Ratio analysis

Team Members:

1) Shashank Chauhan2) Prashant Mishra3) Nitesh Patil4)Mahesh Chavade5) Srinivas Mittapelli

It is NOT just comparing different numbers from the balance sheet, income statement, and cash flow statement.

It is about comparing the number against previous years, other companies, the industry, or even the economy in general.

Ratios 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.

OBJECTIVE OF RATIOS

I.Solvency-•Long term •Short term•Immediate

II.Stability

III. Profitability

IV. Operational efficiency

V. Credit standing

IV. Structural analysis

V. Effective utilization of resources

VI. Leverage or external financing

CLASSIFICATION OF RATIO

BASED ON FINANCIAL STATEMENT

BASED ON FUNCTION BASED ON USER

1] BALANCE SHEET RATIO

2] REVENUE STATEMENT RATIO

3] COMPOSITE RATIO

1] LIQUIDITY RATIO

2] LEVERAGE RATIO

3] ACTIVITY RATIO

4] PROFITABILITY RATIO

5] COVERAGE RATIO

1] RATIOS FOR SHORT TERM CREDITORS

2] RATIO FOR SHAREHOLDERS

3] RATIOS FOR MANAGEMENT

4] RATIO FOR LONG TERM CREDITORS

Its registered office is at Garden Mills Complex, Sahara Gate ,Surat ,Gujarat

Mr. M R Momaya is the Managing Director of the Mill The company is running 16,232 spindles

It produces 7.3 tons of yarn per day The company produces high quality yarn for

weaving.

Surat Textile Mills

Vijayeswari, a Pioneering textile company, produces the finest quality Bed Linen that is enjoyed by consumers worldwide.

It has over 90 years experience in the business In spinning the company’s 50,000 spindles

produce 1260 tons of yarn every year.

It is located at Jay Bharat Rangshala Compound,Saraspur, Ahmedabad-380018.(INDIA)

It has established a good clientele. Where this company have supplied on regular basis the machine to many Textile processing utile in Gujarat all over India as well as Abroad also

LIQUIDITY RATIO

RATIOS FORMULA

CURRENT RATIO = Current Assets/Current liabilities 1.50 6.90 1.53

LIQUID RATIO/ QUICK RATIO

=Quick assets/Quick liabilities 1.02 2.017 0.10

SUPER QUICK/CASH RATIO

=(Cash+Bank+Marketabtle Securities)/ Total current Liabilities

0.32 0.645 0.012

PROFITABILITY RATIO

RATIOS FORMULA

GROSS PROFIT MARGIN

=(Gross profit / Net Sales)

0.06 0.23 0.21

OPERATING PROFIT MARGIN

=(Operating Profit / Net Sales)

0.052 0.21 0.15

NET PROFIT MARGIN

=(NPAT / Net Sales)

0.029 0.03 0.09

ACTIVITY RATIO

RATIOS FORMULA

INVENTORY TURNOVER RATIO

=COGS/ Average Inventory 12.02 0.86 0.94

FIXED ASSET TURNOVER RATIO

= Sales/ Net Fixed Assets

11.70 0.87 2.81

TOTAL ASSET TURNOVER RATIO

= Sales/ Total Assets

2.68 0.27 0.785

RATIOS FORMULA

DEBT EQUITY RATIO

=Long Term Debt / Shareholder’s Equity

0.91 2.02 nil

INTEREST COVERAGE RATIO

=EBIT / Interest3.17 1.57 172.06

PROPRIETORY RATIO

=Shareholder’s fund/Total Assets

0.33 0.312 0.58

LEVERAGE RATIOS

SUMMARY OF FINANCIAL POSITION OF TEXTILE COMPANIES:

CONCLUSION