MODULE

INTRODUCTORY ACCOUNTING
MODULE LEADER
MRS. MEGHNA DANGI
END TERM REPORT
TOPIC: RATIO ANALYSIS

By: Masumi Shah

Chaitanya Shah
Meet Rampuria
Anjana Chandak
Shreya Mandhana
Aditya Kabra

Titan Times Product Limited (TTPL)

SECTOR OVERVIEW
Lifestyle and retail sector
The Lifestyle and Retail Sector of Indian Economy is going through the phase of
tremendous transformation. The retail sector of Indian economy is categorized into
two segments such as organized retail sector and unorganized retail sector with the
latter holding the larger share of the retail market. At present the organized retail
sector is catching up very fast. The impact of the alterations in the format of the
retail sector changed the lifestyle of the Indian consumers drastically. The evident
increase in consumerist activity is colossal which has already chipped out a money
making recess for the retail sector of Indian economy.
With the onset of a globalized economy in India, the Indian consumer's psyche has
been changed. People have become aware of the value of money. Nowadays the
Indian consumers are well versed with the concepts about quality of products and
services. These demands are the visible impacts of the Retail Sector of Indian
Economy.
Since the liberalization policy of 1990, the Indian economy, and its consumers are
getting whiff of the latest national & international products, the with help of print
and electronic media. The social changes with the rapid economic growth due to
trained personnels, fast modernization, enhanced availableness of retail space is the
positive effects of liberalization.
The infrastructure of the retail sector will evolve radically. The emergence of
shopping malls are going steady in the metros and there are further plans of
expansion which would lead to 150 new ones coming up by the year 2008. As the
count of super markets is going up much faster than rate of growth in retail sector, it
is taking the lions share in food trade. The non-food sector, segments comprising
apparel, accessories, fashion, lifestyle felt the significant change with the emergence
of new stores formats like convenience stores, mini marts, mini supermarkets, large
supermarkets, and hyper marts. Even food retailing has became an important retail
business in the national arena, with large format retail stores, establishing stores all
over India. With the entry of packaged foods like MTR, ITC Ashirbad, fast foods
chains like McDonald's, KFC, beverage parlors like Nescafe, Tata Tea, Caf Coffee
and Barista, the Indian food habits has been altered. This stores have earned the
reputation of being 'super saver locations'.
With the arrival of the Transnational Companies(TNC), the Indian retail sector will

confront the following round of alterations. At present the Foreign Direct

Investments(FDI) is not encouraged in the Indian organized retail sector but once
the TNC'S get in they would try to muscle out their Indian counterparts. This would
be challenging to the retail sector in India.
The future trends of the retail sector of Indian economy:
The retail sector of Indian economy will grow up to 10% of total retailing by
the year 2010.
No one single format can be assumed as there is a huge difference in cultures
regionally.
The most encouraging format now would be the hypermarts
The hypermart format would be further encouraged with the entry of TNCs.
With the onset of a globalized economy in India, the Indian consumer's psyche has
been changed. People have become aware of the value of money. Nowadays
the Indian consumers are well versed with the concepts about quality of products &
services. These demands are the visible impacts of the Indian organized retail
sector.
Since the liberalization policy of 1990, the Indian economy, and its consumers are
getting whiff of the latest national & international products, the with help of print &
electronic media. The social changes with the rapid economic growth due to trained
personnels, fast modernization, enhanced availableness of retail space is the positive
effects
of liberalization.
The growth factors of organized retail in India are: Increase in per capita income which in turn increases the household
consumption
Demographical changes and improvements in the standard of living
Change in patterns of consumption and availability of low-cost consumer
credit
Improvements in infrastructure and enhanced availability of retail space
Entry to various sources of financing
The non-food sector, segments comprising apparel, accessories, fashion, lifestyle
felt the significant change with the emergence of new stores formats like
convenience stores, mini marts, mini supermarkets, large supermarkets, and hyper
marts. Even food retailing has became an important retail business in the national
arena, with large format retail stores, establishing stores all over India. With the
entry of packaged foods like MTR, ITC Ashirbad, fast foods chains like
McDonald's, KFC, beverage parlors like Nescafe, Tata Tea, Caf Coffee and Barista,
the Indian food habits has been altered. This stores have earned the reputation of
being
'super
saver
locations'.
India will be an unique business arena in whole of the global economy, for the
social and economic parameters would overrule the big bang of the vivid

competition. Previously mastered by the unorganized retail sector, India opened up

late as an economy in 1990 until then the idea of retail formats were spread by the
government.

Introduction:
TitanTimeProductsLimitedoffersawiderangeofelectronicsmanufacturing
servicestocompaniesintheMedical,Automotive,IndustrialControls,
InstrumentationandAerospaceIndustries.WeareafullyownedsubsidiaryofTitan
CompanyLimitedaTATAEnterpriseandaleadingWatchandJewellerybrandin
India.Wemanufacturehighqualitycircuitassembliestoleadingcompaniesin
EuropeandUSAfromourstateoftheartfacilityinGoa.Ourqualitysystemsare
accreditedtoISO/TS16949since2003.TitanTimeProducts(a100%subsidiaryof
TitanCompany)specialisesinmanufactureofelectronicboardassembliesfor
industriessuchasautomotive,industrialelectronics,telecommunication,consumer
goods,medical,anddefence.
Thestateofartmanufacturingfacility,locatedatVerna,Goa,supports150people
andboastsofacleanroomfacilitymatchingaclass10000.
TitanTimeProducts,capabilitiesincludeSurfaceMountTechnologyforfinepitch
assemblies,BallGridArrayplacements,ChiponboardAssemblies/Wirebonding,
andThroughholeAssemblies.ThetestingfacilitiesweofferincludeIncircuit
testers,AutomaticOnlineInspectionequipment(AOI),Solderthicknessmeasuring
systems,andvariousotherfunctionaltestsetups.
TitanTimeProducts,qualitysystemsareaccreditedtoISO9000andTS16949
standardsandallprocessesareRestrictiononHazardousSubstancescompliant.
ThiscentreisseamlesslyalignedwithourgroupfacilitiesinBangaloreandHosur,
providingcustomersboxbuildcapabilitieswithplasticsandsheetmetalintegration.
WeenjoyanelaboratenetworkofcomponentsuppliersandmanufacturersinIndia
andabroad,andhavesourcingsetupinHongKongandtheUK.
TitanTimeProducts,valuechainprocessesrunonSAP,andthemanufacturing
systemsarecalibratedtoprocessmultipleproductssimultaneously,withbatches
varyingfromProtolotstolargervolumes.
Theimpressivearrayofawardsbestowedonthecompany,suchastheAwardfor
ExcellenceinTotalProductiveMaintenancetheIMEAFrost&SullivanAward,the
CIIExcellenceAwardandtheELCINADun&BradstreetAwardareconfidently
illustrativeofTitanTimeproductsstrongandworldclassmanufacturingpractices.

Sector: Lifestyle and retail

Category: Watch and Accesories
USP: Indian brand with an international styling
Tagline: Be More
Product portfolio: Fastrack, sonata (brands)
Positioning: not just a watch, but style statement

Target group: mid and premium working men and women

Competitors: Timex, Casio, Citizen
Achievements:

Titan Time Products Limited a 100% subsidiary of Titan Company Limited

specializes in providing world class Contract Electronics Manufacturing (CEM)
solutions to companies operating in a variety of high reliability, high quality &
function critical market sectors. The state-of-art manufacturing facility, located at
Verna, Goa since 1992 boasts of a clean-room facility matching the class 10000
requirements. We manufacture electronic-board assemblies for industries such as
automotive, industrial controls, medical electronics, power & energy and RF
communications.
Our capabilities include Surface Mount Technology for fine-pitch assemblies, Ball
Grid Array placements, Chip-on-board Assemblies/ Wire bonding, Through-hole
Assemblies & Conformal coating applications. The testing & inspection facilities
we offer include In-circuit testers, automated functional tests, Automatic Online
Inspection & X Ray Inspection
Our quality systems are accredited to ISO 9000:2008 and TS 16949:2009 standards
and all processes are RoHS compliant. We are also certified for OHSAS 18001
since 2012.
Titan Time Products, value chain processes run on SAP, and the manufacturing
systems are calibrated to process multiple products simultaneously, with batches
varying from Proto lots to larger volumes.
The impressive array of awards bestowed on the company, such as the Award for
Excellence in Total Productive Maintenance, the IMEA Frost & Sullivan Award, the
CII Excellence Award and the ELCINA Dun & Bradstreet Award are confidently
illustrative of Titan Time products strong and world-class manufacturing practices.

Our Mission:
We will do this through a pioneering spirit and a caring, value-driven culture that
fosters innovation, drives performance and ensures the highest global
standards in everything we do.
Our Values and Standards:
Total customer orientation
Customers take precedence over all else, always.
Employee appreciation
We value and respect Titanians and endeavour to fulfil their needs and aspirations.
Performance culture and teamwork
At Titan Company, high performance is a way of life and is nurtured by teamwork.
Creativity and Innovation
Driven by innovation and creativity, we focus on smarter approaches and newer
technologies.

The sectors that TTPL caters to are:

1.
2.
3.
4.
5.

Automotive
Medical electronics and security
Energy and power electronics
RF communications
Industrial controls

Innovation is a way of thinking at Titan Company Limited

Titan Company began its operations with an innovative offering - quartz watches that changed the face of the Indian watch industry. Innovative ideas at Titan
Company have led to significant achievements such as Single Point Solutions to
every Original Equipment Manufacturer customer. Titan Edge, world's slimmest
watch, is probably the best example of the spirit of innovation in the organization
a feat achieved in less than five years of our existence.
Innovation School of Management (IScM) has been started to address the
objective of creating the ability to innovate and making it a culture among the
employees.
At IScM, students are trained on various tools and techniques to develop innovative
thinking capability, and the Head of Departments are trained as a Mentor to use the
innovation outcomes. Tools and techniques enable students to think out of the box
and beyond the obvious. The graduates from IScM deploy this learning to resolve
problems at work, as well as in their personal lives.

Titan Innovation Council (TIC): TIC is a cross functional team of Senior &
Middle Management to create ideas to spread the innovation culture across Titan
Company. They have created and drive the following:
1.Innovation Bazaar: This is an initiative to cross learn the innovative ideas among
the company and showcase the ideas of all the divisional improvement / innovation
in four categories: a) Process, b) Services, c) Design / Product and d) Marketing /
Retail / Customer service through Innovation Bazaar to all the employees of the
Company to understand the happening in the other divisions / functions and to
improve their process.
2.Interweave: This is an initiative that provides an opportunity for different
businesses to present and cross learn the innovative ideas that have been
implemented in other businesses across retail and manufacturing.
3.Tata Innoverse: This is a web 2 based social net working platform, to enable
employees of Titan Company as well as other Tata Companies to provide innovative
ideas to challenges posted by Senior leaders. Employees can also comment and vote
on ideas submitted by other employees. We have also extended Tata Innoverse to
our supplier fraternity.
4.Innovation centre: Innovation centre is a space to generate great ideas and
provides a free, creative Innovation centre space, where interchange of ideas and
unhindered experimentation has a home. It consists of two spaces. The first hall is
the Xerxes Desai Hall of Creativity, which harbours the Exploration Laboratory,
Reference library and Study Area. The second hall is the Bhaskar Bhat Hall of
Tranquillity, is the hall where prospective innovators can meditate, introspect, listen
to lectures or practice yoga.
5.Titan Innovation HUB: Set up at IIT- Madras Research Park, Chennai, it enables
Titan to leverage the specialized expertise of the faculty and students and to utilize
their facilities, labs in creating a collaborative environment between industry and
academia through joint research projects and consulting assignments and in creating
a self-sustaining and technologically fertile environment.
Our contemporary store designs are a great example of innovation. They have
redefined the retailing standards in India since the time when the concept of modern
retailing had not evolved.
The Jewellery Division changed the dynamics of gold market by introducing the
Karameter, an industry first in checking the purity of gold through a non-destructive
test.
Our capabilities include:

Turnkey Circuit Board Assemblies involving Wire Bonding, SMT and

Through hole technologies with ROHS compliance.
Post-board assembly level box build solutions including plastics integration,
metal integration and custom product pack-out.
Tool design & manufacturing, plastic injection molding and precision
machining.

TTPL has won the following coveted awards:

TPM Excellence Award winner in 2007.

ELCINADun & Bradstreet Award winner for Quality in 2008.
ISO / TS 16949 accredited since 2004.
CII EXIM award winner for Business Excellence in 2006.
Frost & Sullivan award winner for Manufacturing Excellence in 2005.

Community Development and CSR Policy

Titan Company has a defined policy for Corporate Social Responsibility(CSR). As
part of its CSR initiative, the manufacturing units of Watch, Jewellery and PED, at
Hosur, have acquired the 'ISO 9001: 2000 Quality Management System Standards'
and 'ISO 14001:2000 Environment System Standard' certifications, in its journey to
be an ecologically responsible organisation.
Corporate social responsibility:
The company's diverse CSR initiatives include:
Education
- Titan Kanya - educating the Girl Child
- Titan Scholarships - Based on need and merit
- Titan School and Titan foundation for education
Employing the differently-abled
Karigar parks/centres
Women's empowerment
Skill development - basic training centre and Unnati programme
Environment management programmes
Miscellaneous community initiatives
Titan Company's community initiatives are committed to build partnership for social
development, focus on sustainable initiatives and improve the quality of life of the
communities where the initiatives operate. With a dedicated force of 250
enthusiastic employee volunteers, the company has formed a Community
Development Forum. This forum works towards mobilising society and volunteers
to make the community initiatives a success. The company's miscellaneous
community development activities include orphanage support, HIV/Aids awareness,
village adoption, vision improvement program, a program to provide work to rural
unemployed women, community rehabilitation, tsunami relief work, eradication of
child labour and environment protection, to name a few. The company has made a
positive change in the lives of over 6000 individuals.
Corporate responsibility begins at home
Titan Company believes that corporate responsibility begins with its employees. The
company ensures that harmony, peace and inclusive approach at work place are
maintained. Efforts are made to engage employees in programs designed to fulfil
our ecological and social responsibility. Various work-place initiatives are
conducted to achieve this: War on Waste - an initiative that reduced the impact of
manufacturing operations on the environment. At Titan Company, Corporate Social

Responsibility is more than philanthropy - it is an internal process that reflects the

soul of the company.
Successful CSR programmes:
Titan Company has embarked on and completed several community development
programmes as part of its CSR initiative. A few among these successful projects
are:
Titan Scholarship - Have been awarded to students in Dharmapuri and Krishnagiri
districts (Tamil Nadu), based on academic performance and socio-economic
background for over 550 students form the economically backward section. In 201314, this programme has been extended to Uttarakhand.
Titan Township - A sustainable community in Hosur (Tamil Nadu), that provides
housing to 1300 residents collaborating with NGOs MCA and Ashraya.
Employment for differently-abled - Over 120 differently-abled individuals are
employed at our watch and jewellery plants at Hosur.
Karigar Park/Centres - A social entrepreneurship project which houses jewellery
karigars in over 14 parks / centres, wherein the company provides the equipment,
material and training and karigars use their skill sets in producing jewellery of the
highest standards and design. The company ensures the best working conditions and
safety practices are followed in the manufacturing process. The Karigar centres also
provide the karigars with boarding, lodging, recreation and gymnasium facilities.
Currently about 1400 karigars have benefitted from this.
Titan School and Titan Foundation for Education - A primary English medium
school up to class X, affiliated with CBSE, with over 700 students, has been created
and supported by Titan Company.
SUPPLY CHAIN MANAGEMENT:
Being a supply chain management partner means more to us than just
manufacturing printed circuit board assemblies. Our customers leverage our supply
chain management expertise to receive high quality products without a high
inventory risk. Our procurement department is organized into commodity and
customer focused teams responsible for new product purchasing support, key
supplier partnerships, material acquisition plans and demand/pull agreements. We
have built exceptional supplier relationship which means lower costs and faster
delivery of high quality material for your project. Our supply chain management
system incorporates systematic approaches to improve lead times, deliveries and
quality.
Supply Chain Management Services at a Glance: Experience why our customers
view us as a trusted extension of their organization by relying on us to manage the
supply chain that includes:

Procurement Expertise We work with commodity buyers with whom we

have decades of supplier relationships and can negotiate the lowest total cost
solution for our customers. We can also recommend options that can deliver the
performance you require at a lower total cost. Our buyers can also help in the

area of obsolete components on whether to find a different source or

recommend a alternative.

Established Supplier Relationships We have long standing relationships

with key suppliers we have worked with to deliver value to our customers. You
get the benefit of our experience in knowing which ones are best suited for your
situation.

Faster Delivery The close relationships we have with our approved

suppliers has enabled us to provide an exceptional delivery track record for our
customers.

Procurement Flexibility We can manage the entire procurement process for

you turnkey or can manage raw material on a consignment basis.

Reduced Inventory Supplier agreements, contracts, and bonded inventory

help to minimize our customers inventory exposure. Our ability to integrate
with your JIT or Kanban process assures you get product only when you need
it.

Procurement Efficiency SAP planning systems control every stage of

production and maintain the flow of material crucial for continuous production
and on-time delivery of the project. It also allows us to respond faster to any
changes while minimizing inventory exposure.

RoHS Expertise Our proactive approach to RoHS years ago follows with a
proven track record in supplying RoHS compliant circuit board assemblies and
complete turnkey products to our customers.
With material acquisition and management a considerable cost factor for our
customers, we have refined our procurement process to significantly lower these
costs and pass along the savings. Our purchasing team maximizes material savings
and brings leveraged buying power through supply-chain management and strategic
alliances, while our supplier certification program ensures the highest material
quality.

Accounting Ratios:
1.
2.
3.
4.

Profitability ratios
Capital structure ratios
Asset utilisation ratios
Return ratios

PROFITABILITY RATIOS
GROSS PROFIT RATIO: Gross profit margin is a financial metric used to assess
a company's financial health and business model by revealing the proportion of
money left over from revenues after accounting for the cost of goods sold (COGS).
It is the ratio of gross profit made by the enterprise during an accounting period to
the sales.
Formula: Sales Cost of goods sold
Sales

or

Gross profit
Sales

Calculation:
Year
Gross
profit
Sales
Gross
profit ratio

Graph:

2014
-1.51

2013
2.24

2012
2.18

2011
1.79

2010
1.04

23.11
-0.06

26.4
0.08

25.87
0.08

22.79
0.07

14.47
0.07

Gross Profit Ratio

0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06

Gross Profit Ratio

2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The sudden decrease in the year 2014s gross profit ratio indicates
that the cost of producing goods for the enterprise has increased and that the firm
has cut down the margin to capture increased market share.

OPERATING PROFIT RATIO: Operating margin is a margin ratio used to

measure a company's pricing strategy and operating efficiency. It can be
calculated by dividing a company's operating income (also known as
"operating profit") during a given period by its net sales during the same
period.
Formula: Earnings before interest, Tax (EBIT)
Sales
Calculation:
Year
EBIT
Sales
Operating
Profit ratio

Graph:

2014
-1.51
23.11
-0.06

2013
2.24
26.4
0.08

2012
2.21
25.87
0.08

2011
1.88
22.79
0.08

2010
1.11
14.47
0.07

Operating Profit Ratio

0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06

Operating Profit Ratio

2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The immediate downfall in the year 2014s operating profit ratio
denotes that the cost of raw materials increased over the period as well as employee
cost, manufacturing expenses and selling and administrative expenses went higher
in the same period.

NET PROFIT RATIO: Net profit ratio is a popular profitability ratio that shows
relationship between net profit after tax and net sales. It is computed by dividing the
net profit (after tax) by net sales.
Formula:

Profit after Tax

Sales

Calculation:
Year
Profit after
tax
Sales
Net Profit
ratio

2014
-2.49

2013
1.48

2012
1.46

2011
1.16

2010
0.43

23.11
-0.1

26.4
0.05

25.87
0.05

22.79
0.05

14.47
0.02

Graph:

Net Profit Ratio

0.05
Net Profit Ratio

0
2014.0

2013.0

2012.0

2011.0

2010.0

-0.05
-0.1

Interpretation: The steep fall in net profit ratio is due to the increase in cost of
goods sold and the low profit margin kept by the enterprise to capture the market
share.

OPERATING EXPENSES RATIO: It is the ratio of gross profit made by the

enterprise during an accounting period to the sales.
Formula:

Operating expenses
Sales

Calculation:
Year
Operating
expenses
Sales
Operating
Expenses
ratio

2014
24.68

2013
24.35

2012
23.69

2011
21.19

2010
13.45

23.11
1.06

26.4
0.92

25.87
0.91

22.79
0.92

14.47
0.92

Graph:

Operating expenses ratio

1.1
1.05
1
0.95
0.9
0.85
0.8

Operating expenses ratio

2014.0 2013.0 2012.0 2011.0 2010.0

Interpretation: The sudden rise in operating expenses ratio shows that the
companys expenditure has increased significantly which needs to be brought under
control so that the company enjoys a good amount of profitability.

ASSETS UTILIZATION RATIOS

TOTAL ASSETS TURNOVER RATIO: This ratio relates the sales achieved by
enterprise during a period to the total asset deployed.
Formula:

Sales e
Total Assets

Calculation:
Year
Sales
Total
Assets

2014
25.37
13.80

2013
29.14
13.72

2012
28.11
9.53

2011
24.72
8.56

2010
15.57
6.39

TATR

1.83

2.12

2.94

2.88

2.42

TATR
3
TATR

2
1
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The ratio has been decreasing over the years which shows that
enterprise isnt able to generate more sales relative to assets deployed in the
business.

FIXED ASSETS TURNOVER RATIO: The fixed-asset turnover ratio is, in

general, used by analysts to measure operating performance. It is a ratio of net
sales to fixed assets. This ratio specifically measures how able a company is to
generate net sales from fixed-asset investments.
Formula:

Sales e
Fixed Assets

Calculation:
Year
Sales
Fixed
Assets

2014
25.37
10.03

2013
29.14
6.28

2012
28.11
5.29

2011
24.72
5.35

2010
15.57
5.15

TATR

2.52

4.64

5.31

4.62

3.01

FATR
6
FATR

4
2
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The company initially used its asset in a productive manner but the
final year shows a significant decline which shows the inefficiency of the asset
utilisation.

CURRENT ASSETS TURNOVER RATIO: Current assets turnover ratio is the

ratio of the value of a companys sales or revenues generated relative to the value of
its current assets. The Asset Turnover ratio can often be used as an indicator of
the efficiency with which a company is deploying its assets in generating revenue.
Formula:

Sales e
Current Assets

Calculation:
Year
Sales

2014
25.37

2013
29.14

2012
28.11

2011
24.72

2010
15.57

Current
Assets
TATR

3.51

6.18

2.91

3.73

1.79

7.22

4.71

7.18

6.62

8.66

CATR
10
8
CATR

6
4
2
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The decline of this ratio over the years is an indication of large
amounts being blocked in inventories or debtors or large cash and cash equivalents
being kept. It is on a path of an efficient working capital management.

INVENTORY TURNOVER RATIO: It includes raw material, consumable stores,

work in progress and finished goods and is a ratio to check how well the inventory
is managed.

Formula:

Cost of goods sold

Inventories

Calculation:
Year

2014

2013

2012

2011

2010

COGS
Inventories
ITR

21.6
2.15
10.04

24.16
2.38
10.15

23.69
2.56
9.25

21
2.38
8.82

13.43
1.40
9.59

ITR
11
10

ITR

9
8
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: Higher the ratio higher and better is the inventory management of
the company. The company shows a rise in its ratio over the record of past 5 years
which is a positive aspect of the company.

DEBTORS TURNOVER RATIO: The ratio talks about the sales made with
debtors outstanding at the end of the period.

Formula:

Sales e
Debtors

Calculation:
Year
Sales
Debtors

2014
25.37
3.23

2013
29.14
3.25

2012
28.11
3.23

2011
24.72
3.98

2010
15.57
1.74

TATR

7.85

8.16

8.70

6.21

8.91

DTR
10
DTR

5
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The rate of collection of receivables is very fast in the company.

The ratio is expressed in times and has increased over time.

AVREAGE PAYMENT PERIOD: This ratio is collected to ascertain the average

credit period enjoyed by any enterprise.

Formula: 365 x Creditors

Purchases
Calculation:
Year
APP (days)

2014
88

2013
53

2012
98

2011
106

2010
69

APP (days)
150
100

APP (days)

50
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The ratio indicates favourable credit terms enjoyed by the

enterprise and lower blockage of its own funds in current assets. So, its a positive
aspect of the enterprise.

CAPITAL STRUCTURE RATIO:

DEBT EQUITY RATIO: Its the ratio of Long-term borrowings to shareholders

fund. The D/E ratio indicates how much debt a company is using to finance its
assets relative to the amount of value represented in shareholders' equity.

Formula:

Borrowed funds e
Shareholders funds

Calculation:

Year
Borrowed
funds
Shareholders
funds
DER

2014
0.57

2013
0.00

2012
0.00

2011
0.50

2010
0.38

8.44

9.01

7.76

6.73

6.01

0.06

0.00

0.00

0.07

0.06

DER
0.08
0.06
0.04
0.02
0

DER

2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The ratio has remained consistent over a period of years. There is
no ideal ratio but it demonstrates how much a company relies on borrowed funds in
a volatile environment.

FIXED ASSETS TO LONG-TERM DEBTS: This ratio is calculated for the

safety of long-term lenders. It is an indication of cushion available to the debt
providers.

Formula:

Fixed assets
ee
Long Term Debts

Calculation:
Total Fixed assets = Total assets Total Current assets

Year
Fixed Assets

2014
10.03

2013
6.28

2012
5.29

2011
5.35

2010
5.15

Long Term
Debts
Ratio

3.07

2.50

0.50

0.38

3.26

2.51

10.7

13.5

Ratio
15
10

Ratio

5
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: : The ratio over the year gets lowered which is a sign that the
lenders feel more secured. Its a note that the ratio is calculated using the book value
of fixed assets.

INTEREST COVERAGE RATIO: Borrowed funds have a fixed obligation

attached to them in the form of paying interest at a fixed rate.

Formula:

EBIT ee
Interest

Calculation:

Year
EBIT
Interest
ICR (times)

2014
-2.49
0
-

2013
1.45
0
-

2012
1.46
0.03
48.66

2011
1.16
0.08
14.5

2010
0.43
0.07
6.14

ICR (times)
60
40

ICR (times)

20
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: Though the ratio line is significantly falling but it is still far away
from 1, which is a healthy sign and shows the high ability of the enterprise to meet
its interest obligation.

RETURN RATIOS
RETURN ON ASSETS: The return on assets ratio, often called the return on total
assets, is a profitability ratio that measures the net income produced by total assets
during a period by comparing net income to the average total assets. In other words,
the return on assets ratio or ROA measures how efficiently a company can manage
its assets to produce profits during a period.
Formula: EBIT (1- Tax rate)
Total Assets
Calculation:
Year
EBIT

2014
2.49

2013
1.48

2012
1.46

2011
5.16

2010
0.43

(1-Tax
rate)
Total
Assets
ROA

0.00

0.53

0.70

0.48

0.12

13.80

13.72

9.53

8.56

6.39

0.18

0.05

0.05

0.31

0.06

ROA
0.4
0.3

ROA

0.2
0.1
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The ratio is changing dynamically over the period and as of 2014,
the return on assets is good as the increase in net operating profit after tax is more
that proportionate than the increase in assets deployed.

RETURN ON CAPITAL EMPLOYED: Return on capital employed or ROCE is

a profitability ratio that measures how efficiently a company can generate profits
from its capital employed by comparing net operating profit to capital employed. In
other words, return on capital employed shows investors how many dollars in
profits each dollar of capital employed generates.
Formula: EBIT (1- Tax rate)
Capital employed
Calculation:
Year
EBIT
(1-Tax rate)

2014
2.49
0.00

2013
1.48
0.53

2012
1.46
0.70

2011
5.16
0.48

2010
0.43
0.12

Shareholders 8.44
funds
Borrowed
3.07
funds
ROCE
0.27

9.01

7.76

6.73

6.01

2.50

0.00

0.50

0.38

0.60

0.06

0.37

0.06

ROCE
0.6
ROCE

0.4
0.2
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The ratio is declining over the period but is still in a good position
as the increase net operating profit after tax is more that proportionate than the
increase in capital employed.

RETURN ON EQUITY: The return on equity ratio or ROE is a profitability ratio

that measures the ability of a firm to generate profits from its shareholders
investments in the company. In other words, the return on equity ratio shows how
much profit each dollar of common stockholders' equity generates.

Formula:

Profit after tax

Shareholders funds

Calculation:
Year
2014
PAT
2.82
Shareholders 8.44

2013
1.00
9.01

2012
1.03
7.76

2011
0.73
6.73

2010
0.34
6.01

funds
ROE

0.34

0.11

0.13

0.11

0.06

ROE
0.4
ROE

0.3
0.2
0.1
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: Return on equity ratio line is on a continuous fall in the last five
year term which shows that the firm is not able to use the money from shareholders
to generate profits efficiently and thereby is not able to grow the company.

DuPont Analysis: DuPont Analysis is a useful technique to break down the ROE
into its constituent elements. It helps to understand the reasons for an increase or
decrease in ROE by identifying the underlying variables.
Formula: Profit after tax x
Sales
Sales
Total assets

Total assets
s
Shareholders funds

Calculation:
Year
PAT
Shareholders
funds
Ratio

2014
6.47
8.44

2013
5.47
9.01

2012
4.44
7.76

2011
3.71
6.73

2010
3.37
6.01

0.76

0.60

0.57

0.55

0.56

Ratio
0.8
0.6

Ratio

0.4
0.2
0
2014.0

2013.0

2012.0

2011.0

2010.0

Interpretation: The ratio clearly shows an increase in ROE over the years of the
company. The underlying variables are clearly identified in the DuPont analysis
done for the company.

CONCLUSION:
The Titan Time Products Limited is a company dealing in lifestyle and retail sector.
This report successfully displays all the accounting ratios of the company. The ratio
analysis was done to find out about the companys overall market standing and the
report provides insight about the same. On doing the ratio analysis it is inferred that
the company is not as successful as it was proposed to be from the last 5 years. The
profitability ratios facilitated us to conclude that the company ranks poor on the
profitability aspect. The sudden decrease in the year 2014s gross profit ratio
indicates that the cost of producing goods for the enterprise has increased and that
the firm has cut down the margin to capture increased market share. The steep fall in
net profit ratio is due to the increase in cost of goods sold and the low profit margin
kept by the enterprise to capture the market share.
The companys downfall can also be witnessed by asset utilization ratios. The fixed
asset turnover ratio has been decreasing over the years which shows that enterprise
isnt able to generate more sales relative to assets deployed in the business. The
current asset turnover ratio shows decline over the years is an indication of large

amounts being blocked in inventories or debtors or large cash and cash equivalents
being kept. It is on a path of an efficient working capital management.
Return on asset ratio is one another set of ratio which provides an insight about the
companys position which is in a downsized state.The return on assets ratio, often
called the return on total assets, is a profitability ratio that measures the net income
produced by total assets during a period by comparing net income to the average
total assets. In other words, the return on assets ratio or ROA measures how
efficiently a company can manage its assets to produce profits during a period.
The company has a bright opportunity to alter its management policies , bring new
ideas to the table, and thereby reach the peak of success it dreams and desires.

LIMITATIONS OF RATIO ANALYSIS:

Ratio analysis is the systematic use of ratios to interpret the financial statements
so that the strengths and weaknesses of a firm as well as its historical performance
and current financial conditions can be determined.
Limitations of Ratio Analysis:
The technique of ratio analysis is a very useful device for making a study of the
financial health of a firm. But it has some limitations which must not be lost sight of
before undertaking such analysis.
Some of these limitations are:
1. Limitations of Financial Statements:
Ratios are calculated from the information recorded in the financial statements. But
financial statements suffer from a number of limitations and may, therefore, affect
the quality of ratio analysis.
2. Historical Information:
Financial statements provide historical information. They do not reflect current
conditions. Hence, it is not useful in predicting the future.
3. Different Accounting Policies:

Different accounting policies regarding valuation of inventories, charging

depreciation etc. make the accounting data and accounting ratios of two firms noncomparable.
4. Lack of Standard of Comparison:
No fixed standards can be laid down for ideal ratios. For example, current ratio is
said to be ideal if current assets are twice the current liabilities. But this conclusion
may not be justifiable in case of those concerns which have adequate arrangements
with their bankers for providing funds when they require, it may be perfectly ideal if
current assets are equal to or slightly more than current liabilities.
5. Quantitative Analysis:
Ratios are tools of quantitative analysis only and qualitative factors are ignored
while computing the ratios. For example, a high current ratio may not necessarily
mean sound liquid position when current assets include a large inventory consisting
of mostly obsolete items.
6. Window-Dressing:
The term window-dressing means presenting the financial statements in such a
way to show a better position than what it actually is. If, for instance, low rate of
depreciation is charged, an item of revenue expense is treated as capital expenditure
etc. the position of the concern may be made to appear in the balance sheet much
better than what it is. Ratios computed from such balance sheet cannot be used for
scanning the financial position of the business.
7. Changes in Price Level:
Fixed assets show the position statement at cost only. Hence, it does not reflect the
changes in price level. Thus, it makes comparison difficult.
8. Causal Relationship Must:
Proper care should be taken to study only such figures as have a cause-and-effect
relationship; otherwise ratios will only be misleading.

9. Ratios Account for one Variable:

Since ratios account for only one variable, they cannot always give correct picture
since several other variables such Government policy, economic conditions,
availability of resources etc. should be kept in mind while interpreting ratios.
10. Seasonal Factors Affect Financial Data:
Proper care must be taken when interpreting accounting ratios calculated for
seasonal business. For example, an umbrella company maintains high inventory
during rainy season and for the rest of year its inventory level becomes 25% of the
seasonal inventory level. Hence, liquidity ratios and inventory turnover ratio will
give biased picture.

BIBLIOGRAPHY:
www.titancem.com
www.titan.co.in
www.capitaline.com
www.investopedia.com
www.accountingformanagement.org
www.accountingtools.com