Current Ratio

This 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. Its a
measure of short term financial strength of the business. The ideal current ratio is 2:1 i.e. Current
Assets should be equal to Current Liabilities.
Current Ratio = Current Assets/Current Liabilities
Interpretation
Current ratio is always 2:1. It means the current assets two time of current liability.
After observing the figure the current ratio is fluctuating.
In the year 2014 ratio is showing good shine.
Here ratio is increase as a increasing rate from 2010 to 2014.
Company is nowhere near the ideal ratio in every year but every company can not achieve this
ratio.

Quick Ratio
This ratio is designed to show the amount of cash available to meet immediate payments. It is
obtained by dividing the quick assets by quick liabilities. Quick Assets are obtained by deducting
stocks from current assets. Quick liabilities are obtained by deducting bank over draft from
current liabilities.
Quick Ratio = Quick Assets/Current Liabilities
Interpretation
Standard Ratio is 1:1

Companys Quick Assets is more than Quick Liabilities for all these 5 years.
From 2009-10 the ratio is increasing because of increase in bank and cash balance.
So all the years has quick ratio exceeding 1, the firm is in position to meet its immediate
obligation in all the years

In 2012-13 quick ratio is decreased because the increase in quick assets is less proportionate to
the increased quick liabilities.
The Quick ratio was at its peak in 2013-14, while was lowest in the 2012-2013

Networking Capital
Networking capital = Current Assets Current Liabilities
This ratio represents that part of the long term funds represented by the net worth and long term
debt, which are permanently blocked in the current assets.
It is Increasing year by year(except 2012-13) because of assets increasing fast than liabilities
Gross Profit Ratio
This is the ratio expressing relationship between gross profit earned to net sales. It is a useful
indication of the profitability of business. This ratio is usually expressed as percentage. The ratio
shows whether the mark-up obtained on cost of production is sufficient however it must cover its
operating expenses.
Gross Profit Ratio = Gross Profit /Sales*100
GP Ratio shows how much efficient company is in Production.
GP is decreasing initially from 2009 for 2 years due to higher production cost.

Gross sales and services are increasing year by year so in effect Gross profit ratio is increasing
year by year up to 2014.

Operating Profit Ratio

This ratio shows the relation between Cost of Goods Sold + Operating Expenses and Net Sales.
It shows the efficiency of the company in managing the operating costs base with respect to
Sales. The higher the ratio, the less will be the margin available to proprietors.
Operating Profit Ratio = COGS + Operating expenses/Sales*100

Interpretation
Operating ratio is lowest during 2011-12.
This shows that the expenses incurred to earn profit were less compared to the previous two
years.
Operating ratio is decreased for initial 2 years and then increased for latest 2 years.

Net Profit Ratio= Net profit /Net sales*100

After observing the figure the ratio is fluctuating.
Company has rise in its net profit in 2012-13 and 2013-14 as compared to the previous years.
Though the companys sale is continuously rising but the net profit is not so much increased so
management should take some steps to decrease its expenses.
Sales is ever increasing for past 5 years.
The overall ratio is showing good position of the company
Return On Investment

Rate of Return on Investment indicates the profitability of business and is very much in use
among financial analysts.
ROI= EBIT/Total Assets*100
Interpretation
From the above observation it can be seen that ratio is fluctuating.
For the past 5years Rate of Return on Investment is ever increasing.
Rate of Return on Equity
Rate of Return on Equity shows what percentage of profit is earned on the capital invested by
ordinary share holders.
Rate of Return on Equity =Profit for the Equity/Net worth
Interpretation
ROE has fallen in initial two years and then increased during latest 3 years.
Company is getting same return on equity.
As a result the share holders are getting higher return every year and investment portfolio
scheme selection was a judicious decision taken by the company.
This happens because Profit and Share Capital both are increasing year after year.

Total Asset Turnover Ratio

The amounts invested in business are invested in all assets jointly and sales are affected through
them to earn profits. Thus it is the ratio of Sales to Total Assets. It is the ratio which measures the
efficiency with which assets were turned over a period.
Total Asset Turnover Ratio = Sales /Total Assets
Interpretation

 The total assets turnover ratio is almost same in all years.

The Assets turnover Ratio is near by 1.5 in all 5 years which shows effective utilization of
assets from the companys view point.

Net Fixed Assets Turnover

To ascertain the efficiency & profitability of business the total fixed assets are compared to sales.
The more the sales in relation to the amount invested in fixed assets, the more efficient is the use
of fixed assets. It indicates higher efficiency. If the sales are less as compared to investment in
fixed assets it means that fixed assets are not adequately utilized in business. Of course excessive
sale is an indication of over trading and is dangerous.
Net Fixed Assets Turnover Ratio = Sales /Net Fixed Assets
Interpretation
Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2014.
Net Fixed Assets Turnover Ratio is increasing year by year because of Sale is increasing
continuously.
It indicates that the company maximizes the use of its fixed assets to earn profit in the business
so that whatever amount is invested by company in fixed asset, gives maximum productivity
which helps to increase sales as well as profit.

Inventory Turnover Ratio

Inventory Turnover Ratio: The no. of times the average stock is turned over during the year is
known as stock turnover ratio.
Inventory Turnover Ratio = COGS / Average stock
Interpretation

From the above calculation we can say that the ratio is increasing. It means inventory is
speedily converted in to sales. So that it is good for the company.
In past four years ratio is increased as compared to earlier year year so management has taken
good care about good efficiency of stock management.

Average age of Inventories

This ratio indicates the waiting period of the investments in inventories and is measured in days,
weeks or months. Inventory turnover and average age of inventories are inversely related.
Average age of Inventories Ratio = 360 days/Inventory Turnover
Interpretation
This graph shows that inventory convert into cash in short time period.
Inventory turnover ratio is low in 2010-11. So In this year inventory is converted in cash
11.95 days.
The management should try to do efficient inventory conversion, so that it will show that
company is effectively utilizing its Inventories quickly.

Debtor Turnover Ratio

Debtor turnover ratio: The debtor turnovers suggest the no. of times the amount of credit sale is
collected during the year.
Debtors Turnover Ratio = Sales/Average Debtors
Interpretation
Debtor turnover indicates how quickly the company can collect its credit sales revenue.

Here the ratio is continuously decreasing, in initial four years, and it shows that the companys
collection of credit sales is improved in its collection period every year and so it shows that the
management has an ability to collect its money from its debtors. So they can invest that money
on Assets, HRD and other investments.
Debt Ratio
Debt ratio indicates the long term debt out of the total capital employed.
Debt Ratio = Long Term Debt/Total Capital Employed
Interpretation
From the above calculation it seems that the ratio is decreasing.

Debt-Equity Ratio
This ratio is only another form proprietary ratio and establishes relation between the outside long
term liabilities and owner funds. It shows the proportion of long term external equity & internal
Equities.
Debt Equity Ratio = Total Long Term debt/Share holder equity
Interpretation
Ratio is falling for past five years. It means Low ratio indicates that Company depends more
on own funds and low financial risk.
Interest Coverage Ratio
Interest Coverage Ratio: The ratio indicates as to how many times the profit covers the payment
of interest on debentures and other long term loans hence it is also known as times interest
earned ratio. It measures the debt service capacity of the firm in respect of fixed interest on long
term debts.
Interest Coverage Ratio = EBIT/Interest

Interpretation
After observing the figure it shows that the ratio is decreasing up to 2012.
In the year 2009-10 company has not much debt compared to EBIT so interest coverage ratio
is high, but in 2012-13 company increasing its external debt so company have pay more interest
among its earnings so interest coverage ratio falling down compare to previous year.
Earnings Per Share
This ratio measures profit available to equity share holders on per share basis. It is not the actual
amount paid to the share holders as dividend but is the maximum that can be paid to them.
Earnings per Share = Net Profits for Equity Shares / No. of Equity Shares
Interpretation
Earning per share is reduced drastically in the first year, but thereafter has increased at good
rate and it is good for investor and shareholder.

Dividend Pay-out Ratio

This ratio indicate split of EPS between Cash Dividends and reinvestment of Profit. If the
Company has Profitable projects than it will prefer to keep dividend pay out ratio lower.
Dividend pay-out Ratio = Dividend per Share in Rs. /Earnings per share in Rupees
Interpretation
In all years there is fluctuation in ratio.
If the company wants to prosper in future with flying colors then ideally more amounts should
be reinvested in the business rather than distributing as dividend.

Profit margin ratio

Profit margin ratio= PAT/Sales*100

Interpretation

The ratio is fluctuating but seems almost constant for all five years. In the recent year it has
shown highest and it is a good sign for the company.