DEPARTMENT OF BUSINESS ADMINISTRATION

ABES ENGINEERING COLLEGE, Ghaziabad

SUMMER TRAINING PROJECT REPORT ON

“A STUDY OF FINANCIAL RATIO ANALYSIS AT

NATH BROTHERS EXIM INERNATIONAL LTD., NOIDA”

Submitted as partial fulfillment for the award of MASTER OF BUSINESS ADMINISTRATION DEGREE

Session 2015-16Presented By:Anchal Goel1403270012

UNDER THE GUIDANCE OF:

DR. ACHLA TYAGI

NBI is one of the Leading and Oldest Export Companies in the Textile Sector. Well known in the Export trade and well respected.

Public Company incorporated on 06 May 1971.

Classified as Indian Non-Government Company and is registered at Registrar of Companies, Delhi.

Authorized share capital is Rs. 1,000,000 and its paid up capital is Rs. 7,50,000.

Directors are VISHWA NATH ANJALA NATH, POONAM NATH,

VIDUR NATH, DEEPIKA NATH. Products : Bedding, Curtain, Cushion,

Garments, Fashion accessories, Handbags, Belts, Scarf/Stole/Shawls.

Some of the Current Clients: Whistles, Oasis, Debenhams, Abercrombie and Fitch, Homeless, Cortefier, Ted baker, River Island etc.

Liquidity ratio

Leverage ratio

Activity ratio

Profitability ratio

Financial Ratio Analysis

For evaluating the financial position and performance of a firm. The relationship between two accounting Figures, expressed mathematically, is known as a financial ratio. Ratios help to summaries large quantities of financial data and to make qualitative judgment about the firm’s financial performance.

NEED OF THE STUDY The study has great significance and provides benefits to

various parties whom directly or indirectly interact with the company.

It is beneficial to management of the company by providing crystal clear picture regarding important aspects like liquidity , leverage , activity and profitability.

The study is also beneficial to employees and offers motivation by showing how actively they are contributing for company’s growth.

The investors who are interested in investing in the company’s shares will also get benefited by going through the study and can easily take a decision whether to invest or not to invest in the company’s shares.

SCOPE OF THE STUDY Understanding and interpreting key financial statement ratios. Interpreting financial information from different

stakeholders ,perspectives such as management, shareholders , investors , borrowers , lenders, employees and regulators.

Detecting earnings manipulation using financial statements and notes to the accounts.

Recognizing potential warning signals from financial statements.

Obtain a good understanding on how to interpret financial statement such as income statement , balance sheet and cash flow statement.

OBJECTIVE OF THE STUDY The major objectives of the resent study are to know about financial

strengths and weakness of Nath Brothers Exim International limited through Financial Ratio analysis.

Main objectives are- To evaluate the financial as well as the profitability position of Nath

Brothers Exim International limited by using ratios as a yardstick to measure the efficiency of the company.

To analyze the financial statements of Nath Brothers Exim Internationational Limited with the help of ratio analysis & also to make comparisons between the ratios during different periods.

To analyze the capital structure of the company with the help of Leverage ratio.

To know whether the financial ratios of Nath Brothers Exim International limited are ideal or not, which is the sign of a healthy business enterprise.

To know whether the company is able to meet its current obligation or not.

RESEARCH METHODOLOGYRESEARCH :According to Redman and Mory : “ Research is systematized effort to gain new

knowledge”.

RESEARCH DESIGN: A detailed outline of how an investigation will take place. A research design will

typically include how data is to be collected, what  instruments  will be employed, how the instruments will be used and the intended means for analyzing data collected.

The research design which, I adopted in this project is Descriptive research design. Descriptive research cannot be used to as the basis of a casual relationship,

where one variable affects another. The description is used for frequency, average and other statistical calculations.

DATA COLLECTION TOOL: Secondary Data: Sources of secondary data were primarily the Internet , Journals ,

Company Annual Report, Company Internal Data ,Catalogues , Plant Visit and Personal Discussion and Interaction with staff members .

LIMITATION OF THE STUDY The study is limited i.e. analyzing 3 years (2011-2014)

performance of the company. The data used in this study largerly depends upon

published annual report only. Future plans of the company will not be disclosed us. Less response by some of the staff members. Problems in collection of the data of past years which is

maintained by the headquarter . Time constraints: 6-weeks span is short to imply the ratio

analyses

DATA ANALYSIS AND INTERPRETATIONWORKING NOTE

FORMULA 2011-12 2012-13 2013-14

Current Assets 152,748,055.26 155,845,466.77 143,151,795.92

Current Liab 74,602,518.93 67,055,141.90 83,103,383.42

Quick Asset CA-INVENTORY 145,034,295.26 143,763,578.77 131,806,655.92

Cash+cash equivalents+invested funds

Cash+cash equivalents+invested funds 48,900,203.94 74,010,158.17 48,117,072.74

Capital 750,000.00 750,000.00 750,000.00

Shareholder’s fundsSHARE

CAPITAL+RESERVES& SURPLUSE

169,340,778.90 176,359,406.30 183,722,021.81

Debt SHORT TERM + LONG TERM LOAN 41,474,624.31 40,863,127.10 47,743,980.35

Total Assests 247,323,938.57 247,163,732.05 270,266,001.75

Equity 169,340,778.90 176,359,406.30 183,722,021.81

Cost of good sold MATERIAL CONSUMED + D. EXP 111,754,897.14 80,828,046.81 115,167,333.28

Avg. Inventory OP INVENTORY /2+ CL. INVENTORY / 2 10,911,345.00 9,897,824.00 11,713,514.00

Inventory 7,713,760.00 12,081,888.00 11,345,140.00

Sales 225,221,851.00 173,228,588.00 225,315,449.00

Working Capital 78,145,536.33 88,790,324.87 60,048,412.50

Net Fixed Assets 53,903,842.95 51,888,316.95 58,119,055.95

Capital Employed TOTAL ASSETS- CURRENT LIABILITY 172,721,419.64 180,108,590.15 187,162,618.33

Fixed Assets 53,979,366.95 51,933,630.95 58,149,822.95

Net Credit sales Assumption :-sales= net cr. Sale 225,221,851.00 173,228,588.00 225,315,449.00

Purchases 74,087,814.74 58,314,192.68 76,966,358.74

Gross Profit SALES- COGS 113,466,953.86 92,400,541.19 110,148,115.72

Net profit 22,599,934.98 9,842,191.40 9,453,321.51

Operating profit REVENUE-COGS-GENERAL & ADMIN EXP 82,739,369.25 62,345,549.47 70,418,522.07

Operating cost COGS+ADMIN EXP+SELLING EXP 142,482,481.75 110,883,038.53 154,896,926.93

EAIT 18,361,434.98 7,018,627.40 7,362,615.51

Number of equity shares 75,000.00 75,000.00 75,000.00

Reserves& surplus 168,590,778.90 175,609,406.30 182,972,021.81

Market Price per Share 10.00 10.00 10.00

Earnings per Share 244.82 93.58 98.17

Avg. creditors OP.+ CL. CREDITORS /2 7,676,493.57 7,127,304.58

Average Trade Debtors 48,771,070.50 54,830,947.00 39,227,694.75

Debtor 74,126,619.00 35,535,275.00 42,920,114.50

Creditors 11,084,366.94 3,170,242.22 3,915,067.15

CONCLUSION On seeing the leverage position of the Nath Brothers Exim

Inernational Limited, I conclude that it is very good as the stake of owners in company is continuously increasing and its long-term debt continuously decreasing it means that company is paying its debt promptly and creditors will not face any risk in investing in Nath Brothers Exim Inernational Limited as Nath Brothers Exim Inernational Limited is giving assured ROI.

On seeing turnover, fixed assets and current assets turnover of company goes on increasing which is a good indicator as it brings commensurate gain and also the average collection goes on decreasing but management should take more efficient steps to reduce it.

On seeing the profitability of the Nath Brothers Exim Inernational Limited overall performance is very good. investors feel safe to invest money in Nath Brothers Exim Inernational Limited

RECOMMENDATIONI have obtained some weak and strong points of the company during the

analysis of financial statements, which are as follows: As just only the analysis financial statement is not only mean to reach

at conclusions we cannot substitute it for sound judgment. Furthermore good judgment depends upon the intelligence and ability of the analyst.

On seeing the liquidity position of Nath Brothers Exim Inernational Limited. I conclude that it is not very good as the current assets are in the form of inventories and debtors. The debt collection period is high and inventories are least liquid current assets. So maintaining the inventories are relatively costly affair for the company and the management must have to investigate properly. It is very necessary so that fund should not be blocked unreasonably. Efficient inventory management is required in Nath Brothers Exim Inernational Limited .