Ratio analysis of rani ltd

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Ratio analysis of rani ltd

  1. 1. RATIO ANALYSIS OF RANI LTD.Prepared For : BOD (Raja Ltd)Prepared By : Management Accountant
  2. 2. STRUCTURE • Background • Profitability of the company • Liquidity position • Efficiency indicators • Investment perspective • Trends of ratios & percentages • Suggestions • Conclusion • Questions & Answers
  3. 3. BACKGROUND • Current economic situation • Nature & type of company • Data limitations
  4. 4. PROFITABILITY OF RANI LTD • Increase in sales • Increase in cost of sales • Falling net profit margin 25000 20000 15000 10000 5000 0 2012 2011 2010 Sales 20440 19467 18540 Cost Of Sales 12247 10650 10753 Net Profit 2132 2650 2578
  5. 5. LIQUIDITY POSITION • Increase in current ratio • Quick ratio at alarming rate • Mismanagement of working capital 2 1.5 1 0.5 0 2012 2011 2010 Current Ratio 1.43 1.21 1.26 Quick Ratio 0.64 0.56 0.57
  6. 6. EFFICIENCY INDICATORS • Receivable collection period • Huge amount of inventory • Increase in operating cycle 160 140 120 100 80 60 40 20 0 2012 2011 2010 Operating Cycle 138 100 90 Inventory Turnover 100 77 84 ReceivableTurnover 49 35 14
  7. 7. INVESTMENT PERSPECTIVE • Earning per share • Dividend per share
  8. 8. TRENDS OF RATIOS• Current Ratio • Net Profit Margin• Quick Ratio • Gross Profit• Working Capital • Return on Assets• Receivable Turnover • ROCE• Inventory Turnover • ROSE• Operating Cycles • EPS• Sales• Cost of Sales• Dividend Per Share
  9. 9. CONCLUSION • Unsecure financial position • Deteriorating results • Acute working capital management problem • Overtrading • Declining Profits • Increasing Cash conversion cycle
  10. 10. SUGGESTION • Comparison with other companies • Improving the average collection period for trade debtors • Improving the Inventory turnover • Avoiding unnecessary overtrading • Working capital management policy • Acquisition of synergies
  11. 11. THANK YOU
  12. 12. QUESTIONS & ANSWERS

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