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A presentation on the topic

  1. 1. A PRESENTATION ON THE TOPIC : RATIO ANALYSIS FOR THE TRAINING UNDER GONE AT:PRESENTED BY: SOURABH MODGIL 5TH SEMESTER ROLL NO. - 44
  2. 2. COMPANY PROFILE Liberty group started operation in 1954 and comprises of five firms namely: Liberty footwear company Liberty enterprise Liberty leathers Liberty group marketing division Liberty shoes limitted
  3. 3.  The company was started by three dreamers in a small town- MR.DP GUPTA,MR.PD GUPTA AND MR.R BANSAL. Liberty Shoes have been fashioning footwear, for well over 50 years now Currently with an annual turnover exceeding INR.600 crore (U.S. $150 million), we figure amongst the top 5 manufacturers of leather footwear of the world producing more than 50,000 pairs a day. Liberty has quality-seeking customers in more than 25 countries.
  4. 4. BRANDS
  5. 5. OBJECTIVES OF THE STUDY: The basic objective of studying the ratios of the company is to know the financial position of the company. To study the profit of the business and net sales of the business and to know stock reserves for the sales of the business. To spot out the strength and weakness of the business.
  6. 6. CURRENT ASSETS = CURRENT ASSETS/CURRENT LIABILITIES YEAR CURRENT ASSETS CURRENT RATIO LIABILITIES 2005-06 938896527 653083419 1.4376 2006-07 1216862601 733828909 1.6582 2007-08 2007940647 673965547 2.98 2008-09 2544279053 1201432362 2.1177 2009-10 3015416632 1147817477 2.6271
  7. 7. current ratio 3.5 3 2.5 2 current ratio 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:IT INDICATES THAT THE LIQUIDITY POSITION OF THE COMPANY IS NOTSOUND IN THE YEAR 2005-06 AS IT IS LESS THEN 2:1.SIMILARLY ISIN 2006-07 .BUT IN 2007-08,08-09 AND IN 2009-2010 THECURRENT RATIO EXCEEDS. THIS IS A POSITIVE SIGN.
  8. 8. QUICK/LIQUID RATIO = CASH +MARKETABLESECURITIES+ ACCOUNTS RECEIVABLE/ CURRENTLIABLITIESYEAR LIQUID ASSETS CURRENT RATIO LIABILITIES2005-06 174140837 653083419 0.26662006-07 164562907 733828909 0.22422007-08 112633117 637965547 0.16712008-09 196033579 1201432362 0.16322009-10 273411559 1147817477 0.2382
  9. 9. Quick/Liquid ratio 0.3 0.25 0.2 0.15 Quick/Liquid ratio 0.1 0.05 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:AS AN IDEAL QUICK RATIO SHOULD BE1:1, IT INDICATES THATTHE COMPANY ABILITY TO USE ITS NEAR CASH OR QUICK ASSETSTO RETIRE ITS CL IS NOT SOUND IN ALL THOSE YEARS.
  10. 10. DEBT EQUITY RATIO = TOTALLIABILITIES/SHAREHOLDERS EQUITYYEAR TOTAL SHARHOLDERS’ RATIO LIABILITIES S EQUITY2005-06 4182856914 2148508410 2.05612006-07 4465142153 1942541010 2.29862007-08 5755393303 2153921231 2.67212008-09 7705393303 1984602576 3.88252009-10 9236673519 1878040034 4.9183
  11. 11. Debt-equity ratio 6 5 4 3 Debt-equity ratio 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:IF THE DEBT EQUITY RATIO IS MORE THAN 1,THIS MEANS THEDEBT IS MAINLY USED FINANCING ITS OPERATIONS. ITINDICATES THAT THE BUSINESS HAS LOT OF RISK BECAUSE ITMUST MEET PRINCIPAL AND INTEREST ON ITS OBLIGATIONS.
  12. 12. PROPRITORY RATIO = SHAREHOLDERSFUND/TOTAL ASSETSYEAR SHAREHOLDERS TOTAL ASSETS RATIO ’S FUND2005-06 1730508410 4182856914 0.41372006-07 1942541010 4465142153 0.43502007-08 2153921231 5755393303 0.37422008-09 1948602576 7705316033 0.25282009-10 1878040034 9236673519 0.2033
  13. 13. Proprietary ratio 0.5 0.45 0.4 0.35 0.3 0.25 Proprietary ratio 0.2 0.15 0.1 0.05 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:THE RATIO CAN BE INTERPRETED AS GOOD IF IT IS HIGHBECAUSE A HIGHER PROPRIETARY RATIO WOULD IMPLY THATCOMPANY HAS ENOUGH CAPITAL TO REPAY ITS CREDITORS,WHENEVER ANY SUCH DEMAND IS MADE BY THE CREDITORS.
  14. 14. FIXED ASSETS TURNOVER RATIO = NETSALES/FIXED ASSETSYAER SALES FIXED ASSETS RATIO2005-06 3662420296 2932295556 1.24892006-07 4182472441 3049535389 1.37152007-08 5012789202 3569472285 1.40432008-09 8026752955 4971279443 1.61462009-10 10466193853 5864295515 1.7846
  15. 15. Fixed assets turnover ratio 2 1.8 1.6 1.4 1.2 Fixed assets turnover 1 ratio 0.8 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:HIGHER THE FIXED ASSETS TURNOVER RATIO, THE BETTER ITIS FOR THE COMPANY BECAUSE A HIGH RATIO INDICATES THEBUSINESS HAS LESS MONEY TIED UP IN THE FIXED ASSETSFOR EACH UNIT OF CURRENCY OF SALES REVENUE.
  16. 16. INVENTORY TURNOVER RATIO =NETSALES/INVENTORYYEAR SALES INVENTORY RATIO2005-06 3662420296 279046650 13.12472006-07 4182472441 366045505 11.42612007-08 5012789202 557230198 8.99592008-09 8026752955 947127445 8.47482009-10 10466193853 1219791118 8.5803
  17. 17. inventory turnover ratio 14 12 10 inventory turnover ratio 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:A HIGH INVENTORY TURNOVER RATIO MEANS THE COMPANY ISEFFICIENTLY MANAGING AND SELLING ITS INVENTORY ANDINDICATE BETTER LIQUIDITY, BUT IT CAN ALSO INDICATE ASHORTAGE OR INADEQUATE INVENTORY LEVELS WHICH MAYCAUSE LOSE IN BUSINESS.
  18. 18. DEBTORS TURNOVER RATIO = TOTAL SALES /DEBTORSYAER SALES DEBTORS RATIO2005-06 3662420296 314675202 11.69872006-07 4182472441 420749095 9.94052007-08 5012789202 1036080367 4.38322008-09 8026752955 643062814 12.48322009-10 10466193853 833322981 12.5596
  19. 19. Debtors turnover ratio 14 12 10 8 Debtors turnover ratio 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:THE HIGHER THE VALUE OF DEBTORS TURNOVER RATIO ,THEMORE EFFICIENT IS THE MANAGEMENT OF DEBTORS OR MORELIQUID THE DEBTOR’S ARE. HIGHER TURNOVER SIGNIFIESSPEEDY AND EFFECTIVE COLLECTION.
  20. 20. WORKING CAPITAL TURNOVER RATIO=COST OF SALES/NET WORKING CAPITALYEAR COST OF SALES NET WORKING RATIO CAPITAL2005-06 3120167111 285813108 10.9172006-07 3425500099 485813108 7.09162007-08 4326627922 1333975100 3.24342008-09 7444286989 1342846691 5.54372009-10 9424223978 1867599155 5.0461
  21. 21. Working capital turnover ratio 12 10 8 Working capital turnover ratio 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION: POSITIVE SIGN SHOWING THEA HIGH RATIO ISCOMPANY IS ABLE TO GENRATE SALES FROMAND INDICATES EFFICENT UTILISATION OFWORKING CAPITAL.
  22. 22. TOTAL ASSETS TURNOVER RATIO= TOTALASSETS/NET SALESYEAR TOTAL ASSETS NET SALES RATIO2005-06 4182856914 3662420296 1.1422006-07 4465142153 4182472441 1.0682007-08 5755393303 5012789202 1.1482008-09 7705316033 8026752955 0.9592009-10 9236673519 10466193853 0.882
  23. 23. Total assets turnover ratio 1.4 1.2 1 0.8 Total assets turnover ratio 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:HIGHER THE COMPANY ASSETS TURNOVERRATIO ,THE LOWER THE PROFIT MARGINESSINCE THE COMPANY IS ABLE TO SALE MOREPRODUCTS AT A CHEPER RATE.
  24. 24. NET PROFIT RATIO= NET PROFIT/SALES*100YEAR NET PROFIT SALES %2005-06 845169350 3662420296 23.0762006-07 1057201950 4182472441 25.2762007-08 1266429294 5012789202 25.2642008-09 1057292022 8026752955 13.1722009-10 992700974 10466193853 9.485
  25. 25. net profit ratio 30 25 20 15 net profit ratio 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:IT’S A NOT GOOD SIGN FOR THE COMPANY ASHIGHER THE NET PROFIT RATIO WILL HELP THEFIRM SERVICE IN THE FALL OF INCOME FROM THESERVICE S,RISE IN COST OF PRODUCTION ORDECLINING DEMAND.
  26. 26. GROSS PROFIT RATIO= GROSS PROFIT/NETSALES*100YEAR GROSS PROFIT SALES %2005-06 1399308423 3662420296 43.712006-07 1513523474 4182472441 41.452007-08 1787683614 5012789202 39.932008-09 2410931568 8026752955 23.312009-10 4333815676 10466193853 41.41
  27. 27. Gross profit ratio504540353025 Gross profit ratio201510 5 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRETATION:THE PROFIT MARGIN IS GOOD WHICH IS APOSITIVE SIGN FOR THE COMPANY.
  28. 28. RETURN ON CAPITAL EMPLOYED= PROFIT BEFORETAX AND INTEREST/CAPITAL EMPLOYED*100YEAR 2005-06 2006-07 2007-08 2008-09 2009-10ROCE% 5.3 8.9 6.6 5.2 4.5
  29. 29. RETURNE ON CAPITAL EMPLOYED 10 9 8 7 6 5 Column1 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10INTERPRITATION :THE LOW PERCENTAGE IS INDICATING THAT THEMANAGEMENT HAS NOT EFFICENTLY USED THEINVESTMENTS MADE BY THE OWNERS ANDCREDITORS INTO THE BUSINESS.
  30. 30. EARNING PER SHARE= PAT/NO. OF SHARESYEAR 2005-06 2006-07 2007-08 2008-09 2009-10EPS 17.65 26.48 27.33 27.75 31.02
  31. 31. EARNING PER SHARE 35 30 25 20 EARNING PER SHARE 15 10 5 0 2006-07 2007-08 2008-09 2009-10INTERPRETSTION:THE HIGHER THE RATIO ,THE BETTER IT ISBECAUSE THE VALUE OF THE SHARE WILLINCREASE.
  32. 32. RECOMMENDATIONS AND SUGGESTIONS : Either the company should decrease the prices or the shoes of less price range should also be there so that need of every kind of customers could be fulfilled. The dealer should regularly visit the retailers and listen to there complaints . Stock should be verified more frequently to avoid difference between book figures and actual figures . Funds should be available in smooth and steady flow so that the construction at the site is not affected.

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