1. RATIO ANALYSIS OF RANI LTD.
Prepared For : BOD (Raja Ltd)
Prepared By : Management Accountant

2. STRUCTURE
• Background
• Profitability of the company
• Liquidity position
• Efficiency indicators
• Investment perspective
• Trends of ratios & percentages
• Suggestions
• Conclusion
• Questions & Answers

3. BACKGROUND
• Current economic situation
• Nature & type of company
• Data limitations

4. PROFITABILITY OF RANI LTD
• Increase in sales
• Increase in cost of sales
• Falling net profit margin
25000
20000
15000
10000
5000
0
2012 2011 2010
Sales 20440 19467 18540
Cost Of Sales 12247 10650 10753
Net Profit 2132 2650 2578

5. LIQUIDITY POSITION
• Increase in current ratio
• Quick ratio at alarming rate
• Mismanagement of working capital
2
1.5
1
0.5
0
2012 2011 2010
Current Ratio 1.43 1.21 1.26
Quick Ratio 0.64 0.56 0.57

6. EFFICIENCY INDICATORS
• Receivable collection period
• Huge amount of inventory
• Increase in operating cycle
160
140
120
100
80
60
40
20
0
2012 2011 2010
Operating Cycle 138 100 90
Inventory Turnover 100 77 84
ReceivableTurnover 49 35 14

7. INVESTMENT PERSPECTIVE
• Earning per share
• Dividend per share

8. TRENDS OF RATIOS
• Current Ratio • Net Profit Margin
• Quick Ratio • Gross Profit
• Working Capital • Return on Assets
• Receivable Turnover • ROCE
• Inventory Turnover • ROSE
• Operating Cycles • EPS
• Sales
• Cost of Sales
• Dividend Per Share

9. CONCLUSION
• Unsecure financial position
• Deteriorating results
• Acute working capital management
problem
• Overtrading
• Declining Profits
• Increasing Cash conversion cycle

10. SUGGESTION
• Comparison with other companies
• Improving the average collection
period for trade debtors
• Improving the Inventory turnover
• Avoiding unnecessary overtrading
• Working capital management policy
• Acquisition of synergies

11. THANK YOU

12. QUESTIONS & ANSWERS