Introduction

Working Capital:
Working capital is the capital available for conducting the day-to-day
operations of an organization; normally the excess of current assets over current
liabilities.
Working capital (abbreviated WC) is a financial metric which
represents operating liquidity available to a business, organization or other entity,
including governmental entity. Along with fixed assets such as plant and
equipment, working capital is considered a part of operating capital. Gross working
capital equals to current assets. Net working capital (NWC) is calculated as current
assets minus current liabilities.[1] It is a derivation of working capital, that is
commonly used in valuation techniques such as DCFs (Discounted cash flows). If
current assets are less than current liabilities, an entity has a working capital
deficiency, also called a working capital deficit.

A company can be endowed with assets and profitability but short of liquidity if its
assets cannot readily be converted into cash. Positive working capital is required to
ensure that a firm is able to continue its operations and that it has sufficient funds
to satisfy both maturing short-term debt and upcoming operational expenses. The
management of working capital involves managing inventories, accounts
receivable and payable, and cash.

Calculation
The basic calculation of the working capital is done on the basis of the gross
current assets of the firm.

Basic formula
working capital = Gross Current assets
Net working capital = Current assets Current liabilities.

working capital cycle

Definition
The working capital cycle (WCC) is the amount of time it takes to turn the net
current assets and current liabilities into cash. The longer the cycle is, the longer a
business is tying up capital in its working capital without earning a return on it.
Therefore, companies strive to reduce its working capital cycle by collecting
receivables quicker or sometimes stretching accounts payable.
Meaning
A positive working capital cycle balances incoming and outgoing payments to
minimize net working capital and maximize free cash flow. For example, a
company that pays its suppliers in 30 days but takes 60 days to collect its
receivables has a working capital cycle of 30 days. This 30 day cycle usually needs
to be funded through a bank operating line, and the interest on this financing is a
carrying cost that reduces the company's profitability. Growing businesses require
cash, and being able to free up cash by shortening the working capital cycle is the
most inexpensive way to grow. Sophisticated buyers review closely a target's
working capital cycle because it provides them with an idea of the management's
effectiveness at managing their balance sheet and generating free cash flow.
2

CEAT TYRES LTD

HISTORY OF THE ORGANIZATION
On the road since 1958, CEAT has run up to be one of the best tyre manufacturers
in the business. We not only make trailblazing tyres, but also market tubes and
flaps. And that's not all. At CEAT we personify our business; tough yet smooth,
secure yet ready to explore the undaunted.
They are young and revving to go; with a maturity that comes with years of market
presence. More than 3500 Cr annual turnover, an impressive list of clients and
OEMs, various awards and certificates are statistics that could speak for them. But
they'd rather scorch the road with their performance!
They believe that tyres are not just accessories; they are the force that moves their
aspirations. With them we get to choose from a wide range of tyres that suit their
needs and vehicle type. (Not to mention, their radials are racers in the world
market!) Strength is one of the most important attributes of our products, which
complements our solid foundation as a part of RPG Enterprises. Our commitment
to quality ensures that you have a safe ride, always. So go on, defy destiny.

PRODUCT OF THE COMPANY

CEAT manufactures a wide range of tyres for various customer radials for Indian
vehicles and caters to various user segments including

Heavy-duty Trucks and Buses

Light Commercial Vehicles
Earthmovers
Forklifts
Tractors
Trailers
Cars
SUVs
Motorcycles and Scooters
Auto-rickshaws

It exports to over 110 countries across the world. In April 2007, the de-merger of
its investment business to a separate investment and finance company was
approved. CEAT is the only tyre company to be awarded the ISO/TS 16949:2002
certification. It is also the 1st Indian tyre company to get a TUV certificate.

(D) COMPARISON OF LAST FIVE YEAR

Comparison of sales:YEAR
Sales

2007-08
2,32,996

2008-09
2,51,369

2009-10
2,80,747

2010-11
3,46,892

2011-12
4,49,202

sales
600000
500000
400000
300000

sales

200000
100000
0
2007-08

2008-09

2009-10

2010-11

2011-12

Interpretation:The above graph shows the comparison of sales of the company. In 2007-08 the
sales of the company was around 2, 32,996 it increases to 2, 51,369 in next years.
In 2011-12 it reaches to 4, 49,202. This shows that the companys turnover is
double in last five year.

 Comparison of profit after tax:YEAR

PAT

2007-08

2008-09
7.54

2009-10

22.28

2010-11

161.04

-16.11

2011-12
148.60

PAT
180
160
140
120
100
80
60
40
20
0
-20
-40

PAT

2007-08

2008-09

2009-10

2010-11

2011-12

Interpretation:The above graph shows the profit after tax of the company of last five year. In
2007-08 the profit of the company was very low & it was 7.54%. In 2008-09 it
increases to 22028% in 2009-10 it reaches to 160.04% which is very good for the
company in 2010-11 the company had made a loss of 16.11% which is not good
for the company. In last year the company had made a profit of 148.60%.

 Comparison of dividend:YEAR
2007-08
2008-09
2009-10
2010-11
2011-12
3.42
6.85
13.70
0.00
13.70
DIVIDEND

DIVIDEND
16
14
12
10
8

DIVIDEND

6
4
2
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Interpretation:The above graph shows the dividend paid by the company to its share holders in
last five year. In 2010-11 the company had not paid the dividend to its share holder
because of the company had made a loss of 16.11%

WORKING CAPITAL
OF CEAT TYRES LTD

Meaning and Classification of ratio analysis:-

Meaning:A ratio is one number expressed in terms of another. It is a

mathematical yard stick that measures the relationship between two figures.
The term accounting ratio is used to describe significant relationship
which exists between figures shows in a balance sheet, in a budgetary
control system or in any other part of the accounting organization.
Business performance can be measured by use of ratios. In fact an
analysis of financial statements is possible only when figures are
expressed as percentage or ratio. Ratio is of major importance for
financial analysis.
Classification of ratios:-

(1) Profitability Ratio:These are the ratios organized to indicate the

profitability of the business.
- Gross profit ratio
- Net profit ratio
- Operating ratio
- Expense ratio
- Return on capital employed
- Return on shareholder fund
9

- Return on equity share capital

- Earnings per share
- Price earnings ratio

(2) Liquidity ratio:These ratios indicate the poison of liquidity. They are
computed to ascertain whether the company is capable of meeting its
short term obligation.
- current ratio
- liquid ratio
- acid teat ratio

(3) Leverage ratio:These ratio shows composition of capital i.e. proportion

of owners capital & capital provided by out sides.
-

Proprietary ratio

- Debt equity ratio

- Capital gearing ratio
- Fixed capital to fixed assets ratio

10

(4) Turnover ratio:These ratios show the efficiency with which resources
are employed in business.
- Fixed assets turnover ratio
- Total assets turnover ratio
- Stock turnover ratio
- Debtors ratio
- Creditors ratio

(5) Coverage ratio:These ratios show how better the debts payment is
covered by profits in business.
- Debt service coverage ratio
- Interest coverage ratio

11

(B) Calculation and interpretation of ratio:1. Profitability ratio:(A) Gross profit ratio = Gross profit * 100
Sales
Gross profit = sales-cogs

2011-12
95285.29*100
464899.71
20.50%

2010-11
56358.1*100
346892.25
16.25%

2009-10
86341.11*100
280747.60
30.75%

2008-09
61059.5*100
251369.25
24.29%

2007-08
67308.86* 100
232996.67
28.59%

Interpretation:Profitability ratio shows the profit of the company. Gross profit of the company in
2007-08 was 28.59% it reaches 24.29% in next year. In 2009-10 the gross profit of
the company was 30.75%. In 2010-11 the companys profit was very low.

12

(B) Net profit ratio = Net profit * 100

Sales
2011-12
1812.95 * 100
464899.71
0.39%

2010-11
2228.33 * 100
346892.25
0.64%

2009-10
16104.15* 100
280747.60
5.74%

2008-09
1611.16 * 100
251369.25
0.64%

2007-08
14860.44* 100
232996.67
6.38%

2011-12,
3.72%
2007-08, 6.92%
2010-11, 4.00%
2008-09, 8.39%

2009-10,
3.28%

Interpretation:Net profit ratio shows the profitability of the company. In 2007-08 the profit of the
company was 6.38% in 2008-09 the profit of the company was 0.64% which is
very low as compare to last year. In 2011-12 the profit of the company is
0.39%which is very low in the five years.

13

(C) Operating ratio = COGS+ Operating exp *100

Sales
2011-12
369614.42+38128.21*100
464899.71
87.71%

2010-11
290534.15+23627.15*100
346892.25
90.56%

2009-10
194406.49+16310.03*100
280747.60
75.05%

2007-08,
81.09%

2008-09,
87.44%

2008-09
190309.75+29488.53*100
251369.25
87.44%

2007-08
165627.81+23134.4*100
232996.67
81.09%

2011-12,
87.71%

2010-11,
90.56%

2009-10,
75.05%

Interpretation:Operating expenses ratio shows that how much expenses had made by the
company in one year. In 2007-08 the expenses of the company was 81.09% & it
reaches to 90.56% in the year 2010-11. In the year 2009-10 the expenses ratio was
75.05% which is low as compare to the other years.

14

(D) Expenses ratio:(1) Administration expenses= Adman. Exp. *100

Sales
2011-12
977.24*100
464899.71
0.21%

2010-11
1063.53*100
346892.25
.31%

2009-10
1188.79*100
280747.60
0.42%

2008-09
1669.92*100
251369.25
0.66%

2007-08
1176.23*100
232996.67
0.50%

2011-12,
0.21%
2007-08, 0.50%
2010-11, 0.31%
2008-09, 0.66%

2009-10, 0.42%

Interpretation:Administration expenses show the business expenses of the company. In 2007-08

the administration Expenses was 0.50% of the total operating expenses. It reaches
to 0.66% in the next year; in 2011-12 the expenses of the company is 0.21% which
is very low as compare to 2007-08.

15

(2) Financial expenses= finance exp.*100

sales
2011-12
19865.91*100
464899.71
4.27%

2010-11
8675.85*100
346892.25
2.33%

2009-10
5901.44*100
280747.60
2.10%

2008-09
6723.61*100
251369.25
2.67%

2007-08
5841.79*100
232996.67
2.51%

2007-08, 2.51%
2011-12, 4.27%
2008-09, 2.67%
2010-11, 2.33%
2009-10,
2.10%

Interpretation:Financial expenses shows the companys financial expenses which the company
had made for improving its performance, its productivity, & for its development.
In 2007-08it was 2.51% & it reaches to 4.27% which is double in five years. In
2008-09 it was 2.67%, in 2010-11 it was 2.33%.

16

(3) Selling & dis. Exp= selling exp*100

Sales
2011-12
38128.21*100
464899.71
3.72%

2010-11
23627.15*100
346892.25
4.00%

2009-10
16310.03*100
280747.60
3.28%

2008-09
29488.53*100
251369.25
8.39%

2007-08
2313.44*100
232996.67
6.92%

2011-12,
3.72%
2007-08, 6.92%
2010-11, 4.00%
2008-09, 8.39%

2009-10,
3.28%

Interpretation:Selling & distribution expenses Shows Companys manufacturing expenses &

transportation expenses. Advertising & marketing expenses is also covered in
selling & distribution expenses. In 2007-08 the expense was 6.92% it reaches
3.72% in 2011-12. In 2008-09 it was 8.39% which is very high.

17

(E) Return on capital employed= Ebit *100

Capital employed
2011-12
2426.99*100
124925.2
1.94%

2010-11
3324.19*100
127327.98
2.61%

2009-10
23899.65*100
94076.50
25.40%

2011-12, 1.94%

2007-08,
25.34%

2008-09
3317.22*100
88650.58
3.74%

2007-08
19731.04*100
77864.81
25.34%

2010-11, 2.61%

2009-10,
25.40%

2008-09, 3.74%

Interpretation:The above ratio shows the return on capital employed by the company on one year.
The company had earned 25.34% return on its capital employed. In 2011-12 its
return is very low & it is 1.94% of its total capital which is very low & not good
for the company.

18

(F) Return on shareholder fund= PAT *100

SHARE HOLDER FUND
2011-12
1812.95*100
67761.25
2.68%

2010-11
2228.33*100
64914.52
3.43%

2009-10
16104.15*100
62871.45
25.61%

2011-12, 2.68%

2007-08,
28.95%

2008-09
1611.16*100
48838.15
3.30%

2007-08
14860.44*100
51325.73
28.95%

2010-11, 3.43%

2009-10,
25.61%

2008-09, 3.30%

Interpretation:Return on shareholders funds shows the hoe much return the shareholder were get
in return. In 2007-08 the ratio was 28.95% & after that the return of the company
were declined & reaches to 3.30% in 2008-09. In 2009-10 it increases to 25.61%
which is good for the company.

19

(G) Return on equity share holder fund= PAT pref.div *100

Equity share holder fund
2011-12
1812.95-0*100
67761.25
2.68%

2010-11
2228.33-0*100
64914.52
3.43%

2009-10
16104.15-0*100
62871.45
25.61%

2011-12, 2.68%

2007-08,
28.95%

2008-09
1611.16-0*100
48838.15
3.30%

2007-08
14860.44-0*100
51325.73
28.95%

2010-11, 3.43%

2009-10,
25.61%

2008-09, 3.30%

Interpretation:This ratio indicates the earning of equity share holders of the company. In 2007-08
the ratio was 28.95% & after that the return of the company were declined &
reaches to 3.30% in 2008-09. In 2009-10 it increases to 25.61% which is good for
the company.

20

(H) Earnings per share= profit available for share holder

No of equity shares
2011-12
1812.95
3424.35
0.53 rs

2010-11
2228.33
3424.35
0.65 rs

2009-10
16104.15
3424.35
4.70 rs

2011-12, 0.53

2008-09
1611.16
3424.25
0.47 rs

2007-08
14860.44
3424.25
4.34 rs

2010-11, 0.65

2007-08, 4.34
2009-10, 4.7

2008-09, 0.47

Interpretation:Earnings per share shows that how much profit each equity shareholders received.
In 2007-08 the earnings of the company was 4.34 Rs & it reaches to 4.70 Rs in
2009-10.in 2008-09, 2010-11 it was 0.47 Rs & 0.65 Rs accordingly. This ratio is
not good for the company.

21

(J) Price earnings ratio= market price of share

Earnings of share holders
2011-12
107.20
0.53
202.26rs

2010-11
107.20
0.65
164.92 rs

2009-10
107.20
4070
22.81 rs

2008-09
107.20
0.47
228.09 rs

2007-08
107.20
4.33
24.76 rs

2007-08, 24.76

2008-09,
228.09

2011-12,
202.26

2010-11,
164.92
2009-10, 22.81

Interpretation:price earnings ratio shows that how much return the shareholders had made by its
current market price in the market. In 2007-08 it was around 24.76 Rs, in 2008-09
the earnings was 228.09 Rs, in 2010-11 it was 164.92 Rs. This ratio is very good
for the company.

22

2. Liquidity ratio:(A) Current ratio:- Current assets

Current liabilities
2011-12
144851.18
177686.09
0.82:1

2010-11
108402.33
106734.27
1.02:1

2009-10
92238.09
75467.05
1.22:1

2008-09
73964.32
48904.12
1.51:1

2007-08
69055.52
52827.32
1.31:1

2011-12,
0.82
2007-08, 1.31
2010-11, 1.02
2008-09, 1.51
2009-10, 1.22

Interpretation:Current ratio shows that how much current assets & current liabilities were there in
the company. In 2007-08 it was 1.31:1 which means that the company had 1.31
current assets against its current liabilities. In 2008-09 it was 1.51:1, in 2009-10 it
was 1.22:1, & in 2011-12 it was 0.82:1 which was very low in the five years.

23

(A) Liquid ratio:- liquid Assets

Liquid liabilities
2011-12
88182.71
177686.09
0.50:1

2010-11
51656.03
106734.27
0.48:1

2009-10
51630.52
75467.05
0.68:1

2008-09
52022.69
48904.12
1.06:1

2007-08
34949.52
52827.32
0.66:1

2011-12, 0.5
2007-08, 0.66
2010-11, 0.48
2008-09, 1.06
2009-10, 0.68

Interpretation:Liquid ratio shows that how much liquidity the company has in the market.
Whether the company is liable to pay its liabilities or not. This all were calculated
on the bases of liquidity ratio. The company has more liquidity in 2008-09 which
was 1.06:1 means the company is in strong position to repay its liabilities. In 201112 it was 0.50:1 which shows that the company had borrowed more money from
the market.

24

(B) Acid test ratio:- cash & bank

Liquid liabilities
2011-12
3595.98
177686.09
0.20:1

2010-11
4788.06
106734.27
0.05:1

2009-10
13998.91
75467.05
0.19:1

2008-09
20151.84
48904.12
0.41:1

2007-08
4158.70
52827.32
0.08:1

2007-08, 0.08

2011-12, 0.2
2010-11, 0.05
2008-09, 0.41
2009-10, 0.19

Interpretation:Acid test ratio shows that how much cash is there in the hand of the company
against its liquid liabilities. In 2007-08 it was around to 0.08:1, in 2009-10 it was
0.41:1. In last year it was around to 0.2:1 which is very low & it is not good for the
company.

25

3. Leverage ratio:(A) Proprietary ratio: - proprietary fund *100

Total assets
2011-12
67761.25
306216.95
22.13%

2010-11
64914.52
265504.23
24.45%

2009-10
62871.45
198365.44
31.69%

2008-09
48838.15
157725.72
30.96%

2007-08
51325.73
149025.21
104.69%

2011-12,
22.13%

2007-08,
104.69%

2010-11,
24.45%
2009-10,
31.69%
2008-09,
30.96%

Interpretation:Proprietary ratio shows the total proprietary fund against its total assets. In 2007-08
The proprietary ratio was around 104.69% which is very high against its total
assets. In 2008-09 it was around 30.96%, in 2009-10 it was 31.69% & in 2011-12
it was 22.30% which is good for the company.

26

(B) Debt equity ratio:- long term debt *100

Eq. share cap.
Long term debt = secured loan
2011-12
57163.95
67761.25
84.36%

2010-11
62413.46
64914.52
963.15%

2008-09,
81.52%
2009-10,
49.63%

2009-10
31205.11
62871.45
49.63%

2007-08,
51.71%

2008-09
39812.43
48838.15
81.52%

2007-08
26539.08
51325.73
51.71%

2011-12,
84.36%

2010-11,
963.15%

Interpretation:The above ratio shows how much debt the company has against its equity share
holders. In 2007-08 the company has 51.71% debts against its equity. In 2010-11 it
reaches to 963.15% which is very high & not good for the company, in 2011-12 it
was around 84%. This ratio shows that the company has more debt against its
equity share holders.

27

(C) Capital gearing ratio:- Fixed charge bearing cap. *100

Equity share capital
Fixed charge bearing capital = secured loan + preference share
2011-12
57163.95
3424.35
16.69%

2010-11
62413.46
3524.35
18.23%

2009-10
31205.11
3424.35
9.11%

2008-09
39812.43
3424.25
11.63%

2007-08
26539.08
3424.25
7.75%

2007-08,
7.75%
2011-12,
16.69%
2008-09,
11.63%
2009-10,
9.11%

2010-11,
18.23%

Interpretation:Capital gearing ratio shows the companys long term borrowing funds which a
company had borrowed. In 2007-08 the company had 7.75% of the total equity. In
2008-09 it was around 11.63%, in 2009-10 it was around 9.11% in 2011-12 it was
16.69% which shows that the company had had taken more borrowings from out
siders.

28

(C) Fixed asset to fixed capital:- Fixed assets

Fixed capital
2011-12
150152.73
124925.2
1.20:1

2010-11
148448.92
127327.98
1.17:1

2007-08, 1.01

2009-10
100276.58
94076.56
1.07:1

2008-09
79494.69
88650.58
0.89:1

2007-08
79009.96
77864.81
1.01:1

2011-12, 1.2

2008-09, 0.89
2010-11, 1.17

2009-10, 1.07

Interpretation:The above ratio shows that how much fixed assets were there in the company
against its fixed capital. In 2007-08 it was around 1.01:1 which is good for the
company. In 2008-09 it reaches to 0.89:1 means the company has 0.89 fixed assets
against its 1 capital. In 2011-12 it was around 1.2:1 which is good for the
company.

29

4. Turnover ratio:(A) Fixed assets turnover ratio:-Sales

Fixed assets
2011-12
464899.71
150152.73
3.10 times

2010-11
346892.25
148448.92
2.34 times

2009-10
280747.60
100276.58
2.80 times

2008-09
251369.25
79494.69
3.16 times

2007-08
67308.86
79009.96
0.85 times

2007-08, 0.85

2011-12, 3.1
2008-09, 3.16
2010-11, 2.34
2009-10, 2.8

Interpretation:
Fixed assets turnover ratio shows that how much fixed assets were there in the
company against sales of the company. In 2007-08 it was around 3.16 times of the
sales. In 2009-10 it was 2.8 times, in 2011- 12 the fixed assets turnover ratio was
3.1 times of its sales.

30

(B) Total assets turnover ratio:-Sales

Total assets
2011-12
464899.71
306216.95
1.52 times

2010-11
346892.25
169213.86
2.05 times

2009-10
280747.60
130272.83
2.16 times

2008-09
251369.25
114982.95
2.19 times

2007-08
67308.86
101815.99
0.66 times

2007-08, 0.66

2011-12, 1.52
2008-09, 2.19
2010-11, 2.05

2009-10, 2.16

Interpretation:Total assets turnover ratio shows the total assets of the company against its sales.
In 2007-08 the total assets were 2.19 times of its sales which are good for the
company. In 2010-11 it was around 2.05% , in 2011-12 the total assets were 1.52
times of the sales.

31

(C) Debtors turnover ratio:Debtors ratio: - debtors + Bills receivables*360

Credit sales
2011-12
60268.47+63664.69*360
464899.71
96 days

2010-11
46867.97+0*360
346892.25
49 days

2009-10
37631.61+0*360
280747.60
48 days

2008-09
31870.85+0*360
251369.25
46 days

2007-08
30790.82+0*360
67308.86
165 days

2011-12
360
96
3.75 times

2010-11
360
49
7.35 times

2009-10
360
48
7.5 times

2008-09
360
46
7.83 times

2007-08
360
165
2.18 times

2011-12, 96
2007-08, 165
2010-11, 49

2008-09,
46

2009-10,
48

Interpretation:Debtors ratio shows that how much debt the company has to recover from the
debtors of the company. In 2007-08 debtors turnover ratio was around 2.18 times
or more than 160 days in a single year. In 2008-09 it was 46 days; in 2009-10 this
ratio was 48 days. In 2011-12 it increases to 96 days.

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(D) Creditors turnover ratio:Creditors ratio: - Creditors + bills payables *360

Credit purchase
2011-12
66894.25+0*360
337931.29
71 days

2010-11
28308.34+0*360
264969.78
38 days

2009-10
49159.76+0*360
172825.69
102 days

2008-09
29496.17+0*360
170428.51
62 days

2007-08
37039.33+0*360
147852.83
90 days

2011-12
360
71
5.07 times

2010-11
360
38
9.47 times

2009-10
360
102
3.53 times

2008-09
360
62
5.8 times

2007-08
360
90
4 times

2011-12, 71
2007-08, 90
2010-11, 38
2008-09, 62
2009-10, 102

Interpretation:The above ratio shows credit period which the company gave to its creditors. In
2007-08 this ratio was around 90 days. It reaches to 71 days in 2011-12. In 200809 the creditors ratio was 62 days; in 2009-10 it was 102 days.

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(D) Stock turnover ratio:- COGS

Average stock
2011-12
369614.42
20683.7
17.87 times

2010-11
290534.15
19856.58
14.63 time

2009-10
194406.49
11395.63
17.06 times

2007-08, 16.85

2008-09, 18.92

2008-09
190309.75
10059.92
18.92 times

2007-08
165687.81
9833.61
16.85 times

2011-12, 17.87

2010-11, 14.63

2009-10, 17.06

Interpretation:Stock turnover ratio shows that how much stock were being turnover in one year.
In 2007-08 the stock turnover ratio of the company was 16.85 times. In 2008-09
the turnover ratio was 18.92 times; in 2009-10 it was 17.06%. In 2011-12 the ratio
was 17.87 times. This ratio of the company is very good for the company.

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5. Coverage Ratio:(A) Debt Service coverage ratio: - P.A.D.P.

Installment+ interest
2011-12
24693.94
43891.61
0.56 times

2010-11
13501.08
-24358.83
10857.75 times (loss)

2009-10
24946.07
14290.45
1.75 times

2008-09
11615.74
-24652.55
13036.81 times(loss)

2007-08
23853.44
-20845.2
3008.24 times

2011-12, 0.56
2007-08,
3008.24
2010-11,
10857.75

2008-09,
13036.81

2009-10, 1.75

Interpretation:This ratio show that how much debt covered by the company in one year. Debt
service coverage ratio shows that how much debt the company recovers in the last
five year. In 2007-08 the debt coverage ratio of the companywas3008.24 times. In
2011-12 it was around to 0.56 times which is very low in the five year. In 2008-09
the company has a loss of 13036.80 times of its profit.

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(B) Interest coverage ratio: - EBIT

Interest
2011-12
19731.04
5693.88
0.16 times

2010-11
3717.22
6552.56
0.42 times

2009-10
23899.65
5683.13
4.21times

2011-12, 0.16

2008-09
3324.19
7849.52
0.57 times

2007-08
2426.99
15600.78
3.47 times

2010-11, 0.42

2007-08, 3.47
2009-10, 4.21

2008-09, 0.57

Interpretation:Interest coverage ratio shows the companys interest recovery from the creditors.
In 2007-08 it was 3.47 times, in 2011-12 it was around to 0.16 times or in 2009-10
this ratio of the company was 4.21 times which is very high.

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