The document analyzes various financial ratios of a company for the year 2014-15. It discusses Return on Investment (ROI) ratio of 11.5%, debt-equity ratio of 0.01, fixed asset ratio of 0.4, interest coverage ratio of 23.71, current ratio of 0.968, quick ratio of 0.67, gross profit margin of 10%, net profit margin of 5.98%, operating ratio of 92.91%, operating profit ratio of 8.76%, earnings per share of Rs. 92.13, book value per share of Rs. 694.45, and price earnings ratio of 21.40. Various stakeholders and their interests in different financial ratios are also outlined.

2.  Return On investment (ROI)-Strategic aim of
business is to earn a return on capital. If return
is not satisfactory, the deficiency should be
corrected or the activity be abandoned.
 ROI=Profit after tax/Net worth
 ROI=37,906/329,970= 11.5 %

3.  It helps in assessment of profitability of
each proposal. It indicates how effectively
operating assets are used in earning
returns . In 2014-15,ROI is 11.5%.Thus it
reveals that investment activities of the
firm have more profitable returns.

4.  DEBT-EQUITY RATIO -This indicates the relationship
between net worth of the company and loan funds. A debt
equity ratio of 2:1 is accepted by financial institutions for
financing projects.
 Debt to equity = Total debt / Total equity
 In 2014, Debt to equity ratio = 243/2,43,184
=0.01
Interpretation - A low debt equity ratio reflects more
security. A high ratio, on the other hand, is considered risky
as it may put the firm into difficulty in meeting its obligations
to outsiders. However, from the perspective of the owners,
greater use of debt (trading on equity) may help in ensuring
higher returns for them if the rate of earnings on capital
employed is higher than the rate of interest payable.

5.  FIXED ASSET RATIO -This ratio indicates
the amount of long term funds deployed in
fixed assets. Fixed assets represent the net
assets. Long term funds include share
capital, reserves and surplus and long term
loans.
 FIXED ASSET RATIO -Fixed Asset/Long
term funds
 =40708/100438
 =0.40.
 Interpretation-the ratio is higher so it shows
that funds will be safer at the time of
liquidation.

6.  INTEREST COVERAGE RATIO -The interest
coverage ratio shows how many times interest
charged is covered by funds that are available
for payment of interest. It shows how many
times company can cover its current interest
payments out of current profits.
 INTEREST COVERAGE RATIO = EBIT/Interest
 =49,760/2098
= 23.71

7.  CURRENT RATIO -This ratio measures the solvency of
the company in the short term. Current assets are those
assets which can be converted into cash within a year.
Current liabilities are those liabilities which can be paid
off within a year. This ratio measures the short term
solvency of the firm. It states the number of times a
company's CL are covered by its CA. The satisfactory
Current Ratio is 2:1.
 Current ratio = Current assets / Current liabilities
= 86,964/89,824
=.968

8.  QUICK RATIO - It is the ratio that Is used to
Measure Company’s ability to meet its current
obligations. A quick ratio of 1:1 indicates highly
solvent position. This ratio serves as a
supplement to current ratio in analysing liquidity.
 Quick ratio = (Current assets – Inventories)
/ Current liabilities
=60,220/89,824
= .67
INTERPRETATION-A company with low quick
ratio may have fast moving inventories. The
analyst, therefore, must have a hard look on the
nature of individual assets.

9. •Inventory Turnover Ratio studies the frequency of conversion of inventory of
finished goods into revenue from operations. It is also a measure of liquidity. It
determines how many times inventory is purchased or replaced during a year.
Low turnover of inventory may be due to bad buying, obsolete inventory, etc.,
and is a danger signal. High turnover is good but it must be carefully interpreted
as it may be due to buying in small lots or selling quickly at low margin to
realize cash. Thus, it throws light on utilization of inventory of goods

10.  The liquidity position of the firm depends upon
the speed with which trade receivables are
realized. This ratio indicates the number of
times the receivables are turned over and
converted into cash in an accounting period.
Higher turnover means speedy collection from
trade receivable.
 TP Turnover RatioTP Treveals average
payment period. Lower ratio means credit
allowed by the supplier is for a long period or it
may reflect delayed payment to suppliers
which is not a very good policy as it may affect
the reputation of the business

11.  GROSS PROFIT MARGIN - This ratio measures the
gross profit margin on the total net sales made by the
company. It represents the excess of sales proceeds
during the year under observation over their cost, before
taking into account administration, selling and
distribution cost. It measures the efficiency of the firm’s
operations.
 GROSS PROFIT MARGIN=(Gross Profit *
100)/Revenue From Operations
 =48,682 /4,86,055
= .1
The higher this Ratios is, the Better it is.

12.  NET PROFIT MARGIN - This ratio is designed to focus attention on the
net profit margin arising from business operations before interest and tax
is deducted. This ratio measures the efficiency of operations of the
company.
 NET PROFIT MARGIN =Profit After Tax/Sales
=12187/203583
=5.98
Operating Ratio- It is computed to analyze cost of operation in relation
to revenue from operations. Operating expenses include office expenses,
administrative expenses, selling expenses, distribution expenses,
depreciation and employee benefit expenses etc. Cost of operation is
determined by excluding non-operating incomes and expenses such as
loss on sale of assets, interest paid, dividend received, loss by fire,
speculation gain and so on.
Operating Ratio: [(Cost Of Operations + Operating Expenses) * 100 ] /
Revenue From Operations
= 92.91%
Lower this Ratio, Better it is.

13.  Operating Profit Ratio: (Operating Profit *
100) / Revenue From Operations. It is
calculated to reveal operating margin. It may
be computed directly or as a residual of
operating ratio.
= 8.76%
 It is very useful for inter-firm as well as intra-
firm comparisons. Higher the Ratio, better it is.

15. A system of Management Control Designed by an American Company named DU
Point Company is popularly called Du Point Control Chart. This system uses the
ratio inter relationship to provide charts for managerial attention. The standard
Ratios of the Company are Compared to present Ratios and Changes in
performance are judged. We can see that as compared to the previous Ratios all
the Ratios have shown a positive change.

16.  EARNING PER SHARE- The Earning per Share
measures the overall profitability in terms of per equity
share of capital contributed.
 EPS= Earnings available /No of shares
=Rs.92.13
This ratio is very important from equity shareholders
point of view and also for the share price in the stock
market. This also helps comparison with other to
ascertain its reasonableness and capacity to pay
dividend.

17.  Book Value Per Share: (Equity Shareholders Funds/ No. of
Equity Shareholders)
=694.45
It gives an idea about the value of their holding and affects
market price of the shares. This ratio is again very important
from equity shareholders point of view as it gives an idea about
the value of their holding and affects market price of the shares.
 Price Earning Ratio: (MPS/EPS)
=21.40
It reflects investors expectation about the growth in the
firm’s earnings and reasonableness of the market price of
its shares. P/E Ratio vary from industry to industry and
company to company in the same industry depending
upon investors perception of their future.

18. 1. Equity Shareholder -An Equity shareholder would like to keep
his money in the company if the Price to Earnings Ratio, Return on
Equity Ratio and the Dividend Yield ratios are higher.
2. Prospective Investor- An Prospective Investor would like to
invest in the company if the Price to Earnings Ratio, Return on
Equity Ratio and the Dividend Yield ratios are higher. Also, he
would like to keep in mind the Current Ratio and Quick Ration to
have an overall view of the company.
3. Promoters and Management -The Promoters and Management
would like to keep a close view on the financial health of the
company by mainly looking at the Profitability Ratios like Return on
Assets and Profit Margin. Also, they keep in mind the Debt-to-
Equity ratio which should be fairly maintained.

19. 4. Employee - An Employee is a stake holder of the company who is
directly affected by the Profits of the company. So, an employee would
be interested in knowing the Profitability ratios of the firm.
5. Supplier- A Supplier’s main interest would be to obtain his payments
timely from the company. So his main interest would be interest would
be to know the Liquidity Ratios of the firm like Quick Ratio and Current
Ratio.
6. Lenders- The Lenders would be interested in getting timely
interest from the company and having an assurance that their
money is in safe hands. They would be interested in the
Profitability, Liquidity and Efficiency ratios.
 7. Customers-The Customers are not as such directly affected by any of
the Ratios, but a good overall performance of the company gives them an
assurance that the company is doing well and they are buying the product
of a reputed company. They might be interested in the Liquidity Ratios.
 8. Tax Collector- A Tax collector would primarily be concerned about
the ratios related to taxes such as the Gross Profit % of sales and Net
Profit % of sales ratios.