Ratio Analysis

It

is a tool of financial analysis. It is a systematic use of ratios to interpret / assess the performance and status of the firm. It is used to compare risk and return relationships of firms of different sizes.

Liquidity Ratio
Current

ratio:Current ratio= Current assets Current liabilities = 0.53 times

Current

ratio of the company is not good . Co. does not have enough current assets to pay current liabilities. Co. should decrease its current liability by decreasing its expenses

Quick

Ratio:Quick ratio = Quick assets Current liabilities = 0.18 times

Company should increase its liquidity as the company dont have enough cash to meet its liabilities, expenses and other emergency requirement.

Super

quick ratio:Super quick ratio = Super quick assets Curr ent liabilities = 0.11
times

Company is in a very bad liquidity position. It should reduce its expenses

Capital Structure Ratio

Debt

equity ratio:Debt equity ratio = Equit

Debt y = 0.14 times

Company long term financial position is good but co. should raise some debts so that it can get tax relief.

Proprietary

Ratio :Proprietary ratio = Shareholder funds T otal assets = 0.40 times

The proprietor should finance more so that lenders and creditors get more satisfaction.

Interest

Coverage Ratio :Interest coverage ratio = earning before interest and tax Interest = 10.56 times The company is in a good position because the company interest coverage ratio is 10 times which imply that even if firms EBIT were to decline the companys operating profit will be sufficient to meet interest on loan.

Debt

Asset Ratio :Debt Asset Ratio =

Debt Asset = 0.06 times

The company is in a good position when considered to debt asset ratio. The co. have sufficient asset to cover the debt.

Profitability Ratio
Gross

Profit ratio:Gross profit ratio = Gross profit X 100 Net sales =

52.86%
A high ratio gross profit to sale is a sign of good management as it implies that the cost of production of the firm is relatively low

Operating

expense ratio:Operating expense ratio = cost of goods sold + operating expenses X 100 Net sales = 81.92%

The company has good operational efficiency. The operating ratio of the company is high which means company is earning good profit.

Return

on assets:Return on assets = Net profit after tax X 100 Average total assets = 9.01%
It is always under estimated because interest paid to the lender are excluded from the net profit.

Return

on equity:Return on equity = Net profit after tax X100 Average total shareholders equity = 25.28%
The companys return on equity is sufficient as compared to return on asset. The owner is getting return on his investment.

Return

on capital employed: Return on capital employed = Earning before interest and tax X 100 Average total capital employed = 22.81%
The company should increase its profitability in consideration to long term funds.The capital employed is not sufficiently used.

Turnover Ratio
It

measure the relationship between the cost of goods sold and the the inventory level Inventory turn over Ratio= cost of goods sold Average stock cost of goods sold= sales - gross profit Average stock = opening stock + closing stock 2 Inventory turn over Ratio =3.31 times

Debtors turn over ratio It shows how quickly debtors are converted into cash or debtors turnover is a test of liquidity of the debtors of a firm Debtors turn over ratio = net credit sales Avg debtors Avg debtors= opening debtors + closing debtors 2 Debtors turn over ratio = 4.41 times

Assets turn over ratio

It indicates the effency with which firm uses all assets to generate sales
Assets

turn over ratio = cost of

Avg assets

goods sold

cost of goods sold=31979.3, avg assets = 59860.81mn =.53 times

Fix assets turnover

This ratio indicates that how fix assets has been used well. This ratio is very important for manufacturing organization.
Fix

assets turnover= cost of goods sold

Fix assets =2.18 times

Current assets turnover

This ratio is very important for those organization which use very less current assets
Current

assets turnover= cost of goods sold current assets =1.13 times

Capital turnover ratio

Capital turnover ratio = cost of goods sold Avg capital employed cost of goods sold =31979.3 capital employed= long term liabilities + owner equity capital employed=2537.16

Capital turnover ratio= 31979.3 2537.16

=1.260 times

Creditors turnover ratio

Creditors

turnover ratio = Net credit purchase avg creditors Purchase = sales + closing stock+ gross profit - opening stock avg creditors = 7782.25 Creditors turnover ratio=6.6 times

Submitted by:Pankaj mansinghani Nikhil Arora Ravi kumar tiwari