ABOUT THE BUSINESS

TOT SOFT TOYS is new emerging entrepreneurial firm. The business was
commenced on January 1, 2023, located in Chennai. The business is manufacturing
soft toys, dolls, plush toys, plushies, stuffed animals, and stuffies. All of their
products comply with international quality standards and are appreciated in
different markets throughout the world. Their motive is to satisfy the yearning of
kids to play with toys and to satisfy the parents in buying their kids quality
products at reasonable price.

A stuffed toy is a toy doll with an outer fabric sewn from a textile and stuffed with
flexible material. They may also be called as cuddly toys. Stuffed toys are the most
popular toys, especially among kids. Since soft toys attract a lot of customers, a
soft toy manufacturing business is well- profitable.

ABOUT THE PROJECT

This project is about a stuffed toy business, TOT SOFT TOYS. This project covers
the transactions carried out by the business over a period of 3 months from 1-Jan-
2023 to 31-Mar-2023, which is then journalized and posted into respective ledger
accounts. GST set off and adjustments are made. The final accounts are prepared
along with common size statements and ratio analysis. The cash flow statement is
also prepared to know about the inflow and outflow of cash in the business. Profit,
financial position and financial soundness of the business are determined.
Interpretations and conclusions are drawn. This project is done by sticking to the
rules and principles of accounting.

INTERPRETATION
The current ratio indicates whether the firm will be able to meet its short- term
financial obligations. The current ratio is more than the ideal ratio of 2:1. The
current ratio of 9.23:1 indicates that the firm will be in a very comfortable position
to pay off all its debts. It is observed that the liquid ratio is also on the same
pattern as the current ratio. The liquid ratio is approximately 8.72:1 which is more
than the standard ratio of 1:1, indicates that the firm has abundant liquid assets to
pay its debts.

The Debt Equity ratio of the firm is 0.32:1. The ratio is very much below the
standard approximate ratio of 2:1. This clearly shows that the company is spending
more from shareholder’s funds and is eligible to take loans as it has a stable
position.

The gross profit ratio or the net profit ratio is a way to measure the financial
performance or the profitability of the business. The gross profit of the firm is
36.88% of net sales and that of the net profit is 12.28% of net sales. This shows
that the firm has made reasonably good amount of profit over the period.

The Return on Investment of the firm is 7.12%.This percentage does not sound
much impressive for a long time basis. Investors would prefer ROI of 10% or above
for better returns.