Ajay Naidu
Ajay Naidu
Ajay Naidu
Table "o$'
Table showing fi+ed asset turnover ratio
6AR
"T !A(!
ARs$ In CroresB
:I?# A!!T!
ARs$ In CroresB
:I?# A!!T
T7"5GR RATI5
AIn timesB
%00'30) 1*%%& 1)1,, 1$0,
%00)30* 1))0% 1',.- 1$0'
%00*30, 1.%0, 1'0&* 1$&,
%00,30- %'1,- 1&1*- 1$-'
%00-30. &1-0) 1%'-) %$))
%00.310 &%%-0 1%1*% 1$*)
I"TRPRTATI5":
7ere, the value of fi)ed assets employed in the business shows a reducing trend which
implies that company didn:t occur any more fi)ed asset during the period (;;- T (;&;. Dnly
the depreciation effect had been given to fi)ed asset.
There has been a decline in the year (;;,4;- but rising there onwards favorably which
indicates that the net fi)ed assets is used more effectively to increase the sales without
additional investment in the period of study.
%$ ;5R=I"/ CAPITA( T7R"5GR RATI5:
Working capital refers to investment in current assets. This is also known as gross concept of
working capital. There is another concept of working capital known as net working capital. =et
working capital is the difference between cur4rent assets and current liabilities. nalysts intend to
establish a relationship between working capital and salsas the two are closely related. Through this
ratio we are attempting to see that one rupee blocked by the organi8ation in net working capital is
generating how much sales. 7igher the ratio better it is.
;5R=I"/ CAPITA( T7R"5GR RATI5 M "T !A(! N "T ;5R=I"/ CAPITA(
In recent years for operating an industry have not only become scarce, but also costly in the
wake of macro level policies on credit squee8e an increase in Interest rate. %o, the working capital
can be defined either as a gross working capital, which include funds invested in all current assets,
or as net working capital, which denotes the difference between the current assets current liabilities
of an organi8ation.
Table "o$)
Table showing ;or1ing capital turnover ratio
6AR
"T !A(!
ARs$ In CroresB
;5R=I"/ CAPITA(
ARs$ In CroresB
;5R=I"/ CAPITA(
T7R"5GR RATI5
AIn timesB
%00'30) 1*%%& &0-- )$%*
%00)30* 1))0% %%)- *$-,
%00*30, 1.%0, %)0) ,$*,
%00,30- %'1,- %0)0 11$,.
%00-30. &1-0) ,),. '$1.
%00.310 &%%-0 .%,* &$',
I"TRPRTATI5":
7ere, the Working 6apital ratio shows a increasing trend from (;;,4;- to (;;N4;< and then
slope downwards due to holding high current assets in the form of cash, bank balances and
receivables in the year (;;<4;G to (;;G4&;
&$ #4T5R! T7R"5GR RATI5:
Aebtor:s turnover ratio measures the efficiency with which the debtors are converted
into cash. This ratio indicates both the quality of debtors and the collection efforts of the
business enterprise. This ratio is calculated as follows!
I$ #ebtorsJ turnover ratio
II$ #ebt collection period$
#4T5RJ! T7R"5GR RATI5 M CR#IT !A(! N AGRA/ ACC57"T! RCIGA4(!
The numerator of this ratio should preferably be credit sales. This is so because the
denominator is logically related to credit sales as it arises from credit sales only. 6ash sales do
not generate debtors. 7owever, as the information related to credit sales is not separately
available in corporate accounts, so total sales could be taken in the numerator. verage debtors
are calculated by dividing the sum of beginning4of4year and end4of4year balance of debtors by
(.
Table "o$*
Table showing #ebtorsJ turnover ratio
ARs$ In CroresB
6AR
CR#IT !A(!
ARs$ In CroresB
#4T5R!
ARs$ In CroresB
#ebtorsJ turnover ratio
AIn timesB
%00'30) 1*%%& 1*-- .$*%
%00)30* 1))0% 1&.0 11$1*
%00*30, 1.%0, 1**0 11$),
%00,30- %'1,- 1))0 1)$*0
%00-30. &1-0) 1.0- 1*$*,
%00.310 &%%-0 1--% 1,$1)
I"TRPRTATI5":
There has been increase in the turnover ratio which shows the efficiency of the
collection department
#ebt collection period:
The ratio indicates the e)tent to which the debt has been collected in time. It gives the
average debt collection period. The ratio is very helpful to lenders because it e)plains to them
whether their borrowers are collecting money within a reasonable time. n increase in the
period will result in greater blockage of funds in debtors.
#ebt collection period M MonthsN#ays in a yearN #ebtorJs turnover ratio
Table "o$,
Table showing #ebt collection period
AIn #aysB
6AR C5((CTI5"
PRI5#
%00'30) &-
%00)30* &&
%00*30, &%
%00,30- %&
%00-30. %%
%00.310 %1
Aebtors: collection period measures the quality of debtors since it measures the
rapidity or slowness with which money is collected from them
I"TRPRTATI5"O
7ere, there has been decreasing trend in the debt collection period which is favorable
for the company. Because, the quicker the collection period. Then more the utili8ation of cash
collected from debtors. It moves from +< days in (;;,4;- to (& days in (;;G4&;.
'$ !T5C= T7R"5GR RATI5:
This ratio indicates whether investment in inventory is efficiently used or not. It is
therefore e)plains whether investment in inventories is within proper limits or not. This ratio is
calculated as follows.
!toc1 Turnover Ratio M "et !ales N Average Inventory
Table "o$-
Table showing !toc1 turnover ratio
6AR
CR#IT !A(
ARs$ In CroresB!
AGRA/ !T5C=
ARs$ In CroresB
!T5C= T7R"5GR
RATI5
AIn timesB
%00'30) 1*%%& ')1. &$).
%00)30* 1))0% '0'% &$-'
%00*30, 1.%0, &,') )$1&
%00,30- %'1,- &0-% ,$.1
%00-30. &1-0) '%%1 ,$)&
%00.310 &%%-0 *%10 )$1.
The Inventory turnover ratio signifies the liquidity of the Inventory. high inventory turnover
ratio indicates brisk sales. The ratio is, therefore a measure to discover the possible trouble in
the form of over stocking or over valuation.
It is difficult to establish a standard ratio of inventory because it will differ from
industry to industry.
I"TRPRTATI5":
7ere, there has been a rising trend in the Inventory turnover ratio which implies that
the inventories are efficiently managed and utili8ed which directly contributes to companies:
productivity. The stock position is known as the graveyard of the balance sheet. low
inventory turnover ratio results in blocking of funds in Inventory which may ultimately result
in heavy losses due to inventory becoming obsolete or deteriorate in quality.
PR5:ITA4I(IT6 RATI5
$rofitability is an indication of the efficiency with which the operation of the business
is carried on. $oor operational performance may indicate poor sales and hence poor profits.
lower profitability may arise due to lack of control over the e)penses. Bankers, financial
institutions and other creditors look at the profitability ratios as an indicator whether or not the
firm earns substantially more than it pays interest for the use of borrowed funds.
Return on Investment
Return on !hareholdersJ fund
Return on total asset
arning per !hare
"et profit Ratio
5perating ratio
RatioJs at /lance
6ear
Return on
investment
Return on
!hareholders
fund
Return
on total
assets
arning
per
share
"et
profit
ratio
5perating
Ratio
%00'30) )$* 31' 3%$.' 31$,* *$& &&$&.
%00)30* 30$-) 3&% 3,$). 3'$1& 30$.' &*$'-
%00*30, *$1) 3* 31$' 30$,& )$& &%$'%
%00,30- %&$1. )0 11$)- *$0- 1'$* %-$)
%00-30. )0 ** %)$1. 1*$) &$&) %.$'
%00.310 %. &% 1&$%' .$,1 1.$1% &-$1-
6hapter /! %ummery, 6onclusions
and %uggestions
:I"#I"/!
This study is carried out with the ob'ective of analy8ing the financial performance of
%I0 to e)amine and understand the role of finance in the growth of the company. This chapter
attempts to highlight the findings of the study.
&. The comparative statement shows that the sales of the year (;&; are very high
compared to the past.
(. The profit before interest and ta) is in positive during the period of study e)cluding the
year (;;-4;/ because of low sales value in the corresponding year.
+. The sales, $BIT, $BT, $T all shows the increasing trend during the period under
review. It depicts that the company is working with more efficiency.
,. The repayment of loan funds which reduces the interest charges and increase in the
selling price of the steel contributes the rising trend.
-. The interest and finance charges in the year (;;G4&; are one third of (;;,4;-. It made
a favorable impact towards the company.
/. 9eturn on Investment fluctuates more due to the charges in the operating profit of the
company.
N. =et $rofit ratio shows increasing trend. It depicts that the efficiency is maintained in
sales value and operating e)penses.
<. Fi)ed ssets turnover ratio shows the increasing trend. It depicts that the company:s
fi)ed assets are utili8ed properly in relation to the sales.
G. Working 6apital turnover ratio depicts the increasing trend shows from (;;- to (;;N
and then slope downwards due to holding high cash and bank balance after the year
(;;<.
&;. Aebtor turnover ratio and debt collection period shows increasing trend. It depicts the
higher performance of debt collection department of the company.
&&. %tock turnover ratio depicts the efficiency of the inventory utili8ation in relation to the
corresponding sales value.
&(. The ideal current ratio is ( which the firm obtains only after the year (;;- it shows the
positive impact.
&+. The ideal liquid ratio is & which is also obtained by the firm only after the year (;;<4
;G, which enables the company to meet the emergency requirements.
&,. $roprietary ratio of the company fluctuates during the period of study. It shows the
change in the value of reserves and surplus in the form of shareholders: fund.
RC5MM"#ATI5" A"# !7//!TI5"!
&. The company may increase the performance by reducing the borrowed capital, so that
the interest an finance charges will be less.
(. The company may increase the sales if it attempts to move into e)port market.
+. The company may reduce the operating inefficiencies through effective utili8ation of
all the resources.
,. The company may strike a balance between the current assets and current liabilities to
maintain the solvency position.
-. Dptimum utili8ation of Working 6apital can be planned so as to result in sound
financial position.
/. There is an urgent need to upgrade and moderni8e the plants for improving the
profitability of %I0.
C5"C(7!I5"
Finance is the life blood of every business. Without effective financial management a
company cannot in this competitive world. $rudent financial Fanager has to
measure the working capital policy followed by the company. %I0 continues to play
an important role in the industrial development of country. There is every possibility
that %I0 would establish for itself a permanent and unshakable position in the
industrial map of India and also in the emerging international market for steel.
4ibliography:
&. M$6$ =han and <ain P:inancial ManagementE
(. #r$ R$P$ Rustogi P :inancial ManagementE by Ta+mann
Publication$
+. Advance financial statement Analysis guide I Pearsons
Publication
,. Audited Published financial statements of !teel Authority of
India (td$ :or financial year %00'30) to %00.310$
-. :inancial statements and Analysis I IC:AI publication$