ACCOUNTS PROJECT

ANKUR SHARMA
APARNA UPADHYAY
BHAVIK JAIN
DEEPALI SRIVASTAVA
GURJOT KAUR
MOHIT KAPOOR
 RATIOS
FINANCIAL RATIOS
CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES

2009
=6040.04/5968.06
=1.01

2010
=5818.89/6935.52
=.83

Interpretation- From the above ratios we can see that ratio in the
year 2010 is less than 2009 as current assets are decreasing by
221.16 and current liabilities are increasing by 967.46 in 2010. So
its important for the co to control upon the current liabilities to
improve financial position.
Quick Ratio/Liquid Ratio= Quick Assets/Current Liabilities

Quick Asset= Current Assets-Closing Stock-Prepaid Expenses

2009

=5818.89-2179.93
=3638.96
=3638.96/6935.52
=.52

2010

=6040.05-2528.86
=3511.19
=3511.19/5968.06
=.59
Interpretation- In the year 2010 the quick ratio of the co. is .59 which is
higher than 2009 i.e a positive sign. This is happening as current liabilities
are decreasing. Thus to have good financial position co. shoul follow the
same trend or necessary steps can be taken by the co. to increase quick
assets for sound position.
Debt Equity Ratio= Long Term Outside
Liabilities/Tangible Net worth

Long Term Outside Liabilities=Secured Loan+Unsecured Loan+Current

Liabilities

2009
=144.65+277.30+4440.08
=4862.03
=4862.03/2061.51
=2.35

2010
=5493.97/2583.52
=2.13

Interpretation- In the above situation ratio is decreasing and it is because

of increase in long term liability by 6031.94 and by522.01 in net worth.
So the co. should try to improve the same to make financial position
sound.
OPERATING RATIOS-
Gross Profit Ratio= Gross Profit/Net Sales*100

Gross Profit= Net Sales-Raw Material-Power and Fuel-Employee Cost-

Manufacturing Expenses

2009

G.P=20504.28-11380.05-301.97-1152.12-297.34
=7372.8
=7372.8/20504.28*100
=35.96

2010

G.P=17769.12-9003.97-244.34-936.30-254.40
=7330.11
=7330.11/17769.12
=41.25

Interpretation- In 2010 Gross Profit Ratio of the co.has increased by 5.29 which
is a positive sign, it is happening as net sales of the co.is decreasing bt to make
profitalility of the co.more sound efforts shoud be done by the co.to improve
profit also in coming year
Operating Profit Ratio=Operating profits/netsales x 100

2009
=2964.94/20504.28*100
=14.46

2010

=2797.70/17769.12*100
=15.74

Interpretation- In the above case operating profit of the co.has increased by

1.28 due to decrease in net sales by 2735.16 and and operating profit by
167.74 but the co should try to improve operating profit rather than decrease in
net sales.
Net Profit Ratio= Net Profit/Sales *100

2009

=2500.71/20504.28*100
=12.20

2010

=2202.03/17769.12*100
=12.39

Interpretation- the net profit ratio of the co. is increasing but with very low rate
by just 0.19.As in this profit of the company has decreased by 298.68 and the
sales has also decreased by 2735.16.To grow fast co. should try to decrease the
expenses and increase the sales..
Inventory Turnover Ratio= Average Inventory/Sales*365

Average Inventory= Opening Stock+Closing Stock/2

2009

=1953.60+2528.86/2
=2241.23
=2241.23/20504.28*365
=39.90days

2010

=2528.86+2179.93/2
=2354.39
=2354.39/17769.12*365
=48.36days

Interpretation-As we can see above inventory ratio of the co.is increased by

8.54 days resultant of increase in average inventory.It means stock will take
more time to convert into liquid form which is a negative sign so co.should try to
improve the liquidity position.
COMPOSITE RATIOS--
Debtors Turnover Ratio= Average Debtors/Sales*365

Average Debtors=Opening Debtors+Closing Debtors/2

2009

=443.37+536.89/2
=490.13
=490.13/20504.28*365
=8.72days

2010=536.89+678.44/2
=607.66
=607.66/17769.12*365
12.48days

Interpretation- In the above case ratio is increasing by 3.76 days resultant of

increase in avg debtors by 117.53.It means co.is providing more relief to the
customers so to improve the liquidity and financial position its must to reduce the
debtors.
Fixed Asset Turnover Ratio= Net Sales/Fixed Assets

2009

=20504.28/1606.78
=12.76

2010

=17769.12/2162.11
=8.22

Interpretation- In the above case the fixed asset turnover ratio has
decreased by 4.54 resultant of increase in fixed assets by 555.33 and
decrease in net sales by 2735.16. It is positive as per financial position is
concern but co. should try to improve its sales for sound liquidity position.
Current Asset Turnover Ratio= Net Sales/Current Assets

2009

=20504.28/5818.89
=3.52

2010

=17769.12/6040.05
=2.94

Interpretation-As per above situation ratio has decreased by 0.58

relutant of decrease in net sales by 2735.16 and increase in current
assets by 221.16 which shows less sound liquidity position. So to
improve the same co. should to to improve upon the same.
Return On Assets= Net Profit After Taxes/Total Assets

Total Assets=Fixed Assets+Current Assets

2009

=1606.78+2528.86+536.89+190.59+1196.95+1586.76
=7646.83
2500.71/7646.83
=.33

2010

=2162.11+2179.93+678.44+231.37+1068.31+1660.84
=7981
=2202.03/7981
=.27
Interpretation-For more sound position of the co. return on assets
should be more. As we above to do the same co. should try to improve
the net profit.
Return On Capital Employed=Net Profit before Interest and
Tax/Average Capital Employed*100

Average Capital Employed=Opening Capital Employed+Closing Capital

Employed/2

2009

=1439.24+2061.51/2
=1750.37
=3241.48/1750.37*100
=185.18

2010

=2061.51+2583.52/2
2322.51
=2997.43/2322.51*100
=129.05
Interpretation- In the above ratio we can see net profit of the co has
decreasedby 55.13 resultant of decrease in N/P before interest and tax
by 244.05 and increase in avg capital employedby 572.14 which is not a
positive sign so co should take care of the same by reducing indirect
expenses.
Return on Equity Capital= Net Profit after Taxes/Tangible
Net Worth

2009

=2500.71/2061.51
=1.21

2010

=2202.03/2583.52
=.85

Interpretation- In this case ratio has decreased by 0.36 due to decrease

in net profit by 298.68 and increase in net worth by 522.01. Due to this
financial position of the co is suffering.
CONCLUSION- From the above ratio
analysis we found that there is need to work upon
certain areas to make the financial position more
sound.But we can also see that overall financial
position of the co is increasing day by day.
THANK YOU