A STUDY ON

FINANCIALPERFORMACE A CASE STUDY ON BHARATHI SOAP WORKS Ltd.

A Project Report Submitted to the KRISHNA UNIVERSITY (KU) in partial fulfillment for the award of

the degree of

MASTER OF BUSINESS ADMINISTRATION

BYG. SRIKANTH

(Regd No:Y11MBA134079)

Under the Guidance ofG. DAVID RAJU MBA., M.Phil.

Asst ProfessorDept. of Business Administration

KBN College-PG Center, Vijayawada.

K.B.N COLLEGE P.G CENTRE(Affiliated to Krishna University)

VIJAYAWADA-5200012011-13

1

DECLARATION

I affirm that the project work titled A STUDY ON

“FINANCIAL PERFORMANE OF BHARATHI SOAP

WORKS LTD,GUNTUR” being submitted by me to the

Department of Business Adminstration of KBN COLLEGE

PG CENTRE (Affiliated to Krishna University),Vijayawada,

under the guidance of Mr.G.DAVID RAJU, MBA, M.Phil,

(Ph.D), is my own work and has not been submitted to any

other University/Institution for the award of any

Degree/Diploma.

Signature of the Candidate GUDAPATI.SRIKANTH

Regd.No:Y11MBA134079

Station :VIJAYAWADADate :

2

BONAFIDE CERTIFICATE

This is to certify that the project entitled A STUDY ON “FINANCIAL

PERFORMANE OF BHARATHI SOAP WORKS LTD,

GUNTUR” is the bonafide record of project work done by Mr.

G.SRIKANTH Regd.No: Y11MBA134079 of MBA during the

year 2011-13

Signature SignatureHead of the Department PROJECT GUIDE

Submitted for the Project Viva-Voce examination held on______________

INTERNAL EXAMINER EXTERNAL EXAMINER

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ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and

supported me during the project work and writing the report.

I am grateful Dr Y.Narsimha Rao, M.Com, Ph.D., Director, KBN

College P.G.Centre,Vijayawada , for permitting me to undergo summer

training for a period of month in BHARATHI SOAP WORKS Ltd,

GUNTUR.

My deepest thanks to G.DAVID RAJU, MBA, M.Phil, (Ph.D),

Assistant professor. the Guide of the project for guiding and correcting

various documents of mine with attention and care. He has taken pain to

go through the project and make necessary correction as and when

needed

My deep sense of gratitude to Mr.MANIKYAVELU,MD .,

[BHARATHI SOAP WORKS LTD.,] support and guidance of

MR.Subramanyam&MR.Ramarao.Thanks and appreciation to

the helpful people at [BHARATHI SOAP WORKS LTD.,], for

their support.

I would also thank my Institution and my faculty members without whom

this project would have been a distant reality. I also extend my heartfelt

thanks to my family and well wishes.

4

Name & Signature of the Candidate

LIST OF TABLES

TABLE NO TABLE NAME PAGE NO1 Current ratio 612 Quick ratio 633 Cash ratio 654 Debt capital ratio 675 To debt to total assets ratio 696 Proprietory ratio 717 Inventory turnover ratio 738 Debtor turnover ratio 759 Debtor collection period 7710 Fixed assets turnover ratio 7911 Working capital turnover ratio 8112 Total assets turnover ratio 8313 Gross profit ratio 8514 Net profit ratio 8715 Return on investment 8916 Return on equity 91

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LIST OF GRAPHS

TABLE NO GRAPH NAME PAGE NO1 Current ratio 622 Quick ratio 643 Cash ratio 664 Debt capital ratio 685 To debt to total assets ratio 706 Proprietory ratio 727 Inventory turnover ratio 748 Debtor turnover ratio 769 Debtor collection period 7810 Fixed assets turnover ratio 8011 Working capital turnover ratio 8212 Total assets turnover ratio 8413 Gross profit ratio 86

14 Net profit ratio 8815 Return on investment 9016 Return on equity 92

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CONTENTS

CHAPTER NO NAME OF THE CHAPTER PAGE

CHAPTER NO I INTRODUCTION 8

Objectivs of Study

Need of the Study

Scope of the study

Methodology of the study

Limitations of the Study

CHAPTER NO II INDUSTRY PROFILE 14

CHAPTER NO III COMPANY PROFILE 34

CHAPTER NO IV THERIOTICAL FRAME WORK 44

CHAPTER NO V DATA ANALYSIS

& 59

INTERPRETATION

CHAPTER NO VI FINDINGS, SUGGESTIONS 93

CONCLUSION

BIBLIOGRAPHY 100

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CHAPER-I

INTRODUCTION

8

RATIO ANALYSIS

INTRODUCTION OF RATIO ANALYSIS:

Ratio analysis is the process of determining and interpreting numerical

relationship based on financial statements. A ratio is a statistical yard stick that

provides a measure of the relationship between variables of figures. Thus

relationship can be expressed as a percentage on as quotient.

Ratio analysis is a powerful tool of financial analysis. In finance

analysis ratio is used as a bench mark of a firm. The absolute accounting

figures reported in the financial statements do provide a meaning full

understanding of the performance and financial position of the firm. Ratio help

summarize large quantities of financial data and to make qualitative judgment

about the firms financial performances.

Ratio analysis is the systematic use of ratio to interpret the “Financial

Statement so that the strength and weakness of a firm as well as its historical

performance and current financial position can be determined. The relational of

ratio analysis lies in the fact that it makes related information comparable. A

single figure by it self has no meaning but when expressed in terms of related

figure. It yields significant inferences.

Meaning of Ratio: A ratio is a comparison of the numerator with the

denominator. In other words, ratio expresses the significant relation ship

between two figures. A percentage is also a ratio multiplies by 100.

The most common ratios which indicate the extent of liquidity of lack of

it are the following.

1. Current ratio

2. Quick ratio

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3. Cash ratio

4. Net working capital ratio

OBJECTIVES OF THE STUDY:-

Following are the specific objectives of the present study:

To study the financial position of the BHARATHI SOAP WORKS

through ratios.

To present the theoretical frame work relating to ratio analysis.

To know the simplifying accounting figures between the years

To know operational efficiency of the BHARATHI SOAP WORKS

To know the locating of weak spot of the Business

To know the profitability position of BHARATHI SOAP WORKS

To know short term solvency position and liquidity position of the

BHARATHI SOAP WORKS.

To offer findings, suggestions and conclusions of study.

METHODOLOGY OF THE STUDY:-

The study has been conducted in the “BHARATHI SOAP WORKS to

examine ration analysis in order to enquire into the issues like liquidity,

timelines and Material Management.

The study has been undertaken in the Accounting & Finance departments of

the “BHARATHI SOAP WORKS

Primary Data:

10

The primary data is collected by discussions with the functional

managers, officers, staff and other members of the BHARATHI SOAP

WORKS

Secondary Data:

The secondary data is obtained from annual report and financial

statement that is balance sheet and profit and loss account, annual reports,

journals, and other informational publications of the “BHARATHI SOAP

WORKS and from the text books of financial management.

Techniques of analysis & Interpretation:-

1. Comparative Financial Statement

2. Common Size Statement

3. Trend Percentage Analysis

4. Funds Flow Statement

5. Cash Flow Statement

6. Net Working Capital Analysis

7. Ratio Analysis

SCOPE OF THE STUDY:-

This project is as a reference guide or as a source of information. It gives the

idea about the financial analysis of a firm.

The main objective of the study was to the study was to put into

practical the theoretical aspect of the study into real life work

experience.

11

The study aims to study the liquidity position of the firm. Ratio analysis

has been used to analyses the financial position of the firm.

It deals with analysis an interpretation of data collected through the

sources primary and secondary data. Graphs and diagrams and

tabulation method are used to analyze and interpret the data collect.

LIMITATIONS OF THE STUDY:-

The study is subject to some limitations.

The study is limited a set universe comprising of the five years samples

The controllable constraints are over looked.

The study is purely based on the secondary data records available in the

company like balance sheets, profit and loss accounts and annual

reports.

All above Captioned limitations of ratio analysis are duly considered

while making the ratio analysis of BHARATHI SOAP WORKS.

There was no scope of gathering current information, as the auditing has

not been done by time of project work.

12

CHAPER-II

13

INDUSTRY PROFILE

INDUSTRY PROFILE

14

After expanding at a snail’s pace, the market for personal wash

products appears to have come to grinding halt in 2001. After posting modest

single digit growth in 1997-2000 figures for the first seven months suggest that

market for detergent soaps has actually shrunk.

Estimates about the extent of declines in market size vary,

Hindustan lever, which straddles. The category with 60% market share by

value, say the market shrunk by 4.5% in value terms in the first half of 2001.

The Indian Soap and Detergent Manufactures Association, puts

the decline at 1%. Other industry sources suggest that the extent of “De-

growth” in the first eight months of 2005 could be as high as 7%.

DEVELOPMENT OF THE DETERGENT INDUSTRY :-

Although the start of the synthetic detergent industry is not shrouded in

the veils of history as were the beginnings of the soap industry, it is

nevertheless not easy to pinpoint exactly when the detergent industry, as such,

came into being. The primary problem is to decide exactly what is being

referred to as a synthetic detergent. The term itself leads to confusion. In the

INDIA the words surfactant or syndet are being used, whilst in Europe the term

'ten side' (for tensio-active material) is coming into fashion.

But if the shrinking market size suggest that Indian consumers are

actually been cutting back on their use of detergent soaps,

This is not really the case. In volume terms, the market for detergent

soaps has continued to show a growth of 10% in the first eight months of 2005

15

The major players have certainly managed to sell more detergent soaps

by volume but price competition in the segment and slew of promotional

campaigns have reduced the effective realization per unit sold. This has

probably neutralized the gains from volume expansion.

DEFINITIONS :-

Many definitions of synthetic detergent have been proposed, all of which are

very wide. The Comity International de Derives Tension Actives has after

several years of deliberation agreed on the following definitions:

Detergent: Product the formulation of which is specially devised to promote the

development of detergency. Note: A detergent is a formulation comprising

essential constituents (surface active agents) and subsidiary constituents

(builders, boosters, fillers and auxiliaries).

Surface Active Agent: Chemical compound which, when dissolved or

dispersed in a liquid is preferentially absorbed at an interface, giving rise to a

number of physic-chemical or chemical properties of practical interest. The

molecule of the compound includes at least one group with an affinity for

markedly polar surfaces, ensuring in most cases solubilization in water, and a

group which has little affinity for water. Note: Compositions in general are

usually mixtures of such compounds.

Amphiphilic Product: Product comprising in its molecule, at the

same time one or more hydrophilic groups and one or more hydrophobic

groups. Note: surface active agents are amphiphilic products.

SYNTHETIC DETERGENTS :-

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The term "synthetic detergent" is used throughout this article, for

a material which cleans (or is used for cleaning), but in this definition soap is

not included. Even so, this is still a wide definition, because, of course, it can

refer to the active ingredient, or the solid, liquid, paste or powder compounded

from this active matter. However, this should not lead to confusion, as the

industry itself as yet makes no distinction in terminology between the basic

material and the ready-for-use product.

The first synthetic detergents which fall into our definition of the

term seem to have been developed by the Germans in the First World War

period to allow fats to be utilized for other purposes. These detergents were of

the short-chain alkyl naphthalene sulphonate type, made by coupling propyl or

butyl alcohols with naphthalene and subsequent sulphonation, and appeared

under the general name of Nekal. These products proved to be only fair to

moderately good detergents, but good wetting agents and are still being

produced in large quantities for use as textile auxiliaries.

In the late 1920s and early 1930s long-chain alcohols were

sulphonated and sold as the neutralized sodium salts without any further

additions except for sodium sulphate as an extender.

In the early 1930s long-chain alkyl aryl sulphonates with

benzene as the aromatic nucleus, and the alkyl portion made from a kerosene

fraction, appeared on the market in the USA. Again, these were available as the

sodium salts extended with sodium sulphate. Both the alcohol sulphates and

the alkyl aryl sulphonates were sold as such as cleaning materials, but did not

make any appreciable impression on the total market.

At the end of the Second World War alkyl aryl sulphonates had

almost completely swamped the sales of alcohol sulphates for the limited uses

to which they were applied as general cleaning materials, but the alcohol

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sulphates were making big inroads into the shampoo field. An exception was

Teepol, a secondary alcohol sulphate which remained popular for some years.

In common, however, with other chemical developments during

this century, progress was not in one direction only. The limiting factor is

always the availability of raw materials in a particular country. Con-currently

with the above developments, there were developed, both in Germany and the

USA, the lgepon type of compounds of which lgepon-T, the sodium salt of

oleyl tauride is an example, and in Germany the Mersolates, which are alkane

sulphates.

In the United Kingdom, Teepol, a secondary olefine sulphate

from petrochemical sources, was manufactured in large quantities and is still

being produced in England and western Europe to this day.

Each of these basic materials has its advantages and disadvantages, but in

considering the feasibility of production the following factors must be taken

into account.

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Availability of raw materials;

Ease of manufacture;

Cost of raw materials;

Cost of manufacture;

Suitability of finished product.

We have purposely placed suitability last, as it is only too true

that not always is the best material made available.

As a result of its ease of manufacture and versatility, the alkyl

benzene sulphonate very quickly gained a foothold in the market, and after the

last war the existing keryl benzene was very quickly replaced by an alkyl

benzene made from propylene tetramer coupled to benzene (PT benzene).

This PT benzene very quickly displaced all other basic detergents

and for the period 1950-65 considerably more than half the detergents used

throughout the world were based on this.

SYNTHETIC DETERGENTS PRODUCTION:-

To give an idea about the enormous rise in synthetic

detergent production, Table-1 compiled from figures submitted by the

American Soap and Detergent Association and the German firm of

Henkel & Cie shows both soap and detergent sales in the USA for

various years to 1972.

SALES TURNOVER IN INDIA:-

INDIA 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

0

10

20

30

40

50

60

70

80

90

East West North Soap and Detergent sales (Year)

Soap Sales 1000 tons

Synthetic sales 1000 tons

1940 1410 4.5

1950 1340 655

1960 583 1645

1972 587 4448

19

1982 620 4680

1992 580 4580

2002 620 4850

2007 650 4900

GRAPHICAL REPRESENTATION OF SALES

TURNOVER IN INDIA:-

20

1940 1950 1960 1970 1980 1990 2000 20070

1000

2000

3000

4000

5000

6000

These figures reveal that immediately after the Second

World War synthetics started making inroads into the production of

soap, which now seems to have settled down to a constant whereas

synthetics have increased enormously.

By 1959 although the US per capita consumption had somewhat leveled

out, total production was still rising as shown in Table 2 which has been

compiled from the 1963 Census of Manufacturers by the Bureau of Census of

the US Department of Commerce and from the Henkel figures

PRODUCTION OF DETERGENTS IN FIGURES:-

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Comparative Production Figures for Synthetic Detergents

Domestic detergents (solid)

Domestic detergents (liquid )

1950 (1000 tons) 1200 354

1960 (1000 tons) 1425 640

1970 (1000 tons) 2672 1773

1980 (1000 tons) 3000 2228

1990 (1000 tons) 3780 2872

2000 (1000 tons) 4280 3287

2007 (1000 tons) 4500 3885

GRAPHICAL REPRESENTATION OF PRODUCTION

TURNOVER IN INDIA:-

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0500

100015002000250030003500400045005000

domestic de-tergents(solid)

domestic de-tergents(liquid)

The broad picture that appears from Table 2 is that while

solid detergents (among which of course powders are included) are

making great strides forward, the liquid detergents are increasing at a

much faster rate.

LOW PRICED BRANDS:-

Industry player commonly attribute the de-growth in the

soap market to down trading. Detergent soaps are the highest penetrated

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product with in the FMCG market, reaching an estimate 95% of the

urban and 87% of the rural house holds. The fairly high contribution

from the rural markets makes this category sensitive to the fortune of the

agricultural economy.

The prolonged drought in north and west of the country

(until 2000) and the sharp fall in farm disposable income has probably

persuaded low income house holds to the down trend, that is shift from

high to low price brands.

This is indeed supported by the fact that with in detergent

soaps, it is the discount segment (soaps that cost between 5-10 per

75gms) that has registered the highest growth rate over the past years.

HLL to appear to endorse the phenomenon of down trading. “There has

been an inter-spectral shift in the soap market, with consumer down

trading from premium and popular to discount soaps” explains the

company’s spokesperson.

However Mr. Hosherder.K press Godrej consumer care,

begs to differ “We think consumers have already pre-committed there

incomes for installments on durables. The substitution of soap with

shampoos for hair wash has also impacted the growth” he said.

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MORE OFFERINGS:-

This is despite the fact that this usually sleepy category

has seen a spate of new players debut new offers in recent times. Over

the past couple of years, NIRMA has lunched a slew of low priced soaps

under the banner of NIRMA.

Henkel spik has made a maiden foray in to the market with

a far range of detergent soaps. The market leader HLL to relaynced

several detergent soaps.

WASHING IMPROVEMENTS:-

After the war, when detergents started appearing in

appreciable quantities on the retail market, it was noted that white cotton

goods were not being washed as white as they should be. This was

explained by the fact that although the active material was able to lift the

dirt from the cloth it could not keep it in suspension. Hence small spots

of dirt were being re-deposited uniformly over the whole surface area of

the cloth while in the wash-tub or machine, thus giving the cloth a grey

appearance.

BETTER QUALITY:-

The crowded market place has also brought a few benefits to the

consumer marketers of soap have tried to woo consumers through un

graded offerings and better quality soaps. Aided by low input prices, the

marketers of detergents have increased the content in their brands, to

offer better quality soaps at a low price. Industry watchers say the

content in some brands has risen from 50-60% of earlier to 70%of late.

Therefore, per unit realization an soaps have declined, the marketers of

soap have actually sacrificed a part of their margins on hiking the

content.

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TOUGH TIMES A HEAD:-

With competitive pressures on the rise and a large number of

brands jostling for consumer attention in sluggish market likely to

remain a different one for most players.

Smaller players such as Godrej Consumer and Henkel Spic have been in

a position to report rebust sales growth in the category over the past

years despite the bruising competition.

However, this is partly due to a relatively small base of

comparison. Unless the market expands, the frenetic promotional

activity may soon tell on the growth rate of players. And when it comes

to sustaining a high decibel promotional campaign, HLL’s size certainly

gives is the where withal to do it.

RURAL REVIVAL:-

It appears that a genuine boost to the market size for detergent

soaps will still have to come from a survival in rural demand.

Evidence from the past does appear to suggest that a sharp rise in rural

incomes would have a cascading affect on market in 1999, after a year

of sluggish growth in 1998, demonstrated that a recovery in agricultural

output does have on indirect impact on sales volumes of FMCG

products.

This year, reports of a good monsoon in the northern & western

parts of the country have sparked off speculation about a revival in

FMCG growth rates. The fact these two regions account for 60% of the

demand for FMCG strengthens this agreement.

26

However, it appears to be a bit early in the day to call it revival. For one,

while the northern & western regions have received satisfactory rein,

southern India has been the victim of very erratic monsoon.

Second, given that the good monsoon in the current year

succeeds two or three consecutive years of drought in some regions,

there could be a substantial time tag before higher rural incomes

translates into better FMCG demand.

Third, farm product prices have dropped sharply in

response to built up of surplus grain stocks. Therefore, even if a good

monsoon translate into agricultural output, there is the question of

whether this will actually expand or shrink farm incomes.

These factors suggest that it may be premature to take

investment exposures in companies focused on detergent soaps in the

hope of revival.

If may be better to wait for concrete signs of o pickup in

rural demand, which is certainly some way off.

THE SOAP MARKET; NOT EXACTLY BUILDING :-

Year Volume Growth(%) Realization(Rs/tons) Growth(%)

2003 4,32,254.00 3.6 46,237.00 10.5

2004 4,48,141.00 3.7 52,155.00 12.8

2005 4,56,040.00 1.8 53,443.00 2.5

2006 4,71,000.00 3.3 56,203.00 5.2

2007 4,98,800.00 4.8 56,320.00 0.2

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CARBOXYMETHYLCELLULOSE (CMC):-

The sodium salt of carboxymethylcellulose (CMC) had

been known to industry for many years and, in fact, a French patent had

been applied for in 1936,1 using CMC as an additive to washing

materials. However, this patent was not developed extensively until the

Second World War, when CMC was used in Germany on a moderately

large scale, initially as an extender for soap which was in short supply,

and then as an additive to the synthetic detergents being produced as a

wartime substitute for soaps. When intelligence reports on the German

industry were published, the use of CMC as an additive to synthetic

detergent powders was noted and investigated and it was found that this

addition eliminated the redeposit ion problem.

BUILDERS :-

Despite the considerable advances made in the production

of the active detergent matter, by the end of the Second World War

progress in the use of detergents for heavy-duty (cotton) washing was

still relatively slow, although they had already displaced soaps to a

considerable extent in the field of fine laundering and dish-washing.

To improve the heavy-duty washing properties,

manufacturers turned for analogies to the soap industry. Soap for cotton

washing had for many years been 'built' with alkaline materials such as

carbonates, silicates, borax, and orthophosphates. All of these singly and

in combination were tried with moderate success.

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Condensed phosphates had started appearing on the

market in increasing quantities and from 1947 onwards heavy-duty

detergent formulations were introduced, initially with tetra sodium

pyrophosphate and then with sodium tripolyphosphate with startling

success.

PRODUCTION OF SODIUM TRIPOLYPHOSPHATE:-

Tons

1947 102,000

1950 280,000

1959 700,000

1964 80,000,000

1967 95,000,000

1970 109,000,000

1972 94,000,000

1974 82,000,000

1984 90,000,000

1994 100,000,000

DATA: Taken from the INDIAN Department of Commerce figures

It will be noted that there is a falling off after 1970. The

reason is a combination of restrictions on and opposition to the use of

phosphates, and also international shortages of raw materials.

29

ENVIRONMENTAL ISSUES:-

Propylene tetramer benzene sulphonate held almost

undisputed sway as the major ingredient used in washing operations till

the early 1960s. Around this time it was noted, however, that sewage

treatment problems were arising. The amount of foam on rivers was

increasing and where water was being drawn from wells located close to

household discharge points, the water tended to foam when coming out

of the tap. This was attributed to the fact that propylene-based alkyl

benzene sulphonates are not completely degraded by the bacteria

naturally present in effluents, and was further narrowed down to the fact

that it is the branched-chain formation of the alkyl benzene which

hinders the attack by the bacteria. However, fatty acid sulphates were

found to degrade very easily, and since all naturally occurring fatty acids

from which fatty alcohols are produced are of the straight-chain variety

(as also are the Ziegier alcohols which started appearing in commercial

quantities at about this time), it seemed possible that a straight-chain

alkyl benzene might be degradable.

Methods of test were developed and it was, in fact, proved that linear

alkyl benzene is biodegradable. Germany introduced legislation

prohibiting the discharge of non-biologically degradable material into

sewer systems. In the USA detergent manufacturers agreed voluntarily

to switch over from PT benzene to linear alkyl benzene by June 1965. In

the United Kingdom a similar type of 'gentleman's agreement' was

entered into.

30

The change to linear alkyl benzene (which can be considered as a return

to a purified form of the keryl benzene in use twenty years previously) gave

some rather surprising results. It was found that the detergency in a heavy-duty

formulation using linear alkyl benzene sulphonate was approximately 10 per

cent better than when using PT benzene sulphonate, solutions of the neutralized

sulphonic acid had a lower cloud point, and pastes and slurries had a lower

viscosity. The first two results were obviously advantageous and a lower

viscosity in slurries had an advantage when the product was spray-dried to a

powder, but when the LAS was sold as a liquid or paste detergent, this lower

viscosity had to be overcome as sales appeal was lost. The manufacture of

powders based on LAS posed some problems, however. Powders became

sticky and lost their free-flowing characteristics, whether made by spray-drying

or one of the other methods.

Mouser and Rainer' have indicated that the actual isomer

distribution of the linear alkalyte has an effect on the stickiness of the powder,

with the 2-phenyl isomer giving the greatest tendency to stickiness and the 5-

or 6-phenyl isomer the least. Additives to overcome this tendency have

therefore been developed.

The switch to linear alkyl benzene is not, however, complete. In

many parts of the world where the problem of sewage treatment is not serious,

the PT benzene is still being used in ever-growing quantities. Also the Ziegler

alcohols are now competitively priced with the linear alkyl benzenes, and

alkane sulphonates are reappearing. Having successfully coped with the

problem of biodegradation the industry faced a new attack. It appeared that in

certain lakes and ponds algae started reproducing at an unprecedented rate.

This was blamed on the extensive use of phosphates which are a food for these

organisms, and again the detergent industry became the whipping boy, because

tremendous amounts of sodium tripolyphosphate are used and then discharged

down the sewer. (The term eutrophication, meaning nutrition by chemical

31

means, has been applied to this phenomenon.) It is not clear whether the blame

should be taken solely by the detergent industry, as concurrently with the

increase in the use of detergent phosphates there was an increase in the use of

phosphate fertilizers, which also find their way into natural water systems.

However, with the big international preoccupation with ecology the detergent

industry is searching for an efficient substitute for sodium tripolyphosphate.

To date a complete replacement has not been found but in the

Scandinavian countries particularly, formulations of household powders

are beginning to appear with appreciable portions of the phosphate

replaced by NTA (nitrilo triacetic acid) which is a better sequestering

agent than tripolyphosphate but has none of the other properties

exhibited by the phosphate. There are fears that in time the extended use

of NTA might bring new problems of this sort, as it contains nitrogen

which is again a good fertilizer and nutrient for algae.

The search is still going on for a phosphate substitute. NTA on its

own will only partially replace phosphates. A mixture of NTA and borax has

been suggested as a complete replacement but here again the borax might

produce more problems than the phosphate is alleged to produce. Some of the

hydroxy-polycarboxylic acids not containing nitrogen are also being

considered.

Enzymes:-The biggest single revolutionary trend in the detergent industry in the

latter years has been the use of enzyme additives. Enzymes as aids to washing

are not new to the industry. Proteolytic enzymes had been tried as additives to

washing powders in Germany in the 1920s with only moderate success and

again in Switzerland in the 1930s. Enzymes, which can be called organic

catalysts, tend to hasten reactions and the proteolytic enzymes convert or 'break

down' proteins wholly or partially into amino acids. The action is rather slow

32

and the production costs high, but with improved methods of production and

purification, strains of enzymes, usually in admixture with a proportion of

amylase which breaks down starches, were developed which were relatively

fast acting. These were added initially to 'pre-soak' detergents and found

immediate acceptance in the European countries where washing habits were

such that washing was normally soaked for a period prior to the wash proper.

Better and better strains of enzymes were developed, with

stability to a wider pH spectrum, stability against perborate and quicker action.

In the United States detergent manufacturers resisted the incorporation of

enzymes into their powders for some years after this type of powder had almost

completely swept the board in Europe but in 1968 enzymatic powders started

appearing there as well. The position at present is that enzymatic powders are

now holding a large proportion of the household detergent market and

formulations appeared made for machine washing.

Some washing-machine manufacturers are now producing

automatic washing machines with a 'Bio' programme which allows the washing

to remain in contact with the detergent solution for an extended period of time

at a relatively low temperature before beginning the washing and heating cycle.

The future of enzymes is at the moment obscure as the production of enzymatic

powders has raised its own problems, and one Scandinavian firm has already

decided to withdraw its powder containing enzymes from the market, but other

large firms are taking enzymes out of some of their powders while forging

ahead with others.

33

CHAPER-III COMPANY PROFILE

COMPANY PROFILE

SRI.A.MANICKAVEL, Proprietor of BHARATHI SOAP WORKS, came to

GUNTUR in 1980 with 2000/- cash and brought some detergents cakes cases

34

from CHENNAI by train and he sold the soaps by rickshaw canvassing door to

door. He got good response in Guntur.

Then he planed to start a factory at Guntur with a initial capital investment of

65000/- and started business on 8-7-1981 at Pothurivari thota, Maya bazaar,

Guntur under the name and style of m/s BHARATHI SOAP WORKS.

The industry was registered under small scale industries (SSI) unit with district

industries centre, Guntur. In the initial stage he run his factory with 12 workers

with manual labour. Later with his hard work he earned and shifted to Gorantla

village, Guntur mandal in 1985. In the factory manickavel has introduced

power mortars in Guntur for the first time.

In the initial stage the products were sold only in prakasam district &

Guntur district only. But, now with their commitment for the industry growth

they worked a lot. The result of hard is the company has got a great reputation

not only in Andhra Pradesh but also in remaining states of southern India.

This is achieved by appointing salesmen at different areas. Through its

management & staff coordination, it acquired a good position in the detergent

industry.

GROWTH & EXPANSION OF BHARATHI SOAP WORKS:-

The company is expanding their performance day to day. They also

implemented new machines to improve production capacity & they supplied

the goods in time. The company has expanded due to quality & quantity

management. The initial works capital of company is Rs.65000/- but now it

reached Rs.64,98,817/-(nearly hundred times of initial capital). This shows the

staff coordination towards company objectives.

35

The company has too increased its marketing & promotional activities

when we go to reports of the company sales turnover. The report shows that

company has increased sales to Rs.8,71,19,174/- when compared to 24,00,000/-

in the initial stage of the company.

PRODUCTS :-

SI NO BRAND NAME

1 BLUE DIAMOND

2 MAGIC

3 BHAVANI

4 SUPER POWER BINKA

5 SAREGAMA

6 TRIPLE X ( XXX )

7 XXX RUF & TUF ( DISH WASH )

8 TRIPLE X DETERGENT POWDER

QUALITY OBJECTIVES OF ORGANISATION:-

To improve sales compared to last year

To improve the consumer satisfaction level

To reduce the wastage in production

To update the knowledge of the employees

To continually improve the process

QUALITY POLICY:-

36

The company has set a quality policy for better growth in the market by

taking a edge over remaining organizations in the industry. The policy is:

“satisfy our costumer by providing quality and services to strive towards

continual improvement of the company”

SALES TURNOVER OF THE COMPANY:-

YEAR PRODUCTS SALES TURNOVER(RS)

2003-2004 Detergents & powder 1,60,85,051.07

2004-2005 Detergents & powder 6,09,56,134.06

2005-2006 Detergents & powder 7,27,69,815.33

2006-2007 Detergents & powder 8,71,19,174.47

2007-2008 Detergents & powder 10,11,99,557.10

2008-2009 Detergents & powder 19,09,69,819.00

2009-2010 Detergents & powder 34,43,23,299.36

GRAPHICAL REPRESENTATION:-

37

2003

-...

2004

-...

2005

-...

2006

-...

2007

-...

2008

-...

2009

-...

050000000

100000000150000000200000000250000000300000000350000000400000000

M/S Bharathi Soap Works initially manufactured only medium

products now they are manufacturing Premium, Economy quality products.

To face competition by improving market share they introduced

different types new brands and packing styles to suit the desires of the

consumers.

The main aim of the company is to supply quality products to

consumers. Quality is more important than profit. It is the key factor for the

success of the company. The company stress upon the quality of

the products rather than its profit margins.

38

This motivational policy to earn huge market share at all places of southern

India.

PRODUCTION CAPACITY:-

The company has an excellent production capacity. The present installed

production capacity of the company is 35-40 Tons of detergent soaps per day

and 20 Tons of detergents powder per day. The machines are operated

according to the demand in the market in that particular situation.

WORKERS WELFARE:-

At present there are 76 workers at production department and 5

employees at office, 2 employees in the canteen and 17 employees as transport

workers.

The company provides complete assistance and facilities to the employees,

workers dedicatedly contributed to increase its market share.

The working environment brings about a pleasant atmosphere and enables the

employees work dedicatedly.

And also he is providing employment for mare than 1000 families in directly

for marketing his products all over southern India.

ORGANIZATION STRUCTURE:-

The company’s organization structure is as follows

39

FUTURE PLANNING:-

The company is planning to introduce quality liquid blue and

toilet soaps in the short period.

ANNAM TRADERS:-

This is sister concern of the Bharathi soap works. The above firm

was established in the year 1990. The main activities are sellers of

detergent cakes, washing powder, chemicals, dates, salt, and other

general goods. This firm also providing employment to nearly 100

families.

AWARDS WON BY THE COMPANY:-

40

The prestigious awards received by the MANAGING DIRECTOR of BSW

are:

“Best entrepreneur for the year of 2004 received on 26th January 2005

from the hands of collector of the district”

“A national award INDIRA GANDHI SADHBHAVANA for the year of

2005 received on 21st November 2005”

SOCIAL ACTIVITIES:-

SRI.A.MANICKAVEL, managing director of Bharathi Soap Works is the hon.

President of Tamil Cultural Association. The association main activity is to

arrange and promote cultural programs to their association members and social

services like distributing free note books, uniform to the poor students. This

association also contributing the cyclone relief funds to chief minister of

various state governments of southern INDIA. He is also president for the

Nadargal Munnetra sangam. This sangam isrunning a school under the name

of kamaraj public school at Tadepalle mandal of Guntur district. This school is

providing good education to poor students who are financially week. He is also

enjoying one more honorable post as president of WALC Foundation (welfare

artificial limb centre). Under this foundation he is providing monetary support

to this association to providing freely artificial limbs to the handicapped poor

people.

Manickavel is most populars social worker and philanthropist in

Guntur. He is directly or indirectly helped, helping the needy, like

missions

41

and charity institutions, orphanages, home for the aged mentally

challenged persons. He is also helping through lions club and rotary

club; by conducting free eye testing camps etc. He has also donated to

natural calamity funds to all states in India regularly. Every year he has

been donating educational funds for books, cloths, fees etc to poor

children directly through Bala Bharathi in Guntur. He is also interested

to participate in the spiritual, cultural and sports activities in the city and

entire AP and donating the funds to the conductors & participants.

CERTIFIACTION:-

The details of the company quality management & quantity

management, The Company have “MOODY INTERNATIONAL

CERTIFICATION” for quality management. It is also an ISO

9001:2000 certification in its Excellency.

LOGO OF MAJOR BRAND IN THE COMPANY:-

42

CERTIFIED LOGO OF THE COMPANY:-

43

CHAPER-IV

theriotical frame work

THERIOTICAL FRAME WORK

Meaning of Ratio: A ratio is a comparison of the numerator with the

denominator. In other words, ratio expresses the significant relation ship

between two figures. A percentage is also a ratio multiplies by 100.

44

The most common ratios which indicate the extent of liquidity of lack of

it are the following.

5. Current ratio

6. Quick ratio

7. Cash ratio

8. Net working capital ratio

1. CURRENT RATIO:

The current ratio is calculated by dividing current assets by current

liabilities.

Current Assets

Current ratio = ------------------

Current Liabilities

The current assets of a firm represent those assets which can be

converted into cash with in a short period of time, normally not exceeding one

year and include cash and bank balances, marketable securities, inventory of

raw material, semi-finished and finished goods, debtors, bill receivables and

prepaid expenses.

Current liabilities include creditors, bills 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 firm’s short term solvency. It indicates the

ability of current assets in rupees for every one rupee of current liability. A

ratio of greater than one means that the firm has more current assets than

current liabilities.

45

2. QUICK RATIO:

Quick ratio establishers a relationship between quick or liquid assets and

currents liabilities. An assets is liquid it can be converte4d into cash

immediately on reasonable soon with out loss of value. Cash is the most liquid

assets. Other assets that are considered to be relatively liquid and included in

quick assets are debtors and bill receivable and marketable securities.

Inventories are considered to be less liquid as they normally requires some time

for realizing into cash and their value also has a tendency to fluctuate. The

quick ratio is calculated by dividing quick assets by current liability.

Quick Assets

Quick ratio = -------------------------------------

Current liabilities

Quick ratio is a rigorous measure of a firm ability to service short term

liabilities.

3. CASH RATIO:

Cash is the most liquid assets. Cash ratio is the ratio of cash and its

equivalent to Current liabilities. Trade investment or marketable securities are

equivalent of cash. Therefore, they may be included in the computation of

cash ratio

Marketable securities

Cash ratio or super quick ratio = ----------------------------------

Current liabilities

4. NET WORKING CAPITAL:

The difference between current assets and current liabilities excluding

short-term Borrowings is called Net Working capital (NWC) or Net current

assets(NCA).net working Capital measures the firm’s potential reservoir of

46

funds. It is considered that between two Firms, the one having the larger net

working capital has greater ability to meet its current Obligations. This is not

necessarily so that measure of liquidity is a relationship, rather than the

difference between assets and current liabilities.

Net working capital

Net working capital ratio = ------------------------------

Net assets

LEVERAGE RATIOS:

Leverage refers to the use of debt finance Debt capital is a cheaper

source of finance and it is also a risky source of finance leverage ratios help in

assessing the risk arising from the use of debt capital.

The short-term creditors like bankers and suppliers of raw materials are

more concerned with the firm’s current debt – paying ability. On the other

hand long term creditors, like debenture holder, financial institutions etc are

more concerned with the firm’s long-term financial institutions etc are more

concerned with the firm’s long – term financial strength. So, a firm should

have a strong short as well as long – term financial position. Financial

leverages of capital structure ratios are calculated to judge the long-term

financial position of the firm. Leverage ratios indicate mix of fund provided by

owners and lenders. There should be an approximate mix of debt and

owner’s equality in financing firm’s assets.

The use of debt is advantageous for shareholders in two ways.

They can retain control of the firm with a limited stake.

Their earnings will be magnified. When firm earns a rate of return on

the total capital employed higher than the interest rate on the borrowed funds.

However, if cost of debt is higher than the forms over all rate of return, the

earnings of the share holders will be reduced. In addition, there is a threat of

insolvency. Thus, use of debt magnifies the share holder’s earnings as well as

increases their risk. A highly debt burdened firm will fund difficulty in raising

47

funds from creditors and owners in future. Creditors treat the owner’s equity as

a margin of safety.

If the equity base is thin, the creditors risk will be high. Thus, leverage ratios

are calculated to measure the financial risk and the firm’s ability of using debt

to share holder’s advantage.

Leverage ratios are calculated from the balance sheet items to determine the

proportion of debt in total financing. Leverage ratio is also computed from the

profits and loss items by determining the extent to which operation profits are

sufficient to cover the fixed charges.

The following are the different leverage rations.

1. Debt ratio

2. Debt – equity ratio

3. Capital employed to net worth

4. Interest coverage ratio

5. Fixed charges coverage ratio.

1. Debt ratio:

Debt ratio is used to analyze the long-term solvency of a firm. It helps

in knowing the proportion of the interest bearing debt in the capital structure.

Debt ratio is computed by dividing total debt by capital employed (CE) or Net

Assets (NA). Total debt will include short and long-term borrowings from

financial institutions, debentures bonds, deferred payment arrangement for

buying capital equipment, bank borrowings, public deposits and any other

interest bearing loan. Capital employed will include total debt and net worth.

DebtDebt ration = -------------------------------

Equity

48

2. Debt Equity Ratio:

The debt equity ratio shows the relative contribution of creditors and

owner’s debt equity ratio is measure of the long – term financial solvency of a

firm. This ratio indicated the relative proportions of debt and equity in

financing the assets of the firm.

The relation ship between outsiders clam and owner’s capital can be

shown in different ways and accordingly, there are many variants of the debt

equity ratio.

One approach is to express the debt equity ratio in terms of the relative

proportion of long-term debt and shareholders equity. Thus

Long-term debtDebt equity ratio= ----------------------------

Share holders equity

The debt considered here is exclusively of current liabilities. The share

holder’s equity includes.

Equity and preference share capital

Past accumulated profits but excludes fictitious assets.

Another approach to the calculation of the debt equity ratio is to relate the total

Debt to the share holder’s equity.

Total debtDebt Equity Ration = ------------------------

Shareholders Equity

3. Capital Employed to net worth:

49

This ratio is another way to express the basic relationship between debt

and equity. Through this ratio one can know the amount of funds that are being

contributed together by and owners for each rupee of the owner’s contribution.

Capital employedCapital employed to net worth= ------------------------------------

Net worth

ACTIVITY RATIOS:

Activity ratios are concerned with measuring the efficiency in asset

management. These ratios are also called efficiency ratios or asset utilization

ratios. The efficiency with which the assets are used would be reflected in the

speed and rapidly with which assets are converted into sales. The greater is the

rate of turnover or conversion, the more efficient is the utilization other things

being equal. For this reason, such ratios are also designated as turnover ratios.

Turnover is the primary mode for measuring the extent of efficient employment

of assets by relating the assets to sales. An activity ratio may therefore be

defined as a test of the relationship between sales and the various assets of a

firm. Depending upon the various types of assets, there are various types of

activity ratios.

1. Accounts Receivable Turnover Ratio:

A firm sells goods for cash and credit. Credit is used as a marketing tool

by a number of companies. When the firm extends credit to its customer’s

accounts receivables (debtors) are created in the firms accounts. Debtors are

expected to be converted into cash over a short period and therefore included in

current assets. The liquidity position of the firm depends on the quality of

debtors to a great extent.

50

Accounts receivable turn over indicates how many times accounts

receivables turn over during year. Accounts receivable turn over is found out

by dividing credit sales by averaged account receivables.

Credit Sales

Accounts Receivable Turnover = ---------------------------------

Average accounts receivables

2. Average collection period:

The average collection period represents the number of days worth

credit sales that is locked in accounts receivables (Debtors). It measures the

quality of debtors since it indicates the speed of their collection. The average

collection period and accounts receivables turnover are related as follows.

365

Average Collection Period = ------------------------------------

Accounts receivables turnover

The average collection period may be compared with the firm’s credit terms to

judge the efficiency of credit management.

The collection period Ratio helps in two aspects

In determining the collect ability of debtors and thus, the efficiency of

collection efforts and

In ascertaining the firms comparative strength and advantage relative.

To its credit policy and performance vis-à-vis the competitors credit

policies and performance.

3. Fixed Assets Turnover:

51

Fixed Assets turnover ratio measures sales per rupee of investments in

fixed assets. This ratio measures the efficiency with which fixed assets are

employed. It is defined as

Sales

Fixed assets turn over = -------------------------------

Fixed assets

4. Total Assets Turnover:

Assets are used to generate sales. A firm should manage its assets

efficiency to maximize sales. The relation ship between sales and assets is

called assets turnover. Assets turnover ratio is computed by dividing sales by

total assets.

Net Sales

Total Assets turn over = -----------------------

Total assets

D. Profitability Ratios:

A company should earn profits to survive and grow over a long period

of time. Profitability reflects the final result of business operations. Profit

must be earned to sustain the operation of the business to be able to funds from

investors and for expansion and growth and to contribute toward social

overheads for the welfare of the society.

Profits are the different between revenues and expenses over a period

time. Profit is the ultimate output of the company and it will have no future it

fails to make sufficient profits.

The Profitability ratios are calculated to measure the operating

efficiency of the company. Besides management of the company, creditors and

owners are also interested in the profitability of the firm. Creditors want to get

52

interest and repayment of principal regularly. Owners want to get a required

rate of return on their investment.

This is possible only when the company earns sufficient profits. Generally two

types of profitability ratios are calculated.

1. Profitability in relation to sales.

2. Profitability in relation to investment.

The profitability ratios are as follows

Gross profit margin

Net profit margin

Operating expenses ratio

Return on investment

Return on equity

Return on total assets

Earnings per share

Dividend per share

Dividend pay out ratio

Price earnings ratio

1. Gross Profit Margin:

The first profitability ratio in relation to sales is the gross profit margin.

It is calculated by dividing the gross profit by sales.

Gross profit

Gross Profit margin = ----------------------- X 100

Net Sales

Gross profit is the difference between net sales and cost of goods sold. The gross

profit margin reflects the efficiency with which the management producers each unit

of product. This ratio indicates the average spread between the cost of goods sold and

sales revenue.

53

Gross profit margin shows the margin left meeting manufacturing costs. It measures

the efficiency if production well as pricing.

2. Net Profit Margin:

The net profit margin ratio is computed by dividing net profit by sales.

Net Profit

Net Profit margin = ----------------------- X 100

Net Sales

Net profit margin establishes a relationship between net profit and sales

indicates management’s efficiency in manufacturing administrating and selling

the product. This ratio is the overall measure of the firm’s ability to turn each

rupee sales into net profit.

A net profit margin shows the earning left for shareholders as a

percentage of net sales. This ratio also indicates the firm’s capacity to

withstand adverse economic conditions.

Gross and net profit margin ratios provide a valuable understanding of the cost

and profit structure of the firm and enable to identify the source of business

efficiency / inefficiency.

3. Operating Expenses Ratio:

The operating expenses ratio is a yardstick of operating efficiency. This

ratio is computed by dividing operating expenses by sales.

Operating expenses

Operating Expenses Ratio = ----------------------- X 100

Sales

Operating expense include cost of goods sold plus selling expenses and general

and administrative expenses. The operating ratio indicates the average

aggregate variations in expenses where some of the expenses may be

increasing while others may be failing. Operating expenses ratio is effected to

54

by a number of factors such as internal factors, employees, managerial

efficiency and external uncontrollable factors.

4. Return on Investment:

The term investment may refer to total assets or net assets. The funds

employed in net assets are known as a capital employed. Net assets net fixed

assets plus current assets minus current liabilities excluding bank loans capital

employed is equal to net worth plus debt. Return on investment is calculated

by dividing earning before interest and tax by assets or capital employed.

EBIT

Return on investment (ROI) = ----------------------------------------

Net assets (or) Capital employed

5. Return on Equity:

Return on equity is of great interest to equity shareholders. Ordinary

shareholders are entitled to the residual profits. If rate of dividend is not fixed

the earning may be distributed to shareholders or retained in the business. A

return on shareholders equity is calculated to see the profitability of owner’s

investment. The return on equity is net profit after taxes divided by share

holders equity or net worth.

Profit after taxes

Return on Equity (ROE) = -------------------------------------

Shareholder Funds

The shareholders equity or net worth will include paid up share capital share

premium and reserves and surplus less accumulated losses. Return on equity

measures the profitability of equity funds invested in the firm. It is very

important measure because of it reflects the productivity of the ownership

capital employed in the form. It is influenced by several factors like earning

power debt equity ratio and average cost of debt funds and tax rate.

6. Return on Total Assets (ROA) Ratio:

55

The profitability ratio is measured in terms of the relationship between

net profits and assets. The Return on assets may also be called Profit – to –

asset ratio. There various approach possible to define net profits and assets.

Profit After taxes

Return on Total Assets = ------------------------------- X 100

Total assets

The return on assets based on this ratio would be an under estimate as

the interest paid the credit of is excluded form the net profits in point of fact the

real return on total assets is the net earnings available to owners and interest as

assets are financed by owners as well as creditors.

7. Earnings per share (EPS) Ratio:

Another way of measuring profitability of ordinary shareholders

investment is earnings per share. The earnings per share are calculated by

dividing the profit after taxes by the total number of ordinary shares out

standing.

Profit After taxes

Earnings per Share (EPS) = ---------------------------------------------

Number of ordinary share outstanding

Earnings per share (EPS) simply shows the profitability of firm on a per share

basis. It does not reflect how much is paid as dividend and how much is

retained in the business. As a profitability index, earnings per share are a

valuable and widely used ratio.

8. Dividend per share Ratio:

The net profit belongs to share holders but the income that they really

receive is the amount is the amount of earnings distributed as cash dividends.

Therefore large number of present and potential investors is dividend per

56

share rather than earnings per share. Dividend per share (DPS) is the earning

distributed to ordinary shareholders dividend by number of ordinary shares

outstanding.

Earnings paid to share holders

Dividend per Share (DPS) = -------------------------------------------------

Number of ordinary shares outstanding

9. Dividend – Payout Ratio:

Dividend – Pay out ratio is dividend per share dividend by the earning

per share.

Dividend per share

Pay out ratio = ----------------------------------

Earnings per share

10. Price Earning Ratio:

Price – Earnings ratio is the most popular financial statistic in stock

market. It is widely used by the security analyst to value the firm’s

performance as expected by investors. It indicates investor’s judgment or

expectations about the firm’s performance. The price earnings ratio is a

summary measure which

primarily reflects the following factors, growth prospect, risk characteristics

shareholders orientation, corporate image and degree of liquidity. The price –

Earnings ratio is defined as:

Market price per share

Price earning ratio = ------------------------------------

Earnings per share

57

The market price per share may be the price prevailing on a certain day the

average price over a period of time. The earnings per share are profit after

taxes less preference dividend by the number of equity shares outstanding.

Diagnostic Role of Ratios:

The essence of the financial soundness of a company lies in balancing

its goals. Commercial strategy and product market choices and resultant

financial needs. The company should have financial capability and flexibility to

pursue its commercial strategy. Ratio analysis is a very useful analytical

technique to raise pertinent questions on a number of managerial issues.

While accessing the financial health of the company with the relating to the

company’s profitability, assets utilization, liquidity, financing and strategies

capabilities may be sough

CHAPER-V

58

DATA ANALYSIS & INTERPRETATION

DATA ANALYSIS & INTERPRETATION

CLASSIFICATION OF RATIOS:

Classification from the point of Financial Management is as follows

1. Liquidity Ratio

2. Leverage Ratio

3. Turnover Ratio

4. Profitability Ratio

59

Liquidity ratio measure the firms ability to meet current obligations.

Leverage ratios show the proportion of debt and equity in financing the firms

assets; Activity ratios reflect the firms efficiency in utilizing its assets and

profitability ratios measure overall performance and effectiveness of the firm.

1. LIQUIDITY RATIO:-

Liquidity refers to the ability of a firm to meet its obligations in the

short run, usually one year. Liquidity ratios are generally based on

relationship between current assets (the sources for meeting short term

obligations) and current liabilities. The important liquidity ratios are : current

ratio, liquidity ratio etc.

a. CURRENT RATIO :

The current ratio is calculated by dividing current assets by current

liabilities. Current assets include cash and those assets, which can be

converted into cash with in a year, such as marketable securities, debtors and

inventories.

Current liabilities include creditors, bills payable, accrued expenses,

short term bank loans, income tax liability and long term debt maturing in

current.

Current Assets Current Ratio =

Current Liabilities

CURRENT RATIO TABLE

60

TABLE-1

YEAR CURRENT

ASSETS

CURRENT

LIABILITIES

RATIO

2005-2006 4248.609 5972.913 0.711

2006-2007 10199.538 17079.226 0.597

2007-2008 14859.904 19233.117 0.772

2008-2009 15550.534 20264.866 0.767

2009-2010 24913.040 32487.368 0.776

CURRENT RATIO

Barchart-1

61

2005-06 2006-07 2007-08 2008-09 2009-100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.711000000000001 0.597 0.77200000000000

10.76700000000000

10.77600000000000

1RATIO

INTERPRETATION :

The company current ratio has been decreasing from year to year since 2005-2007.

The company current ratio slightly changed from year to year since 2008-2010.

Company current assets had fluctuations occurred during the study period from the year 2005-2009 similarly current liabilities increased over proportion than current assets.

b.QUICK RATIO/LIQUID RATIO

This 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 with out a loss or value cash is the most liquid

62

assets; other assets are bills receivables, debtors and marketable securities.

Inventories are considered to be less liquid.

The ratio shows that the immediately available assets, which

assets are Immediately converted in to cash to meet the short term solvency of

the firm.

Quick assets Quick ratio =

Current liabilities

TABLE-2

YEAR LIQUID ASSETS LIQUID

LIABILITIES

RATIO

2005-2006 570.865 5972.913 0.095

2006-2007 2679.388 17079.226 0.156

2007-2008 4258.715 19233.117 0.221

2008-2009 5148.951 20264.866 0.254

2009-2010 3422.914 32487.368 0.105

QUICK RATIO/LIQUID RATIO

63

Barchart-2

2005-06 2006-07 2007-08 2008-09 2009-100

0.05

0.1

0.15

0.2

0.25

0.3

0.095

0.156

0.221

0.254

0.105RATIO

INTERPRETATION :

The company quick ratio has been increasing from year to year since 2005-2009.

The company quick ratio has been decreasing in the year 2009-2010.

Company has maintained quick assets lowest is 570.865 in the year 2005-2006.

CASH RATIO /ABSOLUTE LIQUID ASSETS RATIO

Marketable securities

64

Cash ratio = Current liabilities

This ratio is also is known as super quick ratio. The firm must be maintained 0.5:1

Cash ratio is better. It reflects only the absolute liquidity available with firm.

TABLE-3

YEAR CASH CURRENT

LIABILITIES

RATIO

2005-2006 39.466 5972.913 0.007

2006-2007 177.043 17079.226 0.010

2007-2008 285.179 19233.117 0.015

2008-2009 2875.2 20264.866 0.142

2009-2010 1140.502 32487.368 0.035

65

CASH RATIO /ABSOLUTE LIQUID ASSETS RATIO

Barchart-3

2005-06 2006-07 2007-08 2008-09 2009-100

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.007 0.01 0.015

0.142

0.035RATIO

INTERPRETATION :

Company cash ratio had gone up from 2005-2009 .i.e. 0.007-0.142

Company cash ratio had been decreasing from 2009-2010 i.e.0.142 to 0.035.

The company has maintained cash lowest is 39.466 in the year 2005-2006.

3. LEVERAGE RATIOS:-

66

Financial leverage refers to the use of the debt finance. While

debt capital is a cheaper source of finance. Leverage ratios help in assessing

the risk arising from the use of debt capital.

DEBT CAPITAL RATIO (or) DEBT EQUITY RATIO

Long term debt

Debt equity ratio = Capital

Debt equity ratio is the ratio of the total debt in the firm (both long term and short term ) to equity :is the sum of equity share capital and preferential share capital. This ratio identified value is 0.33% of capital

TABLE-4

YEAR DEBT CAPITAL RATIO

2005-2006 6512.448 5396.505 1.206

2006-2007 10320.108 9788.548 1.054

2007-2008 15117.559 14113.914 1.071

2008-2009 17051.198 19623.142 1.868

2009-2010 18136.397 18008.338 1.007

DEBT CAPITAL RATIO (or) DEBT EQUITY RATIO

67

Barchart-4

2005-06 2006-07 2007-08 2008-09 2009-100

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1.2061.054 1.071

1.868

1.007

RATIO

INTERPRETATION :

The debt ratio was decreased from year since 2005-2007.

The ratio was increased from year since 2007-2009 i.e.1.071 to 1.868.

The ratio likely fall down from year 2009-2010.

TOTAL DEBT TO TOTAL ASSETS RATIO

68

Debt equity ratio is the ratio of the total debt in the firm (both current and fixed ) assets : where the assets is the sum of machinery, equipment buildings debtors inventory cash etc;

= Total debt

Total assets

TABLE-5

YEAR TOTAL DEBT TOTAL ASSETS RATIO

2005-2006 12688.397 17792.002 0.71

2006-2007 27426.596 37221.871 0.73

2007-2008 34377.939 47996.057 0.71

2008-2009 37469.497 56569.235 0.66

2009-2010 50623.766 68328.700 0.74

TOTAL DEBT TO TOTAL ASSETS RATIO

69

Barchart-5

2005-06 2006-07 2007-08 2008-09 2009-100.62

0.64

0.66

0.68

0.7

0.72

0.740.71000000000000

1

0.730000000000001

0.710000000000001

0.660000000000001

0.740000000000001

RATIO

INTERPRETATION :

The company total debt to assets ratio has been increased from the year to year

since 2005-2007.

Total debt to total assets ratio in decreased from the year to year since 2007-2009.

Total debt to total assets ratio increased in the year since 2009-2010.

PROPRIETARY RATIO :-

70

It is a variant of debt equity ratio. It establishes relationship between the

proprietors funds and the total tangible assets.

The ratio is of particular importance to the creditors who can find out the

proportion of shareholders funds in the total assets employed in the business.

Shareholders funds Proprietary ratio = X100

Total assets

TABLE-6

YEAR SHARE

HOLDERS FUND

TOTAL ASSETS RATIO

2005-2006 6887.115 18137.761 0.379

2006-2007 13440.521 37268.003 0.361

2007-2008 18656.267 48544.712 0.384

2008-2009 25329.022 57092.639 0.444

2009-2010 18008.338 68632.104 0.262

PROPRIETARY RATIO

71

Barchart-6

2005-06 2006-07 2007-08 2008-09 2009-100

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.450.379

0.3610.384

0.444

0.262

RATIO

INTERPRETATION :

During the period proprietary ratio slightly decreased from year to year

since 2005-2007.i.e.0.379 to 0.361

The ratio has been increased from 2007-2009 i.e.0.384 to 0.444

The ratio has been decreased from the year 2009 to 2010.

III TURN OVER RATIOS

72

Turnover ratio measures how efficiently the assets are employed by the

firm. Funds of creditors and owners are invested in various assets to generate

sales and profits. These ratios are based on the relationship between the level

of activity, represented by sales or cost of goods sold and levels of various

assets.

1. STOCK TURNOVER RATIO :

These ratio measures how many times on an average stock is

sold during the year. High inventory turnover ratio is always beneficial to the

business. Lower inventory turn over shows that the stock is blocked and not

immediately sold. It shows the poor performance of the business.

Cost of good sold Inventory turn over ratio =

Avg. Inventory

TABLE-7

YEAR COST OF

GOODS SOLD

AVG.INVENTORY RATIO

2005-2006 9714.509 3751.462 2.589

2006-2007 43309.875 4847.555 8.934

2007-2008 47084.221 4509.355 10.441

2008-2009 51982.445 10122.406 5.135

2009-2010 68806.473 14971.195 4.595

73

INVENTORY TURN OVER RATIO :

Barchart-7

2005-06 2006-07 2007-08 2008-09 2009-100

2

4

6

8

10

12

2.589

8.934

10.441

5.1354.595

RATIO

INTERPRETATION :

The inventory turnover ratio has been increasing and decreasing in the

study period

The inventory turnover ratio increased from the year since 2005-2008.

The inventory turnover had decreased from the year to year since 2008-

2010

DEBTORS TURNOVER RATIO

74

The ratio indicates the extent to which the debts have been collected in time.

It gives the average debt collection period. The ratio is very helpful to the

lenders because it explain to them whether their borrowers are collecting

money with is a reasonable time.

Net Sales Debtors turnover ratio =

Average trade debtors

Opening debtors + closing debtors Average Debtors =

2

TABLE-8

YEAR SALES Avg.Debtors RATIO

2005-2006 16085.051 297.3485 54.094

2006-2007 60956.134 1119.0290 54.472

2007-2008 72769.815 2831.5805 25.699

2008-2009 87119.114 2682.606 32.475

2009-2010 101199.557 1780.867 56.826

DEBTORS TURNOVER RATIO

75

Barchart-8

2005-06 2006-07 2007-08 2008-09 2009-100

10

20

30

40

50

60 54.094 54.472

25.699

32.475

56.826

RATIO

INTERPRETATION :

During the period had been observing debtors turnover ratio hike from

year since 2005-2007.i.e.54.094 to 54.472

The year 2007-2009 the ratio decreased to 25.6999

The ratio had been increased from year to year since 2008-2010.

DEBTOR COLLECTION RATIO

76

This ratio indicates the extent to which the debts have been collected in time

the debt collection period indicates the average debt collection period this ratio

is a good indicator to the lenders of the firm,because it explains to the whether

their borrower is collection from its debt in time. An increase in this period

indicates blockage of funds in debtors.

365 Debtors collection period ratio =

Debtors turnover ratio

TABLE-9

YEAR DAY

S

DEBTOR TURNOVER RATIO RATIO

2005-2006 365 54.094 6.747

2006-2007 365 54.472 6.700

2007-2008 365 25.699 14.202

2008-2009 365 32.475 11.239

2009-2010 365 56.826 6.423

77

2005-2006 2006-2007 2007-2008 2008-2009 2009-20100

10

20

30

40

50

6054.094 54.472

25.699

32.475

56.826

6.747 6.7

14.20211.239

6.423

Debtors Turnover Ratio

DEBTOR TURNOVER RATIO RATIO

DEBTOR COLLECTION RATIO

Barchart-9

78

2005-06 2006-07 2007-08 2008-09 2009-100

2

4

6

8

10

12

14

16

RATIO

INTERPRETATION :

During the period, the average collection period ratio decreased 6.747 to

6.700 in the year 2005-2007

The year 2007-2009,the increasing from 6.700 to 14.202.

Debtors collection period ratio decreased from year to year since 2008-

2010.

Debtors collection period ratio has been decreasing and increasing in the

study period. Because of debtor turnover ratio fluctuated year to year.

FIXED ASSETS TURNOVER RATIO

Assets are used to generate sales therefore the firm should

manage its assets efficiently to maximize sales. The relationship between

sales and assets is called assets turnover. The firm can compute fixed assets

turnover simply by dividing sales by fixed assets.

79

Sales Fixed assets turnover ratio =

Fixed assets

TABLE-10

YEAR SALES NET FIXED

ASSETS

RATIO

2005-2006 16085.051 13543.393 1.187

2006-2007 60956.134 26993.262 2.285

2007-2008 72769.815 33136.153 2.196

2008-2009 87119.114 41018.701 2.123

2009-2010 101199.557 43415.660 2.330

FIXED ASSETS TURNOVER RATIO

Barchart-10

80

2005-06 2006-07 2007-08 2008-09 2009-100

0.5

1

1.5

2

2.5

1.187

2.285 2.196 2.1232.33

RATIO

INTERPRETATION

Fixed assets turnover ratio has been increased from the year 2005-2007

i.e. 1.187 to 2.285.

The ratio has been decreased from the year 2009 i.e.2.285 to 2.123

In the year 2009-2010 the ratio increased to 2.330.

WORKING CAPITAL TURNOVER RATIO

It is determined by relating the inventory of the total networking

capital i.e., current assets and current liabilities. This is used to see the

percentage of inventory i.e., stock is relation to total assets of the company.

81

This is used to see whether inventory ratio is stable in relation to the working

capital.

Net salesWorking capital turnover ratio =

Networking capital

Networking capital = current assets – current liabilities.

TABLE-11

YEAR SALES NET WORKING

CAPITAL

RATIO

2005-2006 16085.051 -1724.304 -9.32

2006-2007 60953.134 -6879.688 -8.85

2007-2008 72769.815 -4373.216 -16.63

2008-2009 87119.114 -4714.332 -18.47

2009-2010 101191.557 -7574.328 -13.36

WORKING CAPITAL TURNOVER RATIO

Barchart-11

82

2005-06 2006-07 2007-08 2008-09 2009-10-20

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

-9.32 -8.850000000000

01

-16.63-18.47

-13.36

RATIO

INTERPRETATION :

During the period working capital turnover ratio has been increased

from 9.32 to -8.85 since the year 2005-2007.

In the year 2007-2008 the ratio decreased from -8.85 to -16.63.

In the year 2008-2010 the ratio slightly decreased from -16.63 to 18.47.

The ratio has been increased from -18.47 to -13.36 since the year 2009-

2010.

TOTAL ASSETS TURNOVER RATIO

Net salesTotal Assets turnover ratio =

Net total assets

83

This is depicts the turnover of total assets during the course of business this ratio indicate, whether capitalization is proper it disproportionate amount has been invested in assets this ratio will communicate this massage.

TABLE-12

YEAR SALES NET TOTAL

ASSETS

RATIO

2005-2006 16085.051 17792.002 0.904

2006-2007 60953.134 37221.871 1.637

2007-2008 72769.815 47996.057 1.516

2008-2009 87119.114 56569.235 1.540

2009-2010 101199.557 68328.700 1.480

TOTAL ASSETS TURNOVER RATIO

Barchart-12

84

2005-06 2006-07 2007-08 2008-09 2009-100

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

0.904

1.6371.516 1.54 1.48

RATIO

INTERPRETATION :

During the study period total assets turnover ratio had been increasing

from the year 2005 to 2007from 0.90 to 1.637.

In the year 2007-2008 total assets turnover ratio decreased from 1.637 to

1.516

The year 2008 to 2009 the ratio increased from 1.516 to 1.540 because

due to increased the total assets as well as net sales also.

In the year 2009-2010 the ratio decreased from 1.540 to 1.480

IV PROFITABILITY RATIO

Profitability is an indication of the efficiency with which the

operations of the business are carried on. A lower profitability may arise due

to the lack of control over the expenses. Banker, financial statements and

85

other creditors look at the profitability rations as an indicator whether or not

the firms earns substantially more than it pays interest for the use of

borrowed funds.

1. GROSS PROFIT RATIO :

It is calculated by dividing the gross margin by sales. This ratio shows the

profits relative to sales after three direct production costs are deducted. It

may be used as an indicator of the efficiency of the production operation and

the relation between production costs and selling price.

Gross Profit Gross profit ratio = X 100

Net Sales

TABLE-13

YEAR GROSS PROFIT NET SALES RATIO

2005-2006 6207.753 16085 38.593

2006-2007 18346.246 60953.134 30.097

2007-2008 28187.471 72769.815 38.735

2008-2009 25900.505 87119.114 29.729

2009-2010 32279.216 1011199.557 31.896

GROSS PROFIT RATIO

Barchart-13

86

2005-06 2006-07 2007-08 2008-09 2009-100

5

10

15

20

25

30

35

4038.593

30.097

38.735

29.72931.896

RATIO

INTERPRETATION :

The gross profit of the company gradually increasing from 6207.753 to 32279.216 since the year 2005-2010.

The gross profit ratio has been decreasing from 38.593 to 30.097.

In the year 2007-2008 the gross profit ratio has been increased from 30.097 to 38.735.

In the year 2008-2009 the gross profit ratio fall down from 38.735 to 29.729.

In the year 2009-2010 gross profit ratio increased slightly from 29.729 to 31.896.

The gross profit ratio highest in the year 2007-2008 the ratio is 38.735.

NET PROFIT RATIO :

This ratio is measured by dividing profit after tax by sales. It indicated

managements efficiency in manufacturing, administering and selling the

products. The ratio is the overall measure of the firm’s

87

Net Profit Net profit ratio = X 100

Net Sales

TABLE-14

YEAR NET PROFIT NET SALES RATIO

2005-2006 1490.610 16085.051 9.267

2006-2007 3651.973 60953.134 5.991

2007-2008 4542.353 72769.815 6.242

2008-2009 5705.880 87119.114 6.549

2009-2010 4392.926 101199.557 4.340

NET PROFIT RATIO

Barchart-14

88

2005-06 2006-07 2007-08 2008-09 2009-100

1

2

3

4

5

6

7

8

9

10 9.267

5.991 6.242 6.549

4.34

RATIO

INTERPRETATION :

Net profit ratio has decreased from year 2005-2007 i.e.9.267-5.991.

Net profit ratio has been increased from year to year since 2007-2009

i.e.5.991 to 6.549.

In the year 2007-2008 the ratio has been decreased from 6.549 to 4.340.

RETUTURN ON INVESTMENT(or)CAPITALEMPLOYED

The Return on capital employed ratio is measured in terms of the relation ship

between PBIT and capital employed. It can be calculated as below formula

89

Net Profit after tax Return on capital employed = X 100

Capital Employed

TABLE-15

YEAR PROFIT AFTER

TAX

CAPITAL

EMPLOYED

RATIO

2005-2006 1490.610 11819.039 12.611

2006-2007 3651.973 20142.645 15.130

2007-2008 4542.353 28762.940 15.792

2008-2009 5705.880 36304.369 15.716

2009-2010 4392.926 35841.332 12.250

RETUTURN ON INVESTMENT (or) CAPITAL EMPLOYED

Barchart-15

90

2005-06 2006-07 2007-08 2008-09 2009-100

2

4

6

8

10

12

14

16

12.611

15.1315.792 15.716

12.25

RATIO

INTERPRETATION :

During the study period, return on investment ratio increase from

12.611 to 18.130 since the year 2005-2007.

In the year 2007-2008 the ratio fall down from 18.130 to 15.792.

In the year 2008-2009 the ratio had fall down slightly 15.792 to 15.716.

In the year 2009-2010 the ratio decreased from 15.716 to 12.25

The highest proportion of return on investment is 18.130 in the year

2006-2008.

RETURN ON EQUITY

The return on equity establishes a relationship between net profit and capital of the

firm

91

Net Profit after tax Return on Equity = -----------------------------x100 Capital Employed

TABLE-16

YEAR PROFIT AFTER

TAX

EQUITY RATIO

2005-2006 1490.610 5396.505 27.621

2006-2007 3651.973 9788.548 37.308

2007-2008 4542.353 14113.548 37.183

2008-2009 5705.880 19623.142 29.007

2009-2010 4392.926 18008.338 24.393

RETUTURN ON EQUITY

Barchart-16

92

2005-06 2006-07 2007-08 2008-09 2009-100

5

10

15

20

25

30

35

40

27.621

37.308 37.183

29.007

24.393

RATIO

INTERPRETATION :

During the study period return on equity gradually increased from

27.621 to 37.308 since the year 2005-2008.

From the year 2008 to 2010, return on equity ratio had been decreasing

from 37.308 to 24.393

The highest return on equity ratio is 37.308 since the year 2005 to 2010.

CHAPER-Vi

93

FINDINGS & SUGGESTIONS

FINDINGS

94

1. The current ratio of the Bharathi Soap Works did not reach 2:1 ratio in

the study period i.e. unsatisfactory of the current ratio because current

liabilities is higher than current assets.

2. The quick ratio did not reach 1:1 ratio in the study period i.e.

unsatisfactory of the quick liquid position of the study period. current

liabilities excess than quick assets.

3. The absolute quick ratio is unsatisfactory in the study period. Because it

did not reach 0.5:1 it is finding that cash position is very poor in the

study period.

4. It is finding that Bharathi Soap Works equity position is less than debt

in the study period.

5. Total debt to total assets ratio indicates total assets are more than total

debt.

6. The proprietary ratio shows the total tangible assets maintaining more

than net worth.

7. The inventory turnover ratio increasing gradually even though it is not

satisfactory except the year 2007-2008.i.e.10.441

8. Debtor’s turnover ratio increased from 2005-2009 remaining year 2007-

2008 decreased and 2008-2009 debtors turnover ratio increased slightly.

9. debtors collection period indicates the collection period indicates the

collection period of Bharathi Soap Works vary from year to year

95

10. The fixed assets turnover ratio increased year to year because net fixed assets increased year to year than net sales. This ratio was satisfactory to Bharathi Soap Works.

11. The working capital turnover ratio of the company is very poor performance of working capital because of the study period company maintained negative net working capital.

12. Total assets turnover ratio is slightly increasing year to year. Because every year net sales increasing level higher than total assets increasing level.

13. Gross profit ratio was increased from the year 2005-2008, in the year 2008-2009 the gross profit ratio has been decreased 9% and in the year 2009-2010 the gross profit ratio increased. However ,Gross profit ratio is Bharathi Soap Works.

14. Net profit ratio has been fall down in the year 2006-2007 i.e.9.267 to 5.991. A Again increased from the year 2007-2009 and it is decreased in the year 2009-2010.

15. Return on investment ratio is increasing and decreasing in the study period. The highest return on investment ratio in the year 2006-2007 i.e. 18.130 is the best year for Bharathi Soap Works. The return on investment ratio indicates satisfactory in the study period.

16. Return on equity ratio was increased from the year since 2005-2008 in the year 2008-2010 decreased by more than 3% and in the year 2007-2008 it is decreased by 4%. The highest return on equity is 37.308 in the year 2007-2008.

SUGGESTIONS

96

1. It is suggested to Bharathi Soap Works need to increase in the volume of

current assets and decrease the proportion of current liabilities for the purpose

of to meet the working capital requirements.

2. It is suggested to Bharathi Soap Works need to increase the quick assets at

least equal to the current liabilities is better to Bharathi Soap Works.

3. It is suggested to Bharathi Soap Works need to increase the cash volume at

least half of the current liabilities for the purpose to meet day to day financial

requirements.

4. It is suggested to Bharathi Soap Works increase the equity volume because it

is going to insolvency. Now more debt than equity than may consider highly

leveraged.

5. It is suggested to It is suggested to Bharathi Soap Works need to increase the

total assets because total debt is more than total assets i.e.un satisfactory to

company.

6. It is suggested to Bharathi Soap Works to increase the net worth is better to

the company.

7. It is suggested to Bharathi Soap Works to inventory has to maintain same

level of the year like 2008-2009 is better to Bharathi Soap Works .In the year

2008-2009 average inventory 10122,406.

8. It is suggested to company to increasing the debtors levels is better to Bharathi

Soap Works .For the purpose of to improve the current assets volume.

97

9. It is suggested to maintain the minimum debtor’s collection period is better to

Bharathi Soap Works. Because of present received rupee value is more

valuable than will be received rupee in future.

10. It is suggested to Bharathi Soap Works maintain the same level of fixed

assets is better to the Bharathi Soap Works .Then the company can maximum

utilize the fixed assets.

11. It is suggested to company working capital should be increase is better to

Bharathi Soap Works. Because net working capital is too poor performance

except 2005-2006. More ever need to improve the net working capital

performance.

12. It is suggested to Bharathi Soap Works need to increase the total assets is

better for the purpose of to develop the organization and organization smooth

running.

13. It is suggested to Bharathi Soap Works to maintain the same gross profit

ratio in future also. Because of gross profit was satisfactory in the study

period.

14. It is suggested to Bharathi Soap Works should be increase the net profit is

better. It is possible with minimize operating expenses. Then Bharathi Soap

Works can increase net profit volume.

15. It is suggested to Bharathi Soap Works the same proportion of the investment

is better to Bharathi Soap Works to make the fair returns in future also.

Because Return On Investment is satisfactory in the study period.

16. It is suggested to company to improve the shareholders fund is better. Return

on Equity satisfactory in the study period.

98

CONCLUSION:-

A study on ratio analysis in BHARATHI SOAP WORKS., is

satisfactory. Over all liquidity, Leverage position, turnover position and

profitability Position and profitability position is satisfactory

BALANCE SHEETS OF BHARATHI SOAP WORKS

99

Particulars 2005-06 2006-07 2007-08 2008-06 2009-10

I. Source of funds :1.Share holders fundShare capital 4796.310 5396.505 9788.548 14113.914 19623.1422. Loan fundSecured loan 5112.06 6512.358 10320.108 15117.559 13984.949Un secured loanTotal 9908.516 11908.953 20108.656 29231.453 36675.122

II. Application of funds1. Fixed assets 9310.175 13543.393 26993.262 33136.153 41018.7012.Investments 405.253 89.864 33.989 468.513 370.7533.current assetsa. Inventory 4004.122 3530.106 5519.909 10175.201 10069.611b.Sundry debtors 458.624 136.073 2101.985 3561.176 1804.036c.Cash & bank Balance 87.307 39.466 177.043 285.179 2875.200d.Other current assets 25.200 147.638 2029.312 425.988 331.972e.Loans,advances 566.133 395.326 400.360 412.362 469.715Total 5141.386 4248.609 10228.609 14859.904 15550.534Less: current liabilities 4948.298 5972.913 17079.226 19233.117 20264.866Net working capital 193.088 -1724.304 -6850.617 -4373.213 -4714.332Total 9908.516 11908.953 20108.656 29231.453 36675.122

100

BIBILOGRAPHY:

FINANCIAL MANAGEMENT - I.M.PANDEY

FINANCIAL MANAGEMENT THOERY AND PRACTICE

- M.Y.KHAN

- P.K.JAIN

-

COST AND MANAGEMENT ACCOUTING - R.P.TRIVEDI

-   MANOJ TRIDEVI

PRINCIPLES OF MANAGEMENT - S.N.MAHESWARI

FINANCIAL MANAGEMENT - K.GUPTA

WEBSITE -

www.bharathisoapworks.com

ANNUAL REPORTS OF BHARATHI SOAP WORKS

101

102

103

104