MBA project.

A PROJECT REPORT ON FINANCIAL ANALYSIS
OF
Submitted by
Pinku Kuriakose
Registration #531111189
UNDER THE GUIDANCE AND SUPERVISION OF
Dr. Shahul Hameed
Assistant Professor
SIKKIM MANIPAL UNIVERSITY (SMU)
11/3/2013

FINANCIAL ANALYSISOF NAMMA CARGO SERVICESCO. LTD. MBA FINANCE
Page 2
A
PROJECT REPORT ON FINANCIAL ANALYSIS
OF
NAMMA CARGO SERVICES CO.. LTD.
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF DEGREE OF
MASTER IN BUSINESS ADMINISTRATION (MBA)
Submitted by
PinkuKuriakose
Registration #531111189
UNDER THE GUIDANCE AND SUPERVISION OF
Dr. Shahul Hameed MBA, M.Sc. (Healthcare Management) PhD
Assistant Professor
Submitted to
FACULTY OF MANAGEMENT STUDIES
SIKKIM MANIPAL UNIVERSITY (SMU)
OF HEALTH CARE AND TECHNOLOGICAL SCIENCE
March 2013

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Mr. A. Abdul Hameed , MBA., M.Phil.,
Assistant Professor
BONAFIDE CERTIFICATE
Certified that this project titled “ Financial Analysis of Namma Cargo Services
Co. Ltd” Is the bonafide work of Pinku Kuriakose under my Supervision .
Certified further, that to the best of my knowledge the work reported herein
does not form part of any other project report or dissertation on the basis of
which a degree or award was conferred on an earlier occasion on this or any
other candidate .
Place : Riyadh Signature of the Guide
Date :
Forwarded by
Internal Examiner External Examiner

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DECLARATION
I hereby declare that the dissertation reportentitled “ Financial AnalysisOf
NammaCargo Services” . Submitted in partial fulfillmentfor the award of
Master of Business Administration to SMUUniversity is a record of
independent research work carried out by me under the guidance of
Dr. Shahul Hameed, I also declare that this dissertation report is the
result of my own efforts and has not been submitted earlier for the
award of any other Degree /Diploma/ associate ship and prize by any
other university .
PINKU KURIAKOSE
Place : DAMMAM
Date : 11/03/2013

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Acknowledgment
No significant achievement can be a solo performance, especially when it comes to
preparing a project of this nature. This project has by no means an exception. I believe that
if it were not for the support, confidence and encouragement of many people, this report
would look much different than it does today.
I present sincere thank to Mr. Mohammed Ali (CFO ) for giving us an opportunity to carry
out a project in the firm
I would like to give sincere thanks to Mr. C.K. Ramadas , (Regional Operating Officer) and
Mr. Mohsin Ul- Kabir (Regional Finance Manager) for his continuous support and
guidance during the project. The practical and learning inputs, which they provided me
during whole program, will always add a great learning experience in my career and
personal life.
I would also like to thank , Mr. Kaleem Ahmed (Dy. Regional operating officer) , Mr.
P.K. Asokan (Dy. Regional operating officer) Mr. Anthony Justin(FFWD. Manager)and
last but not the least Mr. Thomas Kuriakose (Chief Accountant ) of Namma Cargo
Services Co., AL-Khobar Saudi Arabia for providing us consistent support by sparing their
valuable time and guidance and co-operation to complete our work successfully.
With immense pleasure, I would like to express my thanks to Prof. Shahul Hameed for
having given me this privilege of working under him and completing this study.
At the end, I take this opportunity to express my deepest gratitude and praises to God all
mighty , without his mercy and grace on me this project would never have been
successfully completed.
Pinku Kuriakose

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INDEX
TITLE PAGE #
INTRODUCTION TOFINANCIALANALYSIS
RESEARCH METHODOLOGY
COMPANYPROFILE
Data Analysis
FINDINGS
SUGGESTIONS
BIBLIOGRAPHY
8
35
39
61
80
81
82

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INTRODUCTION
Financial analysis is the use of financial statements to analyze a company’s financial
position and performance, and to assess future financial performance. It is the process of
evaluating businesses, projects, budgets and other finance-related entities to
determine their suitability for investment. Typically, financial analysis is used to analyze
whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When
looking at a specific company, the financial analyst will often focus on the income
statement, balance sheet, and cash flow statement.
MeaningofFinancial Statements:
Financial statements are a collectionof reports about an organization's financial results and
condition. They are useful for the following reasons:
-To determine the ability of a business to generate cash, and the sources and uses of that cash.
-To determine whether a business has the capability to pay back its debts.
-To trackfinancial results on a trend line to spot any looming profitability issues.
-To derive financial ratios from the statements that can indicate the condition of the business.
-To investigate the details of certain business transactions, as outlined in the disclosures that
accompany the statements.
The standard contents of a set of financial statements are:
BalanceSheet.: Shows the entity's assets, liabilities, and stockholders' equity as of the report date.
They provide some extremely useful information to the extent that balance sheet mirrors
the financial position on a particular date .
Incomestatement. : Shows the results of the entity's operations and financial activities for the
reporting period.
Statement of cashflows.: Shows changes in the entity'scash flowsduring the reporting period.
Supplementary notes.
Profitand LossAccount: Profit and Loss account shows the results of operations during a
certain period of time in terms of revenues obtained and cost incurred during the year.

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Thus the financial statement provides the summarized view of the financial position and
operations of the firm.
Meaning of Financial Analysis :
Financial analysis is an aspect of the overall business finance function that involves
examining historical data to gain information about the current and future financial health
of a company. Financial analysis can be applied in a wide variety of situations to give
business managers the information they need to make critical decisions. According to Alan
S. Donnahoe "The inability to understand and deal with financial data is a
severe handicap in the corporate world,". In a very real sense, finance is the language of
business. Goals are set and performance is measured in financial terms.
Objectives of Financial Analysis :
The objectives of financial analysis is the assessment of the information contained in the
reports as a basis to make sound management decisions in the development of the
company, enhance competitiveness, attract investment and loan funds, evaluation of
partners, as well as determining the effectiveness of the use of material, labor and
production resources.
-To identify trends and patterns in its development for this period.
- To establish the factors those negatively affect the financial condition .
- The identification of reserves that a company can use to improve their financial condition.
- To make recommendations aimed to improve its financial condition.
Features of Financial Analysis
-To present a complex data contained in the financial statement in simple and understandable
form.
-To classify the items contained in the financial statement inconvenient and rational groups.
-To make comparison between various groups to draw various conclusions.

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PurposeofAnalysisof Financial Analysis
-To know the earning capacity or profitability.
-To know the solvency.
-To know the financial strengths.
-To know the capability of payment of interest & dividends.
-To make comparative study with other firms.
Procedure of Financial Statement Analysis
The following procedure is adopted for the analysis and interpretation of financial
statements:-
-The analyst should acquaint himself with principles and postulated of accounting. He
should know the plans and policies of the managements that he may be able to find out
whether these plans are properly executed or not.
-The extent of analysis should be determined so that the sphere of work may be decided. If
the aim is find out. Earning capacity of the enterprise then analysis of income statement
will be undertaken. On the other hand, if financial position is to be studied then balance
sheet analysis will be necessary.
-The financial data be given in statement should be recognized and rearranged. It will
involve the grouping similar data under same heads. Breaking down of individual
components of statement according to nature. The data is reduced to a standard form. A
relationship is established among financial statements with the help of tools & techniques
of analysis such as ratios, trends, common size, fund flow etc.
-The information is interpreted in a simple and understandable way. The significance and
utility of financial data is explained for help indecision making.
-The conclusions drawn from interpretation are presented to the management in the form
of reports.
Analyzing financial statements involves evaluating three characteristics of a company: its
liquidity, its profitability, and its insolvency. A short-term creditor, such as a bank, is
primarily interested in the ability of the borrower to pay obligations when they come due.

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The liquidity of the borrower is extremely important in evaluating the safety of a loan.
Along-term creditor, such as a bondholder, however, looks to profitability and solvency
measures that indicate the company’s ability to survive over a long period of time. Long-
term creditors consider such measures as the amount of debt in the company’s capital
structure and its ability to meet interest payments. Similarly, stockholders are interested in
the profitability and solvency of the company. They want to assess the likelihood
of dividends and the growth potential of the stock.
Comparison can be made on a number of different bases. Following are the three
illustrations:
1.Intra-company basis. This basis compares an item or financial relationship within a
company in the current year with the same item or relationship in one or more prior years
2 .Industry averages. This basis compares an item or financial relationship of a company
with industry averages (or norms) published by financial ratings organizations such as Dun
& Bradstreet, Moody’s and Standard & Poor’s. For example, Sears’s net income can be
compared with the average net income of all companies in the retail chain-store industry.
Comparisons with industry averages provide information as to a company ‘s relative
performance within the industry.
3. Intercompany basis. This basis compares an item or financial relationship of one
company with the same item or relationship in one or more competing companies. The
comparisons are made on the basis of the published financial statements of the individual
companies.
Tools of Financial Statement Analysis
Various tools are used to evaluate the significance of financial statement data. Three
commonly used tools are these:
- Ratio Analysis
-Funds Flow Analysis
-Cash Flow Analysis.
One of the most common ways of analyzing financial data is to calculate ratios from the
data to compare against those of other companies or against the company's own historical
performance. For example : Return on assets is a common ratio used to determine how

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inefficient a company is at using its assets and as a measure of profitability. This ratio could
be calculated for several similar companies and compared as part of a larger analysis.
Therefore the subject project will be focusing on financial analysis of a company using
Ratios .
Meaning of Ratio Analysis :
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the indicated
quotient of two mathematical expressions” and “the relationship between two or more
things”. In financial analysis, a ratio is used as a benchmark for evaluation the financial
position and performance of a firm. The absolute accounting figures reported in the
financial statements do not provide a meaningful understanding of the performance and
financial position of a firm. An accounting figure conveys meaning when it is related to
some other relevant information. For example, an Rs.5 core net profit may look impressive,
but the firm’s performance can be said to be good or bad only when the net profit figure is
related to the firm’s Investment.
The relationship between two accounting figures expressed mathematically, is
known as a financial ratio (or simply as a ratio). Ratios help to summarize large quantities
of financial data and to make qualitative judgment about the firm’s financial performance.
For example, consider current ratio. It is calculated by dividing current assets by current
liabilities; the ratio indicates a relationship- a quantified relationship between current
assets and current liabilities. This relationship is an index or yardstick, which permits a
quantitative judgment to be formed about the firm’s liquidity and vice versa. The point to
note is that a ratio reflecting a quantitative relationship helps to form a qualitative
judgment. Such is the nature of all financial ratios.
Standards of comparison:
The ratio analysis involves comparison for a useful interpretation of the financial
statements. A single ratio in itself does not indicate favorable or unfavorable condition. It
should be compared with some standard. Standards of comparison may consist of:

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 Past ratios, i.e. ratios calculated form the past financial statements of the same firm;
 Competitors’ ratios, i.e., of some selected firms, especially the most progressive
and successful competitor, at the same pint in time;
 Industry ratios, i.e. ratios of the industry to which the firm belongs; and
 Protected ratios, i.e., developed using the protected or proforma , financial
statements of the same firm.
In this project calculating the past financial statements of the same firm does ratio analysis.
Theoretical background:
Use and significance of ratio analysis:-
The ratio is one of the most powerful tools of financial analysis.
It is used as a device to analyze and interpret the financial health of enterprise. Ratio
analysis stands for the process of determining and presenting the relationship of items and
groups of items in the financial statements. It is an important technique of the financial
analysis. It is the way by which financial stability and health of the concern can be judged.
Thus ratios have wide applications and are of immense use today. The following are the
main points of importance of ratio analysis:
a) Managerial Uses of Ratio Analysis:-
1. Helps in Decision Making:-
Financial statements are prepared primarily for decision-making. Ratio analysis helps in
making decision from the information provided in these financial Statements.
2. Helps in Financial Forecasting and Planning:-
Ratio analysis is of much help in financial forecasting and planning. Planning is looking
ahead and the ratios calculated for a number of years a work as a guide for the future.
Thus, ratio analysis helps in forecasting and planning.

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3. Helps in Communicating:-
The financial strength and weakness of a firm are communicated in a more easy and
understandable manner by the use of ratios. Thus, ratios help in communication and
enhance the value of the financial statements.
4. Helps in Co-Ordination:-
Ratios even help in co-ordination, which is of at most importance in effective business
management. Better communication of efficiency and weakness of an enterprise result in
better co-ordination in the enterprise
5. Helps in Control:-
Ratio analysis even helps in making effective control of business. The weaknesses are
otherwise, if any, come to the knowledge of the managerial, which helps, in effective
control of the business.
b) Utility to Shareholders/Investors:-
An investor in the company will like to assess the financial position of the concern where
he is going to invest. His first interest will be the security of his investment and then a
return in form of dividend or interest. Ratio analysis will be useful to the investor in
making up his mind whether present financial position of the concern warrants further
investment or not.
C) Utility to Creditors: -
The creditors or suppliers extent short-term credit to the concern. They are invested to
know whether financial position of the concern warrants their payments at a specified time
or not.

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d) Utility to Employees:-
The employees are also interested in the financial position of the concern especially
profitability. Their wage increases and amount of fringe benefits are related to the volume
of profits earned by the concern.
e) Utility to Government:-
Government is interested to know overall strength of the industry. Various financial
statement published by industrial units are used to calculate ratios for determining short
term, long-term and overall financial position of the concerns.
f) Tax Audit Requirements:-
Sec44AB was inserted in the income tax act by financial act; 1984.Caluse 32 of the income
tax act requires that the following accounting ratios should be given:
1. Gross profit/turnover.
2. Net profit/turnover.
3. Stock in trade/turnover.
4. Material consumed/finished goods produced.
Further, it is advisable to compare the accounting ratios for the year under consideration
with the accounting ratios for earlier two years so that the auditor can make necessary
enquiries, if there is any major variation in the accounting ratios.
Limitations:
Ratio analysis is very important in revealing the financial position and soundness of the
business. But, inspite of its advantages, it has some limitations which restrict its use. These

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limitations should be kept in mind while making use of ratio analysis for interpreting the
financial the financial statements. The following are the main limitations of ratio analysis:
1. False results:-
Ratios are based upon the financial statement. In case financial statement are in correct or
the data of on which ratios are based is in correct, ratios calculated will all so false and
defective. The accounting system it self suffers from many inherent weaknesses the ratios
based upon it cannot be said to be always reliable.
2. Limited Comparability:-
The ratio of the one firm cannot always be compare with the performance of other firm, if
uniform accounting policies are not adopted by them. The difference in the methods of
calculation of stock or the methods used to record the deprecation on assets will not
provide identical data, so they cannot be compared.
3. Absence of Standard Universally Accepted Terminology:-
Different meanings are given to a particular term, egg. Some firms take profit before
interest and tax; others may take profit after interest and tax. A bank overdraft is taken as
current liability but some firms may take it as non-current liability. The ratios can be
comparable only when all the firms adapt uniform terminology.
4. Price level changes affect ratios:-
The comparability of ratios suffers, if the prices of the commodities in two different years
are not the same. Change in price effect the cost of production, sale and also the value of
assets. It means that the ratio will be meaningful for comparison, if the prices do not
change.

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5. Ignoring qualitative factors:-
Ratio analysis is the quantitative measurement of the performance of the business. It
ignores qualitative aspect of the firm, how so ever important it may be. It shoes that ratio is
only a one sided approach to measure the efficiency of the business.
6. Personal bias:-
Ratios are only means of financial analysis and an end in it self. The ratio has to be
interpreted and different people may interpret the same ratio in different ways.
7. Window dressing:-
Financial statements can easily be window dressed to present a better picture of its
financial and profitability position to outsiders. Hence, one has to be very carefully in
making a decision from ratios calculated from such financial statements.
8. Absolute figures distortive:-
Ratios devoid of absolute figures may prove distortive, as ratio analysis is primarily a
quantitative analysis and not a qualitative analysis.
ClassificationofRatios:
Several ratios, calculated from the accounting data can be grouped into various classes
according to financial activity or function to be evaluated. Management is interested in
evaluating every aspect of the firm’s performance. They have to protect the interests of all
parties and see that the firm grows profitably .In view of thee requirement of the various
users of ratios, ratios are classified into following four important categories:
 Liquidity ratios - short-term financial strength
 Leverage ratios - long-term financial strength
 Profitability ratios - long term earning power

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 Activity ratios - term of investment utilization
Liquidity ratios measure the firm’s ability to meet current obligations;
Leverage ratios show the proportions of debt and equity in financing the firm’s assets;
Activity ratios reflect the firm’s efficiency in utilizing its assets; and
Profitability ratios measure overall performance and effectiveness of the firm
LIQUIDITY RATIOS:
It is extremely essential for a firm to be able to meet the obligations as they become due.
Liquidity ratios measure the ability of the firm to meet its current obligations (liabilities).
The liquidity ratios reflect the short-term financial strength and solvency of a firm. In fact,
analysis of liquidity needs the preparation of cash budgets and cash and funds flow
statements; but liquidity ratios, by establishing a relationship between cash and other
current assets to current obligations, provide a quick measure of liquidity. A firm should
ensure that it does not suffer from lack of liquidity, and also that it does not have excess
liquidity. The failure of a company to meet its obligations due to lack of sufficient liquidity,
will result in a poor credit worthiness, loss of credit worthiness, loss of creditors’
confidence, or even in legal tangles resulting in the closure of the company. A very high
degree of liquidity is also bad; idle assets earn nothing. The firm’s funds will be
unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper balance
between high liquidity and lack of liquidity.
The most common ratios which indicate the extent of liquidity are :
(i) Current ratio
(ii) Quick ratio.

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(iii)Cashratio
(iv)Networking capital ratio.
1. Current Ratio:
Current ratio is calculated by dividing current assets by current liabilities.
Current assets
Current Ratio=
Current Liabilities
Current assets include cash and other assets that can be converted into cash within in a
year, such as marketable securities, debtors and inventories. Prepaid expenses are also
included in the current assets as they represent the payments that will not be made by the
firm in the future. All obligations maturing within a year are included in the current
liabilities. Current liabilities include creditors, bills payable, accrued expenses, short-term
bank loan, income tax, liability and long-term debt maturing in the current year.
The current ratio is a measure of firm’s short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. A ratio of
greater than one means that the firm has more current assets than current claims against
them Current liabilities.
2. Quick Ratio:
Quick ratio also called Acid-test ratio, establishes a relationship between quick, or liquid,
assets and current liabilities. An asset is a liquid if it can be converted into cash
immediately or reasonably soon without a loss of value. Cash is the most liquid asset.

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Other assets that are considered to be relatively liquid and included in quick assets are
debtors and bills receivables and marketable securities (temporary quoted investments).
Inventories are considered to be less liquid. Inventories normally require some time for
realizing into cash; their value also has a tendency to fluctuate. The quick ratio is found out
by dividing quick assets by current liabilities.
Quick Assets
Quick Ratio= ----------------------------------
Current Liabilities
3. Cash Ratio:
Since cash is the most liquid asset, it may be examined cash ratio and its equivalent
to current liabilities. Trade investment or marketable securities are equivalent of cash;
therefore, they may be included in the computation of cash ratio:
Cash + Marketable Securities
Cash Ratio= ---------------------------------------------------------
Current Liabilities
4. Interval Measure
Yet another, ratio, which assesses a firm’s ability to meet its regular cash expenses, is the
interval measure. Interval measure relates liquid assets to average daily operating cash

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outflows. The daily operating expenses will be equal to cost of goods sold plus selling,
administrative and general expenses less depreciation (and other non cash expenditures
divided by number of days in a year (say 360).
Current assets - inventory
Interval measure =
Average daily operating expenses
5. Net Working Capital Ratio
The difference between current assets and current liabilities excluding short – term bank
borrowings in called net working capital (NWC) or net current assets (NCA). NWC is
sometimes used as a measure of firm’s liquidity. It is considered that between two firm’s
the one having larger NWC as the greater ability to meet its current obligations. This is not
necessarily so; the measure of liquidity is a relationship, rather than the difference between
current assets and current liabilities. NWC, however, measures the firm’s potential
reservoir of funds. It can be related to net assets (or capital employed):
Net working capital (NWC)
NWC ratio =
(Net assets (or) Capital Employed)
LEVERAGE RATIO:
The short-term creditors, like bankers and suppliers of raw materials, are more concerned
with the firm’s current debt-paying ability. On other hand, ling-term creditors like

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debenture holders, financial institutions etc are more concerned with the firm’s long-term
financial strength. In fact a firm should have a strong short as well as long-term financial
strength. To judge the long-term financial position of the firm, financial leverage, or
capital structure ratios are calculated. These ratios indicate mix of funds provided by
owners and lenders. As a general rule there should be an appropriate mix of debt and
owners equity in financing the firm’s assets.
Leverage ratios may be calculated from the balance sheet items to determine the
proportion of debt in total financing. Many variations
of these ratios exist; but all these ratios indicate the same thing the extent to which the
firms has relied on debt in financing assets. Leverage ratios are also computed form the
profit and loss items by determining the extent to which operating profits are sufficient to
cover the fixed charges.
6.DEBT RATIO:
Debt ratio is a ratio that indicates the proportion of a company's debt to its total assets. It shows
how much the company relies on debt to finance assets. The debt ratio gives users a quickmeasure
of the amount of debt that the company has on its balance sheets compared to its assets. The higher
the ratio, the greater the risk associated with the firm's operation. A low debt ratio indicates
conservativefinancing withan opportunity to borrow in the future at no significant risk.
Total Liabilities
Debt Ratio :
7. Debt-Equity Ratio:
Assets

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The debt-to-equity ratio (debt/equity ratio, D/E) is a financial ratio indicating the relative
proportion of entity's equity and debt used to finance an entity's assets. This ratio is also known as
financial leverage.
Debt-to-equity ratio is the key financial ratio and is used as a standard for judging a company's
financial standing. Itis also a measure of a company's ability to repay its obligations. When
examining the health of a company,it is critical to pay attention to the debt/equity ratio.
A debt-to-equityratiois calculated bytaking the total liabilitiesand dividingit by the shareholders'
equity:
Liabilities
Debt-to-equityratio=
Equity
8. Capital Equity Ratio
Computation that indicates the financial strength of a company. The ratio is equal to
the fixed assets of a company divided by its equity capital. Equity capital is
the amount of money invested in a company by its shareholders. If the ratio is greater than
1, some of the company's assets have been financed by debt.
Fixed Assets
Capital Equity Ratio =
Equity Capital

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ACTIVITY RATIOS:
Funds of creditors and owners are interested in various assets to generate sales and
profits. The better the management of assets, the larger the amount of sales. Activity ratios
are employed to evaluate the efficiency with which the firm manages and utilizes its assets.
These ratios are also called turnover ratios because they indicate the speed with which
assets are being converted or turned over into sales. Activity ratios, thus, involves a
relationship between sales and assets. A proper balance between sales and assets
generally reflects that assets are managed well. Several activity ratios are calculated to
judge the effectiveness of asset utilization.
1.Inventory Turnover Ratio:
Inventory turnover indicates the efficiency of the firm in producing and selling its product.
It is calculated by dividing the cost of goods sold by the average inventory:
Cost of goods sold
Inventory turnover Ratio =
Average inventory
The average inventory is the average of opening and closing balances of inventory. The
cost of goods sold may not be available so we can compute inventory turnover as sales
divided by inventory In a manufacturing company inventory of finished goods is used to
calculate inventory turnover. This inventory turnover ratio indicates whether investment
in inventory is efficiently utilized or not. It, therefore, explains whether investment in
inventory in within proper limits or not. It is calculated by dividing the cost of goods sales
by the average inventory.
The inventory turnover shows how rapidly the inventory in turning into receivable through sales.

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A high inventory turnover is indicative of good inventory management.
A low inventory turnover implies excessive inventory levels than warranted by production and
sales activities or a slow moving or obsolete inventory.
2. Debtors (Accounts Receivable) Turnover Ratio:
A firm sells goods for cash and credit. Credit is used as a marketing tool by number of
companies. When the firm extends credits to its customers, debtors (accounts receivable)
are created in the firm’s accounts. Debtors are convertible into cash over a short period
and, therefore, are included in current assets. The liquidity position of the firm depends on
the quality of debtors to a great extent. Financial analyst applies these ratios to judge the
quality or liquidity of debtors (a) Debtors Turnover Ratio (b) Debtors Collection Period
Debtors’ turnover is found out by dividing credit sales by average debtors:
Credit sales
Debtors turnover =
Debtors
Debtors’ turnover indicates the number of times debtors’ turnover each year generally, the
higher the value of debtors’ turnover, the more efficient is the management of credit.
To outside analyst, information about credit sales and opening and closing balances of
debtors may not be available. Therefore, debtors’ turnover can be calculated by dividing
Total sales by the year-end balances of debtors:

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Sales
Debtors turnover =
Debtors
3. Net Assets Turnover Ratio:
Net assets turnover can be computed simply by dividing sales by net assets (NA)
Sales
Net Assets Turnover =
Net assets
It may be recalled that net assets (NA) include net fixed assets (NFA) and net current assets
(NCA), that is, current assets (CA) minus current liabilities (CL). Since net assets equal
capital employed, net assets turnover may also be called capital employed, net assets
turnover may also be called capital employed turnover.
4. Total Assets Turnover:
Some analysts like to compute the total assets turnover in addition to or instead of the
net assets turnover. This ratio shows the firms ability in generating sales from all financial
resources committed to total assets.

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Sales
Total Assets Turnover =
Total assets
Total Assets (TA) include net fixed Asses (NFA) and current assets (CA) (TA=NFA+CA)
5. Current Assets Turnover
A firm may also like to relate current assets (or net working gap) to sales. It may thus
complete networking capital turnover by dividing sales by net working capital.
Sales
Current assets turnover =
Current assets
6. Fixed Assets Turnover:
The firm to know its efficiency of utilizing fixed assets separately. This ratio measures sales
in rupee of investment in fixed assets. A high ratio indicates a high degree of utilization in
assets and low ratio reflects the inefficient use of assets
Sales
Fixed Assets Turnover =
Fixed Assets
7. Working Capital Turnover Ratio:

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Working Capital of a concern is directly related to sales. The current assets like debtors, bills
receivable, cash, and stock etc. change with the increase or decrease in sales. The Working Capital is
taken as:
Working Capital = Current Assets – Current Liabilities
This Ratio indicates the velocity of the utilization of net working capital. This Ratio indicates the
number of times the working capital is turned over in the course of a year. This Ratio measures the
efficiency with which the working capital is being used by a firm. A higher ratio indicates the
efficient utilization of working capital and the low ratio indicates inefficient utilization of working
capital.
Sales
Working capital turnover =
Net working capital
PROFITABILITY RATIOS
A company should earn profits to survive and grow over a long period of time. Profits are
essential, but it world be wrong to assume that every action initiated by management of a
company should be aimed at maximizing profits, irrespective of concerns for customers,
employees, suppliers or social consequences. It is unfortunate that the word profit is
looked upon as a term of abuse since some firms always want to maximize profits ate the
cost of employees, customers and society. Except such infrequent cases, it is a fact that
sufficient profits must be able to obtain funds from investors for expansion and growth and
to contribute towards the social overheads for welfare of the society.
Profit is the difference between revenues and expenses over a period of time (usually one
year). Profit is the ultimate output of a company, and it will have no future if it fails to

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make sufficient profits. Therefore, the financial manager should continuously evaluate the
efficiency of the company in terms of profit. The profitability ratios are calculated to
measure the operating efficiency of the company. Besides management of the company,
creditors and owners are also interested in the profitability of the firm. Creditors want to
get interest and repayment of principal regularly. Owners want to get a required rate of
return on their investment. This is possible only when the company earns enough profits.
Generally, two major types of profitability ratios are calculated:
 Profitability in relation to sales.
 Profitability in relation to investment.
1. Net Profit Margin
Net profit is obtained when operating expenses; interest and taxes are subtracted form the
gross profit margin ratio is measured by dividing profit after tax by sales:
Net Profit
Net profit Ratio = X 100
Sales
Net profit ratio establishes a relationship between net profit and sales and indicates
and management’s in manufacturing, administrating and selling the products. This ratio is
the overall measure of the firm’s ability to turn each rupee sales into net profit. If the net
margin is inadequate the firm will fail to achieve satisfactory return on shareholders’ funds.
This ratio also indicates the firm’s capacity to withstand adverse economic conditions. A
firm with high net margin ratio would be advantageous position to survive in the face of
falling prices, selling prices, cost of production .

Page 30
2. Net Margin Based on NOPAT
The profit after tax (PAT) figure excludes interest on borrowing. Interest is tax deducts
able, and therefore, a firm that pays more interest pays less tax. Tax saved on account of
payment of interest is called interest tax shield. Thus the conventional measure of net
profit margin-PAT to sales ratio- is affected by firm’s financial policy. It can mislead if we
compare two firms with different debt ratios. For a true comparison of the operating
performance of firms, we must ignore the effect of financial leverage, viz., the measure of
profits should ignore interest and its tax effect. Thus net profit margin (for evaluating
operating performance) may be computed in the following way:
EBIT (1-T)
Net profit margin =
Sales
18. Operating Expense Ratio:
The operating expense ratio explains the changes in the profit margin (EBIT to
sales) ratio. This ratio is computed by dividing operating expenses viz., cost of goods sold
plus selling expense and general and administrative expenses (excluding interest) by sales.
Operating expenses
Operating expenses ratio=
Sales

Page 31
19. Return on Investment (ROI)
The term investment may refer to total assets or net assets. The funds employed
in net assets in known as capital employed. Net assets equal net fixed assets plus current
assets minus current liabilities excluding bank loans. Alternatively, capital employed is
equal to net worth plus total debt.
The conventional approach of calculating return of investment (ROI) is to
divide PAT by investments. Investment represents pool of funds supplied by shareholders
and lenders, while PAT represent residue income of shareholders; therefore, it is
conceptually unsound to use PAT in the calculation of ROI. Also, as discussed earlier, PAT
is affected by capital structure. It is, therefore, more appropriate to use one of the
following measures of ROI for comparing the operating efficiency of firms:
BIT (1-T) EBIT (1-T)
ROI = ROTA = =
Total assets TA
EBIT (1-T) EBIT (1-T)
ROI = RONA = =
Net assets NA
Since taxes are not controllable by management, and since firm’s opportunities for availing
tax incentives differ, it may be more prudent to use before tax to measure ROI. Many
companies use EBITDA (Earnings before Depreciation, Interest, Tax and Amortization)
instead of EBIT to calculate ROI. Thus the ratio is:

Page 32
EBIT
ROI =
Total Assets (TA)
20. Return on Equity (ROE)
Common or ordinary shareholders are entitled to the residual profits. The rate
of dividend is not fixed; the earnings may be distributed to shareholders or retained in the
business. Nevertheless, the net profits after taxes represent their return. A return on
shareholders 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 less accumulated losses. Net worth also be found by subtracting total
liabilities from total assets. The return on equity is net profit after taxes divided by
shareholders equity, which is given by net worth:
Profit after taxes PAT
ROE = =
Net worth (Equity) NW
ROE indicates how well the firm has used the resources of owners. In fact, this ratio is one
of the most important relationships in financial analysis. The earning of a satisfactory
return is the most desirable objective of business. The ratio of net profit to owners’ equity
reflects the extent to which this objective has been accomplished. This ratio is, thus, of
great interest to the present as well as the prospective Shareholders and also of great
concern to management, which has the responsibility of maximizing the owners’ welfare.

Page 33
The return on owners’ equity of the company should be compared with the ratios of
other similar companies and the industry average. This will reveal the relative
performance and strength of the company in attracting future investments.
21. Earnings per Share (EPS)
The profitability of the shareholders investments can also be measured in many other
ways. One such measure is to calculate the earnings per share. The earnings per share
(EPS) are calculated by dividing the profit after taxes by the total number of ordinary
shares outstanding.
Profit after tax
EPS =
Number of share outstanding
22. Dividends per Share (DPS or DIV)
The net profits after taxes belong to shareholders. But the income, which they
will receive, is the amount of earnings distributed as cash dividends. Therefore, a large
number of present and potential investors may be interested in DPS, rather than EPS. DPS
is the earnings distributed to ordinary shareholders dividend by the number of ordinary
shares outstanding.
Earnings paid to shareholders (dividends)
DPS=
Number of ordinary shares outstanding

Page 34
23. Dividend – Payout Ratio
The Dividend – payout Ratio or simply payout ratio is DPS ( or total equity
dividends) divided by the EPS ( or profit after tax):
Equity dividends
Dividend Payout Ratio =
Profit after tax
Dividends per share DPS
= =
Earnings per share EPS

Page 35
RESEARCH METHODOLOGY
SCOPE OF THE STUDY:
The scope of the study is limited to collecting financial data published in the annual
reports of the company every year. The analysis is done to suggest the possible solutions.
The study is carried out for 2 years(2010-11).
Objectives of the study:
-To examine the financial performance of the Namma Cargo Services for the period of
2010-11
-To analyses interpret and to suggest the operational efficiency of the Namma Cargo
Services by comparing the balance sheet& profit & loss Ac
-To critically analyses the financial performance of the Namma Cargo Services With Help
of the ratios.
Data sources:
The study is based on secondary data. However the primary data is also collected to fill
the gap in the information..
-Primary data will be through regular interaction with the officials of
-Secondary data collected from annual reports and also existing manuals and like company
records balance sheet and necessary records.
LIMITATIONS:
-The study is based on only secondary data.
-The period of study was 2010-11 financial years only.

Page 36
ReviewOf Literature
Financial statements have two major uses in financial analysis .first, they are used to
present a historical recover of the firm’s financial development. Second, they are used for a
course of action for the firm.
A performance financial statement is prepared for a future period. It is the financial
manager’s estimate of the firm’s future performance.
The operation and performance of a business depends on many individuals are collective
decisions that are continually made by its management team. Every one of these decisions
ultimately causes a financial impact, for better or works on the condition and the periodic
results of the business. In essence, the process of managing involves a series of economic
choices that activates moments of financial resources connected with the business.
Some of the decisions made by management one will be the major, such as investment in a
new facility, raising large amounts of debts or adding a new line of products or services.
Most other decisions are part of the day to day process in which every functional area of
the business is managed. The combine of effect of all decisions can be observed periodically
when the performance of the business is judged through various financial statements and
special analysis.
These changes have profoundly affected all our lives and it is important for corporate
managers, share holders, tenders, customers and suppliers to investment and the
performance of the corporations on which then relay. All who depend on a corporation for
products, services, or a job must be med about their company’s ability to meet their
demands time and in this changing world. The growth and development of the corporate
enterprises is reflected in their financial statement.

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LIQUIDITY AND PROFITABILITY:
Liquidity and profitability are two important demanders in determining the soundness of
an enterprise.
Liquidity means ability of a firm to meet its current obligations when they become due for
payment. It has two aspects – quantitative and qualitative. Qualitative aspect implies the
quantum of current assets a firm possesses irrespective of making any difference b/w
various types of current assets such as inventories, cash and so on. Qualitative aspect
reforms the quality of current in terms of their realization in to cash considering time
dimension involved in maturing different components of current assets.
Profitability is the capacity of earning profits and due most important measure of
performance of affirms. It is generally assumed that there is negative relationship b/w
liquidity and profitability i.e. higher liquidity results in lower profitability and vice-versa.
The objectives of the study:
-To study the growth and development of the company.
-To study the behavior of liquidity and profitability of the companies.
-To analyze the factors determining the liquidity and profitability.
-To comparative study of selected companies on the basis of selected ratios.
Statement of the problem:
Development of industries depends on several factors such as financial personnel,
technology, and quality of the product and marketing art of these. Financial aspects assume
a significant role in determining the growth of industries. All of the company’s operations
virtually affect its need for cash. Most of these data covering operations areas are however
outside the direct responsibility of the financial executives. Values top management

Page 38
appreciates the value of good financial executives to know the profitability and liquidity of
the concern. The firm whose present operations are inherently difficult should try to makes
its financial analysis to enable its management to stay on top of its working position. In this
context the researcher is interested in undertaking an analysis of the financial performance
of companies to examine and to understand how management of fiancé plays a crucial role
of the financial performance analysis of selected companies in India has been undertaken.

Page 39
Company Profile
Namma Cargo Services Co. ltd was founded in 1983 as an international freight
forwarding company with a long-range strategy of providing comprehensive and
integrated logistics and materials management services for international project
forwarding.
The company’s entire infrastructure - its systems, services, facilities and personnel – has
developed largely in direct response to the transportation needs of Saudi Arabian
industrial, commercial and public sectors and international market.
The company operates throughout the kingdom through 8 offices and with 700
professionals who manage both domestic and international operations . At each location ,
Namma has modern warehouses featuring temperature controlled storage facilities and a
complete fleet of vehicles. In addition, complete door to door services are offeredfor the
movement of general , heavy and oversized cargo from world wide location in to Saudi
Arabia .
At Namma they create and operate logistics facilities, employ people with local knowledge
and provide safety stocks in the new markets. So Namma are not only following where you
go they are leading you down the road to increased profitability .
Namma provided total logistics services including International Freight Forwarding,
Customs Clearance and Transportation to several companies of SABIC Group, namely Ibn
Al-Baytar, Safco, Samad, Kemya and Hadeed. Currently, Namma is handling total movement

Page 40
of cargo from worldwide locations for Saudi Chevron Petrochemical Co., Gulfguard, Saudi
Crane, Middle East Power Company, Middle East Battery, Saudi Bea Fasteners and many
other companies. Additionally, Namma Cargo has executed various prestigious projects in
Saudi Arabia for many local and overseas CLIENTS, such as:
-IBN-ZAHR PP-II Project for Parsons International,
-Al Faisaliah Center Project,
-Petrokemya Olefins Furnace Project for Technip/KTI Demag,
-Gas Expansion Project for Air Products-UK,
-SHARQ second Expansion Project for Chiyoda/CCC,
-Aramco Shudgum Debottling Project for Prichard Al-Bassam.
-Saudi Chevron Petrochemical Project for Fluor Daniel/Chiyoda
-Uthmaniyah Gas Plant Expansion Project for M. S. Al-Suwaidi
-SAFCO Ammonia and Urea Plant Project for Tecnimont
-Ralph M. Parsons Project ARAMCO
-SADAF KFIP Project for Fluor Arabia Ltd.
-ABB Lummus Project for Saudi Aramco Berri Gas
-SAMAD DOP Project for Mitsuibishi Kakoki Kaisha
Over the years, Namma Cargo Services has executed various prestigious projects for Saudi
Aramco along with overseas clients, specializing in moving heavy and oversized cargoes of
any size from worldwide locations to the project site in the Kingdom, such as, ABB-
Lummus-Aramco Berri Gas Plant Project, Saudi Techint Shaybah-Abqaiq Pipeline Project,
Parsons-Aramco Uthmaniyah Gas Plant Expansion Project, McConnel Dowell-Riyadh
Refinery Computer Upgrade Project, McConnel Dowel Rastanura /Dhahran FPP Project,
Techint-Hawiyah Aramco Pipeline Project, CCC-Hawiyah Gas Plant Project for Aramco,
Prichard Al-Bassam for Shedgum Bottleneck Project and particularly we are doing two
major projects for Snamprogetti – Rastanura Kuff Condensate Fractionation Project and
Haradh Arabian Light Crude Increment-II Project. In addition to this we have been awarded
by Saudi Arabian Saipem the Aramco Project Sales Gas to Yanbu AY-I Conversion.

Page 41
Although project shipping has over the years been Namma’s principal focus, the company
also proudly services many large and small Saudi commercial exporters and importers.
Namma’s strong traffic expertise, advanced IT capabilities and rigid attention to
documentation details make the company attractive to commercial as well as project
shippers.
Namma has worldwide partnerships with DHL Global Forwarding, who have offices
throughout the world. This long-standing international relationship give Namma a global
networking capability to handle cargo on a door-to-door basis, and to mobilize cargoes
from all continents to any destination site in the Kingdom.

Page 42
Although many factors contribute to Namma’s development, the key to the company’s
growth and success today is the quality and dedication of its employees, all of whom are
geared to respond to clients requirements with a sense of urgency.
The project division handles comprehensive logistics services. These services include
forwarding of materials and equipment for petrochemical plants, fertilizer plants,
refineries, power plants, and other heavy industrial complexes. Namma offers a full
spectrum of forwarding services for both ocean and air transportation from worldwide
locations. The international routings are carefully examined to determine the safest and
most economical mode of transport. In conjunction with our overseas agents and joint
ventures, Namma arranges for cargo clearance and customs formalities at ports of
discharge.
Furthermore, in recognition of the customers’ reporting needs, Namma has developed
POLEP system [Purchase Order Logistics and Expediting Program], a computerized
cargo tracking information system. By utilizing the in-house developed POLEP system,
customers can avail the facility to expedite, process and monitor [24 hours a day and 7 days
a week] each purchase order line item from its issuance until the final delivery of the
shipment at the destination. This is paramount to Namma’s success in becoming the first
choice of Saudi customers in filling their global logistics requirements.

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In more specific detail, Namma expedites clearance and delivery of the shipments mostly
through their computer network, which includes the duty exemption process, translation
and preparation of Customs Declaration, Document preparation in conformation to duty
exemption listing, and also pre-shipment clearance activities, when required.
Namma also provides in-Kingdom liaison with various government agencies and ministries
for obtaining permits , licenses and duty exemptions .
Namma has been assigned the responsibility of the clearance and transportation for
thousands of tons for Saudi Aramco-Total Refinery and Petrochemical Company , better
known as SATORP , other contracts Namma had attained during the years were Qurayyah
Power Plant project for Doosan, Tasnee’s Samco AA project for Samsung and
Bechtel/Maaden Aluminium Smelter project .

Page 44
To respond to the specialized needs of customers, Namma has acquired SITA network,
enabling access to all international airlines and worldwide partners for data interchange,
thus widening Namma’s total communication network. When rapid transit times and
sophisticated tracking systems are necessary, Namma can meet this demand easily.
As customer’s distribution needs grew, the firm expanded their warehousing capabilities.
The warehouse and export divisions provide a full range of services to meet all
requirements for ocean, air and domestic shipments. Temporary warehouses , insulated
storage halls in several span widths and Roder tent system are cost-effective solutions for
any temporary space problem .

Page 45
Namma operations are equipped with highly skilled personnel, experienced in packing
cargo pieces and personal effects shipments. Varying packing methods are adopted to
ensure full safety of materials throughout the door-to-door move.
At present Namma has eight offices throughout the Kingdom, namely Al-Khobar
[headquarters], Jubail, Riyadh, Jeddah, Yanbu, Bahrain Causeway, Al-Batha Border, Tabuk
and Rabigh. Above all, Namma has personnel, equipment, technology, and Kingdom-wide
presence to successfully manage logistics requirements of the Saudi community.
Mission& Vision:
"We strive to provide our customers with the most advanced and high quality of International
Logistics Services. Our team of dedicated professionals, through responsive communications, is
committed to achieve our customers ultimate satisfaction".

Page 46
Our One Stop–Solutionfor Total Logistics :
-Project Management and logistics services
-Warehouse to Warehouse Services of general cargo worldwide.
-Door to Door service of house old goods and personnel effects worldwide
-Air and Ocean forwarding (import & Export )
-Packing and industrial Crating .
- Customs Clearance
-Duty exemption application and Chemical Permits
- Transportation / Trucking Services
-Storage (Temperature controlled , open yards, General Warehouse Area and Marshalling Yard)
-TransitInsurance
-WarehousingandDistribution
-Local moves-IntercityorIntraKingdom
- Airand OceanChartering Services
-Consolidation andMarshallingServices- Worldwide
-WMS (In- house Warehouse ManagementSystem)

Page 47
Our Capabilities /Unique Selling Propositions (USP)
-Three decades of in valuable operations in the field of end to end logistics
-Global Presence with DHL Global Forwarding
-Own Kingdom wide offices
-Own Kingdom wide warehouses
-Own fleet / Transports
-Known as leading quality services provider in Total Logistics Services
-Equipped with the latest communication and on-line tracking & reporting facilities
-Own clearing brokers at the Airport & Sea Port
-Affiliated to leading Freight Forwarding entities such as IATA, OMNI,HHGFAA,FIATA,FIDI,IAM .
-IT Solutions for Logistics
-Successfully implemented quality system procedure certified by FAIM
-Duty Exemption Application
-Temporary import Chemical Permit Application .

Page 48
THE AWARDS
The Company was quick not only to sense the emerging trends in technology world over,
but alongside played consistently a significant role in experimenting, innovating and
pioneering newer concepts. Increasing Services and Cost Effectiveness became the twin
principles of the Company’s mission and bearing evidence to this committed effort, Namma
Cargo Services has developed the POLEP system [Purchase Order Logistics and
Expediting Program], the first ever logistic software developed solely for recording the
data concerning the shipments.
The Organisation is on a perpetual campaign advocating the use of POLEP and
tirelessly driving customers the message of imperative and the need of cargo info. to meet
the ever-growing demands of the customers in the country.
The successful journey performed with dynamism, vision and indefatigable service in the
path of excellence over a period of two and a half decades, has opened up new horizons for
a prosperous and victorious entry into the new millennium. Crowning all these efforts, the
Company has received several Awards, Trophies and Shields in recognition of its
performance and leading roles in the domains of Import and Export markets and to quote a
significant few,
In Recognition of Outstanding Excellence:
 Service Excellence Award from Vice President of Saudia Cargo in the year 1989
 Outstanding Performance Award in the field of Duty exemption and Chemical
Permit from the Ministry of Interior, in the year 1989.
 Certificate of Merit from Saudia Cargo for outstanding Export for the years
1992, 1993 and 1994.

Page 49
 Award for Export Excellence by his Royal Highness Prince Sultan bin
Abdullaziz Al Saud for the years 1994-95, 1995-96 and 1996-97.
 Rolling Trophies for Export by Saudi Basic Industries (SABIC), continually for
four years beginning from 1994 to 1997.
 Recognized as ‘Export House’ in 1993-94 by the Govt. of KSA .
 Recognized as ‘Trading House' in 1997-98 by the Govt. of KSA .
 JAFZA (Jabel Ali Free Zone) Co’s Award for the outstanding contribution and
cooperativeness during the year 1999-2000.
 National Citizen’s Award for the year 1998 received by our corporate chairman
Sheikh Saleh Al –Turki for outstanding contribution in the field of logistics and
forwarding .
 Outstanding human resource and development Award from the Ministry of
Labour and Employment. in the year 2000.
 Award for the Best Export and Import Effort in the Province during 2001-02
from Lufthansa Cargo.
 IATA (International Air Transport Association) Quality Excellence Award 2002
awarded in recognition of Quality Customer Servicing through the Web
portal (POLEP) as well as telecommunication.
 4th Best Import Clearance Award for the year 2001-2002 from Emirates Sky
Cargo.
 Best Import Effort from IAPH (International Association for ports and
harbors ) in the year 2004-05
 Sea Trade Award for the outstanding Export effort Performance during the
year 2007-2008.
 Toastmaster Regional Award for the continuous contribution in the field of
Personality and Employee Development 2007, 2009 , 2010.
 Saudi Aramco Recognition Award for the outstanding Import and Export
Performance both in Air , Sea and Land during the year 2002-2003.

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 DHL Corporate Excellence Award for the Best Agency in the year 2009-10.
Our Sister Affiliates :
Building Materials Industries :
NesmaOrbit
Consumer Products Business :
Al Faris Al Arabi Trading Company
Engineering & Construction Co.‘s :
Kaefer

Page 51
Nesma& Partners
NesmaEser Onur
Real Estate & Property Management :
NesmaReal Estate

Page 52
Retail :
Jollibee
NesmaChocolate
Services
NDigitec

Page 53
NesmaSecurity
PannesmaCo. Ltd.
Investment & Finance
Nesmal

Page 54
ReAyaHolding
Technology
Jadarah
Mihnati
.

Page 55
Nesma Advanced Technology
Telecommunications
NesmaTelecom
Norconsult

Page 56
Transportation& Marine Services :
Bargail
Istanbul Lines
NammaContainer Lines

Page 57
NammaShipping Lines
NPS

Page 58
Negmar
Nesma Airlines
Travel & Leisure
Mawaddah
NammaTours

Page 59
NesmaTravel
Water & Electricity :
Koncar

Page 60
NesmaElectric
NesmaWater & Energy

Page 61
Data Analysis :
Balance Sheet as of the Year 2010 -2011endingatDecember31
ASSETS
Current Assets :
Cash & Bank Balances
Accounts Receivables
Due from related parties
Unbilled revenue
Inventories
Pre payments and other Receivables
Non-currentassets :
Property and Equipment
Total Assets
LIABILITIES
CurrentLiabilities
Accounts payable
Due to related parties
Accrued and Other liabilities
Ref 2011 2010
19,788,467
47,779,568
31,312,797
27,867,157
292,715
13,066,109
19,845,629
41,826,795
43,846,023
18,625,469
252,941
9,380,423
140,106,813
8,474,484
133,777,280
5,782,979
148,581,297 139,560,259
50,998,374
559,407
58,934.485
50,339,287
48,284
60,277,739

Page 62
Zakat Payable
NonCurrentLiabilities:
Employee’s termination benefits
Total Liabilities
Partner’s Equity
Capital
Statutory reserve
General Reserve
Retained earnings
Total partner’s equity
Total Liabilities and partner’s equity
1,174,209 983,591
111,666,475
17,642,278
111,648,901
15,887,288
129,308,753 127,536,189
5,000,000
2,500,000
2,500,000
9,272,544
19,272,544
148,581,297
5,000,000
2,500,000
2,500,000
2,024,070
12,024,070
139,560,259

Page 63
IncomeStatement as of 2010 -2011 atDecember31
Service revenues
Direct cost
Gross Profit
OperatingExpenses:
General and Administrative
Provisionfor doubtful debts
Other Income(expenses):
Other Income
Financial Charges
Gain on sale of property and equipments
Zakat
Net Income of the Year
2011
654,070,955
(597,585,771)
2010
431,514,985
(385,837,128)
56,485,184
(23,313,739)
(1,200,000)
45,677,857
20,846,026
(997,000)
31,971,445
809,879
(558,480)
163,403
24,834,831
829,910
(597,989)
238,500
32,386,247
(837,773)
31,548,474
24,305,252
(647,155)
23,658,097

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1.LIQUIDITY RATIOS:
(A) Current Ratio:
Current ratio is calculated by dividing current assets by current liabilities.
TABLE 1
Year Current Assets Current
Liabilities
Current Ratio
2010 133,777,280 111,648,901 1:20
2011 140,106,813 111,666,475 1:25
(Source: Auditor’s Reports)
1.16
1.18
1.2
1.22
1.24
1.26
2011 2010
Current assets
Current Ratio =
Current Liabilities

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INFERANCE: In above table shown the current ratio of two years (2010-2011). The
Current Ratio Varied from 1.20 to 1.25 with an average of 1.23 during the study period.
The solvency position of Namma Cargo Services ltd. In terms of current ratio was above
the standard norm volume of 2:1 for the entire period.
(B)QuickRatio:
TABLE2
Year Quick Assets Current Liabilities Quick
Ratio
2010 133,524,339 111,648,901 1.20
2011 139,814,098 111,666,475 1.25
1.16
1.18
1.2
1.22
1.24
1.26
2010 2011
(Quick Assets= CurrentAssets- Inventories
Quick Ratio = Quick Assets
CurrentLiabilities

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INFERENCE: The Ideal Ratio is 1:1 , The firm has a good capacity to pay of current
obligations immediately and is a test of liquidity. The high Quick Ratio indicates that the
firm has the ability to meet its current liabilities.
(C) Cash Ratio:
TABLE3
Year Cash & Bank
Balances
Current
Liabilities
Cash Ratio
2010 19,845,629 111,648,901 0.18
2011 19,788,467 111,666,475 0.18
0
0.05
0.1
0.15
0.2
2010 2011
Cash Ratio = Cash + Marketable Securities
Current Liabilities

Page 67
INFERENCE: This Cash Ratio indicates that the capacity of the company to realize current
liabilities with its liquidity position. The Cash Ratio of Namma Cargo Services has remained
constant in the past 2 years.
(D)Net working capital Ratio:
Net working capital (NWC)
NWC ratio =
(Net assets + F.A)
TABLE 4
Year Net Working
Capital(CA-CL)
Net Assets
(FA+NWC)
Ratio
2010 22,128,379 27,911,358 0.79
2011 28,440,338 36,914,822 0.77

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INFERENCE : Net working capital has decreased from 0.79 in 2010 to0.77 in 2011 so this
clearly shows that the firm has sufficient amount of working capital.
2.LEVERAGE RATIOS:
(A)Debt Ratio
Total Liabilities
Debt Ratio =
Assets
0.76
0.77
0.78
0.79
0.8
2010 2011

Page 69
TABLE 5
Year Total Liabilities Total Assets Ratio
2010 127,536,189 139,560,259 0.91
2011 129,308,753 148,581,297 0.87
INFERENCE: The optimal debt ratio is determined by the same proportion of liabilities and equity
as a debt-to-equity ratio. If the ratio is less than 0.5, most of the company's assets are financed
through equity. If the ratio is greater than 0.5, most of the company'sassets are financed through
debt.
(B) Debt – Equity ratio:
Liabilities
Debt-to-equity ratio =
Equity
0.85
0.86
0.87
0.88
0.89
0.9
0.91
0.92
2010 2011

Page 70
TABLE6
Year Total Liabilities Equity Ratio
2010 127,536,189 12,024,070 10.61
2011 129,308,753 19,272,544 6.71
INFERENCE :For most companies the maximum acceptable debt-to-equity ratio is 1.5-2 and less.
For large public companies the debt-to-equity ratio may be much more than 2, but for most small
and medium companies it is not acceptable. In short a high debt-to-equity ratio indicates that the
firm company may not be able to generate enough cash to satisfy its debt obligations.
(C) Capital Equity Ratio:
Fixed Assets
Capital Equity Ratio =
Equity Capital
0
2
4
6
8
10
12
2010 2011

Page 71
TABLE 7
INFRENCES: The ratio increases in 2010 from1.16 to1.69 in the year 2011.
3. ACTIVITY RATIOS:
(A) Debtor turnover Ratio:
Sales
Debtors turnover =
Debtors
0
0.5
1
1.5
2
2010 2011
Year Fixed Assets Equity Capital Ratio
2010 5,782,979 5,000,000 1.16
2011 8,474,484 5,000,000 1.69

Page 72
TABLE 8
INFERENCE :Debtors Turnover Ratio should be very high then only the company will be
receiving its debts with in a short period. It indicates the company has taken less time to
convert the credit sales into cash. The debtors turnover ratio of the firm was 10:32 in 2010 an
then increased to 13:69 in 2011
0:00
4:48
9:36
14:24
19:12
2010 2011
Year Sales Debtors Ratio
2010 431,514,985 41,826,795 10:32
2011 654,070,955 47,779,568 13:69

Page 73
(B) Net Assets Turnover Ratio:
Net assets turnover can be computed simply by dividing sales by net assets
Sales
Total Assets Turnover =
Net assets
TABLE 9
Year Sales Net assets Ratio
2010 431,514,985 27,911,358 15:46
2011 654,070,955 36,914,822 17:72

Page 74
INFERENCE: Net assets turnover ratio was 15:46 in 2010 and 17:72 in 2011. So this is good
for the company. The more higher the ratio better for the company.
(C) Fixed Assets Turnover Ratio:
Sales
Fixed Assets Turnover Ratio =
Fixed Assets
14
14.5
15
15.5
16
16.5
17
17.5
18
2010 2011

Page 75
TABLE 10
Year Sales Fixed assets Ratio
2010 431,514,985 5,782,979 74:62
2011 654,070,955 8,474,484 77:18
INFERENCE: Fixed assets turnover ratio was 74:62 in2010 and 77:18 in 2011 so the company achieved
maximum fixed asset turnover ratio , which is actually good for the firm.
(D) Current assets turnover Ratio:
Sales
Current assets turnover =
Current assets
73
74
75
76
77
78
2010 2011

Page 76
TABLE 11
Year Sales Current assets Ratio
2010 431,514,985 133,777,280 3:2
2011 654,070,955 140,106,813 4:6
INFERENCE: In this chart it shows the current assets turn over ratio by which company is
currently rotating the assets for business purpose. It was highly purchased current assets
by the end of the year 2011.
(E) Total Assets Turnover Ratio:
Sales
Total Assets Turnover Ratio=
Total Assets
0
1
2
3
4
5
2010 2011

Page 77
TABLE12
Year Sales Total assets ratio
2010 431,514,985 139,560,259 3:1
2011 654,070,955 148,581,297 4:4
INFERENCE: Total Assets Turnover Ratio of the company is rotating their assets into business
purpose. The increase in ratio shows that the company can able to rotate the total assets in
the business
(F) Working Capital Turnover Ratio:
Sales
Working Capital Turnover Ratio=
Working Capital
0
1
2
3
4
2010 2011

Page 78
Table 13
Year Sales Working Capital Ratio
2010 431,514,985 22,128,379 19:5
2011 654,070,955 28,440,338 22:9
INFERENCE: In the above Table and Chart the velocity of the utilization of Net Working
Capital. In the year 2011 holds with efficient working capital.
PROFITABILITY RATIOS:
(A) Net Profit Ratio:
Net Profit
Net profit Ratio = X 100
Sales
0:00
0:00
0:00
0:00
0:00
0:00
0:00
0:00
2010 2011

Page 79
TABLE 14
Year Net Profit Sales Ratio
2010 23,658,098 431,514,985 5:4
2011 31,548,474 654,070,955 4:8
INFERENCE: Net profit ratio has been decreased from 2010 to 2011. A firm with high net
margin ratio would be advantageous position to survive in the face of falling prices, selling
prices, cost of production . Even though the Net profit margin decreases from 5:4 in 2010
and 4:8 in 2011 it still maintains a high margin.
9:36
14:24
19:12
0:00
4:48
9:36
14:24
2010 2011

Page 80
FINDINGS
On the overall evaluation at each and every aspect, the following findings are
found.
 Liquidity ratios have continuously gone under various fluctuations in the
last 2 years. How ever the ratios are more than the industry standard.
This indicates excess cash is maintained in the organization.
 Leverage ratios are as per the industry norm of 3:1 and it is more or less
is maintained steadily in 2 years.
 Turnover ratios are also in line with the standards.
 Even though the Net profit margin decreases from 5:4 in 2010 and 4:8 in
2011 it still maintains a high margin.

Page 81
Suggestions
 The company has a good record of quality of service in the market with
best of my enquiry and investigations.
 They should see that the debtors should be collected with in a specified
time by the company. So, that they can discharge some of its creditors or
current liabilities .
 Ratio analysis are immensely helpful in making a comparative of the
financial statement for 2 years.
 The company financial position is very secure. It is observed that most of
the ratios are as per the industry standard.
 Company adopts proper inventory control techniques to properly
management inventory.

Page 82
BIBLOGRAPHY
 I.M Pandey, 2010, FINANCIAL MANAGEMANT, 9th Edition, Vikas
publishing House private Limited, New Delhi.
 Prasanna Chandra 2009, FINANCIAL MANAGEMENT, 5th Edition, TATA-
McGraw HILL, New Delhi.
 S.P. Jain, K.L Narang, 2010, ADVANCED ACCOUNTANCY, VOLUME II ,
13thEdition, Kalyani publishers, Ludhiana.
Web Sites :
www.nammacargo.com
www.nesma.com

MBA project.

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