Post on 04-Apr-2018
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H M T Ltd. was incorporated in 1953 by the Government of India as a
Machine Tool manufacturing company.Over the years diversified into
Watches, Tractors, Printing Machinery, Metal Forming Presses, Die
Casting & Plastic Processing Machinery, CNC Systems &
Bearings.Successful technology absorption in all product groups through
collaborations with world renowned manu- facturers & further
strengthened by continuous inhouse R&D.Today
Main ProductsAccessories, Watches, Sound Wave Ballast, Tractors, Miscellaneous
Sales & Sundry Jobs, Job Work, Lamp Components, Lamps GLS,
Fluorescent Lamps, Lamps MV, SV & MH, Miniature Batteries, Lamp
Making Machines, Precision Machines, Precision Boring Machinery,
Machine Tools (Including Plastic Injection Moulding Machines), CNC
Systems, Metal Forming Presses, Printing Machines, Food Processing
Machinery, Ball Screws,
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Titan Industries is the world's fifth large wrist watch manufacturer and
India's leading producer of watches under the Titan, Fastrack, Sonata,
Nebula, RAGA, Regalia, Octane & Xylys brand names. It is a joint
venture between the Tata Group, and the Tamil Nadu IndustrialDevelopment Corporation (TIDCO). Its product portfolio includes
watches, accessories and jewellery, in both contemporary and traditional
designs. It exports watches to about 32 countries around the world with
manufacturing facilities in Hosur, Dehradun, Goa and manufactures
precious jewellery under the Tanishq brand name, making it India's only
national jewellery brand. It is a subsidiary of the Tata Group.
Titan watch division was started in 1987. At launch it was the third watch
company in India afterHMT and Allwyn. Titan formed a jointventure with Timex, which lasted until 1998, and setup a strong
distribution network across India. As of 2010, Titan watches account for
a 60% share of the total Indian market and are also sold in about 40
countries through marketing subsidiaries based
in London, Aden, Dubai and Singapore. Titan watches are sold in India
through retail chains controlled by Titan Industries.
http://en.wikipedia.org/wiki/Wrist_watchhttp://en.wikipedia.org/wiki/TIDCOhttp://en.wikipedia.org/wiki/TIDCOhttp://en.wikipedia.org/wiki/Hosurhttp://en.wikipedia.org/wiki/Dehradunhttp://en.wikipedia.org/wiki/Goahttp://en.wikipedia.org/wiki/Tanishqhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Tata_Grouphttp://en.wikipedia.org/wiki/Hindustan_Machine_Toolshttp://en.wikipedia.org/wiki/Hyderabad_Allwyn_Limitedhttp://en.wikipedia.org/wiki/Joint_venturehttp://en.wikipedia.org/wiki/Joint_venturehttp://en.wikipedia.org/wiki/Timex_Group_USAhttp://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/Adenhttp://en.wikipedia.org/wiki/Dubaihttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Dubaihttp://en.wikipedia.org/wiki/Adenhttp://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/Timex_Group_USAhttp://en.wikipedia.org/wiki/Joint_venturehttp://en.wikipedia.org/wiki/Joint_venturehttp://en.wikipedia.org/wiki/Hyderabad_Allwyn_Limitedhttp://en.wikipedia.org/wiki/Hindustan_Machine_Toolshttp://en.wikipedia.org/wiki/Tata_Grouphttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Tanishqhttp://en.wikipedia.org/wiki/Goahttp://en.wikipedia.org/wiki/Dehradunhttp://en.wikipedia.org/wiki/Hosurhttp://en.wikipedia.org/wiki/TIDCOhttp://en.wikipedia.org/wiki/TIDCOhttp://en.wikipedia.org/wiki/Wrist_watch7/31/2019 Accounts Project on Ratio Analysis
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BALANCE SHEET OF HMT LTD.
March 2010 March 2009
Sources Of Funds
Total Share Capital 760.35 760.35
Equity Share Capital 760.35 760.35
Share Application Money 443.00 443.00
Preference Share Capital 0.00 0.00
Reserves -506.11 -453.20
Revaluation Reserves 0.00 0.00
Networth 697.24 750.15
Secured Loans 254.65 341.70Unsecured Loans 366.26 231.42
Total Debt 620.91 573.12
Total Liabilities 1,318.15 1,323.27
March 2009 March 2010
Application Of FundsGross Block 136.39 132.49
Less: Accum. Depreciation 96.93 93.42
Net Block 39.46 39.07
Capital Work in Progress 0.82 2.29
Investments 765.56 765.71
Inventories 29.00 40.38
Sundry Debtors 68.64 74.44
Cash and Bank Balance 2.69 2.02
Total Current Assets 100.33 116.84Loans and Advances 624.66 583.89
Fixed Deposits 1.69 9.64
Total CA, Loans & Advances 726.68 710.37
Deffered Credit 0.00 0.00
Current Liabilities 142.56 124.26
Provisions 71.81 70.20
Total CL & Provisions 214.37 194.46
Net Current Assets 512.31 515.91
Miscellaneous Expenses 0.00 0.29
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Total Assets 1,318.15 1,323.27
Contingent Liabilities 10.52 14.40
Book Value (Rs) 3.34 4.04
P/L ACCOUNTS OF HMT LTD.
March 2010 March 2009
Income
Sales Turnover 194.94 164.44
Excise Duty 1.48 1.92
Net Sales 193.46 162.52
Other Income 53.36 54.56
Stock Adjustments -12.23 -11.90
Total Income 234.59 205.18
ExpenditureRaw Materials 120.83 105.96
Power & Fuel Cost 3.97 4.31
Employee Cost 67.62 63.67
Other ManufacturingExpenses
0.07 0.06
Selling and AdminExpenses
20.11 34.40
Miscellaneous Expenses 6.62 5.73
Preoperative Exp
Capitalised -4.62 -4.67
Total Expenses 214.60 209.46
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Operating Profit -33.37 -58.84
PBDIT 19.99 -4.28
Interest 68.61 63.68
PBDT -48.62 -67.96
Depreciation 3.92 3.40Other Written Off 1.87 1.38
Profit Before Tax -54.41 -72.74
Extra-ordinary items 1.50 3.77
PBT (Post Extra-ordItems)
-52.91 -68.97
Tax 0.00 1.81
Reported Net Profit -52.91 -70.79
Total Value Addition 93.77 103.50
Preference Dividend 0.00 0.00Equity Dividend 0.00 0.00
Corporate Dividend Tax 0.00 0.00
Per share data (annualised)
Shares in issue (lakhs) 7,603.50 7,603.50
Earning Per Share(Rs)
-0.70 -0.93
Equity Dividend (%) 0.00 0.00
Book Value (Rs) 3.34 4.04
ADDITIONAL INFORMATION:
Opening balance of inventory for year 2008-09 is 52.40
Opening balance of share holder equity for year 2008-09 is 377.94
opening balance of debtors for year 2008-09 is 104.02
opening balance of Total assets for year 2008-09 is 1341.93
High and low share prices on 31st march 2009 72.10 and 69.00
High and low share prices on 31st march 2010 70.75 and 68.65
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BALANCE SHEET OF TITAN INDUSTRIES
March 2010 March 2009
Total Share Capital 44.39 44.39
Equity Share Capital 44.39 44.39
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves 679.99 506.85
Revaluation Reserves 0.00 0.00
Networth 724.38 551.24
Secured Loans 72.79 116.76
Unsecured Loans 0.00 58.65
Total Debt 72.79 175.41
Total Liabilities 797.17 726.65
Mar '10 Mar '09
Gross Block 624.33 593.04
Less: Accum. Depreciation 361.70 318.56
Net Block 262.63 274.48
Capital Work in Progress 12.29 19.52
Investments 7.63 7.66
Inventories 1,340.33 1,202.69
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Sundry Debtors 93.61 106.22
Cash and Bank Balance 61.72 54.69
Total Current Assets 1,495.66 1,363.60
Loans and Advances 200.99 128.82
Fixed Deposits 125.00 0.00
Total CA, Loans & Advances 1,821.65 1,492.42
Deffered Credit 0.00 0.00
Current Liabilities 1,172.28 974.00
Provisions 134.74 93.44
Total CL & Provisions 1,307.02 1,067.44
Net Current Assets 514.63 424.98
Miscellaneous Expenses 0.00 0.00
Total Assets 797.18 726.64
Contingent Liabilities 72.19 65.46
Book Value (Rs) 163.19 124.18
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P/L ACCOUNTS OF TITAN INDUSTRIES.
Sales Turnover 4,703.12 3,926.09
Excise Duty 28.70 44.34
Net Sales 4,674.42 3,881.75
Other Income 8.62 -5.91
Stock Adjustments 111.66 178.67
Total Income 4,794.70 4,054.51
Raw Materials 3,561.05 2,940.86
Power & Fuel Cost 17.47 16.11
Employee Cost 275.64 234.20
Other Manufacturing Expenses 6.11 8.99
Selling and Admin Expenses 458.69 427.47
Miscellaneous Expenses 30.86 86.20
Preoperative Exp Capitalised -0.04 -0.09
Total Expenses 4,349.78 3,713.74
Mar '10 Mar '09
12 mths 12 mths
Operating Profit 436.30 346.68
PBDIT 444.92 340.77
Interest 63.52 68.46
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PBDT 381.40 272.31
Depreciation 60.08 41.76
Other Written Off 0.00 0.00
Profit Before Tax 321.32 230.55
Extra-ordinary items -2.92 -10.92
PBT (Post Extra-ord Items) 318.40 219.63
Tax 68.08 60.68
Reported Net Profit 250.32 158.96
Total Value Addition 788.73 772.88
Preference Dividend 0.00 0.00
Equity Dividend 66.58 44.39
Corporate Dividend Tax 11.06 7.54
Shares in issue (lakhs) 443.89 443.89
Earning Per Share (Rs) 56.39 35.81
Equity Dividend (%) 150.00 100.00
Book Value (Rs) 163.19 124.18
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ADDITIONAL INFORMATION:
Opening balance of inventory for year 2008-09 is 1021.09
Opening balance of share holder equity for year 2008-09 is 436.17
opening balance of debtors for year 2008-09 is 96.45
opening balance of Total assets for year 2008-09 is 694
High and low share prices on 31st march 2009 74.75 and 71.10
High and low share prices on 31st march 2010 181.75 and 176.75
PROFITIBILTY RATIO
Profit Margin Ratio
Profit margin shows how much of each sales rupee shows up as net income after allthe expenses paid.
Profit Margin Ratio = (Profit After Tax/ Sales) * 100
HMT ltd.
Profit margin (2008-2009) = (-70.79/162.52)*100
= -43.55%
Profit margin (2009-2010) = (-52.91/193.46)*100
= -27.34%
Here HMT Ltd is suffering loss, as the loss margin has decreased from
-43.55% in 2009 to -27.34% in 2010 because sales has increase more in
comparison to increases in expenses and as profit maximization is equal to
loss minimization , it is good sign for the company.
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Titan industries
Profit margin (2008-2009) = (158.96/3881.75)*100
= 4.09%
Profit margin (2009-2010) = (250.32/4794.70)*100
= 5.22%
Titan industries profit margin has increased from 4.09 to 5.22% because in our view
sales has increased more in comparison of expenses .
COMPARISON:
For year 2008-2009:- HMT Ltd.is suffering loss with loss margin of -43.55 % as
Titan Industries has profit margin of 4.09 %.It clearly indicates Titan Industry is
better.
For year 2010-2011 :- HMT Ltd.is suffering loss and as Titan Industry has profit
margin of 5.22%,it clearly indicates Titan is better.
2 ASSETS TURNOVER:The assets turnover ratio measures the ability of a company to use its assets togenerate sales. It can be calculated in the following manner: -
ASSETS TURNOVER = Sales/Average Total Assets
Average Total Assets = [Opening Assets+ Closing Assets] / 2
HMT Ltd.
Asset turnover ratio (2008-2009) =
[164.44/ {(341.93 +1323.27)/2}]*100
=0.1219times
Asset turnover ratio (2009-2010) =
[193.46/ {(1318.15 +1323.27)/2}]*100 =0.15times
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The assets turnover has increased from 0.12 times in 2009 to 0.15 times in
2010 mainly because of inventory management has improved as we can see
with closing figures of inventories of both the years.
Titan industries
Asset turnover ratio (2008-2009) =
[3881.75/ {(694.05 +726.64)/2}]
= 5.4times
Asset turnover ratio (2010-2011) =
[4794.70/ {(726.04+797.18)/2}]
= 6.30times
Assets turnover has improved as in 2009, assets turnover ratio was 5.46 times
as in 2010 it was 6.30.It indicates company is managing its assets efficiently.
COMPARISON:
For year 2008-2009:-as HMT Ltd is suffering loss, and by the figures of assets
turnover ratio we can say that Titan Industries is performing better.
For year 2009-2010:- Also in this year HMT Ltd. is suffering huge loss and Titan
Industries assets turnover ratio has improved, it clearly shows that titan
industries is better.
3) Return on Assets :-
It measures the profitability from a given level of investment.
Return on Assets= [Profit after Tax / Average Total Assets] * 100
Average Total Assets= (Opening Assets+ Closing Assets) / 2
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HMT Ltd.
Return on Assets (2008-2009) =
[-70.79/ {(1341.93 + 1323.27)/2}]*100
= -5.31%
Return on Assets (2009-2010) =
[-52.91/ {(1318.15 +1323.27)/2}]*100
= -4.006%
In HMT Ltd, return on assets has increased from -5.31%to -4%. This shows
overall loss of HMT ltd has drecresed.
Titan industries
Return on Assets (2008-2009) =
[158.96/ {(694.05 + 726.64)/2}]*100
= 22.38%
Return on Assets (2010-2011) =
[250.32/ {(726.64+797.18)/2}]*100
= 32.85%
In titan industries return on assets has increased from 22.38% to 32.85 this
shows that overall profitability of Titan industries is increased.
COMPARISON:
For year 2008-2009:- HMT Ltd has return on assets of 5.31% and that of Titan
industries it is 5.46% which menace Titan industries is more profitable.
For year 2009-2010:- HMT Ltd has return on assets of 4.006% and that of Titan
industries it is 6.30% which menace Titan industries is more profitable.
4) Return on Equity:-
The Return on Equity or return on net worth allows investors to see how
effective the money invested is being used.
Return on Equity= [Profit after Tax / Avg. Shareholders Equity]* 100
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Avg. Shareholders Equity= [Opening+ closing Shareholder Equity] / 2
Share holder equity = Share capital + Preferential share capital+ Reserve &
Surplus
HMT Ltd.
Return on Equity (2008-2009) =
[-70.79/ {(307.15 + 377.90)/2}]*100
= -20.66%
Return on Equity (2009-2010) =
[-52.91/ {(254.24 + 307.15)/2}]*100
= -18.84%
As HMT Ltd is suffering loss Return on equity is in negative but Return on
equity has shown some improvement from -20.66% in 2009 to -18.84% in
2010.This is the good sign for the company.
Titan industries
Return on Equity (2008-2009) =
[158.96/ {(436.17 + 151.24)/2}]*100
= 32.20%
Return on Equity (2009-2010) =
[250.32/ {(551.24 + 724.38)/2}]*100
= 39.25%
Titan industries has shown improvement in return on equity of 7.05% it is good
sign for the company.
COMPARISON:
For year 2008-2009:- As HMT Ltd. return on equity is negative and Titan
industries has return on equity of 32.20%, which means Titan industries has
good profitability from shareholders view.
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For year 2009-2010:-As HMT Ltd has ROE of -18.84% which is slightly good
than previous year but still HMT Ltd is less profitable than Titan industries
which has ROE of 32.85%.
5) Earning Per Share:-
Earning per share shows income earned per share by the share holders.
Earning per Share = [Profit after tax / Number of Equity shares]
HMT LTD.
Earning per share (2008-2009) = -70.99*10000000/7603.5*100000
= Rs -0.93 per share
Earning per share (2009-2010) = -52.91*10000000/7603.50*100000
= Rs -0.70 per share
Earning per share of HMT has improvement from -0.93 to -0.77. This gives ray
of hope to share holder that company may turn out to be profitable.
Titan Industries
Earning per share (2008-2009) = 158.96*10000000/443.89*100000
= Rs. 35.81 per share
Earning per share (2009-2010) = 250.32*10000000/443.89* 100000
= Rs 56.39 per share
EPS has improved from 35.8% to 56.39% which means profitability has
improved i.e. earning of share holder has increased.
COMPARISON:
For year 2008-2009:-EPS of HMT ltd. is negative that is o -0.93 whereas Titan
industries has EPS of 35.81 which clearly means Titan Industries is better from
investors point of view.
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For year 2009-2010:-EPS of HMT ltd. is of -0.70 whereas Titan industries has
EPS of 56.39 which clearly means Titan Industries is better from investors
point of view.
LIQUIDITY RATIOS
1) Current Ratio:-
The current ratio is used to evaluate the firms ability to pay its short term
debts obligations.
Current Ratio = Current Assets / Current Liabilities
Current Assets = Inventories + sundry debtors + cash +
Loan & Advances
Current Liability = Current Liabilities + Provision
HMT ltd:
Current Ratio (2008-2009) = 724.99/214.37
= 3.38:1
Current Ratio (2009-2010) = 700.73/194.46
=3.60:1
In 2009 current ratio was 3.38:1 which moved to 3.60 :1 which shows that
company is moving towards ideal ratio of 2:1.It also shows that company has
sufficient current assets to pay its debts in short term.
Titan Industries:Current Ratio (2008-2009) = 1492.42/1067.44
= 1.40:1
Current Ratio (2009-2010) = 1821.65/1307.02
=1.39:1
As current ratio of Titan Industries is less than 2:1 which is ideal position, it
means that Titan Industries may default in payment of its short term debts.
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COMPARISON:
For the year 2009-2010:- In this year HMT Ltd has current ratio more than Titan
Industries, but Titan Industries has current ratio of 1.40:1 which in our opinion is
dangerous for the company. As higher current ratio is better than lower i.e. lower
than 2:1, so HMT Ltd is better.
For the year 2010-2011:- In this year HMT Ltd has current ratio more than Titan
Industries, but Titan Industries has current ratio of 1.39:1 which in our opinion is
dangerous for the company. As higher current ratio is better than lower than 2:1, So
HMT Ltd is better.
2) Quick Ratio:-
It is a measurement of how well a business can meet its short term financial
obligation without selling any inventory.
Quick Ratio = Quick Assets / Current Liabilities
Quick Assets = Current Assets - Inventories
HMT Ltd.
Quick Ratio (2008-2009) = (700.73-40.38)/194.46
=3.40:1
Quick Ratio (2009-2010) = (724.99 29)/214.37
= 3.25:1
In both the years quick ratio is higher than ideal level of 1:1.It means company
does not require to sell its inventory to generate cash.
Titan Industries
Quick Ratio (2008-2009) = (1492.42 1202.69)/1067.44
=0.27
Quick Ratio (2009-2010) = (1821.65 1340.33)/1307.02
= 0.37
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Debtor Turnover Ratio (2009-2010) =
[4674.42/ {(93.61 + 106.22)/2}] = 46.78
DTR has increased from 38.31 to 46.78 which means debtors are being quickly
converted in cash in comparison to 2009 which reflects good portfolio ofdebtor.
COMPARISON:-
As DTR of Titan Industries is very high than HMT Ltd. which clearly indicates
that Titan Industries has quality debtors and debt collection mechanism is
good than HMT Ltd.
4) Average debt collection period:-
It is basically measures the time taken for collection of debt.
Average Debt Collection Period = 360 days / Debtors Turnover
HMT Ltd.
Average debt collection period (2008-2009) = 360/1.82
= 197.80 days
Average debt collection period (2009-2010) = 360/2.70
= 133.33 days
Average Debt Collection period has decreased from 197.80 to 133.33.In 2009-2010 recovery of debt from debtors are taking less days as compared to
previous years but still this period is quite high which is not good for the
company.
Titan Industries
Average debt collection period (2008-2009) = 360/38.31
= 9.40 days
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Average debt collection period (2009-2010) = 360/46.78
= 7.70 days
Average debt collection period has decreased from 9.40 days to 7.70 days. It
shows limited blockage of funds with debtors which decreases chance of bad
debt and also indicates the efficiency of good management. In this year
recovery of debt from debtors are taking less days as compare to previous
year.
COMPARISON:-
For the year 2008-2009:- Average debt collection period of both companies
clearly shows that titan industries is better as it has average collection period
of 9.40 in comparison to 197.80 of HMT Ltd. Titan industries Debtors are being
quickly converted into cash.
For the year 2009-2010:-. In this year HMT Ltd collects debt from its debtors in
133.33 days where as Titan industry collects debts from its debtors in 7.70
days. It is clearly being concluded that the amount from debtors of Titan
Industry has being quickly collected as compared to HMT ltd.
5) Inventory Turnover Ratio:-
It measures the number of times a companys inventory is turned into sales.
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventories
Average Inventory = [Opening Inventory + Closing Inventory] / 2
HMT Ltd.
Inventory Turnover Ratio (2008-2009)
= [208.4/ {(552.40 + 40.38)/2}]
= 4.49 times
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Inventory Turnover Ratio (2009-2010)
= [212.6/ {(29 + 40.38)/2}]
= 6.13 times
It has increased from 4.49 times in 2008-2009 to 6.13 times in 2009 it shows
that stock has been efficiently used and also that stock is selling quickly in
comparison to previous year.
Titan Industries
Inventory Turnover Ratio (2008-2009)
= [3627.63/ {(1021.09 + 1202.69/2}]
= 3.26 times
Inventory Turnover Ratio (2009-2010)
= [4318.96/ {(1340.33 +1202.69)/2}]
= 3.40 times
There is marginal increase of 0.14 from 2009-2010 it shows bit improvement in
inventory management but still inventory turnover is quite low which is notgood.
COMPARISON:
For the year 2008-2009:- Here HMT Ltd. Has inventory turnover of 4.49 and
where as Titan Industries has inventory turnover of 3.26 it shows HMT Ltd. has
slightly better Inventory management.
For the year 2009-2010:- In this year HMT Ltd. had inventory turnover ratio of
6.13 times and where as Titan Industries had inventory turnover ratio is 3.40
times. It is clearly being concluded that the HMT Ltd. indicates efficient
inventory management and fast moving inventory as compared to Titan
Industries.
6) Average Inventory Holding Period:-
It means the period or average no. of days the company is holding the
inventory.
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Average inventory holding period = 360 days / Inventory Turnover Ratio
HMT Ltd:-
Average Inventory Holding period (2008-2009) = 360/4.49
=80.17 days
Average Inventory Holding period (2009-2010) = 360/6.13
= 58.13 days
Average Inventory Holding Period has gone down from 80.17 days to 58.13
days which is good for HMT Ltd. as the money blocked in Inventories will get
converted into sales in fewer days this year as compare to previous year.
Titan Industries:-
Average Inventory Holding period (2008-2009) = 360/3.26
= 110.42 days
Average Inventory Holding period (2009-2010) = 360/3.42
= 105.88days
Average Inventory Holding Period has gone down from 110.42 days to 105.88
days which is good for Titan industries as the money blocked in Inventories
will get converted into sales in fewer days this year as compare to previous
year.
COMPARISON:
For the year 2008-2009:- In this year HMT Ltd. had Average Inventory Holding
Period is 80.17 days and where as Titan industries had Average Inventory
Holding Period is 110.42 days. It is clearly being concluded that the HMT Ltd.
indicates efficient inventory management as compared to Titan industries.
For the year 2009-2010:- In this year HMT Ltd. had Average Inventory Holding
Period is 58.13 days and where as Titan Industries had Average Inventory
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Holding Period is 105.88 days. It is clearly again being concluded that the HMT
Ltd. indicates efficient inventory management as compared to Titan Industries.
7)OPERATING CYCLE PERIOD:-
It is the time taken to turn inventory into debtors via credit sales PLUS time
taken to turn debtors into cash.
HMT Ltd:-
2008-2009 2009-2010Average Inventory holdingperiod
80.17 days 58.13 days
Average Debt Collectionperiod
197.80 days 133.33 days
Operating Cycle 277.97 days 191.46 days
It is clearly been seen from the above table that operating cycle has improved
from the previous year.
Titan Industries:-
2008-2009 2009-2010Average Inventory holdingperiod
110.42 days 105.85 days
Average Debt Collectionperiod
9.40 days 7.70 days
Operating Cycle 119.82 days 113.85 days
It is clearly been seen from the above table that operating cycle has improved
from the previous year.
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COMPARISON:
For the year 2008-2009:-As operating cycle period of HMT Ltd. is 277.97 days
and whereas of Titan industries is 119.82 days, so we can easily conclude that
Titan industries is having better position in operating cycle period as
compared to HMT Ltd.
For the year 2009-2010:-As operating cycle period of HMT Ltd. is 191.46 days
and whereas of Titan industries is 113.85 days, so we can again conclude that
Titan industries is having better position in operating cycle period as
compared to HMT Ltd.
SOLVENCY RATIOS
It gives a picture of a companys ability to generate cash flow and pay it
financial obligations. It includes Debt Equity Ratio, Liability to Equity Ratio and
Interest coverage ratio.
1) Debt Equity Ratio:-
It measure the relationship of the capital provided by the creditors to the
amount provided by the shareholders .
Debt Equity Ratio = Debt / Equity
Debt = Secured loans + Unsecured loans
Equity = Share capital + Reserve & Surplus
HMT Ltd
Debt Equity Ratio (2008-2009) = [573.10/(760.35+(-453.20))]
= 1.86
Debt Equity Ratio (2009-2010) = [620.91/(760.35+(-506.11))]
= 2.44
Debt-Equity ratio in 2008-2009 is 1.86 and where as in 2009-2010 is 2.44 which
is clearly showing that it is low in present year, which indicates company is
increasing its degree of financial leverage and company is taking more risk
than to previous year.
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Titan Industries:-
Debt Equity Ratio (2008-2009) = [175.41 /(44.39+506.89)]
= 0.32
Debt Equity Ratio (2009-2010) = [72.79/ (44.39+679.99)]
= 0.10
Debt-Equity ratio in 2008-2009 is 0.32 and where as in 2009-2010 is 0.10 which
is clearly showing that it is low in present year, which indicates there is a small
degree of leverage and the company is too conservative and it is less risky for
creditors.
COMPARISON:-
For the year 2008-2009:-Debt-Equity Ratio of HMT Ltd. is 1.86 and whereas of
Titan Industries is 0.32. So we can easily conclude that HMT Ltd. has higher
leverage and risky for creditors.
For the year 2009-2010:-Debt-Equity Ratio of HMT Ltd. is 2.44 and that of titan
industries is 0.10 and we can clearly conclude that titan industry is less risky
and more conservative using less leverage than HMT Ltd.
2) Liability to Equity Ratio:-
A variant of the Debt-Equity Ratio is the liabilities to equity Ratio. Here, the
numerator has not only debt but also current liabilities and deferred tax
liability in order to get the firms total liabilities.
Liability to Equity Ratio = All Liabilities / Shareholders Equity
All Liabilities = Total Liabilities - Shareholders Equity
All liabilities = Secured loans + Unsecured Loans + Current liability &
Provisions
Share holder equity = Share capital + Preferential share capital+ Reserve &
Surplus
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HMT Ltd.
Liability to Equity ratio (2008-2009) =
All liabilities= total liabilities- share holders equity
=(1590-{760.35-382.41})=1212.7
Liability to Equity ratio= (1212.7 / 377.94)
= 3.21
Liability to Equity ratio (2009-2010) =
All liabilities= total liabilities- share holders equity=
(1087.52-{160.35-506.11})= 833.28
Liability to Equity ratio= (833.28/254.24)
=3.28
Liability-Equity Ratio in 2008-2009 is 3.21 and it has increased to 3.28 in 2009-
2010. It shows that liabilities has increased and shareholders equity had also
increased but at low rate
Titan Industries:-
Liability to Equity ratio (2008-2009) =
All liabilities= total liabilities- share holders equity=
(1794.09 551.24)=1242.85
Liability to Equity ratio = (1242.85 / 551.24)
= 2.25
Liability to Equity ratio (2009-2010) =
All liabilities= total liabilities- share holders equity
=(2104.19-724.38)=1379.81
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Liability to Equity ratio = (1379.81 / 724.38)
= 1.90
Liability-Equity Ratio in 2008-2009 is 2.25and it has decreased to 1.90 in 2009-
2010. It shows that shareholder equity has increased but all liabilities had
decreased at high rate.
COMPARISON:-
For the year 2008-2009:-Liability-Equity Ratio of HMT Ltd. is 3.21 and whereas
of Titan is 2.25, which means HMT Ltd. has more liability than Titan industries.
For the year 2009-2010:-Liability-Equity Ratio of HMT Ltd. is 3.28 and whereas
of Titan industries is 1.90, which means that Titan industries has less liabilityas compare to HMT Ltd.
Interest Coverage Ratios
Measures the protection available to the creditors for payment of interest
charges by the company. This shows whether the company has sufficient
income to cover its interest payments
Interest coverage ratio =PBIT/Interest Expense
PBIT=PBDIT-Dep.
HMT Ltd:-
Interest coverage ratio(2008-2009) =
(-4.28-3.20)/63.68 = -0.12
Interest coverage ratio(2009-2010) =
(19.99-3.92)/68.61=0.23
As Interest coverage ratio has improved from -0.12 to 0.23,it shows that
company has sufficient income for the payment of interest in comparison to
previous year.
Titan industries:-
Interest coverage ratio(2008-2009)=
(340.77-41.76)/68.46=4.37
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Interest coverage ratio(2009-2010)=
(444.92-60.08)/63.52=6.06
As Interest coverage ratio has improved from 4.37 to 6.06,it shows that
company has sufficient income for the payment of interest in comparison toprevious year.
COMPARISON
For 2008-2009:- As HMT Ltd.has interest coverage ratio of -0.12 and that of
Titan Industries it is 4.37. Which clearly shows that Titan Industries has more
safety for the payment of interest.
2009-2010:- As HMT Ltd.has interest coverage ratio of 0.23 and that of Titan
Industries it is 6.06. Which clearly shows that Titan Industries has more safety
for the payment of interest.
Capital Market Ratios
Capital Market ratio evaluate the economic status of the company in the widermarket place.
1) Price Earning Ratio:-
It is considered as an indicator of a firms growth prospects.
Price Earning Ratio = Average stock price per Share / Earning per Share
HMT Ltd:-
Price Earning ratio (2008-2009) =
Average Stock Price= (72.10+69)/2=70.55
Price Earning ratio = 70.55 / -0.93 = -75.86 times
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Price Earning ratio (2009-2010) =
Average Stock Price= (70.75+68.65)/2= 69.7
Price Earning ratio = 69.7/-0.70= -99.57times
In 2008 -2009 HMT Ltd has profit earning ratio of -75.86 in 2009-2010 it is -99.52
which shows stock market has almost no faith that company will recovered
from loss in future.
Titan Industries:-
Price Earning ratio (2008-2009) =
Average Sock Price=(74.75+70.76)/2=72.76
Price Earning ratio= 72.76/ 35.81= 2.03 times
Price Earning ratio (2009-2010) =
Average stock price=(181.75+176.75)/2=179.25
Price earning ratio=179.25/56.39 = 3.18 times
In 2008-2009 Titan industries has profit earning ratio of 2.03 and in 2009-2010 it
is 3.18. It shows stock market is showing some confident in companies future
earning.
COMPARISON:-
For the year 2008-2009:- In 2008-2009 HMT Ltd. Has profit earning ratio of
-75.86 and Titan industries has that of 2.03 which clearly indicates that stock
market is more confident about titan industries.
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For the year 2009-2010:- Price Earning ratio of HMT Ltd. is -99.57 whereas of
Titan industries is 3.18. We can easily conclude that Titan industries is having
a bright future earning growth.
2) Dividend Yield Ratio:-
It represents the current cash return to shareholders.
Dividend Yield Ratio = Dividend per Share / Average stock Price per Share
HMT Ltd:-
Dividend Yield Ratio (2008-2009) = 0 /69.15
= 0
Dividend Yield Ratio (2010-2011) = 0/ 69.10
= 0
In both the year dividend yield is 0 as no dividend by the company which
means shareholders are not getting any return of their investment.
Titan industries:-
Dividend Yield Ratio (2008-2009) = 10/72.76
= 0.14
Dividend Yield Ratio (2009-2010) = 15/ 179.25
= 0.08
Dividend yield has declined from 0.14 in2008-209 to 0.08in 2009-2010 which
shows declining cash return to shareholders.
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COMPARISON:-
For the year 2008-2009:- As HMT Ltd. has 0 dividend yield and Titan industries
has dividend yield of 0.19 therefore, Titan industries is better than HMT ltd.
For the year 2009-2010:- Dividend Yield ratio of HMT Ltd. is 0 whereas of Titan
Industries is 0.08. So we can easily conclude that Titan industries is having
high Dividend Yield ratio which indicates that the cash return on the shareswent up.
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