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Ratio Analysis

• Liquidity Ratios:
o Current Ratio
o Liquidity Ratio
o Absolute Liquid Ratio

I. Current Ratio = Current Assets


Current Liabilities

2008: 8355524 1.08


7686897

2009 7857942 .86


9098678
2010 6871464 = 0.70
9641691

II. Liquidity Ratio = Liquid Assets


Current Liabilities

2008: 3296365 = 0.42


7686897

2009: 3240024 = 0.35


9098678

2010: 2205556 = 0.22


9641691
III. Absolute Liquid Ratio = Absolute Assets
Current Liabilities
2008: 2294172 = 0.29
7686897
2009: 3071897 = 0.33
9098678
2010: 1914836 = 0.19
9641691

o Activity Ratio
o Inventory turnover Ratio
o Account receivable turnover ratio/ Debtor
turnover ratio
o Average collection period
o Account payable turnover ratio/ creditor turnover
ratio

o Average Payment period


o Working capital turnover ratios
o Fixed asset turnover ratio

i. Inventory turnover ratio = CGS


Average Inventory
2008: 12600706 = 17.76
709372

2009: 16519138 = 17.33


952990

2010: 16529932 = 18.31


902710.5

ii. Average Conversion Period


= No of days in a year
Inventory turnover ratio
2008: 360 = 20.27 20 days
17.76
2009: 360 =20.70 21days
17.33
2010: 360 = 19.66 20 days
18.31

iii. A/R turnover ratio = Net Credit Sales


Average A/R
2008: 16957879 = 19.04
890204

2009: 26330404 = 55.46


474727.5

2010: 24508793 = 200.84


122028
iv. Average Collection Period
= No. of days in a year
A/R turnover ratio

2008: 360
19.04

2009 360
55.46

2010: 360
200.84

v. A/P turnover ratio = Net credit


Purchase
Average A/P
vi. Average Payment period
= No. of days in a year
A/P turnover ratio

vii. Working Capital turnover ratio


= CGS
Net working capital
2008 12600706
18655423

2009 16519138
23251972
2010 16529932
25095929

viii. Fixed turnover ratio= CGS


Net fixed asset
2008:12600706
25883550

2009: 16519138
30534420

2010: 16529932
31438780

o Profitability Ratios
1. Gross Profit Ratio
2. Net Profit Ratio
3. Operating Profit Ratio
4. Admin. Expense Ratio
5. Selling Expense Ratio
6. Return on Investment ratio/Net worth
7. Return Equity Ratio
8. Return on Asset Ratio

1) Gross Profit Ratio = Gross Profit *100


Net sales
2008: 4357173 *100
16957879

2009: 9811266 *100


26330404

2010: 7978861 *100


24508793

2)Net profit Ratio= Net Profit Ratio * 100


Net Sales
2008: 2677670 *100
16957879

2009 4596549*100
26330404

2010 3137457 *100


24508793

3) Operating Profit ratio = Operating Profit *100


Net Sales
2008 2677670*100
34239074

2009 4596549*100
38392362

2010 3137457*100
38310244

4) Admin Expense ratio


= admin expense *100
Nat Sales
2008 125752*100
16957879
2009 165936*100
26330404
2010 303244*100
24508793

5) Selling Expense Ratio


= Selling Expense Ratio *100
Net Sales
2008 1155054*100
16957879

2009 2427837*100
26330404
2010 3433047*100
24508793
6) Return on Investment ratio/Net worth
= Net Income After Tax *100
Total Liabilities + Owner’s Equity

2008 2677670*100
34239074

2009 4596549*100
38392362
2010 3137457*100
38310244

7) Return Equity Ratio


= Net Profit After Tax
Share Holder Fund/Owner’s Equity

2008 2677670*100
18655423

2009 4596549*100
23251972

2010 3137457*100
25092929
8)Return on Asset Ratio
= Net Income After Tax *100
Total Assets
2008 2677670*100
34239077

2009 4596549*100
38392362
2010 3137457*100
38310244
• Long Term Solvency Ratio
o Debt to equity ratio
o Proprietary Ratio

A. Debt to equity ratio = Outsider Funds


Shareholders fund

2008 7896754+7686897
18655423

2009 9098678+6041712
23251972

2010 9641691+3572624
25092929
B. Proprietary Ratio = Shareholders funds
Total Assets

2008 18655423
34239074

2009 23251972
38392362

2010 25092929
38310244