CHAPTER – 4

ANALYSIS AND
INTERPRETATION

1
 CHAPTER-4
ANALYSIS AND INTERPRETATION
RATIO ANALYSIS

CURRENT RATIO
In order to measure the short-term liquidity or solvency of a concern, comparison of current
assets and current liabilities is inevitable. Current ratio indicates the ability of a concern to meet
its current obligations as and when they are due for payment.

Current ratio = current assets / current liabilities.

TABLE

A TABLE SHOWING CURRENT RATIO OF PIPDIC LIMITED

YEAR CURRENT CURRENT CURRENT RATIO

ASSETS LIABILITIES
2017 173,763,143 784,924,507 0.22

2018 195,785,659 800,040,695 0.24

2019 345,330,898 800,401,224 0.43

2020 1,078,114,588 819,797,608 1.31

2
CHART

A CHART SHOWING CURRENT RATIO OF PIPDIC LIMITED

CURRENT RATIO
1.4

1.2

0.8 RATIO

0.6

0.4

0.2

0
2017 2018 2019 2020

3
DEBT EQUITY RATIO

To understand the debt to equity ratio, you first need to know what debt and equity are. Debt
is the money that the company owes. When a company borrows money, the amount it needs to
return is the debt. A company usually pays interest on its debt. Equity is the money the company
owns. It is commonly known as shareholder‟s equity. Shareholder‟s equity is the owner‟s
investment in the company. With the debt to equity ratio, you can find out if the company‟s
financing depends on borrowings or equity. It also shows if the company has enough equity
capital to take care of all outstanding debts. It compares the owner‟s equity to the total debt the
company has.

Debt proprietary ratio = Total debt / Total shareholders funds

TABLE

A TABLE SHOWING DEBT-EQUITY RATIO OF PIPDIC LIMITED

YEARS LONG TERM SHAREHOLDERS DEBT EQUITY

DEBTS FUNDS RATIO

2017 632,648,254 950,554,659 0.67

2018 705,657,608 957,044,180 0.74

2019 845,432,464 961,075,182 0.88

2020 867,154,546 932,928,472 0.93

4
 CHART

A GRAPH SHOWING DEBT-EQUITY RATIO OF PIPDIC LIMITED

DEBT-EQUITY
1

0.9

0.8

0.7

0.6
DEBT-EQUITY
0.5

0.4

0.3

0.2

0.1

0
2017 2018 2019 2020

5
PROFITABILITY RATIOS

Profitability ratios are a type of accounting ratio that helps in determining the financial
performance of business at the end of an accounting period. Profitability ratios show how
well a company is able to make profits from its operations.

Profitability ratio = Shareholders fund / Total assets

TABLE

A TABLE SHOWING PROPRIETORY RATIO OF PIPDIC LIMITED

YEARS SHAREHOLDERS TOTAL TANGIBLE PROPRIETORY

FUNDS ASSETS RATIO

2017 950,554,659 1,778,543,991 0.53

2018 957,044,180 1,803,650,635 0.53

2019 961,075,182 1,806,507,646 0.53

2020 932,926,472 1,860,083,018 0.50

6
CHART
A GRAPH SHOWING PROPRIETORY RATIO OF PIPDIC LIMITED

PROPRIETORY RATIO
0.535

0.53

0.525

0.52

0.515
PROPRIETORY RATIO
0.51

0.505

0.5

0.495

0.49

0.485
2017 2018 2019 2020

7
QUICK RATIO

The quick ratio, also called an acid-test ratio, measures a company‟s short-term
liquidity against its short-term obligations. Essentially, the ratio seeks to figure out if a
company has enough liquid assets (cash or things that can easily be converted into cash)
to cover its current liabilities and impending debts. A key point to note, though, is this
isn‟t a test to see how much debt a company has or if it could seek financing to cover any
current debts. Rather, the quick ratio just looks at whether a company‟s liquid assets
outnumber its liabilities.
Quick ratio = Current Assets – Inventory
Current Liabilities

TABLE

A TABLE SHOWING QUICK RATIO OF PIPDIC LIMITED

YEARS QUICK ASSETS CURRENT QUICK

LIABILITIES RATIO
2017 130,984,388 784,924,507 O.17

2018 155,105,821 800,040,695 0.19

2019 345,330,898 800,401,224 0.43

2020 337,984,588 819,797,608 0.41

8
 CHART
A GRAPH SHOWING QUICK RATIO PIPDIC LIMITED

QUICK RATIO
0.5

0.45

0.4

0.35

0.3
QUICK RATIO
0.25

0.2

0.15

0.1

0.05

0
2017 2018 2019 2020

9
EBITA RATIO

EBITDA margin is a profitability ratio that measures how much in earnings a company
is generating before interest, taxes, depreciation, and amortization, as a percentage of
revenue.
The earnings are calculated by taking sales revenue and deducting operating expenses,
such as the cost of goods sold (COGS), selling, general, & administrative expenses
(SG&A), but excluding depreciation and amortization.

EBITDA = Net Income + Interest + Tax + Depreciation & Amortization

TABLE

A TABLE SHOWING EBITDA RATIO OF PIPDIC LIMITED

YEAR EBITDA CURRENT EBITDA

LIABILITIES RATIO
2017

2018

2019 133,749,448 800,401,224 0.16

2020 147,689,460 819,797,608 0.18

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CHART
A GRAPH SHOWING EBITDA RATIO OF PIPDIC LIMITED

Series 1
5

4.5

3.5

3
Series 1
2.5

1.5

0.5

0
Category 1 Category 2 Category 3 Category 4

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OPERATING CASH FLOW

Operating cash flow (OCF) is a measure of the amount of cash generated by a company's
normal business operations. Operating cash flow indicates whether a company can
generate sufficient positive cash flow to maintain and grow its operations, otherwise, it
may require external financing for capital expansion.

Operating cash flow = Operating Income + Depreciation – Taxes + Changes in working capital

TABLE

A TABLE SHOWING OPERATING CASH FLOW RATIO OF PIPDIC LIMITED

YEAR OPERATING CASH CURRENT OPERATING CASH FLOW

FLOW LIABILITIES RATIO
2017

2018

2019 112,146,616 800,401,224 0.14

2020 310,429,145 819,797,608 0.37

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GRAPH

A GRAPH SHOWING OPERATING CASH FLOW RATIO PIPDIC LIMITED

OPERATING CASH FLOW

5

4.5

3.5

3
OPERATING CASH FLOW
2.5

1.5

0.5

0
2017 2018 2019 2020

TOTAL DEBIT RATIO

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 Total-debt-to-total-assets is a leverage ratio that defines how much debt a company owns
compared to its assets. Using this metric, analysts can compare one company's leverage with that
of other companies in the same industry. This information can reflect how financially stable a
company is. The higher the ratio, the higher the degree of leverage (DoL) and, consequently, the
higher the risk of investing in that company.

Total Debt Ratio = Total Debt

Total assets

TABLE

A TABLE SHOWING TOTAL DEBT RATIO OF PIPDIC LIMITED

YEAR TOTAL DEBT TOTAL ASSETS TOTAL DEBTRATIO

2017 828,189,332 177,854,399,1 0.47

2018 846,606,455 180,365,0635 0.47

2019 845,432,464 1,806,507,646 0.46

2020 867,154,456 1,860,083,018 0.46

GRAPH

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 A GRAPH SHOWING TOTAL DEBT RATIO OF PIPDIC LIMITED

TOTAL DEBT RATIO

0.472

0.47

0.468

0.466

0.464 TOTAL DEBT RATIO

0.462

0.46

0.458

0.456

0.454
2017 2018 2019 2020

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NET PROFIT RATIO

Net profit ratio is an important profitability ratio that shows the relationship between
net salesand net profit after tax. When expressed as percentage, it is known as net profit
margin.

Formula for net profit ratio is

Net Profit Ratio = Net Profit × 100

Sales

CHART

A TABLE SHOWING NET PROFIT RATIO OF PIPDIC LIMITED

YEAR NET PROFIT REVENUE FROM NET PROFIT

OPERATION RATIO
2017 257,574,27 828,632,86 0.31

2018 222,769,79 955,785,45 2.23

2019 60,492,248 108,,887,456 0.55

2020 31,566,619 116,638,868 0.27

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GRAPH

A GRAPH SHOWING NET PROFIT RATIO OF PIPDIC LIMITED

NET PROFIT RATIO

0.6

0.5

0.4

NET PROFIT RATIO

0.3

0.2

0.1

0
2017 2018 2019 2020

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OVERALL PROFITABILITY RATIO

Profitability ratio is used to evaluate the company‟s ability to generate income as compared to its
expenses and other cost associated with the generation of income during a particular period. This
ratio represents the final result of the company.

Profitability represents final performance of company i.e. how profitable company. It also
represents how profitable owner‟s funds have been utilized in the company.

Overall profitability ratio = Overall profitability

Total Assets

TABLE

A TABLE SHOWING O VE RAL L P R O FI T AB I L I T Y RAT I O OF PIPDIC

LIMITED

YEAR OVERALL TOTAL ASSETS OVERALL

PROFITABILITY PROFITABILITY
NET PROFIT RATIO
2017 257,574,27 177,854,399,1 0.014

2018 222,769,79 180,365,063,5 0.01

2019 60,492,248 1,806,507,646 0.03

2020 31,566,617 1,860,083,018 0.01

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TABLE

A GRAPH SHOWING O VE R AL L P R O FI T AB I L I T Y RAT I O OF PIPDIC

LIMITED

OVERALLPROFITABILITY RATIO
0.035

0.03

0.025

0.02
OVERALLPROFITABILITY RATIO

0.015

0.01

0.005

0
2017 2018 2019 2020

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 CHAPTER-5

FINDINGS, SUGGESTION

AND

CONCLUSION

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FINDINGS

 It has been found that the Comparing the past 2 years of current ratio, It
has been found that in the year 2020 is increased.

 It has been found that the increased 0.88:1 compared to the last year ratio.
 It has been found that the debt-equity ratio of all the 2 years is different
between 2019- 2020 is 0.05.
 It has been found that the company holds a relative contribution of the
creditors and shareholders employed in the business.
 It has been found that the proprietary ratio is found to be increased in the
year 2019 when compared to the other year.
 It has been found that the shareholders funds and total tangible assets are
found to be increased in the year 2020, even though the proprietary ratio is
less.
 It has been found that the quick ratio is found to be increased in the year
2019 but at the year 2020 it is founded to be decrease.
 It has been found that the quick ratio helps to use the quick assets but in the
year 2020 it is not used efficiently.
 It has been found that the Ebitda ratio is found to be decreased at the year 2019.

 It has been found that the Ebitda ratio is found to be increased at the last
year 2020.

 It has been found that the operating cash flow ratio is found to be reduced in
the year 2019.
 It has been found that the operating cash flow ratio is found to increased at the
year 2020.
 It has been found that the total debt ratio of the company is remains the same.
 It has been found that the net profit ratio is found to be increased at the year
2019- 2020.
 It has been found that the net profit is found to be the increased and decreased
in the current assets and current liabilities.

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 It has been found that the overall profitability ratio is found to be increased
in the year 2019.
 It has been found that the overall profitability ratio is found to be decreased
in the year 2020.

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SUGGESTION

 The cash position of the firm is dynamic. Each year there is either rapid increase or
decrease in the cash and cash equivalents. The firm can plan the cash and cash
expenses insuch a way that is established.
 Company can constantly increase capital turnover ratio in a fluctuating position.

 It is recommended that the organization is to improve the current ratio and proprietary ratio
in future for growth of the organization and using of more ratio analysis methods will
improve the financial performance.

 It is also recommended that the organization can increase the working capital ratio to make
more profit in future.

 The organization should immediately take effective measure to increase the return on
shareholders‟ fund and return on total asset for a future period of time.

 The company was in a good position before pandemic the company has makes
more revenue from its business, but due to pandemic the business goes down, but
the company isbouncing back to its normal stage.

 The net profit, operating profit and fixed assets of the organization should always
maintained in the satisfactory level to avoid loss and maintaining the profitability ratio over
the long period and

 The organization should maintain proper liquid ratio and cash position of the Pondicherry
Industrial Corporation Development and Investment Corporation Limited.

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CONCLUSION

The analysis will be summarized in order fulfill the purpose of the research objectives. The
present study is derived to the conclusion about the financial statement analysis of the
Pondicherry Industrial Corporation Development and Investment Corporation Limited and it is
analyzed with therespect of the overall financial performance of the organization by using the
measurement tools likes Ratio analysis, Comparative balance sheet and Trend analysis.

This study reveals that the financial performance of the Pondicherry Industrial Corporation
Development and Investment Corporation Limited is in satisfactory level during the year
2019- 2020. The organization should frame various strategies to improve their current
corporate position. The financial position of the corporation for the four years is analyzed and
it is proved that the corporation is financially up to the level and the result clearly shows that
there is high degree of current ratio between the net income and equity, and satisfactory level of
comparative balance sheet and thetrend analysis is high in the present year.

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