analysis of financial ratios
TRANSCRIPT
-
7/31/2019 ANALYSIS of Financial Ratios
1/76
A PROJECT ON
ANALYSIS OF FINANCIAL RATIOS
SUBMITTED BY
HITESH.U.BANGERA
T.Y.B.M.S (2009-10)ROLL.NO.03
PROJECT GUIDE
PROF. PRADEEP.N.HATHI
VIVEK COLLEGE OF COMMERCE
GOREGAON (WEST), MUMBAI-400 062
1
-
7/31/2019 ANALYSIS of Financial Ratios
2/76
DECLARATION
I, Hitesh.U.Bangera of T.Y.B.M.S, Roll no-03, Vivek College ofcommerce, hereby declare that I have completed the project titled
Analysis of Financial Ratios in the academic year 2009-10.The
information submitted is true and original to the best of my
knowledge.
---------------
Hitesh.U.Bangera
T.Y.BMS, Vivek College Of commerce
2
-
7/31/2019 ANALYSIS of Financial Ratios
3/76
CERTIFICATE
This is to certify that Hitesh.U.Bangera , T.Y.BMS, Roll No.03 of
Vivek College of commerce has submitted the project titled
ANALYSIS OF FINANCIAL RATIOS on _____________.
The information submitted is true and original to the best of my
knowledge.
------------------- ------------------- ----------------
Project guide BMS coordinator PRINCIPAL
Prof. Savina Bhat Prof. Savina Bhat Vivek College of
Vivek College of Commerce Vivek College of Commerce Commerce
3
-
7/31/2019 ANALYSIS of Financial Ratios
4/76
ACKNOWLEDGEMENT
This project would not have been possible without the co operation
of a number of people to whom I would like extend my heartfelt
thanks and gratitude.
I would like to thank the University of Mumbai & Management of Vivek
College for giving me the opportunity to complete this project.
I would also like to thank my I/C Principal Prof.Dr .Nandita Roy for her
encouragement.
I would like to thank my coordinator Prof.Savina Bhat for her support and
guidance throughout the project.
I would heartily take the opportunity to express my sincere gratitude
towards my project guide Prof.Pradeep.N.Hathi whose guidance & care has
made this project successful.
I would also like to thank my college librarian Mrs.Bindu Verma and the
library staff members who helped me in the completion of the project.
I am ending this acknowledgement to all my friends and my parents who
have helped me directly/indirectly in the completion of my project.
Hitesh.U.Bangera
4
-
7/31/2019 ANALYSIS of Financial Ratios
5/76
INDEX
TOPIC
NO.
TITLE PAGE
--- Declaration 2
--- Certificate 3
---Acknowledgement 4
--- Executive Summary 6
1 Introduction 7-13
2 Classification of Ratios 14-16
3 Types of Ratios 17-34
4 Importance of Ratios 35-37
5 Advantages of Ratio Analysis 38
6 Limitations of Ratio Analysis 39-40
7 Purpose of Ratio Analysis 41
8 Role of Ratio Analysis 42
9 Evaluation of APLAB ltd
through Ratio Analysis
43-74
10 Conclusion 7511 Bibliography
&Webliography
76
5
-
7/31/2019 ANALYSIS of Financial Ratios
6/76
EXECUTIVE SUMMARY
Financial Ratio Analysis represents a fast and simple way of gaining a
snapshot of the financial health of an organization. They range from the
very simple to the complex, and the relevance of many of the ratiosdepends on the nature of the organization and therefore should only be
compared with similar companies.
This project gives an overview of some of the most popular ratios and their
objectives, purposes and importance in the analysis of an organizations
financial health.
Also this project shows how you can use them in an analyzing financial
performance of an organization along with its limitations.
6
-
7/31/2019 ANALYSIS of Financial Ratios
7/76
CHAPTER 1
INTRODUCTION
RATIO ANALYSIS:
Fundamental Analysis has a very broad scope. One aspect looks at the
general (qualitative) factors of a company. The other side considers
tangible and measurable factors (quantitative). This means crunching andanalyzing numbers from the financial statements.
Ratio analysis isn't just comparing different numbers
from the balance sheet, income statement, and cash flow statement. It's
comparing the number against previous years, other companies, the
industry, or even the economy in general. Ratios look at the relationships
between individual values and relate them to how a company has
performed in the past, and might perform in the future.
7
-
7/31/2019 ANALYSIS of Financial Ratios
8/76
MEANING OF RATIO:
A ratio is one figure express in terms of another figure. It is a mathematical
yardstick that measures the relationship two figures, which are related toeach other and mutually interdependent. Ratio is express by dividing one
figure by the other related figure. Thus a ratio is an expression relating one
number to another. It is simply the quotient of two numbers. It can be
expressed as a fraction or as a decimal or as a pure ratio or in absolute
figures as so many times. As accounting ratio is an expression relating
two figures or accounts or two sets of account heads or group contain in the
financial statements.
MEANING OF RATIO ANALYSIS:
Ratio analysis is the method or process by which the relationship of items
or group of items in the financial statement are computed, determined and
presented.
Ratio analysis is an attempt to derive quantitative measure or guides
concerning the financial health and profitability of business enterprises.
Ratio analysis can be used both in trend and static analysis. There are
several ratios at the disposal of an annalist but their group of ratio he would
prefer depends on the purpose and the objective of analysis.
While a detailed explanation of ratio analysis is beyond the scope of this
section, we will focus on a technique, which is easy to use. It can provide
you with a valuable investment analysis tool.
Ratio analysis can provide valuable information about a company's
financial health. A financial ratio measures a company's performance in a
8
-
7/31/2019 ANALYSIS of Financial Ratios
9/76
specific area. For example, you could use a ratio of a company's debt to its
equity to measure a company's leverage. By comparing the leverage ratios
of two companies, you can determine which company uses greater debt in
the conduct of its business. A company whose leverage ratio is higher than
a competitor's has more debt per equity. You can use this information to
make a judgment as to which company is a better investment risk.
OBJECTIVE OF RATIOS
Ratio is work out to analyze the following aspects of business organization-
A) Solvency-
1) Long term
2) Short term
3) Immediate
B) Stability
C) Profitability
D) Operational efficiency
E) Credit standing
F) Structural analysis
G) Effective utilization of resources
H) Leverage or external financing
FORMS OF RATIO:
Since a ratio is a mathematical relationship between to or more
variables / accounting figures, such relationship can be expressed in
different ways as follows
9
-
7/31/2019 ANALYSIS of Financial Ratios
10/76
A] As a pure ratio:
For example the equity share capital of a company is Rs. 20,00,000
& the preference share capital is Rs. 5,00,000, the ratio of equity share
capital to preference share capital is 20,00,000: 5,00,000 or simply 4:1.
B] As a rate of times:
In the above case the equity share capital may also be described as 4
times that of preference share capital. Similarly, the cash sales of a firm are
Rs. 12, 00,000 & credit sales are Rs. 30, 00,000. So the ratio of credit sales
to cash sales can be described as 2.5 [30, 00,000/12, 00,000] or simply by
saying that the credit sales are 2.5 times that of cash sales.
C] As a percentage:
In such a case, one item may be expressed as a percentage of some
other items. For example, net sales of the firm are Rs.50,00,000 & theamount of the gross profit is Rs. 10,00,000, then the gross profit may be
described as 20% of sales [ 10,00,000/50,00,000]
STEPS IN RATIO ANALYSIS
The ratio analysis requires two steps as follows:
1] Calculation of ratio
2] Comparing the ratio with some predetermined standards. The standard
ratio may be the past ratio of the same firm or industrys average ratio or a
projected ratio or the ratio of the most successful firm in the industry. In
10
-
7/31/2019 ANALYSIS of Financial Ratios
11/76
interpreting the ratio of a particular firm, the analyst cannot reach any
fruitful conclusion unless the calculated ratio is compared with some
predetermined standard. The importance of a correct standard is oblivious
as the conclusion is going to be based on the standard itself.
TYPES OF COMPARISONS
The ratio can be compared in three different ways
1] Cross section analysis:
One of the way of comparing the ratio or ratios of the firm is to
compare them with the ratio or ratios of some other selected firm in the
same industry at the same point of time. So it involves the comparison of
two or more firms financial ratio at the same point of time. The cross
section analysis helps the analyst to find out as to how a particular firm has
performed in relation to its competitors. The firms performance may be
compared with the performance of the leader in the industry in order to
uncover the major operational inefficiencies. The cross section analysis is
easy to be undertaken as most of the data required for this may be available
in financial statement of the firm.
2] Time series analysis:
The analysis is called Time series analysis when the performance of
a firm is evaluated over a period of time. By comparing the present
performance of a firm with the performance of the same firm over the last
few years, an assessment can be made about the trend in progress of the
firm, about the direction of progress of the firm. Time series analysis helps
11
-
7/31/2019 ANALYSIS of Financial Ratios
12/76
to the firm to assess whether the firm is approaching the long-term goals or
not. The Time series analysis looks for (1) important trends in financial
performance (2) shift in trend over the years (3) significant deviation if any
from the other set of data\
3] Combined analysis:
If the cross section & time analysis, both are combined together to
study the behavior & pattern of ratio, then meaningful & comprehensive
evaluation of the performance of the firm can definitely be made. A trend
of ratio of a firm compared with the trend of the ratio of the standard firmcan give good results. For example, the ratio of operating expenses to net
sales for firm may be higher than the industry average however, over the
years it has been declining for the firm, whereas the industry average has
not shown any significant changes.
12
-
7/31/2019 ANALYSIS of Financial Ratios
13/76
The combined analysis as depicted in the above diagram, which clearly
shows that the ratio of the firm is above the industry average, but it is
decreasing over the years & is approaching the industry average.
PRE-REQUISITIES TO RATIO ANALYSIS
In order to use the ratio analysis as device to make purposeful
conclusions, there are certain pre-requisites, which must be taken care of. It
may be noted that these prerequisites are not conditions for calculations for
meaningful conclusions. The accounting figures are inactive in them & can
be used for any ratio but meaningful & correct interpretation & conclusioncan be arrived at only if the following points are well considered.
1) The dates of different financial statements from where data is taken
must be same.
2) If possible, only audited financial statements should be considered,
otherwise there must be sufficient evidence that the data is correct.
3) Accounting policies followed by different firms must be same in
case of cross section analysis otherwise the results of the ratio
analysis would be distorted.
4) One ratio may not throw light on any performance of the firm.
Therefore, a group of ratios must be preferred. This will be
conductive to counter checks.
5) Last but not least, the analyst must find out that the two figures beingused to calculate a ratio must be related to each other, otherwise
there is no purpose of calculating a ratio.
13
-
7/31/2019 ANALYSIS of Financial Ratios
14/76
CHAPTER 2
CLASSIFICATION OF RATIOS
CLASSIFICATION OF RATIO
BASED ON FINANCIAL BASED ON FUNCTION BASED ON USER
STATEMENT
1] BALANCE SHEET 1] LIQUIDITY RATIO 1] RATIOS FOR
RATIO 2] LEVERAGE RATIO SHORT TERM
2] REVENUE 3] ACTIVITY RATIO CREDITORS
STATEMENT 4] PROFITABILITY 2] RATIO FOR
RATIO RATIO SHAREHOLDER
3] COMPOSITE 5] COVERAGE 3] RATIOS FOR
RATIO RATIO MANAGEMENT
4] RATIO FOR
LONG TERM
CREDITORS
BASED ON FINANCIAL STATEMENT
Accounting ratios express the relationship between figures taken from
financial statements. Figures may be taken from Balance Sheet, P& P A/C,
14
-
7/31/2019 ANALYSIS of Financial Ratios
15/76
or both. One-way of classification of ratios is based upon the sources from
which are taken.
1] Balance sheet ratio:
If the ratios are based on the figures of balance sheet, they are called
Balance Sheet Ratios. E.g. ratio of current assets to current liabilities or
ratio of debt to equity. While calculating these ratios, there is no need to
refer to the Revenue statement. These ratios study the relationship between
the assets & the liabilities, of the concern. These ratio help to judge the
liquidity, solvency & capital structure of the concern. Balance sheet ratios
are Current ratio, Liquid ratio, and Proprietory ratio, Capital gearing ratio,
Debt equity ratio, and Stock working capital ratio.
2] Revenue ratio:
Ratio based on the figures from the revenue statement is called
revenue statement ratios. These ratios study the relationship between the
profitability & the sales of the concern. Revenue ratios are Gross profit
ratio, Operating ratio, Expense ratio, Net profit ratio, Net operating profit
ratio, Stock turnover ratio.
3] Composite ratio:
These ratios indicate the relationship between two items, of which
one is found in the balance sheet & other in revenue statement.
There are two types of composite ratios-
a) Some composite ratios study the relationship between the profits &
the investments of the concern. E.g. return on capital employed,
return on proprietors fund, return on equity capital etc.
15
-
7/31/2019 ANALYSIS of Financial Ratios
16/76
b) Other composite ratios e.g. debtors turnover ratios, creditors turnover
ratios, dividend payout ratios, & debt service ratios
BASED ON FUNCTION:
Accounting ratios can also be classified according to their functions
in to liquidity ratios, leverage ratios, activity ratios, profitability ratios &
turnover ratios.
1] Liquidity ratios:
It shows the relationship between the current assets & current
liabilities of the concern e.g. liquid ratios & current ratios.
2] Leverage ratios:
It shows the relationship between proprietors funds & debts used in
financing the assets of the concern e.g. capital gearing ratios, debt equity
ratios, & Proprietory ratios.
3] Activity ratios:
It shows relationship between the sales & the assets. It is also known
as Turnover ratios & productivity ratios e.g. stock turnover ratios, debtors
turnover ratios.
4] Profitability ratios:
a) It shows the relationship between profits & sales e.g. operating
ratios, gross profit ratios, operating net profit ratios, expenses ratios
16
-
7/31/2019 ANALYSIS of Financial Ratios
17/76
b) It shows the relationship between profit & investment e.g. return on
investment, return on equity capital.
5] Coverage ratios:
It shows the relationship between the profit on the one hand & the
claims of the outsiders to be paid out of such profit e.g. dividend payout
ratios & debt service ratios.
BASED ON USER:
1] Ratios for short-term creditors:
Current ratios, liquid ratios, stock working capital ratios
2] Ratios for the shareholders:
Return on proprietors fund, return on equity capital
3] Ratios for management:
Return on capital employed, turnover ratios, operating ratios,
expenses ratios
4] Ratios for long-term creditors:
Debt equity ratios, return on capital employed, proprietor ratios.
17
-
7/31/2019 ANALYSIS of Financial Ratios
18/76
CHAPTER 3
TYPES OF RATIOS
18
-
7/31/2019 ANALYSIS of Financial Ratios
19/76
LIQUIDITY RATIO: -
Liquidity refers to the ability of a firm to meet its short-term (usually up to
1 year) obligations. The ratios, which indicate the liquidity of a company,
are Current ratio, Quick/Acid-Test ratio, and Cash ratio. These ratios are
discussed below
CURRENT RATIO
Meaning:
This ratio compares the current assests with the current liabilities. It is also
known as working capital ratio or solvency ratio. It is expressed in the
form of pure ratio.
19
-
7/31/2019 ANALYSIS of Financial Ratios
20/76
Formula:
Current assets
Current ratio =
Current liabilities
The current assets of a firm represents those assets which can be, in the
ordinary course of business, converted into cash within a short period time,
normally not exceeding one year. The current liabilities defined as
liabilities which are short term maturing obligations to be met, as originally
contemplated, with in a year.
Current ratio (CR) is the ratio of total current assets (CA) to total current
liabilities (CL). Current assets include cash and bank balances; inventory of
raw materials, semi-finished and finished goods; marketable securities;
debtors (net of provision for bad and doubtful debts); bills receivable; and
prepaid expenses. Current liabilities consist of trade creditors, bills payable,
bank credit, and provision for taxation, dividends payable and outstanding
expenses. This ratio measures the liquidity of the current assets and the
ability of a company to meet its short-term debt obligation.
CR measures the ability of the company to meet its CL, i.e., CA gets
converted into cash in the operating cycle of the firm and provides the
funds needed to pay for CL. The higher the current ratio, the greater the
short-term solvency. Recommended current ratio is 2: 1. Any ratio below
indicates that the entity may face liquidity problem but also Ratio over 2: 1
as above indicates over trading, that is the entity is under utilizing its
current assets.
20
-
7/31/2019 ANALYSIS of Financial Ratios
21/76
LIQUID RATIO:
Meaning: Liquid ratio is also known as acid test ratio or quick ratio.
Liquid ratio compares the quick assets with the quick liabilities. It is
expressed in the form of pure ratio.
The term quick assets refer to current assets, which can be converted into,
cash immediately or at a short notice without diminution of value.
Formula:
Quick assetsLiquid ratio =
Quick liabilities
Quick Ratio (QR) is the ratio between quick current assets (QA) and CL.
QA refers to those current assets that can be converted into cash
immediately without any value strength. QA includes cash and bankbalances, short-term marketable securities, and sundry debtors. Inventory
and prepaid expenses are excluded since these cannot be turned into cash as
and when required.
QR indicates the extent to which a company can pay its current liabilities
without relying on the sale of inventory. Inventories are excluded from the
numerator of this ratio because they are deemed the least liquid component
of current assets. Generally, a quick ratio of 1:1 is considered good. One
drawback of the quick ratio is that it ignores the timing of receipts and
payments.
21
-
7/31/2019 ANALYSIS of Financial Ratios
22/76
CASH RATIO
Meaning:
This is also called as super quick ratio. This ratio considers only the
absolute liquidity available with the firm.
Formula:
Cash + Bank + Marketable securities
Cash ratio =
Total current liabilities
Since cash and bank balances and short term marketable securities are the
most liquid assets of a firm, financial analysts look at the cash ratio. If the
super liquid assets are too much in relation to the current liabilities then it
may affect the profitability of the firm.
INVESTMENT / SHAREHOLDER
22
-
7/31/2019 ANALYSIS of Financial Ratios
23/76
EARNING PER SHARE:-
Meaning: Earnings per Share are calculated to find out overall profitability
of the organization. Earnings per Share represents earning of the company
whether or not dividends are declared. EPS measures the profits available
to the equity shareholders on each share held.
Formula:
NPAT
Earning per share =
Number of equity share
The higher EPS will attract more investors to acquire shares in the
company as it indicates that the business is more profitable enough to pay
the dividends in time. But remember not all profit earned is going to be
distributed as dividends the company also retains some profits for the
business
DIVIDEND PER SHARE:-
Meaning:
DPS shows how much is paid as dividend to the shareholders on each share
held.
Dividend Paid to Ordinary shareholders
Dividend per Share =
Number of Ordinary Shares
23
-
7/31/2019 ANALYSIS of Financial Ratios
24/76
DIVIDEND PAYOUT RATIO:-
Meaning:
Dividend Pay-out Ratio shows the relationship between the dividends paid
to equity shareholders out of the profit available to the equity shareholders.
Formula:
Dividend per share
Dividend Pay out ratio = *100
Earning per share
D/P ratio shows the percentage share of net profits after taxes and after
preference dividend has been paid to the preference equity holders.
GEARING
24
-
7/31/2019 ANALYSIS of Financial Ratios
25/76
CAPITAL GEARING RATIO:-
Meaning:
Gearing means the process of increasing the equity shareholders return
through the use of debt. Equity shareholders earn more when the rate of the
return on total capital is more than the rate of interest on debts. This is also
known as leverage or trading on equity. The Capital-gearing ratio shows
the relationship between two types of capital viz: - equity capital &
preference capital & long term borrowings. It is expressed as a pure ratio.
Formula:
Preference capital+ secured loan
Capital gearing ratio =
Equity capital & reserve & surplus
Capital gearing ratio indicates the proportion of debt & equity in the
financing of assets of a concern.
PROFITABILITY
These ratios help measure the profitability of a firm. A firm, which
generates a substantial amount of profits per rupee of sales, can
comfortably meet its operating expenses and provide more returns to its
shareholders. The relationship between profit and sales is measured by
profitability ratios. There are two types of profitability ratios: Gross Profit
Margin and Net Profit Margin.
25
-
7/31/2019 ANALYSIS of Financial Ratios
26/76
GROSS PROFIT RATIO:-
Meaning:
This ratio measures the relationship between gross profit and sales. It is
defined as the excess of the net sales over cost of goods sold or excess of
revenue over cost. This ratio shows the profit that remains after the
manufacturing costs have been met. It measures the efficiency of
production as well as pricing. This ratio helps to judge how efficient the
26
-
7/31/2019 ANALYSIS of Financial Ratios
27/76
concern is I managing its production, purchase, selling & inventory, how
good its control is over the direct cost, how productive the concern , how
much amount is left to meet other expenses & earn net profit.
Formula:
Gross profit
Gross profit ratio = * 100
Net sales
NET PROFIT RATIO:-
Meaning:
Net Profit ratio indicates the relationship between the net profit & the sales
it is usually expressed in the form of a percentage.
Formula:
NPAT
Net profit ratio = * 100
Net sales
This ratio shows the net earnings (to be distributed to both equity and
preference shareholders) as a percentage of net sales. It measures the
overall efficiency of production, administration, selling, financing, pricing
and tax management. Jointly considered, the gross and net profit margin
ratios provide an understanding of the cost and profit structure of a firm.
RETURN ON CAPITAL EMPLOYED:-
27
-
7/31/2019 ANALYSIS of Financial Ratios
28/76
Meaning:
The profitability of the firm can also be analyzed from the point of view of
the total funds employed in the firm. The term fund employed or the capital
employed refers to the total long-term source of funds. It means that the
capital employed comprises of shareholder funds plus long-term debts.
Alternatively it can also be defined as fixed assets plus net working capital.
Capital employed refers to the long-term funds invested by the creditors
and the owners of a firm. It is the sum of long-term liabilities and owner's
equity. ROCE indicates the efficiency with which the long-term funds of a
firm are utilized.
Formula:
NPAT
Return on capital employed = *100
Capital employed
FINANCIAL
These ratios determine how quickly certain current assets can be converted
into cash. They are also called efficiency ratios or asset utilization ratios as
they measure the efficiency of a firm in managing assets. These ratios are
based on the relationship between the level of activity represented by sales
or cost of goods sold and levels of investment in various assets. The
important turnover ratios are debtors turnover ratio, average collection
period, inventory/stock turnover ratio, fixed assets turnover ratio, and total
assets turnover ratio. These are described below:
28
-
7/31/2019 ANALYSIS of Financial Ratios
29/76
DEBTORS TURNOVER RATIO (DTO)
Meaning:
DTO is calculated by dividing the net credit sales by average debtorsoutstanding during the year. It measures the liquidity of a firm's debts.
Net credit sales are the gross credit sales minus returns, if any, from
customers. Average debtors are the average of debtors at the
beginning and at the end of the year. This ratio shows how rapidly
debts are collected. The higher the DTO, the better it is for the
organization.
Formula:
Credit sales
Debtors turnover ratio =
Average debtors
29
-
7/31/2019 ANALYSIS of Financial Ratios
30/76
INVENTORY OR STOCK TURNOVER RATIO (ITR)
Meaning:
ITR refers to the number of times the inventory is sold and replaced during
the accounting period.
Formula:
COGS
Stock Turnover Ratio =
Average stock
ITR reflects the efficiency of inventory management. The higher the ratio,
the more efficient is the management of inventories, and vice versa.
However, a high inventory turnover may also result from a low level of
inventory, which may lead to frequent stock outs and loss of sales and
customer goodwill. For calculating ITR, the average of inventories at the
beginning and the end of the year is taken. In general, averages may be
used when a flow figure (in this case, cost of goods sold) is related to a
stock figure (inventories).
FIXED ASSETS TURNOVER (FAT)
The FAT ratio measures the net sales per rupee of investment in fixed
assets.
Formula:
Net sales
Fixed assets turnover =
30
-
7/31/2019 ANALYSIS of Financial Ratios
31/76
Net fixed assets
This ratio measures the efficiency with which fixed assets are employed. A
high ratio indicates a high degree of efficiency in asset utilization while a
low ratio reflects an inefficient use of assets. However, this ratio should be
used with caution because when the fixed assets of a firm are old and
substantially depreciated, the fixed assets turnover ratio tends to be high
(because the denominator of the ratio is very low).
PROPRIETORS RATIO:
Meaning:
Proprietary ratio is a test of financial & credit strength of the business. It
relates shareholders fund to total assets. This ratio determines the long term
or ultimate solvency of the company.
In other words, Proprietary ratio determines as to what extent the owners
interest & expectations are fulfilled from the total investment made in the
business operation.
Proprietary ratio compares the proprietor fund with total liabilities. It is
usually expressed in the form of percentage. Total assets also know it as net
worth.
Formula:
Proprietary fund
Proprietary ratio = OR
Total fund
Shareholders fund
31
-
7/31/2019 ANALYSIS of Financial Ratios
32/76
Proprietary ratio =
Fixed assets + current liabilities
STOCK WORKING CAPITAL RATIO:
Meaning:
This ratio shows the relationship between the closing stock & the working
capital. It helps to judge the quantum of inventories in relation to the
working capital of the business. The purpose of this ratio is to show the
extent to which working capital is blocked in inventories. The ratio
highlights the predominance of stocks in the current financial position of
the company. It is expressed as a percentage.
Formula:
Stock
Stock working capital ratio =
Working Capital
Stock working capital ratio is a liquidity ratio. It indicates the composition
& quality of the working capital. This ratio also helps to study the solvency
of a concern. It is a qualitative test of solvency. It shows the extent of funds
blocked in stock. If investment in stock is higher it means that the amount
of liquid assets is lower.
DEBT EQUITY RATIO:
MEANING:
This ratio compares the long-term debts with shareholders fund. The
relationship between borrowed funds & owners capital is a popular
measure of the long term financial solvency of a firm. This relationship is
shown by debt equity ratio. Alternatively, this ratio indicates the relative
32
-
7/31/2019 ANALYSIS of Financial Ratios
33/76
proportion of debt & equity in financing the assets of the firm. It is usually
expressed as a pure ratio.
Formula:
Total long-term debt
Debt equity ratio =
Total shareholders fund
Debt equity ratio is also called as leverage ratio. Leverage means the
process of the increasing the equity shareholders return through the use of
debt. Leverage is also known as gearing or trading on equity. Debt
equity ratio shows the margin of safety for long-term creditors & the
balance between debt & equity.
RETURN ON PROPRIETOR FUND:
Meaning:
Return on proprietors fund is also known as return on proprietors equity
or return on shareholders investment or investment ratio. This ratio
indicates the relationship between net profit earned & total proprietors
funds.. Its purpose is to measure the rate of return on the total fund made
available by the owners. This ratio helps to judge how efficient the concern
is in managing the owners fund at disposal.
Formula:
NPAT
Return on proprietors fund = * 100
Proprietors fund
33
-
7/31/2019 ANALYSIS of Financial Ratios
34/76
CREDITORS TURNOVER RATIO:
It is same as debtors turnover ratio. It shows the speed at which payments
are made to the supplier for purchase made from them. It is a relation
between net credit purchase and average creditors
Net credit purchase
Credit turnover ratio =
Average creditors
Months in a year
Average age of accounts payable =
Credit turnover ratio
Both the ratios indicate promptness in payment of creditor purchases.
Higher creditors turnover ratio or a lower credit period enjoyed signifies
that the creditors are being paid promptly. It enhances credit worthiness of
the company. A very low ratio indicates that the company is not taking full
benefit of the credit period allowed by the creditors.
34
-
7/31/2019 ANALYSIS of Financial Ratios
35/76
CHAPTER 4
IMPORTANCE OF RATIO ANALYSIS:
As a tool of financial management, ratios are of crucial significance. The
importance of ratio analysis lies in the fact that it presents facts on a
comparative basis & enables the drawing of interference regarding the
performance of a firm. Ratio analysis is relevant in assessing the
performance of a firm in respect of the following aspects:
1] Liquidity position,
2] Long-term solvency,
3] Operating efficiency,
4] Overall profitability,
5] Inter firm comparison
6] Trend analysis.
1] LIQUIDITY POSITION: -
With the help of Ratio analysis conclusion can be drawn regarding
the liquidity position of a firm. The liquidity position of a firm would be
satisfactory if it is able to meet its current obligation when they become
due. A firm can be said to have the ability to meet its short-term liabilities
if it has sufficient liquid funds to pay the interest on its short maturing debt
usually within a year as well as to repay the principal. This ability isreflected in the liquidity ratio of a firm. The liquidity ratio are particularly
useful in credit analysis by bank & other suppliers of short term loans.
35
-
7/31/2019 ANALYSIS of Financial Ratios
36/76
2] LONG TERM SOLVENCY: -
Ratio analysis is equally useful for assessing the long-term financial
viability of a firm. This respect of the financial position of a borrower is of
concern to the long-term creditors, security analyst & the present &
potential owners of a business. The long-term solvency is measured by the
leverage/ capital structure & profitability ratio .Ratio analysis s that focus
on earning power & operating efficiency.
Ratio analysis reveals the strength & weaknesses of a firm in this
respect. The leverage ratios, for instance, will indicate whether a firm has a
reasonable proportion of various sources of finance or if it is heavily loaded
with debt in which case its solvency is exposed to serious strain. Similarly
the various profitability ratios would reveal whether or not the firm is able
to offer adequate return to its owners consistent with the risk involved.
3] OPERATING EFFICIENCY:
Yet another dimension of the useful of the ratio analysis, relevant
from the viewpoint of management, is that it throws light on the degree of
efficiency in management & utilization of its assets. The various activity
ratios measures this kind of operational efficiency. In fact, the solvency of
a firm is, in the ultimate analysis, dependent upon the sales revenues
generated by the use of its assets- total as well as its components.
4] OVERALL PROFITABILITY:
Unlike the outsides parties, which are interested in one aspect of the
financial position of a firm, the management is constantly concerned about
overall profitability of the enterprise. That is, they are concerned about the
36
-
7/31/2019 ANALYSIS of Financial Ratios
37/76
ability of the firm to meets its short term as well as long term obligations to
its creditors, to ensure a reasonable return to its owners & secure optimum
utilization of the assets of the firm. This is possible if an integrated view is
taken & all the ratios are considered together.
5] INTER FIRM COMPARISON:
Ratio analysis not only throws light on the financial position of firm
but also serves as a stepping-stone to remedial measures. This is made
possible due to inter firm comparison & comparison with the industry
averages. One of the popular techniques is to compare the ratios of a firmwith the industry average. It should be reasonably expected that the
performance of a firm should be in broad conformity with that of the
industry to which it belongs. An inter firm comparison would demonstrate
the firms position vice-versa its competitors. If the results are at variance
either with the industry average or with those of the competitors, the firm
can seek to identify the probable reasons & in light, take remedial
measures.
6] TREND ANALYSIS: Finally, ratio analysis enables a firm to take the
time dimension into account. In other words, whether the financial position
of a firm is improving or deteriorating over the years. This is made
possible by the use of trend analysis. The significance of the trend analysis
of ratio lies in the fact that the analysts can know the direction ofmovement, that is, whether the movement is favorable or unfavorable. For
example, the ratio may be low as compared to the norm but the trend may
be upward. On the other hand, though the present level may be satisfactory
but the trend may be a declining one.
37
-
7/31/2019 ANALYSIS of Financial Ratios
38/76
CHAPTER 5
ADVANTAGES OF RATIO ANALYSIS
Financial ratios are essentially concerned with the identification of
significant accounting data relationships, which give the decision-
maker insights into the financial performance of a company.
The advantages of ratio analysis can be summarized as follows:
Ratios facilitate conducting trend analysis, which is important for
decision making and forecasting.
Ratio analysis helps in the assessment of the liquidity, operating
efficiency, profitability and solvency of a firm.
Ratio analysis provides a basis for both intra-firm as well as inter-firm
comparisons.
The comparison of actual ratios with base year ratios or standard ratios
helps the management analyze the financial performance of the firm.
38
-
7/31/2019 ANALYSIS of Financial Ratios
39/76
CHAPTER 6
LIMITATIONS OF RATIO ANALYSIS
Ratio analysis has its limitations. These limitations are described below:
1] Information problems
Ratios require quantitative information for analysis but it is notdecisive about analytical output.
The figures in a set of accounts are likely to be at least several
months out of date, and so might not give a proper indication of the
companys current financial position.
Where historical cost convention is used, asset valuations in the
balance sheet could be misleading. Ratios based on this information
will not be very useful for decision-making.
2] Comparison of performance over time
When comparing performance over time, there is need to consider
the changes in price. The movement in performance should be in line
with the changes in price.
When comparing performance over time, there is need to consider
the changes in technology. The movement in performance should be
in line with the changes in technology.
39
-
7/31/2019 ANALYSIS of Financial Ratios
40/76
Changes in accounting policy may affect the comparison of results
between different accounting years as misleading.
3] Inter-firm comparison
Companies may have different capital structures and to make
comparison of performance when one is all equity financed and
another is a geared company it may not be a good analysis.
Selective application of government incentives to various companies
may also distort intercompany comparison. Comparing the
performance of two enterprises may be misleading.
Inter-firm comparison may not be useful unless the firms compared
are of the same size and age, and employ similar production methods
and accounting practices.
Even within a company, comparisons can be distorted by changes in
the price level.
Ratios provide only quantitative information, not qualitative
information.
Ratios are calculated on the basis of past financial statements. They
do not indicate future trends and they do not consider economic
conditions.
40
-
7/31/2019 ANALYSIS of Financial Ratios
41/76
CHAPTER 7
PURPOSE OF RATIO ANLYSIS
Purposes of ratio analysis are as foll:
1] To identify aspects of a businesses performance to aid decision making
2] Quantitative process may need to be supplemented by qualitative
factors to get a complete picture.
3] 5 main areas:-
Liquidity the ability of the firm to pay its way
Investment/shareholders information to enable decisions to bemade on the extent of the risk and the earning potential of a business
investment.
Gearing information on the relationship between the exposure of
the business to loans as opposed to share capital
Profitability how effective the firm is at generating profits given
sales and or its capital assets
Financial the rate at which the company sells its stock and the
efficiency with which it uses its assets
41
-
7/31/2019 ANALYSIS of Financial Ratios
42/76
CHAPTER 8
ROLE OF RATIO ANALYSIS
It is true that what can be achieved by the technique of ratio analysis cannot
be achieved by the mere preparation of financial statement.
Ratio analysis helps to appraise the firm in terms of their profitability
& efficiency of performance, either individually or in relation to those of
other firms in the same industry. The process of this appraisal is not
complete until the ratio so computed can be compared with something, as
the ratio all by them do not mean anything. This comparison may be in the
form of intra firm comparison, inter firm comparison or comparison with
standard ratios. Thus proper comparison of ratios may reveal where a firm
is placed as compared with earlier period or in comparison with the other
firms in the same industry.
Ratio analysis is one of the best possible techniques available to the
management to impart the basic functions like planning & control. As the
future is closely related to the immediate past, ratio calculated on the basis
of historical financial statements may be of good assistance to predict the
future. Ratio analysis also helps to locate & point out the various areas,
which need the management attention in order to improve the situation.
As the ratio analysis is concerned with all the aspect of a firms
financial analysis i.e. liquidity, solvency, activity, profitability & overall
performance, it enables the interested persons to know the financial &
operational characteristics of an organisation & take the suitable decision.
42
-
7/31/2019 ANALYSIS of Financial Ratios
43/76
CHAPTER 9
EVALUATION OF APLAB LIMITED THROUGH RATIO
COMPANY PROFILE
THE COMPANY
APLAB Limited is a professionally managed Public Limited company
quoted on the Bombay Stock Exchange. Since its inception in 1962,
APLAB has been serving the global market with wide range of electronic
products meeting the international standards for safety and reliability such
as UL, VDE etc. They specialize in Test and Measurement Equipment,
Power Conversion and UPS Systems, Self-Service Terminals for Banking
Sector and Fuel Dispensers for Petroleum Sector. APLAB enjoys
worldwide recognition for the quality of its products, business integrity and
innovative engineering skills.
ABOUT APLAB:
Aplab started its operation in October 1962.
It is a professionally managed 40 years old public limited company.
It is quoted on BOMBAY STOCK EXCHANGE.
It serves customer global customer par excellence.
It specialized in Test & measurement instruments, power conversion,
& UPS & fuel dispensers for petroleum sector.
43
-
7/31/2019 ANALYSIS of Financial Ratios
44/76
It enjoys worldwide recognition for the quality of its business
integrity & innovative engineering skills.
CORPORATE MISSION
1] To achieve healthy and profitable growth of the company in the interest
of our customers & the shareholders.
2] To encourage teamwork, reward innovation and maintain healthy
interpersonal relations within the organization.
3] To expand knowledge and remain at the leading edge in technology to
serve the global market.
4] To create intellectual capital by investing in hardware and embeddedsoftware development.
THE 21ST CENTURY SUCCESS
APLAB had planned to enter the 21st Century with a program for a fast
and healthy growth in the global market based on companys high
technology foundation and the reputation of four decades for prompt
customer service and as a reliable solution provider. After completing three
years in the new era, we can say with pride that we have been delivering
our promises to our customers and the shareholders.
APLAB has entered the field of Professional Services starting with
the Banking and the Petroleum Industry. Focus on developing embedded
system software has been also enhanced. We believe that professional
services sector is poised to grow at a very rapid pace.
44
-
7/31/2019 ANALYSIS of Financial Ratios
45/76
RESEARCH AND DEVELOPMENT
Developing innovative products with the latest technology is the core
strength of APLAB. The Science & Technology Ministry of the Govt. of
India accredits our R&D Laboratories. We have a large team of dedicated,
highly qualified skilled engineers who excel in the latest state-of-the-art-
technology. APLAB is recognized not only for manufacturing standard
products but also in providing solutions and services as per the customer
specifications. We spend more than 4% of the company revenue in
Research & Development activities.
Specific areas in which the company carries out R&D
1. Development of new product especially hi-tech intelligent product &
electronic transaction control system.
2. Improvement in the existing products & production processes,
import substitution.
3. Development of products to suit exports markets.
4. Customizing the products to the customers specifications &
adaptation of imported technology.
Through a continuous interaction with production& Quality Assurance
Department takes up redesign of existing products. This is done to achieve
state of the art in our design & to bring about improvement to get
maximum performance / cost ratio.
EXPORT
APLAB currently exports over 25% of its production to Western Europe,
Canada & USA. Over 30 million U.S. Dollars worth of Power Systems and
45
-
7/31/2019 ANALYSIS of Financial Ratios
46/76
Test Instruments from APLAB are today operational in UK, Germany,
France, Sweden, Belgium, Canada, and USA & Australia.
APLABS ORGANISATION CHART
EXECUTIVE
CHAIRMAN
MANAGING
DIRECTOR
DIRECTOR MAEKETING
[TECHNICAL DIRECTOR
- PE]
GENERAL
MANAGER
FINANCE G.M G.M. MATERIAL G.M. G.M.
MANAGER PROD. MARKETING MANAGER ELTRAC DESIGN
&
DESIGN
46
REGIOAL
HEAD:
MUMBAINEWDELHI
SECUNDA-
RABADBANGLORE
CHENNAI
-
7/31/2019 ANALYSIS of Financial Ratios
47/76
OFFICERS
STAFF
WORKERS
APLAB LIMITED
BALANCE SHEET AS AT 31ST MARCH 2002
(RS.000)
AS AT 31ST 2002 AS AT 31ST 2002
SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital 5,00,00
Reserves and surplus 16,29,69
21,29,69
LOANS
Secured 12,13,48
Unsecured 3,67,99
15,81,47
DEFFERED TAX LIABILITY (NET) 1,06,85
TOTAL 38,18,01
APPLICATION OF FUNDS
FIXED ASSETS
Gross block 15,90,33
Less: depreciation 10,32,96
Net block 5,57,37
Capital work in progress 54,36
6,11,73
INVESTMENT 1,22,32
CURRENT ASSESTS, LOANS &
ADVANCES
Inventories 19,09,77
Sundary debtors 18,49,35
Cash & bank balances 3,31,32
Loan & advances 5,80,36
46,70,80
CURRENT LIABLITIES &
47
-
7/31/2019 ANALYSIS of Financial Ratios
48/76
PROVISIONS
Current liabilities 15,36,09
Provisions 57,57
15,93,66
NET CURRENT ASSESTS 30,77,14
MISCELLANEOUS EXPENDITURE 6,84
Total 3818,01
PROFIT & LOSS ACCOUNT FOR THE ENDED 31ST MARCH 2002
(RS.000)
AS AT 31-3- 2002 AS AT 31-3-2002
INCOME:
Sales and operating earnings 48,19,19
Other income 80,50
Variation in stock 1,31,07
50,30,76
EXPENCES:
Materials consumed 18,97,28
Purchase of trading goods 8,61,75
Payments to & provision for 9,95,04
employees
Manufacturing expenses 2,21,37
Excise duty 65,05
Other expenses 5,76,71
Interest & finance charges 2,60,22
Depreciation 1,05,37
Less: transferred to revaluation 1,15 1,04,22
49,81,64
PROFIT BEFORE TAX 49,12
PRIOR YEAR ADJUSTMENT (NET)
PROVISION FOR TAXATION
Current tax 24,42
Deferred tax liability / (Assets) 4,02
PROFIT AFTER TAX 20,68
Balance brought forward from previous year 1
Balance available for appropriation 20,69
Appropriations:
General reserve 20,68
Surplus / (loss) carried to B/S 1
Proposed dividend
48
-
7/31/2019 ANALYSIS of Financial Ratios
49/76
Tax on proposed dividend
20,69
Basic earning per share (rupee) 0.41
0.41
BALANCE SHEET AS AT 31ST MARCH 2003
(RS.000)
AS AT 31-3- 2003 AS AT 31-3- 2003
SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital 5,00,00
Reserves and surplus 16,55,19
21,55,19
LOANS
Secured 10,27,55
Unsecured 4,53,16
14,80,71
DEFFERED TAX LIABILITY (NET) 87,21
TOTAL 37,23,11
APPLICATION OF FUNDS
FIXED ASSETS
Gross block 17,40,97
Less: depreciation 11,40,93
Net block 6,00,04
Capital work in progress 29,74
6,29,78
INVESTMENT 1,47,26
CURRENT ASSESTS, LOANS &
ADVANCES
Inventories 19,02,79
Sundary debtors 19,05,76
Cash & bank balances 3,95,25
Loan & advances 8,98,62
51,02,42
CURRENT LIABLITIES &
PROVISIONS
Current liabilities 20,41,56
Provisions 1,20,76
21,62,32
49
-
7/31/2019 ANALYSIS of Financial Ratios
50/76
NET CURRENT ASSESTS 29,40,10
MISCELLANEOUS EXPENDITURE 5,97
TOTAL 37,23,11
PROFIT & LOSS ACCOUNT FOR THE ENDED 31ST MARCH 2003
(RS.000)
AS AT 31-3- 2003 AS AT 31-3- 2003
INCOME:
Sales and operating earnings 59,62,22
Other income 15,04
Variation in stock (59,27)
59,17,99
EXPENCES:
Materials consumed 22,41,60Purchase of trading goods 10,37,52
Payments to & provision for 10,63,96
Employees
Manufacturing expenses 2,69,99
Excise duty 72,69
Other expenses 7,62,23
Interest & finance charges 2,36,57
Depreciation 1,07,97
Less: transferred to revaluation 1,03 1,06,94
57,91,50
PROFIT BEFORE TAX 1,26,49
PRIOR YEAR ADJUSTMENT (NET)
PROVISION FOR TAXATION
Current tax 63,19
Deferred tax liability / (Assets) (19,64)
PROFIT AFTER TAX 82,94
Balance brought forward from previous year 1
Balance available for appropriation 82,95
Appropriations:General reserve 26,50
Surplus / (loss) carried to B/S 4
Proposed dividend 50,00
Tax on proposed dividend 6,41
82,95
Basic earning per share (rupee) 1.66
50
-
7/31/2019 ANALYSIS of Financial Ratios
51/76
BALANCE SHEET AS AT 31ST MARCH 2004
(RS.000)
AS AT 31-3- 2004 AS AT 31-3- 2004SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital 5,00,00
Reserves and surplus 17,42,59
22,42,59
LOANS
Secured 11,38,86
Unsecured 5,58,29
16,97.15
DEFFERED TAX LIABILITY (NET) 95,33TOTAL 40,35,07
APPLICATION OF FUNDS
FIXED ASSETS
Gross block 18,41,58
Less: depreciation 12,40,03
Net block 6,01,55
Capital work in progress 15,29
6,16,84
INVESTMENT 1,48,34CURRENT ASSESTS, LOANS &
ADVANCES
Inventories 21,46,20
Sundary debtors 19,51,56
Cash & bank balances 4,49,74
Loan & advances 850,58
53,98,08
CURRENT LIABLITIES &
PROVISIONS
Current liabilities 18,16,17Provisions 3,12,02
21,28,19
NET CURRENT ASSESTS 32,69,89
TOTAL 40,35,07
51
-
7/31/2019 ANALYSIS of Financial Ratios
52/76
PROFIT & LOSS ACCOUNT FOR THE ENDED 31ST MARCH 2004
(RS.000)
AS AT 31-3- 2004 AS AT 31-3-2004INCOME:
Sales and operating earnings 73,90,47
Other income 31,39
Variation in stock 53,99
74,75,85
EXPENCES:
Materials consumed 28,51,40
Purchase of trading goods 14,03,33
Payments to & provision for 12,94,47
employeesManufacturing expenses 3,07,51
Excise duty 70,08
Other expenses 9,17,94
Interest & finance charges 2,46,30
Depreciation 1,10,89
Less: transferred to revaluation 93 1,09,96
72,00,99
PROFIT BEFORE TAX 2,74,86
PRIOR YEAR ADJUSTMENT (NET) 25,71
PROVISION FOR TAXATIONCurrent tax 1,19,50
Deferred tax liability / (Assets) 8,13
PROFIT AFTER TAX 17294
Balance brought forward from previous year 4
Balance available for appropriation 1,72,98
Appropriations:
General reserve 88,30
Surplus / (loss) carried to B/S 7
Proposed dividend 75,00
Tax on proposed divident 9,61
1,72,98
Basic earning per share (rupee) 3.46
BALANCE SHEET AS AT 31ST MARCH 2005
(RS.000)
52
-
7/31/2019 ANALYSIS of Financial Ratios
53/76
AS AT 31-3- 2005 AS AT 31-3- 2005
SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital 5,00,00
Reserves and surplus 19,14,9124,14,91
LOANS
Secured 17,23,12
Unsecured 5,36,89
22,60,01
DEFFERED TAX LIABILITY (NET) 92,02
TOTAL 47,66,94
APPLICATION OF FUNDS
FIXED ASSETSGross block 21,64,89
Less: depreciation 13,43,05
Net block 8,21,84
Capital work in progress -
8,21,84
INVESTMENT 2,32,91
CURRENT ASSESTS, LOANS &
ADVANCES
Inventories 19,32,88
Sundary debtors 23,06,67Cash & bank balances 6,04,64
Loan & advances 10,04,02
58,48,21
CURRENT LIABLITIES &
PROVISIONS
Current liabilities 16,55,15
Provisions 4,80,87
21,36,02
NET CURRENT ASSESTS 37,12,19
TOTAL 47,66,19
PROFIT & LOSS ACCOUNT FOR THE ENDED 31ST MARCH 2005
(RS.000)
AS AT 31-3- 2005 AS AT 31-3 2005
53
-
7/31/2019 ANALYSIS of Financial Ratios
54/76
INCOME:
Sales and operating earnings 74,20,31
Other income 41,69
Variation in stock (38,45)
74,23,55
EXPENCES:
Materials consumed 25,91,83
Purchase of trading goods 15,21,00
Payments to & provision for 13,54,15
employees
Manufacturing expenses 2,71,41
Excise duty 75,41
Other expenses 8,44,78
Interest & finance charges 2,15,82
Depreciation 1,26,68
Less: transferred to revaluation 84 1,25,8470,00,24
PROFIT BEFORE TAX 4,23,31
PRIOR YEAR ADJUSTMENT (NET)
PROVISION FOR TAXATION
Current tax 1,50,84
Deferred tax liability / (Assets) (3,31)
PROFIT AFTER TAX 2,75,78
Balance brought forward from previous year 7
Balance available for appropriation 2,75,85
Appropriations:
General reserve 1,73,20
Surplus / (loss) carried to B/S 3
Proposed dividend 90,00
2,75,85
Basic earning per share (rupee) 5.52
CALCULATIONS AND INTERPRETATION OF RATIOS
1] CURRENT RATIO:
Formula:
54
-
7/31/2019 ANALYSIS of Financial Ratios
55/76
Current assets
Current ratio =
Current liabilities
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005Current assets 46,70,80 51,08,39 53,98,08 58,28,21
Current liabilities 15,93,66 21,62,32 21,28,19 21,36,02
Current ratio 2.93 2.36 2.53 2.72
COMMENTS:
In Aplab company the current ratio is 2.72:1 in 2004-2005. it means
that for one rupee of current liabilities, the current assets are 2.72 rupee are
available to the them. In other words the current assets are 2.72 times the
current liabilities.
Almost 4 years current ratio is same but current ratio in 2004-2005 is
bit higher, which makes company more sound.
The available working capital with the company is in increasing
order.The company has sufficient working capital to meets its urgency/
obligations. A company has a high percentage of its current assets in the
form of working capital, cash that would be more liquid in the sense of
being able to meet obligations as & when they become due. From this
working capital, the company meets its day-to-day financial obligations.
Thus, the current ratio throws light on the companys ability to pay
its current liabilities out of its current assets. The Aplab Companys has a
very good liquidity position of company.
2] LIQUID RATIO:
Formula:
Quick assets
55
-
7/31/2019 ANALYSIS of Financial Ratios
56/76
Liquid ratio =
Quick liabilities
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Quick assets 21,80,67 23,01,01 24,01,30 29,11,31
Quick liabilities 15,93,66 21,62,32 21,28,19 21,36,02
Liquid ratio 1.36 1.06 1.12 1.36
COMMENTS:
The liquid or quick ratio indicates the liquid financial position of an
enterprise. Almost in all 4 years the liquid ratio is same, which is better for
the company to meet the urgency. The liquid ratio of the Aplab Company
has increased from 1.12 to 1.36 in 2004-2005. Day to day solvency is more
sound for company in 2004-2005 over the year 2003-2004.
This indicates that the dependence on the short-term liabilities &
creditors are less .Liquid ratio of Company is favorable because the quick
assets of the company are more than the quick liabilities. The liquid ratio
shows the companys ability to meet its immediate obligations promptly.
3] PROPRIETORY RATIO:
Formula:
Proprietary fund
Proprietary ratio = OR
Total fund
Shareholders fund
56
-
7/31/2019 ANALYSIS of Financial Ratios
57/76
Proprietary ratio =
Fixed assets + current liabilities
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005Proprietary fund 21,29,69 21,55,19 22,42,59 24,14,91
Total fund 52,82,53 57,38,17 66,14,92 66,70,05
Proprietary ratio 40 37.55 33.90 36.20
COMMENTS:
The Proprietary ratio of the company is 36.20% in the year 2004-
2005. It means that the for every one rupee of total assets contribution of
36 paise has come from owners fund & remaining balance 66 paise is
contributed by the outside creditors. This shows that the contribution by
outside to total assets is more than the owners fund. This Proprietary ratio
of the Company shows a downward trend for the last 4 years. As the
Proprietary ratio is not favorable the Companys long-term solvency
position is not sound.
4] STOCK WORKING CAPITAL RATIO:
Formula:
Stock
Stock working capital ratio =
Working Capital
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Stock 19,09,77 19,02,79 21,46,20 19,32,88
Working Capital 30,77,14 29,46,07 32,69,89 37,12,19Stock working
capital ratio
62.06 64.58 65.63 52.06
COMMENTS: This ratio shows that extend of funds blocked in stock. The
amount of stock is increasing from the year 2001-2002 to 2003-2004.
However in the year 2004-2005 it has declined to 52%. In the year 2004-
57
-
7/31/2019 ANALYSIS of Financial Ratios
58/76
2005 the sale is increased which affects decrease in stock that effected in
increase in working capital in 2004-2005.
It shows that the solvency position of the company is sound.
5] CAPITAL GEARING RATIO:
Formula:
Preference capital+ secured loan
Capital gearing ratio =
Equity capital & reserve & surplus
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005Secured loan 12,13,48 10,27,56 11,38,86 1,72,312
Equity capital &
reserves & surplus
21,29,69 21,55,19 22,42,59 2,41,491
Capital gearing
ratio
56.97 47.67 50.78 71
COMMENTS: Gearing means the process of increasing the equity
shareholders return through the use of debt. Capital gearing ratio is a
leverage ratio, which indicates the proportion of debt & equity in the
financing of assets of a company. For the last 3 years [i.e.2001-2002 TO
2003-2004] Capital gearing ratio is all most same which indicates, near
about 50% of the fund covering the secured loan position. But in the year
2004-2005 the Capital-gearing ratio is 71%. It means that during the year
2004-2005 company has borrowed more secured loans for the companys
expansion.
6] DEBT EQUITY RATIO:
Formula:
Total long term debt
58
-
7/31/2019 ANALYSIS of Financial Ratios
59/76
Debt equity ratio =
Total shareholders fund
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Long term debt 15,81,47 14,80,70 16,97,15 22,60,01
Shareholders fund 21,29,69 21,55,19 22,42,59 24,14,91
Debt Equity Ratio 0.74 0.68 0.75 0.93
COMMENTS:
The debt equity ratio is important tool of financial analysis to
appraise the financial structure of the company. It expresses the relation
between the external equities & internal equities. This ratio is very
important from the point of view of creditors & owners.The rate of debt
equity ratio is increased from 0.74 to 0.93 during the year 2001-2002 to
2004-2005. This shows that with the increase in debt, the shareholders
fund also increased. This shows long-term capital structure. The lower ratio
viewed as favorable from long term creditors point of view.
7] GROSS PROFIT RATIO:
Formula:
Gross profit
Gross profit ratio = * 100
Net sales
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Gross profit 24,54,48 37,65,90 45,57,45 42,37,52
Net sales 43,45,46 51,02,37 68,76,89 68,09,78
Gross profit Ratio 56.48 73.80 66.27 62.22
59
-
7/31/2019 ANALYSIS of Financial Ratios
60/76
COMMENTS:The gross profit is the profit made on sale of goods. It is the
profit on turnover. In the year 2001-2002 the gross profit ratio is 56.48%. It
has increased to 73.80% in the year 2002-2003 due to increase in saleswithout corresponding increase in cost of goods sold. However the gross
profit ratio decreased to 66.27% in the year 2003-2004.It is further declined
to 62.22% in the year 2004-2005, due to high cost of purchases &
overheads. Although the gross profit ratio is declined during the year 2002-
2003 to 2004-2005. The net sales and gross profit is continuously
increasing from the year 2001-2002 to 2004-2005.
8] OPERATING RATIO:
Formula:
COGS+ operating expenses
Operating ratio = *100
Net sales
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
COGS +
Operating
expenses
18,90,98 +
2,21,37 +
5,76,71
21,96,32 +
2,69,98 +
7,62,23
28,33,02 +
3,07,51 +
9,17,94
2,57,226+
27,141+
84,478
Net sales 43,45,46 51,02,37 68,76,89 6,80,978
Operating ratio 61.88% 63.27% 59% 54.16%
COMMENTS: The operating ratio shows the relationship between costs of
activities & net sales. Operating ratio over a period of 4 years when
compared that indicate the change in the operational efficiency of the
company. The operating ratio of the company has decreased in all 4 year.
This is due to increase in the cost of goods sold, which in 2001-2002 was
61.88%, in 2002-2003 was 63.27%, in 2003-2004 was 59% & in 2004-
2005 it is 54.16%. Though the cost has increased in 2002-2003 as
compared to 2001-2002, it is reducing continuously over the next two
60
-
7/31/2019 ANALYSIS of Financial Ratios
61/76
years, indicate downward trend in cost but upward / positive trend in
operational performance.
9] EXPENSE RATIO:
The ratio of each item of expense or each group of expense to net sales is
known as Expense ratio. The expense ratio brings out the relationship
between various elements of operating cost & net sales. Expense ratio
analyzes each individual item of expense or group of expense& expresses
them as a percentage in relation to net sales.
A] MANUFACTURING EXPENSES:
Formula:
Manufacturing expenses
Manufacturing expense ratio = *100
Net sales
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Manufacturing
expenses
2,21,37 2,69,98 3,07,51 2,71,41
Net sales 43,45,46 51,02,37 68,76,89 68,09,78
Manufacturing
expenses ratio
5% 5.29% 4.47% 3.98%
COMMENTS: The manufacturing expense is shows the downward trend.
During the year20012002 to 2002-2003 the manufacturing expense
increased because there is increase in the charges like labour, rent , power
& electricity, repair to plant & machinery & miscellaneous works
61
-
7/31/2019 ANALYSIS of Financial Ratios
62/76
expenses. The manufacturing expense during the year 2001-2002 to 2004-
2005 is decreased from 5% to 3.96%. This indicates that the company has
control over the manufacturing expense.
B] OTHER EXPENSES:
Formula:
Other expenses
Other expense ratio = *100
Net sales
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Other expenses 5,76,71 7,62,23 9,17,94 8,44,78
Net sales 43,45,46 51,02,37 68,76,89 68,09,78
Other expenses
ratio
13.2% 14.93% 13.34% 12.40%
COMMENTS: The other expense of company is increased during the
2001-2002 to 2003-2004, because increase in the charges of rent of office,
equipment lease rental, printing & stationary, advertisement & publicity,
transport outward & other charges. But during the year 2004-2005 the other
expenses is decrease from 13.34% to 12.40%. Because decrease in
equipment lease rental, advertisement & publicity, transport charges,
commission & discount, sales tax & purchase tax. This indicates that the
company also controlling the other expenses.
10) NET PROFIT RATIO
62
-
7/31/2019 ANALYSIS of Financial Ratios
63/76
Formula:
NPAT
Net profit ratio = * 100
Net sales
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
NPAT 20,98 82,94 1,72,94 2,75,78
Net sales 434546 51,02,37 68,76,89 68,09,78
Net profit ratio 0.48 1.6 2.5 4.04
0
1
2
3
4
5
2001-2002 2002-2003 2003-2004 2004-2005
NET PROFIT
COMMENTS:
The net profit ratio of the company is low in all year but the net profit is
increasing order from this ratio of 4 year it has been observe that the from
2001-2002 to 2004-2005 the net profit is increased i.e. in 2003 it is
increased by 1.12 in 2003-2004 by 0.9 & in 2004-2005 by
1.54.Profitability ratio of company shows considerable increase.
Companys sales have increased in all 4 years & at the same time company
has been successful in controlling the expenses i.e. manufacturing & other
expenses. It is a clear index of cost control, managerial efficiency & sales
promotion.
63
-
7/31/2019 ANALYSIS of Financial Ratios
64/76
11] STOCK TURNOVER RATIO:
Formula:
COGS
Stock Turnover Ratio =
Average stock
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
COGS 18,90,98 21,96,32 28,33,02 25,72,26
Average stock 5,49,90 5,97,58 6,73,11 6,89,30
Stock Turnover
Ratio
3.4 3.6 4.20 3.73
COMMENTS:
Stock turnover ratio shows the relationship between the sales & stock it
means how stock is being turned over into sales.The stock turnover ratio is
2001-2002 was 3.4 times which indicate that the stock is being turned into
sales 3.4 times during the year. The inventory cycle makes 3.4 rounds
during the year. It helps to work out the stock holding period; it means the
stock turnover ratio is 3.4 times then the stock holding period is 3.5 months
[12/3.4=3.5months]. This indicates that it takes 3.5 months for stock to be
sold out after it is produced.
For the last 4 years stock turnover ratio is lower than the standard but
it is in increasing order. In the year 2001-2002 to 2004-2005 the stock
turnover ratio has improved from 3.4 to 3.73 times, it means with lower
inventory the company has achieved greater sales. Thus, the stock of the
company is moving fast in the market.
12] RETURN ON CAPITAL EMPLOYED:
Formula:
NPAT
64
-
7/31/2019 ANALYSIS of Financial Ratios
65/76
Return on capital employed = *100
Capital employedYEAR 2001-2002 2002-2003 2003-2004 2004 -2005
NPAT 20,68 82,94 1,72,94 2,75,78
Capital employed 38,18,01 37,23,11 40,35,07 47,66,93
Return on capitalemployed
0.54 2.23 4.28 5.79
COMMENTS:
The return on capital employed shows the relationship between profit &
investment. Its purpose is to measure the overall profitability from the total
funds made available by the owner & lenders.
The return on capital employed of Rs.5 indicate that net return of
Rs.5 is earned on a capital employed of Rs.100. this amount of Rs.5 is
available to take care of interest, tax,& appropriation.
The return on capital employed is show-increasing trend, i.e. from 0.54 to
5.79. All of sudden in 2001-2002 the return on capital employed increased
from 0.54 to 5.79. This indicates a very high profitability on each rupee of
investment & has a great scope to attract large amount of fresh fund.
13] EARNING PER SHARE:
Formula:
NPAT
Earning per share=
Number of equity share
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
NPAT 20,98,000 82,94,000 1,72,94,000 2,75,78,000No.ofequity share 50,00,000 50,00,000 50,00,000 50,00,000
Earning per share 0.41 1.66 3.46 5.52
COMMENTS:
65
-
7/31/2019 ANALYSIS of Financial Ratios
66/76
Earning per share is calculated to find out overall profitability of the
company. Earning per share represents the earning of the company whether
or not dividends are declared.The Earning per share is 5.52 means
shareholder gets Rs. 5.52 for each share of Rs. 10/-. In other words the
shareholder earned Rs. 5.52 per share.
The net profit after tax of the company is increasing in all years. Therefore
the shareholders earning per share is increased continuously from 2001-
2002 to 2004-2005 by 0.41 to 05.52. This shows it is continuous capital
appreciation per unit share by 0.41 to 05.52.
The above diagram shows the Earning per share and Dividend per
share is increasing rapidly. It is beneficial to the shareholders and
prospective investor to invest the money in this company.
14] DIVIDEND PAYOUT RATIO:
Formula:
66
-
7/31/2019 ANALYSIS of Financial Ratios
67/76
Dividend per share
Dividend Pay out ratio = * 100
Earning per share
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Dividend per share - 1 1.50 1.80
Earning per share 0.41 1.66 3.46 5.52
Dividend payout
ratio
- 60.24 43.35 32.60
COMMENTS:
In the year 2002-2003 and 2003-2004 the Dividend pay out ratio is
60.24 and 43.35 respectively. In the year 2002-2003 the company has
declared the dividend 60.24 and the balance 39.76 is retained with them for
the expansion. The company has not earned more profit in the year 2001-
2002 hence the company has not declared dividend in the year 2001-2002.
However the company has declared more dividends in the year 2002-2003
as the company has sufficient profit. In the year 2004 the company has
declared 1.50 dividends per share hence the earning per share has doubled.
From this one can say that the company is more conservative forexpansion.
15] COST OF GOODS SOLD:
Formula:
COGS
Cost of goods sold Ratio = * 100
Net sales
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
COGS 18,90,98 21,96,32 28,33,02 25,72,26
Net sales 43,45,46 51,02,37 68,76,89 68,09,78
Cost of goods sold
ratio
43.51 43.04 41.19 37.77
67
-
7/31/2019 ANALYSIS of Financial Ratios
68/76
COMMENTS: This ratio shows the rate of consumption of raw material in
the process of production. In the year 2001-2002 the cost of goods sold
ratio is 43.51% so the gross profit is 56.49%. it indicates that in 2001-2002,
the 43% of raw material is consumed in the process of production.
During the last 4 years the rate of cost of goods sold ratio is
continuously decreasing however the gross profit & sales is increased
during the same period.
16] CASH RATIO:
Formula:
Cash + Bank + Marketable securities
Cash ratio =
Total current liabilities
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Cash + Bank +
Marketable
securities
3,31,32 3,95,25 4,49,74 6,04,64
Total current
liabilities
15,93,66 21,62,32 21,28,19 21,36,02
Cash ratio 0.20 0.18 0.21 0.28
COMMENTS:
This ratio is called as super quick ratio or absolute liquidity ratio. In the
year 2001-2002 the cash ratio is 0.20 & then it is decreased to 0.18 in the
year 2002-2003. Then again it is increased to 0.21 in the year 2003-2004 &
0.28 in the year 2004-2005.
This shows that the company has sufficient cash, bank balance, &
marketable securities to meet any contingency.
68
-
7/31/2019 ANALYSIS of Financial Ratios
69/76
17] RETURN ON PROPRIETORS FUND:
Formula:
NPAT
Return on proprietors fund = * 100
Proprietors fund
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
NPAT 20,68 82,94 1,72,94 2,75,78
Proprietors fund 21,29,69 21,55,19 22,42,59 24,14,91
Return on
proprietors fund
0.97 3.84 7.71 11.41
COMMENTS:
Return on proprietors fund shows the relationship between profits &
investments by proprietors in the company. In the year 2002-2003 the
return on proprietors fund is 3.84% it means the net return of Rs. 3
approximately is earned on the each Rs. 100 of funds contributed by the
owners.
During the last 4 years the rate of return on proprietors fund is in
increasing order. The return on proprietors fund during the year 2001-2002
to 2004-2005 is increased from 0.97% to 11.41%.It shows that the
company has a very large returns available to take care of high dividends,
large transfers to reserve etc. & has a great scope to attract large amount of
fresh fund from owners.
18] RETURN ON EQUITY:
Formula:
NPAT
69
-
7/31/2019 ANALYSIS of Financial Ratios
70/76
Return on equity share capital = * 100
No. of equity share
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
NPAT 20,68 82,94 1,72,94 2,75,78
No. of equity share 50,000 50,000 50,000 50,000Return on equity
share capital
4.13 16.5 34.58 55
COMMENTS:
This ratio shows the relationship between profit & equity
shareholders fund in the company. It is used by the present / prospective
investor for deciding whether to purchase, keep or sell the equity shares.
In the year 2002-2003 the return on proprietors fund is 16.5%, which
means the net return of Rs. 16, is earned on the each Rs.100 of the funds
contributed by the equity shareholders.
The rate of return on equity share capital is increased from4.13% to
55% during the year 2001-2002 to 2004-2005. This shows that the
company has very large returns available to take care of high equity
dividend, large transfers to reserve, & also company has a great scope toattract large amount to fresh funds by issue of equity share & also company
has a very good price for equity shares in the BSE.
19] OPERATING PROFIT RATIO:
Formula:
Operating profit
Operating profit ratio = *100Net sales
COMMENTS: Operating profit ratio shows the relationship between
operating profit & the sales. The operating profit is equal to gross profit
minus all operating expenses or sales less cost of goods sold and operating
70
-
7/31/2019 ANALYSIS of Financial Ratios
71/76
expenses.The operating profit ratio of 7.11% indicates that average
operating margin of Rs.7 is earned on sale of Rs. 100. This amount of Rs. 7
is available for meeting non operating expenses. In the other words
operating profit ratio 7.11% means that 7.11% of net sales remains as
operating profit after meeting all operating expenses.
During the last 4 years the operating profit ratio is increased from
7.11% to 9.38%. It indicates that the company has great efficiency in
managing all its operations of production, purchase, inventory, selling and
distribution and also has control over the direct and indirect costs. Thus,
company has a large margin is available to meet non-operating expenses
and earn net profit.
20] CREDITORS TURNOVER RATIO:
Formula:
Net credit purchase
Credit turnover ratio =Average creditors
Months in a year
Average age of accounts payable =
Credit turnover ratio
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005Net credit purchase 21,21,43 22,71,80 29,08,61 25,29,04
Average creditors 5,88,42 7,91,21 6,96,86 7,80,39
Credit turnover
ratio
3.6 times 3.6 times 4 times 3 times
Average age of
accounts payable
3.3 months 3.3 months 3 months 4 months
71
-
7/31/2019 ANALYSIS of Financial Ratios
72/76
COMMENTS:
The creditors turnover ratio shows the relationship between the credit
purchase and average trade creditors. It shows the speed with which the
payments are made to the suppliers for the purchase made from them.The credit turnover ratio of 4, indicate that the creditors are being
turned over 4times during the year. It indicates the number of rounds taken
by the credit cycle of payables during the year.
There is no standard ratio in absolute term. The creditors ratio for the
year 2001-2002 and 2002-2003 as good as the same, but it is increased by
3.6 to 4 in 2003-2004.this means the company has settled the creditors dues
very fastly than the previous year.
21] DEBTORS TURNOVER RATIO:
Formula:
Credit sales
Debtors turnover ratio =
Average debtors
Days in a year
Debt collection period =
Debtors turnover
YEAR 2001-2002 2002-2003 2003-2004 2004 -2005
Credit sales 47,77,48 55,21,33 74,87,36 68,09,78
Average debtors 18,49,35 19,05,76 19,51,56 23,06,67
Debtors turnover
ratio
2.5 times 2.8 times 3.8 times 2.9 times
Debt collection 146 days 130 days 96 days 125 days
72
-
7/31/2019 ANALYSIS of Financial Ratios
73/76
period
COMMENTS:
Debtors turnover ratio is alternative known as Accounts
Receivable Turnover Ratio. This ratio measures the collectibility of
debtors & other accounts receivable; it means the rate at which the trade
debts are being collected.
The Debtors turnover ratio of 2.5 indicates that the debtors are being
turned over 2.5 times during the year. It means that the credit cycle ofdebtors makes 2.5 rounds during the year. It helps to workout the debt
collection period i.e. 146 days [365/ 2.5 = 146]. This indicates that it
take146 days on an average for the debtors to be settled. Debt collection
period indicates the duration of the credit cycle of the debtors.
The Debtors turnover ratio is almost same during the year 2001-2002
to 2004-2005, which indicates that the debts are being collected at a fast
speed during the year. The operating cycle of the debtors is short. In other
words the debts collection period is short which result into less chance of
bad debts.
SUMMARY OF FINANCIAL POSITION OF APLAB LIMITED
73
-
7/31/2019 ANALYSIS of Financial Ratios
74/76
After going through the various ratios, I would like to state that:
The short-term solvency of the company is quite satisfactory.
Immediate solvency position of the company is also quite
satisfactory. The company can meet its urgent obligations
immediately.
Credit policies are effective.
Over all profitability position of the company is quite satisfactory.
Stock turnover rate is satisfactory. Stock of the company is moving
fast in the market.
The company is paying promptly to the suppliers.
The return on capital employed is satisfactory.
The management should take care of inventory management and speed up
the movement of stock. Effective selling technique or product modification
may be adopted to face the competitors and to improve the financialposition of the company by taking appropriate decisions.
CONCLUSION
74
-
7/31/2019 ANALYSIS of Financial Ratios
75/76
The focus of financial analysis is on key figures contained in the
financial statements and the significant relationship that exits. The
reliability and significance attach to the ratios will largely on hinge upon
the quality of data on which they are best. They are as good for as bad as
the data it self.
Financial ratios are a useful by product of financial statement and
provide standardized measures of firms financial position, profitability and
riskiness. It is an important and powerful tool in the hands of financial
analyst. By calculating one or other ratio or group of ratios he can analyze
the performance of a firm from the different point of view.
The ratio analysis can help in understanding the liquidity and short-
term solvency of the firm, particularly for the trade creditors and banks.
Long-term solvency position as measured by different debt ratios can help
a debt investor or financial institutions to evaluate the degree of financial
risk. The operational efficiency of the firm in utilizing its assets to generate
profits can be assessed on the basis of different turnover ratios. The
profitability of the firm can be analyzed with the help of profitability ratios.
However the ratio analyses suffer from different limitations also. The
ratios need not be taken for granted and accepted at face values. These
ratios are numerous and there are wide spread variations in the same
measure. Ratios generally do the work of diagnosing a problem only and
failed to provide the solution to the problem.
BIBLIOGRAPHY
REFERENCE BOOKS
75
-
7/31/2019 ANALYSIS of Financial Ratios
76/76
FINANCIAL MANAGEMENT
Theory, Concepts & problems
R.P.RUSTAGI
FINANCIAL MANAGEMENT
Text and problems
M.Y. KHAN AND P. K. JAIN
MANAGEMENT ACCOUNTING
AINAPURE
FINANCIAL MANAGEMENT
L.N. CHOPDE
D.N. CHOUDHARI
S.L. CHOPDE
ANAUAL REPORTS OF APLAB LIMITED
2001-2002
2002-2003
2003-2004
2004-2005
WEBSITES -
www.bizd.ac.uk/compfact/ratio
www.cecunc.org.com/business/financial
http://www.bizd.ac.uk/compfact/ratiohttp://www.cecunc.org.com/business/financialhttp://www.bizd.ac.uk/compfact/ratiohttp://www.cecunc.org.com/business/financialhttp://www.zeromillion.com.business/financial