A PROJECT REPORT ON

RATIO ANALYSIS
AT

SUPER SPINNING MILLS LTD
Project submitted In Partial Fulfillment for the DEGREE of

MASTER OF BUSINESS ADMINISTRATION By K.BHAGYALAKSHMI [11HJ1E0001]

Department of Business Management ABR College of Engineering And technology {Affiliated to JNTU} Kandukur Road, Kanigiri (Mandal), Prakasam. 2011-2013

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CERTIFICATE This is to certify that the project work entitled “A STUDY ON RATIO ANALYSIS OF SUPER SPINING MILLS LTD” submitted in the partial fulfillment of the requirement of MASTER OF BUSINESS ADMINISTRATION of work carried out K.BHAGYALAKSHMI under my guidance and supervision

Project Guide

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DECLARATION
I here by declare that the project report entitled “RATIO ANALYSIS” AT

“SUPER SPINNING MILLS LTD” B-Unit, Hindupur presented here
is genuine and original work of mine submitted in partial fulfillment for the award of Master Degree of Business Administration and This project report has not been submitted to any other university or Institution..

K.BHAGYALAKSHMI Place: Date:

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VALIBEEI Head of the department. for providing me with all the required information and for their valuable suggestions.K.S.VALIBEEI (Associate professor).A. SK. K. and. My sincere and heart full thank to MR.BHAGYALAKSHMI [11HJ1E0001] 4 . guidance and monitoring in performing and drafting of the entire project report.ACKNOWLEDEGEMENT May sincere thanks to Ms.BASI REDDY (Director).

CONTENTS S no contents page no 1 CHAPTER .1 Objectives of the study Scope of the study Research and methodology Limitations of the study 1-4 2 CHAPTER – 2 Industry profile Company profile 5-25 3 CHAPTER – 3 Theoretical framework 26-34 4 CHAPTER .4 Data analysis and interpretation 35-57 5 CHAPTER – 5 Suggestions and conclusions Bibliography 58-62 5 .

CHAPTER-1 INTRODUCTION 6 .

solvency and profitability etc. the present study is to understand the financial performance from the management’s point of view. d) Ratio Analysis is an effective tool and useful to assess the important characteristics of the business line. Thus. Ratio analysis is useful to various interest groups such as management. Ratio Analysis is very important to know the efficiency and performance of the organization. liquidity.NEED OF THE STUDY a) Ratio Analysis facilities understanding of financial statements. These ratios present the relative performance of those items in financial statements. It narrates the old story of exchanges in financial condition of the business. However. 7 . vendor’s shareholders and Government as it reveals the financial position of the company. It deals with the items of Balance Sheet and profit and loss account to formulate ratios. c) Ratio is an instrument to measure efficiently of an enterprise and facilitates management control. b) It facilities inter firm and intra firm comparison and highlights relative performance of the organization in different areas.

• The scope is limited to the operations of super spinning limited. • Comparison analysis was done in comparison of its sister units.  Using evaluation techniques.  To analyze the performance in term of its liquidity position efficiently in utilization during the period under the study. balance sheet was of last six years. • The profit and loss account. to analyze financial performance of the company.OBJECTIVES OF THE STUDY  The objectives of the study is to analyze the financial and operational of strength super spinning limited . SCOPE OF THE STUDY The scope and period of study is restricted to the following.  To give a value suggestion on the basis of the study. • The information obtained from the primary and secondary sources was limited to super spinning limited • The key performance indicators were taken from 2003-2009.  To understand the long term and short term solvency of the company. 8 .

and through websites of the company. In the study it is mainly through conversation with concerned officers or staff members either individually or collectively.DATA COLLECTION METHODS The information required for successful completion of the project has been collected through  Primary Data  Secondary Data PRIMARY DATA COLLECTION: The information is collected directly without any reference is primary data. LIMITATIONS OF THE STUDY • The over all profitability of the company is more than satisfactory • There has been a marginal fall in profitability since last two years 9 . SECONDARY DATA COLLECTION: Secondary data of information are collected through company’s annual reports and other the balance sheets and other financial statements. The data includes:  Conducting personal interviews with the officers of the company  Individual observations and interferences  From the people who are directly involved with the business transactions of the firm.

CHAPTER-2 INDUSTRY PROFILE 10 .

over 275 composite mills and around 1. With over 9 million hectares under cotton cultivation and an annual crop of around 3000 million Kgs. employing state of the art technology and providing employment to around 15 million people. the Indian cotton textiles industry is a force reckon with . This combination of traditional art and contemporary design has produced a variety of yarn. electronic cleaners. has not been restricted to the installation of sophisticated processing machinery .INDUSTRY PROFILE THE INDIAN TEXTILE INDUSTRY The Indian Textile Industry is one of the largest segments of Indian Economy Accounting for over one fifth of the industrial production. but also quality. Indian is amongst the worlds largest reservoirs of this popular fiber. slicers etc. 11 .49 million registered looms. The process of economic liberalization in the last decade has seen the industry become globally competitive .not only in terms of price. wide width looms. Modernization. home textiles and other textile products sought after the world over. autoconers. In addition the 80 odd cotton varieties of different descriptions being grown in India. fabric. enables the industry’s produce cover almost every conceivable count and construction of fabrics in a width of choice.. The recent euphoria created in the European markets on Eco-friendly textiles has sent the Indian industry in to a flurry of activity to adapt itself to market requirement today. The winds of change have transformed a traditional art to a modern industry . but also to the adaptation of quality systems confirming to ISO 9000 standards. with over 1300 spinning units.

Exports were considered a marginal outlet for surpluses. the textiles industry was part of the government’s strategy of protecting domestic industry so that local products could replace imports. There in 1989. In Indian textile mills. Production as a share of the manufacturing industry fell from 79 percent in 1951 to under 30 percent in the early 1990s as a result of curbs on capacity expansion and new equipment and differential excise duties. It expanded from 24. The power-loom sector forms the largest portion of the decentralized part of the textile industry. which provides employment in rural areas. 12 . The concentration of production for the domestic market has severely constrained the sub-sector’s growth. Policy on the Textiles Sub-Sector During the early 1960s. domestic demand has stagnated as a result of the uneven distribution of income ( Anson and Simpson. and processed under one roof. Export growth has been disappointed and unable to compensate for the stagnation in domestic demand for textiles.000 units garment export industry.000 units in 1951 to 800. woven in to fabrics . Production in Fey 1992 was 19 billion square meters of cloth.The role Of Textiles Manufacturing In India: A Cotton textile in India is a well-established manufacturing industry and employs more workers than any other sector. Over the years. yarn in spun. 1988) because incomes for most consumers did not rise significantly. Power-loom fabric dominates India’s is also a substantial handloom sector. Emphasis was placed on self sufficiency.

000 looms. prevented any technological changes and internal restructuring in these two state-owned textile sectors. rising operational costs. while the mill and handloom sectors lagged behind (Anubhai and Motai. As a result. 1994). Reforms carried out by the government reduced discrimination against the mill sector by equalizing duty rates (so that all sectors pay the same level of taxes) and allowing the mills greater autonomy in investment related decisions. In its development policies. reaching 800. poor productivity and loss in profitability. This led to a of competitiveness. The New Textile policy aimed at technological advancement and modernization. a weak and sickly industrial structure. the textile (non-clothing) industry has three sectors: the organized mill sector (traditional weaving and spinning). Strong resistance from workers fearing job losses. 1944). Between 1977 and 1986. the power loom sector has flourished at the expenses of the other two. the state discriminated against the mill sector in favor of the power loom sector. 13 . This was done through preferential import and export quotas for the power loom sector (Anubhai and Motai. the power loom sector( modern mechanized looms) and the craft sector. the power loom sector more than doubled its capacity.In India. which was perceived as an engine of growth. Government controls on scrapping obsolete equipment and restrictions on imported machines. the government finally attempted to revitalize the textile industry and make it gradually concentrated more on exports. In 1985. resulted in further under-used existing capacity.

COMPANY PROFILE 14 .

The company chairs man is Sri. promoting and establishment.SUPER SPINNING MILLS PRIVATE LIMITED – B UNIT Brief history of SS mills The story of super spinning mills is one of the continuing sagas of success a story of formation. L. L.G.G. Sri. Balakrishnan at Kirikera in the backward area of Anantapur district. Sumanth. Ramamurthy and managing director is Sri R. The company was promoted and established in the year 1964 by well known industrialist and philanthropist. The successful functioning of their unit gave rise to other units namely 15 .

Banians.G. Ltd. 640 million per annum and the total labour force around 2300. The company is using cotton as raw material and producing. According to the survey conducted by the South India textile research association (SITRA) the company is one among the best 10 mills of couth in respect to quality and productivity. Mangalagiri etc. ELgi equipments Ltd. Singapore. The company... through brokers and also the company is exporting 37% of its products to various countries Viz Bangaladesh. The company is using as raw material and producing yarn in different counts Viz 60s. Elgi trade India Ltd. Dhoties. This had fulfilled the objective of the government to certain extent in promoting the company in this area.. Rayalaseema Technologies Ltd. the companies’ products are used in manufacturing sarees. New Delhi Lehalharangi.000 spindles and an assets Rs. The project implementation of these units have generated direct employment to nearly 3000 families besides indirect employment to another thousand. Sri L. Elrgi & Co Pvt.. etc. commenced its commercial productions in April 1964 with 12000 spindles by 2000. Super-A.90 etc the company’s finished products are being sold in the areas of Tirupur Kolkata. The company has been following a steady dividend policy and never skipped the dividend since 1965.Super-B at Kotunur in year 1983 and Super – C an export oriented – unit at D- Gudalur in Tamilnadu in Year 1992. Varanasi. Japan. the paid up capital of the company is Rs 300 Lakh the company had record steady the growth in its productivity as well as quality and its profitability over the years since its inception. Elgi Rolling Mills Ltd.80. T-Shirts etc and it 16 .. Balakrishnan and Brother’s Ltd. the total capacity of the group on date is 12. Italy Etc..

Also the company has organized several community development and welfare program viz.200 To all the operated people. Also the company has arrived at a settlement on bonus and Effie bonus for 5 years linked to productively.  Constructed drinking water tank at Nakkalapalli.is proud to say that the company is fulfilling one of the basic needs of human being that is clothing. testing equipment and also keeping the plant and the machinery updated from the to time.35% and 28%. The company is providing latest machinery. Kirikera.  Donated submersible water pumps to the people of housing board colony.  Family planning camp was organized and 300 operations were done as an incentive the company has given one polyester saree and blues worth Rs. Also the company has introduced the waste evaluation system I the carding and preparatory department. The company has recently concluded a settlement with its workers on wages and work assignments linked to productively for 5 years. Equipment. The company’s total turnover is around 760 Millions. The company is paying very high bonus that is 36. the company has provided humidification to the entire plant. The company has sound industrial relations. 17 .  Organized one week eye operation camp at LRG Vidyalayam. In order to provide sound upkeeping conditions. sadlapalli village.

Since this area is highly backward. • Running English medium school for the benefits of rural children. 3. Educational benefits for children. This shall be achieved by complying to the requirements of the quality management system and continually improve its effectiveness.High school at Basavanahalli. 4. The company is providing number of welfare amenities for the development of its workers such as: 1. Quality policy of the company Quality leading to customer satisfaction shall be top priority.P.In achieving the tremendous financial soundness. the company has extended its help by way of donations to the development of educational land. 2. The company is paying highest wages and bonus in all textile mill in Andhra Pradesh. Quarters for 20% of its employees. sevamandir.P. medical facilities in this area a few are. • Constructed a block in governmental hospital. Self-employed schemes etc. Interest-free own your house scheme. the company never neglects its responsibility of well being of its employees and the community welfare. • Construction of science block in the same school. Hindupur. Employees 18 . • Construction of auditorium in A. • Donated for construction of a free dispensary by the all India medical association. • Constructed primary school at Mittameedapalli. Residential school. • Donations for construction of Z.

Italy.90s. Ichakarangi. : Tirpur. Malaysia. Sumanth Date of establishment of the Mill Capacity of spindles Raw material Major counts : 1-4-1964 : 59712 (appox) : cotton and viscose : Hosiery – 50s. Super-B an over view Chief promoter Chairman : Sri L.2/56s. Ramamurthy Managing Director & Vice Chairman : Sri R.T-shirts. 2/60s Warp -60s. 80s. Varanasi. competence and skills.sarees etc. 60s. Tenali. Kolkata. The firm is headed by General Manager.. Mangalagiri. Area of the mill Financial products produced Sales local : 13 Acres : Banians. Switzerland. Mumbai.G.G. Singapore.shall be trained and motivated to enhance the quality of their work. Exports : England. Chirala.2/80s. Japan and 19 . Administrative set up The company has total number of employees of 950 out of which 64 are Staff and rests of the people are workmen.80s. Balakrishnan : Sri L.

Enhancing the awareness of employees towards quality thought systematic training. The policy is understood implementation and maintained through display boards training classes. Their efforts are committed towards fulfilling their quality. development and motivation. A Unit -21st Rank B Units – 10th Rank C Unit – 6th Rank The company has also won so many awards at a national level for its quality and productivity. of staff Awards According to the survey conducted by the South India Textile Research association the company is one among the best 10 mills of South India in respect of quality land productivity in 1996 out of 270 mills the company’s three units productivity performance is ranked as follows. The total exports during 20 : 886 (Blue colour) : 64 (white colour ) . requirements of customer exceptions and needs 2. 3. Objectives of the Company 1.Bangladesh. of employees No. No. videocassettes and policy Export Performance The company has identified new markets during the year and thrust has been given more on direct experts.

provision of PLC based panels. which is expected lower the further.4500 lakhs. 5443 lakhs as against Rs. etc were already implemented and other suggestions are at different stages of progress which is expected to save the energy consumption considerably. Research & Development Efforts are being made continuously for improvement up-gradation of the manufacturing process for improving quality and productivity. power interruption on daily basis and increased power tariff rates affected the machine utilization. The company is striving to improve the exports for achieving better results in the coming year. Thrust is being to explore further possibility in these vital areas of energy consumption. 943 lakhs and the net foreign exchange earnings by the company is Rs. Due to this energy saving measures were implemented in different areas excessively by conducting result-oriented energy consultants suggestions offered by the team viz. Direct exports consisted of Rs.the year were Rs. Conservation of energy The power situation in Andhra Pradesh has been critical. conservation of energy. Frequent. centralized waste collection system 21 . 7625 lakhs registered and increasing of 38% over the last year Rs 5540 lakhs. In addition two second – hand wind mill have also been acquired during the year. 4045 lakhs registering a growth of 35% the foreign exchange outflow utilized during the year mainly for modification was Rs. provisions of plant one touch fitting in all the pneumatic lines of machines modification of plant house designs..

cost service and speed. modification of ring frames lift and ring dial combination which is expected to yield 10% higher production. 22 . This will enable the company to compete more efficiently in the competitive global environment. 127019. high-tech gassing machine. micro 2000 yarn cleaners were also added on our post spinning process to offer value added yarns meant for export purpose. contamination cleaners etc. state of art machinery namely either unfrock A-11 and unchain B-11 RSSB D30 draw frames.by the R & D department. efforts are continuing to enlarge the scope of R & D facility to as many areas as possible revenue expenditure incurred on.5to 19% traits with bottom roller cleaners in ring frames and speed to improve the quality etc. During the year. provision of XBZ attachments in carding to improve the realization about 0. adaptation and innovation: The thrust areas have been in improving the quality of the products and increasing productivity through cost effective programmes and value engineering technique. Technology absorption.. In addition. were included in our manufacturing process to produce yarns meeting user 5 to 25% standards. Significant measures taken viz. Research & Development amounted to Rs.. The company commenced the re-engineering process in the organization to fundamentally rethink and redesign manufacturing process to achieve dramatic improvement is critical areas of performance such as quality.

M.M. I shift: 8-00 A. The operator will connect all the incoming calls to the respective table directly. Every paper has its right place. Telephone facility is available. III shift: 1-30 A. To 4-30 P. Every table has been provided with an intercom. employees are advised to complete filling Immediately.M. Computers are provided to make the work easier.Shift timings: General shift : 8-00 A. Communication: All the staff shall be attentive in the process of communication. There are also be used for communicating one table to another.M With a break of one hour for lunch in each shift. To 5-00 P. Office equipment Photocopy can be used with the permission of administrative office. 23 .M. II shift: 4-30 P. These facilities can be used for personal needs after obtaining superiors permission on chargeable basis.M.M. To 8-00 A. The communication must be passed to all the concerned as quickly as possible there should not be any hesitation in giving information at any level subject to the Internal communication: E-mail.M. To 1-30 A.

Stationery is provided for each and every table whatever they need for their work. Employees are advised to use A4 size paper as standard practice. It is advised to avoid damage/wastage by improper handling. Visitors: It is advised to be courteous to visitors. But dispose them soon after meeting is over. Meeting them at reception lounge is recommended. It is advised to meet the visitors only after they have taken the appointment. Security: Mill security is on contract basis. Round the clock security arrangements are provided for the mill and the quarters. Uniform and identity cards: All the staff wears uniforms as prescribed. The company supplies cloth Material for 2 sets of uniform once in 2 years. The company also pays the stitching charge as may be decided by the management.  Uniform should be maintained neat and clean.
 Female staff should attend their work wearing sarees and blouse provide by

the company.  Identity cards are given to each staff. In case of replacement the cost should be borne by the individual concerned all the staff always keep secret, confidential, and prevent the disclosures of divulgence of all information, knowledge, know-how experience, date documents, plans, report statements, logs records, correspondence discussions, contracts, drawings, photo prints, copies, methods, process, layout of machinery finance, qualities etc., of the company that many pass through or come to the employees knowledge.
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Mill Etiquette: • The entire mill premises are deemed as “ No Smoking Zone “ • Avoid entering the cabins when a visitor is present or a meeting is in progress unless it is absolutely necessary. • Avoid standing on the arises and discuss with colleagues or visitors. • Ensure that discussions or talking on telephone do not cause disturbance to others. • Turn off lights computers, etc, whenever they leave work place. • Develop the practice of keeping a daily work plan sheet. Monitor your progress as per work plan an manage time well. • Finally assume yourself as the customer for your work, the review your work so that you are able to give better satisfaction to your customer. Departments in Super-B The following are various departments of super-B  Personal department.  Finance department  Production department.  Purchase department.  Personal department Super Spinning Mills Ltd., A-unit has a separate personal department functioning under the head of Mr. K. Sudhakar. The main job of this department is to recruit, place competent and loyal workers in the enterprise. It also has the job of developing, planning, motivating and maintain the same All employees shall be systematically trained, developed and motivated to continuously improve the quality of their work.
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Function of the personal department The head of the personal department analyze and determine the number of kinds of people required to run the organization. It is assed only by this department and it is the most important function. The personal department functions are at the prior level because only this department analyze the person and appraise their work. Their performance is reviewed periodically, their skills, knowledge, attitude and capacity are analyzed in detailed manner by making frequent enquires regarding them. This can be used for confirming the service of an employee and confirmation of employment. Determining all these actives they can be awarded with increments or higher salary if production etc. Recruitment: The policy of this company is ‘RIGHT MEN FOR RIGHT JOB ‘. The recruitment is made under the following factors: ---a. b. c. d. Job description Type of person – qualification, experience and other skills Go in for advertisement To collect information regarding candidates by advertisement. Screening the application. Short listing the candidates. Interview date and time. The candidates are give prior intimation regarding time and date of interview. The methods used for interviewing are as follows.
1.

Recruitment process:

Written test, Personal interview, Aptitude test, Psychological

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27 . Induction: Making an employee to know about the company. Appointment order. This is by maintenance of attendance. 2. how to conduct himself. In case of late coming or early going. informing the candidates of employment (Working time). leave facilities. one has to get gate pass or permission slip. Time keeping: Time keeping means controlling and maintaining for entry and exit of the members of the company. Joining: After joining the employees must be given induction and orientation programme. Promotion: Generally promotion means an advancement to a better job which involves greater responsibilities and more knowledge and skills. introducing the member of the organization.. 3. 4. especially for staff and workmen by taken system or card system. Confirmation orally or by writing. Job test for technical job. Training: The company provides 6 months training to employees to acquire desired level of skills to further expand their knowledge to shoulder more responsibility.Test. welfare etc.

which gives the basic necessity of food rice is charged at a very reduced rate on no profit no loss basis. Safety Measures: To promote safe working conditions in the work area.. group personnal. In Super Spinning Mills ltd. Periodic medical checkup is to be undertaken by every employee of fee of cost. apart from statutory benefits the employees are provided with facilities like super annuation. Fair price shop: 28 . The super spinning mills has provided all welfare tit to staff within the premises. Welfare of staff: The welfare activity of an organization is carried out to take care of employees and also his family. reimbursement etc. Club also provided to the employees. This avoids idle time and makes them fresh at work.which carries greater prestige and finally higher salary. gratuity fund. Benefit schemes: Statutory benefits are provided as per the acts like provident fund. they follow a good policy which carries seniority and competence as basis of promotion. medical expenses. accident policy. E. maternity benefit etc.I. safe work methods are conveyed to the employees during training programme and during work. Recreational Facilities: Recreation helps to reduce tension of work and to relax for sometime....S. Safety device are provided to suit working environment to protect the health of employees. Tea is provided twice a day to every employee at the table.

Fair price shop is provided to the staff within the premises which gives the necessity commodities. prices are charged at reasonable rates on no-profit and no-loss basis. TYPICAL ERRORS TO BE CONTROLLED IN A PROCESS Errors & Data Relating to People Tools Methods Procedures Mechanisms Attitude & Behavior Courtesy Reliability Trust worthiness Efficiency Performance Delivery & Cost Missed dead lines Over budget costs Untimed delivery PROCESS ERROR MINIMISATION TO IMPROVE CUSTOMER SATISFACTION Product and service Materials Packages Parts Information Management Error Planning Organizing Controlling Directing Allocating Resources Errors from other sources Supplies Vendors Controls External Environment Techniques for problem solving: Brain storming Cause & effect diagram Flow chart _to identify problem and or solution _to identify all root problems _to explain process sequence directly 29 .

of Interdependency factors Control charts _to study the process tends by on-line Plotting and take quick corrective Steps when find necessary. Finishing process objectives:  Zero customer complaints  Adherence proportionate dispatches  Maintain target quality levels  Maintain good house-keeping 30 .Parcto diagram Histogram Graphs Pie chart Scatter diagram _to priorities the problem or causes When satisfied data is available _to graphically represent and studyjyju Process when data available _to show the friend in performance _to pictorically show the contribution Of individual items to the total _to indicate the extent of inter Dependency of no.

CHAPTER-3 31 .

a ratio is used as an index or yardstick for evaluating the financial position and performance of affirm. The relationship between two accounting figure.” In financial analysis. is known as a financial a ratio. investors and others. It is the process of identifying the financial strengths of the balance sheet and profit and loss account. Ratio analysis gives the efficiency and effectiveness of the company’s performance on many parameters. 32 . The point to note is that a ratio indicates a quantitative relationship. which can be in turn. The greater ratio. An accounting ratio shows the relationship between the two interrelated accounting figures as gross profit to sales etc. Ratios help to summarize the large quantities of financial data and to make qualitative judgement about the firm’s financial position.. viz. used to make a qualitative judgement.. Or by parties outside the firm. expressed mathematically. Introduction to the ratio analysis: Nature of ratios: Ratio analysis is a powerful tool of financial analysis. the greater firm’s liquidity and vice versa. It can be under taken by the management of the firm. Such is in the nature of all financial ratios. A ratio is defined as “the indicated quotient of two mathematical expressions” and as “the relationship between two or more things.Theoretical background of the study Financial analysis is helpful in assessing the financial position and profitability of a company. owners creditor. Ratio analysis is done to develop meaning full relationship between individual items and group of items usually shown in the periodical financial statements published by the concern.

Users of ratio analysis: The nature of ratio analysis will differ depending on the purpose of analyst. 2. share holders and investors: Investors and shareholders. They analyses about the firm’s future solvency and profitability overtime. its ability to generate cash. 1. there is need for fixing relationship between various related items.. Long term creditors: The requisite of ratio analysis to come in to being caused by the following facts. They restore The long-term creditors are interested in firm’s long-term solvency and survival. 1. 2. 3. Ratio analysis the starting point for making plans before using any sophisticated forecasting and budgeting procedures.REQUISITE FOR RATIO ANANLYSIS: more confidence in those firms that shows steady growth in earnings as such. Owners are investors desire primarily a basis for estimating capacity. Ratio analysis a tool for the interpretation of financial statements is also important because ratios helps the analysis to have a profound cautiously in to the data given statements figure in their peremptory forms shown in financial statements are neither significant nor to enable to be compared. to be able to pay 33 . they concentrate on the analysis of the firm’s present and future profitability. who have invested their money in the firms. The ratio analysis is useful for the following persons. They are also interested in the firms financial position to the extent it influences the firms earnings ability. Shares are most concerned about the firm’s earnings. Creditors: Creditors are concerned primarily with liquidity and ability to pay interest on redeem loan with in a specific period. Business facts displayed in balance sheet and profit and loss account do not convey any pompous individually. Their significance likes in the fact that they are interrelated. From this time onward.

Employees: The employees are also interested in the financial position of the concern especially profitability. Standards of comparisons: A single ratio in itself does not indicate favorable or unfavorable condition. but it does indicate what can be expected in the future. Are the earnings of the firm adequate? 5. Through the financial analysis they try to seek answers to the following questions. It is their overall responsibility to see at the resources of the are used. How efficiently does the firm use it’s assets? 4. Government : Government is also interested to know the strength and weakness of the firm. The employees make use of information available in financial statements. Government makes the future plans. most effectively and efficiently. Is the firm in a position to meet it’s current obligations? 2. 4. 6. and that the firm’s financial condition is should.interest and repay principal and relationship between various sources of funds. management of the firms or executives would be interested in every aspect of the fianancial analysis. Do investors consider the firm profitable and safe for the purpose of investing their money in the shares of the firm? Financial analysis may not provide exact answers to these questions. 5. There wages increase the amount of fringe benefits are related to the volume of profits earned by the concern. Standards of comparison may consist of : 34 . 1. Management: Finally. policies on the basis of financial information available from various units of the company. It should be compared with some standard. What sources of long term finance are employed by the firm and what is the relationship between them? Is there any danger due to the employment of excessive debt? 3.

3. Ratios of the industry to which the firm belongs. Some times the spread may is wide that the average may not be little utility. 4. It is difficult to get ratio for the industry. Another way of comparison is to compare the ratio of one firm with some related firms in the same industry at the same point of time. If the future ratios indicate weak financial position. A firm can easily resort to such a comparison. Even if industry ratios are available. especially the most progressive and successful at the same point in time. The comparisons strengths and weaknesses in the past and the future. Ratios of some selected firm. Future ratios can be developed from the projected or performed financial statements. The easiest way to evaluate the performance of a firms is to compare its present ratios with past ratios. 2. as it is not difficult to get the published financial statements of the similar firms to determine the financial conditions and performance of a performance of a firm its may be compared with average ratios of the industry of which the firm in a member. Ratios developed using the projected or performed financial statements of the same firm. In most of the cases. it is more useful to compare the firms ratios of a few carefully selected competitors indicates the relative financial position and performance of the firm. deteriote or remained constant over time. corrective actions should be initiated. 1. But there are certain practical difficulties in using the industry ratios. as its characteristics which influences the financial and operating relationships. 3. Ratios calculated from past financial statements of the same firm. When financial ratios over a period of time are compared it gives an indication of the direction of change and reflects whether the firms financial position and performance has improved. This kind of comparison is valid only when the firms accounting policies and procedures have not changed over time. 35 . If the firm within the same industry widely differ in their accounting policies and practices. 2.1. industry ratios are important standards in view of the fact that each industry. they are averages of the ratios of strong and weak firms. The averages will meaningless and the comparison futile. Some times future ratio are used as the standard comparison.

Utility of ratio analysis: It is most important tool of financial analysis. or short-term creditors. These ratios can grouped in to various claases accoarding tyo the Financial activity or function to evaluated. They have to protect the interests of all parties and see that the firm goes profitability. It is possible to extremely strong and extremely weak firms. 2. In view of the requirements of the user of the ratios. the extent which the firm has used its long-term solvency by borrowing funds. we may classify them as follows: Traditional classification: 36 . the parties. The efficiency to which the firm is utilizing its assets ingenerating its sales revenue and 4. 3. the industry ratios will prove to be useful in evaluating the fianancial conditions and performance of a firm. owners and management.4. Long term creditors on other hand. are more interested in the long-term solvency and profitability analysis and the analysis of the firms financial conditions. The people use ratios to determine those financial characterics of the firm in which they are interested with the help of ratio one can determine. Short-term creditor’s main interest is in the liquidity position of the short-term solvency of the firm. Types of ratios: Several ratios can be calculated from the accounting data contained in the fianancial statements. which generally undertake financial analysis. Many diverse groups people are illustrated in analyzing the financial information to indicate the operating and financial efficiency and growth of the firm. The overall operating efficiency and performance. Management is interested in evaluating every activity of the firm. long term creditors. The ability of the firm to meet its current obligations. the industry and eliminate extremely6 strong and extremely weak firms. As stated earlier. 1.

1. Therefore it is necessary to strike a proper balance between liquidity and lack of liquidity. financial institutions etc. Ex. Balance sheet ratios: balance sheet ratios deal with the relationship between two balance sheet items must however pertain to same balance sheet ex: current ratios. Due to lack of sufficient liquidity will result in bad credit rating. Also that is not too much meets its obligations. like debenture holders. loss of creditors confidence our even in law suits resulting in the closure of the company. The ratios indicate the funds provide by the owners and creditors as a general. The most common ratios which indicates the extent of liquidity or lack of it are. 2. Functional classification 1. Leverage of capital structure ratios is calculated. Liquidity ratios: It is extremely essential for a firm to able to meet its obligations as they become due liquidity ratios measure the ability of the firm to meet its current obligations. Composite or mixed ratios: These ratios are exhibit statement items and balance sheet items. But liquidity ratios by estabuilishing and relation ship between cash flow statements. Profit and loss account ratios: This ratios deal with the relation ship between the two profit and loss account items. Both the items must belong to the same profit and loss account. 37 . In fact. Stock turn over ratios. Ex: current ratios. A view high degree of liquidity is also bad. 3. Leverage ratio: The long term creditors. Are more concerned with the firm’s long term financial position of the firm. there should be and appropriate mix of debt and owners equity in financing the firms assets. 2. current ratio and quick ratio. But liquidity ratios by establishing a relation ship between cash and other current assets to currents obligations provide quick measure of liquidity. analysis of liquidity needs the preparation of cash budgets and cash flows statements.

Profitability ratios: A company should earn profits to survive and grow over a long period of time. but it would be wrong to assume that every action initiated by management of company should be aimed at maximizing profits. thus involve a relation ship between sales and the various assets. These ratios are also called turn over ratios because they indicate the speed with which assets are being converted or turned power in to sales activity ratios. Profits are the ultimate output of the company and it will have no future if it falls to make sufficient profits. 4. Profits are difference between total revenues and total expenses over period of time. Profits are essential. Creditors and owners are also interestred in the profitability of the firm. Activity ratios are employed to evaluate the efficiency with which the firm managers and utilizes its assets. Activity ratios: The funds of creditors and owners are invested in various kinds of assets to generate sales and profits. The profitability ratios are calculated to measure the operating efficiency of the company. A p[roper balance between sales assets generally reflects that assets are managed well. Irrespective of social consequences. The better in management of assets. 38 . The larger the amount of sales.3.

does not convey much sense. But there are problems in using ratios. 3. The differences in the definitions of items in the balance sheet and profit and loss statement make the interpretation of ratios difficult. 6. The comparison is rendered difficult because of differences in situations of two companies or one of the companies over years. 7. A single ratio usually. thus are indicators of future. 2. The ratios are generally calculated from past financial statements and. 5. Ratios have to be interpretated and difficult people may interpret the same in different ways. It is difficult decide on paper for comparison. 8.Limitations of ratio analysis: The ratio is a widely used technique to evaluate the financial position and performance of a business. 39 . 1. The following are the limitations of the ratio analysis. The price level changes make the interpretations of ratios invalid. The analyst should be aware of these problems. 4. Ratios are only means of financial analysis and an end in itself. The ratios calculated at a point of time or less informative and defective and they suffer from short term changes.

CHAPTER-4 DATA ANALYSIS & INTERPRETATION 40 .

The current assets should be either liquid or near liquidity. suppliers of the goods and other short term creditors are interested in the liquidity position of a business concern. It 41 . These should be convertible into cash for meeting the current debt obligations. They extend the credit only if they are sure that current assets are adequate to pay out the obligations. If current assets can pay off current liabilities. Current Ratio Current ratio may be defined as the relationship between current assets and current liabilities. B. then liquidity position is said to be satisfactory. If the liabilities are less. In other words. then the current assets cannot be met from them. the following ratios can be calculated. The bankers. A. Current Ratio. The ratio is also known as working capital ratio. To measure the liquidity position of a business concern. then the liquidity position is considered bad.LIQUIDITY RATIOS Liquidity refers to the ability of a concern to meet its current debt obligations. it is the ratio of current assets and current liabilities. Quick Ratio. The short term expenses or current liabilities are met by realizing amounts from current assets.

Prepaid expenses Current ratio= Current assets Current liabilities CURRENT LIABILITIES . .Work in progress . Components of Current Ratio CURRENT ASSETS . The following table gives the details of the items constituting these two elements. Bills receivables .Sundry creditors. Out standing expenses . Bills prepaid . Income tax payable .Dividend payable 42 . Inventories . Cash at bank . Bank overdraft . The two basic components of the ratio are: current assets and current liabilities. Cash in hand .Sundry debtors .is measure of general liquidity and is most widely used to make the analysis of a short term financial position or liquidity of a business enterprise.

51 2.25 2974.10 12862.75 7501.86 6925.84:1 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Current assets Current liabilities Current ratio INTERPRETATION The current ratio of 2:1 is considered ideal.54:1 2011 24907.56:1 4.59:1 2010 24792. current assets double the current liabilities are considered ideal. In other words.particulars Current assets (Rs in lakhs) Current liabilities (Rs in lakhs) Current ratio 2006 2007 9863.63 3.61 8765.32:1 2008 20928.61 2.71 6989.21 3.13 4. High current ratio may not be favorable due to the following reasons: 43 .85 2161.02:1 2009 19468.

44 . the current ratio decreased from 4.54:1 in the year 2010 and later decreased to 2.56:1 in the year 2006 to 4. How ever the company should invest its ideal funds properly.84:1 in the year 2011 This indicates that the position of the firm is satisfactory.• There may be slow moving stocks. If ratio is less than 2.The resources may not warrant the activities. a high current ratio of more then 3 indicates that the firm is having idle funds and has not invested them properly. And later it decreased to 2. it indicates that the business does not enjoy adequate liquidity. On the other hand. a low current ratio may be due to the following reasons: • There may mot be sufficient funds to pay off liabilities. • The figure of debtors may go up because debt collections not satisfactory. • The cash or bank balances may be lying idle because of insufficient investment opportunities. • The business may be trading beyond its capacity . And further decreased to 3. Here.02:1 in the year 2008. And increased to 3.32:1 in the year 2007. The stocks will pileup due to poor sale. How ever.59:1 in the year 2009.

Out standing expenses . Quick ratio may be defined as the relationship between quick assets and current liabilities. Sundry creditors . Bills payable . Dividend payable . Cash at bank . Bank over draft 45 .A Quick ratio/acid test ratio/liquid ratio The term liquidity refers to the ability of a business enterprise to pay its short term liabilities. Sundry debtors . As assets is said to be liquid. it can be converted in to cash with in a short period. Components of quick ratio: Quick assets . marketable securities Quick ratio= Quick assets Current liabilities Quick liabilities . Cash on hand . Bills receivable .

The quick ratio is very useful in measuring the liquidity position of firm.08 2161.1 0 2974. In the same manner.95:1 2008 7502. a low quick ratio does not necessarily mean a bad liquidity position. yet it should be used cautiously and 1:1 rule should not be blindly. if it has fast inventories.  A quick ratio of 1 is considered as ideal. A quick ratio of 1:1 does not necessarily mean satisfactory liquidity position if all the debtors cannot be realized and cash is needed immediately to meet the current obligations.81:1 Quick assets Current liabilities Quick ratio 2007 2008 2009 2010 2011  All current assets. except stock and prepaid expenses are quick assets. O n the other hand.51 1.25 2. indicates inadequate liquidity of the firm.1 3 1.3 9 6989. as inventories are not absolutely non liquid. a quick ratio less than 1. 46 .61 1.49:1 2007 5815. It measures the firm’s capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio.20 6925.52:1 2010 12923.08:1 2009 11431. It is used as a complementary ratio to the current ratio. Although quick ratio is rigorous test of liquidity than the current ratio.99 7501.63 1. Hence a firm having a high quick ratio may not have a satisfactory liquidity position if it has slow paying debtors.21 1. a firm having a low quick ratio may have a good liquidity position.76 8765.Particulars Quick assets Current liabilities Quick ratio 16000 14000 12000 10000 8000 6000 4000 2000 0 2006 2006 5392.85:1 2011 15858.

The funds of creditors and owners are invested in various kinds of assets to generate sales and profits. Activity ratios are employed to evaluated the efficiency with which the firm managers and utilizes its assets. Liquidity of the firm is satisfactory. It is calculated by dividing the sales by average inventory or the year ended inventory. a test of efficient management. This ratio measures how quickly inventory is sold. Low turn over implies over investment in inventories. Active ratios. These ratios are also called turn over ratios because they indicate the speed with which assets are being converted or turned or turned over into sales. This implied under investment in or very low level of inventory. thus involve a relationship between sales and various assets. The lesser amount of money is required to finance the inventory. The better the management of assets. Some of the activity ratios are given under: Inventory turnover ratio= Sales Inventory Debtors turnover ratio= Sales Debtors Assets turnover ratio=Sales Net assets Total asset turnover ratio=Sales Total assets Fixed asset turnover ratio=Sales Net fixed assets Inventory turnover ratio: This ratio is indicated the efficiency of the firm in selling its products. the larger the amount of sales.In the Super Spinning Mills. 47 . dull business. Usually a high inventory turn over ratio indicates efficient management of inventory because more frequently the stocks are sold. the quick ratio is more than 1 in all the years during the period of project study. And presume that there exists an appropriate balance between sales and various assets generally reflect that assets are managed well.

48 .75 3.Inventory turnover ratio= Sales Inventory Particulars Sales Inventory Inventory turn over ratio 2006 29556. here there is an efficient management of inventory because frequently stocks are sold.57:1 2010 36316.98:1 2008 33516.61:1 2007 28101.85 4. inventory turnover ratio is satisfactory because.02 6.35:1 40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Sales Inventory Inventory turnover ratio Interpretation Hence.73 7047.77 4.77 4471.32 3. in the case of SS mills.28 9048.25 8036.66 2.26 13416.52 11869.05:1 2011 39419.49:1 2009 36752.

Debtors turn over ratio= Sales Debtors Particula rs Sales Debtors Debtors turn over ratio 2006 2007 2008 33516.28 22.4:1 25.77 28101.02 22.52 1887.25 1954.0:1 2009 36752.64 16.56 19.2:1 2011 39419.26 1517.56 18.24 1114.6:1 29556.28 2375.Debtors turn over ratio Debtors turn over ratio is the relationship between the credit sales and debtors of the firm.73 1319.2:1 40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Sales Debtors Debtors turn over ratio 49 .8:1 2010 36316.

77 18005. Asset turn over ratio Asset turn over ratio is also known as Investment turn over ratio. 28 33584.2 2007 28101.72 1.17:1 50 . Generally higher the value of debtors turn over the more efficient is the management of credit. Hence the debtors turn over ratio regarding to the table is satisfactory. Asset turn over ratio=Sales Net assets Particulars Sales Net assets 2006 29556.73 2040.26 25538.64:1 over ratio 2011 39419.Interpretation Debtors turn over ratio indicates the number of times debtors turn over each year.37:1 2008 33516.45:1 2010 36316.08:1 Assets turn 1. 48 1.31:1 2009 36752. To an out side analyst information about credit sales and opening and closing balances of debtors may not be available.71 1.87 1.25 25293.85 1. It is based on the relationship between the cost of goods sold (sales) and the assets of the firm.52 33415.

1.Note: Net assets = net fixed assets + net current assets. a firm should manage its assets efficiently to maximize sales. In 2009 the ratio of SS mills is 1. 40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Sales Net assets Assets turn over ratio Interpretation As assets are used to generate sales.17 of the sales for one rupee of capital employed in net assets. 51 . It has to improve its operating performance. The firm can compute the ratio by dividing sales by net assets.17:1 times indicating that SS mills ltd producing Rs.

73 23380 1.93 0.89:1 2011 39419.46:1 2007 28101. Total asset turn over ratio= Sales Total assets Particulars Sales Total assets Total asset turn over ratio 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 2006 29556.27 1.73 1. In 2008the ratio of SS mills is 0.4 0. that SS mills generated sales of Rs.03:1 2009 36752.52 40404.13:1 2010 36316.36 1.Total asset turn over ratio Total asset turn over ratio shows the firm’s ability in generating sales from all the financial committed to total assets.77 20166.83:1 Sales Total assets Total asset turn over ratio Note: Total assets=Total Net fixed assets + Total current assets.0.89 for one rupee investment in fixed and current assets together.25 32795.20:1 2008 33516.28 47353. 52 .89:1.26 32416.

17 2.75:1 2010 36316. 53 .52 15612. calculating sales by net fixed assets.32:1 2011 39419.26 11449.77 10303.22 2.86 2.28 19549.Fixed asset turn over ratio Fixed asset turn over ratio= Sales Net fixed assets Particulars Sales Net fixed assets Fixed asset turn over ratio 2006 29556.86:1 2007 28101.73 10517.87 2.61 2. Depreciated value of fixed assets in computing the fixed asset turn over may render comparison of firm’s over period of time.15 2.67:1 2008 33516.02:1 40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Sales Net fixed assets Fixed asset turn over ratio Interpretation The firm may wish to know its efficiency of utilizing fixed assets.25 13326.91:1 2009 36752.

Leverage ratios may be calculated from the balance sheet items to determine the proportion of debt in total financing. Leverage ratios are also known as capital structure ratios. we can know the proportion of the interest bearing debt in the capital structure. And leverage ratios are also computed from the income statements items by determining the extent to which operating profile are sufficient to cover the fixed charges.These ratios indicate the funds provided by owners and creditors. Some of the leverage ratios calculated is as follows. Total debt ratio= Total debt Capital employed Debt equity ratio= Total debt Net worth Total debt ratio By using this ratio. The leverage ratios are calculated to measure the financial risk and the firm’s ability of using debt for the benefits of share holders. Total debt ratio = Total debt Capital employed 54 . As a general rule. the leverage or capital structure ratios are calculated .LEVERAGE RATIOS To judge the long term financial position of the firm. these should be appropriate mix of debt and owners equity in financing the firm’s assets.

62:1 2010 22257.18 0.81 11712.51 26027.67=0.66:1 2011 26055.e.95 33769.67 means that the lenders have finance 67% it is obviously implies that the owners have providing the remaining finance.22 0. 0.53 38672.67:1 10321.65:1 2009 16162. If we take the debt ratio of 2009 i.28 0.2 0.48 17341.33=33% of the net assets.92 19821. 55 . Where.59:1 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Total debt Capital employed Total debt ratio 2006 2007 2008 2009 2010 2011 Note: Capital employed =Net worth + Borrowings.19 25937.Particulars Total debt Capital Employed Total debt ratio 2006 2007 2008 17124. Net worth = Share capital + Reserves and Surplus Borrowings= Loans + Funds. They have 1-0.75 0.60:1 0.

65:1 2010 22257.93:1 2011 26055.33 1. 2.53 12616.44:1 2008 17124.Debt equity ratio Debt equity ratio can be computed by dividing the total debt by net worth.99 1.e.69 2.47:1 when Compared to the year 2009 i.51 8903.95 11511.72 1.19.92:1 2009 16162.19 9774.24 1. Particulars Total debt Net worth Debt ratio 2006 7020. 56 . 1.07.11 2007 8108.47:1 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Total debt Net worth Debt equity ratio This ratio is decreased in the year 2004 i.81 11712.067:1 10321.e.48 equity 1.

11:1 57 .09:1 2009 3110. Gross profit ratio= Gross profit Sales Particulars Gross profit Sales Gross ratio 2006 2346.25 0.08:1 2010 5373. The profitability ratios can also be computed by relating the profits of a firm to its investment in assets in the term of capital contributed by creditors and owners of the company.52 0.13 36316.11:1 2008 3103.14:1 2011 4524. It is calculated by dividing the gross profit by sales. creditors and owners are also interested in the profitability of the firm. Besides the management of the company.57 29556.26 0.07:1 2007 3343.12 33516.75 28101. Profit is the ultimate output of a company and it will have no future lift fails to make sufficient profits. the difference between total revenues and total expenses over a period of time. Gross profit ratio This profitability is relation to sales is the gross profit margin.18 36752. The profitability ratios are calculated to measure the operating efficiency of the company. If the company is unable to earn a satisfactory return on investment its survival is threatened.80 39419.28 0.73 0.77 profit 0.Profitability ratios A company should earn profits to survive and grow over a long period of time.

• Higher sales price cost of goods sold remaining constant. 58 . High gross profit margin relative to the industry lower cost. A gross profit margin ratio may increase due to any of the following factors. • Lower cost of goods sold. sales price remaining constant.40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Gross profit Sales Gross profit ratio This refers the efficiency with which management produces each unit of product. inefficient utilization of plant and machinery or over investment on plant and machinery resulting in higher cost of production. This ratio indicates the average spread between the cost of goods sold and the sales revenue. Here the ratio is increasing and decreasing indicates sales price has declined or the cost of production has increased. A low gross profit margin reflects a higher cost of goods sold due to the firm’s inability to purchase at favorable term.

This ratio is overall measure of the firm’s ability to turn rupee sales into net profit. 59 .21 2008 1040.21 29556.52 0. Net profit ratio= Profit after taxes Net sales Particulars Profit taxes Net sales Net profit 2006 after 891.05:1 33516.03:1 36752. administrating and selling the products.7 28101.89 2011 1442.26 0.25 0.28 0.Net profit margin Net profit is obtained when operating expenses interest and taxes are subtracted from the gross profit.73 7 0. The net profit margin ratio is measured by dividing profit after tax by sales.06:1 39419.96 2007 1410.49 2010 2241.03:1 0.03:1 36316.04:1 40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Profit after taxes Net sales Net profit ratio Net profit margin ratio established a relationship between net profit and sales and indicates management’s efficiency in manufacturing.95 2009 1127.

Operating expenses ratio This ratio is an important ratio that explains the charges in the profit margin ratio. Operating expenses= cost of goods sold (sales-gross profit) + Selling expenses + general and administration expenses. 60 . Operating expenses ratio= Operating expen Sales Where. This ratio is computed by dividing operating expenses that is cost of goods sold plus selling expenses and general administrative expenses by sales.

44 39419.65 36316.52 0.26 0. 61 .95:1 2008 32813.15 36752.97:1 2007 26918.69 28101.77 0.91 33516.25 0.91:1 2010 33870.Particulars Operating expenses Sales Operating expenses ratio 2006 28876.93:1 2011 37915.98:1 2009 36641. dividends etc.73 0. This operating expenses ratio of SS mills is changing may be due to changes in management policy.28 0.98 29556.96:1 40000 35000 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 Opeating expenses Sales Operating expenses ratio A higher operating expenses ratio is unfavorable since it will leave a small amount of operating income to meet interest.

11:1 2009 1122.11:1 Net profit after 888.84 8108.74 taxes Net worth 7020.72 0.99 0.17:1 2008 1042. 62 .05 1511. The return on shareholders equity is net profit after taxes divided by shareholders equity.61 9774.12:1 14000 12000 10000 8000 6000 4000 2000 0 2006 2007 2008 2009 2010 2011 Net profit after tax Net worth ROE This ratio is one of the most important relationships in financial analysis. Return on owner’s equity of the company should be compared with the ratio for other similar companies and industries which reveal the relative performance and strength of a company. Return on equity (ROE) = Profit after tax Net worth Particulars 2006 2007 1398.35 12616.20:1 2011 1427.11:1 2010 2338.24 0.69 0.33 0.71 8903.Return on Equity A return on shareholders is calculated to see the profitability of the owner’s investment.11 ROE 0.

FINDINGS & BIBLIOGRAPHY 63 .CHAPTER-5 SUGGESTIONS.

64 . Idle assets earn nothing.  The liquidity turn over ratio of the its increasing year by year so the Company has to maintain in the same motto as it increased the efficiency in inventory management of the company.  Gross profit has decreased.SUGGESTIONS  SS MILLS has high liquidity ratio. This may be due to increased in the cost of production or decrease in the income from sales due to decrease in the selling price. a vary high degree of liquidity is also bad. The firm’s funds will be unnecessarily tied up in the current assets. Therefore it is necessary to strike a proper balance between liquidity and lack of liquidity.

Debit equity ratio indicates proportion of the debit and equity of in the financial of longer term capital needs of firm.e...2:1 Inventory turn over ratio is high in 2004 financial year. Total debit ratio of the company has increased in the year 2007 this means proportionate increasing of debit lies more than the proportionate increasing in capital employed this implies the company is depending on long time. In 2006 it is low compared to previous year. It is increasing 2004-2009. • • • • • 65 . Gross profit ratio has decreased in the year 2006 compared to previous year. Operating expenses ratio of has been increased from 2004-2007 and increased in the year 2009 when compared to 2008.FINDINGS • The study reveals that the liquidity of the company is very high then the idle ratio i.

P. Jain & K.K Jain : S.com 66 .superspinning.Narang : WWW. Pandey : Prasanna Chandra : MY.BIBLIOGRAPHY Annual Reports of super spinning mills Financial Management Financial Management Management Accounting Accountancy Website : I. Khan & P.L.M.

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