FINANCE DEPARTMENT

 Finance Department is the part of an organization that is responsible for

acquiring funds for the firm, managing funds within the organization and planning
for the expenditure of funds on various assets. It is the part of an organization
that ensures efficient financial management and financial control necessary to
support all business activities

 The finance team drives our growth platforms, supports our operational pillars,
leverages our competitive advantage and always delivers.

 We support sound business decision-making and innovation planning. Of course,

they also help optimize our growth, cash flow and return to shareholders. We’re
true change agents – aiming for long-term value creation.

Figure 1 structure of finance department

 STATEMENT OF PROFIT & LOSS

NO. PARTICULARS YEAR ENDED ON YEAR ENDED 31

31 DEC 2019 DEC 2020
(IN CR) (IN CR)
A INCOME
SALE OF PRODUCTS 12,295.27 13,290.16
Other Operating Revenues 0 0

1 REVENUE FROM OPERATIONS 12,295.27 13,290.16

Other Income 246.88 145.85
TOTAL INCOME 12,615.78 13,495.88
B EXPENSES
1 Cost Of Materials Consumed 5,150.30 5,554.24
2 Changes In Inventories Of FG,WIP -144.19 -69.33
And Stock-In Trade
4 Employees Benefits Expense 1,258.17 1,500.95
`5 Finance Cost 129.12 164.18
6 Depreciation And Amortization 370.15 370.38
7 Other Expenses 2,936.05 2,959.70
TOTAL EXPENSES 9,942.29 10,683.09

C PROFIT BEFORE TAX (A-B) 2,673.49 2,812.79

D Tax Expense 705.05 730.36
E PROFIT AFTER TAX (C-D) 1,968.44 2,082.43

FINANCIAL RATIOS
 1) NET PROFIT RATIO

It is a measure of profitability. It is calculated by finding the net profit as a % of the

revenue.

NET PROFIT RATIO= NET PROFIT*100/SALES

 1,968.44/12,295.27= 16%
1) OPERATING RATIO

It is company’s operating expense as a percentage of revenue.

OPERATING RATIO= OPERATING EXPENSE*100/SALES

 5778*100/7461=77.44%

2) CURRENT RATIO

It is a liquidity ratio that measures a company’s ability to pay short term

obligations or those due within a year.

CURRENT RATIO=CURRENT ASSETS/CURRENT LIABILITIES

 4185.08/2492.55 = 1.6

4) QUICK RATIO

It is a liquidity ratio, which measures the ability of a company to use its near cash or
quick assets to extinguish its current liabilities immediately.

QUICK RATIO=CURRENT ASSETS-INVENTORY/CURRENT LIABILITIES

 4185.08-1416.48/2492.55 = 1.11

3) DEBT EQUITY RATIO

It is a measure of relative contribution of creditors and shareholders or owners in the
capital employed in business.

DEBT EQUITY RATIO=LONG TERM DEBTS/EQUITY

 31.72/133.65 = 0.2

6) RETURN ON CAPITAL EMPLOYED

Return on capital employed is calculated by dividing net profit or EBIT by employed

capital.

RETURN ON CAPITAL EMPLOYED=EBIT/TOTAL ASSETS-TOTAL CURRENT

LIABILITIES

 2812.79/5321.28-2442.54 = 0.9

7) NET WORKING CAPITAL

Net working capital is the difference between a company’s current assets and current
liabilities.

NET WORKING CAPITAL=CURRENT ASSETS-CURRENT LIABILITIES

 3462.14 – 2442.54 = 1019.6

8) ASSET TURNOVER RATIO

The asset turnover ratio measures the value of a company’s sales or revenue relative to
the value of assets.

ASSET TURNOVER RATIO=NET SALES/TOTAL AVERAGE SALES

AVERAGE SALES=CURRENT YEAR SALES+PREVIOUS YEAR SALES/2

 13290.16/12792.68 = 1.03

9) STOCK TURNOVER RATIO

It indicates the relationship between “cost of goods sold” and “average inventory”.

STOCK TURNOVER RATIO=NET SALES/AVERAGE INVENTORY

 13350/1349.7 = 9.8

10) RETURN ON ASSET:

Return on assets is an indicator of how profitable a company is relative to its total

assets. RETURN ON ASSET=PROFIT AFTER TAX/ TOTAL ASSET

 2082.43/7899.73 = 0.26