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8/3/2019 Radha Madhav Corporation Ltd Final Paresh
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RATIO ANALYSIS AND WORKING CAPITAL
MANAGEMENT
RADHA MADHAV CORPORATION LTD.
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PROFILE
y RMCL can be divided into two areas; Primary Packaging
and Secondary Packaging. Primary Packaging is again
divided into Flexible division and Folded Carton division.
y Secondary packaging includes products like liners,
specialty the comfortable films, cartons and various profiles
for varied applications.
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Cont
y It is produce 23 product
y Product packaging plays a critical role in partnering the
pharmaceutical, food and healthcare industry's endeavor, to
deliver effective and safe OTC medicines, generic medicines,
prescription drugs and health or diet foods.
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DATACOLLECTION
Two Types Data Collection Methods
y
PrimaryD
ata
y Secondary Data
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FINANCIAL STATEMENTANALYSIS
There are three statements to watch:
y Income statement
y Balance sheet
y Statement of cash flows
Three major tools:
y Ratios
y Growth rates
y Working Capital
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FINANCIAL MANAGER ROLE
y In olden days the role of financial manager was only
limited to raising funds and maintaining the books of
accounts.
y But now the trend is changing. The financial manger has
wide scope in present scenario and he plays a vital role in
decision-making, costing, budgeting, and controlling
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ANALYSIS
y Discussion with the management of the company to get general
information about their activities.
y Study of the classification of items adopted in profit and loss
account and balance sheet and the accounting policies of the
concern.
y Study of the annual reports for collecting data of 5 years.
y Analysis of their adopting techniques and methods available.
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RATIOANALYSIS
y To understand the liquidity, profitability and efficiency
positions of the company during the study period.
y Accounting ratios are very useful in assessing the financial
position and profitability of a business enterprise.
y For inter departmental comparisons within an organization
y To evaluate the performance of the company by using ratios
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RATIOANALYSIS
Particular 2009-10 2008-09 2007-08 2006-07 2005-06
Current ratio 2.21 3.74 5.77 8.07 14.84
Quick ratio 1.17 1.94 3.39 5.9 11.03
Total debt/equity 1.68 1.12 0.78 1.19 0.71
Long term assets / total
Assets 0.58 0.57 0.54 0.4 0.37
Inventory turnover ratio 2.57 2.56 3.46 4.23 4.91
Gross profit margin -18.04 8.06 18.28 14.07 10.05
Net profit margin -31.32 0.28 9.95 7.71 7.42
Operating margin -9.43 13.36 20.95 15.48 11.07
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WORKING CAPITAL
y Working capital management involves the relationship
between a firm's short-term assets and its short-term
liabilities.
Objective
y Proper balance between current assets and current liability
y Maintenance of working capital at appropriate level
y Find increase level of investment in current assets
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OPERATING CYCLE
CASH
RAW
MATERIAL
WORK IN
PROGRESS
FINISHED
GOODS
RECIEVABLES
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COMPONENT OF WORKING
CAPITAL
There are two component of working capital.
yCurrent asset
yCurrent liability
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CONCLUSION
y It also provides valuable interpretation separately for each ratio
that helps the organization in implementing the findings that
would help the organization to increase its efficiency.
y Working capital management is an important aspect of any
business. Every business concern should have adequate working
capital to run its business operation.
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