MAYA ADVANCED STUDY CENTRE

FOR MANAGEMENT & I.T

VALAPAD, THRISSUR

KERALA

01743

“A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD”

BY

VAISHAKH.V.R

(reg.520927913)

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT

OF THE REQUIRMENTS FOR DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Of

Sikkim Manipal University

INDIA

Sikkim Manipal University Of Health , Medical and

Technology Sciences

Distance Education Wing

Syndicate House

Manipal- 576 104

STUDENT DECLARATION

I hereby declare that the project report entitled

“A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD.”

Submitted in partial fulfilment of the requirements for the degree of

MASTER OF BUSINESS ADMINISTRATION

To

Sikkim Manipal University

India.

Is my original work and not submitted for the award of any other degree,

diploma, fellowship or any other similar title or prizes

Place ; Valapad Name; Vaishakh.V.R

Date; Reg. No.; 520927913

Examiners declaration

The project report of

Vaishakh.V.R

“ A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD.”

Is approved and is acceptable in quality and form

Intenal Examiner External Examiner

ACKNOWLEDGEMENT

First of all I am dedicating this humble and sincer work or inline to God

almighty for shower strength and blessing he has bestowed on me for doing

this work.

With great happiness I submitted this project entitled

“ A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD.”

With due respect for invaluable suggestions made by my esteem well

wishers.

I take this opportunity to express my sincere thanks and sense of

gratitude to my beloved principal Mr. C.A. Avas , Mr. C. Manoj, coordinator

of Maya Advanced Study Center for Management & IT, Project guide, for their

peerless guidance , suggestion and encouragement to me so that I could

accomplish this work successfully.

I acknowledge my sincere thanks to the personnel manager M.D.Jony,

finance Manager A.I.Jhon and all other employees of the KSE Ltd.

The advices , suggestions and guidance provided with by the staff

members are highly acknowledged

I am thankful to all other teaching and non-teaching staff of Maya Advance

Study Centre for Management & I.T , Valapad for valuable services

rendered by them.

Vaishakh.V.R

Reg.No. 520927913

ABSTRACT

KSE LTD is a cattle feed company which emerged as a leader in solvent

extraction and ready mixed cattle feed in the country. It is the very first

solvent extraction plant in India. Today KSE comments the resources ,

expertise and infrastructure to manufacture a range of feed in high volumes ,

coconut oil cake and refined edible oil.

Statement of the problem

This project is a result of the study conducted in KSE Ltd Irinjalakuda.

The present study entitled a study on financial performance of the

organization and to analyze the performance of various financial areas of the

company. Financial areas is the most important area and it equally related

with all other areas. Every actions of the industry are related with the

financial areas and the performance of the overall company also is mainly

related with the financial areas if any want to get more care , so that the

company can improve their profit and competency. Hence the researcher has

been assigned the duty of identifying the financial performance of the

company.

OBJECTIVES OF THE STUDY

Primary Objective

To analyze the financial position of the firm.

To analyze the liquidity position of the firm.

To find out the profitability of the firm.

To promote suggestion if any on the basis of analysis and interpretation.

To identify efficiently and effectively the company’s resources are being utilized.

To understand the long term solvency position of the firm.

RESEARCH Methodology

Research methodology is a way to systematically solve the research problem.

It may be understand as a science of studying how research is done systematically

it helps to analyze the performance of the company for a particular period from

(2005-2010 )

RESEARCH DESIGN

In this research an attempt has been made to analyze the past performance of the

company research design of this study is descriptive and analytical in nature .

SOURCE OF DATA

Secondary source

It has been collected from the company records, websites, magazines and journals.

TOOLS AND TECHNIQUES FOR DATA ANALYSIS

RATIO ANALYSIS.

COMPARITIVE BALANCE SHEET.

TREND ANALYSIS.

DATA ANALYSIS AND INTERPRETATION

Collected data are edited and tabulated. The tabulated data is further taken

for analysis by using rations and comparatives balance sheet by using liquidity

ratio, activity ratio, comparative balance sheet , trend analysis and bar charts to

give a better understanding of the analyzed data.

CHAPTER – 1

INTRODUCTION

INTRODUCTION TO THE STUDY

Finance is the life blood and nerves centers of a business. Finance is essential

for smooth running of the business. It is rightly as the science of money. Finance

control the policies, activites and decisions of every business. Financial analysis is

a process of identifying the strength and weakness of the firm by properly

establishing relationships.

Financial analysis is the analysis of financial statement of a company to

assess its financial and soundness of its management. Financial statement analysis

seek to evaluate the performance, financial strength, ability to generate enough

cash and the growth outlook of the company. A number of tools are availabel in

tool kit of the analyst for this purpose. The financial statements provide a

summarized view of the financial position and operation of a firm. Therefore ,

much can be learnt about a firm from careful examination of its financial statement

as invaluable documents / performance reports. The analysis of financial statement

is, thus, an important aid to financial analysis.

The focus of financial analysis is on key figures in the financial statement and

the significant relationship that exists between them. The analysis of financial

statement is a process of evaluting relationship between component parts of

financial statement to obtain a better understanding of the firm’s position and

performance. The first task of the financial analysis is to select the information

relevant to the decision under consideration from the total information contained in

the financial statement. The secound step involed in financial analysis is to arrange

the information in a way to highlight significant relationships. The financial

analysis is the process of selection, relation and evaluation.

Based on this reasoning , this project is an attempt to analyze the

financial performance of KSE Ltd.

INDUSTRY PROFILE

Cattle play a vital role in the economy of India. Cow and bullocks are

regarded as the foundation of agriculture in India. Cattle feed supplies the motive

power for almost all agriculture operations such as ploughing, lighting water from

wells and the transport of produced to the market. They provide most of the

manure used by the farmers in India and often enable them to earn some this

during this spare time by carting for hire; they again yield valuable product such as

milk, butter and ghee. The unawareness of farmers about the proper feeding

methods of cows affects the milk productivity cows in rural areas. Due to this

reason the importance of cattle feed industry has been increased in India.

Indian livestock feed industry , though quite old, is still in a very

primitive stage, as it is supplying only about 5 % for cattle feed , and 30% for

poultry feed in India. The bulk of the feed is being produced by un-organized

sector compressed of home and custom mixers. Our human population is ever

growing and more people are likely to consume more animal product as the

economy and income of the people grow. This expands the market for animal

products and therefore compound feed also.

India is deficient in green fodder. The increasing allocation of arable land

and other natural resources for growing food grains,” cereals, and oil seeds for

human consumption and cash crop for exports, the problem of shortage of green

for animal feeding is bound to increase. This opens up prospects for compound

livestock industry.

Feed industry come into existence in India in 1961 with establishment of

feed plant in Ludhiana, India. The animal feed industry has developed since the

beginning of 20th century, initially supplying feedstuffs only for ruminants and

later, as demand developed, also for pigs and poultry. In the past feed mills were

usually built at major ports or close to inland water ways. Many of the raw

materials were imported, including serials such as wheat, barley and maize, and

proteins from groundnuts, linseed , cottonseeds and fishmeal. Some home

produced materials were also used generally by products of the food industry.

These included wheat feed, left over from flour manufacture; oilseed cakes and

meal, from the manufacture of margarine and cooking oils. It can be seen as the

compound feed production for cattle increased between 1974 and 1983. This

increase was influenced by the financial incentives for dairy farmers to produce as

much milk as possible, there by requiring large volume offered for their cattle.

The quality standards of Indian feeds are high are high and up to

international levels. The industry’s production is about 3.0 million tones, which

represents only 5 % of total potentials, and feed exports are not very high. The feed

industry has modern computerized plants and latest equipments for analytical

procedure and least cost ration formulation , and its employs the latest

manufacturing technology. In India the most research work on animal feed is

practical and focuses on the use of by products the upgrading of ingredients and

the enhancing of productivity.

Feed manufacturing on commercial and scientific basis started around

1965 with the setting up of medium- sized feed plants in northern and western

India. Feed was produced mainly to cater to the need of dairy cattle. India is

currently self sufficient in live stock feed and dose not depend on imports. Instead ,

the country exports large quantities of solvent extracted metals, which are a major

source of foreign exchange earnings. BIS has produced guideline feed standards

and the industry also has its own guidelines. Currently there is no compulsion to

use BIS standards, but the central government has been advising states to introduce

their own regulatory standards.

GROWTH OF ANIMAL FEEDS INDUSTRY

The manufacturing of feed in the organized sector in India began around the

mid- sixties with the setting up of medium- sized feed plants in the northern and

western parts of the country. The early seventies established sixty feed factories in

the country and their number increased manifold to over 400 by the late nineties.

The pace of increase was much faster in 70’s ( compound annual growth rate

12.7%) as compared to the subsequent decades. The industrial deli censing in 1991

as part of the economic reform package in India did not impact on the expansion of

feed industry. The 6.3% rate of expansion in pre deli censing period (1976/77 –

1990/91 ) remained much the same at 6.88% during the post de-licensing had on

the food processing industry in general, and dairy industry in particular where a

large number of new factories/plants came up after 1991 -1992.

FEEDING PRACTICES AND THE USE OF COMPONENT

FEED

In India the term “Compound Feed “ refers to feed that is nutritionally balanced

and has been manufactured using the facilities of an analytical laboratory and

under the supervision of nutritionists. There are also a large number of small scale

feed mixers who produce feed for local consumption.

Such feed is termed “ Self Mixed Feed “ or “ Home Mixed Feed “.

CATTL E FEED

The productivity of the cattle is limited because of their poor genetic make

– up , so high quality compound feed ( Industry Feed ) may not necessarily

generate a significant improvement in productivity and this had hampered growth

of a cattle feed industry. Instead they compromise by using such feed in proportion

of 5 to 60 percent, making up the balance with their own formulations. It is only in

the case of highly productive animals that compound feed has been able to show its

real potential and the importance of technology has been demonstrated. The share

of compound cattle feed manufactured by the industry in relation to the overall

potential , is low for the following reason;

The cattle population is fragmented and spread over large part of the country.

Farmer’s low level of education and strong traditional beliefs mean that there is

generally little awareness of compound cattle feed.

More than 50% of the country ‘s total milk production comes from a very

large number of low yielding cows and buffaloes and only the remaining 25% of

the total is produced by cross breed and improved cows. Industrially manufactured

compound cattle feed has proved its value for cross breed cows and buffaloes but

not for yielding cattle because of their genetic limitation. Home mixed feed is very

frequently used for buffaloes and low yielding cattle.

THE QUALITY ASSURANCE OF COMPOUND FEED

The Indian feed industry employs the service of qualified nutritionists.

Members of the industry have their own analytical laboratories and either have

their own research and development facilities or have access to the research

laboratories of agricultural universities or government institutions. The industry is

fully committed to quality and their technical staffs are knowledge about the

nutrition of cattle buffaloes, layers and broilers.

As well as the normal proximate principles, other analyses are regularly carried

out, such as amino acids, aflaxotin, ochratozin, castor , tannins and urease activity.

There is a high degree of awareness of feed microbiology among the millers of

feed. Feed raw materials and finished products are subjected to microbial counts,

salmonella and Escherichia coli testing and mould count and contaminated

materials are rejected and some time destroyed, insurance cover is available.

The feed millers have acquired the latest technologies and modern equipment

such as high pressure liquid chromatography ( HPLC ) and near- infrared ( NIR )

analyzers. All vitamins, minerals and other feed activities are regularly analyzed

using modern analytical techniques.

Regular seminars are conducted , short term course are arranged and Indian

scientists are constantly working to upgrade quality of the Indian feed and make it

completely safe for animal feedings.

The quality of Indian feed can be compared with that of any western feed.

Today it is common to achieve a chicken house average of 310 eggs in 52 weeks,

in layers and body weights 2.0 kg in less than 6 weeks , with a feed conversion

ratio of between 1.8 and 1.9 in boilers. Dairy feed can be use the genetic potential

of Indian at its maximum. The quality of Indian feed is satisfactory and

innovation will continue.

ISSUE IN THE ANIMAL FEED INDUSTRY

Standardization and regulations of animal feed manufactures.

As already mentioned, BIS has produced guidelines feed standards and the

industry also has its own guidelines. Currently there is no compulsion to use BIS

standards, but the central government has been advising states to introduce their

own regulatory standards. The industry, however, is resisting this move. One of the

major reason for oppositions is that the government wants to legislate regulation

under the essential commodities act 1955 which is consideration draconian and

totally inappropriate in the context.

There is no shortage of compound animal feeds anywhere in the country. In

fact, the organized sector of the compound feed industry is facing serious problems

resulting from a huge idle capacity, to the extent of 50 % or more. New capacities

are being added by global players in the feed business and by national as well as

multinational integrators. The nature of animal feed industry has completely

changed.

Further more, the industry has several reservation about implementing BIS

standards. There is a lack of flexibility in these standards and they are lagging far

behind the industry’s products. For cattle , they have not been revised for 30 years,

with the BIS standards for poultry are obsolete.

Another feed standards issue that worries both the government and industry

is that any changes to existing standards will be slow and difficult to arrive at

because of participate conflicts and various lobbying groups. However , the

industry’s principal concern about compulsory standards is that they will disturb

efforts to innovate and upgrade feed production in order to improve the

productivity of the animals. This is because all innovations would have to be

passed by BIS and such a process in likely to take several years to complete.

CLASSIFICATIONS OF ANIMAL FEED SUPPLEMENTS/

ADDITIVES FOR IMPORT

The classification of feed activities is a major hindrance to the Indian feed

industry. World wide, animal feed supplements and additives (HSN ) to which

India is signatory. In the HSN, all feed ingredients are listed under the free

category for import , but the Indian government put them into restricted category in

October 1995.

The industry’s represented by CLFMA , has made several representations to

the government, but these have been round various government departments,

appellate tribunals, the high court and the supreme court without providing any

useful results for the industry.

LOCAL SALES TAX

Another threat to the industry is posed by sales taxes. It must be noted that the

feed industry is mainly commodity – oriented and although it is value added , it

cannot support the burden of any kind of taxation. The industry has made several

representation to the government and some state governments have accepted its

points of view refrained from levying any tax on animal feeds.

IMPORT AND EXPORT

Indian feed was exported to the near east during the 1980’s but the export

demand was reduced when feed mills were set up in the near east. At presently,

India exports about 25000 tons of feed to the near east as general animal feed.

There is no import of animal feed as such in to India. However, the country does

import certain chemicals, feed activities, amino acids and essentials for aquaculture

feed.

CURRENT SITUATION

While analyzing the present situation industry have been facing a lot of

challenges. Due to high process of the raw materials and their non availability

forced many of the companies to curtail their production cost they are compelled to

increase their product price. As a result it will adversely affect to cattle farmers. As

a matter of fact ever after giving in the present rate the companies are not able to

make any profit.

Similarly the dairy industry as a whole is become non profitable to the farmers.

Small farmers are struggling for their existence. They are not getting required

rates for their milk. Currently they are not getting any profit out of the business.

The main reasons for this are that they have pay high prices for grass, cattle feed

and cake etc.

Farmers are depending on milk associates for selling their milk. The societies are

taking milk from the farmer at a rate between Rs. 14 & Rs. 18. According to

farmers the prevailing rate of milk are not profitable to them. And they say they

should get minimum Rs.20. but in fact they are not getting this.

Due to above reasons many of them are compelled to leave from this field. This

may cause serious threat in future to cattle feed industry. Under this circumstance

government should interfere in this trade and should take necessary steps to safe

guard the interest of both farmers and industry.

COMPANY PROFILE

A BRIEF HISTORY OF KSE LIMITED

KSE ltd is a public limited company is a incorporated with substantial capital

participation by the Kerala State Industrial Development Corporation ltd.

Trivandram and though loans from industrial finance corporation of India, New

Delhi. The company is engaged in the solvent extraction of ground nut cake and

rice bran also. The oil thus obtained is moved for industrial purpose into the

market. In addition is full-fledged livestock feed division engaged in the

production of ready mixed cattle feed.

The company was registered in the year 1963. in 1973 the solvent extraction plant

was started with processing capacity of 60 metric tones of cake per day. In 1976

the company stated production of ready mixed feed with the production capacity of

50 metric tones per day and in 1983 the company increased the production of cattle

feed to 120 mt per day which has recently been increased to 180 mt per day by the

construction of a dully automated computerized plant. In 1988 company started a

solvent extraction and cattle feed plant at Swaminathpuram near Palani, with

production capacity of 150mts of cattle feed per day and processing capacity of

100-120mts of expeller extracted deoiled cake.

In 1972, the company lased new cattle feed plant at pothannur near coimpthur with

a production capacity of 80 mts per day and in 1995 company has leased a plan in

mysore with the capacity of 50 mts per day. In 1996 the company started a new

plant I Vedagiri at Kottayam in Kerala with the capacity of 240 mts per day.

Kerala solvent extraction ltd come out with a premium public issue on March 1993

which was over subscribed, through the stock markets are showing a low trend,

now Kerala Solvent’s share is still quoted at Rs.140 per share whose face value is

Rs.10. this reflects the confidence of investing in the company.

It was in 1963 that Kerala Solvent Extraction limited now known as KSE ltd

entered the solvent extraction industry setting up the very first solvent extraction

plant in Kerala. The traditional coconut oil industry in state was facing a decline

then. Though the largest producer of copra in the country, as much as 80% of it,

Kerala the infrastructure to exploit the potential of its abundant produce. While the

oil industry in other parts of the country were thriving.

The Dr. Lokhanathan committee, set up to feasibility of starting new industries in

Kerala, recommended the establishment of 3 solvent extraction plants. And one of

them, in Thrissur district. The oil mill owners in and around Irinjalakuda, who

were thinking in similar lines saw the opportunity and look the initiative to

establish a solvent extraction unit. The solvent extraction plant went on the stream

in 1972 and in 1976 a new plant was setup to manufacture ready mixed cattle feed,

which was a pioneering step. Since then there, was no looking back. The last 3

decades have seen KSE emerging as a leader in solvent extraction and ready mixed

cattle feed in the county and though these years of consolidation and

diversification KSE has crate a niche for itself.

Today KSE commands the resources, expertise and infrastructure to manufacture a

range of live stock feed in high volumes, coconut oil from coconut cake and

refined edible oil. Since the early, KSE had endeavoured to supply its products to

customers through extensive network of dealers and retailers which from a

dedicated force behind the success of KSE. It is matter of pride that KSE is

household name today. The KSE is a public limited company having around 6000

shareholders. The board of directors consisting 10 directors in the executive

committee responsible for the management the article of association of the

company empowers the board of directors of directors to appoint one as the Chief

Managing Director. The company has one Executive Director and one Whole Time

Director.

The Chief Managing Director, Executive Director and Whole time Director are the

smooth running of day to day affairs of the company. Strategic decision of the

company are taken by an executive body consisting of the Managing Director,

Executive Director, Whole time Director, General Manager, Finance Manager,

Nutrionist , Marketing Manager, Plant Manager and Purchase Manager. These

executives are professionals with vast experience in their areas of specialization.

ESTABLISHMENT

Kerala Solvent Extractions Limited now known as KSE limited was

established in 1963, by a handful of coconut millers in and around Irinjalakuda

with a vision to over come the crisis of the coconut oil industry. Initially started as

a solvent extraction plant, the company now produces 750-800 MTS of coconut

cake a day with 4 cattle feed production units and 2 solvent extraction plants. The

company has diversified into the area of dairying by establishing 2 dairy plants for

the production of pasteurized milk and milk products. It has obtained ISO

recognition for its commitment to quality and professionalism.

OBJECTIVES

1. To produce, manufacture ,extract, purchase refine, prepare import ,

export, sell and generally to deal in oil from seeds and other oil bearing

materials to carry on the business of refining the hydrogenation of oil and

the manufacturing of by products there from and of trades connected

there with.

2. To acquire erect, construct, establish operate, and maintain oil

mills ,extraction plants, and workshops.

3. To purchase for the purpose of business of the company. Oil expellers

denigrators , filter press , oil neutralizing , washing , dyeing bleaching ,

filtration and hydrogen plants , punch machines and other machines .

4. To purchase , manufacture , treat purchase sell or otherwise deal in oil

cakes , washing soaps ,toilet soaps , hair oils and timed products.

VISION

We shall endeavour to maintain leadership through quality products,

explore new avenues in product development and marketing, create a stronger

bond between the management, Workforce , dealers and customers ,contribute to

social development and rural enlistment, and constantly strive for excellence in all

spheres of our activities.

SHARE CAPITAL

To authorized share capital of the company is 99,40,000, which is divided into

99,40,000 equity shares of Rs 10 each and redeemable cumulative preference

share of Rs 100 each. The preference shareholders have a right of preferential

divided at the rate of 13.5 % per year. The company at par value allows redemption

of preference shares after 12 years but before 15 years from the date of allotment.

In 1994, company made a public issue of shares and listed the shares in stock

exchange Bombay, Madras, and Cochin Now the company has 6000 share

holders.

SOCIAL SERVICE AND RESPONSIBILITY

The company gave so many contribution to the country at the time of

uncertainties. It contributed 5 lakh each for Kargil and Tsunami Fund .

As a part of social responsibility the company introduced ‘ KS PARK ‘ for

the enjoyment and fun children. And also they are spending Rs.50000 in each

month for it. And also they were conducting some competitions for children

occasionally.

AWARDS AND RECOGINATIONS

The company has won the sea award constituted by Solvent Extractors

Association of India for highest Processor of coconut oil cake for the year 2008-

2009. This award is being received by the company for the past 19 years

consecutively since the inception of the award. Your company has also won the

Best Productivity Performance Awards instituted by the National Productivity

Council , New Delhi in category of animal feed Processing industry continuously

for ten years beginning with 1996-1997.

THE COMPANY –TODAY

The pioneering plant of KSE at Irinjalakuda in many ways. It was first solvent

extraction plant in Kerala. It was first manor factory in the locality, spread over 15

acres. It was here set up its first cattle feed plant. The embodied the spirit of

enterprise of group of committed people, who wanted to user in an era of

modernity into a traditional society and change the industrial landscape of the state.

Naturally, today the Irinjalakuda plant enjoys a flagship status and commands an

edge on infrastructural strength. Taking great in technological development, the

process of computerization in plant and office was initiated way back in 1987.

Research and development plays an important role in the activities of KSE, The

central R & D unit is located here. The plant houses a modern laboratory. The

quality control cell here leads and guides other units and formulates stringent

standards. The chief Nutritionist and Assistant manager quality controls are also

based here. A proud symbol of growth, the Irinjalakuda unit is an inspiring force

for the entire KSE family.

KSE Limited an ISO 9001-2000 certified company is having an annual

sales turnover Rs. 371 crores ; Irinjalakuda branch is the head office of the

company. Only the cattle feed production is running in irinjalakuda plant with a

production capacity of 210 tones per day. The production is running the three

shifts and each shifts they were producing 70 tones. The company is giving 400

direct employments for people in Irnijalakadhu.

GROWTH CHRONICLE

1972

Solvent plant commences operation.

1976

Mixed cattle feed production begins.

1987

Cattle feed production reaches 180 tons

Introduction of computers in the factory and office.

1988

A new mixed cattle feed plant starts operation at swaminathpuram , tamil nadu

with a daily product ion capacity of 180 tones.

1989

A solvent unit with a capacity of 120 tones per day commences operation at the

Tamil Nadu plant.

1990

Introduction of KS supreme pellets, by pass protein cattle feed in the market.

1991

Open its palaghat branch.

1992

Cattle feed manufacturing beings in third party units.

1933

Enter exports market.

1994

Introduction of feed supplements KS Forte public issue and listing of shares.

1995

Vegetable oil refining plant commissioned KS supreme – Sunflower Refined oil

Launched Calicut Branch opens.

1996

240 TPD cattle feed commences at Vedagiri, Kottayam Dist. Kerala.

1997

Company renamed as KSE Ltd.

1998

Fourth feed production unit at Palaghat Launches Dairy Project.

1999

A modern childern’s park and information centre has been completed at

Irinjalakuda for the benefit of the public.

Company starts production and distribution of milk and milk products Konnikkara

and Thalaysthu dairy units.

2002

Cattle feed production capacity at the Irinjalakuda Unit increased to 210MTs per

day.

Cattle feed production capacity at the Irinjalakuda unit increased to 195MTS per

day.

Ice cream Vesta Launched.

2003

Started producing cattle in plant at edayar , kalamassery , Cattle feed production at

the Swaminathapuram unit increased to 195 MTS per day.

2005

Cattle feed production capacity at Irinjalakuda unit increased to 210MTS per day

started producing cattle feed in a leased unit at Erode.

Company acquires its 5th cattle feed manufacturing unit at Mysore

ISO 9001:2000 accreditation

For Vedagiri and Swaminathapuram units.

2006

The 200 TPD solvent extraction plant at Koratty commissioned.

100TPD physical refining plant at Koratty commissioned

Solvent plant at Irinjalakuda dismantled on stablilizing solvent plant at Koratty.

2007

Decided to install 500TPD cattled feed plant at Irinjalakuda unit

Decided to install Fractionation plant at Koratty Unit.

ORGANIZATIONAL STRUCTURE OF KSE LTD

PRODUCT PROFILE

PRODUCT OF KSE Ltd

In the beginning stage of KSE limited had only solvent units. After some

time the company started to produce Jersey copra cakes and compound cattle feed

jersey copra cakes which comes out of the solvent extraction process are made

pure by desolventising and are named as ‘Jersey brand copra’. At present it is

marketed in Kerala, Tamil nadu and Gujarat.

K.S.Cattle feed in two

1. Mash form

2. pellets form

In Mash form contains

1. K.S. Super

2. K.S.Ordinary

3. K.S.Special

In Pellets form contains

1. K.S. Deluxe Pellets

2. K.S. Deluxe plus pellets

3. K.S. Supreme pellets

K.S. Also includes two supplementary products

1. K.S. Forte

2. K.S. Mineral Mixer

K.S. also started producing milk products. Various milk products are

1. K.S. Paal

2. K.S. Ghee

3. K.S. Curd

4. Butter milk

5. Vesta Ice Cream

STATEMENT OF THE PROBLEM

This project is a result of the study conducted in KSE Ltd Irinjalakuda. The

present study entitled a study on financial performance analysis of KSE Ltd is an

over all view of the performance of the financial figure in KSE Ltd.

The study is mainly focused to analyze the effectiveness of the financial

performance of the organization and to analyze the performance of various

financial areas of the company.

Financial area is the most important area and it equally related with all other

areas. Every action of the industry are related with the financial areas and the

performance of the overall company also is mainly related with financial

performance of the industry.

So the present study is to identify the financial areas if any want to get more

care , so that the company can improved their profit and competency. Hence the

researcher has been assigned the duty of identifying the financial performance of

the company.

OBJECTIVES OF THE STUDY

Primary Objective

To evaluate the financial performance of KSE Ltd Irnajalakuda.

Secondary Objective

To analyze the liquidity position of the firm.

To find out the profitability position of the firm.

To promote suggestion if any on the basis of analysis and interpretation.

To identify effectively and efficiently the company’s resources are being

utilized.

To understand the long term solvency position of the firm.

SCOPE OF STUDY

The main scopes of the study are :

The study aims to evaluate the financial performance of KSE Ltd.

The study helps to determine the profitability, liquidity and activity position

of the company, which may be useful to the long term and short term lenders

and creditors of the firm.

The study shows a clear picture to the investors and shareholders about the

overall performance of the concern.

The study aims to measure the growth of KSE Ltd.

The study may helps to find out the profitability of the firm in comparison

with industry.

RESEARCH METHODOLGY

Research Methodology is a way to systematically solve the research problem.

It may be understood as a science of studying our research is done scientifically.

One can also define research as a scientific and systematic search for pertinent

information on a specific topic.

RESEARCH DESIGN

In this research , an attempt has been made to analyze the past financial

statement of KSE Ltd. The study was conducted in order to analyze the financial

statement so that an in depth knowledge about the situation in the company can be

known. The design of the study is descriptive as well as analytical in nature.

SOURCES OF DATA COLLECTION

The study is based on the secondary data from the company. It includes:

Materials provided by the firm such as balance sheet and profit and loss

account.

Books , journals and magazines.

Websites.

TOOLS FOR DATA ANALYSIS

Ratios.

Trend analysis.

PERIOD OF STUDY

The study was undertaken for a period of 3 months from 10th Jan 2011 to 10th

April 2011. The study cover the five year performance of the company for the

period 2005 to 2010.

LIMITATION OF THE STUDY.

1. Financial statement are essential interim reports. It discloses only monitory

facts.

2. Influence of personal judgment.

3. Accounting information may not be realistic. Analysis and interpretation

was made from published data.

4. The time period allotted for completing the project was limited.

5. On the basis of this data analysis we can achieve only an outline of a firm.

CHAPTER - 2

REVIEW OF LITERATURE

FINANCIAL STATEMENT ANALYSIS

Meaning and concept of financial analysis

Financial statements are the result of the accounting process which

begins with recording of transactions. The accounting process involves recording ,

classifying and summarizing business transactions in a systematic way. The

financial statement relate to the third process viz ,summarizing. The financial

statements are based on certain accounting concepts and conventions which cannot

be a full proof.

Financial statements analysis seeks to evaluate the performance , financial

strength , ability to generate enough cash and growth outlook of a company. The

objectives of analysis of financial statements have their genesis in the objectives of

financial statements. The objectives of analyzing them are to evaluate the adequacy

of the profit earned by the company or its financial strength and its ability to

generate enough cash and to evaluate the future growth outlook of the company.

The term financial analysis is also known as analysis and interpretation of

financial statements. It refers to the process of determining the financial strengths

and weaknesses of a firm by establishing strategic relationship between the items

of the balance sheet , profit and loss account and other operative area. The purpose

of financial analysis is to diagnose the information contained in financial

statements so as to judge the profitability and financial soundness of the firm.

DEFINITION

According to Mefcalf and A Titard , “ it is a process of evaluating the

relationship between component parts of a financial statement to obtain a better

understanding of a firm’s position and performance”.

In other words of MYERS, “ financial statement analysis is largely a study of

relationship among the various financial factors disclosed by a single set of

statements, and a study of trend of these factors as shown in a series of

statements’’.

Source : Management Accounting E. Gordon.

RATIO ANALYSIS

INTRODUCATION

The ratio analysis is one of the most powerful tools of financial analysis.

It is the process of establishing and interpreting various ratios. It is with the help of

ratios that the financial statements can be analyzed more clearly and decisions

made from such analysis.

MEANING OF RATIO

A ratio nothing but a simple arithmetical expression of the relationship of one

number to another. It may be defined as the indicated quotient or two mathematical

expression. In simple language ratios is one number expressed in terms of another

and can be worked out by dividing one number into the other.

Ratio analysis is a widely – used tool of financial analysis. It is defined as the

systematic use of ratios to interpret the financial statements so that the strengths

and weaknesses of a firm as well as its historical performance and current financial

condition can be determined. The term ratio refers to the numerical or quantitative

relationship between two items/variables. The relationship can be expressed as :

a. Percentages

b. Fraction and

c. Proportion of numbers.

TYPES OF RATIOS

1) Liquidity ratios.

2) Capital structure / Leverage ratios.

3) Profitability ratios.

4) Turnover / Activity ratios.

1) LIQUIDITY RATIOS

The importance of adequate liquidity in the sense of the ability of a firm to

meet current short – term obligations when they become due for payment

can hardly be overstressed. In fact , liquidity is a perquisite for the very

survival of a firm. The short – term creditors of the firm are interested in the

shot- term solvency or liquidity of a firm. But liquidity implies, from the

view point of utilization of the funds of the firm , which funds are idle or

they earn very little. A proper balance between the two contradictory

requirements that is liquidity and profitability is required for efficient

financial management. The liquidity ratios measure the ability of a firm to

meet its short – term obligations and reflect the short term financial

strength / solvency of a firm. The ratio which indicate the liquidity of a firm

are :

a. Current ratio

b. Acid test / quick ratio

c. Super quick ratio

a. CURRENT RATIO

The currents ratio is the ratio of total current assets to total current liabilities. The

current ratio of the firm measures its short – term obligations. The higher is the

current ratio, the larger is the amount of rupees available per rupees of current

liability , the more is the firm ‘s ability to meet current obligations , and the greater

is the safety of funds of short- term creditors. The size of the current assets should

be sufficiently larger than current liabilities so that the firm would be assured of

being able to pay its current maturing debt as and when it becomes due. Thus the

current ratio measures the size of short – term liquidity “ buffer ”.

b. ACID TEST / QUICK RATIO

Quick ratio is a measurement of a firm ‘s ability to convert its current

assets quickly into cash in order to meet its current liabilities. Thus , it is a

measure of quick or acid liquidity. The acid test ratio is the ratio between

quick current assets and current liabilities.

c. SUPER QUICK RATIO

This ratio is calculated by dividing the super quick assets by the current

liabilities of the firm. The super – quick assets are cash and marketable

securities. This ratio is the most rigorous and conservative test of a firms

liquidity position.

2. CAPITAL STRUCTURE / LEVERAGE RATIOS

The leverage or capital structure ratios may be defined as financial ratios which

throw light on the long term solvency of the firm as reflected in its ability to assure

the long term creditors with regard to :

1. Periodic payment of interest during the period of the loan

2. Repayment of principal on maturity or in pre – determined installments at

due dates.

There are thus , two aspects of the long term solvency of a firm :

1. Ability to repay the principal when due and

2. Regular payment of the interest.

The various types of leverage ratio are

1. Debt – equity ratios

2. Debt to total capital ratio

3. Proprietary ratio

a. DEBT EQUITY RATIO

The relationship between borrowed funds and owner ‘s capital is a

popular measure of the long term financial solvency of the firm.

This relationship is shown by the debt – equity ratio. This ratio reflects the

relative claims of creditors and share holders against the assets of the firm.

The relationship between outsiders capital and outsiders claims can be

shown different ways and accordingly , there are many variants of the debt –

equity ratio ( D/E ). One approach is to express the D/E ratios in terms or the

relative proportion of long term debt and shareholder ‘s equity. The debt

considered here is exclusive of current liabilities.

Another approach to the calculation of debt – equity ratio is to relate the

total debt to the shareholders equity. The D/E ratio is thus , the ratio of total

outside liabilities to owner ‘s total funds. In other words , it is the ratio of the

amount invested by outsiders to the amount invested by owners of business.

b. DEBT TO TOTAL CAPITAL RATIO

Here the outside liabilities are related to the total capitalization of the

firm and not merely to the shareholders equity. Essentially , this type of

capital structure ratio is variant of the D/E ratio. It can be calculated in

different ways. One approaches to relate the long term debt to the

permanent capital of the firm. Included in the permanent capital is

shareholders equity as well as long – term debt.

c. Proprietary ratio

Proprietary ratio also known as equity ratio. The ratio indicates the

proportion of total assets financed by owners. It is an important ratio for

determining long – term solvency of firm. Higher the ratio better is the

long term solvency position of the company.

3. PROFITABILITY RATIO

The operation efficiency of a firm and its ability to ensure adequate return to its

shareholders depends ultimately on the profit earned by it. The profitability of a

firm can be measured by its profitability ratio. In other words , the profitability

ratios are designed to provide answers such as :

Is the profit earned by the firm adequate ?

What rate of return does it represent ?

What is the rate of profit for various divisions and segments of the firm ?

What is the earning per share ?

What is the rate of return to equity holders ? and so on .

Profitability ratios can be determined on the basis of either sales or

investments. The profitability ratios in relation to sales are :

a) Gross profit ratio.

b) Net profit ratio.

Profitability in relation to investments is measured by :

a) Return on investment ratio.

b) Return on shareholder ‘s fund

c) Return on total assets ratio

1. GROSS PROFIT RATIO

Gross profit is the result of the relationship between prices , sales volume and

costs. It is calculated by dividing gross profit by sales. A change in the gross

margin can be brought about by changes in any of these factors. The gross

margin represents the limit beyond which fall in sales prices are outside the

tolerance limit. Further , the gross profit ratio / margin can also be made use

of in determining extent of loss caused by theft , spoilage , damage and so on

in the case of those firms , which follow the policy fixed gross profit margin

in pricing their products.

A high ratio gross profit to sales is a sign of good management as it implies

that the cost of production of the firm is relatively low. It may also be

indicative of a higher sales price without a corresponding increase in the cost

of goods sold. It is also likely that cost of sales might have declined without a

corresponding decline in sales price.

A relatively low gross margin is definitely a danger signal, warranting a

careful and detailed analysis of the factors responsible for it.

2. NET PROFIT RATIO

This measures the relationship between net profits and sales of a firm. The

net profit margin indicative of management’s ability to operate the business

with sufficient success not only to recover from revenues of the period, the

cost of merchandise or services, the expenses of operating the business and

the cost of borrowed funds but also to leave a margin of reasonable

compensation to the owners for providing their capital at risk. The ratio of net

profit to sale essentially expresses the cost price effectiveness of the operation.

A high net profit ratio would ensure adequate return to the owners as well as

enable a firm to withstand adverse economic conditions when selling price is

declining, cost of production is rising and demand for the product is falling.

A low net profit ratio has the opposite implications. However a firm with a

low profit margin can earn high rate of return on investment if it has higher

inventory turnover.

PROFITABILITY RATIOS RELATED TO INVESTMENTS.

1. RETURN ON INVESTMENTS (ROI ):

The profitability ratio can also be computed by relating the profits of a

firm to its investments. Such ratios are popularly termed as return on

investments ( ROI ). Return on investments establishes the relationship

between profit and the capital employed. It is used to measure the overall

profitability and efficiency of the business.

2. RETURN ON SHARE HOLDERS FUND :

This ratio measures the profitability of capital investment in business by

equity share holders. It measures the business success and managerial

efficiency. The ratio of net profit to owner ‘s equity reflects the extent to

which the objective has been accomplished. The return is compared with

the ratios of similar companies to reveal the relative performance and

strength.

3. RETURN ON TOTAL ASSET RATIO :

Here the profitability ratio is measured in terms of relationship between net

profit and assets. The ROA may also be called profit to asset ratio. There

are various approaches possible to define net profits and assets , according

to the purpose and intent of the calculation of the ratio.

4. ACTIVITY RATIOS :

Activity ratios are concerned with measuring the efficiency in asset

management. These ratios are also called efficiency ratios or asset

utilization ratios. The efficiency with which assets are used would be

reflected in the speed and rapidity with which assets are converted into

sales. The greater is the rate of turnover or conversion , the more efficient

is the utilization / management , other things being equal. For this reason ,

such ratios are also designated as turnover ratios. Turnover is the primary

mode for measuring the extent of efficient employment of assets by

relating the assets to sales. An activity ratio may , therefore , be defined as

a test of the relationship between sales and the various assets of a firm.

Depending upon the various types of assets , there are various types of

activity ratios as follows :

Total capital turnover ratio

Working capital turnover ratio

Inventory turnover ratio

Fixed assets turnover ratio

Debtor ‘s turnover ratio

1. TOTAL CAPITAL TURNOVER RATIO :

This ratio ensures whether the capital employed has been effectively used or

not. This is also the text of managerial efficiency and business performance

higher total capital turnover ratio is the interest of the company.

2. WORKING CAPITAL TURNOVER RATIO :

Working capital of a concern is directly related to sales. This ratio indicates the

number of time the working capital is turned over in the course of year. This

ratio measures the efficiency with which the working capital is being used by a

firm.

3. INVENTORY TURNOVER RATIO :

This indicates the number of times inventory is replaced during the year. It

measures the relationship between the cost of goods sold and the inventory

level. This ratio measures how quickly inventory is sold. It is a test of efficient

inventory management. To judge wheather the ratio of a firm is satisfactory or

not it should be compared over a period of time on the basis of trend analysis.

In general , a high inventory turnover ratio is better than a low ratio. A high

ratio implies good inventory management. A very low level of inventory has

serious implications. It will adversely affect the ability to meet customer

demand. It is also likely that the firm may be following a policy of replenishing

its stock in too many small sizes.

4. FIXED ASSETS TURNOVER RATIO:

Fixed assets are used in the business for producing goods to be sold. The

effective utilization of fixed assets will result in increased production and

reduced cost. The assets turnover ratio measures the efficiency of a firm in

managing and utilizing its assets.

5. DEBTORS TURNOVER RATIO :

This ratio shows how quickly receivables or debtors are converted into cash. It

is a test of liquidity of debtors of a firm. This ratio indicates the efficiency with

which debts are collected. It is also known as receivable turnover ratio. It

establishes relationship between credit sales and average debtors.

COMPARATIVE BALANCE SHEET

A comparative balance sheet shows the assets , liabilities and owner

‘s equity of a business enterprise at the beginning and at the end of the

accounting period with increase or decrease in the absolute data in terms of

rupees and percentage. The single balance sheet focuses on the financial status

of the firm as on a particular date , while the comparative balance sheet focuses

on the changes that have taken place in one accounting period. The changes in

the balance sheet items are the result of acquisition or sales of assets , changes

in current assets and current liabilities , issue of shares , profits or loss etc.

A comparative balance sheet has two columns is used show increase or

decrease in figures. A fourth column may be added for giving percentages of

increase or decreases. Comparative balance sheet indicates whether the business

is moving in a favourable or un favourable direction.

TREND ANALYSIS

Trend analysis is very helpful in making a comparative study of the financial

statements of several years. Under this technique , information for a number of

year is taken up and one year , usually the first year is taken as the base year. Each

of the base year is taken as 100 and on that basis , the percentage of other years is

calculated. This procedure may be called as trend percentage method. In financial

analysis the direction of changes over a period of years is of crucial importance.

Time series or trend analysis of ratio indicates the direction of changes.

This kind of analysis is particularly applicable to the items of profit and loss

account. It is advisable that trends of sales and net income may be studied in the

light of two factors , the rate of fixed expansion or secular trend in the growth of

the business and the general price level. It might be found in practice that a

number of firms would show a persistent growth over a period of years.

COMPUTATION OF THE TREND PERCENTAGE

The following steps are involved in the computation of trend ratio :

The statement probably relating to the earliest year may be taken as the base

with reference to which all other financial statements are compared and

analyzed.

Each item in the base year is taken as base year.

If amount of the same item in the other statement is more than that in the

base statement , the trend percentage would be more than 100 % and if the

amount is less than the base amount the trend percentage would be less than

100 %. The trend ratio is computed by dividing each amount in the other

statement with the same item in the base statement.

CHAPTER – 3

DATA ANALYSIS & INTERPRETATION

INTRODUCTION

The term financial analysis also known as analysis and interpretation of

financial statement. Data analysis and interpretation is the core factor of any

project. The study is done with the aid of financial statements from the annual

reports published by the company. The purpose of financial analysis is to diagnose

the information contained in financial statement s so as to judge the profitability

and financial soundness of the firm. The object of analysis and the interpretation

of financial statements are to judge their meaning and their significance. Financial

statement analysis is called financial analysis.

Various tools or devices are used to study the relationship between different

statements. The tool which are used for data analysis and interpretation are:

Ratio analysis

Comparative balance sheet

Trend analysis

DATA ANALYSIS

1. LIQUIDITY RATIO

a. CURRENT RATIO

The current ratio is the ratio of total current assets to total current

liabilities. The current ratio of a firm measures its short –term solvency ,

that is , its ability to meet short term obligations.

Current Ratio = Current assets

Current liabilities.

Table : 1

TABLE SHOWING CURRENT RATIO

Years Current assets

( Rs . in lakhs )

Current liabilities

( Rs. In lakhs )

Current ratio

2005-2006 4590.77 1082 4.63

2006-2007 3063.73 753 4.06

2007-2008 2870.68 854 3.36

2008-2009 3270.91 937 3.49

2009-2010 3277.43 863 3.79

CURRENT RATIO

2005-2006 2006-2007 2007-2008 2008-2009 2009-20100

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

current assetcurrent liablities

INTERPRETATION

The above table indicates the current ratio. As compared to the standard ratio 2:1 the current ratio of company is good in 5 years. If the actual current ratio is less than the standard one ; it shows the in accuracy working capital. But if the

actual ratio is more than the standard ratio. It is the sign of satisfied short term solvency position.

b. QUICK RATIO

This ratio is also known as acid test ratio ( ATR ). It is measurement of firms ability to convert its current assets quickly into cash in order to meet its current liabilities.

Quick Ratio = Liquid assets Current liabilities

Table ;2

TABLE SHOWING QUICK RATIO

Year Quick assets Liabilities Ratio

2005-2006 1244 1082 1.15

2006-2007 846 753 1.13

2007-2008 941 854 1.10

2008-2009 801 937 1

2009-2010 1194 863 1.38

QUICK RATIO

2005-2006 2006-2007 2007-2008 2008-2009 2009-20100

200

400

600

800

1000

1200

1400

Quick assetLiablities

INTERPRETATION

The above table indicate the quick ratio. The actual quick ratio is compared with the standard ratio , which is 1:1 if actual ratio is 1:1 or more than the standard ratio if can means it’s a short term obligation quickly and easily. If the actual ratio is more than the standards the conclusion can be that the concern is not liquid. In the year 2009-2010 quick ratio is 1.38 .

2 . LEVERAGE RATIOS

a. DEBT EQUITY RATIO

It is also known as external internal equity ratio. This ratio indicates the relationship between the external equities or the outsiders fund and the internal equities or the shareholders funds.

Debt- equity Ratio = Total Assets

Share holder fund

Table :3

TABLE SHOWING DEBT EQUITY RATIO

Year Debt ( Rs. In lakh )

Equity ( Rs. In Lakhs )

Ratio

2005-2006 5042.12 2670.67 1.88

2006-2007 3611.87 2532.14 1.42

2007-2008 3142.13 2669.98 1.17

2008-2009 4312.49 2803.33 1.53

2009-2010 4421.68 3257.45 1.36

EQUITY RATIO

2005-2006 2006-2007 2007-2008 2008-2009 2009-20100

1000

2000

3000

4000

5000

6000

DebtEquity

INTERPRETATION

The above chart shows the debt equity ratio. It is clear that the debt equity ratio is varying year by year. This ratio indicates the proportionate line of owner and the outsider against the firm assets. The ideal equity ratio is I.A. high ratio shows the claim of creditors is greater than the owners.

b. PROPRIETORY RATIO

This ratio shows the relationship between shareholders funds and total assets. It indicates long term financial solvency of the firm. This ratio determines the extent of trading on equity. It is also known as net worth to total asset ratio.

Proprietary ratio = shareholder fund Total assets

Table : 4

TABLE SHOWING PROPRITORY RATIO

Year Shareholder fund( Rs in lakh )

Total assets (Rs in lakh)

Ratio

2005-2006 2670.67 7712.79 .35

2006-2007 2532.14 6144.01 .41

2007-2008 2669.98 5812.11 .46

2008-2009 2803.33 7115.82 .39

2009-2010 3257.45 7679.13 .42

PROPRITEORY RATIO

2005-2006 2006-2007 2007-2008 2008-2009 2009-20100

1000

2000

3000

4000

5000

6000

7000

8000

9000

Shareholder fundTotal assets

INTERPRETATION

The above table shows proprietary ratio. The proprietary ratio is varying from year to year. If the ratio is high. It indicates stronger financial position of the firm. On the other hand a lower ratio shows the weaker position of the enterprise. From 2006-2007 financial year there is an increase in the ratio. But for the financial year 2008-2009 it comes down . but now in 2009-2010 it has been increased 0.42.

2. TURN OVER RATIOS

a. TOTAL CAPITAL TURNOVER RATIO

This ratio ensures whether the capital employed has been effectively used or not. This is also the test of management efficiency and business performance. Higher total capital turnover ratio is the interest of the company.

Total capital turnover Ratio = Net sales

Capital employed

Table :5

TABLE SHOWING CAPITAL TURNOVER RATIO

Year Sales ( Rs. In lakh )

Capital employed ( Rs. In lakhs )

Ratio

2005-2006 24030.84 6080.23 3.95

2006-2007 27503.59 5303.52 5.19

2007-2008 28947.50 4795.75 6.04

2008-2009 35007.87 5973.21 5.86

2009-2010 37094.19TOTAL CAPITAL TURNOVER RATIO

2005-2006 2006-2007 2007-2008 2008-2009 2009-20100

5000

10000

15000

20000

25000

30000

35000

40000

SalesCapital employed

INTERPRETATION

The above table shows the total capital turnover ratio. It is clear from the graph that the capital turnover ratio shows an increasing trend from 2006 but in 2008-2009 it slightly declines.

b. WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales. This ratio indicates the number of times the working capital is turnover is the course

of a year.

Working Capital turnover ratio = Sales

Net Working capital

Table : 6

TABLE SHOWING CAPITAL TURNOVER RATIO

Year Sales ( Rs. In lakh )

Working capital (Rs. In lakh)

Ratio

2005-2006 24030.84 3508 6.94

2006-2007 27303.59 2310 11.91

2007-2008 28947.50 2016 14.36

2008-2009 35007.87 2333 15.01

2009-2010 37094.19 2414 15.37

WORKING CAPITAL TURNOVER RATIO

2005-2006 2006-2007 2007-2008 2008-2009 2009-20100

5000

10000

15000

20000

25000

30000

35000

40000

SalesWorking Capital

INTERPRETATION

The above table shows the working capital turnover ratio. This ratio measures the relationship between working capital and sales. It is clear from the graph that the working capital ratio is showing an increasing trend. That mean the working capital is efficiently being used in the firm.

c. INVENTORY TURNOVER RATIO

This ratio shows the number of the stock is turnover during a year. this