Real Strips Limited

A Project Report Submitted to
PROF. APOORVA RAVAL

P.G.R.I.M.S. – MBA College,
(Affiliated With GUJARAT
TECHNOLOGICAL UNIVERSITY)
On
15th FEBURARY, 2010.
In
the Master of Business
Administration Programme.
Submitted by:
HARDIK K SHAH – 48
PREFACE
This is a 21st century today every person

wants to be master in the field they are in.
There are many fields to choose master. So,
one has to choose only one field in which he
thinks he can go further deep. If he chooses
one field to go deep, other fields automatically
subdued.
Master of Business Administration [M.B.A.]

is a professional course, so when the student
completes the course he should not have only
theoretical knowledge he should also have
practical knowledge For the purpose of getting
practical knowledge the student are required
to prepared the project report .The project is
prepared on the basis of the financial analysis
of some organization.
The main purpose in the finance field is to

know how the financial analysis is done. We all
know that finance is the blood of any business
and without it no business can run. In the field
of finance you always learn something new,
and if you like challenging work you should
choose finance.
As we like calculative subject and

challenges, we have chosen an organization
that is REAL STRIPS LIMITED where we get
exposure of all type of work and can learn
many things. It is a private company concern
which deals in the single product that is cold
rolled stainless steel coils.
Financial analysis of a company is very

difficult and the most important, most
challenging task and we like challenges so we
have chosen the subject of financial analysis
and by doing this we are able to know its
financial position and financial structure of the
company.
The most important things required for

analyzing the financial statements is the
annual report of the company. This annual
report contains analysis of the 3 years annual
reports.
Every management student should have

the knowledge of practical application of the
theory that he/she learns in the classroom. So,
this grand project becomes very helpful in
doing so.
Ahmedabad.
3RD November, 2009.
NISHANT R. SHAH -
50
EXECUTIVE SUMMARY
This project report is prepared on the financial analysis of

REAL STRIPS LIMITED Situated Bavla Highway, Ahmedabad. This
report consists of mainly three parts that is Organizational profile,
Introduction to the report and the main theme of the report that is the
financial analysis. The grand project is a good learning experience.
By preparing project report we are able to know the different criteria
and different things about the company.
The initial part of this report contains the brief information

about the organization profile that is its History Development &
Achievements, company profile its product, Infrastructure etc. The
second part consists of the introduction to the report.
The practical concern of this report is revealed by learning of

practical business scenario that is the financial analysis .The third
part consist of financial analysis , contains Ratio analysis , Do Pont
Chart , Horizontal Analysis , Vertical Analysis ,Trend Analysis &
Cash flow Analysis etc.
Ratio analysis comprising mainly five types of ratio analysis as
under:
Liquidity / Balance sheet ratio

Liquidity Ratio
Assets turnover Ratio
Finance/Leverage/Capital Ratio
Valuation Ratio
We have done financial analysis of REAL STRIPS

LIMITED and I found that it is well managing its profit, its staff and
achieving more and more height every year. In the year 2004-2005,
they have occurred profit of Rs. 27588062 before tax and net profit is
Rs. 18286469 .The amount carried forward to the Balance Sheet is
Rs. 66373711. Their earning per share (EPS) is 5.58 Rs. Which is
more than 7.52% compare to last year.
For any company financial analysis is very important because

by analyzing company on the financial basis you are able to know its
profit and loss but you can do analysis of their current and liquidity
position. Not only this you are also able to know the financial position
of the company and whether to invest in it or not. You can also know
that it is a good company or making losses.
You can also know its promoters and think that whether to
invest or divest from the company, the company is occurring debt or
equity based. It is declaring dividend or not and what is the pay-out
ratio there. The company is listed and has its auditors.
What is the earning and is the company creditworthy -all this

answers we get from the annual report and from that we can know
financial position of the company. As the level of student or person or
as a company you should always check the financial position of a
company so that your money and job are safe. In the project report I
tried my level best to know more and more about the company, its
position, its network and its profitability.
Table of Contents
CHAPTER PARTICULAS PAGE NO
NUMBER
Preface
Acknowledgement
Executive Summary
PART: 1 ORGANIZATIONAL PROFILE
Chapter : 1
1.1 Introduction to the Industry
1.2 History & Development
1.3 Company Profile
1.4 Infrastructure
1.5 Management
1.6 Products
1.7 Environment
1.8 Pro-forma Of Inquiry Form
1.9 Organizational Chart
PART: 2 INTRODUCTION TO THE

REPORT
Chapter:2
2.1 Introduction of the Financial Statements
2.2 Introduction Of Ratio Analysis
2.3 Definition Of Ratio
2.4 Statement of Comparison
2.5 Nature of Ratio
2.6 Importance of Ratio Analysis
2.7 Limitation Of Ratio Analysis
2.8 Various types of Ratios
PART:3 FINANCIAL ANALYSIS
Chapter 3: FINANCIAL STATEMENTS
Chapter 4: RATIO ANALYSIS
4.1 Liquidity Ratios

4.2 Profitability Ratios
4.3 Turnover/Activity ratio
4.4 Capital/ Finance/leverage Ratio
4.5 Valuation Ratio
4.6 Comparisons Of the Ratios Of the Four Years
Chapter 5: TREND ANALYSIS
5.1 Trend Analysis of Profit &Loss A/C for 4 Yrs.

5.2 Trend Analysis Of Balance Sheet for 4 Years
Chapter 6: CONCLUSION
BIBLIOGRAPHY
PART - I
CHAPTER-1
SHAPE \* MERGEFORMAT
1.1: INTRODUCTION TO THE INDUSTRY:
I
ndia is a vast market and offers tremendously potential for future.
The per capita consumption of stainless steel in India is still one of
the lowest in the world at 0.70 kg as compared to 14-15 g in the
dev eloped countries but it is growing very rapidly.
The demand for steel products has been a spurt in the

international market. Previously, the domestic utensils sector was the
largest consumer of the company’s product. However the end uses
of the company’s product is also getting diversified with the greater
awareness on the use of the Stainless Steel in Furniture, Building
and Construction Sector. The modernization programmes of the
company have resulted in the production of high grade Stainless
Steels Coil which finds its place in the Process industries, Chemical
Industries & Food processing industries. With the upward trend in the
prices of Flat Stainless Steel Products.
Expansion cum modernization programmes implemented
during the past few years is now yielding result. Turnover has gone
up from Rs 4064.23Lacs in the previous year to Rs. 4901.95 Lacs in
the year under report. Full utilization of the capacity has resulted into
improved operating margin. Gross profit before depreciation and
interest has gone up to Rs. 869.99 lacs showing an increase of 21%
over the previous year.
(A) FUTURE PROSPECTS:
The company has undertaken an expansion project. One more

rolling mill is being installed. After completion of the same, the
installed capacity will go up from the present 8000 MTPA to 12000
MTPA. It is the endeavor of the directors to complete the expansion
during the third quarter of the current fiscal year. The application of
and particularly stainless steel coil is gaining more and more
acceptance in a variety of industrial and domestic use. New and
innovative uses of the stainless steel coils are being made.
The prices of HR coils, which is the basic raw material of the
company have stabilized. Looking at the international scenario it is
expected that price of HR coils will have declining trend. Any
decrease in the price of Hr coils will be to the benefit of the Company
(B) GREEN ENERGY
Power tariff in the state of Gujarat is one of the highest in the

country. Consumption of power in steel industry is very high. Cost of
power consumption is a major cost of component next to raw material
cost. Cost of the power consumption has been increasing steadily for
the past many years, which has been a cause of concern for the
consumers. The government has also been encouraging the
installation of wind turbine generators. The banks also have been
advancing loan at the lower rate of interest.
Last year Company had installed a wind mill of 1.25 MW
capacities. Encourage by the benefits of wind mill during the year one
or more wind mill of 0.350 MW has been installed. During the year
under review Company had consumed 2404415 unit of electricity.
Where as the wind mill had generated 2447176 units, which are set
off against the energy bill paid to the state electricity Board.
1.2: HISTORY AND DEVELOPMENTS:
Stainless steel production in India has a short history of 20

years. In 1978 government of India allowed production of stainless
steel by the private sector. Before 1978 only 15000 MT of stainless
steel was produced per year by the state owned units and the
demand for cold rolled materials was met by imports again by the
State Trading Corporation.
Stainless steel production has taken a giant leap from a measly
15000 MTPA to 1.4 - 1.5 million MTPA which makes India as one of
the fastest growing market of steel in the world.
Comparing it with aluminum, plastics and steel all along its

ongoing tenure, SS is on the way up, as far as its popularity and the
extent of the use is concerned.
Share of Stainless Steel was more domestic utensil sector was

90% in the year 1990-91 and today it is about 75% where as usage
in industrial sector compared to 36.5% by the developed countries is
mere 10%.
Demand for SS is raising at the rate of 5% p.a. currently the

demand is 1.6 MTPA which is targeted to increase to 2 MT within the
two years which indicates bright prospects for the industry.
Stainless steel production in India is rapidly growing every year.
India has emerged as the largest producer of 200 series low nickel
stales steel in the world. There is greater awareness on the use of
stainless steel in the building and construction sector. Moreover the
uses of stainless steel flat products are also increasing in the
Process Industries, chemical processing, Oil & Gas, Petrochemicals,
Food Processing Industries Auto & Aerospace industries, Railways
and telecommunication industries.
Company has put up wind mills with capacity of 1.25 MW &
0.35 MW respectively, to help the drive of alterative energies and
save power cost for us.
The achievement of your company stands on the ground of the

intellectual and professional commitment that our people brought to
their work. Besides operational efficiency and management skills,
honed under the most demanding and competitive conditions, it is the
spirit of all our employees that are bonded cohesively with the
organization.
The company believes in employee’s involvement in achieving

the organizational objectives and focuses its efforts to upgrade the
skills of its workforce to take-up the challenges in the present
competition. The training system provides need-based training to our
employees. We are putting efforts to make our appraisal system
more effective to cater the financial and career aspirations of
employees to increase organizational effectiveness and efficiency.
The industrial relations are good and harmonious. Both
Management and Workgroup take positive approach and come to
mutual understanding, wherever necessary for betterment of the
organization.
Our employees are our most valuable asset and we believe

that your company’s work force is the pivot around which our success
revolves.
1.3: COMPANY PROFILE
Real Strips Limited, AN ISO 9001 : 2000 Accredited Company

came in to existence in 1994 to cater the demand of Cold rolled flat
products of stainless steel, for quality conscious manufacturer. Real
Strips Limited is situated on out skirt of hub city of Gujarat.
Coils/Strips produced by Real Strips Limited are used in

Automobiles, Food & Dairy Industries, Sugar Industries, Watch
Industries, Pipes & Tubes Industries, Utensils, Furniture,
Architectural Utilities, Thermo wares, Chemical process Industries,
Electronic Industries, Surgical industries, etc for very specialized
application.
1.4: INFRASTRUCTURE
In our company around 200 workers working in factory.

Our working capacity is 9000 MT per annum.
Our total area is 48560 square meter or 522700 square feet.
1.5: MANAGEMENTS:
A. BOARD OF DIRECTORS:
SHRI A.K. KATARIA CHAIRMAN
SHRI A.D. SANGHVI MANAGING DIRECTOR
SHRI UGAMRAJ M. HUNDIA JOINT MANAGING

DIRECTOR
SHRI P.S. JAIN JOINT MANAGING

DIRECTOR
SHRI ASHWIN A. KATARIA WHOLE-TIME DIRECTOR
SHRI BABULAL S. JAIN DIRECTOR
SHRI CHANDRESH V. SHAH DIRECTOR
SHRI PAWAN R. MURARKA DIRECTOR
SHRI AMOL DALAL DIRECTOR
B. AUDITORS:
M/S MEHTA LODHA & CO.
CHARTERED ACCOUNTANTS
C. CONTACT PERSON:
MR. PRAKASH S. JAIN PUBLIC REL. OFFICER
MR. RAMESH CHAUDHARY GENERAL

MANAGER
MR. RAMCHARAN BERIWALA FINANCE MANAGER
D. BANKERS:
UNION BANK OF INDIA
STATE BANK OF INDIA
E. REGISTERED OFFICE:
26, MANGAL MURTI COMPLEX,
NEAR SHIV CINEMA,
ASRAM ROAD,
AHMEDABAD - 380009
F. WORKS:
SURVEY NO.245
VILLAGE: SARI
AHMEDABAD-BAVLA HIGHWAY
TALUKA: SANAND
DISTRICT: AHMEDABAD.
1.6: PRODUCT
Chemical Composition
Product QualityRequirement
Mechanical Properties of 2D finish coil
Quality
Surface Finish
Real Strips Limited offers a very comprehensive product mix. Most of the
products are tailor made to cater the need of various industrial/Commercial
segments.
Production Facilities
One 4 Hi Mill
One 12 Hi Mill
Skin Pass Mill
Two Slitting Lines
Five Annealing & Pickling Line
Mechanical properties of 2D finish coil
Grade UTS N/mm2 0.2% pro of % elongation Hardness RB

Minimum stress in 50 mm GI maximum
N/mm2 minimum
minimum
301 515 205 40 95
304 515 205 40 92
304-L 485 170 40 92
316 515 205 40 95
316-L 485 170 40 95
321 515 205 40 95
JSL AUS 515 205 35 96
J-4 515 205 30 98
Quality
Annealed-Pickled (Soft), 1/4 Hand,1/2 Hand, 3/4 Hand, full Hard (As
rolled)
Coil wt. - 50 kg to 2.5 M.T.
Surface finish
CR Strips - Work hardened for specific hardness.
2D -Cold rolled stainless steel strips annelid & pickled.
2B -Cold rolled stainless steel strips annelid & pickled & Skin passed.
Product Quality Requirement
Product Range & /or Tolerance
Characterist
ics
Grade 301,304,304-L,316,316-L,321,JSL
AUS,J4
Finish 2D Cold rolled stainless steel strips
annealed & pickled 2B, Cold rolled
stainless steel strips annealed & skin
passed\ CR strips (Works Harder for
Specific Hardness)
Width For Mill edge Range 250 to 610 mm Tolerance +/-
10 mm
For Slit edge Range 10 to 610 mm Tolerance.
Thickness Up to 1.00 1.00 to 1.75 to 2.50
-> mm 1.75 mm 2.50 mm to3.00
mm
Width Width Width Width Width
10 to 50 0.20 0.20 0.30 0.30
50 to 100 0.20 0.20 0.30 0.30
100 to 200 0.25 0.25 0.30 0.30
200 to 300 0.25 0.25 0.30 0.30
300 to 500 0.40 0.40 0.40 0.40
500 to 610 0.50 0.50 0.50 0.50
Thick ness Coil Tolerance +/- mm
thickness
in mm
Up to0.25 0.03
0.25 to 0.04
0.70
0.70 to 0.05
1.00
1.00 & 5% of coil thickness
above
Better thickness tolerance on demand. Measurement of
thick ness should be made at distance not less than 20 mm
from the edge of the stirs.
Weight Maximum 5.5 kg per mm width of stainless steel strips
depending upon required thickness & width of the coil.
Packing Hessian stainless steel strips or as per customer
requirement.
Coil ID Min 150 mm to 510 mm max depending on thickness &
width of coil.
1.7: ENVIRONMENT
Real Strips Limited has taken serious note to take care of environment. All
the guidelines issued by Honorable High court and Govt. of India are
thoroughly abided. The liquid waste (effluent) released from our
production unit is treated within our Effluent Treatment Plant. The
Effluent Treatment Plant is fully equipped to treat the effluent up to desired
safely level.
Real Strips Limited has started a big drive for tree plantation at our
industrial site. Therefore, Real Strips Limited is proud to call itself
environment friendly organization, believing in environment cleanliness and
industrial safety along with industrial growth.
1.8: PROFORMA OF THE INQUIRY FORM
Name:
Designation:
Company :
Address
City
State
Country:
Zip:
Phone No.
Fax No.
Email Address
INTERESTED IN :
Grade
Thickness
Tolerance:
Width:
Tolerance:
Tensile Strength
Yield Strength
Elongation :
Hardness :
Edge condition
(Unslitted/Slitted) :
Hardness & surface
finish :
Coil wt. :
Coil I.D. :
Quantity :
Place of destination
Comments
1.9: ORGANISATION CHART
PART – II
CHAPTER-2
2.1: INTRODUCTION OF FINANCIAL STATEMENT
A Financial statement is an organized collection of data

according to logical and consistent accounting procedures. Its purpose is to
convey an understanding of some financial aspects of a business firm. A
firm communicates financial information to the user through financial
statements and reports. Two basic financial statements prepared for the
purpose of external reporting to owners, investors and creditors are:
(1) Balance sheet
(2) Profit and loss account.
For the internal management purpose that is planning and controlling,
much more information is needed than contained in the published financial
statement is needed. The basic objective of financial statement is decision
making. Much can be learnt about a firm from careful examination of its
financial statements as invaluable documents. Thus, it is an important aid to
financial analysis.
2.2: INTRODUCTION OF THE RATIO ANALYSIS
Ratio analysis is a powerful tool of financial analysis, where ratios are used
as a yardstick for evaluating the financial condition and performance of a
firm. Analysis and interpretation of various accounting ratios give a skilled
and experienced analysts a better understanding of the financial condition
and performance of the firm that what he could have obtained only through
a persuade of the financial statements. The term ratio refers to the numerical
or quantitive relationship between two items or variables. It can be
expressed as (1) percentages (2) fractions and (3) proportion of numbers.
These alternative methods of expressing items which are related to

each other are, for purpose of financial analysis referred to as ratio analysis.
It should be noted that computing the ratios does not add any information
that already inherited in the figures of profits and sales. What the ratios do is
a more meaningful way so as to enable us to draw conclusions from them.
The systematic use of ratio to interpret the financial statements for knowing
the strength and weakness of a firm as well as its historical performance and
current financial condition.
The ratio analysis as a quantitive tool enables analysists to draw

quantitive information about net profits adequate, efficient uses of assets,
firm’s currents obligations etc.
2.3: DEFINITION OF RATIO:
“The relationship between two accounting figures expressed

mathematically, is known as ratio or financial ratio.”
“The alternative methods of expressing items which are related to

each other are, for purpose of financial analysis, referred to as ratio
analysis.”
2.4: STANDARD OF COMPARISION:
The ratio analysis involves comparison for a useful interpretation of

the financial statements a single ratio in itself does not indicates favorable or
unfavorable condition. Some standards of comparison are useful here, which
may consist of:
 Ratio calculated from the past financial statements of the same firm.
 Ratio developed using the projected or pro forma, financial statement
of the same year.
 Ratios of some selected firms, especially the most progressive and
successful. At the same point of time, and
 Ratios of the industry to which the firm belongs.
The easiest way to evaluate the performance of a firm is to compare
its current ratios with the past ratios. It gives an indication of the direction of
change and reflects whether the firm’s financial performance has improved,
deteriorated or remained constant over time. The change may be affected by
changes in the firm’s performance.
Sometimes future ratios are used as the standards of comparison of

past ratios with future ratios show the firms relative strengths and
weaknesses in the past and the future. If the future ratio indicates the weak
financial position, corrective actions should be initiated.
In the other way, we can compare ratios of one firm with some
selected firms in the same industry at the same point in time. It is more
useful to compare the firms’ ratios with ratio of a few carefully selected
competitors, who have similar operations. It indicates the relative financial
position of the firm.
For determining the financial condition and performance of a firm,

this ratio may be compared with average ratios of the industry of which the
firm is a member. It helps to ascertain the financial standing and capability
of the firm in the industry to which it belongs. Industry ratios are important
standards in view of the fact that each has its own characteristics which
influence the financial and operating relationships.
2.5: NATURE OF RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio is a
indication quotient of two mathematical expressions, which is used as an
index or yardstick for evaluating the financial position and performance of a
firm. The absolute accounting figures do not provide a meaning
understanding of the performance and financial position of the firm.
An accounting figure conveys meaning when it is related to some

other relevant information. Ratios help to summarize the large quantities of
financial data and to make qualitative judgment about the firm’s
performance. The greater the ratio, the greater the firms liquidity and the
vice-versa. The point to note is that a ratio indicates a quantitive
relationship, which can be used to make a quantitive judgment. Such is the
nature of all the financial ratios.
2.6: IMPORTANCE OF RATIO ANALYSIS:
The importance of ratio analysis lies in the fact that it represents facts
on a comparative basic and enables the drawings of a inferences regarding
the performance of a firm. In respect of the following aspects, ratio analysis
is relevant.
1. LIQUIDITY POSITION.
2. LONG TERM SOLVANCY.
3. OPERATING EFFICIENCY.
4. OVER ALL PROFITABILITY.
5. INTER FIRM COMPARISON.
6. TREND ANALYSIS.
2.7: LIMITATIONS OF RATIO ANALYSIS:
There are several limitations of ratio analysis.

1. COMPARATIVE STUDY REQUIRED
2. LIMITATION OF THE FINANCIAL STATEMENT.
3. RATIOS ALOME ARE NOT ADQUATE.
4. WINDOW DRESSING.
5. PROBLEMS OF PRICE LEVEL CHANGES.
6. NO FIXED STATEMENTS
7. RATIOS ARE A COMPOSITE OF MANY FIGURES.
2.8: VARIOUS TYPES OF RATIOS:
There are mainly five kinds of Ratios:
1. LIQUIDITY RATIO.
2. PROFITABILITY RATIO.
3. ASSETS TURNOVER RATIO.
4. FINANCE / LEVERAGE / CAPITAL RATIO.
5. VALUATION RATIO.
1. LIQUIDITY RATIO:
(a) CURRENT RATIO:

(b) LIQUIDITY RATIO/ QUICK RATIO
(c) QUICK RATIO
(d) NET WORKING CAPITAL
(e) CASH GENERATED PER RUPPES OF SALES:
(f) BANK FINANCE GAP RATIO:
(g) CAPITAL GEARING RATIO:
2. PROFITABILITY RATIO.
(a) OPERATING PROFIT RATIO:

(b) GROSS PROFIT RATIO:
(c)NET PROFIT RATIO
(d) RATE OF RETURN ON INVESTMENT:
(e) RATE OF RETURN ON EQUITY:
(f) RETURN ON ASSETS:
3. ASSETS TURNOVER RATIO.
(a) INVENTORY / STOCK TURNOVER RATIO:

(b) AVERAGE AGE OF INVENTORIES:
(c) TOTAL ASSETS TURNOVER:
(d) NET FIXED ASSETS TURNOVER
(e) NET WORKING CAPITAL TURNOVER:
(f) DEBTORS TURNOVER:
(g) CREDITORS TURNOVER RATIO:
4. FINANCE / LEVERAGE / CAPITAL RATIO.
(a) PROPRIETORY RATIO:

(b) EQUITY RATIO:
(c) DEBT RATIO
(d) DEBT EQUITY RATIO:
(e) DEBT TO TOTAL ASSETS RATIO
(f) FIXED ASSETS TO NET WORTH RATIO:
(g) INTEREST COVERAGE RATIO:
(h) DEBT SERVICE COVERAGE RATIO:
5. VALUATION RATIO.
(a) EARNING PER SHARE (EPS)

(b) PRICE EARNING RATIO:
PART –III
CHAPTER-3
FINAICIAL STATEMENTS
BALANCE SHEET AS ON 31ST MARCH 2003

PARTICULARS SC. NO. AS ON AS ON
31-03-2003 31-03-2002
A.SOURCES OF FUNDS
1.SHAREHOLDERS FUNDS
(a) Share capital 1 52693000 47693000
(b) Reserves Surplus 2 36374786 26044659
89067786 73737659
2. LOANS FUNDS
(a) Secured Loans 3 80630217 66878603
(b) Unsecured Loans 4 39465899 40189225
120096116 107167828
3 DEFERRED TAX 18532872 14504643
LIABILITY (NET)
TOTAL 227696774 195310130

B. APPLICATION OF
FUNDS
1. FIXED ASSETS 5
a. Gross Block 197094844 122451921
b .Less; Depreciation 55272879 44673102
NET BLOCK 141821965 77778819
c. Capital work in progress 2490450 55502741
144312415 133281560
2. CURRENT ASSETS, 6
LOANS & ADVANCES
a. Inventories 27623378 20806262
b. Sundry Debtors 62967085 55291640
c. Cash and Bank balances 534091 1691649
d. Loans and Advances 6541434 5099013
97665988 82888564
Less; Current Liabilities & 7 14948386 21835963
Provisions
82717602 61052601
3.MISCELLANEOUS
EXPENDITURE
(to the extent not written off or
adjusted)
Public Issue Expenses 471583 742283
Preliminary Expenses 195174 233686
666757 975969
PARTICULARS SC. NO. AS ON AS ON

31-03-04 31-03-03
A.SOURCES OF FUNDS
1.SHAREHOLDERS
FUNDS
(a) Share capital 1 52693000 52693000
106101966 89067786
2. LOANS FUNDS
(a) Secured Loans 3 117579368 80630217
145025257 120096116
3 DEFERRED TAX 21763005 18532872
LIABILITY (NET)
TOTAL 272890228 227696774
B. APPLICATION OF
FUNDS
1. FIXED ASSETS 5
a. Gross Block 260998679 197094844
B Less; Depreciation 87645132 55272879
NET BLOCK 173353547 141821965
C Capital work in progress 3608547 2490450
176962094 144312415
LOANS & ADVANCES
a. Inventories 48238275 27623378
116354945 97665988
Provisions
95570589 82717602
3.MISCELLANEOUS
EXPENDITURE
(to the extent not written off
or adjusted)
357545 666757
TOTAL 272890228 227696774
PARTICULARS SC. AS ON AS ON
NO. 31-03-05 31-03-04
A.SOURCES OF FUNDS
1.SHAREHOLDERS FUNDS
(a) Share capital 1 52696000 52693000
120569711 106101966
2. LOANS FUNDS
(a) Secured Loans 3 134251287 117579368
141996984 145025257
3 DEFERRED TAX 25536719 21763005
LIABILITY (NET)
TOTAL 288103414 272890228
B. APPLICATION OF FUNDS
1. FIXED ASSETS 5
a. Gross Block 292880246 260998679
B .Less; Depreciation 129973345 87645132
NET BLOCK 162906901 173353547
C .Capital work in progress 9661412 3608547
172568313 176962094
LOANS & ADVANCES
a. Inventories 82464916 48238275

178007129 116354945
Provisions
115416951 95570589
3.MISCELLANEOUS
EXPENDITURE
(to the extent not written off or
adjusted)
118150 357545
TOTAL 288103414 272890228

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED
2002-2003
PARTICULARS 2002-2003 2001-2002
-
INCOME
SALES 335126011 274382684
other Income 5463812 3874931
Increase/(decrease)in Stock 6421488 -6069143
347011311 272188473
EXPENDITURE
Material Cost 254936408 188909295
Manufacturing and other Exp 46111777 38261388
Employee Remuneration 4978266 4442163
Selling &Distribution exp. 4161508 3114995
Public Issues Expenses Written 270700 270700
Off
Preliminary Expenses Written Off 38512 38512
Financial expenses 9881384 13631989
Depreciation 11081460 9113017
331460015 257782060
Profit For The year (EBIT) 15551296 14406413
LESS: Provision For Taxation
(1)Current Tax 1225000 1133333
(2)Deferred Tax 3590175 4371341
Profit After Tax (PAT) 10736121 8835072

ADD/(LESS):Income Tax for 0 -524219
Earlier Year
ADD/(LESS): Prior Period 32060 1225
Adjustment
10768181 8312078
ADD; Balance as Per Last Year 24544659 13282783
LESS: Amount Transferred to -438054 -5231755
Deferred Liability
Balance Carried Forward To 34874786 16363106
Balance Sheet
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED
2003-2004
PARTICULARS 2003-2004 2002-2003
INCOME
SALES 401849631 340474777
other Income 4573285 115046
Increase/(decrease)in Stock 13074059 6208131
419496975 346797954
EXPENDITURE
Material Cost 235074403 254936408
Public Issues Expenses Written Off 270700 270700
conversation charges 45318032 28000
396472997 331246658
(1)Current Tax 2760000 1225000
(2)Deferred Tax 3230133 3590175

ADD/(LESS):Income Tax for Earlier 335 0
Year
ADD/(LESS): Prior Period Adjustment 0 32060
17034180 10768181
LESS: Amount Transferred to 0 -438054
Deferred Liability
Balance Carried Forward To 51908966 34874786
Balance Sheet
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDEDS
2004-2005
PARTICULARS 2004-2005 2003-2004
INCOME
SALES 474461733 401849631
other Income 15733162 4573285
Increase/(decrease)in Stock 9918671 13074059
500113566 419496975
EXPENDITURE
Material Cost 297453538 235074403
Public Issues Expenses Written Off 200883 270700
conversation charges 26536880 45318032
472525504 396472997
(1)Current Tax 5315000 2760000
(2)Deferred Tax 3773714 3230133

ADD/(LESS):Income Tax for Earlier 0 0
Year
ADD/(LESS): Prior Period Adjustment -212879 335
18286469 17034180
LESS: Amount Transferred to -3380000 0
Deferred Liability
LESS: Dividend Tax -441724 0
Balance Carried Forward To Balance 66373711 51908966
Sheet
CHAPTER-4
RATIO ANALYSIS
4.1: LIQUIDITY RATIO.
I t is extremely essential for a firm to be able to meet its

obligation as they become due. Liquidity ratio measures the
ability of the firm to meet its current obligations. Liquidity
ratios by establishing a relationship between cash and other current assets to
current obligations provide a quick measure of liquidity. The failure of a
company to meet its obligations due to lack of sufficient liquidity, will result
in bad credit image or even in law suits resulting in the closure of the
company. Proper balance between liquidity and profitability is required for
efficient management.
The liquidity ratio measures the ability of the firm to meet its
short term obligation and reflect the short term financial strength/ solvency
of a firm. The main ratio which indicates the liquidity of a firm is:
(1) Current Ratio
(2) Liquidity Ratio / Quick Ratio
(3) Acid Test Ratio
(4) Net working capital
(5) Cash generated per rupee of sales
(6) Bank finance gap ratio
(7) Capital Gearing Ratio
1. CURRENT RATIO:
Current ratio is the most widely used ratio which shows the
proportion of current assets to current liability. It is a measure that working
capital is available on time or not.
Current ratio: - current assets
Current liability
SIGNIFICANCE:
The current ratio is not only a measure of solvency but it is an index

of the working capital available to the margin of safety. It means, it is a
crude and quick measure of the firm’s liquidity.
(Rs. In million)
EXHIBIT 4.1
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
CURRENT 8.27 9.77 11.64 17.81
ASSETS
CURRENT 4.51 4.03 5.41 11.25
LIABILITY
RATIO 1.834 2.424 2.152 1.583
(C.A/C.L)
CURRENT RATIO
2.5
2
1.5
PERCENTAGE(%)
1
0.5 RATIO (C.A/C.L)
0
2001-20022002-2003
2003-2004
2004-2005
YEAR
INTERPRETATION:
 Composition of current ratio is very important at the time of

interpretation. Current ratio indicates the sound short term
finance from the creditor’s point of view. But on the other
hand the higher ratio indicates blocking of funds in current
assets. As a conventional rule, current ratio of 2:1 or more is
considered satisfactory. To through more light on the quality
of current assets the percentage of the current assets is to be
calculated.
 However, an arbitrary standard of 2:1 should not be blindly

followed. Firm’s wit less then 2:1 current ratios may be
doing well, while firms with 2:1 or even higher may be
finding great difficulties in paying their bills. This is because
the current ratio is a test of quantity not quality.
 The current assets were increased in the year 2002-2003 but
it has been decreasing.
 The current ratio in the year 2002-2003 &2003-2004 it more
than 2:1 which more than the conventional rule so it is
considered which shows the strong position of firm.
 In the year 2004-2005 it is bit lower than the conventional
rule because the cash has been blocked more in inventories.
 The firm has good cash and bank balance and other current
assets like, interest on bonds, fixed deposits, and deposit
with banks.
2. LIQUIDITY RATIO/ QUICK RATIO
A variant of current ratio is the liquid ratio or quick ratio which is

designed to show the amount of cash available to meet immediate
payments. It is obtained by dividing the liquid assets to liquid liabilities.
Liquid assets are obtained by deducting stock -in trade from current
assets. Liquid liabilities are obtained by deducting bank overdraft from
current liability.
It is also called liquid ratio.
Liquid ratio: - Liquid Assets
Liquid liability
(Rs.In Millions)
EXHIBIT 4.2
YEAR 2001-2002 2002-2003 2003-2004 2004-
2005
LIQUID ASSETS 6.21 7.01 6.81 9.56
LIQUID 4.51 4.03 5.41 11.25

LIABILITIES
RATIO (L.A/L.L) 1.38 1.74 1.26 0.85

LIQUID RATIO / QUICK RATIO
2
1.5
PERCENTAGE
1
(%)
0.5
RATIO (L.A/L.L)
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
 The ideal liquid ratio is 1:1. The firm has more liquid position
and it is good for the company because the firm should have some
cash on hand to meet daily expense.
 The liquidity ratio in the year 2002-2003 was more compared to
other year while in the year 2004-2005 which show decrease in
the ratio to 0.85 that means the liabilities has been increased in
this year which leads to decrease in the ratio So, If the company
wants to be in liquid position The liabilities loan has decreased up
to certain extent. They have to pay more advances and it shows
good creditworthiness and they are easily convertible assets.
 It shows good position of firm. It shows good liquidity position.
They are able to meet unplanned expenses because they had more
liquid assets.
3. ACID TEST RATIO
The acid test ratio is the measure of absolute liquidity position of

firm. The satisfactory ratio is 0.5 to 1.00. It is compared by liquid
liability and quick assets.
ACID TEST RATIO: - QUICK ASSETS

LIQUID LIABILITIES
SIGNIFICANCE: It is measure of a firm’s ability to service short

term liabilities. The usefulness of the ratio lies in the fact that it is widely
accepted as the best available test of the liquidity position of a firm.
(RS in Millions)
EXHIBIT 4.3
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
QUICK 7.425 5.3559 5.9241 5.1414
ASSETS
LIQUID 4.51 4.03 5.41 11.25
LIABILITIES
RATIO 1.14 1.47 0.99 0.66
(Q.A/L.L)
ACID TEST RATIO
1.5
PERCENTAGE 1
(%)
0.5
RATIO (Q.A/L.L)
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
 Generally a quick ratio of 1:1 is considered to represent a
satisfactory current financial condition. A quick ratio of 1:1 or
more does not necessarily imply sound liquidity position.
 A company with a high value of quick ratio can flounder if it has

slow-paying, doubtful and stretched out-in-age receivables. On the
other hand, a company with a low value of quick ratio may be
prospering and paying its current obligation in time, if it has been
managing its inventories very efficiently wit a continuous stability.
 The ratio in 2001-2002 it was 1.14 but in the year 2002-2003it was
improved and increase to 1.47due to increase in debtors and also in
the cash and bank balance But in the year 2003-2004 &2004-2005
it was decrease or decline 0.99 & 0.66 respectively because of
decrease in debtors and also in the bank and cash balance. This
may be because of decrease in the sales.
4. NET WORKING CAPITAL
This ratio represent that part of long term funds represented by net
worth and long term debt which are permanently blocked in the current
assets. Certain minimum level of safety stock, permanent customers, unpaid
bills compensatory minimum bank balance and minimum cash balance are
the example of the permanent working capital
NET WORKING CAPITAL:

TOTAL CURRENT ASSETS – TOTAL CURRENT LIABILITIES
(RS. In
Million)
EXHIBIT 4.4
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
CURRENT 8.27 9.77 11.64 17.81
ASSETS
CURRENT 4.51 4.03 5.41 11.25
LIABILITIES
NET 3.76 5.74 6.23 6.56

WORKING
CAPITAL
NET WORKING CAPITAL
20
15
RUPEES (IN
10
MILLION) CURRENT ASSETS
5
CURRENT LIABILITIES
0
2001- 2002- 2003- 2004- NET WORKING CAPITAL
2002 2003 2004 2005
YEAR
5. CASH GENERATED PER RUPPES OF SALES:
This ratio shows that percentage of sales which is available in cash

form.
C.G.P.R.O.S.: =
P.A.T + DEPRECIATION+NON CASH EXPENSES *100
SALES
(Rs. In Million)
EXHIBIT 4.5
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
P.A.T 12,468,117 10,768,181 17,034,180 1,828,469
NON CASH 34,822,635 21,275,779 49,487,593 56,589,922
EXPENSES
C.G.P.R 47,290,752 32,043,960 66,521,773 58,418,391
SALES 411,574,026 335,126,011 401,849,631 474,461,733
RATIO (%) 11.49% 9.56% 16.55% 12.31%
CASH GENERATED PER Rs.SALES
20.00%
15.00%
PERCENTAGE(%) 10.00%
5.00% RATIO (%)
0.00%
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 In the year 2003-2004 the ratio that is percentage was high that is
16.55% which shows that that much percentage of sales which is
available in the cash form .while in the other year it is less than 2003-
2004 that is in the year 2001-2002 2002-2003& 2004-2005 it was
11.49%, 9.56% & 12.31% respectively.
6. BANK FINANCE GAP RATIO:
B.F.G.R. = TOTAL CURRENT ASSET -MPBF UNDER TANDON

COMMITTEE
MPBF indicates Maximum Permissible bank Finance under Tandon
Committee recommendations of 1975. The maximum permissible bank
finance was restricted to 75% of the working capital gap under method of
bank lending.
Method: (a) 75 %( C.A- C.L)
(b) 75% (C.A) - C.L
(c) 75% (C.A.-C.C.A)-C.L
EXHIBIT 4.6
YEAR 2001 -2002 2002-2003 2003-2004 2004-2005
RAW 2,399,841 2,194,709 9,206,371 31,979,784
MATERIAL
WORK IN 10,544,758 15,419,404 25,184,497 31,820,753
PROGRESS
FINISHED 5,506,713 7,053,555 10,140,786 14,740,107
GOOD
CORE 18,451,312 24,667,668 44,531,654 78,540,644
CURRENT
ASSET
DEBTORS 55,291,640 62,967,085 56,066,652 79,340,547
CURRENT 73,742,952 87,634,753 100,598,306 157,881,191
ASSET
CURRENT 21,835,963 14,948,386 20,784,356 62,590,178
LIABILITIE
S
CA-CL 51,906,989 72,686,367 79,813,950 95,291,013
75%(CA- 38930241.75 54514775.25 59860462.5 71468259.75
CL)
75% C.A 55307214 65726064.75 75448729.5 118410893.25
75%(C.A)- 33471251 50777678.75 54664373.5 55820715.25

C.L
CA-CCA 55291640 62,967,085 56,066,652 79,340,547
75%(CA- 41468730 47225313.75 42049989 59505410.25
CCA)
75%(C.A- 19632767 32276927.75 21265633 (3084767.75)
CCA)-C.L
7. CAPITAL GEARING RATIO:
It is the ratio of fix dividend gearing capital; to uncertain dividend bearing

capital.
CAPITAL GEARING RATIO =
PREFERENCE CAPITAL + DEBENTURES

EQUITY SHARE CAPITAL
EXHIBIT 4.7
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
PREF. CAP. & 54793468 51818405 51066466 43943424
DEBENTURES
EQ. SHARE 32693000 32693000 32693000 32696000

CAPITAL
RATIO ( IN 1.676 1.585 1.562 1.344
TIMES)
CAPITAL GEARING RATIO
2
1.5
PERCENTAGE
1
(%)
0.5 RATIO ( IN TIMES)
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
 Higher the ratio greater the proportion of preference share capital and
debentures to equity share capita. In other words the company is said
to be highly geared in such circumstances the equity share of the
company will be speculative in the market because even by the small
increase in the profit the rate of return on the equity capital will
increase substantially. Higher the ratio major share of the profit will
be absorbed by the preference dividend and debenture interest.
 In the year 2004-2005 the ratio was the lowest, that is 1.344 times.
Which may due to higher share of the profit absorbed by the
preference dividend and debenture interest?
 In the year 2001-2002 it was the highest i.e.1.676 that means the
position the company is said to be highly geared because of the
increase in small rate of return on equity.
4.2: PROFITABILITY RATIO:
Profitability is an indication of the efficiency with which the

operations of the business are carried on. Poor operational performance may
indicate poor sales and poor profit. A Lower profitability may arise due to
lack of control over the expenses. Bankers, financial institutions and other
creditors look at the profitability ratios as an indicator whether or not the
firm earns substantially more than it pays interest for the use of borrowed
funds whether the ultimate repayment of their debts appear reasonably
certain. Owners are interested to know the profitability as it indicates the
return which they can get on their investments.
(1) GROSS PROFIT RATIO:
The ideal ratio is 25% for the trading concern while 15% for the
manufacturing concern. This ratio shows the margin left after meeting
manufacturing costs. It measures the efficiency of production as well as
pricing.
Gross profit ratio= Gross profit *100

Sales
(Rs. In Million)
EXHIBIT 4.8
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
GROSS 61714287 40499314 75866960 83859554
PROFIT
SALES 411574026 335126011 401849631 474461733
RATIO 0.149947 0.120848 0.1887944 0.1767467
RATIO (%) 14.9947 12.0848 18.87944 17.67467
GROSS PROFIT RATIO
20
15
PERCENTAGE(%) 10
5 RATIO (%)
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 Gross profit margin ratio is good in the year 2003-2004 that is nearly
19% while in the year 2004-2005 it is nearly about 18%.
 It is lower in 2002-2003 because of increase in cost of the good sold
in 2002-2003is 126.31 percent which is more than increase in sales
which is 122.14 %
 It is better in 2003-2004 because of the increase in the sale is 46.46%
and increase in the cost of good sold is only 39.76% which is lower
than sales.
 In the year 2004-2005 the increase in the sale is 72.92% and the
increase in COGS is 67.47% which is lower.
(2) NET PROFIT RATIO:
The ratio helps in determining the efficiency with which affairs of the
business are being managed. It also indicates the firm’s capacity to
withstand adverse economic condition.
NET PROFIT RATIO: EARNING AFTER TAX *100

SALES
EXHIBIT 4.9
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
EARNING 12468117 10768181 17034180 18286469
AFTER TAX
NET SALES 411574026 335126011 401849631 474461733
RATIO 0.0303 0.0321 0.0424 0.0385
RATIO (%) 3.03 3.21 4.24 3.85
NET PROFIT PROFIT
5
4
3
PERCENTAGE(%)
2
1 RATIO (%)
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 The ratio is an effective measure to check the profitability of

business. However, constant increase in the net profit ratio year
after year is a definite indication of improving condition of the
business. If the net margin is inadequate, the firm will fail to
achieve satisfactory return on owners’ equity.
 The profit margin is showing high rate in the year 2003-2004 that
is 4.24% in other year it is showing less rate than 2003 -2004
because of inefficiency of increase in sales.
 It is better in the year 2003-2004 because of using of some
favorable conditions like, increase in the sales efforts, use of low
production cost techniques and try to cover more market share
make effect on profit in the year 2003-2004.
(3) OPERATING PROFIT RATIO:
Operating profit ratio can be found out after excluding all non-
operating expenses like interest and taxes that means earning before interest
and tax.
OPERATING PROFIT RATIO = OPERATING PROFIT *100
SALES
EXHIBIT 4.10
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
OPERATING 21609619 15551296 23023978 27588062
PROFIT
SALES 411574026 335126011 401849631 474461733
RATIO 0.053 0.046 0.057 0.058
RATIO (%) 5.250 4.640 5.730 5.815
OPERATING PROFIT RATIO
6
5
4
PERCENTAGE(%) 3
2 RATIO (%)
1
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
OPERATING COST RATIO: = OPERATING COST *100

SALES
EXHIBIT 4.11
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
OPERATING 386673090 331460015 396472997 472525504
COST
SALE 411574026 335126011 401849631 474461733
RATIO 0.939 0.989 0.987 0.996
RATIO (%) 93.950 98.906 98.662 99.592
OPERATING COST RATIO
100
98
96
PERCENTAGE(%)
94
92 RATIO (%)
90
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION
 This ratio is giving the overall picture of the firm. As the profit are
high, the firm’s ability to pay dividend, interest, reserves for debts
etc. is sufficient and the returns on their investments. While low
profit or losses shows inefficiency of the firm to sustain the
operations of the business.
 In the year 2001-2002, the operating profit ratio of the firm showed
the ratio of 5.25%. It was slightly decreasing in the year 2002-2003
that is 4.64% that means the company is facing high operational
expenses which directly effect to the profit. The company is able to
earn the profit only when the sales is increase but again in the year
2003-2004 & 2004-2005 it is increasing that is 5.73 %& 5.815% that
means the sale in both year has been increased.
(4) RATE OF RETURN ON INVESTMENT:
It is also known as return on capital employed or return on assets. It

measures how efficiently the capital is employed.
R.O.R.O.I = EBIT *100

TOTAL ASSETS
This ratio is spitted into following two parts by inserting “sales” in the
above formula.
The below split is popularly known as DU PONT split.
ROI = EBIT *100 X SALES

SALES TOTAL ASSETS
PROFIT MARGIN (%) TOTAL ASSETS TURNOVER
EXHIBIT 4.12
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
EBIT 21609619 15551296 23023978 27588062
SALES 411574026 335126011 401849631 474461733
TOTAL ASSETS 194334161 227033017 272532683 287985264
PROFIT MARGIN (%) 5.25 4.64 5.73 5.81

TOTAL ASSETS 2.12 1.48 1.47 1.65
TURNOVER
R.O.R.O.I 11.12 6.85 8.45 9.58
RATE OF RETURN ON INVESTMENT
12
10
8
PERCENTAGE(%) 6
4
R.O.R.O.I
2
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
PROFIT MARGIN RATIO
6
5
4
PERCENTAGE (%) 3
2
1
0 PROFIT MARGIN (%)
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
ASSET TURNOVER RATIO
2.5
2
RATIO
1.5
( IN TIMES )
1 TOTAL ASSETS
0.5 TURNOVER
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 The rate of return on investment in the year 2001-2002 was the
highest compare to other year because profit margin 5.25% and the
assets turnover was 2.12 times so the rate of return on investment
was about 11.12%.
 In the year 2002-2003 it decreased to 6.85% due decrease in the
profit margin and the asset turnover that is 4.64 % & 1.48 times
respectively.
 In the year 2003-2004& 2004-2005 the rate of return on the

investment was increased due to increased in the profit margin and
the assets turnover that is in the year 2003-2004 5.73% & 1.47
times while in the year 2004-2005 5.81% &1.65 times that is the
rate of return on the investments was 8.45 % & 9.58%.
(5) RATE OF RETURN ON EQUITY:
It measures the profitability of equity funds invested in the firm.

Here the profits for the equity will be considered after deducting
preference dividend.
If no preference share capital exists in the balance sheets then net
profit will be taken in the numerator. The formula of rate of return is as
follows:
RATE OF RETURN =
NET PROFIT -PREFERENCE DIVIDEND * 100
NET WORTH
(Rs. In million)
EXHIBIT 4.13
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
NET 2.46 3.49 5.19 6.64
PROFIT
AFTER
DIVIDEND
NET 7.28 8.84 10.57 12.05
WORTH
RATIO 0.34 0.39 0.49 0.55
RATIO (%) 33.79 39.48 49.10 55.10
RETURN ON EQUITY
60
50
40
PERCENTAGE(%) 30
20
RATIO (%)
10
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATON:
 Return on equity of the company has been increasing year by year

that is from 2001-2002 33.79% to 55.15 in the year 2004-2005.
 That mean the equity funds invested in the company/ firm is good
which shows that the profitability of the business is increasing year
by year.
(6) RETURN ON ASSETS:
This ratio is helpful in knowing the productivity of the total assets. It

will be proper to include the interest in computing the return on total assets.
The objective of computing the return on the total assets is to find out how
effectively the funds pooled together have been used.
RETURN ON ASSETS = PROFIT AFTER TAX *100
TOTAL ASSETS
EXHIBIT 4.14
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
PROFIT 12468117 10768181 17034180 18286469
AFTER TAX
TOTAL 194334161 227033017 272532683 287985264
ASSETS
RATIO 0.064 0.047 0.063 0.063
RATIO (%) 6.42 4.74 6.25 6.35
RETURN ON ASSETS
8
6
PERCENTAGE
4
(%)
2 RATIO (%)
0
2001-2002 2002-2003 2003-2004 2004-2005
YEARS
INTERPRETATION:
 The business can service only when the return on the capital
employed is more than the cost of capital employed in the
business.
 The rate of return on assets was 4.74 during the year 2002-2003
because there is decrease in assets mainly in the current assets
while it was increasing in the year 2003-2004 & 2004-2005 that
to 6.25 & 6.35 respectively because of more profit as the total
assets have also increased. It means the investments in assets
give favorable returns.
4.3: TURN OVER / ACTIVITY RATIO:

Turnover or activity Ratios are employed to evaluate the efficiency
with which the firm manages and utilizes its assets. Funds of creditors and
owners are invested in various assets to generate sales and profit. So, these
ratios are helpful in knowing the speed with which assets are being
compared or turned into sales. It shows relationship between sales and
assets.
(1) A. INVENTORY / STOCK TURNOVER RATIO:
Inventory turnover is a valuable measure of selling efficiency and

inventory quality. It expresses the frequency with which average level of
inventory investment is turned over through operations. It signifies the
liquidity of the inventory.
This ratio indicates how many times in a year the stock is turnover.
Higher the ratio better it is.
STOCK TURNOVER RATIO= COST OF GOOD SOLD
AVERAGE STOCK
WHERE AVERAGE STOCK =
OPENING STOCK + CLOSING STOCK
2
EXHIBIT 4.15
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
COGS 349859739 294626697 325982671 390602179
AVERAGE 20806262 24214820 37930826.5 65351595.5
STOCK
RATIO (In 16.82 12.17 8.59 5.98
times)
STOCK TURNOVER RATIO
20
15
RATIO (IN
TIMES) 10
5
RATIO (In times)
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
 Inventory turnover ratio indicates the relationship between the cost

of good sold and the inventory level. Higher the inventory ratio,
larger the amount of sales, the smaller the amount of the capital
tied up in inventory and the more current the merchandise stock.
 Normally 6 to9 is heavy turnover ratio suppose if it is less than this
that means either stock is not sellable or effort for marketing are
lacking.
 The ratio is very important in judging the ability of management
with which it can move the stock. Higher the ratio more profitable
the business would be.
 In other words if the turnover is higher the organization or the firm
can sell its good with less margin of gross profit conversely low
turnover indicates accumulation of slow moving, absolute or low
quality good which is danger signal to the management.
 The chart shows that the stock turnover ratio is decreasing year by
year that is in the year 2001-2002 it was the highest that is 16.82%
which decline to 5.98% in the year 2004-2005.This shows that the
low turnover indicates accumulation of slow moving, absolute or
low quality good .
(1) B. AVERAGE AGE OF INVENTORIES:
This ratio indicates the waiting period of the investments in the

inventories and is measured in days, week or months. Inventory turnover
and average age of the inventories are inversely related. High inventory
turnover ratio is goods but longer age of the inventory is bad as it indicates
idle blocking of money in the inventories.
(Rs. In Million)
EXHIBIT 4.16
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
DAYS 360 360 360 360
INVENTORY 16.82 12.17 8.59 5.98
TURNOVER
AVERAGE AGE OF 21.40 29.58 41.91 60.20
INVENTORIES
(IN DAYS)
AGE 0F THE INVENTORIES
70
60
50
NO. OF DAYS 40
30
20 AVERAGE AGE OF
10 INVENTORIES (IN DAYS)
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
 In the year 2001-2002 it was the lowest that is 21 days and it was
increasing year by year to 30 days 42 days & 60 days in the year
2002-2003, 2003-2004 &2004-2005 respectively which shows or
indicates that idle blocking of money in the inventories year by
year which is not good for the company or firm. To reduce the
average age of the inventories, inventory turnover should be
increased as well as the blocking of the money should be avoided.
(2) TOTAL ASSETS TURNOVER:
The amount invested in business is invested in all assets for earning

profit.
CAUTION:
If the assets are old and more depreciation has been deducted than the
turnover will seen more which in fact does not show efficiency.
TOTAL ASSETS TURNOVER= SALES
TOTAL ASSETS
Exhibit 4.17
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
SALES 411574026 335126011 401849631 474461733
TOTAL 194334161 227033017 272532683 287985264
ASSETS
TOTAL 2.12 1.48 1.47 1.65
ASSETS
TURNOVER
ASSET TURNOVER RATIO
2.5
2
RATIO
1.5
( IN TIMES )
1 TOTAL ASSETS
0.5 TURNOVER
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
Following points should be kept in mind while interpreting
 Type of assets whether new or old & by which method

depreciation is provided.
 The investment in fixed assets changes in the type of business for
example steel business investment in the fixed assets is very high.
 Sales depend upon overall efficiency in the part of management &
not only on the use of fixed assets.
 It is not always the case that more the sales more the profit, for this
purpose difference between selling price and cost of sales should
be taken into account.
 The method of valuation of assets and in particular method of
valuation of stock must be examined.
 Here in the graph in the year 2001-2002 it was higher that is 2.12
than it decreases to 1.48 times in the year 2002-2003 it may due to
high investment in the fixed assets than in the year 2003-2004 &
2004-2005 it increases to 1.47 &1.65 times respectively.
(3)NET FIXED ASSETS TURNOVER
This ratio measures sales per rupees of investment in fixed assets.

This ratio supposed to measure the efficacy with which fixed assets are
employed. A high ratio indicates a high degree of efficacy in assets
utilization and vice-versa.
FIXED ASSETS TURNOVER = NET SALES
NET FIXED ASSETS
EXHIBIT 4.18
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
NET SALES 411574026 335126011 401849631 474461733
NET FIXED 133281560 144312415 176962094 172568313
ASSETS
RATIO (IN 3.09 2.32 2.27 2.75
TIMES)
FIXED ASSETS TURNOVER
3.5
3
2.5
RATIO ( IN TIME) 2
1.5
1
0.5 RATIO (IN TIMES)
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
 A fixed assets turnover ratio has increased reflects the efficient use
of fixed asset.
 But in the graph it shows in the year 2001-2002 it was highest that
is 3.09 times and it decreased to 2.32,2.27 &2.75 times in the year
2002-2003, 2003-2004, & 2004-2005 respectively
 It is due to decrease in the net sales by 18.57% in the year 2002-
2003 and in the 2003-2004 decreased by 2.36 % by taking the year
2001-2002 as the base year while their was an increase in the
percentage of the sales in the year 2004-2005 by 15.3%.
 It may be due to increase in the fixed assets year by year that is in
the year 2002-2003 it was 8.28% and the year 2003-2004 it was
32.77% and it decreases to 29.48% in the year 2004-2005.
(4) NET WORKING CAPITAL TURNOVER:
This ratio measures sales per rupees of investment in the working

capital. This ratio supposed to measure the efficacy with which working
capital is employed. A high ratio indicates a high degree of efficacy in
working capital utilization and vice-versa.
NET WORKING CAPITAL TURNOVER =
SALES
NET WORKING ASSETS
EXHIBIT 4.19
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
NET SALES 411574026 335126011 401849631 474461733
NET 82717602 61052601 95570589 115416951
WORKING
ASSETS
N.W.C.T 4.98 5.49 4.2 4.11
NET WORKING CAPITAL TURNOVER
6
5
4
RATIO( IN TIMES) 3
2
N.W.C.T
1
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 IN 2001-2002 the ratio was 4.98 times and was increased in the
year 2002-2003 to 5.49times than it decreases to 4.2 times & 4.11
times in the year 2003-2004 & 2004-2005.
 It is due to decrease in the net sales by 18.57% in the year 2002-
2003 and in the 2003-2004 decreased by 2.36 % by taking the year
2001-2002 as the base year while their was an increase in the
percentage of the sales in the year 2004-2005 by 15.3%.
(5) DEBTORS TURNOVER:
The analysis of the debtor’s turnover ratio supplements the

information regarding the liquidation of one item of current assets of the
firm. It measures how rapidly debts are collected. It is a measure of
assessing the ability of the company to promote sales with minimum
investments in uncollected debtors. It indicates timely quick collection or
pre-matured collections through cash discounting incentives, bill
discounting or factoring the book-debts.
DEBTORS TURNOVER = CREDIT SALES

AVERAGE DEBTOR
Exhibit 4.20
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
NET SALES 411574026 335126011 401849631 474461733
AVERAGE 55291640 59129362.5 59516868.5 67703599.5
DEBTORS
DEBTOR 7.44 5.67 6.75 7.01
TURNOVER
(IN TIMES )
DAYS 360 360 360 360
DEBT 48.36 63.52 53.32 51.37
COLLECTION
PERIOD
DEBTORS TURNOVER RATIO
8
6
RATIO ( IN
4
TIMES)
2 DEBTOR TURNOVER
0 (IN TIMES )
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
DEBT COLLECTION PERIOD
70
60
50
NO. OF DAYS 40
30
20 DEBT COLLECTION
10 PERIOD
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
(a) DEBTORS TURNOVER RATIO:
Debtors constitute an important constituent of current assets and therefore

the quality of debtors to a great extent determines a firm’s liquidity. The
higher the ratio the better it is, since it would indicate that debts are being
collected more promptly. For measuring the efficiency, it is necessary to set
a figure, a ratio lower than the standard will indicate inefficiency.
(b) DEBT COLLECTION PERIOD:

Debtor’s collection period measures the quality of debtors since it measures
the rapidity or slowness with which many is collected from them.
A shorter collection period implies prompt payment by debtors. It reduces
the chances of bad debts. A longer collected period implies too liberal and
inefficient credit collection performance. In general, the amount of
receivables should not exceed 3-4 months credit sales.
 During year 2001-2002, the debtor’s turnover ratio was 7.44 which
showed the better collection position of the firm. It means the
outstanding was less and the collection period was short.
 But in the year 2002-2003 the ratio declines 5.67time and the
collection period was increased. It shows the less effective
collection policy of the firm. It makes effect to the need for the
working capital. The main reason for declining trend of debt
collection ratio is the low amount of sales and more numbers of
debtors.
 In the year 2003-2004 &2004-2005 the graph shows the increase
in the trend of the debtor’s turnover ratio and decline in the debt
collection period it may be due to the numbers of the debtors may
be decreased and the amount of sales has been increased.
(6) CREDITORS TURNOVER RATIO:
It indicates the speed with which the payments for credit purchase are
made to the creditors. It is also helpful in knowing the policy of cash
payments to the creditors.
CREDITORS TURNOVER RATIO: TOTAL PURCHASES

AVERAGE CREDITORS.
EXHIBIT 4.21
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
PURCHASES 283363943 254936408 235074403 297453538
AVERAGE 13825379 11860590 13915518.5 35650305
CREDITORS
RATIO (IN 20.50 21.49 16.89 8.34
TIMES)
DAYS 360 360 360 360
PAYMENT 17.56 16.75 21.31 43.15
PERIOD
CREDITORS TURNOVER RATIO
25
20
RATIO ( IN 15
TIME ) 10
5
RATIO (IN TIMES)
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
PAYMENT PERIOD
50
40
30
NO. OF DAYS
20
10 PAYMENT PERIOD
0
2001- 2002- 2003- 2004-
2002 2003 2004 2005
YEAR
INTERPRETATION:
 The creditor’s turnover ratio indicates about the promptness or

other in making payment of credit purchases. The higher creditor’s
turnover ratio or a lower credit period enjoyed ratio signifies that
the creditors are being paid promptly. Thus, enhancing the credit
worthiness of the company. However, a very favorable ratio to this
effect also shows that the business is not taking full advantage of
credit facilities which can allow by the creditors.
 During the year 2002-2003 & 2001-2002 the ratio was 21.49 &
20.5 times respectively which shows the quick payments for the
credit purchase. It may be because of less credit facilities used by
the firm. But the turnover ratio is decreasing very rapidly during
the year 2003-2004 & 2004-2005 that is to 16.89 & 8.34 times.
The purchases during these years are going on decreasing but the
credit purchase are more? So, the turnover ratios are lows and the
payment periods are become more that is 21 days and 43 days in
the year 2003-2004 and 2004-2005. It makes effect on working
capital requirement of the company.
4.4: CAPITAL/ LEVERAGE / FINANCE
STRUCTURE RATIOS
To judge the long term financial position of the firm, financial

leverage or capital structure ratio is calculated. It indicates mix of the funds
provided by the owners and the lenders. Long-term creditors, like
debentures holders, financial institutions strength. In fact, the firm should
have a strong short term as well as long term financial position.
Leverage can work in opposite direction also. If the cost of debt is

higher than the firm’s overall rate of return, the earnings of shareholders will
be reduced. If the firm is actually liquidated for non-payment of debt-
holders’ dues, the worse suffers will be share holders.
(1) PROPRIETORY RATIO:
The ratio indicates the proportion of total assets financed by owners.

It is a variant of debt equity ratio. It established relationship between the
proprietor’s funds and the total assets. This ratio focuses the attention on the
general financial strength of the business enterprise. Higher the ratio
stronger the position of enterprises. It indicates that proprietor have provided
more fund to purchase the assets. If it is 100% that is business does not used
any outside fund that is not using its reputation & bringing cash from
outside, bringing more assets & multiplying business. This opportunity is
lost by the conservative approach.
PROPRITEOR RATIO: PROPRIETORS FUND *100

TOTAL ASSETS
EXHIBIT 4.22
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
PROPRIETORS 47693000 52693000 52693000 52696000
FUND
TOTAL ASSETS 194334161 227033017 272532683 287985264
RATIO (%) 24.54 23.21 19.33 18.30
PROPRIETORY RATIO
25
20
15
PERCENTAGE(%)
10
5 RATIO (%)
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION
 It is a variant of debt equity ratio. The ratio is of particular

importance to the creditors who can find out the proportion of
share holders funds in the total assets employed in the business.
 A high ratio will indicate a relatively little danger to the creditors,
etc in the event of forced reorganization or winding up of the
company. A low ratio indicates greater risk to the creditors since in
the events of losses a part of their money may be lost besides loss
to the proprietors of the business. The higher the ratio the better it
is. A ratio below 50% may be alarming for the creditors since they
may have to lose heavily in the event of company’s liquidation on
account of heavy losses.
 For all the years, the percentage is showing below 50%. It means
the funds are very low as compared to the total assets. In the year
2004-2005, it is the lowest and in the year2001-2002 it shows
24.54% which is the highest in all three years.
(2) EQUITY RATIO:

This ratio can be finding out by dividing net worth to total capital
employed. This ratio focuses the attention on the general financial strength
of the business enterprise. Higher the ratio stronger the position of
enterprise.
EQUITY RATIO: NET WORTH

TOTAL CAPITAL EMPLOYED
EXHIBIT 4.23
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
NET WORTH 72761690 88401029 105744421 120451561
TOTAL 179829518 208497145 250769678 262448545
CAPITAL
EMPLOYED
RATIO 0.40 0.42 0.42 0.46
EQUITY RATIO
0.46
0.44
0.42
PERCENTAGE(%)
0.4
0.38 RATIO
0.36
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
(3) DEBT RATIO:

This ratio can be found out by dividing long term debt to total capital
employed .This ratios are calculated to measure the financial risk.
DEBT RATIO = LONG TERM DEBT
TOTAL CAPITAL EMPLOYED
EXHIBIT 4.24
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
LONG 107067828 120096116 145025257 141996984
TERM
DEBTS
TOTAL 179829518 208497145 250769678 262448545
CAPITAL
EMPLOYED
RATIO 0.60 0.58 0.58 0.54
DEBT RATIO
0.6
0.58
0.56
RATIO ( IN TIMES)
0.54
0.52 RATIO
0.5
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
(4) DEBT EQUITY RATIO:

Leverage ratios are calculated to measure the financial risk and the
firm’s ability of using the debt for the benefit of the share holders. It
determining the extent to which operating profits are sufficient to cover the
fixed charges.
DEBT EQUITY RATIO: LONG TERM DEBTS

NET WORTH
EXHIBIT 4.25
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
LONG 107067828 120096116 145025257 141996984
TERM
DEBTS
NET 72761690 88401029 105744421 120451561
WORTH
RATIO 1.47 1.36 1.37 1.18
DEBT EQUITY RATIO
1.5
1
RATIO (IN TIMES)
0.5
RATIO
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 The DEBT EQUITY RATIO has important from the creditors and
owners point of view and also for the firm itself. The ratio can be
taken as ideal if it is 1:1 there cannot be a rigid rule, it will depend
upon the circumstances. High ratio shows a larger share of
financing by the creditors in relation to the customers and low ratio
implies a smaller claim of creditors.
 In 2001-2002, the ratio was high as compared to other year
because of high amount of long term debts and less net worth. In
the year 2004-2005, the ratio 1.18 was satisfactory in the creditor’s
point of view. It shows that company has successfully adopted the
policy of trading of equity which results in a higher return to
equity share holders. In the year 2001-2002 the ratio was highest
because of more amounts of secured loans. It indicates that the
company depends upon the bank loan s and more on equity capital
for the year 2001-2002.
(5) DEBT TO TOTAL ASSETS RATIO
The ratio indicates the effect of the use of fixed interest or dividend
sources of the funds on the earnings available to the equity share holders.
DEBT TO TOTAL ASSETS RATIO=
TOTAL LONG TERM DEBT
TOTAL ASSETS
EXHIBIT 4.26
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
LONG 107067828 120096116 145025257 141996984
TERM
DEBTS
TOTAL 194334161 227033017 272532683 287985264
ASSETS
RATIO 0.55 0.53 0.53 0.49
DEBT TO TOTAL ASSETS RATIO
0.56
0.54
0.52
RATIO ( IN TIMES)
0.5
RATIO
0.48
0.46
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 This ratio is similar to debt equity ratio in respect of the capital

structure of a firm. Long term creditors are interested in this ratio.
It indicates the extent to which the firm has relied on debt in
financing assets. A firm should have neither a high ratio nor a very
low debt to total assets ratio. High ratio is a burden for creditors
and also a highly debt burden firm will find difficulty in raising
funds from creditors and owners in future.
 From the above graph we can see that in all the year , the ratio are
satisfactory because of less proportion of long term debt as
compared to total assets. During the year 2004-2005 was the
lowest because of high increase in the fixed assets and the current
assets where mainly debtors and cash & bank balance are
increased while the bank loans are decreasing. It indicates that the
investment in fixed assets is done through internal sources or from
equity share capital. It means that during the year 2004-2005, the
firm was less dependent on loans.
(6) FIXED ASSETS TO NET WORTH RATIO:
It shows the relationship between the capital held by equity capital,

reserves and the net fixed assets. It means how much equity we needed
against the fixed assets.
FIXED ASSETS TO NET WORTH RATIO =
NET FIXED ASSET
NET WORTH
EXHIBIT 4.27
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
NET FIXED 133281560 144312415 17696209 172568313
ASSETS
NET 72761690 88401029 105744421 120451561
WORTH
RATIO 1.83 1.63 1.67 1.43
FIXED ASSETS TO NET WORTH RATIO
2
1.5
RATIO ( IN TIMES) 1
0.5 RATIO
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION
 The ratio should not be more than 1. If it less than 1, it shows that
a part of the working capital, which is more or less of a fixed
nature. The ideal ratio is 0.67. In other words, the more the
shareholders’ contribution is tied up in fixed assets the less is the
amount available for the investment in current assets, it means that
creditors have contributed towards large proportion of the net fixed
assets.
 The higher the ratio the less the proportion for creditors, where net
fixed assets exceeds net worth. It may be a signal for many
industrial concerns which should plan for an additional equity
capital.
 In all the year it is more than the ideal ratio that is 0.67, it means
that funds were blocked in the fixed assets that means the liquidity
position of a firm worse but in the year 2004-2005 which is
showing the ratio of 1.43 is less compare to other year that means
the firm is improving that means there is a small decrease in the
fixed assets while the liquidity position is quite improving.
(7) INTEREST COVERAGE RATIO:
This ratio indicates the debts servicing capacity of a firm in so far as

fixed interest on long term loans is concerned. It shows how many times the
interest charges are covered by the Earning before Interest and Tax (EBIT)
out of which they will be paid.
INTEREST COVERAGE RATIO = EBIT
INTEREST
EXHIBIT 4.28
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
EBIT 21609619 15551296 23023978 27588062
INTEREST 20447983 9881384 16087910 15594543
RATIO 1.06 1.57 1.43 1.77
INTEREST COVERAGE RATIO
2
1.5
RATIO
1
(IN TIMES)
0.5 RATIO
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 The standard for this ratio for an industrial company is that interest
charges should be covered six to seven times. From the creditor’s
point of view the larger the coverage, the greater the ability of the
firm to handle fixed charges liabilities and the more assured the
payment of interest to the creditors. Too high the ratio may
indicate unused debt capacity. In contrast, a low ratio is a danger
signal that the firm is using excessive debt and does not have the
ability to offer assured payment of interest to the creditors.
 From table we can see that the interest coverage is very low in the
year 2001-2002 that is 1.05 and in the year 2002-2003, 2003-2004
& 2004-2005 it was 1.57 1.43 & 1.77times . it means that the
extent of earning available for the payment of interest is not
better . It is because the profit is higher and the interest on fixed
loans is low
(8) DEBT SERVICE COVERAGE RATIO:
This ratio indicates how many times the profit covers the payments of
principal and the interest on loan.
When a creditors or a bank lends money to the business, they always

examine the repaying capacity of the borrower. They will try to ascertain
whether the borrower will able to repay installment of principal amount and
the interest regularly, Debt servicing means payment of principal installment
and interest both. Normally company makes such payment from earned
profit or retained profit of the past profit of the past years. Therefore the
proportion of the net profit as compared to the amount of the principal
installment + interest is ascertained. This proportion or ratio is called DEBT
SERVICE COVERAGE RATIO.
Here the profit = profit available for the payment of the debt.
In other words:
PROFIT = PAT + DEP. + INT. PAYABLE ON LOAN.
D.S.C.R. = PROFIT (P.A.T. + DEP. +INT.)

INSTALLMENT OF PRINCIPAL SUM + INTEREST
EXHIBIT 4.29
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
PROFIT 46585626 31731025 66016700 77696964
PRINCIPAL 127515811 129977500 161113167 157591527
+ INT.
RATIO 0.37 0.24 0.41 0.49
(IN TIMES )
DEBT SERVICE COVERAGE RATIO
0.5
0.4
0.3
RATIO ( IN TIMES)
0.2
0.1 RATIO ( IN TIMES )
0
2201-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 The ratio for all the year is not good that means the profit for all
the year is not sufficient for the payment of the debt.
 In the year 2001-2002 it was 0.37 and in the year 2002-2003,2003-
2004, 2004-2005 it was 0.24, 0.41 & 0.49 times respectively.
4.5: VALUATION RATIOS:

Valuation ratios are the results of the management of above four
categories of the functional ratios. Valuation ratios are generally presented
on a per share basis and thus are more useful to the equity investors.
(1) EARNING PER SHARE (EPS)
This is the measurement of calculating the profitability of the

common share holders. As a profitability index, it is a valuable and widely
used ratio. Adjustments for bonus or rights issues should be made while
comparing earning per share over a period of time.
EARNING PER SHARE: PROFIT AFTER TAX

NUMBER OF EQUITY SHARE
EXHIBIT 4.29
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
P.A.T 12468117 10768181 17034180 18286469
NO. OF EQ. 3280000 3280000 3280000 3280000
SHARE
RATIO 3.80 3.28 5.19 5.58
EARNING PER SHARE RATIO
6
5
4
RATIO ( IN TIMES) 3
2
RATIO
1
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION:
 This ratio shows the profitability of the firm on a per share basis. It
helps in deciding that the equity share capital is being used
effectively or not.
 The earning per share during the year 2002-2003 was the lowest
that is 3.28 but in the in the 2003-2004 &2004-2005 it increased to
5.19 & 5.58 because of more profits. It was good for the
shareholder’s point of view.
(2) PRICE EARNING RATIO:

The ratio indicates the number of times the earning per share is
covered by its market price. It helps the investors in deciding whether to buy
or not to buy share of a company at a particular market price.
PRICE EARNING RATIO =

MARKET PRICE PER EQUITY SHARE CAPITAL
EARNING PER SHARE
EXHIBIT 4.30
YEAR 2001-2002 2002-2003 2003-2004 2004-2005
M.P.P.E.S.C. 8.25 5.65 9.62 29.55
E.P.S. 3.80 3.28 5.19 5.58
RATIO 2.17 1.72 1.85 5.30
PRICE EARNING RATIO
6
5
4
RATIO ( IN TIMES ) 3
2
RATIO
1
0
2001-2002 2002-2003 2003-2004 2004-2005
YEAR
INTERPRETATION
 This ratio helps in knowing whether the shares of a company are
under or over valued. It indicates investor’s judgment or
expectation about the firm’s performance. It is a rule of thumb that
the equity shares in industrial companies should sell at 10 times of
the earnings. But it is not same for all kind of firms. It depends on
the type and the earning capacity of the firm.
 During the year 2004-2005, the price earning ratio was high,
which was showing satisfactory result during this year. But rest of
the year it is nearly about 2 times these indicates the ineffective
earning capacity of the firm.
4.6: COMPARISIONS OF THE RATIO OF THE REAL STRIPS

LIMITED FOR THE FOUR YEAR
EXHIBIT 3.31
SR. PARTICULARS 2001-2002 2002-2003 2003-2004 2004-2005
NO (RATIO)
1. CURRENT RATIO 1.834 2.424 2.152 1.583
2. LIQUIDITY 1.38 1.74 1.26 0.85
RATIO /QUICK
RATIO
3 ACID TEST 1.14 1.47 0.99 0.66
RATIO
4 NET WORKING 3.76 5.74 6.23 6.56
CAPITAL
5 CASH 11.49 9.56 16.55 12.31
GENERATED
PER RUPPES OF
SALES
6 BANK FINANCE
GAP RATIO:
(a) 75%(CA-CL) 38930241.75 54514775.25 59860462.5 71468259.75
(b) 75%(C.A)-C.L 33471251 50777678.75 54664373.5 55820715.25
( c) 75%(C.A-CCA)- 19632767 32276927.75 21265633 (3084767.75)
C.L
7 CAPITAL 1.676 1.585 1.562 1.344
GEARING RATIO
8 OPERATING 5.250 4.640 5.730 5.815
PROFIT RATIO
9 OPERATING 93.950 98.906 98.662 99.592
COST RATIO
10 GROSSPROFIT 14.99 12.09 18.88 17.68
RATIO
11 NET PROFIT 3.03 3.21 4.24 3.85
RATIO
12 RATE OF 11.12 6.85 8.45 9.58
RETURN ON
INVESTMENT
13 RATE OF 33.79 39.48 49.10 55.10
RETURN ON
EQUITY
14 RETURN ON 6.42 4.74 6.25 6.35
ASSETS
15 INVENTORY 16.82 12.17 8.59 5.98
TURNOVER
RATIO
16 AVERAGE AGE 21.40 29.58 41.91 60.20
OF
INVENTORIES
17 TOTAL ASSETS 2.12 1.48 1.47 1.65
TURNOVER
18 NET FIXED 3.09 2.32 2.27 2.75

ASSETS
TURNOVER
19 NET WORKING 4.98 5.49 4.2 4.11
CAPITAL
TURNOVER
20 DEBTORS 7.44 5.67 6.75 7.01

TURNOVER
21 DEBT 48.36 63.52 53.32 51.37

COLLECTION
PERIOD
22 CREDITORS 20.50 21.49 16.89 8.34

TURNOVER
RATIO
23 PAYMENT 17.56 16.75 21.31 43.15
PERIOD
24 PROPRIETORY 24.54 23.21 19.33 18.30
RATIO
25 EQUITY RATIO 0.40 0.42 0.42 0.46

26 DEBT RATIO 0.60 0.58 0.58 0.54
27 DEBT EQUITY 1.47 1.36 1.37 1.18
RATIO
28 DEBT TO TOTAL 0.55 0.53 0.53 0.49

ASSETS RATIO
29 FIXED ASSETS 1.83 1.63 1.67 1.43

TO NET WORTH
RATIO
30 INTEREST 1.06 1.57 1.43 1.77

COVERAGE
RATIO
31 DEBT SERVICE 0.37 0.24 0.41 0.49
COVERAGE
RATIO
32 EARNING PER 3.80 3.28 5.19 5.58
SHARE (EPS)
33 PRICE EARNING 2.17 1.72 1.85 5.30

RATIO
CHAPTER – 5
TREND ANALYSIS
T rend analysis involves calculation of percentage changes in financial

statement items for a number of successive years. It is an extension
of horizontal analysis to several years. Trend analysis is carried out
by first assigning a value of 100 to the financial statements items in a past
financial year used as the base year and then expressing financial statements
items in the following years as percentages of the base year value.
Trend analysis over longer periods helps in identifying certain basic

changes in the nature of the business. Since many large corporations publish
a summary of operating results and selected financial indicators for five
years or more, it is possible to perform trend analysis using published
reports.
5.1:
TREND ANALYSIS
REAL STRIPS LIMITED: SELECTED DATA OF PROFIT AND
LOSS ACCOUNT
EXHIBIT 5.1
PARTICULARS 2004-05 2003-04 2002-2003 2001-2002
SALES& OTHER 500113566 419496975 347011311 272188473
INCOME
EXPENDITURE 472525504 396472997 331460015 257782060
EARNING BEFORE 27588062 23023978 15551296 14406413
INT.&TAX
PROVISION FOR 9088714 5989798 4783115 5571341
TAXATION
PROFIT AFTER TAX 18286469 17034180 10768181 8312078
PROFIT AFTER INT, 66373711 51908966 34874786 16363106
& TAX
PARTICULARS 2004-05 2003-04 2002- 2001-2002

2003
SALES& OTHER INCOME 184 154 127 100
SEXPENDITURE 183 154 129 100

EARNING BEFORE 191 160 108 100
INT.&TAX
PROVISION FOR 163 108 86 100
TAXATION
PROFIT AFTER TAX 220 205 130 100
PROFIT AFTER INT, & 406 317 213 100
TAX
TREND ANALYSIS OF P & L A/C
450
400
350 2004-2005
300
RATIO
250 2003-2004
200 2002-2003
150
100 2001-2002
50
0
EXPENDITURE
AFTER INT, &

PROVISION
AFTER TAX
EARNING
INT.&TAX
SALES&
INCOME
TAXATION
BEFORE
OTHER
PROFIT
PROFIT
FOR
TAX
PARTICULAR
INTERPRETATION:
 The sales and the other incomes are increasing that is 1.27, 1.54 &
1.84 times of sales and income of the base year that is 2001-2002.
 The trend percentage indicates that the 2004-2005 sales are 1.84
times 2001-2002 sales, a rise of 84 percentages.
 Profit after interest and tax rose by a whopping 306 percentage.
 The expenditure in shows the rise of 29, 54 & 83 percentage in the
year 2002-2003, 2003-2004 & 2004-2005 respectively.
 The trend of the percentage shows that the sales and the
expenditure rose in the same proportion.
5.2:
TREND ANALYSIS
REAL STRIPS LIMITED: BALANCE SHEET
EXHIBIT 5.2
PARTICULARS 2004-05 2003-04 2002-03 2001-02
Share Capital 52696000 52693000 52693000 47693000
Reserves &Surplus 67873711 53408966 36374786 26044659
Secured Loan 134251287 117579368 80630217 66878603
Unsecured Loan 7745697 27445889 39465899 40189225
Deferred Tax Liability 25536719 21763005 18532872 14504643
Current Liability 62590178 20784356 14948386 21835963
provision
TOTAL FUNDS 350693592 293674584 242645160 217146093
ASSETS
Fixed Assets 172568313 176962094 144312415 133281560
Inventories 82464916 48238275 27623378 20806262
Sundry Debtors 79340547 56066652 62967085 55291640
Cash bal. &bank bal. 1717688 1086909 534091 1691649
Loans & Advances 14483978 10963109 6541434 5099013
Miscellaneous 118150 357545 666757 975969
Expenditure
TOTAL ASSETS 350693592 293674584 242645160 217146093
PARTICULARS 2004-05 2003-04 2002-03 2001-02

Share Capital 110.49 110.48 110.48 100
Reserves &Surplus 260.61 205.07 139.66 100
Secured Loan 200.74 175.81 120.56 100
Unsecured Loan 19.27 68.29 98.2 100
Deferred Tax Liability 176.06 150.04 127.77 100
Current Liability 286.64 95.18 68.46 100
provision
TOTAL FUNDS 161.5 135.24 111.74 100
ASSETS
Fixed Assets 129.48 132.77 108.28 100
Inventories 396.35 231.84 132.76 100
Sundry Debtors 143.49 101.4 113.88 100
Cash bal. &bank bal. 101.54 64.25 31.57 100
Loans & Advances 284.05 215 128.29 100
Miscellaneous 12.11 36.63 68.32 100
Expenditure
TOTAL ASSETS 161.5 135.24 111.74 100
TRENDS IN SHARE HOLDERS FUNDS AND LIABILITIES
EXHIBIT – 5.3
PARTICULARS 2004-05 2003-04 2002-03 2001-02
Share Capital 110.49 110.48 110.48 100.00
Reserves 260.61 205.07 139.66 100.00
&Surplus
Secured Loan 200.74 175.81 120.56 100.00
Unsecured Loan 19.27 68.29 98.20 100.00
Deferred Tax 176.06 150.04 127.77 100.00
Liability
Current Liability 286.64 95.18 68.46 100.00
provision
TOTAL FUNDS 161.50 135.24 111.74 100.00
TREND IN SHARE HOLDERS FUNDS & LIABILITIES
350
300 2004-2005
250
2003-2004
RATIO
200
150 2002-2003
100
50 2001-2002
0
Capital
Secured
Unsecured
Deferred
Reserves
Share
&Surplus
provision
Liability
Current
Liability
Loan
Tax
Loan
PARTICULAR
INTERPRETATION:
 The trend percentage indicates that the reserves and surplus

shows the rise of 39.66, 105.07, and 160.61 percent in the year
2002-2003, 2003-2004 & 2004-2005 respectively.
 The secured loans have shown a rise by 20.56, 75.81 & 100.74
percent in the year 2002-2003, 2003-2004 & 2004-2005
respectively.
 The unsecured loan shows the reverse trend that mean every it is
decreasing that in the base year it was 100 then it decrease in the
year 2001-2002 to 98.2 and in the year 2002-2003 it again
decrease to 68.29 and in the year 2004-2005 it decreases
drastically to 19.27 percent .
 The Deferred liability also show rise by 76.06 % in the year
2004-2005 compare to the base year 2001-2002.
 Current liabilities was first decrease to 68.46 percent in 2002-
2003 then it shows slight increase to 95.18 compare to last year
but shows decrease compare to the base year while in the year
2004-2005 it shows an increase of 186.64 that means 2.87 time
compare to base year.
 Lastly, the Total funds shows the rise compare to the base year in
the year 2002-2003,2003-2004 & 2004-2005 by 11.74, 35.24 &
61.5 percent respectively.
TRENDS IN ASSETS
EXHIBIT 5.4
PARTICULARS 2004-05 2003-04 2002-03 2001-02
Fixed Assets 129.48 132.77 108.28 100
Inventories 396.35 231.84 132.76 100
Sundry Debtors 143.49 101.4 113.88 100
Cash bal. &bank bal. 101.54 64.25 31.57 100
Loans & Advances 284.05 215 128.29 100
Miscellaneous 12.11 36.63 68.32 100
Expenditure
TOTAL ASSETS 161.5 135.24 111.74 100
TREND IN ASSET ( B.Y 2001-2002)
450
400
350 2004-2005
300
2003-2004
RATIO
250
200 2002-2003
150
100 2001-2002
50
0
&bank bal.
Advances
Miscellaneous
Fixed Assets
Inventories
Debtors
Sundry
Cash bal.
Loans &
Expenditure
PARTICULAR
INTERPRETATION:
 The portion of the fixed assets has show the increase by 8.28 in
the year 2002-2003 and in the next year that is 2003-2004 it
increase to 32.77 % but it decreases by 2.29% in the year
compare to last year but shows the increase of 29.48% compare to
base year.
 Unutilized or underutilized assets increase the firms need for
costly financing as well as expenses for maintaince and upkeeps. A
high ratio suggests management’s ability to make a good use of its
assets and low ratio suggests the blocking of money in fixed
assets. As the assets are used to generate sales, the firm should
manage its assets efficiently to maximize the sales.
 The inventories has shown the increase of 32.76 in the year 2002-
2003 then after in the year 2003-2004 it shows the increase of
131.84 % while in the year 2004-2005 it increase by 296.35%
compare to the base year. The increase in the inventories is far
higher than the increase in sales. This is the reason the inventories
turnover shows decrease every year.
 The loans and the advances shows the increasing trend that is by
28.29%, 115% and 184.05% in the year 2002-2003, 2003-2004
and 2004-2005 respectively. It is one of the parts of the current
assets which are used to find out the current ratio. If the
current ratio of the company is high, this indicates the sound short
term finance from the creditor’s point of view. But on the other
and the higher ratio indicates blocking of funds in current assets.
 The cash and the bank balance shows the decreasing trend in the
year 2002-2003 it decrease to 31.57% then after it increases to
64.25% compare to the last year but compare to the base year it
shows the decrease in the trend but in the in the year it increases to
101.54% that is by 1.54% in the year 2004-2005.
 The miscellaneous expenditure is decreasing every year that is to
68.32%, 32.63% and 12.11% in the year 2002-2003, 2003-2004 &
2004-2005 respectively.
 The total Assets shows the rising trend that is by 11.74%, 35.24%
and 61.5% in the year 2002-2003, 2003-2004 & 2004-2005
respectively which shows that the company is efficient with which
affairs of the business are being managed. It also indicates the
firms’ capacity to withstand adverse economic condition
CHAPTER: 6
CONCLUSION
RATIO ANALYSIS:
 The Liquidity position of the company has been decreased this year
because the current ratio & the quick ratio have decreased this year
compared to last year.
 The profitability ratios of the company are not so good Infact, the
Gross profit has decrease from 18.88% to 17.68% in current year
which indicates that the cost of sales is high or that purchase is
inefficient while the Net profit has also decrease from 4.24% to
3.85% which shows that the administrative expenses are slowly
rising.
 All the leverage ratios were not so good in the last year 2003-2004 but
this year 2004-2005 it has been increase especially interest coverage
ratio from 1.43% to 1.77% and also the debt service coverage ratio
has also increase from 0.41 to 0.49
 Inventory turnover ratio is decreasing every year while the debtor
turnover ratio is increasing from the year 2002-2003 to 2004-2005.
 Fixed assets turnover ratio is increasing year.
 Creditor’s turnover ratio is decreasing every year that means the
company is not taking the advantage of the credit period allowed to
them.
 Valuation ratio has also shown increase especially E.P.S. and also
price earning ratio.
HORIZONTAL ANALYSIS
 The growth of the components of the profit and loss account in the
last three year is shown as under:
PARTICULARS Growth In Percentage (%)
2002-2003 2003-2004 2004-2005
Income 27.49% 20.96% 19.22%

Expenditure 28.58% 19.69% 19.88%
Profit(loss) before interest and tax 7.95% 48.05% 19.82%
Provision For Taxation 13.57% 21.40% 51.73%
Profit(loss) After tax 21.52% 58.19% 8.6%
Profit(loss) carried to Balance Sheet 113.13% 49.84% 27.87%
VERTICAL ANALYSIS:
 The following the common size profit and loss for all the year :
PARTICULARS 2004-05 2003-04 2002-2003 2001-

2002
EXPENDITURE 94.48 94.51 95.52 94.71

EARNING BEFORE 5.52 5.49 4.48 5.29
INT.&TAX
PROVISION FOR 1.82 1.43 1.38 2.05
TAXATION
PROFIT AFTER TAX 3.66 4.06 3.1 3.05
PROFIT AFTER INT, & 13.27 12.37 10.05 6.01
TAX
 The following is the composition of share holders funds &
liabilities :
SHARE HOLDERS 2001-02 2002-03 2003-04 2004-05

FUNDS&LIABILITIES
Share Capital 21.96 21.72 17.94 15.03

Reserves &Surplus 11.99 14.99 18.19 19.35
Secured Loan 30.80 33.23 40.04 38.28
Unsecured Loan 18.51 16.26 9.35 2.21
Deferred Tax Liability 6.68 7.64 7.41 7.28

provision
TOTAL FUNDS 100.00 100.00 100.00 100.00
 The following the composition of the assets
ASSETS 2001-02 2002-03 2003-04 2004-05

Fixed Assets 61.38 59.47 60.26 49.21
Inventories 9.58 11.38 16.43 23.51
Sundry Debtors 25.46 25.95 19.09 22.62
Cash bal. &bank 0.78 0.22 0.37 0.49
bal.
Loans & 2.35 2.70 3.73 4.13
Advances
Miscellaneous 0.45 0.27 0.12 0.03
Expenditure
TOTAL 100.00 100.00 100.00 100.00
ASSETS
TREND ANALYSIS
 Following are the selected items of the profit & loss account
PARTICULARS 2004-05 2003-04 2002- 2001-2002

2003
SEXPENDITURE 183 154 129 100

EARNING BEFORE 191 160 108 100
INT.&TAX
PROVISION FOR 163 108 86 100
TAXATION
PROFIT AFTER TAX 220 205 130 100
PROFIT AFTER INT, & 406 317 213 100
TAX
 TREND IN SHARE HOLDERS FUNDS & LIABILITIES
PARTICULARS 2004-05 2003-04 2002-03 2001-02

Share Capital 110.49 110.48 110.48 100.00
Reserves 260.61 205.07 139.66 100.00
&Surplus
Secured Loan 200.74 175.81 120.56 100.00
Unsecured Loan 19.27 68.29 98.20 100.00
Deferred Tax 176.06 150.04 127.77 100.00
Liability
provision
TOTAL FUNDS 161.50 135.24 111.74 100.00
 TREND IN THE ASSETS
PARTICULARS 2004-05 2003-04 2002-03 2001-02

Fixed Assets 129.48 132.77 108.28 100
Inventories 396.35 231.84 132.76 100
Sundry Debtors 143.49 101.4 113.88 100
Cash bal. &bank bal. 101.54 64.25 31.57 100
Loans & Advances 284.05 215 128.29 100
Miscellaneous 12.11 36.63 68.32 100
Expenditure
TOTAL ASSETS 161.5 135.24 111.74 100
BIBLIOGRAPHY
BOOKS:
Narayanaswamy R.: “Financial Accounting “, 2nd Edition, Prentice Hall
Publication (India), 2005.
Shah Sudhir B.: “Advance Accounting & Auditing – 4”, 16th Edition,
Sudhir Publication, 2004.
Shah Sudhir B.: “Accountancy (Company Accounts)”, 5th Edition, Sudhir

Publication, 2005.
Web-Links:
 http://www.real strips .com / Profit.htm.

 http://www.real strips .com / about us.htm.
 http://www.real strips .com / Org.htm.
 http://www.real strips .com / bod.htm.
 http://www.real strips .com / Photo gallery .htm.
 http://www.real strips .com / Product.htm.
 http://www.real strips .com / Environment .htm.
 http://www.real strips .com /Inquiry Form.htm.

Real Strips Limited

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Real Strips Limited

Caricato da

Copyright:

Formati disponibili

A Project Report Submitted to

PROF. APOORVA RAVAL

This is a 21st century today every person

Master of Business Administration [M.B.A.]

The main purpose in the finance field is to

As we like calculative subject and

Financial analysis of a company is very

The most important things required for

Every management student should have

This project report is prepared on the financial analysis of

The initial part of this report contains the brief information

The practical concern of this report is revealed by learning of

Liquidity / Balance sheet ratio

We have done financial analysis of REAL STRIPS

For any company financial analysis is very important because

What is the earning and is the company creditworthy -all this

PART: 1 ORGANIZATIONAL PROFILE

PART: 2 INTRODUCTION TO THE

Chapter 4: RATIO ANALYSIS

4.1 Liquidity Ratios

Chapter 5: TREND ANALYSIS

5.1 Trend Analysis of Profit &Loss A/C for 4 Yrs.

The demand for steel products has been a spurt in the

(A) FUTURE PROSPECTS:

The company has undertaken an expansion project. One more

Power tariff in the state of Gujarat is one of the highest in the

1.2: HISTORY AND DEVELOPMENTS:

Stainless steel production in India has a short history of 20

Comparing it with aluminum, plastics and steel all along its

Share of Stainless Steel was more domestic utensil sector was

Demand for SS is raising at the rate of 5% p.a. currently the

The achievement of your company stands on the ground of the

The company believes in employee’s involvement in achieving

Our employees are our most valuable asset and we believe

Real Strips Limited, AN ISO 9001 : 2000 Accredited Company

Coils/Strips produced by Real Strips Limited are used in

In our company around 200 workers working in factory.

SHRI A.K. KATARIA CHAIRMAN

SHRI A.D. SANGHVI MANAGING DIRECTOR

SHRI UGAMRAJ M. HUNDIA JOINT MANAGING

SHRI P.S. JAIN JOINT MANAGING

SHRI ASHWIN A. KATARIA WHOLE-TIME DIRECTOR

SHRI BABULAL S. JAIN DIRECTOR

SHRI CHANDRESH V. SHAH DIRECTOR

SHRI PAWAN R. MURARKA DIRECTOR

SHRI AMOL DALAL DIRECTOR

M/S MEHTA LODHA & CO.

MR. PRAKASH S. JAIN PUBLIC REL. OFFICER

MR. RAMESH CHAUDHARY GENERAL

UNION BANK OF INDIA

STATE BANK OF INDIA

26, MANGAL MURTI COMPLEX,

NEAR SHIV CINEMA,

Grade UTS N/mm2 0.2% pro of % elongation Hardness RB

2.1: INTRODUCTION OF FINANCIAL STATEMENT

A Financial statement is an organized collection of data

2.2: INTRODUCTION OF THE RATIO ANALYSIS

These alternative methods of expressing items which are related to

The ratio analysis as a quantitive tool enables analysists to draw

2.3: DEFINITION OF RATIO:

“The relationship between two accounting figures expressed

“The alternative methods of expressing items which are related to

2.4: STANDARD OF COMPARISION: