Radha Madhav Corporation Ltd Final Paresh

8/3/2019 Radha Madhav Corporation Ltd Final Paresh

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RATIO ANALYSIS AND WORKING CAPITAL

MANAGEMENT

RADHA MADHAV CORPORATION LTD.


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PROFILE

y RMCL can be divided into two areas; Primary Packaging

and Secondary Packaging. Primary Packaging is again

divided into Flexible division and Folded Carton division.

y Secondary packaging includes products like liners,

specialty the comfortable films, cartons and various profiles

for varied applications.


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Cont

y It is produce 23 product

y Product packaging plays a critical role in partnering the

pharmaceutical, food and healthcare industry's endeavor, to

deliver effective and safe OTC medicines, generic medicines,

prescription drugs and health or diet foods.


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DATACOLLECTION

Two Types Data Collection Methods

y

PrimaryD

ata

y Secondary Data


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FINANCIAL STATEMENTANALYSIS

There are three statements to watch:

y Income statement

y Balance sheet

y Statement of cash flows

Three major tools:

y Ratios

y Growth rates

y Working Capital


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FINANCIAL MANAGER ROLE

y In olden days the role of financial manager was only

limited to raising funds and maintaining the books of

accounts.

y But now the trend is changing. The financial manger has

wide scope in present scenario and he plays a vital role in

decision-making, costing, budgeting, and controlling


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ANALYSIS

y Discussion with the management of the company to get general

information about their activities.

y Study of the classification of items adopted in profit and loss

account and balance sheet and the accounting policies of the

concern.

y Study of the annual reports for collecting data of 5 years.

y Analysis of their adopting techniques and methods available.


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RATIOANALYSIS

y To understand the liquidity, profitability and efficiency

positions of the company during the study period.

y Accounting ratios are very useful in assessing the financial

position and profitability of a business enterprise.

y For inter departmental comparisons within an organization

y To evaluate the performance of the company by using ratios


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RATIOANALYSIS

Particular 2009-10 2008-09 2007-08 2006-07 2005-06

Current ratio 2.21 3.74 5.77 8.07 14.84

Quick ratio 1.17 1.94 3.39 5.9 11.03

Total debt/equity 1.68 1.12 0.78 1.19 0.71

Long term assets / total

Assets 0.58 0.57 0.54 0.4 0.37

Inventory turnover ratio 2.57 2.56 3.46 4.23 4.91

Gross profit margin -18.04 8.06 18.28 14.07 10.05

Net profit margin -31.32 0.28 9.95 7.71 7.42

Operating margin -9.43 13.36 20.95 15.48 11.07


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WORKING CAPITAL

y Working capital management involves the relationship

between a firm's short-term assets and its short-term

liabilities.

Objective

y Proper balance between current assets and current liability

y Maintenance of working capital at appropriate level

y Find increase level of investment in current assets


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OPERATING CYCLE

CASH

RAW

MATERIAL

WORK IN

PROGRESS

FINISHED

GOODS

RECIEVABLES


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COMPONENT OF WORKING

CAPITAL

There are two component of working capital.

yCurrent asset

yCurrent liability


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CONCLUSION

y It also provides valuable interpretation separately for each ratio

that helps the organization in implementing the findings that

would help the organization to increase its efficiency.

y Working capital management is an important aspect of any

business. Every business concern should have adequate working

capital to run its business operation.


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Radha Madhav Corporation Ltd Final Paresh

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