A STUDY ON FINANCIAL PERFORMANCE OF

SRI HARIMALAR MILLS, ERODE

PROJECT REPORT

Submitted by

KARISHMAA
S
[730422631019]
in

partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

ERODE SENGUNTHAR ENGINEERING COLLEGE

(AUTONOMOUS)
PERUNDURAI, ERODE

MAY 2024
 ERODE SENGUNTHAR ENGINEERING COLLEGE (AUTONOMOUS)
ANNA UNIVERSITY, CHENNAI

BONAFIDE CERTIFICATE

Certified that this Report titled “A STUDY ON FINANCIAL

PERFORMANCE OF SRI HARIMALAR MILLS, ERODE.” is the bonafide
work of KARISHMAA. S [730422631019] who carried out the work under my
supervision. Certified further that to the best of my knowledge the work reported
herein does not form part of any other thesis, dissertation, or project on the basis of
which a degree or award was conferred on an earlier occasion on this or any other
candidate.

Signature of the HOD Signature of the Supervisor

Dr.A.RAVISANKAR., MBA., Ph.D. Mr.M.NANDHAKUMAR.,MBA.,(Ph.D)
Professor and Head Assistant Professor
Department of Management Studies Department of Management Studies
Erode Sengunthar Engineering College Erode Sengunthar Engineering
(Autonomous), College (Autonomous),
Perundurai, Perundurai,
Erode – 638 057 Erode – 638 057

Submitted for the viva-voce examination held on

INTERNAL EXAMINER EXTERNAL EXAMINER

 ACKNOWLEDGEMENT

I wish to convey my heartfelt thanks to our Founder, UDYOG RATTAN

SIVA THIRU J. SUDHANANDHEN who always blessed us to give the best.

I heartily express my profound gratitude to our respected President and

Correspondent, THIRU. G. KAMALAMURUGAN for providing an excellent state
of facility to undergo my project work.

I heartily express my profound gratitude to our respected Secretary,

THIRU S. N. THANGARAJU, B.E., M.B.A., for providing an excellent state of
facility to undergo my project work.

I would like to express my sincere thanks to our Principal,

Dr. V. VENKATACHALAM., M.E., Ph.D. for warding me and offering an
adequate duration in completing my project work.

I would like to show my sincere thanks and gratitude to

Dr. A. RAVISANKAR., M.B.A., Ph.D. Head of the Department, Department of
Management Studies for the continuous supports of my project study, for his patience,
guidance, encouragement and motivation.

I express my grateful thanks to my supervisor

Mr. M. NANDHAKUMAR., MBA., (Ph.D) Assistant Professor, Department of
Management Studies, for his kind help, encouragement, suggestion and support
throughout the entire project work

In the end, I am anxious to offer my sincere thanks to all our esteemed teaching
faculty and non-teaching staff members and parents, friends.

KARISHMAA. S
 DECLARATION

I affirm that the project title “A STUDY ON FINANCIAL

PERFORMANCE ON SRI HARIMALAR MILLS, ERODE” being submitted
in partial fulfillment for the award of MASTER OF BUSINESS
ADMINISTRATION is the original work carried out by me. It has not formed the
part of any other project work submitted for award of any degree or diploma, either
in this or any other University.

KARISHMAA. S
(730422631019)
(Signature of the Candidate)

I certify that the declaration made above by the candidate is true.

Signature of the Supervisor,

Mr. M.NANDHAKUMAR., MBA., (Ph.D)
Assistant Professor,
Department of Management Studies,
Erode Sengunthar Engineering College, Perundurai,
Erode – 638 057
 TABLE OF CONTENT

CERTIFICATES
ACKNOWLEDEMENT
DECLARATION
ABSTRACT
TABLE OF CONTENT
LIST OF TABLES
LIST OF CHARTS
Chapter Page
Description
No. No.

I INTRODUCTION
1.1 Introduction of Indian textile industry
1.2 Innovation
1.3 Market size
1.4 Future of textile industry
1.5 Profile of the company 1-11
1.6 Organisation chart
1.7 Statement of the problem
1.8 Objectives of the study
1.9 Scope of the study
1.10 Limitations of the study

II REVIEW OF LITERATURE 12-20

III RESEARCH METHODOLOGY

3.1 Research methodology
3.2 Period of the study
3.3 Sources of data 21-23
3.4 Analysis
3.5 Tools used for analysis
3.5.1 Ratio analysis
 3.5.2 Mean
3.5.3 Standard deviation
3.5.4 Co- efficient of variance

IV DATA ANALYSIS AND INTERPRETATION 24-71

SUMMARY OF FINDINGS,
V 72-76
RECOMMENDATION AND CONCLUSION

Bibliography

Appendix
1) Balance Sheet
2) Profit & Loss Account
 LIST OF TABLES

Table Page
Description
No. No.
4.1 Fixed assets ratio 27
4.2 Current ratio 29
4.3 Quick ratio 31
4.4 Equity ratio 34
4.5 Gross profit margin ratio 37
4.6 Net profit ratio 39
4.7 Return on shareholders funds 41
4.8 Return on total assets 43
4.9 Expenses ratio 45
4.10 Operating profit ratio 47
4.11 Return on capital employed 50
4.12 Return on investment 52
4.13 Financial expenses ratio 54
4.14 Total assets turnover ratio 56
4.15 Fixed assets turnover ratio 58
4.16 Working capital turnover ratio 60
4.17 Inventory turnover ratio 62
4.18 Owned capital turnover ratio 64
4.19 Debtors turnover ratio 66

4.20 Raw material turnover ratio 68

 LIST OF CHARTS

Chart Page
Description
No. No.
4.1 Fixed assets ratio 28
4.2 Current ratio 30
4.3 Quick ratio 32
4.4 Equity ratio 35
4.5 Gross profit margin ratio 38
4.6 Net profit ratio 40
4.7 Return on shareholders funds 42
4.8 Return on total assets 44
4.9 Expenses ratio 46
4.10 Operating profit ratio 48
4.11 Return on capital employed 51
4.12 Return on investment 53
4.13 Financial expenses ratio 55
4.14 Total assets turnover ratio 57
4.15 Fixed assets turnover ratio 59
4.16 Working capital turnover ratio 61
4.17 Inventory turnover ratio 63
4.18 Owned capital turnover ratio 65
4.19 Debtors turnover ratio 67
4.20 Raw material turnover ratio 69
 ABSTRACT

Erode district is one of the most industrialised in the state of Tamilnadu. Industry and
Trade occupy a place of prominence in the economy of the district. Industries that flourished
in early days in and around Erode area. Textile industry is the oldest and one of the biggest
industries in the district. It provides large scale employment and is a source of foreign
exchange earner. Textile industry has developed in all the three segments namely mill sector,
handloom and powerloom in this district. In this research work, one of the biggest textile mill
Shri Harimalar Mills has been taken for examining the financial performance for the last 8
years from 2015-16 to 2022-23. Eight years balance sheet and profit and loss account
statements has been collected from the company and evaluate the financial performance
through ratio analysis. For this, solvency ratios, profitability ratios, turnover ratio have been
evaluated. In solvency ratio, 4 ratios have been evaluated, and 9 ratios have been evaluated
for examining the profitability position of the company. In the case of turnover ratio, 7 ratios
have been evaluated. Apart from the ratio, for examining the validation of the ratio, statistical
tools like mean, standard deviation, co-efficient of variation, ‘t’ test have been examined.
Every ratio has been calculated and presented both table structure and line chart method.
Finally, the research has found the findings and drawn a conclusion. This research found two
variables like total assets turnover ratio and debtors turnover ratio are registered increasing
trend during the study period. All the other ratios are having fluctuating trend. Based on the
findings, some of the value recommendations has been framed.

Keywords : Financial Performance, Textile Industry, Ratio Analysis, Liquidity, Profitability,

Solvency.
 CHAPTER I

INTRODUCTION OF THE STUDY

1.1 INTRODUCTION OF INDIAN TEXTILE INDUSTRY

The textile manufacturing industry is a vital sector of the Indian economy, with a
rich history dating back centuries. India has been known for its textiles and is one of the
largest textile producers and exporters in the world. The Indian textile manufacturing
industry is diverse, encompassing a wide range of textiles, including apparel, home
textiles, technical textiles, and traditional handloom textiles.

The Indian textile manufacturing industry is a significant market, contributing to

India’s GDP and employment. It is one of the largest employers in the country,
generating jobs across the entire value chain, from cotton farming and spinning to
weaving, dyeing, printing, and garment manufacturing.

India has several textile manufacturing clusters, concentrated in regions like

Gujarat, Maharashtra, Tamil Nadu, Uttar Pradesh, and West Bengal. These clusters
specialize in different segments of the textile industry, such as cotton textiles, silk
textiles, and handloom textiles, and contribute significantly to India’s textile production
and exports.

India is the world’s second-largest producer of textiles and garments.

It is also the sixth-largest exporter of textiles spanning apparel, home and technical
products. India has a 4% share of the global trade in textiles and apparel.
The textiles and apparel industry contribute 2.3% to the country’s GDP, 13% to industrial
production and 12% to exports.

The textile industry has around 45 million of workers employed in the sector,
including 3.5 million handloom workers. India’s textile and apparel exports (including
handicrafts) stood at US$ 44.4 billion in FY22, a 41% increase YoY.

1
 Total textile exports are expected to reach US$ 65 billion by FY26. The Indian
textile and apparel industry is expected to grow at 10% CAGR from 2019-20 to reach
US$ 190 billion by 2025-26. The Indian apparel market stood at USS 40 billion in 2020
and is expected to reach US$ 135 billion by 2025.

The Rs. 10,683 crore (US$ 1.44 billion) PLI scheme is expected to be a major
boost for the textile manufacturers. The scheme proposes to incentivize MMF (man-made
fibre) apparel, MMF fabrics and 10 segments of technical textiles products.
India’s textiles sector is one of the oldest industries in the Indian economy, dating
back to several centuries. The industry is extremely varied, with hand-spun and hand-
woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated
mills sector at the other end. The fundamental strength of the textile industry in India is
its strong production base of a wide range of fibre/yarns from natural fibres like cotton,
jute, silk and wool, to synthetic / man-made fibres like polyester, viscose, nylon and
acrylic.

The decentralised power looms/ hosiery and knitting sector form the largest
component of the textiles sector. The close linkage of textiles industry to agriculture (for
raw materials such as cotton) and the ancient culture and traditions of the country in
terms of textiles makes it unique in comparison to other industries in the country. India’s
textiles industry has a capacity to produce a wide variety of products suitable for different
market segments, both within India and across the world.

In order to attract private equity and employee more people, the government
introduced various schemes such as the Scheme for Integrated Textile Parks (SITP),
Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and
Apparel (MITRA) Park scheme.

2
1.2 INNOVATIONS IN TEXTILES

Innovation and technology play a crucial role in the textile manufacturing

industry, driving advancements in production processes, materials, product design,
sustainability, and efficiency.

E-textiles or technical textiles are textiles embedded with sensors, electronics, and
other smart components that can sense and respond to external stimuli. Smart textiles
have diverse applications, ranging from sports and fitness wear to medical textiles,
automotive textiles, and military textiles. They are driving innovation in areas such as
wearable technology, smart monitoring, and connected textiles.

Nanotechnology is also being used in textile manufacturing to enhance properties

such as durability, water repellence, UV protection, and antimicrobial properties of
textiles. Nanotechnology-enabled textiles are finding applications in areas such as
outdoor apparel, protective clothing, and medical textiles, offering improved performance
and functionality.

1.3 MARKET SIZE

The Indian textile and apparel industry is expected to grow at 10% CAGR from
2019-20 to reach US$ 190 billion by 2025-26. India has a 4.6% share of the global trade
in textiles and apparel. Moreover, India is the world's 3rd largest exporter of Textiles and
Apparel. India ranks among the top five global exporters in several textile categories,
with exports expected to reach US$ 65 billion by FY 2026. The textiles and apparel
industry contributes 2.3% to the country’s GDP, 13% to industrial production and 12% to
exports. The textile industry in India is predicted to double its contribution to the GDP,
rising from 2.3% to approximately 5% by the end of this decade.

The Manufacturing of Textiles Index for the month of August 2023 is 106.9
which has shown a growth of 1.6 % as compared to August 2022. The Indian Technical
Textile market has a huge potential of a 10% growth rate, increased penetration level of

3
9-10% and is the 5th largest technical textiles market in the world. India’s sportech
industry is estimated around US$ 1.17 million in 2022-23.

The Indian Medical Textiles market for drapes and gowns is around US$ 9.71
million in 2022 and is expected to grow at 15% to reach US$ 22.45 million by 2027. The
Indian composites market is expected to reach an estimated value of US$ 1.9 billion by
2026 with a CAGR of 16.3% from 2021 to 2026 and the Indian consumption of
composite materials will touch 7,68,200 tonnes in 2027.

India is the world’s largest producer of cotton. In the first advances, the
agriculture ministry projected cotton output for 2023-24 at 31.6 million bales. According
to the Cotton Association of India (CAI), the total availability of cotton in the 2023-24
season has been pegged at 34.6 million bales, against 31.1 million bales of domestic
demand, including 28 million bales for mills, 1.5 million for small-scale industries, and
1.6 million bales for non-mills. Cotton production in India is projected to reach 7.2
million tonnes (~43 million bales of 170 kg each) by 2030, driven by increasing demand
from consumers. It is expected to surpass US$ 30 billion by 2027, with an estimated 4.6-
4.9% share globally.

In 2022-23, the production of fibre in India stood at 2.15 million tonnes. While
for yarn, the production stood at 5,185 million kgs during the same period. Natural fibres
are regarded as the backbone of the Indian textile industry, which is expected to grow
from US$ 138 billion to US$ 195 billion by 2025. India’s textile and apparel exports
stood at US$ 20.01 billion in FY24 (April-October). Exports of textiles (RMG of all
textiles, cotton yarns/fabs./made-ups/handloom products, man-made yarns/fabs./made-
ups, handicrafts excl. handmade carpets, carpets and jute mfg. including floor coverings)
stood at US$ 12.47 billion in FY24 (April-November). Exports for 247 technical textile
items stood at Rs. 5,946 crore (US$ 715.48 million) between April-June (2023-24).
India’s textiles industry has around 4.5 crore employed workers including 35.22 lakh
handloom workers across the country.

4
1.4 FUTURE OF THE TEXTILE INDUSTRY

The future of the Indian textiles industry looks promising, buoyed by strong
domestic consumption as well as export demand. India is working on various major
initiatives to boost its technical textile industry. Owing to the pandemic, the demand for
technical textiles in the form of PPE suits and equipment is on the rise. The government
is supporting the sector through funding and machinery sponsoring. Top players in the
sector are achieving sustainability in their products by manufacturing textiles that use
natural recyclable materials.

With consumerism and disposable income on the rise, the retail sector has
experienced a rapid growth in the past decade with the entry of several international
players like Marks & Spencer, Guess and Next into the Indian market. The growth in
textiles will be driven by growing household income, increasing population and
increasing demand by sectors like housing, hospitality, healthcare, etc.

The technical textiles market for automotive textiles is projected to increase to

US$ 3.7 billion by 2027, from US$ 2.4 billion in 2020. Similarly, the industrial textiles
market is likely to increase at an 8% CAGR from US$ 2 billion in 2020 to US$ 3.3
billion in 2027. The overall Indian textiles market is expected to be worth more than US$
209 billion by 2029.

1.5 PROFILE OF THE COMPANY – SRI HARIMALAR MILLS

The “Shri Harimalar Mills” is a private company situated in the Erode District.
We can say that textile industry is very popular industry. From ginning to weaving all
the processors are spread over the district. It is indeed true to say that this area has
played a vital role in meeting the demand of the cloth for the entire country.

The marketing office of Shri Harimalar Mills is situated at Vakkil Sama Iyar
Street, Near Easwarn Kovil, Erode. The total area of the mill is 12 acres. The company
was established by the Managing Director, Mr. K. Thulasi Doss.

5
HISTORY OF THE COMPANY

Shri Harimalar Mills is specially designed to cater to the needs and demands of
some basic export houses.

Further the unit is planning to install the most modern sophisticated indigenous as
well as imported plant and machinery to enhance production facilities not only to cope
with the ever-increasing demand of the export houses in South India but also to cater to
the domestic needs.

Out of the funds of the company, all the expenses which the company may law
fully pay with respect to the formation and registration of the company or issue of its
capital including brokerage and commission for detaining applicants of for taking place
or under writing of shares/debentures or other securities of the company.

The company shall have the power to establish and maintain any trust and
undertaking the purpose whereof may seem desirable either gratuitously or otherwise.

6
 1.6 ORGANISATION CHART

Managing Director

Auditor Manager Dyeing master Printer

Shift
Shift Supervisor
Typists Accountants Time Office Supervisor

Office Assistants Security Assistants Assistants

Workers Workers

Fig. 1.1 – Organization Chart

7
1.7 STATEMENT OF THE PROBLEM

The objective of a business is to provide goods and services which the society
needs at an affordable price. Profit is merely a measure of the textile industry of the
society for the work being done for it. Profits and profitability play the same role in
business as ‘blood’ and ‘pulse’ in the human body. A business needs profits not only for
its existence but also for the expansion and diversification of its activities. Profit and
profitability are the nerve centre of a business and without it, the existence of a firm is
like a body without soul.

The profitability is an important factor which indicates the growth of any

industry. The efficiency of the business is measured by amount of profit earned. The
greater the profit, the more efficient is the business considered to be. The profit of
business may be measured by studying the profitability of investment in it. Profitability is
referred as the operating performance of the concerned investment. Profitability is a
relative term and its relation with other factor by which the profit is affected, it is the test
of efficiency, powerful motivational and the measure of control in any business. Hence
an attempt has been made to study the profitability of selected sector companies by using
vital profitability ratios. The researcher will make necessary attempts to analyze the
importance of profitability position of the study unit. The study meant to give answers to
the following questions.

1. Whether the profitability performance of the concern as satisfactory or achieving

the objectives of the concern?

2. What passion in the utilization of profitability performance of the concern?

8
1.8 OBJECTIVES OF THE STUDY

The following objectives have been framed for the present study.

Primary Objective :

1. To analyze the financial performance of Sri Harimalar Mills, Erode.

Secondary Objective :

1. To analyze the efficiency in utilization of finance of Sri Harimalar Mills, Erode.

2. To analyze the profitability performance through various ratios.

3. To study the profitability ratios trend of the Sri Harimalar Mills, Erode.

4. To suggest better ways and means to improve the profitability performance of the
selected Sri Harimalar Mills, Erode.

9
1.9 SCOPE OF THE STUDY

The present study aims at assessing the liquidity and profitability position of Sri
Harimalar Mills. The study was undertaken for a period of 8 years from 2015-16 to 2022-
23. The study could help the company as well as the investors to understand its financial
efficiency. These studies describe the strength and weakness of the company in financial
aspects and for the further development.

10
1.10 LIMITATIONS OF THE STUDY

The study has the following limitations:

1. The study covers only the period between 2015-16 and 2022-23. It does not
consider the changes, if any, before or after the period.

2. The study is based on secondary data and therefore limitation of secondary data is
applicable.

3. The financial position of a company is affected by several factors like

economical, social, political, etc., but only financial factors is considered here.

4. The liquidity and profitability is not compared with similar firm in the same
industry.

11
 CHAPTER – II

REVIEW OF LITERATURE

Nguyen et al. (2023)1 focused on exploring capital structure that would have an
impact on the Vietnamese company’s profitability. The researchers built a research model
based on quantitative data. The research used panel data methodology to carry out the
analysis as it took into the effect of the time period in many observations. The required
sample data were gathered from the sample size of 300 Vietnamese firms for the period
from 2012 to 2018. This study used qualitative analysis to process the data as it took into
effect three different techniques namely descriptive statistics, correlation analysis and
regression analysis among a variety of analysis methods. The result justified that firm
profitability, represented by Return on Equity (ROE) and Return on Assets (ROA), was
associated with liquidity and debt. Hence, it was indicated that there was existed positive
relationship between liquidity and profitability of Vietnamese entrepreneurs, while there
was a negative relationship between long-term debt and profit maximization. Moreover,
the short-term loan also had a positive impact on the firm’s profitability in Vietnam.

Abid Mehmood et al. (2022)2 tried to measure the relationship between the
financial leverage and liquidity ratio with the profitability of the textile industry. The
nature of this study was quantitative method. The study had utilized secondary data
source for collecting the required information. The sample data was collected from the 75
textile companies listed on the Pakistan stock exchange from 2016 to 2020 by using
convenience sampling method. In analysis of this study, panel data analysis was
performed via E-Views 11 through fixed and random effect models after selection
through different methods to evaluate the relationship between selected variables. The
Panel regression indicated that there was existed a positive significant relationship
between liquidity and return on assets. Thus, working capital requirements and liquidity

1
Nguyen, Soa La, Cuong Duc Pham, Tu Van Truong, Trong Van Phi, Linh Thuy Le, and Trang
Thu Thi Vu. (2023). Relationship between Capital Structure and Firm Profitability: Evidence from
Vietnamese Listed Companies. International Journal of Financial Studies, 11(45), 1-13.
2
Abid Mehmood, Aboubakar Mirza, Muhammad Saad, & Asad Ali, (2022). The Influence of
Liquidity and Leverage on Profitability: An Evidence from Textile Industry of Pakistan. Pakistan
Journal of Humanities and Social Sciences, 10(4), 1415-1423.

12
issues fittingly can get significant yields on applied resources and return on assets. Also,
the asset turnover ratio had a significant relationship with return on equity and leverage
also had a significant relationship with return on equity but the relationship was inverse.

Kokila and Ramprathap (2021)3 explored that the profitability analysis with
reference to network clothing company private limited. This study basically utilized
primary and secondary data sources. The primary data were fresh data mainly collected
through personal interviews, surveys etc. and secondary data were collected from the
annual reports of the company and from the company website. In analysis part of this
study, the ratio analysis (profitability ratios, net profit ratio, return on investment ratio,
equity capital ratio, return on asset ratio, gross profit ratio and return on shareholders
fund ratio), Trend analysis and comparative balance sheet were approached. It was found
that the high net profit margin in 2015-16 the low not profit margin from 2018-19 and
2019-20. Also, the current ratio of the firm showed and increasing trend, later in 2015-16,
2019-20 the current ratio of the firm showed and increasing trend, later in 2017-18 the
current ratio got declined. This study confirmed that Profitability analysis was the vital
part of Financial Management of any business as Network clothing ltd. and the
profitability of this company was adversely affected by the various factors.

Kantharia (2020)4 proposed a study to examine the financial position of

companies and compare with each other. For this analysis, secondary data has been used.
The data collected from the official website of BSE and selected automobile industries.
Different website, magazine, journal, research paper was used for data collection. For
analysis, three years data would be collected i.e. 2016-2018. Financial position analysed
by using different ratios. Liquidity ratio, debt ratio and profitability ratio are used as tools
for present study. From this study position of Maruti Suzuki and Tata Motors is
ascertained. Net profit ratio indicates better financial position. Maruti Suzuki has higher
ratio than Tata motors. Thus, we found that Suzuki sound financial strong than Tata
motors.
3
Kokila, R., & Ramprathap, K. (2021). A Study on Profitability Analysis with reference to
Network Clothing Company Private Limited. International Journal of Creative Research
Thoughts, 9(5), c729-c738.
4
Kantharia, N. J. (2020). Financial Analysis in Context of Profitability of Automobile Companies –
A Comparative Study between Maruti Suzuki and Tata Motors. IJCRT, 8(6), 509–513.

13
 Mohan Kumar, et al., (2016)5 identified in their research that the liquidity,
profitability and financial health were the key indicators of the company to predict the
future. To maintaining the proper liquidity will minimize the risk of insolvency and it
give a direction to maximize profitability through maintaining creditworthiness in the
market. This study was focused on examining liquidity and profitability position of SAIL
using the ratios like CR, QR, ROTA, ROCE, RONW, GPR, NPR, OPR and EPS. The
financial health of the company was examined using Altman’s Z score model. The study
revealed there was a positive correlation between liquidity and profitability ratios except
ROTA and the calculated Z score values indicated company was in healthy zone.

Surekha and Rama Krishnaiah, (2015)6 found in their research that the Tata
Motors was to earn profit for the surviving and growth of the company. The profit was
earned with the help of money invested in the business. It was essential to observe how
much profit had been earned. This was possible by using Profitability ratios. These ratios
were the most important and reliable indicators to measure the financial performance of
Tata Motors. These ratios check the current operating performance of the Tata Motors
and were very helpful for the management to take remedial measures if there was a
declining trend. In this study, analysis revealed the prosperity of Tata Motors from 2010
to 2014. Prosperity can be examined by using profitability ratios, statistical tools and
growth chart.

Rooh Ollah Arab, et al., (2015)7 presented in their research that the financial
performance of identified units in the steel industry in India in terms of financial ratios
such as Liquidity, Solvency, Activity and Profitability position. A group companies listed
in the stock exchanges in India namely, Tata Steel Ltd., Jindal Steel & Power Ltd., J S W
Steel Ltd., Bhushan Steel Ltd. and Steel Authority of India Ltd. were selected for this

5
Mohan Kumar, M.S., Vasu V, & Aswatha Narayana, T (2016). A Study on Financial Health of
Steel Authority of India Ltd. Imperial Journal of Interdisciplinary Research, 2 (2), 151-161.
6
Surekha, B., & Rama Krishnaiah, K. (2015). A study on financial analysis of Tata Motors.
International Journal of Commerce, Business and Management, 4 (4), 1224-1228.
7
Rooh Ollah Arab, Seyed Saadat M asoumi, & Azadeh Barati, (2015). Financial Performance of
the Steel Industry in India: A Critical Analysis. Middle-East Journal of Scientific Research 23 (6),
1085-1092.

14
study. To evaluate the impact of selected variables on the financial performance of
identified units in the steel industry, ANOVA-Test analysis was used.

Jeevan Jayant Nagarkar, (2015)8 evaluated in the research that the business
cycles were not new to the Indian economy. In last ten years India witnessed two major
phases of business cycle. High growth tide lifted all boats and high revenue high profits
were taken for granted. The last four years had been the phase of recession. Banking
industry which was growing at a high growth of +30% now was struggling to achieve
19% growth. This study was an attempt to analyze performance of five major public,
private and foreign sector banks with principle component analysis on the financial
parameters. The weights were assigned on the basis of importance of the parameters on
financials.

Balaji, (2015)9 observed in the research that the finance was considered as life
blood of business enterprise. Finance was one of the basic foundations of all kinds of
economic activities. The success and survival of any organization depended upon how
efficiently it was able to raise funds as and when needed and their proper utilization. The
object of the present study was to analysis the financial performance of NEYCER, India.
The financial analyses helped to understand how management was efficient in procuring
and utilizing the funds. An attempt was made in the present study to analyze whether an
entity was stable, solvent, liquid or profitable enough to be invested in NEYCER INDIA
limited was leading company in sanitary ware. The finding of the study helped the
prospective investors in taking investment decision.

Vijayalakshmia and Srividya, (2014)10 observed in their research that the

Indian Pharmaceutical sector was highly fragmented with more than 20,000 registered
units. It had expended drastically in the last two decades. The pharmaceutical and
chemical industry in India was an extremely fragmented market with severe price

8
Jeevan Jayant Nagarkar, (2015). Analysis of Financial Performance of Banks in India. Annual
Research Journal of Symbiosis Centre for Management Studies, Pune, 3(1), 26-37.
9
Balaji, C., (2015). A Study on Financial Performance Analysis at Neycer India Ltd., Vadalur.
International Journal of Pure and Applied Researches, 1 (1), 111-114.
10
Vijayalakshmia, V. & Srividya, M. (2014). A study on financial performance of pharmaceutical
industry in India. Journal of Management and Science, 4 (3), 36-54.

15
competition and government price control. The Pharmaceutical Industry in India met
around 705 of the country’s demand for bulk drugs, drug intermediates, pharmaceutical
formulation, chemicals, tablets, orals and injectibles. There were approximately 250 large
units and about 8000 small-scale units, which form the core of the Pharmaceutical
Industry in India (including 5 central public sector units) Looking ahead, the worldwide
pharma market was estimated to more than double to $1.3 billion by the year 2020. The
Indian Pharmaceutical Industry was developing drastically every year. Hence an attempt
had been made to analyze the profitability position of the industry with the help of mean,
standard deviation, co-efficient of variation, multiple regression and analysis of variance.
The increase in profitability will not only yield greater efficiency but also improve
financial performance in future.

Siva and Nivetha, (2014)11 identified in their research that the financial
management was applicable to every type of organization. It did not focus on their nature
of the enterprise or size of the enterprise. The financial statement provided the basic data
for financial performance analysis. The need of study about the financial performance
was to identify the trends and relationship between financial statements items both,
internal and external management users [such as analysts creditors and investors].
Financial statement so with that helped they can judge the profitability and financial
soundness of the enterprise. The study covered the period of 2008-2012 for analyzing the
financial statement of balance sheet.

Ayyappan, et al., (2014)12 investigated in their research that the banks in India
was classified into two major categories, nonscheduled banks and scheduled banks.
Scheduled banks included commercial banks and the co-operative banks. The public
sector banks were accountable for more than 78 percent of total banking industry in
India. Even though private sector banks came later into the market, due to their customer
servicing and easy banking features they were also competing equally with already

11
Siva, S. & Nivetha, R. (2014). A Study on Financial Position at Whirlpool of India Ltd.
International Journal of Research in Management & Business Studies, 1 (2), 48-52.
12
Ayyappan, S. Sivaraman, K. Sakthivadivel, M. (2014). A Study on the Financial Performance
Analysis of Selected BSE Listed Private Sector Banks in India. International Journal of
Engineering and Management Research, 4 (2), 248-252.

16
existing public sector banks. So it was very much essential to analyse the financial
parameters of private sector banks to predict their future performance. In this study three
financial variables namely reserves, networth and deposits had been analyzed for three
private sector banks which included ICICI, Axis bank and HDFC bank using linear trend
model and their future growth was also predicted upto the financial year 2018.

Vivek Singla, (2013)13 reported in the research that the efficient management of
finance was very important for the success of an enterprise. Term financial performance
was very dynamic term. The subject matter of financial performance had been changing
very rapidly. In present time greater importance was given to financial performance. So,
here an attempt was made by me to compare the financial performance of the selected
units i.e. Steel Authority of India and TATA STEEL LTD. While analyzing the financial
performance of the selected units, they included the analysis of working capital and
analysis of profitability.

Govindarajan and ThamilSelvan, (2013)14 found in their research that the

finance was the life blood of every organization. Finance act as a fulcrum to activate the
operating and financial efficiency of every company. The efficiency can be judged with
analysis made on financial statement. Financial performance analysis was made on a
known Public sector under taking Neyveli Lignite Corporation Ltd. to assess the
operating and financial efficiency of the corporation. Ratios of solvency, profitability and
activity had been used to assess the performance. In this present study it was proved that
the corporation was sound in its efficiency.

Calota Traian-Ovidiu, (2013)15 examined in the research that the financial

statements of a company was an important means to obtain information about how the
company operated in the previous period. Interpretation of the evolution of financial

13
Vivek Singla, (2013). A comparative study of financial performance of sail and Tata Steel ltd.
International Journal of Review, Survey and Research, ISSN (Online) 2319-4618.
14
Govindarajan, A., & ThamilSelvan, R. (2013). A Study on Financial Performance of A Public
Sector Under Taking with Special Reference to Neyveli Lignite Corporation Ltd. – Neyveli,
Tamilnadu. Indian Journal of Research, 2 (11), 211-213.
15
Calota Traian-Ovidiu, (2013). Case Study on Analysis of Financial Statements at a Furniture
Manufacturer. Journal of Knowledge Management, Economics and Information Technology, III
(5), 1-24.

17
indicators did not always prove to be easy, requiring multiple calculations and combined
approaches, while the knowledge and understanding of type of business reviewed were
essential in the proper interpretation of the results. Thus, the conclusions of the analysis
carried out in a professional manner will be able to correctly describe the evolution of the
company and to substantiate the user’s decisions.

Abdel- Rahman kh. El- Dalabeeh, (2013)16 identified in the research that the
role of the management accountant in evaluating the companies’ performance through
using the financial analysis methods in evaluating the performance of the National
Chlorine Industries Co. Ltd. The analytical approach, which was based on the analysis of
the financial statements for five years except 2003, was adopted in this study and the
Horizontal Analysis, Vertical Analysis and Financial Ratios, which were the most
common between 2003-2008 were applied. The study concluded that having an
administrator accountant to analyze the financial statements of the National Chlorine
industries Co. Ltd. leaded to identify and explain the deviations and the undesired
extreme results. And through training the employees, it was possible to use other methods
to analyze the deviations that helped in evaluating the company through identifying the
causes for these deviations. The researcher recommended establishing an independent
department for the management accounting in the company to evaluate its performance
through analyzing the deviations and treated them and to provide qualified employees;
scientifically and practically to do the work of the company.

Suvita Jha and Xiaofeng Hui, (2012)17 reported in their research that compared
the financial performance of different ownership structured commercial banks in Nepal
based on their financial characteristics and identified the determinants of performance
exposed by the financial ratios, which were based on CAMEL Model. Eighteen
commercial banks for the period 2005 to 2010 were financially analyzed. In addition,
econometric model (multivariate regression analysis) by formulating two regression

16
Abdel- Rahman kh. El- Dalabeeh, (2013). The Role of Financial Analysis Ratio in Evaluating
Performance (Case Study: National Chlorine industry). Interdisciplinary Journal of Contemporary
Research in Business, 55 (2), 13-28.
17
Suvita Jha, & Xiaofeng Hui, (2012). A comparison of financial performance of commercial banks:
A case study of Nepal. African Journal of Business Management, 6 (25), 7601-7611.

18
models was used to estimate the impact of capital adequacy ratio, non-performing loan
ratio, interest expenses to total loan, net interest margin ratio and credit to deposit ratio on
the financial profitability namely return on assets and return on equity of these banks.
The results showed that public sector banks were significantly less efficient than their
counterpart were; however domestic private banks were equally efficient to foreign-
owned (joint venture) banks. Furthermore, the estimation results revealed that return on
assets was significantly influenced by capital adequacy ratio, interest expenses to total
loan and net interest margin, while capital adequacy ratio had considerable effect on
return on equity.

Michael Doumpos, et al., (2012)18 explored in their research that the purpose of
this study was to estimate and explain the performance of nonlife (i.e., property and
casualty) insurers. The analysis consists of two stages. First, they proposed the use of a
multicriteria method to assess the condition of insurers while considering simultaneously
a set of conflicting financial criteria. Then, they used regression analysis to examine the
influence of firm-specific and country-specific attributes on the overall measure of
performance obtained during the first stage. Macroeconomic conditions such as gross
domestic product (GDP) growth, inflation and income inequality were the most robust
predictors of performance. However, other country-specific characteristics that related to
the institutional environment and financial or economic freedom did not appear to matter.

Amalendu Bhunia, et al., (2011)19 reported in their research that the financial
strengths and weaknesses of the Indian public sector pharmaceutical enterprises by
properly establishing relationships between the items of the balance sheet and profit and
loss account. The study covered two public sector drug and pharmaceutical enterprises
listed on BSE. The study had been undertaken for the period of twelve years from 1997-
98 to 2008-09 and the necessary data had been obtained from CMIE database. The
liquidity position was strong in case of both the selected companies thereby reflecting the

18
Michael Doumpos, Chrysovalantis Gaganis, & Fotios Pasiouras, (2012). Estimating and
Explaining the Financial Performance of Property and Casualty Insurers: A Two-Stage Analysis.
The Business and Economics Research Journal, 5 (2), 155-170.
19
Amalendu Bhunia, Sri Somnath Mukhuti, & Sri Gautam Roy, (2011). Financial Performance
Analysis - A Case Study. Current Research Journal of Social Sciences, 3 (3), 269-275.

1
ability of the companies to pay short-term obligations on due dates and they relied more
on external funds in terms of long-term borrowings thereby providing a lower degree of
protection to the creditors. Financial stability of both the selected companies had showed
a downward trend and consequently the financial stability of selected pharmaceutical
companies had been decreasing at an intense rate. The study exclusively depended on the
public sectors published financial data and it did not compare with private sector
pharmaceutical enterprises. This was a major limitation of the research. The study was of
crucial importance to measure the firm’s liquidity, solvency, profitability, stability and
other indicators that the business was conducted in a rational and normal way; ensuring
enough returns to the shareholders to maintain at least its market value. The study will
help investors to identify the nature of Indian pharmaceutical industry and will also help
to take decision regarding investment.

2
 CHAPTER III

RESEARCH METHODOLOGY

3.1 RESEARCH METHODOLOGY

In research, the methodology needs to be cautiously designed to capitulate results

that are as objective as realistic. Good methodology follows the standards of the
established conventions. For the present study, a number of indispensable inimitabilities
of the research methodology skirmishing the application magnitude and research
rationalization of each one are defined.

3.2 PERIOD OF THE STUDY

The study period has been confined to a period of 8 years from 2015-16 to 2022-
23. The accounting year of the company is from 1st April to 31st March.

3.3 SOURCES OF DATA

The present study is based on the published annual reports of selected Sri
Harimalar Mills. Other necessary information is collected from various secondary
sources and data collected from the company and publications, journals and also various
statistical analyzes of economic surveys.

3.4 ANALYSIS

In order to analyze the collected data and financial tools are used to analysis of
common size statement of change financial performance and trend analysis were
employed. Also arithmetic calculations of percentage were used in the appropriate places
to interpret the data.

2
3.5 TOOLS USED FOR ANALYSIS

In this study various statistical accounting tools have been used such as

1. Ratio Analysis
2. Mean
3. Standard Deviation
4. Co- Efficient of Variance (CV)
5. ‘t’ Test
Pictorial representation through graphs has also been made for better and clear
understanding.

3.5.1 RATIO ANALYSIS

Ratio analysis is regarded as one of the best tools in analysis and comparing the
time series accounting date of different firms. That is why it has been extensively used in
the present study. Various ratios computed in order to analysis the profitability portion of
the firms. To make the analysis and interpretation more precise and accurate, the value of
mean, standard Deviation and Co- Efficient of Variance have been computed from the
ratios.

3.5.2 MEAN

It gives a single value to describe the whole data. It has been obtained by adding
value of all observations and dividing it by the number of observations.

FORMULA:

3.5.3 STANDARD DEVIATION

The standard deviation is the most common measure o variability, measuring the
spread of the data set and the relationship of the mean to the rest of the data. If the data
points are close to the mean, indicating that the responses are fairly uniform, then the
standard deviation will be small. Conversely, if many data points are far from the mean,

2
indicating that there is a wide variance in the responses, then the standard deviation will
be large. If all the data values are equal, then the standard deviation will be zero. The
standard deviation is calculated using the following.

FORMULA:

( X  X)2
S N

3.5.4 CO-EFFICIENT OF VARIANCE (CV)

It is used in a problem with requires comparing the variability of two or more than
two series. To Co-efficient of variation is grater is said to be more variable or conversely
less consistent, less uniform less stable or less homogeneous. On the other hand, the
series for which co-efficient of variation is less, is said to be less variable or more
consistent, more uniform more homogeneous.

FORMULA:
CV

Where “SD” is Standard Deviation and X is the Mean Ratio.

Data and Source of Data

The study is mainly based on secondary data collected from Sri Harimalar Mills
for the period of eight years from 2015-16 to 2022-23. The data were obtained from the
annual reports which were published by the Sri Harimalar Mills, Erode. The ratios have
been calculated from profit & loss account and balance sheet of the company. The
additional information’s were obtained from the officials of the Accounts Departments
and other officials of the company.

2
 CHAPTER – IV

DATA ANALYSIS AND INTERPRETATION

4.1 INTRODUCTION

Financial performance is an important aspect which influences the long-term

stability, profitability and liquidity of an organisation. The financial strengths or
weaknesses of a firm may be identified through ‘financial analysis. Financial
performance analysis is done by computing financial trend percentage, financial ratios
and schedule in changes working capital. Hence an attempt has been made in this chapter
to analyse the financial performance of Sri Harimalar Mills with the help of trend
percentage financial ratios, schedule in changes working capital.

Financial Statements

Financial information becomes the basis for financial planning and analysis.
Financial information is needed to predict, compare and evaluate the firm’s earnings
ability. It is also required to aid in economic decision- making, investment and financial
decision making. The financial information of an enterprise is contained in the financial
statements or accounting reports.

Financial statements are prepared primarily for decision – making. They play a
dominant role in setting the framework of managerial decisions. But the information
provided in the financial statements is not an end in itself as no meaningful conclusions
can be drawn from these statements alone. However, the information provided in the
financial statements is of immense use in making decisions through analysis and
interpretation of financial statements.

The term ‘financial statements’ refers to the balance sheet and profit and loss
account or income statement which are prepared by companies at the end of the
accounting period. Thus a financial statement is an organized collection of data according
to logical and consistent accounting procedures.

2
 The term “Balance Sheet” represents a statement of financial position of a
business at a specified moment of time. It represents all assets owned by the business at a
particular moment of time and the claims or equities of the owners and outsiders against
those assets at that time. It is in a way a snapshot of the financial condition of the
business at that time.

The “Income Statement” or the “profit and loss account” presents the summary of
revenues, expenses and net income or net loss of a firm for a period of time. The income
statement or the profit and loss account reflects the earnings capacity and potential of the
firm. The income statement is the “scoreboard” of the firm’s performance during a
particular period of time.

The statement of retained earnings or profit and loss appropriation account shows
the utilization of profits of the company i.e., dividends declared, amount transferred to
general reserve or any other reserve shown in this account.

Meaning and Definition

The term ‘financial analysis’, also known as analysis and interpretation of

financial statements, refers to the process of determining financial strength and weakness
of the firm by establishing strategic relationship between the items of the balance sheet,
profit and loss account and other operative data.

According to Solomon, “Financial Management is concerned with the efficient

use of an important economic resource, namely capital funds”.20

Phillippatus21 has given a more elaborate definition of the term financial

management. According to him “Financial Management is concerned with the
managerial decisions that result in the acquisition and financing of short term and long
term credits for the firm”. As such it deals with the situations that require selection of
specific assets (or combination of assets), the selection of specific problem of size and

20
C.R.T. Varma, 2002. Financial Management, Noida: The Institute of Chartered Accountant of
India.
21
Ib.Id.,

2
growth of an enterprise. The analysis of these decisions is based on the expected inflows
and outflows of funds and their effect on managerial objectives.

Objectives of Financial Statements

Financial statements are the sources of information on the basis of which

conclusions are drawn about the profitability and financial position of a concern. They
are the major means employed by firms to present their financial situation to owners,
creditors and the general public. The primary objective of financial statements is to assist
in decision making. The Accounting Principles Board of America (APB) states the
following as objectives of financial statements.

1. To provide reliable financial information about economic resources and

obligations of a business firm.
2. To provide other needed information about changes in such economic resources
and obligations.
3. To provide reliable information about changes in net resources (resources less
obligations) arising out of business activities.
4. To provide financial information that assists in estimating the earning potentials
of business.
5. To disclose, to the extent possible, other information related to the financial
statements that is relevant to the needs of the users of these statements.

Financial Ratio Analysis

A ratio is the quotient of two mathematical expressions and the relationship

between two or more numbers. In financial analysis, a ratio is used as an index or
yardstick for evaluating the financial position and performance of a firm. The absolute
accounting figures are reported in the financial statements which do not provide a
meaningful understanding of the performance and financial position of a firm. The

2
relationship between the two accounting figures expressed mathematically is known as a
financial ratio.22

It involves comparison for useful interpretation of the financial statements and it

should be compared with some standards. Standards of comparison may consist of ratios
calculated from the evidence of past financial statements of the firm or ratios developed
by using the financial statements of the firm or ratios of some selected firms or atleast
ratios of the industry to which the firm belongs.

Importance of Ratio Analysis

Ratio analysis also makes possible, comparison of the performance of the

different divisions of the firm. The ratios are helpful in deciding about the efficient and
inefficient firms. It helps in planning and forecasting over a period of time. The financial
strength and weaknesses of a firm are communicated in a more easy and understandable
manner by the use of ratios. Ratios are of immense importance in the analysis and
interpretation of financial statements as they bring out the strength or weakness of the
firm, and the decisions made from such analysis. It even helps in co-ordination which is
of utmost importance in effective business management. Finally, it is an essential part of
the budgetary control and standard costing.

Several ratios can be calculated from the accounting data contained in the
financial statements. The ratios can be grouped into various classes according to the
financial activity to be evaluated. Financial ratios can be grouped as i) Solvency Ratios,
ii) Profitability Ratios and iii) Turnover Ratios

A number of ratios can be calculated to evaluate the financial performance of an

undertaking. At the same time a single ratio cannot convey much sense. Hence, in this
chapter an attempt has been made to compute selected ratios in order to analyse the
financial performance of the study unit.

22
Subir Kumar Banerjee, 1999. Financial Management. New Delhi: S. Chand and Company Ltd.
P. 248.

2
Uses of Ratio Analysis

1. Ratio analysis simplifies the comprehension of financial statement.

2. Ratio analysis provides data for inter-firm comparison.
3. Ratio analysis also makes possible comparison of the performance of the different
divisions of the firm.
4. Ratio analysis helps in planning and forecasting.

SOLVENCY RATIOS

 Fixed Assets Ratio

 Current Ratio
 Quick Ratio or Acid Test or Liquid Ratio
 Equity Ratio

FIXED ASSETS RATIO

The ratio establishes the relationship between fixed assets and long-term funds.
The objective of calculating this ratio is to ascertain the proportion of long-term funds.
The ratio is calculated as given below.

Fixed assets
Fixed Assets Ratio = ------------------------
Long-term funds

The ratio should not generally be more than ‘1’. If the ratio is less than one it
indicates that a portion of working capital has been financed by long-term funds. It is
desirable in that part of working capital is core working capital and it is more or less a
fixed item. An ideal fixed assets ratio is 0.67.

Fixed assets ratio of more than ‘1’ implies that fixed assets are purchased with
short-term funds, which is not a prudent policy.

H0 : The growth of the fixed assets ratio is constant for all the years.
H1 : The growth of the fixed assets ratio is not constant for all the years.

2
 TABLE NO. 4.1
FIXED ASSETS RATIO
(In Times)
Fixed Long Term
Year Ratio
Assets Fund
2015-16 57.1 72.2 0.79
2016-17 62.9 98.3 0.64
2017-18 106.2 124.2 0.86
2018-19 172.9 202.5 0.85
2019-20 176.0 240.8 0.73
2020-21 206.5 303.2 0.68
2021-22 198.1 285.6 0.69
2022-23 198.2 246.1 0.81
Mean 0.76
SD 0.08
CV (%) 10.79
‘t’ Value 26.223
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

Table 4.1 indicates that the fixed assets ratio of Sri Harimalar Mills from the
period 2015-16 to 2022-23. This ratio measures the fixed assets or long term fund of a
concern. The ratio of fixed assets to long term fund ranges from 0.64 during 2016-17 to
0.86 during 2017-18 the study period. The average performance of Sri Harimalar Mills.
in terms of utilization of fixed assets ratio is fluctuating trend during the period of
analysis. So, the Sri Harimalar Mills. should be achieving fixed assets. The mean,
standard deviation and co-efficient of variation of the ratio are 0.76, 0.08 and 10.79
respectively. The result of ‘t’ test noticed that the null hypothesis is rejected that
indicates the growth of the fixed assets ratio is not constant. The fixed assets ratio is
pictorially presented in Chart 4.1.

2
 CHART NO. 4.1
FIXED ASSETS RATIO

3
CURRENT RATIO

Current Ratio may be defined as the relationship between current assets and
current liabilities. This ratio is also known as working capital ratio, is a measure of
general liquidity and is most widely used to make the analysis of a short-term financial
position of a concern. The standard norm is 2:1.

Current assets
Current Ratio =
Current Liabilities

Current assets includes cash in hand, cash at bank, marketable securities,

inventories, sundry debtors, etc. current liabilities includes outstanding expenses, sundry
creditors, short-term advances, income-tax payable, dividends payable, interest accrued
but not due on loans and provisions.

H0 : The growth of the current ratio is constant for all the years.
H1 : The growth of the current ratio is not constant for all the years.

TABLE NO. 4.2

CURRENT RATIO
(In Times)
Current Current
Year Ratio
Assets Liabilities
2015-16 39.26 15.4 2.55
2016-17 117.00 93.1 1.26
2017-18 96.91 67.5 1.44
2018-19 89.43 51.9 1.72
2019-20 89.27 65.6 1.36
2020-21 83.97 27.8 3.02
2021-22 75.89 27.8 2.73
2022-23 132.56 125.1 1.06
Mean 1.89
SD 0.76
CV (%) 40.14
‘t’ Value 7.046
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

3
 Table 4.2 indicates that the current ratio of Sri Harimalar Mills. from the period
2015-16 to 2022-23. This ratio measures the current assets and current liabilities of a
concern. The ratio of current assets to current liabilities ranges from 1.06 during 2022-23
to 3.02 during 2020-21 in the study period. The average performance of Sri Harimalar
Mills. in terms of utilization of current ratio is fluctuating trend during the period of
analysis. So, the company should try to achieve better current assets. The mean, standard
deviation and co-efficient of variation of the ratio are 1.89, 0.76 and 40.14 respectively.
The result of ‘t’ test noticed that the null hypothesis is rejected that indicates the growth
of the current ratio is not constant. The current ratio is pictorially presented in Chart 4.2.

CHART NO. 4.2

CURRENT RATIO

3
QUICK RATIO OR ACID TEST OR LIQUID RATIO

Quick ratio may be defined as the relationship between quick or liquid assets and
current or liquid liabilities. An asset is said to be liquid if it can be converted in to cash
within a short period without loss in value. The standard norm is 1:1.

Liquid Assets
Quick / Liquid Ratio = ----------------------
Current Liabilities

Liquid assets include all current assets except inventories and prepaid expense.

H0 : The growth of the quick ratio is constant for all the years.
H1 : The growth of the quick ratio is not constant for all the years.

TABLE NO. 4.3

QUICK RATIO
(In Times)
Quick Current
Year Ratio
Assets Liabilities
2015-16 2.36 15.4 0.153
2016-17 0.49 93.1 0.005
2017-18 2.98 67.5 0.044
2018-19 0.98 51.9 0.019
2019-20 0.12 65.6 0.002
2020-21 0.12 27.8 0.004
2021-22 0.04 27.8 0.001
2022-23 1.71 125.1 0.014
Mean 0.030
SD 0.052
CV (%) 170.37
‘t’ Value 1.660
‘p’ Value 0.141NS
Source: Annual Report of Sri Harimalar Mills.
Note : Not Significant level

3
 Table 4.3 indicates that the quick ratio of Sri Harimalar Mills. from the period
2015-16 to 2022-23. This ratio measures current assets other than stock and prepaid
expenses are considered as quick assets. The ratio of quick assets to current liabilities
ranges from 0.001 during 2021-22 to 0.153 during 2015-16 the study period. The low
performance of quick assets to Sri Harimalar Mills. in terms of utilization of quick ratio is
fluctuating trend during the period of analysis. So, the company should try to achieve
better quick ratio. The mean, standard deviation and co-efficient of variation of the ratio
are 0.030, 0.052 and 170.37 respectively. The result of ‘t’ test noticed that the null
hypothesis is accepted that indicates the growth of the quick ratio is constant. The quick
ratio is pictorially presented in Chart 4.3.

CHART NO. 4.3

QUICK RATIO

3
EQUITY RATIO

The equity ratio is an investment leverage or solvency ratio that measures the
amount of assets that are financed by owners' investments by comparing the total equity
in the company to the total assets.

The equity ratio highlights two important financial concepts of a solvent and
sustainable business. The first component shows how much of the total company assets
are owned outright by the investors. In other words, after all of the liabilities are paid off,
the investors will end up with the remaining assets.

The second component inversely shows how leveraged the company is with debt.
The equity ratio measures how much of a firm's assets were financed by investors. In
other words, this is the investors' stake in the company. This is what they are on the hook
for. The inverse of this calculation shows the amount of assets that were financed by
debt. Companies with higher equity ratios show new investors and creditors that investors
believe in the company and are willing to finance it with their investments.

Total Equity
Equity Assets = -----------------
Total Assets

H0 : The growth of the equity ratio is constant for all the years.
H1 : The growth of the equity ratio is not constant for all the years.

3
 TABLE NO. 4.4
EQUITY RATIO
(In Times)
Total
Year Total Assets Ratio
Equity
2015-16 32.3 101.7 0.32
2016-17 41.4 211.3 0.20
2017-18 50.0 208.1 0.24
2018-19 75.3 274.7 0.27
2019-20 123.4 266.4 0.46
2020-21 131.2 291.0 0.45
2021-22 142.4 274.4 0.52
2022-23 161.5 331.2 0.49
Mean 0.37
SD 0.13
CV (%) 34.04
‘t’ Value 8.309
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

Table 4.4 indicates that the equity ratio of Sri Harimalar Mills. from the period
2015-16 to 2022-23. This ratio measures the ability of a firm to generate profits from its
shareholders investments in the company. The ratio of total equity to total assets is equity
ratio declined from 0.20 during 2016-17 to 0.52 during 2021-22. This refers to how much
Sri Harimalar Mills. has earned out of equity capital. The average performance of Sri
Harimalar Mills. in terms of utilization of equity ratio is fluctuating trend during the
period of analysis. The mean, standard deviation and co-efficient of variation are 0.37,
0.13 and 34.04 respectively. During the past eight years Sri Harimalar Mills. has infused
more capital into the company but due to non-performing assets of the company the
earning capacity of the company has reduced. The result of ‘t’ test noticed that the null
hypothesis is rejected that indicates the growth of the equity ratio is not constant. The
graphical illustration of the equity ratio is given in Chart 4.4.

3
CHART NO. 4.4

EQUITY RATIO

3
PROFITABILITY RATIO

 Gross Profit Ratio

 Net Profit Ratio
 Return on Shareholder’s Funds
 Return on Total Assets
 Expenses Ratio
 Operating Profit Ratio
 Return on Capital Employed
 Return on Investment
 Financial Expenses Ratio

GROSS PROFIT RATIO

Generally excess of net sales over cost of goods sold is termed as gross profit
ratio. It reflects the efficiency with which management produces each unit of product.
This ratio indicates the average spread between cost of goods sold and sales. This ratio is
of vital importance for gauging business results. It reflects pricing policies of a business.
It also helps in ascertaining whether the average percentage of mark up on the goods is
maintained. A low gross profit ratio will suggest a decline in business which may be due
to insufficient sales. Higher cost of production with the existing or reduced selling price
or all round inefficient management. The Finance manager must be able to detect the
causes of falling gross profit ratio and initiate action to improve the situation. A high
gross profit ratio is a sign of good and efficient management.

Gross Profit
Gross Profit ratio =--------------------------- 100
Net Sales

H0 : The growth of the gross profit margin ratio is constant for all the years.
H1 : The growth of the gross profit margin ratio is not constant for all the
years.

3
 TABLE NO. 4.5
GROSS PROFIT MARGIN RATIO
(In Percentage)
Year Gross Profit Net Sales Ratio
2015-16 -4.23 72.2 -5.86
2016-17 12.04 215.5 5.59
2017-18 16.28 216.3 7.53
2018-19 7.67 303.9 2.53
2019-20 9.45 276.5 3.42
2020-21 1.28 197.7 0.65
2021-22 -1.46 246.9 -0.59
2022-23 13.75 452.5 3.04
Mean 2.04
SD 4.09
CV (%) 200.80
‘t’ Value 1.409
‘p’ Value 0.202 NS
Source: Annual Report of Sri Harimalar Mills.
Note : Not Significant level

Table 4.5 indicates that the gross profit margin ratio of Sri Harimalar Mills. from
the period 2015-16 to 2022-23. This ratio measures the difference between sales and
direct costs, explains the relationship between gross profit and net sales. The ratio of
gross profit to net sales ranges from -5.86 during 2015-16 to 7.53 during 2017-18 the
study period. The average performance of Sri Harimalar Mills. in terms of gross profit
margin is fluctuating trend during the period of analysis. So, the Sri Harimalar Mills.
should try to achieve better gross profit margin ratio. The mean, standard deviation and
co-efficient of variation of the ratio are 2.04, 4.09 and 200.80 respectively. The result of
‘t’ test noticed that the null hypothesis is accepted that indicates the growth of the gross
profit margin ratio is constant. The graphical illustration of the gross profit margin ratio is
given in Chart 4.5.

3
 CHART NO. 4.5
GROSS PROFIT MARGIN RATIO

4
NET PROFIT RATIO

Net profit ratio enables one to measure the relationship between sales and net
profit and it is an indicator of the efficiency of the management in manufacturing, selling
and financing. Net profit margin refers to operating profit margin after adding/ deducting
the non operating surplus / deficit. A high net profit margin would ensure adequate return
to the owners as well as enable a firm to withstand adverse economic conditions when the
selling price is declining, cost of production is rising and demand for the product is
falling. In case the net profit margin is inadequate, the company will not be in a position
to pay off its debts and give a satisfactory return to its shareholders’.

Net Profit after Tax

Net Profit Ratio =------------------------------------ 100
Net Sales

H0 : The growth of the net profit ratio is constant for all the years.
H1 : The growth of the net profit ratio is not constant for all the years.

TABLE NO. 4.6

NET PROFIT RATIO
(In Percentage)
Year Net Profit Net Sales Ratio
2015-16 5.09 72.15 7.06
2016-17 9.07 215.53 4.21
2017-18 8.60 216.29 3.97
2018-19 8.30 303.85 2.73
2019-20 8.07 276.54 2.92
2020-21 7.84 197.69 3.97
2021-22 11.17 246.87 4.52
2022-23 19.11 452.50 4.22
Mean 4.20
SD 1.32
CV (%) 31.38
‘t’ Value 9.012
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

4
 Table 4.6 indicates that the net profit ratio of Sri Harimalar Mills. from the period
2015-16 to 2022-23. This ratio measures the management’s efficiency in operating the
business successfully form the owner’s point. The ratio of net profit to net sales ranges
from 2.73 during 2018-19 to 7.06 during 2015-16 in the study period. The average
performance of Sri Harimalar Mills. in terms of net profit ratio is fluctuating trend during
the period of analysis. So, the Sri Harimalar Mills. should try to achieve better net profit.
The mean, standard deviation and co-efficient of variation of the ratio are 4.20, 1.32 and
31.38 percent respectively. The result of ‘t’ test noticed that the null hypothesis is
rejected that indicates the growth of the net profit ratio is not constant. The graphical
illustration of the net profit ratio is given in Chart 4.6

CHART NO. 4.6

NET PROFIT RATIO

4
RETURN ON SHAREHOLDER’S FUNDS

Return on shareholder’s investment popularly known as ROI or return on

shareholder’s / proprietor’s funds. It is the relationship between net profit and
proprietor’s fund.

The basis two components of the ratio are net profits and shareholder’s funds.
Thus net profits arrived at after deducting interest on long term borrowing and income
tax, because those will be the only profits available for shareholders.

Net Profit
Return on shareholder’s Funds =---------------------------------------100
Shareholder’s fund

H0 : The growth of the return on shareholder’s funds ratio is constant for all the
years.
H1 : The growth of the return on shareholder’s funds ratio is not constant for all
the years.
TABLE NO. 4.7
RETURN ON SHAREHOLDERS FUNDS
(In Percentage)
Shareholder
Year Net Profit Ratio
fund
2015-16 5.09 32.33 15.75
2016-17 9.07 41.39 21.90
2017-18 8.60 49.99 17.20
2018-19 8.30 75.29 11.03
2019-20 8.07 123.36 6.54
2020-21 7.84 131.20 5.98
2021-22 11.17 142.37 7.84
2022-23 19.11 161.48 11.83
Mean 12.26
SD 5.64
CV (%) 46.04
‘t’ Value 6.144
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

4
 Table 4.7 indicates that the return on share holders’ fund of Sri Harimalar Mills.
from the period 2015-16 to 2022-23. This ratio measures the net income after payment of
interest and tax and includes net non operating income. The ratio of profit after tax to
share holders fund ranges from 5.98 during 2020-21 to 21.90 during 2016-17 in the study
period. The average performance of Sri Harimalar Mills. is having fluctuating trend
during the period of analysis. The mean, standard deviation and co-efficient of variation
of the ratio are 12.26, 5.64 and 46.04 respectively. The result of ‘t’ test noticed that the
null hypothesis is rejected that indicates the growth of the return on shareholder’s fund
ratio is not constant. The graphical illustration of the return on shareholders’ fund ratio is
given in Chart 4.7.

CHART NO. 4.7

RETURN ON SHAREHOLDERS FUNDS

4
RETURN ON TOTAL ASSETS

Profitability of business enterprises is measured in relation to investment. It is the

prime measure of the overall profitability of an enterprise. Return on investment
measures the overall effectiveness of management in generating profit with its available
assets. This ratio reveals how profitability of the firm’s assets had been utilized. The rate
of return on investment is the end product of the two-fold sequence of the profit margin
path and can be ascertained by the multiplication of the investment turnover with the
percentage of profit margin on sales.

Net Profit after tax + Interest

Return on Total Assets =-----------------------------------------------100
Total assets – Fictious assets

H0 : The growth of the return on total assets is constant for all the years.
H1 : The growth of the return on total assets is not constant for all the years.

TABLE NO. 4.8

RETURN ON TOTAL ASSETS
(In Percentage)
Year Net Profit Total Assets Ratio
2015-16 5.09 101.7 5.01
2016-17 9.07 211.3 4.29
2017-18 8.60 208.1 4.13
2018-19 8.30 274.7 3.02
2019-20 8.07 266.4 3.03
2020-21 7.84 291.0 2.69
2021-22 11.17 274.4 4.07
2022-23 19.11 331.2 5.77
Mean 4.00
SD 1.06
CV (%) 26.46
‘t’ Value 10.689
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

4
 Table 4.8 indicates that the return on total assets ratio of Sri Harimalar Mills. from
the period 2015-16 to 2022-23. This ratio measures the efficiency in the utilization of
assets. The ratio of net profit to total assets ranges from 2.69 during 2020-21 to 5.77
during 2022-23 in the study period. The average performance of Sri Harimalar Mills. in
terms of utilization of assets is fluctuating trend during the period of analysis. So, the Sri
Harimalar Mills. should try to achieve better return on total assets. The mean, standard
deviation and co-efficient of variation of the ratio are 4.00, 1.06 and 26.46 percent
respectively. The result of ‘t’ test noticed that the null hypothesis is rejected that
indicates the growth of the return on total assets ratio is not constant. The graphical
illustration of the return on total asset ratio is given in Chart 4.8.

CHART NO. 4.8

RETURN ON TOTAL ASSETS

4
EXPENSES RATIO

The expenses ratio indicates the efficiency with which business as a whole
functions. It is better for the concern to know how it is able to save or waste over
expenditure in respect of different items of expenses. Therefore each aspect of cost of
sales and operating expenses are analyzed. The formula for some of the expenses is
given below.

Expenses
Expenses Ratio =------------------------- 100
Sales

H0 : The growth of the expenses ratio is constant for all the years.
H1 : The growth of the expenses ratio is not constant for all the years.

TABLE NO. 4.9

EXPENSES RATIO
(In Percentage)
Year Expenses Sales Ratio
2015-16 84.7 72.2 117.43
2016-17 209.7 215.5 97.31
2017-18 207.5 216.3 95.95
2018-19 301.1 303.9 99.10
2019-20 273.3 276.5 98.81
2020-21 203.9 197.7 103.16
2021-22 255.2 246.9 103.37
2022-23 444.5 452.5 98.22
Mean 101.67
SD 6.88
CV (%) 6.77
‘t’ Value 41.769
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

4
 Table 4.9 indicates that the expenses ratio of Sri Harimalar Mills. from the period
2015-16 to 2022-23. This ratio measures each item of cost viz., the ratio of expenses ratio
ranges from 95.95 during 2017-18 to 117.43 during 2015-16 in the study period. The
average performance of Sri Harimalar Mills. in terms of utilization of expenses is
fluctuating trend during the period of analysis. The mean, standard deviation and co-
efficient of variation of the ratio are 101.67, 6.88 and 6.77 percent respectively. The
result of ‘t’ test noticed that the null hypothesis is rejected that indicates the growth of
the expenses ratio is not constant. The graphical illustration of the expenses ratio is given
in Chart 4.9.

CHART NO. 4.9

EXPENSES RATIO

4
OPERATING PROFIT RATIO

The first profitability ration in relation to sales is the operating profit ratio. The
operating profit margin reflects the efficiency with which the management produces each
unit of product; this ration indicates the average spread between the cost of goods sold
and sales. It is one of the most carefully watched measures of profitability. A high
operating profit ration is the sign of managerial effectiveness. Conversely, a low ratio
should be carefully investigated and compared with the ratios of similar corporations to
diagnoses as also to remedy problem. There is no standard norm for operating profit ratio
and it may vary from business to business but the operating profit should be adequate to
provide for fixed charges, interest and dividend.

Operating Profit
Operating Profit ratio =------------------------------- 100
Net Sales

H0 : The growth of the operating profit ratio is constant for all the years.
H1 : The growth of the operating profit ratio is not constant for all the years.

TABLE NO. 4.10

OPERATING PROFIT RATIO
(In Percentage)
Operating
Year Sales Ratio
Profit
2015-16 -21.00 57.1 -36.79
2016-17 -12.28 62.9 -19.51
2017-18 -21.34 106.2 -20.09
2018-19 -42.48 172.9 -24.56
2019-20 -41.95 176.0 -23.83
2020-21 -40.32 206.5 -19.53
2021-22 -40.52 198.1 -20.45
2022-23 -26.06 198.2 -13.15
Mean -22.24
SD 6.81
CV (%) -30.64
‘t’ Value -9.232
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

4
 Table 4.10 indicates that the operating profit ratio of Sri Harimalar Mills. from the
period 2015-16 to 2022-23. The ratio of operating profit is declined from -36.79 during
2015-16 to -13.15 during 2022-23. The mean is -22.24, standard deviation is 6.81 and co-
efficient of variation is -30.64. It shows that the management efficiency of the company
decreasing trend over a period of time. The company should improve the operating profit
since it is the major part contributing the profitability of the company. The result of ‘t’
test noticed that the null hypothesis is rejected that indicates the growth of the operating
profit ratio is not constant. The graphical illustration of the operating profit ratio is given
in Chart 4.10.

CHART NO. 4.10

OPERATING PROFIT RATIO

5
RETURN ON CAPITAL EMPLOYED

The primary objective of making investment in any business is to obtain

satisfactory return on the capital invested. Hence, the return on capital employed is used
as a measure of success of a business in realizing this objective. It is the chief
profitability ration and the most important measure of performance as it indicates the
comparative efficiency with which the whole company runs properly. Therefore, return
on capital employees is a valuable yardstick to measure the overall performance of an
undertaking. The return on capital employed shows the earning power of the capital
invested. It indicates how the management has used the funds supplied by creditors and
owners. The higher the ratio, the more efficient can be considered the enterprise in using
funds entrusted to it. The comparison of this ratio with the ratio of similar business
organization will reveal the relative operating efficiency of a business enterprise. Further,
an investor can judge the future prospects of business enterprise by taking into
consideration the earning capacity of capital employed. It shows the earning capacity of
the capital.

Earnings before Interest and Tax

Return on Capital Employed =
Capital Employed

H0 : The growth of the return on capital employed is constant for all the years.
H1 : The growth of the return on capital employed is not constant for all the
years.

5
 TABLE NO. 4.11
RETURN ON CAPITAL EMPLOYED
(In Percentage)
Capital
Year EBIT Ratio
Employed
2015-16 -0.19 86.3 -0.22
2016-17 0.56 118.2 0.48
2017-18 0.30 140.6 0.21
2018-19 -4.15 222.8 -1.86
2019-20 -7.38 200.8 -3.67
2020-21 -10.59 263.2 -4.02
2021-22 -2.58 246.7 -1.05
2022-23 16.98 206.1 8.24
Mean -0.24
SD 3.82
CV (%) -1608.83
‘t’ Value -0.176
‘p’ Value 0.865 NS
Source: Annual Report of Sri Harimalar Mills.
Note : Not Significant level

Table 4.11 indicates that the return on capital employed ratio of Sri Harimalar
Mills. from the period 2015-16 to 2022-23. The ratio of return on capital employed is
declined from -4.02 during 2020-21 to 8.24 during 2022-23. The mean is
-0.24, standard deviation is 3.82 and co-efficient of variation is -1608.83. It shows that
the management efficiency of the company fluctuating trend over a period of time. The
company should improve the return on capital employed since it is the major part
contributing the profitability of the company. The result of ‘t’ test noticed that the null
hypothesis is accepted that indicates the growth of the return on capital employed is
constant. The graphical illustration of the return on capital employed ratio is given in
Chart 4.11.

5
 CHART NO. 4.11
RETURN ON CAPITAL EMPLOYED

5
RETURN ON INVESTMENT

A performance measure used to evaluate the efficiency of an investment or to

compare the efficiency of a number of different investments. To calculate return on
investment, the benefit (return) of an investment is divided by the cost of the investment;
the result is expressed as a percentage or a ratio. It measures the sufficiency or otherwise
of profit in relation to capital employed. Return on investment is calculated by using the
following formula :

Operating Profit
Return on Investment =------------------------------- 100
Capital Employed

H0 : The growth of the return on investment is constant for all the years.
H1 : The growth of the return on investment is not constant for all the years.

TABLE NO. 4.12

RETURN ON INVESTMENT
(In Percentage)
Operating Capital
Year Ratio
Profit Employed
2015-16 -21.00 86.3 -24.33
2016-17 -12.28 118.2 -10.39
2017-18 -21.34 140.6 -15.18
2018-19 -42.48 222.8 -19.07
2019-20 -41.95 200.8 -20.88
2020-21 -40.32 263.2 -15.32
2021-22 -40.52 246.7 -16.43
2022-23 -26.06 206.1 -12.64
Mean -16.78
SD 4.50
CV (%) -26.82
‘t’ Value -10.545
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

5
 Table 4.12 indicates that the return on investment of Sri Harimalar Mills. from the
period 2015-16 to 2022-23. The ratio of return on investment is from -24.33 during 2015-
16 to -10.39 during 2016-17. This ratio shows that the company spending towards the
operating profit to capital employed fluctuating trend over a period of time. The mean,
standard deviation and co-efficient of variation are -16.78, 4.50 and -26.82 percent
respectively. The result of ‘t’ test noticed that the null hypothesis is rejected that
indicates the growth of the return on investment is not constant. The graphical illustration
of the return on investment is given in Chart 4.12.

CHART NO. 4.12

RETURN ON INVESTMENT

5
FINANCIAL EXPENSES RATIO

Expense ratio (expense to sales ratio) is computed to show the relationship

between an individual expense or group of expenses and sales. It is computed by dividing
a particular expense or group of expenses by net sales.

Financial Expenses
Financial Expenses Ratio =------------------------------------- 100
Net Sales

H0 : The growth of the financial expenses ratio is constant for all the years.
H1 : The growth of the financial expenses ratio is not constant for all the years.

TABLE NO. 4.13

FINANCIAL EXPENSES RATIO
(In Percentage)
Financial
Year Net Sales Ratio
Expenses
2015-16 5.3 57.1 9.25
2016-17 8.5 62.9 13.51
2017-18 10.0 106.2 9.42
2018-19 14.3 172.9 8.30
2019-20 17.4 176.0 9.88
2020-21 20.4 206.5 9.89
2021-22 16.4 198.1 8.27
2022-23 8.5 198.2 4.31
Mean 9.10
SD 2.54
CV (%) 27.89
‘t’ Value 10.140
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

Table 4.13 indicates that the financial expenses ratio of Sri Harimalar Mills. from
the period 2015-16 to 2022-23. The ratio of financial expenses ratio is from 4.31 during
2022-23 to 13.51 during 2016-17. This ratio shows that the company spending towards

5
the financial expenses to net sales fluctuating trend over a period of time. The mean,
standard deviation and co-efficient of variation are 9.10, 2.54 and 27.89 percent
respectively. The result of ‘t’ test noticed that the null hypothesis is rejected that
indicates the growth of the financial expenses ratio is not constant.

The graphical illustration of the financial expenses ratio is given in Chart 4.13.

CHART NO. 4.13

FINANCIAL EXPENSES RATIO

5
TURNOVER RATIO

 Total Assets Turnover Ratio

 Fixed Assets Turnover Ratio
 Working Capital Turnover Ratio
 Inventory Turnover Ratio
 Owned Capital Turnover Ratio
 Debtors Turnover Ratio
 Raw Materials Turnover Ratio

TOTAL ASSETS TURNOVER RATIO

The ratio shows the relationship between total assets and net sales of the concern.
If the ratio is very high it implies that the concern is over trading on fixed assets. If the
ratio is low, it indicates that over investment in assets and non- utilization of total
capacity. The standard norm is 2:1.
Net Sales
Total Assets Turnover Ratio = --------------------
Total assets
H0 : The growth of the total assets turnover ratio is constant for all the years.
H1 : The growth of the total assets turnover ratio is not constant for all the
years.

TABLE NO. 4.14

TOTAL ASSETS TURNOVER RATIO
(In Times)
Year Sales Total Assets Ratio
2015-16 72.15 101.70 0.71
2016-17 215.53 211.29 1.02
2017-18 216.29 208.08 1.04
2018-19 303.85 274.68 1.11
2019-20 276.54 266.44 1.04
2020-21 197.69 290.98 0.68
2021-22 246.87 274.44 0.90
2022-23 452.50 331.24 1.37
Mean 0.98
SD 0.22
CV (%) 22.55

5
 ‘t’ Value 12.542
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

Table 4.14 indicates that the total assets turnover ratio of Sri Harimalar Mills.
from the period 2015-16 to 2022-23. The ratio of total assets to sales ranges from 0.68
during 2020-21 to 1.37 during 2022-23 in the study period. The average performance of
Sri Harimalar Mills. is increasing trend during 2015-16 to 2010-2011 except the years
during the period of analysis. So, the Sri Harimalar Mills. should try to achieve better
total assets turnover ratio. The mean, standard deviation and co-efficient of variation of
the ratio are 0.98, 0.22 and 22.55 respectively. The result of ‘t’ test noticed that the null
hypothesis is rejected that indicates the growth of the total assets turnover ratio is not
constant. The graphical illustration of the total assets turnover ratio is given in Chart 4.14.

CHART NO. 4.14

TOTAL ASSETS TURNOVER RATIO

5
FIXED ASSETS TURNOVER RATIO

The fixed asset turnover ratio indicates the effectiveness with which different
assets are utilized in the company. It is also known as sales to fixed assets ratio. A high
ratio indicates high degree efficiency in assets utilization. A low ratio means under
utilization of fixed assets. The standard norm is 5 times.

Net Sales
Fixed Assets Turnover Ratio = -------------------
Fixed Assets

H0 : The growth of the fixed assets turnover ratio is constant for all the years.
H1 : The growth of the fixed assets turnover ratio is not constant for all the
years.

TABLE NO. 4.15

FIXED ASSETS TURNOVER RATIO
(In Times)
Net Fixed
Year Sales Ratio
Assets
2015-16 72.2 57.1 1.26
2016-17 215.5 62.9 3.42
2017-18 216.3 106.2 2.04
2018-19 303.9 172.9 1.76
2019-20 276.5 176.0 1.57
2020-21 197.7 206.5 0.96
2021-22 246.9 198.1 1.25
2022-23 452.5 198.2 2.28
Mean 1.82
SD 0.78
CV (%) 43.04
‘t’ Value 6.572
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

Table 4.15 indicates that the fixed assets to turnover ratio of Sri Harimalar Mills.
from the period 2015-16 to 2022-23. This ratio measures the efficiency of utilization of

6
fixed assets and profitability of a business concern. The ratio of cost of goods sold to net
fixed asset ranges from 0.96 during 2020-21 and 3.42 during 2016-17 in the study period.
The average performance of Sri Harimalar Mills. in terms of utilization of fixed assets
Profitability is fluctuating trend during the period of analysis. The mean, standard
deviation and co-efficient of variation of the ratio are 1.82, 0.78 and 43.04 percent
respectively. The result of ‘t’ test noticed that the null hypothesis is rejected that indicates
the growth of the fixed assets turnover ratio is not constant. The graphical illustration of
the fixed assets turnover ratio is given in Chart 4.15.

CHART NO. 4.15

FIXED ASSETS TURNOVER RATIO

6
WORKING CAPITAL TURNOVER RATIO

Working capital turnover indicates the velocity of the utilization of net working
capital. In simple words, it indicates the number of times the working capital is turned
over in the course of a year. A higher ratio indicates efficient management of working
capital and lower indicates otherwise.

Cost of goods sold

Working capital turnover ratio = --------------------------
Net working capital

H0 : The growth of the working capital turnover ratio is constant for all the
years.
H1 : The growth of the working capital turnover ratio is not constant for all the
years.
TABLE NO. 4.16
WORKING CAPITAL TURNOVER RATIO
(In Times)
Working
Year Sales Ratio
Capital
2015-16 72.2 23.9 3.02
2016-17 215.5 23.9 9.03
2017-18 216.3 29.4 7.36
2018-19 303.9 37.5 8.10
2019-20 276.5 23.7 11.68
2020-21 197.7 56.2 3.52
2021-22 246.9 48.1 5.13
2022-23 452.5 7.4 60.96
Mean 13.60
SD 19.35
CV (%) 142.30
‘t’ Value 1.988
‘p’ Value 0.087NS
Source: Annual Report of Sri Harimalar Mills.
Note : Not Significant level

6
 Table 4.16 indicates that the working capital turnover ratio of Sri Harimalar Mills.
from the period 2015-16 to 2022-23. This ratio measures the effective utilization of
working capital turnover ratio. It also measures the smooth running of business or
otherwise. The ratio of sales to working capital ranges from 3.02 during 2015-16 to 60.96
during 2022-23 in the study period. The average performance of Sri Harimalar Mills in
terms of working capital turnover ratio is fluctuating trend during the period of analysis.
The mean, standard deviation and co-efficient of variation of the ratio are 13.60, 19.35
and 142.30 percent respectively. The result of ‘t’ test noticed that the null hypothesis is
accepted that indicates the growth of the working capital turnover ratio is constant. The
graphical illustration of the working capital turnover ratio is given in Chart 4.16.

CHART NO. 4.16

WORKING CAPITAL TURNOVER RATIO

6
INVENTORY TURNOVER RATIO

Inventory turnover ratio is known as “stock velocity” is normally calculated as

sales divided by average inventory. Inventory turnover ratio indicates the number of
times the stock, has been turned over during the period and measures the efficiency with
which a firm is able to manage its inventory.

A high inventory turnover ratio indicates the good inventory management. But
lower ratio reveals dull business.

Cost of goods sold

Inventory turnover ratio = -----------------------------------
Average inventory at cost

H0 : The growth of the inventory turnover ratio is constant for all the years.
H1 : The growth of the inventory turnover ratio is not constant for all the years.

TABLE NO. 4.17

INVENTORY TURNOVER RATIO
(In Times)
Cost of
Year Inventories Ratio
Goods sold
2015-16 76.4 8.35 9.15
2016-17 203.5 6.23 32.66
2017-18 200.0 7.52 26.59
2018-19 296.2 4.93 60.05
2019-20 267.1 6.16 43.36
2020-21 196.4 7.53 26.10
2021-22 248.3 6.87 36.15
2022-23 438.8 5.71 76.83
Mean 38.86
SD 21.22
CV (%) 54.61
‘t’ Value 5.179
‘p’ Value 0.001*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

6
 Table 4.17 indicates that the inventory turnover ratio of Sri Harimalar Mills. from
the period 2015-16 to 2022-23. This ratio measures the effective utilization of inventory.
It also measures the smooth running of business or otherwise. The ratio of cost of goods
sold to inventories ranges from 9.15 during 2015-16 to 60.05 during 2018-19 in the study
period. The average performance of Sri Harimalar Mills. in terms of inventory turnover
ratio is fluctuating trend during the period of analysis. The mean, standard deviation and
co-efficient of variation of the ratio are 38.86, 21.22 and 54.61 percent respectively. The
result of ‘t’ test noticed that the null hypothesis is rejected that indicates the growth of the
inventory turnover ratio is not constant. The graphical illustration of the inventory
turnover ratio is given in Chart 4.17.

CHART NO. 4.17

INVENTORY TURNOVER RATIO

6
OWNED CAPITAL TURNOVER RATIO

Managerial efficiency is also calculated by establishing the relationship between

cost of sales or sales with the amount of capital invested in the business. Capital turnover
ratio is one of the owned capital turnover ratio

Cost of Sales
Owned turnover ratio = ---------------------------
Capital Employed

H0 : The growth of the owned capital turnover ratio is constant for all the years.
H1 : The growth of the owned capital turnover ratio is not constant for all the
years.

TABLE NO. 4.18

OWNED CAPITAL TURNOVER RATIO
(In Times)
Shareholders
Year Sales Ratio
Fund
2015-16 57.1 32.3 1.77
2016-17 62.9 41.4 1.52
2017-18 106.2 50.0 2.13
2018-19 172.9 75.3 2.30
2019-20 176.0 123.4 1.43
2020-21 206.5 131.2 1.57
2021-22 198.1 142.4 1.39
2022-23 198.2 161.5 1.23
Mean 1.67
SD 0.37
CV (%) 22.37
‘t’ Value 12.642
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

Table 4.18 indicates that the owned capital turnover ratio of Sri Harimalar Mills.
from the period 2015-16 to 2022-23. This ratio measures the effective utilization of
owned capital turnover ratio. It also measures the smooth running of business or

6
otherwise. The ratio of sales to shareholders fund ranges from 1.23 during 2022-23 to
2.30 during 2018-19 in the study period. The average performance of Sri Harimalar
Mills. in terms of owned capital turnover ratio is fluctuating trend during the period of
analysis. The mean, standard deviation and co-efficient of variation of the ratio are 1.67,
0.37 and 22.37 percent respectively. The result of ‘t’ test noticed that the null hypothesis
is rejected that indicates the growth of the owned capital turnover ratio is not constant.
The graphical illustration of the owned capital turnover ratio is given in Chart 4.18.

CHART NO. 4.18

OWNED CAPITAL TURNOVER RATIO

6
DEBTORS TURNOVER RATIO

The liquidity position of a company to pay its short term obligations in time
depends upon the quality of its trade debtors. Debtor’s turnover ratio indicates the
number of times the average trade debtors are turned over during a year. The higher value
of the debtor’s turnover reveals more efficient management of debtors. Standard time is 6
times.
Average collection period represents the average number of days for which a firm
has to wait before its receivables are converted into cash.

Net credit sales

Debtors turnover ratio = ------------------------------
Average trade debtors

H0 : The growth of the debtors turnover ratio is constant for all the years.
H1 : The growth of the debtors turnover ratio is not constant for all the years.

TABLE NO. 4.19

DEBTORS TURNOVER RATIO
(In Times)
Trade
Year Net Sales Ratio
Debtors
2015-16 57.1 28.0 2.04
2016-17 62.9 109.8 0.57
2017-18 106.2 86.0 1.23
2018-19 172.9 83.2 2.08
2019-20 176.0 80.3 2.19
2020-21 206.5 71.8 2.88
2021-22 198.1 67.7 2.93
2022-23 198.2 121.5 1.63
Mean 1.94
SD 0.79
CV (%) 40.81
‘t’ Value 6.931
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

6
 Table 4.19 indicates that the debtors turnover ratio of Sri Harimalar Mills. from
the period 2015-16 to 2022-23. This ratio measures the number of times the receivables
are rotated in a year in terms of sales. The ratio of total sales to trade debtors ranges from
0.57 during 2016-17 to 2.93 during 2021-22 in the study period. The average
performance of Sri Harimalar Mills. in terms of utilization of debtors turnover ratio is
increasing trend except 2015-16, 2016-17 and 2022-23 during the period of analysis. The
mean, standard deviation and co-efficient of variation of the ratio are 1.94, 0.79 and
40.81 percent respectively. The result of ‘t’ test noticed that the null hypothesis is
rejected that indicates the growth of the debtors turnover ratio is not constant. The
graphical illustration of the debtor’s turnover ratio is given in Chart 4.19.

CHART NO. 4.19

DEBTORS TURNOVER RATIO

6
RAW MATERIALS TURNOVER RATIO

Inventory turnover indicates the efficiency of the firm’s inventory management. It

shows rapidity turning inventories into sales. Generally, a high turnover is good
indicative of inventory management. Simultaneously, a low inventory turnover implies
excessive inventory level that warranted by production and sales activities, or a slow
moving or obsolete inventory. A high level of sluggish inventory amounts to unnecessary
tie-up of funds, impairment of profit and increased cost. On the other hand a very high
inventory turnover may be the result in frequent stock, outs. The inventory will also be
high if the firm replenishes its inventory in too many small lot sizes. The situation of
frequent stock outs and too many small inventory replacements are costly for the firm.
Thus, too high and too low inventory turnover rates are not preferred. This inventory
includes both finished goods and raw materials.

Sales
Raw Material turnover ratio = -----------------------
Raw Material

H0 : The growth of the raw material turnover ratio is constant for all the years.
H1 : The growth of the raw material turnover ratio is not constant for all the
years.

TABLE NO. 4.20

RAW MATERIAL TURNOVER RATIO
(In Times)
Raw
Year Sales Ratio
Material
2015-16 57.1 38.0 1.50
2016-17 62.9 148.1 0.42
2017-18 106.2 137.7 0.77
2018-19 172.9 204.6 0.85
2019-20 176.0 181.5 0.97
2020-21 206.5 113.8 1.81
2021-22 198.1 171.7 1.15
2022-23 198.2 335.1 0.59

7
 Mean 1.01
SD 0.46
CV (%) 46.06
‘t’ Value 6.140
‘p’ Value 0.000*
Source: Annual Report of Sri Harimalar Mills.
Note : * - Sig. at 1% level

Table 4.20 indicates that the raw material turnover ratio of Sri Harimalar Mills.
from the period 2015-16 to 2022-23. The ratio of sales to raw material ranges from 0.42
during 2016-17 and 1.81 during 2020-21 in the study period. The average performance of
Sri Harimalar Mills. in terms of raw material turnover ratio is fluctuating trend during the
period of analysis. The mean, standard deviation and co-efficient of variation of the ratio
are 1.01, 0.46 and 46.06 percent respectively. The result of ‘t’ test noticed that the null
hypothesis is rejected that indicates the growth of the raw material turnover ratio is not
constant. The graphical illustration of the raw material turnover ratio is given in Chart
4.20.
CHART NO. 4.20
RAW MATERIAL TURNOVER RATIO

7
 CHAPTER V

SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION

5.1 FINDINGS

 It is found from the analysis that fixed assets ratio is having fluctuating trend
during the study period. The result of ‘t’ test noticed that the growth of the fixed
assets ratio is not constant.

 From the analysis, it is noted that current ratio is recorded fluctuating trend for the
selected period of study of Sri Harimalar Mills. From the result of ‘t’ test inferred
that the growth of the current ratio is not constant.

 It is surmised from the analysis that the quick assets ratio is having fluctuating
trend during the study period. The result of ‘t’ test proved that the growth of the
quick ratio is constant.

 It is examined from the analysis that the equity ratio is having fluctuating trend
during the study period. The result of ‘t’ test observed that the growth of the
equity ratio is not constant.

 From the analysis, it is observed that gross profit margin ratio is having
fluctuating trend during the period of analysis. It is noted from the ‘t’ test that the
growth of the gross profit margin ratio is constant.

 It is divulged from the analysis that net profit ratio is having fluctuating trend
during the period. The result of ‘t’ test confirmed that the growth of the net profit
ratio is not constant.

 It is obtained from the analysis that return on shareholders’ fund is having

fluctuating trend during the period. It is determined from the ‘t’ test that the
growth of the return on shareholder’s fund ratio is not constant.

7
 It is found from the analysis that return on total assets is having fluctuating trend
during the period. It is surmised from the ‘t’ test that the growth of the return on
total assets ratio is not constant.

 From the analysis, it is obtained that expenses ratio is having fluctuating trend
during the period of analysis. From the result of ‘t’ test noticed that the growth of
the expenses ratio is not constant.

 It is evaluated from the analysis that operating profit ratio is having decreasing
trend over a period of time. The result of ‘t’ test found that the growth of the
operating profit ratio is not constant.

 It is surmised from the analysis that return on capital employed ratio is having
fluctuating trend over a period of time. It is divulged from the ‘t’ test that the
growth of the return on capital employed is constant.

 It is determined from the analysis that return on investment is having fluctuating

trend during the study period. It is noted from the ‘t’ test that the growth of the
return on investment is not constant.

 It is obtained from the analysis that expenses ratio is having fluctuating trend over
a period of time. The result of ‘t’ test stated that the growth of the financial
expenses ratio is not constant.

 It is discussed from the analysis that total assets turnover ratio is increasing trend
during the period of analysis. It is examined from the ‘t’ test that the growth of the
total assets turnover ratio is not constant.

 From the analysis, it is found that fixed assets turnover ratio is having fluctuating
trend during the period of analysis. It is discussed from the ‘t’ test that the growth
of the fixed assets turnover ratio is not constant.

 It is stated from the analysis that the ratio of working capital turnover is having
fluctuating trend during the period of analysis. It is divulged from the ‘t’ test that
the growth of the working capital turnover ratio is constant.

7
 It is discussed from the analysis that inventory turnover ratio is having fluctuating
trend during the period of analysis. It is evaluated from the ‘t’ test that the growth
of the inventory turnover ratio is not constant.

 It is observed from the analysis that owned capital turnover ratio is having
fluctuating trend during the period of analysis. The result of ‘t’ test noted that the
growth of the owned capital turnover ratio is not constant.

 From the analysis, it is stated from the analysis that debtor turnover ratio is having
increasing trend except 2015-16, 2016-17 and 2022-23 during the period of
analysis. It is surmised from the ‘t’ test that the growth of the debtors turnover
ratio is not constant.

 It is stated from the analysis that raw material turnover ratio is having fluctuating
trend during the period of analysis. The result of ‘t’ test noticed that the growth of
the raw material turnover ratio is not constant.

7
5.2 RECOMMENDATION

1. During the past eight years Sri Harimalar Mills has infused more capital into the
company but due to non-performing assets of the company the earning capacity of
the company has reduced. So, it is recommended to the company should maintain
the non-performing assets for long term financial health.

2. Due to fluctuating trend registered in the operating profit ratio, the company
should improve the operating profit since it is the major part contributing the
profitability of the company.

3. Equity share capital of the organization has to be improved which would pave the
way for reducing outsiders fund and thereby decreasing the service for the debt.

4. Increasing the owner’s equity will give rise to increase in contribution of the net
worth to fixed assets.

5. Fixed assets utilisation can be still improved to make use of available raw
materials to increase the turnover as there is good demand for the product.

6. Maintenance of minimum cash balance can be reduced and thereby utilize the idle
cash balances and bank balances for the business operation.

7. Minimum stock of finished goods can be maintained as they were having

sufficient raw materials.

8. To avoid blocking of capital, debtors collection period has to be minimized

through which the amount realized shall be utilized for repayment of acceptances
and sundry creditors.

7
5.3 CONCLUSION

This research is mainly focused on examining the financial performance of the Sri
Harimalar Mills, Erode. For this, various ratio analysis has done with appropriate
statistical tools. The ubiquitous need of the cotton is necessary in textile industry. From
the research, the researcher found the financial status through various ratio analysis like
solvency, activity and profitability. Based on the findings, the researcher recommended
some valuable suggestions to increase the financial status in the forthcoming years.

Management of the financial aspect of the organization is in good position. The

management has to concentrate on increasing the owners’ equity, stock of finished
goods, and speedy collection of debt. Ways have to be found out to reduce the
production cost and efforts have to be made to enhance the storage facilities to avoid
unforeseen natural calamities. These steps will be helpful in improving the financial
position of the company Sri Harimalar Mills, Erode.

7
 BIBLIOGRAPHY

Books

Balu.V. (2001). Financial Management. Chennai: Sri Venkateswara Publishers.

Kishore.M Ravi. (2000). Financial Management Problem and Solutions. New Delhi:
Taxman Allied Services (P) Ltd.

Khan. M.Y. and Jain. P.K. (2002). Financial Management. New Delhi: Tata MCGraw-
Hill.

Pandey. I.M. (2002). Financial Management. New Delhi: Vikas Publishing House.

Khan and Jain, (1999). Financial Management Text and Problem. New Delhi: Tata
McGraw Hill Publishing Company Ltd.

Maheswari, S.N. (2004). Financial Management, 19th Edition, New Delhi: Sultan Chand
& Sons.

Maheswari, S.N. (2003). Fundamental of Financial Management, 2nd Edition, New

Delhi: Sultan Chand & Sons.

Kulkarni, P.V. and B.G. Satyaprasad, (2004). Financial Management, Mumbai:

Himalaya Publishing House, 12th Edition, p.4.

Shashi K Guptha, R.K.Sharma, (2000). Financial Management Theory and Practice,

New Delhi: Kalyani Publishers.

Prasanna Chandra, (2006). Financial Management Theory and Practice, NewDelhi: Tata
McGraw-Hill Publishing company Limited.
Journals

Abdel- Rahman kh. El- Dalabeeh, (2013). The Role of Financial Analysis Ratio in Evaluating Performance
(Case Study: National Chlorine industry). Interdisciplinary Journal of Contemporary Research in
Business, 55 (2), 13-28.

Abid Mehmood, Aboubakar Mirza, Muhammad Saad, & Asad Ali, (2022). The Influence of Liquidity and
Leverage on Profitability: An Evidence from Textile Industry of Pakistan. Pakistan Journal of
Humanities and Social Sciences, 10(4), 1415-1423.

Amalendu Bhunia, Sri Somnath Mukhuti, & Sri Gautam Roy, (2011). Financial Performance Analysis - A
Case Study. Current Research Journal of Social Sciences, 3 (3), 269-275.

Ayyappan, S. Sivaraman, K. Sakthivadivel, M. (2014). A Study on the Financial Performance Analysis of

Selected BSE Listed Private Sector Banks in India. International Journal of Engineering and
Management Research, 4 (2), 248-252.

Balaji, C., (2015). A Study on Financial Performance Analysis at Neycer India Ltd., Vadalur. International
Journal of Pure and Applied Researches, 1 (1), 111-114.

Calota Traian-Ovidiu, (2013). Case Study on Analysis of Financial Statements at a Furniture Manufacturer.
Journal of Knowledge Management, Economics and Information Technology, III (5), 1-24.

Govindarajan, A., & ThamilSelvan, R. (2013). A Study on Financial Performance of A Public Sector Under
Taking with Special Reference to Neyveli Lignite Corporation Ltd. – Neyveli, Tamilnadu. Indian
Journal of Research, 2 (11), 211-213.

Jeevan Jayant Nagarkar, (2015). Analysis of Financial Performance of Banks in India. Annual Research
Journal of Symbiosis Centre for Management Studies, Pune, 3(1), 26-37.

Kantharia, N. J. (2020). Financial Analysis in Context of Profitability of Automobile Companies – A

Comparative Study between Maruti Suzuki and Tata Motors. IJCRT, 8(6), 509–513.

Kokila, R., & Ramprathap, K. (2021). A Study on Profitability Analysis with reference to Network
Clothing Company Private Limited. International Journal of Creative Research Thoughts, 9(5),
c729-c738.

Michael Doumpos, Chrysovalantis Gaganis, & Fotios Pasiouras, (2012). Estimating and Explaining the
Financial Performance of Property and Casualty Insurers: A Two-Stage Analysis. The Business
and Economics Research Journal, 5 (2), 155-170.
Mohan Kumar, M.S., Vasu V, & Aswatha Narayana, T (2016). A Study on Financial Health of Steel
Authority of India Ltd. Imperial Journal of Interdisciplinary Research, 2 (2), 151-161.

Nguyen, Soa La, Cuong Duc Pham, Tu Van Truong, Trong Van Phi, Linh Thuy Le, and Trang Thu Thi Vu.
(2023). Relationship between Capital Structure and Firm Profitability: Evidence from Vietnamese
Listed Companies. International Journal of Financial Studies, 11(45), 1-13.

Rooh Ollah Arab, Seyed Saadat M asoumi, & Azadeh Barati, (2015). Financial Performance of the Steel
Industry in India: A Critical Analysis. Middle-East Journal of Scientific Research 23 (6), 1085-
1092.

Siva, S. & Nivetha, R. (2014). A Study on Financial Position at Whirlpool of India Ltd. International
Journal of Research in Management & Business Studies, 1 (2), 48-52.

Subir Kumar Banerjee, 1999. Financial Management. New Delhi: S. Chand and Company Ltd. P. 248.

Surekha, B., & Rama Krishnaiah, K. (2015). A study on financial analysis of Tata Motors. International
Journal of Commerce, Business and Management, 4 (4), 1224-1228.

Suvita Jha, & Xiaofeng Hui, (2012). A comparison of financial performance of commercial banks: A case
study of Nepal. African Journal of Business Management, 6 (25), 7601-7611.

Varma, C.R.T. (2002). Financial Management, Noida: The Institute of Chartered Accountant of India.

Vijayalakshmia, V. & Srividya, M. (2014). A study on financial performance of pharmaceutical industry in

India. Journal of Management and Science, 4 (3), 36-54.

Vivek Singla, (2013). A comparative study of financial performance of sail and Tata Steel ltd. International
Journal of Review, Survey and Research, ISSN (Online) 2319-4618.
Websites

 http://ivi.sagepub.com/content/14/2/148.abstract

 http://www.alpma.com.au/Learning-And-Development/Improve-Firm-
Profitability/financial-information-analysis-and-reporting

 https://competency.aicpa.org/media_resources/208022-financial-performance-
analysis-and-measurement

 https://ebstudies.wordpress.com/2012/11/06/financial-performance-analysis/

 https://www.emerald.com/insight/content/doi/10.1108/RJTA-06-2021-
0083/full/html

 www.investopedia.com/terms/f/financialperformance.asp
 APPENDIX
BALANCE SHEET OF SRI HARIMALAR MILLS
(Rs. in Lakhs)
Particulars 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Sources of Funds
A Share Capital
Authorised Share Capital 23.00 23.00 23.00 40.00 40.00 40.00 40.00 40.00
Issued, Subscribed, called up & paid up Capital 23.00 23.00 23.00 40.00 43.36 51.20 62.37 81.48
B Reserve & Surplus 9.33 18.39 26.99 35.29 83.36 91.20 102.37 121.48
C Loan Funds 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
a) Secured Loans 39.92 56.86 74.17 127.21 117.49 172.02 143.28 84.63
b) Unsecured Loans 14.07 19.90 16.40 20.27 0.00 0.00 0.00 0.00
Application of Funds 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Gross Block 70.93 57.08 62.94 106.23 172.92 176.05 206.47 0.00
Add: Additions 0.50 9.56 48.68 72.13 12.36 44.39 7.91 0.00
Less : Depreciation 3.53 3.70 5.39 5.44 9.22 10.37 9.68 0.00
Less : Additions 10.82 0.00 0.00 0.00 0.00 3.59 6.58 0.00
Net Block 57.08 62.94 106.23 172.92 176.05 206.47 198.11 198.24
d) Non Current Investment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
c) Long term loans and advances 5.36 31.35 4.94 12.33 0.95 0.45 0.45 0.45
d) Other Non current assets- Pre operative expenses 0.00 0.00 0.00 0.00 0.18 0.09 0.00 0.00
E Current Assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
a) Inventories 8.35 6.23 7.52 4.93 6.16 7.53 6.87 5.71
b) Sundry Debtors (Trade Receivables) 28.01 109.83 86.05 83.25 80.34 71.76 67.69 121.49
c) Cash and Bank Balances 2.36 0.49 2.98 0.98 0.12 0.12 0.04 1.71
d) Other Current Assets 0.54 0.45 0.36 0.27 2.66 4.57 1.29 3.65
CA 39.26 117.00 96.91 89.43 89.27 83.97 75.89 132.56
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Less : Current Liabilities and Provisions 15.38 93.14 67.52 51.91 65.60 27.76 27.76 125.14
Total Assets 101.70 211.29 208.08 274.68 266.44 290.98 274.44 331.24
 PROFIT & LOSS OF SRI HARIMALAR MILLS
(Rs. in Lakhs)
Particulars 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
A Income
Sales 72.15 215.53 216.29 303.85 276.54 197.69 246.87 452.50
Other Income 17.66 3.26 1.56 7.45 6.72 16.08 22.13 17.18
Total (A) 89.81 218.79 217.85 311.31 283.26 213.77 269.00 469.68
B Expenditure
Material Consumed 38.00 148.15 137.73 204.58 181.49 113.82 171.70 335.10
Manufacturing Expenses 21.06 24.96 16.70 26.51 13.67 17.63 18.29 0.00
Administration Expenses 16.77 24.32 37.61 50.15 51.39 41.59 39.06 39.81
Financial Charges 5.28 8.51 10.01 14.35 17.39 20.43 16.38 8.54
Depreciation 3.53 3.70 5.39 5.44 9.22 10.37 9.68 10.07
Preliminary Expe. Written Off 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.00
Other Expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 50.94
Total Exp 84.72 209.72 207.54 301.11 273.25 203.94 255.20 444.46
Net Profit / (Loss) for the year (A-B) 5.09 9.07 10.31 10.19 10.01 9.83 13.80 25.52
Add/ (Less) Earlier year Income / (Expenses) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Profit Before Tax 5.09 9.07 10.31 10.19 10.01 9.83 13.80 25.52
Less/ (Add) : Provision for Taxation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Last Year Income Tax & FBT Paid 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Current Tax & FBT 0.00 0.00 1.72 1.89 1.94 1.99 2.63 6.41
Add : Loss as Per Last Balance Sheet 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Balance of Profit C/O to Balance Sheet 5.09 9.07 8.60 8.30 8.07 7.84 11.17 19.11