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RESEARCH METHODOLOGY
Research Design Analytical Research Method of Data Collection Secondary Data Period of study 01st January 2011 to 30th April 2011
RATIO ANALYSIS
1. Asset Turnover Ratio 2. Fixed Asset Turnover Ratio 3. Receivable Turnover Ratio 4. Accounts Payable Turnover Ratio 5. Inventory Turnover Ratio 6. Cash Conversion Cycle (Operating Cycle) 7. Days Inventory Outstanding (DIO) 8. Days Payable Outstanding (DPO) 9. Days Sales Outstanding (DIO)
Sales
Year 2006-07 2007-08 2008-09 2009-10 2010-11 () 61096902 76883826 102667346 136337560 153531070
Total Assets
() 8039257.07 11022527.5 13865007 14915281 16891827.85
Total Asset Turn Over Ratio (%) 7.59 6.98 7.41 9.14 9.09
INTERPRETATION:
From the above table its shows that the Assets turnover ratio during the study period. During this study period Asset
Year
Sales
()
Closing
Debtors( ) 2494448.88 4412345.9 6571894.92 6361720
2010-11 153531069.8
7538576.6
20.36
INTERPRETATION The above table shows that the receivable turnover ratio is fluctuating trend during the study period. During the study period the debtor turnover ratio is fluctuating trend ranges from 15.62 percentages in 2008-09 and 24.49 percentages in 2006-07 due to the
Year
purchase
()
payable
() 8162448.71 9653868.19 12478579.28 14219240 15477915.66
Ratio
(%) 8.39 8.32 7.77 9.52 9.12
INTERPRETATION The above table shows that the creditor turnover ratios in the fluctuating trend due to fluctuating in the credit purchase and average accounts payable at cost. The lowest payables turnover ratio recorded in the year of 2008-09(7.77%) and the highest payables
Inventory
()
Inventory Turnover
Ratio (%)
INTERPRETATION The above table shows that the overall inventory turnover ratio during the study period. During this study period over all
2006-07
2007-08 2008-09 2009-10 2010-11
61096901.97
76883825.94 102667345.5 136337560 153531069.8
1132863.23
1092765.23 1805071.98 2962784 3329646.46
53.93
70.35 56.87 46.02 46.11
INTERPRETATION
The above table shows that the fluctuating trend in the Fixed asset turnover ratio . The lowest fixed asset turnover ratio
2006-07
2007-08 2008-09 2009-10 2010-11
1179128
1326462.94 1297392.145 1397434.845 1558435
3434.006247
3834.283836 3274.714219 4382.463014 4156.906849
343
346 396 319 375
INTERPRETATION
The above table it shows that the fluctuating trend of average age of inventory. It indicates that the lowest age of inventory shown in the year 2006-2007(343) and highest in the year of 2008-09(396).
Year
2006-07 2007-08 2008-09 2009-10 2010-11
INTERPRETATION
The above table it shows that the fluctuating trend of average collection period of receivables. It indicates that the
Interpretation
The above table shows that the fluctuating trend of average payment period of payables . It indicates that the lowest
previous year.
Cycle(Days) 2006-07
2007-08 2008-09 2009-10 2010-11
13
17 20 18 17
343
346 396 319 375
356
363 416 337 392
INTERPRETATION The above table shows that the cash conversion cycle of the firm during the study period. It indicates the fluctuating trend
appears in the operating cycle of the firm year to year. The lowest
level of operating cycle is present in the year of 2009-10(337 Days) and the highest level of the operating cycle present in the
Findings
The Assets turnover ratio is in fluctuating trend ranges from 6.98 percentages in 2007-08 and 9.14 percentages in 2009-10. The receivable turnover ratio is fluctuating trend ranges from 15.62 percentages in 2008-09 and 24.49 percentages in 200607.
The Fixed asset turnover ratio is in fluctuating trend. The lowest fixed asset turnover ratio has shown in the year 200910(46.02) and highest in the year 2007-08(70.35).
The average payment period of payables is in fluctuating trend. the lowest in the year of 2009-10(38 days) and highest payment period of payables shown in the year 2008-09(47 days).
The cash conversion cycle of the firm is in fluctuating trend ranges from 337 Days is present in the year of 2009-10 and 416 Days present in the year of 2008-09.
The fixed asset level has decreased in absolute figures in 2007(14.09) as compared to 2008(9.91) in total assets. The current
The fixed asset level has increased in absolute figures in 200809(13.09%) as compared to 2007-08(9.91%) in total assets. The current asset level has decreased 90.09% to 86.98%.
The fixed asset level has increased in absolute figures in 200910(19.86%) as compared to 2008-09(13.02%) in total assets. The current asset level has decreased 86.98% to 80.14%.
The fixed asset level has decreased in absolute figures in 201011(19.86) as compared to 2010(19.81) in total assets. The current
The company has followed a mixed type of credit policy during the year 2006-07 to 2010-11 credit policy was most conservative.
In trend percentage analysis the fixed asset level has decreased in the year of 2007-08 and other years are continuously increased as compared to the year of 2006-07.Investments and
The credit policy adopted by the company was good since the
average collection period was 15 days therefore this will help in increasing the cash balances of company.
Suggestions
The organization may increase the fixed assets reliability through purchase of high level standard machines to decrease the maintenance charges and increase the productivity. The liquidity position of the organization may improved to meet its short term obligations through increase the sales and utilizing the inventory effectively.
The company can improve the current asset through effectively utilize the cash, inventory and managing the
debtors.
Conclusion
From the critical analysis throughout the study, it is
evident that the overall asset position of the company with regards to payables management and cash management is not satisfactory. But still it is seen that the organization is more efficiently using its credit period, the longer the company stretching out the payments.