A

PROJECT REPORT
ON
‘‘RATIO ANALYSIS AT HERITAGE FOODS LTD.’’

Submitted in partial fulfilment of requirement for the award of Degree of

Master of Business Administration

BY

By
MD AMJAD ALI SEHER

Roll No. 18MMBA025HY

Enrolment No. A180503

Under the Supervision

Of

Dr. M. A. Sikandar

Associate Prof.

Department of Management Studies from

MAULANA AZAD NATIONAL URDU UNIVERSITY

GACHIBOWLI, HYDERABAD.

[2018-2020]

1
 DECLARATION

I hereby declare that the project work entitled “RATIO ANALYSIS” submitted to the MAULANA
AZAD ANTIONAL URDU UNIVERSITY, is a record of an original work done by me under the
guidance of Dr. M. A. Sikandar Department of Management Studies and this project work is
submitted in the partial fulfillment of the requirements for the award of the award of degree of Master of
Business Administration. The results embodied in this thesis have not been submitted to any other
University or Institution for the award of any degree or diploma.

MD AMJAD ALI SEHER

DR. M. A. SIKANDAR

Associate Professor, Department of Management

Studies

2
 MAULANA AZAD NATIONALURDU UNIVERSITY

(A Central University established by an Act of Parliament in 1998)Accredited “A” Grade by NACC

Gachibowli, HYDERABAD – 500 032

CERTIFICATE

This is to certify that the Project entitled “RATIO ANALYSIS” is the Bonafide work carried out by
“MD AMJAD ALI SEHER” bearing Roll No. 18MMBA025HY of M.B.A. and the Project has not
been formed the basis for the award previously of any Degree, Diploma, Associate ship, Fellowship or
any other similar title under my Guidance.

Date: Guide’s Signature

Phone: 04023001216, Mob No- 9818798949, Email: [email protected]

www.manuu.ac.in
INDEX

CHAPTER-1 INTRODUCTION 5 -11

 About the topic

3
  Conceptual Framework

CHAPTER- 2 RESEARCH METHODOLOGY 12-15

 Need of the study

 Objectives of the Study

 Scope of the study

 Limitation of the Study

CHAPTER-3 PROFILE OF THE ORGANISATION 16-23

 Industry Profile

 Company Profile

CHAPTER-4 DATA ANALYSIS & INTERPRETATION 24-31

CHAPTER-5 CONCLUSIONS & SUGGESTIONS 32-34

 Findings

 Conclusions

 Suggestions

 Bibliography

INTRODUCTION

ABOUT RATIO ANALYSIS

The ratio analysis is the most powerful tool of financial analysis. Several ratios calculated from
the accounting data can be grouped into various classes according to financial activity or function to
be evaluated.

4
 DEFINITION:
The indicate quotient of two mathematical expressions and as the relationship between two
or more things. It evaluates the financial position and performance of the firm.
As started in the beginning many diverse groups of people are interested in analyzing financial
information to indicate the operating and financial efficiency and growth of firm. These people use
ratios to determine those financial characteristics of firm in which they interested with the help of
ratios one can determine.

 The ability of the firm to meet its current obligations.

 The extent to which the firm has used its long-term solvency by borrowing funds.

 The efficiency with which the firm is utilizing its assets in generating the sales revenue.

 The overall operating efficiency and performance of firm.

The information contained in these statements is used by management, creditors, investors and
others to form judgment about the operating performance and financial position of firm. Uses of
financial statement can get further insight about financial strength and weakness of the firm if they
properly analyze information reported in these statements. Management should be particularly
interested in knowing financial strength of the firm to make their best use and to be able to spot out
financial weaknesses of the firm to take suitable corrective actions. The further plans firm should be
laid down in new of the firm’s financial strength and weaknesses. Thus, financial analysis is the
starting point for making plans before using any sophisticated forecasting and planning procedures.
Understanding the past prerequisite for anticipating the future.
CONCEPTUAL FRAMEWORK

CLASSIFICATION OF RATIOS ANALYSIS

The ratios can be classified into four types:

LIQUIDITY RATIOS
Liquidity ratios measure the firm’s ability to meet current obligations.
 Current Ratio
 Quick Ratio
 Cash Ratio
 Interval Ratio
5
  Net Working Capital Ratio

LEVERAGE RATIOS
Leverage ratios show the proportions of debt and equity in financing the firm’s assets.
 Debt Equity Ratio
 Capital Equity Ratio
 Proprietary Ratio

ACTIVITY RATIOS
Activity ratios reflect the firm’s efficiency in utilizing its assets.
 Inventory Ratio
 Fixed Assets Turnover Ratio
 Total Assets Turnover Ratio
 Current Assets Turnover Ratio
 Collecting Period of Debtor Ratio
 Working Capital Turnover Ratio

PROFITABILITY RATIOS
 Net Profit Margin
 Net Margin Based on NOPAT
 Operating Expense Ratio
 Return on Investment (ROI)
 Return on Equity (ROE)
 Earnings per Share (EPS)
 Dividends per Share (DPS or DIV)
 Dividend- Payout Ratio

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LIQUIDITY RATIOS:
Liquidity ratios measure the ability of the firm to meet the current obligations in the short run,
usually one year. Analysis of liquidity needs the preparation of cash budgets, Cash and fund flow
statements.

It is extremely essential for a firm to be able to meet the obligations as they become due.
Liquidity ratios measure the ability of the firm to meet its current obligations (liabilities). Infect,
analysis of liquidity needs the preparation of cash budgets and cash and funds flow statements, but
liquidity ratios, by establishing a relationship between cash and other current assets to current
obligations, provide a quick measure of liquidity. The most common ratios which indicate the
extent of liquidity are lack of it, are:
 Current ratio
 Quick ratio.
 Cash ratio
 Interval Measure

Current Ratio
Current ratio is calculated by dividing current assets by current liabilities.
Current ratio = Current assets/ Current liabilities

Current assets include cash and other assets that can be converted into cash within a year, such as
marketable securities, debtors and inventories. Prepaid expenses are also included in the current assets as
they represent the payments that will not be made by the firm in the future. All obligations maturing
within a year are included in the current liabilities. Current liabilities include creditors, bills payable.

 Quick Ratio
Quick ratio also called Acid Test Ratio, because it is the acid test of concern’s financial
soundness. It establishes a relationship between quick, or liquid assets and current liabilities. An
asset is a liquid if it can be converted into cash immediately or reasonably soon without a loss of
value.
Quick ratio = (Current assets –Inventory)/ Current liabilities
Cash ratio

7
 Since cash is the most liquid asset, it may be examined cash ratio and its equivalent to current
liabilities. Trade investment or marketable securities are equivalent of cash; therefore, they may
be included in the computation of cash ratio:
Cash ratios = Cash & Cash Equivalent/ Current liabilities

LEVERAGE RATIO:

The short-term creditors, like bankers and suppliers of raw materials, are more concerned with
the firm’s current debt-paying ability. On other hand, long-term creditors like debenture holders,
financial institutions etc. are more concerned with the firm’s long- term financial strength.
Leverage ratios may be calculated from the balance sheet items to determine the proportion of
debt in total financing. Many variations

Net Working Capital Ratio

The different between current assets and current liabilities excluding short-term bank borrowings is called net
working capital (NWC) or net current assets (NCA). NWC is sometimes used as a measure of firm’s liquidity.
NWC measures the firm’s potential reservoir of funds
NWC ratio = Net working capital (NWC)/ Current liabilities
LEVERAGE RATIO:

There are two types of ratios commonly used to analyze financial leverage:
 Structural Ratios
 Coverage Ratios
Structural ratios are based on the proportion of debt and equity in the financial structure of the
firm.
Coverage ratios show the relationship between debt servicing commitments and sources for
meeting these.
Leverage ratios may be calculated from the balance sheet items to determine the proportion of
debt in total financing

Debt Ratio
Debt ratios may be used to analyses the long-term solvency of the firm the firm may be
interested in knowing the proportion of the interest-bearing debt (also called as funded debt) in the
capital structure. debt ratio by dividing total debt by capital employed or net assets. Capital
employed will include total debt and net worth

Debt Equity Ratio

The relationship describing the lenders contribution for each rupee of the owner’s contribution
is called debt-equity (DE) ratio
8
 Debt – equity ratio = Total debt (TD)/ Net worth (NW)

Inventory Turnover
Inventory turnover indicates the efficiency of the firm in producing and selling its product. It is
calculated by dividing the cost of goods sold by the average inventory.
The average inventory is the average of opening and closing balances of inventory.

Debtors (Accounts Receivable) Turnover

A firm sells goods for cash and credit. Credit is used as a marketing tool by number of companies.
When the firm extends credits to its customers, debtors (accounts receivable) are created in the
firm’s accounts. Debtors are convertible into cash over a short period and, therefore, are included
in current assets.
Debtors turnover = Credit sales/ Debtors

PROFITABILITY RATIOS:

Apart from the creditors both short term and long term also interested in the financial
soundness of a firm are the owners and management or the company itself.
The profitability of a firm can be measured by its profitability ratios

 Does the profit earn by the firm adequate?

 What rate of return does it represent?
 What is a rate of profit for various decisions and segments of the firms?
 What are the earnings per share?
 What was amount paid in dividends?
 What is a rate of return to equity holders?

Net Profit Margin

Net profit is obtained when operating expenses; interest and taxes are subtracted from the gross
profit margin ratio is measured by dividing profit after tax by sales:
This ratio is the overall measure of the firm’s ability to turn each rupee sales into net profit
Net Profit Ratio = (Net Profit/ Sales)/*100

Operating Expense Ratio

The operating expense ratio explains the changes in the profit margin (EBIT to sales) ratio. This is
9
computed by dividing operating expenses viz., cost of goods sold plus selling expense and general
and administrative expenses (excluding interest) by sales.

10
Earnings per Share (EPS)
The earnings per share (EPS) are calculated by dividing the profit after taxes by the total number
of ordinary shares outstanding.

Dividends per Share (DPS or DIV)

The net profits after taxes belong to shareholders. But the income, which they will receive, is the
amount of earnings distributed as cash dividends

Dividend Payout Ratio

The dividend – payout Ratio or simply payout ratio is DPS (OR Total equity dividends) divided
by the EPS (or profit after tax):

Return on Equity (ROE)

Common or ordinary shareholders are entitled to the residual profits. The rate of dividend is not fixed:
the earnings may be distributed to shareholders or retained in the business. Nevertheless, the net profits
after taxes represent their return. A return on shareholders’ equity is calculated to see the profitability of
owners’ investment.

Return on Investment (ROI)

Investment represents pool of funds supplied by shareholders and lenders, while PAT represent residue
income of shareholders; therefore, it is conceptually unsound to use PAT in the calculation of ROI

11
 CHAPTER- II
RESEARCH METHODOLOGY

NEED OF THE STUDY

The prevalent educational system providing the placement training at an industry being a part of the
curriculum has helped in comparison of theoretical knowledge with practical system. It has led to note
the convergences and divergence between theory and practice.

The study enables us to have access to various facts of the organization. It helps in
understanding the needs for the importance and advantage of materials in the organization, the
12
study also helps to exposure our minds to the integrated materials management the various
procedures, methods and technique adopted by the organization. The study provides knowledge
about how the theoretical aspects are put in the organization in terms of described below
 To pay wages and salaries.

 For the purchase of raw materials, spares and components parts.

 To incur day-to-day expenses.

 To meet selling costs such as packing, advertising.

 To provide credit facilities to customers.

To maintain inventories and raw materials, work-in-progress and finished stock

OBJECTIVES OF THE STUDY

1. To critically analyses the financial performance of the Heritage Foods India

Limited. With the help of ratios.

2. To study and analyze the financial position of the Company through ratio
analysis.

3. To suggest measures for improving the financial performance of organization.

4. To analyze the asset turnover ratio.

5. To suggest measures for effective and efficient usage of inventory.

RESEARCH METHODOLOGY

The study is both descriptive and analytical in nature. The secondary data has been collected from
the books, journals and websites which deal with online share trading.

RESEARCH

Research is a process in which the researcher wishes to find out the end result for given problem
and thus the solution helps in future course of action the research has been defined a careful
investigation or enquiry especially through search for new facts in branch of knowledge.
13
RESERCH DESIGN

The research design used in this project is analytical in nature the procedure using, which
researcher has to use facts or information already available and analyze these to make a critical
evolution of the performance

14
DATA SOURCES

The study is based on secondary data.

The secondary data collection method includes:
 From the annual report of the company
 Websites
 Journals
 Text books

SCOPE OF THE STUDY

The scope of the study is limited to collecting financial data published in the annual reports of the
company every year. The analysis is done to suggest the possible solutions. The study is carried
out for 5 years (2015-20).

A study of the Ratio Analysis involves an examination of long term as well as short term
sources that a company taps in order to meet its requirements of finance. The scope of the study is
confined to the sources that Heritage Foods India Limited tapped over the years under study i.e.
2015-20.

LIMITATION OF THE STUDY

 The study is based on only secondary data.

 The period of study was 2015-20 financial years only.
 Another limitation is that of standard ratio with which the actual ratios may be
compared generally there is no such ratio, which may be treated as standard for
the purpose of comparison because conditions of one concern differ significantly
from those of another concern.
 The accuracy and correctness of ratios are totally dependent upon the reliability of
the data contained in financial statements on the basis of which ratios are
calculated.

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 CHAPTER-III
PROFILE OF THE ORGANISATION

INDUSTRY PROFILE
Introduction
The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due
to the entry of several new players. It accounts for over 10 per cent of the country’s Gross
Domestic Product (GDP) and around 8 per cent of the employment. India is the world’s fifth-
16
largest global destination in the retail space.

Market Size
India’s retail market is expected to nearly double to US$ 1 trillion by 2020 from US$ 600 billion
in 2019, driven by income growth, urbanization and attitudinal shifts. While the overall retail
market is expected to grow at 12 per cent per annum, modern trade would expand twice as fast at
20 per cent per annum and traditional trade at 10 per cent#.
India’s Business to Business (B2B) e-commerce market is expected to reach US$ 700 billion by
2020. Online retail is expected to be at par with the physical stores in the next five years.
India is expected to become the world’s fastest growing e-commerce market, driven by robust
investment in the sector and rapid increase in the number of internet users. Various agencies have
high expectations about growth of Indian e-commerce markets. Indian e- commerce sales are
expected to reach US$ 120 billion! by 2020 from US$ 30 billion in FY2019. Further, India's e-
commerce market is expected to reach US$ 220 billion in terms of gross merchandise value
(GMV) and 530 million shoppers by 2025, led by faster speeds on reliable telecom networks,
faster adoption of online services and better variety as well as convenience.
India’s direct selling industry is expected to reach a size of Rs 23,654 crore (US$ 3.54 billion) by
FY2019-20, as per a joint report by India Direct Selling Association (IDSA) and PHD.
Indian exports of locally made retail and lifestyle products grew at a compound annual growth
rate (CAGR) of 10 per cent from 2019 to 2020.

Investment Scenario
The Indian retail trading has received Foreign Direct Investment (FDI) equity inflows totaling
US$ 935.74 million during April 2000–December 2016, according to the Department of Industrial
Policies and Promotion (DIPP).
 Amazon India has opened six new fulfillment centers across Chennai, Coimbatore, Delhi,
Jaipur and Mumbai, which will open up 5.5 million square feet of storage space for sellers
on the marketplace who use the ‘Fulfilled by Amazon’ service.
 Aditya Birla Fashion and Retail Limited (ABFRL) has announced that it will acquire
exclusive online and offline rights of Forever 21, an American fast fashion brand, in the
Indian market.
 Mumbai-based baby care and kids’ products e-tailor, Hopscotch.in, has raised US$ 13
million in a Series C round of funding from Facebook co-founder Mr. Eduardo Saverin,
which will help the firm in growth and expansion of its technology platform.
 Textile major Arvind Limited has announced a partnership with Sephora, owned by
LVMH Moet Hennessy Louis Vuitton.
 Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 370.6 million) in a fruit
and vegetable processing unit, an integrated meat processing unit, and a modern shopping
mall in Hyderabad, Telangana.
 Aditya Birla Retail, a part of the US$ 40 billion Aditya Birla Group and the fourth-largest
supermarket retailer in the country, acquired Total hypermarkets owned by Jubilant Retail.

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Government Initiatives
The Government of India has taken various initiatives to improve the retail industry in India.

 Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online
retail of goods and services through the automatic route.
 The Government of Andhra Pradesh signed pacts worth Rs 1,500 crore (US$222.36 million) in a
wide range of sectors including retail and steel and gas with Walmart India.
 The Ministry of Urban Development has come out with a Smart National Common
Mobility Card (NCMC) model to enable seamless travel by metros and other transport
systems across the country, as well as retail purchases.
 IKEA’s retail outlets have a standard design and each location entails an investment of
around Rs 500–600 crore (US$ 74–89 million).

Types of retail outlets

A marketplace is a location where goods and services are exchanged. The traditional market
where traders set up stalls and buyers browse the merchandise.

Retail is usually classified by type of products as follows:

 Hard goods-appliances, electronics, furniture, sporting goods, etc.

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 COMPANY PROFILE

The Heritage Foods Limited was founded by Mr. Nara Chandrababu Naidu in the year
1992, which is one of the fastest growing Public Listed Companies in India, with two
business divisions - Dairy and Renewable Energy. The annual turnover of Heritage Foods
crossed INR 2681 crores in the financial year 2018-19.

Currently, Heritage's milk and milk products have a market presence in Andhra Pradesh,
Telangana, Karnataka, Kerala, Tamil Nadu, Maharastra, Odisha, NCR Delhi, Haryana,
Rajasthan, Uttarakhand & Uttar Pradesh.

In the year 1994, HFL went public and was oversubscribed 54 times. HFL shares are
listed on BSE (Stock Code: 519552) and NSE (Stock Code: HERITGFOOD)

About the founder:

Mr. Nara Chandrababu

Naidu Heritage Foods Limited, India
At present, Heritage has a market presence in the eight states three thousand
villages and three lakh farmers are being benefited in these states. On the other
side, Heritage is serving millions of customers’ needs by, employing more than
5500 people and generating indirect employment opportunities for more than
10000 people. Beginning with a humble annual turnover of Rs.4.38 crores in 1993-
94, the annual turnover of Heritage Foods crossed Rs 2681 crores crores in
financial year 2018- 2019
Mr. Chandrababu Naidu was born on April 20, 1951 in Naravaripally Village,
Chittoor District, Andhra Pradesh, India. His late father Mr. N. Kharjura Naidu
was an agriculturist and his late mother Smt. Ammanamma was a housewife. Mr.
Naidu did his schooling in Chandragiri. He went on to study at the Sri
Venkateswara Arts College, Tirupati. He later also obtained his Masters in
Economics from the Sri Venkateswara University, Tirupati. Mr. Naidu is married
to Mrs. Bhuvaneswari, the daughter of Mr. N T Rama Rao, Ex-Chief Minister of
Andhra Pradesh and a famous star of Telugu Cinema. Mrs. N Bhuvaneswari is the
Vice Chairperson & Managing Director of the company.

Mission

 To be a nationally recognized brand for Healthy and Fresh products with a

revenue of INR 6000 Crore by 2024

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  To anticipate, understand and respond to our Customers' needs by creating high-
quality products and making them available through innovative and convenient
channels

 To embrace the right technology to delight our Customers

 Advocating the balancing of economic, social and environmental aspects to create

a better tomorrow

 Empowering the farmer community through our unique 'Relationship Farming'

Model

 Be the Employer of Choice by nurturing entrepreneurship and promoting

empowerment, alongside transparency

Vision

Delighting every home with Fresh & Healthy products and empowering the Farmer

Heritage Slogan:

 When you are healthy, we are healthy

 “When you are happy, we are happy
 “We live for your "HEALTH & HAPPINESS"

Milk Producers
Effecting change in the standard of living for dairy farmers in terms of:

 Regular income through co-operative efforts

 Women’s participation in income generation
 Protecting farmers from price exploitation by the un-organized sector
 Providing remunerative prices for milk
 Increasing milk productivity through input and extension activities
 Credit facilitation for purchase and insuring of cattle
 Cattle healthcare activities
 Supplying high-quality cattle feed at reasonable prices

Customers:

 Timely supply of pure & fresh products

 Supply of high-quality milk and milk products at affordable prices
 More than 15 lakh happy customers
 High customer satisfaction
 Customer care Centre
 Supply of products through multiple channels like MRF, e-Commerce & Parlous

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 Employees

 Enhancing the technical and managerial skills of employees through continuous

training and development
 Instituting the best appraisal systems to motivate employees
 Fostering incentive, bonus and reward systems to encourage employees
 Providing fair opportunities to all for career development

Returns

 Dividend Payment since Public Issue (January 1995)

Service

 Highest importance to investor service; no notice from any regulatory authority

since 2001 in respect of investor service
 Very transparent disclosures
Suppliers

 Prompt payments to all suppliers

 Associated with high-quality equipment / ingredient suppliers

Society
 Potential Employment Generation
o More than 3,100 employees are working with Heritage
o More than 12,020 procurement representatives have found self-
employment in rural areas
o More than 6900 sales representatives are associated with the company
 More than 942 franchisees operating Heritage Parlours
 Sustainable development with 10.30 MW of renewable energy for running dairy
plants

Qualities of management principles:

 Customer focus to understand and meet the changing needs and

expectations of customers.
 People involvement to promote team work and tap the potential of people.
 Leadership to set constancy of purpose and promote quality culture trough
out the organization.

21
  Process approach to assess the efficiency and effectiveness of each process.
 Systems approach to understand the sequence and interaction of process.
 Continual improvement processes for improved business results.

ENVIRONMENT, HEALTH AND SAFETY POLICY

Members shall take environmental consciousness a step further as a company and
contribute to preserving nature as well as safety measures in own respective work
areas.

ELIMINATION OF CHILD LABOUR

It is the Company's policy not to support child Labor. The Company is committed
to implement the provisions of the Child Laborer (Prohibition and Regulation) Act,
1986.

ABOLITION OF FORCED LABOUR

The Company strictly prohibits forced or compulsory Labors. The Company is
committed to ensuring that employees enter into employment and stay on in the
Company of their own free will.

ACCOUNTABILITY
The Board of Directors (BOD) shall oversee the Company's adherence to ethical
and legal standards. All employees and members of the BOD shall undertake to
stop or prevent actions that could harm customers.

WAIVER OF THE CODE

Any waiver of the applicability of the Code or waiver of application of any
provision of the Code to any Member shall be approved by the Board of Directors
and disclosed as required by Law or SEBI / Stock Exchange regulations.

BRANCHES OF HFIL:
HFIL has many wings. They are

1. Dairy
2. Retail
Dairy:
It is the major wing among all. The dairy products manufactured by HFIL are

22
Milk, curd, butter, ghee, flavoured milk, paneer, doodhpeda, ice cream.

Retail:

In the retail sector HFIL has outlets namely “Fresh@”. In those stores the products
sold are vegetables, milk& milk products, grocery, pulses, fruits etc.

CHAPTE-IV
DATA ANALYSIS
&
INTERPRETATION

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 Current Ratio
350 318.85
304.11 307.24
300
251.89 252.64
241.33
250 233.87 227.95234.44

200 182.75

150

100

50
0.828 0.822 0.733 0.757 0.972
0
2020-19 2019-2018 2018-2017 2017-2016 2016-2015

Current Ratio:
It is the ratio of the current assets current liabilities this ratio is used to know the
company’s ability to meet its current obligations. The standard norm for the
current ratio is 2:1

Current ratio = current Assets / Current liabilities.

Table showing current ratio of Heritage Foods (India) Limited during the
period of-
(All amounts are in cr)
Interpretation:
It is observed that the Heritage Foods India Limited current rationing an
increasing trend;

The company’s liquidity position is not satisfactory the current ratio decrease
slightly up to 2015-2020. The company a financial risk because it might not
be able to easily pay down its short-term obligations.

Quick Ratio:
Quick ratio is relation between quick assets and current liabilities. The term quick

24
 Cash Ratio
Quick Ratio
350 307.24 318.85
318.85
304.11 307.24
304.11
300
300 241.33 234.44
250 241.33
250 234.44
200
150
200
100 55.03 65.4 61.03
150 120.61 45.97 45.23
115.52
50
0.181 0.213 83.35 0.191 0.190 83.04 0.193
100
0 66.26
2020-2019 2019-2018 2018-2017 2017-2016 2016-2015
50
0.380 0.393 0.261 0.275 0.354
0
2020-2019 2019-2018 2018-2017 2017-2016 2016-2015

assets, which can be converted into cash with a short notice. Quick Assets=CA-
Inventories. Ideal QR=1:1

Quick ratio = Quick Assets / current liabilities

Table showing quick ratio of Heritage Foods India Limited during the
period of
(All amounts are in Cr)
Interpretation:
It is observed from the table that the Heritage Foods India Limited Quick Ratio
is not satisfactory.
Except the all year, the remaining is below the standard of the norm 1:1. So it is a
bad sign for the company.
Quick ratio of less than 1 do not have enough liquid assets to pay their current
liabilities and should be treated with caution. If the acid-test ratio is much lower
than the current ratio, it means that a company's current assets are highly
dependent on inventory.

Cash ratio:
Indicates a conservative view of liquidity such as when a company has
pledged its receivables and its inventory, or the analyst suspects severe
liquidity problems with inventory and receivables.
Cash ratio =Cash & Cash equivalent/Current Liabilities

25
 Net Working Capital Ratio
350 318.85
318.85
304.11
304.11 307.24
307.24
300
251.89 252.64 241.33
241.33
233.87 234.44
227.95 234.44
250
182.75
200

150

100

50

0
2020-2019
-0.172 2019-2018
-0.178 2018-2017
-0.267 2017-2016
-0.243 2016-2015
-0.028
-50

Interpretation:
It is observed from the table that the Heritage Foods India Limited Cash Ratio is not
satisfactory. The company has noted a maximum ratio of 0.213 in the year of 2018-2019.
We observed the ratio of the company; it is decreasing gradually. i.e. 0.181 in the year
2020-2019 So it is a bad sign for the company

Net Working Capital Ratio

Net working capital measures the short-term liquidity of a business, and can also indicate
the ability of company management to utilize assets efficiently.
Net working capital (NWC) = CA-CL
NWC Ratio=Current Assets –Current Liabilities/Current Liabilities
(All amounts are in Cr)

Interpretation:
The net working capital computed above resulted in a negative amount. It
means that the company does not have sufficient current assets to meet its
current Obligations.

Debt-equity Ratio
The relationship describing the lenders contribution for each rupee of the owner’s
contribution is called debt-equity (DE) ratio is directly computed by dividing total
debt by net worth.
Debt-equity Ratio= Total Debt/Shareholders Equity
Table showing Debt equity ratio of Heritage Foods India Limited during the
period of

26
 Debt Turnover
Debt Ratio
Equity Ratio
3000
0.6 2681.11
0.53 2613.45
2500
0.5 2343.68 2380.58
2273.4 0.44

0.4
2000
0.31 0.31
0.3
1500 0.23

0.2 1051.45 1018.54

1000 727.87
705.64
0.1

500 345.09
0
2020-2019
3.800 2019-2018
2.486 2018-20147
2.301 2017-2016
3.123 2016-2015
6.898
0
2020-2019 2019-2018 2018-2017 2017-2016 2016-2015
(All amounts are in cr)
Interpretation:
A less than 1 ratio indicates that the portion of assets provided by stockholders is
greater than the portion of assets provided by creditors. The financial position i.e.
D/E of current year is high i.e. 0.53.

Debtors Turnover Ratio:

Debtors Turnover Ratio expresses the relationship between debtors and sales. A
high Debtors Turnover Ratio or low Debt collection period is indicative of sound
credit management policy. Net credit sales is = Sales on credit–Sales returns-
Sales allowances.
Debtors Turnover Ratio= Net Sales/Debtors
Table showing debt turnover ratio of Heritage Foods India Limited during
the period of
(All amounts are in Cr)

Interpretation
From the above table, it is observed that the Heritage Foods India Limited
debtor’s turnover ratio shows a good singh. The company noted a maximum ratio

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 Working Capital Turnover Ratio
3,000.00 2,681.11
2,482.35 2,343.68 2,380.58
2,500.00
1,870.56
2,000.00
1,500.00
1,000.00
500.00
0.00
1 2 3 4 5
-6.490
-500.00 -52.220
-51.343 -45.464
-54.600 -27.579
-84.980 -31.932
-58.580
-366.807

of 6.898 in the year 2016-2015 and the minimum ratio 2.301 in the year of 2018-
2017.
Present year it is 3.800 i.e on 2020-2019.

Working Capital Turnover Ratio

Working Capital Turnover Ratio=Net Sales/Working Capital
Table showing Workin Capital Turnover atio of Heritage Foods India
Limited during the period of
(All amounts are in Cr)

Interpretation:

From the above table, It observed that the Heritage Foods India Limited working
capital turnover ratio shows a bad sing. The company noted a maximum ratio of
(27.579) in the year 2018-2017 and the minimum ratio in the year of 2016-2015.

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 Net Profit Ratio
3000
2681.11
2482.35
2343.68 2380.58
2500

1870.56
2000

1500

1000

500 292.6
83.44 3.361 60.38 2.576 15.642 56.8 2.386
0
2020-2019
-5.968 2019-2018 2018-2017 2017-2016 2016-2015
-160
-500

Net Profit ratio

Net profit is obtained when operating expenses; interest and taxes are subtracted
from the gross profit margin ratio is measured by dividing profit after tax by sales:
Net Profit ratio= (Net Profit/Sales)*100
Table showing Net Profit Ratio of Heritage Foods India Limited during the
period of
(All amounts are in cr)
Interpretation:
From the above table, It observed that the Heritage Foods India Limited The
sales of the organization are more as compared to Net profit. From 2015-2019
show good sing for company, but 2020 show the bad sing for the company.
Maximum ratio of 1.0642 in the year of 2017-2016 and minimum ratio is (5.968)
in the year of 2020, so it’s a bad sing for company.

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 CHAPTER-V

FINDINGS
CONCLUSIONS
SUGGESTIONS
BIBILIOGRAPHY

FINDINGS

1. The Heritage Foods (India) Limited net working capital is negative for
all years ,since it shows decreasing trend, but after that it is in declining
position.

2. The current ratio of Heritage Foods India Limited is not satisfactory

during the period of study 2015-2020. It is decreased slightly.

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 3. The quick ratio of Heritage Foods India Limited is not good though the
quick ratio is showing maximum value of 0.393 in the year 2019-2018 and
then it is declining to be deal.

4. Assets turnover ratio of Heritage Foods India Limited increased. The

company has to maintain this.

5. Inventory turnover ratio of Heritage Foods India Limited is also

increased gradually, without any fit falls up to 2018-2020. But at the year
of 2017-2018 it is declined, and again it has increased. ITR is 19.66 in the
year of 2019-20. Good inventory management is good sign for efficient
management.

CONCLUSIONS
1. The Heritage Foods India Limited Net Profit Ratio is showing profit in
the year 2016-17. This event is an expected one, because since the
previous years it is showing the decline stage in Net Profit Ratio.
2. The Heritage Foods India Limited Gross Profit Margin of Heritage
Foods India Limited increases & decreases due to the increase in sales.
3. Profit Margin of Heritage Foods India Limited is decreasing and
showing negative profit because there is increases price.
4. The Heritage Foods India Limited Net Working Capital Ratio is not
satisfactory.
5. The Heritage Foods India Limited return on Total Assets ratio shows a
negative sign in the year 2019-20.
SUGGESTIONS
1. Improve position funds should be utilized properly.
2. Better awareness to increase in the sales is suggested.
3. The investment on raw material should be made as per the requirement.
Unnecessary investment may block up the funds.

4. The raw material should be acquired from the right source at right quality,
right quantity and at right cost.

5. The process that was being used by Heritage Foods India Limited with
the purchasing department should undergo changes; so that, it seeks
enhance the celerity of the delivery of a product without compromising its
quality by improving the utilization of materials, labor and equipment.

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BIBLIOGRAPHY

BOOKS

Financial Management Written By Prasanna

Financial Management Written By S. N. Maheswari

Annual reports of the company---2015-20

https://www.heritagefoods.in/

www.retailindia.com

www.investopedia.com

https://www.moneycontrol.com/financials/heritagefoods/ratiosVI/HFI#HFI

https://economictimes.indiatimes.com/heritage-foods-ltd/balancesheet/companyid-
8582.cms

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