Professional Documents
Culture Documents
Afs Project
5/12/11
VISION STATEMENT
“To become a market leader in the Industry setting out high
quality standards for the Company and others to follow”
MISSION STATEMENT
To produce/manufacture quality sugar and molasses by maintaining a
high standard of efficiency and staying competitive to ensure
customer satisfaction
Ratio Analysis
Now we shall find out the ratios of the Kohinoor Sugar Mills Limited to
check the condition of the firm. We will find out the Following Ratio
Liquidity Ratio
Those ratios which shows how quickly a firm meets its short term
obligations. Current liability
Following are the liquidity Ratio
• Current Ratio
• Quick Ratio
• Cash Ratio
Current Ratio
The current ratio is obtained by dividing the current assets by current
liabilities. Current assets normally includes: cash, marketable
securities, account receivable and inventories.
Formula
Computation
Analysis
The firm current ratio is in poor condition so it means that they need
financing to cover up their current obligations.
Quick Ratio.
The quick ratio can be calculated by deducting the inventories and
prepayments from the current assets and then dividing the remainder
by current liabilities. Inventories are typically the least liquid of the
firm current assets hence they are the current assets on which losses
are most likely to occur in a bankruptcy.
Formula
Computation
The cash ratio gives the information about the coverage of the current liabilities
through cash which is the liquid. It should be 1: 1 as this is considered as
satisfactory. The liquidity is calculated by adding cash and marketable securities.
The Cash Ratio of Kohinoor Sugar Mills Limited is:
Formula
ANALYSIS
The cash ratio tells us about the covering of short term obligation with
cash and cash equivalent it should the firm quick availability of the
cash and cash equivalent. This shows firm quick liquidity.
LEVERAGE RATIO
Those ratios which show extend to which it is financed by Debt.
Following are the leverage ratio
• debt to equity
• Total debt to total asset
• Total debt ratio
Debt to equity
This ratio asses the extent to which the firm is using borrowed money. This
measures how much effective the firm is in usage of the debt. This ratio tells the
amount of debt taken against each rupee of equity.
The debt to equity ratio of Kohinoor Sugar Mills Limited is:
Formula
Computation
Formula
Years Current liabilities + LT Debt Total Debt + Total Equity Debt Ratio
2005 375,052,080 478,256,327 78.42%
2006 626,733,773 729,938,020 85.86%
Analysis
That means for paying the debt we have 78% owner equity and we
have a 22% liabilities. And in 2006 we have 85 % are owner equity
and 15 percent debt.
Profitability ratios
Profitability is the net result of the number of policies and decisions. The ratios
examined thus far provide useful clues as tot the effectiveness of the firms
operations.
The profitability ratios are:
• Net profit margin
• Gross profit margin
• Operating profit Margin
• Basic earning power
• Return on total assets
Computation
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11
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Years Net Profit After Taxes Net Sales Net Profit Margin
2005 54,081,708 852,372,071 6.34%
2006 8,141,611 913,370,379 0.89%
ANALYSIS
This ratio tells us the percentage of sales that is the profits this ration
also provide information about the profitability of the firm. The more
the net profit margin the more is the profitability of the firm. In case of
Kohinoor sugar the firm has maximum profit which means that the
firm profitability is good.
Formula
Computation
Analysis
This ratio tells us about the percentage of gross profit from the sales
this also shows the profitability of the firm after the cost of sales the
difference between the gross profit margin and the sale is the
percentage of the cost of sales. in case of the Kohinoor sugar the
gross profit margin is good.
Computation
Analysis
This ratio tells us about the operating profitability of the company.
This ratio gives the percentage of sales that is the operating profit.
The difference between the operating margin and the gross profit
Formula
Years Net Profit After Taxes Total Assets Return on Total Assets
2005 54,081,708 911,218,836 5.94%
2006 8,141,611 1,307,811,430 0.62%
Analysis
This ratio tells us about the return that would the total capital employed
generate in the firm. The total capital includes the all form of debt and equity.
This ratio gives us the return on the total capital employed. In case of the
Kohinoor sugar in early year it generate the negative return but by time the
return become positive.
Basic earning power
The basic earning power ratio is calculated by dividing earning before interest
and taxes this ratio shows the raw earning power of the firm assets before the
influence of taxes and leverages.
Receivable turnover
The receivable turnover is defined as the sales divided by receivables. This ratio
shows how many times in a year the receivable received by the customer it
shows how much the firm is efficient tin collecting the account receivables.
The Kohinoor receivable turnover is:
Formula
Formula
Computation
The inventory turnover ratio is defined as CGS divided by the inventories. This
ratio shows that in a year how many times the inventory turn in to the sales. This
shows that how much firm is efficient in managing and recycling inventory in a
year either it is a lot of inventory without circulating or not.
The Kohinoor Sugar Mills Limited the inventory turnover ratio is:
Formula
Computation
Formula
Computation
The payable turnover means in a year how many time they pay the credits of
their purchases which means after credit purchases how many times a year they
pay the credits.
The Kohinoor Sugar Mills Limited payable turnover is:
Formula
Computation
Formula
Computation