RE Modifide Sreenu Project.

7/26/2019 RE Modifide Sreenu Project.

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INTRODUCTION

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 conveys 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.

In finance analysis ratio is used as a bench mark of a firm. Ratio help

summarize large quantities of financial data and to make qualitative udgment

about the firms financial performances.

Ratio analysis is the systematic use of ratio to interpret the !"inancial

#tatement so that the strength and weakness of a firm as well as its historical

performance and current financial position can be determined. The relation 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.

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Definition:

!The relationship between two accounting figures expressed mathematically%.

It helps in making certain decision calculation of more ratios does not serve

any purpose. &nless several appropriate ratios are analyzed and interpreted.

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

to another. According to 'ixon( )ell and *edford 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 +osition

and performance of the firms. The relationship between two accounting figures

expressed mathematically( is known as financial ratio. Ratio helps to summarize

the large quantities of financial data and to make qualitative ,udgment about the

firm-s financial position. A ratio may be expressed simply in one number as the

result of a comparison between two figures.


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NEED FOR THE STUDY

The main need of the study is to analyze the financial information of the Tirumala

/ilk +roducts 0+1 2td.

To find out the liquidity or short term solvency of the Tirumala /ilk +roducts

0+1 2td.

To allow the relationship among various aspects in such a way that it Allows

drawing 3onclusion about the performance( strength( and weaknesses of the

3ompany.

It is beneficial to top management of the company by providing crystal clear

picture regarding important aspects like liquidity( leverage( activity and

profitability.

The study is also beneficial and offers motivations by showing how Activity

they are contributing for the company growth.

The investors who are interested in investing in the company4s #hares will also

get benefited by going though the study and can easily take a decision whether

to invest or not in the company-s #hares.

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OBJECTIVES OF THE STUDY

The main obective of the study is to analyze the financial information of the

Tirumala /ilk +roducts +vt 2td.

To know the performance of the company in different time periods.

To know the future liquidity of the company.

To verify liquidity and its impact on ratio analysis.

To know the profitability and activity position of Tirumala /ilk +roducts +vt

2td.

To know the accurate financial position of the company

To make appropriate suggestions and measures for the effective working of the

3ompany

To analysis the financial performance of the company from the point of ratio

analysis is through various ratios.

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SIGNIFICANCE OF THE STUDY

This study is useful to academicians and scholars.

This study is useful to other researchers.

This study is useful to the organization to make the necessary decision making.

This study is useful to the management( employees( suppliers and society.

This study is useful to the research who conduct in depth research.

This study is useful to the similar organization in assessing their financial

performance.

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METHODOLOGY 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 are called methodology.% /ethods 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 problem to problem. 8ata collection is important step in any

proect and success of any proect 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. 8ata collection plays an

important role in research work. 'ithout proper data available for analysis you

cannot do the research work accurately.

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

+rimary data

#econdary data

Primr! Dt:

Interviewing a few financial departmental heads( officers and management

bodies and staff members of the TIRUMALA MIL" PRODUCTS #P$ Lt%

collected primary data.

Se&on%r! Dt:

The present is mostly secondary resource of the data. These sources are the annual

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reports and original records of TIRUMALA MIL" PRODUCTS #P$ Lt%'

LIMITATIONS OF THE STUDY

"ollowing limitations were encountered while preparing this proect:

Limite% %t:(

This proect has completed with annual reports; It ust constitutes one part

of data collection i.e. secondary. There were limitations for primary data

collection because of confidentiality.

Limite% )erio%:(

This proect is based on five year annual reports. 3onclusions and

recommendations are based on such limited data. The trend of last five year

may or may not reflect the real working capital position of the company

Limite% re:(

Also it was difficult to collect the data regarding the competitors and their

financial information. Industry figures were also difficult to get.


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PERIOD OF STUDY * DATA ANALYSIS

In the present study data is analyzed for five financial years i.e.( from ==6 >=7 to

==?>=@. through ration analysis to know the liquidity position of the firm by

using different ratios as a tools.

The various ratios can be explained by the statements and graphs.

TOOLS

There are various tools used in the financial management. ne of the most

important tool is ratio analysis.

#ome of the important ratios. .

+$ C,rrent rtio

-$ .,i&/ rtio

0$ C12 rtio3$ 4or/in5 &)it6 t,rno7er rtio

8$ In7entor! t,rno7er rtio

9$ Detor;1 t,rno7er rtio


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INDUSTRY PROFILE

The popular adage !nothing succeeds like success !is applicable to the dairy

development in India. If the country witnessed the !green revolution% leading to

self>reliance in food grains in the sixties and the seventies( the decades of the

eighties and the nineties witnessed the !white revolution%. Indian total milk

production is ranked first in the world followed by the &nited #tates. Initially

dairying was largely an unorganized activity.2large land holding farmers keptcattle mainly for bullock production. /ilk was essentially a byproduct. The

surplus after domestic consumption was either converted into conventional

products mainly ghee and sold to middle men who cater to the needs of the

market.

As India enters an era of economic reforms( agriculture( particularly the

livestock sector( is positioned to be a maor growth area. The fact that dairying

could play a more constructive role in promoting rural welfare and reducing

poverty is increasingly being recognized. "or example( milk production alone

involves more than


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0//+1 has exceeded $== million lBpBd. The new capacity would surpass the

proected rural marketable surplus of milk by about 6= percent by ==7.

HISTORY

The origin of dairy farms under public management dates back to

$??9 when the department of 8efense established a few dairy farms in that year to

supply milk and milk products to the *ritish troops. The next step was initiated

during the "irst 'orld 'ar.

In $@$6( the 8epartment of 8efense on the advice of the *oard of

Agriculture advised the Dovernment in $@$9( to appoint imperial dairy expert. The

next important step was the decision to conduct a census of livestock. The *oard

of Agriculture carried out the livestock census in $@$@ as a preparatory action for

planned dairy development. In $@=( the imperial expert recommended to the

Dovernment for the establishment of a training center to meet the manpower

requirements for managing the 8airy "arms. *y this time there were there dairy

farms and until $@5 thebritish government-s approach towards dairying was

confined to milk requirements of the military only. After $@5(diploma course in

dairy were started at *angalore.

8r. E.3. 'right( 8irector( 8airy Research institute( #cotland who was

invited to India in $@59 for reviewing the progress of dairying in the country has

made two recommendations: >

$.Industry needs have to be solved by developing own technology and

technologists in the country.

$=


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.India is country of villages( of which most inhabitants are small( marginal farms

and landless laborers.

In $@5operative &nion limited was

established paving the way for the organization of such union in districts and state.

In $@67( the "amine enquiry commission in its report emphasized the need

for developing fodder supply for increasing milk production and recommended the

adoption of mixed farming with a place for fodder and crop rotation. As a sequel

to this( under the Dreater *ombay /ilk #cheme( milk was procured from kaira

district( Duarat by the private dairy. That gave way to the idea of creating an

institutional structure for dairying on co>operative lines.

DEVELOPMENTS OF INDUSTRY

NATIONAL DAIRY DEVELOPMENT BOARD #NDDB$:

The Dovernment of India had established the Eational 8airy 8evelopment

*oard 0E88*1( an autonomous body headquartered at Anand-s 3o>operative in

India. In order to develop dairy in India( E88E drew plans for 4operation flood-.

OPERATION FLOOD:

In the late sixties( the board drew up a proect called peration "lood 0"1

F meant to crate a flood of milk in India-s villages with funds mobilized from

foreign donations. +roducer-s co>operatives( which sought to link dairy

development with milk marketing( were central plank of this proect. The

peration "lood( which started in $@


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. +roduction increases( raising per capita availability of milk to early == grams

+er day.

5. The dependence on commercial imports of milk solids are alone away with.6. /odernization and expansion of the dairy industry and its infrastructure(

Activating milk grid.

7. /arketing expanded to supply hygienic and fair priced milk to some 5==

/illion consumers in 77= cities and towns.

9. A nationwide network of multi>tier producer-s co>operative( democratic in

structure and professionally managed( has come into existence. /illions of small

producers participate in an economic enterprise and improve the quality of their

life and environment.

operatives in the villages

and make modern technology available to them.

PHASE+:

+hase $ of peration "lood was financed by the sale within India of

skimmed milk powder and butter oil gifted by the G3 countries via the world food

program. As founder>chairman of the Eational 8airy 8evelopment *oard 0E88*1

of India 8r.)urien finalized the plans and negotiated the details of GG3 assistance.

He looked after the administration of the scheme as found>chairman of the

erstwhile Indian 8airy 3o>operation( the proect authority for peration "lood.

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8uring its first phase( the proect aimed at linking India-s $? best milk sheds with

the milk markets of the four metropolitan cities of 8elhi( /umbai( 3alcutta and

/adras.

PHASE-:

+hase of the proect( implemented during $@?$>?7 raised this to some $59

milk sheds linked to over @= urban markets. The seed capital rose from the sale

of '"+BGG3 gift products and 'orld *ank loan had created( by end $@?7( a self>

sustaining system of 65(=== village-s co>operatives covering 6.7 million milk

producers. /ilk powder production went up from (=== tons in the pre proect

year to $( 6=(=== tons in $@?@( thanks to dairies set up und peration "lood. The

GG gifts thus helped to promote self>reliance. 8irect marketing of milk by

producer-s co>operatives resulting inn the transfer of profits from milk contracts

increased by several million liters per day.

PHASE0:

+hase 5 of peration "lood 0$@?7>$@@91 enabled dairy co>operatives to

rapidly build to the basic up the basic infrastructure required to procure and

market more and more milk daily. "acilities were created by the co>operatives to

provide better veterinary first>aid health care services to their producer-s members.

$5


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De7e6o)ment of %ir! in Ninetie1:

The momentum gained in the dairy through co>operatives during the

last = years will now take India into nineties as maor dairying country of the

world. The country-s milk production in the early sixties which was about =

million tons has touched a record of 79 million tons. It is likely to reach about ?=

million tons by === A8. India which one time was dependant on other countries

for products such as milk powder( table butter and cheese has now become self

sufficient. It has even started exporting some of them in small quantities

simultaneously efforts are made to expand milk procurement( processing and

marketing to meet the growing demand for milk products.

MIL" SHEDS>UNIONS:

peration flood programmer has been identified into milk shedsBunions.

E /I2) #HG8# B &EIE# 8I#TRI3T#

$ isakha #rikakulam( izianagaram( izag

Dodavari Gast and 'est Dodavari

5 )rishna )rishna

6 Duntur>+rakasam Duntur>+rakasam

7 3hittoor 3hittoor

9 3uddapha 3uddapha< )urnool )urnool

? Ealgonda>Ranga Reddy Ealgonda>Ranga Reddy

@ /edak>Eizamabad /edak>Eizamabad

$6


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Gro?t2 of t2e In%,1tr!:

*efore the independence of India( in the first half of the =th

centurydairying in the country was largely unorganized. "luid milk and its products were

generally not easily marketable commodities and there was no transport of these

products to far distances. rganized dairying( as well understood in the west

started in a small way when military dairy farms and creameries were established

towards the end of the =th century to meet the demands of the armed forces and

their hospitals. #ome private dairies( such as )aveters and poisonsJ with

encouraged making pasteurized butter( primarily for the use of the *ritish army. As

a result the imperial institute of animal Husbandry and dairying was established in

$@5 at *angalore. There has been another maor effort in the early

$@6=Js where milk produced in rural areas of kaira district was collected in bulk

+asteurized and transported by distributing in *ombay by !the *ombay milk

schemeK operated by the *ombay municipality. 'hen India become independent

in $@6


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8odla 8airy 2imited Eellore in AE8HRA +RA8G#H

/izoram +roducers 3oop. &nion 2td /izoram in AR&EA3HA2 +TA8G#H

#ihota "oods +vt. 2imited Duwahati in A##A/

*hawani 8airy 3ompany /uzaffarpur in *IHAR

*aba 8airy +vt 2imited 3handigarh in 3HAE8IDARH

3alpro "oods +vt. 2td. Eew 8elhi in 8G2HI

8airy 8en 2imited Ahmedabad in D&,ARAT

)wality 8airy 0India1 2imited "aridabad in HARLAEA

/ahaan 8airies 2td. #ahib in HI/A3HA2 +RA8G#H

aid /ilk +roducts +vt. 2td. ,ammu in ,A//&M)A#H/IR

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COMPANY PROFILE

Tirumala /ilk +roducts +rivate 2imited is a professionally managed

company engaged in the manufacture of a wide range of 8airy +roducts which

include /ilk in #achets( #weets( "lavored /ilk( 3urd in 3ups and #achets( /ilk

+owder( *utter( Dhee and *utter il both in bulk as well as in consumer packs...

Gstablished in $@@?( Tirumala /ilk +roducts 0+1 2td. is one of the fastest

growing +rivate #ector Gnterprises in India with a team of dedicated professionals.

The company has one of the most modern and versatile plants in the Indian 8airy

Industry with state>of>the>art technology. Tirumala /ilk +roducts 0+1 2td.

+roducts meet stringent quality control tests and cater to the premium segment of

the market for 8airy +roducts. Tirumala /ilk +roducts 0+1 2td. is presently

implementing an expansion programme and proposes to launch new products in

the near future.

+resently Tirumala /ilk +roducts market presence in Andhra +radesh(

)arnataka and Tamil Eadu. It handle $5 2akh liters of milk per day in packing

stations and dairy plant( which is the single largest plant in the state of Andhra

+radesh. Its Registered ffice is located at Earasarao+et( Dutur 8ist and

3orporate ffice is located at )avurihills( Hyderabad.

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Tirumala /ilk +roducts 0+1 2td. sells a rich( varied offering of nutritious( tasty

and healthy food products under well>known brand. Taste( health( convenience(

reliability and vitality for consumers are key characteristics. /ilk comes fromcattle herd that receive the best care along with healthy and nutritious diet in the

form of quality feed to ensure that they produce wholesome( high>quality milk.

The maor contributors to the success of Tirumala /ilk +roducts 0+1 2td. are:>

/ilk +rocurement Eetwork

#uperior sales and marketing process

#trategic technological M infrastructural advantage

Gfficient human investments

Vi1ion:

!To produce and supply superior quality products with exceptional customer

service to eventually grow as market leader in diary industry.%

Mi11ion:

Tirumala /ilk +roducts 0+1 2T8. will constantly strive to market quality products

at competitive prices( provide value to our business partners( all the whiledelivering exceptional customer service with the highest regard for business

ethics.

Bor% of Dire&tor1:

Tirumala /ilk +roducts 0+1 2td. has a seasoned *oard of 8irectors with a

collective blend of visionary leadership( consumer marketing expertise and

technological prowess.

B'Br2m Ni%, ( Mn5in5 Dire&tor

D'Br2mnn%m ( Joint Mn5in5 Dire&tor

$?


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B'N5e1?r Ro ( Dire&tor

Dr' N'Ven/t Ro ( Dire&tor

E'N'Ro ( E@e&,ti7e Dire&tor

Are1 of o)ertion:

Tirumala distributes milk to various parts of Tamil Eadu( Andhra +radesh(

and )arnataka. Dudur is the main source for delivering milk and milk products to

3hennai and other maor parts of Tamil Eadu. The procurement and processing

section located at +asupattur village of 3hitoor district in Andhra +radesh is the

source of milk( curd and products which are supplied in *angalore and /ysore

/arkets. The packing station located at ellacheruvu( = )/ away from

Registered ffice and plant at #ingavaram 'est Dodavari 8istrict( 'adiyaram in

/edak 8istrict and Dunagal in Rangareddy 8istrict supplies milk( curd and other

products to maor markets of Andhara +radesh( and Telangana states which

includes Hyderabad( iayawada( Duntur( Raamandry( )akinada(isakhapatnam(

/ahabubnagar and )arim Eagar. #kim /ilk +owder( *utter and *utter oil

produced at Dudur plant are supplied to maor Industrial and Institutional

customers located across India.

Certifi&te1 n% A?r%1:

In recognition of its efforts and achievements in the dairy foods industry(

and in acknowledgment of all the challenges surmounted( Tirumala /ilk +roducts

0+1 2td. has won many awards and certificates.

$@


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/ore enduring than any public recognition for our contributions is the

satisfaction we enoy by creating a superior product and giving back to our

communities.

Tirumala /ilk +roducts 0+1 2td. is an I# @==$:=== and an I# ===:

==7 3ertified company. The dairy is following Nuality /anagement #ystem and

"ood #afety #tandards.

Apart from I# certification( It has 3ertificate from #D# on #/+ Analysis too.

Tirumala /ilk +roducts 0+1 2td. has I#I 2icence( Agmark 2icence and adheres to all

other statutory standards as per requirements.

Pro%,&t1:

Tirumala /ilk +roducts 0+1 2td. covers the entire spectrum of dairy

products sold in markets. The complete range of Tirumala /ilk +roducts 0+1 2td.

are highly nutritious( healthy and bring you a world of goodness.

Tirumala /ilk +roducts 0+1 2td. pasteurizes and packages all fresh dairy

products in technologically superior and hygienic conditions to ensure pure natural

freshness.

Tirumala /ilk +roducts 0+1 2td.( Handles 9.7 2akhs 2iters of /ilk per day

in all their packing #tations and main dairy plant which is the highest in the state

of Andhra +radesh.

Tirumala milk products 0p1 ltd. Handles milk in the following locations:>

P&in5 Lo&tion1 Hn%6in5 C)&it! )er %!

Dudur6.= 2akh litres

=


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ellala 3heruvu.= 2akh litres

*himadolu

$.= 2akh litres

+alamaner.= 2akh litres

Dungal6.= 2akh litres

PROCUREMENT OF MIL"

Tirumala /ilk +roducts 0+1 2td. established 7 3hilling centers in Andhra

+radesh and ? chilling centers in Tamilnadu to procure both 3ow M *uffalo milk.

*est quality milk is procured and chilled at chilling centers( to retain freshness of

milk. The strength of the Tirumala /ilk +roducts 0+1 2td. is to procure more than

9.= lakh liters of milk directly from agentsBfarmers using state>of>the>art

machinery and professionally trained staff.

PRODUCTION

Tirumala /ilk +roducts 0+1 2td. has its main dairy plant at )adivedu with

handling capacity of 6.= lakhs lts of milk per day from various chilling

centers and local units.

/ain plant processes 5.= 2akhs 2ts of milk per day in automatic sachet

filling machines for supply and distribution to 3hennai( Tirupati( Eellore(

etcO in insulated puffs.

There is continuous growth in sale of milk from 7==== ltrs to 57==== ltr

with in a span of one>decade.

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Tirumala /ilk +roducts 0+1 2td. has its own supply chain management(

which is the key to timely distribution.

At +alamaner unit processes and supplies $.== lakh liters of milk and==== liters of curd to *angolore city.

ellalacheruvu M *himadolu packing stations processes and supplies .=

lakh liters of milk to iayawada.( Duntur ( Gluru( isakhapatnam()akinada and Raahmundry.

'adiyaram plant has capacity of 7==== 2iters milk to cater to the markets

of /edak( Eizambad( Adilabad and )arim Eagar 8istricts of A.+

B,tter:

Is made from pure cow M *uffalo fat under hygienicially processed

through continuous butter making machine.

G2ee:

Is made from +ure cow M *uffalo butter under supervision 5= years

granulation( colour and aroma of ghee with a capacity of ? tonnes per day. Dhee is

packed in a wide range of < ml to $7 )gs.

Mi6/ Po?%er:


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Is made from fresh cow M buffalo milk( plant is capable of marketing

all type of milk powders with a capacity of $7 tones per day.

B!(Pro%,&t1:

"lavored /ilk(

2assi( )hava(

/ilk 3ake(

/ysore pak(

+anner(

Ice 3ream(

3urd(

*uttermilk

5


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S6e1 Informtion

Year Sales in Rs

2010-11 1240400781

2011-12 1483468207

2012-13 2852734310

2013-14 3738023759

2014-15 4707947739

GRAPHICAL REPRESENTATION

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7

Sales in Rs.

0

500000000

1000000000

1500000000

2000000000

2500000000

3000000000

3500000000

4000000000

4500000000

5000000000

2010-11 2011-12 2012-13 2013-14 2014-15


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INTRODUCTION

9


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Ratio analysis is a powerful tool of financial analysis. A ratio is defined as

the indicated quotient of two mathematical expressions and relationship betweentwo 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 conveys 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. Ratio help summarize large

quantities of financial data and to make qualitative udgment about the firms

financial performances.

Ratio analysis is the systematic use of ratio to interpret the !"inancial

#tatement so that the strength and weakness of a firm as well as its historical

performance and current financial position can be determined. The relation of ratio

analysis lies in the fact that it makes related information comparable. A single

figure by it self has no meaning but when expressed in terms of related figure. It

yields significant inferences.


28/83

Definition:

!The relationship between two accounting figures expressed mathematically%.

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

to another. According to 'ixon( )ell and *edford 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 +osition

and performance of the firms. The relationship between two accounting inurs

expressed mathematically( is known as financial ratio. Ratio helps to summarize

the large quantities of financial data and to make qualitative ,udgment 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.

Rtio m! e e@)re11e% in t2e fo66o?in5 ?!1:(

?


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In the pure ratio.

As a rate.

As a percentage.

IMPORTANCE OF RATIO ANALYSIS:

The importance of ratio analysis lies in the fact that it presents facts on a

3omparative basis and enables the drawing of inferences regarding the

+erformance of the firm. Ratio analysis is relevant in assessing the performance

of a firm in respect of the following points.

#$Li,i%it! Po1ition: 'ith 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.

#$Lon5(term So67en&!: Ratio analysis is equally useful for assessing the long

term financial viability of a firm. The long term solvency is measured by the

leverageB 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.

#&$ O)erti7e Effi&ien&!: 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 by the use

of its assets total as well as its components.

@


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#%$O7er66 Profiti6it!: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 obligation s to its creditors toensure a reasonable return of its owner and secure optimum utilization of the

assets of the firm.

#e$ Inter firm &om)ri1on: Ratio analysis is also stepping stone to remedial

methods. This is made possible due to inter>firm comparison and comparison with

industry averages. ne 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.

#f$Tren% An6!1i1: 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 by the use of 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.

B1i1 of &om)ri1on:

The ratio analysis involves several types of comparison. They are *elow:>

' A comparison of present ratio with the past and expected future

Ratios for same firm.

' A comparison of the ratio with those of similar firm or with industry

averages at the same point time.

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&' Trend series or analysis is also one of the comparison .A "inancial ratio

over a period of time is compared( it is known as trend The analysis should

not simply determine the change( but more important He should understandwhy 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.

TYPES OF RATIO;S:

The ratios are divided into 6 types. They are

2iquidity ratio

2everage ratios

Activity ratios

+rofitability ratios.

+$ Li,i%it! rtio;1:

2iquidity means prerequisites 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

2iquidity of the firm are:

#$ C,rrent Rtio:The current ratio is the ratio of total asserts to total current

liabilities. The higher the current the larger amount of rupees available per rupee

of current liabilities. The ratio is more( the firm-s ability to meet current

obligation and the grater the safety of funds on short term creditors.

C,rrent 11et1

C,rrent Rtio (((((((((((((((((((((((((((

C,rrent 6ii6itie1

5$


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#$ .,i&/ Rtio: This ratio enables the relationship between quick assets and

current liabilities. The quick ratio is found out by dividing the total of the quickestasserts by total current liabilities

C,rrent A11et1 ( In7entorie1

.,i&/ Rtio (((((((((((((((((((((((((((((((((((((((

C,rrent 6ii6itie1

*asically quick ratio of $:$ is considered satisfactorily for current financial

condition.

-'Le7er5e Rtio1:

The second category of the financial ratios is leverage ratios. This ratio is

calculated from the balance sheet items to determine the proportion of debt in total

financing. 2everage ratios are calculated to a udge the financing position of the

firm.

#$ Det E,it! rtio: This is calculated by dividing total debt by Eet worth

or capital employed.

Total debt

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

Net worth

Total debt means short and long term borrowings( financial institutions

8ebenturesBbonds( book borrowings( public deposits and other interest bearing2oans.

5


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#$ Di7i%en% &o7er5e Rtio: It shows the relationship between the profits

after payment of interest and taxes and preference dividend.

Profit after tax

Dividend overa!e Ratio = ---------------------------------

Preferen"e dividend

+' Intere1t Co7er5e Rtio : It shows the relationship between the

profits before payment of interest and taxes and fixed interest charged.

E#$T

$nterest overa!e Ratio= --------------------- $nterest

-' C)it6 E,it! Rtio:This ratio indicates long>term solvency of the

rganization. It is computed by dividing capital employed by Eet worth.

a%ital E&%loyed

a%ital Equity Ratio = -------------------------------

Net worth

0. A&ti7it! Rtio:

Activity Ratios are concerned with measuring the efficiency in asset

/anagement. #ometimes these ratios are called efficiency ratios or asset

&tilization ratios. Actually ratios involve a relationship between sales and Assets.

There are various types of activity ratios.

#$ In7entor! T,rno7er Rtio: This ratio can be computed by dividing the cost

of goods sold by the average inventory.

55


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Co1t of Goo%1 1o6%

In7entor! T,rno7er Rtio (((((((((((((((((((((((((((((((((((( A7er5e In7entor!

In7entor! T,rno7er Perio%:

No' Of' D!1 in !er

In7entor! T,rno7er Perio%= ---------------------------------------

In7entor! t,rno7er Rtio

#$ Detor1 T,rno7er rtio: The second maor 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.

Net &re%it 16e1

Detor1 t,rno7er rtio (((((((((((((((((((( A7er5e %etor1

Detor1 Co66e&tion Perio%: This ratio helps to identify the collection of 3redit

from debtors. It is also known as 8ebtors elocity. It shows the Relationship

between numbers of days in a year to 8ebtors turnover.

098

Detor1 &o66e&tion )erio% (((((((((((((((((((((((((((((((((((((

Detor1 T,rno7er Rtio

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#&$ A11et1 T,rno7er Rtio: A firm should manage its sales sufficiently to

maximize its sales. The relationship between the sales and asset is called assets

turnover. S6e1

A11et1 T,rno7er Rtio (((((((((((((((((((((

Tot6 A11et1

#%$ Fi@e% A11et1 to C)it6 Em)6o!e%: This ratio shows the relationship

between the fixed assets and capital employed.

Fi@e% A11et1

Fi@e% 11et to C)it6 Em)6o!e% (((((((((((((((((((((((((((((

C)it6 Em)6o!e%

iii$ Profiti6it! Rtio:

These ratios are determined on the bases of either sales or investments.

+rofitability ratios are calculated to measure the operating efficiency of the

company. +rofitability ratios are two types:

+' +rofitability and relation to sales.

-'+rofitability in relation to investment.

+$ Profiti6it! in re6tion to 16e1' 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 Mr5in: This profit measures the relationship between profit and #ales.

There are two types of profit margins.

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#$ Gro11 )rofit:this is also known as gross margin. It is calculated by dividing

gross profit by sales. Thus

S6e1 Co1t of 5oo%1 1o6%Gro11 )rofit (((((((((((((((((((((((((((((((((((((((( @ +

S6e1

#$ Net )rofit: This ratio is also known as net margin. This measures the

Relationship between net profit and sales of a firm.

Profit fter t@

Net )rofit Rtio ((((((((((((((((((((((((( @ +

S6e1

-.Profiti6it! in re6tion to in7e1tment:

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

investment.

#$ Ret,rn on In7e1tment: It is also known as !overall profitability ratio%. It

indicates earning gained from investment. It shows relationship

*etween Garnings before interest and taxes to 3apital employed.

EBIT

Ret,rn on In7e1tment ((((((((((((((((((((((((((((((( @ +

C)it6 Em)6o!e%

#$ Ret,rn on E,it!: In this ratio( the earnings after taxes are related

to the market value of total share holders fund.

Profit fter T@

Ret,rn on E,it! ((((((((((((((((((((((((((((((

Net ?ort2

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#&$Ret,rn on C)it6 Em)6o!ment: It shows relationship between profit after

taxes before interest to capital employed. 3apital employed refers to long>term

funds provide by owners. P'B'T

Ret,rn on C)it6 Em)6o!e% ( ((((((((((((((((((((((((((((((

C)it6 em)6o!e%

#%$ Ret,rn on A11et1: The profitability ratios are measured in terms of the

relationship between net profits and assets.

Profit fter T@e1

Ret,rn on A11ert1 ((((((((((((((((((((((((((((((((

Tot6 A11ert1

#e$ Ernin51 )er 12re rtio : This ratio helps in the assessment of the

profitability of the firm from the stand point of equity share holders. It calculates

the earrings per each equity share.

Profit fter T@

Ernin51 )er 12re = ((((((((((((((((((((((((((((((((

No' Of S2re1

#f$ Di7i%en% )er 12re rtio:This ratio represents dividend paid to

The share holder and no of shares.

Dividend

Di7i%en% )er 12re (((((((((((((((((((((((((((

No' Of S2re1

5


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MANAGERIAL USE OF RATIO ANALYSIS:

+$ He6)1 in De&i1ion( m/in5: "inancial statement is prepared primarily

for decision> making. *ut the information provides in financial statements is not

an end in itself 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.

-$ He6)in5 in finn&i6 fore&1tin5 n% P6nnin5: Ratio analysis is of much

help in financial forecasting and planning. +lanning is looking ahead and the ratios

calculated for a number of years work as a guide for the future. /eaningful

conclusions can be drawn for future from these ratios. Thus( ratio analysis helps in

forecasting and planning.

0$ He6)in5 in Comm,ni&tion:The financial strength and weaknesses of a firm

are communicated in a more easy and understandable manner by the use of 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.

3$ He6)1 in &o(or%intion: Ratios even helps in co>ordination( which is of utmost

importance in effective business management. *etter communication of the

efficiency and weaknesses of an enterprise results in better co> ordination in the

enterprise.

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8$ Ot2er ,1e1: 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 bringout the strength and weakness of the firm.

#$ Uti6it! of 12re 2o6%er1 > in7e1tor1: an investor in the company will like to

asses the financial position of the concern where he is going to invest. His first

interest will be security of his investment and then a return in the form of dividend

or interest. "or the5 first purpose he will try to asses the value of fixed loans raised

against them. The investor will feel satisfied only if the concern as sufficient

amount of asserts. 2ong term solvency ratios( on the other hand ( will be useful to

the investors in

/arking up his mind whether financial position of the concern warrants further

investment or not.

#$ Uti6it! to Cre%itor1: The creditors are or suppliers extent #hort>term credits

to the concerns. They are interested to know whether Their payments at aspecified time or not. The concerns pays short>term 3reditors out of its current

assets. If the current assets are quite sufficient

to meet current liabilities then the creditors will not hesitate in extending 3redit

facilities. 3urrent and quick ratios will give an idea about the 3urrent financial

position of the concern.

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#&$ Uti6itie1 of Em)6o!ee1: The employees are also interest in the financial

position of the concern especially profitability. Their wage I increases andamount of fringe benefits are related to the volume of profits earn by the concern

the employees make use of information available ( in financial statements. arious

profitability ratios relating to gross profit( operating profit ( Eet profit etc(. enable

employees to put "orward their view point for the increase of wages and other

benefits.

#% $ Uti6it! to 5o7ernment:Dovernment is interested to know the overall strength

of the industry . arious financial statements published by industrial units are used

to calculate ratios for determining the short> term( long> term and overall financial

position of the concern. +rofitability indexes can also be prepared with the help of

ratios. Dovernment 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.

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ADVANTAGES OF RATIO ANALYSIS:

The various advantages of ratio analysis are given below:

+' It becomes easier to analysis.

#$2iquidity #$#olvency #&$profitability #%$Gfficiency

-' It helps the management in evolution of the present health and

The future planning can be based on the parameters.

0' The efficient with which the firm is utilizing its various assets in

Denerating sales revenue.

3' The ratio analysis helps in decision>making process.

8' The ratio analysis is also helps in security analysis.

9' The details of cumbersome set of numbers are reduced to easily

Interpretable numbers.

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42/83

LIMITATIONS OF RATIO ANALYSIS

The various limitations of ratio analysis are given below:

+' A single ratio does not cover much of sense .( To make better interpretation

a number of ratios have to calculated( which is likely to 3onfuse the analyst

for interpretation.

-' "inancial 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.

0' 3omparison between two variables proves worth provide basis of

aluation is identical.

3' Ratios are computed on the basis of past result. It does help properly to

predict future( to prepare budgets and estimates.

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43/83

DATA ANALYSIS AND INTERPRETATION

#A$' Li,i%it! Rtio1

+' C,rrent Rtio:

3urrent assets include cash and those assets which can be converted in to

cash within a year( such marketable securities( debtors and inventories. All

obligations within a year are include in current liabilities. 3urrent liabilities

include creditors( bills payable accrued expenses( short term bank loan income tax

liabilities and long term debt maturing in the current year. 3urrent ratio indicates

the availability of current assets in rupees for every rupee of current liability.

TABLE NO' 3'+

TA*2G E.6.=GRAPHNO'3'+

65

Yer C,rrent A11et1 C,rrent Lii6itie1 Rtio

=$=>$$ $


44/83

INTERPRETAION:

The current ratio indicates the availability of funds to payment of current

liabilities in the form of current assets. A higher ratio indicates that there were

sufficient assets available with the organization which can be converted in cash(

without any reduction in the value. As ideal current ratio is :$( where current ratio

of the firm is more than :$( it indicates the unnecessarily investment in the

current assets in the form of debtor and cash balance. Ratio is higher in the year

=$=>$$ where cash balance is more than requirement which came through

encashment of deposits.

-' .,i&/ Rtio:

Nuick ratio establishes the relationship between quick or liquid assets and

2iabilities. An asset is liquid if it can be converted into cash immediately or

reasonably soon without a loss of value. 3ash is the most liquid asset .other assets

which are consider to be relatively liquid and include in quick assets are debtors

and bills receivable and marketable securities. Inventories are considered as less

liquid. Inventory normally required some time for realizing into cash. Their value

also have tendency to fluctuate. The quick ratio is find out by dividing quick assets

by current liabilities.

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Yer .,i&/ A11et1 C,rrent Lii6itie1 Rtio

=$=>$$ 96.$6 7=7.$ $5 5=.$< $


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INTERPRETAION:

Nuick ratio indicates that the company has sufficient liquid balance for the

payment of current liabilities. The liquid ratio of $:$ is suppose to be standard or

ideal but here ratio is more than $:$ over the period of time( it indicates that the

firm maintains the over liquid assets than actual requirement of such assets. In the

years =$>$5 M =$6>$7 company has Rs.$.? M $.5$ cash for every $ rupee of

expenses; such a policy is called conservative policy of finance for working

capital. The company maintained sufficient quick ratio.

0' C12 Rtio:

Gven though debtors and bills receivables are considered as more liquid

then inventories( it can not be converted in to cash immediately or in time.

Therefore while calculation of absolute liquid ratio only the absolute liquid assets

as like cash in hand cash at bank( short term marketable securities are taken in to

consideration to measure the ability of the company in meeting short term

financial obligation. It calculates by absolute assets dividing by current liabilities.

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TABLE NO' 3'0

Yer C12 Bn/ 6n&e C,rrent Lii6itie1 Rtio

=$=>$$ 95.9< 7=7.= 5??.5? 9?9.6@ =.7$5 $66.


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INTERPRETATION:

Absolute liquid ratio indicates the availability of cash with company is

sufficient because company also has other current assets to support current

liabilities of the company. 'hen observe the above graph absolute liquid ratio

having some flections because of company carry moreBless cash balance( as a cash

balance is ideal assets company has to take control on such availability of funds

which is affect on cost of the funds.

:#B$' LEVERAGE RATIOS3'Det E,it! Rtio:

6?

ash Ratio

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

2010-11 2011-12 2012-13 2013-14 2014-15


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The term external equities refers to total outside liabilities that

consists of both short term and long term liabilities and the term internal equities

refer to share holders funds that consists of both equity and preference capital. In

case the ratio $0i.e.( outsiders funds are equal to shareholders funds it is considered

to be quite satisfactory1. The debt equity ratio is determined to ascertain the sound

ness of the long term financial policies of the company. It is also known as

!external internal% equity ratio. It may be calculated as follows:

TABLE NO' 3'3

Yer Det E,it! Rtio

=$=>$$ $?55.9 $ $=6.79 ?$5 5?57.6? =5$.9= $.?@

=$5>$6 559?.6? 5=$.6? $.$$

=$6>$7 66?=.5 66?.


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0

0.5

1

1.5

2

2.5

3

2010-11 2011-12 2012-13 2013-14 2014-15

Debt Equity Ratio

Ratio

INTERPRETATION:

The general norm for debt equity ratio is $: 0or1 $:$ this is applicable only

for developed countries. In case of developing countries like India( a general

norm of 5:$ or :$ is maintained by the firms. *ecause the firm is depending on

borrowed capital rather than equity capital. The debt position of the company is

fluctuating in the years =$=>$$ and =$>$5 but remaining years the company

satisfied the idle ratio of debt equity ratio

8' Pro)rietr! rtio:

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It is also known as equity ratio. This ratio establishes the relationship

between shareholders- funds to total assets of the firm. The shareholders- fund is

the sum of equity share capital( preference share capital( reserves and surpluses.

ut of this amount( accumulated losses should be deducted. n the other hand( the

total assets mean total resources of the concern. The ratio can be calculated as

under

TABLE NO' 3'8

Yer S2re2o6%er1 f,n% Tot6 11et1 Rtio

=$=>$$ $ ?$7 656?.


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0

0.1

0.2

0.3

0.4

0.5

0.6

2010-11 2011-12 2012-13 2013-14 2014-15

Proprietory Ratio

INTERPRETATION:

The above graph shows that the +roprietary ratio of Tirumal /ilk +roducts

0+1. 2td was increased gradually from the year =$= to =$7. A high ratio shows

that there is safety for creditors of all types. Here the company having nearly =.7

percentage of proprietary ratio. #o the company able to pay to the creditors.

#C$' TURNOVER RATIOS

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9' Fi@e% A11et1 T,rn O7er Rtio:

Assets are used to generate sales therefore the firm should manage its assets

efficiently to maximize sales. The relationship between sales and assets is called

assets turnover. The firm can compute fixed assets turnover simply by dividing

sales by fixed assets.

TABLE NO' 3'9

Yer S6e1 Net Fi@e% A11et1 Rtio #time1$

=$=>$$ $6=6.=< $5$5.?= @.66

=$$>$ $6?56.9? $95.$= @.$5

=$>$5 ?7


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8

8.5

9

9.5

10

10.5

11

11.5

2010-11 2011-12 2012-13 2013-14 2014-15

Fixed Aet !ur"o#er Ratio

Ratio $t i%e&

INTERPRETATION:

A high fixed assets turnover ratio indicates a high degree of efficiency in

assets utilization and low relation reflects inefficient use of assets. It can be

observed from the above table the fixed assets turnover ratio is having some

fluctuations.


55/83

It signifies that for an amount of sales( a relative amount of working capital

is needed. If any increase in sales contemplated working capital should be

adequate and thus this ratio helps management to maintain the adequate level of

working capital. The ratio measures the efficiency with which the working capital

is being used by a firm. It may thus compute net working capital turnover by

dividing sales by working capital.

TABLE NO' 3'$$ $6=6.=< $=@.$= $=.7

=$$>$ $6?56.9? $=$5 ?7=$6 5


56/83

GRAPHNO'3'$$ $=57.=9 $=@=.$ $$6 5==57. $7 5


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GRAPHNO'3'=

0

2

4

6

8

10

12

14

2010-11 2011-12 2012-13 2013-14 2014-15

+"#e"tory !ur"o#er Ratio

Ratio

INTERPRETATION:

The above table shows that the company maintained its inventory turnover

ratio was increased gradually from =$$ to =$7. In the year =$7 the company

increased its inventory turnover ratio. A high inventory Turnover ratio indicates

efficient management of inventory because the stocks are sold more frequently and

lesser amount of money is required to finance the inventory.

' Cre%itor1 T,rno7er Rtio:

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This Ratio is similar to the debtor-s turnover ratio. It compares

creditors with the total credit purchases. It signifies the credit period enoyed by

the firm in paying creditors. Accounts payable include both sundry creditors and

bills payable.

TABLE NO' 3'

Yer N'C'P A75 N'4 Rtio

=$=>$$ $=6$=.56 57?.$6 @.=9

=$$>$ $$@


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GRAPHNO'3'

0

5

10

15

20

25

30

35

2010-11 2011-12 2012-13 20 13-14 2014-15

)reditor !ur"o#er Ratio

Ratio

INTERPRETATION:

*y observing the above table( it is clear that the creditors turnover

ratio of Tirumala /ilk +roducts 0+1. 2td was decreased its creditors turn over ratio

gradually. That mean the company decreased its credit year by year. #o decreasing

credit is beneficial to the company.

+' Detor1 T,rno7er Rtio:

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8ebtors turnover ratio or accounts receivable turnover ratio indicates the

velocity of debt collection of a firm. In simple words it indicates the number of

times average debtors 0receivable1 are turned over during a year.

TABLE NO' 3'+

Yer S6e1 Detor1 Rtio

=$=>$$ $6=6.=< 95.7? [email protected]=

=$$>$ $6?56.9? 9?.66 $.9$5 ?7$6 5$7 6


62/83

INTERPRETATION:

The above graph shows that the debtor-s turnover ratio of the company was

increased in the year =$= and in the years =$$ and =$= it was decreased after

that it was increased. The higher the value of debtor-s turnover the more efficient

is the management of debtors or more liquidity. #o the company having good

position in management of debt.

#D$' PROFITABILITY RATIOS

9

Debtors Turnover Ratio

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2010-11 2011-12 2012-13 2013-14 2014-15


63/83

++' Gro11 )rofit rtio:

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.

TABLE NO' 3'++

Yer Gro11 Profit Net 16e1 Rtio

=$=>$$ $95.?@ $=@.$= $.$


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0

0.5

1

1.5

2

2.5

3

2010-11 2011-12 2012-13 2013-14 2014-15

,ro Proit Ratio

Ratio

INTERPRETATION:

The gross profit ratio is increased from the year =$=>=$$ to =$6>=$7

and in the year ==?>=@ it was increased highly. In all the years the ratio was

increased due to some reasons that are operating expenses of Tirumala /ilk

+roducts 0+1. 2td are decreased( however this ratio is satisfactory as it is showing

some increasing.

+-' Net Profit rtio:

96


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Eet profit margin establishes a relationship between net profit and sales

indicates management-s efficiency in manufacturing administrating and selling the

product. This ratio is the overall measure of the firm-s ability to turn each rupee

sales into net profit.

The net profit margin shows the earning left for shareholders as a

percentage of net sales. This ratio also indicates the firm-s capacity to withstand

adverse economic conditions. Dross and net profit margin ratios provide a

valuable understanding of the cost and profit structure of the firm and enable to

identify the source of business efficiency B inefficiency.

TABLE NO' 3'+-Yer Net )rofit Net 16e1 Rtio

=$=>$$ 6?7.$ 967.$9 $6?56.9? 6.57

=$>$5 $$$.< ?7$6 =$.7 5$7 57?.7 6


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0

1

2

3

4

5

6

7

8

2010-11 2011-12 2012-13 2013-14 2014-15

/et Proit Ratio

Ratio

INTERPRETAION:

8uring the period =$$>$7 the net profit ratio of the company is gradually

increased year by year except the year =$. The reason why the operating

expenses of the company is reduced year by year so the net profit of the company

was increased.

+0' O)ertin5 Profit rtio

99


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perating +rofit means profit earned by the concern from its

business operation and not from the other sources. 'hile calculating the net profit

of the concern all incomes either they are not part of the business operation likeRent from tenants( Interest on Investment etc. are added and all non>operating

expenses are deducted. #o( while calculating operating profits these all are ignored

and the concern comes to know about its business income from its business

operations.

perating +rofit Ratio shows the relationship between perating

+rofit and Eet #ales. perating +rofit Ratio can be calculated in the following

manner: >

TABLE NO' 3'+0

Yer O)ertin5 Profit Net 16e1 Rtio

=$=>$$ $$@$ $5@65.$5


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91.5

92

92.5

93

93.5

94

94.5

95

95.5

96

96.5

97

2010-11 2011-12 2012-13 2013-14 2014-15

perati"( Proit Ratio

Ratio

INTERPRETATION:

perating +rofit Ratio indicates the earning capacity of the concern

on the basis of its business operations and not from earning from the other sources.

It shows whether the business is able to stand in the market or not.

The above graph shows that there are some fluctuations in operating

profit ratio. "rom the year =$ to =$7 it was continuously decreasing the reason

why the operating expenses are increasing year by year from ==@ to =$7.

+3' Ret,rn on Tot6 A11et1:

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69/83

The profitability ratio is measured in terms of the relationship

between net profits and assets. The Return on assets may also be called +rofit F to

F asset ratio. There various approach possible to define net profits and assets. The

return on assets based on this ratio would be an under estimate as the interest paid

the credit of is excluded form the net profits in point of fact the real return on total

assets is the net earnings available to owners and interest as assets are financed by

owners as well as creditors.

.

TABLE NO' 3'+3

Yer Net Profit A'T Tot6 A11et1 Rtio

=$=>$$ $6.$ $95.69 $5 696.9< 7?9


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0

2

4

6

8

10

12

14

16

18

2010-11 2011-12 2012-13 2013-14 2014-15

Retur" o" !ota* Aet Ratio

Ratio

INTERPRETATION:

The ratio of Tirumala /ilk +roducts 0+1 2td limited is on increasing

trend indicating the profitability with regard to the better utilization of total assets.

The increasing ratio indicates that the company has a good proportion of return on

total assets. The company return on total assets ratio was increased year by year.

+8' Ret,rn on E,it!:


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Return on equity is of great interest to equity shareholders. rdinary

shareholders are entitled to the residual profits. If rate of dividend is not fixed the

earning may be distributed to shareholders or retained in the business. A return on

shareholders equity is calculated to see the profitability of owner-s investment.

The return on equity is net profit after taxes divided by shareholders equity or net

worth.

TABLE NO' 3'+8

Yer Profit fter T@ Net ?ort2 Rtio

=$=>$$ $6.$6 @?$7 $56


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0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

2010-11 2011-12 2012-13 2013-14 2014-15

Retur" o" uity Ratio

Ratio

INTERPRETATION:

The return on equity ratio was increased year by year due to high profits

after tax. And the net worth is also increasing year by year. This increasing ratio

indicates that the company has used the owner-s resources satisfactorily.

+9' Ret,rn on in7e1tment:


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RI 0Return on Investment1 is probably the most important calculation one

needs to make to ensure the long>term viability of their business. It is not enough

to build in a profit margin on the product or service being offered. ne must track

with proficiency the amount of dollars being invested into attracting sales and how

much RI those dollars put back into the business. If the investment meets too

little return( a product line is doomed to fail in the long>term.

TABLE NO' 3'+9

Yer E'B'I'T S2re2o6%er1 e,it! Rtio

=$=>$$ $6 $9@7.$5 5=$.6? 56.10

=$6>$7 55.76 656?.


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GRAPHNO'3'+9

INTERPRETATION:

The above graph shows that the return on investment of Tirumala

/ilk +roducts 0+1. 2td having gradual increasing from =$=>$$ to =$5>$6 but in

the year =$$>$ it decreases when compared with =$6>$7 year. The reason for

fluctuation of return on investment is fluctuations in market expenses.


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+


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GRAPHNO'3'+

RE Modifide Sreenu Project.

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Transcript of RE Modifide Sreenu Project.