CHAPTER I INTRODUCTION

RATIO ANALYSIS

MEANING OF RATIO ANALYSIS

Ratio is an expression of the quantitative relationship that exists between the two numbers. In simple language ratio is one number expressed in terms of another and can be worked out by dividing one number into the other. It shows the relationship between two figures. Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements. So that the strengths weakness of a firm as well as its historical performance and current condition can be determined. The relationship between two (or) more accounting figures/groups is called financial ration. A financial ratio helps to summarize a large mass of financial data into a concise form and to make meaningful interpretation and conclusion about the performance and position of the firm. A ratio may be expressed either in proportion (or) as tare (or) as percentage. A ration may take the form of proportion. Here the figures of the two items used for computing the ratio (or) expressed in common denominator examples are current ration 4:2, acid test ratio = 1:2:1 etc. turnover ratio = 2 times. Financial statements can give better in sight about financial strength and weakness of the firm if they properly analyze information reported in financial statements. Management should be particularly interested in knowing financial strengths of the firm to make their best use and to be able to spot our financial weakness of the firm to take suitable corrective actions. Analyzing financial statements is of interests to tenders, investors, security analysts, managers and others. Financial analyze may be done for a variety of purpose which may range from a sample analysis of the short term liquidity position of the firm, to comprehensive assessment of the strengths and weaknesses of the firm in various areas, it helps in assessing corporate excellence, judging credit worthiness, forecasting brand ratings predicting bankrupt. There are various methods of techniques used in analyzing financial statements such as comparative statements common size and trend analysis. But these simple tools will not be helpful to the analyst to make out the firms financial position and performance.

For a meaningful and realistic assessment of the position and performance of the firm the analyst should try to establish and evaluate the relationship between different components items of basic financial analysis. It is the process of establishing and interpreting various ratios. It is with the help of ratios that the financial statements can be analyzed more clearing and decisions made from such analysis.

NATURE OF RATIO ANALYSIS:

Nature: - The ratio analysis of financial statements stands for the process of arrangement of data computation of ratios interpretation of the rations so computed of protections through ratios. However ratio analysis is not an end itself. It is only a means of better understanding of financial statements and weakness of a firm collection of more ratios does not serve and purpose, unless several appropriate ratio are analyzed and interpreted. The following are the 4 steps involved in ratio analysis, control of the firm with a limited state and there earnings will be magnified with the overall rate of return of the firm is higher than the cost of debt capital.

DEFINITION:
RATIO: It may be defined as The indicated quotient two Mathematical expression and as The relationship between two (or) more things. In financial analysis, a ratio issued as a bench mark for evaluating the financial position and performance of the company. Ratio is defined as the indicated quotient of two mathematical expressions and as the relationship between two or more things in financial analysis. Ratio Analysis is a technique of analysis and interpretation of financial statements. It is a process establishing and interpreting various ratios for helping in making certain decisions. It is a process of establishing and interpreting various for helping in making certain decisions. It is a means of better understanding of financial strength and weakness of a firm.

Steps for Ratio analysis

1. Selection of Relevant data from the financial statements depending upon the object of analysis. 2. Calculation of appropriate ratios from the above data. Comparison of the calculated ratios with the ratios of the same firm in the past, 3. The ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs 4. Interpretation of ratios.

The ratio is used as benchmark for evaluating the financial position of the firm. The absolute accounting figures reported in the financial statements do not provide a meaningful understanding of the performance and financial position of the firm. As accounting figure conveys meaning when it is related to some other information. The relation between two accounting figures expressed mathematically is known as financial relations. Ratios help to summarize the large quantity of the financial data and make qualitative judgment about firms performance.

The importance of the ratio analysis for a business firm lies in the study of the numerical aspect of the problem and systemized with the help of ratio analysis. Its main contribution lies in bringing into hold relief to the inter relationship which exists between various segments of business, as expressed through accounting statement and avoiding any distortions that may result from absolute of accounting information.

To evaluate the financial position and performance of a firm the financial executives needs a certain yard stick. The yardstick frequently used in ratio analysis it is an instrument for diagnosis of the health of an enterprise. Thus it does by evaluating in a broader context important aspects of the conduct of business like liquidity. Solvency Profitability capital bearing etc. such an evaluation enables conclusion to be drawn regarding the financial requirements.

Further, the ration analysis can be of in valuable aid to the management in the discharge of its basic duties and functions like forecasting, planning, coordination, communication and control. And an analysis study of this part performance of the business helps in predicting the future.

INTERPRETATION OF THE RATIOS:

A Single ratio in itself does not convey much of the sense. To make ratios more useful they have to be further interpreted. 1. Group of ratios 2. Ratios may be interpreted by calculating a group of related ratios. A single ratio supported by other related additional ratios becomes more understandable and meaningful. 3. Historical Comparison 4. One of the easiest and most popular ways of evaluating the performance of the firm is to compare its present ratios with past ratios called comparison over time. 5. Projected ratios 6. Ratios can also be calculated for future standards based upon the projected or proforma of financial statements. 7. Inter firm Compared 8. Ratios of one firm can also be compared with the ratios of some other selected firms in the same industry at the same point of time.

GUIDELINES FOR USE OF RATIOS:

Accuracy of financial statements: the ratios are calculated from the data
available in financial statements.

Objectives or Purpose of Analysis: The types of ratios to be calculated will

depend upon the purpose for which these are required.

Selection of Ratios: Precaution in ratio analysis is the proper selection of

appropriate ratios.

 Use of Standards: The ratios will give an indication of the financial position
only when discussed with reference to certain standards.

Caliber of Analysis: The ratios are only guidelines for the analyst he should not
base his decisions entirely on them.

UITILITY OF RATIO ANALYSIS:

The following are the important managerial uses of Ratio Analysis.

Help in Decision Making: Financial Statement is prepared primarily for decision

making. But the information provided on the financial statements in not an end in itself and no meaningful conclusion can be drawn from these statements alone.

Financial Forecasting: Ratio Analysis is of much help in financial forecasting and

planning. A Ratio relating to past Sales. Profits and financial position in the future trends.

Comparison: with the help of Ratio Analysis, ideal Ratios can compose and they can
be used for comparison of particular firms progress and performance.

Control and Co-ordination: Making effective control of the business. Standard

ratios can be based upon proforma financial statements and variances is deviations if any can be found by comparing the actual with the standards so as to take a corrective action at the right time. Co-ordination which is of utmost important in effective business management.

Cost Control: Ratios are very useful for measuring the performance and are useful
cost control. Ratio analysis throws light on the degree of efficiency in management and utilization of assets.

Communication value: The financial Strength and weakness of the firm are
communicated in a most easy and understandable manner by the use of ratios.

Inter firm comparison: Ratio analysis throws light on the financial position of a
firm but also serve as a stepping stone to remedial measures. They made possible with the inter firm comparison with the industry averages. They expected that the performance of a firm should be in broad confirm with that of industry to which it belongs. Such comparison demonstrates the relative strengths of the firm.

 Other uses: Financial are use full in the diagnosis of financial health of a firm they
highlight the liquidity, solvency, profitability, and capital gearing position of a firm. It is an essential part of the budgetary control and standard costing. Ratios are immense importance in the analysis and interpretation of financial statements as they bring the strength or weakness of a firm.

1. Ratio analysis simplifies the understanding of financial statement. 2. The financial strength and weakness of a firm are communicated to the intrest parties in easy and understandable manner. 3. Ratio analysis enables an enterprise to achieve co-ordination.

LIMITATIONS OF RATIO ANALYSIS:

1. 2. 3. 4. 5. 6. 7. 8.
Limited use of single ratio. Lack of adequate standards. Price level changes. Un comparable. Change of accounting procedure. Inherent limitations of accounting. Ratios are no substitutes. Absolute figurers distortive.

LIMITATIONS OF RATIO ANALYSIS:

Ratio may not prove to be the ideal tool for inter firm comparisons. When two firms adopt different accounting policies.

1. A study of ratios in isolation, without studying the actual figures, may lead to wrong conclusions. 2. Ratios can be calculated only on the basis on the data if the original data is not reliable, then ratios will be misleading.

3. Ratio analysis suffers from lack of consistency. 4. In the absence of well accepted standards, interpretation of ratios becomes subjective. 5. Ratios fail to reflect the impact of price level changes, and hence, can be misleading. 6. Ratios are only tools of quantitative analysis and fail to take into account the qualitative aspects of a business. 7. Ratios are based on past data and hence cannot be reliable guide to future performance. 8. Ratio are volatile and can be influenced by a single transaction with extreme value. 9. Ratios are only indicators. They need a proper analysis by a capable management; they are only the means, and not an end, in the interpretation of financial statements.

CLASSIFICATON OF RATIOS: _______________________________________________________

Traditional Classification OR Statement ratio Importance Functional Classification OR Classification According to Tests Ratios according to importance Significance Ratios

Balance sheet ratios OR Position statement Ratio

Liquidity Ratios

Primary Ratios

Leverage Ratios

Secondary Ratios

Position & Loss A/c Ratios OR Revenue Income Statement Ratio

Activity Ratios

Profitability Ratios

Composite / Mixed Ratios OR Inter Statement Ratios

A. TRADITIONAL CLASSIFICATION OR STATEMENT RATIOS:

_______________________________________________________

Balance sheet Ratios OR Position Statement Ratio

Profit & Loss A/c Ratio OR Revenue / Income Statement Ratios

Composite/ Mixed Ratio OR Inter Statement Ratios

1) Current Ratio 2) Liquidity Ratio (Acid) Test or Quick Ratio 3) Absolute Liquidity Ratio 4) Debt Equity Ratio

1) Gross Profit Ratio 2) Operating Ratio

1) Stock turnover ratio 2) Debtors turnover ratio

3) Operating Profit Ratio 4) Net profit Ratio

3) Payables turnover ratio 4) Fixed Asset turnover Ratio

5) Proprietary Ratio 6) Capital Gearing Ratio

5) Expense Ratio 6) Interest coverage Ratio

5) Return on equity capital 6) Return on share holders funds

7) Asset Proprietorship Ratio 8) Inventory to working Capital Ratio 9) Ratio of current Assets To fixed Assets

7)

Return employee

on

capital

8) Capital Turnover Ratio 9) Working capital turnover Ratio 10) Return on total resources 11) Total Assets Turnover

B. FUNCTIONAL CLASSIFICATION OR CLASSIFICATION ACCORDING TO TEST. FINANCIAL CLASSIFICATION IN VIEW OF FINANCIAL MANAGEMENT OR CLASSIFICATION ACCORDING TO TESTS.
LIQUIDITY RATIOS A. 1) Current Ratio 2) Liquidity Ratio (Acid Test or Quick Ratio) 3) Absolute Liquid Ratio B. 1) Debtors Turnover 2) Creditors Turnover Ratio 3) Inventory Turnover Ratio 1) Debt Equity Ratio 2) Debt to Total Capital Ratio 3) Interest coverage Ratio 4) Cash flow/ Debt. Service Ratio 5) Capital Gearing. LONG-TERM SOLVENCY & LEVEERAGE RATIOS Financial Operating Composite ACTIVITY RATIOS 1) Inventory Turnover Ratio 2) Debtors Turnover Ratio 3) Fixed Assets Turnover Ratio 4) Total Assets Turnover Ratio 5) Working Capital Turnover Ratio 6) Payable turnover Ratio 7) Capital Employed Turnover Ratio B. In relation to Investments 1) Return on Investments 2) Return on capital employed 3) Return on equity capital 4) Return on total resources 5) Earnings per share 6) Price earnings Ratio PROFIT ABILITY RATIOS A. In relation to Sales 1) Gross profit Ratio 2) Operating Ratio 3) Operation Profit Ratio 4) net Profit Ratio 5) Expenses Ratio

10

CHAPTER II RESEARCH METHODOLOGY

11

RESEARCH METHODOLOGY
Methodology is the way in which we find out the information. It describes how project is done. The methodology includes methods, procedures, and techniques, and techniques used to collect and analyze information.

The proposed study is carried out with the help of both primary and secondary sources of data. The present study will reveal the finance performance of the company covering purely financial data supplied by the companys financial statements through ratio analysis.

OBJECTIVES OF STUDY:
The following are the objectives of study: 1. To comparison of changes in ratios of different phenomenon at different times. 2. To know the current financial position and liquidity position of the company. 3. To know the ling term financial position of the company. 4. To assess the financial stability of a concern by the application of Ratio Techniques. 5. To know the profitability of the concern. 6. To know the progress of the business over a period of time. 7. To evaluate the credit worthiness position of the corporation. 8. To calculate the return on investments of the corporation. 9. To identify the reasons for the change in profitability and financial position of the company. 10. To understand the efficiency of the firm with the help of turnover ratios.

SCOPE OF THE STUDY:

The present study ill revel the finance performance of the company covering purely financial data supplied by the companies through RATIO ANALYSIS.

12

The study is confirmed to RATIO ANALYSIS Ratio analysis is one of the most popularly used tool in financial analysis. Ratio analysis is used as yardstick for evaluation the financial position and performance of the company. It is a technique of analysis & interpretation of financial statements. It is used for decision making.

The Ratio Analysis is analyzed financial data along with interpretation. The study is based on last five years annual reports of Ratna Infrastructure Projects Private Limited. The present study is restricted only five years ( 2005-06 to 2009-10 ) Only the secondary data has been taken for the study.

The study covers only the financial performance of the corporation.

Only the ratio analysis is taken as a technique to evaluate the financial performance of the corporation. The scope covers is confined to the liquidity ratios, leverage ratios, efficiency ratios, and profitability ratios. The scope of study of study is limited of the availability of past or historical information of financial statements.

PERIOD OF THE STUDY:

To study the comparative financial statements analysis of RIPPL the research had chosen six years period from 2005-2006 to 200902010 as period of study. In the report the financial conduction of the company in the six years of the study period, was analyzed and presented in the form of statements and tablets, accompanied by respective interpretations.

13

THE LIMITATIONS OF THE STUDY:

The following are the limitations of the study

1. The study has been limited to only five years ( 2005-2010 ) 2. All the ratios could not be covered under the study, because of inadequate information. 3. The price level changes are not taken in to account in the financial statement over the five years. 4. The major limitation of the corporation under the study was time. Since it was to be completed within short period of time, which is not sufficient to under the comprehensive study. 5. The study of the company includes only ratios analysis. 6. The conclusion drawn from the annual figures provided by the company which may not give accurate financial position of the company.

7. There are many techniques for financial analysis but the study is carried out by only Ratio Analysis. 8. In published accounts key information is sometimes omitted, thus may limit the amount of analysis that can be undertaken. 9. Financial analysis is based upon the only minority information and non minority factors are ignored. 10. This study may not reflect the whole financial position of the organization.

COLLECTION OF DATA:
The study is mainly based on the secondary data obtained for last 5 years. The data is collected from the annual reports of RIPPL and other printed material available from the company. Some of the data collected from reports and other journals.

]
14

PRIMARY DATA: The data collected first time for any statistical investigation and is used in the statistical analysis is termed as primary data. The primary data is collected by interacting with the finance manager and other concerned executives at the administrative office of the company.

SECONDARY DATA: The data has been collected from financial statements of profit and loss account, balance sheets of RIPPL websites, and journals of the concerned organization. The secondary data was collected from already published sources such as annual reports, internal records. All the secondary data used for the study has been extracted from the annual reports, manuals and other published materials of the company. Secondary data has been used to analyxe the financial performance of the corporation.

Sources of Secondary data:

1. Secondary data has been collected through annual reports and other publishe broachers. 2. Company web site ( www.ratinfra.in )

15

CHAPTER III COMPANY PROFILE

16

COMPANY PROFILE Type of industry: construction

Companies that design, develop, build, or tear down structures, as well as companies that supply them, are all part of the construction industry. Currently in the U.S., the industry is depressed despite recently lowered interest rates. However, there is still activity in the private and government sectors, as well as small jobs such as remodeling.

Industry composition:
The construction industry is considered a great indicator industry to the overall health of a nations economy. When the construction demand increases, that means that many other industries are growing as well, and vice versa. The construction industry is composed not only of companies that actually build structures, but also those that design, develop, repair, or maintain structures. The construction of infrastructures such as roadways, railroads, or airports is included in our transport manufacturing industry.

History:
The construction industry began back in ancient times when humans began to build their own shelters, such as huts, out of the natural resources they has available around them. The industry has evolved a lot since those times, especially in modernized economies, but the basics are still the same. Construction is still humans using the natural resources available to them to build objects, such as private shelter, roads, or public buildings that are of use of them.

The construction industry is characterized by cycles of growth and depression. The outcome of companies that make construction materials is tied closely to the amount of new construction taking place; that, in turn, is influenced by interest rates and the growth of the other industries in the economy. Recent construction history has been largely determined by the raising interest rates and economic outlook.

17

On January 31, 2006, Alan Greenspan stepped down as the U.S., Federal Reserve Chairman, and was replaced by Bob Bernanke. The housing market, which experienced a boom in the early 2000s due to record low interest rates and political policies, was already slowing down. Under the new Fed leadership, interest rates increased, leading to a depressed housing market as people examined the interest rates for their loans and decided against purchasing a home. The economic collapse of 2008 further crippled the construction industry by killing nearly all growth in other industries in the economy. This has caused global builders and supplies of the construction industry to suffer.

The Construction industry is fragmented. The production in this industry is divided among a few different companies, however, no single firm has large enough share of the market to be able to influence the industrys direction or price levels.

The construction industry is divided into three major segments. The construction of building segment includes contractors, usually called general contractors, who build residential, industrial, commercial, and other buildings. Heavy and civil engineering construction contractors build sewers, roads, highways, bridges, tunnels, and other projects. Specialty trade contractors perform specialized activities related to construction such as carpentry, painting, plumbing, and electrical work.

Good and services. Houses, apartments, factories, offices, schools, roads, and bridges are only some of the products of the construction industry. This industrys activities include the building of new structures, including site preparation, as well as additions and modifications to existing ones. The industry also includes maintenance, repair, and improvements on these structures.

Ratna infrastructure Projects Private Limited is an established and ISO 9001:2008 accredited engineering and construction company engaged in execution of infrastructure Projects, such as construction of National Highways, Dams, Irrigation Canals, Bridges, Buildings and Industrial Plants. It started in a small way as Ratna Constructions with the first brick of foundation for it laid in the year 1987 for executing civil contract works. Since its establishment
18

Ratna has evolved, matured and forayed in to the entire gamut of infrastructure works. Ratna has proved itself time and again beyond doubt to meet the challenges and requirements of various infrastructure projects, small and large from state governments agencies and private employers. Ratna Constructions has become RATNA INGRASTRUCTURE PROJECTS PRIVATE LIMITED (RIPPL) with effect from April 30, 2007 as an ongoing process of metamorphosis and to reflect the type of various works undertaken by RIPPL.

Areas of Expertise
Dams

Canals

Structures

Road Works

Buildings

Pipe Lines

VISION OF RATNA INFRASTRUCTURE PROJECTS PVT LTD

It is our vision to build a world-class engineering, construction, and project management enterprise. We will be recognized for our abilities to complete projects on-time with zero tolerance for cost overruns. We will create a professional environment that will continually challenge our associates and affiliates to innovate, improve, and delivered.

19

MISSION OF RATNA INFRASTRUCTURE PROJECTS PVT LTD

It is our mission to build enduring infrastructure for communities around the world. Excellence in project management is critical to our mission.

MANAGEMENT TEAM
Ratna Infrastructure Projects Private Ltd (RIPPL) is headed by Sri M.M.L. Narasimham as its Managing Director at the apex who is a visionary with an uncompromising spirit on principals and an eye for detail both major and minor. His dynamism and leadership qualities have drawn the best of professionals from different fields who bring together their rich knowledge and expertise to the common platform. They undertake and execute jobs independently and support and supplement the effort of the Managing Director under whose stewardship the companys growth is scaling new heights.

MANPOWER
Ratnas greatest asset has been its manpower resources with whose support the organization has grown in leaps and bounds. The team consists of highly qualifies and experienced personnel drawn from prestigious organizations. The total manpower strength of the Company during the year has crossed 2000 members. Keeping in view the shortage of manpower in the industry, Ratna has been continuously working on sourcing of manpower. The Company also started working closely with National Academy of Construction (NAC), Hyderabad, for training manpower in certain technical streams and later on absorbing them to meet the Companys requirements. One of the focus areas pertaining to this sector is driving staff and to mitigate the shortage we tied up with The Krishna District Lorry Owners Association and Driving Schools, Vijayawada, for training the personnel in driving. Assessment of competencies required by HODs for effective performance was carried out. In the areas where competencies were found wanting, training programmes were conducted. Two such programmes are on Team Building and Project Management respectively.

20

Quality Assurance
Ratna has built a reputation for quality and is firmly committed to its motto of Ecellence through Quality. It is Ratnas objective to continuously improve on the level of Quality Performance to ensure that the company is successful in business. To this end, the Group strives to conduct its operations in such a manner that all projects and services are carried out to meet the clients requirements while it continuously equips itself with the necessary methodologies and tools to improve quality systematically. In the pursuit of operational excellence in all aspects of its business, Ratna has successfully formulated, the Ratna Quality and Safety Assessment System (RAQSAS) in 2000. RQSAS is self-regulated assessment system of procedures and testing methods in which standards were set out for the various quality and safety aspects of irrigation construction. In an environment of poor skills and a transient migrant workforce which is prevalent in construction field, the introduction of RQSAS will help Ratna in its effort to enhance the quality and safety performance standards in building projects.

CORPORATE OVERVIEW
Ratna Constructions is a quality conscious company. The company continues to strengthen its position and is today regarded as a trusted business partner. Ratna Constructions developed a rich technical expertise integrating state-of the- art technologies to specifically address the user needs with the timely execution of quality work as its core competence, Ratna Constructions began to encompass the latest construction technologies and integrated its accumulated expertise to harmonize people, facilities and environment. Bolstering corporate value further, Ratna Constructions is moving fast forward in shaping the destiny of our country. And as an ongoing process of metamorphosis, Ratna Constructions has become Ratna Infrastructure Projects Pvt limited with effect from April 20,2007

21

FIXED ASSETS
PLANT & SEGMENTS
Our strong asset base provides a strong competitive leverage for shorter turnaround times and cost effective business model. The company has Rs. 100 cores of Gross Block consisting of Excavators, Tippers, Transit Mixers, Crushers, Batching Plants, Tower Cranes, Compactors, Loaders etc. and is in the process of adding equipment worth Rs. 100 cores

BUSINESS SEGMENTS
Ratna has been active in the field of construction in India for more than 22 years as a Multi-Service organization and is best known for its expertise in implementation of construction schemes and infrastructure works, below are the few areas where Ratnas skill can be seen: IRRIGATION

INDUSTRIAL

POWER

RAODWAYS

BULDINGS

URBAN INFRASTRUCTURE

PARTNERS
Joint ventures bring together the core strength tow different parties to the forefront and enable them to take up works and execute them efficiently for optimum utilization of resources for mutual benefit. Some of the major joint ventures are: Gayatri Ratna JV

22

Hindustan Ratna JV ZVS Ratna Sushee JV MEIL Ratna JV KBL Ratna JV Ratna Sai Sudheer JV Ratna RK JV KCL Ratna

CLIENTS
The client list of Ratna includes various Government Departments, Private

Organizations, Public Sector Undertaking etc. below is list of our few esteemed clients: National Thermal Power Corporation

Irrigation Department

R & B, Public Health

GMR

Visakha Steel Plant

National Mineral Development Corporation

NTPC Tamilnadu Energy Company Ltd.

23

APGENCO

Bhartiya Rail Bijlee Corporation Ltd.

Bhilai Engineering Corporation Ltd.

Hindustan Steel Works Construction Ltd.

BOC India Ltd.

TATA Projects Ltd.

Siemens Ltd.

Tamilnadu Road Development Company Ltd

NAME OF BANKS WHICH PROVIDED FINANICAL ASSISTANCE TO RIPPL

1) State Bank of India 2) State Bank of Travancore 3) State Bank of Mysore 4) Axis Bank Limited 5) Bank of India 6) IDBI Bank Limited 7) ING Vysya Bank Limited 8) UCO Bank

24

LIST OF EQUIPMENT AND MACHINERY OWNED BY RATNA INFRASTRUCTURE PROJECTS PVT.LTD:

Sl. No.

Details of each equipment EARTH MOVING EQUIPMENT

No. of Units

1 2 3 4 5 6 7 8 9 10 11 12

Excavators Graders Dozers Tractor Dozers Loaders Tractor Loaders Loader Cum Excavator Soil Compactor Tippers Water Tankers Tractor Tanker Diesel Tankers

51 6 4 2 3 8 2 7 248 14 1 5

ROCK PROCESSING EQUIPMENT

1 2 3 4 5 6 Crushing Plants Crawler Drills Compressors Air Compressors Drilling Compressor Rock Breaker 4 6 5 7 1 1

CONCRETE EQUIPMENT
1 2 3 4 5 6 7 8 9 10 11 Batching Plant Mini Batching Plant Mobile Batching plant 9 2 3 14 4 1 1 31 13 11 6 15

Total
Concrete Pumps Ice Plant Chilling Plant Transit Mixers Self loading transit Mixers (C.C) Concrete Mixers Canal lining pavers Needle Vibrator
25

12 13

Bed Vibrator Plate Vibrator

5 11

ROAD WORK EQUIPMENT

1 2 3 4 5 6 7 8 1 2 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 WMM Plant Hot Mix Plant Sensor Paver Mechanical Paver Bitumen Sprayer Rollers Vibromax Roller Sheep Foot Roller 1 1 2 3 1 5 1 1

VEHICLES
Two wheelers 4 wheelers 124 50

GENERATORS
Generators 67

GENERAL
Welding machines Mobile cranes Hydrualic Mobile Crane Tower Crane Track Mounted ( 12 T X 45/50M ) Dewatering Pumps ( Diesel ) Electric Pumps Submergible Pumps Shuttering Plates Acro tubes for Scaffolding Total Stations Leveling instruments Lab Equipment Weigh Bridge Bar bending & Cutting Machines 36 1 1 1 37 28 8 80000 Sq.m 80000 Nos 3 10 2 Lots 2 2

Pipe Manufacturing Equipment

1 2 3 4 5 6 Plate Bending machine SAW Welding Machines Pug Cutting Machines Rectifiers Hydro Testing Equipment Grinding Machines AG 7
26

2 Nos. 8 Nos. 4 Nos. 8 Nos. 2 Nos. 4 Nos.

7 8 9 10

Grinding Machines AG 5 Hoist Arrangements Guniting Machines Sans blasting & Painting

2 Nos. 2 Nos. 6 Sets 4 Sets

AWARDED PROJECTS

Dummugudem Lift Irrigation scheme on Godavari river SRBC Pothireddypadu Canal works Package No. 12 of GNSS Projects Package No. 29 of GNSS Projects Package No. 14 of GNSS Projects Mid Manair Dam & Canal Feeder Canal in veligonda PKG 93 B Telugu Gnaga Projects PBC Polavaram Project Package 8 PKG 93A Telugu Ganga Project PBC Toll Plaza and Roads Storm Water Drains

27

COMPLETED PROJECTS
Sunkesula-Dam closing under Veligonda division N H 7 Road Site leveling- Rourkela Steel Plant Satna-Maihar Earth work and site preparation, kirandul North Canal of mylavaram Package No. 48A

Address:

Plot No. 88, Prashashan nagar, Road No.72, Jubilee Hills, Hyderabad 500 033. Phone: +91-040-23557131 / 23555263 / 23551798 Fax : 040 23555264, Email : ho@ratnainfra.in

28

CHAPTER IV DATA ANALYSIS AND INTERPRETATION

29

I. LIQUIDITY RATIOS Liquidity refers to the ability of a concern to meet its current obligations as when these become due. The short term obligations are met by realizing amounts from current, floating or circulating assets. To measure the liquidity of a company, the following rations can be calculated

1. Current ratio 2. Quick ratio

1. CURRENT RATIO
Current ratio may be defined as the relationship between current assets and current liabilities. It is a measure of liquidity and is mostly widely used to make the analysis of shortterm financial position of liquidity of a firm. It indicates the amount of current assets available for each current liability. Higher the ratio, greater the margin of safety for creditors and vice- versa. However, too high / too low ratio calls for further investigations since the too high ratio may indicate the presence of idle funds and too low ratio may indicate the overtrading / under capitalization.

FORMULA:

Current Assets

Current ratio = ----------------------------

Current liabilities

Standard:
A relatively high current ratio is the indication that the firm / organization is liquid and has to pay its current obligations in time as and when they become due.

30

When a low current ratio represents that the liquidity position of firm is not good and the firm shall not be able pay its current liabilities in time.

A current ratio 2:1 usually as ideal.

Table shows current ratio calculations:

(Rs lakh) YEAR CURRENT ASSETS ( Rs in lakhs ) 2006-07 2007-08 2008-09 2009-10 2010-11 Average 18,228.22 16,556.18 18,086.49 27,638.88 26,711.90 21,444.334 CURRENT LIABILITIES (Rs in lakhs ) 6,545.08 6,071.60 6,327.70 9,170.64 5,795.64 6,782.062 2.79 2.73 2.86 3.01 4.60 3.19 RATIO

Current ratio
5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 2009-10 2010-11 2.79 2.73 2.86 3.01 4.6

31

Interpretation:
1. If we observe the above current ratio table, the current ratio is decreased between 2006-07 and 2007-08 i.e. 2.79 to 2.73 due to decrease in current assets. 2. Current assets increased between 2007 08 and 2008 09 and 2008 09 i.e., 2.73 to 2.86 due to increases in current assets. 3. Between the year 2008 to 2009 and 2009 to 2010 there is increase in current ration i.e. 2.86 to 3.02. 4. It is observed that current ratio between 2009 2010 and 2010 2011 is increased from 3.01 to 4.6 5. The average current ratio for the five years 2006 -2011 was 3.198. 6. it has been observed that the current ratio is maximum in the year 2010 2011 7. If we compare current ratio with standard ratio, it is clear that the company is maintaining current ratio.

II. QUICK RATIO Quick ratio can be defined as the relationship between quick or liauid assets and current liabilities. It measures the firms capacity to payoff current obligations immediately and is a more rigorous test of liquidity than current ratio.

Quick Assets are assets that can be converted into cash very quickly without much loss.

Quick liabilities are which have to be necessarily paid within 1 year. All current assets, expect stock and prepaid expenses, are also quick assets. All current liabilities, except Bank overdraft are quick liabilities.

32

FORMULA:

Liquid Assets

Quick Ratio =

-------------------------

Current Liabilities Quick Assets = Current Assets ( stock + prepaid expenses ) While computing and using quick ratio, it must be ensured. 1. That the quality of both receivable ( debtors and bills receivable ) should be carefully assessed.

2. That all quick assets and current liabilities have been properly valued.

Standard:
A quick ratio of 1 is usually considered as ideal. A quick ratio of less than 1 is indicative of (1:1 ) inadequate liquidity of the business. A very high quick ratio is also not advisable, as funds can be more profitably employed. (Rs lakh)

YEAR

LIQUID ASSETS ( Rs in lakhs )

CURRENT LIABILITIES (Rs in lakhs ) 6,545.08 6,071.60 6.327.70 9,170.29 5,795.64 6,782.062 1.03 1.01 1.07 0.66 1.69 1.11

RATIO

2006-07 2007-08 2008-09 2009-10 2010-11 Average

6,766.28 6,682.02 6,793.42 6,074.16 9,810.73 7,225.322

33

QUICK RATIO
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006-07 2007-08 2008-09 2009-10 2010-11 1.03 1.01 1.07 1.69

0.66

Interpretation: 1. From the above table, it is realized that the quick ratio is fluctuating year to year during the period of study. 2. Between the years 2006 -2007 and 2007 -2008 there is an increase in Quick ratio of 1.1 from 1.03 because of increase in quick assets. 3. There is a decrease in quick ratio in the year 20082009 to 1.07 from the year 2007-08. 4. Between the years 2008-09 and 2009-10 quick ratio decreased from 1.07 to 0.66 because of decrease in quick assets. 5. Quick ratio between 2009 10 and 2010 -2011 increased from 0.66 to 1.69. 6. The average quick ratio during the period is 1.11. 7. The highest Quick Ratio of period of five years is in the year 2010 11 is 1.69. 8. When compared with the standard ratio the company is maintaining healthy quick ratio.

34

II.LEVERAGE RATIOS
The short term creditors, like bankers and suppliers of raw material, are more concerned with the firms current debt paying ability. To judge the long term financial position of the firm, financial leverage ratios are calculated. Any ratio used to calculate the financial leverage of company to get an idea of the companys methods of financing or to measure its ability to meet financial obligations. These ratios indicate mix of funds provided by owners and leanders.as a general rule, there should be an appropriate mix of debt and owners equity in financing firms assets.

i. DEBT EQUITY RATIO

Debt equity ratio is the relation between borrowed funds and owners capital in a firm it is also known as external internal equity ratio. The debt equity ratio is used to ascertain the soundness of long term financial policies of the business.

The main purpose of this ratio is to determine the relative states of outsiders and shareholders. Total debt will include short term borrowings from financial institutions, debentures, public deposits, interest bearing loans.

FORMULS:

Debt (Outsiders Fund)

Debt-equity Ratio

---------------------------

Equity (Shareholders funds)

35

Standard:

A Debt Equity Ratio of 1:1 is considered ideal

Table shows Debit Equity Ratio calculations

(Rs lakh) YEAR DEBIT ( Rs in lakhs ) 2006-07 2007-08 2008-09 2009-10 2010-11 Average 12,186.64 10,765.45 10,597.18 11,923.08 17,938.78 12,682.226 EQUITY (Rs in lakhs ) 11,016.39 13,865.26 17,103.08 26,320.50 30,712.16 19,803.478 1.10 0.77 0.62 0.45 0.58 0.704 RATIO

Debt-equity ratio
1.2 1 0.8 0.77 0.6 0.4 0.2 0 2006-07 2007-08 2008-09 2009-10 2010-11 0.62 0.45 0.58 1.1

36

Interpretation: 1. The above debt equity ratio table reveals the long term solvency position of the company during the period of study (2006-07 to 2010-11). 2. There is a decrease in debt equity ratio between the years 2006 07 and 2007 08 due to decrease in outsiders funds. 3. Decreased from 1.1 to 0.77 in the years 2006 07 to 2007 08. 4. Debt Equity increases due to increase in Debt o an organization. 5. The debt equity of years 2006 - 07 to 2009 10 is decreasing because of decrease in shareholders funds. 6. The average debt equity ratio for last five years is 0.704. 7. Compared with the standard debt equity ratio, the corporation is maintaining the right balance between the external and internal equity.

ii. FIXED ASSETS RATIO:

This ratio indicates the mode of financing the fixed assets.

Fixed assets are used in the business for producing goods to be sold. The effective utilization of fixed assets will result in increased production and reduced cost.

FORMULA:

Fixed Assets

Fixed Assets Ratio

---------------------------

Total long-term funds Total longterm funds = shareholders funds + funded debts

37

A financially well managed company will have its fixed assets financed by long term fund. Therefore, the fixed assets ratio should never be more than 1. A ratio of 0.67 is considered ideal.

Case (i): if fixed assets is more than the total longterm funds it implies that the firm has financed a part of the fixed assets out of current funds or the working capital which is not a good financial policy.

Case (ii): if total longterm funds is more than fixed assets it implies that a part of the working capital requirements is met oil of the long term funds of the firm.

Table shows Fixed Assets Ratio calculation

(Rs lakh) YEAR DEBIT ( Rs in lakhs ) 2006-07 2007-08 2008-09 2009-10 2010-11 Average 16,962.44 19,982.12 23,374.94 28,564.61 34,828.27 24,742.476 EQUITY (Rs in lakhs ) 23,203.03 24,5651.07 25,541.29 34,054.59 36,771.12 28,826.22 0.73 0.81 0.91 0.83 0.95 0.85 RATIO

38

FIXED ASSETS RATIO

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 2009-10 2010-11 0.73 0.81 0.91 0.83 0.95

Interpretation:

1. From the above table, it is realized that the Fixed assets ratio is fluctuating year to year during the period of study. 2. Between the years 2006 2007 and 2007 2008 there is an increase in Fixed assets ratio of 0.73 from 0.81 due to increase in long term funds. 3. There is a increase in Fixed assets ratio in the year 2008 2009 to 0.91 from the year 2006 07 because of increase in fixed assets value. 4. The fixed assets ratio should never be more than 1. A ratio of 0.67 is considered ideal.. 5. Between the years 2008 09 and 2009 10 fixed assets ratio decreased from 0.91 to 0.83. 6. Fixed assets ratio between 2009 10 and 2010 11 increased from 0.83 to 0.95. 7. The average Fixed assets ratio during the period is 0.85. 8. The highest Fixed assets Ratio of period of five years is in the year 2010 11 is 0.95. 9. The fixed assets ratio indicates that the fixed assets utilization of company is in a proper manner.

39

iii. PROPRIETARY RATIO

A variant to the debt equity ratio is the proprietary ratio, which is also known as equity ratio. The ratio establishes the relationship between capital to the total assets of the firm. The ratio of proprietors funds to total funds is an important ratio for determining longterm solvency of a firm. The components of this ratio are proprietors funds and total assets.

Formula: Shareholders funds

Proprietary ratio

--------------------------------

Total assets

As equity rati represents the relationship of owners fund to total assets (higher the ratio or the shareholders in the total capital of the company, better is the long term solvency position of company). The ratio indicates the extent to which the assets of the company can be lost without effecting the interest of creditors of the company.

40

Table shows proprietary Ratio Calculations

(Rs lakh)

YEAR

SHARE HOLDERS FUNDS ( Rs in lakhs )

TOTAL ASSETS (Rs in lakhs )

RATIO

2006-07 2007-08 2008-09 2009-10 2010-11 Average

11,016.39 13,865.26 17,103.08 26,320.50 30,712.16 19,803.478

28,357.03 30,233.89 34,398.53 45,864.87 54,543.05 38,677.474

0.38 0.45 0.49 0.57 0.56 0.49

PROPRIETARY RATIO
0.6 0.5 0.49 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 2009-10 2010-11 0.38 0.45 0.57 0.56

41

Interpretation: 1. From the above table, it is realized that the Proprietary ratio is increasing year to year during the period of study. 2. Between the years 2006 2007 and 2007 -08 there is an increase in proprietary ratio of 0.38 from 0.45 due to increase in share holder funds. 3. There is a increase in Proprietary ratio in the year 2008 2009 to 0.49 from the year 2006 07. 4. Between the years 2008 09 and 2009 10 Proprietary assets ratio increased from 0.49 to 0.57. 5. Proprietary ratio between 2009 -10 and 2010 -11 decreased from 0.57 to 0.56 due to more increase in total assets value than the share holder funds. 6. The average Proprietary ratio during the period is 0.49. 7. The highest Proprietary Ratio period of five years is in the year 2009 10 is 0.57.

42

iv. FIXED ASSETS TO SHARE HOLDER FUNDS RATIO

The ratio establishes the relationship between fixed assets and shareholders funds i.e., share capital. The ratio can be calculated as follows.

Formula :

Fixed Assets

Fixed Assets to Shareholders fund Ratio =

-------------------------------Shareholders funds

Generally the purchase of fixed assets should be financed by share holders equity. If the ratio is less than 100 percent it implies that owners funds are more than total fixed assets and a part of working capital is provided by the share holders. When the ratio is more than 100 percent it implies that owners funds are not sufficient to finance the fixed asset and to firm has to depend upon the outsiders to finance for fixed assets.

Table shows Fixed Assets to Share bolder Funds Ratio Calculations

(Rs lakh) YEAR FIXED ASSETS ( Rs in lakhs ) SHAREHOLDER FUNDS (Rs in lakhs ) 2006-07 2007-08 2008-09 2009-10 2010-11 Average 16,962.44 19,982.12 23,374.94 28,564.61 34,282.27 24,742.476 11,1016.39 13,865.26 17,103.08 26,320.50 30,712.16 19,803.478 1.53 1.44 1.36 1.08 1.13 1.308 RATIO

43

Fixed assets to shareholders funds

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006-07 2007-08 2008-09 2009-10 2010-11 1.53 1.44

1.36 1.08 1.13

Interpretation:

1. From the above table, it is realized that the Fixed assets to share holders funds ratio is continuously increasing year to year during the period of study. 2. Between the year 2006 2007 and 2007 2008 there is an decrease in Fixed assets to share holders funds ratio of 1053 to 1.44 due to increase in share holder funds. 3. There is a decrease in Fixed assets to share holders funds ratio in the year 2008 2009 to 1.36 from the year 2006 07. 4. Between the years 2008 09 and 2009 10 Fixed assets to share holder ratio decreased from 1.36 to 1.08. 5. Fixed assets to shareholders fund ratio between 2009 -10 Fixed assets to share holder ratio decrease from 1.08 to 1.13 because the value of fixed assets increased more. 6. The average Fixed assets to shareholders fund ratio during the period is 1.308. 7. The highest Fixed assets to shareholders fund Ratio of period of five years is in the year 2005 06 is1.53.

44

v. FIXED INTEREST COVERAGE RATIO

Net income to debt service ratio or simply debt service ratio is used to test the debtservicing capacity of a firm. The ratio is also known as Interest Coverage Ratio. This ratio is calculated by dividing the net profit before interest and taxes by fixed interest charges.

Formula :

Net profit (before interest and taxes)

Fixed interest coverage

---------------------------------------------------

Interest charges

Table show s Fixed Interest Coverage Ratio Calculations

(Rs lakh)

YEAR

NETPROFIT BEFORE INTEREST ( Rs in lakhs )

INTEREST CHARGES (Rs in lakhs )

RATIO

2006-07 2007-08 2008-09 2009-10 2010-11 Average

3,767.47 4,831.14 9,131.52 15,013.47 7,784.61 8,123.642

1,925.55 1,543.20 1,512.43 1,177.43 1,423.28 1,516.378

1.96 3.13 6.04 12.75 5.47 5.87

45

Fixed interest coverage ratio

14 12 10 8 6 6.04 4 2 1.96 0 2006-07 2007-08 2008-09 2009-10 2010-11 3.13 5.47 12.75

Interpretation :

1. From the above table, it is realized that the Fixed interest coverage ratio is fluctuating year to year during the period of study. 2. Between the years 2006 2007 and 2007 08 there is an increase in Fixed interest coverage ratio of 1.96 form 3.13 due to increase in net profit value. 3. There is a increase in Fixed interest coverage ratio in the year 2008 2009 to 60.4 from the year 2006 07. 4. Between the years 2008 09 and 2009 10 Fixed interest coverage ratio increased from 60.4 to 12.75. 5. Fixed interest coverage ratio between 2009 10 and 2010 11 decreased form 12.75 to 5.47 due to increase in interest charges in the year 2010 11. 6. The average Fixed interest coverage ratio during the period is 5.87. 7. The highest Fixed assets Ratio of period of five years is in the year 2009 10 is 12.75.

46

III. PROFITABILITY RATIOS

i. RETURN ON EQUITY

Return on equity capital is a relationship between the profits of a company and its equity capital, can be calculated as

Formula : Net profit after tax preference dividend

Return on Equity

-----------------------------------------------

Equity shares capital

Table shows Return On Equity Ratio Calculated

(Rs lakh)

YEAR

NETPROFIT AFTER TAX ( Rs in lakhs )

EQUITY SHARES CAPITAL (Rs in lakhs )

RATIO

2006-07 2007-08 2008-09 2009-10 2010-11 Average

1,626.10 2,983.61 5,584.04 10,636.04 5,801.33 5,326.224

1,196.69 1,335.75 1,335.75 1,335.75 1,335.75 1,307.938

47

1.36 2.23 4.18 7.96 4.34 4.10

Return on equity
9 8 7 6 5 4 3 2 1 0 2006-07 2007-08 2008-09 2009-10 2010-11 1.36 2.23 4.18 4.34 7.96

Interpretation : 1. From the above table, it is realized that the Return on equity ratio is fluctuating year to year during the period of study. 2. Between the years 2006 2007 and 2007 2008 there is an increase in Return on equity ratio of 2.23 from 1.36 due to increase in net profit value. 3. There is a inverse in Return on equity ratio in the year 2008 2009 to 4.18 from the year 2006 07. 4. Between the years 2008 09 and 2009 10 Return on equity ratio increased from 4.18 to 7.96. 5. Return on equity ratio between 2009 10 and 2010 -11 decreased from 7.96 to 4.34 because the value of net profit is decreased in the year 2010 11. 6. The average Return on equity ratio during the period is 4.01. 7. The highest Return on equity Ratio of period of five years is in the year 2009 10 is 7.96.

48

ii. RETURN ON SHAREHOLDERS FUND RATIO

Return on shareholder investment, popularly known as ROI or RETURN ON SHARE/ PROPRIETARY FUNDS is the relationship between net profits (after interest & tax) and the proprietors funds. Thus Formula :

Net profit

Return on share holder investment

-----------------------------------

Shareholder funds

Table Shows Return On Share Holder Funds Ratio Calculation

(Rs lakh) YEAR NETPROFIT ( Rs in lakhs ) SHARE HOLDER FUNDS (Rs in lakhs ) 2006-07 2007-08 2008-09 2009-10 2010-11 Average 1,699.92 3,027.94 5,561.04 10,636.04 5,801.33 5,345.854 11,016.39 13,865.26 17,103.08 26,320.50 30,712.16 19,803.478 0.15 0.22 0.32 0.40 0.19 0.256 RATIO

49

Return on shareholders funds

0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2006-07 2007-08 2008-09 2009-10 2010-11 0.15 0.22 0.19 0.32 0.4

Interpretation :

1. From the above table, it is realized that the Return on share holder funds ratio is fluctuating year to year during the period of study. 2. Between the year 2006 -07 and 2007 08 there is an increase in Return on shareholder funds ratio of 0.22 from 0.15 due to increase in share holder funds value. 3. There is a increase in Return on shareholder fund ratio in the year 2008 -09 to 0.32 from the year 2006 07. 4. Between the years 2008 09 and 2009 10 Return on equity ratio increased from 0.32 to 0.4. 5. Return on equity ratio between 20089 - 10 and 2010 -11 decreased from 0.4 to 0.19 because the value of net profit is decreased. 6. The average Return on shareholders funds ratio during the period is 0.256. 7. The highest Return on equity Ratio of period of five years is in the year 2009 10 is 0.4.
50

iii. RETURNS ON TOTAL ASSETS RATIO

Return on total assets is a relationship between the new profit (after interest & tax ) and the total assets. Thus,

Formula :

Net profits

Return on total assets

--------------------------------------

Total assets

Table Shows Return On Total Assets Ratio Calculations

(Rs lakh)

YEAR

NETPROFIT ( Rs in lakhs )

TOTAL ASSETS (Rs in lakhs ) 28,357.03 30,233.89 34,398.53 45,864.87 54,543.05 38,677.474 0.06 0.1 0.16 0.23 0.11 0.132

RATIO

2006-07 2007-08 2008-09 2009-10 2010-11 Average

1,699.92 3,027.94 5.564.04 10,636.04 5,801.33 5,345.854

51

Return on total assets ratio

0.25 0.2 0.15 0.1 0.1 0.05 0 2006-07 2007-08 2008-09 2009-10 2010-11 0.06 0.23

0.16 0.11

Interpretation:

1. From the above table, it is realized that the Return on total assets ratio is fluctuating year to year during the period of study. 2. Between the years 2006- 07 and 2007 08 there is an increase in Return on total assets ratio of 0.1 from 0.06 due to increase in total assets value. 3. There is a increase in Return on total assets ratio in the year 2008 09 to 0.16 from the year 2006 07. 4. Between the years 2008 09 and 2009 -10 Return on total assets ratio increased from 0.16 to 0.23. 5. Return on total assets ratio between 2009 10 and 2010 -11 decreased from 0.23 to 0.11 because the value of net profit is decreased. 6. The average Return on total assets ratio during the period is 0.132. 7. The highest Return on total assets Ratio of period of five years is in the year 2009 -10 is 0.23.

52

iv. ACTIVITY RATIOS

i. CREDITORS TURNOVER RATIOS For any business operations, a firm has to make credit purchases and incur short term liabilities. A supplier goods i.e., creditor is naturally interested in finding out how much time the firm is likely to take in repaying its trade creditors. Creditors turnover ratio can be calculated as:

Formula:

Annual purchase (raw material)

Creditors turnover ratio

----------------------------------------------

Average trade creditors

Table Shows Creditors Turnover Ratio Calculations

(Rs lakh) YEAR TOTAL PURCHASE ( Rs in lakhs ) 2006-07 2007-08 2008-09 2009-10 2010-11 Average 11,841.05 14,172.16 16,524.74 23,824.76 23,536.09 18,039.76 TRADE CREDITORS (Rs in lakhs ) 4,385.53 4,727.46 5,101.56 7,915.78 4,886.56 5,406.378
53

CREDITORS RATIO

2.70 3.06 3.24 3.01 4.81 3.365

Creditors turn over ratio

6 5 4.81 4 3 2 1 0 2006-07 2007-08 2008-09 2009-10 2010-11 2.7 3.24

3.06

3.01

Interpretation:

1. From the above table, it is realized that the Creditors turnover ratio is fluctuating year to year during the period of study. 2. Between the years 2006 07 and 2007 08 there is an increase in Creditors turnover ratio of 2.7 from 3.06 due to increase in total purchase value. 3. There is a increase in creditors turnover ratio in the year 2008 09 to 3.24 from the year 2006 07. 4. Between the years 2008 09 and 2009 10 Creditors turnover ratio decreased from 3.24 to 3.01 because the value of total purchase is increased more in the year 2010 -11. 5. Creditors turnover ratio between 2009 10 and 2010 -11 increased from 3.01 to 4.81 due to decrease in trade creditors in the year 2010 -11. 6. The average Creditors turnover ratio during the period is 3.364 7. The highest Creditors turnover Ratio of period of five years is in the year 2010 11 is 4.81.

54

CHAPTER V CONCLUSIONS AND SUGGESTIONS

55

CONCLUSIONGS :

1. RIPPL is not maintaining required amount of current assets to meet its current
liabilities when compared to standard ratio 2:1. 2. The liquidity position of the company is satisfactory during the study period. 3. It has been observed from the survey of quick ratios are 1.03,1.1, 1.07, 0.66, 1,69 in the years 2006, 2007, 2008, 2009 and 2010. 4. The overall profitability ratio reflects the overall efficiency with capital is used. It helpful for making capital budgeting decisions. The ratio is always goes an increasing in our project period. 5. The profitability position of the concern is satisfactory except in 2009 10. 6. The debt equity ratio measures the extent of equity covering the debt. This ratio is determined to ascertain the soundness of long term financial policies of the company. The ratio is goes on decreasing in our project period except on 2008 -09 which is favorable for long term creditors, because a large margin of protection provides sasfety for the creditors. 7. A quick ratio of 1:1 is usually considered as ideal. The company is maintaining its in proper manner. 8. By observing creditors turnover ratio it is very fluctuating 2.7 in 2005 06 and increased to 4.81 in 2009 10. 9. The return on shareholder funds of the corporation is very low during the study period. 10. Return of shareholder funds ratios are 0.15, 0.22, 0.32, 0.40 and 0.19 in the year 2005, 2006, 2007, 2008, 2009.

56

SUGGESTIONS
1. The company should invest sufficient funds in the current assets to stress then the liquidity. 2. It is better to increase the profitability of the concern. 3. The fixed interest coverage ratio of the organization is goes on increasing so that the lenders are confident to receive periodical interest charges. 4. The company is fluctuating with is current liabilities year to year. So it is better to streamline its current liabilities. 5. The corporation should reduce the investment in the current assets to avoid the problem of idle investment. 6. The corporation should try to minimize the fixed interest charges to eliminate the financial risk in the future period of time.

57

BIBLIOGRAPHY

58

BIBLIOGRAPHY :

MANAGEMENT ACCOUNTING

R.K. SHARMA & SHASKH.GUPTA

FINANCIAL MANAGEMENT
Text & problems

M.Y. KHAN & P.K. JAIN

FINANCIAL MANAGEMENT
Principles & Practice

S.N. MAHESHWARI.

FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT

I.M. PANDEY.

G. SUDARSANA REDDY.

WEB SITES

www.ratinafra.in www.google.com www.investopeid.com www.wikipedia.com Annual Reports of RIPPL 2007 - 2010

59

60