A

PROJECT REPORT
ON
RATIO ANALYSIS
Of
Infowiz Pvt. Ltd.

Under The Supervision of Submitted By:

Submitted By:
Rahul Mehta
MBA ( 2nd Year )
Roll No : 180175207

SETH JAI PARKASH MUKAND LAL INSTITUDE OF

ENGINEERING & TECHNOLOGY ( YAMUNANAGAR , 135001 )
( Approved by AICTE & HRD ministry, Affiliated to Kurukshetara University )

1
 KURUKSHETRA UNIVERSITY, KURUKSHETRA
ACKNOWLEDGEMENT

To test the student’s academic knowledge in practical situations of corporate world, Semester
summer internship has been included in the B.com course. I would like to take this moment to
express my deepest gratitude to the group of people without whose help and support I would not
have been able to complete this project.

I wish to begin by thanking the management at INFOWIZ COMPANY At Chandigarh.

MS.KARANPREET (Professor of Finance dept) for providing me this great opportunity to work
in their esteemed Company.I would also like to thank them for the help, support and guidance
that they have provided me with during the course of my project work.

I would also like to deeply thank my industry mentor MS.KARANPREET for his valuable
insights and constant guidance and support.

I express my deep sense of gratitude to the management of SDIMT for imparting me with the
required help. I would like to specially thank my college mentor Mr.DALVIR GREWAL, for his
guidelines, support and motivation which have been a great help to me for this project.

I would also like to thank all those people who spent their valuable time in this project, and all
those people who directly or indirectly contributed in making this project a success.

NAVPREET SINGH JAURA

2
 PREFACE

For the completion of the B.COM it has been mandatory to obtain Training in Finance. This
training session really help me in gathering knowledge of market.
I have prepared this Project on the topic “Ratio Analysis in Infowiz Company At Chandigarh” in
which I have written about how an organization set their standards to make comparison and
better production..
This Report is prepared during my semester training. Training is life’s greatest treasure as it is
full of experience, observation and knowledge. The training held was very gainful as it took us
close to real life. This period also provide a chance to give theoretical knowledge a practical
shape and to learn from practical results semester training that I have taken at Infowiz
Co.,Chandigarh. It has been very educative and fruitful experience for me for it has given mean
insight into some practical experience without which classroom knowledge can be regarded as
incomplete.
I wish this great company success so it may flourish and serve the nation and have to achieve
many goals.

Thanks

3
 DECLARATION

I, Rahul Mehta declare that the project Ratio Analysis in INFOWIZ Pvt Ltd , at Chandigarh
submitted to KURUKSHETRA UNIVERSITY , KURUKSHETRA in partial fulfillment of the
requirement of the degree of MBA is a record of original project work done by me.

I further declare that this project report has not been submitted to any other university/ institution
of any degree.

RAHUL MEHTA

4
 CERTIFICATE BY THE GUIDE

This is to certify that MR NAVPREET SINGH JAURA student of B.COM-3RD Year CU

CHANDIGARH, has undertaken the project entitled Ratio Analysis of Infowiz Co.” Under my
guidance and supervision for partial fulfillment of the requirement for the degree of B.COM.

Ms. KARANPREET
(Project Guide)

5
 INDEX

Sr. No- Contents Page No-

1 Introduction of company different activities

2 Introductions of Section of finance 15

3 Objective of the training 35

4 Research methodology 36

5 Review of literature 37

6 Data analysis and interpretation 47

7 Findings 64

8 Limitations 65

9 Suggestions 66

10 Conclusion 67

11 Bibliography 68

12 Annexure 69

6
  INTRODUCTION OF THE COMPANY

 BRIEF HISTORY OF THE COMPANY

INFOWIZ is leading strategic IT
Company offering integrated IT solution. INFOWIZ is having rich experience managing global
clients across various business verticals and align IT strategies to achieve business goals. The
various accreditations that we achieved for every service, we offer reflect our commitment
towards the quality assurance.

INFOWIZ is a 8 years young organization which has won the

NATIONAL AWARD for 2 consecutive years 2014-2015 & 2015-16 for BEST Industrial
Training from Hon` able GOVERNER of Punjab & Haryana Sh. Kaptan Singh Solanki. He
is also the Chancellor of PTU & Punjabi University. INFOWIZ is a member of Confederation
of Indian Industry ( CII membership number – N4654P ) & also with an ISO Certification.
We have a global foot prints in providing the off shore companies of US, UK, France, Ireland,
Canada and Australia with quality and timely Web and SEO services.

7
 INFOWIZ is an organization which is established in the field
of Web Development (PHP & .NET), JAVA (Core as well as Advance), I-phone & Android
Applications, Embedded systems (AVR, PIC & ARM),Automation, ROBOTICS, Networking
(MCSE, CCNA & RHSE) & in Mechanical.

Our skilled team of professionals make sure that the product is developed as per the
customer’s needs and keeping the customer informed about the development of their project
from time to time. We do not only emphasize on formulating an attractive solution to our clients
but also believe in providing a workable solution. INFOWIZ offers research based Search
Engine Marketing products that help achieve greater insights to customer’s online business. Our
Research & Development arm offers SEO tools for SEM professionals.

INFOWIZ also provides Technical Support & Consultancy to Software Companies like
JIA Group, Newzealand, Sagitech solutions Panchkula, Jarc infotech Mohali, Infonet Solution,
Delhi etc.

Over time Infowiz has gained a reputation of delivering esteemed training. We provide 6
months industrial training in Chandigarh and Mohali to six weeks industrial training both
depending upon the student’s requirements. Infowiz provides training to students from various
fields involving CSE, IT, MCA, BCA, Civil, Electrical and Electronics, MBA and Mechanical.
We also provide specialized training in several technologies like PHP, Java, .NET, Android,
Networking, C/C++, Automation, Matlab, VLSI-VHDL, Autocad, 3Ds MAX, Solidworks, CNC
Programming, CRE-O, NX-CAD and many more. We also provide training in the latest
technologies like Python, AI, Machine Learning and VR along with few other diploma courses.
Infowiz apart from facilitating Industrial training in Chandigarh and Mohali also offers
services such as:
Web Designing
Website Development
Digital Marketing
Android and IOS app Development

8
Infowiz embarks upon a step further regarding industrial training with placements. We provide
in-house training aided by a strong placement and consultancy wing. We impart industry based
effective training and excellent placements by bolstering the students with technical and soft
skills. We have placed students in several reputed organizations like DRDO, NTPC, Indian
Railways, and MTS etc making Infowiz Software the best industrial training company in
Chandigarh, Mohali, Bathinda, and Delhi
.

 Our Mission :
 To bring to the students the best possible training and provide them with skills so that the
students get the placements and advance in their professional lives on a higher pedestal. We
aim to deploy the best of our infrastructure and team of experts in educating and training the
students with the skills necessary.
 To promote technical education.
 To maintain our status as an excellent training provider coupled with placements.
 To provide value-based education and make a difference.
 To provide best and sustainable services and solutions to clients.

“ I Hated Every Minute of Training, but I Said, “Don`t Quit. Suffer Now and
Live The Rest Of Your Life AS A Champion. ”
Muhammad Ali

 Our Vision :
Infowiz’s vision it to present itself as the best among the class nurturing
excellence through a systematic approach fostering the growth of students and our clients. We
wish to move to greater heights incorporating a high standard of ethics. We wish to expand our
services across several places and in the course making Infowiz Software the best industrial
training company in Chandigarh, Mohali, Bathinda, and Delhi.

9
 Values :
Our values are the silos upon which rests our company. We ensure to add value
to our education, services and help it to reach higher realms.

 Team Work :
Moving forward together with an all-inclusive mindset ensuring benefit to all.
 Respect :
Respect for individuals and addressing their needs.
 Delivery :
Time management and ensuring pinpoint and precise delivery with no delay
and extracting the most out of 6 months industrial training in Chandigarh and Mohali.
 Brilliance :
Offering best and competitive services and training solutions.
 Quality :
Ensuring quality backed by hard work and sincere effort.

 Our Hottest Clients & Projects:-

Sr. No. Projects URL’s Country

1) Viva Sales www.infowiz.in/vivasales UK

2) Mds Creative www.mdscreative.com Germany

3) Liddle TV www.filmon.com UK

4) Paradigms( Android) running Australia

5) Printcost www.popgraphics.net UK

10
6) PSTDO Bootstrap www.bootstrap.achieversperfect.com USA

7) Essencesoftwares www.essencesoftwares.com Australia

8) Dashboard(Wordpress) running USA

9) Realstate www.realestate.infowiz.in Russia

10) Dealpartners(WordPress) www.dealpartners.co.uk.gridhosted.co.uk UK

11) Littletonvineyard www.littletonvineyard.net USA

12) Gpakoffshore www.gpakoffshore.com UK

 OUR TEAM :-

“ A Ship is as good as the crew who sail her. ”

Our Technical team of professionals handing, designing & delivering of projects has a strong
presence in the North India & the US. Our engineers are already working on the latest
technologies like I-Phone & Android Applications, Robotics, VLSI-VHDL, Embedded
System, Networking and Cloud computing.

1) Dr. Seema
(Managing Director)
She is the backbone of INFOWIZ and a woman with more than 9 year rich practical
experience who believes in taking up new ventures and projects.

11
2) Mr. kamaljot kansal
(Deputy Director)
A man who strongly feel that “Nothing is Impossible”. A very committed team
leader who has been professionally attached with Multinational companies for more than 18
years and has lead the marketing teams in all states of North India.

3) Mr. Bonish singla

(Branch Manager)
A man who believes that “Honour Time & Place, then you will be honoured.” he
has more than 4 years solid industrial experience in a software companies & is very dashing and
innovative in his technical approach.

4) Ms. Urvashi
(Dean Academics)
A woman who believes that “Challenges are what make life interesting and
overcoming them is what makes life meaningful.” She has more than 3years experience in
business development.

5) Er. Nishant Goyal

(Manager)
A woman believes that “don’t wait for extra ordinary opportunities, seize common
occasions and make them great.” She has more than 4 years experience in marketing field.

6) Er. Kamal Garg

12
 (Head & Technical Advisor at US Branch)
More than 10 years industrial experience in US and smooth handling of the entire
US business.

7) Ms.Mandeep Kaur
(Center Head- US Branch)
A woman who firmly believes that “In life, where you reach largely depends
upon where you start.” She joined this branch in the year 2007 and has given her immense inputs
in bringing the company to its present status.

 COURSES Offered :-

 For CSE/IT/MCA Professionals:-

1) Web Development in PHP with LIVE Projects

2) Web Development in .NET with LIVE Projects
3) JAVA (Core as well as Advance ) with LIVE Projects
4) Android Applications with LIVE Projects
5) Web Designing (Photoshop, Coral Draw)
6) C#, Console Applications, VB.NET, ASP.NET
7) MySQL, SQL, ORACLE
8) Networking (MCSE, CCNA, RHSE)
9) SEO (Search Engine Optimization)

13
 For ECE/EE/EIE/ME/CIVIL Professionals:-

1) Robotics With Live Project

2) VLSI-VHDL with Live Project
3) Embedded System Design with Live Project
4) Microcontroller with Live Project
5) Microprocessor with Live Project
6) PCB Designing
7) AVR & PIC Family
8) PCB and layout designing
9) AUTOMATION with Live Project
10) Project development with ARM processors
11) CATIA, PRO-E, AUTOCAD, SOLID WORKS.

Our core strength is our timely, technically and cost effective project
delivery. We also provide customers with designs as per their demands. INFOWIZ also
provide JOB Oriented Industrial Training of 1 year and 6/4/2 Months in CSE, IT, ECE,
EE, ME, Civil, BBA,BCA,MBA, MCA & also for Non-technical students . We help students
in building their career.

 INTRODUCTION OF SECTION OF FINANCE

TECHNIQUES OF STORE CONTROL :-

Following are the main techniques of store control which are followed by BCL.
1. VED analysis.
2. ABC analysis.
3. FSN analysis.
4. Perpetual inventory system & store verification.
5. Determination of various levels.

VED ANALYSIS:-

14
V – Vital, essential and desirable – analysis is used primarily for control of spare parts. These are
also known as control by importance and exception (CIE). This analysis is made to get the
effective results. V – vital – the spares, the stock out of which even for a short time will stop
production for quite some time and where the cost of stock is very high, are known as vital
spares. The items which are stored under the vital category in BCL are:-
CATEGORY ITEMS
V – Vital Ball bearings, machinery spares, electrical goods, diesel & rfo,
processing chemicals, husk, coal.

These vital spares are a must for running the concern smoothly and these must be stored
adequately. The non - availability of these vital spares will cause havoc in the concern. E-
Essential – The E type of spares are also necessary but their stocks may be kept at low figures.
The spares the absence of which cannot be tolerated for more than a few hours or a day and the
cost of lost production is high and which are essential for the production to continue, are known
as essential spares. The items which are stored under the essential category in BCL are:-

CATEGORY ITEMS
E – Essential Belt & accessories, pipe and pipe fittings, valve, packing sheets.

D – Desirable – The desirable spares are those spares which are needed but their absence for
even a week or so will not lead to stoppage of production. Some spares though negligible in
monetary value, may be vital for the production to continue and require constant attention. The
items which are stored under desirable category in BCL are:-

CATEGORY ITEMS
D – Desirable Lab material, packing material, hardware items, MS filling, other
manufacturing material, building material, iron and steel, joining sheets &
rubber goods, miscellaneous Eng. Stores, refractories, welding material,
lubricants & grease, general stores.

ABC ANALYSIS:-

15
ABC – Always better control – It is also known as proportional parts value analysis method.
Under this technique of material control, materials are listed in ‘A’, ‘B’ and ‘C’ categories in
descending order based on money value of consumption. The inventories of certain concerns
consists of small percentage of items which contribute a large percentage of value of
consumption and a large percentage of items of material contribute a small percentage of value.
“A” may include more costly items, while category “B” may consist of less costly items and
category “C” of the least costly items.

ABC analysis measures the cost significance of each item of material. It concentrates on
important items, so it is also known as ‘control by importance and exception’ ( C.I.E). It is
scientific method of material control because it lay emphasis on discriminating control over
different items of stores classified on the basis of investment involved.

GROUP PERCENTAGE OF ITEMS PERCENTAGE OF COST

A 12% 80%
B 25% 15%
C 63% 5%

A monetary advantage will come by controlling these items. An attention should be paid in
estimating requirements, purchasing, maintaining safety stocks and properly storing of ‘A’
category materials. The control of ‘C’ items may be relaxed and these stocks may be purchased
for a year. A little more attention should be given towards ‘B’ category items and their purchase
should be undertaken at quarterly or half year intervals.
PRACTICALLY

CLASS VALUE ( IN RS.) NO. OF ITEMS

A Above – 10,000 400
B 5,000 – 10,000 600
C Below 5,000 4980

16
EXAMPLE
A Machine seals, critical valves. electrical motors, gear boxes, compressors.
B Valves, pumps, temperature control indicators.
C V – vells, bearings, pump shaft & other spares, couplin.

FSN ANALYSIS:-
FSN - Fast moving, slow moving, non-moving items.
Another important method of exercising control over inventory is FSN analysis. This approach
enables the management to find out the turnover of items lying in stores, thus pointing out the
fast moving, slow moving or non- moving items and hence helping them to avoid keeping capital
lockup in them.

PRACTICALLY
CATEGORY CLASSIFICATION TIME PERIOD
F Fast moving items Less than 1 year
S Slow moving items Greater than 1 year but lesser than 2 year.
N Non-moving items Greater than 2 year.

EXAMPLES
F Lab material processing, packing material, welding material.
S Lubricants, V-Vells, jointing sheet & bearing
N Pump spares, electrical goods, miscellaneous engine.

Inventory turnover ratio is the ratio of the value of material consumed during a period to the
average value of inventory held during that period.

Cost of material used in period or value

Inventory turnover = --------------------------------------------------
Cost of avg. stock held during that period.

17
High ratio is an indicator of fast moving stock and uses investment in it. Low ratio indicates slow
moving stock i.e. accumulation of absolute stock, or carrying too much stock. If the ratio is zero,
it indicates non moving stock, i.e. the items has not at all been used during the period and hence
should be disposed off.

With the help of FSN analysis, a firm thus realizes the losses, which are caused due to their over
stocking or under stocking inventory turnover ratio. It will indicate the number of days in which
average inventory is consumed. The investment in stores is quite large in BCL, so it is desirable
to know the turnover of some important items in order to avoid keeping the capital locked up in
undesirable stock.

18
  OBJECTIVE OF THE TRAINING
1 To get families with the actual working environment in industry.
2 To work under an authority in discipline.
3 To find out the gap between practical knowledge and theoretical knowledge of ACCOUNT
OR FINANCE.
4 To complete the training report.
5 To complete the MFC a two year course.
6 To know the financial position of the industry.
7 To determine the profit of company

 RESEARCH METHODOLOGY

For carrying out the project all of the information is collected

from the annual report of the company. My own experience & knowledge which I gathered
during my training duration

Questioning:-
Actually no particulars questionnaire was prepared. Question related to problems and data
tallied with CA, FM & accountants of the company.

Analysis:-
Analysis of various types of data, statements are also made during the study by using
standard formulas.
Data is collected in the form of the primary and secondary data
.

19
  Ratio Analysis

ANALYSIS OF RATIOS:-
A relationship between various accounting figures, which are
connected with each other, expressed in mathematical terms is called ratio.
Definition :
According to Kennely and Macmillan, “The relationship of one
item to another expressed in simple mathematical form is known as ratio.”

Every company mainly prepare two statements which are:-

1 The income statement.
2 The balance sheet.

The data which are shown by the co. in both the statements do not show better insight to various
users, unless these data are analyzed, so it is very crucial aspect to analyze the information and
shown in the statements so they can provide the knowledge of strength & weakness of the firm.
In firm many parties are always interested to know firms financial position. & they came to
know all this by analyzing the data & information. In brief financial analysis is the process of
selection relation and evaluation.

Following statement are include in the list of financial statements:--

1 P & L a/c
2 Balance sheet
3 P& L app. a/c
4 Fund flow statement
5 Cash flow statement
6 Various schedules

20
OBJECTIVE OF ANALYSIS:--
(1) To present a complex data contained in the financial statement in simple and understandable
form.
(2) To make comparison between various groups to draw various conclusion.
(3) To spot out strengths weakness of business.
(4) To depict changes in cash position from one year to another year.
(5) To determine the source from where the working capital was obtained & for which purpose
it will be used.
Purpose of analysis of finance:--
(1) To know the earning capacity of profitability.
(2) To know the solvency.
(3) To know the financial strength.
(4) To know the trend of business.
(5) To know the capability of payment of interest and dividend.

 ANALYSIS OF STATEMENT RATIOS

Cash flow statements:-
Cash flow statement is a statement which describes the inflows (sources) and outflow (uses) of
cash and cash equivalents in an enterprise during a specific period of time. A cash flow statement
summarizes the causes of changes in cash position of a business enterprise between dates of two
balance sheet.
Advantages:--
(1) It is very useful in the evaluation of cash position of a firm.
(2) Cash flow statement helps in planning the repayment of loan and Advantage.
(3) Cash flow statement provides in formations of all activities classified under operating,
investing and financing activates.
(4) It helps in answering some intricate questions like:-
- What happened to the net profit?
- Where did the profit go?
- Why more dividend could not be paid nspide of sufficient avaible profit?

21
Fund flow statements:--
Fund flow statement is a method by which we study changes in the financial position of a
business enterprise between beginning and ending financial statement dates. It is a statement
showing sources and uses of funds for a period of time.

FOULKE defines, A statement of sources and application of funds is a technical device

designed to analyse the changes in the financial condition of a business enterprise between two
dates.

IMPORTANCE OF FUND FLOW STATEMENT:-

1) It helps in the formation of a realistic dividend policy.
2) it helps in the analysis of financial operation.
3 ) it helps in the proper allocation of resources.
4) it helps knowing the overall creditworthiness of a firm.

LIMITATION OF FUND FLOW STATEMENTS:-

1)It cannot reveal contionus changes.
2) it is simply arrangement of data given in the financial statement.
3) changes in cash are more relevant for financial management then the working capital.

22
Cash flows statement for the year ended 30th MAY 2018
(rs. In lacs)
Particulars 30th MAY 2018 30th june 2017
(a) cash flow from operating
Activities
Net profit before tax & extraordinaries 32205 21833.66
items
Add:- dep. 6333.92 4973.67
Less:- gain on sale of fixed (170.04) ----
Assets
Dividend income (566.78) (241.57)
Interest received & (8422.39) (1854.04)
Other income
Preliminary exp. w/o 214.11 216.71
29594.10 24928.43

Increase /decrease in stock (1761.51) (2204.88)

Increase / decrease in other (250.73) (199.45)
Receivable
Increase/decrease in s. drs. (3214.89) (1559.13)
Increase/decrease in loan & (3910.73) (28952.74)
Advance
Increase/decrease in c.liab. (1993.92) 1900.30)

Cash generation by operation 18963.78 6087.47

Interest received 8422.39 1854.04
Dividend received 566.78 241.57
Net cash from operating activities
27952.95 (3991.86)

23
(b) cash flow from investing (110953.63) (18085.49)
Activities 897.38 -----
Addition to fixed assets 1467.50 (22331.31)
sale of fixed assets (108588.75) (40416.80)
purchase of investment

(c) cash flow from financing 17514.74 11100.00

Activities ---- 117955.16
Proceed from share
Proceed from new borr- (36902.48) (4884.87)
Owing (2840.69) (1702.11)
Repayment of borrowing (22228.43) 122468.18
Dividend & dividend tax
Net cash from financing activities
Net cash flow during the year (102864.23) 78059.52
Cash & cash equilent (o/b) 142187.12 64127.60
Cash & cash equilent (c/b)
39322.89 142187.12

Working notes:-

(1) Figure in brackets indicates cash outflow and without brackets indicates cash Inflow.
(2) Int. paid during the year is considered part of operation activities.

Ratio analysis:-
Ratio is defined as the numerical or quantitable relationship between two items variables. This
relationship can be expressed as percentage, fraction or proportion of numbers. This ratio
analysis as a quantative tool enables analysis to draw quantitative answers to question such as:-
1 can the firm meet its current abligation?
2 Are the assets being used efficiently?
3 Are the net profit adequate?
4 Can the firm meet its current obligation?

24
Significance of ratio analysis:--
1) helps in financial forecasting and planning.
2) helps in communicating.
3) helps in controlled coordination.
4) helps in decision making.

Limitations of ratio analysis:--

1) personal basis.
2) uncomparible.
3) lack of adequate standards.
4) inherent limitation of accounting.

CLASSIFICATION OF RATIO:-

Liquidity ratio solvency ratio activity ratio profitability ratio

(1) current ratio (1) debt equity (1) inventory (1) gross profit
(2) liquid ratio ratio turnover ratio ratio
(2) debt to total (2) drs. Turnover (2) operating
Capital ratio (3) fixed assets ratio
(3) interest coverage turnover ratio (3) net profit
Ratio (4) working capital ratio
(4) capital gearing turnover ratio (4) return on
Ratio (5) capital employed investment
Turnover ratio (5) Return on
equity
(6) EPS

25
  DATA ANALYSIS AND INTERPRETATION

Liquidity ratio:--
Liquidity refers to the ability of a concern to meet its current obligations as the and when
these become due. The short term obligation are met by realising amounts from current, floating
or circulating assets. If current assets can pay off current liabilities then liquidity position will be
satisfactory. On the other hand if current liab. May not be easily met out of current assets then
liquidity position will be bad. The bankers suppliers and other short term crs. Are interested in
the liquidity of the concern. They will extend credit only if they are sure that current assets are
enough to pay out the obligation. To measure the liquidity of a firm the following ratio can be
calculated.
1) Current ratio
2) Quick ratio

1) Current ratio:--
Current assets/current liabilities
(in lacs)
Year Current assets Current liab. Current ratio
2015-16 208767.29 17462.36 11.9
2017-18 114539.46 25887.05 4.42

Quick ratio:--
Quick ratio may be define as the relationship between liquid assets and current liab. Inventres
and prepaid exp. Are not included in quick assets because they can not be converted in to cash
immediately.

26
Quick ratio = quick assets/quick liabilities.
(in lacs)
Year Quick assets Quick liab. Quick ratio
2015-16 54497.28 25887.08 1:2.1
2017-18 154397.35 17462.36 1:8

Solvency ratio:--
The term solvency refers to the of a concern to meet its long term obligation long term
solvency ratio indicate a firm’s ability to meet the fixe interest and cost of repayment its long
term boroweing.

1) Debt equity ratio

Debt equity ratio also known as external -internal ratio. This ratio indicate relationship
between the external equity and internal equity .

Debt equity ratio= out sider fund/share holders funds

(in lacs)
Year Outsider fund Shareholders funds Ratio
2015-16 177108.18 132450.56 1:1.3
2017-18 145023.46 168911.27 1:1.16

Interpretation:-
A high debt equity ratio which indicate that the claim of outsides are greater then the owners.
A ratio of 1:1 may be usually concedired to be satisfactory. The debt equity ratio of the firm is
comparatively satisfactory.

27
2) Interest coverage ratio:--

Interest coverage ratio indicate the number of times is covered by the profit available to pay
the interest charge generally higher the ratio more safe are the long term crs. Because even if the
earning of the firm fall the firm shall be able to meet its commitment to fix interest charge.

Interest coverage ratio=EBIT /fixed int. charge

(in lacs)
Year EBIT Fixed int. charge Ratio
2015-16 21833.66 127.48 1:17
2017-18 32205.28 82.35 1:39

3) Capital gearing ratio:-

The term capital gearing is used to describe the relationship between equity share capital
including reserve and surplus to preference share capital and other fixed interest. If the
preference share capital and other fixed interest bearing loans exceed the equity share capital
including reserve the firm said to be highly geared. The firm is said to be in low gear if
preference share capital and other fixed interest bearing loans are less than equity capital and
reserve.

Capital gearing ratio= equity share cap. + reserve & surplus / Preference capital +fixed int.
(in lacs)
Year ESP+R&P PR. C +F.INT RATIO
2015-16 132450.56 13472.36 9.8%
2017-18 168911.27 10202.94 16.5%

28
ACTIVITY RATIO:-
Activity ratio measures the efficiency or effectiveness with the which a firm manages its
resources or assets. These ratio are also called turnover ratios because they indicate the speed
with which assets are converted or turned over into sales.
These ratios ignore the movement of current assets, it is important to calculate the following
turnover or efficiency ratios to comment upon the liquidity or the efficiency with which the
liquidity resources are being used by a firm.

1) Inventory turnover ratio:-

Inventory turnover ratio include whether inventer has been efficiently under or no. the
purpose is to see whether only the required minimum funds here been locked up in inventory.
Inventory average ratio indicate the no. of times the stock has been turnover during the period
and evaluate the efficiency and include firms is able to manage its inventory.

Inventory turnover ratio:- net sales/ average stock.

Year Net sales (lacs) Average stock Ratio
2015-16 89496.32 14009.88 6.38 times
2017-18 119570.57 14890.63 8 times

Interpretation:-
Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually a
high inventory turnover / stock velocity indicates efficient management of inventory. In the year
2009-10 the ratio is greater then the previous. So its shares great satisfactory to the company. Its
shows the stock does not sale quickly and remain in store for the long time.

2) Debtors turnover ratio:-

Drs. Turnover ratio indicates the velocity of debt collection of firm. In simple words , it
indicates the number of times average drs.

29
Drs. Turnover ratio:- net credit annual sales/ average drs.

Year Total sales(lacs) Debtors(lacs) Ratio

2015-16 89496.32 11950.06 7.48
2017-18 119570.57 15165.52 0.78

Interpretation:-
Generally the higher the value of drs. Turnover the more efficient is the management of
drs./ sales or more liquid are the drs. Similarly low drs. Turnover implies inefficient management
of drs. And less liquid debtors.

3) Fixed assets turnover ratio:-

Fixed assets turnover ratio:-- sales / fixed assets

Year Sales(in lacs) Fixed assets Ratio

2015-16 89496.32 72284.30 1.23
2017-18 119570.57 176176.66 .67

Interpretation:-
Fixed assets turnover ratio is the relationship between sales or cost of goods sold and fixed
capital. In the year 2008-09 the ratio i. 1.23 shows the share market efficiency of assets in the
year 2009-10 the ratio derived up to .67 show inefficiency of the fixed assets.

4) Working capital turnover ratio:--

Working capital turnover ratio shows the velocity of the utilization of net working capital.
working.capital ratio. :-- sales /fixed assets
Year Sales (in lacs) Fixed assets Ratio
2015-16 89496.32 191304.93 .46
2017-18 119570.57 88652.41 1.34

30
Interpretation:-
Working capital ratio show the excess of c.a. in year on the working capital of the company
is not good and improving in the year 2009-10.

5) Average collection period:-

The average collection period represent the average no. of days for which a firm has to wait
before its receivable are converted into cash.

Average Collection. Period :- average debtors/ sales per day

Year A.S.(in lacs) Sales per day Ratio

2015-16 11950.63 248.60 90days
2017-18 15165.52 332.14 45 days

Interpretation:-
Generally the shorter the period of average collection period the better is the quality of
debtors. On the year 2008-09 if it is very high in 90 days. it show the inefficient collection
performance. But it improve in the year 2009-10 up to 45 days.

PROFITABILITY RATIO:-

In the words of lord Keynes, ‘’profit is the engine that drives the business enterprise ‘’.
Businesses need profit not only for its existence but also for expansion and diversification. The
investors want an adequate return on their investment .workers want higher wages, crs. Want
higher security for their interest and loan and so on. A business enterprise can discharge its
obligations to the various segments of the socity only through earning of profits. Profits are, thus
a usefull meaeure of overall efficiency of a business. Profits to the management are the test of
efficiency and a measurement of control to owners a measure of worth of their investement to the
cr.the margin of safty .

31
 Generally profitability rarios are calculate either in relation to sales or in relation to
investment the variorus profitability are discussed below:-

1) Gross profit ratio:-

G.P. ratio measure the relationship of gross profit to net sales and is usually represented as a
percentage.

Gross Profit. ratio:-- gross profit /net sales(100)

Year Gross.P. lacs) Net sales Ratio
2015-16 26807.01 89496.32 18%
2017-18 38539.20 11957.57 32%

Interpretation:--
The Gross Profit ratio shows the company is increasing year by year. It shows that change
may be the result of decrease in cost of good sold without increasing in sales revenues as change
in the method of valuation of closing stock.

2.Net Profit Ratio

Net profit ratio establishes a relationship between net profit (after taxes) and sales and
indicates the efficiency or the management in manufacturing selling administrative and other
activities of the firm. This ratio is the overall measure of firm’s profitability and is calculated as:-

Net Profit RATIO:- net profit after tax /net sales (100)
Year N.P. after tax (lacs) Net sales Ratio
2015-16 16355.03 89496.32 18%
2017-18 23584.44 119570.57 19%

32
Interpretation:--
The high net profit margin would assure adequate return to the owners as well as enable to
with stand adverse. Condition when selling price is decline. The ratio is margin improve in the
year 2009 by 1%.

3) Earning per shares:-

E.P.S. is a small variation of return on equity capital and is collected by dividing the net
profit after tax & preference dividend by the total no. of equity share
E.P.S. = net profit after tax – pref. dividend/ no. of equity share.
E.P.S.= 2010(18.86) 2009(14.71)

4) Return on equity :--

Return on Equity. = profit after tax/share holders funds(100)
Year P.A. Tax S.H. fund Ratio
2015-16 16355.03 132450.56 12.3%
2017-18 23584.44 168911.27 14%

Interpretation:--
This ratio is more meaningful to the equity shareholders who are interested to know profit
earned by the company and that profit which can be made available to pay dividend to them. The
ratio to increasing rate at 12.3 to 14% in the year 2009-10 it indicate that firm good return and
satisfactory to share holders.

FINDINGS

1. The liquidity position of the firm is not sound as compared to last year.

2. The solvency position of the firm is satisfactory.

3. The company has raised less debt as compared to last year.

4. The stocks are used efficiently.

33
 5. The working capital usage has also improved this year.

6. The debtor management system is inefficient.

7. The fixed Assets are also not utilized.

8. The gross profit is increasing due to decrease in cost of goods sold.

9. The net profits of the company have increased by 1%.

LIMITATIONS

1. There may be some manipulations in Balance sheet.

2. The ratios derived from interpretation are not sure good or bad indicators of the company.

3. Circumstances may differ from company to company.

4. Company’s actual position can’t be derived from this analysis.

5. Some non-financial sort of data can also be used to locate company’s weak points.

SUGGESTIONS

1. The company should raise its current assets.

2. The company should look for sources of working capital

3. Cash inflow management system should be fast.

4. Company should increase its own funds by creating reserves.

5. The company should have a proper dividend policy.

34
CONCLUSION:--
1) Company has registered a turnover rupees 119570.57 lacs which shows an increase by
33.60% from the previous year.
2) Profit after tax increase rs. 21833.66 lacs during the previous to rs. 23584.44 lacs
represented an increase of 44.20%.
3) Company declare dividend at the rate of rs. 3 per share .
4) Earning per share of the company is rs. 1886 in 2010 which is greater than the previous
year from rs. 14.71.
5) In the year 2010 company redeem the preference share.
6) Cash position decrease in 2010 from rs. 142187.12 lacs to rs. 39322.89 lacs which may
turns into illiquidity.
7) In the year 2010 company investing rs. 68171.95 lacs incorporation in the previous year.

35
  Annexure
Profit & loss a/c for the year ended 30th MAY 2018
( Rs. In lacs)
Particulars Scedule 30th MAY 2018 30th june 2017
Income:--
Sales:- other income 119570.57 89496.32
Expenditure:-
Material manufacturing exp. 9 70958.34 54453.48
Personal exp. 10 5205.15 4188.30
Administration selling exp. 11 2389.08 2021.84
Financial exp. 2478.80 2025.37
Total 81031.37 62688.94
Profit before dep. 38539.20 26807.33
Dep. 6333.92 4973.67
Profit before tax 32205.28 21833.66
Provision for taxation
Current tax 3626.92 1817.76
Deffered tax 4993.92 3660.87
Profit after tax
23584.44 16355.03
Add: accumulated profit
3863.16 38.75
Balance available for app.
27447.60 16393.78
Approprication:--
10000.00 9600.00
Transfer to general reserve
300.37 0.00
Tra. to sinking fund
0.00 130.75
Tra. to prefer share red.reserve a/c
3923.71 2447.62
Tra. to equity share
41.27 0.00
Tra. to tax for previous year
5.62 7.87
Dividend on preference share
667.87 344.38
Provision for dividend tax
12508.76 3863.16
Surplus carried to b/s
18.86 14.71

36
37
Balance sheet as on 30th june 2010(rs. In lacs)
Particulars shedule 30th june 30th june
2010 2009
1) sources of funds
(a) share capital 1 2615.81 2578.37
(b) reserves surplus 2 166295.46 129872.19
2) loan funds
(a) secured 3 10202.70 13472.36
(b) unsecured 117151.16 150783.98
Total 296265.13 296706.90
(1) application of funds:-
Fixed assets
Gran block 4 203469.29 93278.59
Less:- dep. 27292.63 20994.29
Net block 176176.66 72284.30
(2) investment 5
31010.35 32477.85
(3) current assets: loan & 6
Advance
a) current assets
interest rec.
8.87 259.60
stock
15771.39 14009.88
debtors
15165.52 11950.63
cash , bank
39322.89 142187.12
b) loan & advance
44270.79 208767.29
less:- current liab. & provision 7
current liab.
Provision
17669.60 12851.84
Total current liab. & provision
8217.45 4610.52
net current assets
25887.05 17462.36
4) miscellaneous exp.
88652.41 191304.93
total

38
425.71 639.82
296265.13 296706.90

39