ANALYSIS AND INTERPRETATION RATIO ANALYSIS

Ratio analysis is the quantitative interpretation of the company’s financial performance. It

provides valuable information about the organization’s profitability, solvency, efficiency and
liquidity positions as represented by the financial statements. It is one of the most important
financial tools, which has come to be used very frequently for analyzing the financial
strengths and weaknesses of an enterprise. Ratio analysis is the process of determining and
presenting in arithmetical terms the relationship between figures and groups of figures drawn
from these statements.

Ratio analysis is mainly performed by external analysts as financial statements are the
primary source of information for external analysts. The analysts very much rely on the
current and past financial statements in order to obtain important data for analyzing financial
performance of the company. The data or information thus obtained during the analysis is
helpful in determining whether the financial position of a company is improving or
deteriorating.

DEFINITION OF RATIO ANALYSIS

A Ratios is defining as “the indicated quotient of two mathematical expression” and as “the
relation between two or more things”. From the researcher’s point of view, ratio can be
defined as a mathematical expression that has a relationship between two or more accounting
figures, which makes the interpretation of financial statements meaningful to the users.

SIGNIFICANCE OF USING RATIO ANALYSIS

The significance of a ratio can only be truly appreciated when:

• It is compared with other ratio in the same set of financial information.

• It is compared with the same ratios in previous financial statement.

• It is compared with the standard of performance. Such a standard may be either the ratio
which represents the typical performance of the trade or industry, or the ratio which
represents the target set by management as desirable for the business.
CLASSIFICATION OF RATIO:

1. SHORT-TERM SOLVENCY RATIOS:

• Current ratio
• Quick ratio
• Inventory turnover ratio
• Debtors turnover ratio

2. LONG-TERM SOLVENCY RATIOS:

• Fixed asset ratio
• Proprietary ratio
• Debt equity ratio
• Solvency ratio

3. PROFITABILITY RATIO:
• Gross profit ratio
• Operating expense ratio
• Operating profit ratio
• Net profit ratio

DATA ANALYSIS AND INTERPRATATION:

1. SHORT-TERM SOLVENCY RATIO:

A financial ratio that is intended to provide information about a firm’s solvency or

liquidity over the short run, i.e., its ability to meet short-term requirements for payment
of obligations without undue stress. Mainly, short-term liquidity ratios focus on current
assets and current liabilities. These ratios concern short-term creditors, in their attempt to
 ensure a borrowing firm is able to meet its short-term obligations (loans, bills, etc.).
Short-term solvency ratios are also known as short-term liquidity ratios.
Current ratio: The current ratio is a measure of a company’s ability to pay off the
obligations within the next twelve months. This ratio is used by creditors to evaluate
whether a company can be offered short term debts. It also provides information about
the company’s operating cycle. It is also popularly known as Working capital ratio. It is
obtained by dividing the current assets with current liabilities.

Current ratio is calculated as follows: Current ratio = Current Assets / Current

Liabilities

CURRENT RATIO

YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO

Mar-12 423.68 663.89 0.638178011

Mar-13 364.53 652.57 0.55860674

Mar-14 670.13 825.91 0.811383807

Mar-15 554.86 966.15 0.574300057

Mar-16 581.98 1172.37 0.496413248

Mar-17 731.47 1169.99 0.625193378

Mar-18 901.63 1356.7 0.664575809

Mar-19 1308.59 1777.12 0.736354326

Mar-20 1266.48 1907.62 0.663905809

Mar-21 1768.22 2447.49 0.722462605

TOTAL CURRENT RATIO 6.49137379

AVERAGE CURRENT RATIO 0.649137379

 CURRENT RATIO
0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

INTERPRATATION:

shows that average of current ratio is which representation that the company has performed
best

Quick ratio:

Quick ratio is also known as Acid test ratio is used to determine whether a company or a
business has enough liquid assets which are able to be instantly converted into cash to meet
short term dues. It is calculated by dividing the liquid current assets by the current liabilities.

It is represented as Quick Ratio = (Cash + Marketable securities + Accounts receivable) /

Current liabilities

QUICK RATIO
CURRENT
CURRENT CURRENT QUICK
YEAR INVENTORY ASSETS -
ASSETS LIABILITIES RATIO
INVENTORY
Mar-
12 423.68 185.89 237.79 663.89 0.358176806
Mar- 364.53 181.6 182.93 652.57 0.280322418
13
Mar-
14 670.13 213.87 456.26 825.91 0.552433074
Mar-
15 554.86 350.79 204.07 966.15 0.21121979
Mar-
16 518.98 359.97 159.01 1172.37 0.135631243
Mar-
17 713.47 315.67 397.8 1169.99 0.340002906
Mar-
18 901.63 418.33 483.3 1356.7 0.356232034
Mar-
19 1308.59 672.98 635.61 1777.12 0.35766296
Mar-
20 1266.48 679.06 587.42 1907.62 0.307933446
Mar-
21 1768.22 1066.27 701.95 2447.49 0.286804032
TOTAL QUICK RATIO 3.186418708
AVERAGE QUICK RATIO 0.318641871

QUICK RATIO
0.6

0.5

0.4

0.3

0.2

0.1

0
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
INTERPRETATION:

shows that average of quick ratio is which representation that the company has performed
best

Debtors turnover ratio:

The accounts receivable turnover ratio, also known as the debtor’s turnover ratio, is an
efficiency ratio that measures how efficiently a company is collecting revenue – and by
extension, how efficiently it is using its assets. The accounts receivable turnover ratio
measures the number of times over a given period that a company collects its average
accounts receivable.

DEBTORS TURNOVER RATIO

DEBTORS TURNOVER
YEAR NET SALES AVERAGE DEBTORS
RATIO

Mar-13 521 185.89 2.958739039

Mar-14 609.5 181.6 3.851872247

Mar-15 842.7 213.87 3.940244074

Mar-16 1085.6 350.79 3.09472904

Mar-17 1200.9 359.97 3.336111343

Mar-18 1423.1 315.67 4.508188931

Mar-19 1825.6 418.33 4.364018837

Mar-20 2011.9 672.98 2.989539065

Mar-21 2179.4 679.06 3.209436574

Mar-22 2601.4 1066.27 2.439719771

TOTAL DEBTORS TURNOVER RATIO 34.69259892

 AVERAGE DEBTORS TURNOVER RATIO 3.469259892

DEBTORS TURNOVER RATIO

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

INTERPRATATION:

shows that average of debtors turnover ratio is which representation that the company has
performed best

INVENTORY TURNOVER RATIO

Inventory turnover refers to the amount of time that passes from the day an item is
purchased by a company until it is sold. One complete turnover of inventory means the
company sold the stock that it purchased, less any items lost to damage or shrinkage.

Successful companies usually have several inventory turnovers per year, but it varies by
industry and product category.

INVENTORY TURNOVER RATIO

INVENTORY TURNOVER
YEAR NET SALES INVENTORIES
RATIO

Mar-13 521 185.89 2.958739039

Mar-14 609.5 181.6 3.851872247

Mar-15 842.7 213.87 3.940244074

Mar-16 1085.6 350.79 3.09472904

 Mar-17 1200.9 359.97 3.336111343

Mar-18 1423.1 315.67 4.508188931

Mar-19 1825.6 418.33 4.364018837

Mar-20 2011.9 672.98 2.989539065

Mar-21 2179.4 679.06 3.209436574

Mar-22 2601.4 1066.27 2.439719771

TOTAL INVENTORY TURNOVER RATIO 34.69259892

AVERAGE TURNOVER RATIO 3.469259892

INVENTORY TURNOVER RATIO

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

INTERPRATATION:

shows that average of inventory turnover ratio is which representation that the company has
performed best
Long term solvency ratio

Long term solvency means the firm’s ability to meet its liabilities in the long run. Long term
solvency ratios help to determine the ability of the business to repay its debts in the long run.
Long-term solvency ratios are designed to measure the ability of a business to meet its
financial obligations in the medium and longer term. Solvency is the ability of a company to
meet its long-term debts and financial obligations.

Solvency ratio:

A solvency ratio measures how well a company's cash flow can cover its long-term debt.
Solvency ratios are a key metric for assessing the financial health of a company and can be
used to determine the likelihood that a company will default on its debt.

SOLVENCY RATIO

TOTAL LIABILITIES
YEAR TOTAL ASSETS SOLVENCY RATIO
TO OUTSIDER

Mar-13 2166.19 624.2 2.991148854

Mar-14 2496.72 1790.9 2.096498447

Mar-15 2871.83 1421.5 2.020281393

Mar-16 4141.45 2389.5 1.733186859

Mar-17 4785.04 2774.8 1.724463024

Mar-18 5298.55 3188.4 1.661820976

Mar-19 6086.27 3702.3 1.643915944

Mar-20 8373.56 4162 2.011907737

Mar-21 8296.57 4877.5 1.700988211

Mar-22 9065.62 5560.8 1.630272623

TOTAL SOLVENCY RATIO 19.21448407

AVERAGE SOLVENCY RATIO 1.921448407

 SOLVENCY RATIO
3.5

2.5

1.5

0.5

0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

INTERPRATATION:

shows that average of solvency ratio is which representation that the company has performed

SOLVENCY RATIO

Proprietory ratio:

Proprietary ratio is a type of solvency ratio that is useful for determining the amount or
contribution of shareholders or proprietors towards the total assets of the business. It is also
known as equity ratio or shareholder equity ratio or net worth ratio.

The main purpose of this ratio is to determine the proportion of the total assets of a business
that is funded by the proprietors. Proprietary ratio can be used to evaluate the stability of the
capital structure of a business or company and also show how the assets of a business are
formed by issuing a number of equity shares rather than taking loans or debt from outside.

Proprietary Ratio = Proprietors Funds / Total Assets

PROPRIETORY RATIO

YEAR SHAREHOLDER FUNDS TOTAL ASSETS PROPRIETORY RATIO

Mar-13 26.75 1724.2 0.03693731

Mar-14 133.77 1790.9 0.112326812

Mar-15 133.77 1421.5 0.094104819

Mar-16 182.31 2389.5 0.076296296

Mar-17 182.59 2774.8 0.065802941

Mar-18 182.64 3188.4 0.05728265

Mar-19 288.68 3702.3 0.077973152

Mar-20 288.96 4162 0.06942816

Mar-21 433.03 4877.5 0.088781138

Mar-22 649.55 5560.8 0.116808733

TOTAL PROPRIETORY RATIO 0.795742009

AVERAGE PROPRIETORY RATIO 0.079574201

 PROPRIETORY RATIO
0.14

0.12

0.1

0.08

0.06

0.04

0.02

0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

INTERPRATATION: shows that average of proprietor ratio is which representation that the
company has performed best

Debt equity ratio: The Debt to Equity ratio (also called the “debt-equity ratio”, “risk ratio”,
or “gearing”), is a leverage ratio that calculates the weight of total debt and financial
liabilities against total shareholders’ equity. This ratio highlights how a company’s capital
structure is tilted either toward debt or equity financing.

Debt Equity Ratio = Outsider’s funds / Shareholders fund

DEBT EQUITY RATIO

YEAR OUTSIDER'S FUND SHAREHOLDER'S FUND DEBT EQUITY RATIO

Mar-13 123.7 26.75 3.091588785

Mar-14 231.5 133.77 1.730582343

Mar-15 224.2 133.77 1.676011064

Mar-16 956.4 182.31 5.246009544

Mar-17 889.5 182.59 4.871570185

Mar-18 867 182.64 4.747043364

Mar-19 760.8 288.68 2.63544409

Mar-20 531.7 288.96 1.840047065

Mar-21 1011.4 433.03 2.335634944

Mar-22 1024.9 649.55 1.577861596

TOTAL DEBT EQUITY RATIO 29.75179298

AVERAGE DEBT EQUITY RATIO 2.975179298

DEBT EQUITY RATIO

6

0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
INTERPRATATION:

shows that average of Debt equity ratio is which representation that the company has
performed best

Fixed asset ratio:

The fixed asset turnover ratio reveals how efficient a company is at generating sales from its
existing fixed assets. The fixed asset turnover ratio is calculated by dividing net sales by the
average balance in fixed assets. A higher ratio implies that management is using its fixed
assets more effectively.

FIXED ASSET RATIO

YEAR FIXED ASSETS SHAREHOLDER'S FUND FIXED ASSET RATIO

Mar-13 1370.58 26.75 51.23663551

Mar-14 1728.97 133.77 12.9249458

Mar-15 1750 133.77 13.08215594

Mar-16 2948.22 182.31 16.17146618

Mar-17 3100.61 182.59 16.98126951

Mar-18 3286.97 182.64 17.99698861

Mar-19 3661 288.68 12.68186227

Mar-20 5460.33 288.96 18.89649086

Mar-21 5302.42 433.03 12.24492529

Mar-22 5489.56 649.55 8.451327842

TOTAL FIXED ASSET RATIO 180.6680678

AVERAGE FIXED ASSET RATIO 18.06680678

 FIXED ASSET RATIO
60

50

40

30

20

10

0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

INTERPRATATION:

shows that average of Fixed asset ratio is which representation that the company has
performed best.

Gross profit ratio:

Gross profit ratio is a ratio or metric that helps in determining the efficiency and
performance of a company. It is computed by dividing the gross profit of a company by its
total net sales. Moreover, the GP ratio can also be obtained in a percentage firm by
multiplying the above result by 100.

When done so, it is regarded as the gross profit margin or gross profit percentage.

Gross Profit Ratio Formula = (Gross Profit/Net Sales) X 100.

NET PROFIT RATIO

YEAR NET PROFIT SALES NET PROFIT RATIO

Mar-13 45.44 550 8.261818182

Mar-14 -16.5 699.5 -2.358827734

Mar-15 35.4 842.7 4.200783197

Mar-16 147.53 1085.6 13.58971997

Mar-17 186.73 1200.9 15.54917145

Mar-18 235.6 1423.1 16.55540721

Mar-19 235.6 1825.6 12.90534619

Mar-20 488.55 2011.9 24.28301605

Mar-21 226.43 2179.4 10.38955676

Mar-22 489.49 2601.4 18.81640655

TOTAL NET PROFIT RATIO 122.1923978

AVERAGE NET PROFIT RATIO 12.21923978

 NET PROFIT RATIO
30

25

20

15

10

0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

INTERPRETATION: shows that average of Net profit ratio is which representation that the
company has performed best.

NET PROFIT RATIO

Operating profit ratio:

In business, operating margin—also known as operating income margin, operating profit

margin, EBIT margin and return on sales —is the ratio of operating income to net sales,
usually expressed in percent.

Operating profit Ratio = Operating Profit / Net Sales × 100 Since, the operating profit ratio is
expressed as a percentage, therefore we need to multiply by 100, the value obtained by the
division of operating profit with the net sales.
OPERATING PROFIT RATIO

YEAR EBIT SALES OPERATING PROFIT RATIO

Mar-13 112.8 550 20.50909091

Mar-14 157 699.5 22.44460329

Mar-15 211.4 842.7 25.08603299

Mar-16 266.6 1085.6 24.55784819

Mar-17 364 1200.9 30.31060038

Mar-18 394.8 1423.1 27.74225283

Mar-19 446.5 1825.6 24.45771253

Mar-20 479 2011.9 23.80834037

Mar-21 460.1 2179.4 21.11131504

Mar-22 536.5 2601.4 20.62351042

TOTAL OPERATING PROFIT RATIO 240.651307

AVERAGE OPERATING PROFIT
RATIO 24.0651307

OPERATING PROFIT RATIO

35

30

25

20

15

10

0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
INTERPRETATION:

shows that average of operating profit ratio is which representation that the company has
performed best.

Operating expense ratio:

The operating expense ratio (OER) is calculated by dividing all operating expenses less depreciation
by operating income. A lower operating expense ratio (OER) is more desirable for investors because it
means that expenses are minimized relative to revenue.

Operating expense ratio= (Operating expense/net sales)*100

OPERATING EXPENSE RATIO

YEAR OPERATING EXPENSES SALES OPERATING EXPENSE RATIO

Mar-13 123.5 550 22.45454545

Mar-14 155.6 699.5 22.24446033

Mar-15 201.9 842.7 23.95870417

Mar-16 250.3 1085.6 23.05637436

Mar-17 308.6 1200.9 25.69739362

Mar-18 376.9 1423.1 26.48443539

Mar-19 465.4 1825.6 25.49298861

 Mar-20 572.2 2011.9 28.44077737

Mar-21 641.5 2179.4 29.4347068

Mar-22 697.8 2601.4 26.82401784

TOTAL OPERATING EXPENSE RATIO 254.0884039

AVERAGE OPERATING EXPENSE RATIO 25.40884039

35
OPERATING EXPENSE RATIO

30

25

20

15

10

0
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

INTERPRETATION:
shows that average of operating expense ratio is which representation that the company has
performed best.