic estimation of market
trailer for houses had come into attention keys factor influencing value of house- interior and
exterior appearance various characteristics of house had been evaluated using data sheet , photos
of house interior and exterior and method foe estimating the luxury level real estate photos and
by applying this it auto perform zero estimation .

Manuel B. Aalbers (2019) in his research article on real estate have started studying about
residential (housing) and commercial real estate (offices, retail, leisure) at the combination of
financial and urban geographies to understand how the built environment and has been turned
into a (quasi-)financial asset – ‘unitized’ and liquid – through a range of regulatory and socio-
technical changes and constructions. It is not reduce to the increase in household debt, mortgage
securitization and international investment in office markets, but increasingly also affects rental
housing: private equity, hedge funds and REITs buy up huge portfolios of private and social
rented housing, while housing associations use derivatives and other financial instruments. This
research study the most recent research on finance, real estate and housing.

36
Yehmin Miao (2019) in his research article on the real estate industry a brief introduction and
explanation about the real estate finance and its risks. In this paper, the important and main focus
on the link between real estate price fluctuation and financial risk, real estate bubble, the
formation and transmission of real estate financial risk, and the control of real estate financial
risk. Various research categories were classified and reviewed. His summaries the following
facts: real estate financial risk needs to be improved; the research on real estate bubble needs to
be quantified; the research on risk formation needs to be deepened from the mechanism

Mike Juru (2019) in this research article to find and appraise the offering realtors in financial
market, particularly given in the background that the financial markets are the support of
economy. There is ample of opportunity to find finance market challenges using services given
nature of real estate education and practice in the country. Realtors could play important role to
improving performance of financial market.

Piet Eichholtz, Rogier Holtermans and Nils Kok (2019) according to this research article gives
new understanding into the performance of real estate, attention on the environmental
performance of assets. In this energy intensity decreased by more than 40% over the decade.
According to this is associated with significantly lower energy consumption and that there is
substantial variation in these effects, depending on certification level and program, and label
tenure.

David Chambers, Christophe Spaenjers and Eva Steiner (2019) according to this research
tell us about the direct real estate investment are less profitable and more risky in long run rather
than previously thought. Here we collect financial data for four large investors for the period
1901-1970. Then gross income initially changes around 5% but upward and downward changes
in real estate. Long-term real income growth rates are close to zero.

37
 CHAPTER-3
RESEARCH
METHODOLOGY

38
3. RESEARCH METHODOLOGY

3.1 CONCEPTUALIZATION

Financial ratios are mathematical correlation of financial statement accounts or various

categories. It provides the interrelationships amid the financial statement accounts benefit
customer, internal company management , investors, creditors understands how well defined a
business is performing and areas of needing improvement.
Financial ratios are the widespread tools and most common tool are used to analyze a business'
financial standing. Ratios are easy to learn, easy to understand and simple to compute. Ratio can
also be used to analyze and compare different companies in different industries. But a ratio is
commonly a methodically comparison based on proportions, big and small companies can be use
ratios to compare their financial information. In a manner, financial ratios don't take into
consideration the size of a company or the industry. It is just like a raw computation of financial
position and performance.

Ratios provide us to compare and analyze different companies across industries, big and small, to
find their strengths and weaknesses. They are split up into various main categories:, market
prospect, investment leverage, liquidity, solvency, efficiency, profitability and coverage.

A ratio comparison & analysis is a quantitative analysis of data contained in a company’s

financial statements. Ratio analysis is based on mainly three financial statements like the
balance sheet, income statement and cash flow statement; the ratios of one item – to another item
or combination or a combination of items - are then calculated. Ratio analysis is used to find
various aspects of a company’s operating and financial performance such as its liquidity,
profitability, efficiency, and solvency. The trend of these ratios over time is studied to check
whether they are increasing or decreasing. Ratios are also compared across different companies
in the same sector to get an idea of comparative valuations and to see how they stack up, and it
is a cornerstone of fundamental analysis.

39
3.2 SIGNIFICANCE OF STUDY

This research is based on financial analysis of G.B. ENTERPRISES PVT. LTD. Financial
Analysis is of utmost important. This research is based to test the financial efficiency. The
G.B. Enterprise is trying phenomenal incremental and is one of the largest and fastest growing
sectors in the country, with the compounded annual growth rates of the market crossing 25%.
Additional, fast emerging middle class population, on the behind of changing and busy lifestyle
and surging disposable income, the industry will continue to grow at a pace in coming years. It
now accounts for roughly half of all company revenues in the developed countries and continues
to expand there and in many other industrial countries in the coming years. But some of the
most rapid growth is occurring in the developing world; where it's radically changing the
way people purchase, and heavily promoted. This project aims at providing information about
Fabrication industry, its financial soundness, reason for its emergence and several other factors
that are responsible for its growth.
This report provides extensive research and rational analysis on the financial position of
company on the basis of their financial statements. It features their performance, key related
variables and competitive landscape of the market. The research study looks into the financial
condition and future forecasts, and outlines current trends and analyses. It has been made to help
clients in analyzing the opportunities, challenges and drivers vital to the growth of fabrication
industry in India. This study helps in locating the deficient areas of the company and also helps
in suggesting the ways for improvement of financial health of the company through innovative
ideas of the research analysis.

40
OBJECTIVE
To study the financial position through ratios of G.B. Enterprises.

SUB OBJECTIVES

To understand the financial reports of the company.

To analyze various ratios and commenting on them.

To do a deeper analysis of the liquidity, solvency, activity and profitability of the business.
To give concrete suggestion to the company to improve its financial position.

3.3 SCOPE OF THE STUDY:

These are some of the scope of the study:

The present scope can be extended to access the present financial position of the company.
Ratios have predictor value and they are helpful in forecasting and planning the business
activities for a future period. The financial analysis is one of the most popular techniques
employed to diagnose the financial edifice and flow of funds of a firm. The ratios are used to
locate symptoms of problems. The cause of the problem and the solution for it are steps ahead.

3.4 RESEARCH DESIGN:

The research design creates the blueprint for the measurement, collection, and analysis of data. It
helps the scientists in the allocation of his restricted resources by posing actual choices
“Research Design is the structure and plan of inspection so conceived as to provide answer to
research questions.”

So in short research design must include at least following points:

3.4.1 Unique and clear statement of research problem.
3.4.2 Techniques and Procedure to be used for gathering information.
3.4.3 Process and methods used in processing and analyzing the data.

41
Types of Research Design:

 Exploratory research.
 Descriptive research.

Research Design Used:

Descriptive research design is used in this research project. A Descriptive research design

is a scientific way and method, which involves describing and observing the behaviour of a
subject without influencing it in any way.

The methods and way used in context of this research design are:
3.4.4 The survey of concerning literature,
3.4.5 Experience Survey.

The main and important features of this research design are given bellow as following:
3.4.6 Non-Probability Sampling design is used, it is flexible in nature as well as easy to use..

3.4.7 There is a no determined design for the analysis.

3.4.8 No pre-determined decisions about the logistics operational procedures.

Why Descriptive Type Research Methodology?

The motive of descriptive research design is in descriptive state. The main feature and
characteristic is that the research has no control over the variables; he can only report what has
happened or what is happening.

3.5 SOURCES OF DATA COLLECTION

Data collection is in fact, the most important aspect of a survey. While collecting data utmost
care must be exercised because data constitute the foundation on which the superstructure of
statistical analysis is built. If the data are inadequate and inaccurate, the entire analysis may be
faulty and the decision taken would be misleading.

42
(Sources of data collection)

Secondary type of data collection has been used in this project. The different sources for
collecting data are as follows-

 Secondary Data
• Website
• Manual
• Newspaper
• Journal
• Financial statements of company

Managerial Usefulness of the Study:

• It will be very useful for the managers to know the financial health and operational
efficiency of the company.
• Analysis of data leads to comments over past performances, present position and
future trends.
• Banks, financial institutions and other creditors can ascertain to what extent the firm is
viable unit and whether it is a worthwhile to grant loans.

43
 CHAPTER-4
DATA ANALYSIS AND
INTREPRETATION

44
4 DATA ANALYSIS AND INTERPRETATION

4.1. CURRENT RATIO :-

Current Ratio = Current Assets / Current Liability Ideal Ratio = 2:1

Curren Curr Curren

Years
t ent t
Assets Liabil Ratio
ities
2018- 18378 27846 0.66
2019 541 273
2019- 21979 32805 0.67
2020 532 272
2020- 24565 40942 0.60
2021 592 653
Table 4.1

Fig.4.1
INTERPRETATION:

The graph shows that the current ratio is decreasing in 2019-2020 from the past years. Ideal
ratio is 2:1, but company have the current ratio which is below the standard ratio.
The current ratio as show in graph is 0.60:1 in 2020-2021.The financial position of company is
not good.

4.2 LIQUIDITY RATIO:

 Liquid Ratio = Liquid Assets / Current Liabilities

Cu Liquid
Yea Liq rren ity
rs uid
t Rati
Asse
ts Liab o
ilitie
s
2018 6961 2784 0.25
- 568 6273
2019
2019 1016 3280 0.31
- 9634 5272
2020
2020 1310 4094 0.32
- 1649 2653
2021
Table -4.2

0.35 Liquidity Ratio

2018-20192019-20202020-2021 liquidity ratio
0.3
0.25
0.2
0.15
0.1
0.05
0

figure 4.2
INTERPRETATION:

The graph shows that there is continuous increase in the liquidity ratio from last three years; but
it is less than the standard ratio which is 1:1 .In 2018-2019 liquidity ratio is 0.32:1. The financial
position of company is not good.
46
4.3 WORKING CAPITAL TURNOVER RATIO:
Working Capital Turnover Ratio=Net Sales / Net Working Capital

Net W
Yea N Worki orking
rs et
ng capital
S
al Capita T.O.R.
es
l
2018 1 94677 10.95
- 0 32
2019 3
6
7
1
6
6
5
2019 1 10825 11.20
- 2 740
2020 1
2
4
8
2
8
8
2020 1 16377 9.06
- 4 061
2021 8
3
7
6
1
7
3

Table 4.3

11
 9.5

8.5

11.5
10.5 Net Working2019-2020
2018-2019 Capital Turnover Ratio
2020-2021 net working capital
turnover ratio

Figure-4.3

INTERPRETATION:
The above graph shows that the company’s net working capital turnover ratio is reduced in 2020-
2021 , which is 9.06:1 and In 2019-2020 net working capital turnover ratio is greater than other
years which is 11.20:1.

47
4.4 CURRENT ASSETS AT G.B. ENTERPRISES PVT. LTD. HAS BEEN
CLASSIFIED INTO FOLLOWING CATEGORIES.

Curren 2018- 2019- 202

t 2019 2020 0-
Assets 202
1
Invento 11566 11979 143
ries 105 644 039
43
Sundry 15412 12558 184
debtors 16 66 083
6
Cash & 10880 53352
Bank 03 26 446
217
1
Loans 34087
& 41832 96 395
Advanc 17 864
es 2
Total
current 1 219 245
assets 83785 79532 655
41 92

Table 4.4

Fig 4.4
INTERPRETATION:
In this graph, it shows that the company’s total current asset is increasing which is 8565592 in
2019-2020, which is greater from other years. In this inventories are also increasing in 2019-
2020 which is 4987379. Other current assets are also increasing in 2021 year.

48
4.5 GROWTH RATE OF SALES

Growth
Years Sales rate of
sales
2018- 103671 25.13
2019 665
2019- 121248 23.4
2020 288
2020- 148376 18.62
2021 173

Table-4.5

Fig 4.5

INTERPRETATION:
In this graph the growth rate of sale is decreasing year to year. In 2020-2021 growth rate sale
is 18.62%, and in year 2018-2019 25.13% growth rate of sale.

49
4.6 INVENTORY TO CURRENT ASSEST
Table Showing Percentage of Inventory to total Current Assets

Cu Inventory to
Y I rr current
e n
e assets
a v
r e nt
s n
t A
o ss
r
y et
s

2
0
1 1 1 0.62
8 1 8
- 5 3
6 7
2 6 8
0 1 5
1 0 4
9 5 1
2
0
1 1 2 0.55
9 1 1
- 9 9
7 7
2 9 9
0 6 5
2 4 3
0 4 2
2
0
2 1 2 0.58
0 4 4
- 3 5
0 6
2 3 5
0 9 5
2 4 9
1 3 2

Table -4.6
 0
Inventory To Current
.
6 Assets
4
0
.
6
2
0
.
6
0 I
.
5
8
0
.
5
6

0
.
5
4
0
.
5
2
0
.
5
2 2 2020-2021
0 0
1 1
8 9
- -
2 2
0 0
1 2
9 0
Fig 4.6

INTERPRETATION:

Graph shows that the inventory to asset ratio is increase from 2019-2020, which is 0.58:1.but
2018-2019 is highest inventory to current asset whichever is 0.62:1.

50
4.7 Inventory Turnover Ratio
Inventory Turnover Ratio = Sale / Average Inventory

Inventor
Years Inventor Sales y
y turnover
ratio
2018-2019 1156610 1036716 0.11
5 65
2019-2020 1197964 1212482 0.10
4 88
2020-2021 1430394 1483761 0.09
3 73

Table -4.7

Inventory turnover ratio

0.12

0.1

0.08

0.06

0.04

0.02

0
2018-2019 2019-2020 2020-2021

Fig.4.7

INTERPRETATION:

This graph shows that inventory turnover ratio is decreasing this means that inventory is being
hold for long time, which is 0.09:1. In 2018-2019 inventory turnover ratio is highest whichever
is 0.11:1. In 2020-2021, it is decreasing.

51
4.8 CASH TO CURRENT ASSETS RATIO:
Cash to current assets ratio: Cash / Current assets

Cash to
Years Cash Current Current
Assets
assets
Ratio
2018- 377604 1088003 5.9
2019
2019- 1936893 5335226 2.4
2020
2020- 1555863 4462171 1.8
2021

1 Table 4.8

0
CASH TO CURRENT ASSETS
.. Cash To Current
2018-20192019-20202020-2021
RATIO
Assets Ratio
7
5 Fig-4.8
6
INTERPRETATION:
4
The graph shows that the company has not been able to maintain a good control over the cash.
3
So there may be need of more Working Capital Management for dealing with daily operation of
company. Cash
2 to current asset ratio is decreasing year to year.

52
4.9 Cash Turnover Ratio

Cash Turnover Ratio = Net Sales / Cash & Bank Balance

Cash
Years Sale Cash turno
ver
ratio
2018- 10367 10880 92.8
2019 1665 03
2019- 12124 53352 22.3
2020 8288 26
2020- 14837 44621 32.9
2021 6173 71

TABLE-4.9

.
100 2018-2019 2019-2020 2020-2021 CASH TURNOVER RATIO
90 Cash Turnover Ratio
Fig 4.9
80
70
INTERPRETATION:
60
The50graph shows the 2019-20 reports about the cash turnover ratio show that the company had
40
enough
30 cash left in its hands after paying out all of its expenses, but this trend started to come

down in the following year.

20 53
10
0
4.10 Cash to Current liability ratio
Cash to Current Liability Ratio = Cash / Current Liability

Cu Cash to
Ye Cash rre Current
ar nt
s Liabilities
Lia
bili
ties
20
1088 278 3.94
18
003 462
-
73
20
19
20
5335 328 16.36
19
226 052
-
72
20
20
20
4462 409 10.93
20
171 426
-
53
20
21

Table 4.10
188
10 2019
2020
2021
166
Fig 4.10
14
12
INTERPRETATION:
The graph shows that there is an irregularity in the ratio. There is need of Working Capital
Management to pay their current obligation and to dealing with daily operations of the company.

4 54
2
0
CASH TO CURRENT LIABILITY
4.11. Fixed Assets Turnover Ratio

Year Ratio
2018-2019 5.46
2019-2020 3.93
1
2020-2021 3.19

0
(Table No. 4.11)
Ratio
Fixed Assets Turnover Ratio 2019
2020
2021
6 (Fig No. 4.11)

INTERPRETATION:
5
It is interpreted that Ratio is higher but also decreasing from previous years and lower of this
ratio is good for business which indicates company has more assets in 2019 as comparison to
4
other years. In 2021 fixed assets ratio is 3.19:1. Lowest in 2020-2021.
3

2
55
4.12. Debt Equity Ratio:

Year Ratio

2018- 3.8
2019

2019- 2.89
2020

2020- 2.69
2021

(Table No. 4.12)

4 Ratio 2019
3.5
3 2020
2.5
2 2021
1.5
1
0.5
0
(Fig No. 4.12)

INTERPRETATION:

The graph shows that ratio is higher in 2019 and 2020 year as compared to 2021 and this shows
risky financial position as there is no sufficient funds that is equity to meet future debt but it is
less in other year therefore it is interpreted that financial position is worst.

56
4.13 Earnings Per Share

Year Ratio

2018- 8.12
2019
2019- 6.21
2020
2020- 3.21
2021

(Table No. 4.13)

9 Ratio 2019
8
7 2020
6
5 2021
4
3
2
1
0
(Fig No. 4.13)

INTERPRETATION:

This ratio indicates the Earning per share in this ratio it show that in 2021 ratio is lower as
compared to the 2020 & 2019. Due to this it clearly shows that the earning per share is highest in
2019.

57

59
4.14. Investment Turnover Ratio

Year Ratio
2018- 0.01
2019
2019- -
2020 0.0057
6
2020- -0.12
2021

(Table No. 4.14)

(Fig No. 4.14)

INTERPRETATION:-
It is interpreted that ratio is showing increasing trend in 2019 and it lowest in 2020 & 2021 but in
2021 investment turnover ratio decrease from the previous.
58
4.15 Gross Profit Ratio

Year Ratio

2018- 0.2686
2019 82434
2019- 0.0806
2020 52355
2020- 1
2021

(Table No. 4.15)

0.8

0.6 2
0
1
9
0.4 2
0
2
0
0.2 2
0
2
1
0
Ratio

(Fig No. 4.15)

INTERPRETATION:

59
From the above data it is interpreted that Gross profit ratio of G.B. enterprises is increasing in
2021 which indicates financial position is sound. In 2020 & 2019 is lower.

59
4.16 Proprietary Ratio

Year Ratio
2018- -0.01
2019
2019- 0.41
2020
2020- 1.45
2021

(Table No. 4.16)

1.6 Ratio 2019

1.4
1.2 2020
1
0.8 2021
0.6
0.4
0.2
0
-0.2
(Fig No. 4.16)

INTERPRETATION:
The graph shows that ratio G.B. enterprises is increasing in every year indicates good
financial soundness of business. Current years proprietary ratio is
1.45:1 in 2021.

60
4.17 Capital Gearing Ratio

Year Ratio

2018- 0.17
2019
2019- .282
2020
2020- .84
2021

(Table No .4.17)

0.9 RATIO 2019

0.8
0.7 2020
0.6
0.5 2021
0.4
0.3
0.2
0.1
0
(Fig No. 4.17)

INTERPRETATION:
From the above data we can see that gearing ratio is highest in 2021 and decreasing in other
years. In this Case company earns moderate profit and thus return on equity shareholder is
maximized.

61
4.18 Interest coverage Ratio

Year Ratio

2018-2019 2.89

2019-2020 0.261

2020-2021 -4.61

(Table No. 4.18)

(Fig No. 4.18)

INTERPRETATION:
We can see that ratio of is decreasing in every year. In this case the management may face
difficulties to raise loan in future. Current interest coverage ratio is going to be negative which is
-4.61:1in 2021.
4.19 Net Profit Ratio

2018- 2.3
2019
2019- 1.2
2021
2020- -0.18
2021

(Table No. 4.19)

(Fig No. 4.19)

INTERPRETATION:
From the above data we can see that net profit ratio in 2019 and decreasing in other years .So
this indicate that less profitable company will begin 2021 net profit ratio is
-0.18.
63
 CHAPTER 5:
FINDINGS,
SUGGESTIONS
AND
CONCLUSION

64
5.1 FINDINGS

 The study shows the weak short term liquidity in the form of current liability. This means that
lots of funds have been blocked.
 Management needs to find the reason for the decreasing trend in the Working Capital
Management of the company.
 Most of the fund is blocked in provisions so company need more Working Capital
Management so efficient working can be achieved in the finances of the company. Inventories
and other current assets are in limit but efforts can be made to lower them so that the company
is left with more useful liquid resources.
 The sales call for more STOCK in the form of current assets such as inventories and debtors.
 Company’s sales are increasing year by year.
 The increasing growth rate of sales year by year is a sign of future expansion opportunities in the
form of entering new air areas.
 There is more need of Working Capital Management as the funds are stocked in the form of
inventories.
 Management needs to pay special attention to increase the inventory turnover of the company.
 The 2019-20 reports about the cash turnover ratio show that the company had enough cash left in
its hands after paying out all of its expenses, but this trend started to come down in the following
years .
 Also the irregularity in the ratio is not a good feature as it shows inconsistency of the operations.

65

5.2 LIMITATIONS OF THE STUDY

 Efforts has been made to collect the relevant information through the sources available, still
some relevant information could not be gathered.

 The time consuming could not provide ample opportunity to study every detail of the
company.

 Some data and figures have not been uncovered by the company on account of confidential
report, leading to restriction in analysis.

 Since most of the data used in secondary in nature, this poses the constraints on the validity
and reliability of the data.

 More Dependence on the secondary data limits the information gathered.

66
 5.3 SUGGESTIONS AND RECOMMENDATION

 To make their short term solvency position better, the company should have to keep
maintain their position to become financially strong.
 Short term solvency ratio is better; this is a positive and strong point for company.
 Cash ratio is decreasing from last year. The company has to take a step for improvement
in cash ratio and it will help in making their financial position satisfactory.
 Debt equity ratio of company is not satisfactory. So the firm have to reduce their long term
debt and used of equity should be done.
 Proprietary ratio is not satisfactory because after 2019 it is decreasing. The firm should
have to maintain this ratio by increasing their proportion of total asset from equity.
 Company has more asset as compare to liability. It is a positive point for any investor. So
the company has to maintain this position.
 Debts used in business are more as compared to equity but from 2018, these are decreasing.
This is the positive step taken by firm to make their financial position strong.
 Working capital turnover ratio is good in last year of firm. The firm should use its working
capital in an effective manner so that it will help in making the financial position better.
 It was found that G.B. enterprises Pvt Ltd. whose liquidity is having least correlation with
dividend payout. However suggestion is made to the company to increase their liquid
position by reducing long term investment.
 The leverage of company is having least correlation with dividend payout. Hence
suggestion is made to company to reduce their borrowing and thereby start their dividend
payout.
 The finance department needs to attain a level of cash and current liabilities so that all the
payments are done in time and at the same time there is no idle cash lying in the bank
accounts. Also the irregularity in the ratio is not a good feature as it shows inconsistency
of the operations. The firm needs to stabilize its ratios.

67
 5.4 CONCLUSIONS

The main purpose of this study was to compare the financial performance of the
G.B. ENTERPRISES PRIVATE LIMITED during the period 2019 to 2021. Accordingly,
the scope of the study had been kept limited to the period 2019 to 2021 i.e. a period of 3
years. Thus, keeping the above purpose in mind the objectives of the study have been
carefully designed so as to reach the destination and thus to fulfill our purpose of
measuring financial performance of the company. Moreover, to reach the desired destination
and to accomplish the objectives of the study a suitable research methodology has been
designed. After analysing the statement of the G.B. ENTERPRISES PRIVATE LIMITED by
the help of various ratios it observed that the trend of growth is negative. G.B. Enterprises
private limited has strong performance with robust top line growth and high quality earning
in all business segments. Debt equity ratio is not satisfactory. So the firm have to reduce
their long term debt and used of equity should be done. Company has more assests have
compare to liability it is positive point of any investor. So the company has to maintain this
position.After analysis and interpretation of financial performance of G.B. ENTERPRISES
PRIVATE LIMITED. We can give conclusion that overall financial performance of the
company is declining. Hence the directors of the company should pay more attention to

recover the financial position of the company.

68
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