1.

1 Introduction

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the relationship
between two or more things’’. In financial analysis, a ratio is used as a benchmark for evaluating
the financial position and performance of the firm. The absolute accounting figures reported in
the financial statements do not provide a meaningful understanding of the performance and
financial position of the firm. An accounting figure conveys meaning when it is related to some
other relevant information. Ratios help to summarises large quantities of financial data and to
make qualitative judgment about the firm’s financial performance. For example, consider
current ratio. It is calculated by dividing current assets and current liabilities; this ratio indicates
a quantified relationship between current assets and current liabilities. This relationship is an
index or yardstick, about the firm’s ability to meet its current obligations. It measures the firm’s
liquidity.

Ratio analysis is, “the systematic use of ratio to interpret the financial statements that the
strength and weakness of a as well as its historical performance and current financial position”.
The rational of ratio analysis lies in the fact that it makes related information comparable. A
single by itself has no meaning, but, when expressed in terms of related figure, it yields
significant interface.

Ratio analysis is the process of determining and interpreting numerical relationship based on
financial statements. A ratio is a statistical yardstick that provides a measure of the financial
relationship between variables or figures. This relationship can be expressed as a percentage or
as a quotient

Definition

“Analyzing financial statements”, according to Metcalf and Titard, “is a process of evaluating the
relationship between component parts of a financial statement to obtain a better understanding
of a firm’s position and performance.

1.2 Need of the study

Ratio analysis is required for a company in this cut through competition. Ratio analysis is used to
analyze the financial position of the company. It is the process of identifying the strengths and
weaknesses of the company by properly establishing the items of the balance sheet and the
profit & loss account through which conclusions on the performance, strength, and weaknesses
of the Company can be drawn. Ratio analysis helps the top management of the company by

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providing crystal clear picture regarding important aspects like liquidity, leverage, activity and
profitability. The study is also beneficial to employees and offers motivation by showing how
actively they are contributing for company’s growth. The investors who are interested in
investing in the company’s shares will also get benefi ted by going through the study and
can easily take a decision whether to invest or not to invest in the company’s shares.

1.3 Objectives of the study

To find out the overall efficiency of the firm on the basis of available financial information.
To find out the liquidity or short-term solvency of THE TAJ GATEWAY HOTEL PVT LTD.
To measure the profitability and solvency position of THE TAJ GATEWAY HOTEL PVT LTD.
To study the operating efficiency of THE TAJ GATEWAY HOTEL PVT LTD.
.

1.4 Scope of the study

The present study is designed to make effort to understand the management of ratio analysis
in THE TAJ GATEWAY HOTEL PVT LTD. With the help of financial ratios to analyze the financial
position of the company.

The scope of the study is limited to collect the financial data published in the annual reports of
a company and do an analysis of the data with a view to suggest favourable solution to the
various problems related to financial performance

The project on “Ratio analysis of THE TAJ GATEWAY HOTEL PVT LTD”. Provides information
from the financial year 2012 to 2017 with regard to the comparative common size recent trends
and develops a comparative common size recent trends and develops a comprehensive review
of the financial performance of the bank. This project gives an insight of various tools to
ascertain and evaluated the financial performance of the THE TAJ GATEWAY HOTEL PVT LTD.

1.5Methodology of the study

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

understood as a science of studying now research is done systematically. In that various steps,
those are generally adopted by a researcher in studying his problem along with the logic behind
them. It is important for research to know not only the research method but also know
methodology.” The procedures by which researcher go about their work of describing,
explaining and predicting phenomenon is called methodology.” Methods comprise the
procedures used for generating, collecting and evaluating data. All this means that it is necessary
for the researcher to design his methodology for his problem as the same may differ from

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problem to problem. Data collection is important step in any project and success of any project
will be largely depend upon now much accurate you will be able to collect and how much time,
money and effort will be required to collect that necessary data, this is also important step. Data
collection plays an important role in research work. Without proper data available for analysis
you cannot do the research work accurately.

The study is mainly based on two sources of data. They are

Primary data

Secondary data

Primary Data

Interviewing a few financial departmental heads, officers and management bodies and
staff members of THE TAJ GATEWAY HOTEL PVT LTD collected primary data. However, the
present study in based on secondary data.

Secondary Data

The present is mostly secondary resource of the data. These sources are the annual
reports and original records of THE TAJ GATEWAY HOTEL PVT LTD

1.6 Limitations of the study

The study was limited to only five years financial data.

The study is purely based on secondary data which were taken primarily from published annual
reports of THE TAJ GATEWAY HOTEL PVT LTD.
Limited financial ratios are used for analysis
Limited of the statistical tool used for the analysis
The study is based on only the past records.
The short span of time of 45 days for carrying out the study is also one of the limitations.

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2.1 Overview of Tata Group

Tata Group is an Indian multinational conglomerate company headquartered in Mumbai, India.

It encompasses seven business sectors: communications and information technology,
engineering, materials, services, energy, consumer products and chemicals. Tata group was
founded in 1868 by Jamsetji Tata as a trading company. It has operations in more than 80
countries across six continents. Tata Group has over 100 operating companies with each of them
operating independently. Out of them 32 are publicly listed. The major Tata companies are Tata
steel, Tata Motors, Tata Teleservices, Titan Industries, Tata Communications and Taj Hotels. The
combined market capitalizations of all the 32 listed Tata companies was INR 6.8 Trillion ($ 109
billion) as of March 2014. Tata receives more than 58% of its revenue from outside India.

A Tata group remains a family-owned business, as the descendants of the founder (from the
Tata family) own a majority stack in the company. The current chairman of the Tata group is
Cyrus Pallonji Mistry, who took over from Ratan Tata in 2012. Tata Sons is the promoter of all
key Tata companies and holds the bulk of shareholding in these companies. The chairman of
Tata Sons has traditionally been the chairman of the Tata group. About 66% of the equity of Tata
Sons is held by philanthropic trusts endowed by members of the Tata family.

The Tata Group and its companies & enterprises is perceived to be India‘s best-known global
brand within and outside the country as per an ASSOCHAM survey. The 2009, annual survey by
the Reputation institute ranked Tata Group as the 11th most reputable company in the world.
The survey included 600 global companies. The Tata Group has helped establish and finance
numerous quality researches, educational and cultural institutes in India. The group was
awarded the Carnegie Medal of philanthropy in 2007 in recognition of its long history of
philanthropic activities.

2.2 History

Jamshetji Nusserwanjin Tata, founder of the Tata Group, opened the Taj Mahal Palace & Tower,
the first Taj property and the first Taj Hotel, on 16 December 1903. The building overlooks the
Arabian Sea. He decided to open the grand luxury hotel after an incident involving racial
discrimination at the Watson‘s Hotel after an incident involving racial discrimination at the
Watson‘s Hotel in Mumbai, where he was refused entry as the hotel did not permit Indians, who
were non-white. Hotels which accepted only European guests were then very common across
British India. Jamsetji Tata travelled to London, Paris, Berlin and Dusseldorf to arrange for
materials and pieces of art, furniture and interior artefacts for his hotel. The Taj Group has been
active in converting former royal palaces in India into world class luxury Hotels such as the Taj
Lake Palace in Udaipur, the Rambagh Palace in Jaipur and Umaid Bhawan Palace in Jodhpur. In
1974, the Taj Group opened India‘s first international five star deluxe beach resort, the Fort
Aguada Beach Resort in Goa. The Taj Group also began its business hotel in Mumbai, in 1977,
and opening the Taj mahal Hotel, Delhi in 1978. In 1980, the Taj Group took its first step

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internationally by opening its first outside India, the Taj Sheba Hotel in Sana‘s, Yemen and in the
late 1980s, acquired interests in the Crown Plaza – James Court, London and 51 Buckingham
Gate Luxury Suites and Apartments in London. In 1984, the Taj Group acquired under a license
agreement each of the taj West End, Bangalore, Taj Connemara, Chennai and Savoy Hotel, Ooty,
with which the Taj Group made its foray into Bangalore. With the opening of the five star deluxe
hotel Taj Bengal in Kolkata in 1989; the Taj Group became the only hotel chain with a presence
in the five major metropolitan cities of Mumbai, Delhi, Kolkata, Bangalore and Chennai.
Concurrently with the expansion of its luxury hotel chain in the major metropolitan cities, the Taj
Group also expanded its business hotels division in the major metropolitan and large secondary
cities in India. During the 1990s, the Taj Group continued its geographic and market coverage in
India. It developed specialized operations (such as wildlife lodges) and consolidated its position
in established markets through the upgrading of existing properties and development of new
properties. Taj Kerala Hotels & Resorts Limited was set up in the early 1990s along with the
Kerala Tourism Development Corporation

2.3 Taj Hotel

The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively known as Taj
Hotels Resorts and Palaces and is recognised as one of Asia's largest and finest hotel company.
Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the company opened its
first property, The Taj Mahal Palace Hotel, Bombay in 1903. The Taj, a symbol of Indian
hospitality, completed its centenary year in 2003.

Taj Hotels Resort and Palaces comprises more than 119 hotels in 45 locations across India with
an additional 15 international hotels in 12 Countries in the Malaysia, United Kingdom, United
States of America, Bhutan, Sri Lanka, Africa, the Middle East and Australia.

Spanning the length and breadth of the country, gracing important industrial towns and cities,
beaches, hill stations, historical and pilgrim centres and wildlife destinations, each Taj hotel
offers the luxury of service, the apogee of Indian hospitality, vantage locations, modern
amenities and business facilities.

IHCL operate in the luxury, premium, mid-market and value segments of the market through

The following:

Taj (luxury full-service hotels, resorts and palaces) is our

flagship brand for the world‘s most discerning travellers
seeking authentic experiences given that luxury is a way of life
to which they are accustomed. Spanning world-renowned
landmarks, modern business hotels, idyllic beach resorts,
authentic Rajput palaces and rustic safari lodges, each Taj
hotel reinterprets the tradition of hospitality in a refreshingly

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modern way to create unique experiences and lifelong memories. Taj also encompasses a
unique set of iconic properties rooted in history and tradition that deliver truly unforgettable
experiences. A collection of outstanding properties with strong heritage as hotels or palaces
which offer something more than great physical product and exceptional service. This group is
defined by the emotional and unique equity of its iconic properties that are authentic, non-
replicable with great potential to create memories and stories.

Taj also encompasses a unique set of iconic properties rooted in history and tradition that
deliver truly unforgettable experiences. A collection of outstanding properties with strong
heritage as hotels or palaces which offer something more than great physical product and
exceptional service. This group is defined by the emotional and unique equity of its iconic
properties that are authentic, non- replicable with great potential to create memories and
stories.

Taj Exotica is our resort and spa brand found in the most exotic and relaxing locales of the
world. The properties are defined by the privacy and intimacy they provide. The hotels are
clearly differentiated by their product philosophy and service design.

Taj Safaris are wildlife lodges that allow travellers to experience the unparalleled beauty of the
Indian jungle amidst luxurious surroundings. They offer India‘s first and only wildlife luxury lodge
circuit. Taj Safaris provide guests with the ultimate, interpretive, wild life experience based on a
proven sustainable ecotourism model.

Premium Hotels (premium full-service hotels and resorts) provide a new generation of travellers
a contemporary and creative hospitality experience that matches their work-hard play-hard
lifestyles. Stylish interiors, innovative cuisine, hip bars, and a focus on technology set these
properties apart.

The Gateway Hotel (upscale/mid-market full service hotels and resorts) is a pan-India network
of hotels and resorts that offers business and leisure travellers a hotel designed, keeping the
modern nomad in mind. At the Gateway Hotel, we believe in keeping things simple. This is why;
our hotels are divided into 7 simple zones- Stay, Hangout, Meet, Work, Workout, Unwind and
Explore.

Ginger (economy hotels) is IHCL‘s revolutionary concept in hospitality for the value segment.
Intelligently designed facilities, consistency and affordability are hallmarks of this brand targeted
at travellers who value simplicity and self-service.

Taj Hotels Resorts and Palaces is committed to replicate its domestic success onto international
shores with plans to build an international network of luxury hotels, which will provide an
exemplary product-service combination and in the process create a global brand. The current

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international portfolio includes luxury resorts in the Indian Ocean, business and resort
destinations in the Middle East and Africa, serviced apartments in the UK, the first hotel in
Australia and three a top-end luxury hotels in the US.

2.4 Industry swot analysis

Strengths

1. Group comprises 119 hotels in 55 locations across India with an additional 16 international
destinations

2. Employee strength over 13000 people

3. The perfect experience of Indian luxury living

4. Employee retention due to good brand image

5. Considered to be the most premium hotel chain in India

6. Top-of-the-mind brand recall

7. Total 14423 Rooms.

Weaknesses

1. Limited market share due to tough competition from international and domestic players
means

2. Terrorist attacks left a question over the security

Opportunities

1. Introduce better membership plans

2. Improve hygiene standards

3. Upgrade to international methods of work

Threats

1. Other Heritage properties

2. Competitors upgrading to international standards of work ethic

3. Expectation of clients in terms of technological develop

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Competitors
1. Leela Group of Hotels

2. Oberoi Hotels and Resorts

3. Hyatt

3.1 Introduction to the Gateway Hotel Vijayawada

The Gateway Hotel is a scenic spot for your stay in the financial capital of Andhra Pradesh.

Just look out your window for panoramic views of the Krishna River and surrounding hills.

Close to Vijayawada's business district and the city's best sights and attractions, this is an

ideal location for business or holiday travel. Guest may also enjoy the knowledge that they

are staying at the only hotel in the Vijayawada with a swimming pool and state-of-the-art

health club.

Accommodations

108 rooms including 12 suites in which to unwind

High-speed internet & Wi-Fi available throughout the hotel
Vijayawada's only hotel with a swimming pool
Three meeting rooms and three banquet halls, including the largest pillar less banquet
Room in the city
Rooftop poolside venue for events
We have parking space at the basement level for over 200 cars, the largest in the city
Only 5 Star category Hotel In Vijayawada and 2nd in A.P.

Proximity

25 minutes from the domestic airport

15 minutes from the railway station

Address: - 39-1-63, GV Estates, M.G Road, Vijayawada-10, Andhra Pradesh

Web Site: www.tajhotels.com, Tel: +91-866-6455899

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Company profile

The Gateway Hotel is a scenic spot for your stay in the financial capital of Andhra Pradesh.
Just look out your window for panoramic views of the Krishna River and surrounding hills.
Close to Vijayawada's business district and the city's best sights and attractions, this is an
Ideal location for business or holiday travel. Guest may also enjoy the knowledge that they
Are staying at the only hotel in the Vijayawada with a swimming pool and state-of-the-art
Health club.

The Customers:

The main customers of hotels can be classified as follows:

1. Business customers
2. Luxury customers
3. Leisure customers
4. Wedding customers

1. Business customers:

These customers usually travel on expense account, so they will be looking for a hotel close to
the place where they are doing business, which secure so they don‘t have to worry about
kidnappings and robberies, that‘s clean and comfortable with food available either in hotel or
close to it some leisure activities Such as gym and pool.70% of the occupancy is by these slot of
customers as a part of developing city and nearby working zones.

2. Luxury customers:

These are the customer who expects the pampering and only the best of everything and has the
money to pay for it.

3. Leisure customers

These leisure customers also want all facilities as such as business customers, but there are
paying themselves so they want the best price they can get. Rate of leisure customers is less
compared to rest tourism spots.

4. Wedding customers

There are the customers who use conference rooms and ball rooms. They need enough parking
to deal with their expected crowd, and they want a good food services department to bring
coffee and pastries. These customers need a good planner. Keeping in point of Vijayawada
functions are the most nearby.

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The Competitors:

Quality inn DV Manor – 115 rooms

3 F & B Outlets
Gymnasium
3 banquet halls maximum- 600 capacity

2) Fortune Murali Park – 94 rooms

3 f&b outlets
Coffee shop
Gymnasium
3 banquet halls maximum-1000 capacity.
3) Novatel hotel – 280 rooms

The Business Environment:

The combination of internal and external factors that influence a company‘s operating situation.
The business environment can include factors such as: clients and suppliers; its competition and
owners; improvements in technology; laws and governments activities; and market, social and
economic trends.

Internal Environment:

The conditions, entities, events and factors within an organization that influence its activities
and choice, particularly the behaviour of the employees. Factors that are frequently considered
part of the internal environment include the organization‘s mission statement, leadership styles,
and its organizational culture.

External Environment:

The conditions, entities, events and factors surrounding an organization that influence its
activities and choices and determine its opportunities and risks. Also called operating
environment.

Technology:

Gateway was an international content wholesaler and technology provider for the travel
industry. Our products allowed travel partners to easily compare rates and directly, flights,
transfers and cars. Worldwide there were more than 5,000 travel agents, OTA‘s, tour operators
and airlines who used Gateway‘s services daily.

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Hotels - As a content wholesaler, Gateway provides room rates for 200,000 unique hotels
worldwide. There‘s a large variety in accommodation types, ranging from budget to luxury.
These can easily be compared and directly booked in our user-friendly booking tool, which is
available in different formats for your office and your business website

Flights - Our flight booking engine allows travel agents to compare and book published and
negotiated air fares, as well as fares from low cost carriers and charters in one single system.
Customize your flight system to guide your customers in the booking flow and show them the
flight they‘re looking for, with many cross-selling options and interesting features.
Transfers - This module allows travel agents to offer their customers a transfer service between
airport and hotel. Similar to the hotel module, several suppliers can be compared and the
transfers can be booked at the best net prices
Cars - To complete your travel package, you can offer your customers a rental car in more than
200 countries worldwide. The user-friendly interface allows to choose the best suited car and to
manage the reservation from beginning to end.

Oracle:

Oracle Hospitality delivers a wide range of software, hardware, and related services
along with a rapidly growing portfolio of cloud solutions to enable our customers in the
hospitality industry to provide superior service and experience to their guests anywhere.

3.3 swot Analysis

Strengths

High brand recognition

Technical innovations to improve customer experiences and Constant upgrade of business

processes
Good employee retention
Around over 78 countries
They have been in the industry for 93 years now making them real experts at what they do.
Good reputation in the market.

Weakness

Limited market share in spite of good brand recall

Operations are affected globally due to different Govt. policies and parameters

Opportunities

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High potential in emerging markets
Innovation in customer services
Digitalization and better use of technology
Indian and as well as global hospitality sectors are looking at a boom

Threats

Entry of several international brands along with the strong hold of long standing, well
established Indian brands.
Competition on price point
Stagnated growth
Economic and political turbulence in most countries

3.4 Who’s who:-

Departmental Heads at the company:

Department Name Designation

Finance M Shankar Rao Chief Accountant

Susan Maude Lazaro H R Manager

Sales & Marketing Vijay Kumar Sales Manager

Engineering V M N Malleswara Rao Chief Engineer

Food Production Sridhar Punna Chef In charge

F&B Service S V Ramana Murthy F&B Manager

Security D. Mahesh Security In charge

House Keeping B. Shreedhar Executive Housekeeper

Front Office Jagath Changappa Front Office Manager

3.5 organisation structure

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Game Plan

The Indian Hotels company Ltd is the largest Hotel Leisure and Hospitality company is south
Asia. The company's hotel business emphasizes the global operation of hotels and resorts in the
Luxury, Upper, upscale and Economy segments. The company's brand name includes Taj Hotels
Resorts and palaces, Vivanta by Taj Gateway Hotel and Ganger. Dedicated to the highest
standards of hospitality. Service and continuous innovation for over a hundred years the Taj
group. Includes Owned Leased and Managed hotels totalling 119 hotels, in 12 countries on 5
continents with 14423 rooms. Our aim is to be recognized as on of the top global hotels groups
providing exceptional customer satisfaction in each of ourhotels. The growth strategy of our
group is to operate 20000 rooms in 25 major destinations around the World and achieve a group
turnover ofus$2billion, with 33 shares from international operations by 2016.

3.6 Vision/ Mission

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Statement of the Taj

Embrace Talent and harness expertise to leverage stander of excellence in the art of hospitality
to grow our international presence, increase demotic Dominance and creative value for all stake
holders.

Facilities & Services

Hotel Business Services include:

Audio/Visual Equipment
Business Centre-24 hrs
Laptop on hire, with prior intimation
Indoor and Outdoor banqueting facilities are available
Hotel Leisure and Other Services include:
24 hrs Front Desk
Airport Transfer - On Request
Astrologer On Call
Banquet Facility
Bar & Restaurants
Barber Shop
Beauty Salon
Bell - Desk Services
Car Rentals
Currency Exchange
Express Check in Check out
Facilities For the Physically Challenged
Florist
Health Club
Health/Ayurveda Centres
Hotel Safe

Internet Access Available in Rooms

Internet/E-mail/Fax Facilities
Interpreter Services
Laundry Services
Lounge
Luggage Storage
Medical Services-Doctor on Call
Phone-Two Telephone Lines in Rooms
Postal/Parcel Services

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Room Service-24 Hrs
Travel Desk - Ticketing, Tours

3.7 Rooms & Suites

Gateway has 108 guest rooms including Stander (70) Superior Rooms (10), execute (10), Deluxe
Rooms (16) and Gateway suit (2). All the rooms are elegantly furnished and offer contemporary
amenities. All the rooms have full length glass windows.

Standard

Superior

Deluxe Suites

Executive

Deluxe Rooms

Total

Facilities in Rooms

42‖ Plasma TVs with satellite programs

Movable work table
Strong Task Lighting
2 line direct dial telephones
In-room tea/coffee makers
Mini bar
Wi-Fi Internet throughout the hotel

Room Types:

Superior Rooms

The hotel has elegantly styled and well appointed Superior Rooms, of 350 sq ft, that offer all the
mentioned amenities. Located on the third to seventh floors, these large rooms offer a choice
between city, hills and river views and include all the conveniences required for a pleasant stay.

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Deluxe Rooms

The hotel has Deluxe Rooms, of 350 sq. ft., that offer enhanced in-room amenities and access to
the private lounge. Guests are also offered a choice of buffet breakfast at the private lounge or
Café 17.

Luxury Rooms

The hotel has Luxury Rooms, of 550 to 650 sq. ft., that offer enhanced amenities, some of which
are partitioned into separate living and sleeping areas. In-room check in as well as Happy Hours
at the private lounge are offered.

Gateway Suit (Presidential Suite)

The hotel has a luxurious two-room Presidential Suite spreading across 1080 sq ft. The suite
offers a choice of special amenities and services:
Complimentary buffet breakfast at the Lounge from 0730 - 2200 hrs on the fifth floor
A bottle of wine in the room Happy hour at the Lounge from 1830 - 1930 hrs where we serve
cocktails with a selection of hors d'oeuvers

Tea / Coffee through the day in the Lounge

Use of the meeting room in the Business Centre for 1 hour (per stay), subject to availability

Complementary ironing (1 set per stay)

Personal butler on request

Executive Rooms

Located on the eighth floor, these large rooms showcase our best views of the city, hills and
river. They have standing showers, as well as bathtubs and offer complimentary breakfast.

Executive Suites

Located on me third to seventh floors, these contemporary rooms have a living room in
Addition to an extra spacious bedroom. They offer panoramic views of the city, hills and

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River. They have a walk-in wardrobe, standing shower and bathtub and offer complimentary
Breakfast.

Hotel room rates

Single Double
Standard 8000 9000
Superior 9000 10000
Executive 10000 11000
Executive Suite 15500 15500
Gateway Suite 23500 23500

Check in 14:00 hours Check out 12:00 Noon

Extra bed rate per Night 1050/-

Additional Occupant in the room 1050/-

Terms:
Taxes extra as Applicable

Tariff and taxes subject to change without prior notice.

Children below 12 years are accommodated at no extra charge
In the same room without extra bed on room only basis.
All the above tariff is on a per Night Basis

The tariff includes basic Wi - fi package

Access to Swimming pool and Health Club
Right of Admission reserved

Reservation

This is a section of the front office, which is the hub of the department, requests for reservation
of the room from various sources and the information‘s processed, properly documented,
stored and retrieve at the appropriate time induce a guest his room upon arrival. Rooms being a
highly perishable commodity (as the sale of rooms is linked with a time element) it is the duty of
the reservation department that rooms are not allowed to perish.

Sources of Reservation

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The usual sources from which reservation sources are airlines, wholesale tour operators, travel
agents (local and foreign), free individual travelers, groups, companies leading hotels of the
world trust, instant reservation system, sales department, embassies, and institutions.

Types of Plans

A plan is a package proposal of rooms and meals, and some times even travel. A European plan
will include only a room whereas the rest of the services would be charged for American plan,
which would include meals usually breakfast and the evening meal as well as the room rental
included in the room rate. The packages offered by the hotel are inclusive of a airport transfer,
breakfast at the citrus and the room rate.

Guest History Card

This is done in order to give a guest extra attention and special care. It's usually done for repeat
clientele. For example some guest may like a non smoking room and some may like a hard
mattress. This is where the front office informs the housekeeping department or the relevant
department that special care must be taken in order to ensure a comfortable, carefree stay at
the hotel.

All such information is maintained by the front office and is fed into the computer.

Rates followed by Reservation

A Rack Rate

This is the highest room rate charged by the hotel. It is the rate given to the guest who does not
fall into any particular category, such as a walk-in guest who requests a room for the night.

Corporate Rates

These are room rates offered to business people staying in the hotel.
This can be further broken down into Business people who are frequent guests (a specified
number of visits per week or per month) and guest who are employees of a corporation that has
contracted for a rate that reflects all business from that corporation.

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Commercial Rates

These are room rates for business people who represent and have infrequent or sporadic
patterns of travel. Collectively this group can be a major segment of hotel guest and thus
warrant a special rate..

Group Rates

These are rates offered to a large group of people visiting the hotel for a common reason. The
marketing and sales department usually negotiates this rate with a travel agency or with a
professional organization.

Family Rates

These are room rates offered to encourage visits by families with children. This rate is offered to
families during seasonal or promotional times.

Day use Rate

A room rate based on the length of stay of a guest, which is applied to guests who use a room
only for 3-4 hours in a day.

Reservation Cycle

Receive guest call

Listen to guest request
Check for room availability
Create profile & ask for company, nationality, inner circle member.
If the guest is 1st timer then apply BAR rates.
Make reservation filling all the required details in the profile
Reconfirm the reservation, give the conformation no. to the guest.
Update in Fidelio, take print out.
3.8 Food and Beverage outlets:

Chinese Specialty Restaurants

A 66 cover Chinese specialty restaurants located at first floor with rich wood finish giving an
authentic Chinese ambience adding it to the experience of the dinner in our restaurant offers a
huge choice of A-la-carte Chinese delicacies including all regions of china for lunch and dinner.

19
The restaurants operates during Lunch and Dinner with delectable beverages ranging from
imported wines/spirits and cocktails.

The coffee shop

This 24 hour coffee shop offers a multi cuisine menu featuring continental, Chinese and Indian
favourites. The American style coffee shop located at the lobby level offers buffet and a-al-carte
choices with dispenses to cater to the needs of our clients. The live counter with the buffet
offers an extensive selection of tawa dished, pasta, biryani and chats. The only restaurants in the
city to have a huge chocolate fountain during lunch and dinner buffets. The coffee shop can
accommodate 80 people at a time and an ideal place for casual dining.

Bar

The bar is located at first floor adjacent to the Chinese specialty restaurant with 32 covers
operating from 1200 hours till midnight offering a great selection of wines, spirits, and liquors.
The beverages range from Indian to imported brands to choose from. The bar has unique live
entertainment concept elevating the experience of bar in private.

Swimming pool

Located at the 10 floor, scheduled to open by December 2007. The pool opened from 07.00 hrs
to 21.00 hrs.

Health Club

The hotel offers a choice of leisure and recreational activities and facilities that are ideal for
guests wishing to unwind. The Health Club has a state-of-the-art gym and a rooftop swimming
pool. Sightseeing and shopping trips can also be organized.

Health Club Facilities:

Fitness Centre- well equipped
Steam
Chill Shower
Roof top Swimming Pool
Jacuzzi – inbuilt cold water

20
Banqueting facilities

Gateway hotel, Vijayawada offers one of the largest banqueting facilities in the city, the hotels
offers 7 indoors and one outdoor venue that can accommodate between 10-1200 people. The
alfresco and pool side offer one of the most premium banqueting venues in the city. Located by
the swimming pool, these venues offer spectacular views of the Vijayawada city.

Guest Safety

The hotel is equipped with the latest fire fighting equipment to fight any type of fire.

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated quotient
of two mathematical expressions and relationship between two or more things. In financial
analysis a ratio is used as an index for evaluating the financial position and performance of the
firm. The absolute accounting figures reported in the financial statements do not provide a
meaningful understanding of the performance and financial position of a firm. An accounting
figure covey meaning when it is related to some other relevant information.

Ratio analysis is the process of determining and interpreting numerical relationship based on
financial statements. A ratio is a statistical yard stick that provides a measure of the relationship
between variables of figures. Thus, relationship can be expressed as a percentage on as
quotient.

Ratio analysis is a powerful tool of financial analysis. In finance analysis ratio is used as a
bench mark of a firm. The absolute accounting figures reported in the financial statements do
provide a meaning full understanding of the performance and financial position of the firm.

21
Ratio help summarize large quantities of financial data and to make qualitative judgment about
the firm’s financial performances.

Ratio analysis is the systematic use of ratio to interpret the “Financial Statement so that
the strength and weakness of a firm as well as its historical performance and current financial
position can be determined. The relational of ratio analysis lies in the fact that it makes related
information comparable. A single figure by itself has no meaning but when expressed in terms of
related figure. It yields significant inferences.

Definition:

“The relationship between two accounting figures expressed mathematically”.

Meaning of ratio:

Ratio is one figure express in terms of another figure. It is a mathematical yardstick that
measures the relationship two figures, which are related to each other and mutually
interdependent. Ratio is express by dividing one figure by the other related figure. Thus, a ratio
is an expression relating one number to another. It is simply the quotient of two numbers. It can
be expressed as a fraction or as a or as a pure ratio or in a decimal absolute figure as “so many
times”. As accounting ratio is an expression relating two figures or accounts or two sets of
account heads or group contain in the financial statements.

Meaning of ratio analysis:

Ratio analysis is the method or process by which the relationship of items or group of items in
the financial statement are computed, determined and presented.
The basis for financial analysis of any firm is financial information. A business firm prepares its
financial statements as they provide useful financial information and are helpful for decision-
making. Financial information is needed to predict, compare and evaluate the firm’s earning
ability. The profit or loss statement shows the operating profit of the concern and the balance
sheet depicts the balance value of acquired assets and liabilities at a point of time. For obtaining
the material and relevant information necessary for ascertaining the financial strengths and
weakness of an enterprise, it is necessary to analyse the data depicted in the financial
statement. The analysis is done by properly establishing the relationship between the items of
balance sheet and profit /loss account.

22
Financial statement analysis’ is a meaningful interpretation of ‘Financial statements’ for ‘parties
demanding financial information’. There are certain steps, which must be taken into
consideration for financial statement analysis:

Identification of user’s purpose.

Identification of data source.

Selecting the techniques to be used for such analysis

Meaning and concept of Financial Analysis:

The term Financial Analysis is also known as analysis and interpretation of financial statements
refers to process of determining financial strengths and weakness of the firm by establishing
strategic relationship between the items of the Balance sheet, Profit & Loss A/c and operative
data. The purpose of financial analysis is to diagnose the information contained in the financial
statements to judge the profitability and financial soundness of the firm. Financial statements
analysis is an attempt to determine the significance and meaning of the financial statement data
so that the forecast may be made of the future earnings, ability to pay interest and debt
maturities and profitability of a sound dividend policy. The term financial statement analysis
includes both analysis and interpretation.

The term analysis is used to mean the simplification of financial data by methodical
classification of the data given in financial statements, interpretation means explaining the
meaning and significance of the data so simplified. However, both analysis and interpretation
are interlinked and complementary to each other. Analysis is useless without interpretation and
interpretation without analysis is difficult or even impossible

Financial analysis is required for many financial

Management Decisions:

How to manage the finances to achieve the strategic goals of the institution

How to increase profitability

How to reach self-sufficiency/breakeven point

How to increase efficiency especially reducing the cost per unit

What is the optimum level of each different operational expense including the cost of funds

23
How to manage the costs of Human resources as part of overall human resource management

How to deal with the effect of inflation

How much capital do you need?

What should the asset structure be?

How to manage the fixed assets, i.e., the depreciation policy, how to finance them, are they
insured

Are the safe?

How to undertake trend analysis and to compare actual performance against planned
performance Ratio analysis is an attempt to derive quantitative measure or guides concerning
the financial health and profitability of business enterprises. Ratio analysis can be used both in
trend and static analysis. There are several ratios at the disposal of an analyst but their group of
ratios he would prefer depends on the purpose and the objective of analysis.

While a detailed explanation of ratio analysis is beyond the scope of this section, we will focus
on a technique, which is easy to use. It can provide you with a valuable investment analysis tool.

This technique is called cross-sectional analysis. Cross-sectional analysis compares financial

ratios of several companies from the same industry. Ratio analysis can provide valuable
information about a company's financial health. A financial ratio measures a company's
performance in a specific area. For example, you could use a ratio of a company's debt to its
equity to measure a company's leverage. By comparing the leverage ratios of two companies,
you can determine which company uses greater debt in the conduct of its business. A company
whose leverage ratio is higher than a competitor has more debt per equity. You can use this
information to make a judgment as to which company is a better investment risk.

However, you must be careful not to place too much importance on one ratio. You obtain a
better indication of the direction in which a company is moving when several ratios are taken as
a group.

Objective of ratios

Ratio is work out to analyse the following aspects of business organization-

Solvency-

Long term

Short term

24
Immediate

Stability

Profitability

Operational efficiency

Credit standing

Structural analysis

Effective utilization of resources

Leverage or external financing

Importance of ratio analysis

The importance of ratio analysis lies in the fact that it presents facts on a Comparative basis and
enables the drawing of inferences regarding the Performance of the firm. Ratio analysis is
relevant in assessing the performance of a firm in respect of the following points.

Liquidity Position:

With the help of ratio analysis conclusions can be drawn regarding the liquidity position of the
firms. The liquidity position of the firms would be satisfactorily if it is able to meet its current
obligations when they become due. The liquidity ratios are particularly useful in credit analysis
by banks and other suppliers of short term loans.

Long-term Solvency:

Ratio analysis is equally useful for assessing the long term financial viability of a firm. The long-
term solvency is measured by the leverage/ capital structure and profitability ratios, which focus
on earning power and operating efficiency. Ratio analysis reveals the strength and weakness of a
firm in this respect.

Operative Efficiency: It is relevant from the view point of management and it throws light on
the degree of efficiency in the management and utilization of its assets. The ultimate analysis
depends upon the sales revenue generated using its assets total as well as its components.

Overall Profitability:

In this the management is constantly concerned about the overall profitability of the enterprise.
They are concerned about the ability of the firm to meet its short term as well as long term

25
obligation s to its creditors to ensure a reasonable return of its owner and secure optimum
utilization of the asserts of the firm.

Inter firm comparison:

Ratio analysis is also stepping stone to remedial methods. This is made possible due to inter-
firm comparison and comparison with industry averages. One of the popular techniques is to
compare the ratios of the firm with the industry averages. An inter firm comparison would
demonstrate the relative position of its competitors.

Trend Analysis:

Ratio analysis enables a firm to take the time dimension into account. In other words, whether
the financial position of as firm is improving or deteriorating over the years. This is made
possible using trend analysis. A significant of trend analysis of ratio lies in the fact that the
analyst can know the direction of moment. The present level may be satisfactorily, but the
trend may be declining one. Thus, the trend analysis is of great significance.

Basis of comparison:

The ratio analysis involves several types of comparison. They are Below: -

A comparison of present ratio with the past and expected future

Ratios for same firm.

A comparison of the ratios of the with those of similar firm or with industry averages at the
same point time. Such a comparison would provide considerable insight into a relative financial
condition and Performance of the firm.

Trend series or analysis is also one of the comparison. A Financial ratio over a period is
compared, it is known as trend the analysis should not simply determine the change, but more
important He should understand why the ratios have changed.

The other comparison may relate to comparison of items with a single year’s financial statement
of a firm comparison with standards or plans.

FORMS OF RATIO:

Since a ratio is a mathematical relationship between two or more variables / accounting

figures, such relationship can be expressed in different ways as follows

26
A) As a pure ratio:

For example, the equity share capital of a company is Rs 20,00,000 & the preference share
capital is Rs. 5,00,000, the ratio of equity share capital to preference share capital is 20,00,000:
5,00,000 or simply 4:1.

B) As a rate of times:

In the above case the equity share capital may also be described as 4 times that of
preference share capital. Similarly, the cash sales of a firm are

Rs. 12,00,000 & credit sales are Rs. 30,00,000. so, the ratio of credit sales to cash sales can be
described as 2.5 [30,00,000/12,00,000] or simply by saying that the credit sales are 2.5 times
that of cash sales.

C) As a percentage:

In such a case, one item may be expressed as a percentage of some other item. For
example, net sales of the firm are Rs.50,00,000 & the amount of the gross profit is Rs. 10,00,000,
then the gross profit may be described as 20% of sales [ 10,00,000/50,00,000]

STEPS IN RATIO ANALYSIS

The ratio analysis requires two steps as follows:

1) Calculation of ratio

2) Comparing the ratio with some predetermined standards. The standard ratio may be the past
ratio of the same firm or industry’s average ratio or a projected ratio or the ratio of the most
successful firm in the industry. In interpreting the ratio of a firm, the analyst cannot reach any
fruitful conclusion unless the calculated ratio is compared with some predetermined standard.
The importance of a correct standard is oblivious as the conclusion is going to be based on the
standard itself.

Pre-requisites to ratio analysis

To use the ratio analysis as device to make purposeful conclusions, there are certain pre-
requisites, which must be taken care of. It may be noted that these prerequisites are not
conditions for calculations for meaningful conclusions. The accounting figures are inactive in
them & can be used for any ratio but meaningful & correct interpretation & conclusion can be
arrived at only if the following points are well considered.

The dates of different financial statements from where data is taken must be same.

27
If possible, only audited financial statements should be considered, otherwise there must be
sufficient evidence that the data is correct.

Accounting policies followed by different firms must be same in case of cross section analysis
otherwise the results of the ratio analysis would be distorted.

One ratio may not throw light on any performance of the firm. Therefore, a group of ratios must
be preferred. This will be conductive to counter checks.

Finally, the analyst must find out that the two figures being used to calculate a ratio must be
related to each other, otherwise there is no purpose of calculating a ratio.

Based on financial statement

Accounting ratios express the relationship between figures taken from financial statements.
Figures may be taken from Balance Sheet, P& P A/C, or both. One-way of classification of ratios
is based upon the sources from which are taken.

1 Balance sheet ratio:

If the ratios are based on the figures of balance sheet, they are called Balance Sheet
Ratios. E.g. ratio of current assets to current liabilities or ratio of debt to equity. While
calculating these ratios, there is no need to refer to the Revenue statement. These ratios study
the relationship between the assets & the liabilities, of the concern. These ratios help to judge
the liquidity, solvency & capital structure of the concern. Balance sheet ratios are Current ratio,
Liquid ratio, and Proprietary ratio, Capital gearing ratio, Debt equity ratio, and Stock working
capital ratio.

2 Revenue ratios:

Ratio based on the figures from the revenue statement is called revenue statement ratios.
These ratios study the relationship between the profitability & the sales of the concern. Revenue
ratios are Gross profit ratio, Operating ratio, Expense ratio, Net profit ratio, Net operating profit
ratio, Stock turnover ratio.

3 Composite ratios:

These ratios indicate the relationship between two items, of which one is found in the
balance sheet & other in revenue statement.

There are two types of composite ratios-

28
Some composite ratios study the relationship between the profits & the investments of the
concern. E.g. return on capital employed, return on proprietor’s fund, return on equity capital
etc.

Other composite ratios e.g. debtor’s turnover ratios, creditors turnover ratios, dividend payout
ratios, & debt service ratios

Based on function

Accounting ratios can also be classified according to their functions in to liquidity ratios, leverage
ratios, activity ratios, profitability ratios & turnover ratios.

1 Liquidity ratios:

It shows the relationship between the current assets & current liabilities of the concern
e.g. liquid ratios & current ratios.

2 Leverage ratios:

It shows the relationship between proprietor’s funds & debts used in financing the assets
of the concern e.g. capital gearing ratios, debt equity ratios, &Proprietary ratios.

3 Activity ratios:

It shows relationship between the sales & the assets. It is also known as Turnover ratios &
productivity ratios e.g. stock turnover ratios, debtor’s turnover ratios.

4 Profitability ratios:

It shows the relationship between profits & sales e.g. operating ratios, gross profit ratios,
operating net profit ratios, expenses ratios

It shows the relationship between profit & investment e.g. return on investment, return on
equity capital.

5 Coverage ratios:

It shows the relationship between the profit on the one hand & the claims of the outsiders
to be paid out of such profit e.g. dividend payout ratios & debt service ratios.

Based on user:

29
1 Ratios for short-term creditors:

Current ratios, liquid ratios, stock working capital ratios

2 Ratios for the shareholders:

Return on proprietor’s fund, return on equity capital

3 Ratios for management:

Return on capital employed, turnover ratios, operating ratios, expenses ratios

4 Ratios for long-term creditors:

Debt equity ratios, return on capital employed, proprietor ratios.

Managerial use of ratio analysis:

1)Helps in Decision- making: Financial statement is prepared primarily for decision- making. But
the information provide in financial statements is not an end and no meaningful conclusion can
be drawn from these statements alone. Ratio analysis helps in making decision on the
information provide in these financial statements.

2) Helping in financial forecasting and Planning: Ratio analysis is of much help in financial
forecasting and planning. Planning is looking ahead, and the ratios calculated for many years
work as a guide for the future. Meaningful conclusions can be drawn for future from these
ratios. Thus, ratio analysis helps in forecasting and planning.

3) Helping in Communication: The financial strength and weaknesses of a firm are

communicated in a more easy and understandable manner using ratios. The information
contained in the financial statements is conveyed in a meaningful manner to the one for whom
it is meant. Thus, ratios help in communication and enhance the value of financial statement

4) Helps in co-ordination: Ratios even helps in co-ordination, which is of utmost importance in

effective business management. Better communication of the efficiency and weaknesses of an
enterprise results in better co- ordination in the enterprise.

5) Other uses: There are so many other uses of ratio analysis. It is an essential part of the
budgetary control and standard costing. Ratios are of immense importance in the analysis and
interpretations of financial statements as they bring out the strength and weakness of the firm.

(a) Utility of shareholders/investors: an investor in the company will like to assess the financial
position of the concern where he is going to invest. His first interest will be security of his

30
investment and then a return in the form of dividend or interest. For the3 first purpose he will
try to assess the value of fixed loans raised against them. The investor will feel satisfied only if
the concern as sufficient number of asserts. Long term solvency ratios, on the other hand, will be
useful to the investors in. ill Marking up his mind whether financial position of the concern
warrants further investment or not.

(b) Utility to Creditors: The creditors are or supplier’s extent Short-term credits to the concerns.
They are interested to know whether their payments at a specified time or not. The concerns
pay short-term Creditors out of its current assets. If the current assets are quite sufficient

to meet current liabilities then the creditors will not hesitate in extending Credit facilities.
Current and quick ratios will give an idea about the Current financial position of the concern.

(c) Utilities of Employees: The employees are also interest in the financial position of the
concern especially profitability. Their wage I increases, and amount of fringe benefits are
related to the volume of profits earn by the concern the employees make use of information
available, in financial statements. Various profitability ratios relating to gross profit, operating
profit, Net profit etc, enable employees to put forward their view point for the increase of wages
and other benefits.

(d)Utility to government: Government is interested to know the overall strength of the industry.
Various financial statements published by industrial units are used to calculate ratios for
determining the short- term, long- term and overall finance position of the concern. Profitability
indexes can also be prepared with the help of ratios. Government may base its future policies on
the bases of industrial information from various units. The ratios may use as indicators of overall
financial strength of public as well as private sector. In the absence of the reliable economic
information, government plans and polices may not prove successful.

Advantages of ratio analysis:

The various advantages of ratio analysis are given below:

It becomes easier to analysis.

(a) Liquidity (b) Solvency (c) profitability (d) Efficiency

It helps the management in evolution of the present health and

The future planning can be based on the parameters.

The efficient with which the firm is utilizing its various assets inGenerating sales revenue.

31
The ratio analysis helps in decision-making process.

The ratio analysis is also helps in security analysis.

The details of cumbersome set of numbers are reduced to easily

Interpretable numbers.

Limitations of ratio analysis

The various limitations of ratio analysis are given below:

A single ratio not cover much of sense., To make better interpretation many ratios must
calculated, which is likely to Confuse the analyst for interpretation.

Financial statements can be easily window dressed their figures. As a result, the correct picture
cannot be drawn up by the ratio analysis, although certain structural defects can be detected.

Comparison between two variables proves worth provide basis of Valuation is identical.

Ratios are computed based on past result. It does help properly to predict future, to prepare
budgets and estimates.

Purpose of ratio analysis

1. To identify aspects of a business’s performance to aid decision making

2. Quantitative process – may need to be supplemented by qualitative

Factors to get a complete picture.

3. 5 main areas: -

Liquidity: – the ability of the firm to pay its way

Investment/shareholders: – information to enable decisions to be made on the extent of the

risk and the earning potential of a business investment

Gearing: – information on the relationship between the exposure of the business to loans as
opposed to share capital

Profitability: – how effective the firm is at generating profits given sales and or its capital assets

Financial: – the rate at which the company sells its stock and the efficiency with which it uses its
assets
32
Role of ratio analysis

It is true that the technique of ratio analysis is not a creative technique in the sense that it
uses the same figure & information, which is already appearing in the financial statement. At the
same time, it is true that what can be achieved by the technique of ratio analysis cannot be
achieved by the mere preparation of financial statement.

Ratio analysis helps to appraise the firm in terms of their profitability & efficiency of
performance, either individually or in relation to those of other firms in the same industry. The
process of this appraisal is not complete until the ratio so computed can be compared with
something, as the ratio all by them do not mean anything. This comparison may be in the form
of intra firm comparison, inter firm comparison or comparison with standard ratios. Thus, proper
comparison of ratios may reveal where a firm is placed as compared with earlier period or in
comparison with the other firms in the same industry.

Introduction of ratio analysis

33
Ratio analysis is a powerful tool of financial analysis. It helps in making certain decision
calculation of more ratios does not serve any purpose. Unless several appropriate ratios are
analysed and interpreted.

A ratio is a simple arithmetical expression of the relationship of one number to another.

According to Wixom, Kelly and Bedford a ratio “is an expression of the quantitative relationship
between two numbers”.

Ratio Analysis is a widely used tool of financial analysis. A ratio is

Defined as the “indicated quotient of two mathematical expressions” and “a relationship

between two or more things”.

A ratio is used as an index or yardstick for evaluating the financial Position and performance
of the firms. The relationship between two accounting inures expressed mathematically, is
known as financial ratio. Ratio helps to summarize the large quantities of financial data and to
make qualitative Judgment about the firm’s financial position. A rational ratio analysis lies in the
fact that it makes related information comparable. A ratio may be expressed simply in one
number as the result of a comparison between two figures.

Ratio may be expressed in the following ways: -

In the pure ratio.

As a rate.

As a percentage.

Types of ratio’s:

The ratios are divided into 4 types. They are

Liquidity ratios

Leverage ratios

Activity ratios

Profitability ratios.

34
Liquidity ratios:

Liquidity means pre requisites for the survival of firm. The liquidity Ratio’s measures the ability of the
firm to meet its short applications and reflect the short term financial solvency of a firm. The ratios
which indicate the Liquidity of the firm are:

 Current Ratio: The current ratio is the ratio of total assets to total current liabilities. The
higher the current the larger number of rupees available per rupee of current liabilities. The,

Curren Assets

Current Ratio = ---------------------------------------

Current Liabilities

 more the firm’s ability to meet current obligation and the grater the safety of funds on
short term creditors.

(b) Quick Ratio: This ratio enables the relationship between quick assets and current liabilities.
The quick ratio is found out by dividing the total of the quickest asserts by total current liabilities

Quick assets

Quick Ratio = ---------------------------------------

Current liabilities

(c)Cash ratio: The relationship between cash and bank balance by current liabilities

Cash and Bank Balance

Cash ratio= -----------------------------------

Current Liabilities

35
2. Leverage Ratios:

The second category of the financial ratios is leverage ratios. This ratio is calculated from the
balance sheet items to determine the proportion of dept. in total financing. Leverage ratios are
calculated to a judge the financing position of the firm.

Debt Equity ratio:

This is calculated by dividing long term liabilities by shareholder fund.

long term liabilities

Debt Equity Ratio = --------------------------

Shareholder fund
Total debt means short and
long-term borrowings, financial institutions debentures/bonds, book borrowings, public deposits
and other interest-bearing Loans

(b). Proprietary Ratio:It shows the relationship between net worth and total assets.

Net worth

proprietary Ratio = ---------------------------------X 100

total assets

3. Activity Ratio:

Activity Ratios are concerned with measuring the efficiency in asset Management.
Sometimes these ratios are called efficiency ratios or asset Utilization ratios. Ratios involve a
relationship between sales and Assets. There are various types of activity ratios.

(a) Inventory Turnover Ratio: This ratio can be computed by dividing the cost of goods sold by
the average inventory.

36
 (b) Debtors Turnover ratio:The second major activity ratio is the debtor’s turnover Ratio. The
debtor’s turnover ratio is a test of the liquidity of the debtors of a firm. The debtor’s turnover
ratio is found out by dividing credit sales by average debtors.

Sales

Debtors turnover ratio = ------------------------------

Debtors

(c)Assets Turnover Ratio: A firm should manage its sales sufficiently to maximize its sales. The
relationship between the sales and assert is called assets turnover.

3. sales

Assets Turnover Ratio = ---------------------------

Total Assets

Profitability Ratio:

These ratios are determined on the bases of either sales or investments. Profitability ratios are
calculated to measure the operating efficiency of the company. Profitability ratios are two types:

Profitability and relation to sales.

Profitability in relation to investment.

Profitability and relation to sales: These ratios are based on the premise that a firm should earn
sufficient profit on each rupee of sales. In this, the ratios consist of Profit Margin. This profit
measures the relationship between profit andSales. There are two types of profit margins.

Gross profit: this is also known as gross margin. It is calculated by dividing gross profit by sales.
Thus

37
 Sales –Cost of goods sold

Gross profit = ---------------------------------------- x 100

Sales sales

(b) Net profit: This ratio is also known as net margin. This measures the relationship between
net profit and sales of a firm.

Profit after tax

Net profit Ratio = ------------------------- x 100

Sales

2. Profitability in relation to investment:

The profitability ratios can also be computed by relating the profit of a firm to investment.

(a) Return on Investment: It is also known as “overall profitability ratio”. It indicates earning
gained from investment. It shows relationship

Between Earnings before interest and taxes to Capital employed.

EBIT

Return on Investment = ------------------------------- x 100

Capital Employed

(b) Return on Equity: In this ratio, the earnings after taxes are related. To the market value of
total shareholders fund.

Profit after Tax

Return on Equity = ------------------------------

38 worth
Net
(c) Return on Assets: The profitability ratios are measured in terms of the relationship between
net profits and assets.

Profit after Taxes

Return on Asserts = --------------------------------

Total Asserts

GROSS PROFICT

It is calculated by dividing the gross margin by sales. This ratio shows the profits relative
to sales after three direct production costs are deducted. It may be used as an indicator
of the efficiency of the production operation and the relation between production costs
and selling price

Gross profit

Gross profit ratio = -----------------------------*100

Net sales

Table 5.1 Gross Profit

39
 Years Gross profit(in crores) Net sales(in crores) Gross profit ratio

2015-2016 223.12 1875.86 11.89%

2016-2017 216.20 1929.51 11.20%

2017-2018 230.58 2024.38 11.39%

2018-2019 321.89 2273.70 14.16%

2019-2020 225.34 2391.25 9.42%

3000

2500

2000

1500
Gross profit(in crores)
1000 Net sales(in crores)
Gross profit ratio
500

0
6 7 8 9 0
2 01 2 01 2 01 2 01 2 02
1 5- 1 6- 1 7- 1 8- 1 9-
20 20 20 20 20

Source – Annual Report

Interpretation:

40
From the above it is understood that the gross profit ratio of the company is quite fluctuating
during the final year 2012-2015 gross profit ratio is has been decreasing compared with financial
year 2015-2016 it indicates that sales has increased. In 2015 -16 the gross profit ratio decreased
compared with previous year as sales charges (room rents) have increased in the year 2016.

Net Profit ratio

Net Profit ratio is the ratio between net profit after taxes and net sales. It indicated what portion
of sales is left to the owner after operating expenses. Non-operating income such as interest on
investments, gain on sale of fixed assets and so one added to the operating Profit. Non-
operating expenses such as loss on sale of fixed assets and so one added to the operatingProfit.

Net profit

Net Profit Ratio = -----------------------------*100

Net sales

Table 5.2 Net Profit Ratio

Years Net profit(in crores) Net sales Net profit ratio

(in crores)
2015-2016 156.3 1875.86 8.33%

2016-2017 146.61 1929.51 7.60%

2017-2018 146.68 2024.38 7.24%

2018-2019 211.25 2273.50 9.29%

2019-2020 108.43 2391.25 4.53%

41
 3000

2500

2000

1500
Net profit(in crores)
1000 Net sales
Net profit ratio
500

0
6 7 8 9 0
2 01 2 01 2 01 2 01 2 02
1 5- 1 6- 1 7- 1 8- 1 9-
20 20 20 20 20

Source – Annual Report

Interpretation:

This ratio measures the company’s overall profitability. The year 2015 and year 2017 profit is
less comparing with other years because operating costs are increasing. In the year 2016 the
company has more profitability because the profit has increased due to the increase in income
from services. The net profit has decreased during the year 2017 as there in decrease in the rate of
room occupancy.

Expenses ratio

This ratio measures the relationship between various expenses and net sales. The main objective
of computing this ratio is to provide information about increase or decrease in expenses. It is
also variable for the purpose of finding out whether and to what extends expenses very as
between different trading periods. This is computed on the basis of following formula

Amount of expences

Expenses ratio = --------------------------------------------- *100

Net sales

42
Table 5.3 Expenses ratio

Years Amount expenses(in crores) Net sales(in crores) Expenses ratio

2015-2016 1701.67 1875.86 90.7%

2016-2017 1761.13 1929.51 91.27%

2017-2018 1873.02 2024.38 92.52%

2018-2019 2060.43 2273.50 90.62%

2019-2020 2219.77 2391.25 92.82%

3000

2500

2000

1500
Amount expenses(in
crores)
1000 Net sales(in crores)
Expenses ratio
500

0
6 7 8 9 0
2 01 2 01 2 01 2 01 2 02
1 5- 1 6- 1 7- 1 8- 1 9-
20 20 20 20 20

Source – Annual Report

Interpretation:

From the above it is understood that the expenses ratio of the company is quite fluctuating
during the final years 2012-2015. And again in the year 2015 2016 it has decreased and in the

43
year 2016-2017 there is an increase in the expenses ratio as there is decrease in the rate of
room occupancy which leads to increase in operating expenses.

Return on holders share fund:

This ratio measures the relationship between net profit and share holder‘s fund. It determines
the profitability of company from the perspective of share holders. This is computed on the basis
of following formula

Profit after tax

Return on share holders fund = ------------------------------------------*100
Share holders fund

Table 5.5 Return on Share Holders Fund Ratio

Year Profit after tax(in crores)

Profit after tax(in crores)
Return on share holders
fund ratio
2015-2016 156.3 80.75 1.93%
2016-2017 146.61 80.75 1.81%
2017-2018 146.68 80.75 1.81%
2018-2019 211.25 98.93 2.13%
2019-2020 108.43 98.93 1.10%

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 250

200

150

Profit after tax(in crores)

100 Profit after tax(in crores)
Return on share holders
50 fund ratio

0
6 7 8 9 0
2 01 2 01 2 01 2 01 2 02
1 5- 1 6- 1 7- 1 8- 1 9-
20 20 20 20 20

Source – Annual Report

Interpretation:

From the above it is understood that return on share holders fund ratio of the company is quite
satisfactory during the final year period. Because of net profit will be increased at the same time
share holders fund capital increased in year of 2016 comparing with the year 2017 .

2. Liquidity ratio
1. Current Ratio
Current ratio may be defined as the relationship between current assets and current liabilities.
This ratio also known as Working capital ratio is a measure of general liquidity and is most widely
used to make the analysis of a short-term financial position (or) liquidity of a firm.
Current Assets

Current Ratio =

Current liabilities

Table 5.6 Current Ratio

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 Year Cu current assets(in current liabilities(in crores) Current ratio
crores)

2015-2016 338.01 805.77 0.42

2016-2017 316.02 1153.43 0.27

2017-2018 1055.75 881.29 1.20

2018-2019 1130.01 1281.93 0.88

2019-2020 506.23 1392.59 0.36

1600
1400
1200
1000
800
Current assets(in crores)
600 Current liabilities(in
crores)
400 Current ratio
200
0

0 16 0 17 0 18 0 19 0 20
-2 -2 -2 -2 -2
15 16 17 18 19
20 20 20 20 20

Source – Annual Report

Interpretation

Current Ratio of 2:1 is considered as satisfactory for a firm. The company’s current ratio for the year
2012-13 is 1.28 and it has decreased to 0.27% and later on it has increased to 1.20% in the year 2014-15.
Therefore it has shown a downtrend to 0.88 in 2015-16 and 0.36% in 2016-17. Current Investment has
decreased during the year.

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Quick Ratio:

The ideal Quick Ratio of me: I am considered to be satisfactory. High Acid Test Ratio is an
indication that the firm has relatively better position to meet its current obligation in time. On
the other hand, a low value of quick ratio exhibiting that the firm's liquidity position is not good.

Quick Assets
Quick Ratio=
Current Liabilities

Table 5.7 Quick Ratio

Years Quick assets Quick liabilities Quick Ratio

(in crores) (in crores)

2015-2016 299.64 805.77 0.37

2016-2017 275.84 1153.43 0.24
2017-2018 1012.59 881.29 1.15
2018-2019 1084.93 1281.93 0.85
2019-2020 458.67 1392.59 0.33

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 1600
1400
1200
1000
800
Quick assets
600
Quick liabilities
400 Quick Ratio

200
0
6 7 8 9 0
2 01 2 01 2 01 2 01 2 02
1 5- 1 6- 1 7- 1 8- 1 9-
20 20 20 20 20

Source – Annual Report

Interpretation:

Standard quick ratio is 1:1. From the above it is understood that the Company’s quick ratio for the
year 2012-13 is 0.37 and it has decreased to 0.24 and later on it has increased in the year 2014-15.it has
decreased to 0.85% and0.33% in 2015-2016 &2016-2017. Investments, cash and short terms loans have
decreased during the year. Current liabilities are more than current assets.

3. Absolute Liquid Ratio:

The optimum value for this ratio should be one, i.e., 1: 2. It indicates that 50% worth absolute
liquid assets are considered adequate to pay the 100% worth current liabilities in time. If the
ratio is relatively lower than one, it represents that the company's day-to-day cash management
is poor. If the ratio is considerably more than one, the absolute liquid ratio represents enough
funds in the form of cash to meet its short-term.

Absolute liquid Assets

Absolute liquid Ratio=
Current Liabilities

Table 5.8 Absolute Liquid Ratio

Years Absolute liquid assetsQuick liabilities Absolute liquid Ratio

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 (in crores) (in crores)
2015-2016 48.96 805.77 0.06

2016-2017 43.17 1153.43 0.03

2017-2018 355.83 881.29 0.40

2018-2019 22.30 1281.93 0.02

2019-2020 21.7 1392.59 0.01

1600
1400
1200
1000
800
Absolute liquid assets
600
Quick liabilities
400 Absolute liquid Ratio

200
0
6 7 8 9 0
2 01 2 01 2 01 2 01 2 02
1 5- 1 6- 1 7- 1 8- 1 9-
20 20 20 20 20

Source – Annual Report

Interpretation

The ideal absolute liquid ratio is 0.1:1.It shows liquidity position of the company. But the above
table shows it is not satisfactory. Because the company cash and bank balances and marketable
securities has decreased in the year 2016 compared to 2017. As the performance of the
company is less than 1 in 2017, the company has no enough funds.

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Iii. Activity ratio (or) turnover ratio
1. Fixed asset turnover ratio

Fixed asset turnover is the ratio of sales on the profit and loss account to the value of fixed
assets on the balance sheet. It indicates how well the business is using its fixed assets to
generate sales. A declining ratio may indicate that the business is over invested in plant
equipment or other fixed assets.

Sales

Fixed asset turnover ratio = ------------------------------------

Fixed assets

Table 5.9 Fixed Assets Turnover Ratio

Years Sales (in crores) Net fixed assets(in crores)

Fixed assets Ratio

2015-2016 1875.86 2065.69 0.91

2016-2017 1929.51 2129.29 0.91

2017-2018 2024.38 2153.66 0.94

2018-2019 2273.70 2211.55 1.03

2019-2020 2391.25 5587.36 0.43

50
 100%
90%
80%
70%
60%
50%
Fixed assets Ratio
40% Net fixed assets(in crores)
30% Sales (in crores)
20%
10%
0%
6 7 8 9 0
2 01 2 01 2 01 2 01 2 02
1 5- 1 6- 1 7- 1 8- 1 9-
20 20 20 20 20

Source – Annual Report

Interpretation

Generally, a high fixed assets turnover ratio indicates better utilization of fixed assets and a low
ratio means inefficient or under-utilization of fixed assets. The company’s fixed assets turnover ratio
for the year 2012-13 is 0.91 and in the year (2014-2015), it has increased. There after the fixed assets
turnover ratio is good. Finally, that effected a huge increase in the ratio compared with the previous
year’s ratio.

PROPRIETARY RATIO

The proprietary ratio also known as the equity ratio is the proportion of shareholders
equity to total assets, and as such provides a rough estimate of the amount of capitalization
currently used to support a business.

Share holder fund

Proprietary ratio = -----------------------------------------

Total Assets

Table 5.10 Proprietary Index

Years Share holder funds Total

(in assets (in crores)Proprietary Ratio

51
 crores)
2015-2016 80.75 7226.22 0.01
2016-2017 80.75 6766.37 0.01
2017-2018 80.75 7198.38 0.01
2018-2019 98.93 7562.12 0.01
2019-2020 98.93 6093.59 0.02

8000
7000
6000
5000
Share holder funds (in
4000 crores)
3000 Total assets (in crores)
2000
Proprietary Ratio
1000
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

Source – Annual Report

Interpretation

From the above it is understood that the Proprietary ratio of the company is quite satisfactory
during the final year period. This ratio has been constant for the period from 2012-2013 to 2015-
2016 and has increased to 0.02.The performance of this ratio is satisfactory in this current year.

52
 FINDINGS
It was observed that the gross profit margin & net profit margin of THE TAJ GATEWAY HOTEL
PVT LTD, is in fluctuating trend, during the period of the study because of increasing operation
cost.
The net profit ratio of the company has been good during all the years.

The study results reveal that the current asset ratio of THE TAJ GATEWAY HOTEL PVT LTD, is
volatile.

The current liabilities are being volatile during the period of the study because of excessive
requirement of working capital for operations.

It was observed that the debt equity ratio of THE TAJ GATEWAY HOTEL PVT LTD, is in declining
trend. The reason is increase in share holders fund is much more than the long term liabilities.

The fixed assets turnover ratio of the company fluctuating throughout the period of the study.
The Ratio of the company is satisfactory

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 SUGGESTIONS
The company has to maintain the optimum liquidity position for future.

Based on the study it is recommended that the company needs to maintain the optimum
interest coverage for its debt capital in future also.

Increase the net sales by assigning the challenges task to the employees.

Utilize the current assets in appropriate manner.

Maintain long term liabilities at optimum level.

The company needs to improve its gross profit in order to increase its profitability.

The company needs to concentrate on improving its return on equity to maximize the
shareholders wealth.

The company needs to take necessary steps to maintain the current net profit ratio as it
is satisfactory.

54
 CONCLUSION
A study on ratio analysis in THE TAJ GATEWAY HOTEL PVT LTD has been carried out as a project the

study was conducted for a period of 2013-14 to 2017-2018. A thorough analysis was conducted

for a period & the study has been done with the given annual reports and other financial

reports.

This project of ratio analysis “evaluating the past performance and predicting the future
successes or failures of business organisation”. THE TAJ GATEWAY HOTEL PVT LTD, VIJAYAWADA
to determine the ratio liquidity, leverage, asset activity, profitability and performance of
company. THE TAJ GATEWAY HOTEL works having good position and maintains the standards
the good liquidity position so the company can able to meet is its liabilities and the company
profitability activity ratios performance is well

55
 BIBLOGRAPHY

Referred following tests and websites

I. M. Pandey, Financial management
Prasanna Chandra, Financial management
Sharma R.K Management of accountancy principals And Practice, KALYANI Publishers
Varma k k: “financial accounting for analysis “ excel books, new delhi

2 . Reports and manuals

Annual reports of the taj gateway hotel pvt limited Vijayawada

Website

www.Apgenco.com
www.Apgenco.gov .in
www.google.com

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