KALOL INSTITUTE OF MANAGEMENT [KIM]

MBA SEM-3

SUBJECT: Summer Internship Programme (SIP)

A Summer internship project report on “Ratio Analysis of Bajaj Tiles”

Prepared & Presented By:

1. Riddhi Patel [217250592069]
 CONTENT
1. Company Profile
2. Introduction of Topic
3. Research Methodology
4. Data Analysis
5. Findings
6. Suggestions
7. Conclusion
Profile of Company

Name of the Company Sterling Ceramics

Registered Office B/F Durga Complex, Nr. Juna Market
Yard, Himmatnagar, Sabarkantha-
383001
Website:WWW.bajajtiles.com
Work Address Near GGS Station, Village Kaiyal,
Taluka Kadi, Dist. Mahesana, Gujarat
382715
Constitution Partnership Firm
Industry Ceramic Industry
Size of Unit Medium Scale Enterprise
Date of Incorporation Incorporated on April 1,2001 and
Reconstituted on December 11,2001
Activity Manufacturing of Ceramic Tiles
Introduction of Topic

Ratio Analysis is a quantitative procedure of obtaining a look into a firm’s

functional efficiency, Liquidity, revenues, and profitability by analyzing its
financial records and statements. Ratio analysis is a very important factor
that will help in doing analysis of the fundamentals of equity.
A ratio is a simple arithmetical expression of the relationship of one
number to another. It may be defined as the indicated quotient of two
mathematical expressions. Once of the most important financial tools
which has come to be used very frequently for analyzing the financial
strengths and weaknesses of the enterprise is ratio analysis.
Ratio analysis is referred to as the study or analysis of the line items present
in the financial statement of the company. It can be used to check various
factors of a business such as profitability, liquidity, solvency and efficiency
of the company or the business.
Research Methodology

1. Research Objective
The role objective of the project is to help the management of the
organization in decision making regarding the subject matter.
Calculation of financial statement and ratio is only the clerical task
whereas the interpretation of its needs immense skill intelligence and
foresightedness. One of the easiest and most popular ways of evaluating
performance of the organization is to compare its ratios with past once
called comparison and through development action plan.
It gives an indication of the direction of change and reflects whether the
organization’s financial position and predominance has deteriorated or
remained constant over period of time.
Here much emphasis is given to historical comparison and on forecasting
the immediate future trends.
2. Research Design
In conclusive research I have used descriptive research and also used
multiply cross sectional in research project because find out conclusive
and the information collected from the respondents only once.

Secondary data:-
The secondary data used in the project is the information is collected from
the brochures and websites of sterling ceramics. Relevant information has
been collected from the core information I have used internet to get the
information of company or competitors.
Data Analysis

Ratio analysis is a conceptual technique which dates back to the inception

of accounting, as a concept. Financial analysis as a scientific tool is used to
carry out the calculations in the area of accounting.
Ratio analysis is a technique of analysis and interpretation of financial
statements. It is the process of establishing and interpreting various
ratios for helping in making certain decision. However, ratio analysis
is not an end in itself. It is only a means of better understanding of
financial strength and weakness of a firm.
1. Current ratio

The current ratio is a liquidity ratio that measures a company ability

to pay short-term obligations or those due within one year. It tells
investors and analysis how a company can maximize the current
assets on its balance sheet to satisfy its current debt and other
payables.

o Current ratio = Current assets

Current Liabilities

Year 2018 2019 2020 2021 2022

Current 2.13 2.56 2.76 3.52 2.67
ratio
 Current ratio
4

3.5

2.5

2
Current ratio

1.5

0.5

0
2018 2019 2020 2021 2022

Interpretation:-
The company ratio is year by year increased. 2018 to 2021 it was
increase constantly and in year 2022 it was decreased. Highest ratio
is 3.52 and then in next year 2.67 it is decrease.
2. Quick ratio:-

The quick ratio measures a company’s ability to pay off short term
obligations with liquid assets. In other words, the quick ratio is an
accounting ratio that measures a company’s liquidity. It is also
known as the acid test ratio as it tests the ability of a company to
convert its quick assets into instant cash.
o Quick ratio = Current assets – Inventory
Current Liabilities – B.O.D

Year 2018 2019 2020 2021 2022

Quick 1.63 1.99 2.47 3.03 2.44
ratio
 Quick ratio
3.5

2.5

Quick ratio
1.5

0.5

0
2018 2019 2020 2021 2022

Interpretation:-
Quick ratio in this chart is this show increased ratio year by year.
2018 ratio was 1.63 and increase in 2021 is 3.03.
3. Inventory Turnover:-

Inventory turnover is a financial ratio showing how many times a

company has sold and replaced inventory. During a given period. A
company can then divide the days in the period by the inventory
turnover formula to calculate the days it takes to sell the inventory
on hand.
o Inventory Turnover = Net Sales
Average Inventory at Selling Price

Year 2018 2019 2020 2021 2022

Inventor 10.68 9.70 8.25 12.20 11.50
y
Turnove
r
 Inventory turnover
14

12

10

Inventory turnover
6

0
2018 2019 2020 2021 2022

Interpretation:-
In this chart 2018 ratio was 10.68 and than next two year decreased.
2021 increase ratio 12.20 decrease year 2022.
4. Debt Equity Ratio:-

The debt-equity ratio is a measure of the relative contribution of the

creditors and shareholders or owners in the capital employed in
business. Simply stated, ratio of the total long term debt and equity
capital in the business is called the debt-equity ratio.
Debt – Equity Ratio = Total debt
Total Shareholder’s equity

Year 2018 2019 2020 2021 2022

Debt 0.01 0.01 0.02 - 0.02
Equity
Ratio
 Debt euity ratio
0.025

0.02

0.015

Debt euity ratio

0.01

0.005

0
2018 2019 2020 2021 2022

Interpretation:-
In this graph shows that first two year same ratio and third year
increase 0.02 and 2021 is ratio was 0 then next year increase 0.02.
5. Debtors Turnover Ratio

The Debtors Turnover ratio also called as Receivables turnover ratio

shows how quickly the credit sales are converted into the cash. This
ratio measures the efficiency of a firm in managing and collecting
the credit issued to the customers.
Debtors Turnover Ratio = Net Credit Sales
Average Account Receivable

Year 2018 2019 2020 2021 2022

Debtors 7.24 6.68 6.79 7.01 8.11
Turnove
r Ratio
 Debtors turnover ratio
9

Debtors turnover ratio

4

0
2018 2019 2020 2021 2022

Interpretation:-
In this chart 2018 ratio 7.24 and then next two decreased and then
2021 and 2022 ratio was increased.
6. Fixed Asset Turnover:-

The fixed asset turnover ratio reveals how efficient a company is at

generating sales from its existing fixed assets. A higher ratio implies
that management is using its fixed assets more effectively. A high
FAT ratio does not tell anything about a company’s ability to
generate solid profits or cash flows.
Fixed Asset Turnover = Net Sales
Average Fixed Assets

Year 2018 2019 2020 2021 2022

Fixed 2.20 2.30 2.07 2.01 3.42
Asset
Turnove
r
 Fixed asset turnover ratio
4

3.5

2.5

2
Fixed asset turnover ratio

1.5

0.5

0
2018 2019 2020 2021 2022

Interpretation:-
In this chart ratio was increased and decreased year by year 2019
ratio is 2.30 and then decreased next two year. Year 2022 increased
ratio 3.42.
7. Asset Turnover Ratio:-

Asset Turnover ratio is the ratio between the value of a company’s

sales or revenues and the value of its assets. It is an indicator of the
efficiency with which a company is deploying its assets to produce
the revenue. Thus, asset turnover ratio can be a determinant of a
company’s performance.
Asset Turnover Ratio = Net Sales
Average Total Assets

Year 2018 2019 2020 2021 2022

Asset 2.00 1.84 1.54 1.38 1.63
Turnove
r Ratio
 Asset turnover ratio
2.5

1.5

Asset turnover ratio

1

0.5

0
2018 2019 2020 2021 2022

Interpretation:-
In this graph year 2018 ratio is 2.00 and then decreased constantly
three year. 2022 ratio is increase 1.63.
Findings

In General, good current ratio is anything over 1, with 1.5 to 2

being the ideal. Here, the Bajaj tiles current ratio is more than 2. so,
company has more than enough cash to meet its liabilities while
using its capital effectively.
A good quick ratio is greater than 1, Here, the Bajaj tiles quick ratio
is more than 1. That typically means Bajaj tiles business is healthy
and can pay its liabilities.
Company’s debt decreases as compared to own capital so, company’s
risk liabilities decreases and company increases its further production
activity by receiving money as debt.
In the retail sector, an asset turnover ratio of 2.5 or more could be
considered good. Tiles has assets turnover ratio more than 2.5. Than
means the Bajaj tiles can generate enough revenue for it self.
In the retail sector, an asset turnover ratio of 2.5 or more could be
considered good. Here, the ratio is less than 2.5 it is not good.
Suggestion

The company has to increase the profit maximization and has to

decrease the operating expenses.
By considering the profit maximization in the company the earning
per share, investment and working capital also increases. Hence, the
outsiders are also interested to invest.
Leasing instead of buying assets. Accelerating the collection of
accounts receivables. Improving efficiency.
The company should maintain sufficient cash and bank balance; they
should invest the idle cash in marketable securities or short term
investments in share, debentures, bonds and other securities
The firms should have proper check on the manufacuring process of
the plant.
Conclusion

The study is made on the topic financial performance using ratio

analysis with five years data in Bajaj Tiles.
Ratio analysis can provide insight into companies’ relative financial
health and future prospects. It can yield data about profitability,
liquidity, earnings, extended viability, and more. The result of such
comparison can mean more powerful decision-making when it comes
to selecting companies in which to invest.
Debt equity ratio, solvency ratio and interest coverage ratio are
showing an average increase in the long term solvency of the firm.
Fixed assets turnover ratio is showing that the firm needs lesser
investment in fixed assets to generate sales.