A

Project Report

On

Financial Analysis
 Presented
to
Prof: S
Murali

Submitt
ed by:
Karan Sanan
 Rajul Dubey
Harsha Vijayvergia

Acknowledgement

With a sense of gratitude and respect, we would like to

extend our heartiest thanks to all of those who provided
help and guidance to make this project a big success. No
Project is ever the outcome of single individual’s talent or
effort. This work is no exception. This project would not
have been possible without the whole hearted
encouragement, support and co-operation of our guide,
friends and well-wishers.

Although it is not possible for us to name and thank them

all individually, we must make special mention of some of
the personalities and acknowledge our sincere indebtness
to them.

The successful completion of this project rests on the

shoulder of many persons who have helped us directly or
indirectly. We wish to take this opportunity to express to
all
those, without whose help, completion of this project
would have been difficult.
We are indebted and thankful to all the individuals who
have guided, advised,inspired and supported us in
making this project a success.

Our gratitude to our honorable guide Prof. S.MURALI for

giving us the opportunity for developing the project and
his able guidance, inestimable motivation an constant
constant encouragement throughout our project.

Executive Summary

It is Summarize tin of all report in one or two pages so as

to provide an overview of the company. it is also called
synopsis or Abstract. As a partials fulfillment of the
requirement for the Managerial Accounting Course. We
have completed a project report
on financial Analysis of Wipro Ltd.:

 Sales Figure is increasing at a handsome rate. it is at

Rs. 58400.23 Million. In 2003-04 and it is increased to Rs.
141395.8 Million. So Sales is increased 75.05% because
of aggressive Selling Policy.

 Profit after Tax is also increasing as compare to 2003-

04 it is increasing 22514 Million at Rs 3408, 8747,
4388.6, 5970.4, respectively last four year. This is
because company has increased it sales and doing good
cost management.

 Net worth of the company is increased in this year

because of increase in Reserve
& Surplus.
 Current Ratio of Wipro limited is showing good
position. It is 1.26 Times in 2003-04 then it is increased to
2.13 Times in 2007-08 this shows Company has achieved
standard Ratio.

 The returns on the investment is somewhat decline in

current year.

 The EPS of Share is increased Rs. 7.43 to Rs 20.62 in

2007-08 So Shareholder
are benefited.

 Company’s Total Assets are increased and it trying to

expand its business on the
other hand debt are also increased it shows that
company trying to Trading on Equity.

 After analyzing all aspect Company’s performance is

good.
ACCOUNTING
POLICIES
Significant accounting policies

i. Basis of preparation of financial statements

The financial statements are prepared in accordance with
Indian Generally Accepted Accounting Principles (GAAP)
under the historical cost convention on the accrual basis,
except for certain financial instruments which are
measured
on a fair value basis. GAAP comprises Accounting
Standards specified in the Companies (Accounting
Standards) Rules, 2006, Accounting Standards issued by
the Institute of Chartered Accountants of India (ICAI) and
other generally accepted accounting principles in India.

ii. Use of estimates

The preparation of financial statements in accordance
with the generally accepted accounting principles
requires management to make judgments, estimates and
assumptions that affect the application of accounting
policies and the reported amounts of assets and
liabilities, income and expenses. Estimates and
underlying assumptions are reviewed on an ongoing
basis. Revision to accounting estimate is recognized in
the period in which the estimates are revised and in any
future period affected.
iii. Goodwill
The goodwill arising on acquisition of a group of assets is
not amortised and is tested for impairment if indicators of
impairment exist.

iv. Fixed assets

Intangible assets and work-in-progress Fixed assets are
stated at historical cost less accumulated depreciation.
Costs include expenditure directly attributable to the
acquisition of the asset. Borrowing costs directly
attributable to the construction or production of
qualifying assets are capitalized as part of the cost.
Intangible assets are stated at the consideration paid for
acquisition less accumulated amortization.
Advances paid towards the acquisition of fixed assets
outstanding as of each balance sheet date and the cost of
fixed assets not ready for use before such date are
disclosed under capital work-in-progress.

v. Investments
Long term investments are stated at cost less any other
than temporary decline in the value of such investments.
Current investments are valued at lower of cost and fair
value determined by category of investment. The fair
value is determined using quoted market price/market
observable information adjusted for cost of disposal.

vi. Inventories
Inventories are valued at lower of cost and net realizable
value, including necessary provision for obsolescence.
Cost is determined using the weighted average method.
vii. Provisions and contingent liabilities
Provisions are recognised when the Company has a
present
obligation as a result of past event, it is probable that an
outflow of resources will be required to settle the
obligation, and a reliable estimate can be made of the
amount of obligation.
A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may,
but probably will not, require an outflow of resources.
Where there is a possible obligation or a present
obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
The Company recognizes provision for onerous contracts
based on the estimate of excess of unavoidable costs of
meeting obligations under the contracts over the
expected economic benefits.

viii. Revenue recognition

Services:
Revenue from Software development services comprises
revenue from time and material and fixed-price contracts.
Revenue from time and material contracts is recognized
as related services are performed. Revenue from
fixedprice, fixed-time frame contracts is generally
recognised in accordance with the “Percentage of
Completion” method. Revenues from BPO services are
derived from both timebased and unit-priced contracts.
Revenue is recognised as the related services are
performed, in accordance with the specific terms of the
contract with the customers.
Revenue from application maintenance services is
recognised over the period of the contract. Revenue from
customer training, support and other services is
recognised as the related services are performed.
Provision for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses
become probable based on the current contract
estimates.

‘Unbilled revenues’ included in loans and advances

represent cost and earnings in excess of billings as at the
balance sheet date. ‘Unearned revenues’ included in
current liabilities represent billing in excess of revenue
recognised.

Products:
Revenue from sale of products is recognised when the
product has been delivered, in accordance with the sales
contract. Revenues from product sales are shown as net
of excise duty, sales tax separately charged and
applicable discounts.

Other income:
Agency commission is accrued when shipment of
consignment is dispatched by the principal.
Profit on sale of investments is recorded upon transfer of
title by the Company. It is determined as the difference
between the sales price and carrying amount of the
related
investment.
Interest is recognized using the time-proportion method,
based on rates implicit in the transaction.
Dividend income is recognized where the Company’s
right
to receive dividend is established.
ix. Leases
Leases of assets, where the Company assumes
substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are
capitalized at the lower of the fair value of the leased
assets at inception and the present value of minimum
lease payments. Lease payments are apportioned
between the finance charge and the outstanding liability.
The finance charge is allocated to periods during the
lease term at a constant periodic rate of interest on the
remaining balance of the liability.
Leases where the lesser retains substantially all the risks
and rewards of ownership are classified as operating
leases. Lease rentals in respect of assets taken under
operating leases are charged to profit and loss account
on a straight line basis over the lease term.
In certain arrangements, the Company recognizes
revenue
from the sale of products given under finance leases. The
Company records gross finance receivables, unearned
income and the estimated residual value of the leased
equipment on consummation of such leases. Unearned
income represents the excess of the gross finance lease
receivable plus the estimated residual value over the
sales price of the equipment. The Company recognises
unearned income as financing revenue over the lease
term using the
effective interest method.

x. Foreign currency transactions

The Company is exposed to currency fluctuations on
foreign
currency transactions. Foreign currency transactions are
accounted in the books of accounts at the average rate
for
the month.

Transaction:
The difference between the rate at which foreign
currency
transactions are accounted and the rate at which they are
realized is recognized in the profit and loss account.

Translation:
Monetary foreign currency assets and liabilities at period
end are restated at the closing rate. The difference
arising
from the restatement is recognized in the profit and loss
account.
In March 2009, Ministry of Corporate affairs issued a
notification amending AS 11, ‘The effects of changes in
foreign exchange rates’. Before the amendment, AS 11
required the exchange gain/ losses on the long term
foreign currency monetary asset/ liability to be recorded
in the profit
The amended AS 11 provides an irrevocable option to the
Company to amortise exchange rate fluctuation on long
term foreign currency monetary asset/ liability over the
life of the asset/ liability or March 31, 2011, whichever is
earlier. The amendment is applicable retroactively from
the financial year beginning on or after December 7,
2006.
The Company did not elect to exercise this option.

xi. Financial Instruments

Financial instruments are recognised when the Company
becomes a party to the contractual provisions of the
instrument.
Derivative instruments and Hedge accounting:
The Company is exposed to foreign currency fluctuations
on foreign currency assets, liabilities, net investment in a
non-integral foreign operation and forecasted cash flows
denominated in foreign currency. The Company limits the
effects of foreign exchange rate fluctuations by following
established risk management policies including the use of
derivatives. The Company enters into derivative financial
instruments, where the counterparty is a bank.
The Company early adopted AS 30 and the limited
revisions
to other accounting standards which come into effect
upon
adoption of AS 30 from April 1, 2008. In accordance with
the recognition and measurement principles set out in AS
30, changes in fair value of derivative financial
instruments
designated as cash flow hedges are recognised directly in
shareholders’ funds and reclassified into the profit and
loss
account upon the occurrence of the hedged transaction.
Changes in fair value relating to the ineffective portion of
the hedges and derivatives not designated as hedges are
recognised in the profit and loss account as they arise.
AS 30 states that particular sections of other accounting
standards; AS 4, Contingencies and Events Occurring
after Balance Sheet Date, to the extent it deals with
contingencies, AS 11 (revised 2003), The Effects of
Changes in Foreign Exchange Rates, to the extent it deals
with the ‘forward exchange contracts’ and AS 13,
Accounting for Investments, except to the extent it
relates to accounting for investment properties, will stand
withdrawn only from the date AS 30 becomes mandatory
(April 1, 2011 for the Company). Accordingly, the
Company continues to comply with the guidance in AS 4 –
relating to contingencies, AS 11 – relating to forward
contracts and AS 13 – relating to investments until AS 30
becomes mandatory.
The fair value of derivative financial instruments is
determined based on observable market inputs including
currency spot and forward rates, yield curves, currency
volatility etc.

Non-Derivative Financial Instruments

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets of
the Company mainly include cash and bank balances,
sundry debtors, unbilled revenues, finance lease
receivables, employee travel and other advances, other
loans and advances and derivative financial instruments
with a positive fair value. Financial liabilities of the
Company mainly comprise secured and unsecured loans,
sundry creditors, accrued expenses and derivative
financial instruments with a negative fair value. Financial
assets liabilities are recognised on the balance sheet
when the Company becomes a party to the contractual
provisions of the instrument. Financial assets are
derecognized when all of risks and rewards of the
ownership have been transferred. The transfer of risks
and rewards is evaluated by comparing the exposure,
before and after the transfer, with the variability in the
amounts and timing of the net cash flows of the
transferred assets.
The Company measures the financial assets and
liabilities, except for derivative financial assets and
liabilities at amortized cost using the effective interest
method. The Company measures the short-term payables
and receivables with no stated rate of interest at original
invoice amount, if the effect of discounting is immaterial.
Non-interest bearing deposits are discounted to their
present value.
 FUTURE GROWTH
PROSPECTS

Wipro's forward looking and cautionary statements

Certain statements in this release concerning our future growth prospects
and our ability to successfully complete and integrate potential acquisitions
are forward looking statements, which involve a number of risks, and
uncertainties that could cause actual results to differ materially from those
in such forward looking statements. The risks and uncertainties relating to
these statements include, but are not limited to, risks and uncertainties
regarding our ability to integrate and manage acquired IT professionals, our
ability to integrate acquired assets in a cost effective and timely manner,
fluctuations in earnings, our ability to manage growth, intense competition
in IT services including those factors which may affect our cost advantage,
wage increases in India, our ability to attract and retain highly skilled
professionals, time and cost overruns on fixed-price, fixed-time frame
contracts, client concentration, restrictions on immigration, our ability to
manage our international operations, reduced demand for technology in our
key focus areas, disruptions in telecommunication networks, liability for
damages on our service contracts, the success of the companies in which
Wipro has made strategic investments, withdrawal of fiscal governmental
incentives, political instability, legal restrictions on raising capital or
acquiring companies outside India, unauthorized use of our intellectual
property and general economic conditions affecting our industry. Additional
risks that could affect our future operating results are more fully described
in our filings with the United States Securities and Exchange Commission.
These filings are available at www.sec.gov. Wipro may, from time to time,
make additional written and oral forward looking statements, including
statements contained in the company's filings with the Securities and
Exchange Commission and our reports to shareholders. Wipro does not
undertake to update any forward-looking statement that may be made from
time to time by or on behalf of the company.
 AUDIT
REPORT

REPORT
The Directors present the Annual Report of Wipro Limited
for the year ended March 31, 2000.
The Scheme of Amalgamation of Wipro Computers
Limited (formerly Wipro Acer Limited) with our Company
has been approved by the Hon’ble High Court of
Karnataka on February 16, 2000. The erstwhile Wipro
Computers Limited stands merged with our Company
with retrospective effect from April 1, 1999. The Annual
Report of Wipro Limited for the year 1999-2000 has been
prepared after giving effect to the amalgamation.

(Rs. in mns)

2000 1999
Sales and other income (net of excise duty) 23,129
18,040
Profit before tax from ordinary activities 507
1,764
Provision for tax
501 62
Profit after tax from ordinary activities
3,006 1,702
Non-recurring/prior period items (523)
(581)
Profit for the year 2,483
1,121
Appropriations :
Interim dividend on preference shares 26
6
Interim / Proposed dividend on equity shares 69
69
Corporate Tax on distributed dividend 10
8
Sales of the Company in the year ended March 31, 2000, were Rs. 23,129
mns, up by 28% and Profit after Tax was Rs.3006 mns, up by 77% over the
previous year. Over the last 10 years, Sales have grown at an average
annual rate of 23% and Profit after tax at 43%. The Company’s export at
Rs.10,506 mns has registered a growth of 61% as compared to the
previous year.

Dividend

The Directors recommend that the interim dividend of fifteen

percent per equity share be considered as the final dividend to be
appropriated from the profits for the year 1999-2000 subject to
approval by the members at the Annual General Meeting.

Directors
Mr A Soota, resigned as a Director of the Company with effect
from August 7, 1999. The Directors place on record their
appreciation of the valuable advice and guidance given by him
while he was a Director of the Company.
Mr Vivek Paul, was appointed as Vice Chairman of the Company
with effect from July 27, 1999 as approved by the members at the
last Annual General Meeting held on July 29, 1999.
Mr Hamir K Vissanji, Mr N Vaghul and Mr B C Prabhakar, retire
by rotation and being eligible offer themselves for re-appointment.

Fixed deposits
Fixed deposits from the public as at March 31, 2000, were
Rs.0.89 mns, and the unclaimed deposits as at that date were Rs
0.89 mns.

Subsidiary companies
As required under Section 212 of the Companies Act, 1956, the
Annual Reports for the year 1999-2000 and Accounts for the year
ended on March 31, 2000, of the subsidiary companies Wipro
Welfare Limited (formerly Wipro Factors Limited), Wipro Net
Limited, Wipro Trademarks Holding Limited (formerly Wipro
Investment Limited), Wipro Prosper Limited (formerly Inlec
Investment Limited) , Wipro Inc., Enthink Inc., and Wipro Japan
KK are attached. With a view to reassure our investors, your
Company has desubsidiarised Wipro Finance Limited to ensure
accountability and derisk the Company by disposing off 48.69% of
its holding of equity shares in Wipro Finance Ltd.

Auditors
The auditors, M/s. N M Raiji & Co., retire at the conclusion of the
ensuing Annual General Meeting and offer themselves for re-
appointment.
Members are requested to appoint them as auditors and fix their
remuneration.

Qualification to Auditor’s report

Auditor’s comments in their report under para 5(b) read along with
note to accounts no.2 is self explanatory.
ANNEXURE

AUDITORS’

REPORT
Annexure referred to in paragraph 1 of our report to the members of Wipro
Limited (“the Company”) for the year ended March 31, 2010

1. a) The Company has maintained proper records showing full particulars,

including quantitative details and situation of fixed assets.

b) The Company has a regular programme of physical verification of its

fixed assets by which all fixed assets are verified in a phased manner over
a period of three years. In our opinion, this periodicity of physical
verification is reasonable having regard to the size of the Company and the
nature of its assets. No material discrepancies were noticed on such
verification.

c) Fixed assets disposed of during the year were not substantial, and
therefore, do not affect the going concern assumption.

2. a) The inventory, except goods-in-transit and stocks lying with third

parties, has been physically verified by the management during the year. In
our opinion, the frequency of such verification is reasonable. For stocks
lying with third parties at the year-end, written confirmations have been
obtained.

b) The procedures for the physical verification of inventories followed by the

management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
c) The Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification between the physical stocks
and the book records were not material.

3. a) The Company has granted loans to 3 wholly owned subsidiaries

covered in the register maintained under Section 301 of the Companies
Act, 1956 (“the Act”). The maximum amount outstanding during the year
and the year-end balance of wipro is given.

Name of the Entity Maximum amount outstanding during year

Year-end balance

Wipro Cyprus Private Limited 1,568

Enthink Inc. 42
Wipro Singapore Pte Limited 22
Wipro Holdings (Mauritius) Limited 3

b) In our opinion, the rate of interest, where applicable and other terms and
conditions on which loans have been granted companies, firms or other
parties listed in the register maintained under Section 301 of the Act are
not, prima facie, prejudicial to the interest of the Company.

c) The principal amounts and interest, wherever applicable, are being

repaid regularly in accordance with the agreed contractual terms.
Accordingly, paragraphs 4(iii)(d) of the Order are not applicable to the
Company.

d) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained under
Section 301 of the Act. Accordingly, paragraphs 4(iii)(e) to (g) of the Order
are not applicable to the Company.

4. In our opinion and according to the information and explanations given to

us, there is an adequate internal control system commensurate with the
size of the Company and the nature of its business with regards to
purchase of inventories and fixed assets and with regard to sale of goods
and services. We have not observed any major weakness in the internal
control system during the course of the audit.

5. a) In our opinion and according to the information and explanations given

to us, the particulars of contracts or arrangements referred to in Section
301 of the Act have been entered in the register required to be maintained
under that Section.

b) In our opinion, and according to the information and explanations given

to us, the transactions made in pursuance of contracts and arrangements
referred to in (a) above and exceeding the value of Rs. 5 lakh with any
party during the year have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time except for
purchases of certain services which are for the Company’s specialized
requirements and similarly for sale of certain goods and services for the
specialized requirements of the buyers and for which suitable alternative
sources are not available to obtain comparable quotations. However, on
the basis of information and explanations provided, the same appear
reasonable.

6. The Company has not accepted any deposits from the public.

7. In our opinion, the Company has an internal audit system commensurate

with the size and nature of its business.

8. We have broadly reviewed the books of accounts maintained by the

Company pursuant to the rules prescribed by the Central Government
under Section 209(1)(d) of the Act for maintenance of cost records in
respect of Vanaspati, Toilet soaps, Lighting products and Mini computers/
Microprocessor based system and Data communication system and are of
the opinion that, prima facie, the prescribed accounts and records have
been made and maintained. However, we have not made a detailed
examination of the records.

9. a) According to the information and explanations given to us and on the

basis of our examination of the records of the Company, amounts
deducted/accrued in the books of account in respect of undisputed
statutory dues including Provident Fund, Employees’ State Insurance,
Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty
and other material statutory dues have been generally regularly deposited
during the year by the Company with the appropriate authorities. As
explained to us, the Company did not have any dues on account of
Investor Education and Protection Fund.
According to the information and explanations given to us, no undisputed
amounts payable in respect of Provident Fund, Employees’ State
Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty,
Excise duty and other material statutory dues were outstanding as at March
31, 2010 for a period of more than six months from the date they became
payable.
There were no dues on account of cess under Section 441A of the Act
since the date from which the aforesaid Section comes into force has not
yet been notified by the Central Government.

b) According to the information and explanations given to us, the following

dues of Income tax, Excise duty, Customs duty, Sales tax and Service tax
have not been deposited by the Company on account of disputes

10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses during the financial year
and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given
to us, the Company has not defaulted in repayment of any dues to any
financial institution or bank. The Company did not have any outstanding
debentures during the year.

12. The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the explanations given to us, the
Company is not a chit fund/nidhi/mutual benefit fund/ society
ANALYSIS OF
BALANCE SHEET
Trend Analysis of Balance Sheet
Trend Analysis of Balance Sheet involves calculation of percentage changes
in the
Balance Sheet items for a no. of successive years. This is carried out by
taking the
items of the past financial year used as base year and items of other years
are
Trend Analysis of Fixed assets

Year 2003-04 2004-05 2005-06 2006-

07 2007-08

Total Fixed Assets 100 130.827 112.844 175.077

220.726

Interpretation
 The fixed assets are increase in current year is good
for the company.
 Hear fixed assets are increasing as a increasing rate it
means the company has
expand it’s business.
 Fixed Assets are continuously increasing year by year.
 It seems that the company has good future plans and
they want to expand their
business so they have invested more and more funds in
fixed assets.
 Fixed assets are efficiently utilized by the company
due to which the profit of
the company is increasing every year.
 In 2006-07and 2007-08 Company has huge increase its
land, patents, trade
marks and rights.

2.1.2 Trend Analysis of total current assets

Year 2003-04 2004-05 2005-06 2006-07 2007-

08

Total Current Assets 100 129.242 157.708 154.955

166.304

Interpretation
 The current assets is shows the cash liquidity of the company.
 Hear it is increase it year by year it means the company has sufficient
liquidity for
generating the business
RATIO ANALYSIS

Ratio analysis involves establishing a comparative

relationship between the
components of financial statements. It presents the
financial statements into various
functional areas, which highlight various aspects of the
business like liquidity,
profitability and assets turnover, financial structure. It is a
powerful tool of financial
analysis, which recognizes a company’s strengths as well
as its potential trouble
spots.
It can be further classified as in different categories of
Ratio.
analysis,
 which recognizes a company’s strengths as
well as its potential trouble
spots.
It can be further classified as in different categories of
Ratio.
Liquidity
 Ratios
Profitability
 Ratios
Asset Turnover Ratios
solvency

Investor-related

.Liquidity Ratio

Liquidity refers to the existence of the assets in the cash

or near cash form. This ratio
indicates the ability of the company to discharge the
liabilities as and when they
mature. The financial resources contributed by owners or
supplemented by outside
debt primarily come in the cash form as under in the
balance sheet form.
The following Liquidity Ratios are calculated for the
company.
Current
 Ratio
Quick
 Ratio
Net  Working Capital

Current Ratio
This ratio shows the proportion of Current Assets to
Current Liabilities. It is also
known as “Working Capital Ratio” as it is a measure of
working capital available at a
particular time. It’s a measure of short term financial
strength of the business. The
ideal current ratio is 2:1 i.e. Current Assets should be
equal to Current Liabilities.
Current Ratio = Current Assets
----------------------
Current Liabilities

Current Ratio
Year 2003-04 2004-05 2005--06 2006-07
2007-08
Ratios 1.26 1.58 1.44 1.67
2.13

Interpretation
 Current ratio is always 2:1 it means the current assets
two time of current liability.
 After observing the figure the current ratio is
fluctuating.
 In the year 2008 ratio is showing good shine.
 Hear ratio is increase as a increasing rate from 2004 to
2008.
 Company is no where near the ideal ratio in every year
but every company can not
achieve this ratio.
 Current ratio is increased in 2007-08 as compared to
2003-04 because of increase in
Inventories 100.96% and 123.77 % increased in Cash and
Bank balance.
 Current ratio is decreased in 2005-06 as compared to
the last year because of
increase in liabilities by 45.39% and 93.19% in increasing
in Provision.

Quick Ratio

This ratio is designed to show the amount of cash

available to meet immediate
payments. It is obtained by dividing the quick assets by
quick liabilities. Quick Assets
are obtained by deducting stocks from current assets.
Quick liabilities are obtained by
deducting bank over draft from current liabilities.
Quick Ratio = Quick Assets
-------------------
Current Liabilities

Quick Ratio
Year 2003-04 2004-05 2005--06 2006-07
2007-08
Ratios 1.2 1.5 1.4 1.6
2.0

Interpretation
 Standard Ratio is 1:1
 Company’s Quick Assets is more than Quick Liabilities
for all these 5 years.
 In 2007-08 the ratio is increasing because of increase
in bank and cash balance.
 So all the years has quick ratio exceeding 1, the firm is
in position to meet its
immediate obligation in all the years.
 In 2005-06 quick ratio is decreased because the
increase in quick assets is less
proportionate to the increased quick liabilities.
 The Quick ratio was at its peak in 2007-08, while was
lowest in the 2004-05.

Profitability Ratios
A company should earn profits to survive and grow over a
long period of time. It
would be wrong to assume that every action initiated by
management of company
should be aimed at maximizing profits, irrespective of
social as well as economical
consequences. It is a fact that sufficient must be earned
to sustain the operation of the
business to be able to obtain funds from investors for
expansion and growth and to
contribute towards the responsibility for the welfare of
the society in business
environment and globalization.
The profitability ratios are calculated to measure the
operating efficiency of the
company.
The following Profitability Ratios are calculated for the
company.
Gross
 Profit Ratio
Operating
 Profit Ratio
Net  Profit Ratio
Rate  Of Return On Investment
Rate  Of Return On Equity

Gross Profit Ratio

This is the ratio expressing relationship between gross
profit earned to net sales. It is a
useful indication of the profitability of business. This ratio
is usually expressed as
percentage. The ratio shows whether the mark-up
obtained on cost of production is
sufficient however it must cover its operating expenses.
Gross Profit Ratio = Gross Profit X 100
Sales

Gross profit ratio analysis

Year 2003-04 2004-05 2005--06 2006-07
2007-08
Trend 29.8 31.7 32.6 33.7
33.0

Operating Profit Ratio

This ratio shows the relation between Cost of Goods Sold
+ Operating Expenses and
Net Sales. It shows the efficiency of the company in
managing the operating costs
base with respect to Sales. The higher the ratio, the less
will be the margin available
to proprietors.
Operating Profit Ratio = COGS+Operating
expences X 100
------------------------------------
----------------
Sales
Operating ratio
2003-04 2004-05 2005--06 2006-07
2007-08 83.5 80.0
79.0 77.9 81.7

Net Profit Ratio

= Net profit x 100
--------------------------
Net sales

Net profit ratio

2003-04 2004-05 2005-06 2006-07
2007-08
16.3 19.4 19.2 19.8
17.7

Turnover
Asset Turnover Ratio are basically productivity ratios
which measure the output
produced from the given input deployed. This relationship
is shown as under
Productivity = Output
-------------
Input
Assets are inputs which are deployed to generate
production (or sales). The same set
of assets when used intensively produces more output or
sales. If the asset turnover is
high, it shows efficient or productive use of input.
The following Assets Turnover Ratios are calculated for
the company.
Total
 Assets Turnover
Net Fixed Assets Turnover
Net  Working Capital Turnover
Inventory
 Turnover Ratio
Debtor  Turnover (in times)
Total Asset Turnover Ratio
The amounts invested in business are invested in all
assets jointly and sales are
affected through them to earn profits. Thus it is the ratio
of Sales to Total Assets. .It is
the ratio which measures the efficiency with which assets
were turned over a period.

Total Asset Turnover Ratio = Sales

----------
Total Assets

Total assets turnover ratio

Year 2003-04 2004-05 2005-06 2006-07
2007-08
Trend 1.5 1.5 1.6 1.5
1.2

Net Fixed Assets Turnover

To ascertain the efficiency & profitability of business the
total fixed assets are compared
to sales. The more the sales in relation to the amount
invested in fixed assets, the more
efficient is the use of fixed assets. It indicates higher
efficiency. If the sales are less as
compared to investment in fixed assets it means that
fixed assets are not adequately
utilized in business. Of course excessive sale is an
indication of over trading and is
dangerous.
Net Fixed Assets Turnover Ratio = Sales
----------
Net Fixed Assets

Total fixed assets turnover ratio

Year 2003-04 2004-05 2005—06 2006-07
2007-08
Time 4.0 4.2 4.9 4.0
2.4
INVESTOR RELATED RATIO:This ratio indicate split of
EPS between Cash Dividends and reinvestment of Profit.
If
the Company has Profitable projects than it will prefer to
keep dividend pay out ratio
lower.
Dividend pay-out Ratio = Dividend per Share in Rs.
---------------------------------
--
Earnings per share in
Rupees

Year 2003-04 2004-05 2005-06 2006-07

2007-08
Trend(Rs.) 1.54 4.68 2.94 3.77
3.43
 FINDING
S
 Though the sales has been continuously increased
from past 3 years but the
proportionate expenditure is also rising so overall not
making any huge effect on net
profit of this company.
 Hear the in 2005 company has reinvest profit for
business expansion it is good
shine for the company.
 The total expenditure is near by 80% of total income in
every year.
 Every year PBT is near by 20% of total income.
 Fixed assets are efficiently utilized by the company
due to which the profit of the
company is increasing every year.
 Liabilities is incressing rate it mean company has to
developed business. And
purchase raw material on credit basis.
 Company has enough cash in hand so that in any
condition company can take
Any Financial decision easily.
 All the years has quick ratio exceeding 1, the firm is in
position to meet its
immediate obligation in all the years.
 GP Ratio shows how much efficient company is in
Production.
Comments
 The company’s future plans for expansion seem clear
due to increased
investment in Fixed Assets .Efficient use of these Assets
has enabled the
company to observe an increased profit.
 Though the company’s sale is continuously rising but
the net profit is not so
much increased so management should take some steps
to decrease its
expenses.
 Company should try its best to increase sales and
profit.
 The profit margin ratio shows decline in current year so
that company should
tray to increase profit after tax
 Current ratio is very good it is 2.13:1 so company has
fully utilize cash
liquidity for business development
.
 Comments
1: share capital amount from year 03-04 to 04-05 has
increased in an phenominal manner

2: same goes for year 04-05 to 05-06 as well as 06-07 to

07-08

3:goodwill has increse from year 06-07 to 07-08

4:cash balance has increased through out all the years

5:increase in the fixed asset throughout all the year

SUGGESTION
 The company’s future plans for expansion seem clear
due to increased
investment in Fixed Assets .Efficient use of these Assets
has enabled the
company to observe an increased profit.
 Though the company’s sale is continuously rising but
the net profit is not so
much increased so management should take some steps
to decrease its
expenses.
 Company should try its best to increase sales and
profit.
 The profit margin ratio shows decline in current year so
that company should
tray to increase profit after tax
 Current ratio is very good it is 2.13:1 so company has
fully utilize cash
liquidity for business development.