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A report on S.Kumars Nationwide Limited

AProject Report On

Finance Management of

SUBMMITED TO

BRAHAMCHARI WADI TRUST INSTITUTE OF BUSINESS

ADMINISTRATION

(AFFILIATED TO THE GUJARAT UNIVERSITY)

TOWARD THE PARTIAL FULFILLMENT OF

THE PAPER OF PRATICAL STUDIES

IN THE SECOND YEAR OF BECHELOR OF

BUSINESS ADMINISTRATION PROGRAM

SUBMMITED BY:Bhoi Kalpesh K.

S.Y.B.B.A

Roll No:-2009

Div:A

1
http://www.sknl.co.in/home.aspx

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PREFACE

Since the few years the business world has completely

changed. There has a rapid development taken place in India

changing the past independence period industrialization in the

country which has made India one of the industrial powers of the

world. Revaluation in the field of commerce and business has

changed many lives in India. The avenues of economic liberalization

and globalization have invited certain change and business

enterprises are now able to face challenges at competition from

multinationals.

Practical knowledge is the essential for facing all direct

circumstances.

Acknowledgement

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I cant reach to my goal without the help of the god .so;

first of all I want to acknowledge fist toe deep dept of gratitude

to the GOD. I am also thankful to my parents whose wish was

with me every time for success of my work.

Now, I would like to thank to the director of my collage

shri.TRIVEDI SHILPA for giving me the golden opportunity.

Then I would like to thank to my project guide Prof. Pallavi

Oza. I am also grateful to all the faculties and office staffmembers of my collage. I cannot describe all their

contributions in my project.

Last but not the least I am grateful to all the authors of

the books that I have used in preparing my project.

Name: - Bhoi Kalpesh K.

Roll No:-2009

Ch Contents Pag

e

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1.

2.

PART ONE

Introduction to company

1) History

2) Mission statement

3) Address of Registered office

4) Board of Director

5) Name of brand & list of products

PART TWO

Theory of Ratio analysis

1 ) Introduction

2) Meaning & classification of ratio analysis

3) Advantages of Ratio analysis

4) Limitation of Ratio analysis

5)Usefulness of ratio analysis

6

7

8

9

11

13

18

19

20

27

30

31

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3.

4.

5.

6) Calculation of Ratio With chart & Ex.

PART THREE

cash flow statement

1)Introduction

3)Utility & limitation

3)Cash flow statement

4)Interpretation

Conclusion

Bibliography

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PART:-1

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COMPANY HISTORY

The transformation of SKNL took place when Nitin Kasliwal

took over the reins of his family run textiles business, of which SKNL

was the flagship company. Since assuming control he has created a

strong textiles focused company that is completely professional in

structure and management. With a vision to clothe the world, SKNL is

arguably the only Indian textiles player today that is operating across

all fiber categories and market segments.

SKNL became a purely textiles and apparel company with no

other businesses. With a strong focus on manufacturing especially it

set up in addition to its existing manufacturing facilities in Dewas MP,

a state of the art luxury suiting plant at Mysore in 1998. With over 4

units spread across these 2 locations, the company was set to achieve

bigger heights.

Challenging circumstances not withstanding SKNL grew at a

scorching pace. It developed a wide distribution network of more than30,000 agents and dealers. Its deep penetration in all retail formats

helped it ride the boom in consumer spending and growth of organised

retail.

To keep pace with brisk growth in business, teams were

strengthened and infrastructure modernized. Offices, plants,

machinery were updated in line with the growth outlined for the

company.

Mission Statement

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SKNL aims to be a model company incorporating the best workethics and corporate governance. The companys mission is to grow

extensively without compromising on quality. It aims to be amongst the

top 3 players in every area of operations. It benchmarks achievements

against international quality standards and treats every milestone

achieved as the stepping-stone to the reach the zenith.

The company continues to pursue growth both organically andinorganically to contribute to the development of the Indian economy.

SKNL believes in fair play, thereby creating value for its

stakeholders, employees and customers to maximize shareholder value.

Instilling in its employees, the need to offer best products and services

to its consumers, SKNL has created a world class enterprise managedby seasoned professionals.

SKNL will continue to operate in all product categories catering

to different segments of the market.

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NAME AND ADDRESS OF THE

COMPANY

Name: S.Kumars Nationwide limited

Registered Office:

Avadh, Shree Ram Mills Premises,

Ganpatrao Kadam Marg, Worli,

Mumbai 400 018.

Website: www.sknl.co.in

Major plants:

Menswear and Home Textiles Complex

3B Industrial Area No. 2, Agra Bombay Road,

Dewas, (M.P.)

Worsted Fabrics Complex

Thandavapura, Nanjangud Taluka,

Mysore Dist., Karnataka.

Spinning and Weaving Complex

Chamunda Standard Mills,

Balgarh, Dewas, (M.P.).

Wardrobe Solutions

No. 121/52, Hosahalli Gollarahatti,

Magadi Road, Bengaluru.

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Karnataka.

High Value Fine Cotton (HVFC) & HomeTextiles

Jhagadia Industrial Estate, GIDC,

Ankleshwar, Gujarat.

Hartmarx Corporation

1680, East Touhy Avenue

Desplanes, IL 60018

Hickey Freeman

1155 Clinton Avenue North

Rochester, Monroe County, NY 14621

Coppley Corporation

56, York Boulevard

Hamilton ON, L8N 3S6

Marling & Evans Limited

Vernon House, 40 New North Road

Huddersfield, West Yorkshire, HD15LS

Leggiuno SPA

Via Dante Alighieri, 121038 Leggiuno (VA) - Italy

.

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Board of directors

Dr. A. C. ShahChairman

Nitin S. KasliwalVice Chairman & Managing

Director

Jyoti N. KasliwalDirector

Anil ChannaDeputy Managing Director

K. P. RauDirector (Nominee of IDBI Bank)

Dr. Vinayshil GautamDirector (Nominee of EXIM

Bank)(W.e.f. 31st October, 2009)

Anish ModiDirector (Nominee of IDM Pvt. Ltd.)

Denys FirthDirector (Nominee of IDM Pvt. Ltd.)

Martin HenryDirector

Vijay KalantriDirector

Dara D. AvariDirector

Col. S. K. RajeDirector

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COMPANY SECRETARY & COMPLIANCE

OFFICERNimesh S. Shah

AUDITORS

M/s. Haribhakti & Co.

SOLICITORS

M/s. Little & Co.

REGISTRAR & TRANSFER AGENTS

Bigshare Services Pvt. Ltd.

E - 2, Ansa Industrial Estate,

Sakivihar Road, Sakinaka,

Andheri (East), Mumbai 400 072

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Brands & products

BRANDS:-

REID & TAYLOR

BELMONTE

S.KUMARS

UNIFORMITYBY

BELMONT

CARMICHAEL HOUSE

STEPHENS BROTHERS

PRODUCTS

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Fabrics:-

Consumer Textiles

School Uniforms

Complete Uniform fabrics (tops & bottoms)

Industrial worker fabrics

Fire resistant fabrics

Stain resistant fabrics

Stretch and other modified blends

Military Uniform Fabrics

Hospitality Uniform Fabrics

Stain & Crease Resistant fabrics

Medical & paramedical work

Easy clean fabrics

Worsted & Premium Suitings

All Wool Superfine

Polywood Blends

Wool Cashmere Blends

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Wool Lines & Wool Silk Polyster blends

Polyster Viscose Blends

Polester Viscose-worsted

Value added polyester Viscose blends

Wrinkle resistant suitings

ECOFRESH suitings

High Value Fine Cotton Fabrics

Poplin, Dobby & Twill-40s

Poplin & Dobby-50s

Poplin, Dobby & Pinpoint-2/80s

Poplin & Fac-2/100s & 1/50s

Poplin, Zephyr, Dobby, Pinpoint & Oxford-

2/100s

Poplin, Dobby & Oxford-2/120s

Poplin & Dobby-2/140s

Apparel;-

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Ready to Wear:-

T-Shirts

Jackets

Socks

Cufflinks

Belts

Suits

Blazers

Shirts

Trousers

Ties

Work Wear Garments:-

T- Shirts

Jackets

Socks

Cufflinks

Belts

Shirts

Lab Coats

Aprons

Trousers

Dungarees

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Home textiles:-

Bed lines :-

Table Linen

Terry Towels

Furnishings

Grey Sheeting Cloth Made ups

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Part: - 2

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Introduction

Money is the live blood of the business. The land,

building, machinery, and other assets like raw material etc.

need the capital.

Money is required for paying rent, eages, interest and

also foe paying other expanses like transportation, storage,

communication; insurance and advertisement etc. expansion

and modernization of a firm cannot be done without proper

finance.

In short, the finance is the oil that lubricates the big

machinery i.e. the business firm. Finance may be said to be the

circulatory system of the corporation between the units of

activity.

Thus, finance management is broadly concerned with the

acquisition and use of funds by a business firm. S.KumarsNationwide limited is in quite good position from the view

point of finance. This because of his sound finance department

the department always tries to minimize the different costs of

the firm.

The company has sat his finance source according to his

needs. The company knows the importance of finance

department so; it always motivates the personnel concernedwith it. Due to this the company is able to achieve his target

within the budget.

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(A)Meaning and definition of ratio analysis:-

Ratio analysis is a widely used tool of financial

analysis. It is defined as the systematic use of ratio

to interpret the financial statements so that the

strength and weaknesses of a firm as well as its

historical performance and current financial

condition can be determined. The term ratio refers

to the numerical or quantitative relationship

between two variables

(B) Classification & types of ratio analysis

Different ratios are used for different purpose these ratios can be

grouped into various classes according to the financial activity.

Ratio are classified into four broad categories.

1. Liquidity Ratio

2. Leverage Ratio

3. Profitability Ratio

4. Activity Ratio

1. Liqudity Ratio:

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Liquidity ratio measures the firms ability to meet its

Current obligations i.e. Ability to pay its obligations and when

they become due. Commonly used ratios are:

Current ratio:Current ratio is the ratio, which express relationship

between current asset and current liabilities. Current asset are

those which can be converted into cash within a short periodof time, normally not exceeding one year. The currentliabilities which short- term maturing to be met.

Current Asset=Current ratio

Current liabilities

Acid test ratio:

The acid test ratio is a measure of liquidity signed to

overcome theDefect of current ratio. It is often referred to as

quick ratio because it is a measurement of firms ability to

convert its current assets quickly into cash in order to meet itscurrent liabilities.

Acid test ratio = Current asset- Inventories

Current liabilities

2.Leverage or capital structure ratio:

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Leverage or capital structure ratios are the ratios, whichindicate the relative interest of the owners and the creditors inan enterprise. These ratios indicate the funds provided by thelong-term creditors and owners.

To judge the term financial position of the firm followingratios are applied.

1. Debt equity ratio:

Debt-equity ratio which expresses the relationshipbetween debt and equity this ratio explains how far ownedfunds are sufficient to pay outside liabilities. It is calculated byfollowing formula

Debt equity ratio = Long term + short term debts + current liabilitiesNet worth

2. Total Debt ratio:

This ratio explains how far owned and borrowed funds

are sufficient to pay debtor the firm

Long term +short term borrowing current liabilities

Capital employed

3. Profitability ratio:

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Profitability ratio are the best indicators of overallefficiency of the business concern, because theycompare return of value over and above the value putinto business with sales or service carried on by the firmwith the help of assets employed. Profitability ratio canbe determined on the basis of:

Sales Investment

Profitability ratios related to sale:

1. Gross profit to sales ratio.

2. Net profit to sales ratio or net profit of margin.

1. Gross profit to sales ratio:The gross profit to sales ratio establishes

relationship between gross profit And sales to measurethe relative operating efficiency of the firm to reflectpricing policy

Sales-cost of goods sold *100

Gross profit to sales ratio= Sale

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2. Net profit margin:

The net margin indicates the managements ability

to earn sufficient profit on sales to earn sufficient profit on

sales not only to cover all revenue operating expenses of

the business, the cost of borrowed funds and the cost of

goods or servicing, but also to have sufficient margin to

pay reasonable comparison to shareholders on theircontributions to the firm.

Net profit margin = Net profit after tax and interest *100

Sales

3. Profitability ratios related to investments:

a. Return on assets

b. Return on capital employed

a. Return on assets:

The profitability ratio here measures the relationship

between net

Profit and assets= Net profit after tax

Fixed assets

b.Return on capital employed:

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Return on capital employed= Net profit after taxesTotal capital employed

3. Activity ratio:

Activity ratio are sometimes are called efficiencyratios. Activity ratios are concerned with how efficiency

the assets of the firm are managed.

These ratio express relatonship between level of

sales and the Investment in various assets inventors,

receivables, fixed assets etc.

The important activity ratios are as follows:

1. Inventory turnover Ratio :

Inventory turn over ratio = Raw materials consumed

Average stock of raw materials

2. Debt turn over ratio :

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This ratio shows quickly debtors are converted into Cash

= Total sales

Debtor

3. Average collection period ratio:

This ratio indicates how quickly the inventory is converted into cash.

=Days in a yearDebtors turnover

4. Working capital turnover ratio:

This ratio shows the number of times the working capital turns in

trading transaction. If it has an increasing trend over the previous

year it shows that the working capital is being used efficiently.

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(C)Advantage of Ratio analysis:

It helps in evaluating the firms performance:

With the help of ratio analysis conclusion can be drawn regarding

several aspects such as financial health. Profitability and operational

efficiency of the undertaking. Ratio points out the operating efficiency of

the firm i.e. whether the management has utilized the firms assets

correctly, to increase the investors wealth. It ensures a fair return to its

owners and secures optimum utilization of firms assets.

It helps in inter-firm comparison:

Ratio analysis helps in inter-firm comparison by providing

necessary data. An interim comparison indicates relative position. It

provides the relevant data for the comparison of the performance of

different departments. If comparison shows a variance, the possible

reasons of variations may be identified and if results are negative, the

action may be initiated immediately to bring them in line.

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It simplifies financial statement:

The information given in the basic financial statements serves no

useful Purpose unless it s interrupted and analyzed in some comparable

terms. The ratio analysis is one of the tools in the hands of those who want

to know something more from the financial statements in the simplified

manner.

It helps in determining the financial position of the

concern:

Ratio analysis facilitates the management to know whether the firms

financial position is improving or deteriorating or is constant over the years

by setting a trend with the help of ratios The analysis with the help of ratio

analysis can know the direction of the trend of strategic ratio may help the

management in the task of planning, forecasting and controlling.

It is helpful in budgeting and forecasting:

Accounting ratios provide a reliable data, which can be compared, studied

and analyzed. These ratios provide sound footing for future prospectus. The ratios

can also serve as a basis for preparing budgeting future line of action.

Liquidity position:

With help of ratio analysis conclusions 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

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become due. The ability to met short term liabilities is reflected in the

liquidity ratio of a firm.

Long term solvency:

Ratio analysis is equally for assessing the long term financial ability of the

Firm. The long term solvency s measured by the leverage or capital structure and

profitability ratio which shows the earning power and operating efficiency, Solvency

ratio shows relationship between total liability and total assets.

Operating efficiency:

Yet another dimension of usefulness or ratio analysis, relevant

from the View point of management is that it throws light on the

degree efficiency in the various activity ratios measures this kind of

operational efficiency.

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(D)'''''Limitations of financial ratioanalysis'''''

(1) Many ratios are calculated on the basis of the balance-sheet figures.These figures are as on the balance-sheet date only and may not beindicative of the year-round position.

(2) Comparing the ratios with past trends and with competitors may notgive a correct picture as the figures may not be easily comparable dueto the difference in accounting policies, accounting period etc.

(3) It gives current and past trends, but not future trends. # Impact ofinflation is not properly reflected, as many figures are taken at historicalnumbers, several years old.

(4) There are differences in approach among financial analysts on how

to treat certain items, how to interpret ratios etc.

(5) The ratios are only as good or bad as the underlying informationused to calculate them.

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(E)Usefulness of Ratio analysis

Ratio analysis is a technique of analyzing the financial

statements by calculating ratios. Here is the list of uses of ratio

analysis

1. It is useful for inter firm comparison which implies that

company compares its performance with that of its industry

peers.

2. It is useful in intra firm comparison which means that

company will compare the performance of various

departments of the company so as to judge the best

department within the company.

3. It is useful in simplifying the accounting figures to makethem understandable to a layman, because it is easier to

understand ratios then plain figures.

4. It is also useful in forecasting and planning for the future,

also it helps in control by comparing the actual performance

with that of forecasted performance and looking for reason for

it.

5. It is also used for analysis of financial statements by various

interested parties like bankers, creditors, supplier etc. for

taking future decision about the company.

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Meaning of liquidity:The term liquidity refers to ability to pay its obligations when they

become due. Liquidity ratios measure the ability of a firm to meet its

short-term obligations and reflect the short-term financial strength or

solvency of a firm.

Liquidity ratios are classified into two types:

1. Short term liquidity and

2. Long term liquidity

(1)Current Ratio :-

Definition: - This most widely used ratio shows theproportion of current assets to current liabilities. It is also

known as Working capital Ratio.

The ratio is obtained by dividing current assets by current

liabilities.

Formula : - Current Assets

Current Liabilities

Particular/year 2007-2008 2008-2009 2009-2010

Current assets 110125.11 145737.49 180183.04

Current liabilities 11656.91 14312.68 24418.00

Ratio 9.45:1 10.18:1 7.38:1

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0

2

4

6

8

10

12

2007-2008 2008-2009 2009-2010

Current Ratio

Interpretation:-

The current ratio for the year 2008-2009 is 10.18

compared to ratio 9.45 this ratio is high short term liquidity efficiency at

the same time holding more than sufficient current assets mean

inefficient use of resources.

The ratio for the year 2009-2010 is 7.38:1 which

means efficient use of funds but at the risk of low liquidity.

(2)Liquid ratio :-

Definition: - To remove the defect of current ratio, liquidratio is used. It is a variant of current which is designed

to show the amount of funds available to meet

immediate payments. It is obtained by dividing the liquid

assets by liquid liabilities.

Formula :- Liquid Ratio = Liquid Assets

Liquid Liabilities

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Particular/year 2007-2008 2008-2009 2009-2010

Liquid assets 61873.51 87964.81 107589.17

Liquid liabilities 11656.91 14312.68 24418.00

Ratio 5.31 6.15 4.41

Chart : -

0

1

2

3

4

5

6

7

2007-2008 2008-2009 2009-2010

Liquid ratio

3-D Column 23-D Column 3

Interpretation:-

This liquid ratio in the year 2007-2008 is 5.31 & in the

year 2008-2009 is increase 6.15 later this year it decreases. It means

the ratio of the year 2009-2010 is 4.41 the ratio during 2009-2010 was

unsatisfactory but the company is in the position to cover it in short run.

(3) Proprietary fund ratio :-

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Definition :- The ratio shows the proportion of

proprietors funds to the total assets employed in thebusiness. The proprietors funds or shareholders equity

consist of share capital and reserve.

Formula :- Proprietors Funds *100

Total assets

Particular/year 2007-2008 2008-2009 2009-2010

Proprietors fund 96803.61 105775.17 91260.95

Total assets 117571.87 285811.03 346034.52

Ratio 82.36 31.93 30.57

Chart :-

0

10

2030

40

50

60

70

80

90

2007-2008 2008-2009 2009-2010

Proprietory Ratio

Interpretation :-

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The ratio increase only in the year 2007-2008

after that it is decrease in the year 2008-2009 &after also decrease in the year 2009-2010 was

30.57 %.

(4)Operating ratio :-

Definition: - It is a ratio that shows relationship between cost ofgoods sold plus operating expenses to sales. Operating

expenses include administrative and selling and distribution

expenses. They do not include finance expenses like interest and

taxes on income. Of course, some analyses include even finance

expenses also. It is computed as follows.

Formula :-

Operating Ratio = Cost of goods sold + Operating expenses

Net Sales

Particular/year 2007-2008 2008-2009 2009-2010

C.O.G.S 115030.43 135654.07 180565.03

Operating

expenses

20080.67 21225.74 34209.06

Sales 160572.30 155022.84 215482.12

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Ratio 84.14 101.10 99.67

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010

East

Interpretation:-

From the above chart We can say that the

manufacturing & selling & distribution expenses Of the company are

increasing.

(5)Gross profit ratio

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Definition: - It is the basic measure of profitability of business. It

expresses relationship between gross profits earned to net sale.It is also known as gross margin.

Formula :- Gross Profit *100

Sale

Particular/year 2007-2008 2008-2009 2009-2010

Gross profit 45541.87 19368.77 34917.09

Sales 160572.30 155022.84 215482.12

Ratio 28.36% 12.48% 16.20%

Chart :-

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2007-2008 2008-2009 2009-2010

Gross profit Ratio

3-D Column 2

3-D Column 3

Interpretation :-

Here, there is high ratio in 2007-2008 is 28.36%

It means it is a good for company but after that

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It is decrease which is shown as cost of

production is decrease by time to time.

(6) Net profit ratio :-

Definition: - This ratio measures the relation between the net

profits and sales of the firm. The net profit is obtained after

charging operating expenses, interest, depreciation and taxes to

the gross profit. The reasonable ratio ensures adequate return to

the owners and so it is of great significance to owners.

Formula :-

Net profit ratio = Net profit ( After tax) * 100

Sales

Particular/year 2007-2008 2008-2009 2009-2010

Net profit 17812.67 6008.64 10610.25

Sales 160572.30 155022.84 215482.12

Ratio 11.1 3.88 4.92

Chart :-

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0

2

4

6

8

10

12

2007-02008 2008-2009 2009-2010

Net profit ratio

Interpretation :-

The above chart implies that the efficiency of profit earning of the

company is decrease & increase rate as the net profit ratio is decrease

from 11.1 to 3.88 for the second year & it is increase at 4.92. Here the

profitability of Net profit is increase decrease increase.

(7) Stock Turnover

Definition: - The ratio signifying the efficiency of sales is the stock

turnover. It shows the number of times the average stock is

turned over during the year. It is computed by dividing the cost

goods sold by the average stock of the year. If however, themonthly figures of the stock are available, the average monthly

stock will give a better turnover ratio.

Stock Turnover = Cost of goods sold

Average Stock

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Particular/year 2007-2008 2008-2009 2009-2010

C.O.G.S 115030.43 135654.07 180565.03

Average stock 32437.20 32704.45 40865.81

Ratio 3.55 4.15 4.42

0

0.5

1

1.5

2

2.5

3

3.5

44.5

2007-2008 2008-2009 2009-2010

Stock turnover

3-D Column 2

3-D Column 3

Interpretation :-

The stock turn over ratio is 3.55 in the year

2007-2008 & after that it is increasing in the

year 2008-2009. After that it is increasing

rapidly in the year 2009-2010. This is

satisfactory for the Company. In this case the

company can be considered in good position.

Here ratio is increasing.

(8) Total assets turnover :-

Definition : -

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The funds used in business are employed in both

fixed assets and current assets both, and profit isearned with the help of both. Hence it would be useful

to know the proportion of total assets to sales.

Formula :-

Total assets turnover = Sales

Current Assets

Particular/year 2007-2008 2008-2009 2009-2010

Sales 160572.30 155022.84 215482.12

Total sales 207446.32 285811.03 346034.50

Ratio 0.77 0.54 0.62

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0

0.1

0.2

0.3

0.4

0.5

0.6

0.70.8

2007-

2008

2008-

2009

2009-

2010

Total assets turnover

(9) Fixed assets turnover:-

Definition :-

To ascertain the efficiency and profitability of business,

the total fixed assets are compared to sales. The more the sales in

relation to the amount invested in fixed assets, the more the sales inrelation to the amount invested in fixed assets, the more efficient is the

use of fixed assets. It indicates higher efficiency. If the sales are less as

compared to investment in fixed assets, it means that fixed assets are

not adequately utilized in business. Of course, excessive sale is in

indication of over trading and is dangerous. This ratio is computed as

follows:

Formula:-

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Fixed Assets Turnover = SalesFixed Assets

Particular/year 2007-2008 2008-2009 2009-2010

Sales 160572.30 155022.84 215482.12

Fixed assets 83727.53 109583.69 12545.67

Ratio 1.92 1.41 1.77

Interpretation :-

In this ratio in 2007-2008 is 1.92 & after that in the

year 2008-09 ratio is 1.41. It is decrease that is not

good for company but after rapidly increase in year

2009-2010 situations comfortable because of

increase ratio.

(10) Debtor ratio :-

Definition: - The ratio shows the number of days taken to collectthe dues of credit sales. It shows the efficiency or otherwise of

collection policy of an enterprise.

The ratio is computed by dividing debtors and bills

receivable by the average daily sales. The average daily

sale is obtained by dividing the total annual sales by 365.

Formula :-

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Debtors Ratio = Debtors + Bills ReceivableAverage Daily Sales

Particular/year 2007-2008 2008-2009 2009-2010

Debtors 61028.78 83666.94 102963.35Credit sales 160572.30 155022.84 215482.12

Ratio 139 Days 197 Days 174 Days

Interpretation :-

With the help of chart We can say that the ratio

of 2008-09 its better than 2007-08 ratio and in

2009-10 it was decreased.

(11) Debtor turn over ratio :-

Definition :-

The debtor turnover suggests the number of times the

amount of credit sale is collected during the year.

46

0

50

100

150

200

2007-2008 2008-2009 2009-2010

Ratio

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Formula: - Credit sales

Debtors

Particular/year 2007-2008 2008-2009 2009-2010

Credit sales 160572.78 155022.84 215482.12

Debtors 61028.78 83666.94 102963.35

Ratio 2.63 1.85 2.09

0

0.5

1

1.5

2

2.5

3

2007-

2008

2008-

2009

2009-

2010

Debtor turnover ratio

Interpretation:-

The debtor turnover ratio is 2.63 high. And for

the year of 2008-09 is 1.85 and for the year of

2009-10 is 2.09 its less than year of 2007-08

and better than 2008-09.

(12) Return on total assets ratio:-

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Definition: - Profit is earned in business for the owners and so

they are naturally interested in the return they get on their money

invested in companys business. This is measured by return on

shareholders equity.

Formula: - Net profit after taxes *100

Shareholders funds

Particular/year 2007-2008 2008-2009 2009-2010

Net profit aftertaxes

17812.67 6008.64 10610.25

Shareholders

fund

96803.61 91260.95 107747.36

Ratio 18.40 6.58 9.85

0

5

10

15

20

2007-08 2008-09 2009-10

Return on shareholders' equity

Interpretation:-

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Here ratio of the 2007-08 is a good but after that

it is decrease in 2008-09 and In 2009-10 ratio is

increase it means company is in a progress.

(13) Capital Gearing Ratio:-

This ratio expresses the proportion of

preference capital + debenture and ordinary

capital.

Formula:-

Capital Gearing Ratio = fixed interest bearing Capital

Ordinary Capital

Particular/year 2007-2008 2008-2009 2009-2010

All liability 17221.44 8694.37 7638.29

Equity sh. capital 21004.86 22339.14 23651.38

Ratio 0.82 0.39 0.32

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0

0.2

0.4

0.6

0.8

1

2007-08 2008-09 2009-10

Capital gearingratio

Interpretation:-

In the year of 2007-08 it is 0.82 And It is

decrease in the year of 2008-09 to 0 .39:1

and in 2009-10 it decrease at 0.32:1

Companys long term liability are

decreased & this is reason behind

decrease of ratio.

(14) Expense ratio:-

Expense ratio for the purpose of ascertaining

relationship between operating expenses & Net

sales.

Formula:-

Expense ratio = Expense

Sales

Particular/year 2007-2008 2008-2009 2009-2010

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Expenses 133258.95 153841.54 211173.09

Sales 160572.30 155022.84 215482.12

Ratio 0.83 0.99 0.98

0.75

0.8

0.85

0.9

0.95

1

2007-2008 2008-2009 2009-2010

Expenses ratio3-D Column 2

3-D Column 3

Interpretation:-In this ratio are increasing respectively

year to year. Hear the ratio is 0.83 in the

year 2007-08 and it increase the year of

2008-09 to 0.99 and in 2009-10 it increase

at 0.98

(15) Return on total assets ratio:-

Definition:- The return on total assets implies how the

funds supplied by both owners and creditors are

utilized in business. Thus it measures the overall

profitability of the business.

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Formula:-

Return on Total Assets= Net profit after taxes * 100

Total assets

Particular/year 2007-2008 2008-2009 2009-2010

NPAT 17812.67 6008.64 10610.25

Total assets 207446.32 285811.03 346034.50

Ratio 8.59 2.10 3.07

0

2

4

6

8

10

2007-08 2008-09 2009-10

Return on total asset

3-D Column 2

3-D Column 3

Interpretation:- In year 2007-2008 ratio is 8.59 and

as the company has used leverage, it was able to

earn much higher return on its equity shares than it

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earned on its total assets. And in 2008-09 Ratio

Decrease And in 2009-10 it is little increase it is

show the situation of company

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Introduction

Cash is the most liquid assets of a business. All business

transactions ultimately result in to cash in flow or cash flow,

hence a statement that flow is considered to be an important

on it can be said, and therefore that cash is both beginning

and the end of the business operations. The business should

have sufficient cash on hand, that the liabilities can be paid as

and when they fall due. The cash on hand should not be

excessive otherwise the cash would remain idle, reducing the

over all profit ability.

Sources of Cash Flows,

The most important source of cash in flow is that which is

generated by business operations. This includes two items.

Profit from operations.

Cash flow from change in current assets is current

liabilities.

Cash Flow from Fixed Assets and Liabilities,

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(a) Cash receipts

(1) Sale of fixed assets

(2) Sales of investment

(3) Proceeds of fresh issue of shares or debentures

(4) Bank loan etc.

(b) Cash Payments.

(1) Purchase of fixed assets

(2) Shares capital or bank loan returned

(3) Payment of dividend

(4) Payment of taxes.

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Utility of cash flow statement

(A) Efficient cash management

(B) Useful for internal financial management

(C) Information about cash receipts and payments

(D) Useful for control

(E) Ease in obtaining funds

Limitations of Cash flow statement

(A) Does not always show the true liquid position of business

(B) Fails to give any idea about the profitability

(C) Cash flow can at the best supplement fund flow

statement be cause cash is only a part of working

capitals.

(D) Cash Flow statement is not useful by it self for cash

planning and control.

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Cash flow statement

Particulars 2007-2008

2008-2009

2009-2010

Rs. In Lacs

A. CASH FLOW FROMOPERATING ACTIVITIES

Net profit before tax &extraordinary items

21866.58 14253.70 14152.19

Adjusted For;

Depreciation 3566.54 265 4 .49 4171.21

Deferred revenueexpenditure

1001.26 1261. 49 1596.27

Profit & Loss on sales of

fixed assets

(-32.91) (-65.51) 463.51

Sundry balances writtenback

(-44.90) (12.46 ) (27.55)

Sundry balances written off 119.35 5.75 7.91

ESOP compensationdebited to P &L

171.80 308.75 151.30

Bad debts -- 10.02 --

Interest expenses 8310.96 13461.26 23596.46

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Interest income (-222.52) (-97.22) (58.50)

Income on CDR exit -- (-5779.75) --

Provision for doubtful debts -- 142.80 114.45

Exchange rate fluctuation -- 1129.04 (282.67)

Operating Profit beforeworking capital changes

34736.15 27271.86 43884.58

Adjusted For :

Trade and other receivables 2717.03 (29417.65) (19466.09)

Inventories 2113.75 (9521.08) (14821.19)

Trade payables &provisions

(3108.89) 1311.49 596.50

Cash generated fromOperations

36458.04 (10355.38)

10193.80

Direct taxes (2971.39) (8877.15) (6130.63)

Cash flow/(outflow)before prior periodActivities

33486.65 (19232.53)

4063.17

Prior period Adjustment(gross)

(45.62) (54.52) 34.02

Net cash from OperatingActivities (A)

33441.03 (19287.05)

4097.19

B. CASH FLOW FOMINVESTING ACTIVITIESAcquisition of fixed assets(including capital work inprogress)

(38701.32) (28707.63) (16528.57)

Sale of fixed assets 9349.37 211.15 14.75

Investment (4003.52) (16490.29) (21936.72)

Interest income 222.53 97.72 58.50

Net cash flow from/(used)in investing (33132.94) (44889.05) (38392.04)

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Activities (B)

C. CASH FLOW ARISIGFROM FINANCINGACTIVITIESProceed from secured loans (2229.82) 86638.68 58807.35

Proceed from unsecuredloans

(6896.96) (3043.37) (872.36)

Proceed from equityshares/ shares to be

allotted

16445.56 0.00 1340.35

Proceed from preferenceshares

77.26 (8284.57) (1056.08)

Interest expenses (8310.96) (13461.26)

(23596.46)

Income on CDR exit -- 5779.75 --

Net cash flow fromFinancing Activities (c)

(914.92) 67629.24 34622.80

Net Increase in Cash &Cash Equivalents(A+B+C)

(606.83) 3453.14 327.95

Opening Bal. of Cash &Cash Equivalents

1451.56 844.73 4297.87

Closing Bal. of Cash & CashEquivalents

844.73 4297.87 4625.82

Net change in cash &cash Equivalent

(606.83) 3453.14 325.95

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Interpretation:

Profit before Tax:

The profit in year 2008, 2008, and 2010 is respectively21866.58, 14253.70 & 14152.19. This shows decreasingcash inflow. By which the firm can get its currentobligations.

Operating profit before change in working capital:

The profit in year 2008, 2009 & 2010 is 33441.03,(19287.05) & 4097.19 lacs which is increasing. This is thekey indicator to the firm to the extant to which theoperations of the enterprise have generated sufficient cashflow.

Cash Flow from Investing Activities:

In year 2008, 2009 & 2010 the cash flow is (33132.94),(44889.05), and (38392.04) .The inflow is less than the cashoutflow. Which represent the extent to which expenditurehas been made for resources intended to generate futureincome & cash flows.

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Cash Flow from Financing Activities:

The separate disclosure of cash flows arising from financingactivities is important because it is useful in predictingclaims on future cash flow by providers of funds to theenterprise.

CONCLUSION

Finally I considered that this project of S.kumars Nationwide

Limited was a great experience. It was very wonderful experiences

for me form this project. I learned about the particular aspects of the

private sector.S.Kumars Nationwide limited is one of the leading textile co.

of the world by careful analysis at this report it is found that

S.Kumars Nationwide limited is developing at very fast rate and that

days are not far when SKNL will become the leading Company in

the world.

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BIBILIOGRAPHY

Web Site: www.sknl.co.in

Book: Accountancy B.S.SHAH PRAKASHAN

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