This document provides an analysis of ratios and cash flow statements for a company. It begins with an introduction and overview of the company's history, products, facilities and board of directors. It then discusses the importance of ratio analysis and categorizes key ratios into groups such as liquidity, profitability, leverage and activity ratios. The document also includes the company's cash flow statement, stock performance, common size statements and conclusions.
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To Evaluate the Liquidity Position, Turnover Position, Profitability Position of the Company Under Study
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Examples of ratio analysis include current ratio, gross profit margin ratio, and inventory turnover ratio.
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A FINANCIAL ANALYSIS OF RATIOS & CASH FLOW STATETMENT
1. A FINANCIAL ANALYSIS OF RATIOS &
CASH FLOW STATETMENT
REPORTON
PREFACE
The last few years have witnessed the winds of changes
and rapid development all over the business world. The area of knowledge based
competition is upon us.
Today India has come out as a globalize country the process of
globalization has affected the corporate a lot.
The rule of the game has clearly changed business. These technique that had
served well in past decades have been rushed a side by technology and knowledge
for the existences of the business in the cutthroat competition prevailing in the
industrial unites. A total awareness is the first and the foremost thing necessary
formula the aspects working smarter seem to reset in the greater economic impact
than merely working harder. Today true leaning is borne out of experience and
observation; hence business schools offer training looking at the present sceneries
education and the administrative method of management of business.
There are so many objective of this program. The main object of these
practical studies is for student to be of the industrial environment through
industrial visit. We came to know about different industries their acetates to work.
Their problems and how they survive. The students get the acetates to work, their
problems and how they survive. The students get the knowledge regarding various
business functions. A part from this there is many indirect benefits to the students
like their communication skill as are developed and they have an opportunity to
approach work as a team instead of individual. The industrial changes to gets along
group and also creates co-ordination among students.
2. 2
INDEX
Ch.No Chapter Name Page No.
1 Part No.-1
-General Profile of the company 5
-Board of director 8
-Ragistered office 9
-Relelated company 10
-Products 11
2 Part No-2
-Ratio Analysis 14
-Balance sheet 52
3 Part No-3
-Cash Flow Statement 55
4 Part No-4
-Stock Market Performance 58
5 Part No-5
-Common size statement 59
6 Conclusion 61
7 BIBLIOGRAPHY 62
3. 3
HISTORY
The company was founded in 1986 as a partnership, under the name M/s Gujarat
Industries, to manufacture Pigments by our Executive Chairman Mr Jayanti Patel,
together with our Managing Directors, Mr Ashish Soparkar and Mr Natwarlal
Patel, as well as two of our Executive Directors Mr Ramesh Patel and Mr Anand I
Patel (collectively the "Founders").
On 2 January 1995, our Company, Meghmani Organics Limited, was incorporated
as a joint stock company with limited liability pursuant to Part IX of the Indian
Companies Act. Under Section 566 of the Indian Companies Act, "joint stock
Company" means a company having a permanent paid-up or nominal share capital
of fixed amount divided into shares.
The Vatva Plant
In 1986, we commenced operations to manufacture Phthalocynine Green 7 more
popularly known as Pigment Green 7 (PG-7) at our first manufacturing plant
situated at the GIDC Industrial Estate, Vatva, which is approximately 14 km from
Ahmedabad City. This industrial estate is developed by the state government's
nodal agency, GIDC.
As at 30 November 2003, we have invested Rs 128.49 million in plant and
machinery and building at the Vatva Plant. Our manufacturing facilities at the
Vatva Plant are ISO 9001-2000 certified.
The Chharodi Plant
4. 4
In 1995, the Founders decided to diversify our business through the manufacture of
Agrochemicals. The plant for the manufacture of Agrochemicals is located in
Chharodi Village, which is approximately 40 km from Ahmedabad City. The cost
of commissioning the Chharodi Plant was approximately Rs 300.7 million.
At the plant, the company manufactures Technical Grade Pesticides which include
synthetic pyrethroids such as Cypermethrin, Permethrin and Alpha Cypermethrin
and organic phosphorous compounds such as Acephate as well as new Technical
Grade Pesticides such as Imidacloprid and Triazophos, Formulations and
Pesticides Intermediates such as MPB and CMAC. As at 30 November 2003, the
company has invested Rs 440.7 million in plant and machinery and building at the
Chharodi Plant. The company manufacturing facilities at the Chharodi Plant is ISO
9001-2000 certified.
The Panoli Plant
In 1996, the Company proceeded to expand Pigments business and to move
upstream into the manufacture of CPC Blue, a raw material used in the
manufacture of green Pigments and the manufacture of the blue Pigments namely,
Alpha Blue and Beta Blue.
The company acquired two plots of GIDC land at the GIDC Industrial Estate,
Panoli, to set up the manufacturing facilities. The plant is located on the western
side of India near Ankleshwar, which is approximately 200 km south from
Ahmedabad and 250 km north from Bombay. This area is one of India's chemical
manufacturing centers and is accessible by railway and roads, and has adequate
infrastructure facilities for the industries and is in close proximity to sources of raw
materials and other inputs.
The project was partially funded by way of an equity injection by JF Electra
(Mauritius) Limited (now known as Electra Partners Mauritius Limited), a
Mauritius based private equity investment company which injected Rs 205.0
million and Pisces Re Ltd, a Mauritius based company which injected Rs 175.0
million. The construction of the plant was completed in the second half of 1997
and we commenced manufacturing CPC Blue, Alpha Blue and Beta Blue in
5. 5
February 1998. At present, the Panoli Plant has a production capacity of 7200
TPA, 600 TPA and 3,000 TPA for CPC Blue, Alpha Blue and Beta Blue
respectively. The company manufacturing facilities at the Panoli Plant is ISO
9001-2000 certified.
As at 30 November 2003, the company has invested Rs 550.8 million in plant and
machinery and building at the Panoli Plant. In February 2004, the company
acquired an adjoining plot of land of 34,000 sq m for Rs 12.0 million.
As Company exports a majority of products manufactured at the Panoli Plant, we
converted this division into an Export Oriented Unit (EOU) in FY2003, to enjoy
certain tax and duty benefits.
Ankleshwar Plant
In FY2003, the company acquired another plant in Ankleshwar at a purchase price
of Rs 31.5 million. The Ankleshwar Plant commenced production on 1 August
2003 to manufacture Chlorpyrifos, a class of Agrochemical products, and has a
current installed production capacity of 480 TPA.
As at 30 November 2003, we have invested a further Rs 53.4 million in plant and
machinery and building at the Ankleshwar Plant. Mumbai Office
In 1996, we purchased office premises in Mumbai, which is presently headed by
Mr Ashvin Raythatha, our Executive Director, who oversees our imports and
exports activities.
6. 6
BOARD OF DIRECTOR
Jayanti M.Patel (Executive Chairman)
Ashish N. Soparkar (Managing Director)
Ramesh M. Patel (Executive Director)
Anand I. Patel (Executive Director)
Ashvin K. Raythattha (Executive Director)
Chinubhai R. Shah (Independent Director)
Balkrishna T. Thakkar (Independent Director)
Jayaraman Vishwanathan (Independent Director)
Chandan Bhattacharya (Independent Director)
Foo Meng Tong (Independent Director)
K. N. Venkatasubramanian (Independent Director)
8. 8
RELATED COMPANY
Meghmani Dyes & Intermediates & Meghmani Industries Limited
Ashish Chemicals
Meghmani Pigments
Meghmani Industries Limited
Matangi Industries
PRODUCT OF THE COMPANY:-
9. 9
The company has mainly three type of the productthese are as under.
Pigments product
Pesticides
New product
The company producing the different type of the Pigments products like,
Pigments for Plastics
Pigments for Printing Inks
Pigments for Coatings
The company also producing the different products of the Pesticides such as
Formulation Products
Technical Products
Intermediates
The new product of the company is Hysol-P based CPC Blue product.
Ratio Analysis;-
10. 10
A ratio is one number expressed in terms of other. It is a mathematical yardstick
that measures the relationship between two figures. Ratio analysis helps various
interested parties like prospective investors, creditors, banks, employees etc. to
draw useful conclusion to serve their purpose.
The use of ratio is becoming increasing popular recently. Originally, the banks
used the current ratio to judge the capacity of the borrowing firm to repay the loan
and to make regular interest payments. Today it has assumed such an important
that anybody connected with the business turns to ratio for measuring the financial
strength and earning capacity of their business. Here we classified the ratio on the
bases of the Functional Classification.
Traditional classification
Funcational classification
(1)Liquidity ration
(2)Profitability ratio
(3)Leverage ratio
(4)Activity ratio
IMPORTANCE OF RATIO
11. 11
In application to studying the rupee amount shown in the financial statements,
relationships between different items may be established by computing various
ratios. The relation between two related items of financial statement is known as
Ratio. A ratio is thus, one number expressed in terms of other Ratios are
particularly useful in comparing one year’s performance with other years, as well
as one company’s performance with another’s. In many cases the average ratios
relating to companies in particular industries are available, and an individual
company’s ratio may be compared with such an average.
Ratios help to make qualitative judgments depending upon the calculations made
which are quantitative judgments. 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 compare with some
standard. Standard of comparison may decided by the company or firm itself.
We can understand the important of Ratio Analysis by the following advantage,
which can be gained from the ratio analysis.
Efficiency:
The turn over ratios is excellent guide to measure the efficiency of managers. The
stock turnover ratio will indicate how efficiency sale is being. The debtor’s
turnover will indicate the efficiency of collection department and assts turn over
shows efficiency with which the assts are used in business. All such ratio related to
sales present a good picture of success or otherwise of the business.
Profitability:
Useful information about the trend of profitability is available from profitability
ratio the gross profit ratio. Net profit ratio and ratio on return on investment give a
good idea of a profitability of business on the basis of these ratios investors get and
idea about the overall efficiency of business the management gets and idea about
the efficiency of managers.
Liquid
12. 12
Infect the use of ratio was made initially to ascertain the liquidity of business. The
current ratio, liquid ratio, and acid test ratio will tell whether the business will be
able to pay regularly the interest and loan installment.
Inter firm comparison:
The absolute ratios of the firm are not of much use unless they are compared with
similar ratio of other firms belonging to the same industries, this is inter firm
comparison which show the strength and weakness of the firm as compared to
other firms and will indicate corrective measures.
Useful for budgetarycontrol:
Regular budgetary reports are proposing in a business those the system of
budgetary control is in use. It various ratios are presented in this report it will give
a fairly good idea about various aspect of finance position.
IndicateTrend:
The ratio of the last three to five years will indicate the trends in the a respective
field for e.g. the current ratio of a firm is lower that the industry average but the
ratio of the last five years shown as improving trend. It is an encouraging trend
reverse may also be true a particular ratio of company for one year may compare
for variable with industry but if its trend shows deterioration it is not desirable only
ratio analysis will provide this information.
LIMITATIONOF RATIO
13. 13
Ratio can sometimes be misleading if an analyst doesnot know the reliability and
soundness of the figures from which they are computed and the financial position
of the business at other times of the year
The mechanics of ratio construction are not important as the proper interpretation
of the ratio. As a matter of falt; ratio are only a preliminary step in interpretation.
They call attention to certain aspects of the business which need detailed
investigation before arriving at any final conclusion.
Ratio can never be the substitute of raw figures. At the time of interpretation there
of raw figures should also be referred to.
Interpretation comparison on the basis of ratio analysis is disorted because of the
differing practices followed by different companies in respect of allocation of the
cost of fixed assets and intangible costs between different time periods.
[A] LIQUIDITY RATIOS
14. 14
1) Current Ratio:-
This most widely used ratio shows the portion of current assets to
current liabilities. It is also known as Working Capital Ratio. It is generally
believed that 2:1 current ratio shows a comfortable working capital position i.e.
the current assets should be twice the current liability. This rule is based on the
logic that in a worse situation, even if the value of current assets becomes half,
the firm will be able to meet its obligation.
Current Ratio= Current Asset
Current liabilities
(Rs in Millions)
Particulars 2007 2008 2009
Current Assets 3469.7 4488.45 5342.89
Current
Liabilities
573.88 905.67 1437.14
Ratio 6.05 4.96 3.72
15. 15
Interpretation
It is generally believed that 2:1 is a comfortable ratio that is current assets
should be twice the current liabilities. But it is not a very hard and fast rule. There
may be instances when an enterprises may function satisfactorily even with the
ratio of 1: 1.
As we see into the working capital position of the company. But, here in this
company current ratio is almost near to 5:1, i.e., 6.05:1, 5.57:1, 3.50:1 respectively
which means company have more liquidity than the requirement , so we can say
from the debtors’ turnover ratio that current assets are more due to more credit
period given to debtors. And we cannot say that it is due to inventory stock
because inventory has enough turnovers which show that the stock is not ideal.
0
1
2
3
4
5
6
7
2007 2008 2009
Current Ratio
Current Ratio
16. 16
2. Liquid Ratio:-
These Ratios indicates the position of liquidity position of
the company. They are computed to ascertain whether the company is capable of
meeting its short-term obligation from its short-term resources.
Liquid Assets
Liquid Liability
(Rs in Millions)
Particulars 2007 2008 2009
Liquid Assets 2526.69 3634.00 4288.44
Liquid
Liability
573.88 905.67 1437.14
Ratio 4.40 4.01 2.98
Liquid Ratio
17. 17
Interpretation
The liquid ratio is a better indicator of liquid position of the company and
shows the company will be able to meet its current obligation due to immediate
payment at short notice. However it is believed that liquid assets should at least
cover the liquid liability so the ratio should be 1:1. Here in the company the liquid
position of the company is excess respect 4.40, 4.01, 2.98 so the company has to
invest in the assets.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2007 2008 2009
Liquid Ratio
Liquid Ratio
18. 18
3. Debt-Equity Ratio
This ratio is only another form of proprietary ratio and establishes relationship
between the outside long-term liabilities and owners’ funds. It shows the
proportion of long-term External Equities and Internal Equities.
Debt- Equity Ratio= Long Term Liability X 100
Share’s Holder Fund
(Rs in Millions)
Particulars 2007 2008 2009
Long term liability 1718.57 1842.33 1901.19
Sh. Holder fund 2830.68 4074.61 4481.73
Ratio 60.71% 45.21% 42.42%
19. 19
Interpretation
The ratio indicates the relationship between long funds and net worth of the
company. 0.5:1 is normally accepted ratio by the financial institutions, means debt
should be halved of net worth. Debt equity ratio of the company is not fully
satisfactory but in the year by year it is decreasing which is good for the company,
because it shows decreasing debt year by year. Year by year debt was decreasing
and net worth was increasing, so the ratio simply decreased.
0
10
20
30
40
50
60
70
2007 2008 2009
Debt Equity Ratio
Debt Equity Ratio
20. 20
4. Gross Profit Ratio
(Rs in Millions)
It is a ratio expressing relationship between Gross Profit earned to Net Sales. It
is a useful indication of the profitability of business. This ratio is usually
expressed as a percentage. The ratio shows whether the mark-up obtained on
cost of production is sufficient. In many industries, there are more or less
recognized gross profit ratios and the business should strive to maintain this
standard.
Gross profit ratio: Gross profit x 100
Sales
(Rs in Millions)
Particulars 2009 2008 2007
Gross Profit 2,151,697,613 1,402,708,495 1,351,583,879
Net Sales 7,683,688,371 5,869,717,005 4,690,593,469
Ratio 28% 23.90% 28.81%
21. 21
A high ratio impels that the cost of the production is relatively lower or that
purchases are made at low price. Allow ratio suggest that the firm is not able to
buy at reasonable price or production in the under control. Here the gross profit
ratio is fluting over the period of the time. But in 2009, 2007 the ratio is
satisfactory while in the 2008 the ratio is respect low.
0
5
10
15
20
25
30
2009 2008 2007
Gross Profit Ratio
Gross Profit Ratio
22. 22
5. Net Profit Ratio
The ratio is valuable for the purpose of ascertaining the over-all profitability of the
business and shows the efficiency or otherwise of operating the business. It is the
reserve of the operating ratio. Generally, the ratio is computed on the basis of net
profit earned from operation of business and non-operating expenses and income
are excluded. This ratio indicates what portion of sales revenue is left to the
proprietors after all operating expenses are met. The higher the ratio, the better will
be the profitability
Net profit ratio: Net profit x 100
Sales
(Rs in Millions)
Particulars 2009 2008 2007
PAT 505,306,936 375,971,197 408,808,133
Net sale 7,683,688,371 5,869,717,005 4,690,593,469
Ratio 6.57% 6.40% 8.72%
23. 23
The Net Profit Margin indicate management ability to operate the business
with sufficient not only to recover from the income of the period.. The higher the
ratio indicate that the business stand in good economic condition. Here in this ratio
in the year of 2007 the company earns the handsome profit with respect year2008,
2009 the profit is fluctuant so the company has to put too much affords.
0
1
2
3
4
5
6
7
8
9
2009 2008 2007
Net Profit Ratio
Net Profit Ratio
24. 24
6. Return on Share holder Fund:-
In order to judge the efficiency with the proprietor Fund are employed in business
this ratio is ascertain. It also indicate whether the return on proprietor fund is
enough in relation to the risk that they undertake this ratio should what amount of
dividend is likely to be received on share.
Return on Share holder Fund = PAT x 100
Share holder Fund
(Rs in Millions)
Particulars 2007 2008 2009
PAT 408.81 375.97 505.31
Share holder Fund 2830.68 4074.61 4481.73
Ratio 14.44% 9.23% 11.27%
25. 25
The ratio indicate how profitability the fund provided by the owner have been
used in the business. The higher the ratio indicates the company has earned the
handsome profit and the shareholder will get the good return on it so the reputation
of the company will increase. Hare in the ratio in 2007 share holder has got good
reward wet with respect year2008 and 2009 the ratio is go down so the reputation
of the company may be go down.
7. Return on Total Assets
0
2
4
6
8
10
12
14
16
2007 2008 2009
Return on share holder Fund
Return on share holder Fund
26. 26
The Return on Total Assets measures the profitability of the total
funds/investments of a firm. Here, the profitability ratio is measured in terms of the
relationship between net profits and assets. The ROA may be called profit-to-assets
ratio.
Return on Total Assets = PAT x 100
Total Assets
(Rs in Millions)
Particulars 2007 2008 2009
PAT 408.81 375.97 505.31
Total Assets 5232.75 6953.56 7946.76
Ratio 7.81% 5.41% 6.36%
28. 28
8. Return on Capital Employed
The ROCE is the second type of ROI. Here the profits are related to the total
capital employed. The term capital employed refers to long-term funds supplied by
the lenders and owners of the firm. It is computed in two ways; first it is equal to
non-current liabilities plus owners’ equity. And second is it is equivalent to net
working capital plus fixed assets. The higher the ratio, the more efficient is the use
of capital employed.
Return on Capital Employed = PBT x 100
Total Capital Employed
(Rs in Millions)
Particulars 2007 2008 2009
PBT 455.17 474.20 621.23
Capital Employed 3374.98 5316.34 5071.65
Ratio 13.47% 8.92% 12.25%
30. 30
9. Fixed assets turnover ratio
To ascertain the profitability of the business, the total fixed assets are compared to
the sales. The more the sales in relation to the amount invested in fixed assets, the
more efficient is the use of fixed assets, vice-a-versa. If the ratio is low it indicates
that investment in fixed assets is more than necessary and should be reduced. On
the other hand if the ratio is high it reflects that fixed assets are effectively used to
earn profit.
Fixed assets turnover = Net Sale
Fixed Assets
(Rs in Millions)
Particulars 2007 2008 2009
Net Sales 1484.37 1375.06 1501.19
Fixed Assets 4690.59 5932.39 7683.69
Ratio 3.16 4.31 5.12
32. 32
10 Current Assets Turnover Ratio:-
To ascertain the working position of the business the current assets are compared
to sales. If the sales are more then as compare to investment in the current assets it
indicate better working position and if the sales are less than as compared to
investment in current assets it menace that current assets are not adequate utilized
in business.
Current Assets turnover Ratio = Sales
Current Assets
(In Millions)
Particulars 2007 2008 2009
Sales 4690.59 5932.39 7683.69
Current Assets 3469.70 4488.45 5342.89
Ratio 1.35 1.32 1.44
34. 34
11. Debtor’s turnover Ratio
The debtors are created, when credit sales is used as marketing tool along with the
cash sales. The debtors are expected to be converted into cash over a short period
of time and hence they are included in the current assets. The liquidity portion of
the company depends upon the quality of the debtors to a great extent. This ratio
indicates the number of times the debtors turned into cash every year. Generally
higher ratio shows the efficient credit management. It also indicates the efficiency
and promptness in the collection of the debtors. This ratio is calculated with the
following formula:
Debtor’s Turnover Ratio = Net sales
Debtors + Bills Receivables
(Rs in Millions)
Particulars 2007 2008 2009
Credit Sale 4690.69 5932.39 7683.69
Average debtors 1950.76 2306.26 2754.29
Ratio 2.40 times 2.57 times 2.79 times
35. 35
The higher the debtors turnover or shorter are the collection period the better the
management of the firm. It implies better liquidity, as debtors make prompt
payment. But a longer collection period reflects a poor credit policy on the part of
the management. However, short collection period is not always desirable. It may
mean very strick collection policy which may reduce the volume of sales.
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2007 2008 2009
Debtors Turnover Ratio
Debtors Turnover Ratio
36. 36
12. Debtor’s Ratio
The debtors are created, when credit sales is used as marketing tool along with the
cash sales. The debtors are expected to be converted into cash over a short period
of time and hence they are included in the current assets. The liquidity portion of
the company depends upon the quality of the debtors to a great extent. This ratio
indicates the number of times the debtors turned into cash every year. Generally
higher ratio shows the efficient credit management. It also indicates the efficiency
and promptness in the collection of the debtors. This ratio is calculated with the
following formula:
Debtor’s Ratio = Debtors + Bills Receivables
Credit sales
(Rs in Millions)
Particulars 2007 2008 2009
Credit Sale 4690.69 5932.39 7683.69
Debtors +BR 1950.76 2661.75 2846.82
Ratio 152 days 164 days 135days
37. 37
The debtor ratio indicates affiance of collection of the department. It is difficult to
give and simple figure about the affiance of the collection. Here the date of the
credit is fluctuant in the number of the year. But as the compare to the industry
ratio the company have make the strong policy toward the collection.
0
20
40
60
80
100
120
140
160
180
2007 2008 2009
Debtors Ratio
Debtors Ratio
38. 38
13. Creditors Ratio
The number of days within us makes payment to our creditor for credit purchase is
obtained from creditor velocity. This ratio is obtained by dividing creditor &bill
payable by credit purchase and multiplying by 365 day.
Creditors Ratio = Creditors + Bills Payable
Credit purchase
(Rs in Millions)
Particulars 2007 2008 2009
Creditors+ Bills
Payable
428.06 778.90 1279.37
Credit purchase 2988.37 3802.46 5231.69
Ratio 52Days 75Days 89Days
39. 39
The creditor ratio indicates in how many time the company will make the payment.
Here the period of payment is increase in the respect year. So the company has to
make strong policy regarding the payment.
0
10
20
30
40
50
60
70
80
90
2007 2008 2009
Series 1
Series 1
40. 40
14. Creditor Turnover Ratio
The Creditor turnover ratio suggests the number of times the amount of credit
purchase is paid during the year. This ratio is compared by dividing credit purchase
by Avg. coeditors.
Creditor Turnover Ratio = Credit purchase
Avg. coeditors
(Rs in Millions)
Particulars 2007 2008 2009
Credit purchase 2988.37 3802.46 5231.69
Avg. coeditors 428.06 603.48 1029.14
Ratio 6.98 6.30 5.08
42. 42
15. Expenses Ratio:-
For the purpose of ascertain relation between operating expenses and net sales
expenses ratio over a number of year will reveal the extent to which expenses very
in relation to sales.
Expenses Ratio = Expenses x 100
Sales
(Rs in
Millions)
Particulars 2007 2008 2009
Expenses 4462.92 5396.03 7099.33
Sales 4690.69 5932.39 7683.69
Ratio 95.14% 90.96% 92.39%
44. 44
16. Long term to fox Assets Ratio:-
The ratio shows the relationship between fix capital and fix assets. The ratio is 1:1
or more.
Long term to fox Assets Ratio = Long term fund
Fixed Assets
(Rs in Millions)
Particulars 2007 2008 2009
Long term fund 4664.88 6047.89 6509.63
Fixed Assets 1484.37 1375.06 1501.19
Ratio 3.14:1 4.40:1 4.34:1
46. 46
17. Total Assets Turn Over Ratio:-
The fund used in business is employed in both fixed assets and
current assets and profit is earned with the help of both. Hence it would be useful
to know the proprietor of total assets to sales.
Total Assets Turn Over Ratio= Sales
Total Assets
(Rs in Millions)(Rs in Millions)
Particulars 2007 2008 2009
Sales 4690.59 5932.39 7683.69
Total Assets 5232.75 5953.56 7946.76
Ratio 0.90 0.85 0.97
48. 48
18. Return on Equity Share Capital:-
This ratio indicates profitability of a firm from the view point of real owners who
bear all the risk of business. It signifies the success with which the management
has been able to earn enough return has been able to earn enough return on funds
supplied by the proprietor.
Return on Equity Share Capital= PAT-Pref. Dividend *100
Eq. Sh. Capital
(Rs in Millions)
Particulars 2007 2008 2009
PAT-Pref.
Dividend
408.81 375.97 505.31
Eq. Sh. Capital 2830.68 4074.61 4481.73
Ratio 14.44% 9.23% 11.27%
53. 53
CASH FLOW STATEMENT
A statement showing Inflow of Cash and Outflow of Cash during the
last year and as a result the balance of the cash at the end of the Year is
known as “Cash Flow Statement”. This statement helps management to
know the actual liquid position of cash on the hand and also to ascertain
whether the business is able to get enough cash to meet the liability as
and when they arise.
54. 54
Cash Flow Statementfor the year ended 31st March 2009
Particulars 31.03.2009 31.03.2008 31.03.2007
A. Cash flow from Operating activity
Net Profit Before Tax
Adjustment for:
Deprecation
Unrealistic Foreign Gain
Deferred Revenue Expenses Written off
Interest and Finance Charges
Dividend Received
Interest Received
Diminution in Investment
Interest Received Inter Company
Loss on sale on the Investment
Loss on Discarded assets
Loss on Sale of Fixed Assets (Net)
621,233,925
153,625,886
7,788,823
-
240,055,596
(37,000)
(27,267,425)
-
-
-
680,458
1,945,868
474,203,629
143,701,631
(73,838,724)
-
101,779,529
(50,278,520)
(50,278,520)
(190,000)
(50,105,954)
565,717
-
2,812,584
455,165,626
135,013,251
20,354,746
1,970,339
120,764,106
(30,000)
(390,791)
-
-
-
-
1,188,512
Operating Profit before Exceptional Item 376,792,206 102,062,259 278,870,163
Exception Item 427,109,193 - -
Operating Profit before working capital
changes
1,425,135,324 576,265,888 734,035,789
Adjustment for:
Inventories
Debtors
Loan and Advances
Current liability
Provision for Employee Benefit
(200,003,526)
(185,072,231)
(420,992,617)
497,899,972
18,645,692
88,569,502
(710,993,999)
(361,680,484)
323,157,533
1,225,120
(169,561,604)
(219,192,103)
(140,171,758)
51,298,174
-
Sub Total (289,522,710) (659,722,328) (477,627,291)
Cash Generated from operation
Direct Taxes paid
1,135,612,614
(147,563,850)
(83,456,440)
(81,146,619)
256,408,498
(56,452,692)
Net Cash from operating activity 988,048,764 (164,603,059) 199,955,806
B. Cash flow from Investment Activity
Purchase of Fixed assets
Dividend Received
Interest Received
Purchase of Mutual Fund
Sale of Mutual Fund
Investment in Subsidiaries
Sale of Fix Assets
(288,040,537)
37,000
26,547,869
-
-
(12,630,000)
5,664,498
(39,234,176)
21,738,524
172,566
(1,305,000,000)
1,555,565,717
(1,055,560,418)
2,027,412
(383,006,568)
30,000
390,791
(278,552,750)
-
-
1,791,180
Net Cash Used in Investing Activity (268,426,170) (820,290,375) (659,347,347)
C. Cash flow from Financing Activity
Dividend Paid
Tax on Dividend
Interest and Financed Charges Paid
Bank Borrowing (Working capital)
Proceeds from other Borrowing
Other Borrowing Repaid
Increase in Share Capital
Increase In Share Premium
(76,018,077)
(12,966,210)
(227,215,147)
(651,815,775)
2,091,668,000
(1,388,120,000)
-
-
(72,226,800)
(12,274,945)
(97,173,085)
697,438,392
(573,675,434)
-
53,684,211
908,213,82
(70,220,500)
(9,848,425)
(120,764,106)
(140,535,789)
829,359,231
-
-
-
Net Cash from Financing Activity (264,467,209) 908,213,l828 488,172,411
55. 55
Net (Decrease)/Increase in cash and Cash
Equivalent
455,155,385 (13,493,027) 28,780,870
Cash on Hand-Opening Balance 65,622,573 79,115,600 50,334,730
Cash on hand Closing Balance 520,777,958 65,622,573 79,115,600
Interpretation:-
Net cash from operating activities is increase in year 2009 has compare to year
2008 and 2007. It is good position of the company.
Operating activity is key idietor of the extent to which the operation of the
enterprise have generated sufficient cash flow:
(i) To maintain the operating ability of the operating ability of the enterprise.
(ii) Pay dividend
(iii)Repay, loans
But in this company not satisfied for above provisions.
The separate disclosure of cash flow arising from investing activities is important
because the cash flow represent the extent to which expenditure have made for
resources intended to generated future income and cash flows.
58. 58
Interpretation:-
Although the overall income has increased the substantial income has been
stable.
In the 2008-09 there’s much more increase in stock, again it increased by
current year, here the effect of economic slowdown is been observed.
Gradually the monetary benefits to employee decreases during these three
consecutive years.
Admin. & selling expenses has been seen increase which shows that
company is spending more in promotional activities.
Lastly the net profit is increasing figure vise but not percentage vise i.e.
Profit is not relatively increasing with the sales.
PBIT
Exceptional
Item
Profit Before
Tax
Payment &
provision of
current Tax
Fringe Benefit
Tax
Deffered Tax
Profit After
Tax
846,596,074
225,362,149
621,233,925
117,668,661
2,500,000
(4,241,672)
505,306,936
10.07
2.68
7.39
1.39
0.029
0.05
6.011
474,203,629
-
474,203,629
80,382,548
2,526,252
15,323,632
375,971,197
7.44
7.44
1.26
0.039
0.24
5.89
455,165,626
-
455,165,626
47,327,423
2,720,693
(3,690,443)
408,808,133
-
-
9.13
0.94
0.05
0.07
8.2
59. 59
CONCLUSION
It can be seen that company’s return on the investments is not high. Net profit
of the company is not very high.
We can conclude after observing the ratios that the company does not earn
good profit. The net profit ratio has decrease compare with the last year.
Earning per ratio share showing low trend during the current year .Debtor ratio
is also not good. Fixed Assets turnover ratio has increased which favorable for the
company.
Finally, observing all ratio and situation of the company. We can observe a
median position in the market.