Financial Analysis of Oswal Woollen Mills Ltd.

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Financial Analysis of Oswal Woollen Mills Ltd.

  1. 1. “A STUDY ON FINANCIAL ANALYSIS OF OWM”<br />IshudeepKaur<br />MBA 2C<br />
  2. 2. Contents<br />Introduction to Textile Industry<br />Introduction to Nahar Group<br />Introduction to OWM Ltd.<br />Introduction to Project<br />Research Objectives<br />Research Methodology<br /> Financial Analysis & Interpretation<br />Findings<br />Conclusion<br />
  3. 3. Introduction to Textile Industry<br />
  4. 4. Source -http://www.ibef.org/download/Textiles_Apparel_060710.pdf<br />
  5. 5. Source-http://www.ibef.org/download/Textiles_Apparel_060710.pdf<br />
  6. 6. Source-<br />http://www.ibef.org/download/Textiles_Apparel_060710.pdf<br />
  7. 7. Introduction to Nahar Group<br />
  8. 8. Source- http://www. naharsaga.in/<br />
  9. 9.
  10. 10. NaharGroup of Companies<br /> Source - http://www.naharsaga.in/<br />
  11. 11. Introduction to OswalWoollen Mills Ltd<br />
  12. 12. Source- http://www.owmnahar.in/<br />
  13. 13. Source- http://www.owmnahar.in/<br />&Balance sheet <br />
  14. 14. Organizational Structure of OWM<br />
  15. 15.
  16. 16. Departments of OWM<br />
  17. 17. SWOT Analysis of OWM<br />Strengths<br />Extensive experience of the promoters of OWM.<br />Many persons are working here for more than 50 yrs. <br />Strong dealer network and mutual relationship with them.<br />Certification from Wool Mark and ISO 9002.<br />OWM has its brand image and they can easily arrange the finance for the operations of the company.<br />
  18. 18. Weaknesses<br />OWM is dependent upon foreign producers for greasy wool. <br />Risks in relation to outsourcing of cotton segment of the Monte Carlo products.<br />Opportunity<br /><ul><li>Manufacturing of Kids garments.
  19. 19. Opening more number of Outlets</li></li></ul><li>Threats<br />Mushrooming and upcoming of small hosieries in Ludhiana.<br />Company is facing threat from the fake competitors like OswalWoollenMela etc. <br />It has to depend upon imported wool and the supply of raw material is affected by the climates of the supplier countries. <br />
  20. 20. Introduction to Project<br />
  21. 21. Financial Statements<br />Financial statements are the outcome of summarizing process of accounting.<br />Statements are prepared as an end result of financial accounting and are major sources of financial information of an enterprise.<br /> Financial statements serve as the basis for decision making by the management as well as other outsiders who are interested in the affairs of the firm.<br />
  22. 22. Title- A Study on Financial Analysis of OswalWoollen Mills Ltd.<br /><ul><li> Objectives of Study
  23. 23. To analyze financial position of the company.
  24. 24. To analyze financial performance of the company.</li></li></ul><li><ul><li>..</li></ul>Research Methodology<br />Sources of Data <br /><ul><li> Primary Data - Consulting various personnel's in </li></ul> Finance Dept.<br /><ul><li> Secondary Data - Journals , Websites, Company’s Annual</li></ul> Report, CMA Data<br />Methodological Assumptions <br /><ul><li> For calculation of Debtors Turnover Ratio, all Sales</li></ul> are taken as Credit Sales.<br /><ul><li> For calculation of Creditors Turnover Ratio, all Purchases</li></ul> are taken as Credit Purchases<br />
  25. 25. Tools of Financial Analysis<br />
  26. 26. Limitations of Study<br /><ul><li> Study was limited to the information provided</li></ul> by the officials.<br /><ul><li> Only 5 year data is taken for study.
  27. 27. Research is done based on only internal information</li></ul> available.<br /><ul><li> Analysis is only a mean not an end as it</li></ul> has been done on the basis of my own interpretation. <br />
  28. 28. Ratio Analysis<br />
  29. 29.
  30. 30. Current Ratio<br />Current Ratio = Current Assets<br /> Current Liabilities<br />
  31. 31. Quick Ratio<br />Quick Ratio = Quick Assets<br /> Current Liabilities<br />
  32. 32. Absolute Liquid Ratio<br />Absolute Liquid Ratio = Cash in hand +Cash at bank + Marketable Securities<br /> Current Liabilities<br />
  33. 33.
  34. 34. Inventory Turnover Ratio<br />Inventory Turnover Ratio = Cost of Goods Sold<br /> Average Inventory<br />
  35. 35. Inventory Conversion Period<br />Inventory Conversion Period = 365 days<br /> Inventory Turnover Ratio<br />
  36. 36. Debtors Turnover Ratio<br />Debtors Turnover Ratio = Net Credit Sales<br /> Average Debtors<br />
  37. 37. Average Collection Period<br /> Average Collection Period = 365 days<br /> Average Debtors<br />
  38. 38. Creditors Turnover Ratio<br /> Creditors Turnover Ratio = Net Credit Purchases<br /> Average Creditors<br />
  39. 39. Average Payment Period<br /> Average Payment Period = 365 days<br /> Creditors Turnover Ratio<br />
  40. 40. Working Capital Turnover Ratio<br />Working Capital Turnover Ratio = Cost of Sales<br /> Net Working Capital<br />
  41. 41.
  42. 42. Gross Profit Ratio<br />Gross profit Ratio = Gross Profit * 100<br /> Net sales<br />
  43. 43. Net Profit Ratio<br />Net profit Ratio = Net Profit * 100<br /> Net sales<br />
  44. 44. Operating Profit Ratio<br />Operating profit Ratio = Operating Profit * 100<br /> Net sales<br />
  45. 45. Operating Cost Ratio<br />Operating Cost Ratio = Operating Cost * 100<br /> Net sales<br />
  46. 46.
  47. 47. Return on Shareholder Fund<br />Return on Shareholder fund = Net Profit ( after int & tax ) <br /> Shareholder’s fund<br />
  48. 48. Return on Equity Capital<br />Return on Shareholder fund = Net Profit ( after int & tax ) <br /> Paid up Capital<br />
  49. 49. Turnover Ratio<br />Turnover Ratio = Net Sales<br /> Total Current Assets<br />
  50. 50. Earnings Per Share<br />Return on Shareholder fund = Net Profit ( after int & tax ) <br /> Paid up Capital<br />
  51. 51.
  52. 52. Debt Equity Ratio<br />Debt Equity Ratio = Outsiders Fund<br /> Share holders Fund<br />
  53. 53. Solvency Ratio<br />Solvency Ratio = Total Liabilities to Outsiders<br /> Total Assets<br />
  54. 54. Debt Service Ratio<br /> Debt Service Ratio = Earnings before interest & tax <br /> Fixed Interest obligation<br />
  55. 55.
  56. 56. Sales Trend<br />
  57. 57. Net Profit Trend<br />
  58. 58. Earning Per Share<br />
  59. 59. Fund Flow Statement <br />It is a statement which shows the movement of funds <br />It indicates the various means by which funds were obtained during a particular period and the ways in which these funds were employed.<br />
  60. 60.
  61. 61.
  62. 62.
  63. 63. Cash Flow Statement <br />This statement describes the inflows and outflows <br />of cash and cash equivalents in an enterprise during<br /> a specified period of time.<br />
  64. 64.
  65. 65.
  66. 66.
  67. 67. Common Size Income Statement <br />
  68. 68.
  69. 69. Common Size Balance Sheet<br />
  70. 70.
  71. 71.
  72. 72.
  73. 73. Interpretation<br />This statement reveals that company’s policy is to purchase Fixed Assets from long term sources there by not affecting the working capital<br />Company has raised its current assets from long term sources which leads to improvement in liquidity position.<br /> So, we can say that the company is using its long term sources to finance both fixed and current assets. <br />
  74. 74. Comparative Income Statement<br />
  75. 75.
  76. 76. Findings<br />
  77. 77.
  78. 78.
  79. 79. Conclusion<br />
  80. 80.
  81. 81. Thank you<br />

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