RATIO ANALYSIS

1 NIRMA

(1) CURRENT RATIO 2006

: :

Current assets Current liabilities 597.68 348.09

Year Current ratio

March-2006 1.71:1

March-2005 0.91:1

March-2004 0.39:1

Comments: - The ideal current ratio is 2:1 but for Nirama Ltd the current ratio is gradually increasing from the last three years which indicates the short term financial soundness of the company. The company is able to meet its current obligations out of its current assets.

(2) LIQUID RATIO/ACID TEST

Liquid assets/ Current assets-inventories Liquid liabilities/ Current liability-Bank OD

2006

507.19 565.79 March-2005 0.83:1.00 March-2004 0.28:1.00

Year Acid test ratio

March-2006 0.90:1.00

Comment:- The standard Liquid ratio is 1:1 which helps in credit analysis by banks and other suppliers of short term loans. As compare to standards it is found that liquid assets are very less means liquid assets are less than the liquid liabilities.

(3) RETURN ON SHAREHOLDERS FUNDS OR RETURN ON NET WORTH Year March-2006 Return on equity 11.70% ratio

Net profit after interest and taxes Shareholders fund/Net worth

March-2005 15.11 %

March-2004 15.08 %

Comments: - ROSF is used to determine the efficiency with which the proprietors fund is deployed in the business. It indicates whether the return on proprietors funds is enough in relation to the risks that they undertake it also shows what amount of dividend is likely to be received on shares. Although there is no particular standard for this it should be high as much as possible. In 2004 it was 15.08% & increased to 15.08% but it decresed in the year 2006 at 11.70% so this shows the unsatisfactory condiation for the company.

(4) RATE OF RETURN ON CAPITAL EMPLOYED/ROI 06

: :

Net profit before interest &taxes Net capital employed 363.58 2396.08 March-2005 15.77 % March-2004 18.18 %

Year Return on investment ratio

March-2006 15.17%

Comments: - Here the profits are related to the total capital employed refer to long term funds supplied by the creditors and owners of the firm.Here there is no fixed standard but here return on investment is high is better and low is bad. The ROCE ratio is 15.17% which means that when the company invest Rs.100 it earns Rs.15.17. So to increase the return on the investment the company should pay the interest, tax, dividend to its shareholders and to create reserves hence the amount to be received is less.

(5) EARNING PER EQUITY SHARE

Divisible profit Total equity share

Year Earning per share

March-2006 29.33

March-2005 35.13

March-2004 30.55

Comments: - In this case there is no any fixed standard of EPS but it should be more then the face value of the share so that it is better. Because if a share price of the company is high then and then the value of the share is maximized and EPS is one of the important measures of economic performance of a corporate entity. Here in case of Arvind Mills EPS is increased from the year 2004 to 2005 by 4.58 but in the year of 2006 it is reduced by 5.80 which can be increased by the company if it earns more profit.

(6) PRICE EARNING RATIO 2006

: :

Market price of share Earning per share 375.95 29.33

Year Price earning ratio

March-2006 12.81

March-2005 10.70

March-2004 12.30

Comments: - This ratio is benefited to the investor at the end of the year how much return an investor can generate through the firms share. It also describes a companys future earning potential in the market. Here in case of NIRAMA the P/E Ratio is in increasing rate. It gives much more return than the prevailing bank rates.

(7) FIXED ASSETS TURNOVER RATIO :

sales Fixed assets 2244.11 1750.13 March-2005 1.14 March-2004 0.99

2006

Year Assets turnover ratio

March-2006 1.28

Comments: - Effective utilization of fixed assets will result in increased production and reduced cost. Here the ratio is increased by 0.29 within the year 2004 to 2006 it indicates that fixed assets are used effectively to earn profit in the business.

(8) GROSS PROFIT RATIO 2006

Gross profit * 100 Sales : 245.28 * 100 2244.11 March-2005 14.07% March-2004 12.99%

Year Gross profit ratio

March-2006 10.92%

Comments: - GP Ratio shows the efficiency with which the company is manufacturing the goods. This ratio also shows the markup obtained on the cost of the production is sufficient of not. Although the sales of the company is increasing with accordance of the profit.

(9) NET PROFIT RATIO

Net profit * 100 Sales

2006

241.38 * 100 2244.11

Year March-2006 March-2005 March-2004 Net profit ratio 10.75% 13.24% 12.12% Comments: - NP Ratio shows what portion of sales revenue is left to the proprietors after all the operating expenses are met. The ratio is at increasing rate in year 2004-2005 which indicates for a sale of Rs.100 Company earns Rs.13.24. From which it has to create reserves and to pay dividend to shareholders. But in the year 2006 it decreases it is bed for the company.

2P&G
RATIO ANALYSIS:(1) CURRENT RATIO : Current assets Current liabilitie

Comments: - The ideal current ratio is 2:1. But for P & G Company does not needs any out side source since last 3 years so it is a good strength for the company and it shows that company is best for investment. (2)LIQUID RATIO/ACID TEST : Liquid assets/ Current assets-inventories Liquid liabilities/ Current liability-Bank OD 2006 : 296.97 175.49 March-2005 1.09:1.00 March-2004 1.33:1.00

Year Acid test ratio

March-2006 1.69:1.00

Comment:- The ideal current ratio is 1:1. but for P & G it is above the given slightly above the standard. It is good sign for the company

(3) RETURN ON SHAREHOLDERS FUNDS OR RETURN ON NET WORTH Year March-2006 Return on equity 51.10% ratio

Net profit after interest and taxes Shareholders fund/Net worth

March-2005 55.20 %

March-2004 36.90 %

Comments: - ROSF is used to determine the efficiency with which the proprietors fund is deployed in the business. Although there is no particular standard for this it should be high as much as possible. In given company it is very good it is 51.10% in the current year, so we have to say that investor will feel that there saving is in good company. (4) RATE OF RETURN ON CAPITAL EMPLOYED/ROI 2006 Year Return on investment ratio : : March-2006 70.09% Net profit before interest &taxes Net capital employed 191.10 1779.80 March-2005 78..70 % March-2004 51.20 %

Comments: - ROCE shows the profitability of business which means whether company will able to earn profit in future. For the given three years it is vary high which is the good sign for the investor. So company may able to sustain in future.

(5) EARNING PER EQUITY SHARE

Divisible profit Total equity share March-2005 32.78 March-2004 25.78

Year Earning per share

March-2006 39.47

Comments: - In this case there is no any fixed standard of EPS but it should be more as investor is always interested to get more from the company in which he is investing his saving. Here in case of P & G EPS is in increasing rate so that it is better to the company to maximize its value and wealth in the market.

(6) PRICE EARNING RATIO 2006 Year Price earning ratio March-2006 22.88

: :

Market price of share Earning per share 902.90 39.47 March-2005 23.78 March-2004 23.44

Comments: - This ratio is benefited to the investor at the end of the year how much return an investor can generate through the firms share. It also describes a companys future earning potential in the market. Here in case of P & G the P/E Ratio is in increasing rate in the year of 2004 to 2005 and in the year of 2006 it decrease but slight. It gives a high rate of return now.

(7) FIXED ASSETS TURNOVER RATIO : 2006 Year Assets turnover ratio March-2006 9.15 :

Net sales Fixed assets 598.57 65.38 March-2005 9.37 March-2004 7.17

Comments: - It indicates that there is no major fluctuation in the turnover ratio in the year of 2006.but it should always be as high as possible as its shows the strength of the company and in the P & G it is 9.15 so it is good. (8) GROSS PROFIT RATIO 2006 : Gross profit * 100 Sales : 201.37* 100 598.57 March-2004 15.43%

Year Gross profit ratio

March-2006 33.64%

March-2005 17.32%

Comments: - GP Ratio shows the efficiency with which the company is manufacturing the goods. Although the sales of the company is increasing with in 3 years and the profit is also increasing. So the company is best in the sector. (9) NET PROFIT RATIO 2006 Year Net profit ratio March-2006 32.30% : : Net profit * 100 Sales 139.51 * 100 598.57 March-2005 16.81% March-2004 14.90%

Comments: - NP Ratio shows what portion of sales revenue is left to the proprietors after all the operating expenses are met. The NP ratio of company is increasing year by year. And it is good sign for the investors and company.

3 EMANI
RATIO ANALYSIS:(1) CURRENT RATIO Year Current ratio March-2006 2.42 : Current assets Current liabilities March-2005 2.27 March-2004 1.93

Comment:- The standard ratio is 2:1 which means that the firm should have enough assets to pay its liabilities. Here the current ratio of the company is more than 2 and it is from the last 2 years which is at increasing rate. So we can say that the company has sufficient current assets to overcome from the liabilities.

(2)LIQUID RATIO/ACID TEST

Liquid assets/ Current assets-inventories Liquid liabilities/ Current liability-Bank OD

Year Acid test ratio

March-2006 1.11

March-2005 1.21

March-2004 2.19

Comment:- Liquid ratio shows the liquid capacity of the firm in other words how well a company can convert its assets into cash to pay short term liabilities. The standard acid test ratio is 1:1 which is compared to actual which is grater than the 1 so it is sure that the company is able to pay its short term liabilities from selling its liquid assets.

(3) RETURN ON SHAREHOLDERS FUNDS OR RETURN ON NET

Net profit after interest and taxes Shareholders fund/Net worth

WORTH Year March-2006 Return on equity 14.72% ratio Comments: - This ratio measures the earning power of equity capital it also shows what amount of dividend is likely to be received on shares. The ratio here is increased sharply from 7.77% to 14.72% which shows the satisfactory condition for the company it shows for every Rs.100 invested by the shareholders profit earned is 14.72 in the year (4) RATE OF RETURN ON CAPITAL EMPLOYED/ROI : Net profit before interest &taxes *100 Net capital employed Year Return on investment ratio March-2006 14.07% March-2005 9.53% March-2004 7.80% March-2005 9.30% March-2004 7.77%

Comments: - It indicates the percentage of return on the total capital employed in the business. The capital employed basis provides a test of profitability related to the sources of long term funds. Here there is no fixed standard but here return on investment is high is better and low is bad. In the case of Emani ltd the ratio is increased from about 8% to 14% which means that when the company invests Rs.100 it will get Rs.14.07. (5) EARNING PER EQUITY SHARE Year Earning per share March-2006 7.79 : Divisible profit Total equity share March-2005 4.68 March-2004 3.83

Comments: - The EPS helps in determining the market price of the equity shares of the company. It also helps in estimating the companys capacity to pay dividend to its equity shareholders in other words we can say that this ratio shows the amount of earnings attributable to each equity share. EPS should be more then the face value of the share.

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The face value of the share is Rs.2 and the EPS was highest in the year 2006 which is higher then the face value of the share so an investor can be motivated to buy the shares. (6) PRICE EARNING RATIO 2006 Year Price earning ratio March-2006 38.26 : : Market price of share Earning per share 298.05 7.79 March-2005 32.55 March-2004 30.31

Comments: - This ratio indicates the number of times the earning per share is covered by its market price. This ratio helps the investor in deciding whether to buy or not to buy the shares of a company at a particular market price. The ratio is 38.26 means that market value of every one rupee of earning is 38.26 times. (7) FIXED ASSETS TURNOVER RATIO : Year Assets turnover ratio March-2006 1.06 Net sales Fixed assets March-2005 1.05 March-2004 0.93

Comments: - This ratio indicates the extent to which the investment in fixed assets contribute toward sales If compared with a previous period, it indicates whether the investment in fixed assets has been judicious or not. There has been a increase in the ratio. It means increase in the investment in fixed assets has brought about commensurate gain.

(8) GROSS PROFIT RATIO 2006

Gross profit * 100 Sales : 58.41* 100 307.37

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Year Gross profit ratio

March-2006 19.00

March-2005 14.88

March-2004 10.93

Comments: - This ratio expresses relationship between gross profit and net sales. It also helps on ascertaining whether the average percentage of mark-up on the goods is maintained. In short it indicates the efficiency of production operations. Here the GP ratio is increasing. It means increased investment in the business has resulted in profits and it is good for the investors. (9) NET PROFIT RATIO 2006 Year Net profit ratio March-2006 16.06% : : Net profit *100 Sales 49.37 * 100 307.37 March-2005 13.07% March-2004 9.72%

Comments: - This ratio indicates net margin earned on sale of Rs.100. An increase in the ratio over previous period indicates improvement in the operational efficiency of the business

4 HLL
RATIO ANALYSIS:-

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1) CURRENT RATIO

Current assets Current liabilities March-2004 0.94:1

Year Current ratio

March-2006 0.82:1

March-2005 0.90:1

Comments: - For HLL Ltd the current ratio is low as compare to the standard ratio & there no major fluctuation within the last three years which indicates that company should try to improve this as it is always better to be around the standard. The company is not able to meet its current obligations out of its current assets in urgency. (2)LIQUID RATIO/ACID TEST : Liquid assets/ Current assets-inventories Liquid liabilities/ Current liability-Bank OD 2006 Year Acid test ratio March-2006 0.11:1.00 : 451.73 4236.84 March-2005 0.18:1.00 March-2004 0.26:1.00

Comment:- The standard Liquid ratio is 1:1 but for HLL it is quite low which shows can face problems in getting short term loans from banks & suppliers didnt allow credit sales for such type companies. So company should try to improve this.

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(3) RETURN ON SHAREHOLDERS FUNDS OR RETURN ON NET WORTH Year March-2006 Return on equity 0.61% ratio

Net profit after interest and taxes Shareholders fund/Net worth

March-2005 0.57 %

March-2004 0.82 %

Comments: - the company didnt have good ROSF ratio due to reason for buying of different machineries to include technology in the firm. As this is an investment & it can give much better result in the future. But from investor perspective it is still better for follow wait & watch strategy before investing in the firm. (4) RATE OF RETURN ON CAPITAL EMPLOYED/ROI Year Return on investment ratio : Net profit before interest &taxes Net capital employed March-2005 0.45 % March-2004 0.59%

March-2006 0.79%

Comments: - Above ratios shows that company is not doing well because it is less then 1 and it is bed for the company and the investors. Company has to improve it in the future.

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(5) EARNING PER EQUITY SHARE

Divisible profit Total equity share

Year Earning per share

March-2006 5.67

March-2005 4.78

March-2004 6.87

Comments: - It is low for all the given three years. but as you seen that it is increasing year by year and it will took some time to make the company more profitable.

(6) FIXED ASSETS TURNOVER RATIO :

Net sales Fixed assets March-2005 4.88 March-2004 5.36

Year Assets turnover ratio

March-2006 5.10

Comments: - Effective utilization of fixed assets is necessary to increase the profit of the firm. Hear it is increased in 2006 as compare to 2005. So it is a good sign for the company.we have to increase the sales for achieving good turnover ratio.

(7) GROSS PROFIT RATIO 2006

Gross profit * 100 Sales : 38.34 * 100 300.37 March-2005 11.99% March-2004 16.78%

Year Gross profit ratio

March-2006 12.76%

Comments: - GP Ratio shows the efficiency with which the company is manufacturing the goods. The ratio is increasing for the company the every year, which is the positive trend for the company.

(8) NET PROFIT RATIO

Net profit * 100

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Sales 2006 Year Net profit ratio March-2006 11.77% : 23.46 * 100 300.37 March-2005 11.01% March-2004 15.98%

Comments: - NP Ratio shows what portion of sales revenue is left to the proprietors after all the operating expenses are met. The ratio is satisfactory for the company except that it has decreased in 2005 because of less sale in that year.

(9) DEBT-EQUITY RATIO

Total Debt________ Equitys Net worth

Year Net profit ratio

March-2006 0.35:1

March-2005 0.75:1

March-2004 0.30:1

Comments: - the present decreasing trend in this ratio is good for the company. From the investor point of view this is the good sign as they feel much secure and from company point of view it shows that they are using the present equity very nicely.

5 DABUR
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RATIO ANALYSIS:(1)CURRENT RATIO : Current assets Current liabilities March-2005 0.79:1 March-2004 1.27:1

Year Current ratio

March-2006 0.79:1

Comments: -The ideal current ratio is 2:1. but for Dabur ltd it is 0.79:1.it shows that short term strength of company is not good but it is steady trend from year 2005 to 2006 and company can improve it in the future.

(2)LIQUID RATIO/ACID TEST

Liquid assets/ Current assets-inventories Liquid liabilities/ Current liability-Bank OD

2006

54.46 324.03 March-2005 0.008:1.00 March-2004 0.003:1.00

Year Acid test ratio

March-2006 0.17:1.00

Comment: - The ideal current ratio is 1:1. But for dabur ltd it is below the given standard. You can say that it is nil it shows liquid portion of company is very bad. But it is increasing and it can reach at ideal level but it will take some time.

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(3) RETURN ON SHAREHOLDERS FUNDS OR RETURN ON NET WORTH Year March-2006 Return on equity 0.42% ratio

Net profit after interest and taxes Shareholders fund/Net worth

March-2005 0.43 %

March-2004 0.37 %

Comments: - ROSF is used to determine the efficiency with which the proprietors fund is deployed in the business. Although there is no particular standard for this it should be high as much as possible. In given company it is very low, so we have to improve this so that investor will feel that there saving is in good company. (4) RATE OF RETURN ON CAPITAL EMPLOYED/ROI Year Return on investment ratio : Net profit before interest &taxes Net capital employed March-2005 43.83 % March-2004 39.23 %

March-2006 47.09%

Comments: - Here there is no fixed standard but here return on investment is high is better and low is bad. In the case of Dabur in the year of 2004 it is in increasing rate. So it is better for the organization.

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(5) EARNING PER EQUITY SHARE

Divisible profit Total equity share

Year Earning per share

March-2006 3.05

March-2005 4.80

March-2004 3.28

Comments: - The EPS of the company is not very good so it is not fetching the interest of the new investors. One thing you have seen in the ratio that it is not stable so it is risky. (6) PRICE EARNING RATIO 2006 Year Price earning ratio March-2006 49.22 : : Market price of share Earning per share 150.15 3.05 March-2005 46.77 March-2004 44.16

Comments: - This ratio is benefited to the investor at the end of the year how much return an investor can generate through the firms share. It also describes a companys future earning potential in the market. Here in case of Cheslind the P/E Ratio is in increasing rate very high as it was 0 in the year 2005 because they didnt declare the dividend.

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(7) FIXED ASSETS TURNOVER RATIO : 2006 Year Assets turnover ratio March-2006 7.37 :

Net sales Fixed assets 1369.68 185.77 March-2005 6.95 March-2004 7.72

Comments: - This ratio indicates the Fixed assets in relation to the sales of the company. The ratio is increased from the last year so it indicates that the assets are used properly in relation to the sales.

(8) GROSS PROFIT RATIO

Gross profit * 100 Sales March-2005 12.02% March-2004 10.99%

Year Gross profit ratio

March-2006 15.37%

Comments: - GP Ratio shows the efficiency with which the company is manufacturing the goods. Although the sales of the company is increasing with in 3 years and the profit is also. So again it is good for the company and investors both. (9) NET PROFIT RATIO 2006 Year Net profit ratio March-2006 13.80% : : Net profit * 100 Sales 189.08 * 100 1369.68 March-2005 11.66% March-2004 8.81%

Comments: - NP Ratio shows what portion of sales revenue is left to the proprietors after all the operating expenses are met. The NP ratio of company is increasing year by year and it good sign for the investor. But company should try to improve this as with experience it should increase.

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(10)Debt Equity Ratio

long term debt Sh. Holder Fund March-2005 0.15 March-2004 0.22

Year Debt Eq. Ratio

March-2006 0.09

Comments: - This ratio of Dabur India ltd is 0.09 in the year of 2006 but it is always good that it should be as low as possible. During the given 3 years there is changes taking place. As you have seen it is decreasing and it is very good for the company.

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BIBLIOGRAPHY

www.investsmartindia.com www.hll.com www.daburindia.com www.moneycontrol.com Maheshwari S.N: Financial & Management Accounting, 4th Edition, Sultan S Chand, New Delhi.

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