Industry Profile

Ratio Analysis

BES Group of Institutions (GVIC), Angallu 18 INDUSTRY PROFILEIndia is the world leader in milk production with total volume of 115 million tons. Driven by steady population growth and rising income, milk consumption continues to rise in India. Dairy market is currently growing at an annual growth rate of around 7 per cent in volume terms. The market size of Indian dairy industry stands at around US$ 45 billion. Since Indias population is predominantly vegetarian; milk serves as an important part of daily diet. Indians use milk in various preparations such as in brewing tea and coffee, in making yogurt or curd and in preparing many Indian dishes. For most households, milk is also a popular beverage due to its nutritional value. In India, rural households consume almost 50 percent of total milk production. The remaining 50 percent is sold in the domestic market. Of the share of milk sold in the domestic market, almost 50 percent is consumed in fluid form, 35 percent is consumed as traditional products (cheese, yoghurt and milk based sweets), and 15 percent is consumed for the production of butter, ghee, milk powder and other processed dairy products (including baby foods, ice cream, whey powder, casein, and milk albumin).Most dairy products are consumed in the fresh form and only a small quantity is processed for value addition. In recent years, however, the market for branded processed food products has expanded. Although only around 2 per cent food is processed in India, still the highest processing happens in the dairy sector, where 35 per cent of the total produce is processed, of which only 13 per cent is processed by the organised sector. While world milk production declined by 2 per cent in the last three years, according to FAO estimates, Indian production has increased by 4 per cent. The milk production in India accounts for more than 13% of the total world output and 57% of total Asia's production. The top five milk producing nations in the world are India ,USA, Russia, Germany and France.Although milk production has grown at a fast pace during the last three decades (courtesy: Operation Flood), milk yield per animal is very low.

The main reasons for the low yield areLack of use of scientific practices in milching.Inadequate availability of fodder in all seasons.Unavailability of veterinary health services.MILK YIELD COMPARISON:Country

Milk Yield (Kgs per year)USA7002UK5417Canada5348New Zealand2976Pakistan1052India795World (Average)2021Source: Export prospects for agro-based industries, World Trade Centre, Mumbai.MARKET SIZE AND GROWTH:Market size for milk (sold in loose/ packaged form) is estimated to be 36mn MT valued at Rs470bn. The market is currently growing at round 4% pa in volume terms. The milk surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk products is concentrated in these milk surplus States. The top 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and Gujarat together account for 58% of national production.Milk production grew by a mere 1% pa between 1947 and 1970. Since the early 70's, under Operation Flood, production growth increased significantly averaging over 5% pa.About 75% of milk is consumed at the household level which is not a part of commercial dairy industry. Loose milk has a larger market in India as it is perceived to be fresh by most consumers. In reality however, it poses a higher risk of adulteration and contamination.The production of milk products, i.e. milk products including infant milk food, malted food, condensed milk & cheese stood at 3.07 lakh MT in 1999. Production of milk powder including infant milk-food has risen to 2.25 lakh MT in 1999, whereas that of malted food is at 65000 MT. Cheese and condensed milk production stands at 5000 and 11000 MT respectively in the same year.PRODUCTION OF MILK IN INDIAYearProduction in million MT1988-8948.41989-9051.41990-9153.71991-9256.31992-9358.61993-9461.21994-9563.51995-96651996-9768.51997-9870.81998-9974.71999-00(E)78.12000-01(T)81.0

E= EstimatedT= Target expected

MAJOR PLAYERSThe packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-operative Milk Marketing Federation (GCMMF) is the largest player. All other local dairy cooperatives have their local brands (For e.g. Gokul, Warana in Maharashtra, Saras in Rajasthan, Verka in Punjab, Vijaya in Andhra Pradesh, Aavin in Tamil Nadu, etc). Other private players include J K Dairy, Heritage Foods, Indiana Dairy, Dairy Specialties, etc. Amrut Industries, once a leading player in the sector has turned bankrupt and is facing liquidation.PACKAGING TECHNOLOGYMilk was initially sold door-to-door by the local milkman. When the dairy co-operatives initially started marketing branded milk, it was sold in glass bottles sealed with foil. Over the years, several developments in packaging media have taken place. In the early 80's, plastic pouches replaced the bottles. Plastic pouches made transportation and storage very convenient, besides reducing costs. Milk packed in plastic pouches/bottles have a shelf life of just 1-2 days, that too only if refrigerated. In 1996, Tetra Packs were introduced in India. Tetra Packs are aseptic laminate packs made of aluminum, paper, board and plastic. Milk stored in tetra packs and treated under Ultra High Temperature (UHT) technique can be stored for four months without refrigeration. Most of the dairy co-operatives in Andhra Pradesh, Tamil Nadu, Punjab and Rajasthan sell milk in tetra packs. However tetra packed milk is costlier by Rs5-7 compared to plastic pouches. In 1999-00 Nestle launched its UHT milk. Amul too re-launched its Amul Taaza brand of UHT milk. The UHT milk market is expected to grow at a rate of more than 10-12% in coming yearsEXPORT POTENTIALIndia has the potential to become one of the leading players in milk and milk product exports. Location advantage: India is located amidst major milk deficit countries in Asia and Africa. Major importers of milk and milk products are Bangladesh, China, Hong Kong, Singapore, Thailand, Malaysia, Philippines, Japan, UAE, Oman and other gulf countries, all located close to India.LOW COST OF PRODUCTION:Milk production is scale insensitive and labor intensive. Due to low labor cost, cost of production of milk is significantly lower in India. Concerns in export competitiveness are.QUALITY:Significant investment has to be made in milk procurement, equipments, chilling and refrigeration facilities. Also, training has to be imparted to improve the quality to bring it up to international standards.PRODUCTIVITY:To have an exportable surplus in the long-term and also to maintain cost competitiveness, it is imperative to improve productivity of Indian cattle. There is a vast market for the export of traditional milk products such as ghee, panzer, shrikhand, rasgolas and other ethnic sweets to the large number of Indians scattered all over the world.

SWOT ANALYSISStrengthWeaknessLargest milk producer in the worldA huge base of around 11 million farmersTraditional emphasis on consumption

Poor feeding practices Poor access to institutional creditLack of cold storage facilities

OpportunityThreatElastic demand; economic growth will spur demand Increasing preference for branded dairy productsGrowing focus on health and nutrients in urban market

Nearly 80 per cent of the Indian dairy industry is unorganized Removal of import duty has led to the threat of dumping

INDIA'S EXPORTS OF MILK PRODUCTSDescription(Quantity, M T.: Value, Rs. Million)1995-961996-971997-98

QuantityValueQuantityValueQuantityValueSkimmed milk powder4,638.623,35.32282.7019.645.000.375Milk and Milk Food for babies8.272.019111.374.2711.002.02Milk cream332.2328.041.000.084--Sweetened condensed milk41.732.849.220.9760.397.22Whey78.463.7511.501.016.000.342Ghee/Butter/Butter oil7,895.08431.1299.9719.24,352.082,38.95Cheese(a) Fresh0.100.013----(b) Processed5.671.202.10.37522.102.19(c) Other66.648.3536.780.6924.844.55TOTAL-8,72.7-52.4-2,55.6KEY FACTS65 per cent of the milk is sold in loose formOnly 5 per cent of the milk is sold through retail chains70 per cent is delivered to the homes by milk agentsCarton milk or packaged milk has been growing at 24 per cent annually Most branded FMCG companies are keen on launching flavoured dairy products whose market size is pegged at US$ 166 millionCRITICAL ISSUES

Key success factorsBusiness concernsDemand driversLiquid milkSourcing Distribution

Financial distress of co-operatives

Packaging in smaller units

Packaged milkTechnology

Small market size

ConvenienceHealth concerns

Milk productsBrandingRefrigeration

Inadequate infrastructure

Increase in per capita income

Infant milEducationMarketing

Poor penetration

Changing food habits

REGULATORY CHANGESDairy sector was de-licensed in 1991No industrial license is required fro dairy industryForeign equity participation permitted to the extent of 51 per cent in dairy processing sectorExcise duty on dairy machinery has been fully waived off

KEY LEGISLATIONS:Milk and Milk Products Order 1992: With following controls Collection areas/milk sheds specified Processing capacity fixedRevised MMPO in 2002: Controls stand withdrawnThe production, distribution and supply of milk products are controlled by the Milk and Milk Products Order, 1992. The order sets sanitary requirements for dairies, machinery, and premises, and includes quality control, certification, packing, marking and labeling standards for milk and milk products. The Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992 and Rules 1993

COMPANY PROFILEJERSEY CREAMLINE DAIRY PRODUCTS LTD:it is customer centric private dairy employing modern machinery and applying advanced technologies. It constantly endeavors to give its customers the best products by way of continuous research and innovation.Creamline, an ISO 22000 accredited dairy, is a leading manufacturer & supplier of milk and milk products in Southern India spanning across Andhra Pradesh, Tamilnadu, Karnataka and with a foothold at Nagpur in Central India. It operates its milk procurement, milk and milk products processing and distribution through Strategic Business Units (SBUs). Its milk and dairy products are sold under the popular brand name JERSEY. Since inception, the company has been growing consistently under the visionary leadership of promoter directors, business acumen of operational heads and unrelenting efforts of committed workforce.The Company entered into strategic partnership with M/s. Godrej Agrovet Limited, the largest animal feed manufacturing company in the country, in the Year 2005 by offering equity stake of to strengthen its backward integration with farmers, the primary producers of milk, for compound feed supply. The Company is open to strategic business tie-ups at national and international level and is looking at export opportunities to its products. The workforce of the company is composed of a balanced mixture of technocrats, dairy engineers, production and quality specialists besides the dedicated top-notch management team overseeing the entire corporate functioning.The Company has excellent infrastructure with 30 own and 9 associate milk chilling centers, 40 BMCUs, 7 packing stations, 6 sales offices and 1 state of the art powder plant/SBU at Ongole. It has a combined milk processing capacity of 6.85 lakh liters per day. The company markets its products through a well laid distribution network comprising of company owned parlors, exclusive franchise outlets, product push carts. Besides, the company also sells its products through 5000 agents panning across Southern India and Maharashtra. The company has entered the market of cultured products like Yoghurt, Curd, Lassi and Buttermilk in 2005 and within a short span made its mark in the dairy market.Since its incorporation in the year 1986, the company has successfully applied many innovative practices like 24 hour parlors with unemployed youth in 1993, mobile milk testing labs in 1998 etc. The company is now planning to expand its operations to Central India by setting up new Processing & Packaging Units.Jersey has become a household name for dairy products and continues to create consumers delight to perfection. Continued support and encouragement of customers including households, prestigious defense establishments, railways, educational institutions, IT Companies, star hotels, and hospitals in ever increasing numbers stand testimony to our superior quality products.

COMPANY PRODUCTSMILKMilk is regarded as the most nearly perfect single food stuff. Today, milk is the most important single item of human diet, as it is beneficial at all stages of human growth literally from cradle to grave due to its high nutritive value. Importance of milk in diet is mainly due to its contribution of high quality protein, its exceptional richness in Calcium and its general supply of pre-formed Vitamin A and of riboflavin and other members of B2 complex.Customer priority comes first to us always. Currently, we process and supply the following range of milk.MILK PRODUCTSCURD: JERSEY curd is prepared with fresh quality milk under the influence of lactic acid bacteria at around 40oC. The milk, inoculated with bacterial culture, is hygienically packed in clean food grade plastic cups and sealed by an automated packing machine prior to incubation. After curd achieved the desirable properties, it is kept at chilled temperature until delivered to customer. JERSEY curd is a fresh, safe, hygienic and tasty product which has all nutritious goodness of milk.JERSEY CURD is available in quantities of 100 g, 200 g, and 500 g with a shelf life of 7 days at chilled storage conditionsBUTTERMILKThis is an inseparable part of traditional South Indian meal since ages. It is made from fresh pasteurized standardized milk curd that contains lactic acid bacteria, diluted along with required amount of spices extracts and salt for added taste. Jeera powder added for our Jeera flavored Butter Milk.JERSEY BUTTER MILK is available in two flavors. Regular flavor is available in 200 ml sachet and Jeera flavor is available in 200 ml plastic container. The products have a shelf life of 5 days.LASSI: Sweetened Lassi is also the most popular cultured milk beverage. It is prepared using fresh pasteurized standardized milk curd. Sugar is added and homogenized to give excellent mouth feel. Lassi contains appreciable amounts of milk proteins and phospholipids.FLAVORED MILKIs made from sterilized double toned milk which consists of 1.5% fat and 9.0% SNF. It is available in different flavors such as badam, strawberry, banana and chocolate. The sugar is also added to enhance the taste.JERSEY flavored milk is available in glass bottles of 200 ml and has a shelf life of 6 months.GHEE:This is very popular milk product and is widely consumed with regular meals. It has unique pleasant flavor and grainy texture. Ghee is pure clarified butter fat with negligible moisture content. Ghee has high nutritive value with fat-soluble vitamins (A, D, E & K). It is widely used for shallow and deep-frying of food. Countless Indian sweetmeats based with cereals, milk solids, fruits and vegetables are cooked in ghee.JERSEY GHEE is available in 200 g, 500 g, and 1 L packs and has a shelf life of 3 months. Bulk quantity also available in 15kg tins.Our Ghee also has AGMARK certification.COOKING BUTTER:This is the butter obtained from cream without any additives like salt, colouring or flavoring agents. It is concentrated form of milk fat. It contains more than 82% milk fat, 1.5% curd and 16% moisture. It is very high in fat which contains fat-soluble vitamins A, D, E and K.JERSEY COOKING BUTTER is available in 200 g, 500 g and 1 Kg poly packs. It has a shelf life of one month at deep freeze storage temperatures.Butter also available in bulk packs in 20 Kg carton form.PANEER: It is a healthy, protein-rich food. It is a pure coagulated milk product made from fresh milk of 6% fat and 9% SNF. Paneer is formed when milk is precipitated by adding sour milk, lactic acid or citric acid. It is the most common form of Indian cheese and is a high protein food. So, panzer is often substituted for meat in Indian vegetarian cuisine.Panzer is packed and sold in 200 g, 500 g and 1 Kg poly packs. It has a shelf life of 1 month.DOODH PEDALS: it is a desiccated sweetened product made from fresh milk and contains 45% milk solids and 35% sugar. It is slightly brownish white in colour and has coarse grainy structure. The product is hygienically packed. Doodhpeda is a nutritious product with delicious taste and having a shelf life of 7 days.BASUNDI:It is a popular milk delicacy served on special occasions. It is prepared from fresh milk with 6% Fat and 9% SNF. Milk is precipitated with a gentle heating continuously scooping out the skim and adding sugar. JERSEY Burundi is packed in attractive food grade plastic containers and has a shelf life of 7 days.ICE CREAMSThere are certain things in life that are sheer delight to the soul and add meaning to our existence. These go beyond the limits of age and are cherished and adored by everybody. Ice creams certainly are among those finer things in life. Ice cream is a power pack of nutrients. It is the most palatable source of milk proteins and a rich source of calcium, phosphorous and other minerals vital in building strong bones and teeth. Ice cream is also an excellent source of food energy. Having twice or three times the fat content of milk, and more than half its total solids being sugar (sucrose and lactose) the energy value of ice cream is very high. That makes ice cream a very desirable food for growing children and persons who need to put on weight.Jersey brand of exotic ice creams are made of fresh milk based fats and are brought to you by Creamline Dairy. A preferred choice of every connoisseur of fine taste, what really makes the difference is the processes that are adopted at Creamline to make our products endearing to everybody. Utmost care is taken to ensure the highest level of hygiene and superlative efforts are made to create the flavors which make you to coming back to Jersey again and again.Now that is the reason why we caution you eating Jersey Ice Cream can be addictive. Just try once and see for yourself.COMPANY FOOD SAFETY POLICYWe at CDPL are committed to provide safe and nutritious Milk & Milk products to our customers that comply with all the legal and regulatory requirements, by adopting good manufacturing practices and good hygiene practices.We are committed for continual improvement of our food safety management system, aiming at customer satisfaction & delight and endeavor to become a global player.To this effect we communicate, implement and maintain the requirements of the food safety throughout the food chain.COMPANY TAGLINEHealth- Fun-Excitement

COMPANY VISION, MISSION & VALUESVISIONTo emerge as a Leader in Dairy Foods with Global Presence through Business Excellence and ensuring Customer DelightMISSIONTo grow continuously, offering value added Dairy Products and gain customers confidence through Innovative PracticesVALUESWe act with a sense of pride adopting ethical practices and compassionate approachCOMPANY AWARDS AND REWARDSWon best vendor in hospitality sector award by Taj group in 2004.Accredited with ISO 9001 certification in 2002.Won best entrepreneur of the year 2001 award from Hyderabad management association.Entered in to strategic partnership with Godrej Agrovet limited.

BOARD OF DIRECTORSCDPL has the advantage of being run by industry professionals since incorporation in the year 1986. It is first generation entrepreneurial companyManaging Director Mr. K. Bhasker Reddy,Director Finance Mr. M. Gangadhar,Director Technical Mr. D. Chandrasekhar Reddy,Executive Director Mr. C. BalrajGoud and Mr. SrinathShettkar.

The members have substantial experience in their respective fields such as Dairy Technology, Finance, Marketing and HR & Administration.

MAJOR COMPETITORS

Vijaya milk dairyDodla milk dairyHeritage milk productsTirumala milk products

RATIO ANALYSISINTRODUCTIONFinancial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and profit and loss account. Management should be particularly interested in knowing financial strengths and weaknesses of the firm to their their suitable corrective actions.Financial analysis is the starting point for marking plans, before using any sophisticated forecasting and planning procedures.NATURE OF RATIO ANALYSIS:Ratio analysis is a powerful tool of financial analysis. A ratio is defined as The indicated quotient of mathematical expression and as the relationship between two or more things. A ratio is used as benchmark for evaluating the financial position and performance of firm. The relationship between two accounting figures, expressed mathematically, is known as a financial ratio. Ratios help to summaries large quantities of financial data and to make qualitative judgment about the firms financial performance.The persons interested in the analysis of financial statements can be grouped under three heads owners (or) investors who are desire primarily a basis for estimating earning capacity. Creditors who are concerned primarily with liquidity and ability to pay interest and redeem loan within a specified period. Management is interested in evolving analytical tools that will measure costs, efficiency, liquidity and profitability with a view to make intelligent decisions.STANDARDS OF COMPARISION:The ratio analysis involves comparisons for a useful interpretation of the financial statements. A single ratio in itself does not indicate favorable or unfavorable condition.It should be compared with some standard. Standards of comparison may consist of:PAST RATIOS: Ratios calculated from the past financial statements of the same firm.COMPETITIONS RATIOS:Ratios of some selected firms, especially the most progressive and successful competitor, at the same point of time.INDUSTRY RATIOS:The easiest way to evaluate the performance of a firm is to compare its present ratios with past ratios. When financial ratios over a period of time are compared, it is known as the series analysis or trend analysis.CROSS SECTIONAL ANALYSIS:Another way to comparison is to compare ratios of one firm with some selected firm in the industry at the same point in time. This kind of comparison is known as the cross-sectional analysis.INDUSTRY ANALYSIS: To determine the financial condition and performance of a firm, its ratio may be compared with average ratios of the industry of which the firm is a member. This type of analysis is known as Industry analysis.PROFORMA ANALYSIS:Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit & loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz., owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst.Trade creditors are interested in firms ability to meet claims over a very short period of time. Their analysis will, therefore, confine to the evaluation of the firms liquidity position.Suppliers of Long-Term Debt are concerned with the firms long term solvency and survival. They analyze the firms profitability over time, its ability to generate cash to be able to pay interest and repay Ratio analysis principal and the relationship between various sources of fund. Long term creditors do analyze the historical financial statements, but they place more emphasis on the firms projected or pro forma, financial statements to make analysis about its future solvency and profitability.Investors, who have invested their money in the firms shares, are most concerned about the firms that show steady growth in earnings. As such, they concentrate on the analysis of the firms present and future profitability. They also interested in the firms financial structure to the extent it influence the firms earnings ability and risk.Management of the firm would be interested in every aspect of the financial analysis. It is their overall responsibility to see that the resources of the firm are used most effectively, and the firms financial condition is sound.

UTILITY OF RATIO ANALYSIS:The ratio analysis is the most powerful tool of the financial analysis. As stated in the beginning, many diverse groups of people are interested in analyzing the financial information to indicate the operating and financial efficiency, and growth of the firm. These people use ratios to determine those financial characteristics of the firm in which they are interested. With the help of ratios, one can determine:The ability of the meet its current obligations.The extent to which the firm has used its long-term solvency by borrowings funds.The efficiency with which the is firm is utilizing its assets in generating sales revenue.The overall operating efficiency and performance of the firm.

Utility of Share holders/Investors:Utility to creditorsUtility to employeesUtility to GovernmentUses of Ratio Analysis:Ratio analysis is one of the most powerful tools of financial statements. Ratio analysis will be used to know the financial position in different purpose. Ratio analysis uses the some functions of Banks, institutions, investors, shareholders and management.

Managerial uses of Ratio Analysis:Helps in decision makingHelps in financial forecasting and planningHelps in communicatingHelps in coordinationHelps in controlLIMITATIONS OF RATIOS:The above discussion reveals that ratios are exceptionally useful tools. However, they should be used with extreme care as they suffer from certain serious drawbacks. Some of them are listed below.

False Results: Ratios are based upon the financial statements. Incase financial statements are incorrect or the data upon which ratios are based is incorrect, ratios calculated will also be false and defective. The accounting system itself suffers from many inherent weaknesses, so the ratios base upon it cannot be said to be always reliable.

Limited Comparability: The ratio of the one firm cannot always be compared with the performance of other firm, it uniform accounting policies are not adopted by them. The difference in the methods of calculation of stock or the methods used to record the depreciation on assets will not provide identical data, so they cannot be compared.

Price level changes affect ratios: The comparability of ratios suffers, if the price of the commodities in two different years is not the same change in price affects the cost of production, sales and also the value of assets. It means that the ratio will be meaningful for comparisons, if the prices do not change.

No single standard ratio: There is not a single standard ratio which can indicate the true performance of the business at all time and in all circumstances. Every form has to work in different situations and circumstances, so a particular ratio cannot be supposed to be standard for everyone. Strikes, lock-outs, floods, wars etc., materially affect the performance, so it cannot be matched with the circumstances in normal days.

Ignoring qualitative factors: Ratio analysis is the quantitative measurement of the performance of the business. It ignores the qualitative aspect of the firm, how so ever important it may be. It shows that ratio is only a one sided approach to measure the efficiency of the business.

CLASSIFICATION OF RATIOS:So many ratios, calculated from the accounting data can be grouped into various according to financial activity or function to be evaluated. The parties interested in financial analysis are short and long creditors, owners and management. Short-term creditors main interest is in the liquidity position or the short-term solvency of the firm. Long term creditors are interested in long-term solvency and profitability of the firm. Owners concentrate on the firms profitability and financial condition. Management is interested in evaluating every aspect of the firms performance. In view of the requirement of the various users of ratios, we may classify them into the following four important categories.LIQUIDITY RATIOS LEVERAGE RATIOSACTIVITY RATIOSPROFITABILITY RATIOS

LIQUDITY RATIOS:Liquidity ratios measure the ability of the firm to meet its obligations. Liquidity ratios help in establishing a relationship between cash and other current assets to current obligations to provide a quick measure of liquidity. A firm should ensure that it does not have excess liquidity. A very high degree of liquidity is also bad, idle assets earn nothing. The firms funds will be unnecessarily tied up in current assets. Therefore it is necessary to strike a proper balance between high liquidity.CURRENT RATIO QUICK RATIO CASH OR QUICK RATIO NET WORKING CAPITAL RATIO

LEVERAGE RATIOS:The short-term creditors, like bankers and suppliers of raw material, are more concerned with the firms current debt-paying ability. On the other hand, long-term creditors like debenture holders, financial institutions are more concerned with the firms long-term financial strength. To judge the long-term financial position of the firm, financial leverage, or capital structure, ratios are calculated. These ratios indicate mix of funds provided by owners and lenders. There should be an appropriate mix of dent and owners equity in financing the firms assets.The process of magnifying the share holders return though the use of debt is called financial leverage or financial gearing or trading on equity.Leverage ratios are calculated to measure the financial risk and the firms ability to using dent to share holders advantage. DEBT RATIODEBT EQUITY RATIOINTREST COVERAGE RATIOPROPRIETIRY RATIO

ACTIVITY RATIOS:Activity ratios are employed to evaluate the efficiency with which the firm manages and utilities its assets. These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales. Activity ratios thus involve a relationship between sales and assets. A proper balance between sales and assets generally reflects that assets are managed well. Activity ratios help to judge the effectiveness of asset utilizationINVENTORY TURNOVER RATIODEBTORS TURNOVER RATIOCOLLECTION PERIOD TOTAL ASSETS TURNOVER RATIONET ASSETS TURNOVER RATIO FIXED ASSETS TURNOVER RATIOCURRENT ASSETS TURNOVER RATIOWORKING CAPITAL TURNOVER RATIO

PROFITABILITY RATIOS:A company should earn profits to survive and grow over along period of time. Profits are essential but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits. Profit is the difference between revenues and expenses over a period of time. Profitability ratios are calculated to measure the operating efficiency of the company. Besides management of the company, creditors want to get interest and repayment of principal regularly. Generally, two major types of profitability ratios are calculated.GROSS PROFIT MARGINNET PROFIT MARGINOPERATING EXPENSES RATIORETURN ON INVESTMENTRETURN ON EQUITYEARNINGS PERSHAREDIVIDENDS PER SHAREDIVIDEND PAYOUT RATIO

LIQUIDITY RATIOS:1. CURRENT RATIO:The current ratio is an acceptable measure of the firms short term solvency. Current assets include cash within a year, such as marketable securities, debtors and inventories. Prepaid expenses are also included in current in current assets as they represent the payments that will not be made by the firm in the future. All the obligations maturing with in a year are included in current liabilities. Current liabilities included creditors, bill payable, accrued expenses, short-term bank loan, income-tax liability and long-term debt maturing in the current year.The current ratio is a measure of the firms short-term solvency. It indicates the availability of current assets in rupees for every one rupee of current liability. A current ratio of 2:1 is considered satisfactory. The higher the current ratio, the greater the margin of safety; the larger the amount of current assets in relation to current liabilities, the moreThe firms ability to meet its obligations. It is a crude-and-quick measure of the firms liquidity.Current ratio is calculated by dividing current assets and current liabilities.Current AssetsCurrent Ratio=Current Liabilities

2. QUICK RATIO:Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset, other assets which are considered to be relatively liquid assets, other assets which are considered to be relatively liquid and included in quick assets are debtors and receivables and marketable securities (temporary quoted investments) Inventories are considered to be less liquid. Inventories normally require some time for realizing into cash; their Value also has a tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities.Quick AssetsQuick Ratio=Quick liabilities

3. CASH RATIO: Since cash is the most liquid asset, a financial analyst may examine cash ratio and its equivalent current liabilities. Trade investment or marketable securities are equivalent of cash; therefore, they may be included in the computation of cash ratio.If the company carries a small amount of cash there is nothing to be worried about the lack of cash if cash if the company has reserves borrowing power. In India, firms have credit limits sanctioned from banks, and easily draw cash. Cash ratio is calculated as cash marketable securities divided by current liabilities.Cash+Marketable SecuritiesCash Ratio=Current liabilities

4. NETWORKING CAPITAL RATIO:The difference between the current assets and current liabilities excluding short-term bank borrowings is called networking capital or net current assets.

Net Working CapitalNet working capital ratio= Net Assets

Sometimes it is used to measure firms liquidity. If the firm is having NWC has the greater ability to meet its current obligations.

LEVERAGE RATIOS:1. DEBT RATIO:Several debt ratios may be used to analyze the long-term solvency of a firm. The firm may be interested in knowing the proportion of the interest-bearing debt (also called funded debt) in the capita structure. It may be, therefore, computer debt ratio Ratio analysis by dividing total debt by capital employed or net assets. Total debt will include short and long-term borrowings from financial institutions, debentures/bonds, deferred payment arrangements for buying capital equipments, bank borrowings, public deposits and any other interest bearing loan. Capital employed will include total debt and net worth.Total DebtDebt Ratio = Total Debt + Net worth

A high ratio means that claims of creditors are greater than those of owner. A high level of debt introduces inflexibility in the firms operations due to the increasing interference and pressure from creditors.2. DEBT EQUITY RATIO: Debt equity ratio indicates the relationship describing the lenders contribution for each rupee of the owners contribution is called debit-equity ratio. Debt equity ratio is directly computed by dividing total debt by net worth. Lower the debt-equity ratio higher the degree of protection. A debt ratio of 2:1 is considered ideal.Total DebtDebt-Equity Ratio=Net worth

3. INTEREST COVERAGE RATIO:This ratio is determined by debiting profit before interest charges. In this the lender will be interested in finding out whether the business would earn sufficient profit to pay the interest charges. Interest being paid periodically. EBITInterest Coverage Ratio= Interest

4. TOTAL LIABILITIES RATIO:Total liabilities ratio indicated the relationship between total assets and total liabilities. In this we know the wealth of the organization and satisfying the shareholders. Total liabilitiesTotal liabilities Ratio = Total Assets

ACTIVITY RATIOS:Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales. Activity ratios thus involve a relationship between sales and assets. A proper balance between sales and assets generally reflects that assets are managed well. Activity ratios help to judge the effectiveness of asset utilization.1. INVENTORY TURNOVER RATIO:Inventory turnover indicates the efficiency of the firm in producing and selling its product. It is calculated by dividing the cost of goods sold by the average inventory.2. DEBTORS OR ACCOUNTS RECEIVABLE TURNOVER RATIO:A firm sells goods for cash and credit. Credit is used as marketing tool by a number of companies. When the firm extends credits to its customers, debtors are created in the firms account. Debtors turnover indicates the number of times debtors turnover each year. The higher the value of debtors turnover, the more efficient is ht management of credit. Debtors turnover is found out by dividing credit sales by average debtors. Credit salesDebtors Turnover Ratio = Average debtors

3. COLLECTION PERIOD:The average number of days for which debtors remain outstanding is called period in other words its debtors remains outstanding for 12 months. The average collection period measures the quality of debtors since it indicates the speed of their collection.

DebtorsCollection Period = X 360Sales

4. NET ASSETS TURN OVER RATIO:Assets are used to generate sales therefore a firm should manage its assets efficiently to maximize sales. The relationship between sales and assets is called assets turnover. A firms ability to produce a large volume of sales for a given amount of net assets is the most important aspect of its operating performance. SalesNet Assets Turnover Ratio = Net Assets

5. TOTAL ASSETS TURNOVER RATIO:Some analysts like to compute the total assets turnover in addition to or instead of the net assets turnover. This ratio shows the firms ability in generating sales from all financial resources committed to total assets. SalesTotal Assets Turnover Ratio = Total Assets

6. FIXED ASSETS TURNOVER RATIO:SalesFixed Turnover Ratio= Fixed AssetsThe firm wishes to know its efficiency of utilizing fixed assets and current assets separately. The use of depreciated value of fixed assets in computing the fixed assets turnover may render comparison of firms performance over period or with other firms.

7. WORKING CAPITAL TURNOVER RATIO:A firm may also like to relate net current assets or net working capital to sales. Working capital turnover ratio indicates for one rupee of sales the company needs how many net current assets. This ratio indicates whether or not working capital has been effectively utilized in market sales. SalesWorking Capital Turnover Ratio = Net Current Assets

PROFITABILITY RATIOS:A company should earn profits to survive and over a long period of time. Profits are essential but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits. Profit is the difference between revenues and expenses over a period of time. Profitability ratios are calculated to measure the operating efficiency of the company. Besides management of the firm. Creditors want to get interest and repayment of principal regularly.Generally, two major types of profitability ratios are calculated:Profitability in relation to salesProfitability in relation to investment

1. GROSS PROFIT MARGIN:The first profitability ratio in relation to sales is the gross profit margin the gross profit margin reflects the efficiency with which management produces each unit of product. This ratio indicates the average speed between the cost of goods sold and the sales revenue. When we subtract the gross profit margin from 100percent, we obtain the ratio of cost of goods sold to sales. A high gross profit margin ratio is a sigh of good management. A gross margin ratio may increase due to any of the following factors: higher sales prices cost of goods sold remaining constant, lower cost of goods sold, sales prices remaining constant. A low gross profit margin may reflect higher cost of goods sold due to the firms inability to purchase raw materials at favorable terms. Inefficient utilization of plant and machinery, or over investment in plant and machinery, resulting in higher cost of due to fall in prices in the market.Sales-cost of goods soldGross profit margin = Sales

2. NET PROFIT MARGIN:Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. Net profit margin ratio establishes a relationship between net profit and sales and indicates managements efficiency in manufacturing, administering and selling the products. This ratio is the overall measure of the firms ability to turn each rupee sales into net profit.This ratio also indicates the firms capacity to withstand adverse economic conditions. A firm with a high net margin ratio would be in an advantageous position to survive in the face of falling selling price, rising cost of production or declining demand for the product.

Profit after tax Net profit margin = Sales

3. OPERATING EXPENSES RATIO:The operating expenses ratio explains the changes in the profit margin ratio. A higher operating expenses ratio is unfavorable factors, internal factors. The ratio is computed by dividing operating expenses by sales. Operating expenses=cost of goods sold plus selling expenses and general administrative expenses by sales. Operating ExpansesOperating Expenses Ratio = Sales

4. RETURN ON INVESTMENT:The term investment may refer to total assets or net assets. The fund employed in net assets is known as capital employed. Investment represent pool of a funds supplied by shareholders and lenders. Net assets equal net equal net fixed assets plus current assets amounts current liabilities excluding band loans. Alternatively, capital employed is equal to net worth plus total debt.The conventional approach of calculating return on investment is to divide profit after tax by investment. Where on net assets. RONA is equivalent of return on capital employed.EBITReturn on Investment = Capital employed

5. RETURN ON EQUITY (ROE):A return on shareholders equity is calculated to the profitability of owners investment. ROE indicates how well they have used the resources of owners. The ration is the most important relationships in financial analysis. The earning of satisfactory return is the most desirable objective of a business. The ratio of net profit to owners equity reflects the extent to which this objective has been accomplished. This ratio is great invested to the present as well as prospective shareholders and of great concern to management which has the responsibility of maximizing the owners welfare.

Profit after TaxesReturn of Equity =

Net worth

6. EARNING PER SHARE (EPS):The profitability of the common shareholders investment can also measure in many other ways. One measure is to calculate the earnings per share. Earnings per share indicate whether or not the firms earnings power on per share has increased or not. Earnings per share simply show the profitability of the firm on a per share basis. It does. Net reflect how much is paid as dividend and how much is retained in the business. But, as profitability index, it is valuable and widely used ratio. It also helps in estimating the companys capacity to pay dividend to its equity shareholders. It is calculated by dividing profit after taxes by the total number of shares outstanding. Profit after TaxEarning Per Share = Number of Shares

7. DIVIDENDS PER SHARE (DPS):The net profits after taxes belong to shareholders. But the income which they really receive is the amount of earnings distributed as cash dividends. A large number of present and potential investors may be interest in DPS, rather than EPS. Dividend per share is earnings distributed to ordinary shareholders dividend by the number of ordinary share outstanding. DividendDividend per Share = Number of shares

8. DIVIDEND PAYOUT RATIO:A firms dividend policy has the effect of dividing its earnings into two parts retained earnings and dividend. The retained earnings provide funds to finance the firms long term growth. It is the most significant source of financing a firms investment. Dividend policy of the firm has its effect on both the long term financing and the wealth of shareholders. Dividend per ShareDividend Payout Ratio = Earning Per Share

8. PRICE EARNINGS RATIO: Market Value per SharePrice Earnings Ratio = Earning Per Share The price earning ratio is widely used by security analysis to value the firms performance as expected by investors judgment or expectations about the firms performance. Management is also interest in this market appraisal of the firms performance and will take to find the cause if the P/E ratio declines. Price earnings ratio reflects investors expectations the growth in the firms earnings. Industries differ in their growth prospects.

RESEARCH METHODOLOGYData collection methodsPrimary dataInformation collected from company guide and finance manager of the company.Secondary dataCompany balance sheet and profit and loss account of the company.Sample sizeThe data of the companys profits and loss accounts, balance sheets is collected for 4 years.Data AnalysisThrough Ratio analysis simple percentages and different types of graphs are used.Financial management is responsible for maintain not only the credit storing of enterprise but also for generating the right amount of funds of the right time. It plays an extremely crucial role in the continuity and growth of a business. No business con is procured, established without adequate financial resources.Through the availability of finance is of great importance, securing the required finance from the right source is of prime concern. Improper management of capital leads not only to loss of profit but also the ultimate failure of the business. Financial management gas also viewed as an integral part of the over all management rather than as staff especially concerned with funds raising operations. In other words, financial management is directly concerned with the over all management of an enterprise and taking policy decisions relating to the line of business size of firm, type of equipment used, extent of debt, liquidity etc,.Which in turn determine the size of the profitability? Therefore, financial management assumes a greater significance in any industry.But by and large business under takings in India have not given due importance to financial management without any factual information on the financial management practices it is difficult to evolve norms for sound and efficient financial management. Hence there is a need for study of financial management practices in India.This study is based in the data collected from primary and secondary sources. Both qualitative and quantitative data relating to the working of company financial performance and other related aspects were collected from individual company thorough interview method.Tools and Techniques of analysis:The following tools and techniques of financial analysis are used as measures of judging the degree of efficiency of financial management. The figures of annual reports have been rounded off to two decimal places in crores of rupees. The analysis of data is carried out through financial ratio.

STATEMENT OF THE PROBLEMAnalyzing the financial statements is very important for an organization. So, my study is the Ratio analysis of Creamlline Diary Products company from 2009-2012. The study is done to find out whether the company is stable

OBJECTIVES OF THE STUDYTo analyze the financial performance of Creamlline Diary Products Company.For drawing conclusions regarding the liquidity position of a firm.To determine the long-term financial solvency of company though Ratio analysis.To analyze the effectiveness in the utilization of assets.To suggest any measures for improving the financial performance of the company.

NEED FOR THE STUDYFinancial forecasting is an integral part of financial planning. Forecasting uses past data to estimate the future financial requirements. Ratio analysis is a powerful tool of financial analysis. A ratio is used as a benchmark for evaluating the financial position and performance of the firm. Ratio helps to summarizes large quantities of financial data and to make qualitative judgment about the firms financial performance. With the help of ratios, one can determine.The ability of the firm to meet its current obligations.The extent to which the firms has used its long-term solvency by borrowing funds.The efficiency with the firm is utilizing its assets in generating sales revenue.The overall operating efficiency and performance of the form.

Analysis and interpretation of various accounting ratios gives a skilled and Experience analyst, a better understanding of the financial condition and performance of the firm. Thus ratio analysis can assist management in its basic function of forecasting, planning, coordination, control and communication.

LIMITATIONS OF THE STUDYThe study is based on the information providing by the organization in the form of various annual reports and it is not standard.The stuffy is based on only the balance sheets and profit and loss accounts of the company and it has its own limitations.Details analysis could not be carried for the project work because off limited time span. Ratio analysis only provides a glimpse of the past performance and forecasts for future may not be correct since several other factors like market conditions, management policies etc., affect the future operation.The ratio facilitates wholly quantitative analysis only. The qualitative factors which are so important for the successful functioning of the organization are completely ignored.Ration analysis suffers from the serious limitations of the statistical concepts such as determinations of standard for comparison.Ratio analysis helps in providing only a part of the information needed in the process of decision-making.

LIQUIDITY RATIOS:1. CURRENT RATIO:Current AssetsCurrent Ratio = Current liabilities The ratio between all current assets and all current liabilities; another way of expressing liquidity. It is a measure of the firms short-term solvency. It indicates the availability of current assets in rupee for every one rupee of current liability. A ratio of greater than one means that the firm has more current assets than current claims against them.

YearCurrent AssetsCurrent LiabilitiesCurrent Ratio201129741700960.4220122142031397911.5320136312238062890.782014116909110972081.07

Inference:The standard norm for ratio is 2:1. During the year 2011 the ratio is 0.423 and it has increased to 1.53 in 2012 and it is decreased to 0.78 in the year 2013 and it has increased to 1.06 in 2014. Though the ratio above was not standard. Current ratio above 1:1 is always considered healthy.2. CASH RATIO:The ratio between cash plus marketable securities and current liabilities.Cash and Bank BalancesCash Ratio = Current Liabilities

YearCash & Bank BalancesCurrent LiabilitiesCash Ratio20115470700960.0820121138721397910.8220132224328062890.28201452541010972080.48

Inference:The standard norm for ratio is 1:2. During the year 2011 the rati0 is 0.08 and it increased to 0.82 in 2012 and it is decreased to 0.28 in the year 2013 and again it increased to 0.48 in 2014. The above Ratio has been fluctuating continuously.

3. NET WORKING CAPITAL RATIO The difference between current assets and current liabilities excluding short-term bank borrowing is called net working capital or net current assets.Net Working CapitalNet working capital ratio=Net Assets

YearNet working CapitalNet assets Net working capital ratio201140355949160.432012744123457390.22201317506614226060.1220147188312444190.06

Inference:During the year 2011 the Net working capital ratio is Negative i.e., (0.43) and it increased to profit ratio of 0.22 in the year 2012 and again it has decrease to 0.12 in the year 2013 and it increased to profit ratio of 0.06 in the year 2014. The above ratio has been fluctuating continuously.

LEVERAGE RATIOS:4. DEBT RATIO:If the firm may be interested in knowing the proportion of the interest bearing debt in the capital structure.Total DebtDebt Ratio =Total Debt + Net worth

YearTotal Debt Total Debt + Net worthDebt ratio20110665000.002012802218580220.00420131168834 61945640.18820144672113123172800.379

Inference:During the year 2011 the ratio is 0.00 and it was increased to 0.04 in the year 2012 and again it increased to 0.18 in the year 2013 and again it increased to 0.38 in the year 2014. The ratio has gradually increased year by year. So ratio is satisfactory.

5. DEBT EQUITY RATIO:Shows the ratio between capital by the owners and the funds provided by the lenders.Total DebtDebt-Equity Ratio=Net worth

YearTotal Debt Total Debt + Net worthDebt ratio20110605000.002012802218500000.0042013116883450257300.2322014467211346451670.611

Inference:The standard norm for ratio is 2:1. During the year 2012 the ratio is 0.004 and it increased to 0.23 in the year 2013 and it again increased to 0.61 in the year 2014. The ratio above is not standard. So the ratio is not satisfactory.

6. INTEREST COVERAGE RATIO:The ratio shows the number of times the interest charges are covered by funds that are ordinary available for their payment. EBITInterest Coverage Ratio= Interest

YearEBITInterestInterest coverage ratio201135650163218.172012300437454786.612013255936411070423.12201435684677654446.62Inference:During the year 2011 the Interest coverage ratio was Negative i.e., (218.17) but it improved to (6.61) in 2012 and again it fell to (23.12) in the tear 2013 and it further fell to (46.62) in the year 2014. This ratio was Negative in all the years. So the ratio is not satisfactory.

7. TOTAL LIABILITIES RATIO: Total liabilities ratio indicated the relationship between total assets and total liabilities. In this we know the wealth of the organization and satisfying the shareholders. Total liabilitiesTotal liabilities Ratio = Total Assets

Total liabilities: Current liabilities+ Secured and unsecured loans.Total assets: Fixed assets+ Investment+ Current assets.YearTotal liabilitiesTotal assetsTotal liabilities ratio201170096949160.74201214781316616590.082013197512341054850.48201457693217693310.80

Inference:During the year 2011 the ratio is 0.74 and it decreased to 0.08 in the year 2012 and it increased to 0.48 in the year 2013 and again it increased to 0.80 in the year 2014. This ratio has seen fluctuations.

8. PROPRITORY RATIO:It shows the difference between share holders funds to total tangible funds. Share holders fundProprietary Ratio = Total Tangible assets

YearShare holders fundTotal tangible assetsProprietary Ratio201160500590161.02201218500005567633.46201350257306825107.362014764516769067110.69

Inference:During the year 2011 the ratio is 1.03 and it increased to 33.46 in the year 2012 and again it decreased to 7.36 in the year 2013 and again increased to 110.69 in the year 2014.

ACTIVITY RATIO:9. FIXED ASSETS TURNOVER RATIO:The firm may wish to know its efficiency of utilizing fixed assets and current assets separately. The use of depreciated value of fixed assets in computing the fixed assets turnover may render comparison of firms performance over period or with other firms. SalesFixed Turn over Ratio = Net Fixed Assets

YearSalesFixed AssetsRatio201106517502012200561315360.15220133078587913830.389201419019447532825.24

Inference:During the ratio year 2011 the ratio is 0 and it increased to 0.15 in the year 2012 and it increased to 0.39 in the year 2013 and it increased to 25.24 in the year 2014. The above ratio has been increasing continuously.

10. CURRENT ASSESTS TURNOVER RATIO:Current assets turnover ratio shows the ratio between the current assets to sales. SalesCurrent Assets Turn Over Ratio = Current Assets

YearSalesCurrent AssetsRatio20110297410.002012200562142030.09320133078586312230.4872014190194411690911.626

Inference:During the year 2012 the ratio is 0.09 and it increased to 0.49 in the year 2013 and again it increased to 1.63 in the year 2014. The ratio was gradually increasing.

11. TOTAL ASSETS TURNOVER RATIO:Some analysts like to compute the total assets turnover in addition to or instead of the net assets turnover. This ratio shows the firms ability in generating sales from all financial resources committed to total assets. SalesTotal Assets Turnover Ratio = Total Assets

YearSalesTotal AssetsRatio20110949160.0020122005616616590.012201330785841054850.0742014190194471693310.265

Inference: During the year 2012 the ratio was 0.012 and it increased to 0.07 in the year 2013 and again it increased to 0.26 in the year 2014. The ratio has increasing year-by-year.

12. WORKING CAPITAL TURNOVER RATIO:A firm may also like to relate net current assets or net working capital to sales. Working capital turnover indicates for one rupee of sales the company needs how many net current assets. This ratio indicates where or not working capital has been effectively utilized market sales. SalesWorking capital Turn over Ratio = Net Current Assets

YearSalesWorking capitalRatio20110403550.00201220056744120.26920133078581750661.754201419019447188326.45

Inference:During the year the 2011 the ratio is 0 and it was increased to 0.27 in the year 2012 and it decreased to a negative ratio of 1.76 in the year 2013 and it increased to 26.45 in the year 2014. The above ratio was fluctuating.

13. NET ASSETS TURN OVER RATIO:Assets are used to generate sales therefore a firm should manage its assets efficiently to maximize sales. The relationship between sales and assets is called assets turnover. A firms ability to produce a large volume of sales for a given amount of net assets is the most important aspect of its operating performance. SalesNet Assets Turnover Ratio = Net Assets

YearSalesNet AssetsRatio20110949160.002012200563457390.058201330785814226060.2162014190194412444191.528

Inference:During the year 2012 the ratio is 0.06 and it increased to 0.22 in the year 2013 and again it increased to 1.53 in the year 2014. This ratio is increasing steadily year-by-year.

14. CAPITAL TURNOVER RATIO:The ratio obtains by dividing sales with the capital employed. SalesCapital Turn over Ratio =Capital employed

YearSalesCapital employedRatio20110605000.0020122005618580220.010201330785861945640.04920141901944123172800.154

Inference:During the year 2011 the ratio was 0 and it increase to 0.01 in the year 2012 and again it increased to 0.05 in 2013 and it increased to 0.15 in the year 2014. This ratio is increasing steadily year-by-year.

PROFITABILITY RATIO:15. RETURN ON INVESTMENT:The conventional approach of calculated ROI to divide to PAT by investment. EBITReturn on investment =Capital employed

YearSalesCapital employedRatio20113565060500-0.75420123004731858022-0.161201325593646194564-0.4132014356846712317280-0.289

Inference:During the year 2011 the Return on investment was negative 0.75 and it improved to 0.16 in the year 2012 and again it fall to 0.41 in the year 2013 and increased to 0.29 in the year 2014. This ratio was negative in all the years.

16. RETURN ON EQUITY RATIO:Determines the rate of return on your investment in the business. As an owner or shareholder this is one of the most important ratios as it shows the hard fact about the business are you making enough of a profit to compensate you for the risk of being in business EBITReturn on investment =Capital employedRatio Analysis

BES Group of Institutions (GVIC), Angallu 18

YearSalesNet worthRatio (%)2011356506050058.97%2012300473185800016.24%20132559371502573050.92%20143568467764516746.67%

Inference: During the year 2011 the ratio is 58.97% and it improved to 16.24% in the year 2012 and again it fall to 50.92% in the year 2013 and it improved to 46.67% in the year 2014. This ratio was fluctuating. This ratio was negative in all the years.

17. EARNING PER SHARE RATIO:The profitability of the common shareholders investment can also be measured in many other ways. One measure is to calculate the earning per share. Earning per share indicates whether or not the firms earnings power on per share basis. It also helps in estimating the companys capacity to pay dividend to its equity shareholders.Profit after TaxEarnings per Share =Number of Shares

YearSalesNet worthRatio (%)20113568000050000713.6020123004740001850000001.624201325593710004685000005.462201435684670007020000005.083

Inference:During the year 2011 the earning per share ratio was negative i.e., 713.6 and it was improved to 1.62 in the year 2012 and again it was fell it 5.46 in the year 2013 and it was improved to 5.08 in the year 2014. This ratio was negative in all the years.

FINDINGSNet working capital ratio was negative in the year 2011 and 2014 i.e., 0.43 and 0.12 because current liabilities are more than the current assets.Interest coverage ratio was negative in all the years.The proprietary ratio was very high during the year 2014 i.e., 110.69. Because of total tangible assets was reduced more in that year.Fixed assets Turnover Ratio was very high in the year 2014 i.e., 25.24 because the fixed assets was reduced more in 2014.Working capital turnover ratio was negative in the year 2013 i.e., 1.75 because current liabilities are more than current assets.Return on investment ratio was better in 2012 ie.0.16 in compared with all the years.Return on Equity ratio was better in 2012 i.e. (16.24%) in compared with all the years.Earnings per share Ratio was negative in all the years.Cash Ratio is get very low. Because the company is failed in keeping sufficient cash and bank balances and marketable securities.

SUGGESTIONSThe Liquidity position of the company is low. It is advised that, the company has to improve its liquidity position.The company should increase its coverage ratio to serve long term debts.As there is decreased in Fixed assets it is advised that the company must take proper steps to utilize its assets in an optimum manner.Return on investments is fluctuates every year. The company has to make efforts in increasing return on investment by reducing its administration and other expenses.The company has to increase the profit maximization. By considering the profit maximization in the company the earning per share, investment and working capital also increases. Hence, the investors will be invested to invest.The company should maintain cash and Bank balances. They should invest the idle cash in Marketable securities or short term investments in shares, debentures, bonds and other securities.

CONCULSIONAfter undertaking the study the financial performance of the company during the year 2009-2012. It is observed that most of the parameters are according to the company average and the study is concluded with the observations that more care should be taken in utilizing the companys assets and also by searching the break-even at the earliest which will make the organization financially much more stable in the long run.

BIBLIOGRAPHYFINANCIAL MANAGEMENT by I.M. Pandey, Vikas Publishing House Pvt. Ltd., New Delhi, 9th Edition.

FINANCIAL MANAGEMENT by M.Y. Khan & P.K.Jain, Tata Mc Graw-Hill Publishing Company Ltd., New Delhi. 5th Edition.

FINANCIAL ACCOUNTING & ANALYSIS by S.P. Jain & K.L. Narang, Kalyani Publishers, Ludhiana.

FUNDAMENTALS OF FINANCIAL MANAGEMENT by Prasanna Chandra, Tata Mc Graw-Hill Publishing Company Ltd., New Delhi.