REPORT ON

SUMMER TRAINING
"RATIO ANALYSIS OF JCT Ltd."

SUBMITTED TO
In partial fulfilment of the requirement for the award of degree of
MASTERS OF BUSINESS ADMINISTRATION
Submitted to RAMGARHIA INSTITUTE OF ENGGINEERING &
TECHONOLOGY
SESSION(2012-2014)
Supervised By: Submitted By:
Mr. Sandeep Sachdeva Sunaina
MBA 3rd sem.

RAMGARHIA INSTITUTE OF ENGGINEERING & TECHONOLOGY


INDEX
S.NO. PARTICULARS PAGE NO.
Preface
Acknowledgement
Summer training certificate
Executive summary
Chapter 1 Introduction of the company
1.1 Profile of the company
1.2 Company history
1.3 Organisation structure
1.4 Product range of the company
1.5 HR Policies of the company
1.6 Future prospects
Chapter 2 Literature review
Chapter 3 Research methodology
3.1 Objectives of the study
3.2 Need of the study
3.3 Data collection
3.4 Limitation of the study
Chapter 4 Data analysis
Chapter 5 Finding, Suggestion & Conclusion
Bibliography
Annexure
















DECLARATION

I Sunaina hereby declare that this project is the record of authentic
work carried out by me during the academic year 2012 2013 and has not been
submitted to any other University or Institute towards the award of any degree.




Signature of the student
( Sunaina)





















PREFACE
Finance is an important to business as blood is to the human body. It is adequate flow of
finance with which business is started and run smoothly in an efficient way. Proper
management of financial resources is of prime importance in any business and financial
analysis leads towards this direction. The present project report shows financial health of JCT
Ltd. (JAGATJIT COTTON TEXTILE). The picture of financial position in the company is
shown with the help of various financial tools i.e. Ratio analysis. However, the work is
subject to time constraints but still it is the analysis of annual report of company and can
supplement the interpretation in having crucial decision in regard to financial management.
As in todays competitive world, it is essential to have a sound financial position to make a
firm capable of facing tough and competitive business environment.



















ACKOWLEDGEMENT

The project would not have seemed the light of day without the help & guidance of many
people. I take opportunity to convey my deepest gratitude to those individuals.
I would like to express my heartfelt to all those who contributed directly or indirectly in
preparation of this report. I would like to place on record my sincere gratitude and
appreciation to my project guide Ms. DEEPA RAWAT , RAMGARHIA INSTITUTE OF
ENGINEERING & TECHNOLOGY for her kind co-operation and guidance which enabled
me to complete my project
I am indebted to my project guide Mr. Sanjay Maheshwari (G.M.-F&A), who gave me
guidance, encouragement and inspiration throughout the project .I am very grateful to him for
his support that enabled me to enhance my knowledge and helped to draft the report.
I also express my sincere thanks to Mr. Sandeep Sachdeva for helping me and guiding me in
completing my project.
All in all, it was the pleasant learning experience for me in JCT Ltd, thanks to all seniors and
staff for making it so memorable. It was their encouragement that, support and co operation,
which made me, give some meaning to my project.
Finally, I am very thankful to my family and God who has provided me support at every
moment. I hope that company and interested readers will find this Project Work useful.













EXECUTIVE SUMMARY
Companies strive from day to day to make their business publicly strong, financially strong,
and appeasing and profitable for its shareholders. Shareholders as well as the company's
management use several tools to determine a company's health and direction. These tools
are better known as ratio analysis. Ratios are among the more widely used tools of financial
analysis because they provide clues to and symptoms of underlying conditions. Ratios help
measure a company's liquidity, activity, profitability and leverage. These four measured
sections show how ratio analysis is used in decision-making, how a firm can measure its
financial situation and financial performance, and the strengths and weaknesses of the
company. Although ratios report mostly on past performances, they can be predictive too, and
provide lead indications of potential problem areas.
Research aims to evaluation of ratio analysis in investment decision making, and to know the
financial position of the company. The report aims to provide appropriate information about
the industries and financial position with its ratios analyses technique. In literature review
part where the extract materials from various books, magazines, news papers and internet
resources. Research also consist the research methodology and data analyses and
interpretation.
Figures were obtained from comparative balance sheets and profit and loss statements from
the relevant years as well as additional information that were forwarded by the board. This
information enabled the development of percentage and ratio analysis which was then used to
create the report. The investigation revealed that the company had not improved its position
compared to previous years. The profitability of the company was significantly not better
whilst the liquidity had remained reasonably steady. The solvency of the company had
declined however, which affected the long-term obligations of the business. Overall, the
company is in a not much sounder position
There are some suggestions
Company is following very conservative credit policy for its Debtors and there is need
to increase the credit period for its debtors in order to increase its Sales and Profits.
The companys fixed assets are continuously declining. There is a need to increase the
fixed assets by raising low cost Outsiders Funds.
The company is paying large amount on Non Operating Expenses due to which the
companys overall profitability position is not good. The company should have to
control its interest and financial charges in order to bring down the Non Operating
Expenses







CHAPTER :- 1





















AN INTRODUCTION OF THE THAPER GROUP

A visionary who wanted to lay the foundation of an enterprise that would help India through
her formative years, founded the Thapar Group in the early 1920s. As pioneers they are the
fourth largest industrial conglomerate in the country, with over 54 different companies and 80
manufacturing plants. Assets have accumulated over Rs. 24000 million with an annual
turnover of about $2 billion. The group grows annually at the rate of over 19%. The group
has diversified industrial interests that include paper, Chemicals, Textiles, Manmade Fibers,
Glass, Electronics, Heavy Engineering, Diesel Engines, Power Equipment, Motor and Pump
sets, Gensets, transmission and Distribution Equipments etc. Beyond this, the Thapar Group
manufactures equipment for industries related to Aviation, Mining, Marine, Metallurgy, Oil
exploration, Shipping, and Mechanical handling. Industrial products like Electronic Process
Instrumentation Boilers and Furnaces, Steam and Energy Control Equipment are also the part
of Thaper Groups activities. Software Growth is another area that Thaper Group has
explored.
Flagship that represents the Thaper Group:

Ballarpur Industries Ltd.
JCT Ltd.
Compton Greaves Ltd.
Greaves Cotton and Company Ltd
The companies have gone beyond their initial industrial interest and pioneered a wide range
of products and services through their subsidiaries. The Thapar Groups spectacular growth
in a span of over 80 years is a result of two factors:

A clear philosophy that governs the mission of business across all levels of hierarchy
and the openness of mind to share global technologies with those who are willing and
brave.
The Thapar Groups manufacturing values ensure associations only with the worlds
best and most capable corporations.
The group owes its success to a well known attitude of doing business globally and
nationally, an attitude that involves lighting changes, both in terms of technology,
infrastructure, and ability to adopt the changing scenario at home and abroad, and a warm
management philosophy that always puts people first.

J.C.T. FACTUALS
1.Established in : 1946
2.Operation of production : 1951

3.1950s Installed Capacity
Spindle : 17856
Looms : 390
4. Present Installed Capacity
Spindles : 63244
Open End Rotors : 1488
Looms : 450( Conventional)
: 172 (Sulzer)
: 69 (Air-Jet)
5.Annual Turnover (in Rs. Crores) : Rs.300 Exceeding
6. Manpower






7. Registered Office : Village Chohal
Distt. Hoshiaspur
146024 (Pb.)
8. Corporate Office : 305-309, 3
rd
floor
Rattan Jyoti building
18, Rajendra palace
New Delhi 110008

9.Export Market:
United Kingdom U.S.A
South East Asia Middle East Asia
Bangladesh Srilanka
Mauritius
10. Domestic Market:

A.

Workers

5000

B.

Staff

530

Defence Services (largest consumers)
Wholesale dealers and retailers
Export merchants
11. Company Secratory : Mr.S.C.Saxena
12. Auditors : S.P chopra & co.
Chartered accountants
F-31, can naught place
New Delhi- 11000
13. Units
a. Textiles : Phagwara(Punjab)
: Sriganganagar(Rajasthan)
b. Filament : Hoshiarpur(Punjab
FABRIC RANGES:
FABRIC STYLES: BULL DENIMS, TWILLS, CHINO, CORDS, CANVAS, DUCKS,
FLANNEL, TUSSORES, YARN DYED SHIRTING, PRINTS UPTO
8 COLOURS.

FINISHES: MICRO-SANDING, PEACHING, SOFT-FINISH, STAFFFINISH,
EASY CARE, WATER REPELLEMENT, RAIN AND STAIN PROOF.

BLENDS: 100% COTTON, POLYSTER: COTTON BLENDED FABRICS-
65:35, 35:63, POLYSTER VISCOSE WITH BLEND 48:52.

TEXTILE INDUSTRY
OVERVIEW
JCT Limited commenced its textile operations in 1946.The Textiles Division of the company
has grown to be one of the largest composite textile units in Northern India with an annual
turnover of Rs. 300 crores (USD 70 million) .. Boasting of a 4500-strong work force and the
capacity to produce 4 million metres of the finest cotton and blended fabrics every month,
JCT is undoubtedly a major player in both the domestic and export markets.
JCT has presence all over the world with exports to USA, Europe, Far East, Middle East,
Mauritius, and other countries. The fabric is made for leading international brands complying
with their standard
JCT LIMITED PHAGWARA: AN OVERVIEW


In the field of cotton and blended fabrics, JCT has always been a trendsetter. It is one of the
leading manufacturers and exporters of cotton and Synthetic textiles in the country.
JCT limited Phagwara; a composite unit having spinning, weaving, and processing facilities.
It was incorporated on 28
th
October, 1946 under the name of M/S Jagatjit Cotton textiles
Mills. The establishment of JCT limited was the result of the decision taken by the
government of India under the post war development plan. It was decided to locate the mill in
the north India and after much discussion; Kapurthala was selected as a site for textile
venture. It was M/S Karamchand Bros. Ltd. Who entered into a final contract with the
government of India to set a mill at Phagwara (Punjab). The disadvantage of unfavorable
weather was offset by other factors such as cheap labour, availability of raw material, and
governments aid. Thus, the company came into existence in 1946. In the initial years, the
business was on a small scale and the company was manufacturing only cotton fabrics. That
is why it is called Jagatjit Cotton Textiles Ltd. Afterwards the company also started
manufacturing cotton yarn, and nylon 6 filament yarns. JCT has made a big dent in synthetic
markets by producing plain and fancy suiting; both piece dyed and fibber dyed and dyed yarn
shirting in innumerable designs and weaves to cater the different segments of the market
The policy of management to reinvest its profits year after year led the mill to grow rapidly
into one of the leading textiles mill in the country. In 1995, Rs. 300 crores was invested for
the modernization of the Phagwara unit. This unit is now one of the most modern units with
the state of art technology.
The management for over three decades has implemented the concept of participative
management. The workers/ employees and their representatives are fully involved in the
management and running the affairs of the company. This policy of management has
generated tremendous goodwill for the company amongst its employees and the result is that
the company has a committed workforce of about 5000 workers and 530 employees and the
most cordial employee- employer relationship.
As this is the era of cutthroat competition, JCT believes in quality, which results in
leadership, and as result, this has led them to tremendous growth. JCT fabrics have captured
profitable sections in the market. There has been a constant growth in the man-made fibber
with a wide variety of nylon and polyester filament yarn.
LOCATION OF JCT
The mill is situated in Phagwara town on G.T. Road, the national highway number -1. It is 40
kilometers from Ludhiana towards Amritsar. The location of the mill is of great advantage as
transportation of goods is cheaper, easier and quick.
JCT PHAGWARA COMPLEX

The complex consists of a mill and the Thapar colony. In the mill, there is a main production
unit, administration offices, go downs, stores, canteen, dispensary, and the turbines for the
generation of electricity.
The residential complex known as Thapar colony is for the officers and other employees. It
includes gymnasium and club. The whole complex, thus, is like a small town in itself.
CORPORATE PROFILE OF JCT LTD
JCT Limited, the flagship company of the Thapar Group, has been a fore-runner in the field
of Textiles ever since its inception in 1951. The Group has combined turnover of US $2
Billion in the year 2004-05. The groups constant endeavor has been to upgrade
manufacturing processes and capacity to world standards, which has resulted in
collaborations with some of biggest multinational corporations like TEIJIN SEKIE from
Japan, NOY-VALLESINA, Zimmer AG, Hitachi Ltd., Corning, Mitsubishi Corporation,
General Electrical, Westing house and David Brown.
JCT Limited, under the leadership of Mr. M Thapar (Chairman) and Mr. Samir Thapar (Vice
Chairman) is premier Indian Cotton Textiles and Nylon Filament Yarn manufacturer having
manufacturing facilities in Northern India. JCT Limited is well renowned brand name in
Cotton Textiles and Synthetic yarn communities in India and abroad. For their regular and
consistent exports Govt. of India has awarded Export house status to the company for past
10years on regular basis.
JCT belongs to THAPAR GROUP, one of the most reputed business groups in India. The
Thapar group of companies was founded in early 1920s by Late Lala Karam Chand Thapar,
which grew in size and scale to become the fourth largest conglomerate in the country during
early 1990s with over 40 companies and 75 manufacturing plants. JCT Limited is an India-
based company. The Company operates in two business segments: Textiles and Filament.

JCT is a leading name in the domestic and overseas textile markets with operations in two
distinct business viz. cotton/blended textiles and nylon filament yarn. It ploughs on proudly
as a multi-market company that is driven and fueled by culture and values that demand a high
standard of performance and work ethics to establish itself as makers of finest products in the
country. JCT Limited follows a balanced model for growth corporate responsibility and
contribution towards social causes such as literacy and environment, sports and sportspersons
development areas important as innovations in production techniques.

Domestic Market: The Company is a leader in Domestic segment and derives premium on
its products. We are the first one to introduce Micro Denier Products in collaboration with
Val Lesina- Italy. The group owes its success to a well known attitude of doing business,
globally and nationally. An attitude that involves effecting lightning changes, both in terms of
technologies and infrastructure and the ability to adapt to changing scenarios at home and
abroad. Company has strong hold and efficient distribution across India and abroad.




International Market: The courage to look beyond national fences has today made filament
division as leading exporter of value added product Nylon Filament Yarns from India. Today
JCT has many Global Customers, satisfied with their product and service, few of their regular
international markets are:





HISTORY OF THE JCT
Year Events 1946- The Company was incorporated on 28
th
October in Kapurthala. The
main object of the company is to manufacture cotton textile goods. The products
manufactured are sheetings, shirting, cambric, dhoties, sarees, coating, mazril, mulls, etc.
Counts ranging from 12s to 60s are spun and the cloth width varies from 27 inches to 66
inches.

1950-430 preference & 30,910 No.of equity shares allotted.1,815 pref.& 36135 shares
forfeited.

1962- The Company acquired Benaras Cotton and Silk Mills.
-4, 16,364 No. of rights of equity shares issued (prem. Rs 5, prop. of 1:1)

1963-Preference shares entitled to gross dividend of 6.5% P.A

1967-4, 16,275 No. of equity shares issued in prop. 1:2

1973- The Company entered in to a collaboration agreement with Thonburi Textile Mills,
ltd., Bangkok whereby the Company was to render technical Knowhow for modernizing the
existing weaving and processing facility besides its expansion by 21,600 spindles. This
agreement was slightly revised during 1978-79.

1975-25,000 11% pref. shares issued.

1978- Shree Sadul textile, ltd. was merged with the Company on 28
th
October, and the
merger was effected from 1st February 1977.
-Taplon Synthetics Ltd. was amalgamated with the company with effect from 1st Feb. 1979.
As per the scheme of amalgamation, 2,02,535.No. of Equity Shares of the company were
allotted to the members of Taplon synthetics Ltd. after cancelling 28,200 No. of equity shares
held by the company as investment in Taplon Synthetics Ltd.
-2,38,108 No. of Equity Shares and 24,839 pref. shares allotted to members of Shree Sadul
Textiles Ltd. upon its merger with the company.

1979-With effect from 1st February, Taplon synthetics Ltd was merged with the Company.
-7,64,117 bonus Equity shares issued in proportion of 1:2 2,760 bonus equity shares remained
to be allotted to non-resident shareholder.

1980- 2277026 rights equity shares issued at par in prop. 1:1, 319 bonus shares allotted to
non residents (244) bonus shares remain to be allotted. 202535 No. of Equity Shares issued to
members of Taplon Synthetics upon its merger.

1981 - The Company received a letter of intent from the Punjab State Industrial
Development Corporation to participate in a 15,000 tonnes per annum, polyester staple fibre
project to be set up at Hoshiarpur in the Company's nylon plant premises.
-A technical collaboration agreement was entered into with E.I. Dupont, De Nemours of
USA. A new Company under the name and style of Punjab Polyfibres, Ltd. was incorporated
to implement this project.

-A letter of intent was received to increase the capacity from 15,000 tonnes to 30,000 tonnes
per annum.
-The Company entered into a management & Technical Know-how Assistance Agreement
with Chempaka Negri Lakshmi Textile SND, BHD at Malaysia

1983- 100000 13.5% pref. shares were issued. Rate of dividend on these pref. shares was
increases to15% from 16
th
may 1984.These pref. shares are redeemable during 30
th

April1996-99

1986 - To improve the profitability of the Hoshiarpur unit, the Company took steps to
convert a substantial part of its production capacity for the manufacture of polyester filament
yarn.
-A letter of intent was received for the manufacture of 15,000 TPA of polyester filament
yarn.
-At Sriganganagar unit operations were adversely affected due to workers strike for 3 months
during October to December.

1987 - The Company offered 7,58,334-12.5% partly convertible secured redeemable
debentures (E-Series) of Rs.120 each for cash at par on rights basis in the ratio of 1
debentures were allotted to retain over-subscription.

1988 - The Company took up implementations of the PFY project in stages. It was
planned to add one spinning line to produce specialty yarn, in the first stage.
- A dyeing plant was installed at Hoshiarpur, to increase the production of dyed yarn. In
addition, a waste recycling plant was installed to increase the recovery of caprolactum from
waste. In April, the name of the Company was changed from `Jagatjit Cotton Textile Mills,
Ltd.' to JCT, Ltd.

1990 - With effect from 1st April the undertakings of Kidarnath Kishanchand Pvt. Ltd.,
(KKPL) and Sterling Steels & Wires, Ltd. (SSWL) were amalgamated with the Company.
As per the scheme of amalgamation the following shares were allotted without payment in
cash.

1991 - The profitability was adversely affected by various factors such as increase in
interest rates, devaluation, and partial convertibility of Rupee etc.
-The performance of the nylon and polyester filament yarn division was affected due to steep
increase in excise duty, poor off take of textile material, increase in the cost of the basic raw
material viz., caprolactum and import curbs.
-Also the textile division was affected by the general recession in the textile market and
unprecedented rise in cotton prices.

1992- The Company offered 9723759 No. of equity shares of Rs. 10 each at a premium of
Rs.40 per Shares.
-During October-November the Company offered 36637091. No. of equity shares of Rs.10
each for cash at premium of Rs.40 per shares on rights basis in the prop. 1:1 (all were taken
up).

1993 - With a view to consolidating its position in the synthetic fiber industry, the
Company undertook to set up a grass-root polyester simplex with facilities to manufacture
polyester staple fiber, textile grade chips, PET resins up to 11,000 TPA all in the first phase.
-With the rise in prices of cotton, it was proposed to shift production towards polyester
blended fabrics. New varieties of cloth with high value addition were introduced.
-The Textile division embarked upon a plan of modernization wherein older equipments were
to be replaced with modern and efficient equipment.
-Both 20000-5% and 24869-5% (income tax free) cumulative preference shares were
redeemed.

1994 - The steel division entered into a tie up with a Korean Company for manufacture of
wire ropes.
-JCT Fibers Ltd., was merged with the Company. It was proposed to increase the polymer
capacity to 65,000 TPA from 33,000 TPA. The said additional polymer was to be processed
partly on polyester filament yarn and partly on polyester staple fibers.
-The Company also undertook to invest in downstream equipment to manufacture additional
polyester filament yarn and additional polyester staple fiber.
-Under a modernization/replacement programmer, the Company proposed to install 48 high
speed sophisticated looms and open end spinning machines at Phagwara.

2001 - The Company has decided hive-of its synthetic fiber division in Punjab and has also
proposed to restructure its equity capital by reducing the face value of its shares from Rs 10
to Rs.2.50
-MM Thapar group flagship JCT has decided to induct three new professionals on the board.
The new inductees are Raj Mohan Singh, head of the company's Phagwara unit, finance head;
T N Subramanian and; S P Narang, secretary, The Institute of Company Secretaries of India .
2003 -JCT Members approve delisting from 3 exchanges (Ludhiana, Delhi and Kolkata)
2004- JCT buys Senegal mill. JCT Limited, a pioneer in textiles in north India, is all set to
spread its operations overseas. Through its subsidiary, CNLT Malaysia, JCT has acquired a
composite textile mill in Senegal on a long-term lease

2005
- JCT gets UN nod for carbon trading. Textile major JCT's rice husk-based power
project at its plant in Phagwara, Punjab, has been registered with the UN panel for clean
development mechanism (CDM) projects. CDM projects are those that qualify to trade
carbon credits.

2007- JCT signs MOU with Dakshidin Corporation to produce water pumping & power
generation Wind Mills, Dakshidin Signs MOU With Indian Conglomerate, JCT Limited
Enters Multi-Billion Dollar Indian Market.




Organization structure
1. Vice Chairman and Managing Director Mr.Samir Thapar
Board of Directors
2. Director(operations) Mr. Rajmohan Singh
3. Mr.Makhan Saha
4. Mr. Gordan Kathuria
5. Mr. Satya Pal Narang
6. Mr. Sanjay Sethhee
IFCI Nominee

BOARD OF DIRECTOR

















MR. SAMIR THAPAR
MR.APAR SINGH
DUGAL
MR.MAHESH SAHAI
MR. GORDHAN
KATHURIA
MR.SATYA PAL
NARANG
MR.VIPUL SINGLE


BANKERS


OBJECTIVES OF THE GROUP
To consolidate and develop core business areas mainly: synthetic and textiles.
To attain the position amongst the leading composite textiles mills in India and to
retain its position among the top companies in the synthetic fiber industry.
To expand and diversify into allied product areas and simultaneously increase global
presence & develop international together with domestic market to achieve rapid
growth.
To evolve into a quality conscious, customer oriented and fast expanding
organization.

CORPORATE PHILOSOPHY
JCT believes in dignity of human beings.
JCT believes that there exists a psychological contract between the organization and
the employees, and the growth of both is interlinked.
BANKERS
OF JCT
ALLAHABAD
BANK
PUNJAB
NATIONAL
BANK
PUNJAB &
SIND BANK
STATE BANK
OF INDIA
STATE BANK
OF PATIALA
STATE BANK
OF
TRAVANCORE

JCT strive to attract, develop, and retain the best talent available.
JCT doesnt believe in any discrimination on the basis of caste, creed, religion, race,
or gender.
JCT believes in the concept of right person at the right job.
JCT values merit and recognizes ability.
JCT encourages teamwork and believes that this enhances problem-solving
capabilities.
JCT actively promotes sports and other cultural activities for cohesiveness and
harmony.
JCT knows that it is the part of the changing environment and that it has to be
proactive to such changes. JCT continuously strives to be a better corporate citizen.

QUALITY POLICY OF JCT
Customers satisfaction is the motto of JCT Ltd. They, therefore commit themselves to
produce and deliver such fabrics so as to meet the customers demands


This is achieved by:
Identifying customers requirements and converting them into products.
Pursuing the process of continuous improvement by the employees of the
organization.
Quality
Policy
Up Gradation
Of Quality
Identification
Of Customers
Need
Countinous
Improvement
Customers
Satisfaction
Confirm The
Desired

Ensuring that quality standards are maintained and upgraded to reflect the changing
customers requirements.

MAJOR DEPARTMENTS OF JCT LIMITED
In todays competitive world, the process of production is very important but the stand of the
company becomes strong and sound if it moves towards productivity. This increase in
productivity has to be achieved without sacrificing the quality of the end product. To meet the
required objectives, the mill is divided into three main functions contributing equally to the
effective and efficient working of the mill. These three major functions are subdivided into
Departments and further into sections these three functions are as follows:
A). Production Function
B). Non Production Function
C). Service Function
Production Function comprises of the following Departments:
1). SPINNING
A) Cotton Spinning
B) Synthetic Spinning
C) Spinning Auto-Coro/ Open End Spinning
D) Spinning Maintenance
E) Post Spinning
2). WEAVING
A) Weaving Preparatory Conventional
B). Weaving Conventional
C). Weaving Preparatory Sulzer.(solder)
D) Weaving Sulzer
E) WEAVING AIR JET
3). PROCESSING
A) Synthetic Processing
B) Cotton Processing
C) Finishing
D) Printing



Non Production Function comprises of the following Departments:
1). Warehouse
a) Mending
b) Grey Folding
c) Cotton Ware House
d) Synthetic Warehouse
e) Exports Warehouse
2). Marketing
a) Domestic Marketing
b) RMG Marketing
c) Exports Marketing
3) Raw Material Department
4) Fabric Development Department
5) Production Planning Department
6) Research and Development
7) ISO Department
Service Function comprises of the following Department:
A) Human Resource Department
B) Finance and Accounts Department
C) Information Technology Department
D) Administration Department
E) Purchase Department
F) Engineering Department
G) Labour & Industrial Relation Department
E) FINANCE AND ACCOUNTS
Finance department is one of the important sections of the company. The main idea behind
maintaining the records is to judge the accurate position of the company regarding the profits
made or the losses incurred by the company.
The objectives of the finance department are:
To ascertain the results of the business activities carried on during the year.
To show the financial position of the business as on a particular date.
To meet the requirements of the taxation authorities, investors, management, and owners.
This department is divided into following sections:

1) Raw Material Section
2) Store Section
Stores Accounting
Insurance
C Form/D Form
3) Establishment Section
Salary
Wages
LTA
Medical Allowances
Bonus
4) General Account
Furniture Maintenance
Other Expenses
Refreshment Expenses
5) Bank (Finance)
6) Debtors Account
Direct
Through Banks
7) Assets/Depreciation Account
Original Cost Depreciation
WDV
Costing:
Pre-Production Costing
Routine Costing
Productions
Returns
Budgeting:
Budgets are prepared monthly, quarterly and yearly as per the requirement.
is carried at an interval of 6 months. The external audit includes the following:
Observation
Non conformity
Suggestion for further improvement
To provide & maintain the network as well as the Computer hardwares of the
company

A) FINANCE AND ACCOUNTS DEPARTMENT
Finance department is one of the important sections of the company. The main idea behind
maintaining the records is to judge the accurate position of the company regarding the
profits made or the losses incurred by the company. The objectives of the finance
department are:
To ascertain the results of the business activities carried on during the year.
To show the financial position of the business as on a particular date.
To meet the requirements of the taxation authorities, investors, management and
owners.
This department is divided into following section:
1) Raw Material Section
2) Store Section
Stores Accounting
Insurance
C Form and D Form
3) Establishment Section
Salary
Wages
LTA
Medical Allowances
Bonus
4) General Account
Furniture Maintenance
Other Expenses
Refreshment Expenses
5) Bank (Finance)
6) Debtors Account
Direct
Through Banks
7) Assets and Depreciation Accounts
Original Cost Depreciation
WDV
8) Costing
Pre-Production Costing
Routine Costing
Productions
Returns
9) Budgeting
Budgets are prepared monthly, quarterly and yearly as per the requirement.

B) PURCHASE DEPARTMENT

All the purchases made by the mill are made through this department (except the raw
materials). This department manages the purchase of the following items:
New Machinery
Dyes and Chemicals
Packing Materials
Capital Goods
Spare parts for all machines
C) ADMINSTRATION DEPARTMENT
The administration department ensures Office Establishment, Dispatch, Transportation,
Records Leave & Insurance of the company. The main objectives of this department are:
Office Establishment
Transportation
Records
Leave
Insurance

D) FACTORY DEPARTMENT
The factory department ensures safety, security and welfare of the workers of the company.
The main objectives of this department are:
To ensure safety and security of the staff and workers.
Disciplinary actions in regard to workers.
Recruitments of workers and allotment of departments.
To keep the record of the attendance of the staff members and the workers.
To prepare the statement of the salary and wages of the staff and the workers.
This department is also called the personnel department. It ensures the safety, security and
welfare of the staff and workers. It takes care of disciplinary actions and sports. This
department is further divided into following sections:-
1. Time Office: This section deals with recording of time of workers, staff members and
trainees with the help of numbered cards.
2. Safety Department: There are three safety officers in JCT. If an accident occurs
inside the plant then proper enquiry is done so that this could be avoided in the future.
3. Security Department: This department makes all arrangements of security in the
factory.
4. Establishment: This department makes the records of wages and salaries of staff and
workers. Employees Staff Insurance Corporation provides the staff members free
medical service


WELFARE ACTIVITES

Educational
o Free education for girl students up to 10+2
o Nominal fee for boy-students of 10+1 and 10+2
o Prizes/scholarship for meritorious students: A prize of Rs.500 is awarded to all
students obtaining 1st division in Class 10 and a scholarship of Rs.150 is given to
them every month for as long as they continue their studies.
Textile Workers Educational Institute
The school was started in 1960 as a Middle School and at present around 50 dedicated
teachers are imparting education to about 2000 students up to 10+2 level in Arts, Science and
Commerce subjects. The school is affiliated to Punjab School Education Board. It has got
airy Class-rooms, play-grounds, well-equipped Science Laboratories, Computer Lab,
Conference Room, Staff Rooms, Canteen, etc.. Its Library consists of educational and
informative books. The children of the employees are getting education almost free.
Stipend is paid to brilliant students in case they continue their studies even after passing out
from the school. To enhance the knowledge, tours to different places are arranged for the
students. The school is known in the region for its Extra Curricular Activities, especially in
sports.
Blood Donation/ Hospital
Throughout the year, free medical check-up camps are arranged in the mills residential
campus for employees and their families as well as outside the colony for general public. Free
Eye Check-up and Operation Camps are organized in the mills colony with the assistance of
team of eye-specialist doctors for general public. Blood Donation Camps are held where the
employees donate blood.
Social
The Thapar Ladies' Club provides entertainment for the ladies.
Incentive is given to a worker if he or his spouse undergoes an operation for family
planning.
A crche for small children is provided.
Community Hall is available for marriages and other functions.
Buses ply for children of the employees going to local schools as well as those in
Jalandhar.
Facilities for swimming, gymnasium, steam bath, squash, badminton, lawn tennis,
billiards and table tennis are available to employees and their families.
Bank ATM facility is available near the mill's Colony Gate for the employees.



ENVIRONMENTAL POLICY
JCT Limited is committed to protecting the environment through:
Optimally using of raw materials and energy.
Efficiently and safely handling and storage of products.
Maintaining a safe working environment.
Training employees on safety and environmental issues.
Continually improving the environmental conditions.
SWOT ANALYSIS OF JCT
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves
specifying the objective of the business venture or project and identifying the internal and
external factors that are favourable and unfavourable to achieve that objective.
Strengths: attributes of the person or company that are helpful to achieving the
objective(s).
Weaknesses: attributes of the person or company that are harmful to achieving the
objective(s).
Opportunities: external conditions that are helpful to achieving the objective(s).
Threats: external conditions which could do damage to the objective(s)
STRENGTHS
One of the oldest known fabric manufacturers.
Good name in the market for superior stuff of cloth.
One of the biggest manufacturers of the widest range/ variety of cotton fabrics.
Acquisition of 9002 gave the company a new position.
Highly modern and sophisticated machines.
Competent and well disciplined staff.
No labour trouble.
Good network of loyal dealers.
Extensive use of computers in each and every department.
Company provides the maximum facilities to its employees.
WEAKNESS
Do not manufacture high or premium quality fabrics.
Never advertised the acquisition of ISO 9002.
No training is imparted to employees to progress further or to acquire position in an
organisation.

Not ready for deep penetration into the market.
Designing of cloth is not very good.
Overheads are high which leads towards the financial crisis.
Export division is centralised in Mumbai.
Lack of new and fresh skill.
Lack of team work.
Advertisement of its product as compared to other textile companies such as
Raymonds and Reliance is very less.

OPPORTUNITIES
Vast market for value added products.
Bring into practise the new business policies and practises which are being used
elsewhere in the industry for better utilization of resources.
Prospects of export.
Should go directly to the end user through exclusive show

THREATS
Heavy competition due to MNC.
Unsecured financial position.
Delay in implementation of any kind of assignment could prevent from keeping pace
with newer technology.

New blood/ competent person not ready to join the firm.
Product Range of the Company
JCT started the business on a small and the company was manufacturing only cotton fabrics
and this is the reason why it is called Jagjit Cotton Textiles Ltd. But now the company is
called JCT Ltd. and has also started manufacturing Synthetic Fibbers', Cotton Yarn, Nylon
and Filament Yarn.

JCT is synonymous with the highest quality. With stringent control at every stage of the
production process, it is no wonder that the Textile Division of JCT Ltd. is the first in the
industry in the country to be accredited with ISO-9002 Certification.

The mill produces a wide range of fabrics in variety of weaves like Twill Stains, Dobbies,
Cords, Oxfords, and Plains etc. The product range includes bottom weight fabrics like Bull
Denims, Drills, Gabardine, Chino, Cords, Dobbies, Ducks and Canvasses, Flannel, Satin,
Defence Fabric including camouflage, Piece Dyed Shirting, Yarn Dyed Shirting, Workwear
Fabrics, Tussores, Lycra Strech Fabric etc. in both 100% cotton and poly/cotton blends in
various combination in warp and weft in the range of 110 GSM with single as well as piled
yarn.


JCT offers a wide range of finishes like Micro-sanding, Peaching, Soft Finish, Resin Finish/
Wrinkle Free/ Easy Care, Water Rapellant/ Rain and Stain Proof finish, stiff finish for canvas
clothes etc. JCT is the pioneer in manufacturing Organic cotton fabrics-specially designed
eco-friendly fabrics. JCTs commitment to globalization is reflected in exports of its Organic
cotton fabrics, Wide Width Sheeting, Dyed Bottom Weight Twills and Dyed Shirting.

Twills, Natural Twills, Bull Denim, Canvas and Flannels on a regular basis to USA, UK,
Europe, Mauritius, South America, Far East and Middle East.

The JCT Fabric has captured profitable sections of the market. There has been a constant
growth in the manmade fibers with a wide variety of nylon and polyester filament yarn. After
the unfavourable climate conditions, and the continuous rising of prices of raw material and
in spite of difficult trading conditions, the company has been able to maintain its profitability.
This is because of the better quality products and effective marketing strategies.


HR Policies of the Company
Safety and Health Policy
Total customers satisfaction is the motto of JCT Ltd. (Phagwara)
So that the targets are achieved and humanity and productivity is saved and served
To achieve the motto of total customer satisfaction with total safety of its employee.
JCT Ltd. management is committed to provide safe and hazard free working environment
through its policy of:-
Detecting & removing unsafe working condition and undesired work practices by
incorporating the statutory requirement into its system.
Considering that avoiding accident is an essential part of every operation of the
company.
Through Education and Training develop safety aware employees who may work
safety to solve himself and his fellow employees and maintain continuous interest in
safety through safety activities
By creating the concept of safety that the safety is everybodys business and inbuilt
safety is the integral part of our developing activities.
Development Programs
As a part of overall corporate attempt to significantly upgrade the technical and behavioral
skills of its employees. JCT arranges developmental programs like supervisory
developmental programs. For this Company conduct a number of in house training programs
every year involving the faculty from plant and HRD department.
Executives are also encouraged to participate in external training programs, workshops,
seminars etc. The Companys policy has always been to give the top most priority to human

resource development with a view to improving the effectiveness on the job in organizational
communication and in their attitude towards work.


Computer Training
JCT Ltd. arranges computer training programs for its employees and staff members, which
has helped in gaining exposures to modern techniques in the field of computer education.
Other Training Activities
Small group activities
Effective management
Management of Human Resources
Training to trainers
Statistical quality control
JCT has its own very well trained teams of hockey, cricket, football etc. through which JCT
tends to prove that to prove that work and play hand in hand.
FUTURE PROSPECTUS

To produce Quality Products to meet customer requirements.
Meet the quality standards of the domestic & international customers.
Satisfy the internal & external customers.
Facilitates the best facilities to its employees in comparison to other industries in this
belt.
Overall growth & development of its employees.
Initiate for the welfare of Society, State & of the Country.
























CHAPTER :-2
























RATIO ANALYSIS
INTRODUCTION
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of
the ratio to interpret the financial statements. So that the strengths and weaknesses of a firm,
as well as its historical performance and current financial condition can be determined. The
term ratio refers to the numerical or quantitative relationship between two variables.
Ratio Analysis uses a combination of financial or operating data from a company or industry
to provide a basis of comparison. Each ratio measures a unique relationship that may impact
others.
The Balance Sheet and the Statement of Income are essential, but they are only the starting
point for successful financial management. Apply Ratio Analysis to Financial Statements to
analyze the success, failure, and progress of your business. To do this compare your ratios
with the average of businesses similar to yours and compare your own ratios for several
successive years, watching especially for any unfavourable trends that may be starting.

According to Batty J. Management Accounting:

Ratio can assist management in its basic functions of forecasting, planning coordination,
control and communication.

RATIO ANALYSIS
The term "Ratio" refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as

Percentages
Fractions
Proportion of numbers

Ratio analysis is a process of determining and interpreting relationships between figures of
financial statements. Ratio analysis is defined as the systematic use of the ratio to interpret
the financial statements. So that the strengths and weaknesses of a firm, as well as its
historical performance and current financial condition can be determined.

STEPS IN RATIO ANALYSIS

The first task of the financial analysis is to select the information relevant
to the decision under consideration from the statements and calculates
appropriate ratios
To compare the calculated ratios with the ratios of the same firm relating to the past or
with the industry ratios. It facilitates in assessing success or failure of the firm.
Third step is to interpretation, drawing of inferences and report writing conclusions
are drawn after comparison in the shape of report or recommended courses of action.





BASIS OR STANDARED OF COMPARSION


Ratios are relative figures reflecting the relation between variables. They enable analyst to
draw conclusions regarding financial operations. They use of ratios as a tool of financial
analysis involves the comparison with related facts. This is the basis of ratio analysis. The
basis of ratio analysis is of four types.

Past ratios, calculated from past financial statements of the firm.
Competitors ratio, of the sum most progressive and successful competitor firm at the
same point of time.
Industry ratio, the industry ratios to which the firm belongs to
Projected ratios, ratios of the future developed from the projected or pro forma
financial statements

NATURE OF RATIO ANALYSIS

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 decisions.
It is only a means of understanding of financial strengths and weaknesses of a firm. There are
a number of ratios which can be calculated from the information given in the financial
statements, but the analyst has to select the appropriate data and calculate only a few
appropriate ratios. The following are the four steps involved in the ratio analysis.

Selection of relevant data from the financial statements depending upon the objective
of the analysis.
Calculation of appropriate ratios from the above data.
Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms
or the comparison with ratios of the industry to which the firm belongs.
Interpretation of the ratio.


INTERPRETATION OF RATIOS
The interpretation of ratios is an important factor. The inherent limitations of ratio
analysis should be kept in mind while interpreting them. The impact of factors such as
price level changes, change in accounting policies, window dressing etc., should also be
kept in mind when attempting to interpret ratios. The interpretation of ratios can be made
in the following ways.
Single ratio
Group ratio

.
Projected ratio
Historical ratio
Inter-firm ratio

GUIDELINS OR PERCAUTION FOR USE OF RATIOS
The calculation of ratios may not be a difficult task but their use is not easy. Following
guidelines or factors may be kept in mind while interpreting various ratios is

Accuracy of financial statements
Objective or purpose of analysis
Selection of ratios
Use of standards

USE AND SIGNIFICANCE OF RATIO ANALYSIS
A. MANAGERAIL USES OF RATIO ANALYSIS
Help in decision making:
financial statements are prepared primarily for decision making. but the information
provide in financial statements is not an end in its self and no meaningful conclusion can
be draw from these statements alone. ratio analysis help in making decisions from the
information provided in these financial statements.
Help in financial forecasting & planning:
ratio analysis is of much help in financial forecasting and planning. planning is looking
ahead and the ratios calculate for a number of years work as a guide for the future.
meaningful can be drawn for future from these ratios. thus, ratio analysis helps in
forecasting and planning.
Help in communicating:
the financial strength and weakness of a firm are communicated in a more easy and
understandable manner by use of ratios the information contained in the financial
statements is conveyed in a meaningful manner to the one for whom it is meant. thus,
ratio helps in communication and enhance the value of the financial statements.
Help in coordination:
ratio helps in coordination which is of utmost importance in effective business
management. better communication of efficiency and weakness of an enterprise results in
a better coordination in the enterprise.
Help in control:
ratio analysis helps in making effective control of the business.
Other uses:

it is an essential part of the budgetary control and standard costing. ratio are also
importance in the analysis and interpretation of financial statements as they bring the
strength and weakness of the firm.
B.UTILITY TO SHARE HOLDER, INVESTOR:
an investor in the company will like to asses the financial position of the concern where
he is going to invest. his first interest will be the security office investment and then a
return in form of dividend or interest for that purpose he will try to asses the value of
fixed asset and the loan raised against them. the investor will feel satisfy only if the
concern has sufficient amount of assets. 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 creditor extend short term credit to the concern. they are interested to know whether
financial position of the concern warrants to their payments at a specific time or not.
D.UTILITY TO EMPLOYEES:
the employees are also interested in the financial position of the concern specially
profitability. the wages increases and about of fringe benefits are related to the volume of
profits earned by the concern the employees make use of information available in
financial statements. various profitability ratios relating to gross profit, operating profit ,
net profit etc unable employee to put forward their view point for the increase of wages
and other benefits.
E. UTILITY TO GOVERNMENTS:
government is interested to know the overall strength of the industry. government may
base its future policies on the basis of industrial information available from various units.
the ratio may be used as indicator of overall financial strength of the public as well as
private sector. in the absence of reliable economic information, government plans and
policies may not be prove successful.
F. TAX AUDIT REQUIREMENTS:
section 44 AB was inserted in the income tax act, 1984 under this section every assesses
engaged in any business and having turnover or gross receipts exceeding Rs. 40 lakhs is
required to get the accounts date for feeling the return of income under section 139(1). in
case of professional a similar is required if the gross receipts exceed Rs. 10 lakh. clause
32 of the income tax act required that the following accounting ratio should be given.
GROSS PROFIT
NET PROFIT
STOCK IN TRADE
FINISHED GOODS PRODUCED





LIMITATION OF RATIO ANALYSIS


limited use of a single ratio:
a single ratio, usually, does not conveyed much of a sense. to make a better
interpretation a number of ratio have to be calculated which is likely to confuse the
analyst then help him in making any meaningful conclusion.

lack of adequate standards:
there are no well accepted standards or rule of thumb for all ratios which can be
accepted as norms. it readers interpretation of the ratio difficult.
Inherent limitation of accounting:
like financial statements, ratios also suffers from the inherent weakness of the
accounting records such as their historical nature. ratios of the past are not necessarily
true indicators of the future.

Change of accounting procedures:
change of accounting procedures by a firm often makes ratio analysis misleading e.g.
a change in the valuation methods of inventories from FIFO to LIFO increases the
cost of sales and reduces considerably the value of closing stocks which makes stock
turnover ratio to be lucrative and unfavourable gross profit ratio.
Window dressing:
financial statement can easily be window dressed to present a better picture of its
financial and profitability position to outsiders. hence ones has to be very
careful in making a decision from ratio calculated from such financial statements. but
it may be very difficult for an outsider to know about the window dressing made by a
firm.
Personal bias:
ratio are only means of financial analysis and not an end in itself. ratio have to be
interpreted and different people may interpret the same ratio in different ways.
Uncomparable:
it make comparison of ratios difficult and misleading. moreover comparison are made
difficult due to differences in definition of various financial terms used in ratio
analysis.
Absolute figure distortive:
ratio devoid of absolute figure may prove distractive as ratio analysis is primarily a
quantitative analysis and not a qualitative analysis.

Price level changes:
while making ratio analysis, no consideration is made to the change in price level and
this makes the interpretation of ratios invalid.
Ratios no substitutes:
ratio is merely a tool of financial statement. hence, ratios become useless if separated
from the statements from which they are computed.
Clues not conclusion :
ratio provide only clues to analysts and not final conclusions. these ratios have to be
interoperated by these experts and there are no standard rule for interpretation.



CLASSIFICATION OF RATIO

The use of ratio analysis is not confined to financial manager only. There are different parties
interested in the ratio analysis for knowing the financial position of a firm for different
purposes. Classification of ratio depend upon the objective and availability of data.
various accounting ratios can be classified as follows:

1. Traditional Classification
2. Functional Classification
3. Significance ratios

1. Traditional Classification: It includes the following.

Balance sheet (or) position statement ratio: They deal with the relationship
between two balance sheet items, e.g. the ratio of current assets to current liabilities
etc., both the items must, however, pertain to the same balance sheet.
Profit & loss account (or) revenue statement ratios: These ratios deal
with the relationship between two profit & loss account items, e.g. the ratio of gross
profit to sales etc.,
Composite (or) inter statement ratios: These ratios exhibit the relation
between a profit & loss account or income statement item and a balance sheet items,
e.g. stock turnover ratio, or the ratio of total assets to sales.

2. Functional Classification :

These include liquidity ratios, long term solvency and leverage ratios, activity ratios and
profitability ratios.
3. Significance ratios :

Some ratios are important than others and the firm may classify them as primary and
secondary ratios. The primary ratio is one, which is of the prime importance to a concern.
The other ratios that support the primary ratio are called secondary ratios.


IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIO ARE

Liquidity ratio
Leverage ratio
Activity /Performance/Turnover ratio
Profitability ratio

1. LIQUIDITY RATIOS:-

Liquidity represents one's ability to pay its current obligations or short term debts within a
period less than one year .Liquidity ratios, therefore measure a company's liquidity position.

the ratio are important from the viewpoint of its creditors as well as management. The
Liquidity position of the company can be measured by mainly using two liquidity ratios such
as follows:
Current Ratio
Quick/Liquidity/Acid Test Ratio

A.) CURRENT RATIO:

Current ratio is the ratio, which express relationship between current asset and current
liabilities. Current asset are those which can be converted into cash within a short period of
time, normally not exceeding one year. Current liabilities include those liabilities which are
repayable in a years time. This ratio also known as Working capital ratio is a measure of
general liquidity and is most widely used to make the analysis of a short-term financial
position of a firm
.


Current ratio =

Current assets
Current liabilities

Significance: - The current ratio of 2:1 is the standard ratio. It means the current assets
are twice as comparison to the current liabilities and they are sufficient to meet the short term
obligation. The higher ratio indicates the better liquidity position; the firm will be able to pay
its current liabilities more easily.
Components of Current Ratio-

CURRENT ASSETS CURRENT LIABILITES
Cash in hand Sundry debtors
Cash at bank Bills receivable
Bills receivable Outstanding expenses
Inventories Bank overdraft
Short term investment Taxes etc., payable
Sundry debtors Dividends payable
Prepaid expenses Short term advances
Recoverable expenses Sundry creditors
Marketable securities


B.) QUICK RATIO:
. A distinction is made between quick current assets and current liability. Quick current assets
are those current assets which are convertible into cash rather early. As inventory is not likely
to be realized early, the sum is not treated as quick assets.



QUICK RATIO =

QUICK ASSETS
CURRENT LIABILITES-BANK OD

QUICK ASSETS = CURRENT ASSETS - (INVENTORIES+PREPAID EXP)
Significance:- Quick Assets means those assets, which will yield cash very shortly.
An ideal quick ratio is said to be 1:1. If it is more, it is considered to be better. This ratio is
a better test of short term financial position of the company.

Components of Quick or Liquid Ratio-
QUICK ASSETS CURRENT LIABILITES
Cash in hand Outstanding expenses
Cash at bank Bank overdraft
Sundry debtors Bills payable
Marketable securities Sundry creditors
Temporary investments Dividend payable
Income tax payable
Short term advances

2. LEVERAGE RATIOS:-
The leverage or solvency ratio refers to the ability of a concern to meet its long term
obligations. Accordingly, long term solvency ratios indicate firms ability to meet the fixed
interest and costs and repayment schedules associated with its long term borrowings. The
following ratios can be calculated.

Debt Equity Ratio.
Proprietary Ratio or Equity Ratio.
Solvency Ratio or Ratio of Liability to Total Assets.
Fixed Assets to Net Worth or Proprietors funds Ratio.
Fixed Assets to Long-term Funds or Fixed assets Ratio
Ratio of Current Assets to Proprietors Funds
A.) Debt-Equity ratio:
Debt-equity ratio which expresses the relationship between debt and Equity. This ratio
explains how far owned funds are sufficient to pay outside liabilities. It is also known as
External-internal Ratio.

Debt-equity Ratio = Outsiders funds/ Shareholders funds
Or
= Debt /equity

Or
= External Equity /Internal Equity

Significance:- A ratio of 1:1 may be usually considered to be a satisfactory ratio although
there cannot be any rule of thumb or standard norm for all types of businesses.
Components of debt equity Ratio:
OUTSIDERS FUND SHAREHOLDER FUND
Current liability Equity share capital
Debenture Preference share capital
Mortgage loan Capital reserve
Bank loan Reserve & surplus
Long term loan Profit and loss a/c
Bonds Share premium

B.) PROPRIETORY RATIO OR EQUITY RATIO:
A variant to the debt-equity ratio is the proprietary ratio which is also known as equity ratio.
This ratio establishes relationship between share holders funds to total assets of the firm

Proprietary ratio =

Shareholder fund
Total assets
.
Significance:- The proportion of shareholders funds to total funds should be 33% or more.
If the ratio is low it indicates that long-term loans are less secured and they face the risk of
losing their money.
Components of Proprietary Ratio-
SHARE HOLDERS FUND
TOTAL ASSETS
Share Capital Fixed assets
Reserve and Surplus
CURRENT ASSETS
Cash in hand & at bank
Bills receivable
Inventories
Marketable securities
Sundry debtors
Prepaid expenses

C.) Solvency Ratio or Ratio of Liability to Total Assets :
This ratio is a small variant of equity and can be simply calculated as 100-equity ratio. This
ratio indicates the relationship between the total liabilities to outsiders to total assets of a firm
and can be calculated as followed:

Solvency Ratio = Total liabilities to Outsiders/Total assets
Or
= 100-proprietory ratio

Significance:- lower the ratio of solvency ratio ,more satisfactory or state is the long-term
solvency position of a firm.

D.) Fixed assets to Net worth ratio:
This ratio is also known as fixed to proprietors funds. The ratio establishes relationship
between fixed and shareholders funds i.e. share capital plus reserve, surplus and retained
earnings. This ratio calculated follows:-
Fixed assets to Net worth ratio
= Fixed Assets (after depreciation) / Shareholders Fund *100

Significance:- Normally , the purchase of fixed assets should be financed by shareholders
funds. If this ratio is less than 100%, it would mean that proprietors fund are more than fixed
assets and a part of working capital is provided by the proprietors. This will indicate the long-
term financial soundness of business.
SHAREHOLDER'S FUND
FIXED ASSETS
Equity share capital Machinery
Preference share capital Land & building
Capital reserve Plant
Reserve & surplus Vehicles
Profit and loss a/c
Share premium
(-) Deferred expenses

E.)Fixed Assets to Long-term Funds:
This ratio is also known as fixed assets ratio. A variant to the ratio of fixed assets to total long
term funds which is calculated as follows:-
Fixed Assets to Long-term Funds
= Fixed Assets (after depreciation)/Total long term funds*100

Total Long Term Funds = shareholder funds + long term borrowing
Long term borrowing = Total Debt Current liability





F.) Current assets to proprietarys Ratio:
The ratio is calculated by dividing the total of current assets by the amount of shareholders
funds. The ratio indicates extent to which proprietors funds are invested in current assets.
There is no rule of thumb for this ratio and depending upon business.
Current assets to proprietors funds
= Current Assets/ Shareholders Fund*100

Significance:- There is no rule of thumb for this ratio and depending upon the nature of the
business there may be different ratios for different firms.

3. ACTIVITY RATIOS:-
These ratios are known as efficiency ratios or turnover ratios. The funds of the owners and
creditors are used to finance various assets of the firm. The efficiency of the firm depends
upon the speed with which these assets are turned over or generate sales. The relationship
between various assets and sales are reflected in activity turnover ratios. Higher turnover
ratios indicate the better use of capital or resources and in turn lead to higher profitability.
Turnover ratio include:
Working capital turnover ratio
Fixed assets turnover ratio
Debtor turnover ratio or receivable turnover ratio and average collection period
Creditor turnover ratio and average collection period
Inventory turnover ratio or stock turnover ratio and inventory conversion period

A.) WORKING CAPITAL TURNOVER RATIO:

Working capital of a concern is directly related to sales. This ratio reveals how efficiently
working capital has been utilized in making sales.


Working Capital Turnover Ratio = Cost of Goods Sold
Working Capital

Significance:- This ratio is of particular importance in nonmanufacturing concerns where
current assets play a major role in generating sales. A high working capital turnover ratio
shows efficient use of working capital and quick turnover of current assets like stock and
debtors.







B.) FIXED ASSETS TURNOVER RATIO:
Fixed assets ratios is also termed as the ratio sales to fixed assets. fixed assets turnover
indicates how efficiently fixed assets are used. it measure the efficiency with which the firm
has been its fixed assets to generate sales. this ratio is calculated in following manners:

Fixed assets turnover ratio =

Cost of goods sold
Net fixed assets



Cost of sales = Income from services


Net fixed assets = Fixed assets - Depreciation

Significance:- This ratio is particular importance in manufacturing concerns where the
investment in fixed asset is quite high. If there is increase in this ratio, it will indicate that
there is better utilization of fixed assets.
C.).a) Debtors Turnover Ratio:
This ratio indicates the number of times the debtors are turned over during a year. This shows
the relationship between credit sales and average debtors during the year.

Debtor Turnover Ratio = Net Credit Sales/Average Debtors + Average B/R


Significance:- The higher the ratio, the better it is, since it indicates that amount from
debtors is being collected more quickly. The more quickly the debtors pay, the less the risk
from bad- debts, and so the lower the expenses of collection and increase in the liquidity of
the firm
b.) Average collection period:
The average collection period represents the average number of days for which a firm has to
wait before its receivables are converted into cash.

Average collection period= working days in a year/debtors turnover ratio



Significance:- A higher debt collection period is thus, an indicates of the inefficiency and
negligence on the part of management. On the other hand, if there is decrease in debt
collection period, it indicates prompt payment by debtors which reduces the chance of bad
debts.
D.).a) Creditors Turnover Ratio:
This ratio indicates relationship between credit purchases and average creditors during the
year.

Creditors Turnover Ratio = Net credit Purchases / Average Creditors +
Average B/P

Significance:- The higher the ratio, the better it is, since it will indicate that the creditors are
being paid more quickly which increases the credit worthiness of the firm.
b). Average payment period :
The average payment period represents the average number of days taken by the firm to pay
its creditors.
Average payment period= working days in a year/creditors turnover
ratio

Significance:- The lower the ratio, the better it is, because a shorter payment period implies
that the creditors are being paid rapidly.

E.) a.) INVENTORY TURNOVER RATIO :
inventory turnover ratio is also known as stock turnover ratio. inventory ratio shows the
relationship between the cost of goods sold and average inventory. this ratio measures how
frequently the company's inventory turned into sales. this ratio is calculated by using
following formula.

Inventory turnover ratio =

Cost of goods sold
Average stock

in the absence of the cost of goods of sold and average stock, the following formula can be
used to calculate inventory turnover ratio.

Inventory turnover ratio =

Sales
Closing inventory



COGS =Opening stock+ Purchases+ Carriage inward+ Direct wages or
Expenses - Closing stock

Or
COGS = Sales - Gross profit



Average stock = Opening stock + Closing stock
2

Significance:- This ratio indicates whether stock has been used or not. It shows the speed
with which the stock is rotated into sales or the number of times the stock is turned into sales
during the year. The higher the ratio, the better it is, since it indicates that stock is selling
quickly.
b.) Inventory conversion period :
Inventory conversion period is calculated for clearing the stocks and it is calculated by
dividing the number of days by inventory turnover ratio.

Inventory conversion period=working days in a year/inventory turnover
ratio

4. PROFITABILITY RATIOS:-
The main object of every business concern is to earn profits. A business must be able to earn
adequate profits in relation to the risk and capital invested in it. The efficiency and the
success of a business can be measured with the help of profitability ratio.

Gross profit to sales ratio.
Net profit to sales ratio
Operating Ratio
Operating profit ratio
Expenses Ratio
A.) Gross profit Ratio :
The gross profit to sales ratio establishes relationship between gross profit and sales to
measure the relative operating efficiency of the firm to reflect pricing policy.


Gross Profit Ratio = Gross Profit / Net Sales *100

Significance:- This ratio measures the margin of profit available on sales. The higher the
gross profit ratio, the better it is.

B.) NET PROFIT RATIO :

Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates
the efficiency of the management in manufacturing, selling administrative and other activities
of the firm.

Net profit ratio=


Net Profit / Net sales *100


Net Profit after Tax = Net Profit () Depreciation () Interest () Income Tax

Net Sales = Income from Services

Significance:- An increase in the ratio over the previous year shows improvement in the
overall efficiency and profitability of the business.
C.) Operating Ratio :
This ratio measures the proportion of an enterprise cost of sales and operating expenses in
comparison to its sales.
Operating Ratio = Cost of Goods Sold + Operating Expenses/ Net Sales
*100

Significance:- Operating Ratio and Operating Net Profit Ratio are inter-related. Total of
both these ratios will be 100.Lower the operating ratio is better, because it will leave higher
margin of profit on sales.
D.) Operating profit ratio:
This ratio includes the relationship between operating profits and sales.
Operating profit ratio=operating profit/net sales*100


Operating profit = Net sales-Operating cost
Significance:- Higher this ratio shows efficiency of a firm
E.) Expenses Ratio :
These ratio indicate the relationship of various expenses and net sales. The operating ratio
reveals the average total variations in expenses. Expense ratios are calculated by dividing
each item of expenses with the net sales to analyze the causes of variation of the operating
ratio.

Expenses ratio=particular expenses/net sales*100

Significance:- If the expenses ratio is lower, the profitability will be greater and if the
expenses ratio is higher, the profitability will be lower.





















































CHAPTER :- 2






























LITERATURE REVIEW

Many researchers have studied financial ratios as a part of working capital Management;
however, very few of them have discussed the working capital Policies in specific. Some
earlier work by Gupta and Heffner (1972) examined the differences in financial ratio
averages between industries. The Conclusion of both the studies was that differences do exist
in mean profitability, Activity, leverage and liquidity ratios amongst industry groups. Pinches
et al. (1973) used factor analysis to develop seven classifications of ratios, and found that the
classifications were stable over the 1951-1969 time periods. In a regional study, Pandey and
Parera (1997) provided an empirical evidence of working capital management policies and
practices of the private sector manufacturing companies in Sri Lanka. The information and
data for the study were gathered through questionnaires and interviews with chief financial
officers of a sample of manufacturing companies listed on the Colombo Stock Exchange.
They found that most companies in Sri Lanka have informal working capital policy and
company size has an influence on the overall working capital policy (formal or informal) and
approach (conservative, moderate or aggressive). Moreover, company profitability has an
influence on the methods of working capital planning and control.

Chu et al. (1991) analyzed the hospital sectors to observe the differences of financial ratios
groups between hospital sectors and industrial firms sectors. Their study concluded that
financial ratios groups were significantly different from those of industrial firms ratios as
well these ratios were relatively stable over the five years period. A significance relationship
for about half of industries studied indicated that results might vary from industry to industry.
Another aspect of working capital management has been analyzed by Lamberson (1995)
who studied how small firms respond to changes in economic activities by changing their
working capital positions and level of current assets and liabilities. Current ratio, current
assets to total assets ratio and inventory to total assets ratio were used as measure of working
capital while index of annual average coincident economic indicator was used as a measure
of economic activity. Contrary to the expectations, the study found that there is very small
relationship between charges.

in economic conditions and changes in working capital. However, Weinraub and Visscher
(1998) have discussed the issue of aggressive and conservative working capital management
policies by using quarterly data for a period of 1984 to 1993 of US firms. Their study looked
at ten diverse industry groups to examine the relative relationship between their
aggressive/conservative working capital policies. The authors have concluded that the
industries had distinctive and significantly different working capital management policies.
Moreover, the relative nature of the working capital management policies exhibited
remarkable stability over the ten-year study period. The study also showed a high and
significant negative correlation between industry asset and liability policies and found that
when relatively aggressive working capital asset policies are followed they are balanced by
relatively conservative working capital financial policies.

Sathyamoorthi (2002) focused on good corporate governance and in turn effective
management of business assets. He observed that more emphasis is given to investment in
fixed assets both in management area and research. However, effective management working
capital has been receiving little attention and yielding more significant results. He analyzed
selected Co-operatives in Botswana for a period of 1993-1997 and concluded that an
aggressive approach has been followed by these firms during all the four years of study.

Filbeck and Krueger (2005) highlighted the importance of efficient working capital
management by analyzing the working capital management policies of 32 non-financial
industries in USA. According to their findings significant differences exist between industries
in working capital practices over time.

Maria Zain (2008), in this articles he discuss about the return on assets is an important
percentage that shows the companys ability to use its assets to generate income. He said that
a high percentage indicates that companys is doing a good utilizing the companys assets to
generate income. He notices that the following formula is one method of calculating the
return on assets percentage. Return on Assets = Net Profit/Total Assets. The net profit figure
that should be used is the amount of income after all expenses, including taxes. He enounce
that the low percentage could mean that the company may have difficulties meeting its debt
obligations. He also short explains about the profit margin ratio Operating Performance .He
pronounces that the profit margin ratio is expressed as a percentage that shows the
relationship between sales and profits. It is sometimes called the operating performance ratio
because its a good indication of operating efficiencies. The following is the formula for
calculating the profit margin. Profit Margin = Net Profit/Net Sales.

Diane White (2008), He refer that the accounts receivable is an important analytical tool for
measuring the efficiency of receivables operations is the accounts receivable turnover ratio.
Many companies sell goods or services on account. This means that a customer purchases
goods or services from a company but does not pay for them at the time of purchase. Payment
is usually due within a short period of time, ranging from a few days to a year. These
transactions appear on the balance sheet as accounts receivable.
Gopinathan Thachappilly (2009), in this articles he discuss about the Financial Ratio
Analysis for Performance evaluation. It analysis is typically done to make sense of the
massive amount of numbers presented in company financial statements. It helps evaluate the
performance of a company, so that investors can decide whether to invest in that company.
Here we are looking at the different ratio categories in separate articles on different aspects of
performance such as profitability ratios, liquidity ratios, debt ratios, performance ratios,
investment evaluation ratios.
James Clausen (2009), He state that the Profitability Ratio Analysis of Income Statement
and Balance Sheet Ratio analysis of the income statement and balance sheet are used to
measure company profit performance. He said the learn ratio analyses of the income
statement and balance sheet. The income statement and balance sheet are two important
reports that show the profit and net worth of the company. It analyses shows how the well the
company is doing in terms of profits compared to sales. He also shows how well the assets
are performing in terms of generating revenue. He defines the income statement shows the
net profit of the company by subtracting expenses from gross profit (sales cost of goods
sold). Furthermore, the balance sheet lists the value of the assets, as well as liabilities. In
simple terms, the main function of the balance sheet is to show the companys net worth by
subtracting liabilities from assets. He said that the balance sheet does not report profits,
theres an important relationship between assets and profit. The business owner normally has
a lot of investment in the company assets.

Gopinathan Thachappilly (2009), He discuss about the Profitability Ratios Measure
Margins and Returns such as gross, Operating, Pretax and Net Profits, ROA ratio, ROE ratio,
ROCE ratio. However, he determines the Gross profit is the surplus generated by sales over
cost of goods sold. He discussion about the Gross Profit Margin = Gross Profit/Net Sales or
Revenue. Moreover, Operating profits are arrived at by deducting marketing, administration
and depreciation and R&D costs from the gross margin. Nonetheless, He explains about the
operating profit margin. Operating Profit Margin = Operating Profit/Net Sales or Revenue.
Nevertheless, pretax profits are computed by deducting non-operational expenses from
operating profits and by adding non-operational revenues to it. Pretax Profit Margin = Pretax
Profit/Net Sales or Revenue .Nonetheless, he also analysis about the net profit margin.Net
Profit Margin = Net Profit/Net Sales or Revenue. He also explains that the returns on
resources used dividend into three categories such as ROA, ROE, and ROCE: At first the
Return on Assets = Net Profit/ (Total Assets at beginning of the period + Total Assets at the
close of the period)/2) - The denominator is the average total assets employed during the
year. Return on Equity = Net Profit/ (Shareholders' Equity at the beginning of the year +
Shareholders' Equity at the close of the year)/2).ROCE ratio: Return on Capital Employed =
Net Profit/ (Average Shareholders' Equity + Average Debt Liabilities) - Debt Liabilities.
James Clausen (2010), in this article he barfly express about the liquidity ratio. He
Pronounce that it is analysis of the financial statements is used to measure company
performance. It also analyses of the income statement and balance sheet. Investors and
lending institutions will often use ratio analyses of the financial statements to determine a
company profitability and liquidity. If the ratios indicate poor performance, investors may be
reluctant to invest. Therefore, the current ratio or working capital ratio, measures current
assets against current liabilities. The current ratio measures the companys ability to pay back
its short-term debt obligations with its current assets. He thinks a higher ratio indicates the
company is better equipped to pay off short-term debt with current assets. Wherefore, the
acid test ratio or quick ratio, measures quick assets against current liabilities. Quick assets are
considered assets that can be quickly converted into cash. Generally they are current assets
less inventory.
Gopinathan Thachappilly (2010), in this articles he express about debt management. He
mention that the Ratio of Debt to Equity has Implications for return on equity debt ratios
check the financial structure of the business by comparing debt against total capital, against
total assets and against owners' funds. The ratios help check how "leveraged" a company is,
and also the financial maneuverability of the company in difficult times. The concepts of
leverage and other issues are examined below. The Debt Ratios formula is that Debt Ratio =
Total Liabilities / Total Assets (Total liabilities include even non-interest-bearing operational
liabilities) and Debt to Equity Ratio (Debt Capital Ratio) = Total Liabilities / Shareholders'
Equity. Capitalization (Term Debt Ratio) = Long-term Debt / (Long-Term Debt +
Shareholders' Equity).Interest Coverage Ratio = Profit before Interest and Taxes (PBIT) /
Interest Expense. Simultaneously, debt ratios and the related interest coverage ratio checks
the soundness of a company's financing policies. One the one hand, use of debt funds can
enhance returns to owners. On the other hand, high debt can mean that the company will find
it difficult to raise funds during lean periods of business. Lucia Jenkins (2010),
Understanding the use of various financial ratios and techniques can help in gaining a more

complete picture of a company's financial outlook. He thinks the most important thing is
fixed cost and variable cost. Fixed costs are those costs that are always present, regardless of
how much or how little is sold. Some examples of fixed costs include rent, insurance and
salaries. Variable costs are the costs that increase or decrease in ratios proportion to sales.
Gopinathan Thachappilly(2010),he also state that the Liquidity Ratios help Good Financial
.He know that a business has high profitability, it can face short-term financial problems and
its funds are locked up in inventories and receivables not realizable for months. Any failure to
meet these can damage its reputation and creditworthiness and in extreme cases even lead to
bankruptcy. In addition to, liquidity ratios are work with cash and near-cash assets of a
business on one side, and the immediate payment obligations (current liabilities) on the other
side. The near-cash assets mainly include receivables from customers and inventories of
finished goods and raw materials. Coupled with, current ratio works with all the items that go
into a business' working capital, and give a quick look at its short-term financial position.
Current assets include Cash, Cash equivalents, Marketable securities, Receivables and
Inventories. Current liabilities include Payables, Notes payable, accrued expenses and taxes,
and Accrued installments of term debt). Current Ratio = Current Assets / Current Liabilities.
Similarly, Quick ratio excludes the illiquid items from current assets and gives a better view
of the business' ability to meet its maturing liabilities. Quick Ratio = Current Assets minus
(Inventories + Prepaid expenses + Deferred income taxes + other illiquid items) / Current
Liabilities. In the final ratio under this article is cash ratio .Cash ratio excludes even
receivables that can take a long time to be converted into cash. Cash Ratio = (Cash + Cash
equivalents + Marketable Securities) / Current Liabilities.

James Clausen (2011), He denotes that about the total asset ratio. The calculation uses two
factors, total revenue and average assets to determine the turnover ratio. When calculating for
a particular year, the total revenue for that year is used. Instead of using the year ending asset
total from the balance sheet, a more accurate picture would be to use the total average assets
for the year. Once the average assets are determined for the same time period that revenue is
compared, the formula for calculating the asset turnover ratio is. Total Revenue / Average
Assets = Asset Turnover Ratio.

Jo Nelgadde (2011), He said that learn how to perform inventory analysis and inventory
turnover analysis to better understand a business as well as to identify effective inventory
management. He analyzing a companys financial performance definitely includes
performing inventory analysis. He know that there are three types of business inventory: Raw
Materials (RM),Work-In-Progress (WIP),Finished Goods (FG).He give idea two types
formula of ratio such as Inventory Turnover = Cost of Goods Sold / Average Inventory,
Average age of Inventory = 360 days / Inventory Turnover.

Munya Mtetwa (2012), in this article he short propose that about the fixed asset. He define
that fixed assets are assets that are used in production or supply of goods or services and they
are to be used within the business for more than one financial year. Consequently, fixed
assets represent the company's long term income generating assets and they can either be

tangible or non tangible. It includes land and buildings, plant and equipment, golf courses,
casinos, football players, machinery and hotels depending on the nature of the business under
consideration. Fixed asset turnover = Sales / Net fixed asset.

Jo Nelgadde (2012), in this article he briefly about the asset management ratio. It divided
into different types of categories. He state that about the used to analyze accounts receivable
and other working capital figures to identify significant changes in the company operations
and financial accounts. He said that there are two categories about this ratio such as account
receivable turnover and average age of account receive. He measurement the ratio as,
Accounts receivable turnover = Sales / Average Accounts receivable. Average age of
accounts receivable/ collection period = 365 days / Accounts receivable Turnover.











































CHAPTER :-3































REASON FOR THE CHOICE OF THE PROJECT

J.C.T. Ltd. is one of the famous and oldest renowned Companies in India. Its cotton fabric is
not only famous in India, but also has wide acceptance in European countries. JCT is concern
of the Taper group having the turnover of Rs. 1000 Cr. Being a student of finance I had a
curiosity to know how such a big concern control and manages its financial set up. Company
is always ready to share its old experience to its Trainees. Another reason to select, JCT is its
setup which is excellent blend of classical and modern concern. Hence there are many
opportunities to learn for a student like me. This study is aimed to analyzing ratio of J.C.T.
Ltd. Phagwara.
RESEARCH METHODOLOGY
As the nature of the study relates to finance performance the main part used was secondary
data. It includes profit and loss account, balance sheet etc. Thus the study is based on the
published accounts and annual reports of JCT Ltd. The period cover from 2009-10. The
present study is based upon primary and secondary data. The sources of primary data are the
official records and discussion with the officers in the finance dept. of the organization. The
secondary sources of the data include various publications of the organization and annual
reports and audited financial statements. The data, which are presented in this report, have
been taken from secondary sources. The data of JCT LTD. for the year , 2009-2010, 2011-
2012 used in these report have been taken from financial statements i.e., the Profit & Loss
Account, Balance Sheet for the relevant years.

RESEARCH DESIGN
Research design stands for the framework of research. The research design utilized in this
study is descriptive.

DATA COLLECTION
Data refers to information or facts. It is not only refers numerical figures but also includes
descriptive facts. While deciding about the method of data collection to be used for the study,
The researcher should keep in mind about two types of data, such as primary data and
secondary data.
PRIMARY DATA:-
primary data is the most authentic and accurate source of data collection as it provides fresh
and first hand information:
direct personal interview
discussion with the senior staff member of the financial department of the company.



SECONDARY DATA:-
Secondary data means data that are already available in the organization. The researcher has
to look into sources for the data from where he can obtain data. The secondary data may
either be published or unpublished.
Published data will be available in
Magazines
Journals, books
Reports by management, scholars, economist etc...
The secondary data for conducting the study has been taken from Financial Statement that is
Income Statement, Balance Sheet Statement, Annual Reports of Company and some other
financial records


NEED AND SCOPE FOR THE PROJECT
This project will be a learning device for the finance student.

The study has great significance and provides benefits to various parties who 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 companys growth.

The investors who are interested in investing in the companys 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 companys shares.

OBJECTIVES OF THE PROJECT

To study the present financial analysis of J.C.T. Ltd

To know the financial profitability position of the concern.

Compare performance with past performance



LIMITATION
The time of around one and half months was too short to study as wide subject like
Financial Analysis.

The executives were hesitant to reveal complete information since it was confidential.

Executives were unaware of many terms related to Financial Analysis while asking to
them.

Ratio analysis is based upon only monetary information and non monetary factors are
ignored like the efficiency of the workers, staff etc.

Lack of information regarding the competitors.
























CHAPTER :- 4














LI QUI DI TY RATI O
CURRENT RATI O:-
=TOTAL CURRENT ASSETS / TOTAL CURRENT LI ABI LI TI ES
Current Ratio
(Fig. In Rs.lakhs)
Year Current Assets Current
Liabilities
Ratio
2009 12466.01 8076.78 1.54:1
2010 14043.61 8405.13 1.67:1
2011 12913.13 8459.48 1.53:1
2012 13692.23 10604.57 1.29:1


INTERPRETATION:
Normally, Current Assets should be twice the Current Liabilities. According to the financial
statement of J.C.T. Ltd. Phagwara. In Year 2008 Current Asset are twice the Current
Liabilities. i.e. 2.18:1. Hence the financial position of the company can said to be satisfactory.
But from year 2009 to 2010 the current ratio is , 1.54, 1.67 respectively, are decreasing; it
may be less investment in inventory by company. Also shows below standard of 2:1 which
means company is bad position for the financial Year 2009-2012.In 2012 there is a decrease
current ratio due to which ratio falls down with increase in current liabilities.


0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8
2009
2010
2011
2012
Current ratio
ratio

QUI CK RATI O:-
=TOTAL QUI CK ASSETS / TOTAL CURRENT LI ABI LI TI ES
Quick Ratio
(Fig. In Rs.lakhs)
Year Quick Assets Current
Liabilities
Ratio
2009 4245.38 8076.78 0.52:1
2010 4818.07 8405.13 0.57:1
2011 4897.63 8459.48 0.58:1
2012 4872.60 10604.57 0.46:1


INTERPRETATION:
From the year 2009, the quick ratio is consistently decreasing which is not a good for the
company. Because company has fast moving inventory company is able to fulfil its
liquid liabilities. Also from 2009 this ratio shows an increasing trend which can be an
added benefit if maintained properly for the company. The financial position of the
company can be said to be not satisfactory because the ratio of the year (2009-2012) is
less than the standard of 1:1.


0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
2009
2010
2011
2012
Quick ratio
ratio

ABSOLUTE LI QUI D RATI O:-
=TOTAL ABSOLUTE LI QUI D ASSETS / TOTAL CURRENT
LI ABI LI TI ES
Absolute Liquid Ratio
(Fig. In Rs.lakhs)
Year Absolute Liquid
Assets
Current
Liabilities
Ratio
2009 374.66 8076.78 0.046:1
2010 221.24 8405.13 0.026:1
2011 187.91 8459.48 0.022:1
2012 171.58 10604.57 0.016:1



INTERPRETATION:
The J.C.T. Ltd does not have an adequate amount of cash and balance that is absolute liquid
assets because of that in all the year, the company has very less absolute liquid ratio that the
standard norm that is 0.05:1.That is not a good signal for the company. So company needs to
maintain proper cash on its current position also. Hence the financial position of the company
can said to be not satisfactory.
0 0.01 0.02 0.03 0.04 0.05
2009
2010
2011
2012
ratio
ratio

LEVERAGE RATI OS OR SOVENCY RATI O
DEBT-EQUI TY RATI O:-
=OUSIDERS FUND / SHAREHOLDERS
FUND
Debt-Equity Ratio
(Fig. In Rs.lakhs)
Year Outsiders
Fund
Shareholders
Fund
Ratio
2009 11992.44 26634.25 0.45:1
2010 13316.49 43159.78 0.31:1
2011 14560.99 40703.57 0.36:1
2012 16079.11 36100.92 0.45:1


INTERPRETATION:
In 2009 Debt-Equity ratio is 0.45:1. The Debt-Equity ratio is more favourable from the
long-term creditors point of view because a high proportion of owners funds provide a
large margin of safety for them. But it is considered unsatisfactory for shareholders
because it indicates that firm has not been able to use low cost outsiders fund to magnify
their earning. But in year 2012 it is 0.45:1 which can satisfy shareholders and reflect
change in firms strategy.

0 0.1 0.2 0.3 0.4 0.5
2009
2010
2011
2012
ratio
ratio

PROPRI ETARY RATI O OR EQUI TY RATI O:-
=SHAREHOLDERS FUNDS/TOTAL ASSETS
Equity Ratio
(Fig. In Rs.lakhs)
Year Shareholders
Fund
Total Assets Ratio
2009 26634.25 38626.69 0.69:1
2010 43159.78 56476.27 0.76:1
2011 40703.57 55264.56 0.74:1
2012 36100.92 52180.03 0.69:1



INTERPRETATION:
The Proprietary Ratio of J.C.T Ltd. is satisfactory. From last four years it remains
above 60%. It represents long term solvency of the company. It protects the interest of
the creditors of the company. There is a need to keep a check on the ratio for the
companys better future.


0.64 0.66 0.68 0.7 0.72 0.74 0.76 0.78
2009
2010
2011
2012
ratio
ratio

SOLVENCY RATI O OR RATI O OF LI ABI LI TY TO
TOTAL ASSETS:-
=TOTAL LI ABI LI TI ES TO OUTSI DERS/TOTAL
ASSETS
Solvency Ratio
(Fig. In Rs.lakhs)
Year Total Liabilities
to Outsiders
Total Assets Ratio
2009 11992.44 38626.69 0.31:1
2010 13316.49 56476.27 0.24:1
2011 14560.99 55264.56 0.26:1
2012 16079.11 52180.03 0.31:1



INTERPRETATION: The Solvency Ratio of J.C.T Ltd. is satisfactory. From last
four years it remains less 40%. It represents long term solvency of the company. It protects
the interest of the creditors of the company. There is a need to keep a check on the ratio for
the companys better future.


0 0.05 0.1 0.15 0.2 0.25 0.3 0.35
2009
2010
2011
2012
ratio
ratio

FI XED ASSETS TO NET WORTH RATI O:-
= FIXED ASSETS (AFTER DEPRECIATION)/ SHAREHOLDERS
FUND *100
Fixed Assets to Net Worth Ratio
(Fig. In Rs.lakhs)
Year Fixed Assets
(after
depreciation)
Shareholders
Funds
Ratio
2009 26160.68 26634.25 98.22%
2010 42432.66 43159.78 98.32%
2011 42351.43 40703.57 104.05%
2012 38487.80 36100.92 106.61%



INTERPRETATION:
In the year 2009 to 2010 the ratio is less than 100%. It means that all the Fixed Assets are
financed from Shareholders Funds and a part of Shareholders Funds are financed from
Working Capital of the company, which is good for the short-term solvency position of the
company. But in the year 2011 to 2012 the ratio is more than 100%. It means that
Shareholders Funds are not sufficient to finance the Fixed Assets and the company has to
depend upon Outsiders to finance the Fixed Assets.

94 96 98 100 102 104 106 108
2009
2010
2011
2012
ratio
ratio

FI XED ASSETS TO LONG TERM FUNDS:-

= FI XED ASSETS (AFTER DEPRECIATI ON) / TOTAL LONG TERM
FUNDS*100

Fixed Assets to Long term Funds
(Fig. In Rs.lakhs)
Year Fixed Assets
(after
depreciation)
Long term
Funds
Ratio
2009 26160.68 30549.91 85.63%
2010 42432.66 48071.14 88.27%
2011 42351.43 46805.08 90.48%
2012 38487.80 41575.46 92.57%



INTERPRETATION:
As the ratio of J.C.T Ltd. does not exceed 100%. It means that all the fixed assets are financed
from long term funds and a part of long term funds are financed for working capital of the
company, which is good for the solvency position of the company. In 2009, the ratio is
88.27%. It means that 88.27% of long term funds are financed for fixed assets and the rest for
working capital. In 2011 to 2012 it is 90.48 and 92.57 means long term funds are financed for
fixed assets.
82 84 86 88 90 92 94
2009
2010
2011
2012
ratio
ratio

CURRENT ASSETS TO PROPRIETARYS RATI O:-

= Current Assets/ Shareholders
Fund*100

Current Assets To proprietarys Ratio
(Fig. In Rs.lakhs)
Year Current Assets Shareholders
Fund
Ratio
2009 12466.01 26634.25 46.80%
2010 14043.61 43159.78 32.54%
2011 12913.13 40703.57 31.72%
2012 13692.23 36100.92 37.93%


INTERPRETATION:
This ratio represents the extent to which the proprietors funds are invested in current
assets. As this ratio of J.C.T.Ltd. decreases year by year, but in year 2012 it is an
increase.




0 10 20 30 40 50
2009
2010
2011
2012
ratio
ratio

ACTI VI TY RATI O
I NVENTORY TURNOVER RATI O:-
=COST OF GOODS SOLD / AVERAGE
STOCK

I nventory Turnover Ratio
(Fig. In Rs.lakhs)
Year Cost of Goods
Sold
Average
stock
Ratio
2009
22192.78 7331.40
3.03 Times
2010
22554.59 8723.09
2.59 Times
2011
28366.68 8620.52
3.29 Times
2012
29105.89 8417.57
3.46 Times


INTERPRETATION:
Inventory Turnover Ratio includes the number of times the stock has been turned over
during the period. In J.C.T. Ltd. in year 2009-2010 is 3.03 and 2.59 respectively.
Inventory Turnover Ratio is declining thats not good signal for company. But in year
2011-2012 its starts increasing thats good signal for company.



0 0.5 1 1.5 2 2.5 3 3.5 4
2009
2010
2011
2012
ratio
ratio

I NVENTORY CONVERSI ON PERI OD:-

=WORKI NG DAYS I N A YEAR / I NVENTORY TURNOVER
RATI O

I nventory Conversion Period
(Fig. In Rs.lakhs)
Year Working Days
in a Year
Inventory
Turnover
Ratio
Days
2009 365 3.03 120 Days
2010 365 2.59 141 Days
2011 365 3.29 111 Days
2012 365 3.46 106 Days


INTERPRETATION:
Inventory Turnover Ratio for the Year 2009 is 3.03 times which represent high ITR,
which indicates that within 101 days the inventory is sold. In 2009-2010 the Inventory
Conversion Period is Increasing Year by Year . So it is not good for the company. But in
2011-2012 the Inventory Conversion Period is decreasing Year by Year is 111 and 106
days. So its good for the company.



0 20 40 60 80 100 120 140 160
2009
2010
2011
2012
days
days

DEBTORS TURNOVER RATI O:-

=NET CREDI T SALES / AVERAGE DEBTORS +
AVERAGE B/R

Debtors Turnover Ratio
(Fig. In Rs.lakhs)
Year Credit Sales Average
Debtors +
B/R
Ratio
2009
29234.13 2691.04
10.86 Times
2010
29322.54 2819.99
10.40 Times
2011
32009.65 3203.33
10.00 Times
2012
31536.24 2789.90
11.30 Times
TABLE 1.12


INTERPRETATION:
The Debtor Turnover Ratio of J.C.T. Ltd. is in Year 2009 is 10.86 and in Year 2010
its decreases is 10.40. But in 2007 its increases is 10.86, this shows that management
of debtors is efficient and there is quick payment by debtors. As we know that the
higher the DTR or lower the collection period is better than the low DTR or high
collection period, which shows there inefficiency of management. It is more efficient
in debtors management in last four years. In year 2012 the Debtor Turnover Ratio is
11.30 which show quick payment by debtors.
9 9.5 10 10.5 11 11.5
2009
2010
2011
2012
ratio
ratio

AVERAGE COLLECTI ON PERI OD
=WORKI NG DAYS I N A YEAR / DEBTORS TURNOVER
RATI O

Average Collection Period
(Fig. In Rs.lakhs)
Year Working Days
in a Year
Debtors
Turnover
Ratio
Days
2009 365 10.86 34 Days
2010 365 10.40 35 Days
2011 365 10.00 37 Days
2012 365 11.30 32 Days


INTERPRETATION:
As this indicates the speed with which debtors receivables are being collected. In J.C.T.
Ltd. the average collection period has been increased from 34 days in year 2009 to 35
days in 2010. But in 2007 its decreased 34 days and in 2011-2012 it is increases 37 days
and 32 days respectively. At last its decreases from 32 days in 2012. That means
company has a better management of debtors.


29 30 31 32 33 34 35 36 37 38
2009
2010
2011
2012
days
days

CREDI TORS TURNOVER RATI O:-
=NET CREDI T PURCHASES / AVERAGE CREDI TORS +
AVERAGE B/P
Creditors Turnover Ratio
(Fig. In Rs.lakhs)
Year Credit Purchases Average
Creditors
+ B/P
Ratio
2009
11488.82 4260.64
2.70 Times
2010
10336.51 5375.56
1.92 Times
2011
10630.72 4499.87
2.36 Times
2012
13865.48 4754.93
2.92 Times

INTERPRETATION:
In course of business operation firm has to make credit purchases and incur short term
liabilities. It is 2.70 in 2009 means better liquidity. In 2009-2010 it decreasing is
2.70 and 1.92. But it increases in 2011-2012 is 2.36 and 2.92. The company has better
it is, but it will not indicate that the creditors are being paid more quickly.




0 0.5 1 1.5 2 2.5 3 3.5
2009
2010
2011
2012
ratio
ratio

AVERAGE PAYMENT PERI OD:-

=WORKI NG DAYS I N A YEAR / CREDI TORS TURNOVER
RATI O

Average Payment Period
(Fig. In Rs.lakhs)
Year Working Days in
a Year
Creditors
Turnover
Ratio
Days
2009 365 2.70 135 Days
2010 365 1.92 190 Days
2011 365 2.36 155 Days
2012 365 2.92 125 Days

INTERPRETATION:
As we know that the higher Credit Turnover Ratio or lower the Average Payment
Period is better and Vice-versa. In J.C.T. Ltd. the CTR is decreased from year 2009-
2010 and Average Payment Period increases during that period which indicates that
the payments to suppliers are not promptly and the more credit period enjoyed by the
firm thus enhancing the credit worthiness of the company is unfavourably. In the year
2011 or 2012 it is less it shows firm is liquidity position and better for company.



0 50 100 150 200
2009
2010
2011
2012
days
days

FI XED ASSETS TURNOVER RATI O:-

=COST OF GOODS SOLD / NET FI XED
ASSETS

Fixed Assets Turnover Ratio
(Fig. In Rs.lakhs)
Year Cost of Goods
Sold
Fixed Assets Ratio
2009
22192.78
26160.68 0.85 Times
2010
22554.59
42432.66 0.53 Times
2011
28366.68
42351.43 0.67 Times
2012
29105.89
38487.80 0.76 Times



INTERPRETATION:
This ratio is particular importance in manufacturing concerns where the investment in
fixed asset is quite high. In J.C.T. Ltd. the fixed assets turnover ratio is decreases in
year 2009-2010 are 0.85 and 0.53 respectively. It means the company is not better
utilization of fixed assets. But in year 2011-2012 is increases are 0.67 and 0.76. It
means the company is better utilization of fixed assets.


0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
2009
2010
2011
2012
ratio
ratio

WORKI NG CAPI TAL TURNOVER RATI O:-

=COST OF GOODS SOLD / WORKI NG
CAPI TAL

Working Capital Turnover Ratio
(Fig. In Rs.lakhs)
Year Cost of Goods
Sold
Working
Capital
Ratio
2009
22192.78
4389.23 5.06 Times
2010
22554.59
5638.48 4.00 Times
2011
28366.68 4453.65
6.37 Times
2012
29105.89 3087.66
9.43 Times
TABLE 1.17

INTERPRETATION:
As we know that Working Capital Turnover Ratio measures the efficiency with which
the firm is using the working capital. In J.C.T. Ltd. the Working Capital Turnover
Ratio has upward and downward trend. The WCTR during year 2009-2010 is 5.06
and 4. If we interpret working capital turnover ratio in year 2010 is high i.e. 5.06
times as compare to other three years, which means the efficient utilization of
working capital in year 2010 than other three years. In 2011 or 2012 it is 6.39 and
9.43 high means efficient utilize of working capital.



0 2 4 6 8 10
2009
2010
2011
2012
ratio
ratio

PROFI TABI LI TY RATI O:-

GROSS PROFI T RATI O:-
=GROSS PROFI T / NET SALES *
100

Gross Profit Ratio
(Fig. In Rs.lakhs)
Year Gross Profit Net Sales Ratio
2009
7041.35 29234.13
24.09 %
2010
6767.95 29322.54
23.08 %
2011
3642.97 32009.65
11.38 %
2012
2430.35 31536.24
7.71 %


INTERPRETATION:
The gross profit of J.C.T. Ltd. is adequate to cover the operating expenses but it is
inadequate to cover fixed interest and financing charges, depreciation, and excise
duty. In 2009-2010 its increases gross profit is 24.09, and 23.08 respectively. But in
2011 and 2012 is 11.38 and 7.71. It is an alarming downfall in gross profits.




0 5 10 15 20 25 30
2009
2010
2011
2012
ratio
ratio


NET PROFI T RATI O:-
=NET PROFI T / NET SALES *
100

Net Profit Ratio
(Fig. In Rs.lakhs)
Year Net Profit Net Sales Ratio
2009 2957.49
29234.13
10.12 %
2010 2849.56
29322.54
9.72 %
2011 -2496.56
32009.65
-7.80 %
2012 -3,398.38
31536.24
-10.78 %


INTERPRETATION:
The Net profit of J.C.T. Ltd. is in Year 2009-2010 its increases net profit is 10.12 and
9.72 respectively. But in 2011 and 2012 it is net losses of the company i.e. -7.8 and -
10.78. It is decreases in the ratio over the previous year. Therefore shows not
improvement in the overall efficiency and losses of the business.




-15 -10 -5 0 5 10 15
2009
2010
2011
2012
ratio
ratio


OPERATI NG RATI O:-
=OPERATI NG COST / NET SALES *
100

Operating Ratio
(Fig. In Rs.lakhs)
Year Operating cost Net Sales Ratio
2009
23881.12 29234.13
81.69 %
2010
24124.69 29322.54
82.27 %
2011
30231.99 32009.65
94.45 %
2012
30841.68 31536.24
97.80 %

INTERPRETATION:
Operating ratio of the J.C.T.Ltd. increases very rapidly. In 2009 it is 81.69% but in
2012 it is 97.80 % which is very unfavorable to the J.C.T.Ltd. because it lefts a small
margin to cover the non-operating expenses that is interest and financial charges,
excise duty and depreciation. Thats why company has faced losses. So there is a need
to check on this ratio as this rises year by year.





70 75 80 85 90 95 100
2009
2010
2011
2012
ratio
ratio

OPERATI NG PROFI T RATI O:-
=OPERATI NG PROFI T / NET SALES *
100

Operating Profit Ratio
(Fig. In Rs.lakhs)
Year Operating Profit Net Sales Ratio
2009
5353.01 29234.13
18.31 %
2010
5197.85 29322.54
17.73 %
2011
1777.66 32009.65
5.55 %
2012
694.56 31536.24
2.20 %

INTERPRETATION:
Operating Profit ratio of the J.C.T.Ltd. is decreases very rapidly. In 2009 it is 18.31%
but in 2012 it is 2.20 % which is very unfavorable to the J.C.T.Ltd. because it lefts a
small margin to cover the non-operating expenses that is interest and financial
charges, excise duty and depreciation. Thats why company has faced losses. So there
is a need to check on this ratio as this rises year by year.







0 5 10 15 20
2009
2010
2011
2012
ratio
ratio








CHAPTER :- 5



















FINDINGS
The current ratio has shown in a decreasing trend as, 1.54, 1.67, 1.53 and 1.29. In last
four years is lower than the normal bench mark. But it is close to acceptable current
ratio of industrial companies. During 2012 of which indicates a continuous increase in
both current assets and current liabilities.

The quick ratio is also in a decreasing trend throughout the period 2009 12 resulting
as 0.52, 0.57, 0.58, and 0.46. It is not acceptable, because it is not nearer to 1. So
J.C.T Ltd. is not able to meet out its short-term debt.

The absolute liquid ratio has been decreased from 0.046 to 0.016 from 2009 12
because it does not have an adequate amount of cash.

Less debt equity ratio indicates that, the long term solvency of the company is
satisfactory. The Debt equity ratio indicates a high financial risk and low borrowing
capacity. Lower Debt equity ratio of Jct shows that stake of owners is more than that
of creditors.

The proprietary ratio has shown a fluctuating trend as 0.69, 0.76, 0.74 and 0.69. From
last four years it remains above 60%. It represents long term solvency of the company
is good.

The ratio of the company for all the years under analysis indicates that the overall
Solvency of the company is good because its proportion is less.

The fixed assets to net worth ratio have shown in an increasing trend during 2009-
2012. But in the year 2011 to 2012 the ratio is more than 100%. It means that
Shareholders Funds are not sufficient to finance the Fixed Assets and the company
has to depend upon Outsiders to finance the Fixed Assets.

The fixed assets to long term fund ratio have shown in an increasing trend during
2009-2012. But it does not exceed 100%. It means that all the fixed assets are

financed from long term funds and a part of long term funds are financed for working
capital of the company, which is good for the solvency position of the company.

The current assets to proprietary ratio have shown in a decreasing trend as 46.80,
32.54, 31.72 and 37.93.

The higher inventory turnover ratio of JCT shows that its stock is selling more
quickly. But the inventory turnover ratio has shown in a fluctuating trend as 2.59,
3.03, 3.29 and 3.46. But in year 2011-2012 its starts increasing thats good signal for
company.

The debtors turnover ratio is indicates that amount from debtors is being collected
more quickly. So quickly payment means sales policy of company is efficient.

The average collection period indicates that the collection policy of the company is
very good. It shows the good credit policy followed by management.

The creditors turnover ratio has fluctuating trends as 2.70, 1.92, 2.36 and 2.92. But it
increases in 2011-2012 is 2.36 and 2.92. The company has better position.

The fixed assets turnover ratio is in decreasing trend from the year 2009 12 ( 0.85,
0.53, 0.67, and 0.76). It indicates that the company is not efficiently utilizing the fixed
assets.

The working capital increased from 0.56 to 9.43 in the year 2009 -12.

The gross profit ratio is in fluctuation trends. But it decreases in last two years. So
company has a bad position.

The net profit ratio is in fluctuation manner. It decreases in the current year compared
with the previous year from 10.12 to -10.78. Therefore shows not improvement in the
overall efficiency and losses of the business.

Operating ratio increases very rapidly from 81.69 to 97.80 in the year 2009-2012.
This is very unfavorable to the company because it lefts a small margin to cover the

non-operating expenses that is interest and financial charges, excise duty and
depreciation. Thats why company has faced losses.

The operating profit ratio is in fluctuating manner as 18.31, 17.73, 5.55 and 2.20 from
2009 12 respectively.

SUGGESTIONS AND RECOMMENDATION
Company is following very conservative credit policy for its Debtors and there is need to
increase the credit period for its debtors in order to increase its Sales and Profits.

Cash position of the organization is unsatisfactory because of Absolute Liquid Ratio of
organization is much below than accepted norms. On the other hand Current Ratio and
Acid Test Ratio are satisfactory. It means Liquid assets are quite sufficient to provide a
cover to Current Liabilities. However, absolute Liquid Assets like cash and bank balance
needs augmentation.

The company has to increase its Credit Turnover Ratio in order to avail the discounting
facilities and to bring down the Cost of Goods Sold.

The companys fixed assets are continuously declining. There is a need to increase the
fixed assets by raising low cost Outsiders Funds.

The company is meeting its losses by Sales of Fixed Assets. It is not good for the long
term position of the company.

The company is paying large amount on Non Operating Expenses due to which the
companys overall profitability position is not good. The company should have to control
its interest and financial charges in order to bring down the Non Operating Expenses.

Obsolete machinery should be replaced with new machinery for controlling increased
cost of goods sold.

Organization should improve their marketing strategy to get more orders and to get higher
turnover in order to complete with its competitors.

Company should concentrate more on exports market due to which foreign currency will
flow into country.


Company should make investment for advertisement in order to complete with other
composite mills.


LIMITATION
The time of around one and half months was too short to study as wide subject like
Financial Analysis.

The executives were hesitant to reveal complete information since it was confidential.

Executives were unaware of many terms related to Financial Analysis while asking to
them.

Ratio analysis is based upon only monetary information and non monetary factors are
ignored like the efficiency of the workers, staff etc.

Lack of information regarding the competitors.




















CONCLUSI ON

During 2009
In 2009, the company earned operating profits amounts to Rs 5353.01 Lakhs which
was Rs. 1011.23 Lakhs more than from its last year. While sales increased with
Rs.1701.93 Lakhs only. But the companys overall profitability position seems to be
good because of far reaching decrease in the non operating expenses.
During 2010
In 2010, the company earned operating profits amounts to Rs.5197.85 Lakhs which is
Rs.155.13 Lakhs less than the previous year. Also sales increases with the meagre
amount of Rs.88.42 Lakhs but non operating expenses increases with an amount of
Rs.243.79 Lakhs also direct expenses increases with an amount of Rs. 271.81 Lakhs.
This results the net profit is decreased by107.93 Lakhs in last years.
During 2011
In 2011, operating profit of the company decreases by Rs.3420.17 Lakhs; this may be
due to increase in direct expenses to the tune of Rs.5883.16 Lakhs. Also operating and
non operating expenses of the company increases with an amount of Rs.1932.24
Lakhs. Due to which company suffered a net loss and the decreased by Rs. 5346.12
Lakhs in last years.
During 2012
In 2012, the company earned operating profits amounts to Rs.694.56 Lakhs which is
Rs.1083.12 Lakhs less than the previous year. Also sales decreases with the meagre
amount of Rs.473.41 Lakhs but non operating expenses increases with an amount of
Rs.78.99 Lakhs also direct expenses increases with an amount of Rs. 405.61 Lakhs.
This results the net loss is decreased by 901.82 Lakhs in last years to the company.

The companys overall position is not satisfactory. Particularly the current
years position is not well due to raise in the loss level from the last year position.
Its not good for the organization to diversify the funds to different sectors in the
present market scenario.









REFERENCES
Mtetwa, Munya. (2012). Fixed Assets: Capital Expenditure , Journal of fixed
assets in accounting.
Nelgadde, Jo. (2012). Accounts Receivable Analysis: A Guide to Analyzing Trade
Debtors for Small Business Owners, Journal of accounts receivable analysis.
Hutchinson, James (2011), Long Term Debt to Equity Ratio of a Business:
Understand a Company's Value to its Investors and Owners, Journal of long term
debt to equity ratio.
Nelgadde, Jo. (2011). Debt Collection and Debt Recovery Tools: Using Credit
Insurance and Debt Collection Agencies , Journal of debt collection and debt
recovery tools.
Thachappilly, Gopinathan. (2011). Financial Ratio Analysis for Performance Check:
Financial Statement Analysis with Ratios Can Reveal Problem Areas. Journal of
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Clausen, James. (2010), Accounting 101 Income Statement: Financial Reporting
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Thachappilly, Gopinathan. (2010). Profitability Ratios Measure Margins and
Returns: Profit Ratios Work with Gross, Operating, Pretax and Net Profits. Journal
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Clausen, James. (2010). Accounting 101 Financial Statement Analysis in
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of financial statement.
Thachappilly, Gopinathan. (2009). Debt Ratios Look at Financial
Viability/Leverage: The Ratio of Debt to Equity Has Implications for Return on
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Jenkins, Lucia. (2009). Contribution Margin and Breakeven Analysis: Determining
when a Company will Realize a Profit , Journal of contribution margin and
breakeven analysis.

Thachappilly, Gopinathan. (2009). Liquidity Ratios Help Good Financial
Management: Liquidity Analysis reveals likely Short-Term Financial Problems.
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Clausen, James. (2009), Basic Accounting 101- Asset Turnover Ratio: Inventory,
Cash, Equipment and Accounts Receivable Analysis, Journal of asset turnover
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Nelgadde, Jo. (2009). Inventory Analysis: A Guide to Analyzing Inventory for Small
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Zain, Maria. (2009). How to Use Profitability Ratios: Different Types of
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the Numbers. John Wiley and Sons. p.173.
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Publishers, pp. 8.1-8.60.






Annexure















BALANCE SHEET OF JCT AS AT 31 March 2009-12
Particulars 2012 2011 2010 2009
Source Of Funds
1. Share Holder Funds
a) Capital 39499.31 43200.13 40310.22 23676.76
b) Reserve & Surplus (3398.38) (2496.56) 2849.56 2957.49
Total (A) 36100.92 40703.57 43159.78 26634.25

2.Loan Funds
a) Secured Loan 3672.08 3760.74 3883.04 3530.04
b) Unsecured Loan 1802.46 2340.77 1028.32 385.62
Total (B) 5474.54 6101.51 4911.36 3915.66
Total Source OF Funds (A+B) 41575.46 46805.08 48071.14 30549.91

Application of funds
1.Fixed Assets
a) Gross Block 72362.37 73281.81 64736.13 35074.75
b) Less: Deprecation (34092.38) (31153.67) (28105.20) (26962.70)
c) Net block 38269.99 42128.14 36630.93 8112.05
d)Capital WIP incl. advance agst
mach/cw
217.81 223.29 4223.56 17829.43
e) Machine in transit ( incl. under
approval)
0.00 0.00 1578.17 219.20
Total Fixed Assets 38487.80 42351.43 42432.66 26160.68
Total Fixed Assets (incl. Deprecation) 72850.18 73505.10 70537.86 53123.38
2.Investments 0.00 0.00 0.00 0.00
3. Current assets, Loans & Advances
(A) Current Assets
a) Interest accrued on investments 0.00 0.00 0.00 0.00
b)Inventory 8819.63 8015.50 9225.54 82220.63
c) Sundry Debtors 2447.93 3131.87 3247.78 2365.20
d) Cash & Bank Balance 171.58 187.91 221.24 374.66
Total 11439.14 11335.28 12721.56 10960.49
(B) Loans & Advances 2253.09 1577.85 1322.05 1505.52
Total Current Assets (C) 1369.23 12913.13 14043.61 12466.01
Less: Current Liabilities
a) Current Liabilities 9306.27 7139.18 7337.23 6942.15
b) Provisions 1298.30 1320.30 1067.90 1134.63
Total Current liabilities (D) 10604.57 8459.48 8405.13 8076.78
Net Current Assets (E=C-D) 3087.66 4453.65 5638.48 4389.23
TOTAL APPLICATION 41575.46 46805.08 48071.14 30549.91

STATEMENT SHOWING PROFIT & LOSS OF JCT Ltd.
FOR THE YEAR 2009-2012
Particulars 2012 2011 2010 2009
INCOME:
Income From Operation 31,536.24 32009.65 29322.54 29234.13
Other Income 6151.31 492.44 781.09 490.09
Change In Stock (471.10) 782.34 799.6 767.88
TOTAL INCOME 31,680.45 33284.43 30903.23 30492.1
EXPENDITURE:
Manufacturing Expenses 24,436.56 24949.47 19819.45 19576.47
Purchase Of Finished Goods 300.25 258.47 502.99 211.56
Payment to & Provision 3,897.98 3941.08 3031.75 3172.63
For Employees Administration
Expenses
814.80 962.99 822.82 756.57
Selling & Distribution Expenses 920.99 902.32 747.28 931.77
Interest & Financing Charges 1,222.33 1013.82 593.82 689.57
Excise Duty 226.39 222.94 771.09 1101.16
Depreciation 3,259.54 3529.42 1764.47 1094.85
TOTAL EXPENDITURE (B) 35,078.84 35780.99 28053.67 27534.61
Profit /Loss Carried To Balance Sheet
(A-B)
(3,398.38) (2496.56) 2849.56 2957.49
EBIT 1083.49 2046.67 5207.85 4741.91

Others Information:
Cost of Goods Sold 29105.89 28366.68 22554.59 22192.78
Gross Profit 2430.35 3642.97 6767.95 7041.35
Operating Cost 30841.68 30231.99 24124.69 23881.12
Purchases 13865.48 10630.72 10336.51 11488.82
Average Credit 4754.93 4499.87 5375.56 4260.64