Description
Financial Ratio Analysis is the calculation and comparison of main indicators - ratios which are derived from the information given in a company's financial statements(which must be from similar points in time and preferably audited financial statements and developed in the same manner).
Introduction to Conveyor components
Wherever material has to be moved, conveyed, accumulated, fed or turned, conveyer products for the handling and transport of unit loads are used. These products play a pivotal role in helping companies meet the new challenges of materials handling. Conveyer components are generally used in steel plants, power plants, coal industry, cement industry, fertilizer industry, mineral industry, chemical industry, seaports and airports. Global demand for the material handling industry is ever-evolving. Conveyor Equipment Manufacturers Association (CEMA) originally projected that growth in manufacturing business spending in the United States would increase by 7% in 2006. Industry demand slumped in 2001-2003, caused by poor economic growth. 2004 was a transition year for demand, while 2005 growth approached 8.5%. Historically, increases in consumer confidence and spending are necessary to deliver growth in unit handling conveyors. In 2001-2003, many unit handling equipment manufacturers struggled with overcapacity, which impacted price/margin positions and created mergers and consolidations. Today, unit handling companies that are flexible and deliver customer value, particularly with strong technical innovations, are securing leadership recognition and market share.
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Conveyors - Types
Gravity Roller Conveyors Powered Belt Conveyors Skate wheel Conveyors Powered Roller Conveyors Extendable Conveyors Special Purpose Conveyors
Conveyor Components is designed for Easy material transportation in Distribution centers, warehouses, assembly lines, shipping, palletizing systems, mail and parcel sorting centers, mail-order companies, etc., Conveyor Components is designed for move parts or materials from one location to another
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COMPANY PROFILE
M/s. Roll well Conveyor Components Pvt. Ltd. was established on the 10th of April, 1989 by two technocrats, Mr. P. Krishnan and G. Thangavelu for the manufacture of conveyor components and the firm’s management was taken over by Mr. T. C. Goyal and Mr. Praveen Goyal in the year 1996. The Manufacturing plant is located in the state of Andhra Pradesh in Hindupur on a land spanning 3.75 Acres with the factory building covering 1691.66 Sq. Meters. It is powered by has a 200HP power connection from the Andhra Pradesh State Electricity Board. The Head office of the company is located at Bangalore and it also has newly established branch for marketing in the metropolitan city of Mumbai. The company’s products are generally used in steel plants, power plants, coal industry, cement industry, fertilizer industry, mineral industry, chemical industry, seaports and airports. Head Office of the company located at Bangalore, Karnataka. Head Office Address: #21-D, II Phase, Peenya Industrial Area, Bangalore – 560058 Ph: 080 – 8394700, 8396489 Fax: 080 – 8396558 E-mail: [email protected]
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Manufacturing plant located in Hindupur, Andhra Pradesh Manufacturing plant Address: #60, IDA, Thumkunta village, Hindupur – 515211 Anantapur (Dt), A.P. Ph: 08556 – 247424 E-mail: [email protected] Branch Office: 1008, D Wing, Shreeprabha, Sejal Park, 120, Link Road, Goregaon(west), Mumbai – 400 104 Phone: Mail : 022 – 28741124 [email protected]
Present promoters and partners of the company are Mr. T.C. Goyal, Mr. Praveen Goyal and Mr. Avinash Goyal. 1996 onwards they are maintaining this ROLL WELL Conveyor components Pvt. Ltd. Chief Executive Officer Mr. M. Surendra is handling manufacturing plant.
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ROLL WELL TEAM Design and manufacturing facilities are handled by a team of highly experienced and technically competent professionals who monitor every aspect of the manufacturing process from selection of the right raw materials and components to rigorous quality control right down to the proper packing of the finished products. Rollwell certified manufacturer of
Is India’s Premier ISO 9001:2000
conveyors and conveyor components like idlers, pulleys etc. Since 1986, Roll well has set unique standards in quality, performance, dependability and durability. ROLL WELL FACILITIES Plant is equipped with manufacturing and testing facilities like: Manufacturing facilities include: ? Double Head Pipe Simultaneous Boring Machines ? Horizontal Drilling Machines ? Center less Grinding Machines ? Semi Automatic Welding Machines ? CO2 Welding Fixture (Double head Simultaneous Welding Machine)
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? ? ? ? ? ? ? ? ?
Hydraulic Horizontal Assembly Press Hydraulic Deep Drawing Press Roller Freeing machines Series of Lathe machines, maximum length of 7 meters. Various types of welding and fabrication equipment. Various types of drilling machines. Material handling equipments - Lifting facility up to 10 tones. Profile cutting, Pug cutting etc. Battery of slicing machines imported from Germany and USA.
The Key testing facilities include; ? Friction Testing Machine. ? Water/slurry Ingress Testing Machine. ? Dust Ingress Testing Machine. ? Thickness Testers ? Hardness testing equipment for rubber rings ? Break Off Force Testing Equipment ? Axial Float Checking Device
ROLLWELL PRODUCTS ? Idlers ? Pulleys
?
? ?
Belt Conveyors Screw Conveyors Shuttle Conveyors
? Drum Motors
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PRODUCT RANGE Idlers Belt width Roller diameter Shaft diameter : : 40mm to 2400mm 76.1mm to 219mm : 20mm to 45mm
Any combination can be supplied. Pulleys Range Shaft size : : 220mm to 1000mm diameter 40mm to 200mm diameter
Any combination can be supplied.
Rollwell products
Idlers Idlers are the heart of a conveyor, since reliability and longer life can reduce down time for the conveyors, effect reduction in power consumption and increase belt life. Rollwell idlers operate with very
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low coefficient of friction and are designed for reliable and guaranteed performance. Pulleys Rollwell pulleys use ultrasonically tested shafts and are stress relieved before machining. The pulleys are statically balanced which ensures increased bearing life and reduced power consumption. Various straight or crown faced pulleys, with or without rubber lagging are manufactured in different combinations of diameters and face widths. Belt Conveyors Rollwell has the expertise to design and develop most appropriate techno – economic belt conveyors suitable for various service conditions. The belt conveyors are designed using customized software programs developed as per CEMA and other standards. All components like idlers, base frames, pulleys are manufactured in house and our plant is specifically equipped for heavy fabrication etc. Screw Conveyors Our screw conveyors are designed to ensure a sturdy pipe design, minimum run out, minimum coefficient of friction, ease of maintenance and reduced power loss. The special sealing system prevents dust entry and trouble free operation. The screw flights are machine formed and are available in various configurations and
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thickness. The screw flights are hard faced with special electrodes to prolong its life.
Shuttle Conveyors Rollwell has specialized in manufacturing Shuttle Conveyors suitable for various application and industries. Our plant is equipped with special fixtures to test run the complete shuttle conveyor assembly. As in other conveyors, idlers, pulleys, and all fabrication work is in house which ensures a quality product at most reasonable cost. Drum Motors The Ramsal Drum Motor requires minimal space on the conveyor frame and completely eliminates the need for external motor, gearbox, chain, sprockets, chain guard or pillow block bearings. By housing all vital components internally, the Ramsal Drum Motor reduces operating & maintenance costs and improves safety conditions
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Rollwell is a regular supplier to the top companies in the following sectors; Cement Industry Rollwell idlers and pulleys are the lifelines of majority of cement plants in India. Right from lime stone crushing section to cement packing section, we have designed and installed various material handling equipments like Belt conveyors, Shuttle Conveyors, Screw feeders, Screw Conveyors, Bucket elevators, Crushers, Slide Gates, Air Slides, Vibrating screens etc. Steel Industry A vast majority of the private steel manufactures in India rely on Rollwell products for handling various materials like iron ore, coke, limestone, additives, fluxes, etc. Our range of Idlers, Pulleys, Belt Conveyors, and Shuttle Conveyors etc have been a preferred option for various new and expansion projects in the steel industry. Mining Industry Top mining companies revert to Rollwell idlers for critical material handling requirements applications.
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Port Trusts Our equipment for components likes idlers and pulleys are used for conveying, storage and extraction of various materials at different port trusts. Power Plants Coal and ash handling in thermal plants use Conveyor Components, Feeders, Belt Conveyors, Bucket elevators, Vibrating Screens, Coal crusher, Gates, Screw conveyors etc, which are manufactured by Rollwell. Fertilizer Industries Rollwell idlers and pulleys are deployed for various belt conveyors used in conveying raw materials and packed fertilizers. Chemical Industries Feeders, Belt conveyors, Bucket elevators, Screw conveyors are used at various stages of manufacturing in the chemical industries. Exports Rollwell products are exported to companies and turn key project executors for countries in Middle East, Africa, Europe and USA.
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ORGANISATIONAL STRUCTURE
BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER
MARKETING
PERSONNEL
PRODUCTION
FINANACE
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INTRODUCTION Management should be particularly interested in knowing financial strengths of the firm to make their best use and to be able to spot out financial weakness of the firm to take suitable corrective actions. Taking this as central idea, the project work was undertaken for Rollwell Pvt. Ltd. This project was based on the guidelines and instructions handed over by the company. This includes the tools of analysis, objectives. Basically the work was aimed at learning the current financial position of the company and knowing the reasons for this position. Hence in my study I have tried to analyze the financial performance of Rollwell, for the financial year 1999-2005 with the help of ratios. This study helps the company to know the current financial position, which indirectly helps to formulate various strategies to consolidate and upgrade its present financial position.
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OBJECTIVES OF THE STUDY The objective of the study is to know the financial position of Rollwell. ? To study the liquidity position of the company. ? To study the profitability ratio of the company. ? To study the solvency position of the company. ? To study how for the company utilizing its assets effectively. ? To provide information to the investors in investment decision. ? To find out the solutions to the unfavourable financial conditions and financial performance. ? To take the suitable corrective measures. SCOPE OF THE STUDY The project is aimed at analyzing the performance of the company on various financial aspects like liquidity position, leverage position, profitability position.
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Purpose of the project is to analyze the past and present performance of the company on the various financial areas, since past performance will be essential yard stick for predicting the future performance of the company.
PERIOD OF STUDY The period covered by the study over 7 years from 1998-99 to 200405. Research design of the study: Scanning through standard text books to understand the theory behind the ratio analysis. Identification of financial ratios likely to reflect financial performance adequately. Collection of company specific literature i.e., company’s profile and annual reports over this study period. Calculation of these ratios over the study period and tabulation. Finally forwarding certain recommendations and conclusions to the company. Sources of data Primary source: The primary data was obtained by discussions with various financial executives.
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Secondary source: Annual reports of the company Company’s profile Various text books
LIMITATIONS OF THE STUDY ? The study is based on past financial reports of the company, so it may not represent the future performance of the company. ? It is difficult to make decision on the basis of comparison. ? Due to time constraints in-depth analysis is not conducted.
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FINANCIAL RATIO ANALYSIS
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by property establishing relationships between the item of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, owners, creditors, investors and others. Ratio analysis is a powerful technique of analysing the financial statements. Management should be particularly interested in knowing financial strengths of the firm to make their best use and to be to spot out financial weaknesses of the firm to make suitable corrective actions. Thus, financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. RATIO ANALYSIS – MEANING A ratio is an arithmetical relationship between two figures. A ratio is defined as
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“The indicated Quotient of two Mathematical expression”. Financial statements are useful to the executives, owners, Creditors, investors etc., Based upon the financial statements, users can form judgment about the operating performance of the firm and financial position of the firm. A creditor can ascertain the liability position of the firm that is the ability of the firm to repay its current liabilities. The management of the firm analyze the financial statements to judge the operating efficiency of the firm. The shareholders (owners) analyze the financial statement of the firm to find out the profitability. The investors analyze the financial statements of the firm to know the ability of the firm to pay interest regularly. The future plans of the firm should be laid down in the view of the firm’s financial strength and weakness. USERS OF RATIO ANALYSIS: ? Trade creditors ? Lenders ? Investors ? Government ? Management Trade creditors are interested in firm’s ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evaluation of the firm’s liquidity position. Suppliers of long-term debt, on the other hand, are concerned with the firm’s long-term solvency and survival. They analyze the firm’s profitability over time, its ability to generate cash to be able to pay
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interest and repay principal and the relationship between various sources of funds. Financial statements to make analysis about its future solvency and profitability. Investors, who have invested their money in the firm’s shares, are most concerned about the firm’s earnings. They restore more confidence in that firm’s that show steady growth in earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s financial structure to the extent it influences the firm’s earnings ability and risk. Government is also interested to know the strength and weakness of the firm. Government makes the future plans, policies on the basis of financial information available from various units of the company. Management of the firm would be interested in every aspect of the financial analysis. It is their overall responsibility to see that the resources of the firm are used most effective and efficiently, and that the firm’s financial condition is sound. OBJECTIVES OF RATIO ANALYSIS The main objectives of ratio analysis are to 1. Analysis the financial position of the firm by using the various accounting ratios. 2. To know the liquidity position of the firm that is the firm that is the firm’s relative strengths and weakness of the firm. 3. To know the various sources utilize by the firm. 4. To know the amount of debt in the firm.
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5. To provide information to the investors in Investment Decision. 6. To compare financial position of the firm in the current year with the previous year financial position. 7. To know the season effects in the firm, that is cost position of the firm between the profit making and loss making period. 8. To help the management in planning, controlling and decision making. 9. To find out the solution to the unfavorable financial conditions and financial performance. 10. To take the suitable corrective measures when the firm’s financial conditions and performance are unfavorable to the firm when compared to other firms in the same industry.
SIGNIFICANCE OF RATIO ANALYSIS A ratio is used for evaluating the financial position and performance of a firm. Various parties like trade creditors, banks, financial institutions, investors, shareholders and management are interested in the ratio analysis for knowing and evaluating the financial position of a firm for different purposes like for granting credit, providing loans or making investments in the firm. Ratio analysis helps in budgetary control and standard costing, apart from forecasting, planning, proper communication, control and coordination. As they expose the strengths and weakness of the firm, they are of immense importance in the analysis and interpretation of financial statements.
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NATURE AND SCOPE OF RATIO ANALYSIS Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “The indicated Quotient of two Mathematical expression” and as “the relationship between two or more things”. In financial analysis, a ratio is used as a benchmark for evaluating the financial position and performance of a firm. The absolute accounting figures reported in the financial statements don’t provide a meaningful understanding of the performance and the financial position of a firm. An accounting figures conveys meaning when it is related to some other relevant information. Ratio helps to summaries large quantities of financial data and to make qualitative judgment about the firm’s financial performance. For example, consider current ratio. It is calculated by dividing current assets by current liabilities. This relationship is an index or yardstick which permits a qualitative judgment to be formed about the firm’s ability to meet its current obligations. It measures the firm’s liquidity. The greater the ratio, the greater the firm’s liquidity. Utility of Ratio Analysis ? Assessment of the firm’s financial conditions and capabilities. ? Diagnosis of the firm’s problems, weaknesses and strengths. ? Credit analysis ? Security analysis ? Comparative analysis ? Time series analysis
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LIMITATIONS OF RATIO ANALYSIS: No doubt, ratios are exceptionally useful tools. But, they have to be used with a caution as they suffer from some limitations. i) An analyst should know the reliability and soundness of the figures from which the ratios are computed. Otherwise, ratios can some times be misleading. ii) As a single ratio does not convey much of sense, often, a number of ratios are calculated to make a better interpretation of the financial data, which some times its likely to confuse the analyst rather than help him making a meaningful conclusion iii) iv) Raito mislead, whenever there is a change in the accounting procedure. To make ratios as acceptable norms, they should be some well acceptable standards or rules of thumb. Unfortunately no such rules exist.
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v)
As ratios are calculated from the financial data contained in the financial statements, which are based on the historical data, ratios suffer from the same limitation of financial statements that they are of historical nature, thus, are no indicators of future. While financial analysts are more interested in what happens in future, the ratio indicates what happened in the past.
vi)
To present a better picture about the financial health of the organization, financial statements may easily be window dressed. Therefore, one has to be careful while making a decision based on ratios calculated from such financial statements.
vii)
A single ratio may be interpreted in different ways, at different times by different people. Ratios are only means of financial analysis and not an end in itself.
viii) As ratio analysis is only a quantitative analysis and not qualitative one ratios devoid of absolute figures may prove distortive. Ratios can never be the substitutes for the raw figures. ix) x) As no consideration is made to the changes in the prize levels, the interpretation of ratios is invalid. The differences in the definition of items in the balance sheet and income statement make the interpretation of ratios difficult. Diversity of views exists as what should be included in net worth or share holders equity, current assets or current liabilities. Whether preference share capital should
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be included in debt or equity should current liabilities be included in debt in calculation of the debt equity ratios. xi) The ratios calculated at a point of time are less informative and defective as they suffer from short term changes
CLASSIFICATIONS OF RATIO ANALYSIS: ? ? ? ? Liquidity ratios Leverage ratios Turnover ratios Profitability ratios
LIQUIDITY RATIO Liquidity refers to the ability of the firm to meet its obligations in the short-run, usually one year. Liquidity ratio is generally based on the relationship between current assets and current liabilities. “Liquidity means ability of the business to pay of its short term liabilities”. In ability to pay short term liabilities affect the creditability of the business. It also lowers its credit rating. A continuous default on part of the business to pay off its liability may even create disturbances to its day to day operations. The liquidity ratios are: Current ratio, Quick ratio, Cash ratio, net working capital ratio. LEVERAGE RATIO
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Leverage ratios indicate the long term financial strengths of the company. Long term creditors, like debenture holders, financial institutions etc., are more interested in this group of ratios because these ratios help them to know the margin of safety available to their capital and the debt servicing ability of the company. The relative shares of ownership and debt capital and there by the manner in which funds have been mobilized, the degree of financial risk resulting from the introduction of debt capital can be known by calculating these ratios. Between debt and equity capital, debt is cheaper source of capital, but it is more risky from the firm’s point of view. This is because; interest on debt is a fixed obligation which has to be paid irrespective of profits made by the company. Further, non-payment of interest leads to insolvency of the firm. If the company is liquidated, the share holders are the worst sufferers as they are the residual owners. But debt capital would help existing share holders to retain their control over the company with a limited stake and magnify their earnings. Thus, the use of debt as both advantages and disadvantages. The important leverage ratios: debt ratio, debt-equity ratio, TL-to-TA ratio, interest coverage ratio. TURNOVER RATIO Turnover ratios, also referred to as activity ratios or asset management ratios, measure how efficiently the assets are employed by a firm. These ratios are based on the relationship
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between the level of activity, represented by sales or cost of goods sold, and levels of various assets. The important turnover ratios are: inventory turnover ratio, debtor’s turnover ratio, average collection period, total assets turnover, fixed assets turnover, working capital turnover, and current assets turnover.
PROFITABILITY RATIO Profitability reflects the final result of business operations. Profit is a ultimate output of a company. A company will have no future if it fails to make sufficient profit. There are two types of profitability ratios: Profit margins ratios and rate of return ratios. Profit margin ratios show the relationship between profit and sales. Since profit can be measured at different stages, there are several measures of profit margin. The most popular profit margin ratios are: gross profit margin ratio and net profit margin ratios. Rate of return ratio reflects the relation ship between profit and investment. The important of rate of return measures are: return on assets, earning power, and return on equity.
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1. LIQUIDITY RATIOS Liquidity ratios measure a firm’s ability to meet its current obligations. CURRENT RATIO: Current assets include cash and those assets which can be converted into cash with in a year. Such as marketable securities, debtors and inventories. Current liabilities include creditors, bills payable, accrued expenses, short-term bank loan, income-tax liability and long-term debt maturing in current year. The current ratio is calculated by dividing current assets by current liabilities: CURRENT ASSETS ---------------------------CURRENT LIABILITIES
CURRENT RATIO
=
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YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
6 5 4 3 2 1 0 RATIOS
C.A 11885131.63 11827600.14 10539975.70 10996509.38 11363319.56 18084796.08 25038096.93
C.L 6924137.02 4359796.64 1967939.97 2136174.35 2343478.03 4425451.31 13143418.26
CURRENT RATIO 1.72:1 2.71:1 5.35:1 5.15:1 4.85:1 4.08:1 1.90:1
CURRENT RATIO
1999 1.72
2000 2.71
2001 5.35
2002 5.15 YEARS
2003 4.85
2004 4.08
2005 1.9
INTERPRETATION: As a conventional rule, a current ratio of 2:1 is considered satisfactory. If the ratio is less than 2:1, it indicates that the business does not enjoy adequate liquidity. If the ratio is higher than 2:1, though it may be comfortable for the creditors but not for the concern. From the above analysis, from 2001 to 2004 the current ratio are more than 4:1, which means organization have excess current
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assets over current liabilities. Very high degree of liquidity is also bad; idle assets earn nothing. Organization with high current ratio might not be in a position to pay current liabilities, because of unfavorable distribution of current assets in relation to liquidity. In the years 2001 to 2005 the current ratios decreased by 5.35:1 to 1.90:1, it indicates that the position of the firm is satisfactory. However the company should invest its ideal funds properly.
QUICK RATIO Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. It is also called acid-test ratio.
QUICK RATIO =
QUICK ASSETS ------------------------CURRENT LIABILITIES
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YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
Q.A 7334641.63 7695265.14 5865673.7 3176306.38 3801845.56 7567685.08 11914810.93
C.L 6924137.02 4359796.64 1967939.97 2136174.35 2343478.03 4425451.31 13143418.26
QUICK RATIO 1.05:1 1.76:1 2.98:1 1.48:1 1.62:1 0.38:1 0.91:1
NOTE: Quick assets =
current assets - inventory
QUICK RATIO
3 2.5 2 1.5 1 0.5 0 RATIOS
1999 1.05
2000 1.76
2001 2.98
2002 1.48 YEARS
2003 1.62
2004 0.38
2005 0.91
INTERPRETATION:
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A quick ratio of 1:1 is considered to represent a satisfactory current financial condition. From the above analysis, from 1999 to 2003 the quick ratios are higher than 1:1, in these years quick assets maintain good. In the year 2001 the quick ratio is 2.98; high quick ratio may not have a satisfactory. In the years 2004 and 2005 the quick ratios are 0.38 and 0.91 ie., quick ratios less than 1, it indicates inadequate liquidity of the firm. But we can’t come to the conclusion that the firm’s liquidity position is satisfactory.
CASH RATIO As cash is the most liquid asset, a relationship between cash and current liabilities is examined to know the solvency position.
CASH RATIO =
Cash + Marketable securities -------------------------------Current Liabilities
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YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
Cash + Marketable securities 251282.69 61691.38 84079.35 143750.51 181330 118819.31 299075.79
CURRENT LIABILITIES 6924137.02 4359796.64 1967939.97 2136174.35 2343478.03 4425451.31 13143418.26
CASH RATIO 0.04:1 0.01:1 0.04:1 0.06:1 0.07:1 0.03:1 0.02:1
NOTE: Here cash means not only the cash balance but also the bank balance of the firm
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CASH RATIO
0.08 0.06 0.04 0.02 0
RATIOS 1999 0.04 2000 0.01 2001 0.04 2002 0.06 2003 0.07 2004 0.03 2005 0.02
YEARS
INTERPRETATION: The ideal ratio is 1:2 or 0.5. The firms cash ratios is not satisfactory. It is nearly 2 rupees to 7 rupees for every 100 rupees of current liabilities. From the above analysis, from 1999 to 2005 the cash ratio of the firm is less than 1 time which is bad to the firm
NET WORKING CAPITAL RATIO
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The difference between current assets and current liabilities excluding short-term borrowing is called net working capital or net current assets. Net working capital is some times used a measure of a firm’s liquidity. This ratio is calculated by dividing net working capital with net assets. Networking Capital -------------------------Net Assets
NET WORKING CAPITAL RATIO=
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
N.W.C 4960994.61 7467803.50 8572035.73 8860335.03 9019841.53 13659344.77 11894678.67
NET ASSETS 9478655.16 11703353.05 12488180.28 12462321.08 12834749.08 17380736.32 17800756.22
NWC RATIO 0.52:1 0.64:1 0.69:1 0.71:1 0.70:1 0.78:1 0.67:1
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NET WORKING CAPITAL RATIO
0.8 0.6 0.4 0.2 0
RATIOS 1999 0.52 2000 0.64 2001 0.69 2002 0.71 2003 0.7 2004 0.78 2005 0.67
YEARS
INTERPRETATION: The larger net working capital has the greater ability to meet its current obligations. This ratio measures the firms potential reservoir of funds. In analysis, from 1999 to 2005 the net working capital ratio of the firm is less than 1, it indicates that the position of the firm is not satisfactory.
2. LEVERAGE RATIOS
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Financial leverage refers to the use of debt finance. Leverage ratios indicate the long-term financial strength of the company. These ratios are helpful to management in proper administration of capital. It also helps the creditors to know the capacity of a business concern to pay debt in future. DEBT RATIO: Debt ratios may be used to analyze the long-term solvency of the firm. The debt ratio is calculated by dividing total debt by capital employed. Debt Ratio = Total Debt --------------------------Capital Employed
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
TOTAL DEBT 13410566.57 15053623.57 15380704.09 15012022 13458919.97 11699460.03 9036206.67
CAPITAL EMPLOYED 16666770.57 18309827.57 18636908.09 17586539 16033436.97 17381736.32 17851356.22
DEBT RATIO 0.80:1 0.82:1 0.82:1 0.85:1 0.84:1 0.67:1 0.53:1
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DEBT RATIO
1 0.8 0.6 0.4 0.2 0
RATIOS 1999 2000 2001 2002 2003 2004 2005 0.8 0.82 0.82 0.85 0.84 0.67 0.53
YEARS
INTERPRETATION: In the year 2005 debt ratio of 0.53 means that lenders have finance 53%, it obviously implies that owners have provided the remaining finance. They have financed 1-0.53 = 0.47 = 47% of net assets. The lending capacity continuously decreasing in the years 2002 to 2005, means that the firm has nearly Rupee 1 for every 85 p, 84 p, 67 p, 53 paise in the years 2002 to 2005, which means the solvency position of the company.
DEBT-EQUITY RATIO
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The debt-equity ratio shows the relative contributions of creditors and owners. It shows the relationship between borrowed funds and owner’s capital. This ratio is calculated by using the following formula: Debt-equity Ratio = Total Debt -----------------Net worth
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
TOTAL DEBT 13410566.57 15053623.57 15380704.09 15012022 13458919.97 11699460.03 9036206.67
NET WORTH 3256204 3256204 3256204 2574517 2574517 5645224.29 8118731.55
DEBTEQUITY RATIO 4.12:1 4.62:1 4.72:1 5.83:1 5.23:1 2.07:1 1.12:1
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DEBT-EQUITY RATIO 6 5 4 3 2 1 0 RATIOS 1999 4.12 2000 4.62 2001 4.72 2002 5.83 YEARS 2003 5.23 2004 2.07 2005 1.12
INTERPRETATION: In general, the lower the debt-equity ratio, the higher the degree of protection enjoyed by the creditors. It is clear that in this firm, lenders have contributed more funds than owners. In 1999 to 2003 the debt equity ratio is increased by 4.12 to 5.23, because the debt of company has more than equity of the firm. It is unfavorable to the firm as it has to suffer great financial strains during the period of low profits. In 2005 debt equity ratio is 1.12, lenders contribution is 1.12 times of owners contribution 0.53/0.47 = 1.12. In the years 2002 to 2005 the ratio is decreased by 5.83:1 to 1.12:1, which means the solvency position of the firm is satisfactory.
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TOTAL LIABILITIES TO TOTAL ASSETS RATIO: To assess the proportion of total funds, short-term and long-term provided by outsiders to finance total assets, the following ratio may be calculated:
Total liabilities to total assets ratio =
Total liabilities -------------------------Total assets
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
TOTAL LIABILITIES 20334703.59 19413420.21 17348644.06 17148196.35 15802398 16124911.34 22179624.93
TOTAL ASSETS 16402792.18 16063149.69 14456120.25 14598495.43 15178227.11 21806187.63 30944174.48
TL TO TA RATIO 1.24:1 1.21:1 1.20:1 1.17:1 1.04:1 0.74:1 0.72:1
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1.4 1.2 1 0.8 0.6 0.4 0.2 0 RATIOS 1999 1.24
TL TO TA RATIO
2000 1.21
2001 1.2
2002 1.17 YEARS
2003 1.04
2004 0.74
2005 0.72
INTERPRETATION: From the above analysis, from 1999 to 2003 total liabilities to total assets ratio is more than 1% and after two years ie.,2004 & 2005 the ratios is decreases by 0.74 & 0.72, which means the solvency position of the company.
COVERAGE RATIO:
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Coverage ratio is used to measure the debt servicing ability of the company. Long-term creditors are more interested in this ratio than the debt-equity ratio. This ratio shows the number of times interest charges on long-term debt are covered by the firms operating profits (EBIT). This ratio is computed by dividing EBIT by interest charges: EBIT ----------------------Interest
Interest Coverage =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
EBIT 2261725.97 2742252.89 2669326.71 2440397.61 3953366.25 5637857.01 5611184.86
INTEREST 1751764 1852397 1884386 1816509.72 1689800.22 1497043.63 1089630 1.29 1.48 1.42 1.34 2.34 3.76 5.15
RATIO
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COVERAGE RATIO
6 5 4 3 2 1 0
1999 2000 2001 2002 2003 2004 2005 1.48 1.42 1.34 2.34 3.76 5.15
RATIOS 1.29
YEARS
INTERPRETATION: The higher coverage ratio is desirable. A lower ratio indicates excessive use of debt or inefficient operations. In the years, 1999 to 2005 the interest coverage ratio is increased by 1.29 to 5.15 except the years 2001 and 2002. A high interest coverage ratio means that the firm can easily meet its interest burden even if profit before interest and taxes suffer a considerable decline. It indicates the firm ability to meet interest obligations.
3 .TURNOVER RATIOS:
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Turnover or activity ratios measure the firm’s efficiency in utilizing its assets. It is also called asset management ratio. Activity ratios measure how efficiently the assets are employed by a firm. This ratios are based on the relationship between the level of activity, represented by sales or cost of goods sold, and levels of various assets. INVENTORY TURNOVER RATIO: This ratio indicates the efficiency of the firm in selling its products. It is calculated by dividing the cost of goods sold by the average inventory: COST OF GOODS SOLD INVENTORY TURNOVER = ---------------------------------AVERAGE INVENTORY
OPENINGINVENTORY+CLOSING IVENTORY AVERAGE INVENTORY = ----------------------------------------------------2
NO OF DAYS IN THE YEAR INVENTORY HOLDING PERIOD: -----------------------------------INVENTORY TURN OVER
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YEARS
COST OF GOODS SOLD 5893392.53 5167182.11 3253109.64 9078460.61 14782118.72 25149806.82 57035511.72
19981999 19992000 20002001 20012002 20022003 20032004 20042005
AVERAGE INVENTO INVENTOR RY Y TURNOVE R RATIO 2215333.5 2.66 2375667 2136275.5 2358138.5 2649091 2225796.5 2547440 2.17 1.52 3.85 5.58 11.29 22.38
INVENTO RY HOLDING PERIOD 137.22 168.2 240.13 94.80 65.41 32.33 16.30
INVENTORY TURNOVER RATIO
30 20 10 0
1999 2000 2001 2002 2003 2004 2005
RATIOS 2.66 2.17 1.52 3.85 5.58 11.29 22.38
YEARS
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INVENTORY HOLDING PERIOD
300 200 100 0
1999 2000 2001 2002 2003 2004 2005
RATIOS 137.2 168.2 240.1 94.8 65.4 32.3 16.3
YEARS
INTERPRETATION: This ratio measures how quickly inventory is sold, a test of efficient management. A high inventory turnover ratio indicates efficient management of inventory because more frequently the stocks are sold. The decrease in the inventory holding period is the result of the increased turnover ratio. Firstly, from the years 1999 to 2001 the inventory turnover ratios is decreases. Low inventory turnover indicates that the inventory does not sell fast and remain in ware house for a long period. Low turnover implies over investment in inventories. After, years from 2002 to 2005 inventory turnover ratio is continuously increasing by 3.85 times to 22.39 times. Ratio is continuously increasing which is good for the organization. Hence in the case of Roll well Pvt. Ltd. Inventory turnover ratio is satisfactory. Here there is an efficient management of inventory because frequently stocks are sold. A too high inventory turnover ratio may lead to stock outs and production interruptions.
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DEBTORS TURNOVER RATIO: This ratio indicates the speed of conversion of debtors into cash. The sub ratio of debtors turnover ratio is debt collection period which indicates the average collection period. SALES -------------------DEBTORS
DEBTORS TURNOVER RATIO =
DEBT COLLECTION PERIOD =
NO OF DAYS IN A YEAR ---------------------------------------DEBTORS TURNOVER RATIO
YEARS SALES
DEBTORS
19981999 19992000 20002001 20012002 20022003 20032004 20042005
6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58
6193395.78 6773809.76 5404224.35 2171656.87 2838220.91 6917302.77 9927096.77
DEBTORS TURNOV ER RATIO 1.03 0.89 0.75 4.46 6.00 4.23 6.20
DEBT COLLECTI ON PERIOD 354.3 410.1 486.6 81.8 60.8 86.2 58.8
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DEBTORS TURNOVER RATIO 8 6 4 2 0 RATIOS 1999 1.03 2000 0.89 2001 0.75 2002 4.46 YEARS 2003 6 2004 4.23 2005 6.2
DEBT COLLECTION PERIOD
500
0
1999 2000 2001 2002 2003 2004 2005
RATIOS 354.3 410.1 486.6 81.8 60.8 86.2 58.8
YEARS
INTERPRETATION: Debtor turnover ratio & debt collection period tell us about the credit policy of the company. Debtor turnover indicates the number of times debtor turn each year. The higher the debtors turnover the greater the efficiency of credit management. High debtors turnover leads to low collection period. Debtors turn over ratio is increasing in 2004 & 2005, so the credit management is more efficient. The debt collection period is decreasing in the year 2004 & 2005 is 86.28 days to 58 days, then the collection will be done quickly.
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ASSETS TURNOVER RATIO: The relationship between sales and assets is called assets turnover 1. NET ASSETS TURNOVER: This ratio is computed by dividing sales by net assets. SALES -----------------NET ASSETS
NET ASSETS TURNOVER =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58
NET ASSETS 9478655.16 11703353.05 12488180.28 12462321.08 12834749.08 17380736.32 17800756.22 0.67 0.52 0.32 0.78 1.33 1.68 3.46
RATIO
NOTE: Net assets = Net fixed assets + Net current assets.
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NET ASSETS TURNOVER RATIO
4 2 0
1999 2000 2001 2002 2003 2004 2005
RATIOS 0.67 0.52 0.32 0.78 1.33 1.68 3.46
YEARS
INTERPRETATION: As assets are used to generate sales, a firm should manage its assets efficiently to maximize sales. In the above years, 2003 to 2005 the net assets turnover ratios are 1.33, 1.68 & 3.46 times. It implies that Rollwell Pvt. Ltd. is producing Rs.3 of sales for one rupee of capital employed in net assets. Firm ability to produce a large volume of sales for a given amount of net assets.
TOTAL ASSETS TURNOVER:
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This ratio shows the firm’s ability in generating sales from all financial resources committed to total assets.
SALES TOTAL ASSETS TURNOVER = ------------------TOTAL ASSETS NOTE: Total assets = Net fixed assets + current assets.
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58
TOTAL ASSETS 16402792.18 16063149.69 14456120.25 14598495.43 15178227.11 21806187.63 30944174.48
RATIO 0.39 0.38 0.28 0.66 1.12 1.34 1.99
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TOTAL ASSETS TURNOVER RATIO
2 1.5 1 0.5 0 1999 2000 2001 2002 2003 2004 2005 YEARS
RATIOS 0.39 0.38 0.28 0.66 1.12 1.34 1.99
INTERPRETATION: This ratio measures how efficiently assets are employed. In the year 2003 to 2005 sales is more than the investment in fixed and current assets together. Total assets turnover ratio is increasing by 1.12, 1.34 to 1.99 times, Rollwell generates to sales for 1 rupee investment in fixed and current assets together.
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FIXED & CURRENT ASSETS TURNOVER RATIO: This ratio measures sales per rupee of investment in fixed assets. This ratio is supposed to measure the efficiency with which fixed & current assets are employed. SALES FIXED ASSETS TURNOVER = -----------------------------NET FIXED ASSETS SALES CURRENT ASSETS TURNOVER = ----------------------------CURRENT ASSETS SALES YEARS 19981999 19992000 20002001 20012002 20022003 20032004 20042005 6403354.50 6057038 4038050.35 9702348.50 17045684.7 5 29290620.2 0 61557066.5 8 FIXED ASSETS CURRENT FIXED ASSETS ASSETS TURNOVE R RATIO 4517660.5 11885131.6 1.42 5 3 4235549.5 11827600.1 1.43 5 4 3916144.5 5 3601986.0 5 3814907.5 5 3721391.5 5 5906077.5 5 10539975.7 0 10996509.3 8 11363319.5 6 18084796.0 8 25038096.9 3 1.03 2.69 4.47 7.87 10.42 CURRENT ASSETS TURNOVE R RATIO 0.54 0.51 0.38 0.88 1.50 1.62 2.46
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FIXED & CURRENT ASSETS TURNOVER RATIO
12 10 8 6 4 2 0 1999 FA RATIO CA RATIO 1.42 0.54 2000 1.43 0.51 2001 1.03 0.38
FA RATIO
2002 2.69 0.88
CA RATIO
2003 4.47 1.5
2004 7.87 1.62
2005 10.42 2.46
INTERPRETATION: A high fixed and current assets turnover ratio indicates a high degree of efficiency in asset utilization. A low ratio reflects inefficient use of assets. In the year 2002 to 2005 fixed assets turnover ratios is increasing by 2.69 to 10.42. High ratio indicates a high degree of efficiency in assets. Current assets turnover ratios is increasing by 1.5 to 2.46. Rollwell assets turnover its fixed assets faster than current assets.
NET WORKING CAPITAL TURNOVER RATIO:
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This ratio helps in knowing the efficiency in the management of working capital by indicating the amount of sales generated for each rupee of investment in working capital. The ratio is:
SALES NET WORKING CAPITAL TURNOVER RATIO = ---------------NET WORKING CAPITAL
Net working capital = current assets – current liabilities YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 NET WORKING CAPITAL 4960994.61 7467803.50 8572035.73 8860335.03 9019841.53 13659344.77 11894678.67 RATIO 1.29 0.81 0.47 1.09 1.89 2.14 5.17
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NET WORKING CAPITAL TURNOVER RATIO
6 5 4 3 2 1 0 RATIOS 1999 2000 2001 2002 2003 2004 2005 1.29 0.81 0.47 1.09 YEARS 1.89 2.14 5.17
INTERPRETATION: This ratio shows the relationship between net current assets or net working capital to sales. Working capital turnover ratios in 2002 to 2005 increased by 1.09 to 5.17. Amount of sales is more than the amount of working capital.
4. PROFITABILITY RATIO
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Profitability ratios measure a firm’s overall efficiency and effectiveness in generating profit. . Profit is the difference between revenues and expenses over a period of time. Profit is the ultimate output of a company, and it will have no future if it fails to make sufficient profits. Therefore, the financial manager should continuously evaluate the efficiency of its company in terms of profits. GROSS PROFIT MARGIN RATIO: This ratio shows the margin left after meeting manufacturing costs. It measures the efficiency of production as well as pricing. Gross profit ratio is calculated by dividing gross profit by sales. GROSS PROFIT RATIO = GROSS PROFIT --------------------------SALES SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 GP RATIO % 7.9 15 19 6 13.3 14 7.3
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
GROSS PROFIT 509961.97 889855.89 784940.71 623887.89 2263566.03 4140813.38 4521554.86
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GROSS PROFIT RATIO
20 15 10 5 0
RATIOS 1999 2000 2001 2002 2003 2004 2005 7.9 15 19 6 13.3 14 7.3
YEARS
INTERPRETATION: High gross profit ratio is a sign of good management as it implies that the cost of goods sold is low. A low gross profit ratio indicates management inefficiency as it implies that cost of goods sold is high. In the year 2005 gross profit ratio is low ie., 7.3% compared to all previous years. It means low gross profit ratio indicates inefficiency as it implies that cost of goods sold is high. A low gross profit margin may reflect higher cost of goods sold due to the firm’s inability to purchase raw material at favourate terms, inefficient utilization of plant and machinery or over investment in plant and machinery. The ratio will also be low due to a fall in prices in the market. A firm should identify and analyze the factors responsible for low gross profit ratio to take corrective measures to improve the situation. NET PROFIT MARGIN
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Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. The net profit margin ratio is measured by dividing profit after tax by sales. PROFIT AFTER TAX -------------------------------SALES SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 NP RATIO % 3.2 9.6 11.2 2.5 11.3 11.9 3.6
NET PROFIT MARGIN =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
PAT 202615.97 581640.89 450746.71 242822.89 1925530.03 3505447.18 2273507.26
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NET PROFIT RATIO 15 10 5 0
1999 2000 2001 2002 2003 2004 2005 3.2 9.6 11.2 2.5
YEARS
RATIOS
11.3 11.9
3.6
INTERPRETATION: This ratio indicates the overall ability of a firm to turn each rupee of sales in to net profit. From 2002 to 2004 the net profit ratio is increased by 2.5% to 11.9%. It indicates management’s efficiency in manufacturing, administrating and selling the products. In the year 2005 the ratio is decreased by 3.6%, It is better to increasing profits.
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OPERATING EXPENSE RATIO This ratio is an important ratio that explains the changes in the profit margin (EBIT to sales) ratio. This ratio is computed by dividing operating expenses viz., cost of goods sold plus selling expenses and general and administrative expenses by sales:
OPERATING EXPENSES OPERATING EXPENSE RATIO = ------------------------------------SALES
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
OPERATING EXPENSES 634702.55 683749.66 917578.93 2909870.70 1301361.39 2518078.55 4666960.45
SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 9.9 11.2 22 29.9 7.6 8.6 7.6
RATIO
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OPERATING EXPENSES RATIO 30 20 10 0
RATIOS 1999 2000 2001 2002 2003 2004 2005 9.9 11.2 22 29.9 7.6 8.6 7.6
YEARS
INTERPRETATION: The higher operating expenses ratio is unfavorable. The operating expenses has been increasing and decreasing from 1999 to 2005. The operating expenses ratio of Rollwell is changing may be due to changes in management policy. Operating expenses ratios has been increasing from 1999 to 2002, which indicates that the company increased expenses to increase the sales, it effect on the net profit of the organization. After years the percentage of ratio is decreased. A lower expense ratio is better for the organization.
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RETURN ON EQUITY (ROE) The goal of financial management is to maximize the wealth of equity share holders who are the owners of the company. This ratio is calculated to see the profitability of owner’s investment. The return on shareholders equity is net profit after taxes divided by shareholders equity PROFIT AFTER TAXES -----------------------------------NET WORTH
ROE =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
PAT 202615.97 581640.89 450746.71 242822.89 1925530.03 3505447.18 2273507.26
NET WORTH 3256204 3256204 3256204 2574517 2574517 5645224.29 8118731.55 6 17.8 13.8 9.4 74.8 62.1 28
RATIO
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RETURN ON EQUITY RATIO
80 60 40 20 0
RATIOS 1999 6 2000 2001 17.8 13.8 2002 9.4 2003 74.8 2004 2005 62.1 28
YEARS
INTERPRETATION: This ratio is of great interest to the existing and prospective share holders and also of great concern to management which has the responsibility of maximizing the owner’s wealth. The return on equity measures the profitability of equity funds invested in the firm. It is calculated to see the profitability of owner’s investment. The ratios in 2003 to 2005 the percentage is decreased by 74 to 28%. Higher ratio is better for the equity shareholders.
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EARNING PER SHARE This ratio is used to calculate the earnings per share. The earnings per share is calculated by dividing the profit after taxes by the total number of common shares outstanding. Profit after Tax --------------------------------------------------Number of Common Shares Outstanding
EPS =
YEARS
PAT
1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
202615.97 581640.89 450746.71 242822.89 1925530.03 3505447.18 2273507.26
NO OF COMMON SHARES OUTSTANDIN G 10000 10000 10000 10000 20000 20000 50000
RATIOS IN RS
20.26 58.16 45.07 24.28 96.27 175.27 45.47
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EARNING PER SHARE 200 150 100 50 0
1999 2000 2001 2002 2003 2004 2005 175 45.5
RS 20.3 58.2 45.1 24.3 96.3
YEARS
INTERPRETATION: The higher the earnings per share, the better is the performance of the company. Earning per share in the year 2003 to 2005 is Rs.96, 175 and 45. The higher earnings per share enable a company to pay more dividend or issue bonus shares. Earning per share shows the profitability of the firm on a per share basis.
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FINDINGS ? From 2001 to 2004, current ratio of the company is more than 4:1, the current ratio of the company is very high, idle assets earn nothing. ? Cash ratio of the firm is very low. ? From 1999 to 2003 debt equity ratio is increased by 4:1 to 5:1, high debt equity ratio is not favoured. ? Interest coverage ratio is increased; it indicates the firms ability to meet interest obligations. ? From 2002 to 2005, inventory turnover ratio is continuously increasing. ? Debtors turnover ratio is increasing leads to Debt collection period is decreasing. ? Rollwell is producing Rs 3/- of sales of Rs 1/- of capital employed in net assets, firm ability to produce a large volume of sales. ? Gross profit ratio is low compare to all previous years. ? Operating expenses ratio is increasing.
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SUGGESTIONS ? From 2001 to 2005 the current ratios decreases from 5.35:1 to 1.90:1, it indicates the liquidity position is satisfactory, however the company has to maintain the same position. ? The company should increase its cash ratio, because it is nearly 2 rupees to 7 rupees for every 100 rupees of current liabilities. ? A too high inventory turnover ratio is not necessary it may lead to stock outs and production interruptions. ? Debt collection period is decreasing by 86 days to 58 days, so the company has to maintain same position then the collection will be done quickly. ? Firm ability to produce a large volume of sales, so company should raise the advertising budgets and give wide range of advertisement of its product. ? Gross profit is low, it indicates inefficiency as it implies that cost of goods sold is high. A firm should identify and analyze the factors responsible for low gross profit ratio to take corrective measures to improve the situation. ? Operating ratio is increasing, which indicates that the company increased expenses to increase the sales. It effects on the net profit of the organization. A low expense ratio is better for the organization.
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? Return on equity is low, the company has to make efforts in increasing return on investments by reducing its administration, selling and other expenses.
BIBLIOGRAPHY
FINANCIAL MANAGEMENT SEVENTH EDITION FINANCIAL MANAGEMENT SIXTH EDITION FINANCIAL MANAGEMENT FOURTH EDITION
I.M.PANDEY
PRASANNA CHANDRA
M.Y.KHAN & P.K.JAIN
ANNUAL REPORTS OF ROLLWELL PVT. LTD. (1999-2005)
WEB SITES:
www.rollwell.net www.google.com www.directindustry.com
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doc_946404205.doc
Financial Ratio Analysis is the calculation and comparison of main indicators - ratios which are derived from the information given in a company's financial statements(which must be from similar points in time and preferably audited financial statements and developed in the same manner).
Introduction to Conveyor components
Wherever material has to be moved, conveyed, accumulated, fed or turned, conveyer products for the handling and transport of unit loads are used. These products play a pivotal role in helping companies meet the new challenges of materials handling. Conveyer components are generally used in steel plants, power plants, coal industry, cement industry, fertilizer industry, mineral industry, chemical industry, seaports and airports. Global demand for the material handling industry is ever-evolving. Conveyor Equipment Manufacturers Association (CEMA) originally projected that growth in manufacturing business spending in the United States would increase by 7% in 2006. Industry demand slumped in 2001-2003, caused by poor economic growth. 2004 was a transition year for demand, while 2005 growth approached 8.5%. Historically, increases in consumer confidence and spending are necessary to deliver growth in unit handling conveyors. In 2001-2003, many unit handling equipment manufacturers struggled with overcapacity, which impacted price/margin positions and created mergers and consolidations. Today, unit handling companies that are flexible and deliver customer value, particularly with strong technical innovations, are securing leadership recognition and market share.
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Conveyors - Types
Gravity Roller Conveyors Powered Belt Conveyors Skate wheel Conveyors Powered Roller Conveyors Extendable Conveyors Special Purpose Conveyors
Conveyor Components is designed for Easy material transportation in Distribution centers, warehouses, assembly lines, shipping, palletizing systems, mail and parcel sorting centers, mail-order companies, etc., Conveyor Components is designed for move parts or materials from one location to another
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COMPANY PROFILE
M/s. Roll well Conveyor Components Pvt. Ltd. was established on the 10th of April, 1989 by two technocrats, Mr. P. Krishnan and G. Thangavelu for the manufacture of conveyor components and the firm’s management was taken over by Mr. T. C. Goyal and Mr. Praveen Goyal in the year 1996. The Manufacturing plant is located in the state of Andhra Pradesh in Hindupur on a land spanning 3.75 Acres with the factory building covering 1691.66 Sq. Meters. It is powered by has a 200HP power connection from the Andhra Pradesh State Electricity Board. The Head office of the company is located at Bangalore and it also has newly established branch for marketing in the metropolitan city of Mumbai. The company’s products are generally used in steel plants, power plants, coal industry, cement industry, fertilizer industry, mineral industry, chemical industry, seaports and airports. Head Office of the company located at Bangalore, Karnataka. Head Office Address: #21-D, II Phase, Peenya Industrial Area, Bangalore – 560058 Ph: 080 – 8394700, 8396489 Fax: 080 – 8396558 E-mail: [email protected]
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Manufacturing plant located in Hindupur, Andhra Pradesh Manufacturing plant Address: #60, IDA, Thumkunta village, Hindupur – 515211 Anantapur (Dt), A.P. Ph: 08556 – 247424 E-mail: [email protected] Branch Office: 1008, D Wing, Shreeprabha, Sejal Park, 120, Link Road, Goregaon(west), Mumbai – 400 104 Phone: Mail : 022 – 28741124 [email protected]
Present promoters and partners of the company are Mr. T.C. Goyal, Mr. Praveen Goyal and Mr. Avinash Goyal. 1996 onwards they are maintaining this ROLL WELL Conveyor components Pvt. Ltd. Chief Executive Officer Mr. M. Surendra is handling manufacturing plant.
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ROLL WELL TEAM Design and manufacturing facilities are handled by a team of highly experienced and technically competent professionals who monitor every aspect of the manufacturing process from selection of the right raw materials and components to rigorous quality control right down to the proper packing of the finished products. Rollwell certified manufacturer of
Is India’s Premier ISO 9001:2000
conveyors and conveyor components like idlers, pulleys etc. Since 1986, Roll well has set unique standards in quality, performance, dependability and durability. ROLL WELL FACILITIES Plant is equipped with manufacturing and testing facilities like: Manufacturing facilities include: ? Double Head Pipe Simultaneous Boring Machines ? Horizontal Drilling Machines ? Center less Grinding Machines ? Semi Automatic Welding Machines ? CO2 Welding Fixture (Double head Simultaneous Welding Machine)
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? ? ? ? ? ? ? ? ?
Hydraulic Horizontal Assembly Press Hydraulic Deep Drawing Press Roller Freeing machines Series of Lathe machines, maximum length of 7 meters. Various types of welding and fabrication equipment. Various types of drilling machines. Material handling equipments - Lifting facility up to 10 tones. Profile cutting, Pug cutting etc. Battery of slicing machines imported from Germany and USA.
The Key testing facilities include; ? Friction Testing Machine. ? Water/slurry Ingress Testing Machine. ? Dust Ingress Testing Machine. ? Thickness Testers ? Hardness testing equipment for rubber rings ? Break Off Force Testing Equipment ? Axial Float Checking Device
ROLLWELL PRODUCTS ? Idlers ? Pulleys
?
? ?
Belt Conveyors Screw Conveyors Shuttle Conveyors
? Drum Motors
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PRODUCT RANGE Idlers Belt width Roller diameter Shaft diameter : : 40mm to 2400mm 76.1mm to 219mm : 20mm to 45mm
Any combination can be supplied. Pulleys Range Shaft size : : 220mm to 1000mm diameter 40mm to 200mm diameter
Any combination can be supplied.
Rollwell products
Idlers Idlers are the heart of a conveyor, since reliability and longer life can reduce down time for the conveyors, effect reduction in power consumption and increase belt life. Rollwell idlers operate with very
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low coefficient of friction and are designed for reliable and guaranteed performance. Pulleys Rollwell pulleys use ultrasonically tested shafts and are stress relieved before machining. The pulleys are statically balanced which ensures increased bearing life and reduced power consumption. Various straight or crown faced pulleys, with or without rubber lagging are manufactured in different combinations of diameters and face widths. Belt Conveyors Rollwell has the expertise to design and develop most appropriate techno – economic belt conveyors suitable for various service conditions. The belt conveyors are designed using customized software programs developed as per CEMA and other standards. All components like idlers, base frames, pulleys are manufactured in house and our plant is specifically equipped for heavy fabrication etc. Screw Conveyors Our screw conveyors are designed to ensure a sturdy pipe design, minimum run out, minimum coefficient of friction, ease of maintenance and reduced power loss. The special sealing system prevents dust entry and trouble free operation. The screw flights are machine formed and are available in various configurations and
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thickness. The screw flights are hard faced with special electrodes to prolong its life.
Shuttle Conveyors Rollwell has specialized in manufacturing Shuttle Conveyors suitable for various application and industries. Our plant is equipped with special fixtures to test run the complete shuttle conveyor assembly. As in other conveyors, idlers, pulleys, and all fabrication work is in house which ensures a quality product at most reasonable cost. Drum Motors The Ramsal Drum Motor requires minimal space on the conveyor frame and completely eliminates the need for external motor, gearbox, chain, sprockets, chain guard or pillow block bearings. By housing all vital components internally, the Ramsal Drum Motor reduces operating & maintenance costs and improves safety conditions
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Rollwell is a regular supplier to the top companies in the following sectors; Cement Industry Rollwell idlers and pulleys are the lifelines of majority of cement plants in India. Right from lime stone crushing section to cement packing section, we have designed and installed various material handling equipments like Belt conveyors, Shuttle Conveyors, Screw feeders, Screw Conveyors, Bucket elevators, Crushers, Slide Gates, Air Slides, Vibrating screens etc. Steel Industry A vast majority of the private steel manufactures in India rely on Rollwell products for handling various materials like iron ore, coke, limestone, additives, fluxes, etc. Our range of Idlers, Pulleys, Belt Conveyors, and Shuttle Conveyors etc have been a preferred option for various new and expansion projects in the steel industry. Mining Industry Top mining companies revert to Rollwell idlers for critical material handling requirements applications.
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Port Trusts Our equipment for components likes idlers and pulleys are used for conveying, storage and extraction of various materials at different port trusts. Power Plants Coal and ash handling in thermal plants use Conveyor Components, Feeders, Belt Conveyors, Bucket elevators, Vibrating Screens, Coal crusher, Gates, Screw conveyors etc, which are manufactured by Rollwell. Fertilizer Industries Rollwell idlers and pulleys are deployed for various belt conveyors used in conveying raw materials and packed fertilizers. Chemical Industries Feeders, Belt conveyors, Bucket elevators, Screw conveyors are used at various stages of manufacturing in the chemical industries. Exports Rollwell products are exported to companies and turn key project executors for countries in Middle East, Africa, Europe and USA.
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ORGANISATIONAL STRUCTURE
BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER
MARKETING
PERSONNEL
PRODUCTION
FINANACE
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INTRODUCTION Management should be particularly interested in knowing financial strengths of the firm to make their best use and to be able to spot out financial weakness of the firm to take suitable corrective actions. Taking this as central idea, the project work was undertaken for Rollwell Pvt. Ltd. This project was based on the guidelines and instructions handed over by the company. This includes the tools of analysis, objectives. Basically the work was aimed at learning the current financial position of the company and knowing the reasons for this position. Hence in my study I have tried to analyze the financial performance of Rollwell, for the financial year 1999-2005 with the help of ratios. This study helps the company to know the current financial position, which indirectly helps to formulate various strategies to consolidate and upgrade its present financial position.
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OBJECTIVES OF THE STUDY The objective of the study is to know the financial position of Rollwell. ? To study the liquidity position of the company. ? To study the profitability ratio of the company. ? To study the solvency position of the company. ? To study how for the company utilizing its assets effectively. ? To provide information to the investors in investment decision. ? To find out the solutions to the unfavourable financial conditions and financial performance. ? To take the suitable corrective measures. SCOPE OF THE STUDY The project is aimed at analyzing the performance of the company on various financial aspects like liquidity position, leverage position, profitability position.
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Purpose of the project is to analyze the past and present performance of the company on the various financial areas, since past performance will be essential yard stick for predicting the future performance of the company.
PERIOD OF STUDY The period covered by the study over 7 years from 1998-99 to 200405. Research design of the study: Scanning through standard text books to understand the theory behind the ratio analysis. Identification of financial ratios likely to reflect financial performance adequately. Collection of company specific literature i.e., company’s profile and annual reports over this study period. Calculation of these ratios over the study period and tabulation. Finally forwarding certain recommendations and conclusions to the company. Sources of data Primary source: The primary data was obtained by discussions with various financial executives.
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Secondary source: Annual reports of the company Company’s profile Various text books
LIMITATIONS OF THE STUDY ? The study is based on past financial reports of the company, so it may not represent the future performance of the company. ? It is difficult to make decision on the basis of comparison. ? Due to time constraints in-depth analysis is not conducted.
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FINANCIAL RATIO ANALYSIS
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by property establishing relationships between the item of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, owners, creditors, investors and others. Ratio analysis is a powerful technique of analysing the financial statements. Management should be particularly interested in knowing financial strengths of the firm to make their best use and to be to spot out financial weaknesses of the firm to make suitable corrective actions. Thus, financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. RATIO ANALYSIS – MEANING A ratio is an arithmetical relationship between two figures. A ratio is defined as
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“The indicated Quotient of two Mathematical expression”. Financial statements are useful to the executives, owners, Creditors, investors etc., Based upon the financial statements, users can form judgment about the operating performance of the firm and financial position of the firm. A creditor can ascertain the liability position of the firm that is the ability of the firm to repay its current liabilities. The management of the firm analyze the financial statements to judge the operating efficiency of the firm. The shareholders (owners) analyze the financial statement of the firm to find out the profitability. The investors analyze the financial statements of the firm to know the ability of the firm to pay interest regularly. The future plans of the firm should be laid down in the view of the firm’s financial strength and weakness. USERS OF RATIO ANALYSIS: ? Trade creditors ? Lenders ? Investors ? Government ? Management Trade creditors are interested in firm’s ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evaluation of the firm’s liquidity position. Suppliers of long-term debt, on the other hand, are concerned with the firm’s long-term solvency and survival. They analyze the firm’s profitability over time, its ability to generate cash to be able to pay
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interest and repay principal and the relationship between various sources of funds. Financial statements to make analysis about its future solvency and profitability. Investors, who have invested their money in the firm’s shares, are most concerned about the firm’s earnings. They restore more confidence in that firm’s that show steady growth in earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s financial structure to the extent it influences the firm’s earnings ability and risk. Government is also interested to know the strength and weakness of the firm. Government makes the future plans, policies on the basis of financial information available from various units of the company. Management of the firm would be interested in every aspect of the financial analysis. It is their overall responsibility to see that the resources of the firm are used most effective and efficiently, and that the firm’s financial condition is sound. OBJECTIVES OF RATIO ANALYSIS The main objectives of ratio analysis are to 1. Analysis the financial position of the firm by using the various accounting ratios. 2. To know the liquidity position of the firm that is the firm that is the firm’s relative strengths and weakness of the firm. 3. To know the various sources utilize by the firm. 4. To know the amount of debt in the firm.
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5. To provide information to the investors in Investment Decision. 6. To compare financial position of the firm in the current year with the previous year financial position. 7. To know the season effects in the firm, that is cost position of the firm between the profit making and loss making period. 8. To help the management in planning, controlling and decision making. 9. To find out the solution to the unfavorable financial conditions and financial performance. 10. To take the suitable corrective measures when the firm’s financial conditions and performance are unfavorable to the firm when compared to other firms in the same industry.
SIGNIFICANCE OF RATIO ANALYSIS A ratio is used for evaluating the financial position and performance of a firm. Various parties like trade creditors, banks, financial institutions, investors, shareholders and management are interested in the ratio analysis for knowing and evaluating the financial position of a firm for different purposes like for granting credit, providing loans or making investments in the firm. Ratio analysis helps in budgetary control and standard costing, apart from forecasting, planning, proper communication, control and coordination. As they expose the strengths and weakness of the firm, they are of immense importance in the analysis and interpretation of financial statements.
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NATURE AND SCOPE OF RATIO ANALYSIS Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “The indicated Quotient of two Mathematical expression” and as “the relationship between two or more things”. In financial analysis, a ratio is used as a benchmark for evaluating the financial position and performance of a firm. The absolute accounting figures reported in the financial statements don’t provide a meaningful understanding of the performance and the financial position of a firm. An accounting figures conveys meaning when it is related to some other relevant information. Ratio helps to summaries large quantities of financial data and to make qualitative judgment about the firm’s financial performance. For example, consider current ratio. It is calculated by dividing current assets by current liabilities. This relationship is an index or yardstick which permits a qualitative judgment to be formed about the firm’s ability to meet its current obligations. It measures the firm’s liquidity. The greater the ratio, the greater the firm’s liquidity. Utility of Ratio Analysis ? Assessment of the firm’s financial conditions and capabilities. ? Diagnosis of the firm’s problems, weaknesses and strengths. ? Credit analysis ? Security analysis ? Comparative analysis ? Time series analysis
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LIMITATIONS OF RATIO ANALYSIS: No doubt, ratios are exceptionally useful tools. But, they have to be used with a caution as they suffer from some limitations. i) An analyst should know the reliability and soundness of the figures from which the ratios are computed. Otherwise, ratios can some times be misleading. ii) As a single ratio does not convey much of sense, often, a number of ratios are calculated to make a better interpretation of the financial data, which some times its likely to confuse the analyst rather than help him making a meaningful conclusion iii) iv) Raito mislead, whenever there is a change in the accounting procedure. To make ratios as acceptable norms, they should be some well acceptable standards or rules of thumb. Unfortunately no such rules exist.
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v)
As ratios are calculated from the financial data contained in the financial statements, which are based on the historical data, ratios suffer from the same limitation of financial statements that they are of historical nature, thus, are no indicators of future. While financial analysts are more interested in what happens in future, the ratio indicates what happened in the past.
vi)
To present a better picture about the financial health of the organization, financial statements may easily be window dressed. Therefore, one has to be careful while making a decision based on ratios calculated from such financial statements.
vii)
A single ratio may be interpreted in different ways, at different times by different people. Ratios are only means of financial analysis and not an end in itself.
viii) As ratio analysis is only a quantitative analysis and not qualitative one ratios devoid of absolute figures may prove distortive. Ratios can never be the substitutes for the raw figures. ix) x) As no consideration is made to the changes in the prize levels, the interpretation of ratios is invalid. The differences in the definition of items in the balance sheet and income statement make the interpretation of ratios difficult. Diversity of views exists as what should be included in net worth or share holders equity, current assets or current liabilities. Whether preference share capital should
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be included in debt or equity should current liabilities be included in debt in calculation of the debt equity ratios. xi) The ratios calculated at a point of time are less informative and defective as they suffer from short term changes
CLASSIFICATIONS OF RATIO ANALYSIS: ? ? ? ? Liquidity ratios Leverage ratios Turnover ratios Profitability ratios
LIQUIDITY RATIO Liquidity refers to the ability of the firm to meet its obligations in the short-run, usually one year. Liquidity ratio is generally based on the relationship between current assets and current liabilities. “Liquidity means ability of the business to pay of its short term liabilities”. In ability to pay short term liabilities affect the creditability of the business. It also lowers its credit rating. A continuous default on part of the business to pay off its liability may even create disturbances to its day to day operations. The liquidity ratios are: Current ratio, Quick ratio, Cash ratio, net working capital ratio. LEVERAGE RATIO
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Leverage ratios indicate the long term financial strengths of the company. Long term creditors, like debenture holders, financial institutions etc., are more interested in this group of ratios because these ratios help them to know the margin of safety available to their capital and the debt servicing ability of the company. The relative shares of ownership and debt capital and there by the manner in which funds have been mobilized, the degree of financial risk resulting from the introduction of debt capital can be known by calculating these ratios. Between debt and equity capital, debt is cheaper source of capital, but it is more risky from the firm’s point of view. This is because; interest on debt is a fixed obligation which has to be paid irrespective of profits made by the company. Further, non-payment of interest leads to insolvency of the firm. If the company is liquidated, the share holders are the worst sufferers as they are the residual owners. But debt capital would help existing share holders to retain their control over the company with a limited stake and magnify their earnings. Thus, the use of debt as both advantages and disadvantages. The important leverage ratios: debt ratio, debt-equity ratio, TL-to-TA ratio, interest coverage ratio. TURNOVER RATIO Turnover ratios, also referred to as activity ratios or asset management ratios, measure how efficiently the assets are employed by a firm. These ratios are based on the relationship
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between the level of activity, represented by sales or cost of goods sold, and levels of various assets. The important turnover ratios are: inventory turnover ratio, debtor’s turnover ratio, average collection period, total assets turnover, fixed assets turnover, working capital turnover, and current assets turnover.
PROFITABILITY RATIO Profitability reflects the final result of business operations. Profit is a ultimate output of a company. A company will have no future if it fails to make sufficient profit. There are two types of profitability ratios: Profit margins ratios and rate of return ratios. Profit margin ratios show the relationship between profit and sales. Since profit can be measured at different stages, there are several measures of profit margin. The most popular profit margin ratios are: gross profit margin ratio and net profit margin ratios. Rate of return ratio reflects the relation ship between profit and investment. The important of rate of return measures are: return on assets, earning power, and return on equity.
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1. LIQUIDITY RATIOS Liquidity ratios measure a firm’s ability to meet its current obligations. CURRENT RATIO: Current assets include cash and those assets which can be converted into cash with in a year. Such as marketable securities, debtors and inventories. Current liabilities include creditors, bills payable, accrued expenses, short-term bank loan, income-tax liability and long-term debt maturing in current year. The current ratio is calculated by dividing current assets by current liabilities: CURRENT ASSETS ---------------------------CURRENT LIABILITIES
CURRENT RATIO
=
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YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
6 5 4 3 2 1 0 RATIOS
C.A 11885131.63 11827600.14 10539975.70 10996509.38 11363319.56 18084796.08 25038096.93
C.L 6924137.02 4359796.64 1967939.97 2136174.35 2343478.03 4425451.31 13143418.26
CURRENT RATIO 1.72:1 2.71:1 5.35:1 5.15:1 4.85:1 4.08:1 1.90:1
CURRENT RATIO
1999 1.72
2000 2.71
2001 5.35
2002 5.15 YEARS
2003 4.85
2004 4.08
2005 1.9
INTERPRETATION: As a conventional rule, a current ratio of 2:1 is considered satisfactory. If the ratio is less than 2:1, it indicates that the business does not enjoy adequate liquidity. If the ratio is higher than 2:1, though it may be comfortable for the creditors but not for the concern. From the above analysis, from 2001 to 2004 the current ratio are more than 4:1, which means organization have excess current
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assets over current liabilities. Very high degree of liquidity is also bad; idle assets earn nothing. Organization with high current ratio might not be in a position to pay current liabilities, because of unfavorable distribution of current assets in relation to liquidity. In the years 2001 to 2005 the current ratios decreased by 5.35:1 to 1.90:1, it indicates that the position of the firm is satisfactory. However the company should invest its ideal funds properly.
QUICK RATIO Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. It is also called acid-test ratio.
QUICK RATIO =
QUICK ASSETS ------------------------CURRENT LIABILITIES
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YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
Q.A 7334641.63 7695265.14 5865673.7 3176306.38 3801845.56 7567685.08 11914810.93
C.L 6924137.02 4359796.64 1967939.97 2136174.35 2343478.03 4425451.31 13143418.26
QUICK RATIO 1.05:1 1.76:1 2.98:1 1.48:1 1.62:1 0.38:1 0.91:1
NOTE: Quick assets =
current assets - inventory
QUICK RATIO
3 2.5 2 1.5 1 0.5 0 RATIOS
1999 1.05
2000 1.76
2001 2.98
2002 1.48 YEARS
2003 1.62
2004 0.38
2005 0.91
INTERPRETATION:
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A quick ratio of 1:1 is considered to represent a satisfactory current financial condition. From the above analysis, from 1999 to 2003 the quick ratios are higher than 1:1, in these years quick assets maintain good. In the year 2001 the quick ratio is 2.98; high quick ratio may not have a satisfactory. In the years 2004 and 2005 the quick ratios are 0.38 and 0.91 ie., quick ratios less than 1, it indicates inadequate liquidity of the firm. But we can’t come to the conclusion that the firm’s liquidity position is satisfactory.
CASH RATIO As cash is the most liquid asset, a relationship between cash and current liabilities is examined to know the solvency position.
CASH RATIO =
Cash + Marketable securities -------------------------------Current Liabilities
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YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
Cash + Marketable securities 251282.69 61691.38 84079.35 143750.51 181330 118819.31 299075.79
CURRENT LIABILITIES 6924137.02 4359796.64 1967939.97 2136174.35 2343478.03 4425451.31 13143418.26
CASH RATIO 0.04:1 0.01:1 0.04:1 0.06:1 0.07:1 0.03:1 0.02:1
NOTE: Here cash means not only the cash balance but also the bank balance of the firm
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CASH RATIO
0.08 0.06 0.04 0.02 0
RATIOS 1999 0.04 2000 0.01 2001 0.04 2002 0.06 2003 0.07 2004 0.03 2005 0.02
YEARS
INTERPRETATION: The ideal ratio is 1:2 or 0.5. The firms cash ratios is not satisfactory. It is nearly 2 rupees to 7 rupees for every 100 rupees of current liabilities. From the above analysis, from 1999 to 2005 the cash ratio of the firm is less than 1 time which is bad to the firm
NET WORKING CAPITAL RATIO
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The difference between current assets and current liabilities excluding short-term borrowing is called net working capital or net current assets. Net working capital is some times used a measure of a firm’s liquidity. This ratio is calculated by dividing net working capital with net assets. Networking Capital -------------------------Net Assets
NET WORKING CAPITAL RATIO=
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
N.W.C 4960994.61 7467803.50 8572035.73 8860335.03 9019841.53 13659344.77 11894678.67
NET ASSETS 9478655.16 11703353.05 12488180.28 12462321.08 12834749.08 17380736.32 17800756.22
NWC RATIO 0.52:1 0.64:1 0.69:1 0.71:1 0.70:1 0.78:1 0.67:1
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NET WORKING CAPITAL RATIO
0.8 0.6 0.4 0.2 0
RATIOS 1999 0.52 2000 0.64 2001 0.69 2002 0.71 2003 0.7 2004 0.78 2005 0.67
YEARS
INTERPRETATION: The larger net working capital has the greater ability to meet its current obligations. This ratio measures the firms potential reservoir of funds. In analysis, from 1999 to 2005 the net working capital ratio of the firm is less than 1, it indicates that the position of the firm is not satisfactory.
2. LEVERAGE RATIOS
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Financial leverage refers to the use of debt finance. Leverage ratios indicate the long-term financial strength of the company. These ratios are helpful to management in proper administration of capital. It also helps the creditors to know the capacity of a business concern to pay debt in future. DEBT RATIO: Debt ratios may be used to analyze the long-term solvency of the firm. The debt ratio is calculated by dividing total debt by capital employed. Debt Ratio = Total Debt --------------------------Capital Employed
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
TOTAL DEBT 13410566.57 15053623.57 15380704.09 15012022 13458919.97 11699460.03 9036206.67
CAPITAL EMPLOYED 16666770.57 18309827.57 18636908.09 17586539 16033436.97 17381736.32 17851356.22
DEBT RATIO 0.80:1 0.82:1 0.82:1 0.85:1 0.84:1 0.67:1 0.53:1
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DEBT RATIO
1 0.8 0.6 0.4 0.2 0
RATIOS 1999 2000 2001 2002 2003 2004 2005 0.8 0.82 0.82 0.85 0.84 0.67 0.53
YEARS
INTERPRETATION: In the year 2005 debt ratio of 0.53 means that lenders have finance 53%, it obviously implies that owners have provided the remaining finance. They have financed 1-0.53 = 0.47 = 47% of net assets. The lending capacity continuously decreasing in the years 2002 to 2005, means that the firm has nearly Rupee 1 for every 85 p, 84 p, 67 p, 53 paise in the years 2002 to 2005, which means the solvency position of the company.
DEBT-EQUITY RATIO
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The debt-equity ratio shows the relative contributions of creditors and owners. It shows the relationship between borrowed funds and owner’s capital. This ratio is calculated by using the following formula: Debt-equity Ratio = Total Debt -----------------Net worth
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
TOTAL DEBT 13410566.57 15053623.57 15380704.09 15012022 13458919.97 11699460.03 9036206.67
NET WORTH 3256204 3256204 3256204 2574517 2574517 5645224.29 8118731.55
DEBTEQUITY RATIO 4.12:1 4.62:1 4.72:1 5.83:1 5.23:1 2.07:1 1.12:1
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DEBT-EQUITY RATIO 6 5 4 3 2 1 0 RATIOS 1999 4.12 2000 4.62 2001 4.72 2002 5.83 YEARS 2003 5.23 2004 2.07 2005 1.12
INTERPRETATION: In general, the lower the debt-equity ratio, the higher the degree of protection enjoyed by the creditors. It is clear that in this firm, lenders have contributed more funds than owners. In 1999 to 2003 the debt equity ratio is increased by 4.12 to 5.23, because the debt of company has more than equity of the firm. It is unfavorable to the firm as it has to suffer great financial strains during the period of low profits. In 2005 debt equity ratio is 1.12, lenders contribution is 1.12 times of owners contribution 0.53/0.47 = 1.12. In the years 2002 to 2005 the ratio is decreased by 5.83:1 to 1.12:1, which means the solvency position of the firm is satisfactory.
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TOTAL LIABILITIES TO TOTAL ASSETS RATIO: To assess the proportion of total funds, short-term and long-term provided by outsiders to finance total assets, the following ratio may be calculated:
Total liabilities to total assets ratio =
Total liabilities -------------------------Total assets
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
TOTAL LIABILITIES 20334703.59 19413420.21 17348644.06 17148196.35 15802398 16124911.34 22179624.93
TOTAL ASSETS 16402792.18 16063149.69 14456120.25 14598495.43 15178227.11 21806187.63 30944174.48
TL TO TA RATIO 1.24:1 1.21:1 1.20:1 1.17:1 1.04:1 0.74:1 0.72:1
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1.4 1.2 1 0.8 0.6 0.4 0.2 0 RATIOS 1999 1.24
TL TO TA RATIO
2000 1.21
2001 1.2
2002 1.17 YEARS
2003 1.04
2004 0.74
2005 0.72
INTERPRETATION: From the above analysis, from 1999 to 2003 total liabilities to total assets ratio is more than 1% and after two years ie.,2004 & 2005 the ratios is decreases by 0.74 & 0.72, which means the solvency position of the company.
COVERAGE RATIO:
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Coverage ratio is used to measure the debt servicing ability of the company. Long-term creditors are more interested in this ratio than the debt-equity ratio. This ratio shows the number of times interest charges on long-term debt are covered by the firms operating profits (EBIT). This ratio is computed by dividing EBIT by interest charges: EBIT ----------------------Interest
Interest Coverage =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
EBIT 2261725.97 2742252.89 2669326.71 2440397.61 3953366.25 5637857.01 5611184.86
INTEREST 1751764 1852397 1884386 1816509.72 1689800.22 1497043.63 1089630 1.29 1.48 1.42 1.34 2.34 3.76 5.15
RATIO
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COVERAGE RATIO
6 5 4 3 2 1 0
1999 2000 2001 2002 2003 2004 2005 1.48 1.42 1.34 2.34 3.76 5.15
RATIOS 1.29
YEARS
INTERPRETATION: The higher coverage ratio is desirable. A lower ratio indicates excessive use of debt or inefficient operations. In the years, 1999 to 2005 the interest coverage ratio is increased by 1.29 to 5.15 except the years 2001 and 2002. A high interest coverage ratio means that the firm can easily meet its interest burden even if profit before interest and taxes suffer a considerable decline. It indicates the firm ability to meet interest obligations.
3 .TURNOVER RATIOS:
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Turnover or activity ratios measure the firm’s efficiency in utilizing its assets. It is also called asset management ratio. Activity ratios measure how efficiently the assets are employed by a firm. This ratios are based on the relationship between the level of activity, represented by sales or cost of goods sold, and levels of various assets. INVENTORY TURNOVER RATIO: This ratio indicates the efficiency of the firm in selling its products. It is calculated by dividing the cost of goods sold by the average inventory: COST OF GOODS SOLD INVENTORY TURNOVER = ---------------------------------AVERAGE INVENTORY
OPENINGINVENTORY+CLOSING IVENTORY AVERAGE INVENTORY = ----------------------------------------------------2
NO OF DAYS IN THE YEAR INVENTORY HOLDING PERIOD: -----------------------------------INVENTORY TURN OVER
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YEARS
COST OF GOODS SOLD 5893392.53 5167182.11 3253109.64 9078460.61 14782118.72 25149806.82 57035511.72
19981999 19992000 20002001 20012002 20022003 20032004 20042005
AVERAGE INVENTO INVENTOR RY Y TURNOVE R RATIO 2215333.5 2.66 2375667 2136275.5 2358138.5 2649091 2225796.5 2547440 2.17 1.52 3.85 5.58 11.29 22.38
INVENTO RY HOLDING PERIOD 137.22 168.2 240.13 94.80 65.41 32.33 16.30
INVENTORY TURNOVER RATIO
30 20 10 0
1999 2000 2001 2002 2003 2004 2005
RATIOS 2.66 2.17 1.52 3.85 5.58 11.29 22.38
YEARS
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INVENTORY HOLDING PERIOD
300 200 100 0
1999 2000 2001 2002 2003 2004 2005
RATIOS 137.2 168.2 240.1 94.8 65.4 32.3 16.3
YEARS
INTERPRETATION: This ratio measures how quickly inventory is sold, a test of efficient management. A high inventory turnover ratio indicates efficient management of inventory because more frequently the stocks are sold. The decrease in the inventory holding period is the result of the increased turnover ratio. Firstly, from the years 1999 to 2001 the inventory turnover ratios is decreases. Low inventory turnover indicates that the inventory does not sell fast and remain in ware house for a long period. Low turnover implies over investment in inventories. After, years from 2002 to 2005 inventory turnover ratio is continuously increasing by 3.85 times to 22.39 times. Ratio is continuously increasing which is good for the organization. Hence in the case of Roll well Pvt. Ltd. Inventory turnover ratio is satisfactory. Here there is an efficient management of inventory because frequently stocks are sold. A too high inventory turnover ratio may lead to stock outs and production interruptions.
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DEBTORS TURNOVER RATIO: This ratio indicates the speed of conversion of debtors into cash. The sub ratio of debtors turnover ratio is debt collection period which indicates the average collection period. SALES -------------------DEBTORS
DEBTORS TURNOVER RATIO =
DEBT COLLECTION PERIOD =
NO OF DAYS IN A YEAR ---------------------------------------DEBTORS TURNOVER RATIO
YEARS SALES
DEBTORS
19981999 19992000 20002001 20012002 20022003 20032004 20042005
6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58
6193395.78 6773809.76 5404224.35 2171656.87 2838220.91 6917302.77 9927096.77
DEBTORS TURNOV ER RATIO 1.03 0.89 0.75 4.46 6.00 4.23 6.20
DEBT COLLECTI ON PERIOD 354.3 410.1 486.6 81.8 60.8 86.2 58.8
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DEBTORS TURNOVER RATIO 8 6 4 2 0 RATIOS 1999 1.03 2000 0.89 2001 0.75 2002 4.46 YEARS 2003 6 2004 4.23 2005 6.2
DEBT COLLECTION PERIOD
500
0
1999 2000 2001 2002 2003 2004 2005
RATIOS 354.3 410.1 486.6 81.8 60.8 86.2 58.8
YEARS
INTERPRETATION: Debtor turnover ratio & debt collection period tell us about the credit policy of the company. Debtor turnover indicates the number of times debtor turn each year. The higher the debtors turnover the greater the efficiency of credit management. High debtors turnover leads to low collection period. Debtors turn over ratio is increasing in 2004 & 2005, so the credit management is more efficient. The debt collection period is decreasing in the year 2004 & 2005 is 86.28 days to 58 days, then the collection will be done quickly.
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ASSETS TURNOVER RATIO: The relationship between sales and assets is called assets turnover 1. NET ASSETS TURNOVER: This ratio is computed by dividing sales by net assets. SALES -----------------NET ASSETS
NET ASSETS TURNOVER =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58
NET ASSETS 9478655.16 11703353.05 12488180.28 12462321.08 12834749.08 17380736.32 17800756.22 0.67 0.52 0.32 0.78 1.33 1.68 3.46
RATIO
NOTE: Net assets = Net fixed assets + Net current assets.
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NET ASSETS TURNOVER RATIO
4 2 0
1999 2000 2001 2002 2003 2004 2005
RATIOS 0.67 0.52 0.32 0.78 1.33 1.68 3.46
YEARS
INTERPRETATION: As assets are used to generate sales, a firm should manage its assets efficiently to maximize sales. In the above years, 2003 to 2005 the net assets turnover ratios are 1.33, 1.68 & 3.46 times. It implies that Rollwell Pvt. Ltd. is producing Rs.3 of sales for one rupee of capital employed in net assets. Firm ability to produce a large volume of sales for a given amount of net assets.
TOTAL ASSETS TURNOVER:
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This ratio shows the firm’s ability in generating sales from all financial resources committed to total assets.
SALES TOTAL ASSETS TURNOVER = ------------------TOTAL ASSETS NOTE: Total assets = Net fixed assets + current assets.
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58
TOTAL ASSETS 16402792.18 16063149.69 14456120.25 14598495.43 15178227.11 21806187.63 30944174.48
RATIO 0.39 0.38 0.28 0.66 1.12 1.34 1.99
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TOTAL ASSETS TURNOVER RATIO
2 1.5 1 0.5 0 1999 2000 2001 2002 2003 2004 2005 YEARS
RATIOS 0.39 0.38 0.28 0.66 1.12 1.34 1.99
INTERPRETATION: This ratio measures how efficiently assets are employed. In the year 2003 to 2005 sales is more than the investment in fixed and current assets together. Total assets turnover ratio is increasing by 1.12, 1.34 to 1.99 times, Rollwell generates to sales for 1 rupee investment in fixed and current assets together.
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FIXED & CURRENT ASSETS TURNOVER RATIO: This ratio measures sales per rupee of investment in fixed assets. This ratio is supposed to measure the efficiency with which fixed & current assets are employed. SALES FIXED ASSETS TURNOVER = -----------------------------NET FIXED ASSETS SALES CURRENT ASSETS TURNOVER = ----------------------------CURRENT ASSETS SALES YEARS 19981999 19992000 20002001 20012002 20022003 20032004 20042005 6403354.50 6057038 4038050.35 9702348.50 17045684.7 5 29290620.2 0 61557066.5 8 FIXED ASSETS CURRENT FIXED ASSETS ASSETS TURNOVE R RATIO 4517660.5 11885131.6 1.42 5 3 4235549.5 11827600.1 1.43 5 4 3916144.5 5 3601986.0 5 3814907.5 5 3721391.5 5 5906077.5 5 10539975.7 0 10996509.3 8 11363319.5 6 18084796.0 8 25038096.9 3 1.03 2.69 4.47 7.87 10.42 CURRENT ASSETS TURNOVE R RATIO 0.54 0.51 0.38 0.88 1.50 1.62 2.46
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FIXED & CURRENT ASSETS TURNOVER RATIO
12 10 8 6 4 2 0 1999 FA RATIO CA RATIO 1.42 0.54 2000 1.43 0.51 2001 1.03 0.38
FA RATIO
2002 2.69 0.88
CA RATIO
2003 4.47 1.5
2004 7.87 1.62
2005 10.42 2.46
INTERPRETATION: A high fixed and current assets turnover ratio indicates a high degree of efficiency in asset utilization. A low ratio reflects inefficient use of assets. In the year 2002 to 2005 fixed assets turnover ratios is increasing by 2.69 to 10.42. High ratio indicates a high degree of efficiency in assets. Current assets turnover ratios is increasing by 1.5 to 2.46. Rollwell assets turnover its fixed assets faster than current assets.
NET WORKING CAPITAL TURNOVER RATIO:
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This ratio helps in knowing the efficiency in the management of working capital by indicating the amount of sales generated for each rupee of investment in working capital. The ratio is:
SALES NET WORKING CAPITAL TURNOVER RATIO = ---------------NET WORKING CAPITAL
Net working capital = current assets – current liabilities YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 NET WORKING CAPITAL 4960994.61 7467803.50 8572035.73 8860335.03 9019841.53 13659344.77 11894678.67 RATIO 1.29 0.81 0.47 1.09 1.89 2.14 5.17
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NET WORKING CAPITAL TURNOVER RATIO
6 5 4 3 2 1 0 RATIOS 1999 2000 2001 2002 2003 2004 2005 1.29 0.81 0.47 1.09 YEARS 1.89 2.14 5.17
INTERPRETATION: This ratio shows the relationship between net current assets or net working capital to sales. Working capital turnover ratios in 2002 to 2005 increased by 1.09 to 5.17. Amount of sales is more than the amount of working capital.
4. PROFITABILITY RATIO
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Profitability ratios measure a firm’s overall efficiency and effectiveness in generating profit. . Profit is the difference between revenues and expenses over a period of time. Profit is the ultimate output of a company, and it will have no future if it fails to make sufficient profits. Therefore, the financial manager should continuously evaluate the efficiency of its company in terms of profits. GROSS PROFIT MARGIN RATIO: This ratio shows the margin left after meeting manufacturing costs. It measures the efficiency of production as well as pricing. Gross profit ratio is calculated by dividing gross profit by sales. GROSS PROFIT RATIO = GROSS PROFIT --------------------------SALES SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 GP RATIO % 7.9 15 19 6 13.3 14 7.3
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
GROSS PROFIT 509961.97 889855.89 784940.71 623887.89 2263566.03 4140813.38 4521554.86
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GROSS PROFIT RATIO
20 15 10 5 0
RATIOS 1999 2000 2001 2002 2003 2004 2005 7.9 15 19 6 13.3 14 7.3
YEARS
INTERPRETATION: High gross profit ratio is a sign of good management as it implies that the cost of goods sold is low. A low gross profit ratio indicates management inefficiency as it implies that cost of goods sold is high. In the year 2005 gross profit ratio is low ie., 7.3% compared to all previous years. It means low gross profit ratio indicates inefficiency as it implies that cost of goods sold is high. A low gross profit margin may reflect higher cost of goods sold due to the firm’s inability to purchase raw material at favourate terms, inefficient utilization of plant and machinery or over investment in plant and machinery. The ratio will also be low due to a fall in prices in the market. A firm should identify and analyze the factors responsible for low gross profit ratio to take corrective measures to improve the situation. NET PROFIT MARGIN
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Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. The net profit margin ratio is measured by dividing profit after tax by sales. PROFIT AFTER TAX -------------------------------SALES SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 NP RATIO % 3.2 9.6 11.2 2.5 11.3 11.9 3.6
NET PROFIT MARGIN =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
PAT 202615.97 581640.89 450746.71 242822.89 1925530.03 3505447.18 2273507.26
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NET PROFIT RATIO 15 10 5 0
1999 2000 2001 2002 2003 2004 2005 3.2 9.6 11.2 2.5
YEARS
RATIOS
11.3 11.9
3.6
INTERPRETATION: This ratio indicates the overall ability of a firm to turn each rupee of sales in to net profit. From 2002 to 2004 the net profit ratio is increased by 2.5% to 11.9%. It indicates management’s efficiency in manufacturing, administrating and selling the products. In the year 2005 the ratio is decreased by 3.6%, It is better to increasing profits.
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OPERATING EXPENSE RATIO This ratio is an important ratio that explains the changes in the profit margin (EBIT to sales) ratio. This ratio is computed by dividing operating expenses viz., cost of goods sold plus selling expenses and general and administrative expenses by sales:
OPERATING EXPENSES OPERATING EXPENSE RATIO = ------------------------------------SALES
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
OPERATING EXPENSES 634702.55 683749.66 917578.93 2909870.70 1301361.39 2518078.55 4666960.45
SALES 6403354.50 6057038 4038050.35 9702348.50 17045684.75 29290620.20 61557066.58 9.9 11.2 22 29.9 7.6 8.6 7.6
RATIO
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OPERATING EXPENSES RATIO 30 20 10 0
RATIOS 1999 2000 2001 2002 2003 2004 2005 9.9 11.2 22 29.9 7.6 8.6 7.6
YEARS
INTERPRETATION: The higher operating expenses ratio is unfavorable. The operating expenses has been increasing and decreasing from 1999 to 2005. The operating expenses ratio of Rollwell is changing may be due to changes in management policy. Operating expenses ratios has been increasing from 1999 to 2002, which indicates that the company increased expenses to increase the sales, it effect on the net profit of the organization. After years the percentage of ratio is decreased. A lower expense ratio is better for the organization.
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RETURN ON EQUITY (ROE) The goal of financial management is to maximize the wealth of equity share holders who are the owners of the company. This ratio is calculated to see the profitability of owner’s investment. The return on shareholders equity is net profit after taxes divided by shareholders equity PROFIT AFTER TAXES -----------------------------------NET WORTH
ROE =
YEARS 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
PAT 202615.97 581640.89 450746.71 242822.89 1925530.03 3505447.18 2273507.26
NET WORTH 3256204 3256204 3256204 2574517 2574517 5645224.29 8118731.55 6 17.8 13.8 9.4 74.8 62.1 28
RATIO
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RETURN ON EQUITY RATIO
80 60 40 20 0
RATIOS 1999 6 2000 2001 17.8 13.8 2002 9.4 2003 74.8 2004 2005 62.1 28
YEARS
INTERPRETATION: This ratio is of great interest to the existing and prospective share holders and also of great concern to management which has the responsibility of maximizing the owner’s wealth. The return on equity measures the profitability of equity funds invested in the firm. It is calculated to see the profitability of owner’s investment. The ratios in 2003 to 2005 the percentage is decreased by 74 to 28%. Higher ratio is better for the equity shareholders.
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EARNING PER SHARE This ratio is used to calculate the earnings per share. The earnings per share is calculated by dividing the profit after taxes by the total number of common shares outstanding. Profit after Tax --------------------------------------------------Number of Common Shares Outstanding
EPS =
YEARS
PAT
1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
202615.97 581640.89 450746.71 242822.89 1925530.03 3505447.18 2273507.26
NO OF COMMON SHARES OUTSTANDIN G 10000 10000 10000 10000 20000 20000 50000
RATIOS IN RS
20.26 58.16 45.07 24.28 96.27 175.27 45.47
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EARNING PER SHARE 200 150 100 50 0
1999 2000 2001 2002 2003 2004 2005 175 45.5
RS 20.3 58.2 45.1 24.3 96.3
YEARS
INTERPRETATION: The higher the earnings per share, the better is the performance of the company. Earning per share in the year 2003 to 2005 is Rs.96, 175 and 45. The higher earnings per share enable a company to pay more dividend or issue bonus shares. Earning per share shows the profitability of the firm on a per share basis.
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FINDINGS ? From 2001 to 2004, current ratio of the company is more than 4:1, the current ratio of the company is very high, idle assets earn nothing. ? Cash ratio of the firm is very low. ? From 1999 to 2003 debt equity ratio is increased by 4:1 to 5:1, high debt equity ratio is not favoured. ? Interest coverage ratio is increased; it indicates the firms ability to meet interest obligations. ? From 2002 to 2005, inventory turnover ratio is continuously increasing. ? Debtors turnover ratio is increasing leads to Debt collection period is decreasing. ? Rollwell is producing Rs 3/- of sales of Rs 1/- of capital employed in net assets, firm ability to produce a large volume of sales. ? Gross profit ratio is low compare to all previous years. ? Operating expenses ratio is increasing.
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SUGGESTIONS ? From 2001 to 2005 the current ratios decreases from 5.35:1 to 1.90:1, it indicates the liquidity position is satisfactory, however the company has to maintain the same position. ? The company should increase its cash ratio, because it is nearly 2 rupees to 7 rupees for every 100 rupees of current liabilities. ? A too high inventory turnover ratio is not necessary it may lead to stock outs and production interruptions. ? Debt collection period is decreasing by 86 days to 58 days, so the company has to maintain same position then the collection will be done quickly. ? Firm ability to produce a large volume of sales, so company should raise the advertising budgets and give wide range of advertisement of its product. ? Gross profit is low, it indicates inefficiency as it implies that cost of goods sold is high. A firm should identify and analyze the factors responsible for low gross profit ratio to take corrective measures to improve the situation. ? Operating ratio is increasing, which indicates that the company increased expenses to increase the sales. It effects on the net profit of the organization. A low expense ratio is better for the organization.
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? Return on equity is low, the company has to make efforts in increasing return on investments by reducing its administration, selling and other expenses.
BIBLIOGRAPHY
FINANCIAL MANAGEMENT SEVENTH EDITION FINANCIAL MANAGEMENT SIXTH EDITION FINANCIAL MANAGEMENT FOURTH EDITION
I.M.PANDEY
PRASANNA CHANDRA
M.Y.KHAN & P.K.JAIN
ANNUAL REPORTS OF ROLLWELL PVT. LTD. (1999-2005)
WEB SITES:
www.rollwell.net www.google.com www.directindustry.com
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