INTRODUCTION:

 Finance is regarded as the life blood of a business enterprise. In the modern oriented economy, finance is one of the basic foundations of all kinds of economics activities. Finance statements are prepared primarily for decision-making. They play a dominant role in setting the frame work and managerial conclusion and can be drawn from these statements. However, the information provided in the financial statement is of immense use in decision-making through analysis and interpretation of financial statements. As said earlier finance is said to be life blood of any business. Every business under taking needs finance for its smooth working. It has to raise funds from the cheapest and low risky source to utilize this in most effective manner. So every company will be interested in knowing its financial performance. The project entitled Financial performance Analysis of X s Ltd throw light on overall financial performance of the company.

OBJECTIVES OF STUDY:
 To know the financial position of the X Ltd.  To know the Liquidity and Profitability position of the company.  To know the financial strength and weakness of the company.

SCOPE OF THE STUDY

 The study covers the financial performance of the Company.  The study is made by making comparison of five year of it operation.  The study aims to reveal where it stands in respect to liquidity and an effective use of Asset.

PERIOD OF THE STUDY

The study covered a period of five years from 2005-06 to 2009-10 accounting year ends 31st march every year.

RESEARCH METHODOLOGY:
The study is based on secondary data. Data pertaining behavior of liquidity solvency and profitability position were collection from the Balance Sheet and Profit & Loss account of X Ltd. The necessary data were obtained from published annual report.

TOOLS AND TECHNIQUE: y RATIO ANALYSIS

 Liquid ratio  Solvency ratio  Profitability ratio

LIMITATION OF THE STUDY:

 The study is based on secondary data  The time span was limited only a period of five years.  The study suffers all the limitation of ratio analysis, such as lack of adequate change, income, price level change etc.

ANALYSIS SCHEME:
The study is divided into four parts.  The first part deals with profile of the company.  The Second part deals with analysis & interpretation of the ratios.  The Third Part deals with findings & suggestions.  Finally conclusion are given in the fourth part

PART I COMPANY PROFILE

INTRODUCTION
The X Ltd. is an Public Limited Company. Founded in 1948, it is an automobile industry and the company is one of India's leading manufacturers of commercial vehicles, such as trucks and buses, as well as emergency and military vehicles. The company is based in Chennai, India. It s also makes spare parts and engines for industrial and marine applications. 11500 employees are working in this company; it sells about 60,000 vehicles and about 7,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle segment with a market share of 28%, with passenger transportation options ranging from 19 seaters to 80 seaters, X Ltd. is a market leader in the bus segment. The company claims to carry over 60 million passengers a day, more people than the entire Indian rail network. The company concentrates on the 16 Ton to 25 Ton range of trucks. Entire truck range starting from 7.5 Tons to 49 Tons.

HISTORY
The origin of X Ltd can be traced to the urge for self-reliance felt by independence of India, Pandit Jawaharlal Nehru, India s first Prime Minister, persuaded Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. The company began in 1948 as X Motors, to assemble Austin cars. The company was renamed and started manufacturing commercial vehicles in 1955 with equity participation by X Ltd. Early products included the X Comet bus which was a passenger body built on a truck chassis, sold in large numbers to many operators, it built a reputation for reliability and ruggedness. This was mainly due to the product design legacy carried over from x Ltd. The 5,00,000 vehicle they have put on the road have considerably eased the additional pressure placed on the road transportation in independent India. The company long term plan to become a global player by benchmarking global standards of technology and quality was soon firmed up.

GOALS:
The company s plans are to acquire smaller car manufacturers in China and in other developing countries. X Ltd. bought a majority stake in the Czech based- Avia. Called Avia X Ltd., this will give X Ltd. a channel into the competitive European market. According to the company, the joint venture sold 518 LCVs in Europe despite tough economic conditions. The company will expand its product offers into construction equipment. The company says negotiation is progressing on land acquisition, and the production plans are in place. Aside from the full expansion planned for the company, X Ltd. is also paying close attention to the environment. They are one of the companies showing the strongest commitment to environmental protection, utilizing eco-friendly processes in their various plants. Even as they thrust into different directions, X Ltd., maintains an R&D group that aims to uncover ways to make their vehicles more fuel efficient and reduce emissions

CURRENT STATUS
The company has also maintained its profitable track record for 60 years. The annual turnover of the company was USD 1.4 billion in 2008-09. Selling 54,431 medium and heavy vehicles in 2008-09. X Ltd has also entered into some significant partnerships, seizing growth opportunities offered by diversification and globalization with Continental Corporation for automotive infotronics; with Alteams in Finland for high pressure die casting and recently, with John Deere for construction equipment.

FACILITIES
 The company has six manufacturing location in India: Ennore and Hosur, Tamilnadu (Hosur 1, Hosur 2, CPPS) Alwar, Rajasthan Bhandara, Maharastra  The company has an Engine Research and Development facility in Hosur  The company is setting up a new Plant in the North Indian state of Uttarakhand at pant Nagar at an investment outlay of Rs. 1200 crores.  This plant is expected to go on stream in the year 2010.  The Plant will have a capacity to produce around 40,000 commercial vehicles and is expected to cater mainly to the North Indian market taking advantage of the excise duty and other tax concessions.

PRODUCTS
y y y y y y y y y y Luxura Viking BS-I - city bus Viking BS-II - city bus Viking BS-III -city bus Cheetah BS-I Cheetah BS-II Panther 12M bus Stag Mini Stag CNG

PART II RATIO ANALYSIS

MEANING:
Ratios are relationship expressed in mathematical items between figures which are connected with each other in some manner.

CLASSIFICATION:
 Short term solvency ratio: I. Liquidity ratio 3.1 Current ratio. 3.2 Liquid ratio. 3.3 Absolute liquidity ratio. II. Activity ratio 3.4 Inventory turnover ratio 3.5 Inventory conversion period 3.6 Debtor turnover ratio 3.7Average collection period 3.8 Working capital turnover ratio.  Long term solvency ratio: 3.9 Deb Equity ratio 3.10 Proprietary ratio 3.11 Fixed asset to net worth ratio 3.12 fixed asset ratio. 3.13 Current asset to proprietary fund 3.14 Fixed asset turnover ratio.  Profitability ratio 3.15 Gross profit ratio 3.16 Net profit ratio 3.17 Operating profit ratio 3.18 Selling & administration expenses

ANALYSIS AND INTERPRETATION:

The financial performed of a firm can be evaluated by constructing ratio for the various items appearing in the financial statement. A ratio is a simple artificial expression of the relationship between two mathematical variables. Ratio analysis is a technique of analysis and interpretation of financial statement by establishing and interpreting various ratios useful for decision making. In this chapter I have applied various ratios for analyzing financial position of the company. The result and interpretation are given below.

SHORT-TERM SOLVENCY RATIO

I.LIQUIDITY RATIO: 3.1. CURRENT RATIO

Current ratio may be defined as the relationship between current asset and current liabilities. The current ratio is the index of the concern financial stability since it shows extent of the working capital, which is the amount by which the current asset exceeds the current liabilities. The rule of the thumb is 2:1

Current ratio=

Current Asset ______________ Current Liability

Current Asset= Inventories + Sundry debtors+ Cash & Bank balance. Current liabilities= Bills payable + Bank O/D. CURRENT RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Current Asset* 1492.88 1681.75 1644.30 2374.91 2849.22 Current liabilities* 1344.19 1865.97 2196.40 2207.29 3002.68 * Rs .in . Cr Ratio 1.11 0.90 0.74 1.07 0.94

INTERPRETATION:
The rule of thumb of current ratio is 2:1 the ratio shows a fluctuating trend. In the year 2005-2006 the ratio was 1.11 and it was decreased from 0.90 to 0.74 in 2006-2007 and 2007-2008. In 2008-2009 the ratio was decreased to 1.07 and 2009-2010 the ratio was again decreased to 0.94. So it was not satisfactory.

3.2. LIQUID RATIO:

This ratio also termed as acid test or quick ratio. This is ascertaining by comparing the liquid asset and current liability. It is the test of liquidity to the ability of the current ratio .the term liquidity refers to the ability of a firm to pay its short term obligation. The rule of thumb is 1:1. Liquid Asset _______________ Current Liability

Liquid ratio =

Liquid Asset = Current Asset Inventories. LIQUID RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Liquid asset* 590.32 611.43 420.39 1044.91 1210.98 Current liabilities* 1334.19 1865.97 2196.49 2207.29 3002.68 *Rs .in. Cr Ratio 0.44 0.32 0.19 0.47 0.40

INTERPRETATION:
The rule of thumb of liquid ratio is 1:1. The liquid ratio in the year 20052006 and it was decreased from 0.32 to 0.19 in 2006-2007 and 2007-2008. The ratio was again increased to 0.47 in 2008-2009 and 2009-2010. The ratio was again decreased to 0.40 in the year 2005-2006 to 2009-2010. The liquid ratio was not satisfactory of the company

3.3. ABSOLUTE LIQUID RATIO OR CASH RATIO:

The ratio measures the relationship between cash and near cash item on the hand and immediately maturing obligation on the other. The inventory and debtor are excluded from current asset to calculate this ratio. The rule of thumb is 0.5:1.

Absolute ratio=

Absolute Liquid Asset ___________________ Current Liability

Absolute liquid asset = Cash & Bank balance ABSOLUTE LIQUID RATIO * Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Absolute liquid asset* 165.98 88.5 44.55 86.93 188.92 Current liabilities* 1334.19 1865.97 2196.49 22.7.29 3002.68 Ratio 0.12 0.04 0.02 0.03 0.06

INTERPRETATION:
The rule of thumb of absoluter liquid ratio is 0.5:1. In the year 2005-2006 the ratio was 0.10 and next year onwards it was decreasing trend. In the year 2006-2007 to 2008-2009, the ratio was decreased from 0.04 to 0.02. In 2009-2010 the ratio was decreased to 0.06. So it was not satisfactory in 2005-2006 to 2009-2010.

II.ACTIVITY RATIO

3.4. INVENTORY TURNOVER RATIO:

Every firm has to maintain a certain level of inventory to finished goods. It was able to meet the requirements of the business, inventory turnover indicates the number of times stock has been turned during the period and evaluate the efficiency with which a firm is able to manage. Net Sales ____________ Inventory

Inventory turnover ratio=

Net sales = Sales Excise duty. INVENTORY TURNOVER RATIO * Rs. in . Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Inventory* 902.56 1070.32 1223.91 1330.01 1638.24 Ratio 5.93 6.87 6.51 4.63 4.53

INTERPRETATION:
The inventory turnover ratio in the year 2005-2006 was 5.95 but it was increased to 6.87 in 2006-2007. In 2007-2008 to 2009-2010 the ratio was decreased from 6.51 to 4.53. This stock turnover ratio implies over investment in stock.

3.5. INVENTORY CONVERSION PERIOD:

It may be of interest to see average time taken for clearing the stock. This can be possible by calculating inventory conversion period. This period is calculated by dividing the number of days by inventory turnover ratio. No. of days in a year Inventory conversion period= ________________________ Inventory turnover ratio

INVENTORY CONVERSION PERIOD * Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Days in a year* 365 365 365 365 365 Stock turnover ratio* 5.93 6.87 6.51 4.63 4.63 Ratio 61 53 56 78 80

INTERPRETATION:
In the year 2005-2006 the conversion period was 61 days and it was decreased to 56 days in 2006-2007. In 2007-2008 the days slightly increased to 56 days. In 2008-09 and 2009-10 the days was increased from 78 to 80 days. It indicates more days to clear stock compared to previous year.

3.6. DEBTOR TURNOVER RATIO:

It established the relationship between the net credit sales and average debtor. It indicates the number of times the collection debtor has turnover during the year. The higher the ratio is better result with ratio is better result with efficient management. Net credit sales Debtor turnover ratio= ______________ Average debtor

Average debtor= Opening debtor + Closing debtor+ Opening bills receivable + Closing bills receivable. DEBTOR TURNOVER RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net credit sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Average debtor* 424.34 522.88 375.84 957.97 1022.06 times 12.60 14.07 21.21 6.43 7.27

INTERPRETATION:
In this year 2005-2006 the ratio was 12.60 times and it decreased to 14.07 in 2006-2007. In 2007-2008 the ratio again increased to 21.21 and it was decreased to 6.43 in 2008-2009. In 2009-2010 it was slightly increased to 7.27. It implies in efficient management of debtor or sales.

3.7. AVERAGE COLLECTION PERIOD:

The number of days taken by a firm for collecting of its receivable or debtors during the year. It indicates the relationship between average debtor and net credit sales. No. of days in a year Average collection period = _____________________ Debtor turnover ratio

AVERAGE COLLECTION PERIOD Year 2005-06 2006-07 2007-08 2008-09 2009-10 Days in a year 365 365 365 365 365

Rs .in cores Debtor turnover Days ratio 12.60 28 14.07 25 21.21 17 6.43 56 7.27 50

INTERPRETATION:
The collection period in the year 2005-2006 the days was 28. In 2006-07 and 2007-2008 it was reduced from 25 days to 17 days. In 2008-2009 it was increased to 56 days and it was decreased to 50 days in 2009-2010. It indicates the debt was collected in 50 days.

3.8. WORKING CAPITAL TURNOVER RATIO:

This ratio indicates the number of time the working capital is turned over in the course of a year. . The higher ratio indicates efficient utilization of working capital. The higher may be the result of high turnover of inventories of receivable Net sales Working capital turnover ratio= ____________________ Net working capital Net working capital = Current Assets Current Liabilities. WORKING CAPITAL TURNOVER RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 *Rs. in. Cr Working capital* 587.32 574.72 217.66 720.32 736.17 Ratio 9.12 12.80 36.62 8.56 10.10

INTERPRETATION:
The ratio shows fluctuating trend from 2005-2006 to 2009-2010. The ratio was 9.12 in 2005-2006 and it was increased from 12.80 to 36.62 in 20072008. But it was decreased to 8.56 in 2008-09and in the year 2009-2010 it was again slightly increased to 10.10.

LONG TERM SOLVENCY RATIO

3.9. DEBT EQUITY RATIO

This ratio is also known as internal and external equality ratio .it is mainly calculated to assess the soundness of long term financial policies and to determine the relative s stakes of outsiders and owners. It indicates the relationship between debt and equity. Long term fund _________________________ Shareholders fund

Debt equity ratio=

Long term debt = Secure loan + Unsecured loan. Shareholder fund= Share capital, Reserve & Surplus. DEBT EQUITY RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Long term debt* 691.93 640.40 887.50 1961.98 2280.45 * Rs. In. Cr Shareholders fund* 1412.46 1894.58 2148.98 3478.89 3656.30 Ratio 0.48 0.33 0.41 0.56 0.62

INTERPRETATION:
The rule of thumb is 2:1. The debt equity in the year 2005-06 was 0.48 but and 2006-2007 it was decreased to 0.33 and next three year it was slightly increased from 0.41 to 0.62 in the year 2007-2008 to 2009-2010. The ratio shows that the long term debt is very low, so the company can make use of the law cost of fund, and it was satisfactory.

3.10. PROPRIETARY RATIO:

This ratio is also called as equity ratio or owner s fund ratio. This ratio points out relationship between the shareholders fund and total asset of the company. It indicates the proportion of total asset financed by shareholders. Shareholders fund _________________ Total asset.

Proprietary ratio=

Total asset= Current asset +Fixed asset.

PROPRIETARY RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Shareholders fund total asset* 1412.46 1894.58 2148.98 3473.89 3656.30 Total asset* 2104.40 2534.97 3036.48 5435.87 5936.76 *Rs. in. Cr Ratio 0.67 0.74 0.74 0.63 0.61

INTERPRETATION:
The rule of thumb is above 50% of the ratio is satisfactory. The ratio shows in the year 2005-2006 was 0.67 and it was increased to 0.74 in 2006-2007 and 2007-2008. In 2008-2009 the ratio was decreased to 0.63 and again decreased to 0.61 in 2009-2010. It shows the shareholders are financed to total asset so it was satisfactory.

3.11. FIXED ASSET TO NET WORTH RATIO:

This ratio indicates as to what extends the shareholders fund have been invested in fixed assets. If the ratio is high, it implied that much of shareholders are invested in fixed asset. But too high indicates what the high amount is tied up in fixed capital. Fixed asset Fixed asset to net worth ratio= ______________ Shareholders fund

FIXED ASSET TO NETWORTH RATIO * Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Fixed asset* 943.27 1307.04 1525.55 3399.11 4249.56 Shareholders fund* 1412.46 1894.58 2148.98 3473.89 3656.30 Ratio 0.66 0.68 0.63 0.97 1.16

INTERPRETATION:
There is no rule of thumb but 60 plus 0.65 is said to be satisfactory. The ratio was 0.66 in the year 2005-2006. In 2006-2007 it was increased to 0.68 but in 2007-2008 it was increased to 0.63 in 2008-2009 the ratio was increased to 0.97 and 2009-2010 again the ratio was increased to 1.16. The shareholders fund is properly utilized.

3.12. FIXED ASSET RATIO:

The ratio indicates the extent to which the totals of fixed asset are financed by long term fund of the firm. Generally the total fixed asset should be equal to the total long term fund. But if fixed assets exceeds, it implies that firm has financial asset, which not good the financial policy. Fixed asset before depreciation Fixed asset ratio= ______________________________ Total long term

Fixed assets = Long term investment. Fixed term funds = Share capital, Reserve & Surplus FIXED ASSET RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Fixed asset* 2138.50 2620.20 2942.44 4953.27 6018.63 Long term funds* 1412.46 1894.58 2148.98 3473.89 3656.30 *Rs. In. Cr Ratio 1.51 1.38 1.36 1.42 1.64

INTERPRETATION:
In the year 2005-2006 the fixed asset ratio was 1.51 and it was decreased from 1.38 to 1.36 in 2006-2007 and 2007-2008. In 2008-2009 the ratio was slightly increased from 1.42 to 1.64 in 2008-2009 and 20092010. It implies the company has financed a part of fixed out of current asset.

3.13. CURRENT ASSET TO PROPRIETORS FUND:

The ratio is calculated by dividing the total of current asset by the amount of shareholder s fund. The ratio indicates the extent to which proprietors fund are invested in current assets. Current asset Current asset to proprietor s fund= __________________ Shares holders fund

CURRENT ASSET TO PROPRIETORY FUND *Rs. in. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Current asset* 1492.88 1681.75 1644.30 2374.91 2849.22 Share holders fund* 1412.46 1894.58 2148.98 3478.89 3656.30 Ratio 1.05 0.88 0.76 0.68 0.77

INTERPRETATION:
The ratio shows fluctuating trend. In the year 2005-2006 the ratio was 1.05 and it was reduced from 0.88 to 0.68 in 2006-2007 to 2008-2009. But it was slightly increased to 0.77. This shows more than 50% of share holders are invested in current asset.

3.14. FIXED ASSET TURNOVER RATIO:

This ratio measures the efficiency in utilization of fixed asset. A high ratio reflects overtrading on the other hand a lower ratio indicates idle capacity and excessive investment in fixed asset. Net sales Fixed asset turnover ratio= ________________ Net fixed asset.

FIXED ASSET TURNOVER RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Net fixed asset* 943.27 1307.04 1525.5 3399.11 4249.56 Ratio 5.68 5.63 5.22 1.81 1.75

INTERPRETATION:
The fixed asset turnover ratio. The ratio was decreasing trend was 5.68 in the year 2005-2006. And it easy slightly reduced from 5.63 to 5.22 in 2006.2007 and 2007-2008. In 2008-2009 and 2009-2010 the ratio was again decreased from 1.81 to 1.75. The ratio implies the company utilizes the fixed asset to achieve the highest sales.

PROFITABILITY RATIO

3.15. GROSS PROFIT RATIO:

It indicates the margin of profit on sale. It measures the relationship of gross profit to net sales and it is represented in percentage. The high gross profit ratio is sign of good management. The relatively low profit ratio is not good for the company. There are no standard norms. Gross profit Gross profit ratio= ________________ Net profit Gross profit = Sales- Cost of goods sold GROSS PROFIT RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Gross profit* 556.59 768.16 828.25 400.35 752.16 *Rs. In. Cr Net sales* Ratio 5359.94 10 7358.88 10 7972.52 10 6168.99 6 7436.18 10

X 100

INTERPRETATION:
This ratio represent in percentage. The ratio shows in the year 2005-2006, 2006-2007and 2007-2008 was 10 % and the ratio was decreased to 6% in the year 2008-2009. In 2009-2010 the ratio again increased to 10%. The Gross profit ratio was increasing trend, so overall ratio was satisfactory.

3.16. NET PROFIT RATIO:

Net profit ratio indicate the relationship between net profit and sales the efficiency of the manufacturing, welling and other activities of the firm Net profit (after tax) Net profit ratio= _______________________ X 100 Net sales

NET PROFIT RATIO *Rs. In. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net profit (after tax)* 327.32 441.29 469.31 190.00 423.67 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Ratio in % 6 5 5 3 5

INTERPRETATION:
The ratio shows in the year 2005-2006 was 6% and the ratio was decreased to 5% in 2006-2007 and 2007-2008. Again the ratio was decreased to 3% in 2008-2009 and it was increased again 5% in 2009-2010. Because the company has been increased the net sales and overall net profit was increased trend.

3.17. OPERATING PROFIT RATIO:

Operating profit ratio is calculated for analyzing profitability of a concern. Increase in operate profit indicates improvement of firm working by cost reduction or increase sales. Operating profit Operating profit ratio = _______________ X 100 Net sales

OPERATING PROFIT RATIO Year 2005-06 2006-07 2007-08 2008-09 2009-10 Operating profit* 540.36 686.16 804.49 473.09 761.40 *Rs. in. Cr Net sales* Ratio 5359.94 10 7358.88 9 7972.52 10 6168.99 7 7436.18 10

INTERPRETATION:
The ratio was 10% in the year 2005-2006 and slightly decreased to 9% in 2006-2007. In 2007-2008 again reached 10% and it was decreased to 7% in 2008-2009. In 2009-2010 the ratio was increased to 10%. The overall operating profit and sales are increased and reduce the expenses.

3.18. SELLING AND ADMINISTRATION EXPENSES:

Selling and administrative ratio indicates the relationship between the expenses and sales .the changes in the selling and administrative expenses will be impact on sales.

Selling & Administration expenses Selling and administration expenses= ___________________________ X100 Net sales

SELLING AND ADMINISTRATION EXPENSES *Rs. in. Cr Year 2005-06 2006-07 2007-08 2008-09 2009-10 Selling &Administration expenses* 199.36 259.50 263.5 495.68 445.89 Net sales* 5359.94 7358.88 7972.52 6168.99 7436.18 Ratio 3 3 3 8 5

INTERPRETATION:
The expenses ratio was 3% in three year that is 2005-2006, 2006-2007 and 2007-2008. In the year 2008-2009 it was increased to 8% but in the year 2009-2010. It decreased to 5%. Because the expenses are slightly decreased compared to previous year.

PART III

FINDINGS:
 The current ratio was a fluctuating trend from 2005-2006 to 20092010. In last year the ratio was decreased 0.94. Because this is due to increased in debtor and cash & bank balances.  The liquid ratio was declining trend in 2009-2010. Because increase the debtor and cash & bank balances in last year.  The absolute liquid ratio implies in last year was slightly increased because the company should keep cash to meet day to day expenses.  Inventor s turnover ratio implies the company has made low sales because more days are taken to clear the stock, and high investment in stocks.  The debtor s turnover ratio indicates the last two year decreased. Because the company marked inefficient management of debtor or sales and debts was collected in 50 days in last years.  The working capital was increased trend 2008-2009 and 2009-2010. This two year the working capital implies less utilization.  Debt equity ratio helps to measure the extend to which debt financing to the business. The ratio is very low expected last year, the company can make use low cost fund in future.  The proprietary ratio was fluctuating trend. It indicates the shareholders are more than 50% are investment in total asset. Because increase the value of asset in future. So it was satisfactory.  The fixed asset ratio are measure the utilization of fixed asset. The fixed asset is increasing trend. So the company was making high sales.  The gross profit ratio was 10% in four year; the company has making the sales in proportionally. Because the cost of goods sold is slightly variation.  The net profit ratio implies the profitability position of the company has increased in 2009-2010 and sales are growing up.  Operating profit ratio also implies the profit has been increased compared to previous year. Because the company was make low amount of cost of goods sold.  The expenses ratio of the company was decreasing, because to make the high sales.

SUGGESTION
 The current ratio and absolute ratio was maintained lower cash than ideal ratio. So, the company cab take step to increase the cash position to meet its expenses.  The company is allowed credit period for 50 days. The debt collection period can be reduced with in 30days.  The company should increase the long term debt.  To reduce the investor cost of the company must follow average inventory system,  Otherwise, the company was making investment in current asset and reducing cost of sales at the same time increasing sales and profit was good in earlier days.

CONCLUSION:
The project entitled A STUDY OF FINANCIAL PERFORMANCE ANALYSIS OF X LIMITED was undertaken with the objective of financial performance and to examine profitability performance of the company. From the study gross profit and net profit position was good. The liquidity position should be increase the company. Long term solvency position of company was satisfactory. In overall performance of X LIMITED was good.