Analysis and Interpretation of Data

4.
ANALYSIS AND INTERPRETATION OF DATA
4.1-4.5: STATEMENT OF CHANGES IN WORKING CAPITAL

Working capital is defined as the difference between current assets and
current liabilities. A statement of changes in working capital is computed to
compare figures from two successive years.
THE GENERAL RULE

a) An increase in current asset will increases working capital
b) A decrease in the current asset will decreases working capital
c) An increase in current liabilities will decreases working capital
d) A decrease in current liabilities will increases working capital.
The change in the amount of any current asset or current liability in the current
balance sheet against the prior balance sheet results in an increase or reduction in
working capital. The difference is documented for each current asset and current
obligation separately.
If current assets are more in the current period than in the prior period, the impact is a
rise in working capital, which is reported in the increase column. If a current
obligation exceeds a previous liability in the current period, the impact is a fall in
working capital, which is reported in the decline column.
4.1 STATEMENT OF CHANGES IN WORKING CAPITAL
FOR THE YEAR 2016-17
in INR.crs.
Particulars 31/3/2016 31/3/2017 Increase Decrease

Current assets
closing stock 2914.74 3701.90 787.16
deposits 244.31 357.90 113.59
sundry debtors 2510.71 3948.0 1437.29
cash in hand 0.85 0.27 0.58
bank accounts 133.45 314.98 181.53
TDS A/C 479.54 0 479.54
value added tax A/C 269.31 193.1 76.21
A= total current assets 6552.37 8516.15
Current liabilities
duties & taxes 12.66 10.51 11.15
sundry creditors 11011.32 12608.76 1597.44
B= total current
liabilities 11023.32 12619.27
NET WORKING
CAPITAL(A-B) 4470.95 4103.12 2530.72 2162.89
Increase or decrease in
working capital 367.83 367.83
4470.95 4470.95 2530.72 253072
Source: balance sheet of JSW Steels
INTERPRETATION
The table above clearly indicates the decrease in working capital from
2020 to 2021. The net decrease in working capital is the result of comparing all
of the increases and decreases in the statement of changes in working capital.
The above table focuses on the fact that the increase in working capital is
Rs.367/-crs.

Current assets
closing stock 9270 10082 812
deposits 513 344 169
sundry debtors 3948 4692 744
cash in hand 0.44 1 0.56
bank accounts 568 481 87
TDS A/C 0 195 195
value added tax A/C 193.1 131 62.1
A= total current assets 14492.54 15926
Current liabilities
duties & taxes 34 352 318
sundry creditors 11604 13988 2384
B= total current liabilities 11638 14340
NET WORKING 2854.54 1586 1751.56 3020.1
CAPITAL(A-B)
Increase or decrease in 1268.54 1268.54

working capital
2854.54 2854.54 3020.1 3020.1
INTERPRETATION
The table above clearly indicates the rise in working capital from 2020 to
2021. The net rise in working capital is the result of comparing all of the
increases and decreases in the statement of changes in working capital. The
above table focuses on the fact that the increase in working capital is
Rs.1268.54/-crs.

Current assets
deposits 344 4737 4393
cash in hand 1 0.5 0.5
TDS A/C 195 184 11
value added tax A/C 48 117 129
A= total current assets 15843 22805.5
Current liabilities
NET WORKING
CAPITAL(A-B) 1503 9561.5 8189 70.5
working capital 8058.5 8058.5
9561.5 9561.5 8189 8189
INTERPRETATION
above table focuses on the fact that the increase in working capital is
Rs.8058.5/-crs.

Current assets
deposits 4840 1824 3016
cash in hand 1 1
TDS A/C 184 253 69
value added tax A/C 117 0 117
A= total current assets 22934 22830
Current liabilities
NET WORKING
CAPITAL(A-B) 9685 4783 7652 12555
working capital 4902 4902
9685 9685 12555 12555
INTERPRETATION
above table focuses on the fact that the increase in working capital is Rs.4902/-
crs.

Current assets
deposits 1824 10425 8601
cash in hand 1 0 1
TDS A/C 253 221 32
value added tax A/C 0 0
A= total current assets 22830 25296
Current liabilities
NET WORKING
CAPITAL(A-B) 4793 12609 15605 7789
working capital 7816 7816
12609 12609 15605 15605
INTERPRETATION
The table above clearly indicates the rise in working capital from 2020 to 2021.
The net rise in working capital is the result of comparing all of the increases and
decreases in the statement of changes in working capital. The above table
focuses on the fact that the increase in working capital is Rs.7816/- crs.
4.6 RATIO ANALYSIS

A ratio is a relationship expressed in mathematical terms between two
individual groups of data connected with each other in some logical manner.
Ratio analysis is widely used tool of financial analysis. This systematic method
helps to interpret the financial statement so that the strengths and weakness of a
firm as well as the historical performance and current financial condition can be
determined.
A ratio can be used as a yardstick for evaluating the financial position and
performance of a concern, because the absolute accounting data cannot provide
meaningful understanding and Interpretation. A ratio is the relationship between
two accounting items expressed mathematically. Ratio analysis helps the analyst
to make quantitative judgment with regard to concern's financial position and
performance.
Purpose of the ratio analysis

To study the short term solvency of the firm- liquidity of the firm.
To study the long term solvency of the firm- leverage position of the firm.
To interpret the profitability of the firm- profit earning capacity of the firm.
To identify the operating efficiency of the firm- turnover of the ratios.
STEPS INVOLVED IN RATIO ANALYSIS

STEP 1
Calculation of ratios from the information obtained from financial statements
according to the requirement of decision.
STEP 2
Compare the calculated ratios with pre-determined standard ratios. They may be
a past ratio of the same organization average ratio or a projected ratio or the
ratio of the most successful organization in the industry.
4.7 LIQUIDITY RATIO
4.7.1 CURRENT RATIO

Current ratio may be defined as a relationship between current assets and
current liabilities. It is a measure of general liquidity and is most widely used to
make the analysis of short term financial position of a firm.
 The ideal value of current ratio is 2:1
Current Ratio = Current Assets / Current Liabilities
Year Current Current Current

assets liabilities ratio
2016-17 21261 29511 0.72
2017-18 19253 25205 0.76
2018-19 33555 42008 0.79
2019-20 29375 35594 0.82
2020-21 35852 43299 0.82
Source: balance sheet of JSW Steel
ANALYSIS
From the above table, we can observed that current ratio in 2016-2017 it is 0.72,
in 2017-2018 it is 0.76, in 2018-2019 it is 0.79, in 2019-2020 it is 0.82, in 2020-
2021 it is 0.82. This is very lower than ideal ratio. The ideal value of current
ratio is 2:1
CHART NO: 4.1
CURRENT RATIO
CURRENT RATIO
0.84
0.82
0.8
0.78
0.76
0.74
0.72
0.7
0.68
0.66
2016-17 2017-18 2018-19 2019-20 2020-21
INTERPRETATION
The chart shows that current ratio in 2016-2017 it is 0.72, in 2017-2018 it is 0.76, in
2018-2019 it is 0.79, in 2019-2020 it is 0.82, in 2020-2021 it is 0.82. The current
ratio of all the above FIVE years is below the standard, so the organization can’t
meet its short term obligation. The company is not able to generate enough from
operations to pay for its current obligations with current assets.
4.7.2 LIQUID OR QUICK RATIO
The liquidity ratios are a result of dividing cash and other liquid assets by the
short term borrowings and current liabilities. They show the number of times
the short term debt obligations are covered by the cash and liquid assets. If the
value is greater than 1, it means the short term obligations are fully covered.
Liquidity refers to the ability of a concern to meet its current obligations and
when these become due.
 The ideal value of quick ration is 1:1.
Liquid Ratio = Liquid Assets / Current Liabilities
OR
Quick Ratio = Quick Assets / Quick Liabilities
Quick assets = Current assets – (stock + prepaid expenses)
Quick liabilities = Current liabilities – Bank overdraft
Year Quick Quick Quick Ratio

assets liabilities
2016-17 20012 24631 0.81
2017-18 9096 23033 0.39
2018-19 18786 35675 0.52
2019-20 19554 28781 0.67
2020-21 21367 41300 0.51
ANALYSIS
From the above table, we can observed that Liquid or quick ratio in 2016-2017
it is 0.81, in 2017-2018 it is 0.39, in 2018-2019 it is 0.52, in 2019-2020 it is
0.67, in 2020-2021 it is 0.51. Above all the value of that Liquid or quick ratio
is lower than standard form of absolute liquid ratio.
CHART NO: 4.2
LIQUID OR QUICK RATIO
QUICK RATIO
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2016-17 2017-18 2018-19 2019-20 2020-21
INTERPRETATION
The chart shows that that Liquid or quick ratio in 2016-2017 it is 0.81, in
2017-2018 it is 0.39, in 2018-2019 it is 0.52, in 2019-2020 it is 0.67, in 2020-
2021 it is 0.51. The Liquid or quick ratio of all the above three years is above
the standard, so the society can meet its short term obligation. The company is
able to generate enough from operations to pay for its current obligations with
current assets.
4.7.3 ABSOLUTE LIQUID RATIO
Absolute Liquid Assets include cash in hand and at bank and marketable
securities or temporary investments.
 The acceptable norm for this ratio is 50% or 0.5: 1 or 1: 2
Absolute Liquid Ratio = Absolute Liquid Assets / Current Liabilities
Year Absolute Liquid Current Absolute Liquid

Assets liabilities Ratio
2016-17 1012 29511 0.03
2017-18 763 25205 0.03
2018-19 5663 42008 0.13
2019-20 3968 35594 0.11
2020-21 11951 43299 0.27
ANALYSIS
From the above table, we can observed that Absolute Liquid Ratio in 2016-2017
0.11, in 2020-2021 it is 0.27.Above all the value of Absolute Liquid Ratio is
greater than standard form of absolute liquid ratio.
CHART NO: 4.3
ABSOLUTE LIQUID RATIO
ABSOLUTE LIQUID RATIO

0.3
0.25
0.2
0.15
0.1
0.05
0
2016-17
2017-18
2018-19
2019-20
2020-21
INTERPRETATION
The chart shows that Absolute quick ratio in 2016-2017 it is 0.03, in

2021 it is 0.27. The Absolute quick ratio of all the above three years is above the
standard, so the society can meet its short term obligation. The company is able
to generate enough from operations to pay for its current obligations with
current assets.
4.8 PROFITABILITY RATIOS
4.8.1 GROSS PROFIT RATIO
Gross profit is a financial metric used to assess a company's financial health and
business model by revealing the proportion of money left over from revenues
after accounting for the cost of goods sold (COGS).
It is a popular tool to evaluate the operational performance of the business.
Gross profit ratio = (Gross profit / Net sales) × 100
Year Gross profit Net sales Gross profit Gross profit

ratio ratio (in
percentage)
2016-17 5131 56913 0.09 9.01%
2017-18 7309 66234 0.11 11.03%
2018-19 11198 84757 0.13 13.21%
2019-20 3908 72610 0.05 5.37%
2020-21 12097 79839 0.15 15.15%

ANALYSIS
From the above table, we can observed Gross profit ratio in 2016-2017 it is
9.01%, in 2017-2018 it is increased to 11.03%, in 2018-2019 it is increase to
13.21%, in 2019-2020 it is decreased to 5.37% and in 2020-2021 increased to
15.15%.
There is no norm or standard to interpret gross profit ratio (GP ratio). Generally,
a higher ratio is considered better.
CHART NO: 4.4
GROSS PROFIT RATIO

GROSS PROFIT RATIO
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2016-17 2017-18 2018-19 2019-20 2020-21
INTERPRETATION
The chart shows that Gross profit ratio in 2016-2017 it is 9.01%, in 2017-2018 it
is increased to 11.03%, in 2018-2019 it is increase to 13.21%, in 2019-2020 it is
decreased to 5.37% and in 2020-2021 increased to 15.15%.
The ratio can be used to test the business condition by comparing it with past
years ratio. The gross profit ratio from the chart, over the past five years is the
indication that there is slight improvement consecutively in this firm.
4.8.2 OPERATING PROFIT RATIO
Operating profit ratio is a profitability ratio that measures what
percentage of total revenues is made up by operating income. This ratio shows
what proportion of revenues is available to cover non-operating costs like
interest expense. This ratio is important to both creditors and investors because it
helps show how strong and profitable a company's operations are.
Operating profit ratio = (Operating profit / Net sales) × 100
Operating profit= Net sales - (Cost of goods sold + Administrative and

office expenses + Selling and distribution exp.)
OR
Operating profit = Net sales - Operating cost
A higher operating margin is more favorable compared with a lower ratio

because this shows that the company is making enough money from its ongoing
operations to pay for its variable costs as well as its fixed costs.
Year Operating Net sales Operating Operating

profit profit ratio profit ratio(in
percentage)
2016-17 10927 56913 0.19 19.19%
2017-18 13852 66234 0.20 20.91%
2018-19 18844 84757 0.22 22.23%
2019-20 12301 72610 0.16 16.94%
2020-21 19455 79839 0.24 21.36%

Source: balance sheet of Ambica motors
ANALYSIS
From the above table, we can observed operating profit ratio in 2016-2017 it is
21.36%.
A higher operating margin is more favorable compared with a lower ratio.
CHART NO: 4.5
OPERATING PROFIT RATIO
OPERATING PROFIT RATIO
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2016-17
2017-18
2018-19
2019-20
2020-21
INTERPRETATION
The chart shows that operating profit ratio in 2016-2017 it is 19.19%, in 2017-
2018 it is increased to 20.91%, in 2018-2019 it is increase to 22.23%, in 2019-
2020 it is decreased to 16.94% and in 2020-2021 increased to 21.36%. A higher
operating margin is more favorable compared with a lower ratio. The graph
shows that last five years operating profit ratio is higher than it’s
predecessor year ratio. Except the pandemic year and the year next to that.
4.8.3 NET PROFIT RATIO
It is the ratio that shows relationship between net profit after tax and net
sales. It is computed by dividing the net profit (after tax) by net sales. The
measure is commonly reported on a trend line, to judge performance over time.
It is also used to compare the results of a business with its competitors.

Net profit is not an indicator of cash flows, since net profit incorporates a
number of non-cash expenses, such as accrued expenses, amortization, and
depreciation.
The formula for the net profit ratio is to divide net profit by net sales, and then
multiply by 100. The formula is:
Net profit ratio = (Net profit / Net sales) x 100
Year Net Profit Net sales Net profit Net profit

ratio ratio x 100
2016-17 3577 56913 0.06 6.28%
2017-18 4625 66234 0.06 6.98%
2018-19 7524 84757 0.08 8.87%
2019-20 3919 72610 0.05 5.39%
2020-21 7873 79839 0.09 9.86%

ANALYSIS
From the above table, we can observed Net profit ratio in 2016-2017 it is
9.86%.
CHART NO: 4.6
NET PROFIT RATIO

NET PROFIT RATIO
10.00%
9.00%
8.00%
7.00%
6.00%
Axis Title 5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2016-17 2017-18 2018-19 2019-20 2020-21
INTERPRETATION
The chart shows that net profit ratio in in 2016-2017 it is 6.28%, in 2017-2018 it
is increased to 6.98%, in 2018-2019 it is increase to 8.87%, in 2019-2020 it is
decreased to 5.39% and in 2020-2021 increased to 9.86%.A higher net profit
ratio is more favorable compared with a lower ratio. The graph shows that last
year net profit ratio is higher than last year. So it is satisfactory.
4.9 ACTIVITY RATIOS
4.9.1 INVENTORY TURNOVER RATIO

The Inventory turnover is a measure of the number of times inventory is
sold or used in a time period such as a year. The equation for inventory turnover
equals the cost of goods sold or net sales divided by the average inventory.
Inventory turnover ratio = Cost of goods sold / Average inventory
Usually, a higher inventory turnover ratio is preferred, as it indicates that more

sales are being generated given a certain amount of inventory.
Sometimes a very high inventory ratio could result in lost sales, as there is not
enough inventory to meet demand. It is always important to compare the
inventory turnover ratio to the industry benchmark to asses if a company is
successfully managing its inventory.
Year cost of goods sold average inventory Inventory turnover

ratio
2016-17 29122 8006 3.63
2017-18 38730 9676 4.00
2018-19 49612 10340 4.79
2019-20 41569 10219 4.06
2020-21 41986 10517 3.9

ANALYSIS
From the above table, we can observed Inventory turnover ratio in 2016-2017 it
is 3.63, in 2017-2018 it is 4.00, in 2018-2019 it is 4.79, in 2019-2020 it is 4.06,
in 2020-2021 it is 3.9. Thou the level are satisfactory but it’s evident that there
is a drop in 2021.
CHART NO: 4.7
INVENTORY TURNOVER RATIO

INVENTORY TURNOVER RATIO
5
4.5
4
3.5
3
2.5
Axis Title 2
1.5
1
0.5
0
2016-17
2017-18
2018-19
2019-20
2020-21
INTERPRETATION
The chart shows that inventory turnover ratio in 2016-2017 it is 3.63, in 2017-
2018 it is 4.00, in 2018-2019 it is 4.79, in 2019-2020 it is 4.06, in 2020-2021 it
is 3.9.A higher inventory turnover ratio is more favorable compared with a
lower ratio. The graph shows that last year 2021 turnover have drop to 4.06 to
3.9.
4.9.2 FIXED ASSETS TURNOVER RATIO
Fixed-asset turnover is the ratio of sales to the value of fixed assets. It
indicates how well the business is using its fixed assets to generate sales. This
ratio measures the efficiency with which a firm is utilizing its fixed assets in
generating sales.
Fixed assets turnover ratio = Net sales / Fixed assets (Net)
Year Net sales fixed assets fixed assets

turnover ratio
2016-17 56913 50215 1.13
2017-18 66234 49503 1.33
2018-19 84757 49245 1.72
2019-20 72610 46117 1.57
2020-21 79839 46167 1.72

ANALYSIS
From the above table, we can observed Fixed-asset turnover ratio in 2016-2017
1.57, in 2020-2021 it is 1.72.
CHART NO: 4.8
FIXED ASSETS TURNOVER RATIO

FIXED ASSETS TURNOVER RATIO
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2016-17 2017-18 2018-19 2019-20 2020-21
INTERPRETATION
The chart shows that Fixed-asset turnover ratio in 2016-2017 it is 1.13, in 2017-
2018 it is 1.33, in 2018-2019 it is 1.72, in 2019-2020 it is 1.57, in 2020-2021 it
is 1.72.A higher Fixed-asset turnover ratio is more favorable compared with a
lower ratio. Analysis of fixed assets turnover ratio reveals that it is increasing in
the last year signifying that there is an improvement in the utilization of
resources, so it is satisfactory.
4.9.3 CURRENT ASSETS TURNOVER RATIO
Current assets turnover ratio is the relationship between sales or cost of

goods sold and current assets employed in the business. This ratio measures the
efficiency with which a firm is utilizing its current assets in generating sales.
Current assets turnover ratio = (Net sales / Current asset)
Year Net sales Current assets Current assets

turnover ratio
2016-17 56913 21261 2.67
2017-18 66234 19253 3.44
2018-19 84757 33555 2.52
2019-20 72610 29375 2.47
2020-21 79839 35852 2.22

ANALYSIS
From the above table, we can observed current asset turnover ratio in 2016-2017
2.47, in 2020-2021 it is 2.22.
CHART NO: 4.9
CURRENT ASSETS TURNOVER RATIO

CURRENT ASSETS TURNOVER RATIO
3.5
2.5
1.5
0.5
0
2016-17 2017-18 2018-19 2019-20 2020-21
INTERPRETATION
The chart shows that current asset turnover ratio in in 2016-2017 it is 2.67, in
2021 it is 2.22. A higher ratio is always more favorable. Higher turnover ratios
mean the company is using its assets more efficiently. This chart shows that the
company isn't using its assets efficiently.
4.9.4 WORKING CAPITAL TURNOVER RATIO
The working capital turnover ratio is also referred to as net sales to
working capital. It indicates a company's effectiveness in using its working
capital. The working capital turnover ratio is calculated as follows.
A high working capital turnover ratio shows a company is running
smoothly and has limited need for additional funding. Money is coming in and
flowing out on a regular basis, giving the business flexibility to spend capital on
expansion or inventory. A high ratio may also give the business a competitive
edge over similar companies.
However, an extremely high ratio, typically over 80%, may indicate a
business does not have enough capital supporting its sales growth. Therefore,
the company may become insolvent in the near future.
Working capital turnover ratio = Sales / Working capital

Year Sales Working capital Working
capital
turnover ratio
2016-17 56913 8250 6.89
2017-18 66234 5952 11.12
2018-19 84757 8453 10.02
2019-20 72610 6219 11.67
2020-21 79839 7447 10.72

ANALYSIS
From the above table, we can observed that working capital turnover ratio in
2016-2017 it is 6.89, in 2017-2018 it is 11.12, in 2018-2019 it is 10.02, in
2019-2020 it is 11.67, in 2020-2021 it is 10.72.
CHART NO: 4.10
WORKING CAPITAL TURNOVER RATIO

Working Capital Turnover Ratio
12
10
0
2016-17 2017-18 2018-19 2019-20 2020-21
INTERPRETATION
The chart shows that working capital turnover ratio in From the above table, we
can observed that working capital turnover ratio in 2016-2017 it is 6.89, in
2020-2021 it is 10.72.A high ratio shows that this business is not investing in
too many accounts receivable (AR) and inventory assets for supporting its sales.
This chart shows that the company is using its working capital efficiently, so it
isn‘t satisfactory.
5. FINDINGS, SUGGESTIONS & CONCLUSION
5.1 FINDINGS
 The decrease in working capital from 2026 to 2017. The net decrease in
working capital is the result of comparing all of the increases and decreases
in the statement of changes in working capital. The above table focuses on
the fact that the increase in working capital is Rs.367/-crs.
 The rise in working capital from 2017 to 2018. The net rise in working
capital is the result of comparing all of the increases and decreases in the
statement of changes in working capital. The above table focuses on the fact
that the increase in working capital is Rs.1268.54/-crs.
that the increase in working capital is Rs.8058.5/-crs.
that the increase in working capital is Rs.4902/- crs.
 the rise in working capital from 2020 to 2021. The net rise in working capital
is the result of comparing all of the increases and decreases in the statement
of changes in working capital. The above table focuses on the fact that the
increase in working capital is Rs.7816/- crs.
 The chart shows that current ratio in 2016-2017 it is 0.72, in 2017-2018 it is

0.76, in 2018-2019 it is 0.79, in 2019-2020 it is 0.82, in 2020-2021 it is 0.82.
The current ratio of all the above FIVE years is below the standard, so the
organization can’t meet its short term obligation. The company is not able to
generate enough from operations to pay for its current obligations with current
assets.
 From the above table, we can observed that Liquid or quick ratio in 2016-
2017 it is 0.81, in 2017-2018 it is 0.39, in 2018-2019 it is 0.52, in 2019-
2020 it is 0.67, in 2020-2021 it is 0.51. Above all the value of that Liquid
or quick ratio is lower than standard form of absolute liquid ratio.
 The chart shows that Absolute quick ratio in 2016-2017 it is 0.03, in 2017-
2018 it is 0.03, in 2018-2019 it is 0.13, in 2019-2020 it is 0.11, in 2020-2021
it is 0.27. The Absolute quick ratio of all the above three years is above the
standard, so the society can meet its short term obligation. The company is
able to generate enough from operations to pay for its current obligations
with current assets.
 The chart shows that Gross profit ratio in 2016-2017 it is 9.01%, in 2017-
2018 it is increased to 11.03%, in 2018-2019 it is increase to 13.21%, in
2019-2020 it is decreased to 5.37% and in 2020-2021 increased to 15.15%.
 The ratio can be used to test the business condition by comparing it with past
years ratio. The gross profit ratio from the chart, over the past five years is
the indication that there is slight improvement consecutively in this firm.
 The chart shows that operating profit ratio in 2016-2017 it is 19.19%, in
2017-2018 it is increased to 20.91%, in 2018-2019 it is increase to 22.23%,
in 2019-2020 it is decreased to 16.94% and in 2020-2021 increased to
21.36%. A higher operating margin is more favorable compared with a lower
ratio. The graph shows that last five years operating profit ratio is higher
than it’s predecessor year ratio. Except the pandemic year and the year next
to that.
 The chart shows that net profit ratio in in 2016-2017 it is 6.28%, in 2017-
2018 it is increased to 6.98%, in 2018-2019 it is increase to 8.87%, in 2019-
2020 it is decreased to 5.39% and in 2020-2021 increased to 9.86%.A higher
net profit ratio is more favorable compared with a lower ratio. The graph
shows that last year net profit ratio is higher than last year. So it is
satisfactory.
 The chart shows that inventory turnover ratio in 2016-2017 it is 3.63, in
2020-2021 it is 3.9.A higher inventory turnover ratio is more favorable
compared with a lower ratio. The graph shows that last year 2021 turnover
have drop to 4.06 to 3.9.
 The chart shows that Fixed-asset turnover ratio in 2016-2017 it is 1.13, in
2020-2021 it is 1.72.A higher Fixed-asset turnover ratio is more favorable
compared with a lower ratio. Analysis of fixed assets turnover ratio reveals
that it is increasing in the last year signifying that there is an improvement in
the utilization of resources, so it is satisfactory.
 The chart shows that current asset turnover ratio in in 2016-2017 it is 2.67,
in 2017-2018 it is 3.44, in 2018-2019 it is 2.52, in 2019-2020 it is 2.47, in
2020-2021 it is 2.22. A higher ratio is always more favorable. Higher
turnover ratios mean the company is using its assets more efficiently. This
chart shows that the company isn't using its assets efficiently.
 The chart shows that working capital turnover ratio in From the above table,
we can observed that working capital turnover ratio in 2016-2017 it is 6.89,
in 2017-2018 it is 11.12, in 2018-2019 it is 10.02, in 2019-2020 it is 11.67,
in 2020-2021 it is 10.72.A high ratio shows that this business is not investing
in too many accounts receivable (AR) and inventory assets for supporting its
sales. This chart shows that the company is using its working capital
efficiently, so it is satisfactory.
5.2 SUGGESTIONS
 The company should work on its curren ratio, because The company is not
able to generate enough from operations to pay for its current obligations with
current assets.
 And the company should improve its liquidity position. The company is
able to generate enough from operations to pay for its current obligations
with current assets.
 As the company has seen a fall in inventory turnover in the year 2020-2021
it must focus on improving the inventory turnover to grow.
 From the inference of current assets turnover ratio we can infer that the
company isn't using its assets efficiently.
5.3 CONCLUSION
The research on working capital management at JSW Steel ltd. provides a

perspective on examining the performance of the society's working capital
management by analyzing financial data using ratio analysis.
During the research period, there were a few ups and downs in the working capital
and ratio analysis, which would affect the organization's operations, particularly
during the pandemic year 2019-2020. All of the statistics have dropped, and the firm,
in particular, JSW Steel Ltd., has demonstrated a considerable recovery from the
pandemic disruption. However, it is recognized that the overall financial status is
favorable. The utilization of resources has been extremely poor. The firm must take
the required actions to maximize the use of current assets in order to increase
profitability. Profitability is expected to increase over the next few years.
Based on the research and interpretation, we attempted to provide my findings and

recommendations for the firm to the best of our ability.
BIBLIOGRAPHY
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4.

ANALYSIS AND INTERPRETATION OF DATA

4.1-4.5: STATEMENT OF CHANGES IN WORKING CAPITAL

THE GENERAL RULE

Particulars 31/3/2016 31/3/2017 Increase Decrease

Particulars 31/3/2017 31/3/2018 Increase Decrease

Increase or decrease in 1268.54 1268.54

Particulars 31/3/2018 31/3/2019 Increase Decrease

Particulars 31/3/2019 31/3/2020 Increase Decrease

Particulars 31/3/2020 31/3/2021 Increase Decrease

4.6 RATIO ANALYSIS

Purpose of the ratio analysis

STEPS INVOLVED IN RATIO ANALYSIS

4.7.1 CURRENT RATIO

Current Ratio = Current Assets / Current Liabilities

Year Current Current Current

Liquid Ratio = Liquid Assets / Current Liabilities

Quick Ratio = Quick Assets / Quick Liabilities

Quick assets = Current assets – (stock + prepaid expenses)

Quick liabilities = Current liabilities – Bank overdraft

Year Quick Quick Quick Ratio

 The acceptable norm for this ratio is 50% or 0.5: 1 or 1: 2

Absolute Liquid Ratio = Absolute Liquid Assets / Current Liabilities

Year Absolute Liquid Current Absolute Liquid

ABSOLUTE LIQUID RATIO

ABSOLUTE LIQUID RATIO

The chart shows that Absolute quick ratio in 2016-2017 it is 0.03, in

It is a popular tool to evaluate the operational performance of the business.

Gross profit ratio = (Gross profit / Net sales) × 100

Year Gross profit Net sales Gross profit Gross profit

2016-17 5131 56913 0.09 9.01%

2017-18 7309 66234 0.11 11.03%

2018-19 11198 84757 0.13 13.21%

2019-20 3908 72610 0.05 5.37%

2020-21 12097 79839 0.15 15.15%

GROSS PROFIT RATIO

Operating profit ratio = (Operating profit / Net sales) × 100

Operating profit= Net sales - (Cost of goods sold + Administrative and

Operating profit = Net sales - Operating cost

A higher operating margin is more favorable compared with a lower ratio

Year Operating Net sales Operating Operating

2016-17 10927 56913 0.19 19.19%

2017-18 13852 66234 0.20 20.91%

2018-19 18844 84757 0.22 22.23%

2019-20 12301 72610 0.16 16.94%

2020-21 19455 79839 0.24 21.36%

It is also used to compare the results of a business with its competitors.

Net profit ratio = (Net profit / Net sales) x 100

Year Net Profit Net sales Net profit Net profit

2016-17 3577 56913 0.06 6.28%

2017-18 4625 66234 0.06 6.98%

2018-19 7524 84757 0.08 8.87%

2019-20 3919 72610 0.05 5.39%

2020-21 7873 79839 0.09 9.86%

NET PROFIT RATIO

4.9.1 INVENTORY TURNOVER RATIO

Inventory turnover ratio = Cost of goods sold / Average inventory

Usually, a higher inventory turnover ratio is preferred, as it indicates that more

Year cost of goods sold average inventory Inventory turnover

2016-17 29122 8006 3.63

2017-18 38730 9676 4.00

2018-19 49612 10340 4.79

2019-20 41569 10219 4.06