A SUMMER PROJECT REPORT ON HISTORICAL COMPARISON AND INTERPRETATION OF RATIOS UNDERTAKEN AT: GARDEN SILK MILLS LTD.

SURAT

SUBMITTED BY: MR. RAJNIKANT.M.USADADIYA (MBA BATCH 2009-11) GUIDED BY: MR. LALIT TANK BHAGWAN MAHAVIR COLLEGE OF MANAGEMENT
149, BMEF CAMPUS, B/H.HEENA BUNGALOWS, BHARTHANA, SURAT 395017 (GUJARAT) PH: 0261-3231553

DECLARATION

I hereby declare that the summer project report titled HISTORICAL COMPARISON AND INTERPRETATION OF RATIOS is an original piece of work done by me for the fulfillment of the award of degree of Master of Business Administration and whatever information has been taken from any sources had been duly acknowledged. I further declare that the information received from the company is used for academic purpose only.

Date: July

, 2010 RAJNIKANT M USADADIYA

Place: Surat

ACKNOWLEDGEMENT
I would like to take this opportunity to express my deep sense of gratitude towards my college Bhagvan Mahavir College Of Management, Surat, for giving me this tremendous opportunity to work in the industry for the real time project. I am also thankful to Mr. Bipin Modi (Head of finance department) and Mr. Jayeshbhai Divawala (Assistant manager) of Garden Silk Mills Ltd, Surat. for giving me an opportunity for getting invaluable experience in such reputed organization. At the same time, I am very much thankful to all staff members of Garden Silk Mills for their kind co-operation. I express my sincere thanks to Dr. A S Abani (Director) for his affection, encouragement and support during my training. I am also grateful to Mr. Lalit Tank (Mentor), and other teaching staff and non-teaching staff for their indirect help to complete my research work. I would like to record my special thanks to my parents, friends, and colleagues help me directly or indirectly in preparation of project work.

RAJNIKANT USADADIYA

EXECUTIVE SUMMARY
About the topic One of the most financial tools which has come to be used very frequently for analyzing the financial strengths and weaknesses of the enterprise is ratio analysis. Ratio analysis is a technique of analysis and interpretation of financial statement. It is the process of establishing and interpreting various ratios for helping in making certain decision. Here the topic is Historical comparison and interpretation of ratios, in which comparison of historical data and its interpretation is done with the current year (2008-09). Objectives: The primary objectives for doing this work are as follows. 1. Measuring the profitability of the company. 2. Judging of operational efficiency of company. 3. Assessing the solvency of the company. 4. Measuring short and long term financial position of the company. 5. Facilitating comparative analysis of the performance. The secondary objective of the study is to determine future course of action to improve efficiency of the company. Research Methodology: It is a comparative study on financial data of the company; here the analytical research design is taken as a research methodology for computing the ratios. Data Collection:

The topic of research study is concerned with the annual report of the company and other financial data, so it is secondary data collection method. Conclusion and Findings: Current ratio of the company is 4.06, 4.81, 4.97 and 3.68 respectively. It is over the acceptable norm i.e.2:1 and the company have higher ratio which indicates company can be in better position to meet current obligation. Quick ratio of the company is between2.64to2.31 in last four years. The satisfactory ratio is 1:1. So it can be said that it has satisfactory liquidity position. Debtor turnover ratio is 24.46 times in 2005-06, 24.62 times in 2006-07, and 19.42 times in 2007-08, 17.95 times in 2008-09. The receivables collection period is 15 days, 15 days, 19 days, and 20 days respectively. So collection days are increasing day by day which is weak sign for the company. Stock turnover ratio is 9.62 in 2005-06, 10.47 in 2006-07, 9.19 in 200708 and 7.56 in 2008-09 and holding days is 37 days, 34 days, 39and 48 days respectively. It was highest in the 2008-09 i.e 7.56 when holding days are highest 48 days. In general company make good profit every year and companys efficiency is also good so it is concluded that company made much improvement in 2008-09 compare to last three year. Recommendation: The Company should give more importance to inventory management and try to increase inventory turnover ratio. This will help in reducing inventory costs. As far as cash management is concerned, cash inflow is efficiently undertaken, but improvement in cash out flows i.e. payments & disbursement of cash requires considerable attention. As

managerial point of view, different collection center will be established for prompt collection and centralize payments of money from head bank to various suppliers of materials are required.

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