PROJECT REPORT

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 Project Report
(Submitted for the Degree of B.Com Honors in Accounting & Finance under the
West Bengal State University)

TITLE OF THE PROJECT

PERFORMANCE OF ITC.LTD
Submitted By

Name of the Candidate: APU MAITY

College Name: BHAIRAB GANGULY
COLLAGE
Registration No: 107221140721
W.B.S.U Roll No: 6251130-17775
College Roll No: 7030
Supervised by

Name of the Supervisor: Dr. Surajit Sengupta

Name of the College: Bhairab Ganguly College
Month and Year Submission
2025

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 Supervisor's Certificate

This is to certify that APU MAITY a student of B.Com. Honors in

Accounting & Finance of BHAIRAB GANGULY COLLAGE under the
WEST BENGAL STATE UNIVERSITY has worked under my supervision
and guidance for his Project Work and prepared a Project Report with the
title FINANCIALSTATEMENT ANLYSIS OF ITC. LTD, which he is
submitting his genuine and original work to the best of my knowledge.

Signature:
Place: Panihati Name: Apu Maity
Date: Designation:
Name of the College: BHAIRAB GANGULY COLLAGE

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 Student's Declaration

I hereby declare that the Project Work with the title Financial Statement
Analysis of ITC Ltd. is submitted by me for the partial fulfillment of the
degree of B.Com. Honors in Accounting & Finance under the West Bengal
State University is my original work and has not been submitted earlier to
any other University /Institution for the fulfillment of the requirement for any
course of study.

I also declare that no chapter of this manuscript in whole or in part has

been incorporated in this report from any earlier work done by others or by
me However, extracts of any literature which has been used for this report
has been duly acknowledged providing details of such literature in the
references.

Signature:
Name: Apu Maity
Place: Panihati Address: GHOLA, SODEPUR
Kolkata-700111

Date: Registration No: 107221140721

Roll No. : 7030

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 ACKNOWLEDGEMENT
This report is an outstanding prospect to convey my gratefulness to
those many people. Whose timely help and guidance went a long way
in finishing this project work from Commencement to achievement, I
would like to express my sincere thanks to Dr. Subhranil Som (Principal
of our college) for giving me an opportunity for pursuing the project.

This project could not been completed without the able guidance and
support of Asst. Dr. Surajit Sengupta

Last but not the least would like to thank my friends, family members
who helped me for the completion and deeper understanding of the
concept of performance appraisal.

Working on this project has proved to be an enlightening experience for

me.

Date: Signature:

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 CONTENT

TITLE PAGE
1. INTRODUCTION 7 TO 13
Introduction 7
History 8
Objective of the Study & need of Study 9
Research Methodology 10
Scope of Study & Limitation of Study 11
Literature Review 12 TO 13
2.CONCEPTUAL FRAMEWORK 14 TO 17
Meaning of Financial Statement Analysis 14
Various Approaches of Financial Statement
Analysis 14 - 15
Various Parties in Financial Statement Analysis 16
Limitations of Financial Statement Analysis 17
Tools & Techniques of Analysis and Interpretation 17
3. PRESENTATION OF DATA ANALYSIS &
FINDINGS 18 TO 31
4. CONCLUSION & RECOMMENDATIONS 32 TO 33
5. BIBLIOGRAPHY & REFERENCE 34

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 INTRODUCTION
ITC is one of India's foremost private sector companies with a market capitalisation
of nearly US $ 14 billion and a turnover of over US $ 5 billion.* ITC is rated among
the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable
Companies by Forbes magazine, among India's Most Respected Companies by
BusinessWorld and among India's Most Valuable Companies by Business Today. ITC
ranks among India's 10 Most Valuable (Company) Brands', in a study conducted by
Brand Finance and published by the Economic Times. ITC also ranks among Asia's
50 best performing companies compiled by Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information
Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other
FMCG products. While ITC is an outstanding market leader in its traditional
businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is
rapidly gaining market share even in its nascent businesses of Packaged Foods &
Confectionery, Branded Apparel, Personal Care and Stationery.

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 HISTORY
ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco
Company of India Limited'. Its beginnings were humble. A leased office on Radha
Bazar Lane, Kolkata, was the centre of the Company's existence. The Company
celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land
situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum
of Rs 310,000. This decision of the Company was historic in more ways than one. It
was to mark the beginning of a long and eventful journey into India's future. The
Company's headquarter building, 'Virginia House', which came up on that plot of
land two years later, would go on to become one of Kolkata's most venerated
landmarks. The Company's ownership progressively Indianised, and the name of
the Company was changed to I.T.C. Limited in 1974. In recognition of the
Company's multi-business portfolio encompassing a wide range of businesses -
Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards &
Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting &
Stationery the full stops in the Company's name were removed effective
September 18, 2001. The Company now stands rechristened 'ITC Limited'.

 Though the first six decades of the Company's existence were primarily
devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco
businesses, the Seventies witnessed the beginnings of a corporate
transformation that would usher in momentous changes in the life of the
Company.
 In 1975 the Company launched its Hotels business with the acquisition of a
hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'.
The objective of ITC's entry into the hotels business was rooted in the
concept of creating value for the nation. ITC chose the hotels business for its
potential to earn high levels of foreign exchange, create tourism
infrastructure and generate large scale direct and indirect employment.
Since then ITC's Hotels business has grown to occupy a position of leadership,
with over 100 owned and managed properties spread across India.

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OBJECTIVE OF THE STUDY
The objectives of the study are as follows:-

➢ To understand to analyze and to suggest methods of improving profitability

management.

➢ To understand the key factors affecting profitability.

➢ To access the working capital employed by the company.

➢ To identify the financial strength and weakness of the company.

➢ To have an insight into the management of profit in an organization.

➢ To access the past performances of the firm. Past performance is a good

indicator of future performance. Investor or creditor are interested in the trend of
past sales ,cost of goods sold ,operating expenses ,net income ,cash flow and
return on investment.

➢ To access the operational efficiency of a management company, the actual

performance of the firm which is revealed in the financial statements can be
compared with some standards set earlier and the deviation of any between
standards and actual performances can be used as the indicator of efficiency of
the management.

NEED OF THE STUDY

Financial statement analysis is used to identify the trends and relationships
between financial statements. Both internal and external users of the financial
statement need to evaluate a company’s profitability, liquidity and solvency. The
most common methods used for financial statement analysis are trend analysis,
common – size statements and ratio analysis. These methods include calculations
and comparisons of the results to historical company data, competitors or
industry averages to determine the relative strength and performances of the
company being analyzed.

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RESEARCH METHODOLOGY:

RESEARCH TYPE

My research is based on the secondary data ie, historical data of ITC Limited.
Secondary data has been used to understand the fill rate of some market SKU of
Food division of Modern trade channel and then to make suggestions for successful
business strategy for the company's use to increase its sales i.e. to increase the fill
rate to 95% for ITC's food Business

DATA TYPE

Secondary data has been used for the purpose of study of Designing PO process for
MT channel for ITC's Food Business!

Secondary data was collected from the modern trade dashboards of ITC Limited for
the months of January, February, March and April.

DATA COLLECTION METHOD

In order to colleet the secondary data, Modern Trade dashboards of ITC limited for
4 months was used that was already provided. The dashboards of January, February
March and April 2019 were given and then after thorough understanding, studying
and analysing came to a conclusion about understanding the drops in fill rate that
affects the sales directly causes of drop and how to improve the fill rate were
prepared

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SCOPE OF THE STUDY:
The basis of financial planning and analysis is financial information; financial need
to predict compare and evaluate the firm’s earning ability. It is also required to
aid in economic decision making investment & financial statement or accounting
reports. It contains summarized information of the firm’s financial affairs,
organized systematically. They are the means to present the firm’s situation to
owners, creditors and general public. Presentation of the statements is the
responsibility of top management so they should be prepared very carefully and
should contain as much information as possible because they are very useful to
judge the financial efficiency of the company

LIMITATIONS OF THE STUDY

➢ It is very difficult to obtain the primary data of ITC ltd because of time
constraints.

➢ Sophisticated statistical tools such as regression analysis have not been

employed.

➢ Financial analysis is based on monetary information, it has only been

considered and non monetary information has been ignored.

➢ It is very time consuming, utilization of time is necessary in all the cases or

research we do.

➢ Since this topic covers a huge area, so it is impossible for me to do this analysis
of more than one company or make a comparative study between them.

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LITERATURE REVIEW :
According to Direct hit.com “Financial statement analysis is when someone
looks through the accounting entries for a portion of a company’s book and looks
for ways to lower cost or raise revenue or stream line process. It usually refers to
an employee of that company not a contractor.”

According to Barron’s Accounting Dictionary “Financial statement analysis

means use and transformation of financial data into a form that can be used to
monitor andevaluate the firm’s financial position, to plan future financing and to
designate the size of the firm and its rate of growth.”

According to Alan S. Donahue who wrote in his book “what every manager
should know about financial analysis.”

- In a very real sense, finance is the language of business. Goals are set and
performance is measured in financial terms. Plants are built, equipments ordered,
new projects undertaken based on clear investment return criteria. Financial
analysis which mainly consists of financial statement analysis is required in each
and every case.

According to Investopedia financial dictionary “The process of reviewing and

evaluating a company’s financial statement (such as balance sheet or profit or loss
statement ), thereby gaining and understanding of financial health of the
company and enabling more effective decision making. Financial statements
record financial data; however this information must be evaluated through
financial statement analysis to become more useful to investors, shareholders,
managers and other interested parties.”
Application to ITC Ltd*

According to ITC’s Annual Reports (2023, 2024), the company has consistently
maintained strong liquidity ratios, such as the current ratio and quick ratio,
indicating sound short-term solvency. Profitability ratios like Gross Profit Margin
and Net Profit Margin have shown resilience, supported by the company’s strong
brand portfolio and diversified revenue streams.

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A study by Moneycontrol.com (2024) noted:

ITC’s balance sheet strength lies in its low debt levels and high return on capital
employed (ROCE), which makes it a stable investment even during economic
slowdowns.

Scribd.com research documents and financial forums have highlighted that ITC’s
expansion into non-cigarette FMCG products has improved its earnings quality,
reducing dependency on any single segment.

Conclusion of Literature Review:

The literature reviewed shows that financial statement analysis is a critical tool
for evaluating ITC Ltd’s overall financial health. It not only helps in understanding
profitability and liquidity but also supports strategic decisions in a complex, multi-
sector business environment. Through various techniques like ratio analysis and
cash flow evaluation, stakeholders can make informed judgments about ITC’s
operational efficiency, financial stability, and future prospects.

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CONCEPTUAL FRAMEWORK
MEANING OF FINANCIAL STATEMENT ANALYSIS
Analysis of financial statement is a systematic process & critical information
underlined in the financial statements in order to understand & make decisions
regarding the operations of the firm. The analysis of financial statements is a
relationship among various financial facts as set out in the financial statements
i.e. B/S and P/L account. The complex data given in these financial statements is
divided /broken into simple and valuable elements and relationships are
established between the elements of the same statements or different financial
statements. These include certain absolute information about assets, liabilities,
equity, revenue, expenses and profit or loss of an enterprise.

VARIOUS APPROACHES OF FINANCIAL STATEMENT

ANALYSIS:
There are two main approach of financial statement analysis and they are:
➢ Traditional Approach

➢ Modern Approach

Traditional Approach – The use of the word traditional implies adherence to

some age old practice, conventions or methods. If we look back to the history of
development of FSA, we find that it started during the latter half of the 19th
century when the size of the business was comparatively smaller and there were
very few complicated business structure. At that time the analysis was mainly
made for credit evaluation & investment decisions with the use of a very few
selected ratios like current ratio (current asset – current liabilities) and Debt
equity ratio (debts – equity capital) .The main purpose would be to make credit
analysis and understand the short term solvency position very soon certain ratios
like profitability ratios, acid test ratio’s were also used. The basic features of
TRADITIONAL APPROACH to financial statementanalysis are:-

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➢It is past oriented.

➢It is related to the analysis of financial data as available from the published
financial statements.
➢The technique applied here are simple and easy to understand.

➢It is a general purpose analysis. It does not confirm to any specific purpose.

➢It is mainly a short term analysis aimed at judging the profitability and inancial
position of the business.

Modern Approach – The modern or new financial statement analysis came out
with a specific purpose oriented and integrated approach which designs to
provide specific information for the separate needs of specific decision takers. It
developed in a manner to be usable according to the varying requirements of
such decision takers. The mode of analysis under this approach is based on
quantitative as well as qualitative data collected in keeping with needs of decision
models. Such collections of data are made according to the environment – both
internal and external in which a firm has to function. Naturally both inside and
outside sources are tapped.
The main features MODERN APPROACH to financial statement analysis are:-

➢ This approach ties up FSA with other branches of knowledge like statistics,
economics, etc.

➢This approach puts emphasis on both short term and long term profitability and
financial standing of a concern.

➢Under it, the decision maker has to select first the specific issues which he
needs information. The analysis is made according to the selections.

➢It extends over both financial and non financial measures for making
predictions about future profitability & cash flows to the business.

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VARIOUS PARTIES INTERESTED IN
FINANCIAL STATEMENT ANALYSIS :
The list of stakeholders who are interested in a company and interested parties in
Financial Statement Analysis are most important, those are:-

➢ Management – The management always looks for the safe survival of the
business and the maintenance of its economic viability and sustainable growth.
For carrying out managerial activities, proper planning, framing useful policies and
strategies, taking appropriate decisions regarding allocation of limited resources
and exercising overall control are required.

➢ Investors – They look for steady return and the safety of their investment. The
shareholders try to know the profitability of the firm and its dividend policy.

➢ Bankers/Lenders – They need information as whether the recovery of their

existing and proposed loans to the firm will be possible in due time and whether
they will get proper interest on such loans.

➢ Suppliers and Trade Creditors – They want to assess the profitability and short
term solvency of the firm to which they are going to allow credit facilities.

➢ Employees – They want information about the profitability and financial

stability of their employers firm.

➢ Customers – Usually the customers want to build up a long relationship &

want a continuous supply of quality products at reasonable price.

➢ Competitors – For comparisons of relative performance results they need

information out of FSA.

➢ Government – It depends upon financial statement analysis of a firm for the

different reasons assessment of general/economic conditions of the firm, its
position in the industry, considering and applying national economic statistics,
deciding tax matters etc.

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LIMITATIONS OF FINANCIAL
STATEMENTS:
Although financial statements render ample information service to the
stakeholders of a business as well as to its outsiders, such statements suffer from
certain limitations. These are:

➢ These statements report quantitative facts only. The qualitative aspects are
not properly hinted upon.

➢ Only some major and important pieces of information are transmitted. An

overall picture cannot be reflected by the traditional financial statements. As a
result, decision making become partial and biased.

➢ Personal observations and intuitions are not allowed proper lee way to bring
out complete material facts.

➢ Change of socio-economic scenario and political surrounding’s find no place in

financial statements. But pre-dominantly these factors are governing the
development of businesses.

TOOLS & TECHNIQUES OF ANALYSIS

AND INTERPRETATION:
➢ Ratio Analysis –It is also an important method of analysis of financial
statement. It is adapted to establish meaningful mathematical relation between
two items or two groups of items show in financial statements.

.➢ Cash flow Statement –This technique is very useful in the management of

cash and analysis of short term liquidity. Under this method a statement is
prepared to show the inflow and outflow of cash related to various activities in
the concern during a specific period.

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CONSOLIDATED PROFIT AND LOSS
STATEMENT

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CONSOLIDATED BALANCE SHEET

pg. 19
CONSOLIDATED CASHFLOW STATEMENT

pg. 20
pg. 21
1. RATIO ANALYSIS
Liquidity Group
1. CURRENT RATIO:
It shows the ratio of current asset over current liabilities. The customary ratio is 2 :1
which means Rs 2 of asset is ready to pay Re1 of liability. Current assets are those
which can be converted into cash in an accounting period. Similarly current liabilities are
those which need to be paid in an accounting period.

Particulars 2023-2024 2022-2023

(Rs in CRs) (Rs in CRs)
Current Assets 36070.67 35203.44
Current liabilities 12415.61 12415.62
Current Ratios 2.9 2.83

Quick Ratio

1.98

1.975

1.97

1.965
1 2

Quick Ratio

Interpretation: Since the customary ratio is 2.9:1, it is seen that current ratio is
greater than 2 in 2023-24. However it shows that current ratio has shown
improvement over the past two financial years.

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2. ACID TEST RATIO:

This ratio shows the company’s capability to pay its current liability very quickly.
Because of this ratio is also known as Liquid Ratio or Quick Asset ratio. It is a ratio
of Quick assets to Quick liabilities. Quick assets are those which are immediately
converted into cash in an accounting period. Quick assets mean current assets
less stock.

Quick Assets
Acid Test Ratio= --------------------------------
Quick Liabilities

Particulars 2023-24 2022-23

(Rs in CRs) (Rs in CRs)
Quick Assets 24439.16 24609.54
Quick Liabilities 12415.61 12415.62
Quick Ratio 1.97 1.98

Quick Ratio

1.98

1.975

1.97

1.965
1 2

Quick Ratio

Interpretation: The conventional ratio is 1:1. It means Re 1 of asset is ready to pay

Re1 of liability. It is seen that company’s acid test ratio is over the conventional
ratio of 1:1. So short term financial position of the company is good .

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Turnover Group
1. CURRENT ASSET TURNOVER RATIO:

This ratio shows the relation between current assets and Net sales. This
measures the efficiency level of the company for utilization of working capital.

Net Sales
Current Asset Turnover Ratio= ---------------------------------
Current Asset
Particulars 2023-24 2022-23
(Rs in CRs) (Rs in CRs)
Net Sales 70105.29 70251.28

Current Assets 36070.67 35203.44

Current Asset 1.94 1.99
Turnover ratio

Current Asset Turn Over Ratio

2
1.98
1.96
1.94
1.92
1.9
year 2023-24 year 2022-23

Interpretation: It is evident that current asset turnover ratio has decreased from
1.99 in 2023 to 1.94 in 2024 . This shows that utilization of working capital of the
company is not satisfactory.

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2. FIXED ASSETS TURNOVER RATIO:

Fixed assets are used by the manufacturing company to produce goods with
reduced cost. Efficient utilization of fixed assets will increase production and
thereby increase in profitability. Higher the ratio better is the company.

Particulars 2023-24 2022-23

(Rs in CRs) ( Rs in CRs)
Net Sales 70105.29 70251.28

Fixed Assets 22015.50 20491.32

Fixed Asset Turnover 3.18 3.42

ratio

Fixed Asset Turnover ratio

0.86
0.84
0.82
0.8
0.78
0.76
2023-24 2022-23

Interpretation: Fixed assets turnover ratio decreased to 3.18 in 2023-24

comparing to 3.42 in 2022-23. Hence it can be said utilization of fixed assets for
production is not satisfactory.

pg. 25
3. TOTAL ASSETS TURNOVER RATIO:

This ratio shows how efficiently company has utilized its total asset to generate
production and sales. The higher is the ratio, more efficient the company is or vice
versa.

Particulars 2023-24(Rs in CRs) 2022-23(Rs in CRs)

Net Sales 70105.29 70251.28

Net Assets 87327.60 82261.74

Total Assets Turnover 0.80 0.85

Ratio

total Asset Turnover ratio

0.86
0.84
0.82
0.8
0.78
0.76
2023-24 2022-23

total Asset Turnover ratio

Interpretation: It appears from the above that the company’s total asset turnover
ratio had slowly decreased in 2023-24, comparing to that of 2022-23 , Moreover it
also indicates that assets are being not utilized efficiently. So the position is not
satisfactory.

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4. WORKING CAPITAL TURNOVER RATIO :

This ratio shows that the number of times the working capital is converted into
revenue in an accounting period, or how efficient management is in using its
working capital to generate sales revenue.
Net sales
Working Capital turnover ratio= ----------------------------------
Working Capital [C.A. – C.L.]
Particulars 2023-24 2022-23
(Rs in CRs) (Rs in CRs)
Net Sales 70105.29 70251.28

C.A – C.L 12,023.55 12,193.92

Working Capital turnover 5.83 5.76

ratio

Working Capital turnover ratio

5.85
5.8
5.75
5.7
(Rs in CRs) (Rs in CRs)
2023-24 2022-23

Working Capital turnover ratio

Interpretation: The above table shows that the company has not a good working
capital in hand to fulfill all its needs. But the graph shows that it keeps on
increasing this financing year.

pg. 27
5. INVENTORY TURNOVER RATIO :

This ratio shows the relation between costs of goods sold and average stock. It
means how much time stock has been rolled to make cost of goods sold. Higher
the ratio, more efficient the company is. The equation of for inventory turnover
equals the cost of goods sold divided by the average inventory. Inventory
turnover ratio is also known as inventory turns, stock turn, stock turns, turns and
stock turnover.

Cost of Goods Sold

Inventory Turnover Ratio = -----------------------------
Average Stock
Particulars 2023-24 2022-23
(Rs in CRs) (Rs in CRs)
Cost Of Goods sold 28190 29860

Average Stock 11612.7 11317.6

Inventory Turnover Period 2.43 2.64

Inventory Turnover Period

2.7
2.6
2.5
2.4
2.3
(Rs in CRs) (Rs in CRs)
2023-24 2022-23

Inventory Turnover Period

Interpretation: The above table shows that the company has not a good working
capital in hand to fulfill all its needs. And the graph also shows that it keeps on
Decreasing this financing year.

pg. 28
C. Profitability Group
1. GROSS PROFIT RATIO:

This ratio shows the relation between Gross profit and sales. Increase in gross
profit ratio will indicate good sales at reduced direct cost. This shows the
manufacturing efficiency.

Gross Profit
Gross Profit Ratio= -------------------------
Sales
Particulars 2023-24 2022-23
(Rs in CRs) (Rs in CRs)
Gross Profit 26323.34 26477.54

Sales 70105.29 70251.28

Gross Profit ratio 37.54% 37.68%

Gross Profit ratio

37.70%
37.65%
37.60%
37.55% Gross Profit ratio
37.50%
37.45%
(Rs in CRs) (Rs in CRs)
2023-24 2022-23

Interpretation: It is seen from the above that Goss profit has decreased by 0.14%
in the year 2023-24. So the position is not satisfactory. Gross profit margin is
lower than 2022-23.

pg. 29
2. NET PROFIT RATIO: This ratio shows the relation between net profit and net
sales. This shows the operating efficiency of a company. Increase in the ratio
means managerial efficiency like better performance or vice versa.

Particulars 2023-24 2022-23

(Rs in CRs) (Rs in CRs)
Net Profit 20421.97 18753.51

Net Sales 70105.29 70251.28

Net Profit ratio 29.13% 26.69%

Net Profit ratio

29.50%
29.00%
28.50%
28.00%
27.50%
27.00% Net Profit ratio
26.50%
26.00%
25.50%
25.00%
(Rs in CRs) (Rs in CRs)
2023-24 2022-23

Interpretation: It is seen from the above that Net profit has increased to 0.14% in
the year 2014-15. It is observed from the above that the company is able to
maintain the increase the profit slightly. Net profit margin is higher than 2013-14.

pg. 30
 D. Solvency Group
1. INTEREST COVERAGE RATIO: This ratio shows the ability of the company to
pay the interest on outstanding borrowings. In other words it indicates whether
sufficient profit to service has the interest burden. The higher the ratio better is
the ability of the company.

Net Profit before Interest & Taxes

Interest Coverage Ratio = ---------------------------------------------------

Interest

Particulars 2023-24 2022-23

(Rs in CRs) (Rs in CRs)
Net Profit before interest & 27139.88 24677.54
Taxes
Interest 79.8 73.8
Interest Coverage Ratio 340 times 334.2 times

Interest Coverage Ratio

342
340
338
Interest Coverage Ratio
336
334
332
330
2023-24 202-23

Interpretation: The above table shows that the company is more than capable to
pay its dues with sufficient amount of profit ie.340.8 times in 2023-24 and 334.8
times in 2022-23. This is possible due to very low outstanding borrowed funds.

pg. 31
CONCLUSION & RECOMMENDATIONS
Recommendations:
The overall financial position of the company is good. It is advised that company
should look for better working capital management to improve liquidity further.

1) The company is cash rich company and need not go for any long term
borrowings.

2) The Company may ask its suppliers to extend the credit period.

3) A high debtor’s turnover ratio indicates an improvement in the business

conditions or improved collection procedure. The company has high debtors
turnover ratio and as such need not tighten the credit policy further.

4) The net profit of the company has increased consistently for the last years. It
has not only helped to cover all operating expenses but is able to reward its
shareholders.

5) The company should consider expenses for selling & Distribution to increase
sales and to survive in the competition.

pg. 32
Conclusion:
The project was undertaken to evaluate the financial performance so that it gives
an idea about the company’s financial position. It is expected that the study will
help understanding the overall financial performance of the company. It is also
expected that the recommendation / suggestions made will bring attention of the
management. The observations are as follows –

1. The customary ratio for current ratio is 2:1. FY 2023-24 and 2022-23 has
improved It’s current ratio to 2.83 in 2022-23 and 2.9 in 2014-15.

2. Standard ratio for Acid Test ratio is 1:1. The Company has liquid ratio is greater
than standard one for the last years. This shows that liquidity position of the
company is good.

3. Standard Debt Equity ratio is 2:1. The company has very low Debt Equity ratio
in the last years. This shows that the company has very lesser burden for interest
on borrowings.

4. Gross profit ratio of the company is good. GP ratio is 37.68 %, 37.54%% in 2023-
24, and 2022-23 respectively.

5. Similar is the position for Net profit ratio. The company has actually maintained
29.13% in the last years.

6. Interest Coverage ratio – Due to low outstanding borrowings, interest

coverage ratio is high which 340 times is for the FY ending 2024

7. Inventory Turnover period is hovering between 2.43 to 2.64.

pg. 33
REFFERENCE
 Investopedia. (2024). Financial Statement Analysis. Retrieved from:
(https://www.investopedia.com)(https://www.investopedia.com)
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 ITC LTD (2023, March 31)

https://www.itcportal.com/about-itc/shareholder-value/annual-reports/itc-
annual-report-2023/pdf/ITC-Report-and-Accounts-2023.pdf

 OTHER SOURCES

https://www.google.com/

http://www.moneycontrol.com/

https://www.scribd.com/

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