ANALYSES AND DATA INTERPRETATIONMASTER TABLE FOR WORKING CAPITAL:Particulars2008-092009-102010-112011-12

Cash2664116255642473138100028161490169

Raw-Materials518716903259073805327333090863670256062

Work-in-progress143577562124360115931207626448792

Finished-Goods38720950176510272915814718251093748619

Debtors43076543137961398990030483813855

TOTAL

990001865363771540551359020055015757497

Statement showing working capital on 2009

INTERPRETATION The above graph shows that current assets are Inventory, Dr, Cash & Bank and Loans& advances more than current liabilities which are short-term borrowing, trade paybles, other current liabilities, short-term provision. It shows that company is growing stage.

Statement showing working capital on 2010

SL NOPARTICULARS2010

ICurrent Assets

Inventories1725628265

Debtors13796139

Cash & Bank55642473

Loan & Advance261030560

ASub Total A2056097437

IICurrent Liabilities

Short-term borrowing1458847725

Trade paybles7098139

other current liabi22122852

Short-term provision22602332

BSub total B1510671048

IIINet working Cap A-B 545426389

INTERPRETATION The above graph shows that current assets are Inventory, Dr, Cash & Bank and Loans& advances more than current liabilities which are short-term borrowing, trade paybles, other current liabilities, short-term provision. But compare to last year 2009 Net working capital has decreased.

Statement showing working capital on 2011

SL NOPARTICULARS2011

ICurrent Assets

Inventories1240563436

Debtors89900304

Cash & Bank138100028

Loan & Advance584403148

ASub Total A2052966916

IICurrent Liabilities

Short-term borrowing681859399

Trade paybles131836764

other current liabi394407197

Short-term provision74344100

BSub total B1282447460

IIINet working CapA-B 770519456

INTERPRETATION The above graph shows that current assets are Inventory, Dr, Cash & Bank and Loans& advances more than current liabilities which are short-term borrowing, trade payable, other current liabilities, short-term provision. But compare to last year 2010 Net working capital has increased.

Statement showing working capital on 2012SL NOPARTICULARS2012

ICurrent Assets

Inventories2006814860

Debtors83813855

Cash & Bank161490169

Loan & Advance269447197

ASub Total A2521566081

IICurrent Liabilities

Short-term borrowing1092805003

Trade payables1764895986

other current liabilities648269883

Short-term provision56063551

BSub total B3562034423

IIINet working CapA-B -1040468342

INTERPRETATION The above graph shows that current assets are Inventory, Dr, Cash & Bank and Loans& advances less than current liabilities which are short-term borrowing, trade payable, other current liabilities, short-term provision. But compare to last year 2011 Net working capital has decreased. It indicates that company is not having favorable liquidity position. In fact, in 2012 the net working capital is negative indicating current liabilities are more than current assets, which is not a good sign of financial performance.

WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES

Table showing net working capital SPSC, ltd.

Sl NoParticular2009201020112012

ACurrent Assets1103920130205609743720529669162521566081

BCurrent Liabilities522492786151067104815462461363562034423

CWorking Capital (A-B)581427344545426389506720780-1040468342

Interpretation: The above table shows there is continuous decline in the working capital of the company from Rs.58.14 crores in 2009 to Rs.54.54 in 2010, Rs.50.67 in 2011. But, in view of sudden increase in current liabilities in the year 2012, the working capital is negative, which is not a good sign of solvency.

Ratio Analysis

1. Inventory turnovers ratio It indicate the efficiency of the firm in producing the selling its product. The ratio indicates how fast inventory is sold. A high ratio is good from viewpoint of liquidity and vice versa. A low ratio would signify that inventory does not sell and stay on the shelf or in warehouse for a long time.

Inventory Turnover Ratio = cost of goods sold Average Inventory

YearCost of goods soldAverage inventoryRatio

2008-0914930896107610741821.961818763

2009-10259073805312034213352.152810473

2010-11273330908614661289181.864303372

2011-12367025606218600631101.973188997

GRAPH

InterpretationThe above graph shows that inventory turnover ratio was more in the 2009-10 but declined in the year 2010-11 and 2011-12 which shows that the company is not managing its inventory effectively. This is considering higher inventory ratio indicates inventory getting sold quickly in terms of sales, which is a good sign of financial performance. But, since inventory turnover ration has been declining company needs to look at how to improve inventory management.

1) CURRENT ASSETSCURRENT RATIO = --------------------------------CURRENT LIABILITYCURRENT RATIO

Year2009201020112012

Current Assets1103920130205609743720529669162521566081

Current Liabilities822492786151067104815462461363562034423

Ratio1.3421639061.3610490781.3277102970.707900537

GRAPH

Interpretation

This ratio indicates the solvency of the company. It shows the proportion of current assets to current liabilities. Normally, it is expected that current ratio should be 2:1, indicating that current assets should be twice of current liabilities. As the current ratio is less than the ideal ratio, the solvency position of company is low. Also, in the year 2012 there has been major change in current liabilities resulting in a negative working capital which is not a good sign. The company has to initiate measures to bring down current liabilities or increase current assets to improve liquidity position of the company.

PROFITABILITY RATIO

GROSS PROFIT RATIO

GROSS PROFITGROSS PROFITRATIO = ------------------------ x 100 NET SALES

YEAR2009201020112012

GROSS PROFIT328925029429627773525924750653548927

NET SALES1836181577217943440037811538524052456123

RATIO17.9135349719.7128104913.9091073916.12723018

GRAPH

InterpretationThis ratio shows the margin left meeting the purchase and manufacturing costs. It measures the efficiency as well as pricing. High gross profit ratio means a high margin for covering other expenses like administrative, selling and distribution expenses. In 2010 gross profit ratio is more which decreased in 2011 and 2012. This indicates there is a marginal decline in profitability of the company.

NET PROFIT RATIO

NET PROFIT NET PROFIT = -------------------- X 100 NET SALES

YEAR2009201020112012

NET PROFIT39111451312142573380738033548927

NET SALES1836181577217943440037811538524052456123

RATIO2.1300426651.432218240.8941022060.827866508

GRAPH

Interpretation

This ratio shows the earning left for share-holders as percentage of net sales.It measures the overall efficiency of all the functions of business firm like production, administrative, selling, financing, pricing , tax management etc. Higher the ratio, better it is because it gives an idea of overall efficiency of the firm. As we see in above graph, the trend in this ratio is declining. The Net Profit Ratio of the company has declined from 2.13% in 2009 to 0.82% in 2012 which indicates the companys operational performance has declined.

WORKING CAPITAL TURNOVER RATIO

Cost of goods soldWORKING CAPITAL TURNOVER RATIO= ----------------------------------- Net working capital

YearCost of goods sold Net working capRatio

2008-09

14930896105814273442.567972809

2009-10

25907380535454263894.749931623

2010-11

27333090867705194563.547358947

2011-12

3670256062-1040468342-3.527503831

InterpretationThe above graph shows that working capital turnover ratio of the company was good in 2009-10 as compared to 2008-09. But, there is a marginal decline in the year 2010-11 where the ratio value is 3.54. However, in view of negative working capital in 2011-12, the ratio has changed significantly indicating lower financial performance.