A PROJECT REPORT

ON

THE FINANCIAL RISK AND PERFORMANCE

EVALUATION OF GOODBUY SOAPS & COSMETICS
PVT LTD.

By

Ms. HANNAH JOSEPH K

Regn No. LCAWMBA053

Submitted to

THE UNIVERSITY OF CALICUT

In partial fulfilment of the requirements for the award of the degree of

the

MASTER OF BUSINESS ADMINISTRATION

Under the Guidance of

MR SYAMRAJ KP

ASSISTANT PROFESSOR

LEAD COLLEGE OF MANAGEMENT

DHONI, PALAKKAD, KERALA- 678009

JULY 2024
 DECLARATION

I, MS. HANNAH JOSPEH K, Reg No: LCAWMBA053, hereby declare

that this report titled “A study on the Financial Risk and Performance

Evaluation of Goodbuy Soaps & Cosmetics Pvt Ltd” is a record of my

original work done under the guidance of Mr Syamraj KP, Assistant

Professor LEAD College of Management, Dhoni Palakkad. I further

declare that this exposition is a result of my own effort and has not

been submitted earlier for the award of any degree/ diploma by

University of Calicut or any other University or Academic body.

Date: HANNAH JOSEPH K

Place: Regn No. LCAWMBA053

 ACKNOWLEDGEMENT

I humbly bow before the ALMIGHTY GOD for giving me the

strength and wisdom to complete this project successfully.

I wish to express my deep sense of gratitude to Dr. THOMAS

GEORGE K, Director, LEAD COLLEGE OF MANAGEMENT
for granting me the permission and facilities to do the project.

I am grateful to Prof. KEERTHANA VIPIN, Mentor, LEAD

College of Management for the sincere and constant support that
I have received throughout my academic career.

I am highly indebted to Mr. SYAMRAJ K.P (PROJECT GUIDE),

Assistant Professor, LEAD College of Management for his
guidance and constant supervision throughout this project.

I would like to express my sincere gratitude to my dear parents

and friends, for their support and coordination rendered to me, to
make this project a success and, I would like to acknowledge my
deepest regards to all the teachers at LEAD College of
Management, Palakkad for their impartial help, support, and
guidance towards this project.

Finally, I thank all those who helped me, directly and indirectly,
to carry out this project successfully.

HANNAH JOSPEH K
 EXECUTIVE SUMMARY

This research project examines the critical aspects of financial risk and
performance evaluation of Goodbuy Soaps and Cosmetics Pvt Ltd, a prominent
player in the consumer goods sector. Through meticulous examination of
financial statements, key performance indicator and market dynamics, the study
identifies the critical areas of financial risk and evaluate the company’s
performance against industry benchmarks and strategic objectives.

The research study explores the symbolic relationship between financial risk
management and performance evaluation, highlighting how proactive evaluation
not only mitigates risks but also uncovers the opportunities for growth. It also
assesses the effectiveness of performance evaluation frameworks in aligning
operational outcomes with the corporate goals, fostering efficiency and
enhancing shareholder value.

The findings highlight several critical insights into Goodbuy Soaps and
Cosmetics Pvt Ltd.’s financial risk and performance. Key financial ratios such
as liquidity ratios (current ratio, quick ratio), profitability ratios (gross profit
margin, net profit margin), and solvency ratios (debt ratio, proprietary ratio)
provide a comprehensive view of the company's operational effectiveness and
financial management. Furthermore, the assessment considers industry
benchmarks and compares Goodbuy Soaps and Cosmetics Pvt Ltd.’s
performance against competitors to identify areas of strength and areas needing
improvement.

Recommendations stemming from the analysis aim to enhance Goodbuy Soaps

and Cosmetics Pvt Ltd.’s financial health and operational efficiency. Strategies
include optimizing working capital management to improve liquidity, enhancing
profitability through cost management and pricing strategies, and leveraging
technological advancements for efficiency gains. These initiatives are designed
to mitigate financial risks and capitalize on growth opportunities in the
competitive market landscape. By implementing these recommendations,
Goodbuy Soaps and Cosmetics Pvt Ltd can strengthen its financial position and
achieve sustainable long-term success in the consumer goods industry.
 TABLE OF CONTENTS

CHAPTERS TITLE PAGE NO.

1.1 Introduction 2-3

1.2 Industry Profile 3-11

1.3 Company Profile 12-18

1.4 Problem Statement 19

CHAPTER 1
INTRODUCTION
1.5 Objective of the study 19

1.6 Research Methodology 19-20

1.7 Scope of the Study 20-21

1.8 Limitations of the study 21

CHAPTER 2 2.1 Literature Review 23-42

REVIEW OF
LITERATURE 2.2 Theoretical Framework 43-56
CHAPTER 3
DATA 3.0 Data Analysis & Interpretations 57-76
ANALYSIS
4.1 Summary 78

4.2 Findings 79-81

CHAPTER 4
FINDINGS
4.3 Suggestions 82

4.4 Conclusion 83-84

BIBLIOGRAPHY Bibliography 85-90

ANNEXURE Annexure 91-95

 LIST OF TABLES

Table No Title Page no

3.1.1 Solvency Ratio 60

3.1.2 Proprietary Ratio 61

3.1.3 Debt Ratio 62

3.1.4 Total Liability to Net Worth Ratio 63

3.1.5 Current Liability to Net Worth Ratio 64

3.1.6 Fixed Asset to Net Worth Ratio 65

3.1.7 Current Ratio 66

3.1.8 Liquid Ratio 67

3.1.9 Capital Gearing Ratio 68

3.1.10 Return On Capital Employed Ratio 69

3.1.11 Gross Profit Ratio 70

3.1.12 Operating Profit Ratio 71

3.1.13 Net Profit Ratio 72

3.2.1 Trend Analysis on Fixed Asset 73

3.2.2 Trend Analysis on Debt 74

3.2.3 Trend Analysis on Net Profit 75

3.2.4 Trend Analysis on Net Worth 76

 LIST OF CHARTS

Chart No Title Page no

3.1.1 Solvency Ratio 60

3.1.2 Proprietary Ratio 61

3.1.3 Debt Ratio 62

3.1.4 Total Liability to Net Worth Ratio 63

3.1.5 Current Liability to Net Worth Ratio 64

3.1.6 Fixed Asset to Net Worth Ratio 65

3.1.7 Current Ratio 66

3.1.8 Liquid Ratio 67

3.1.9 Capital Gearing Ratio 68

3.1.10 Return On Capital Employed Ratio 69

3.1.11 Gross Profit Ratio 70

3.1.12 Operating Profit Ratio 71

3.1.13 Net Profit Ratio 72

3.2.1 Trend Analysis on Fixed Asset 73

3.2.2 Trend Analysis on Debt 74

3.2.3 Trend Analysis on Net Profit 75

3.2.4 Trend Analysis on Net Worth 76

 CHAPTER 1

INTRODUCTION
1.1 INTRODUCTION

The organization's finances are its lifeblood and the most crucial component of
every project. that it is linked to all managerial actions. All businesses, no matter
how big or little, require funding to run their operations and meet their goals.
The fulfilment of a work in terms of current standards of accuracy, completeness,
cost, and time is referred to as financial performance. The word finance comes
from Latin word Finis. The art and science of managing money is known as
finance. Finance is the administration of financial movements inside an
organization; it differs from money in that it is not always needed.

The risk of losing money on investments or business operations owing to a

variety of causes is referred to as financial risk. When assessing a company's
overall financial stability and health, financial risk is a crucial factor. By
correctly creating a relationship between the elements of the balance sheet and
profit and loss account, the financial performance analysis determines the firm's
strengths and weaknesses in terms of finances.

Financial and performance analysis becomes more important as the soap sector
develops for businesses trying to manage market pressures, maintain growth,
and succeed in the long run. A company's operations can be evaluated for
efficiency and health using financial risk and performance evaluation, which is
a crucial tool for strategic decision-making and long-term growth. This
introduction lays the groundwork for an in-depth analysis of Goodbuy Soaps and
Cosmetics Pvt Ltd that explores its financial situation and assesses its
performance in relation to the financial landscape. Given its significance in the
soap business, Goodbuy Soaps and Cosmetics Pvt Ltd presents a compelling
case for financial research. Goodbuy Soaps and Cosmetics Pvt Ltd was founded
with the objective of revolutionizing how people collect and preserve memories.
Since then, the company has continuously grown, providing cutting-edge goods
and services that are catered to a variety of customer needs. But as it grows, it
becomes more and more important for all parties involved—from investors to
management teams—to comprehend the financial nuances. The process of
evaluating potential risks to a company's financial performance and stability lies
at the heart of financial risk analysis. An extensive summary of a business's
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 earnings for a certain time period is given by the financial statements, which
include information on its income, costs, assets, liabilities, and cash flows.
Analysts can learn more about the operational effectiveness, liquidity, solvency,
and profitability of Goodbuy Soaps and Cosmetics Pvt Ltd. by examining these
statements.

1.2 INDUSTRY PROFILE

India is currently among the global leaders in soap production. The per capita
usage of toilet/bath soap in India is 800 grams, compared to 6.5 kg in the USA,
4.0 kg in China, 1.1 kg in Brazil, and 2.5 kg in Indonesia. The Indian soap market
is estimated to be worth USD 3.98 billion in 2023. The majority of the fast-
moving consumer goods (FMCG) sector is made up of soaps, with toilet and bar
soaps accounting for about 30% of the total soap market. There are organized
and unorganized sectors in the FMCG industry. The organized sector employs
over 66 billion people. The last three years have seen a CAGR of 4% growth in
the industry. Product categories include cleaning supplies, food and drink,
cosmetics, skin care, hair care, pet care, dental care, soaps and detergents, and
home care, health and hygiene items. Products in the premium class cost twice
as much as those in the economy segment. Approximately 80% of the soap
market is made up of the economy and popular sector. Five million retail
establishments in India sell soaps, with 3.75 million of those locations being in
rural areas. Since 70% of Indians live in rural regions and 50% of soap sales
occur in these markets, the products are widely accessible throughout the
country. Demand in rural areas is expected to increase as disposable incomes
rise since customers are becoming more affluent and purchasing luxury goods.
Several markets, including the consumer, institutional, and industrial sectors,
can be distinguished within the soap industry. The consumer market, which
include goods like laundry detergent, bar soap, and liquid soap, is the biggest
sector of the soap industry. Products used in enterprises and institutions, such as
hand soap and dishwashing liquid, are included in the institutional market.
Products used in industrial environments, such metal cleaners and degreasers,
are part of the industrial market.

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 The amount of luxury soaps relative to economy soaps has not changed recently,
although rising costs have caused some customers to hunt for less expensive
alternatives. The leading companies in the personal wash soap industry are
Henkel, Unilever, Procter & Gamble, and Colgate-Palmolive. The unorganized
FMCG sector, including around 40% of the organized industry's volume with
localized products, has a valuation of Rs 100 billion. Over the past three years,
the herbal product industry within FMCGA has grown at a good clip, with a
valuation of Rs. 50 billion. Within the soap industry, toilet soaps are the most
popular sector and the driver of the category. When they perceive better value in
the popular category, consumers downgrade from the premium sector;
conversely, when their expectations rise and they can afford it, they upgrade
from the economy group. We anticipate strong demand from this group in the
popular range due to the growing disposable income in semi-metropolitan areas
and the rural sector.

1.2.1 HISTORY OF SOAP INDUSTRY

Babylon (2800 BCE): The earliest evidence of soap-like substances comes from
ancient Babylon. Excavations have unearthed clay cylinders inscribed with a
recipe for soap made from water, alkali, and cassia oil.

Egypt (1550 BCE): Egyptians used a soap-like substance for washing. The Ebers
Papyrus, an ancient Egyptian medical document, refers to a substance that
resembles soap that is created by combining alkaline salts with vegetable and
animal oils.

Greece and Rome: The Greeks were aware of soap, but it was the Romans who
popularized its use for bathing. They used soap made from tallow (animal fat)
and wood ashes. Public baths became a social and health institution in Roman
culture.

Medieval Period

Europe: During the early Middle Ages, soap production was localized and
artisanal. Soap-making knowledge was kept alive by monasteries, where it was
produced for cleaning and medicinal purposes.

4
Islamic Contributions: During the Islamic Golden Age, significant
advancements were made in soap-making. Islamic chemists improved the
process by producing soaps using vegetable oils (such as olive oil) and adding
aromatic oils. They also invented the process of hard soap, which became widely
popular in Europe later on.

Renaissance to Early Modern Period

Italy, Spain, and France (12th-15th Century): These regions became renowned
for their high-quality soap production, particularly hard soap. The city of Castile
in Spain became famous for its Castile soap, made with olive oil.

England: England's soap industry started to flourish in the twelfth century. King
James, I established regulated soap manufacturing in 1622 when he gave a firm
a monopoly on soap making.

Industrial Revolution

Technological Innovations: The manufacturing of soap was altered during the

Industrial Revolution in the 18th and 19th centuries. There were two noteworthy
innovations:

The Leblanc Process (1791): Invented by French chemist Nicolas Leblanc, this
process allowed for the mass production of soda ash (sodium carbonate) from
salt, providing a crucial ingredient for soap-making.

The Solvay Process (1861): Developed by Belgian chemist Ernest Solvay, this
method produced soda ash more efficiently, further boosting soap production.

Rise of Commercial Soap Manufacturers:

Lever Brothers: Lever Brothers was founded by William Hesketh Lever and his
brother James in 1884. They revolutionized the soap industry with Sunlight
Soap, one of the first branded soaps marketed aggressively. Lever Brothers
eventually became part of Unilever, a global leader in consumer goods.

Procter & Gamble: Established in 1837 by William Procter and James Gamble,
this corporation rose to prominence in the soap sector with the introduction of
classic items such as Ivory soap in 1879.

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 20th Century to Present

Product Diversification: The 20th century saw the diversification of soap

products. Innovations led to the creation of synthetic detergents, which began to
compete with traditional soap, especially for laundry purposes. Liquid soaps and
body washes were introduced, providing consumers with more choices.

1.2.2 INDIAN SOAP MARKET

It is anticipated that the Indian Soap Market would grow at a robust rate of 7.1%
CAGR through 2029. Within the consumer products sector of the Indian
economy, the soap market is a booming and dynamic industry. Glycerin,
colorants, and essential oils are added to soaps, which are emulsifying and
cleaning agents made from sodium or potassium salts. In India, bath soaps are
the most popular kind of soap. In order to satisfy a wide range of customer
preferences, they are made in liquid and bar form and frequently include various
scents, moisturizing agents, and herbal substances. They aid in eliminating
perspiration and sebum from the body, avoiding pore blockage, and lowering the
presence of bacteria that cause acne. They also help with cleaning different types
of dinnerware and kitchen utensils. Soaps are widely used in India's textile, food
and beverage (F&B), chemical, ceramics, and paint sectors because they are
reasonably priced, simple to use, and easily accessible. Furthermore, toilet soaps
include a broad variety of items made for face cleaning, hand washing, and
everyday use. In addition, medicinal soaps with therapeutic ingredients like
turmeric, aloe vera, and neem are well-liked in India because of their possible
health advantages. Another niche market is specialized soaps that address
particular skin issues like dry skin or acne.

Herbal and Ayurvedic soaps are becoming more and more popular as consumers
place an increasing emphasis on natural and organic goods. Sandalwood, Tulsi,
and other plant-based extracts are common constituents in these soaps and are
thought to provide skincare advantages. Because of the growing confidence in
the health and skincare benefits of herbal and natural components, soap products
are becoming more and more sought after by consumers. Specialized soap
brands with unique compositions and packaging have become more prevalent in

6
 the market. These goods are aimed toward customers seeking luxurious
experiences and improved skincare advantages.

A personalized experience can be created by allowing customers to engrave their

names on soap bars or choosing from a variety of fragrances and ingredients
offered by certain soap brands. The popularity of e-commerce has allowed soap
businesses to reach a wider audience and made it easier for customers to make
purchases online. In addition to offering a large selection of soap options, e-
commerce platforms frequently run deals and discounts. In the soap sector,
sustainability is becoming more and more significant. Brands are emphasizing
environmentally friendly packaging, cutting back on water use in manufacturing,
and encouraging ethical ingredient sourcing.

There are many brands competing for consumers' attention in this fiercely
competitive market. In order to sustain market share, brands need to consistently
innovate and set themselves apart. Consumers' sensitivity to price may put
pressure on soap producers' prices. It's always difficult to strike a balance
between cost and quality. Moreover, vigilantness and adherence are necessary to
achieve regulatory norms, particularly those pertaining to ingredient safety and
labeling. The growing middle-class population, growing awareness of personal
hygiene and care, market segmentation, and product diversity are some of the
major factors influencing the Indian soap industry.

TYPES OF SOAPS AVAILABLE IN THE MARKET

▪ Beauty Soaps : These are designed for skincare benefits, including

moisturizing, whitening and anti- ageing properties.
▪ Medicated Soaps : These soaps have therapeutic properties and are used for
specific skin conditions.
▪ Herbal soaps : Made from natural ingredients, these soaps appeal to
consumers looking for organic and eco- friendly products.
▪ Detergent Bars : Often used for washing clothes, these bars are more
focused on cleaning than skincare

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1.2.3 KEY MARKET DRIVERS.

• Increasing awareness of personal care and hygiene

The COVID-19 outbreak has brought attention to how vital it is to
practice good personal hygiene and handwashing. The importance of soap
in halting the transmission of infectious diseases has been highlighted by
public health campaigns and educational programs, which has increased
demand for soap products. Rapid urbanization in India has resulted in
notable shifts in consumer tastes and lifestyle. Urban residents have easier
access to personal care goods and are more exposed to trends that emphasize
hygiene. Urban culture now includes a desire for cleanliness and grooming,
which drives the demand for soap.

• Expanding Middle-class population

India's middle class has been progressively expanding due to a number
of causes, including rising incomes, urbanization, and more work options.
Due to their higher discretionary income and increased purchasing power,
members of the middle class may afford a larger variety of personal care
goods, such as high-end, branded soaps. As a result, many are switching
from cheap, generic soaps to more expensive, specialist soap options.
Customers in the middle class are frequently brand aware and look for
reputable and well-known soap brands. They are prepared to spend money
on high-quality goods, which encourages brand loyalty and recurring
business.

• Market Segmentation and Product Diversification

In terms of product variety and market segmentation, the Indian soap
market has undergone substantial change. Manufacturers understand that
different consumer preferences, skin types, and lifestyle choices must be
accommodated. As a result, numerous soap brands and variations have
emerged, each aimed at a certain client base. Brands of herbal and organic
soap are proliferating as a result of the increased demand for natural and
herbal products. Customers who are concerned about their health will likely

8
 be drawn to these products because they highlight natural components and
are said to be kinder to skin.

1.2.4 KEY MARKET TRENDS

• Shift Toward Herbal and Natural Ingredients

Consumer preferences have significantly shifted in favor of herbal and
natural components in soap products in recent years. The increasing public
consciousness of environmental and health issues is intimately associated
with this trend. Due to growing consumer awareness of the chemicals and
artificial additives found in standard soaps, consumers are looking for soap
alternatives that are safer for the environment and softer on their skin.

• Rise of Premium and Specialty Soaps.

Customers are prepared to spend more money on superior soap products
that provide advantages beyond simple cleaning. Luxurious ingredients like
shea butter, goat's milk, honey, and essential oils are frequently found in
premium soaps and are thought to have skin-nourishing and moisturizing
qualities.

• Expansion of Antibacterial and Hygiene- Focused Soaps

The COVID-19 epidemic has increased consumer worries about cleanliness
and hygiene, which has resulted in a demand spike for soaps with an
antibacterial and hygiene focus. Because of their ability to either eliminate
or stop the growth of dangerous bacteria and germs on the skin, these soaps
are in great demand during emergencies involving public health. Customers
are probably going to keep making these items a priority, particularly during
flu seasons and other health emergencies, which will support the soap
segment's ongoing growth.

1.2.5 KEY MARKET CHALLENGES

• Intense competition and market saturation
There are many local and national companies fighting for market share in
the fiercely competitive soap industry. Well-known companies with a

9
 significant market share, like Hindustan Unilever Limited (HUL), Godrej
Consumer Products, ITC, and Procter & Gamble, provide a variety of soap
products to suit the tastes of different customer segments. Manufacturers of
soap have low profit margins as a result of price wars brought on by intense
competition. Brands may decide against investing in R&D for novel soap
formulas due to fierce competition. Trusted brands are typically stuck with
by consumers, making it difficult for new competitors to take market share.

• Price Sensitivity and Inflation

India's soap market faces a great deal of price sensitivity due to the
country's diversified consumer base, wide range of income levels, and
pressure from inflation. Although there are high-end soap companies, a
significant proportion of the populace looks for less expensive alternatives.
Brands are frequently under pressure to maintain competitive soap pricing,
which affects their profit margins. Profitability may be further eroded by
inflationary pressures on production costs and raw material prices. Changes
in the economy may cause consumers to migrate to less expensive soap
options.

• Evolving Consumer Preferences and Sustainability Concerns

Custom soap makers face a challenge from changing consumer demands
brought on by growing health consciousness and concerns about
sustainability. More and more customers are looking for soap products that
reflect their beliefs, such as those that use natural ingredients,
environmentally friendly packaging, and don't use inhumane production
methods. Companies can launch eco-friendly product lines with variations
of natural and organic soap. Making the switch to packaging made of
recyclable or biodegradable materials can improve the sustainability profile.
Gaining the trust of environmentally conscious customers can be achieved
through providing transparent information about ingredient source and
production methods.
1.2.6 RECENT DEVELOPMENTS

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 • Reliance Industries said in 2023 that a variety of home and personal care
products would be available, including laundry detergents, toilet and floor
cleansers, and soaps for washing and bathing. In the next months, Reliance
Consumer Products, a division of Reliance Industries, will launch the
product statewide through a variety of distribution channels.
• 2023: With the launch of the distinctive Fiama Sandalwood Oil and
Patchouli Gel Bar, Fiama, a well-known personal wash brand in India under
ITC, keeps innovating and upending the market.
• Reliance Consumer items Limited declared in 2023 that it will be
introducing a large assortment of home and personal care items as part of
its FMCG portfolio growth. The portfolio consists of the following
products: Dozo dishwashing bars and liquids; HomeGuard toilet and floor
cleaners; Glimmer beauty soaps; Get Real natural soaps; Puric hygiene
soaps; and Enzo laundry detergent powder, liquid, and bars.

KEY PLAYERS:

▪ Hindustan Unilever Limited (HUL): Brands like LUX, Lifebuoy and Dove.
▪ Godrej Consumer Products Limited: Brands Like Cinthol and Godrej No.
1
▪ ITC Limited: Brands like Fiama and Vivel
▪ Wipro Consumer Care & Lighting: Brands like Santoor.

11
1.3 COMPANY PROFILE

Name: Goodbuy Soaps& Cosmetics Private Limited

Company CEO: Khalid K.P

Nature of Business: FMCG Manufacturer

Legal Status of Firm: Limited Company

Year of Establishment: 2007

Location: Kerala, India

Total Number of Employees: 101 to 500 Employees

Annual Turnover: Rs 25-50 Crore

Figure 1- Logo of Good Buy Soaps and Cosmetics Pvt Ltd

1.3.1 ABOUT GOODBUY SOAPS AND COSMETICS PVT LTD

Goodbuy Soaps and Cosmetics Pvt. Ltd. is an Indian company based in Kerala
that manufactures soaps and cosmetics. The innovative concept of Good Buy
Soaps and Cosmetics Pvt. Ltd. emerged in 2007 from the brain of the company's
managing director, Mr. K. P. Khalid, a seasoned soap manufacturer with

12
experience in business management. After working for several years for well-
known detergent and soap firms, he decided to start his own manufacturing
company with the full backing of the executives he had previously worked with.
These days, Good Buy also produces cleaning supplies and soaps for those top
brands in their several plants.

With the support of knowledgeable and skilled managers and employees, GOOD
BUY's business acumen spans a wide range of industries, giving customers
convenient access to a wide range of products and performance-based
satisfaction. The goal is not to compete, but to focus entirely on completing each
task linked to product development, leaving the client to compare the final
products. This is how the standard of service is created. Our primary goal is to
ensure that the consumer is completely satisfied with the value that they have
received for their money. After that, there has been no turning back, and Good
Buy has continued on its spectacular development trajectory, recording its
largest increase in 2014 and 2015. Currently, Good Buy can produce more than
14 tons per day.

FEMINA - Good Buy's flagship toilet soap line is available in five exotic
fragrances: jasmine, rose, passion, lime, and sandalwood. It ranks first in the Rs.
10.00 class, selling over one million pieces per month in Kerala's rural
marketplaces.

CUTEE - Good Buy has produced four new fragrances: "Papaya, Haldi Manjal,
Herbow & Gulfee Oudh" in reaction to the popularity of the debut of a new
round soap in four seductive scents: "White Zaffron," "Silky Skin," "Sandal,"
and "Olive Sona," which has immediately become popular among young people.

The logistics are likewise up to date, with deliveries being professionally

scheduled and completed by the company's own trucks and contracted vehicles.
The management keeps staff morale high by providing timely performance
appraisals and surprising bonuses. Good understanding, timely support, and
treating all employees equally has resulted in a very congenial working
environment for all members of the Good Buy family of enterprises.

13
 The Good Buy Group has always believed in helping the needy, and we are glad
to say that a large percentage of our employees are women, allowing them to
provide excellent assistance to their families. Men are hired in the plant to
perform the harder tasks. Finally, every year, Good Buy sets aside a portion of
its profits for charitable causes, donations, and the upliftment of the
underprivileged and needy.

1.3.2 SUBSIDARY COMPANIES

REMONA COSMETICS & DETERGENTS [Pvt] LTD.

This manufacturing unit is situated around five Kms. away from Good Buy
Soaps factory. This unit manufactures:

• Femo Dish wash 500 Gms

• Femo Dish wash cake 180 Gms
• Liquid Dish wash 200 ml [Green & yellow]
• Siruvani detergent cakes [Blue & Pink]
• Car wash shampoo
• Bike wash shampoo
• Hand wash 330 ml
• Soap oil

GEE BEE CHEM

Gee Bee Chem is a manufacturing unit that manufactures detergent powders
which are sold to different brands. This unit manufactures and supplies the
detergent powders to some young entrepreneurs in bulk packaging whereby they
repack into smaller packing.

1.3.3 QUALITY POLICY STATEMENT

The Good Buy Group's policy and goal is to offer its customers the best possible
products and services. Being a certified company, the Good Buy management,
reiterates their total commitment to quality. The quality System is being
formulated to ensure that the customer receives a quality product as well as

14
 service and that the needs and expectations of the Stockists, Distributors, Dealers
& Customers are fully met.

To achieve the above objectives and meet these commitments, Good Buy ensures
that quality is planned, implemented and verified by means of review, inspection,
testing and audits. The management emphasizes the principle that "Quality is
everybody's business" and that "Every individual is responsible for the quality
of work he or she produces".

Innovative in-house developments:

In line with the vision propagated by our honourable Prime Minister, the new
Indian slogan "Make in India", GOOD BUY recently started manufacture and
launched a novel concept in the form of a goat milk soap. The technology has
been purchased out right from COSMIN INTERNATIONAL INC. - UK. Most
of the ingredients used are imported from the finest manufacturers worldwide.
This soap MILSO is the first of its kind in India and is destined to swipe the
market in the short run.

Good Buy also has a full-fledged, sophisticated laboratory to test all material for
their standards like TFM, moisture, chlorides, free alkali, pH, etc. The strict
standards and practises followed ensures that no raw material with inferior
quality is entertained.

1.3.4 PRODUCTS OF GOODBUY SOAPS & COSMETICS PVT LTD

CUTEE THE BEAUTY SOAPS

• Olive Sona: Cutee Olive Sona Soap, enhanced with olive oil, softens and
hydrates skin, leaving it glowing and moisturized.

• Haldi Manjal: Turmeric's essence contains antibacterial qualities, lightens

skin tone, and decreases skin pigmentation. All of this beauty is combined
in Cutee Haidi Manjal to offer skin-soothing treatment.
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• Silky Skin: Cutee Silky Skin's sophisticated composition hydrates
even the deepest skin cells. The skin becomes smooth and silky as a
result of its nurturing and nourishment.

• Gulfee Oudh: Gulfee Oudh provides you with a rejuvenating and

calming bathing experience along with a lingering sweet sense of
pleasantness thanks to its infusion of the calming fragrance and
perfume of Arabian Oudh.

• White Zaffron: Your body will smell wonderful and have a golden
shine after using this gentle formula that leaves your skin feeling
supple and hydrated.

• Papaya Fruit Mix: Cutee Papaya Fruit Mix Soap is a great way to
moisturize dry, flaky skin and remove dead skin cells because of its
strong exfoliating qualities.

• International The Pure White Soap: A body wash that is both

thorough and maintains the moisture balance of the skin. Your skin
will appear softer, smoother, and more luminous after using Cutee
International Pure White Soap.

• Sandal: As it softly removes impurities and properly cleanses your

skin, it gives you confidence. The skin feels cleansed and renewed
after using it.

• International Green Tea Aroma: • Presenting Cutee Green Tea

Aroma: all the goodness of green tea without any animal fat, for
naturally fresh skin.

• Herbow: Presenting Cutee Herbow Soap, which uses the healing

properties of herbs to cleanse, nourish, and tone your skin. This

16
 leaves the skin feeling incredibly soft and clean for a long time. It
also guarantees a thorough cleanse.

• Milso: The first beauty soap made in India that features goat milk
deliciousness. According to legend, the world-famous Egyptian
beauty Queen Cleopatra had a bath in goat milk and honey. This
time-honoured secret is unveiled to you by MILSO, who knows how
to make your skin look and feel amazing.
• Sandal Gold: Cutee Sandal Gold, which is scented with sandal oil,
purifies, nourishes, and revitalizes your skin, giving it a smoother,
more radiant complexion.

• Milky Almond: Cutee Milky Almond soap feeds skin with the
goodness of almond oil and leaves skin feeling clean but not dry.

• Lavender Bloom: Cutee Lavender Bloom has an alluring scent that

comes from the natural scent of pure lavender. Your skin becomes
softer, cleaner, and brighter when it calms and exfoliates.

• Hand wash: Cutee Sandal Hand Wash (300ml), which nourishes and
revitalizes your skin while enhancing its texture and tone, is scented
with sandal oil. The selection of fragrances includes both classic
sandal oil and recently introduced flavour variations that are highly
well-liked by both young and old.

1.3.5 SWOT Analysis of Goodbuy Soaps and Cosmetics Pvt. Ltd.

Strengths:

• Innovation: Goodbuy has a reputation for launching new and unique

products, like their Milso goat milk soap. This could make them stand out
in a competitive market.

17
 • Manufacturing Expertise: Along with the experience in private label
manufacturing, Goodbuy has the knowledge and capabilities to produce
high-quality soaps and cosmetics.
• Global Sourcing: Sourcing ingredients internationally allows Goodbuy to
potentially find higher quality materials or unique ingredients not readily
available locally.

Weaknesses:

• Limited Brand Recognition: As a private label manufacturer, Goodbuy does

not have a strong brand presence among consumers.
• Dependence on Other Brands: Their business model relies on contracts with
other brands, which could be vulnerable to economic downturns or changes
in consumer preferences.

Opportunities:

• Expanding Natural and Organic Market: There is a growing market for

natural and organic beauty products. Goodbuy could benefit from this trend
by emphasizing formulations and ingredients that are natural.
• Growth of E-commerce: Goodbuy can now reach a wider audience and sell
directly to consumers thanks to the popularity of internet shopping.
• Export Potential: With expertise in manufacturing, Goodbuy could explore
exporting their products to international markets.

Threats:

• Competition: The soap and cosmetics sector are fiercely competitive, with
big, global companies and smaller, specialty brands fighting for consumers'
attention.
• Fluctuating Raw Material Prices: The cost of ingredients can be volatile,
which could impact Goodbuy’s profitability.
• Changing Consumer Preferences: In the beauty sector, customer tastes can
shift quickly. For Goodbuy to remain relevant, it must be flexible.

18
1.4 STATEMENT OF THE PROBLEM

This project aims to evaluate Good Buy Soaps Pvt Ltd' s liquidity, profitability, and
solvency metrics to evaluate performance in relation to industry norms, pinpoint
strengths and shortcomings, and create long-term sustainability plans. Important
factors influencing the business's financial performance will be identified by
analysing these measures, facilitating strategic planning and well-informed
decision-making. This knowledge will enable management to allocate resources
effectively, optimize operational efficiency, and mitigate risks, positioning the
company for sustainable growth and success.

1.5 OBJECTIVES OF THE STUDY

1. To assess the company's solvency and financial stability.

2. To assess the company's short-term financial strategies and liquidity.
3. To analyze Profitability and Capital efficiency trends.
4. To analyze the factors contributing to the volatility in financial performance and
assets growth.

1.6 RESEARCH METHODOLOGY

The precise procedures and techniques used to identify, select, process, and analyse
data on a subject are known as research methodology. The analytical research
approach is the foundation around which the study is developed. The financial
reports for the previous four years were the source of the data for the research.
Collected data were analysed using Ratios and Trend analysis. The output was
presented in table & chart. Further inferences where derived and provided in the
form of findings and suitable suggestions where provided.

1.6.1 RESEARCH DESIGN

The framework for research and methods that a researcher chooses to use when
conducting a study are called research design. The study forms on the basis with
a mode of Analytical research approach. The data for the research were collected
from the financial report for the past 4 years (2020-2023).
1.6.2 DATA COLLECTION
19
SOURCES OF DATA

The primary source of data for the study is secondary information taken from the
company's annual reports. Two sources of the data needed for the research approach
have been collected. The sources of data collection are as follows:

PRIMARY SOURCES

The formation was gathered through engaging in discussions with the company's
employees to gain insight into the business's operations.

SECONDARY SOURCES

The secondary source of data was gathered from the company's published annual
reports, handouts, books, journals, websites, and other sources.

1.6.3 TOOLS USED FOR THE STUDY

Ratio Analysis tools

• Liquidity Ratios (e.g., Current Ratio, Quick Ratio)

• Profitability Metrics (e.g., Gross Profit Margin, Net Profit Margin)
• Solvency Ratios (e.g., Debt-to-Assets Ratio, Debt-to-Capital Ratio)
Trend Analysis
• Trend analysis on Fixed Assets
• Trend analysis on Debt
• Trend analysis on Net Profit
• Trend analysis on Net Worth

1.7 SCOPE OF THE STUDY

This research will examine a company's financial performance from 2019–2020

to 2022–2023 in order to assess how well the organization is performing
financially. It will specifically concentrate on significant financial factors such
fixed assets, debt levels, net profit, and net worth. In addition to assessing the
growth of fixed assets, debt levels, and net profit trends, this will entail analysing
the company's asset management procedures and investment strategies. In
addition, the study will determine the primary factors that are responsible for the
20
 patterns in net profit, as well as the consequences these factors have for the
financial risk and leverage of the organisation. Additionally, it will analyse the
volatility of net worth, taking into consideration a variety of factors like changes
in equity, revaluation of assets, and retention of profits. The purpose of the study
is to offer a full understanding of the company's financial dynamics, risk
management techniques, and strategic decisions. This will be accomplished via
the utilization of both quantitative and qualitative methodologies. The findings
will include recommendations for increasing financial stability and performance,
as well as insights into the company's financial health, highlighting both the
company's strengths and weaknesses.

1.8 LIMITATIONS OF THE STUDY

• The study’s duration is restricted to four years, so the results of the study
cannot be generalized.
• The analysis is completely based on secondary data; inherent limitations of
secondary data would have affected the study.
• There always exists a risk of personal bias during the analysis and
interpretation process.
• The tools and techniques used for the study has its own limitations.

21
 CHAPTER-2

REVIEW OF LITERATURE &

THEORETICAL FRAMEWORK

22
2.1 REVIEW OF LITERATURE

This chapter covers the literature review and the theoretical framework. A
comprehensive overview of past research projects is provided by the study of
literature, and the specifics of these studies provide insight into what needs to be
studied moving ahead. It also strengthens the theoretical base of the research
study The literature review is a compilation of reviews of earlier studies carried
out by other researchers and scholars in the subject of financial risk and
performance evaluation. The theoretical framework comprises the theories,
components, and their explanations employed in the study effort.

Benedetta Esposito, Daniela Sica, Stefania Supino, Ornella Malandrino

(2024) This paper “Measuring the impact of circular economy performance on
financial performance: The moderating role of stakeholder engagement”
investigates whether and to what extent circular economy performance affects
the financial performance of a global sample of listed agri-food firms. Moreover,
testing has been done on the moderating potential role of stakeholder
participation in empowering this relationship. Based on Environmental, Social,
and Governance ratings that were classed in the context of the reuse, reduction,
recovery, and recycling (4R) paradigm, a circular economy performance index
has been created. Next, a multivariate regression model covering the years 2015–
2022 has been created. Stakeholder theory and the natural resource-based
perspective have been combined into a more comprehensive theoretical
framework. The findings indicate a favourable correlation between the financial
performance, stakeholder engagement's boosting effect, and the performance of
the circular economy. The study's conclusions give academics and managers
plenty of reason to think on the circular economy's profitability and the critical
role that stakeholder engagement plays in providing a significant impulse to the
circular transition.

L.Sainath yada, Dr. T. Vara Lakshmi, K. Anjali (2024), In this paper

“Financial Performance Analysis of ICICI Bank Using Ratio Analysis” gives
this analysis of financial statement help in making future decision and strategy
as it is required to show the financial situation, which is derived from historical
and present records. The data is collected from the annual reports, secondary
23
data and can be analysed using ratio analysis. The aim is to evaluate the bank's
operational efficiency, liquidity, solvency, and overall financial health over a
specific period. Ratios such as profitability ratios (Return on Assets, Net profit
margin), liquidity ratios (Current Ratio, Quick Ratio, Cash ratio), efficiency
ratios (Asset Turnover Ratio, cost to income ratio), and solvency ratios (Debt-
to-Equity Ratio, Debt ratio) are computed and analysed to gain insights into the
bank's financial strengths and weaknesses.

Kah Fai Liew, Weng Siew Lam, Weng Hoe Lam, (2024), “Determination on
the Financial Performance of Construction Companies Using TOPSIS Model”
Evaluation of financial performance is crucial for the construction sector since
organizations in the construction industry have a significant impact on a nation's
economic growth. Financial performance analysis can be utilized to understand
the financial status of the companies. The essential methods for filtering through
the data and gaining a more comprehensive understanding of the performance
of the construction company are financial ratios. The financial performances of
Malaysia's listed construction companies are assessed by using the proposed
TOPSIS model. The outcomes of this research study display the top five
performing companies are KERJAYA, SUNCON, AME, GAMUDA, and
FAJAR. For the sake of ongoing improvement, these profitable businesses can
act as a standard for other businesses with lesser financial outcomes. This
analysis demonstrates the importance of the study in assessing the firms'
financial performance and ranking the construction companies. This study is
beneficial not only to the company itself for future improvement, but also to the
policy maker, stakeholder, and investor during the decision-making process.

Anis Ali, Abdulrahman Alhassan, Nadeem Fatima, (2024), “Financial

Performance and Total Resources: Trend and sensitivity Analysis of Indian Oil
Exploration and Production Companies.” The firms involved in the exploration
and production (E&P) of natural gas resources and crude oil play a crucial role
in the energy sector and contribute to the economy. Identifying, drilling, and
extracting natural gas resources and crude oil from below the surface of the earth
are referred to as exploration and production. The downstream businesses use
the basis provided by exploration and production companies to turn crude oil
into consumables. The financial performance of the downstream companies
24
depends on the cost efficiency of the E&P firms. The goal of the research is to
ascertain how financial performance metrics relate to overall resources. The
study's foundation is made up of financial ratios, secondary data, index numbers
used to calculate financial performance, and financial performance variability.
The short- and long-term trends and rapid effects of variability on total assets on
financial measurements are obtained through correlation. The study discovered
that while the absolute quantity of expansion of all available resources
negatively governs profitability based on sales and short-term paying
capabilities, return on total resources is positively influenced over the long term.
There is a short-term lag in the positive increase of the total resources on the
ROA, despite the favourable long-term correlation. Overall, based on their
average absolute number of total resources, relatively, the mutual study of the
mean growth rate of all resources and financial indicators of Indian E&P explore
negativity.

Konstantinos Chrysafis, Georgia C. Papadopoulou, Ioannis N. Theotokas

(2024) Measuring financial performance through operating business efficiency
in the global cruise industry: A fuzzy benchmarking study on the “big three”:
This research “Measuring financial performance through operating business
efficiency in the global cruise industry: A fuzzy benchmarking study on the “big
three”” seeks to fill this gap by examining the financial performance of
companies in the shipping sector, specifically the cruise sub-sector. This analysis
focuses on the "three biggest players" in the industry. Benchmarking is crucial
for prospective new entrants as well as for current market players. Fuzzy
methods are used in modelling situations that involve uncertainty. The results
show that restructuring the three companies' activities is necessary to generate
revenue and settle debt. Carnival Corporation also exhibits the strongest growth
potential, maintains its leadership in liquidity, offers the highest return on assets,
and borrows less than the other two firms, all of which further highlight the
company's durability during difficult times.

Anju Goswami, Pooja Malik (2024), In this research “Risks and financial
performance of Indian banks” gives a cursory look at the COVID-19 period.
During the II wave of the coronavirus crisis, the novel coronavirus (COVID-19)
reduced their lending agility and created financial stress, which led to an increase
25
in non-performing loans (NPLs) and poorer performance. Consequently, it is
critical to determine the risky variables affecting Indian banks' financial
performance from 2018 to 2022. A balanced panel dataset comprising 75
scheduled commercial banks from three distinct ownership groups—public,
private, and foreign banks—that were actively operating between 2018–2022
makes up our sample. A fixed-effects model (FEM), which addresses the
problem of variability among various banks over time, is used to identify factors.
We also use the pooled ordinary least squares (OLS) model, an alternative
metric, to identify the risky drivers of the financial performance of Indian banks
in order to further confirm the validity of our findings. Based on empirical
research, financial performance in India is negatively impacted by default risk,
solvency risk, and COVAR. On the other hand, the COVID-19 crisis, high
liquidity, and Z-score improve Indian banks' financial performance. Factors
related to systemic and unsystematic risk are significant in establishing the
COVID-19 prognosis. The "bad-management," "moral hazard," and "tail risk
spillover of a single bank to the system" theories are all supported by the study.
Compared to their peer group, public sector banks (PSBs) have a great deal of
ability to achieve financial performance while managing exogenous shocks and
unsystematic risk. Ultimately, the coefficients of the primary model are validated
using robustness check estimates.

Deepika Goyal, (2024). Examining the expansion and financial performance of

solo health insurance firms in India is the main goal of the current study,
"Performance Analysis of Standalone Health Insurance Companies in India."
Five independent health insurance providers have been chosen for this study's
analysis of the companies' financial performance. The secondary material was
gathered from books, journals, publications, official company websites, reports
from the Insurance Regulatory and Development Authority of India, and internet
searches. The time frame for the study is 2016–2017–2022–2023. The nature of
this investigation is analytical. Numerous statistical methods, such as mean,
percentage, and yearly growth rate, have been used to analyse data. The number
of lives covered by the policies, the premium earned, the number of claims made,
and the ratio of incurred claims have all been included in the study. Over time,
there has been a notable rise in the premiums that stand-alone health insurance
26
firms receive. For other competitors in this market, this is the most crucial
element. An annual increase in insurance company offices is observed. However,
the standalone health insurance service provider has a very low claim ratio. Due
to the fact that over 50% of the population lacks health insurance, there are
numerous opportunities for the health insurance industry to grow its market
share.

Anjali Patel, Jaydeep Ramanuj (2024), “Liquidity and profitability analysis of

the selected it companies of India.” Ratios are very helpful tools for any firm to
understand financial statements and make decisions. Every business need, both
short- and long-term success to be sustainable and to expand over the long run.
As IT corporations grow to be the dominant force not just in a single nation but
across the globe. The main objective of the study is to gain a better understanding
of the relationship between the profitability ratio and the liquidity ratio for TCS
(Tata Consultancy Services) and Infosys, two specifically chosen Indian IT
businesses. Data for the study is gathered from the annual reports of the chosen
companies during a ten-year period, beginning in March 2014 and ending in
March 2023. Regression analysis and the arithmetic mean were employed as
statistical techniques. Both the profitability ratio and the liquidity ratio indicate
that TCS did better than Infosys. The findings of the regression analysis indicate
that there is no relationship between the profitability ratio and the liquidity ratio.

Sewaram Bhadkariya, Mansi Mathur, (2023), “Profitability Analysis of

Public Sector and Private Sector Banks in India.” People look for profitability
above all else when they put money in a bank. The base of a nation's economic
development is its banking system's capital. The failure of the banking system
can have multiple causes, including the stimulation of a particular country due
to different risks, money inflation, financial crises, imbalanced economic
development, unavoidable pandemics like COVID-19, limited money
circulation, etc. Indian banks have incorporated CBS to take use of technology
and enhance client support. Indian banks' profitability has been impacted by a
number of factors, including competition, banking reforms, economic
slowdowns that have increased non-performing assets, high-tech investments,
and baseline risk management. However, banks in both the public and private
sectors have continuously demonstrated respectable performance. It is feasible
27
to comprehend the profitability of public and private sector banks since they
continue to be the two forms of institutions in the Indian banking sector. The
study included the public and private banks in India between 2012 and 2022, a
span of 11 years.

PS Aithal (2024), The study of financial performance analysis in the Indian oil
and drilling sector serves a crucial role in giving stakeholders insights into the
financial stability, operational effectiveness, and strategic positioning of
businesses within this industry, as stated in this paper, "A Financial Performance
Analysis of Indian Oil Exploration & Drilling Sector. Purpose." A sector's
overall stability, growth potential, and risk exposure can be evaluated by
stakeholders, including investors, policymakers, and industry participants,
through the analysis of critical financial measures including profitability,
liquidity, and valuation ratios. Furthermore, this kind of study helps with well-
informed decision-making processes including the design of policies, risk
management plans, investment allocation, and strategic planning. It is crucial for
stakeholders to comprehend the financial performance of enterprises operating
in the Indian oil and drilling sector in order to efficiently traverse the intricacies
of this dynamic industry, seize opportunities, and address any potential issues.
The analysis included enterprises engaged in oil exploration and drilling that
were listed on the Bombay Stock Exchange.

Ruiqi Li, Jing Liang, Cheng, Xiaoyan Zhang, Longfeng Zhao, Chen Zhao,
H. Eugene Stanley, (2024), “The evolution of k-shell in syndication networks
reveals financial performance of venture capital institutions:” In China, the
relatively nascent field of venture capital (VC) is still fraught with uncertainty.
Consequently, creating a strong social network with other venture capital
organizations is an excellent method to exchange knowledge and resources as
well as take use of the complementarity of skills and knowledge to mitigate risks.
Strong evidence suggests that more highly networked venture capital firms
perform better financially. Nevertheless, the majority of earlier research ignores
the evolution of venture capital firms and concentrates only on a few basic
topology indicators of the static syndication network, ignoring higher-order
network structure and making it impossible to provide a thorough assessment.
In this research, we build temporal syndication networks between VC
28
institutions year by year based on VC investment records in the Chinese market.
Since k-shell decomposition takes into account higher-order connection patterns,
we use k-shell to assess the impact of venture capital firms in syndication
networks. The Chinese venture capital institutions can be divided into five
distinct groups based on their investing behaviours and financial performance,
which are determined by clustering time series of k-shell values. This in turn
demonstrates the effectiveness of our approach, which allows us to disclose their
financial investment success solely on the basis of appropriate sequential
network attributes. A smaller intra-group and a bigger inter-group distance
indicate that k-shell is a better indicator than other network centrality
measurements.

Ivena Mashoeda, (2024), in her research study “The Influence of Net Profit
Margin, Return on Asset, Current Ratio, Price Earning Ratio, Solvency Ratio on
Market Price” aims to analyse the influence of Profit Margin, Return on Assets,
Current Ratio, Solvency Ratio on Market Price. Information about company
share prices is related to these 5 variables. The data used in this research is the
Consumer Good Industry Company (CGIC) which has complete data related to
these variables so that the sample obtained is 13 companies in 2019-2022. The
data analysis technique used in this research is the selection of a panel data
regression model with the Chow test, Hausman test, large range multiplier (LM)
test, and parameter significance test. Based on the test results, it can be said that
Market Price (MP) is significantly influenced by Net Profit Margin (NPM), but
not by Return on Assets (ROA), Current Ratio (CR), Price Earning Ratio (PER),
or Solvency Ratio (SR).

Molina M, Median Wilestari, (2024), In order to shed light on important

insights into managing financial performance, investment decisions, and
strategic approaches within organizations, the researchers in "Examining
Financial Strategy Management: Understanding Financial Performance,
Investment Decisions, and Strategic Approaches through Qualitative
Description and Literature Review" dive into the complexities of financial
strategy management through a qualitative examination and literature review.
The principal aim of this research is to offer a thorough comprehension of
financial strategy management through the integration of current information
29
and the identification of areas that require additional investigation. The study's
qualitative description and literature analysis are based on important
publications by well-known academics in the fields of finance, economics,
psychology, and strategic management. The literature review's conclusions
highlight the complexity of financial strategy management and stress the need
of taking a thorough, impartial approach to evaluating financial success that
incorporates both quantitative measurements and qualitative insights.
Furthermore, the study emphasizes how crucial investment choices are in
determining the results of organizational success, clarifying findings from
empirical research, behavioural finance, and modern portfolio theory. The study
also identifies various strategic approaches to financial management, with an
emphasis on innovation, adaptability, and strategic flexibility in navigating
dynamic business environments. These approaches range from Porter's
competitive strategy frameworks to Mintzberg's ten schools of strategy
formulation. By strengthening current frameworks and providing useful
implications for managerial practice, the research advances theoretical
understanding and helps firms improve their financial management strategies
and gain a lasting competitive edge.

Thiyam Jitendra Singh, (2023), The researcher analyses how financial

institutions are essential to a country's economic development in this study,
"Evaluating Financial Performance of Regional Rural Banks in India."
Prioritizing rural development is crucial, as India hopes to become a developed
nation by 2047, having risen to the fifth rank among the world's economic
powers in 2024. On October 2, 1975, the Narsimha committee launched
Regional Rural Banks (RRBs) as a solution to the rural credit gap. The principal
objective of these banks' establishment was to supply loans to rural areas so that
they may participate in the economy and support the development of micro,
small, and medium-sized businesses in order to raise their level of living. RRBs
function with the intention of making a profit, much like every other type of
business or financial organization. For this reason, RRBs must make enough
money to pay for their overhead. The goal of this research paper is to analyse
RRBs' profit and loss trends throughout a ten-year period, from 2013–14 to
2022–23. The analysis is predicated on secondary data that has been gathered
30
from many sources, including the RBI and NABARD annual reports, important
statistics, RRB financial statements, and pertinent books, articles, and websites.

Yinglin Wei (2023), In order to give stakeholders a thorough analysis, the

"Pfizer Financial Performance Analysis Report 2019-2022" attempts to assess
Pfizer's financial performance during the previous three years. Pfizer is a major
multinational biopharmaceutical corporation that operates all over the world.
Pfizer prioritizes research and development as the foundation of company
growth, and it holds a number of unique patents in important disease areas.
Pfizer's sales increased by 95% in 2022 as a result of the oversupply of
Comirnaty and other product categories. The cash flow, profitability, and return
ratios all show positive surpluses as a result of the revenue explosion.
Furthermore, due to corporate strategy and rising needs, business operations
have improved in terms of inventory management and turnover ratios. But now
that the epidemic is over, Pfizer's biggest commercial concern is how to keep up
product sales growth because several of the most important patents are about to
expire and the health industry is getting more cutthroat and competitive.

Nilutpal Narayan Konwar (2023), In-depth research on financial performance

is done in the study "Financial performance analysis of Reliance Industries Ltd.-
An Indian Conglomerate MNC." The process of evaluating a company's
financial strength and weaknesses using its financial statements—the income
statement (profit and loss account) and position statement (balance sheet)—is
referred to as "financial performance analysis". It assists a business in effectively
projecting future earnings as well as in taking the appropriate corrective action
to address deficiencies. One of the biggest private sector businesses in India,
Reliance Industries Limited (RIL) is well-established in the quickly growing
retail and telecommunications industries. This report examines RIL's financial
performance over a five-year period, from the 2017–18 fiscal year to the 2021–
2022 fiscal year. The goal of the study was to assess the company's financial
standing as well as to identify and analyse any changes in the finances and the
anticipated outcomes using ratio and trend analysis. The firm website, annual
reports, published publications, and other trustworthy sources were the sources
from which the data was gathered. The analysis shows that the business has
shortcomings in a number of areas, and strengthening those areas will enable the
31
business to reach its ideal ratios. The research has several constraints about data
from original sources, data analysis tools, study periodicity, and other related
aspects.

Imaeka I. CHARLES, Imoh C. UFORD, (2023), The business and financial

performance of Amazon.com was examined for a three-year period from 2019
to 2021—notably, the time when the COVID-19 pandemic lockdowns were
implemented—in their paper "Comparative analysis and evaluation of business
and financial performance of Amazon.com: a three-year period critical review
of exceptional success." Finding the firm's essential success factors was the goal.
The financial reports from Walmart Inc., a competitor brand that was functioning
well during the time, were compared to determine Amazon's financial
performance. Using the SWOT and PEST models, the researchers first
determined the crucial business elements that contributed to Amazon's
outstanding performance. Furthermore, ratio analysis was used to perform a
basic financial analysis of Amazon.com's three-year audited financial statements
for the period ending in 2019 to 2021. To guarantee a useful analysis, the
findings of Amazon's ratio analysis were then contrasted with Walmart's
financial performance during the same time frame. This comparison revealed
that Amazon's profitability, liquidity, solvency, and efficiency ratios are superior
to Walmart Inc.'s, despite the Covid-19 pandemic having a negative impact on
the performance of most businesses during that time. The outcome of the
financial analysis was specifically explained by the PEST and SWOT analysis
results. Given the strengths Amazon.com has demonstrated in terms of its
customer-centric and resilient business model, ongoing innovation,
advancements in cloud computing, and strong brand name, the researchers
contend that the company is well-positioned for continued excellence going
forward, having maintained such exceptional performance in the face of the
Covid-19 pandemic. To be the industry leader in the future, it must, nevertheless,
address employee grievances, assess its overseas business division, and monitor
rivalry.

Dr. R. Blessie Pathmu, Saru Latha N (2023), This study, "A study on financial
performance analysis of the tropical agrosystem India Pvt. Ltd." examines
financial parameters such liquidity, solvency, profitability, and efficiency ratios
32
in order to assess the company India Pvt. Ltd.'s financial performance from 2017
to 2022. The quantitative approach and descriptive study design form the
foundation of the employed research methodology. Utilizing statistical tools like
cash flow analysis, comparative balance sheet analysis, and trend analysis, the
data is gathered from the company's annual reports and financial statements.
According to the study's findings, the company's profitability and efficiency
ratios have been trending positively during the study period, and it has
maintained a solid financial position. The business is able to repay its short- and
long-term debts since it is in a sound financial position. According to the report,
the business should keep concentrating on raising its profitability and efficiency
ratios while preserving its robust liquidity and solvency. According to the study's
overall findings, the business is healthy financially and has been able to stay
stable and enhance its financial performance over time.

Pradip Kumar Das, (2023), "Financial Appraisal Through Ratio Analysis," The
Indian economy benefits greatly from the country's steel industry. feels that India
has a strong history and is a well-known brand in the global steel business. This
further demonstrates the Indian Steel Company's strength and resilience against
outside risk factors. Globalization provides the organization with sufficient
flexibility to grow internationally and enhance India's product portfolio by
employing cutting-edge technologies. India is positioned prominently in the
world by Tata Steel Ltd. The current study aims to disclose Tata Steel Ltd.'s
financial evaluation through the long-standing association between the profit and
loss account and balance sheet feedbacks. This study examines Tata Steel Ltd.'s
financial appraisal for the years 2017–2018 through 2021–2022, using
secondary data as a source. The company's performance is generally satisfactory,
according to the results, but investors tend to view it as a novice because it uses
funds for other investment and decision-making options.

Mr. R. Ajithkumar, Dr. V.T. Dhanaraj, Dr. T.M. Hemalatha, Ms. V.

Pavithra, Ms Charumathi Medavarshini.P, Mr. Selvasrikanth.S, (2023), The
financial performance of the FMCG industry is examined in their study, "A
Comparative Study on Cause and Consequent Effect Relationship of Liquidity -
Profitability Analysis of Select Fast-Moving Consumer Goods." One of the most
significant industries in the world is the FMCG sector. The fourth-largest
33
industry in India is the FMCG sector. More than four million people are
employed by it in downstream activities. Food and beverages, personal care,
household care, and personal care are its main constituents. With a market value
of over Rs. 200,000 crores, the FMCG industry is likely to continue growing at
a fast rate, with a current growth rate of double digits. An indication of a
corporate concern's general soundness is its financial performance. Financial
performance, taken as a whole, is the extent to which financial goals have been
reached. It is a method for calculating the financial impact of a company's
decisions and actions. It is employed to gauge a company's overall financial
success over a specified time frame. In the current study, ratio analysis and a
number of other statistical approaches are used to analyse the overall financial
performance of a selected group of FMCG companies in India. The report
examines the FMCG sector's financial performance from a new angle. It will
assist prospective investors in selecting a secure investment and locating areas
for expansion. Because the analysis is based on secondary data from published
reports and financial statements, its scope is restricted.

Prasad M and Bijin Philip (2023) demonstrated by means of empirical study

in his paper "A Study on The Financial Performance of The South Indian Bank"
that the banking industry is essential to the financial system of any nation. It
affects the nation's economy by offering loans, investments, and infrastructure.
Every nation's ability to develop and flourish depends on its banking industry.
Therefore, the performance evaluation of the South Indian Bank's new
generation is the main emphasis of this study. An assessment of South Indian
Bank's profitability, efficiency, and overall financial health is part of the bank's
financial performance study. This research offers insightful information about
the Bank's overall performance and capacity to provide stakeholders with long-
term rewards. Numerous financial ratios and indicators, including the ratio of
fixed assets to net worth, the ratio of credit to deposit, the ratio of investment to
deposit, the ratio of cash to deposit, the ratio of cost to income, the ratio of
deposit to cost, and other ratios, are used to assess the Bank's financial
performance. The income statement and balance sheet of the Bank are examined
in order to compute these ratios. According to the report, South Indian Bank has
been steadily increasing its profitability and net interest income, maintaining a
34
healthy financial position. Along with a decrease in non-performing assets and
a rise in the provision coverage ratio, the Bank's asset quality has also improved
over time. According to South Indian Bank's financial performance study, the
bank is in a stable financial situation. Still, in order to maintain its growth and
profitability going forward, it must address a few key areas of concern.

Dr. Yukti Baljit Chandok, Prof. Vrinda Dave (2023), One of the main
emerging industrial sectors in India, the Argo-based sector encourages the
integrated growth of both industry and agriculture. This is examined in the paper
"Analysis of liquidity of selected companies from the Argo-based manufacturing
sector in India." It connects and fortifies ties between agriculture and industry.
The goal of this study is to examine, evaluate, and contrast the liquidity of
businesses in the textile, paper, and sugar industries—the three main segments
of India's Argo-based manufacturing sector. For financial analysis, four
businesses have been chosen from each industry. Over a ten-year period, from
2008–09 to 2017–18, liquidity analysis on data gathered from annual reports of
the chosen companies from the Argo–based manufacturing industry in India has
been researched. For three different liquidity ratios—the current ratio, the liquid
ratio, and the cash and bank to current liability ratio—mean, standard deviation,
and covariance were computed. Companies were ranked according to industry
and overall metrics using a mean. The percentage of each industry in the total
industry mean was also ascertained. The difference in liquidity between the
chosen organizations was measured using the statistical t-test. It was determined
that businesses in the paper and textile industries were outperforming those in
the sugar industry in terms of liquidity. Businesses in the sugar sector were
struggling financially. The top-ranked company overall was Vardhman Ltd, a
textile company. Analysis of ratios indicates that there is a significant difference
in the liquidity ratios among the textile and paper industry, among the sugar and
paper industry, and among the textile and sugar industry too.

Mr. P. Kanagaraj, Mr. C. Harsh (2023), Coal India Limited (CIL), one of the
biggest coal-producing companies in the world, had its financial performance
from 2017 to 2022 analysed in the report "A study on financial performance of
coal India limited." Evaluating CIL's financial performance metrics—
profitability, liquidity, solvency, and efficiency—is the goal of the study. A range
35
of financial metrics and techniques were used to analyse data taken from CIL's
annual reports. The study's conclusions show that while CIL's revenue and
profitability have consistently increased over time, the business still has
problems with efficiency and liquidity. The importance of financial performance
analysis in assisting companies such as CIL in making informed decisions and
fortifying their financial position is underscored in the report. The study's
findings may be useful to policymakers, stakeholders, and investors in
evaluating CIL's financial performance and guiding their decisions.

Sevgi Sumerli Sarıgül, Merve Ünlü Esra Yaşar (2023), This research seeks to
evaluate the financial performance of six airline operators operating in Europe
from 2019 to 2021 through an analysis of their publication "Financial
Performance Analysis of Airlines Operating in Europe: CRITIC Based MAUT
and MARCOS Methods." Eight financial ratios were employed to measure
performance: return on equity, cash ratio, equity multiplier, financial leverage
ratio, asset turnover rate, equity turnover rate, and return on assets ratio. The
significance levels of the criteria associated with the CRITIC technique, one of
the MCDM approaches, were established in order to analyse these criteria. The
financial performance ranking of the airline firms was also determined based on
the pertinent years using the MAUT and MARCOS techniques. The asset
turnover rate in 2019 and the financial leverage ratio criteria in 2020 and 2019
were found to be the most significant criteria, based on the results of the CRITIC
approach. The airline with the best financial performance in 2019, 2020, and
2021 was determined to be Air France using the MAUT technique. The
MARCOS method's results show that EasyJet had the best financial performance
in 2020 and 2021, while Pegasus Airlines had the best financial performance in
2019.

Osama Fayez Atayah, Mohamed Mahjoub Dhiaf, Khakan Najaf,

Guilherme Francisco (2022), The purpose of this study, "Impact of COVID-19
on financial performance of logistics firms: evidence from G-20 countries," is to
add to the body of knowledge already available on logistics by examining the
relationship between listed logistics firms' financial performance and the
COVID-19 and contrasting the financial performance of G-20 countries'
logistics firms during the pandemic. Data on all logistics companies from the G-
36
20 countries have been gathered from Bloomberg in order to perform the
confirmatory analysis and evaluate the assumptions developed for this study.
The first quarter of 2010 through the final quarter of 2020 was used as the study
sample for this report, which looked at the effect of the pandemic on financial
performance. The findings indicate that logistic companies' financial
performance improved dramatically in 2020. Overall, the country-specific
findings supported the basic findings, and throughout the pandemic, the financial
performance of 14 out of the 20 nations whose logistic enterprises were analysed
showed a considerable increase. Nonetheless, the second hypothesis is supported
by this paper's discovery of the logistics companies' poor financial performance
throughout the COVID-19 period in six nations (Germany, Korea, Russia,
Mexico, Saudi Arabia, and the UK).

Gautam Das (2022) The Indian government has undertaken significant

measures to support the expansion of this industry, given its critical position in
several of its signature projects. In the current study, "Financial Performance
Analysis of the Steel Industry in India," several financial indicators taken from
the Prowess, CMIE database are used to evaluate the financial performance of
the industry from 2013 to 2022. According to one measure, the study discovers
a strong correlation between profitability and liquidity. Specifically, panel
regression analysis has been used to solve the problem of the steel industry's
overall performance. In the end, we have selected 24 steel businesses using a
methodical sampling technique. We have used eight independent variables, the
majority of which are activity ratios and three profitability ratios, namely NPM,
ROCE, and ROA. These variables are related to both profitability and
performance. As a result, there are numerous factors, including cost, revenue,
capital, assets, and other relevant variables, that are connected to the issue of the
steel industry's financial performance.

Mrs. T. Sree Geetha, Dr. P. Revathi (2022), The official directory and database
of the Centre for Monitoring the Indian Economy, such as "PROWESS IQ,"
provided secondary data for the study "Liquidity and profitability analysis of
select electrical machinery companies in India." Purposive sampling is used to
choose the samples, and the study looks at sales volume for the top 10 companies
out of 258 listed in India's electrical machinery industry. The study employs
37
methods and tools like Mean, Standard Deviation, Coefficient of Variation, Ratio
Analysis, and Altman Z-Score spanning ten fiscal years, from 2011–12 to 2020–
21. A business endeavour’s main objective is to turn a profit. Profit is a potent
supplementary indicator that can be used to guide a company's capital decisions.
This research aims to analyse liquidity and comprehend profitability position.
Thus, it can be seen that Current Assets are higher (2.21) than Current Liabilities
(1), Liquid Assets are higher (1.79) than Current Liabilities (1.00), and the mean
value is large (24.91). A corporation with a sound financial basis in terms of
liquidity is indicated by a working capital turnover ratio of 4.45 and an inventory
turnover ratio that suggests stronger sales. The highest gross profit ratio (18.85)
shows that the company is making a profit, the mean value (5.71) indicates that
the debtor turnover ratio is too high and indicates that the businesses are in
financial distress and unable to pay the debtors, and the net profit ratio (2.97)
shows that the business's selling and distribution expenses are under control. The
Volta Companies in the too-healthy zone include Schneider Electric
Infrastructure Ltd., MP Transformers Ltd., and Cummins Generator
Technologies India Pvt. Ltd. Companies in the "Distress Zone" are Powerica
Ltd., C & S Electric Ltd., and Kirloskar Electric Co. Ltd. The researcher suggests
boosting shareholder cash to raise current assets and lower operating costs while
also improving net profit by increasing the current ratio. Selected Indian
manufacturers of electrical machinery will benefit from these actions in the long
run by becoming more profitable.

Dr. Venkataiah Pasunoori, Dr. B. Mohan Kumar, Dr. M. Janakiram,

E.V.C.M. Sastry, M. Indira (2022), A study on “financial performance of
central bank of India.” The banking industry plays a vital role in the economic
development of a country which determines the money circulation among the
people. The financial sector, which forms the backbone of the economy, is
essential to the nation's survival. The sole important factor determining the
operational effectiveness and long-term viability of the banking industry is
financial performance. India's financial system is vast and includes numerous
branches as well as a wide range of financial services. This paper aims to
investigate the financial performance of the Central Bank of India through the
analysis of various ratios. Specifically, the financial performance will be
38
evaluated using income and expenditure data as well as consolidated balance
sheets from the period of 2018 to 2022 by utilizing liquidity, solvency, profit and
loss and balance sheet ratios.

Seaba Teresa James (2021) a study on the “A study on the financial

performance of construction industry in India during covid-19.” The primary
purpose of this research paper is to analyse and interpret the financial
performance and position of leading construction companies from around the
world. This study's focal companies are Responsive Industries Ltd., Dilip
Buildcon, KNR Constructions Ltd., and NCC Ltd. and Ashoka Buildcon. The
companies chosen are based on a criterion of top companies in the field of civil
construction sector. Ratio analysis is the main tool that will be used for the
analysis. Trend analysis is also used along with ratio analysis. The analysis will
involve comparison for the half yearly financial results of 2018, 2019 and the
first half of 2020. The research also sheds light into the impact of COVID-19
pandemic in the industry based on the selected company’s financials.
Construction Industry is presumed to be impacted heavily by the COVID-19
pandemic. The problems faced include labour shortages, supply chain
complications and financial constraints. The ripples of the initial outbreak in
Wuhan, China is going on in the industry even as the first half of 2020 came to
an end. Contracts will be affected across construction sites around the globe if
such a crisis happens. The relevance of all these will be investigated by this
study.

Le Duc Hoang, Nguyen Quang Viet, Nguyen Huaong Anh (2021), The
purpose of this research, "Trade-Off Theory and Pecking Order Theory:
Evidence from Real Estate Companies in Vietnam," was to evaluate the
applicability of these two theories in identifying the capital structure of fifty
listed real estate firms in Vietnam. The study's findings demonstrate that the
pecking order theory is more appropriate and ought to be used for Vietnam's
listed real estate companies. It should also serve as a helpful guide for these
companies, helping them to consider pertinent theories when adjusting their own
capital structures in order to become more competitive and sustain business
growth.

39
Chnar Abdullah Rashid (2021), “The efficiency of financial ratios analysis to
evaluate company’s profitability.” The business unit's main objective is to
generate revenue. The goal of the profitability study is to comprehend the
commercial company's present level of efficiency and operating performance. It
should be noted that, unless it is correlated with other numbers, such sales, cost
of goods sold, operational expenses, investment capital, etc., the net income
number by itself is not particularly useful in assessing the effectiveness and
success of the business. As a result, figuring out the profit rate can influence the
outcome and the business's comparison. The company's emphasis on overall
efficiency is limited to this criterion. This essay's primary objective was to
review and assess recent studies that examined how well businesses performed
in terms of profitability. As a result, the analysis concluded that the most crucial
metric for assessing a company's performance is profitability. Therefore,
additional article assessments can be conducted using other financial measures,
such liquidity, in order to increase the efficacy of the companies' performance.

Syarifah, (2021), The objective of the research paper titled "Impact of Earnings
Management, Liquidity Ratio, Solvency Ratio and Ratio Profitability of Bond
Ratings in Manufacturing: (Case Study Sub-Sector Property and Real Estate
Sector Companies listed on the Indonesia Stock Exchange (IDX)")" is to
examine how bond ratings are affected by these factors. 45 businesses in the real
estate and property sector that were listed on the Indonesia Stock Exchange
between 2017 and 2020 make up the study's population. E-views Version 9 was
used to process the data. Four companies were chosen as samples for the
purposive sampling strategy that was employed. Multiple regression analyses
and quantitative descriptive approaches are used in this study to ascertain the
relationship between the variables. The study's findings demonstrate that
profitability ratios, solvency ratios, liquidity ratios, and earnings management
all have an impact on bond ratings concurrently. Bond ratings are somewhat
impacted negatively by earnings management, somewhat positively and
significantly by the liquidity ratio, and slightly negatively by the solvency and
profitability ratios. Investors should be aware of a property and real estate sector
business's duties as provided by a depository, as this will help them choose which
company is suitable for investment.
40
Neelu Nandan Vibhakar, Sparsh Johari, Kamalendra Kumar Tripathi,
Kumar Neeraj Jha, (2021). “Development of financial performance evaluation
framework for the Indian construction companies.” In a developing nation such
as India, the building industry plays a significant role in economic activities.
Therefore, in order to take the necessary actions for their improvement, it
becomes necessary to regularly monitor the performance of Indian construction
businesses. The objective of this study is to create a financial performance
evaluation framework (FPEF) for construction enterprises by utilizing the
financial factors—such as investor return, company efficiency, and operations
management—that were determined in the previous study. Based on factors such
as scope, sub-sectors, age, enlistment at the national stock exchange, and the
availability of data on 20 financial ratios for each company in the Capitalize
database from 2008 to 2017, a stratified sampling technique was used to select
a sample of 100 Indian construction companies, resulting in a set of 1000 data
records. To accomplish the goal, multi-attribute decision making techniques
such simple additive weighting and Shannon-Weaver entropy have been applied.
In order to rate and categorize each organization into five groups and assign
recommendations for improvement, the net financial performance score and
performance grade of each were ascertained. By giving information about the
company's financial patterns over time without requiring the adoption of a
laborious methodology, the established FPEF, which includes the financial
performance equation, will assist the relevant stakeholders in taking the
necessary actions for improvement.

Yusni Nuryani, Denok Sunarsi, (2020), The purpose of the research project
"The Effect of Current Ratio and Debt to Equity Ratio on Dividing Growth" is
to examine how PT. Gajah Mas's dividend changes are impacted by current and
debt-to-equity ratios. Regression testing, testing, determination, and hypothesis
testing are all part of the statistical analysis employed in this explanatory
research study process. The hypothesis test had a significance of 0.045 <0.05,
indicating a substantial impact of the debt-to-equity ratio on the predicted
dividend of 34.2%. The hypothesis test yielded a significance level of 0.014,
with the current ratio and debt to equity ratio being significant to dividend
conversion of 47.8%.
41
 James Agyei, Shaorong Sun, Eugene Abrokwah, (2020) - In order to
determine which of the two competing theories best explains the financing
decisions of small and medium-sized enterprises (SMEs), the study "Trade-Off
Theory Versus Pecking Order Theory: Ghanaian Evidence" looked at the
theoretical predictions of both theories. The panel data methodology was used
in the study to look at 187 SMEs in Ghana. The findings show that both theories'
explanatory power applies to and is relevant for SMEs in Ghana. The findings
also demonstrate that the capital structure of SMEs is significantly influenced
by factors such as profitability, asset size, growth, age, liquidity, and tangibility.
Furthermore, the results demonstrate that SMEs' decisions about their capital
structure are not significantly influenced by risk. Broadly, the results provide
evidence to back the pecking order theory, indicating that Ghanaian SMEs’
funding decisions exhibit the theoretical predictions of the pecking order theory.

2.2 THEORETICAL FRAMEWORK

2.2.1 Financial Stability and Solvency

➢ Solvency ratio and Proprietary ratio

Financial Stability Theory, which holds that high solvency and proprietary
ratios are indicative of strong financial health and a reduced reliance on
external debt, serves as the foundation for the assessment of solvency and
proprietary ratios in this study. Solvency ratios—more especially, the total
solvency ratio—and proprietary ratios are the main ideas discussed.
Within this approach, the proprietary ratio and overall solvency ratio are the
independent factors, while financial stability is the dependent variable.
According to the correlations, keeping these ratios' values high denotes a solid
financial situation with less financial risk. Empirical data from Davis and
Miller (2021), which showed that businesses with high solvency and
proprietary ratios were less likely to experience financial crisis, further
supports this.
The hypotheses guiding this part of the study are:
• H1: A consistently high solvency ratio positively affects financial stability.

42
• H2: A high proprietary ratio since 2021 reflects lower financial risk and
strong financial health.
These hypotheses are tested to validate the theoretical propositions and to
extend the understanding of how solvency and proprietary ratios contribute to
overall financial stability. The study aims to corroborate findings from recent
research while providing new insights into the company's financial dynamics
under investigation.

➢ Debt ratio and Financial Risk

The Trade-Off Theory of Capital Structure explains the connection between
debt ratio and financial risk. As per the theory, companies choose their ideal
capital structure by weighing the advantages and disadvantages of taking on
debt. The key concepts involved include the debt ratio, financial risk and
leverage. In this approach, the debt ratio is the independent variable and
financial risk is the dependent variable.
The primary hypothesis (H1) states that an increased debt ratio in 2023
heightens financial risk and leverage. This hypothesis is supported by recent
research highlighting the adverse effects of high leverage on financial
stability. For example, Johnson et al, (2023) demonstrated that firms with
elevated debt ratios are more subjected to financial distress during the recent
economic disruptions caused by the COVID – 19 pandemics. These findings
underscore the critical importance of managing debts levels to mitigate
financial risk and maintain corporate stability.
By examining the intricate balance between debt and financial risk, this
theoretical framework offers a thorough comprehension of how leverage
affects the financial stability of a company. It emphasizes how important it
is for businesses to properly evaluate their debt-to-asset ratios in order to
maintain long-term financial stability and stay clear of the dangers of using
too much leverage.

➢ Total Liability to Net worth Ratio

The Pecking Order Theory, which holds that businesses prioritize their
sources of financing based on the principle of least effort or resistance,
43
 preferring internal financing first, debt is issued when that is depleted, and
equity is the last option, serves as the theoretical basis for this study.

The notions of Financial Health and the Total Liability to Net Worth Ratio
are fundamental to this paradigm. A measure of a company's financial
leverage that shows the percentage of its obligations in relation to its net
worth is the total liability to net worth ratio. The ability of a business to meet
its financial responsibilities and continue operating is reflected in its overall
stability and performance, which is referred to as its financial health. The
idea behind the relationship between these ideas is that a decrease in the
ratio of total liabilities to net worth indicates a decrease in liabilities in
comparison to net worth, which signifies an increase in financial health.
This connection supports the Pecking Order Theory, which holds that
businesses with lower debt levels are more likely to have a stronger financial
position due to prudent financial management.

The study identifies two key variables:

Dependent Variable: Financial Health

Independent Variable: Total Liability to Net Worth Ratio

The research proposes several hypotheses to explore these relationships:

H1: An increased debt ratio in 2023 heightens financial risk and leverage.

2.2.2 Liquidity and Short- Term Financial Strategies

➢ Current Ratio and Liquidity Ratio

The theory of working capital management, which emphasizes the

management of a company's short-term assets and obligations to guarantee
operational effectiveness and financial stability, serves as the foundation for
this investigation. This framework's core ideas are the liquidity ratio, current
ratio, and short-term obligations. The Liquidity Ratio offers a more
comprehensive evaluation of a company's capacity to pay its short-term
obligations without selling inventory or securing additional financing,
whereas the Current Ratio gauges a company's ability to cover its short-term
liabilities with its short-term assets.
44
 The concept that changes in the Current Ratio and Liquidity Ratio indicate
the company's capacity to fulfil its short-term obligations is the basis of the
linkages between these categories. These ratios show how well a business
manages its working capital and offer insights into its operational strategies
and financial health.

The study identifies two key variables:

Dependent Variable: Short-Term Financial Health

Independent Variables: Current Ratio, Liquidity Ratio

The research proposes several hypotheses to explore these relationships:

H1: Significant fluctuations in the Current Ratio and Liquidity Ratio

indicate changes in the company's operational strategies.

H2: A Liquidity Ratio below 1 negatively impacts the company's ability to

pay off current liabilities without heavily relying on its assets.

H3: A Current Ratio above 1 reassures short-term creditors of the company's

financial stability.

2.2.3 Profitability and Capital Efficiency

➢ Return on Capital Employed

The theoretical foundation for this study is the Efficiency Theory,

emphasizing that the efficiency of resource utilization directly impacts a
firm's profitability and overall performance. According to this theory,
optimal use of capital resources should yield higher returns and enhance
profitability. The three primary concepts of this framework are capital use
efficiency, profitability, and return on capital employed (ROCE). ROCE
calculates the profitability and effectiveness of a company's use of capital.
The ability of the business to turn a profit in relation to its outlays and other
costs is known as profitability. Capital Utilization Efficiency measures how
well a business turns a profit using its capital.
The relationship between these concepts is critical. A decline in ROCE
suggests that a company is experiencing reduced profitability and
inefficiency in its capital utilization. This relationship is aligned with the
45
 Efficiency Theory, which posits that better capital utilization should
enhance profitability.

The study identifies two key variables:

Dependent Variable: Profitability

Independent Variables: ROCE

The research hypothesizes that change in ROCE can serve as indicators of

a company’s profitability and capital efficiency:

H1: A significant decline in ROCE from 2021 to 2022 reduces profitability

and capital utilisation efficiency.

➢ Capital Gearing Ratio

This study is based on the Risk Management Theory, which examines how
firms manage and mitigate financial risks through strategic decision-
making. The theory emphasizes the importance of balancing risk and return
in financial management to ensure long-term sustainability and stability.
Key concepts within this framework include the Capital Gearing Ratio,
Financial Risk, and Financing Strategies. The percentage of a company's
capital that is financed by debt as opposed to equity is measured by the
capital gearing ratio. Financial Risk pertains to the potential for financial
loss or instability, while Financing Strategies refer to the methods and
approaches a company uses to raise capital.
The relationship between these concepts is founded on an idea that
fluctuations in the Capital Gearing Ratio reflect varying approaches to
financing and risk management. Changes in this ratio can indicate shifts in
a company's strategy to balance debt and equity financing, which in turn
affects its financial risk profile.

The study identifies two key variables:

Dependent Variable: Financial Risk

Independent Variables: Capital Gearing Ratio
The research proposes that changes in the Capital Gearing Ratio have a
direct impact on a company's financial risk and financing strategies.
46
 H1: Variations in the Capital Gearing Ratio from 2020 to 2023 impact the
company's financial risk and financing strategies.

2.2.4 Volatility in Financial Performance and Asset Growth

➢ Fixed assets and Asset Management

The theoretical foundation for this study is Asset Management Theory,
which emphasizes the efficient utilization of the company's assets to
maximize its returns and support long-term growth. This theory underscores
the strategic importance of managing both tangible and intangible assets to
achieve optimal performance and investment outcomes. Key concepts
within this framework are the concepts of Fixed Assets Growth, Asset
Management, and Investment Strategies. Fixed Assets Growth refers to the
increase in the company’s long-term tangible assets, such as property, plant,
and equipment. Asset Management involves the effective management of
these assets to enhance their productive use. Investment Strategies
encompass the company’s plans and actions for allocating resources
towards assets that promise future growth and profitability.
The relationship between these concepts is grounded in the notion that
growth in fixed assets signals a company’s commitment to investing in its
future growth. This investment, if managed efficiently, is expected to
enhance the company’s overall asset management efficiency. Thus, an
increase in fixed assets reflects proactive investment strategies aimed at
improving long-term performance.

The study identifies two key variables:

Dependent Variable: Asset Management Efficiency

Independent Variables: Fixed Assets Growth
The research hypothesizes that significant increases in fixed assets
positively impact asset management efficiency.
H1: The significant increase in fixed assets from 2020-2021 to 2022-2023
enhances the company’s asset management and investment efficiency.

47
➢ Debt Levels and Debt Management
This study is based in Debt Management Theory, which explores the
strategies employed by companies to handle their debt obligations and
optimize their capital structure. Effective debt management, according to
the concept, which is essential for preserving financial stability and
accomplishing long-term financial objectives.
The primary concepts involved in this framework are Debt Levels, Debt
Management, and Financing Strategies. Debt Levels refer to the amount of
debt a company holds at any given time. Debt Management encompasses
the practices and policies a company uses to handle its debt. Financing
Strategies refer to the approaches companies adopt to finance their
operations, whether through debt, equity, or a combination of both.
The relationship between these concepts is evident in the trends of debt
levels, which reflect a company’s approach to managing debt and
implementing its financing strategies. Effective debt management is often
indicated by stable or optimally fluctuating debt levels, showcasing the
company's strategic approach to leveraging debt for growth and stability.

The study identifies two key variables:

Dependent Variable: Debt Management Efficiency

Independent Variables: Debt Levels
The study hypothesizes that fluctuations in debt levels provide insight into
a company's debt management strategies.
H1: Fluctuations in debt levels from 2020 to 2023 indicate the company’s
strategic approach to debt management.

➢ Net Profits Trends

The theoretical basis of this study is profitability theory, which emphasizes
that a company's capacity to turn a profit from its activities is a crucial sign
of its performance and financial health. The two main ideas of this
framework are financial performance and net profit. Net Profit is the
measure of a company's earnings after all expenses have been deducted
from revenues, while Financial Performance refers to the overall financial
health, efficiency, and profitability of the company. These ideas are related
48
 in that patterns in net profit over time reveal information about the
profitability and financial health of the business. Consistent net profit
growth typically signals strong financial performance, whereas significant
fluctuations may indicate underlying issues or opportunities within the
company.

The study identifies two key variables:

Dependent Variable: Financial Performance

Independent Variables: Net Profits Trends
The research proposes the following hypothesis to explore the relationship
between these variables:
H1: Significant fluctuations in net profit from 2019-2020 to 2022-2023
highlight the company’s changing financial performance.

➢ Net Worth Volatility

The theoretical framework for this study draws from the Financial Stability
Theory, which emphasizes the importance of maintaining stable financial
conditions to ensure sustained operational capabilities and shareholder value.
Key concepts integral to this framework include Net Worth, Financial Stability,
and Equity Value. Net Worth represents the residual value of a company’s assets
after deducting liabilities and serves as a fundamental indicator of its financial
strength. Financial Stability encompasses the ability of a firm to withstand
financial shocks and maintain its operational and investment activities without
significant disruptions. Equity Value reflects the market valuation of
shareholders’ equity, influenced by the company’s financial stability and
perceived risk.

The relationship explored in this framework posits that fluctuations or volatility

in net worth are indicative of changes in a company’s financial stability and
equity value. Increased volatility may signal underlying financial instability,
potentially impacting equity valuation and investor confidence.

The study identifies two key variables:

Dependent Variable: Financial Stability

49
 Independent Variables: Net Worth Volatility

Based on the theoretical premises, the study hypothesizes:

H1: Volatility in net worth from 2020-2023 impacts the company’s overall
financial stability and equity value.

2.2.5 PERFORMANCE EVALUATION

Performance evaluation involves assessing how well an organization is

achieving its financial and operational objectives. It provides an in-depth
comprehension of performance by using a variety of quantitative and qualitative
metrics. The key Components of Performance Evaluation are: financial
performance metrics and Non-Financial Performance Metrics

Financial Performance Metrics:

• Return on Investment (ROI): Evaluates the return on investments.

• Economic Value Added (EVA): Evaluates value created beyond the
minimum return demanded by the company's shareholders.
• Earnings Per Share (EPS): Illustrates the profitability of the company per
share.
• Total Shareholder Return (TSR): Combines capital gains and dividends to
show the total return to shareholders.

Non-Financial Performance Metrics:

• Customer Satisfaction: Evaluates customer loyalty and satisfaction.

• Employee Engagement: Measures workforce motivation and retention.
• Operational Efficiency: Assesses process efficiency and productivity.

2.2.6 RATIO ANALYSIS

The method used to analyse the data and determine the capital structure's
efficiency is called ratio analysis. The quantitative examination of data from a
company's financial accounts is known as ratio analysis. Line items from
financial statements such as the cash flow, income, and balance sheets serve as
50
 the foundation for ratio analysis. From there, ratios between one item or a
combination of items and another item or combinations are computed. Ratio
analysis is used to assess the efficiency, liquidity, profitability, and solvency of
a company, among other aspects of its operating and financial performance. To
determine if these ratios are getting better or getting worse over time, their trend
is examined. Additionally, ratios are compared between several businesses in the
same industry to determine how they compare and to gain a sense of relative
valuations. A key component of basic analysis is ratio analysis.

IMPORTANCE OF RATIO ANALYSIS

Ratio analysis is important since it allows one to derive conclusions about a

firm's performance by presenting facts in a comparable manner. Ratio analysis
is relevant for evaluating a company's performance in relation to the following
aspects:

1. Liquidity Portion.

2. Long term Solvency.

3. Operating efficiency.

4. Overall profitability.

5. Inter firm comparison.

THE RATIOS USED FOR FINANCIAL ANALYSIS AND PERFORMANCE
EVALUVATION
1. SOLVENCY RATIO

A crucial indicator of a company's capacity to pay off debt and other

commitments. The solvency ratio shows how much cash flow a business has
available to pay down its short- and long-term debt. The likelihood that a
business would miss payments on its debt increases with a decrease in its
solvency ratio.

Solvency ratio = Total Asset/ Total Debt

2. PROPRIETARY RATIO
The proprietary ratio, sometimes referred to as the equity ratio, measures the
ratio of shareholders' equity to total assets and, as such, offers a ballpark

51
 indication of the present capitalization levels utilized by a company. An
organization most likely has the space in its financial structure to take on more
debt if needed, and a high ratio means that it has enough equity to fund its
operations. On the other hand, a low ratio suggests that a firm might be relying
more on debt or trade payables than equity to fund operations, which could put
the business in danger of going bankrupt.

Proprietary Ratio = Shareholders fund/Total assets

3. DEBT RATIO

A financial indicator that shows how much leverage a company has is its debt
ratio. The ratio of total debt to total assets, stated as a percentage or decimal, is
known as the debt ratio. It can be seen as the percentage of debt used to finance
an organization's assets.
Debt Ratio=Total Debt/ Total Asset

4. TOTAL LIABILITIES TO NET WORTH RATIO

This ratio reflects how much the enterprise's net worth can balance its
obligations. Avoid a ratio higher than 1.0 as it suggests that creditors possess a
larger portion of the company than the owners possess.
Total liabilities to Net worth Ratio = Total liabilities/Net worth

5. CURRENT LIABILITY TO NET WORTH

The ratio helps in determining how much of the company's funding comes
from creditors as opposed to their own capital. A lengthy accounts payable
time or insufficient owner investment may be indicated by a ratio of.6 or
higher. It is important to avoid upsetting the creditors to the point that it
interferes with regular business operations.

Current liability to Proprietor’s Fund = Current liability / Net worth

6. FIXED ASSET TO NET WORTH RATIO

A measure of a company's solvency is its fixed assets to net worth ratio,

52
 which shows how much of the owners' cash is locked up in fixed assets like
property, plant, and equipment and how much is available for working
capital, or funds needed for the business's operations. A fixed assets to net
worth ratio of 0.75 or more is generally not good since it shows how
susceptible the company is to unforeseen circumstances and shifts in the
business environment.

Fixed asset to Net worth Ratio = Fixed asset/Net worth

7. CURRENT RATIO

The current ratio shows the total liquidity of the business. The matching
profiles of short-term and long-term assets and liabilities are generally
indicated by the current ratio. The current ratio of 2:1 is ideal.

Current Ratio = Current assets / Current liabilities

8. LIQUIDITY RATIO

By calculating measures like the current ratio, quick ratio, and operating cash
flow ratio, liquidity ratios assess a company's capacity to meet debt
commitments as well as its margin of safety. Examining current liabilities
against liquid assets allows one to assess how well short-term debts are
covered in an emergency. Liquidity ratios are used by mortgage originators
and bankruptcy analysts to assess going concern difficulties since they show
cash flow positioning.

Liquidity Ratio=Liquid Asset / Current Liabilities

9. CAPITAL GEARING RATIO

The capital gearing ratio, which is calculated by dividing the equity held by
common stockholders by fixed interest or dividend-bearing funds, is a helpful
tool for analyzing a company's capital structure. Measuring the relationship
between the funds contributed by common stockholders and the funds
contributed by those who receive a fixed-rate monthly interest or dividend is
known as capital structure analysis.

53
 Capital Gearing Ratio = (Preference share capital + Debentures + other
borrowed funds) / Shareholders Fund

10. RETURN ON THE CAPITAL EMPLOYED RATIO

The ratio of a company's net operating profit to its capital employed is called
return on capital employed, or ROCE. By representing an organization's
operating profit as a percentage of its capital employed, it calculates its
profitability. The total of long-term financing and stockholders' equity is the
capital employed. As an alternative, the difference between total assets and
current liabilities can be used to compute capital employed. This is the formula
used to get return on capital used.

ROCE Ratio = Net Operating Profit / Capital Employed

11. OPERATING PROFIT RATIO

The operating profit margin ratio shows how much money a business makes
after covering its variable production expenses, like labour and raw materials.
It also represents the effectiveness of a corporation in managing the
expenditures and expenses related to business operations and can be stated as
a percentage of revenues.

Operating Profit Ratio = Operating Profit/ Net Sales*100.

2.2.7 TREND ANALYSIS

One method to assess the financial accounts is to compute trends from a set
of data. The parental link between each item and the identical item in the base
year is computed as part of the trend analysis process, which also determines
whether the trend is upward or downward. When comparing an item in a
comparative statement to itself from the prior year, it is determined if it has
increased, decreased, or stayed the same. Finding out if a proportion of an
item (like the cost of revenue from operations) is rising or falling inside the
common base (like revenue from operations) is known as common size
analysis. However, in a trend analysis, the same item's behavior is examined
across a specific time frame, specifically the last five years. The trend
percentage is computed using this base year as a reference. The trend % will
54
 be less than 100 if the other year's figure is less than the base year's figure,
and more than 100 if the other year's figure is greater than the base year's
figure.

Trend Percentage = Present year value / Base year value x100

Components of Trend Analysis

• Trend: the overall trend of data movement over a period of time.

Trends can be flat (no discernible movement), upward (positive), or
downward (negative).
• Seasonality: Consistent, foreseeable variations in data that take place
at regular intervals, including weekly, monthly, or annual trends.
• Cyclical Patterns: Extended data fluctuations across a number of
years, frequently resulting from external events like economic cycles.
• Unpredictable variations in data that don't follow a clear pattern are
known as irregular or random fluctuations. Measurement errors or
random events could be the cause of these changes.

Benefits of Trend Analysis

• Identifying Patterns and Trends: By examining data over time, businesses
can identify consistent patterns and trends. This can help in understanding
the direction in which the business or market is moving.

• Forecasting: Using past data, trend analysis helps in forecasting future

movements. It is crucial for budgeting, planning, and strategic decision-
making.

• Performance Evaluation: Analysing trends in financial statements and other

key performance indicators (KPIs) allows businesses to evaluate their
performance over time. This helps in comparing current performance with
past performance.

• Problem Detection: Trend analysis can reveal underlying issues within the
business. For example, a downward trend in sales or profit margins might

55
 indicate operational inefficiencies, market challenges, or other issues that
need to be addressed.

• Benchmarking: Businesses can utilize trend analysis to compare their

performance with industry benchmarks or competitors. This helps in
identifying areas where the business is performing well or where
improvements are needed.

• Resource Allocation: By understanding trends, businesses can allocate

resources more effectively. For example, increasing investment in areas
showing positive growth trends while reducing resources in declining areas.

• Strategic Planning: Trend analysis provides valuable insights that inform

strategic planning. It helps the businesses to set realistic goals, develop
actionable strategies, and align their operations with market trends.

• Risk Management: Recognizing unfavourable trends early allows

businesses to take pre-emptive actions to mitigate risks. For instance,
identifying a trend of increasing costs can lead to strategies for cost control
and efficiency improvements.

• Improving Financial Health: Continuous monitoring and analysis of

financial trends enable businesses to maintain and improve their financial
health by making data-driven decisions.

• Customer Insights: Trends in customer behaviour, preferences, and

feedback may assist organizations in customizing their products, services,
and marketing tactics to better align with customer wants and increase
satisfaction.

56
 CHAPTER-3
DATA ANALYSIS &
INTERPRETATION

57
3.0 DATA ANALYSIS AND INTERPRETATIONS
In this chapter, the researcher will analyze and interpret GOODBUY SOAPS AND
COSMETICS LTD's financial performance and evaluate it using financial tools such as
ratio analysis and trend analysis. The analysis will be based on GOODBUY SOAPS
AND COSMETICS LTD's annual report for the period 2020-2023.

3.1 RATIO ANALYSIS

Financial ratios are one of the most commonly used tools for managerial
decision-making. Financial ratios are the comparison of multiple data from
financial statements to get insight into a company's performance. Financial ratios
are useful to business managers because they may be interpreted rather than
calculated. Ratios can act as indicators, clues, or red flags for significant links
between factors used to assess a company's performance in terms of profitability,
asset utilization, liquidity, leverage, or market valuation. A ratio is described as
"the indicated quotient of two mathematical expressions" as well as "the
relationship between two or more things".

THE TOOLS USED IN DATA ANALYSIS ARE;

1. SOLVENCY RATIO = TOTAL ASSET

TOTAL DEBT

2. PROPRIETARY RATIO = SHAREHOLDERS FUND

TOTAL ASSET
3. DEBT RATIO = TOTAL DEBT
TOTAL ASSET

4. TOTAL LIABILITY TO NET WORTH RATIO = TOTAL LIABILITY

NET WORTH

5. CURRENT LIABILITY TO NET WORTH RATIO

=TOTAL LIABILITY
NET WORTH

6. FIXED ASSETS TO NET WORTH RATIO = FIXED ASSETS

NET WORTH
58
7. CURRENT RATIO = CURRENT ASSETS
CURRENT LIABILITIES

8. LIQUID ASSETS = LIQUID ASSETS

CURRENT LIABILITIES

9. CAPITAL GEARING RATIO = BORROWED FUND

SHAREHOLDERS FUND

10. RETURN ON CAPITAL EMPLOYED = EBIT

CAPITAL EMPLOYED

11. GROSS PROFIT RATIO = GROSS PROFIT X100

NET SALES

12. OPERATING PROFIT RATIO = OPERATING PROFIT X100

NET SALES

13. NET PROFIT RATIO = NET PROFIT X 100

NET SALES

59
3.1.1 SOLVENCY RATIO

TABLE 3.1.1 SOLVENCY RATIO

YEAR TOTAL TOTAL RATIO

ASSET DEBT
2019-20 264277898.04 60772462.07 0.229956
2020-21 305403545.56 65266582.62 0.121709
2021-22 377723.1 93406.57 0.171528
2022-23 380382.91 190590.94 0.330146
[Source: Annual Report]

CHART NO 3.1.1 SOLVENCY RATIO

0.6

0.5

0.4

0.3

0.2

0.1

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The solvency ratio is calculated to determine the company's capacity to pay offits

outside liabilities. 20% or above solvency is generally considered as healthier. The

company is considered solvent when its total assets exceed its total liabilities. The

rise in the solvency ratio, notably in 2023, suggests that the company's financial

health is improving dramatically.

60
3.1.2 PROPRIETARY RATIO

TABLE 3.1.2 PROPRIETARY RATIO

YEAR SHAREHOLDERS TOTAL ASSET RATIO
FUND
2019-20 64483583.56 264277898.04 0.243999154
2020-21 105202205.76 305403545.56 0.344469497
2021-22 127737.54 377723.1 0.338177729
2022-23 134091.33 380382.91 0.352516705
[Source: Annual Report]

CHART NO 3.1.2 PROPRIETARY RATIO

0.4
0.344469497 0.352516705
0.35 0.338177729

0.3
0.243999154
0.25

0.2

0.15

0.1

0.05

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

This ratio defines the relationship between the proprietor's money and
the unit's total resources, with proprietor's funds referring to equity share
capital and reserves and surpluses. The above chart shows an increasing
trend. The ideal proprietary ratio is 0.75:1 or more. A high ratio suggests
that creditors are safe, whereas a low ratio indicates that creditors are at
risk. The above chart clearly shows that the company has maintained its
standard ratio, which is beneficial to the organization.

61
3.1.3 DEBT RATIO

TABLE 3.1.3 DEBT RATIO

YEAR TOTAL DEBT TOTAL ASSET RATIO

2019-2020 60772462.07 264277898.04 0.229956657
2020-2021 65266582.62 305403545.56 0.213706041
2021-2022 93406.57 377723.1 0.247288477
2022-2023 190590.94 380382.91 0.501050218
[Source: Annual Report]

CHART NO 3.1.3 DEBT RATIO

DEBT RATIO
0.6
0.501050218
0.5

0.4

0.3 0.247288477
0.229956657 0.213706041
0.2

0.1

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The debt ratio indicates a company's ability to repay its liabilities using its assets.
In other words, this indicates how many assets the corporation must sell to cover
all of its liabilities. A debt ratio of 1 to 1.5, often known as the ideal ratio, is
widely seen as a lesser risk. The sharp increase in the debt ratio over the last year
(2022-2023) may indicate increasing borrowing, either for expansion or due to
financial difficulties.

62
3.1.4 TOTAL LIABILITY TO NET WORTH RATIO

TABLE 3.1.4 TOTAL LIAIBILITY TO NET WORTH RATIO

YEAR TOTAL NET WORTH RATIO

LIABILITY
2019-2020 19,97,94,314.48 6,44,83,583.56 3.098374865
2020-2021 20,02,01,339.82 10,52,02,205.76 1.90301466
2021-2022 249985.57 127737.54 1.957025084
2022-2023 246291.57 134091.33 1.836744926
[Source: Annual Report]

CHART NO: 3.1.4 TOTAL LIAIBILITY TO NET WORTH RATIO

3.5
3.098374865
3

2.5

1.90301466 1.957025084
2 1.836744926

1.5

0.5

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The above chart is showing the total liability to net worth ratio of the company.
The chart depicts a random trend that increases and decreases alternately.
According to the above chart, the substantial decline from 3.0 in 2020 to about
2.0 in 2021, followed by a minor decrease to 1.8 in 2023, indicates that the
corporation has actively reduced its liabilities relative to its net worth. This is a
good sign of improved financial health and lower financial risk.

63
3.1.5 CURRENT LIABILITY TO NET WORTH RATIO

TABLE 3.1.5 CURRENT LIAIBILITY TO NET WORTH RATIO

CURRENT NET WORTH

YEAR RATIO
LIABILITY
2019-2020 15,36,48,352.79 6,44,83,583.56 2.382751422
2020-2021 15,20,12,907.99 10,52,02,205.76 1.444959309
2021-2022 173590.67 127737.54 1.358963622
2022-2023 161918.33 134091.33 1.207522738
[Source: Annual Report]

CHART 3.1.5 CURRENT LIAIBILITY TO NET WORTH RATIO

2.5 2.382751422

1.444959309
1.5 1.358963622
1.207522738

0.5

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The current liabilities to net worth ratio reveals how much debt is paid for with
equity. It is one of a firm's solvencies and, as a general rule, should not exceed
60%. A larger percentage indicates considerable pressure on future cash flows.
The accompanying figure shows that the company's current obligation to net
worth ratio has dramatically improved, indicating stronger financial health and
lower risk.

64
3.1.6 FIXED ASSET TO NET WORTH RATIO

TABLE 3.1.6 FIXED ASSET TO NET WORTH RATIO

FIXED ASSET NET WORTH

YEAR RATIO
2019-2020 1,32,07,454.87 6,44,83,583.56 0.204818869
2020-2021 1,28,04,112.80 10,52,02,205.76 0.121709546
2021-2022 21910.60 127737.54 0.171528276
2022-2023 44269.81 134091.33 0.330146699
[Source: Annual Report]

CHART 3.1.6 FIXED ASSETS TO NET WORTH RATIO

0.35 0.330146699

0.3

0.25
0.204818869
0.2
0.171528276

0.15
0.121709546

0.1

0.05

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The fixed asset-to-net worth ratio illustrates how much of the owner's cash is
trapped in fixed assets. The standard ratio is 0.50 or lower; a greater ratio shows
that the organization is vulnerable to unforeseen business developments. The
chart above illustrates that fixed assets declined significantly between 2020 and
2021, showing a reduction in fixed asset investment relative to net wealth. It
began to rebound in 2021-2022, and by 2022-2023, the ratio had more than
quadrupled from the previous year, indicating a significant increase in fixed
asset investment relative to the company's net value.

65
3.1.7 CURRENT RATIO

TABLE 3.1.7 CURENT RATIO

CURRENT ASSET CURRENT

YEAR RATIO
LIABILITY
2019-2020 25,04,41,713.18 15,36,48,352.79 1.629966795
2020-2021 29,22,20,702.77 15,20,12,907.99 1.922341376
2021-2022 354451.95 173590.67 2.041883645
2022-2023 334104.35 161918.33 2.063412771
[Source: Annual Report]

CHART 3.1.7 CURENT RATIO

2.5

2.041883645 2.063412771
2 1.922341376

1.629966795

1.5

0.5

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The current ratio measures the liquidity of current assets or the ability of a
corporation to meet its maturing current liabilities. The optimal current ratio is
one; a high ratio appeals to short-term creditors, but a low ratio concerns them.
The accompanying figure shows that the current ratio has continuously
increased from 2020 to 2023. This pattern demonstrates that the company's
liquidity position has improved steadily throughout the years.

66
3.1.8 LIQUID RATIO

TABLE 3.1.8 LIQUID RATIO

LIQUID ASSET CURRENT

YEAR RATIO
LIABILITY
2019-2020 1,09,34,475.72 15,36,48,352.79 0.07116559
2020-2021 76,11,318.94 15,20,12,907.99 0.050070215
2021-2022 8857.23 173590.67 0.051023652
2022-2023 4363.2 161918.33 0.026946918
[Source: Annual Report]

CHART 3.1.8 LIQUID RATIO

0.08
0.07116559
0.07

0.06
0.050070215 0.051023652
0.05

0.04

0.03 0.026946918

0.02

0.01

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The liquidity ratio demonstrates a company's ability to pay its current liabilities
without relying on its assets. The optimal liquid ratio is 1:1. It is displaying a
decreasing trend and is less than 1.

67
3.1.9 CAPITAL GEARING RATIO

TABLE 3.1.9 CAPITAL GEARING RATIO

BORROWED SHAREHOLDERS
YEAR RATIO
FUND FUND
2019-2020 4,61,45,961.69 64483583.56 0.715623406
2020-2021 4,81,88,431.83 105202205.76 0.458055337
2021-2022 76394.90 127737.54 0.598061463
2022-2023 84373.24 134091.33 0.629222188
[Source: Annual Report]

CHART 3.1.9 CAPITAL GEARING RATIO

0.8
0.715623406
0.7
0.629222188
0.598061463
0.6

0.5 0.458055337

0.4

0.3

0.2

0.1

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

This is an ideal instrument for analysing the capital structure of a company. A

company is said to be low geared if the majority of its capital consists of
common stockholders' equity. On the other side, a corporation is said to be
highly geared when the majority of its capital is constituted of debt. The ideal
ratio is one. The above analysis shows that the ratio is increasing.

68
3.1.10 RETURN ON CAPITAL EMPLOYED RATIO

TABLE 3.1.10 RETURN ON CAPITAL EMPLOYED RATIO

EBIT CAPITAL
YEAR RATIO
EMPLOYED
2019-2020 4,02,88,714.32 11,06,29,545.25 0.364176805
2020-2021 5,51,83,535.83 153390637.57 0.359758175
2021-2022 31,114.32 204132.43 0.152422229
2022-2023 8,860.31 218464.58 0.040557192
[Source: Annual Report]

CHART 3.1.10 RETURN ON CAPITAL EMPLOYED RATIO

0.4
0.364176805 0.359758175
0.35

0.3

0.25

0.2
0.152422229
0.15

0.1
0.040557192
0.05

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

The above table and chart represent the return on capital employed ratio across
the study period, which is declining. According to the study, the company's
return has decreased throughout the years.

69
3.1.11 GROSS PROFIT RATIO

TABLE 3.1.11 GROSS PROFIT RATIO

GROSS PROFIT NET SALES

YEAR RATIO
2019-2020 18,07,00,749.16 58,47,54,859.97 30.9019662%
2020-2021 23,93,80,300.71 73,68,45,818.44 32.48716281%
2021-2022 1,12,384.82 8,30,541.85 13.53150597%
2022-2023 1,06,520.71 7,67,440.44 13.87999699%
[Source: Annual Report]

CHART 3.1.11 GROSS PROFIT RATIO

35 32.48716281
30.9019662
30

25

20

15 13.53150597 13.87999699

10

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION
A high gross profit margin indicates that the company effectively managed its
cost of sales. It also shows that the company has more funds to handle
operations, financing, and other expenses. A good gross margin target is 50%.
The above chart and table indicate that all of the years fall inside their optimal
range.

70
3.1.12 OPERATING PROFIT RATIO

TABLE 3.1.12 OPERATING PROFIT RATIO

OPERATING NET SALES

YEAR RATIO
PROFIT
2019-2020 54,44,83,249.21 58,47,54,859.97 93.11307806%
2020-2021 681724594.24 73,68,45,818.44 92.51930013%
2021-2022 8,00,058.43 8,30,541.85 96.32969489%
2022-2023 7,59,087.11 7,67,440.44 98.91153377%
[Source: Annual Report]

CHART 3.1.12 OPERATING PROFIT RATIO

100
98.91153377

98
96.32969489
96

94 93.11307806
92.51930013
92

90

88
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

According to the above chart and table, the operating ratio increased from 2021
to 2023, showing a decrease in operational efficiency and profitability. The
company's operating expenses increased faster than its revenue, which might be
attributed to rising costs or inefficient spending management.

71
3.1.13 NET PROFIT RATIO

TABLE 3.1.13 NET PROFIT RATIO

NET NET SALES

YEAR RATIO
PROFIT
2019-2020 2,90,66,235.74 58,47,54,859.97 4.970670229%
2020-2021 40718622.2 73,68,45,818.44 5.52607088%
2021-2022 22,535.33 8,30,541.85 2.713328654%
2022-2023 6353.8 7,67,440.44 0.827920926%
[Source: Annual Report]

CHART 3.1.13 NET PROFIT RATIO

6
5.52607088
4.970670229
5

3 2.713328654

1 0.827920926

0
2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION

Net Profit Ratio is a measure of overall profitability. Net profit is calculated by

taking into account both operating and non-operating components of income
and expenses. The ratio reveals how much of the net sales remain for the owners
after all expenses have been satisfied. According to the above chart, the net
profit ratio has been quite low during the last four years, with the greatest ratio
recorded in 2020-21 at 5.52%.
72
3.2 TREND ANALYSIS

Trend Analysis = Current Year Value−Base Year Value * 100

Base Year Value

3.2.1 TREND ANALYSIS ON FIXED ASSET

TABLE 3.2.1 TREND ANALYSIS ON FIXED ASSET

FIXED ASSETS (IN PERCENTAGE

YEAR
THOUSANDS)
2019-2020 13207.87 -
2020-2021 12804.80 (0.030517411)
2021-2022 21910.60 0.711123954
2022-2023 44269.81 1.020474565

CHART 3.2.1 TREND ANALYSIS ON FIXED ASSET

1.2
1.020474565
1

0.8 0.711123954

0.6

0.4

0.2

-0.030517411
0
2019-2020 2020-2021 2021-2022 2022-2023
-0.2

INTERPRETATION

Based on the analysis, it is clear that the fixed asset has steadily increased over the
years. This could indicate significant investments or acquisitions of fixed assets
throughout these years.

73
3.2.2 TREND ANALYSIS ON DEBT

TABLE 3.2.2 TREND ANALYSIS ON DEBT

DEBT PERCENTAGE
YEAR
2019-2020 60772462.07 -
2020-2021 65266582.62 0.07394995
2021-2022 93406.57 (0.9985688450
2022-2023 190590.94 1.040444692

CHART 3.2.2 TREND ANALYSIS ON DEBT

1.5
1.040444692
1

0.5
0 0.07394995
0

-0.5
-0.998568845
-1

-1.5
2019-2020 2020-2021 2021-2022 2022-2023
TREND PERCENTAGE 0.07394995 -0.998568845 1.040444692

INTERPRETATION

The above chart shows a slight rise in 2020-2021, followed by a sharp fall in 2021-
2022 and a significant increase again in 2022-2023, all while remaining significantly
lower than debt levels in 2019-2020 and 2020-2021. This could indicate a variety of
financial tactics or events affecting debt levels, such as substantial repayments,
refinancing, or additional borrowings.

74
3.2.3 TREND ANALYSIS ON NET PROFIT

TABLE 3.2.3 TREND ANALYSIS ON NET PROFIT

YEAR DEBT PERCENTAGE

2019-2020 60772462.07 -
2020-2021 65266582.62 0.07394995
2021-2022 93406.57 (0.9985688450
2022-2023 190590.94 1.040444692

CHART 3.2.3 TREND ANALYSIS ON NET PROFIT

0.6
0.400890799
0.4

0.2

0
2019-2020 2020-2021 2021-2022 2022-2023
-0.2

-0.4

-0.6 -0.718051611

-0.8
-0.99944656
-1

-1.2

INTERPRETATION

The above chart shows that the net profit has fluctuated significantly over the years,
with a notable increase in 2020-2021, followed by a dramatic decrease in 2021-2022,
nearly eliminating the profit, and a further decline in 2022-2023, though less severe
than the previous year's decrease. The general pattern from 2019-2020 to 2022-2023
shows that the corporation saw a significant increase in profits, followed by a
dramatic collapse and continuous decline. This could indicate underlying operational
issues, market conditions, or one-time occurrences that had a major influence on
profitability.

75
3.2.4 TREND ANALYSIS ON NET WORTH

TABLE 3.2.4 TREND ANALYSIS ON NET WORTH

YEAR NET PROFIT PERCENTAGE

2019-2020 29066235.74 -
2020-2021 40718622.2 0.400890799
2021-2022 22,535.33 (0.99944656)
2022-2023 6353.8 (0.718051611)

CHART 3.2.4 TREND ANALYSIS ON NET WORTH

0.8 0.631457186
0.6

0.4

0.2 0.049740977
0
2019-2020 2020-2021 2021-2022 2022-2023
-0.2

-0.4

-0.6

-0.8
-0.99878579
-1

-1.2

INTERPRETATION

The chart above illustrates that net worth has been highly variable over the last few
years, with a large peak in 2020-2021, a severe decline in 2021-2022, and a slight
rebound in 2022-2023.

76
 CHAPTER: 4

SUMMARY, FINDINGS, SUGGESTIONS

AND CONCLUSION

77
4.1 SUMMARY

The research is based on four years of financial data acquired from

Goodbuy Soap and Cosmetics Pvt Ltd.’s annual report. The study has

been conducted to know the effectiveness of financial risk and

performance evaluation of the company. The project is broken down

into four chapters. The first chapter deals with introduction, industry

profile, company profile and research methodology, The research

methodology part discussed about statement of problem, research tools

etc., objectives of the study scope and significance of study and

limitations. Chapter two deal with the review of literature and

theoretical concept that has been used in this study. It has highlighted

the viewpoints of different authors about the financial risk and

performance evaluation. In chapter three the researcher has gone

through analysis of company’s financial risk and performance

evaluation using the different financial ratios and trend analysis; from

the analysisthe researcher has an overall picture about the financial risk

and performance evaluation of Goodbuy Soap and Cosmetics Pvt Ltd.

78
4.2 FINDINGS

➢ The company demonstrates strong financial health with a

consistently higher overall solvency ratio each year, indicating
that its total assets exceed total liabilities. This trend indicates the
company's ability to repay external loans and preserve financial
stability. (Refer Table 3.11)

➢ The company's proprietary ratio has been quite high since 2021,
indicating a good financial condition with a considerable part of
assets backed by equity. This is typically viewed favourably as it
suggests lower financial risk due to less reliance on external debt.
(Refer Table 3.1.2)

➢ In 2023, the company's debt ratio increased significantly,

indicating a substantial level of debt. This could indicate
increased financial risk due to higher leverage. (Refer Table
3.1.3)

➢ The company's Total Liability to Net worth ratio decreased

significantly between 2020 and 2023, showing aggressive
reduction of liabilities in relation to net value. This is a good sign
of improved financial health and lower financial risk. (Refer
Table 3.1.4)

➢ The company's current liability to net worth ratio indicates

increased financial health due to significant improvement in
short-term liabilities. and reduced risk. (Refer Table 3.1.5)

➢ The fixed assets to net worth ratio reflects changes in the

company's financial strategy or operations. The increase near the
end of the period suggests expansion activities, showing that the

79
 company is actively investing in fixed assets to support future
growth. (Refer Table 3.1.6)

➢ The liquidity ratio falling below 1 raises concerns about the

company's ability to repay current creditors without relying
heavily on its assets. A ratio less than one indicates a probable
issue in handling short-term responsibilities. (Refer Table 3.1.8)

➢ The current ratio, mostly above 1, showcases the company's

strong liquidity and ability to cover short-term liabilities.
Comparing all the years, the 2022-23 financial year reflects a
particularly good current ratio, reassuring short-term creditors.
(Refer Table 3.1.7)

➢ The capital gearing ratio shows significant fluctuations from

2020 to 2023. After a notable decrease in 2021, it increased again
in 2022 and 2023. This trend indicates varying approaches to
financing and risk management over these years. High gearing
ratios indicate increased reliance on debt, which can boost returns
in good times but can increase financial risk during downturns.
(Refer Table 3.1.9)

➢ The Return on Capital Employed (ROCE) ratio for the company

declined significantly from 2021 to 2022, dropping from 0.265
to 0.110, indicates a notable decrease in profitability and
efficiency in capital utilization during that period. (Refer Table
3.1.10).

➢ The gross profit ratio shows a significant increase from 30.90%

in 2019-2020 to 32.49% in 2020-2021, followed by a sharp
decline to 13.53% in 2021-2022 and a slight recovery to 13.88%
in 2022-2023. These fluctuations highlight the volatility in the
80
 company's ability to create profit through its primary business
activity across the specified years, reflecting both positive and
challenging periods in its financial performance. (Refer Table
3.1.11)

➢ The operating net ratio has shown a consistent upward trend over
the years, increasing from 93.11% in 2019-2020 to 98.91% in
2022-2023, indicating improving operational efficiency and
profitability over the period. (Refer Table 3.1.12)

➢ The net profit ratio has decreased significantly from 5.53% in

2020-2021 to 0.83% in 2022-2023, indicates a substantial decline
in profitability over the period. (Refer Table 3.1.13)

➢ From the trend analysis of Fixed Asset, it has shown a significant

increase from -0.03% in 2020-2021 to 1.02% in 2022-2023,
indicating substantial growth in fixed assets over the period.
(Refer Table 3.2.1)

➢ From the trend analysis of Debt, it indicates a moderate increase

in 2020-2021 then a sudden decline in 2021-2022 and a
substantial increase in 2022-2023, though still much lower than
the debt levels in 2019-2020 and 2020-2021. (Refer Table 3.2.2)

➢ From the trend analysis of Net Profit, it shows the overall trend
from 2019-2020 to 2022-2023 indicates that the company
experienced a substantial rise in profits followed by a severe drop
and continued decline. (Refer Table 3.2.3)

➢ From the Trend Analysis of Net Worth, it shows that the net worth
over these years has been highly volatile, with a major peak in
2020-2021, a severe downturn in 2021-2022, and a minor
rebound in 2022-2023. (Refer Table 3.2.4)
81
4.3 SUGGESTIONS

➢ Maintaining a consistently high solvency ratio, which is indicative

of financial stability, is crucial. This will guarantee that the
organisation can meet its long-term obligations while maintaining
investor confidence in a comfortable manner.
➢ Optimise Proprietary Ratio: To mitigate financial risk, capitalise on
the high proprietary ratio by utilising equity funding for strategic
investments, thereby reducing reliance on external debt.
➢ Prudently Manage Debt Levels: Develop a comprehensive debt
management strategy to mitigate the significant increase in the debt
ratio in 2023. This will help to mitigate the financial risks
associated with higher leverage while also preserving a balanced
capital structure.
➢ Sustain the efforts that resulted in the substantial decrease in the
Total Liability to Net Worth Ratio from 2020 - 2023: Maintain
Reduced Liabilities. This approach will persist in its ability to
mitigate financial risk and improve financial well-being.
➢ Improve Liquidity Management: By optimising working capital
management, the liquidity ratio, which has declined below 1, can
be improved. The company's financial resilience will be enhanced
by ensuring that it can cover short-term liabilities without
significantly relying on assets.
➢ Strategically invest in fixed assets to capitalise on the positive trend
in the fixed assets to net worth ratio. This strategy is conducive for
future expansion and underscores the organization's dedication to
operational improvements and expansion.
➢ Stabilise Profitability: Aim to reverse the decline in the net profit
ratio from 2020-2021 to 2022-2023 by identifying and addressing
the underlying causes. The company's capacity to endure
challenging economic conditions and preserve a competitive
advantage will be improved by enhancing profitability.

82
4.4 CONCLUSION

In conclusion, the financial risk and performance evaluation of

Goodbuy Soaps & Cosmetics Pvt Ltd has provided significant insights
into the company's overall financial health and performance over the
years. The company has great financial health, with a growing overall
solvency ratio each year, suggesting the ability to pay off external
obligations and sustain financial stability. Furthermore, a relatively
high proprietary ratio since 2021 indicates a strong financial position
with considerable assets funded by equity, implying decreased
financial risk due to reduced reliance on external loans. A big increase
in the debt ratio in 2023 shows that the corporation has taken on
significant debt, potentially increasing financial risk due to increased
leverage. The considerable decline from 2020 to 2023 reflects
intentional efforts to reduce liabilities relative to net assets, implying
improved financial health and lower financial risk.

The company's gross profit ratio fluctuated significantly, with a strong

spike followed by a decrease, indicating unpredictability in profit
generation from key business activities. The huge reduction in the net
profit ratio implies a major decline in profitability, emphasizing the
difficulty of maintaining net profitability in the face of unfavourable
economic conditions. However, a constant increasing trend in the
operating profit ratio suggests that operational efficiency and
profitability have improved over time. Goodbuy Soaps & Cosmetics
Pvt Ltd should prioritize profitability, adopt good risk management,
and conduct regular financial audits to identify and address possible
issues early on. By taking appropriate measures and getting
professional guidance, the company can increase investor confidence,
strengthen its market position, and effectively traverse the business
landscape's problems.

83
In conclusion, Goodbuy Soaps & Cosmetics Pvt Ltd is in a strong
position, with multiple growth potential and financial strength. The
company has demonstrated excellent long-term solvency and a steady
liquidity position, but there are areas of concern about short-term
liquidity and diminishing profitability that require strategic attention.
With a proactive approach to risk management, regular financial audits,
and benchmarking against industry peers, Goodbuy Soaps &
Cosmetics Pvt Ltd can remain agile and resilient in an ever-changing
market, promoting long-term success and providing value to its
stakeholders.

84
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JOURNALS & REPORTS

Annual Reports of Goodbuy Soaps and Cosmetics Pvt Ltd

WEBSITES

https://www.goodbuysoaps.co.in/about
https://www.indiamart.com/gee-bee-chem/#aboutus
https://www.indiamart.com/goodbuy-soaps-and-cosmetics-pvt-
ltd/profile.html
https://cuteesoap.com/products.php
https://www.techsciresearch.com/report/india-soap-
market/4847.html
https://corporatefinanceinstitute.com/resources/accounting/financi
al-performance/

90
ANNEXURE

91
BALANCE SHEET

PARTICULARS 2023(in 2022(in

thousands) thousands)
EQUITY AND LIABILITIES
Shareholders Fund
a) Share Capital 11000.00 11000.00
b) Reserves & Surplus 123091.33 116737.54
Non- Current Liabilities
a) Long term borrowings 84373.24 76394.90
b) Long term provisions - -
Current Liabilities
a) Short term Borrowings 17505.08 17011.67
b) Trade Payables
• outstanding dues to others 88712.62 94483.11
c) Other current liabilities 54513.81 58492.98
d) Short term provisions 1186.82 3602.91

TOTAL 380382.91 377723.10

ASSETS
Non- current assets
a) property, plant and equipment
• property, plant and equipment 44269.81 21910.60
• tangible assets - -
b) Deferred Tax Asset 1392.44 971.00
c) Long term loans and Advances - -
d) Other non-current assets 616.31 389.34
Current assets
a) Inventories 54272.65 65052.49
b) Trade Receivables 241176.9 258482.22
c) Cash and cash equivalents 4363.2 8857.23
d) Short Term Loans and Advances 15626.7 6706.53
e) Other current assets 18664.9 15353.48

TOTAL 380382.91 377723.10

92
PARTICULARS 2021 2020
EQUITY AND LIABILITIES
Shareholders Fund
c) Share Capital 1,10,00,000 1,10,00,000
d) Reserves & Surplus 9,42,02,205.76 5,34,83,583.56
Non- Current Liabilities
c) Long term borrowings 4,81,88,431.83 4,61,45,961.69
d) Long term provisions - -
Current Liabilities
e) Short term Borrowings 1,70,78,150.79 1,46,26,500.38
f) Trade Payables
• outstanding dues to others 8,46,36,274.87 9,94,86,208.39
g) Other current liabilities 4,59,68,417.83 3,94,10,644.02
h) Short term provisions 43,30,064.50 1,25,000

TOTAL 30,54,03,545.56 26,42,77,898.04

ASSETS
Non- current assets
e) property, plant and equipment
• property, plant and equipment 1,20,27,063.49 1,27,48,782.93
• tangible assets 7,77,049.31 4,58,671.94
f) Deferred Tax Asset 3,78,730 6,28,730
g) Long term loans and Advances - -
h) Other non-current assets - -
Current assets
f) Inventories 3,19,58,887.06 2,40,15,924.72
g) Trade Receivables 23,42,96,585.83 19,35,56,818.03
h) Cash and cash equivalents 76,11,318.94 1,09,34,475.72
i) Short Term Loans and Advances 1,09,34,475.72 1,78,30,155.59
j) Other current assets 86,74,287.03 41,04,339.12

TOTAL 30,54,03,545.56 26,42,77,898.04

93
PROFIT AND LOSS STATEMENT

PARTICULARS 2023(in 2022(in

thousands) thousands)
A. CONTINUING OPERATIONS
a. Revenue from Operations 7,67,440.44 8,30,541.85
b. Other Incomes 506.96 630.9
TOTAL REVENUE 7,67,947.40 8,31,172.75

EXPENSES
a. Cost of materials consumed 4,65,573.10 4,93,849.37
b. Purchasing of trading goods 1,95,346.63 2,24,307.66
c. Changes in inventories of 923.36 (2,799.40)
Finished Goods & Work in
Progress
d. Employee Benefit expenses 14,639.10 14,543.80
e. Depreciation and amortization 6,127.17 3,895.04
expenses
f. Finance Cost 12,805.10 10,016.12
g. Other Expenses 63,672.65 56,245.84
TOTAL EXPENSES 7,59,087.10 8,00,058.44

Profit/(Loss) before exceptional extra 8,860.31 31,114.32

ordinary items
Exceptional extra ordinary items - -

Profit/(Loss) before tax 8,860.31 31,114.32

TAX EXPENSES
a. Current tax expense for the year 2,927.95 8,772.94
c. Less: MAT credit entitlement for - -
the year
d. Net tax expenses - -
e. Deferred Tax (421.44) (193.95)

Profit after tax from continuing 6,353.80 22,535.33

operations
B. DISCONTINUING - -
OPERATIONS
C. TOTAL OPERATIONS 6,353.80 22,535.33
PROFIT/(LOSS) for the year 6,353.80 22,535.33

Earnings Per Share (Basic/ Diluted) 577.62 2,048.67

94
PARTICULARS 2021 2020
A. CONTINUING OPERATIONS
a) Revenue from Operations 73,68,45,818.44 58,47,54,859.97
b) Other Incomes 62,311.63 17,103.56
TOTAL REVENUE 73,69,08,130.07 58,47,71,963.53

EXPENSES
a) Cost of materials consumed 446831917.73 383219619.43
b) Purchasing of trading goods 15,26,33,600 6,56,34,491.38
c) Changes in inventories of (4,01,298.60) 77,03,715.87
Finished Goods & Work in
Progress
d) Employee Benefit expenses 1,30,35,853.50 1,27,13,842
e) Depreciation and amortization 28,32,523 20,01,775
expenses
f) Finance Cost 93,65,353.25 77,26,889.23
g) Other Expenses 5,74,26,645.36 6,54,82,916.30
TOTAL EXPENSES 68,14,24,594.24 544483249.21

Profit/(Loss) before exceptional extra 5,51,83,535.83 4,02,88,714.32

ordinary items
Exceptional extra ordinary items - -

Profit/(Loss) before tax 5,51,83,535.83 4,02,88,714.32

TAX EXPENSES
a) Current tax expense for the year 1,47,83,291 1,13,04,749
b) Less: MAT credit entitlement for - -
the year
c) Net tax expenses - -
d) Deferred Tax (3,18,377.37) (82,270.42)

Profit after tax from continuing 40718622.2 29066235.74

operations
B. DISCONTINUING
OPERATIONS
C. TOTAL OPERATIONS
PROFIT/(LOSS) for the year 40718622.2 29066235.74

Earnings Per Share (Basic/ Diluted) 3,903.99 2,786.79

95