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A PRESENTATION ON

Dilip Singh MBA 3rd sem

TITLE
A Study of Ratio analysis in montex pens company

Contents

Introduction Vision mission What is ratio Objectives Research methodology Types of ratio Analysis n data interpretation Findings conclusion

Introduction

Montex is writing instrument oriented industry.


Montex was started by Mr. Raman Jain in 1976 in Mumbai Montex has a network of 33 branch offices, 208 Customer Relation Centers and 41 depots spread across India

Our vision is to offer a wide range of writing instrument pens and ball pens for meeting the requirement of various educational areas.

VISION....

MISSION.
To be the leading manufacturer of writing instrument in the nationwide. Continually innovating the product. Offering internationally acclaimed product at cost effective solution. Managing all our suppliers, employees, partners and customers in a highly. Growing our value through new ideas.

What is Ratio?
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm. The term ratio refers to the numerical or quantitative relationship between two items /variables.

Objectives
To determine the financial conditions and financial performance of the firm. To involve comparison for a useful interpretation of the financial statements. To find out the solution to the unfavorable financial conditions and financial conditions. To forecast the future of the company. To analyze the firms relative strengths and weakness

Research Methodology
researcher from the respondents directly. observation and communication.

Primary Data

Secondary Data
existing records, company manual & Internet

annual reports

Types of Ratios:

Short term solvency ratio


Current ratio Absolute liquid ratio Cash position ratio

Long term solvency ratio


Proprietary ratio Solvency ratio Fixed assets to net worth ratio

Profitability ratio
Return on equity Return on total resource Net profit ratio Operating expenses ratio

ANALYSIS AND INTERPRETATION OF DATA

Current Ratio:-Current Liabilities


CURRENT YEAR ASSETS (Rs in Cr.) 2005371.21 182.89 239.37 253.34 272.56 286.92 2.03 1.78 2.08 2.34 2.62 CURRENT RATI LIABILITIES O (Rs in Cr.)

Current Assets

06
2006427.74 07 2007525.70 08 200809 200910 752.45 637.37

GRAPH
800 700 600 500 400 300 200 100 0 2005-06 2006-07 2007-08 2008-09 2009-10 CURRENT LIABILITIES(Rs in Cr.) CURRENT ASSETS(Rs in Cr.)

RATIO

INTERPRETATION
Current ratio indicates the firms commitment to meet its short term obligations. It is an index of the short term financial stability of an enterprise because it shows the margin available after paying off current liabilities.

CASH POSITION RATIO..

YEAR

CASH (Rs in Cr.)

CURRENT LIABILITIES (Rs in Cr.) RATIO

2005-06 2006-07
2007-08 2008-09 2009-10

36.72 16.76
19.46 24.32 31.23

182.89 239.37
253.34 289.46 312.59

0.20 0.07
0.07 0.08 0.09

CASH POSITION RATIO

350 300 250 200 150 100 50 0 2005-06 2006-07 2007-08 2008-09 2009-10 CASH(Rs in Cr.) CURRENT LIABILITIES (Rs in Cr.)

RATIO
0.2 0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2005-06 2006-07 2007-08 2008-09 2009-10 RATIO

INTERPRETATION

This ratio indicates the ability to discharge its short term liabilities with the available cash on hand.

A ratio of 1:1 is considered to be a good ratio but a rate of 0.75:1 is also good. The above ratios stated above imply that the company does not have enough cash on hand to meet all the current liabilitie

RETURN ON EQUITY
PROFIT YEAR (Rs in Cr.) (Rs in Cr.) EQUITY SHARE CAPATAL RATIO

2005-06

32.79

14.19

2.31

2006-07

34.12

14.19

2.40

2007-08 2008-09

34.58 43.56

14.19 14.19

2.43 3.07

2009-10

59.23

14.19

4.17

60 50 40 PROFIT(Rs in Cr.) 30 20 10 0 2005-06 2006-07 2007-08 2008-09 2009-10 EQUITY SHARE CAPITAL(Rs in Cr.)

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 RATIO

INTERPRETATION:-

The ratio indicates that the profitability for the equity shareholders. The above figures indicate that the equity shareholders are getting better returns on their investments. The company has been able to provide good returns to its equity investors over the last five years.

RETURN ON TOTAL RESOURCE:-

NET PROFIT YEAR (Rs in Cr.)

TOTAL ASSETS RATIO (Rs in Cr.)

2005-06 2006-07 2007-08 2008-09 2009-10

32.79 34.12 34.58 36.43 38.72

401.08 417.71 470.70 483.27 515.76

0.082 0.082 0.074 0.075 0.075

600 500 400 300 200 100 0 2005-06 2006-07 2007-08 2008-09 2009-10 NET PROFIT(Rs in Cr.) TOTAL ASSETS(Rs in Cr.)

Contd..
INTERPRETATION:-

It is the ratio of net profit to total resources or total assets. Return here means net profit after taxes and total resources means all realizable assets including intangible assets, if they are realizable. This ratio measures the productivity of the total resources of a concern. On analysis of the ratio it denotes that the company is able to maintain its productivity over the five year period.

Finding

The current liabilities of the company are increasing continuously from year after year. But when compared to these, current assets are also increasing year after year. Current ratio was not constant during these five years The cash balance position of the company shows a huge drop indicating that its inability to maintain liquid assets. Loans and advances position shows an upward trend Indicating amounts locked up in small advances. The share capital of the company is constant for the five year period indicating that the company seems not to have any major expansion plans. The debtors position shows an upward trend. Although as stated above, the sales are improving, it is better to reduce the debtors position.

Suggestion
The company has to maintain its current assets to be more so that it will be double the current liabilities and it should meet the standard ratio 2:1. This will help the company to meet its current obligations easily. Or the company can decrease its liabilities to meet the standard ratio. Cash maintained by the company should be increased so that the cash position ratio is kept to the standard i.e. 1:1. The standard can be reached either by increasing cash maintained or by decreasing current liabilities. Interest payout ratio of the company has to be kept low because higher the interest payout ratio will decrease the profit of the company. The company has to maintain its fixed assets less so that to avoid large funds tie up in the fixed assets.

Thank You