Current Ratio

This ratio shows the proportion of Current Assets to Current Liabilities. It is alsoknown 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. Theideal 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 2008 ratio is showing good shine.
Hear ratio is increase as a increasing rate from 2004 to 2008.
Company is no where near the ideal ratio in every year but every company can notachieve this ratio.
Current ratio is increased in 2007-08 as compared to 2003-04 because of increase inInventories
100.96% and 123.77 % increased in Cash and Bank balance.
Current ratio is decreased in 2005-06 as compared to the last year because of increase in liabilities by
45.39% and 93.19% in increasing in Provision


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 Assetsare obtained by deducting stocks from
current assets. Quick liabilities are obtained bydeducting 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.
In 2007-08 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 itsimmediate obligation in
all the years

In 2005-06 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 2007-08, while was lowest in the 2004-2005

Networking Capital
Networking capital = Current Assets Current Liabilities
This ratio represents that part of the long term funds represented by the networth and long term debt,
which are permanently blocked in the currentassets.
It is Increasing Double than year by year because of assets increasing fast thanliabilities
Gross Profit Ratio
This is the ratio expressing relationship between gross profit earned to net sales. It is auseful 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 issufficient however it must cover its operating expenses.
Gross Profit Ratio = Gross Profit X 100Sales
GP Ratio shows how much efficient company is in Production.
GP is decreasing 2007-08 due to higher production cost.
Gross sales and services are increasing year by year so in effect Gross profit ratio isicreasing year by
year up to 2007.

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 availableto proprietors.
Operating Profit Ratio = COGS+Operating expences X 100Sales

Interpretation
Operating ratio is lowest during current 2007.
This shows that the expenses incurred to earn profit were less compared to the previous two years.
Operating ratio is decreses feom 2004 to anward decreasing rate

Net Profit Ratio= Net profit x 100Net sales
After observing the figure the ratio is fluctuating.
Company has rise in its net profit in 2006-07 as compared to the previous year because the company
has increased its sales 41.45% .
Though the companys sale is continuously rising but the net profit is not so muchincreased so
management should take some steps to decrease its expenses.
Sales is decrease in 2008 compare to 2007
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 muchin use among
financial analysts.
ROI= EBIT X 100Total Assets
Interpretation
From the above observation it can be seen that ratio is fluctuating.
In the year 2005-06 Rate of Return on Investment is slightly increase as comparedto previous year
Ratio is decreasing after 2005 at adecreasing rate because of asseets increasecompare to sales

Rate of Return on Equity
Rate of Return on Equity shows what percentage of profit is earned on the capitalinvested by ordinary
share holders.
Rate of Return on Equity =Profit for the EquityNet worth
Interpretation
ROE is remaining almost same Between 2005 to 2007, but it is decrease in2008 because the the
company has increase share capital but profit not getting that muchincrease.
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 increasing same way.

Total Asset Turnover Ratio
The amounts invested in business are invested in all assets jointly and sales areaffected through them to
earn profits. Thus it is the ratio of Sales to Total Assets. .It isthe ratio which measures the efficiency with
which assets were turned over a period.
Total Asset Turnover Ratio = SalesTotal 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 effectiveutilization of
assets from the companys view point.
In the year 2005-06 ratio is increased because of companys total assets isincreased by
24.52%, but sales is increased by 29.92%.So the ratio is increased but
in current year it is decreased because sale increasing by 41.45% and Assetsincreasing by
49.28%.


Net Fixed Assets Turnover
To ascertain the efficiency & profitability of business the total fixed assets are comparedto sales.
The more the sales in relation to the amount invested in fixed assets, the moreefficient is the use
of fixed assets. It indicates higher efficiency. If the sales are less ascompared to investment in
fixed assets it means that fixed assets are not adequatelyutilized in business. Of course excessive
sale is an indication of over trading and isdangerous.
Net Fixed Assets Turnover Ratio = SalesNet Fixed Assets
Interpretation
Here the ratio of Net Fixed Asset Turnover is continuously increasing up to 2006and after that it
has strated decline.Because sales as wellas assets boths are equallyincrease.
Net Fixed Assets Turnover Ratio is increasing year by year because of Sale isincreasing
continuously.
It indicates that the company maximizes the use of its fixed assets to earn profit inthe business
so that whatever amount is invested by company in fixed asset, givesmaximum 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 theyear is
known as stock turnover ratio.
Inventory Turnover Ratio = COGSAverage stock
Interpretation
From the above calculation we can say that the ratio is decreasing. It mensinventory is not
spdly convert in to sales. So that it is bad for the company.
In 2003-04 ratio is increased as compared to after that all year so managementshould take care
about good efficiency of stock management.
But in 2006 onward ratio is decreasing because of increase in COGS. So companyshould
devise a systematic operational plan for inventory control.

Average age of Inventories

This ratio indicates the waiting period of the investments in inventories and is measuredin days,
weeks or months. Inventory turnover and average age of inventories areinversely related.
Average age of Inventories Ratio = 360 daysInventory Turnover
Interpretation
This graph shows that inventory convert into cash in short time period.
Inventory turnover ratio is low in 2003-04 So In this year inventory is converted incash 11.9
days.
The inventory conversation in to cash time duration is increases from 2004 to everyyear so
the management should tray to efficient inventory conversation,so it will Itshows that company
effectiveness utilizing its Inventories in 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 salesrevenue.
Here the ratio is continuously decreasing, so that the companys collection of creditsales is
efficient management is improved its collection period every year so itshows that the
management have an ability to collect its money from his debtors. Sothey 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 fluctuating.
In 2007-08 the ratio is increased as compared to the previous year because the totalloan funds
are increased by 661.56%.
In 2005-06 Company has issued equity Share and also loan is decreased.
Its means that now company trying to increasing Trading on equity.


Debt-Equity Ratio
This ratio is only another form proprietary ratio and establishes relation between theoutside long
term liabilities and owner funds. It shows the proportion of long termexternal equity & internal
Equities.
Debt Equity Ratio = Total Long Term debt/Share holder equity
Interpretation
It shows companies accumulated more equity than required company has to refocusto its
strategic policies and plans and try to accumulate more debt funds in future soas to make the
balance between debt and equity.
There is only current year ratio is some what sufficient
Interest Coverage Ratio
Interest Coverage Ratio: The ratio indicates as to how many times the profit coversthe payment
of interest on debentures and other long term loans hence it is alsoknown as times interest earned
ratio. It measures the debt service capacity of the firmin respect of fixed interest on long term
debts.
Interest Coverage Ratio = EBIT/Interest
Interpretation
After observing the figure it shows that the ratio has mix trend up to 2006.
In the year 2007-08 company has not much debt compare to EBIT so interestcoverage ratio is
high but in 2007-08 company increasing its external debt socompany have pay more interest
among its earnings so interest coverage ratiofalling down compare to previous year.
Earnings Per Share
This ratio measures profit available to equity share holders on per share basis. It is notthe 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 SharesNo. of Equity Shares
Interpretation
Earninig per share is increasing as a increasing rate it is good for invester and shareholder.
In 2007-08 Profit is increasing by 42.30% and No Equity share Holder increased by2.03%,
Due to that EPS Ratio is increasing in current year.
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 ratiolower.
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 moreamounts should
be reinvested in the business rather than distributing as dividend.
In 2005-06 company has reinvested in business for expansion
P/E Ratio
P/E Ratio is computed by dividing the current market price of a share by earning per share. This
is Popular measure extensively used in Investment analysis.
P/E Ratio = Current Market Price of ShareEarnings per Share
Interpretation

In 2004-05 P/E Ratios is high means Share price of company is Stable and Shareholder are
interested to invest in the companys share.
But in 2006-07 P/E Ratio is Falling down word So company share price is not asstable as
compare to previous year

Profit margin ratio
Profit margin ratio= PAT/Sales*100
Interpretation

The ratio is shows equal for middle three year it means the company has maintainthe equal
ratio for year 2005 to 2007.
The ratio shows decline in current year it is bad sign for the company