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Radha Madhav Corporation Ltd Final Paresh

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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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