Britania Industries Limited Financial Statement Analysis with the help of Ratio Analysis. Calculated Turnover Ratio, Activity Ratio, Profitability Ratio

1. A Study on Financial Performance using Ratio Analysis of
Britannia Industries Limited
A Dissertation Report
Submitted in partial fulfilment of the requirement
for the award of the degree of Second Semester
Master of Business Administration
in Business Economics
Submitted by
Uday Kiran Sahu
(Reg. No 19421BEM046)
Under the Guidance of
Priyabrata Sahoo
Assistant Professor
Department of Economics
Faculty of Social Science
Banaras Hindu University
Varanasi 221005
Academic Year 2019-2020

2. DECLARATION
I hereby declare that the Project Report entitled A STUDY ON RATIO ANALYSIS
AT “BRITANNIA INDUSTRIES LIMITED” is a record of independent research work
submitted by me to Banaras Hindu University, Varanasi, Uttar Pradesh for developing
the real time experience as well as award the degree of Master of Business
Administration in Business Economics and has been carried out during the period of
my study at Banaras Hindu University, Varanasi Under the guidance of PRIYABRATA
SAHOO, Department of Economics. Faculty of Social Science, BHU.
Uday Kiran Sahu
19421BEM046
30.09.2020
Place: Vanarasi

3. BONAFIDE CERTIFICATE
Certified that this project report titled “A STUDY ON RATIO ANALYSIS of
BRITANNIA INDUSTRIES LIMITED” is the bonafide work of Uday Kiran Sahu who
carried out the research under my supervision.
Certified further, that to the best of my knowledge the work reported here in
does not form part of any other Project report or dissertation on the basis of which a
degree or award was conferred on an earlier occasion on this or any other
candidate.
Signature of the Supervisor Signature of the HOD
(Priyabrata Sahoo)

4. ACKNOWLEDGEMENT
Dissertation is the combination of ideas, suggestions, contributions and work
involving many people. So, I begin this report by acknowledging the guidance and
support of all those who encouraged and helped me in completing this task. I hereby
take the opportunity to express my sincere reference and gratitude to all of them. I
have immense pleasure to acknowledge my sincere gratitude towards my learned and
dynamic guide, Dr. Priyabrata Sahoo, Assistant Professor, Department of Economics,
BHU, Varanasi Who has been the constant source of inspiration during the course of
this study. His wisdom, vision, diligence and sincerity not only gave a direction to this
study but also imparted the research skills. I am thankful to Dr. Priyabrata Sahoo for
his expert advice and inspiration from time to time which helped me to concentrate
more on our dissertation work and execute it on time. I am obliged to all the faculty
members of Department of Economics for their constant inspiration and
encouragement.
I am always in debited to my parents for their endless support being it a moral,
financial or emotional, which enabled me to reach at this level of knowledge.
I am grateful to all those who directly or indirectly helped me in completing this
dissertation. I have freely drawn ideas from the writings of eminent scholars and
authors. I am grateful to all of them.

5. Introduction
THEORETICAL BACKGROUND:
FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and weakness
of the firm. It is done by establishing relationships between the items of financial
statements viz., balance sheet and profit and loss account. Financial analysis can be
undertaken by management of the firm, viz., owners, creditors, investors and others.
Objectives of the Financial Analysis
Analysis of financial statements may be made for a particular purpose in view.
1. To find out the financial stability and soundness of the business enterprise.
2. To assess and evaluate the earning capacity of the business
3. To estimate and evaluate the fixed assets, stock etc., of the concern.
4. To estimate and determine the possibilities of future growth of business.
5. To assess and evaluate the firm’s capacity and ability to repay short term and
long term loans.
Parties Interested in Financial Analysis
The users of financial analysis can be divided into two broad groups.
Internal users
1. Financial executives
2. Top management
External users
1. Investors
2. Creditor.
3. Workers
4. Customers
5. Government
6. Public
7. Researchers
Significance of Financial Analysis - Financial analysis serves the following purpose.
To Know the Operational Efficiency of the Business: The financial analysis
enables the management to find out the overall efficiency of the firm. This will enable
the management to locate the weak Spots of the business and take necessary
remedial action.

6. Helpful in Measuring the Solvency of The Firm: The financial analysis helps the
decision makers in taking appropriate decisions for strengthening the short-term as
well as long-term solvency of the firm.
Comparison of Past and Present Results: Financial statements of the previous
years can be compared and the trend regarding various expenses, purchases, sales,
gross profit and net profit can be ascertained.
Helps in Measuring the Profitability: Financial statements show the gross profit, &
net profit.
Inter‐firm Comparison: The financial analysis makes it easy to make inter-firm
comparison. This comparison can also be made for various time periods.
Bankruptcy and Failure: Financial statement analysis is significant tool in predicting
the bankruptcy and the failure of the business enterprise. Financial statement analysis
accomplishes this through the evaluation of the solvency position.
Helps in Forecasting: The financial analysis will help in assessing future
development by making forecasts and preparing budgets.
METHODS OF ANALYSIS:
A financial analyst can adopt the following tools for analysis of the financial statements.
These are also termed as methods of financial analysis.
a. Comparative statement analysis
b. Common-size statement analysis
c. Trend analysis
d. Funds flow analysis
e. Ratio analysis
ABOUT RATIO ANALYSIS
The ratio analysis is the most powerful tool of financial analysis. Several ratios
calculated from the accounting data can be grouped into various classes according to
financial activity or function to be evaluated.
DEFINITION:
The indicate quotient of two mathematical expressions “and as’’ The relationship
between two or more things. “It evaluates the financial position and performance of
the firm. As started in the beginning many diverse groups of people are interested in
analysing financial information to indicate the operating and financial efficiency and
growth of firm. These people use ratios to determine those financial characteristics of
firm in which they interested 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 the firm is utilizing its assets in generating the sales
revenue.
• The overall operating efficiency and performance of firm.

7. The information contained in these statements is used by management,
creditors, investors and others to form judgment about the operating performance and
financial position of firm. Uses of financial statement can get further insight about
financial strength and weakness of the firm if they properly analyse information
reported in these statements. Management should be particularly interested in
knowing financial strength of the firm to make their best use and to be able to spot out
financial weaknesses of the firm to take suitable corrective actions. The further plans
firm should be laid down in new of the firm’s financial strength and weaknesses. Thus
financial analysis is the starting point for making plans before using any sophisticated
forecasting and planning procedures. Understanding the past is a prerequisite for
anticipating the future.
Standards of Comparison: The ration analysis involves comparison for a useful
interpretation of the financial statements. A single ratio in itself does not indicate
favourable or unfavourable condition. It should be compared with some standard.
Standards of comparison may consist of:
• Past Ratios, i.e. ratios calculated form the past financial statements of the same
firm;
• Competitors’ Ratios, i.e., of some selected firms, especially the most progressive
and successful competitor, at the same pint in time;
• Industry Ratios, i.e. ratios of the industry to which the firm belongs; and
• Protected Ratios, i.e., developed using the protected or proforma, financial
statements of the same firm.
In this project calculating the past financial statements of the same firm does ratio
analysis.
TIME SERIES ANALYSIS
The easiest way to evaluate the performance of a firm is to compare its present
ratios with past ratios. When financial ratios over a period of time are compared, it is
known as the time series analysis or trend analysis. It gives an indication of the
direction of change and reflects whether the firm's financial performance has
improved, deteriorated or remind constant over time.
CROSS SECTIONALANALYSIS
Another way to comparison is to compare ratios of one firm with some selected
firms in the industry at the same point in time. This kind of comparison is known as the
cross-sectional analysis. It is more useful to compare the firm's ratios with ratios of a
few carefully selected competitors, who have similar operations.

8. INDUSTRY ANALYSIS
To determine the financial conditions and performance of a firm. Its ratio may be
compared with average ratios of the industry of which the firm is a member. This type
of analysis is known as industry analysis and also it helps to ascertain the financial
standing and capability of the firm & other firms in the industry. Industry ratios are
important standards in view of the fact that each industry has its characteristics which
influence the financial and operating relationships.
Use and Significance of Ratio Analysis: -
The ratio is one of the most powerful tools of financial analysis. It is used as a
device to analyse and interpret the financial health of enterprise. Ratio analysis stands
for the process of determining and presenting the relationship of items and groups of
items in the financial statements. It is an important technique of the financial analysis.
It is the way by which financial stability and health of the concern can be judged. Thus
ratios have wide applications and are of immense use today. The following are the
main points of importance of ratio analysis:
A) Managerial uses of Ratio Analysis: -
1. Helps in Decision Making: -
Financial statements are prepared primarily for decision-making. Ratio analysis
helps in making decision from the information provided in these financial
Statements.
2. Helps in Financial Forecasting and Planning: -
Ratio analysis is of much help in financial forecasting and planning. Planning is
looking ahead and the ratios calculated for a number of years a work as a guide
for the future. Thus, ratio analysis helps in forecasting and planning.
3. Helps in Communicating: -
The financial strength and weakness of a firm are communicated in a more easy
and understandable manner by the use of ratios. Thus, ratios help in
communication and enhance the value of the financial statements.
4. Helps in Co-Ordination: -
Ratios even help in co-ordination, which is of at most importance in effective
business management. Better communication of efficiency and weakness of an
enterprise result in better co-ordination in the enterprise
5. Helps in Control: -
Ratio analysis even helps in making effective control of business.The weaknesses
are otherwise, if any, come to the knowledge of the managerial, which helps, in
effective control of the business.
b) Utility to Shareholders/Investors: - An investor in the company will like to assess
the financial position of the concern where he is going to invest. His first interest will
be the security of his investment and then a return in form of dividend or interest.

9. Ratio analysis will be useful to the investor in making up his mind whether present
financial position of the concern warrants further investment or not.
c) Utility to Creditors: - The creditors or suppliers extent short-term credit to the
concern. They are invested to know whether financial position of the concern
warrants their payments at a specified time or not.
d) Utility to Employees: - The employees are also interested in the financial position
of the concern especially profitability. Their wage increases and amount of fringe
benefits are related to the volume of profits earned by the concern.
e) Utility to Government: - Government is interested to know overall strength of the
industry. Various financial statement published by industrial units are used to
calculate ratios for determining short term, long-term and overall financial position of
the concerns.
f) Tax audit requirements: - Sec44AB was inserted in the income tax act by financial
act; 1984.Caluse 32 of the income tax act requires that the following accounting ratios
should be given:
1. Gross profit/turnover.
2. Net profit/turnover.
3. Stock in trade/turnover.
4. Material consumed/finished goods produced.
Further, it is advisable to compare the accounting ratios for the year under
consideration with the accounting ratios for earlier two years so that the auditor can
make necessary enquiries, if there is any major variation in the accounting ratios.
Limitations:
Ratio analysis is very important in revealing the financial position and soundness of
the business. But, inspite of its advantages, it has some limitations which restrict its
use. These limitations should be kept in mind while making use of ratio analysis for
interpreting the financial the financial statements. The following are the main
limitations of ratio analysis:
1. False Results: -
Ratios are based upon the financial statement. In case financial statement are in
correct or the data of on which ratios are based is in correct, ratios calculated will
all so false and defective. The accounting system it self suffers from many
inherent weaknesses the ratios based upon it cannot be said to be always
reliable.
2. Personal Bias: -
Ratios are only meaning of financial analysis and an end in itself. The ratio has
to be interpreted and different people may interpret the same ratio in different
ways.
3. Limited Comparability: -

10. The ratio of the one firm cannot always be compare with the performance of other
firm, if uniform accounting policies are not adopted by them. The difference in the
methods of calculation of stock or the methods used to record the deprecation on
assets will not provide identical data, so they cannot be compared.
4. Absence of Standard Universally Accepted Terminology: -
Different meanings are given to a particular term, egg. Some firms take profit
before interest and tax; others may take profit after interest and tax. A bank
overdraft is taken as current liability but some firms may take it as noncurrent
liability. The ratios can be comparable only when all the firms adapt uniform
terminology.
5. Price Level Changes Affect Ratios: -
The comparability of ratios suffers, if the prices of the commodities in two different
years are not the same. Change in price effect the cost of production, sale and
also the value of assets. It means that the ratio will be meaningful for comparison,
if the prices do not change.
6. Ignoring Qualitative Factors: -
Ratio analysis is the quantitative measurement of the performance of the
business. It ignores qualitative aspect of the firm; how so ever important it may
be. It shoes that ratio is only a one-sided approach to measure the efficiency of
the business.
7. Window Dressing: -
Financial statements can easily be window dressed to present a better picture of
its financial and profitability position to outsiders. Hence, one has to be very
carefully in making a decision from ratios calculated from such financial
statements.
8. Absolute Figures Distortive: -
Ratios devoid of absolute figures may prove distortive, as ratio analysis is
primarily a quantitative analysis and not a qualitative analysis.
Classification of Ratios:
Several ratios, calculated from the accounting data can be grouped into various
classes according to financial activity or function to be evaluated. Mangement is
interested in evaluating every aspect of the firm’s performance. They have to protect
the interests of all parties and see that the firm grows profitably. In view of thee
requirement of the various users of ratios, ratios are classified into following four
important categories:
• Liquidity ratios - short-term financial strength
• Leverage ratios - long-term financial strength
• Profitability ratios - long term earning power
• Activity ratios - term of investment utilization
a) Liquidity ratios measure the firm’s ability to meet current obligations;
b) Leverage ratios show the proportions of debt and equity in financing the
firm’s assets;

11. c) Activity ratios reflect the firm’s efficiency in utilizing its assets; and
d) Profitability ratios measure overall performance and effectiveness of the
firm.
LIQUIDITY RATIOS:
It is extremely essential for a firm to be able to meet the obligations as they become
due. Liquidity ratios measure the ability of the firm to meet its current obligations
(liabilities). The liquidity ratios reflect the short-term financial strength and solvency
of a firm. In fact, analysis of liquidity needs the preparation of cash budgets and
cash and funds flow statements; but liquidity ratios, by establishing a relationship
between cash and other current assets to current obligations, provide a quick
measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity,
and also that it does not have excess liquidity. The failure of a company to meet its
obligations due to lack of sufficient liquidity, will result in a poor credit worthiness,
loss of credit worthiness, loss of creditors’ confidence, or even in legal tangles
resulting in the closure of the company. A very high degree of liquidity is also bad;
idle assets earn nothing. The firm’s funds 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 lack of it, are:
(i) Current ratio
(ii) Quick ratio.
(iii) Cash ratio
LEVERAGE RATIO:
The short-term creditors, like bankers and suppliers of raw materials, are more
concerned with the firm’s current debt-paying ability. On other hand, ling-term
creditors like debenture holders, financial institutions etc are more concerned with
the firm’s long-term financial strength. In fact a firm should have a strong short as
well as long-term financial strength. In fact a firm should have a strong short-as well
as long-term financial position. To judge the longterm financial position of the firm,
financial leverage, or capital structure ratios are calculated. These ratios indicate
mix of funds provided by owners and lenders. As a general rule there should be an
appropriate mix of debt and owners equity in financing the firm’s assets. Leverage
ratios may be calculated from the balance sheet items to determine the proportion
of debt in total financing. Many variations of these ratios exist; but all these ratios
indicate the same thing the extent to which the firms has relied on debt in financing
assets. Leverage ratios are also computed form the profit and loss items by
determining the extent to which operating profits are sufficient to cover the fixed
charges.
ACTIVITY RATIOS:
Funds of creditors and owners are interested in various assets to generate sales
and profits. The better the management of assets, the larger the amount of sales.
Activity ratios are employed to evaluate the efficiency with which the firm manages

12. and utilizes its assets. These ratios are also called turnover ratios because they
indicate the speed with which assets are being converted or turned over into sales.
Activity ratios, thus, involves a relationship between sales and assets. A proper
balance between sales and assets generally reflects that assets are managed
well. Several activity ratios are calculated to judge the effectiveness of asset
utilization.
PROFITABILITY RATIOS
A company should earn profits to survive and grow over a long period of time. Profits
are essential, but it world be wrong to assume that every action initiated by
management of a company should be aimed at maximizing profits, irrespective of
concerns for customers, employees, suppliers or social consequences. It is
unfortunate that the word profit is looked upon as a term of abuse since some firms
always want to maximize profits ate the cost of employees, customers and society.
Except such infrequent cases, it is a fact that sufficient profits must be able to obtain
funds from investors for expansion and growth and to contribute towards the social
overheads for welfare of the society. Profit is the difference between revenues and
expenses over a period of time (usually one year). Profit is the ultimate output of a
company, and it will have no future if it fails to make sufficient profits. Therefore, the
financial manager should continuously evaluate the efficiency of the company in
terms of profit. The profitability ratios are calculated to measure the operating
efficiency of the company. Besides management of the company, creditors and
owners are also interested in the profitability of the firm. Creditors want to get
interest and repayment of principal regularly. Owners want to get a required rate of
return on their investment. This is possible only when the company earns enough
profits. Generally, two major types of profitability ratios are calculated:
o Profitability in relation to sales.
o Profitability in relation to investment.

13. Abstract:
This paper is regarding analysis of financial performance of Britannia Industries
Limited. Accounting ratios supportive to analyze the financial locus of a company.
Financial analysis aids to evaluate the financial health of a firm. Accounting ratios are
intended for a number of years which demonstrates the changes. Ratios are useful
tool for various stakeholders like management, financiers, shareholders and creditors
etc. In order to analyze the financial performance of Visa Steel Limited, the accounting
ratios are used. Secondary data is used from the Published Annual Reports of the
company for time period 2012-13 to 2016-17. The final result of the paper in
accordance to the financial performance of Visa Steel Limited shows that the financial
performance of the company is poor after 2015-16 and directors should pay more
attention to revive the company.
Keywords - Accounting Ratios, Annual Reports, Britannia Industries Limited,
Financial Performance, FMCG Industry
Profile of Britannia Industries Limited:
Britannia Industries is one of India’s leading food companies with a 100 year legacy
and annual revenues in excess of Rs. 9000 Cr. The company set up the Britannia
Nutrition Foundation in 2009, and began working on public private partnership to
address malnutrition amongst under-privileged children and women. Britannia is
among the most trusted food brands, and manufactures India’s favorite brands like
Good Day, Tiger, NutriChoice, Milk Bikis and Marie Gold which are household names
in India. Britannia’s product portfolio includes Biscuits, Bread, Cakes, Rusk, and Dairy
products including Cheese, Beverages, Milk and Yoghurt. Britannia products are
available across the country in close to 5 million retail outlets and reach over 50% of
Indian homes.
Britannia Bread is the largest brand in the organized bread market with an annual
turnover of over 1 lac tons in volume and Rs.450 crores in value. The business
operates with 13 factories and 4 franchisees selling close to 1 mn loaves daily across
more than 100 cities and towns of India. The Company leading with Mr. Nusli N Wadia
(Chairman) and Mr. Varun Berry (MD). The leader in policy making is Mr. T.V.
Thulsidass and auditor of company is B S R & Co. LLP, Chartared Accountants,
Banglore.
Britannia have a presence in more than 60 countries across the globe. Our
international footprint includes presence in Middle East through local manufacturing in
UAE and Oman, are the No 2 biscuit player in UAE with a strong contention to
leadership and have a similarly strong market position in the other GCC countries. We
are also the market leaders in Nepal and are in the process of investing a
manufacturing facility in the country.

14. RESEARCH METHODOLOGY
This study follows an analytical research methodology focused on quantitative data
already collected by others for various purposes. The analysis should be performed
with secondary data sources in order to achieve an accurate outcome from the
test. The company's annual reports are the primary sources for this secondary info.
References from books such as financial management , management accounting,
or any other standard textbooks can be used. Applied mathematics and
nonstatistical tools can be used for the analyzation of data. Additionally, so as to
realize the efficiency of financial analysis the standard tools may be used.
NEED OF THE STUDY
The prevalent educational system providing the placement training at an
industry being a part of the curriculum has helped in comparison of theoretical
knowledge with practical system. It has led to note the convergences and
divergence between theory and practice. The study enables us to have access to
various facts of the organization. It helps in understanding the needs for the
importance and advantage of materials in the organization, the study also helps to
exposure our minds to the integrated materials management the various
procedures, methods and technique adopted by the organization. The study
provides knowledge about how the theoretical aspects are put in the organization
in terms of described below
❖ For the purchase of raw materials, spares and components parts.
❖ To incur day-to-day expenses.
❖ To meet selling costs such as packing, advertising.
❖ To provide credit facilities to customers.
❖ To maintain inventories and raw materials, work-in-progress and finished
stock.
❖ To pay wages and salaries.
The problems, which are common to most of the public sectors under taking,
are materials scarcity. Capacity utilization and mainly working capital
requirements. Thus, the importance of the study reveals as to how efficiently the
working capital has been used so far in the organization.

15. SCOPE OF THE STUDY
The scope of study is limited to collecting financial data published in the annual
reports of the company every year. The analysis is done to suggest the possible
solutions. The study is carried out for 5 years (2016-2020).
Using the ratio analysis, firms past, present and future performance can be
analysed and this study has been divided as short-term analysis and long-term
analysis. The firm should generate enough profits not only to meet the expectations
of owner, but also to expansion activities.
OBJECTIVES OF THE STUDY
1. To study and analyse the financial position of the Company through ratio
analysis for the period of 2016 to 2020
2. To suggest measures for improving the financial performance of organization.
3. To analyse the profitability position of the company.
4. To assess the return on investment.
5. To analyse the asset turnover ratio.
6. To determine the solvency position of company.
7. To suggest measures for effective and efficient usage of inventory.
8. To analyses interpret and to suggest the operational efficiency of the Britannia
Industries Limited by comparing the Balance Sheet & Profit and Loss Ac.
9. To critically analyses the financial performance of the Britannia Industries
Limited with Help of the ratios.
Research Design
In view of the objects of the study listed above an exploratory research design
has been adopted. Exploratory research is one which is largely interprets and
already available information and it lays particular emphasis on analysis and
interpretation of the existing and available information.
• To know the financial status of the company.
• To know the credit worthiness of the company.
• To offer suggestions based on research finding.
Data Collection Methods
Primary Data - Information collected from internal guide and finance manager.
Primary data is first-hand information.
Secondary Data - Company balance sheet and profit and loss account. secondary
data is second hand information.

16. Data Collection Tools
To analyse the data, acquire from the secondary sources “Ratio Analysis “The
scope of the study is defined below in terms of concepts adopted and period under
focus. First the study of Ratio Analysis is confined only to the Britannia Industries
Limited. Secondly the study is based on the annual reports of the company for a
period of 5 years from 2015-16 to 2020 the reason for restricting the study to this
period is due time constraint.
LIMITATIONS
• The study was limited to only four years Financial Data.
• The study is purely based on secondary data which were taken primarily
from Published annual reports of Britannia Industries Limited
• There is no set industry standard for comparison and hence the inference
is made on general standards.
• The ratio is calculated from past financial statements and these are not
indicators of future.
• The study is based on only on the past records.
• Non availability of required data to analysis the performance.
• The short span of the time provided also one of limitations.

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19. Data Analysis & Interpretation
Liquidity Ratios
The terms ‘liquidity’ and ‘short-term solvency’ are used synonymously. Liquidity or
short term solvency means ability of business to pay its short term liabilities. Inability
to pay-off short term liabilities affects its credibility as well as its credit rating.
Continuous default on the part of the business leads to commercial bankruptcy.
Eventually such commercial bankruptcy may leads to its sickness and dissolution.
Short term lenders and creditors of a business are very much interested to know its
state of liquidity because of their financial stake. Both lack of sufficient liquidity and
excess liquidity is bad for the organisation.
Various Liquidity Ratios are:
a. Current Ratio
b. Quick Ratio or Acid test Ratio
c. Cash Ratio or Absolute Liquidity Ratio
d. Net Working CapitalRatio
Current Ratio
The current ratio is a measure of firm’s short-term solvency. It indicates the availability
of current assets in rupees for every one rupee of current liability. A current ratio of 2:1
is considered satisfactory. The higher the current ratio, the greater the margin of
safety; the larger the amount of current assets in relation to current liabilities, the more
the firm's ability to meet its obligations. It is a cured -and -quick measure of the firm's
liquidity.
Current Ratio calculated as follows –
Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑒𝑛𝑡𝑠 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Financial
Year
Current
Assets
Current
Liabilities
Working
Capital
Current
Ratio
2019 – 2020 3,674.97 2,565.30 1,109.67 1.43
2018 – 2019 3,526.34 1,851.41 1,674.93 1.90
2017 – 2018 3,151.28 1647.97 1,503.31 1.91
2016 – 2017 2339.24 1345.40 993.84 1.73
2015 – 2016 1724.12 1329.84 394.28 1.29

20. Interpretation-
In above pictures shown the current ratio of five years (2016- 2020). The Current Ratio
of Britannia Industries Limited varied from 1.29 to 1.43 with an average of 1.65 during
the study period. The solvency position of Britannia Industries Limited In terms of
current ratio was below the standard norm volume of 2:1 for the entire period. The
current Ratio in the year 2017-18 was 1.91. This came down to 1.43 in the last 2 years
This shows utilization of idle funds in the company. This indicates the short-term
liquidity of the company because the higher current ratio indicates the good quality
and also the satisfactory debt repayment capacity of the firm. It also ensures the safety
of the investments made by the creditors. The current ratio of Britannia Industries
Limited Is unsatisfactory.
Net Working Capital Ratio
Net working capital is more a measure of cash flow than a ratio. The result of his
calculation must be a positive number. Bankers look at Net working capital over a time
to determine a company’s ability to whether financial crisis. Loans are often tried to
minimum working capital requirements. Working Capital of a concern is directly related
to sales. The current assets like debtors, bills receivable, cash, and stock etc. change
with the increase or decrease in sales. The Working Capital is taken as: It is calculated
as follows
This Ratio indicates the velocity of the utilization of net working capital. This Ratio
indicates the number of times the working capital is turned over in the course of a year.
This Ratio measures the efficiency with which the working capital is being used by a
firm. A higher ratio indicates the efficient utilization of working capital and the low ratio
indicates inefficient utilization of working capital.
Working Capital = Current Assets - Current Liabilities
0
0.5
1
1.5
2
2.5
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Current Ratio

21. Interpretation-
Net working capital has increased from 394.28cr in 2015-16 to 1109.67cr in 2019-
2020. In these five years working capital condition is good, raising continuously in last
four years. So its clearly show that the industry has sufficient amount if working capital.
Quick Ratio/Acid Test Ratio
Quick ratio also called Acid-test ratio, establishes a relationship between quick, or
liquid, assets and current liabilities. An asset is a liquid if it can be converted into cash
immediately or reasonably soon without a loss of value. Cash is the most liquid asset.
Other assets that are considered to be relatively liquid and included in quick assets
are debtors and bills receivables and marketable securities (temporary quoted
investments). Inventories are considered to be less liquid. Inventories normally require
some time for realizing into cash; their value also has a tendency to fluctuate. The
quick ratio is found out by dividing quick assets by current liabilities.
Quick Assets consist of only cash and near cash assets. Inventories are
deducted from current assets on the belief that these are not 'near cash assets' and
also because in times of financial difficulty inventory may be saleable only at liquidation
value. But in a seller's market inventories are also near cash assets.
Quick Assets = Current Assets – Inventories (Stock) – Prepaid Expenses
This Ratio Calculated as follows
Quick Ratio =
𝑄𝑢𝑖𝑐𝑘 𝐴𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑒𝑛𝑡𝑠 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Financial
Year
Quick
Assets
Current
Liabilities
Quick
Ratio
2019 – 2020 1451.98 2,565.30 0.56
2018 – 2019 1253.94 1,851.41 0.67
2017 – 2018 1347.82 1647.97 0.81
2016 – 2017 474.77 1345.40 0.35
2015 – 2016 674.00 1329.84 0.50
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
1,800.00
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Net Working Capital

22. Interpretation-
An acid-test of 1:1 considered satisfactory unless the majority of "quick assets" are in
accounts receivable, and the pattern of accounts receivable collection lags behind
the schedule for paying current liabilities.
The low Quick Ratio indicates that the firm has the inability to meet its current
liabilities. The above table shows the Quick Ratio of five years (2016- 2020). The
Quick Ratio of Britannia Industries Limited was varied. It was below the standard
norm of 1:1 for the entire period. It confirms that the liquidity position of this Britannia
Industries Limited. in terms of quick ratio was below the standard, so it need to be
improve in quick ratio by decreasing current liabilities or maintaining cash and bank
balance or invest more in current assets
Cash Ratio/Absolute Liquid Ratio
Since cash is the most liquid asset, it may be examined cash ratio and its equivalent
to current liabilities. Cash and Bank balances and short-term marketable securities,
Trade investment or marketable securities are the most liquid assets of a firm, financial
analyst stays look at cash ratio. If the company carries a small amount of cash, there
is nothing to be worried about the lack of cash if the company has reserves borrowing
power. Cash Ratio is perhaps the most stringent Measure of liquidity. Indeed, one can
argue that it is overly stringent. Lack of immediate cash may not matter if the firm
stretch its payments or borrow money at short notice.
This Ratio Calculated as follows
Cash Ratio =
𝐶𝑎𝑠ℎ 𝑎𝑛𝑑 𝐵𝑎𝑛𝑘 𝐵𝑎𝑙𝑎𝑛𝑐𝑒𝑠 + 𝑀𝑎𝑟𝑘𝑡𝑎𝑏𝑙𝑒 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠
𝐶𝑢𝑟𝑒𝑛𝑡𝑠 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Financial
Year
*Cash and
Bank Balance
Current
Liabilities
Cash
Ratio
2019 – 2020 1131.62 2,565.30 0.44
2018 – 2019 859.70 1,851.41 0.46
2017 – 2018 1043.22 1647.97 0.63
2016 – 2017 295.61 1345.40 0.21
2015 – 2016 503.39 1329.84 0.37
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Quick Ratio

23. Interpretation-
The above pictures describes that cash ratio is increasing in Britannia Industries
Limited which is in the range of 0.37 to 0.44 for the past five years. This indicates that
there is a good short term solvency for the company. Because lower cash ratio means
the company has a not in a better financial position in short term. Even current ratio
is low and the cash ratio is also low it indicates a less repayment capacity of the firm.
This ratio result to the indication of fail to meet of the business to pay its current
liabilities in real.
Leverage Ratio
The leverage ratios may be defined as those financial ratios which measure the long
term stability and structure of the firm These ratios indicate the mix of funds provided
by owners and lenders and assure the lenders of the long term funds with regard to:
• Periodic Payment of interest during the period of the loan and
• Repayment of principal amount on maturity
Debt to Total Assets Ratio
Several debt ratios may used to analyze the long-term solvency of a firm. The firm
may be interested in knowing the proportion of the interest-bearing debt in the capital
structure. It may, therefore, compute debt ratio by dividing total total debt by capital
employed on net assets. Total debt will include short and long-term borrowings from
financial institutions, debentures/bonds, deferred payment arrangements for buying
equipment, bank borrowings, public deposits and any other interest-bearing loan.
Capital employed will include total debt net worth.
This ratio measures the portion of total assets financed with debt and therefore
the extent of financial leverage.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Absolute Liquid Ratio

24. This ratio calculated as follows
Debt to Total Assets Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Financial Year Total Debt Total Assets Debt Ratio
2019 – 2020 1817.31 7841.23 0.23
2018 – 2019 1775.31 6241.82 0.28
2017 – 2018 1554.32 5187.92 0.29
2016 – 2017 1261.09 4108.80 0.30
2015 – 2016 1243.71 3493.91 0.35
Interpretation-
The portion of assets in the industry is more financed with debt in 2015-16. In these
five years industry had maintaining debt free assets. Britannia Industries limited should
maintain its assets from debt in the future. The rate of debt is raised in the industry is
lower than they maintain assets. The debt to total assets ratio is satisfactory.
Debt-Equity Ratio
It indicates the relationship describing the lenders contribution for each rupee of the
owner's contribution is called debt-equity ratio. Debt equity ratio is directly computed
by dividing total debt by net worth. Lower the debt-equity ratio, higher the degree of
protection. A debt-equity ratio of 2:1 is considered ideal. The debt consists of all short
term as well as long-term and equity consists of net worth plus preference capital plus
Deferred Tax Liability.
This Ratio Calculated as follows
Debt − Equity Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝐹𝑢𝑛𝑑
Financial Year Total Debt Shareholders Fund Debt-Equity Ratio
2019 – 2020 1817.31 4,402.83 0.41
2018 – 2019 1775.31 4,253.25 0.41
2017 – 2018 1554.32 3406.23 0.45
2016 – 2017 1261.09 2696.42 0.46
2015 – 2016 1243.71 2091.68 0.59
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Debt to Total Assets Ration

25. Interpretation-
The portion of assets in the industry is more financed with owners fund in 2015-16. In
these five years industry had maintaining assets out of its profits and operations
revenue. Britannia Industries limited reduced purchasing of assets from owners fund .
The rate of assets is installed by the industry is from its operation. The debt-equity
ratio is satisfactory in Britannia Industries Limited.
Activity Ratio/ Turnover Ratio
These ratios are employed to evaluate the efficiency with which the firm
manages and utilises its assets. For this reason, they are often called 'Asset
management ratios'. These indicate the frequency of sales with respect to its
assets. These assets may be capital assets or working capital or average
inventory. These ratios are usually calculated with reference to sales/cost of
goods sold and are expressed in terms of rate or times.
Funds of creditors and owners are interested in various assets to generate sales
and profits. The better the management of assets, the larger the amount of sales.
Activity ratios are employed to evaluate the efficiency with which the firm manages and
utilizes its assets. These ratios are also called turnover ratios because they indicate
the speed with which assets are being converted or turned over into sales. Activity
ratios, thus, involves a relationship between sales and assets. A proper balance
between sales and assets generally www.studymafia.org reflects that assets are
managed well. Several activity ratios are calculated to judge the effectiveness of asset
utilization.
Debtor Turnover Ratio
A firm sells goods for cash and credit. Credit is used as a marketing tool by number of
companies. When the firm extends credits to its customers, debtors (accounts
receivable) are created in the firm’s accounts. Debtors are convertible 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 analyst applies
these ratios to judge the quality or liquidity of debtors.
This Ratio Calculated as follows
0
0.1
0.2
0.3
0.4
0.5
0.6
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Debt-Equity Ratio

26. Receivables (Debtors) Turnover Ratio =
𝐴𝑛𝑛𝑢𝑎𝑙 𝐶𝑟𝑒𝑑𝑖𝑡 𝑆𝑎𝑙𝑒𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠
Debtors’ turnover indicates the number of times debtors’ turnover each year
generally, the higher the value of debtors’ turnover, the more efficient is the
management of credit. To outside analyst, information about credit sales and opening
and closing balances of debtors may not be available. Therefore, debtors’ turnover
can be calculated by dividing Total sales by the year-end balances of debtors:
Financial Year Sales Sundry Debtors Debtors Turnover Ratio
2019 – 2020 11,444.91 320.36 35.72
2018 – 2019 10,972.07 394.24 27.83
2017 – 2018 9899.76 304.60 32.50
2016 – 2017 9227.89 179.16 51.50
2015 – 2016 8549.09 170.61 50.10
Interpretation-
The above chart shows that debtors turnover ratio of Britannia Industries Limited for
the five years is decreasing which implies that recovery of debtors is slow due to the
change in composition of customer base. Because a low ratio implies that it
considered congenial for the business as it implies better cash flow.
Debtors Turnover Ratio should be very high then only the company will be
receiving its debts with in a short period. It indicates the company has taken less
time to convert the credit sales into cash. In the above Table shows the Debtors
turnover ratio of five years (2016-2020). The debtors turnover ratio of Britannia
Industries Limited.
Creditors Turnover Ratio
This ratio is calculated on the same lines as receivable turnover ratio. This ratio shows
the velocity of payables payment by the firm.
This Ratio Calculated as follows
Payables (Creditors) Turnover Ratio =
𝐴𝑛𝑛𝑢𝑎𝑙 𝐶𝑟𝑒𝑑𝑖𝑡 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠
0
10
20
30
40
50
60
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Debtors Turnover Ratio

27. The firm can compare what credit period it gives from the suppliers and what it
offers to the customers. Also it can compare the average credit period offered to the
customers in the industry to which it belongs
Financial Year Purchases Sundry Creditors Creditors Turnover Ratio
2019 – 2020 5901.16 1116.28 5.2864514
2018 – 2019 5513.01 1140.51 4.8338112
2017 – 2018 4906.08 994.09 4.9352473
2016 – 2017 4839.57 757.31 6.3904742
2015 – 2016 4331.49 769.08 5.6320409
Interpretation-
The creditors turnover ratio reveals the ability of the firm to avail the creditors from
suppliers throughout the year. A low creditors turnover ratio implies favourable since
the firm enjoys lengthy credit period. The above chart shows that for the last five years
of Britannia Industries Limited, maintain its credit period almost at same level and this
shows loyalty In payment of dues to creditors. Britannia Industries Limited pays early
to their creditors even their customer payback late.
Total Assets Turnover Ratio
Some analysts like to compute the total assets turnover in addition to or instead of the
net assets turnover. This ratio shows the firms ability in generating sales from all
financial resources committed to total assets.
This Ratio Calculated as follows
Total Assets Turnover Ratio =
𝑆𝑎𝑙𝑒𝑠 𝑜𝑟 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Financial Year Sales Total Assets Total Assets Turnover Ratio
2019 – 2020 11,444.91 7841.23 1.46
2018 – 2019 10,972.07 6241.82 1.76
2017 – 2018 9899.76 5187.92 1.91
2016 – 2017 9227.89 4108.80 2.25
2015 – 2016 8549.09 3493.91 2.45
0
1
2
3
4
5
6
7
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Creditors Turnover Ratio

28. Interpretation-
This ratio indicates the efficiency utilisation of assets towards to sales. As the volume
of sales increasing and volume of assets also but in lesser rate. The Above chart
shows downward sloping, i.e. the efficiency of utilization assets is falling down in these
five years.
Current Assets Turnover Ratio
A firm may also like to relate current assets (or net working gap) to sales. It may thus
complete networking capital turnover by dividing sales by net working capital.
This Ratio Calculated as follows
Current Assets Turnover Ratio =
𝑆𝑎𝑙𝑒𝑠 𝑜𝑟 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
Financial Year Sales Current Assets Total Assets Turnover Ratio
2019 – 2020 11,444.91 3,674.97 3.11
2018 – 2019 10,972.07 3,526.34 3.11
2017 – 2018 9899.76 3,151.28 3.14
2016 – 2017 9227.89 2339.24 3.94
2015 – 2016 8549.09 1724.12 4.96
0
0.5
1
1.5
2
2.5
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Total Assets Turnover Ratio
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Current Assests Turnover Ratio

29. Interpretation-
The ratio indicates that how fast inventory is used or sold. A high ratio is good from
the view point of liquidity and vice verse. A low ratio would indicate that inventory
is not used/sold/lost and stays in a shelf or in the warehouse for long time.
Profitability Ratios
The profitability ratios measure the profitability or the operational efficiency of the
company. These ratios reflect the final results of business operations. They are some of
the most close watched and widely quoted ratios. Management attempts to maximize
these ratios to maximize firm value.
The results of the firm can be evaluated in terms of its earnings with or sales or
owner's interest etc. Therefore, the profitability ratios are broadly classified in four
categories:
(i) Profitability Ratios related toSales
(ii) Profitability Ratios related to overall Return on Investment
(iii) Profitability Ratios required for Analysis from Owner’s Point of View
(iv) Profitability Ratios relate to Market/valuation/Investors
Profitability Ratio (Based on Sales)
Gross Profit Ratio
Gross profit ratio expresses the relationship of gross profit to net sales or turnover,
Gross profit is the excess of the proceeds of goods sold and services rendered
during a period over 1 beer cost, before taking into account administration, selling
and distribution and financing charges.
Gross profit ratio is expressed as follows:
Gross Profit Ratio =
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡𝑠
𝑆𝑎𝑙𝑒𝑠
Financial Year Gross Profit Sales Gross Profit Ratio
2019 – 2020 1860.87 11,444.91 16.25
2018 – 2019 1768.90 10,972.07 16.12
2017 – 2018 1518.36 9899.76 15.33
2016 – 2017 1304.00 9227.89 14.13
2015 – 2016 1220.46 8549.09 14.27
13
13.5
14
14.5
15
15.5
16
16.5
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Gross Profit Ratio

30. Interpretation-
Gross profit margin depends on the relationship between price/sales, volume and
costs. A high gross profit margin is a favourable sign of good management. From the
above picture of Britannia Industries Limited shows the raising slope of gross profit
from the las five years. That reflects the company is maintain proper comtrol on trade
activities. The chart stands for strong financial financial position.
Net Profit Ratio
Net profit is obtained when operating expenses; interest and taxes are subtracted from
the gross profit margin ratio is measured by dividing profit after tax by sales.
Net profit ratio establishes a relationship between net profit and sales and
indicates and management’s in manufacturing, administrating and selling the
products. This ratio is the overall measure of the firm’s ability to turn each rupee sales
into net profit. If the net margin is inadequate the firm will fail to achieve satisfactory
return on shareholders’ funds. This ratio also indicates the firm’s capacity to withstand
adverse economic conditions. A firm with high net margin ratio would be advantageous
position to survive in the face of falling prices, selling prices, cost of production.
Net profit ratio is expressed as follows:
Net Profit Ratio =
𝑁𝑒𝑡 𝑃𝑟𝑜𝑖𝑡𝑠
𝑆𝑎𝑙𝑒𝑠
Financial Year Net profits Sales Net Profit Ratio
2019 – 2020 1484.30 11,444.91 12.96
2018 – 2019 1122.20 10,972.07 10.22
2017 – 2018 947.89 9899.76 9.57
2016 – 2017 843.69 9227.89 9.14
2015 – 2016 763.31 8549.09 8.92
Interpretation-
The above table of Britannia Industries Limited for the past five years shows that the
net profit ratio was 8.92 to 12.96 from 2016-2020 this shows the continuous increase
in sales. Net profit ratio of an industry indicates the efficient management of the
business and also increase in profit. This picture reflects to high sales made by
Britannia Industries Limited.
0
2
4
6
8
10
12
14
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Net Profit Ratio

31. Operating Profit Ratio
The ratio of all operating expenses (i.e material, labour, factory overheads and office
and selling expenses) to sales is Operating ratio.
Operating Profit = Sales - Cost of Goods Sold - Direct expenses
Net profit ratio is expressed as follows:
Operating Profit Ratio =
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑖𝑡𝑠
𝑆𝑎𝑙𝑒𝑠
Financial Year Operating Profits Sales Operating Profit Ratio
2019 – 2020 155.56 11,444.91 1.35
2018 – 2019 81.21 10,972.07 0.74
2017 – 2018 84.47 9899.76 0.85
2016 – 2017 91.81 9227.89 0.99
2015 – 2016 71.79 8549.09 0.83
Interpretation-
The above picture shows Britannia Industries Limited have great operating profit
from their operations. Operating profit reflected to gross profit and net profits
Profitability Ratio (Owners Point of view)
Earnings per Share-
The profitability of the shareholders investments can also be measured in many other
ways. One such measure is to calculate the earnings per share. The earnings per
share (EPS) are calculated by dividing the profit after taxes by the total number of
ordinary shares outstanding.
This ratio is computed by earning available to equity share holders by the total
amount of equity share outstanding. It reveals the amount of period earnings after
taxes which occur to each equity share. This ratio is an important index because it
indicates whether the wealth of each share holder on a per share basis as changed
over the period.
This Ratio Calculated as follows
Earning Per Share =
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡𝑠 (𝑃𝐴𝑇)
𝑁𝑜 𝑜𝑓 𝐸𝑞𝑢𝑖𝑡𝑦 𝑆ℎ𝑎𝑟𝑒𝑠
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Operating Profits Ratio

32. Financial Year Net profits No of Equity Shares EPS
2019 – 2020 1484.30 24.05 61.71
2018 – 2019 1122.20 24.03 46.69
2017 – 2018 947.89 24.01 39.47
2016 – 2017 843.69 24.00 35.15
2015 – 2016 763.31 24.0 31.80
Interpretation-
The above picture shows the investors enjoy their profit from each share. Britannia
Industries Limited have benefited investors. They enjoy their earning from the
company.
0
10
20
30
40
50
60
70
2019 – 2020 2018 – 2019 2017 – 2018 2016 – 2017 2015 – 2016
Earning Per Share

33. Summary
Finding
From the study, it is found that the management must improve the current ratio by
lowering the current liabilities. The turnover ratios are not satisfactory during the five
year of study the ratio has been downward growth. Assets turnover ratios reflects that
inefficient use total assets towards production and sale. The debtor’s turnover ratio is
not satisfactory. Over the past five years the ratio has declined. The low ratio indicates
how slowly money is collected from the debtors. Therefore, Britannia Industry should
improve the ratio by collecting deferred dues well in time by satisfying the customer in
terms of performance of the sets supplied by Britannia. The creditors turnover ratio
calculated for the last five years proves satisfactory and the amount payable is
decreasing every year which means the number of creditors have been decreased.
The Britannia Industry limited clearing accounts payable earlier than account
receivables. Profitability ratios is quite positive and investors enjoy their money
invested from past years.
Suggestions
To increase the margin of safety it is suggested that the borrowed fund must
maintained at a low level. Over the last 5 years BHEL must be maintained throughout.
To increase the gross profit margin the cost of production must be decreased by
purchasing good quality materials at less price, worker’s efficiency can be improved
and scraps can be decreased. To increase the debtor’s turnover ratio the deferred
dues must be collected well in time to satisfy the customers. It is observed that the
capital employees is not satisfactory. The current ratio is far from the ideal current ratio
of 2:1 which should be improve in coming days. It is suggested to reduce outside
liabilities to bring turnover ratio to normal.
Conclusion
Finally, after analysing all ratios, it is clear that the assets have less than liabilities, so
need to maintain assets in the industry to get better results. Collection of debt from
customers can help to raise assets and it automatically reflects the industry overall.
The industry is in profitable position it should maintain as normal.

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Source
➢ Google
➢ Audited Annual Reports
BIBLOGRAPHY
1. I.M.Pandey : Financial Management
2. M.Y.Khan & P.K.Jai : Financial Management
3. S.P. Jain & K.L. Narang : Cost & Management accounting
4. K.Rajeswara rao & G. Prasad : Accounting & Finance
5. P.Kulakarni : Financial Management
***