GROUP MEMBERS

Mirali Mehta Sapna Sutaria Trushti Pandya Shweta Vedant Khushbu Kanakhra Vishakha Katarmal

GUIDED BY: HIRAL SHAH

Is a method or process by which the relationship of items or group of item in financial statement are computed and presented. Is an important tool of financial analysis. Is used to interpret the financial statement so that the strength and weakness of firm, its historical position and current financial condition can be determined.

A mathematical yardstick that measures the relationship between two figure or group of figure which are related to each other and are mutually interdependent. It can be expressed as a pure ratio, percentage or as a rate.

Ratio can be broadly classified in to four groups namely Liquidity Ratio Capital Structure/Leverage Ratio Profitability Ratio Activity Ratio

These ratio measures the operating efficiency of the firm and the ability to ensure adequate returns to its shareholder. The profitability of a firm can be measure by its profitability ratio. Further the profitability ratio can be determined: In relation to sales In relation to investment

Profitability Ratio in relation to sales Gross Profit Margin Net Profit Margin Expenses Ratio

Profitability Ratio in relation to Investment Return on Asset (ROA) Return on Capital Employed (ROCE) Return on shareholders equity (ROE) Earning per share (EPS)

GROSS PROFIT RATIO = Gross Profit 100 Sales

PEBITA = Earning before interest and tax, depreciation and allowances Net Sales

NET PROFIT RATIO = Net Profit 100 Sales

ROA = Net Profit after tax + Interest 100 Total Assets

ROCE = Net Profit after tax + Interest 100 Capital Employed

ROE =

Net Profit after tax 100 Total shareholders equity

EPS = Net Profit after tax Preference dividend Number of equity shares

Liability Equity share capital 10% preference share Reserves 10% debentures Bank od Creditors Bills payable

Amt. 150000 100000 70000 150000 50000 40000 10000

Assets Fixed assets Stock Debtors Cash& bank Prepaid exp.

Amt. 420000 65000 70000 10000 5000

570000

570000

Particulars Total Sales (Cash Sales is 4/5 of Credit Sales)

Gross Profit Net Profit (Before Interest and Tax 50%)

Amount 9,00,000
2,25,000 1,59,000

CALCULATE: 1. GPR 2. NPR 3. ROCE 4. RREC 5. RRSF

GPR = 2,25,000 * 100 9,00,000

NPR
Particulars

= 25%

Amount

Net Profit
Less: Interest 10% Less: Tax 50%

1,59,000
15,000 1,44,000 72,000 72,000

72,000 * 100 9,00,000

= 8%

ROCE
Capital Employed = 3,20,000 + 1,50,000 = 4,70,000 = 1,59,000 * 100 ROCE = 4,70,000 = 33.83% RREC = = 72,000-10,000 * 100 1,50,000 = 41.33%