A

PROJECT REPORT
ON
RATIO ANALYSIS
Of
Infowiz company

SUBMITTED TO: SUBMITTED BY:

Mr Dalvir Grewal Navpreet Grewal
B.com-(3nd yr)
Roll NO-16bcm1332

CHANDIGARH UNIVERSITY CHANDIGARH

1
 ACKNOWLEDGEMENT

To test the student’s academic knowledge in practical situations of corporate world,

Semester summer internship has been included in the B.com course. I would like to
take this moment to express my deepest gratitude to the group of people without
whose help and support I would not have been able to complete this project.

I wish to begin by thanking the management at INFOWIZ COMPANY At Chandigarh.

MS.KARANPREET (Professor of Finance dept) for providing me this great
opportunity to work in their esteemed Company.I would also like to thank them for
the help, support and guidance that they have provided me with during the course
of my project work.

I would also like to deeply thank my industry mentor MS.KARANPREET for his
valuable insights and constant guidance and support.

I express my deep sense of gratitude to the management of SDIMT for imparting

me with the required help. I would like to specially thank my college mentor
Mr.DALVIR GREWAL, for his guidelines, support and motivation which have been a
great help to me for this project.

I would also like to thank all those people who spent their valuable time in this
project, and all those people who directly or indirectly contributed in making this
project a success.

NAVPREET SINGH JAURA

2
 PREFACE

For the completion of the B.COM it has been mandatory to obtain Training in
Finance. This training session really help me in gathering knowledge of market.
I have prepared this Project on the topic “Ratio Analysis in Infowiz Company At
Chandigarh” in which I have written about how an organization set their standards
to make comparison and better production..
This Report is prepared during my semester training. Training is life’s greatest
treasure as it is full of experience, observation and knowledge. The training held
was very gainful as it took us close to real life. This period also provide a chance to
give theoretical knowledge a practical shape and to learn from practical results
semester training that I have taken at Infowiz Co.,Chandigarh. It has been very
educative and fruitful experience for me for it has given mean insight into some
practical experience without which classroom knowledge can be regarded as
incomplete.
I wish this great company success so it may flourish and serve the nation and have
to achieve many goals.

Thanks

3
 DECLARATION

I, NAVPREET SINGH JAURA declare that the project Ratio Analysis in INFOWIZ
CO., at Chandigarh” submitted to CHANDIGARH UNIVERSITY CHANDIGARH in

partial fulfillment of the requirement of the degree of B.COM is a record of original

project work done by me.

I further declare that this project report has not been submitted to any other
university/ institution of any degree.

NAVPREET SINGH JAURA

4
 CERTIFICATE BY THE GUIDE

This is to certify that MR NAVPREET SINGH JAURA student of B.COM-3RD Year CU

CHANDIGARH, has undertaken the project entitled Ratio Analysis of Infowiz Co.”
Under my guidance and supervision for partial fulfillment of the requirement for the
degree of B.COM.

Ms. KARANPREET

(Project Guide)

INDEX
5
Sr.No- Contents Page No-

Chapter-1 1
Introduction of company 2
1 Different activities 4

2
Chapter-2
Introductions of Section of finance 15

3 Objective of the training 35

4
Chapter-3
Research methodology 36

5 Ratio analysis 37
6 Chapter-4
Data analysis and interpretation 47
7 Findings 64
8 Limitations 65
9 Suggestions 66
10 Conclusion 67

11 Bibliography 68
12 Annexure 69

6
 CHAPTER 1

INTRODUCTION
OF
THE COMPANY

7
INTRODUCTION OF THE COMPANY

BRIEF HISTORY OF THE COMPANY

INFOWIZ is leading strategic IT Company offering integrated IT solution. INFOWIZ is
having rich experience managing global clients across various business verticals and
align IT strategies to achieve business goals. The various accreditations that we achieved
for every service, we offer reflect our commitment towards the quality assurance.

INFOWIZ is a 8 years young organization which has won the NATIONAL AWARD
for 2 consecutive years 2014-2015 & 2015-16 for BEST Industrial Training from
Hon` able GOVERNER of Punjab & Haryana Sh. Kaptan Singh Solanki. He is also
the Chancellor of PTU & Punjabi University. INFOWIZ is a member of Confederation
of Indian Industry ( CII membership number – N4654P ) & also with an ISO
Certification. We have a global foot prints in providing the off shore companies of US,
UK, France, Ireland, Canada and Australia with quality and timely Web and SEO
services.

INFOWIZ is an organization which is established in the field of Web Development (PHP

& .NET), JAVA (Core as well as Advance), I-phone & Android Applications, Embedded
systems (AVR, PIC & ARM),Automation, ROBOTICS, Networking (MCSE, CCNA &
RHSE) & in Mechanical.

Our skilled team of professionals make sure that the product is developed as per the
customer’s needs and keeping the customer informed about the development of their
8
project from time to time. We do not only emphasize on formulating an attractive
solution to our clients but also believe in providing a workable solution. INFOWIZ offers
research based Search Engine Marketing products that help achieve greater insights to
customer’s online business. Our Research & Development arm offers SEO tools for SEM
professionals.

INFOWIZ also provides Technical Support & Consultancy to Software Companies like
JIA Group, Newzealand, Sagitech solutions Panchkula, Jarc infotech Mohali, Infonet
Solution, Delhi etc.

Our Hottest Clients & Projects:-

PROJECTS URL’s
COUNTRY

1) Viva Sales www.infowiz.in/vivasales

UK
2) Mds Creative www.mdscreative.com
Germany
3) Liddle TV www.filmon.com
UK
4) Paradigms( Android) running
Australia
5) Printcost www.popgraphics.net UK
6) PSTDO Bootstrap www.bootstrap.achieversperfect.com
USA
7) Essencesoftwares www.essencesoftwares.com
Australia
8) Dashboard(Wordpress) running
USA
9) Realstate www.realestate.infowiz.in
Russia
10) Dealpartners(WordPress) www.dealpartners.co.uk.gridhosted.co.uk UK
11) Littletonvineyard www.littletonvineyard.net
USA

9
 12) Gpakoffshore www.gpakoffshore.com
UK

OUR TEAM:-

“A Ship is as good as the crew who sail her.”

Our Technical team of professionals handing, designing & delivering of projects has a
strong presence in the North India & the US. Our engineers are already working on the
latest technologies like I-Phone & Android Applications, Robotics, VLSI-VHDL,
Embedded System, Networking and Cloud computing.

1) Dr. Seema
(Managing Director)
She is the backbone of INFOWIZ and a woman with more than 9 year rich practical
experience
who believes in taking up new ventures and projects.

2) Mr. kamaljot kansal

(Deputy Director)
A man who strongly feel that “Nothing is Impossible”. A very committed team
leader who has
been professionally attached with Multinational companies for more than 18 years
and has lead
the marketing teams in all states of North India.

3) Mr. Bonish singla

(Branch Manager)
A man who believes that “Honour Time & Place, then you will be honoured.” he has
more
than 4 years solid industrial experience in a software companies & is very dashing
and innovative
in his technical approach.

4) Ms. Urvashi
(Dean Academics)

10
 A woman who believes that “Challenges are what make life interesting and
overcoming them is
what makes life meaningful.” She has more than 3years experience in business
development.

5) Er. Nishant Goyal

(Manager)
A woman believes that “don’t wait for extra ordinary opportunities, seize common
occasions and
make them great.” She has more than 4 years experience in marketing field.

6) Er. Kamal Garg

(Head & Technical Advisor at US Branch)
More than 10 years industrial experience in US and smooth handling of the entire US
business.

7) Ms.Mandeep Kaur
(Center Head- US Branch)
A woman who firmly believes that “In life, where you reach largely depends upon
where you
start.” She joined this branch in the year 2007 and has given her immense inputs in
bringing the
company to its present status.

COURSES Offered :-

For CSE/IT/MCA Professionals:-

1) Web Development in PHP with LIVE Projects

2) Web Development in .NET with LIVE Projects
3) JAVA (Core as well as Advance ) with LIVE Projects
4) Android Applications with LIVE Projects
5) Web Designing (Photoshop, Coral Draw)
6) C#, Console Applications, VB.NET, ASP.NET
7) MySQL, SQL, ORACLE
8) Networking (MCSE, CCNA, RHSE)
9) SEO (Search Engine Optimization)
11
For ECE/EE/EIE/ME/CIVIL Professionals:-

1) Robotics With Live Project

2) VLSI-VHDL with Live Project
3) Embedded System Design with Live Project
4) Microcontroller with Live Project
5) Microprocessor with Live Project
6) PCB Designing
7) AVR & PIC Family
8) PCB and layout designing
9) AUTOMATION with Live Project
10) Project development with ARM processors
11) CATIA, PRO-E, AUTOCAD, SOLID WORKS.

Our core strength is our timely, technically and cost effective project delivery. We also provide
customers with designs as per their demands. INFOWIZ also provide JOB Oriented Industrial
Training of 1 year and 6/4/2 Months in CSE, IT, ECE, EE, ME, Civil, BBA,BCA,MBA, MCA
& also for Non-technical students . We help students in building their career.

For INFOWIZ

12
 CHAPTER-2

INTRODUCTION
OF
SECTION OF FINANCE

13
TECHNIQUES OF STORE CONTROL :-

Following are the main techniques of store control which are followed by BCL.

1. VED analysis.

2. ABC analysis.

3. FSN analysis.

4. Perpetual inventory system & store verification.

5. Determination of various levels.

VED ANALYSIS:-

V – Vital, essential and desirable – analysis is used primarily for control of spare

parts. These are also known as control by importance and exception (CIE). This

analysis is made to get the effective results. V – vital – the spares, the stock out of

which even for a short time will stop production for quite some time and where

the cost of stock is very high, are known as vital spares. The items which are stored

under the vital category in BCL are:-

CATEGORY ITEMS

14
V – Vital Ball bearings, machinery spares, electrical goods, diesel

& rfo, processing chemicals, husk, coal.

These vital spares are a must for running the concern smoothly and these must be

stored adequately. The non - availability of these vital spares will cause havoc in

the concern. E- Essential – The E type of spares are also necessary but their stocks

may be kept at low figures. The spares the absence of which cannot be tolerated for

more than a few hours or a day and the cost of lost production is high and which

are essential for the production to continue, are known as essential spares. The

items which are stored under the essential category in BCL are:-

CATEGORY ITEMS

E – Essential Belt & accessories, pipe and pipe fittings, valve,

packing sheets.

D – Desirable – The desirable spares are those spares which are needed but their

absence for even a week or so will not lead to stoppage of production. Some spares

though negligible in monetary value, may be vital for the production to continue

15
and require constant attention. The items which are stored under desirable category

in BCL are:-

CATEGORY ITEMS

D – Desirable Lab material, packing material, hardware items, MS filling,

other manufacturing material, building material, iron and steel,

joining sheets & rubber goods, miscellaneous Eng. Stores,

refractories, welding material, lubricants & grease, general

stores.

ABC ANALYSIS:-

ABC – Always better control – It is also known as proportional parts value

analysis method. Under this technique of material control, materials are listed in

‘A’, ‘B’ and ‘C’ categories in descending order based on money value of

consumption. The inventories of certain concerns consists of small percentage of

items which contribute a large percentage of value of consumption and a large

16
percentage of items of material contribute a small percentage of value. “A” may

include more costly items, while category “B” may consist of less costly items and

category “C” of the least costly items.

ABC analysis measures the cost significance of each item of material. It

concentrates on important items, so it is also known as ‘control by importance and

exception’ ( C.I.E). It is scientific method of material control because it lay

emphasis on discriminating control over different items of stores classified on the

basis of investment involved.

GROUP PERCENTAGE OF ITEMS PERCENTAGE OF

COST

A 12% 80%

B 25% 15%

C 63% 5%

A monetary advantage will come by controlling these items. An attention should

be paid in estimating requirements, purchasing, maintaining safety stocks and

properly storing of ‘A’ category materials. The control of ‘C’ items may be relaxed

and these stocks may be purchased for a year. A little more attention should be

given towards ‘B’ category items and their purchase should be undertaken at

17
quarterly or half year intervals.

PRACTICALLY

CLASS VALUE ( IN RS.) NO. OF ITEMS

A Above – 10,000 400

B 5,000 – 10,000 600

C Below 5,000 4980

EXAMPLE

A Machine seals, critical valves. electrical motors, gear boxes,

compressors.

B Valves, pumps, temperature control indicators.

C V – vells, bearings, pump shaft & other spares, couplin.

FSN ANALYSIS:-

FSN - Fast moving, slow moving, non-moving items.

Another important method of exercising control over inventory is FSN analysis.

This approach enables the management to find out the turnover of items lying in

18
stores, thus pointing out the fast moving, slow moving or non- moving items and

hence helping them to avoid keeping capital lockup in them.

PRACTICALLY

CATEGORY CLASSIFICATIO TIME PERIOD

F Fast moving items Less than 1 year

S Slow moving items Greater than 1 year but lesser than 2

year.

N Non-moving items Greater than 2 year.

EXAMPLES

F Lab material processing, packing material, welding

material.

S Lubricants, V-Vells, jointing sheet & bearing

N Pump spares, electrical goods, miscellaneous engine.

Inventory turnover ratio is the ratio of the value of material consumed during a

period to the average value of inventory held during that period.

19
 Cost of material used in period or value

Inventory turnover = --------------------------------------------------

Cost of avg. stock held during that period.

High ratio is an indicator of fast moving stock and uses investment in it. Low ratio

indicates slow moving stock i.e. accumulation of absolute stock, or carrying too

much stock. If the ratio is zero, it indicates non moving stock, i.e. the items has not

at all been used during the period and hence should be disposed off.

With the help of FSN analysis, a firm thus realizes the losses, which are caused due

to their over stocking or under stocking inventory turnover ratio. It will indicate the

number of days in which average inventory is consumed. The investment in stores

is quite large in BCL, so it is desirable to know the turnover of some important

items in order to avoid keeping the capital locked up in undesirable stock.

20
 OBJECTIVE OF THE TRAINING

1 To get families with the actual working environment in industry.

2 To work under an authority in discipline.

3 To find out the gap between practical knowledge and theoretical knowledge of

ACCOUNT OR FINANCE.

4 To complete the training report.

5 To complete the MFC a two year course.

6. To know the financial position of the industry.

7. To determine the profit of company

21
 CHAPTER 3

RESEARCH METHODOLOGY

22
RESEARCH METHODOLOGY

For carrying out the project all of the information is collected from the annual

report of the company. My own experience & knowledge which I gathered during

my training duration

Questioning:-

Actually no particulars questionnaire was prepared. Question related to problems

and data tallied with CA, FM & accountants of the company.

Analysis:-

Analysis of various types of data, statements are also made during the study by

using standard formulas.

Data is collected in the form of the primary and secondary data

23
 Chapter 4 –

Ratio Analysis
ANALYSIS OF RATIOS:-

A relationship between various accounting figures, which are connected with

each other, expressed in mathematical terms is called ratio.

Definition : according to Kennely and Macmillan, “The relationship of one

item to another expressed in simple mathematical form is known as ratio.”

Every company mainly prepare two statements which are:-

1 The income statement.

2 The balance sheet.

The data which are shown by the co. in both the statements do not show better

insight to various users, unless these data are analyzed, so it is very crucial aspect

to analyze the information and shown in the statements so they can provide the

knowledge of strength & weakness of the firm. In firm many parties are always

interested to know firms financial position. & they came to know all this by

24
analyzing the data & information. In brief financial analysis is the process of

selection relation and evaluation.

Following statement are include in the list of financial statements:--

1 P & L a/c

2 Balance sheet

3 P& L app. a/c

4 Fund flow statement

5 Cash flow statement

6 Various schedules

OBJECTIVE OF ANALYSIS:--

(1) To present a complex data contained in the financial statement in simple and

understandable form.

(2) To make comparison between various groups to draw various conclusion.

(3) To spot out strengths weakness of business.

(4) To depict changes in cash position from one year to another year.

(5) To determine the source from where the working capital was obtained & for

which purpose it will be used.

25
Purpose of analysis of finance:--

(1) To know the earning capacity of profitability.

(2) To know the solvency.

(3) To know the financial strength.

(4) To know the trend of business.

(5) To know the capability of payment of interest and dividend.

ANALYSIS OF STATEMENT RATIOS

Cash flow statements:-

Cash flow statement is a statement which describes the inflows (sources) and

outflow (uses) of cash and cash equivalents in an enterprise during a specific

period of time. A cash flow statement summarizes the causes of changes in cash

position of a business enterprise between dates of two balance sheet.

26
Advantages:--

(1) It is very useful in the evaluation of cash position of a firm.

(2) Cash flow statement helps in planning the repayment of loan and Advantage.

(3) Cash flow statement provides in formations of all activities classified under

operating, investing and financing activates.

(4) It helps in answering some intricate questions like:-

- What happened to the net profit?

- Where did the profit go?

- Why more dividend could not be paid nspide of sufficient available

profit?

Fund flow statements:--

Fund flow statement is a method by which we study changes in the financial

position of a business enterprise between beginning and ending financial statement

dates. It is a statement showing sources and uses of funds for a period of time.

FOULKE defines, A statement of sources and application of funds is a technical

27
device designed to analyse the changes in the financial condition of a business

enterprise between two dates.

IMPORTANCE OF FUND FLOW STATEMENT:-

1) It helps in the formation of a realistic dividend policy.

2) it helps in the analysis of financial operation.

3 ) it helps in the proper allocation of resources.

4) it helps knowing the overall creditworthiness of a firm.

LIMITATION OF FUND FLOW STATEMENTS:-

1)It cannot reveal contionus changes.

2) it is simply arrangement of data given in the financial statement.

3) changes in cash are more relevant for financial management then the working

capital.

28
Cash flows statement for the year ended 30th MAY 2018

(rs. In lacs)

Particulars 30th MAY 2018 30th june 2017

(a) cash flow from operating
Activities
Net profit before tax & 32205 21833.66
extraordinaries items
Add:- dep. 6333.92 4973.67
Less:- gain on sale of fixed (170.04) ----
Assets
Dividend income (566.78) (241.57)
Interest received & (8422.39) (1854.04)
Other income
Preliminary exp. w/o 214.11 216.71
29594.10 24928.43

Increase /decrease in stock (1761.51) (2204.88)

Increase / decrease in other (250.73) (199.45)
Receivable
Increase/decrease in s. drs. (3214.89) (1559.13)
Increase/decrease in loan & (3910.73) (28952.74)
Advance
Increase/decrease in c.liab. (1993.92) 1900.30)

Cash generation by operation 18963.78 6087.47

29
Interest received 8422.39 1854.04
Dividend received 566.78 241.57
Net cash from operating activities 27952.95 (3991.86)
(b) cash flow from investing
Activities
Addition to fixed assets (110953.63) (18085.49)
sale of fixed assets 897.38 -----
purchase of investment 1467.50 (22331.31)
(108588.75) (40416.80)
(c) cash flow from financing
Activities
Proceed from share 17514.74 11100.00
Proceed from new borr- ---- 117955.16
Owing
Repayment of borrowing (36902.48) (4884.87)
Dividend & dividend tax (2840.69) (1702.11)
Net cash from financing activities
(22228.43) 122468.18
Net cash flow during the year
Cash & cash equilent (o/b)
Cash & cash equilent (c/b)
(102864.23) 78059.52
142187.12 64127.60
39322.89 142187.12

30
Working notes:-

(1) Figure in brackets indicates cash outflow and without brackets indicates

cash Inflow.

(2) Int. paid during the year is considered part of operation activities.

Ratio analysis:-

Ratio is defined as the numerical or quantitable relationship between two items

variables. This relationship can be expressed as percentage, fraction or proportion

of numbers. This ratio analysis as a quantative tool enables analysis to draw

quantitative answers to question such as:-

1 can the firm meet its current abligation?

2 Are the assets being used efficiently?

3 Are the net profit adequate?

4 Can the firm meet its current obligation?

Significance of ratio analysis:--

1) helps in financial forecasting and planning.

2) helps in communicating.

3) helps in controlled coordination.

4) helps in decision making.

31
Limitations of ratio analysis:--

1) personal basis.

2) uncomparible.

3) lack of adequate standards.

4) inherent limitation of accounting.

CLASSIFICATION OF RATIO:-

Liquidity ratio solvency ratio activity ratio profitability ratio

(1) current ratio (1) debt equity (1) inventory (1) gross profit

(2) liquid ratio ratio turnover ratio ratio

(2) debt to total (2) drs. Turnover (2) operating

Capital ratio (3) fixed assets ratio

(3) interest coverage turnover ratio (3) net profit

Ratio (4) working capital ratio

(4) capital gearing turnover ratio (4) return on

Ratio (5) capital employed investment

Turnover ratio (5) Return on

equity

(6) EPS

32
 CHAPTER 4

DATA ANALYSIS

AND

INTERPRETATION

33
DATA ANALYSIS AND INTERPRETATION:-

Liquidity ratio:--

Liquidity refers to the ability of a concern to meet its current obligations as the and

when these become due. The short term obligation are met by realising amounts

from current, floating or circulating assets. If current assets can pay off current

liabilities then liquidity position will be satisfactory. On the other hand if current

liab. May not be easily met out of current assets then liquidity position will be bad.

The bankers suppliers and other short term crs. Are interested in the liquidity of

the concern. They will extend credit only if they are sure that current assets are

enough to pay out the obligation. To measure the liquidity of a firm the following

ratio can be calculated.

1) Current ratio

2) Quick ratio

34
1) Current ratio:-- Current assets/current liabilities

(in lacs)

Year Current assets Current liab. Current ratio

2015-16 208767.29 17462.36 11.9

2017-18 114539.46 25887.05 4.42

Quick ratio:--

Quick ratio may be define as the relationship between liquid assets and current

liab. Inventres and prepaid exp. Are not included in quick assets because they can

not be converted in to cash immediately.

Quick ratio = quick assets/quick liabilities.

(in lacs)

Year Quick assets Quick liab. Quick ratio

2015-16 54497.28 25887.08 1:2.1

2017-18 154397.35 17462.36 1:8

35
Solvency ratio:--

The term solvency refers to the of a concern to meet its long term obligation long

term solvency ratio indicate a firm’s ability to meet the fixe interest and cost of

repayment its long term boroweing.

1) Debt equity ratio

Debt equity ratio also known as external -internal ratio. This ratio indicate

relationship between the external equity and internal equity .

Debt equity ratio= out sider fund/share holders funds

(in lacs)

Year Outsider fund Shareholders funds Ratio

2015-16 177108.18 132450.56 1:1.3

2017-18 145023.46 168911.27 1:1.16

Interpretation:-

A high debt equity ratio which indicate that the claim of outsides are greater then

36
the owners. A ratio of 1:1 may be usually concedired to be satisfactory. The debt

equity ratio of the firm is comparatively satisfactory.

2) Interest coverage ratio:--

Interest coverage ratio indicate the number of times is covered by the profit

available to pay the interest charge generally higher the ratio more safe are the long

term crs. Because even if the earning of the firm fall the firm shall be able to meet

its commitment to fix interest charge.

Interest coverage ratio=EBIT /fixed int. charge

(in lacs)

Year EBIT Fixed int. Ratio

charge

2015-16 21833.66 127.48 1:17

2017-18 32205.28 82.35 1:39

37
3) Capital gearing ratio:-

The term capital gearing is used to describe the relationship between equity share

capital including reserve and surplus to preference share capital and other fixed

interest. If the preference share capital and other fixed interest bearing loans

exceed the equity share capital including reserve the firm said to be highly geared.

The firm is said to be in low gear if preference share capital and other fixed

interest bearing loans are less than equity capital and reserve.

Capital gearing ratio= equity share cap. + reserve & surplus / Preference capital

+fixed int.

(in lacs)

Year ESP+R&P PR. C +F.INT RATIO

2015-16 132450.56 13472.36 9.8%

2017-18 168911.27 10202.94 16.5%

38
ACTIVITY RATIO:-

Activity ratio measures the efficiency or effectiveness with the which a firm

manages its resources or assets. These ratio are also called turnover ratios because

they indicate the speed with which assets are converted or turned over into sales.

These ratios ignore the movement of current assets, it is important to calculate the

following turnover or efficiency ratios to comment upon the liquidity or the

efficiency with which the liquidity resources are being used by a firm.

39
1) Inventory turnover ratio:-

Inventory turnover ratio include whether inventer has been efficiently under or no.

the purpose is to see whether only the required minimum funds here been locked

up in inventory. Inventory average ratio indicate the no. of times the stock has been

turnover during the period and evaluate the efficiency and include firms is able to

manage its inventory.

Inventory turnover ratio:- net sales/ average stock.

Year Net sales (lacs) Average stock Ratio

2015-16 89496.32 14009.88 6.38 times

2017-18 119570.57 14890.63 8 times

Interpretation:-

Inventory turnover ratio measures the velocity of conversion of stock into sales.

Usually a high inventory turnover / stock velocity indicates efficient management

of inventory. In the year 2009-10 the ratio is greater then the previous. So its shares

great satisfactory to the company. Its shows the stock does not sale quickly and

40
remain in store for the long time.

2) Debtors turnover ratio:-

Drs. Turnover ratio indicates the velocity of debt collection of firm. In simple

words , it indicates the number of times average drs.

Drs. Turnover ratio:- net credit annual sales/ average drs.

Year Total Debtors(lacs) Ratio

sales(lacs)

2015-16 89496.32 11950.06 7.48

2017-18 119570.57 15165.52 0.78

Interpretation:-

Generally the higher the value of drs. Turnover the more efficient is the

management of drs./ sales or more liquid are the drs. Similarly low drs. Turnover

implies inefficient management of drs. And less liquid debtors.

41
3) Fixed assets turnover ratio:-

Fixed assets turnover ratio:-- sales / fixed assets

Year Sales(in lacs) Fixed assets Ratio

2015-16 89496.32 72284.30 1.23

2017-18 119570.57 176176.66 .67

Interpretation:-

Fixed assets turnover ratio is the relationship between sales or cost of goods sold

and fixed capital. In the year 2008-09 the ratio i. 1.23 shows the share market

efficiency of assets in the year 2009-10 the ratio derived up to .67 show

inefficiency of the fixed assets.

42
4) Working capital turnover ratio:--

Working capital turnover ratio shows the velocity of the utilization of net working

capital.

working.capital ratio. :-- sales /fixed assets

Year Sales (in lacs) Fixed assets Ratio

2015-16 89496.32 191304.93 .46

2017-18 119570.57 88652.41 1.34

Interpretation:-

Working capital ratio show the excess of c.a. in year on the working capital of the

company is not good and improving in the year 2009-10.

43
5) Average collection period:-

The average collection period represent the average no. of days for which a firm

has to wait before its receivable are converted into cash.

Average Collection. Period :- average debtors/ sales per day

Year A.S.(in lacs) Sales per day Ratio

2015-16 11950.63 248.60 90days

2017-18 15165.52 332.14 45 days

Interpretation:-

Generally the shorter the period of average collection period the better is the

quality of debtors. On the year 2008-09 if it is very high in 90 days. it show the

inefficient collection performance. But it improve in the year 2009-10 up to 45

days.

44
PROFITABILITY RATIO:-

In the words of lord Keynes, ‘’profit is the engine that drives the business

enterprise ‘’. Businesses need profit not only for its existence but also for

expansion and diversification. The investors want an adequate return on their

investment .workers want higher wages, crs. Want higher security for their interest

and loan and so on. A business enterprise can discharge its obligations to the

various segments of the socity only through earning of profits. Profits are, thus a

usefull meaeure of overall efficiency of a business. Profits to the management are

the test of efficiency and a measurement of control to owners a measure of worth

of their investement to the cr.the margin of safty .

Generally profitability rarios are calculate either in relation to sales or in relation to

investment the variorus profitability are discussed below:-

45
1) Gross profit ratio:-

G.P. ratio measure the relationship of gross profit to net sales and is usually

represented as a percentage.

Gross Profit. ratio:-- gross profit /net sales(100)

Year Gross.P. lacs) Net sales Ratio

2015-16 26807.01 89496.32 18%

2017-18 38539.20 11957.57 32%

Interpretation:--

The Gross Profit ratio shows the company is increasing year by year. It shows that

change may be the result of decrease in cost of good sold without increasing in

sales revenues as change in the method of valuation of closing stock.

46
2.Net Profit Ratio

Net profit ratio establishes a relationship between net profit (after taxes) and sales

and indicates the efficiency or the management in manufacturing selling

administrative and other activities of the firm. This ratio is the overall measure of

firm’s profitability and is calculated as:--

Net Profit RATIO:- net profit after tax /net sales (100)

Year N.P. after tax (lacs) Net sales Ratio

2015-16 16355.03 89496.32 18%

2017-18 23584.44 119570.57 19%

Interpretation:--

The high net profit margin would assure adequate return to the owners as well as

enable to with stand adverse. Condition when selling price is decline. The ratio is

margin improve in the year 2009 by 1%.

47
3) Earning per shares:-

E.P.S. is a small variation of return on equity capital and is collected by dividing

the net profit after tax & preference dividend by the total no. of equity share

E.P.S. = net profit after tax – pref. dividend/ no. of equity share.

E.P.S.= 2010(18.86) 2009(14.71)

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4) Return on equity :--

Return on Equity. = profit after tax/share holders funds(100)

Year P.A. Tax S.H. fund Ratio

2015-16 16355.03 132450.56 12.3%

2017-18 23584.44 168911.27 14%

Interpretation:--

This ratio is more meaningful to the equity shareholders who are interested to

know profit earned by the company and that profit which can be made available to

pay dividend to them. The ratio to increasing rate at 12.3 to 14% in the year 2009-

10 it indicate that firm good return and satisfactory to share holders.

49
FINDINGS

1. The liquidity position of the firm is not sound as compared to last year.

2. The solvency position of the firm is satisfactory.

3. The company has raised less debt as compared to last year.

4. The stocks are used efficiently.

5. The working capital usage has also improved this year.

6. The debtor management system is inefficient.

7. The fixed Assets are also not utilized.

8. The gross profit is increasing due to decrease in cost of goods sold.

9. The net profits of the company have increased by 1%.

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LIMITATIONS
1. There may be some manipulations in Balance sheet.

2. The ratios derived from interpretation are not sure good or bad indicators of
the company.

3. Circumstances may differ from company to company.

4. Company’s actual position can’t be derived from this analysis.

5. Some non-financial sort of data can also be used to locate company’s weak
points.

51
SUGGESTIONS

1. The company should raise its current assets.

2. The company should look for sources of working capital

3. Cash inflow management system should be fast.

4. Company should increase its own funds by creating reserves.

5. The company should have a proper dividend policy.

52
CONCLUSION:--
1) Company has registered a turnover rupees 119570.57 lacs which shows an

increase by 33.60% from the previous year.

2) Profit after tax increase rs. 21833.66 lacs during the previous to rs. 23584.44

lacs represented an increase of 44.20%.

3) Company declare dividend at the rate of rs. 3 per share .

4) Earning per share of the company is rs. 1886 in 2010 which is greater than

the previous year from rs. 14.71.

5) In the year 2010 company redeem the preference share.

6) Cash position decrease in 2010 from rs. 142187.12 lacs to rs. 39322.89 lacs

which may turns into illiquidity.

7) In the year 2010 company investing rs. 68171.95 lacs incorporation in the

previous year.

53
CHAPTER 5

ANNEXURE

54
 Annexure
Profit & loss a/c for the year ended 30th MAY 2018

( Rs. In lacs)

Particulars Schedule 30th MAY 30th june

2018 2017
Income:--
Sales:- other income 119570.57 89496.32
Expenditure:-
Material manufacturing exp. 9 70958.34 54453.48
Personal exp. 10 5205.15 4188.30
Administration selling exp. 11 2389.08 2021.84
Financial exp. 2478.80 2025.37
Total 81031.37 62688.94
Profit before dep. 38539.20 26807.33
Dep. 6333.92 4973.67
Profit before tax 32205.28 21833.66
Provision for taxation
Current tax 3626.92 1817.76
Deffered tax 4993.92 3660.87
Profit after tax
23584.44 16355.03
Add: accumulated profit
3863.16 38.75
Balance available for app.
27447.60 16393.78
Approprication:--
Transfer to general reserve 10000.00 9600.00
Tra. to sinking fund 300.37 0.00
Tra. to prefer share red.reserve a/c 0.00 130.75
Tra. to equity share 3923.71 2447.62
Tra. to tax for previous year 41.27 0.00
Dividend on preference share 5.62 7.87
Provision for dividend tax 667.87 344.38
Surplus carried to b/s 12508.76 3863.16
Earning per share(eps) 18.86 14.71

55
Balance sheet as on 30th june 2010(rs. In lacs)

Particulars shedule 30th june 30th june

2010 2009
1) sources of funds
(a) share capital 1 2615.81 2578.37
(b) reserves surplus 2 166295.46 129872.19
2) loan funds
(a) secured 3 10202.70 13472.36
(b) unsecured 117151.16 150783.98
Total 296265.13 296706.90
(1) application of funds:-
Fixed assets
Gran block 4 203469.29 93278.59
Less:- dep. 27292.63 20994.29
Net block 176176.66 72284.30
(2) investment 5 31010.35 32477.85
(3) current assets: loan & 6
Advance
a) current assets
interest rec. 8.87 259.60
stock 15771.39 14009.88
debtors 15165.52 11950.63
cash , bank 39322.89 142187.12
b) loan & advance
44270.79 208767.29
less:- current liab. & 7
provision
current liab. 17669.60 12851.84
Provision 8217.45 4610.52
Total current liab. & provision
25887.05 17462.36
net current assets
4) miscellaneous exp. 88652.41 191304.93
total 425.71 639.82
296265.13 296706.90

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