janaki project

8/10/2019 Janaki Project

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A STUDY ON

DEMAND FORECASTING FOR GOLD AND JEWELLERY IN VISAKHAPATNAM

With reference t

V!i"h!# E$%ire Pri#!te Li$ite&

A project report submitted to JNTU University, Kakinada in partial fulfillment of the

requirements for the award of the deree of

MASTER OF 'USINESS ADMINISTRATION

'(

P)JANAKI CHANDRA

*Re+&) N) ,,-.-/01.1.12

Un&er the +3i&!nce f

Mr4) K) DEEPIKA

MBA., MCom

VISAKHA INSTITUTE FOR PROFESSIONAL STUDIES(Approved by AICTE & Affiliated to JNTU,Kakiada!

DIRECTORATE OF DISTANCE EDUCATION

ANDHRA UNIVERSITY

*ISO 511,6.111 Certifie&2

VISAKHAPATNAM78-111-

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CERTIFICATE OF THE GUIDE

T"i# i# to $ertify t"at M4) P)J!n!9i Ch!n&r!: Re+&) N) ,,-.-/01.1.1 #t%det of M.B.A,

i i#ak"a I#tit%te 'or rofe##ioal )t%die# i#ak"apatam, d%ri* t"e a$ademi$ year +-/+-0

"a# %der*oe pro1e$t 2ork iVAI'HAV EMPIRE PVT LTD):i#ak"apatam from

-3/0/+-3 to -0/4/+-3 o t"e topi$ of 5RATIO ANALYSIS;; 2it" refere$e to VAI'HAV

JEWELLERS: VS


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DECLARATION

I .JANAKI C;AN96A "ereby de$lare t"at t"i# pro1e$t 2ork etitled VAI'HAV

EMPIRE PVT)LTD): i#ak"apatam o t"e topi$ RATIO ANALYSIS, 2it" refere$e to

*VS


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ACKNOWLEGEMENT

I e=pre## my deep #e#e of *ratit%de to t"e maa*emet of aib"av 1e2eller#. 'or *ivi* me a

opport%ity to do my ob#ervatio #t%die# for t"e a2ard of MBA *RATIO ANALYSIS2)

I 2i#" to e=pre## deep *ratit%de to my pro1e$t *%ide, K)DEEPIKAof i#ak"a I#tit%te 'or

rofe##ioal )t%die#,i#ak"apatam 2"o "a# *ive me val%able advi$e t"ro%*"o%t my pro1e$t

2ork.

I am e=tremely t"akf%l to my pro1e$t *%ide at aib"av 1e2eller# Mr..6AM

6A)A9 ()6.Maa*er / 'ia$e! of aib"av i i#ak"apatam. 'or t"eir val%able #%pport ad

*%ida$e *ive t"ro%*"o%t t"e pro1e$t. I 2o%ld like to t"ak t"em for "avi* #pared t"eir time for

me, i #pite of t"eir b%#y #$"ed%le#.

'ially, I 2o%ld like to t"ak everyoe ivolved i t"i# pro1e$t for $ooperati* i $ompleti*

t"e pro1e$t #%$$e##f%lly.

P)JANAKI CHANDRA

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CHAPTER6,

Itrod%$tio

Need for t"e #t%dy

7b1e$tive of t"e )t%dy

Met"odolo*y

>imitatio# of t"e )t%dy

CHAPTER6. INDUSTRY PROFILE

?"at i# retaili*

6etail format i Idia

8lobal #$eario of retaili*

6etail #$eario of Ad"ra rade#"

Importa$e of retaili*

T"e f%t%re of retaili*

CHAPTER 7 - PROFILE OF THE ORGANI=ATION

Abo%t aib"av Empire vt >td.

Abo%t aib"av Je2eller#

;i#tory i#io ad Mi##io

)2ot

CHAPTER 7/ THEORETICAL FRAMEWORK OF THE RATIO ANALYSIS[5]


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CHAPTER 78 DATA ANALYSIS AND INTERPRETATION

CHAPTER 7>

)%mmary

)%**e#tio# Co$l%#io

Biblio*rap"y

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CHAPTER ? ,

Itrod%$tio

Need for t"e #t%dy

7b1e$tive of t"e )t%dy

Met"odolo*y

>imitatio# of t"e )t%dy

RATIO ANALYSIS

6atio aaly#i# i# a te$"i


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aaly#i# i# ot a ed for it#elf. It i# oly a mea# of better %der#tadi* of fia$ial #tre*t"# ad

2eake## of a firm.

TITLE OF THE STUDY6

T"e #t%dy "a# bee titled a#RATIO ANALYSIS)

NEED OF THE STUDY

VAI'HAV EMPIRE PVT LTD i# a #%$$e##f%lly maa*ed $ompay a# evidet by t"e re$et

aaly#i#.

T"e eed for t"e #t%dy i# %dertake to aaly@e ad %der#tad t"e 6atio Aaly#i# pro$e## i

AIB;A EMI6E T >T9, 2"i$" *ive# mea e=po#%re to pra$ti$al impli$atio of t"eory ko2led*e.

-. Eval%atio of 6atio Aaly#i# effe$tivee## pro$e## for %der#tadi* t"e dire$tio i 2"i$" t"e

$ompay i# movi* #o a# To de$ide ad implemet t"e f%t%re e $o%r#e of a$tio 2it" a vie2 to

a$"ieve t"e ob1e$tive# i t"e be#t itere#t of t"e or*ai@atio.+. T"e mai eed of t"e #t%dy i# to e#%re t"e met"od# follo2ed by t"e or*ai@atio for ratio aaly#i#

te$"i


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T"i# #t%dy of M#. aib"av Empire vt >td (E>! "a# bee %dertake to eval%ate t"e fia$ial

effi$ie$y of t"e or*ai@atio by e#tabli#"i* t"e follo2i* ob1e$tive#.

To ko2 abo%t t"e vario%# #o%r$e# of fia$e#, 2orki* $apital to E>.

To 1%d*e t"e fia$ial po#itio, i.e. t"e #"ort/term li.

To determie t"e profitability tred# of E>.

To a##e## t"e overall fia$ial po#itio of t"e $ompay t"ro%*" vario%# e#tabli#"ed te$"i


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"ave bee *at"ered from t"e bala$e #"eet#, profit ad lo## a$$o%t# a%al report# ad ot"er book# ad

ma%al# of t"e aib"av Empire rivate >imited.

LIMITATIONS OF THE STUDY6

Every #t%dy i# $od%$ted %der $ertai limitatio#. T"e #t%dy relate# oly to fia$ial data ad ot"er

area# are ot take ito $o#ideratio. T"e #t%dy i# $arried o%t oly for a period of + mot". It 2a# ot

po##ible to *et $et per$et $orre$t iformatio. T"e re#ear$" 2a# made a$$ordi* to t"e iformatio

available from related departmet# ad t"ro%*" a%al report# p%bli#"ed. T"e #et #t%dy $over# oly for a

period of t"ree year#. )o t"e aaly#i# 2ill be made o t"i# ba#i#.

+--/-+ (A%dited fia$ial#! +-+/- (A%dited fia$ial#!

+-/-3(Ua%dited fia$ial#!

CHAPTER7.

?"at i# retaili*

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6etail format i Idia

8lobal #$eario of retaili*

6etail #$eario of Ad"ra rade#"

Importa$e of retaili*

T"e f%t%re of retaili*

WHAT IS RETAILING6

Ret!i@in+$o#i#t# of t"e #ale of *ood# or mer$"adi#e from a fi=ed lo$atio, #%$" a# a departmet

#tore, bo%ti


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)"op# may be o re#idetial #treet#, #"oppi* #treet# 2it" fe2 or o "o%#e# or i a #"oppi* mall.

7lie retaili*, a type of ele$troi$ $ommer$e %#ed for b%#ie##/to/$o#%mer (B+C! tra#a$tio# ad mai

order, are form# of o/#"op retaili*.

)"oppi* *eerally refer# to t"e a$t of b%yi* prod%$t#. )ometime# t"i# i# doe to obtai e$e##itie#

#%$" a# food ad $lot"i* #ometime# it i# doe a# a re$reatioal a$tivity. 6e$reatioal #"oppi* ofte

ivolve# 2ido2 #"oppi* (1%#t looki*, ot b%yi*! ad bro2#i* ad doe# ot al2ay# re#%lt i a p%r$"a#e.

RETAIL SECTOR IN INDIA6

6etail i# IdiaD# lar*e#t id%#try, a$$o%ti* for over - per $et of t"e $o%tryD# 89 ad aro%d

ei*"t per $et of t"e employmet. 6etail id%#try i Idia i# at t"e $ro##road#. It "a# emer*ed a# oe of t"e

mo#t dyami$ ad fa#t pa$ed id%#trie# 2it" #everal player# eteri* t"e market. B%t be$a%#e of t"e "eavy

iitial ive#tmet# re


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6etail i# t"e #e$od/lar*e#t id%#try i t"e Uited )tate# bot" i %mber of e#tabli#"met# ad

%mber of employee#. T"e U.). retail id%#try *eerate# .F trillio i retail #ale# a%ally (3.+ trillio if

food #ervi$e #ale# are i$l%ded!, appro=imately --,GG per $apita. T"e retail #e$tor i# al#o oe of t"e lar*e#t

2orld2ide. ?al/Mart i# t"e 2orldD# lar*e#t retailer ad t"e 2orldD# lar*e#t $ompay 2it" more t"a -+

billio (U)9! i #ale# a%ally. ?al/Mart employ# -. millio a##o$iate# i t"e Uited )tate# ad more t"a

3, iteratioally. T"e #e$od lar*e#t retailer i t"e 2orld i# 'ra$eD# Carrefo%r.

6etail trade a$$o%t# for abo%t -+.3 per$et of all b%#ie## e#tabli#"met# i t"e Uited )tate#

)i*le/#tore b%#ie##e# a$$o%t for over G0 per$et of all U.). retailer#, b%t *eerate le## t"a 0 per$et of

all retail #tore #ale#. 8ro## mar*i typi$ally r%# bet2ee - ad per$et of #ale# for t"e id%#try b%t varie#

2idely by #e*met.

'e2 be#t or*ai@ed 1e2elry #tore# i 2orld are likeH.

ale Corporatio, 8ordo# 1e2eler#, Kay 1e2eler#, 99ma#, Tai#"


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ko2 2"at i# available ad $a #ee it before b%yi*. I additio, retailer# may provide may e=tra #ervi$e#

from per#oal #"oppi* to *ift 2rappi* to delivery, 2"i$" i$rea#e# t"e val%e of prod%$t# ad #ervi$e# to

$o#%mer#.

A$$ordi* to t"e Natioal 6etail 'ederatio, - i 0 Ameri$a 2orker# are employed i t"e retail

id%#try. T"e 9epartmet of >abor e#timate# t"at #i$e -GG, 4, e2 1ob# "ave bee $reated i t"e retail

#e$tor. T"at# -L of all e2 1ob# i t"e Uited )tate#. At pre#et, more 1ob# are provided i retaili* t"a t"e

etire U.). ma%fa$t%ri* #e$tor.

THE FUTURE OF RETAILING6

Adva$e# i te$"olo*y, like t"e Iteret, "ave "elped make retaili* a eve more $"alle*i* ad

e=$iti* field i re$et year#. T"e at%re of t"e b%#ie## ad t"e 2ay retaili* i# doe are $%rretly

%der*oi* f%dametal $"a*e#. ;o2ever, retaili* i #ome form 2ill al2ay# be e$e##ary. 'or e=ample,

eve t"o%*" t"e Iteret i# be*ii* to make it po##ible for ma%fa$t%rer# to #ell dire$tly to $o#%mer#, t"e

very va#te## of $yber#pa$e 2ill #till make it very diffi$%lt for a $o#%mer to p%r$"a#e every prod%$t "e or

#"e %#e# dire$tly. 7/lie retailer#, like Ama@o.$om, bri* to*et"er a##ortmet# of prod%$t# for $o#%mer#

to b%y i t"e #ame 2ay t"at bri$k#/ad/mortar retailer# do. I additio, traditioal retailer# 2it" p"y#i$al

#tore# 2ill $oti%e to be e$e##ary.

7f $o%r#e, retailer# 2"o offer per#oal #ervi$e#, like "air #tyli*, 2ill eed to "ave fa$e/to/fa$e

itera$tio 2it" t"e $o#%mer. B%t eve 2it" prod%$t#, $o#%mer# ofte 2at to #ee, to%$" ad try t"em

before t"ey b%y. 7r, t"ey may 2at prod%$t# immediately ad 2oDt 2at to 2ait for t"em to be #"ipped.

Al#o, ad per"ap# mo#t importatly, i may $a#e# t"e e=perie$e of vi#iti* t"e retailer i# a importat part

of t"e p%r$"a#e.

Everyt"i* t"at t"e retailer $a do to make t"e #"oppi* e=perie$e plea#%rable ad f% $a "elp

e#%re t"at $%#tomer# $ome ba$k.

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CHAPTER ? -

PROFILE OF THE ORGANI=ATION

Abo%t aib"av Empire vt >td.

Abo%t aib"av Je2eller#

;i#tory

i#io ad Mi##io

)2ot

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INTRODUCTION6

Evol%tio of AIB;A #tarted i -G A9, 2"e >ate )ri. 8rad"i 6am M%rt"y #tarted a

%i


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$ommi##ioi* t2o 2idmill# i t"e 9idi*%l di#tri$t of Tamilad%. Today t"e *ro%p #tad# tall after fo%r

*eeratio of #%#taied *ro2t" ad e=pa#io.

aib"av i# t"e Idia# lar*e#t I)7 $ertified 1e2ellery #"oppi* mall. It# i# t"e e=tedi* it# #ervi$e#

2it" 8old, 9iamod & plati%m Je2ellery. 'or t"e fir#t time i Ad"ra rade#" aib"av i# offeri* G+0

)terli* )ilver . It i# al#o offeri* braded *ift item# like 6A97, TA8;EUE6, TI))7T, 9IINITI, 9

MA6T EPC>U)I' ad KE)A6 prod%$t# for t"e $orporate $liet#.T"e re#ti*io%# liea*e of t"e 8rad"i#

& Emer*e$e of aib"av Empire rivate >imited

HISTORY6

-G O >ate.)ri 8rad"i ram M%rt"y of early -G laid t"e fo%datio for t"e #%$$e##ive 8rad"i# of

t"e later year#, by #tarti* a %iate. )ri 8rad"i Bala Kri#"a took t"e matle from "i# fat"er ad improved %po t"e b%#ie##

by leap# ad bo%d#. 8rad"i Bala Kri#"a & )o#, a iovative te=tile #"o2room i El%r% 2a# a bi*

mile#toe i 8rad"i# 'amily.

-G3 O It 2a# )ri 8rad"i Naredra 2"o took t"e tor$" for2ard. >et by #%$$e## i El%r% i te=tile

id%#try e=teded "i# dream #tream ito t"e 2orld of Je2ellery market by opei* aib"av. ?"e

aib"av opeed it# door, a traditio of %#%rpa##ed #ervi$e,


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traditio be$ame more ad more etre$"ed ad t"e approa$" to2ard# b%#ie## "a# bee $"a*ed dra#ti$ally

pari*# t"e alo* of aib"av Era.

-GG- O T"e 8rad"i# of t"e +- Cet%ry took a e2 li*"t t"ro%*" )ri Amaredra 8rad"i, a

E*ieeri* 8rad%ate 2"o i# e*a*ed i p%tti* to pra$ti$e "i# fat"er# *lorio%# year#, t"e "o%#e of

8rad"i# "a# *raied Immemorable e=perie$e ad i# o2 "adli* t"e eterpri#e#, aib"av Je2eller#

2it" a #tate of t"e art )"o2room at i#ak"apatam.

-GG3 O 2it" e2 blood at t"e "elm i t"e form of >ate. Mr.Mao1 K%mar 8rad"i, $"a*e 2a#

ievitable. T"e ma 2it" a bled of old #$"ool traditioali#m 2it" kee #e#e for maa*e rid pra$ti$e# vi#/#/

vi#


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T"e 8rad"i# family "a# al2ay# bee a patro of t"e art#. T"ey "ave idetified ad e$o%ra*ed

talet over t"e year# ad "ave bee #po#ori* t"e Natioal Emie$e a2ard# f%$tio, t"e 0 day#

$%lt%ral e=trava*a$e of m%#i$ ad da$e re$o*i@i* ad feli$itati* e=$eptioal $otrib%tio# to t"e art#

every year #i$e ++.

COMPANY HISTORY6

The P!tri!rch !n& Fr$er Gener!tin46

It be*i d%ri* t"e early -G# i a little/ko2 to2 $alled El%r%, #it%ated o t"e road bet2ee

i1aya2ada ad i#ak"apatam. )ri 8rad"i 6ama M%rt"y, #p%rred by a #%$$e##f%l ad e#tabli#"ed family

b%#ie## i C"eai, $"oo#e El%r% to ope "i# very o2 Te=tile )"o2room. >ittle did "e ko2 t"e, "e

2o%ld lay t"e fo%datio for oe of t"e lar*e#t privately "eld $orporate i Idia.

Taki* over from "i# fat"er, )ri 8rad"i BalaKri#"a re"ri#teed t"e #"o2room to 8rad"i

BAlaKri#"a ad )o#. Uder t"e e2 ame t"e #"o2room *re2 i #tat%re ad a$$epta$e amo*#t t"e

people of El%r%. T"e #"o2room evet%ally 2et o to be$ome El%r%# bi**e#t retail# o%tlet ad t"e

8rad"i# O El%r%# mo#t re#pe$ted b%#ie## me.

BalaKri#"a# iovatio# evet%ally lead to "i# #o# de#tiy. )ri Naredra 8rad"i e=paded t"e

family# b%#ie## ito 8old, literally. ;i# vi#io 2a# to $"ael t"ye #%$$e## of "i# fat"er# te=tile b%#ie##

ito it.

The 'irth Of V!i"h!# !n& the C3rrent Gener!tin6

?it" e2 blood at t"e "elm i t"e form >ate.Mr. Mao1 K%mar 8rad"i, $"a*e 2a# ievitable.

C"a*e $ame i t"e form of aib"av, maki* t"e be*ii* of a e2 era i t"e "i#tory of t"e 8ad"i#.

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Mr.Mao1 #"ifted t"e operatio# ba#e from El%r% to i#ak"apatam ad e#tabli#"ed t"e aib"av

ame a# oe of t"e mo#t tr%#ted ad preferred 1e2eler# i i#ak"apatam. Mr.Mao1 K%mar 8rad"i i# a

bled of od #$"ool traditioali#m 2it" a kee #e#e for maa*emet ad opport%ity.

;e #treamlied t"e b%#ie## by implemeti* id%#try be#t pra$ti$e# ad #tri$t


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STORE LAYOUT6

T"e ma1or a##et of aib"av i# it# o%t#tadi* ar$"ite$t%re 2"i$" 2a# de#i*ed by oe of t"e Idia#

reo2ed ar$"ite$t. T"e layo%t i# very keely de#i*ed ad #tr%$t%red by *ivi* every importa$e to mi%te

a#pe$t#.

T"e f%ri#"i* ad fi=t%re# are very %i


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)QUA6E i# "%*ely $o#tr%$ted i ad abo%t - #ft, 2"i$" "a# very lar*e $ellar ad #%b $ellar for

parki* $ar# ad t2o 2"eeler#.

T"e appro=imate area of $ellar ad #%b $ellar i# -F #ft ad -4 #ft re#pe$tively, 2"ere +

%mber# of ve"i$le# $a be parked at a time.

>et %# o2, "ave a detailed pi$t%re abo%t all t"e floor# i aib"av.

SU' CELLAR6

)%b $ellar of aib"av $over# a very "%*e area of -4 #ft. )%b $ellar i# a$$ommodati*

'ire p%mp "o%#e.

Uder *ro%d 2ater #tora*e #y#tem.

Employee parki*.

*eerator#.

Iverter room.

CELLAR6

C%#tomer parki*.

aib"av *old p%r$"a#e pla offi$e.

Time offi$e.

Maitea$e offi$e.

T"ere i# a lobby 2"i$" i# a atri%m of aro%d #ft 2"i$" "a# divided aib"av ad Kakatala

2it" 3F #ft ea$".

GROUND FLOOR6

T"e *ro%d floor $arrie# "eavy *old 1e2ellery. T"e total area it $over# i# 3-F.+0 #ft. 8ro%d floor

$ompri#e# of likeH

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4 lar*e $o%ter# 2it" 40 mm "ei*"t.

A re$eptio $o%ter to "adle


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FOURTH FLOOR6

T"i# floor $arrie# of *em #toe# 1e2ellery ad all r%by, emerald, #app"ire et$. T"ere are #ome

iteratioal brad item# like 2at$"e# ad a$$e##orie# of brad# like TI))7T, 6A97, M7NT B>ANC ad

TA8;EUE6. T"i# floor $over# a area of abo%t -3.- #ft#.

4 $o%ter#

CM9# per#oal $abi, $ofere$e room, patry, *%e#t

room ad bi* lo%*e.

'ially t"e 2"ole b%ildi* from t"e *ro%d level i# abo%t 3. feet "ei*"t. T"ere are t"ree

alleviator#, oe for t"e $%#tomer#, oe for t"e employee# ad ot"er for CM9 2"i$" i# "i# per#oal.

Ea$" ad every a#pe$t i t"e or*ai@atio i# *ivi* "i*" importat a# t"e ayt"i* #"o%ld ot "%rt

t"e $oveie$e of t"e $%#tomer ad a# 2ell a# employee#.

DAY TO DAY OPERATIONS6

)UCCE)) I) )?EET BUT IT) )EC6ET I) )?EAT. T"e #%$$e## of may or*ai@atio lie# i t"e

"ad# of t"e member# of t"e firm, "o2 2ell t"ey $otrib%te i performi* t"e operatio# i t"e or*ai@atio.

rimary #%$$e## lie# i t"e effe$tive ad effi$iet operatio# t"at take pla$e i t"e #tore ad ba#i*

o t"e #tore performa$e.

T"e daily operatio# i aib"av are %i


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T"e t"e pro$e## of $leai* pro$e## #tart# by t"e "o%#e keepi* departmet. Ea$" ad every part of t"e

#tore i# made to $lea ad "o%#ekeepi* i# re#po#ible for t"e $leai* pro$e##. T"i# pro$e## $oti%e#

till G.30am.

T"e #taff i# #%ppo#ed to $ome to before -.am ad *ive t"eir atteda$e t"ro%*" t"%mb prit

dete$tor#.

T"e by #"arp -.am prayer i# "eld i t"e atri%m for 0mi%te# 2"ere it i# $omp%l#ory for ea$" ad

every employee.

A# t"e prayer $omplete# t"e floor maa*er# are re#po#ible to ope t"e #tro* room lo$ker# ad made

t"e prod%$t# a##orted i t"e $o%ter# by t"e $o%ter i$"ar*e#.By t"e -.am a##ortmet pro$e##

$omplete#.

T"e t"e floor maa*er 2ill $"e$k t"e total #taff atteda$e ad make a ote of 2eekly off, leave#,

ab#etee# ad late $omer#.

7 ea$" ad every day t"e 1e2ellery pa$ki* material#, $o%ter a$$e##orie#, di#play #to$k pad# are

$"e$ked ad are replei#"ed before t"e #ale# #tart#.

At -.am t"e $%#tomer# are 2el$omed to t"e #"op, ad t"e t"e #ale# pro$e## #tart#. ?"e t"e

$%#tomer eter# t"e #"o2 room, t"ey are 2ell re$eived by t"e C6E# ad t"ey *%ide t"em to rea$" t"e

re


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;o%#e keepi* #taff are itrod%$ed to mob t"e floor#, $o%ter#, for every oe "o%r ad al#o itrod%$ed to

$lea t"e floor, d%#ti* t"e $o%ter# ad #pe$ial $leai* if ay.

?"ile t"e #ale# *o o t"e patry boy# are i#tr%$ted to #erve t"e

$%#tomer#.

T"e admii#trative *rieva$e# like t"e ele$tri$al, pl%mbi*, $arpetry ad E9 A6E C;ECKE9 by t"e

floor maa*er# if ay.

'ially t"e #ale# pro$e## *oe# o till i*"t G.pm.T"e after t"e $o%ter i$"ar*e# are re#po#ible to

"ad over t"e #lip# of t"e $lo#i* #to$k detail# to t"e ivetory departmet.

T"e t"e prod%$t# are #afely #tored i t"e #tro* room lo$ker# ad fially t"e key# are "aded over t"e

vi*ila$e offer#.

MERCHANDISING6

Mer$"adi#i* $over# all t"e f%$tio# ivolved i idetifyi* t"e ri*"t prod%$t for t"e retailer,

#o%r$i* it ad t"e evet%ally, e#%ri* t"at it rea$" t"e ed $o#%mer, i# mer$"adi#i*.

I mer$"adi#i* t"e t"ree f%$tio# are very importat for better f%$tioi* of retail #tore. I t"at

t"e fir#t o i# HH

,2 ASSORTMENT6

A##ortmet refer# to t"e #ele$tio of mer$"adi#i* $arried by a retailer. It i$l%de# bot" t"e breat" of a

prod%$t $ate*orie# ad t"e variety 2it" i ea$" $ate*ory.

A##ortmet i# oe of t"e $ore a#pe$t# i mer$"adi#i*. T"e 2idt" of t"e a##ortmet i#

t"e %mber of di#ti$t *ood# $ate*orie# or prod%$t lie t"at a retailer $arrie#. Ad t"e dept" of a##ortmet i#

t"e variety i ay oe of *ood# $ate*ory 2it" 2"i$" a retailer i# ivolved

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No2 let# "ave a #t%dy of a##ortmet made i aib"av 1e2elry #"o2 room, 2"ere t"ere i# a

va#t of prod%$t, variety ad ra*e of 1e2elry. >et# #tart# from floor 2i#eH.

8ro%d 'loor. (T"i# i# a##orted 2it" all "eavy 2ei*"t *old 1e2elry!

T2o $o%ter# for e$kla$e, "aram ad vaddaam

Ba*le# $o%ter of daily 2ear ad fa$y 2ear.

>o$ket #et 2it" ear ri*#.

T"e *ro%d floor i# maily $o$etrated o "eavy 2ei*"t *old a# be$a%#e it 2ill attra$t t"e more

2alk i# of $%#tomer ad may $reate i imp%l#e b%yi*.

'ir#t 'loor (T"i# i# a##orted 2it" li*"t 2ei*"t *old 1e2elry!

Ne$k $"ai $o%ter, bra$elet ad pedet $o%ter.

)t%d#, "a*i* ear ri*# $o%ter.

Ma*al#%tra ad bla$k bead# $o%ter.

'i*er ri*# for me ad 2ome of *em# ad #emi pre$io%# #toe# $o%ter.

I t"i# floor t"e 2alk i#


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9iamod# e$kla$e, ear ri*#, fi*er ri*#, ba*le# $o%ter

T"e#e 1e2elrie# are all of #olitaire# ad are $ertified by )olitaire 8emolo*i$al >aboratorie#,

2"i$" e#%re t"e p%rity of diamod#.

'o%rt" 'loor (T"i# i# a##orted 2it" 8em#, r%by, emerald 1e2elry!

8em #toe# 1e2elry, r%by, emerald 1e2elry.

Ati


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ivolved, t"e lo*i#ti$#, t"at from 2"i$" t"e pla$e i# bro%*"t, t"e maitea$e t"at i# doe to #tore or

pre#erve t"e ivetory, t"e $ompetitive aaly#i# ad e$oomi$ $oditio# t"at appear i e=teral

eviromet ad ba#i* o t"e#e t"e pri$i* i# doe for 1e2elry.

T"e $o#t of t"e metal i# variable a# it fl%$t%ate# 2it" t"e #li*"t $"a*e i t"e e=teral eviromet

"e$e e#timatio be$ome# very diffi$%lt.

B%t for diamod#, pri$i* i# doe ba#i* o t"e parameter# like

$arat

$%t

#"ape

#i@e

?"e t"e *old, #ilver, diamod# are p%r$"a#e a val%e added ta= (AT! of -L i# al#o added to t"e $o#t of

1e2elry ad fially t"e #elli* pri$e i# $al$%lated.

VISUAL MERCHANDISING6

All t"e $ompoet# of t"e retail mer$"adi#i* mi= play a role i $reati* t"e ima*e, t"e maer

i 2"i$" it i# pre#eted to t"e $o#%mer i#, may a time# a differetiati* fa$tor. )"oppi* today i# a

#e#ory e=perie$e. T"e retailer eed# to appeal to t"e #e#e# of #i*"t, to%$", #o%d ad #mell. ?"e *%ided

by t"e#e, "e $a $reate a #"oppi* e=perie$e t"at 2ill eti$e t"e #"opper# ito t"e #tore.

Every mi%te t"i* "a# to be pre#eted i a attra$tive maer ad at t"e #ame time, it "a# to

be profitable to t"e retailer. Ba#i$ally vi#%al mer$"adi#i* i# $o$ered 2it" t"e #tore de#i* ad it#

eviromet. T"e elemet# of t"e #tore eviromet are likeH.

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T"ere are t2o type# of #tore de#i*H.

ETERIOR STORE DESIGN6

T"i# i$l%de# #ome fa$tor# like B%ildi* Ar$"ite$t%re, )tore T"eme ad >o$atio.

If 2e #peak abo%t t"e B%ildi* Ar$"ite$t%re, let# be*a from t"e frota*e of aib"av. ?e $a

#ee a #mall fo%tai $overed 2it" *la## $a#e, 2"i$" eye/$at$"i* for people pa## by t"e #"o2 room. Ad at

t"e etra$e of t"e lobby t"ere# a a%tomati$ ope *la## door# 2"i$" "a# #e#or# %po it.

arki* pla$e i# very edeavor i at%re 2"i$" $a a##ort more t"a "%dred# of ve"i$le# i bot"

$ellar ad #%b/$ellar. T"e "ealt" ad #afety i# al#o take ito $o#ideratio by t"e or*ai@atio ad it i# ot

ay 2ay i$oveiet to $%#tomer#.

INTERIOR STORE DESIGN6

T"e iterior #tore de#i* of aib"av i# mid blo2i* ad ide#$ribable. T"e 2"ole iterior b%ildi* i#

f%ri#"ed 2it" 2ood imported from Arab $o%try ad de#i*ed by famo%# ar$"ite$t%re. T"e floor fi=t%re#

ad t"e 2all fi=t%re# are ma%fa$t%red i vario%# material# like 2ood, *la## ad #yt"eti$.

'loori* ad $eili* ad t"e 2all# 2ork to*et"er i $reati* a ima*e. T"e #tore i# $etrali@ed air/

$oditioi*. T"ere are $arpet# o floor. T"e li*"ti*# are effe$tive a# t"at e"a$e t"e 1e2elry very m%$".

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T"e e$k# %#ed for t"e 1e2elry di#play are 2"ite i $olored a# t"e 1e2elry #"o%ld *ive #oot"i* impre##io

o $%#tomer.

T"ere are t"eme *rap"i$#, #i* a*e#, ad promotioal *rap"i$#. To make it a# a #"oppi* e=perie$e,

#o%d i# al#o very importat to rela= t"e $%#tomer 2"ile #"oppi*. aib"av "a# al2ay# $o$etrated o t"e

$%#tomer# #ati#fa$tio t"ey play very #oft m%#i$ like $la##i$al a# "i*" $la## $%#tomer# #tep i# more. T"e

2"ole #tore t"eme i# de#i*ed ba#i* o t"e tar*et $%#tomer# ad mer$"adi#e mi=. T"e atmo#p"ere ad

dR$or are very appeali* to every idivid%al 2"o #tep i t"e #tore.

STAFFING6

EM>7SEE i# al2ay# ko2 a# t"e iteral $%#tomer of t"e or*ai@atio. T"e role# of #taff are

al2ay# a importat i##%e for a or*ai@atio ad it# performa$e.

Be"id AIB;A) #%$$e## t"e #taff $otrib%tio i# very lar*e. T"e team 2ork 2"i$" i# ivolved i#

appre$itable.AIB;A believe# i oee## amo* t"e employee ad t"ey $o#ider it a# t"eir family. T"e

%i


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C6E)/--

I8I>ENCE/--

6E>EIE6)/3

T"e #%pport #taff like t"e doorma# ad driver# i# ad re#pe$tively.

T"e maitea$e departmet# t"ere are -- member# 2orki* .I aib"av pro1e$t t"ere are 0 $ivil

2orker# .T"ere are "o%#ekeepi* #taff, 2"o are + i %mber ad #e$%rity 2"o are -- i member are "ired

from t"e private people by aib"av. No2 $omi* to t"e ba$k offi$e #taff i #"o2room maa*er# $abi, 2e

fid +- #taff 2orki*.

I data etry departmet t"ere are -- member#.

Ivetory departmet t"ere are - member#.

%r$"a#e pla departmet t"ere are F member#.

Ad fially t"ere are t"ree member# employed per#oally for CM9 ad t"ey i$l%de oe i*ila$e, oe

er#oal A##i#ta$e, oe 9river

T"ere i# a va#t "ierar$"y of #taff member# employed i aib"av, 2"i$" 2ill *ive a $lear pi$t%re of #taff i

#"o2room. T"i# #tart# 2it"

CM9

);7?677M MANA8E6

9EUTS );7?677M MAN8E6

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'>776 MANA8E6

9EUTS '>776 MANA8E6 C7UNTE6 INC;A68E

)A>E) C7769INAT76

C7UNTE6 INC;A68E

)ENI76 )A>E) 67M7T76

CU)T7ME6 6E>ATI7N EPECUTIE

CA);IE6)

I8I>ENCE 7''ICE6)

ANET6S )UE6I)76

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;7U)E KEIN8 )TA''

INVENTORY

aib"av vt >td i# a "%*e retailer i 1e2elry market, 2it" a lar*e %mber of varietie# of *old,

#terli* #ilver ad diamod item#. It ma%fa$t%re# it# 1e2elry for #ale. B%t maily it i# a pro$%rer of 1e2elry

item# from may braded ad #pe$iali@ed ma%fa$t%rer ad dealer# i Idia ad ei*"bori* $o%trie#.

aib"av i# $oe$t 2it" oly pro$%remet pro$e##, b%t a# t"i# i# a 1e2elry b%#ie##, t"e role of

#%pply $"ai i# ot #o ma1or. It doe# ot "ave ay $"ai pro$e## from ma%fa$t%rer to 2"ole #eller. T"ey

doe# ot maitai 2are"o%#e or di#trib%tio $etre, a# t"ey deal 2it" very pre$io%# metal. )o t"ey bri* all

t"e pro$%red #to$k to t"e ivetory departmet i #"o2 room.

T"ey pro$%re #to$k from ma%fa$t%rer ad dealer# like i M%mbai, C"eai, Kolkata,

A"medabad, Ba*alore, i1aya2ada, Jod"p%r ad ellore.

>ot of 1e2elry i# $reated, 2"i$" are #tored i lo$ker# i ivetory ad t"e ta**i* pro$e## take#

pla$e. T"i# i# doe i t"e #oft2are $alled $admi%m, prepared by Jilaba Ifo#y# >td. T"e pro*rammi* i# of

)Q> ad i#%al Ba#i$. I ivetory departmet #oft2are i# al#o developed.

After t"e ta**i* i# doe, pri$i* i# made o t"e re#pe$tive 1e2elry o it# 2ei*"t ad $o#t ad t"e it i#

prepared for delivery, a# #oo a# t"e re#pe$tive $o%ter i$"ar*e# pla$e t"e demad for it.

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T"ere i# al#o a A%dit departmet, 2"i$" look after t"e a$$%ra$y ad a%t"eti$ity of all t"e ta**i*

ad order of t"e 1e2elry i ea$" ad every $o%ter. T"i# "elp# i avoid of #"rika*e# ad t"eft of 1e2elry

item#.

Ad if 2e talk abo%t t"e >o*i#ti$#, t"at i# doe very $aref%lly a# t"i# deal# 2it" a 1e2elry item. ?"ile

tra#portatio may mea#%re# are take to avoid mi#repre#etatio#.

CUSTOMER RELATION MANAGEMENT6

aib"av i# be$omi* #killed i C6M 2"i$" fo$%#e# o meeti* t"e idivid%al eed# of val%ed

$%#tomer#. aib"av i# providi* e=$ellet real Otime $%#tomer #ervi$e t"ro%*" t"e effe$tive %#e of effe$tive

%#e of idivid%al a$$o%t iformatio t"ey *at"er from ea$" $%#tomer #o t"at t"ey $%#tomi@e market

offeri*#, #ervi$e#, pro*ram#, me##a*e# ad media. aib"av maitai# ad mie# a ri$" $%#tomer databa#e

2it" iformatio derived from all t"e $"ael#.

aib"av i# *aii* a lot of $%#tomer# 2it" t"e "elp of C6M ad t"e rea#o# are a# follo2#:

T"e *oal i# to $reate ad to keep t"e $%#tomer#.

T"e employee# are traied i #%$" a 2ay t"at t"eir motto i# ot to #ell b%t "elp t"e $%#tomer# to b%y.

'ially t"ey 2at t"e $%#tomer# to #ay I >7E T7 BUS IN AIB;A.

T"ey maitai *ood relatio#"ip# 2it" $%#tomer# by %der#tadi* t"eir eed# i aib"av ad

"elpi* t"e $%#tomer# i# t"eir top priority.

aib"av fo$%#e# maily o t"e follo2i* poit#:

T"ey e#%re t"at $%#tomer *et# *ood val%e for t"e moey t"ey pay.

T"ey pay m%$" attetio to t"e $%#tomer#.

T"ey make #%re t"at t"e employee# are 2ell dre##ed, *ood at $omm%i$atio, ad *ood body la*%a*e.

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aib"av al2ay# keep# i mid abo%t t"e $%#tomer per$eptio:

T"ey develop a $%#tomer profile 2it" t"e data t"at i# available

2it" t"em.

aib"av al2ay# look# at t"e b%#ie## 2it" $%#tomer# eye#.

T"ey make #%re t"at t"ey do ot $"eat t"e $%#tomer# 2it" t"eir fal#e promi#e# 1%#t to #ell t"e prod%$t#

ad t"ey are a2are of t"eir romi#e#.

If ay problem ari#e# t"e t"ey $o#ider it a# a *reat opport%ity i #olvi* it "e$e 2ii* $%#tomer#.

'ially 2"at $%#tomer# feel abo%t aib"av i# t"at

8ood feeli* t"at t"ey e=perie$e after #"oppi*.

T"e #ati#fa$tio t"at t"ey derive be$a%#e t"ey 2"at t"ey 2at from 2"at t"ey "ave.

'OARD OF DIRECTORS6

S) N) DIRECTOR NAME DESIGNATION

-. B"arata Mallika 6ata K%mari 8rad"i C"airma ad Maa*i* dire$tor

+. )ri ekata Amaredra 8rad"i E=e$%tive 9ire$tor

. )id%ri 8rad"i 9ire$tor

3. )ai Keert"aa 8rad"i 9ire$tor

0. Md. Irfa A#ari Compay )e$retary

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CHAPTER ? /

THEORATICAL REVIEWS OF RATIO ANALYSIS

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FINANCIAL RATIO ANALYSIS

INTRODUCTION6

A# ob#erved, a ba#i$ limitatio of t"e traditioal fia$ial #tatemet $ompri#i* A#

ob#erved, a ba#i$ limitatio of t"e traditioal fia$ial #tatemet $ompri#i* t"e bala$e #"eet ad t"e

profit ad lo## a$$o%t i# t"at t"ey do ot *ive all t"e iformatio related to t"e fia$ial operatio of t"e

firm. Nevert"ele##, t"ey provide #ome e=tremely %#ef%l iformatio to t"e e=tet t"at t"e Bala$e )"eet

mirror# t"e fia$ial po#itio o a parti$%lar date i term# of t"e #tr%$t%re of a##et#, liabilitie# ad o2er#

e


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T"%#, fia$ial aaly#i# i# t"e #tarti* poit for maki* pla#, before %#i* ay #op"i#ti$ated fore$a#ti*

ad plai* pro$ed%re#. Uder#tadi* t"e pa#t i# a pre/reak"# t"ro2# o li*"t o it# ade


41/97

T"e fi*%re of Net profit "a# to be $o#idered i relatio to ot"er variable#. ;o2 doe# it #tad i

relatio to #ale# If, t"erefore, Net profit# are #"o2 i term# of t"eir relatio#"ip 2it" item# #%$" a# )ale#,

A##et#,Capital employed, E


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be$ome d%e. A firm $a be #aid to "ave t"e ability to meet it# #"ort/term liabilitie# if it "a# #%ffi$iet li


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6atio aaly#i# ot oly t"ro2# li*"t o t"e fia$ial po#itio of a firm b%t al#o #erve# a# a #teppi*

#toe to remedial mea#%re#. T"i# i# made po##ible d%e to iter/firm $ompari#o ad $ompari#o 2it"

id%#try avera*e#. A #i*le fi*%re of a parti$%lar ratio i# meai*le## %le## it i# related to #ome #tadard or

orm. 7e of t"e pop%lar te$"i


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7e #erio%# limitatio of ratio aaly#i# ari#e# o%t of t"e diffi$%lty a##o$iated 2it" t"ere

$omparability. 7e te$"i


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I brief, ratio aaly#i# #%ffer# from #erio%# limitatio#. T"e aaly#t #"o%ld ot be $arried a2ay by it#

over #implified at%re, ea#y $omp%tatio 2it" "i*" de*ree of pre$i#io. T"e reliability ad #i*ifi$a$e

atta$"ed to ratio# 2ill lar*ely deped %po t"e


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. Ule## ot"er2i#e t"e ratio# $al$%lated are $ompared 2it" $ertai #tadard# oe 2ill ot be rea$" at

$o$l%#io#. T"e#e #tadard# may be a r%le of t"%mb a# i $%rret ratio (+:-!, may be id%#try

#tadard#, may be pro1e$ted ratio# et$. T"e $ompari#o of $al$%lated ratio# 2it" t"e #tadard# 2ill

"elp t"e aaly#t i formi* "i# opiio abo%t fia$ial #it%atio of t"e $o$er.

3. T"e ratio# are oly t"e tool# of aaly#i# b%t t"eir iterpretatio 2ill deped %po t"e $aliber ad

$ompete$e of t"e aaly#t. ;e #"o%ld be familiar 2it" vario%# fia$ial #tatemet# ad t"e

#i*ifi$a$e of $"a*e# et$.0. A 2ro* iterpretatio may $reate "avo$ for t"e $o$er #i$e 2ro* $o$l%#io# may bad to 2ro*

de$i#io#. T"e %tility of ratio# i# liked 2it" e=perti#e of t"e aaly#t.. T"e ratio# are oly *%idelie# for t"e aaly#t "e #"o%ld ot ba#e "i# de$i#io# etirely o t"em. ;e

#"o%ld #t%dy ay ot"er relevat iformatio, #it%atio i t"e $o$er, *eeral e$oomi$ eviromet

et$., before rea$"i* fial $o$l%#io#.

T"e #t%dy of ratio# i i#olatio may ot al2ay# prove %#ef%l. T"e iterpretatio #"o%ld %#e

t"e ratio# a# *%ide ad may try to #oli$it ay ot"er relevat iformatio 2"i$" "elp# i# rea$"i* a $orre$t

de$i#io.

U4er4 f fin!nci!@ !n!@(4i46

'ia$ial aaly#i# i# t"e pro$e## of idetifyi* t"e fia$ial #tre*t"# ad 2eake##e# of t"e

firm by properly e#tabli#"i* relatio#"ip# bet2ee t"e item# of bala$e #"eet ad profit ad lo## a$$o%t.

'ia$ial aaly#i# $a be %dertake by maa*emet of t"e firm, or by partie# o%t#ide t"e firm, vi@.,

o2er#, ive#tor# ad ot"er#.

T"e at%re of aaly#i# 2ill differ depedi* o t"e p%rpo#e of t"e aaly#t.

Trade $reditor# are itere#ted i firm# ability to meet t"eir $laim# over a very #"ort period of time.

T"eir aaly#i# 2ill, t"erefore, $ofie to t"e eval%atio of t"e firm# li


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itere#t ad repay pri$iple ad t"e relatio#"ip bet2ee vario%# #o%r$e# of f%d#. (Capital #tr%$t%re

relatio#"ip!.

Ive#tor#, 2"o "ave ive#ted t"eir moey i t"e firm# #"are, are mo#t $o$ered abo%t t"e firm#

eari*#. T"ey re#tore more $ofide$e i t"o#e firm# t"at #"o2 #teady *ro2t" i eari*#. A#

#%$", t"ey $o$etrate o t"e aaly#i# of t"e firm# pre#et ad f%t%re profitability. T"ey are al#o

itere#ted i t"e firm# fia$ial #tr%$t%re to t"e e=tet it ifl%e$e# t"e firm# eari*# ability ad

ri#k.

Maa*emet of t"e firm 2o%ld be itere#ted i every a#pe$t of t"e fia$ial aaly#i#. It i# t"eir

overall re#po#ibility to #ee t"at t"e re#o%r$e# of t"e firm are %#ed mo#t effe$tively ad effi$ietly,

ad t"at t"e firmV# fia$ial $oditio i# #o%d.

T(%e4 f R!ti4

)everal ratio#, $al$%lated from t"e a$$o%ti* data, $a be *ro%ped ito vario%# $la##e#

a$$ordi* to fia$ial a$tivity or f%$tio to be eval%ated. A# #tated earlier, t"e partie# itere#ted i

fia$ial aaly#i# are #"ort/term ad lo*/term $reditor#, o2er# ad maa*emet. )"ort/term $reditor#V

mai itere#t i# i t"e li


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, LI


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Creditor#, Bill payable, A$$r%ed e=pe#e#, )"ort/term bak loa, ad I$ome Ta= >iability ad >o*/term

debt mat%ri* i t"e $%rret year.

T"e $%rret ratio i# a mea#%re of t"e firm#V #"ort/term #olve$y. T"e "i*"er t"e $%rret ratio, t"e

lar*er i# t"e amo%t of r%pee# available per 6%pee of $%rret liability, t"e more i# t"e firm#V ability to meet

$%rret obli*atio# ad t"e *reater i# t"e #afety of f%d# of #"ort/term $reditor#.

i


50/97

)i$e $a#" i# mo#t li


51/97

e=tet to 2"i$" t"e firm "a# relied o debt i fia$i* a##et#. >evera*e ratio# are al#o $omp%ted from t"e

profit ad lo## item# by determii* t"e e=tet to 2"i$" operati* profit# are #%ffi$iet to $over t"e fi=ed

$"ar*e#.

!"#T $ "%U&T' (AT&)

T"e relatio#"ip de#$ribi* t"e leder $otrib%tio for ea$" r%pee of t"e o2er# $otrib%tio

i# $alled 9EBT/EQUITS 6ATI7. 9EBT O EQUITS 6ATI7 i# dire$tly $omp%ted by t"e follo2i*

form%la.

DE'T DE'T7E


52/97

E'IT

Intere4t C#er!+e R!ti 777777777777777777777777777777777

INTEREST CHARGES

FIED ASSETS TO NET WORTH6

T"i# ratio idi$ate# t"e e=tet to 2"i$" E


53/97

I a ma%fa$t%ri* $ompay ivetory of fii#"ed *ood# i# %#ed to $al$%late ivetory t%rover.

C4t f +&4 4@& INVENTORY TURNOVER RATIO

A#er!+e in#entr(

DE'TORS TURNOVER RATIO6

A firm #ell# *ood# for $a#" ad $redit. Credit i# %#ed marketi* tool by a %mber of

$ompaie#. ?"e t"e firm e=ted# $redit# to it# $%#tomer#, debtor# (a$$o%t# re$eivable#! are $reated i t"e

firm#V a$$o%t#. T"e debtor# are e=pe$ted to be $overted ito $a#" over a #"ort period ad, t"erefore, are

i$l%ded i $%rret a##et#. T"e li


54/97

De"tr4 Mnth4D!(4*in ! (e!r2

*r2

S!@e4

FIED ASSETS TURNOVER RATIO6

T"e fi=ed a##et# t%rover ratio mea#%re# t"e effi$ie$y 2it" 2"i$" t"e firm i# %tili@i* it#

ive#tmet# i fi=ed a##et#, #%$" a# lad, b%ildi*, plat ad ma$"iery, f%rit%re, et$. It al#o idi$ate# t"e

ade


55/97

NET WORKING CAPITAL C3rrent A44et4 7 C3rrent Li!"i@itie4

(E=$l%di* #"ort/term bak borro2i*#!

/) PROFITA'ILITY RATIOS6

A $ompay #"o%ld ear profit# to )%rvive ad 8ro2 over a lo* period of time. rofit# are

e##etial, b%t it 2o%ld be 2ro* to a##%me t"at every a$tio iitiated by maa*emet of a $ompay #"o%ld

be aimed at ma=imi@i* profit#, irre#pe$tive of #o$ial $o#e


56/97

-. Gr44 %rfit $!r+inrefle$t# t"e effi$ie$y 2it" 2"i$" t"e maa*emet prod%$e# ea$" %it of

prod%$t. T"i# ratio idi$ate# t"e avera*e #pread bet2ee t"e $o#t of *ood# #old ad t"e #ale#

reve%e. ?"e 2e #%btra$t t"e *ro## profit mar*i from -L, 2e obtai t"e ratio of Co#t of *ood#

to )ale#.

Bot" t"i# #"o2# profit# relative to #ale# after t"e ded%$tio of prod%$tio $o#t#, ad idi$ate# t"e

relatio bet2ee rod%$tio $o#t# ad )elli* pri$e. A "i*" *ro## profit mar*i relative to t"e id%#try

avera*e implie# t"at t"e firm i# able to prod%$e at relatively lo2er $o#t.

A "i*" *ro## profit mar*i ratio i# a #i* of *ood maa*emet. A *ro## mar*i ratio may i$rea#e d%e

to ay of t"e follo2i* fa$tor#.

;i*"er #ale# pri$e#, $o#t of *ood# #old remaii* $o#tat,

i. >o2er $o#t of *ood# #old, #ale# pri$e# remaii* $o#tat,

ii. A $ombiatio of variatio# i #ale# pri$e# ad $o#t#, t"e mar*i 2idei*, ad

iii. I$rea#e# i t"e proportioate vol%me of "i*"er mar*i item#.

T"e aaly#i# of t"e#e fa$tor# 2ill reveal to t"e maa*emet t"at "o2 a depre##ed *ro## profit mar*i

$a be improved.

A lo2 *ro## profit mar*i may refle$t "i*"er $o#t of *ood# #old d%e to t"e firm#V iability to

p%r$"a#e ra2 material# at favorable term#, ieffi$iet %tili@atio of plat ad ma$"iery, re#%lti* i "i*"er

$o#t of prod%$tio. T"e ratio 2ill al#o be lo2 d%e to fall i pri$e# i t"e market, or market red%$tio i

#elli* pri$e by t"e firm i a attempt to obtai lar*e #ale# vol%me, t"e $o#t of *ood# #old remaii*

%$"a*ed. T"e fia$ial maa*er m%#t be able to dete$t t"e $a%#e# of a falli* *ro## mar*i ad iitiate

a$tio to improve t"e #it%atio.

S!@e4 ? C4t f +&4 4@&

*r2 Gr44 %rfit

GROSS PROFIT MARGIN RATIO

S!@e4

NET PROFIT MARGIN RATIO6

[56]


57/97

Net profit i# obtaied 2"e operatio e=pe#e#, itere#t ad ta=e# are #%btra$ted from t"e *ro##

profit.

If t"e o/operati* i$ome fi*%re i# #%b#tatial, it may be e=$l%ded from AT to #ee

profitability ari#i* dire$tly from #ale#. Net profit mar*i ratio e#tabli#"e# a relatio#"ip bet2ee et profit

ad #ale# ad idi$ated maa*emet# effi$ie$y i ma%fa$t%ri*, admii#teri* ad #elli* t"e prod%$t#.

T"i# ratio i# t"e overall mea#%re of t"e firm#V ability to t%r ea$" r%pee #ale# ito et profit. If t"e et

mar*i i# iade


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. CASH MARGIN RATIO6

Ca#" profit e=$l%de# depre$iatio. It mea# Net profit after itere#t# ad ta=e# b%t before

depre$iatio. T"i# ratio idi$ate# t"e relatio#"ip bet2ee t"e profit, 2"i$" a$$r%e# i $a#" ad #ale#.

8reater per$eta*e idi$ate# better po#itio ad i$e/er#a a# it #"o2# t"e $orre$t profit eared by t"e firm.

T"i# ratio i# e=pre##ed a# $a#" profit to #ale#.

C!4h %rfitCASH MARGIN RATIO ,11

S!@e4

-) OPERATING MARGIN RATIO6

7perati* mar*i ratio i# al#o ko2 a# 7perati* Net profit ratio. It i# t"e ratio of operati*

profit to #ale#. T"i# ratio e#tabli#"e# t"e relatio#"ip bet2ee t"e total $o#t i$%rred ad #ale#. 7perati*

profit i# t"e Net profit after depre$iatio b%t Before Itere#t# ad Ta=e#. T"e p%rpo#e of $omp%ti* t"i#

ratio i# to fid o%t t"e overall operatioal effi$ie$y of t"e b%#ie## $o$er. It mea#%re# t"e $o#t of

operatio# per r%pee of #ale#.

T"i# ratio i# e=pre##ed a# operati* profit to #ale#.

O%er!tin+ %rfit

OPERATING MARGIN RATIO ,11

S!@e4

PROFITA'ILITY RATIOS IN RELATION TO INVESTMENT

-. 6ETU6N 7N INE)TMENT

[58]


59/97

+. 6ETU6N 7N NET ?76T;

. 6ETU6N 7N CAITA>

3. 6ETU6N 7N 867)) B>7CK

RETURN ON INVESTMENT6

T"e term ive#tmet refer# to Total A##et#. T"e f%d# employed i Net a##et# are ko2 a#

Capital Employed. Net a##et# e


60/97

Net %rfit !fter intere4t t!RETURN ON NET WORTH ,11

Sh!reh@&er4 f3n&4

RETURN ON CAPITAL6

T"e 67CE i# t"e #e$od type of 67I. T"e term $apital employed refer# to lo*/term f%d#

#%pplied by t"e $reditor# ad o2er# of t"e f%d. It $a be $omp%ted i t2o 2ay#. 'ir#t, it i# e


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CHAPTER 7 8

DATA ANALYSIS AND INTERPRETATION

[61]


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FINANCIAL RATIOS6

('ia$ial 6atio# are $al$%lated to 1%d*e t"e fia$ial po#itio of t"e $o$er for lo* O term a# 2ell

a# t"e #"ort O term #olve$y poit of vie2!

A. LiB3i&it( R!ti46 *LiB3i&it( R!ti4 !re 34e& t $e!43re the fir$;4 !"i@it( t $eet 4hrt ter$

"@i+!tin4)2

I. C%rret 6atioII. Q%i$k 6atio

III. Ab#ol%te Q%i$k 6atioI. ?orki* Capital 6atio

B. St!"i@it( R!ti46 *St!"i@it( R!ti4 he@% in !4cert!inin+ the @n+ ter$ 4@#enc( f ! fir$ t

$eet @n+ ter$ "@i+!tin4)2I. 'i=ed A##et# 6atioII. 6atio of C%rret A##et# to 'i=ed A##et#

III. 9ebt E


63/97

Inter%ret!tin6

A# a r%le t"e $%rret ratio 2it" +:- or more i# $o#idered a# #ati#fa$tory po#itio of t"e firm. T"ere i#

a *rad%al i$rea#e i t"e $%rret ratio every year. ?"ile $ompared to +--/-+ t"e ratio "a# bee i$rea#ed to

. i +-+/- (C%rret A##et# i$rea#ed by -FL, C%rret >iabilitie# i$rea#ed by -+L! ad 2"e

$ompared to +-+/- it "a# i$rea#ed .-- poit# i +-/-3, it i# d%e to t"e de$rea#e i t"e C%rret

>iabilitie# (4L! ad i$rea#e i t"e C%rret A##et# by (-L!. T"e C%rret 6atio of t"e Compay i# 8rad%ally

Improvi*.

II) i


64/97

Ye!r C3rrent

!44et4

Stc9 in h!n&


65/97

A"4@3te B3ic9 r!ti

A"4@3te


66/97

T"i# ratio idi$ate# t"e velo$ity of t"e %tili@atio of et 2orki* $apital. It idi$ate# t"e %mber of

time t"e 2orki* $apital i# t%red over i a year.

Wr9in+ C!%it!@ R!ti

Net Wr9in+ C!%it!@ C3rrent A44et4 ? C3rrent Li!"i@itie4

Ye!r S!@e4 Net r9in+ c!%it!@ R!ti

.1,,7,. --,3G,0-,F-,F+ 3,3,3-,GF4 .3-

.1,.7,- -,+,4F,F0,3- 0,F,44,04 +0.F0 .1,-7,/ 4,G4,,,++3 ,0G,04,4-+ --.G4

Inter%ret!tin6

T"e ?orki* Capital 6atio i +--/-+ i# .3- ad i +-+/- it i# +0.F0, t"ere i# a de$rea#e of 4.0 poit#.

I t"e year +-/-3 t"e ?orki* Capital 6atio i# --.G4, t"ere i# a de$rea#e of -.FF poit#, t"i# i# d%e to t"e

de$lie i t"e b%llio #ale# d%ri* t"e 'S +-/-3, a# per 6BI dire$tive# ad i$rea#e i t"e 2orki* $apital

by +L ad de$rea#e i t"e #ale# by 3L.

[66]


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') STAT'ILITY RATIOS6

I.FIED ASSETS RATIO6

T"i# ratio e=plai# 2"et"er t"e firm "a# rai#ed ade


68/97

I t"e year +-/-3 t"e fi=ed a##et# "ave bee i$rea#ed (0L! 2"erea# t"e $apital "a# i$rea#ed (-GL!. T"e

ratio "a# bee de$rea#ed .3 poit# d%e to le## i$rea#e of fi=ed a##et# $ompared to t"e $apital employed.

II) R!ti f C3rrent A44et4 t Fie& A44et46

T"e de$rea#e i t"e ratio may mea t"at tradi* i# #la$k or more me$"ai@atio "a# bee p%t t"ro%*".

A i$rea#e i t"e ratio may reveal t"at ivetorie# ad debtor# "ave %d%ly i$rea#ed or fi=ed a##et# "ave

bee ite#ively %#ed. A i$rea#e i t"e ratio, a$$ompaied by i$rea#e i profit, idi$ate# t"e b%#ie## i#

e=padi*.

R!ti f C3rrent A44et4 t Fie& A44et4

Ye!r C3rrent !44et4 Inc*&ec2

f c!

Fie& !44et4 Inc*&ec2 f

f!

R!ti

.1,,7,. +,F,,3,004 / F,+,-,++ / 0.33

.1,.7,- +,3,0,G,G30 -FL 4,+,GF,3 /L .0

.1,-7,/ +,3G,0,F0,F -L F,GG,3F,3 0L .3

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Inter%ret!tin6

I t"e year +-+/- t"e 6atio "a# bee i$rea#ed -.+- poit#, d%e to t"e i$rea#e of $%rret

a##et# (-FL! ad de$rea#e of fi=ed a##et# (/L!. I t"e year +-/-3 t"e ratio "a# bee de$rea#ed .+0 poit#,

d%e to t"e i$rea#e of $%rret a##et# (-L! ad more i$rea#e of fi=ed a##et# (0L! t"a t"e $%rret a##et#.

III)De"t ? EB3it( R!ti6

T"e ratio idi$ate# t"e relatio#"ip bet2ee t"e e=teral e


70/97

Ye!r O3t4i&er f3n&4 Sh!reh@&er4; f3n&4 R!ti

.1,,7,. ,F,F3,4- 43,--,0,03- .G

.1,.7,- -,G+,4,+34 F0,F-,+4,0G .-+

.1,-7,/ +,-4,, G,4F,F,430 .+

Inter%ret!tin6

A# a r%le t"e 9ebt E


71/97

Pr%riet!r( R!ti

Ye!r Sh!re h@&er4 f3n& Tt!@ !44et4 R!ti

.1,,7,. 43,--,0,03- +,+,-,3,-3G .+F

.1,.7,- F0,F-,+4,0G +,G4,0+,-F,430 .+F

.1,-7,/ G,4F,F,430 ,3,-3,-0,FG .-

Inter%ret!tin6

A "i*" e


72/97

,)PROFITA'ILITY RATIOS

(T"e#e ratio# are $al$%lated to eli*"te t"e ed re#%lt# of b%#ie## a$tivitie# 2"i$" i# t"e #ole

$riterio of t"e overall effi$ie$y of a b%#ie##!

-. 8ro## rofit 6atio+. Net rofit 6atio. 7perati* 6atio3. 7perati* rofit 6atio0. 6et%r o Capital Employed. 6et%r o )"are"older# '%d4. 6et%r o E


73/97

.1,.7,- G,F,G,4G -+,,G,G-,F -,+,4F,F0,3- 0.

.1,-7,/ 4+,G+,+,GG 4,+3,F,+4,+3 4,G4,,,++3 G.-3

Inter%ret!tin6

T"e "i*"er t"e *ro## profit t"e better t"e fia$ial performa$e of t"e firm. T"ere i# a de$rea#e i

bot" t"e Co#t of 8ood# )old ad )ale#, $ompared to previo%# year# "o2ever t"ere i# a i$rea#e i *ro##

profit.

II. Net Prfit R!ti6

Net profit ratio e#tabli#"e# a relatio#"ip bet2ee et profit (after ta=e#! ad #ale#. It idi$ate# t"e

effi$ie$y of t"e maa*emet i ma%fa$t%ri*, #elli*, admii#trative ad ot"er a$tivitie# of t"e firm.

;i*"er t"e ratio, t"e better i# t"e profitability. T"i# i# %#ef%l to t"e proprietor# ad ive#tor# be$a%#e it

reveal# t"e overall profitability of t"e $o$er

[73]


74/97

Net %rfit r!ti

Ye!r Net %rfit S!@e4 R!ti

.1,,7,. 0,0F,F4,+00 --,3G,0-,F-,F+ .3F

.1,.7,- --,G,43,00 -,+,4F,F0,3- .FG

.1,-7,/ -,G4,0G,-0- 4,G4,,,++3 -.4

Inter%ret!tin6

T"e "i*"er et profit ratio i# a idi$ator of t"e #tro* fia$ial po#itio of t"e $ompay. T"ere i# a

i$rea#e i Net rofit 6atio of .3-L i +-+/- 2"ile $ompared to t"e +--/-+. I t"e year +-/-3 t"ere

i# a i$rea#e of .3FL 2"ile $ompared to +-+/-, t"i# i# d%e to de$rea#e i bot" t"e #ale# ad et profit,

t"e et profit 6atio i# i$rea#ed to -.4.

III) OPERATING RATIO6

[74]


75/97

T"e operati* ratio $a be %#ed to determie t"e effi$ie$y of a $ompay#

maa*emet by $ompari* operati* e=pe#e# to et #ale#. It i# $al$%lated by dividi* t"e operati*

e=pe#e# by t"e et #ale#. T"e #maller t"e ratio, t"e *reater t"e or*ai@atio# ability to *eerate profit. T"e

ratio doe# ot fa$tor i e=pa#io of debt repaymet.

O%er!tin+ R!ti : OC CGS A&$in e% Se@@in+ !n& &i4tri"3tin e%

Ye!r O%er!tin+ c4t Inc*&ec2

in )c

Net 4!@e4 I*&2 in net

4!@e4

R!ti

.1,,7,. --,G,00,FG,+3 / --,3G,0-,F-,F+ / G.0+L

.1,.7,- -+,+,F3,-G,G04 .-L -,+,4F,F0,3- .-L G.GL .1,-7,/ 4,0G,+,F-, /.GL 4,G4,,,++3 /.FL G.33L

Inter%ret!tin6

T"e #maller t"e ratio, t"e *reater t"e or*ai@atio# ability to *eerate profit if reve%e de$rea#e#.

;ere t"e operati* ratio i +--/-+ i# G.0+L ad i# i$rea#ed to t"e G.GL i +-+/-, d%e to more

i$rea#e i operati* $o#t t"a t"e #ale#. I t"e year +-/-3 t"e 7perati* ratio i# de$rea#ed, d%e to

de$rea#e i t"e #ale# (/GL! ad t"e operati* $o#t (/3-L!.

[75]


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IV) OPERATING PROFIT RATIO6

T"e operati* profit ratio i# %#ed to mea#%re t"e relatio#"ip bet2ee t"e

operati* profit ad et #ale# of t"e $ompay. 7perati* profit i# $al$%lated by ded%$ti* t"e et #ale# from

t"e operati* $o#t.

O%er!tin+ Prfit R!ti

O%er!tin+ Prfit Gr44 Prfit ? O%er!tin+ E%en4e4

Ye!r Gr44 %rfit O%er!tin+e%en4e4

O%er!tin+%rfit

Inc*&ec2f )%

Net 4!@e4 I*&2 f 4!@e4

R!ti

.1,,7,. 4,3,00,-GG ,0,+,- G,G0,G+,0F / --,3G,0-,F-,F+ / .34L

.1,.7,- G,F,G,4G +G,-3,+F,-G G,G3,0,343 L -,+,4F,F0,3- -L .L

.1,-7,/ 4+,G+,+,GG 3,3,03,G F,04,3F,0G3 /L 4,G4,,,++3 /GL 3.FL

Inter%ret!tin6

T"e operati* profit ratio i# %#ed to mea#%re t"e relatio#"ip bet2ee t"e operati* profit ad et

#ale# of t"e firm. ;i*"er t"e operati* profit ratio t"e firm $a i$rea#e it# #ale ad $a $%t# do2 it#

operati* $o#t. I t"e year +-+/- t"e operati* profit ratio "a# bee de$rea#ed .3-L, t"i# i# d%e to

[76]


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i$rea#e of #ale# (-L!. I t"e year +-/-3 t"e operati* profit ratio "a# bee i$rea#ed -.44L, t"i# i# d%e

to de$rea#e of t"e #ale (/GL! ad i$rea#e of operati* profit (-L! 2"e $ompared to t"e previo%# year.

V) RETURN ON CAPITAL EMPLOYED6

6et%r o $apital employed i# $al$%lated 2it" t"e "elp of eari*# before ta= ad $apital employed.

Capital employed i# t"e #%m of t"e #"are "older# e


78/97

Inter%ret!tin6

;ere, i t"e year +-+/- t"ere i# a i$rea#e of et profit %p to -GL ad t"e $apital employed 2a#

le## (-0L!, #o t"ere 2a# a i$rea#e of 3.GF poit# i t"e ratio. I t"e year +-/-3 t"e $apital employed

(4L! 2a# "i*"er t"a t"e et profit (/L! d%e t"i# t"ere i# a de$rea#e i t"e ratio.

VI) RETURN ON SHAREHOLDER;S FUND6

6atio of et profit to #"are"older# f%d #"o2# t"e e=tet to 2"i$" profitability ob1e$tive i# bei*

a$"ieved. ;i*"er t"e ratio, t"e better it i#. ?"e it i# de#ired to 2ork o%t t"e profitability of t"e $ompay

from t"e #"are"older# poit of vie2, t"e it i# $al$%lated by t"e follo2i*:

Ret3rn n Sh!reh@&er4 F3n& ,11

Ye!r

Net Prfit !fter

Intere4t !n& T! Sh!reh@&er4;

F3n&4

Inc*Dec2

Of N%it

Inc*Dec2 f

Sh;4 F3n&4 R!ti

.1,,7,. 0,0F,F4,+00 43,--,0,03- / / 4.03

.1,.7,- --,G,43,00 F0,F-,+4,0G -GL -L -.

.1,-7,/ -,G4,0G,-0- G,4F,F,430 /+4L -L --.3

[78]


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Inter%ret!tin6

;ere, i t"e year +-+/- t"ere i# a "%*e i$rea#e i t"e et profit (-GL! d%e to t"e i$rea#e of t"e

#"are "older f%d#. I t"e year +-/-3 t"e et profit de$rea#e# (/+4L! eve t"o%*" t"e #"are"older# f%d#

are i$rea#ed. It i# d%e to t"e de$rea#e of t"e #ale# t"e et profit de$rea#e# ad t"e ret%r o t"e #"are"older#

f%d ratio "a# bee de$rea#ed to .+ poit# i +-/-3.

VII) RETURN ON E


80/97

Inter%ret!tin6

I t"e year +-+/-t"e Net rofit "a# bee i$rea#ed d%e to t"e i$rea#e of t"e E


81/97

Inter%ret!tin6

A $ompay $a "ave a "i*" ret%r o a##et# eve if it "a# a lo2 profit mar*i be$a%#e it

"a# a "i*" a##et t%rover. T"e profit# of t"e $ompay i +-/-3 "ave bee de$rea#ed 2"e $ompared to t"e

previo%# year, b%t t"e t%rover o t"e a##et# "a# bee i$rea#ed. T"e $ompay "a# *eerated more a##et#

2it" le## ive#tmet. )o t"e $ompay i# better at $overti* it# ive#tmet ito profit.

I) EARNINGS PER SHARE6

Eari*# per #"are ratio are %#ed to fid o%t t"e ret%r t"at t"e #"are"older# ear

from t"eir #"are#. After $"ar*i* depre$iatio ad paymet of ta=, t"e remaii* amo%t 2ill be di#trib%ted

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to t"e #"are "older#. It i# *eerally $o#idered to be t"e #i*le mo#t importat variable i determii* a

#"are# pri$e. It i# al#o a ma1or $ompoet %#ed to $al$%late t"e pri$e to eari*# val%atio ratio.

E!rnin+4 %er 4h!re

Ye!r

Net %rfit !fter

t!

Preference &i#i&en& N) Of eB3it(

4h!re4

E!rnin+ %er

4h!re

.1,,7,. 0,0F,F4,+00 7 G4,4, 0.4+

.1,.7,- --,G,43,00 7 G4,4, --.G4 .1,-7,/ -,G4,0G,-0- 7 G4,4, --.+

Inter%ret!tin6

If t"e eari* per #"are i$rea#e#, t"ere i# a po##ibility t"at t"e $ompay may pay more

divided or i##%e bo%# #"are#. I #"ort t"e market pri$e of t"e #"are of t"e $ompay 2ill be affe$ted by

all t"e#e fa$tor#. ;ere t"e i t"e Sear +-+/- t"e et profit "a# bee i$rea#ed very m%$" (-GL!

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evet%ally t"e eari* per #"are "a# al#o bee i$rea#ed. 9%e de$rea#e of et profit i +-/-3 t"e

eari* per #"are de$rea#ed to .43 poit#.

.)TURN OVER RATIOS

(T%rover ratio# are t"o#e 6atio# %#ed to mea#%re t"e effe$tivee## 2it" 2"i$" a $o$er %#e# it#

re#o%r$e# at it# di#po#al. It idi$ate# po#itio of a##et# %#a*e.!

I. Capital T%rover 6atioII. 'i=ed A##et# T%rover 6atio

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III. ?orki* Capital T%rover 6atioI. Total A##et# T%rover 6atio. Ivetory T%rover 6atio

I) CAPITAL TURNOVER RATIO6

Capital t%rover ratio #"o2# t"e effi$ie$y of $apital employed i t"e b%#ie## by

$omp%ti* "o2 may time# $apita employed i# t%red/over i a #tated period. T"e "i*"er t"e ratio, t"e

*reater are t"e profit#. A lo2 Capital t%rover ratio #"o%ld be take to mea t"at #%ffi$iet #ale# are ot

bei* made ad profit# are lo2er. T"e ratio i# a#$ertaied a# follo2#:

C!%it!@ t3rn#er r!ti

Ye!r S!@e4 Inc*&ec2

4!@e4

C!%it!@ e$%@(e& Inc*&ec2 c

e

R!ti

.1,,7,. --,3G,0-,F-,F+ / FF,+,3-,04G /-.

.1,.7,- -,+,4F,F0,3- -L -,-,4,0,4 -0L-+.F0

.1,-7,/ 4,G4,,,++3 /GL -,+-,4,FF,+- -GL .0F

Inter%ret!tin6

I t"e year +-+/- t"e Capital employed i# i$rea#ed (-0L! ad t"e #ale# "ave bee de$rea#ed

(-L!, d%e to t"i# t"e Capital T%rover 6atio "a# bee de$rea#ed (.-F poit#!. I t"e year +-/-3 al#o t"e

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85/97

$apital employed i# i$rea#ed (-GL! b%t t"e #ale# "ave bee de$rea#ed (/GL!, d%e to t"i# $"a*e# t"e

Capital T%rover 6atio "a# bee de$rea#ed (.+ poit#!

II) FIED ASSETS TURNOVER RATIO6

T"i# ratio mea#%re# t"e effi$ie$y of t"e a##et# %#e. T"e effi$iet %#e of a##et# 2ill

*eerate *reater #ale# per r%pee ive#ted i all t"e a##et# of a $o$er. T"e ieffi$iet %#e of t"e a##et 2ill

re#%lt i lo2 #ale# vol%me $o%pled 2it" "i*"er over"ead $"ar*e# ad %der %tili@atio of t"e available

$apa$ity. T"i# ratio e=pre##e# t"e %mber of fi=ed a##et# are bei* t%red/over i a #tated period.

Fie& A44et4 T3rn#er R!ti

Ye!r S!@e4 Inc*&ec2

in 4!@e4

Fie& !44et4 Inc*&ec2 in

f !

R!ti

.1,,7,. --,3G,0-,F-,F+ / F,+,-,++ / .

.1,.7,- -,+,4F,F0,3- -L 4,+,GF,3 /L 0.-F

.1,-7,/ 4,G4,,,++3 /GL F,GG,3F,3 0L +.30

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Inter%ret!tin46

I t"e Sear +-+/- t"e #ale# i$rea#ed to (-L! 2"e $ompared to previo%# year. T"e fi=ed a##et#

are de$rea#ed to (/L!. T"e ratio al#o i$rea#ed 0.-+ poit#. T"ere i# a better %tili@atio of fi=ed a##et#. I

t"e year +-/-3 eve t"o%*" t"e %tili@atio of fi=ed a##et# i$rea#ed (0L! t"e #ale# "ad de$rea#ed to (/

GL!. T"e ratio "ad de$rea#ed -3.4 poit#.

III) WORKING CAPITAL TURNOVER RATIO6

T"i# ratio #"o2# t"e %mber of time# t"e 2orki* $apital i# t%red O over i a #tated

period. T"e "i*"er i# t"e ratio, t"e lo2er i# t"e ive#tmet i 2orki* $apital ad t"e *reater are t"e profit#.

;o2ever, a very "i*" t%rover of 2orki* $apital i# a #i* of overtradi* ad may p%t t"e $o$er ito

fia$ial diffi$%ltie#. A lo2 2orki* $apital t%rover ratio idi$ate# t"at 2orki* $apital i# ot effi$ietly

%tili@ed.

Wr9in+ C!%it!@ T3rn#er R!it

Ye!r S!@e4 C3rrent A44et4C3rrent

Li!"i@itie4

Net Wr9in+

C!%it!@R!ti

.1,,7,. --,3G,0-,F-,F+ +,F,,3,004 -,4,G,-,04 3,3,3-,GF4 .3-

.1,.7,- -,+,4F,F0,3- +,3,0,G,G30 -,G,-0,-,G 0,F,44,04 +0.F0

.1,-7,/ 4,G4,,,++3 +,3G,0,F0,F -,F,,+4,F ,0G,04,4-+ --.G4

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Inter%ret!tin6

I t"e year +-+/- t"e ratio "a# bee de$rea#ed 4.0 poit#, t"i# i# d%e to lo2 i$rea#e of #ale# t"a

t"e i$rea#e of 2orki* $apital. I t"e year +-/-3 t"e ratio "a# bee de$rea#ed (-.FF!. T"i# i# d%e to t"e

le## %tili@atio of t"e 2orki* $apital i t"e $ompay. T"e 2orki* $apital ratio i t"e year +-+/- i#

--.G4.

IV) TOTAL ASSETS TURNOVER RATIO6

Total a##et# t%rover ratio mea#%re# t"e ability of a $ompay to %#e it# a##et# to

effi$ietly *eerate #ale#. T"i# ratio $o#ider# all a##et#, $%rret ad fi=ed. T"e total a##et# t%rover ratio i#

$al$%lated by dividi* t"e et #ale# 2it" total a##et#. T"e lo2er t"e total a##et# t%rover ratio t"ere i#

ieffe$tive %tili@atio of a##et#. T"e "i*"er t"e total a##et# t%rover ratio t"ere i# effe$tive %tili@atio of

a##et#.

Tt!@ !44et4 t3rn#er r!ti

Ye!r S!@e4Inc*Dec2

In S!@e4Tt!@ A44et4

Inc*Dec2 In

Tt!@ A44et4R!ti

.1,,7,. --,3G,0-,F-,F+ / +,+,-,3,-3G / 3.F

.1,.7,- -,+,4F,F0,3- -L +,G4,0+,-F,430 -3L 3.4

.1,-7,/ 4,G4,,,++3 /GL ,3,-3,-0,FG +L +.+

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Inter%ret!tin6

I t"e year +-+/- t"e total a##et# t%rover ratio "a# bee de$rea#ed .- poit#, t"i# i# d%e to

le## INC9EC of #ale# (-L! $ompared to INC9EC of Total A##et# (-3L!. I t"e year +-/-3 t"ere i# a

"%*e de$rea#e of #ale# (/GL! ad de$rea#e of total a##et# (+L!, t"e ratio "ad de$rea#ed -.40 poit#.

V) INVENTORY TURNOVER RATIO6

Every firm "a# to maitai a $ertai level of ivetory of fii#"ed *ood# #o a# to

be able to meet t"e re


89/97

Inter%ret!tin6

I t"e year +-+/- t"e $o#t of *ood# #old "a# bee i$rea#ed (-0L!, ad t"e avera*e ivetory i#

al#o "i*" (0L! $ompared to previo%# year. I t"e year +-/-3 t"e ivetory t%rover ratio "a# bee

de$rea#ed .FG poit#, t"i# i# d%e to t"e de$rea#e of t"e avera*e ivetory (/-GL! ad $o#t of *ood# #old (/

3-L!. T"e#e bot" are de$rea#ed d%e to t"e lo2 opei* ad $lo#i* #to$k. T"e ivetory t%r ratio i# lo2

d%e to t"e $o#t of *ood# #old i# lo2 $ompared to t"e avera*e ivetory.

-) COVERAGE RATIOS

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(T"e#e ratio# idi$ate t"e e=tet to 2"i$" t"e itere#t# of t"e per#o# etitled to *et a fi=ed ret%r or

a #$"ed%led repaymet a# per a*reed term# are #afe. T"e "i*"er t"e $over, t"e better it i#!I. 'i=ed Itere#t $overa*e 6atio

I) FIED INTEREST COVERAGE RATIO6

T"i# ratio mea#%re# t"e ability of t"e $o$er to #ervi$e t"e debt. T"i# ratio i# very importat

from leder# poit of vie2 ad idi$ate# 2"et"er t"e b%#ie## 2o%ld ear #%ffi$iet profit# to pay

periodi$ally t"e itere#t $"ar*e#. T"e "i*"er t"e ratio, t"e more #e$%red t"e leder# 2ill be i re#pe$t of t"eir

periodi$al itere#t i$ome.

Intere4t c#er!+e r!ti

Inter%ret!tin6

A# of a r%le, t"e itere#t $overa*e ratio belo2 - idi$ate# t"e $ompay i# ot *eerati*

#%ffi$iet reve%e# to #ati#fy t"e itere#t e=pe#e#. I t"e year +--/-+ t"e itere#t $overa*e ratio i# -.G

ad i +-+/- it i# -.GF, t"ere i# a i$rea#e of .0 poit#. T"ere i# a #i*ifi$at de$rea#e i t"e ratio to

.++ poit# i t"e year +-/-3.

[90]

Ye!r P"it Intere4t R!ti

.1,,7,. 3,44,4,0-G +-,0,G3,F -.G

.1,.7,- 3,F4,G4,-3F +,03,44,4 -.GF

.1,-7,/ 4,4,0,--F +-,,0-,4 -.4


91/97

/)LEVERAGE RATIOS

(T"e#e ratio# e=plai t"e e=tet to 2"i$" t"e debt i# employed i t"e $apital #tr%$t%re of a firm.!I. 7perati* >evera*eII. 'ia$ial >evera*e

I) OPERATING LEVERAGE6

It o$$%r# 2"e 2it" fi=ed $o#t# t"e per$eta*e $"a*e i profit# d%e to $"a*e i #ale#

vol%me i# *reater t"a t"e per$eta*e $"a*e i #ale# vol%me. It #"o2# t"e e=tet of t"e $"a*e i eari*#

before itere#t ad ta= (EBIT! a# a re#%lt of $"a*e i #ale# vol%me. T"e de*ree of operati* levera*e *oe#

o de$rea#i* 2it" every i$rea#e i #ale# vol%me above t"e break O eve poit. It i# $al$%lated by t"e

follo2i* form%la:

O%er!tin+ Le#er!+e

M!r+in!@ Cntri"3tin S!@e4 ? P3rch!4e4

Ye!r S!@e4 P3rch!4e4 M!r+in!@

cntri"3tin

E"it R!ti

.1,,7,. --,3G,0-,F-,F+ -,4,0,+,+3 40,3,4,4 3,44,4,0-G -.F3

.1,.7,- -,+,4F,F0,3- -+,,G,G-,F -,3-,++,F+ 3,F4,G4,-3F .3

.1,-7,/ 4,G4,,,++3 4,-,G,04,00 F,,4+,FG 4,4,0,--F +.-

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92/97

Inter%ret!tin6

I t"e year +--/-+, t"e operati* levera*e i# -.F3. I +-+/- it de$rea#ed -.33 poit# it i#

d%e to "eavy de$rea#e of t"e mar*ial $otrib%tio ad i$rea#e of t"e EBIT. I t"e year +-/-3 it "a#

i$rea#ed -.4 poit# it i# d%e to t"e i$rea#e of t"e mar*ial $otrib%tio to (G-L! ad de$rea#e of t"e

EBIT to (/FL!.

II) FINANCIAL LEVERAGE6

?"e a firm pro$%re# debt $apital to fia$e it# eed#, it i# #aid to "ave fia$ial levera*e. It

tell# t"e e=tet of t"e $"a*e i eari*# before ta= (EBT! d%e to $"a*e i operati* i$ome (EBIT!. It may

be favorable or %favorable. 67I i# lo2er t"a t"e $o#t of debt t"e firm "a# %favorable fia$ial levera*e.

'avorable levera*e i# al#o referred to tradi* o e


93/97

Ye!r E"it Inc*&ec2

in e"it

E"t Inc*&ec2 in

e"t

R!ti

.1,,7,. 3,44,4,0-G / G,4,3,-3 / 3.-4

.1,.7,- 3,F4,G4,-3F L -F,,,GF3 F3L +.+4

.1,-7,/ 4,4,0,--F FL -,3,+,0- /GL +.+G

Inter%ret!tin6

I t"e year +--/-+ t"e fia$ial levera*e i# "i*" (3.-4!. It "a# de$rea#ed -.G poit#. I t"e

year +-+/- t"e fia$ial levera*e "ad de$rea#ed -.G poit# t"i# i# d%e to t"e i$rea#e of t"e EBT (F3L!.

I t"e year +-/-3 t"e fia$ial levera*e "ad i$rea#ed .+ poit#, t"i# i# d%e to t"e i$rea#e of EBIT (FL!

2"e $ompared to t"e de$rea#e of EBT(/GL!. .1,-7,/: the &!t! i4

t!9en fr$ 3n!3&ite& fin!nci!@4)

[93]


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CHAPTER ? >

)%mmary

)%**e#tio#

Co$l%#io

Biblio*rap"y

[94]


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S3$$!r(

6atio aaly#i# i# t"e te$"i


96/97

T"e li


97/97

'ially it i# $o$l%di* t"at $ompay "a# bri*"t f%t%re i ear year #o it eed# to #ti$k o it#

operatio# i optim%m maer

'I'LOGRAPHY

'946

'ia$ial maa*emet I.M .adey

'ia$ial maa*emet M.S.K"a

'ia$ial maa*emet ra#aa C"adra

We"4ite46

222.domai/b.$om

222.*oo*le.$om

222.a#2er.$om

222.maa*emetparadi#e.$om

J3rn!@46

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