Finance is recorded as the life blood of a business enterprise. This is because in the modern money-oriented economy finance is one of the basic foundations of all kinds of economic activities. It is the master key which provides access to all the sources for being employed in manufacturing and merchandising activities. Business needs money to make more money. It is true that money begets more money, only when it is properly managed. The efficient management of every business enterprise is closely linked with efficient management of its finances. It is a process of conversion of accumulated funds to productive use. The main objective comprises financial planning, raising the needed funds, financial and control. The business can not run efficiently if it does not have adequate finance to meet its requirements.
Profit is a key factor in profit analysis because most managerial decision is influenced by earning capacity of business. Profitability is an indicator of an operational running of business the high profit indicates a sound profitable condition of business and vice versa.
[...] STUDY AREA The nature of study is made to understand the features and concept underlying in profitability. The topic under study deals with Comprehensive Compendium Study on Profitability at Wimco limited' which plays a vital role in the development of the organization. All projection and interpretation are based on the balance sheet, income Statement etc and financial tools are applied for such analysis of the financial statement which helps to know the overall profitability position of the organization. SCOPE The work is purely an in-house analysis. [...]
[...] To conclude the liquidity and solvency position helps in profitability analysis of business the factors are SOLVENCY Solvency generally refers to the capacity are ability of the business to meet its short term and long term obligation. If a company is in a position to pay its long term liabilities easily, it is said to be position long term solvency. If a company's financial position is strong to pay current liabilities, it is regarded as short term solvency. LIQUIDITY The liquidity measures the ability of the firm to meet is short-term obligation and reflects the short term financial strength / solvency of the firm. [...]
[...] FINDINGS The overall profitability ratio, in 2007 is 5.22 compared with year 2007-08 as It was found that sales and profit correlate each other and its value 0.89 which is as per the convention rule i.e. -1to 1. The return on share holders fund is decreased in 2007-08 as 4.3 compared to previous year 2006-07 as The earnings per share of the organization is decreased in proportion as 0.09 in 2007-08 compared to the previous year 2006- 07as It was found that the current ratio for assets and liability has slight deviation in 2004-05, 2005-06, and 2007-08. [...]
[...] Cost control Expenditure in the different operational areas of an enterprise can be analyzed with the help of an appropriate cost account system to enable the financial manager to bring costs under control Pricing Pricing is of great significance in the company's marketing effort, image and sales level. The formulation of pricing policies should lead to profitability, and also the image of organization Forecasting feature profits Expected profits are determined and evaluated. Profit levels have to be forecast from time to time in order to strengthen the organization Measuring the cost of control Each source of funds has a different cost of capital which must be measured because the cost of capital linked with profitability of the enterprise. [...]
[...] During the year 2007-08 the number of equity shares is The net loss suffered by the organization in 2003-04, 2004-05, and 2005-06 has resulted in loss per share for the equity share holder's in the corresponding years. Calculations are showed in annexure. RETURN ON SHARE HOLDERS FUND TABLE 1.8 YEAR NET PROFIT SHARE RATIO HOLDERS FUND Net profit after tax Return on shareholders fund= *100 Share Holders Fund Source; Annual report, Wimco Limited INFERENCE TABLE NO 1.8 shows the return on shareholder's fund 2004- 4.8 2005-(- 3.6 2006-(- 11.9 2007-( 5.8 2008-( 4.3 respectively. [...]
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