ANALYSES AND DATA INTERPRETATION

MASTER TABLE FOR WORKING CAPITAL:

Particulars

2008-09

2009-10

2010-11

2011-12

Cash

26641162

55642473

138100028

161490169

Raw-Materials

518716903

2590738053

2733309086

3670256062

Work-inprogress

14357756

212436011

593120762

6448792

Finished-Goods

387209501

765102729

1581471825

1093748619

Debtors

43076543

13796139

89900304

83813855

990001865

3637715405

5135902005

5015757497

TOTAL

Statement showing working capital on 2009

1.2E+09
1E+09
800000000
600000000
400000000
Series1

200000000

Net working Cap A-B

Sub total B

PARTICULARS
Current Assets
Inventories
Debtors
Cash & Bank
Loan & Advance
Sub Total A
Current Liabilities
Short-term borrowing
Trade paybles
other current liabi
Short-term provision

INTERPRETATION
The above graph shows that current assets are Inventory, Dr, Cash & Bank and
Loans& advances more than current liabilities which are short-term borrowing, trade paybles,
other current liabilities, short-term provision. It shows that company is growing stage.

Statement showing working capital on 2010

SL NO

PARTICULARS

Current Assets

2010

Inventories
Debtors

13796139

Cash & Bank

55642473

Loan & Advance

261030560

A
II

1725628265

Sub Total A

2056097437

Current Liabilities

Short-term borrowing

1458847725

7098139
Trade paybles
22122852
other current liabi
22602332
Short-term provision

Sub total B

III

Net working Cap A-B

1510671048

545426389

2.5E+09
2E+09
1.5E+09
1E+09
500000000

Series1

INTERPRETATION
The above graph shows that current assets are Inventory, Dr, Cash & Bank and
Loans& advances more than current liabilities which are short-term borrowing, trade paybles,
other current liabilities, short-term provision. But compare to last year 2009 Net working capital
has decreased.

Statement showing working capital on 2011

SL NO

PARTICULARS

Current Assets

2011

Inventories

1240563436

Debtors
Cash & Bank

138100028

Loan & Advance

584403148

A
II

89900304

Sub Total A

2052966916

Current Liabilities

Short-term borrowing

681859399

131836764
Trade paybles
other current liabi

394407197

Short-term provision

Sub total B

III

Net working CapA-B

74344100

1282447460

770519456

2.5E+09
2E+09
1.5E+09
1E+09
500000000

Series1

INTERPRETATION
The above graph shows that current assets are Inventory, Dr, Cash & Bank and
Loans& advances more than current liabilities which are short-term borrowing, trade payable,
other current liabilities, short-term provision. But compare to last year 2010 Net working capital
has increased.

Statement showing working capital on 2012

SL NO

PARTICULARS

Current Assets

2012

Inventories

2006814860

Debtors
Cash & Bank

161490169

Loan & Advance

269447197

A
II

83813855

Sub Total A

2521566081

Current Liabilities

Short-term borrowing

1092805003

Trade payables

1764895986

other current liabilities

Short-term provision

Sub total B

III

Net working CapA-B

648269883
56063551

3562034423

-1040468342

4E+09
3E+09
2E+09
1E+09

Series1

0
-1E+09
-2E+09

INTERPRETATION
The above graph shows that current assets are Inventory, Dr, Cash & Bank and
Loans& advances less than current liabilities which are short-term borrowing, trade payable,
other current liabilities, short-term provision. But compare to last year 2011 Net working capital
has decreased. It indicates that company is not having favorable liquidity position. In fact, in
2012 the net working capital is negative indicating current liabilities are more than current assets,
which is not a good sign of financial performance.

WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES

Table showing net working capital SPSC, ltd.

Sl Particular
No

Current Assets

2009

2010

2011

2012

1103920130

2056097437

2052966916

2521566081

Current
Liabilities

522492786

1510671048

1546246136

3562034423

Working
Capital (A-B)

581427344

545426389

506720780

1040468342

Interpretation: The above table shows there is continuous decline in the working capital of the
company from Rs.58.14 crores in 2009 to Rs.54.54 in 2010, Rs.50.67 in 2011. But, in view of
sudden increase in current liabilities in the year 2012, the working capital is negative, which is
not a good sign of solvency.

Ratio Analysis

1. Inventory turnovers ratio

It indicate the efficiency of the firm in producing the selling its product. The ratio indicates
how fast inventory is sold. A high ratio is good from viewpoint of liquidity and vice versa. A low
ratio would signify that inventory does not sell and stay on the shelf or in warehouse for a long
time.

Inventory Turnover Ratio =

cost of goods sold

Average Inventory

Year

Cost of goods
sold

Average inventory

Ratio

2008-09

1493089610

761074182

1.961818763

2009-10

2590738053

1203421335

2.152810473

2010-11

2733309086

1466128918

1.864303372

2011-12

3670256062

1860063110

1.973188997

GRAPH

Ratio
2.2
2.15
2.1
2.05
2
1.95
1.9
1.85
1.8
1.75
1.7

Ratio

2008-09

2009-10

2010-11

2011-12

Interpretation
The above graph shows that inventory turnover ratio was more in the 2009-10 but
declined in the year 2010-11 and 2011-12 which shows that the company is not managing its
inventory effectively. This is considering higher inventory ratio indicates inventory getting sold
quickly in terms of sales, which is a good sign of financial performance. But, since inventory
turnover ration has been declining company needs to look at how to improve inventory
management.

1) CURRENT RATIO

CURRENT RATIO

Year
Current Assets

Current
Liabilities

Ratio

CURRENT ASSETS
=
-------------------------------CURRENT LIABILITY

2009
1103920130

2010
2056097437

2011
2052966916

2012
2521566081

822492786

1510671048

1546246136

3562034423

1.342163906

1.361049078

1.327710297

0.707900537

GRAPH

Ratio
1.6
1.4
1.2
1
0.8

Ratio

0.6
0.4
0.2
0
1

Interpretation

This ratio indicates the solvency of the company. It shows the proportion of current assets
to current liabilities. Normally, it is expected that current ratio should be 2:1, indicating that
current assets should be twice of current liabilities. As the current ratio is less than the ideal ratio,
the solvency position of company is low. Also, in the year 2012 there has been major change in
current liabilities resulting in a negative working capital which is not a good sign. The company
has to initiate measures to bring down current liabilities or increase current assets to improve
liquidity position of the company.

PROFITABILITY RATIO

GROSS PROFIT RATIO

GROSS PROFIT
GROSS PROFITRATIO = ------------------------ x 100
NET SALES

YEAR

2009

2010

2011

2012

328925029

429627773

525924750

653548927

NET SALES

1836181577

2179434400

3781153852

4052456123

RATIO

17.91353497

19.71281049

13.90910739

16.12723018

GROSS
PROFIT

GRAPH
20
18
16
14
12
10
8
6
4
2
0
2009

2010

2011

2012

Interpretation
This ratio shows the margin left meeting the purchase and manufacturing costs. It measures the
efficiency as well as pricing. High gross profit ratio means a high margin for covering other
expenses like administrative, selling and distribution expenses. In 2010 gross profit ratio is more
which decreased in 2011 and 2012. This indicates there is a marginal decline in profitability of
the company.

NET PROFIT RATIO

NET PROFIT
NET PROFIT = -------------------- X 100
NET SALES

2009

2010

2011

2012

39111451

31214257

33807380

33548927

NET SALES

1836181577

2179434400

3781153852

4052456123

RATIO

2.130042665

1.43221824

0.894102206

0.827866508

YEAR
NET PROFIT

GRAPH
2.5
2
1.5
1
0.5

0
2009

2010

2011

2012

Interpretation

This ratio shows the earning left for share-holders as percentage of net sales.
It measures the overall efficiency of all the functions of business firm like production,
administrative, selling, financing, pricing , tax management etc. Higher the ratio, better it is
because it gives an idea of overall efficiency of the firm. As we see in above graph, the trend in
this ratio is declining. The Net Profit Ratio of the company has declined from 2.13% in 2009 to
0.82% in 2012 which indicates the companys operational performance has declined.

WORKING CAPITAL TURNOVER RATIO

Cost of goods sold

WORKING CAPITAL TURNOVER RATIO= ----------------------------------Net working capital

Year

Cost of goods sold

Net working cap

Ratio

2008-09

1493089610

581427344

2.567972809

2009-10

2590738053

545426389

4.749931623

2010-11

2733309086

770519456

3.547358947

2011-12

3670256062

-1040468342

-3.527503831

Ratio
6
5
4
3
2
1

Ratio

0
-1

2008-09

2009-10

2010-11

2011-12

-2
-3
-4

Interpretation
The above graph shows that working capital turnover ratio of the company was good in
2009-10 as compared to 2008-09. But, there is a marginal decline in the year 2010-11 where the
ratio value is 3.54. However, in view of negative working capital in 2011-12, the ratio has
changed significantly indicating lower financial performance.