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A Study of Financial Performance Through Ratios
A Study of Financial Performance Through Ratios
INTRODUCTION
1. INTRODUCTION TO FINANCE
Finance is called the science of money. It studies the principles and methods of obtaining control over money from those who have saved it, and the administration of it by those into whose control it passes.
Finance may be defined as the provision of money at the time when it is required. Finance refers to the management of flows of money through an organization. It concerns with the application of skills in the manipulation, use and control of money. According to Wheeler, Finance is that business activity which is concerned with the acquisition and conversion of capital funds in meeting financial needs and overall objective of a business enterprise.
Thus finance is that administrative area or set of administrative function in an organization may have the means to carry out its objective as smoothly as possible. In other words , finance is the process of conservation of accumulated funds for productive purposes. It is so intermingled with other economic forces that there is difficulty in appreciating the role it plays.
The subject of finance has been traditionally classified into two classes: (1) public ;finance and (2) private finance. Public finance deals with the requirements receipts and disbursements of funds in the government institution like states, local self governments and central governments. Private finance is concerned with requirements , receipts and disbursements of fund in case of an individual, a profit seeking business organization and a non-profit organization.
the enterprise dynamic. No business, whether big, medium or small can be started without an adequate amount of finance. Right from the very beginning, i.e. conceiving an idea to business, finance is needed to promote or establish the business, acquire fixed assets, make investigations such as market surveys, etc. develop product, keep men and machine at work, encourage management to make progress and create values. Even an existing concern may require further finance for making improvements or expanding the business.
The scope of finance involves shaping the fortunes of the enterprise as it involves the most vital decisions of allocation of capital. A broad and farsighted outlook has to be taken into consideration to ensure the funds of the enterprise are utilized in the most efficient manner. Financial decisions have far reaching consequences for the firm because they influence the size, profitability, growth, risk, and survival of the firm.
1.2Finance Function
Finance function is the most important of all business functions. It remains a focus of all activities . It is not possible to substitute or eliminate this function because this business will close down in the absence of finance. He need for money is continuous. It start with the setting up an enterprise and remains at all the times. The development and expansion of business rather needs more commitment for funds. The funds will have to be raised from various sources. The sources will be selected in relation to the implications attached with them. The receiving of money is not enough.. its utilization is more important. The money once received will have to be returned also. If its use is proper then its return will be easy otherwise it will create difficulties for repayment. The management should have an idea of using money profitably. It may be easy to raise funds that it may be difficult to repay them. The inflows and outflows of funds should be properly matched.
2. Estimating and controlling cash flows and requirements: The prime responsibility of finance function is to see that an adequate supply of cash is on hand at the proper time for smooth flow of operations of the company. Since flow of cash originates in sales and cash requirements are closely related to the volume of sales, the fulfillment of he responsibility of providing cash in the proper amount at the proper time requires forecasting.
3. Investments decisions or capital budgeting: It involves the excisions of capital commitment of long term assets that would yield benefits in future. The significant aspect of investments decisions is task of measuring the prospective profitability of new investment.
4. Financing decision: It includes where and how to require funds to meet the firms investments needs. It determines the proportion of equity and debt that is the capital structure of the firm in such a way as to obtain the best financing mix or the optimum capital structure.
5. A proper trade- off must be achieved between profitability and liquidity. The current assets should be invested in such a way that the funds would be made available when needed. A firm performs finance functions simultaneously and continuously in the course of business.
Financial Statement
Finance statement is a collection of data organized according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It will show a position at the moment in time, as in the case of a balance sheet, or may reveal a serious of activities over a given period of time, as in the case of an income statement. The term financial statement refers to the two statements:
1. The position statement or the balance sheet 2. The income statement or the profit and loss account.
Financial statements are also called as financial reports. In the words of Anthony financial statements, essentially are interim reports, presented annually and reflector division of the life of an enterprise into more or less arbitrary accounting period more frequently a year.
2. Accounting conventions: Certain accounting conventions are followed while preparing financial statements. The convention of valuing inventory at cost or market price, whichever is lower is followed .The use of accounting conventions makes financial statements comparable, simple and realistic.
3. Postulates: The accountant makes certain assumptions while making accounting records. One of these assumptions is that the enterprises treated as a going concern. This assumption is also known as realization postulate.
4. Personal judgement: Certain standard accounting conventions are followed in preparing financial statements but still personal judgement of the accountant plays an important part.
1. To provide reliable financial information about economic resources and obligation of a business activities.
2. To provide other needed information about changes in net resources arising out of business activities.
3. To provide financial information that assists in estimating the earning potentials of business.
4. To disclose other information related to the financial statements that is relevant to the needs of the users of these statements.
2. Income statement or profit and loss account: Income statements are prepared to determine the operational position of the concern. It is a statement of revenues earned and the expenses incurred for earning that revenue.
1. Management: The financial statements are useful for assessing the efficiency for different cost centers. The management is able to exercise cost control through these statements. The efficient and inefficient spots are brought to the notice of the management. The management is able to decide the course of action to be adopted in the future. 2. Creditors: Creditors are interested in the financial position of the purchasing concern to ascertaining its short term liquidity position. 3. Bankers : The bankers is interests to see that the loan amount is secure and the customer is also able to pay the interest regularly. The banker will analyze the balance sheet to determine financial strength of the concern and profit and loss account will also be analyzed to find out the earning position. 4. Inventors: The investors include both short term and long term investors. They are interested in the security of the principal amount of loan and regular interest payments by the concern. 5. Government: The financial statements are used to assess tax liability of business enterprise. These statements enable government to find out whether business is following various rules and regulations or not. These statements also become a base for framing and amending various laws for the regulation of business. 6. Trade association: These associations provide service and protection to the members. They may analyze the financial statements for the purpose of proving facilities to these members. 7. Stock exchange: The stock exchanges deal in purchase and sale of securities of different companies. The financial statements enable the stock brokers to judge the financial position of different concerns.
In the words of Myers financial statement analysis is largely a study of relationship among the various financial factors as disclosed by a single set of statements, and a study of trend of these factors as shown in a series of statements.
2. Comparison:
More splitting or re-grouping of the figures found in the financial statements into the desired component parts is not sufficient for judging the profitability and the financial statements are dissected or split into the required comparable component parts.
The comparable components parts must be compared with each other and their relative magnitudes must be measure.
3. Interpretation:
After the financial statements are analyzed or dissected into comparable component parts and their relative magnitudes of the comparable component parts is measured through
comparison, then the results means the formation of rational judgement and drawing of proper conclusions about the progress.
Common size financial statement and financial ratios are the two totals employed in vertical analysis.
The important methods of financial analysis are: 1) Comparative statement analysis 2) Common size statement analysis 3) Trend analysis 4) Cash flow analysis 5) Funds flow analysis 6) Ratio analysis
Trend analysis:
It helps in identifying the direction in which the organization is moving .It involves the ascertainment arithmetical relationship of each item of several years with the same of base year.
Ratio analysis:
It is a tool used to present the figures of financial statements in a simple concise and intelligent form. It is a process of establishing meaningful relationship between two figures.
CHAPTER . 2
2.3: OBJECTIVES OF THE STUDY:1. To study all the financial statements of past five years and to identify the changes in the various items present in them. 2. To make the analysis and interpretation of ratios more effective by using various ratios to understand the composition of various expenses and the proportion of the profit (Gross, Operating, and net) to sales in the statement. Estimation of liquidity ratios, operating ratio solvency ratios, profitability ratios, in order to ascertain the financial statements by establishing between them.
3. To analyze the financial risk of the company is exposed to and examines the shortterm liquidity and long-term solvency position of the company. 4. To study the working capital management of the company. 5. To examine the increase in the various cost items in relation to the sales and to point out the area in which improvement can be made.
2.4: SCOPE OF THE STUDY:The study is limited only to the MOTHER DAIRY, Yelahanka. The current study is undertaken for the purpose of knowing the overall financial performance of MOTHER DAIRY.
2.5: METHODOLOGY OF STUDY: Data has been collected from primary sources and secondary sources.
Primary data: It constitute the data collected through personal interview, with different persons of Finance Department.
Secondary data:The secondary sources for the study are made available through:1. Annual reports of the company. 2. Magazines and generals 3. Text books, internet and financial statements
2.6: TOOLS OF ANALYSIS:The data so collected is proposed to be analyzed with the help of simple mathematical and accounting tools like Ratio Analysis, Comparative statements and Funds Flow Statement and Trend percentage Research Instrument: Balance Sheet .
2.7: LIMITATIONS OF THE STUDY:-1. A detail study could not be carried out because of lack of time. 2. The results of the study are based on the assumption that all the information provided by the respondents is correct. 2.8: CHAPTER SCHEME 1. It covers Introduction to Finance , Scope and Importance of Financial Finance Function, Nature of Financial Statement, Objectives of Financial Statement, Types of Financial Statement, Uses of Financial Statement, Financial Statement Analysis, Objectives of Analysis and Interpretation of Financial Statements, Types of Financial Analysis, Tools, Techniques or Financial Analysis: 2. It covers title of the study, Statement of the problem, Objectives of the study, Scope of the
study, Methodology of the study, Research instruments ,Limitations of the study.
CHAPTER. 3
COMPANY PROFILE
3.COMPANY PROFILE
3.1. HISTORY OF DAIRY CO-OPERATIVE IN INDIA The co-operative movement started in India in the last decade of the 19th century with two objects in view, i.e. to protect the farmers from the hands of the private money leaders and to improve their economic condition. The history of Dairy Development movement in India is a new one. The most notable of this venture was a Khera district co-operative milk producer union limited of Anand, Gujarat. But after independence, the national government took great initiative in setting up new Dairy co-operative in many parts of India. The National Dairy Development Board was set up to make the ambitious project a success.
Dairy industry is playing a vital role in providing quality and hygienic milk and milk products at competitive prices to the urban consumers as well as it is providing employment opportunities to the rural people
DAIRY CO-OPERATIVE SOCIETY (DCS) :DCS FUNCTIONS:Dairy co-operative society is a basic organization unit functioning at the village level. Democracy is practiced at the gross root levels. Democracy is practiced at the gross root level in these societies, which are organized on the co-operative principles, by training local people to organize and manage the activities, village level institution building and development of local leadership is promoted. All milk cattle owners are eligible to become members of the co-operative society.
The DCS functions daily and acts as a marketing outlet for the milk produced in the villages .Input facilities are also channelized to the dairy farmers through these societies and include veterinary first aid, sale of cattle , supply of fodder seeds, seedlings, provision of know how etc, payment for the milk purchased is also arranged through the society. A string of DCS is organized to form a milk procurement route linked to chilling center or a dairy.
3.5. MILK UNION:Scope of union:Union is the middle tier of the complex co-operative organization network. Federating the society in ear marked geographical area forms unions. The milk unions are organized to make them economically viable and the jurisdiction extends from one district to 3 districts.
3.3. FUNCTIONS OF UNION:DCS are grouped at district level into co-operative milk producers union. The unions organize new DCS, assist .DCS with their management including audit of accounts, supervise, purchase, process, and market the liquid milk, provision of input facilities are also organized by the union and channel zed to the dairy farmers through DCS. The input
facilities include supply of cattle feed, fodder, veterinary services training and know how on scientific animal husbandry.
3.4. MILK FEDERATION:The role:The Karnataka Co-operative milk producers federated Ltd, came into existence on 1.5.1984 by federating the milk unions in the state and thus forming the state level apex organization. The federation is implementing the project activities .When all the project activities are completed, the main role of the federation will be to market surplus, milk products and to produce and supply centralized inputs.
3.5. FEDERATION FUNCTIONS:Presently Mother Dairy and Nandini milk products at Bangalore are under the control of KMF. Four cattle feed plants, a Central Training Institute and a centralized testing and quality control laboratory are functioning, under the direct control of KMF. Coordination of activities between the unions and developing market for the increasing milk production is the responsibility of KMF. The Respective unions are organizing local milk market in the area of union. Surpluses and deficiencies of liquid milk amongst the members milk union and disposing milk added the federation Managers product at remunerative price. However the federation organizes marketing of liquid milk and products outside the state. Milk and milk products are sold under NANDINI brand name, which has become household name in Karnataka. To make products available to consumers, distribution network has been established and sales depots are commissioned at Bangalore, Hubli, Chennai, Tirupathi, and Mangalore. The distribution network includes 150 major professional wholesale dealers spreading across all the southern states of India. The major quality of milk is sold as liquid milk. In these parts other products like Butter, Ghee, and SMP (Skim Milk Power), WMP, Pedha, and Flavored milk. Burfis, Panner, Khova, Jamoon mix, Jamoons, Mysore Paks, Badam powder and Ice cream are sold.
PROCUREMENT Mother Dairy has a unique nature of homogenizing the milk and selling it to the consumers through Bulk Vending Booths FRP (Fiber Reinforcement Plastic) tanks. In addition to production of toned Milk in sachet, it also produces Full Cream Milk in sachet (6.0% FAT and 9.0% SNF) and products like White Butter, Ghee, Curds, Ice-cream, ac well as Buttermilk in sachets..
The capacity of Mother Dairy is about 4.0 lakh liters per day. The mother dairy procures around 2.0 to 2.4 lakhs liters per day from Kolar milk unions the milk is processed and sold to consumer of Bangalore city through bulk vending booths FRP(Fiber Reinforcement Plastic) tanks and sachets.
The Mother Dairy has a ice cream plant of 300 liters capacity per day and it tie up with the Gujarat co operative milk marketing federation for manufacture of ice cream in the brand name AMUL. This apart ice cream in the brand of NANDINI is sold by the mother dairy.
The Mother Dairy has a milk powder plant of 30 metric tones capacity per day . The surplus milk of affiliated district milk unions is procured and converted as milk powder.
The Mother Dairy is headed by a director who is functional director cadre officer of the federation in the pay scale of 12800-16720 and duly supported by managerial cadre officers. The unit is located in YELAHANKA has the following address MOTHER DAIRY. (KMF). GKVK POST YELAHANKA BANGALORE - 560065
3.7.Area of operation:
The Mother Dairy KMF operates regionally. It operates throughout the Karnataka. Now the emphasis is given to extend the marketing territory apart from the Karnataka.
3.8.Ownership Pattern:
Karnataka state government in association with National Dairy Development Board funds of the Mother Dairy, KMF. Mother Dairy was commissioned under operation flood-2 with a processing capacity of 2 lakh per day on 7-12-1984, with an investment of Rs. 6.97 crores, at Yalahanka new town in a total area of 28.09 acres.
It is expanded to 4 lakh liters under operation flood-3 during 1993-94 with an additional cost of Rs. 3.64 crores. Total investment for this project is Rs. 10.61 crores.
3.9.PRODUCT PROFILE NANDINI PRODUCTS RANGE NANDINI MILK: Nandini toned milk Nandini homogenized milk Nandini full cream milk Nandini good life milk
Nandini curd Nandini ghee Nandini butter Nandini panner Nandini khova Nandini mysorepak Nandini skimmed milk power Nandini badam power Nandini jamoon mix Nandini ice cream Nandini burfi Nandini processed cheese Nandini bulk cheddar cheese Nandini bite
VARIETIES OF ICE CREAM MANUFACTURED: PLAIN VARIETIES Vanilla Strawberry Mango Pineapple Chocolate
PREMIUM VARITIES:
FANDOOS
Vanilla Strawberry Sundae
3.10.COMPETETORS INFORMATION
The success of each and every business unit mainly depends on how brilliantly it faces the competition and a Mother dairy is not an exception. It has almost 93% market share in Bangalore and presently it is the brand for milk products. The major competitors to Mother Dairy are as follows: Heritage:- heritage is engaged in producing of milk products like butter, curd etc Good Morning Arogya Nilgiries: nilgiries is also engaged in producing milk and curd etc Dodla Gomota Milk way Swastika
CHAPTER .4
THEORITICAL BACKGROUND
4.RATIO ANALYSIS
The ratio analysis is one of the most powerful tools of financial analysis. It is the process of establishing and interpreting various ratios(quantitative relationship between figures and groups of figures).It is with the help of ratios that the financial statements can be analyzed more clearly and decisions made from such analysis.
4.1Meaning of ratio
A ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. According to Accountants Handbook by Wixon, Kell and Bedford, a ratio is an expression of the quantitative relationship between two numbers.
4.2Classification of Ratios
Ratio may be classified in a number of ways keeping in view the particular purpose. Ratios indicating profitability are calculated on the basis of the profit and loss account, those indicating financial position are calculated on the basis of the balance sheet and those which show operating efficiency or productivity or efficient use of resources are calculated on the basis of figures shown in the profit and loss account and the balance sheet. To achieve the purpose effectively ratios may be classified as under:
A. Classification according to the nature of accounting statement from which the ratios are derived 1) Balance sheet ratios: It deals with the relationship between two balance sheets items.
2) Profit and loss account ratio: This type of ratio show the relationship between two items which are in the profit and loss account e.g. Gross profit ratio, net profit ratio, operating ratio. 3) Combined or composite ratios: This ratio shows the relationship between the items one of which is taken from profit and loss account and other from balance sheet e.g. Debtors turnover ratio, stock turnover ratio, capital turnover ratio.
B. Classification from the point of view of financial management. 1) Liquidity ratio: Liquidity means ability of a firm to meet its current liabilities. This ratio measures the short term solvency or financial position of a firm. These ratios are calculated to comment upon the short term paying capacity of a concern or the firms ability to meets its current obligation. 2) Capital structure: These ratios are used to analyze the long term solvency of a business. There are two aspects of long term solvency of a firm. a) Ability to repay the principle amount when due b) Regular payment of interest.
3) Turnover ratios: These ratios are used to indicate the efficiency with which assets and resources of a firm are being utilized. These ratios are known as turnover ratios because they indicate the speed with which assets are being converted or turned over into sales .A higher turnover ratio generally indicates better use of capita resources which in turn as a favorable effect on the profitability of the firm.
4) Profitability ratios: Profitability is the overall measures of the companies with regad to efficient and effective utilization of resources at their command it indicates in a nutshell the effectiveness of the decisions taken by the management from time to time. Profitability ratios are of utmost importance from time to time. Profitability ratio are of utmost importance for a concern. These ratios are calculated to enlighten the end results of business activities which is the overall efficiency of a business concern.
1) Current Ratio: It is the most widely used ratio. It is the ratio of current assets to current liabilities. It shows a firms ability to cover its current liabilities with its current assets. It is expressed as.
Significance and objective Current ratio throws good light on the short term financial position and policy. It is an indicator of a firms ability to promptly meet its short term liabilities. Relatively high current ratio indicated that the firm is liquid and has ability to meet its current liabilities.
2)Quick Ratio: This ratio is also known as acid test ratio. It is a more severe test liquidity of a company. It shows the ability of a business to meet its immediate financial commitment. Quick assets Quick ratio = Current liabilities Significance and objective Quick ratio is a more rigorous test of liquidity of a firm than the current ratio. When quick ratio is used along with current ratio, it gives a better picture of the firms ability to meet its short term liabilities out of its short term assets.
3)Absolute liquid ratio: Absolute liquid assets Absolute liquid ratio = Current liabilities Significance and objective This ratio is calculated to find out the cash liquidity of a company. Higher the ratio, the higher is the cash liquidity A low is not a serious matter because the company van always borrow from a bank for short term requirements.
4)Debt Equity Ratio: This ratio measures the relationship between long term debts and shareholders funds.
Significance and objectives This ratio shows the relative amount of funds supplied to the company by outsiders and by owners. A low debt equity ratio implies a greater claim of owners on the assets of the company than the owners. On the other hand, a high debt equity ratio indicates that the claims of the debtors are greater than those of the owners.
5)Proprietary Ratio : This ratio measures the relationship between shareholders funds and total assets. Shareholders Funds Proprietary ratio = Total Assets
6)Interest Coverage Ratio: This ratio indicates whether the business earns sufficient profit to pay periodically the interest charges.
Significance and objectives This ratio is very important from lenders point of view because it indicates the ability of a company to pay interest out of its profits.
7)Debt to Total funds Ratio: This ratio shows the relationship between the debts and total funds employed in the business. Debts Debts To Total Funds ratio = Total Funds
Significance and objectives : This ratio shows the proportion of funds supplied by outsiders in the total funds
employed in the business. This ratio also serves the purpose of indicating the possibility of raising additional loans.
8)Capital Gearing Ratio: This is the ratio between the fixed interest bearing securities and equity share capital. Fixed Income Securities Debts To Total Funds ratio = Equity Shareholders Funds
Significance and objectives A company is highly geared if this ratio is more than one. If it is less than one, it is low geared. A highly geared company has the advantage of trading on equity.
9)Inventory Turnover Ratio: This ratio establishes the relationship between the costs of goods sold and average stock.
Significance and objectives This ratio indicates he efficiency of a firms inventory management. It also gives rate at which stocks are converted into sales and then into cash.
10)Debtors Turnover Ratio: This ratio indicates the relationship between the net credit sales and trade debtors. It shows the rate at which cash is generated by the turnover of debtors. Net credit annual sales Debtors turnover ratio = Average trade debtors
Significance and objectives This ratio lies in the fact that debtors constitute one of the important items of current assets and this ratio indicates as how many days the average sales are tied up in the amount of debtors.
11)Fixed assets Turnover Ratio: This ratio indicates the efficiency with which the firm is utilizing its investments in fixed assets such as plant and machinery, land and building, etc.
Sales Fixed assets turnover ratio = Net fixed assets Significance and objectives A high ratio indicates efficient utilization of fixed assets in generating sales and a low ratio may signify that that the firm has an excessive investment in fixed asset.
12)Working Capital Turnover Ratio: This ratio indicates the efficiency or inefficiency in the utilization of working capital in making sales. Cost of sales Working capital turnover ratio = Average working capital
Significance and objectives A high working capital turnover turn over ratio shows the effective utilization of working capital in generating sales.
13)Capital Turnover Ratio: This ratio shows the relationship between sales and total capital employed. Sales Capital turnover ratio = Total capital employed Significance and objectives This ratio shows the efficiency with which capital employed in the business is used. A high capital turnover ratio indicates the possibility of greater profit and low capital turnover ratio is a sign of insufficient sales and possibility of lower profits.
14)Creditors Turnover Ratio: This ratio measures the relationship between credit purchases and average accounts payable.
Net credit annual purchases Creditors turnover ratio = Average trade creditors
15)Gross Profit Ratio: This ratio expresses the relationship between gross profit and sales. Gross Profit Gross profit ratio = Net sales Significance and objectives It indicates the average margin on the goods sold. It shows whether the selling prices are adequate or not. 100
16) Net profit Ratio: This is a ratio of net profit to net sales. Net profit Net profit ratio = Net sales 100
Significance and objectives: It is the overall measure of a firm ability to turn each rupee of sales into profit. It indicates the efficiency with which a business is managed.
17)Operating Ratio: This ratio explains the relationship between cost of goods sold and sales. Operating cost Operating ratio = 100 Net sales
Significance and objectives The operating ratio is the yardstick to measure the efficiency with which a business is operated. It shows the percentage of net sales that is absorbed by operating expenses.
18) Return on Investment: It measures the overall profitability. It is ascertained by comparing profit earned and capital employed to earn it. Profit before interest and taxes ROI ratio = Capital employed X 100
Significance and objectives It is the only ratio which measures satisfactorily the overall performance of a business from the point of view of Profitability. This ratio indicates how well the management has utilized the funds supplied by the owners and creditors. 19)Return o proprietors Equity: It shows the ratio of net profit to owners equity.
Net profit after tax and interest ROI ratio = Shareholders funds X100
Significance and objectives This ratio measures the return on the total proprietors equity of the shareholders.
CHAPTER .5
ANALYSIS OF DATA
RATIO ANALYSIS
The ratio analysis is one of the most powerful tools of financial analysis. It is the process of establishing and interpreting various ratios(quantitative relationship between figures and groups of figures).It is with the help of ratios that the financial statements can be analyzed more clearly and decisions made from such analysis.
Meaning of ratio
A ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. According to Accountants Handbook by Wixon, Kell and Bedford, a ratio is an expression of the quantitative relationship between two numbers.
CURRENT RATIO Current ratio is defined as the relationship between current assets & current liabilities this ratio is also known as working capital ratio is a measure of general liquidity & is most widely used to make the analysis to the short term financial position or liquidity of a firm. Current ratio=current assets/ current liabilities.
TABLE SHOWING CURRENT RATIO Year 2003-04 2004-05 Current Assets 154931328 138387552 Current Liabilities 74655895 47706064 Current ratio 2.07 2.9
INTERPRETATION From the above graph it is clear that the current ratio has been increased from 2003-04 i.e to 2.07 to 2.9%.And there after it has been decrease in the year 04-05 to 1.74 and in 2006-07 to 2007-08 again it has increased from 2.01% to 2.22% .This shows that the dairy has improved its current ratio.
QUICK RATIO Quick ratio, is also known as acid test or liquid ratio is a more rigorous test of liquidity than the current ratio. The term liquidity than to pay its short term obligations as & when they became due quick ratio may be define as the relationship between quick assets and & current liabilities and assets is said to be liquid if it can be converted into cash within a short period without loss of value. Liquid ratio=Liquid Assets / Current Liabilities.
Table No 5.2
Quick ratio
2.5 2 1.5 1 0.5 0 2003-04 2004-05 2005-06 2006-07 2007-08 Quick ratio
INTERPRETATION From the above graph it is clear that the quick ratio has been increased from 2003-05 i.e. 1.33 to 2.26 and there after it has been decreased from 2005-08 i.e 1.25 to 1.07.This indicates that the ratio is above the standard and the company has the ability to meet its liquid or current liabilities. ABSOLUTE LIQUID RATIO Absolute liquid assets include cash in hand and at bank and marketable securities or temporary investments. The acceptable norm for this ratio is 50% or 0.5:1 or 1:2 that is Rs one worth absolute liquid assets are considered adequate to pay Rs 2 worth current liabilities in time as all the creditors are not expected to demand cash at the same time and then cash may also be realized from debtors and inventories.
Table No 5.3
TABLE SHOWING ABSOLUTE LIQUID RATIO Year Absolute Liquid Assets Current Liabilities Absolute liquid ratio 2003-04 2004-05 2005-06 2006-07 2007-08 61387316 59822293 23107618 10191643 7370916 74655895 47706064 77424018 77424018 85444313 0.82 1.25 0.29 0.14 0.08
1.4
1.2
0.4
0.2
INTERPRETATION From the above graph it is clear that the absolute liquid ratio has been increased from the 2003-05 i.e 0.82 to 1.25 and from there after it has been decreased from 2005-08 i.e from 0.29 to 0.08.It indicates that the company has in sufficient liquidity position to pay off its short term liabilities.
INVENTORY TURNOVER RATIO Inventory turn over ratio also known as stock velocity & is normally calculated as sales/average inventory or cost of goods sold/average inventory. It indicates whether inventory has been efficiently used or not. The purpose is to see whether only the required minimum funds have been locked up in inventory. Inventory turn over ratio indicates the number of time the stock has been turned over during the period & evaluates the efficiency with which a firm is able to manage its inventory. A stock turnover of 8 times a year is considered ideal.
Table No 5.4 TABLE SHOWING INVENTORY TURNOVER RATIO Year Cost of goods sold Average Stock Inventory Turnover Ratio 2003-04 2004-05 2005-06 2006-07 2007-08 966046089 1098673069 1122742029 1272790056 1703223557 55403828 42968456 34279593 51035946 81167530 17.43 25.56 32.7 24.9 20.9
Inventory Turnover Ratio 35 30 25 20 Inventory TurnoverRatio 15 10 5 0 2003-04 2004-05 2005-06 2006-07 2007-08
INTERPRETATION From the above graph it is clear that the inventory turnover ratio has been increased from the 2003-06 i.e 17.43 to 32.7 and from there after it has been decreased from 2006-08 i.e from 24.9 to 20.9. It indicates that the company has inefficient management of inventory and has excess stock in relation to production and sales.
INVENTORY CONVERSION PERIOD Days in a year Inventory Conversion Period = Inventory Turnover Ratio Table No 5.5 . Year TABLE SHOWING INVENTORY CONVERSION PERIOD Days in a year Inventory turn over ratio 2003-04 2004-05 2005-06 365 365 365 17.43 25.56 32.7 20.4 14.26 11.14 RATIO
2006-07 2007-08
365 365
24.9 20.9
14.63 17.46
RATIO
25 20 15 10 5 0 2003-04 2004-05 2005-06 2006-07 2007-08 RATIO
INTERPRETATION From the above graph it is clear that the inventory conversion period has been decreasing from the 2003-06 i.e 20.4 to 11.14 and there after it has been increasing from 2006-08 i.e 11.14 to 17.46.this indicates that the company has taken adequate measures to reduce the inventory period.
DEBTORS TURN OVER RATIO A concern may sell goods on cash as well as on credit. Credit is one of the important elements of sales promotion. The volume of sales can be increased by following a liberal credit policy may result in trying up substantial funds of firm in the form of trade debtors.
Trade debtors are expected to be converted into cash within a short period & are included in current assets. Hence the liquidity position of concern to pay its short term obligation in time depends upon the quality of its trade debtors.
Net credit annual sales Debtors turnover ratio = Average trade debtors Table No 5.6 TABLE SHOWING DEBTORS TURNOVER RATIO Year Credit sales Average Trade Debtors 2003-04 2004-05 2005-06 2006-07 2007-08 1131530176 1279675642 1265251998 1479900312 1987487342 13405511 15560295 18488386 22198901 24342600 Debtors Turnover Ratio 84.4 82.23 68.4 66.6 81.64
Debtors Turnover Ratio 90 80 70 60 50 Debtors Turnover Ratio 40 30 20 10 0 2003-04 2004-05 2005-06 2006-07 2007-08
INTERPRETATION
From the above graph it is clear that the debtors turnover ratio has been decreased from 2004-07 i.e 84.4 to 66.6. And in 2007-08 it has increased by 81.64 and shows that the companys debtors are making payments promptly. By this it indicates that the company has inefficient management of the debtors & also has more investment in working capital. This is due to reasons of changes in companys credit policy or inability to collect from its debtors.
WORKING CAPITAL TURNOVER RATIO Working capital turn over ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of time the working capital is turned over in the course of a year. This ratio measures the efficiency with which working capital is being used by the firm & a higher ratio indicates efficient utilization of working capital & a low ratio indicates otherwise. But a high working capital & a low ratio indicates otherwise. Cost of sales Working capital turnover ratio = Average working capital
GRAPH - 5.7
INTERPRETATION From the above graph it is clear that the Working capital turnover ratio has been increased from 2003-08 i.e. 14.09 to 22.4. It indicates that the company has efficient utilization of working capital in generating sales
SOLVENCY RATIO This ratio is a small variant of equity ratio & simply can be calculated has 100-equity ratio. The ratio indicates the relationship between the total liabilities to outsiders to total assets of firm.
Solvency ratio
2.5 2 1.5 1 0.5 0 2003-04 2004-05 2005-06 2006-07 2007-08 Solvency ratio
INTERPRETATION
From the above graph it is clear that the solvency ratio has been increasing from 200306 i.e from 1.66 to 1.97and there after it has been decreasing from 2006-08 i.e from 1.71 to 1.61 .It indicates that the company has more satisfactory in the long term solvency position.
INTEREST COVERAGE RATIO It is used to test the debt servicing capacity of a firm. The ratio is also known as interest coverage ratio. This ratio is calculated by dividing the net profit before interest & taxes by fixed interest charge. EBIT Interest coverage ratio = Interest expense
Table No - 5.9 TABLE SHOWING INTEREST COVERAGE RATIO Year EBIT/ Interest charges Interest Coverage Ratio 2003-04 2004-05 2005-06 2006-07 2007-08 74812415 90448681 46330836 82932593 115578941 GRAPH 5.9 GRAPH SHOWING INTEREST COVERAGE RATIO 11687179 9950185 8270810 7785238 6527407 6.4 9 5.6 10.6 17.7
Interest Coverage Ratio 20 18 16 14 12 10 8 6 4 2 0 2003-04 2004-05 2005-06 2006-07 2007-08 Interest Coverage Ratio
INTERPRETATION From the above graph it is clear that the interest coverage ratio has been increasing from 2003-05 i.e from 6.42 to 9 and there after decreasing from 2004-06 i.e 9 to 5.6.And from 2006-08 it has increased by 17.7.This indicates if the companys earnings fall, it can be able to meet its commitment of fixed interest charges out of its profits.
NET FIXED ASSETS TURNOVER RATIO This ratio calculated by dividing sales & net fixed assets depreciation this ratio indicates the efficiency with which the firm is utilizing its investments in fixed assets.
Table No 5.10 . TABLE SHOWING NET FIXED ASSETS TURNOVER RATIO Year Sales Net Fixed Assets Fixed Assets Turnover Ratio 2003-04 2004-05 1131530176 1279675642 305401135 297654153 3.7 4.29
4 Fixed Assets 3
INTERPRETATION From the above graph it is clear that the fixed assets turnover ratio has been increasing from 2003-08 i.e from 3.7 to 6.03.It indicates that the company has efficient utilization of fixed assets in generating sales. NET PROFIT RATIO This is the ratio of net profit to net sales.
Net profit Net profit ratio = Net sales Table No 5.11 TABLE SHOWING NET PROFIT RATIO Year Net profit Sales Net Profit Ratio 100
INTERPRETATION From the above graph it is clear that the net profit ratio has been increasing from 2003-08 i.e. from 5.39 to 5.47. It indicates that the company is managing to improve its net profit & also indicates the scope for improvement and fluctuation is due to the expenses & sales fluctuation.
DEBT EQUITY RATIO This ratio attempts to measure the relationship between long term debts & owners fund. In other words, this ratio measures the relative claims of long term creditors on the one hand owners on the other hand, on the assets of the company. Long-term debt
Debt-equity ratio = Shareholders equity Table No 5.12 TABLE SHOWING DEBT EQUITY RATIO Year 2003-04 2004-05 2005-06 2006-07 2007-08 Long Term Debts 128486099 115984574 102217887 117468610 115700000 Owners fund 73694768 91245113 50285426 87246678 120892426 Debt equity ratio 1.74 1.27 2.03 1.34 0.95
0.5
INTERPRETATION From the above graph it is clear that the Debt Equity ratio has been decreasing from 20003-08 i.e. from 1.74 to 0.95.It indicates that the ratio claims to outsiders are greater that those of owners fund & also indicates unfavorable to the company because the
company may not be able to get credit without paying very high interest rates to outsiders.
PROPRIETORY RATIO A variant to the debt equity ratio is the proprietary ratio which is also known as equity ratio or share holders to total equities ratio or net worth to total assets ratio. This ratio establishes the relationship between share holders funds or total assets of the firm .The ratio of proprietary funds to total funds is an important ratio for determining long term solvency of the firm. The components of this ratio are shareholders funds or proprietors funds and total assets.
Table No 5.13 . TABLE SHOWING PROPRIETORY RATIO Year 2003-04 2004-05 2005-06 2006-07 2007-08 Owners Fund 73694768 91245113 50285426 87246678 120892426 / Total Assets 4603324646 436041708 453734449 475812379 518989153 Proprietary ratio 16.0 20.9 11.08 18.33 23.29
Proprietary ratio 25
20
15 Proprietary ratio 10
INTERPRETATION From the above graph it is clear that the Proprietory ratio has been increasing from 200304 i.e from 16.0 to 23.29. It indicates that ratio in all the years is below 50% which indicates unfavorable situation to owners.
DEBTS TO TOTAL FUNDS RATIO This ratio shows the relationship between debts to total funds employed in the business.
Debt
Debt to Total Funds Ratio ratio = Total Funds Table No 5.14 . TABLE SHOWING DEBTS TO TOTAL FUNDS RATIO Year Debt Total Funds Inventory conversion period 2003-04 2004-05 2005-06 2006-07 2007-08 203141994 120755178 179641905 189476332 201144313 276836762 254935751 229927331 276723010 322036740 0.73 0.47 0.78 0.68 0.62
INTERPRETATION
From the abovr graph it is clear that the debts to total funds ratio has been decreasing from 2003-08 i.e from 0.73 to 0.62.It indicates that the company has better position to its creditors to pay debt and raising additional loans.
CAPITAL TURNOVER RATIO Capital turnover ratio is the relationship between sales & capital employed. This ratio is calculated to measure the efficiency with which a firm a utilizes its resources or the capital employed. Sales Capital turnover ratio = Total capital employed Table No 5.15 TABLE SHOWING CAPITAL TURNOVER RATIO
Year
Sales
Capital Employed
GRAPH - 5.15
5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2003-04 2004-05 2005-06 2006-07 2007-08 Capital turnover ratio
INTERPRETATION From the above graph it is clear that the debts to Total Funds Ratio has been increasing from 2003-08 i.e from 2.93 to 4.58.Which indicates that the company has efficiently used its capital employed & has the possibility of greater profitability.
RETURN ON INVESTMENT
This is the most important test of profitability of a business. It measures the overall profitability. It is ascertained by comparing profit earned & capital employed to earn it.
Profit before interest and taxes ROI ratio = Capital employed Table No 5.16 TABLE SHOWING RETURN ON INVESTMENT RATIO Year 2003-04 2004-05 2005-06 2006-07 2007-08 PBIT 74812415 90448681 46330836 82932593 115578941 Capital employed 452866869 388335644 376310431 403804657 433544840 RATIO 19.3 23.2 12.31 20.5 26.65 X 100
25
20
15
RATIO
10
INTERPRETATION
From the above graph it is clear that the Return on Investment ratio has been increasing from 2003-08 i.e from 19.3 to 26.65 .It indicates that management has utilized the funds supplied by the owners as well as creditors & return on those funds are also good.
RETURN ON EQUITY. This ratio is also known as return on share holders funds. It shows the ratio of net profit to owners equity.
Earnings After Tax Return on Equity ratio = Owners Funds Table No 5.17 TABLE SHOWING RETURN ON EQUITY RATIO Year 2003-04 2004-05 2005-06 2006-07 2007-08 EAT 61101056 78651402 37691715 74782953 108740526 Owners Fund 73694768 91245113 50285426 87246678 120892426 RATIO 82.9 86.1 74.9 85.7 89.9
GRAPH - 5.17
INTERPRETATION From the above table it is clear that the Return on Equity Ratio has been increasing from 2003-08 i.e from 82.9 to 89.9. It indicates that the company has very good profitability & return on the total equity of the owners fund is good.
The ratio establishes a link between the long term funds raised from outsiders & total long term funds available in the business.
Funded Debt Funded Debt To Total Capitalization ratio = Total Capitalization Table No 5.18 TABLE SHOWING FUNDED DEBT TO CAPITALISATION RATIO Year 2003-04 2004-05 2005-06 2006-07 2007-08 Funded Debt 12593711 12593711 12593711 12463724 12151900 Total Capitalization 202180867 2072229687 152503313 204715288 236592427 RATIO 6.22 6.07 8.25 6.08 5.13
INTERPRETATION
From the above graph it is clear that the Funded Debt To Capitalisation Ratio has been decreasing from 2003-05 i.e to 6.07 and there after increased to 8.25 and from 2006-08 i.e to 5.13.It indicates that the company has not relied much on outside sources for raising long term funds but there is enough scope for the firm to raise long term loans from outsiders.
FIXED ASSETS TO NET WORTH RATIO The ratio establishes the relationship between fixed assets & owners fund.
Fixed Assets Fixed Assets To Net Worth Ratio ratio = Owners Funds Table No 5.19 TABLE SHOWING FIXED ASSETS TO NET WORTH RATIO Year 2003-04 2004-05 2005-06 2006-07 2007-08 Fixed Assets 305401135 297654153 318456107 330794662 329141037 Owners Fund 73694768 91245113 50285426 87246678 120892426 RATIO 414.41 326.21 633.29 379.14 272.25
GRAPH - 5.19
RATIO
700
600
500
200
100
INTERPRETATION From the above graph it is clear that the fixed assets to net worth ratio has been decreasing from 2003-08 i.e from 414.41 to 272.25.It indicates that the owners fund are less than fixed assets so the company has to depend upon the outsiders to finance the fixed assets.
RATIO OF CURRENT ASSETS TO PROPRIETORS FUNDS The ratio is calculated by diving the total of current assets by the amount of share holders fund or owners fund.
Table No 5.20
TABLE SHOWING CURRENT ASSETS TOPROPRIETORS FUNDS RATIO Year 2003-04 2004-05 2005-06 2006-07 2007-08 Current Assets 1549313128 138387552 135278340 145017717 189848116 Owners Fund 73694768 91245113 50285426 87246678 120892426 RATIO 210.23 151.66 269.02 166.2 157.03
250
200
150
RATIO
100
50
INTERPRETATION From the above graph it is clear that the current assets to proprietors funds ratio has been decreased from 20003-08 i.e from 210.23 to 157.03. It indicates that the owners fund are less than current assets so that the company has to depend upon the outsiders to finance the current assets.
A variant to the ratio of fixed assets to net worth is the ratio of fixed assets to long term funds. Fixed Assets Fixed Assets To Total Long Term Funds = Total Long Term Funds Table No 5.21 TABLE SHOWING FIXED ASSETS TO TOTAL LONG TERM FUNDS RATIO
GRAPH - 5.21 GRAPH SHOWING FIXED ASSETS TO TOTAL LONG TERM FUNDS RATIO
RATIO 2.5
1.5 RATIO 1
0.5
INTERPRETATON
From the above graph it is clear that the Fixed Assets to Total Long Term Funds Ratio has been decreased from 2003-05 i.e from 1.51 to 1.43 and thereafter increasing to 2.08 in 2005-06 and has been declining from 2006-08 to 1.39.It indicates that the company has financed a part of the fixed assets out of current funds or working capital which is not a good financial policy.
GROSS PROFIT RATIO Gross profit ratio measures the relationship of gross profit to net sales & is usually represented as a percentage.
Year
Gross Profit
Sales
GRAPH NO - 5.22
Gross Profit Ratio 16 14 12 10 8 6 4 2 0 2003-04 2004-05 2005-06 2006-07 2007-08 Gross Profit Ratio
INTERPRETATION From the above graph it is clear that the Gross Profit Ratio has been decreasing from 2003-06 i.e from 14.6 to 11.2.And there after increasing from 2006-08 i.e from 13.9 to 14.3. A low gross profit ratio indicates high cost of goods sold due to unfavorable purchasing policies, excessive competition or due to lower sales or lesser selling prices. High gross profit ratio indicates increase in sales or selling prices or reduction in cost of goods sold.
The ideal ratio of gross profit ratio is 25% to 35%. Therefore this indicates that the companys profitability position is not favorable. However in the year 2006-08 the gross profit ratio has slightly increased to 14.3% due to increased sales as a result of more publicity campaign.
OPERATING RATIO
A operating ratio establishes the relationship between cost of goods sold +operating expenses on the one hand sales on the other .In other words, it measures the cost of operations per rupee of sales. Operating cost Operating ratio = Net sales 100
Table No 5.23 TABLE SHOWING OPERATING RATIO Year COGS +operating Expenses 2003-04 2004-05 2005-06 2006-07 2007-08 1064497168 1199302880 1229041439 1403256946 1882719267 GRAPH - 5.23 GRAPH SHOWING OPERATING RATIO 1131530176 1279675642 1265251998 1479900312 1987487342 94.0 93.7 97.1 94.8 94.7 Net Sales Operating Ratio
Operating Ratio
98 97 96 95 94 93 92 2003-04 2004-05 2005-06 2006-07 2007-08 Operating Ratio
INTERPRETATION
From the above graph it is clear that the operating ratio has been decreased from 2003-05 i.e from 94.0 to 93.7 and increased there after to 97.1 in 2005-06 ,But decreased from 2006-08 to 94.7. The ideal ratio is 75% to 85%. In all the years i.e. from 2003-08 the operating ratio of the company is more than 85% which indicates that the operating expenses is more than net sales.
Table No 5.24 TABLE SHOWING OPERATING PROFIT RATIO Year Operating Profit / Sales Operating Profit Ratio 2003-04 2004-05 2005-06 2006-07 2007-08 67033005 80372759 36210556 76643364 104768073 1131530176 1279675642 1265251998 1479900312 1987487342 5.92 6.28 2.86 5.17 5.27
GRAPH NO - 5.24
INTERPRETATION From the above graph it is clear that the operating profit ratio has been decreased from 2003-08 from 5.92 to 5.27.Which indicates that the operating expenses or more.
CHAPTER. 6
6.1 SUMMARY OF FINDINGS The current ratio has been increased from 2003-08 i.e.from 2.07to 2.22% .This shows that the company has improved its current ratio. The quick ratio has been increased from 2003-05 i.e. 1.33 to 2.26 and there after it has been decreased from 2005-08 i.e 1.25 to 1.07.This shows that the ratio is above the standard and the company has the ability to meet its liquid or current liabilities. The absolute liquid ratio has been decreased from 2003-08 i.e 0.82 to 0.08 .It shows that the company has in sufficient liquidity position to pay off its short term liabilities. The inventory turnover ratio has been increased from the 2003-06 i.e 17.43 to 32.7 and has declined in 2006-08 to 20.9. From study it reveals that the company has inefficient management of inventory due to excess of stock in relation to production and sales. The inventory conversion period has been decreasing
to 11.14 and increased in 2006-08 to 17.46.This shows that the company has taken adequate measures to reduce the inventory period. The Working capital turnover ratio has been increased from 2003-08 i.e. 14.09 to 22.4. It shows that the company has efficient utilization of working capital in generating sales. The interest coverage ratio has been increasing from 2003-05 i.e from 6.42 to 9 and declined in 2004-06 to 5.6.And in 2006-08 it has raised to 17.7.This shows if the companys earnings fall, it can be able to meet its commitment of fixed interest charges out of its profits.
The fixed assets turnover ratio has been increasing from 2003-08 i.e from 3.7 to 6.03.It shows that the company has efficient utilization of fixed assets in generating sales. The net profit ratio is in increasing trend from 2003-08 i.e. from 5.39 to 5.47.% It shows that the company is to improving its net profit and fluctuation is due to the expenses & sales fluctuation. The Debt Equity ratio has been decreasing from 2003-08 i.e. from 1.74 to 0.95.It shows that the ratio claims to outsiders are greater than those of owners funds. The Proprietary ratio has been increasing from 2003-04 i.e from 16.0 to 23.29%. It indicates that ratio in all the years is below 50% which shows unfavorable situation to owners. The debts to total funds ratio has been decreasing from 2003-08 i.e from 0.73 to 0.62.It shows that the company has better position to its creditors to pay debt raised. The Return on Investment ratio has been increasing from 2003-08 i.e from 19.3 to 26.65 .It shows that management has utilized the funds supplied by the owners as well as creditors & return on those funds are generating revenue . The Funded Debt To Capitalisation Ratio has been decreasing from 2003-05 i.e to 6.07 and shows increasing trend in 2006-08 from 8.25 to 5.13.It shows that the company has not relied much on outside sources for raising long term funds. The Gross Profit Ratio has been decreasing from 2003-06 i.e from 14.6 to 11.2.And has raised to 14.3% in 2006-08 .Therefore this shows that the companys is trying to achieve its profitability position .
6.2.CONCLUSION
Finance is called the science of money. It studies the principles and methods of obtaining control over money from those who have saved it, and the administration of it by those into whose control it passes.
The liquidity ratios analyzed indicates that the short term liquidity position of the company is slightly below the set standards and may face a problem of shortage of working capital if the liquidity position of the company does not improve.
The turnover ratios which measures the operating efficiency of the company indicates that the company has to make use of the available resources and also increase the sales volume.
The profitability ratios are used to measure the overall efficiency has not of much improvement in the past five years. Thus the company should take effective measure to increase its profitability position.
6.3.RECOMMANDATIONS
As the companys liquidity position to pay its short term liabilities is less it has to improve its liquidity position by realizing funds from debtors and inventories. As the company is maintaining high inventory turnover it has to deduce to increase its production and sales to generate revenue out of it. As the companys outsiders funds are greater than owners funds it has to raise funds from owners in order to avoid paying high interest rates to outsiders to get credit. The debts to total funds ratio has better position to its creditors to pay debt raised, from outsiders it can raise additional loans for its operations. The inventory conversion period has been increasing measures should be taken to reduce for inventory conversion to generate more sales. Debtors turnover ratio has been fluctuating which reduces efficient management and more in investment in working capital, measures should be taken to increase collection from trade debtors. Average collection Period has been decreasing , it is suggested to maintain the same. Working capital turnover Ratio is increasing, it is suggested to maintain the same. Net profit ratio has been increasing in little variation the expenses has to be reduced and sales to be increased to improve the net profit.
The Fixed Assets to Net Worth Ratio has been decreasing the owners funds are less than fixed assets. The dependency upon the outsiders to finance the fixed assets has to reduce. Ratio Of current assets To Proprietors Funds has been decreasing to improve working capital current assets has to be invested more. Gross profit ratio has been increasing in little variation the expenses has to be reduced and sales to be increased to improve the gross profit. Operating Profit Ratio has been increased to reduce operating expenses which is good for profitability position of the company.
CHAPTER . 7
BIBILIOGRAPHY
BIBLIOGRAPHY
1. Reference Books:
M Y KHAN & PK JAI Management Accounting (Fourth Edition) SHASHI K. GUPTA,R.K. SHARMA Management Accounting (First Edition) SHASHI K. GUPTA, R.K. SHARMA, NEETI GUPTA, Financial Management (Second Edition).
WEBSITE:- www.kmfnandini.com
CHAPTER. 7
SL. NO.
PARTICULARS EXPENDITURE:
SCH NO.
YEAR 2003-04
YEAR 2004-05
1 2 3 4 5 6
Opening Stock Purchases Interunit\Union Purchases Inter Federation Purchases Procurement Transportation Processing & Manufacturing Expenses
45 46 47 47A 48 49
165,484,085.70
181,002,570.89
TOTAL INCOME
1,186,871,528.69
1,310,208,726.87
7 8 9 10
Sales - (Local Sales) Interunit\Union sales Inter Federation Sales Closing Stock
50 51 51A 52
Gross Loss transfered to Profit and Loss A/C TOTAL 1,186,871,528.69 1,310,208,726.87
SL. NO.
PARTICULARS EXPENDITURE:
SCH NO.
YEAR 2005-06
YEAR 2006-07
1 2 3 4 5 6
Opening Stock Purchases Interunit\Union Purchases Inter Federation Purchases Procurement Transportation Processing & Manufacturing Expenses
45 46 47 47A 48 49
142,509,966.88
207,110,254.40
TOTAL INCOME 7 8 9 10 Sales - (Local Sales) Interunit\Union sales Inter Federation Sales Closing Stock 50 51 51A 52
1,303,278,101.15
1,543,945,504.05
Gross Loss transfered to Profit and Loss A/C TOTAL 1,303,278,101.15 1,543,945,504.05
TRADING ACCOUNT FOR THE YEAR ENDED 2007-08 SL. NO. EXPENDITURE: PARTICULARS SCH NO. CURRENT YEAR 2007-08
Opening Stock
45
64,045,191.33
Purchases
46
1,606,734,493.17
Interunit\Union Purchases
47
22,674,493.80
47A
0.00
Procurement Transportation
48
27,464,814.15
49
80,594,435.20
284,263,783.70
TOTAL INCOME
2,085,777,211.35
50
1,793,054,175.82
Interunit\Union sales
51
194,433,166.84
51A
0.00
10
Closing Stock
52
98,289,868.69
PROFIT & LOSS ACCOUNT FOR THE YEAR 2003-04 SL. NO. EXPENDITURE PARTICULARS SCH NO. CURRENT YEAR 2003-04
Staff Expenses
53
45,939,187.21
Adminstration Expenses
54
10,744,347.44
Taxes
55
2,024,179.00
56
19,885,650.62
57
11,687,179.29
58
0.00
Depreciation : - Depreciation on fixed assets - Lease amount on BVB sites written off
20 21,881,894.69
61,101,056.75 173,263,495.00
165,484,085.70
Other Income
60
5,211,978.93
61
2,461,715.92
10
62
105,714.45
11
63
0.00
173,263,495.00
SL. NO.
PARTICULARS
SCH NO.
YEAR 2005-06
YEAR 2004-05
EXPENDITURE
Staff Expenses
53
49,508,171.03
44,928,316.30
Adminstration Expenses
54
9,908,841.11
9,675,424.57
Taxes
55
368,310.28
1,847,093.00
56
23,166,704.65
23,780,661.70
57
8,270,810.77
9,950,185.92
58
0.00
0.00
37,691,715.21 152,630,247.05
78,651,402.73 191,078,493.28
142,509,966.88
181,002,570.89
Other Income
60
9,340,083.72
8,316,626.88
61
533,005.00
1,757,669.27
10
62
247,191.45
1,626.24
11
63
0.00
0.00
152,630,247.05
191,078,493.28
PROFIT & LOSS ACCOUNT FOR THE YEAR 2006-07 2007-08 SL. NO. EXPENDITURE PARTICULARS SCH NO. YEAR 2007-08 YEAR 2006-07
Staff Expenses
53
84,089,965.91
63,782,030.83
Administration Expenses
54
36,154,511.66
9,684,772.52
Taxes
55
310,505.20
384,401.00
56
34,617,464.37
32,869,570.28
57
6,527,907.53
7,765,238.29
58
724,832.17
0.00
20
24,633,769.28
24,130,516.77
108,740,526.74 295,799,481.86
74,782,953.64 213,399,483.33
284,263,783.70
207,110,254.40
Other Income
60
8,058,856.93
4,192,289.63
61
987,245.29
1,301,854.00
10
62
2,489,595.94
795,085.30
11
63
0.00
0.00
295,799,481.86
213,399,483.33
II
65
12,593,711.07
III
66
128,486,099.39
IV
Profit and Loss Account (To be trfrd.to H.O.) TOTAL APPLICATION OF FUNDS:
72
61,101,056.75 202,180,867.21
68
305,401,135.70
VI
Investments
69
0.00
VII
Current Assets, Loans & Advances : a) Inventory b) Sundry Debtors c) Cash & Bank balances d) Loans and Advances
TOTAL -
460,332,464.53
VIII
71
258,151,597.32
202,180,867.21
TOTAL
202,180,867.21
II
65
12,593,711.07
III
66
115,984,574.01
IV
Profit and Loss Account To be transferred to KMF C.O.) TOTAL APPLICATION OF FUNDS: 72 78,651,402.73 207,229,687.81
68
297,654,153.40
VI
Investments
69
0.00
VII
Current Assets, Loans & Advances : a) Inventory b) Sundry Debtors c) Cash & Bank balances d) Loans and Advances
TOTAL -
436,041,708.33
VIII
71
228,812,020.52
207,229,687.81
TOTAL
207,229,687.81
PREVIOUS SL. NO. SOURCES OF FUNDS: I Share Capital 64 0.00 PARTICULARS SCH NO. YEAR 2005 - 06
II
65
12,593,711
III
66
102,217,887
IV
Profit and Loss Account (To be transferred to KMF C.O.) TOTAL APPLICATION OF FUNDS: 72 37,691,715 152,503,313
68
318,456,107
VI
Investments
69
0.00
VII
Current Assets, Loans & Advances : a) Inventory b) Sundry Debtors c) Cash & Bank balances d) Loans and Advances
453,734,449 TOTAL
TOTAL
152,5,03,313
PREVIOUS SL. NO. SOURCES OF FUNDS: I Share Capital 64 0.00 PARTICULARS SCH NO. YEAR 2006 - 07
II
65
12,463,724.07
III
66
117,468,610.96
IV
Profit and Loss Account (To be transferred to KMF C.O.) TOTAL APPLICATION OF FUNDS: 72 74,782,953.64 204,715,288.67
68
330,794,662.64
VI
Investments
69
0.00
VII
Current Assets, Loans & Advances : a) Inventory b) Sundry Debtors c) Cash & Bank balances d) Loans and Advances
TOTAL
475,812,379.75
VIII
71
271,097,091.08
204,715,288.67
TOTAL
204,715,288.67
SCH NO.
YEAR 2007-2008
64
0.00
II
65
12,151,900.40
III
66
115,700,000.00
IV
Profit and Loss Account (To be transferred to KMF C.O.) TOTAL APPLICATION OF FUNDS: 72 108,740,526.74 236,592,427.14
68
329,141,037.63
VI
Investments
69
0.00
VII
Current Assets, Loans & Advances : a) Inventory b) Sundry Debtors c) Cash & Bank balances d) Loans and Advances
TOTAL
518,989,153.93
VIII
71
282,396,726.79
236,592,427.14
TOTAL
236,592,427.14