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    CHAPTER I

    INTRODUCTION

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    RATIO ANALYSIS

    MEANING OF RATIO ANALYSIS

    Ratio is an expression of the quantitative relationship that exists between the twonumbers. In simple language ratio is one number expressed in terms of another and can be

    worked out by dividing one number into the other. It shows the relationship between two figures.

    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 weakness of a firm as well

    as its historical performance and current condition can be determined.

    The relationship between two (or) more accounting figures/groups is called financial

    ration. A financial ratio helps to summarize a large mass of financial data into a concise form and

    to make meaningful interpretation and conclusion about the performance and position of the

    firm.

    A ratio may be expressed either in proportion (or) as tare (or) as percentage. A ration may

    take the form of proportion. Here the figures of the two items used for computing the ratio (or)

    expressed in common denominator examples are current ration 4:2, acid test ratio = 1:2:1 etc.

    turnover ratio = 2 times.

    Financial statements can give better in sight about financial strength and weakness of the

    firm if they properly analyze information reported in financial statements. Management should

    be particularly interested in knowing financial strengths of the firm to make their best use and to

    be able to spot our financial weakness of the firm to take suitable corrective actions.

    Analyzing financial statements is of interests to tenders, investors, security analysts,

    managers and others. Financial analyze may be done for a variety of purpose which may range

    from a sample analysis of the short term liquidity position of the firm, to comprehensive

    assessment of the strengths and weaknesses of the firm in various areas, it helps in assessing

    corporate excellence, judging credit worthiness, forecasting brand ratings predicting bankrupt.There are various methods of techniques used in analyzing financial statements such as

    comparative statements common size and trend analysis. But these simple tools will not be

    helpful to the analyst to make out the firms financial positi on and performance.

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    For a meaningful and realistic assessment of the position and performance of the firm the

    analyst should try to establish and evaluate the relationship between different components items

    of basic financial analysis. It is the process of establishing and interpreting various ratios. It is

    with the help of ratios that the financial statements can be analyzed more clearing and decisions

    made from such analysis.

    NATURE OF RATIO ANALYSIS:

    Nature: - The ratio analysis of financial statements stands for the process of arrangement of data

    computation of ratios interpretation of the rations so computed of protections through ratios.

    However ratio analysis is not an end itself. It is only a means of better understanding of financial

    statements and weakness of a firm collection of more ratios does not serve and purpose, unless

    several appropriate ratio are analyzed and interpreted. The following are the 4 steps involved in

    ratio analysis, control of the firm with a limited state and there earnings will be magnified with

    the overall rate of return of the firm is higher than the cost of debt capital.

    DEFINITION:

    RATIO:

    It may be defined as The indicated quotient two Mathematical expression and as The

    relationship between two (or) more things.

    In financial analysis, a ratio issued as a bench mark for evaluating the financial position

    and performance of the company.

    Ratio is defined as the indicated quotient of two mathematical expressions and as the

    relationship between two or more things in financial analysis.

    Ratio Analysis is a technique of analysis and interpretation of financial statements. It is a

    process establishing and interpreting various ratios for helping in making certain decisions. It is a

    process of establishing and interpreting various for helping in making certain decisions.It is a means of better understanding of financial strength and weakness of a firm.

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    Steps for Ratio analysis

    1. Selection of Relevant data from the financial statements depending upon the object of

    analysis.

    2. Calculation of appropriate ratios from the above data. Comparison of the calculated ratios

    with the ratios of the same firm in the past,

    3. 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

    4. Interpretation of ratios.

    The ratio is used as benchmark for evaluating the financial position of the firm. The

    absolute accounting figures reported in the financial statements do not provide a meaningful

    understanding of the performance and financial position of the firm. As accounting figure

    conveys meaning when it is related to some other information. The relation between two

    accounting figures expressed mathematically is known as financial relations. Ratios help to

    summarize the large quantity of the financial data and make qualitative judgment about

    firms performance.

    The importance of the ratio analysis for a business firm lies in the study of the numerical

    aspect of the problem and systemized with the help of ratio analysis. Its main contributionlies in bringing into hold relief to the inter relationship which exists between various

    segments of business, as expressed through accounting statement and avoiding any

    distortions that may result from absolute of accounting information.

    To evaluate the financial position and performance of a firm the financial executives

    needs a certain yard stick. The yardstick frequently used in ratio analysis it is an instrument

    for diagnosis of the health of an enterprise. Thus it does by evaluating in a broader context

    important aspects of the conduct of business like liquidity. Solvency Profitability capital

    bearing etc. such an evaluation enables conclusion to be drawn regarding the financial

    requirements.

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    Further, the ration analysis can be of in valuable aid to the management in the discharge

    of its basic duties and functions like forecasting, planning, coordination, communication and

    control. And an analysis study of this part performance of the business helps in predicting the

    future.

    INTERPRETATION OF THE RATIOS:

    A Single ratio in itself does not convey much of the sense. To make ratios more useful

    they have to be further interpreted.

    1. Group of ratios

    2. Ratios may be interpreted by calculating a group of related ratios. A single ratio

    supported by other related additional ratios becomes more understandable and

    meaningful.

    3. Historical Comparison

    4. One of the easiest and most popular ways of evaluating the performance of the firm is

    to compare its present ratios with past ratios called comparison over time.

    5. Projected ratios

    6. Ratios can also be calculated for future standards based upon the projected or

    proforma of financial statements.

    7. Inter firm Compared 8. Ratios of one firm can also be compared with the ratios of some other selected firms

    in the same industry at the same point of time.

    GUIDELINES FOR USE OF RATIOS:

    Accuracy of financial statements: the ratios are calculated from the dataavailable in financial statements.

    Objectives or Purpose of Analysis: The types of ratios to be calculated willdepend upon the purpose for which these are required.

    Selection of Ratios: Precaution in ratio analysis is the proper selection of appropriate ratios.

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    Use of Standards: The ratios will give an indication of the financial positiononly when discussed with reference to certain standards.

    Caliber of Analysis: The ratios are only guidelines for the analyst he should notbase his decisions entirely on them.

    UITILITY OF RATIO ANALYSIS:

    The following are the important managerial uses of Ratio Analysis.

    Help in Decision Making: Financial Statement is prepared primarily for decisionmaking. But the information provided on the financial statements in not an end in

    itself and no meaningful conclusion can be drawn from these statements alone.

    Financial Forecasting: Ratio Analysis is of much help in financial forecasting andplanning. A Ratio relating to past Sales. Profits and financial position in the future

    trends.

    Comparison: with the help of Ratio Analysis, ideal Ratios can compose and they can be used for comparison of particular firms progress and performance.

    Control and Co- ordination: Making effective control of the business. Standard

    ratios can be based upon proforma financial statements and variances is deviations if

    any can be found by comparing the actual with the standards so as to take a corrective

    action at the right time. Co-ordination which is of utmost important in effective

    business management.

    Cost Control: Ratios are very useful for measuring the performance and are usefulcost control. Ratio analysis throws light on the degree of efficiency in management

    and utilization of assets.

    Communication value: The financial Strength and weakness of the firm arecommunicated in a most easy and understandable manner by the use of ratios.

    Inter firm comparison: Ratio analysis throws light on the financial position of afirm but also serve as a stepping stone to remedial measures. They made possible

    with the inter firm comparison with the industry averages. They expected that the

    performance of a firm should be in broad confirm with that of industry to which it

    belongs. Such comparison demonstrates the relative strengths of the firm.

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    Other uses: Financial are use full in the diagnosis of financial health of a firm theyhighlight the liquidity, solvency, profitability, and capital gearing position of a firm. It

    is an essential part of the budgetary control and standard costing. Ratios are immense

    importance in the analysis and interpretation of financial statements as they bring the

    strength or weakness of a firm.

    1. Ratio analysis simplifies the understanding of financial statement.

    2. The financial strength and weakness of a firm are communicated to the intrest parties in

    easy and understandable manner.

    3. Ratio analysis enables an enterprise to achieve co-ordination.

    LIMITATIONS OF RATIO ANALYSIS:

    1. Limited use of single ratio.

    2. Lack of adequate standards.

    3. Price level changes.

    4. Un comparable.

    5. Change of accounting procedure.

    6. Inherent limitations of accounting.7. Ratios are no substitutes.

    8. Absolute figurers distortive.

    LIMITATIONS OF RATIO ANALYSIS:

    Ratio may not prove to be the ideal tool for inter firm comparisons. When two

    firms adopt different accounting policies.

    1. A study of ratios in isolation, without studying the actual figures, may lead to wrong

    conclusions.

    2. Ratios can be calculated only on the basis on the data if the original data is not reliable,

    then ratios will be misleading.

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    3. Ratio analysis suffers from lack of consistency.

    4. In the absence of well accepted standards, interpretation of ratios becomes subjective.

    5. Ratios fail to reflect the impact of price level changes, and hence, can be misleading.

    6. Ratios are only tools of quantitative analysis and fail to take into account the qualitative

    aspects of a business.

    7. Ratios are based on past data and hence cannot be reliable guide to future performance.

    8. Ratio are volatile and can be influenced by a single transaction with extreme value.

    9. Ratios are only indicators. They need a proper analysis by a capable management; they

    are only the means, and not an end, in the interpretation of financial statements.

    CLASSIFICATON OF RATIOS:

    _______________________________________________________

    Traditional Functional Significance

    Classification Classification Ratios

    OR OR

    Statement ratio Classification Ratios according to

    Importance According to Tests importance

    Balance sheet ratios Liquidity Ratios Primary Ratios

    OR

    Position statement Ratio Leverage Ratios Secondary Ratios

    Position & Loss A/c Ratios Activity Ratios

    OR

    Revenue Income Statement Ratio Profitability Ratios

    Composite / Mixed Ratios

    OR

    Inter Statement Ratios

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    A. TRADITIONAL CLASSIFICATION OR STATEMENT RATIOS:

    _______________________________________________________

    Balance sheet Ratios Profit & Loss A/c Ratio Composite/ Mixed Ratio

    OR OR OR

    Position Statement Ratio Revenue / Income Inter Statement

    Statement Ratios Ratios

    1) Current Ratio 1) Gross Profit Ratio 1) Stock turnover ratio

    2) Liquidity Ratio (Acid) 2) Operating Ratio 2) Debtors turnover ratio

    Test or Quick Ratio

    3) Absolute Liquidity Ratio 3) Operating Profit Ratio 3) Payables turnover ratio

    4) Debt Equity Ratio 4) Net profit Ratio 4) Fixed Asset turnover

    Ratio

    5) Proprietary Ratio 5) Expense Ratio 5) Return on equity capital

    6) Capital Gearing Ratio 6) Interest coverage Ratio 6) Return on share holdersfunds

    7) Asset Proprietorship 7) Return on capital

    Ratio employee

    8) Inventory to working 8) Capital Turnover Ratio

    Capital Ratio 9) Working capital

    9) Ratio of current Assets turnover Ratio

    To fixed Assets 10) Return on total

    resources

    11) Total Assets Turnover

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    B. FUNCTIONAL CLASSIFICATION OR CLASSIFICATION ACCORDING TO TEST.

    FINANCIAL CLASSIFICATION IN VIEW OF FINANCIAL MANAGEMENT OR CLASSIFICATION

    ACCORDING TO TESTS.

    LIQUIDITY RATIOS LONG-TERM SOLVENCY& LEVEERAGE RATIOS

    ACTIVITY RATIOS PROFIT ABILITY RATIOS

    A. 1) Current Ratio

    2) Liquidity Ratio (Acid

    Test or Quick Ratio)

    3) Absolute Liquid Ratio

    B. 1) Debtors Turnover

    2) Creditors Turnover Ratio

    3) Inventory Turnover Ratio

    Financial Operating Composite

    1) Debt Equity Ratio

    2) Debt to Total Capital Ratio

    3) Interest coverage Ratio

    4) Cash flow/ Debt. Service

    Ratio

    5) Capital Gearing.

    1) Inventory Turnover Ratio

    2) Debtors Turnover Ratio

    3) Fixed Assets Turnover Ratio

    4) Total Assets Turnover Ratio

    5) Working Capital Turnover

    Ratio

    6) Payable turnover Ratio

    7) Capital Employed Turnover

    Ratio

    A. In relation to Sales

    1) Gross profit Ratio

    2) Operating Ratio

    3) Operation Profit Ratio

    4) net Profit Ratio

    5) Expenses Ratio

    B. In relation to Investments

    1) Return on Investments

    2) Return on capital employed

    3) Return on equity capital

    4) Return on total resources

    5) Earnings per share

    6) Price earnings Ratio

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    CHAPTER II

    RESEARCHMETHODOLOGY

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    RESEARCH METHODOLOGY

    Methodology is the way in which we find out the information. It describes how project is

    done. The methodology includes methods, procedures, and techniques, and techniques used to

    collect and analyze information.

    The proposed study is carried out with the help of both primary and secondary sources of

    data. The present study will reveal the finance performance of the company covering purely

    financial data supplied by the companys financial statements through ratio analysis.

    OBJECTIVES OF STUDY:

    The following are the objectives of study:

    1. To comparison of changes in ratios of different phenomenon at different times.

    2. To know the current financial position and liquidity position of the company.

    3. To know the ling term financial position of the company.

    4. To assess the financial stability of a concern by the application of Ratio Techniques.

    5. To know the profitability of the concern.

    6. To know the progress of the business over a period of time.

    7. To evaluate the credit worthiness position of the corporation.

    8. To calculate the return on investments of the corporation.

    9. To identify the reasons for the change in profitability and financial position of the

    company.

    10. To understand the efficiency of the firm with the help of turnover ratios.

    SCOPE OF THE STUDY:

    The present study ill revel the finance performance of the company covering purely

    financial data supplied by the companies through RATIO ANALYSIS.

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    The study is confirmed to RATIO ANALYSIS Ratio analysis is one of the most

    popularly used tool in financial analysis. Ratio analysis is used as yardstick for evaluation the

    financial position and performance of the company. It is a technique of analysis & interpretation

    of financial statements. It is used for decision making.

    The Ratio Analysis is analyzed financial data along with interpretation. The study is based on last five years annual reports of Ratna Infrastructure Projects

    Private Limited.

    The present study is restricted only five years ( 2005-06 to 2009-10 ) Only the secondary data has been taken for the study.

    The study covers only the financial performance of the corporation.

    Only the ratio analysis is taken as a technique to evaluate the financial performance of the

    corporation.

    The scope covers is confined to the liquidity ratios, leverage ratios, efficiency ratios, and

    profitability ratios.

    The scope of study of study is limited of the availability of past or historical information

    of financial statements.

    PERIOD OF THE STUDY:

    To study the comparative financial statements analysis of RIPPL the research had chosen

    six years period from 2005-2006 to 200902010 as period of study. In the report the financial

    conduction of the company in the six years of the study period, was analyzed and presented in

    the form of statements and tablets, accompanied by respective interpretations.

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    THE LIMITATIONS OF THE STUDY:

    The following are the limitations of the study

    1. The study has been limited to only five years ( 2005-2010 )

    2. All the ratios could not be covered under the study, because of inadequate information.

    3. The price level changes are not taken in to account in the financial statement over the

    five years.

    4. The major limitation of the corporation under the study was time. Since it was to be

    completed within short period of time, which is not sufficient to under the comprehensive

    study.

    5. The study of the company includes only ratios analysis.

    6. The conclusion drawn from the annual figures provided by the company which may

    not give accurate financial position of the company.

    7. There are many techniques for financial analysis but the study is carried out by

    only Ratio Analysis.

    8. In published accounts key information is sometimes omitted, thus may limit the

    amount of analysis that can be undertaken.

    9. Financial analysis is based upon the only minority information and non

    minority factors are ignored.

    10. This study may not reflect the whole financial position of the organization.

    COLLECTION OF DATA:

    The study is mainly based on the secondary data obtained for last 5 years. The data is

    collected from the annual reports of RIPPL and other printed material available from the

    company. Some of the data collected from reports and other journals.

    ]

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    PRIMARY DATA:

    The data collected first time for any statistical investigation and is used in the statistical

    analysis is termed as primary data.

    The primary data is collected by interacting with the finance manager and other

    concerned executives at the administrative office of the company.

    SECONDARY DATA:

    The data has been collected from financial statements of profit and loss account, balance

    sheets of RIPPL websites, and journals of the concerned organization.

    The secondary data was collected from already published sources such as annual reports,

    internal records.All the secondary data used for the study has been extracted from the annual reports,

    manuals and other published materials of the company. Secondary data has been used to analyxe

    the financial performance of the corporation.

    Sources of Secondary data:

    1. Secondary data has been collected through annual reports and other publishe

    broachers.

    2. Company web site ( www.ratinfra.in )

    http://www.ratinfra.in/http://www.ratinfra.in/http://www.ratinfra.in/http://www.ratinfra.in/
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    CHAPTER III

    COMPANY PROFILE

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    COMPANY PROFILE

    Type of industry: construction

    Companies that design, develop, build, or tear down structures, as well as companies thatsupply them, are all part of the construction industry. Currently in the U.S., the industry is

    depressed despite recently lowered interest rates. However, there is still activity in the private

    and government sectors, as well as small jobs such as remodeling.

    Industry composition:

    The construction industry is considered a great indicator industry to the overall health of a

    nations economy. When the construction demand increases, that me ans that many other

    industries are growing as well, and vice versa. The construction industry is composed not only of

    companies that actually build structures, but also those that design, develop, repair, or maintain

    structures. The construction of infrastructures such as roadways, railroads, or airports is included

    in our transport manufacturing industry.

    History:

    The construction industry began back in ancient times when humans began to build their own

    shelters, such as huts, out of the natural resources they has available around them. The industry

    has evolved a lot since those times, especially in modernized economies, but the basics are still

    the same. Construction is still humans using the natural resources available to them to build

    objects, such as private shelter, roads, or public buildings that are of use of them.

    The construction industry is characterized by cycles of growth and depression. The outcome of

    companies that make construction materials is tied closely to the amount of new constructiontaking place; that, in turn, is influenced by interest rates and the growth of the other industries in

    the economy. Recent construction history has been largely determined by the raising interest

    rates and economic outlook.

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    On January 31, 2006, Alan Greenspan stepped down as the U.S., Federal Reserve Chairman, and

    was replaced by Bob Bernanke. The housing market, which experienced a boom in the early

    2000s due to record low interest rates and political policies, was already slowing down. Under

    the new Fed leadership, interest rates increased, leading to a depressed housing market as people

    examined the interest rates for their loans and decided against purchasing a home. The economic

    collapse of 2008 further crippled the construction industry by killing nearly all growth in other

    industries in the economy. This has caused global builders and supplies of the construction

    industry to suffer.

    The Construction industry is fragmented. The production in this industry is divided

    among a few different companies, however, no single firm has large enough share of the market

    to be able to influence the industrys direction or price levels.

    The construction industry is divided into three major segments. The construction of

    building segment includes contractors, usually called general contractors, who build residential,

    industrial, commercial, and other buildings. Heavy and civil engineering construction contractors

    build sewers, roads, highways, bridges, tunnels, and other projects. Specialty trade contractors

    perform specialized activities related to construction such as carpentry, painting, plumbing, and

    electrical work.

    Good and services. Houses, apartments, factories, offices, schools, roads, and bridges

    are only some of the prod ucts of the construction industry. This industrys activities include the

    building of new structures, including site preparation, as well as additions and modifications to

    existing ones. The industry also includes maintenance, repair, and improvements on these

    structures.

    Ratna infrastructure Projects Private Limited is an established and ISO 9001:2008

    accredited engineering and construction company engaged in execution of infrastructure

    Projects, such as construction of National Highways, Dams, Irrigation Canals, Bridges, Buildings

    and Industrial Plants. It started in a small way as Ratna Constructions with the first brick of

    foundation for it laid in the year 1987 for executing civil contract works. Since its establishment

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    Ratna has evolved, matured and forayed in to the entire gamut of infrastructure works. Ratna

    has proved itself time and again beyond doubt to meet the challenges and requirements of

    various infrastructure projects, small and large from state governments agencies and private

    employers. Ratna Constructions has become RATNA INGRASTRUCTURE PROJECTS

    PRIVATE LIMITED (RIPPL) with effect from April 30, 2007 as an ongoing process of

    metamorphosis and to reflect the type of various works undertaken by RIPPL.

    Areas of Expertise

    Dams

    Canals

    Structures

    Road Works

    Buildings

    Pipe Lines

    VISION OF RATNA INFRASTRUCTURE PROJECTS PVT LTD

    It is our vision to build a world-class engineering, construction, and project management

    enterprise. We will be recognized for our abilities to complete projects on-time with zerotolerance for cost overruns. We will create a professional environment that will continually

    challenge our associates and affiliates to innovate, improve, and delivered.

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    MISSION OF RATNA INFRASTRUCTURE PROJECTS PVT LTD

    It is our mission to build enduring infrastructure for communities around the world.

    Excellence in project management is critical to our mission.

    MANAGEMENT TEAM

    Ratna Infrastructure Projects Private Ltd (RIPPL) is headed by Sri M.M.L.

    Narasimham as its Managing Director at the apex who is a visionary with an uncompromising

    spirit on principals and an eye for detail both major and minor. His dynamism and leadership

    qualities have drawn the best of professionals from different fields who bring together their rich

    knowledge and expertise to the common platform. They undertake and execute jobs

    independently and support and supplement the effort of the Managing Director under whose

    stewardship the companys growth is scaling new heights.

    MANPOWER Ratnas greatest asset has been its manpower resources with whose support the

    organization has grown in leaps and bounds. The team consists of highly qualifies and

    experienced personnel drawn from prestigious organizations. The total manpower strength of the

    Company during the year has crossed 2000 members. Keeping in view the shortage of manpower

    in the industry, Ratna has been continuously working on sourcing of manpower. The Company

    also started working closely with National Academy of Construction (NAC), Hyderabad, for

    training manpower in certain technical streams and later on absorbing them to meet the

    Compa nys requirements. One of the focus areas pertaining to this sector is driving staff and to

    mitigate the shortage we tied up with The Krishna District Lorry Owners Association and

    Driving Schools, Vijayawada, for training the personnel in driving. Assessment of competencies

    required by HODs for effective performance was carried out. In the areas where competencies

    were found wanting, training programmes were conducted. Two such programmes are on TeamBuilding and Project Management respectively.

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    Quality Assurance

    Ratna has built a reputation for quality and is firmly committed to its motto of Ecellence

    through Quality. It is Ratnas objective to continuously improve on the level of Quality

    Performance to ensure that the company is successful in business. To this end, the Group strives

    to conduct its operations in such a manner that all projects and services are carried out to meet

    the clients requirements while it continuously e quips itself with the necessary methodologies

    and tools to improve quality systematically. In the pursuit of operational excellence in all aspects

    of its business, Ratna has successfully formulated, the Ratna Quality and Safety Assessment

    System (RAQSAS) in 2000. RQSAS is self-regulated assessment system of procedures and

    testing methods in which standards were set out for the various quality and safety aspects of

    irrigation construction. In an environment of poor skills and a transient migrant workforce which

    is prevalent in construction field, the introduction of RQSAS will help Ratna in its effort to

    enhance the quality and safety performance standards in building projects.

    CORPORATE OVERVIEW

    Ratna Constructions is a quality conscious company. The company continues to

    strengthen its position and is today regarded as a trusted business partner. Ratna Constructions

    developed a rich technical expertise integrating state-of the- art technologies to specifically

    address the user needs with the timely execution of quality work as its core competence, Ratna Constructions began to encompass the latest construction technologies and integrated its

    accumulated expertise to harmonize people, facilities and environment. Bolstering corporate

    value further, Ratna Constructions is moving fast forward in shaping the destiny of our country.

    And as an ongoing process of metamorphosis, Ratna Constructions has become Ratna

    Infrastructure Projects Pvt limited with effect from April 20,2007

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    FIXED ASSETS

    PLANT & SEGMENTS

    Our strong asset base provides a strong competitive leverage for shorter turnaround times

    and cost effective business model. The company has Rs. 100 cores of Gross Block consisting of

    Excavators, Tippers, Transit Mixers, Crushers, Batching Plants, Tower Cranes, Compactors,

    Loaders etc. and is in the process of adding equipment worth Rs. 100 cores

    BUSINESS SEGMENTS

    Ratna has been active in the field of construction in India for more than 22 years as a

    Multi-Service organization and is best known for its expertise in implementation of constructionschemes and infrastructure works, below are the few areas where Ratnas skill can be seen:

    IRRIGATION

    INDUSTRIAL

    POWER

    RAODWAYS

    BULDINGS

    URBAN INFRASTRUCTURE

    PARTNERS

    Joint ventures bring together the core strength tow different parties to the forefront and

    enable them to take up works and execute them efficiently for optimum utilization of resources

    for mutual benefit. Some of the major joint ventures are:

    Gayatri Ratna JV

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    Hindustan Ratna JV

    ZVS Ratna Sushee JV

    MEIL Ratna JV

    KBL Ratna JV

    Ratna Sai Sudheer JV

    Ratna RK JV

    KCL Ratna

    CLIENTS

    The client list of Ratna includes various Government Departments, Private

    Organizations, Public Sector Undertaking etc. below is list of our few esteemed clients:

    National Thermal Power Corporation

    Irrigation Department

    R & B, Public Health

    GMR

    Visakha Steel Plant

    National Mineral Development Corporation

    NTPC Tamilnadu Energy Company Ltd.

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    APGENCO

    Bhartiya Rail Bijlee Corporation Ltd.

    Bhilai Engineering Corporation Ltd.

    Hindustan Steel Works Construction Ltd.

    BOC India Ltd.

    TATA Projects Ltd.

    Siemens Ltd.

    Tamilnadu Road Development Company Ltd

    NAME OF BANKS WHICH PROVIDED FINANICAL ASSISTANCE TORIPPL

    1) State Bank of India

    2) State Bank of Travancore

    3) State Bank of Mysore

    4) Axis Bank Limited

    5) Bank of India6) IDBI Bank Limited

    7) ING Vysya Bank Limited

    8) UCO Bank

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    LIST OF EQUIPMENT AND MACHINERY OWNED BY RATNA

    INFRASTRUCTURE PROJECTS PVT.LTD:

    Sl.No.

    Details of each equipment No. of Units

    EARTH MOVINGEQUIPMENT

    1 Excavators 512 Graders 63 Dozers 44 Tractor Dozers 25 Loaders 36 Tractor Loaders 8

    7 Loader Cum Excavator 28 Soil Compactor 79 Tippers 24810 Water Tankers 1411 Tractor Tanker 112 Diesel Tankers 5

    ROCK PROCESSINGEQUIPMENT

    1 Crushing Plants 42 Crawler Drills 63 Compressors 54 Air Compressors 75 Drilling Compressor 16 Rock Breaker 1

    CONCRETEEQUIPMENT

    1 Batching Plant 92 Mini Batching Plant 23 Mobile Batching plant 3

    Total 144 Concrete Pumps 45 Ice Plant 16 Chilling Plant 17 Transit Mixers 318 Self loading transit Mixers (C.C) 139 Concrete Mixers 1110 Canal lining pavers 611 Needle Vibrator 15

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    12 Bed Vibrator 513 Plate Vibrator 11

    ROAD WORKEQUIPMENT

    1 WMM Plant 12 Hot Mix Plant 13 Sensor Paver 24 Mechanical Paver 35 Bitumen Sprayer 16 Rollers 57 Vibromax Roller 18 Sheep Foot Roller 1

    VEHICLES1 Two wheelers 1242 4 wheelers 50

    GENERATORS1 Generators 67GENERAL

    1 Welding machines 362 Mobile cranes 13 Hydrualic Mobile Crane 14 Tower Crane Track Mounted

    ( 12 T X 45/50M )1

    5 Dewatering Pumps ( Diesel ) 376 Electric Pumps 287 Submergible Pumps 88 Shuttering Plates 80000

    Sq.m9 Acro tubes for Scaffolding 80000

    Nos10 Total Stations 311 Leveling instruments 1012 Lab Equipment 2 Lots13 Weigh Bridge 214 Bar bending & Cutting Machines 2

    Pipe

    ManufacturingEquipment1 Plate Bending machine 2 Nos.2 SAW Welding Machines 8 Nos.3 Pug Cutting Machines 4 Nos.4 Rectifiers 8 Nos.5 Hydro Testing Equipment 2 Nos.6 Grinding Machines AG 7 4 Nos.

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    7 Grinding Machines AG 5 2 Nos.8 Hoist Arrangements 2 Nos.9 Guniting Machines 6 Sets10 Sans blasting & Painting 4 Sets

    AWARDED PROJECTS

    Dummugudem Lift Irrigation scheme on

    Godavari river

    SRBC Pothireddypadu Canal works

    Package No. 12 of GNSS Projects

    Package No. 29 of GNSS Projects

    Package No. 14 of GNSS Projects

    Mid Manair Dam & Canal

    Feeder Canal in veligonda

    PKG 93 B Telugu Gnaga Projects PBC

    Polavaram Project Package 8

    PKG 93A Telugu Ganga Project PBC

    Toll Plaza and Roads

    Storm Water Drains

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    COMPLETED PROJECTS Sunkesula-Dam closing under Veligonda division

    N H 7 Road

    Site leveling- Rourkela Steel Plant

    Satna-Maihar

    Earth work and site preparation, kirandul

    North Canal of mylavaram

    Package No. 48A

    Address:

    Plot No. 88, Prashashan nagar,

    Road No.72, Jubilee Hills,

    Hyderabad 500 033.

    Phone: +91-040-23557131 / 23555263 / 23551798

    Fax : 040 23555264, Email : [email protected]

    mailto:[email protected]:[email protected]:[email protected]:[email protected]
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    CHAPTER IV

    DATA ANALYSISAND

    INTERPRETATION

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    I. LIQUIDITY RATIOS

    Liquidity refers to the ability of a concern to meet its current obligations as when these

    become due. The short term obligations are met by realizing amounts from current, floating or

    circulating assets.

    To measure the liquidity of a company, the following rations can be calculated

    1. Current ratio

    2. Quick ratio

    1. CURRENT RATIO

    Current ratio may be defined as the relationship between current assets and current

    liabilities. It is a measure of liquidity and is mostly widely used to make the analysis of short-

    term financial position of liquidity of a firm.

    It indicates the amount of current assets available for each current liability. Higher the

    ratio, greater the margin of safety for creditors and vice- versa. However, too high / too low ratio

    calls for further investigations since the too high ratio may indicate the presence of idle funds

    and too low ratio may indicate the overtrading / under capitalization.

    FORMULA:

    Current Assets

    Current ratio = ----------------------------

    Current liabilities

    Standard:

    A relatively high current ratio is the indication that the firm / organization is liquid and

    has to pay its current obligations in time as and when they become due.

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    When a low current ratio represents that the liquidity position of firm is not good and the

    firm shall not be able pay its current liabilities in time.

    A current ratio 2:1 usually as ideal.

    Table shows current ratio calculations:

    (Rs lakh)

    YEAR CURRENT

    ASSETS

    ( Rs in lakhs )

    CURRENT

    LIABILITIES

    (Rs in lakhs )

    RATIO

    2006-07 18,228.22 6,545.08 2.79

    2007-08 16,556.18 6,071.60 2.73

    2008-09 18,086.49 6,327.70 2.86

    2009-10 27,638.88 9,170.64 3.01

    2010-11 26,711.90 5,795.64 4.60

    Average 21,444.334 6,782.062 3.19

    2.79 2.732.86

    3.01

    4.6

    0

    0.5

    1

    1.5

    2

    2.5

    3

    3.5

    4

    4.5

    5

    2006-07 2007-08 2008-09 2009-10 2010-11

    Current ratio

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    Interpretation:

    1. If we observe the above current ratio table, the current ratio is decreased between

    2006-07 and 2007-08 i.e. 2.79 to 2.73 due to decrease in current assets.

    2. Current assets increased between 2007 08 and 2008 09 and 2008 09 i.e., 2.73 to

    2.86 due to increases in current assets.

    3. Between the year 2008 to 2009 and 2009 to 2010 there is increase in current ration i.e.

    2.86 to 3.02.

    4. It is observed that current ratio between 2009 2010 and 2010 2011 is increased

    from 3.01 to 4.6

    5. The average current ratio for the five years 2006 -2011 was 3.198.

    6. it has been observed that the current ratio is maximum in the year 2010 2011

    7. If we compare current ratio with standard ratio, it is clear that the company is

    maintaining current ratio.

    II. QUICK RATIO

    Quick ratio can be defined as the relationship between quick or liauid assets and current

    liabilities.

    It measures the firms capacity to payoff current obligations immediately and is a more

    rigorous test of liquidity than current ratio.

    Quick Assets are assets that can be converted into cash very quickly without much loss.

    Quick liabilities are which have to be necessarily paid within 1 year. All current assets,

    expect stock and prepaid expenses, are also quick assets. All current liabilities, except Bank

    overdraft are quick liabilities.

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    FORMULA:

    Liquid Assets

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

    Current Liabilities

    Quick Assets = Current Assets ( stock + prepaid expenses )

    While computing and using quick ratio, it must be ensured.

    1. That the quality of both receivable ( debtors and bills receivable ) should be carefully

    assessed.

    2. That all quick assets and current liabilities have been properly valued.

    Standard:

    A quick ratio of 1 is usually considered as ideal. A quick ratio of less than 1 is indicative

    of (1:1 ) inadequate liquidity of the business. A very high quick ratio is also not advisable, as

    funds can be more profitably employed.

    (Rs lakh)

    YEAR LIQUID

    ASSETS

    ( Rs in lakhs )

    CURRENT

    LIABILITIES

    (Rs in lakhs )

    RATIO

    2006-07 6,766.28 6,545.08 1.03

    2007-08 6,682.02 6,071.60 1.01

    2008-09 6,793.42 6.327.70 1.07

    2009-10 6,074.16 9,170.29 0.66

    2010-11 9,810.73 5,795.64 1.69

    Average 7,225.322 6,782.062 1.11

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    Interpretation:

    1. From the above table, it is realized that the quick ratio is fluctuating year to year during

    the period of study.

    2. Between the years 2006 -2007 and 2007 -2008 there is an increase in Quick ratio of 1.1from 1.03 because of increase in quick assets.

    3. There is a decrease in quick ratio in the year 2008 2009 to 1.07 from the year 2007-08.

    4. Between the years 2008-09 and 2009-10 quick ratio decreased from 1.07 to 0.66

    because of decrease in quick assets.

    5. Quick ratio between 2009 10 and 2010 -2011 increased from 0.66 to 1.69.

    6. The average quick ratio during the period is 1.11.

    7. The highest Quick Ratio of period of five years is in the year 2010 11 is 1.69.

    8. When compared with the standard ratio the company is maintaining healthy quick

    ratio.

    1.03 1.011.07

    0.66

    1.69

    0

    0.2

    0.4

    0.6

    0.8

    1

    1.2

    1.4

    1.6

    1.8

    2006-07 2007-08 2008-09 2009-10 2010-11

    QUICK RATIO

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    II.LEVERAGE RATIOS

    The short term creditors, like bankers and suppliers of raw material, are more concerned

    with the firms current debt paying ability. To judge the long term financial position of thefirm, financial leverage ratios are calculated.

    Any ratio used to calculate the financial leverage of company to get an idea of the

    companys methods of financing or to measure its ability to meet financial obligations.

    These ratios indicate mix of funds provided by owners and leanders.as a general rule,

    there should be an appropriate mix of debt and owners equity in financing firms assets.

    i. DEBT EQUITY RATIO

    Debt equity ratio is the relation between borrowed funds and owners capital in a firm it

    is also known as external internal equity ratio.

    The debt equity ratio is used to ascertain the soundness of long term financial policies

    of the business.

    The main purpose of this ratio is to determine the relative states of outsiders and

    shareholders. Total debt will include short term borrowings from financial institutions,

    debentures, public deposits, interest bearing loans.

    FORMULS:

    Debt (Outsiders Fund)

    Debt-equity Ratio = ---------------------------

    Equity (Shareholders funds)

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    Standard:

    A Debt Equity Ratio of 1:1 is considered ideal

    Table shows Debit Equity Ratio calculations

    (Rs lakh)

    YEAR DEBIT

    ( Rs in lakhs )

    EQUITY

    (Rs in lakhs )

    RATIO

    2006-07 12,186.64 11,016.39 1.10

    2007-08 10,765.45 13,865.26 0.77

    2008-09 10,597.18 17,103.08 0.62

    2009-10 11,923.08 26,320.50 0.45

    2010-11 17,938.78 30,712.16 0.58

    Average 12,682.226 19,803.478 0.704

    1.1

    0.77

    0.62

    0.45

    0.58

    0

    0.2

    0.4

    0.6

    0.8

    1

    1.2

    2006-07 2007-08 2008-09 2009-10 2010-11

    Debt-equity ratio

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    Interpretation:

    1. The above debt equity ratio table reveals the long term solvency position of the

    company during the period of study (2006-07 to 2010-11).

    2. There is a decrease in debt equity ratio between the years 2006 07 and 2007 08 due

    to decrease in outsiders funds.

    3. Decreased from 1.1 to 0.77 in the years 2006 07 to 2007 08.

    4. Debt Equity increases due to increase in Debt o an organization.

    5. The debt equity of years 2006 - 07 to 2009 10 is decreasing because of decrease in

    shareholders funds.

    6. The average debt equity ratio for last five years is 0.704.

    7. Compared with the standard debt equity ratio, the corporation is maintaining the right

    balance between the external and internal equity.

    ii. FIXED ASSETS RATIO:

    This ratio indicates the mode of financing the fixed assets.

    Fixed assets are used in the business for producing goods to be sold. The effective

    utilization of fixed assets will result in increased production and reduced cost.

    FORMULA:

    Fixed Assets

    Fixed Assets Ratio = ---------------------------

    Total long-term funds

    Total longterm funds = shareholders funds + funded debts

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    A financially well managed company will have its fixed assets financed by long term fund.

    Therefore, the fixed assets ratio should never be more than 1. A ratio of 0.67 is considered ideal.

    Case (i): if fixed assets is more than the total longterm funds it implies that the firm has financed

    a part of the fixed assets out of current funds or the working capital which is not a good financial

    policy.

    Case (ii): if total longterm funds is more than fixed assets it implies that a part of the working

    capital requirements is met oil of the long term funds of the firm.

    Table shows Fixed Assets Ratio calculation

    (Rs lakh)

    YEAR DEBIT

    ( Rs in lakhs )

    EQUITY

    (Rs in lakhs )

    RATIO

    2006-07 16,962.44 23,203.03 0.73

    2007-08 19,982.12 24,5651.07 0.812008-09 23,374.94 25,541.29 0.91

    2009-10 28,564.61 34,054.59 0.83

    2010-11 34,828.27 36,771.12 0.95

    Average 24,742.476 28,826.22 0.85

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    iii. PROPRIETARY RATIO

    A variant to the debt equity ratio is the proprietary ratio, which is also known as equityratio. The ratio establishes the relationship between capital to the total assets of the firm. The

    ratio of proprietors funds to total funds is an important ratio for determining longterm solvency

    of a firm. The components of this ratio are proprietors funds and total assets.

    Formula:

    Shareholders funds

    Proprietary ratio = --------------------------------

    Total assets

    As equity rati represents the relationship of owners fund to total assets (higher the ratio

    or the shareholders in the total capital of the company, better is the long term solvency positionof company). The ratio indicates the extent to which the assets of the company can be lost

    without effecting the interest of creditors of the company.

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    Table shows proprietary Ratio Calculations

    (Rs lakh)

    YEAR SHARE HOLDERS

    FUNDS

    ( Rs in lakhs )

    TOTAL ASSETS

    (Rs in lakhs )

    RATIO

    2006-07 11,016.39 28,357.03 0.38

    2007-08 13,865.26 30,233.89 0.45

    2008-09 17,103.08 34,398.53 0.49

    2009-10 26,320.50 45,864.87 0.57

    2010-11 30,712.16 54,543.05 0.56

    Average 19,803.478 38,677.474 0.49

    0.38

    0.450.49

    0.57 0.56

    0

    0.1

    0.2

    0.3

    0.4

    0.5

    0.6

    2006-07 2007-08 2008-09 2009-10 2010-11

    PROPRIETARY RATIO

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    Interpretation:

    1. From the above table, it is realized that the Proprietary ratio is increasing year to year

    during the period of study.

    2. Between the years 2006 2007 and 2007 -08 there is an increase in proprietary ratio of

    0.38 from 0.45 due to increase in share holder funds.

    3. There is a increase in Proprietary ratio in the year 2008 2009 to 0.49 from the year

    2006 07.

    4. Between the years 2008 09 and 2009 10 Proprietary assets ratio increased from

    0.49 to 0.57.

    5. Proprietary ratio between 2009 -10 and 2010 -11 decreased from 0.57 to 0.56 due tomore increase in total assets value than the share holder funds.

    6. The average Proprietary ratio during the period is 0.49.

    7. The highest Proprietary Ratio period of five years is in the year 2009 10 is 0.57.

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    iv. FIXED ASSETS TO SHARE HOLDER FUNDS RATIO

    The ratio establishes the relationship between fixed assets and share holders funds i.e.,

    share capital. The ratio can be calculated as follows.

    Formula :

    Fixed Assets

    Fixed Assets to Shareholders fund Ratio = --------------------------------

    Shareholders funds

    Generally the purchase of fixed assets should be financed by share holders equity. If the

    ratio is less than 100 percent it implies that owners funds are more than total fixed assets and a

    part of working capital is provided by the share holders. When the ratio is more than 100 percent

    it implies that owners funds are not sufficient to finance the fixed asset and t o firm has to

    depend upon the outsiders to finance for fixed assets.Table shows Fixed Assets to Share bolder Funds Ratio Calculations

    (Rs lakh)

    YEAR FIXED ASSETS

    ( Rs in lakhs )

    SHAREHOLDER

    FUNDS

    (Rs in lakhs )

    RATIO

    2006-07 16,962.44 11,1016.39 1.53

    2007-08 19,982.12 13,865.26 1.442008-09 23,374.94 17,103.08 1.36

    2009-10 28,564.61 26,320.50 1.08

    2010-11 34,282.27 30,712.16 1.13

    Average 24,742.476 19,803.478 1.308

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    Interpretation:

    1. From the above table, it is realized that the Fixed assets to share holders funds ratio is

    continuously increasing year to year during the period of study.

    2. Between the year 2006 2007 and 2007 2008 there is an decrease in Fixed assets to

    share holders funds ratio of 1053 to 1.44 due to increase in share holder funds.

    3. There is a decrease in Fixed assets to share holders funds ratio in the year 2008 2009

    to 1.36 from the year 2006 07.

    4. Between the years 2008 09 and 2009 10 Fixed assets to share holder ratio

    decreased from 1.36 to 1.08.

    5. Fixed assets to shareholders fund ratio between 2009 -10 Fixed assets to share holder

    ratio decrease from 1.08 to 1.13 because the value of fixed assets increased more.6. The average Fixed assets to shareholders fund ratio during the period is 1.308.

    7. The highest Fixed assets to shareholders fund Ratio of period of five years is in the

    year 2005 06 is1.53.

    1.531.44

    1.36

    1.081.13

    0

    0.2

    0.4

    0.6

    0.8

    1

    1.2

    1.4

    1.6

    1.8

    2006-07 2007-08 2008-09 2009-10 2010-11

    Fixed assets to shareholders funds

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    v. FIXED INTEREST COVERAGE RATIO

    Net income to debt service ratio or simply debt service ratio is used to test the debt-servicing capacity of a firm. The ratio is also known as Interest Coverage Ratio. This ratio is

    calculated by dividing the net profit before interest and taxes by fixed interest charges.

    Formula :

    Net profit (before interest and taxes)

    Fixed interest coverage = ---------------------------------------------------

    Interest charges

    Table show s Fixed Interest Coverage Ratio Calculations

    (Rs lakh)

    YEAR NETPROFIT

    BEFORE

    INTEREST

    ( Rs in lakhs )

    INTEREST

    CHARGES

    (Rs in lakhs )

    RATIO

    2006-07 3,767.47 1,925.55 1.96

    2007-08 4,831.14 1,543.20 3.13

    2008-09 9,131.52 1,512.43 6.04

    2009-10 15,013.47 1,177.43 12.75

    2010-11 7,784.61 1,423.28 5.47

    Average 8,123.642 1,516.378 5.87

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    Interpretation :

    1. From the above table, it is realized that the Fixed interest coverage ratio is fluctuating

    year to year during the period of study.

    2. Between the years 2006 2007 and 2007 08 there is an increase in Fixed interest

    coverage ratio of 1.96 form 3.13 due to increase in net profit value.

    3. There is a increase in Fixed interest coverage ratio in the year 2008 2009 to 60.4

    from the year 2006 07.

    4. Between the years 2008 09 and 2009 10 Fixed interest coverage ratio increased

    from 60.4 to 12.75.

    5. Fixed interest coverage ratio between 2009 10 and 2010 11 decreased form 12.75to 5.47 due to increase in interest charges in the year 2010 11.

    6. The average Fixed interest coverage ratio during the period is 5.87.

    7. The highest Fixed assets Ratio of period of five years is in the year 2009 10 is 12.75.

    1.96

    3.13

    6.04

    12.75

    5.47

    0

    2

    4

    6

    8

    10

    12

    14

    2006-07 2007-08 2008-09 2009-10 2010-11

    Fixed interest coverage ratio

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    III. PROFITABILITY RATIOS

    i. RETURN ON EQUITY

    Return on equity capital is a relationship between the profits of a company and its equity capital,

    can be calculated as

    Formula :

    Net profit after tax preference dividend

    Return on Equity = -----------------------------------------------

    Equity shares capital

    Table shows Return On Equity Ratio Calculated

    (Rs lakh)

    YEAR NETPROFIT

    AFTER TAX

    ( Rs in lakhs )

    EQUITY

    SHARES

    CAPITAL

    (Rs in lakhs )

    RATIO

    2006-07 1,626.10 1,196.69 1.36

    2007-08 2,983.61 1,335.75 2.23

    2008-09 5,584.04 1,335.75 4.18

    2009-10 10,636.04 1,335.75 7.96

    2010-11 5,801.33 1,335.75 4.34

    Average 5,326.224 1,307.938 4.10

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    Interpretation :

    1. From the above table, it is realized that the Return on equity ratio is fluctuating year to

    year during the period of study.

    2. Between the years 2006 2007 and 2007 2008 there is an increase in Return onequity ratio of 2.23 from 1.36 due to increase in net profit value.

    3. There is a inverse in Return on equity ratio in the year 2008 2009 to 4.18 from the

    year 2006 07.

    4. Between the years 2008 09 and 2009 10 Return on equity ratio increased from 4.18

    to 7.96.

    5. Return on equity ratio between 2009 10 and 2010 -11 decreased from 7.96 to 4.34

    because the value of net profit is decreased in the year 2010 11.

    6. The average Return on equity ratio during the period is 4.01.

    7. The highest Return on equity Ratio of period of five years is in the year 2009 10 is

    7.96.

    1.36

    2.23

    4.18

    7.96

    4.34

    0

    1

    2

    3

    4

    5

    6

    7

    8

    9

    2006-07 2007-08 2008-09 2009-10 2010-11

    Return on equity

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    ii. RETURN ON SHAREHOLDERS FUND RATIO

    Return on shareholder investment, popularly known as ROI or RETURN ON SHARE/

    PROPRIETARY FUNDS is the relationship between net profits (after interest & tax) and the

    proprietors funds. Thus

    Formula :

    Net profit

    Return on share holder investment = -----------------------------------

    Shareholder funds

    Table Shows Return On Share Holder Funds Ratio Calculation

    (Rs lakh)

    YEAR NETPROFIT

    ( Rs in lakhs )

    SHARE HOLDER

    FUNDS

    (Rs in lakhs )

    RATIO

    2006-07 1,699.92 11,016.39 0.15

    2007-08 3,027.94 13,865.26 0.22

    2008-09 5,561.04 17,103.08 0.32

    2009-10 10,636.04 26,320.50 0.40

    2010-11 5,801.33 30,712.16 0.19

    Average 5,345.854 19,803.478 0.256

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    Interpretation :

    1. From the above table, it is realized that the Return on share holder funds ratio isfluctuating year to year during the period of study.

    2. Between the year 2006 -07 and 2007 08 there is an increase in Return on shareholder

    funds ratio of 0.22 from 0.15 due to increase in share holder funds value.

    3. There is a increase in Return on shareholder fund ratio in the year 2008 -09 to 0.32

    from the year 2006 07.

    4. Between the years 2008 09 and 2009 10 Return on equity ratio increased from 0.32

    to 0.4.

    5. Return on equity ratio between 20089 - 10 and 2010 -11 decreased from 0.4 to 0.19

    because the value of net profit is decreased.

    6. The average Return on shareholders funds ratio during the period is 0.256.

    7. The highest Return on equity Ratio of period of five years is in the year 2009 10 is

    0.4.

    0.15

    0.22

    0.32

    0.4

    0.19

    0

    0.05

    0.1

    0.15

    0.2

    0.25

    0.3

    0.35

    0.4

    0.45

    2006-07 2007-08 2008-09 2009-10 2010-11

    Return on shareholders funds

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    iii. RETURNS ON TOTAL ASSETS RATIO

    Return on total assets is a relationship between the new profit (after interest & tax ) and

    the total assets. Thus,

    Formula :

    Net profits

    Return on total assets = --------------------------------------

    Total assets

    Table Shows Return On Total Assets Ratio Calculations

    (Rs lakh)

    YEAR NETPROFIT

    ( Rs in lakhs )

    TOTAL ASSETS

    (Rs in lakhs )

    RATIO

    2006-07 1,699.92 28,357.03 0.06

    2007-08 3,027.94 30,233.89 0.1

    2008-09 5.564.04 34,398.53 0.16

    2009-10 10,636.04 45,864.87 0.23

    2010-11 5,801.33 54,543.05 0.11

    Average 5,345.854 38,677.474 0.132

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    Interpretation:

    1. From the above table, it is realized that the Return on total assets ratio is fluctuating

    year to year during the period of study.2. Between the years 2006- 07 and 2007 08 there is an increase in Return on total

    assets ratio of 0.1 from 0.06 due to increase in total assets value.

    3. There is a increase in Return on total assets ratio in the year 2008 09 to 0.16 from the

    year 2006 07.

    4. Between the years 2008 09 and 2009 -10 Return on total assets ratio increased from

    0.16 to 0.23.

    5. Return on total assets ratio between 2009 10 and 2010 -11 decreased from 0.23 to

    0.11 because the value of net profit is decreased.

    6. The average Return on total assets ratio during the period is 0.132.

    7. The highest Return on total assets Ratio of period of five years is in the year 2009 -10

    is 0.23.

    0.06

    0.1

    0.16

    0.23

    0.11

    0

    0.05

    0.1

    0.15

    0.2

    0.25

    2006-07 2007-08 2008-09 2009-10 2010-11

    Return on total assets ratio

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    Interpretation:

    1. From the above table, it is realized that the Creditors turnover ratio is fluctuating year

    to year during the period of study.

    2. Between the years 2006 07 and 2007 08 there is an increase in Creditors turnover

    ratio of 2.7 from 3.06 due to increase in total purchase value.

    3. There is a increase in creditors turnover ratio in the year 2008 09 to 3.24 from the

    year 2006 07.

    4. Between the years 2008 09 and 2009 10 Creditors turnover ratio decreased from

    3.24 to 3.01 because the value of total purchase is increased more in the year 2010 -11.

    5. Creditors turnover rati o between 2009 10 and 2010 -11 increased from 3.01 to 4.81due to decrease in trade creditors in the year 2010 -11.

    6. The average Creditors turnover ratio during the period is 3.364

    7. The highest Creditors turnover Ratio of period of five years is in the year 2010 11 is

    4.81.

    2.73.06

    3.243.01

    4.81

    0

    1

    2

    3

    4

    5

    6

    2006-07 2007-08 2008-09 2009-10 2010-11

    Creditors turn over ratio

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    CHAPTER V

    CONCLUSIONSAND

    SUGGESTIONS

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    CONCLUSIONGS :

    1. RIPPL is not maintaining required amount of current assets to meet its currentliabilities when compared to standard ratio 2:1.

    2. The liquidity position of the company is satisfactory during the study period.

    3. It has been observed from the survey of quick ratios are 1.03,1.1, 1.07, 0.66, 1,69 in

    the years 2006, 2007, 2008, 2009 and 2010.

    4. The overall profitability ratio reflects the overall efficiency with capital is used. It

    helpful for making capital budgeting decisions. The ratio is always goes an increasing

    in our project period.

    5. The profitability position of the concern is satisfactory except in 2009 10.

    6. The debt equity ratio measures the extent of equity covering the debt. This ratio is

    determined to ascertain the soundness of long term financial policies of the company.

    The ratio is goes on decreasing in our project period except on 2008 -09 which is

    favorable for long term creditors, because a large margin of protection provides sasfety

    for the creditors.

    7. A quick ratio of 1:1 is usually considered as ideal. The company is maintaining its in

    proper manner.

    8. By observing creditors turnover ratio it is very fluctuating 2.7 in 2005 06 and

    increased to 4.81 in 2009 10.

    9. The return on shareholder funds of the corporation is very low during the study period.

    10. Return of shareholder funds ratios are 0.15, 0.22, 0.32, 0.40 and 0.19 in the year

    2005, 2006, 2007, 2008, 2009.

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    SUGGESTIONS

    1. The company should invest sufficient funds in the current assets to stress then the

    liquidity.

    2. It is better to increase the profitability of the concern.

    3. The fixed interest coverage ratio of the organization is goes on increasing so that the

    lenders are confident to receive periodical interest charges.

    4. The company is fluctuating with is current liabilities year to year. So it is better to

    streamline its current liabilities.

    5. The corporation should reduce the investment in the current assets to avoid the

    problem of idle investment.

    6. The corporation should try to minimize the fixed interest charges to eliminate the

    financial risk in the future period of time.

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    BIBLIOGRAPHY

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