INTRODUCTION

Financial statements are the outcome of summarizing

process

of

accounting.

Financial

statements

provide

summarized view of financial position and operations of the

firm. The financial statements s essentially is interim reports
presented annually and reflect a Division of the life of and
enterprise. They are the means to present the firms. Financial
position to owners, creditors and the general public.
As these statements are used by investors and financial
analyst to examine the firms performances in order to make
investment decisions they should be prepared very carefully
and contains as much information as possible.
According to John N. Myer,
The financial statement provide a summary of a
business enterprise, the balance sheet reflecting the
assets liabilities and capital as on a certain date and
the

income

statement

showing

the

results

of

operations during a certain period

Financial ratio analysis is the systematic use of ratio to
interpret financial statements so that the existing strengths

and weaknesses of a firm as well as its historical performance

and current financial conditions, can be determined and there
by helps the analyst to draw conclusions regarding financial
operations like:
Short term long term planning.
Measurement and evaluation of financial performance
Study of financial trends
Decision making for investments and capital expenditure
Diagnosis of financial sickness.

The above conclusions can be drawn by reducing the

information from financial statements to a small set of indices
or percentage values that then form the basis for measuring
different aspects of firms activities.

NEED AND IMPORTANCE OF THE STUDY:

Financial management is a managerial activity, which
is concerned with the planning and controlling of the firms
financial resources. The Tobacco is one of the successful
organizations in India. It is believed that the company makes
profits year after year in spite of volatile environment. It is
known fact that the success of any organization depends upon
prudent financial management. This situation has created an
interest to study and analyze some of the financial aspect of
this organization. Hence a study has been under taken on the
proposed topic Financial Analysis through a comparative
study in Tobacco.

OBJECTIVES OF THE STUDY

The following are some of the objectives that are set for
the study that was conducted on the area of the comparative
analysis.

To examine the solvency of the Tobacco, and know the

current financial position and liquidity position.
To assess the profitability position of the Tobacco,to
make some useful recommendations.

 To see whether the firm has maintained adequate

investment in current assets or not.
To analyze the financial position of the Tobacco,to know
the cement sector in India and also to know the profile
of the Tobacco.
To compare the yearly performance of the common
size and comparative statements

SCOPE OF THE STUDY

The study limited to Tobacco. All the departments of

Tobacco are involved in this study.
The study based on availability on Tobacco past 5 years
data.
The study focuses on to find out comparative statements.
The study also focuses on the ratios depending upon the
statements.
To understand the financial position of Tobacco for the
current year.
As it is not researchers direct observation but the
secondary

sources

of

information

provided

by

the

company. Most of the data is based on secondary data.

 Due to time limitation only five years annual reports have

taken under the study.
The scope of the study limited to collecting the financial
data published Annual Reports of the company.
The study is confined to only one cement that is Tobacco
As it is not researchers direct observation but the
secondary

sources

of

information

provided

by

the

company. Most of the data is based on secondary data.

METHODOLOGY OF THE STUDY

Methodology

is

systematic

procedure

of

collecting

information in order to analyze and verifying a phenomenon.

The collection of data is done through two principal sources viz.
(1) Primary data
(2) Secondary data
Primary Data:
It is the information collected directly without any
reference. In the study, it was mainly interviews with concerned

officer and staffs either individually or collectively. This study

does not include any primary data.
Secondary Data:
The secondary data is collected from printed books, like text
books,

magazines,

reports of Tobacco

company

website,

newspaper,

annual

Ltd. Company and Financial Management

books.

The data includes:

1. Collections of requires data from annual report of Tobacco
Industries Limited.
2. Reference from text book and journals relating to Financial
Management and

articles published in business dairies like

the Economics times, Business line etc.

LIMITATIONS OF THE STUDY

The study has been confined to know the comparative

analysis of assets and liabilities at Tobacco factory.

 The study having limited scope of gathering sufficient

financial information as it is confidential.
Time period for the Project was also limited.Due to time
limitation only five years annual reports have taken under
the study.
This study based on historical data and interim reports of
the Tobacco Industries Limited.
The study does not include all the aspects of Tobacco.

COMPANY PROFILE
History of the company
The Company was incorporated on 18th October, 1919
under the Indian Companies Act, 1913, in the name and style
of Tobacco Cotton Mills Ltd. It had a Textile Mill at 42, Garden
Reach Road, Calcutta 700024. The name of the Company was
changed to Tobacco Industries & Cotton Mills Ltd. on 30th
August, 1961 and the same was further changed to Tobacco
Industries Limited on 9th July, 1986. The said Textile Mill at
Garden Reach Road was eventually demerged into a separate
company.
Tobacco industry is one of the leading manufacturing of
cements in India. Incorporated by the promoters of Birla Group
Company. It is a dry process cement plant. The plant capacity is
8.28 lakh per annum .It is located at basanthnagar in
karimnagar District of Andhra Pradesh. This is 8Km. Away from
the Ramagundam Railway, linking Madras to New Delhi.
The company's first unit at Basanthnagar with a capacity of
2.1 lakh tones per annum incorporating Humboldt suspension
pre -heater system was commissioned during the year 1969.
The second unit was set up in the year 1971 with a capacity of
2.1 lakh tones per annum and the third unit with a capacity
of2.5 lakh tones per annum went on steam in the year 1978.

The coal for this company is supplied by Singareni Collieries

and the power is obtained from APSEB. The power demand for
the factory is about 21MW Tobacco got DG sets of 4MW each
installed in the tear 1987.
Tobacco has set up a 15 MW captive power plant to
facilitate for an uninterrupted power supply for manufacturing
of cement started on 24th August, 1997 per hour 12 MW,
actual power is 15MW.
Tobacco industry distinguished itself among all the cements
factories in India by bagging the national productivity award
consecutively for tow years that is for the year 1985-86and
1986-87.
One among of the industries gains in the country today serving
the nation on the industrial front,Tobacco industries Limited has
a chequered and eventful history dating to the twenties when
the industrial House of Birla acquired it with only a Textile Mill
under its banner in 1924.
It grew from strength to and spread its activities to never fields
like Rayon, pulp, transparent paper, Spun pipes, Refractoriness,
Tyers and other product.
Looking to the wide gap between the demand and supply of a
vital commodity Cement which

plays an important role in

national building

activity, the government of India had

delicensed the cements Industry in the year 1966 with a view

to attract private entrepreneurs to augment to cement
production. Kesoram rose to the occasion and decided to set up
a few cement plants in the country.
Birla supreme is a popular brand of Kesoram Cement from its
prestigious plant of Basanthnagar in A.P. which has outstanding
track record in performances and productivity serving the
nation for the last two and half decades It has proved its
distinction by bagging several national awards and state
awards. It also has the distinction of achieving optimum
capacity utilization.
Kesoram offers a choice of top quality Portland cement for light
heavy constructions and allied applications. Quality is built to
every fact of the operation.
The plant layout is national to being with the lime stone
is rich in calcium carbonate a key factor the influence the
quality of the final product. The dry process, Technology used in
the

latest

computerized

monitoring

oversees.

The

manufacturing process samples are sent regularly to the

bureau of India Standards national council of construction and
building measures for News Papers, Magazines hoardings etc.

Tobacco undertaking marketing activities extensively in

the states of Andhra Pradesh, Karnataka, Tamilnadu, Karla,
Maharastra and Gujarat. In A.P. sales deposits are located in
different

areas

like

Karimnagar,

Warangal,

Nizamabad,

Vijayawada and Nellore. In other states it has opened around

10 depots. The market share of Kesoram Cement in all India
Cement Market is 1.19%. In A Andhra Pradesh it is a 7.05%.
GROWTH
The First Plant for manufacturing of rayon yarn was
established at Tribeni, District Hooghly, West Bengal and the
same was commissioned in December, 1959 and the Second
Plant was commissioned in the year 1962 enabling it to
manufacture 4,635 metric tons per annum (mtpa) of rayon
yarn.This Unit has 6,500 metric tons per annum (mtpa) capacity
as on 31.3.2007.
The plant for manufacturing of transparent paper
was also set up at the same location at Tribeni, District
Hooghly, West Bengal, in June, 1961. It has the annual capacity
to manufacture 3,600 metric tons per annum (mtpa of
transparent

paper.

The Company divered into manufacturing of Cast Iron Spun

Pipes & Pipe Fittings at Bansberia, District Hooghly, West

Bengal, with a production capacity of 45,000 metric tons per

annum (mtpa) of cast iron spun pipes and Pipe fittings in
December, 1964.
The Company subsequently diversified into the
manufacturing of Cement and in 1969 established its first
cement

plant

under

the

name

'Kesoram

Cement'

at

Basantnagar, Dist. Karimnagar (Andhra Pradesh) and to take

advantage of favourable market conditions, in 1986 another
cement

plant,

known

as

'Vasavadatta

Cement',

was

commissioned by it at Sedam, Dist. Gulbarga (Karnataka). The

cement manufacturing capacities at both the plants were
augmented from time to time according to the market
conditions

and

as

on

31.3.2007

have

annual

cement

manufacturing capacities of 0.9 million tons and

3.65milliontonsrespectively
The Company in March 1992, commissioned a plant at
Balasore known as Birla Tyres in Orissa, for manufacturing of
10,00,000 mtpa automotive tyres and tubes in the first phase
in collaboration with Pirelli Ltd., U.K., a subsidiary company of
the world famous Pirelli Group of Italy - a pioneer in production
and development of automotive tyres in the world. The
company as on 31.3.2007 had the manufacturing capacities of
1.95 million tyres, 1.4 million tubes and 1.1 million flaps per

annum in thesaidPlant.

It

has

small

manufacturing

capacities

of

various

chemicals at Kharda in the State of West Bengal also. It has the

annual manufacturing capacities of 12,410 mtpa of Caustic
Soda Lye, 5,045 mtpa of Liquid Chlorine, 6,205 mtpa of Sodium
Hypochlorite, 8,200 mtpa of Hydrochloric Acid, 3,200 mtpa of
Ferric Alum, 18,700 mtpa of Sulphuric Acid and 1,620,000 m3 of
purified Hydrogen Gas.

AWARDS:
TOBACCO Bagged prestigious awards including national
award for productivity technology conservation and several
state awards for the year1984, Tobacco bagged Best family
planning effort in the state of the Federating of A.P. Chamber
of commerce and Industry. Also national award for two
successive years, 1985 and 1986 and National award for
Mines safety For two years 1985-86 and 1986-87.It has also
bagged the National Award
For energy efficiency for the year 1989-90 for the
performance among all cement plants in India. Thus

award installed by national council for cement and

building material (NCCBM) in association with energy Govt
of India.

National Award for excellence industry Best Management

award of the Govt of A.P for the year 1993.
Tobacco industry has also won the award for workers
welfare including family planning for the year 2000-01 of
the federation of Andhra Pradesh chambers of commerce
and industry, which was presented by the humble chief
minister of Andhra Pradesh Sri N.Chandra Babu naidu.

PROFILE OF CEMENT INDUSTRY:

The Indian Cement industry is the second largest cement
producer in the world, with an installed capacity of 144 million
tones. The industry has undergone rapid technological up

gradation and vibrant growth during the last two decades, and
some of the plants can be compared in every respect with the
best operating plants in the world. The industry is highly
energy intensive and the energy bill in some of the plants is as
high as 60% of cement manufacturing cost. Although the newer
plants are equipped with the latest state-of-the-art equipment,
there

exists

substantial

scope

for

reduction

in

energy

consumption in many of the older plants adopting various

energy conservation measures.
The Indian cement industry is a mixture of mini and large
capacity cement plants, ranging in unit capacity per kiln as low
as 10 tpd to as high as 7500 tpd. Majority of the production of
cement in the country (94%) is by large plants, which are
defined as plants having capacity of more than 600 tpd. At
present there are 124 large rotary kiln plants in the country.
The Ordinary Portland Cement (OPC) enjoys the major
share (56%) of the total cement production in India followed by
Portland Pozzolana Cement (PPC) and Portland Slag Cement
(PSC). A positive trend towards the increased use of blended
cement can be seen with the share of blended cement
increasing to 43%. There is regional imbalance in cement
production in India due to the limitations posed by raw material
and fuel sources. Most of the cements plants in India are
located in proximity to the raw material sources, exploiting the

natural resources to the full extent. The southern region is the

most cement rich region while other regions have almost same
Cement production capacity.
THEROTICAL CONCEPTS
The term financial analysis refers to the process of
determining financial strength and weakness of the firm by
establishing strategic relationship between the items of the
balance sheet and profit and loss account and other operative
data.
Financial analysis is a process of evaluating the
relationship between component parts of a financial
statement to obtain better understanding of a firms
positions and performance.
By Metcalf and Tirard
Financial

statement

relationship

among

analysis
various

is

largely

financial

study

factors

of

in

business as a disclosed by single set of statements. And

a study of the firm of these factors in a series of
statement
By Myers

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.

NATURE
The financial statement is prepared on the basis of
recorded facts. The recorded facts are those that can be
expressed in monitory terms. The accounting records and
financial statements prepared from those records are based on
historical

costs.

The

financial

statements

are

prepared

periodically generally for the accounting period.

Financial statements as composed of data, which are the
result of combination of:
Recorded facts concerning business transaction.
Convention
technique.

adopted

to

facilitate

the

accounting

 Postulates or assumptions made to personal judgment

used in the application of the correction and postulates.
Types of financial analysis:
We can classify various types of financial analysis into different
categories depending upon
The material use
The method of operation/ modes operandi of analysis
According to material use of financial analysis is of two types:
External Analysis
Internal Analysis

EXTERNAL ANALYSIS:
The analysis is not done by outsiders who do not have
access to the detailed internal accounting records of the
business firm do not do the analysis. These outsiders include
investors, potential investors, creditors, potential creditors,
government agencies, credit agencies and the general public
for financial analysis these external parties is to the firm

depend almost entirely on the published financial statements.

Thus surveys only limited purpose. However the recent
changes the government regulation requiring business firm to
make available more detailed information to the public through
audited publish account has considerably improved the position
of the external analysis.
INTERNAL ANALYSIS:
The analysis conducted by the persons who have access
to the internal accounting records of a business firm is known
as internal analysis. Such an analysis can therefore be
performed by executives and employee of the organization as
well as government agencies which have statutory powers
vested in them. Financial analysis that can be affected
depending upon the purpose to be achieved.
On the basis of modus operandi:
According to the methods of operation followed in the analysis,
financial analysis can also of two types.
Horizontal analysis
Vertical analysis

Horizontal Analysis:
This makes to possible to focus attention on items have
changed significantly during period under review. It is also
called as dynamic analysis. It refers the comparison of financial
data of company several years. The figures for this type of
analysis are present horizontally over a number of columns.
The figures of various years compared with standard base year.
A base year chooses as beginning point.
Vertical Analysis:
It refers to the study of relationship of the various
items in the financial statements of one accounting period. In
this type of analysis the figures from financial statements of a
one year compared with a base selected from the same years
statements. It is also known as static analysis.
Procedure of financial statement analysis:
There are three steps involved in the analysis of financial
statements those are:
(1) Selection
(2) Classification
(3) Interpretation

The first step involves selection of information relevant to the

purpose of analysis of financial statements. The second step
involved in the methodical classification of the data and third
step included drawing of interest and conclusions.
The following procedure is adopted for the analysis and
interpretation of financial statements
The analyst should acquaint himself with the principles
and postulates of accounting. He should know the plans
and policies of the management so that he may be able to
find out whether these plans are properly executed or not.
The extent of analysis should be determined so that the
spear of work may be decided. The aim is to find out the
earning capacity of the enterprise then analysis income
statement will be under taken on the other hand if
financial position is to be studied then balance sheet
analysis is required.
The financial data given in the statement should be
reorganized and re-arranged. It will involve the grouping
of similar data under same heads, breaking down of
individual components of statements according to nature.
The data is reduced to a standard form.

 A relationship is established among financial statements

with the help of tools and techniques of analysis such as
ratios, trends.
The

information

understandable

interpreted

way.

The

in

significance

simple
and

utility

and
of

financial data is explained for helping in decision making.

The conclusions drawn from interpretation are presented
to be management the form of report.

Objectives of Financial Statement:

The Financial Statement are the source of information
on the basis of which conclusion are drawn about the
profitability and financial position of a concern. They are the
major means employed by firms to present their financial
position of owners, creditors and the general public. The
primary objective of principles Board of America State the
following objectives of financial statements.

 Obligations

of

business

firm.

To

provide

reliable

information about changes such economic resources and

obligations to provide reliable financial information about
economic resources and.
To provide financial information that assists in estimating
the earning potentials of business.
To disclose to the extent possible other information to the
financial statements that is relevant to the needs of the
users of these statements.
To provide reliable information about changes in net
resources arising out of business activities.

Characteristics of Ideal Financial Statements:

The financial statements are prepared with a view to
depict financial position of the concern. A proper analysis and
interpretation of these statements enables a person to judge
the profitability of financial strength of the business. The
financial statement should be prepared in such away that they
are able to give a clear and orderly picture of the concern. The
ideal financial statements have the following characteristics.

Comparability:
The results of financial analysis should be in a way that
can also be in compared with the figures of other concerns of
the same nature.
Analytical Presentation:
The information should be analyzed in such a way that
similar data is presented at the same place a relationship can
be established in similar type of information. This will be helpful
in analysis and interpretation of data.
Brief:
Possible, the financial statements should be presented in
brief. The reader will be able to form an idea about the figures.
On the other hand, if figures are given in details then it will
become difficult to judge the working of the business.

Promptness:

The financial statement should be prepared and presented

at the earliest possible, immediately at the close financial year,
statements should be ready.
Importance of Financial Analysis:
The financial statements are mirrors, which reflect the
financial position operating strength or weakness of the
concern. The statements are useful to Management, Investor,
Creditors, Bankers, Workers, and Government and public and
large. George O may points out the following major uses of
financial statements: As a report of steward ship
As basis of fiscal policy
To determine the legality of dividends
As guide to advice divided action
As a basis for the granting of credit
As information for prospect investors in an
enterprise
As a guide to the value of investment already
As a aid to government supervision

 As a basis for price or rate regulation

As basis for taxation

The utility of financial statement to different parties

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 is
able to decide the notice of the management. The Management
is able to decide the course of action to be adopted in future.
Creditors:
The trade creditors are to be paid in a short period this
liability is met over of current assets. The creditors will be
interested in current solvency of the concern. The calculation of
current ratio and liquid ratio will enable the creditors to assess
urgent financial position of the concern in relation to their
debts.
Bankers:

The Bankers are interest to see the loan amount is secure

and the customer is also able to pay the interest regularly. The
bankers will analysis the balance sheet to determine financial
strength of the concern and P&L A/c will also be studied to find
out the earning position. These statements also help the
bankers to determine the amount of securities it will ask from
the customers as a cover for the loans.
Investor:
The investors include both short term and long-term
investors. They are interested payments in the security of
principle amount of loan and regular interested payments in
the concern. The investors will study the long-term solvency of
the concern will the help of financial position but it will also
study future prospects and expansion of the concern. The
possibility of paying back the loan amount in the fact of
liquidation of the concern is also taken into consideration
Trade Association:
This association provides service and protection to the
member. They may analysis the financial statements for the
purpose of providing facilities to these members. They may
develop

standard

accounting.

ratios

and

design

uniform

system

of

Stock Exchange:
The stock exchange deals in purchase and sale of
different

securities of

different

companies.

The financial

statement enables the stockbrokers to judge the financial

position of different concerns. The fixation of prices for
securities etc. is also based on these statements.

Methods of devices of Financial Analysis:

The analysis and interpretation of financial statements
issued to determine the financial position and result of
operations as well. A numbers of method of devices are used to
study the relationship between different statements. An effort
is made to use those devices, which clearly analyze the
position of the enterprise. The following methods of analysis
are generally used.
Comparative Statements
Tend Analysis
Common Size Statements
Fund flow Analysis
Cash flow Analysis

 Ratio Analysis
Comparative Statements:

The comparative financial statements are statements of the

financial position at different periods of time. The elements of
financial position are shown in comparative forms so as to give
an idea of financial position at two on more periods. Any
statements prepared in a comparative form for financial
analysis purposes. Not only the comparison of the figures of
two periods but also be relationship between balance sheet and
income statement enables an in depth study of financial
position and operative results. The comparative statements
may show.
Absolute figures (rupees amount)
Changes in absolute figure that is increase or decrease in
absolute figures.
Absolute data in term of percentages.
The analysis is able to draw useful conclusions when
figures are given in a comparative position. The figures of sales
for a quarter, half-year or one year may tell only the present
position of sales efforts. When sales figures of current periods
of time, similarly, comparative figures will indicates the trend
and direction of financial position and operating results.

The financial data will be comparative only when same

accounting principles are used in preparing these statements.
In case of any deviation in the use of accounting principles this
fact must be mentioned at the foot of financial statements and
the analysis should be careful in using these statements. The
two comparative statements are:

Balance Sheet
Income Statement
Comparative Balance Sheet:
The Comparative balance sheet analysis is the study of
the trend of the same items, group of items and computed
items in two or more balance sheets of the same business
enterprise on different dates. The changes in periodic balance
sheet items reflect the conduct of business. The changes can
be observed by comparison of the balance sheet at the
beginning and at the end of a period and these changes can
help in forming an opinion about the progress of an enterprise.
The comparative balance sheet has two columns for the data of
original balance sheet. A third column is used to shown
increased in figures. The fourth column may be added for
giving percentages of increases or decreases.

Guide lines for interpretation of Comparative Balance

Sheet:
While interpreting Comparative Balance Sheet the
interpreter is expected to study the following aspects:
Current financial position and liquidity position.
Long-term financial position.
Profitability of the concern.
For studying current financial position or short-term
financial position of a concern, one should the working capital
in both the years. The excess of current assets over current
liabilities will give the figures of working capital. The increase in
working capital will mean improvement in the current financial
position of the business. An increase in current assets
complained by the increase in current liabilities of the same
amount will not shown by provement in the short-term financial
position.
The long-term financial position of the concern can be
analyzed by studying the changes in fixed assets, long-term
liabilities and capital. The proper financial policy of concern will
be to financial fixed assets by the financial institutions or issue
of fresh share capital. An increase in fixed assets should be
compared to the increase in long-term loans and capital.

It is the increase in fixed assets is more the increase in

long-term securities then part of fixed assets has been financed
from the working capital. On the other hand, if the increase in
long-term securities is more than the increase in fixed assets
the fixed assets have not only been financed from long-term
sources but part of working capital has also been financed from
long-term sources. A wise policy will be finance fixed assets by
raising long-term funds.
The next aspect to be studied in comparative balance sheet
question is the profitability of the concern. The study of
increase or decrease in retained earnings various resources and
surpluses will enable the interpreter to see whether the
profitability has improved or not. An increase the balance sheet
of profit and loss accounting and other resources created from
profits will means an increase in profitability to the concern.
After studying various assets and liabilities an opinion
should be formed about the financial position of the concern.
One cannot say if short-term financial position is good then
long-term financial position must be given at the end.
Comparative Income Statement:
The comparative income statement gives and idea of the
progress of a business over a period of time. The changes in
absolute data in money values and percentages can be

determined to analyze the profitability of the business like

comparative balance sheet income statement also has four
columns. First two columns give figures of various items for two
years third and fourth columns are used to show increase or
decrease in figures in absolute amounts and percentages
respectively.

1.Classification of Ratios
A) Liquidity Ratios and current assets movement or
efficiency ratios.
B) Long-term Financial or test of solvency.
C) Analysis of Profitability ratios.
Analysis of
capital
structures.
Liquidity
Ratios

Solvency
Ratios

Profitability
Ratios

Capital
Structure
Ratios

1.Current Ratio
2.Quick Ratio
3.Absolute Ratio
Current Assets
Movement or
Efficiency
Ratios.
1.
Inventory/stock
turnover ratio.
2. Debtors
Turnover
Ratios.
3. Average
Collection
period.
4.Creditors
Turnover Ratio
5.Average
payment Ratio
6. Working
capital
Turnover Ratio.

1. D.btEquity
Ratio.
2. Funded
debt
Ratio.
3.
Proprietor
y Ratio.
4. Solvency
Ratio.
5.
Proprietar
y Funds
Ratio.
6. Fixed
Assets
Ratio.
7. Interest
Coverage
Ratio.
8. Ratio of
Current
assets to
Proprietar
y funds.

a) General
Profitability
Ratios.
1. Gross Profit
Ratios.
2. Operating
Ratio.
3. Operating
Profit Ratio.
4. Net Profit
Ratio.
b)Overall
Profitability
Ratios:
1. Return on
share-holders
investment.
2. Return on
equity capital.
3. Earning Per
share.
4. Return on
Capital
employed.
5. Capital
Turnover
Ratio.
6. Dividend
Yield Ratio.
7. Dividend Payout Ratio.
8. Earning Yield
Ratio.

1. Capital
Gearing
Ratio.
2. Total
investme
nt to
Longterm
Liabilities.
3.Ratio of
Current
Liabilities
to Share
holders
Funds.
4.Ratio of
Reserve to
Equity
Capital.

2. Importance and User of Ratio Analysis:

The Ratio Analysis is the one of the powerful tools of
financial analysis. It is used to analyze and interpret the
financial health of the enterprise. It is with the help of ratios
that the financial statement can be analyzed more clearly and
decision made for such analysis.
i) Importance:
1. Simplifies changes in financial condition of the Business.
2. It facilities to inter-firm comparison which reveal strong
and weak firms.
ii) Uses:
1. It helps in decision making.
2. Help in financial forecasting and planning.
3. Financial strength and weakness can be easily
communicated.
4. Helps in effective control of business from deviations.

5. It is essential part of budgeting control and standard

costing.
6. It is helpful in assessing the financial position of the
concern where the

shareholder/investor is going to

invest.
7. Helps in knowing the financial position of the company
to extend credit to the concern for creditors.
8. It helps in knowing the profitability of the concern
because fringe benefits are related to the volume of
profits earned.
iii) Limitations of Ratio Analysis:
Ratios are based only on information that has been
recorded in the financial statement. They suffer from
inherent

weakness

of

accounting

records

such

as

historical approach.
Ratios are not only the indicators; they cannot be taken
as final decision regarding good or bad financial position
of the business.
Ratios will give misleading results with the effects in price
level are not taken into account.
No fixed standards can be laid down for ideal ratio; it may
differ from industry to industry.

 They can be easily window dressed to present better

picture of financial and profitability of outsider.
Different people interpret ratios in different ways which
leads to bias. As it is only the means, not and end in it.

COMPUTATION OF LIQUIDITY RATIOS:

CURRENT RATIO:
CURRENT RATIO =

CURRENT ASSETS
----------------

----------CURRENT
LIABILITIES
QUICK RATIO:
QUICK RATIO

QUICK ASSETS
----------------------------CURRENT LIABILITIES

CASH RATIO or ABSOLUTE LIQUID RATIO:

RATIO
SECURITES
---- -------------------

CASH+MARKETABLE
-------------CURRENT

LIABILITIES
COMPUTATION EFFICIENCY RATIOS:
STOCK TURNOVER RATIO:
RATIO

COST OF GOODS SOLD

-------------------------------AVERAGE STOCK

DEBTORS TURNOVER RATIO:

RATIO

SALES
------------DEBTORS

WORKING CAPITAL TURNOVER RATIO:

RATIO

SALES
-------------------NET WORKING CAPITAL

COMPUTATION FOR PROFITABILITY RATIOS:

OPERATING RATIO:
RATIO
=
COST OF GOODS SOLD+ALL
OTHER EXPENSES
---------------------------------------------------------------SALES
CURRENT LIABILITIES TO WORKING CAPITAL:
RATIO

CURRENT LIABILITIES
--------------------------------------

NET WORKING CAPITAL

CURRENT ASSETS TO WORKING CAPITAL:
RATIO

CURRENT ASSETS

COMPARATIVE BALANCE SHEET OF

AS ON 31ST MARCH 2004 & 2005

PARTICULAR
S
Assets
A) Current
Assets,
Loans &
advances
inventories
Sundry
debtors

2004

1,96,03,4
9,211
1,53,56,1
6,883

2005

AMOUNT
INCREAS
%
E OF
CHANG
DECREA
E
SE

2,03,06,6 7,03,13,
2,246
035
2,00,79,4 47,23,26
3,703
,820

3.59
30.76

Cash & Bank

Balances
Other
current
assets

19,86,09,
590

24,36,78,
553

26,32,18,
444

21,90,26,
144

Loans &
Advance

1,01,35,3
7,983
4,97,13,3
2,111

89,38,37,
399
5,39,51,4
8,045

11,05,59,
80,944
5,33,70,6
4,492

62,92,23,
75,002

11,46,77, 41,17,91
72,103
,162
5,84,76,8 51,06,24
9,135
,603
5,62,00,8 9,88,33,
2,968
484
53,12,10
-7
7,92,25,5 10,27,09
97
,435
5,69,93,0 19,62,30
8,565
,812
24,99,02, 14,69,32
930
,695
5,94,92,1 34,31,63
1,495
,507

11,23,37,
07,113

11,34,43, 42,38,15
59,540
,934

TOTAL (A)
B) Fixed
Assets Gross
Block
(-)
Deprecation
Net block
(-) Lease adj
A/c
(+) Capital
work in
progress

5,71,89,1
6,452
53,12,107
18,19,35,
032
5,85,55,3
9,377

(+)
Investments
TOTAL (B)
TOTAL
ASSETS
(A+B)

39,68,35,
625

4,50,68,
963
22.7
4,41,92,
300 - 16.79
11,97,00
,584 - 11.81
42,38,15
,934
8.53
3.72
9.57
- 1.73

-56.45
- 3.33
-37.03
- 5.45
-7.16

PARTICULARS
Liabilities
A) Sources of
funds Capital
Reserves &
Surplus
TOTAL (A)
B) Loans &
Funds
Secured loans
Unsecured loans
TOTAL (B)
C) Current
Liabilities and
Provisions
Current
Liabilities

2004

2005

AMOUNT
INCREASE
OF
DECREAS
E

45,92,66,06 45,74,15,09
0
0 18,50,976
2,92,85,74,1 3,02,74,12,3 9,88,38,1
55
32
77
3,38,78,40, 3,48,29,42 9,69,89,
215
2
207

3,80,07,02,4 3,07,68,09,7
93
30
60,83,18,70 1,38,95,63,4
5
67
4,40,90,21, 4,46,63,73,
198
193

Provisions
Deferred tax
liability

17,72,82,28 1,45,37,59,8
2
24
63,71,29,28 69,43,29,84
6
1
1,05,68,94,1 1,24,50,69,2
32
56

TOTAL ( C )
TOTAL
LIABILITIES

3,46,68,45, 3,39,31,58,
700
921
11,26,37,0 11,34,43,5
7,113
9,540

72,39,92,
763
78,12,44,
762
5,73,51,
999

31,90,62,
458
5,72,00,5
55
18,81,75,
124
7,36,86,
779
8,06,52,
427

%
CHANGE

- 0.40
3.37
2.86

- 19.05
128.43
1.30

- 18.00
8.98
17.80
-2.13
7.16

(A+B+C)

INTERPRETATION:
In Current assets, inventories, sundry debtors, cash and
bank balances have increased and other current assets and
loans and advances have decreased. Overall there was an
increase of 8.53% in current assets.
Fixed assets the companys gross block has slightly
increased by 3.72%. The company should try to improve its
gross block. The companys investments have decreased by
37.03%. The company should try to improve its investments.
Totally
Fixed assets have decreased to 5.45%/,In liabilities capital has
decreased to 0.40%.
Long-term debts, the companys secured loans and
unsecured loans have increased by 19.05% and 128.43%. The
company should try to reduce its unsecured loans.

Current liabilities there were increased by 18% and provision

was increased by 8.98%. The company should try to reduce its
current liabilities and provisions.
COMPARATIVE BALANCE SHEET
AS ON 31ST MARCH 2005 & 2006

PARTICULARS

Assets
A) Current
Assets, Loans
& advances
inventories
Sundry
debtors

2005

2006

89,38,37,3 1,56,01,54,
99
141
5,39,51,48, 6,30,63,52,
045
212

27,17,45
,582
62,84,74
0
4,58,42,
686
1,26,99,
789
7,37,82,
198
66,63,16
,742

11,46,77,7 11,51,53,0
2,103
3,749
5,84,76,89, 6,32,89,51,
(-) Deprecation
135
679

4,75,31,
646
48,12,62
,544

Cash & Bank

Balances
Other current
assets
Loans &
Advance
TOTAL (A)
B) Fixed
Assets Gross
Block

2,03,06,62, 2,30,24,07,
246
828
2,00,79,43, 2,01,42,28,
703
443

AMOUNT
INCREAS
%
E OF
CHA
DECREAS NGE
E

24,36,78,5
53
21,90,26,1
44

19,78,35,6
67
23,17,25,9
33

13.3
8
0.31
18.8
1
5.8
82.5
12.3
5
4.14
8.23

Net block
(+) Capital
work in
progress
(+)
Investments
TOTAL (B)
TOTAL ASSETS
(A+B)

PARTICULAR
S
Liabilities
A) Sources of
funds Capital
Reserves &
Surplus

5,62,00,82, 5,18,63,52,
968
070

43,37,30
,898

7,92,25,59 52,84,85,3
7
66
5,69,93,08, 5,71,48,37,
565
436
24,99,02,9 28,19,24,4
30
44
5,94,92,11, 5,99,67,61,
495
880
11,34,43,5 12,30,31,1
9,540
4,092

44,92,59
,769
1,55,28,
871
3,20,21,
514
4,75,50,
385
96,87,54
,552

2005

2006

AMOUNT
INCREASE
OF
DECREASE

45,74,15,09 45,74,15,09
0
0
3,02,74,12,3 3,31,40,43,6
32
94
3,48,29,42 3,77,14,58,
2
784

Nil
28,66,31,3
62
28,66,31,
362

3,07,68,09,7 2,60,51,36,4
Secured loans
30
85
Unsecured
1,38,95,63,4 2,44,03,87,1
loans
67
25
4,46,63,73, 5,04,55,23,
TOTAL (B)
193
610

47,16,73,2
45
1,05,08,23,
658
57,91,50,
413

TOTAL (A)
B) Loans &
Funds

7.72
5.67
0.27
12.8
0.79
8.45

%
CHAN
GE

Nil
9.47
7.65

-15.33
75.62
12.96

C) Current
Liabilities
and
Provisions
Current
Liabilities

1,45,37,59,8 1,85,59,95,1
24
99

69,43,29,84 45,12,32,23
Provisions
1
3
Deferred tax
1,24,50,69,2 1,17,89,04,2
liability
56
66
3,39,31,58, 3,48,61,79,
TOTAL ( C )
921
111
TOTAL
LIABILITIES
11,34,43,5 12,30,31,1
(A+B+C)
9,540
4,092

40,22,35,3
75
24,30,97,6
08
4,66,87,37,
456
9,30,20,1
90
96,87,54,
552

27.67
-35.01
79.84
2.74
8.45

INTERPRETATION:
From the above financial years we can compare companys
financial analysis for the year 2005 & 2006.
In Current assets, the companys inventories, sundry
debtors, other current assets, loans and advances have
increased but cash and bank balance have decreased to
18.81%.

The

company

should

maintain

adequate

cash

resources. Overall there was an increase of 12.35% in current

assets.
Fixed assets were increased by 4.14% and investment
also increased by 12.81% and there is a slight increase in total
fixed assets by 0.79%. The company should try to improve its
fixed assets.
In liabilities there was no change in capital, the company
should improve its capital and reserves and surplus have
decreased to 9.47%
Long-term debts, secured loans have increased by 75.62%. The
company should decrease its unsecured loans.
Totally the companys financial analysis is satisfactory.

COMPARATIVE BALANCE SHEET

AS ON 31ST MARCH 2006 & 2007

PARTICULAR
S

2006

2007

2,30,24,07,
828

2,55,18,52,
443

AMOUNT
INCREASE
OF
DECREAS
E

%
CHANG
E

Assets
A) Current
Assets, Loans &
advances
inventories

Sundry
debtors
Cash & Bank
Balances
Other current
assets
Loans &
Advance
TOTAL (A)
B) Fixed
Assets Gross
Block
(-)
Deprecation
Net block
(+) Capital

2,01,42,28, 1,84,37,25,
443
247
19,78,35,66 24,83,13,62
7
9
23,17,25,93 28,89,28,15
3
4

24,94,44,6
15
17,05,03,1
96
5,04,77,96
2
5,72,02,22
1
39,48,40,9
74
20,82,19,
572

1,56,01,54,
141

1,16,53,13,
167

6,30,63,52
,212

6,09,81,32
,640

11,51,53,03
,749
6,32,89,51,
679
5,18,63,52,
070
52,84,85,36

12,15,29,31 63,76,27,9
,737
88
6,80,31,40, 47,41,88,6
378
99
5,34,97,91, 16,34,39,2
359
89
2,08,24,05, 1,55,39,20,

10.83
- 8.46
25.51
24.68
-25.31
-3.30
9.54
7.49
3.15
294.03

work in
progress
(+)
Investments
TOTAL (B)
TOTAL
ASSETS
(A+B)

6
680
314
5,71,48,37, 7,43,21,97, 1,71,73,59,
436
039
603
28,19,24,44 29,01,50,81
4
1 82,26,367
5,99,67,61 7,72,23,47 1,72,55,8
,880
,850
5,970

28.77

12,30,31,1
4,092

12.33

13,82,04,8
0,490

1,51,73,6
6,398

30.05
2.91

PARTICULARS
Liabilities
A) Sources of
funds Capital
Reserves &
Surplus
TOTAL (A)
B) Loans &
Funds
Secured loans
Unsecured
loans
TOTAL (B)
C) Current
Liabilities and
Provisions
Current
Liabilities

2006

2007

45,74,15,84 45,74,15,09
0
0
3,70,30,84,3 3,31,40,43,6
00
94
4,16,05,00, 3,77,14,58,
140
784
4,13,36,83,5 2,60,51,36,4
90
85
2,07,98,60,9 2,44,03,87,1
94
25
6,21,35,44, 5,04,55,23,
584
610

Provisions

1,61,23,30,5 1,85,59,95,1
85
99
76,21,94,06 45,12,32,23
1
3

Deferred tax
liability

1,07,19,11,1 1,17,89,04,2
20
66

TOTAL ( C )
TOTAL
LIABILITIES

3,44,64,35, 3,48,61,79,
766
111
13,82,04,8 12,30,31,1
0,490
4,092

AMOUNT
INCREASE
OF
DECREASE

750
38,90,40,6
06
38,90,41,
356
1,52,85,47,
105
36,05,26,1
31
1,16,80,2
0,974

24,36,64,6
14
31,09,61,8
28
10,69,93,1
46
3,97,43,3
45
1,51,73,6
6,398

%
CHANG
E

0.0016
11.73
10.31

58.67
-14.77
23.14

-13.12
68.91
-9.07
-1.14
12.33

(A+B+C)

INTERPRETATION:
In current assets, the companys inventories, cash & bank
balances other current assets have increased but sundry
debtors and loans and advances have decreased. Overall there
was increase of 3.30% in current assets.
Fixed assets were increased by 9.54% and investments
also increased by 2.91%. Total assets were increase upto
28.77%.
In liabilities there was slight increase in capital of
0.00016%. The company should improve its capital and
reserves and surplus have increase by 11.73%.
Long-term debts, secured loans have increased by
56.67% and unsecured loans have decreased to 14.77%. The
company should decrease its secured loans.
Current liabilities were decreased to 13.12% and
provisions it was increased by 68.91%. The company should try
to decrease its provisions.
Overall the companys financial position is satisfactory.

PARTICULAR
S
Liabilities
A) Sources of
funds Capital
Reserves &
Surplus
TOTAL (A)
B) Loans &
Funds
Secured loans
Unsecured
loans
TOTAL (B)
C) Current
Liabilities
and
Provisions
Current
Liabilities
Provisions
Deferred tax
liability
TOTAL ( C )
TOTAL
LIABILITIES
(A+B+C)

2007

2008

AMOUNT
INCREASE
OF
DECREASE

45,74,15,09 45,74,16,36
0
5
525
3,31,40,43,6 6,08,69,28,2 2,38,38,43,
94
76
976
3,77,14,58, 6,54,43,44, 2,38,38,4
784
641
4,501
2,60,51,36,4 6,43,19,70,1 2,29,82,86,
85
65
575
2,44,03,87,1 2,29,60,29,5 21,61,68,5
25
65
71
5,04,55,23, 8,72,79,99, 2,51,44,5
610
730
5,146

%
CHANG
E

0.00015
64.37
57.29

55.59
10.39
40.46

1,85,59,95,1
99
45,12,32,23
3
1,17,89,04,2
66
3,48,61,79,
111

2,26,82,92,0
85
1,35,70,49,2
21
1,12,40,92,8
79
4,74,94,34,
185

65,59,61,5
00
59,48,55,1
60
5,21,81,75
9
1,30,29,9
8,419

37.80

12,30,31,1
4,092

20,02,17,7
8,556

6,20,12,9
8,066

44.87

40.68
78.04
4.86

INTERPRETATION:
In Current assets, the companys inventories, sundry
debtors, other current assets, loans and advances have
increased but cash and bank balance have decreased to
18.02%.

The

company

should

maintain

adequate

cash

resources. Overall there was an increase of 42.35% in current

assets.
Fixed assets was increased by 74.25% and investments
decreased to 0.49%. Totally fixed assets were increase upto
46.85%.
In liabilities there was slight increase in capital of
0.00015%. The company should improve its capital. Reserves
and surplus have increased by 64.37%.
Long-term debts, secured loans and unsecured loans have
increased by 55.59% and 10.39%. The company should try to
decrease its secured loan.
Current liabilities were increase by 40.68% and provisions
also increased by 78.04%. The company should try to decrease
its provisions

COMPARATIVE BALANCE SHEET

AS ON 31ST MARCH 2008 & 2009

PARTICULARS

Assets
A) Current Assets,
Loans & advances
inventories
Sundry debtors
Cash & Bank
Balances
Other current
assets
Loans & Advance
TOTAL (A)
B) Fixed Assets
Gross Block
(-) Deprecation
Net block
(+) Capital work in
progress

(+) Investments

2008

2009

AMOUNT
INCREASE
OF
DECREASE

3,76,88,27,7
77
2,45,94,52,5
81
27,24,22,34
1
11,81,99,41
2
2,06,22,47,2
61
8,68,11,49,
372
16,76,31,75,
670
7,21,93,42,5
88
9,54,38,33,0
82
1,50,80,68,1
95
11,05,19,01,
277
28,87,27,90
7

4,42,17,01,8
10
2,73,07,35,2
05
40,54,21,33
3
21,46,91,78
5
4,29,01,79,1
91
12,06,27,2
9,324
18,95,44,39,
391
8,11,20,25,8
73
10,84,24,13,
518
6,34,59,31,6
50
17,18,83,45,
168
47,82,66,73
7

65,28,74,0
33
27,12,82,6
24
13,29,98,9
92
9,64,92,37
3
2,22,79,31,
930
3,38,15,7
9,952
2,19,12,63,
721
89,26,83,2
85
1,29,85,80,
436
4,83,78,63,
455
6,13,64,43,
891
18,95,38,8
30

%
CHANG
E

17.32
11.03
48.82
81.63
108.03
38.95
13.07
12.36
13.60
320.79
55.52
65.64

TOTAL (B)
TOTAL ASSETS
(A+B)

PARTICULAR
S
Liabilities
A) Sources of
funds Capital
Reserves &
Surplus
TOTAL (A)
B) Loans &
Funds
Secured loans
Unsecured
loans
TOTAL (B)
C) Current
Liabilities
and
Provisions
Current
Liabilities
Provisions
Deferred tax

11,34,06,2
9,184
20,02,17,7
8,556

2008

17,66,66,1
1,905
29,72,93,4
1,229

2009

6,32,59,8
2,721
9,70,75,6
2,673

AMOUNT
INCREASE
OF
DECREASE

45,74,16,36 45,74,16,39
5
5
6,08,69,28,2 9,36,17,93,4
76
89
6,54,43,44, 9,81,92,09,
641
884

30
3,27,48,65,
213
3,27,48,6
5,243

6,43,19,70,1 9,71,06,02,0
65
40
2,29,60,29,5 2,43,75,36,4
65
72
8,72,79,99, 12,14,81,3
730
8,512

3,27,86,31,
875
14,15,06,9
07
3,42,01,3
8,782

2,26,82,92,0 3,03,03,23,5
85
92
1,35,70,49,2 3,30,39,27,0
21
56
1,12,40,92,8 1,42,77,42,1

76,20,31,5
07
1,94,68,77,
835
30,36,49,3

55.78
48.48

%
CHANG
E
0.0
0065
53.80
50.04

50.97
6.16
0.39

33.5
143.46
27.01

liability
TOTAL ( C )
TOTAL
LIABILITIES
(A+B+C)

79
85
4,74,94,34, 7,76,19,92,
185
833
20,02,17,7
8,556

29,72,93,4
1,229

06
3,01,25,5
8,648

63.42

9,70,75,6
2,673

48.48

INTERPRETATION:
In current assets the companys inventories, sundry
debtors, cash & bank balances and loans and advances have
increased and other current assets were also increased upto
81.63%. Overall there was an increase of 38.95% in current
assets.
Fixed assets were increased by 13.07% and investments
increase up to 65.64%. Totally fixed assets were increased upto
55.78%.
In liabilities there was a slight increase in capital of
0.00065%. The company should concentrate on this aspect.
Reserves and surplus have increased by 53.80%.
Long term debts, secured loans and unsecured loans have
increased by 50.97% and 6.16%. The company should try to
reduce its secured loans.
Current liabilities were increased up to 33.05% and
provisions

up

to

143.06%.

The

company

should

concentrate on this factor.

Over all the companys financial position is satisfactory.

more

CURRENT RATIO:

Financial

Current

Current

Current

Year

Assets

Liabilities

Ratio

(Rs. in

(Rs. in Lakhs)

Lakhs)
2003-04

2004-05

2005-06

2006-07

53951.48

21480.89

63063.52

23072.27

60981.33

86811.49

23745.24

36253.41

2.51

2.73

2.57

2.39

2007-08

120627.29

63342.50

1.90

Graphical Representation:
3.00
2.50

2.73
2.51

2.57

2.39
1.90

2.00
1.50
1.00
0.50
2003-04

2004-05

2005-06

2006-07

2007-08

INTERPRETATION:
Here for the current ratio in the year 2003-04 was 2.56. In
the year 2007-2008 the companys liquidity position is 1.90.It
means not satisfactory. So it has to improve the liquidity
position to meet current obligations.

QUICK RATIO:

Financial

Quick Assets

Current

Year

(Rs. in

Liabilities

Lakhs)

(Rs. in Lakhs)

2003-04

33644.86

2004-05

40039.44

2005-06

35462.8

2006-07

49123.21

2007-08

40542.13

21480.89

23072.27

23745.24

36253.41
63342.50

Quick Ratio

1.56

1.74

1.49

1.35

0.06

GRAPH -2

INTERPRETATION:
As a conventional rule, quick ratio should be 1:1 the above
data of reveals that quick ratio in year in year 2003-04 was
1.56:1 which is above the conventional rule, it says that a large
amount of funds was locked in quick assets where the company
is not generating any revenue or return on those assets. In the

year 2005-06 is 1.49, in the current year it is 0.06. So the

company should improve in this area.
CASH RATIO

YEARS

Cash and Bank

CURRENT

CASH

Balance

LABILITIES

RATIO

Rs.in lakhs

2003-2004

2439.78

21480.89

0.11

2004-2005

1978.36

23072.27

0.08

2005-2006

2483.13

23745.24

0.10

2006-07

2724.22

36253.41

0.07

2007-08

40542.13

63342.50

0.06

GRAPH 3

INTERPRETATION:

The cash ratio to Britannia as a conventional rule the ratio

should be 0.15:1. In the year 2003-04 the ratio was 0.11:1.
Later decreased to 0.07:1 which the firm has decreased its
cash position in the year 2007. In the year 2007-08, the ratio is
0.06.

DEBT-EQUITY RATIO: -

YEARS

2003-

LONG TERM

SHAREHOLDER

DEBT

DEBTS

S FUND

EQUITY

Rs.in lakhs

Rs.in lakhs

RATIO

44663.73

34848.27

1.28

50455.23

37714.59

1.33

62135.45

41605.00

1.49

2006-07

87250.00

65443.44

1.33

2007-08

12148.13

98192.09

1.23

2004

20042005

20052006

Graph No.4

INTERPRETATION:
As a convention rule of the firm debt equity ratio
should 1:1 i.e., for every one equity the firm can raise loan or
debenture here for the KCIL in the year 2003-2004, the debt
equity ratio was 1.28:1 which is somewhat higher when
compare to conventional rule later increase
to 1.34 in 2004 when compare to 2003 and further
decreased to 1.28 and finally in the year 2008 it was 1.23.

FIXED ASSETS TURNOVER RATIO:

YEARS

Net Sales Rs.in

Average Fixed

lakhs

Assets Rs. In

RATIOS

lakhs

2003-04

129553.62

57974.23

2.23

2004-05

142195.77

57070.73

2.49

2005-06

161317.74

74321.97

2.17

2006-07

220896.60

110519.01

1.99

2007-08

29879.22

17188.34

1.73

Graph No.5

INTERPRETATION
A high fixed assets turnover ratio indicates an efficient
utilization of fixed assets and greater operating efficient and
profitability. The fixed asset turnover ratio in the year 2003 is
1.87 times later the ratio has been increased to 2.23 times in
the year 2003, 2004 it increased to 2.49 in 2004, finally it is
decreased in the year 2005 and 2006 it ratio is 2.17 times and
1.99 times. This shows that the firm has been consistently
shows the performance and utilization of fixed assets towards
sales effectively. In the year 2007-08 the ratio is 1.73.

FINDINGS

There should be effective coordination between the

different department like production, sales, purchase,
finance, marketing etc., This will enhance the efficiency
of the organization.
The fixed assets for all five financial years 2003-2008
has been increased year to year.
Share capital is stable for all the five years.
There should be proper communication between
various department and responsibility centers.
Education about the importance of budgeting should
be

communicated

to

all

concerned

authorities,

involved directly or indirectly to work according, for

the growth of the company.
There should be well-organized manpower planning,
especially with regard to production

SUGGESTIONS:
It is suggested to GOLDEN & GODR FREY PHILLIPS to enhance the
dividend percentage year-by-year because they are following constant
dividend policy.
It is suggested to VST to issue bonus shares to the share holders, if
possible.
Compare to other companies ITC ltd has producing different types of
product

CONCLUSION:

 The dividend paid to share holders is 350 by the

VST industries
The dividend declared by ITC is Rs/-250.
The dividend paid by VST industries is more than
ITC in the year 2008.
GTC & GPC industries distributed same dividend
percentage (250)in the year 2008.

BIBLIOGRAPHY

IM Panday

Financial Management

M.Y. Khan & P.K. Jain

Financial Management

Prasanna Chandra
Management

: Fundamentals of Financial

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