A Project Report on

“A STUDY ON CAPITAL STRUCTURE AND OTHER FINANCIAL

RATIO’S OF ASCENT HR CONSULTANCY PVT, LTD”

BY

KASHIF KHAN

1NH15MBA72

Submitted to

DEPARTMENT OF MANAGEMENT STUDIES

NEW HORIZON COLLEGE OF ENGINEERING,
OUTER RING ROAD, MARATHALLI,
BANGALORE

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

INTERNAL GUIDE EXTERNAL GUIDE

Dr. AR SAINATH RANJEETH KUMAR DAS
Professor NHCE (Payroll executive ascent hr.)

2015-2017
 CERTIFICATE

This is to certify that Kashif khan bearing 1NH15MBA72 is a bonafide student

of Master of Business Administration course of the Institute 2015-2017,
autonomous program, affiliated to Visvesvaraya Technological University,
Belgaum. Project report on “(A STUDY ON CAPITAL STRUCTURE AND OTHER
FINANCIAL RATIO’S OF ASCENT HR CONSULTANCY PVT LTD)”is prepared by
him under the guidance of Dr. AR SAINATH, in partial fulfillment of
requirements for the award of the degree of Master of Business Administration
of Visvesvaraya Technological University, Belgaum Karnataka.

Signature of Internal Guide Signature of HOD Signature of Principal

 DECLARATION

I, student name , hereby declare that the project report entitled “a study on
capital structure and other financial ratio’s of ascent hr company” with reference
to ascent hr company” prepared by me under the guidance of
Dr. AR SAINATH, faculty of M.B.A Department, New Horizon College of
Engineering.
I also declare that this project work is towards the partial fulfillment of the
university regulations for the award of the degree of Master of Business
Administration by Visvesvaraya Technological University, Belgaum.
I have undergone a summer project for a period of sixteen weeks. I further
declare that this project is based on the original study undertaken by me and has
not been submitted for the award of a degree/diploma from any other University
/ Institution.

Signature of Student
Place:
Date
 ACKNOWLEDGEMENT

I wish to express my heartiest gratitude to our principal MANJUNATH NHCE

having initiated and extended his co-operation, guidance and encouragement
throughout the period of this dissertation.

I extend my heartfelt thanks to SHEELAN MISRA HOD and all teaching

faculty of management department NHCE for their co-operation.

Another word of thanks goes to my guide Dr. AR SAINATH NHCE for their
co-operations and instant support throughout this project.

I am grateful to my parents and my beloved siblings for their constant support

and immense help throughout the study.

I am also thankful to ascent hr team for their encouragement and co-operation in

completing this work.

I am indebted to my friends for their co-operations

Place: Kashif khan

Date: (1NH15MBA72)
 TABLE OF CONTENTS

CHAPTER NO. CONTENTS PAGE NO.

1 INTRODUCTION 1-6
1.1TITLE OF THE STUDY
1.2NEED FOR THE STUDY
1.3 OBJECTIVES OF THE STUDY:
1.4 SCOPE OF THE STUDY
1.5 METHODOLGY OF THE STUDY:
1.6 REVIEW OF LITERATURE
1.7 STATEMENT OF THE PROBLEM
1.8 LIMITATIONS OF THE STUDY

2 PROFILE OF THE COMPANY 7-14

2.1 COMPANY PROFILE
2.2 VISION AND MISSION
2.3 QUALITY POLICY
2.4 PRODUCTS/SERVICES PROFILE AREAS OF
OPERATION
2.5 SWOT ANALYSIS
2.6 FUTURE GROWTH AND PROSPECTS AND
FINANCIAL STATEMENT

3 THEORETICAL BACKGROUND OF 14-19

THE STUDY
3.1 CAPITAL STRUCTURE:
3.2 IMPORTANCE OF CAPITAL STRUCTURE
3.3 TO REDUCE THE OVERALL RISK OF THE
COMPANY
3.4 TO DO AN ADJUSTMENT ACCORDING TO
BUSINESS ENVIRONMENT
3.5 IDEA GENERATION OF NEW SOURCE OF
FUND

4 DATA ANALYSIS AND 20-60

INTERPRETATION
5 SUMMARY OF FINDINGS, 61-64
SUGGESTION & CONCLUSIONS
5.1 FINDINGS:
5.2 SUGGESTIONS AND RECOMMENDATIONS:
5.3 CONCLUSION

BIBLIOGRAPHY 65-70
ANNEXURE
 List of tables:

Tables page no.

4.1 Table showing the current ratio of previous five years 21
4.2 Table showing the liquidity ratio of the company 23
4.3 Table showing quick ratio of the company. 25
4.4 Table showing Working Capital Turnover Ratio 27
4.5 Table shows details about debt equity ratio 29
4.6 Table showing proprietary ratio 31
4.7 Table showing Fixed assets to net worth ratio 33
4.8 table showing interest coverage ratio 35
4.9 Table shows inventory turnover ratio 37
4.10 Table showing Debtors turnover ratio 39
4.11 Table shows Average collection period 41
4.12 Table showing fixed assets turnover ratio 43
4.13 Table showing about total assets a turnover ratio 45
4.14 Table showing about gross profit ratio 47
4.15 Table showing about net profit ratio 49
4.16 Graph showing about Operating Ratio 51
4.17 Table showing about earnings per share 53
4.18 Graph showing the Solvency Ratio 55
4.19 Table show’s Return on Return on Assets 57
4.20 Graph show’s Return on Capital Employed 59
 List of graphs:

Graphs Page no
4.1 .Graph shows the details about current ratio of previous five years 22
4.2 Graph showing the liquidity ratio of ascent hr ltd 24
4.3. Graph showing about quick ratio 26
4.4. Graph showing Working Capital Turnover Ratio 28
4.5. Graph shows details about debt equity ratio 30
4.6. Graph showing proprietary ratio 32
4.7. Graph showing Fixed assets to net worth ratio 34
4.8. Graph showing interest coverage ratio 36
4.9. Graph shows inventory turnover ratio 38
4.10. Graph showing Debtors turnover ratio 40
4.11. Graph shows Average collection period 42
4.12. Graph showing fixed assets turnover ratio 44
4.13. Graph showing about total assets turnover ratio 46
4.14. Table showing about gross profit ratio 48
4.15. Graph showing about net profit ratio 50
4.16 Graph showing about Operating Ratio 52
4.17 Table showing about earnings per share 54
4.18 Graph showing the Solvency Ratio 56
4.19 Table show’s Return on Return on Assets 58
4.20 Graph show’s Return on Capital Employed 60
 1. INTRODUCTION

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 1. INTRODUCTION

1.1TITLE OF THE STUDY:

“A STUDY ON CAPITAL STRUCTURE AND OTHER FINANCIAL RATIO‟S
ASCENT HR CONSULTANCY PVT, LTD”
1.2NEED FOR THE STUDY:
 Finance is that business activity that is concerned with the organization and
conversion of capital funds in meeting financial needs and overall objectives
of a business enterprise.
 Finance is that business activity that is concerned with the organization and
conversion of capital funds in meeting financial needs and overall objectives
of a business enterprise.
 The basis for financial planning, analysis and Decision making is the financial
information.
 Financial information is needed to predict, compare and evaluate the firm‟s
earning ability.
 It is also required to aid in economic decision-making investment and
financial statement or accounting reports.

1.3 OBJECTIVES OF THE STUDY:

 To understand the capital mix of the company.
 To analyze the current ratio, liquidity ratio and quick ratio.
 To study working capital turnover of the company.
 To study the long term solvency of the company.
 To analyze Earning per share of the company.

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 1.4 SCOPE OF THE STUDY

So the project work is confined to finance department only and it addresses the financial tools
which is used to increase of financial performance of the firm. Financial viability, structure
and utilization of capital in the company is also analyzed from 2015-2016

In the modern environment, finance occupies a key position; value of the company represents
financial stamina that it got over the long run. Finance is well defined only when the source is
obtained from profitable funds and scope, the employment of finance, how best it can install
in the business. Broad scope of finance function is concerned with almost all aspects of
business operations. Although it is difficult to set limits to finance function, there are many
number of business decisions, which do not involve finance.

Finance is vast area of facts, principles of practice dealing with various ways of raising and
using it by individuals and others. It deals with how individuals and companies divide their
business income between consumption and how to choose from among the available
investment opportunities and also how they raise money for increased consumption or
investment. It also encompasses the study of financial markets, institutions and activities of
government, with stress on those aspects relating to financial decisions of individuals and
companies. In fact finance is on in dispensable today that it is rightly said that it is the life
blood of an enterprise. Without adequate finance, no enterprise can possibly accomplish its
objectives.

1.5 METHODOLGY OF THE STUDY:

The major purpose of descriptive research is description of the state of affairs as it exists at
present the researcher will be adopting descriptive research technique since the researcher has
no control over the variables and is going work only on the basis of the report provided by the
organization.

Primary Data:

Primary data was collected through informal discussion with the finance manager of the
company.

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 Secondary Data:

Main source of secondary data was Annual reports of the company, standard text
books, relevant journals, reports, magazines and website

PLAN OF ANALYSIS

The data collected will be analyzed with the help of following tools

i. Tables
ii. Graphs
iii. Charts

Apart from these tables, graphs, pie charts various mathematical and statistical tools and
techniques will be used for analysis. From the proposed study, findings and implementations
as well as an arriving at a conclusion will be interpreted. The suggestion is also drawn from
these data.

1.6 REVIEW OF LITERATURE

Under this the researcher presents what is so for known about the problem under
consideration. It enables the researcher to know the different areas covered by various
studies, to concentrate on the areas where little research has been carried out, to look into
various merits and shortcomings of certain studies already completed and to verify the
present findings with that of previous ones. Review of literature includes the information
such as company projects, annual reports, MBA projects etc …

Richard Loth has more than three decades of international experience in banking (Citibank,
Industrial National Bank, and Bank of Montreal), corporate financial consulting, and non-
profit development assistance programs. A company's reasonable, proportional use of debt
and equity to support its assets is a key indicator of balance sheet strength. A healthy capital
structure that reflects a low level of debt and a corresponding high level of equity is a very
positive sign of investment quality.

The Modigliani-Miller theorem, proposed by Franco Modigliani and Merton Miller, forms
the basis for modern thinking on capital structure, though it is generally viewed as a purely

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theoretical result since it disregards many important factors in the capital structure decision.
The theorem states that, in a perfect market, how a firm is financed is irrelevant to its value.
This result provides the base with which to examine real world reasons why capital structure
is relevant, that is, a company's value is affected by the capital structure it employs. Some
other reasons include bankruptcy costs, agency costs, taxes, and information asymmetry. This
analysis can then be extended to look at whether there is in fact an optimal capital structure:
the one which maximizes the value of the firm.

Trade-off theory

Main article: Trade-off theory of capital structure

Trade-off theory allows the bankruptcy cost to exist. It states that there is an advantage to
financing with debt (namely, the tax benefits of debt) and that there is a cost of financing with
debt (the bankruptcy costs and the financial distress costs of debt). The marginal benefit of
further increases in debt declines as debt increases, while the marginal cost increases, so that
a firm that is optimizing its overall value will focus on this trade-off when choosing how
much debt and equity to use for financing. Empirically, this theory may explain differences in
D/E ratios between industries, but it doesn't explain differences within the same industry.

Pecking order theory

Main article: Pecking Order Theory

Pecking Order theory tries to capture the costs of asymmetric information. It states that
companies prioritize their sources of financing (from internal financing to equity) according
to the law of least effort, or of least resistance, preferring to raise equity as a financing means
“of last resort”.

The present research concentrates on risk and return concepts in analyzing the importance of
capital structure with the help financial ratios and also the company financial documents.
This project is done with the intention of examining the impact of risk in achieving the
optimum capital structure.

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 1.7 STATEMENT OF THE PROBLEM

The first and foremost step in the research process is selecting and properly defining a
research problem where the researcher must find the problem and formulate it so that it
becomes researchable.

This study aims at the risk and return relationship between the debts equity funds needed for
the organization. The goal of capital structure is to manage the firm‟s debt and equity in such
a way that available resources are used in an effective way to meet the satisfactory level of
the firm. It deals with the interrelation between debt and equity with the help of ratios.

1.8 LIMITATIONS OF THE STUDY

 The analysis of capital structure management is mainly based on the published annual report
of the company i.e. secondary data. So the data may differ between published and original.
 The study is restricted for a period of 5 years commencing from 2006-2007 to 2010-2011. So,
it shows limited period data are considered.
 Time is one of the main limitations of this study and within this time all aspects cannot be
studied in detail.

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 CHAPTER 2

PROFILE OF THE INDUSTRY AND COMPANY

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 CHAPTER 2
PROFILE OF THE INDUSTRY AND COMPANY

2.1 Company Profile

Ascent Consulting Pvt Ltd established in the year of 2003.

People Management is a key business function that has a direct impact on competitiveness,
efficiency of operations, and long-term profitability of an organization. Which is why,
organizations have been investing enormous time and resources in the HR function, which
diverts focus from the organization‟s core business.

Ascent Consulting precisely addresses this anomaly through its 360 degree HR Management
Solutions that transform the HR service delivery. While these solutions accomplish cost
reduction, greater efficiencies and improved quality, our larger effort is aimed at improving
organizational efficiency and not just creating incremental change.

Ascent has achieved this by building the right mix of skills and knowledge required for an
effective Outsourced HR Management function. Our solutions employ a matrix of
technology, domain expertise, streamlined business workflow, and highly skilled people to
create tangible, measurable, performance improvements throughout the client‟s organization.

Ascent is recognized as one of the most trusted partners in this business by clients around the
world. We work as an extension of our client‟s business. Our management and delivery teams
are passionate about building efficiencies in our clients‟ business.

Our bespoke technology solutions for HR needs are unique in the industry and are backed by
the best of industry practices in Data management, Information Security, Data Privacy,
anywhere access and very user friendly processes.

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2.2 Vision and Mission

Vision
To be recognized as a Result Oriented, Innovative and Dedicated partner to clients,
constantly delivering effective HR Solutions that meet client expectations.

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 Mission
To partner our clients to create a competitive edge by providing the best talent and HR
Solutions, thereby enabling them to focus on their core business.

2.3 Quality Policy

Extensive and proven track record in Executive Search, Recruitment and Selection
Assignments.

Strong database and domain Knowledge.

Quick turnaround time, planning and execution.

Ability to provide recruitment solutions at any operating level in the client organization.

Around 25 Senior Recruitment specialists on board.

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 Commitment to quality and perfection in every assignment undertaken.

Highest level of confidentiality maintained at all levels.

2.4 Products/Services profile areas of operation

1. HR Outsourcing:

As an emerging global leader in the HR Outsourcing space, Ascent provides intuitive and
customized solutions to any enterprise irrespective of its size / scale. Our solutions address
the needs from integrated HR outsourcing solutions or complicated multi country Payroll
services to handling benefits and Compliance services across the world.

Payroll & Compliance

Payroll processing is a mundane, repetitive and data-intense activity which can be a drain on
the productivity, resource utilization and costs, in the HR function of any organization.

Benefits Consulting

Our decade-long experience has helped us develop and deliver tax-efficient Flexible Benefit
structures that meet both the employee‟s needs as well as organizational needs.

Labour Compliances

While designing these solutions, we are cognizant of the fact that every enterprise must be
treated differently when it comes to labour relations.

HR Consulting

Ascent has the knowledge and ability to provide HR consulting solutions across the value
chain, right from acquisition planning to cost optimization to separation management design.

Training Support

Extensive training plans for clients to ensure better management of HR services,

compensation planning, benefits planning, and compliance.

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2. HR AUTOMATION

Ascent‟s HR Automation suite comprises five different applications, built over a knowledge
base of vast experience and real life scenarios.

Power HR

A fully integrated comprehensive real time HR delivery system covering all aspects from
Hire to Leave.

HR Berry

HR Berry is a smaller suite as opposed to Power HR and covers On Boarding, Life Cycle,
Separation, Time and Payroll aspects.

Power Pay

Power Pay is the main Payroll Processing engine that drives our multi-country, Payroll
Processing capabilities.

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Power CMS

Ascent‟s innovative approach is best seen in this product which is a result of our extensive
research and years of experience in handling real life situations.

2.5 SWOT Analysis

Strengths

-monetary assistance provided

-existing distribution and sales networks
-experienced business units

Weaknesses

-future market size

-high loan rates are possible

Opportunities

-new acquisitions
-income level is at a constant increase

Threats

-technological problems
-rising cost of raw materials
-increasing costs
-increase in labor costs
-growing competition and lower profitability

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2.6 Future growth and prospects and financial statement

We are looking for HR professionals who can handle payroll queries and handle HR Help
desk activities.
1. Payroll.
2. Compliance: ESI, PF,PT, Gratuity, Bonus.
3. HR Generalist functions.

Exposure in the following skills:-

a) PHP & MySQL
b) Codeignitor/Cake PHP/Zend framework.
c) OOP (object oriented programming) using PHP.
d) JQuery,CSS, XML

e) Candidate should have strong working knowledge of PowerBuilder.

f) Responsible for development, maintenance and support.

g) Should have strong knowledge of SQL.

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 3. THEORETICAL BACKGROUND OF THE STUDY.

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 3. THEORETICAL BACKGROUND OF THE STUDY.

3.1 Capital structure:

Management can be approached by answering the question, what are the appropriate amount,
mix, structure, and cost of debt and equity to support the organization's strategic financial
goals? Capital structure planning is very important to survive the business in long run. After
simple watching the balance sheet of company, you see two sides of balance sheet.

The whole experienced gained during the Dissertation study was informative, educative,
inspiring for me. It not only gave an exposure to what the work goes in company. It also
shows how much stress involved and the hard work put by this company. This project is deals
with the topic called capital structure it simply means debt and equity mix. Dissertation
project deals with depth knowledge about the topic and also it helps to know what companies
need to have standard debt –equity mix and what exactly Exide industry is using is it helps
the efficiency utilization of various resources funded to the company .

Dissertation study is also helps to know various financial terms influences the organization
and also helps to know the causes and effects relating to departments processes and
organization wholly .with the use of this project it guides to becoming financial managers
about financial matters will get practical experience in the organization it helps in for future.

The crux of the problem is to know and analyze the Sources and Application of Funds
in the corporation to have better picture of financial position of Exide industry Ltd

Ascent HR consulting Pvt Ltd. is one of the top-ranking broking house in India,
with a dominant position in both institutional and retail broking. Ascent HR consulting Pvt
Ltd. is amongst the best-capitalized firms in the broking industry in terms of net worth.
Ascent HR consulting Pvt Ltd. was found in 2003 as small sub-broking unit, with just two
people running the show. Focus on customer-first-attitude, ethical and transparent business
practices respect for professionalism, research based value investing and implementation of
cutting-edge technology has enabled is to blossom into thousand member team.

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This research is aims at to study the methods adopted by the company to have the optimum
capital structure. To examine the changing trend of the capital structure of ascent company.

The present research study is based on descriptive research. The researcher will be adopting
descriptive research technique since the researcher has no control over the variables and is
going work only on the basis of the report provided by the organization.

Major findings from the study are Higher liquidity ratio indicates efficient utilization of
working capital, in this company working capital is very high in the year 2008-09 i.e. 13.30
which is good situation for the firm growth.
The standard debt-equity ratio is 2:1 but the company is ratio less than the standard ratio the
logical conclusion of the firm is not able to use low –cost outsiders funds to magnify their
earnings.
The company is having heavy equity ratio the higher the ratio at the share of the
shareholders in the total capital of company better is the long – term solvency perform of the
company.
The Solvency Ratio represents the company having the ratio of total liabilities to total assets
more satisfactory at stable is the long-term solvency position of a firm.
The company EPS is increasing from the past to present year by year continuously. That is
rupees 80 per share. It attracts investors to invest in equities.
The company has to provide welfare activities to employees like, medical expenses,
education facilities, insurance packages etc. These things are assisting to company to reduce
of payment of taxes.
The company has to increase short term financial resources to increase the assets of the
company.
The company has to plan to increase sales by inviting innovative designs and try to reduce
expenses to increase the operating profit ratio.

3.2 Importance of capital structure

Capital structure planning is very important to survive the business in long run. After simple
watching the balance sheet of company, you see two sides of balance sheet. One side is
liability side and other side is asset side. Liability side is the mixture of finance of company

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which company has collected from internal and external sources and it has been used or will
be used for development of company.

3.3 To reduce the overall risk of the company

When the company makes capital structure before actual getting money from money supplier,
they can do many adjustments for reducing the overall risk. Suppose, they have made capital
structure by adding three sources of fund, one is equity share, and other is debenture and last
is pref. share, it is known that they have to pay debt at its maturity at any cost and its interest
at fixed rate. So, the company will try to get minimum debt in new business because in new
business the rate of return will be less than rate of interest and for getting more loan means
taking high risk of return more amount of interest even there is no profit.

But, if the business succeeds, at that time, they can increase estimated amount of debt by just
changing the value of debt in capital structure (written just for planning) in excel sheet. The
company can easily pay the interest because of higher ROI. At that time the company can
enjoy the trading on equity. But finance manager should also careful watch whether
shareholders are more expected regarding dividend or not because high expectation can be
against the development of the company.

3.4 To do an adjustment according to business environment

Company also adjusts different sources expected amount according to business environment.
Suppose in future, if government of India cuts off his relation with China, from where our
company is getting fund, it will definitely tough for us to get more money from China. But
proper planning of capital structure of future sources will be helpful for us to enlarge our area
for getting money. In finance, it is called maneuverability. It means to create mobility of
sources of fund by including maximum alternatives in planned capital structure. Suppose, if
RBI increases the interest rate, it means your cost for getting debt will be high, at that time,
you can choose any other cheap source of fund.

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3.5 Idea generation of new source of fund
Good planning of capital structure will make versatile to finance manager for getting money
from new sources. If you have studied Wikipedia‟s page of venture capital or private equity
sources, you would precisely understand that how finance managers of company are
generating new and new idea for getting money from public at low risk. Promoters or
managers do 10 minutes meeting with investors and motivate them by showing the special
event which they have made in PPT.

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 4. DATA ANALYSIS AND INTERPRETATION:

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 4. DATA ANALYSIS AND INTERPRETATION:

This chapter deals with the analysis and interpretation with the help of available
graphs and tables in return to ratios to help the organization to use effective use of
debt and equity mix.

4.1 Current Ratio

The current ratio is the ratio of total current assets to total current liabilities. It is calculated
by dividing current asset by current liabilities:

Current Assets

Current Ratio = -----------------------

Current Liabilities

4.1 Table showing the current ratio of previous five years

current
years current assets liabilities ratio
2011-12 1328.74 796.42 1.66
2012-13 911.82 592.87 1.53
2013-14 741.58 486.64 1.52
2014-15 876.47 572.45 1.53
2015-16 575.2 410.23 1.4

Analysis:

The above table shows the information about current ratio that is in 2011-12 current ratio
is1.4 , in 2012-13 ratio is 1.53,in 2013-14 ratio is 1.52,in 2014-15 ratio is 1.53 &in 2010-11
ratio is 1.66.

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4.1 Graph shows the details about current ratio of previous five years

Current ratio
2006/07--2010-11

1.66
1.53 1.52 1.53
1.4

1 2 3
4
5
6
7

Inference:

The above graph shows that details about Current ratio of the company. it is increasing
from2011-12 -1.4 but in 2012-13 it has decreased to 1.52 because of less financial resources
and later on it has increased to1.66 in 2015-16 year

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Absolute Liquid Ratio OR Cash Ratio

Absolute liquid Assets include cash in hand and at bank and marketable securities or
temporary investment. The acceptable norms for this ratio is 50%or 0.5:1or 1:2

Absolute liquid assets

Absolute Liquid Ratio = ------------------------------

Current liabilities

4.2 Table showing the liquidity ratio

years liquid assets current liabilities ratio

2011-12 469.79 796.42 0.58
2012-13 304.23 592.87 0.51
2013-14 303.11 486.64 0.62
2014-15 305.73 572.45 0.53
2015-16 178.59 410.23 0.43

Analysis:

The above table shows the position of the liquidity ratio. That is in 2011-12 liquidity ratio is
0.43, in 2015-16 it is 0.53, in 2014-15 it is 0.62, in2013-14 it is0.51& in 2011-12 it is0.58

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4.2 Graph shows about details of liquidity ratio

liquidity ratio
Series1

0.62
0.58
0.51 0.53
0.43

Inference:

The above graph shows informs that Liquidity ratio has increased from 2011-12 to 2012-13
that has 0.43 to 0.62, in 2014-15 it has decreased to0.51 &it is increasing slowly to next year
at 0.58 and shows the position of the liquidity of the company.

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Acid-Test / Quick Ratio

The acid-test ratio is the ratio between quick current assets and current liabilities and
is calculated by dividing the quick assets by the current liabilities

Quick Assets

Acid-Test Ratio = -----------------------

Current Liabilities

4.3 Table showing quick ratio

years 2011-12 2012-13 2013-14 2014-15 2015-16

quick assets 30.21 46.51 72.09 50.47 103.26
liquid liability 410.23 572.45 486.64 592.87 796.42

ratio 0.074 0.081 0.148 0.085 0.129

Analysis:

The above table indicates that the Acid Test/ quick/ Ratio in the years from 2011 to 2016.
The quick ratio it was decreased and the year of 2014-15 up to0.085, the ratio of Acid Test
Ratio is flexible up to0.129 in last year.

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4.3 Graph showing about quick ratio

Quick ratio
0.148
0.129

0.081 0.085
0.074

1 2 3 4 5 6

Inference:

The above graph indicates the details of quick ratio. it has decreased up to 0.085 in the year
of 2014-15 up to comparing .074, .081, .148, the ratios are less than the ideal or standard
ratio of 1:1 the conclusions is that the concern is not liquid that is the ability of the concern to
pay its short term liabilities is difficult. The firm must maintain ideal ratio this position

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Working capital turnover ratio

Net working capital (NWC) represents the excess of current assets over current liabilities. It
is frequently employed as measure of company‟s; liquidity position. Greater is the amount of
NWC, the greater is the liquidity of the firm accordingly, and NWC is a measure of liquidity.

Sales

Working Capital Turnover Ratio = ---------------------------

(Net) Working Capital

4.4 Table showing Working Capital Turnover Ratio

years 2011-12 2012-13 2013-14 2014-15 2015-16

sales 1870.32 2844.93 3393.02 3794 4553.6
net w.c 164.97 304 254.94 318.95 532.32
ratio 11.33733 9.358322 13.30909 11.89528 8.554253

ANALYSIS:

The above table shows and also explains that the working capital Ratio is decreased in the
year of 2012-13, in 2013-14 it has increased and up to 2015-16 the ratio of working capital is
decreased year by year.

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4.4 Graph showing Working Capital Turnover Ratio

working capital turnoer ratio

13.30909234
11.89528139
11.33733406

9.358322368
8.554253081

11-12 12-13 13-14 14-15 15-16

INFERENCE:

The above graph gives working capital turnover ratio indication to the velocity of utilization
of net working capital the ratio measures the efficiency with which the working capital is
being used by a firm. Higher ratio indicates efficient utilization of working capital, here
working capital is very high i.e. 13.30 which is not good situation for the firm. And later on it
has decreased.

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Debt -Equity Ratio

The relationship between borrowed funds and owner‟s capital is a popular measure of the
long-term financial solvency of a firm. This claims of creditors and shareholders against the
asset of the firm. Alternatively, this ratio indicates the relative proportions of debts and equity
in financing the assets of a firm.

Total Debt

Debt-Equity Ratio = -------------------------

Shareholder’s Equity

4.5 Table shows details about debt equity ratio

2014-
year 2011-12 2012-13 2013-14 15 2015-16
loan funds 324.7 349.81 317.18 89.99 2.15
shareholders‟
funds 670.46 1026.35 1250.35 2219.77 2742.45
ratio 0.484294 0.340829 0.253673 0.04054 0.000784

ANALYSIS:

The above table shows that the Debt-equity Ratios in the years of 2011-12 to 2015-16.The
Ratio of Debt-equity are decreased contentiously for all the previous years.

NHCE-2017 Page 29
4.5 Graph shows details about debt equity ratio

Debt equty ratio

0.000783971

0.040540236

0.253672972

0.340829152

0.484294365

INFERENCE:

The above graph informs that Comparing the standard ratio of the debt equity ratio is less
than standard ratio. The standard ratio is 1:1 and the company is ratio less than the standard
ratio the logical conclusion is the firm has not been able to use low –cost outsiders funds to
magnify their earnings.

NHCE-2017 Page 30
Proprietary Ratio

Still another variant of the D/E Ratio is to relate owner‟s funds with total assets. This is called
the proprietary Ratio. The ratio indicates the proportion of total assets financed by owner‟s
symbolically it is equal to:

Proprietor’s Funds

Proprietary Ratio = ------------------------- X 100

Total Assets

4.6 Table showing proprietary ratio

2012- 2013- 2015-

year 2011-12 13 14 2014-15 16
equity 670.46 1026.35 1250.35 2219.77 2742.45
total assets 1039.81 1424.06 1608.73 2368.76 2812.1
ratio in
% 64.47909 72.0721 77.7228 93.71021 97.5232

ANALYSIS:

The above table shows that the Proprietary Ratio in the years from 2011-12 to 2015-16. The
Ratio is increased year by year.

NHCE-2017 Page 31
4.6 Graph showing proprietary ratio

Proprietary ratio
97.5232033
93.71021125

77.72279997
72.0721037
64.47908753

INFERENCE:

The above table shows that ratio represents the relationship of owner fund to total assets,
here the company is having heavy equity ratio the higher the ratio at the share of the share
holders in the total capital of company better is the long – term solvency perform of the
company. That is increased year by year.

NHCE-2017 Page 32
Fixed assets turnover ratio:

Which expresses the relationship between the net worth and fixed assets? It indicates
efficiency with which firm uses its fixed assets to generating net worth then it is known as
fixed assets to net worth ratio.

Fixed assets

Fixed assets to net worth ratio = -------------------------

Net worth

4.7 Table showing fixed assets to net worth ratio

year 2011-12 2012-13 2013-14 2014-15 2015-16

net fixed assets 496.83 601.77 685.31 714.44 901.81
shareholder funds 670.46 1026.35 1250.35 2219.77 2742.45
ratio in
% 74.10285 58.63205 54.80945 32.18532 32.88337

ANALYSIS:

The above table shows that the Fixed assets to net worth ratio in the years from 2006-07 to
2010-11. The Ratio is increased year by year. It has decreased year by year.

NHCE-2017 Page 33
4.7 Graph showing fixed assets to net worth ratio

Fixed assets to networth ratio

74.10

58.63
54.80

32.18 32.88

INFERENCE:

The above graph informs that fixed assets to net worth ratio gives relationship between fixed
assets to net worth. It indicates efficiency with which firm uses its fixed assets to generating
net worth. Graph shows the ratio is decreasing from year by year this views company equity
is more up to current year 2015-16.

NHCE-2017 Page 34
Debt service ratio or interest coverage ratio

Net income to debt service ratio or simply debt service ratio is used to test the debt- servicing
capacity of a firm. The ratio is also known as interest coverage ratio or coverage ratio or fixed
charges or time interest earned. This ratio is calculated by dividing the net profit before
interest and taxes by fixed interest charges.

Net Profit (before interest and taxes)

Debt service ratio= -------------------------------------------------- X100

Fixed Interest

4.8 Table showing interest coverage ratio

2013-
year 2011-12 2012-13 14 2014-15 2015-16
EBIT 235.2 374.32 435.39 810.59 893.43
fixed interest
charges 27.7 37.4 47.89 10.29 5.73
ratio 8.490975 10.00856 9.09146 78.77454 155.9215

ANALYSIS:

The above table shows that the Fixed assets to net worth ratio in the years from 2011-12 to
2015-16. The Ratio of 2015-16, it has increased up to 155% it shows that the firm much
interest paid to outsiders. The year by year it has decreased.

NHCE-2017 Page 35
4.8 Graph showing interest coverage ratio

Intrest coverage ratio

180
160 155.92
140
120
ratio in %

100
80 78.77
60
40
20
8.49 10.00 9.09
0
years

INFERENCE:

The graph shows that the company interest coverage ratio indicates the number of times
interest is covered by the profits available to pay to interest charges. But a too high interest
coverage ratio not good for the firm because it may implies that firm is not using debt as a
sources of finance. The logical conclusion higher the ratio safer is the long term creditors
because even if earnings of the firm fall, the firm shall be able to meet its fixed interest
charges.

NHCE-2017 Page 36
Inventory turnover or stock turnover ratio

Every firm has to maintain a certain levels of inventory of finished goods so as to be able to
meet the requirements of the business. But the level of inventory should neither be too high
nor too low

Net Sales

Inventory Turnover Ratio = -------------------

Inventory

4.9 Table shows inventory turnover ratio

2011- 2012- 2013- 2014- 2015-

year 12 13 14 15 16
COGS 1609.35 2147.47 3231.63 3797.96 3731.15
Avg inventory 234.65 319.16 483.67 504.6 522.62
ratio 6.858 6.728 6.681 7.526 7.139

ANALYSIS:

The above table shows that the Inventory Turnover Ratio in the years from 2011-12 to 2015-
16. The ratio of Inventory Turnover Ratio is increased year by year.

NHCE-2017 Page 37
4.9 Graph shows inventory turnover ratio

Inventory turnover ratio

6.858 6.728 7.526
6.681 7.139

2011-12
2012-13
2013-14
2014-15
2015-16

INFERENCE:

The above graph indicates that the inventory turnover ratio denotes the speed at which the
inventory will be converted in to sales there by contributing for the profit of the concern and
also shows that efficiency of its management. The logically conclusion is the ratio is
increased year by year the higher the ratio is better it is because it shows that finished stock is
rapidly turned- over.

NHCE-2017 Page 38
Debtors’ turnover ratio:

It indicates the no of times average Drs are turned over during the yr. it shows the
relationship between credit sales &Drs of the firm.

Total sales

Debtors turnover ratio = ---------------------

Closing Drs& receivables

4.10 Table showing Debtors turnover ratio

year 2011-12 2012-13 2013-14 2014-15 2015-16

sales 1870.32 2844.93 3393.02 3794 4553.6
sundry Drs &
bills 148.38 259.21 231.02 254.58 366.53
ratio 12.60493 10.97539 14.68713 14.90298 17.88672

ANALYSIS:

The above table shows that the Inventory Turnover Ratio in the years from 2011-12 to 2015-
16. The ratio of Inventory Turnover Ratio is decreased to10.97 in 2012-13 year and later on it
has increased year by year.

NHCE-2017 Page 39
4.10 Graph showing Debtors turnover ratio

Debtors turnover ratio

17.88671537

10.97538675 14.90297745
14.68712666

1
12.60493328

INFERENCE:

The above graph informs that the Drs Turnover ratio indicates the no. of times average Drs
are turned over during the year. In2011-12 ratio is 12.60 in next year it came to10.97 due to
increase in Drs. From 2012-13 to2014-15 ratio has increased to17.88 it implies duration
speed of which Drs is collected . It is good for the firm

NHCE-2017 Page 40
Debt collection period ratio:

Debt collection period ratio shows the average time taken by the firm to collect by the firm to
collect the debts .this ratio measures the liquidity of the firm‟s Drs is the average collection
period

365

Avg collection period = --------------------

Drs Turnover ratio

4.11 Table shows Avg collection period

year 2011-12 2012-13 2013-14 2014-15 2015-16

annual days 365 365 365 365 365
Drs turnover ratio 12.60493 10.97 14.68 14.9 17.88
days 28.95692 33.27256 24.86376 24.49664 20.41387

ANALYSIS:

The above table shows that the Avg collection period in the years from 2011-12 to 2015-
16.it indicates the no. of day‟s average collection of Drs in a year .i.e. 29, 33, 25, 24, 20 days
respectively.

NHCE-2017 Page 41
4.11 Graph shows Avg collection period

Avg collection period

28.95 33.27 24.86 24.49 20.41

INFERENCE:

The graph shows that avg collection period has In 2011-12 it was 29 days, in the year2012-
13 it became 33 days due to increase in Drs. In2013-14 it is 25 days, in 2014-15 it is 24 days ,
in2015-16 it is 20 days. It implies duration speed of which Drs is collected. It is good &leads
to efficiency for the firm.

NHCE-2017 Page 42
Sales to Fixed Assets (or Fixed Assets Turnover) Ratio:

This ratio measures the efficiency of the assets use. The efficient use of assets will generate
sales per rupee invested in all the assets of a concern. The inefficient use of the assets will
result in low sales volume coupled with higher overhead charges and underutilization of the
available capacity

Sales

Fixed assets turnover ratio = -----------------

Fixed assets

4.12 Table showing fixed assets turnover ratio

year 2011-12 2012-13 2013-14 2014-15 2015-16

sales 1870.32 2844.93 3393.02 3794 4553.6
net fixed assets 496.83 601.77 685.31 714.44 901.81
ratio 3.764507 4.727604 4.951073 5.310453 5.049401

ANALYSIS:

The above table shows that the Avg collection period in the year from 2011-12 to 2015-16.
In this table fixed assets turnover ratio is increasing from the year 2011-12 to 2015-16 that is
3.7, 4.7,4.9,5.3,5.4 units respectively.

NHCE-2017 Page 43
4.12 Graph showing fixed assets turnover ratio

fixed assets turnover ratio

5.310452942
4.951073237 5.04940065
4.727603569

3.764506974

11

INFERENCE:

This graph shows fixed assets turnover ratio is increasing from the year 2011-12 is 3.7units,
2012-13 that is, 4.7units , 2013-14 is 4.9units, 2014-15 is5.3units,2015-16 is5.4 units
respectively.

NHCE-2017 Page 44
Total assets turnover ratio:

Sales
Total assets turnover ratio = --------------------
Total assets

4.13 Table showing about total assets turnover ratio

2012- 2013-
years 2011-12 13 14 2014-15 2015-16
sales 1870.32 2844.93 3393.02 3794 4553.6
total assets 1039.81 1424.06 1608.73 2368.76 2812.1
ratio 1.798713 1.99776 2.10913 1.601682 1.619288

ANALYSIS:

The above table shows that the total assets turnover ratio in the year from 2011-12 to 2015-
16. It shows that ratio increased from 1.79 to 2.1 for first 3 years and later in2010-11, 2014-
15 it has in constant change that is 1.6 units.

NHCE-2017 Page 45
4.13 Graph showing about total assets turnover ratio

Total assets turnover ratio

2.5

1.5

0.5

INFERENCE:

The above table shows the efficiencies of the company in better utilization of its fixed assets.
The ideal ratio is 1 times. The above graph shows that from 2011-12 to 2014-15 ratios is
increasing due to increase in total assets. In2013-14 it was decreased to a.6 units because of
underutilization of total assets. In 2015-16 it has constant that is 1.61 it means that the
efficient utilization of total assets to generate sales.

NHCE-2017 Page 46
Gross profit ratio:

Higher the ratio the better it is the low ratio indicate unfavorable trend in the form of
reduction in selling prices not in accompanied by proportionate decrease in cost of goods Or
increase in cost of production. The gross profit should be adequate to cover fixed expenses,
dividends and building up of reserves.

Gross profit
Gross profit ratio = ---------------- *100
Sales

4.14 Table showing about gross profit ratio

2011-12 2012-13 2013-14 2014-15 2015-16

years
GP 235.2 374.32 435.39 810.59 893.83
sales 1870.32 2844.93 3393.02 3794 4553.6
ratio in
% 12.57539 13.15744 12.83193 21.36505 19.62908

ANALYSIS:

The above table shows that the gross profit ratio in the year from 2006-07 to 2010-
11.in2006-07 it is 12%, in2007-08 it is 13%, in2008-09it is decreased to 12%, in2009-10 it
is21% and in2010-11 it has again decreased to19%.

NHCE-2017 Page 47
4.14 Table showing about gross profit ratio

Gross profit ratio

21.36505008
19.62908468

12.57538817 13.15744148 12.83193144

1 1 1

INFERENCE:

The above graph indicates the Gross profit ratio of the company shows increasing trend,
which is an indication of good results. In the year 2011-12 it is 12%, in 2012-13 it is 13%, in
2013-14 it is decreased to 12%, due to increase cost of production. In 2014-15 it is increased
to21% because of increase in sales. And in2015-16 it has again decreased to19% due increase
in cost of production...

NHCE-2017 Page 48
Net profit ratio:

Net profit ratio establishes a relationship between net profit (after tax) and sales, and
indicates the efficiency of the management in manufacturing, selling, administrative and
other activities of the firm. This ratio is overall measures of firm‟s profitability and is
calculated as:
Net profit
Net profit ratio = ------------------*100

Sales

4.15 Table showing about net profit ratio

2014- 2015-
2011-12 2012-13 2013-14 15 16
years
NP 155.2 250.32 284.39 537.09 666.36
sales 1870.32 2844.93 3393.02 3794 4553.6
ratio in
% 8.298045 8.798811 8.381619 14.1563 14.6337

ANALYSIS:

The above table shows that the net profit ratio in the year from 2011-12 to 2015-16.the net
profit ratio is in8% for three years i.e. 2011-12, 2012-13, 2013-14. And next two years it has
increased to 14%.

NHCE-2017 Page 49
4.15 Graph showing about net profit ratio

Net profit ratio

14.63369642

14.15629942

8.381618735

8.798810516

8.298045254

INFERENCE:

The above graph shows net profit ratio is increasing in the current year, the last 1 years; it is a
good sign of progress of the company. The ratio of the firm shows a fluctuating trend and it is
not a good sign for the organization. In 2011-12, 2012-13,2013-14 net profit ratio is 8% due
to constant sales,in2014-15,2015-16 it has increased to 14.634% due to increase of sales.

NHCE-2017 Page 50
Operating Ratio:

It is obtained by dividing contribution, i.e., sales minus variable cost, by the EBIT, i.e.
earnings before interest and tax.

Operating Cost

Operating Ratio= _________________ x 100

Net Sale

4.16 Table showing about Operating Ratio

2011-12 2012-13 2013-14 2014-15 2015-16

years
OPP 184.79 368.73 565.39 861.68 1182.8
sales 1870.32 2844.93 3393.02 3794 4553.6
ratio in
% 9.880127 12.96095 16.66333 22.71165 25.97505

ANALYSIS:

The above table shows that the operating ratio in the year from 2006-07 to 2010-11 .that
has increased from 9.88 to 25.97 units.

NHCE-2017 Page 51
4.16 Graph showing about Operating Ratio

operating ratio

25.97505271
22.71164997
16.66332648
12.96095159

1
9.880127465

2006-07 2007-08 2208-09 2009-10 2010-11

INFERENCE:

The above graph informs that the operating ratio in the year from 2006-07 to 2010-11. That
has increased from 9.88 to 25.97 units. The operating ratio is considered to be a yard stick of
operating efficiency but if should be used cautiously because if may be affected by a number
of uncontrollable factors beyond the control of the firm. The researcher suggest to firm
higher the operating ratio the less favorable and less operating ratio is more favorable in case
of interest paid and income tax.

NHCE-2017 Page 52
Earnings per share:

The ratio measures the profit available to the equity share holders on a per share basis that is
the amount that they can get on every share held. The ratio between net profit after tax and
number of equity shares is called as EPS.

Profit after tax

Earnings per share = ----------------------------- [rupees]

No. of shares

4.17 Table showing about earnings per share

2012-
2011-12 13 2013-14 2014-15 2015-16
years
NP 155.2 250.32 284.39 537.09 666.36
equity shares 75 80 80 85 85
EPS 2.069333 3.129 3.554875 6.318706 7.839529

ANALYSIS:

The above table shows that the earnings per share in the year from 2006-07 to 2010-11.table
expresses the details about net profit earned and equity shares both items relation is called
earnings per share in rupees

NHCE-2017 Page 53
4.17 Graph showing about earnings per share

EPS

7.839529412

6.318705882

3.554875
3.129
2.069333333
1, 1
2006-07 2007-08 2008-09 2009-10 2010-11

INFERENCE:

The above graph shows EPS is increased from 2006-0 7 as 2.06 ,2007-08 as 3.12 to2008-08
stable is3.55 and later increased to 2010-11 that is 7.83.which tells that company EPS is
higher leads good returns for equity share holders.

NHCE-2017 Page 54
Solvency ratio or ratio of total liabilities to total assets

The term „solvency‟ refers to the ability of a concern to meet its long term obligations. The
long-term indebtedness of a firm includes debenture holders. Financial institutions providing
medium and long-term loans and other creditors selling goods on installment basis

Total Liability to outsiders

Solvency Ratio = ------------------------------------ X 100

Total Asset

4.18 Tale showing the Solvency Ratio

YEARS TOTAL TOTAL RATIO

LIABILITY ASSET
TO
OUTSIDERS
2011-12 2.15 2812.1 0.076
2012-13 89.99 2368.76 3.799
2013-14 317.18 1608.73 19.71
2014-15 349.81 1424.06 24.56
2015-16 324.7 1039.81 31.22

ANALYSIS:

The above table shows that the solvency Ratio in the years from 2006-07 to 2010-11. The
Ratio of 2006-07, it was 31.22. The rest of the four year will be decreased year by year. It
means the outsiders fund is also decreasing in capital.

NHCE-2017 Page 55
4.18 Graph showing the Solvency Ratio

Solvency Ratio

31.22

24.56

19.71

3.799

0 0.076

INFERENCE:

The graph shows that solvency ratio represents the company having the ratio of total
liabilities to total assets more satisfactory at stable is the long-term solvency position of a
firm. The list of the five years is decreased from 31.22, 24.56, 19.71, 3.79 & 0.076
respectively year by year. It means the outsiders fund is also decreasing in capital mix.

NHCE-2017 Page 56
Return on Assets Ratio:

Here, The Profitability Ratio is measured in terms of the relationship between net profit and
assets. The ROA may also be called profit-to-asset, according to the purpose and intent of the
calculation of the ratio.

The ROA measure the profitability of the total funds/investments of a firm. It, however,
throws no light on the profitability of the different sources of funds which finance the total
assets.

Net profit

Return on Assets = ---------------- X 100

Total Assets

4.19 Table show’s Return on Return on Assets

YEARS NET PROFIT TOTAL ASSETS RATIO

2011-12 666.36 2812.1 23%
2012-13 537.09 2368.76 22%
2013-14 284.39 1608.73 17%
2014-15 250.32 1424.06 15%
2015-16 155.2 1039.81 14.92

ANALYSIS:

The above table shows that the Return On assets Ratio in the years from 2006-07 to 2010-
11. The return on assets Ratio. It has increased year by year, Return On assets Ratio is varies
in last five years.

NHCE-2017 Page 57
4.19 Graph show’s Return on Assets

Return on Assets
2006-07
14%

2007-08
2010-11
15%
23%
2008-09
17%

2009-10
22%

INFERENCE:

The graph shows that the return on assets ratio. finally the company‟s‟ asset utilization ratio
is satisfactory because the total income of the company is increased to comparing 2006-07
i.e. 14% year and ratio is increased to15%,17%,22%,23% respectively. So the firm can take
care about efficient utilization of assets of the company.

NHCE-2017 Page 58
Return on Capital Employed:

Return on capital employed establishes the relationship between profit and the capital
employed. It is the primary ratio and is most widely used to measure the overall profitability
efficiency of a business. The term capital Employed refers to the total investments made in a
business and can be defined in a following way.

Net Profit

Return on Capital Employed = -----------------------

Capital employed

4.20 Table show’s Return on Capital Employed

YEARS NET PROFIT TOTAL ASSETS RATIO

2011-12 666.36 2812.1 0.23
2012-13 537.09 2368.76 0.22
2013-14 284.39 1608.73 0.17
2014-15 250.32 1424.06 0.15
2015-16 155.2 1039.81 0.14
.

ANALYSIS:

The above table shows that the Return on Capital Employed Ratio in the years from 2006 to
2011. Return on Capital Employed Ratio is decreased in last five years.

NHCE-2017 Page 59
4.20 Graph show’s Return on Capital Employed

Return on Capital Employed

NET PROFIT RATIO

2006-07 0.14

2007-08 0.15

2008-09 0.17

2009-10 0.22

2010-11 0.23

INFERENCE:

The above graph shows that the return on capital employed of the firm shows an increasing
flow. This ratio shows a increase from 2006-07 that 0.14, 0.15, 0.17, 0.22, 0.23 respectively
up to 2010-11.due to various factors like increase in profit margin, inventory

NHCE-2017 Page 60
 5. SUMMARY OF FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

NHCE-2017 Page 61
 5. SUMMARY OF FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

5.1 FINDINGS:

 The debt equity ratio of the company is constantly decreasing. The firm has not been
able to use low –cost outsiders funds to magnify their earnings.
 Current ratio of the company is increasing in the year 2013-14 that is 1.66 units because of
effective utilization of financial resources
 The quick ratios are less than the ideal or standard ratio of 1:1 the conclusions is that the
concern is not liquid that is the ability of the concern to pay its short term liabilities is
difficult. The firm must maintain ideal ratio this position.
 Higher liquidity ratio indicates efficient utilization of working capital; here working capital is
very high in the year 2013-14 i.e. 13.30 which is good situation for the firm growth.
 The company is having heavy equity ratio the higher the ratio at the share of the
shareholders in the total capital of company better is the long – term solvency perform of the
company.
 Fixed assets to net worth ratio shows the ratio is decreasing from year by year this views
company equity is more up to current year2013-14.
 The company interest coverage ratio indicates the number of times interest is covered by the
profits available to pay to interest charges
 Average collection period duration speed of which there is collected .it is good &leads to
efficiency for the firm.
 Total assets turnover ratio in 2014-15 it has constant that is 1.61times. it means that the
efficient utilization of total assets to generate sales
 The Net profit ratio shows an increasing in the current year& the last 1 year it is a good sign
of progress of the company. The ratio of the firm shows a fluctuating trend and it is not a
good sign for the organization.
 The return on capital employed of the firm shows an increasing flow. This ratio shows an
increase from 2014-15 that 0.14, 0.15, 0.17, 0.22, 0.23 respectively up to 2015-16. It means
investors can get good profits.

NHCE-2017 Page 62
 The long term Solvency Ratio represents the company having the ratio of total liabilities to
total assets more satisfactory at stable is the long-term solvency position of a firm.
 The company EPS is increasing from the past to present year by year continuously. That is
rupees 80 per share. It attracts investors to invest in equities.

5.2 SUGGESTIONS AND RECOMMENDATIONS:

 The company has to increase selling prices and decrease the cost of the goods and attract
customers by introducing innovative models for earning expected rate of returns.

 In the net profit ratio at the year 2015 the higher ratio shows better profitability of the
company. The increasing of net profit is depends upon the investment or capital of the
company. The company has to focus on investment of capital.

 The company has to plan to increase sales by inviting innovative designs and try to reduce
expenses to increase the operating profit ratio.

 According to the pecking order theory the ratio shows there is positive relationship between
size and profitability because the firm prefer over equity and less debt.

 The company has to provide welfare activities to employees like, medical expenses,
education facilities, insurance packages etc. These things are assisting to company to reduce
of payment of taxes.

 The company has to increase short term financial resources to increase the assets of the
company.

NHCE-2017 Page 63
 5.3 CONCLUSION

Capital structure refers to the mixture of debt and equity. It is a purpose of decision making
by the corporate managers of company size, profitability, risk of the firm. The ascent
company has a capable to utilization of funds to meet organizational needs and goals. The
company has a short term financial resources to increase of total assets of the industry. The
company aims to forecast of innovative client satisfaction for increasing of company
performance as well as net profit.

 Firm has to increases the shareholder‟s wealth by increase in the Earnings per share.
 The long term solvency position of the company has shown a recurrent increase.

NHCE-2017 Page 64
 ANNEXURE:

Dear Sir/Madam,
I am Kashif khan a student of “New Horizon College of Engineering” - MBA Program,
final year MBA (Finance) doing a project in Ascent Consulting Pvt. Ltd., Bangalore which
is an important part of my curriculum.

The topic of my project is “A STUDY ON CAPITAL STRUCTURE AND

OTHER FINANCIAL RATIO’S OF ASCENT HR CONSULTANCY PVT,
LTD.” Under the guidance of (Dr AR SAINATH)

NHCE-2017 Page 65
Balance sheet as on 2012-16

------------------- in Rs. Cr. -------------------

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
12 moths 12 moths 12 moths 12 moths 12 moths
Sources Of Funds
Total Share Capital 85.00 85.00 80.00 80.00 75.00
Equity Share Capital 85.00 85.00 80.00 80.00 75.00
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 2,630.25 2,104.51 1,137.75 909.45 552.98
Revaluation Reserves 27.20 30.26 32.60 36.90 42.48
Net worth 2,742.45 2,219.77 1,250.35 1,026.35 670.46
Secured Loans 0.06 0.17 179.62 272.40 277.87
Unsecured Loans 2.09 89.82 137.56 77.41 46.83
Total Debt 2.15 89.99 317.18 349.81 324.70
Total Liabilities 2,744.60 2,309.76 1,567.53 1,376.16 995.16
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
12 moths 12 moths 12 moths 12 moths 12 moths
Application Of Funds
Gross Block 1,561.15 1,336.46 1,256.70 1,097.47 946.15
Less: Accum.
725.31 659.78 588.70 542.36 480.32
Depreciation
Net Block 835.84 676.68 668.00 555.11 465.83
Capital Work in Progress 65.97 37.76 17.31 46.67 31.01
Investments 1,377.97 1,335.37 668.18 518.28 378.01
Inventories 858.95 606.77 438.47 570.74 396.61
Sundry Debtors 366.53 254.58 231.02 259.21 148.39
Cash and Bank Balance 14.78 2.88 33.71 1.68 1.42
Total Current Assets 1,240.26 864.23 703.20 831.63 546.42
Loans and Advances 102.64 54.96 62.64 57.16 37.82
Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Total CA, Loans &
1,342.90 919.19 765.84 888.79 584.24
Advances

NHCE-2017 Page 66
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 741.92 560.70 445.89 527.29 379.80
Provisions 136.16 98.54 105.91 105.39 84.12
Total CL & Provisions 878.08 659.24 551.80 632.68 463.92
Net Current Assets 464.82 259.95 214.04 256.11 120.32
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 2,744.60 2,309.76 1,567.53 1,376.17 995.17
Contingent Liabilities 123.21 59.75 9.96 2.03 34.88
Book Value (Rs) 31.94 25.76 15.22 12.37 8.37

Source : Dion Global Solutions Limited

NHCE-2017 Page 67
 BALANCE SHEET as on 2012-16 ------------------- in Rs. Cr. -------------------

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

12 moths 12 moths 12 moths 12 moths 12 moths

Income
Sales Turnover 5,558.43 4,542.06 4,233.65 3,603.66 2,381.10
Excise Duty 483.83 326.09 472.37 449.10 299.69
Net Sales 5,074.60 4,215.97 3,761.28 3,154.56 2,081.41
Other Income 150.23 6.89 -9.19 9.36 11.62
Stock Adjustments 191.73 47.09 -17.99 83.51 94.15
Total Income 5,416.56 4,269.95 3,734.10 3,247.43 2,187.18
Expenditure
Raw Materials 3,054.37 2,270.43 2,256.57 1,988.49 1,257.08
Power & Fuel Cost 164.04 135.78 118.89 100.69 89.87
Employee Cost 282.85 225.21 170.90 151.03 123.96
Other Manufacturing Expenses 68.94 34.88 28.57 22.91 21.04
Selling and Admin Expenses 805.20 697.83 613.14 499.91 370.55
Miscellaneous Expenses 8.67 4.64 4.82 5.00 4.89
Preoperative Exp Capitalized 0.00 0.00 0.00 0.00 0.00
Total Expenses 4,384.07 3,368.77 3,192.89 2,768.03 1,867.39
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
12 moths 12 moths 12 moths 12 moths 12 moths
Operating Profit 882.26 894.29 550.40 470.04 308.17
PBDIT 1,032.49 901.18 541.21 479.40 319.79
Interest 8.68 9.94 37.88 40.82 30.38
PBDT 1,023.81 891.24 503.33 438.58 289.41
Depreciation 83.45 80.65 67.94 64.24 54.20
Other Written Off 0.00 0.00 0.00 0.00 0.00
Profit Before Tax 940.36 810.59 435.39 374.34 235.21
Extra-ordinary items 0.00 0.00 0.00 0.00 -7.59
PBT (Post Extra-ord Items) 940.36 810.59 435.39 374.34 227.62
Tax 274.00 273.50 151.00 124.00 72.41
Reported Net Profit 666.36 537.09 284.39 250.33 155.21
Total Value Addition 1,329.70 1,098.34 936.32 779.55 610.32
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 127.50 82.00 48.00 32.00 26.25
Corporate Dividend Tax 12.93 13.24 8.10 5.44 4.46
Per share data (annualised)
Shares in issue (lakhs) 8,500.00 8,500.00 8,000.00 8,000.00 7,500.00
Earnings Per Share (Rs) 7.84 6.32 3.55 3.13 2.07
Equity Dividend (%) 150.00 100.00 60.00 40.00 35.00
Book Value (Rs) 31.94 25.76 15.22 12.37 8.37
Source : Dion Global Solutions Limited

NHCE-2017 Page 68
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