term paper of ac

8/7/2019 term paper of ac

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SUBMITTED TOLECT. NITIKA SEHGAL

TERM PAPE


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SUBMITTED TOHARPREET SING

ROLL NO. A18SEC. S1001

ON DABUR LTD


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INTRODUCTION OF DAB

Leading Brands are :-

BRAND NAME

Dabur Honey

Dabur Chyawanprash

Herbal Digestives

Hajmola

Dabur lal Tail tops baby massage oil

It is the Fourth largest FMCG company in In

like health care , personal care , homecare aindia. And now led by his great grandson VivIndia, near the Indian capital New Delhi , whBangladesh,Egypt and Nigeria ). Today it is a

Vatika, anmol, Hajmola, dabur Amla Chyawawith turnover Rs 100 each. Strategic positio

VisioDedicated to the hea

Principles O This is our company. We accept personal


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Passion ForWe all are leaders in our area of responsibility, withdoing what matters most.

People Deve

People are our most important asset. We add value

ConsumWe have superior understanding of co

TeamWe work together on the principle of mutual trustin advocating proposals, including recognizing risks

Innova Continuous innovation in prod

IntegWe are committed to the achievement of businesspartners and with each other.


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UR

40%

65%

90%

75%

35%

MARKET

SHARE

ia and is positioned successfully on the specialist herbal platfor

nd foods. The company was founded by Dr. Burman in 1884 asek C . Burman , who is the chairman of Dabur India limited . There it is registered. The company has over 12 branches in indiaRs 28 bn company with market capitalization worth Rs 106 bn .

nprash, Dabur honey and Lal Dant manjanof various brands in market share

nslth and well being of every household"

nershipresponsibility, and accountability to meet business needs.


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winninga deep commitment to deliver results. We are determined to be the best a

lopment

through result driven training, and we encourage & reward excellence.

er Focusnsumer needs and develop products to fulfill them better.

orktransparency in a boundary-less organisation. We are intellectually hones

.

ionucts & processes is the basis of our success.

ityuccess with integrity. We are honest with consumers, with business


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m. It operates in key consumer products

small pharmacy in Calcutta ( Kolkata ),company headquarters are in Ghaziabad ,

and abroad ( Nepal, Dubai,


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t


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Comparative income Statement as on 31st m

Industry :Personal Care - Indian - Large

(Rs in Crs)

2,880.45 2,423.68

23.58 27.52

2,856.87 2,396.16

40.52 44.19

9.68 38.89

2,907.07 2,479.24

992.21 937.1335.43 36.63

197.62 154.7

432.15 358.33

566.4 429.25

111.04 96.32

0 0

2,334.85 2,012.36

572.22 466.88

13.28 14.47

558.94 452.4131.91 27.42

527.03 424.99

89.66 47.48

0 6.51

4.04 -2.55

433.33 373.55

12.08 18.8

421.25 354.75

-0.19 -0.71

428.94 323.230 0

335.17 267.13

526.91 428.94

173.6 151.39

0 0

200 175

4.65 4.02

Year Mar 10(12) Mar09(12)

INCOME :

Sales Turnover

Excise Duty

Net Sales

Other Income

Stock Adjustments

Total Income

EXPENDITURE :

Raw MaterialsPower & Fuel Cost

Employee Cost

Other Manufacturing Expenses

Selling and Administration Expenses

Miscellaneous Expenses

Less: Pre-operative Expenses Capitalised

Total Expenditure

Operating Profit

Interest

Gross ProfitDepreciation

Profit Before Tax

Tax

Fringe Benefit tax

Deferred Tax

Reported Net Profit

Extraordinary Items

Adjusted Net Profit

Adjst. below Net Profit

P & L Balance brought forward

Statutory Appropriations

Appropriations

P & L Balance carried down

Dividend

Preference Dividend

Equity Dividend %

Earnings Per Share-Unit Curr


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8.64 8.53

for 2009 and 2010 for caculating percentage for 201

Earnings Per Share(Adj)-Unit Curr

Book Value-Unit Curr

http://www.capitaline.com

Take 2009 as a base year for calculating


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rch 2010

Absolute change Percentage

456.77 18.84

-3.94 14.31

460.71 19.22

-3.67 8.3

-29.21 75.1

427.83 17.25

55.08 5.87-1.2 3.27

42.92 27.74

73.82 20.6

137.15 31.95

14.72 15.28

0

322.49 16.02

105.34 22.56

-1.19 8.22

106.53 23.544.49 16.37

102.04 24

42.18 88.8

6.51 1

-6.59 258.43

59.78 16

-6.72 35.7

66.5 18.74

-0.52 73.2

105.71 32.70

68.04 25.47

97.97 22.8

22.21 14.6

0 0

25 14.2

0.63 15.67

INTERPRE

In comparative statements , weyears, of each item to itself.

Sales turnover:- sales turnoverthis is not the actual sale value, t

sales turnover of the company it schange was approx Rs.456.77 anincreased i.e. 19.22 % Because in

RAW MATERIAL :- It is the basicengaged . As we clearly see the rbecause company 's sales was inmore and better raw material . Th

POWER AND FUEL COST :- It wmore production means more usathis company their was reduction iscale or it may some subsidies giv

OTHER MANUFACTURING EXP

manufacturing expenses also incrincreased from their previous yearprevious one. The overall manufa20 % .

OPERATING PROFIT :- The highProfit Margin shows the companyProfit Margin can also mean salesjust jump from Rs 466.88 to Rs 57

DEPRECIATION :- The simple rea

to more usage of machineries , to

OTHER ITEMS :- As we know thepercentage in their shareholder di

Coclusion - After doing analysisprofitability position of the comnet profit after deducting all theand Rs 526.91 in 2010 which is


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0.11 1.28

0

percentage.


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ATION OF COMPARATIVE P & L A/C

have made comparison between past two years it may be for more than two

of the company means the overall sale he made in a particular financial year . Butere some deduction in the form of duty like excise duty . if we see the overallhows better position of the company in the eyes of investor , govt. The absoluted in percentage it was 18.84 % but after deduction the overall percentage asthe 2009 the excise duty was Rs 27.52 and in 2010 it was reduced to Rs 23.58.

need of every company or industry to produce something in which they arew material of the comapny was increased from their previous years , it was justcreased which lead to more production for more production there is a need ofapproxmatiely change in the raw material was Rs 55.08 .

s used in running machines to produce goods . It varies with level of productione of power and fuel and vice versa. But if we see the cost of power and fuel of

n cost from previous year it may be due to that company produced goods at largeen by govt. in regard to power .

NSES :- As we know if any comapny increase its production the overall

ases. The samething happen with this company the overall sales of the companyfor this they must increase his production which leads to higher expenses fromturing exp. increases from 2009 to 2010 was Rs.73.82 and in percentage it was

er the Operating Profit Margin, the better. This is because a higher Operatingcan keep its costs under control (successful cost accounting). A higher Operatingare increasing faster than costs, and the firm is in a relatively liquid position, They2.22 difference with Rs 105.34.

son for increasing depreciation was increasing production and sales which leads

ls etc.

company was in overall profitable situation so they can easily increase someidend . Like they increase equity dividend 175 to 200.

of profit and loss a/c of the company we come to know about theirany . So we can say that company was doing well in the corporate world its

expenses and dividend to their shareholder they earn Rs 428.94 in 2009ery good sign for the company.


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Common Size income Statement as on 31st march 20


(Rs in Crs)

Percentage

2,880.45

23.58

2,856.87 100

40.52 1.41

9.68 0.33

2,907.07 101.75

992.21 34.73

35.43 1.24

197.62 6.91

432.15 15.12

566.4 19.82

111.04 3.88

0 0

2,334.85 81.72

572.22 20.0213.28 0.46

558.94 19.56

31.91 1.11

527.03 18.44

89.66 3.13

0 0

4.04 0.14

433.33 15.16

12.08 0.42

421.25 14.74

-0.19 0.01

428.94 15.01

0 0

335.17 11.73

526.91 18.44

173.6 6.07

0 0

YearMar10(12)

INCOME :

Sales Turnover

Excise Duty

Net Sales

Other Income

Stock Adjustments

Total Income EXPENDITURE :

Raw Materials

Power & Fuel Cost

Employee Cost

Other Manufacturing Expenses

Selling and Administration Expenses

Miscellaneous Expenses

Less: Pre-operative Expenses Capitalised

Total Expenditure

Operating ProfitInterest

Gross Profit

Depreciation

Profit Before Tax

Tax

Fringe Benefit tax

Deferred Tax

Reported Net Profit

Extraordinary Items

Adjusted Net Profit

Adjst. below Net Profit

P & L Balance brought forward

Statutory Appropriations

Appropriations

P & L Balance carried down

Dividend

Preference Dividend


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200 7

4.65 0.16

8.64

Equity Dividend %

Earnings Per Share-Unit Curr

Earnings Per Share(Adj)-Unit Curr

Book Value-Unit Curr



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0

Percentage

2,423.68

27.52

2,396.16 100

44.19 1.84

38.89 1.62

2,479.24 103.46

937.13 39.1

36.63 1.52

154.7 6.45

358.33 14.95

429.25 17.91

96.32 4

0 0

2,012.36 83.98

466.88 19.4814.47 0.6

452.41 18.88

27.42 1.14

424.99 17.73

47.48 1.98

6.51 0.27

-2.55 0.1

373.55 15.58

18.8 0.78

354.75 14.8

-0.71 0.02

323.23 13.48

0 0

267.13 11.14

428.94 17.9

151.39 6.31

0 0

Mar09(12)

InterpretationIn common size statements, the sales figure is asspercentage of sales in the income statement. In th

liabilities is taken as 100 and all the figures are expast theory for comparison is called as trend analysome important items which can be logically conninformation for a number of years is taken up andas the base year. Each item of the base year is takother years are calculated.

Gross profit (or gross margin) percentage, is calcor by subtracting the cost of goods sold percentagsales price that exceeds the cost of goods sold. Itavailable to cover expenses other than cost of goo

% to 19.56 % .

Total expenditurecommon-size income statement reflects the relatiadministrative expenses and net sales. Managerspercentages that increase over time are usually vi

Operating income and Net incomethe two most important are the operating incomeoperating income percentage is an indicator of manumerator, operating income (or loss), excludes b

expenses are not directly affected by operating (bpercentage is a better reflection of how managemnet income percentage reflects the firms overall plevel of activity (net sales). Both ratios are indicatcompany shows good growth in both the years . Inin operating profit. and in net income it was 17.9

FORMULA FOR CALCULATING= INDIVIDU


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175 7.3

4.02 0.16

8.53 0.35


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umed to be 100 and all figures are expressed as ae Balance Sheet, the total of the assets or

ressed as a percentage of this total. Using thesis. Trend percentages are calculated only forcted with each other. Under this technique,ne year, which is usually the first year, is taken

en as 100 and on that basis, the percentage for

ulated either by dividing gross profit by net salesfrom 100%. It reflects the percentage of theeasures the percentage of revenue that is

ds sold and to contribute toward profits, i.e 18.88

nship between selling, general, andave substantial control over these costs, andwed with disfavor.

percentage and the net income percentage. Thenagements success in operating the firm. Theth interest expense and taxes. Because these

ying and selling) decisions, the operating incoment handles the day-to-day affairs of the firm. The

rofitability, after interest and taxes, relative to itsrs of a firms financial success. In both the Income2009 it was 19.48 and in 2010 it was 20.02 % i.e .in 2009 and in 2010 it was 18.44 %.

COMMON SIZE STATEMENTL ITEM / SALE AS A BASE x 100


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(Rs in Crs)

Percentage

86.9 10.11662.48 77.09

0 0

0 0

749.38 87.2

24.27 2.82

85.7 9.97

109.97 12.79

859.35 100

687.23 79.97236.28 27.49

0 0

450.95 52.47

0 0

23.31 2.71

348.51 40.55

298.44 34.72

130.48 15.18

163.91 19.07325.12 37.83

917.95 106.8

432.06 50.27

440.1 51.21

872.16 101.49

45.79 5.32

2.74 0.31

23.82 2.77

35.77 4.16

-11.95 1.39

859.35 100

156.12

Common size Balancesheet as on 31st march.2010

Year Mar 10

SOURCES OF FUNDS :

Share CapitalReserves Total

Equity Share Warrants

Equity Application Money

Total Shareholders Funds

Secured Loans

Unsecured Loans

Total Debt

Total Liabilities

APPLICATION OF FUNDS :

Gross BlockLess : Accumulated Depreciation

Less:Impairment of Assets

Net Block

Lease Adjustment

Capital Work in Progress

Investments

Current Assets, Loans & Advances

Inventories

Sundry Debtors

Cash and Bank

Loans and Advances

Total Current Assets

Less : Current Liabilities and Provisions

Current Liabilities

Provisions

Total Current Liabilities

Net Current Assets

Miscellaneous Expenses not written off

Deferred Tax Assets

Deferred Tax Liability

Net Deferred Tax

Total Assets

Contingent Liabilities



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Percentage

86.51 9.83651.69 74.09

0 0

0 0

738.2 83.92

10.65 1.21

130.72 14.86

141.37 16.07

879.57 100

518.77 58.97210.45 23.92

0 0

308.32 35.05

0 0

51.71 5.87

436.9 49.67

261.72 29.75

112.36 12.77

143.69 16.33227.28 25.83

745.05 84.7

331.21 37.65

332.89 37.84

664.1 75.5

80.95 9.2

8.64 0.98

23.54 2.67

30.49 3.46

-6.95 0.79

879.57 100

162.41

Mar 09 INTERPRETATION

Financial statements are critical in determining the fiwhere we find information about a company's assetindicates how a company is performing at a specificsame as a regular balance sheet. In a common sizetotal assets. Knowing the accounting equation assetcommon size balance sheet much easier. If you wanbalance sheet makes for easy analysis when compar

If we see the common size balancesheet of the comthe company was very good , they issued share capiincreases approxmatiely 77 % from 74 % . The com

unsecured loans but in 2010 company company onlyunsecured loans , Thats why their overall debt reducsay that the overall position of the company was vertheir liabilities and purchase more fixed assets fromexpand their business in future . but company didntthey didnt earn sufficient return which reduces their


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nancial health of a company. The balance sheet isheld and liabilities owed. A balance sheetperiod of time. A common size balance sheet is thealance sheet values are listed as a percentage of-liabilities=owner's equity, makes reading theto know if a company is thriving, the common size

ing one company to another.

any we can say that overall financial position oftal more in 2010 than 2009 and also their reserveany raise their funds through secured loans and

raise their funds through secured loans not fromed to Rs 859.35. After doing analysis of assets wey good they have sufficient liquid assets to payprevious year it may be due to they want toinvest money their money in securities from whichcash balance.


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Comparative size Balancesheet as on 31st march.201

Absolute change

86.9 86.51 0.39

662.48 651.69 10.79

0 0 0

0 0 0

749.38 738.2 11.18

24.27 10.65 13.62

85.7 130.72 -45.02109.97 141.37 -31.4

859.35 879.57 -20.22

687.23 518.77 168.46

236.28 210.45 25.83

0 0 0

450.95 308.32 141.68

0 0 0

23.31 51.71 -28.4

348.51 436.9 -88.39

298.44 261.72 36.72

130.48 112.36 18.12

163.91 143.69 20.22

325.12 227.28 97.84

917.95 745.05 172.9

432.06 331.21 100.85

440.1 332.89 107.21

872.16 664.1 208.06

45.79 80.95 -35.16

2.74 8.64 -5.9

23.82 23.54 0.28

35.77 30.49 5.28

-11.95 -6.95

859.35 879.57 -20.22

156.12 162.41

Year Mar 10 Mar 09

SOURCES OF FUNDS :

Share Capital

Reserves Total

Equity Share Warrants

Equity Application Money

Total Shareholders Funds

Secured Loans

Unsecured LoansTotal Debt

Total Liabilities

APPLICATION OF FUNDS :

Gross Block

Less : Accumulated Depreciation

Less:Impairment of Assets

Net Block

Lease Adjustment

Capital Work in Progress

InvestmentsCurrent Assets, Loans & Advances

Inventories

Sundry Debtors

Cash and Bank

Loans and Advances

Total Current Assets

Less : Current Liabilities and Provisions

Current Liabilities

Provisions

Total Current Liabilities

Net Current Assets

Miscellaneous Expenses not written o

Deferred Tax Assets

Deferred Tax Liability

Net Deferred Tax

Total Assets

Contingent Liabilities


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Percentage

0.45

1.66

1.51

127.89

-34.44-22.21

-2.3

32.47

12.27

45.95

-54.92

-20.23

14.03

16.13

14.07

43.05

23.21

30.45

32.21

31.33

-43.43

-68.29

1.19

17.32

0

-2.3

0

INTERPRETATIONSHARE CAPITAL :- Company raise their share capbehind the issuing more capital may be they want tRESERVE TOTAL :- Reserves are created to pay futucompany from their profits . Company usally retain2010 company reserves are increased to Rs 662.4810.79.

LOANS :- Secured loans are those loans which is se

loan amount. It increase the liabilities of the compa2010 company was mostly dependent upon loans fbusiness and also they getting loans easily becausemoney lenders.

FIXED ASSETS :- These are capital in nature for thcan start their production . company purcahses morabsolutechange was Rs 168.46 reason behind it theproduce more goods .

CURRENT ASSETS :- Thses assets play an very i

these they cann't pay their liabilities , purchase ascurrent aseests position of the company we can saycurrent assets with an absolute change Rs 172.9 Cosell their goods on credit to their customers which ishould given more emphasis on cash sale which lea


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ital from prvious year by Rs 0.39 reasonexpand to their business .

e liabilities, these reserves are created bysome part of their profits as a reserve . Infrom Rs 651.69 with an difference of

cured with some security as against the

y but also increase their cash position. Innds because they want to expand theirof good image in the eyes of investors or

e company , without fixed assests nobodye fixed assets in 2010 than in 2009 andy expand their business or they want to

portant role in any company without

ets , pay dividend etc. As we see thethat from 2009 there was increase in

mapny debtors are increasing means theynot very good sign for the company they

ds to increase their cash position.


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(Rs in Crs)

Year 10-Mar 9-Mar

Sources of Funds

Cash profit 459.16 394.23Increase in equity 0.25 0.11

Increase in other networth 0 0

Increase in loan funds 0 124.03

Decrease in gross block 0 0

Decrease in investments 88.39 0

Decrease in working capital 40.16 0

Others 6.04 5.31

Total Inflow 594 523.68

Application of funds

Cash loss 0 0

Decrease in networth 248.94 12.39

Decrease in loan funds 31.4 0

Increase in gross block 139.43 86.28

Increase in investments 0 166.53

Increase in working capital 0 107.09

Dividend 173.6 151.39

Others 0.63 0

Total Outflow 594 523.68

Industry :Personal Care - Indian -Large


INTER

Cash pr

very goo

Increasexpand i

Increasliabilitiescompany

Decreasimplies t

shares ofalso enh

DecreasCompan

INTERP

Increasand 139.

Decreas1. Comp

borro2. Comp

Dividen cash prothe mind


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RETATIONS OF SOURCES OF FUNDS

fit : - The company's cash profit from 2009 to 2010 is increasing . It implies that c

, it works on their maximum level .

in equity :- The company raise its equity from its previous year by 0.14 Rs. it mas business or may be due to purcahse some assests for the company .

in loan funds :- In previous year company mostly dependent upon loan from theibut in 2010 the company doesnt want to expand their business or regarding some. In other word we can say that in 2010 company not dependent upon loans.

e in investment :- In previous year investment level of the compnay was zero butat , the compnay invest his money in some other company's share or may be in g

other compnay from where they earn return which was giving benefit to the compnce their cash position.

e in working capital :- In short we can say that was well capable of meeting theirhas sufficent liquid assests to meet their expenses i.e. day to day expenses or lia

ETATIONS OF APPLICATION OF FUNDS

in gross block:- From the previous year the gross block of the company has incr3 in 2010 , the reason behind this company purchased new fixed assests to expan

e in loan funds :- There may be two reason behind the dec. in loan funds which any used his loan funds to meet their liabilities but it also increased his liabilities fromoney.

ny used his loan funds to purchase new assests .

:- From the previous year , company giving more dividend to their shareholder beit than previous year . So they can easily distribute more dividend from previous yof shareholder and security also.


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mpany's operating efficiency is

be due to company wants to

ir lenders which enhance theirpurchasing assests for the

in 2010 it was 88.39 whichvt. securities or purchase some

ny to meet their liabilities and

day to day expenses .ilities.

eased which was 86.28 in 2009d their business .

e given below:-m which they

ause company has now morear. It aslo build confidence in


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Industry :Personal Care - Indian - Large(Rs in Crs)

10-Mar 9-Mar

Cash Flow Summary

Cash and Cash Equivalents at Beginning of the year 151.84 68.26

Net Cash from Operating Activities 481.49 323.57

Net Cash Used in Investing Activities -267.54 -238.38Net Cash Used in Financing Activities -201.88 -9.77

Net Inc/(Dec) in Cash and Cash Equivalent 12.07 75.42

Cash and Cash Equivalents at End of the year 163.91 143.68

Intranet Version of Capitaline Corporate Databases

Cash from investing:Some businesses will invest outside their core operInterpretation: This portion of the cash flow statement accounts for cash usedinvestments. But if we see the position of this company it shows very bad sigshare or in some securities they didn't get any earn return from that in both th2009 it was Rs 238.38 and in 2010 it was Rs 267.54. In nut shell they nothing

Cash from financing: This last section refers to the movement of cash frloan or issuing stock to new investors. Dividends to current investors also fit inInterpretation: Investors will like these last two items, since they reap the dividand wants to keep it for the companys gain. A simple formula for this section:acquire stock.

Conclusion :- After doing analysis of cash flow statement of company ,we coactivities due to their operating efficiency but they didnt earn from their remreduction in cash balance from their previous year. which is Rs 75.42 in 2009 t


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INTREPRETATIONThe cash flow statement discloses how a company raised money and how it san analytical tool, measuring an enterprises ability to cover its expenses in thconsistently bringing in more cash than it spends, that company is consideredA cash flow statement is divided into three parts: operations, investing and fin

Cash from operations: This is cash that was generated over the year frNote how the statement starts with net earnings and works backward, addingaccounts receivable. In simple terms, this is earnings before interest and taxeInterpretation:This may serve as a better indicator than earnings, since noncasay that operating efficiency of the company was very good , they generateproper their resources in planned way which leads to more cash from operati

ations or acquire new companies to expand their reach.to make new investments, as well as proceeds gained from previousbecause whatever they invest their money in some other company's

e years their cash balance from their return was in negative i.e . inarn from their investing activities.

m financing activities. Two common financing activities are taking on ahere.ends, and it signals that Target is confident in its stock performancecash from issuing stock minus dividends paid, minus cash used to

e to know that company is generating cash only from their operatingining activities i.e. investing and financing which leads to theirRs 12.07 in 2010.


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ent those funds during a given period. It is alsoe near term. Generally speaking, if a company isto be of good value.ancing.

m the companys core business transactions.in depreciation and subtracting out inventory and(EBIT) plus depreciation minus taxes.

sh earnings cant be used to pay off bills. We canmore cash from their previous year , they utiliseg activities i.e Rs 151.84 in 2010.


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MEANING OF ACCOUNTING RATIO:A ratio is a mathematical relationship between two related items expresscalculate a Ratio. One number is put as a numerator and the other as a dvariables expressed in either percentage or in multiples or in periods. Rat

performance of the firm can be gauged from four anglesProfitabilityLiquidityAsset EfficiencySolvencyThe overall performance of firm is a function of these factors and we candepends upon efficient utilization of asset, which is managed only throug

OBJECTIVES OF RATIO ANALYSIS1 Helps in identification of significant accounting data relationship2 Simplifies financial statements

3 Helps in planning and forecasting4 Helps in simplifying accounting figures5 Helps in Inter-firm comparison6 Helps the investor to evaluate their investment7 Helps the marketing manager to evaluate the sale and return from it

CLASSIFICATION OF RATIOSThe particular purpose of a user is determining the particular ratios that might bas under:

1 LIQUIDITY RATIOSCurrent ratioQuick ratioAbsolute liquid ratio2 PROFITABILITY RATIOSGross Profit RatioNet Profit RatioOperating RatioReturn on InvestmentReturn on Equity

Earning per share3 TURNOVER/ACTIVITY/EFFICIENCY RATIOSInventory Turnover RatioDebtors Turnover RatioCreditors Turnover Ratio4 SOLVENCY RATIOS


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Interest Coverage Ratio


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d in quantitative form. Two numbers are needed tonominator. Ratio refers to relationship between two

io helps in analyzing the financial performance of firm. The

say that profitability depends upon liquidity and liquidityh well formulated capital structure.

e used for financial analysis. Ratios are generally classifieds are


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Key ratios of company

LIQUIDITY RATIOSCurrent ratio = Current assets / Current liabilities

For 2009 = 745.05 / 664.1= 1.12 : 1

For 2010 = 917.95 / 872.16= 1.05 : 1

Quick ratio = Cash in hand + Cash at bank - (Prepaid eliabilitiesFor 2009 = 143.69 / 664.1

= 0.21 :1For 2010 = 163.91 / 872.16

= 0.18 :1

WORKING CAPITAL CYCLEDebtor turnover ratio =Net Sale or Cost of goods sold / AveragFor 2009 = 2396.16 / 112.36 ( Only Debtor )

= 21.32 timesFor 2010 = 2856.87 / 121.42 ( Avg. Dr. )

= 23.52 timesAvg. debtors = Opening Dr + Closing Dr / 2

Collection period = No. of days ( 365 ) / Debtor turnover r

For 2009 = 365 / 21.32= 17 days approx.

For 2010 = 365 / 23.52= 15 days approx.

Inventory turnover ratio = Cost of goods sold / Average iFor 2009 = 1929.28 / 261.72 ( Only 2009 stock )

= 7.37 timesFor 2010 = 2297.93 / 280.08 ( avg inventory value )

= 8 times

Days inventory = 365 / Inventory turnover ratioFor 2009 = 365 / 7

= 52 daysFor 2010 = 365 / 8

= 46 days

OPERATING RATIOS=


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For 2009 = 466.88 / 2423.68 x 100= 19.26 %

For 2010 = 572.22 / 2880.45 x 100= 19.86 %

Net profit = Net profit / Net salesFor 2009 = 428.94 / 2396.16 x 100

= 18 %For 2010 = 526.91 / 2856.87 x 100

= 18.44 %

Operating ratio = Operating expenses / Net salesFor 2009 = 429.25 / 2396.16

= 0.17 :1For 2010 = 566.4 / 2856.87

= 0.19 : 1

LEVERAGE RATIOS

Debt to equity ratio = Debt / Owners EquityFor 2009 = 603.3 / 738.2

= 81.72 : 1For 2010 = 627.73 / 749.38

= 83.76 : 1

Interest coverage ratio = EBITDA / Interest expenses

for 2009 = 466.88 / 14.47= 32.26For 2010 = 572.22 / 13.28

= 43 : 1

Funded debt to total capitalisation ratio = Funded debt /For 2009 = 141.37 /879.57 X 100

= 16.07 %For 2010 = 109.97 / 859.35 X 100

= 12.79 %

Proprietory Ratio or Equity ratio = Shareholders funds / TFor 2009 = 738.2 / 879.57

=0.83For 2010 = 749.38 /859.35

= 0.87

Overall Profitability RatioReturn on Shareholder investment = NP after int. and ta


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. .= 58.10 %

For 2010 = 526.91 / 749.38 X 100= 70.31 %


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penses + Stock) / Current

Debtor Or Debtor + Bills Recieveable

atio

ventory


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total capitalisation X 100

tal assests

es / Shareholders funds X 100


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LIQUIDITY RATIOS

CURRENT RATIOThese values come from your balance sheet and are a measure of your liquidity

greater your cushion. Although a satisfactory value for a current ratio varies fsmaller current ratio may mean that you have successfully negotiated to pay ythe current ratio of this company we can easily say that company's position wacurrent assets to meet their liabilities properly.

QUICK RATIOThis is a slightly more conservative measure of liquidity because it uses only yoshortterm debt. Also called Acid-Test Ratio, this is very similar to your current rareceivable. The quick ratio excludes inventory, which must first be sold and thenever converted to cash. They are simply assets you paid for in advance. As a rsituation.RULE OF THUMB FOR QUICK RATIO IS 1:1. The company should tr

position is not good to meet their liabilities in crunch situation.

WORKING CAPITAL CYCLE RATIO'S

DEBTOR TURNOVER RATIO(Sales/Receivables Ratio) Measures number of times AR turns over duringconsideration seasonal fluctuations nor a large proportion of cash sales cIf we take the Debtors turnover in terms of days which is approx. 17 dayin terms of cash collections from their debtors because company collect

CREDITORS TURNOVER RATIOCTR = Cost of goods sold / average creditors

= 1943.75 / 331.21= 5.86 ( 2009 )

CTR= Cost of goods sold / Average Creditors= 229.97 / 381.35= 6.02 (2010)

Payment period = 365 / CTR= 365 / 5.86= 62 days. for 2009

For 2010 = 365 / 6.02= 60 days.

The average payment period ratio represents the number of days by theare being paid promptly. This situation enhances the credit worthiness ofadvantage of credit facilities allowed by the credit. If we see the creditorsnot so good . The company made his payment in approx 3 months to thei

INVENTORY TURNOVER RATIONumber of times inventory turns in period. High turn can indicate better liquidit


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to inaccurate sales forecast can also a planned inventory build-up in anticipatiratio in days it can be approx. 54 days in 2009 and 46 days in 2010 which is v

OPERATING RATIO'S

GROSS PROFIT RATIO

FORMULA = Gross profit / Sales x 100For 2009 = 452.41 / 2396.16 x 100= 18.88 %

For 2010 = 558.94 / 2856.87 x 100= 19.56 %

Gross profit ratio may be indicated to what extent the selling prices of goproduces its products. As the gross profit is found by deducting cost of gvary from business to business. However, the gross profit earned shouldand dividends.

OPERATING PROFIT MARGIN

This value measures the percent of revenue remaining after paying all opall operating expenses) divided by your gross sales expressed as a perce

NET PROFIT RATIOThe net income divided by your gross sales, expressed as a percentage.earns per dollar or Rs of sales. Interpretation is similar to profit margin, toften doesn't tell the entire story Profit can increase, but it does not mea lower profit margin then had been seen with a lower profit. In nutshelllowest cost.

OPERATING RATIOThis ratio shows management efficiency by comparing your operating exrevenue decreases. This ratio; however, does not take into account any d

LEVERAGE RATIO'S

INTEREST COVERAGE RATIOIndicates what portion of debt interest is covered by your companys caspay its interest expenses. Ideally you want the ratio to be over 1.5. In botfrom their profits.

DEBT TO EQUITY RATIOAlso called Debt to Worth, this ratio compares the total liabilities of youryour balance sheet). It indicates what proportion of equity and debt yourLow indicates greater long-term financial safety and/or flexibility to borro

Funded debt to total capitalisation ratio = Funded debA variation of the debt-to-equity ratio, this value computes the proportioamount of your leverage and compare it to others to help analyze your c


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.

Proprietory Ratio or Equity ratio = Shareholders funds /Generally this ratio was calculate to see what portion or amount of shareposition of the company but the position of this company was not so goo

OVERALL PROFITABILITY

Return on sahreholder investmentBasically, ROE shows how much profit your company generates from a given leyour industry. ROE may also be calculated by dividing net income by average sthe end of the period, then divide by two. You may also want to calculate the chshareholders equity at the end of the period as the denominator. Calculating b


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Interpretation

. Your current ratio indicates your ability to pay your current debt out of your current asset

rom industry to industry, a general rule of thumb is that a current ratio of 2 tour suppliers later than the usual 30 days. Now according to Rule Thumb of current rationot good because there liabilities increased as much as current assest increased approx .

ur available cash and accounts receivable in the equation.. A value < 1:1 implies dependtio but it includes only those current assets that can be most readily used to pay bills todacash collected before it can be used to pay liabilities. It also excludes current assets like pesult, the quick ratio is a good indication of how well you are able to meet your current lia

to maintain this ratio , but if we see company ' s ratio in both years they are less than 1

the period. Higher the turn, shorter the time between sale and collection of the campared to total sales.in 2009 and in 2010 it was 15 days, then we can conclude that the company's po

cash in just within 17 to 15 days from their debtors.

firm to pay its creditors. A high creditors turnover ratio or a lower credit period ratithe company. However a very favorable ratio to this effect also shows that the busiturnover ratio of the company we can say that , the overall position regarding their suppliers which is not entertained to their creditors .

or good merchandising or shortage of needed inventory for sales. Low turn can mean ov


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on of possible material shortages. You still need to take seasonal fluctuations into account.ry good for the company.

ods per unit may be reduced without incurring losses on operations. It reflects efficods sold from net sales, higher the gross profit better it is. There is no standard GPe sufficient to recover all operating expenses and to build up reserves after payin

erating expenses (Operating Income). The operating profit margin is your operatinntage.

he companys after-tax profit margin tells you (and investors) the percentage of me aftertax profit margin is more stringent as it takes into account taxes. Looking atan that its profit margin is improving. For example, if company increases sales, ane can say that their is need to control the overall cost little bit more so that compa

penses to your net sales. The smaller the ratio, the greater your companys abilityebt repayment or debt increase. In both the years the company is well capable in

flow situation. A ratio below 1 means that your company is having problems geneh the years , the interest coverage ratio of company is very good they can easily c

usiness to your total owners equity or net worth (the value of your total assets micompany is using to finance assets. Also, it expresses a degree of protection proviw.

/ total capitalisation X 100of your company's long-term debt compared to your available capital. Investors umpany's risk exposure. Generally, companies who finance a greater portion of the


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.

Total assestsholder funds was used to finance their assets , it was considered higher the ratio m

because of low ratio.

el of shareholder investment. The ROE is useful for comparing the profitability of your coareholders' equity. Calculate by adding the shareholders equity at the beginning of the pange in ROE for a period, first by using shareholders equity at the start of the period as thth beginning and ending ROE enables you to determine the change in profitability over th


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s. The higher the ratio, the

1 or greater is fairly healthy. Ahich is 2 to 1 , if we compareSo they have not sufficent

ncy on inventory to liquidatey: cash and accountsrepaid expenses, which areilities in a crunchhich implies , that company's

sh. Does not take into

ition was good in both years

signifies that the creditorsiness is not taking the fullr payments to creditors was

rstocking, obsolescence, builds


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. If we see their Inventory

iency with which a firmratio for evaluation. It mayall fixed interest charges

income (gross profit minus

oney your company actuallythe earnings of a companyif costs also rise, youll have

ny can earn more profit at

o generate a profit ifgenerating profit.

rating enough cash-flow toover his interest expenses

nus your total liabilities fromed by owners for creditors.

e this ratio identify toir capital via debt are


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eans better long term

pany to that of other firms inriod to shareholders equity ate denominator and then using

period.


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COST SHEET OF DABUR

PARTICULARS 2009

Raw material 937.13

PRIME COST ( A 937.13

Power and fuel cost 36.63

Employee cost 154.7

Other manufacturing expenses 358.33

FACTORY COST ( B ) 549.66

TOTAL ( 1486.79

Selling and administration overhead 429.25

SELLING COST TOTA 1916.04

PROFIT 507.64

SALES 2,423.68


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2010

992.21

992.21

35.43

197.62

432.15

665.2

1657.41

566.4

2223.81

656.64

2,880.45

INTREPERTATIONIt consists of direct material, direct wages and direct expe

aggregate of cost of material consumed, productive wage

basic, first, flat or direct cost of a product.

Prime Cost = Direct material + Direct Wages + Direct exp

Direct material means cost of raw material used or consu

the material purchased in a particular period is used in pr

balance at opening and closing of the period. Hence, it isis adjusted in the material purchased. Opening stock of mthe material purchased and we get material consumed orraw material in 2010 it may be due to they want to increa2010.In addition to prime cost it includes works or factory overhindirect wages, and indirect expenses incurred in the factomanufacturing cost. The work cost of the company is incretheir production for that their indirect expenses should beIf office and administrative overheads are added to factorIn nut shell we can say that due to increase their producti

earn more profit in 2010 than in 2009.


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ses. In other words Prime cost represents the

, and direct expenses. It is also known as

nses

ed in production. It is not necessary that all

duction. There is some stock of raw material in

ecessary that the cost of opening and closing stock of materialterial is added and closing stock of raw material is deducted inused in production of a product. The company purchase moree their production because company sales are increasing in

eads. Factory overheads consist of cost of indirect material,ry. Factory cost is also known as works cost, production orase from Rs 549.66 to Rs 665.2 due to they want to increaseincreased.or works cost, total cost of production is arrived at.

n their expenses are also increases but apart from that they


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YEAR SALE % COST OF GOODS SOLD %

2009 2,396.16 100 1943.75 100

2010 2,856.87 119 2297.93 118

TREND ANALYSIS

INTERPRETATIONEach years amounts will be divided by the 2001 ampercentage will be presented.As we see the trend analysis of the company we intresale was 119 % of 2009 and in cost of goods sold it

that comapny was expand their business or it may bpersonally think that company should try to reduce tearn more profit as we see in 2010 company's net prwhich is not very huge But we cannt denied that comprofit . But they should try to reduce their cost.


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PROFIT %

428.94 100

526.91 123

unts and the resulting

pret that in 2010 theas 118 % we can say

due to the inflation . Ieir cost so that they canfit was 123 % as of 2009

pany didnt earn any

term paper of ac

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