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Project Report: Pune University
Project Report: Pune University
PROJECT REPORT
ON
At
54 MIDC, SATPUR
NASIK - 422 007, INDIA.
Submitted to
PUNE UNIVERSITY
By
Mr. HEMANT VISHNUPANT GUNJAL
MBA [FINANCE]
IMRT, NASHIK
1
ACKNOWLEDGEMENT
2
INDEX
CHAPTER 4 CONCLUSION
Conclusion 56
3
Recommendations & Suggestions 58
APPENDEX
a) Bibliography
59
4
1.1 OBJECT OF THE PROJECT
5
6
1.2 SELECTION OF THE TOPIC FOR STUDY
7
OBJECTIVE OF THE STUDY
8
1.3 METHODOLOGY OF THE STUDY
The data collected for the project was in the form of written
as well as verbal information regarding ratio analysis of the
company.
1) Primary data: -
The information about the Company is gathered from the
discussion with the employees/staff and from the web site of the
Company.
2) Secondary data:-
The methodology of this study has been adopted on the following basis:
9
1.5 LIMITATION OF THE STUDY
The time span for the project was very short which was of 2
months, which itself acts as a major constraint. Moreover,
studying the guidelines and applied it practically within such
short time span was a task of great pressure.
10
1.6 UTILITY OF THE STUDY
MBA’s are known for their presentation skills and practical touch
to the theoretical knowledge and are counted in the professionals.
11
12
2.1 INTRODUCTION TO THE ORGANISATION
13
2.2 ORGANIZATIONAL STRUCTURE
Chairman
M.D.
Worker
14
2.3 GENERAL INFORMATION ABOUT THE
ORGANIZATION
HISTORY
15
XLO INDIA LIMITED, Nasik:-
16
17
3.1 MEANING & DEFINITION
Definition:-
18
3.2 INTRODUCTION TO RATIO ANALYSIS
CLASSIFICATION OF RATIOS
Functional classification.
FUNCTIONAL CLASSIFICATION:-
a) Liquidity Ratio
b) Profitability Ratio
19
Liquidity: -
Profitability:-
It’s ability to earn income and sustain growth in both short term
and long term. A company’s degree of profitability is usually based on
the income statement, which reports on the company’s result of
operations.
20
Each group is discussed in detail as under:-
A) Liquidity Ratio:-
As noted above, these ratios measure the liquidity position
of the company, in liquidity ratio there are two types:-
a) Current Ratio
a) Current Ratio :-
It is ascertained as under:-
b) Liquid Ratio:-
21
The quick ratio is a much more exacting measure than the current
ratio. By excluding inventories, it concentrates on the really liquid
assets, with value that is fairly certain. It helps answer the question.
B) Profitability ratio:-
22
2. Net profit ratio: - Popularly known as N.P. ratio, considers the net
profits to sales as under:
As this is profitability ratio, higher the N.P. ratio better will be the
profitability on sales.
It is ascertained as under:
23
C) Activity Ratio or Turnover Ratio:-
It is ascertained as under:
24
b) Assets turnover ratio:-
This ratio indicates the efficient utilization of all assets; i.e. fixed
assets and current assets. It is also called as “Capital turnover ratio.”
It is ascertained ad under:
It is ascertained as under:-
D) Leverage ratio:-
Leverage ratio measures the use of fixed-interest-bearing
securities in magnifying the return on equity capital. It is also called as
financial leverage on trading in equity or debt-equity ratio or capital-
gearing ratio.
It is ascertained as under:-
25
Proprietary ratio:
This ratio measures the proportionate contribution of
proprietor in the total assets.
It is ascertained as under:-
E) Valuation ratio:-
It is also called as pricing ratio. The following are the important
valuation ratio:
It is ascertained as under:-
26
Concept
7) Turnover : Sales/Assets.
Proprietary
9) Ratio : Total Assets/Shareholders fund.
27
3.3 Analysis of data and its Presentation
Balance Sheets
(In Lacs)
LIABILITIES :
Share Capital 149.91 149.91 149.91
Reserves & Surplus 467.53 480.97 504.57
Cash credit 51.33 26.60 22.94
Bills Receivable 73.37 18.35 14.69
Other Secured Loan 5.58 0.00 0.00
Unsecured Loan 160.95 119.15 120.12
Current Liabilities & Provision 328.35 387.69 372.89
CURRENT ASSETS
Inventories 139.60 187.66 164.61
Debtors (Excl. B/D) 423.78 450.72 481.64
Bills Receivable 73.37 18.35 14.69
Cash & Bank 87.94 26.74 69.60
Loans & Advances 53.05 77.44 65.69
Total Current Assets 777.74 760.91 796.23
QUICK ASSETS
Total Current Assets 777.74 760.91 796.23
Less : Inventory 139.60 187.66 164.61
Total Quick Assets 638.14 573.25 631.62
CURRENT LIABILITIES
Cash credit 51.33 26.60 22.94
Bills Payable 73.37 18.35 14.69
Current Liabilities & Provision 328.35 387.69 372.89
28
Total current liabilities 453.05 432.64 410.52
(In Lacks)
NET WORTH
Share Capital 149.91 149.91 149.91
Reserves & Surplus 467.53 480.97 504.57
617.44 630.88 654.48
Less : Misc.exps W/off 0.00 6.32 0.00
Total Net Worth 617.44 624.56 654.48
CAPITAL EMPLOYED
Net Fixed Assets 458.73 414.89 388.34
Current Assets 777.74 760.91 796.23
1236.47 1175.80 1184.57
Less : Current Liabilities 453.05 432.64 410.52
Misc.exps. W/off 0.00 6.32 0.00
Total capital Employed 783.42 736.84 774.05
TOTAL DEBT
Long term secured loans 5.58 0.00 0.00
Long term unsecured loans 160.95 119.15 120.12
Total Debt 166.53 119.15 120.12
INVENTORY
Raw materials 54.58 107.62 81.64
Work in process 61.14 61.74 59.61
Finished Goods 6.21 9.47 14.01
Stores & spares 17.67 8.83 9.35
AVERAGE INVENTORY
Raw materials 61.58 81.10 94.63
Work in process 59.39 61.44 60.68
Finished Goods 10.27 7.84 11.74
Stores & spares 20.03 13.25 9.09
Total Average Inventory 151.27 163.63 176.14
29
Financial Performance
(In lacs)
30
LIQUIDITY RATIO
1) Current ratio
2) Quick ratio
CURRENT RATIO
Calculation of ratios:-
Reporting of Ratios:-
31
CURRENT RATIO
2
1.95
1.9
RATIO 1.85
1.8
1.75
1.7
1.65
1.6
2004 2005 2006
YEAR
Comment:-
1) Thus it has a moderate and sufficient asset to be
converted into cash in order to the companies debts as and when
required.
2) But it can be seen that the current ratio has been increased
from 1.72 to 1.96.
32
Quick Ratio
Reporting of Ratios:-
33
QUICK RATIO
1.6
1.55
1.5
1.45
RATIO
1.4
1.35
1.3
1.25
1.2
2004 2005 2006
YEAR
Comment:-
2) In our case, we can see that the ratio is continuously growing and it is
above one which shows high liquidity.
34
LEVERAGE RATIOS
2) Proprietary ratio
Calculation of ratio:-
Reporting of Ratios:-
35
DEBT- EQUITY
0.3
0.25
0.2
RATIO
0.15
0.1
0.05
0
2004 2005 2006
YEAR
Comment:-
2) Thus we can see that the debt equity ratio of the organization is
decreasing, increasing the protection of creditors.
36
PROPRIETARY RATIO
Calculation of ratio:-
Reporting of Ratios:-
37
PROPRIETORY
0.56
0.55
0.54
0.53
RATIO
0.52
0.51
0.5
0.49
0.48
0.47
2004 2005 2006
YEAR
Comment:-
38
PROFITABILITY RATIOS:-
GROSS PROFIT:-
Calculation of ratio:-
Reporting of Ratios:-
39
GROSS PROFIT
3
2.5
2
Ratio 1.5
1
0.5
0
2004 2005 2006
Year
Comment:-
40
Net profit ratio:-
Calculation of ratio:-
Reporting of Ratios:-
41
NET PROFIT
1.8
1.6
1.4
1.2
RATIO
1
0.8
0.6
0.4
0.2
0
2004 2005 2006
YEAR
Comment:-
1) The ratio is design to focus attaintion on net
profit margin arising from business operation.
42
Return capital employed: -
Calculation of ratio:-
Reporting of Ratios:-
43
RETURN ON CAPITAL EMPLOYEED
25
20
15
RATIO
10
0
2004 2005 2006
YEAR
Comment:-
1) The strategic aim of a company is to earn a return on
capital
44
TURN OVER RATIO
45
INVENTORY TURNOVER RATIO:-
Calculation of ratio:-
Reporting of Ratios:-
46
INVENTORY TURN OVER
16
14
12
RATIO 10
8
6
4
2
0
2004 2005 2006
YEAR
Comment:-
1) Most of the capital is lock up in the inventory of manufacturing
companies.
3) In our case, we can see that day by the ratio is going down
which means the stock turnover period is higher than previous
which may be harmful for the company.
47
ASSET TURNOVER RATIO:-
This ratio indicates the efficient utilization of all assets; i.e. fixed
assets and current assets.
Calculation of ratio:-
Reporting of Ratios:-
48
ASSET TURN OVER
1.84
1.82
1.8
1.78
1.76
RATIO
1.74
1.72
1.7
1.68
1.66
1.64
2004 2005 2006
YEAR
Comment: -
49
Fixed asset turnover ratio:-
Calculation of ratio:-
Reporting of Ratios:-
50
FIXED ASSET TURN OVER
5.3
5.2
5.1
5
RATIO
4.9
4.8
4.7
4.6
4.5
2004 2005 2006
YEAR
Comment:-
1) Among the total capital employed in the form of total
assets, this ratio measures the contribution of fixed assets
in sales and the resultant profitability.
51
VALUATION RATIO
Calculation of ratio:-
2004 = 21.04 / 15
= 1.40
2005 = 11.43 / 15
= 0.76
2006 = 31.49 / 15
= 2.53
Reporting of Ratios:-
52
EPS
2.5
1.5
RATIO
0.5
0
2004 2005 2006
YEAR
Comment:-
53
54
Conclusions:
In this project,
I reviewed following areas of financial ratio analysis research:
55
56
RECOMMENDATIONS AND SUGGETIONS
1) The current ratio is means to the near to the standard current ratio
2:1 but still main point management should consider is that there
is very high amount blocked in debtors as well as the current
liabilities and provisions are pending is high.
57
APPENDIX
BIBLIOGRAPHY
Financial management –
By, Prof. R.P.RASTOGI
www.xloindia.com
58