Ratio Analysis Project Report for MBA

Hi I would like to have the in formation on the broad view of the topics which has to be covered in the Ration Analysis project which is undertaken by students of MBA programme?

[Pathak]

The principle target of the Project Report is Find the Ratio Analysis of organization. What's more, sub targets of this report is comprehend the Meaning of Ratio, Pure Ratio or Simple Ratio, Advantages of Ratio Analysis, Limitations of Ratio Analysis, grouping of Ratio, Liquidity Ratio, Profitability Ratio or Income Ratio, Activity and Turnover Ratio, Return on Capital Employed

MBA PROJECT REPORT ON RATIO ANALYSIS

Significance of Ratio:- A proportion is basic arithmetical articulation of the relationship of one number to another. It might be characterized as the demonstrated remainder of two scientific expressions.

As indicated by Accountant's Handbook by Wixon, Kell and Bedford, "a proportion is a declaration of the quantitative relationship between two numbers".

Proportion Analysis:- Ratio examination is the procedure of deciding and displaying the relationship of things and gathering of things in the announcements. As per Batty J. Administration Accounting "Proportion can help administration in its fundamental elements of guaging, arranging coordination, control and correspondence".

It is useful to think about the liquidity, dissolvability, capital structure and benefit of an association. It is useful device to help in applying judgment, generally complex circumstances.

Proportion examination can speak to taking after three techniques.

Proportion might be communicated in the accompanying three ways :

1. Unadulterated Ratio or Simple Ratio :- It is communicated by the basic division of one number by another. For instance , if the present resources of a business are Rs. 200000 and its present liabilities are Rs. 100000, the proportion of 'Current resources for current liabilities' will be 2:1.

2. "Rate" or 'So Many Times :- In this sort , it is ascertained how frequently a figure is, in contrast with another figure. For instance , if a company's credit deals amid the year are Rs. 200000 and its indebted individuals toward the end of the year are Rs. 40000 , its Debtors Turnover Ratio is 200000/40000 = 5 times. It demonstrates that the credit deals are 5 times in contrast with borrowers.

3. Rate :- In this sort, the connection between two figures is communicated in hundredth. For instance, if an association's capital is Rs.1000000 and its benefit is Rs.200000 the proportion of benefit capital, in term of rate, is 200000/1000000*100 = 20%

Point of preference OF RATIO ANALYSIS

1. Accommodating in examination of Financial Statements.

2. Accommodating in similar Study.

3. Accommodating in finding the frail spots of the business.

4. Accommodating in Forecasting.

5. Gauge about the pattern of the business.

6. Obsession of perfect Standards.

7. Viable Control.

8. Investigation of Financial Soundness.

Constraints OF RATIO ANALYSIS

1. Correlation unrealistic if distinctive firms receive diverse bookkeeping arrangements.

2. Proportion examination turns out to be less powerful because of value level changes.

3. Proportion might be misdirecting without total information.

4. Restricted utilization of a solitary information.

5. Absence of appropriate models.

6. False bookkeeping information gives false proportion.

7. Proportions alone are not sufficient for legitimate conclusions.

8. Impact of individual capacity and predisposition of the examiner.

Order OF RATIO

Proportion might be ordered into the four classifications as takes after:

A. Liquidity Ratio

a. Current Ratio

b. Fast Ratio or Acid Test Ratio

B. Influence or Capital Structure Ratio

a. Obligation Equity Ratio

b. Obligation to Total Fund Ratio

c. Restrictive Ratio

d. Altered Assets to Proprietor's Fund Ratio

e. Capital Gearing Ratio

f. Interest Coverage Ratio

C. Action Ratio or Turnover Ratio

a. Stock Turnover Ratio

b. Account holders or Receivables Turnover Ratio

c. Normal Collection Period

d. Loan bosses or Payables Turnover Ratio

e. Normal Payment Period

f. Altered Assets Turnover Ratio

g. Working Capital Turnover Ratio

D. Productivity Ratio or Income Ratio