RATIO ANALYSIS PROJECT PPT OF SHSSKL NIPANI MBA FINANCE

1. TITLE OF THE PROJECT
“A Study on ANALYSIS OF FINANCIAL
PERFORMANCE ON The BASIS OF
FINANCIAL RATIO’S” of Halasidhanath
Sahakari Sakhar Karkhana Ltd.
Presented BY:-
BABASAB .S. PATIL
USN no:-2ba09mba07
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2.  Sugar industries are brought prosperity as form 1850.
 In India total sugar mills are 574 as per 2007-08
 India is the second largest producer of sugarcane next to Brazil.
 Most of the sugar industries are located in Uttar Pradesh, Bihar, Maharashtra,
AandraPradesh, Karnataka and Tamilnadu .
 The Indian sugar industry is a key driver of rural development, supporting
Indian's
economy growth.
 Karnataka sugar industry ranked 3rd in terms of its contribution of sugar in the
total
Sugar production in the country.
 Karnataka stands 4th in the cultivation of sugar cane.
INDUSTRY PROFILE
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3. COMPANY PROFILE
SHREE HALASIDHANATH SAHAKARI SAKHAR KARKHANA LTD
NIPNI is Established in the year of 22-04-1981. The company is registered
under the provision of companies Act-1956 DSK/REG-2/80-81. The 1st
Crushing Season is started in 1983. The managing director of SHSSK Ltd
is Shri .D.A. Chougale. The Company mainly producing sugar (white
crystal sugar) and also producing by products like Bagasses & Molasses.
The present turn over of the company is 43-45 Cororer. Total staff of the
company is 638. The Area operation the factory can be covered in 68
villages including of that 43 villages from Chikodi.
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4. OBJECTIVES OF THE STUDY
 To study the profitability of Halasidhanath Sahakari Sakhar Karkhana Ltd. Nipani.
 To study the liquidity position.
 To find activity turnover
 To study operating efficiency of Halsidhanath Sahakari Sakhar Karkhana Ltd Nipani.
SCOPE OF THE STUDY
The main scope of the study was to put into practical the theoretical aspect
of the study into real life work experience. The study of Ratio analysis
further the study is based on last 5 years Annual Reports of Shri
Halasidhnath Sahakari Sakhar Karkhana. Ltd.
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5. RESEARCH METHODOLOGY
 Sources of data collection:
1. Primary data:- The data required for the project was collected through
the discussion with finance manager and Other staff of the company. That
is through discussion with concerned staff in the company.
• Secondary data:- The major source of data for this project was
collected through
• Balance sheet of SSHSKL
• Profit and loss account of 5 year period from 2005-2009
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6. DATA ANALYSIS & INTERPRETETION
Gross profit Margin ratio:
Gross profit ratio represents the relation between the profits and sale
Gross Profit Margin = Gross Profit / Net Sales * 100
INTERPRETATION:-
The Gross-Profit Margin ratio of SHSSKL has ups and down
in these five years period. The gross profit measures the relation
between the sales and profits. The gross-profit ratio in the year 2004-
05 is 23.26 and next year 2005-06 is 13.66 and in 2006-07 its 11.22
then in 2008its become 17.44 and in 2008-09 it is 12.63.
YEAR GROSS
PROFIT
SALES G.P.
RATIO
2004-05 7,00,15,301.58 301002504.06 23.26
2005-06 41317359.41 302304793.75 13.66
2006-07 3,79,03,469.81 337985566.07 11.02
2007-08 6,09,91,621.57 349546301.04 17.44
2008-09 5,44,14,256.14 430543494.12 12.63
23.26
13.66
11.22
17.44
12.63
0
5
10
15
20
25
2004-05 2005-06 2006-07 2007-08 2008-09
GROSS PROFIT RATIO
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7. Net Profit ratio
This ratio measures the relationship between and net profit and net sales
Net Profit Ratio = Net Profit / Net Sales*100
INTERPRETATION
The net profit is the indicative of the management’s ability to operate the business
with sufficient success. In the above bar diagram it shows that the net profit ratio of SHSSKL
has increased 4.84 in 2004-05 but it decreased in the next years 1.34 in 2004-05 and it again
decreased in 2006-07.then it increased 0.62 and it again decreased 0.38.in 2008-09.
YEAR NET PROFIT SALES N.P.RATIO
2004-05 14569011.39 301002504.06 4.84
2005-06 4053781.26 302304793.75 1.34
2006-07 1179916.79 337985566.07 0.34
2007-08 2178816.70 349546301.04 0.62
2008-09 1653143.88 430543494.12 0.38
4.84
1.34
0.34
0.62
0.38
0
1
2
3
4
5
6
2004-05 2005-06 2006-07 2007-08 2008-09
NET PROFIT RATIO
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8. CURRENT RATIO
The ratio measures the relationship between the current Assets and
current Liabilities Current Ratio = Current Assets
Current Liabilities
INTERPRETATION:-
An ideal current ratio is 2: 1 Thus 2 is the considered as a safe margin from the
above diagram it determines that the firm has safe margin in1.4 2006-07 and in 2004-06 it has
0.67&0.47 moreover it has not safe margin 2007-09 e.i to 0.78& 0.86
YEAR Current Assets Current
Liabilities
RATIO
2004-05 308321871.3 454294589.7 0.67
2005-06 265422636.1 563620481.6 0.47
2006-07 875637598.7 623087336.2 1.40
2007-08 446111012.4 565628200.9 0.78
2008-09 471836449.8 542837550.5 0.86
0.67
0.47
1.4
0.78
0.86
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2004-05 2005-06 2006-07 2007-08 2008-09
CURRENT RATIO
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9. Liquidity Ratio
Liquidity Ratio = Liquid Assets
Liquid Liabilities
Liquid Assets= Current Assets-Inventories
Liquid-Liabilities = Current Liabilities - Bank-overdraft
INTERPRETATION:-
Usually, a high acid test ratio is an indication of that firm’s better liquidity
position. From the above table it determines that the firm has 0.24 &0.067 in the year
2004-06 and it increased 0.79 in 2006-07 and it again decreased 0.18 in 2007-08 then
again raised0.30 in 2008-09
Years Liquid assets Liquid
Liabilities
Ratio
2004-
2005
110024781.8 454294589.7 0.24
2005-2006 37885949.4 563620481.6 0.067
2006-2007 496655612.5 623087336.2 0.79
2007-2008 102195141.3 565628200.9 0.18
2008-2009 163116368.5 542837550.5 0.30
0.24
0.067
0.79
0.18
0.3
0
0.2
0.4
0.6
0.8
1
2004-05 2005-06 2006-07 2007-08 2008-09
LIQUIDITY RATIO
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10. ACTIVITY RATIO
INVENTORY TURN-OVER RATIO:-
Sales
Inventory Turn-Over ratio=
Average Inventory
Opening-Stock + Closing-Stock
Average Inventory =
2
INTERPRETATION: -
This means that the inventory in the first year has been sold1.56 very slow in 2004-05 And it
again increase in 2005-08 e.i 1.28, 1.04, 1.02.and in last year it again decreased 1.4 in 2008-09
Years Average
Inventory
Sales Inventory
Turn-Over
ratio
2004-2005 192353685.5 301002504.06 1.56
2005-2006 234674943.5 302304793.75 1.28
2006-2007 324789674.5 337985566.07 1.04
2007-2008 342085995.0 349546301.04 1.02
2008-2009 305513910.0 430543494.12 1.40
1.56
1.28
1.04 1.02
1.4
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2004-05 2005-06 2006-07 2007-08 2008-09
INVENTORY TURNOVER RATIO
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11. FIXED ASSETS TURN-OVER RATIO
Sales
Fixed assets turn-over ratio =
Fixed-Assets
INTERPRETATION:-
The ratio indicates the extent to which the investment in fixed assets
contributed towards to sales. As the figure shows, in 2004-05 the fixed assets
turnover ratio is 0.85 and it increase in the next 3years continuously with
0.83, 0.92, 0.94. And it again decreases in 2008-09 e.i to 0.66.
YEARS SALES FIXED-
ASSETS
F. A. T-O
RATIO
2004-05 301002504.06 350064970.91 0.85
2005-06 302304793.75 361712835.66 0.83
2006-07 337985566.07 363487965.66 0.92
2007-08 349546301.04 371470849.66 0.94
2008-09 430543494.12 647506096.70 0.66
0.85 0.83
0.92 0.94
0.66
0
0.2
0.4
0.6
0.8
1
2004-05 2005-06 2006-07 2007-08 2008-09
FIXED ASSETS TURN OVER RATIO
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12. CURRENT ASSETS TURN-OVER RATIO
Sales
Current assets turn-over ratio =
Current Assets
INTERPRETATION:-
The current assets turnover ratio measures that how quickly the short
term obligations can be met. In the following graph it is shown that there is
increasing0.97, 1.13 in 2004-06 current assets turnover ratio. And it falls0.38 in
2006-07 and it increase slightly0.78 to 0.91 in 2007-09.
YEARS SALES CURRENT
ASSETS
C. A. T-O
RATIO
2004-2005 301002504.06 308321871.3 0.97
2005-2006 302304793.75 265422636.1 1.13
2006-2007 337985566.07 875637598.7 0.38
2007-2008 349546301.04 446111012.4 0.78
2008-2009 430543494.12 471836449.8 0.91
0.97
1.13
0.38
0.78
0.91
0
0.2
0.4
0.6
0.8
1
1.2
2004-05 2005-06 2006-07 2007-08 2008-09
CURRENT A. TURNOVER RATIO
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13. Operating-Efficiency Ratio:-
Direct Material cost to sales = Direct Material cost *100
Net-sales
INTERPRETATION:-
Direct Material cost to sales should be low enough to leave portion of sales to give fair return to investors
from the above table show that 66.57 & 64.23 in the year 2004-05 and 2007-08 it give the fair to the
investors where as72.51, 71.43 and 71.86. 2005-07and 2008-09 are not up to mark able .
YEARS Direct
Material
SALES Percentage
(%)
2004-2005 200389076.8 301002504.06 66.57
2005-2006 219224160.5 302304793.75 72.51
2006-2007 241453980.32 337985566.07 71.43
2007-2008 224546979.08 349546301.04 64.23
2008-2009 309403524.5 430543494.12 71.86
66.57
72.51 71.43
64.23
71.86
D.M COST TO SALES
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14. Direct Labour cost to sales
Direct Labour cost to sales = Direct Labour cost *100
Net-sales
INTERPRETATION:-
From the above table shows that the cost of direct labour of the firm in the year
of 2004-05 is 4.94% where it compare to the next 3year it increase5.60, 8.18 &
9.97. Slithightlliy. And it again decreases in the year of 2008-09. It shows that
the firm efficient utilized the labour in the year of 2004-05 and 2005-06.
YEARS
Di. Labour SALES Percentage
(%)
2004-2005 14885365.90 301002504.06 4.94
2005-2006 16958271.40 302304793.75 5.60
2006-2007 27661900.24 337985566.07 8.18
2007-2008 34862365.60 349546301.04 9.97
2008-2009 35562670.05 430543494.12 8.25
4.94%
5.60%
8.18%
9.97%
8.25%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2004-05 2005-06 2006-07 2007-08 2008-09
Direct Labour cost to Sales
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15. Factory Overhead to Sales
Factory Overhead to Sales = Factory Overhead cost *100
Net-sales
INTERPRETATION: -
From the above table shows that the cost of manufacturing overhead of the firm in
the year of 2004-05 is 5.22% where it compare to the next 3year it increase
8.46,9.16,& 9.16 in 2005-08. And it again decreases 6.79 in the year of 2008-09.
YEARS F-
Overhead
Net-SALES Percentage
(%)
2004-2005 15712759.79 301002504.06 5.22
2005-2006 25581554.35 302304793.75 8.46
2006-2007 30966215.70 337985566.07 9.16
2007-2008 32038895.00 349546301.04 9.16
2008-2009 29269482.40 430543494.12 6.79
0
2
4
6
8
10
2004-05 2005-06 2006-07 2007-08 2008-09
5.22
8.46 9.16 9.16
6.79
FACTORY O.H TO SALES
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16. Findings
 Gross profit and net profits are decreased during the period of study, which indicates that firm’s
inefficient management in manufacturing and trading operations.
 Liquidity ratio of the firm is not better liquidity position in over the five years. It shows that the
firm had not sufficient liquid assets.
 The current assets turnover ratio is increasing during the period of 2004-06 and again it
decrease in the period of 2006-07. And again increase in next two year slithightlliy.
 Liquidity ratio of the firm is not better liquidity position in over the five years. It shows that the
firm had not sufficient liquid assets.
 The inventory of the firm in the first year has been sold very slow. And there is an increase in the
movement of the inventories but it slightly decreased in the last year. This may be a sign not good
to the firm.
 The fixed assets turnover ratio of the firm has in 2004-05 the ratio is 0.85 and it increase in the
next 3years continuously and it again decrease in 2008-09.
 The current assets turnover ratio is increasing during the period of 2004-06 and again it decrease
in the period of 2006-07. And again increase in next two year slithightlliy.
 Direct Material cost ratio of the firm is has less material cost during the period of 2004-05 &
2007-08 and it raised in the year of 2005-06 and 2008-09.
 The cost of direct labour of the firm in the year of 2004-05 is 4.94%and it increasing slithightlliy
up to 2007-08 and it decrease in the next year.
 The cost of manufacturing overhead of the firm in the year of 2004-05 is 5.22% where it
compare to the next 3year it increase rapidly.
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17. SUGGESTIONS
The profit Of the Company Is not in a good Position For That company has to
Take Alternative Actions such As
Increasing in Procurement in sugarcane ,
Production, and Control in Expenses Like, Administrative, selling Etc.
The firms have low current ratio so it should increase its current ratio where it
can meet its short term obligation smoothly.
 Liquidity ratio of the firm is not better liquidity position in over the five years.
So I suggested that the firm maintain proper liquid funds like cash and bank
balance.
CONCLUSION
The study undertaken has brought in to the light of the following conclusions. According to
this project I came to know that from the analysis of financial statements it is clear that
SHSSK Ltd. Have been incurring loss during the period of study. So the firm should focus
on getting of profits in the coming years by taking care internal as well as external factors.
And with regard to resources, the firm is take utilization of the assets properly. And also the
firm has a maintained low inventory.
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