gayathri findings

8/7/2019 gayathri FINDINGS

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FINDINGS:

We are discussing about mainly 7 kinds of ratio. All the ratios performs very well in last five

years that gives better profitability & liquidity position to the company.

1. The net profit of Ashok Leyland Limited is moderately satisfactory recently in the year

2009-10. Hence the profit decreases from the year 2007-08 of 6.7% to 5.84% during the

year 2009-10. But there is a fall in the profit rate to 3.17% during the year 2008-09. The

management efficiency is based on the net profit of the concern. The company should

concentrate in the operational efficiency in the forth coming years.

2. Normally, the Gross Profit Ratio should not remain the same from year to year. But in

Ashok Leyland Limited the gross profit increases from 17.01% during the year 2007-08

to 23.76% during the year 2008-09 showing a good sign, subsequently it increases to

53.60% almost double during the recent year 2009-10 which reflects the higher efficiency

of the production and trading operations of the concern.

3. The Fixed Assets Turnover Ratio indicated the extent of utilization of fixed assets.

During 2007-08 the company has utilized the assets in a better way than the recent years

2008-09 and 2009-10. The organization has not utilized the fixed assets effective so the

management should take necessary steps to utilize the fixed assets effectively.

4. The Current Ratio of the year 2009-10 is 1:22. Hence the ratio increased higher than theideal ratio 2:1. So the organization can meet out the current liabilities with the current

assets.

5. Debt Equity Ratio:

The company has a debt ratio of 0.04 which means the debt capacity has been almost

exhausted. It is necessary for the company to build up its equity base for this purpose it is

desirable to retain as much profit as possible.

6. Proprietary Ratio: The acceptable ratio is 1:3 the ratio of this company is below 50%

the extent of protection to creditors is to be alerted.

7. Capital Gearing Ratio: Capital Gearing Ratio shows the relationship between the two

groups of funds. In this organization the Capital Gearing ratio increases year by year. So

it indicates that the company is at a greater advantage by indicating that the funds bearing

fixed interest or fixed dividend exceeds the equity share-holder funds.


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SUGGESTIONS AND CONCLUSIONS:

From the detail findings, it is suggested and concluded that the company should take

necessary steps to increase the net profit ratio, gross profit ratio by finding out the causes of a

falling gross margin. To improve the fixed assets turnover ratio the available assets should be

utilized to the maximum. The current ratio indicates the sound solvency position of the company.

The Debt Equity Ratio is not satisfactory. The organization may concentrate on rising off long-

term funds to expand their business. The capital gearing ratio is necessary to maintain

satisfactory of 1:1 it is also understood that the company is depend upon outside liabilities. From

the above details it is finally concluded that the overall financial position is satisfactory for this

company but by taking in to consideration the suggestions given about Ashok Leyland limited

can strengthen its financial position.


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BIBLIOGRAPHY:

BOOKS:

PRINCIPLES OF MANAGEMENT ACCOUNTING

-by Dr. S. N .Mageshwari

MANAGEMENT ACCOUNTING

-by T. S. Reddy and Y. Hariprasad Reddy

RESEARCH METHODOLOGY

- by C. R. Kothari

WEBSITES:

www.ashokleyland.com
http://www.ashokleyland.com/http://www.ashokleyland.com/http://www.ashokleyland.com/

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