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In the year 1946 the union was known as KAIRA DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION.
Cattle Feeding:-
AMUL provide the “Dan” to the cattle of member farmers.
AMUL produces the “by pass protein Dan” and “Purk Dan” to the
cattle of farmers at reasonable cost.
Contd…
Free Animal Vaccination:-
Often Animals are caught up in unknown diseases. To protect
the animals from such diseases periodical Vaccination
programme are arranged by AMUL.
Account Division:-
The function of this Division is prepare voucher, bills. It also
issue Check for the payment.
ESTA Division:-
The function of this division is to prepare payroll of employee.
OBJECTIVE OF STUDY :-
To check the financial position of Amul.
To study the liquidity position through various working
capital related ratios.
To check the return on equity and return on capital employed
of Amul.
To check the profitability of Amul.
To derive findings,conclusions and means to improve various
ratios.
Connt…
METHOD OF DATA COLLECTION:-
Secondary Data
LIMITATIONS:-
The research is of five years only.
No comparision with competitors.
The entire study is based on secondary data.
No avalibality of data for the separate products of Amul..
Ratio Analysis of Amul
MEANING OF RATIO:
Ratio analysis is a widely used tool of financial analysis. It is
defined as the systematic use of ratio to interpret the fined
statement, so that the strengths & weakness of the forms as well
as its historical performance & current financial condition can
be determined. The term ratio refers to the number or
quantitative relationship between two items or variables.
DEFINITION OF RATIO :
The term “Ratio” refers to the numerical and quantitative
relationship between two items or variables. This
relationship can be exposed as
• Percentages
• Fractions
• Proportion of numbers
Liquididy Ratio
Liquidity ratio includes,
Current ratio
Liquid ratio
YEAR RATIO
2005-06 2.119
2006-07 1.64
2007-08 2.087
2008-09 1.622
2009-10 1.332
Graph 1
INTERPRETATION :-
From above graph we can see that current ratio of Amul for the
year 2006-07, 2008-09 and 2009-10 are lower than previous year
and also lower than standard ratio.
YEAR RATIO
2005-06 1.228
2006-07 1.067
2007-08 1.117
2008-09 0.705
2009-10 0.827
Graph 2
INTERPRETATION :-
This ratio shows that the liquidity position of the AMUL is
rising slowly in 2009-10.And from graph we can see that the
liquidity position of the Amul is declining in 2008-09 as
compared to previous year but this year though it is higher than
previous year, it is not up to standard ratio.
YEAR RATIO
2005-06 1.187
2006-07 1.037
2007-08 1.088
2008-09 0.675
2009-10 0.817
Graph 3
INTERPRETATION :-
Form above graph we can summarize that the quick ratio for the
2008-09 is lowest but in 2009-10 again it rises slowly.In 2005-06
Amul has strongest position in terms of liquidity. During 2005-06,
2006-07 and 2007-08 , this ratio is good as compared to standard
ratio but in last two years, i.e. in 2008-09 and 2009-10, it is below
the standard ratio.
To improve this ratio, Amul should retain its profit in business.
Profitability Ratio
Profitability ratio includes,
Operating Ratio
YEAR RATIO
2005-06 20.53
2006-07 20.29
2007-08 18.68
2008-09 18.55
2009-10 17.52
Graph 4
INTERPRETATION:
Gross profit ratio shows the declining position of Amul year
by year. During all five years it is not satisfactory level. This
happened because of decline in gross profit year by year.
To improve this ratio, Amul should try to reduce sales price of
its products.
Net Profit Ratio
Net Profit Ratio measures the net earnings of the company as
compared to net sales of the company. The ratio is valuable for
the purpose of ascertain the overall profitability of business
and shows the efficiency or otherwise of operating the
business. “The higher the ratio the better will be the
profitability.
YEAR RATIO
2005-06 0.46
2006-07 0.5
2007-08 0.42
2008-09 0.42
2009-10 0.44
Graph 5
INTERPRETATION:-
Net profit ratio is very low of Amul then the ideal ratio.Net
Profit Ratio is rises for the year 2009-10. Amul is a co-operative
society and so it distributes its profit to farmers. So the net profit
of Amul is not very high in all five years and because of this net
profit ratio shows declining position of the Amul.
Favorable change can take place due to reduction in tax rate,
obtaining of some relief/allowance/reduction in tax liability
Operating Ratio
It is ratio showing relationship between cost of goods sold,
operating expense and net sales. It shows the efficiency of the
management.
YEAR RATIO
2005-06 98.52
2006-07 98.53
2007-08 99.09
2008-09 98.8
2009-10 97.66
Graph 6
INTERPRETATION :-
Operating expense of the Amul is more than the ideal ratio for
the all five years.Amul has also reduced its operating expense for
this year. It is nearer to 97to98% for all five years
Return on Capital Employed
This ratio shows the relationship between net profit before
interest to capital employed of the company.The term capital
employed includes all assets except fictitious assets.
2005-06 7.12
2006-07 8.18
2007-08 8.38
2008-09 9.11
2009-10 20.99
Graph 7
INTERPRETATION :-
Return on Capial Employed increases from year to year. This
ratio shows the better position to give return to is share holders and
borrowed capital.
The improvement in ratio can be brought about by improving
profit before tax, reduction in tax rate, reduction in long term funds
including equity.
Return on Shareholder’s fund
It measures the return that the share holder gets as compared to
their investment.
YEAR RATIO
2005-06 8.79
2006-07 9.94
2007-08 10.06
2008-09 12.44
2009-10 15.02
Graph 8
INTERPRETATION :-
From above graph we can see that every year Return on
Shareholders Fund increases. It shows that every year Amul is
giving more and more return to its shareholders. It helps to
create goodwill in the market.
Leverage Ratio
Leverage Ratio includes,
Proprietary Ratio
The higher the ratio means that outside creditors have a larger
claim than the owners of the business. The pressure from
creditors would increase and their interference would also
increase. This ratio shows the proportion of long term external
liabilities and equities i.e. proportion of funds provided by share
holder or proprietors.
YEAR RATIO
2005-06 3.14
2006-07 2.18
2007-08 3.77
2008-09 3.41
2009-10 3.6
Graph 9
INTERPRETATION :-
There is ups and downs in five years in Debt Equity ratio. The
ratio shows that for every ownership capital of re.1, there is 3.14
Rs. Borrowed capital in 2005-06 and likewise. This does not shows
the good position of the company. It increases the financial risk of
the Amul.
Properitary Ratio
This ratio indicates the relationship between proprietor’s fund
and total assets. The proprietor’s fund includes equity share
capital, preference share capital, reserves and accumulated
surplus. Total assets include fixed, current and fictitious assets.
YEAR RATIO
2005-06 15.02
2006-07 16.12
2007-08 12.55
2008-09 12.74
2009-10 8.88
Graph 10
INTERPRETATION:-
There is ups and downs in the propritory ratio during last five
years. During 2009-10, this ratio is much less than the previous
years. This ratio means that for every 100 Rs. Total assets, there is
8.88 shareholders fund employed for fixed assets in 2009-10.this
give less security to the creditors.
Interest Coverage Ratio
The ratio indicates as to how many times the profit covers the
payment of interest on debentures and other long-term loans.It
measures the debt service capacity of the firm in respect of
fixed interest on long-term debts.Higher the ratio more sound is
the financial strength of the company.
YEAR RATIO
2005-06 1.41
2006-07 1.58
2007-08 1.55
2008-09 1.51
2009-10 1.59
Graph 11
INTERPRETATION:-
This ratio is better in this year than last four years. This shows
good position of the Amul. This means that Amul is able to pay
interest on borrowed capital. This shows financially strong position
of the company.
Activity Ratio
Activity Ratio includes,
Receivable Ratio
Payable Ratio
Inventory Turnover Ratio
The number of times the average stock is turned over during
the year is known as stock turnover.It is computed by dividing
the cost of goods sold by average stock in the business.
Average inventory
TABLE 12
YEAR RATIO
2005-06 7.75
2006-07 8.75
2007-08 8.53
2008-09 7.5
2009-10 8.79
Graph 12
INTERPRETATION :-
There are no far changes in the inventory turnover ratio. It is
lowest in 2008-09. This year means in 2009-10 it has been
increased. This means that inventory is turned over for 8.79 times
during this year. This shows increase in sales of products so it is
good position of the Amul.
Receivable Ratio(Collection Period)
This ratio gives us idea about in how many days we are able
to collect the payment from our debtors.This ratio can be
obtained dividing debtors by credit sales and also multiplied
by 365 days. So our answer will come in days.
YEAR RATIO
2005-06 37
2006-07 29
2007-08 30
2008-09 13
2009-10 23
Graph 13
INTERPRETATION :-
This ratio shows the average days in which we will able to get a
payment from our debtors. The lower the days, it shows good
position of the company. It is lowest in 2008-09. In 2009-10, it
increases by10 days i.e. 23 days. Compared to previous year it is
not the good position but comparing with 2005-06, 2006-07 and
2007-08, this year the position of the company is good.
Fixed Assets Turnover Ratio
To ascertain the efficiency and profitability of business the
total fixed assets the more compared to sales. The more the
sales in relation to the amount invested in fixed assets the more
efficient is the use of fixed assets. It indicates higher efficiency.
2005-06 14.13
2006-07 15.2
2007-08 17.51
2008-09 19.92
2009-10 12.03
Graph 14
INTERPRETATION :-
The Fix Assets Turnover ratio was consequently increasing
during the last four years but this year has been declined. This
does not show a good position of Amul. It causes because of
either increase in total assets or decrease in net sales.
Payable Ratio(in days)
The number of days within which we make payment to our
creditors for credit purchase its obtained by creditors ratio.
YEAR RATIO
2005-06 3
2006-07 2
2007-08 2
2008-09 1
2009-10 18
Graph 15
INTERPRETATION:-
Payable ratio shows that how many days the creditors are giving
us for payment. During last four years it was much lesser but in
this year, it has been tremendously increased. This shows good
position of Amul. This may happen because of increase in the
goodwill of Amul.
Findings
Liquidity position of Amul is going down every year.Quick
ratio and Current ratio decreases in year 2009-10 i.e.this year.
Operating Ratio for all five year is very high.It is near about
97 to 98 percentage in all five year.
Net profit for the year 2009-10 increasing, which has positive
effects on some ratios.
For the product Amul Kool, Amul should reuse the bottles to
reduce the expenses. This will help to reduce the prices and
increase in sales.
Amul is now going to launch Amul Tea for the rural market.
So, Amul should distribute the sample packets to get the
response of the rural people.