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A SUMMER TRAINING PROJECT REPORT ON

RATIO ANALYSIS
IN FLEXITUFF INTERNATIONAL LTD THE PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (2011-2013)

SUBMITTEDTO: SUKRITI HSA

SUBMITTED BY KULDEEP SINGH MBA IIIrd SEM.

AMRAPALI INSTITUTE,SHIKSHA NAGER, KALADHUNGI ROAD, HALDWANI (NAINITAL) UTTRAKHAND

ACKNOWLEDGEMENT

We take this opportunity to express our deep gratitude to the management of FLEXITUFF INTERNATIONAL LIMITED A&R Division, Pipalgao Road,Near Idgaha Mahuakhera Gang, KASHIPUR U.S Nager (UTTARAKHAND) for providing us the opportunity to get an exposure of their esteemed unit. We are sincerely thankful to the HRD Deptt. Which co-ordinate our training and WE especially express our thanks to Mr. SNJAY SINGH BHAR DY. MANAGER (A/C.D.) D.N. UPDHYA, DY.MANAGER (H.R) for their continued help and guidance during our stay here. We wish to express our sincere gratitude to HOD & personnel of Account Office where we had detailed interaction & inspiring guidance and motivation from them. Last but not the least we express our deep gratitude to our respective Training & Placement Officers for sending us to such a large integrated industry for summer training and giving us a chance to acquire an experience of my life time. We also express our sincere indebt ness to our parents and family members for providing their continued moral support during our training period.

KULDEEP SINGH MBA III SEM. AMRAPALI GROUP OF INSTITUTES, HALWANI

PREFACE

This is more than one factor at work, while which can ensure the true completion of the project. It is not an idea held on certain topic that matter, but it is complete knowledge attaining process and therefore requires an in depth knowledge of the topic of the project.

The project includes an overview of Ratio analysis in FLEXITUFF INTERNATIONAL KASHIPUR UNIT.

The varies and varied aspects of the problems has logically discussed and systematically presented in a simple language.

S.NO. 1 2 3 4 5 6 7 8 9 10 11 12

CONTENTS Acknowledgements Preface Industry Profile Company Profile Theoretical Background Objectives and Scope Research Methodology Data Presentation And Analysis Summery of Findings Suggestions and Recommendations Conclusions Annexure Limitations and scope

PAGE NO
2 3 6-11 12-43 44-81 82-83 84-87 88-99 100-101 102-103 104-105

106 107-108

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Bibliography

HISTORY OF ORGANISATION

HISTORY OF THE ORGANISATION

The flexible intermediate bulk container popularly nomenclature as FIBCs is said to have been first manufactured in the late 1950s / early 1960s in the United States, Europe and Japan. The FIBCs manufactured with polyolefin fabrics were experimented in Uk, Canada and the US around late 1960s and early 1970s.The growth of the flexible intermediate bulk bags that are universally used today is however spurned with the development of the high strength lightweight fabric (polypropylene). The FIBCs are giant size bags in drum or box shapes, with capacities ranging from 250-2000 kg depending on the bulk density of the product. Whereas the basic material is polypropylene (PP), high-density Polyethylene (HDPE) or polyamide (Nylon) are also used. The FIBCs can be custom built to meet specific requirement and also UV stabilized.

The concept of bulk packaging revolves around environmental aspects apart from reducing the cost of packaging and faster handling. They also facilitate to minimize losses in spillage and pilferage and create better working atmosphere.

India witnessed the introduction of FIBCs during early 1990s and has since grown to be frontline manufacturers in the world. Although the domestic market growth is still at a slow pace, the converting industry has found export acceptance and nearly ninety percent of production is exported providing the exchequer an excellent FE earning. Both the domestic demand and exports are envisaged to record excellent growth potential.

ABOUT FLEXITUFF

Flexituff International Ltd, a company promoted by the renowned Kalani group from Indore. Flexituff has the largest capacity in India (2nd largest in the World) to produce PP woven based products. It has the most modern Plant & Equipments under one roof to convert PP granules to tapes, fabric, printing, extrusion lamination & bag making.

Flexituff is the first company to start BOPP printed & laminated pp woven bags in India about seven years back. It is the leader in Jumbo bags, Big bags and container liners. Due to continuous support and strength derived from its own R& D and the international quality set & maintained by its team of scientists, engineers & professionals, today, Flexituff is exporting to more than 40 countries in the world and has been receiving Best export awards year after year. Flexituff is the first and only Asian company now successfully audited and certified by AIB (American Institute of Food Bakers, USA) and BRC (British Retailers Consortium UK) to make direct food contact bags for supplies to American and European companies. It is also certified for ISO 9001: 2008, ISO 14001:2004, ISO 22000:2005 and HACCP. In addition to three Units at Pithampur near Indore, they are coming up with another most modern Unit at Kashipur at Uttarakhand. Flexituff caters to different sectors like; Agriculture produce-vegetables, fruits, rice, wheat, atta, besan, salt, spices, as well as to other sectors like; fertilizer, chemicals, cement, etc.,. It also has the experience & expertise to produce any type of PP / HDPE bags to customer specifications. Flexituff offers packaging solutions of their products right from 1 KG to 20, 000 KG.

GLOBAL FIBC PRODUCTION & CONSUMPTION

ADVANTAGES OF FIBC

Each FIBC can carry up to 1000 times its own weight. Each FIBC has integral lifting loops, eliminating the need for pallets. Excellent printability. Efficient use of space with Specific Designs Simple to use Cost effective Very strong yet flexible Low per mt packaging cost Variety of dimensions available Variety of filling, discharging and lifting facilities Can be used for hazardous chemicals as specified in the UN Chapter 6.5 recommendations.

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COMPANY PROFILE Be it polywoven products (like FIBCs, geotextiles, BOPP bags) or thermo-formed FLEXITUFF INTERNATIONAL LIMITED, worlds largest poly-woven packaging company, occupies the enviable status of being the sparkling jewel in the diverse Kalani Industrial Enterprise - one of the leading and respected business Groups of Central India. With 4 multi-locational manufacturing plants, combined annual capacities of over 40,000 MT and dedicated distribution footprints in more than 40 countries, Flexituff, with its 6000 strong work-force, has emerged as worlds most preferred one-stop-shop for bulk packaging products and solutions. Set up to fulfill the demanding bulk packaging and transporting requirements of a host of industries across the globe, Flexituff has an enviable number of attributes working for its most discerning buyers. Economies of scale, the edge of attitude, 100% integration under one roof, global foot print, nearly 2 decades of being in the industry, global manufacturing standards and cost advantage of Asia. Its state of the art manufacturing facilities at SEZ Indore (M.P.), Kandla (Gujarat) and Kashipur (Uttranchal) measure up to the exacting global norms of GMP, AIB and BRC-IoP. Flexituffs ISO-9001-2000 certified facility with its integrated manufacturing base permits scaling the throughput to match demanding deadlines.

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articles (food trays, boxes, punnets) or retail packagings (leno/net bags for vegetables), Flexituffs products find ready acceptability in all continents. A pro-active customer-centric approach has helped Flexituff gain a larger global market share. A fact acknowledged by the Government of India with the highest FIBC Exporter Award for past seven years in a row. Since its inception in the year 1993, Flexituff core values of commitment to Safety, Health and the Environment, high ethical standards and respect for people have been the cornerstone of its existence and what it stands for. At Flexituff workforce is assumed to be the stake holders of its efficiency. A people driven enterprise, it makes every effort to nurture a team that can grow with the organization. A team that shares the responsibilities and rewards, fairly and squarely. Team Flexituff is committed to serving all your FIBC requirements. The

commitment stems less from the mammoth manufacturing facilities they possess and more from theirr 2000 strong work force. Nothing defines Flexituff better than its people. Young in outlook and rich in experience, Team Flexituff improvement in quality and strives for total customer satisfaction, continuous ever larger value to its buyers.

delivering

Despite the over arching team spirit that prevails at Flexituff, we believe, commitment to customers begins with the individual. Although, our 2000 member team works like a well greased machine, it is the individuals - the cogs, who fuel its driving commitment to quality and responsiveness.

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100% customer orientation has helped Flexituff gain wide global market share. A fact, acknowledged by the Govt. of India with this highest FIBC exporters award, for last 6 years in a row. Awards, citations, growing volumes, expanding product range and satisfied customers are achievements we now take in our stride. But nothing fails to tickle us more than the idea of an impossibility. Throw us a challenge and you have us hooked. Team Flexituff nurtures its hunger to hit the ball out of the park. We like to be known as partners who can rise to the moment, who can be counted upon to meet a crisis head on... Flexituff has an enviable number of attributes working for you. Economies of scale, the edge of attitude, 100% integration under one roof, global footprint, a decade of being in the industry and the cost advantages of Asia.

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FACT SHEET Year of Establishment : 2002 Nature of Business : Manufacturer, Exporter

Number of Employees : 501 to 1000 People Turnover : US$ 10-25 Million (or Rs. 40-100 Crore Approx)

MISSION:- is to function clean, safe, environment friendly and provide packaging solutions to its customer with the best quality products and service. VISION :- is to continue to invest in its human resources, state of art equipments, technology and to stand as reputable, vibrant, innovative, honest, reliable organization and to provide quality product & services at competitive price to its customer VALUES:a)

Meeting commitments made to customer. Faster learning creativity and speed of response. Respect of dignity and potential of individual. Loyalty and pride in the company. Team playing. Zeal to excel. Integrity and fairness of all matters.

b) c) d) e) f) g)

GROWTH:- To ensure the steady growth by enhancing the competitive edge in existing business, new Areas and international operations areas fulfill the nationals expectations from Flexituff International Ltd.

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PRIMARY COMPETITIVE ADVANTAGES:It is gained by focusing on three main features:

Modern technology. Traditional craftsmanship.


Best quality with experience.

PROFITABILITY : To provide a reasonable and adequate return on capital , capacity utilization and productivity and generalization of adequate internal resources to finance the companys growth . CUSTOMER FOCUS : To build a high degree of customer confidence by providing increased value for money through international standards of product quality , performance and superior customer . PEOPLE ORIENTATION: To enable each employee to achieve his potential improve his capabilities , perceive his role and responsibility and participate and contribute positively to the growth and success of company to invest in human resource continuously. TECHNOLOGY: To achieve technological excellence in operations by the development of indigenous technologies to suit business need and provide a competitive adequate to the company . IMAGE: To fulfill the expectations which stockholder like government as owners, employees customers (buyers) and country at large have from Flexituff International Ltd.

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INTEGRATED PLANT - ALL FACILITIES UNDER ONE ROOF Flexituff International Limited is one of the very few fully integrated plants is the world. Its 100% integration permits us to deliver our products in multiple options while retaining 100% control over the manufacturing process. Needless to say, Flexituff is fully independent from the vagaries of outsourced material or workmanship. Last minute change in specifications, add on orders can be quickly and comfortably accommodated at Flexituff. We are able to maintain full traceability of material and workmanship in our Quality Assurance systems. Total Quality Control. Enhanced customization, last minute changes, faster sampling and lower turn around delivery time are the winning advantages of our vertical integration. The Power of Integration Quoted at 1st World FIBC Congress, Amsterdam, Netherlands. " We are highly concerned with the quality of bags and give credit to those suppliers who are vertically integrated and thus able to keep 100% control of every step of the manufacturing process from the moment you qualify the virgin resin, extrude and weave the fabric, to sewin -g and finishing." Dr. Thomas Gerdau Head of Procurement, International Packaging Hoechst Procurement International, GMBH, Germany.

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Flowchart showing the Integrated Plant of Flexituff.

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EXTRUSION Microprocessor controlled extrusion ensure excellent input for the subsequent operations. Extrusion plants at Flexituff - the very life blood of the manufacturing process, are state-of-the-art Starlinger. This ultimate extrusion technology comes alive in the experienced hands of our workforce to process over 60,000 kgs. of virgin polymer everyday. Producing impeccable high tensile strength tapes with optimum elongation - a pre requisite for perfect fabric. Precision winding being the key to weave fine fabrics, all tapes are wound by new generation inverter controlled winders to produce even bobbins. Quality checks begin from the very initial stages of Tape-making. Every lot produced is checked for its Denier, Strength, Elongation and Color.

3 layer co extruded liner plant.

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If 3 layer co-extruded liner plant is a luxury, so be it. Our buyers deserve this luxury. This over qualified plant ensures that we produce liners with zero pinholes, fish eyes or any other extrusion flaw. At Flexituff, microprocessor controlled Form-fit Liner Machine cuts, seals and form-fits the liner in a dust-free clean room environment conforming to ISO Level-7 (< 10,000 PPM). Be it Glued, Tabbed or Flanged-in, well executed process eliminates liner twisting inside the bag. The vital facility of coating the essential prerequisite for making FIBCs is a 2.4 meter wide coating plant laminating both circular and flat fabric in thicknesses ranging from 15 to 80 microns. A unique fabric cleaning device, designed and developed in-house, is mounted on the coating machine to avoid any foreign particle going in-between fabric and the coating. The quality is free. As the foremost manufacturer of FIBC in the world, they are sensitive to decoding customer needs. Their design and development team is committed to evolving bulk packaging solutions for your specific requirements. Infact, they try to preempt them.

Form fit liner sealing.

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Extrusion coating. FABRIC Flawless weaving, off the floor stacking of stretch wrapped rolls and unsurpassed 6 color printing.

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Fine and consistently even fabric is the face of our FIBCs. Over 3 million square feet of high quality fabric is woven everyday on an array of wide width Starlinger looms. Computerized weaving machines with the help of skilled hands produce consistent quality fabric. In the end what you have from this state-of-the-art facility is an amazing collection of poly woven fabric, ranging 60 GSM to 300 GSM ready to be turned into burly jumbo bags for stringent end applications. Flexituff's R&D initiatives are amply reflected in its ultrasonic slitting and sealing technology which makes our fabric comparable to tuck in fabric of a Sulzer loom. Flexituff recognizes that for a critical food contact application, its not enough to mere make a high quality fabric, the fabric also needs to be contamination-free, carrying no foreign particle or even a speck of dirt. To achieve this high level of fabric cleanliness, fabric is stretch-wrapped on looms itself. Raising the bar on cleanliness, the stretch sealed fabric rolls never touch the ground. 4 color printing a rare facility with others is pass at Flexituff. For, we utilize a 6 color flexo -graphic printing machine of a kind, which makes the fabric come alive. This excellence finds it's match in the fabric's evenness to create sharp, even, non-fading prints repeats after repeats.

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Off the floor stacking. The quality mantra. At Flexituff, we hardly believe that quality is what clients demand. Out here, we believe, quality is what you live. And breathe. Quite simply, the cost of making a quality product is seldom more than that of a sub standard product. But its value, far higher. ZERO OUTSOURCING OF CRITICAL AUXILLARIES For consistency in quality and schedules, even the smallest auxillary is manufactured in-house. Genuine quality, is a chain without a weak link. Any FIBC, therefore, is as good as the quality of input that goes into making it. Recognizing that even a small leak can sink a ship, Flexituff rather chose to invest in establishing facilities for making every FIBC input in-house. It has paid rich dividends in terms of customer satisfaction.

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Take for example high tenacity sewing yarn for FIBCs. Flexituff commissioned state-ofthe-art Fare multifilament plant which produces 7 GPD UV stabilized sewing thread in the deniers ranging 420 to 5200. Also set up in-house is the facility of twisting the filament yarn into sewing thread to required specifications. Or take the all important webbing.

A battery of needle looms make 75 million metres of webbings required to produce bags at Flexituff. In-house production not only ensures required level of UV stability and the strength but also customizing of webbing to colours and weaving required by the client. The list is quite exhaustive. Be it filler-cord for sift proofing, Tie-tape, rope and B-lock bag for closure, document pouch, identification labels, printing stereos all inputs get made in-house. ASSEMBLING THE FINAL PRODUCT An intelligent, skilled and trained workforce assembles the components into efficient bulk containers. 21,000 FIBCs a day in addition to Builder bags and single loop bags make Flexituff the largest production facility in the world. Be it Form-stable Q-bag, U.N. Certified Hazmat bag or Type-C/D bag, Flexituff offers the most cost-effective solutions for carrying bulk commodities up to 2500 kgs. Every Flexituff FIBC design is certified by NEL, UK. The assembly section is planned for neat and clean environment, smooth workflow and strict adherence to Clean Room Specifications. The specially trained work force, qualified for basic intelligence parameters and quality orientation works as a team to deliver consistent product quality. Full scale production for any bag starts only after the first prototype bag has been certified by the QC in all respects, including Load Test. Each and every bag is inspected for all critical and aesthetic parameters.

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Metal detection. To ensure contamination-free bag, every bag is cleaned on pneumatically-operated cleaning machine where double action blowers with alternating blowing and suction cycles eliminate the smallest loose particles from the bag. All food contact application bags essentially pass through a Metal Detector unit eliminating any chance of metal no matter how light or small to slip in the bag. Appreciating the need to be 100% right every time, as an abundant precaution, Flexituff has instituted additional layer of quality audit. Where a team of professionals randomly draw 10% bags for inspection from duly baled ready to go bags. Any minor deviation in the drawn sample leads to entire lot to go back for re-inspection and segregation. Packaging these packages is an art in itself at Flexituff. Each batch is packed in compact cuboid bales which are duly stretchwrapped and marked for easy readability and stackability at clients place. The new European and the U.S. Pallet Norms ISPM-15 are followed as every individual pallet is treated and marked

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Eager to reach out. Flexituff is keen to forge a business relationship with you. Our capacities can smoothly tackle your most demanding requirements. No challenge, in terms of quantity or quality is too large to keep us from catering to your need.

Dual action bag cleaning

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A responsible corporate in worlds largest integrated clean room


FIBC manufacturing facility.
People Focus
Dreams are what drive us. We respect people and value their individual differences and this has led to a free, vital corporate culture that encourages creativity. We are fortunate to have so many talented people with different backgrounds, interests and skills who come together to create offerings for the future. Flexituff is a place where teamwork is essential. Yet our employees also maintain the freedom to work on their own, be creative and make their own decisions. And most of all, grow both personally and professionally. Equal Opportunity & Meritocracy: Recruitment and promotions in Flexituff are all based strictly on merit. Equal opport unities are provided to all without regard to race, caste, religion, colour, ancestry, marital status, gender, age or nationality. The Company believes that people accept meritocracy as a just and equitable system, and contribute best under optimum challenges and opportunities & differential rewards commensurate with performance.

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Corporate Governance
At Flexituff, our pursuit to achieve good governance is an ongoing process, thereby ensuring truth, transparency, accountability and responsibility in all our dealings with our employees, shareholders, consumers and communities. We aim to develop capabilities and identify opportunities that best serve the goal of value generation, thereby creating an outstanding organization.

Environment, Health and Safety:


Since its inception, the Flexituff core values of commitment to safety, health and the environment, high ethical standards and respect for people have been the cornerstone of who we are and what we stand for. Well communicated EHS policies ensure that production targets never override the safety of a person and that as a responsible corporate, we remain an environmentally responsible neighbor in the communities where we operate, acting promptly and surely to correct incidents or conditions that endanger health, safety or the environment.

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PLASTIC INDUSTRY AT A GLANCE


Globalization has become the most important message for the development of the industrial sector in India which means the industries have to become both competitive and cost effective. During 2001 Flexituff acquired two large units: Special Economic

zone Pithampur and A&R Devision, Mahuakhera Gang. Flexituff worlds Largest Integrated Clean Room FIBC Manufacturing facilities.turiye is the worlds second Largest Exporter of FIBC.

Today, modern Turkiye ranks 17th among the largest economies in the world and 7th in Europe with its GDP reaching almost US $ 500 billion in 2007. The Turkish economy is growing during the last 22th quarters, averagely 7 percent in the last five years. As a result of the eminent change of Turkiyes economic and trade policies in the early 80s, its foreign trade has constantly boosted, reaching a value of 270 billion dollars in 2007. Flexituff is the worlds largest integrated Clean-Room FIBC manufacturing facility. We produce over 11 million FIBCs every year which get exported to over 30 countries across all the continents.

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Flexituff, besides being the largest integrated manufacturer, also have qualitative edge substantiated by :1. Food-grade certification from American Institute of Baking i.e. AIB(USFDA), USA with highest ranking i.e. Superior Grade. We have this certification for past three years. 2. Europes most-coveted certification, BRC-IoP i.e. British Retail Consortium and Institute of Packaging for direct food contact packaging for past three years. 3. ISO9001:2000 certification from TUV, Germany. 4. HACCP certification i.e. Hazard Analysis Critical Control Points. Flexituff also has a fully established Research & Development (R&D) Wing with 12 Design Engineers who continuously work on offering cost-efficient and safe packaging solutions. To support the R&D function, we have also employed chemical scientists and microbiologists. We have the most modern in-house Test Laboratory equipped with Load Test Rig, UV Weatherometer, MFI Tester, and all other required Test Equipment. This well equipped and state of art manufacturing facility helps us in maintaining a vast product range. Our team of design engineers are working day in

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and day out to increase our offerings to niche markets. Till date we have some patented product listed with our name, along with being licensee of some others. We are not confined to the existing product range only, but do take over R & D on any new project of viability. Our design engineers and scientists are dedicated to manufacture new products to come up to customers expectation. In the end with we take pride in informing you that we have received "The Top Exporters Award" for our products from government of India continuously for last 6 years.

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ORGINAZATION STRUTURE Flexituff International Limited


CHAIRMAN

PRESIDENT VICE PRESIDENT (UNITHEAD)

SENIOR GENERAL MANAGER

GENERAL MANAGER

DY. GENERAL MANAGER

MANAGER

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DY. MANAGER

ASST. MANAGER

OFFICER

ASST. OFICER

GRADED STAFF

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RAW MATERIALS:Companies main raw materials are: 1. Polypropylene 2. Films and Fabrics 3. Plastic Dana 4. Printing Chemical 5. Waste Plastic
6. High polyethylene:HMHDPE, HDPE Blow moulding grade

COMPANIES MARKETING POLICY:Companies marketing policy is targeted to meet customers need and satisfaction. Presently the company is also exporting its items to various countries. The head office of the Company is at Dhar. MARKET FOOTPRINT

GERMANY; FRANCE; IRELAND; NETHERLANDS; SPAIN; MEXICO; UNITED KINGDOM; BELGIUM; ITALY; PORTUGAL; GREECE; BRAZIL; USA; UAE; RUSSIA;

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KENYA; RWANDA; CHILE; ERETRIA; CANADA; SWITZERLAND; AUSTRALIA; ALGERIA; JAPAN; NEW ZEALAND; CHINA; EGYPT; SINGAPORE; SWEDEN; ISRAEL; AUSTRIA.

FIBC USER SEGMENTS:


1-Chemicals 2-Fertilisers 3-PHARMACEUTICALS 4-Polymers 5-HAZARDOUS GOODS 6-Minerals 7-Cement 8-Agri Produce 9-Building Materials

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CARE FOR ENVIRONMENT


Preserving and Protecting the Environment is a top priority at Century. We always sensitive to our bio-diversity of the soil, water and Air around us. Flexituff power plant maintains an efficient system for reducing air emissions. Electrostatic Precipitators have been installed to remove particulates form recovery boilers, coal fired boilers and lime kiln flue gases. In strict adherence to the standards & guidelines, the effluents are treated in a modern ETP, which is recognized as a model plant for its efficiency & performance. Companys adoption of a systematic approach to the environment matters including waste minimization, water recycling & re-use programs of by products has facilitated the company in getting the ISO-14001:2004 certification for its Environment Management System. Companys friendship with Environment has also reflected in its Bagasse based plastic being licensed for Eco labeling, a distinct honor to be attained.

CARING OF THE COMMUNITY


Flexituff cares for the community at large & strives to be a good corporate & social citizen. We actively contribute to the community development of the areas in our surroundings & regularly conduct medical camps, undertake construction work of schools, drinking water facilities, self-employment schemes etc.

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PROCESS DESCRIPTION
A process for bag manufacture of a bag having a first dimension from a sealed bottom of the bag to an open top of the bag, the bag being fabricated from a continuous tube of plastic film bag material. The process includes the steps of providing a continuous tube of plastic film bag material. The side edges of the bat material are folded between a front bag panel and a rear bag panel to form gussets. A sealing station having apparatus for placing two parallel and spaced apart seals and a knife for cutting the continuous tube of the plastic film bag material between the two parallel and spaced apart seals; First adjacent double seals are formed across the front bag panel and the rear bag panel, the double seals in parallel side-by-side relation with one another with the plastic film bag material there between. The continuous tube of plastic film bag material is at least twice the first dimension from the sealed bottom of the bag to the open top of the bag. This forms second adjacent double seals across the front bag panel and the rear bag panel, the second adjacent double seals in parallel side-by-side relation with one another. By cutting the continuous tube of plastic film bag material between the second adjacent double seals, a double bag unit is formed and severed having single seals at opposite ends of the double bags.

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PRODUCTS OFFERED

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PRODUCT RANGE Flexituff manufactures one of the widest range of FIBCs in the world. Whatever be your packaging and bulk transportation requirement, you will find a suitable product in our comprehensive range. Moreover, with our in house Design & Development Center, any packaging requirement can be aptly developed, tested and offered as sample very quickly. Some of the standard designs at Flexituff are as under: 1. TYPE C & D. 2. ASSORTED. FIBCs (coated/uncoated) Form Stable Baffle Bags Form Fitted Liner Bags Glued Liner bags Conductive Type C Bags Dissipative Type D Bags Type C +D Bags Sling Bags Drum Bags Asbestos bags Container Liner Bags

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Food Grade Bags Tunnel Lift Bags Builder Bags PP / Paper Sandwich Bags Sand Bags BOPP Printed Bags Garden Waste Bags Carry Bags TYPE C & D Safely managing the occurrence of static electricity during FIBC filling and emptying operations is a critical concern in the chemical process industry. Static discharges from an FIBC can range from operator shocks to those capable of igniting flammable gases, vapors and dust. By using an FIBC with static protective properties, the risk of a hazardous static discharge is significantly reduced. STATIC DISSIPATIVE TYPE-D FIBC: Flexituff offers static dissipative FIBC using static protective yarn. Static protective yarn protects from hazardous electro static discharges by safely dissipating charge into the atmosphere.

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STATIC GROUNDABLE TYPE-C FIBC: The conductive Type C bag from Flexituff uses conductive threads in a woven grid structure. These threads are grounded to avoid accumulation of charge.

Left : Static Dissipative type-D Right : Static Groundable type-C ASSORTED Garden Waste Bags: Your way to a better and cleaner environment... versatile garden waste bags for County Councils, Collection Services, Farms and Individual Residences: Ideally suited for: Grass cutting Hedge trimming Woody waste Kitchen waste Leaves & Shrubs

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Garden Waste Bag. BOPP Printed Bags: Be different! Do away with monotony and dullness of your bags. Style them with our high quality 6 color magic printing.

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RATIO ANALYSIS
Ratio Analysis is the most commonly used analysis to judge the financial strength of a company. A lot of entities like research houses, investment bankers, financial institutions and investors make use of this analysis to judge the financial strength of any company.

This analysis makes use of certain ratios to achieve the above-mentioned purpose. There are certain benchmarks fixed for each ratio and the actual ones are compared with these benchmarks to judge as to how sound the company is the type of ratio analysis that is most effective depends upon who needs the information. Credit analysts are concerned with risk evaluation, and they therefore will concentrate of ratios that measure whether a company can pay its financial obligations and how much debt is involved in capital structure. On the opposite end of the spectrum, analysts looking at a business in terms of an investment opportunity will employ ratios that determine if a company is efficient and how great is its potential profitability.
For example, knowing that a company has a particular profit margin as determined by a corresponding ratio is meaningless by itself. Financial analysts know it's more important to determine how that ratio looks in terms of other similar companies, or even how that ratio looks compared to prior profitability levels of that same company. In addition, these ratios must be studied over a proper time period, allowing for major changes within the company to be taken into consideration. Balance sheet ratio analysis is useful in determining the solvency of a business and the amount of reliance it has on its creditors. Specific ratios included in this group are current ratio, which measures financial strength by dividing a company's assets by its liabilities, and quick ratio, which takes the essence of the current ratio but excludes inventory. By focusing on the liquid assets of a business, a quick ratio can measure its strength even in a worst-case scenario whereby all of its funding was suddenly removed

A ratio is a mathematical relationship between two related terms expressed in quantitative form. An accounting ratio is defined as quantitative relationship between two or more items of the financial statements connected with each other. The quantitative relationship may be expressed in either of the following ways:-

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TYPES OF RATIOS

Normally, ratios are used for the purpose of assessing the profitability, activity or operating efficiency and position of a business concern. Thus ratio according to the purpose, which they serve, may put into the following groups.

1-Profitability Ratio 2-Activity Ratio 3-Liquidity Ratio 4-Leverage Ratios or Long Term Solvency Ratios. PROFITABILITY RATIOS:The profitability ratios are used to measure how well a business is performing in terms of profit. The profitability ratios are considered to be the basic bank financial ratios.

In other words, the profitability ratios give the various scales to measure the success of the firm. The profitability ratios can also be defined as the financial measurement that evaluates the capacity of a business to produce yield against the expenses and costs of business over a particular time period. If a company is having a higher profitability ratio compared to its competitor, it can be inferred that the company is doing better than that particular competitor. The higher or same profitability ratio of a company compared to its previous period also indicates that the company is doing well. The return on assets, profit margin and return on equity are the examples of profitability ratios

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One of the most common profitability ratios is the profit margin. This can be expressed as the gross profit margin or net profit margin, and it can be expressed by company, by sector, by product, or by individual unit. The information reported on the income statement will enable you to determine the overall profit margin. If additional breakdowns are provided, more detailed margins can be calculated. What Does Profitability Ratios Mean? Classes of financial metrics that help investors assess a business's ability to generate earnings compared with its expenses and other relevant costs incurred during a specific period. When these ratios are higher than a competitor's ratio or than the company's ratio from a previous period, this is a sign that the company is doing well. The profitability ratio should be compared with the relevant time period. The profitability ratio of the industries that experience operations on the seasonal basis should be compared properly. For example, in case of the retail industry, high revenue is earned during the Christmas season. Hence comparing the profit margin of the 4th quarter with the 1st quarter of a retailer will not give clear picture of the profitability of the retail business. Hence in order to judge the profitability of the retailer perfectly, the profit margin of the 4th quarter of a retailer should be compared with the profit margin of the 4th quarter of the previous year.

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The measures of profitability ratios are: 1.Gross Profit Ratio (GP Ratio): Definition of gross profit ratio:

Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales.

Components:
The basic components for the calculation of gross profit ratio are gross profit and net sales. Net sales means that sales minus sales returns. Gross profit would be the difference between net sales and cost of goods sold. Cost of goods sold in the case of a trading concern would be equal to opening stock plus purchases, minus closing stock plus all direct expenses relating to purchases. In the case of manufacturing concern, it would be equal to the sum of the cost of raw materials, wages, direct expenses and all manufacturing expenses. In other words, generally the expenses charged to profit and loss account or operating expenses are excluded from the calculation of cost of goods sold.

Formula:
Following formula is used to calculate gross profit ratios: [Gross Profit Ratio = (Gross profit / Net sales) 100] Example: Total sales = $520,000; Sales returns = $ 20,000; Cost of goods sold $400,000 Required: Calculate gross profit ratio. Calculation: Gross profit = [(520,000 20,000) 400,000] = 100,000 Gross Profit Ratio = (100,000 / 500,000) 100
= 20%

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Significance:
Gross profit ratio may be indicated to what extent the selling prices of goods per unit may be reduced without incurring losses on operations. It reflects efficiency with which a firm produces its products. As the gross profit is found by deducting cost of goods sold from net sales, higher the gross profit better it is. There is no standard GP ratio for evaluation. It may vary from business to business. However, the gross profit earned should be sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividends.

Causes / reasons of increase or decrease in gross profit ratio:


It should be observed that an increase in the GP ratio may be due to the following factors. 1. Increase in the selling price of goods sold without any corresponding increase in the cost of goods sold. 2. Decrease in cost of goods sold without corresponding decrease in selling price. 3. Omission of purchase invoices from accounts. 4. Under valuation of opening stock or overvaluation of closing stock. On the other hand, the decrease in the gross profit ratio may be due to the following factors. 1. Decrease in the selling price of goods, without corresponding decrease in the cost of goods sold. 2. Increase in the cost of goods sold without any increase in selling price. 3. Unfavorable purchasing or markup policies. 4. Inability of management to improve sales volume, or omission of sales. 5. Over valuation of opening stock or under valuation of closing stock Hence, an analysis of gross profit margin should be carried out in the light of the information relating to purchasing, mark-ups and markdowns, credit and collections as well as merchandising policies.

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This ratio measures the relationship between gross profit and net sales. Objective:-the main objective of computing this ratio to determine the efficiency with which Production and purchase operation are carried on .

GROSS PROFIT RATIO =(GROSS PROFIT/NET SALES )*100

2. NET PROFIT RATIO:Components of net profit ratio:


The two basic components of the net profit ratio are the net profit and sales. The net profits are obtained after deducting income-tax and, generally, non-operating expenses and incomes are excluded from the net profits for calculating this ratio. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets and losses on sales of fixed assets, etc are excluded.

Formula:
[Net Profit Ratio = (Net profit / Net sales) 100]

Example:
Total sales = $520,000; Sales returns = $ 20,000; Net profit $40,000 Calculate net profit ratio.

Calculation:
Net sales = (520,000 20,000) = 500,000 Net Profit Ratio = [(40,000 / 500,000) 100] =8

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Significance:
NP ratio is used to measure the overall profitability and hence it is very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment. This ratio also indicates the firm's capacity to face adverse economic conditions such as price competition, low demand, etc. Obviously, higher the ratio the better is the profitability. But while interpreting the ratio it should be kept in mind that the performance of profits also be seen in relation to investments or capital of the firm and not only in relation to sales.

3. Operating Ratio:
Definition:
Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage.

Components:
The two basic components for the calculation of operating ratio are operating cost (cost of goods sold plus operating expenses) and net sales. Operating expenses normally include (a) administrative and office expenses and (b) selling and distribution expenses. Financial charges such as interest, provision for taxation etc. are generally excluded from operating expenses.

Formula of operating ratio:


Operating Ratio = [(Cost of goods sold + Operating expenses) / Net sales] 100 Example: Cost of goods sold is $180,000 and other operating expenses are $30,000 and net sales is $300,000.

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Calculate operating ratio.

Calculation:
Operating ratio = [(180,000 + 30,000) / 300,000] 100 = [210,000 / 300,000] 100 = 70%

Significance:
Operating ratio shows the operational efficiency of the business. Lower operating ratio shows higher operating profit and vice versa. An operating ratio ranging between 75% and 80% is generally considered as standard for manufacturing concerns. This ratio is considered to be a yardstick of operating efficiency but it should be used cautiously because it may be affected by a number of uncontrollable factors beyond the control of the firm. Moreover, in some firms, nonoperating expenses from a substantial part of the total expenses and in such cases operating ratio may give misleading results.

4. Return on Shareholders Investment or Net Worth Ratio:


Definition:
It is the ratio of net profit to share holder's investment. It is the relationship between net profit (after interest and tax) and share holder's/proprietor's fund. This ratio establishes the profitability from the share holders' point of view. The ratio is generally calculated in percentage.

Components:
The two basic components of this ratio are net profits and shareholder's funds. Shareholder's funds include equity share capital, (preference share capital) and all reserves and surplus belonging to shareholders. Net profit means net income after payment of interest and income tax because those will be the only profits available for share holders.

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Formula of return on shareholder's investment or net worth Ratio:


[Return on share holder's investment = {Net profit (after interest and tax) / Share holder's fund} 100] Example: Suppose net income in an organization is $60,000 where as shareholder's investments or funds are $400,000. Calculate return on shareholders investment or net worth Return on share holders investment = (60,000 / 400,000) 100 = 15% This means that the return on shareholders funds is 15 cents per dollar.

Significance:
This ratio is one of the most important ratios used for measuring the overall efficiency of a firm. As the primary objective of business is to maximize its earnings, this ratio indicates the extent to which this primary objective of businesses being achieved. This ratio is of great importance to the present and prospective shareholders as well as the management of the company. As the ratio reveals how well the resources of the firm are being used, higher the ratio, better are the results. The inter firm comparison of this ratio determines whether the investments in the firm are attractive or not as the investors would like to invest only where the return is higher.

5. Return on Equity Capital (ROEC) Ratio:


In real sense, ordinary shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. Preference share holders get a fixed rate of dividend irrespective of the quantum of profits of the company). The rate of dividends varies with the availability of profits in case of ordinary shares

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only. Thus ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of the company. Return on equity capital which is the relationship between profits of a company and its equity, can be calculated as follows:

Formula of return on equity capital or common stock:


Formula of return on equity capital ratio is: Return on Equity Capital = [(Net profit after tax Preference dividend) / Equity share capital] 100

Components:
Equity share capital should be the total called-up value of equity shares. As the profit used for the calculations are the final profits available to equity shareholders as dividend, therefore the preference dividend and taxes are deducted in order to arrive at such profits.

Example:
Calculate return on equity share capital from the following information: Equity share capital ($1): $1,000,000; 9% Preference share capital: $500,000; Taxation rate: 50% of net profit; Net profit before tax: $400,000. Calculation: Return on Equity Capital (ROEC) ratio = [(400,000 200,000 45,000) / 1000,000 ) 100] = 15.5%

Significance:
This ratio is more meaningful to the equity shareholders who are interested to know profits earned by the company and those profits which can be made available to pay dividends to them. Interpretation of the ratio is similar to the interpretation of return on shareholder's investments and higher the ratio better is.

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6. Return on Capital Employed Ratio (ROCE Ratio):


The prime objective of making investments in any business is to obtain satisfactory return on capital invested. Hence, the return on capital employed is used as a measure of success of a business in realizing this objective. Return on capital employed establishes the relationship between the profit and the capital employed. It indicates the percentage of return on capital employed in the business and it can be used to show the overall profitability and efficiency of the business.

Definition of Capital Employed:


Capital employed and operating profits are the main items. Capital employed may be defined in a number of ways. However, two widely accepted definitions are "gross capital employed" and "net capital employed". Gross capital employed usually means the total assets, fixed as well as current, used in business, while net capital employed refers to total assets minus liabilities. On the other hand, it refers to total of capital, capital reserves, revenue reserves (including profit and loss account balance), debentures and long term loans.

Calculation of Capital Employed:


Method--1. If it is calculated from the assets side, It can be worked out by adding the following: 1. The fixed assets should be included at their net values, either at original cost or at replacement cost after deducting depreciation. In days of inflation, it is better to include fixed assets at replacement cost which is the current market value of the assets. 2. Investments inside the business 3. All current assets such as cash in hand, cash at bank, sundry debtors, bills receivable, stock, etc. 4. To find out net capital employed, current liabilities are deducted from the total of the assets as calculated above.

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Gross capital employed = Fixed assets + Investments + Current assets Net capital employed = Fixed assets + Investments + Working capital*. *Working capital = current assets current liabilities.

Precautions For Calculating Capital Employed:


While capital employed is calculated from the asset side, the following precautions should be taken: 1. Regarding the valuation of fixed assets, nowadays it is considered necessary to value the assets at their replacement cost. This is with a view to providing for the continuing problem of inflations during the current years. Under replacement cost methods the fixed assets are to be revalued on the basis of their current market prices either by reference to reliable published index numbers, or on valuation of experts. When replacement cost method is used, the provision for depreciation should be recalculated since depreciation charged might have been calculated on original cost of assets. 2. Idle assetsassets which cannot be used in the business should be excluded from capital employed. However, standby plant and machinery essential to the normal running of the business should be included. 3. Intangible assets, like goodwill, patents, trade marks, rights, etc. should be excluded. However, if they have sale value or if they have been purchased they may be included. Investments made outside the business should be excluded. 4. All current assets should be properly valued. Any excess balance of cash or bank than required for the smooth running of the business should be excluded. 5. Fictitious assets, like preliminary expenses, accumulated losses, discount on issue of shares or debentures, advertisement, suspense account, etc. should be excluded. 6. Obsolete assets which cannot be used in the business or obsolete stock which cannot be sold should be excluded.

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Method--2. Alternatively,

capital employed can be calculated from the liabilities side of a balance

sheet. If it is calculated from the liabilities side, it will include the following items: Share capital: Issued share capital (Equity + Preference) Reserves and Surplus: General reserve Capital reserve Profit and Loss account Debentures Other long term loans Some people suggest that average capital employed should be used in order to give effect of the capital investment throughout the year. It is argued that the profit earned remain in the business throughout the year and are distributed by way of dividends only at the end of the year. Average capital may be calculated by dividing the opening and closing capital employed by two. It can also be worked out by deducting half of the profit from capital employed.

Computation of profit for return on capital employed:


The profits for the purpose of calculating return on capital employed should be computed according to the concept of "capital employed used". The profits taken must be the profits earned on the capital employed in the business. Thus, net profit has to be adjusted for the following:

Net profit should be taken before the payment of tax or provision for taxation because tax is paid after the profits have been earned and has no relation to the earning capacity of the business.

If the capital employed is gross capital employed then net profit should be considered before payment of interest on long-term as well as short-term borrowings.

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If the capital employed is used in the sense of net capital employed than only interest on long term borrowings should be added back to the net profits and not interest on short term borrowings as current liabilities are deducted while calculating net capital employed.

If any asset has been excluded while computing capital employed, any income arising from these assets should also be excluded while calculating net profits. For example, interest on investments outside business should be excluded.

Net profits should be adjusted for any abnormal, non recurring, non operating gains or losses such as profits and losses on sales of fixed assets.

Net profits should be adjusted for depreciation based on replacement cost, if assets have been added at replacement cost.

Formula of return on capital employed ratio:


[Return on Capital Employed=(Adjusted net profits*/Capital employed)100] *Net profit before interest and tax minus income from investments.

Significance of Return on Capital Employed Ratio:


Return on capital employed ratio is considered to be the best measure of profitability in order to assess the overall performance of the business. It indicates how well the management has used the investment made by owners and creditors into the business. It is commonly used as a basis for various managerial decisions. As the primary objective of business is to earn profit, higher the return on capital employed, the more efficient the firm is in using its funds. The ratio can be found for a number of years so as to find a trend as to whether the profitability of the company is improving or otherwise.

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7. Dividend Yield Ratio:


Definition:
Dividend yield ratio is the relationship between dividends per share and the market value of the shares. Share holders are real owners of a company and they are interested in real sense in the earnings distributed and paid to them as dividend. Therefore, dividend yield ratio is calculated to evaluate the relationship between dividends per share paid and the market value of the shares.

Formula of Dividend Yield Ratio:


Following formula is used for the calculation of dividend yield ratio: [Dividend Yield Ratio = Dividend Per Share / Market Value Per Share]

Example:
For example, if a company declares dividend at 20% on its shares, each having a paid up value of $8.00 and market value of $25.00. Calculate dividend yield ratio: Calculation: Dividend Per Share = (20 / 100) 8 = $1.60 Dividend Yield Ratio = (1.60 / 25) 100 = 6.4%

Significance of the Ratio:


This ratio helps as intending investor is knowing the effective return he is going to get on the proposed investment.

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8. Dividend Payout Ratio:


Dividend payout ratio is calculated to find the extent to which earnings per share have been used for paying dividend and to know what portion of earnings has been retained in the business. It is an important ratio because ploughing back of profits enables a company to grow and pay more dividends in future.

Formula of Dividend Payout Ratio:


Following formula is used for the calculation of dividend payout ratio [Dividend Payout Ratio = Dividend per Equity Share / Earnings per Share]

A complementary of this ratio is retained earnings ratio. Retained earning ratio is calculated by using the following formula: [Retained Earning Ratio = Retained Earning Per Equity Share / Earning Per Equity Share]

Example:
Calculate dividend payout ratio and retained earnings from the following data: Net Profit Provision for taxation Preference dividend 10,000 5,000 2,000 Payout Ratio = ($0.40 / $1) 100 = 40% Retained Earnings Ratio = ($0.60 /$1) 100 = 60% No. of equity shares Dividend per equity share 3,000 $0.40

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Significance of the Ratio:


The payout ratio and the retained earning ratio are the indicators of the amount of earnings that have been ploughed back in the business. The lower the payout ratio, the higher will be the amount of earnings ploughed back in the business and vice versa. A lower payout ratio or higher retained earnings ratio means a stronger financial position of the company.

9. Earnings Per Share (EPS) Ratio:


Definition:
Earnings per share ratio (EPS Ratio) is a small variation of return on equity capital ratio and is calculated by dividing the net profit after taxes and preference dividend by the total number of equity shares.

Formula of Earnings Per Share Ratio:


The formula of earnings per share is: [Earnings per share (EPS) Ratio = (Net profit after tax Preference dividend) / No. of equity shares (common shares)]

Example:
Equity share capital ($1): $1,000,000; 9% Preference share capital: $500,000; Taxation rate: 50% of net profit; Net profit before tax: $400,000. Calculate earnings per share ratio. Calculation: EPS = 1,55,000 / 10,000 = $15.50 per share.

Significance:
The earnings per share is a good measure of profitability and when compared with EPS of similar companies, it gives a view of the comparative earnings or earnings power of the firm. EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased.

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10.Price Earnings Ratio (PE Ratio):


Definition:
Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company.

Formula of Price Earnings Ratio:


Following formula is used to calculate price earnings ratio: [Price Earnings Ratio = Market price per equity share / Earnings per share] Example: The market price of a share is $30 and earning per share is $5. Calculate price earnings ratio. Calculation: Price earnings ratio = 30 / 5 =6 The market value of every one dollar of earning is six times or $6. The ratio is useful in financial forecasting. It also helps in knowing whether the share of a company are under or over valued. For example, if the earning per share of AB limited is $20, its market price $140 and earning ratio of similar companies is 8, it means that the market value of a share of AB Limited should be $160 (i.e., 8 20). The share of AB Limited is, therefore, undervalued in the market by $20. In case the price earnings ratio of similar companies is only 6, the value of the share of AB Limited should have been $120 (i.e., 6 20), thus the share is overvalued by $20.

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Significance of Price Earning Ratio: Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price. Generally, higher the price earning ratio the better it is. If the P/E ratio falls, the management should look into the causes that have resulted into the fall of this ratio.

I. ACTIVITY RATIO:This category of ratios includes those ratios, which highlight upon the activity and operational efficiency ratios of the business concern. These ratios are also called efficiency ratios or assets utilization ratios. The efficiency with which the assets are used would be reflected in the speed and rapidity with which assets are converted into sales. The grater is the rate of turnover or conversion the more efficient is the utilization\management other things are being are equal. Turnover is the primary mode for measuring the extent of efficient employment of assets to sales. An activity ratio may, therefore, be defined as a test of the relationship between sales and the various assets of a firm.

1. Inventory Turnover Ratio or Stock Turnover Ratio (ITR):


Every firm has to maintain a certain level of inventory of finished goods so as to be able to meet the requirements of the business. But the level of inventory should neither be too high nor too low. A too high inventory means higher carrying costs and higher risk of stocks becoming obsolete whereas too low inventory may mean the loss of business opportunities. It is very essential to keep sufficient stock in business.

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Definition:
Stock turn over ratio and inventory turn over ratio are the same. This ratio is a relationship between the cost of goods sold during a particular period of time and the cost of average inventory during a particular period. It is expressed in number of times. Stock turn over ratio / Inventory turn over ratio indicates the number of time the stock has been turned over during the period and evaluates the efficiency with which a firm is able to manage its inventory. This ratio indicates whether investment in stock is within proper limit or not.

Components of the Ratio:


Average inventory and cost of goods sold are the two elements of this ratio. Average inventory is calculated by adding the stock in the beginning and at the and of the period and dividing it by two. In case of monthly balances of stock, all the monthly balances are added and the total is divided by the number of months for which the average is calculated.

Formula of Stock Turnover/Inventory Turnover Ratio:


The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost.

(a) [Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost] Generally, the cost of goods sold may not be known from the published financial statements. In such circumstances, the inventory turnover ratio may be calculated by dividing net sales by average inventory at cost. If average inventory at cost is not known then inventory at selling price may be taken as the denominator and where the opening inventory is also not known the closing inventory figure may be taken as the average inventory. (b) [Inventory Turnover Ratio = Net Sales / Average Inventory at Cost] (c) [Inventory Turnover Ratio = Net Sales / Average inventory at Selling Price] (d) [Inventory Turnover Ratio = Net Sales / Inventory]

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Example:
The cost of goods sold is $500,000. The opening stock is $40,000 and the closing stock is $60,000 (at cost). Calculate inventory turnover ratio Calculation: Inventory Turnover Ratio (ITR) = 500,000 / 50,000* = 10 times This means that an average one dollar invested in stock will turn into ten times in sales *($40,000 + $60,000) / 2 = $50,000

Significance of ITR:
Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually a high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold, the lesser amount of money is required to finance the inventory. A low inventory turnover ratio indicates an inefficient management of inventory. A low inventory turnover implies over-investment in inventories, dull business, poor quality of goods, stock accumulation, accumulation of obsolete and slow moving goods and low profits as compared to total investment. The inventory turnover ratio is also an index of profitability, where a high ratio signifies more profit, a low ratio signifies low profit. Sometimes, a high inventory turnover ratio may not be accompanied by relatively a high profits. Similarly a high turnover ratio may be due to under-investment in inventories. It may also be mentioned here that there are no rule of thumb or standard for interpreting the inventory turnover ratio. The norms may be different for different firms depending upon the nature of industry and business conditions. However the study of the comparative or trend analysis of inventory turnover is still useful for financial analysis.

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2. Debtors Turnover Ratio | Accounts Receivable Turnover Ratio:


A concern may sell goods on cash as well as on credit. Credit is one of the important elements of sales promotion. The volume of sales can be increased by following a liberal credit policy. The effect of a liberal credit policy may result in tying up substantial funds of a firm in the form of trade debtors (or receivables). Trade debtors are expected to be converted into cash within a short period of time and are included in current assets. Hence, the liquidity position of concern to pay its short term obligations in time depends upon the quality of its trade debtors.

Definition:
Debtors turnover ratio or accounts receivable turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year.

Formula of Debtors Turnover Ratio:


[Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors] The two basic components of accounts receivable turnover ratio are net credit annual sales and average trade debtors. The trade debtors for the purpose of this ratio include the amount of Trade Debtors & Bills Receivables. The average receivables are found by adding the opening receivables and closing balance of receivables and dividing the total by two. It should be noted that provision for bad and doubtful debts should not be deducted since this may give an impression that some amount of receivables has been collected. But when the information about opening and closing balances of trade debtors and credit sales is not available, then the debtors turnover ratio can be calculated by dividing the total sales by the balance of debtors (inclusive of bills receivables) given. and formula can be written as follows. [Debtors Turnover Ratio = Total Sales / Debtors]

Example:
Credit sales $25,000; Return inwards $1,000; Debtors $3,000; Bills Receivables $1,000.

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Calculate debtors turnover ratio

Calculation:
Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors = 24,000* / 4,000** = 6 Times *25000 less 1000 return inwards, **3000 plus 1000 B/R

Significance of the Ratio:


Accounts receivable turnover ratio or debtors turnover ratio indicates the number of times the debtors are turned over a year. The higher the value of debtors turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm.

3. Average Collection Period Ratio:


Definition:
The Debtors / Receivable Turnover ratio when calculated in terms of days is known as Average Collection Period or Debtors Collection Period Ratio The average collection period ratio represents the average number of days for which a firm has to wait before its debtors are converted into cash.

Formula of Average Collection Period:


Following formula is used to calculate average collection period: [(Trade Debtors No. of Working Days) / Net Credit Sales] Example: Credit sales $25,000; Return inwards $1,000; Debtors $3,000; Bills Receivables $1,000.

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Calculate average collection period. Calculation: Average collection period can be calculated as follows: Average Collection Period = (Trade Debtors No. of Working Days) / Net Credit Sales 4,000* 360** / 24,000 = 60 Days * Debtors and bills receivables are added. **For calculating this ratio usually the number of working days in a year are assumed to be 360.

Significance of the Ratio:


This ratio measures the quality of debtors. A short collection period implies prompt payment by debtors. It reduces the chances of bad debts. Similarly, a longer collection period implies too liberal and inefficient credit collection performance. It is difficult to provide a standard collection period of debtors.

4. Creditors / Accounts Payable Turnover Ratio:


Definition and Explanation:
This ratio is similar to the debtors turnover ratio. It compares creditors with the total credit purchases. It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors and bills payable. Same as debtors turnover ratio, creditors turnover ratio can be calculated in two forms, creditors turnover ratio and average payment period.

Formula:
Following formula is used to calculate creditors turnover ratio: [Creditors Turnover Ratio = Credit Purchase / Average Trade Creditors]

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Average Payment Period:


Average payment period ratio gives the average credit period enjoyed from the creditors. It can be calculated using the following formula: [Average Payment Period = Trade Creditors / Average Daily Credit Purchase] [Average Daily Credit Purchase= Credit Purchase / No. of working days in a year] Or [Average Payment Period = (Trade Creditors No. of Working Days) / Net Credit Purchase] (In case information about credit purchase is not available total purchases may be assumed to be credit purchase.)

Significance of the Ratio:


The average payment period ratio represents the number of days by the firm to pay its creditors. A high creditors turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. This situation enhances the credit worthiness of the company. However a very favorable ratio to this effect also shows that the business is not taking the full advantage of credit facilities allowed by the creditors.

5. Working Capital Turnover Ratio:


Definition:
Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio represents the number of times the working capital is turned over in the course of year and is calculated as follows: Formula of Working Capital Turnover Ratio: Following formula is used to calculate working capital turnover ratio [Working Capital Turnover Ratio = Cost of Sales / Net Working Capital]

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The two components of the ratio are cost of sales and the net working capital. If the information about cost of sales is not available the figure of sales may be taken as the numerator. Net working capital is found by deduction from the total of the current assets the total of the current liabilities. Example: Cash Bills Receivables Sundry Debtors Stock Sundry Creditors Cost of sales Calculate working capital turnover ratio Calculation: Working Capital Turnover Ratio = Cost of Sales / Net Working Capital Current Assets = $10,000 + $5,000 + $25,000 + $20,000 = $60,000 Current Liabilities = $30,000 Net Working Capital = Current assets Current liabilities = $60,000 $30,000 = $30,000 So the working Capital Turnover Ratio = 150,000 / 30,000 = 5 times 10,000 5,000 25,000 20,000 30,000 150,000

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Significance:
The working capital turnover ratio measure the efficiency with which the working capital is being used by a firm. A high ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. But a very high working capital turnover ratio may also mean lack of sufficient working capital which is not a good situation.

6. Fixed Assets Turnover Ratio:


Definition:
Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means underutilization of fixed assets. The ratio is calculated by using following formula: Formula of Fixed Assets Turnover Ratio: Fixed assets turnover ratio turnover ratio is calculated by the following formula: Fixed Assets Turnover Ratio = Cost of Sales / Net Fixed Assets

II. LEVERAGE RATIOS OR LONG TERM SOLVENCY RATIOS


Debt equity ratio Proprietary or Equity ratio Ratio of fixed assets to shareholders funds Interest coverage or debt service ratio Capital gearing ratio

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1. Debt to Equity Ratio:


Definition:
Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is also known as external internal equity ratio. It is determined to ascertain soundness of the long term financial policies of the company. Formula of Debt to Equity Ratio: Following formula is used to calculate debt to equity ratio [Debt Equity Ratio = External Equities / Internal Equities] Or [Outsiders funds / Shareholders funds] As a long term financial ratio it may be calculated as follows: [Total Long Term Debts / Total Long Term Funds] Or [Total Long Term Debts / Shareholders Funds] Components: The two basic components of debt to equity ratio are outsiders funds i.e. external equities and share holders funds, i.e., internal equities. The outsiders funds include all debts / liabilities to outsiders, whether long term or short term or whether in the form of debentures, bonds, mortgages or bills. The shareholders funds consist of equity share capital, preference share capital, capital reserves, revenue reserves, and reserves representing accumulated profits and surpluses like reserves for contingencies, sinking funds, etc. The accumulated losses and deferred expenses, if any, should be deducted from the total to find out shareholder's funds

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Some writers are of the view that current liabilities do not reflect long term commitments and they should be excluded from outsider's funds. There are some other writers who suggest that current liabilities should also be included in the outsider's funds to calculate debt equity ratio for the reason that like long term borrowings, current liabilities also represents firm's obligations to outsiders and they are an important determinant of risk. However, we advise that to calculate debt equity ratio current liabilities should be included in outsider's funds. The ratio calculated on the basis outsider's funds excluding liabilities may be termed as ratio of long-term debt to share holders funds.

Example:
From the following figures calculate debt to equity ratio: Equity share capital Capital reserve Profit and loss account 6% debentures Sundry creditors Bills payable Provision for taxation Outstanding creditors Required: Calculate debt to equity ratio. Calculation: External Equities / Internal Equities = 1,200,000 / 18,000,000 = 0.66 or 4 : 6 It means that for every four dollars worth of the creditors investment the shareholders have invested six dollars. That is external debts are equal to 0.66% of shareholders funds. 1,100,000 500,000 200,000 500,000 240,000 120,000 180,000 160,000

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Significance of Debt to Equity Ratio:


Debt to equity ratio indicates the proportionate claims of owners and the outsiders against the firms assets. The purpose is to get an idea of the cushion available to outsiders on the liquidation of the firm. However, the interpretation of the ratio depends upon the financial and business policy of the company. The owners want to do the business with maximum of outsider's funds in order to take lesser risk of their investment and to increase their earnings (per share) by paying a lower fixed rate of interest to outsiders. The outsiders creditors) on the other hand, want that shareholders (owners) should invest and risk their share of proportionate investments. A ratio of 1:1 is usually considered to be satisfactory ratio although there cannot be rule of thumb or standard norm for all types of businesses. Theoretically if the owners interests are greater than that of creditors, the financial position is highly solvent. In analysis of the long-term financial position it enjoys the same importance as the current ratio in the analysis of the short-term financial position.

2. Proprietary Ratio or Equity Ratio:


Definition:
This is a variant of the debt-to-equity ratio. It is also known as equity ratio or net worth to total assets ratio. This ratio relates the shareholder's funds to total assets. Proprietary / Equity ratio indicates the long-term or future solvency position of the business. Formula of Proprietary/Equity Ratio: Proprietary or Equity Ratio = Shareholders funds / Total Assets Components: Shareholder's funds include equity share capital plus all reserves and surpluses items. Total assets include all assets, including Goodwill. Some authors exclude goodwill from total assets. In

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that case the total shareholder's funds are to be divided by total tangible assets. As the total assets are always equal to total liabilities., the total liabilities, may also be used as the denominator in the above formula.

Example:
Share holders funds are $1,800,000 and the total assets, which are equal to total liabilities are $3,000,000. Calculate proprietary ratio or Equity ratio. Calculation: Proprietary or Equity Ratio = 1,800,000 / 3,000,000 This means that out of every $1 employed in the business, shareholders contribution is about 60 cents. Accordingly, the creditors contribution would be the remaining 40 cents.

Significance:
This ratio throws light on the general financial strength of the company. It is also regarded as a test of the soundness of the capital structure. Higher the ratio or the share of shareholders in the total capital of the company, better is the long-term solvency position of the company. A low proprietary ratio will include greater risk to the creditors.

3. Fixed Assets to Proprietor's Fund Ratio:


Definition:
Fixed assets to proprietor's fund ratio establishes the relationship between fixed assets and shareholders funds. The purpose of this ratio is to indicate the percentage of the owner's funds invested in fixed assets. Formula: [Fixed Assets to Proprietors Fund = Fixed Assets / Proprietors Fund]

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The fixed assets are considered at their book value and the proprietor's funds consist of the same items as internal equities in the case of debt equity ratio. Example: Suppose the depreciated book value of fixed assets is $ 36,000 and proprietor's funds are 48,000 the relevant ratio would be calculated as follows: Fixed assets to proprietor's fund = 36,000 / 48,000 = 0.75 or 0.75 : 1

Significance:
The ratio of fixed assets to net worth indicates the extent to which shareholder's funds are sunk into the fixed assets. Generally, the purchase of fixed assets should be financed by shareholder's equity including reserves, surpluses and retained earnings. If the ratio is less than 100%, it implies that owners funds are more than fixed assets and a part of the working capital is provide by the shareholders. When the ratio is more than the 100%, it implies that owners funds are not sufficient to finance the fixed assets and the firm has to depend upon outsiders to finance the fixed assets. There is no rule of thumb to interpret this ratio by 60 to 65 percent is considered to be a satisfactory ratio in case of industrial undertakings.

4. Debt Service Ratio or Interest Coverage Ratio:


Definition:
Formula of Debt Service Ratio or interest Interest coverage ratio is also known as debt service ratio or debt service coverage ratio. This ratio relates the fixed interest charges to the income earned by the business. It indicates whether the business has earned sufficient profits to pay periodically the interest charges. It is calculated by using the following formula.

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coverage ratio : [Interest Coverage Ratio = Net Profit Before Interest and Tax / Fixed Interest Charges] Example: If the net profit (after taxes) of a firm is $75,000 and its fixed interest charges on long-term borrowings are $10,000. The rate of income tax is 50%. Calculate debt service ratio / interest coverage ratio Calculation: Interest Coverage Ratio = (75,000* + 75,000* + 10,000) / 10,000 = 16 times *Income after interest is $7,5000 + income tax $75,000

Significance of debt service ratio:


The interest coverage ratio is very important from the lender's point of view. It indicates the number of times interest is covered by the profits available to pay interest charges. It is an index of the financial strength of an enterprise. A high debt service ratio or interest coverage ratio assures the lenders a regular and periodical interest income. But the weakness of the ratio may create some problems to the financial manager in raising funds from debt sources. 5. Capital Gearing Ratio: Definition and Explanation: Closely related to solvency ratio is the capital gearing ratio. Capital gearing ratio is mainly used to analyze the capital structure of a company. The term capital structure refers to the relationship between the various long-term form of financing such as debentures, preference and equity share capital including reserves and

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surpluses. Leverage of capital structure ratios are calculated to test the long-term financial position of a firm. The term "capital gearing" or "leverage" normally refers to the proportion of relationship between equity share capital including reserves and surpluses to preference share capital and other fixed interest bearing funds or loans. In other words it is the proportion between the fixed interest or dividend bearing funds and non fixed interest or dividend bearing funds. Equity share capital includes equity share capital and all reserves and surpluses items that belong to shareholders. Fixed interest bearing funds includes debentures, preference share capital and other long-term loans. Formula of capital gearing ratio: [Capital Gearing Ratio = Equity Share Capital / Fixed Interest Bearing Funds] Example: Calculate capital gearing ratio from the following data: 1991 Equity Share Capital Reserves & Surplus Long Term Loans 6% Debentures 500,000 300,000 250,000 250,000 Calculation: Capital Gearing Ratio 1992 = (500,000 + 300,000) / (250,000 + 250,000) = 8 : 5 (Low Gear) 1993 = (400,000 + 200,000) / (300,000 + 400,000) 6 : 7 (High Gear) 400,000 200,000 300,000 400,000 1992

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It may be noted that gearing is an inverse ratio to the equity share capital.
Highly Geared------------Low Equity Share Capital Low Geared---------------High Equity Share Capital

Significance of the ratio:


Capital gearing ratio is important to the company and the prospective investors. It must be carefully planned as it affects the company's capacity to maintain a uniform dividend policy during difficult trading periods. It reveals the suitability of company's capitalization.

III. LIQUIDITY RATIO


Liquidity means ability of the farm to pay .Its short -term debts in time liquidity ratio are calculated to measure the short term financial position of the firm. Liquidity ratios Liquidity ratios measure a businesss ability to cover its obligations, without having to borrow or invest more money in the business. The idea is that there should be sufficient cash and assets that can be readily converted into cash to cover liabilities as they come due. One of the most common liquidity ratios is: 1. CURRENT RATIO This ratio is used to assess the short-term financial position of the business concern. In other words, it is an indicator of the firms ability to meet its short term obligations.

Current Ratio = Current Assets / Current Liabilities

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Current assets basically include cash, short-term investments and marketable securities, accounts receivable, inventory, and prepaid expenses. Current liabilities include accounts payable to vendors and employees, and installments on notes or loans that are due within one year. Creditors, B/P outstanding expenses dividend payable short term loans bank overdraft etc. It is generally accepted that current assets should be 2 times the current liabilities, and then only will realization from current assets be sufficient to pay the current liabilities on time and enable the firm to meet other day to day expenses.

OBJECTIVES AND SIGNIFICANCE


This ratio is an indicator of the firms ability to meet its short-term liabilities. It is used tot assess the short-term financial position. It shows the number of times the current assets are in excess over current liabilities. As a normal rule, current assets should be twice the current liabilities. A very high ratio will result from idleness of funds only and, therefore, is not a good sign. This ratio could also be seen as a measure of working capital the difference between current assets and current liabilities. A company with a lot of working capital will be in a better position to expand and improve its operations. On the contrary, a company with negative working capital does not have sufficient resources to meet its current obligations, and therefore is not in a position to take advantage of opportunities for growth.

2. QUICK RATIO, LIQUID RATIO OR ACID TEST RATIO


Liquid Ratio is worked out to test the short-term liquidity of the firm in its correct form. It from current assets the stock and prepaid expenses are removed, the remainder is known as liquid assets. Liquid assets are those which are either in the form of cash or cash equivalents or can be converted into cash within a very short time. Acid-test Ratio = Current Assets minus Inventories / Current Liabilities

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Inventory is a current asset that may or may not be quickly converted into cash. This depends on the rate at which inventory is being turned over. By excluding inventory, the acid-test ratio only considers that part of current assets that can be readily converted into cash. This ratio, also called the Quick Ratio, tells how much of the business's short-term debt can be met by using the company's liquid assets at short notice. A quick ratio 1:1 has usually been considered favorable.

OBJECTIVES AND SIGNIFICANCE This ratio is also an indicator of short-term solvency of the firm. A part of the current assets are not readily realizable/convertible into cash. Where as while computing the liquid assets, the illiquid portion of current assets are eliminated. So liquid ratio is considered as a further refinement of current ratio. The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures the firm's capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. Usually a high liquid ratios an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. As a convention, generally, a quick ratio of "one to one" (1:1) is considered to be satisfactory. Although liquidity ratio is more rigorous test of liquidity than the current ratio , yet it should be used cautiously and 1:1 standard should not be used blindly. A liquid ratio of 1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors cannot be realized and cash is needed immediately to meet the current obligations. In the same manner, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely nonliquid. Hence, a firm having a high liquidity ratio may not have a satisfactory liquidity position if it has slow-paying debtors. On the other hand, A firm having a low liquid ratio may have a good

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liquidity position if it has a fast moving inventories. Though this ratio is definitely an improvement over current ratio, the interpretation of this ratio also suffers from the same limitations as of current ratio.

3. Absolute Liquid Ratio:


Absolute liquidity is represented by cash and near cash items. It is a ratio of absolute liquid assets to current liabilities. In the computation of this ratio only the absolute liquid assets are compared with the liquid liabilities. The absolute liquid assets are cash, bank and marketable securities. It is to be observed that receivables (debtors/accounts receivables and bills receivables) are eliminated from the list of liquid assets in order to obtain absolute4 liquid assets since there may be some doubt in their liquidity.

Formula of Absolute Liquid Ratio: [Absolute Liquid Ratio = Absolute Liquid Assets / Current Assets] This ratio gains much significance only when it is used in conjunction with the current and liquid ratios. A standard of 0.5 : 1 absolute liquidity ratio is considered an acceptable norm. That is, from the point of view of absolute liquidity, fifty cents worth of absolute liquid assets are considered sufficient for one dollar worth of liquid liabilities. However, this ratio is not in much use.

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OBJECTIVE , SCPOE& LIMITATION

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LIMITATIONS OF THE STUDY


The following are the limitations of the study: The sample size was small and hence the results can have a degree of variation. The response of the employees in giving information was lukewarm. Organizations resistance to share the internal information. Questionnaire is subjected to errors.

SCOPE OF THE STUDY


Training Effectiveness is the process wherein the management finds out how effective it has been at training and developing the employees in an organization.

This study gives some suggestions for making the present training and development
system more effective.
It gives organization the direction, how to deal differently with different employees.

It identifies the training & development needs present among the employees.

OBJECTIVE OF THE STUDY


The effectiveness of the training programmes can be established through this study. This study helps to understand, analyze & apply the core concepts of training in an organization. Managers would be able to identify the need of training for its employees. Managers would know what employees think of the training and development programmes and make changes if necessary.

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RESEARCH METHOLOGY

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3.1 RESEARCH METHODOLOGY


To conduct a research scientific method must be followed. The universe of study at FLAXIFUFF INTERNATIONAL LTD. is basically very large in which it is difficult to collect information from all the employees. So, the sampling method has been followed for this study. The analysis is based on primary and secondary data collected for this purpose.

SOURCE OF DATA:
The data collected for the project work are from two sources that is primary and secondary sources.

PRIMARY SOURCES
For this research I have followed the structure personnel interviews after deciding to carry out a survey research by selecting sample from the population of the FLAXITUFF

INTERNATIONAL LTD.The opinion of employees was collected using appropriate questionnaire. This observation was brought about with the help of attention and perception.

SECONDARY DATA
The secondary data were collected from the internet and the manual published by the company.

METHOD OF ANALYSIS:The tools used for analysis are:


I. II. III. IV. V. VI. COMMON-SIZE P/L A/C COMMON-SIZE BALANCE SHEET COMPARTIVE P/L A/C COMPARTIVE BALANCE SHEET TREND ANALYSIS RATIO ANALYSIS

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RESEARCH DESIGN
A research design is the arrangement of condition for collection and analysis of data that aims to combine relevance to the research purpose with economy in procedure. It constitutes the blueprint for the collection, measurement and analysis of data. There are two types of research design:-

1. EXPLORATORY RESEARCH:- It goal is to shed light on the real nature of the


problem and to suggest possible solutions or new ideas. Here, it is done through a questionnaire which contains about 16 questions categorized into 6 sections.

2. CONCLUSIVE RESEARCH:- It is designed to choose among various possible course


of action i.e. to make decision. The research done for conclusion is based on the results drawn out of the questionnaire, and then figuring out the actual situation through several pie-charts.

RESEARCH INSTRUMENT
It can be of two types: STRUCTURED UNSTRUCTURED

In this project, the structured instrument is used which is a planned, formal list of questionnaire where the questions were asked directly from the employees

3.2 SAMPLE TECHNIQE


Sampling is a technique which helps us in providing a solution of a given problem is a lesser amount of time at a lesser cost by studying a subpart (small section) of the population and without using much of the efficiency.

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Probability sampling: It is of three types:


Simple random sampling Stratified random sampling Cluster sampling

Non-probability sampling: This method does not provide every item in the universe with a
known chance of being included in the sample. In this sample mathematical calculation is not possible. Types of non-probability sampling are: CONVENIENCE SAMPLING JUDGMENTAL SAMPLING QUOTA SAMPLING

In this project, non-probability convenience sampling is adopted.

SAMPLE SIZE
The sample size for this project taken into consideration is 80.

RESEARCH PROBLEMS
The data collection phase of this project for' framing effective work life balance strategies for FLAXITUFF INTERNATIONAL LTD. employees was difficult and prone to error. Some employees were not available for feedback session. Some of them refused to cooperate due to lack of time and loads of work. Also, so

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Data Presentation And Analysis

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CURRENT RATIO I

Particulars Current Assets Current Liabilities Current Ratio

2012 1988612862 642154457 3.096

2011 923079438.71 613503563.88 1.50

Series 1
3.5 3 2.5 2 1.5 1 0.5 0 2011 2012 Series 1

ANALYZE- We can see that in 2011 the current ratio is more than 2012, means for every one rupee there is 3.09 rupees in business. Current assets going down and it is the over trading situation.

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QUICK/LIQUIDITY/ACID TEST RATIO

Particulars Liquidity Assets Current Liabilities Liquidity Ratio

2012 581634165 642154457 0.90

2011 529823108.70 613503563.88 0.86

Series 1
0.91 0.9 0.89 0.88 0.87 0.86 0.85 0.84 2011 2012 Series 1

ANALYZE- We can see that the liquidity ratio in 2011 is more than 2012 and the liquidity position is not as much stronger as in the last year.

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ABSOLUTE LIQUID RATIO

Particulars Absolute Liquid Assets Current Liabilities Absolute Liquid Ratio

2011 27947826.65 613503563.88 0.040

2012 29749270 642154457 0.045

Series 1
0.046 0.045 0.044 0.043 0.042 0.041 0.04 0.039 0.038 0.037 2011 2012 Series 1

ANALYZE- The absolute ratio is more in 2011 than 2012 and the absolute liquid position is much stronger than last year .

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PROFIT ABILITY RATIO

GROSS PROFIT RATIO

Particulars Gross Profit Net Sales Gross Profit Ratio

2011 156281171 1529192840 10.22

2012 589280758 2319442409 25.40

Series 1
30 25 20 15 10 5 0 2011 2012

Series 1

ANALYZE- The gross profit ratio is less in 2011 than 2012 and it show what portion of sales is left to cover operating expenses and non- operating expanses to pay dividend and to create reserves .

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NET PROFIT RATIO

Particulars Net Profit Net Sales Net Profit Ratio

2012 230366679 997076207 2.04

2011 38272737.20 1529192840 2.50

Series 1
3 2.5 2 1.5 1 0.5 0 2011 2012

Series 1

ANALYZE- Net Profit Ratio is more in 2012 than 2011. The ratio greater is the capacity of the firm to with stand adverse economic condition and vice versa.
OPEARTING PROFIT RATIO

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OPERATING PROFIT RATIO

Particulars Operating Profit Net Sales Operating Profit Ratio

2012 193329833 997076207 0.19

2011 371039671 1529192840 0.24

0.3

0.25

0.2

0.15

Series 1

0.1

0.05

0 2011 2012

ANALYZE- As the Operating Profit Ratio is less in 2012 than to 2010. the ratio may decrease due to low gross profit , high operating expenses . higher the ratio, greater is the capacity of the firm to with stand adverse economic condition and vice versa.

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PROFIT ABILITY RATIO BASED ON INVESTMENT RETURN ON TOTAL ASSETS-

Particulars PBIT TOTAL ASSETS RETURN ON TOTAL ASSETS

2011 58184407.20 3011484273 1.93

2012 103389106 4039630681 2.55

2.5

1.5

0.5

0 2011 2012

ANALYZE- Return on total assets ratio is greater in 2012 than 2010. It indicate the firms ability of generating profit per rupee of total assets. Higher the ratio, the more efficient the management and utilization of total assets.

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RETURN ON CAPITAL EMPLOYED Particulars PBIT CAPITAL EMPLOYED RETURN ON TOTAL ASSETS 2012 103389106 745171756 13.87 2011 58184407.20 645079804.99 9.01

16 14 12 10 8 6 4 2 0 2011 2012 Series 1

ANALYZE- The return on capital employed ratio is greater in 2012 than 2011.The ratio indicates the firms ability to generating profit per rupee of capital employed. Higher the ratio, the more efficient the management and utilization of capital employed.

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DEBT-TOTAL FUND RATIO

Particulars LONG TERM DEBTS CAPITAL EMPLOYED DEBT TOTAL FUND

2012 1146363763 745171756

2011 1391434550.74 645079804.99

1.53

2.15

Series 1
2.5

1.5 Series 1 1

0.5

0 2012 2011

ANALYZE- The Total Debt Equity Ratio is less in 2012 than 2011. It indicates the margin of safety to long term creditors a low total debt-equity ratio implies the use of more equity than debt.

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ACTIVITY RATIO

CAPITAL TURN OVER RATIO

Particulars Net Sales CAPITAL EMPLOYED CAPITAL TURN OVER RATIO

2012 2319442409 745171756

2011 1529192840 645079804.99

3.11

2.37

Series 1
3.5 3 2.5 2 1.5 1 0.5 0 2012 2011 Series 1

ANALYZE-The Capital Turnover Ratio is more 2012. It indicates the firms ability to generate sales per rupee of capital employed, Higher the ratio, the more efficient the management and utilization of capital employed

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FIXED ASSETS TURNOVER RATIO

Particulars NET SALES NET FIXED ASSETS FIXED ASSETS TURNOVER RATIO

2012 2319442409 2509426797 0.92

2011 1529192840 2366304468 0.64

Series 1
1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2012 2011 Series 1

ANALYZE- The Fixed Assets Turnover Ratio is more 2012. It indicates the firms ability to generate sales per rupee of investment n fixed assets, Higher the ratio, the more efficient the management and utilization of fixed ratio.

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FINDINGS

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FINDINGS OF STUDY

1. Current ratio is lower than the ideal current ratio that is 2:1. The current ratio for the year 2012 is 3.096:1. This situation is profitable for the company but it is risky one as far as solvency or liquidity position of the business. 2. G.P. Ratio is varying between 16% to 25%. This is mainly become of tariff Varying of G.P .between 16% to 25% is a good sign for organization. 3. Net profit was high in year 2011.In the year 2012 N.P. is decreasing in comparison to the year 2011. 4. In the current year the operating ratio increases just because of the increment in the sales along with the cost of goods sold & operating expenses in compare with the previous year. 5. In the current year the return on capital employed ratio decreases because of the decreases in the profit plus interest and increase in the pital employed. 6. Net assets turnover ratio declines in the last two years. 7. Net working capital ratio increases in the current year in comparison to the previous year. 8. Employees remuneration & benefits ratio is declining in the year 2012 comparison 2011. 9. Other expense has increased over year by year. So other expense has affected the profitability. 10. Return on total assets is also very good. Its mean condition of organization is very good. Return on total assets depends upon fixation only.

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SUGGESTIONS/ RECOMMENDATIONS

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RECOMMEENDATIONS

All the negative sign disclosed in the for going discursion may be solved by taking a various appropriate steps. As it is not possible to discuss all of them due to certain limitation, only some steps are being suggested for instances are as follows: Current ratio of FLAXITUFF INTERNATIONAL LTD is lower comparison to ideal current ratio 2:1. So company should try to improve their liquidity position by increasing their current assets. A company should not sacrifice their liquidity with the profitability of the concern. Quick ratio is also low. Company should also try to improve this ratio also. Other expenses increased in the year 2011. It mgt. can control the other expenses profit may be increased. So management has to control the other expenses. Operating expenses has increased over the year 2009. So management have control on our operating expenses an increases profit. Reduce the repairs and maintenance expenditure, building repairs and machinery repairs etc The entire inventory like raw material, stores & spares, packing material, chemicals, felt; wire etc. to be reduced kept at minimum level Improve operational efficiency by way of increase in production and reduction in consumptions like steam, power, raw material, chemicals, packing material, stores & spaces etc

Comparison of sales and other expenses show the trend analysis. There comparison shows the negative aspect because the proportionate sales is less than charge expenses. So control current assets,

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CONCLUSION

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CONCLUSION
Ratio analysis is very essential for success of a business and, therefore, needs efficient management and control. Each of the components of the Ratio analysis needs proper management to optimise profit. The study reveals that the liquidity position of this company is comparatively good in year 2011 as compare to previous years. The ratios reveal that the companys ability in managing the current assets is found inadequate which require generation of more sales. On the whole, it can be concluded that the companys overall ratio analysis is not at desired level and we have made the realistic recommendation for the improvement in operational and managerial efficiency of the company as to maintain and increase further by effective utilization and control of all the assets.

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LIMITATIONS OF THE STUDY

This study is limited to two years. The study is restricted to the application of ratio analysis This study is limited to only one company The data of this study has been primarily taken from published annual reports only. The study is depend on two year balance sheet.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

Text Books:
Bhalla V.K., Financial Management, 1999, Sultan Chand & Sons Publications , New Delhi. Kothari C.R. Research Methodology Method & Techniques Wishwa Prakashan , Daryaganj , New Delhi-110 002 Gupta S. P. Financial Management, 2003, Sahitya Bhawan Publications, New Delhi.

Journals & Magazines:


Business Today Companys annual report Companys published journals

Webliography

www.kalanigroup.com www.flexituff.com www.fibc.com www.wikipedia.org

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