PROJECT ENTITLED ONRATIO ANALYSIS OF JAY ENTERPRISES
INDEX
ChapterContents Page No.
Chapter 1 Company Profile,
Chapter 2 Research methodology, Objectives of the study, Scope
Of The Study, Type And Source Of Data, Limitations, Tools Of
Analysis- Ratio Analysis, Graphical Analysis
Chapter 3 Theoretical Background,
Chapter 4 Analysis and Interpretation,
Chapter 5 Findings, Suggestions and Conclusion
EXECUTIVE SUMMARYProject title: Financial AnalysisCompany: Jay
Enterprises. Jay enterprise is an engineering firm established in
2007. It is into manufacturing of precision auto components.
Financial analysis which is the topic of this project refers to
an assessment of the viability, stability and profitability of the
business. These financial reports are made with using the
information taken from financial statements of the firm and it is
based on the significant tools of ratio analysis and capital
budgeting. These reports are usually presented to top management as
one of their basis in making crucial business decisions.
During the summer training at Jay Enterprises, I had close
connection with preparation of financial ratios and capital
budgeting which was made with the help of professionals in the
accounting team of the company. This experience was an emphasis on
the importance of these tools of ratios and capital budgeting which
could be the roots of decisions made by management. In this project
I have studied about what all financial information is to be
submitted to the Company so as to assure the Companyer that the
firm needs credit facility and has enough funds and future
projected profits to repay the borrowed amount after the stipulated
time.
So, I was influenced to allocate the aim of this project to
study the details about these ratios and tools of capital budgeting
and their possible effects on the decisions made by not only people
inside the company but also the outsiders such as investors.
Research framework: This study is based on the data about Jay
Enterprises, Pune MIDC for a detailed study of its financial
statements, documents and system ratios and finally to recognize
and determine the position of the company.
Types of data which helped to prepare this report:1. First type
is the primary data which was collected personally to be used and
studied to prepare and reach the objectives already mentioned.2.
The secondary data which was already prepared so these data was
only used to reach the aims and objectives of this project. These
data has been collected from the financial reports of the company
already available. (Please refer annexure).
How the data was collected: The sources of collecting the
primary data was through interviews, observation and questionnaire,
however the secondary one was collected from the financial
statements already available.
CHAPTER 1COMPANY PROFILE
CHAPTER 1COMPANY PROFILE
Promoters and Company ProfileName of Proprietor : Mr. Jayesh
Arjun GaikeName of unit: JAY EnterprisesAddress: Plot no. A-73,
Five Star Industrial Area, Pune MIDCNature of business:
Manufacturing Precision Automobile Components, Spare Parts, Special
Purpose Tools, Engineering Job Works, Etc.Education Qualification:
B.E. (Mechanical), Pune
Competence of promoter: Proprietor has experience of more than 5
years in the field of related activities and job work. He is also
having good relationship in industries.Constitution: Proprietary
concernRegistered office: Parth House, Plot No. 64,Vidya Nagar,
Pune, MIDC.Experience of proprietor and technical feasibility of
project:-Rapidly advancing technology and pressure of social
factors, added to highly competitive and rapidly changing
industrial environment, has created a situation in which the
success of an enterprise and possibly its survival, depends to an
increasing extent of the knowledge, skill and experience of
promoters, consequently any description of successful management
practice, particularly involving the application of specialized
techniques is useful and welcome.The proprietor is technically
qualified i.e. bachelor of Engineering in Mechanical. The
proprietor has passed B.E. in 2000 from Dr. Babasaheb Ambedkar
Marathwada, University. Thereafter proprietor worked with Shamraj
Engineering Works, as design engineer for 5 years. His father Arjun
Gaike is in this business from last 25 years and the business is
running in profits with good reputation in market. Proprietor has
the required experience to sustain in the cut throat market and
well in touch with the market trends which will beneficial for the
growth and prosperity.JAY Enterprises is an engineering company
established its business in 2007 and the firm is employing in all
15 employees. Out of which 10 are skilled workers, 5 are unskilled
worker, 2 are supervisors, 1 is an accountant and 1 is staff
manager. The following activities are carried out by the firm:
manufacturing automobile components, spare pats, special purpose
tools/machinery, engineering job work, etc. the firm is upgrading
technology for which it wants the finance in form of term loan for
fixed assets and cash credit for its working capital.
The expected growth in the production after purchase and
installation will be as follows:ITEMMONTHLY QTY.
Pin cum follower12000
Governor bell6000
Rocker fulcrum-0387200
Rocker fulcrum-0267200
Flange lube oil filter7200
Starter plate6000
CHAPTER 2 RESEARCH METHODOLOGY
CHAPTER 2 RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY:1. To study the steps involved in
project formulation for analysis.2. The second objective, however
the most important one or in other word the principle aim of this
project is the understanding and assessment of financial ratios
based on the statements of the company.3. Through profitability
ratios understand the profitability position of the firm.4. To find
out the utility of financial ratio in credit analysis and
determining the Internal Rate of Return, Payback Period, Net
Present Value and financial capability of the firm. 5. The aim of
the project is to recognize the position of the company through
ratios and data available. This recognition is a leading factor in
changes of each and every company and the base and root of lots of
management decisions.
SCOPE OF STUDY IS LIMITED TO THE 5 FINANCIAL YEARS I.E.1.
2008-2009 and 2. 2009-2010,3. 2010-2011,4. 2011-2012,5.
2012-2013.
TYPE AND SOURCE OF DATA, Sources of data:Two types of data1.
Primary2. SecondaryPrimary data:In primary data collection, the
information and data has been collected through questions raised to
the Company personnel during the visit followed by asking question
from the Company staff regarding procedure for giving business loan
and enhancing knowledge about the repayment procedureSecondary
data:Secondary data is taken by the researcher from secondary
source internal and external the researcher must thoroughly search
secondary data sources before commissioning any effort for
collecting primary dataInternal data from within the
organisationExternal data from outside the organisationThe
secondary data were collected from the brochure of the Company, the
boards with the information displayed in the Company premises and,
from the Company we
LIMITATIONS OF THE STUDY1. Data used is acquired from secondary
resources; hence has certain limitations.2. Confidential data is
not provided and allowed to use. 3. Time constraint- time duration
given is limited. So, detailed analysis is not possible.4.
Financial data shows position of the company on a particular date
only.
TOOLS OF ANALYSIS- RATIO ANALYSIS, GRAPHICAL ANALYSIS
Financial statement analysis:Financial analysis could be
processed in many different ways, depending on what we want to
achieve. Financial analysis can be used as just a monitoring
tooling the selection of stocks in the secondary market. Or it can
be used as a forecasting tool for future financial conditions and
results. It may be used for evaluation and diagnosis of managerial,
operating or other problem areas. Furthermore, financial analysis
is a great and accurate base to rely which reduces the guessing and
uncertainty that presents in all decision making situations.
Financial analysis does not lessen the need for judgment but rather
establishes a sound and systematic basis for its rational
application.Who uses these analyses:Financial statements are used
and analyzed by a different group of parties, these groups consists
of people both inside and outside a business. Generally, these
users are:A. Internal Users: are owners, managers, employees and
other parties who are directly connected with a company:
1.Owners and managers require financial statements to make
important business decisions that affect its continued operations.
Financial analysis is then performed on these statements to provide
management with more detailed information. These statements are
also used as part of management's report to its stockholders, and
it form part of the Annual Report of the company.
2. Employees also need these reports in making collective
bargaining agreements with the management, in the case of labor
unions or for individuals in discussing their compensation,
promotion and rankings.
B. External Users: are potential investors, Company, government
agencies and other parties who are outside the business but need
financial information about the business for numbers of
reasons.
1. Prospective investors make use of financial statements to
assess the viability of investing in a business. Financial analyses
are often used by investors and is prepared by professionals
(financial analysts), thus providing them with the basis in making
investment decisions.
2. Financial institutions (Company and other lending companies)
use them to decide whether to give a company with fresh loans or
extend debt securities (such as a long-term Company loan).
3. Government entities (tax authorities) need financial
statements to ascertain the propriety and accuracy of taxes and
duties paid by a company.
4. Media and the general public are also interested in financial
statements of some companies for a variety of reasons.
Financial Ratio analysisRatio analysis is such a significant
technique for financial analysis. It indicates relation of two
mathematical expressions and the relationship between two or more
things.
Financial ratio is a ratio of selected values on an enterprise's
financial statement. There are many standard ratios used to
evaluate the overall financial condition of a corporation or other
organization. Financial ratios are used by managers within a firm,
by current and potential stockholders of a firm, and by a firms
creditor. Financial analysts use financial ratios to compare the
strengths and weaknesses in various companies.
Values used in calculating financial ratios are taken from
balance sheet, income statement and the cash flow of company,
besides Ratios are always expressed as a decimal values, such as
0.10, or the equivalent percent value, such as 10%.
Essence of ratio analysis:Financial ratio analysis helps us to
understand how profitable a business is, if it has enough money to
pay debts and we can even tell whether its shareholders could be
happy or not.
Financial ratios allow for comparisons: 1. between companies 2.
between industries 3. between different time periods for one
company 4. between a single company and its industry average
To evaluate the performance of one firm, its current ratios will
be compared with its past ratios. When financial ratios over a
period of time are compared, it is called time series or trend
analysis. It gives an indication of changes and reflects whether
the firms financial performance has improved or deteriorated or
remained the same over that period of time. It is not the changes
that has to be determined, but more importantly it must be
recognized that why those ratios have changed. Because those
changes might be result of changes in the accounting polices
without material change in the firms performances.Another method is
to compare ratios of one firm with another firm in the same
industry at the same point in time. This comparison is known as the
cross sectional analysis. It might be more useful to select some
competitors which have similar operations and compare their ratios
with the firms. This comparison shows the relative financial
position and performance of the firm. Since it is so easy to find
the financial statements of similar firms through publications or
medias this type of analysis can be performed so easily.
To determine the financial condition and performance of a firm,
its ratios may be compared with average ratios of the industry to
which the firm belongs. This method is known as the industry
analysis that helps to ascertain the financial standing and
capability of the firm in the industry to which it belongs.
Industry ratios are important standards in view of the fact that
each industry has its own characteristics, which influence the
financial and operating relationships. But there are certain
practical difficulties for this method. First finding average
ratios for the industries is such a headache and difficult. Second,
industries include companies of weak and strong so the averages
include them also. Sometimes spread may be so wide that the average
may be little utility. Third, the average may be meaningless and
the comparison not possible if the firms with in the same industry
widely differ in their accounting policies and practices. What does
ratio analysis tell us?After such a discussion and mentioning that
these ratios are one of the most important tools that is used in
finance and that almost every business does and calculate these
ratios, it is logical to express that how come these calculations
are of no importance.
What are the points that those ratios put light on them? And how
can these numbers help us in performing the task of management?
The answer to these questions is: We can use ratio analysis to
tell us whether the business 1. is profitable 2. has enough money
to pay its bills and debts3. could be paying its employees higher
wages, remuneration or so on4. is able to pay its taxes5. is using
its assets efficiently or not6. has a gearing problem or everything
is fine7. is a candidate for being bought by another company or
investor and more.
But as it is obvious there are many different aspects that these
ratios can demonstrate. So for using them first we have to decide
what we want to know, then we can decide which ratios we need and
then we must begin to calculate them.Which Ratio for whom:As before
mentioned there are varieties of people interested to know and read
these information and analyses, however different people for
different needs. And it is because each of these groups has
different type of questions that could be answered by a specific
number and ratio.
Therefore we can say there are different ratios for different
groups, these groups with the ratio that suits them is listed
below:1. Investors: these are people who already have shares in the
business or they are willing to be part of it. So they need to
determine whether they should buy shares in the business, hold on
to the shares they already have or sell the shares they already
own. They also want to assess the ability of the business to pay
dividends. As a result the Return on Capital Employed Ratio is the
one for this group.2. Lenders: This group consists of people who
have given loans to the company so they want to be sure that their
loans and also the interests will be paid and on the due time.
Gearing Ratios will suit this group. 3. Managers: managers might
need segmental and total information to see how they fit into the
overall picture of the company which they are ruling. And
Profitability Ratios can show them what they need to know.4.
Employees: the employees are always concerned about the ability of
the business to provide remuneration, retirement benefits and
employment opportunities for them, therefore these information must
be find out from the stability and profitability of their employers
who are responsible to provide the employees their need. Return on
Capital Employed Ratio is the measurement that can help them.5.
Suppliers and other trade creditors: businesses supplying goods and
materials to other businesses will definitely read their accounts
to see that they don't have problems, after all, any supplier wants
to know if his customers are going to pay them back and they will
study the Liquidity Ratio of the companies.6. Customers: are
interested to know the Profitability Ratio of the business with
which they are going to have a long term involvement and are
dependent on the continuance of presence of that.7. Governments and
their agencies: are concerned with the allocation of resources and,
the activities of businesses. To regulate the activities of them,
determine taxation policies and as the basis for national income
and similar statistics, they calculate the Profitability Ratio of
businesses.8. Local community: Financial statements may assist the
public by providing information about the trends and recent
developments in the prosperity of the business and the range of its
activities as they affect their area so they are interested in lots
of ratios.9. Financial analysts: they need to know various matters,
for example, the accounting concepts employed for inventories,
depreciation, bad debts and so on. Therefore they are interested in
possibly all the ratios.10. Researchers: researchers' demands cover
a very wide range of lines of enquiry ranging from detailed
statistical analysis of the income statement and balance sheet data
extending over many years to the qualitative analysis of the
wording of the statements depending on their nature of
research.
Classification of Ratios: A financial ratio can give a financial
analyst an excellent picture of a company's situation and the
trends that are developing. A ratio gains utility by comparison to
other data and standards.
Financial ratios quantify many aspects of a business and are an
integral part of financial statement analysis. Financial ratios are
categorized according to the financial aspect of the business which
the ratio measures. Although these categories are not fixed in all
over the world however there are almost the same, just with
different names:
1. Profitability ratios which use margin analysis and show the
return on sales and capital employed. 2. Rate of Return Ratio (ROR)
or Overall Profitability Ratio: The rate of return ratios are
thought to be the most important ratios by some accountants and
analysts. One reason why the rates of return ratios are so
important is that they are the ratios that we use to tell if the
managing director is doing their job properly.3. Liquidity ratios
measure the availability of cash to pay debt, which give a picture
of a company's short term financial situation.4. Solvency or
Gearing ratios measures the percentage of capital employed that is
financed by debt and long term finance. The higher the gearing, the
higher the dependence on borrowing and long term financing. The
lower the gearing ratio, the higher the dependence on equity
financing. Traditionally, the higher the level of gearing, the
higher the level of financial risk due to the increase volatility
of profits. It should be noted that the term Leverage is used in
some texts.5. Turn over Ratios: or activity group ratios indicate
efficiency of organization to various kinds of assets by converting
them to the form of sales.6. Investors ratios usually interested by
investors.
Liquidity Ratios:The two liquidity ratios, the current ratio and
the acid test ratio, are the most important ratios in almost the
whole of ratio analysis and also the simplest to use.
Liquidity ratios provide information about a firms ability to
meet its short- term financial obligations. They are particular
interest to those extending short term credit to the firm. Two
frequently-used liquidity ratios are current and quick ratio.
While liquidity ratios are most helpful for short-term
creditors/suppliers and Companies, they are also important to
financial managers who must meet obligations to suppliers of credit
and various government agencies. A company's ability to turn
short-term assets into cash to cover debts is of the utmost
importance when creditors are seeking payment. Company analysts and
mortgage originators frequently use theliquidity ratios to
determinewhether a company will be able to continue as a going
concern. A complete liquidity ratio analysis can help uncover
weaknesses in the financial position of the business. Generally,
the higher the value of the ratio, thelarger the margin of
safetythatthe company possesses to cover short-term debts.
CHAPTER 3THEORETICAL BACKGROUND
CHAPTER 3THEORETICAL BACKGROUND
Financial statementsDefinition:Financial statements (or
financial reports) are formal records of a business' financial
activities. These statements provide an overview of a business'
profitability and financial condition in both short and long
term.
There are three basic financial statements: Balance sheet: also
referred to as statement of financial position. It is a statement
of the book value of all of the assets and liabilities (including
equity) of a business at a particular date. A balance sheet is
often described as a "snapshot" of the company's financial
condition on a given date.Income statement also called a Profit and
Loss Statement (P&L), is a financial statement that reports a
company's results of operations over a period of time for companies
that indicates how revenue (money received from the sale of
products and services before expenses are taken out) is transformed
into net income (the result after all revenues and expenses have
been accounted for).The purpose of the income statement is to show
managers and investors whether the company made or lost money
during the period being reported.Cash Flow statement: is a
statement, which measures inflows and outflows of cash on account
of any type of business activity. The cash flow statement also
explain reasons for such inflows and outflows of cash so it is a
report on a company's cash flow activities, particularly its
operating, investing and financing activities. Objective of the
statements: The objective of financial statements is to provide
information about the financial strength, The objective of
performance and changes in financial position of a company The
objective of company which is useful for a wide range of users in
making economic decisions.
CHAPTER 4ANALYSIS AND INTERPRETATION
CHAPTER 4ANALYSIS AND INTERPRETATION
Current ratio:This ratio measures the solvency of the company in
the short term. Current assets are those assets, which can be
converted in to cash within a year. Current liabilities and
provision are those liabilities that are payable within a year. A
current ratio2:1 indicates a highly solvent position. Company
consider a current ratio 1.33:1 as the minimum acceptable level for
providing working capital finance. The constituents of the current
assets are as important as the current assets themselves for
evaluation of a company solvency position. Current assetCurrent
ratio = __________________ Current liability
Interpretation:A current ratio 2:1 indicates a highly solvent
position. Company consider a current ratio 1.33:1 as the minimum
acceptable level for providing working capital finance. It is high
in year 2010-2011 therefore it is more capable of paying its
obligations. Thereafter it is low as comparatively but under
acceptable norms. CL is more in the year 2011-2012 which shows a
low ratio of 2.30 corresponding to the current assets in that
year.
Quick liquid ratio:The essence of this ratio is a test that
indicateswhether a firm has enough short-term assets to cover its
immediate liabilities without selling inventory. So it is the
backing available to liabilities that must be paid almost
immediately.
There are two terms of liquid asset and liquid liabilities in
this formula, Liquid asset is all current assets except the
inventories and prepaid expenses, because prepaid expenses cannot
be converted to cash. The liquid liabilities include all current
liabilities except Company overdraft and cash credit since they are
not required to be paid off immediately.
Current assets, loans and advances inventories Quick liquid
ratio = ______________________________________ Current liabilities
and provisions BOD
Interpretation: A quick liquid ratio of 1:1 indicates highly
solvent position. This ratio serves as a supplement to the current
ratio in analyzing liquidity. It is 1.13 (average) in our case. In
the year 2010-2011 it is high which interprets that the CA of the
firm is fast moving.
Leverage ratios:The long-term financial stability of the firm
may be considered upon its ability to meet all its liabilities,
including those not currently payable. The ratios which are
important in measuring the long term solvency ratio are as
follows:-Debt-equity ratio:Capital is derived from two sources
shares and loans. It is quite likely for only shares to be issued
when the company is formed but loans are invariably raised at some
later date. There are numerous reasons for issuing loan
capital.
Long term debtDebt-equity ratio = ________________ Shareholders
funds
The ratio indicates the relationship between loan funds and net
worth of the company, which is known as gearing. If the proportion
of debt to equity is low, a company is said to be low geared, and
vice versa. A debt equity ratio of 2:1 is the norm accepted by
financial institutions for financing of projects. Higher debt-
equity ratio may be permitted for highly capital intensive
industries like petrochemicals, fertilizers, powers etc. the higher
the gearing, the more volatile the return to the shareholders. A
debt equity ratio, which shows a declines trend over the years, is
usually taken as a positive sign reflecting on increased cash
accrual and debt and debt repayment in act, one of the indicatory a
unit turning sick is a risky debt equity ratio.Usually when
calculating ratio, the preference share capital is excluded from
debt, but if the ratio is show effect of use of fixed interest
sources on earnings available to the shareholders then it is to be
included. On the other hand, if the ratio is to examine financial
solvency then preference shares shall form part of the capital.
Interpretation:In case of our organization there is improvement
in D/E ratio year by year. A debt-equity ratio, which shows a
decline trend over the years, is usually taken as positive sign
reflecting on increased cash accrual and debt and debt repayment in
act. It is more in year 2008-2009 which interprets the firm mostly
rely on more debt may be for gross-operative expenses.
Proprietary ratio:It indicates the relationship between owners
fund and total assets. And shows the extent to which the owners
fund are sunk in assets or different kinds of it. Shareholders net
worthProprietary ratio = _______________________ Total assets
Interpretation:The proprietary ratio is increasing year by year.
It denotes that the proprietors have provided the funds to purchase
the assets of the concern instead of relying on other sources of
funds like Company borrowings, trade creditors and others. It also
indicates why the debt is decreasing year by year.
Interest Coverage ratio:This ratio measures the debt servicing
capacity of a firm insofar as fixed interest on long-term loan is
concerned. It is determined by dividing the EBIT by the fixed
interest charges on loans. Thus,EBITInterest coverage ratio =
_______________________InterestThis ratio indicates the extent to
which a fall in EBIT is tolerable in that the ability of the firm
to service its interest payment would not be adversely
affected.
Interpretation:Interest coverage of 8.54 times would imply that
even if the firms EBIT were to decline to 8.54 of the present
level, the operating profits available for servicing the interest
on loan would still be equivalent to the claims of the lenders.
Debt service coverage ratio:This ratio is the key indicator to
the lender to assess the extent of ability of the borrower to
service the loan in regard to timely payment of interest and
repayment of loan instalment. It indicates whether the business is
earning sufficient profits to pay not only the interest charges,
but also the instalments due of the principal amount. The ratio is
calculated as follows: Profit after taxes + Depreciation + Interest
on loan DSCR = _________________________________________ Interest
on loan + loan repayment in a year
A ratio of two is considered satisfactory by the financial
institutions. The greater DSCR indicates the better debt servicing
capacity of the organization. By means of cash flow projection, the
borrower should work DSCR for the entire duration of the loan. This
will enable the lender to take correct view of the borrowers
repayments capacity.
Interpretation:It is high in the first year of the concern,
which is acceptable norm, therefore it can service the debt
sufficiently in this year. Servicing debt is more in first year as
also shown by debt-equity ratio therefore the ratio is high in this
year.
Asset management ratio:Asset management ratios measure how
effectively the firm employs its resources. These ratios are also
called activity or turnover ratios which involves comparison
between the level of sales and investment in various accounts
inventories, debtors, fixed assets, etc.Asset management ratios are
used to measure the speed with which various accounts are converted
into sales or cash. The following asset management ratios are
calculated for analysis.
Inventory turnover ratio:Inventory turnover ratio measures how
many times the companies inventory has been sold. A considerable
amount of a company capital may be tied up in the financing of raw
materials, work-in-progress and finished goods. It is important to
ensure that the level of stock is kept as low as possible,
consistent with the need to fulfil customers order in time. The
formula of ratio is;Sales Inventory turnover ratio =
____________________________Average inventory
Interpretation:The ratio in year 2008-2009 is low corresponding
to other years which show excessive inventory utilization than
required. It declines in years 2011-2012 to 2012-2013 may be due to
the stack up of inventory.
Average consumption period:Average consumption period is
obtained by dividing average inventory by sales.Average inventory X
365Average consumption period =__________________________Sales
Interpretation:The average consumption period is 29 days a year
which is acceptable by the norms of firm.
Debtors turnover ratio:Debtor turnover, which measures whether
the amount of resources tied up in debtors, is reasonable and
whether the company has been efficient in converting debtors into
cash. The formula is;Credit salesDebtors turnover ratio =
_____________________Average debtorsThe higher the ratio, the
better the position.
Interpretation:The ratio is more in the year 2009-2010 compared
to other years which indicates the collection period is low for
this fiscal. Also the credit sales is more corresponding to
increase in debtors which illustrates a high ratio.
Debtors collection period:Debtor s collection period, which
measures how long it take to collect amount from debtors. The
actual collection period can be compared with the stated credit
terms of the company. If it is longer than those terms, then this
indicates some insufficiency in the procedure for collecting
debts.Average debtors X 365Debtors collection period =
______________________Credit sales
Interpretation:The average of debtors collection period is 23.82
which are lower than the stated credit terms of the firm which is
good for the firm. The collection period is low in year 2009-2010
corresponding to other years but debtors turnover ratio is high for
this year which shows relaxation in credit terms by the firm.
Creditors turnover ratio:The term creditors include trade
creditors and bills payable. Credit purchases Creditors turnover
ratio = ____________________________Average creditors
Interpretation:A high turnover ratio indicates that payment to
the creditors is quite prompt but it also implies the full
advantage of credit allowed by creditors is not taken. A low ratio
indicates that payment to creditors is not quite prompt and it
needs to be improved. In year 2010-2011 the ratio is high which
interprets that the accounts are settled rapidly.
Creditors payment period:The measurement of the creditor
turnover period shows the average time taken to pay for goods and
services purchased by the company. In general the longer the credit
period achieved the better, because delays in payment mean that the
operations of the company are being financed interest free by
suppliers of materials. If too long a period is taken to pay
creditors, the credit rating of the company may suffer.
Average creditors X 365Creditors payment period =
_________________________________Credit purchases
Interpretation:The creditors payment period is decreasing for
the years 2008-2011 which is good for the firms credit rating.
Thereafter it is increasing but in accordance with acceptable
norms.
Fixed asset turnover ratio:This ratio will be analyzed further
with ratios for each main category of assets. This is a difficult
set of ratios to interpret as asset values are based on historic
cost. An increase in the fixed figure may result from the
replacement of an asset at increased price or the purchase of an
additional asset intended to increases production capacity. The
ratio of the accumulated depreciation provision to the total of
fixed asset at cost might be used as an indicator of the average
age of the assets; particularly when depreciation rates are noted
in the accounts.Sales Fixed asset turnover ratio =
______________________Fixed asset
Interpretation:A high fixed asset ratio indicates the capability
of the firm to earn maximum sales with the minimum investing in
fixed assets. So it shows that the firm is using its assets more
efficiently. There is scope for further investments in fixed assets
after 2010-2011.
Total assets turnover ratio:This ratio indicates the number of
times total assets are being turned over in a year. The higher the
ratio indicates overtrading of total assets, while a low ratio
indicates idle capacity. Sales Total assets turnover ratio =
______________________ Total assets
Interpretation:The ratio has increasing trend over the five year
period which illustrates that the firm is utilizing its total
assets carefully year by year. The ratio in year 2008-2009 to
2010-2011 shows the assets are at idle capacity and can be utilized
further.
Working capital turnover ratio:This ratio indicates the extent
of working capital turned over in achieving sales of the firm. As
its name suggests it is the relationship between turnover and
working capital. It is a measurement comparing the depletion of
working capitalto the generation of sales over a given period.
Thisprovides some useful informationas to how effectively a company
is usingits working capital to generate sales.
A company uses working capital to fund operations and purchase
inventory. These operations and inventory are then converted into
sales revenue for the company. The working capital turnover ratiois
usedto analyze the relationship between the money used to fund
operations and the sales generated from these operations. Sales
Working capital turnover ratio = __________________________ Working
capital
Interpretation: The firm has increasing trend which is better
because it means that the firm is generating a lot of sales
compared to the money it uses to fund the sales. A firm uses WC to
purchase inventory and convert inventory into sales. As the
inventory turnover is low in year 2008-2009 the WC is
underutilized.
Capital employed turnover ratio:This ratio indicates efficiency
in utilization of capital employed in generating revenue.The
capital employed turnover ratio tells us the state of the
relationship between the shareholders' investment in the business
and the sales that the management of the business has been able to
generate from it.Sales Capital employed turnover ratio =
___________________________ Capital employed
Interpretation:The capital employed turnover ratio increases
from 2008-2009 to 2010-2011 due to the decrease in capital
employed. It means that the firm is utilizing its capital wholly.
The ratio is showing increasing trend in the years thereafter also,
because the sales are increasing in accordance with capital
employed.
Profitability ratios:As the name itself suggests, this ratio is
calculated to determine profitability of the firm. The basic
objective of almost every business is to earn profit which is
essential for survival of the business.
A business needs profits not only for its existence but also for
its expansion and diversification. The investors want inadequate
return on their investments, workers want higher wages, creditors
want higher security for interest and loan and the list could
continue.
It is aclass of financial metrics that are used to assess a
business's ability to generateearnings as compared toits expenses
and other relevant costs incurred during a specific period of time.
For most of these ratios, having a higher value relative to a
competitor's ratio or thesame ratio from a previous period is
indicative that the company is doing well.
Gross profit ratio:The gross profit margin ratio tells us the
profit a business makes on its cost of sales. It is a very simple
idea and it tells us how much gross profit our business is
earning.
Gross profit is the profit we earn before we take off any
administration costs, selling costs and so on. So we should have a
much higher gross profit margin than net profit margin.High ratios
are favourable in this, since it indicates the business is earning
a good return on the sale of its merchandise. Gross profit X
100Gross profit ratio =
_______________________________________Sales
Interpretation:The average of gross profit margin is 19.91 which
are good for the firm for further growth. A high gross profit shows
good management. The trend shows that COGS is increasing year by
year. It may also indicate higher sales price without corresponding
increase in COGS. It also indicates unsatisfactory basis of
valuation of stock.
Net profit margin ratio:The ratio is designed to focus attention
on the profit margin arising from business operations before
interest and tax is deducted. The convention is to express profit
after tax and interest as a percentage of sales.This ratio reflects
net profit margin on the total sales after deducting all expenses
but before deducting interest and taxation. This ratio measures the
efficiency of operation of the company. The net profit is arrived
at from gross profit after deducting administration, selling and
distribution expenses. The non operating incomes and expenses are
ignored in computation of net profit before tax, depreciation and
interest.
Net profit before interest and tax X 100Net profit margin ratio
= __________________________Sales
Interpretation:There is substantial decline in administration,
selling and distribution expenses due to which there is low GP and
high EBIT in year 2008-2009 to 2009-2010.
Cash profit ratio:Cash profit ratio measures the cash generation
in the business as a result of the operations expressed in the
terms of sales. The cash profit ratio is a more reliable indicator
of performance where there are sharp fluctuations in the profit
before tax and net profit from year to year owing to difference in
depreciation charged. Cash profit ratio evaluates the efficiency of
operations in terms of cash generation and is not affected by the
method of depreciation charged. Cash profit Cash profit ratio =
_________________________________ x 100 Sales
Cash profit = net profit + depreciation.
Interpretation:The cash profit ratio shows increasing trend over
the span of five years which illustrates that the cash generation
of the firm is efficient for further operations of the firm. It
also illustrates the firm is using the depreciation charge
efficiently and effectively. A result of increasing trend may be
also the reason behind the increase in DSCR.
Return on capital employed:The strategic aim of business
enterprises is to earn a return on capital. If any particular case,
the return in the long run is not satisfactory, then the deficiency
should be corrected or the activity be abandoned for a more
favorable one. The rate of return on investment is determined by
dividing net profit or income by the capital employed or investment
made to achieve that profit.ROCE consists of two components i.e. I)
Profit margin. II) Investment turnover.It will be seen from the
following formula that ROCE can be improved by increasing one or
both of its components i.e. the profit margin and the investment
turnover in any of the following ways: Increasing the profit margin
Increasing the investment turnover Increasing both profit margin
and investment turnover.
Return on investment analyses provides a strong incentive for
optimal utilization of the assets of the company. This encourages
managers to obtain assets that will provide a satisfactory return
on investment.Net profit X 100ROCE = ______________________Capital
employed
Interpretation:The increasing trend of this ratio shows that the
firm is providing a strong incentive for optimal utilization of the
assets. It also indicates that the profit margin and investment
turnover are increasing. It is commonly used as a measure for
comparing the performance between business and for assessing
whether a business generates enough returns to pay for its cost of
capital. The first year shows loss, it seems to have failed to
maintain the earning rate on the funds employed.
Return on assets:The profitability of the firm is measured by
establishing relation of net profit with the total assets of the
organization. This ratio indicates the efficiency of utilization of
assets in generating revenue. Net profit after tax X 100Return on
assets = _______________________________ Total assets
Interpretation:The ratio is showing increasing trend over the
period of five years which shows that the firm is utilizing its
resources efficiently. There is scope for expansion after year
2011-2012.Sr.no.RatiosYears
08-0909-1010-1111-1212-13
1Current ratio1.882.102.392.302.32
2Quick liq. Ratio1.051.121.281.091.02
3Debt-equity ratio3.041.810.860.310.00
4Proprietary ratio 0.200.250.370.530.70
5Interest cov. Ratio2.202.743.675.118.54
6DSCR2.201.211.351.431.55
7Inventory turn. Ratio11.3913.5413.4513.1013.09
8Avg. consume. Period32.0326.9627.1427.8627.89
9Debt turn. Ratio14.4016.3515.6615.2015.14
10Debts collect. Period25.3522.3223.3124.0124.11
11Credit. turn. Ratio16.1817.1117.5516.9817.00
12Credit. paym. Period22.5621.3420.7921.4921.47
13FA turn. Ratio2.153.414.814.875.04
14Total ass. turn. Ratio1.301.601.892.052.17
15WC turn. Ratio5.776.016.046.066.07
16Cap. emp. turn. Ratio1.612.272.732.953.10
17GP margin ratio20.3019.8319.8219.7919.79
18NP margin ratio8.1911.7013.6314.6614.54
19Cash profit ratio9.6910.0510.7211.2912.14
20Return on cap. emp.(0.33)8.9717.9424.1727.66
21Return on assets(0.26)6.3112.4416.7719.32
CHAPTER 5FINDINGS, SUGGESTIONS AND CONCLUSION
CHAPTER 5 FINDINGS, SUGGESTIONS AND CONCLUSION
FINDINGS1. Debt-equity ratio is marked by an increasing trend.
The margin of safety to the Company seems to be adequate.2. Debt
service coverage ratio is more in year 2008-2009 which is affecting
profitability of the firm.3. Sales are more in year 2008-2009
compared to other years, therefore it should be properly utilized
(from Inventory turnover ratio). Also investment in inventory in
year 2009-2010 and year 2010-2011 shows that the firm is
replenishing its stock in too many small sizes.4. The total assets
turnover ratio for year 2008-2009 to year 2010-2011 shows the
assets can be utilized more in these years. But as this is new firm
it is acceptable. 5. From gross profit margin ratio we can say that
the valuation of stock (closing or opening) is not efficient. 6. In
year 2011-2012 and 2012-2013 the administration, selling and
distribution expenses are likely to be more as compared to other
years due to which the gross profit margin declines in those years.
Therefore it should be lowered as possible.
SUGGESTIONS
1. From proprietary ratio we can suggest that the firm should
rely on debt and own funds proportionately.2. From debtors
collection period we can suggest that in first year 2008-2009 the
collection period should be lowered and should maintain low
turnover ratio. 3. Payment period is high in year 2008-2009 which
can be lowered to avail the benefits of delay.4. Under-utilization
of working capital is being done in year 2008-2009 which should be
efficient.
CONCLUSION:After completing this project titled Financial
analysis it can be concluded that:-
The business environment of the company is really good. The
companys track record is oriented towards profitable growth and
with strong fundamentals. There is ability of the enterprise to
generate cash and cash equivalent in the future. The average
performance of the company is acceptable with the industry
standards. As the ratios are in accordance with the industry
standard, the Company should appraise the creditworthiness of the
firm. It gives information about the economic resources controlled
by the enterprise.
CHAPTER 6 BIBLIOGRAPHY
CHAPTER 6BIBLIOGRAPHY
Bibliography: Financial Management, N.M. Vechalekar. Financial
Management, Ravi M. Kishore.
ratioRatio AnalysisSr.
NODescriptionYears08-0909-1010-1111-1212-13'1current ratio=
CA,loans & adv.86.3098.77116.92115.23119.42CL &
prov.45.8647.0148.8850.1351.54Ratio
=1.882.102.392.302.32Average2.20Sr.
NODescriptionYears08-0909-1010-1111-1212-13'2Quick liquid ratio=
CA,loans & adv.-invt.47.9852.6862.3954.7452.52CL &
provisions-BOD45.8647.0148.8850.1351.54Ratio
=1.051.121.281.091.02Average1.11Sr.
NODescriptionYears08-0909-1010-1111-1212-13'3Debt-equity ratio=
long term debt132.75105.6874.9239.960.00shareholders
funds43.6858.4087.55128.19177.21Ratio
=3.041.810.860.310.00Average1.50Sr.
NODescriptionYears08-0909-1010-1111-1212-13'4Proprietary ratio=
shareholders net worth43.6858.4087.55128.19177.21total
assets218.37233.15234.39242.30253.75Ratio
=0.200.250.370.530.70Average0.41Sr.
NODescriptionYears08-0909-1010-1111-1212-13'5Debt service coverage
ratio= PAT+Dep.+interest50.2758.9365.3969.6675.63Interest+loan
repay in year22.8148.5948.5948.5948.82Ratio
=2.201.211.351.431.55Average1.55Sr.
NODescriptionYears08-0909-1010-1111-1212-13'6Inventory turnover
ratio= sales283.40372.38443.75496.10549.99average
inventory24.8727.5033.0037.8642.03Ratio
=11.3913.5413.4513.1013.09Average12.91Sr.
NODescriptionYears08-0909-1010-1111-1212-13'7Avg.Consumption
period= Avg.inventor
X3659,078.7410,038.9912,044.1713,820.5515,340.23sales283.40372.38443.75496.10549.99Ratio
=32.0326.9627.1427.8627.89Average28.38Sr.
NODescriptionYears08-0909-1010-1111-1212-13'8Debtors turnover
ratio= credit sales283.40372.38443.75496.10549.99average
debtors19.6822.7728.3432.6336.32Ratio
=14.4016.3515.6615.2015.14Average15.35Sr.
NODescriptionYears08-0909-1010-1111-1212-13'9Debtors collection
period= avg.debtor X
3657,183.508,311.1010,343.3111,911.3313,257.70credit
sales283.40372.38443.75496.10549.99Ratio
=25.3522.3223.3124.0124.11Average23.82Sr.
NODescriptionYears08-0909-1010-1111-1212-13'10Creditors turnover
ratio= credit purchases130.61146.56173.85192.06212.67average
creditors8.078.579.9011.3112.51Ratio
=16.1817.1117.5516.9817.00Average16.96Sr.
NODescriptionYears08-0909-1010-1111-1212-13'11Creditors payment
period= avg. creditors
X3652,947.043,126.953,614.704,127.974,565.86credit
purchases130.61146.56173.85192.06212.67Ratio
=22.5621.3420.7921.4921.47Average21.53Sr.
NODescriptionYears08-0909-1010-1111-1212-13'12Fixed assets turnover
ratio= sales283.40372.38443.75496.10549.99fixed
assets131.76109.0892.16101.78109.03Ratio
=2.153.414.814.875.04Average4.06Sr.
NODescriptionYears08-0909-1010-1111-1212-13'13Total assets turnover
ratio= sales283.40372.38443.75496.10549.99total
assets218.37233.15234.39242.30253.75Ratio
=1.301.601.892.052.17Average1.80Sr.
NODescriptionYears08-0909-1010-1111-1212-13'14Working capital
turnover ratio= sales283.40372.38443.75496.10549.99working
capital49.1561.9473.4881.8190.55Ratio
=5.776.016.046.066.07Average5.99Sr.
NODescriptionYears08-0909-1010-1111-1212-13'15capital employed
turn. ratio= sales283.40372.38443.75496.10549.99capital
employed176.43164.08162.47168.16177.21Ratio
=1.612.272.732.953.10Average2.53Sr.
NODescriptionYears08-0909-1010-1111-1212-13'16Gross profit margin=
gross profit
X10057.5373.8587.9798.19108.85sales283.40372.38443.75496.10549.99Ratio
=20.3019.8319.8219.7919.79Average19.91Sr.
NODescriptionYears08-0909-1010-1111-1212-13'17Net profit margin=
EBIT
X10023.2143.5660.5072.7579.95sales283.40372.38443.75496.10549.99Ratio
=8.1911.7013.6314.6614.54Average12.54Sr.
NODescriptionYears08-0909-1010-1111-1212-13'18Cash profit ratio=
cash profit
X10027.4737.4147.5756.0366.77sales283.40372.38443.75496.10549.99Ratio
=9.6910.0510.7211.2912.14Average10.78Sr.
NODescriptionYears08-0909-1010-1111-1212-13'19Return on capital
employed= Net profit X100(0.57)14.7229.1540.6449.02capital
employed176.43164.08162.47168.16177.21Ratio
=(0.33)8.9717.9424.1727.66Average15.68Sr.
NODescriptionYears08-0909-1010-1111-1212-13'20Return on assets= net
profit X
100(0.57)14.7229.1540.6449.02assets218.37233.15234.39242.30253.75Ratio
=(0.26)6.3112.4416.7719.32Average10.92
summaryDescriptionYears08-0909-1010-1111-1212-13'current
ratio1.882.102.392.302.32DescriptionYears08-0909-1010-1111-1212-13'quick
liquid
ratio1.051.121.281.091.02DescriptionYears08-0909-1010-1111-1212-13'debt-eqity
ratio3.041.810.860.310.00DescriptionYears08-0909-1010-1111-1212-13'proprietary
ratio0.200.250.370.530.70DescriptionYears08-0909-1010-1111-1212-13'DSCR2.201.211.351.431.55DescriptionYears08-0909-1010-1111-1212-13'Inv.turn.
Ratio11.3913.5413.4513.1013.09DescriptionYears08-0909-1010-1111-1212-13'Avg.
cons.
Ratio32.0326.9627.1427.8627.89DescriptionYears08-0909-1010-1111-1212-13'Debt.
Turn.
Ratio14.4016.3515.6615.2015.14DescriptionYears08-0909-1010-1111-1212-13'Debt.
Coll.period25.3522.3223.3124.0124.11DescriptionYears08-0909-1010-1111-1212-13'Cred.turn.
Ratio16.1817.1117.5516.9817.00DescriptionYears08-0909-1010-1111-1212-13'Cred.
Pay.
Period22.5621.3420.7921.4921.47DescriptionYears08-0909-1010-1111-1212-13'FA
turn.
Ratio2.153.414.814.875.04DescriptionYears08-0909-1010-1111-1212-13'TA
turn.
Ratio1.301.601.892.052.17DescriptionYears08-0909-1010-1111-1212-13'WC
turn.
Ratio5.776.016.046.066.07DescriptionYears08-0909-1010-1111-1212-13'Cap.
Emp turn.
Ratio1.612.272.732.953.10DescriptionYears08-0909-1010-1111-1212-13'GP
ratio20.3019.8319.8219.7919.79DescriptionYears08-0909-1010-1111-1212-13'NP
ratio8.1911.7013.6314.6614.54DescriptionYears08-0909-1010-1111-1212-13'cash
profit
ratio9.6910.0510.7211.2912.14DescriptionYears08-0909-1010-1111-1212-13'Ret.
On cap.
Emp(0.33)8.9717.9424.1727.66DescriptionYears08-0909-1010-1111-1212-13'Ret.
On assets(0.26)6.3112.4416.7719.32
graphs
graphs1.88198201412.10112883682.39222086322.29859023792.3171036354
current ratio
1.04627272111.12069944891.27643568961.09195061161.0190967521
quick liquid ratio
3.03940066781.80970743280.85579527380.31174655280.0000191759
debt-eqity ratio
0.2000124850.25046977050.37351316540.52905201050.6983561877
proprietary ratio
2.20428855421.21277421951.34584576081.43363660091.5490773547
DSCR
11.393912244713.538950139613.447988256313.101972039313.0862080386
Inv.turn. Ratio
32.034650799726.959254317127.141606093327.858401689927.8919606753
Avg. cons. Ratio
14.416.353713961215.65938739915.202033541815.1417957846
Debt. Turn. Ratio
25.347222222222.319089160223.308702358524.009945708624.1054631295
Debt. Coll.period
16.176008967417.107011776317.554397492116.981972824417.0007060373
Cred.turn. Ratio
22.564280270621.336280396220.792510831821.493380290621.4696965643
Cred. Pay. Period
2.15083414533.41377438794.81480970484.87424867615.0444054394
FA turn. Ratio
1.29782482751.59712941871.89324089862.04741921012.1674453338
TA turn. Ratio
5.76647433236.01194074326.0394791966.0640529546.0736934957
WC turn. Ratio
1.60635688612.26946605492.73130310982.95024764963.1035792481
Cap. Emp turn. Ratio
20.299704138719.831706810219.823907440919.793249370719.7918140191
GP ratio
8.190744232611.697841532113.634465657214.664177353814.5369048254
NP ratio
9.691760976810.045091114510.718906168611.293965450112.1395386513
cash profit ratio
-0.32513625228.972117127117.94129175824.171047144527.6593904082
Ret. On cap. Emp
-0.26268751616.314098499612.436256967716.774275291519.3164768428
Ret. On assets
ratioRatio AnalysisSr.
NODescriptionYears08-0909-1010-1111-1212-13'1current ratio=
CA,loans & adv.86.3098.77116.92115.23119.42CL &
prov.45.8647.0148.8850.1351.54Ratio
=1.882.102.392.302.32Average2.20Sr.
NODescriptionYears08-0909-1010-1111-1212-13'2Quick liquid ratio=
CA,loans & adv.-invt.47.9852.6862.3954.7452.52CL &
provisions-BOD45.8647.0148.8850.1351.54Ratio
=1.051.121.281.091.02Average1.11Sr.
NODescriptionYears08-0909-1010-1111-1212-13'3Debt-equity ratio=
long term debt132.75105.6874.9239.960.00shareholders
funds43.6858.4087.55128.19177.21Ratio
=3.041.810.860.310.00Average1.50Sr.
NODescriptionYears08-0909-1010-1111-1212-13'4Proprietary ratio=
shareholders net worth43.6858.4087.55128.19177.21total
assets218.37233.15234.39242.30253.75Ratio
=0.200.250.370.530.70Average0.41Sr.
NODescriptionYears08-0909-1010-1111-1212-13'5Debt service coverage
ratio= PAT+Dep.+interest50.2758.9365.3969.6675.63Interest+loan
repay in year22.8148.5948.5948.5948.82Ratio
=2.201.211.351.431.55Average1.55Sr.
NODescriptionYears08-0909-1010-1111-1212-13'6Inventory turnover
ratio= sales283.40372.38443.75496.10549.99average
inventory24.8727.5033.0037.8642.03Ratio
=11.3913.5413.4513.1013.09Average12.91Sr.
NODescriptionYears08-0909-1010-1111-1212-13'7Avg.Consumption
period= Avg.inventor
X3659,078.7410,038.9912,044.1713,820.5515,340.23sales283.40372.38443.75496.10549.99Ratio
=32.0326.9627.1427.8627.89Average28.38Sr.
NODescriptionYears08-0909-1010-1111-1212-13'8Debtors turnover
ratio= credit sales283.40372.38443.75496.10549.99average
debtors19.6822.7728.3432.6336.32Ratio
=14.4016.3515.6615.2015.14Average15.35Sr.
NODescriptionYears08-0909-1010-1111-1212-13'9Debtors collection
period= avg.debtor X
3657,183.508,311.1010,343.3111,911.3313,257.70credit
sales283.40372.38443.75496.10549.99Ratio
=25.3522.3223.3124.0124.11Average23.82Sr.
NODescriptionYears08-0909-1010-1111-1212-13'10Creditors turnover
ratio= credit purchases130.61146.56173.85192.06212.67average
creditors8.078.579.9011.3112.51Ratio
=16.1817.1117.5516.9817.00Average16.96Sr.
NODescriptionYears08-0909-1010-1111-1212-13'11Creditors payment
period= avg. creditors
X3652,947.043,126.953,614.704,127.974,565.86credit
purchases130.61146.56173.85192.06212.67Ratio
=22.5621.3420.7921.4921.47Average21.53Sr.
NODescriptionYears08-0909-1010-1111-1212-13'12Fixed assets turnover
ratio= sales283.40372.38443.75496.10549.99fixed
assets131.76109.0892.16101.78109.03Ratio
=2.153.414.814.875.04Average4.06Sr.
NODescriptionYears08-0909-1010-1111-1212-13'13Total assets turnover
ratio= sales283.40372.38443.75496.10549.99total
assets218.37233.15234.39242.30253.75Ratio
=1.301.601.892.052.17Average1.80Sr.
NODescriptionYears08-0909-1010-1111-1212-13'14Working capital
turnover ratio= sales283.40372.38443.75496.10549.99working
capital49.1561.9473.4881.8190.55Ratio
=5.776.016.046.066.07Average5.99Sr.
NODescriptionYears08-0909-1010-1111-1212-13'15capital employed
turn. ratio= sales283.40372.38443.75496.10549.99capital
employed176.43164.08162.47168.16177.21Ratio
=1.612.272.732.953.10Average2.53Sr.
NODescriptionYears08-0909-1010-1111-1212-13'16Gross profit margin=
gross profit
X10057.5373.8587.9798.19108.85sales283.40372.38443.75496.10549.99Ratio
=20.3019.8319.8219.7919.79Average19.91Sr.
NODescriptionYears08-0909-1010-1111-1212-13'17Net profit margin=
EBIT
X10023.2143.5660.5072.7579.95sales283.40372.38443.75496.10549.99Ratio
=8.1911.7013.6314.6614.54Average12.54Sr.
NODescriptionYears08-0909-1010-1111-1212-13'18Cash profit ratio=
cash profit
X10027.4737.4147.5756.0366.77sales283.40372.38443.75496.10549.99Ratio
=9.6910.0510.7211.2912.14Average10.78Sr.
NODescriptionYears08-0909-1010-1111-1212-13'19Return on capital
employed= Net profit X100(0.57)14.7229.1540.6449.02capital
employed176.43164.08162.47168.16177.21Ratio
=(0.33)8.9717.9424.1727.66Average15.68Sr.
NODescriptionYears08-0909-1010-1111-1212-13'20Return on assets= net
profit X
100(0.57)14.7229.1540.6449.02assets218.37233.15234.39242.30253.75Ratio
=(0.26)6.3112.4416.7719.32Average10.92
summaryDescriptionYears08-0909-1010-1111-1212-13'current
ratio1.882.102.392.302.32DescriptionYears08-0909-1010-1111-1212-13'quick
liquid
ratio1.051.121.281.091.02DescriptionYears08-0909-1010-1111-1212-13'debt-eqity
ratio3.041.810.860.310.00DescriptionYears08-0909-1010-1111-1212-13'proprietary
ratio0.200.250.370.530.70DescriptionYears08-0909-1010-1111-1212-13'DSCR2.201.211.351.431.55DescriptionYears08-0909-1010-1111-1212-13'Inv.turn.
Ratio11.3913.5413.4513.1013.09DescriptionYears08-0909-1010-1111-1212-13'Avg.
cons.
Ratio32.0326.9627.1427.8627.89DescriptionYears08-0909-1010-1111-1212-13'Debt.
Turn.
Ratio14.4016.3515.6615.2015.14DescriptionYears08-0909-1010-1111-1212-13'Debt.
Coll.period25.3522.3223.3124.0124.11DescriptionYears08-0909-1010-1111-1212-13'Cred.turn.
Ratio16.1817.1117.5516.9817.00DescriptionYears08-0909-1010-1111-1212-13'Cred.
Pay.
Period22.5621.3420.7921.4921.47DescriptionYears08-0909-1010-1111-1212-13'FA
turn.
Ratio2.153.414.814.875.04DescriptionYears08-0909-1010-1111-1212-13'TA
turn.
Ratio1.301.601.892.052.17DescriptionYears08-0909-1010-1111-1212-13'WC
turn.
Ratio5.776.016.046.066.07DescriptionYears08-0909-1010-1111-1212-13'Cap.
Emp turn.
Ratio1.612.272.732.953.10DescriptionYears08-0909-1010-1111-1212-13'GP
ratio20.3019.8319.8219.7919.79DescriptionYears08-0909-1010-1111-1212-13'NP
ratio8.1911.7013.6314.6614.54DescriptionYears08-0909-1010-1111-1212-13'cash
profit
ratio9.6910.0510.7211.2912.14DescriptionYears08-0909-1010-1111-1212-13'Ret.
On cap.
Emp(0.33)8.9717.9424.1727.66DescriptionYears08-0909-1010-1111-1212-13'Ret.
On assets(0.26)6.3112.4416.7719.32
graphs
graphs1.88198201412.10112883682.39222086322.29859023792.3171036354
current ratio
1.04627272111.12069944891.27643568961.09195061161.0190967521
quick liquid ratio
3.03940066781.80970743280.85579527380.31174655280.0000191759
debt-eqity ratio
0.2000124850.25046977050.37351316540.52905201050.6983561877
proprietary ratio
2.20428855421.21277421951.34584576081.43363660091.5490773547
DSCR
11.393912244713.538950139613.447988256313.101972039313.0862080386
Inv.turn. Ratio
32.034650799726.959254317127.141606093327.858401689927.8919606753
Avg. cons. Ratio
14.416.353713961215.65938739915.202033541815.1417957846
Debt. Turn. Ratio
25.347222222222.319089160223.308702358524.009945708624.1054631295
Debt. Coll.period
16.176008967417.107011776317.554397492116.981972824417.0007060373
Cred.turn. Ratio
22.564280270621.336280396220.792510831821.493380290621.4696965643
Cred. Pay. Period
2.15083414533.41377438794.81480970484.87424867615.0444054394
FA turn. Ratio
1.29782482751.59712941871.89324089862.04741921012.1674453338
TA turn. Ratio
5.76647433236.01194074326.0394791966.0640529546.0736934957
WC turn. Ratio
1.60635688612.26946605492.73130310982.95024764963.1035792481
Cap. Emp turn. Ratio
20.299704138719.831706810219.823907440919.793249370719.7918140191
GP ratio
8.190744232611.697841532113.634465657214.664177353814.5369048254
NP ratio
9.691760976810.045091114510.718906168611.293965450112.1395386513
cash profit ratio
-0.32513625228.972117127117.94129175824.171047144527.6593904082
Ret. On cap. Emp
-0.26268751616.314098499612.436256967716.774275291519.3164768428
Ret. On assets
Sheet1SR. NOITEMSUPPLIERMONTHLY QTY.RAW MATERIAL COST PER
UNITSCRAP PER UNITMACHINING COST PER UNITSELLING &ADMIN.OTHER
MFG. EXPENSESELLING PRICE1Pin cum followerNCUB fastners,
Ahmadnagar1200012.751.0817.130.751.1237.442Governer bellKalaria
forge, Rajkot600020.161.5827.951.211.8160.493Rocker fulcrum
038BARC, Mumbai720012.690.5418.060.791.1839.274Rocker fulcrum
026BARC, Mumbai720011.240.4715.430.681.0234.065Flange lube oil
filterSuyog autocast, Bhosari
pune720046.450.2920.001.722.5886.016Starter plateDivya metals,
Belgaon6000122.175.62152.006.9810.47349.12
LIST OF ASSETSList Of AssetsPlant & Machineries For
Production :Sr.No.ParticularsUnitsAmount1CNC machine345600002VMC
machine120500003Gear Hobbing m/c14750004Imprignation
m/c15000005Thread rolling m/c12500006Center grinding
m/c13000007Band saw m/c1750008Washing m/c1800009Drilling
m/c29800010Tools50000011Trollies and bins4500012Spare
parts250000Total9183000Add: 10 % Contingecies918300Total Cost of
Plant & Machinery10101300Electrical Installation
:Sr.No.ParticularsUnitsAmount1Main Control Pannel11250002Cable
& Wiring150003Tranformer1800004MSEB Deposit300005Other
Expenses450000Total700000Add: 10 % Contingencies70000Total
Projected Cost For Electrical Installtion770000Inspection &
other Equipments :Sr.No.ParticularsUnitsAmount1Measuring
gauges1730002Inspection
table300003Trollies245004Digimeter250005Punching
m/c1400006Telephones345007Weighing m/c2300008Xerox
m/c11500009Vaccumn cleaner525000Total502000Add: 10 %
Contingencies50200Total Projected Cost of
Equipements552200Furniture :Sr.No.ParticularsUnitsAmount1Fire
Equipments5250002Tables7580003Chairs20500004Cupboards5450005Lockers4160006File
Cabinets5200007Other Furniture100000Total314000Add: 10 %
Contingencies31400Total Projected Cost Of Furniture345400Computer
Systems
:Sr.No.ParticularsUnitsAmount1Computer3750002UPS360003Printer125000Total106000Add:
10 % Contingencies10600Total Projected Cost of Computers
System116600Pre-Operative Expenses
:Sr.No.ParticularsUnitsAmount1Stamp Duty500002Company Registration
Expenses1500003Professional Charges750004Licence Expenses500005Bank
Processing Fees750006Stationary200007Other
Misc.Expenses25000Total445000Add: 10 % Contingencies44500Total
Pre-operative Expenses489500Building
:Sr.No.ParticularsUnitsAmount1Floor foundation3500002Construction
As per Estimate3350000Total3700000Add: Contingencies as per
Architect Estimate370000Total Projected Cost of Building4070000
COST OF PROJECTCost Of
ProjectSr.No.ParticularsAmount1Land$55,0002Building$4,070,0003Plant
& Machinery$10,101,3004Electrification$770,0005Inspection &
Other Equipments$552,2006Furniture$345,4007Computer
System$116,6008Pre-Operative Expenses$489,5009Margin Money For
Working Capital$1,200,000Total Cost Of Project$17,700,000Means Of
FinanceSr.No.ParticularsAmountBank Term Loan (75%)
Say$13,275,000Own Contribution$4,425,000Total Means Of
Finance$17,700,000Working Capital
RequirementSr.No.ParticularsAmountTotal Requirement$4,900,000Means
Of FinanceBank Cash Credit$3,700,000Own Contribution$1,200,000Total
Means of Finance$4,900,000
basisBASIS & PRESUMPTIONS :ESTIMATE OF PRODUCTION AND
SALESQUANTITY DETAILSYEAR08-0909-1010-1111-1212-13'CAPACITY
UTILISATION65%75%85%90%95%NO. OF WORKING DAYS310310310310310PIN CUM
FOLLOWERinstalled capacity per day462462462462462OPENING
STOCK0.09,00910,39511,78112,474PRODUCTION PER ANNUM IN
GROSS93,093107,415121,737128,898136,059SALES QUANTITY IN
GROSS84,084106,029120,351128,205135,366#CLOSING STOCK FOR 30
DAYS9,00910,39511,78112,47413,167WIP for 3
Days1,5001,5001,5001,5001,500TOTAL SALES
QUANTITY84,084106,029120,351128,205135,366GOVERNER BELLinstalled
capacity per day231231231231231OPENING
STOCK0.04,5055,1985,8916,237PRODUCTION PER ANNUM IN
GROSS46,54753,70860,86964,44968,030SALES QUANTITY IN
GROSS42,04248,51054,97858,21261,446CLOSING STOCK FOR 30
DAYS4,5055,1985,8916,2376,584WIP for 3 Days900900900900900TOTAL
SALES QUANTITY42,04248,51054,97858,21261,446ROCKER FULCRUM
038installed capacity per day277277277277277OPENING
STOCK0.05,4026,2337,0647,479PRODUCTION PER ANNUM IN
GROSS55,81664,40372,99077,28381,577SALES QUANTITY IN
GROSS50,41463,57272,15976,86881,161CLOSING STOCK FOR 30
DAYS5,4026,2337,0647,4797,895WIP for 3 Days900900900900900TOTAL
SALES QUANTITY50,41463,57272,15976,86881,161ROCKER FULCRUM
026installed capacity per day277277277277277OPENING
STOCK0.05,4026,2337,0647,479PRODUCTION PER ANNUM IN
GROSS55,81664,40372,99077,28381,577SALES QUANTITY IN
GROSS50,41463,57272,15976,86881,161CLOSING STOCK FOR 30
DAYS5,4026,2337,0647,4797,895WIP for 3 Days900900900900900TOTAL
SALES QUANTITY50,41463,57272,15976,86881,161FLANGE LUBE
OILinstalled capacity per day277277277277277OPENING
STOCK0.05,4026,2337,0647,479PRODUCTION PER ANNUM IN
GROSS55,81664,40372,99077,28381,577SALES QUANTITY IN
GROSS50,41463,57272,15976,86881,161CLOSING STOCK FOR 30
DAYS5,4026,2337,0647,4797,895WIP for 3 Days900900900900900TOTAL
SALES QUANTITY50,41463,57272,15976,86881,161STARTER PLATEinstalled
capacity per day230230230230230OPENING
STOCK0.04,4855,1755,8656,210PRODUCTION PER ANNUM IN
GROSS46,34553,47560,60564,17067,735SALES QUANTITY IN
GROSS41,86052,78559,91563,82567,390CLOSING STOCK FOR 30
DAYS$4,4855,1755,8656,2106,555WIP for 3 Days750750750750750TOTAL
SALES QUANTITY41,86052,78559,91563,82567,390DETAILS OF RATE PER
GROSSYEAR08-0909-1010-1111-1212-13'SELLING PRICE PER GROSSPin cum
follower37.4439.3141.2843.3445.51Governer
bell60.4963.5166.6970.0273.53Rocker fulcrum
03839.2841.2443.3145.4747.75Rocker fulcrum
02634.1035.8137.6039.4841.45Flange lube oil
filter86.0090.3094.8299.56104.53Starter
plate349.12366.58384.90404.15424.36CLOSING STOCK PER GROSS FINISHED
GOODSPin cum follower30.6732.2033.8135.5037.28Governer
bell49.5552.0354.6357.3660.23Rocker fulcrum
03832.1833.7935.4837.2539.11Rocker fulcrum
02627.9029.3030.7632.3033.91Flange lube oil
filter70.4673.9877.6881.5785.64Starter
plate286.00300.30315.32331.08347.63RAW MATERIAL PER GROSSPin cum
follower12.7513.3914.0614.7615.50Governer
bell20.1621.1722.2323.3424.50Rocker fulcrum
03812.6913.3213.9914.6915.42Rocker fulcrum
02611.2411.8012.3913.0113.66Flange lube oil
filter46.4548.7751.2153.7756.46Starter
plate122.17128.28134.69141.43148.50MACHINING EXPENSES PER GROSSPin
cum follower17.1317.9918.8919.8320.82Governer
bell27.9529.3530.8132.3633.97Rocker fulcrum
03818.0618.9619.9120.9121.95Rocker fulcrum
02615.4316.2017.0117.8618.76Flange lube oil
filter20.0021.0022.0523.1524.31Starter
plate152.00159.60167.58175.96184.76SCRAP PER GROSSPin cum
follower1.081.131.191.251.31Governer bell1.581.661.741.831.92Rocker
fulcrum 0380.540.570.600.630.66Rocker fulcrum
0260.470.490.520.540.57Flange lube oil
filter0.290.300.320.340.35Starter plate5.625.906.206.516.83SELLING
& ADMIN. EXPENSES PER GROSSPin cum
follower0.750.790.830.870.91Governer bell1.211.271.331.401.47Rocker
fulcrum 0380.790.830.870.910.96Rocker fulcrum
0260.680.710.750.790.83Flange lube oil
filter1.721.811.901.992.09Starter plate6.987.337.708.088.48OTHER
MANUFACTURING EXPENSES PER GROSSPin cum
follower1.121.181.231.301.36Governer bell1.811.902.002.102.20Rocker
fulcrum 0381.181.241.301.371.43Rocker fulcrum
0261.021.071.121.181.24Flange lube oil
filter2.582.712.842.993.14Starter
plate10.4710.9911.5412.1212.73NOTE:- the cost of WIP components is
taken as 50% of total cost and the cost of closingstock per gross
is taken as total cost of a componentESTIMATE OF SALES, STOCK,
RAWMATERIAL, & EXPENSES :VALUE PER ANNUM(Rs. In
Lakhs)YEAR08-0909-1010-1111-1212-13'OPENING STOCK OF FINISHED
GOODS0.024.8730.1335.8639.87SALES IN
RUPEES283.40372.38443.75496.10549.99Pin cum
follower31.4841.6849.6855.5761.60Governer
bell25.4330.8136.6640.7645.18Rocker fulcrum
03819.8026.2231.2534.9538.75Rocker fulcrum
02617.1922.7627.1330.3433.64Flange lube oil
filter43.3657.4168.4276.5384.84Starter
plate146.14193.50230.62257.95285.97CLOSING STOCK OF FINISHED GOODS
IN RUPEES24.8730.1335.8639.8744.19Pin cum
follower2.763.353.984.434.91Governer bell2.232.703.223.583.97Rocker
fulcrum 0381.742.112.512.793.09Rocker fulcrum
0261.511.832.172.422.68Flange lube oil
filter3.814.615.496.106.76Starter
plate12.8315.5418.4920.5622.79TOTAL PURCHASES PER YEAR IN
RUPEES130.61146.56173.85192.06212.67TOTAL RAW MATERIAL CONS. PER
YEAR IN RUPEES117.16141.94168.91187.78208.13TOTAL CLOSING STOCK OF
RAW MATERIAL IN RUPEE11.3413.7416.3518.1720.14TOTAL WIP IN
RUPEE2.112.222.332.452.571.pin cum followerraw material cons. Per
year11.8714.3817.1119.0221.09Op. Stock Of Raw
Material0.01.151.391.661.84Work In Progress0.230.240.250.270.28Cl.
Stock Of Raw
Material1.151.391.661.842.04PURCHASES13.2514.8617.6319.4821.57#2.govener
bellraw material cons. Per year9.3811.3713.5315.0416.67Op. Stock Of
Raw Material0.00.911.101.311.46Work In
Progress0.220.230.250.260.27Cl. Stock Of Raw
Material0.911.101.311.461.61PURCHASES10.5111.8013.9815.4517.103.rocker
fulcrum 038raw material cons. Per year7.088.5810.2111.3512.58Op.
Stock Of Raw Material0.00.690.830.991.10Work In
Progress0.140.150.160.170.18Cl. Stock Of Raw
Material0.690.830.991.101.22PURCHASES7.918.8810.5311.6312.884.rocker
fulcrum 026raw material cons. Per year6.277.609.0410.0611.15Op.
Stock Of Raw Material0.00.610.740.880.97Work In
Progress0.130.130.140.150.15Cl. Stock Of Raw
Material0.610.740.880.971.08PURCHASES7.017.869.3210.3011.405.flange
lube oilraw material cons. Per year25.9331.4137.3841.5646.06Op.
Stock Of Raw Material0.02.513.043.624.02Work In
Progress0.320.330.350.370.39Cl. Stock Of Raw
Material2.513.043.624.024.46PURCHASES28.7532.2738.3142.3346.886.starter
plateraw material cons. Per year56.6268.6081.6390.75100.59Op. Stock
Of Raw Material0.05.486.647.908.78Work In
Progress1.071.131.181.241.30Cl. Stock Of Raw
Material5.486.647.908.789.73PURCHASES63.1770.8884.0792.88102.84MACHINING
EXPENSES129.26156.60186.35207.18229.63#SCRAP IN
RUPEES5.076.147.318.139.01#SELLING & ADMN.
EXPENSES6.287.609.0510.0611.15#OTHER MFG.
EXPENSES9.4111.4013.5615.0816.71#SUNDRY
DEBTORS19.6825.8630.8234.4538.19(25 Days Of Sales)SUNDRY CREDITORS
FOR RAW8.079.0610.7511.8713.15Pin cum
follower0.550.620.730.810.90Governer bell0.440.490.580.640.71Rocker
fulcrum 0380.330.370.440.480.54Rocker fulcrum
0260.290.330.390.430.48Flange lube oil
filter1.201.341.601.761.95Starter plate ( 30 Days of
Purchase)5.265.917.017.748.57OTHER
DETAILSDescriptionUnitValueInterest Rate on LT Loans%13.0%Interest
Rate on CASH CREDIT%15.0%Repayment Schedule - LoansYears1 + 4Share
of Unsecured loans in Equity%0.0%Income Tax Rate%30.09%WDV
Depeciation Rates - Land%0.0%WDV Depeciation Rates -
Buildings%10.00%WDV Depeciation Rates - P&M%20.87%WDV
Depeciation Rates - Electrical Installation%13.91%WDV Depeciation
Rates- Inspection & other Eqp.%13.91%WDV Depeciation Rates -
Furniture%18.10%WDV Depeciation Rates - Computer System%40.00%Write
off time for Preliminary & P-op. exp.YearsCost Of
Capital%14.00%WORKING CAPITAL DETAILS (No. of
Days)DescriptionWIP3Finsihed Goods30Debtors25Creditors (except
starter plate)15Margin Money25%
P&L BSPROJECTED PROFITABILITY STATEMENT :(Rs. In
Lakhs)YEAR08-0909-1010-1111-1212-13'SALES283.40372.38443.75496.10549.99OTHER
INCOMESales Of
SCRAP5.076.147.318.139.01TOTAL288.47378.52451.06504.23559.00Op.
Stock Of Finished Goods0.024.8730.1335.8639.87Raw Material
Consumption117.16141.94168.91187.78208.13Machining
expenses129.26156.60186.35207.18229.63Other MFG.
expenses9.4111.4013.5615.0816.71LESS: Cl. Stock Of Finished
Goods24.8730.1335.8639.8744.19TOTAL COST OF
SALES230.94304.67363.09406.03450.14GROSS
MARGIN57.5373.8587.9798.19108.85LESS: Admn.
Expenses6.287.609.0510.0611.15PROFIT BEFORE DEP. &
INT.51.2566.2478.9288.1397.70LESS:
Depreciation28.0422.6818.4215.3817.75PROFIT BEFORE
INTEREST23.2143.5660.5072.7579.95LESS:Interest on Term
Loan17.2615.9712.288.083.31Interest On Cash
Credit5.555.555.555.555.55Preliminary Exp.
W/o0.980.980.980.980.98PROFIT BEFORE
TAX(0.57)21.0641.7058.1470.11Taxable
Profit(0.57)21.0641.7058.1470.11LESS: INCOME
TAX0.06.3412.5517.4921.10Net Profit After
Tax(0.57)14.7229.1540.6449.02Income Tax has been Calculated as per
Income Taxpayable for the assessment year 2008-09.PROJECTED BALANCE
SHEET(Rs. In Lakhs)YEAR08-0909-1010-1111-1212-13'LIABILITIESEquity
Share Capital44.2544.2544.2544.2544.25Reserves &
Surplus(0.57)14.1543.3083.94132.96Subsidy0.025.0025.0025.0025.00Term
LoanTerm Loan132.75105.6874.9239.960.00Cash
Credit37.0037.0037.0037.0037.00Unsecured Loan0.00.00.00.00.0Current
LiabilitiesSundry
Creditors8.079.0610.7511.8713.15Provisions0.780.951.131.261.39TOTAL
LIABILITIES222.28236.09236.35243.28253.75ASSETSFixed
Assets131.76109.0892.16101.78109.03Investments0.00.00.00.00.0MSEB
Deposits0.300.300.300.300.30Subsidy
Receivable0.025.0025.0025.0025.00Current AssetsInventory :Finished
Goods24.8730.1335.8639.8744.19Raw
Material11.3413.7416.3518.1720.14Work In
Progress2.112.222.332.452.570.00.0Sundry
Debtors19.6825.8630.8234.4538.19Cash & Bank
Balance28.3026.8231.5720.2914.33Misc. ExpensesPreliminary
Expenses3.922.941.960.980.0TOTAL
ASSETS222.28236.09236.35243.28253.75PROJECTED CASH FLOW
STATEMENT(Rs. In Lakhs)YEAR08-0909-1010-1111-1212-13'OPENING
CASH0.028.3026.8231.5720.29Profit after
Tax(0.57)14.7229.1540.6449.02Share
Capital44.250.00.00.00.0Unsecured Loan0.00.00.00.00.0Increase /
(Decrease) In Term Loan132.750.00.00.00.0Increase/(Decrease) In
Cash Credit37.000.00.00.00.0Increase/(Decrease) In
Creditors8.070.991.691.131.27Increase/(Decrease) In
Provisions0.780.170.180.130.14Add : Non Cash
ItemsDepreciation28.0422.6818.4215.3817.75Preliminary
Exp.0.980.980.980.980.98TOTAL CASH INFLOW
(A)251.3067.8477.2489.8389.44APPLICATION OF FUNDS:Addition to Fixed
Assets159.810.01.5025.0025.00Pre-Operative
Expenses4.900.00.00.00.0MSEB Deposit0.300.00.00.00.0Term Loan
Principal :Term Loan0.027.0730.7634.9639.96Others
:Increase/(Decrease) In Other Current
Assets0.00.00.00.00.0Increase/(Decrease) in
Investment0.00.00.00.00.0Prepaid
Expenses0.00.00.00.00.0Increase/(Decrease) In
Debtors19.686.184.963.643.74Increase/(Decrease) In Cl.
Stock38.327.778.455.956.41TOTAL CASH OUTFLOW
(B)223.0041.0145.6669.5575.11CLOSING CASH
(A-B)28.3026.8231.5720.2914.33ASSESSMENT OF WORKING CAPITAL
REQUIREMENT(Rs. In Lakhs)YEAR08-0909-1010-1111-1212-13'CURRENT
ASSETSSundry Debtors19.6825.8630.8234.4538.19Closing StockFinished
Goods24.8730.1335.8639.8744.19Raw
Material11.3413.7416.3518.1720.14Work In
Progress2.112.222.332.452.57TOTAL58.0071.9585.3594.94105.09CURRENT
LIABILITIESSundry
Creditors8.079.0610.7511.8713.1517.923.5828.131.4234.83Provision
For
Expenses0.780.951.131.261.39TOTAL8.8610.0111.8813.1314.5418.6824.5329.2332.6736.22Working
Capital Gap (CA-CL)49.1561.9473.4881.8190.55Cash Credit36.86Say
Rs.$37Margin Money For Working Capital12.15Say Rs.12
DepreciationProjected Depreciation ScheduleYearParticularsRate
OfOp.BalanceAdditions/DepreciationClosing
WDVDepreciation(Sale)FirstLand0.00%$55,0000.00.0$55,000Building10.00%$4,070,0000.0$407,000$3,663,000Plant
& Machinery20.87%$10,101,3000.0$2,108,141$7,993,159Electrical
Installation13.91%$740,0000.0$102,934$637,066Inspection & other
Equip.13.91%$552,2000.0$76,811$475,389Furniture18.10%$345,4000.0$62,517$282,883Computer
System40.00%$116,6000.0$46,640$69,960Total$15,980,5000.0$2,804,044$13,176,456SecondLand0.00%$55,0000.00.0$55,000Building10.00%$3,663,0000.0$366,300$3,296,700Plant
& Machinery20.87%$7,993,1590.0$1,668,172$6,324,986Electrical
Installation13.91%$637,0660.0$88,616$548,450Inspection & other
Equip.13.91%$475,3890.0$66,127$409,262Furniture18.10%$282,8830.0$51,202$231,681Computer
System40.00%$69,9600.0$27,984$41,976Total$13,176,4560.0$2,268,400$10,908,056ThirdLand0.00%$55,0000.00.0$55,000Building10.00%$3,296,7000.0$329,670$2,967,030Plant
& Machinery20.87%$6,324,9860.0$1,320,025$5,004,962Electrical
Installation13.91%$548,4500.0$76,289$472,161Inspection & other
Equip.13.91%$409,2620.0$56,928$352,334Furniture18.10%$231,681$100,000$41,934$289,747Computer
System40.00%$41,976$50,000$16,790$75,186Total$10,908,056$150,000$1,841,637$9,216,419FourthLand0.00%$55,0000.00.0$55,000Building10.00%$2,967,0300.0$296,703$2,670,327Plant
&
Machinery20.87%$5,004,962$2,500,000$1,044,536$6,460,426Electrical
Installation13.91%$472,1610.0$65,678$406,483Inspection & other
Equip.13.91%$352,3340.0$49,010$303,324Furniture18.10%$289,7470.0$52,444$237,302Computer
System40.00%$75,1860.0$30,074$45,111Total$9,216,419$2,500,000$1,538,444$10,177,975FifthLand0.00%$55,0000.00.0$55,000Building10.00%$2,670,3270.0$267,033$2,403,294Plant
&
Machinery20.87%$6,460,426$2,500,000$1,348,291$7,612,135Electrical
Installation13.91%$406,4830.0$56,542$349,941Inspection & other
Equip.13.91%$303,3240.0$42,192$261,132Furniture18.10%$237,3020.0$42,952$194,351Computer
System40.00%$45,1110.0$18,045$27,067Total$10,177,975$2,500,000$1,775,054$10,902,920Note
: MSEB Deposit of Rs.30000 has been deducted from Electrical
Installation
RepaymentRepayment ScheduleRate of Interest : 13 %Repayment
Schedule : First year Moratorium PeriodRepayment in 4 Years
ThereonYearQuarterOp.BalanceInstallmentInterestPrincipal
Repay.BalanceFirstI132.750.04.310.0132.75II132.750.04.310.0132.75III132.750.04.310.0132.75IV132.750.04.310.0132.75Total0.017.260.0SecondI132.7510.764.316.45126.30II126.3010.764.106.66119.65III119.6510.763.896.87112.78IV112.7810.763.677.09105.68Total43.0415.9727.07ThirdI105.6810.763.437.3398.36II98.3610.763.207.5690.79III90.7910.762.957.8182.99IV82.9910.762.708.0674.92Total43.0412.2830.76FourthI74.9210.762.438.3366.60II66.6010.762.168.6058.00III58.0010.761.898.8749.13IV49.1310.761.609.1639.96Total43.048.0834.96FifthI39.9610.761.309.4630.50II30.5010.760.999.7720.73III20.7310.760.6710.0910.65IV10.6510.990.3510.640.00Total43.273.3139.96NOTE
;- If a sum P borrowed, is repaid in 'n' equal instalments compound
interestbeing calculated at R % per period of instalment, then the
value of eachinstalment is given byP x Rn$1001 - 100(100 + R)
cash inflowStatement Showing Total Cash Inflow(Rs.in
Lacs)ParticularsYear08-0909-1010-1111-1212-13'1) Total Cash
Inflowa) Net Profit After Tax(0.57)14.7229.1540.6449.02b)
Depreciation28.0422.6818.4215.3817.75c) Preliminay Expenses
W/Off0.980.980.980.980.98Cash
Accurals28.4538.3848.5457.0167.74Add:d) Interest on Term
Loan17.2615.9712.288.083.31e) Interest on
W.C.Loan5.555.555.555.555.55Sub total22.8121.5217.8313.638.86Total
Cash Inflow51.2559.9166.3770.6476.60Net Present
Value44.9652.5558.2261.9667.20284.89Internal rate of
return22%17922474Statement Showing Value Addition(Rs.in
Lacs)ParticularsYear08-0909-1010-1111-1212-13'A)
IncomeSales288.47378.52451.06504.23559.00Total
(A)288.47378.52451.06504.23559.00B) ExpenditureRaw material
Consumed92.28136.68163.18183.78203.81Machining
Expenses129.26156.60186.35207.18229.63Other
Mfg.Expenses9.4111.4013.5615.0816.71Total230.94304.67363.09406.03450.14C)
Value Addition (A-B)57.5373.8587.9798.19108.85D) Value Addition
%19.94%19.51%19.50%19.47%19.47%
payback periodPayback Period(Rs.in Lacs)ParticularsAmountA)
Total Cost OF the Project177.00B) Cash InflowYear - I28.45Year -
II38.38Year - III48.54Year - IV57.01Year - V67.74C) Therefore
Payback Period isA) Total Cost OF the Project177.00Less : Cash
inflow from Year 128.45a) Deficit at the end of year 1148.55Less :
Cash inflow from Year II38.38b) Deficit at the end of year
II110.17Less : Cash inflow from Year III48.54c) Deficit at the end
of year III61.63Less : Cash inflow from Year IV57.01d) Deficit at
the end of year IV4.62Less : Cash inflow from Year V67.74Surplus at
the end of year V(63.13)Pay Back Period (in months)49
DSCRStatement Showing D.S.C.R. & Interest Coverage
RatioParticularsYear08-0909-1010-1111-1212-13'Profit After
Tax(0.57)14.7229.1540.6449.02Add
:Depreciation28.0422.6818.4215.3817.75Net Cash Accruals
(A)27.4737.4147.5756.0366.77Add :Term Loan
Interest17.2615.9712.288.083.31Interest on Working Capital
Loan5.555.555.555.555.55Sub Total (B)22.8121.5217.8313.638.86Amount
available for Debt Service
(C=A+B)50.2758.9365.3969.6675.63Repayment obligationsTowards Term
Loan - Installment17.2643.0443.0443.0443.27Towards Working Capital
Interest5.555.555.555.555.55Sub Total
(D)22.8148.5948.5948.5948.82Debt Service Coverage Ratio
(C/D)2.201.211.351.431.55Averabe Debt Service Coverage
Ratio1.55Note : During the first year no principal repayment will
be made due to moratorium periodHence DSCR appers to be on higher
side.Interest Coverage
RatioParticularsYear08-0909-1010-1111-1212-13'Profit Before
Interest & After Tax (C)50.2758.9365.3969.6675.63Interest on
Term Loan17.2615.9712.288.083.31Interest on Working
Capital5.555.555.555.555.55Sub Total
(E)22.8121.5217.8313.638.86Interest Coverage Ratio
(C/E)2.202.743.675.118.54Average Interest Coverage Ratio4.45
RatiosRatio AnalysisSr.
NODescriptionYears08-0909-1010-1111-1212-13'1current ratio= current
assets,loans & advances86.3098.77116.92115.23119.42current
liabilities & provisions45.8647.0148.8850.1351.54Ratio
=1.882.102.392.302.32Average2.202Quick liquid ratio= CA,loans &
advances-inventories47.9852.6862.3954.7452.52CL &
provisions-bank overdraft45.8647.0148.8850.1351.54Ratio
=1.051.121.281.091.02Average1.11Leverage ratios4Debt-equity ratio=
long term debt132.75105.6874.9239.960.00shareholders
funds43.6858.4087.55128.19177.21Ratio
=3.041.810.860.310.00Average1.505Proprietary ratio= shareholders
net worth43.6858.4087.55128.19177.21total
assets218.37233.15234.39242.30253.75Ratio
=0.200.250.370.530.70Average0.416Debt service coverage ratio=
PAT+Dep.+interest on loan50.2758.9365.3969.6675.63Interest on
loan+loan repayment in year22.8148.5948.5948.5948.82Ratio
=2.201.211.351.431.55Average1.557Inventory turnover ratio=
sales283.40372.38443.75496.10549.99average
inventory24.8727.5033.0037.8642.03Ratio
=11.3913.5413.4513.1013.09Average12.918Avg.Consumption period=
Avg.inventory
X3659,078.7410,038.9912,044.1713,820.5515,340.23sales283.40372.38443.75496.10549.99Ratio
=32.0326.9627.1427.8627.89Average28.389Debtors turnover ratio=
credit sales283.40372.38443.75496.10549.99average
debtors19.6822.7728.3432.6336.32Ratio
=14.4016.3515.6615.2015.14Average15.3510Debtors collection period=
average debtors X
3657,183.508,311.1010,343.3111,911.3313,257.70credit
sales283.40372.38443.75496.10549.99Ratio
=25.3522.3223.3124.0124.11Average23.8211Creditors turnover ratio=
credit purchases130.61146.56173.85192.06212.67average
creditors8.078.579.9011.3112.51Ratio
=16.1817.1117.5516.9817.00Average16.9612Creditors payment period=
average creditors
X3652,947.043,126.953,614.704,127.974,565.86credit
purchases130.61146.56173.85192.06212.67Ratio
=22.5621.3420.7921.4921.47Average21.5313Fixed assets turnover
ratio= sales283.40372.38443.75496.10549.99fixed
assets131.76109.0892.16101.78109.03Ratio
=2.153.414.814.875.04Average4.0614Total assets turnover ratio=
sales283.40372.38443.75496.10549.99total
assets218.37233.15234.39242.30253.75Ratio
=1.301.601.892.052.17Average1.8015Working capital turnover ratio=
sales283.40372.38443.75496.10549.99working
capital49.1561.9473.4881.8190.55Ratio
=5.776.016.046.066.07Average5.9916capital employed turnover ratio=
sales283.40372.38443.75496.10549.99capital
employed176.43164.08162.47168.16177.21Ratio
=1.612.272.732.953.10Average2.5317Gross profit margin= gross profit
X10057.5373.8587.9798.19108.85sales283.40372.38443.75496.10549.99Ratio
=20.3019.8319.8219.7919.79Average19.9118Net profit margin= net
profit before interst & tax
X10023.2143.5660.5072.7579.95sales283.40372.38443.75496.10549.99Ratio
=8.1911.7013.6314.6614.54Average12.5419Cash profit ratio= cash
profit
X10027.4737.4147.5756.0366.77sales283.40372.38443.75496.10549.99Ratio
=9.6910.0510.7211.2912.14Average10.7820Return on capital employed=
Net profit X100-0.5714.7229.1540.6449.02capital
employed176.43164.08162.47168.16177.21Ratio
=-0.338.9717.9424.1727.66Average15.6821Return on assets= net profit
X
100-0.5714.7229.1540.6449.02assets218.37233.15234.39242.30253.75Ratio
=-0.266.3112.4416.7719.32Average10.92
ratioRatio AnalysisSr.
NODescriptionYears08-0909-1010-1111-1212-13'1current ratio=
CA,loans & adv.86.3098.77116.92115.23119.42CL &
prov.45.8647.0148.8850.1351.54Ratio
=1.882.102.392.302.32Average2.20Sr.
NODescriptionYears08-0909-1010-1111-1212-13'2Quick liquid ratio=
CA,loans & adv.-invt.47.9852.6862.3954.7452.52CL &
provisions-BOD45.8647.0148.8850.1351.54Ratio
=1.051.121.281.091.02Average1.11Sr.
NODescriptionYears08-0909-1010-1111-1212-13'3Debt-equity ratio=
long term debt132.75105.6874.9239.960.00shareholders
funds43.6858.4087.55128.19177.21Ratio
=3.041.810.860.310.00Average1.50Sr.
NODescriptionYears08-0909-1010-1111-1212-13'4Proprietary ratio=
shareholders net worth43.6858.4087.55128.19177.21total
assets218.37
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