RETURN ON INVESTMENT

Particular 2015 2016

Net profit before int. tax 139986.86 122411.98
and dividends
Capital Employed 2311044.32 2724324.36
Ratio 0.0605 0.0449

Return on investment ratio

2015 2016

40%

60%

Fig.

ROI higher the ratios better the results. It indicates the firm's ability of generating
profit per rupee of capital employed. As compare to base year ratio current year
ratio is lower that means base year results are better than current year.
RETURN ON EQUITY CAPITAL
PARTICULAR 2015 2016
Net profit after int. tax 781758.66 813023.59
and preference dividends
Equity shareholder fund 594271.69 646939.78
Ratio 1.31 1.25

Return on equity capital

2015 2016

49% 51%

Fig.

This ratio measures the profitability of the capital invested in the business by
equity shareholders. As the business is conducted with a view to earn profit, return
on equity capital measures the business success and managerial efficiency. We can
say that in base year more capital has been invested by the shareholders than in
current year.
RETURN ON SHAREHOLDER FUND
Particular 2015 2016
Net profit after int. tax but 187486.97 1660803.81
after dividents
Shareholder fund 594271.69 646939.78
Ratio 0.31 0.25

RETURN ON SHAREHOLDER FUND

2015 2016

45%
55%

Fig.

This ratio reflects how effectively equity shareholders fund are utilized . It
measures the operational efficiency of management. Higher ratio is always in the
interest of the enterprise, because it proves efficiency of the management.
CURRENT RATIO
Particular 2015 2016
Current assets 1741213.77 2073190.94
Current liabilities 1512073.57 1720422.85
Ratio 1.15 1.20

Current ratio

51% 2015 49%

2016

Fig.

Current ratio indicates rupees of current assets available for each rupee of current
liability. Higher the ratio, greater the margin of safety for short term creditors.
As standard ratio of current ratio is 2:1 if we compare this ratio with other ratios
than we can say that both year ratios are lower than standard ratio, but we can say
that safety margin is higher than the base year for current year.
QUICK ASSETS
Particular 2015 2016
Quick assets 1736466.34shrutika jain 2064339.74
Current liabilities 1512073.57 1720422.85
Ratio 1.14 1.20

2015 2016

51% 49%

Fig.

Quick ratio indicates rupees of quick assets available for each rupee of current
liability. Standard ratio of quick ratio is 1:1. As both year ratios are nearby the
standard ratio so we can easily say that company can meet their short-term
obligation.
CASH RATIO
Particular 2015 2016
Cash + bank 20549.11 23949.19
Current liability 1512073.57 1720422.85
Ratio 0.0135 0.013

cash ratio
2015 2016

49% 51%

Fig.

Cash ratio indicates the amount of cash over current liability, in base year cash is
more over liability than in current year.
DEBT EQUITY RATIO

PARTICULAR 2015 2016

Debt 1752039.16 2126568.98
Equity 594271.69 646939.78
Ratio 2.94 3.28

Debt equity ratio

2015 2016

47%
53%

Fig.

Debt equity ratio indicates the margin of safety of long- term creditors .
Traditionally, a debt Equity Ratio of 2:1 is consider to be satisfactory which means
debt could be twice the equity. As we can see that both year ratios are satisfactory
and if we compare both we can say that current year debt is thrice of its equity and
is more than base year debt.
TOTAL ASSETS TO DEBT RATIO

Particular 2015 2016

Total assets 1741213.77 4500684.36
debt 1716772.63 2077384.58
Ratio 0.98 2.16

total assets to debt ratio

2015 2016

31%

69%

Fig.

Total assets to debt ratio indicates the margin of safety of long- term creditors. As
we can see that ratio is more in current year.
A high total assets to debt ratio implies the use of more equity than debt which
means a larger safety margin for long term creditors since owner's equity is treated
as a margin of safety by long term creditors.
FIXED ASSET RATIO

Particular 2015 2016

Long term loan+ 1747020.6 2724324.36
shareholder fund
Net fixed asset 11917.57 12907.14
Ratio 146.59 211.07

Fixed asset ratio

2015 2016

41%

59%

Fig.

The ratio indicates long term financial soundness of the business. If the ratio is less
then it means that the business has been financing the purchase of fixed asset out of
working capital which is wrong policy.
PROPRIETORY RATIO

Particular 2015 2016

Shareholder fund 594271.69 646939.78
Total asset 3863314.02 4500684.36
Ratio 15.38 14.37

Propritery ratio
2015 2016

48% 52%

Fig.

Proprietary ratio indicates the extent to which the assets of the enterprise have
been financed out of propritor's fund. A high proprietary ratio indicates the larger
safety margin for creditors and the enterprise is not taking the benefit of trading on
equity. By comparing the ratios of both the years we can say that base year has
higher ratio than current year. A low ratio indicates the greater risk to creditors and
the enterprise is taking the benefit of trading in equity.
RESERVE TO CAPITAL RATIO

Particular 2015 2016

Reserve 582988.88 635647.75
Capital 11282.81 11292.03
Ratio 51.67 56.29

reserve to capital ratio

2015 2016

48%
52%

Fig.

This ratio indicates the relationship between reserves and capital. More reserves
shows financial soundness of the firm, because it will be able to meet future losses,
if any out of these reserves.