RATIO ANALYSIS

By:
TAJAMUL
SADAF
DAVID
NAZAR
KISHEN
POONAM
 RATIO ANALYSIS

 Ratio-analysis is a concept or technique which is as

old as accounting concept. Financial analysis is a
scientific tool. It has assumed important role as a tool
for appraising the real worth of an enterprise, its
performance during a period of time and its pit falls.
Financial analysis is a vital apparatus for the
interpretation of financial statements. It also helps to
find out any cross-sectional and time series linkages
between various ratios.
 WHY FINANCIAL ANALYSIS

Lenders’ need it for carrying out the following

 Technical Appraisal
 Commercial Appraisal
 Financial Appraisal
 Economic Appraisal
 Management Appraisal
 LIQUIDITY RATIO

1. Current Ratio = Total Current Assets/ Total

Current Liabilities

2010 2009
0.94 1.98
INTERPRETATION ?
2.Quick ratio= Total Quick Assets/ Total Current Liabilities
Quick Assets = Total Current Assets (minus) Inventory
2010 2009
0.92 1.90
INTERPRETATION: ?
 CAPITAL STRUCTURE RATIO
Capital Structure Ratio tests the long term solvency of the
firm……

1.Debt-equity ratio= Total Liabilities / Owners Equity or Net

Worth
2010 2009
0.98 0.57
INTERPRETATION: ?
2.Proprietary ratio=shareholders fund/total
assets
2010 2009
.41 .55
INTERPRETATION: ?
 TURNOVER RATIO

These ratio indicates the speed with which the assets are being
converted or turned into sales…..
1. Stock turnover ratio : cost of goods sold /average
inventory
2010 2009
7.65 7.72
Can be calculated by sales also
40.16 42.75
INTERPRETATION : ?
 TURNOVER RATIO

2. Debtor turnover ratio: shows relationship between

cr.sales and trade debtors
=Cr. Sales/avg.debtor
2010 2009
() ()
 
INTERPRETATION: ?
Avg.collection period: days in a year/
dr.turnover ratio
 
 
 
INTERPRETATION: ?
3.Fixed assets turnover ratio: net sales/net fixed
assets
2010 2009
.72 .85
 
INTERPRETATION: ?
4.Working capital turnover ratio:
net sales/working capital
2010 2009
-25.37 3.28
 
INTERPRETATION: ?
5.Capital turnover ratio: net sales/total capital
employed
2010 2009
.52 .85
 
INTERPRETATION: ?
 PROFITABILITY RATIO

1. Gross profit ratio: (gross profit/net sales) x100

 
2010 2009
80.9% 81.94%
 
INTERPRETATION: ?
 
2.Net profit ratio: (net profit/net sales)x100
 
2010 2009
32.26% 35.15%
 
INTERPRETATION: ?
3.Return on capital employed : (EBIT/CAPITAL
EMPLOYED)x100
 
2010 2009
13.8% 25.58%
 
INTERPRETATION: ?
 
4.Return on shareholder fund:
(PAT/shareholder fund)x100
 
2010 2009
25.74% 25.29%
 
Interpretation: ?
 
 
5. Return on total assets: (PAT/total assets)x100
 
2010 2009
15.75% 17.25%
 
INTERPRETATION: ?
CONCLUSION
THANK YOU