Mahendra institute of management And Technical studies

A project study report On RATIO ANALYSIS

PREFACE

The MFC curriculum is designed in such a way that student can grasp maximum knowledge and can get practical exposure to the corporate world in minimum possible time. Business schools of today realize the importance of practical knowledge over the theoretical base. The Spring Internship Program provides an opportunity to the students in understanding the industry with special emphasis on the development of skills in analyzing and interpreting practical problems through the application of management theories and techniques. It is a new platform of learning through practical experience, which incorporates survey and comparative analysis. It gives the student an opportunity to relate the theory with the practice, to test the validity and applicability of his/her classroom learning against real life business situations. 1

ACKNOWLADGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide for his exemplary guidance, monitoring and constant encouragement throughout the course of this training. The help and guidance given by him time to time shall carry me a long way in the journey of life on which I am about to embark. Lastly, I am thankful to staff of COCA COLA for answering my each query regarding the process of the company. I am obliged to staff members of COCA COLA for the valuable information provided by them in their respective fields. I am grateful for their cooperation during the period of my assignment. I am making this project not only for marks but to also increase my knowledge.

THANKS AGAIN TO ALL WHO HELPED ME.

DECLARATION

I do hereby declare that this project report entitled Working Capital Management of RSP is prepared by me on the basis of the information collected by me during the duration of 33 days i.e. from 1st May, 2014 to 16th June, 2014, under the valuable guidance of Shri. S. R. BEHERA Manager (F&A) Sales Accounts Department. I hereby declare that I have fulfilled all the provisions of institutional training in Rourkela Steel Plant. During my training I gained knowledge on capital structure and cost of capital of Rourkela Steel Plant, Rourkela.

MADHUSMITA ROUTRoll No 13MFC27MFC (2013-15)

Summary of that Study:-In this project, titled A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT COCA COLA BEVERAGES LTD. This aim is to analysis the liquidity and profitability position of the company using the financial tools. This study based on financial statements such as Ratio Analysis, Comparative balance sheet. By using this tools combined it enables to determine in an effective manner.The study is made to evaluate the financial position, the operational results as well as financial progress of a business concern.This study explains ways in which ratio analysis can be of assistance in long-range planning, budgeting and asset management to strengthen financial performance and help avoid financial difficulties.The study not only throws on the financial position of a firm but also serves as a stepping stone to remedial measures for coca cola .This project helps to identify and give suggestion the area of weaker position of business transaction in COCA COLA LTD.

TABLE OF CONTENT PREFRANCE 1 ACKNOWLEDGEMENT 2TABLECONTENT....................................................... 3 INTRODUCTION ........................................................................................................................................ 5 HISTORY OF THE COCA-COLA .............................................................................................................. 6 COCA-COLA SYSTEM IN INDIA ........................................................................................................... 10 COLA-COLA INDIA PVT. LTD........................................................................................................... 11 HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. ..................................................................... 11 BOTTLING NETWORK OF COCA-COLA .....................................................................................12 THE PRESENT POSITION OF COCA-COLA INDIA............................................................................. 13 PACKAGES OF THE PRODUCTS....................................................................................................... 14 COMPETITORS OF COCA-COLA IN INDIA .........................................................................................15 LIST OF COMPETITORS AND THEIR PRODUCTS ......................................................................... 16 HCCBPL PLANT AT GOBLEJ

COMPANY PROFILE

HISTORY OF THE COCA-COLA [MIRACLE BY DR. JOHN PEMBERTON] The first Coca-Cola recipe was invented in Columbus, Georgia, by John Stith Pemberton, originally in 1885 coca wine was called as a Pembertons French wine coca. As miracle was made by John Stith, it is assumed that he may have been inspired by the formidable success of European Angelo Marianas, coca wine. John Pemberton concentrated the Coca-Cola formula in a three legged brass kettle in his backyard. The name was a suggestion given by John Pembertons book keeper Frank Robinson. The first sales were at Jacobs pharmacy in Atlanta, Georgia, on May 8 1886. It was initially sold as a patent medicines for five cents a glass at soda fountains, which were popular in the united states at the time due to the belief that carbonated water was good for the health. Pemberton claimed Coca-Cola cured many diseases, including morphine addiction, dyspepsia, neurasthenia, headache, and impotence. Pemberton ran the first advertisement for the beverage on May 29 of the same year in the Atlanta journal. For the first eight months only nine drinks were sold each day. Coca-Cola was sold in bottles for the first time on March 12 1894. Cans of coke first appeared in 1955. The first bottling of Coca-Cola occurred in Vicksburg, Mississippi, at the biedenharn candy company in 1891. Its proprietor was Joseph a biedenharn. The original bottles were biedenharn bottles, very different from the much later hobble-skirt design that is now so familiar. As a Candler was tentative about bottling the drink, but the two entrepreneurs who proposed the idea were so persuasive. However that Candler signed a contract proved to be problematic for the company for decades to come, legal matters were not helped by the decision of the bottlers to subcontract to other companies- in effect, becoming parent bottlers. The Coca-Cola Company is a 120 years old company with its origin from Atlanta, Georgia. Coke was at first used as a refreshment drink. The drink was discovered by Dr. John Pemberton on May 8, 1886. The soft drink was given the name Coca-Cola by Frank Robinson. The Coca Cola Company was bought over and incorporated by Asa Griggs Candler, an entrepreneur. The company was then patented in the year 1887 and final was registered in 1893. Coke sells 1.7 billion drinks a day and it is the most recognized brand in the world. Coca-Cola currently offers more than 500 brands in over 200 countries or territories. The formula of manufacturing Coke lies in Downtown Atlanta on a piece of a paper. The Coca-Cola Company was founded by Mr. Asa Griggs Candler after he bought the brand in 1889 and incorporated the company in 1892. Muhtar Kent is the current chairman & chief executive of the company. The Coca-Cola Company is a beverage company which has several competitors throughout the world. But the leading competitors of the company globally are PepsiCo, Nestle and Dr. Pepper Snapple Group. The people of Hong-Kong use Coca-Cola as a medicine for cough & cold, by serving it hot then its normal temperature. 7

Committees of the Board:-2.1 Audit Committee of Directors The Board of Directors of the Company has constituted the Audit Committee of Directors to oversee the companys financial reporting process and disclosure of financial information and to review Internal Audit reports, findings of internal investigations. All accounting and financial policies of the company are being considered by the Audit Committee before submission to the Board. The Audit Committee comprises of three Non-Executive Directors and one Executive Director. The Chairman of the Audit Committee is Non-Executive Director.

Project Implementation Review Committee (PIRC) of Directors:-

The Project Implementation Review Committee (PIRC) of Directors constituted by the Board of Directors comprises of three Non-Executive Directors and two Executive Directors. The Committee reviews the progress of Phase-II Project and advises on critical issues, if any arise during implementation. .

Bond / Debenture Committee of Directors:-

The Board of Directors have constituted the Bond/Debenture Committee of Directors comprising of two members to expeditiously consider and approve allotment / issue, transfer, transmission, consolidation, splitting of bonds of the Company and other related issues.

Share Committee of Directors :-

The Board of Directors have constituted a Share Committee of Directors comprising of four members to expeditiously consider and approve allotment of equity shares against Rights Issue.

Policies of NINL:- Quality Policy Human Resource Policy Environmental Policy Human Resource Development Policy Energy Policy Occupational Health And Safety Policy

Quality Policies

We, at NINL are committed to meet the needs and expectations of customers and other interested parties. To accomplish this, we will : Produce quality products and provide services to all customers to earn their confidence and their delight. Achieve quality of the products by following systematic approach through planning, documented procedures and timely review of quality objectives. Continually improve the quality of all materials, process and products.Maintain an enabling environment, which encourages teamwork and active involvement of all employees with total commitment.

Energy PoliciesWe, at NINL are committed to optimally utilize various forms of energy in a cost effective manner to affect conservation of energy. To accomplish this, we will

Monitor closely and control the consumption of various forms of energy through an effective Energy Management System. Adopt appropriate energy conservation technologies. Maximize the use of cheaper and easily available forms of energy Make energy conservation a mass movement with the involvement of all employees. Maximize recovery of waste Energy

Human Resources Policies

We, at NINL believe that our employees are the most important resource. To realize the full potential of the employees, the company is committed to Provide work environment that makes the employees committed and motivated for maximizing productivity. Establish system for maintaining transparency, fairness in dealing with employees. Empower employees for achieving targets through commitment, responsibility and accountability. Encourage teamwork, creativity, innovativeness and high achievement orientation. Provide opportunities for developing skill and knowledge for employee growth. Ensure effective communication channels with employees

Introduction of Ratio analysisRATIO ANALYSIS INTRODUCTION There are a number of tools and techniques to analyze the financial Information presented in financial statements. These are, comparative statements, common -size statements, trend analysis, ratio analysis etc. But the techniques of financial analysis discussed earlier are not so useful to judge the detailed financial efficiency of a concern from different angles. The ratio analysis is a technique of financial analysis which concerns with analyzing the financial information in depth, from different angles. It is a most widely used technique to evaluate the detailed financial efficiency of the business concern. There are a number of ratios out of which different ratios can be use to examine the financial ability of a firm from different angles. MEANING OF RATIO A ratio is an arithmetic expression of quantitative relationship between related numerical facts. It may be expressed as a quotient, percentage or proportion. According to accountants hand book of wixon, kell and Bedford, a ratio has been defined an expression of the quantitative relationship between two number kohler defines ratio as a relation of an amount a to anther b expressed as the ratio of a to b (a : b) . This expression is read as a is to b . A ratio can be also be expressed as a single number in a simple fraction, integer or decimal fraction . MEANING OF RATIO ANALYSIS The ratio analysis concerns with calculating different ratios by using the required financial information presented in the financial statements. Therefore, the ratio analysis can be defined as the process of determining the quantitative relationship between the related components of the financial statements in order to judge the financial efficiency of a business concern .the different components are to be used for judging ability from different aspects. INTERPRETATION OF THE RATIOS:- The interpretation of ratios is an important factor. The inherent limitations of ratio analysis should be kept in mind while interpreting them. The impact of factors such as price level changes, change in accounting policies, window dressing etc., should also be kept in mind when attempting to interpret ratios. The interpretation of ratios can be made in the following ways. Single absolute ratio Group of ratios Historical comparison

GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS:- The calculation of ratios may not be a difficult task but their use is not easy. Following guidelines or factors may be kept in mind while interpreting various ratios is Accuracy of financial statements Objective or purpose of analysis Selection of ratios Use of standards Caliber of the analysis

IMPORTANCE OF RATIO ANALYSIS :- Aid to measure general efficiency Aid to measure financial solvency Aid in forecasting and planning Facilitate decision making Aid in corrective action Aid in intra-firm comparison Act as a good communication Evaluation of efficiency Effective tool

LIMITATIONS OF RATIO ANALYSIS :- Differences in definitions Limitations of accounting records Lack of proper standards No allowances for price level changes Changes in accounting procedures Quantitative factors are ignored Limited use of single ratio Background is over looked CLASSIFICATION OF RATIOS The ratio analysis is not only useful to the management but also useful to other parties interested in the financial ability of a business concern. These three basis of classification are as follows :1. Traditional classification2. Significant classification3. Functional classification

1. Traditional classification This classification is based on the sources of financial information for such ratio analysis. These financial statements are the position statement or balance sheet and the income statement. The sources of information for some ratios is the position statement and some ratios are calculation by using the financial information exclusively form the income statement. The ratio atre also known as the statements ratios under this classification. under this basis the ratios can be classified into three different categories as follows.A. Position statement ratioB. Income statement ratioC. Composite ratio A .Position statement ratio The ratio which are calculated by using the financial data exclusively from the position statement are called position statement ratio. These are also known as the balance sheet ratio. The ratio is ratio, capital gearing ratio, current assets to fixed asset ratio etc.B. Income statement ratio The ratio which are exclusively concerned with the financial information presented in the income statement are call the income statement ratio. It is also call as profit and loss account ratios. These are gross profit ratio, net profit ratio, operating ratio, operating profit ratio, expense ratios etc.C. Composite ratios - this ratio are calculated by taking financial information from both financial statements. One accounting data is taken from the position statement and the from the income statement in order to calculate each of these ratio. These ratios are also known as inter-statement ratios or mixed ratios. These are inventor or stock turnover ratio, creditor turnover ratio, working capital turnover ratio, debtor turnover ratio, fixed assets turnover ratio, ROI, ROCE, EPS, DPS etc. 2. Significant classificationThe classification is based on the importance of such ratio for inter-firm comparison. As we know, the competition is increasing day-by-day in modern business. Therefore, the ratio can also be classified into the two categories according to their importance for inter- firm comparison these are:A. Primary ratio B. Secondary ratio A. primary ratio:The ratio which are considered as most important for the inter-firm comparison are call primary ratio there is only one such ratio which is the return on capital employed . The firm earning higher rate of profit on its capital employed is comparatively better in its overall activities.B. Secondary ratio:-The ratio which are not so important for inter-firm comparison are called secondary ratio. These ratios are generally used to measure the efficiency of various internal activities of a concern.

3. Functional classification The financial efficiency of a business concern in normally tested from four different angles such as judging short-term solvency, judging long-term solvency, judging operating activities and judging profitability. Therefore, all the ratios can also be classificationinto four different groupsaccording to their functions to test the financial ability of a concern form the above four specified angles . such as:A. Liquidity ratioB. Activity ratioC. Solvency ratioD. Profitability ratio

A. Liquidity ratio These ratio concern with the analysis of short-term financial ability of a business enterprise, these are calculated by comparing different component of the current assets with the current liabilities. These ratios are most useful for the short term creditors to judge the ability of the concern to repay their claim in right time .the following ratio are to be calculated for such purpose.1. Net working capital 2. Current ratio 3. Liquid ratio 4. Absolute liquid ratio1. Net working capital :- Net working capital is the excess of current assets over current liabilities a business concern. The net working capital is also popularly known as working capital. It can be calculated as under.Net working capital= current assets- current liabilities 2. Current ratio :- The current ratio is proportion of the current assets on the current liabilities of a business concern. It is calculated by dividing the total of current assets by total of all current liabilitiesCurrent ratio= Significance:- According to accounting principles, a current ratio of 2:1 is supposed to be an ideal ratio.It means that current assets of a business should, at least , be twice of its current liabilities. The higher ratio indicates the better liquidity position, the firm will be able to pay its current liabilities more easily. If the ratio is less than 2:1, it indicate lack of liquidity and shortage of working capital.The biggest drawback of the current ratio is that it is susceptible to window dressing. This ratio can be improved by an equal decrease in both current assets and current liabilities.

3. Liquid ratio :- The quotient which is by dividing the total liquid assets by the total current liabilities of firm is call liquid ratio. It is useful to measure the ability of a business concern to repay its current liabilities immediately at their due dates . The liquid ratio can be calculated by the following way . Liquid ratio = *Liquid assets = current assets inventories prepaid expensesSignificance:- An ideal quick ratio is said to be 1:1. If it is more, it is considered to be better. This ratio is a better test of short-term financial position of the company.4. Absolute liquid ratio :- The ratio of absolute liquid assets to current liabilities is called absolute liquid ratio. It concern with measuring the absolute liquidity position of a business firm. The absolute liquidity assets include all those current assets which are in cash or equivalent to cash such as, cash in hand, cash at bank, marketable securities and short term investment. The absolute liquidity ratio can be calculated by using the following formal.

Absolute liquidity ratio = Significance :- An ideal absolute quick ratio is said to be 0.5. If it is more or it less considered to be difficult to be survive. This ratio also is a better test of short-term financial position of the company.B. Activity ratios :-These ratios concern with exhibiting the efficiency of different activities in which the resources of the firm have been employed. They can indicate the rapidity in movement of different assets and liabilities of a business concern. Therefore, these ratios are also known as turnover ratio. The various turnover ratios are as follows:1. Inventory turnover ratio As we know every business concern has to maintain a certain levels of inventories for uninterrupted operation of its day-to day business activities. But those inventories should be converted into next forms as quick as possible. So, Inventory turnover ratio = * Generally cost of goods sold may not be known from the published financial statements. In such case this ratio may be calculated by dividing net sales by average inventory at cost. Inventory turnover ratio = Significance:- This ratio indicates whether stock has been used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year.The higher the ratio, the better it is, since it indicates that stock is selling quickly. In a business where stock turnover ratio is high, goods can be sold at a low margin of profit and even than the profitability may be quit high. 2. Debtor Turnover Ratio:- This ratio concern with analysis the promptness in debts collection by business firm. The efficiency in debts management can be tested by this ratio . This ratio is also known as debtor velocity ratio. Because it indicates the velocity of debtors during the concerned accounting year. The following formulae can be used can for such calculation. Debtor turnover ratio =Average debts collection period = Note:- If any information about opening & closing trade debtors are not given ,then debtors turnover ratio can be calculated :- * Debtor turnover ratio =Significance :- This ratio indicates the speed with which the amount is collected from debtors. The higher the ratio, the better it is, since it indicates that amount from debtors is being collected more quickly. The more quickly the debtors pay, the less the risk from bad- debts, and so the lower the expenses of collection and increase in the liquidity of the firm.

3. Creditors turnover ratio:- The ratio which concern with exhibiting the rapidity of creditors payment is called creditors turnover ratio. The average creditors payment period can be known by the help of this ratio. Such period can be calculated by dividing the period in the concerned accounting year either bin day or in moths or in weeks, by the creditors turnover ratio. They can be calculated as follows.Creditors turnover ratio = Average creditors payment period = Significance :- This ratio indicates the speed with which the amount is being paid to creditors. The higher the ratio, the better it is, since it will indicate that the creditors are being paid more quickly which increases the credit worthiness of the firm.

4. Working capital turnover ratio:-This ratio can be calculated by dividing the cost of sale of the wholes accounting year by the average of net working capital .the cost of goods sold or the net sales figures may also be used for such calculation , if no information is available regarding the cost of sales. Working capital turnover ratio =Average working capital circulation period =Note:- Instead of cost of sales we can used sales as numerator & Net working capital as denominator. So,*Working capital turnover ratio =Significance:- This ratio is of particular importance in non-manufacturing concerns where current assets play a major role in generating sales. It shows the number of times working capital has been rotated in producing sales.A high working capital turnover ratio shows efficient use of working capital and quick turnover of current assets like stock and debtors.A low working capital turnover ratio indicates under-utilization of working capital.

C. Solvency ratio The liquidity ratio discussed earlier concern with measuring the shout-term financial position of a concern. They indicate the ability of a firm to meet its current obligation in due times. Those ratios are not helpful for determining the long term solvency position of a business firm. The following are such ratios to examine the long-term solvency of a business concern.

1. Debt-equity ratio 2. Proprietory ratio 3. Solvency ratio4. Fixed assets ratio 5. Coverage ratio6. Cash flow ratio 1. Debt-equity ratio:- The ratio which representing the debt as proportion on owned capital of a business undertaking is called Debt-equity ratio. It can be calculated as under.Debt-equity ratio= or Significance:- This Ratio is calculated to assess the ability of the firm to meet its long term liabilities. Generally, debt equity ratio of is considered safe.If the debt equity ratio is more than that, it shows a rather risky financial position from the long-term point of view, as it indicates that more and more funds invested in the business are provided by long-term lenders.The lower this ratio, the better it is for long-term lenders because they are more secure in that case. Lower than 2:1 debt equity ratio provides sufficient protection to long-term lenders.

2. Proprietary ratio : The proprietary ratio is another approach to determine the long term solvency position of business undertaking. it concerns with establishing the relationship between the owners net equity and the total net assets of a business firm. Therefore, this ratio is also called as net worth ratio or equity ratio. This ratio can be calculated as follows. Proprietary ratio = 100Significance:- This ratio should be 33% or more than that. In other words, the proportion of shareholders funds to total funds should be 33% or more. A higher proprietary ratio is generally treated an indicator of sound financial position from long-term point of view, because it means that the firm is less dependent on external sources of finance.If the ratio is low it indicates that long-term loans are less secured and they face the risk of losing their money.

3. Solvency ratio :- This ratio is the little variant of the proprietory ratio. It concern with measuring the proportion of total net assets financed by outside liability .This ratio is calculated as the percentage of total outside liabilities on the total net assets of a business enterprise. Therefore this ratio is also call as debt to total assets ratio or debt to total capital ratio. This ratio can be calculated as under .Solvency ratio = 100Significance:- Generally lower the ratio of total liabilities to total asset , more satisfactory or stable is the long term solvency position of the firm.

4. Fixed assets ratio:- The ratios which concern with measuring the proportion of fixed assets on different components of capital are called fixed assets ratio. The following are such fixed assets ratio.(a) Fixed assets to net worth ratio:- This ratio concern with expressing the fixed assets of a firm as percentage on net worth available to the . it indicates the portion of the fixed assets financed by the owners fund. The following formula can be to calculate this ratio Fixed assets to net worth ratio = 100Significance:- It indicates the extent to which the shareholders funds are sunk Into the fixed assets. Normally 60 to 65 percent is considered to be satisfactory ratio. (b) Fixed assets to long term funds ratio: - This ratio concern with reflecting the total fixed assets as a percentage on long- term funds of the business concern. The long-term funds for this ratio are the owners equity and long- term debts.Fixed assets to long-term funds ratio = 100Significance:-Here the total fixed asset must be above to the long term funds which is good for company. Because some part of working capital requirements is met out of the long term funds of the firm.

5. Coverage ratio- The ratio which concern with measuring the sufficiency of the profit earned to meet various fixed charges of a business enterprise are called coverage ratio. The following are such coverage ratios.(A) Interest coverage ratio: - This ratio indicates the proportion of operation profit to the fixed interest charge of a business concern. Here, the concern of operation profit is the profit before interest and corporate income tax. Because the interest is tax deductible. Interest coverage ratio=

(B) preference dividend coverage ratio:- This ratio concerns with analysing the adequacy of profit after tax to pay the dividend payable to preference shareholders is also one of the fixed charges for a joint stock company. Because that dividend paid at an agreed fixed rate.Preference dividend coverage ratio =

(c) Total coverage ratio:-A business concern may have some other fixed charges in addition to interest and preference dividend such as lease payment, instalment payment on long-term debts etc . The ratio which concern with determined the ability of a business firm to cover its total fixed charges is total coverage ratio. The Total coverage ratio may be calculated as follows:-Total coverage ratio= Tax rate =

6. Cash flow ratio:- This ratio is calculated by dividing the annual net cash inflow by the total fixed charges. The net cash inflow flow for this purpose is excluding the amount of cash required for day-to-day operation of the business activities. This ratio indicates the adequacy of cash inflow to pay such fixed charges. Therefore, this ratio is also called as cash to debt service ratio. the formula to calculate this ratio may be as under. Cash flow ratio =

D. Profitability ratio:-The ratio which are calculated to evaluation the sufficiency of the profit earned by a business concern are called Profitability ratios .They indicate the comparative results of the business operation of a firm , during the concerned accounting year . Classification of profitability ratio The profitability ratio can be classified into two on the basis of their importance. Those classifications are as under: 1. General profitability ratio2. Overall profitability ratio

1. General profitability ratio:- These profitability ratio are not so important form the management point of view .They simply concern with determining the percentage of profits under different concepts, on the net sale revenue . Therefore , these ratio are also knows as the profitability ratio related to sales . The following are such general profitability ratio .

a) Gross profit ratio. b) Net profit ratio.c) Operating profit ratio.d) Operating expense ratio.e) Expense ratio(a) Gross profit ratio:-The profitability ratio which concerns representing the gross profits as a percentage on net sales is called gross profit ratio. This ratio can be calculated as under: Gross profit ratio= 100

(b) Net profit ratio:-This ratio concerns with determining the percentage of net profit earned by a business undertaking on its net sales revenue. This ratio is also called as the net profit margin. The net profit for this purpose is the profit after interest and corporate income tax(EAT).This ratio can be calculated by the following way. Net profit ratio= 100

(c) Operating profit ratio:-This profitability ratio is the percentage of operating profit on the net sales revenue of a business concern. The profit before interest and corporate income tax (EBIT) is the operating profit for calculating this ratio. The following formula can be used to calculate this ratio.Operating profit ratio= 100

(d) Operating expenses ratio:-The percentage of total operating cost of a business concern on its net sales revenue is called operation expenses ratio. This ratio is also popularly known as operating ratio. This ratio is to be calculated as follows.Operating expenses ratio = 100

(e) Expenses ratios:-The different expenses ratios of a business concern should also be calculated in addition to the profitability ratio discussed earlier .these ratio helpful in future planning and forecasting , such expenses ratios can be calculated as under. i. cost of goods sold ratio =

ii. Administrative expenses ratio =iii. Selling and distraction expenses ratio = iv. N0n-operating expenses ratio =

v. Financial expenses ratio =

2. Overall profitability ratio: - The profitability ratio discussed earlier are not so useful for analyzing the profit of a business concern form investment point of view. Those ratio simply concern with expressing the profit under different concepts as a percentage of net sale. The following profitability ratio can be calculated to examine the overall efficiency in earning of a business firm. 3. Return on investment (ROI)4. Return on equity capital 5. Return on capital employed6. Earnings per share(EPS)7. Earning yield ratio 8. Dividend per share (DPS )9. Dividend yield ratio 10. Dividend pay-out ratio 11. Price earnings ratio

(a) Return on investment:- Return on shareholders investment popularly known as RETUN ON INVESTMENT Or return on shareholder/proprietors funds is the relationship between net profits (after interest & tax) and the proprietors funds. Thus, Return on Investment =(b) Return on Equity capital:- Return on equity capital which is the relationship between profits of a company & its equity capital, can be calculated as:- Return on equity capital = (c) Return on capital employed:- Return on capital employed establishes the relationship between profits and the capital employed. It is the primary ratio and is most widely used to measure the overall profitability and efficiency of a business. The term capital employed refers to the total investments made in a company and can be defined in a number of ways. Three most widely used in a business.

Gross capital employed:- Gross capital employed = Fixed Assets + Current Assets Net Capital employed:- Net capital employed = Total assets Current liabilities Proprietors Net capital employed:- Proprietors Net capital employed = Fixed Assets + current liabilities- outside liabilities(d) Earnings per share:- Earnings per share is a small variation of return on equity capital. SoE.P.S=

(e) Dividend per share:- Dividend per share = (f) Dividend yield ratio:-Shareholders are the real owners of a company & they are interested in real sense in the earnings distributed and paid them as dividends. Dividend yield ratio (g) Earning yield ratio:-This ratio also shows the relationship between earning per share and market values of shares. x100(h) Dividend pay-out ratio:-Mainly to find the extend of which earning per share have been retained in the business. So, Dividend pay-out ratio =(i) Price earnings ratio:-This ratio mainly calculated to estimate of appreciation in the value of share of a company and is widely used by investors to decide whether share buy ir not. So, Price earnings ratio

LIQUIDITY RATIOS1 .Net working capital Net working capital =current assets -current liabilities Table-2.1.1 Years2012201120102009

Current Assets58007.8685464.1054129.7856665.56

current Liabilities 60506.7675087.0422180.7319862.98

Net working capital -2498.910377.0631949.0536802.58

Chart -2.1.1

The above chart shows that in COCA COLA , Net working capital is negative value in the yr 2012. Net working capital position is increasing in year 2009 as compared to year 2010. In year 2011 net working capital is decreasing as compared to year 2010.

1.2. Current ratio

Current ratio = Table2. 1.2Years2012201120102009

Current Assets58007.8685464.156129.7856665.56

current Liabilities60506.7675087.6422180.7319862.98

Current ratio0.9581.1382.532.85

Chart -2.1.2

A relatively high current ratio is an indication that the firm is liquid & has the ability to pay its current obligation when they become due. The financial performance of a company ratio is nearer to standard ratio 2:1. In the study it is noticed that for the period of 201-13 the current ratio is decreased as compared to the previous year because of increase in current liability. So a decrease in the current ratio represents decrements in the liquidity position of the organization .It is using its blocked money in normal business activities which expected to fetch more return.

1.3Liquid ratio- Liquid ratio=

Liquid assets = current assets - inventories - prepaid expenses Table2. 1.3Years2012201120102009

Liquid Assets15476.4433178.5629781.3812305.31

current Liabilities60506.7675087.0422180.7319862.98

Liquid ratio0.250.441.340.61

Chart2. 1.3A high acid test ratio indicates that the firm is liquid & has the ability to meet its current liabilities in time. The acid test ratio is decreased from in the year 2010-11 to 0.234 in the year 2012. The company need to recast its quick ratio in the acceptable range of 1:1by reducing its inventory.

1.4 Absolute liquid ratio:-Absolute liquid ratio = Table 2.1.4 Year2012201120102009

Absolute liquid assets8855.1524999.481206.512391.34

current Liabilities60506.7675087.0422180.7319862.98

Absolute liquid ratio 0.1460.730.0560.12

Chart 2.1.4

The above chart shows that in NINL, Absolute liquid ratio increasing in year 2011 as compared to year 2009-10. In year 2012 Absolute liquid ratio is decreasing as compared to year 2011.

2 Activity ratios2.1. Inventory turnover ratio

Inventory turnover ratio = Table2. 2.1.2Years2012201120102009

Net sales193121.66157760.65152122.67131634.66

Average stock 22986.0523561.3720541.2446528.37

Inventory turnover ratio8.46.697.47.96

The above chart shows that in NINL, inventory ratio increasing in year 2012 as compared to year 2009-10. In year 2011 inventory ratio is decreasing as compared to year 2012 which good sign for the company.

2.2. Debtor Turnover Ratio Debtor turnover ratio =

Table 2.2.2Years2012201120102009

Net sale 193121.66157760.65152122.67131654.66

Debtors1615.651303.9620475.93599.34

Debtor Turnover Ratio 119.53120.987.42219.66

Chart 2.2.2

The above chart shows that in NINL, Debtor turnover ratio decreasing in year 2010 was very low In year 2009 Debtor turnover ratio was highedt as compared to year 2011-12.

2.3. Creditors turnover ratio

Creditors turnover ratio = Table 2.2.3Years2012201120102009

Net credit purchases125113.55146648.5892440.1089084.42

Creditors30959.4141055.16975.585374.66

Creditors turnover ratio4.043.5713.2516.57

Chat2. 2.3

The above chart shows that in NINL, Creditors turnover ratio is totally decreasing in year 2011-12 as compared to year 2009-10. In year 2011 Creditors turnover ratio is increasing as compared to year 2010.

2.4Working capital turnover ratioWorking capital turnover ratio =

Table2. 2.4Years2012201120102009

Cost of sales193121.66157760.65152122.67131634.66

Average net working capital-(2498.9)10377.0631949.0536802.58

working capital turnover ratio-77.28215.204.763.57

Charts 2.2.4

The above chart shows that in NINL,Working capital turnover ratio negative value in the year2012. Working capital turnovers increasing in year 2011 as compared to year 2009& 2010..

3.Solvency ratio3.1, Debt-equity ratio:-Debt-equity ratio= or Table 2.3.1Years2012201120102009

Outsiders funds175388.81181957.46179362.32173019.45

shareholders' funds99767.47100008.7383310.379804.3

debt equity ratio1.751.812.152.16

Chart 2.3.1

The above chart shows that in NINL, debt equity ratio is decreasing in year 2012 as compared to year 2009-10. In year 2011 capital turnover ratio is decreasing as compared to year 2010. In year 2012 capital turnover ratio is decreasing as compared to year 2011 which is good for company.

3.2Proprietory ratio Proprietary ratio = 100 Table 2.3.2Years2012201120102009

Owners net worth99767.47100008.7383310.879804.3

total net assets335663.04345041.19272686.73284853.87

proprietory ratio29.7228.9830.5528.01

Chart 2. 3.2

The above chart shows that in NINL, propritory ratio highest in year 2010 as compared to year 2009-10. In year 2011 propritory ratio is decreasing as compared to year 2010. In year 2012 propritory ratio is increasing as compared to year 2011.

3.3Solvency ratioSolvency ratio =100

Table 2.3.3Years2012201120102009

Total outside liabilities235895.5245032.46201543.05192882.43

Total net asset335663.04345041.19272686.73284853.87

solvency ratio 70.2771.0173.9167.71

Chat 2.3.3

The above chart shows that in NINL, solvency ratio increasing in year 2010 as compared to year 2009. In year 2011 solvency ratio is decreasing as compared to year 2010. In year 2012 solvency ratio is decreasing as compared to year 2011.

3.4.1Fixed assets to net worth ratioFixed assets to net worth ratio = 100Table 2.3.4.1Years2012201120102009

Total fixed assets 277615.18259577.02230724.09216021.17

owners equity99767.47100008.7383310.874804.3

fixed assets ratio to net wroth278.26259.55276.94288.78

Chart2. 3.4.1

The above chart shows that in NINL, fixed assets ratio to net worthies decreasing in year 2010 as compared to year 2009. In year 2011fixed assets ratio to net worth is decreasing as compared to year 2010. In year 2012 fixed assets ratio to net worth is decreasing as compared to year 2011. In 2013 fixed assets ratio to net worth is increasing.

3.4.2 Fixed assets to long term funds ratioFixed assets to long-term funds ratio = 100Table 2.3.4.2Years2012201120102009

Total fixed assets277615.18259577.02230724.09216021.37

Total long-term fund275156.28251885.53262673.14252823.75

fixed assets to long-term funds ratio100.89103.0587.8385.44

Chart 2.3.4.2

The above chart shows that in NINL, Fixed assets to long-term funds ratio is greater in the year 2011 as compared to other year. In year 2010 fixed assets to long-term is lower than the other financial years.

3.5 Interest coverage ratioInterest coverage ratio= Table 2.3.5Years2012201120102009

operating profit or EBIT15568.28--28968.818094.5627750.3

fixed interest charges(10.45%)20000200002000020000

interest coverage ratio0.77-1.440.901.38

Chart 2.3.5

The above chart shows that in NINL, Interest coverage ratio negetive in year 2011 as compared to year 2009-10 & 2012. In year 2012 Interest coverage ratio is covered some extent of loss which is made in the year 2011.

4.1 General profitability ratio4.1.1Gross profit ratioGross profit ratio= 100Table 2.4.1.1Years2012201120102009

Gross profit43036.7329200.4942550.0156255.96

Net sale 193121.66157760.65152122.67131634.66

Gross profit ratio22.2822.7127.9742.73

Chart2. 4.1.1

The above chart shows that in NINL, gross profit ratio is decreased in year 2012 as compared to year 2009-10. But in year 2012 gross profit ratio is approximately same as compared to year 2011 not greater than in the year 2009.

4.1.2 Net profit ratio:-Net profit ratio= 100Table 2.4.1.2Years2012201120102009

Net profit(EAT)2944.5-173.143793.477923.04

Net sales193121.66157760.65152122.67131634.66

net profit ratio 1.524-10.972.496.018

Chart 2.4.1.2

The above chart shows that in COCA COLA , net profit ratios negative in year 2011. In year 2009 sound well as compared to year 2010 & 2012.

4.1.3 Operating profit ratioOperating profit ratio = 100

Table 2.4.1.3 Years2012201120102009

Operating profit (EBIT)10468.58-6788.4152122.6722192.00

Net sale193121.66157760.6517054.18131634.66

operating profit ratio5.42-4.311.2116.85

Chart2.4.1.3

The above chart shows that in COCA COLA , 0perating profit ratio negative in year 2011 as compared to other financial year. In year 2012 operating profit ratio is slightly decrease as compared to year 2010-09.4.1.4 Operating expenses ratioOperating expenses ratio = 100

Table 2.4.1.4Years2012201120102009

operating cost 187924.24165009.89139692.07116270.76

Net sales 193121.66157760.65152122.67131634.66

operating expenses ratio97.30104.5991.8288.32

Chart 2.4.1.4

The above chart shows that in COCA COLA , operating expenses ratio is in year 2011 increasing as compared to year 2009-10. In year 2012 net profit ratio is comparatively low as in the year 2011Expenses ratios4.1.5.1 cost of goods sold ratioCost of goods sold ratio =Table 2.4.1.5.1Years2012201120102009

Cost of goods sold150084.93128560.16109572.6675378.70

Net sale193121.66157760.65152122.67131634.66

Cost of goods sold ratio77.7181.4972.0257.26

Chart 2.4.1.5.1

The above chart shows that in COCA COLA Cost of goods sold ratio is in year 2012 slightly decreasing as compared to year 2011. In year 2011 Cost of goods sold ratio is increasing as compared to year 2010-09.

2.5 Overall Profitability Ratio:-2.5.1 Return on investment:- Return on Investment = Table 2.2.5.1Years2012201120102009

Net Profit2944.50(17314)3793.477923.04

Shareholders Fund99767.47100008.7383310.879804.3

Return on investment(%)2.95(17.31)4.559.92

Chat 2.2.5.1

The above chart shows that in COCA COLA, return on investment totally decreasing in year 2011 as compared to other year . In 2009 financial year figure was better than the other financial year.

Return on Equity capital:- Return on equity capital = Table2. 2.5.2Years2012201120102009

Net PAT2944.50(17313.93)3793.477923.04

Preference Dividend2135.722135.722135.722135.72

Equity share capital(paid up)58129.4147951.0539979.4139979.41

Return on equity capital1.39(31.65)4.14614.47

Chart2. 2.5.2

The above chart shows that in COCA COLA, return on equity capital is totally decreasing in year 2010 as compared to other financial year. In year 2009 is highest ratio than the other financial year.

PROFIT& LOSS A/C AFTER YEAR ENDED OF 31ST MARCH (2009-12)Particulars 2009 2010 2011 2012

INCOMES

Gross Sales including Inter Plant Transfer135870.60157995.91161584.82205580.57

Less:1) Excise duty4235.945873.243824.1712458.91

3)JPC cess0000

Net Sales131634.66152122.67157760.65193121.66

Other Income330.76101.08703.81977.3

Total Income131965.42152223.75158464.45195098.96

EXPENDITURE407605

Raw materials consumed89084.8292440.10146668.58125113.55

Changes of inventory of finished goods [+/(-)]-20534.0812508.98-18549.2519699.89

Changes of excise duty on stock of finished goods714.31-665.631919.32-1328.94

Stores& Spares consumed3137.742796.503486.483614.70

Power & Fuel772.97939.23803.86961.13

Repair and maintenance370.05623.36460.83695.66

Employees benefits expenses4679.365129.866690.147849.40

Other expenses35167.5623401.6124988.4124718.72

Depreciation expenses9325.539302.939310.009416.18

Total expenditure122718.26146476.94175778.37190740.29

Profit before tax9247.162746.81-17313.924358.67

(Less) Tax deduction(Current+ differed tax)2861.693906.6803158.31

Profit after tax7923.043793.47-17313.922944.50

Comparative Statement from Balancesheet:- Comparative study of financial statement is the comparison of the financial statement of the business with the previous years financial statements and with the performance of other competitive enterprises, so that weaknesses may be identified and remedial measures applied. Comparative statements can be prepared for both types of financial statements i.e., Balance sheet as well as profit and loss account. The comparative profits and loss account will present a review of operating activities of the business. The comparative balance shows the effect of operations on the assets and liabilities that change in the financial position during the period under consideration. Comparative analysis is the study of trend of the same items and computed items into or more financial statements of the same business enterprise on different dates. The presentation of comparative financial statements, in annual and other reports, enhances the usefulness of such reports and brings out more clearly the nature and trends of current changes affecting the enterprise.

Particulars 31st March 2012(In lakhs)31st March 2011(In lakhs) Changes (In Lakhs)

Non Current Asset(A)277,655.18259,577.02180,78.16

Current Assets (B)InventoriesSundry DebtorsCash and Bank BalanceLoans and Advances42,519.301615.658,855.155017.7652,259.041,303.9624,999.986901.12-9,739.74311.69-16,144.83-1,883.36

Total current Assets (B+A)335,663.04345,041.12-9,378.08

Shareholders Funds :Share CapitalReserves and Surplus60,265.1339,502.34

50,086.7731,853.34

10,178.367649

Total Shareholders Funds(A)99,767.4781,940.1117,827.36

Non current liability (B)175,388.81169,945.425,443.39

Current liability(C)60,506.7675,087.04-14,580.28

Total Liabilities (A+B+C )335,663.04345,041.12-9,378.08

Comparative Balance sheet of 31st March2012-11:-

Interpretation of balance sheet 31st March 2012-11

The comparative balance sheet of the company reveals during 2012, that there has been a increase in the non-current assets of Rs.18,078.16 lakhs, which indicates company purchased machineries for the org. Inventories position is increased as compared to 2011 because it creates somehow problems for future. Due to less cash balance in 2012 its non current liability is increased of Rs5443.39 which is also not good. The overall financial position of the company for the year (2012-2011) is not satisfactory.

Comparative Balance sheet of 31st March2011-10:- Particulars 31st March 2011(In Lakhs)31st March 2010(In Lakhs) Changes(In Lakhs)

Non Current Asset(A)259,577.02230,724.0928,852.93

Current Assets (B)InventoriesSundry DebtorsCash and Bank BalanceLoans and Advances52,259.041,303.9624,999.986901.1224,348.4020,475.931,260.518,044.9427,910.64-19171.9723739.47-1143.82

Total current Assets (B+A)345,041.12284853.8760,187.25

Shareholders Funds :Share CapitalReserves and Surplus50,086.7731,853.34

42,115.1341,195.697971-9342.35

Total Shareholders Funds(A)81,940.1183,310.82-1370.71

Non current liability (B)169,945.42179,362.32-9416.9

Current liability(C)75,087.0422,180.7352,906.31

Total Liabilities (A+B+C )345,041.12284853.8760,187.25

Interpretation of balance sheet 31st March 2011-10

The comparative balance sheet of the company reveals during 2011, that there has been a increase in the non-current assets of Rs.28,852 lakhs, which indicates company purchased machineries for phase-ii Inventories position is increased as compared to 2010 of Rs27,910 lakhs which is not good sign for the company. Due to excess cash balance in 2011 is utilized for the repayment of loan, for meeting out current liabilities and provision and also for making investment, also increased for continuing day to day expenses. The overall financial position of the company for the year (2011-2010) is satisfactory.

Comparative Balance sheet of 31st March2010-09:-

Particulars 31st March 2010(In lakhs)31st March 2009(In lakhs) Changes(In Lakhs)

Non Current Asset(A)230,724.09216,021.1714702.39

Current Assets (B)InventoriesSundry DebtorsCash and Bank BalanceLoans and Advances24,348.4020,475.931,260.518,044.9444,360.25599.342391.349314.63-20011.8519876.59-1130.83-1269.99

Total current Assets (B+A)284,853.87272,686.7312,167.14

Shareholders Funds :Share CapitalReserves and Surplus42,115.1341,195.6942,115.1337,689.1703506.52

Total Shareholders Funds(A)83,310.8279,804.303506.52

Noncurrent liability (B)179,362.32173019.456342.87

Current liability(C)22,180.7319,862.982317.75

Total Liabilities (A+B+C )284853.87272,686.7312,167.14

Interpretation of balance sheet 31st March 2010-09

The comparative balance sheet of the company reveals during 2010, that there has been a increase in the non-current assets of Rs. 14702.39lakhs, which indicates company purchased machineries for phase-ii Inventories position is increased as compared to 2010 of Rs-20011.85Lakhs which is not good sign for the company. Due to excess cash balance in 2010 is utilized for the repayment of loan, for meeting out current liabilities and provision and also for making investment, also increased for continuing day to day expenses. The overall financial position of the company for the year (2010-2009) is satisfactory.

FINDINGS OF THE STUDY:-1) The current ratio is gradually decreasing from the financial year 2009 ,which is not good for the profit point of view . Because the firm shall not able to pay the current liabilities in time. 2) The liquid ratio is decreasing year after year. Though the ratio is above 1 in all thefour years, it is preferable to improve upon the situation. This may be due to the fact that the stock is major composition of current assets, which excludes liquid assets. The firm should try to clear the stocks.3) The inventory turnover ratio from the four years indicated a good inventory policy and efficiency of business operations of the company.4) The working capital turnover ratio has been increasing during the four years, which indicates that there is lowest investment of the working capital and more profit. More profit is in the sense that there is higher ratio.5) The proprietary ratio in all the four years is not above the satisfactory level, that is, 50%. It indicates the creditors are facing some credit problems for them.6) The debt to equity ratio is decreasing year after year, which indicates, the servicing of debt is less burden and consequently its credit standing is not adversely affected. But it maintaining its standards as like 1:1.7) The Net Profit for the four years has been ups & down which shows that the selling and distribution expenses arent works properly. 8) Comparative balance sheet proves that the financial performance for each financial year is not as much satisfactory as compared with its previous year during the period of 2009-2012.

SUGGESTION & RECOMMENDATION:-

7.1 SUGGESTION AND RECOMMENDATION1. The liquidity position of the company can be utilized in a better or other effective purpose.2. The company should use increase the inventory turn over ratio to increase profitability.3. The company can increase its sources of funds to make effective research and development system for more profits in the years to come.4. Finally most important thing is to must avoid repeatedness of loss.

CONCLUSION:-

The study is made on the topic financial performance using ratio analysis with five years data in COCA COLA. The current and liquid ratio indicates the short term financial position of COCA COLA whereas debt equity and proprietary ratios shows the long term financial position. Similarly, activity ratios and profitability ratios are helpful in evaluating the efficiency of performance in COCA COLA The financial performance of the company for the five years is analyzed and it is proved that the company is financially sound.

BIBLOGRAPHY

BOOKS:- M.Y. Khan and P K Jain Financial Management Shasi k Gupta, R.K. Sharma Management Accounting Kalyani Publisher S.M. Maheswari Management Accounting, Sultan Chand & Sons Educational Publishers, New Delhi.

WEBSITES:-www.COCA COLA .inwww.google.co.in