Ratio Analysis

RATIO ANALYSIS
CHAPTER 1
RESEARCH DESIGN
INTRODUCTION
AKIM, BELLARY Page 1

RATIO ANALYSIS
The RAYATAR SAHAKARI SAKKRE KARKHANE NYIYAMIT (R.S.S.K.N) is a

large scale Agro-based sugar industry. It covers under Co-operative sector.
This factory was registered on 29th July 1982 itself and government has
given licensee for 2,500 TCD (Tone Capacity per day).( But it plans to increase
capacity 2,500 to 3500) In the same year government has given registration
number is DSK/REG/182-83 dated: 27/07/1982. From that onwards it started
issuing the shares to the public this issuing of shares comes to end in the year
1997. During these periods they purchased 200 acres of land at Timmapur
(Mudhol Taluka) village at a cost of Rs.24 lac. The 1st trial crushing was taken in
the month of May from 19/05/1999 to 10/06/1999. .
Ratio Analysis is one of the techniques of financial analysis where ratios

are used as a yardstick for evaluating the financial condition and performance of
a firm. Analysis and interpretation of various accounting ratios gives a better
understanding of financial condition and performance of firm. It provides data for
intra-firm comparison. They also revel financially strong and weak such as
overvalued and undervalued of firms. These ratios help to indicate a company’s
efficiency in the past and likely performance in future. It should be noted that
computing the ratios does not add any information in figures of profits and sales.
Trend ratios involve a comparison of the ratios of a firm over a period, that is
present ratios involve a comparison of the ratios of a firm. Trend ratios indicate
the direction of change in the performance.
STATEMENT OF PROBLEM:
Accounting ratios are relationship expressed in mathematical
terms between the figures that are connected with each other in some manner.
All companies whether big or small will prefer to be in good financial position.
The balance sheet of a company that has been undertaken for the
study furnishes that the industry is in good financial position.
To evaluate a firm’s financial condition and performance there is a need to
check up various aspects of a firm’s financial health, a tool frequently used
during these check up in financial ratio.
The study is conducted to evaluate the performance and market standing
of RSSKN in order to give a better scope to the investors, shareholders, creditors

RATIO ANALYSIS
and the management themselves about rating of RSSKN and its performance in
the market.
Objectives of the Study:
1. To study & analyze the short term solvency & liquidity position of the
company.
2. To know the impact of various assets & liabilities on financial performance

of company.
3. To evaluate the financial performance & operations with the help of

financial ratios
Methodology
Study Period
The period covered for the study is five year starting from financial year
2004-05 to 2008-09.
Method of data collection
The collection of the data of this report is segregated into
a. Primary data
It is collected through direct interaction with
Account officer. This includes
The organization chart, various department etc.
b. Secondary data
Source like company annual report

RATIO ANALYSIS
CHAPTER 2
INDUSTRY PROFILE

RATIO ANALYSIS
INDUSTRY PROFILE
The sugar industry is one of the important Ago-based industry of

the country India is the fourth major sugar production in the world. The first
three is Russia, Brazil and Cuba. Sugar industry provides direct employment to
nearly 3lakh persons this industry supports about 25 million agriculturists. It
pay’s both to the central government and the state government about Rs.350
crores by way of different taxes. The capital employed in the industry is of the
order of Rs.780 crores. There are about 414 mills producing sugar, which are
spread all over the country.
Sectors No. of factories
Private sector 127
Public sector 60
Co-operative sector 227
Total 414
RATIO ANALYSIS OVERVIEW
Ratio analysis is a powerful tool of financial analysis, the easiest way to

evaluate the performance of the firm.
The ratio defined as expression of quantities relationship between two

numbers. In financial analysis a ratio is used as benchmark for evaluating
financial position & performance.
INTRODUCTION
RATIO ANALYSIS
The project is carried out in Ranna sugar industry. The project studies “The
Operational & Financial Health” through ratio analysis.
Ratio analysis is a technique of analysis the financial statement of

business or industrial concerns especially to take output & credit decisions. This
technique is quite sophisticated & being used by business firms in modern days.
However ratio analysis is not an end itself. It is only the means of better
understanding of financial strength &weakness of a firm. Just as blood pressure,
pulse & temperature are measured of health of individual, so does the ratio
analysis measures the economic & the financial health of concern.
Ratio analysis is one of the most powerful tools of financial analyses

which helps to analysis & interpret in the health of enterprise. Ratio’s also
measured work efficiency & proved to be basic instruments in the control
process & they are backbone in schemes of business forecast.
Three are different parties interested in the ratio analysis for knowing
the financial position of the firm fir different purposes. The supplier of goods on
credit, bank, financial institutions, investors, shareholders & management all
make use of ratio analysis as tool in evaluating the financial position &
performance of a firm for granting credit, providing loans, making investment in
the firm. With the help of ratio one can point out poor. The conclusions can also
be drawn as to whether the performance of the company is improving or
deteriorating. Thus ratios have wide application & area of immense use today
With the help of ratio one can determine
1. The ability of the firm to meet its current obligations.
2. The extent to which the firm has used its borrowed funds.
3. The efficiency with which the firm is utilizing in generating sales revenues.
4. The overall operating efficiency & performance of the company.

RATIO ANALYSIS
Significance of ratio analysis
1. Ratio Analysis helps in decision making from the information provided in

financial statement.
2. Ratio Analyses is of much help in financial forecasting & planning.
3. The financial strength & weakness of firm are communicated in a more

easy & understandable manner by the user of ratios.
4. Ratio even helps in co-ordination, which is of utmost importance in

effective business management.
5. Ratio Analysis even helps in working effective control of business.
Limitations of ratio Analysis:
Ratio should be used very carefully & decision should be taken only after
done &deep consideration because they suffer from certain limitations which are
given below.
1. The most important limitation of ratio analysis lies in the data adopted for
calculating ratios, every time adopts its own accounting procedure &
practices differ from to another. It is therefore cannot be compared with
other firm.
2. Ratios are computed on the past data, such ratio may be reluctant for
future forecasting because of changes in time & price levels.
3. Ratios are not universally applicable; they are not useful to well establish
companies as they do not depend upon external sources of finance.
Classification of Ratios
Ratios can be classified into different categories depending upon the

basis of classification.
I. TRADITIONAL CLASSIFICATION
Traditional Classification has been on the basis of financial statements, on

which ratio may be classified as follows.

RATIO ANALYSIS
1. Profit & Loss account ratios.
E.g. Gross Profit Ratio, Net Profit Ratio, Operating Ratio etc
2. Balance sheet ratio.
E.g. Current Ratio, Debt Equity Ratio, Working Capital Ratio etc
3. Composite/Mixed ratio.
E.g. Stock Turnover Ratio, Debtors Turnover Ratios, Fixed Assets
Turnover Ratio etc
II. FUNCTIONAL CLASSIFICATION OF RATIOS
Functional ratios
1. Liquidity ratios
1. Current Ratio
2. Quick Ratio
3. Absolute Liquid Ratio
4. Net Working Capital Ratio
2. Leverage Ratios
1. Total Debt Ratio
2. Debt-equity Ratio
3. Capital Employed Ratio
4. Fixed Asset to Net worth Ratio
5. Current Asset to Proprietor’s fund Ratio

RATIO ANALYSIS
III. PROBABILITY RATIOS
a. Gross profit Ratio
b. Net profit Ratio
c. Operating Ratio
d. Operating profit Ratio
e. Expenses Ratio:
I. Cost of goods sold
II. Administration, selling and others
f. Return on investment
g. Return on Equality
h. ESP (Earning per share)
IV. ACTIVITY RATIO
i. Inventory Turnover Ratio
ii. Debtors turnover Ratio
a. ACP
iii. Asset Turnover Ratio:
1. Net Asset Turnover Ratio
2. Fixed Asset Turnover Ratio
3. Current Asset Turnover Ratio
iv. Working Capital Turnover Ratio.

RATIO ANALYSIS
INTRODUCTION TO SUGAR INDUSTRY
The Indian sugar industry is a key driver of rural development, supporting India's
economic growth. The industry is inherently inclusive supporting over 50 million
farmers and their families, along with workers and entrepreneurs of almost 500
mills, apart from a host of wholesalers and distributors spread across the
country.
The industry is at a cross roads today, where it can leverage opportunities

created by global shifts in sugar trade as well as the emergence of sugarcane as
a source of renewable energy, through ethanol and cogeneration. While some of
these opportunities have been well researched in the past, there was a need to
assess the potential for India and to develop a comprehensive and actionable
roadmap that could enable the Indian industry to take its rightful place as a food
and energy producer for one of the world's leading economies.
The sugar industry occupies a prominent place among the organized

industries in India. Sugar industry holds second rank next to cotton textiles
industry in importance.
It provides employment to nearly 5lakh people directly. Sugar is

essential product in India. Considerable quantity of sugar is produced since old
days. India produces white sugar, Khandasari, and Jaggery. There are about 506
industries working throughout the country.
Among them 120 are in private sector 235 in cooperative sector and 95 are in
public sector. In Karnataka state there are about 40 sugar industries established.
Out of 40, 20 are in private sector, 18 are in co-operative sector, and remaining
2 are in public sector. The sugar industries are located in rural areas and have an
in intrinsic symbiotic relationship with rural masses. Some units are also in
position to supply surplus power to the grid thru Bagass based co-generation
system.
India is second largest producer of sugarcane next to Brazil. As per last

year data, about 4 million hectares of land is under sugarcane with an average
yield of 70 tones per hectare. India is largest producer of sugar including
traditional sugar sweetener, Khandasari and Gur equivalent to 26 million tones
raw value followed by Brazil in the second place at 18.5 million tones. Even in

RATIO ANALYSIS
respect of white crystal sugar, India has ranked No position 7 out of last 10
years.
Type of Sectors In India In Karnataka
Cooperative sector 282 18
Private sector 157 19
Public sector 67 02
Joint Venture 01
Total 506 40
The sugar industry contributed to the revenue of central and state govt.
a sum of rupees 350 crores in the form of taxes.
GROWTH OF SUGAR INDUSTRY
On 1st July 1990, the government of India issued new guidelines for
licensing new sugar factories and for the expansion of the existing sugar
factories.
Under this guideline the licensing policy has been made very liberal so as
to boost the production of sugar.
India is the original home of sugarcane and has a flourishing sugar

industry in the ancient time. But the modern sugar manufacturing industries
were established in Bihar. But the real development of the industry took place
only after 1932 when protection was given to this industry against foreign
competition within a short period 2 or 3 years. The number of sugar mills
increased from only 32 in 1931-32, 137 in 1935-36 and the production also
increased during the same period.

RATIO ANALYSIS
Government enacted the Sugar Development Fund Act & Rules, which
provides for levy of per quintal of sugar known as Sugar Development Fund
(SDF). The SDF is utilized for granting term loans to sugar mills modernization
and grants for research projects in the sugar besides creation of buffer stocks as
and when required to ensuring price stability. Government de-licensed sugar
sector in August 1998. It is now open to entrepreneurs to set up mills without
license but at distance of 15kms away from the existing factory. Sugar units free
to expand their capacity and also put up higher capacity new units. This should
help to consolidate and expand their capacities wherever cane potential exists.
NET POSITION
Indian Sugar Industry at glance
No of sugar factories established 506
Total capital employed Rs. 50,000 crores
Total annual turnover Rs. 25,000 crores
Total payment to cane growers Rs. 18,000 crores
Contribution to central & state Rs. 1700crores+800crores

exchequers
Direct employment : rural educated Rs. 5.00Lakhs
Farmers/families involved in sugar cane Rs. 45 million

(7.5% of rural population)
In global economy, the Indian sugar industry has achieved a number of

milestones
1. Largest Sugar Producer in 7 out of 10 years
2. Second Largest Area under Cane/Cane production
3. Amongst the cost effective industries with its field cost (Sugar cane) being
the second lowest, despite small land-holding and low productivity
4. Fourth efficient processor of sugar despite low capacity of its sugar plants
as compared very large-size plants in other parts of the world

RATIO ANALYSIS
GOVERNMENT POLICY
The present policy of decontrol 10% of production by each unit is supplied

for public distribution system I as levy sugar at Govt. notified prices admittedly
bellow 20% of the actual cost of production. The levy sugar is I to the public
irrespective of their economic status. The balance 90% is sold in the free market
against monthly/ issued by the Government. This policy has been continuing
since 1967-68 except for brief periods of de-control I during the years of surplus
production and accumulated sugar stocks. Government announces the Statutory
Minimum price (SMP) for sugarcane every year based on recommendations of
the Commission for Agricultural Cost & Prices (CACP).
THE PROBLEMS FACED BY THE SUGAR INDUSTRY
Sugar industries are considered as an agro based industries, so these sugar

industries mainly depend upon monsoon. The problems faced by sugar industries
are as fallows.
1. Shift in location problem
2. Problem of high price of sugar
3. Need for keen development

RATIO ANALYSIS
CHAPTER 3
COMPANY PROFILE

RATIO ANALYSIS
COMPANY PROFILE:
LOCATION : The RAYATAR SAHAKARI SAKKRE KARKHANE
NYIYAMIT (R.S.S.K.N)
Factory: Timmapur Mudhol, Tq: Mudhol
District: Bagalkot
ESTABLISHED IN : 25/11/1999
REGESTERED NO : DSK/REG/182-83
WEEKLY HOLIDAY : SUNDAY
WORKING SHIFT : 4 am to 12 pm, 12 pm to 8 pm, 8 pm to 4 am
CHAIRMAN : R.S.Talewad
M.D : S.S Pujari
FINANCIAL : The Karnataka State Co-operative sugar Factories
INSTITUTION Ltd, Bangalore
OF THE COMPANY
BANKERS OF THE :IDBI - Bangalore
COMPANY D.C.C Bank Timmapur,
D.C.C.Bank Mudhol
DCC Bank Bijapur

RATIO ANALYSIS
OBJECTIVES OF THE COMPANY
1. To produce entire crystal sugar at international par quantity standards.
2. Optimum utilization of the Raw Material, Time, Manpower & Money.
3. Socio friendly environment, Pollution free condition.
4. Power generation, Petroleum products and even distribution.
5. To make available good working condition and opportunity development

with proper training and high moral.
6. Maintain continuous improvement programs in Technology.
7. Help farmers to increase their yield through research & development.
8. Establish an effective & reliable process control.
9. To produce good quality sugar at acceptable prices to meet the increasing

demand
PRODUCTS OF SUGAR INDUSTRY (RSSK)
PRODUCTS : SUGAR
BY-PRODUCTS : There are two types of byproducts
1. Molasses
2. Bagasse
The 1st regular season starts in the year of 1999-2000, from 25th NOV 1999
to 28th
June 2000 (217 days). The progress achieved during this season is as follows:
Total Cane Crushed 4,07,989 MT
Sugar produced 5,10,015 Qtls

RATIO ANALYSIS
Recovery 12.50%
Molasses produced 17,360 NT
The estimated project cost of R.S.S.K.N Sugar factory was Rs.47.25crores

as prepared by the Karnataka State Co-operative sugar Factories Ltd, Bangalore.
And this report has been appraised by the IFCI, New Delhi.
10% Member shares Rs.4,725 crores
30% Government Rs.14,175 crores
Term loan from

60% Rs.28,350 crores
Financial Institutions
Total 47,250 crores
Vision
1. To become one of the dignified company in the country.
2. To give due importance for the development of society.
Mission
To support employee and farmers development for the fullest extent.
Improving our operation activities.
D) Product and service profile:
The product and service profile are very important topic for the each and
every organization. In the R.S.S.K.N they have totally three types of products are
producing those are as follows-
1. Sugar (Main product)
2. Molasses ( By product)
3. Bagasses (By product)

RATIO ANALYSIS
In the sugar section that is the main production of the company in sugar they are
produce these types of sugars are producing
This unit is producing two grade of sugar S-30 and M-30.
And they are covering 5 taluks to getting sugar cane and there payment is
satisfaction to the formers.
Chemicals used in production:
1. Washing soda- production
2. Common salt- production
3. Phosphoric Acid- Maintaining pH
4. Ammonium biflouride formalin- Quality maintain and presser vative.
5. Mill samitation chemical Caustic soda- for cleaning purpose
6. To prevent generation of bacteria and germs
E) Area of operation:
The RAYATAR SAHAKARI SAKKRE KARKHANE NIYAMIT Rannanagar Timmapur.

The share section is one of the important sections because more than half of the
share capital is collected from the share holders.
The area of operation-- NATIONNALLY
1. Andra Pradesh
2. Uttar Pradesh
3. Tamilnadu
4. Maharashtra
5. Bihr etc.
Sugar is sold in all over county according to the customer’s requirements.

RATIO ANALYSIS
And they are collecting raw materials from the nearby areas such
1. Mudhol
2. Bagalkot
3. Bilgi
4. Badami and
5. Jamakhandi,etc.
F) Ownership pattern: CO OPERATIVE SECTOR
The R.S.S.K.N Rannanagar Timmapur it is the cooperative sector company.

This factory was registered on 29th July 1982 itself and government has given
licensee for 2500 TCD.(now 3500) In the same year government has given
registration number is DSK/REG/182-83 dated 27-071982. From the onwards it
started issuing the shares to the public this issuing of shares comes to end in the
year 1997.
The share section is one of the important sections because more than half
of the share capital is collected from the share holders.
G) Competitors information
The degree of competition for R.S.S.K.N is more, as other big organization like
1. Niranis private limited
2. Nandi co operative sector
3. Renuka sugars and
4. Prabhulingeshwar mills ltd
5. Sameerwadi sugars ltd
Sugar is also attracting the minds of the farmers towards them. The sugar
produced in this factory is of good quality and competitive enough in the market.
The overall management R.S.S.K.N is efficient. They make accurate buying from
farmers for their sugar cane and the farmers are satisfied with this.

RATIO ANALYSIS
H) Infrastructure facilities
LOCATION
The Ryatar Sahakari Sakkare Karkhane Niyamit is one of the co-operative

sectors in sugar production, which is located in Rannanagar, at Timmapur and is
16KM away from Mudhol. Which is a Taluka place and it is located near the Bank
of Ghtaprabha River, so the factory has obtained the permission for lifting water
from this river for factory use.
Facilities from the company:
1. Transportation facility
2. Housing facility
3. Guesthouse facility
4. Canteen facility
5. Restroom facility
6. Safety facility
7. Insurance facility
8. Education facility
9. Hospital facility, etc.
The main functional divisions of R.S.S.K.N are as follows.
1. Cane Development and procurement department

RATIO ANALYSIS
2. Production department
3. Account department
4. Administration department
5. share section
6. Purchase section
7. Time office section
8. Sales section
9. Stores section
10. Co-generation section.
11. Computer section
12. Security section
13. Civil section
CANE DEVELOPMENT AND PROURENMENT DEPARTMENT
The structure of this department is as under-

RATIO ANALYSIS
Cane
Manager
Cane Department Cane

Procurement
Cane
Supervisors
The philosophy of the cane development and marketing is almost

common for all the sugar units. While in following paragraphs, description is for
Khatauli but applies generally to Deoband & Ramkola units as well.
OBJECTIVES OF CANE DEVELOPMENT DEPARTMENT
1) To develop the backward area.
2) To improve the variety of can.

RATIO ANALYSIS
3) To provide raw materials to the factory
4) To provide materials to the factory
5) To maintain the raw material (sugar cane) capacity. Which is required

by the
factory (i,e 2500TCD)
6) To maintain registration of cane, gang and plantation.
7) To undertake seed distribution programme. The main function cane

development department is to arrange for raw materials, which is
required in the factory. For these bases (i.e. growers that grow
sugarcane first in his field) they also provide a loading gang with 8 to 10
members per village and also a bonded tractor for transportation. In
season 150 tractors are engaged and 200 gangs are different villages in
a day.
PRODUCTION DEPARTMENT
To utilize the installed capacity of 2500 TCD in proper manner the

following personality the duty to manage the manufacturing department

RATIO ANALYSIS
Production
Laboratory Incharge Deputy Chief
Laboratory Chemist Manufacturing
Laboratory Boys Staff and
Production department is the main department of the factory and is classified

into two sections:
1. Engineering section.
2. Manufacturing section.
Engineering section:
This section maintains all the work connected with plant and machinery.
This section area at enhancement of the feeding capacity of the factory. It is
assisted by workshop.

RATIO ANALYSIS
Work shop contains lathe machine, turning machine, welding etc., to

repairs the spares and default machinery’s.
Manufacturing section:
This section is classified into three sub-sections
1. Laboratory
2. Manufacturing process
3. Warehouse.
CHEMICAL USED IN THE PRODUCTION:
1. Caustic soda- for cleaning purpose
2. Washing soda- for cleaning purpose
3. Common salt- for cleaning purpose
4. Phosphoric Acid- Maintaining pH
5. Ammonium biflouride formalin- Quality maintain and presser vative. Mill

samitation chemical- to prevent generation of bacteria
6. Hydros- colour
7. Viscosity reducer-for reducing viscosity.
8. Msopropile Alcohol
9. Commercial HCL
10. Bleaching powder- clearing purpose
11. Led acitate- for lab uses.
And other chemical used are burnt lime, sulphur, othophosphoric acid.

RATIO ANALYSIS
ACCOUNT DEPARTMENT
Structure:
Account Officer
Cane Accountant
General Accountant
Casher
Clerk
Account department is divided into two main sections,

they are:
1. General account section
2. Cane account section.
1) General account section:
This section maintains all transactions. Income tax, sales tax and
commercial tax procedure are done by this section. The verities of registers
maintained by this section are:
1. Bank registers
2. Contractors registers

RATIO ANALYSIS
3. Depositors registers
4. Fixed assets registers
2) Cane account section:
The main function of this section is to maintain records of supplier’s

name, which supplies sugar cane to the factory and maintains the register of
payment.
The register maintained by this section is:
a) Self harvest payment register
b) Harvester bill
ADMINISTRATIVE DEPARTMENT:
Administrative department is classified into five sections share, sales,

purchases, store, time office and security.
a. SHARE SECTION:
The share section is one of the important section because more than half
of the share capital is collected from the share holders.
There are five classes of shares:
“A” Class- Grower members
“B” Class- Co-operative institution
“C” Class- State government
“D” Class- Non grower members

RATIO ANALYSIS
“E” Class- Outside are members.
The person who wants to become a member has to follow the

procedure/rules. He has to fulfill appropriate application given by the share
section authority. If the Directors approve the application, then only he is
treated as shareholder of the factory. After the approval he has to pay the
amount equivalent to face value of the share.
There is no transferability of share. If at all he wants to transfer his

shares, he has to transfer to such a person who is the member of the factory. If
he transfers to another person it is not valid and such shares get cancelled. For
the identification of its members, the factory issues share certificates and
identity cards to such shareholders.
This section gives identity card only. This section is also send notice to
the concerned members on behalf of the factory. They maintain two types of
books of accounts viz.
b. PURCHASE SECTION:
It is also a important section in administrative department in performing

the activities of purchasing. In this section there are two employees, one is
purchase manager and another one is purchase assistant. The purchase
manager issues the purchase order from various section of the factory. He
estimates the cost purchase and accordingly he go for direct purchases or
purchases through purchase committee.
RSSKN, HAVE SOME SPECIFIC CONDITON I TO PURCHASE MATERIAL
The material received or any reason what so ever will be returned to the
suppliers at their own cost.

RATIO ANALYSIS
The material should be recently packed if any breakage, leakage it is the

responsibilities of the supplier
All the disputes arising out of the transaction
Sales tax will have refunded if changed extra
The order will be treated as canceled if goods are not supplied then the
specific period
If the goods are not supplied according to order specification there in the
advance amount paid by the factory will carry 13 %interest
Managing
Director
Superintendent
Senior purchasing officer
Junior purchasing
officer
Helpers
C. TIME OFFICE SECTION:
Function-

RATIO ANALYSIS
1) Distribution of salary according to the workers attendance.
2) Sanctioning of leaves to workers.
3) Maintaining working bell.
There are 581 workers working in this factory. As this is a new

establishment of all working on daily wages. Within a few months the
management is going to take workers as permanent at present only on leave in a
month is sectioned to the workers.
The factory runs three shifts in a season-
Shift Starting time Closing time
1st Shift 4am 12pm
2nd Shift 12pm 8pm
3rd Shift 8pm 4am
One general shift 8.30am to 5.30pm for both season and off season.
D. SALES SECTION
This section will take care of all the sales transactions like sale of

RATIO ANALYSIS
1. Sugar,
2. Molasses,
3. Bagasse.
4. Scrap material.
SKILL:
The R.S.S.K.N Rannanagar Timmapur is maintaining the On the Job Training:
If the organization is to achieve its goals, it is necessary to have right

people with right skills to accomplish it. Skill references to ability to perform
certain task without any difficulty.
At RANNA Sugars: Ranna Sugar has right people with right skilled with
reference to innovation new ideas, up grading the products with latest
technology achieving the goal according to established standards.
Skill Implemented in Ranna Sugars has been divided into three levels, they are
1. Top lever
2. Middle levels
3. Lower levels
Conceptual
Managerial
Technical
1. Top level regress more conceptual skills

2. Middle level requires management skills
3. Lower level requires more technical skills.
Employees are trained through secular training programs. Many employees have
participate in various work shops. Organized at technical association in sugar
industry.

RATIO ANALYSIS
A team three engineers and 2 chemists visited sugar refinery. Units in

Thailand during 2003 Goods methods of operation and houses keeping have
been adopted in the refinery
STYLE:
The style which is portrayed to out side world, is derived from the styles
and behaviors exhibited inside organization. The internal style of the
organization effects how staff feels, thinks and do their jobs. Therefore an
organization is reflection of its culture.
At Ranna Sugars : Staff in the company also goal oriented. They are
enthusiastic is achieving the goals, staff are co-operative and completes
the assigned jobs within given period of time.
1. Diversify in income by sugar co-products.
2. Operates the county’s largest sugar refinery make up
European grade refinery sugars.
STRATEGY :
The way in which a business aims to improve its position in relation to its
competition is embodied in its strategy
At Ranna Sugars : Introduce the new technologies and products

strategic importance in time with national objective to improve, quality,
reliability of products there by attaining the international standards.
Company advocating a strategies for government action.
1. Additional promotion measures to doubles India’s exports.
2. A buffer stock financed from the sugar development
SYSTEM:

RATIO ANALYSIS
All the formal and informal procedure that make an organization work are
system. It uses to be successful.
At Ranna Sugars : Ranna Sugars has its own system in procuring the
raw materials from formers and qualified vendors, producing out put with
qualified out put with quality inspection of international standards offering
the products to customer with fine packaging and spares and provide
good after sales services.
Security System :
Plant security system is contract basis, round the clock security
arrangements are provided for the plaint and quarters security system is of plant
is such that no person can enter the premises without an approved from
management.
ACCOUNTING SYSTEM
1. The company has system of accounting on accrual basis bot
income and expenditure.
2. The company has a system of accounting sales of excise
duty and other taxes.
STAFF:
Good hard working citizens play essential role in the development of

nation the employee are responsible for. The success of failure of company.
At Ranna Sugars : Ranna Sugar has employees highly qualified and
experienced professionals, its fully geared face new challenges. Employees are
engineering, chemist ,I.T.I. fitters, Electricians, skilled and unskilled workers the
Ranna Sugar have young and motivated team has made large contribution to
company success. Many of engineers and chemist have secured top ranks.
SHARED VALUE :
Employees share the same guiding values mission that is an excellently

managed company has a deriving purpose philosophy that is known and
practiced by everyone.

RATIO ANALYSIS
At Ranna Sugars : Ranna Sugar employees practices the same rakes

and mission fir the achievement of the goals.
Environmental policy
Ranna Sugar is committed to comply with the requirements of relevant
environmental management system and continuously effectiveness. Employee
should be rained on environmental aspects to minimize the pollution conserve
natural resources.
QUALITY POLICY
Quality leading to customer satisfaction shall be top priority this shall be
achieved by complying with the requirement of the quality management system
and continuously improve its effectiveness.
Employee shall be trained and motivated to achieve the quality of their
work competence skill. Other values
3. Cost and time consciousness.
4. Trust and team spirit
5. Respect for others
6. Integrity
SWOT ANALYSIS
STRENGTHS:
1. It is located in a place where good infrastructure is available.
2. The company’s concentration towards the quality of the product.
3. The technological standard of the company.
4. Modern equipments.
5. High production efficiency.
6. Good sources of raw material.

RATIO ANALYSIS
7. Power generation.
8. Large supply of fertilizers and good quality seeds.
9. Timely payment
WEAKNESS:
The company needs improvement and should concentrate on timely customer

service.
1. Labours turnover.
2. The promotion procedure in the organization is too rigid.
3. The company not focus on all department
4. The number of sugar factories near by this factory
5. No schemes and offers.
OPPORTUNITIES:
1. Expansion of projects likes paper unit, ethanol production, bio-fertilizers
2. All these above projects will give the company maximum profits.
THREATS:
1. Stiff competition by brands like , Godavari Sugars, Nirani Sugars and other
brands.
2. Government intervention.
3. Over production by all companies

RATIO ANALYSIS
Different Departments in the Organization. Of R.S.S.K.N

are as follows.
4. Cane Development and procurement department
5. Production department
6. Account department
7. Administration department
8. share section
9. Purchase section
10. Time office section
11. Sales section
12. Stores section
13. Co-generation section.
14. Computer section
15. Security section
16. Civil section
Each Manager has separate Manager, Deputy Manager, Assistant officer and
Supervisor.
It was really a one good experience working in the organization like

R.S.S.K.N which is of great repute of sugar manufacturing in that area.
Employees from every corner of the department helped me in getting the
required information for the successful completion of this project.
They cooperated well when we had to disturb them with so many queries
in our mind to be cleared from the concerned person during the visits to the
respective departments in the organization.
Through the all departments I have done my project successfully.

RATIO ANALYSIS
CHAPTER 4
THEORETICAL
FRAMEWORK
RATIO ANALYSIS:
RATIO ANALYSIS
Meaning
Ratio Analysis is a widely used tool of financial analysis. It can be used to
compare the risk and return relationships of firms of different sizes. It is defined
as the systematic use of Ratio to interpret the financial statements, so that the
strengths and weaknesses of a firm as well as its historical performance and
current financial condition can be determined.
The Term ‘Ratio’ refers the numerical or quantitative relationship between
two items/variables which help us to draw certain conclusions. The relationship
between two variables/items may be expressed as
a. Percentage.
For example: Net profits are 25% of sales.
b. Fractions.
For example: Net profit is one-fourth of sales.
c. Proportion of numbers.
For example: Relationship between Net profit and sales is 1:4
Steps Involved In Ratio Analysis:

1. Selection of a relevant data from financial statements.
2. Calculation of appropriate ratio based on data selected for the purpose.
3. Comparison of ratio so calculated with those of some form in the past or
with the ratio of some other firm in the industry.
4. Interpretation of ratio.
Need for Accounting Ratios:

1. Accounting Ratio’s are helpful to the Management, investors, creditors,
etc..., in their decision making — which is useful in revealing inter-
relations among various accounting items. They are useful for increasing
profits through cost reduction and enhancing managerial efficiency. The
following are the major uses of Accounting Ratio’s:
2. They help us to enquire probable casual relation among various items by
means of analyzing past activities.
3. Ratio’s based on past data are used particularly of planning and budgeting
which are used as a guide to co-ordinate various functions and divisions.

RATIO ANALYSIS
4. By means of Ratio’s idea about trend of business and its ups and downs
can be easily provided to outsiders who are not willing to know the affairs
of the business.
5. Departmental activities can be evaluated with the Ratio’s.
6. Ratios provide indication about managerial efficiency.
7. Ratios are considered predictive devices. Ratio’s based on past data are
used to predict future. Sometimes they are used to get indication about
whether a firm is going to be sick or insolvent.
Advantages of Ratio Analysis:

1. Ratio Analysis simplifies the understanding of financial statements.
2. Ratio’s bring out the inter-relationship among various financial figures and
bring to light their financial significance.
3. Ratio Analysis is a device to analyze and interpret the financial health of
the enterprise.
4. Ratios contribute significantly towards effective planning and forecasting.
A study of a trend in the past works as a helpful guide for the future.
5. Ratio’s serve as effective control tools. They also facilitate establishment
of a standard costing system and budgeting control.
Limitations of Ratio Analysis:

1. When comparisons of two firms are made, the Ratio analysis may not give
satisfactory result. The two firms may adopt different accounting policies
and hence the result may not be comparable.
2. A study of Ratios in isolations, without studying the actual figures, may
lead to wrong conclusions. Ratios are only supplementary to and not
substitutes for absolute figures.
3. Ratios can be only as correct as the data on which they are based. If the
original data is not reliable, then the ratios will be misleading.
4. Ratio analysis suffers from the lack of consistency. Ratios are defined
differently by various experts and hence are prone to manipulation.
5. Ratios fail to reflect the impact of prize level changes, and hence can be
misleading.
6. In the absence of well accepted standards, interpretations of ratios
become subjective.

RATIO ANALYSIS
7. Ratios are based on past data, and hence can not be reliable guide to
future performance.
8. Ratios are only tools of quantitative analysis and fail to take into account
the qualitative aspects of a business.
Ratios are volatile and can be influenced by a single transaction with extreme
value.
Types of Ratios:
1. Liquidity (or) Short term solvency Ratios.
2. Activity Ratios.
3. Profitability Ratios.
4. Leverage Ratios.
1) LIQUIDITY RATIOS
Liquidity or Short term solvency analysis aims to determine the ability of a
business to meet its financial obligations during the short term and to maintain
its short term debt paying ability. The aim of liquidity analysis is for a company
to have adequate funds on hand to pay bill when they are due and to meet
unexpected needs for cash.
Liquidity Analysis mainly focuses on balance sheet relationships that
indicate the ability of a business to liquidate current and non-current liabilities.
The following are important Liquidity Ratios:
1. Current Ratio.
2. Quick Ratio.
3. Absolute Ratio or Cash Ratio.

4. Inventory to Working Capital Ratio.
a) Current Ratio:
Current Ratio expresses the relationship of Current Assets to Current
liabilities. It is widely used as a broad indicator of a company’s liquidity or short
term solvency, that is, its ability to meet short-term obligations. The Current
Ratio is calculated by dividing the total current assets by total current liabilities.

RATIO ANALYSIS
Formula for calculation:
Current Assets
Current Ratio =
Current Liabilitie s
Interpretation:
The Ideal Ratio in this regard is 2:1.
Current Assets are those assets which in the ordinary course of business
can be converted into cash within a short period of time normally not exceeding
one year and includes cash and bank balance, marketable or short-term
securities, bills receivables, sundry debtors, stock of raw materials, semi-finished
goods( work-in-progress), and finished goods, prepaid expenses.
Current Liabilities are those which are payable usually with in a period of
one year which includes bills payable, sundry creditors, bank overdraft, o/s
expenses, income received in advance, proposed dividends, provision for
taxation, short term loans and advance.
b) Acid Test Ratio or Quick Ratio:

Quick Ratio is a measure of Liquidity calculated dividing Current Assets
minus Inventory and Prepaid expenses by Current Liabilities. A rupee of cash or
debtor is considered more readily available to meet obligations than a rupee of
inventory.
Quick Assets
Quick Ratio =

RATIO ANALYSIS
Interpretation:
The Ideal Ratio is 1:1. A ratio of more than one does not always imply
sound liquid position. Ratio of less than one does not always imply bad liquid
position.
d) Inventory to Working Capital:
This Ratio shows the relationship between Inventory and Working Capital.
It is used to reveal the proportion of Working Capital covered by Inventories
alone. It also indicates whether there is over stocking or under stocking.
Inventories include closing stock of raw material, Work-in-progress,
finished goods. Working capital is the excess of current assets over current
liabilities.
Inventory
Inventory to Working Capital = x 100
Working Capital
Interpretation:
As per the Standard Inventory to Working Capital Ratio, the inventories
should not absorb more than 75% of Working capital. As such, a low ratio
indicates under stocking and a high liquid position, while a high ratio indicates
over stocking and a low liquid position.
2) ACTI VITY RATIOS

The Activity Ratios also known as Efficiency Ratios indicates the operating
efficiency of an enterprise in utilizing its various assets.
These ratios are also called as ‘Turnover ratios’ (or) ‘Performance ratios’
(or) ‘Current assets movement ratio’, because they measure the speed at which
the assets are being converted into sales. All the ratio coming under this
category are calculated with reference to sales or cost of sales and expressed in
number of times say, 6 times, 10 times, etc..,.
Higher the Turnover ratio, better the profitability and use of capital or
resources will be.

RATIO ANALYSIS
The important Turnover Ratios are:

1. Inventory or Stock Turnover Ratio.
2. Debtors Turnover Ratio.
3. Creditors Turnover Ratio.
4. Working Capital Turnover Ratio.
5. Current Assets Turnover Ratio.
6. Fixed Assets Turnover Ratio.
7. Total Assets Turnover Ratio.
a) Inventory Turnover Ratio:

This Ratio establishes relationship between Cost of Goods sold during the
given period and the average amount of Inventory held during the given period.
It indicates the number of times the Stock is turned over during the year. It
indicates whether there is over stocking or under stocking of finished goods.
Formula for the calculation:
Cost of goods sold

Inventory Turnover ratio =
Average Inventory
Cost of goods sold means sales minus gross profit. The average Inventory
refers to simple average of opening and closing inventory or stock.
Interpretation:
This indicates the efficiency of the management in utilizing the inventory.
A stock turnover ratio of 8times is considered Ideal. A high ratio is good from the
view point of liquidity and vice versa. A low ratio would signify that inventory
does not sell fast and stays in the warehouse for a long time.

RATIO ANALYSIS
b) Debtors Turnover Ratio:

This Ratio expresses how quickly cash is collected from customers. In
other words Debtors turnover ratio is calculated to measure the efficiency of a
credit promotion policy and credit collection policy.
Debtors Turnover Ratio is determined by dividing Net Credit Sales by
Average debtors outstanding during the year.
Net Annual credit sales

Debtors Turnover Ratio =
Average Debtors or Sundry Debtors
Net Annual Credit Sales consists of Gross Annual Credit Sales minus
Returns, if any, from customers. Average debtors are the simple average of
debtors at the beginning and at the end of the year.
Interpretation:
A high ratio is indicative of shorter time lag between Credit sales and Cash
collection. A low ratio shows that debts are not being collected rapidly.
c) Working Capital Turnover Ratio:

This Ratio shows the relationship between the Working Capital and the
Sales. This ratio shows the number of times Working Capital is turned over in a
stated period. The ratio indicates the efficient or in-efficient utilization of the
Working Capital of an enterprise.

RATIO ANALYSIS
Net Sales
Working Capital Turnover Ratio =
Working Capital
Interpretation:
The Higher the ratio the lower is the investment in Working Capital and
greater are the profits. However, a very high turnover of working capital is a sign
of over trading and may put the concern in financial difficulties.
e) Current Assets Turnover Ratio:
Current Asset Turnover Ratio is the ratio between Current Assets and
Sales. This ratio is the contribution of current assets to sales.
Sales
Current Assets Turnover Ratio =
Current Assets
Interpretation:
There is no Ideal or Standard Current assets turnover ratio. Yet, the
inference is that a high current assets turnover ratio is an indication of better
utilization of current assets. On the other hand, a lower current assets turnover
ratio suggests that the current assets are not been used effectively.
f) Fixed Assets Turnover Ratio:

This Ratio expresses the number of times Fixed Assets are turned over in
a stated period. This period show how well the fixed assets are being used in the
business. It establishes the relationship between fixed assets and sales.

RATIO ANALYSIS
Assets
Fixed Assets Turnover ratio =
Fixed Assets
Interpretation:
The Ideal Ratio is 5 times. The Ratio more than 5 times indicates better
utilization of fixed assets. The ratio less than 5 times indicates poor utilization of
fixed assets. The higher the ratio betters the performance.
g) Total Assets Turnover Ratio:

This ratio expresses the relationship between Total assets (or) Resources
(or) Sales. Although fixed assets are directly converted with the generation of
sales, the other assets also contribute to the production and activities of the
firm. Hence, to know whether all the assets are utilize4,properly or not, this ratio
is calculated.
Sales
Total Assets Turnover ratio =
Total Assets
Interpretation:
It indicates the sales generated per rupee of investment in Total assets.
Higher the Ratio, more the revenue. A high ratio is an indicator of over trading of
Total assets, while a low reveals Ideal capacity. The traditional standard for the
ratio is 2 times.
3) PROFITABILITY RATIOS:
Profitability Ratio’s reveal the total effect of the business transactions on
the profit position of an enterprise and indicate how far the enterprise has been
successful in its aim.

RATIO ANALYSIS
Profitability is an indication of efficiency with which the operations of the

business are carried on. A lower profitability may arise due to the lack of control
over the expenses.
Profitability Ratio’s are much important to an enterprise, management,
owners, creditors, employees, government, customers and the country.
The important Profitability Ratio’s:
1. Gross Profit Ratio.

2. Net Profit Ratio.
3. Gross Profit Ratio:
a) Gross Profit Ratio:

It reveals the result of trading operations of the business. This ratio
indicates the degree to which the selling price of goods per unit may decline with
out resulting in losses from operations to the firm. It is the ratio between Gross
Profit and Sales.
Gross Pr ofit
Gross Pr ofit Ratio = x 100
Sales
Interpretation:
There is no standard Gross profit ratio. The higher the ratio, the better will
be the performance of the business. The ratio discloses the Overall margin with
in a business undertaking. The business undertaking must limit its operating
expenses to earn sufficient profit. It identifies whether the average mark-up on
the goods has been maintained or not.
b) Net Profit Ratio:
It indicates the result of overall operations of the firm. It is also known as
‘Profit Margin’. It measures the relationship between Net profit and Sales of the
firm. This ratio helps in determining the efficiency with which affairs of the
business are being managed.

RATIO ANALYSIS
Net Profit means final balance of operating and non-operating incomes

after meeting all expenses.
Net Pr ofit
Net Pr ofit ratio = x 100
Net Sales
Interpretation:
The higher the ratio, the more profitable is the business. The ratio
indicates the quantum of profits earned by a concern. The main purpose of this
ratio is to know the profitability of the firm reflected by the management’s
efficiency in manufacturing, administrating, and selling the products.
3) RETURN ON INVESTMENT RATIO:

The conventional approach of calculating return on investment is to divide
PAT (Profit After Tax) by investment. Investment represents pool of funds
supplied by shareholders and lenders, and PAT represents residue income of
shareholders.
PAT
ROI =
Total assets
4) RETURN ON EQUITY
A return on shareholder’s equity is calculated to see the profitability of
owners investment . The shareholders equity or net worth will include paid – up
share capital, share premium and reserves and surplus. The return on equity is
net profit after taxes divided by shareholders equity which is given by a net
worth.
PAT
ROE =
Net worth

RATIO ANALYSIS
4) LEVERAGE RATIO’S:
Leverage Ratio’s or Capital Structure Ratio’s indicating the relative
interests of the Owners and the Creditor in an enterprise. They help to determine
the stake of the creditors, they undertake in investing funds in an enterprise.
There should be an approximate mix of Debt and Owners Equity in financing the
firm’s assets.
Leverage Ratio’s are useful to the management in the proper
administration of capital i.e.., they indicate to the executives as to what extent
the practice of trading on equity can be carried on safely.
Leverage Ratio’s may be calculated from the balance sheet items and
from profit and loss account.
The following are the important Leverage Ratios:

1. Debt — Equity Ratio.
2. Proprietary Ratio.
3. Fixed Assets to Net Worth Ratio.
4. Fixed Assets Ratio.
5. Current Assets to Net worth Ratio.
6. Current Liabilities to Net worth Ratio.
a) Debt — Equity Ratio:

The relationship between borrowed funds and Owner’s Capital is a popular
measure of the Long-term financial solvency of a firm. This relationship is
determined by the Debt-Equity ratio. This ratio reflects the relative claims of
Creditors and Shareholders against the assets of the firm. Alternatively, this ratio
indicates the relative proportions of debt and equity in financing the assets of a
firm.
Debt-Equity ratio measures the ratio of Long term or Total debt or
shareholders Equity.
Long Term Debt Outsiders Funds

Debit − Equity ratio = or
Shareholde rs Fund Shareholde rs Funds

RATIO ANALYSIS
Long term debt includes Long term liabilities such as Debentures,

Mortgage Loans, Liabilities with fixed percentage of interests etc..,. Shareholders
funds includes Equity share capital plus Preference share capital plus different
Reserves plus P&L account Credit balance and different Capital Incomes.
Interpretation:
The Ideal Ratio in this regard is 2:1. This ratio is the measure of the
contribution of the Owners to the long — term finances of the concern as
compared to the contribution of the Long — term Creditors.
A high ratio is Unfavorable as Debt is more than the accepted norm when
compared to Equity. The company is exposed to higher risk if the Long — term
Debt is more than the standard norm as the firm may not be in a position to
service the debt.
b) Proprietary Ratio:
Proprietary Ratio brings out the relationship between Shareholders funds
and Total Assets.
Net Worth
Pr oprietary Ratio =
Total Assets
Net Worth means the excess of Total assets over Total Liabilities. It means
owner or proprietor’s or shareholders funds. Total Assets includes all Tangible
assets, which are real and can be realized. It is an index of the amount of
proprietor’s funds invested on the Total Asset of a concern.
Interpretation:
A high proprietary ratio indicates the sound financial strength or position
of the business and a low ratio indicates unsound financial position. The Ideal

RATIO ANALYSIS
ratio for this is considered to be 5:1. It indicates the relative risk of Owners and
the Creditors of an enterprise.
c) Current Assets to Net Worth Ratio:

This Ratio is calculated to measure the proportion of Current Assets
financed by Owner’s funds.
Current Assets
Current Assets to Net worth Ratio =
Net worth
CHAPTER 5

RATIO ANALYSIS
DATA ANALYSIS &
INTREPRETATION
I. Liquidity Ratio
Liquidity ratio measures the ability of the firm to meet its current
obligation (liabilities). In fact analysis of liquidity needs the preparation of cash
budget and cash and fund flow statement but liquidity ratio, by establishing a
relationship between cash and other current asset to current obligation, to
provide a quick measure of liquidity. A firm should ensure that it doesn’t suffer
lack of liquidity and also that it dose not have excess liquidity.
The common liquidity ratios are:-
1. Current Ratio
RATIO ANALYSIS
Current ratio may be defined as the relationship between quick or liquid

asset and current liabilities. This is a measure of general liquidity & is most
widely used to make analysis of short-turn financial position or liquidity of firm. It
is calculated by dividing the total current assets by total current liabilities.
Current Assets
Current Ratio =
TABLE-1.1 Current Ratio
Year Current Current Ratio
Assets Liabilities
Amt in Rs. Amt in Rs
2004-05 430076093. 141205546. 3.04

00 00
2005-06 343665293. 224758035. 1.5

00 00
2006-07 336389326. 802862101. 0.42

00 00
2007-08 417811267. 868538140. 0.48

00 00
2008-09
AKIM, BELLARY 349345761. 774530918. 0.45 Page 53
00 00
RATIO ANALYSIS
CURRENT RATIO
4
3
RATIO
2 Ratio
3.04
1 1.5
0 0.42 0.48 0.45
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTERPRETATION
Table 1.1 An arbitrary standard of current ratio is 2:1 indicates that for
every one rupee of current liability two rupee of current assets is available. In
the year 2004-05 ratio was 3.04 in the year 2005-06 ratio was decreases 1.5 in
the year 2006-07 decreases0.42 and 2007-08 increases0.48 in the year 2008-09
0.45. this shows that there is no short term solvency of the company .
2. Quick Ratio/Acid Test Ratio
Quick ratio establishes relationship between quick or liquid assets &

current liabilities. It is also known as acid test ratio. An asset is said to be liquid if
it can be converted into case within short period of time without loss of value.
The prepaid expenses and stock were excluded.
Quick Assets
Quick Ratio =
TABLE-1.2 Quick Ratio

RATIO ANALYSIS
Year Quick Current Ratio
Assets Liabilities
Amt.in Rs Amt.in Rs
2004-05 2842892837. 141205546. 2.01

00 00
2005-06 177992977. 224758035. 0.79

00 00
2006-07 138313276. 802862101. 0.17

00 00
2007-08 127813793. 868538140. 0.15

00 00
2008-09 170711841. 774530918. 0.22

00 00
QUICK RATIO
2.5
2
RATIO
1.5
Ratio
1 2.01
0.5 0.79
0 0.17 0.15 0.22
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTERPRETATION
Table1.2 reveals that quick ratio of the company is not higher than
standard 1:1. This shows that the firm’s liquidity position is not so good. in the
year 2004-05 ratio was 2.01 and 2005-06 decreases 0.79 in the year 2006-07
decreases to 0.17 in the year 2007-08 decreases 0.15 and 2008-09
increases0.22 .
3. Absolute Quick Ratio/cash Ratio

RATIO ANALYSIS
Cash ratio is the strongest measurement of liquidity. Since cash is the

most liquid assets, a financial analyze may examine cash ratio & its equivalent to
current liabilities. Trade investments or marketable securities are equivalent of
cash therefore they may be included in computation of cash ratio.
To calculate absolute quick ratio we consider cash in hand, cash at bank

& marketable securities.
Cash Ratio = Cash + Marketable securities
Current Liabilities
TABLE-1.3 Absolute Quick Ratio
Year Quick Assets Current Liabilities Ratio

Amt. In Rs
Amt. In Rs
2004-05 2576932. 141205546 0.01

00 .00
2005-06 4896521.0 224758035 0.02

0 .00
2006-07 128313276. 802862101 0.17

00 .00
2007-08 127813793. 868538140 0.15

00 .00
2008-09 170711841.0 774530918 0.22

0 .00
ABSOLUTE QUICK RATIO
0.25
0.2
RATIO
0.15
Ratio
0.1 0.22
0.17 0.15
0.05
0 0.01 0.02
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR

RATIO ANALYSIS
INTERPRETATION
Table 1.3 reveals that absolute quick ratio is below the standard ratio i.e.
0.5:1 indicates that 50 paisa worth of absolute liquidity assets are to be
maitained to meet one rupee worth of current liabilities. In the years 2004-05
ratio was 0.01 in the year 2005-06 ratio was 0.02 and 2006-07 increases 0.17
and 2007-08 decreases0.15 in tge year 2008-09 ratio was 0.22 it indicates that
there is no sufficient liquidity in a firm.
4. Net Working capital ratio
Net Working capital ratio is the relationship between net working capital
to its net assets. The different between current asset & current liabilities
excluding short term borrowing is called net working capital (NWC) or net
current assets.
NWC = Net Working Capital
Net Assets
TABLE-1.4 Net Working Capital Ratio

RATIO ANALYSIS
Year NWC Net Asset Ratio
Amt. In Rs Amt. In Rs
2004-05 96946913.00 154465865.00 0.09
2005-06 47535001.00 948118650.00 0.05
2006-07 15245938.00 568828076.00 0.07
2007-08 51045769.00 570188858.00 0.11
2008-09 914230.00 571266078.00 0.16
NWC
0.2
0.15
RATIO
0.1 Ratio
0.16
0.05 0.09 0.11
0.05 0.07
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTERPRETATION
Table 1.4 reveals that ratio is decreasing2004-05 ,to 2005-06. 0.09to

0.05 and in the year 2006-07 ratio was increased 0.07 in the year 2007-08
increased 0.11 and 2008-09 ratio is 0.16.Generally a high ratio is considered to
be good.
II. Leverage Ratios

RATIO ANALYSIS
Leverage ratios are also known as capital structure ratio. These ratios
indicate mix of funds provided by owners & lenders. As a general rule these
should be appropriate mix debt & owners equity in financing the firm’s assets.
Leverage ratios are calculated to judge the long long-term financial

position of the company. Some of the popular leverage ratios are:
a. Total Debt Ratio
Debt ratio may be used to analyze the debt ratio by dividing Total debt
(T.D) by dividing Capital employed (C.E) or net assets (N.A).
The total debt include short and long term borrowing from financial institutions,
debentures, bounds, deferred payments, arrangements for buying capital
equipment’s bank borrowings, public deposits etc.
Debt Ratio = Total Debt
Capital Employed
TABLE-2.1 Total Debt Ratio

RATIO ANALYSIS
Year Total Debt Capital Employed Ratio

Amt. In Rs
Amt. In Rs
2004-05 554110249.00 6788463.00 0.82%
2005-06 499246293.00 623250062.00 0.80%
2006-07 547168647.00 217530000.00 2.61%
2007-08 565092766.00 218018495.00 2.59%
2008-09 627397167.00 223983274.00 2.80%

RATIO ANALYSIS
DEBT RATIO
3.00%
2.50%
2.00%
RATIO
1.50% 2.80% Ratio

2.61% 2.59%
1.00%
0.50% 0.82% 0.80%
0.00%
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTERPRETATION
Table 2.1 Debt ratio is in the year 2004-05 is0.82 in the year 2005-06
decreased 0.80 in the year 2006-07 increased 2.61 in the year 2.59 and 2008-09
reached at 2.80
b. Debt-Equity Ratio
Debt-Equity ratio shows the relative contribution of creditors and

owners. Debt-Equity also known as External-Internal equity ratio. It is calculated
to measure the relative claims of outsiders against firm assets.
Debt-Equity Ratio = Total Debt
Net Worth

RATIO ANALYSIS
TABLE-2.2 Debt Equity Ratio
Year Total Debt Net Worth Ratio
2004-05 554110249.00 43052429.00 0.61
2005-06 499246293.00 63171947.00 0.62
2006-07 547168647.00 568828076.00 0.52
2007-08 565092766.00 570188858.00 0.82
2008-09 627397167.00 571266087.00 0.93
DEBT EQUITY RATIO
1
0.8
RATIO
0.6
0.93 Ratio
0.4 0.82
0.61 0.62 0.52
0.2
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTREPRETATION
Table 2.2 reveals that in the company the lenders contribution is

increasing year by year. In the year 2004-05 0.61 and 2005-06 0.62 in the year
2006-07decresed 0.52 in the year 2007-08 ratio is 0.82 in the year 2008-09
increases0.93 year 2006-07 0.52 Ratio shows the relationship describing the
lenders contribution for each rupee of owner’s contribution.

RATIO ANALYSIS
c. Fixed Assets to Net Worth
This ratio establishes the relationship between fixed assets &

Shareholders fund i.e. Share Capital plus reserves & Surplus & retained
earnings. The ratio can be calculated as follows.
Fixed Assets to Net worth Ratio = Fixed Assets (After Depreciation) X

100
Shareholder’s fund
This ratio indicates the extent to which share holders funds are into sunk
into fixed assets. There is no rule thumb to interpret this ratio but 60% to 65% is
considered to be satisfactory.
TABLE-2.3 fixed Assets to net worth Ratio
Fixed Assets Shareholder Fund
Year Amt. In Rs Amt. In Rs Ratio
2004-05 563374006.00 217335000.00 2.59
2005-06 564147519.00 217400000.00 2.59
2006-07 568828076.00 27530000.00 2.61
2007-08 570188850.00 218018495.00 2.62
2008-09 571266087.00 223983274.00 2.55

RATIO ANALYSIS
F/A TO NETWORTH RATIO
2.64
2.62
2.6
RATIO
2.58
Ratio
2.56 2.61 2.62
2.54 2.59 2.59
2.52 2.55
2.5
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTREPRETATION
Table 2.3 reveals that percentage of fixed assets value contributed by its
owners is increasing year by year , in the year 2004-05 and 2005-06 ratio is
2.59.in the year 2006-07 increases 2.61 in the year 2007-08 increases 2.62 in
the year 2008-09 decreases 2.55 implies that funds are not sufficient to finance
the fixed assets & the firm has to depends upon outside to finance fixed assets .
d. Current Assets to Proprietor’s funds ratio
This ratio is calculated by dividing total current assets by shareholders

funds. It indicates the extent to which proprietor funds are invested in current
assets. There is no rule of thumb for this ratio & depending upon the nature of
the business there may be different ratios for different firms.

RATIO ANALYSIS
CA to PF ratio = Current Assets
Proprietors Fund
TABLE-2.4 Current Assets to Proprietors Fund
Current Assets
Proprietors Fund
2004-05 430076093.00 217335000.00 1.97
2005-06 343665293.00 217400000.00 1.58
2006-07 336389326.00 217530000.00 1.55
2007-08 417811264.00 21801849.00 1.92
2008-09 349345761.00 223983274.00 1.56
C/A TO PROFRIETARY RATIO
2.5
2
RATIO
1.5
Ratio
1 1.97 1.92
1.58 1.55 1.56
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTREPRETATION
reveals that proprietors fund & investments are increasing & Current
assets are decreasing .in the year 2004-05 ratio was 1.97 in the Year 2005-06
has decreased to 1.58 & next year again decreased to 1.55 and in the year
2007-08ratio 1.92 and the year 2008-09 decreases 1.56.
1. Profitable Ratios
The primary objective of a business undertaking is to earn profits. Profit

is the difference between revenue & expenses over a period of time. Profit is

RATIO ANALYSIS
output of a company & company will have no further if it fails to make sufficient
profit Profits are thus a useful measure of overall efficiency of a firm.
These ratios are calculated to measure the operating efficiency of the

company. Beside management, creditors, owners are also interested in the
profitability of the company. Generally profitability ratios are calculated either in
relation to sales or in relation to investment. The various profitable ratios are:
In Relation to Sales
Gross Profit Ratio
G.P.Ratio measures the relationship between gross profits & sales; it

is usually represented in percentage. Thus Gross profit margin highlights the
production efficiency at a concern
G.P.Ratio = Gross Profit X 100
Sales
G.P.Ratio indicate the extent to which selling price of goods per unit may decline
without resulting in losses on operations of firm. It reflect efficiency with which
firm produces the product.
TABLE-3.1 Gross Profit Ratio
Year Gross Profit Sales Ratio
2004-05 32048846.00 269842495.0 0.11

0
2005-06 119992232.00 622678642.0 0.19

0

RATIO ANALYSIS
2006-07 81751169.00 592532689.0

0
13.8
2007-08 98156497.00 453435123.0 21.65

0
2008-09 79531898.00 736206987.0 10.8

0

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INRTEPRETATION
Table 3.1 reveals that gross profit of the company has increasing in
year by year gross profit was in the year 2004-05 ratio was -0.11, it increases
to 0.19 and in but further gross profit was increased in 2006-07 ratio was
13.8 in the year 2007-08 increses ratio is 21.65 and in the year 2008-09
decreses 10.8 The efficiency of firm is not satisfactory
b. Net profit ratio
Net profit ratio establishes the relationship between net profit &
sales & indicates efficiency of management in manufacturing. Selling,
administrative & other activities of the firm. This ratio is used as a measure of
overall profitability & it helps in determining the efficiency of the firm to carry
on its business.
Net Profit Ratio= Net Profit after tax X 100
Sales
TABLE-3.2 Net Profit Ratio
Net Profit Sales
ear Amt. In Rs Amt. In Rs Ratio
2004-05 43052429.00 269842495.00 15.95
2005-06 63171947.00 622678642.00 10.14
2006-07 15245938.00 592532689.00 2.57
2007-08 51045764.00 453435123.00 11.26
2008-09 91423.00 736206987.00 0.01242
ALLUM KARIBASAPPA INSTITUTE OF MANAGEMENT BELLARY

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NET PROFIT RATIO
20
15
RATIO
10 Ratio
15.95
5 10.14 11.26
0 2.57 0.01242
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INRTEPRETATION
Table 3.2 This ratio indicates firms capacity to face the economic
conditions, higher the ratio better the profitability. From the table it is clear
that in 2004-05 ,2005-06, 2006-07 continuously decrease ratio is 15.95,
10.14, 2.57, year by year and in 2007-08 is increased.11.26. and 2008-09 is
decreased 0.01242..so the company is under the loss but profit was
decrease year by year .
c. Operating Ratio
It is the relation between cost of goods sold & operating expenses on

one hand & the sales on the other hand. It measures the cost of operations
per rupee of sales.
Operating Ratio = Operating Cost X 100
Sales

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TABLE-3.3 Operating Ratio
Operating Cost Sales
2004-05 179620260.00 269842495.00 66.56
2005-06 498590333.00 622678642.00 80.07
2006-07 592997583.00 592532689.00 100.8
2007-08 447200049.00 453435123.00 98.62
2008-09 545311535.00 736206987.00 74.04
OPERATING RATIO
120 100.8 98.62

100 80.07
66.56 74.04
80
RATIO
60 Ratio
40
20
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTREPRETATION
Table 3.3 reveals that the operating ratio in the year 2004-05 ratio
is 66.56 in the year 2005-06 increased by 80.07 and in the year 2006-07
100.00 means there is an decrease in profit of company. In the year 2007-
08 decreased by 98.62 and in the year ratio 74.04 it is showing an decrease
trend this shows that company is slowly increase the profit.
d. Expenses Ratio

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It indicates the relationship of various expenses to net sales.

Expenses ratio are calculating by dividing each item of expenses or group of
expenses with net sales to analyze the causes for variation in operating ratio.
Administration, office, selling & other Expense Ratio:
This ratio indicates the relationship at administrative, selling &

other Expenses to the sales of the company. Here normally lower the
expenses higher the profitability.
Administration, office, selling & other Expenses =

Expenses X 100
Sales
TABLE -3.4 Administration, selling & other expenses Ratio
Expenses Sales
2004-05 83744275.00 269842495.00 31.03%
2005-06 58700650.00 622678642.00 9.42%
2006-07 68321455.00 592532689.00 11.53%
2007-08 92474395.00 453435123.00 20.39%
2008-09 108276722.00 736206987.00 14.71%

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OPERATING RATIO
40.00%
30.00%
20.00% Ratio
31.03%
10.00% 20.39%
11.53% 14.71%
9.42%
0.00%
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTREPRETATION
Table 3.4 There is no role of thumb for this ratio, as it may differ
from firm to firm depending upon nature of business. In the year 2004-05
ratio is 31.03% ,in the year 2005-06 ratio is decreased 9.42% in the year
2006-07 ratio increased 11.53% in the year 2007-08 ratio is20.39% and in
the year 2008-09 ratio is decreased by 14.71%
2. Profitability in relation to Investment
a. Return on shareholders Investment:
Return on shareholders investments, popularly known as ROI. It is the

relationship between net profit after tax & shareholders funds. Thus this ratio
is considered as affective indicator of the company’s profitability because it
reflects the success of management in the efficient utilization of the owner’s
investment.
ROI = Net Profit after Tax X 100
Shareholders fund

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Net Profit Shareholder Fund
2004-05 43052429.00 217335000.00 20%
2005-06 63171947.00 17400000.00 29%
2006-07 15245938.00 17530000.00 .01%
2007-08 51045767.00 218018495.00 23.41%
2008-09 91423.00 223983274.00 0.04%
Return on shareholders investment
ROI
40%
RATIO
30%
20% Ratio
10%
0%
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTREPRETATION
Table 3.5 reveals how were the resources of a firm were being used.
So higher the ratio better will be the result in the year 2004-05 20% in the
year 2005-06ratio is 29% in the year 2006-07 ratio is decreased .01% in the
year 2007-08 ratio is 23.41% and it decreased by 0.04%

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IV. Activity Ratios:
Funds are invested in various assets in business to make sales &

earn profit. The efficiency with which assets are managed directly affects the
volume of sales. The better the management of assets, the larger is the
amount of sales & the profit. Activity ratio measures the efficiency or
effectiveness with which a firm manages its resources or assets. These ratios
are also called turnover ratio because they indicate the speed with which
assets are converted or turned over into sales.
The various activity ratios are:
a. Inventory Turnover Ratio:
Inventory turnover ratio indicates the number of times stock has

been turned over during the period & evaluates efficiency with which a firm is
able manage inventory.
The ratio is calculated by dividing the net sales divided by average

inventory at cost.
ITR = Net Sales
Average Inventory at Cost
Average inventory should be taken for calculating stock turnover ratio.

Adding the stock in the beginning & at the end of period & dividing it by 2 to
calculate average inventory.

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TABLE-4.1 Inventory turnover ratio
Net Sales Average

Inventory
2004-05 269842495.00 149040556.00 1.81
2005-06 622678642.00 114404573.00 2.44
2006-07 592532689.00 312640080.00 1.9
2007-08 453435123.00 484623044.00 .94
2008-09 736206987.00 379314434.00 1.94
INVENTORY TURNOVER RATIO
3
2.5
2
1.5 Ratio
2.44
1 1.81 1.9 1.94
0.5 0.94
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
INTERPRETATION:
Table 4.1Inventory Turnover ratio has increased from 1.81 to

2.44 in the year 2004-05 to 2005-06 & decreased .in the year 2006-07 ratio
is 1.9 in the year 2007-080.94 and in the year 2008-09.1.94. increased it
shows a fall that. which signifies the firms efficiency in producing and selling
is improving

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b. Assets Turnover Ratio:
Assets are used to generate sales. Therefore a firm should manage

its assets efficiency to maximum sales. Assets turnover ratio shows
relationship between sales & assets. The various assets turnover ratio are:
Net Assets Turnover Ratio = Sales
Net asset
TABLE4.2 Net Asset Turnover Ratio
Year Sales Net Assets Ratio
2004-05 560320147.00 1306020841.00 0.42
2005-06 548538351.00 1003003055.00 0.55
2006-07 269842495.00 1054465865.00 0.26
2007-08 622678642.00 948118650.00 0.66
2008-09 592532689.00 1175611916.00 0.504

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NETASSETTURNOVERRATIO
0.7
0.6
RATIO
0.5
0.4
0.66 Ratio
0.3 0.55 0.504
0.2 0.42
0.26
0.1
0
2004- 2005- 2006- 2007- 2008-
05 06 07 08 09
YEAR
INTREPRETATION
Table 4.2In the year 2004-05 to 2005-06 ratio was 0.47, 0.55
respectively which means firm is able to produce large volume of sales for
given amount of net assets. But in the year 2006-07 it is decreased 0.26 due
to less volume at sales to the given net assets . In the year 2007-08
increased 0.66, in the year 2008-09 ratio is 0.504 .
TABLE 4.3 Fixed Assets Turnover Ratio
i. Fixed Assets Turnover Ratio = Sales
Fixed
Assets

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Year Sales Net Fixed Assets Ratio
2004-05 269842495.00 523585135.00 0.51
2005-06 622678642.00 532690595.00 1.16
2006-07 592532689.00 568828676.00 1.04
2007-08 453435123.00 570188858.00 0.80
2008-09 736206987.00 571266087.00 1.29
F/A TURNOVER RATIO
1.5
RATIO
1
1.29 Ratio
0.5 1.16 1.04 0.8
0.51
0
2004- 2005- 2006- 2007- 2008-
05 06 07 08 09
YEAR
INTREPRETATION
Table 4.4 reveals in the year 2004-05 0.51 ,2005-06 ratio is 1.16
decreased in the year 2006-07 ratio is 0.80 and again increased in the year
2008-09 1.29 up to the year 2005-06, which indicates higher degree of
efficiency in assets utilization. It is lower in the year 2006-07. and again it is
showing an decreased trend in the year 2007-08 & 2008-09increased to
1.29..

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ii. Current Assets Turnover Ratio = Sales
Current Assets
TABLE4.5 Current Assets Turnover Ratio
Year Sales Current Assets Ratio
2004-05 269842495.00 430076093.00 0.62
2005-06 622678642.00 343665293.00 1.81
2006-07 592532689.00 336389326.00 1.76
2007-08 453435123.00 417811264.00 1.09
2008-09 736206987.00 349345761.00 2.11

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current asset turnover ratio
2.5
2
1.5
ratio
Ratio
1 2.11
1.81 1.76
0.5 1.09
0.62
0
2004- 2005- 2006- 2007- 2008-
05 06 07 08 09
year
INTREPRETATION
Table 4.5 reveals that the current assets turnover ratio of the
company has improved its utilization current assets but it was reduced in the
year 2004-05 ratio is 0.62 due to in efficiency utilization of current assets.
And in the year 2005-06 increased 1.81, 2006-07 decreased to 1.76, and
again decreased to 1.09 ,and 2008-09 trend up 2.11.
d. Working Capital turnover Ratio:
A firm may also related net current assets to sales. Working capital
turnover ratio indicates the velocity of the utilization of net working capital.
Working Capital Turnover Ratio = Sales
Net Current Assets
TABLE 4.6 Working Capital Turnover Ratio

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Year Sales Net Current Asset Ratio
Amt in Rs Amt. In Rs
2004-05 269842495.00 4586424515.00 1.22

Working Capital turnoverRatio
2005-06 622678642.00 1625293064.00 3.37
10 8.15
2006-078 592532689.00 2288870547.00 0.12
6 5.23
Ratio
2007-8 453435123.00
3.37 1189072585.00 Ratio 5.23
4
1.22
2008-092 736206987.00
0.12 726908534.00 8.15
0
2002-03 2003-04 2004-05 2005-06 2006-07
Year
INTREPRETATION
Table 4.6 reveals that working capital turnover ratio in the year 2002-
03 was 1.22,in the year 2003-04 it increased to 3.37,in the year 2004-05 it
decresed to 0.12,in the year 2005-06 again increased to 5.23,in the year
2006-07 increased to 8.15 indicate the efficient utilization of working capital.
But in the year 2004-05 it was reduced due to the inefficiency in utilization of
working capital.0.12.

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CHAPTER 6
FINDINGS
SUGGESTIONS AND
CONCLUSION

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FINDINGS :
1)In the year 2004-05 current ratio was 3.04 in the subsequent years
it doesn’t reach the standard ratio ,so it is unfavorable of the company.
2) Quick ratio has been continuously decreasing year by year, it shows

that company’s liquidity position is weak.
3) Absolute quick ratio has increased year by year but s still below the
standard of 1:1 company position is still weak .
4)Debt Equity Ratio in the year 2004-05, 0.61 subsequent year

increased year by year company position is good.
5) Gross profit in the year 2004-05 ratio 0.11% and in the year 2008-09
ratio is trend up 10.8% company position is favorable.
6) Net profit Ratio in the 2004-05 was 15.95% but in the 2008-09
decreased 0.01.% it shows un favorable of the company .

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SUGGESTIONS
1. The current ratio and Quick ratio of the company doesn’t reach
standard ratio so company need to concentrate on increasing the
current ratio by increasing in current asset and Quick Assets.
2. debt ratio of the company has been increased year to year . high debt
ratio is unfavorable of the company.
3. Net profit ratio weak try to increase sales and the investment on fixed
asset should be reduced.
4. The company needs to maintain good inventory turnover ratio by

increasing the sales.
5. The company needs to increases the working capital turnover ratio for
efficiency utilization of working capital.
CONCLUSION
Study of the ratio analysis of ranna sugars reveals the performance of

the company in terms of financial aspects .it is found that there is an
increase in sales ,net profit, gross profit during 2008-09 the cash balance is
also increased for the above said year . it is also observed that the current
ratio is not satisfactory .quick ratio is decreased year by year .as observed
absolute liquid ratio is found there is increasing year by year . net working
capital ratio is also increasing year by year .
Further the company performance and efficiency can be improved by

above mentioned points in the suggestion.

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BIBLIOGRAPHY
 I.M. Pandey – Financial Management. Vikas Publishing House Pvt. Ltd.

 M.Y. Khan and P. K. Jain – Financial Management. Tata Mcgraw –Hill
publishing company Ltd. New Delhi.
 Prasanna Chandra – Fundamentals of Financial Management. Tata Mcgraw
Hill Publishing Company Ltd. New Delhi.

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RATIO ANALYSIS

AKIM, BELLARY Page 1

The RAYATAR SAHAKARI SAKKRE KARKHANE NYIYAMIT (R.S.S.K.N) is a

Ratio Analysis is one of the techniques of financial analysis where ratios

AKIM, BELLARY Page 2

Objectives of the Study:

2. To know the impact of various assets & liabilities on financial performance

3. To evaluate the financial performance & operations with the help of

Method of data collection

The collection of the data of this report is segregated into

It is collected through direct interaction with

Account officer. This includes

The organization chart, various department etc.

Source like company annual report

AKIM, BELLARY Page 3

AKIM, BELLARY Page 4

The sugar industry is one of the important Ago-based industry of

Sectors No. of factories

Private sector 127

Co-operative sector 227

RATIO ANALYSIS OVERVIEW

Ratio analysis is a powerful tool of financial analysis, the easiest way to

The ratio defined as expression of quantities relationship between two

Operational & Financial Health” through ratio analysis.

Ratio analysis is a technique of analysis the financial statement of

Ratio analysis is one of the most powerful tools of financial analyses

With the help of ratio one can determine

1. The ability of the firm to meet its current obligations.

4. The overall operating efficiency & performance of the company.

AKIM, BELLARY Page 6

Significance of ratio analysis

1. Ratio Analysis helps in decision making from the information provided in

2. Ratio Analyses is of much help in financial forecasting & planning.

3. The financial strength & weakness of firm are communicated in a more

4. Ratio even helps in co-ordination, which is of utmost importance in

5. Ratio Analysis even helps in working effective control of business.

Limitations of ratio Analysis:

Ratios can be classified into different categories depending upon the

Traditional Classification has been on the basis of financial statements, on

AKIM, BELLARY Page 7

1. Profit & Loss account ratios.

2. Balance sheet ratio.

E.g. Stock Turnover Ratio, Debtors Turnover Ratios, Fixed Assets

Turnover Ratio etc

II. FUNCTIONAL CLASSIFICATION OF RATIOS

3. Absolute Liquid Ratio

4. Net Working Capital Ratio

1. Total Debt Ratio

3. Capital Employed Ratio

4. Fixed Asset to Net worth Ratio

5. Current Asset to Proprietor’s fund Ratio

AKIM, BELLARY Page 8

III. PROBABILITY RATIOS

a. Gross profit Ratio

b. Net profit Ratio

d. Operating profit Ratio

I. Cost of goods sold

II. Administration, selling and others

h. ESP (Earning per share)

IV. ACTIVITY RATIO

i. Inventory Turnover Ratio

ii. Debtors turnover Ratio

iii. Asset Turnover Ratio: