ANALYSIS

The total asset turnover ratio of the company in the year 2011-2012 is 1.42 and decreased to
0.26 in the year 2012-2013. In the year 2013-2014, it was 0.28 and it increased slightly to 0.3
in the year 2014-2015 and then it further showed slight increase to 0.33 in the year 2015-
2016.
INTERPRETATION
Total asset turnover ratio of the company has shown a decreasing trend throughout year. The
decrease in the ratio is due to the decrease in the value total assets. The company must
improve its management of assets to maintain an efficient total assets turnover ratio.
WORKING CAPITAL TURNOVER RATIO
The ratio which expresses the relationship between the working capital and sales, the current
assets like debtors, bills receivables, cash, stock etc. are changes with the increase or decrease
of sales. Working capital indicates difference between the current assets and current
liabilities. Working capital ratio indicates the number of time the working capital is turned
over during the year. It means velocity of utilization of net working capital.
FORMULA
Working Capital Turnover Ratio = Net Sales/Net Working Capital
ANALYSIS
From the above table we can analyse that the company proprietary ratio is 0.5462 in the year
2011-2012 and in the year 2012-2013 it increased to 0.9233 and in next year i.e. in the year
2013-2014 it has decreased to 0.9029. In the year 2014-2015 it further decreased to 0.8961
and in the end of year 2015-2016 it decreased to 0.8956.
INTERPRETATION
The company proprietary ratio is not stable it is fluctuating throughout the years. This is
because of the increase and decrease in total assets and shareholders’ funds. The company
should to take steps to maintain efficient proprietary ratio and good solvency position.
PROPRIETARY RATIO
This ratio establishes the relationship between shareholders’ funds to total assets of the firm.
A variant to the debt equity ratio is the proprietary ratio which is also known as Equity Ratio.
FORMULA
Proprietary Ratio = Shareholders Funds/Total Assets
SOLVENCY RATIO
The ratio is a small variant of equity ratio and can be simply calculated as
FORMULA
Solvency Ratio = Outsider Funds/Total Assets
ANALYSIS
The company fixed asset ratio is 0.32 in the year 2011-2012 and in the year 2012-2013 it
increased to 21.08. in the year 2013-2014 it further increased to 23.25 and in the year 2014-
2015 it decreased to 20.68 and then it again increased to 21.29 in the year 2015-2016.
INTERPRETATION
The fixed assets ratio of the company is showing increasing trend throughout the year.
Though in the year 2011-2012 the fixed assets ratio was very low the next 4 years it has
increased which is a good sign for the company. The companies fixed assets ratio is
satisfactory.
ANALYSIS
The debt equity ratio of 1:1 is generally acceptable. From the view of the company, the lower
this ratio, the less the company has to worry in meeting its fixed obligations. The debt equity
ratio of the company is 0.37 in the year 2011-2012 and it decreased to 0.04 in the year 2012-
2013 and further it decreased to 0.03 in the year 2013-2014 and it increased to 0.04 in the
year 2014-2015 and in the year 2015-2016 again there is decreasing trend of 0.03.
INTERPRETATION
The company has maintained a sufficient debt equity ratio. The ratio has shown a decreasing
trend throughout the year which is a good sign for the company. The company as no need to
depend upon outsiders for its financial requirements as it has maintained a good debt equity
ratio.
LEVERAGE RATIOS
Long term solvency ratios convey a firm’s ability to meet the interest costs and repayments
schedule of its long term obligations. Leverage Ratios is also known as Capital Structure
Ratios.
DEBT EQUITY RATIO- It measures the relationship between long term and shareholders
fund. It is also known as External-Internal Equity Ratio.
FORMULA
Debt Equity Ratio = Long Term Debt/Shareholders Fund
FIXED ASSETS RATIO
A variant to the ratio of fixed assets to net worth is the ratio of fixed assets to total long-term
funds which is calculated as
FORMULA
Fixed Assets Ratio = Fixed Assets/Total Long Term Funds
ANALYSIS
This ratio indicates the relationship between total liabilities to outsiders and total assets. The
company solvency ratio was 0.207 in the year 2011-2012 and it decreased to 0.039 in the year
2012-2013 and it further decreased to 0.033 in the year 2013-2014 and in the year 2014-2015
it has slightly increased to 0.036 before dropping to 0.033 in the year 2015-2016.
INTERPRETATION
From the above we can interpret that the company has not maintained the sufficient solvency
ratio. The company solvency ratio is showing a decreased trend due to the decrease in total
assets and increase in outsiders’ fund in the past to year. The company has to improve its
solvency ratio to attain good solvency position.
ACTIVITY OR TUNOVER RATIOS
This ratio is calculated to measure the efficiency with which the resources of a firm have
been employed. These ratios are also called Turnover Ratios because they indicate the speed
with which the assets are being turned over into sales.
DEBTORS TURNOVER RATIO
It is also called Receivables Turnover Ratio. It indicates the efficiency with which debtors are
converted into cash.
FORMULA
Debtors Turnover Ratio= Net sales/Average Trade Debtor
ANALYSIS
The debtor turnover ratio of the company is showing 14.21 in the year 2011-2012 and next
year i.e. in the year 2012-2013 it decreased to 11.7 and it further decreased to 10.79. In the
year 2013-2014 it increased to 15.68 and again it decreased to 14.53 in the end of 2015-2016.
INTERPRETATION
This ratio shows that rate at which cash is generated by the turnover of debtors. The
efficiency of debt collection is also indicated in this ratio. The company debt collection or
debtor turnover ratio is not efficient it is not satisfactory it is showing a decreased trend. The
company has to maintain a higher and efficient debtor turnover ratio which results in quicker
debt collection.
ANALYSIS
The working capital turnover of company was 2.83 in the year 2011-2012 and decreased to
2.7 in the year 2012-2013 and further it decreased to 2.68 in the year 2013-2014 and then it
decreased to 2.38 in the year 2014-2015 and then further it decreased to 1.97 in the year
2015-2016.
INTERPRETATION
A high working capital turnover ratio shows the efficient utilization of working capital in
generating sales. A low ratio, on the other hand, may indicate excess of net working capital.
The company has maintained a low turnover ratio which is not satisfactory. The company
must concentrate on the working capital to meet it current liabilities.
TOTAL ASSETS TURNOVER RATIO
The ratio which expresses the relationship between the sales and assets, it indicates efficiency
with which firm uses its total assets to generating sales. Higher the turnover ratio is
satisfactory
FORMULA
Total Assets Turnover Ratio = Net Sales/ Total Assets