CHAPTER-1

COMAPANY PROFILE

S.S. SAIB CONSTRUCTION PRIVATE LIMITED

We take the opportunity to introduce our self as most respected Construction firm. We engaged
in the business of providing the TOTAL SATISFACTION in construction/ Project work.
We provide the services for:
1

1) Civil Works

2) Steel works (include sheds, space frames etc)

3) Jib Cranes

4) Interior designing

5) Trolleys( any type)

6) Structure for Over head crane/ EOT cranes

7) Roller conveyers

8) Manufacturer of gutters

9) Supply parts to ACE CRANES and ECEL. (Crane Parts)

10 10) Specialized in SS (Stainless Steel) Fabrication Equipments

11 11) Porta Cabins
12 12) Equipments for Chemical Plants.
We are the business from last 15 years. All activity is being undertaken at our plant located in
Faridabad. This plant has the latest machinery like sheet shearing machines, sheet bending
machines, lathe machines, Arc, Tig, Mig welding machines, all kind drilling and cutting
machines, over head crane (3 ton).
We have an list of Reputed Customers from whom we get the repeat orders like JCB India ltd,
Yamaha motors India Pvt. Ltd, Escorts Construction and Equipment Limited, New Holland
Tractor India (P) limited, Dharampal Prem Chand Limited (Agartala).
We have a strong team of professionals and technical experts having rich experience in their
respective field in India and abroad. All activities for sophisticated and typical jobs are being
taken under the direct supervision of highly qualified and well experienced expert hands in our
factory situated in the industrial hub at Faridabad.

History
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Managing Director - Shane Summers celebrates 33 years in the building and construction
business.
Shane Summers joined the workforce with a privately owned building company on the Gold
Coast as an apprentice carpenter and joiner in 1977. Shane worked on commercial and industrial
sites for many years and studied building at the Gold Coast Institute of Technical and Further
Education.
From 1993 2000, SS Constructions oversaw the construction of luxury homes at Sanctuary
Cove, Sovereign Island and the Gold Coast. From the year 2000, the company branched out and
began building commercial and industrial buildings throughout south east Queensland.
Shanes clients benefit from his proactive engagement with the building industry and the
community by having superior access to industry issues and information.
Chairman (Gold Coast) Queensland Master Builders Association (QMBA) - 2005 - 2008
Current Councilor (Gold Coast Representative) for Queensland Master Builders Association
(QMBA) - 2004 - 2009
Shane has a passion for the trade and supports the training and development of the next
generation of skillful tradesmen and quality builders.
Chairman (Gold Coast) - Construction Training Queensland (CTQ) - 2003 - 2004
Development of Apprenticeships Expo - to promote apprenticeships and training 2004
Master Builders panel representative for the development and selection of the technical courses
for builders and builders licensing at Construction Training Australia- 2002
New member of the Australian Industry Trade College- 200

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Home
SS Constructions specialize in the building and construction of luxury homes, commercial and
industrial buildings in South East QLD. SS Constructions is an award winning, privately owned
Australian company based on the Gold Coast.
Formed in 1993 by Shane Summers, SSC provides building and construction services for
commercial, industrial and residential projects in South East Queensland and the Northern Rivers
area of New South Wales.
From project planning, scheduling, legal certification, material selection and support after
completion SS Constructions offers a complete building solution. You can take comfort in SS
Constructions wealth of experience, underpinning knowledge to perform work professionally
and to your satisfaction.
The company employs exceptional staff with diverse backgrounds and experience, not only in
construction but also in the support services.
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Name of satisfied organization

M/S JCB India Limited. (Ballabgarh)

M/S Escorts Limited. (Faridabad)

(a). Plant 1 (Engineering Division)

(b). Plant-3 (Construction Equipment Division).
(c). Agri. Machinery Group.
(d). Ford Limited.

Claas Limited. (Faridabad)

Yamaha. Motors India Pvt. Limited (Greater Noida & Faridabad)

Glaxo Smith Cline Beechem consumer Health care.(Maan feed Ltd)

Consolidated Coin Company. (Division of Nepcon turbo charger Ltd)

Fibertex Pvt. Limited.(Faridabad)

Asia brown Bovary Limited. (ABB) (Faridabad)

Mahindra & Mahindra Ltd. (M&M) (Hyderabad and Haridwar)

Knorr Bermse India. (Faridabad)

Defence Land System India. (DLSI) (A unit of Mahindra at Haryana)

Federal Mogul Goetze India Ltd. (Patiala and Bangalore)

Jackson Developer Pvt. Ltd.(Owner of v3s mall, Crowne plaza)

Suzuki Motorcycle Pvt. Ltd. (Gurgoan)

Name of satisfied organization

Kunj Bihari Processors Pvt. Limited. (Faridabad)

Orbit resorts Limited. (Gurgoan)

J.B.M Limited. (Gurgoan)

Parson nutritional limited. (Horlicks). (Sahibabad (U.P)

Khemka Container Pvt. Limited. (Noida. U.P)

International print-o-pack. (Noida. U.P)

Embassy of Israel. (New Delhi)

Enpro India limited (Noida)

C.T.C Limited (Auditorium) (New Delhi)

TruTrac Limited. (Gurgoan)

Oswal Electrical Limited. (Faridabad)

JBES Limited. (Gurgoan)

Food and Health Care (Himachal)

Hotel Oberoi (EIH) (New Delhi)

Tecumseh India Limited. (Faridabad)

V3S mall. (Laxmi Nagar New Delhi)

Radisson Hotel. (Pashim Vihar, New Delhi)

Awards
SS Saib Constructions has been recognized by the building and construction industry for its
success in building and residential construction. SS Saib Constructions has received the
following building awards:

2009 Tourism & Hospitality Facilities up to $8 Million

2004 Best use of site

2004 Housing on sloping sites

1998 Best use of site

1997 Best Contract House over $1,000,000

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1997 Innovated use of timber

1997 Best use of site

1997 Innovative use of Technology

1997 Energy Efficiency in Housing

1997 Gold Coast House of the Year

1996 Queenslands best house over $1,000,000

1995 Workmanship Award

1995 Best Home Renovation

1994 Best Interior Construction

1994 Best Use of Site

1994 Gold Coast Best House

1994 Workmanship award

1994 Gold Coast House of the Year

Testimonials
I needed someone to build a prestige home on our prime waterfront property at Sanctuary Cove
on the Gold Coast. SS Constructions did more than just build the home. They managed the
project so I could concentrate on my business. SS Constructions managed and co-ordinated the
whole process with such competence that I didnt have to worry about if the job was being done
properly. The finish of the home is of very high standard. We have been in the home for several
8

years now and the house is good as the day it was built, which is testimony in itself to the skill
and experience available from the builder.
Greg Matthews
SS Constructions built a commercial factory for us at Logan home. We are based in New
Zealand and as such required more of a project manager than a standard construction company.
SS Constructions, and more specifically Shane Summers co-ordinated the building from concept
design, consent and construction. We would not hesitate to use SS Constructions again, with
them having successfully completed our building project and would highly recommend them.
Brian Blanchard
"Since 1994, SSC has completed a number of projects for me to my complete satisfaction.
Shane has a highly developed ability to understand his clients needs and to work effectively with
or without an architects involvement, to produce high quality outcomes in sometimes difficult
and demanding situations. I have no hesitation and much pleasure in giving this endorsement to
a builder who in my opinion produces work of the highest possible quality."

Services in
Residential Building
SS Constructions has provided a premium building service to the luxury housing market since
1993. Building luxury homes on the Gold Coast, SS Constructions places a high priority on
attention to design, detail and finish that has resulted in building awards for design and
workmanship.

Not just builders- SS Constructions provide a complete management service that includes
employing and coordinating suitable local design consultants for custom projects, preliminary
budgeting and cost management, obtaining approvals, compliance and certification.
From past experience some of our clients may only see the project on a few occasions during the
building process. We understand that our clients are too busy with their core businesses and
lifestyles to attend to all of the organizing, so we work with our clients, and fill the gaps to
overcome the obstacles professionally.
SS Construction thrives on challenges and gets excited about difficult projects where other
builders waiver. Our approach to our work is to overcome problems based on experience and
underpinning technical knowledge and management skill.
Commercial Building
SS Constructions managing director Shane Summers spent 15 years managing commercial
construction projects before he built his first house. Whilst working for large building companies
when he was a younger man he developed his own successful systems of construction, site
management and cost control that always provided good results for the clients both in quality and
price.
Good projects just dont happen. The right people need to be sourced and the right conditions
need to be established to achieve the best results. SS Constructions likes to engage early on the
project and either project manage the design team on behalf of the client [the owners agent]
from the outset or alternatively become part of the team managed by the owners separate agent.
The client definitely benefits as we are not just builders and have a lot to offer in experience.
SS Constructions is an established reliable business and has superior access to the best personal,
trade contractors and tradesmen living in and around the district. We are not interested in just
doing a job; we take pride in our work and do the best job we can.
SS Construction provided a total management service to the owner of the facility. We employed
and coordinated the design consultants, authority negotiations, approvals and certification,
10

construction works and hand over. A special feature to the project was to pre manufacture the
1000m2 feature timber building off site at our factory at Coomera in order to compensate for
delays caused by council town planning negotiations. The initiative resulted in the facility being
operational for the Christmas trade which provided the owner the opportunity to recover some of
the building cost immediately.
Industrial Building
SS Constructions are a manufacturing company in the building industry. We are very interested
in manufacturing processes for other industries. It is so important to employ someone interested
and understands the importance of time and motion, manufacturing processes and equipment
installations. This is very exciting providing technical assistance and expertise to another
manufacturer.
Building the Tuscany Stone Facility
We achieved good results for the directors of the Tuscany Stone Co project in Ashmore on the
Gold Coast where they manufacture marble and granite products for the building industry. The
facility includes warehousing stock and handling equipment, wet sawing, moulding and
polishing equipment, office and administration facilities and worker facilities. SS Construction
project managed the design, construction and certification of the project.

Sustainable Building
New challenges are presenting themselves right now for the collection of water and recycling
water for manufacturing, conservation of energy for the operation of the buildings and thermal
control, and the operation of equipment, using sustainable methods and materials and providing a
good and safe environment for workers.

11

SS Constructions are interested and active in using sustainable and suitable products and
materials and investigating the integration of the products into the project.
This year we have performed extensive investigated into structures made from plantation forest
pine being a 100% renewable material for commercial and industrial use. We have engaged with
Hyne Timbers, being the largest and most experienced manufacturer of timber products in
Australia. Our research indicates that we overlooking the advantages that timber can offer over
steel framed buildings under the right circumstances.
This year we also engaged with Ritek Building Solutions with their insulative roof and wall
systems and cladding materials where we can vastly improve the energy efficiency or energy
control for heating and cooling buildings.
SS Constructions are interested in researching products that are an advantage to our clients.

Companys Site View

12

Site View of JCB India Ltd.

13

Roofing work including toughened glass and

Aluminium composite panel Glazing, painting
work and Landscaping work.
(Pre coated 0.50 mm thick sheet used Area
covered 5000 Sq.mt Aprox.)
(Project completed- 25 Days)

Structure Steel work for EOT crane for 10

TON Capacity.
(Total Qty of Steel 150 Ton)
(Project Completed - 1 month)

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Jib cranes.
Up to 1 4 Ton Capacities.
(Take 10 15 days to supply the Jib crane after getting a Confirm order)

Project Name Engine Assembly for JCB machines (Air Conditioned Building)
Project Features
Total Qty of steel 180 Ton
Mezzanine floor - 750 Sq.mt ( made of deck sheet and steel columns)
Precoated Sheets 2500 sq. Mt for Partition

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Cafeteria of Size 30M x 90M

Complete Steel Building using ISMB 300 x 300 Box
for columns, ISMC 450 steel section for Beam and
deck Sheet for slab.
Project Cost - 80 Lakhs
Time of Completion- 1 month

Chimneys for generators ( Including all Panelling

and Insulation of chimneys) and Steel structure for
supporting the Chimney and generators cable.
(Misc. Work)

16

Site View of Defence Land System India (A Unit of M & M Ltd)

Construction of mezzanine floor along with

juckting of R.C.C Columns over the basement
Area at 6mtr Height.

Side view of the going construction of new

building Showing R.C.C Mezzanine floor, trusses,
R.C.C Beams, brick work etc.

17

Site View of Dharampal Premchand Ltd Agartala, Gawhati

80% of Steel was fabricated from our

Factory and rest 20% being fabricated
at site.
Fabricated 300 tons/ month.
Constructed 8 gantry For EOT Crane of
45 mtr in Length (Span) and weight of
each gantry is 35 tons and all four
gantries was fabricated at our factory.

18

View of Some Interior Design Works at different Sites.

Site view Oberoi Hotel at Lodhi Road, New Delhi

Constructed a STEEL & GLASS STAIRCASE.
Width of the Staircase is 2.50 mtr, and
No support below the glass steps,
Thickness of each Toughened glass steps is 2 x 20 = 40 mm
Stainless Steel Cladding Done over the Steel Section.
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Railing 20 mm Toughened glass & top Rail of SS Steel pipe.

CHAPTER-2
REVIEW OF LITERATURE

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Ratio Analysis
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated
quotient of two mathematical expressions and as the relations between two or more things.
In financial analysis, a ratio is used as a benchmark for evaluating the financial position and
performance. The absolute accounting figures reported in the financial statement do not provide
a meaningful understanding of the performance and financial position of a firm. For example,
Rs.5 crores net profit may look impressive, but firms performance can be said to be good or bad
only when the N.P. figure is related to firms investment.
Ratio helps to summarize large quantities of financial data and to make qualitative judgment
about the firms performance.
Standards of comparison
The ratio analysis involves comparison for a useful interpretation of the financial statements. A
single ratio in itself does not indicate favorable or unfavorable condition. It should be compared
with some standards. Standards of comparison may consist of:

Past ratios, i.e., ratio calculated from past financial statements of the firm.

Competitive ratio, i.e., ratio of some selected firms, especially the most progressive and
successful competitor, at the same point of time;

Industry ratios, i.e., ratio of industry which the firm belongs; and

Projected ratios, i.e., ratios developed using the Projected, Performa, financial statements
of the same firm.

Time ratio analysis

The easiest way to evaluate the performance of the firm is to compare its present ratio with the
past ratios. When the financial ratios over a period of time are compared, it is known as time
21

series analysis. It gives an indication of the direction of change and reflects of whether firms
financial performance has improved deteriorated or remain constant over time.
Cross sectional analysis
Another way of comparison is to compare ratio of the firm with some selected firms in the same
industry at the same point in time. The kind of comparison is known as the cross sectional
analysis. The kind of comparison indicates the relative financial position and performance of the
firm. A firm can easily report to such a comparison, as it is not difficult to get the published
financial statements of the similar firms.
Industry analysis
To determine financial condition and performance of a firm, its ratio may be compared with
average ratio of the industry of which firm is a member. The sort of analysis is known as
industrial analysis, help member to ascertain the financial standing and capabilities of the firm
vis-a-vis other firms in the industry. Industry ratios are important standard in the view of the fact
that each industry has its characteristics, which influence the financial and operating
relationships.
Practical difficulties:1. It is difficult to get average ratio for the industry.
2. Even if industry ratios are available they are average ratios of string and weak firms.
Some time difference is so wide that average is of small utility.
3. Averages may be meaning less and comparison will be futile if firm within the same
industry widely differ in their accounting policies and practices.
According to R.N. Anthony:
A ratio is simply one number expressed in terms of another. It is found by dividing one number
into the other.
Thus, we can say that the relationship between two figures expressed in arithmetical terms is
called a ratio.
22

Objectives of ratio analysis:

To help in analysis of financial statement.

To help in simplification of accounting data.

To help in comparative studies.

To help in locating weak spots of the business.

To help in forecasting.

To estimate about trends in business.

To have effective control.

To study about the financial soundness.

To help in fixation of ideal standards.

Scope of ratio analysis:

The financial analyst use ratio to determine those financial characteristics of the firm in which
they are interested.
With the help of ratios, one can determine:

The ability of the firm to meet current obligations;

The extent to which firm has used its long term solvency by borrowing funds;

The efficiency to which firm is utilizing its assets in generating sale revenue; and

The overall operating efficiency and performance of the firm.

Performance analysis:
In fact, it has to be realised that the short and long term financial position and the profitability of
the firm are tested in every kind of financial analysis, but the emphasis would differ. Some ratios
are more important in one kind of analysis than other. If a short term creditor analysis only the
23

current position and find it satisfactory, he cannot be certain about the safety of his claim if the
firms long term financial position or profitability is unfavorable. The satisfactory current
position would become adverse in future if the current resources are consumed by the long term
financial condition. Similarly, the good long-term financial position is no guarantee for the long
term creditors claims if the current position or the profitability of the firm is bad.
Credit analysis:
In credit analysis, the analyst will usually select a few important ratios. He may use the current
ratio or quick-asset ratio to judge the liquidity or debt-paying ability; debt-equity ratio to
determine the stake of the owners in the business and the firms capacity to survive in the long
run and any one of the profitability. For example, return on capital employeed to determine the
firms earning prospects.
Security analysis:
The major focus of security analysis is on the long term profitability. Profitability is dependent
on number of factors. One would certainly be concerned with the efficiency with which the firm
utilizes its assets and the financial risk to which the firm is exposed. So along with the
profitability ratio one would also analyze the activity ratio and leverage ratio.
Competitive analysis:
The ratio of the firm does not revel by themselves do not reveal anything. For meaningful
interpretation, the ratio of firm should be compared with the ratio of similar firms and industry.
The comparison will reveal whether the firm is significantly out of line with its competitors.
Trend analysis:
The ratio analysis will reveal the financial condition of the firm more reliably when trend ratio
over time are analysed. The trend analysis of the ratio adds considerable significance to the
financial analysis because it studies rati
o of several years and isolates the exceptional instances occurring in one or two periods.
Although the trend analysis of companys ratio is itself informative, but it is more informative to
compare the trend in companys ratio with the trend in industries ratio.
Caution in using ratio analysis

24

The ratio analysis is widely used techniques to evaluate financial position and performance of a
business. But there are certain problems in using these ratios.
The following are certain limitations of using these ratios:

It is difficult to decide proper basis of comparison.

The comparison is rendered difficult because of difference in situation of two companies.

The price level changes make the interpretation of the ratios invalid.

The difference in the definition of items in the balance sheet and the profit and loss
statement make the interpretation ratios more difficult.

The ratios calculated at a point of time are less informative and defective as they suffer
short term changes.

The ratios are generally calculated from past financial statement and, thus are no
indicators of future.

Standards of comparison:
Ratios of a company have meaning only when they compared with some standards. It is difficult
to find out a proper basis of comparison. Usually it is recommend that ratios will be prepared
with industry averages. But industry averages are not easily available.
Compare differences:
Situations of two companies are never same. Similarly, the factors influencing the performance
of a company in one year may change in another. Thus, the comparison of ratios of the
companies becomes difficult and meaningless when they are operating in different situations.
Price level changes:
The accounting figures, presented in financial statements, are expressed in momentary unit
which is used to remain constant. The prices change over years, which effects accounting
earnings. At least three effects of inflation can be identified; first, nominal value of inventory
increase second, asset is stated at original cost (less depreciation) in the balance sheet. Because
of inflation, their current value or replacement cost will be much higher than book value, third,

25

inflation affects accounting profits of the firms, which borrow. If the interest rates is fixed,
shareholders gains at the cost of lenders.
Different definitions of variables:
In practice, differences exist as to the meaning of certain terms. Diversity of views exists as to
what would be included in the net worth or shareholders equity, current assets or liability.
Historical data:
The basis to calculate ratios are historical financial statements. The financial analyst is more
interested in what happens in future, while the ratios indicate in the past. Management of the
company has information about the companys future plan and policies and be able to predict
future happenings to a certain extend. But the outside analyst has to rely on the past ratios, which
may not necessarily reflect the firms financial positions and performance in the future.

Types of ratios
Usually ratios are calculated from the accounting data, can be grouped into various classes,
according to financial activity or functions to be evaluated.
Parties interested in the financial analysis are

Short term creditors

Long term creditors

Owners

Management

Short term creditors mainly interested in the liquidity and short term solvency of
the firm.

Long term creditors more interested in the solvency and profitability of the firm.

Owners concentrate on the firms profitability and financial condition.

26

Management is interested in evaluating every aspect of the firms performance.

They have to protect the interest of all particles and see that firms grow
profitability.

Liquidity ratios
Liquidity refers to the ability of the firm to meet its current obligations. It is also called as
short term solvency ratios. These ratios are used to assess the short-term financial position of
the concern. They indicate the firms ability to meet its current obligation out of the current
resources.
According to Saloman J.Flink
Liquidity is the ability of the firm to meet its current obligations as they fall due.
According to Herbert B.Mayo
Liquidity is the ease with which assets may be converted into cash without loss.
Liquidity Ratios are:
1. Current Ratio.
2. Quick Ratio.
3. Cash Ratio.

Leverage ratios
Long term creditor like the debentures holders financial institutions etc are interested in the
firms long-term financial strength. These ratios are calculated to assess the ability of the firm to
meet its long-term liability as and when they become due.
27

To judge the financial position of the, financial leverage, or capital structure ratio are calculated.
These ratios indicate mix of funds provided by owners and lenders.
Leverage ratios are as:
1. Debt-equity ratio.
2. Debt to total funds ratio.
3. Proprietary ratio.
4. Interest coverage ratio.

Activity ratios
Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes
the assets. These are also called the turnover ratios, because they indicate the speed with which
assets are being inverted or turned over into sales. Higher turnover ratios indicate the better
utilization of capital or resources and in turn lead to higher profitability.
Several activity ratios are calculated to judge the effectiveness of assets utilization.
These are:1. Inventory Turnover Ratio.
2. Debtors Turnover Ratio.
3. Fixed assets Turnover Ratio.
4. Average collection Period.

Profitability Ratios
A company should earn profits to survive and grow over a long period of time. Profit is the
measurement of the efficiency of the business.
Generally there are two types of profitability ratios calculated:

Profitability in relation to sales.

28

Profitability in relation to investment.

Profitability ratio includes the following:1. Gross Profit Ratio.

2. Net Profit Ratio.
3. Operating Profit Ratio.
4. Return on Investment.
5. Return on Equity.
Financial Statement
Financial statement means a statement or document which explains necessary financial
informations about an institution. Financial statements are prepared rationally and on the basis
of accounting principles. Their main objective is to provide information about the financial
aspects of business. Financial statements express the financial position of a business at the end of
accounting period and the results of its operations performed during the year.
At any movement in time, a business firm can be viewed as a pool of funds. These funds are
from various sources i.e. equity shares, preference shares, debentures, financial institutions and
past earning retained in the business. Funds raised from the sources are committed to a number
of uses i.e. fixed assets used in production of goods and services, inventories used to facilitate
production and sales, accounts receivable owned by customers and cash and marketable
securities used for transaction and liquidity purposes.
According to John N.Myer
The term financial statement, as used in modern business, refers to two statements which the
accountant prepares at the end of a period of time for a business enterprise. They are the balance
sheet or a statement of financial position and the income statement, or profit and loss statement.
Financial statement includes:
Income statement
Balance sheet
29

Statement of Retained Earnings

Statement of Changes in Financial position
Analysis of Financial Statements
Financial statements are prepared for the achievement of specific objective. These objectives
include the knowledge about financial position of business, results of business operations, liquid
position, earning capacity of business, future plan for increase in income etc. without analysis
statements, the objectives cannot be fulfilled.
According to John Myer
Financial statement analysis its largely a study of relationships among the various financial
factors in a business, as disclosed by a single set of statements, and a study of the trends of these
factors as shown by a series of statement.
Process of Financial Analysis
Determining objectives of analysis
Rearrangement of facts
Approximation of figures
Comparison
Study of Trends
To Draw Conclusions
Reporting
Forecasting of financial analysis
Comparative financial statements
Common size statements
Trend analysis
Ratio analysis
Fund flow statements
Cash flow statements
Comparative financial statements
30

Under this method the items of financial statements relating to two or more periods are kept side
by side so that they can be compared. By preparing comparative financial statement the nature and
quantum of change in different items can be calculated and it also helps in the future estimates. By
comparing with the data of the previous years it can be ascertained what type of changes in the
different items of current year have taken place and the future trend of business can be estimated.

Common size statement

One of the major drawbacks of comparative financial statements is that these statements do not
present the change in relationship of various items to Total Assets. Comparative statements are not
useful to compare two or more business because there is no common base for comparison.
Common size financial statements are such statements in which items of the financial statements
are converted in percentage on the basis of a common base. In common size income statements
net sales may be considered as 100%. Other items can be converted as its proportion.
Trend analysis
Trend analysis helps in future forecasts of various items on the basis of the data of previous years.
Under this method one year is taken as base year and on its basis the ratios in percentages for
other years are calculated. From the study of these ratios the changes in that item are estimated
and trend is estimated. To find out trend ratios, each item of base year is taken as 100 and
percentage of item of other years can be calculated accordingly.

31

CHAPTER-3
OBJECTIVES AND SCOPE OF THE
STUDY

32

OBJECTIVES OF THE STUDY

The study was conducted at S.S.SAIB CONSTRUCTION PRIVATE LIMITED, keeping in mind
the following objectives. It helps

To analyse the financial statement.

To simplify the accounting data.

To find out the weak spots of the business.

To measure the trends of the business.

To study about the financial soundness.

To study liquidity position of the company by taking various measurements.

To evaluate the financial performance of the company.

To know the efficiency in the management and utilisation of its assets

To assess the long-term viability of the firm.

SCOPE OF THE STUDY
The ability of the firm to meet current obligation.
The extent to which firm has used its long term solvency by borrowing funds.
The efficiency to which firm is utilizing its assets in generating sales revenue; and
The overall operating efficiency and performance of the firm.
33

CHAPTER-4
RESEARCH METHODOLOGY

34

RESEARCH METHODOLOGY
Meaning of Research
Research is common parlance refers to search for knowledge. Once can also define research as a
scientific and systematic search for pertinent information on a specific topic. Infact, research is
an art of scientific investigation.
Types of Research
The basic types of research are as follows:
1. Descriptive Vs. Analytical: Descriptive research includes survey and fact finding
enquires of different kinds. In analytical research, on the other hand, the researcher has to
use facts or information already available, and analysis there to make a critical evaluation
of the material.
2. Applied Vs. Fundamental: Research can either be applied or action research or
fundamental to basic or pure Research. Applied research aims at finding a solution for an
immediate problem facing a society or an business organization where as fundamental
research mainly concerned with Generalizations and with the formulation of the theory.
3. Quantitative Vs. Qualitative: Quantitative research is based on the measurement of
quantity or amount. It is applicable to phenomena that can be expressed in terms of
quantity. Qualitative research, on the other hand, is concerned with qualitative
phenomena, i.e. phenomena.
4. Conceptual Vs. Empirical: Conceptual research is that related to some ideas or theory. It
is generally used by philosophies and thinkers to develop new concept or to reinterpret
existing ones.

35

5. Some other types of researches: All other type of research are variation of one or more
of the above stated approaches, based on either the purpose of research or the time
required to accomplish research, on the environment in which research is done or on the
basis of some other similar factors.

RESEARCH DESIGN
Research design specifies the methods and procedures for conducting a particular research study.
A research design is the arrangement of conditions for collection and analysis of the data in a
manner that aims to combine relevance to the research purpose with economy in procedure.
Research design is broadly classified into three types which are as follows:

Exploratory Research Design

Descriptive Research Design

Causal Research Design

I have chosen the descriptive design.

36

DESCRIPTIVE RESEARCH DESIGN:

Descriptive research studies are those studies which are concerned with described the
characteristics of particular individual.
In descriptive as well as in diagnostic studies, the researcher must be able to define clearly, what
he wants to measure and must find adequate methods for measuring it along with a clear cut
definition of population he want to study. Since the aim is to obtain complete and accurate
information in the said studies, the procedure to be used must be carefully planned. The research
design must make enough provision against bias and must maximize reliability, with due concern
for the economical.
METHOD OF DATA COLLECTION
SOURCES OF DATA:To fulfill the information need of the study. The data is collected from primary as well as
secondary sources.

37

SECONDARY DATA:Secondary data means that are already available i.e. they refer the data which have already been
collected and analysed by someone else when the researcher utilizes secondary data than he has
to look into various sources from where he can obtain them, in this case he is certainly not
confronted with the problems that are usually associated with the collection of original data.

38

Secondary data may either be published data or unpublished data. It was collected from internal
sources.
During my study I used both the sources of data collection i.e. primary and secondary source of
data. As far as secondary data is concerned, it included company profile, company records,
vouchers and various publication, internet etc.
Besides secondary data collection, primary sources like interview and observations are used for
understanding the study.
I used the various types of secondary data in my study:

Organisational file,

Official records,

Newspapers,

Magazines,

Management books,

Preserved information in the companys database,

Website of the company.

ADVANTAGES:

Helps in identifying the research problem.

Helps in generation of new ideas which can be authenticated by primary research.

Helps in gaining better insight into the project.

Helps in understanding the concept better.

Easy to collect.

Less expensive as compare to primary data.

DISADVANTAGES:

May not always answer the specific questions pertaining to your study.

Lack of availability.

Inaccurate, adulterated and outdated data.

39

CHAPTER- 5
INTRODUCTION

INTRODUCTION
40

Ratio analysis is a technique of analyzing the financial statement of industrial concerns.

Now a day this technique is sophisticated and is commonly used in business concerns. Ratio
analysis is not an end but it is only means of better understanding of financial strength and and
weakness of a firm.
Ratio analysis is one of the most powerful tools of financial analysis which helps in
analyzing and interpreting the health of the firm. Ratios are proved as the basic instrument in
the control process and act as back bone in schemes of the business forecast.
With the help of ratio we can determine
The ability of the firm to meet its current obligation.
The limit or extent to which the firm has used its borrowed funds.
The efficiency with which the firm is utilizing in generating sales revenue.
The operating efficiency and performance of the company .
Classification of Ratios
Ratios can be classified into different categories depending upon the basis of
classification.
I. TRADITIONAL CLASSIFICATION
Traditional Classification has been on the basis of financial statements, on which ratio may
be classified as follows.
1. Profit & Loss account ratios.
E.g. Gross Profit Ratio, Net Profit Ratio, Operating Ratio etc
2.Balance sheet ratio.
E.g. Current Ratio, Debt Equity Ratio, Working Capital Ratio etc
3. Composite/Mixed ratio.
E.g. Stock Turnover Ratio, Debtors Turnover Ratios, Fixed Assets
Turnover Ratio etc

41

II. FUNCTIONAL CLASSIFICATION OF RATIOS

Functional ratios
1.

Liquidity ratios
a) Current Ratio
b) Quick Ratio
2.

Leverage Ratios
a) Debt-equity Ratio
b) Current Asset to Proprietors fund Ratio

III. PROBABILITY RATIOS

a. Gross profit Ratio
b. Operating profit Ratio
c. Return on investment
IV. ACTIVITY RATIO
i. Inventory Turnover Ratio
ii. Asset Turnover Ratio:
a. Fixed Asset Turnover Ratio
b. Current Asset Turnover Ratio
iii. Working Capital Turnover Ratio.

42

CHAPTER-6
DATA ANALYSIS AND
INTERPRETATIONS

43

Liquidity Ratios
Current Ratio Trends
This ratio explains the relationship between current assets and current liabilities of a business. The
formula of calculating the ratio is:Current Assets
Current ratio = _________________
Current liabilities
Current Assets include those assets which can be converted into cash within a years time.
Current Assets = Cash in hand + Cash at Bank + Short term investments + Debtors + Stock
+ Prepaid expenses + Bank Receivable.
Current Liabilities include those liabilities which are repayable in a years time.
Current Liabilities = Bank overdraft + Bank Payable + Creditors + Provision for taxation +
Proposed dividend + Loans Payable within a year.
This ratio indicates the availability of Current Assets in rupees for every one rupee of current
liability.

YEAR

C.A. / C.L.

CURRENT RATIO

2009-2010 (in crores)

110/31.74

3.47:1

2010-2011 (in crores)

135.56/29.31

4.79:1

Table 4.1 : Current Ratio

44

6
5
4
Current Ratio 3
CURRENT RATIO

2
1
0
Year

45

Fig. 4.1 : Current Ratio

Significance:
As a conventional rule, a ratio of 2:1 or more is considered satisfactory. It means that current
assets should, at least, be twice of its current liabilities. The higher ratio, the better it is, because
the firm will be able to pay its current liabilities more easily.
Comments:
Although the high ratio says that we can easily meet up over current liabilities but too high ratio is
also not beneficial for the company as it shows that because of poor investment policies of the
management and poor control of inventory assets are lying idle and they should be further
invested.

Quick ratio Trends

Quick ratio indicates whether the firm is in a position to pay its current liabilities within a month
or immediately.
Liquid assets
Quick Ratio = _____________________
Current liabilities
Liquid assets = Current assets Stock Prepaid expenses
Liquid assets mean those assets which will cash very shortly. All current assets accept stock and
prepaid expenses are included in liquid assets. Stock is excluded from liquid assets because it has
46

to be sold before it converted into cash. Prepaid expenses are also excluded from it because they
are not expected to be converted into cash.

YEAR

L.A. / C.L.

QUICK RATIO

2009-2010 (in crores)

79.71/31.74

2.51:1

2010-2011 (in crores)

97.85/28.31

3.46:1

Table 4.2 : Quick Ratio

47

4
3.5
3
2.5
Quick Ratio

2
1.5

QUICK RATIO

1
0.5
0
Year

Fig. 4.2 : Quick Ratio

Significance:
48

Generally, the quick ratio of 1:1 is considered to be satisfactory. Quick ratio thus more rigorous
test of liquidity than the current ratio ands, when used together with current ratio, it gives a better
picture of short term financial positions of the firm.
Comments:
Since quick ratio is increasing over the years, it gives a better picture of firms short term financial
position so firm is in a position to pay its current liabilities immediately or within a month.

Cash Ratio Trends

Since cash is the most liquid asset, a financial analyst may examine cash ratio and its equivalent
current liabilities. Trade Investments and marketable securities equivalent to cash; so they may be
included in cash ratio.
Cash ratio generally helps in finding out whether the cash is being proper utilized in the business
not and to check that whether or not cash is lying ideal in the firm It shows that debtors are not
making prompt payments and company is not able to make better utilization of cash.
Cash + Marketable securities
Cash Ratio = ____________________________
Current Liabilities

YEAR

C+M/S / C.L.

CASH RATIO

2009-2010 (in crores)

15.35/31.74
49

0.48:1

2010-2011 (in crores)

13.31/28.31

0.47:1

Table 4.3 : Cash Ratio

0.48
0.48
0.48
0.48
Cash Ratio

0.47
0.47

CASH RATIO

0.47
0.47
0.47
0.46
Year

50

Fig. 4.3 : Cash Ratio

Significance:
Cash ratio generally helps in finding out whether the cash is being proper utilised in the business
or not and to check that whether or not cash is lying ideal in the firm, if yes then to make proper
utilization of cash.
Comments:
As we can see that circulation of cash has decreased over the past years. It shows that debtors are
not making prompt payments and company is not able to make better utilization of cash.

Leverage ratios
Debt-Equity Ratio Trends
Several debt ratios may be used to analyse the long term solvency of the firm. The firm may be
interested in knowing the portion of the interest-bearing debt (also called funding debt) is the
capital structure. It indicates the proportion of funds which are acquired by long term borrowing
in comparison to shareholders funds.
Debt

Long term Loans

51

Debt Equity Ratio = ___________

OR

Equity

_________________
Shareholders Funds

Long Term Loans = Debentures + Mortgage Loans + Bank Loan + Loan from Financial
Institutions + Public Deposits.
Shareholders Funds = Equity Share Capital + Preference Share Capital + Share Premium +
General Reserves + Capital Reserves + Credit Balance of Profit and Loss Accounts
Accumulated Losses and Fictitious Assets.

YEAR

D/E

DEBT-EQUITY
RATIO

2009-2010 (in crores)

16.04/154.82

0.10:1

2010-2011 (in crores)

72/129.35

0.55:1

Table 4.4 : Debt Equity Ratio

52

0.6

0.5

0.4

Debt-Equity Ratio 0.3

DEBT-EQUITY RATIO

0.2

0.1

0
Year

53

Fig. 4.4 : Debt Equity Ratio

Significance:
The normally accepted debt equity ratio is 2:1, if the ratio is higher than 2:1, it means that long
term borrowing is more than twice in comparison to funds to provide by owners and it will
indicate a risky financial position.
Comments:
As we can see that the debt ratio of firm is decreasing over the years rather it borrowed some
funds in 2006-2007 but previous data is very sound, so it indicates that firm has a better financial
position to pay its long term debts and the ratio of previous year is less than the required
standards, which is satisfactory but it should control this increase in the last year so that the firm
can make use of market fund and increase activity.
Debt to Total Funds Ratio Trends
This ratio expresses the relationship between long term debt and shareholders fund. It indicates
the proportion of funds which are acquired by long term borrowing in comparison to shareholders
funds. This ratio is calculated to assess the ability of the firm to meet its long term liabilities.
Debt
Debt to Total Funds Ratio = _________________
Debt + Equity
Long Term Loans (Debt) = Debentures + Mortgage Loans + Bank Loan + Loan from Financial
Institutions + Public Deposits.

54

Shareholders Funds (Equity) = Equity Share Capital + Preference Share Capital + Security
Premium + General Reserves + Capital Reserves + Credit Balance of Profit and Loss Accounts Accumulated Losses and Fictitious Assets.

YEAR

D / D+E

2009-2010 (in crores)

16.04/170.86

2010-2011 (in crores)

72/201.35

Fig. 4.5 : Debt- Total Ratio

55

DEBT-TOTAL
RATIO

9%

35%

40%
35%
30%
25%
Debt-Total Ratio 20%
DEBT-TOTAL RATIO

15%
10%
5%
0%

Year

Fig. 4.5 : Debt-Total Ratio

56

Significance:
Debt to total funds ratios of 0.67:1 (or 67%) is considered satisfactory. A higher ratio than this is
generally considered as the indicator of risk. Because it means that the firm depends too much on
outsides loans for the existence. Any withdrawal of funds by the lenders will put the company in
difficulties.
Comments:As we see that firm is able to make prompt payments since the debt-equity ratio shows a gradual
decrease and lastly firm has paid its debt in the current year. As it has a sound position and the
ratio was much lower compared to required standards which indicates a good payment system.
Now the company is free from any market liability.

Proprietary Ratio Trends

This ratio indicates the proportion of total funds provided by owners or shareholders.
Equity
Proprietary Ratio

________________
Debt + Equity
OR
Shareholders Funds

______________________________________
Shareholders Fund + Long-Term Loans

57

YEAR

E / D+E

PROPRIETARY RATIO

2009-2010 (in crores)

177.61/193.65

9%

2010-2011 (in crores)

194.07/266.07

35%

Table 4.6 : Proprietary Ratio

58

40%
35%
30%
25%
Proprietary Ratio 20%
PROPRIETARY RATIO

15%
10%

5%
0%
Year

Fig. 4.6 : Proprietary Ratio

59

Significance:
The ratio should be 33% or more than that. A higher proprietary ratio is generally treated as an
indicator of sound financial position from long term point of view. Because it means that firm is
less dependent on external sources of finance. On the other hand lower the ratio, the less secured
are the long term loans and face the risk of losing their money.
Comments:
Higher proprietary ratio is treated as the indicator of sound financial position from the long-term
point of view because it is less depended on external sources of finance. The companys
proprietary ratio is ranging between 92% to 100% which is quite good. As clearly depicted by the
calculations
Interest Coverage Ratio Trends
This ratio is also termed as debt service Ratio or Fixed Charge Coverage Ratio. This ratio is
calculated by dividing the net profit before charging interest and Income Tax by Fixed Interest
charges.
Net Profit before interest and taxes
Interest Coverage Ratio = __________________________________
Fixed Interest Charges
Net profit before interest and taxes is to be taken for the calculation of this ratio because this is the
amount of profit out of which interest and taxes are to be paid out. Fixed interest charges include
interest on fixed (long term) loans or debentures.

60

YEAR

NP/FIC

INTEREST COVERAGE RATIO

2009-2010 (in crores)

31.10/0.62

50.16 times

2010-2011 (in crores)

30.62/0.98

31.24 times

Table 4.7 : Interest Coverage Ratio

60
50
40
Interest Coverage Ratio 30
INTEREST COVERAGE RATIO

20
10
0
Year

61

Fig. 4.7 : Interest Coverage Ratio

Significance:
This ratio indicates how many times the interests charges are covered by the profits available to
pay interest charges. A long term lender is interested in findings out whether the business will earn
sufficient interest to pay the interest charges regularly. The higher the ratio, more secure the lender
is in respect of payment of interest regularly. An interest coverage ratio of 6 to 7 times is
considered appropriate.
Comments:
Normally acceptable interest coverage ratio is 6 to 7 times, when as the actual of the company is
31.24 times in current year, it means that profits of the company are 31 times in comparison to
fixed interest charges. So the firm is able to pay the interest on long term loans regularly.

Activity Ratio

62

 Inventory Turnover Ratio Trends

Inventory turnover indicates the efficiency of the firm on producing and selling its products. It is
calculated by dividing the cost of goods sold by the average inventory.
Cost of Goods Sold
Inventory Turnover Ratio = _______________________
Average inventory
Cost of goods Sold = Opening Stock + Purchases + Direct Charges Closing Stock.
OR
Cost of goods Sold = Net Sales Gross Profit.

YEAR

COGS/Av. Inventory

INVENTORY RATIO

2009-2010 (in crores)

178.95/24.73

6.22 times

2010-2011 (in crores)

211.93/34.08

6.21 times

Table 4.8 : Inventory Ratio

63

6.22
6.22
6.22
6.22
Inventory Ratio

6.21
6.21
INVENTORY RATIO
6.21
6.21
6.21
6.2
Year

Fig. 4.8 : Inventory Ratio

64

Significance:
This ratio indicates whether or not the stock has been efficiently utilized. It shows the speed with
which the stock is rotated into sales. The higher the ratio, the better it is, since it indicates that the
stock is selling quickly. In business where stock turnover is high goods can be sold at low margin
of profit and even then the profitability can be high.
Comments:
Inventory turnover ratio of the company is quite good earlier it means that there is proper outflow
of the stock and goods do not remain in the godown for a long time. As we can see that the
inventory turnover is decreasing which shows that there is overspending in stock which is left
unused.

Debtors Turnover Ratio Trends

This ratio indicates the relationship between the credit sales and average debtors or debtor of the
current year.
Net Current
Debtor Turnover Ratio = _______________________________
Average Debtors + Average B/R

65

Bills receivable are added in debtors for the purpose of calculation of this ratio. While calculating
this ratio, provision for bad debt and doubtful debt is not deducted from total debtors, so that it
may not give a false impression that debtors are collected quickly.
Net Credit Sales = Total Sales Cash Sales.
Average Debtors = (Opening Debtors + Closing Debtors)/2
Average Bills Receivables = (Opening B/R + Closing B/R)/2

YEAR

SALES / D+B/R

DEBTORS RATIO

2009-2010 (in crores)

89.79/37.57

2.38 times

2010-2011 (in crores)

123.51/45.25

2.72 times

Table 4.9 : Debtors Ratio

66

2.8
2.7
2.6
Debtors Ratio 2.5
DEBTORS RATIO

2.4
2.3
2.2
Year

Fig. 4.9 : Debtors Ratio

Significance:

67

This ratio indicates the speed with which the amount is collected from debtors. The higher the
ratio, the better it is, since it indicates that amount from debtors is being collected more quickly.
The less the risk from bad debt, and so the lower the expenses of collection and increase in the
liquidity of the firm.
Comments:
Debtor turnover ratio of the company is 2.72 which is quite good it means there is efficient credits
sales policy of the management. So there is less risk of bad debts but there is increase in the ratio
from the last year.

Average Collection Period Trends

This ratio indicates the time within which the amount is collected from debtor and bills receivable.
Average Debtors
Average Collection Period = ___________________ * 100
Credit Sales
OR
365
= _________________
Debtors Turnover

YEAR

365/SALES

AVERAGE PERIOD

68

2009-2010 (in crores)

365/2.38

153 days

2010-2011 (in crores)

365/2.72

134 days

Table 4.10 : Average Ratio

155
150
145
140
Average Period
AVERAGE PERIOD
135

130
125
120
Year

69

Fig. 4.10 : Average Ratio

Comments:
Although the average collection period of the firm decreased. The current year is good according
to the functioning of the firm because it has been noticed that the inventory turnover (10.91 times)
and the debtor turnover (2.93 times), which fully satisfies the activities of the firm. This ratio is an
indication of efficient working of the management.
Fixed Assets Turnover Ratio Trends
Assets are used to generate sales. Therefore, a firm should manage its assets efficiently to
maximize sales. The relationship between sales and assets is called assets turnover ratio. Assets
turnover ratios can be calculated.
Cost of Goods Sold
70

Fixed Assets Turnover Ratio = _________________________

Net Fixed Assets
Net Fixed Assets = Fixed Assets Depreciation + Capital Work-in-Progress

YEAR

COGS/F.A.

FIXED ASSETS RATIO

2009-2010 (in crores)

178.95/120.86

1.48 times

2010-2011 (in crores)

211.93/168.45

1.27 times

Table 4.11 : Fixed Assets Ratio

71

1.5
1.45
1.4
1.35
Fixed Assets Ratio
FIXED1.3
ASSETS RATIO

1.25
1.2
1.15
Year

72

Fig. 4.11 : Fixed Assets Ratio

Significance:
This ratio is of particular importance in manufacturing concerns where the investment in fixed
assets is quite high. This ratio reveals how effectively the fixed assets are being utilized, compared
with previous year.

Profitability Ratios
Gross Profit Ratio Trends
This ratio shows the relationship between Gross Profit and Sales.
Gross Profit
Gross Profit Ratio = ________________________ * 100
Net Sales
Net Sales = Sales Sales Return

YEAR

G.P. / NS

GROSS PROFIT RATIO

73

2009-2010 (in crores)

27.58/59.79

31%

2010-2011 (in crores)

25.67123.51

21%

Table 4.12 : Gross Profit Ratio

74

35%
30%
25%
20%
Gross Profit Ratio
GROSS
15%PROFIT RATIO

10%
5%
0%
Year

75

Fig. 4.12 : Gross Profit Ratio

Significance:
This ratio measures the margin of profit available on sales. No ideal standard is fixed for this ratio,
but it should be adequate enough to meet not only operating expenses but also to provide for
depreciation, interest on loans, dividends and creation of reserve.
Comments:
As the figure clearly states that the revenue generated from sales is increasing but the profit is
going down by few digits because of increase in manufacturing activities. But still the ratio of the
current year is quite significant but still the company need to find the reason for this continuous
decrease in this ratio which might be problematic in new future.

Net Profit Ratio Trends

This ratio shows the relationship between the net profit and the sales. Net profit is used to measure
the overall profitability of business.Net profit margin is considered as an indicator of the success
of the management to operate the business successfully.
Net Profit
Net Profit Ratio = ______________ * 100
Net Sale

YEAR

N.P. / N.S.

NET PROFIT RATIO

2009-2010 (in crores)

10.35/89.79

12%

76

2010-2011 (in crores)

15.43/123.51

12%

Table 4.13 : Net Profit Ratio

77

14%

12%

10%

8%
Net Profit Ratio
NET PROFIT RATIO

6%

4%

2%

0%
Year

78

Fig. 4.13 : Net Profit Ratio

Significance:
Net Profit ratio is used to measure the overall profitability of business. Net profit margin is
considered as an indicator of the success of the management to operate the business successfully.
It is possible the gross profit ratio may be increasing but net profit ratio may not be increasing or
even show a decreasing trend.

Operating Profit Ratio Trends

This ratio establishes the relationship between all the operating expenses and sales.

Operating Profit
Operating Profit Ratio = ________________________ * 100
Net Sales
Operating Profit = Gross Profit Operating expenses (efficient and administrative expenses
selling and distribution expenses, discount, interest on short-term debts
etc.)
79

YEAR

O.P. / N.S.

OPERATING PROFIT RATIO

2009-2010 (in crores)

20.21/89.79

23%

2010-2011 (in crores)

22.72/123.51

22%

Table 4.14 : Operating Profit Ratio

80

23%
23%
23%
23%
Operating Profit Ratio

22%

22%
OPERATING
PROFIT RATIO
22%
22%
22%
21%
Year

Fig. 4.14 : Operating Profit Ratio

81

Significance:
This ratio measure the rate of net profit earned on sales. It helps in determining the overall
efficiency of the business operations. As increase in the ratio over the previous shows
improvement in the overall efficiency and profitability of the business.
Comments:
The net profit ratio also shows a decrease the operating expenses have increased in comparison to
net year. So they should keep a watch on their operating activities and try to reduce the
expenditure incurred on them.
To the figure clearly states that the revenue generated from sales is increasing but the profit is
going down by few digits because of increase in operational activities. But still the ratio of the
current year is quite significant but this continuous decrease in the ratio might be problematic.
Current year is quite significant but this continuous decrease in the ratio might be problematic.
Quantity is decreasing but rate increased that is why there is profit otherwise there would have
been loss.
Return On Investment (ROI) Trends
This ratio reflects the overall profitability of the business. It is calculated by comparing the profit
earned and the capital employed to earn it.

Profit before tax, interest and dividends

Return on investment = ________________________________________ * 100
Net worth

YEAR

PROFIT / NET WORTH

82

RETURN OF INVESTMENT

2009-2010 (in crores)

20.21/52.85

38%

2010-2011 (in crores)

27.72/57.64

48%

Table 4.15 : Return of Investment

83

60%

50%

40%

Return of Investment 30%

RETURN OF INVESTMENT

20%

10%

0%
Year

84

Fig. 4.15 : Return of Investment

Significance:
This ratio helps in taking decisions regarding capital investment in the new projects. The new
projects will be commenced only if the rate of return on capital employed / net worth in such
projects is expected to be more than the rate of borrowings.

Return on Equity (ROE) Trends

Equity shareholders of a company are more interested in knowing the earning capacity of the
fields in the business. As such, this ratio measures the profitability of the funds belonging to the
equity shareholders. Since the profits available to equity shareholders will be the profit left after
payment of interest, taxes and dividend on preference share capital.
Net profit after interest, tax and
Preference dividend
Return on Equity Shareholders Funds = ___________________________________ * 100
Equity Shareholders Funds

85

Equity Shareholders Funds = Equity Share Capital + All Reserves + Credit Balance of P&L
A/c Fictitious assets Debit Balance of P&L A/c.

YEAR

PROFIT / EQUITY

RETURN OF EQUITY

2009-2010 (in crores)

10.35/4.14

3%

2010-2011 (in crores)

15.43/4.14

4%

Table 4.16 : Return of Equity

86

5%
4%
4%
3%
3%
Return f Equity
2%
RETURN OF EQUITY
2%
1%
1%
0%
Year

87

Fig. 4.16 : Return of Equity

Significance:
This ratio measures how efficiently the equity shareholders funds are being used in the business.
It is true measures of the efficiency of the management since it shows what the earning capacity of
the equity shareholders funds. The higher the ratio, the better it is, because in such a case equity
shareholders may be given a higher dividend. But the graph is fluctuating; this shows that the
shareholders are not getting constant return on their investment.
We can compare the earning capacity of firm with the other firms with the help of this ratio.
Similarly, by comparing the previous years ratio with that of the current year of our business we
can ascertain whether the return on equity shareholders funds is increasing or not. Their ratio may
also be used for declaration of dividend and creation of reserve for future growth.

CHAPTER- 7
FINDINGS
88

89

FINDINGS
After collection and analyzing the data, the researcher has to accomplish the task of drawing
interferences. Its only through interpretation that researcher can expose relations and processes
that underlie his findings. Thus interpretations a device through which the factor that seems to
explain what has been observed by researcher in the course of the study can be understood better.
So for the simplification I have divided my findings in four parts.
Liquidity Ratio
Current ratio increases over the year which shows good sign on the part of management
functions as we notice that it is below the required standard. But idleness of assets has to be taken
care of. They should be utilized in some beneficial investment.
Quick Ratio also increases which shows that company is carrying enough amount of liquid
assets.
Cash ratio has also gone down which means debtors are not making prompt payments.
Leverage Ratio
Debt ratio of the firm is decreasing which indicates that the firm is able to pay its debts in time.
Debt to total funds ratio is also decreasing and firm is finally paid all of its debt in the current
years which tell that firm is free from all outside liabilities.
Proprietary ratio of the firm is also much higher than 33% which is the indicator of sound
financial position as firm is less dependent on external sources of finance.

90

Turnover Ratios
Fixed assets ratio revels how efficiently the fixed assets are being utilized in the business
indicated by an increase this shows proper utilization of assets.
Inventory turnover ratio is quite high which indicates that stock is regulated into business at
regular intervals and one can also measure the sales policies of the firm.
Debtor turnover ratio also shows an increase which indicates that the amount is regularly
collected by the debtor so there is less risk of bad debts and collection period also satisfies.
Profitability Ratios
Gross profit ratio compared with the previous years shows a gradual decrease which sounds
problematic for the company.
Net profit ratio decrease with the high volumes compared in the previous year. Thus is due to
depreciation and increase in manufacturing and operating expenses.
Operating profit ratio also shows a decrease in comparison to past years.

91

CHAPTER-8
CONCLUSIONS

92

CONCLUSIONS
In todays environment it becomes very important for organizations to retain their, becomes very
important for organizations to retain their employees. The top organizations are on the top
because they value their employees and they know how to keep them glued to the organization.
Employees stay and leave organizations for some reasons. The reason may be personal or
professional. These reasons should be understood by the employer and should be taken care of.
The organizations are becoming aware of these reasons and adopting many strategies for
employee retention. The project under study in the S.S.SAIB CONSTRUCTION PRIVATE
LIMITED FARIDABAD is having a large number of employees, but with the large number of
employees the organization is having moderately good communication, recruitment, and
performance appraisal system.
From the above study of employee retention system in S.S.Saib Construction Company I observe
that employee retaining techniques adopted by organization is moderately good. In S.S.Saib
Construction Company there are sufficient activities done to improve employee retention and
retain employees for longer time. But as in this competitive there are some limitations in the
organizations which the organization has to overrule to make their organizations better than
others like1. Lack of open communication.
2. Proper feedback is not given to employees which may demotivate the employees.
3. Lack of appropriate development opportunities given to employees.
4. Lack of transparent work culture

93

CHAPTER-9
LIMITATIONS

94

LIMITATIONS OF THE STUDY

Though the present study aimed to achieve the above-mentioned objectives in full earnest
and accuracy, it was hampered due to certain limitations. Some of the limitations of this study
may be summarized as follows:

Getting accurate data from the company is very difficult.

Since I did not have the privilege to work on a large scale, so many findings and
recommendation may not be as much in tune with their ground realities as may be
considered desirable.

Last but not the least, the time constraint faced is the project might have affected the
comprehensiveness of its findings.

95

CHAPTER-10
RECOMMENDATIONS AND
SUGGESTIONS

96

RECOMMENDATIONS

The liquidity ratio shows that the liquidators position of the company is quite
satisfactory. All the ratios such as the current ratio, quick ratio and cash ratio show a
significant increase in comparison with past years. The company has to make full utilization
of its assets.

Leverage position of the company is good as we can see that the ratio continuously
decreases and lastly the firm is able to pay all its debt in current year. So the firm should try
to maintain it and should invest its money in some profitable activities.

Gross profit ratio of the company is declining, this could be due to:
Increase in the prices of raw material.
Increase in the manufacturing expenses.
There is full in the prices of unsold goods, there by reducing the value of unsold
goods.

Focused attention should be paid by including a special drive to expatiate recoveries from
sundry debtors.

The net profit ratio of the firm also decreases. It shows the inefficiency and unpredictability
of the business. This decline is because in expenses borne by operating activities.

The operating profit ratio is less than previous year.

97

Suggestion
1. The company may improve its current ratio by decreasing the current liabilities because
in the year 2008-09 current assets are decreased and it may also improve its quick ratio.
2. The company may decrease its total debt as there is increase in total debt the year 200809. The company may increase its investment in current assets.
3. Long terms solvency of the company has to be improved by limiting amount invested by
outsiders to the amount invested by the owner of the company . this can be achieved by
purchasing the shares gradually.
4. The proper management of the inventory can improve liquidity position and efficiency of
the company.

98

CHAPTER-11
BIBLIOGRAPHY AND
QUESTIONNAIRE

99

BIBLIOGRAPHY
Books:a) Gupta, Shashi K.&R.K. Sharma, Financial management, Kalyani publisher
(5 th edition)
b) Goel, D.K., Analysis of Financial Statements, Arya publications,
(5 th edition)
c) Kothari, C.R., Research Methodology, Sultan Chand publications,
(3 rd edition)
d) Pandey, LM, Financial Management, Vikas publications
(2 nd edition)
World Wide Web:

www.ssscpl.in

www.india-today.com

www.ssconstruction.net

www.ssconstruction.au

www.ssconstruction.com

100

Balance Sheet
Principal Groups

Working Capital
(Current Assets-Current
Liabilities)
Cash-in-hand
Bank Accounts

1-Apr-2011 to
31-Mar-2012

Principal Ratios

1,81,38,665.53 Dr

80,167.50 Dr

Quick Ratio

1.15 : 1

(Current Assets-Stock-in-hand : Current

Liabilities)
Debt/Equity Ratio

0.54 : 1

(Loans (Liability) : Capital Account + Nett

Profit)
Gross Profit %

9.85 %

3,31,31,488.20 Cr

Nett Profit %

4.00 %

7,97,64,430.24 Cr

Operating Cost %

21,51,174.75 Dr
1,02,96,889.34 Cr

Sundry Debtors

2,87,86,865.82 Dr

(due till today)

(due till today)

10,78,69,339.08 Dr

Sales Accounts

16,55,09,012.32 Cr

Purchase Accounts

12,07,67,155.84 Dr

Stock-in-hand
Nett Profit
Wkg. Capital Turnover
(Sales Accounts / Working
Capital)
Inventory Turnover

1.50 : 1

(Current Assets : Current Liabilities)

Bank OD A/c

Sundry Creditors

Current Ratio

1-Apr-2011
to 31-Mar2012

1,26,89,560.00 Dr
66,16,325.77 Cr
9.12

(as percentage of Sales Accounts)

Recv. Turnover in days

56.66 days

(payment performance of Debtors)

Return on Investment %

34.91 %

(Nett Profit / Capital Account + Nett Profit

)
Return on Wkg. Capital %

13.04

96.00 %

(Nett Profit / Working Capital) %

(Sales Accounts / Closing

Stock)

101

36.48 %

Data consolidated for financial analysis:

Particulars

2010

2009

Inventory (A)

37.73

30.44

Debtors (B)

73.24

51.59

Cash & Bank Balance (C)

13.31

15.35

Loans and advances (D)

11.29

12.61

Total Current Assets

135.56

110

Liquid assets

97.85

79.71

Fixed Assets

167.45

120.86

Current Liabilities

28.31

31.74

Share Capital (E)

9.19

9.19

Reserve & Surplus (F)

184.88

168.42

Shareholders Funds

194.07

177.61

Long-term Debt

72

16.04

Net Worth

194.07

177.61

(A + B + C + D)

& Provisions

(E + F)

102

Financial data of the company under study

Years

2010

2009

Sales

237.60

206.53

Other Income

6.59

5.05

Operating Profit

26.88

28.73

Profit before Tax

30.62

31.10

Tax

12.09

8.28

Profit after Tax

18.53

22.80

Gross Profit

25.67

27.58

Cash Sales

114.09

116.74

103