Understanding Financial Position of Radico Khaitan Ltd.

A SUMMER INTERNSHIP PROJECT REPORT
on
UNDERSTANDING FINANCIAL POSITION OF RADICO
KHATIAN LTD.
SUBMITTED IN PARTIAL FULLFILLMENT OF THE REQUIREMENT FOR THE
DEGREE OF MASTRES OF BUSINESS ADMINISTRATION
Submitted by
Talha Khan
MBA General 3rd
Semester
Enrolment no: 2019-502-113
Under the guidance of
Dr. Nudrat Moini Rahman
(Assistant Professor)
DEPARTMENT OF MANAGEMENT
SCHOOL OF MANAGEMENT & BUSINESS STUDIES
JAMIA HAMDARD, HAMDARD NAGAR, NEW DELHI-110062
(2020)

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CERTIFICATE
This is to certify that this project entitled (UNDERSTANDING FINANCIAL POSTION
OF RADICO KHAITAN LTD.) is the Bonafede work done by Mr. TALHA KHAN, Enrol.
No: 2019-502-113, under my guidance and supervision. Certified further that to the best of
my knowledge, the work reported herein does not form part of any other project report on the
basis of which a degree or award was conferred on an earlier occasion on this or any other
candidate.
Place: New Delhi
Date: Dr. Nudrat Moini Rehman

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ACKNOWLEDGEMENT
At the very outset I am thankful to Almighty Allah the most benevolent and merciful who is
providing me the courage and ability to complete this work.
“Gratitude is the hardest of emotion to express and often does not find adequate ways to
convey the entire one feels.”
Summer internship is one of the vital part of MBA course, which helped me to learn a lot of
experiences which will be beneficial in my succeeding career.
For this, with an ineffable sense of gratitude I take this opportunity to express my deepest
sense of indebtedness to Mr. Karun Mehra , an acquaintance who provided me an opportunity
to learn the corporate culture at RADICO KHAITAN during my MBA course.
At the same time I want to thank all the faculty members for the knowledge they enriched me
with during the academic year.
I am also very much thankful to Dr. Mudit Jain of Radico Khaitan Ltd. For his interest,
constructive criticism, persistent encouragement and untiring guidance throughout the
development of the project. It has been a great privilege to work under his inspiring guidance.
Further, I would also like to extend my sincere thanks to Dr. Nudrat Moini Rehman, my
faculty supervisor, for his valuable guidance, suggestions and outstanding mentorship.

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EXECUTIVE SUMMARY
The project report is on “UNDERSTANDING FINANCIAL POSITION OF RADICO
KHAITAN LTD.”
The main objective of the study was to study financial statements of Radico khaitan ltd. The
training involved the day to day working at Radico Khaitan. This project helped me to
understand the professional working environment and helped me to get the deeper
understanding of the process of Ratio analysis & interpretation and how decisions are taken
to strengthen the financial position. For this study 5 years balance sheet have been taken for
ratio analysis & interpretation.
The project includes the mission and objectives of the company along with its performance
and the product line. The report includes the functions of the finance department, its structure
and working. Main objective in understanding this project is to supplement academic
knowledge with absolute practical exposure to day to day function of the business
organization.
The first phase of the project is to study and develop a deeper understanding of the concept of
Ratio analysis of financial statements.
Second phase includes the analysis of the company’s financial position based on calculation
of various ratios like liquidity ratios, profitability ratios and turnover ratios.
The final phase is about drawing conclusion about the company’s financial position on the
ratios so calculated

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LIST OF CONTENT
CHAPTER CONTENT PAGE. NO.
1 Introduction
 Company Profile of Radico Khaitan
 Need of the Study
 Scope of the study
7-10
2 Review of literature 11-13
3 Research Methodology
 Objective of the study
 Sample Size, Instrument, Research
Design, Method of data Collection
14-16
4 Data Interpretation & Analysis 17-58
5 Conclusion, Suggestions & Limitation 59-62
6 References 63
7 Appendices 64-67

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CHAPTER A- INTRODUCTION
Company Profile of Radico Khaitan
Rampur Distillery was established in 1943 and was known for its spirits in India. In 1999,
they decided to launch and market its own brands and changed their name to Radico Khaitan
Ltd. To further boost its its production capacity of bottled and branded products, the company
has tied up with bottling units in various parts of the country. Their vision is to go to the depth
of consumer’s heart and to be his friend forever and their mission is to provide consumer with
quality products and services by using state of the art technology, and in the process ensure
competitive leadership and build timeless brands.
History
Established in 1943, Radico Khaitan Ltd. Is one of India’s largest liquor manufacturer. It was
formerly known as Rampur Distillery and Chemical Company Ltd. Later in 1999, Radico
launched its own brands and marketted them. The company linked up with various bottling
units throughout the country in order to increase its production capacity.
Initially, the distillery manufactured extra neutral alcohol (ENA) and supplied its bulk to liquor
companies like Mohan Meakin, Shaw Wallace and the United Breweries Group. G.N. Khaitan,
father of Lalit Khaitan bought the in-loss Rampur Distillery for ₹ 1.6 million from Vishnu Hari
Dalmia in 1972. Dr. Khaitan, who is a veteran of Indian liquor industry looks over the entire
Radico business. He transformed Radico from a small brand into one of the best liquor
enterprise in the country. Dr. Khaitan has been associated to be the most profitable entrepreneur
in the sector, being player to a Rs. 995 crore company. Radico, now under the directorship of
Dr. Khaitan, installed a malt spirit plant, a soya oil/rapeseed extraction plant at Ratlam, Madhya
Pradesh and a biogas cogeneration and secondary treatment plant. The company invested ₹ 365
million in its modernization and expansion. It introduced Contessa Whiskey, Contessa Rum
and some other products in1995. The company collaborated with Whyte and Mackay Group
plc., and launched 3 Scotch brands in India. In 2003, Radico created Radico International, its
International division, which introduced brands like Beck’s beer and wines in the Indian
market. The company installed an ENA deluxe plant at the Rampur unit. The ENA produced
would be used by the company itself as well as sold in India and exported. Radico took over
Whytehall brand by purchasing its 51 % stake in 2004. It also took over Anab-e-Shahi bottling

8
plant in Andhra Pradesh. Radico launched Magic Moments vodka in November 2005, thus
entering the vodka market. It became the first Indian liquor company with overseas lines when
it entered two overseas joint ventures in 2006. There, it holds sales, distribution and marketing
base. Radico entered a joint venture with Diageo in 2006 in the spirits market in India, where
it handles manufacturing and distribution functions. In 2007, Radico set up a Greenfield
distillery in Aurangabad, Maharashtra in a tripartite joint venture with Ridhi Sidhi Pvt Ltd and
NV Distillers. It introduced Morpheus brandy in 2009, named after a Greek God. It entered
into a joint venture with E and J Gallo and launched Carlo Rossi in the same year. Radico
entered into an agreement with a Japanese firm to market and distribute its whiskies in India.
In 2011, it launched a 100% grain whisky called After Dark. In 2003, Radico started its PET
division which produces several PET bottles and jars for cosmetics, home, personal care,
pharmaceutical, edible oil and confectionery industries. It started with meeting its in-house
needs by utilizing single stage machines of Nissei ASB Machine Co. Ltd., Japan, which grew
into supplying PET bottles to competitors also. The PET bottles manufacturing plant is set up
in Uttrakhand and it operates independently. The PET division supplies bottles to companies
like Keo Karpin Hair Oil, BL Agro Hair Oil Ltd., Khandelwal Oils Ltd. etc. Today, Radico has
three millionaire brands, among which 8 PM Whisky set the record of selling one million cases
in its first year thus entering into the Limca Book of Records and Drinks International
magazine. The other two millionaire brands are Contessa Rum and Old Admiral Brandy.
Radico’s brands have stralled market in almost every segment – whisky, brandy, gin, vodka
and rum.
Radico manufactures several whiskey, brandy, rum, gin and vodka products today. The Indian
whiskey is produced by ENA, alongwith other ingredients like matured Indian malt spirit,
Scotch whiskey concentrate, flavours, caramel and dm water. Brandy is made by blending
ENA, matured grape spirit and flavours. Sugarcane products, cane juice spirit and base ENA
alongwith flavouring is used to produce Rum which is a distilled liquor. Gin is produced by
distillation of grain mash or redistillation of spirit with botanicals like angelica, juniper berries,
lemon and orange peels, cassia bark, cardamom and coriander. The products manufactured by
Radico include whiskies like Special appointment whisky, 8pm Royale whisky, Whitefield
whisky, 8pm whisky, Radico gold supreme whisky, Radico gold whisky, Contessa delux
whisky, Rampur No. 1 whisky; brandies like Contessa brandy, Old Admiral brandy, White
Field brandy, 8pm Excellency brandy; rums like Contessa rum, Largest rum, 8pm Bermuda,
Black Cat rum, Rampur No. 1, Big Hit rum, Contessa White rum; gins like Contessa Gene, Big

9
Hit Gene, Magic Moment Gene; and vodkas like Magic Moments vodka, Magic Moments
Remix Vodka, Magic Moments verve vodka, Magic Moments verve Flavoured Vodka.
Radico transitioned from manufacturing the basic Extra Neutral Alcohol to becoming a
company with highly successful brands in a short time span. Their outstanding understanding
of market demand and ability to satisfy consumer needs alongwith superior quality, innovative
packaging, reasonable pricing and wide distribution network made it to win marketing mix.
The sales team consists of highly experienced professionals with vast domain expertise in
liquor industry, which alongwith excellent marketing makes it stand out in its field. The
company has been giving healthy profits continuously over years. It also has various Firsts to
its Credit like being the first Indian distillery which obtained ISO 9001:2000 certifications,
achieving capacity utilization of over 100% in alcohol plant, being the first environment-
friendly distillery in India. The Rampur Distillery has an effluent treatment plant which is
unique in nature and it complies with Zero Dischrarge concept by CPCB. It also has a
cogeneration plant which makes Radico self-reliant for power, and backward integration which
fulfils company’s need of PET bottles. All these units are environment friendly meeting 100%
Pollution Control Norms.
Need of the Study
This study is conducted to enhance my knowledge as a student of finance and for the fulfilment
of my degree of Masters of Business Administration. Ratio analysis holds an important place
in financial accounting and financial management. This topic is selected due to its significance
in any financial set up. It facilitates the accounting information to be summarized and simplified
in a required form. It provides necessary information to the management to take prompt
decision relating to business. Ratio analysis reveals profitable and unprofitable activities. Thus,
the management is able to concentrate on unprofitable activities and considers improving the
efficiency. Ratio analysis is used as a measuring rod for effective control of performance of
business activities. To justify this concept and to get a practical exposure of this concept of
financial management, this study is undertaken.
The following points further highlight the need for study conducted:
• For understanding the concept of ratio analysis.
• For understanding the relevance of ratio analysis for any company.

10
• Role of Ratio analysis in evaluating overall financial position of any company.
• For identifying the components of ratio analysis to be able to recognize their
contribution in managerial decision making
• For measuring the performance of a company’s profitability position
• For measuring the performance of a company’s liquidity position
Scope of the study
• The scope of the study is identified after and during the study is conducted. The main
scope of the study is to put into practical the theoretical aspect of the study into real life
work experience.
• Using ratio analysis, firms past, present and future performance is analyzed and this
study can be divided into short term analysis and long term analysis.
• The scope covers the opportunity realized and experience gained of actually calculating
ratios on the true facts and figures of the company.
• The company’s performance is observed for a period of 5 years through Ratio analysis.
• Also, the recent trends in company’s performance have been studied for the current year.

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CHAPTER 2- REVIEW OF LITERATURE
Bliss (1923) argues that fundamental relationships in business are expressed in ratios and
developed a complete model in terms of ratios. The objective model was immature but
encouraged others to start working on this idea.
Justin (1924) argued that the method of collecting sector data and calculating estimates is
called "Scientific ratio analysis". The word "scientific" in this article was completely incorrect
because no evidence was found that the hypothesis formation and the hypothesis test had
actually been performed.
Various critics of rating analysis also emerged. Gilman (1925) follows the concern with the
analysis of the scale (1) ratings are binding on time and have changed as time has passed and
therefore cannot be interpreted (2) ratings are not a natural judging standard for the companies
using them high-speed ratings that affect reliability.
Foulke (1931) developed and promoted his own set of financial estimates successfully. This
set of financial estimates was published and quickly recognized as an important and significant
group of ratios.
Rasmer and Foster (1931) used eleven scales to test whether successful firms had higher
ratings than unsuccessful firms. Although this study was not mature, immaturity was not
considered in view of the important role this study plays in measuring the usefulness of the
scales. The American Securities and Exchange Commission was established in 1934. This
also increased the mobility of the financial statements and with the help of this aspect of the
value of the measurement analysis has been improved and implemented.
Fitzpatrick (1932) with the help of thirteen different types of ratings estimates 120 firms
failed and found that three out of thirteen ratings predicted firm failures with direct accuracy
while other ratios also showed some predictive potential.
Marwin (1942) using several ratios analyzes the financial styles of large and successful firms.
When you compare the average sector estimates with the average estimates of large firms that
fail and you find that the current three estimates, total operating income in total assets and fair
value of credit were able to detect failure before actual failure. This study demonstrates the

12
actual power of predicting rate analysis and the results are still reliable.
Walter (1957) included elements of the cash flow statement in the rate analysis. At the end
of the world military fund statement began to emerge and with the measure of the portfolio
fund statement it was reproduced.
Hickman (1958) used interest rates and the total profit margin to predict the default value in
a corporate business.
Saulnier (1958) argues that firms with low current rates and credit ratios have a higher chance
of automation when firms have higher rates.
Moore and Atkinson (1961) point out the relationship between payment volume and
financial estimates and show the results of rate analysis influencing the lending capacity of
firms.
Sorter and Becker (1964) examined the relationship between the psychological model and
the integrated personality of financial estimates and found that a long-established company
maintains high liquidity and solvency balance.
Beaver(1967) reviewed the predictive power of measurement analysis and demonstrated the
ability to measure prediction failure within five years prior to the fall. The statistical method
used in the study was significantly stronger than previous studies and the fund statement data
was used to calculate the estimate. This study laid the foundation for future research on
quantitative analysis.
Horrigan (1968) argues that the analysis of ratios has been around for a long time and the
main reason for the development of scale analysis is its use in the analysis of ratios structures
in the year 300 B.C. in recent times it has been used as a standard tool for financial analysis
analysis. In the nineteenth century the main reasons for using rate analysis were the power of
financial institutions and the transfer of managers to professional managers. Measurement
analysis used for two purposes namely credit and management. In the application of profit
management and debt management, debt resilience is a key focus. Typically, rate analysis is
used for credit analysis.
There has been a rapid increase in financial knowledge in the nineteenth century and studying

13
this fast-growing information analyst first compares the same things and then goes on to
compare current assets and liabilities with other estimates. At that time the current rate was
the most important measure of all available measurements. Analysis of performance results
Dupont analysis is also used. The result is divided into three parts and compared with other
companies to identify the problem with strong business areas.
Pinches and Mingo (1973) studied the formation of ratios and found that ratios could be
divided into different groups. Present the general division of financial estimates on a sound
basis. The results concluded that estimates could be divided into four categories of financial
benefits, short-term financial strength, return on investment and strengthening long-term
investments.
Stevens (1973) also studies the topic of measurement and collects financial estimates into four
categories that include employment, income generation, livelihoods and profits.
Pinches, Mingo, and Caruthers (1973) and Pinches, Eubank, Mingo, and Caruthers
(1975) continue to work on this issue and divide the financial estimates into seven categories
including profit, maximum profit, cash. short-term, investment recovery, asset recovery,
financial upliftment and financial position.
Libby (1975) also studied the division of financial estimates and included those divisions
from seven to five. The five categories include cash flow, occupation, financial position, profit
and equity. Johnson (1979) continues his research on Pinches (1973) and adds another decay
rate to seven items. Twelve different factors or division of financial estimates
Chen and Shimerda (1981) examined carefully the five published studies and found that
some of the twelve items presented in the studies had similar and simple words translated.
Therefore, there are twelve elements arranged into seven elements. The seven factors are
income, total income, income, interim acquisition, investment return, profit margin and capital
gains.
Gombola and Ketz (1983) found that the fund and income statement were produced for
different purposes and interest rates did not have the information provided by the valuation.
In other words, both of these ratios provide important and unique information to each other.

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CHAPTER 3- RESEARCH METHODOLOGY
1. RESEARCH PROBLEM:
The Problem of the study is ‘UNDERSTANDING FINANCIAL POSITION OF
RADICO KHAITAN LTD. USING RATIO ANALYSIS OF FINANCIAL
STATEMENTS’.
2. OBJECTIVE OF THE STUDY:
• To develop practical understanding of ratios based on financial statements.
• To develop clarity about different types of ratios and their significance in
financial set up.
• To study and analyse the financial position of the Company through ratio
analysis.
• To suggest measures for improving the financial performance of organization.
• To study and compare the financial position of company with its competitors
through ratio analysis.
3. RESEARCHDESIGN:
Research design is a framework or plan to be used as a guide in collecting and analyzing data.
It is a blueprint that is followed in completing a study. The research design may be exploratory
or descriptive in nature.
This project is based on Descriptive Research Design.
The objective of the descriptive research is used for frequencies, averages and other statistical
calculations. Qualitative research often has the aim of description and researchers may follow-
up with examinations of why the observations exist and what the implications of the findings
are.
4. TYPE OF DATA USED:
Primary data:
The Primary data has been collected directly from Finance Manager and other staff members.

15
Secondary Data:
The Secondary data was used. Secondary data is data collected by someone other than the user
for some other purpose but has some relevance and utility for the user. Secondary data analysis
saves time that would otherwise be spent collecting data and provides larger and higher-
quality databases that would be unfeasible for any individual researcher to collect on their
own. The secondary data is often the most convenient and cost-effective option. Secondary
data was collected from official website of Radico Khaitan.
The secondary data includes the Financial Statements of the firm for last five years; i.e. from
Financial Statements for the year 2016 Financial Statements for the year 2017 Financial
Statements for the year 2018 Financial Statements for the year 2019 Financial Statements for
the year 2020
Period: The Study covers a period of five years data from 2016,2017,2018,2019 & 2020 mean
an Accounting year of the company consisting of 365 working days.
5. PROCEDURE OF DATA COLLECTION:
Data in the form of balance sheet and Income statement has been collected from the official
website of Radico Khaitan Limited
6. SAMPLING DESIGN:
The sampling design adopted is Convenience Sampling which comes under Non- Probability
Sampling.
7. SAMPLING SIZE:
Sampling unit: Financial Statements (Balance Sheet and Profit & loss A/c) Sampling Size:
Last five years financial statements
The accuracy of the ratios is subject to the validity of information provided through Balance
sheet, Profit and Loss A/c.
8. STATISTICALTOOLS USED:
Statistical tools like bar -graphs, excel sheets & ANOVA test have been used in the report so
as to make the data more expressive and easily understandable.

16
Bar Graphs are used to show the classification of various main heads under Sources and
Application of Funds.

17
CHAPTER 4 – DATA INTERPRETATION AND
ANALYSIS
CLASSIFICATION OF RATIOS ON THE
BASIS OF BALANCE SHEET
Balance sheet ratios which establish the relationship between two balance sheet items. For
example, Current Ratio, Fixed Asset Ratio, Capital Gearing Ratio and Liquidity Ratio etc.
I. LIQUIDITY RATIOS
Short-term Solvency Ratios attempt to measure the ability of a firm to meet its short-term
financial obligations. In other words, these ratios seek to determine the ability of a firm to avoid
financial distress in the short-run. The two most important Short-term Solvency Ratios are the
Current Ratio and the Quick Ratio. (Note: the Quick Ratio is also known as the Acid-Test
Ratio.)
a) CURRENT RATIO:-
The Current Ratio is calculated by dividing Current Assets by Current Liabilities. Current
Assets are the assets that the firm expects to convert into cash in the coming year and Current
Liabilities represent the liabilities which have to be paid in cash in the coming year. The
appropriate value for this ratio depends on the characteristics of the firm's industry and the
composition of its Current Assets. However, at a minimum, the Current Ratio should be greater
than one.
Current Assets are those assets which can be converted into cash within a short period i.e. not
exceeding one year. It includes the following:
Cash in hand, Cash at Bank, Bill receivables, Short term investment, Sundry debtors, Stock,

18
Prepaid expenses. Current liabilities are those liabilities which are expected to be paid within
a year. It includes the following:
Bill payables, Sundry creditors, Bank overdraft, Provision for tax, outstanding expenses.
YEARS 2016 2017 2018 2019 2020
Total Current Assets 1310.6 1163.89 1238.89 1225.39 1422.05
Total Current Liabilities 1088.8 1008.54 951.28 778.93 843.45
Solution:-The Current Ratio is calculated (Mar 2016) as follows:
Current assets = 1310.6
Current Liabilities = 1088.8
Current Assets 1310.6
Current Ratio = = = 1.20
Current Liabilities 1088.8
Current Ratio = 1.20

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Solution:-The Current Ratio is calculated (Mar 2019) as follows: Current
assets = 1225.39
Solution:-The Current Ratio is calculated (Mar 2020) as follows: Current
assets = 1422.05
YEARS 2016 2017 2018 2019 2020
Current Ratio 1.2 1.15 1.3 1.57 1.69

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Interpretation of Current Ratio:-
 We know that ideal current ratio is 2: 1. This ideal does not met in any of the years from 2016 to
2020.
 However, we know that current ratio of more than one is also considered to be satisfactory
because it indicates that all the current liabilities can be paid out of available current assets. This
condition is met in all the years.
 The current ratio is highest in the year 2020 i.e. 1.68. Higher value of current ratio indicates more
liquidity of the firm's ability to pay its current obligation in time.
 The current ratio is lowest in the year 2017 i.e. 1.15. A low value of current ratio means that the
firm may find it difficult to pay its current liabilities as one which is generally recognized as the
patriarch among ratios.
CURRENT RATIO OF ALL THE 4 COMPANIES
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2016 2017 2018 2019 2020
CURRENT RATIO
COMPANIES RADICO US UB GMB
2016 1.2 0.89 1.15 1.33
2017 1.15 0.95 1.24 0.58
2018 1.3 1.04 1.47 0.82
2019 1.57 1.04 1.43 0.82
2020 1.69 1.04 1.49 1.25

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Anova: Single Factor
SUMMARY
Groups Count Sum Average Variance
Column 1 5 6.91 1.382 0.05597
Column 2 5 4.96 0.992 0.00477
Column 3 5 6.78 1.356 0.02308
Column 4 5 4.8 0.96 0.10115
Interpretation: -
There exists very significant difference between Quick Ratio of Radico khaitan, United Spirits,
United Breweries, GM Breweries, Regarding their Current Ratio.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2016 2017 2018 2019 2020
Chart Title
RADICO US UB GMB
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 0.776495 3 0.25883167 5.59726803 0.00806353 3.23887152
Within Groups 0.73988 16 0.0462425
Total 1.516375 19

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b) QUICK RATIO OR LLIQUID RATIO
The Quick Ratio recognizes that, for many firms, Inventories can be rather illiquid. If these
Inventories had to be sold off in a hurry to meet an obligation the firm might have difficulty in
finding a buyer and the inventory items would likely have to be sold at a substantial discount
from their fair market value.
This ratio attempts to measure the ability of the firm to meet its obligations relying solely on
its more liquid Current Asset accounts such as Cash and Accounts Receivable. This ratio is
calculated by dividing Current Assets less Inventories by Current Liabilities.
Quick Ratio = Current Assets – (Inventory + Prepaid expenses)
Current Liabilities
YEARS 2016 2017 2018 2019 202
0
Total Current Assets 1310.
6
1163.
89
1238.
89
1225.
39
1422.
05
Total Current
Liabilities
1088.
8
1008.
54
951.2
8
778.9
3
843.4
5
Inventories 274.0
9
293.0
3
310.8
6
359.7
1
374.1
8
Solution:- The Quick Ratio is calculated (Mar 2016) as follows:
Inventories = 274.09
Prepaid expenses = 0
Current Liabilities
1310.6– 274.09 1306.54
Quick Ratio =
1088.8
=
1088.8
= 0.952

23
Quick Ratio = 0.952
Current Liabilities
1163.8 – 293.03 870.86
Quick Ratio =
1008.54
=
1008.54
= 0.863
Quick Ratio = 0.863
Current Liabilities
1238.89– 310.86 928.03
Quick Ratio =
951.28
=
951.28
= 0.9755
Quick Ratio = 0.9755

24
Current Liabilities
1225.39– 359.71 865.68
Quick Ratio =
778.93
=
778.93
= 1.1113
Quick Ratio = 1.1113
Current Liabilities
1422.05– 374.18 1047.87
Quick Ratio =
843.45
=
843.45
= 1.242
Quick Ratio = 1.242
2016 0.95 0.57 0.8 1.05
2017 0.86 0.62 0.85 0.37
2018 0.97 0.67 1.02 0.61
2019 1.11 0.64 0.94 0.48
2020 1.24 0.59 0.94 0.83

25
SUMMARY
Column 1 5 5.13 1.026 0.02233
Column 2 5 3.09 0.618 0.00157
Column 3 5 4.55 0.91 0.0074
Column 4 5 3.34 0.668 0.07492
ANOVA
Between Groups 0.568015 3 0.18933833 7.13004456 0.00295305 3.23887152
Within Groups 0.42488 16 0.026555
Total 0.992895 19
Interpretation: -
There exists very significant difference between Quick Ratio of Radico khaitan, United Spirits,
United Breweries, GM Breweries, Regarding their Current Ratio.
CLASSIFICATION ON THE BASIS
OF INCOME STATEMENT
These ratios deal with the relationship between two items or two group of items of the income
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2016 2017 2018 2019 2020
Chart Title
RADICO US UB GMB

26
statement or profit and loss account. For example, Gross Profit Ratio, Operating Ratio, Operating
Profit Ratio, and Net Profit Ratio etc.
II. PROFITABILITY RATIOS:
The term profitability means the profit earning capacity of any business activity. Thus, profit
earning may be judged on the volume of profit margin of any activity and is calculated by
subtracting costs from the total revenue accruing to a firm during a particular period.
Profitability Ratio is used to measure the overall efficiency or performance of a business.
Generally, a large number of ratios can also be used for determining the profitability as the
same is related to sales or investments. The following important profitability ratios are
discussed below:
a) Gross Profit Ratio.
b) Operating Profit Ratio.
c) Net Profit Ratio.
d) Return on Investment Ratio.
e) Return on Capital Employed Ratio.
f) Return on Assets
a. GROSS PROFIT RATIO
Gross Profit Ratio established the relationship between gross profit and net sales. This ratio is
calculated by dividing the Gross Profit by Sales. It is usually indicated as percentage.
FORMULA:
Gross Profit Ratio =
Gross profit
× 100
Net sales
Gross Profit = Sales - Cost of Goods Sold
Net Sales =. Gross Sales - Sales Return (or) Return Inwards

27
YEARS 2016 2017 2018 2019 2020
Net Sales 16,398 16,676 18,184 20,615 23,926
Cost of Goods Sold 11,390 11,781 12,253 13,433 16,189
Table 4.7
Solution:- The Gross Profit Ratio is calculated (Mar 2016) as follows:
Net sales = 16,398
Cost of Goods sold =11,390
Gross Profit =16,398– 11,390
= 5,008
5,008
× 100
16,398
Gross Profit Ratio = 30.54%
Net sales = 16,676
Gross Profit = 16,676– 11,781
= 4,895
4,895
× 100
16,398
Net sales = 18,184
Gross Profit = 18,184– 12,253
= 5,931
5931
× 100
118,184

28
Net sales = 20,615
Gross Profit = 20,615– 13,433
= 7,182
7182
× 100
20,615
Net sales = 23,926
Gross Profit = 23,926– 16,189
= 7,737
7,737
× 100
23,926
YEARS 2016 2017 2018 2019 2020
GROSS PROFIT RATIO (%) 30.54 29.35 5.01 34.83 32.33
0
5
10
15
20
25
30
35
40
2016 2017 2018 2019 2020
GROSS PROFITRATIO (%)

29
INTERPRETATION OF GROSS PROFIT RATIO:
 Higher Gross Profit Ratio is an indication that the firm has higher profitability. It also
reflects the effective standard of performance of firm's business.
 The Gross Profit Ratio is highest in the year 2019 i.e. 34.83%. Higher Gross Profit Ratio
will be result of the following factors:
a) Increase in selling price, i.e., sales higher than cost of goods sold.
b) Decrease in cost of goods sold with selling price remaining constant.
c) Increase in selling price without any corresponding proportionate increase in cost.
d) Increase in the sales mix.
 The Gross Profit Ratio is lowest in the year 2018 i.e. 5.01%. A low gross profit ratio
generally indicates the result of the following factors:
a) Increase in cost of goods sold.
b) Decrease in selling price and Decrease in sales volume.
c) High competition.
d) Decrease in sales mix.
 Gross Profit Ratio increasing 2018 to 2019
b. OPERATING PROFIT RATIO
Operating Profit Ratio indicates the operational efficiency of the firm and is a
measure of the firm's ability to cover the total operating expenses. Operating Profit
Ratio can be calculated as:
FORMULA:
Operating Profit Ratio =
Operating Profit
× 100
Net sales
Operating Profit = Net Sales – Operating Cost
(OR)
= Net Sales – (Cost of Goods Sold + Office and
Administrative Expenses + Selling and
Distribution Expenses)
(OR)
=Gross Profit – Operating Expenses
(OR)

30
=Net Profit+ Non-Operating Expenses - Non-
Operating Income.
Net Sales = Sales - Sales Return (or) Return Inwards
Solution: The Operating Profit Ratio is calculated (Mar 2016) as follows:
Net sales = 1651.82
Operating Profit = 187.73
187.73
× 100
1651.82
Operating Profit Ratio = 11.36%
Net sales = 1679.9
211.29
× 100
1679.9
Net sales = 1822.77
269.75
× 100
1822.77
YEARS 2016 2017 2018 2019 2020
Net Sales 1651.82 1679.9 1822.77 2096.95 2427.04
Operating Profit
187.73 211.29 269.75 350.34 371.81

31
Net sales = 2096.95
350.34
× 100
2096.95
Net sales = 2427.04
37181
× 100
2427.04
YEARS 2016 2017 2018 2019 2020
OPERATING PROFIT (%) 11.36 12.57 14.79 16.70 15.31
0
2
4
6
8
10
12
14
16
18
2016 2017 2018 2019 2020
OPERATING PROFIT(%)

32
INTERPRETATION OF OPERATING PROFILE RATIO:
 The Operating Profit ratio is highest in the year 2019 i.e. 16.7%. Higher the ratio, the better is
the profitability of the business. This ratio is also helpful in controlling cash.
 The Operating Profit ratio is lowest in the year 2016 i.e.11.36%. Lower the operating profit
ratio is decrease the business.
c. NET PROFIT RATIO
Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin Ratio (or) Net
Profit to Sales Ratio. This ratio reveals the firm's overall efficiency in operating the
business. Net profit Ratio is used to measure the relationship between net profit (either
before or after taxes) and sales.
FORMULA:
Net Profit Ratio =
Net Profit After Tax
× 100
Net Sales
Net profit includes non-operating incomes and profits. Non-Operating Incomes such as
dividend received, interest on investment, profit on sales of fixed assets, commission
received, discount received etc. Profit or Sales Margin indicates margin available after
deduction cost of production, other operating expenses, and income tax from the sales
revenue. Higher Net Profit Ratio indicates the standard performance of the business
concern.
YEARS 2016 2017 2018 2019 2020
Net Sales 1651.82 1679.9 1822.77 2096.95 2427.04
PAT 76.89 80.61 123.45 188.06 227.5
Solution:- The Net Profit Ratio is calculated (Mar 2016) as follows:
Net sales = 1651.82
Net Profit after tax = 76.89
Net Profit Ratio =
76.89
× 100
1651.82

33
= 4.65%
Net sales = 1679.9
Net Profit Ratio =
80.61
× 100
1679.9
= 4.79%
Net sales = 1822.77
Net Profit Ratio =
123.45
× 100
1822.77
= 6.74%
Net sales = 2096.95
Net Profit Ratio =
188.06
× 100
2096.95
= 8.96%
Net sales = 2427.04
Net Profit Ratio =
227.5
× 100
2427.04
= 9.37%
YEARS 2016 2017 2018 2019 2020
Net Profit Margin (%) 4.65 4.79 6.74 8.96 9.37

34
INTERPRETATION OF NET PROFIT RATIO
• Net profit (NP) ratio is a useful tool to measure the overall profitability of the business.
• The Net profit (NP) ratio is highest in the year 2020 i.e. 9.37%. A high ratio indicates
the efficient management of the affairs of business.
• The Net profit (NP) ratio is lowest in the year 2016 i.e.4.65 %. A low ratio indicates the
minimum profit.
• There is no norm to interpret this ratio. To see whether the business is constantly
improving its profitability or not, the analyst should compare the ratio with the previous
years’ ratio, the industry’s average and the budgeted net profit ratio.
• The use of net profit ratio in conjunction with the assets turnover ratio helps in
ascertaining how profitably the assets have been used during the period.
NET PROFIT MARGIN OF ALL THE COMPANIES
2016 4.65 1.47 5.79 16.21
2017 4.79 1.98 4.84 11.62
2018 6.74 6.87 7.01 17.11
2019 8.96 7.33 8.69 17.73
2020 9.37 7.75 6.56 14.47
0
1
2
3
4
5
6
7
8
9
10
2016 2017 2018 2019 2020
Net ProfitMargin (%)

35
INTPRETATION
There exists no significant difference between Net profit Ratio of Radico khaitan, United
Spirits, United Breweries, while GM Breweries is shooting the sky, Regarding their Net profit
Ratio.
0
2
4
6
8
10
12
14
16
18
20
2016 2017 2018 2019 2020
Chart Title
RADICO US UB GMB
ANOVA
Between Groups 329.70618 3 109.90206 19.4581838
1.3772E-
05 3.23887152
Within Groups 90.36984 16 5.648115
Total 420.07602 19
SUMMARY
Column 1 5 34.51 6.902 4.97117
Column 2 5 25.4 5.08 9.5094
Column 3 5 32.89 6.578 2.07227
Column 4 5 77.14 15.428 6.03962

36
d. RETURN ON INVESTMENT RATIO
This ratio is also called as ROL This ratio measures a return on the owner's or shareholders'
investment. This ratio establishes the relationship between net profit after interest and taxes
and the owner's investment. Usually this is calculated in percentage. This ratio, thus. Can be
calculated as:
Return on Investment Ratio = Net Profit (after interest and tax) × 100
Shareholders' Fund (or) Investments
Shareholder's Investments = Equity Share Capital + Preference Share Capital + Reserves
and Surplus - Accumulated Losses
YEARS 2016 2017 2018 2019 2020
PAT 76.89 80.61 123.45 188.06 227.5
Total Shareholders’ Funds 963.12 1,029.8 1,142.1 1,314.9 1,520.5
Solution:- The Return on Investment Ratio is calculated (Mar 2016) as follows:
Shareholders’ Funds = 963.12
Return on Investment Ratio = 76.89 × 100
963.12
=7.98%
Shareholders’ Funds = 1,029.8
1,029.8
=7.82%

37
1,142.1
=10.80%
1,314.9
=8.97%
Shareholders’ Funds = 963.12
1,520.5
=14.96%
YEARS 2016 2017 2018 2019 2020
Return on Investment Ratio
(%)
7.98 7.82 10.8 8.97 14.96
0
2
4
6
8
10
12
14
16
2016 2017 2018 2019 2020
Return on InvestmentRatio (%)

38
INTPRETATION
• The Return on investment ratio is highest in the year 2020 i.e. 14.96%.
• The Return on investment ratio is lowest in the year 2017 i.e. 7.82%.
e. RETURN ON CAPITAL EMPLOYED RATIO
Return on Capital Employed Ratio measures a relationship between profit and capital
employed. This ratio is also called as Return on Investment Ratio. The term return
means Profits or Net Profits. The term Capital Employed refers to total investments
made in the business.
FORMULA:
Return on Capital Employed =
Net Profit After Taxes
× 100
Gross Capital Employed
(OR)
Return on Capital Employed = Profit After Taxes Before Interest × 100
Gross Capital Employed
(OR)
Return on Capital Employed = Net Profit After Taxes Before Interest × 100
Average Capital Employed or
Net Capital Employed
Net Capital Employed = Total Assets – Current Liabilities.
YEARS 2016 2017 2018 2019 2020
PAT
76.89 80.61 123.45 188.06 227.5
Total Assets 1778.91 1684.1 1664.32 1638.2 1919.43
Current Liabilities 532.08 536.08 566.84 592.41 540.96
Solution:-The Return on Capital Employed is calculated (Mar 2016) as follows:

39
Net Profit After Tax = 76.89
Total Assets = 1778.91
Net Capital Employed = Total Assets – Current Liabilities
= 1778.91– 532.08
= 1246.83
76.89
×100
1246.83
=6.16%
= 1684.1– 536.08
= 1148.02
80.61
×100
1148.02
=7.02%
= 1664.32– 566.84
= 1097.48

40
123.45
×100
1097.48
=11.24%
= 1638.2– 592.41
= 1045.79
188.06
×100
1045.79
=17.98%
= 1919.43– 540.96
= 1378.47
227.5
×100
1378.47
=16.50%
YEARS 2016 2017 2018 2019 2020
Return on Capital Employed (%) 6.16 7.02 11.24 17.89 16.5

41
RETURN ON CAPITAL EMPLOYED RATIO:
• The Return on Capital Employed ratio is highest in the year 2019 i.e. 17.89%.
Managers use this ratio for various financial decisions. It is a ratio of overall
profitability and a higher ratio is, therefore, better
• The Return on Capital Employed ratio is lowest in the year 2016 i.e.6.16 %.
A lowest ratio indicates the minimum profitability.
• Return on capital employed ratio measures the efficiency with which the investment
made by shareholders and creditors is used in the business.
• To see whether the business has improved its profitability or not, the ratio
canbe calculated for a number of years.
RETURN ON CAPITAL EMPLOYED RATIO OF COMPANIES
YEARS 2016 2017 2018 2019 2020
Radico Khaitan 6.16 7.02 11.24 17.89 16.5
United Spirits
5.71 9.02 10.22 13.56 15.73
United Breweries
18.92 13.77 22.02 28.36 16.62
GM Breweries
31.43 29.28 37.58 33.2 20.91
0
2
4
6
8
10
12
14
16
18
20
2016 2017 2018 2019 2020
Return on Capital Employed (%)

42
SUMMARY
Column 1 4 62.22 15.555 149.509633
Column 2 4 59.09 14.7725 101.555025
Column 3 4 81.06 20.265 161.7473
Column 4 4 93.01 23.2525 82.5800917
Column 5 4 69.76 17.44 5.507
ANOVA
Source of
Variation SS df MS F P-value F crit
Between Groups 196.38847 4 49.0971175 0.49008994 0.74308635 3.05556828
Within Groups 1502.69715 15 100.17981
Total 1699.08562 19
INTERPRETATION
There exists no significant difference between Return on Capital Employed Ratio of
Radico khaitan, United Spirits, United Breweries, GM Breweries, Regarding their
Current Ratio in 2020
0
5
10
15
20
25
30
35
40
2016 2017 2018 2019 2020
Chart Title
Radico Khaitan United Spirits United Breweries GM Breweries

43
f. RETURN ON ASSETS
This ratio is compared to know the „Productivity of the total assets‟. There are two
methods of computing Return on Total Assets
Return on Asset=
Net Profit.
×100
Total Assets
YEARS 2016 2017 2018 2019 2020
Total Assets 1778.91 1684.1 1664.32 1638.2 1919.43
Net Profit 76.89 80.61 123.45 188.06 251.67
Solution:-The is Return on Asset calculated (Mar 2016) as follows:
Net Profit = 76.89
Return on Asset =
76.89
× 100
1778.91
= 4.32
Net Profit = 80.61
Return on Asset =
80.61
× 100
1684.1
= 4.78
Net Profit = 123.45

44
Return on Asset =
123.45
× 100
1664.3
= 7.41
Net Profit = 188.06
Return on Asset =
188.06
× 100
1638.2
= 11.47
Net Profit = 251.67
Return on Asset =
251.67
× 100
1919.43
= 13.11
YEARS 2016 2017 2018 2019 2020
Return on Asset (%) 4.32 4.78 7.41 11.47 13.11
0
2
4
6
8
10
12
14
2016 2017 2018 2019 2020
Return on Asset (%)

45
RETURN ON ASSETS RATIO
• Return on Assets indicates the number of cents earned on each dollar of assets.
• The Operating Profit ratio is highest in the year 2020 i.e. 13.11. A higher value of return
on assets shows that business is more profitable. This ratio should be only used to
compare companies in the same industry. The reason for this is that companies in some
industries are most asset-insensitive i.e. they need expensive plant and equipment to
generate income compared to others.
• The Return on Assets ratio is lowest in the year 2016 i.e. 4.32. Their ROA will naturally
be lower than the ROA of companies which are low asset-insensitive. An increasing
trend of ROA indicates that the profitability of the company is improving. Conversely,
a decreasing trend means that profitability is deteriorating.
RATIO OF ALL THE 4 COMPANIES:
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 4.32 4.78 7.41 11.47 13.11
United Spirits
1.48 1.93 6.47 7.6 8.23
United Breweries
7.13 5.12 8.34 10.46 7.7
GM Breweries
25.23 15.6 20.77 19.43 14.02
0
5
10
15
20
25
30
2012 2013 2014 2015 2016
Chart Title

46
SUMMARY
Column 1 4 38.16 9.54 114.732067
Column 2 4 27.43 6.8575 36.0154917
Column 3 4 42.99 10.7475 45.2274917
Column 4 4 48.96 12.24 25.6623333
Column 5 4 43.06 10.765 10.6381667
INTERPRETATION:
There exists no significant difference between Return on Assets Ratio of Radico khaitan,
United Spirits, United Breweries, GM Breweries, Regarding their Current Ratio.
CLASSIFICATION ON THE BASIS
OF MIXED STATEMENTS
These ratios also known as Composite or Mixed Ratios or Inter Statement Ratios. The inter
statement ratios which deal with relationship between the item of profit and loss account and
item of balance sheet. For example, Return on Investment Ratio, Net Profit to Total Asset
Ratio, Creditor's Turnover Ratio, Earning Per Share Ratio and Price Earnings Ratio etc.
a. EARNINGS PER SHARE RATIO
Earnings Per Share Ratio (EPS) measures the earning capacity of the concern from the owner's
point of view and it is helpful in determining the price of the equity share in the market place.
Earnings Per Share Ratio can be calculated as:
FORMULA:
Net Profit After Tax
Earnings Per Share Ratio =
No. of Equity Shares
ANOVA
Source of
Between Groups 64.97595 4 16.2439875 0.34967063 0.84019433 3.05556828
Within Groups 696.82665 15 46.45511
Total 761.8026 19

47
Equity Share Capital
No. of Equity Shares =
Face value of each share
ADVANTAGES
• This ratio helps to measure the price of stock in the market place.
• This ratio highlights the capacity of the concern to pay dividend to its shareholders.
• This ratio used as a yardstick to measure the overall performance of the concern.
YEARS 2016 2017 2018 2019 2020
Equity Share Capital 26.61 26.61 26.66 26.68 26.71
Face value of each shares 2.00 2.00 2.00 2.00 2.00
Profit After Tax 76.89 80.61 123.45 188.06 227.5
Solution:-The Earning Per Share Ratio is calculated (Mar 2016) as follows:
Profit after Taxes = 76.89
Equity Share Capital = 26.61
Face value = 2
26.61
2
No. of Equity Shares = 13.305
Earnings Per Share Ratio =.
76.89
13.305
EPS = 5.78
Solution: The Earning Per Share Ratio is calculated (Mar 2017) as follows:
Face value = 2

48
26.61
2
80.61
13.305
EPS = 6.06
Face value = 2
2
123.45
13.33
EPS = 9.26
Face value = 2
26.68
2
188.06
13.34

49
EPS = 14.09
Face value = 2
26.71
2
227.50
13.355
EPS = 17.03
YEARS 2016 2017 2018 2019 2020
Basic EPS (Rs.) 5.78 6.06 9.26 14.89 17.03
INTERPRETATION
• The shares are normally purchased to earn dividend or sell them at a higher price in future.
0
2
4
6
8
10
12
14
16
18
2016 2017 2018 2019 2020
Basic EPS (Rs.)

50
EPS figure is very important for actual and potential common stockholders because the
payment of dividend and increase in the value of stock in future largely depends on the
earnings of the company. EPS is the most widely quoted and relied figure by investors.
In most of the countries, the public companies are required to report EPS figure on the
income statement. It is usually reported below the net income figure.
• The Earning Per Share Ratio is highest in the year 2020 i.e. Rs 17.03. There is no rule of
thumb to interpret earnings per share. The higher the EPS figure, the better it is. A higher
EPS is the sign of higher earnings, strong financial position and, therefore, a reliable
company to invest money. For a meaningful analysis, the analyst should calculate the EPS
figure for a number of years and also compare it with the EPS figure of other companies
in the same industry.
• The Earning Per Share Ratio is highest in the year 2016 i.e. Rs 5.78
• A consistent improvement in the EPS figure year after year is the indication of continuous
improvement in the earning power of the company
EARNINGS PER SHARE OF ALL 4 COMPANIES
YEARS 2016 2017 2018 2019 2020
Radico Khaitan 5.78 6.06 9.26 14.89 17.03
United Spirits
8.39 11.69 38.65 9.06 9.7
United Breweries
11.14 8.67 14.9 21.29 16.16
GM Breweries
49.85 29.84 49.86 45.21 37.12
0
10
20
30
40
50
60
2016 2017 2018 2019 2020
Chart Title

51
SUMMARY
Column 1 4 75.16 18.79 433.5554
Column 2 4 56.26 14.065 115.892433
Column 3 4 112.67 28.1675 371.322492
Column 4 4 90.45 22.6125 251.901092
Column 5 4 80.01 20.0025 140.916958
b. TOTAL ASSETS TURNOVER
The Total Assets Turnover Ratio measures how productively the firm is managing all of its
assets to generate Sales. This ratio is calculated by dividing Sales by Total Assets.
FORMULA:
Total Assets Turnover = Sales. ×100
Total Assets
YEARS 2016 2017 2018 2019 2020
Net Sales 1651.82 1679.9 1822.77 2096.95 2427.04
Total Assets 2,310.99 2,220.18 2,231.16 2,230.60 2,460.39
Solution: The is Total Asset Turnover calculated (Mar 2016) as
follows:
Net Sales = 1,217.28
ANOVA
Source of
Between Groups 430.30105 4 107.575263 0.40947097 0.79905965 3.05556828
Within Groups 3940.76513 15 262.717675
Total 4371.06618 19

52
Total Assets Turnover =
1217.28
×100
2310.99
= 52.67%
Solution: The is Total Asset Turnover calculated (Mar 2017)
as follows:
Net Sales = 1679.9
1679.9
×100
2220.18
= 75.66%
as follows:
Net Sales = 1822.77
1822.77
×100
2231.16
= 81.69%
as follows:
Net Sales = 2096.96
2096.95
×100
2230.60
= 94.01%

53
as follows:
Net Sales = 2427.04
2427.04
×100
2460.39
= 98.64%
YEARS 2016 2017 2018 2019 2020
Asset Turnover Ratio (%) 52.67 75.66 81.69 94.01 98.64
INTERPRETATION
• The Asset turnover ratio is highest in the year 2020 i.e. 98.64. A high asset
turnover ratio indicates greater efficiency.
• The Asset turnover ratio is lowest in the year 2016 i.e.52.67. A low asset turnover ratio
indicates inefficiency, or high capital-intensive nature of the business. A low total asset
turnover can indicate many problems. The firm may have unsold inventory and may be
finding it difficult to sell it fast enough. There could be a problem with receivables, as
the firm may have a long collection period. The firm may also not be under utilizing its
fixed assets. Reading this ratio along with other ratios will provide a clearer picture
about the firm.
0
20
40
60
80
100
120
2016 2017 2018 2019 2020
AssetTurnover Ratio (%)

54
c. WORKING CAPITAL TURNOVER RATIO
This ratio highlights the effective utilization of working capital with regard to sales. This ratio
represents the firm's liquidity position. It establishes relationship between cost of sales and net
working capital. This ratio is calculated as follows:
Working Capital Turnover Ratio =
Net Sales
Working Capital
YEARS 2016 2017 2018 2019 2020
Total Current Assets 1,310.63 1,163.89 1,238.94 1,225.39 1,422.05
Total Current Liabilities 1,088.82 1,008.54 951.28 778.93 843.45
Net Sales 1651.82 1679.9 1822.77 2096.95 2427.04
Solution: The Working Capital Turnover Ratio is calculated (Mar 2016) as follows:
Net Sales = 1217.28
TCA= 1310.63
TCL= 1088.82
Working Capital = Current Assets - Current Liabilities
=1310.63–1088.82
=221.81
1217.28
221.81
=5.48 times
Net Sales = 1679.9
TCA= 1,163.89
TCL= 1,008.54

55
=1,163.89–1,008.54
=115.35
1679.9
115.35
=14.56 times
Net Sales = 1822.77
TCA= 1238.94
TCL= 951.28
=1238.94–951.28
=287.66
1822.77
287.66
=6.33 times
Net Sales = 2096.95
TCA= 1225.39
TCL= 778.93
=1225.39–778.93
=446.46
2096.95
446.46

56
=4.69 times
Net Sales = 2427.04
TCA= 1422.05
TCL= 1088.82
= 1422.05–1088.82
=333.23
2427.24
333.23
=7.29 times
YEARS 2016 2017 2018 2019 2020
Working Capital Turnover Ratio 5.48 14.56 6.33 4.69 7.29

57
INTERPRETAITON:
• It is an index to know whetherthe working capital has beeneffectively utilized or not in making
sales.
• The Working Capital Turnover Ratio is highest in the year 2017 i.e. 14.56. A higher working
capital turnover ratio indicates efficient utilization of working capital, i.e., a firm can repay its
fixed liabilities out of its working capital.
• The Working Capital Turnover Ratio is lowest in the year 2019 i.e. 4.69. A lower working
capital turnover ratio shows that the firm has to face the shortage of working capital to meet its
day-to-day business activities unsatisfactorily
RATIO OF ALL THE 4 COMPANIES
YEARS 2016 2017 2018 2019 2020
Radico Khaitan 5.48 14.56 6.33 4.69 7.29
United Spirits
4.35 4.57 4.47 4.83 4.84
United Breweries 8.4 6.31 6.97 6.28 5.95
GM Breweries
27.55 35.06 36.65 26.15 22.78
0
2
4
6
8
10
12
14
16
2016 2017 2018 2019 2020
Working Capital Turnover Ratio

58
SUMMARY
Column 1 4 45.78 11.445 118.187767
Column 2 4 60.5 15.125 195.6119
Column 3 4 54.42 13.605 237.156367
Column 4 4 41.95 10.4875 109.545092
Column 5 4 40.86 10.215 71.1719
ANOVA
Source of
Between Groups 71.87822 4 17.969555 0.12279771 0.97207941 3.05556828
Within Groups 2195.01908 15 146.334605
Total 2266.8973 19
INTERPRETATION
There exists no significant difference between Radico khaitan, United Spirits, United
Breweries, GM Breweries, Regarding their Current Ratio.
0
5
10
15
20
25
30
35
40
2016 2017 2018 2019 2020
Chart Title

59
CHAPTER 5- CONCLUSION,SUGGESTIONS,LIMITATIONS
A. CONCLUSION
Liquidity Ratios:
• Current ratio is not that must satisfactory as it is not meeting the ideal requirement. But
in each year Current Assets are more than Current liabilities which shows the company
in a position of paying its liabilities.
• The quick ratio is ideal but it declined from 2016 to 2017 but from 2018 graph went up
which is fine.
Conclusion: The Company’s liquidity position is satisfactory but there is scope for better
results.
Profitability Ratios:
• After the decline of 2018 the company is restoring its profitability condition as Gross
Profit Ratio, Operating Profit Ratio & Net Profit Ratio are seen to be increasing in the
years after 2014.
• The Return on Investment & Return on Assets has been stable in the last five years as it
varies between 8% to 15% & 4% to 13% respectively in all the years. This highlights
consistency in investment returns.
• In the present year return on Capital Employed has not restored from the downfall
witnessed in 2019 and 2020. This is a negative sign about the performance of the
company.
• The shareholders of the company should be satisfied because the company has been
earning a promising stable earnings per share which ranges between Rs. 5 to Rs. 17.The
highest EPS is observed in 2020 which is a good indicator of the company’s financial
position as well as marketing position in the year. But overall, industry wide the EPS of
the company is low.
Conclusion: The Company’s profitability position is quite satisfactory.

60
Turnover Ratios:
• The Assets turnover ratios represent a positive sign for the company because the sales
are able to cover a large portion of total assets in the recent.
• The company’s satisfactory Working Capital Turnover Ratio is reflecting that the
company is able to effectively utilize it sales.
Conclusion: The company’s turnover ratios are indicating that company is in a healthy
position.

61
B. SUGGESTIONS
• The company must keep a check on its current liabilities in order to make the current
Ratio attractive.
• The company should strive to keep a check on its Quick Ratio as it shrinks compared to
the company's competitors. This can be done by controlling current debts/liabilities.
• The company's profits are based on each level and the industry as a whole. It is proposed
to ensure the maintenance of this stability or profit. Also, the company should take steps
to further improve profits.
• EPS is low compared to other companies in the industry. The company should take care
of it in order to retain its shareholders over time.

62
C. LIMITATIONS
• The time allocated for the project was insufficient. For doing a detailed analysis a lot of
time is required.
• The project provides an overview of the company and not just one.
• Ratio analysis alone has various limitations such as based on qualitative data and ignores
quantitative data. Therefore, when judging the performance of a company, one cannot
completely rely on the ratios.
• Confidential information regarding data collection was monitored. Therefore, the study
is largely based on secondary data.
• Restrictions due to company.

63
CHAPTER 6- REFERANCES
WEBSITE:
www.google .com
www.radicokhaitan.com
www.moneycontrol.com
www.business-standard.com
www.financialexpress.com
www.equitymaster.com
www.economictimes.indiatimes.com
https://www.youtube.com/channel/UCLvnJL8htRR1T9cbSccaoVw
TEXT BOOKS:
• Maheshwari and Maheshwari, A Textbook of Accounting for Management,
VIKAS PUBLISHING HOUSE PVT LTD, New Delhi
• CORPORATE FINANCE, A textbook by Aswath Damodaran
WILEY PUBLICATIONS, NYC

64
CHAPTER 7- APPENDIX
BALANCE SHEET OF RADICO KHAITAN(IN CRORES)
YEARS Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 26.71 26.68 26.66 26.61 26.61
TOTAL SHARE CAPITAL 26.71 26.68 26.66 26.61 26.61
Reserves and Surplus 1,493.57 1,288.26 1,115.46 1,003.28 936.51
TOTAL RESERVES AND
SURPLUS 1,493.57 1,288.26 1,115.46 1,003.28 936.51
TOTAL SHAREHOLDERS
FUNDS 1,520.53 1,314.94 1,142.12 1,029.89 963.12
NON-CURRENT LIABILITIES
Long Term Borrowings 1.53 21.66 34.4 103.31 195.73
Deferred Tax Liabilities [Net] 78.47 104.05 92.52 69.28 54.98
Other Long Term Liabilities 5.32 0.66 1.03 0.79 1.16
Long Term Provisions 11.1 10.37 9.81 8.37 7.18
TOTAL NON-CURRENT
LIABILITIES 96.42 136.73 137.76 181.75 259.05
CURRENT LIABILITIES
Short Term Borrowings 397.37 301.6 487.8 550.91 620.06
Trade Payables 264.24 244.84 214.14 185.32 176.01
Other Current Liabilities 129.06 164.14 167.77 232.09 259.1
Short Term Provisions 52.78 68.35 81.57 40.22 33.65
TOTAL CURRENT
LIABILITIES 843.45 778.93 951.28 1,008.54 1,088.82
TOTAL CAPITAL AND
LIABILITIES 2,460.39 2,230.60 2,231.16 2,220.18 2,310.99
ASSETS
NON-CURRENT ASSETS
Tangible Assets 729.54 697.92 667.69 682.87 704.5
Intangible Assets 13.89 16.02 17.8 20.95 24.89
Capital Work-In-Progress 18.08 16 20.19 2.2 1.91
Other Assets 0 0 0 0 0
FIXED ASSETS 761.51 729.94 705.68 706.02 731.3
Non-Current Investments 155.39 155.39 155.39 155.39 155.39

65
Deferred Tax Assets [Net] 0 0 0 0 0
Long Term Loans And Advances 16.58 8.03 29.01 63.3 56.16
Other Non-Current Assets 104.86 111.85 102.13 131.58 57.51
TOTAL NON-CURRENT
ASSETS 1,038.34 1,005.21 992.21 1,056.30 1,000.36
CURRENT ASSETS
Current Investments 0 0 50 50 50
Inventories 374.18 359.71 310.86 293.03 274.09
Trade Receivables 823.05 641.75 630.01 624.01 610.93
Cash And Cash Equivalents 18.24 17.67 22.35 14.07 12.7
Short Term Loans And Advances 40.74 46.7 54.49 58.74 168.25
Other Current Assets 165.84 159.56 171.23 124.03 194.66
TOTAL CURRENT ASSETS 1,422.05 1,225.39 1,238.94 1,163.89 1,310.63
TOTAL ASSETS 2,460.39 2,230.60 2,231.16 2,220.18 2,310.99

66
PROFIT & LOSS ACCOUNT OF RADICO KHAITAN (in Rs. Cr.)
YEARS Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
12 mths 12 mths 12 mths 12 mths 12 mths
INCOME
REVENUE FROM
OPERATIONS [GROSS] 9,392.00 8,036.24 6,244.45 4,837.87 4,244.67
Less: Excise/Sevice Tax/Other
Levies 6,990.85 5,961.06 4,447.60 3,188.05 2,619.27
REVENUE FROM
OPERATIONS [NET] 2,401.15 2,075.18 1,796.85 1,649.82 1,625.40
TOTAL OPERATING
REVENUES 2,427.04 2,096.95 1,822.77 1,679.90 1,651.82
Other Income 9.19 13.29 26.67 19.65 38.87
TOTAL REVENUE 2,436.23 2,110.23 1,849.44 1,699.55 1,690.69
EXPENSES
Cost Of Materials Consumed 1,270.91 1,044.86 939.2 902.46 881.36
Operating And Direct Expenses 0 0 0 0 0
Changes In Inventories Of FG,WIP
And Stock-In Trade -18.83 -41.7 -12.53 4.42 -4.19
Employee Benefit Expenses 186.08 171.38 154.97 141.17 128.34
Finance Costs 31.61 35.48 68.24 80.38 84.75
Depreciation And Amortisation
Expenses 52.53 42.44 40.9 41.7 43.13
Other Expenses 613.48 560.9 445.83 406.03 441.93
TOTAL EXPENSES 2,139.37 1,824.52 1,662.16 1,590.70 1,591.97
PROFIT/LOSS BEFORE TAX 272.69 285.71 187.28 108.85 98.72
TAX EXPENSES-CONTINUED
OPERATIONS
Current Tax 70.95 85.73 39.78 14.02 27.35
Less: MAT Credit Entitlement 0 0 0 0 0
Deferred Tax -25.76 11.91 24.05 14.72 -2.71
Tax For Earlier Years 0 0 0 0.04 0.63
TOTAL TAX EXPENSES 45.19 97.64 63.83 28.78 25.27
PROFIT/LOSS AFTER TAX AND
BEFORE EXTRAORDINARY
ITEMS 227.5 188.06 123.45 80.07 73.45
PROFIT/LOSS FROM
CONTINUING OPERATIONS 227.5 188.06 123.45 80.07 73.45
PROFIT/LOSS FOR THE
PERIOD 227.5 188.06 123.45 80.07 73.45
OTHER ADDITIONAL
INFORMATION

67
EARNINGS PER SHARE
Basic EPS (Rs.) 17.05 14.1 9.26 6.02 5.52
Diluted EPS (Rs.) 17.04 14.08 9.25 6 5.5
Imported Raw Materials 0 0 0 0 0
Indigenous Raw Materials 0 0 0 0 0
STORES, SPARES AND LOOSE
TOOLS
Imported Stores And Spares 0 0 0 0 0
Indigenous Stores And Spares 0 0 0 0 0
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 19.3 16.07 12.82 12.81 10.64
Tax On Dividend 0 0 0 0 2.17
Equity Dividend Rate (%) 100 60 50 40 40

Understanding Financial Position of Radico Khaitan Ltd.

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