Escolar Documentos
Profissional Documentos
Cultura Documentos
INDUSTRY PROFILE
In modern fashion technology, the demand for perfection begins right at the
birth of the raw materials, permeates through every single process, till the highly
discerning customer dons the finished garment. It is this demand for perfection that
has spurred the growth of and organisation and its corporate philosophy.
Those who can furnish clients with the best quality, competitive price,
excellent customer services and prompt delivery can only survive in the market. Super
Spinning Mills Limited takes immense pride in perceiving its role as the
comprehensive architect of every single yarn and garment that its produces.
Over its four decades of chequered growth it has expanded to 1,30,000 spindles
spread over 3 operational units. The company commenced operations with the
manufacture grey, mercerized and dyed cotton yarn. Today, the company has carved a
niche for itself on the textile map of the country.
Group Companies:
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COMPANY PROFILE
AN OVERVIEW OF SUPER SPINNING GROUP OF MILLS
Super spinning mills is one of the largest group of spinning mills of south India. The
super spinning mills limited was incorporated on 6th June of the same year 1962. the
corporate office of Super spinning group of mills is located at coimbatore, Tamilnadu.
The corporate manager takes all financial decisions of the super-spinning group of
mills. It enjoys taking crucial decisions of these super-spinning mills. It has authority
to appoint to various auditors managers etc. and also deals with export spinning group
of mills managers flow top to bottom to top. The company mangers and auditors must
be responsible to the all activities of super spinning group of mills. The must submit
quarterly and annual reports to the corporate office.
A Unit:
The first unit, Super–A is situated at Kirikera in the Bangalore—Anantapur state
Highway near Hindupur in Anantapur District of Andhra Pradesh. This mill was
register in 1962 and commenced production in 1964. This is located in an area of
around 13 acres. The unit initial capacity of this unit is 12096 spindles. The present
capacity of this unit is 59520 spindles manufacturing. Yam 24 hours a day and 7 days
a week spinning hosiery yam, ware yam and 2ply in counts ranging from 10s to 140s
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of cotton varieties. All are ring-spun yams only. This unit produces one of the finest
yams in the country.
The Unit—A is capable of producing yam in counts raging between 10s and
140s in both carded and combed in single and 2ply varities to suit different end users.
This mills user’s cotton and viscose as raw material. The selection. Purchase and
supply of raw material is done by its central office at Coimbatore. One of the
important joys for success of the mill is the very careful selection and purchase of raw
materials, which is done with meticulous care under the able super vision of the
Managing director. The wastage of cotton in the production process of the mill is
negligible. The mill has provision permission to store the cotton much enough to 4
months and to store this material, it has 3 godown with a capacity of 8000 bales each
for identification in godown, colored cards with indication of materials details like
variety, count a lot number etc.,
The yarn producers in the mill is used to produce Banians, T-Shirts, Dhotis, Lunges,
Sarees, Curtains etc. The yarn of the mill has wide market all over India and abroad.
The customer for the yam of the mill are spread all over India, in Tripura, Kolkatta,
Mumbai, Varanaisi, Delhi, Mangalgiri, Chirala, Gadag, Bangalore, Tka, Koppel,
Hubli and Guellerguda, etc., this unit has exporting yam to the other countries like
Japan, Singapore, Malaysia, U. K. Italy, Germany, Bangaladesh, Switzerland, etc.
Export Market Yarn : 60’s 62/1 Combed Yarn 80/2 Combed Yam.
B-Unit
This second unit, Super-B was established in the year 1983 at Kotnur, near Hindupur
in Anantapur dist of Andhra Pradesh. This is located in an area of around 12 acres.
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Another 8 acres around the factory is beautifully grown with green culture. This unit
initial capacity was 28800 spindles. And its installed capacity is 51840 spindles. This
mill is spinning hosiery yarn’s warp yarns, 2ply an 3ply yam in counts ranging from
30’s 100’s both carded and combed varieties. All area ring spun yarns only. This mill
produced the finest quality yarn.
Super spinning mills ltd., B-Unit is capable of producing yarn in counts ranging
between 20’s and 100’s in both carded and combed varieties to suit different and re
used. The mill daily production in around 15000 kgs and cotton conception is around
20000 kgs. This is one of the leading spinning mills in India, noted for its progressive
out look and technical excellence. The excel in every other endeavors for the quality.
This mill manufactures yarn of fine quality supplying to different regions in India.
They also producer cotton swing thread to cater to the needs of hosiery market there
are some local centers of sales of these yarn and sewing threads in thirupura,
Calcutta, Delhi, Mumbai, Varanasi, Thenali and Mangalore. At present, the yarn
produced from the mills in being widely used for banyans, knit wae, doti, sarees,
curtains, Zari, the mill produces the high quality ot yarn. This super-B unit has
experience in exporting yarn to countries like Singapore, Malasia, U K, South Africa,
Canada, Dubai, South Coria, USA, China, etc.,
Domestic Market 40’s 60’s 2/60’s 74’s combed yarn and 2/30’s DL
And 2/36’s and 2/40’s both grey and mercerizing
Export Market : 38’s and 4’s 36/2, 40/2, 60/2 cotton knitting and weaving.
The mill has very good generators so that they can continue the production of the mill
with out any interruption even during the power- cut period. This mill is having fully
equipped quality continuous modernization and timely expansion has given us
competitive edges and over the companies. As a result of this, the company gas
established itself as a leaser of its products.
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According to the survey conducted by the South India Textile Research Association
(SITRA), the performance of this company has been maintained consistency in
production and quality over the past.
C-Unit
This Unit, SUPER-C, is situated at D-gudlaur, vendasandur taluk, dinddugal Anna
Dist, Tamilnadu. This is located in an area of around 25 acres, build up in an area of
9600 sq.m
Present spindles of the mills is 16128 those are manufacturing yarns 24 hours a day
and 7 days a week and spinning yarn in counts ranging between 20’s NE to 34’s NE in
both carded combed varieties to suit different and users.
Super Spinning mill Ltd. C-UNIT is capable of producing yarn in counts ranging
between 18’s NEW to 100’s NE in both carded and combed varieties to suit different
end users. This unit is producing yarn for 20’s 24’s, 30’s cotton knitting yarn. It has
experience in exporting an to countries like Israel, Singapore, Malaysia, Mauritius,
Hong cong, Bangladesh, Argentina, Philippines, etc.
Super garment units started from 2002. Now they are having three garment units at
Thirupur, Arasure, and heckler. Super Spinning Mills has started opened spinning at
SUPER-A and SUPER-C to reuse their cotton waste and to produce cotton yarn
counts ranging from 6’s to 10’s
Super Sara
This Unit, SUPER-SARA, is situated at M Beerapalli, Hindupur ATP Dist; Andhra
Pradesh This is located in an area of around 100 acres, build up in an area of 16000-
sq.m and unit turnover approximately 40 Cores.
Present spindles of the mills is 30576 those are manufacturing yarns 24 hours a day
and 7 days a week and spinning yarn in counts ranging between 30’s NE to 60’s NE in
both carded combed varieties to suit different and users.
Super Spinning mill Ltd. SUPER-SANAUNIT is capable of producing yarn in counts
ranging between 18’s NEW to 100’s NE in both carded and combed varieties to suit
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different end users. This unit is producing yarn for 20’s 24’s, 30’s cotton knitting
yarn. It has experience in exporting an to countries like Bangladesh, etc
Machinery
Super Spinning Mills is equipped with following to meet the customer requirements to
make them satisfied with its products.
1. Lakshmi Rieter make blow room, carding silver lap machines, ribbon lap
machines, combers speed frames, ring frames
2. Elitist Spinning Machine
3. AERO feed blow room lines with CI/2 A, CI/3, CROSROL&DK803 carding
machines
4. RIETER unilap and RIETER combers
5. HARA-Cherry, RSB, RIETER & Zinser make with and with out auto leveler
drew frames.
6. RIK cone winders fixed with electronic yarn cleaners and micro 2000 cleaners
7. VMM make doubling machines veejay TFO and veejay heavy doubles and
assembling winder.
8. PS melter singeing machines, SSM gassing machine
9. Scholfhorest-220and 338 Mutate CBF SAVIO & MURATEE autoconers
equipped with UPM& LOCPP6 PP6 FR-900 clnears
10. Quality assurance department with necessary testing equipotent like AFIS, hair
ness tests and UT3, etc
11. Planned maintenance system for machinery, electrical system and generators
12. 130% power generators capacity to run the factory
13. 100% RITEIR Machine working first time in India.
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POLICIES
1. Quality Policy:
3 Environmental Policy:
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The manufacturing process of yarn from raw and synthetic cotton in all the three mills
is almost one and the same the process so briefly explained hereby under.
Mixing
The first step in the process of production begins with mixing. In this process various
components bales are opened-up, spread out evenly, in the form of a stock with
preliminary loosening of the matted cotton besides, cotton is highly compressed and
stored for a long time before they are opened. Cotton fiber is hygroscopic and requires
certain amount of moisture for proper processing this is achieved by mains of
installing spot humidifiers, which inject moisture to cotton while putting the stock
mixing in this process, reusable waste is also mixed.
Blow-room
The cotton taken form mixing room is fed into blue room. After suitable opening and
rolled completely on to what is called lap. The function of opening and cleaning is
done by various types of beaters. By making use of the centrifugal force at these
revolving beaters by making use of the air current, trash sand particals, fragments of
seeds, heavier impurities, etc, are separated. The waste percentage that is normally
removed here depends on trash content in cotton all the machines are carefully
adjusted so that they clean the cotton without damaging the fiber.
Carding
In carding process the most important function is cotton spinning viz.,
individualization of fiber is performed. All the spinning is familiar with an adage to
card will is to spin well. The cotton in the lap form that is produced in the blue room,
thought opened up has to be further opened for individualization of fibers. The lap
passes through a saw toothed revolving ‘hickerin’ which open out the cotton into
very small tufts and eliminated seeds bits, leafy bmatter, hucks, etc the open cotton
transferred to a cylinder, which is clothed with small metallic wire points. The cotton
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is carried further by means of a cylinder and further intensive opening of the cotton
take place between the flats which are moving slowly on cylinder. Due to the
difference in speed, the close proximity (10/1000) and design of the wire point
between flats and cylinder fibers are fully individualized. These fibres are then
transfer to doffer and then on to crust rolled, which completely pulverize the foreign
matter.
The cotton is deliver in the form of a thin web, which is condensed into rope from
called ‘silver’ and is collected in a can. Here also about 4 to 5 persons of waste is
removed.
Drawing
The fibers emerging out of the cards are all-individual but laid in criss-cross fashion
alon the axis the silver. Since spinning mainly on attention process for carding
onwards, the fibers, in this silver are to be perfectly parallel to each other. The draw
frame fulfills this objective by doubling and drafting the doubling of the ends also
ensures a through blend of the various pairs of roller, each successive pair of roller
revolving faster than the preceding ones this draw one of the fibres and arranges them
in a parallel fashion. 8 ends of cards of silver are doubled and drafted 8in times to
obtain silver of similar weight per unit length normally two passages of draw frames
are employed. Beside the with per unit length of the silver is also improves an amount
of the doubling of the silver.
Combing
Combing is an additional process employed whenever yarn of good quality is
required. As mentioned previously, cotton, consists of fibers of various length. The
short-fibers present in the cotton are a nuisance and will result in poor evenness, high
imperfection such as thick and thin places in the yarn and result in lower yarn
strength. Hence by removing the short, fibers the quality of yarn can be substantially
improved. The process of eliminating the short fibers done by means of combers.
Normally first passage draws frames cans fed ton super lap former, which is
preparatory machine for combing.
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Super lap
About 36 to 48 ends of silver are combed to gather giving a slight draft and are
converted into suitable for feeding at combers.
Combers
The combers perform the removing of shirt fibers in the cotton. This is done by means
of combs mounted into half lap the cotton fibers of a definite feed are helpful firmly
by means of nippers. The short fibers, which are not held by the nipper, are not
combed, removed and collected at the back of the machine. This process is done
continuously on the comber. The waste percentage extracted at comber depends on the
short fibre percentage extracted at comber depends on the short fibre percentage and
the quality of the yarn required.
Fly frames
The materials in the form of silver are fed into this machine. This is drafted down on
attended by about 10 to 15 times by means of pairs of recover as explained earlier.
The issuing stand is very thin. Hence, certain amount of twice is imparted to the
strained to within stand by and is would into a package called bobbin. Normally each
bobbin contains 0.9 to 1.0 kg. Of the material, which is called roving. This is now
ready for feeding at the ring frames.
Ring frames
This ring frames converts the roving into final yarn. The roving is drafted or thinned
down about 15 to 30 times. The issuing strained if fibers are twisted is then wound on
to ring frame. The twist inserted depends on the quality of the cotton and the end use
of the yarn, the factors controlling the production at the ring frames are the twist
inserted and spindle speed. The twist is inserted at the yarn by means of the ring
traveler, which is moving on the ring. This traveler lags behind the spindle and hence
the yarn on the behind the spindle and hence the yarn on to the bobbins.
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Doubling
When yarn of a better uniform and higher strength is required, doubling is resorted to.
The feed package of the doubling frame is cheeses, which is produced at the doublers
winding. The doubler winder joints two ends together and winds them into a cheese
form.
The doubling frame inserts the required amount of twist and winds the double yarn on
to bobbin.
Winding
The yarn deliver at spinning or doubling is in the form of small package called cops.
This cannot be directly delver to the customers of yarn. Besides the consumers require
the yarn in different types to suit requirements. Because of this, the yarn is converted
either to cones or honk form.
Cone winding
In this department, the yarn caps are wounded on to bigger package, which is
normally one kg in weight, the package comes in the form of a cones. This is normally
resorted to where the total length of the yarn required is more has in the case of warp
yarn for weaving on automatic looms. While winding on to cones the yarn is passes
between two closely set combs, which remove foreign matter and thick places in the
yarn.
Reeling
When the yarn is to be used in hand looms or for dying before weaving, the yarn is
will on to hank from. In this department bathe spinning cops are related to hank form
on hank is 840 yards in length the yarn is passed through brushed which remove the
adhering foreign matter, etc. this hanks are converted into small bundles and then on
to bales for dispatching to the market.
In all departments the humidity conditions are properly maintained which is
made possible by installing humidification plants with recalculating facilitate, while
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the quality control division looks after the quality of the yarn, the maintained division
looks after the maintainers of the plant and machinery.
Products
The companies three units produced variety of yarn in count ranging between 201’s
and 100’s both carded and combed varieties to suit different end users. The company
products are high quality and are being appreciated globally.
The produced yarn productions of super spinning group of molls are as follows.
1. 20’s combed hosiery
2. 24’s combed hosiery
3. 30’s combed hosiery
4. 40’s combed hosiery diamond
5. 40’s ruby
6. 50’’s combed hosiery reel
7. 60’s combed special hosiery
8. 60/2 special hosiery
9. 94 combed hosiery
10. 60’s fine and cross plain red
11. 80’s & 50/1 grey combed
12. 2/30, 3/36, 2/40’s single mercerized and bleached.
Quality Policy
These group units of the company the top priority for quality and take meticulous
care in maintaining it at every stage of manufacture.
These three mills have been awarded ISO 9002 accreditation
The quality policy to super spinning mills is as follows
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Export Market
The company is doing will in case of exports. It has very good sales in the past few
years and got eligible to be recording as export house in 1997. the company units
produces the finest quality of yarn garn aments for domestics well as export
market. The produces yarn of super spinning mills is used various products like
banians, knit wear, dhotis, sarees, curtains, zari, T-Shirt, etc.
Working hours of super spinning mills ltd:
Attendance Procedure
Punching the code give to them in the computer network in HRD office marks
daily attendance. They have to punch their code number in the computer at two
times i.e. while coming for duty after interval.
Leave Details
There is no leave restriction for managerial staff. However, they are expected to
follow the norm applicable to another staff.
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For availing leave, at least two days advance intimation should be given expect for
sudden illness and unforeseen circumstances leave for a period of more than 3
days should be intimated a week in advance
Retiral Benefits
For those who eligible for provident fund, the monthly recovery from the
individual and the company’s contribution together is deposits with the reasonal
provident fund commissioner, Kadapa. Gratuity and superannuation contribution
of managed by trustee the life insurance corporation of India.
Performance Appraisal
All the employees will be evaluated once in every 6 months i.e. June and
December every year. The appraisal system shall be used to identify needs, career
development, incremental and exgratia. The appraisal shall be done by the
immediate supervision as per performance appraisal system.
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Identity cards will be given to each staff. In case of replacement the cost should be
borne by the individual concerned.
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AWARDS
The Company has received several awards for its continuous efforts in quality
production. A few as follows.
RECOGNITION
By BVQL was awarded to super spinning in the year 1994. super has understood
the importance of ISO quality systems very early and is the first among its kind of
industry in Andhra Pradesh to attain this recognition.
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Consumer Profile
Domestic
EXPORT
Naseez fabrics - Dubai
Mantifal SPA - Italy
Anjun Union Corporation - Korea
Carolina fabrics - Dubai
Sumotoma Corporation - Japan
Subroma textiles - Bangladesh
Bosifil SPA - Italy
VENDOR PROFILE
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SALES
DOMESTIC
Tirupur
Kolkatta
Mumbai
Varanasi
Ichalkarangi
Tenali
Mangalagiri
Chirala
EXPORTS
England
Singapore
Malaysia
Italy
Switzerland
Japan
Bangladesh and it haslong
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PRODUCTS PROFILE
We believe that quality products are not only by promises but also by proven results.
Development of new textile products is done through – Innovation indefining
production processes of higher quality and making available modern technologies and
professionals with the highest level of competence.
The following advantages which have always been our ultimate goals:-
High Efficiency
The Most Competitive & Reasonable Price
Products Quality Guarantee
Prompt & Superior Service
Punctual Delivery
We Manufacture
NE 20s to NE 120s
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Woven Fabrics
To meet out the customer requirements we have various options in raw materials
India Cotton
GIZA
GIZA Blends
Supima
PIMA Blends
Organic Cottons
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REVIEW OF LITERATURE
Introduction: -
Ratio Analysis
Meaning and Scope: -
Ratio Analysis is a widely used tool financial analysis. The term ratio in it
refers to the relationship expressed in mathematical terms between two individual
figures or group of figures connected with each other in some logical manner and
are selected from Financial Statements of the concern. A financial Ratio helps to
express the relationship between tow accounting figures in such a way that users
can braw conclusions about the performance, strength and weaknesses of a firm. A
ratio reflecting a quantitative relationship helps to from a qualitative judgment.
A single ratio does not convey much meaning and has to be compared with some
standard. Standard of comparison may consist of:
I. Past Ratios
II. Projected Ratio
III. Competitors Ratios
IV. Industry ratios
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The Ratio analysis is the most powerful tool of financial analysis with the help of
ratios one can determine:
• The ability of the firm to meet its current obligations;
• The extent to which the firm has used its long-term solvency by borrowing
funds;
• The efficiency with which of the firm is utilizing its assets in generating sales
revenue, and
• The overall operating efficiency and performance of the firm
Performance analysis:
A short-term creditor will be interested in the current financial position of the firm,
while a long-term creditor will pay more attention to the solvency of the firm. He
will also be interested in the profitability of the firm. The equity shareholders are
generally concerned with their return and also about the financial conditions only
when their earnings are depressed.
Credit Analysis:
In credit analysis, the analyst will usually select a few important ratios. He may
use the current ratio or quick-ratio to judge the firm’s liquidity or debt-paying
ability; debt-equity ratio to determine the stake of the owners in the business and
the firm’s capacity to survive in the long run and any one of the profitability ratios.
Security Analysis:
The ratio analysis is also useful in security analysis. The major focus in
security analysis is on the long-term profitability. The detailed analysis of the
earning power is important for security analysis.
Comparative Analysis:
The ratio of a firm by themselves do not reveal anything. For meaningful
interpretation, the ratios of a firm should be compared with the ratios of similar firms
and industry. This comparison will reveal whether the firm is significantly out of line
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with its competitors. If it is significantly out of line, the firm should undertake a
detailed analysis to spot out the trouble areas.
Trend Analysis:
Trend analysis of the ratios adds considerable significance to the financial analysis
because it studies ratios of several years and isolates the exceptional instances
occurring in one or two periods. Although the trend analysis of the company’s ratios
itself is informative, but it is more informative to compare the trends in the company’s
ratios with the trends in industry ratios.
Management has to protect the interest of all the conditional parties, creditors, owners,
and others. They have to ensure some minimum operating efficiency and keep the risk
of the firm at a minimum level. Their survival depends upon their operating
performance.
Objectives (or) Purpose of Ratio Analysis: -
The nature of analysis will differ depending on the purpose of the analyst. It can be
undertaken by management of the firm, or by parties outside the firm namely owners,
creditors, investors and others.
Trade Creditors: -
They are interested in firm’s ability to meet their claims over a very short
period of time. Hence their analysis is confined to evaluation of the firm’s
liquidity position.
Suppliers of long-term debt: -
They are concerned with firm’s long-term solvency and survival. They analyze
the firm’s profitability over time, its ability to generate cash to be able to pay
interest and repay principal and the relationship between various sources of
funds.
Investors: -
They are most concerned about the firm’s earnings. They are also interested in
every aspect of the firm’s financial structure to the extent it influences the
firm’s earnings ability and risk.
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Management: -
They would be interested in every aspect of Financial Analysis. It is their overall
responsibility to see that the resources of the firm are used most effectively and
efficiently, and that the firm’s financial condition is sound.
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CLASSIFICATION OF RATIOS
The use of Ratio Analysis is not confined to financial manager only. There are
different parties interested in the Ratio Analysis for knowing the financial position of
a firm for different purposes. In view of various users of ratios, there are many types
of ratios, which can be calculated from information given in the financial statements.
The particular purpose of the user determines the particular ratios that might be used
for financial analysis.
For example, a supplier of goods of firm, or a banker advancing a short term loan to
firm, is interested primarily in the short term paying capacity of the firm or say; its
liquidity. On the other hand, financial institution advancing a long-term credit to a
firm will be primarily interested in the solvency or long-term financial position of the
concern. Similarly, the interest of the owners (shareholders) and the management also
differ. The shareholders are generally interested in the profitability or dividend
position of firm while management requires information on almost all the financial
aspects of the firm to enable it to project the interest of all the parties.
Various accounting ratios can be classified as follows:
A Traditional Classification/ Statement Ratios
B Functional Classification / Classification to tests
C Significance Ratios/ Ratios according to importance
A Traditional Classification / Statement Ratios: -
Classification according to the financial statements from which these ratios are
calculated is traditional classification.
The following are different types of traditional classification.
Revenue Ratios/ profit and loss accounting ratios / income statement
ratios: -
When two variables are taken from revenue statement the ratio is known as
revenue ratio for example,
1. Gross Profit Ratio
2. Operating Ratio
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Eg
I. Debt Equity Ratio
II. Debt to Capital
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LIQUIDITY RATIOS
Liquidity Ratios measure the ability of the firm to meet its current obligations. A firm
should ensure that it does not suffer lack of liquidity, and also that it should not have
excess liquidity. The failure of a company to meet its obligations due to lack of
sufficient liquidity, will result in a poor creditworthiness, loss of creditor’s confidence,
or even in legal tangles resulting in the closure of the company. A very high degree of
liquidity is also bad; firm’s funds will be unnecessarily tied up in current assets.
The most common liquidity ratios are:
I. Current Ratio
II. Quick Ratio/Acid Test Ratio
III. Cash Ratio/Absolute Liquid Ratio
Other Ratios include interval measure and net capital ratio
a) Current Ratio: -
The Current Ratio may be defined as the relationship between current assets and
current liabilities. This ratio is a measure of general liquidity and is most widely
used to make the analysis of a short-term financial position or liquidity of a firm. It
is calculated as
Current Assets
Current Ratio= Current Liabilities
A high current ratio may not be favorable due to the following reasons:
I. There may be slow moving stocks. The stocks will pile up due to poor sales.
II. The figures of debtors may go up because debt collection is no satisfactory
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III. The cash or bank balances may be lying idle because may be laying idle
because of insufficient investment opportunities.
On the other hand, a low current may be due to the following reasons:
I. There may not be sufficient funds to pay off liabilities
II. The business may be trading beyond the capacity. The resources may not
warrant the activities.
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(b) Type of Product: The type of products in which a business deals also
influences current ratio. A business dealing in goods whose demand changes fast
will require a high current ratio. On the other hand, if products have more
intrinsic value e.g. gold, silver, metals, etc. a lower current ratio may also do.
(c) Reputation of the Concern: A business with better goodwill and reputation
may afford small current ratio because the turnover is more and creditors also
allow credit for longer periods. A new concern or a concern, which has not
established its reputation, will need higher current assets to pay current liabilities
in time.
(e) Seasonal Influence: Current assets and current liabilities changes with the
season. In a peak season, current assets will be more and current ratio will be
high. On the other hand will go down when the season is off.
(f) Types of Assets Available: The type of current assets in the business also
influences interpretation of current ratio. If the current assets include large
amounts of slow moving stocks then even a high ratio may not be satisfactory.
All the above-mentioned factors should be taken into mind while interpreting
current ratio
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b) Quick Ratio: -
It is also called as Acid test ratio. It enables a relationship between quick, or liquid,
assets and current liabilities
Quick Assets
Quick Ratio = ————————
Current Liabilities
A quick ratio of 1 to 1 is considered to represent a satisfactory current financial
condition.
Like current ratio a reasonable standard for the acid test ratio varies from season
to season in company and from company in an industry
c) Cash Ratio/Absolute Liquid Ratio: -
The cash Ratio measure the absolute liquidity of the business. This ratio considers
only the absolute liquidity available with the firm. This ratio is calculated as;
Note
The current ratio and the quick ratio have not yet out lived their utility. They are still
important ratios in the financial analysis. However, the analyst must keep the note of
the following points:
1) The liquidity ratio should be subjected to quantitative tests. The major
components of current assets-receivable and inventory must be carefully
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announced to determine their quality, otherwise the ratio may grow and
mislead.
2) The liquidity ratios are subject to the influence of other financial forces,
which can improve or deteriorate the ratios in no time. These ratios will
not fluctuate because of the movement of the receivables and, but one
also affected by changes in fixed asset and profit and Loss account.
3) The 2 to 1 current ratio or the quick ratio of 1: 1 should not be relied
blindly. Each industry of firm has its own operating and financial
characteristics. A current ratio of 1.5 to 1 may be perfectly acceptable in
one line of business, where 3 to 1 ratio may be typical of another.
Terms related to Liquidity Ratios
a) Current Ratio
Current Assets include cash and those that can be converted into cash
within a year, such as marketable securities, debtors, prepaid expenses and
inventories.
b) Current Liabilities
Current Liabilities are those obligations maturing within a year. They
include creditors, bills payable, accrued expenses, short-term bank loan,
income tax liability and long-term debt maturing in the current year.
c) Quick Assets:
Quick Assets of only cash and near cash assets.
Quick Assets=Current Assets-Inventories
d) Quick Liabilities
Quick Liabilities are that portion of current liabilities, which fall the
immediately.
Quick Liabilities= Current Liabilities-Bank Overdraft-cash Credit
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a) Debt-Equity Ratio: -
it helps in knowing the interest-bearing debt in the capital structure. The Debt
Equity ratio measures the long-term financial solvency of a business concern.
This ratio is also popularly known as “External-Internal Equity Ratio” This
ratio can be viewed as indicating the relative proportion of debt and equity in
financing the assets of the business unit. It is calculated as
Total Debt
Debt Equity Ratio = ——————————
Net Worth
Activity Ratios: -
Activity Ratios are also called “Turnover ratios”, since they relate to the use of assets
for generation of income through turnover. These ratios are used to measure the
effectiveness of the employment of resources. Activity ratios involve a relationship
between sales and assets. Several Activity Ratios can be calculated to judge
effectiveness of asset utilization. Some of them as follows..
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Net Sales
Debtors Turnover Ratio= ———————
Total Debtors
Collection/conversion period: this indicates the extent to which the debts have
been collected in time. It is calculated as
Days in a Year
Collection/Conversion Period= ——————————
Debtors’ turnover
Sales
Assets Turnover Ratio = ——————————
Total Assets
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Net Sales
Stock Turnover Ratio = —————————
Closing Stock
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PROFITABILITY RATIOS
The financial manager should continuously evaluate the efficiency of its company
in term of profits. A company should earn profits to survive and grow over a long
period of time. A measure of profitability is the overall measure of efficiency. In
general terms, efficiency of business is measured by the input and output analysis.
By measuring the output as a proportion of the input and comparing the result of
similar other firms or periods the relative change in its profitability can be
established. The income as compared to the capital employed indicates
profitability of firm. Thus the chief profitability ratio is:
Operating Profit (Net Margin)
—————————————— X 100
Operating Capital Employed
The main profitability ratio an all other sub ratios are collectively known as
‘profitability ratios’ Profitability ratio can be determined on the basis of either
investment or sales.
Some of the profitability ratios are as follows: -
a) Net Profit Ratio
b) Gross Profit Ratio
c) Return on Capital Employed
d) Return on shareholders’ investment
e) Return on Assets
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Net Profit
Net Profit Ratio= ————————— X 100
Sales
Gross Profit margin reflects the efficiency with which management produces each unit
product. This ratio indicates the average spread between the cost of goods sold and
revenue. This ratio indicates the relation between production costs and selling price. It
is calculated as
Gross Profit
Gross Profit Ratio = ————————— X100
Sales
This ratio is also known as ‘overall profitability ratio’. The income as compared to the
capital employed indicates the return on investment. It shows how much the company
is earning on its investment. This ratio is calculated by dividing the EBIT (Earnings
before Interest & Tax) with Capital Employed.
EBIT
Return Capital Employed = ———————————— X100
Net Capital Employed
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EBIT
Return on Shareholders Investment = —————— X100
Equity
Return on Assets: -
The profitability ratio is measured in terms in relationship between net profits and
assets employed to earn that profit. This ratio measures the profitability of the firm in
terms of assets employed in the firm. The R O A may measured as follows.
PAT
Return on Assets = ———————————— X100
Total Fixed Assets
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The ratio analysis is a widely used technique to evaluate the financial position and
performance of business. Yet it suffers from various limitations.
o It is difficult to decide on proper basis of comparison.
o The company is rendered difficult because of differences in situations of two
companies or of one company over years.
o The price level changes make the interpretation of ratios invalid.
o The differences in the definitions of items in the Balance Sheet and the Profit
and Loss Statement make the interpretation of ratios difficult.
o The ratios calculated at a point of time are less informative and defective as
they suffer from short-term changes.
o The ratios are generally calculated from past financial statements and, thus are
no indicators of future.
Standards of Comparison
Ratio of a company has meaning only when they are compared with some standards.
It is difficult to find out a proper basis of comparison. Usually, it is recommended that
ratios should be compared with industry averages. But the industry averages are not
easily available. In India, no systematic and comprehensive industry ratios are
complied.
Company Differences:
Situations of two companies are never same. Similarly, the factors influencing the
performance of a company in one year may change in another year. Thus, the
comparison of the ratios of two companies becomes difficult and meaningless when
they are operating in different situations.
Price Level Changes: -
The interpretation and comparison of ratios are also rendered invalid by the changing
value of money. The accounting figures, presented in the financial statements, are
expressed in the monetary unit, which is assumed to remain constant. In fact, prices
change over years, which affect accounting earnings.
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The success of industry mainly depends on many factors viz., sales and
profit of a business concern, rate of return of the industry and the organization,
optimum inventory the industry carries, methods of long term and short term funding,
treasury management etc., and this could be achieved by observing good management
practices. It is in this context the study is initiated in SUPER SPINING PRIVATE
LIMITED to find out their financial management system of previous 4 years and find
out the problems if any and the performance of the S S MILLS with the help of ratios
and other techniques of financial analysis.
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It is known fact that the success of the every organization depends upon its financial
strengths & weakness of the firm and ratio analysis is used as tool to analyze the
financial performance of the company, in financial analysis a ratio is used an index or
yard stick for evaluating firms out financial performs post 4 years would give some
insights if there are among errors associated with budgeting which are subjective
elements.
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The purpose of the study was to know the financial performance of the unit. For this
the ratio analysis tool was most suitable. This would reveal the solvency position of
the unit. The trend of sales and profitability for the past 4 years was calculated to
know if any deviations occurred and to know the reasons for it. However the study
had its own limitations like ratio analysis is a post-mortem analysis and the data
utilized were secondary in nature etc.
• Ratio Analysis
• Trend Analysis
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The overall objective of study is to appropriate the financial performance of SSM for
the period of 4 years from 2003-04 to 2006 -2007. However, the study is taken up
with the following objectives.
o To trace out the organizational profile of SSM, with a view to find out the
positive and negative aspects of the organizational arrangement.
o To appraise the performance of the company with regard to its working capital
maintenance.
o To analyze the solvency position of SSM with an aim of identifying, if any
loop holes are present in the administration of equity.
o To study the inventory management with the help of appropriate ratios
o To forward certain suggestions for the consideration of management of SSM.
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RESEARCH METHODOLOGY
Research Design: -
To analyze the working capital, trends and for the purpose of ratio analysis, Financial
Analysis has to be carried out. Financial analysis is the analysis and interpretation of
financial statements and a proper financial analysis can give the users better insight
about financial strengths and weakness of the firm. Financial analysis is the starting
pint for making plans, before using any sophisticated forecasting and planning
procedure.
For the purpose first the required information has to be collected like for ratio analysis
and owing capital management analysis, income statements, trading and profit and
loss accounts, balance sheet, funds flow statement, etc. are to be collected the, the data
in the statements is to be properly organized and arranged and then relationship is
established between financial statements and finally conclusions are drawn from the
interpreted information and presented in the form of reports.
Research Methodology: -
Research involves getting tools, ideas from texts, journals, books, records, Websites.
The collection of data is an important aspect of Research.
The sources of information fall under two categories.
Internal Sources: -
Every company keeps certain records such as accounts, records, reports, etc. These
records provide sample information for research.
External Sources: -
When internal records are insufficient and required information is not available the
organization the organization depends on eternal sources. The external sources of data
are:
I. Primary Data
II. Secondary Data
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Primary Data: -
The data collected for a purpose in original and for the first time is known as primary
data. The data collected by the researcher himself to study a particular problem.
The primary data of the study is collected through interaction and discussion with the
officials and the staff at SSM, Hindupur.
Secondary Data: -
The data which is collected from the published sources that is for the first time is
called secondary data.
The secondary data for the study is collected from the annual reports of SSM from
2003-04 to 2006-07.
Data Analysis: -
Data analysis is done by implementing various tools like ratio analysis, trend analysis,
etc.
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1.Current ratio: -
Current assets
Current ratio = --------------------------
Current liabilities
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Interpretation:
As a conventional rule, a current ratio of 2:1 or more is considered satisfactory.
The SSML current ratios in the year 2003-07 are 3.02, 2.59, 3.54, and 2.84
respectively.
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2.Quick ratio: -
Quick assets
Quick ratio= -------------------
Current liabilities
Current liabilities
Years Quick assets Ratio
2003-04 7549.81 6925.63 1.09
2004-05 11431.99 7501.51 1.52
2005-06 12923.39 6989.21 1.85
2006-07 11431.99 8765.61 1.30
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Interpretation:
Quick ratio is a widely accepted ratio this ratio universal standard is 1:1 except
2003-04 year company had excess liquid assets rest of years ratio was reasonable,
This indicates company extremely had good liquidity position.
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Current liabilities
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Interpretation:
The universal standard is 1:2 companies almost all years had less super liquid
assets. This indicates company had huge in debtor besides their collection period was
very high so company was not easy to meet quick obligations immediately
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4.Debt-equity ratio: -
Total debt
Debt-equity ratio= -------------------
Net worth
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Interpretation:
The universal standard is 1:2 here; company had excess net worth than
standard. This indicates heavy cost of debt to company so here profit maximization
was possible rather than wealth maximization of shareholders.
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Sales
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Interpretation:
Debtor turnover ratio measures the collection period of debtors, here sales were
so rapidly converting in to cash. This is good to company year 2003-04 was little bit
rather than rest of years.
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Days in a year
Debtor collection period = --------------------
Debtor’s turnover ratio
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Interpretation:
This ratio is another devise to measure the quality of debtors. This ratio
represents the average number of days the company takes to convert its debtors in to
cash almost all years company had able to collect debtors quickly so liquidities
position was very good.
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Interpretation:
This ratio shows the firms ability in generating sales from all financial
resources committed to total sales this decelined in the year 2003-04 so company sales
so progressive than total assets.
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Interpretation:
This ratio measures the current assets capacity with turnover here current assets are so
heavy for production of goods however company should concentrate on more fixed
assets rather than current assets.
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Sales
Fixed assets turnover ratio= ------------
Fixed assets
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Interpretation:
This ratio measures the fixed assets capacity with turnover hare fixed assets
sufficient for production of goods however company should concentrate on more
fixed assets rather than current assets.
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Sales
Working capital turnover ratio = ------------------
Working capital
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Interpretation:
This ratio measures the effect of working capital gap on sales or amount of
sales generated its net current assets, the networking capital gap were properly utilized
in generating sales current assets turnover to sales.
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11.Net profit: -
Net profit
Net profit = ----------------
Sales
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Interpretation:
Company had heavy operating expenses and interest rates so had company had
very less not profit Ratio Company should reduce their indirect expenses and interest
rates.
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EBIT
Return on shareholders ratio= ------------------
Equity
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Interpretation:
This ratio measures relationship between earnings and equity here every
shoulders get increasing dividend from year to year so shareholders wealth
maximizing year to year for ever 2005-06 was heavy return to shareholders rather than
rest of years.
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13.Return on assets: -
PAT
Return on assets= --------------------
Total assets
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Interpretation:
This ratio measures the how much return earned on total assets almost all years
company had very low return so company should decrease its current assets rather
than fixed assets
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14.Return on capital: -
EBIT
Return on capital= ---------------------
Capital employed
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Interpretation:
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Gross profit
Gross profit ratio= ---------------------
Sales
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Interpretation:
Company had heavy gross profit in 2005-06 rather than rest of years so
company should concentrate on manufacturing expenses .it should be very less.
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PAT
Return on investment= ---------------------
Capital employed
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Interpretation:
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PAT
Number of shares
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Interpretation:
The earning per share obtained for four years are 1.89,2.04,4.06and 2.59
respectively, the earning per share have been rapidly increased. The ratio is favorable
in the year 2006,because it is highest ratio.
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FINDINGS
The company sales have increased every year from Rs 33516.26 in the year 2003-04
to Rs: 39419.28 lakhs in the year, 2006-07, which reflects in favorable position.
The profit of the company have increased from 1042.71 lakhs in the year 2003-04 to
24960.87 lakhs in the year 2006-07 it reflects in favorable position.
The liquidity ratios have increased initially for one year but later they have decreased
but firm as enough current assets to meet the current liabilities
The debt equity ratio indicate that the claims of outsiders or more than those owners
debt equity ratio is 1.92 in the year 2003-04, and it has increased to 1.93 in the
year 2005-06 due to increase to in total debt and it has further increased to 2.06
in the year 2006-07.
The debtors turnover ratio have decreased the debtor turnover ratio of the company for
the years 2003-07 are 22.09, 18.80,19.24 and 16.59 respectively, the collection
period has gradually increased but the debtors collection period is less than 22
days .
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SUGGESTIONS
Since debtor’s collection period is greater than15 days the company can
decrease this period for the development.
It is suggested that the form should have to increase its management efficiency
which increase it capacities to with stand the adverse economics conditions for
earning more profits to recover its loses
It is suggested that the firm should have to utilize it current assets and current
liabilities properly
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CONCLUSIONS
Liquidity ratios, both current ratio and quick ratio are showing effectiveness in
liquidity as in all the years current ratio is greater than the standard 2:1 and
quick ratio is greater than the standard 1:1 ratio.
Debt equity, solvency ratio and interest coverage ratio are showing an average
increase in the long term solvency of the firm.
Fixed assets turnover ratio is showing that the firm needs lesser investment in
fixed assets to generate sales.
The gross profit ratio, net profit ratio is showing the increasing trends. The
profitability of the firm the increasing.
The interest that has to be paid is very less when compared to the sales. The
firm is not utilizing the debt conservatively.
The firm is relating much of the earnings ( based on dividend payout ratio. )
The company financial performance is very good and also they will increase
their business year by year by expanding their branches.
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BIBLIOGRAPHY
WEBSITE :
www. superspinningmills.com
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