A
PRESENTATION
on
“Comparative study of ratio analysis with reference to shree steel company”
SUBMITTEDE BY
ASHISH D. DULE
B.B.A (PART-III)
UNDER THE GUIDANCE OF
[Link] SUCHAK
CENTRAL INSTITUTE OF BUSINESS MANAGEMENT
RESEARCH AND DEVELOPMENT PAWAN BHOOMI-NAGPUR-25
2010-2011
INTRODUCTION
it involves analyzing its financial statement and health
of business, its management and competitive
advantages, and its competitors and markets. The
analysis is performed on historical and present data,
but with the goal to make financial projections. It
involves the study of current as well as past market
condition.
Ratio Analysis
What is a ratio?
A ratio:-
It is the mathematical relationship between two
quantities in the form of a fraction or percentage.
A ratio on its own has little or no meaning at all.
WHAT IS RATIO ANALYSIS?
DEFINITION:-
It refers to an analysis of the relationships of items in
financial statements & thereby an investigation into the
financial performance of an entity using a series of
ratios.
Objective
To compare the financial statement of past
three years
To calculate the various ratio of financial
statements
To Study the efficiency of operation
To Study the risk of operation
To know the profitability of the company
RESEARCH METHODOLOGY :
It is the plane , structure and strategy of investigation
conceived so as to obtained answer to research question and
to control variance
Types of Research Design:
It is broadly classified as exploratory
and conductive research, which focuses on the discovery of
the data. Conclusive research is more formal and structured
than the exploratory research. It is based on large
representative samples and the data obtained are subjected
to quantitative analysis
DATA ANALYSIS
RATIO 2008 2009 2010
CURRENT RATIO 2.39 3.73 2.79
LIQUID RATIO 1.37 2.43 1.67
PROPRIETORSFUND 32.44 40.72 43
RATIO
DEBT EQUITY RATIO 1.40 1.1 0.96
FIXED ASSETTO NET 0.99 0.91 0.9
WORTH RATIO
CURRENT ASSET TO 1.69 1.08 0.98
PROPRIETOR FUND
RETURN ON SHARE 9.83 5.12 3.4
HOLDER FUND
CAPITAL GEARING 0.72 0.786 1.02
RATIO
SOLVENCY 0.78 0.59 0.57
NET PROFIT RATIO 6.88 3.90 2.89
OPERATING PROFIT 15.61 12.91 13.56
RATIO
RETURNON 7.6 5.6 2.93
INVESTMENT
INTERPRETATION :
CURRENT RATIO :
this chart shows that in 2009 there is larger the amount of
rupees available per rupee of current liability
LIQUID RATIO :
the ratio shows that in 2009 company is in good condition
than 2008 & 2010
PROPRIETORS FUND RATIO :
Ratio of three year, company is below the 50% which is not
satisfactory for the creditor. Comparing the three year ,in 2010is better than
both of them
DEBT EQUITY RATIO :
The ratio shows that the company is highly risk geared in
2008.
FIXED ASSETTO NET WORTH RATIO:
The chart shows that there is a greater obligation in 2008 than
others
RETURN ON SHARE HOLDER FUND :
The ratio indicates that in 2008 the firm is high return on equity.
CAPITAL GEARING RATIO :
the ratio shows that the company is increasing its capital gearing
SOLVENCY :
the companies have sufficient fund to pay its out side liabilities
NET PROFIT RATIO :
The net profit ratio determine the trend in profit margin in the
company and its performance in this company. The ratio shows that the
company is losing its profit margin continuous.
RETURNON INVESTMENT :
Return on asset investment indicates the efficiency of utilization of
asset in generating revenue, this ratio shows that the capacity of generating
revenue is decreasing
conclusion
The ideal current ratio is 2:1 .This chart shows that in
2009& 2010 have larger the amount of rupees available per
rupee of current liability. So in case of solvency firm will
pay off debts because of its high current and liquid ratio.
Higher ratio ratio indicates a secured position to creditors
but in every year there is having low ratio which indicates
greater risk to creditors
A high ratio shows that the claim of creditor is greater
than those of owner. A very high is unfavorable to the
firm’s point of view. The ratio shows that the company is
highly risk geared
Creditor‘s obligation have been used to acquire a part of
fixed asset. The company has sufficient obligation
The ratio shows the dependence on the external sources.
The company is depended more on external sources.
Due to high return on investment, This will reveal the relative
performance and strength of firm in attractive future
investment.
If the ratio is high, the capital gearing is said to be high and if
the ratio is low, the capital gearing said to be low above
indicates that proportion between owner’s fund and non
owner’s fund. This proportion knows as leverage.
This shows that relation between total investments to long term
liabilities. Which means owner’s fund contribution is more and
hence having low geared.
The efficiency of the company is good on his operation.
The ratio of risk taking is high.
The ratio shows that the profit margin of the company is
declining continuous so the company should concentrate on the
profit margin of the company
Hence from all the interpretation it is concluded that the
operation of the company is satisfactory and the company is in
good position.
recommendation
Company should concentrate on their current asset and try to
decrease the liabilities
Same as the current ratio, the quick ratio of the company is falling
down in 2010. that means the company should decrease its
inventories , loan and liabilities
The expenses of the company are increasing every year so the
operating expenses should be maintain by the company
Return on share holder was decreasing from2009-2010 this is bad
for the company so the company should concentrate on the
dividend and the interest which they give to their share holder
Net profit of the company is also decreasing so it is the big
problem of the company , the company should make positive
attention on that matter
Thank you