Ratio analysis
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Transcript of Ratio analysis
Team Members:
1) Shashank Chauhan2) Prashant Mishra3) Nitesh Patil4)Mahesh Chavade5) Srinivas Mittapelli
It is NOT just comparing different numbers from the balance sheet, income statement, and cash flow statement.
It is about comparing the number against previous years, other companies, the industry, or even the economy in general.
Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future.
OBJECTIVE OF RATIOS
I.Solvency-•Long term •Short term•Immediate
II.Stability
III. Profitability
IV. Operational efficiency
V. Credit standing
IV. Structural analysis
V. Effective utilization of resources
VI. Leverage or external financing
CLASSIFICATION OF RATIO
BASED ON FINANCIAL STATEMENT
BASED ON FUNCTION BASED ON USER
1] BALANCE SHEET RATIO
2] REVENUE STATEMENT RATIO
3] COMPOSITE RATIO
1] LIQUIDITY RATIO
2] LEVERAGE RATIO
3] ACTIVITY RATIO
4] PROFITABILITY RATIO
5] COVERAGE RATIO
1] RATIOS FOR SHORT TERM CREDITORS
2] RATIO FOR SHAREHOLDERS
3] RATIOS FOR MANAGEMENT
4] RATIO FOR LONG TERM CREDITORS
Its registered office is at Garden Mills Complex, Sahara Gate ,Surat ,Gujarat
Mr. M R Momaya is the Managing Director of the Mill The company is running 16,232 spindles
It produces 7.3 tons of yarn per day The company produces high quality yarn for
weaving.
Surat Textile Mills
Vijayeswari, a Pioneering textile company, produces the finest quality Bed Linen that is enjoyed by consumers worldwide.
It has over 90 years experience in the business In spinning the company’s 50,000 spindles
produce 1260 tons of yarn every year.
It is located at Jay Bharat Rangshala Compound,Saraspur, Ahmedabad-380018.(INDIA)
It has established a good clientele. Where this company have supplied on regular basis the machine to many Textile processing utile in Gujarat all over India as well as Abroad also
LIQUIDITY RATIO
RATIOS FORMULA
CURRENT RATIO = Current Assets/Current liabilities 1.50 6.90 1.53
LIQUID RATIO/ QUICK RATIO
=Quick assets/Quick liabilities 1.02 2.017 0.10
SUPER QUICK/CASH RATIO
=(Cash+Bank+Marketabtle Securities)/ Total current Liabilities
0.32 0.645 0.012
PROFITABILITY RATIO
RATIOS FORMULA
GROSS PROFIT MARGIN
=(Gross profit / Net Sales)
0.06 0.23 0.21
OPERATING PROFIT MARGIN
=(Operating Profit / Net Sales)
0.052 0.21 0.15
NET PROFIT MARGIN
=(NPAT / Net Sales)
0.029 0.03 0.09
ACTIVITY RATIO
RATIOS FORMULA
INVENTORY TURNOVER RATIO
=COGS/ Average Inventory 12.02 0.86 0.94
FIXED ASSET TURNOVER RATIO
= Sales/ Net Fixed Assets
11.70 0.87 2.81
TOTAL ASSET TURNOVER RATIO
= Sales/ Total Assets
2.68 0.27 0.785
RATIOS FORMULA
DEBT EQUITY RATIO
=Long Term Debt / Shareholder’s Equity
0.91 2.02 nil
INTEREST COVERAGE RATIO
=EBIT / Interest3.17 1.57 172.06
PROPRIETORY RATIO
=Shareholder’s fund/Total Assets
0.33 0.312 0.58
LEVERAGE RATIOS
SUMMARY OF FINANCIAL POSITION OF TEXTILE COMPANIES:
CONCLUSION