Ratio Analysis @ Bec Bagalkot Mba

8/2/2019 Ratio Analysis @ Bec Bagalkot Mba

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TITLE OF THE PROJECTA Study on RATIO ANALYSIS of SHREEHalasidhanath Sahakari Sakhar

Karkhana Ltd.

Presented BY:-

BABASAB .S. PATIL

USN no:-2ba09mba07


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Sugar industries are brought prosperity as form 1850.

In India total sugar mills are 574 as per 2007-08

India is the second largest producer of sugarcane next to Brazil.

Most of the sugar industries are located in Uttar Pradesh, Bihar, Maharashtra,

AandraPradesh, Karnataka and Tamilnadu .

The Indian sugar industry is a key driver of rural development, supporting

Indian's economy growth.

Karnataka sugar industry ranked 3rd in terms of its contribution of sugar in the

total Sugar production in the country.

Karnataka stands 4th in the cultivation of sugar cane.

INDUSTRY PROFILE


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COMPANY PROFILESHREE HALASIDHANATH SAHAKARI SAKHAR KARKHANA LTD

NIPNI is Established in the year of 22-04-1981. The company is registered

under the provision of companies Act-1956 DSK/REG-2/80-81. The 1st

Crushing Season is started in 1983. The managing director of SHSSK Ltd

is Shri .D.A. Chougale. The Company mainly producing sugar (white

crystal sugar) and also producing by products like Bagasses & Molasses.

The present turn over of the company is 43-45 Cororer. Total staff of the

company is 638. The Area operation the factory can be covered in 68

villages including of that 43 villages from Chikodi.


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OBJECTIVES OF THE STUDY To study the profitability of Halasidhanath Sahakari Sakhar Karkhana Ltd. Nipani.

To study the liquidity position.

To find activity turnover

To study operating efficiency of Halsidhanath Sahakari Sakhar Karkhana Ltd Nipani.

SCOPE OF THE STUDYThe main scope of the study was to put into practical the theoretical aspect

of the study into real life work experience. The study of Ratio analysis

further the study is based on last 5 years Annual Reports of ShriHalasidhnath Sahakari Sakhar Karkhana. Ltd.


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RESEARCH METHODOLOGY

Sources of data collection:

1. Primary data:- The data required for the project was collected through

the discussion with finance manager and Other staff of the company.

Secondary data:-The source of data for this project was collected

through

Balance sheet of SSHSKL

Profit and loss account of 5 year period from 2005-2009
http://balance.docx/http://trading%20and%20profit.docx/http://trading%20and%20profit.docx/http://trading%20and%20profit.docx/http://trading%20and%20profit.docx/http://balance.docx/http://balance.docx/


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DATA ANALYSIS & INTERPRETETIONGross profit Margin ratio:

Gross profit ratio represents the relation between the profits and sale

Gross Profit Margin = Gross Profit / Net Sales * 100

YEAR GROSS

PROFIT

SALES G.P.

RATIO

2004-05 7,00,15,301.58 30,10,02,504.06 23.26

2005-06 4,13,17,359.41 30,23,04,793.75 13.66

2006-07 3,79,03,469.81 33,79,85,566.07 11.02

2007-08 6,09,91,621.57 34,95,46,301.04 17.44

2008-09 5,44,14,256.14 43,05,43,494.12 12.63

INTERPRETATION:-

The Gross-Profit Margin ratio of SHSSKL has ups and down in these five years period.

The gross profit measures the relation between the sales and profits. The gross-profit ratio in the

year 2004-05 is 23.26 and next year 2005-06 is 13.66 and in 2006-07 its 11.22 then in 2008its

become 17.44 and in 2008-09 it is 12.63.

ANALYSIS:- From the above calculation the gross profit margin ratio in 2004-05 it is high so it

good to the firm. As compare to other year its not up to mark able.

23.26

13.6611.22

17.44

12.63

0

5

10

15

20

25

2004-05 2005-06 2006-07 2007-08 2008-09

GROSS PROFIT RATIO


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Net Profit ratioThis ratio measures the relationship between and net profit and net sales

Net Profit Ratio = Net Profit / Net Sales*100

INTERPRETATION

The net profit is the indicative of the managements ability to operate the business with sufficient success.In the above bar diagram it shows that the net profit ratio of SHSSKL has increased 4.84 in 2004-05 but it

decreased in the next years 1.34 in 2004-05 and it again decreased in 2006-07.then it increased 0.62 and it again

decreased 0.38.in 2008-09.

ANALYSIS:- from the above diagram it shows that the firm has efficient utilization of assets in 2004-05 compare

to other years

YEAR NET PROFIT SALES N.P.RATIO

2004-05 14,56,9,011.39 30,10,02504.06 4.84

2005-06 40,53,781.26 30,23,04793.75 1.34

2006-07 11,79,916.79 33,79,85,566.07 0.34

2007-08 21,78,816.70 34,95,46,301.04 0.62

2008-09 16,53,143.88 43,05,43,494.12 0.38

4.84

1.34

0.340.62 0.38

0

1

2

3

4

5

6

2004-05 2005-06 2006-07 2007-08 2008-09

NET PROFIT RATIO


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CURRENT RATIO The ratio measures the relationship between the current Assets and

current Liabilities Current Ratio = Current Assets

Current Liabilities

INTERPRETATION:-

An ideal current ratio is 2: 1 Thus 2 is the considered as a safe margin from theabove diagram it determines that the firm has safe margin in1.4 2006-07 and in 2004-06 it has

0.67&0.47 moreover it has not safe margin 2007-09 e.i to 0.78& 0.86

ANALYSIS:-From the diagram it shows that the firm has safe margin in 2006-07. Compare to

other years it has not safety margin

YEAR Current Assets Current

Liabilities

RATIO

2004-05 30,83,21,871.3 45,42,94,589.7 0.67

2005-06 26,54,22,636.1 56,36,20,481.6 0.47

2006-07 87,56,37,598.7 62,30,87,336.2 1.40

2007-08 44,61,11,012.4 56,56,28,200.9 0.78

2008-09 47,18,36,449.8 54,28,37,550.5 0.86

0.67

0.47

1.4

0.780.86

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2004-05 2005-06 2006-07 2007-08 2008-09

CURRENT RATIO


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Liquidity RatioLiquidity Ratio = Liquid Assets

Liquid Liabilities

Liquid Assets= Current Assets-Inventories

Liquid-Liabilities = Current Liabilities - Bank-overdraft

INTERPRETATION:-

From the above table it determines that the firm has 0.24 &0.067 in the year 2004-06 and it increased

0.79 in 2006-07 and it again decreased 0.18 in 2007-08 then again raised0.30 in 2008-09.

ANALYSIS:- Usually, a high acid test ratio is an indication of that firms better liquidity

position. So the firm has better liquidity position in 2006-07.

Years Liquid assets Liquid

Liabilities

Ratio

2004-2005 11,00,24,781.8 45,42,94,589.7 0.24

2005-2006 37,88,5,949.4 56,36,20,481.6 0.067

2006-2007 49,66,55,612.5 62,30,87,336.2 0.79

2007-2008 10,21,95,141.3 56,56,28,200.9 0.18

2008-2009 16,31,16,368.5 54,28,37,550.5 0.30

0.24

0.067

0.79

0.18

0.3

0

0.2

0.4

0.6

0.8

1

2004-05 2005-06 2006-07 2007-08 2008-09

LIQUIDITY RATIO


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ACTIVITY RATIO INVENTORY TURN-OVER RATIO:-

Sales

Inventory Turn-Over ratio=

Average Inventory

Opening-Stock + Closing-Stock

Average Inventory =

2

INTERPRETATION: -

This means that the inventory in the first year has been sold 1.56 very slow in 2004-05 And it

again increase in 2005-08 e.i 1.28, 1.04, 1.02.and in last year it again decreased 1.4 in 2008-09

ANALYSIS:- The inventory in the 2004-05 has been sell 1.56 and in the year 2008-09 it

shows that the firm has sufficient inventory of sugar.

Years Average

Inventory

Sales Inventory

Turn-Over

ratio

2004-05 19,23,53,685.5 30,10,02,504.06 1.56

2005-06 23,46,74,943.5 30,23,04,793.75 1.28

2006-07 32,47,89,674.5 33,79,85,566.07 1.04

2007-08 34,20,85,995.0 34,95,46,301.04 1.02

2008-09 30,55,13,910.0 43,05,43,494.12 1.40

1.56

1.28

1.04 1.02

1.4

0

0.5

1

1.5

2

2004-05 2005-06 2006-07 2007-08 2008-09

INVENTORY TURNOVER RATIO


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FIXED ASSETS TURN-OVER RATIONet-Sales

Fixed assets turn-over ratio =

Fixed-Assets

YEARS SALES FIXED-

ASSETS

F. A. T-O

RATIO

2004-05 30,10,02,504.06 35,00,64,970.91 0.85

2005-06 30,23,04,793.75 36,17,12,835.66 0.83

2006-07 33,79,85,566.07 36,34,87,965.66 0.92

2007-08 34,95,46,301.04 37,14,70,849.66 0.94

2008-09 43,05,43,494.12 64,75,06,096.70 0.66

0.85 0.830.92 0.94

0.66

0

0.2

0.4

0.6

0.8

1

2004-05 2005-06 2006-07 2007-08 2008-09

FIXED ASSETS TURN OVER RATIO

INTERPRETATION:-

The ratio indicates the extent to which the investment in fixed assets contributedtowards to sales. As the figure shows, in 2004-05 the fixed assets turnover ratio is 0.85 and it

decrease 0.83 in 2005-06 but it increase again in the next 2years continuously with 0.92, 0.94.

And it again decreases in 2008-09 e.i to 0.66.

ANALYSIS:- By analyzing this ratio it shows that the firms fixed assets utilized efficiently .


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CURRENT ASSETS TURN-OVER RATIOSales

Current assets turn-over ratio =

Current Assets

INTERPRETATION:-

The current assets turnover ratio measures that how quickly the short term

obligations can be met. In the following graph it is shown that there is increasing0.97,

1.13 in 2004-06 current assets turnover ratio. And it falls0.38 in 2006-07 and it increase

slightly0.78 to 0.91 in 2007-09.

ANALYSIS:- The current assets turnover ratio measures that how quickly the short term

obligations can be met. It shows that the current assets are promptly invested towards

making sales.

YEARS SALES CURRENT

ASSETS

C. A. T-

O

RATIO

2004-2005 30,10,02,504.06 30,83,21,871.3 0.97

2005-2006 30,23,04,793.75 26,54,22,636.1 1.13

2006-2007

33,79,85,566.07

87,56,37,598.7

0.38

2007-2008 34,95,46,301.04 44,61,11,012.4 0.78

2008-2009 43,05,43,494.12 47,18,36,449.8 0.91

0.97

1.13

0.38

0.780.91

00.2

0.4

0.6

0.8

1

1.2

2004-05 2005-06 2006-07 2007-08 2008-09

CURRENT A. TURNOVER RATIO


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Operating-Efficiency Ratio:-

Direct Material cost to sales = Direct Material cost *100

Net-sales

INTERPRETATION:-

Direct Material cost to sales should be low enough to leave portion of sales to give fair return to investors from the above table show

that 66.57 & 64.23 in the year 2004-05 and 2007-08 it give the fair to the investors where as72.51, 71.43 and 71.86. 2005-07and

2008-09 are not up to mark able .

ANALYSIS:- By analyzing the above ratios it clearly shows that, the companys profitability is not

satisfactory in the year of 2005-07&2008-09.campare to other years.

YEARS Direct

Material

SALES Percenta

ge (%)

2004-2005 20,03,89,076.8 30,10,02,504.06 66.57

2005-2006 21,92,24,160.5 30,23,04,793.75 72.51

2006-2007 24,14,53,980.32 33,79,85,566.07 71.43

2007-2008 22,45,46,979.08 34,95,46,301.04 64.23

2008-2009 30,94,03,524.5 43,05,43,494.12 71.86

66.5772.51 71.43

64.2371.86

D.M COST TO SALES


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Direct Labour cost to sales

Direct Labour cost to sales = Direct Labour cost *100

Net-sales

YEARS

Di. Labour SALES Percentag

e (%)

2004-2005 14,88,5,365.90 30,10,02,504.06 4.94

2005-2006 16,95,8,271.40 30,23,04,793.75 5.60

2006-2007 27,66,1,900.24 33,79,85,566.07 8.18

2007-2008 34,86,2,365.60 34,95,46,301.04 9.97

2008-2009 35,56,2,670.05 43,05,43,494.12 8.25

INTERPRETATION:-

From the above table shows that the cost of direct labour of the firm in the year of 2004-05 is 4.94%

where it compare to the next 3year it increase5.60, 8.18 & 9.97. Slithightlliy. And it again decreases in

the year of 2008-09. It shows that the firm efficient utilized the labour in the year of 2004-05 and

2005-06.

ANALYSIS:- By analyzing the above table shows that the cost of direct labour of the firm in the

year is increased in 2006-08 compare to other years.

4.94%5.60%

8.18%

9.97%

8.25%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2004-05 2005-06 2006-07 2007-08 2008-09

Direct Labour cost to Sales


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Factory Overhead to Sales

Factory Overhead to Sales = Factory Overhead cost *100Net-sales

INTERPRETATION: -

From the above table shows that the cost of manufacturing overhead of the firm in the year

of 2004-05 is 5.22% where it compare to the next 3year it increase 8.46,9.16,& 9.16 in

2005-08. And it again decreases 6.79 in the year of 2008-09.

ANALYSIS:- By analyzing the above table it shows that the firm has high cost of

manufacturing overhead in the year 2005-08 it s unfavorable to the company.

YEARS F-Overhead Net-SALES Percenta

ge (%)

2004-05 15,71,2,759.79 30,10,02,504.06 5.22

2005-2006 25,58,1,554.35 30,23,04,793.75 8.46

2006-2007 30,96,6,215.70 33,79,85,566.07 9.16

2007-2008 32,03,8,895.00 34,95,46,301.04 9.16

2008-2009 29,26,9,482.40 43,05,43,494.12 6.790

2

4

6

8

10

2004-05 2005-06 2006-07 2007-08 2008-09

5.22

8.46 9.16 9.16

6.79

FACTORY O.H TO SALES

gs


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Findings Gross profit and net profits are decreased during the period of study, which indicates that firms inefficient

management in manufacturing and trading operations.

Liquidity ratio of the firm is not better liquidity position in over the five years. It shows that the firm had not

sufficient liquid assets.

The current assets turnover ratio is increasing during the period of 2004-06 and again it decrease in the

period of 2006-07. And again increase in next two year slithightlliy.

The inventory of the firm in the first year has been sold very slow. And there is an increase in the movement of

the inventories but it slightly decreased in the last year. This may be a sign not good to the firm.

The fixed assets turnover ratio of the firm has in 2004-05 the ratio is 0.85 and it increase in the next 3years

continuously and it again decrease in 2008-09.

Direct Material cost ratio of the firm is has less material cost during the period of 2004-05 & 2007-08 and it

raised in the year of 2005-06 and 2008-09.

The cost of direct labour of the firm in the year of 2004-05 is 4.94%and it increasing slithightlliy up to 2007-08

and it decrease in the next year.

The cost of manufacturing overhead of the firm in the year of 2004-05 is 5.22% where it compare to the next

3year it increase rapidly.


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SUGGESTIONSThe profit Of the Company Is not in a good Position For That company has to

Take Alternative Actions such As

Increasing in Procurement in sugarcane ,

Production, and Control in Expenses Like, Administrative, selling Etc.

The firms have low current ratio so it should increase its current ratio where it

can meet its short term obligation smoothly.

Liquidity ratio of the firm is not better liquidity position in over the five years.

So I suggested that the firm maintain proper liquid funds like cash and bank

balance.

CONCLUSION

The study undertaken has brought in to the light of the following conclusions. According to

this project I came to know that from the analysis of financial statements it is clear that

SHSSK Ltd. Have been incurring loss during the period of study. So the firm should focus

on getting of profits in the coming years by taking care internal as well as external factors.

And with regard to resources, the firm is take utilization of the assets properly. And also the

firm has a maintained low inventory.


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