- The document analyzes the ratio analysis of Amara Raja Batteries Limited over 5 years from 2009-2014. - Key ratios like current ratio, quick ratio, total debt ratio, and debt-equity ratio are calculated from the company's annual reports. - Current ratios were above 2:1 standard except in 2011-2012. Debt ratios increased over time, showing a rising dependence on debt financing rather than equity.

1. A study on “RATIO ANALYSIS” at
Amara raja batteries limited ,Tirupati.
JAWAHARLAL NEHRU TECHNOLOGIAL
UNIVERSITY,ANANTAPURAMU
Submitted By: Under the guidance of:
R.MALLIKARJUNA Dr.P.JAYARAMI REDDY
130A1E0061 M.B.A,Ph.D

2. INTRODUCTION:
RATIO ANANLYSIS
Introduction
The ratio analysis is the most powerful tool of financial analysis. Several ratios calculated from the
accounting data can be grouped into various classes according to financial activity or function to be
evaluated.
DEFINITION:
“The indicate quotient of two mathematical expressions and as “The relationship
between two or more things’’. It evaluates the financial position and performance of the firm. As started in
the beginning many diverse groups of people are interested in analyzing financial information to indicate
the operating and financial efficiency and growth of firm. These people use ratios to determine those
financial characteristics of firm in which they interested with the help of ratios one can determine.
• The ability of the firm to meet its current obligations.
• The extent to which the firm has used its long-term solvency by borrowing funds.
• The efficiency with which the firm is utilizing its assets in generating the sales revenue.
• The overall operating efficiency and performance of firm.
Alexander wall is the pioneer of ratio analysis. He presented a detailed system of
ratio analysis in the year 1919. Ratio analysis is important one for all management accounting for decision
making.
Ratio analysis of financial statements stands for the process of determining and
presenting the relationship of items and groups of items in the statements.
• Ratio analysis is a powerful tool of financial analysis. It is a process of identifying
the financial strengths and weakness of the firm by properly establishing the relationship between the
different items of balance sheet and profit and loss account for a meaningful understanding of the
financial position and performance of the firm.

3. COMPANY PROFILE:
Amara Raja Batteries (ARBL) incorporated under the companies Act, 1956 in 13th February 1985, and
converted into public Limited Company on 6th September 1990.
The chairman and Managing Director of the company is “Sri Gala Ramachandra Naidu”. ARBL is
a first company in India, which manufactures Values regulated Lead Acid (VRLA) Batteries. The main
objectives of the company are a manufacturing of good quality of “Sealed Maintenance Free” (SMF)
acid batteries. The company is setting up to Rs.1, 920 lakhs plant is in 185 acres in Karakambadi
village, Renigunta Mandal. The project site is notified under “B” category.
The company has the clear-cut policy of direct selling without any intermediate. So they
have set up six branches and are operated by corporate operations office located in Chennai. The
company has virtual monopoly in higher A.H. (Amp Hour) rating Market its product VRLA. It is also
having the facility for industrial and automotive batteries.
Amara Raja is 5 ‘S ’Company and its aim are to improve the work place environment by using 5‘S
techniques which is A systematic and rational approach to workplace organization and methodical
house keeping with a sense of purpose, consisting of the following five elements
SEIRI - Sort out
SEITON -Systematic arrangement
SEISO -Spic and span
SEIKETSU -Standardization
SHITSUKI -Self discipline

4. NEED OF THE STUDY:
 The study has great significance and provides benefits to various
parties whom directly or indirectly with the company.
 To express the relationship between different financial aspects in
such a way that it allows the user to draw conclusions about the
performance, strengths and weaknesses of the company.
 To diagnose the information contained in financial statement so
as to judge the profitability of the firm.
 The study helps to know a liquidity, solvency, profitability and
turnover position of the company.

5. 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 5 years (2009–14). The present study is confined to
only Amara raja batteries Limited only.

6. OBJECTIVE OF THE STUDY:
 To study and analyze the financial position of the Company
through ratio analysis
 To analyze the profitability position of the ARBL.
 To determine the long term solvency position of ARBL.
 To suggest the feasible solution to improve the overall
efficiency of the ARBL.

7. RESEARCH METHODOLOGY:
The main aim of the study is to know the financial performance
of the Amara raja batteries limited, Tirupati, Chittoor Dist.
Research
Any efforts which are directed to study of strategy needed to identify the
problems and selection of best solutions for better results are known as
research.
Research Design
In view of the objects of the study listed above an exploratory research
design has been adopted. Exploratory research is one which is largely
interprets and already available information and it lays particular emphasis on
analysis and interpretation of the existing and available information.
 To know the financial status of the company.
 To know the credit worthiness of the company.
 To offer suggestions based on research finding.

8. Data Collection Methods
Primary Data
Information collected from internal guide and finance manager.
Secondary data
Company balance sheet and profit and loss account.
Company’s annual reports
Company websites
www.amararaja.co.in
www.arbl.com
Books
Financial management : I.M. Pandey
Financial management : Prasanna Chandra
TOOLS AND TECHNIQUES
 Time –series analysis
 Cross sectional analysis

9. LIMITATION OF THE STUDY:
The following are the limitation of the study
 The study was limited to only five years Financial Data.
 The study is purely based on secondary data which were
taken primarily from Published annual reports of
Amararaja batteries Ltd.,
 There is no set industry standard for comparison and
hence the inference is made on general standards.
 The ratio is calculated from past financial statements and
these are not indicators of future.

10. DATAANALYSIS AND INTERPRETATION

11. LIQUIDITY RATIO’S:
A.CURRENT RATIO
The current ratio is the between all current assets and all
current liabilities; another way of expressing liquidity. It is a
measure of the 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 ASSETS
CURRENT RATIO= -----------------------------------
CURRENT LIABILITIES

12. YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO
2009-10 1,593,241,430 6,35,941,300 2.50
2010-11 1,612,642,497 638,958,266 2.52
2011-12 2,280,704,176 1,181,003,846 1.93
2012-13 3,500,193,294 1,312,272,610 2.67
2013-14 5,975,961,025 2,020,744,952 2.96
0
0.5
1
1.5
2
2.5
3
200
9-10
201
0-11
201
1-12
201
2-13
201
3-14
current ratio 2.5 2.52 1.93 2.67 2.96
2.5 2.52
1.93
2.67
2.96
CURRENTRATIO
CURRENT RATIO
INTERPRETATION:
The standard norm for current ratio is 2:1. During the year 2009 the current ratio is 2.5
and During the year 2010-11 the ratio is 2.52 and it has decreased to 1.93 during the y
ear 2011-12 and increased to 2.67 in 2012-13 and it is increased to 2.67 in the year
2013-14 and it has increased to 2.96 in the year 2014. The ratio above was standard
except in the year 2011. So the ratio was satisfactory.

13. B. QUICK RATIO
Quick ratio establishes a relationship between quick, or liquid,
assets and current liabilities. An asset is liquid if it can be converted
into cash immediately or reasonably soon without a loss of value.
QUICK ASSETS
QUICK RATIO= --------------------------------
CURRENT LIABILITIES

14. YEAR QUICK ASSETS CURRENT LIABILITIES QUICK RATIO
2009-
10
1,171,600,450 628,525,100 1.86
2010-
11
1,171,683,584 638,958,266 1.83
2011-
12
1,708,741,955 1,181,003,846 1.45
2012-
13
2,578,479,879 1,312,272,610 1.96
2013-
14
4,032,625,321 2,020,744,952 1.99
INTERPRETATION:
The standard form of a quick ratio is 1:1. Quick ratio is decreased in the year 2010 to
1.83 from 2.45. Then, it decreased to 1.45 in the year 2011. And it has increased to 1.96
in the year 2012 and then it increased to 1.99 in the year 2013-14.however the ratio is
more than the standard norms so it is satisfactory.

15. 2.LEVERAGE RATIOS
A. TOTAL DEBT RATIO
TOTAL DEBT
TOTAL DEBT RATIO= ------------------------------------------
TOTAL DEBT+ NET WORTH

16. year Total debt Total debt+ net
worth
Total debt
ratio
2009-10 232,111,700 2,035,900,500 0.11
2010-11 233,058,880 2,039,907,551 0.11
2011-12 378,672,427 2,391,525,347 0.16
2012-13
1,407,083,880
3,843,741,557 0.37
2013-14 3,162,620,560 3,493,635,030 1.10
0
0.2
0.4
0.6
0.8
1
1.2
2009-
2010
2010-11 2011-12 2012-13 2013-14
Total debt ratio 0.11 0.11 0.16 0.37 1.1
0.11 0.11 0.16
0.37
1.1
debtratios
Total debt ratio
INTERPRETATION:
This ratio gives results relating to the capital structure of a firm. Debt ratio is 0.08 in the
year 2010 it increased to 0.11 & 0.16 in the corresponding years 2011 & 2012. Again it
is increased to 0.37 & 1.10 in the year 2013& 2014. From the above in fluctuating trend
we can conclude that the company’s dependence on debt is increasing. It is not better
position in collection of debt.

17. B.DEBT EQUITY RATIO
Debt equity ratio indicates the relationship
describing the lenders contribution for each rupee of the
owner’s contribution is called debt- equity ratio. Debt
equity ratio is computed by dividing Long term Liabilities
divided by Equity. Lower debt – equity ratio higher the
degree of protection. A debt-equity ratio of 2:1 is
considered ideal.
LONG TERM DEBTS
DEBT EQUITY RATIO= ----------------------------------
EQUITY CAPITAL

18. year Long terms debts Equity capital Debt-equity ratio
2009-10 232,100,550 1,804,550,420 0.12
2010-11 233,058,880 1,806,848,650 0.13
2011-12 378,672,427 2,012,852,920 0.19
2012-13 1,407,083,880 2,436,657,677 0.58
2013-14
3,162,620,560 3,331,014,470 0.95
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2009-10 2010-11 2011-12 2012-13 2013-14
D-E RATIO 0.12 0.13 0.19 0.58 0.95
0.12 0.13
0.19
0.58
0.95
D-ERATIOS
D-E RATIO
INTERPRETATION:
The ratio gives results relating to the capital structure of a firm. Debt equity ratio is 0.09 in
the year 2010 and it increased to 0.13 & 0.19 in the year 2011 and 2012. In the year 2013 &
2014 the ratio has increased to 0.5 8 & 0.95. We can conclude that the company depends
on the debt fund is increasing.

19. ACTIVITY TATIO :
A. INVENTORY TURN OVER RATIO
It indicates the firm 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 INVENTIRY

20. YEAR COST OF GOODS
SOLD
AVERAGE
INVENTORY
INVENTORY
TURNOVER
RATIO
2009-10 2,218,490,920 371,098,120 5.97
2010-11 2,228,549,828 374,102,223 5.96
2011-12 3,499,805,230 506,460,567 6.91
2012-13 5,324,665,192 746,837,818 7.13
2013-14 9,782,463,974 1,432,524,559 6.83
5.2
5.4
5.6
5.8
6
6.2
6.4
6.6
6.8
7
7.2
2009-
10
2010-
11
2011-
12
2012-
13
2013-
14
inventory turnover
ratio
5.97 5.96 6.91 7.13 6.83
5.97 5.96
6.91
7.13
6.83
inventoryturnoverratio
inventory turnover ratio
INTERPRETATION:
Inventory turnover ratio is 5.57 Times in the year 2009. But, it is increased to 5.96 in the
Year 2010. Then, it is increased to 6.91 in the year 2011 and again increased to 7.13 in the
year2012. But, it is decreased to 6 .83 in the year 2013-14. Inventory turnover ratio
increased for Year that is company production is also increased. Subsequently sales are
also increased.

21. B. DEBTORS TURNOVER RATIO
It is found out by dividing t he credit sales by average debtors.
Debtor’s turnover indicates the number of times debtor’s
turnover each year.
sales
Debtors turnover ratio=------------------------------
Average debtors

22. year sales Average debtors Debtors turnover
ratio
2009-10 2,596,350,100 550,720,552 4.71
2010-11 2,685,436,096 560,689,881 4.79
2011-12 4,458,29 5,779 753,113,338 5.92
2012-13 7,451,03 2,998
1 ,158,032,767
6.43
2013-14 13,499,867,499
1 ,862,113,498
7.25
0
1
2
3
4
5
6
7
8
2009-
10
2010-
11
2011-
12
2012-
13
2013-
14
DEBTORS TURNOVER
RATIO
4.71 4.79 5.92 6.43 7.25
4.71 4.79
5.92
6.43
7.25
DEBTORSTURNOVERRATIO
DEBTORS TURNOVER RATIO
INTERPRETATION:
Debtor’s turnover ratio is 4.71 times in the year 2010 and it is increased to 4.7 9 times in
the year 2011 and increased to 5.92 times in the year 2012 and it increased t o 6.43 times
&7.25 times in the years 2013 &2014.

23. PROFITABILITY RATIOS
A. GROSS PROFIT RATIO:
This ratio shows that the margin left after meeting
manufacturing costs. It measures the efficiency of
production as well as pricing.
GROSS PROFIT
GROSS PROFIT RATIO= ----------------------------
NET SALES
Gross profit= Net sales-Cost of goods sold
Cost of goods sold= Opening stock+ material consumed+
mfg .exp- closing stock

24. YEARS GROSS PROFIT NET SALES GROSS PROFIT RATIO
2009-10 453,720,910 2,751,456,125 16
2010-11 456,886,268 2,685,436,096 17
2011-12 958,490,549 4,458,295,779 21.5
2012-13 2,126,367,806 7,451,032,998 28.5
2013-14 3,717,403,516 13,499,867,499 27.5
0
5
10
15
20
25
30
2009-
10
2010-
11
2011-
12
2012-
13
2013-
14
gross profit in
ratios
16 17 21.5 28.5 27.5
16 17
21.5
28.5 27.5
grossprofitratios
gross profit in ratios
INTERPRETATION:
From the above we can say that gross profit ratio is 16% in the year 2010 but it increased
to 17 % &21.5% in 2011&2012 and a gain it increased to 28.5% in the year 2013 and
it is decreased to 27.5% in the Year 2014.The company is maintaining proper control on
Trade Activities.

25. B. NET PROFIT RATIO
This ratio also indicates the firm's capacity to wit h stand
adverse economic conditions. A firm with a high net
margin ratio would be in an advantageous position to
survive in the face falling selling prices, rising costs of
production or declining demand for the product.
NET PROFIT
NET PROFIT RATIO= --------------------------
NET SALES

26. YEARS NET PROFIT NET SALES NET PROFIT RATIO
2009-10 84,750,325 2,751,456,125 3.08
2010-11
86,900,563
2,685,436,096
3.2
2011-12
238,465,730
4,458,295,779
5.3
2012-13 470,434,575 7,451,032,998 6.3
2013-14
9,436,315,11
13, 499,867,49 9
6.99
INTERPRETATION:
During the year 2010 the net profit margin is 3.08 it suddenly increased to 3.2% in
the year 2011 because of decreased in administration and selling expenses. In the
next year, it again increased to 5.3 in the year 2012 and it again increased to 6.3 in
2013 and to 6.99 in the year 2014

27. FINDINGS:
• Except in the year 2012, the company is maintaining current ratio as 2 and
more, standard which indicates the ability of the firm to meet its current
obligations is more. It shows that the company is strong in working funds
management.
• The company is maintaining of quick assets more than quick ratio. As the
company having high value of quick ratio. Quick assets would meet all its
quick liabilities without any difficulty.
• The company is failed in keeping sufficient cash & bank balances and
marketable securities.
– In above all current assets and liabilities ratios are better that also it is double the
normal position. Observe the absolute & super quick ratio the company cash
performance is down position.
• Debt Equity ratio is increasing every year. It indicates the company depends
on the debt fund increasing.
• In the year 2010, the interest coverage ratio 7.56 which increased to 94.76 in
the year 2013 and high fluctuations in the followed years. In this position,
outside investors are interested to invest their money in this company.
• The net profit of the company is increasing over the study period. Hence the
organization maintaining good control on all trees of expenses.

28. CONCLUSION:
From the above analysis of the company’s financial statements it’s concluded
that the company’s financial position is good because the company’s leverage,
activity and profitability positions are good and the company have to increase
its liquidity position for better performance in future.