1.

1 INTRODUCTION
Financial management has vital and an integrated part of business management.
Financial management is concerned with the planning and controlling of the firms financial
resource. It is often said that the financial management has received less emphasis as
compared to topics like production and marketing. However, the task of financial planning
and controlling will assume relative more important role than in the past due to certain
changes that have taken place or will take place in economy. Factors such as increasing pace
of industrialization, technological innovations land inventions, raising price levels, increasing
influence of government in financial matters etc...
DEFINATION OF FINANCIAL MANAGEMENT:
Financial management is that managerial activity which is concerned with the planning
and controlling of the firms financial resources.
OBJECTIVES OF FINANCIAL MANAGEMENT:
The financial objective of a company is to maximize owners economic welfare. However,
there is disagreement as to how the economic welfare of owners can be maximized. They are
mainly two points discussed.

1. Profit maximization

2. Wealth maximization

OBJECTIVES OF PROFIT MAXIMIZATION:

1. An individual or firm performing any economic activity rationally aims at utility

maximization. Utility can be measure in terms of profit.
2. Profit maximization assumes perfect competition.
3. Enhancement of personal power and individual wealth.
4. The modern business environment is characterized by limited liability and a
divorce between management and ownership.
5. Profit maximization is regarded as unrealistic, difficult, inappropriate and immoral.
6. A market economy, characterized by a high degree of competition, would certainly
ensure efficient production of goods and services desired by society.

1
 Profit maximization suffers from the following limitations
1. It is vague
2. It ignores the timing of returns
3. It ignores risk.

WEALTH MAXIMIZATION:
Wealth maximization means maximizing the net present value of a course of action to
shareholders. Wealth of a course of action is the difference between that present value of its
benefits and the present value of its costs.
1. Questions of the timing and risk of the expected benefits.
2. Wealth maximization objective is an appropriate and operationally feasible criterion to
choose among the alternative financial actions.
3. Maximize in making investment and financing decisions on behalf of shareholders.

1.2 RATIO ANALYSIS

Financial Analysis is the process of identifying the financial strengths and
weaknesses of the firm by the properly establishing relationship between the items of the
Balance Sheet and the Profit and Loss Account. Financial Statement Analysis is managerial
interpretation of financial statements for parties demanding financial information.
Ratio Analysis is a widely used tool financial analysis. The term ratio in it refers
to the relationship expressed in mathematical terms between two individual figures or group
of figures connected with each other in some logical manner and are selected from Financial
Statements of the concern. A financial Ratio helps to express the relationship between two
accounting figures in such a way that users can draw conclusions about the performance,
strength and weaknesses of a firm. A ratio reflecting a quantitative relationship helps to from
a qualitative judgment.
A single ratio does not convey much meaning and has to be compared with some standard.
Standard of comparison may consist of:

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 1. Past Ratios
2. Projected Ratio
3. Competitors Ratios
4. Industry ratios

Time Series Analysis:

When financial ratios over a period are compared, it is known as the time series analysis. The
performance of a firm is evaluated by comparing its present ratios with past ratios.

Cross-Sectional Analysis:
Comparing the ratios of one firm with some selected firms in the same industry at the same
pint in time is known as the cross-sectional analysis.
Pro Forma Analysis:
The comparison of current (or) past ratios with future ratios is projected analysis or pro forma
analysis. It shows the firms relative strengths and weaknesses in the past and future. Future
ratios can be developed from the projected or pro forma, financial statements.
Utility of Ratio Analysis:
The Ratio analysis is the most powerful tool of financial analysis with the help of ratios
one can determine:
The ability of the firm to meet its current obligations;
The extent to which the firm has used its long-term solvency by borrowing funds;
The efficiency with which of the firm is utilizing its assets in generating sales
revenue.
The overall operating efficiency and performance of the firm.

Performance Analysis:
A short-term creditor will be interested in the current financial position of the firm,
while a long-term creditor will pay more attention to the solvency of the firm. He will also be
interested in the profitability of the firm. The equity shareholders are generally concerned
with their return and also about the financial conditions only when their earnings are depress.
Credit Analysis:
In credit analysis, the analyst will usually select a few important ratios. He may
use the current ratio or quick-ratio to judge the firms 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 ratios.
Security Analysis:
The ratio analysis is also useful in security analysis. The major focus in
Security Analysis is on the long-term profitability. The detailed analysis of The earning
power is important for security analysis.
Comparative Analysis:

3
The ratio of a firm by themselves does not reveal anything. For meaningful Interpretation, the
ratios of a firm should be compared with the ratios of similar firms and industry. This
comparison will reveal whether the firm is significantly out of line with its competitors. If it
is significantly out of line, the firm should undertake a detailed analysis to spot out the
trouble areas.
Trend Analysis:
Trend analysis of the ratios adds considerable significance to the financial analysis
because it studies ratios of several years and isolates the exceptional instances occurring In
one or two periods. Although the trend analysis of the companys ratios itself is Informative,
but it is more informative to compare the trends in the companys ratios with the trends in
industry ratios.

Management has to protect the interest of all the conditional parties, creditors, Owners
and others. They have to ensure some minimum operating efficiency and keep the risk of the
firm at a minimum level. Their survival depends upon their operating Performance.
RATIO ANALYSIS
The term Ratio refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as
Percentages
Fractions
Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the financial
statements. So that the strengths and weaknesses of a firm, as well as its historical
performance and current financial condition can be determined. Ratio reflects a quantitative
relationship helps to form a quantitative judgment.
STEPS IN RATIO ANALYSIS
The first task of the financial analysis is to select the information relevant to the
decision under consideration from the statements and calculates appropriate ratios.
To compare the calculated ratios with the ratios of the same firm relating to the
pas6t or with the industry ratios. It facilitates in assessing success or failure of the
firm.
Third step is to interpretation, drawing of inferences and report writing conclusions
are drawn after comparison in the shape of report or recommended courses of
action

BASIS OR STANDARDS OF COMPARISON

Ratios are relative figures reflecting the relation between variables. They enable analyst to
draw conclusions regarding financial operations. They use of ratios as a tool of financial
analysis involves the comparison with related facts. This is the basis of ratio analysis. The
basis of ratio analysis is of four types.
Past ratios, calculated from past financial statements of the firm.
Competitors ratio, of the some most progressive and successful competitor firm at
the same point of time.
Industry ratio, the industry ratios to which the firm belongs to
Projected ratios, ratios of the future developed from the projected or pro forma
financial statements.

4
NATURE OF RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions.
It is only a means of understanding of financial strengths and weaknesses of a firm. There are
a number of ratios which can be calculated from the information given in the financial
statements, but the analyst has to select the appropriate data and calculate only a few
appropriate ratios. The following are the four steps involved in the ratio analysis.
Selection of relevant data from the financial statements depending upon the
objective of the analysis.
Calculation of appropriate ratios from the above data.
Comparison of the calculated ratios with the ratios of the same firm in the past, or
the ratios developed from projected financial statements or the ratios of some other
firms or the comparison with ratios of the industry to which the firm belongs.

INTERPRETATION OF THE RATIOS

The interpretation of ratios is an important factor. The inherent limitations of ratio analysis
should be kept in mind while interpreting them. The impact of factors such as price level
changes, change in accounting policies, window dressing etc., should also be kept in mind
when attempting to interpret ratios. The interpretation of ratios can be made in the following
ways.
Single absolute ratio
Group of ratios
Historical comparison
Projected ratios
Inter-firm comparison
GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS
The calculation of ratios may not be a difficult task but their use is not easy. Following
guidelines or factors may be kept in mind while interpreting various ratios are
Accuracy of financial statements
Objective or purpose of analysis
Selection of ratios
Use of standards
Caliber of the analysis

OBJECTIVES (OR) PURPOSE OF RATIO ANALYSIS:

The nature of analysis will differ depending on the purpose of the analyst. It can
be undertaken by management of the firm, or by parties outside the firm namely owners,
creditors, investors and others
Trade Creditors:
They are interested in firms ability to meet their claims over a very short period of
time. Hence their analysis is confined to evaluation of the firms liquidity position.
Suppliers of long-term debt:

5
 They are concerned with firms long-term solvency and survival. They analyze the
firms profitability over time, its ability to generate cash to be able to pay interest and repay
principal and the relationship between various sources of funds.
Investors:
They are most concerned about the firms earnings. They are also interested in every
aspect of the firms financial structure to the extent it influences the firms earnings ability
and risk.
Management:
They would be interested in every aspect of Financial Analysis. It is their overall
Responsibility to see that the resources of the firm are used most effectively and efficiently,
and that the firms financial condition is sound.

USERS OF RATIO ANALYSIS:

a) Financial analysis is the process of identifying the financial strength and weakness of firm by properly
establishing relationship between the items of balance sheet and the profit and loss account.
b) Trade creditors are interested in firms ability to meet their claims over a very short period of time.
Their analysis will therefore, confine to the evaluation of the firms liquidity position.
c) Suppliers of long-term debt are concerned with firms long-term solvency and survival. They analysis
the firms profitability overtime. Its ability to generate cash to be able to pay interest and repay
principal and relationship between various sources of funds.
d) Investors, who have interested their money in the firms. Shares are almost concerned about the firm
earnings. They restore more confidence in thos3e firms that shows steady growth in earnings.
e) As such, they concentrate on the analysis of the firms financial structure to the extent it influence the
firms earnings ability and risk.
f) Management of the firm would be interested in every aspect of the financial analysis. It is their overall
responsibilities to see that the resources of the firm are used most effectively and efficiently, and that
the firms financial condition is sound.

MANAGERIAL USES OF RATIO ANALYSIS:

1. Help in decision making:
Financial statements are prepared preliminarily for decision making. But the
information provided in financial statements is not an end in itself and no meaningful
conclusion can be drawn from these statements alone. Ratio analysis helps in decision
making decisions from the information provided in these financial statements.
1. Helps in financial forecasting and planning:
Ratio analysis is of much help in financial forecasting and planning. Planning is looking
ahead and the ratios calculated for a number of years work as a guide for future.
Meaningful conclusions can be drawn for future from these ratios. Thus ratio analysis
helps in forecasting and planning.

6
2. Helps in communication:
The financial strength and weakness of a firm are communicated in a more easy and
understandable manner by the use of ratios. The information contained in the financial
statements is conveyed in a meaningful manner to the one for even if it meant. thus, ratios
help in communication and enhance the value of the financial statements.
3. Helps in co-ordination :
Ratios even in co-ordination which is of at most importance in effective business
management. Better communication of the efficiency and weakness of an enterprise
results in better co-ordination in the enterprise.
4. Helps in control:
Ratio analysis is also helps in making effective control of the business. Slandered ratios
can be based upon Performa of financial statements and variances or deviations, if any,
can be found by comparing the actual with the standard so as to take a corrective action at
the right time.

IMPORTANCE OF RATIO ANALYSIS

In the preceding discussions, we have illustrated the computation and the implication of the important ratio
that can be calculated from the balance sheet and profit and loss accounts of the firm. As a tool of financial
management, they are of crucial significance. The importance of ratios analysis lies in his fact that it presents
facts on a comparative basis and enables the drawing of inferences regarding the performance of a firm.
Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects.
Aid to measure general efficiency
Aid to measure financial solvency
Aid in forecasting and planning
Facilitate decision making
Aid in corrective action
Aid in intra-firm comparison
Act as a good communication
Evaluation of efficiency
Effective tool

LIQUIDITY POSITION:
With the help of ratio analysis conditions can be drawn regarding the 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. A 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-maturing debt usually within a year as well the principal. The liquidity ratios are
particularly useful in credit analysis by bank and other suppliers of short-term loans.
LONG-TERM SOLVENCY:

7
 Ratio analysis is equally useful for assessing the long-term financial liability of a firm. The long-term
solvency is measured by the leverage and capital. Structure and profitability ratios which focus on earning
power and operating efficiency. Ratio analysis reveals and weakness of a firm in this respect.
OPERATING EFFICIENCY:
Yet another dimension of his usefulness of the ratio analysis, relevant from the viewpoint of management,
hates it brows light on the degree of efficiency in the management and utilization of its assets. It would be
recalled that the various activity ratios measure this kind of operational efficiency.
INTER-FIRM COMPARISON:
Ratio analysis not only throws light on the financial position of a firm but also serves as a stepping stone to
remedial measures. This is made possible due to inter firm comparison would demonstrate the relative position
vis--vis its competitors.
TREND ANALYSIS:
Ratio analysis enables a firm to take the time dimension into account in other words, whether the financial
position of a firm is improving or deteriorating over the years. The significance of the trend analysis of ratios
lies in the fact that the analysis cans now direction of improvement i.e. whether the movement is favorable or
unfavorable.

LIMITATIONS OF RATIO ANALYSIS

Ratio analysis is a widely used tool of financial analysis. But it suffers from various limitations. The
operational implication of his is that while using ratios, the conclusions should not be taken their fact values.
Some of the limitations which characterized analysis are;
DIFFICULTY IN COMPARISION:
Once serious limitation of ratio analysis arises out of the difficulty associated with their comparison to
draw inferences. One technique that is employed is inter-firm comparison. But such comparisons are vitiated by
different procedure adopted by various firms. The differences may relate to estimation of assets and
amortization of intangible assets etc..
IMPACT OF INFLATION:
The second major limitation of the ratio analysis as a tool of financial analysis is associated with price level
changes. This, in fact, is a weakness of the traditional financial statements which are based on historical costs.
The one implication of this future of the financial statements as regards ratio analysis in the price level. As a
result, ratio analysis will not adjust for changes in the price level. As a result, ratio analysis will not yield strictly
comparable and, therefore, dependable results.
CONCEPTUAL DIVERSITY:
Yet another factory which affects the usefulness of ratios is that there are differences of opinion regarding
the various concepts used to compute the ratios. In brief, ratio analysis suffers from serious limitations. The
reliability and significance attached to ratios will largely depend on the quality of data on which they are based .
LIMITED SCOPE:
Ratio analysis is not suitable for sound judgment rather is useful tool to aid in applying
judgment to complex situation. But its scope is limited.

1.3 NEED FOR THE STUDY

The analysis helps company to assets its position which is to be introduced and
standardized for this organization. Which is looking ahead and the ratios calculated for a
number of years work as a guide for the future. The financial strengths and weakness of firm
are communicated in a more easy and understandable manner by the user of ratios. Ratio
analysis also helps in effective control of the business.

8
 2.1 INDUSTRY PROFILE
INTRODUCTION
Brass is a metal composed primarily of copper and zinc. Copper is the main
component, and brass is usually classified as a copper alloy. The color of brass varies from
dark reddish brown to a light silvery yellow depending on the amount of zinc present; the
more zinc, the lighter the color. The zinc content can vary between 10% to about 45 %.
HISTORY OF THE BRASS INDUSTRY
The discovery of metal changed the lives of the people in the ancient world. Metal and
its alloy made agriculture easier, providing farmers with more efficient tools to work their
land. Armies that possessed metal kanives, swords, and shields were no match for those that
did not. The first two metal and its alloy widely used by humans, copper (and its alloy brass)
and gold are still important in peoples lives today.
Romans were the first to use brass, as alloy of copper and zinc, on any significant
scale, although Greeks were already well acquainted with the metal in Aristotles time (330
B.C.) Greeks knew it as Oreichalcos a brilliant white copper, which was made by mixing
tin and copper with a special earth called Calmia or calamine. Calamine was an impure
zinc carbonate, which was rich in silica and found on the shores of the black sea. To make
brass, ground calamine ore and copper were to the metallic state but not high enough to melt
copper. However, zinc vapor permeated the copper and formed the copper and formed brass,
which then melted.

In antiquity the words bronze and brass did not exist. Brass is an English word derived
from braes (Old English) and bras or bras (Middle English) about 1200 AD26 In the language
of Tudor England, brass stood for any copper alloy, and the King James Bible uses the word
in that context. Joseph Smith, favoring the King James Bible, translated the Book of Mormon
using brass in the same manner.
The Industrial Revolution
The industrial revolution brought about a tremendous change in the production of
copper and its alloy, beginning with a demand for more and better raw material. Mine
production rose as steam driven pumps were applied to remove water from diggings.
Smaller throughput increased as well, largely due to faster remove of impurities from ore.
Brass has long been the first material of choice in the construction of measuring
instrument for use of sea or in any moist, salt-laden atmosphere. This is due not only to the
corrosion resistance of brass but also to its good machinability.
The Modern Era
The enormous growth in world copper demand between 1850 and 2000, this growth
was initiated by a series of advances in copper using technologies, Whereas total demand at
the end of the 19th century was about 500,000 mT. 1992 forecasts of world copper
consumption were 14,630,000 mT. For the year 2000 and 17, 900,000mT. For 2005.

9
World Reserves
The largest and commercially most important deposits are those in the mountainous
spine of south America and western north America, principally in the United State and Chile
but also include Canada, Mexico and Peru, large and important deposits are located in south
central Africa, principally in Zaire and Zambia. Together, north and South America and
Africa contain more than one half of the known copper deposits in the world.
However, Europe (primarily Russia and the confederation of Independent states of
CIS) and the Pacific Rim (Chiefly Australia and Papua New Guinea) also contain copper
mineralization. South America holds the largest shares of both reserves (31.1% if the world
total) and reserve base (18.5%). North and Central America follow, with 22.7% and 24.9% of
world reserves and reserve base, respectively.
Among individual countries, Chile has the largest fraction of the total reserve base at
19%, the United States ranks 2nd with 18%; the C.I.S and Zambia each have 7%; while
Canada Peru, and Zaire each account for 6%.
Brief History of brass industries in India
The story of Indian Brass as is generally known began during the age of the Indus
Valley civilization i.e. around 2400BC to 1700BC.38 the extraction of this spread to other
sites such as Kalibangan in Rajasthan, Lothal in Gujarat and Laimabad in Maharashtra. The
two most well known sites are of course Mohanjodaro and Harappa. The Harappan figure of
a dancer, with her carfree stance, is one of the first metal sculpture pieces discovered in
India.39 The large Buddha figure at Sultanganj is possibly the largest surviving metal work of
ancient time and is a monument to the skill of Indian craftsmen in melting and casting metal.
The important clusters of the brass in the Southern and Western regions are Pembertha
and Hyderabad in Andhra Pradesh; Bidar, Negamangala, Mysore and Gadag in Karnataka
(Bidriwar); Swamimalai, Nachiarkoil, Madurai, umbakonam, Tirupur and Tanjore in Tamil
Nadu; Ambarnath, Thana, Kalyan and Nasik in Maharashtra; Trichur in Kerala; Jamnagar in
Gujarat and Pondicherry, etc.
Moradabad in Uttar Pradesh is world famous for its range of brass items. A wide range
of household items like pots, trays, bowls and decorative pieces are made here and are
decorated with intricate etching. Electroplated brass and copper items and items made of
white metal are also created in Moradabad. Banaras is known for cast sculptures of deities
and household utensils made of brass and copper. Varanasi, in Uttar Pradesh is the first city in
India for the multitude of its cast and sculptured mythological images and emblematic in
brass and copper as well as household utensils.
Mirzapore is now one of the most important centers of the brass utensils industry in Uttar
Pradesh. It supplies the needs of a large part of the State and even exports articles of
household use to other Countries.

Raw Materials
The main component of brass is copper. The amount of copper varies between 55% and
95% by weight depending on the type of brass and its intended use. Brasses containing a high
percentage of copper are made from electrically refined copper that is at least 99.3% pure to
minimize the amount of other materials. Brasses containing a lower percentage of copper can
also be made from electrically refined copper, but are more commonly made from less
expensive recycled copper alloy scrap. When recycled scrap is used, the percentages of
copper and other materials in the scrap must be known so that the manufacturer can adjust the
amounts of materials to be added in order to achieve the desired brass composition.
The second component of brass is zinc. The amount of zinc varies between 5% and 40%
by weight depending on the type of brass. Brasses with higher percentages of zinc are
stronger and harder, but they are also more difficult to form and have less corrosion

10
resistance. The zinc used to make brass is a commercial grade sometimes known as spelter.
Some brasses also contain small percentages of other materials to improve certain
characteristics. Up to 3.8% by weight of lead may be added.
Further Alloying Additions
Alloying additions are made to the basic copper-zinc alloys for a variety of reasons:-
To improve mach inability
To improve strength
To improve corrosion resistance
For other special reasons

The Manufacturing Process

The manufacturing process used to produce brass involves combining the appropriate
raw materials into a molten metal, which is allowed to solidify. The shape and properties of
the solidified metal are then altered through a series of carefully controlled operations to
produce the desired brass stock.
Brass stock is available in a variety of forms including plate, sheet, strip, foil, rod, bar,
wire, and billet depending on the final application. For example, brass screws are cut from
lengths of rod. The zigzag fins used in some vehicle radiators are bent from strip.
Pipes and tubes are formed by extruding, or squeezing rectangular billets of hot brass
through a shaped opening, called a die, to form long, hollow cylinders.
Melting
Hot rolling
Annealing and cold rolling
Finish rolling
Quality Control
FEATURES OF BRASS
Brass has a combination of strength, corrosion resistance, and formability that will
continue to make it a useful material for many applications in the foreseeable future.68 Brass
also has an advantage over other materials in that most products made from brass are
recycled or reused, rather than being discarded in a landfill, which will help ensure a
continued supply for many years.
Excellent Machinability
Good Strength
Ductility
Conductivity
Easily Joining
Non-sparking
Good Corrosion Resistance
Wear Resistant
Plating
Attractive Colour
Hygiene
Magnetic permeability
Cast ability

11
 2.2 COMPANY PROFILE
M/S Jyothi Brass metal works is a renowned company located in Anantapur city of
ANDHRA PRADESH. It is proprietorship based company. It was started or established in the

12
 year 2000. The main bankers of the company are State Bank of India, Main Branch, Sainagar,
and Anantapur with the work force numbering up to 45. Brass metal works has made
tremendous inroads in to the Builders Hardware in India.
They manufacture various hardware products of Builders Hardware from extruded
brass such as Tower bolts, hinges, Door handles, Window Rings, Doorstoppers, Baby latches
etc under the brand name called JYOTIBRASS the quality and perfect brass. Jyoti brass
brand enjoys 25% of the market share in the brass industry.
The company is manufacturing the products catering to the needs of particular and
specific customers. The target market changes from place to place like special extruded brass
and gold coated products catering to the needs of the customers in coastal place, South-
Eastern parts of India where the chances of corrosion of the hardware material is very high.
Due to superior quality the Jyoti brass Brand has made an everlasting impact in the minds of
the customers. Though the products are highly prices Jyotibrass Brand is increasing its
market share, this is possible due to its superior quality and the excellent after sales service.
The product got ISI marked licenses granted by M/S. Bureau of Indian standards is
the first company to get ISI mark in brass.
1) Tower Bolts : CM/L 6372976
2) BUTT HINGES : CM/L 6387787
An ISO 9001:2000 certified company
The company has a wide network of dealers of up to 60 and a strong sales force.
These sales persons shall target the dealers and produce the orders from them. The turnover
of the company is over 1 crore during 2006 -07.

The basic raw material of the company is the Brass extruded sections. The raw
material is bought from various companies like Jindal, Balco, Hindalco etc after
succeeding in the hardware industry the company lying with the ideas of manufacturing the
basic raw material of the hardware industry Brass extrusions.
Extruded brass outstands in quality and strength than conventional cast and
machine draw hardware. Extruded hardware will have more molecular strength and better
surface finish. Extrusions are made from a uniform combination of alloys giving high tensile
strength with micro sized molecules giving no chance for blowholes. When the alloy is in
uniform combination there will not be impurities and the extrusion becomes harder in
comparison with cast materials. "JYOTIBRASS" hinges are recommended for heavy doors
and shutters.
JYOTIBRASS offers a better protective finish by giving ELECTRO-PHORETIC
coating which is ever coat and the latest technology in surface finish rendering the product
weather resistant, durability of the finish depends on the coating and at "JYOTIBRASS"
gives a polished brass finish with ever coat. This is a "state-of-the-art" process depositing
hardwearing material on the brass surface. This microscopic layer protects the product from
discoloration, even at the harshest of environments such as sunlight, pollution and humidity
etc, Hence "JYOTIBRASS" products are introduced with added strength better surface finish
and weather resistant requiring no maintenance at all.

LIST OF MAJOR PROJECTS SUPPLIED

1) Seabird Township of Indian Navy Project, Karwar (Larsen & Toubro Ltd.,)
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2) Larsen & Toubro Ltd., A1, B1, C1 & C2, C3, C4, D1 & D2 Towers of Serene County Project,
Hyderabad.
3) L & T Ltd., South City PDD, Renka, Bannerghatta Road, Bangalore.
4) Surya city, Bangalore and other different projects of Karnataka Housing Board, Bangalore.
5) Leo Meridian, Hyderabad.
6) India Heritage Foundation, ISKON, Bangalore.
7) Ramky Infrastructure Ltd., Cuddapah.
8) D.S.R. Constructions, Bangalore.
9) Subham Developers, Hyderabad.
10) Aparna Constructions, Hyderabad.
11) NCL (Jampana Constructions), Bangalore.
12) M/s. B.G. Shirke Const. Technology Ltd., Bangalore, Mysore and Pune.
13) Karnataka State Housing Board Projects through Contractors.
14) Medical Colleges, Belgaum and Hassan, Shimoga and Mandya under PWD.
15) Ambience Properties, Secunderabad.
16) APR Constructions, Hyderabad.
17) Omega Constructions, Hyderabad.
18) P.L. Raju Constructions, Hyderabad.
19) Venser Constructions, Hyderabad
20) Ramky Constructions, Hyderabad.
21) Sreenivasa Constructions, Hyderabad.
22) DLF Constructions, Hyderabad.
23) Alience Construction Ltd., Hyderabad.
24) IVRCL Infrastructure Medical College, Bidar.
25) IVRCL Navel Project, Payyanur, Kerala State.
26) Navayuga Construction Navel Project, Payyanur, Kerala State.
27) Nagarjuna Constructions, Ernakulam.
28) RDS Constructions, Ernakulam.

3.1 RESEARCH METHODOLOGY

For the preparation of a project the collection of data is very essential.
(1) PRIMARY DATA
In view of the objectives of the study, data collected mainly interactions and
discussions with the companys executives, an expletory research is one, which largely
interprets the already available information, and it lays particulars emphasis on analysis and
interpretation of the existing and available information. It makes use of secondary data.
(2) SECONDARY DATA
Secondary data is collected from the annual reports of jyothi brass metal works
during for the last five years and various other reports like companys magazines journals
published books and journals and web sites.

14
 LITERATURE
Books:
The information, which are required for the net working capital and ratio analysis
from I.M.Pandey, Prasanna Chandra & M.Y.Khan & P.K. Jain books.
Journals:
Journals are used for finding out new ideas and information required for the research
work.
Internet:
Internet has been used to get more information for the research from various web sites
like, www.Moneycontrol.com & www.google.com to explore new ideas to be implemented
in the statistical tools
Company records:
Made a thorough investigation about the companys existing ventures, new additions to
capture the attention towards Ratio Analysis.

3.2 OBJECTIVES OF THE STUDY

To study the financial performance of the jyothi brass metal works.
To analyze he liquidity position of the company.
To study the financial leverage of the company over a period of five years.
To analyze the profitability of the company.
To conduct an in depth study in the working of the organization.
The comparison of past and present performance helps to understand the
companys efficiency level.

3.3 SOURCE OF DATA

Research Design:
To analyze the working capital, trends and for the purpose of ratio analysis,

15
 Financial Analysis has to be carried out. Financial analysis is the analysis and interpretation
of financial statements and a proper financial analysis can give the users better insight about
financial strengths and weakness of the firm. Financial analysis is the starting point for
making plans, before using any sophisticated forecasting and planning procedure.
For the purpose first the required information has to be collected like for ratio
analysis and owing capital management analysis, income statements, trading and profit and
loss accounts, balance sheet, funds flow statement, etc. are to be collected the, the data in the
statements is to be properly organized and arranged and then relationship is established
between financial statements and finally conclusions are drawn from the interpreted
information and presented in the form of reports.

Research Methodology:
Research involves getting tools, ideas from texts, journals, books, records, Websites. The
collection of data is an important aspect of Research.
The sources of information fall under two categories.
Internal Sources: -
Every company keeps certain records such as accounts, records, reports, etc. These records
provide sample information for research.
External Sources: -
When internal records are insufficient and required information is not available the
organization the organization depends on eternal sources. The external sources of data are:
I. Primary Data
II. Secondary Data
(I) Primary Data: -
The data collected for a purpose in original and for the first time is known as primary
data. The data collected by the researcher himself to study a particular problem.
The primary data of the study is collected through interaction and discussion with the
officials and the staff an M/S JYOTHI BRASS METAL WORKS ANANTAPUR.
(II) Secondary Data: -
The data which is collected from the published sources that is for the first time is
called secondary data.
The secondary data for the study is collected from the annual reports of M/S JYOTHI
BRASS METAL WORKS ANANTAPUR from 2008 to 2012

Data Analysis: -
Data analysis is done by implementing various tools like ratio analysis, trend analysis,
etc.
3.4 CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are different parties
interested in the ratio analysis for knowing the financial position of a firm for different
purposes. Various accounting ratios can be classified as follows:

16
1. Traditional Classification
2. Functional Classification
3. Significance ratios
1. Traditional Classification
It includes the following.
Balance sheet (or) position statement ratio: They deal with the relationship
between two balance sheet items, e.g. the ratio of current assets to current
liabilities etc., both the items must, however, pertain to the same balance sheet.
Profit & loss account (or) revenue statement ratios: These ratios deal with the
relationship between two profit & loss account items, e.g. the ratio of gross profit
to sales etc.,
Composite (or) inter statement ratios: These ratios exhibit the relation between a
profit & loss account or income statement item and a balance sheet items, e.g.
stock turnover ratio, or the ratio of total assets to sales.

2. Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity ratios and
profitability ratios.
3. Significance ratios
Some ratios are important than others and the firm may classify them as primary and
secondary ratios. The primary ratio is one, which is of the prime importance to a concern. The
other ratios that support the primary ratio are called secondary ratios.
TYPES OF RATIOS
Several ratios, calculated from the accounting data, can be grouped into
various classes according to financial activity of function to be evaluated. The
management is interested in evaluating every aspect of the firms performance. They have
to protect the interest is in the liquidity position or the short-term solvency of the firm;
Long-term creditors are more interested in the long-term profitability and financial
condition. IN the view of the requirements of the various users of ratios, we may classify
them into the following categories. Ratio analysis enables the analyst to compare items on
a single financial statement or to examine the relationship between items on two financial
statements. After calculating ratios for each years financial data, the analyst can then
examine trends for the company across years. Since ratios adjust for size, using this
analytical tool facilities intercompany as well intercompany comparisons. Ratios are often
classified using the following terms:

Liquidity Ratios
Leverage Ratios
Activity Ratios

17
 Profitability
Profitability ratios are gauges of the companys operating success for a given period of
time.

Liquidity ratios are measures of the short term ability of the company to pay its debts
when they come due and to meet unexpected needs for cash. Solvency ratios indicate the
ability of the company to meet its long term obligations on a continuing basis and thus to
survive over a long period of time.

In judging how well on a company is doing, analysts typically compare a

companys ratios to industry statistics as well as to its own past performance.

Goals

A. Managerial uses of ratio analysis:

Helps in decision making.

Helps in financial forecasting and planning.

Helps in communicating

Helps in co-ordination.

Helps in Control.

Utility to share holders.

B. Utility to creditors.

C. Utility to employees.

D. Utility to government.

CLASSIFICATION OF RATIOS

18
 LIQUIDITY LEVERAGE ACTIVITY PROFITABILITY
RATIO RATIO RATIO RATIOS

1. Current ratio 1. Debt equity 1. Inventory 1. Gross profit ratio

ratio turnover ratio

2. Debt to total 2. Debtors

2. Liquidity ratio capital ratio turnover ratio 2. Operating ratio

3. Interest 3. Fixed assets

coverage turnover ratio
3. Absolute ratio 3. Operating profit
ratio.
4. Total assets ratio
4. Capital turnover ratio
4. Net profit ratio
gearing ratio
5. Working
5. Equity ratio capital ratio
5. Return on
6. Fixed assets 6. Payable
investment ratio
to net worth turnover ratio
ratio 6. Return on equity
capital
7. Fixed assets
ratio 7. Capital
employed
8. Current assets ratio
7. Return on total
to proprietors resources
ratio.
8. Earnings per
9. Solvency ratio share

9. Price earnings
ratio

A.LIQUIDITY RATIOS
Liquidity Ratios measure the ability of the firm to meet its current obligations. In fact,
analysis of liquidity needs the preparation of cash budgets and cash and fund flow statements;
but liquidity ratios, by establishing a relationship between cash and other current assets to
current obligations, provide a quick measure of liquidity. The failure of a company to meet its
obligations due to lack of sufficient liquidity, will result in a poor creditworthiness, loss of
credit worthiness, loss of creditors confidence, or even in legal tangles resulting in the closure

19
of the company. A very high degree of liquidity is also bad; idle assets earn nothing. The most
common ratio which indicates the extent of liquidity or lack of it is;
1. Current ratio
2. Quick ratio (or) acid-test ratio
3. Absolute liquid ratio (or)cash ratio

1. CURRENT RATIO:
The current ratio is a measure of the firms short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. A ratio of
greater than one means that the firm has more current assets than current claims against them.
Current ratio is calculated by dividing current assets by current liabilities.
Current Assets
Current Ratio = ------------------------------
Current Liabilities

Components of current ratio

CURRENT ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses

Cash at bank Bank over draft

20
 Bills receivable Bills payable

Inventories Short-term advances

Work-in-progress Sundry creditors

Marketable securities Dividend payable

Short-term investments Income-tax payable

Sundry debtors

Prepaid expenses

. The two basic components of this ratio are current assets and current liabilities. Current
assets include Cash and these assets which can be easily converted into cash within a short
period of time generally one year. Current assets are those obligation which are payable
within a short period of generally one year.
An ideal current ratio in 2:1. As a convention the minimum of two to one ratio is
referred to as a bankers rule of thumb or arbitrary standard of liquidity for a firm. A ratio
equal or near to the rule of thumb of 2:1 be current assets double the current liabilities is
considered satisfactory. A relatively high current ratio is an indication that the firm is liquid
and has the ability to pay its current obligation in time as when they become due. On the
other hand relatively low current ratio represents that the liquidity position of the firm is not
good and the a ratio equal or near to the rule of thumb of 2:1 be current assets double the
current liabilities is considered satisfactory. A relatively high current ratio is an indication
that the firm is liquid and has the ability to pay its current obligation in time as and when they
become due. On the other hand a relatively low current ratio represents that the liquidity
position of the firm is not good and the firm shall not be able to pay its current liabilities in
time without facing difficulties.

2. QUICK RATIO:
Quick ratio is also called acid test ratio, establishes a relationship between quick or liquid
assets and current liabilities. An asset is liquid if it can be converted into cash immediately or
reasonable soon without a loss of value cash is the most liquid asset. Quick assets are debtors
and bills receivables and marketable securities.
Quick ratio is found out by dividing quick assets by current liabilities.

21
 Quick Assets

Quick Ratio = ---------------------------------

Current Liabilities

Components of Quick (or) Liquid Ratio

QUICK ASSETS CURRENT LIABILITIES
Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Sundry debtors Short-term advances
Marketable securities Sundry creditors
Temporary investments Dividend payable
Income tax payable
The quick ratio is very useful in measuring the liquidity position of firm. It measures the
firms capacity to pay off current obligations immediately and is a more rigorous test of
liquidity than ratio. It is used as a complementary ratio to the current ratio. A quick ratio
may be defined as the relationship between quick assets and current liabilities. Quick asset is
found by subtracting inventories and prepaid expenses from current ratio.
As a rule of thumb or as convention quick ratio of 1:1 is considered satisfactory. It
is generally thought that if quick assets are equal to current liabilities than the concern may be
able to meet its short-term obligations. Usually, a light acid test ratio is an indication that the
firm is liquid and has the ability to meet it current or liquid liabilities in time and on the other
hand a low quick ratio represent that the firm liquidity position is not good.
3. CASH RATIO (OR) ABSOLUTE LIQUID RATIO:
Cash is the most liquid asset a financial analyst may examine cash ratio and its
equivalent to current liabilities. Trade investment or marketable securities are equivalent of
cash.
Cash + Marketable Securities
Cash Ratio = -----------------------------------------------------------
Current Liabilities

Components of Absolut Liquid Ratio

CURRENT LIABILITIES
ABSOLUTE LIQUID ASSETS

Cash in hand Out standing or accrued expenses

Cash at bank Bank over draft
Interest on Fixed Deposit Bills payable
Short-term advances

22
 Sundry creditors
Dividend payable
Income tax payable
Although receivable, debtors and bills receivable are generally more liquid than inventories,
yet there may be doubts regarding their realization into cash immediately or in time. Hence,
some authorities are of the opinion that absolute liquid ratio should also be calculated
together with current ratio and acid test ratio so as to exclude even receivables from the
current assets and find at the absolute liquid assets.
Absolute liquid assets include cash in hand and at bank and marketable securities
or temporary investments. The acceptable norm for this ratio is 50% or 5:1 or 1:2 i.e. Re.1
worth absolute liquid assets are considered adequate to pay Rs.2 worth Current liabilities in
time as all creditors are not expected to demand cash at the same time and then cash may also
be realized from debtors and inventories.
B. LEVERAGE RATIOS:
The short-term creditors, like bankers and suppliers of raw material, are more concerned
with the firms current debt-paying ability. Long-term creditors like debenture holders,
financial institutions etc. are more concerned with the firms long-term financial strength.
To know the long-term financial position of the firm, financial leverage, or capital
structure ratios are calculated. These ratios indicate mix of funds provided by owners and
lenders. It has number of implications those are
a) Between debt and equity, debt is more risky from the firms point of view.
b) Use of debt is advantageous for shareholders in two ways.
1. They can retain control of the firm with a limited stake.
2. Their earning will be magnified.
3. A highly debt burdened firm will find difficulty in raising funds from
Creditors and owners in future.
Leverage Ratios are calculated to measure the financial risk and firms ability of
using debt to shareholders advantage. Leverage ratio may be calculated from the balance
sheet items to determine the proportions of debt in total financing.
1. Debt ratio
2. Debt equity ratio
3. Capital employed to net worth ratio
4. Interest coverage ratio
5. Fixed charge coverage ratio
1. DEBT RATIO:
Several debt ratios may be used to analyze the long-term solvency of a firm. The firm
may be interested in knowing the proportion of the interest-bearing debt in the capital
structure. Total debt includes short and long-term borrowings from financial institutions,
debentures, deferred payment arrangements for buying capital equipments, bank borrowings,
public deposits and any other interest-bearing loan. Capital employed will include total debt
and net worth (NW).Debt ratio is calculated as dividing total debt (TD) by capital employed
(CE) or net assets (NA).
Total Debt
Debt Ratio = -----------------------------------------
Total Debt +Net Worth

23
2. DEBT-EQUITY RATIO
The relationship between borrowed funds and owners capital is a popular measure of
the long-term financial solvency of a firm. This relationship is shown b the debt-equity ratios.
This ratio reflects the relative claims of creditors and shareholders against the assets of the
firm. The debt considered here is exclusive of current liabilities.
The debt equity ratio is an important tool of financial analysis to appraise the
financial structure of firm. The ratio reflects the relative contribution of creditors and owners
of business in is financing. A high ratio shows a large share of financing by the creditors
relatively to the owners and therefore a larger claim of creditors. The ratio is 1:2; it implies
that for every rupee of outside liability, the firm has two rupees of owners. There is therefore
a safety margin of 50% available to the creditors of the firm.
Total Debt
Debt Ratio = -----------------------------------------------
Share Holders equity

A high debt-equity ratio has equally serious

implications from the firms point of view. The high proportion of debt in the capital structure
would lead to inflexibility in the operations of the firm. A low debt-equity ratio has just the
opposite implications.
3. CAPITAL EMPLOYED TO NET WORTH RATIO
There is yet another alternative way of expressing the basic
relationship between debt and equity. It describes how much funds are being contributed
together by calculating the ratio of capital employed or net assets to net worth.
Capital Employed
Capital Employed To Net Worth Ratio = -------------------------------
Net Worth

4. INTREST COVERAGE RATIO:

Interest coverage ratio is also called as debt service ratio or
fixed charges cover. This ratio is valuable in providing information as regards the no. of times
interest charges are covered by funds available for interest payment. It is calculated by
dividing the net profit before interest and taxes (operating profit or earnings before interest
and taxes or EBIT) by fixed interest charges.
EBITDA
Interest Coverage Ratio = -----------------------------------------------

Fixed Interest Charges

5. FIXED CHANGE COVERAGE RATIO:

This ratio measure debt servicing ability comprehensive because it considers both the
interest and principal repayment obligations .it shows how many times the pretax operating

24
.income covers all fixed financing charges.
EBIT+ Depreciation
Interest Coverage Ratio =
----------------------------------------------------------
Interest + Repayment of loan Tax rate

C. ACTIVITY RATIOS
Activity ratio are employed to evaluate the efficiency with
which the firm manages and utilities its assets. These ratios are also called turnover ratios or
efficiency ratios. The efficiency with which the assets are used would be reflected in the
speed and rapidity with which assets are converted into sales. Such ratios are also designated
as turnover ratios. An activity ratio may, therefore, be defined as a test of the relationship
between sales and the various assets of the firm. We illustrate below the important activity
ratios.
1. Stock turnover ratio
2. Inventory turnover ratio
3. Debtors turnover ratio
4. Average collection period
5. Fixed Assets turnover ratio
6. Creditors turnover ratio
7. Current assets ratio
1. STOCK TURN OVER RATIO:
This ratio indicates the no. of times the stock sold out during the year. The cost of
goods sold is compared with the stock in the trade. This ratio indicates the efficiency in
inventory management. If the turnover is higher, than it means lesser amount of capital is
blocked up in the form of working capital.

Cost Of Goods Sold

Stock Turnover Ratio =
-------------------------------------------
Average Stock

2. INVENTORY TURN OVER RATIO

This ratio plays the vital role in the firm and it indicates the efficiency of the firm in
producing and selling its products. It measures the relationship between the costs of goods
sold by the inventory level. It is calculated by dividing the cost of goods sold by the average
inventory.

25
 Cost Of Goods Sold
Inventory Turnover Ratio =
----------------------------------------------
Average Inventory

The inventory turnover shows how rapidly is turning into receivable though sales. A
high inventory turnover is indicative of goods inventory management. A low inventory
turnover implies excessive inventory levels then warranted by production and sales
activities. A high level of sluggish inventory amounts to unnecessary tie-up of funds
reduced profit and increased costs.
3. DEBTORS TURN OVER RATIO:
This ratio indicates the average time lag in number of days between sales and cash
collection form debtors. It explains the number of days of credit enjoyed by the debtors. IT is
also called as receivable turnover. Higher ratio considers management is efficient and vice
versa.
Net Credit Sales
Debtors Turnover Ratio =
-----------------------------------------------
Average Debtors

4. AVERAGE COLLECTION PERIOD:

It indicates the time taken to collect money from the debtors. If this average collection
period is more than credit period. Granted to the debtors, it indicates liberal policy and the
firm is in efficient in collecting the dues and vice versa.

No. Of Working Days

Average Collection Period = --------------------------------------------------------
Debtors Turnover Ratio

5. FIXED ASSETS TURN OVER RATIO

This ratio will reflect the relationship between fixed assets and proprietors
funds. This ratio is also called as fixed assets to net worth ratio. It is calculated as follows:
Net Sales
Fixed Assets Turnover Ratio =
----------------------------------

Net Fixed Assets

Component of Current Assets to Fixed Assets Ratio

26
 CURRENT ASSETS FIXED ASSETS
Cash in hand Machinery
Cash at bank Buildings
Bills receivable Plant
Inventories Vehicles
Work-in-progress
Marketable securities
Short-term investments
Sundry debtors
Prepaid expenses
6. CREDITORS TURNOVER RATIO:
This ratio indicates the average time lag in no. of days
between the purchases and cash payment to creditors. It indicates the no of days credit enjoy
b the firm from its creditors. It is also called as payable ratio. This ratio is also called as fixed
assets to net worth ratio. It is calculated as follows.
Net Credit Purchases
Creditors Turnover Ratio = ------------------------------------
Average Accounts Payable

7. CURRENT ASSETS TURN OVER RATIO:

This ratio is calculated to indicate the relation between sales and current assets. It is
calculated to know the current assets are used in generating the turnover. It is calculated by
dividing sales with current assets. This ratio is also called as fixed assets to net worth ratio. It
is calculated as follows:
Net Sales
Current Assets Turn Over Ratio = ----------------------------
Total Current Assets

8. TOTAL ASSETS TURN OVER RATIO:

This ratio indicative of the efficiency in utilizing total assets in generating sales. . This
ratio is also called as fixed assets to net worth ratio. It is calculated as follows:

27
 Net Sales
Total Assets Turn Over Ratio = ------------------------
Total Assets

D. PROFITABILITY RATIOS:
Profit is the difference between revenues and expenses over a
period of time. The profitability ratios are calculated to measure the operating efficiency of
the company. Generally two major types of profitability ratios are calculated i.e. profitability
in relate to sales and profitability relate to investment. Profitability ratios related on each
rupee of sales. Profitability ratios related to sales are classified below:
Gross profit ratio
Net profit ratio
Operating expense ratio
Return on investments ratio

1. GROSS PROFIT RATIO

The profit margin measures the relationship between profit and sales. It is the result of
the relationship between prices, sales volume and cost. The gross profit or gross margin
represents the limit beyond which fall in sales
Price is outside the tolerance limit. A high ratio of gross profits to sales is a sign of
good management and a low gross margin may reflect higher cost of goods due to the firms
inability to purchase raw materials at favorable terms, inefficient utilization of plant
machinery or over investment in plant and machinery resulting in higher cost of production.
Gross Profit
Gross Profit Ratio = ---------------------- X 100
Sales

Gross profit margin is calculated by dividing the gross profit

by sales. This ratio indicates the average the averaged spread between the cost of goods sold
and the sales revenue.
2. NET PROFIT RATIO
Net profit margin ratio establishes a relationship between net profit and sales and
indicates managements efficiency in manufacturing, administering and selling the product.
This ratio is the overall measure of the firms ability to turn each rupee sales into net profit.
This also indicates the firms capacity to withstand adverse economic conditions.

28
 Net Profit After Tax
Net Profit Ratio = --------------------------------------- 100
Net Sales

Taxes are not controllable by the firm, and also, one may not
now the marginal corporate tax rate while analyzing the published data. Therefore, the ratio
may calculate on before tax basis.
3. OPERATING EXPENSE RATIO
The operational expense ratio explains the changes in the profit margin ratio.
This ratio is computed by dividing operating expenses by sales.
The operating expense ratio is a yardstick of operating efficiency and this ratio indicates the
average aggregative variations in expenses. A low operating ratio is large a test of operational
efficiency.

4. RETURN ON INVESTMENTS RATIO

Return on share holders investment, popularly known as Return on
investments (or) return on share holders or proprietors funds is the relationship between net
profit (after interest and tax) and the proprietors funds.
Net profit (after interest and tax)
Return on investment = -------------------------------------------------------
Shareholders funds

The ratio is generally calculated as percentages by

multiplying the above with 100.

4.1 DATA ANALYSIS AND INTERPRETATION

4.1CURRENT RATIO:
Current Assets
Current Ratio = -----------------------------------
Current Liabilities
4.1TABLE:
YEAR CURRENT CURRENT CURRENT

29
 ASSESTS(Rs) LIABILITES(Rs) RATIO
2009 8585759 5976848 1.43
2010 8269915 4078185 2.02
2011 10327697 3839854 2.08
2012 8604616 2836135 3.03
2013 7583059 2278494 3.32
2014 8673358 1604453 5.40

4.1GRAPH
CURRENT RATIO

INTERPRETATION:

From the above table shows that current ratio of the jyothi brass metal works is
gradually increasing year by year 2009-10 is 1.43,2010-11 is 2.02,2011-12 is 3.03,2012-2013
3.32 and the year 2013-2014 is 5.04.The standard ratio of the company must be 2:1. It shows
that the current ratio of the company is above of the standard ratio. So it is satisfactory of the
company.

30
4.2QUICK RATIO:
Quick Assets
Quick Ratio = ---------------------------------
Current Liabilities
4.2TABLE:

YEARS QUICK CURRENT QUICK

ASSESTS(Rs) LIABILITES(Rs) RATIO
2009 2750620 5976848 0.46
2010 1677925 4078185 0.41
2011 3654409 3839854 0.95
2012 2068834 2836135 0.72
2013 2719390 2278494 1.19
2014 3293751 1604452 2.07

4.2GRAPH:

QUICK RATIO

INTERPRETATION:
From the above table shows that quick ratio of the jyothi brass metal works is gradually
increasing year by year is 2009-10,2010-11,2011-12,2012-13,2013-14 is 0.46,0.41,0.95,0.72
and 2.07The standard ratio of the company must be 1:1. It shows that the Quick ratio of the
company is below of the standard ratio in the year 2009-14.

31
4.1.3CASH RATIO:
Cash + Marketable Securities
Cash Ratio = ----------------------------------------------------
Current Liabilities
4.3TABLE:
YEARS CASH+MARKETABLE CURRENT CASH
SECUIRITIES(Rs) LIABILITES(Rs) RATIO
2009 176151 5976848 0.02
2010 17101 4078185 0.04
2011 141481 8389854 0.03
2012 43836 2836135 0.05
2013 76728 2278494 0.03
2014 12116 1604453 7.55

4.3GRAPH:
CASH RATIO

INTERPRETATION:
From the above table shows that cash ratio of the jyothi brass metal works is gradually
increased and decreased year by year. Compared to 2009-10, 2010-11 it is decreased i.e. 0.02,
0.04.later it is increased in 2010-11 i.e. 0.04. After it is decreased in 2012-13 i.e. 0.03 and in
2013-14 it is increased i.e. 7.55.

32
4.4STOCK TURNOVER RATIO:
Cost of Goods Sold
Stock Turnover Ratio = ---------------------------------------------

Average Stock
4.4TABLE:
YEARS COST OF GOODS AVERAGE STOCK
SOLD(Rs) ACCOUNTS TURNOVER
PAYABLE(Rs) RATIO
2009 13721939 4960288 2.76
2010 13827519 5012307 2.75
2011 12059104 5538395 2.17
2012 \14241918 5519771 2.46
2013 12852612 52013915 0.24
2014 18420684 4082043.5 4.51
4.4 GRAPH:
STOCK TURNOVER RATIO

INTERPRETATION:
From the above table shows that total stock Turnover Ratio of the jyothi brass metal
works in the year is increased year by year.2009-010 is 2.76. but it is increased in 2010,2012
i.e.2.76,2.71 in the year 2011-12 it is decreased i.e.2.17.2013-14 the stock turnover ratio is
decreased To 4.51.

33
4.5CREDITORS TURNOVER RATIO:

Net Credit Purchases

Creditors Turnover Ratio = -------------------------------------------------
Average Accounts Payable
4.5TABLE:

YEARS NET CREDIT AVERAGE CREDITORS

PURCHASES(Rs) ACCOUNTS TURNOVER
PAYABLE(Rs) RATIO
2009 5532392 6140165 0.09
2010 7648329 5519699 1.38
2011 58611017 4351915 1.34
2012 7106586 3907821 1.81
2013 4951333 3907281 1.26
2014 10545739 402226 1.40

4. 5GRAPH:
CREDITORS TUROVER RATIO

INTERPRETATION:
From the above table shows that the creditors Turnover Ratio of the jyothi brass metal
works in the year 2009-10is 0.68. it is increased in year by year 2010-11,2011-12, 2012-
13,2013-14 i.e.0.68,0.90,1.38,1.34,1.81.it is increased in year by year up to 2013-14 i.e. 1.40.

4.6FIXED ASSETS TURNOVER RATIO:

34
 Net Sales
Fixed Assets Turnover Ratio = ---------------------------------
Net Fixed Assets
4.6TABLE:
YEARS NET SALES(Rs) NET FIXED FIXED ASSETS
ASSETS(Rs) TUROVER
RATIO
2009 13721939 3410417 4.02
2010 13827519 2970908 4.65
2011 12059104 2669304 4.51
2012 14241917 2452263 5.80
2013 12852612 3149289 4.08
2014 18420684 2735150 6.73

4.6GRAPH:

FIXED ASSETS TUROVER RATIO

INTERPRETATION:
From the above table shows that fixed asset turnover ratio of the jyothi brass metal works
in the year 2009-10 is 4.02. But it is increased up to 2013-14. I.e.6.73. it is satisfactory of the
jyothi brass metal works.

4.7TOTAL ASSETS TURNOVER RATIO:

Net Sales
Total Assets Turn Over Ratio = --------------------------------

35
 Total Assets
4.7TABLE:
YEARS NET SALES(Rs) TOTAL TOTAL ASSETS
ASSETS(Rs) TUROVER
RATIO
2009 13721939 6019329 2.27
2010 13827519 7162638 1.93
2011 12059104 9157147 1.31
2012 14241917 8230744 1.73
2013 12852612 8453854 1.52
2014 18420684 9804055 1.87

4.7GRAPH:

INTERPRETATION:
From the above table shows that fixed asset turnover ratio of the jyothi brass metal works.
In the year 2009-10 is 1.97. It is increased after 2009-10. From 1.97 to 2.27. After it is
decreased in the year 2011-12, 2012-13 i.e. 1.93 and 1.31. But it is increased in the year
2013-14 i.e.1.87.

4.8WORKING CAPITAL TURNOVER RATIO:

Net Sales
Working Capital Turnover Ratio = --------------------------------------
Average Working Capital
4.8TABLE:
YEARS NET SALES(Rs) AVERAGE WORKING
WORKING CAPITAL
CAPITAL(Rs) TUROVER
RATIO

36
 2009 13721939 2566430 5.34
2010 13827519 1107277 12.48
2011 12059104 1170550 10.30
2012 14241917 373872 38.09
2013 12852612 870795 14.75
2014 18420684 1130697 16.29

4.8GRAPH:

INTERPRETATION:
From the above table shows that working capital turnover ratio of the jyothi brass
metal works in the year 2009-10 is 12.48. But it is growing year by year up to 20012-11. But
in 2013-14 the working capital ratio is increased by 16.29.

4.9CURRENT ASSETS TURNOVER RATIO:

Net Sales
Current Assets Turn Over Ratio = ---------------------------------------
Total Current Assets
4.9TABLE:
YEARS NET SALES(Rs) TOTAL CATR
CURRENT
ASSETS(Rs)
2009 13721939 8585759 1.59
2010 13827591 8269915 1.67
2011 12509104 10327697 1.21
2012 14241917 5778481 2.46
2013 12852612 7583059 1.69

37
 2014 18420684 8673358 2.12

4.9GRAPH:

INTERPRETATION:
From the above table shows that Current asset turnover ratio of the jyothi brass metal works
in the year 2009-10 is 1.59 It is decreased in the year 2010-11 is 1.59. After 2011-12, 2012-13
it is increased i.e. 1.67, 1.85 but in the year 2013-14 also the current assets turnover ratio
increased to 2.12.

4.10TOTAL DEBT RATIO:

Total Debt
Debt Ratio = -------------------------------------------------
Capital Employed + Net Worth
4.10TABLE:

YEARS TOTAL CAPITAL TOTAL DEBT

DEBT(Rs) EMPLOYED(Rs) RATIO
2009 7071830 843987 0.37
2010 1297127 4078185 0.31
2011 1345794 3839854 0.35
2012 122778 2826135 0.43
2013 1345794 4079125 0.32
2014 12580613 7068905 0.47

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4.10GRAPH:

INTERPRETATION:
From the above table shows that the Total Debt ratio of the jyothi brass metal works in the
year 2009-10 is 2.47It is decreasing year 2010-11 i.e.0.37.2010-11 i.e. 0.31, 2010-11 i.e.
0.35.but in the year 2013-14 it is increased to0.32.because secured loans are decreasing.

4.11 INTREST COVERAGE RATIO:

EBITDA
Interest Coverage Ratio = --------------------------------------

Fixed Interest Charges

4.11TABLE:

YEARS EBITDA(Rs) FIXED INTREST INTREST

CHARGES(Rs) COVERAGE
RATIO
2009 1236078 879785 1.40
2010 899503 112089 8.02
2011 714664 116424 6.13
2012 751827 173069 4.34
2013 532562 141422 3.76
2014 1269582 157872 8.04
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4.11GRAPH:

INTERPRETATION:
From the above table shows that the Interest Coverage Ratio of the jyothi brass metal
works in 2010-11 is 9.31. It is decreased gradually year by year 2010-11, 2011-12, 2012-13,
2013-14 i.e. 1.40, 8.02, 6.13, 4.34,3.76,8.04.

4.12CAPITAL EMPLOYED TO NET WORTH RATIO:

Capital Employed
Capital Employed To Net Worth Ratio = -------------------------------
Net Worth
4.12TABLE:

YEARS CAPITAL NET WORTH(Rs) CAPITAL

EMPLOYED(RS) EMPLOYED TO
NET WORTH
RATIO
2009 6019329 843987 7.13
2010 7162638 4078185 1.73
2011 9157147 3839854 2.38
2012 8230744 2826135 2.91
2013 8453854 2278494 3.71
2014 9804055 1604453 6.11

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4. 12GRAPH:

INTERPRETATION:
From the above table shows that the Interest Coverage Ratio of the jyothi brass metal
works is in the year 2009-10 is 2.57 it is increased in the year 2010-11 i.e. 7.13. But it is
decreased in the year 2011-12, 2012-13, 2013-14 i.e. 1.75, 2.38, 2.91.3.71,6.11.

4.13GROSS PROFIT RATIO:

Gross Profit
Gross Profit Ratio = ---------------------- X 100
Sales
4.13TABLE:

YEARS GROSS NET SALES(Rs) GROSS PROFIT

PROFIT(Rs) RATIO
2009 5330636 13721939 38.84
2010 4719487 13827519 34.13
2011 4318606 12059104 35.81
2012 5003212 14241918 35.1
2013 4474021 12852612 34.81
2014 5176877 18420684 28.10

4.13GRAPH:

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INTERPRETATION:
From the above table shows that Gross Profit ratio of the jyothi brass metal works in the year
2009-10 is 38.03 the gross profit is increased from 2009-14 i.e. 28.10. It is a sign of good
management.

4.14 NET PROFIT RATIO:

Net Profit after Tax

Net Profit Ratio = ---------------------------------- X 100
Net Sales
4.14TABLE:

YEARS PROFIT AFTER NET SALES(Rs) NET PROFIT

TAXES(Rs) RATIO
2009 1236078 13721939 9.00
2010 899503 13827519 6.50
2011 714664 12059104 5.92
2012 751827 14241917 5.98
2013 532562 12852612 4.14
2014 1269582 18420684 6.89

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4.14GRAPH:

INTERPRETATION:
From the above table Net Profit ratio of the jyothi brass metal works in the year 2009-10 is
9.97. net profit decreased from 2008-09 to 2013-14 i.e. 9.00,5.92,5.98,6.89.
So overall company net profit is fluctuating. The main cause is that operating expenses
are low level.

4.15 OPERATING PROFIT RATIO:

Operating Profit
Operating Profit Ratio = ---------------------------- X100
Net Sales
4.15TABLE:

YEARS OPERATING NET SALES(Rs) OPERATING

EXPENSES(Rs) PROFIT RATIO
2009 9676522 13721939 70.51
2010 10106218 13827519 73.08
2011 8738684 1205104 72.46
2012 10496701 14241917 73.70
2013 9689529 115395 83.96
2014 1056433 12580613 83.74

4.15GRAPH:

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INTERPRETATION:

From the above table shows that operating Profit ratio of the jyothi brass metal works
in the year 2009-10 is 71.24. It is increasing further years 2010-13 i.e. 7.61, 73.18, 72.46, and
73.70.,83.96.

4.16RETURN ON ASSETS RATIO:

Profit after Taxes
Return on Assets Ratio= -----------------------------------X100
Total Assets

4.16TABLE:

YEARS PROFIT AFTER TOTAL RETURN ON

TAXES(Rs) ASSETS(Rs) ASSETS RATIO
2009 1236078 6019329 20.53
2010 899503 71626238 12.55
2011 714664 9157147 7.80
2012 715827 8230744 9.13
2013 532562 8453854 6.29
2014 1269582 9804055 12.94

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4.16GRAPH:

INTERPRETATION:
From the above table shows that return on assets ratio of the jyothi brass metal works
in the year 2009-10 is 19.68 but it is decreasing and also increasing year by year the return on
assets ratio in the year 2012 is i.e. 9.13.,9.03.

4.17RETURN ON INVESTMENT RATIO:

Net Profit
Return on Investment Ratio = --------------------------------------X100
Capital Employed
4.17TABLE:

YEARS NET PROFIT(Rs) CAPITAL RETURN ON

EMPLOYED(Rs) INVESTMENT
RATIO
2009 1236078 5979847 20.68
2010 899503 4078185 22.05
2011 714664 3839854 18.06
2012 751827 2886135 26.60
2013 532562 2278494 23.37
2014 1269582 1604453 79.12

4.17GRAPH:

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INTERPRETATION:
From the above table shows that return on assets ratio of the jyothi brass metal works in
the year 2009-10 is 28.03. But it is decreased year by year .return on investment ratio in
2013-14 is 25.06.

3.5 LIMITATIONS OF THE STUDY

The information provided in the company balance sheet is only the data source
available.
In the study many factors that need detailed analysis could not be discussed in detail
because of the limitations regarding length of the project and time available.
The study is the subject to the limitations of the nature financial analysis tools and
techniques.
Further the study takes into consideration the quantitative aspect of the performance.
The information available in the balance sheet has taken from the published annual
reports, so it has limitations.
Since financial matters are sensitive in nature the same could not be acquired easily.

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 5.1 FINDINGS
The findings of the study of Financial Statement Analysis of Jyothi Bass Metal Works
Anantapur are:
Current Ratio and Quick ratio of the company is ideal capacity the fraction standard
ratio is 2:1 and 1:1. So it is greater than the standard ratio it is also increasing every
year.
Total Assets Turnover Ratio of the company is increased every year. Because the sales
were high due to the market conditions.
The company sales and profitability is in good position.
The jyothi brass metal works gross profit ratio is in the year of 2011-12 is 38.84.
The companys Net Profit Ratio in the year of 2009-10 is 9.97 it is decreased in the
year of 2012-13 is 5.98.
The company operating profit ratio is increased compared to 2009-10.
The companys operating expenses ratio is low. The main cause is higher sales and
lower discount.
The company liquidity position is good.
Working capital is fluctuating, so it is better to maintain sufficient level.

5.2 CONCLUSION
The study of ratio s in the of Jyothi Brass Metal Works, Anantapur lead to the following
conclusions

The Current ratio is more than 2 during the study period. This shows the availability
of Current Assets per Rupees of Current Liability is more than 2.
During the study period the company is having sufficient cash to meet its day-to-day
expenditures which is revealed by the cash ratio.
During the study period, the Networking capital position of the company is
satisfactory. So The Company is able to meet its day-to-day working capital
requirements.
The companys efficiency is turning its fixed assets is satisfactory and is continuously
decreasing

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 The liquidity position of the company can be decreased by decreasing the current ratio
and quick ratio. The ratio can be decreased by increasing the current liabilities. In
2010-11 the ratio improved by decreasing the current liabilities..

The management of company must low sound the fixed assets turnover ratio.

There is a decrease in the Net profit margin which reflects the low profitability
position of the company.

The net profit of the jyothi brass metal works is decreased year by year. The main
cycle is that operating expenses and cost of production are high level.

BIBLIOGRAPH

Pandey .I.M., Financial management, 9th edition,

M.Y.Khan & P.K. Jain
Prassanna Chandra
Srivastava. R.M.
Financial accounting for managers
M/S Jyothi brass metal works Pvt Ltd
M/S Jyothi brass metal works Pvt Ltd
Vikas Publishing (Pvt) Ltd., New Delhi.
Financial management text, problems & cases,
4th edition TATA MC Grawhill publishing comp. Ltd.,
New Delhi.
Investment Analysis & Portfolio Management
TATA MC Grawhill publishing comp. Ltd.,
New Delhi.
Financial Management and Policy,
3rd edition, Himalaya Publishing House
Ruchi bhatya
annual reports
financial statements

REFFERING WEBSITES:
www.Moneycontrol.com
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www.google.com

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