Course Instructor: Dr Lalit Bhalla , Sushant Gupta

Academic Task No.: CA2 Academic Task Title: Company Based Assignment

Date of Allotment: Date of submission: Sep 27, 2019

Student’s Roll no: 55 Student’s Reg. No: 11907219

Sec: Q1940
Evaluation Parameters: (Parameters on which student is to be evaluated- To be mentioned by
students as specified at the time of assigning the task by the instructor)

Learning Outcomes: By calculating all the ratio get to know about the company liquidity, activity,
solvency and profitability position in the industry.

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other student’s
work or from any other source except where due acknowledgement is made explicitly in the text,
nor has any part been written for me by any other person.

Student’s Sign/Name: Aman Jaiswal

Evaluator’s comments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of assignment

Evaluator’s Signature and Date:

Marks Obtained: _______________ Max. Marks: ______________

 Company Profile
Oricon Enterprises Ltd formerly known as Oriental Containers Ltd
that deals in the field of packaging, real estate and petrochemicals.
Parent company of Oricon Enterprises Ltd is Parijat Enterprises which
deals in the field of Real Estate, Marine logistics, Packaging and
Petrochemicals. It was founded in 1968. The Managing Director of
Oricon Enterprises Ltd is Mr Rajendra Somani. Oricon Enterprises
Ltd manufactures mixed pentane and heptane – A petrochemical with
industrial application. The manufacturing plant of the Oricon
Enterprises Ltd is in Khopoli (Maharashtra) with capacity around
10,000 tonnes per annum.
There clients are one of the leading companies. The companies they
provide petrochemicals are following below:

 Reliance Petroleum
 IPCL
 Baroda Nagothane
 Tamil Naidu Products ltd
 Nirma
 LG
Along with United Shippers Ltd (USL) they are the largest handler of
the dry cargo in our country with revenue around Rs404.85 Cr. It is
engaged in logistics and packaging in the regions of Gujarat,
Maharashtra and Goa. They handles the cargo like coal, petcoke,
polypropelene polymer, steel plates, salt and sugar.
Vision & Mission:
“ To enhance the shareholders value by diversifying into business
segments which are futuristic, growth oriented and scaleable in
future.”
 LIQUIDITY RATIOS

1. Current Ratio
Formula: Current Ratio = Current Assets/ Current
Liabilities.

Company Current Ratio

Oricon Enterprises 1.35
Orient Papers 0.98
Prism Johnson 0.43

Interpretation: In comparison to its competitor Oricon Enterprises

Ltd have better liquidity position. Company is able to pay its
liabilities and can have working capital to run its business. Company
is able to turn its assets into cash more effortlessly in the industry in
comparison to its competitor.

2. Quick Ratio
Formula: Quick Ratio = Quick Assets/ Current Liabilities
Quick Assets = Current Assets – Inventory

Company Quick Ratio

Oricon Enterprises 0.79
Orient Papers 0.46
 Prism Johnson 0.51

Interpretation: In comparison to its competitor Oricon Enterprises

Ltd have better quick ratio. The ideal situation is that the acid test
ratio have to be greater than 1, but it depend upon the industry. Here,
Oricon having better quick ratio in compare to Orient and Prism. It
means that Oricon Enterprise Ltd can pay the 80% of its current
liabilities with immediate effect.

Efficiency Ratio/Turnover Ratio

1. Debtor Turnover Ratio

Formula: Debtor Turnover Ratio = Net Credit Sales /

Average Receivables.
Average receivables = Total Receivables/2

Company DTR

Oricon Enterprises 5.52 Times

Orient Papers 4.2 Times

Prism Johnson 3.74 Times

Average Collection Period

Formula: Average Collection Period = Time / Debtor
Turnover Ratio. Time can be in months, days and years.
Generally we take months and days.
 Company ACP (Days)

Oricon Enterprises 66 Days

Orient Papers 87 Days

Prism Johnson 97 Days

Interpretation: This ratios shows that the Oricon Enterprises have

better position in the market as compare to its competitor like Orient
Papers and Prism Johnson. It means that the other company having
issues regarding to the rules and norms of sale of the goods on the
credit to other companies. Oricon having better position while
collecting the credit amount from their creditors. Oricon Enterprises
can collect their credit sales amount in the period of 2 months or 66
days which is comparatively low than the other companies. Orient
taking 3 months and Prism taking little more than 3 months to collect
the amount at which they sell their products. They can make some
changes in their sales credit policy in order to make a proper flow of
cash into the company.

2. Creditors Turnover Ratio

Formula: Creditors Turnover Ratio = Net Purchases on

Credit / Total Payable

Company CTR
Oricon Enterprises 6.73 Times
Orient Papers 3.57 Times
 Prism Johnson 5.36 Times

Formula: Average Payment Period = Time / Creditors

Turnover Ratio.

Company APP (Days)

Oricon Enterprises 54 Days

Orient Papers 102 Days

Prism Johnson 68 Days

Interpretation: By the above CTR and the APP we get to know that
the company from Oricon Enterprises trades have very strict policy in
its credit sales. Only Orient Papers having ample amount of time to
pay back its debt. Rest of them having nearly 2 months for paying
back their trade debts. From the Two ratio that is DTR & CTR it
shows that the Oricon Enterprises and Prism Johnson having problem
because they have to pay their debts even before they get any money
from their debtors. Their ACP are 66 & 91 Days which is higher than
the APP. It clearly shows that they have to take more liabilities from
the third party to pay their debts. Due to the Oricon Enterprises have
very lenient policy that’s why they facing issues into their purchases.
From the companies they purchase the raw material have very strict
policy for their debtors.
 3. Inventory Turnover Ratio
Formula: Inventory Turnover Ratio = COGS / Average
StockCOGS = Opening Stock + Net Purchase + Direct
Expense – Closing Stock
COGS = Net Sales – Gross Profit
Average Inventory or Stock = (Opening Stock + Closing
stock)/2

Company ITR

Oricon Enterprises 5.71

Orient Papers 11.88

Prism Johnson 9.18

Average Inventory (Days)

Formula: Inventory Conversion Period = (No. of
day/month/year) / Inventory Turnover Ratio

Company Conversion(Days)

Oricon Enterprises 64 Days

Orient Papers 31 Days

Prism Johnson 38 Days

Interpretation: The company which is fastest to convert its stocks

into sales is Orient Papers and Prism Johnson. Oricon takes more than
two month to convert its stock into sales. It is showing that in the
company Orient Papers and Prism Johnson there is efficient
management that help them to convert its stock into sales at a very
rapid rate. Whereas Oricon Enterprises need to revamp their strategy
of sales to increase the ratio of converting stocks into sales. Oricon
Enterprises not using their resources efficiently that’s why the
company is not able to convert its stock into sales rapidly.

Profitability Ratio
1. Gross Profit Ratio

Formula: Gross Profit Ratio = (Revenue – COGS) / Revenue

Gross Profit Ratio Year

4.44% Mar-19

-13.54% Mar-18

Interpretation: From previous financial year company perform

exceedingly well in terms of Gross Profit Ratio. In the financial year
2017 – 2018 company having negative Gross profit percentage, which
means that company sales are way less than the company COGS. This
financial year company targets efficient use of the production from
which they get the results. Company having good Gross Profit Ratio
this year, that indicates satisfactory sales and less production cost.

2. Net Profit Ratio

Formula: Net Profit Ratio = ( Net Profit / Net Sales ) * 100

 Net Profit = Gross Profit – (Total Operating
Expense + Interest + Taxes + Amortization + Depreciation

Net Profit Ratio Year

5.10% Mar-19

29.41% Mar-18

Interpretation: Company net profit ratio from last financial

year drastically fallen out. Last financial year company net profit was
29.41% whereas this financial year it comes on 5.10%. It means that
the company lower down its prices to capture the maximum market
share which resulted in lower rate of net profit. Company is in mood
of expanding its production, it is also one of the reason that’s why
they firstly giving low price products and once they capture the
market share they increase the price of their product from where they
can generate profit. It is the strategic decision of the company.
3. Earning Per Share

Formula: Earning Per Share = (NPAT – Preferential

Dividend ) / No. of Equity Shares Outstanding *100
NPAT: Net Profit After Tax.

Earning Per Share Year

Rs2.05 Mar-19

Rs0.98 Mar-18
 Interpretation: From previous financial year company EPS
increases twice. Previous year company EPS was Rs0.98 on the
other hand this financial year company EPS is Rs2.05, which
mean that the company generating profit for their shareholders.
Company market creditability increase from previous year.
Company need to increase their production level in order to
generate more profit which will increase their EPS in the future.
It is a satisfactory EPS because it has something to get for the
shareholder of the company.

4. Operating Profit Ratio

Formula: Operating Profit Ratio = ( Operating Profit / Net

Sales) / 100
Operating Profit = Operating Income – Operating Expense

Operating Profit Ratio Year

8.85% Mar-19
-12.16% Mar-18

Interpretation: From previous financial year company getting more

profit in terms of Operating Profit Ratio. It means that the company
using its operations more effectively from the previous year. This
financial year company having operation profit ratio 8.85% which is
slightly low from the average category of the OPR, but it is very good
in comparison to last year. There may be the reason that company
reducing its operation cost by effective management and hence can
generate more profit from the sales.
 5. Return On Investment

Formula: ROI = (NPBIT) / (Capital Employed) * 100

NPBIT = Net Profit Before Income Tax
Capital Employed = Shareholder Fund + Outstanding Funds

Return on Investment Year

5.18% Mar-19

2.57% Mar-18

Interpretation: The ROI of the company is very low because it

generate only 5% of the returns which is very low for any individuals.
It means that the company is unable to use its management in
effective way. In compare to previous year the company is having
good returns but the growth is very low. Due to the ROI is very low
company can either give it to shareholder or keep as a reserves. But it
is not possible to do both the things, because of the low ROI.

Solvency Ratio
1. Debt Equity Ratio:
Formula: Debt Equity Ratio = Long Term Debts / Shareholders

Debt Equity Ratio Year

0.25 Mar-19
0.47 Mar-18
Interpretation: The ideal debt equity ratio is 1:2 which means that
the Shareholders is twice the long term debts. Here the company
improve its debt equity position from previous financial ratio. In the
previous financial year company is just the ideal ratio, but in this
financial year company is having shareholders four times of the
shareholders in comparison to the long term debts. It means that the
company is having ample amount of the shareholders under its belt.
Company getting more shareholders due to many reasons like
expansion strategy, low price shares or low risk of financial losses.

2. Interest Coverage Rate

Formula: Interest Conversion Rate = NPBIT / Total
Interest
NPBIT: Net Profit Before Interest Tax

Interest Coverage Rate Year

16 Times Mar-19

3 Times Mar-18

Interpretation: Company operating profit is very satisfactory due to

which company can pay their interest very rapidly. The interest
coverage ratio is very high which means it can attract more and more
shareholders towards the company. It also suggest that the company
shareholder contributing more in the company expenses.
Conclusion:
 Company liquidity position in compare to its competitors is
good but not so effective. Company can pay their liabilities 80%
with immediate effect. But after that company have to take more
liability to run its business, company working capital is very
low.
 Company efficiency is not satisfactory. Company need to work
on their policy. Company credit policy is very leneant in
compare to their competitor, they don’t with left with capital for
almost one month. So they need more strict policy regarding to
their debtors through which company can be more effective in
their activity.
 In comparison to previous year company perform satisfactory
this financial year. They need to expand their production and
need to generate more EPS to attract more shareholders. In front
of profitability company doing less than satisfactory.
 Company is solvent enough to run their business. Company is
able to pay their debts and can pay their lends too.
 In the last, the two main factors which is importing in buying
shares of a particular company is that the EPS and P/E. In both
the aspects company is not satisfactory. That’s why I`m not
going to buy the shares in the company. Because as a
shareholders I want to only earn more and more profit. And in
this company the EPS is quite low that’s the reason I will not
buy the shares of the company.