TABLE OF CONTENTS

CHAPTER NO. TITLE PAGE NO.

ABSTRACT (i)
LIST OF TABLES (iii)
LIST OF CHARTS (iv)
INTRODUCTION
1.1 Introduction 1
1
1.2 Industry Profile 3
1.3 Company Profile 4
REVIEW OF LITERATURE
2
2.1 Review of Literature 7
RESEARCH METHODOLOGY
3.1 Introduction 11
3.2 Statement of the problem 11
3.3 Objectives of the study 11
3 3.4 Scope of the study 12
3.5 Research design 12
3.6 period of study 12
3.7 Method of collection 13
3.8 Tools used 13
DATA ANALYSIS AND INTERPRETATION
4
4.1 Ratio analysis 14
FINDINGS, SUGGESTIONS AND CONCLUSION
5.1 Findings of the Study 30
5 5.2 Suggestions 31
5.3 Limitations of the study 31
5.4. Conclusion 32
REFERENCES
ANNEXURE I – BALANCE SHEET
ANNEXURE II – ARTICLE
 ABSTRACT

A ratio analysis is a quantitative analysis of information contained in a company’s

financial statements. Ratio analysis is based on line items in financial statements like
the balance sheet, income statement and cash flow statement . Ratio analysis is used
to evaluate various aspects of a company’s operating and financial performance such
as its efficiency, liquidity, profitability and solvency. Fabsys Technologies Private
Limited was established in the year 2004. Fabsys is a professional software
development company in Chennai. Company provides solutions for web design and
development, Web application development, SEO based Digital Marketing, Creative
Multimedia Works and Hosting Services. Fabsys technologies believes good service
is good business and its aspects are to focus the needs of the clients and provide
100% satisfaction. A Successful management of the working capital in any concern
will ensure the success of business. In the Study of Fabsys Technologies, the working
capital management is good and the profit increasing.
 LIST OF TABLES
TABLE PAGE
LIST OF TABLES
NO. NO.

4.1.1 TABLE SHOWING WORKING CAPITAL RATIO 14

4.1.2 TABLE SHOWING INVENTORY TURNOVER RATIO 16

4.1.3 TABLE SHOWING DEBTORS TURNOVER RATIO 17

4.1.4 TABLE SHOWING AVERAGE COLLECTION PERIOD 18

4.1.5 TABLE SHOWING NET PROFIT RATIO 20

4.1.6 TABLE SHOWING RETURN ON TOTAL ASSETS 21

4.1.7 TABLE SHOWING RETURN ON INVESTMENT 22

TABLE SHOWING RETURN ON SHAREHOLDERS

4.1.8 23
FUNDS

4.1.9 TABLE SHOWING SOLVENCY RATIO 25

4.1.10 TABLE SHOWING GROSS PROFIT RATIO 27

4.1.11 TABLE SHOWING OPERATING PROFIT RATIO 28

 LIST OF CHARTS
CHART PAGE
LIST OF CHARTS
NO. NO.

4.1.1 CHART SHOWING WORKING CAPITAL RATIO 15

4.1.2 CHART SHOWING INVENTORY TURNOVER RATIO 16

4.1.3 CHART SHOWING DEBTORS TURNOVER RATIO 18

4.1.4 CHART SHOWING AVERAGE COLLECTION PERIOD 19

4.1.5 CHART SHOWING NET PROFIT RATIO 20

4.1.6 CHART SHOWING RETURN ON TOTAL ASSETS 22

4.1.7 CHART SHOWING RETURN ON INVESTMENT 23

CHART SHOWING RETURN ON SHAREHOLDERS

4.1.8 24
FUNDS

4.1.9 CHART SHOWING SOLVENCY RATIO 26

4.1.10 CHART SHOWING GROSS PROFIT RATIO 27

4.1.11 CHART SHOWING OPERATING PROFIT RATIO 29

 CHAPTER 1 – INTRODUCTION

1.1. INTRODUCTION

RATIO ANALYSIS

A ratio analysis is a quantitative analysis of information contained in a company’s

financial statements. Ratio analysis is based on line items in financial statements like
the balance sheet, income statement and cash flow statement; the ratios of one item –
or a combination of items - to another item or combination are then calculated. Ratio
analysis is used to evaluate various aspects of a company’s operating and financial
performance such as its efficiency, liquidity, profitability and solvency. The trend of these
ratios over time is studied to check whether they are improving or deteriorating. Ratios
are also compared across different companies in the same sector to see how they stack
up, and to get an idea of comparative valuations. Ratio analysis is a cornerstone of
analysis. Ratio analysis refers to the analysis and interpretation of the figures appearing
in the financial statements (i.e., Profit and Loss Account, Balance Sheet and Fund Flow
statement etc.). It is a process of comparison of one figure against another. It enables
the users like shareholders, investors, creditors, Government, and analysts etc. to get
better understanding of financial statements.

DEFINITION
Khan and Jain define the term ratio analysis as “the systematic use of ratios to
interpret the financial statements so that the strengths and weaknesses of a firm as well
as its historical performance and current financial conditions can be determined.”

ADVANTAGES OF RATIO ANALYSIS

1. Forecasting and Planning:

The trend in costs, sales, profits and other facts can be known by computing ratios of
relevant accounting figures of last few years. This trend analysis with the help of ratios
may be useful for forecasting and planning future business activities.

1
2. Budgeting:

Budget is an estimate of future activities on the basis of past experience. Accounting

ratios help to estimate budgeted figures. For example, sales budget may be prepared
with the help of analysis of past sales.

3. Indication of Overall Profitability:

The management is always concerned with the overall profitability of the firm. They want
to know whether the firm has the ability to meet its short-term as well as long-term
obligations to its creditors, to ensure a reasonable return to its owners and secure
optimum utilization of the assets of the firm. This is possible if all the ratios are
considered together.

4. Indication of Liquidity Position:

Ratio analysis helps to assess the liquidity position i.e., short-term debt paying ability of
a firm. Liquidity ratios indicate the ability of the firm to pay and help in credit analysis by
banks, creditors and other suppliers of short-term loans.

5. Aid to Decision-making:

Ratio analysis helps to take decisions like whether to supply goods on credit to a firm,
whether bank loans will be made available etc.

LIMITATIONS OF RATIO ANALYSIS

1. Ratios Account for one Variable:

Since ratios account for only one variable, they cannot always give correct picture
since several other variables such Government policy, economic conditions,
availability of resources etc. should be kept in mind while interpreting ratios.

2
2. Limitations of Financial Statements:

Ratios are calculated from the information recorded in the financial statements. But
financial statements suffer from a number of limitations and may, therefore, affect the
quality of ratio analysis.

3. Changes in Price Level:

Fixed assets show the position statement at cost only. Hence, it does not reflect the
changes in price level. Thus, it makes comparison difficult.

4. Different Accounting Policies:

Different accounting policies regarding valuation of inventories, charging depreciation

etc. make the accounting data and accounting ratios of two firms non-comparable.

1.2 INDUSTRY PROFILE

The Rise & Journey of Web Development in India

It was in 1991, when the first website was developed in India. Since then, the web
development industry has never looked back. Intelligence combined with determination,
form the base of the web industry. There has been an amazing increase in the extension
to the basic web production in the last few years. Use of still graphics, animated
graphics, has increased remarkably. Web has become more interesting with the arrival
of 3 D technology of VRML (Virtual Reality Markup Land page). The `cost of developing
a website has become very cheap. There are many web development systems available
to the public free of charge to help in development of this industry. Websites like
Facebook, Twitter has already started showing high popularity in the field of
communication & social-networking.

Success Of Web Development Industry in India

It would be really surprising to know that with only about 5% of India’s large population
having access to computer & internet; India has achieved the top most place in web
development industry & IT services.

3
Future Of Web Development Industry in India

Though the web designing & development industry in India is now at a greater pace,
but the future of this depends on how well it is taken care of. The web designing &
development industry has got tremendous foundation in India & it has got a shinning
future. Excellent results are expected from online auction sites like eBay.

1.3 COMPANY PROFILE

Fabsys Technologies Private Limited, established in the year 2004 Fabsys is a

professional software development company based in Chennai, South India. Company
provides solutions for web design and development, Web application development,
SEO based Digital Marketing, Creative Multimedia Works and Hosting Services.
Company’s rich portfolio justifies the fact that Fabsys functions as a world class offshore
web development Company. Company believes good service is good business our
aspects are to focus the needs of our clients and provide 100% satisfaction.

Company’s passion is to provide a world class web designs to all the startups and large
organizations. they deliver website designing and development services ranging from
simple static to interactive dynamic, responsive website. web design process always
takes into consideration the requirements, suggestion and continuous feedback from
clients in order to deliver web work that not only satisfies them but exceeds their
expectations.

Why Fabsys?

For over ten years Fabsys have been delivering beautiful, standards compliant web
sites and has emerged as a premium website design company in Chennai. With a deep
commitment to designing the best possible experience for the end user it comes as no
surprise that their work is showcased around the web. web portfolio speaks for itself.

4
From simple brochure sites through to highly complex database driven applications,
Fabsys can design and build a solution that will work for you and your clients. Company
is confident that all of their clients would not hesitate to recommend their web design
services.

TEAM

They are a team of young enthusiasts with strong focus, dedication and passion for
what we do. Fabsys, help you maintain and improvise your online identity and
rediscover and reinstate your brand. they also facilitate you to reach out in the Global
markets.

 Project Manager
 Layout Designer
 Web designers
 Web Developers
 Content Writers

SOLUTION

Fabsys was established with an aim to provide Low-Cost Web Design, Development
and SEO, Web promotions and social marketing services that not only meet the
expectations, but also reflect the philosophy of creating real values for their clients. they
have a holistic approach that goes beyond mere cost savings for their client.

MISSION

To be a global online service provider in India having an excellent customer service with
pioneering technology, creativity, integrity and social responsibility.

VISION

 To create and deliver emerging highest quality precision services.

 To ensure that projects are completed and delivered within the time requirements
of our customers. To satisfy customer's requirements and expectations through
dedicated service.

5
  To treat each customer and employee with integrity and fairness.

SERVICES

 Software Development Services

 Customize Web Design
 Corporate Web Design
 Mobile Site Design
 Web Application Development
 SEO & Digital Marketing
 Creative Multimedia Works
PRODUCTS

 Online College Management System

 Online School Management System

 Online Multipurpose Billing System

 Quick E-Shop with Payment Gateway

 Library Management System – Barcode & RFID

 Online Question Paper Generator

COMPANY DIRECTORS
 HELEN TITTU RAJA – MANAGING DIRECTOR
 NARENDRA KUMAR – DIRECTOR

CONTACT DETAILS
FABSYS TECHNOLOGIES PRIVATE LIMITED
34/6, AVVAIYAR STREET, AMBAL NAGAR
EKKATTUTHANGAL, CHENNAI -600032.044-485194

6
 CHAPTER 2 – REVIEW OF LITERATURE

2.1 INTRODUCTION
A literature review is a critical and in-depth evaluation of previous research. It is a
summary and synopsis of a particular area of research, allowing anybody reading the
paper to establish why the study is pursuing this particular research. A good literature
review expands on the reasons behind selecting a particular research question. A
literature review is likewise not a collection of quotes and paraphrasing from other
sources. A good literature review should critically evaluate the quality and findings of
the research.

Maria Zain (2018), in this article he discusses about the return on assets is an important
percentage that shows the company’s ability to use its assets to generate income. He
said that a high percentage indicates that company’s is doing a good utilizing the
company’s asset 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.

James Clausen (2018), in this article expresses 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’s 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

Gopinathan Thachappilly (2018), in his studies, states that the Liquidity Ratios help
Good Financial. He knows 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 image its reputation and
creditworthiness and in extreme cases even lead to bankruptcy .

7
Jo Nelgadde (2018), in this thesis, he briefly discusses about the asset management
ratio. It divided into different types of categories. He states that about the used to
analyze accounts receivable and other working capital figures to identify significant
changes in the company’s 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.

Al-Aameri and Alrikabi (2019) was focusing on one of the important techniques in
financial analysis, namely, the financial ratios, for the purpose evaluating the
performance of petroleum projects company, and to find out the main strength and
weakness points, so as to suggest the remedial actions for treatment of negative points
and enhance the positive one. The papers contains detail study for the data included in
financial statements to explain the financial performance of the company, and that will
help the management for planning the future according to the previous performance,
and also contain the converting process of the data of financial statements to meaningful
information through several techniques, the financial statement analysis among them.

Lucia Jenkins (2019), 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.

A study in Australian financial institutions (Elizabith & Greg, 2019) showed that all
financial performance measures as interest margins, return on assets, and capital
adequacy are positively correlated with customer service quality scores. Many
researchers have been too much focus on asset and liability management in the
banking sector, (Arzu & Gokhan, 2019) discussed the asset and liability management
in financial crisis. They argued that an efficient asset-liability management requires
maximizing bank’s profit as well as controlling and lowering various risk, and their study
showed how shifts in market perceptions can create trouble during crisis.

8
Medhat, (2019) used multiple regression analysis and correlations to test the financial
performance of Omani Commercial banks. He used the ROA and the interest income
as performance proxies (dependent variables), and the bank size, the asset
management and the operational efficiency as independent variables. He found positive
strong correlation between financial performance and operational efficiency and a
moderate correlation between ROA and bank size.

Khan (2019) found that the bank with higher total capital, deposits, credits, or total
assets does not always mean that has better profitability performance. According to Dr.
M. Ravichandran the financial performance can be measured by using various financial
tools such as profitability ratio, solvency ratio, comparative statement, etc. Based on the
analysis, findings have been arrived that the company has got enough funds to meet its
debts & liabilities, the income statement of the company shows sales of the company
increased every year at good rate and profit also increased every year.

M. Ganga (2020) on the evaluation of financial performance of Equitas Micro Finance

Private Limited in Chennai. According to them financial analysis is important to plan and
control the firm’s financial resources. They adopted various research techniques to find
the evaluation of financial performance of the organization. They found that the
managers must concentrate on gray area which would be useful for future growth of the
company.

Dr. M. Ravichandran (2020) the financial performance can be measured by using

various financial tools such as profitability ratio, solvency ratio, comparative statement,
etc. Based on the analysis, findings have been arrived that the company has got enough
funds to meet its debts & liabilities, the income statement of the company shows sales
of the company increased every year at good rate and profit also increased every year.

Gopinathan Thachappilly (2020), in this article he discusses about the Financial

Ratio Analysis for Performance evaluation. Its analysis is typically done to make sense
of the massive number 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

9
separate articles on different aspects of performance such as profitability ratios,
liquidity ratios, debt ratios, performance ratios investment evaluation ratios.

10
 CHAPTER 3 – RESEARCH METHODOLOGY

3.1 INTRODUCTION

Research Methodology is a systematic way to solve a research problem. It includes

various steps that are generally adopted by a researcher in studying the problem along
with the logic behind them. The present study was conducted at Fabsys Technologies
Private Limited. The study depends mainly on the secondary data namely the annual
reports of the company. Five years annual reports had been collected from the
company. Data had also been collected from text books, journals, newspapers,
magazines and internet.

3.2 STATEMENT OF THE PROBLEM

Ratio analysis is used to evaluate various aspects of a company’s operating and

financial performance such as its efficiency, liquidity, profitability and solvency. The
trend of these ratios over time is studied to check whether they are improving or
deteriorating. Ratio analysis is widely used as a powerful tool of financial statement
analysis to check the company’s operations or financial performance is difficult task by
some other tools for the company. So, the study on ratio analysis at Fabsys
Technologies Private Limited, is taken as the study to measure the performance of the
company.

3.3 OBJECTIVES THE STUDY

Primary objective

To study on ratio analysis towards the Fabsys Technologies Private Limited.

Secondary objectives

 To study the short-term liquidity positions of company.

 To study the efficiency of inventory management.

 To study the effectiveness of credit management of the company.

 To analyse the long-term solvency of the business concern.

11
  To study how best the working capital is utilized in the company.

3.4 SCOPE OF THE STUDY

 The scope of the study defined below in terms of concept adopted and period
under focus.

 The study of management of working capital is only the Fabsys Technologies

Private Limited., Chennai.

 Thus, the whole purpose of the project is to analyze the past and present
performance of the company on various financial areas like cash, inventories and
receivables.

 Since the past performance data essential for predicting future planning process

3.5 RESEARCH DESIGN

“A Research Design is the arrangement of conditions for collection and analysis of data
in a manner that aims to combine relevance to the research purpose with the economy
in procedure”. In fact, the research design is the conceptual structure with in which
research is conducted; it constitutes the blue print for the collection, measurement and
analysis of data, the research design utilized in this study is analytical research.

3.6 PERIOD OF STUDY

The duration taken by the researcher for the data collection and analysis regarding the
ratio analysis of Fabsys Technologies Private Limited. for three months. The data used
are of last five years from 2017 – 2021.

12
3.7 METHOD OF COLLECTION

The study basically uses primary and secondary data. Primary data means data which
is fresh collected data. Secondary data means the data that are already available.
Generally speaking, secondary data is collected by some organizations or agencies
which have already been processed when the researcher utilizes secondary data. the
process of secondary data collection and analysis is called desk research.

3.8 TOOLS USED

RATIO ANALYSIS

A ratio is the quotient of two mathematical expressions and the relationship between
two or more numbers. In financial analysis, a ratio is used as an index or yardstick for
evaluating the financial position and performance of a firm. The relationship between
the two accounting figures expressed mathematically is known as a financial ratio. Itt
involves comparison for a useful interpretation of the financial statements and it should
be compared with some standards

 Working capital ratio

 Inventory Turnover ratio

 Debtors’ turnover ratio

 Average collection period

 Net profit ratio

 Return on total assets

 Return on investment

 Return on shareholders’ Funds

 Solvency ratio

 Gross profit ratio

 Return on assets ratio

 Operating profit ratio

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CHAPTER 4 – DATA ANALYSIS AND INTERPRETATION

WORKING CAPITAL RATIO

The working capital ratio, also called the current ratio, is a liquidity ratio that
measures a firm’s ability to pay off its current liabilities with current assets. The
working capital ratio is important to creditors because it shows the liquidity of the
company.
Net working capital
Working capital ratio = ---------------------------
Net assets

Net
Working
Year capital Net assets Ratio
2016-2017 22.91 117.92 0.19
2017-2018 22.72 127.80 0.18
2018-2019 11.92 124.38 0.10
2019-2020 12.46 133.73 0.09
2020-2021 1.83 132.51 0.01

TABLE NO: 4.1.1 -WORKING CAPITAL RATIO

Interpretation

The above table indicates that the Working capital ratio is 0.19 in the year of 2016-
17. It has decreased to 0.18 in the year of 2017-18. It has decreased to 0.10 in the
year of 2018-19. It has further decreased to 0.09 and 0.01in the year of 2019-2020
and 2020-21 respectively.

14
 2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

Year

CHART NO: 4.1.1- WORKING CAPITAL RATIO

INVENTORY TURNOVER RATIO

This ratio indicates the efficiency of the firm in producing and selling its product. This
ratio indicates the number of times inventory is replaced during the year. It measures
how quickly inventory is sold. The inventory turnover reflects the efficiency of the
firm in producing and selling its products. This ratio indicates the velocity or the
movement of goods during the year. It is calculated as follows.
Cost of goods sold
Inventory turnover ratio --------------------------------
Average inventory

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 TABLE NO 4.1.2.
INVENTORY TURNOVER RATIO

Year Cost of goods sold Average inventory Ratio

2016-
2017 213.30 283.54 0.75
2017-
2018 3.42 56.69 0.06
2018-
2019 1.09 52.72 0.02
2019-
2020 -19.01 61.14 -0.31
2020-
2021 20.10 70.10 0.29

Interpretation

The above table indicates that the inventory turnover ratio is 0.75 in the year of 2016-
17. It has decreased to 0.06 in the year of 2017-18. It has further decreased to 0.02
and -0.31 in the year of 2018-19 and 2019-20 respectively. It has increased to 0.29
in the year of 2020-21.

2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

Year

CHART NO 4.1.2 INVENTORY TURNOVER RATIO

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DEBTORS TURNOVER RATIO

Ratio of net credit sales to average trade debtors is called debtors turnover ratio.
It is also known as receivables turnover ratio. This ratio is expressed in times. It
can be calculated as

Debtors turnover ratio = sales

debtors

TABLE NO: 4.1.3

DEBTORS TURNOVER RATIO

Year Sales Debtors Ratio

2016-2017 208.95 31.44 6.65

2017-2018 205.42 33.58 6.12

2018-2019 242.33 27.00 8.98

2019-2020 255.96 27.98 9.15

2020-2021 217.49 20.46 10.63

Interpretation

The above table indicates that the debtor’s turnover ratio is 6.65 in the year of 2016-
17. It has decreased to 6.12 in the year of 2017-18. It has increased to 8.98 in the
year of 2018-19. It has further increased to 9.15 and 10.63 in the year of 2019-20
and 2020-21 respectively.

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 2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021
Year

CHART NO 4.1.3 DEBTORS TURNOVER RATIO

COLLECTION PERIOD

The average collection period is the approximate amount of time that it takes for a
business to receive payments owed in terms of accounts receivable. The average
collection period is calculated by dividing the average balance of accounts
receivable by total net credit sales for the period and multiplying the quotient by the
number of days in the period. To find the collection period
360
Collection Period = ---------------------------
Debtors’ turnover ratio

TABLE NO: 4.1.4

AVERAGE COLLECTION PERIOD

Days in a Debtors’ Debt collection

Year year turnover ratio period (days)
2016-2017 365 6.65 54.92
2017-2018 365 6.12 59.67
2018-2019 365 8.98 40.67

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 2019-2020 365 9.15 39.90

2020-2021 365 10.63 34.34

Interpretation

The above table indicates that the average collection period is 54.92 in the year of
2016-17. It has increased to 59.67 in the year of 2017-18. It has further increased to
40.67 in the year of 2018-19. It has decreased to 39.90 in the year of 2019-20. It has
further decreased to 34.34 in the year of 2020-21.

2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

Year

CHART NO: 4.1.4 AVERAGE COLLECTION PERIOD

NET PROFIT RATIO

Net profit is obtained when operating expenses interest and taxes are subtracted
from the gross profit. The ratio is measured as

Net profit margin = profit after tax

Sales

This ratio is established a relationship between net profit and sales and indicates
managements efficiency in manufacturing, administrating and selling the products.
This ratio is the overall measure of the firm’s ability to turn each rupee sales into net
profit.

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 TABLE NO: 4.1.5

NET PROFIT RATIO

Year Net profit Net sales Ratio

2016-2017 8.15 208.95 3.90

2017-2018 0.42 205.42 0.20

2018-2019 3.46 242.33 1.43

2019-2020 9.37 255.96 3.66

2020-2021 9.11 217.49 4.19

Interpretation

The above table indicates that the net profit ratio is 3.90 in the year of 2016-17. It
has decreased to 0.20 in the year of 2017-18. It has increased to 1.43 in the year of
2018-19. It has increased to 3.66 in the year of 2019-20. It has further increased to
4.19 in the year of 2020-2021.

2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

Year

CHART NO: 4.1.5 - NET PROFIT RATIO

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Return on total assets

Return on assets is a measure of how effectively the firm's assets are being used
to generate profits. It is defined as:
Net profit
Return on Assets = -----------------------------
Total Assets

TABLE NO: 4.1.6

RETURN ON TOTAL ASSETS

Year Net profit Total assets Ratio

2016-2017 8.15 117.92 6.91

2017-2018 0.42 127.80 0.33

2018-2019 3.46 124.38 2.78

2019-2020 9.37 133.73 7.01

2020-2021 9.11 132.51 6.87

Interpretation

The above indicates that the return on total assets ratio is 6.91 in the year of 2016-
17. It has decreased to 0.33 in the year of 2017-18. It has increased to 2.72 in the
year of 2018-19. It has further increased to 7.01 in the year of 2019-20. It has
decreased to 6.87 in the year of 2020-2021

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 2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

CHART NO: 4.1.6 RETURN ON TOTAL ASSETS

8. Return on investment

The term in investment may refer to total assets or net assets. The conventional
approach of calculating return on investment is to divide profit after tax by
investment.
Operating profit
Return on investments = -----------------------------
Capital employed

TABLE NO: 4.1.7

RETURN ON INVESTMENT
Capital
Year Operating profit employed Ratio

2016-2017 34.11 40.85 0.84

2017-2018 22.81 50.77 0.45

2018-2019 26.81 39.27 0.68

2019-2020 38.26 38.91 0.98

2020-2021 38.66 57.11 0.68

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Interpretation

The above table indicates that the return-on-investment ratio is 0.84 in the year of
2016-17. It has decreased to 0.45 in the year of 2017-18. It has increased to 0.68 in
the year of 2018-19. It has further increased to 0.98 in the year of 2019-20. It has
decreased to 0.68 in the year of 2020-21.

2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

Year

CHART NO: 4.1.7 RETURN ON INVESTMENT

RETURN ON SHAREHOLDERS FUNDS

The Return on Shareholders’ Funds ratio is a measure of the profit for the period
which is available to the ordinary shareholders with the ordinary shareholders' stake
in a business.
Net profit after interest & tax
Return on shareholders’ funds = --------------------------------------
Shareholders’ funds

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 TABLE NO: 4.1.8

RETURN ON SHAREHOLDERS FUNDS

Net profit after Shareholder’s

Year interest & tax fund Ratio

2016-2017 8.15 56.23 14.49

2017-2018 0.42 49.79 0.84

2018-2019 3.46 50.05 6.91

2019-2020 9.37 47.55 19.71

2020-2021 9.11 39.22 23.23

Interpretation

The above table indicates that the return on shareholders’ funds ratio is 14.49 in the
year of 2016-17. It has decreased to 0.84 in the year of 2017-18. It has increased to
6.91 in the year of 2018-19. It has increased to 19.71 in the year of 2019-20. It has
further increased to 0.79 in the year of 2020-21.

2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

Year

CHART NO: 4.1.8 RETURN ON SHAREHOLDERS FUNDS

24
Solvency ratio

Solvency ratio is a key metric used to measure an enterprise’s ability to meet its debt
and other obligations. The solvency ratio indicates whether a company’s cash flow
is sufficient to meet its short-term and long-term liabilities. The lower a company's
solvency ratio, the greater the probability that it will default on its debt obligations.
Totaldebt
Solvency ratio = -----------------------------
Total tangible assets

TABLE NO: 4.1.9

SOLVENCY RATIO
Total tangible
Year Total debt assets Ratio

2016-2017 61.69 168.71 0.37

2017-2018 78.01 176.40 0.44

2018-2019 74.33 182.26 0.41

2019-2020 86.18 205.75 0.42

2020-2021 93.29 190.70 0.49

Interpretation

The above table 4.9 indicates that the solvency ratio is 10.37 in the year of 2016-17.
It has increased to 0.44 in the year of 2017-18. It has decreased to 0.41 in the year
of 2018-19. It has increased to 0.42 in the year of 2019-20. It has further increased
to 0.49 in the year of 2020-21.

25
 2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021
Year

CHART NO: 4.1.9 SOLVENCY RATIO

GROSS PROFT RATIO

The first profitability ratio in relation to sales is the gross profit margin. It is calculated
as
Gross Profit
Gross profit margin = -----------------------
Sales
This ratio indicates the average spread between the cost of goods sold and sales
revenue. A high gross profit margin ratio is a sign of goods management. It is relative
to the industry average implies the firm able to produce at relatively lower cost.

26
 TABLE NO: 4.1.10

GROSS PROFIT RATIO

Year Gross profit Net sales Ratio

2016-2017 65.73 208.95 31.46

2017-2018 53.46 205.42 26.02

2018-2019 70.92 242.33 29.27

2019-2020 69.97 255.96 27.34

2020-2021 69.93 217.49 32.15

Interpretation

The above table indicates that the gross profit ratio is 31.46 in the year of 2016-17.
It has decreased to 26.02 in the year of 2017-18. It has increased to 29.27 in the
year of 2018-19. It has decreased to 27.34 in the year of 2019-20. It has increased
to 32.15 in the year of 2020-21.

2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

Year

CHART NO: 4.1.10 GROSS PROFIT RATIO

27
OPERATING PROFIT RATIO

The operating margin ratio, also known as the operating profit margin, is a
profitability ratio that measures what percentage of total revenues is made up by
operating income. In other words, the operating margin ratio demonstrates how
much revenues are left over after all the variable or operating costs have been paid.
Operating profit
Operating profit ratio = ----------------------
Net sales

TABLE NO: 4.1.11

OPERATING PROFIT RATIO

Year Operating profit Net sales Ratio

2016-2017 34.11 208.95 16.32

2017-2018 22.81 205.42 11.10

2018-2019 26.81 242.33 11.06

2019-2020 38.26 255.96 14.95

2020-2021 38.66 217.49 17.78

Interpretation

The above table indicates that the operation profit ratio is 16.32 in the year of 2016-
2017. It has decreased to 11.10 in the year of 2017-2018. It has further decreased
to 11.06 in the year of 2018-2019. It has increased to 14.95 in the year of 2019-
2020. It has increased to 17.78 in the year of 2020-2021.

28
 2016-2017 2017 -2018 2018 – 2019 2019 – 2020 2020 – 2021

CHART NO: 4.12 OPERATING PROFIT RATIO

29
CHAPTER 5 – FINDINGS, SUGGESTIONS AND CONCLUSION

5.1. FINDINGS

 The working capital ratio is 0.19 in the year of 2017 and it has decreased to 0.18
in the year of 2018.
 The inventory turnover has decreased to 0.06 in the year of 2017 and it has
decreased to 0.02 in the year of 2019.
 The debtor’s turnover ratio has increased to 8.98 in the year of 2019 and it has
increased to 9.15 in the year of 2020.
 The average collection period has decreased to 39.90 in the year of 2020 and it
has decreased to 34.34 in the year of 2021.
 The net profit ratio has decreased to 0.20 in the year of 2018 and it has increased
to 1.43 in the year of 2019.
 The return on total assets ratio is 6.91 in the year of 2017 and it has decreased to
0.33 in the year of 2018.
 The return-on-investment ratio has increased to 0.68 in the year of 2019 and it has
increased to 0.98 in the year of 2020.
 The return on shareholders’ ratio has increased to 19.71 in the year of 2020 and it
has increased to 0.79 in the year of 2021.
 The solvency ratio has increased to 0.44 in the year of 2018 and it has decreased
to 0.41 in the year of 2019.
 The gross profit ratio is 31.46 in the year of 2017 and it has decreased to 26.02 in
the year of 2018.
 The operation profit ratio has increased to 14.95 in the year of 2020 and it has
increased to 17.78 in the year of 2021.

30
5.2 SUGGESTIONS

 the Fabsys Technologies Private Limited., Chennai within a short span of time is
making very good progress. The company trademark was its highest ever turns
over during the progress, further the capacity utilization of the plants and the
various operational efficiency achievements further the capacity signifies growth of
the organization .it can take up the following suggestions based on the study.
 Liquidity ratio here reflects the firm ability to meet short term current obligation.
Aanalysis of these ratio revealed that the liquidity position has been satisfactory.
 Turnover ratio indicates the turnover position of the company, here ratio reflects
high turnover on the basis of five years is good.
 The financial performance of the company is good, so this company capture high
market share and growth.
 Fund is proper allocated to fixed assets and current assets. It should possible for
the company to carry on the work smoothly.

5.3 LIMITATIONS OF THE STUDY

 The project work study was mainly based upon the information from the secondary,
mainly balance sheet, profit and loss account, the annual report and accounts book
by only giving limited information regarding the performance of the company.

 The study has been restricted span of time 5 years only.

31
5.4. CONCLUSION

A Successful management of the working capital in any concern will ensure the success
of business. In The Fabsys Technologies Private Limited., working capital management
is in good condition. the level of profit is increasing in nature. However, to show the better
business result, the management may concentrate on increases of sales, sales level
before changing credit policy variable, credit policy helps to retained its old customer and
create new customer by coming them away from competitors. Better co-ordination
between each department is very important, like sales, production, purchase because it
helps to avoid the credit risk and it decrease the debt collection days.

32
REFERENCES

BOOKS

 S.N. Maheswari, Financial Management, (2006), Sultan Chand & Sons.

 Charles T. Horngreen, Alnoor Bhimani, Srikant M. Datar, and George foster
Management and Cost Accounting, (2004), Financial Times/Prentic Hall.
 Terry Lucey, Management Accounting, (2003), Cengage Learning.
 I.M.Pandy, “Financial Management” Vikas Publishing House Private Ltd.8th
edition.
 C.R.K. Kothari, “Research Methodology” Vishura Publishers Chennai. 2 nd edition
2000.
 R. K Sharma & Shashi K.Gupta, “ Financial Management” Kalyani Publishers, New
delhi.

WEBSITES

 www.fabsys.com
 www.websiteindustry.com
 www.industrytrend.com
 www.mbanotes.com

33
 1. BALANCE SHEET OF FABSYS TECHNOLOGIES PRIVATE LIMITED., CHENNAI

2017 2018 2019 2020 2021

Sources Of Funds

Total Share Capital 4.28 4.28 4.28 4.28 4.28

Equity Share Capital 4.28 4.28 4.28 4.28 4.28

Reserves 51.95 45.51 45.77 43.27 34.94

Networth 56.23 49.79 50.05 47.55 39.22

Secured Loans 57.32 72.91 72.2 83.5 89.3

Unsecured Loans 4.37 5.1 2.13 2.68 3.99

Total Debt 61.69 78.01 74.33 86.18 93.29

Total Liabilities 117.92 127.8 124.38 133.73 132.51

Application Of Funds

Gross Block 297.37 296.58 294.48 292.72 290.9

Less: Revaluation Reserves 27.08 27.43 27.79 28.14 28.52

Less: Accum. Depreciation 176.95 166.44 156.21 145 133.91

Net Block 93.34 102.71 110.48 119.58 128.47

Capital Work in Progress 0 0 0 0 0.09

Investments 1.67 2.38 1.97 1.67 2.1

Inventories 38.93 35.51 34.42 53.43 33.33

Sundry Debtors 31.44 33.58 27 27.98 20.46

Cash and Bank Balance 3.33 2.22 8.39 3.09 6.34

Total Current Assets 73.7 71.31 69.81 84.5 60.13

Loans and Advances 26.28 28.44 27.22 22.78 17.1

Total CA, Loans & Advances 99.98 99.75 97.03 107.28 77.23

Current Liabilities 72.58 73.73 81.99 91.82 73.47

Provisions 4.49 3.3 3.12 3 1.93

Total CL & Provisions 77.07 77.03 85.11 94.82 75.4

Net Current Assets 22.91 22.72 11.92 12.46 1.83

Total Assets 117.92 127.80 124.38 133.73 132.51

Contingent Liabilities 14.37 14.73 14.68 15.14 15.41

Book Value (Rs) 131.85 116.74 117.35 111.49 91.95

in Rs. Cr.

34
 INCOME STATEMENT OF FABSYS TECHNOLOGIES PRIVATE LIMITED., CHENNAI

2017 2018 2019 2020 2021

Income

Sales Turnover 208.95 205.42 242.33 255.96 217.49

Net Sales 208.95 205.42 242.33 255.96 217.49

Other Income 0.48 0.5 0.87 0.07 0.27

Stock Adjustments 0.48 5.91 -6.5 6.31 1.67

Total Income 209.91 211.83 236.7 262.34 219.43

Expenditure

Raw Materials 126.42 123.13 142.8 156.04 118.72

Power & Fuel Cost 16.8 28.83 28.61 29.95 28.84

Employee Cost 22.08 23.96 24.58 22.9 19.69

Miscellaneous Expenses 10.02 12.6 13.03 15.12 13.25

Total Expenses 175.32 188.52 209.02 224.01 180.5

Operating Profit 34.11 22.81 26.81 38.26 38.66

PBDIT 34.59 23.31 27.68 38.33 38.93

Interest 11.11 11.37 11.74 13.57 14.12

PBDT 23.48 11.94 15.94 24.76 24.81

Depreciation 10.57 10.68 10.85 11.14 11.25

Profit Before Tax 12.91 1.26 5.09 13.62 13.56

PBT (Post Extra-ord Items) 12.91 1.26 5.09 13.62 13.56

Tax 4.76 0.84 1.63 4.25 4.45

Reported Net Profit 8.15 0.42 3.46 9.37 9.11

Total Value Addition 48.90 65.39 66.22 67.97 61.78

Equity Dividend 1.71 0.85 0.85 0.85 0

Corporate Dividend Tax 0.35 0.17 0.17 0.14 0

Per share data (annualised)

Shares in issue (lakhs) 42.65 42.65 42.65 42.65 42.65

Earning Per Share (Rs) 19.09 0.97 8.1 21.97 21.35

Equity Dividend (%) 40 20 20 20 0

Book Value (Rs) 131.85 116.74 117.35 111.49 91.95

35
 STUDY ON FINANCIAL RATIO ANALYSIS OF FABSYS TECHNOLOGIES PRIVATE LIMITED

Shubam Bidlan(126922405028),Sushanth Gupta(126922405029),

Syed Mustafa(126922405030),G.Sai Akhil(126922405010)

B.Com.,

N.GAYATHRI,Assistant Professor, SOLITAIRE BUSINESS SCHOOL, Hyderabad

ABSTRACT II. REVIEW OF LITERATURE

A ratio analysis is a quantitative analysis of information A literature review is a critical and in-depth evaluation
contained in a company’s financial statements. Ratio of previous research. It is a summary and synopsis of
analysis is based on line items in financial statements like a particular area of research, allowing anybody reading
the balance sheet, income statement and cash flow statement the paper to establish why the study is pursuing this
. Ratio analysis is used to evaluate various aspects of a particular research.
company’s operating and financial performance such as its
efficiency, liquidity, profitability and solvency. Fabsys Khan (2019) found that the bank with higher total
Technologies Private Limited was established in the year capital, deposits, credits, or total assets does not always
2004. Fabsys is a professional software development mean that has better profitability performance.
company in Chennai. Company provides solutions for web
design and development, Web application development, Dr. M. Ravichandran (2020) the financial
SEO based Digital Marketing, Creative Multimedia Works performance can be measured by using various financial
and Hosting Services. Fabsys technologies believes good tools such as profitability ratio, solvency ratio,
service is good business and its aspects are to focus the comparative statement, etc.
needs of the clients and provide 100% satisfaction. A
Successful management of the working capital in any
Gopinathan Thachappilly (2020), in this article
concern will ensure the success of business. In the Study of
he discusses about the Financial Ratio Analysis
Fabsys Technologies, the working capital management is
for Performance evaluation.
good and the profit in increasing

Keywords – Ratio analysis, Income statement, III. MATERIALS AND METHODS

liquidity, profitability, solvency. A. OBJECTIVES OF THE STUDY
1. To study on ratio analysis towards the Fabsys
I. INTRODUCTION Technologies Private Limited.
A ratio analysis is a quantitative analysis of information 2. To analyze the long-term solvency of
contained in a company’s financial statements. Ratio
the business concern.
analysis is based on line items in financial statements like
the balance sheet, income statement and cash flow B. RESEARCH DESIGN
statement; the ratios of one item – or a combination of items
The research Design is the arrangement of conditions for
- to another item or combination are then calculated Ratio
collection and analysis of data in a manner that aims to
analysis refers to the analysis and interpretation of the
combine relevance to the research purpose with the
figures appearing in the financial statements (i.e., Profit and
economy in procedure.
Loss Account, Balance Sheet and Fund Flow statement etc.).
It is a process of comparison of one figure against another.
It enables the users like shareholders, investors, creditors, C. PERIOD OF STUDY
Government, and analysts etc. to get better understanding of
financial statements. Khan and Jain define the term ratio The duration taken by the researcher for the data collection and
analysis as “the systematic use of ratios to interpret the analysis regarding the ratio analysis of Fabsys Technologies
financial statements so that the strengths and weaknesses of Private Limited. for three months. The data used are of last five
a firm as well as its historical performance and current years from 2017 – 2021.
financial conditions can be determined.”
D. METHOD OF COLLECTION

The study basically uses primary and secondary data. Primary

data means data which is fresh collected data. Secondary data
means the data that are already available. Generally speaking,
secondary data is collected by some organizations or agencies
which have already been processed when the researcher utilizes
secondary data.

1
 2016-
E. TOOLS USED IN THE RESEARCH
2017 208.95 31.44 6.65
A ratio is the quotient of two
mathematical expressions and the 2017-

relationship between two or more 2018 205.42 33.58 6.12

numbers. In financial analysis, a 2018-

ratio is used as an index or 2019 242.33 27.00 8.98
yardstick for evaluating the 2019-
financial position and 2020 255.96 27.98 9.15
performance of a firm. 2020-
2021 217.49 20.46 10.63
IV. DATA ANALYSIS

TABLE NO 4.1.1.

INVENTORY TURNOVER RATIO

Cost of Average
Year goods sold inventory Ratio
2016-
2017 213.30 283.54 0.75
2017-
2018 3.42 56.69 0.06
2018-
2019 1.09 52.72 0.02
2019-
2020 -19.01 61.14 -0.31
2020-
2021 20.10 70.10 0.29

CHART NO 4.1.1
INVENTORY TURNOVER RATIO

INTERPRETATION

The above table indicates that the inventory turnover

ratio is 0.75 in the year of 2016-17. It has decreased
to 0.06 in the year of 2017-18. It has further
decreased to 0.02 and -0.31 in the year of 2018-19
and 2019-20 respectively. It has increased to 0.29 in
the year of 2020-21.

TABLE NO: 4.1.2

DEBTORS TURNOVER RATIO

Year Sales Debtors Ratio

2
 CHART NO 4.1.2 DEBTORS
TURNOVER RATIO

INTERPRETATION

The above table indicates that the debtor’s

turnover ratio is 6.65 in the year
of 2016- 17. It has decreased to 6.12 in the year of
2017-18. It has increased to 8.98 in the year of 2018-
19. It has further increased to 9.15 and 10.63 in the
year of 2019-20
and 2020-21 respectively.

3
 TABLE NO: 4.1.3
TABLE NO: 4.1.4

NET PROFIT RATIO

RETURN ON TOTAL ASSETS
Net Net Net Total
Year profit sales Ratio Year profit assets Ratio
2016- 2016-
2017 8.15 208.95 3.90 2017 8.15 117.92 6.91

2017- 2017-

2018 0.42 205.42 0.20 2018 0.42 127.80 0.33

2018-
2018-
2019 3.46 124.38 2.78
2019 3.46 242.33 1.43
2019-
2019-
2020 9.37 133.73 7.01
2020 9.37 255.96 3.66
2020-
2020- 2021 9.11 132.51 6.87
2021 9.11 217.49 4.19

CHART NO: 4.1.3

NET PROFIT RATIO CHART NO: 4.1. 4
RETURN ON TOTAL ASS ETS

INTERPRETATION

The above table indicates that the net profit ratio is3.90 in the
year of 2016-17. It has decreased to 0.20 in the year of 2017-18.
ratio is 6.91It has increased to 1.43 in the year of 2018-19. It has
increased to 3.66 in the year of 2019-20. It has further increased
to 4.19 in the year of 2020-2021.

4
INTERPRETATION

The above indicates that the return on total assets ratio is 6.91
in the year of 2016-17. It has decreased to 0.33 in the year of
2017-18. It has increased to 2.72 in the year of 2018-19. It
has further increased to 7.01 in the year of 2019-20. It has
decreased to 6.87 in the year of 2020-21

SUGGESTIONS

the Fabsys Technologies Private Limited., Chennai within a

short span of time is making very good progress. The
company trademark was its highest ever turns over during the
progress, further the capacity utilization of the plants and the
various operational efficiency achievements further the
capacity signifies growth of the organization .it can take up
the following suggestions based on the study. Liquidity ratio
here reflects the firm ability to meet short term current
obligation. An analysis of these ratio revealed that the
liquidity position has been satisfactory. Turnover ratio
indicates the turnover position of the company, here ratio
reflects high turnover on the basis of five years is good.

CONCLUSION

A Successful management of the working capital in any

concern will ensure the success of business. In The Fabsys
Technologies Private Limited., working capital management
is in good condition; the level of profit is increasing in nature.
However, to show the better business result, the management
may concentrate on increases of sales, sales level before
changing credit policy variable, credit policy helps to
retained its old customer and create new customer by coming
them away from competitors. Better co-ordination between
each department is very important, like sales, production,
purchase) because it helps to avoid the credit risk and it
decrease the debt collection days.

REFERENCES

 S.N. Maheswari, Financial Management,(2006),

Sultan Chand & Sons.
 Charles T. Horngreen, Alnoor Bhimani, Srikant M.
Datar, and George foster Management and Cost
Accounting, (2004), Financial Times/Prentic Hall.
 Terry Lucey, Management Accounting, (2003),
Cengage Learning.
 I.M.Pandy, “Financial Management” Vikas
Publishing House Private Ltd. 8th edition.
 C.R.K. Kothari, “Research Methodology” Vishura
Publishers Chennai. 2nd edition 2000.
 R.K Sharma & Shashi K.Gupta, “ Financial
Management” Kalyani Publishers, New delhi.

WEBSITES
www.fabsys.com
www.websiteindustry.com
www.industrytrend.com
www.mbanotes.com