DATA ANALYSIS AND INTERPRETATION

1. Current Ratio

Current Ratio = Current Assets/Current Liabilities

Particulars 2019-2020 2020-2021 2021-2022

Current Assets 33,78,650.78 34,73,635.21 38,22,251.70

Current 15,16,067.90 18,59,645.86 14,92,324.22

Liabilities
Current Ratio 2.23 1.87 2.56

Interpretation: -

• The above figure show’s that there is fluctuation trend.

• As the ideal current ratio is 2:1 and from the about data calculated during the past 3
years we can see that During the year 2019-20 the current ratio was 2.23 which is
within the recommended range.

• In the year 2020-21 we can see that current ratio was decreased to 1.87, this is mainly
dueto increase in sundry creditors as company has invested more capital in Stock.
• But in 2021-22 current ratio was 2.73 which is much higher due to increase in sundry
debtors as there was high amount Advance paid to employee. & Current liabilities
decreased as there was Advance paid from debtors in Previous year which was utilize
to meet current liabilities.
 2. Liquid Ratio/Quick Ratio/Acid Test Ratio

Acid Test Ratio = Quick Assets/ Quick Liabilities

Quick Assets = Current Assets – (Stock + Prepaid Expenses)Quick Liabilities
=Current Liability – Bank Overdraft

Particulars 2019-2020 2020-2021 2021-2022

Quick Asset 30,61,690.78 31,98,145.21 35,56,651.70

Quick Liabilities 15,160,67.90 18,59,645.86 14,92,324.22

Liquid Ratio 2.0194% 1.7197% 2.3832%

Interpretation: -

• The above figure show’s that there is fluctuation trend.

• From the above data company having best liquid ratio in 2021-22. in the year 2021-22
liquid ratio is 2.38. Quick assets increased in 2021-22 because bank balance & MVAT
 receivables increased also there was benefit of tax.
• In 2020-21 it decreased i.e 1.71 it was due to increase in current liabilities as due to
more production sundry creditors had increased .quick assets increased because cash
balance increased .
3. Fixed Assets Turnover Ratio
Fixed Assets Turnover Ratio = Net Sales / Fixed Assets

Particulars 2019-2020 2020-2021 2021-

22
Net sales 1,22,53,314.2 1,29,40,511.9 1,19,46,981.6

Fixed Assets 68,67,835.00 1,28,86,198.0 1,24,22,939.8

F.A. turnover ratio 1.78 1.00 0.96

1.8
2 1.6
1.4
1.2
1
0.8
0.6
0.4
0.2

2019-20 2020-21 2021-22

Interpretation: -

● From the above data it is clear that in the year 2020-21 that, the organization has

increased sales and organization had purchased new fixed assets as Machinery in this
year. And machinery is directly related to production, that’s why the ratio was
increased

● In the year 2020-21 Fixed assets are increased due to increase in capital purchased of

land and building, plant & machinery, office equipment but vehicles purchase was very
high which was almost 3 time of previous year.

● In the year 2021-22 fixed assets decreased due to repaying loan by selling of fixed

assets like plant & machinery, vehicles. that’s why ratio decrease.
4. Working Capital Turnover Ratio
Working Capital Turnover Ratio = Net Sales / Working Capital

Particulars 2019-2020 2020-2021 2021-2022

Net sales 1,22,53,314.2 1,29,40,511.9 1,19,46,981.6

4 7 8
Working Capital 18,62,582.88 16,13,989.35 23,29,927.4
8
W.C. turnover ratio 6.58 8.02 5.13

Interpretation: -

In the year 2020-21 the organization had increase sales with minimum investment in
working capital. It is due to organization kept low investment in fixed assets and
current assets.
In the year 2020-21 w.c turnover ratio was increased due to drastically increased in
working capital. working capital was increased due to increased in current asset as cash
& bank balance were increased due development & sale of Sara Engineers.
In 2021-22 ratio falls due to fall in working capital as cash & bank balance were
decreased because it was used in development activites for Sara Engineers.
as fixed assets like land & building, office equipment were purchased for capital in progress.
 5. Net Working Capital Ratio

Net Working Capital Ratio = Net Working Capital / Net Assets

Particulars 2019-2020 2020-2021 2021-2022

Net Working 1862582.9 1613989.35 2329927.5

Capital
Net Assets 10453690 17006971.2 17025259

NET WC 0.18 0.09 0.14

0.20

0.18

0.16

0.14

0.12

0.10

0.08

0.06

0.04

0.02

0.00
2019-20 2020-21 2021-22

● Net working capital measures the firm’s potential reservoir of funds.

● The Net working capital ratio has increased in the year 2020-21 due to increase in

current assets over current liabilities. The company’s current assets enhanced mainly
due to good cash & bank balance, which company get from Nala wade sugar mills
project.

● In 2020-21, the Net working capital ratio falls down as current liabilities are

overpowering current assets. The current liabilities increased due to sundry debtors as
company busy more stock for future purpose

● In 2021-22, current assets are decreased due to reduction in cash & bank
balance. The company has used cash to invest in fixed assets, capital work in
progress etc
6. Debt-Equity Ratio
Debt-Equity Ratio = Total Debt/ Total Equity

Particulars 2019-2020 2020-2021 2021-2022

Total Debt 23,19,878.15 75,21,726.86 73,55,998.68
Total Equity 66,17,744.73 76,25,598.49 81,76,936.65
Debt-Equity ratio 0.35 0.98 0.89

Interpretation: -

● This ratio is used to assess a company capital structure it show relative

proportion of shareholder’s equity & debt used to finance a company assets.

Lower volumes of debt-to-equity ratio are favorable indicating less risk.

● In year 2020-21 it’s less it means the company does not relies much on external lenders.

● But in year 2020-21 it is increased as percentage of assets of business which

are financedby the debts is increased as unsecured loans are high.

● Again in year 2021-22 it decreased which shows the assets of business are
financed morebe shareholder’s equity then debts and is controlled.
7. Debt Ratio
Debt Ratio = Total Debt/ Net Assets

Particulars 2019-2020 2020-2021 2021-2022

Total Debt 23,19,878.15 75,21,726.86 73,55,998.68
Total Assets 1,04,53,690.00 1,70,06,971.21 ,70,25,259.00
Debt Ratio 0.22 0.44 0.43

Interpretation: -

● This ratio indicates the percentage of a company's assets that are provided via

debt. Thisratio ranges from 0.00 to 1.00

● In year 2020-21 it’s less it means the company is operating at low risk & it would

beeasy to obtain loans for new projects.

● But in year 2020-21 it is increased but controlled as company has

obtained moreunsecured loans.

8. Net Working Capital Ratio
Net Working Capital = Current Assets –Current liabilities

Particulars 2019-2020 2020-2021 2021-2022

Current Assets 33,78,650.78 34,73,635.21 38,22,251.70

Current liabilities 15,16,067.90 18,59,645.86 14,92,324.22

Net Working 18,62,582.88 16,13,989.35 23,29,927.48

Capital

2500000

2000000

1500000

1000000

500000

2019-20 2020-21 2021-22

 INTERPRITETION-

● The above figure show’s that there is fluctuation trend.

● In the year 2020-21 we can see that current liabilities increase, this is mainly due to
increase in sundry creditors as company has invested more capital in Stock.

● In 2021-22 it reached high in the year. The current assets are enhanced due to increase

in sundry debtors as there was high amount Advance paid to employee .and current
liabilities decreased as there was Advance paid from debtors in privies year which was
utilize to meet current liabilities .
 9. Current Ratio
Current Ratio = Current assets/current liabilities

Particulars 2019-2020 2020-2021 2021-2022

Current Assets 33,78,650.7 34,73,635.2 38,22,251.7

8 1 0
Current Liabilities 15,16,067.9 18,59,645.8 14,92,324.2
0 6 2
Current Ratio 2.23 1.87 2.56
 Interpretation: -

• The above figure show’s that there is fluctuation trend.

• As the ideal current ratio is 2:1 and from the about data calculated during the past 3
years we can see that During the year 2020-21 the current ratio was 2.23 which is
within the recommended range.
• In the year 2020-21 we can see that current ratio was decreased to 1.87, this is mainly
dueto increase in sundry creditors as company has invested more capital in Stock.

• But in 2021-22 current ratio was 2.73 which is much higher due to increase in sundry
debtors as there was high amount Advance paid to employee.& current liabilities
decreased as there was Advance paid from debtors in Previous year which was
utilize to meet current liabilities

• WHICH RATIO FOR WHOM:

There are different ratios for different groups, these groups with the ratio that suits them is
listed below:

1. Investors: these are people who already have shares in the business or they are willing
to be part of it. So they need to determine whether they should buy shares in the business,
hold on to the shares they already have or sell the shares they already own. They also want
to assess the ability of the business to pay dividends. As a result the Return on Capital
Employed Ratio is the one for this group.
2. Lenders: This group consists of people who have given loans to the company so they
want to be sure that their loans and also the interests will be paid and on the due time.
Gearing Ratios will suit this group.
3. Managers: managers might need segmental and total information to see how they fit
into the overall picture of the company which they are ruling. And Profitability Ratios can
show them what they need to know.
4. Employees: Return on Capital Employed Ratio is the that can help them.
5. Suppliers and other trade creditors: businesses supplying goods and materials to other
businesses will definitely read their accounts to see that they don't have problems, after all,
any supplier wants to know if his customers are going to pay them back and they will study
the Liquidity Ratio of the companies.
6. Customers: are interested to know the Profitability Ratio of the business with
which they are going to have a long term involvement and are dependent on the
continuance of presence of that.
7. Governments and their agencies: are concerned with the allocation of resources and, the
activities of businesses. To regulate the activities of them, determine taxation policies and as
the basis for national income and similar statistics, they calculate the Profitability Ratio of
businesses.
8. Local community: Financial statements may assist the public by providing
information about the trends and recent developments in the prosperity of the business and
the range of its activities as they affect their area so they are interested in lots of ratios.