INTRODUCTION

RATIO ANALYSIS
The term ratio means an expression of one number in relation to another
number. The process of determining and interpreting the relationship between
two numerical figures in a financial statement is known as the ratio analysis.
It is used as a benchmark to assess the financial position and performance
of a firm. Financial ratios are classified depending on the activity to be
evaluated.

CLASSIFICATION OF RATIO
1. Liquidity ratios
2. Solvency ratios
3. Profitability ratios
4. Activity ratios
LIQUIDITY RATIO:
Liquidity Ratios usually project a picture of how far a firm is prepared to
meet its immediate liabilities or obligations. It shows the liquidity of a firm.
The important liquidity ratios are
1. current ratio
2. quick ratio
3. absolute ratio
SOLVENCY RATIO:
Solvency ratio indicates the firm’s position in meeting its long term
obligations. This is calculated to judge the long term financial strength of the
firm. These ratios indicate the proposition of fund provided by the owner and by
the lender in financing the business activities. The important solvency ratios are
1. debt-equity ratio
2. proprietary ratio
PROFITABILITY RATIO:
Profitability ratio helps us to find the overall profitability of running the
business. It is calculated to find the operating efficiency of the company or a firm.
The following are the types of profitability ratio

1. gross profit ratio

2. net profit ratio
3. operating profit ratio

ACTIVITY RATIO
Activity ratios are calculated for getting an idea about the effectiveness
and efficiency of the management in conducting the business. It shows how the
firm goes about in utilizing the asset provided by the creditor and the owner. This
ratio is also called as the turn over ratio.
1. debtor turnover ratio
2. fixed asset turnover ratio
3.creditor turnover ratio

CURRENT RATIO
Current ratio is used to measure the firm’s short term solvency. Current
ratio is calculated by dividing current asset by current liability
. CURRENT ASSETS
CURRENT RATIO= ---------------------------------
CURRNET LIABILITIES

Current assets include cash, sundry debtor, bills receivable, marketable

securities, stock and prepaid expenses.
 Current liability include all obligation that will be become due for
payment within a period of one year, such as bank overdraft , sundry creditors ,
short term bank loans , bills payable , and outstanding expenses.

QUICK RATIO
This ratio is used to assess the firm’s immediate liquidity. It establishes
relationship between the most quick or liquid assets with current liabilities. It is
also called as liquid or acid- test ratio.

LIQUID ASSETS
QUICK RATIO = --------------------------------
CURRENT LIABILITIES
Liquid assets include current asset less stock and prepaid expenses.

DEBT-EQUITY RATIO
Debt equity ratio helps us to find the proportion between debt (i.e. funds
provided by the outsiders or lenders) and equity (i.e. funds provided by the
shareholders). With this ratio, we can find how far the business is depending on
outsiders or shareholders fund for its survival. It can be calculated as
TOTAL LONG TERM DEBT
DEBT-EQUITY RATIO = -----------------------------------------
SHAREHOLDERS FUND
Total long term debts include debentures, long term funds banks and
financial Institutions.
Shareholders fund includes equity share capital, preference share capital
and reserves & surplus.
PROPRITARY RATIO
This ratio establishes a relationship between shareholders funds and total
tangible assets. The proprietary ratio is calculation as
SHAREHOLDER FUND
PROPRIETARY RATIO = ------------------------------------------
TOTAL TANGIBLE ASSET
Total tangible assets include all assets except Goodwill and Preliminary
expenses, Trademark, Patent, Copyright, etc

GROSS PROFIT RATIO

This ratio reflects the efficiency of the firm in carrying out its trading
activities. It indicates the relationship of gross profit to sales. Gross profit ratio is
calculated as
GROSS PROFIT
GROSS PROFIT RATIO = ----------------------------- * 100
SALES
Gross profit = sales – cost of goods sold.
Cost of goods sold = opening stock + purchase + direct expenses related to
purchase – closing stock.

NET PROFIT RATIO

This ratio indicates the overall efficiency of the firm in carrying out its
business activities. It indicates the relationship of net profit to sales. Net profit
ratio is calculated as

NET PROFIT
NET PROFIT RATIO = ------------------------- * 100
SALES
 Net profit = Gross profit – administrative expenses, selling & distribution
expenses and finance expenses, including depreciation and other provisions.

OPERATING PROFIT RATIO

This ratio indicates the operational efficiency of the management. It
establishes the relationship between the operating profits to sales. It can be
calculated as
OPERATING PROFIT
OPERATING PROFIT RATIO = --------------------------------- *100
SALES
Operating profit = gross profit – operating expenses
Operating expenses include administrative expenses including
depreciation and selling expenses.

DEBTORS TURNOVER RATIO

Debtor turnover ratio usually indicates the time period taken by the firm in
collecting the amount due from the debtors (Person to whom goods are sold on
credit). It indicates the number of times credit customers’ collection gets
completed in entirely debtor’s turnover each year. It is calculated as

CREDIT SALES
DEBTORS TURNOVER RATIO = ------------------------------------
ACCOUNTS RECEIVABLE

FIXED ASSET TURNOVER RATIO

A firm may be interested in knowing its efficiency in utilizing its fixed
assets to generate sales use this ratio. It is calculated as
SALES
 FIXED ASSET TURNOVER RATIO = -----------------------
FIXED ASSETS
Fixed asset value should be taken after considering depreciation (i.e. fixed
asset – depreciation)

CREDITORS TURNOVER RATIO

Creditor turnover ratio indicates the period in which the payment is made
to creditors. This establishes the relationship between credit purchases and
average accounts payable. Accounts payable include sundry creditors and bills
payable. It is calculated as
PURCHASE
CREDITOR TURNOVER RATIO= ----------------------------------
ACCOUNTS PAYABLE

RETURN ON INVESTMENT (ROI)

ROI is ascertained by a comparison of profit earned and capital employed
to earn it. The result is expressed as a percentage. This ratio judge the overall
performance of the firm. It is calculated as

NET PROFIT BEFORE INTEREST, TAX, AND

DIVIDENDS (EBIT)
ROI = ----------------------------------------------------------------------
NET FIXED ASSETS + WORKING CAPITAL

INTEREST COVERAGE RATIO

This ratio indicates how much times the operating profit covers the fixed
interest and hence measures the margin of safety for the lenders. Interest is to be
paid as committed irrespective of whether the firm generates surplus or not. This
is calculated as
EARNINGS BEFORE INTEREST
AND TAXES
INTEREST COVERAGE RATIO = --------------------------------------------
INTEREST ON LONG TERM
LOANS AND DEBENTURE

CHAPTER II

2.1 SCOPE OF THE STUDY:

 The study highlights on the financial position and performance of a

firms

 The study ability of firm in meeting it’s the long term obligation.

 The study aimed at finding overall profitability of running the

business.

2.2 OBJECTIVE OF THE STUDY:

 To study the liquidity position of a firm by considering the position

of current asset and current liabilities.

  To study the firm position in meeting its long term obligation.

 To study the overall profitability of running the business.

 To study the effectiveness and efficiency of the management in

conducting the business.

2.3 LIMITATION OF THE STUDY

 The secondary data is used for analysis.

 In ratio analysis there is no proper base for carrying out the

comparison process.

 We cannot decide the financial position of the firm only by using

ratio analysis alone.

2.4 RESEARCH METHODOLOGY

SOURCES OF DATA
This study is based on secondary data collected from the Annual Report of
Steel Authority of India Limited from the year 2005 – 2009 and from the
company’s website www.idbifederal.com.

TOOLS USED
 Liquidity ratio
 Solvency ratio
 Profitability ratio
 Activity ratio

PERIOD OF STUDY
The period of study has taken only five years from 2005 – 2009.
2.5 DATA ANALYSIS AND INTERPRETATION

CURRENT RATIO
CURRENT ASSET
= ---------------------------------------
CURRENT LIABILITIES

TABLE 2.1
YEAR CURRENT ASSET CURRENT CURRENT RATIO
LIABILITIES
2008-2009 34510.87 12228 2.82

2007-2008 26317.62 9439 2.79

2006-2007 20378.62 6500 3.14

2005-2006 17383.75 8108 2.14

 2004-2005 14187.43 6608 2.15

(Source: Annual report of IDBI)

INTERPRETATION
Current ratio shows the short-term financial position of the business. This
ratio measures the ability of the business to pay its current liabilities. The ideal
current ratio is supposed to be 2:1.
The current ratio shows fluctuating trends over the five year period from
2004 to 2009 are 2.15, 2.14, 3.14, 2.79, and 2.82 respectively. The ratio shows
that the company is in sound financial position to pay its current liabilities.

CURRENT RATIO

CHART 2.1f

CURRENT RATIO
3.5
3
2.5
2
CURRENT RATIO
1.5
1
0.5
0
9 8 7 6 5
2 00 2 00 2 00 2 00 2 00
0 8- 0 7- 0 6- 0 5- 0 4-
20 20 20 20 20
LIQUID RATIO
LIQUID ASSET
= ------------------------------------
CURRENT LIABILITIES

TABLE 2.2
YEAR LIQUID ASSET CURRENT LIQUID RATIO
LIABILITIES
2008-2009 24389.42 12228 1.99

2007-2008 19460.39 9439 2.06

2006-2007 13727.15 6500 2.11

2005-2006 10126.74 8108 1.25

2004-2005 11159.87 6608 1.69

(Source: Annual report of IDBI)

INTERPRETATION
Liquid ratio is calculated to work out the liquidity of a business. This ratio
measures the ability of the business to pay its current liabilities in a real way. The
ideal liquid ratio is supposed to be 1:1 i.e. liquid assets must be equal to the
current liabilities.
The liquid ratio shows the fluctuating trend over the period of study ratios
are 1.69 to 1.99. The company is in position to pay its current liabilities.

LIQUID RATIO

CHART 2.2f
 LIQUID RATIO
2.5

1.5
LIQUID RATIO
1

0.5

0
9 8 7 6 5
2 00 2 00 2 00 2 00 2 00
0 8- 0 7- 0 6- 0 5- 0 4-
20 20 20 20 20

DEBT – EQUITY RATIO

TOTAL LONGTERM DEBTS
= -------------------------------------------
SHAREHOLDERS FUND
 TABLE 2.3
YEAR LONG TERM SHAREHOLDER DEBT- EQUITY
DEBT FUND RATIO
2008-2009 7539 27984.10 0.269

2007-2008 3045 23063.57 0.132

2006-2007 4181 17313.15 0.241

2005-2006 4298 12601.41 0.341

2004-2005 5770 10306.65 0.56

(Source: Annual report of IDBI)

INTERPRETATION
This ratio is a measure of owner’s stock in the business.
Proprietors are always keen to have more funds from borrowings. The
normally acceptable debt-equity ratio is 2:1.

The ratio shows that shareholder funds are higher than the
borrowed funds. The company depends on owner fund rather than
borrowed funds.

DEBT – EQUITY RATIO

CHART 2.3f
 DEBT- EQUITY RATIO
0.6
0.5
0.4
0.3 DEBT- EQUITY RATIO
0.2
0.1
0
09

08

07

06

05
0

0
0

0
-2

-2

-2

-2

-2
08

07

06

05

04
20

20

20
20

20

PROPRIETARY RATIO
SHAREHOLDER FUND
= ---------------------------------------
TOTAL TANGIBLE ASSET

TABLE 2.4
 YEAR SHAREHOLDER TOTAL TANGIBLE PROPRIETARY
FUND ASSET RATIO

2008-2009 27984.10 46779.87 0.59

2007-2008 23063.57 37888.62 0.61

2006-2007 17313.15 31976.62 0.54

2005-2006 12601.41 28498.8 0.44

2004-2005 10306.65 27865.56 0.37

(Source: Annual report of IDBI)

INTERPRETATION
This ratio indicates the general financial position of the business concern.
This ratio has a particular importance for the creditors who can ascertain the
proportion of shareholder’s funds in the total assets of the business. Higher the
ratio, greater will be the satisfaction for creditors.

The ratio has been increase from the year 2004 to 2009 from 0.37 to 0.59.
The creditor will be satisfied with the increase in financial position.

PROPRIETARY RATIO

CHART 2.4f
 PROPRIETARY RATIO
0.7
0.6
0.5
0.4
PROPRIETARY RATIO
0.3
0.2
0.1
0
09

08

07

06

05
0

0
0

0
-2

-2

-2

-2

-2
08

07

06

05

04
20

20

20
20

20

GROSS PROFIT RATIO

GROSS PROFIT
= ---------------------------- * 100
SALES
 TABLE 2.5
YEAR GROSS PROFIT SALES GROSS PROFIT
RATIO

2008-2009 29875.68 43150.08 69.24

2007-2008 25978.86 39510.15 65.75

2006-2007 20937.24 33923.12 61.72

2005-2006 16665.68 27860.34 59.82

2004-2005 14999.11 28522.83 52.59

(Source: Annual report of IDBI)

INTERPRETATION
Gross Profit Ratio provides guidelines to the concern whether it is
earning sufficient profit to cover administration and marketing expenses
and is able to cover its fixed expenses.

The ratio shows that company’s earning is increasing every year.

In the year 2004-2005 it was 52.59% it increased to 69.24 in 2008-2009.
 GROSS PROFIT RATIO

CHART 2.5f

GROSS PROFIT RATIO

70
60
50
40
GROSS PROFIT RATIO
30
20
10
0
9 8 7 6 5
2 00 2 00 2 00 2 00 2 00
0 8- 0 7- 0 6- 0 5- 0 4-
20 20 20 20 20

NET PROFIT RATIO

 PROFIT BEFORE TAX
= ------------------------------------- * 100
SALES

TABLE 2.6
YEAR NET PROFIT SALES NET PROFIT RATIO

2008-2009 9404 43150.08 21.79

2007-2008 11469 39510.15 29.03

2006-2007 9423 33923.12 27.78

2005-2006 5706 27860.34 20.48

2004-2005 9363 28522.83 32.83

(Source: Annual report of IDBI)

INTERPRETATION
In order to work out overall efficiency of the concern Net Profit ratio is
calculated. This ratio is helpful to determine the operational ability of the concern.
While comparing the ratio to previous year’s ratios, the increment shows the
efficiency of the concern.
The ratio shows a fluctuation trend over the period of study in 2004 -2005
32.83 % in 2008-2009 21.79 %.

NET PROFIT RATIO

 CHART 2.6f

NET PROFIT RATIO

35
30
25
20
NET PROFIT RATIO
15
10
5
0
9 8 7 6 5
2 00 2 00 2 00 2 00 2 00
0 8- 0 7- 0 6- 0 5- 0 4-
20 20 20 20 20

OPERATING PROFIT RATIO

OPERATING PROFIT
 = ---------------------------------- * 100
SALES

TABLE 2.7
YEAR EBIT SALES OPERATING PROFIT RATIO

2008-2009 9657 43150.08 22.38

2007-2008 11718 39510.15 29.66

2006-2007 9755 33923.12 28.76

2005-2006 6178 27860.34 32.94

2004-2005 9970 28522.83 34.95

(Source: Annual report of IDBI)

INTERPRETATION
Operating Profit 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 operating profit ratio shows decreasing trend 34.95 in 2004-

2005 to 22.38 in 2008-2009. Earning before interest and tax was decreased
from 11718 to 9657.

OPERATING PROFIT RATIO

 CHART 2.7f

OPERATING PROFIT RATIO

35
30
25
20 OPERATING PROFIT
15 RATIO
10
5
0
9 8 7 6 5
2 00 2 00 2 00 2 00 2 00
0 8- 0 7- 0 6- 0 5- 0 4-
20 20 20 20 20

INVENTORY TURNOVER RATIO

COST OF GOODS SOLD
= ------------------------------------------
 AVERAGE STOCK

TABLE 2.8
YEAR CGS AVERAGE STOCK INVENTORY
TURNOVER RATIO

2008-2009 15558.51 8577.78 2.084

2007-2008 13529.14 7458.94 1.813

2006-2007 12985.76 3369.39 3.854

2005-20006 11194.32 2659.16 4.209

2004-2005 10074.89 2393.24 3.788

(Source: Annual report of IDBI)

INTERPRETATION
The inventory turnover ratio measure how quickly the inventory is
sold. It is a test of efficient inventory management. High inventory ratio is
better than a low ratio.

The ratio values from the year 2004 -2009 are 3.788, 4.209, 3.854,
1.813, and 2.084. This shows fast conversion of inventory into cash. The
inventory turnover ratio is very high in the year 2005 - 2006.

INVETNTORY TURN OVER RATIO

CHART – 2.8f
 INVENTORY TURNOVER RATIO
4.5
4
3.5
3
2.5 INVENTORY
2 TURNOVER RATIO
1.5
1
0.5
0
09

08

07

06

05
0

0
0

0
-2

-2

-2

-2

-2
08

07

06

05

04
20

20
20

20

20

DEBTOR TURNOVER RATIO

SALES
= -------------------------------------
 SUNDRY DEBTORS

TABLE2.9
YEAR SALES SUNDRY DEBTOR
DEBTORS TURNOVER RATIO
2008-2009 43150.08 3024.36 14.27

2007-2008 39510.15 3048.12 12.96

2006-2007 33923.12 2314075 14.66

2005-2006 27860.34 1881.73 14.81

2004-2005 28522.83 1908.45 14.95

(Source: Annual report of IDBI)

INTERPRETATION
This ratio indicates the efficiency of the concern to collect the
amount due from debtors. It determines the efficiency with which the trade
debtors are managed. Higher the ratio, better it is as it proves that the debts
are being collected very quickly.

The ratio shows that the efficiency company in collection its debt
from the debtor remains same from the year 2004-2005 14.95, to 2008-
2009 14.27.

DEBTOR TURNOVER RATIO

CHART 2.9f
 DEBTOR TURNOVER RATIO
15
14.5
14
13.5 DEBTOR TURNOVER
13 RATIO

12.5
12
11.5
09

08

07

06

05
0

0
0

0
-2

-2

-2

-2

-2
08

07

06

05

04
20

20

20
20

20

FIXED ASSET TURNOVER RATIO

SALES
= ----------------------------
FIXED ASSET
 TABLE 2.10
YEAR SALES FIXED FIXED ASSET
ASSET TURNOVER RATIO
2008-2009 43150.08 12268.83 3.52

2007-2008 39510.15 11571.31 3.41

2006-2007 33923.12 11597.71 2.93

2005-2006 27860.34 12162.14 2.29

2004-2005 28522.83 12485.07 2.28

(Source: Annual report of IDBI)

INTERPRETATION
It measures the efficiency with which fixed assets are employed.
A high ratio means a high rate of efficiency of utilization of fixed asset
and low ratio means improper use of the assets.

Fixed asset turnover ratio show there is an increasing trend from

the period 2004-2005 2.28 to 3.52 in 2008-2009. The company is utilizes
its fixed asset.

FIXED ASSET TURNOVER RATIO

 CHART 2.10f

FIXED ASSET TURNOVER RATIO

4
3.5
3
2.5
2 FIXED ASSET
TURNOVER RATIO
1.5
1
0.5
0

0 09 0 08 0 07 0 06 0 05
-2 -2 -2 -2 -2
08 07 06 05 04
20 20 20 20 20

CREDITOR TURNOVER RATIO

PURCHASE
 = -----------------------------------
ACCOUNTS RECEIVABLE

TABLE 2.11
YEAR PURCHASE ACCOUNTS CREDITOR
RECEIVABLE TURNOVER
RATIO

2008-2009 20083.69 4150.85 4.84

2007-2008 13935.17 2983.56 4.67
2006-2007 13276.2 2545.07 5.22
2005-2006 12391.12 2427.36 5.10
2004-2005 9358.92 2207.50 4.24
(Source: Annual report of IDBI)

INTERPRETATION
The low turnover ratio reflects liberal credit terms generated by supplier,
while a high ratio shows that accounts are to be settled rapidly.
The creditor turnover ratio shows fluctuating trend. The ratio was at 5.22
in 2006-2007, but decreased to 4.67 in 2007-2008. Again in the year 2008-2009 it
increased to 4.84. From this we can say that management in making efficient use
of working capital.

CREDITOR TURNOVER RATIO

 CHART 2.11f

CREDITOR TURNOVER RATIO

6

4
CREDITOR TURNOVER
3 RATIO
2

0
09

08

07

06

05
0

0
0
-2

-2

-2

-2

-2
08

07

06

05

04
20

20

20

20
20

RETURN ON INVESTMENT
EBIT
= -----------------------------------------------
 NET FIXED ASSET + WORKING CAPITAL

TABLE 2.12
YEAR EBIT CAPITAL ROI
EMPLOYED
2008-2009 9656.69 34552 27.95

2007-2008 11717.67 28450 41.19

2006-2007 9755 25476 38.33

2005-2006 6178 21782 28.36

2004-2005 9970 20064 49.69

(Source: Annual report of IDBI)

INTERPRETATION
The higher percentage is better, because that means the company is doing a
good job using its assets to generate sales.
Here the return on investment ratio was at 49.69 in 2004-2005, but it was
decreased to 28.36 and 38.33 in 2005-2006, 2006-2007 again increased to 41.19
in 2007-2008 but again it decreased to 27.95 in 2008-2009.

RETURN ON INVESTMENT

CHART 2.12f
 ROI
50
45
40
35
30
25 ROI
20
15
10
5
0
09

08

07

06

05
0

0
-2

-2

-2

-2

-2
08

07

06

05

04
20

20

20

20

20

INTEREST COVERAGE RATIO

EBIT
 = -----------------------------------------------------
INTEREST ON LONG TERM LOANS

TABLE 2.13

YEAR EBIT INTEREST INTEREST

COVERAGE RATIO
2008-2009 9656.69 326.33 29.59
2007-2008 11717.67 252.62 46.39
2006-2007 9755 333.01 29.29
2005-2006 6178 472.45 13.07
2004-2005 9970 606.74 16.43
(Source: Annual report of IDBI)

INTERPRETATION
This ratio expresses the satisfaction to the lenders of the concern whether
the business will be able to earn sufficient profits to pay interest on long-term
loans. This ratio indicates that how many times the profit covers the interest. It
measures the margin of safety for the lenders. The higher the number, more
secure the lender is in respect of periodical interest.
Here the ratio was at 16.43 in 2004-2005 it increased to 46.39 in 2007-2008
but in the year 2008-2009 it decreased to 29.53 due to decrease in EBIDT value.

INTEREST COVERAGE RATIO

 CHART 2.13f

INTEREST COVERAGE RATIO

50
45
40
35
30
25 INTEREST COVERAGE
RATIO
20
15
10
5
0

0 09 0 08 0 07 0 06 0 05
-2 -2 -2 -2 -2
08 07 06 05 04
20 20 20 20 20

2.6 FINDINGS OF THE STUDY

1. The current ratio shows fluctuating trends over the five year period from
2004 to 2009 are 2.15, 2.14, 3.14, 2.79, and 2.82 respectively. The ratio
shows that the company is in sound financial position to pay its current
liabilities.
2. The liquid ratio shows the fluctuating trend over the period of study ratios
are 1.69 to 1.99. The company is in position to pay its current liabilities
3. The ratio has been increase from the year 2004 to 2009 from 0.37 to 0.59.
The creditor will be satisfied with the increase in financial position.
4. The ratio shows that company’s earning is increasing every year. In the
year 2004-2005 it was 52.59% it increased to 69.24 in 2008-2009
5. The ratio shows a fluctuation trend over the period of study in 2004 -2005
32.83 % in 2008-2009 21.79 %.
6. The operating profit ratio shows decreasing trend 34.95 in 2004-2005 to
22.38 in 2008-2009. Earning before interest and tax was decreased from
11718 to 9657.
7. The inventory turnover ratio values from the year 2004 -2009 are 3.788,
4.209, 3.854, 1.813, and 2.084. This shows fast conversion of inventory
into cash. The inventory turnover ratio is very high in the year 2005 -
2006.
8. The debtor turnover ratio shows that the efficiency company in collection
its debt from the debtor remains same from the year 2004-2005 14.95, to
2008-2009 14.27.
9. Fixed asset turnover ratio show there is a increasing trend from the period
2004-2005 2.28 to 3.52 in 2008-2009. The company is utilizes its fixed
asset.
10. The creditor turnover ratio shows fluctuating trend. The ratio was at 5.22
in 2006-2007, but decreased to 4.67 in 2007-2008. Again in the year 2008-
 2009 it increased to 4.84. From this we can say that management in
making efficient use of working capital.
11. The return on investment ratio was at 49.69 in 2004-2005, but it was
decreased to 28.36 and 38.33 in 2005-2006, 2006-2007 again increased to
41.19 in 2007-2008 but again it decreased to 27.95 in 2008-2009.
12. The interest coverage ratio was at 16.43 in 2004-2005 it increased to 46.39
in 2007-2008 but in the year 2008-2009 it decreased to 29.53 due to
decrease in EBIDT value
 CHAPTER- III

SUGGESTION AND RECOMMENDATION

 The liquidity position of the company is satisfactory. Even though the

company’s current ratio is fluctuating the company can increase the
liquidity position by reducing the current liabilities.
 The company profits are huge in the current year; it is better to declare the
dividend to shareholders.
 Optimum utilization of working capital can be planned so as to result in
sound financial position.
 The company depends more on owners fund its better to increase the
borrowed capital to increase the profit after tax.
 The company can utilize its fixed asset effectively in order to increase its
return on investment.
CONCLUSION

The company’s overall position is at a good position. Particularly the

current year’s position is well due to raise in the profit level from the last year. It
is better for the organization to diversify the funds to different sectors in the
present market scenario.
 BIBILOGRAPHY

REFERED BOOKS

 FINANCIAL MANAGEMENT - I. M. PANDEY

 MANAGEMENT ACCOUNTANCY - PILLAI & BAGAVATI
 FINANCIAL MANAGEMENT – S. N MAHESHWARI

INTERNET SITES

 WWW.IDBIFEDERAL.COM