INTRODUCTION

Profit maximization is one of the basic objectives of every business organization. Profits are
one of the factors which judge the financial performance and analysis of the organization.
There are various techniques or methods for analyzing information obtained in the financial
statements viz. comparative statements, common size statements, Trend Percentages, Funds
flow analysis, cash flow analysis and atio !nalysis. Financial !nalysis is to underta"en by
the manager of the firm or by parties outside to viz. #wners, $reditors etc.
atio !nalysis is most widely used and powerful tool or technique of financial analysis. The
term ratio refers to the numerical or quantitative relationship between two variables.

atio !nalysis help%s in ma"ing inter and intra comparison. ! study of the trend of strategic
ratios helps the management in planning, forecasting and decision&ma"ing. 't helps in
identifying specific wee" areas. 'n short, through the technique of ratio analysis, the firm%s
solvency, efficiency and profitability can be accessed.
NEED AND SCOPE OF THE STUDY:
Financial statement is the instruments to watch out the performance of a (usiness
enterprise. atio analysis technique of analyzing the financial 'nformation contained in the
balance sheet and profit ) loss account, for more *eaningful ) understanding of the financial
position ) performance of firm.
'n financial analysis, a ratio is used as the index or yardstic" for evaluating the financial
position and performance of a firm. The analysis is very useful for both inside and outside
groups. They are interested in the results or relationship reported in the financial attachment.
The analysis helps to ma"e a qualitative judgment about the firm%s financial positions
) relationship. The ratio indicates a qualitative relationship, which can in turn be used to ma"e
a qualitative judgment. 't estimates the enterprise with other similar underta"ings. +nterprise is
possible through ratios. They help an analysis to find out liquidity profitability, leverage )
efficiency.
OBJECTIVES OF THE STUDY:
The following are some of the objectives that are set for the study, that is
To find out the ability of the firm to meet its current obligations.
To examine the solvency position of the #rganisations.
To assess the profitability position of the company.
To "now overall operational efficiency ) financial performance of the company.
T# evaluate the activity position with the help of profitability ratios.
RESEARCH METHODOLGY:
The methodology adopted for any study includes both primary data and secondary data.
PRIMARY DATA:
Primary data collected through the personal interviews conducted with the finance manager
and interaction with the officiates !xis ban".
SECONDARY DATA:
!nnual reports of the company from ,--.&,--/ to ,-00&,-0,.
$ollecting the relevant information from the standard text boo"s related to finance.
equired information is collected from lecturers.
LIMITATIONS OF THE STUDY:
This study suffers from different limitations. The ratios may not be ta"en for granted
and accepted at face values.
!ll the ratios could not be covered under the study because of inadequate information
Price level changes are not ta"en into account in the financial statemants over the years.
The study is limited period from ,--.&,--/ to ,-00&,-0,.
The project study is confirmed to short period i.e, 12 days only.
Financial ratios of a firm often show a high degree of correlation. 'n view of ratios
correlations, it is redundant and often confusing to employe a large number in financial
statement analysis.











INDUSTRY PROFILE
BANK:
! (an" is a profit see"ing business firm which deals with money and credit. 't accepts
deposits from the public and ma"es these funds available to those who need them. 't helps in
the remittance of money from one place to another.
! ban"ing company is defined as a company which transacts the business of ban"ing in
'ndia. ! ban"ing company in 'ndia has been defined in the ban"ing companies act 0313 as
4one which transacts the business of ban"ing which means the purpose of lending of
investment, of deposits of money from the public. epayable on demand and withdraw able
by cheques, draft, order or otherwise.
Types of Ba!s:"
Co##e$%&a' Ba!s:
$ommercial ban"s perform all "inds of ban"ing business. 'ts primary function is to
accept deposits from the public and ma"es the funds available to those who need them. These
ban"s usually give short term loans and advances. They also render services such as collection
of cheques, safe custody of valuables, remittance facilities etc.
I()s*$&a' Ba!s:
'ndustrial ban"s are also 4'nvestment (an"s5 they are primary meant to cater to the
financial needs of industrial underta"ings. They provide medium&term and long&term credits to
the industries for the purchase of fixed assets.
Ce*$a' Ba!:
! central ban" is the apex financial system of a country. 't is regarded as the highest
monetary authority in the country. 't acts as the leader in the money mar"et. 't supervises
controls and regulates the activities of the commercial ban"s.
Sa+&,s Ba!s:
6avings (an" collects the small savings of the people. The pool together the scattered
savings of these ban"s is to encourage the habit of thrift among the people hence these ban"s
impose many restrictions on the withdrawals.
E-%.a,e Ba!s:
+xchange ban"s mainly deal in foreign exchange. They purchase and sell foreign
currencies and discount foreign bills. They finance foreign trade.
Co"ope$a*&+e Ba!s:
These are a group of financial institutions organized under the provision of the co&
operative societies of the states. The main objective of these ban"s is to provide cheap credit
to their members.
P$&+a*e Ba!s:
'n every country there are large numbers of private ban"s. 'ndividuals and firms do
ban"ing business such private ban"s are also "nown as indigenous ban"s in 'ndia. Private
(an"s also carry trading a port from the ban"ing business.
Re,&oa' R)$a' Ba!s:
egional rural (an"s were established under regional rural ban" act 03.2. ural (an"s
may be defined as primary ban"ing institutions. 't was established to perform the ban"ing
functions with the objective of developing the village areas.
Lea( Ba!s:
This ban"s a district and integrates its schemes with district plans for an effective
distribution of credit along with the expanded ban"ing facilities as per local needs. ('
introduced the lead ban"s scheme in 7ecember 0383. The lead ban" co&ordinates the activities
at all the credit institutions, co&operative ban"s, commercial ban"s and other in its allotted
districts.
Ba!&, sys*e# & I(&a:
(an"ing system occupies an important place in nation%s economy. ! ban"ing
institution is an dispensable in a modern society. 't plays a pivotal role in the economic
development of a country and forms the care of the money mar"ets in an advanced country.
'n 'ndia, through the money mar"et is still characterized by the existence of both
organized and unorganized segments, institutions in the organized money.
BAKING STRUCTURE IN INDIA
Rese$+e Ba! of I(&a
Ce*$a' Ba! a( s)p$e#e #oe*a$y a)*.o$&*y
6cheduled (an"s
$ommercial (an"s $o&operative (an"s
Foreign Banks
(40)
Regional Rural
Banks (196)
Urban Co-
operative Banks
(52)
tate Co-
operative
Banks (16)
!ubli" e"tor
Banks (2#)
!rivate e"tor
Banks ($0)
tate Bank o% &n'ia
an' (sso"iate Banks
())
*t+er ,ationali-e'
Banks
(19)
*l' Banks (22) ,e. Banks ())
Rese$+e Ba! of I(&a /RBI0:
The eserve (an" of 'ndia was setup in the 0392 as a private shareholders ban". 't was
nationalized in :anuary 0313 by the Passage of the reserve ban" act of 031/. !s a result, all
the paid&up capital of the ban" of s. 2 crore, has since been hold by the central ;overnment,
which may from time to time give such directions to the ban", as it may, after consultation with
the governor of the ban", consider necessary in the public interest.
O$,a&1a*&o a( #aa,e#e*:
The (', as the central ban" of the country is the centre of the 'ndian financial and
monetary system as the ban" of +ngland, is" (an" of 6weden, and the Federal eserve
(oard of the <6. =owever it is perhaps the oldest among the central ban"s in the developing
countries.
The ban" is managed by a central board of directors four local boards of directors and a
committee of the central board of directors. The functions of the local boards are to advise the
central board on matters referred to them. They are also revered to perform duties as are
delegated to them. The final control of the ban" in the central board which comprises the
governor four deputy governors, and fifteen directors nominated by the central government.
The committee of the central board consists of the governor, the 7eputy ;overnors, and such
other directors as may be present at a given meeting.
The internal organization setup of the ban" has been modified and expanded from the
time to time in order to cope with the increasing volume and ran"s of he ban"s activities. The
underta"ing principal of the internal organization is functional specialization with devote co&
operation. 'n order to perform its various functions, the ban" has been divided and sub divided
into a large no. of departments. ! part from ban"ing and issued departments, there are at
present ,- departments and there training establishments at the central office of the ban".
Ro'e of RBI:
>ote issuing authority
;overnment (an"er
?ays and *eans advances
#verdrafts
(an"ers (an"
6upervising authority
+xchange $ontrol !uthority
Promoter of the financial system
*oney *ar"et
!griculture 6ector
'ndustrial Finance
$redit 7elivery
M&ss&o of RBI:
The mission statement of the eserve (an" of 'ndia is to faster price stability coupled
with productivity led economic growth consistent with employment objectives while ensuring
the integrity efficiency of financial and payment systems.
T.e O$,a&1a*&oa' Va')es:
The values underlying the mission statement include.
0. Public 'nterest
a. !ccountability
b. esponsiveness
,. 'ntegrity endorsing professional ethics and standards in operational and dealings.
9. +xcellence
1. Fastening motivation
2. 'ndependence of view, and
8. esponsiveness and dynamism
V&s&o fo$ f)*)$es:
The vision statement states, the ban" @('A aims to be a leading central ban" credible,
transparent, proactive and contemporaneous policies and see"s to be a catalyst for the
emergence of a globally competitive financial system that helps deliver a high analytic of life
to the people of the country.
O23e%*&+es:
To maintain the internal value of the nation%s country
To preserve the external value of currency
To secure reasonable price stability and
To promote economic growth with rising levels of employment, output and real time.
F)%*&os of RBI:
!ccording to the ban"ing commission the rural ban"s perform the following functions.
!ccepting deposits from the customers
;ranting loans and advances to the needy rural people
Providing ancillary ban"ing services on par with the commercial ban"s.
=elping for the overall development of villagers in its area of operation
Providing assistance in the mar"eting of their products
To provide employment opportunities and encouraging the setting up rural industries.
COMPANY PROFILE
INTRODUCTION TO A4IS BANK
!xis (an" was of the new private ban"s to have begun operations in 0331, after the
government of 'ndia allowed new private ban"s to be established. The ban" was promoted
jointly by the administration of the specified underta"ing of the unit trust of 'ndia @<T'&'A, Bife
'nsurance $orporation of 'ndia @B'$A and ;eneral 'nsurance $orporation of 'ndia @;'$A and
other for P6< 'nsurance companies, i.e., >ational 'nsurance $ompany Btd., The >ew 'ndia
!ssurance $ompany Btd., The #riental 'nsurance $ompany Btd., and <nited 'ndia 'nsurance
$ompany ltd.
The (an" as on 90
st
7ecember, ,-0- is capitalization to the extent of s. 1-3.3- crores
with the public holding @#ther than promoters and ;7sA at 29.8,C.
The (an"s egistered #ffice is at !hmadabad and its central office is located at
*umbai. The (an" has a very wide networ" of more than 0,/0 branches @including 083
services (ranchesD$P$s as on 90
st
7ecember ,-0-A. The (an" has a networ" of over 29-9
!T*6. @as on 90
st
7ecember, ,-0-A Providing ,1 hours a day ban"ing convenience to its
customers. This is one of the largest !T* networ" in the country.
BANK ANNUAL TURNOVER:
!xis ban" is private sector organization that offers services in ban" with annual total
turnover of 2--- crores and with employee strength of 2--0 and above. $ommercial ban"ing
services which includes merchant ban"ing, direct finance infrastructure finance, venture capital
fund, advisory, trusteeship, forex, treasury and other related financial services. !s on 90
*arch ,--3 the group has /,. branches, extension counters and 9,232 automated teller
machines @!T*sA.
P$o#o*e$s:
!xis (an" Btd., has been promoted by the largest and the best financial institution of
the country <T'. The ban" was set up with a capital of s. 002 crores which <T' contributing
s. 0-- crores, B'$ s. ..2 crore and ;'$ and its four subsidiaries contributing s. 0.2 core
each.
H&s*o$y of A-&s Ba!:
5667: The (an" was incorporated on 9
rd
7ecember and certificate of business on 01
th
7ecember. The ban" transacts ban"ing business of all description. <T' (an" Btd., was
promoted by <nit Trust of 'ndia, Bife 'nsurance corporation of 'ndia, general insurance
corporation of 'ndia and its four subsidiaries. The ban" was the first private sector ban" to get
a license under the new guidelines issued by the ('..
5668E The ban" obtained license to act as depository participant with >67B and applied for
registration with 6+(' to act as 4trustee to debenture holders5. upees 0--- crores were
contributed by <T', the rest from B'$ s. ..2 cores, ;'$ and its four subsidiaries s. 0.2 cores
each.
5669E The ban" has ,/ branches in under and semi urban areas as on 90
st
:uly. !ll the
branches are fully computerized and networ"ed through F!6T, !T* services are available in
,. branches. The ban" came out with a public issue of 0,2-,--,--- >o. of equity shares of s.
0-D& each a premium of s. 00 per share aggregating to s, 90.2- crores and offer for sale of
,,--,--,--- >o. equity share for cash at a price of s. ,0 per share out of the public issue
,,,-,--- shares were reserved for allotment on preferential basis to employees of <'T ban".
(alance of 9, 1., /-,--- shares were offered to the public.
5666: <T' ban" and $itiban" have launched an international co&branded credit card <T'
(an" and $itiban" have come together to launch an international co&branded credit card under
the master card umbrella. <T' ban" ltd has inaugurated an off site !T* !sho" >agar here,
ta"ing the total number of its office !T*s to (*.
:;;;: The ban" has announced the launch of Tele&7epository services for its depository
clients. <T' (an" has launch of connect its internet ban"ing product <T' ban" has signed a
memorandum of understanding with equitymaster.com for e&bro"ing activities of the site.
'nfinity.com financial securities ltd., an e&bro"ing outfit is typing up with <T' ban" for a
ban"ing interface. ;eojit securities ltd, the first company to start online trading services, has
signed a *#< with <T' ban" to enable investors to buyDsell dement stoc"s through the
company%s website. 'ndia bulls have signed a memorandum of understanding with <T' ban".
:;;5: <T' ban" launched a private placement of non&convertible debentures to rise up to s.
.2 cores. <T' ban" has opened two offsite !T*s and one extension counter with an !T* in
*angalore, ta"ing its total number of !T*s across the counter to 922. <T' ban" has recorded
a 8, percent rise in net profit for the quarter ended 6eptember 9-, ,--0 at s. 9-.32 crore. For
the second quarter ended 6eptember 9-, ,--0, the next profit was s. 03.-/ crore. The total
income of the ban" during the quarter was up 29 percent at s. 988.,2 crore.
:;;:: <T' (an" Btd has informed (6+ that 6hri ( (ar wale has resigned as a 7irector of
the (an" w.e.f. :anuary -,, ,--,. !$ 6hah, former $hairman of (an" of (aroda, also retired
from the ban"s board in the third quarter of last year. =is place continues to be vacant *.
7amodaran too" over as the director of the board often ta"ing in the reins of <T'. (.6 Pandit
has also joined the ban"%s board subsequent to the retirement of G; Fassal.
:;;:: ( Paranjpe and !bid =ussain cease to be the 7irectors of <T' (an". <T' (an" Btd
has informed that in the meeting of the (oard of 7irectors following decisions were ta"en *r
Hash *ahajan, Fice $hairman and *anaging 7irector of Punjab Tractors Btd were appointed
as a !dditional 7irector with immediate effect.
:;;:: ( Paranjpe ) !bid =ussain cease to be the 7irectors of <T' (an". <T' (an" Btd has
informed that in the meeting of the (oard of 7irectors following decisions were ta"enE *r
Hash *ahajan, Fice $hairman and *anaging 7irector of Punjab Tractors Btd was appointed as
an !dditional 7irector with immediate effect. *r > $ 6inghal former Fice $hairman and
*anaging 7irector of 6$'$' was appointed as an !dditional 7irector with immediate effect.

:;;7: <T' (an" Btd has informed (6+ that at the meeting of the (oard of 7irectors of the
company held on :anuary 08, ,--9, 6hri > (haradwaj, *anaging 7irector of B'$ has been
appointed as an !dditional 7irector of the (an" with immediate effect. <T' (an", the private
sector ban" has opeaned a branch at >ellore. The ban"Is $hairman and *anaging 7irector, 7r
P.:. >aya", inaugurating the ban" branch at ;T oad on *ay ,8. 6pea"ing on the occasion, 7r
>aya" said, This mar"s another step towards the extensive customer ban"ing focus that we are
providing across the country and reinforces our commitment to bring superior ban"ing
services, mar"ed by convenience and closeness to customers. :;;<: $omes out with s. 2--
mn <nsecured edeemable >on&$onvertible 7ebenture 'ssue, issue fully subscribed <T' (an"
Btd has informed that 6hri !jeet Prasad, >ominee of the !dministrator of the 6pecified
<nderta"ing of the <nit Trust of 'ndia @<T' & 'A has been appointed as an !dditional 7irector
of the (an" w.e.f. :anuary ,-, ,--1. <T' (an" opens new branch in <dupi. <T' (an", ;eojit
in pact for trading platform in Jatar.
:;;=: <T' (an" enters into a ban" assurance partnership with (ajaj !llianz ;eneral for selling
general insurance products through its branch networ". <T' (an" launches its first 6atellite
etail !ssets $entre @6!$A in Garnata"a at *angalore.
:;;>: <(B sets up branch in :aipur&<T' (an" unveils priority ban"ing lounge.
V&s&o:
To be the preferred financial solutions provider excelling in customer delivery through
insight, empowered employees and smart use of technology.
M&ss&o:
To be the leading ban"s providing avidity services system and good services field of
deposits, loans, !T* $ards and other potential areas.
OBJECTIVES:
G$o?*.:
To ensure a study growth by enhancing the competitive edge of !xis (an" in +xisting
business, new area and international operation so as to fulfill national expectation from !xis
(an".
P$of&*a2&'&*y:
To provide a reasonable and adequate return on capital employed primary through
improvement in operational efficiency capacity utilization internal resources to finance the
ban" growth.
Co$e Va')es:
$ustomer centricity
+thics
Transparency
#wnership
Types of A%%o)*s:
>ormal current !ccount
(usiness advances !ccount
(usiness select account
(usiness classic account
$urrent account
6aving account
E#p'oyees:
Private sector lender, !xis (an", plans to hire around 1,2-- employees in the current
fiscal of which ,,2-- appointments will be through the lateral route, a ban" official said
on *onday.
The ban" plans to cover up the shortage of nearly ,,2-- officers in retail ban"ing
through the new recruitments this year, !xis President @=A%s (hattacharya said in
*umbai.
4The attrition rate has gone up to 01.8 percent in the current fiscal, up , percent from
last years rate of 0, percent. This has come as a challenge, 4(hattacharya said5.
!ccording to him, the country%s private ban"ing sector has an average attrition rate of
0/ percent which is growing every year.
!ttrition rate among :unior&level staffers of our ban" has been found comparatively
history, which will be at around 0/ percent in Fy -/ as against about 08 percent last
year5 he said.
MILESTONES:
*arch&,-0,E =ighest net wor" of +7$ machines eached , la"h installed +7$
machines& the highest for any ban" in india.
#ctober K ,-00E !xis (an" launches our new payroll giving program & A-&s Ca$es
*arch K ,-0-E !xis (an" launches platinum credit card, 'ndia%s first +*H chip
based card.
7ecember&,--3 !xis (an" gets !!! >ational long&term rating from Fitch
ratings.
6eptember&,--3 !xis (an" ties up with (asque Private +dmond de othschild
+urope for ?ealth management.
:uly ,--/ <T' (an" re&brands itself as !xis (an"
:uly ,--/ <T' (an" 6uccessfully raises <67 0-2- million
:uly ,--/ <T' (an" ties up with Tata *otors Btd. for car loans
:une ,--/ <T' (an"%s expansion into !sia supported by P6
A?a$(s:
The number of 6avings (an" accounts grew from 39.31 lacs as on 90st *arch ,-00 to
003.92 lacs as on 90st *arch ,-0,.
'n ,-00 announced the @7)( K !xis (an" (usiness ;aurav 6*+ !wards ,-00%.
The !sset Triple ! $ountry !wards ,-0-E (est domestic ban" in 'ndia.
(usiness world best ban" awards K Fastest growing large ban".
(usiness today best ban" awards K 'ndia%s best ban", 'ndia%s fastest growing ban",
'ndia%s most consistent ban".
+T 'nteragency ban" best ban" ,--3.
Taisma K $ustomer !ppreciation !ward ,--3.
7 ) 7 (est ban" awards K (est private (an".
Boa$( of D&$e%*o$s:
7r. !darsh Gishore & $hairman
6mt. 6hi"ha 6harma & *anaging 7irector K $+#
6hri 6.G. $ha"rabarti & 7eputy *anaging 7irector
6hri :.. Farma & 7irector
7r. .=. Patil & 7irector
6mt. ama (ijapur"ar & 7irector
6hire .(.B. Fanish & 7irector
6hri *.F. 6ubbaiah & 7irector
6hri G.>. Prithviraj & 7irector
6hri F.. Gaundinya & 7irector
6hri 6.(. *athur & 7irector
A4IS BANK EMPLOYEES DETAILS /KARIMNAGAR0:
(ranch *anager E 0
!sst. *anager E 0
!ccount #fficer E 0
= *anager E 0
Financial *anager E 0
*ar"eting *anager E 0
Technical 7ept E 0
#ffice !dministration E E 9
$ashiers E 9
*ar"eting +xecutive E 8
'nsurance 7ept @:>;A
(ranch E *u"arampura
(ranch *anager E Fijay Gumar
RATIO ANALYSIS
atio !nalysis is a widely used tool of financial analysis. The term ratio in it refers to
the relationship expressed in mathematical terms between two individual figures
of group of figures connection with each other in some logical manner and are
selected from financial statement of the concern. The ratio analysis is based on
the fact that a single accounting figure by itself may not communicate any
meaningful information but when expressed as relative to some other figure, it
may definitely provide some significant information. The relationship between
two or more accounting figuresD groups is called financial ratio.
Na*)$e of Ra*&o Aa'ys&s:
atio analysis is technique of analysis and interpretation of financial statements. 't is
the process of establishing and interpreting is for helping in ma"ing certain decisions.
=owever, ratio analysis is not an end in itself. 't is only a means of better understanding of
financial strengths and wea"ness of a firm. The ratios may be used as a symptom li"e blood
pressure, the pulse rate or the body temperature and their interpretation depends upon the
caliber and competence of the analyst.
App'&%a*&o of $a*&o aa'ys&s & f&a%&a' (e%&s&o #a!&,:
! popular technique of analyzing the performance of a business concern is that of
financial ratio analysis. !s a tool of financial management, they are of crucial
significance. The importance of ratio analysis lies in the fact that it presents facts
on a comparative basis ) enables drawing of inferences regarding the
performance of a firm. atio !nalysis is relevant in assessing the performance of
a firm in respect of the following aspectsE
F&a%&a' Ra*&os fo$ e+a')a*&, pe$fo$#a%e:
L&A)&(&*y Pos&*&o:
?ith the help of ratio analysis one can draw conclusion regarding liquidity position
of a firm. The liquidity position of a firm would be satisfactory if it is able to
meet its current obligations when they become due. ! firm can be said to have the
ability to meet its short&term liabilities if it has sufficient liquid funds to pay the
interest on its short&term maturing debt usually within a year as well as the
principal. This ability is reflected in the liquidity ratios of a firm. The liquidity
ratios are particularly useful in credit analysis by ban"s and other suppliers of
short&term loans.
Lo,"*e$# So'+e%y:
Ratio analysis is equally useful for assessing the long&term financial viability of a firm.
This aspect of the financial position of a borrower is of concern to the long&term
creditors, security analysts and the present and potential owners of a business.
The long&term solvency is measured by the leverageDcapital structure and
profitability ratios, which focus on earning power and operating efficiency.
Ope$a*&, Eff&%&e%y:
atio analysis throws light on the degree of efficiency in the management and utilization
of its assets. The various activity ratios measure this "ind of operational
efficiency. 'n fact, the solvency of a firm is, in the ultimate analysis, dependent
upon the sales revenues generated by the use of its assets&total as well as its
components.
O+e$ a'' p$of&*a2&'&*y:
<nli"e the outside parties that are interested in one aspect of the financial position of a
firm, the management is constantly concerned about the overall profitability of
the enterprise. That is, they are concerned about the ability of the firm to meet its
short&term as well as long&term obligation to its creditors, to ensure a reasonable
return to its owners and secure optimum utilization of the assets of the firm
I*e$"f&$# %o#pa$&so:
atio analysis not only throws light on the financial position of a firm but also serves as a
stepping stone to remedial measure. This is made possible due to inter&firm
comparisonDcomparison with industry averages. ! single figure of particular ratio
is meaningless unless it is related to some standard or norm. !n inter&firm
comparison would demonstrate the relative position vis&vis its competitors.
FINANCIAL RATIO FOR BUDGETING:
'n this field ratios are able to provide a great deal of assistance, budget is only an estimate
of future activity based on past experience, in the ma"ing of which the
relationship between different spheres of activities are invaluable. 't is usually
possible to estimate budget figures using financial ratios.
ACCORDING TO SIGNIFICANCE:
The (ritish 'nstitute of *anagement has recommended the classification of
according to their significance or importance for inter&firm comparison. These
areE
P$&#a$y Ra*&o:
These ratios are one, which is of the prime importance to a concernL eturn on $apital
+mployed is named as primary ratio.
Se%o(a$y Ra*&o:
The other ratios, which support or explain the primary ratios, are called as secondary
ratios.
A%%o$(&, *o So)$%e:
Financial atios can be classified on following basis according to sourceE
Re+e)e Ra*&os:
?hen two variables are ta"en from revenue statement the ratio so computed is called as
evenue atio.
Ba'a%e S.ee* Ra*&o:
?hen two variables are ta"en from the balance sheet the ratio is called (alance 6heet
atio.
M&-e( Ra*&o:
?hen one variable is ta"en from the evenue 6tatement and the other from (alance 6heet the
ratio is called as mixed ratio.
CLASSIFICATION OF RATIOS:
The use of ratio analysis is not confined to financial management only. There are
different parties interested in the ratio analysis for "nowing the financial position
of a firm for different purposes. 'n view of various uses of ratios, there are many
types of ratios, which can be calculated from the information given in the
financial statements. The particular purpose of the user determines particular
ratios that might be for financial analysis. Farious accounting ratios can be
classified as followE
L&A)&(&*y Ra*&oE&
$urrent atio
!cid&test atio
$ash atio
Le+e$a,e Ra*&o :"
7ebt&+quity atio
Total 7ebt atio
'nterest $overage atio
Preference 7ividend atio
Fixed Payment $overage atio
7ebt 6ervice $overage atio
$apital ;earing atio
Proprietary atio
A%*&+&*y Ra*&o:"
$apital Turnover atio
Fixed !ssets Turn over ratio
?or"ing $apital Turnover atio
Total !ssets Turnover atio
'nventory Turnover atio
7ebtors Turnover atio
$reditors Turnover atio
P$of&*a2&'&*y Ra*&o:"
;ross Profit atio
>et Profit atio
#perating atio
#perating Profit atio
A%%o$(&, *o Usa,e:
The ratios, which cover different aspects of a business organization, are classified as
belowE
L&A)&(&*y Ra*&os:
These are the ratios, which measure the short&term solvency or financial position of the
firm. These ratios are calculated to comment upon the short&term paying capacity of a firm or
to meet its current obligations.
Cap&*a' S*$)%*)$eBLe+e$a,e Ra*&os:
These are the ratios, whish convey a firm%s ability to meet the interest costs and
repayment schedule of its long&term obligations. These ratios show the proportions of debt and
equity in financing of the firm. These ratios measure the contribution of financing by owners as
compared to financing by outsiders.
A%*&+&*y $a*&os:
These are calculated to measure the efficiency with which the resources of a firm have
been employed. These ratios are also called turnover ratios because they indicate the speed
with which assets are being turned over into sales.
P$of&*a2&'&*y Ra*&os:
These ratios measure the results of the business operations or overall performance and
effectiveness of the firm. The results of the firm can be evaluated in terms of its earning with
reference to a given level of assets or sales or owners interest etc.
Barge number of financial ratios is used within each category and some of these
may carry same information rather than focusing on any new light. Therefore, it
is necessary to avoid duplicate of information. The analyst should be selective
with regard to the use of financial ratios. For our analysis following important
ratios are been dealt which are discussed in detail as belowE
L&A)&(&*y Ra*&os:
The terms Mliquidity% and Mshort&term solvency% are used synonymously. Biquidity
or short&term solvency means ability of the business to pay its short&term
liabilities. 'nability to pay&off short&term liabilities affects its creditability as well
as its credit rating. $ontinues default on the part of the business leads to
commercial ban"ruptcy. +ventually such commercial ban"ruptcy may lead
sic"ness and dissolution. 6hort&term lenders and creditors of a business are very
much interested to "now its state of liquidity because of their financial sta"e. The
important liquidity ratios areE
C)$$e* Ra*&o:
't measures the ability of the firm to meet its current liabilities. $urrent assets get
converted into cash during the operating cycle of the firm and provide the funds needed to pay
current liabilities. !pparently, the higher the current ratio the greater the short&term solvency. 't
is defined asE
$urrent ratio N
$urrent !ssets
""""""""""""""""""""""""
$urrent Biabilities
$urrent assets include cash, current investment, debtors, inventories, loans and
advances, and pre&paid expenses. $urrent liabilities comprise short&term loan,
creditors, ban" overdraft, proposed dividend, provision for tax, outstanding
expenses. The general norm in 'ndia is 0.99. 'nternationally it is ,.
A%&("*es* Ra*&o:
!lso called, as quic" ratio is a fairly stringent measure of liquidity. 't is based on those
current assets, which are highly liquid C inventories are excluded from current assets as are
deemed to be the least component of current assets. 't is defined asE
!cid&test ratio N
Juic" assets are defined as current assets excluding inventories. The general rule is 0E0.
Cas. $a*&o:
The cash ratio is perhaps the most stringent measure of liquidity. 'ndeed, one can argue that it
is overly stringent. Bac" of immediate cash may not matter if the firm can stretch
its payments or borrow money at short notice. 't is defined asE
$ash atio D
The general norm is at -.2E0 or 2-C.
Le+e$a,e Ra*&os:
Financial leverage refers to the use of debt finance. ?hile debt capital is a cheaper
source of finance, it is also a ris"ier source of finance. Beverage ratios help in assessing the
ris" arising from the use of debt capital. Two types of ratios are commonly used to analyses
financial leverageE M6tructural ratios% and M$overage ratios%. 6tructural ratios are based on the
proportions of debt and equity in the financial structure of the firm. $overage ratios show the
relationship between debt servicing commitments and the sources for meeting these burdens.
The important ratios areE
Juic" !ssets
&&&&&&&&&&&&&&&&&&&&&
$urrent liabilities
$ash and (an" balance O $urrent 'nvestment
--------------------------------------------
$urrent liabilities
De2*"EA)&*y $a*&o:
't is the basic and the most common measure of studying the indebtedness of the firm. 't is
based on the assumption that the extent to which a firm should employ the debt
should be viewed in terms of the size of the cushion provided by the shareholders
funds. 't is calculated asE
7ebt&+quity atio D
?here debt includes long&term loan, borrowings and debentures. >et worth
includes equity share capital, preference share capital and all the accumulated
reserves and surplus.
To*a' De2* $a*&o:
This depicts the proportion of total assets financed by the total liabilities. 'mpliedly, the
remaining assets are financed by the shareholders funds. The higher the ratio the more ris"y is
the situation because all liabilities are to be repaid sooner or later. *oreover, higher liabilities
imply greater financial ris" also. 't is computed asE

To*a' De2*
To*a' De2* $a*&o D """""""""""""""""""""""""
To*a' Asse*


?here total debts include long&term debt and current liabilities. ?hile total assets
include fixed assets and current assets.
7ebt
PPPPPPPPPPPP..
7ebt O +quity
I*e$es* Co+e$a,e Ra*&o:
't measures as to how many times the interest liability of the firm is covered with the
operating profits of the firm. This ratio gives an idea as to how much fall in +('T, the firm can
sustain before it commits a default in payment of the interest liability. The higher the ratio, the
better it is for the firm and for the lenders. 't is calculated asE
IC D
?here +('T is operating profit of the firm and interest is fixed interest liability of the firm.
P$efe$e%e D&+&(e( Ra*&o:
The ratio attempts to measure the ability of the firm to pay the fixed preference
dividend and tells as to how secure the preference dividend is in relation to the earning power
of the firm. The higher the ratio, better the preference shareholders. 't is calculated asE
PC Ra*&o N
F&-e( Pay#e* Co+e$a,e Ra*&o:
The F$ ratio incorporates the coverage of the principal repayment of the liability. 't
shows the relationship between the operating profits of the firm and the fixed liabilities in
respects of interest, preference dividend repayment etc. it may be calculated asE
FC D

EBIT
----------
Interest
Profit after Tax
----------------------
Preference Dividend
EBIT
----------------------
I + (PR+PD)/ (1-t)
?here ' am interest liability, P is principal repayment, P7 is fixed preference
dividend and t is tax rate.
De2* Se$+&%e Co+e$a,e Ra*&o:
<sed by financial institutions in 'ndia, the debt service coverage ratio is defined asE
DC N
Financial institution calculates the average debt service coverage ratio for the period during
which the term loan for the project is repayable. >ormally, financial institution
regards a debt service coverage ratio of 0.2E ,. !s satisfactory.
Cap&*a' ,ea$&, $a*&o:
't is calculated to show the proportion of fixed interest @dividendA bearing capital to
funds belonging to equity shareholders. 't is calculated asE
CG Ra*&o D
P$op$&e*a$y Ra*&o: 't is calculated asE

P$op$&e*a$y Ra*&o D
Proprietary fund includes +quity 6hare $apital, preference share capital, reserve
) surplus less fictitious assets. Total assets fictitious assets and losses.
PAT+depreciation+interst+other non-cash item
----------------------------------------------------------
Interest + ease rentas + repa!ment of oan
Preference capita + De"ent#re + oan
-----------------------------------------------
(E$#it! capita + Reserve % &#rp#s)
Proprietar! '#nd
-----------------------
Tota Assets
A%*&+&*y Ra*&os:
The activity ratios are also called the Turnover ratios or performance ratios. These are
employed to evaluate the frequency of sales w.r.t. its assets. These assets may be capital assets
or wor"ing capital or average inventory. These ratios are usually calculated with reference to
salesDcost of goods sold and are expressed in terms of rate or times. 6everal activity ratios are
as followsE
Cap&*a' T)$o+e$ Ra*&o:
This ratio indicates the firm%s ability of generating sales per rupee of long&term
investment. The higher the ratio, the more efficient the utilization of owner%s and long&term
creditors fund. 't is calculated asE
Cap&*a' T)$o+e$ Ra*&o D
?here capital employed includes shareholders fund and long&term loan.
F&-e( Asse*s T)$o+e$ Ra*&o:
! high fixed assets ratio indicates efficient utilization of fixed assets in generating
sales. ! firm whose plant and machinery are old may show a higher
Fixed assets turnover ratio than the firm, which has purchased them recently. 't is calculated asE
F&-e( Asse*s T)$o+e$ Ra*&o D
?here capital assets is all fixed assets.
&aes
----------------------
(apita Empo!ed
&ae
-------------------
(apita Assets
To*a' Asse*s T)$o+e$ Ra*&o:
This ratio measures the rupee sales generated by per rupee of tangible assets being
maintained by the firm. 't may be calculated asE
To*a' Asse*s T)$o+e$ Ra*&o D
Eo$!&, Cap&*a' T)$o+e$ Ra*&o:
't studies the velocity of utilization of the wor"ing capital of the firm during a year.
The higher the ratio the lower is the investment in wor"ing capital and higher the profitability.
't is calculated asE

Eo$!&, Cap&*a' T)$o+e$ Ra*&o D
The wor"ing capital here refers to net wor"ing capital i.e. total assets less total
liabilities.
I+e*o$y T)$o+e$ Ra*&o:
This ratio is also "nown as stoc" turnover ratio establishes the relationship between the
cost of good sold during the year and the average inventory held during the year. ! high ratio
indicates good liquidity. 't is calculated as
I+e*o$y T)$o+e$ Ra*&o D
?here cost of good sold is opening stoc", purchase less closing stoc" and gross profit.
!nd average inventory is average of opening and closing stoc".
&aes
-------------------
Tota Assets
&aes
----------------------
)or*in+ (apita
(,-&
------------------------
Avera+e Inventor!
De2*o$s T)$o+e$ Ra*&o:
'n case firm sells good on credit, the realization of sales revenue is delayed and the
receivable are created. The cash is realized from these receivables later on. The speed with
which these receivables are collected affects the liquidity position of the firm. The debtor%s
turnover ratio throws light on the collection and credit policies of the firm. 't is calculated asE
De2*o$s T)$o+e$ Ra*&o N

E.e$e a+,F a%%o)* $e%e&+a2'e &s a+e$a,e of (e2*o$s G 2&''s $e%e&+a2'eF
+valuation of the ratio can be made better and meaningful in terms of average
collection period, which is as followE
A+,F Co''e%*&o Pe$&o( N
The shorter the collection period implies quic" payment by debtors. ?hile longer the
period larger the chance of bad debts.
C$e(&*o$s T)$o+e$ Ra*&o:
This ratio is calculated on the same lines as receivable ratio. This ratio shows the
velocity of debt payment by the firm. 't compares the annual credit purchases with the average
payable as followE

C$e(&*o$s T)$o+e$ Ra*&o N

(redit &aes
--------------------------
Av+. Acco#nts receiva"e
/01
-------------------
D/T Ratio
(redit P#rchase
-------------------------
Av+. Acco#nts Pa!a"e
?here average accounts payable are creditors ) bills payable. ! low creditor%s turnover ratio
reflects liberal credit terms granted by suppliers. ?hile a high ratio shows that
accounts are settled rapidly.
+valuation of the ratio can be made better and meaningful in terms of average
payment period, which is as followE
A+,F Pay#e* Pe$&o( N

(y this firm can compare what credit period it receives from the suppliers.
P$of&*a2&'&*y Ra*&os:
The profitability ratios measure the profitability or the operational efficiency of the
firm. There are two groups of persons who may be specifically interested in the analysis of the
profitability of the firm. These are @iA the management, which is interested in the overall
profitability and operational efficiency of the firm, and @iiA the equity shareholders who are
interested in the ultimate returns available to them. (oth of these parties and any other party
such as creditors can measure the profitability of the firm. The performance of the firm can be
evaluated in terms of its earning with reference to a given level of assets or sales or owner
interest etc. broadly the profitability ratio are calculated by relating the returns with reference
to @iA sales of the firm, @iiA assets of the firm, @iiiA the owner%s contribution.
P$of&*a2&'&*y Ra*&o 2ase( o Sa'es of *.e f&$#:
Profit is a factor of sales and is earned indirectly as a part of the sales revenue. This
ratio analyses how much of profit is earned, how is it going to be used for meeting he cost of
goods sold, depreciation indirect expenses, tax liability and return to shareholders. The
important ratios areE
/01
-----------------
(/T Ratio
G$oss P$of&* Ra*&o:
This ratio is also called the average mar" up ratio. This ratio reflects the efficiency with
which the firm producesDpurchase the goods. =igher the ratio better is the result. ! low ;P
ratio, generally indicates high cost of goods sold due to unfavorable purchasing policies, lesser
sales, lower selling prices, excessive competition, over investment in plant and machinery etc.
it is calculated asE

-ross profit
GP Ra*&o N ---------------
2et saes
Ne* P$of&* Ra*&o:
't measures the efficiency of the management in generating additional revenue over and
above the total cost of operation. 't shows the overall efficiency in manufacturing,
administrative, selling and distributing the product. 't is calculated asE
NP Ra*&o N

2et profit
---------------
2et saes
Ope$a*&, P$of&* Ra*&o:
This refers to the pure operating profit of the firm i.e. the profit generated by the
operation of the firm and hence is calculated before considering any financial leverage, non&
operating incomeDlosses and tax liability. The operating profit is also "nown as earnings before
interest and tax @+('TA. The #P ratio is calculated asE

OP p$of&* Ra*&o N
Ope$a*&, Ra*&o:
This ratio establishes relationship between cost of good sold and other operating
expenses on the one hand and the sales on the other hand. Thus, it measures the cost of
operations per rupee of sales. 't also indicates the percentage of net sales that is consumed by
operating cost. The higher the ratio, the less favorable it is, it would have a small margin to
covert interest, income&tax, dividend and reserve. 't is calculated asE
OR Ra*&o D
?here operating cost includes administrative cost, selling cost and financial cost
P$of&*a2&'&*y Ra*&o 2ase( o Asse*sBI+es*#e*:
The profitability of a firm can also be analyzed with reference to assets employed to
earn a return. >ormally, the more the assets employed, greater should be the profits and vice&
versa. The important ratio areE
EBIT
------------
2et &aes
Tota ,peratin+ (ost
------------------------
2et &aes
Re*)$ o Asse*s:
This measures the profitability of the firm in terms of assets employed in the firm. The
#! is measured by establishing the relationship between the profits and the assets employed
to earn that profit. 't is calculated asE

ROA D
Re*)$ o Cap&*a' E#p'oye(BI+es*#e*:
This is the post&tax version of earning power. 't considers the effect of taxation, but not the
capital structure. 't is internally consistent. 'ts merit is that it is defined in such a
way that it can be compared directly with the post&tax weighted average cost of
capital of the firm. 't is calculated asE
ROCE N
?here capital employed includes share capital, reserve ) surplus, debentures less
miscellaneous expenses and non&trade investment.
P$of&*a2&'&*y Ra*&os 2ase( o O?e$Hs V&e?: <ltimately the profit of the firm
belongs to the owners who have invested their fund in the form of equity share
capital or preference share capital or retained earnings. Therefore, the profits of a
firm should be analyzed from the point of view of the owner%s. the important
ratios areE
Re*)$ o EA)&*y:
The #+ examines profitability of the firm from the perspective of the equity investors by
relating profits available for the equity shareholders with the boo" value of the
equity investment. 't is calculated asE
ROE D
2et Profit after Tax
-------------------------
Av+. Tota Assets
+('T
&&&&&&&&&&&&&&&&&&&&&&
$apital +mployed
+quity +arnings
&&&&&&&&&&&&&&&&&&&&&&&&&&&
+quity shareholders Fund
Ea$&,s pe$ S.a$e: The #+ measures the profitability in terms of the total funds and
explains the return as a percentage while +P6 measures the same in terms of
number of equity shares. 't is calculated asE

EPS D
D&+&(e( pe$ S.a$e: 6ometimes the +quity shareholders may not be interested in the +P6
but in the return which they are actually receiving from the firm in the form of
dividends. The amount of profits distributed to shareholders per share is "nown
as 7P6 and may be calculated asE
DPS D
D&+&(e( Payo)* Ra*&o: This ratio is the between the 7P6 and +P6 of the firm i.e. it
refers to the proportion of the +P6 which has been distributed by the company as
dividend. 't is calculated asE
DP Ra*&o D
E$#it! Earnin+s
------------------------------
2o. of E$#it! shares
Tota Profits Distri"#ted
----------------------------
2o. of E$#it! shares
Dividend per &hare
--------------------------
Earnin+s per &hare
P$&%e Ea$&, Ra*&o: This is the ratio, which establishes the relationship between the +P6
and the mar"et price of a share. 't indicates the expectations of the equity
investors about the earnings of the firm. The investor%s expectations are reflected
in the mar"et price of the share and therefore the PD+ atio gives an ides of
investor%s perception of the +P6. 't is thus the ris" factor of the share. 't is
calculated asE
PBE Ra*&o N
L&#&*a*&os of Ra*&o Aa'ys&s:
The atio analysis is one of the most powerful tools of financial management.
Though ratios are simple to calculate and easy to understand, they suffer from
serious limitationsE
L&#&*e( )se of a s&,'e $a*&o:
! single ratio, usually, does not convey much of a sense. To ma"e a better
interpretation a number of ratios have to be calculated which is li"ely to confuse
the analyst than help him in ma"ing any way meaningful condition.Q
La%! of A(eA)a*e S*a(a$(s:
There are no well&accepted standards or norms of thumb for all ratios, which can
be accepted as norms. 't renders interpretation of the ratios difficult.
I.e$e* L&#&*a*&os of A%%o)*&,:
Bi"e financial statements, ratios also suffer from the inherent wea"ness o
accounting records such as their historical nature. atios of the past are not
necessarily true indicators of the future.
3ar*et Price per &hare
------------------------
Earnin+s per &hare
C.a,e of A%%o)*&, P$o%e()$es:
$hange in accounting procedure by a firm often ma"es ratio analysis misleading,
e.g.E a change in the valuation of methods of inventories from F'F# to B'F#
increases the cost of sales and reduces considerably the value of closing stoc"s
which ma"es stoc" turnover ratio to be lucrative and unfavorable gross profit
ratio.
Pe$soa' B&as: atios are not only means of financial analysis and not an end in itself.
atios have to be interpreted and different people may interpret the same ratio in
different ways.
I%o#pa$a2'e:
>ot only industries differ in their nature but also the firms of the similar business
widely differ in their size and accounting procedures, etc. this ma"es comparison
of ratios difficult and misleading. *oreover, comparisons are made difficult due
to difference in definitions of various financial terms used in the ratio analysis.
A2so')*e f&,)$es D&s*o$*:
atios devoid of absolute figures may prove distort, as ratio analysis is primarily
a quantitative analysis and not a qualitative analysis.
P$&%e 'e+e' C.a,es:
?hile ma"ing ratio analysis, no consideration is made to the changes in price
level and this ma"es the interpretation of ratios invalid.
CURRENT RATIO

Fo$#)'a: $urrent atio N $urrent !ssets D $urrent Biabilities
RsF & 'a!.s
CHART:
YEAR
CURRENT
ASSETS
CURRENT
LIABILITIES
RATIO
,--.&-/ 13.09.9, ,1-33.20 ,.-8
,--/&-3 29320.1/ ,01/-./3 ,.20
,--3&0- 89-89.2, ,9-.,.,. ,..9
,-0-&00 8-3/0.9, ,9.12.,1 ,.28
,-00&0, /8/00.13 98,29.10 ,.93
INTERPRETATIONS: "
The above table shows that the liquidity position of the firm is very good. The current
assets increased on the whole from ,--.&-/ to ,-00&0,. This is because of continues increases
in inventories and decreases in other current assets. Though sundry debtors, loans and
advances and ban" balance fluctuated during these 2 years. 't also implies a large part of the
current assets is idle.
ACID TEST RATIO
Juic" !ssets
Fo$#)'a: !cid&test atio N &&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
$urrent Biabilities
RsF & 'a!.s
H+! $<+>T !66+T6
$<+>T
B'!('B'T'+6
!T'#
,--.&-/ 9-00- ,1-33.20 0.,1
,--/&-3 99812 ,01/-./3 0.28
,--3&0- 1--93 ,9-.,.,. 0..9
,-0-&00 92189 ,9.12.,1 0.13
,-00&0, 130,9 98,29.10 0.92

CHART:
INTERPRETATIONS: "
The above table shows that Juic" ratio for the year ,--.&-/ is of 0.,1,in ,--/&-3 is
0.28, in ,--3&0- the ratio is 0..9, in the year ,-0-&00 is 0.13 ,in the year ,-0-&00 the ratio is
0.92, in the year ,-00&0, the ratio is 0.1,,in the year ,-00&0, the ratio is 0.99 and more than
that of the standard rule of 0E0 due to continuous increases in the current assets which are
easily convertible in cash.
CASH RATIO
$ash )(an" balanceO$urrent 'nvestment
Fo$#)'a: $ash atioN
$urrent liabilities
RsF & 'a!.s
YEAR CASH
CURRENT
LIABILITIES
RATIO
:;;8";9 659>F5; :<;66F=5 ;F;9
:;;9";6 :<76F89 :5<9;F96 ;F55
:;;6"5; 5689F7= :7;8:F:8 ;F;6
:;5;"55 :<97F57 :78<=F:< ;F55
:;55"5: :8:<F:: 7>:=7F<5 ;F;9
CHART:
INTERPRETATIONS: "
The super Juic" ratio is an indication that the firm is liquid and has ability to meet its
current liabilities in time. The above ratio clearly indicates that the firm is highly liquid, as the
cash ratio for all the five year is 0E0. This also indicates that most of the liquid assets are idle,
which can be invested elsewhere.
DEBT EIUITY RATIO
7ebt
Fo$#)'a: 7ebt&equity atio N
7ebt O+quity
RsF & 'a!.s

CHART
INTERPRETATIONS: "
From the above it is clear that the shareholders fund is less than that of the long&term
debt. 6o, we can infer that the firm assets are financed less by the internal funds rather than the
external funds by which it is using its resource more effectively.
YEAR DEBT EIUITY RATIO
:;;8";9 <<;6;F:5 77989F<; 5F7;
:;;9";6 <<>>7F87 7<9<9F:8 5F:9
:;;6"5; =;<==F:7 7885<F=9 5F7<
:;5;"55 >:57=F<< <5>;=F;; 5F<6
:;55"5: 98:86F66 >=<<7F<< 5F77
TOTAL DEBT RATIO
Total 7ebts
Fo$#)'a: Total 7ebt atio N &&&&&&&&&&&&&&&&&&&&
Total !ssets
RSF IN LAKHS
YEAR TOTAL DEBT
TOTAL
ASSETS
RATIO
:;;8";9 >9596F8: 55:>78F;8 ;F>;
:;;9";6 >>5<<F>: 557<<7F=6 ;F=9
:;;6"5; 87=:8F=5 5:7;75F5; ;F=6
:;5;"55 9=99;F>6 579:;<F9; ;F>:
:;55"5: 5:7=77F<5 :;;:58F89 ;F>5
CHART:
INTERPRETATIONS : "
The above table depicts that the total liabilities of the firm are increasing but this is less
than proportionate increase to total assets. !s such it implies that total assets are financed by
outside liabilities and only a fractional part is been financed by owner%s fund. Thus it shows a
better position of the company.
INTEREST COVERAGE RATIO
+('T
Fo$#)'a: 'nterest $overage atio N
'nterest
RSF IN LAKHS
YEAR EBIT
FI4ED
INTEREST
RATIO
:;;8";9 8966F:= <>=6F=9 5F8;
:;;9";6 55877F59 7<7:F:9 7F<:
:;;6"5; 5<:7;F:: :8><F8< =F5<
:;5;"55 557>9F:6 7:8=F78 7F<8
:;55"5: 78=:9F>7 77=;F7; 55F:;
CHART:
INTERPRETATIONS: "
The above ratio indicates that the firm covers a good deal of interest liability with the
operating profit of the firm. Thus we can say that it can sustain well before it commits a default
in payment of the interest liability.
PREFERENCE DIVIDEND RATIO

Profit after Tax
Fo$#)'a: Preference dividend atioN
Preference dividend

RSF INLAKHS
YEAR EBIT
FI4ED
INTEREST
RATIO
:;;8";9 :95<F>8 5;7>F:> :F85
:;;9";6 >:66F=8 5:6;F5 <F99
:;;6"5; 77=5F:9 57;7F68 :F=8
:;5;"55 <=8;F6: 5=><F8> :F6:
:;55"5: :>=>9F7 5<=>F8; :F67
CHART:
INTERPRETATIONS: "
The above ratio indicates that the firm%s ability to pay the fixed preference dividend is
not satisfactory. The company%s profit is increasing but a major portion of the profit is been
recouped bac" and utilized for investment. !s shown in table that dividend is not paid in the
year ,-00&0,. !s such preference shareholders are not satisfactory with result.
PROPRIETARY RATIO
Proprietary fund
Fo$#)'a: Proprietary atioN &&&&&&&&&&&&&&&&&&&&&&&&&&
Total !ssets
RSF IN LAKHS
YEAR NET EORTH
TOTAL
ASSETS
RATIO
:;;8";9 77989F<; 55:>78F;8 ;F7;
:;;9";6 7<9<9F:8 557<<7F=6 ;F75
:;;6"5; 7885<F=9 5:7;75F5; ;F75
:;5;"55 <5>;=F;5 579:;<F9; ;F7;
:;55"5: >=<<7F<< :;;:58F89 ;F7:
CHART:
INTERPRETATIONS: "
!s the total debt ratio represents relationship of the owner%s funds to total assets, higher
the ratio the better the solvency position of the firm. The above ratio shows that the 2 years
ratio is more than 9-C. 6o we consider that the long&term solvency of the firm is satisfactory.
CAPITAL TURNOVER RATIO
Sa'es
Fo$#)'a: $apital turnover atio N &&&&&&&&&&&&&&&&&&&&
$apital employed
RSF IN LAKHS
YEAR SALES
CAPITAL
EMPLOYED
RATIO
:;;8";9 57=78=F:7 99=78F== 5F=:
:;;9";6 5:6>87F67 656>:F>6 5F<5
:;;6"5; 5<:56=F88 666=9F9> 5F<:
:;5;"55 5>5758F8< 55<<=6F== 5F<;
:;55"5: ::;96>F>; 5>76><F78 5F7<
CHART:
INTERPRETATIONS: "
From the above table, it indicates that the ratio is not so high. The firm is not using its
resources efficiently. From this we can conclude that the overall utilization of its resources is
satisfactory.
FI4ED ASSETS TURNOVER RATIO
Sa'es
Fo$#)'a: Fixed !ssets Turnover atio N &&&&&&&&&&&&&&&&&&&
F&-e( Asse*s
RSF IN LAKHS
YEAR SALES
FI4ED
ASSETS
RATIO
:;;8";9 57=78=F:7 =96==F76 :F:6
:;;9";6 5:6>87F67 =>667F;9 :F:8
:;;6"5; 5<:56=F88 =85<9F78 :F<9
:;5;"55 5>5758F8< 8<7:5F68 :F58
:;55"5: ::;96>F>; 55;=56F;5 :F;;
CHART:
INTERPRETATIONS: "
The above ratios indicates that the fixed assets turnover rates are in the decreasing
trend, but is satisfactory as the sales generated are showing good figure. 't shows that there is
a scope for increasing in production and sales with effective use of fixed assets. (ut present
year the ratio is decreased to -.0..
TOTAL ASSETS TURNOVER RATIO
6ales
Fo$#)'a: Total !ssts Turnover atio N &&&&&&&&&&&&&&&&&&
Total !ssets
RSF IN LAKHS
YEAR SALES
TOTAL
ASSETS
RATIO
:;;8";9 57=78=F:7 55:>78F;8 5F:;
:;;9";6 5:6>87F67 557<<7F=6 5F5<
:;;6"5; 5<:56=F88 5:7;75F5; 5F5>
:;5;"55 5>5758F8< 579:;<F9; 5F58
:;55"5: ::;96>F>; :;;:58F89 5F5;
CHART:
INTERPRETATIONS: "
The above ratio indicates that the firm%s ability to generate sales by per rupee of
tangible assets is average. 't is in decreasing trend showing a poor performance of the firm.
There is always a scope to increase the turnover by proper utilization of total assets.
EORKING CAPITAL TURNOVER RATIO
6ales
Fo$#)'a: wor"ing capital Turnover ratio N &&&&&&&&&&&&&&&&&&&&&
?or"ing capital
RSF IN LAKHS
YEAR SALES
EORKING
CAPITAL
RATIO
:;;8";9 57=78=F:7 :=>57F9; =F:9
:;;9";6 5:6>87F67 7:<8;F=9 7F66
:;;6"5; 5<:56=F88 76665F:< 7F=>
:;5;"55 5>5758F8< 78:7>F;8 <F77
:;55"5: ::;96>F>; =;==9F;9 <F78
CHART:
INTERPRETATIONS: "
From the above ratio it indicates that utilization of the wor"ing capital is efficient and is
satisfactory. The ratio is in increasing trend, which shows low investment in wor"ing capital. 't
also shows that profitability is good as the increasing in sales is satisfactory when compared to
wor"ing capital.
INVENTORY TURNOVER RATIO /TABLE C 570
$ogs
Fo$#)'a: 'nventory Turnover atio N &&&&&&&&&&&&&&&&&&&&&&&&&
!verage 'nventory
RSF IN LAKHS
CHART:
INTERPRETATIONS: "
The ratio indicates the efficiency of the firm is selling its products or services. ! high
ratio indicates efficient management of inventory. 'n the above ratio it indicated that the
inventory is getting converted into cash in the five years. This implies that the management of
inventory is satisfied. Though the table shows that the ratio has decreased in the year ,-00&0,
to -.18.
YEAR
COST OF
GOODS
SOLD
AVERAGE
INVENTORY
RATIO
:;;8";9 57=78=F:7 56>;7F<6 >F6;
:;;9";6 5:6>87F67 :;7;>F>: >F79
:;;6"5; 5<:56=F88 :7;:<F;8 >F58
:;5;"55 5>5758F8< :==59F=: >F7:
:;55"5: ::;96>F>; 78>99F:8 =F9>
GROSS PROFIT RATIO
G$oss p$of&*
Fo$#)'a: ;ross profit atio N &&&&&&&&&&&&&&&&&&&&&&&&
Ne* sa'es
RSF IN LAKHS
YEAR
GROSS
PROFIT
SALES RATIO
:;;8";9 559:;=F;> 57=78=F:7 9F87
:;;9";6 57879;F8: 5:6>87F67 5;F=6
:;;6"5; 5<677;F:9 5<:56=F88 5;F=;
:;5;"55 5>>>6:F;< 5>5758F8< 5;F77
:;55"5: ::=9;;F>> ::;96>F>; 5;F::
CHART:
INTERPRETATIONS: "
This ratio indicates the extent to which selling prices of goods per unit may decline
without resulting losses in operating of a firm. The higher the ratio the better the results. 't
implies that the profitability of the firm is not satisfactory and it is not covering various
operating expenses without incurring losses. The ratio is decreasing from year ,--.&-/ to
,-00&0,. The gross profit ratio is at very low level.
NET PROFIT RATIO
Ne* p$of&*
Fo$#)'a: >et profit atio N &&&&&&&&&&&&&&&&&&&&&&
Ne* sa'es
RSF IN LAKHS
YEAR NET PROFIT SALES RATIO
:;;8";9 7998F=9 57=78=F:7 :F98
:;;9";6 ><65F7< 5:6>87F67 =F;;
:;;6"5; 7<>7F89 5<:56=F88 :F<7
:;5;"55 <=8;F6: 5>5758F8< :F97
:;55"5: >=>9F7: ::;96>F>; 5:F;:
CHART:
INTERPRETATIONS: "
The above ratio shows that the firm is earning the constant returns over its sales. The
above table shows that the firm is earning profit over its net sales, which is good for any
manufacturing concern.
OPERATING PROFIT RATIO
EBIT
Fo$#)'a: #perating Profit atio N &&&&&&&&&&&&&&&&&&&&&
Ne* sa'es
RSF IN LAKHS
YEAR EBIT SALES RATIO
:;;8";9 8966F:= 57=78=F:7 ;F;=9
:;;9";6 55877F59 5:6>87F67 ;F;6;
:;;6"5; 5<:7;F:: 5<:56=F88 ;F5;;
:;5;"55 557>9F:6 5>5758F8< ;F;8;
:;55"5: 78=:9F>7 ::;96>F>; ;F5>6
CHART:
INTERPRETATIONS: "
From the above table we can infer that more than /-C of the sale has been consumed
by the operating profit. #nly less than ,-C is left to cover interest charges, income tax
payments, dividend and the retention of profits as a reserve. The ratio is not satisfactory.
CONCLUSIONS:
*gt of company is efficient which reflects a healthy functioning and performance.
The current ratio of 'cici lombard general insurance is satisfactory as the current assess
are more then $urrent liabilities.
>et profit ratio of the current year increased which is not a good sign for
company.
!s the operating expenses ratio of #($ is satisfactory there is n improvement in
the current year return on assess ratio is satisfactory.
There is increase in fixed assess return over ratio it is average.
?or"ing capital turnover ratio is good.
There is decrease in the debt equity ratio of 'cici lombard general insurance it
shows that the firm fall to get advantage from the debt to minimize the share
value.
$ompany%s ;ross profit ratio is quite good during the study period
The proprietary ratio shows that the five years ratio is more then 9-C. 6o we consider
that the long term solvency of the firm is satisfactory.
6heholders fund is less then that of the long term debt. 6o less by the internal funds
rather then the external funds by which it is using its resource more effectively.
$ash ratio clearly indicates that the firm is highly liquid as the cash ratio for all the five
years is 0E0 this also indicates that most of the liquid assets are idle which can ne
invested elsewhere.

SUGGESTIONS:
$ompany should maintain adequate reserves.
't should control costs.
$ompany should maintain adequate liquidity.
't should try to raise its owner equity.
$ompany should maintain adequate rations.
$ompany should ta"e all the measures to promote its sales.
$ompany should try to utilize assets to the fullest extent.
To improve the liquidity position of the company it is suggested that the company shall
finance more in current assets or pay off part of current liabilities form long term funds.
$ompany should maintain good cash and ban" balances.
The company should try to generate required wor"ing capital )also try to manage if
efficiency.
The company should try to effectively utilize in fixed assets.
BIBILIOGRAPHY

BOOKS:
MANAGEMENT ACCOUNTING
& G. 6=!*!
& G.;<PT=!
FINACIAL MANAGEMENT
& ' *. P!>7!H
FUNDAMENTALS OF FINANCIAL MANGAMENT
& P!6!>! $=!>7!
COSTGMANAGEMENT ACCOUNTING
& >G.P!6!7
& !G.P!6!7
SOURCES:
EEBSITE OF A COMPANY: www.axisban".com
EEBSITE FOR GENRERAL REFRENCE:www.google.com