MAYA ADVANCED STUDY CENTRE

FOR MANAGEMENT & I.T

VALAPAD, THRISSUR

KERALA

01743

“A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD”

BY

VAISHAKH.V.R

(reg.520927913)

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIRMENTS FOR DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Of

Sikkim Manipal University

INDIA

Sikkim Manipal University Of Health , Medical and

Technology Sciences

Distance Education Wing

Syndicate House
 Manipal- 576 104

STUDENT DECLARATION

I hereby declare that the project report entitled

“A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD.”

Submitted in partial fulfilment of the requirements for the degree of

MASTER OF BUSINESS ADMINISTRATION

To

Sikkim Manipal University

India.

Is my original work and not submitted for the award of any other degree,
diploma, fellowship or any other similar title or prizes

Place ; Valapad Name; Vaishakh.V.R

Date; Reg. No.; 520927913

 Examiners declaration

The project report of

Vaishakh.V.R

“ A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD.”

Is approved and is acceptable in quality and form

Intenal Examiner External Examiner

 ACKNOWLEDGEMENT

First of all I am dedicating this humble and sincer work or inline to God
almighty for shower strength and blessing he has bestowed on me for doing
this work.

With great happiness I submitted this project entitled “

A STUDY ON FINANCIAL PERFORMANCE OF KSE LTD.” With due
respect for invaluable suggestions made by my esteem well wishers.

I take this opportunity to express my sincere thanks and sense of

gratitude to my beloved principal Mr. C.A. Avas , Mr. C. Manoj, coordinator
of Maya Advanced Study Center for Management & IT, Project guide, for their
peerless guidance , suggestion and encouragement to me so that I could
accomplish this work successfully.

I acknowledge my sincere thanks to the personnel manager M.D.Jony,

finance Manager A.I.Jhon and all other employees of the KSE Ltd.

The advices , suggestions and guidance provided with by the staff

members are highly acknowledged

I am thankful to all other teaching and non-teaching staff of Maya Advance

Study Centre for Management & I.T , Valapad for valuable services
rendered by them.

Vaishakh.V.R
Reg.No. 520927913

ABSTRACT

KSE LTD is a cattle feed company which emerged as a leader in solvent

extraction and ready mixed cattle feed in the country. It is the very first
solvent extraction plant in India. Today KSE comments the resources ,
expertise and infrastructure to manufacture a range of feed in high volumes ,
coconut oil cake and refined edible oil.

Statement of the problem

This project is a result of the study conducted in KSE Ltd Irinjalakuda.

The present study entitled a study on financial performance of the
organization and to analyze the performance of various financial areas of the
company. Financial areas is the most important area and it equally related
with all other areas. Every actions of the industry are related with the
financial areas and the performance of the overall company also is mainly
related with the financial areas if any want to get more care , so that the
company can improve their profit and competency. Hence the researcher has
been assigned the duty of identifying the financial performance of the
company.
 OBJECTIVES OF THE STUDY

Primary Objective

To analyze the financial position of the firm.

To analyze the liquidity position of the firm.

To find out the profitability of the firm.

To promote suggestion if any on the basis of analysis and interpretation.

To identify efficiently and effectively the company’s resources are being utilized.

To understand the long term solvency position of the firm.

RESEARCH Methodology

Research methodology is a way to systematically solve the research problem.

It may be understand as a science of studying how research is done systematically
it helps to analyze the performance of the company for a particular period from
(2005-2010 )

RESEARCH DESIGN

In this research an attempt has been made to analyze the past performance of the
company research design of this study is descriptive and analytical in nature .
SOURCE OF DATA

 Secondary source

It has been collected from the company records, websites, magazines and journals.

 TOOLS AND TECHNIQUES FOR DATA ANALYSIS

RATIO ANALYSIS.

COMPARITIVE BALANCE SHEET.

TREND ANALYSIS.

 DATA ANALYSIS AND INTERPRETATION

Collected data are edited and tabulated. The tabulated data is further taken
for analysis by using rations and comparatives balance sheet by using liquidity
ratio, activity ratio, comparative balance sheet , trend analysis and bar charts to
give a better understanding of the analyzed data.
 CHAPTER – 1

INTRODUCTION
INTRODUCTION TO THE STUDY

Finance is the life blood and nerves centers of a business. Finance is essential
for smooth running of the business. It is rightly as the science of money. Finance
control the policies, activites and decisions of every business. Financial analysis is
a process of identifying the strength and weakness of the firm by properly
establishing relationships.

Financial analysis is the analysis of financial statement of a company to

assess its financial and soundness of its management. Financial statement analysis
seek to evaluate the performance, financial strength, ability to generate enough
cash and the growth outlook of the company. A number of tools are availabel in
tool kit of the analyst for this purpose. The financial statements provide a
summarized view of the financial position and operation of a firm. Therefore ,
much can be learnt about a firm from careful examination of its financial statement
as invaluable documents / performance reports. The analysis of financial statement
is, thus, an important aid to financial analysis.

The focus of financial analysis is on key figures in the financial statement and
the significant relationship that exists between them. The analysis of financial
statement is a process of evaluting relationship between component parts of
financial statement to obtain a better understanding of the firm’s position and
performance. The first task of the financial analysis is to select the information
relevant to the decision under consideration from the total information contained in
the financial statement. The secound step involed in financial analysis is to arrange
the information in a way to highlight significant relationships. The financial
analysis is the process of selection, relation and evaluation.
 Based on this reasoning , this project is an attempt to analyze the
financial performance of KSE Ltd.

INDUSTRY PROFILE

Cattle play a vital role in the economy of India. Cow and bullocks are
regarded as the foundation of agriculture in India. Cattle feed supplies the motive
power for almost all agriculture operations such as ploughing, lighting water from
wells and the transport of produced to the market. They provide most of the
manure used by the farmers in India and often enable them to earn some this
during this spare time by carting for hire; they again yield valuable product such as
milk, butter and ghee. The unawareness of farmers about the proper feeding
methods of cows affects the milk productivity cows in rural areas. Due to this
reason the importance of cattle feed industry has been increased in India.

Indian livestock feed industry , though quite old, is still in a very

primitive stage, as it is supplying only about 5 % for cattle feed , and 30% for
poultry feed in India. The bulk of the feed is being produced by un-organized
sector compressed of home and custom mixers. Our human population is ever
growing and more people are likely to consume more animal product as the
economy and income of the people grow. This expands the market for animal
products and therefore compound feed also.

India is deficient in green fodder. The increasing allocation of arable land

and other natural resources for growing food grains,” cereals, and oil seeds for
human consumption and cash crop for exports, the problem of shortage of green
for animal feeding is bound to increase. This opens up prospects for compound
livestock industry.

Feed industry come into existence in India in 1961 with establishment of

feed plant in Ludhiana, India. The animal feed industry has developed since the
beginning of 20th century, initially supplying feedstuffs only for ruminants and
later, as demand developed, also for pigs and poultry. In the past feed mills were
usually built at major ports or close to inland water ways. Many of the raw
materials were imported, including serials such as wheat, barley and maize, and
proteins from groundnuts, linseed , cottonseeds and fishmeal. Some home
produced materials were also used generally by products of the food industry.
These included wheat feed, left over from flour manufacture; oilseed cakes and
meal, from the manufacture of margarine and cooking oils. It can be seen as the
compound feed production for cattle increased between 1974 and 1983. This
increase was influenced by the financial incentives for dairy farmers to produce as
much milk as possible, there by requiring large volume offered for their cattle.

The quality standards of Indian feeds are high are high and up to
international levels. The industry’s production is about 3.0 million tones, which
represents only 5 % of total potentials, and feed exports are not very high. The feed
industry has modern computerized plants and latest equipments for analytical
procedure and least cost ration formulation , and its employs the latest
manufacturing technology. In India the most research work on animal feed is
practical and focuses on the use of by products the upgrading of ingredients and
the enhancing of productivity.
 Feed manufacturing on commercial and scientific basis started around
1965 with the setting up of medium- sized feed plants in northern and western
India. Feed was produced mainly to cater to the need of dairy cattle. India is
currently self sufficient in live stock feed and dose not depend on imports. Instead ,
the country exports large quantities of solvent extracted metals, which are a major
source of foreign exchange earnings. BIS has produced guideline feed standards
and the industry also has its own guidelines. Currently there is no compulsion to
use BIS standards, but the central government has been advising states to introduce
their own regulatory standards.

GROWTH OF ANIMAL FEEDS INDUSTRY

The manufacturing of feed in the organized sector in India began around the
mid- sixties with the setting up of medium- sized feed plants in the northern and
western parts of the country. The early seventies established sixty feed factories in
the country and their number increased manifold to over 400 by the late nineties.
The pace of increase was much faster in 70’s ( compound annual growth rate
12.7%) as compared to the subsequent decades. The industrial deli censing in 1991
as part of the economic reform package in India did not impact on the expansion of
feed industry. The 6.3% rate of expansion in pre deli censing period (1976/77 –
1990/91 ) remained much the same at 6.88% during the post de-licensing had on
the food processing industry in general, and dairy industry in particular where a
large number of new factories/plants came up after 1991 -1992.
FEEDING PRACTICES AND THE USE OF COMPONENT FEED

In India the term “Compound Feed “ refers to feed that is nutritionally balanced
and has been manufactured using the facilities of an analytical laboratory and
under the supervision of nutritionists. There are also a large number of small scale
feed mixers who produce feed for local consumption.

Such feed is termed “ Self Mixed Feed “ or “ Home Mixed Feed “.

CATTL E FEED

The productivity of the cattle is limited because of their poor genetic make
– up , so high quality compound feed ( Industry Feed ) may not necessarily
generate a significant improvement in productivity and this had hampered growth
of a cattle feed industry. Instead they compromise by using such feed in proportion
of 5 to 60 percent, making up the balance with their own formulations. It is only in
the case of highly productive animals that compound feed has been able to show its
real potential and the importance of technology has been demonstrated. The share
of compound cattle feed manufactured by the industry in relation to the overall
potential , is low for the following reason;

The cattle population is fragmented and spread over large part of the country.
Farmer’s low level of education and strong traditional beliefs mean that there is
generally little awareness of compound cattle feed.

More than 50% of the country ‘s total milk production comes from a very
large number of low yielding cows and buffaloes and only the remaining 25% of
the total is produced by cross breed and improved cows. Industrially manufactured
compound cattle feed has proved its value for cross breed cows and buffaloes but
not for yielding cattle because of their genetic limitation. Home mixed feed is very
frequently used for buffaloes and low yielding cattle.

THE QUALITY ASSURANCE OF COMPOUND FEED

The Indian feed industry employs the service of qualified nutritionists.

Members of the industry have their own analytical laboratories and either have
their own research and development facilities or have access to the research
laboratories of agricultural universities or government institutions. The industry is
fully committed to quality and their technical staffs are knowledge about the
nutrition of cattle buffaloes, layers and broilers.

As well as the normal proximate principles, other analyses are regularly carried
out, such as amino acids, aflaxotin, ochratozin, castor , tannins and urease activity.
There is a high degree of awareness of feed microbiology among the millers of
feed. Feed raw materials and finished products are subjected to microbial counts,
salmonella and Escherichia coli testing and mould count and contaminated
materials are rejected and some time destroyed, insurance cover is available.

The feed millers have acquired the latest technologies and modern equipment
such as high pressure liquid chromatography ( HPLC ) and near- infrared ( NIR )
analyzers. All vitamins, minerals and other feed activities are regularly analyzed
using modern analytical techniques.

Regular seminars are conducted , short term course are arranged and Indian
scientists are constantly working to upgrade quality of the Indian feed and make it
completely safe for animal feedings.
 The quality of Indian feed can be compared with that of any western feed.
Today it is common to achieve a chicken house average of 310 eggs in 52 weeks,
in layers and body weights 2.0 kg in less than 6 weeks , with a feed conversion
ratio of between 1.8 and 1.9 in boilers. Dairy feed can be use the genetic potential
of Indian at its maximum. The quality of Indian feed is satisfactory and
innovation will continue.

ISSUE IN THE ANIMAL FEED INDUSTRY

Standardization and regulations of animal feed manufactures.

As already mentioned, BIS has produced guidelines feed standards and the
industry also has its own guidelines. Currently there is no compulsion to use BIS
standards, but the central government has been advising states to introduce their
own regulatory standards. The industry, however, is resisting this move. One of the
major reason for oppositions is that the government wants to legislate regulation
under the essential commodities act 1955 which is consideration draconian and
totally inappropriate in the context.

There is no shortage of compound animal feeds anywhere in the country. In

fact, the organized sector of the compound feed industry is facing serious problems
resulting from a huge idle capacity, to the extent of 50 % or more. New capacities
are being added by global players in the feed business and by national as well as
multinational integrators. The nature of animal feed industry has completely
changed.

Further more, the industry has several reservation about implementing BIS
standards. There is a lack of flexibility in these standards and they are lagging far
behind the industry’s products. For cattle , they have not been revised for 30 years,
with the BIS standards for poultry are obsolete.

Another feed standards issue that worries both the government and industry
is that any changes to existing standards will be slow and difficult to arrive at
because of participate conflicts and various lobbying groups. However , the
industry’s principal concern about compulsory standards is that they will disturb
efforts to innovate and upgrade feed production in order to improve the
productivity of the animals. This is because all innovations would have to be
passed by BIS and such a process in likely to take several years to complete.
CLASSIFICATIONS OF ANIMAL FEED SUPPLEMENTS/ ADDITIVES
FOR IMPORT

The classification of feed activities is a major hindrance to the Indian feed

industry. World wide, animal feed supplements and additives (HSN ) to which
India is signatory. In the HSN, all feed ingredients are listed under the free
category for import , but the Indian government put them into restricted category in
October 1995.

The industry’s represented by CLFMA , has made several representations to

the government, but these have been round various government departments,
appellate tribunals, the high court and the supreme court without providing any
useful results for the industry.

LOCAL SALES TAX

Another threat to the industry is posed by sales taxes. It must be noted that the
feed industry is mainly commodity – oriented and although it is value added , it
cannot support the burden of any kind of taxation. The industry has made several
representation to the government and some state governments have accepted its
points of view refrained from levying any tax on animal feeds.

IMPORT AND EXPORT

Indian feed was exported to the near east during the 1980’s but the export
demand was reduced when feed mills were set up in the near east. At presently,
India exports about 25000 tons of feed to the near east as general animal feed.
 There is no import of animal feed as such in to India. However, the country does
import certain chemicals, feed activities, amino acids and essentials for aquaculture
feed.

CURRENT SITUATION

While analyzing the present situation industry have been facing a lot of
challenges. Due to high process of the raw materials and their non availability
forced many of the companies to curtail their production cost they are compelled to
increase their product price. As a result it will adversely affect to cattle farmers. As
a matter of fact ever after giving in the present rate the companies are not able to
make any profit.

Similarly the dairy industry as a whole is become non profitable to the farmers.
Small farmers are struggling for their existence. They are not getting required
rates for their milk. Currently they are not getting any profit out of the business.
The main reasons for this are that they have pay high prices for grass, cattle feed
and cake etc.

Farmers are depending on milk associates for selling their milk. The societies are
taking milk from the farmer at a rate between Rs. 14 & Rs. 18. According to
farmers the prevailing rate of milk are not profitable to them. And they say they
should get minimum Rs.20. but in fact they are not getting this.

Due to above reasons many of them are compelled to leave from this field. This
may cause serious threat in future to cattle feed industry. Under this circumstance
government should interfere in this trade and should take necessary steps to safe
guard the interest of both farmers and industry.
 COMPANY PROFILE

A BRIEF HISTORY OF KSE LIMITED

KSE ltd is a public limited company is a incorporated with substantial capital
participation by the Kerala State Industrial Development Corporation ltd.
Trivandram and though loans from industrial finance corporation of India, New
Delhi. The company is engaged in the solvent extraction of ground nut cake and
rice bran also. The oil thus obtained is moved for industrial purpose into the
market. In addition is full-fledged livestock feed division engaged in the
production of ready mixed cattle feed.

The company was registered in the year 1963. in 1973 the solvent extraction plant
was started with processing capacity of 60 metric tones of cake per day. In 1976
the company stated production of ready mixed feed with the production capacity of
50 metric tones per day and in 1983 the company increased the production of cattle
feed to 120 mt per day which has recently been increased to 180 mt per day by the
construction of a dully automated computerized plant. In 1988 company started a
solvent extraction and cattle feed plant at Swaminathpuram near Palani, with
production capacity of 150mts of cattle feed per day and processing capacity of
100-120mts of expeller extracted deoiled cake.

In 1972, the company lased new cattle feed plant at pothannur near coimpthur with
a production capacity of 80 mts per day and in 1995 company has leased a plan in
mysore with the capacity of 50 mts per day. In 1996 the company started a new
plant I Vedagiri at Kottayam in Kerala with the capacity of 240 mts per day.
Kerala solvent extraction ltd come out with a premium public issue on March 1993
which was over subscribed, through the stock markets are showing a low trend,
now Kerala Solvent’s share is still quoted at Rs.140 per share whose face value is
Rs.10. this reflects the confidence of investing in the company.
It was in 1963 that Kerala Solvent Extraction limited now known as KSE ltd
entered the solvent extraction industry setting up the very first solvent extraction
plant in Kerala. The traditional coconut oil industry in state was facing a decline
then. Though the largest producer of copra in the country, as much as 80% of it,
Kerala the infrastructure to exploit the potential of its abundant produce. While the
oil industry in other parts of the country were thriving.

The Dr. Lokhanathan committee, set up to feasibility of starting new industries in

Kerala, recommended the establishment of 3 solvent extraction plants. And one of
them, in Thrissur district. The oil mill owners in and around Irinjalakuda, who
were thinking in similar lines saw the opportunity and look the initiative to
establish a solvent extraction unit. The solvent extraction plant went on the stream
in 1972 and in 1976 a new plant was setup to manufacture ready mixed cattle feed,
which was a pioneering step. Since then there, was no looking back. The last 3
decades have seen KSE emerging as a leader in solvent extraction and ready mixed
cattle feed in the county and though these years of consolidation and
diversification KSE has crate a niche for itself.

Today KSE commands the resources, expertise and infrastructure to manufacture a

range of live stock feed in high volumes, coconut oil from coconut cake and
refined edible oil. Since the early, KSE had endeavoured to supply its products to
customers through extensive network of dealers and retailers which from a
dedicated force behind the success of KSE. It is matter of pride that KSE is
household name today. The KSE is a public limited company having around 6000
shareholders. The board of directors consisting 10 directors in the executive
committee responsible for the management the article of association of the
company empowers the board of directors of directors to appoint one as the Chief
Managing Director. The company has one Executive Director and one Whole Time
Director.

The Chief Managing Director, Executive Director and Whole time Director are the
smooth running of day to day affairs of the company. Strategic decision of the
company are taken by an executive body consisting of the Managing Director,
Executive Director, Whole time Director, General Manager, Finance Manager,
Nutrionist , Marketing Manager, Plant Manager and Purchase Manager. These
executives are professionals with vast experience in their areas of specialization.

ESTABLISHMENT

Kerala Solvent Extractions Limited now known as KSE limited was

established in 1963, by a handful of coconut millers in and around Irinjalakuda
with a vision to over come the crisis of the coconut oil industry. Initially started as
a solvent extraction plant, the company now produces 750-800 MTS of coconut
cake a day with 4 cattle feed production units and 2 solvent extraction plants. The
company has diversified into the area of dairying by establishing 2 dairy plants for
the production of pasteurized milk and milk products. It has obtained ISO
recognition for its commitment to quality and professionalism.

OBJECTIVES

1. To produce, manufacture ,extract, purchase refine, prepare import ,

export, sell and generally to deal in oil from seeds and other oil bearing
materials to carry on the business of refining the hydrogenation of oil and
the manufacturing of by products there from and of trades connected
there with.
 2. To acquire erect, construct, establish operate, and maintain oil mills
,extraction plants, and workshops.
3. To purchase for the purpose of business of the company. Oil expellers
denigrators , filter press , oil neutralizing , washing , dyeing bleaching ,
filtration and hydrogen plants , punch machines and other machines .
4. To purchase , manufacture , treat purchase sell or otherwise deal in oil
cakes , washing soaps ,toilet soaps , hair oils and timed products.

VISION

We shall endeavour to maintain leadership through quality products,

explore new avenues in product development and marketing, create a stronger
bond between the management, Workforce , dealers and customers ,contribute to
social development and rural enlistment, and constantly strive for excellence in all
spheres of our activities.

SHARE CAPITAL

To authorized share capital of the company is 99,40,000, which is divided into

99,40,000 equity shares of Rs 10 each and redeemable cumulative preference
share of Rs 100 each. The preference shareholders have a right of preferential
divided at the rate of 13.5 % per year. The company at par value allows redemption
of preference shares after 12 years but before 15 years from the date of allotment.
In 1994, company made a public issue of shares and listed the shares in stock
exchange Bombay, Madras, and Cochin Now the company has 6000 share
holders.
SOCIAL SERVICE AND RESPONSIBILITY

The company gave so many contribution to the country at the time of

uncertainties. It contributed 5 lakh each for Kargil and Tsunami Fund .

As a part of social responsibility the company introduced ‘ KS PARK ‘ for

the enjoyment and fun children. And also they are spending Rs.50000 in each
month for it. And also they were conducting some competitions for children
occasionally.

AWARDS AND RECOGINATIONS

The company has won the sea award constituted by Solvent Extractors
Association of India for highest Processor of coconut oil cake for the year 2008-
2009. This award is being received by the company for the past 19 years
consecutively since the inception of the award. Your company has also won the
Best Productivity Performance Awards instituted by the National Productivity
Council , New Delhi in category of animal feed Processing industry continuously
for ten years beginning with 1996-1997.

THE COMPANY –TODAY

The pioneering plant of KSE at Irinjalakuda in many ways. It was first solvent
extraction plant in Kerala. It was first manor factory in the locality, spread over 15
acres. It was here set up its first cattle feed plant. The embodied the spirit of
enterprise of group of committed people, who wanted to user in an era of
modernity into a traditional society and change the industrial landscape of the state.
Naturally, today the Irinjalakuda plant enjoys a flagship status and commands an
edge on infrastructural strength. Taking great in technological development, the
process of computerization in plant and office was initiated way back in 1987.
Research and development plays an important role in the activities of KSE, The
central R & D unit is located here. The plant houses a modern laboratory. The
quality control cell here leads and guides other units and formulates stringent
standards. The chief Nutritionist and Assistant manager quality controls are also
based here. A proud symbol of growth, the Irinjalakuda unit is an inspiring force
for the entire KSE family.

KSE Limited an ISO 9001-2000 certified company is having an annual

sales turnover Rs. 371 crores ; Irinjalakuda branch is the head office of the
company. Only the cattle feed production is running in irinjalakuda plant with a
production capacity of 210 tones per day. The production is running the three
shifts and each shifts they were producing 70 tones. The company is giving 400
direct employments for people in Irnijalakadhu.

GROWTH CHRONICLE
1972

Solvent plant commences operation.

1976

Mixed cattle feed production begins.

1987

Cattle feed production reaches 180 tons

Introduction of computers in the factory and office.

1988

A new mixed cattle feed plant starts operation at swaminathpuram , tamil nadu
with a daily product ion capacity of 180 tones.

1989

A solvent unit with a capacity of 120 tones per day commences operation at the
Tamil Nadu plant.

1990

Introduction of KS supreme pellets, by pass protein cattle feed in the market.

1991

Open its palaghat branch.

1992

Cattle feed manufacturing beings in third party units.

1933
Enter exports market.

1994

Introduction of feed supplements KS Forte public issue and listing of shares.

1995

Vegetable oil refining plant commissioned KS supreme – Sunflower Refined oil

Launched Calicut Branch opens.

1996

240 TPD cattle feed commences at Vedagiri, Kottayam Dist. Kerala.

1997

Company renamed as KSE Ltd.

1998

Fourth feed production unit at Palaghat Launches Dairy Project.

1999

A modern childern’s park and information centre has been completed at

Irinjalakuda for the benefit of the public.

Company starts production and distribution of milk and milk products Konnikkara
and Thalaysthu dairy units.

2002

Cattle feed production capacity at the Irinjalakuda Unit increased to 210MTs per
day.
Cattle feed production capacity at the Irinjalakuda unit increased to 195MTS per
day.

Ice cream Vesta Launched.

2003

Started producing cattle in plant at edayar , kalamassery , Cattle feed production at

the Swaminathapuram unit increased to 195 MTS per day.

2005

Cattle feed production capacity at Irinjalakuda unit increased to 210MTS per day
started producing cattle feed in a leased unit at Erode.

Company acquires its 5th cattle feed manufacturing unit at Mysore

ISO 9001:2000 accreditation

For Vedagiri and Swaminathapuram units.

2006

The 200 TPD solvent extraction plant at Koratty commissioned.

100TPD physical refining plant at Koratty commissioned

Solvent plant at Irinjalakuda dismantled on stablilizing solvent plant at Koratty.

2007

Decided to install 500TPD cattled feed plant at Irinjalakuda unit

Decided to install Fractionation plant at Koratty Unit.

ORGANIZATIONAL STRUCTURE OF KSE LTD
PRODUCT PROFILE
PRODUCT OF KSE Ltd

In the beginning stage of KSE limited had only solvent units. After some
time the company started to produce Jersey copra cakes and compound cattle feed
jersey copra cakes which comes out of the solvent extraction process are made
pure by desolventising and are named as ‘Jersey brand copra’. At present it is
marketed in Kerala, Tamil nadu and Gujarat.

K.S.Cattle feed in two

1. Mash form

2. pellets form

In Mash form contains

1. K.S. Super
2. K.S.Ordinary
3. K.S.Special

In Pellets form contains

1. K.S. Deluxe Pellets

2. K.S. Deluxe plus pellets
3. K.S. Supreme pellets

K.S. Also includes two supplementary products

1. K.S. Forte
2. K.S. Mineral Mixer

K.S. also started producing milk products. Various milk products are

1. K.S. Paal

2. K.S. Ghee

3. K.S. Curd

4. Butter milk

5. Vesta Ice Cream

STATEMENT OF THE PROBLEM

This project is a result of the study conducted in KSE Ltd Irinjalakuda. The
present study entitled a study on financial performance analysis of KSE Ltd is an
over all view of the performance of the financial figure in KSE Ltd.

The study is mainly focused to analyze the effectiveness of the financial

performance of the organization and to analyze the performance of various
financial areas of the company.

Financial area is the most important area and it equally related with all other
areas. Every action of the industry are related with the financial areas and the
performance of the overall company also is mainly related with financial
performance of the industry.
 So the present study is to identify the financial areas if any want to get more
care , so that the company can improved their profit and competency. Hence the
researcher has been assigned the duty of identifying the financial performance of
the company.

OBJECTIVES OF THE STUDY

Primary Objective

To evaluate the financial performance of KSE Ltd Irnajalakuda.

Secondary Objective

To analyze the liquidity position of the firm.

To find out the profitability position of the firm.
To promote suggestion if any on the basis of analysis and interpretation.
To identify effectively and efficiently the company’s resources are being
utilized.
To understand the long term solvency position of the firm.

SCOPE OF STUDY

The main scopes of the study are :

 The study aims to evaluate the financial performance of KSE Ltd.
The study helps to determine the profitability, liquidity and activity position
of the company, which may be useful to the long term and short term lenders
and creditors of the firm.
The study shows a clear picture to the investors and shareholders about the
overall performance of the concern.
The study aims to measure the growth of KSE Ltd.
The study may helps to find out the profitability of the firm in comparison
with industry.

RESEARCH METHODOLGY

Research Methodology is a way to systematically solve the research problem.

It may be understood as a science of studying our research is done scientifically.
One can also define research as a scientific and systematic search for pertinent
information on a specific topic.

RESEARCH DESIGN

In this research , an attempt has been made to analyze the past financial
statement of KSE Ltd. The study was conducted in order to analyze the financial
statement so that an in depth knowledge about the situation in the company can be
known. The design of the study is descriptive as well as analytical in nature.

SOURCES OF DATA COLLECTION

The study is based on the secondary data from the company. It includes:
 Materials provided by the firm such as balance sheet and profit and loss
account.
Books , journals and magazines.
Websites.

TOOLS FOR DATA ANALYSIS

Ratios.
Trend analysis.

PERIOD OF STUDY

The study was undertaken for a period of 3 months from 10th Jan 2011 to 10th
April 2011. The study cover the five year performance of the company for the
period 2005 to 2010.

LIMITATION OF THE STUDY.

1. Financial statement are essential interim reports. It discloses only monitory

facts.
2. Influence of personal judgment.
3. Accounting information may not be realistic. Analysis and interpretation
was made from published data.
4. The time period allotted for completing the project was limited.
5. On the basis of this data analysis we can achieve only an outline of a firm.
 CHAPTER - 2

REVIEW OF LITERATURE

FINANCIAL STATEMENT ANALYSIS

 Meaning and concept of financial analysis

Financial statements are the result of the accounting process which

begins with recording of transactions. The accounting process involves recording ,
classifying and summarizing business transactions in a systematic way. The
financial statement relate to the third process viz ,summarizing. The financial
statements are based on certain accounting concepts and conventions which cannot
be a full proof.

Financial statements analysis seeks to evaluate the performance , financial

strength , ability to generate enough cash and growth outlook of a company. The
objectives of analysis of financial statements have their genesis in the objectives of
financial statements. The objectives of analyzing them are to evaluate the adequacy
of the profit earned by the company or its financial strength and its ability to
generate enough cash and to evaluate the future growth outlook of the company.

The term financial analysis is also known as analysis and interpretation of

financial statements. It refers to the process of determining the financial strengths
and weaknesses of a firm by establishing strategic relationship between the items
of the balance sheet , profit and loss account and other operative area. The purpose
of financial analysis is to diagnose the information contained in financial
statements so as to judge the profitability and financial soundness of the firm.

DEFINITION
 According to Mefcalf and A Titard , “ it is a process of evaluating the
relationship between component parts of a financial statement to obtain a better
understanding of a firm’s position and performance”.

In other words of MYERS, “ financial statement analysis is largely a study of

relationship among the various financial factors disclosed by a single set of
statements, and a study of trend of these factors as shown in a series of
statements’’.

Source : Management Accounting E. Gordon.

RATIO ANALYSIS
INTRODUCATION

The ratio analysis is one of the most powerful tools of financial analysis.
It is the process of establishing and interpreting various ratios. 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 nothing but a simple arithmetical expression of the relationship of one

number to another. It may be defined as the indicated quotient or two mathematical
expression. In simple language ratios is one number expressed in terms of another
and can be worked out by dividing one number into the other.

Ratio analysis is a widely – used tool of financial analysis. It is defined as the

systematic use of ratios to interpret the financial statements so that the strengths
and weaknesses of a firm as well as its historical performance and current financial
condition can be determined. The term ratio refers to the numerical or quantitative
relationship between two items/variables. The relationship can be expressed as :

a. Percentages
b. Fraction and
c. Proportion of numbers.

TYPES OF RATIOS

1) Liquidity ratios.
2) Capital structure / Leverage ratios.
3) Profitability ratios.
4) Turnover / Activity ratios.

1) LIQUIDITY RATIOS

The importance of adequate liquidity in the sense of the ability of a firm to

meet current short – term obligations when they become due for payment
can hardly be overstressed. In fact , liquidity is a perquisite for the very
survival of a firm. The short – term creditors of the firm are interested in the
shot- term solvency or liquidity of a firm. But liquidity implies, from the
view point of utilization of the funds of the firm , which funds are idle or
they earn very little. A proper balance between the two contradictory
requirements that is liquidity and profitability is required for efficient
financial management. The liquidity ratios measure the ability of a firm to
meet its short – term obligations and reflect the short term financial
strength / solvency of a firm. The ratio which indicate the liquidity of a firm
are :
a. Current ratio
b. Acid test / quick ratio
c. Super quick ratio

a. CURRENT RATIO
The currents ratio is the ratio of total current assets to total current liabilities. The
current ratio of the firm measures its short – term obligations. The higher is the
current ratio, the larger is the amount of rupees available per rupees of current
liability , the more is the firm ‘s ability to meet current obligations , and the greater
is the safety of funds of short- term creditors. The size of the current assets should
be sufficiently larger than current liabilities so that the firm would be assured of
being able to pay its current maturing debt as and when it becomes due. Thus the
current ratio measures the size of short – term liquidity “ buffer ”.

b. ACID TEST / QUICK RATIO

Quick ratio is a measurement of a firm ‘s ability to convert its current

assets quickly into cash in order to meet its current liabilities. Thus , it is a
measure of quick or acid liquidity. The acid test ratio is the ratio between
quick current assets and current liabilities.

c. SUPER QUICK RATIO

This ratio is calculated by dividing the super quick assets by the current
liabilities of the firm. The super – quick assets are cash and marketable
securities. This ratio is the most rigorous and conservative test of a firms
liquidity position.

2. CAPITAL STRUCTURE / LEVERAGE RATIOS

 The leverage or capital structure ratios may be defined as financial ratios which
throw light on the long term solvency of the firm as reflected in its ability to assure
the long term creditors with regard to :

1. Periodic payment of interest during the period of the loan

2. Repayment of principal on maturity or in pre – determined installments at
due dates.

There are thus , two aspects of the long term solvency of a firm :

1. Ability to repay the principal when due and

2. Regular payment of the interest.

The various types of leverage ratio are

1. Debt – equity ratios

2. Debt to total capital ratio
3. Proprietary ratio

a. DEBT EQUITY RATIO

The relationship between borrowed funds and owner ‘s capital is a

popular measure of the long term financial solvency of the firm.
This relationship is shown by the debt – equity ratio. This ratio reflects the
relative claims of creditors and share holders against the assets of the firm.
The relationship between outsiders capital and outsiders claims can be
shown different ways and accordingly , there are many variants of the debt –
 equity ratio ( D/E ). One approach is to express the D/E ratios in terms or the
relative proportion of long term debt and shareholder ‘s equity. The debt
considered here is exclusive of current liabilities.
Another approach to the calculation of debt – equity ratio is to relate the
total debt to the shareholders equity. The D/E ratio is thus , the ratio of total
outside liabilities to owner ‘s total funds. In other words , it is the ratio of the
amount invested by outsiders to the amount invested by owners of business.

b. DEBT TO TOTAL CAPITAL RATIO

Here the outside liabilities are related to the total capitalization of the
firm and not merely to the shareholders equity. Essentially , this type of
capital structure ratio is variant of the D/E ratio. It can be calculated in
different ways. One approaches to relate the long term debt to the
permanent capital of the firm. Included in the permanent capital is
shareholders equity as well as long – term debt.

c. Proprietary ratio

Proprietary ratio also known as equity ratio. The ratio indicates the
proportion of total assets financed by owners. It is an important ratio for
determining long – term solvency of firm. Higher the ratio better is the
long term solvency position of the company.

3. PROFITABILITY RATIO
The operation efficiency of a firm and its ability to ensure adequate return to its
shareholders depends ultimately on the profit earned by it. The profitability of a
firm can be measured by its profitability ratio. In other words , the profitability
ratios are designed to provide answers such as :

 Is the profit earned by the firm adequate ?

 What rate of return does it represent ?
 What is the rate of profit for various divisions and segments of the firm ?
 What is the earning per share ?
 What is the rate of return to equity holders ? and so on .

Profitability ratios can be determined on the basis of either sales or

investments. The profitability ratios in relation to sales are :

a) Gross profit ratio.

b) Net profit ratio.

Profitability in relation to investments is measured by :

a) Return on investment ratio.

b) Return on shareholder ‘s fund
c) Return on total assets ratio

1. GROSS PROFIT RATIO

Gross profit is the result of the relationship between prices , sales volume and
costs. It is calculated by dividing gross profit by sales. A change in the gross
margin can be brought about by changes in any of these factors. The gross
 margin represents the limit beyond which fall in sales prices are outside the
tolerance limit. Further , the gross profit ratio / margin can also be made use
of in determining extent of loss caused by theft , spoilage , damage and so on
in the case of those firms , which follow the policy fixed gross profit margin
in pricing their products.
A high ratio gross profit to sales is a sign of good management as it implies
that the cost of production of the firm is relatively low. It may also be
indicative of a higher sales price without a corresponding increase in the cost
of goods sold. It is also likely that cost of sales might have declined without a
corresponding decline in sales price.
A relatively low gross margin is definitely a danger signal, warranting a
careful and detailed analysis of the factors responsible for it.

2. NET PROFIT RATIO

This measures the relationship between net profits and sales of a firm. The
net profit margin indicative of management’s ability to operate the business
with sufficient success not only to recover from revenues of the period, the
cost of merchandise or services, the expenses of operating the business and
the cost of borrowed funds but also to leave a margin of reasonable
compensation to the owners for providing their capital at risk. The ratio of net
profit to sale essentially expresses the cost price effectiveness of the operation.

A high net profit ratio would ensure adequate return to the owners as well as
enable a firm to withstand adverse economic conditions when selling price is
declining, cost of production is rising and demand for the product is falling.
 A low net profit ratio has the opposite implications. However a firm with a
low profit margin can earn high rate of return on investment if it has higher
inventory turnover.

PROFITABILITY RATIOS RELATED TO INVESTMENTS.

1. RETURN ON INVESTMENTS (ROI ):

The profitability ratio can also be computed by relating the profits of a
firm to its investments. Such ratios are popularly termed as return on
investments ( ROI ). Return on investments establishes the relationship
between profit and the capital employed. It is used to measure the overall
profitability and efficiency of the business.

2. RETURN ON SHARE HOLDERS FUND :

This ratio measures the profitability of capital investment in business by

equity share holders. It measures the business success and managerial
efficiency. The ratio of net profit to owner ‘s equity reflects the extent to
which the objective has been accomplished. The return is compared with
the ratios of similar companies to reveal the relative performance and
strength.

3. RETURN ON TOTAL ASSET RATIO :

Here the profitability ratio is measured in terms of relationship between net
profit and assets. The ROA may also be called profit to asset ratio. There
 are various approaches possible to define net profits and assets , according
to the purpose and intent of the calculation of the ratio.

4. ACTIVITY RATIOS :

Activity ratios are concerned with measuring the efficiency in asset

management. These ratios are also called efficiency ratios or asset
utilization ratios. The efficiency with which assets are used would be
reflected in the speed and rapidity with which assets are converted into
sales. The greater is the rate of turnover or conversion , the more efficient
is the utilization / management , other things being equal. For this reason ,
such ratios are also designated as turnover ratios. Turnover is the primary
mode for measuring the extent of efficient employment of assets by
relating the assets to sales. An activity ratio may , therefore , be defined as
a test of the relationship between sales and the various assets of a firm.
Depending upon the various types of assets , there are various types of
activity ratios as follows :

Total capital turnover ratio

Working capital turnover ratio

Inventory turnover ratio

Fixed assets turnover ratio

Debtor ‘s turnover ratio

1. TOTAL CAPITAL TURNOVER RATIO :

This ratio ensures whether the capital employed has been effectively used or
not. This is also the text of managerial efficiency and business performance
higher total capital turnover ratio is the interest of the company.

2. WORKING CAPITAL TURNOVER RATIO :

Working capital of a concern is directly related to sales. This ratio indicates the
number of time the working capital is turned over in the course of year. This
ratio measures the efficiency with which the working capital is being used by a
firm.

3. INVENTORY TURNOVER RATIO :

This indicates the number of times inventory is replaced during the year. It
measures the relationship between the cost of goods sold and the inventory
level. This ratio measures how quickly inventory is sold. It is a test of efficient
inventory management. To judge wheather the ratio of a firm is satisfactory or
not it should be compared over a period of time on the basis of trend analysis.
In general , a high inventory turnover ratio is better than a low ratio. A high
ratio implies good inventory management. A very low level of inventory has
serious implications. It will adversely affect the ability to meet customer
demand. It is also likely that the firm may be following a policy of replenishing
its stock in too many small sizes.
4. FIXED ASSETS TURNOVER RATIO:

Fixed assets are used in the business for producing goods to be sold. The
effective utilization of fixed assets will result in increased production and
reduced cost. The assets turnover ratio measures the efficiency of a firm in
managing and utilizing its assets.

5. DEBTORS TURNOVER RATIO :

This ratio shows how quickly receivables or debtors are converted into cash. It
is a test of liquidity of debtors of a firm. This ratio indicates the efficiency with
which debts are collected. It is also known as receivable turnover ratio. It
establishes relationship between credit sales and average debtors.
 COMPARATIVE BALANCE SHEET

A comparative balance sheet shows the assets , liabilities and owner

‘s equity of a business enterprise at the beginning and at the end of the
accounting period with increase or decrease in the absolute data in terms of
rupees and percentage. The single balance sheet focuses on the financial status
of the firm as on a particular date , while the comparative balance sheet focuses
on the changes that have taken place in one accounting period. The changes in
the balance sheet items are the result of acquisition or sales of assets , changes
in current assets and current liabilities , issue of shares , profits or loss etc.

A comparative balance sheet has two columns is used show increase or

decrease in figures. A fourth column may be added for giving percentages of
increase or decreases. Comparative balance sheet indicates whether the business
is moving in a favourable or un favourable direction.
 TREND ANALYSIS

Trend analysis is very helpful in making a comparative study of the financial

statements of several years. Under this technique , information for a number of
year is taken up and one year , usually the first year is taken as the base year. Each
of the base year is taken as 100 and on that basis , the percentage of other years is
calculated. This procedure may be called as trend percentage method. In financial
analysis the direction of changes over a period of years is of crucial importance.

Time series or trend analysis of ratio indicates the direction of changes.

This kind of analysis is particularly applicable to the items of profit and loss
account. It is advisable that trends of sales and net income may be studied in the
light of two factors , the rate of fixed expansion or secular trend in the growth of
the business and the general price level. It might be found in practice that a
number of firms would show a persistent growth over a period of years.
COMPUTATION OF THE TREND PERCENTAGE

The following steps are involved in the computation of trend ratio :

The statement probably relating to the earliest year may be taken as the base
with reference to which all other financial statements are compared and
analyzed.
Each item in the base year is taken as base year.
If amount of the same item in the other statement is more than that in the
base statement , the trend percentage would be more than 100 % and if the
amount is less than the base amount the trend percentage would be less than
100 %. The trend ratio is computed by dividing each amount in the other
statement with the same item in the base statement.
 CHAPTER – 3

DATA ANALYSIS & INTERPRETATION

INTRODUCTION

The term financial analysis also known as analysis and interpretation of

financial statement. Data analysis and interpretation is the core factor of any
project. The study is done with the aid of financial statements from the annual
reports published by the company. The purpose of financial analysis is to diagnose
the information contained in financial statement s so as to judge the profitability
and financial soundness of the firm. The object of analysis and the interpretation
of financial statements are to judge their meaning and their significance. Financial
statement analysis is called financial analysis.

Various tools or devices are used to study the relationship between different
statements. The tool which are used for data analysis and interpretation are:

Ratio analysis
Comparative balance sheet
Trend analysis
 DATA ANALYSIS

1. LIQUIDITY RATIO

a. CURRENT RATIO

The current ratio is the ratio of total current assets to total current
liabilities. The current ratio of a firm measures its short –term solvency ,
that is , its ability to meet short term obligations.

Current Ratio = Current assets

Current liabilities.

Table : 1

TABLE SHOWING CURRENT RATIO

Years Current assets Current liabilities Current ratio

( Rs . in lakhs ) ( Rs. In lakhs )
2005-2006 4590.77 1082 4.63

2006-2007 3063.73 753 4.06

2007-2008 2870.68 854 3.36

2008-2009 3270.91 937 3.49

2009-2010 3277.43 863 3.79

CURRENT RATIO

5000

4500

4000

3500

3000

2500 current asset

ratio
2000

1500

1000

500

0
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

INTERPRETATION

The above table indicates the current ratio. As compared to the standard
ratio 2:1 the current ratio of company is good in 5 years. If the actual current ratio
is less than the standard one ; it shows the in accuracy working capital. But if the
actual ratio is more than the standard ratio. It is the sign of satisfied short term
solvency position.

b. QUICK RATIO

This ratio is also known as acid test ratio ( ATR ). It is measurement of

firms ability to convert its current assets quickly into cash in order to meet its
current liabilities.

Quick Ratio = Liquid assets

Current liabilities

Table ;2

TABLE SHOWING QUICK RATIO

Year Quick assets Liabilities Ratio

2005-2006 1244 1082 1.15

2006-2007 846 753 1.13

2007-2008 941 854 1.10

2008-2009 801 937 1

2009-2010 1194 863 1.38

QUICK RATIO

1400

1200

1000

800
Quick asset
Liablities
600 Column1

400

200

0
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

INTERPRETATION

The above table indicate the quick ratio. The actual quick ratio is
compared with the standard ratio , which is 1:1 if actual ratio is 1:1 or more than
the standard ratio if can means it’s a short term obligation quickly and easily. If
the actual ratio is more than the standards the conclusion can be that the concern is
not liquid. In the year 2009-2010 quick ratio is 1.38 .
2 . LEVERAGE RATIOS

a. DEBT EQUITY RATIO

It is also known as external internal equity ratio. This ratio indicates the
relationship between the external equities or the outsiders fund and the internal
equities or the shareholders funds.

Debt- equity Ratio = Total Assets

Share holder fund

Table :3

TABLE SHOWING DEBT EQUITY RATIO

Year Debt Equity Ratio

( Rs. In lakh ) ( Rs. In Lakhs )
2005-2006 5042.12 2670.67 1.88

2006-2007 3611.87 2532.14 1.42

2007-2008 3142.13 2669.98 1.17

 2008-2009 4312.49 2803.33 1.53

2009-2010 4421.68 3257.45 1.36

EQUITY RATIO

6000

5000

4000

3000 Debt
Column1

2000

1000

0
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

INTERPRETATION

The above chart shows the debt equity ratio. It is clear that the debt equity ratio
is varying year by year. This ratio indicates the proportionate line of owner and the
outsider against the firm assets. The ideal equity ratio is I.A. high ratio shows the
claim of creditors is greater than the owners.
 b. PROPRIETORY RATIO

This ratio shows the relationship between shareholders funds and total
assets. It indicates long term financial solvency of the firm. This ratio
determines the extent of trading on equity. It is also known as net worth to
total asset ratio.

Proprietary ratio = shareholder fund

Total assets

Table : 4

TABLE SHOWING PROPRITORY RATIO

Year Shareholder fund Total assets Ratio

( Rs in lakh ) (Rs in lakh)

2005-2006 2670.67 7712.79 .35

2006-2007 2532.14 6144.01 .41

2007-2008 2669.98 5812.11 .46

2008-2009 2803.33 7115.82 .39

2009-2010 3257.45 7679.13 .42

PROPRITEORY RATIO

9000

8000

7000

6000

5000
Shareholder fund
4000 Series 3

3000

2000

1000

0
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

INTERPRETATION

The above table shows proprietary ratio. The proprietary ratio is varying
from year to year. If the ratio is high. It indicates stronger financial position of the
firm. On the other hand a lower ratio shows the weaker position of the enterprise.
From 2006-2007 financial year there is an increase in the ratio. But for the
financial year 2008-2009 it comes down . but now in 2009-2010 it has been
increased 0.42.
 2. TURN OVER RATIOS

a. TOTAL CAPITAL TURNOVER RATIO

This ratio ensures whether the capital employed has been effectively
used or not. This is also the test of management efficiency and business
performance. Higher total capital turnover ratio is the interest of the company.

Total capital turnover Ratio = Net sales

Capital employed

Table :5

TABLE SHOWING CAPITAL TURNOVER RATIO

Year Sales Capital employed

( Rs. In lakh ) ( Rs. In lakhs ) Ratio

2005-2006 24030.84 6080.23 3.95

2006-2007 27503.59 5303.52 5.19

2007-2008 28947.50 4795.75 6.04

 2008-2009 35007.87 5973.21 5.86

2009-2010 37094.19
TOTAL CAPITAL TURNOVER RATIO

40000

35000

30000

25000

20000 Sales
Capital employed
15000

10000

5000

0
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

INTERPRETATION

The above table shows the total capital turnover ratio. It is clear from the graph
that the capital turnover ratio shows an increasing trend from 2006 but in 2008-
2009 it slightly declines.
 b. WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales. This ratio

indicates the number of times the working capital is turnover is the course

of a year.

Working Capital turnover ratio = Sales

Net Working capital

Table : 6

TABLE SHOWING CAPITAL TURNOVER RATIO

Year Sales Working capital Ratio

( Rs. In lakh ) (Rs. In lakh)

2005-2006 24030.84 3508 6.94

2006-2007 27303.59 2310 11.91

2007-2008 28947.50 2016 14.36

2008-2009 35007.87 2333 15.01

2009-2010 37094.19 2414 15.37

WORKING CAPITAL TURNOVER RATIO

40000

35000

30000

25000

20000 Sales
Working Capital
15000

10000

5000

0
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

INTERPRETATION

The above table shows the working capital turnover ratio. This ratio measures
the relationship between working capital and sales. It is clear from the graph that
the working capital ratio is showing an increasing trend. That mean the working
capital is efficiently being used in the firm.
 c. INVENTORY TURNOVER RATIO

This ratio shows the number of the stock is turnover during a year.
this