Professional Documents
Culture Documents
ON
At
TO
ROLL NO-02015103917
2017-2019
1
ACKNOWLEDGMENT
officers who are working in accounts department for their valuable advice, cooperation and
I am thankful to my mentor Mrs. Mansi Saxena madam for helping and guiding me to make
this Project.
Regards
Disha Panwar
2
Declaration:
I hereby declare that the project report entitled “Report On Ratio Analysis” submitted in
partial fulfilment of the requirements for the degree of the Masters of Business
Administration is my original work and not submitted for the award of any other degree,
diploma, fellowship or any other similar title or prizes. I would like to categorically mention
that all the information has been collected, analysed and known for the project is entirely the
authentic possession of mine.
The assistance and help received during the course of investigation have been fully
acknowledged.
Disha
MBA
02015103917
3
INDEX
Sr. Page
Particulars Number
Number
2 Executive Summary 6
3 Company Profile 7 – 16
6 Findings 60 – 62
8 Limitations 66 – 67
9 Bibliography 68
4
NEED FOR THE STUDY:
The study has great significance and provides benefits to various parties whom
The study is also beneficial to employees and offers motivation by showing how
The investors who are interested in investing in the company’s shares will also get
benefited by going through the study and can easily take a decision whether to invest
5
EXECUTIVE SUMMARY:
Statement Analysis through various ratios in the company. This project gives us
information and report about company’s Financial Position. Throughout the project the
focus has been on presenting information and comments in easy and intelligible manner.
organization and to have exposure to the various management practices in the field of
Finance. This training has also given me an on the job experience of Financial
Management.
This project is very useful for those who want to know about company and financial
6
Company
Profile
7
INTRODUCTION OF COMPANY
Arbro Pharmaceuticals Private Limited's Annual General Meeting (AGM) was last held on
30 September 2016 and as per records from Ministry of Corporate Affairs (MCA), its balance
sheet was last filed on 31 March 2016.
Directors of Arbro Pharmaceuticals Private Limited are Vinod Kumar Chhabra, Vijay Arora,
Saurabh Arora and Sunil Kumar.
Company Details
CIN U24232DL1985PTC021362
RoC RoC-Delhi
Registration 21362
Number
8
CIN U24232DL1985PTC021362
Category
Our MISSION is to provide humanity as a whole with a wide choice of cost effective,
quality products and services for the improvement of health and treatment of medical
conditions.
Our VISION is to product innovation and technology upgradation thereby strengthening our
position to strive for leadership in pharmaceutical and allied services.
Established in 1985 by the chairman of the group Mr. Vijay Kumar Arora with the long
term objective and high corporate values that includes:
9
Advanced in-house quality control setup with capability
to support the Industry globally
To provide clinical & analytical services with excellent
quality.
The unit has been established with the aim to provide high quality, cost effective medicines to
suffering masses for domestic, semi-regulated markets and rest of the world. All the key
operations have been assigned to highly qualified full time professionals. The company is
well-respected in the pharmaceutical market for its reliable products, services and for quality
of personnel.
Arbro group has two well equipped and state of the art laboratories and world class R & D
facilities with a pool of experienced professionals, scientists and medical professionals to
produce the most advance range of safe, effective and affordable medicines.
– Antibiotics
–Anti Uclerant
-Anti- Fungal
-Anti Hisdaminics
-Anti- Viral
-Analgesics/ Anti-inflammatory
-Haematinics
10
Arbro has also set up Animal Health Division, which primarily manufacture feed
supplements & pharmaceuticals for this segment. At present is strongly positioned in several
states in India & are on the mission to expand market in domestic & International arena.
We are delighted to welcome you to our new division “Consumer Wellness” which will
look after the marketing and sales of our innovative products.For last 30 years Arbro
Pharmaceuticals gathered an exceptional expertize in Research and Development. With our
fully owned subsidiaries “Arbro Analytical Division” and “Auriga Research” we are
amongst top Indian Pharmaceutical Research and drug testing houses.
Growth is the virtue of nature and so of us. With our indigenously developed formulation we
decided to forward integrate and start structured marketing. This inspired us to create
“Consumer Wellness Division” under the visionary leadership of young and dynamic
researcher Dr. Saurabh Arora who has been at the helm of Arbro Analytical Division for
more than 10 years. With this creation our intentions are to redefine the market by applying
modern science to traditional knowledge.
At “Arbro Consumer Wellness Division” we make great things happen. With 30 years of
research backup and hard work of more than 300 scientists we have always endeavored to
bring something new to the table. In the same spirit Dr. Saurabh Arora has got breakthrough
in the enhanced Bio-availability of phyto-derivatives by modification of Drug Delivery that
is “Self-Nano Emulsifying System”. We have been awarded the US Patent for this and
about to get an Indian patent as well.
The marketing and sales team at “Arbro Consumer Wellness” will enable us reach millions of
people around and bring health and happiness in their lives.
Brand
SNEC-30 is “Self Nano Emulsifying Curcumin 30mg” is our original patented formulation
which is the highest bio-available form of phyto-derivative Curcumin. This formulation is
based on Nano Technology and knows no barriers. Other simple curcumin formulations get
trapped in the intestine and hepatic first pass system and fail to achieve the desired results.
SNEC-30 by its Self Nano Emulsifying properties does not get trapped in the Intestine and
reaches directly into the Lymphatic system bypassing the Hepatic First pass system making it
the highest Bio-Available Curcumin compound. Radio Labelled studies show that it crosses
even BBB and reaches to even the soft tissues in the extremities. This enables the SNEC-30
to work wonders at very low doses.
More than 4000 research papers published on Curcumin in last 5 years suggest it works in
multi therapeutic domains. It is a very good chemo and radio protective, several times more
potent analgesic and anti-inflammatory than many available painkillers, an anti-oxidant,
Immuno-modulator and so on.
11
With this brand we intend to give a powerful contrivance to the millions of Doctors in their
practice for bringing smile on the face of their patients.
Quality:
Arbro maintains strict quality parameters for the manufacturing and distribution of products.
Achieved head of state position through our supreme levels of quality. We believe to deliver
highest level of quality and customer satisfaction. ISO 9001:2008 Certification and ISO / IEC
17025:2005 Accreditation explain our efforts to achieve maximum quality level. Quality
Assurance is a measure of the degree of sophistication of managerial, scientific and technical
tools used in the plan and execution of product process of any industry. In the pharmaceutical
industry QUALITY is the most fundamental task of Total Quality Management. We at Arbro
are committed to ensure that every product we manufacture and distribute meets with and
conform over its shelf life to internationally accepted standards of quality, purity, efficacy
and safety. Arbro quality focus encompasses all areas of operation – from procurement of the
best raw materials, to optimum manufacturing technology, to precise delivery of the
customer’s requirements – thus ensuring a rapid access of both domestic and global markets.
All our systems are well documented and are implemented by an expert trained staff with a
line of reporting that is independent of manufacturing.
We have state of the art laboratory with the advanced infrastructure and procedures to support
a stringent quality policy. At our manufacturing site, the latest analytical instruments and
firmly monitored quality assurance and quality control systems ensures consistent quality of
our products.There is regular validation of processes, test methods, water and environment, as
well as periodic calibration of all instruments, to guarantee product output of consistent top
quality. Vendor evaluation and selection is carried out as per stringent quality, product,
manufacturing, service and delivery parameters to ensure the highest quality raw materials.
The Quality Assurance Department accomplished by qualified personnel, constantly monitors
quality parameters and performing systematic sampling and testing at every stage from raw
materials, through each process of intermediate and finished products. A full fledged Quality
Control Laboratory which follows Good Laboratory Practices and incorporates the most
modern testing equipment, in order to perform the stringent quality analytical tests prescribed
by different national and International Pharmacopoeia.
12
Products:
Arbro Pharmaceuticals Limited has a huge product basket includes: Branded and Generic
Formulations covering majority of therapeutic segments for all oral dosage forms.
Therapeutic Categories
Antibiotics
Ami Tubercular
Anti Epileptic
Antacid
Anti Diabetic
Anti Malarial
Anti Histaminic
Cardio Vascular
Anti Diarrhea
Laxative
Anti Migraine/ Anti Vertigo
Cough Medicine
Analgesics/ Antipyretics
Anti Asthmatic
Psychotrapic
Anti Emetic/ Anti Nausea
Steroids
Minerals/ calcium
13
Director Details
to operations/ activities of the firm. The end product of accounting constitutes financial
statements such as Balance sheet, The Income Statement and The Statement of changes in
Financial position/ sources and uses of funds statement/ Cash flow statement. The
information contained in these statements and reports assists Financial Managers in assessing
the past performance & future direction of the firm and meeting the legal obligation, such as
payment of taxes and so on. Thus Accounting and Finance are functionally closely related.
14
STRUCTURE OF ACCOUNTS DEPERTMENT
COMMERCIAL
MANAGER
ACCOUNTS
HEAD
1. Financial:
Funds are arranged from head office for the payment of expenses, engineering bills,
transportation bills etc. Reports are maintained related to operating expenses that means total
expenses during the month like, salary, wages, freight, welfare etc.
2. Excise:
Accounts of modvat received and payment of the central excise duty on the finished goods
dispatches.
3. GST:
Accounts of GST received on purchase and payment of GST on finished goods dispatches.
15
The various duties and responsibilities of Accounts department:
7. MIS Activities
16
RESEARCH
METHODOLOGY
17
OBJECTIVES OF STUDY
The major objectives of the resent study are to know about financial strengths and weakness
To evaluate and analyze various facts of the financial performance of the company.
Secondary Objectives:
To simplifies and summarizes a long array of accounting data and makes them
understandable.
18
Research methodology is a way to systematically solve the research problem. it may be
understood as a science of studying how research is done scientifically. So, the research
methodology not only talks about the research methods but also considers the logic behind
Research Design:
Descriptive research is used in this study because it will ensure the minimization of bias and
maximization of reliability of data collected. The researcher had to use fact and information
already available through financial statements of earlier years and analyze these to make
critical evaluation of the available material. Hence by making the type of the research
From the study, the type of data to be collected and the procedure to be used for this purpose
were decided.
Data Collection:
The required data for the study are basically secondary in nature and the data are collected
Primary Data:
Primary data are those data, which is originally collected afresh. In this project,
Questionnaire Method and Interview Method has been used for gathering required
information.
19
Sources of Data:
The sources of data are from the annual reports of the company from the year 2007-
2008 to 2009-2010.
The data collected were edited, classified and tabulated for analysis. The analytical tools used
in this study.
Comparative statement.
Trend Percentage.
Ratio Analysis.
RATIO ANALYSIS
Financial Analysis:
weaknesses of the firm and establishing relationship between the items of the balance sheet
Financial ratio analysis is the calculation and comparison of ratios, which are
derived from the information in a company’s financial statements. The level and historical
20
trends of these ratios can be used to make inferences about a company’s financial condition,
its operations and attractiveness as an investment. The information in the statements is used
by;
Trade creditors, to identify the firm’s ability to meet their claims i.e. liquidity position
of the company.
Investors, to know about the present and future profitability of the company and its
financial structure.
Ratio Analysis:
The term “Ratio” refers to the numerical and quantitative relationship between
Percentages
Fractions
Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the
financial statements. So that the strengths and weaknesses of a firm, as well as its historical
performance and current financial condition can be determined. Ratio reflects a quantitative
2) Financial analyst.
3) Mutual funds.
21
4) Stock broker and stock exchange authorities.
5) Government.
6) Tax department.
7) Competitors.
9) Company’s management.
the process of establishing and interpreting various ratios for helping in making certain
There are a number of ratios which can be calculated from the information given in the
financial statements, but the analyst has to select the appropriate data and calculate only a few
appropriate ratios. The following are the four steps involved in the ratio analysis.
Selection of relevant data from the financial statements depending upon the objective
of the analysis.
22
Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms
or the comparison with ratios of the industry to which the firm belongs.
Classification of Ratios:
A) Liquidity Ratios
3) Indicates present cash solvency and ability to remain solvent in times of adversities.
Current ratio
Current ratio is useful to find out solvency of the company. High current ratio
indicates that company will be able to pay its debt maturity within a year. Low current ratio
indicates that company will not be able to meet its short term debts.
Current Assets
Current Ratio=
Current Liabilities
23
(b) Quick Ratio:
Quick ratio is also known as acid test ratio. It indicates immediate ability of
a company to pay off its current obligations. And also shows the solvency and financial
soundness of the business. Greater the ratio stronger the financial position of the
company.
Quick Assets
Quick Ratio=
Quick Liabilities
B) Profitability Ratios:
utilization of business assets and funds are done efficiently and best way or not , so as to
a) Related To Sales:
production as well as pricing. Decrease in the ratio indicates reduction in selling price or
increase in the cost of production or decline in the business activity. Increase in the ratio
24
Gross Profit
Gross Profit Ratio = X 100
Sales
Operating Profit
Operating Profit Ratio: X 100
Sales
It shows the overall efficiency of the business. Higher the ratio indicates
higher efficiency of business and better utilization of total resources. In addition it indicates
1) Return On Investment:
It measures the overall performance of the company that is utilization of total resources and
funds available with the company. Higher the ratio better utilization of funds. It indicates
25
EBT But AT
It measures the productivity of shareholders funds. Higher the ratio indicates better utilization
C) Turnover Ratio-
It measures how efficiently the assets are employed. These ratios are
period usually a year. Higher the ratio more efficient is the management of inventory. But
higher inventory turnover ratio is not always good if it is lower level of inventory because it
invites problem of frequency stock outs and loss of sales and customer or goodwill.
26
Cost of Goods Sold
Inventory Turnover Ratio:
Average Stock in Hand
management of debtors. Smaller no. of dates, higher will be the efficiency of the collection
department.
Avg. collection period should not exceed 1.5 times the credit period allowed.
Receivable (Debtors)
Avg. Collection Period:
27
4) Fixed Asset Turnover Ratio:
It indicates efficiency in the utilization of fixed assets like plant and machinery by
management.
Net Sales
Fixed Assets Turnover Ratio =
Fixed Assets
relationships between the amount invested in the assets and the result accrues in terms of
sales.
Net Sales
Total Asset Turnover Ratio =
Total Assets
28
D) Financial Ratio –
Term loan and capital which does not carry fixed rate of interest or dividend.
When the ratio is more than one then the capital is said to be highly geared that means low
equity share capital and greater amount of preference share capital, debenture, long term loan.
When the ratio is less than one then the capital is said to be very lowly geared
that means low earning per share. Equity shareholder will control the company. It results in
over capitalization.
2) Proprietary Ratio:
with the total funds invested in business. It indicates long run solvency of the business. High
ratio means company is less dependent on outside funds and company is quite solvent. Low
ratio indicates company is more dependent on outside funds solvency and solvency may be
danger.
Proprietary Fund
Proprietary Ratio:
Total Assets
29
3) Stock Working Capital Ratio:
indicates strength and weaknesses of working capital; high ratio indicates slow movement in
stock and also reflects better management of inventory as well as working capital.
Stock
Stock Working Capital Ratio:
Working Capital
Higher the ratio less secured is the creditors, lower the ratio creditors enjoy
Debt
Debt Equity Ratio:
Equity
30
2) Debt Asset Ratio:
It indicates the percentage of the total asset created by the company through
short term and long term debt. Higher the ratio less safe is the creditors and vice versa.
Debt
Debt Asset Ratio:
Total Assets
outsiders with owner’s contribution. Lower the ratio better is the solvency of the business
This indicates earning capacity of the business to pay its interest burden.
31
F) Dividend Ratio:
These ratios for a particular company are relevant for an investor for
making an investment decision as to whether he should invest in the share of the company.
This ratio indicates weather over a given period their have been change in
the wealth per share holder. Other the ratio increases the possibility for the higher dividends
It indicates relationship between market price of the share and the current
earnings per share. It helps to determine the future price of the share.
3) Payout Ratio:
32
It indicates how much proportion of the earning per share is retaining for
percentage of is investment. It indicates the feature like the profitability and dividend policy
of the company. When dividend yield is lower than the expected return, market price for the
Equity Dividend
Dividend per Share:
No. Of Equity Shares
Dividend Yield
Market Price per Share
33
Interpretation of the Ratios:
The Interpretation of ratios is an important factor. The inherent limitations of ratio analysis
should be kept in mind while interpreting them. The impact of factors such as price level
The calculation of ratios may not be a difficult task but their use is not easy.
Following guidelines or factors may be kept in mind while interpreting various ratios is
Selection of ratios
Use of standards should also be kept in mind when attempting to interpret ratios.
34
DATA ANALYSIS
AND
INTERPRETATION
35
1)Financial stability Ratios:
To measure the liquidity of a firm the following ratios can be calculate the following
ratios,
a) CURRENT RATIO:
Current Asset
Current Ratio:
Current Liabilities
Table1.a:
(Rupees in lakhs)
Year Current Assets Current Liabilities Ratio
Current Ratio
2.5
2.2
2
1.8
1.5 1.5
1 Current Ratio
0.5
0
2015-16 2016-17 2017-18
The current ratio of the firm measures the short term solvency. It indicates the rupees of
36
The above chart shows that decline trend from the F.Y. 2015 to F.Y. 2017.
This is mainly due to increasing creditors from F.Y. 2015 to F.Y. 2017. In the F.Y. 2015-16,
it shows 2.2:1 which was higher than the standard ratio i.e. 2:1. There was continuous decline
in the current ratio which is not good sign for the company.
b) QUICK RATIO:
Quick Asset
Quick Ratio:
Quick Liabilities
Table.1.b:
(Rupees in lakhs)
Year Quick Asset Quick Liabilities Ratio
Quick Ratio
1.2
1.07
1 0.975
0.87
0.8
0.6
Quick Ratio
0.4
0.2
0
2015-16 2016-17 2017-18
37
ANALYSIS AND INTERPRETATION:
The above chart indicates the decline trend from the F.Y. 2015 to F.Y. 2017. In the F.Y. 2016
and F.Y. 2017 the quick ratio of the company was below standard that means large part of
current asset of the firm is tie up in slow moving and unsellable investment of Finish goods
and also slow moving of debts, but, the overall trend shows declining which is not a positive
2) PROFITABILITY RATIO :
A) RELATED TO SALES
Table 2.A.a:
(Rupees in lakhs)
Earning Before
Year Sales Ratio
Interest Taxes
38
Operating Profit Ratio
12.50%
11.00%
9.50%
9.00%
2015-16 2016-17 2017-18
The above chart shows that there was a continuous decreased in the ratio. That means the
ratio was decreased from 12.02% in FY 2015-16 to 10.22% in FY 2017-18. This is due to
Net Profit
Net Profit Ratio: X 100
Sales
Table .2.A.b:
(Rupees in lakhs)
Year Net Profit Sales Ratio
39
Net Profit Ratio
8.50%
8.00%
6.50%
31-3-15 31-3-16 31-3-17
The above chart indicates the Net Profit Ratio in 2015-16 was 7.88 % which
further increases to 8.35% in FY 2016-17. Further it had fallen to 7.25% in FY 2017-18. That
means company suffers the losses after the FY 2016-17. In FY 2016-17 the net profit was
a) Return on investment:
40
Table 2.B.a:
(Rupees in lakhs)
Earnings Before
Total Asset /
Year Interest But After Ratio
Liability
Tax
Return On Investment
16.50%
16.00%
15.50%
15.00%
14.50%
16.17% Return On
14.00% 15.74% Investment
13.50%
13.00%
13.55%
12.50%
12.00%
2015-16 2016-17 2017-18
41
Table .2.B.b:
(Rupees in lakhs)
Net Profit after Equity shareholder
Year Ratio
Tax fund
20.00%
15.00%
0.00%
31-3-15 31-3-16 31-3-17
This ratio indicates how well the firm has used the resources of owner. The earning of a
satisfactory result is the most desirable objective of the business. This ratio is important to
The above chart shows that the ratio was almost constant in first two years. Further it
declined to 15.28% this is due to increased in the reserve and surplus of the company.
Higher the ratio indicates better utilization of recourses but in APL It shows decreasing trend
42
3. TURNOVER RATIOS:
Net Sales
Inventory turnover ratio:
Closing Stock
Table 3.a:
(Rupees in lakhs)
Year Net Sales Closing Stock Ratio
The above chart shows that the stock gets converted into cash was 6.46 times, 7.02 times and
8.18 times in the FY 2015 to 2016 respectively. If we compared the figures of sales and
inventory of first two years, the level of inventory is almost same, but in the FY 2016 and17
the sales was increased with low cost of inventory which implies the management is
43
b) Average Collection Period:
Receivable (Drs)
Average collection period:
Average sales per day
Table 3.b:
(Rupees in lakhs)
Average sales per
Year Receivable (Drs) Ratio
day
62 61.62
60
59.24
58
Average Collection
56 Period
54.77
54
52
50
2015-16 2016-17 2017-18
The above chart shows that the collection period was high in FY 2016-17i.e. 62 days. This
means, a very long collection period would imply either for credit selection or an inadequate
collection. The average collection period short in FY 2017-18 which means that better is a
44
c) Receivable turnover ratio:
Credit sales
Receivable turnover ratio:
Average debtors
Table 3.c:
(Rupees in lakhs)
Year Credit sales Average debtors Ratio
6.6 6.6
6.4
6.2
6.1 Receivable Turnover
6 Ratio
5.9
5.8
5.6
5.4
2015-16 2016-17 2017-18
This ratio indicates the average credit period enjoyed by debtors. The above chart shows that
the customers to whom the credit sales are made pay 6.1times, 5.9 times & 6.6 times in the
FY 2015 to 2017 respectively. In the FY 2016-17 THE DEBTORS TURNOVER RATIO was
low which indicates the absence of a strict credit policy and also point out that there were
45
delayed to recover the revenue from sales. This point out into the huge block up of working
It was high in FY 2017-18 i.e. 6.6 times which indicate prompt payment on
Net sales
Fixed asset turnover ratio:
Fixed assets
Table 3.d:
(Rupees in lakhs)
Year Net sales Fixed assets Ratio
46
ANALYSIS AND INTERPRETATION:
It indicates efficiency in the utilization of fixed assets like plant and machinery by
management.
From the above chart the fixed asset turnover ratio of APL slowly increases
over period of time. From this we can say that a company has been successful to manage and
utilized its assets. Also a company has been more effective in using the investment in fixed
Net sales
Total asset turnover ratio:
Total asset
Table.3.e:
(Rupees in lakhs)
Year Net sales Total asset Ratio
47
Total Asset Turnover Ratio
1.98
1.96 1.962
1.94
1.92
1.9 1.898
1.88 Total Asset Turnover
1.86 Ratio
1.84 1.845
1.82
1.8
1.78
31-3-15 31-3-16 31-3-17
The total asset turnover ratio indicates the firm’s ability to generate sales from all financial
resources.
From the above chart the total asset turnover ratio was decreased from 1.9 times in FY 2015-
16 to 1.8 in FY 2017-18. The total asset turnover of the company was 1.8 times implies that
APL generate a sell of Rs. 1.8 for one rupee investment in fixed and current asset together.
Table 3.f:
(Rupees in lakhs)
Net credit
Year Average creditors Ratio
purchases
48
Creditor's Turnover Ratio
6
5.3
5
4.8
4 4
3 Creditor's Turnover
Ratio
2
0
31-3-15 31-3-16 31-3-17
The above chart dips from 5.3 times to 4.0 times from the FY 2015-16 to FY 2017-18. From
this we can interpret that APL has successful to manage its creditors because, over the years
trend is declining.
4) Financial ratio:
a) Proprietary ratio:
Proprietary Fund
Proprietary ratio: X 100
Total assets
Table 4.a
(Rupees in lakhs)
49
Proprietary Ratio
90.00%
88.00%
86.00%
84.00%
82.00%
80.00% 87.62% Proprietary Ratio
78.00%
76.00% 81.19%
78.46%
74.00%
72.00%
31-3-15 31-3-16 31-3-17
From the above chart the ratio was consistently increased in three years. The
ratio was high in the FY 2009-10 i.e. 0.87%. It indicates the company is quite solvent.
Stock
Stock working capital ratio:
Working capital
Table 4.b:
(Rupees in lakhs)
50
Stock Working Capital Ratio
120.00%
100.00%
80.00%
20.00%
0.00%
31-3-15 31-3-16 31-3-17
The above chart shows the continuous increase in the trend of the ratio. The weightage of
stock in the current assets is high in the FY 2017 – FY 2018 as compare to other FY. That
owner’s fund.
Debt
Debt equity ratio:
Equity
51
Table 5.a: (Rupees in lakhs)
The above chart shows the continuous increase in the trend of the ratio. The
weightage of stock in the current assets is high in the FY 2009 – FY 2010 as compare to other
owner’s fund.
Debt
Debt equity ratio:
Equity
Table 5.a:
(Rupees in lakhs)
52
Debt Equity Ratio
30.00%
25.00%
20.00%
15.00%
Debt Equity Ratio
24.47%
10.00% 20.84%
5.00% 12.14%
0.00%
31-3-15 31-3-16 31-3-17
This ratio is useful to judge long term financial solvency of a firm. This ratio reflects the
relative claim of creditor and shareholder against the assets of the firm.
From the above chart the debt equity ratio of the APL was consistently declined from 24.47%
the firm had less claims from outsiders as compared to those of owner.
Debt
Debt asset ratio:
Total assets
Table5.b:
(Rupees in lakhs)
Year Debt Total assets Ratio
53
Debt Asset Ratio
25.00%
20.00%
15.00%
0.00%
31-3-15 31-3-16 31-3-17
From the above chart the debt asset ratio was consistently decreased from
Table 5.c:
(Rupees in lakhs)
Total Capital
Year Long Term Debt Ratio
Employed
54
Long Term Debt to Total
Capitalisation Ratio
8.00%
7.00%
6.00%
5.00%
4.00% Long Term Debt to Total
7.07%
3.00% 6.24% Capitalisation Ratio
2.00%
1.00% 2.12%
0.00%
31-3-15 31-3-16 31-3-17
The above chart indicates that the ratio was consistently decreased from 7.07%
in FY 2015-16 to 2.12% in FY 2017-18, means that APL is successful to manage its long
term debt which further implies that the APL is in better position in terms of solvency.
Table 5.d:
(Rupees in lakhs)
Earnings Before
Year Interest Ratio
Interest And Tax
55
Interest Coverage Ratio
100
90 89.51
80
74.91
70 68.16
60
50 Interest Coverage
40 Ratio
30
20
10
0
31-3-15 31-3-16 31-3-17
From the above chart the trend of the ratio was decreased from 89.51 times in
FY 2015-16 to 68.16 times in FY 2017-18. From this, it indicates that APL is trying to reduce
its interest burden which is good sign for both i.e. there creditors and shareholders.
6) Dividend Ratio:
These ratios for a particular company are relevant for an investor for making an investment
56
Table .6.a: (Rupees in lakhs)
Earnings After
No. Of Shares Paid
Year Tax – Preference Ratio
Up
Dividend
From the above chart the EARNING PER SHARE of the company was high
in FY 2016-17 i.e. Rs.43.43. This means that as compare to the other FY there has been
b) Payout Ratio:
57
Table 6.b: (Rupees in lakhs)
Payout Ratio
33.00%
32.00%
31.00%
30.00%
29.00%
31.90% Payout Ratio
28.00%
30.35%
27.00%
27.63%
26.00%
25.00%
31-3-15 31-3-16 31-3-17
It indicates how much proportion of the earning per share is retaining for
The above chart indicates that the pay out ratio was high in FY 2017-18 i.e.
31.90%. If the divided pay out ratio is subtracted from 100, retention ratio is obtained. Means
that in APL the retention ratio from FY 2015 to FY 2017 was 69.65%, 72.37%, 68.1%
respectively and APL is ploughed back its maximum percentage of its profit.
58
c) Dividend per shares ratio:
Equity dividend
Dividend per share:
No. of equity shares
No. Of Equity
Year Equity Dividend Ratio
Shares
12.15
12.1
12.05
Dividend Per Share Ratio
12.14
12
11.95 12 12
11.9
31-3-15 31-3-16 31-3-17
The dividend per share ratio of the APL was almost same i.e. Rs. 12 in the FY
2016 to FY 2017 .But if we compared earning per share with Dividend per share it shows that
Earning per share is more than Dividend per share. In this case of Earning per share,
adjustment of bonus or right issue should be made while calculating Dividend per share over
the year.
59
FINDINGS
60
1. The ideal current ratio is 2:1 which the firm obtains only in the FY 2015-16 it shows the
positive impact.
2. The ideal liquid ratio is 1:1 which is also obtained by the firm in FY 2015-16 and FY
2016-17 it indicates that APPL, without selling its inventory, has enough short-term assets to
3. The net profit ratio shows fluctuating trend, it shows that more or less the company is
4. The operating profit ratio of the APPL is in fluctuating manner as 12.02%, 11.97%, and
5. The return on investment ratio is increased from 0.15% to .016% in FY 2015 to FY 2016
7. The fixed asset turnover ratio of the firm is in increasing trend from the F.Y. 2015 to 2017,
8. The proprietary ratio of the firm shows increasing trend, means that the long term solvency
9. APPL borrowed loans in such a way that the cost of this debt financing do not outweigh
the return that the company generates on the debt through investment and business activities
10. The APPL is successful to manage its long term debt. In the FY 2015-16 the long term
debt was Rs. 4660.29 which was reduced to Rs. 1608.29 in FY 2017-18.
61
11. APPL is far better in covering its fixed cost with the interest coverage ratio.
12. The sales, profit before tax, profit after tax shows the increasing trend during the period
under review. It depicts that the company is working with more efficiency.
13. The company has not made any preferential allotment of shares and also company has not
62
SUGGESTIONS
AND CONCLUSION
63
Suggestions:
1. The CURRENT RATIO of APPL was less than the standard in FY 2016-17 and 2017-
18i.e.1.8, 1.5 respectively. A low current ratio indicates that co will not be able to meet its
2. APPL should look into its credit policies in order to ensure the timely collection of
3. There is decreasing trend in interest coverage ratio which is due to heavy investment
which further effect on the return on investment ratio. So APPL should keep up its
4. The APPL should formulate the strategy to use the fixed assets more effectively to
6. Inventory is the biggest item of balance sheet that must have demanded a large amount of
7. There should be efficient utilization of share holder fund to increase return on investment
CONCLUSION:
management a company cannot in this competitive world. A Prudent financial Manager has
The company’s overall position is at a good position. Through the losses were
there in the FY 2011-2012, they were able to come out of it successfully and regain into
profitable scenario. Particularly the last three year’s position is well due to raise in the profit
level from the FY 2015 to FY 2017. It is better for the firm to diversify the funds to different
64
On a whole ARBRO Pharmaceuticals Private Limited has once again
demonstrated its potential to ride through the difficult times. Despite the slowdown in its
growth, it has determined to grab numerous opportunities that are facing Indian
Pharmaceuticals Industry.
sector. Car ownership in India stands at little more than one percent. However, rising
affordability and the launch of economical cars such as the Tata Nano are expected to propel
the market for OEM coatings and refinishes in the coming years.
Higher demand for marine paints can be expected in the next decade, once
investments in ports and port development have started to reach fruition. As India is hopeful
of competing with other established shipbuilding nations, the multinationals are likely to find
Also other segments are showing promising opportunities to grow. With these
many opportunities at hand along with the potential player who would be able to make use of
So from this we can conclude that there is a better opportunities for investors
65
LIMITATIONS
66
The main limitations of the project undertaken are as under:-
Time: The time of around two months was too short to study as wide subject like
Financial Analysis.
Busy Schedule of Concerned Executives: The concerned executives were not having
very busy schedule because of which they were reluctant to give appointment.
67
BIBLIOGRAPHY
https://arbropharma.com/
68