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Patson Chemical Pvt. Ltd.

A Project Report Submitted in Partial fulfillment of award of MBA Degree

Project Guide Prof.Parnika Jha

Submitted By Ketan P. Dhameliya Roll No : 22

S. K. PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES Gandhinagar, India December 2011

CERTIFICATE
This is to certify that Mr.Ketan Dhameliya of S.K.Patel Institute of Management and Computer Studies, Gandhinagar has submitted his Winter Project titled, The Project Report on Patson Chemical Pvt. Ltd. in the year 2011-2012 in the partial fulfillment of Master of Business Administration.

Dr. N N Jani Director

Prof. Sonu Gupta HOD

Prof.Parnika jha Project Guide

DECLARATION
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I, hereby declare that the Winter Project titled, The Project Report on Patson Chemical Pvt. Ltd is original to the best of our knowledge and has not been published elsewhere. This is for the purpose of partial fulfillment of Kadi Sarva Vishvavidhyalaya requirements for the award of the title of Master of Business Administration, only.

Signature Ketan P. Dhameliya MBA SEM-I

PREFACE
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The career of the person depends upon many things. One of them is the knowledge. He/she acquires through theory is not sufficient to develop. His/her personality and to develop some skills, but now a days, it is no more. Practical training is necessary to implement the theories & acquire the knowledge, so far this purpose our institute s k patel institute of management and computer studies affiliated by Kadi university, Gandhinagar arranged 4 days of summer training programmed which is necessary for any M.B.A. student. That is in order to sharpen our skills and to bridge the gap of the theory and practice. I completed my training at PATSON CHEMICALS. The training report is made with clear objective of study of PATSON CHEMICALS. How its working. The report will give the brief details of all the department of PATSON CHEMICALS. My report provides you all the information related to the various departments of PATSON CHEMICALS. Its current affaires and working. I receive all information and co-operation from the staff members. I hope so, these reports fulfill need of the educational requirements. Hence, this report is designed with the objective to gain practical knowledge is undertaken on a chemical industry. How its working and its finance department.

ACKNOWLEDGEMENT
I am glad to express my profound sentiments of gratitude to all who rendered their valuable help for the successful completion of this project report titled, financial performance of PATSON CHEMICALS. And to know the functions of Finance and Accounts department. I record my deep sense of gratitude to Mr.Mitul Patel, who had given me a chance to do a project under this root of PATSON CHEMICALS, and given opportunity to know the functions of finance & accounts department. I want to say specially thanks to Dr.N N Jani to allow me to under go training the PATSON CHEMICALS and Prof.Parnika Jha provides me to guideline how to make a good report. I am very thankful to all the member of the company for giving me necessary information related to the department at which they are working and giving their valuable time for guiding and providing lots of information concerning. My genuine sense of gratitude goes to the respective universities that gave me a chance to brighten my academic qualification that provided me this opportunity to have a practical knowledge of relevant fields.

EXECUTIVE SUMMARY
This Winter Project Report of the Patson Chemical Pvt. Ltd. includes various functions like production, marketing, finance and human resource. This report is prepared after the training of 4 days at the companys location at Bhavnagar. It includes the financial analysis of the company and at the end conclusion is given. The term Financial Analysis also known as analysis and interpretation of financial statements refers to the process of determining financial strength and weaknesses of the firm by establishing strategic relationship between the items the balance sheet, profit and loss account and other operative data.

INDEX
Sr. No. 1 2 3 4 5 6 7 8 9 10 10.1 10.2 10.3 11 12 13 14 15 16 17 18 PARTICULAR COMPANY PROFILE HISTORY OF THE PATSON CHEMICALS ABOUT PATSON CHAMICALS PRODUCT PROFILE MANUFACTURING PROCESS ORGANISATION STRUCTURE OBJECTIVE OF RESEARCH SCOPE OF THE STUDY LIMITATION OF THE STUDY WORKING CAPITAL CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL COMMON SIZED STATEMENT OF PROFIT & LOSS A/C COMMON SIZED STATEMENT OF BALANCE SHEET PROFITABILITY RATIOS LIQUIDITY RATIOS ACTIVITY RATIOS SUGGESTIONS CONCLUSION BIBLIOGRAPHY Page No. 9 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25 28 30 35 36 37

COMPANY PROFILE
Name Factory Address : PATSON CHEMICALS : Plot no. 92, Phase- 1 G.I.D.C. Chitra, Bhavnagar 364004 8

Office Address Type of Business Names of Partner

: As above. : Partnership Firm : Mr. Mitul M. Mavani, Mr. Damjibhai M. Patel, Mr. Valjibhai L. Lathiya, Mr. Govindbhai D. Malaiya, Mr. Pankajbhai N. Lathiya, Miss. Bhanuben C. Malaiya.

Banker Establish Contacts (O) (R) Fax Website E-mail

: State Bank of India. (Chitra Branch) : 1981 : (0278) - 2446097, 2448139 2447417 : (0278) 2445097 : www.patsonchemical.com : contact@patsonchemical.com

HISTORY OF THE PATSON CHEMICAL


PATSON CHEMICALS has been a leader unit in manufacturing of Bulk Drugs and Fine chemical since it commenced in 1981. The founder of this unit Mr. D.M. Patel continuously upgraded the quality of product to the satisfaction of renowned customers all round India and abroad. Continuous progress has been achieved through the skills of their workforce, commitment to new technologies and dedication to good customer service. This

has leaded the company to expand its business in Singapore, Canada, Germany, Bangkok and South Africa. The Sister concern of Patson Chemical is Patson Laboratories Pvt. Ltd been engaged in manufacturing of tablets, capsules and liquid orally. PATSON CHEMICALS production unit of the chemicals is sited in the industrial spot of Bhavnagar i.e. G.I.D.C. Chitra for getting the advantage of locality. It is not having any branch, offices, factory and warehouse. The company has been documented as a partnership firm in 1981 by Mr. N.H.LATHIYA. He was a main founder of PATSON CHEMICALS. Then the control of the firm was given to DAMJIBHAI PATEL. He had worked hard to accelerate the growth of the firm and is doing well for the development of the firm. After the smooth function of the firm, Mr. M. M. Mavani joined the firm in the year of 2000.

ABOUT PATSON CHAMICALS


Young and dynamic technocrats manage the company. They persevere to provide the best quality and service to their customers. To achieve the highest standards of quality, and thoroughly inspect the inward goods, in-process materials and finished products. PATSON CHEMICALS have a well equipped laboratory where they use modern techniques for research and development of new products. PATSON CHEMICALS one of the most

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important strategy is "qualitative business". We consciously put these actions in our everyday lives.

Achieving customers satisfaction is fundamental to business. Provide products and services of the highest quality. Practice dignity and equity in relationship, and provide opportunities for people to realize their full potential. Foster mutually beneficial relations with all business partners. Manage operations with high concern for safety and the environment. Be a responsible corporate citizen.

PRODUCT PROFILE
Basically the firm manufactures chemicals for the purpose of making drugs for the disease. The firm use very complicated process for getting this chemical. Thus procedure takes 5 days to get prepared.

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The PATSON CHEMICALS provide the raw material to the large scale industries. The products of the firm are as bellow: N-BUTILE BROMIDE (chemical) DIE-ETHILE EMINE (chemical) OXIPHINE BUTAZONE (drug) PHENYL BUTAZONE (drug)

The products are raw material for large scale. They made the pain-killer tablet and drug. The production of the PHENYL BUTAZONE was initiated in 1987. It was sold in tons to pharmaceutical companies. It was exported also in many countries. As we know that 1992 to 1998 was the golden era of the company. These chemicals were demanded very much.

MANUFACTURING PROCESS
PATSON CHEMICALS manufactures the product as per the UNITED STATE PHARMACOPOIEA (USP) for the production of PHENYL BUTAZONE. Various raw materials such as N-BUTYL, DIETHYL MELOLATE, HYDRO BENZENE and SODIUM METAL are required. Manufacturing process consists of following steps.

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N-BUTYL DIETHYL MELONATE

HYDRO BENZENE

SODIUM METAL

SODIUM SALICYLAIN

--------------------------------------------------------------------------------------REACTOR | CARBON TOWER | ACIDIFICATION | CENTRIFUGAL FILTER | TRAY DRIER | GRINDER | PACKAGING WEIGHT INSPECTION

1. Mixing of various raw materials Firstly various raw like N-BUTYL, DIETHYL MELOLATE, HYDRO BENZENE and SODIUM METAL, SODIUM METANOL, COSTIC SODA, GLACIAL ACIDIC ACID are mixed. 2. Reacting In the reactor, different types of chemical reactions are performed on the mixture of raw material listed in the step1 13

3. Carbon tower After the reacting process, the mixture is passed through the carbon tower which give 99% pure PHENYL BUTAZONE. 4. Acidification Next acidification is performed on the water link solicitor of PHENYL BUTAZONE. It gives white colored PHENYL BUTAZONE. 5. Centrifugation In this step, soft lumpy of PHENYL BUTAZONE are obtained. 6. Drying In the tray drier PHENYL BUTAZONE is passed through 7. Grinding In the grinder the granules are crushed into fine power. 8. Packaging After all the earlier steps have been performed, PHENYL BUTAZONE is packaged in the layered bag. Then they are placed in to HDPP (HYDENCITY POLY PROPALIN) solar resistant drums. These drums are known as CRAFTED DRUMS. 9. Weight inspections When the PHENYL BUTAZONE powder is to be dispatched, it is packed in the HDPP bags, because the company is engaged bulk drugs production transporting. So, it is packed in the powder form in the HDPP bags that have capacity of 25 kg. For the proper weighting the company uses the electronic weighting machines. Then these drums are dispatched from the company.

ORGANISATION STRUCTURE
Every companys most important part is organization structure and it plays major role for any of the successful company. In PATSON CHEMICAL organization structure is functional type. The authority line with the top level & flows from top level to bottom level. The responsibility moves from

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bottom level to top level. In PATSON CHEMICAL every partners have the responsibility in the proportion of their authority.

PARTNERS

PRODUCTION MANAGER

PRODUCTION MANAGER

PRODUCTION MANAGER

SUPERVISOR

SALESMEN

ACCOUNTANT

OBJECTIVE OF RESEARCH Calculate ratio of Patson chemical Ltd. and analyze their financial

situation. Take into account Patson Chemicals five years balance sheet and ratio

to analyze them.

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Developing & analyzing Common size income statement. Determine whether investment in this company is profitable or not. Determine the financial weakness and strength of the company. To measure the enterprise's short-term and

long-term solvency.

To measure the enterprise's operating efficiency and profitability.

SCOPE OF THE STUDY

This project is vital to us in a significant way. It does have some importance for the company too. These are as follows.

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This project will be a learning device for the finance student. Through this project we would study the various methods of the Financial The project would also be an effective tool for analyzing the companys position. This will show the liquidity position of the company and also how do they This study will be useful for seeing at what extent of the stage , company is going.

Analysis.

maintain a particular liquidity position.

LIMITATION OF THE STUDY

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Percentages shown in common size statement analysis give only the change in

proportion of one item to one item. It fails to indicate whether the financial position or performance over a period of different years is improving or deteriorating.

Final results of the firm also depend upon a number of factors such as general

economic conditions, competition and the policy framed by the government. Hence, before giving any opinion on the basis of accounting ratios, all such factors must be kept in mind. But ratio analysis does not take into consideration these factors.

Some accounting ratios are not taken due to lack of information

When comparing performance over time, there is need to consider the changes in

price, changes in technology and changes in accounting policy.

On the basis of only last five years balance sheet companys performance and its

evaluation may not be appropriate.

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WORKING CAPITAL OF PATSON CHEMICAL

PARTICULARS

2007

2008

2009

2010

2011

current assets: Inventories Sundry debtors Bank & cash Loan & advances total current assets less current liability: Sundry creditors for goods Other current liabilities Provisions total current liabilities: working capital total application of funds 1711954 49529 1761483 3590915 31434 57957 3680306 1261064 21423 65701 1348188 1777147 35220.50 66563 1878930.50 166114 60803 91023 317940 4361404 2061029 186403.02 870167.38 7479009.4 2842430 4272202 242077.4 1910605.02 9267314.42 1386110 1257662 2324687.8 968699.3 5937159.09 2612451.59 2549772 658249.99 965984.16 6786457.74 3355921.91 2467034 776850.91 625687.52 7225494.34

5717526.4

5587008.42

4588971.09

4907527.24

2194946.22

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1).Current assets A current asset means the assets in the form of cash or can be readily converted in to the cash within a shorter time. They include cash, bank balance, stock, debtors, bills receivable, prepaid expenses, accrued income, and readily marketable securities etc. Current assets YEAR 2007 2008 2009 2010 2011 RS. 7479009.4 9267314.42 5937159.09 6786457.74 7225494.34

As the current asset is given in the above table. We can see that in the year 2007 the current asset is of Rs.7479009.4.then in next year in 2008 the current asset is increase to 9267314.42.it increases in compare to the previous year.In the year 2009 current assets again decrease by 3330155.33 and reaches to 5937159.09.And in the year 2010 current assets increase by 849298.65 and reaches to 6786457.74. And finally in the year 2011 current assets increase by 439036.6 and reaches to 7225494.34. So we can find that the in the Patson chemical the current assets is the fluctuating year by year that shows poor working capital management in Patson chemical. Company should improve its working capital.

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2).Current liability Current liability includes the liability which company has to pay within the period of one year. It includes creditors, deposits, provision for tax, and all other provisions. CURRENT LIABILITY YEAR 2007 2008 2009 2010 2011 RS. 1761483 3680306 1348188 1878930.50 317940

From the above table we find that in the year 2007 the current liability was1761483, in the 2008 it increase by 1918823 and reaches to 3680306. The next year in 2009 it decreases by 2332118 and reaches to 1348188. And in the year 2010 it increase by 530742.50 and reaches to 1878930.50. And finally in the year 2011 it decreases by 1560990.5 and reaches to 317940. From 2010 to 2011 current liability decrease by 1560990.5. It ensures the negative effect to the progress of the company. Patson chemical should try to reduce its current liabilities so as to have the effective working capital for the smooth operating of the business.

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3).Working capital Business capital is broadly divided in to two groups fixed capital and working capital. fixed capital refers to the funds invested in to such fixed or permanent asset as land, building, machinery etc. WORKING CAPITAL YEAR 2007 2008 2009 2010 2011 RS. 5717526.4 5587008.42 4588971.09 4907527.24 2194946.22

As shown in the above table we can see that in 2007 the working capital of Patson chemical is 5717526.4, and the next year in 2008 we can see that the working capital decreases and reaches to 5587008.42.and the next year 2009 we can see that the working capital decreases and reaches to 4588971.09. And in the year 2010 it can be increases and reaches to 4907527.24. And finally in the year 2011 it can be decreases and reaches to 2194946.22. Form the above statement of working capital we can understand that the working capital decrease day by day in Patson chemical. Patson chemical should try to increase its working capital.

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COMMON SIZED STATEMENT OF PROFIT & LOSS ACCOUNT OF PATSON CHEMICAL


31-Mar-11 PARTICULAR Amount Income % Amount % Amount % Amount % Amount %

31-Mar-10

31-Mar-09

31-Mar- 08

31-Mar-07

Sales

20209857

85.6 2 14.2 2 0.16

17728587

86.76

21488292

93.36

14648225

83.64

14841475

97.3 6 2.06

Closing stock

3355921.91

2612451.59

12.79

1386110

6.02

2842430

16.23

314554

Other income Total income(A) Expenditure

37588.18

92045.06

0.45

142809.66

0.62

22249

0.12

87049

0.57

23603367.09

100

20433103.65

100

23017212

100

17512904

100

15243078

100

Opening stock Purchase of raw material Manufacturing exp. Administration & other exp. Finance exp.

2612451.59

11.8 9 74.9 9 7.26

1386110

7.51

2842430

13.19

4361404

25

723997

5.12 79.7 9 10.4 6 2.08

16472155.75

14644766.26

79.39

15869254

73.64

10932378

62.69

11283719

1593956.84

1281419.83

6.95

1516759.5

7.04

1365776

7.83

1478981.1

910492.11

4.14

698301.15

3.78

1059175

4.91

418306.6

2.4

295044.27

69480

0.32

121000

0.66

31277.16

0.14

187929

1.07

155672

1.1

Depreciation Total expenditure(B) NET PROFIT (A-B)

308390

1.40

315107

1.71

231925

1.08

173233

203835

1.44

21966926.29

100

18446704.24

100

21550821

100

17439027

100

14141248

100

1636440.80

7.45

1986399.41

10.77

14,66,391

6.8

73,877

0.42

11,01,829.7

7.79

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COMMON SIZED STATEMENT OF BALANCE SHEET OF PATSON CHEMICAL

31-Mar-11 PARTICULAR Amount Capital account of partner Secured loan 8076065.21 % 85.73

31-Mar-10 Amount 6926305.41 % 75.04

31-Mar-09 Amount 5994112.44 % 72.83

31-Mar-08 Amount 5208681.84 % 48.78

31-Mar-07 Amount 5586603.15 % 61.71

911435.35

9.67

309483.05

3.35

773226.87

9.39

1673912.8

15.68

1566758.3

17.31

Un secured loan Current liabilities & Provision Sundry creditor for goods Other liabilities Provision TOTAL LIABILITIES

115000

1.22

115000

1.25

115000

1.40

115000

1.08

137485

1.52

166114 60803 91023

1.76 0.65 0.97

1777147 35220.50 66563

19.25 0.38 0.72

1261064 21423 65701

15.32 0.26 0.80

3590915 31434 57957

33.63 0.29 0.54

1711954 49529

18.91 0.55

9420440.56

100

9229718.96

100

8230527.31

100

10677900.64

100

18240072.45

100

Fixed asset Current asset

2194946.22

23.30

2443261.22

26.47

2293368.22

27.86

1410586.22

13.21

1573320.05

17.38

Inventories

3355921.91

35.65

2612451.59

28.30

1386110

16.84

2842430

26.62

4361404

48.18

Sundry debtors

2467034

26.19

2549772

27.63

1257662

15.28

4272202

40

2061029

22.77

Cash & Bank Loan & Advance & Deposits TOTAL ASSETS

776850.91

8.25

658249.99

7.13

2324687.79

28.25

242077.4

2.27

186409.02

2.06

625687.52

6.64

965984.16

10.47

968699.3

11.77

1910605.02

17.89

870167.38

9.61

9420440.56

100

9229718.96

100

8230527.31

100

10677900.64

100

9052329.45

100

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(A) PROFITABILITY RATIOS


1). Gross profit ratio Gross Profit Ratio = Gross Profit Sales 2007 1669331.72 *100/14841475 11.23% 2008 831097.08*100 /14648225 5.67% 2009 2645958.59*100/ 21488292 12.31% 2010 3028742.5*100/ 17728587 17.08% 2011 2887214.73*100/ 20209857 14.29% * 100

From the above calculation of ratio that shows in 2006-07 the ratio is 11.23% , in 2007-08 the ratio is 5.67% we can see that the ratio is decrease in 2007-08.And in 2008-09 the ratio is 12.31 %.the gross profit ratio is increase in 2008-09. In the year 2009-10 the ratio is 17.08%, so the gross profit ratio is increased in 2009-10.And finally in the year 2010-11 the ratio is 14.29%, so the gross profit ratio is decreased in 2010-11. This ratio of Patson chemical is low it indicates that the cost of sales is high or that the purchasing is inefficient. In such case the management of Patson chemical must investigate the causes and try to bring up this ratio.

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2).Operating ratio Operating ratio= Cost of goods sold + operating expenses * 100 Net sales

2007 13622859.55*100/ 14841475 91.79%

2008 14423358.49*100/ 14648225 98.46%

2009 19932785.56*100/ 21488292 92.76%

2010 17032565*100/ 17728587 96.07%

2011 15939561.84*100/ 20209857 78.87%

The ratio displayed in above table we find that in 2006-07 the operating ratio is 91.79% then it increases to 98.46% and in the year 2008-09 it increases to 92.76%.In the year 2009-10 it increased to 96.07%.And finally in the year 2010-11 it decreased to 78.87%.There is no specific trend in above 3 year in Patson Chemical. In year 2006-07 the operating ratio shows that is 91.79% it means that the operating expense is 92 rs. per 100rs goods .in 2007-08 the ratio is 98.46% that shows not good operating position the high ratio will be gives lower profit. in 2008-09 the ratio decreases to 92.76% so it is not good position Patson Chemical should try to decreases operating ratio.

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3). Net profit ratio Net Profit Margin = Profit after Tax* 100 Sales 2007 1101829.45 * 100/ 14841475 7.42% 2008 73877.52 * 100/ 14648225 0.50% 2009 1466391.1* 100/ 21488292 6.82% 2010 1986399.41* 100/ 17728587 11.20% 2011 1636440.80*100/ 20209857 8.10%

From the above calculation we find that in 2006-07 the ratio is 7.42 and in 2007-08 is 0.50 and in the year 2008-09 the net profit ratio is 6.82.In the year 2009-10 the ratio is 11.20.And finally in the year 2010-11 the ratio is 8.10, so the ratio is decreased in 2010-11. We can find that the ratio trend slaps down and up word from the above figure. The higher ratio, the batter will be the profitability in order to have batter idea of profitability

(B) LIQUIDITY RATIOS

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1) Current assets ratio Current asset ratio = Current assets Current liability 2007 7479009.4/ 1761483 4.24 2008 9267314.42/ 3680306 2.52 2009 5937159.09/ 1348088 4.40 2010 6786457.74/ 1878930.50 3.61 2011 7225494.34/ 317940 22.73

In 2006-07 the current assets ratio is 4.24 and it is decreases to 2.52 in the year 2007-08.The current assets ratio in 2008-09 it increases to 4.40. In the year 2009-10 the ratio is 3.61, so the ratio is decreased in 2009-10.In the year 2010-11 the ratio is 22.73, so the ratio is increased in 2010-11. The adequacy of this ratio depends upon a number of factors like the nature of business, the efficiency of collection department etc. if the turnover is quick and the collection is efficient, the business may be successfully carried on with a low current ratio. The current ratio of Patson chemical is considered as satisfactory level the ratio of 4.40 shows that for the payment of the one liability the company had 4.40 rs. its shows the strong financial position of Patson chemical.

2) Quick ratio or acid-test ratio Quick Ratio = Quick Assets Quick Liabilities

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2007 870167.38/ 1761483 0.49

2008 1910605.02/ 3680306 0.52

2009 968699.30/ 1348188 0.72

2010 965984.16/ 1878930.50 0.51

2011 625687.52/ 317940 1.97

The above table shows that in 2006-07 the quick ratio is 0.49 in 2007-08 the ratio increases and become 0.52 and in the year 2008-09 the ratio is 0.72. In the year 200910 the ratio is 0.51. In the year 2010-11 the ratio is 1.97, so the ratio is increased in 201011. The measure of absolute liquidity may be obtained by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities this is very exacting standard of liquidity and it is satisfactory if the ratio is 0.5:1.

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(C) ACTIVITY RATIOS


1). Fix asset turnover ratio Fix assets turnover ratio = sales Fixed assets

2007 14841475/ 1573320.05 9.43 times

2008 14648225/ 1410586.22 10.38 times

2009 21488292/ 2293368.22 9.37 times

2010 17728587/ 2443261.22 7.26 times

2011 20209857/ 2194946.22 9.21 times

From the above table we can see that in the year 2006-07 the fixed asset turn over ratio is 9.43. In the year 2007-08 it becomes 10.38. And in the year 2008-09 is 9.37. In the year 2009-10 the ratio is 7.26 and in the year 2010-11 the ratio is 9.21, so the ratio is increased in 2010-11 in compare to 2009-10. This ratio is higher it means the fixed assets are being used effectively to earn profit in Patson Chemical. The ratio in the year 2009-10 increases in compare to the previous year 2008-09 and in the current year ratio become increased to 9.21 this ratio is good for position in Patson Chemical.

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2).stock turnover ratio Stock turnover = cost of goods sold Average stock

2007 1054210/ 519275.5 2.03 times

2008 69877190/ 3601917 19.40 times

2009 13637041/ 2114270 6.45 times

2010 29469399/ 1999280.80 14.74 times

2011 32546112/ 11411154.29 2.85 times

Stock turnover in 2006-07 is 2.03 it means that total turnover of goods is 2 times in a year and in 2007-08 the ratio is 19.40 and in the year 2008-09 the ratio is 6.45. In the year 2009-10 the ratio is 14.74 and finally in the year 2010-11 the ratio is 2.85. The higher turnover, the more profitable the business would be. The firm in such a case will be able to trade on small margin of gross profit.

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3). Debtors ratio Debtors ratio = Debtors + Bills receivable Average daily sales

2007 2061029/ 40661.57 51 Days

2008 4272202/ 40132.12 106 Days

2009 1257662/ 58872.03 21 Days

2010 2549772/ 48571.47 52 Days

2011 2467034/ 55369.47 45 Days

Debtors ratio in 2006-07 is 51 days it means that they credit sales is collected in 51 days. 2007-08 the ratio is 106 days it means that credit collection policy is weak. In 200809 the ratio is 21 days and in 2009-10 the ratio is 52 days.And finally in the year 2010-11 the ratio is 45 days it means that credit collection policy is good. The higher this ratio, the more unsatisfactory position it shows. It suggests that the credit and collection policy is weak. This would result into unsatisfactory state of working capital and weak liquid position.

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4). Creditors ratio Creditors ratio = Creditors + Bills payable Average daily purchase

2007 1711954/ 30914.30 55 Days

2008 3590915/ 29951.72 120 Days

2009 1261064/ 43477.41 29 Days

2010 1777147/ 40122.65 44 Days

2011 166114/ 45129.19 3 Days

Creditors ratio in 2006-07 is 55 days it means that they do not take full advantage of credit period. 2007-08 the ratio is 120 days it means that they take full advantage of credit period. 2008-09 the ratio is 29 days and in 2009-10 the ratio is 44 days. And finally in the year 2010-11 the ratio is 3 days it means that they do not take full advantage of credit period.

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5).Total assets turnover ratio Total assets turnover ratio = Sales Total assets 2007 14841475/ 9052329.45 1.64 times 2008 14648225/ 10677900.64 1.37times 2009 21488292/ 8230527.31 2.61 times 2010 17728587/ 9229718.96 1.92 times 2011 20209857/ 9420440.56 2.15 times

From the above table we can see that in the year 2006-07 the total assets turn over ratio is 1.64 times. In the year 2007-08 it becomes1.37 times And in the year 2008-09 is 2.61 times. In the year 2009-10 the ratio is 1.92 times. And finally in the year 2010-11 the ratio is 2.15 times, So the ratio is increased in compare to 2009-10. This ratio is important to know the over-all efficiency of the business. The higher this ratio, it shows that with less amount of investment in total assets, the business has a capacity to sell more and as such its profitability is also more.

SUGGESTIONS
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Companys profit margin is very fluctuating year-on-year. There should be


consistency in the up or down of the profit. A huge fluctuation is not healthy for the company.

PATSON CHEMICALS needs to decrease its operating expanses so that the net profit can be enhanced.

Company should increase the proprietors capital than borrowings. As it reduces the
burden of interest.

Currently, company is selling their products only in domestic market. But company
should also go in the international market. So that companys products can be sold at premium rate.

Company should try to reduce finance expenses. Because it has been increasing
every year, which absorbs a part of the net profit.

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CONCLUSION

The focus of financial analysis is on key figures contained in the financial statements and the significant relationship that exits. In company there is a vast amount of data available. But its very difficult to see each & every data to analyze them. As a alternative Ratio Analysis will be a very useful devices to make the efficient and rapid utilization of available data to interprets.

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BIBLIOGRAPHY
The following sources become very much helpful for me to prepare this project report. ADVANCED ACCOUNTANCY

WWW.PATSON CHEMICAL.COM

WWW.WIKIPEDIA.COM

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