RATIO ANALYSIS

A finance statement is any statement containing financial data drafted in a systematic manner in order to arrive at a some meaningful conclusion. A ratio figure showing the logical relationshi9p between any two items taken from financial statement.

1) Current ratio: This is most widely used ratio shows the proportion of current assets to current liabilities. It is also known as working capital ratio. As it is a measure of working capital available at a particular time. The ratio is obtained by dividing current assets by the current liabilities.

Current ratio= current assets Current liabilities

Rs. In 000 2009: = = COMMENT: The ideal ratio is 2:1 but the companys ratio in all 3 years is high than ideal ratio. A very high current ratio may be due to the pilling up of inventory inefficiency in debtors, high bank and cash balance account without proper investment. As compare to 2008, in 2009 the ratio is increase but as compare to 2009,in 2010 the ratio is decrease. 2010: = = 2011: = =

2) Debtors ratio:
The ratio shows the no. of days taken to collect the dues of credit sales. It shows the efficiency or otherwise of the collection policy of the enterprise. The ratio is computed by dividing the amount of debtors & bills receivable by the average daily sales. The average daily sales are obtained by dividing the total annual sales by 365.

Debtors ratio = debtors + B/R *365 Sales

Rs. In 000 2008: =254597262*365 2009: = 244845224*365 727215120 =123 days 2010: =304913780*365 874925116 =127 days

=114 days COMMENT:

The higher this ratio, the more unsatisfactory position it shows. It suggests that the credit & collection policy is weak. Debtors ratio is increasing year by year in year 2008 collection period 114 days. In year 2009 it is increasing by 9 days & becomes 123 days & in year 2010 it is increasing by 4 days & become 127 days. Company must try to decrease collection period. This ratio is make very bad situation in company.

3) Inventory turnover ratio:

A considerable amount of a companys capital may be tied up in the financing of raw material, work in progress & finished goods. It is important to ensure that the level of stocks is kept as low as possible, consistent with need to fulfill customers orders in time. Inventory turnover ratio = Sales Inventory Rs. In 000 2008: =812293294 202207801 =4.02:1 2009: = 727215120 342030362 = 2.13:1 2010: =874925116 311155882 =2.81:1

In 2008 this ratio 4.02 .it mean that 4.02 times a companys inventory has been sold during the year. In 2009,the ratio is 2.13 times. Which has decreased as compare to the last year and 2010 the ratio is 2.81 times. It means the ratio is increased as compare to 2009. Because the average sale has increased.

4) Acid-test ratio
In this ratio comparing only cash & bank balance as well as marketable securities with liquid liabilities. Liquid liabilities are obtained by deducting bank overdraft from current liabilities. This is a very exacting standard of liquidities and it is satisfactorily if ratio is 0.5:1

Acid-test ratio = quick assets Liquid liabilities

Rs. In 000 2008: =17083286 170252657 =0.10:1 COMMENT: In the year 2008 the ratio is 0.1:1 & in the year 2009 the ratio is same 0.1:1 but in the year 2010 the ratio of company is decreased & become 0.06:1 because increase in liquid liability & decrease in quick assets. Generally standard of liquidity is with the ratio of 0.5:1. So, in this company the position of liquidity is not much good. 2009: = 17107051 164581712 = 0.10:1 2010: =10541613 183529565 =0.06:1

5) Liquid ratio

A variant of current ratio is the liquid ratio or quick ratio which is designed to show the amount of cash available to meet immediate payments. It is obtained by dividing the liquid assets by liquid liabilities.

Liquid ratio = liquid Assets Liquid Liabilities

2008: =366046603 170252657 =2.15:1 COMMENT:

RS. IN 000 2009: =372343760 164581712 =2.26:1

2010: =426500683 183529565 =2.32:1

We can show that liquid ratio of the company is increasing year by year. In year 2008 ratio is 2.15 times, 2009,2.26 times & 2010 ratio is 2.32 times. So, liquid ratio is increase every year if liquid assets are equal to or more than liquid liabilities the condition may be considered as satisfactory. Here, liquid assets are more than liquid liabilities.

6) Current assets turnover ratio

The amount invested in business is invested in current assets jointly & sales are affected through them to earn profit. So, in order find out relation between current assets to sales. Current assets are in the form of cash or can be readily converted into cash with a short time.

Current assets turnover= sales Current assets

Rs. In 000 2008: =812293294 568254404 =1.43:1 COMMENT: We can show that current asset turnover ratio is very law in all 3 year. This is not good for company. Company should increase sales turnover. The current assets turnover ratio of company in year 2008,1.43 times, in year 2009 1.20 & bin year 2010 1.19. so we can say that by increasing sales turnover company must increase current turnover ratio. 2009: = 727215120 714374122 = 1.02:1 2010: =874925116 737656565 =1.19:1

7) Working capital turnover ratio

Working capital means difference between current assets & current liabilities. working capital turnover ratio can be obtain by dividing sales by working capital. w. c. turnover ratio= sales W. c. Rs. In 000 2008: =812293294 398001748 =2.04:1 Comment: Company shows very law working capital turnover. Company should increase sales turnover. In year 2008 w.c. turnover ratio 2.04 times, in year 2010 w.c. turnover ratio 1.58 times. So, company should increase sales turnover & decrease collection period. 2009: = 727215120 549792310 = 1.32:1 2010: =874925116 554127000 =1.58:1

SWOT ANALYSIS

The word SWOT Analysis

S Strengths W Weakness O Opportunities T Threats

So when we analysis these thing we say it to be SWOT analysis. So I am also trying to analyses DECOLIGHT CERAMIC LIMITED, in this matter.

STRENGHT:

Sound Financial Position. Good quality production. High quality manpower. Professionals handling are in operation. Product competitiveness. They have less competition.

WEAKNESS:

The competition is comparatively high in ceramic industry. The collection period is very long , it is not good for company. DECOLIGHT CERAMIC LIMITED late in market.

OPPORTUNITIY:

Company has opportunity to expand the business is his field & other field also. Through advertising company can set-up international market.

THREATS:

Economic slow- down. Recession which indirectly affect. Highly competitive market against imported ceramic. Company has to maintain its secrets.

FUTURE PLAN

This unit is constantly making such efforts to achieving their goals by making quality products & serving the society at large.

The following future plan of DECOLIGHT CERAMIC LIMITED : Replacing the old technology polishing line with the latest technology and longer length polishing line. This will contribute to improvement in quality, reduction in energy consumption, saving in working hours. Introduction of nano technology backed machinery for manufacturing of high nano quality vitrified tiles. Introduction of heavy duty tile press capable of manufacturing larger size vitrified tiles of 8 * 4.

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SUGGESTIONS

Giving a suggestion to such a competent firm would be difficult on my part. Yet considering myself a well-wisher of the organization, I would like to mention that in this competitive market person becomes an important part of the business. Their working attitude is affected by family conditions.

So, I would suggest that they can be given family insurance benefits over & above the facilities they are given.

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CONCLUSION

During our visit to DECOLIGHT CERAMIC LIMITED, I have collected all information above from the industry as well as from its office. The effect of this industrial visit on us cannot be expressed in words.

The DECOLIGHT CERAMIC LIMITED is an ideal organization. The cooperation of the employees good. The management is also effective. All the departments are also handled by authorized person who have great experience and it is one of the response of the firm.

I came to give my conclusion that its future is very bright and they will progress well.

So, I wish the company makes more and more profit, fulfill the future plans and get good and global market.

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BIBLIOGRAPHY

Books: Financial management Financial management Financial management Principles of management accounting By Khan & jain By I.M.Pandey By Ravi M. Kishore Dr. S.N. Maheshwari

Website: www.decocovering.com

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