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ASUMMER PROJECT REPORT

ON

HISTORICAL COMPARISON AND

INTERPRETATION OF RATIOS

UNDERTAKEN AT:

GARDEN SILK MILLS LTD.SURAT

SUBMITTED BY:

MR. RAJNIKANT.M.USADADIYA(MBA BATCH 2009-11)

GUIDED BY:

MR. LALIT TANK

BHAGWAN MAHAVIR COLLEGE OFMANAGEMENT

149, BMEF CAMPUS, B/H.HEENA BUNGALOWS,BHARTHANA, SURAT 395017 (GUJARAT)

PH: 0261-3231553


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DECLARATION

I hereby declare that the summer project report titled HISTORICAL

COMPARISON AND INTERPRETATION OF RATIOS is an original piece

of work done by me for the fulfillment of the award of degree of Master of

Business Administration and whatever information has been taken from

any sources had been duly acknowledged.

I further declare that the information received from the company is used

for academic purpose only.

Date: July , 2010

Place: Surat RAJNIKANT M

USADADIYA


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ACKNOWLEDGEMENT

I would like to take this opportunity to express my deep sense of gratitude

towards my college Bhagvan Mahavir College Of Management, Surat,

for giving me this tremendous opportunity to work in the industry for the

real time project.

I am also thankful to Mr. Bipin Modi (Head of finance department)and Mr. Jayeshbhai Divawala (Assistant manager) of Garden Silk

Mills Ltd, Surat. for giving me an opportunity for getting invaluable

experience in such reputed organization. At the same time, I am very much

thankful to all staff members of Garden Silk Mills for their kind co-operation.

I express my sincere thanks to Dr. A S Abani (Director) for his affection,

encouragement and support during my training.

I am also grateful to Mr. Lalit Tank (Mentor), and other teaching staff

and non-teaching staff for their indirect help to complete my research work.

I would like to record my special thanks to my parents, friends, and

colleagues help me directly or indirectly in preparation of project work.

RAJNIKANT

USADADIYA


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EXECUTIVE SUMMARY

About the topic

One of the most financial tools which has come to be used very

frequently for analyzing the financial strengths and weaknesses of the

enterprise is ratio analysis. Ratio analysis is a technique of analysis and

interpretation of financial statement. It is the process of establishing

and interpreting various ratios for helping in making certain decision.

Here the topic is Historical comparison and interpretation of ratios, in

which comparison of historical data and its interpretation is done with

the current year (2008-09).

Objectives:

The primary objectives for doing this work are as follows.

1. Measuring the profitability of the company.

2. Judging of operational efficiency of company.

3. Assessing the solvency of the company.

4. Measuring short and long term financial position of the company.

5. Facilitating comparative analysis of the performance.

The secondary objective of the study is to determine future course of

action to improve efficiency of the company.

Research Methodology:

It is a comparative study on financial data of the company; here the

analytical research design is taken as a research methodology for

computing the ratios.

Data Collection:


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The topic of research study is concerned with the annual report of the

company and other financial data, so it is secondary data collection

method.

Conclusion and Findings: Current ratio of the company is 4.06, 4.81, 4.97 and 3.68

respectively. It is over the acceptable norm i.e.2:1 and the company

have higher ratio which indicates company can be in better position

to meet current obligation.

Quick ratio of the company is between2.64to2.31 in last four years.

The satisfactory ratio is 1:1. So it can be said that it has satisfactory

liquidity position.

Debtor turnover ratio is 24.46 times in 2005-06, 24.62 times in

2006-07, and 19.42 times in 2007-08, 17.95 times in 2008-09. The

receivables collection period is 15 days, 15 days, 19 days, and 20

days respectively. So collection days are increasing day by day

which is weak sign for the company.

Stock turnover ratio is 9.62 in 2005-06, 10.47 in 2006-07, 9.19 in 2007-

08 and 7.56 in 2008-09 and holding days is 37 days, 34 days,

39and 48 days respectively. It was highest in the 2008-09 i.e

7.56 when holding days are highest 48 days.

In general company make good profit every year and companys

efficiency is also good so it is concluded that company made much

improvement in 2008-09 compare to last three year.

Recommendation:

The Company should give more importance to inventory

management and try to increase inventory turnover ratio. This will

help in reducing inventory costs.

As far as cash management is concerned, cash inflow is efficiently

undertaken, but improvement in cash out flows i.e. payments &disbursement of cash requires considerable attention. As


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managerial point of view, different collection center will be

established for prompt collection and centralize payments of

money from head bank to various suppliers of materials are

required.INDEX

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