RATIO ANALYSIS Ratio analyses are a powerful tool of financial analysis.

A ratio is defined as “the

indicated quotient of two mathematical expressions” and as “the relationship between two or more
things”. In financial analysis a ratio is used as a benchmark for evaluating the financial position and
performance of a firm. The relationship between two accounting figures, expressed mathematically, is
known as a financial ratio.

TYPES OF RATIOS Several ratios; calculated from the accounting data, can be grouped into various
classes according to financial activity or function to be evaluated. We may classify the ratios into the
following categories.

Liquidity ratios

Leverage ratios Profitability ratios

 Capital Structure Ratio

 Other Ratio

LIQUIDITY RATIO It is extremely essential for a firm to be able to meet its obligations as they become
due. Liquidity ratios measure the ability of the firm to meet its current obligations. In fact, analyses of
liquidity needs the preparation of cash budgets and cash and fund flow statements but liquidity ratios by
establishing a relationship between cash and other current assets to current obligations, provide a quick
current assets to current obligations, provide a quick measure of liquidity. A firm should ensure that it
should not suffer from lack of liquidity, and also that it does not have excess liquidity. The failure of
company to meet its current obligation due to lack of sufficient liquidity, will result in poor credit
worthless, loss of creditor’s confidence for even in legal tangles resulting in the closure of the company.
A very high degree of liquidity is also bed. the firms fund will be unnecessarily tied up in current assets
therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity. The most
common ratios, which indicate the extent of liquidity, are Current ratio Quick ratio 11 CURRENT
RATIO Current ratio is the ratio of total current assets to total current liabilities. Current assets of a firm
represent those assets which can be in ordinary course of business converted into cash with in short
period of time and current liabilities defined as liabilities which are short term manufacturing obligation
to meet current assets. To measure the financial liquidity of Amul Current assets = Stock, Advance &
debtors, Cash & Bank Balance. Current liabilities = Deposits, Due to societies, O/s against Expenses and
Purchases, Sundry Creditors, Provisions. Current assets Current Ratio = ________________ Current
liabilities YEAR CURRENT ASSETS CURRENT LIABILITY RATIO (C.A/C.L) 2003-04 16102.2 6786 2.37 2004-
05 18596.49 8988.56 2.07 2005-06 18990.94 9460.79 2.12 2006-07 19874.21 12106.54 1.64 2007-08
28995.9 13892.41 2.09 2008-09 28874.39 17801.69 1.62 12 Current Ratio 0 0.5 1 1.5 2 2.5 2003-04
2004-05 2005-06 2006-07 2007-08 2008-09 INTERPRETATION The ideal Current Ratio of any firm is 2:1.
In AMUL first three year the ratio is more than 2, it indicates good financial ability of the sector. But
after that the ratio is declining because of the increase in Current Liability. It indicates that day by day
the amounts of creditors are increasing which is not good for the sector. 13 QUICK RATIO Quick ratio is
also called acid test ratio. It is the ratio between quick current assets and current liabilities. It is
calculated by dividing the quick assets by current claim. Quick ratio is the measurement of firm’s ability
to convert its current assets quickly into cash in order to meet its current claim. The term quick assets
refers to current assets which can be converted into cash immediately or at a short notice without
reduction in value of quick ratio. Quick Assets = Stock, due from societies, Advances, trade and Sundry
Debtors Cash and Bank Balance Quick assets Quick Ratio = ______________ Current liabilities YEAR
QUICK ASSETS CURRENT LIABILITY RATIO (Q.A/C.L) 2003-04 11365.37 6786 1.67 2004-05 10686.31
8988.56 1.19 2005-06 9078.21 9460.79 0.96 2006-07 10533.65 12106.54 0.87 2007-08 13258.02
13892.41 0.95 2008-09 9433.42 17801.69 0.53 14 Quick Ratio 1.67 1.19 0.96 0.87 0.95 0.53 0 0.2 0.4 0.6
0.8 1 1.2 1.4 1.6 1.8 Quick Ratio 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 YEAR TIMES
INTERPRETATION The ideal Quick Ratio is 1:1. In AMUL the Quick Ratio is more than 1 in 2003-04 and
2004-05. But than after it started declining and reached below 1 for the next four years. The reason is
continuous increase in the current liability. 15 LEVERAGE RATIO In the short term creditors like bankers
and suppliers of raw material; are more concerned with firm’s current debt-paying ability, on the other
hand, long-term creditors like debenture holders, financial institution are more concerned with the
firm’s long term financial strength In fact a firm should have short as well as long term financial position.
To judge the longterm financial position of the firm’s financial leverage or capital structure ratios are
calculated. These ratios indicate funds provided by owners and lenders. As a general rule, there should
be an appropriate mix of debt and owner’s equity in financing the firm’s assets. STOCK TURNOVER
RATIO This ratio indicates the efficiency of the firm in selling its product. It is calculated by dividing the
cost of good sold by average inventory. Average Stock Inventory turnover = ___________________ ×
300 Cost of Goods Sold Cost of good sold = Opening stock + Purchase of Milk + Purchase of Raw Material
+ Purchase expenses – Closing stock Opening Stock + Closing Stock Average Inventory =
____________________________ 16 2 YEAR AVGERAGE STOCK COST OF GOODS SOLD RATIO
(A.S./C.O.G.S)*300 2003-04 4493.49 43660.28 31 days 2004-05 4900.41 47221.13 31 days 2005-06 7199
56259.48 38 days 2006-07 7471.21 65762.20 34 days 2007-08 10214.83 88181.97 35 days 2008-09
Inventory Turnover 0 10 20 30 40 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Year Days
INTERPRETATION From the above ratio we can say that AMUL is turning its inventory of finished good
into sales in 31 days in 2003-04 and 2004-05, 38 days in 2005-06, 34 days and 35 days in 2006-07 and
2007-08 respectively. It is good for any co-operative sector. 17 DEBTORS TURNOVER RATIO A firm sells
goods for cash and credit is used as a marketing tool by a number of companies. When the firm extends
credit to its customer. Book debts (debtors or receivables) are created in the firm’s accounts. Book debts
are expected to be converting into cash over a short period and, therefore are included in current
assets. The liquidity position of the firm depends on the quality of debtors to a great extent. Financial
analyses apply three ratios to judge the quality or liquidity debtors: (a) debtor turnover (b) Collection
period and (c) again schedule of debtors. Debtor’s turnover Ratio can be found out dividing Average
Debtors by Sales Sales = Net Sales of Milk and Milk products Debtors = Trade Debtors, Sundry debtors,
Debtors Debtors Turnover Ratio = ________ × 300 Sales YEAR AVGERAGE DEBTORS SALES RATIO
(A.D./SALES)*300 2003-04 6690.15 54088.29 37 days 2004-05 6797.52 59459.07 34 days 2005-06
7679.62 70206.23 33 days 2006-07 6759.25 81631.69 25 days 2007-08 7625.77 107187.29 21 days
2008-09 137212.35 18 Debtors Turnover Ratio 0 10 20 30 40 2003-04 2004-05 2005-06 2006-07 2007-08
2008-09 Year Days INTERPRETATION From the above ratios we can say that AMUL’S Debtors remain
outstanding for 37 days in 2003-04, 34 days in 2004-05, 33 days, 25 days, 21 days in 2005-06, 2006-07
and 2007-08 respectively. The Collection period of Debtors is decreasing day by day. It is good sign for
AMUL. 19 CREDITOR TURNOVER RATIO Creditor turnover ratio is computed by net credit purchases to
average creditors. Creditors = Outstanding against Purchases + Societies + Outstanding against Expenses
+ Sundry Creditors Creditor Turnover Ratio = _ Average Creditors × 300 Net Purchase YEAR AVGERAGE
CREDITORS NET PURCHASE RATIO (A.C. /N.P.)*300 2003-04 5930.37 41188.59 43 days 2004-05 7098.06
49931.03 43 days 2005-06 8095.97 57374.94 42 days 2006-07 9798.1 64034.16 46 days 2007-08
12312.25 93690.87 39 days 2008-09 20 Creditors Turnover Ratio 35 40 45 50 2003-04 2004-05 2005-06
2006-07 2007-08 2008-09 Year Days INTERPRETATION From the above we can say that the payment of
Creditors is outstanding by AMUL. 43 days in 2003-04 and 2004-05, 42 days, 46 days, 39 days in 2005-
06, 2006-07 and 2007-08 respectively. The payment period to Creditor remain same in every year. It is
good for AMUL. 21 FIXED ASSETS TURNOVER RATIO Firm may wish to know its efficiency of utilizing
fixed assets separately for AMUL the fixed assets turnover ratio is Sales Fixed Assets Turnover =
__________________ Net Fixed Assets YEAR SALES NET FIXED ASSETS RATIO (Sales/N.F.A) 2003-04
54088.29 9588.26 5.64 2004-05 59459.07 6107.85 9.73 2005-06 70206.23 4968.66 14.13 2006-07
81631.69 5371.69 15.20 2007-08 107187.29 6122.97 17.51 2008-09 137212.35 Fixed Asset Turnover
Ratio 0 5 10 15 20 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Series1 INTERPRETATION From
the above ratio we can say that in AMUL Fixed Assets is recovered in 5.64 times in 2003-04, 9.73 times in
2004-05, 14.13 times, 15.2 times, 17.51 times in 2005-06, 2006-07 and 2007-08 respectively. We can say
that the total Fixed Assets Turnover is increasing day by day. It is good sign for AMUL. 22 WORKING
CAPITAL TURNOVER RATIO A firm may also like to relate net working capital to sales. It may thus
computer net working capital turnover by dividing sales by net working capital turnover for Amul the
ratio is Sales Net Current assets Turnover = _______________ Working Capital YEAR SALES WORKING
CAPITAL RATIO (Sales/W.C.) 2003-04 54088.29 9320.2 5.80 2004-05 59459.07 9607.93 6.18 2005-06
70206.23 9530.15 7.37 2006-07 81631.69 7767.67 10.51 2007-08 107187.29 5033.89 21.42 2008-09
137212.35 23 N et C u rren t Asset T u rn o ver 0 5 10 15 20 25 2003-04 2004-05 2005-06 2006-07 2007-
08 2008-09 S eries 1 INTERPRETATION From the above we can say that AMUL is able to recover its
Working Capital 5.8 times in 2003-04, 6.18 times in 2004-05, 7.37 times in 2005-06, 10.51 times 2006-07
and 21.42 times in 2007-08. Working Capital Turnover is also increasing day by day. It is good and from it
AMUL can generate more and more sales. 24 TOTAL ASSETS TURNOVER RATIO Total Assets Turnover
Ratio shows the firms ability in generating sales from all financial sources committed to total assets thus
Sales Total Assets Turnover = _____________ Total Assets Total assets (TA) include Net fixed assets
(NFA) and Current Assets (CA) for Amul the ratio is YEAR SALES TOTAL ASSETS RATIO (Sales/T.A.) 2003-
04 54088.29 26326.08 2.05 2004-05 59459.07 25277.94 2.35 2005-06 70206.23 24595.17 2.85 2006-07
81631.69 25761.82 3.17 2007-08 107187.29 35864.51 2.99 2008-09 137212.35 25 Total Asset Turnover
0 1 2 3 4 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 INTERPRETATION From the above data we
can say that in AMUL Total Asset Turnover is recovered 2.05 times in 2003-04, 2.35 times in 2004-05,
2.85 times, 3.17 times, 2.99 times in 2005-06, 2006-07 and 2007-08 respectively. Till 2007- 08 the Total
Asset Turnover Ratio is increasing because the total asset is quiet same in every year. But in 2007-08 the
Total Assets is increasing by 40% from 2006-07. So the turnover ratio is declining in that year. 26 NET
ASSETS TURNOVERS The firm can compute net assets turnover simply by dividing sales by net assets
(NA) net assets turnover may also called capital employed turnover for Amul the ratio is Net Assets =
Net Fixed Asset + Current Asset after deducting Current Liability Net assets turnover = Sales Net Assets
YEAR SALES NET ASSETS RATIO (Sales/N.A.) 2003-04 54088.29 18908.46 2.86 2004-05 59459.07 9607.93
6.18 2005-06 70206.23 14498.81 4.84 2006-07 81631.69 13139.36 6.21 2007-08 107187.29 11126.86
9.63 27 Net Asset Turnover 0 5 10 15 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
INTERPRETATION From the above data we can say that Assets Turnover in AMUL during 2003-04 is 2.86
times, 6.15 times in 2004-05, 4.84 in 2005-06, 6.21 times in 2006-07 and 9.63 times in 2007-08
respectively. The Net Asset Turnover is increasing day by day. But the total Current Liability is also
increasing and it is directly affected to Net Asset Turnover. If the Current Liability is decreased than the
Net Asset can be Turnover by more than this ratio. 28 PROFITABILITY RATIOS A company should earn
profit to survive and grow over a long period of time. Profit are essential but it would be wrong to
assume that every action initiated by management of a company should be aimed at maximizing profits
irrespective of social consequences and profit is looked upon as a term of above since some firms always
want to maximize profits at due cost of employees, customers, and society. Except such infrequent
cases, it is fact profit must be earned to sustain the operation of the business to be able to obtain funds
from investor for expansion and growth and to contribute towards the social overhead for the welfare
of society. Profit is the difference between revenues and expenses over a period of time. Profit is the
ultimate output of the company; and it will have no future if it fails to make sufficient profits. There fore
financial manager should continuously evaluate the efficiency of its company in term of profits.
Generally two types of profitability ratios are calculated. Profitability in relation to sales Profitability in
relation to investment Measures of Profit Profit can be measured in various ways 1) Gross Profit (2) Net
Profit 29 GROSS PROFIT TO SALES RATIO Gross profit ratio is calculated by dividing Gross Profit by sales.
Here gross profit is the different between sales and the manufacturing cost of good sold. Sales – Cost of
Good sold Gross profit margin = ______________________ × 100 Sales YEAR GROSS PROFIT SALES
RATIO (G.P./Sales)*100 2003-04 10428.01 54088.29 19.27 2004-05 12235.94 59459.07 20.58 2005-06
13946.75 70206.23 19.87 2006-07 15869.49 81631.69 19.44 2007-08 19005.32 107187.29 17.73 2008-
09 137212.35 Gross Profit Ratio 16 17 18 19 20 21 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
INTERPRETATION From the above ratio we can say that Gross Profit Ratio in 2003-04 is 19.27%, 20.58%
in 2004-05 20.58%, 19.87% in 2005-06, 19.44% in 2006- 07 and 17.73% in 2007-08 respectively. The
total amount of Gross Profit is increasing every year. But the ratio is decreasing; the main reason is
increase in the Purchase Price Milk and Raw Material. 30 NET PROFIT RATIO Net Profit is obtained when
operating expenses; interest and taxes are subtracted from gross-profit. The net profit margin ratio is
measured by dividing profit after tax by sales. Net profit Net profit margin = __________ × 100 Sales
YEAR NET PROFIT SALES RATIO (N.P./Sales) 2003-04 252.46 54088.29 0.46 2004-05 311.23 59459.07
0.52 2005-06 323.74 70206.23 0.46 2006-07 411.50 81631.69 0.50 2007-08 451.51 107187.29 0.42
2008-09 575.53 137212.35 0.42 Net Profit Ratio 0 0.2 0.4 0.6 2003-04 2004-05 2005-06 2006-07 2007-08
2008-09 INTERPRETATION From the above figure we can say that the percentage of Net Profit is 0.46%
in 2003-04 and 2005-06. In 2004-05 it is 0.52%, 0.50% in 2006-07 and 0.42% in 2007-08 respectively. The
total amount of sales is increased every year but at the other side total operating expenses is also
increased day by day. So it directly affect to Net Profit Ratio of AMUL. OPERATING EXPENSES RATIO 31
Operating Expenses ratio is found out by dividing operating cost by sales. Operating Cost = Total Cost –
Interest – Provision – Closing Stock Operating Cost Operating Cost Ratio = __________ × 100 Sales YEAR
OPERATING COST SALES RATIO (O.C./Sales) 2003-04 53422.7 54088.29 98 2004-05 58785.45 59459.07
98 2005-06 69636.1 70206.23 99 2006-07 80627.15 81631.69 98 2007-08 106956.62 107187.29 99
2008-09 137212.35 32 Operating Cost Ratio 97.5 98 98.5 99 99.5 2003-04 2004-05 2005-06 2006-07
2007-08 2008-09 INTERPRETATION From the above data we can say that Operating Expense remains
same during the 2003-04, 2004-05, 2006-07 i.e.98 %. In 2005-06 and 2007-08 it was 99%. The Operating
Expenses of AMUL is increasing out of 1 Rs of sales 98 and 99 paisa is consumed in operating Expenses.
The main reason is increase in Marketing, Packaging, and Processing Expenses and the price of Raw
Material and Milk. RETURN ON CAPITAL EMPLOYEED 33 Return on Capital Employed Ratio is found out
by dividing Net Profit by Capital Employed Capital Employed = Total Assets – Misc. Expenses – Current
Liability Net profit Return on Capital Employed = __________ × 100 Capital Employed YEAR NET PROFIT
CAPITAL EMPLOYED RATIO (N.P./C.E.) 2003-04 252.46 19540.09 1.29 2004-05 311.23 16289.38 1.91
2005-06 323.74 15063.48 2.15 2006-07 411.50 13572.19 3.03 2007-08 451.51 11767.44 3.84 2008-09
575.53 Return On Capital Employed 0 1 2 3 4 5 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 34
INTERPRETATION From the above data we can say that Return on Capital Employed during 2003-04 is
1.29%. It was 1.91% in 2004-05, 2.15% in 2005-06, 3.03% in 2006-07 and 3.84% in 2007-08 respectively.
Return on Capital Employed is increasing day by day. The recover Ratio of Capital Employed in the
business is increasing it is good sign for AMUL. RETURN ON SHAREHOLDER FUND 35 Return on
Shareholder Fund Ratio is found out by dividing Net Profit by Shareholders Fund. Shareholders Fund =
Equity Share Capital + Reserve and Surplus – Misc. Expenses Net profit Return on Shareholders Fund =
__________ × 100 Shareholders Fund YEAR NET PROFIT SHAREHOLDER S FUND RATIO (N.P. /S.F.) 2003-
04 252.46 3201.91 7.88 2004-05 311.23 3452.65 9.01 2005-06 323.74 3683.51 8.78 2006-07 411.50
4138.50 9.94 2007-08 451.51 4486.30 10.06 2008-09 575.53 Return On Shareholder Fund 0 5 10 15
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 INTERPRETATION 36 From the above ratio we can
say that the Return on Shareholder Fund is 7.88% in 2003-04, 9.01% in 2004-05, 8.78% in 2005-06,
9.94% in 2006-07, and 10.06% in 2007-08 respectively. The Return on Shareholders Fund is increasing
every year. So it is good sign that the recover ratio of amount invested is increasing. EARNING PER
SHARE 37 The profitability of the common shareholders investment can also be measured in many other
ways on such measure is to calculate the earning per share. The earning per share is calculated by
dividing the profit after taxes by the total number of common (ordinary) shares outstanding. EPS
calculation made over years indicate whether or net the firms earning power on per-share basis has
changed over that period. Earning per share of the company should be compared with the industry
average and the earning per share of other firms. Earning per share simply shows the profitability of the
firm on per share basis. Net Profit Earning per share = __________________________________ Number
of common shares outstanding YEAR NET PROFIT NO. OF SHARES O/S RATIO (N.P. /Share) 2003-04
252.46 12.13 20.81 2004-05 311.23 13.95 22.31 2005-06 323.74 15.97 20.25 2006-07 411.50 19.80
20.78 2007-08 451.51 22.29 20.26 2008-09 575.53 38 Earnings Per Share 19 20 21 22 23 2003-04 2004-
05 2005-06 2006-07 2007-08 2008-09 INTERPRETATION From the above data we can say that Earning
per Share is 20.81Rs in 2003- 04, 22.31 Rs in 2004-05, 20.25 Rs in 2005-06, 20.78 Rs in 2006-07 and
20.26 Rs in 2007-08. Earning per Share ratio is comparatively better for AMUL. The shares of AMUL are
distributed only to the Societies, so the main earning is distributed to its Societies. DIVIDEND PAYOUT
RATIO 39 Dividend payout ratio is known as a payout ratio. It measures the relationship between the
earning belonging to the ordinary shareholders and the dividend paid to them. In other words, the D/P
ratio shows what percentage share the net profit after taxes and preference dividend is paid out as a
dividend to the equity holders. It can be calculated by dividing the total dividend paid to owners by the
total profits/earnings available to them. Alternatively it can be found out by dividing the DPS by the EPS.
The rate of dividend per ordinary share = 15 % Amt. provided for Dividend (1) Dividend =
________________ × 100 Earning per share Dividend per share (1) Dividend payout ratio =
________________ × 100 Earning per share 40 YEAR DIVIDENED EARNING PER SHARE RATIO (Div./E.P.S)
2003-04 14.53 20.81 69.82 2004-05 14.53 22.31 64.95 2005-06 14.60 20.25 72.10 2006-07 14.50 20.78
69.78 2007-08 14.60 20.26 72.06 2008-09 Divideend Payout Ratio 60 65 70 75 2003-04 2004-05 2005-06
2006-07 2007-08 2008-09 INTERPRETATION From the above ratio we can say that Dividend Pay Out
Ratio is 69.82% in 2003-04, 64.95% in 2004-05, 72.10% in 2005-06, 69.78% in 2006-07 and 72.06 in
2007-08. From the Total Earning per Share averagely 70% amount is distributed to the Shareholders. 41
CAPITAL STRUCTURE RATIO In this type of Ratio the comparison made for Capital Structure. In this Ratio
the proportion is to be found out between different types of long term capital. In this type of ratios we
can find out following type of ratios Debt Equity Ratio Proprietary Ratio DEBT – EQUITY RATIO Debt-
Equity Ratio Compute by dividing Total Debt to Net Worth. Total Debt = Debentures + Deposits + Long
Term Loans Net Worth = Equity Share Capital + Reserve & Surplus Total Debt Debt-Equity Ratio =
____________ Net Worth YEAR TOTAL DEBT NET WORTH RATIO (T.D./N.W) 2003-04 10840.16 3201.91
3.38 2004-05 10363.16 3452.65 3.00 2005-06 9216.63 3754.41 2.45 2006-07 7363.71 4221.59 1.74
2007-08 5874.95 4591.36 1.28 2008-09 42 Debt-Equity Ratio 0 1 2 3 4 2003-04 2004-05 2005-06 2006-
07 2007-08 2008-09 INTERPRETATION From the above ratio it is clear that Debt-Equity Ratio in 2003-04
is 3.38 times. It was 3.0 times in 2004-05, 2.45 times in 2005-06, 1.74 times in 2006-07 and 1.28 times in
2007-08. The ideal Debt-Equity Ratio is 2:1, in AMUL 2003-04, 2004-05 and 2005-06 the Ratio is more
than 2, because of the higher amount of Long Term Debt but than after it is declining, so it shows that
Total Long Term Debt is decreasing. It is good sign for AMUL. PROPRIETARY RATIO 43 Proprietary Ratio is
found out by dividing Proprietary Fund by Total Assets. Proprietary Fund = Equity Share Capital +
Reserve and Surplus Proprietary fund Proprietary Ratio = ____________ Total Assets YEAR PROPRIETARY
FUND TOTAL ASSETS RATIO (Sales/T.A.) 2003-04 3201.01 26326.08 12.16 2004-05 3452.65 25277.94
13.66 2005-06 3754.41 24595.17 15.26 2006-07 4221.59 25761.82 16.39 2007-08 4591.36 35864.51
12.80 2008-09 Proprietary Ratio 0 5 10 15 20 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
INTERPRETATION From the above ratio it is clear that Proprietary Ratio for the year 2003-04 is 12.16%.
In 2004-05 it is 13.66%, in 2005-06 it is 15.26%, in 2006-07 it is 16.39% and in 2007-08 it is 12.8%. Out of
total Assets the above percentage is invested by Proprietor and it is not better but we can say it is good
for any Co-Operative Society. OTHER RATIOS 44 In this Ratio we find following types of Ratio Debt
Ratio Debtors – Asset Ratio DEBT RATIO: This Ratio can be found out by dividing Total Debt by Net
Asset. Debt = Loans + Debentures + Fixed Deposit Net Asset = Total Assets – Current Liability Total Debt
Debt Ratio = ____________ × 100 Net Assets YEAR TOTAL DEBT NET ASSETS RATIO (Debt./N.A.*100)
2003-04 10840.16 19540.09 55.48 2004-05 11363.16 16289.38 69.75 2005-06 9716.63 15063.48 64.50
2006-07 7363.71 13572.19 54.25 2007-08 15374.95 107187.29 70.32 2008-09 137212.35 45 Debt Ratio
0 20 40 60 80 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 INTERPRETATION From the above
ratio we can say that Debt Ratio in 2003-04 is 55.48%. It was 69.75% in 2004-05, 64.5% in 2005-06,
54.25% in 2006-07 and 130.65% in 2007-08. It is comparatively good, except 2007-08. TOTAL LIABILITY
TO ASSET RATIO 46 This Ratio can be found out by dividing Total Liability by Total Asset Total Liability =
Debentures + Loans + Fixed Deposit + Current Liability Total Liability Total Liability to Total Assets Ratio =
____________ × 100 Total Assets YEAR TOTAL LIABILITY TOTAL ASSETS RATIO (Sales/T.A.) 2003-04
17618.62 26326.08 67.00 2004-05 19296.36 25277.94 76.00 2005-06 18608.22 24595.17 76.00 2006-07
18796.43 25761.82 73.00 2007-08 28947.46 35864.51 81.00 2008-09 Total Liability to Total Asset Ratio 0
20 40 60 80 100 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 INTERPRETATION From the above
ratio we can say that Total Liability to Total Asset Ratio in 2003-04 is 67%. In 2004-05 and 2005-06 it is
76%, in 2006-07 it is 73% and in 2007-08 it is 81%. From the above ratio we interpret that in compare of
Total Assets. The percentage of Total Liability is comparatively less so it indicate good sign for AMUL.
CHALLENGES TO BE MET 47 Expansion upgrading of plant and equipment to met increasing demanded
for quality and quantity with the help of better-qualified personnel. Rapid increase in productivity while
respecting the basic man land animal dynamic that is control to dairy and agriculture development in
India Development of new markets and expansion of old ones replacing additional system with quality
packaged milk products and vegetable. Creating a national information network to ensure that
accurate timely information is available to all who need it. Rapid progress towards the highest qualify
standard strengthens institutions leaders, managers and members. CONCLUSION 48 Amul is a highly
successful co-operative sector in world. Which truly work for farmers, who are the members of union all
departments are working well and help the union to reach toward top position. I have list out some
recommendations they are follow. Amul has competitive established system. The four hands of Amul
are working successfully with corporation. The people of Amul are very cooperative and enthusiastic.
Amul is famous as “Anand pattern” for its cooperative organization in world. So it’s a matter proud for
people of Anand as well as India. Amul is really “The Taste of India”. By this summer internship report
anybody can get the overview of the condition of the financial statement and the organization’s past
and present situation. The ratio analysis shows the direction of the organization’s growth. According to
my point, success factor being Amul are hard work discipline, co-operative structure, production
technology development, and the proper method for paying the debt and collecting the payment. The
main cost for AMUL is transportation cost for collecting the milk from different villages. But now AMUL
have the chilling facilities to some big villages (milk collection centre). So that the milk is stored up to 2-3
days. Then AMUL collect the milk from there after 3 days. 49 BIBLIOGRAPHY (1) Company’s Annual
Reports (last 6 years) (2) www.Google.com (3) www.Amuldairy.com (4) Prasanna Chandra, Financial
Management Fourth Edition 50