1

A STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF

MILLWRIGHTS ENGINEERING PVT LTD, COIMBATORE.
PROJECT REPORT

Submitted
by
SOUNDARYA K.S
Register No: 622022631036

In partial fulfillment for the award of the degree

Of

MASTER OF BUSINESS ADMINISTRATION

In
Submitted to

DEPARTMENT OF BUSINESS ADMINISTRATION

PAAVAI COLLEGE ENGINEERING

NAMAKKAL - 637018

JUNE 2024
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BONAFIDE CERTIFICATE

Certified that this summer training report is the bonafide work of

SOUNDARYA K.S, Reg.No.622022631036, II MBA, Paavai
College Of Engineering, Pachal, Namakkal, who undergone the
training work under my supervision. Certified further that to the best
of my knowledge the work reported herein does not form part of any
other report on the basis of which a degree or award was conferred on
an earlier occasion on this or any other candidate.

FACULTY GUIDE HEAD OF THE

DEPARTMENT

Submitted for the End semester Examinations held on _______________

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INTERNAL EXAMINER EXTERNAL

EXAMINER

ACKNOWLEDGEMENT

I Would like to express my gratitude to Shri.CA.N.V.Natrajan,

Chairman, B.Com, FCA, and Smt.N.MangaiarkarasiM.sc.,
Correspondent, Paavai College Of Engineering, Pachal, Namakkal
for giving me an opportunity and facility to complete this project.
I Feel immense pleasure in expressing my deep sense of
gratitude to Mr.K.K.Ramasamy, M.E., Ph.D., Director
Administration, Paavai Engineering College, Pachal, Namakkal for
all the encouragement received during the MBA course.
I Wish to place my deep sense of gratitude to Dr.C.Suresh Kumar,
M.E., Ph.D., Principal, Paavai College Of Engineering, Pachal,
Namakkal for all the encouragement received during the MBA
course.
I Would like to express my gratitude to Dr.C.Suresh Kumar, M.E.,
Ph.D., Principal, Paavai College Of Engineering, Pachal,
Namakkal and all the faculty members of MBA department.
I Owe my boundless thanks and gratitude towards my faculty guide
Ms.S.Megalatha., MBA., Paavai College Of Engineering, Pachal,
Namakkal for her guidance for preparation of this training report.

SOUNDARYA K.S
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CONTENTS

Chapter No Particulars Page No

List of Tables
List of Charts
1 INTRODUCTION
1.1 Introduction 1
1.2 Objectives of the study 6
1.3 Scope of the study 8
1.4 Limitations of the study 8
2 CONCEPTS AND REVIEW
2.1 Review of related literature 9
2.2 Company profile 12
3 METHODOLOGY
3.1 Research design 14
3.2 Sources of data 14
3.3 Reasearch tools 14
4 DATA ANALYSIS AND INTERPRETATION

4.1 Analysis of the data 15

5 RESULTS AND DISCUSSION
5.1 Findings 28
5.2 Suggestions 28
5.3 Conclusions 29
Appendices
References
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LIST OF THE TABLES

TABLE NO TITLE PAGE NO

4.1 Current ratio 16

4.2 Quick ratio 18

4.3 Interest coverage ratio 20

4.4 Operating profit ratio 22

4.5 Pre tax profit 24

4.6 Cash position ratio 26

LIST OF THE CHARTS

TABLE NO TITLE PAGE NO

4.a Current ratio 17

4.b Quick ratio 19

4.c Interest coverage ratio 21

4.d Operating profit ratio 23

4.e Pre tax profit 25

4.f Cash position ratio 27

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CHAPTER – 1

1.1 INTRODUCTION

FINANCE

Finance is the art and science of managing money. Finance is regarding as the life blood of a
business enterprise. In general, finance may be defined as the activity concerned with
planning, raising, controlling and administering of the funds used in business. The term
financial analysis also known as analysis and interpretation of financial statement, refers to
the process of determining financial strength and weakness of the firm by establishing
strategic relationship between the items of the profit & loss and balance sheet and other
operational data.

MEANING OF FINANCE

Finance is a field that deals with the study of investments. It includes the dynamics of
assets and liabilities over time under conditions of different degrees of uncertainty and risk.
Finance can also be defined as the science of money management. Finance aims to price
assets based on their risk level and their expected rate of return. Finance can be broken into
three different sub-categories: public finance, corporate finance and personal finance.

The term “financial statement analysis is largely a study of relationship among the
various financial factors in a business as disclosed by a single set of statement and a study of
the trend of these factors as shown in a serried of statement”.

DEFINITION

According to Metcalf and Titard, “Analyzing financial statement in the process of evaluating
the relationship between the component part of the financial statements to obtain a better
understanding of a firm’s position and performance”.

TYPES OF FINANCIAL ANALYSIS

Financial statements are analyzed by different parties for different purposed. The analysis is
done from different angles. Accordingly, we can classify financial statement analysis into

different categories as follows:

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1. On the basis of concerned parties:

According to different parties concerned with the operation of the company,
the financial statement analysis can be of two types:

• External Analysis

• Internal Analysis

(a) External Analysis:

When the analysis is undertaken by outside parties namely existing and
prospective investors, suppliers, lenders, government agencies, customers etc., it
is external financial statement analysis. These external parties do not have any
access to the internal records of the company; nor do they have any scope to
know the hidden accounting policy, if any, of the management. So, they have to
depend almost entirely on the published financial statements and other additional
information supplied by the management.

(b)Internal Analysis:
This analysis is undertaken by the management of the company to monitor its
financial and operating performance. As the analysis is done by the party who has
access to the internal records and policies, it is expected to be more effective and
reliable.

2. On the basis of time period of the study :

Based on the time period covered for the study, the financial statement analysis
can be grouped into: Horizontal Analysis Vertical Analysis

(a) Horizontal Analysis:

This analysis refers to the study of past consecutive balance sheets, income
statements or statements of cash flow at a time. The analysis can be made between
two periods or over a series of periods. The relevant accounting numbers of all years
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of the study are presented horizontally in a statement over a number of columns each
representing a year. Those figures can also be graphically presented. The figures of
each year are compared with those of the base year i.e., the beginning year of the
study. This analysis is also called ‘Dynamic Analysis’ as it covers several years for
study. This analysis is very much effective for understanding the direction and trend
of the organization particularly when it is undertaken for several years. Comparative
statements and trend analysis are two important tools that can be employed for
horizontal analysis.

(b)Vertical Analysis:

When the analysis is restricted to the financial statements of one particular

period only, it is known as vertical analysis of financial statements. In this analysis
each item of a particular financial statement is expressed as percentage of a base
figure selected from the same statement. It is also known as ‘Static Analysis’ as it
concentrates solely on one year’s financial statement. Common-size statements and
accounting ratios are two important tools used for vertical analysis. This analysis is
very much useful for understanding the structural relationship of various items in a
financial statement. Vertical analysis can also be done for studying the relationship
within a set of financial statement at a point of time.

Tools and techniques of financial statement analysis

1. Comparative Statement or Comparative Financial and Operating
Statements.
2. Common Size Statements.
3. Trend Ratios or Trend Analysis.
4. Average Analysis.
5. Statement of Changes in Working Capital.
6. Fund Flow Analysis.
7. Cash Flow Analysis.
8. Ratio Analysis.
9. Cost Volume Profit Analysis
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A brief explanation of the tools or techniques of financial statement analysis presented

below :

1. Comparative Statements
Comparative statements deal with the comparison of different items of the Profit and
Loss Account and Balance Sheets of two or more periods. Separate comparative statements
are prepared for Profit and Loss Account as Comparative Income Statement and for Balance
Sheets.

As a rule, any financial statement can be presented in the form of comparative statement
such as comparative balance sheet, comparative profit and loss account, comparative cost of
production statement, comparative statement of working capital and the like.

2. Comparative Income Statement

Three important information are obtained from the Comparative Income Statement.
They are Gross Profit, Operating Profit and Net Profit. The changes or the improvement in
the profitability of the business concern is find out over a period of time. If the changes or
improvement is not satisfactory, the management can find out the reasons for it and some
corrective action can be taken.

3. Comparative Balance Sheet

The financial condition of the business concern can be find out by preparing
comparative balance sheet. The various items of Balance sheet for two different periods are
used. The assets are classified as current assets and fixed assets for comparison. Likewise,
the liabilities are classified as current liabilities, long term liabilities and shareholders’ net
worth. The term shareholders’ net worth includes Equity Share Capital, Preference Share
Capital, Reserves and Surplus and the like.
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4. Common Size Statements

A vertical presentation of financial information is followed for preparing common-size statements.

Besides, the rupee value of financial statement contents are not taken into consideration. But, only
percentage is considered for preparing common size statement.

The total assets or total liabilities or sales is taken as 100 and the balance items are compared
to the total assets, total liabilities or sales in terms of percentage. Thus, a common size
statement shows the relation of each component to the whole. Separate common size
statement is prepared for profit and loss account as Common Size Income Statement and for
balance sheet as Common Size Balance Sheet.

5. Trend Analysis
The ratios of different items for various periods are find out and then compared under
this analysis. The analysis of the ratios over a period of years gives an idea of whether the
business concern is trending upward or downward. This analysis is otherwise called as
Pyramid Method.

6. Average Analysis
Whenever, the trend ratios are calculated for a business concern, such ratios are
compared with industry average. These both trends can be presented on the graph paper also
in the shape of curves. This presentation of facts in the shape of pictures makes the analysis
and comparison more comprehensive and impressive.

7. Statement of Changes in Working Capital

The extent of increase or decrease of working capital is identified by preparing the
statement of changes in working capital. The amount of net working capital is calculated by
subtracting the sum of current liabilities from the sum of current assets. It does not detail the
reasons for changes in working capital.

8. Fund Flow Analysis

Fund flow analysis deals with detailed sources and application of funds of the
business concern for a specific period. It indicates where funds come from and how they are
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used during the period under review. It highlights the changes in the financial structure of the
company.
9. Cash Flow Analysis
Cash flow analysis is based on the movement of cash and bank balances. In other
words, the movement of cash instead of movement of working capital would be considered
in the cash flow analysis. There are two types of cash flows. They are actual cash flows and
notional cash flows.

10. Ratio Analysis

Ratio analysis is an attempt of developing meaningful relationship between
individual items (or group of items) in the balance sheet or profit and loss account. Ratio
analysis is not only useful to internal parties of business concern but also useful to external
parties. Ratio analysis highlights the liquidity, solvency, profitability and capital gearing.

11. Cost Volume Profit Analysis

This analysis discloses the prevailing relationship among sales, cost and profit. The
cost is divided into two. They are fixed cost and variable cost.constant relationship between

sales and variable cost.

1.2 OBJECTIVE OF FINANCIAL STATEMENT ANALYSIS

Financial statement is helpful in assessing the financial position and profitability of

the concern. Keeping in the view of accounting ratio the accountant should calculate the ratio
in appropriate form as early as possible for presentation for management for managerial
decisions.

Following are the main objectives of analysis of financial statements: -

1. To evaluate the business in terms of profit in present and future.

2. To evaluate the efficiency of various parts or department of the business.
3. To evaluate the short term and long term solvency of business for distributing
profit to the trade creditor and debenture holders.
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4. To evaluate the chances of growth of business in the future by preparing budgets

and forecasting.
5. To evaluate the operational efficiency of one firm with another firm by study the
comparative statements.

IMPORTANCE OF ANALYSIS OF FINANCIAL STATEMENT

Financial statement is prepared at a certain point of time according to established

convention. These statements are prepared to suit the requirement of the proprietor. For
measuring the financial soundness, efficiency, profitability and future prospects of the
concern, it is necessary to analyze the financial statement. Following purposes are served by
the Financial analysis: -

1. Help in Evaluating the operational of efficiency the Concern:- It is

necessary to analyze the financial statement for matching the total expenses incurred
in manufacturing, Advertising, selling and distribution of the finished goods and total
financial expanses of the current year comparing with the total expanses of the
previous year and evaluate the managerial efficiency of concern.

2. Help in Evaluating the short and long term financial position:- It is

necessary to analyze the financial statement for comparing the current assets and

current liabilities to evaluate the short term and long term financial soundness .

3. Help in calculating the profitability: - It is necessary to analyze the financial

statement to know the gross profit and net profit.

4. Help in indicating the trend of achievements :- Analysis of financial

statement helps in comparing the Financial position of previous year and also
compare various expenses, purchases and sales growth, gross and net profit. Cost of
goods sold, total value of assets and liabilities can be compare easily with the help of
Analysis of financial statement.

5. Forecasting, budgeting and deciding future line of action:-The

potential growth of the business can be predicts by the analysis of financial statement
which helps in deciding future line of action. Comparisons of actual performance
with target show all the shortcomings.
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6. LIMITATIONS OF FINANCIAL ANALYSIS

 It is Suffering from the limitations of financial statements

 There is Absence of standard universally accepted terminology in financial
analysis
 price level changes is ignored in financial analysis
 quantity aspect is ignored in financial analysis
 Financial analysis provides misleading result in absence of absolute data

1.3 SCOPE OF THE STUDY:

1. This study clearly defines the financial status of the concern during the
working period.
2. The scope is limited to the secondary data only.
3. An effort is made to find out the level of achievement of the company.

1.4 LIMITATION OF THE STUDY:

1. This study based on past data.

2. Financial statement analysis cannot be a substitute for judgment.

3. In this study only selected ratio analysis are used.

4. The period of study is 1 month only.

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CHAPTER - 2

2.1 REVIEW OF LITERATURE

Review of literature refers to the collection of the result of the various

researches relating to the present study. It takes into consideration the research of the
previous researchers which are related to the present research in any way. Here are the
reviews of the previous research related with the present study.

Robert W. Smith and Thomas D. Lynch

Ratio is any strategic or tactical advantage, and as a verb, means to exploit
such an advantage, just as the use of a physical lever gives one an advantage in the physical
sense.Ratio is a very popular business term .In the world of finance, Ratio is the use of
borrowed money to make an investment and the return on an investment.

Ethan Coquette
Which an investor or business is utilizing borrowed money. Companies
that are highly Ratio may be at risk of bankruptcy if they are unable to make payments on
their debt; they may also be unable to find new lenders in the future. Ratio is not always bad,
however; it can increase the shareholders' return on their investment and often there is

BOLLEN(1999) conducted a study on Ration Variables on which he found three different

uses of ratio variables in aggregated data analysis: (1)as measure of theoretical concepts, (2)
as a means to control an extraneous factor, and (3) as a correction for heteroscedasticity. In
the use of ratios as indices of concepts, a problem can arise if it is regressed on other indices
or variables that contain a common component. For example , the relationship between two
per capital measures may be confounded with the common population component in each
variable. Regarding the second use of ratio, only under exceptional conditions will ratio
variaables be a suitable means of controlling an extraneous factor. Finally, the use of ratios
to correct for heteroscedasticity. Alternative to ratios for each of these cases are discussed
and evaluated.
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Cooper(2000) conducted a study on Financial Intermediation on which he observed that

the quantitative behavior of business-cycle models in which the intermediation process acts
either as a source of fluctuations or as a propagator of real shocks. In neither case do we find
convincing evidence that the intermediation process is an important element of aggregated
fluctuations. For an economy driven by intermediation shocks, consumption is not smoother
than output, investment is negatively correlated with output, variations in the capital stock
are quite large, and interest rates are procyclical . The model economy thus fails to match
unconditional moments for the U.S. economy. We also structurally estimate parameters of a
model economy in which intermediation and productivity shocks are present, allowing for
the intermediation process to propagated the real shock. The unconditional correlations are
closer to those observed only when the intermediation shock is relatively unimportant.

Gerrard(2001)conducted a study on The Financial performance on which he found that

Using ratio analysis the financial performance of a sample of independent single-plant
engineering firms in Leeds is examined with regard to structural and locational differences in
establishments .A number of determinants of performance are derived and lestedgainst the
constructed data base. Inner-city engineering firms performs relatively less well on all
indicators of using different measures of performance since this affects the magnitude and
significance of the results. Financial support in necessary to sustain engineering in the inner
city in the long run.

Schmidgall (2003) conducted a study on Financial Analysis Using the Statement of Cash
flow on which he observed that Managers use may financial ratios to judge the health of
their businesses. With the recent requirement of a statement of cash flow (SCF) by the
Financial Accounting Standards Board, managers now have a new set of ratios that will give
a realistic picture of the business. The ratios include cash flow-interesst coverage, cash
flow-dividend coverage, and cash flow from operations to cash flow in investments. These
ratios are particularly useful because they show changes in hotel or restaurant’s cash position
over time, rather than at a given moment, as is the case with many other ratios.

Murinde (2003) conducted study on Corporate financial Structures on which he observed

that the financial structure of a sample of Indian non-financial companies using a new and
unique dataset consisting of a panel containing the published accounts of almost 900
companies that published a full set of accounts every year during 1989-99. In a new
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departure in the literature, the dataset includes quoted and unquoted companies. We
compare the sources-uses approach to analyzing company financial structures with the
assetliability approach. We use both approaches to characterize and to compare the financial
structures of Indian companies over time; between quoted and unquoted companies; and
between companies which belong to a business group and those that do not. Finally, we
compare our results to those obtained previously for India and for the industrial countries.

Mcmahon (2005) conducted a study on Financial Information on which he found that

financial statement mean little to the uninitiated. This paper, explains, in layman’s terms,
how to understand financial information. It covers measures of profitability. The second
article will cover measures of company liquidity and the use of financial ratios. This paper
continues to explain how to interpret and understand financial information. It deals with
measures of liquidity, solvency and fund flows and described how to establish standards
against which a company’s financial ratios can be compared.

Lee (2008) conducted a study on Financial Risk on which he observed that financial
researchers, including those concentrating on the lodging industry, use various financial risk
measures for their studies. Examples f those risk measures are beta, earnings variability,
bankruptcy probability, debt-to-equity ratio and book-to-market ratio. The purpose of this
study is, first, to descriptively investigated various financial risk measures used in the
loading financial literature by performing factor analysis and identifying four distinct risk
groups. Second, this study examines the predictive ability of the four risk groups for lodging
firm performance. The finding of this study suggest that strategic and stock performance risk
factors better represent a lodging firm’s financial risk than do bankruptcy and firm
performance risk factor better represent a lodging firm’s financial risk than do bankruptcy
and firm performance risk factors, and also, ROA than ROE better estimated lodging firm
performance in terms of their relationships with financial risk

Johnson (2009) conducted a study on Financial Ratio patterns on which he found that the
properties and characteristics of financial ratios have received considerable attention in
recent years with interest primarily focused on determining the predicative ability of
financial ratios and related financial data. Principal areas of investigation have included the
prediction of corporate bond rating, and the anticipation of financial impairment). Related
studies have examined the characteristics of merged firms the differences in financial ratio
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averaged among industries whether firms seek to adjust their financial ratios toward industry
averages the relationship between accounting-determined and market-determined risk
measure, and the influence of financial ratios on analysts’ judgments about impending
bankruptcy the general conclusion to emerge from these various research efforts is that a
number of financial ratios have predictive and descriptive utility when properly employed.

Mistrydharmendra.s (2012) understood a study to analyze the effect of various

determination on the profitability of the selected companies .It concluded that debt equity
ratio, inventory ratio, total assets were important determinats which effect positive or
negative effect on the profitability. It suggerted to improve solvency as to reduce fixed
financial burden on the company profit and give the benefit of trading on equity to the

shareholders.

HotwaniRakhi (2013) the author examines the profitability position and growth of
company . Data is analyzed through rations, standard deviations and coefficient of variance.
The study reveals that there not exists a strong relationship between sales & profitability of
company.

MathurShivam&AgarwalKrati (2016)Ratio’s are an excellent and scientific way to

analyze the financial performance of any firm.These indicators help the investors to invest
the right company for expected profits.
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Company profile

MILLWRIGHT ENGINEERING PRIVATE LIMITED is a private limited Company

incorporated on 16/12/1991 and is 26 Years 6 Months 23 Days old. It is classified as Indian
Non-Government Company and is registered at RoC-Coimbatore. Its authorized share
capital is Rs. 3500000 and its paid up capital is Rs. 3452500.

MILLWRIGHT ENGINEERING PRIVATE LIMITED 's Annual General Meeting (AGM)

was last held on 2015-09-30. As per records from Ministry of Corporate Affairs (MCA), this
company's balance sheet was last filed on 2015-03-31.

Registration number of the company is 3567. U29199TZ1991PTC003567 is the Corporate

Identification Number (CIN) of this company. Its registered address is NO. 7 G.K.D.
NAGAR, Coimbatore, Tamil Nadu, 641037.

The company is involved in Accessories and parts for general purpose machinery,
manufacturing,Calendaring or other rolling machines (not for metal or glass),
manufacturing,Exhaust hoods for commercial use, manufacturing,Exhaust hoods for
industrial use, manufacturing,Exhaust hoods for laboratory use, manufacturing,Fans intended
for industrial applications, manufacturing,Gaskets (metal), manufacturing,General purpose
machinery, nec, manufacturing,Joints made of a combination of materials,
manufacturing,Joints made of a layers of materials, manufacturing,Manufacture of other
general purpose machinery,Manufacturing of accessories and parts for general purpose
machinery,Manufacturing of calendaring or other rolling machines (not for metal or
glass),Manufacturing of exhaust hoods for commercial use,Manufacturing of exhaust hoods
for industrial use,Manufacturing of exhaust hoods for laboratory use,Manufacturing of fans
intended for industrial applications,Manufacturing of gaskets (metal),Manufacturing of
general purpose machinery, nec,Manufacturing of joints made of a combination of
materials,Manufacturing of joints made of a layers of materials.

Current status of MILLWRIGHT ENGINEERING PRIVATE LIMITED is - Active.

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CHAPTER - 3

3.1 RESEARCH AND METHODOLOGY

RESEARCH DESIGN

In view of the objectives of the study, an exploratory research design was adopted.
Exploratory research is one which largely interprets the already available information. It lays
particularly emphasis on analysis and interpretation of the existing and available information
and it makes use of secondary data.

SOURCES OF DATA

The data is one types

1. Secondary data

SECONDARY DATA

Secondary data is the data, which is already available. It can be obtained through company
records, internet and some data collected from the observation method.

The study is based on secondary data. The secondary data consists of the profit & loss and
balance sheet of Scotts garment ltd ranging for the last 5 years.

RESEARCH TOOLS

 Ratio analysis

RATIO ANALYSIS:

Ratio analysis is one of the techniques of financial analysis where ratio is used as a
yardstick for evaluating the financial condition and performance of a firm. Analysis and
interpretation various accounting ratio gives a skilled and experience analyst, a better
understanding of the financial condition and performance of the firm that what he could have
obtained only through a perusal of financial statement.
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CHAPTER – 4

4.1 DATA ANALYSIS AND INTERPRETATION

I. LIQUIDITY RATIOS

The liquidity ratio are useful in measuring the firms ability to meet its current
obligation i.e., short term liability.

Current ratio

The current ratio is a measure of liquidity calculated dividing the current assets
by the current liabilities.

A current ratio of 2:1 is considered ideal.

Calculation of current ratio:

Current assets

Current ratio -------------------------

Current liabilities
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TABLE – 1

CURRENT RATIO
YEAR CURRENT CURRENT RATIO(%)
ASSETS(IN LIABILITIES(IN
LAKHS) LAKHS)
2013-2014 358.82 129.86 2.76

2014-2015 387.83 123.25 3.14

2015-2016 509.44 179.52 2.83

2016-2017 559.88 196.97 2.84

Source: secondary data

INTERPRETATION:
The above table shows clearly the current ratio of the company for the year 2013-2014 to
2016-2017. The ratio was 2.76 3.14, 2.83, and 2.84. Generally the accepted norm 2:1. It
measures the current ratio of company satisfactory.

CHART -1
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CURRENT RATIO

Sales

1.2

1.4

3.2 8.2

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

QUICK RATIO:

Quick ratio is a measure of liquidity calculated dividing current assets minus inventory and
prepaid expenses by current liabilities.

Quick assets

Quick ratio ----------------------

Current liabilities

TABLE NO – 2
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QUICK RATIO

YEAR QUICK CURRENT RATIO(%)

ASSETS(IN LIABILITIES(IN
LAKHS) LAKHS)
2013-2014 141.93 134.86 1.05

2014-2015 158.74 123.25 1.28

2015-2017 219.96 179.52 1.22

2016-2017 240.97 196.97 1.22

Source: secondary data

INTERPRETATION:
The above table shows clearly the quick ratio of the company for the year 2016-2017
to 2016-2017. The ratio was 1.05, 1.28, 1.22, and 1.22. The standard norm for the quick ratio
is 1:1. However the ratio was above the standard norm so the ratio was satisfactory.

CHART NO -2
QUICK RATIO

Sales

1.2

1.4

3.2 8.2

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

INTEREST COVERAGE RATIO:

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The interest coverage ratio measures the firm’s ability to make contractual interest
payments.

EBIT

Interest coverage ratio ---------------------

Interest charges

TABLE NO -3

INTEREST COVERAGE RATIO

YEAR EBIT(IN LAKHS) INTEREST(IN RATIO(%)

LAKHS)
2013-2014 128.19 25.82 4.96

2014-2015 46.63 23.59 1.97

2015-2016 48.25 31.37 1.53

2016-2017 52.57 34.00 1.54

Source: secondary data

INTERPRETATION:
Interest coverage ratio is 4.96 in the year 2013. It is decreased automatically to 1.97 in the
year 2014. But it is decreased to 1.53 in the year 2015 and decreased to 1.54 in the year 2016
and it same to 1.54 in the year 2017. In this position outside investors is invested to invest
the money in this company.
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CHART NO – 3 INTEREST
COVERAGE RATIO

Sales

1.2

1.4

3.2 8.2

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

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NET PROFIT MARGIN

Net profit margin is also known as net margin. This measures the relationship between net
profit and sales of a firm. Depending on the concept of net profit employed, this ratio can be
computed in two ways:

Operating profit ratio:

Operating profit ratio is calculated by dividing the operating net profit by sales .this ratio
helps in determining the ability of the management in running the business.

Operating profit

Operating profit Ratio = -------------------------- *100

Net sales

TABLE NO – 4

OPERATING PROFIT RATIO

YEAR OPERATING NET SALES(IN RATIO(%)

PROFIT(IN LAKHS)
LAKHS)
2013-2014 76.73 505.25 15

2014-2015 60.71 572.55 10

2015-2016 74.49 637.42 11.68

2016-2017 81.43 700.66 11.62

Source: secondary data

INTERPRETATION:
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The tables show clearly the operating profit ratio of the company for the year 20132014 to
2016-2017. The ratio was 15, 10, 11.68and 11.62. The company operating profit is decreased
in the final year.

CHART NO – 4 OPERATING
PROFIT RATIO

Sales

1.2

1.4

3.2 8.2

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

PRE TAX PROFIT RATIO:

Pre tax margin is company earnings before tax as a percentage of total sales or revenues.
The higher the pretax profit margin the more profitable the company.

EBT

Pre tax profit ratio ------------

Net sales

TABLE NO – 5
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PRE TAX PROFIT RATIO

YEAR EBT(IN LAKHS) NET SALES(IN RATIO(%)

LAKHS)
2016-2017 107.37 505.25 0.21

2016-2017 28.04 572.55 0.04

2016-2017 21.88 637.42 0.03

2016-2017 23.56 700.66 0.03

Source: secondary data

INTERPRETATION:
From the above table shows clearly the pre tax profit of the company for the year
2016-2017 to 2016-2017. The ratio was 0.21, 0.04, 0.03 and 0.03. The company pre tax
profit is decreased in the final years.

CHART NO – 5

PRE TAX PROFIT RATIO

Sales

1.2
1.4

3.2 8.2

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

CASH POSITION RATIO:

 29

Cash position is a sign of financial strength and liquidity. In addition to cash itself, this
position often takes into consideration highly liquid assets, such as certificates of deposit,
short – term government debt and other cash equivalents.

Cash & bank balance

Cash position ratio -------------------------------

Current liabilities

TABLE NO – 6

CASH POSITION RATIO

YEAR CASH & BANK CURRENT RATIO(%)

BALANCE(IN LIABILITIES(IN
LAKHS) LAKHS)
2013-2014 10.53 129.86 0.08

2014-2015 12.13 123.25 0.09

2015-2016 13.01 179.52 0.07

2016-2017 13.81 196.97 0.07

Source: secondary data

INTERPRETATION:

From the above table shows clearly the cash position ratio of the company for the year
2013-2014 to 2016-2017. The ratio was 0.08, 0.09, 0.07 and 0.07. Generally accepted norm
0.75:1. But cash position ratio was below. It measures the cash position ratio of company not
satisfied.

CHART NO – 6
 30

CASH POSITION RATIO

Sales

1.2

1.4

3.2 8.2

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

CHAPTER – 5
 31

SUMMARY FINDING, SUGGESION AND CONCLUSION

5.1 FINDINGS

 Except in the year 2015, the company maintaining current ratio as 2 and more,
standard which indicate the ability of the firm to meet is current obligation is more.
It shows that the company is strong in working funds management.
 The proprietary ratio of Millwrights Engineering private Ltd is almost equal to the
standard ratio. It can be regarded satisfactory.
 The company is maintaining of quick asset more than quick ratio. As the company
having high value of quick ratio. Quick assets would meet all its quick liabilities
without any difficulty.
 The company is failed in keeping sufficient cash & bank balance and marketable
securities.
 Debt equity ratio is increasing every year. It indicates the company depends on the
debt funds increasing.
 In the year 2013, the interest coverage ratio 4.96 which decrease to 1.97 in the year
2014 and high fluctuation in the followed years.
 In the year 2015, the operating profit ratio 10 which increase to 11.62 in the year of
2016-2017.

5.2 SUGGESTIONS
 32

 The company has to increase the profit maximization and has to decrease the
operating expenses.
 By considering the profit maximization in the company the earning per share,
investment and working capital also increase. Hence, the outsiders are also
interested to invest.
 The company should maintain sufficient cash and bank balance, they should
invest the idle cash in marketable securities or short term investment in shares,
debenture, bonds and other securities.
 The company should increase its interest coverage ratio to serve long term
debt.
 The company need more fixed assets to manage the firm control and develop
the manufacturing product.
 The Millwrights Engineering private Ltd should be reduced unnecessary
expenditure and operating expenses.
 The company is able to provide better quality of debtors and prompt of
debtors.
 The company should have a responsible of current ratio and the greater is the
safety of short term creditors.
 33

5.3 CONCLUSION

The spinning industry is a fast growing industry. The efficiency of production assumes
greater importance. Hence the Millwright Engineering private Ltd should concentrate on
reducing cost and other expenses so that its competitiveness may improve, leading to higher
profits and greater maximization of wealth for the stake holders. In addition the company
should focus on cash position, so that there is effective use of increasing cash and bank
balance.
 34

BIBLOGRAPHY

I.M.Pandy : Financial Management

M.Y.Khan&P.K.Jai : Financial Management

S.P.Jain& K.L. Narang : Cost & Management Accounting

K.Rajeswararao&G.Prasad : Accounting & Finance

P.Kulakarni : Financial Management

WEBSITES:

WWW.Google.Com

WWW.amaron.co.in
 35

Profit &Loss – Millwright Engineering Private Ltd.Rs(In Lakhs)

PARTICULARS 2016-2017 2013-3014 2016-2017 2016-2017

INCOME:

Sales Turnover 500.25 567.55 632.42 695.66

Excise Duty 0 0 0 0
NET SALES 505.25 572.55 637.42 700.66
Other Income 0 0 0 0
TOTAL INCOME 566.13 573.92 639.75 703.72
EXPENDITURE:

Manufacturing Expenses 11.63 12.95 17.24 18.96

Material Consumed 254.8 361.25 374.51 411.96
Personal Expenses 97.73 105.69 128.32 141.15
Selling Expenses 0 0 0 0
Administrative Expenses 64.35 31.95 42.86 47.14
Expenses Capitalised 0 0 0 0
Provisions Made 0 0 0 0
TOTAL EXPENDITURE 428.52 511.84 562.93 619.22
Operating Profit 76.73 60.71 74.49 81.43
EBITDA 137.61 62.08 76.82 84.5
Depreciation 14.42 20.45 33.57 36.92
Other Write-offs 0 0 0 0
EBIT 128.19 46.63 48.25 52.57
Interest 25.82 23.59 31.37 34
EBT 107.37 28.04 21.88 23.56
Taxes 18.33 7.39 -2.25 2047
Profit and Loss for the Year 84.04 15.65 19.13 21.04
Non Recurring Items 0 7.18 0.67 0.74

REPORTED PAT 84.04 22.83 19.8 21.78

KEY ITEMS
 36

Shares in Issue (Lakhs) 267.38 284.77

EPS - Annualised (Rs) 31.43 8.02

Rs (in Lakhs)
Equity Dividend 2.24 0 0 0
Equity Dividend (%) 8.37 0 0 0
284.77 313.24

Particulars 2016-2017 2013-3014 2016-2017 2016-2017

Liabilities

Share Capital 26.74 28.48 28.48 31.32

Reserves & Surplus 201.1 234.82 254.62 280.08
Net Worth 227.84 263.3 283.1 311.41
Secured Loan 254.06 284.15 327.04 359.74
Unsecured Loan 0 0 0 0
TOTAL LIABILITIES 481.9 547.44 610.14 671.15
Assets

Gross Block 259.5 325.72 359.05 394.96

(-) Acc. Depreciation 81.28 101.73 127.75 140.53
Net Block 178.22 223.98 231.29 254.41
Capital Work in Progress 24.53 8.73 0.8 0.88
Investments 50.19 50.15 48.13 52.94
Inventories 216.89 229.09 289.92 318.91

Sundry Debtors 80.92 86.94 99.84 109.32

Cash and Bank 10.53 12.13 13.01 13.81
Loans and Advances 60.48 69.67 116.67 127.83
Total Current Assets 358.82 387.83 509.44 559.88
Current Liabilities 113.19 110.16 164.31 180.74
Provisions 11.67 8.09 10.21 11.23
 37

Total Current Liabilities 125.86 123.25 179.52 196.97

NET CURRENT ASSETS 228.96 264.58 329.92 362.91
Misc. Expenses 0 0 0 0
TOTAL ASSETS(A+B+C+D+E) 481.9 547.44 610.14 671.15

Rs (in Crores)