ratio analysis 1234

8/6/2019 Ratio Analysis 1234

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It is NOT just comparing different numbers from thebalance sheet, income statement, and cash flow

statement.

It is about comparing the number against previousyears, other companies, the industry, or even theeconomy in general.

Ratios look at the relationships between individualvalues and relate them to how a company has performedin the past, and might perform in the future.


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OBJECTIVE OF RATIOS

I.Solvency-

Long term

Short termImmediate

II. Stability

III. Profitability


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IV. Operational efficiency

V. Credit standing

IV. Structural analysis

V. Effective utilization of resources

VI. Leverage or external financing


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CLASSIFICATION OF RATIO

BASED ON FINANCIAL

STATEMENT

BASED ON FUNCTION BASED ON USER

1] BALANCE SHEET RATIO

2] REVENUE STATEMENT

RATIO

3] COMPOSITE RATIO

1] LIQUIDITY RATIO

2] LEVERAGE RATIO

3] ACTIVITY RATIO

4] PROFITABILITY RATIO

5] COVERAGE RATIO

1] RATIOS FOR SHORT TERM

CREDITORS

2] RATIO FOR SHAREHOLDERS

3] RATIOS FOR MANAGEMENT

4] RATIO FOR LONG TERM

CREDITORS


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Its registered office is at Garden Mills

Complex, Sahara Gate ,Surat ,Gujarat

Mr. M R Momaya is the Managing Director of

the MillThe company is running 16,232 spindles

It produces 7.3 tons of yarn per day

The company produces high quality yarn for

weaving.

Surat Textile Mills


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Vijayeswari, a Pioneering textile company,

produces the finest quality Bed Linen that is

enjoyed by consumers worldwide. It has over 90 years experience in the business

In spinning the companys 50,000 spindles

produce 1260 tons of yarn every year.


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It is located at Jay Bharat Rangshala

Compound,

Saraspur, Ahmedabad-380018.(INDIA)

It has established a good clientele.Where this company have supplied on

regular basis the machine to many

Textile processing utile in Gujarat all

over India as well as Abroad also


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LIQUIDITY RATIO

RATIOS FORMULA

CURRENT RATIO = Current

Assets/Current

liabilities1.50 6.90 1.53

LIQUID RATIO/

QUICK RATIO

=Quick

assets/Quick

liabilities1.02 2.017 0.10

SUPER

QUICK/CASH RATIO

=(Cash+Bank+

Marketabtle

Securities)/

Total current

Liabilities

0.32 0.645 0.012


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PROFITABILITY RATIO

RA

TIOS

FORMULA

GROSS PROFIT

MARGIN

=(Gross profit / Net

Sales)

0.06 0.23 0.21

OPERATING

PROFIT MARGIN

=(Operating Profit /

Net Sales) 0.052 0.21 0.15

NET PROFIT

MARGIN

=(NPAT / Net Sales)

0.029 0.03 0.09


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ACTIVITY RATIO

RATIOS FORMULA

INVENTORY

TURNOVER RATIO

=COGS/

Average

Inventory12.02 0.86 0.94

FIXED ASSET

TURNOVER RATIO

= Sales/ Net

Fixed Assets 11.70 0.87 2.81

TOTAL ASSET

TURNOVER RATIO

= Sales/ Total

Assets 2.68 0.27 0.785


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RATIOS FORMULA

DEBT EQUITY

RATIO

=Long Term Debt

/ Shareholders

Equity0.91 2.02 nil

INTEREST

COVERAGE

RATIO

=EBIT / Interest 3.17 1.57 172.06

PROPRIETORY

RATIO

=Shareholders

fund/Total Assets 0.33 0.312 0.58

LEVERAGE RATIOS


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SUMMARY OF FINANCIAL POSITION OF

TEXTILE COMPANIES:Ratios and formulas Surat textiles Vijayeswari textiles Laxmi machines

Current ratio 54.76/36.31=1.50 207.13/30.00=6.90 1027.06/669.41=1.53

Quick ratio 36.64/36.31=1.02 60.51/30.00=2.017 69.84/669.41=0.10

Super quick ratio 11.59/36.31=0.32 23.45/36.31=0.645 8.24/669.41=0.012

Inventory turnover ratio 227.83/18.94=12.02 77.98/90.73=0.86 90.90/96.43=0.94

Fixed asset turnover ratio 260.24/22.23=11.70 113.27/130.77=0.87 1252.91/446.42=2.81

Total asset turnover ratio 260.24/97.01=2.68 113.27/417.69=0.27 1252.91/1595.18=0.785

Debt equity ratio 29.00/31.70=0.91 263.79/130.49=2.02 nil

Interest coverage ratio 12.67/4.00=3.17 23.05/14.66=1.57 151.42/0.88=172.06

Proprietory ratio 31.70/95.59=0.33 130.49/417.69=0.312 925.78/1595.18=0.58

Gross profit margin 14.49/246.35=0.06 32.42/113.27=0.23 243.38/1159.36=0.21

Operating profit margin 13.57/260.24=0.052 24.10/113.27=0.21 192.20/1252.91=0.15

Net profit margin 7.21/246.35=0.029 3.62/113.27=0.03 104.68/1159.36=0.09

Calculated ratios


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CONCLUSION


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ratio analysis 1234

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