"RATIO ANALYSIS OF JANAKALYAN MULTIPURPOSE CO-OPERATIVE LIMITED" SUNUWAL
1.1.
Introduction of the study
Ratio
analysis is a form of financial statement analysis that is used to obtain a
quick indication of firm's financial performance .It is one of such a tools in
hand who wants to know something more from the financial statement in the
simplified manner .It is widely used tools of financial analysis which helps to
know weakness of a firm's as well as its historical performance and current
financial condition of any organization so, it is necessary tools to every
firm. Ratio analysis also helps in inter-firm's performance comparison of
different department and finds if any planning is needed for its effectiveness.
Liquidity
is defined as the ability of a company to meet its financial obligation as they
come due. The liquidity ratio, then, is a computation that is used to measure a
company's ability to pay its short term debts. There are two common calculations
that fall under the category of liquidity ratios. The current ratio is the most
liberal of the two. It is followed by the acid-test ratio. These two ratios are
often grouped together by financial analysis when attempting to accurately
measure the liquidity of a company.
Profitability
analysis is a component of enterprise resources planning (ERP) that allows
administrators to forecast the profitability of a proposal or optimize the
profitability of an existing project. Profitability analysis can anticipate sales
& profit potential specific to aspects of the market such as, customer age
group, geographic regions or product types. It helps to identify the most and
least profitable clients, products or services.
Profitability
and liquidity are two important variables which gives information about the performance
of any business entity. For long term survival and healthy growth both
profitability and liquidity should go parallel to each other .Profitability is
one of the major goals of any business, without being profitable it is not
possible for business to survive and the business need short-term funds to
fulfill its day to day needs in operations and other requirements . So, the
liquidity tells about the business capacity to meet short term needs of funds
by the business and the profitability tells about the profit generated from the
operation of business.
In
the modern age business has to face difficult challenges and competition. To
overcome such challenges and competition, different analysis should be done
among them financial analysis provides meaningful information about the
financial aspects of the business. It is the process of identifying the
financial strength and weakness of the firm by properly establishing
relationship between them i.e. Balance sheet & income statement.
The
reason to choose this title is that many studies have been conducted in past to
find the tradeoff between profitability and liquidity, and there is a huge
variation in this results. The purpose of the research is know the relationship
between two ratio of the financial statements i.e. profitability and liquidity
.The relation is measured by current ratio, quick ratio, Net working capital, Gross
profit margin ratio, Net profit margin ratio.
Saving and Credit co-operatives can be the
link that will give rural business access to credit at cost for lower than
interest rates currently charged by money lenders. People do not have the habit
of saving as well as knowledge of financial institution. To get rid from such
problems, different cooperative have been established .Among them Janakalyan
Multipurpose Co-operative limited is the one established on 2057 B.S as per
Directives of division cooperative limited. It is situated in Sunuwal-06,Nawalparasi.
There are 1586share shareholders and the share amount is Rs. 1,31,67,100. Loan facility
is given to people at 13-14% interest annually. People deposits their money at
saving interest 8% annually, people deposits money on daily basis and monthly
basis. Fertilizer to poor farmers is also distributed at low costs.
1.2.
Review of Literature
Review of Literature is thus, an essential
part of all research studies. It is a way to discover what other research in
the area of our problems has uncovered. A critical review of the literature
will helps us to know or develop through understanding and insight it into
previous research works that relates to our study. The literature survey will
also provides the function for developing a comprehensive theoretical framework
from which hypothesis can be develop for testing. The literature survey also
maximize the risk of pursuing dead-ends in research. Advantages of reviewing
the literature apply to the design of our project. Designing a study involves
several decisions as to what variables to include and how to measure them, what
techniques to use and so on.
According to Wixonkell and Bedford (1996), "a
ratio is an expression of the quantitative relationship between two numbers.”
Ratio is the expression of one figures in
terms of another's. It is the expression of the relationship of the mutually
independent figures, it is simple mathematical expression of the relationship
of one item to another. Absolute figure alone convey no meaning unless they are
interrelated to exist among various accounting data.
Kehler (1999) defines ratio as "a ratio
is the relationship of amount to another expressed as the ration of as a simple
fraction integer, decimal fraction of percentage."
Therefore, ratio refers to the numerical or
quantitative relationship between two numbers.
1.3.
Statement of the problems
Ratio is the expression of one figure in terms
of another .It is the expression of the relationship between the mutually independent
figures. It is simple mathematical expression of the relationship of one item
to another. Absolute figure anyone convey no meaning unless they are compared
with past research. According to ratios, It shows the interrelationship existed
among various accounting data.
1. What are the Liquidity positions of the firm?
2. What are the profitability positions of the
firm?
3. What is the financial position of firm from
the view point of liquidity and profitability?
1.4.
Objectives of the study.
A field work report will be meaningless
without having any objectives. So, the basic objectives of financial analysis
is to provide meaningful financial information to these who have need of it and
legitimate interest and right to have such information for decision making.The
various objectives are enumerated below:
1. To evaluate different ratios of past 5 years.
2. To analyzed the liquidity ratio of the firm.
3. To identify the profitability ratio of the
firm.
4. To analyzed the financial position of the
firm.
5. To analyzed the financial position of the firm
from the viewpoint of liquidity and profitability.
1.5.
Significance of the study.
Nowadays many Banks & Financial
Institutions are established all over the country. In these situations
institutional services are significant to develop the country by providing
loans and credit facilities.
1. This study helps to know how well the resources
of financial institutions.
2. To analyze the current situation of the
financial institutions.
3. This study helps to analyze liquidity and
profitability and manage them well.
4. This study provides bases for planning.
5. By the help of this study, financial
institutions can give quick financial decisions.
1.6.
Methodology of the study.
The research methodology is the process of
arriving to the solution of the problem through and systematic dealing with the
collection, analysis and interpretation of facts and figures. As this research
entirely considers about, the Ratio Analysis of Janakalyan Multipurpose
Co-operative Limited.Sunuwl-06.For the purpose of achieving the objective the
following methodology has been proposed to follow, which included research
design, collection of data, presentation and analysis technique.
1.6.1.
Research design
For preparing this report, descriptive research
design is used. Data are collected from only secondary method, because this
method is easily available. The following methodology is adopted for the data
presentation and analysis.
1.6.2.
Data Collection Methods.
In this report writing most of the required
data are secondary data.
Published Information of Organization
Under this method, the necessary accounts of
the company published will be analyzed to gather necessary information. Annual
Reports, Financial statements, Official Records, Published Books, Official
Website etc. will be used to collect the data.
Previous Fieldwork Report Search
Previous report for the same financial
institutions will be consulted and gathered necessary information.
1.6.3.
Techniques of Data Analysis.
After collecting the data, it will be analyzed;
it is measured by following tools:
1. Trend Analysis
2. Bar Diagram
3. Table
4. Average
5. Percentage
6. Different Ratios
1.7. Limitation of the study.
2. All data will be Secondary Nature.
3. This report studies only few Ratios.
4. The data will be used from F/Y 2070/71 to
2074/075.
5. Report will be based on T.U Requirement of BBS
4th Year.
6. Limited tools and techniques are used for data
analysis.
1.8.
Time Allotment.
The time allotment for writing this report
will be as follows:
|
S.N. |
Activities |
No. of
Days |
|
1. |
Topic Selection |
3 |
|
2. |
Proposal
Writing |
10 |
|
3. |
Field Visit and
Data Collection |
12 |
|
4. |
Presentation
and Analysis Data |
15 |
|
5. |
Proof Reading |
5 |
|
6. |
Setting and
Printing Report |
5 |
|
|
Total |
50 |
1.9.
References.
The lists of all references as on this field
work are.
·
Dangol, R.M. (2059),
Accounting for financial Analysis and planning, Kathmandu; Taleju Publication
·
Joshi, P.R. (2061B.S),
Corporate Finance, Kathmandu; Book Publisher and Distributers.
·
Agrawal, G.R (2003),
Project Management in Nepal, Kathmandu; M.K Publisher and Distributors.
·
Hornby, A.S.(1996),
Advance Learner Dictionary, Oxford University.
1.10. Report
Structure.
The present study has been organized into five
chapters. They are Whole report summarized by listed below.
Chapter-I: Introduction
The first chapter includes background of the
study, statement of the problems, objectives, rationale and limitation of the
study.
Chapter-II: Related
Literature Review
The second chapter included conceptual review,
review of previous works and research gap.
Chapter-III:
Research Methodology
The third chapter includes types of research, research
design, nature of data, types of data, population and sample, data collection
and analysis technique and report structure.
Chapter-IV: Results
and Findings.
The fourth chapter includes presentation of
data in tables and figure and their analysis and major findings.
Chapter-V: Discussion
and Conclusion.
The fifth chapter includes discussion and
conclusion.
Lastly, references and appendices are added at
the end of this report.
Log raj bhayt
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