51194759 MBA Project on Financial Ratios

8/11/2019 51194759 MBA Project on Financial Ratios

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INTRODUCTION TO RATIO ANALYSIS and

INTERPRETITION

OBJECTIVE:

To understand the information contained in financial statements with a

view to know the strength or weaknesses of the firm and to make forecast about

the future prospects of the firm and thereby enabling the financial analyst to

take different decisions regarding the operations of the firm.

RATIO ANALYSIS:

Fundamental Analysis has a very broad scope. One aspect looks at the

general (qualitative) factors of a company. The other side considers tangible

and measurable factors (quantitative). This means crunching and analying

numbers from the financial statements. !f used in con"unction with other

methods# quantitative analysis can produce e$cellent results.

%atio analysis isn&t "ust comparing different numbers from the balance

sheet# income statement# and cash flow statement. !t&s comparing the number

against previous years# other companies# the industry# or even the economy in

general. %atios look at the relationships between individual values and relate

them to how a company has performed in the past# and might perform in the

future.

MEANING OF RATIO:A ratio is one figure e$press in terms of another figure. !t is a

mathematical yardstick that measures the relationship two figures# which are

related to each other and mutually interdependent. %atio is e$press by dividing

one figure by the other related figure. Thus a ratio is an e$pression relating one

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number to another. !t is simply the quotient of two numbers. !t can be e$pressed

as a fraction or as a decimal or as a pure ratio or in absolute figures as ' so

many times. As accounting ratio is an e$pression relating two figures or

accounts or two sets of account heads or group contain in the financial

statements.

MEANING OF RATIO ANALYSIS:

%atio analysis is the method or process by which the relationship of

items or group of items in the financial statement are computed# determined

and presented.

%atio analysis is an attempt to derive quantitative measure or guides

concerning the financial health and profitability of business enterprises. %atio

analysis can be used both in trend and static analysis. There are several ratios

at the disposal of an annalist but their group of ratio he would prefer depends

on the purpose and the ob"ective of analysis.

hile a detailed e$planation of ratio analysis is beyond the scope of this

section# we will focus on a technique# which is easy to use. !t can provide you

with a valuable investment analysis tool.

This technique is called cross-sec!ona" ana"#s!s. *ross+sectional analysis

compares financial ratios of several companies from the same industry. %atio

analysis can provide valuable information about a company&s financial health. A

financial ratio measures a company&s performance in a specific area. For

e$ample# you could use a ratio of a company&s debt to its equity to measure a

company&s leverage. ,y comparing the leverage ratios of two companies# you

can determine which company uses greater debt in the conduct of its business.A company whose leverage ratio is higher than a competitor&s has more debt

per equity. -ou can use this information to make a "udgment as to which

company is a better investment risk.

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owever# you must be careful not to place too much importance on one ratio.

-ou obtain a better indication of the direction in which a company is moving

when several ratios are taken as a group.

OBJECTIVE OF RATIOS

%atio is work out to analye the following aspects of business organiation+

A) /olvency+

0) 1ong term

2) /hort term

3) !mmediate

,) /tability

*) 4rofitability5) Operational efficiency

6) *redit standing

F) /tructural analysis

7) 6ffective utiliation of resources

) 1everage or e$ternal financing

FORMS OF RATIO:

/ince a ratio is a mathematical relationship between to or more variables

8 accounting figures# such relationship can be e$pressed in different ways as

follows 9

A$ As a %&re ra!o:

For e$ample the equity share capital of a company is %s. 2:#::#::: ;

the preference share capital is %s.


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!n the above case the equity share capital may also be described as >

times that of preference share capital. /imilarly# the cash sales of a firm are

%s. 02#::#::: ; credit sales are %s. 3:#::#:::. so the ratio of credit sales to

cash sales can be described as 2.< ?3:#::#:::802#::#:::@ or simply by saying

that the credit sales are 2.< times that of cash sales.

C$ As a %ercena)e:

!n such a case# one item may be e$pressed as a percentage of some

other item. For e$ample# net sales of the firm are %s.


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One of the way of comparing the ratio or ratios of the firm is to compare

them with the ratio or ratios of some other selected firm in the same industry at

the same point of time. /o it involves the comparison of two or more firmBs

financial ratio at the same point of time. The cross section analysis helps the

analyst to find out as to how a particular firm has performed in relation to its

competitors. The firms performance may be compared with the performance of

the leader in the industry in order to uncover the ma"or operational

inefficiencies. The cross section analysis is easy to be undertaken as most of

the data required for this may be available in financial statement of the firm.

+$ T!(e ser!es ana"#s!s:

The analysis is called Time series analysis when the performance of a

firm is evaluated over a period of time. ,y comparing the present performance

of a firm with the performance of the same firm over the last few years# an

assessment can be made about the trend in progress of the firm# about the

direction of progress of the firm. Time series analysis helps to the firm to assess

whether the firm is approaching the long+term goals or not. The Time series

analysis looks for (0) important trends in financial performance (2) shift in trend

over the years (3) significant deviation if any from the other set of dataC

,$ Co(!ned ana"#s!s:

!f the cross section ; time analysis# both are combined together to study

the behavior ; pattern of ratio# then meaningful ; comprehensive evaluation of

the performance of the firm can definitely be made. A trend of ratio of a firm

compared with the trend of the ratio of the standard firm can give good results.

For e$ample# the ratio of operating e$penses to net sales for firm may be higher

than the industry average however# over the years it has been declining for the

firm# whereas the industry average has not shown any significant changes.

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The combined analysis as depicted in the above diagram# which clearly shows

that the ratio of the firm is above the industry average# but it is decreasing over

the years ; is approaching the industry average.

PRE-RE.UISITIES TO RATIO ANALYSIS

!n order to use the ratio analysis as device to make purposeful

conclusions# there are certain pre+requisites# which must be taken care of. !t

may be noted that these prerequisites are not conditions for calculations for

meaningful conclusions. The accounting figures are inactive in them ; can be

used for any ratio but meaningful ; correct interpretation ; conclusion can be

arrived at only if the following points are well considered.

0) The dates of different financial statements from where data is taken must

be same.

2) !f possible# only audited financial statements should be considered#

otherwise there must be sufficient evidence that the data is correct.

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3) Accounting policies followed by different firms must be same in case of

cross section analysis otherwise the results of the ratio analysis would be

distorted.

>) One ratio may not throw light on any performance of the firm. Therefore#

a group of ratios must be preferred. This will be conductive to counter

checks.

@ 4%OF!TA,!1!T- 2@ %AT!O FO%

%AT!O %AT!O /A%6O156%

3@ *O4O/!T6 @ %AT!O FO%1OD7 T6%

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*%65!TO%/

BASED ON FINANCIAL STATEMENT

Accounting ratios e$press the relationship between figures taken from

financial statements. Figures may be taken from ,alance /heet # 4; 4 A8*# or

both. One+way of classification of ratios is based upon the sources from which

are taken.

*$ Ba"ance s/ee ra!o:

!f the ratios are based on the figures of balance sheet# they are called

,alance /heet %atios. 6.g. ratio of current assets to current liabilities or ratio of

debt to equity. hile calculating these ratios# there is no need to refer to the

%evenue statement. These ratios study the relationship between the assets ;

the liabilities# of the concern. These ratio help to "udge the liquidity# solvency ;

capital structure of the concern. ,alance sheet ratios are *urrent ratio# 1iquid

ratio# and 4roprietory ratio# *apital gearing ratio# 5ebt equity ratio# and /tock

working capital ratio.

+$ Re0en&e ra!o:

%atio based on the figures from the revenue statement is called revenue

statement ratios. These ratio study the relationship between the profitability ;

the sales of the concern. %evenue ratios are 7ross profit ratio# Operating ratio#

6$pense ratio# Det profit ratio# Det operating profit ratio# /tock turnover ratio.

,$ Co(%os!e ra!o:

These ratios indicate the relationship between two items# of which one is

found in the balance sheet ; other in revenue statement.There are two types of composite ratios+

a) /ome composite ratios study the relationship between the profits ; the

investments of the concern. 6.g. return on capital employed# return on

proprietors fund# return on equity capital etc.

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b) Other composite ratios e.g. debtors turnover ratios# creditors turnover

ratios# dividend payout ratios# ; debt service ratios

BASED ON FUNCTION:

Accounting ratios can also be classified according to their functions in to

liquidity ratios# leverage ratios# activity ratios# profitability ratios ; turnover

ratios.

*$ L!1&!d!# ra!os:

!t shows the relationship between the current assets ; current liabilities

of the concern e.g. liquid ratios ; current ratios.

+$ Le0era)e ra!os:

!t shows the relationship between proprietors funds ; debts used in

financing the assets of the concern e.g. capital gearing ratios# debt equity ratios#

; 4roprietory ratios.

,$ Ac!0!# ra!os:

!t shows relationship between the sales ; the assets. !t is also known asTurnover ratios ; productivity ratios e.g. stock turnover ratios# debtors turnover

ratios.

2$ Pro'!a!"!# ra!os:

a) !t shows the relationship between profits ; sales e.g. operating ratios#

gross profitratios# operating net profit ratios# e$penses ratios

b) !t shows the relationship between profit ; investment e.g. return on

investment# return on equity capital.

3$ Co0era)e ra!os:

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!t shows the relationship between the profit on the one hand ; the claims

of the outsiders to be paid out of such profit e.g. dividend payout ratios ; debt

service ratios.

BASED ON USER:

*$ Ra!os 'or s/or-er( cred!ors:

*urrent ratios# liquid ratios# stock working capital ratios

+$ Ra!os 'or /e s/are/o"ders:

%eturn on proprietors fund# return on equity capital

,$ Ra!os 'or (ana)e(en:

%eturn on capital employed# turnover ratios# operating ratios# e$penses

ratios

2$ Ra!os 'or "on)-er( cred!ors:

5ebt equity ratios# return on capital employed# proprietor ratios.

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LI.UIDITY RATIO: -

1iquidity refers to the ability of a firm to meet its short+term (usually up to 0 year)

obligations. The ratios# which indicate the liquidity of a company# are *urrent

ratio# Guick8Acid+Test ratio# and *ash ratio. These ratios are discussed below

CURRENT RATIO

Mean!n):

This ratio compares the current assests with the current liabilities. !t is also

known as Iworking capital ratioB or I solvency ratioB. !t is e$pressed in the form of

pure ratio.

6.g. 2=0

For(&"a:

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C&rren assesC&rren ra!o 4

C&rren "!a!"!!es

The current assests of a firm represents those assets which can be# in the

ordinary course of business# converted into cash within a short period time#

normally not e$ceeding one year. The current liabilities defined as liabilities

which are short term maturing obligations to be met# as originally contemplated#

with in a year.

*urrent ratio (*%) is the ratio of total current assets (*A) to total current

liabilities (*1). *urrent assets include cash and bank balancesJ inventory of raw

materials# semi+finished and finished goodsJ marketable securitiesJ debtors (net

of provision for bad and doubtful debts)J bills receivableJ and prepaid e$penses.

*urrent liabilities consist of trade creditors# bills payable# bank credit# provision

for ta$ation# dividends payable and outstanding e$penses. This ratio measures

the liquidity of the current assets and the ability of a company to meet its short+

term debt obligation.

*% measures the ability of the company to meet its *1# i.e.# *A gets converted

into cash in the operating cycle of the firm and provides the funds needed to

pay for *1. The higher the current ratio# the greater the short+term solvency.

This compares assets# which will become liquid within appro$imately twelve

months with liabilities# which will be due for payment in the same period and is

intended to indicate whether there are sufficient short+term assets to meet the

short+ term liabilities. %ecommended current ratio is 2= 0. Any ratio below

indicates that the entity may face liquidity problem but also %atio over 2= 0 as

above indicates over trading# that is the entity is under utiliing its current

assets.

LI.UID RATIO:

Mean!n):

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1iquid ratio is also known as acid test ratio or quick ratio. 1iquid ratio compare

the quick assets with the quick liabilities. !t is e$pressed in the form of pure

ratio. 6.g. 0=0.

The term quick assets refer to current assets# which can be converted into#

cash immediately or at a short notice without diminution of value.

For(&"a:

.&!c5 assesL!1&!d ra!o 4

.&!c5 "!a!"!!es

Guick %atio (G%) is the ratio between quick current assets (GA) and *1. GA

refers to those current assets that can be converted into cash immediately

without any value strength. GA includes cash and bank balances# short+term

marketable securities# and sundry debtors. !nventory and prepaid e$penses are

e$cluded since these cannot be turned into cash as and when required.

G% indicates the e$tent to which a company can pay its current liabilities

without relying on the sale of inventory. This is a fairly stringent measure of

liquidity because it is based on those current assets# which are highly liquid.

!nventories are e$cluded from the numerator of this ratio because they are

deemed the least liquid component of current assets. 7enerally# a quick ratio of

0=0 is considered good. One drawback of the quick ratio is that it ignores the

timing of receipts and payments.

CAS6 RATIO

Mean!n):

This is also called as super quick ratio. This ratio considers only the absolute

liquidity available with the firm.

For(&"a:

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Cas/ 7 Ban5 7 Mar5ea"e sec&r!!es

Cas/ ra!o 4

Toa" c&rren "!a!"!!es

/ince cash and bank balances and short term marketable securities are the

most liquid assets of a firm# financial analysts look at the cash ratio. !f the super

liquid assets are too much in relation to the current liabilities then it may affect

the profitability of the firm.

INVESTMENT 8 S6ARE6OLDER

EARNING PER SA6RE:-

Mean!n):

6arnings per /hare are calculated to find out overall profitability of the

organiation. An earnings per /hare representsearning of the company

whether or not dividends are declared. !f there is only one class of shares# the

earning per share are determined by dividing net profit by the number of equity

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shares.

64/ measures the profits available to the equity shareholders on each share

held.

For(&"a:

NPAT

Earn!n) %er s/are 4

N&(er o' e1&!# s/are

The higher 64/ will attract more investors to acquire shares in the company as

it indicates that the business is more profitable enough to pay the dividends in

time. ,ut remember not all profit earned is going to be distributed as dividends

the company also retains some profits for the business

DIVIDEND PER S6ARE:-

Mean!n):

54/ shows how much is paid as dividend to the shareholders on each share

held.

For(&"a:

D!0!dend Pa!d o Ord!nar# S/are/o"ders

D!0!dend %er S/are 4N&(er o' Ord!nar# S/ares

DIVIDEND PAYOUT RATIO:-

Mean!n):

5ividend 4ay+out %atio shows the relationship between the dividend paid to

equity shareholders out of the profit available to the equity shareholders.

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For(&"a:

D!0!dend %er s/are

D!0!dend Pa# o& ra!o 4 9*Earn!n) %er s/are

584 ratio shows the percentage share of net profits after ta$es and after

preference dividend has been paid to the preference equity holders.

GEARING

CAPITAL GEARING RATIO:-

Mean!n):

7earing means the process of increasing the equity shareholders return

through the use of debt. 6quity shareholders earn more when the rate of the

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return on total capital is more than the rate of interest on debts. This is also

known as leverage or trading on equity. The *apital+gearing ratio shows the

relationship between two types of capital vi= + equity capital ; preference

capital ; long term borrowings. !t is e$pressed as a pure ratio.

For(&"a:

Pre'erence ca%!a"7 sec&red "oanCa%!a" )ear!n) ra!o 4

E1&!# ca%!a" ; reser0e ; s&r%"&s

*apital gearing ratio indicates the proportion of debt ; equity in the financing of

assets of a concern.

PROFITABILITY

These ratios help measure the profitability of a firm. A firm# which generates a

substantial amount of profits per rupee of sales# can comfortably meet its

operating e$penses and provide more returns to its shareholders. The

relationship between profit and sales is measured by profitability ratios. There

are two types of profitability ratios= 7ross 4rofit argin and Det 4rofit argin.

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GROSS PROFIT RATIO:-

Mean!n):

This ratio measures the relationship between gross profit and sales. !t is defined

as the e$cess of the net sales over cost of goods sold or e$cess of revenue

over cost. This ratio shows the profit that remains after the manufacturing costs

have been met. !t measures the efficiency of production as well as pricing. This

ratio helps to "udge how efficient the concern is ! managing its production#purchase# selling ; inventory# how good its control is over the direct cost# how

productive the concern # how much amount is left to meet other e$penses ;

earn net profit.

For(&"a:

Gross %ro'!Gross %ro'! ra!o 4 9 *

Ne sa"es

NET PROFIT RATIO:-

Mean!n):

Det 4rofit ratio indicates the relationship between the net profit ; the sales it is

usually e$pressed in the form of a percentage.

For(&"a:

NPAT Ne %ro'! ra!o 4 9 *

Ne sa"es

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This ratio shows the net earnings (to be distributed to both equity and

preference shareholders) as a percentage of net sales. !t measures the overall

efficiency of production# administration# selling# financing# pricing and ta$

management. Kointly considered# the gross and net profit margin ratios provide

an understanding of the cost and profit structure of a firm.

RETURN ON CAPITAL EMPLOYED:-

Mean!n):

The profitability of the firm can also be analyed from the point of view of the

total funds employed in the firm. The term fund employed or the capital

employed refers to the total long+term source of funds. !t means that the capitalemployed comprises of shareholder funds plus long+term debts. Alternatively it

can also be defined as fi$ed assets plus net working capital.

*apital employed refers to the long+term funds invested by the creditors and the

owners of a firm. !t is the sum of long+term liabilities and owner&s equity. %O*6

indicates the efficiency with which the long+term funds of a firm are utilied.

For(&"a:

NPAT

Re&rn on ca%!a" e(%"o#ed 4 9*

Ca%!a" e(%"o#ed

FINANCIAL

These ratios determine how quickly certain current assets can be converted intocash. They are also called efficiency ratios or asset utiliation ratios as they

measure the efficiency of a firm in managing assets. These ratios are based on

the relationship between the level of activity represented by sales or cost of

goods sold and levels of investment in various assets. The important turnover

ratios are debtors turnover ratio# average collection period# inventory8stock

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turnover ratio# fi$ed assets turnover ratio# and total assets turnover ratio. These

are described below=

DEBTORS TURNOVER RATIO


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INVENTORY OR STOC> TURNOVER RATIO


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depreciated# the fi$ed assets turnover ratio tends to be high (because the

denominator of the ratio is very low).

PROPRIETORS RATIO:

Mean!n):

4roprietary ratio is a test of financial ; credit strength of the business. !t relates

shareholders fund to total assets. This ratio determines the long term or ultimate

solvency of the company.

!n other words# 4roprietary ratio determines as to what e$tent the ownerBs

interest ; e$pectations are fulfilled from the total investment made in the

business operation.

4roprietary ratio compares the proprietor fund with total liabilities. !t is usually

e$pressed in the form of percentage. Total assets also know it as net worth.

For(&"a:

Pro%r!ear# '&ndPro%r!ear# ra!o 4 OR

Toa" '&nd

S/are/o"ders '&nd

Pro%r!ear# ra!o 4 F!@ed asses 7 c&rren "!a!"!!es

STOC> OR>ING CAPITAL RATIO:

Mean!n):

This ratio shows the relationship between the closing stock ; the working

capital. !t helps to "udge the quantum of inventories in relation to the working

capital of the business. The purpose of this ratio is to show the e$tent to which

working capital is blocked in inventories. The ratio highlights the predominance

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of stocks in the current financial position of the company. !t is e$pressed as a

percentage.

For(&"a:

Soc5

Soc5 or5!n) ca%!a" ra!o 4 or5!n) Ca%!a"

/tock working capital ratio is a liquidity ratio. !t indicates the composition ;

quality of the working capital. This ratio also helps to study the solvency of a

concern. !t is a qualitative test of solvency. !t shows the e$tent of funds blocked

in stock. !f investment in stock is higher it means that the amount of liquid

assets is lower.

DEBT E.UITY RATIO:

MEANING:

This ratio compares the long+term debts with shareholders fund. The

relationship between borrowed funds ; owners capital is a popular measure of

the long term financial solvency of a firm. This relationship is shown by debt

equity ratio. Alternatively# this ratio indicates the relative proportion of debt ;

equity in financing the assets of the firm. !t is usually e$pressed as a pure ratio.

6.g. 2=0

For(&"a:

Toa" "on)-er( de

De e1&!# ra!o 4 Toa" s/are/o"ders '&nd

5ebt equity ratio is also called as leverage ratio. 1everage means the process

of the increasing the equity shareholders return through the use of debt.

1everage is also known as IgearingB or Itrading on equityB. 5ebt equity ratio

shows the margin of safety for long+term creditors ; the balance between debt

; equity.

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RETURN ON PROPRIETOR FUND:

Mean!n):

%eturn on proprietors fund is also known as Ireturn on proprietors equityB or

Ireturn on shareholders investmentB or I investment ratioB. This ratio indicates the

relationship between net profit earned ; total proprietors funds. %eturn on

proprietors fund is a profitability ratio# which the relationship between profit ;

investment by the proprietors in the concern. !ts purpose is to measure the rate

of return on the total fund made available by the owners. This ratio helps to

"udge how efficient the concern is in managing the ownerBs fund at disposal.

This ratio is of practical importance to prospective investors ; shareholders.

For(&"a:

NPATRe&rn on %ro%r!eors '&nd 4 9 *

Pro%r!eors '&nd

CREDITORS TURNOVER RATIO:

!t is same as debtors turnover ratio. !t shows the speed at which payments are

made to the supplier for purchase made from them. !t is a relation between netcredit purchase and average creditors

Ne cred! %&rc/aseCred! &rno0er ra!o 4

A0era)e cred!ors

Mon/s !n a #earA0era)e a)e o' acco&ns %a#a"e 4

Cred! &rno0er ra!o

,oth the ratios indicate promptness in payment of creditor purchases. igher

creditors turnover ratio or a lower credit period en"oyed signifies that the

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creditors are being paid promptly. !t enhances credit worthiness of the company.

A very low ratio indicates that the company is not taking full benefit of the credit

period allowed by the creditors.

IMPORTANCE OF RATIO ANALYSIS:

As a tool of financial management# ratios are of crucial significance. The

importance of ratio analysis lies in the fact that it presents facts on a

comparative basis ; enables the drawing of interference regarding the

performance of a firm. %atio analysis is relevant in assessing the performance

of a firm in respect of the following aspects=

0@ 1iquidity position#

2@ 1ong+term solvency#

3@ Operating efficiency#

>@ Overall profitability#


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%atio analysis is equally useful for assessing the long+term financial

viability of a firm. This respect of the financial position of a borrower is of

concern to the long+term creditors# security analyst ; the present ; potential

owners of a business. The long+term solvency is measured by the leverage8

capital structure ; profitability ratio %atio analysis s that focus on earning power

; operating efficiency.

%atio analysis reveals the strength ; weaknesses of a firm in this

respect. The leverage ratios# for instance# will indicate whether a firm has a

reasonable proportion of various sources of finance or if it is heavily loaded with

debt in which case its solvency is e$posed to serious strain. /imilarly the

various profitability ratios would reveal whether or not the firm is able to offer

adequate return to its owners consistent with the risk involved.

,$ OPERATING EFFICIENCY:

-et another dimension of the useful of the ratio analysis# relevant from

the viewpoint of management# is that it throws light on the degree of efficiency

in management ; utiliation of its assets. The various activity ratios measures

this kind of operational efficiency. !n fact# the solvency of a firm is# in the

ultimate analysis# dependent upon the sales revenues generated by the use of

its assets+ total as well as its components.

2$ OVERALL PROFITABILITY:

Enlike the outsides parties# which are interested in one aspect of the

financial position of a firm# the management is constantly concerned about

overall profitability of the enterprise. That is# they are concerned about the

ability of the firm to meets its short term as well as long term obligations to its

creditors# to ensure a reasonable return to its owners ; secure optimum

utiliation of the assets of the firm. This is possible if an integrated view is taken

; all the ratios are considered together.

3$ INTER FIRM COMPARISON:

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%atio analysis not only throws light on the financial position of firm but

also serves as a stepping+stone to remedial measures. This is made possible

due to inter firm comparison ; comparison with the industry averages. A single

figure of a particular ratio is meaningless unless it is related to some standard

or norm. one of the popular techniques is to compare the ratios of a firm with

the industry average. !t should be reasonably e$pected that the performance of

a firm should be in broad conformity with that of the industry to which it belongs.

An inter firm comparison would demonstrate the firms position vice+versa its

competitors. !f the results are at variance either with the industry average or

with the those of the competitors# the firm can seek to identify the probable

reasons ; in light# take remedial measures.

$ TREND ANALYSIS:

Finally# ratio analysis enables a firm to take the time dimension into

account. !n other words# whether the financial position of a firm is improving or

deteriorating over the years. This is made possible by the use of trend analysis.

The significance of the trend analysis of ratio lies in the fact that the analysts

can know the direction of movement# that is# whether the movement is favorable

or unfavorable. For e$ample# the ratio may be low as compared to the norm but

the trend may be upward. On the other hand# though the present level may be

satisfactory but the trend may be a declining one.

ADVANTAGES OF RATIO ANALYSIS

Financial ratios are essentially concerned with the identification of

significant accounting data relationships# which give the decision+maker insights

into the financial performance of a company. The advantages of ratio analysis

can be summaried as follows=

%atios facilitate conducting trend analysis# which is important for

decision making and forecasting.

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%atio analysis helps in the assessment of the liquidity# operating

efficiency# profitability and solvency of a firm.

%atio analysis provides a basis for both intra+firm as well as inter+firm

comparisons.

The comparison of actual ratios with base year ratios or standard

ratios helps the management analye the financial performance of

the firm.

LIMITATIONS OF RATIO ANALYSIS

%atio analysis has its limitations. These limitations are described below=

*$ In'or(a!on %ro"e(s

%atios require quantitative information for analysis but it is not decisive

about analytical output .

The figures in a set of accounts are likely to be at least several months

out of date# and so might not give a proper indication of the companyBs

current financial position.

here historical cost convention is used# asset valuations in the balance

sheet could be misleading. %atios based on this information will not be

very useful for decision+making.

+$ Co(%ar!son o' %er'or(ance o0er !(e

hen comparing performance over time# there is need to consider the

changes in price. The movement in performance should be in line with

the changes in price.

hen comparing performance over time# there is need to consider the

changes in technology. The movement in performance should be in line

with the changes in technology.

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*hanges in accounting policy may affect the comparison of results

between different accounting years as misleading.

,$ Iner-'!r( co(%ar!son

*ompanies may have different capital structures and to make

comparison of performance when one is all equity financed and another

is a geared company it may not be a good analysis.

/elective application of government incentives to various companies

may also distort intercompany comparison. comparing the performance

of two enterprises may be misleading.

!nter+firm comparison may not be useful unless the firms compared are

of the same sie and age# and employ similar production methods and

accounting practices.

6ven within a company# comparisons can be distorted by changes in the

price level.

%atios provide only quantitative information# not qualitative information.

%atios are calculated on the basis of past financial statements. They do

not indicate future trends and they do not consider economic conditions.

PURPOSE OF RATIO ANLYSIS:

0@ To identify aspects of a businesses performance to aid decision making

2@ Guantitative process 9 may need to be supplemented by qualitative

Factors to get a complete picture.

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3@ < main areas=+

L!1&!d!#9 the ability of the firm to pay its way

In0es(en8s/are/o"ders9 information to enable decisions to be made

on the e$tent of the risk and the earning potential of a business

investment

Gear!n)9 information on the relationship between the e$posure of the

business to loans as opposed to share capital

Pro'!a!"!#9 how effective the firm is at generating profits given sales

and or its capital assets

F!nanc!a" 9 the rate at which the company sells its stock and the

efficiency with which it uses its assets

ROLE OF RATIO ANALYSIS:

!t is true that the technique of ratio analysis is not a creative technique in

the sense that it uses the same figure ; information# which is already appearing

in the financial statement. At the same time# it is true that what can be achieved

by the technique of ratio analysis cannot be achieved by the mere preparation

of financial statement.

%atio analysis helps to appraise the firm in terms of their profitability ;

efficiency of performance# either individually or in relation to those of other firms

in the same industry. The process of this appraisal is not complete until the ratio

so computed can be compared with something# as the ratio all by them do not

mean anything. This comparison may be in the form of intra firm comparison#

inter firm comparison or comparison with standard ratios. Thus proper

comparison of ratios may reveal where a firm is placed as compared with earlier

period or in comparison with the other firms in the same industry.

%atio analysis is one of the best possible techniques available to the

management to impart the basic functions like planning ; control. As the future

is closely related to the immediate past# ratio calculated on the basis of

historical financial statements may be of good assistance to predict the future.

30


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%atio analysis also helps to locate ; point out the various areas# which need the

management attention in order to improve the situation.

As the ratio analysis is concerned with all the aspect of a firms financial

analysis i.e. liquidity# solvency# activity# profitability ; overall performance# it

enables the interested persons to know the financial ; operational

characteristics of an organisation ; take the suitable decision.

EVALUATION OF APLAB LIMITED T6ROUG6 RATIO

COMPANY PROFILE

T6E COMPANY

A41A, 1imited is a professionally managed 4ublic 1imited company

quoted on the ,ombay /tock 6$change. /ince its inception in 0ML2# A41A, has

been serving the global market with wide range of electronic products meeting

the international standards for safety and reliability such as E1# H56 etc. They

specialie in Test and easurement 6quipment# 4ower *onversion and E4/

/ystems# /elf+/ervice Terminals for ,anking /ector and Fuel 5ispensers for

4etroleum /ector. A41A, en"oys worldwide recognition for the quality of its

products# business integrity and innovative engineering skills.

ABOUT APLAB:

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Aplab started its operation in October 0ML2.

!t is a professionally managed >: years old public limited company.

!t is quoted on ,O,A- /TO*N 6*AD76.

!t serves customer global customer par e$cellence.

!t specialied in Test ; measurement instruments# power conversion# ;

E4/ ; fuel dispensers for petroleum sector.

!t en"oys worldwide recognition for the quality of its business integrity ;

innovative engineering skills.

MISSION:

To deliver high quality# carefully# engineered products# on time# with in

budget# as per the customer specification in a manner profitable to both#

our customers ; so to us.

VISION:

To be a global player# recognied for quality ; integrity.

To be the TO4 !D5!AD *O4AD- as conceived by our customers.

To be ' T6 ,6/T company to work for# as rated by our employees.

GOAL:

7oal at Aplab is e$tract ordinary customer service as we provide our

customer needs in the personal service industry.

CORPORATE MISSION

0@ To achieve healthy and profitable growth of the company in the interest of our

customers ; the shareholders.

2@ To encourage teamwork# reward innovation and maintain healthy

interpersonal relations within the organiation.

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3@ To e$pand knowledge and remain at the leading edge in technology to serve

the global market.

>@ To understand the customerBs needs and provide solutions than merely

selling products.


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software has been also enhanced. e believe that professional services sector

is poised to grow at a very rapid pace.

.UALITY IS OUR OR> CULTURE - ISO *:+

Guality at A41A, is a part of our peopleBs attitude. 6ntire organiation is

committed to create an environment that encourages individual e$cellence and

a personal commitment to quality. !n A41A,# 'Guality is everybodyBs

responsibility and all strive to 'do it right the first time. !t is therefore natural

that A41A, 1imited is certified for quality with !/O M::0=2::: registration.

.UALITY POLICY:

Aplab will deliver to its customer products ; services that consistently

meet or e$ceed their requirement.

Aplab will achieve this by total commitment ; involvement of every

individual.

Aplab will encourage its employees ; suppliers to develop quality

products prevent defects ; make continual improvement in all

processes.

.UALITY OBJECTIVE: Aplab is an !/O M::0=2::: certifies company.

0:: customer satisfaction.

On time delivery every time reduction is out going 44 to 0:#:::

%6/6A%* AD5 56H61O46DT

5eveloping innovative products with the latest technology is the core

strength of A41A,. The /cience ; Technology inistry of the 7ovt. of !ndiaaccredits our %;5 1aboratories. e have a large team of dedicated# highly

qualified skilled engineers who e$cel in the latest state+of+the+art+technology.

A41A, is recognied not only for manufacturing standard products but also in

providing solutions and services as per the customer specifications. e spend

more than > of the company revenue in %esearch ; 5evelopment activities.

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!nstruments from A41A, are today operational in EN# 7ermany# France#

/weden# ,elgium# *anada# and E/A ; Australia.

APLABS ORGANISATION C6ART

E?ECUTIVE

C6AIRMAN

MANAGING

DIRECTOR

DIRECTOR MAE>ETING

TEC6NICAL DIRECTOR

- PE$

GENERAL

MANAGER

FINANCE GHM GHMH MATERIAL GHMH GHMH

MANAGER PRODH MAR>ETING MANAGER ELTRAC DESIGN

; PRODH ;

DESIGN

DEVLOP-

MENT

36

REGIOAL

HEAD:

MUMBAI

NEWDELHI

SECUNDA-RABAD

BANGLORE

CHENNAI


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OFFICERS

STAFF

OR>ERS

PRODUCTS OF APLAB:

a. T6/T ; 6A/E%66DT !D/T%E6DT/

b. !7 4O6% A* /-/T6/ (E4/# Frequency *onverter#

!nverter# !solation Transformer)

c. !7 4O6% 5* /-/T6/ (5* 4ower /upply# 5*

Eninterruptible 4ower /upply)

d. AT !D/TA*A/

e. 4O6% /E441!6/# A*+5* 4O6% /E441-# 5*85*

*ODH6%T6%/# /4/# !DH6%T6%/# /TA,!1!Q6%# 1!D6

*OD5!T!OD6%# !/O1AT!OD T%AD/FO%6%

ATM INSTACAS6

The ,anking Automation

5ivision of A41A, was

launched in 0MM3# when we

introduced !D/TA*A/+

!ndiaBs first indigenouslymanufactured AT

!D/TA*A/ demonstrated

A41A,Bs skills in design#

hardware manufacturing

and software integrations.

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Our in house %;5 group is constantly striving to scan the rapidly changing

technology and offer suitable end to end solutions. e are into /elf /ervice

5elivery /ystems# !*% *heque 4rocessing and /mart *ard based solutions.

The latest is !A766DA,165 *heque 4rocessing solution+ GE!*N*16A%.

APLAB LIMITED

BALANCE S6EET AS AT ,*STMARC6 ++(%/.B:::)

AS AT ,*ST ++ AS AT ,*ST++

SOURCES OF FUNDS

S6ARE6OLDERS FUND

/hare capital R

Ensecured 3#LS#MM

0S

DEFFERED TA? LIABILITY


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4rovisions


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+

Bas!c earn!n) %er s/are


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NET CURRENT ASSESTS 2M#>:#0:

MISCELLANEOUS E?PENDITURE


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BALANCE S6EET AS AT ,*ST

MARC6 +2 (%/.B:::)

AS AT ,*-,- +2 AS AT ,*-,- +2

SOURCES OF FUNDS

S6ARE6OLDERS FUND

/hare capital 2#2#


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PROFIT ; LOSS ACCOUNT FOR T6E ENDED ,*STMARC6 +2(%/.B:::)

A/ AT 30+3+ 2::> AS AT ,*-,-+2INCOME:

/ales and operating earnings S3#M:#>S

Other income 30#3M

Hariation in stock #:3#33

4ayments to ; provision for 02#M>#>S

6mployeesanufacturing e$penses 3#:S#

!nterest ; finance charges 2#>L#3:

5epreciation 0#0:#RM

1ess= transferred to revaluation M3 0#:M#ML

S2#::#MM

PROFIT BEFORE TA? 2#S>#RL

PRIOR YEAR ADJUSTMENT


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BALANCE S6EET AS AT ,*STMARC6 +3(%/.B:::)

AS AT ,*-,- +3 AS AT ,*-,- +3

SOURCES OF FUNDSS6ARE6OLDERS FUND

/hare capital #M0

2>#0>#M0

LOANS

/ecured 0S#23#02

Ensecured

APPLICATION OF FUNDS

FI?ED ASSETS

7ross block 20#L>#RM

1ess= depreciation 03#>3#:

*apital work in progress +

R#20#R>

INVESTMENT 2#32#M0

CURRENT ASSESTS LOANS ;ADVANCES

!nventories 0M#32#RR

/undary debtors 23#:L#LS

*ash ; bank balances L#:>#L>

1oan ; advances 0:#:>#:2

R#20

CURRENT LIABLITIES ;

PROVISIONS

*urrent liabilities 0L#S#LL#0M

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PROFIT ; LOSS ACCOUNT FOR T6E ENDED ,*STMARC6 +3(%/.B:::)

A/ AT 30+3+ 2::< AS AT ,*-, +3

INCOME:

/ales and operating earnings S>#2:#30

Other income >0#LMHariation in stock (3R#>#23##SR!nterest ; finance charges 2#0 0#2

S:#::#2>

PROFIT BEFORE TA? >#23#30

PRIOR YEAR ADJUSTMENT


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*$ CURRENT RATIO:

For(&"a:

C&rren asses

C&rren ra!o 4 C&rren "!a!"!!es

YEAR +*-++ ++-+, +,-+2 +2 -+3

C&rren asses >L#S:#R: + 32#LM#RM

2::>+2::< + 3L#M2#0M

The company has sufficient working capital to meets its urgency8

obligations. A company has a high percentage of its current assets in the form

of working capital# cash that would be more liquid in the sense of being able to

meet obligations as ; when they become due. From this working capital# the

company meets its day+to+day financial obligations.

Thus# the current ratio throws light on the companyBs ability to pay its

current liabilities out of its current assets. The Aplab *ompanyBs has a very

good liquidity position of company.

+$ LI.UID RATIO:

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For(&"a:

.&!c5 assesL!1&!d ra!o 4

.&!c5 "!a!"!!es

YEAR +*-++ ++-+, +,-+2 +2 -+3

.&!c5 asses 20#R:#LS 23#:0#:0 2>#:0#3: 2M#00#30

.&!c5 "!a!"!!es 0 years the liquid ratio is same# which is better for thecompany to meet the urgency. The liquid ratio of the Aplab *ompany has

increased from 0.02 to 0.3L in 2::>+2::+2::< over the year 2::3+2::>.

This indicates that the dependence on the short+term liabilities ;

creditors are less ; the company is following a conservative working capital

policy.

1iquid ratio of *ompany is favorable because the quick assets of the

company are more than the quick liabilities. The liquid ratio shows the

companyBs ability to meet its immediate obligations promptly.

,$ PROPRIETORY RATIO:

For(&"a:

4roprietary fund shareholders fund

4roprietary %atio+++++++++++++++++++++++++++ or ++++++++++++++++++++++++++++++++++++++++

T!"# $%&' $()e' "**e!*+,%.L("(#(!(e*

YEAR +*-++ ++-+, +,-+2 +2 -+3

47


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Pro%r!ear# '&nd 20#2M#LM 20##M0

Toa" '&nd OR>ING CAPITAL RATIO:

For(&"a:

Soc5Soc5 or5!n) ca%!a" ra!o 4 or5!n) Ca%!a"

YEAR +*-++ ++-+, +,-+2 +2 -+3

Soc5 0M#:M#SS 0M#:2#SM 20#>L#2: 0M#32#RRor5!n) Ca%!a" 3:#SS#0> 2M#>L#:S 32#LM#RM 3S#02#0M

Soc5 or5!n)ca%!a" ra!o

L2.:L L>.+2::


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For(&"a:

Pre'erence ca%!a"7 sec&red "oan

Ca%!a" )ear!n) ra!o 4 E1&!# ca%!a" ; reser0e ; s&r%"&s

YEAR +*-++ ++-+, +,-+2 +2 -+3

Sec&red "oan 02#03#>R 0:#2S# :.LR :.S< :.M3

49


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COMMENTS:

The debt equity ratio is important tool of financial analysis to appraise the

financial structure of the company. !t e$presses the relation between the

e$ternal equities ; internal equities. This ratio is very important from the point of

view of creditors ; owners.

The rate of debt equity ratio is increased from :.S> to :.M3 during the

year 2::0+2::2 to 2::>+2::


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7ross profit %atio

:

2:

>:

L:

R:

2::0+

2::2

2::2+

2::3

2::3+

2::>

2::> +

2::.

!t is further declined to L2.22 in the year 2::>+2::+2::+2::SR

Ne sa"es >3#>L


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COMMENTS:

The operating ratio shows the relationship between costs of activities ;

net sales. Operating ratio over a period of > years when compared that indicate

the change in the operational efficiency of the company.

The operating ratio of the company has decreased in all > year. This is

due to increase in the cost of goods sold# which in 2::0+2::2 was L0.RR# in

2::2+2::3 was L3.2S# in 2::3+2::> was +2::< it is .0L.

though the cost has increased in 2::2+2::3 as compared to 2::0+2::2# it is

reducing continuously over the ne$t two years# indicate downward trend in cost

but upward 8 positive trend in operational performance.

$ E?PENSE RATIO:

The ratio of each item of e$pense or each group of e$pense to net sales is

known as I6$pense ratioB. The e$pense ratio brings out the relationship between

various elements of operating cost ; net sales. 6$pense ratio analyes each

individual item of e$pense or group of e$pense; e$presses them as a

percentage in relation to net sales.

A$ MANUFACTURING E?PENSES:

For(&"a:

Man&'ac&r!n) e@%enses

Man&'ac&r!n) e@%ense ra!o 4 9*

Ne sa"es

YEAR +*-++ ++-+, +,-+2 2004 -2005

Man&'ac&r!n)e@%enses

2#20#3S 2#LM#MR 3#:S#


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COMMENTS:

The manufacturing e$pense is shows the downward trend. 5uring the year

2::092::2 to 2::2+2::3 the manufacturing e$pense increased because there

is increase in the charges like labour# rent # power ; electricity# repair to plant ;

machinery ; miscellaneous works e$penses. The manufacturing e$pense

during the year 2::0+2::2 to 2::>+2::< is decreased from >#SRNe sa"es >3#>L .M3 03.3> 02.>:

COMMENTS:

The other e$pense of company is increased during the 2::0+2::2 to 2::3+

2::># because increase in the charges of rent of office# equipment lease rental#

printing ; stationary# advertisement ; publicity# transport outward ; other

charges. ,ut during the year 2::>+2::< the other e$penses is decrease from

03.3> to 02.>:. ,ecause decrease in equipment lease rental# advertisement

; publicity# transport charges# commission ; discount# sales ta$ ; purchase

ta$ . This indicates that the company also controlling the other e$penses.

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*= NET PROFIT RATIO

For(&"a:

NPAT Ne %ro'! ra!o 4 9 *

Ne sa"es

YEAR +*-++ ++-+, +,-+2 +2 -+3

NPAT 2:#MR R2#M> 0#S2#M> 2#S


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**$ STOC> TURNOVER RATIO:

For(&"a:

COGS Soc5 T&rno0er Ra!o 4 A0era)e soc5

YEAR +*-++ ++-+, +,-+2 +2 -+3

COGS 0R#M:#MR 20#ML#32 2R#33#:2 2 times which indicate that

the stock is being turned into sales 3.> times during the year. The inventory

cycle makes 3.> round during the year. !t helps to work out the stock holding

period# it means the stock turnover ratio is 3.> times then the stock holding

period is 3.< months ?0283.>3. years stock turnover ratio is lower than the standard but it

is in increasing order. !n the year 2::0+2::2 to 2::>+2::< the stock turnover

ratio has improved from 3.> to 3.S3 times# it means with lower inventory the

company has achieved greater sales. Thus# the stock of the company is moving

fast in the market.

*+$ RETURN ON CAPITAL EMPLOYED:

For(&"a:

NPAT

Re&rn on ca%!a" e(%"o#ed 4 9* Ca%!a" e(%"o#ed

55


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YEAR +*-++ ++-+, +,-+2 +2 -+3

NPAT 2:#LR R2#M> 0#S2#M> 2#S:#3S#LL#M3

Re&rn on ca%!a"e(%"o#ed

:. 2.23 >.2R


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The net profit after ta$ of the company is increasing in all years.

Therefore the shareholders earning per share is increased continuously from

2::0+2::2 to 2::>+2::< by :.>0 to :


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COMMENTS:

!n the year 2::2+2::3 and 2::3+2::> the 5ividend pay out ratio is L:.2>

and >3.3< respectively. !n the year 2::2+2::3 the company has declared the

dividend L:.2> and the balance 3M.SL is retained with them for the e$pansion.

The company has not earned more profit in the year 2::0+2::2 hence the

company has not declared dividend in the year 2::0+2::2. owever the

company has declared more dividends in the year 2::2+2::3 as the company

has sufficient profit. !n the year 2::> the company has declared 0.3#>L


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*$ CAS6 RATIO:

For(&"a:

Cas/ 7 Ban5 7 Mar5ea"e sec&r!!es

Cas/ ra!o 4 Toa" c&rren "!a!"!!es

YEAR +*-++ ++-+, +,-+2 +2 -+3

Cas/ 7 Ban5 7Mar5ea"esec&r!!es

3#30#32 3#M#>M#S> L#:>#L>

Toa" c&rren"!a!"!!es

0 ; :.2R in

the year 2::>+2::


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COMMENTS:

%eturn on proprietors fund shows the relationship between profits ;

investments by proprietors in the company. !n the year 2::2+2::3 the return on

proprietors fund is 3.R> it means the net return of %s. 3 appro$imately is

earned on the each %s. 0:: of funds contributed by the owners.

5uring the last > years the rate of return on proprietors fund is in

increasing order. The return on proprietors fund during the year 2::0+2::2 to

2::>+2::< is increased from :.MS to 00.>0.

!t shows that the company has a very large returns available to take care

of high dividends# large transfers to reserve etc. ; has a great scope to attract

large amount of fresh fund from owners.

*$ RETURN ON E.UITY:

For(&"a:

NPATRe&rn on e1&!# s/are ca%!a" 4 9 *

NoH o' e1&!# s/are

YEAR +*-++ ++-+, +,-+2 +2 -+3

NPAT 2:#LR R2#M> 0#S2#M> 2#S


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to reserve# ; also company has a great scope to attract large amount to fresh

funds by issue of equity share ; also company has a very good price for equity

shares in the ,/6.

*$ OPERATING PROFIT RATIO:

For(&"a:O%era!n) %ro'!

O%era!n) %ro'! ra!o 4 9*Ne sa"es

COMMENTS:

Operating profit ratio shows the relationship between operating profit ;

the sales. The operating profit is equal to gross profit minus all operating

e$penses or sales less cost of goods sold and operating e$penses.

The operating profit ratio of S.00 indicates that average operating

margin of %s.S is earned on sale of %s. 0::. this amount of %s. S is available for

meeting non operating e$penses. !n the other words operating profit ratio S.00

means that S.00 of net sales remains as operating profit after meeting all

operating e$penses.

5uring the last > years the operating profit ratio is increased from S.00to M.3R. !t indicates that the company has great efficiency in managing all its

operations of production# purchase# inventory# selling and distribution and also

has control over the direct and indirect costs. Thus# company has a large

margin is available to meet non+operating e$penses and earn net profit.

+$ CREDITORS TURNOVER RATIO:

For(&"a:

Ne cred! %&rc/aseCred! &rno0er ra!o 4

A0era)e cred!ors

61


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Mon/s !n a #ear

A0era)e a)e o' acco&ns %a#a"e 4Cred! &rno0er ra!o

YEAR +*-++ ++-+, +,-+2 +2 -+3

Ne cred!%&rc/ase

20#20#>3 22#S0#R: 2M#:R#L0 2

A0era)e cred!ors 2 S#M0#20 L#ML#RL S#R:#3M

Cred! &rno0erra!o

3.L times 3.L times > times 3 times

A0era)e a)e o'acco&ns %a#a"e

3.3 months 3.3 months 3 months > months

COMMENTS:

The creditors turnover ratio shows the relationship between the credit purchase

and average trade creditors. !t shows the speed with which the payments are

made to the suppliers for the purchase made from them.

The credit turnover ratio of ># indicate that the creditors are being turned

over >times during the year. !t indicates the number of rounds taken by the

credit cycle of payables during the year.

There is no standard ratio in absolute term. The creditors ratio for the

year 2::0+2::2 and 2::2+2::3 as good as the same# but it is increased by 3.L

to > in 2::3+2::>.this means the company has settled the creditors dues very

fastly than the previous year.

DEBTORS TURNOVER RATIO:

For(&"a:

Cred! sa"es

Deors &rno0er ra!o 4

A0era)e deors

Da#s !n a #ear

De co""ec!on %er!od 4

Deors &rno0er

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YEAR +*-++ ++-+, +,-+2 +2 -+3

Cred! sa"es >S#SS#>R M#3< 0M#:


64/66

The company is paying promptly to the suppliers.

The return on capital employed is satisfactory.

The management should take care of inventory management and speed up themovement of stock. 6ffective selling technique or product modification may be

adopted to face the competitors and to improve the financial position of the

company by taking appropriate decisions.

CONCLUSION:The focus of financial analysis is on key figures contained in the financial

statements and the significant relationship that e$its. The reliability and

significance attach to the ratios will largely on hinge upon the quality of data on

which they are best. They are as good for as bad as the data it self.

Financial ratios are a useful by product of financial statement and

provide standardied measures of firms financial position# profitability and

riskiness. !t is an important and powerful tool in the hands of financial analyst.

,y calculating one or other ratio or group of ratios he can analye the

performance of a firm from the different point of view.

The ratio analysis can help in understanding the liquidity and short+term

solvency of the firm# particularly for the trade creditors and banks. 1ong+term

solvency position as measured by different debt ratios can help a debt investor

or financial institutions to evaluate the degree of financial risk. The operational

efficiency of the firm in utiliing its assets to generate profits can be assessed

on the basis of different turnover ratios. The profitability of the firm can be

analyed with the help of profitability ratios.

owever the ratio analyses suffers from different limitations also. The

ratios need not be taken for granted and accepted at face values. These ratios

are numerous and there are wide spread variations in the same measure.

64


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%atios generally do the work of diagnosing a problem only and failed to provide

the solution to the problem.

BIBLIOGRAP6Y

REFERENCE BOO>S

FINANCIAL MANAGEMENT

Theory# *oncepts ; problems

RHPHRUSTAGI


Te$t and problems

MHYH >6AN AND PH >H JAIN

MANAGEMENT ACCOUNTING

AINAPURE


LHNH C6OPDE DHNH C6OUD6ARI SHLH C6OPDE

65


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ANAUAL REPORTS OF APLAB LIMITED

+*-++

++-+,

+,-+2

+2-+3

EBSIDES -

H!dHacH&58co(%'ac8ra!o

Hcec&ncHor)Hco(8&s!ness8'!nanc!a"

Hero(!""!onHco(H&s!ness8'!nanc!a"
http://www.bizd.ac.uk/compfact/ratiohttp://www.cecunc.org.com/business/financialhttp://www.zeromillion.com.business/financialhttp://www.bizd.ac.uk/compfact/ratiohttp://www.cecunc.org.com/business/financialhttp://www.zeromillion.com.business/financial

51194759 MBA Project on Financial Ratios

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