Financial resource management

FINANCIAL RESOURCE MANAGEMENT

Introduction

To discourse the fiscal place of any concern there are batch of issues which would be kept in forepart to turn up the fiscal study of any concern. The concern Income study, balance sheet are cardinal tools for mensurating the fiscal stableness. We can compare with the last twelvemonth study or would compare with any other companies fiscal statement, but here we are traveling to compare both the companies with the footing of accounting ratios, which are better tools for it.

Now we will happen out some similarities in both the companies on the footing of the accounting ratios.

FIRST PART OF THE ASSIGNMENT

For the usage of fixing fiscal study, comparing public presentation of both companies is mandatory. That tools will assist to comparing the public presentation of both companies for fixing the ratio analysis.

The Study of relationship between fiscal variable ratios, the ratios compare with one ratio for the all sections in one industry. This comparing indicates if the peculiar industry fiscal study is expected. For illustration, a individual ratio should be calculated last period of clip to explicate the any particular development exists. After all we can give fiscal invest study to industry. The study footing of these ratio computations and comparing we able to give fiscal study advise to propose and convert for industry for illustration Mr.sivakumaran traveling to put in his company ?50000.

We should cipher some most of import ratios for utilizing of some available informations. we will fix net income and loss history ( Income statement ) and balance sheet for the utilizing of last twelvemonth statement for discovery out the better public presentation and understanding the fiscal place of the company.

WHEEL INTERNATIONAL PVT LTD INCOME STATEMENT

Ratio analysis for wheel international

With values or benchmarks. The ratios should be calculate by the given value so that value is taken into histories in a peculiar industry to happen out the public presentation assessment of the peculiar company.

“ The Ratio finds out industries public presentation assessment by utilizing the some ratios representatively. The assorted fiscal study of the industry ” . Generally five ratios used to happen out public presentation in ratio analysis, which are following: the fixing fiscal study for doing future determination that which company is suited for sivakumaran we have to cipher different ratio which should fundamentally utilizing the company strength and profitableness. Now we are traveling to discourse the undermentioned ratio:

Margin Ratio:

  1. Gross net income ratio
  2. Gross Profit ratio =gross profit/sales*100

    Current twelvemonth = 450000/10000=45 %

    Previous twelvemonth = 425000/12500=34 %

  3. Net net income ratio
  4. Net net income ratio = Net profit/sales *100

    Current twelvemonth = 380500/35400=10.75 %

    Previous twelvemonth = 354300/34450=10.28 %

    Efficiency Ratio:

  5. Current ratio
  6. Current ratio = Current assets / Current liabilities

    Current twelvemonth = 25000/5000 = 5 %

    Previous twelvemonth = 20000/5000 = 4 %

  7. Acid trial ratio
  8. Acid trial ratio = Current Assets – Stock / Current Liabilitiess

    Current twelvemonth = 300000-50000/50000 = 5 %

    Previous twelvemonth = 250000-10000/50000 = 3 %

    The Acid trial ratio is of import trial that find out weightier the company adequate money for short term assets to concentrate the immediate liability without stocks From the above ratio computation the company some important alterations both twelvemonth but company unable to pay their current liability and would be looked at some cautiousness.

    Long-run solvency and purchase ratio:

  9. Debt equity ratio = debt/equity*100
  10. Current twelvemonth = 350000/450000*100 = 77 %

    Previous twelvemonth = 250000/400000*100 = 62.5 %

    Corporate ratio

  11. Net incomes per portion = ( net income after revenue enhancement – penchant dividend ) /
  12. figure of ordinary portions

    Current twelvemonth = 45000/1000 = 45

  13. Previous twelvemonth = 40000/1000 = 40

Ratio analysis for raja ltd

Efficiency ratio

  1. Current ratio = Current assets / Current liabilities
  2. Current twelvemonth = 250000/ 50,000= 5 %

    Previous twelvemonth = 200000/50000 = 4 %

    From the above ratio computation last twelvemonth company able to pay short term liability is in fold. This consequence says company traveling productively.

  3. Acid trial ratio = Current Assets – Stock / Current Liabilitiess
  4. Current twelvemonth = ( 150000-50000 ) /20000 = 5 %

    Previous twelvemonth = ( 130000-40000 ) /30000=3 %

    From the above ratio computation the Acid trial ratio indicate that the company is in good place. They have limited money for confronting the short term plus without stock.

    The company major betterment in the present twelvemonth comparison with last twelvemonth.

    Margin Ratios

  5. Gross net income ratio
  6. Gross net income ratio = Gross net income /sales*100

    Current twelvemonth = 1000000/80000*100 = 80 %

    Previous twelvemonth = 1000000/80000*100=80 %

  7. Net net income ratio
  8. Net net income ratio = Net profit/sales*100

    Current twelvemonth = 100000/60000*100=60 %

    Previous twelvemonth = 100000/55000*100 = 55 %

    Liquidity Ratios

  9. Debtor ratio
  10. Debtor ratio = Debtor/sales*365

    Current twelvemonth = 5642000 / 23450*365 = 123 Dayss

    Previous twelvemonth =8756400 /134600*365 = 86 Dayss

  11. Creditor ratio
  12. Creditor ratio = Creditor/cost of sales*365

    Current twelvemonth = 7654000/60000*365=98 yearss

    Previous twelvemonth = 6856000/45600*365=76 yearss

Decision

The company should take future investing determination depends upon the hazard taking capablenesss investor point of position. The chief regulations and ordinance for the investor agree higher hazard and higher net income. the some of the investor reedy to take hazard they have ability to confront the job and some of the investor is non ready to take risk.the raja pvt ltd is ready to take hazard its followers regulations and ordinance like high hazard and high net income.

Basically the ratio analysis based on historical informations and the company portion holder have to take determination depends upon the investor environment.

The maximal investor or the portion holder are really strong about the portion monetary value because that is chief consider of the future net income of the industry. The hole the portion monetary value based on the future ends of company the monetary value value besides take into history to while the fixing the fiscal study. Its one of the good intelligence for the investor if the portion value addition at the same clip another point of position bad intelligence. Its affect the market portion value. This is of import to the raja pvt ltd while the repairing the market portion monetary value value at the same clip they have to see about the company future determination.

Second PART OF THE ASSIGNMENT

It is really importance for endurance and betterment of the house to happen out and cipher the public presentation assessment of its critical accomplishment factors. Performance assessment is indispensable to explicate that the house is using its maximal human resources efficaciously and expeditiously. In any company The Financial state of affairs measured by one or more ways they are

  • Benchmarking
  • Ratio analysis
  1. RATIO Analysis: –
  2. The ratio analysis utilizing the company to happen out the public presentation assessment by two different attack utilizing the different ratio. There are different ratios they are

  • Liquidity ratio
  • Employee ratio
  • Corporate ratio
  • Financial ratio
  • Management efficiency ratio
  • Profitability ratio

Profitability Ratio:

This ratio determine that the achievable of the industry to make net income in the company. Those Measures the company net income is really of import to the portion holders to accomplish their ends or the industry development. The company spouse force gross in the signifier of dividends of the company. Further, the doing net incomes may be calculated by utilizing the increasing market portion value with taking the capital net income.

The Net incomes are besides really of import to the creditors because net net incomes are one of the beginning to cover the debt. Profitableness may be calculate utilizing by following ratios.

Tax return on capital employed: –

It is used in finance as the step of the returns that a company is recognizing from its capital employment. It is normally used as a step for comparing the public presentation between concerns and for measuring whether a concern generates plenty returns to pay for its cost of capital.

http//en.wikipedia.org/wiki/ROCE

A low ROCE can easy be wiped out in a downswing, if the figure is lower than the cost of borrowing, increased adoptions will cut down net incomes per portion unless the excess money can be used in countries where the ROCE is higher than the cost of borrowing. It serves as a usher to the company in increasing possible acquisitions and in get downing up new activities if their possible ROCE is non attractive they should be avoided.

ASSET Employee turnover: –

The proper use of the assets checked by the plus turnover ratio. the ratio does non see if the bettering company public presentation could be face-to-face when the company traveling down or the fail to keep works and machinery up to day of the month.

Net Net income Margin:

The net net income ratio is see the sum which net income consider capital per portion its after taking the money like the cost of gross revenues, disposal cost, distribution cost and all other cost. This net income is the net income which is taking before paying the involvement and revenue enhancement.

GROSS PROFIT Margin:

Gross net income border cipher the gross net income divided the company turnover multi by hundred. It see the cost of goods sold or the entire gross revenues its take off the disposal disbursal and all gross revenues cost etc..

LIQUIDITY RATIO:

Liquidity ratio is the ratio which is the utilizing to happen out the employee or company public presentation assessment. For utilizing the some ratio for discovery out the public presentation assessment they are

  • Current Ratio
  • Acid Test Ratio
  • Debtors Ratio
  • Creditors Ratio

Current ratio is the most of import to happen out the company ‘s good fiscal place. Its concern the company current assets divided by the company current liabilities. The most utile for the calculated for the future fiscal place of figure of twelvemonth. In acerb trial ratio is concern which the company stock will be subtracted from the current assets. And the current plus divided by the current liabilities which is the same consequence like as current ratio. In debitors and creditors ratios are really good indexs of whether a peculiar company is in short of hard currency or non by spliting the entire creditors and debitors by one twenty-four hours purchase and one twenty-four hours gross revenues severally.

MANAGEMENT EFFICIENCY RATIOS:

Management efficiency ratio is calculated by utilizing the gross revenues and cost. The stock turnover ratio which is derived by the entire cost of gross revenues divided by the inventry.its maintain the company stock the stock should be ration This ratio may be measured as a sub-ratio for working capital use.

Corporate Ratio:

This ratio analysis is supplying the really utile information. Its maintain the company fiscal place and the future fiscal construction the company face the competition in the outside industry. Corporate ratio is maintain the industry stock and strong accounting item.

FINANCIAL RATIOS:

Financial ratio is really utile index of a company ‘s public presentation and fiscal place. This ratio can be calculated by the utilizing fiscal statements. this is most utile for comparison the house ‘s fiscal place to other company. its calculate utilizing by the some ratios.

  • BENCHMARKING:
  • Benchmarking is one the procedure to find which is the best in the company and happen out the employee criterion among the employee in the administration. Its fundamentally to compare the two things for place the best 1 among the two this is really easy to compare others. Nowadays the most of the company are utilizing the bench taging to place best employee to give wages. Some type of bench taging they are strategic bench marker, the public presentation bench taging, procedure bench taging, functional bench taging, internal bench marker, external bench marker, international bench taging etc..

    Mention

    • “ Taking Control of IT Costs ” . Nukes, Sebastian. London ( Financial Times Prentice Hall ) : March 20, 2000. ISBN 978-0-273-64943-4
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    • Sharman, Paul A. ( 2003 ) . “ Bring On German Cost Accounting ” . Strategic Finance ( December ) : 2-9.
    • Kilger, Wolfgang ( 2002 ) . Flexible Plankostenrechnung und Deckungsbeitragsrechnung. Updated by Kurt Vikas and Jochen Pampel ( 11th Edition ed. ) . Wiesbaden, Germany: Gabler GmbH.
    • Vocational Business: Training, Developing and Motivating People by Richard Barrett – Business & A ; AMP ; Economics – 2003. – Page 51.
    • Administration industrielle et generale – prevoyance administration – commandement, coordination – controle, Paris: Dunod, 1966
    • Gomez-Mejia, Luis R. ; David B. Balkin and Robert L. Cardy ( 2008 ) . Management: Peoples, Performance, Change, 3rd edition. New York, New York USA: McGraw-Hill. pp.20. ISBN 978-0-07-302743-2.
    • Craig, S. ( 2009, January 29 ) . Merrill Bonus Case Widens as Deal Struggles. Wall Street Journal. [ 1 ]
    • Kotter, John P. & A ; AMP ; Dan S. Cohen. ( 2002 ) . The Heart of Change. Boston: Harvard Business School Publishing.