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              A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspect of business firm. It may show the position at a moment in time as in the case of a balance sheet or may reveal a series of activities over a given period of time, as in case of an Income statement.
Accounting process involves recording, classifying and summarizing various business transactions. The day-today transactions of business are recorded in different subsidiary books. The transactions are posted into various ledger accounts and be balances are taken out at the end of a financial period.
Financial statements are the outcome of summarizing process of accounting. They are essentially interim reports presented annually and account period, more frequent a year.


According to Metcalf and Trihard, analysing of financial statement is a "Process of evaluating the relationship between component parts of financial statements to obtain a better understanding of firm's position and performance."
According a Smith & Ashfume, financial statements are defined as "The end product of financial accounting statements prepared by the accountant of a business enterprise that support to reveal the financial position of the enterprise the result of its recent activities and analysis of what has been done with earnings."

According to John N Myer, "The financial statements provide a summary of accounts of a business enterprise, the balance sheet reflecting the assets and liabilities and a capital as  on a certain date and the income statement showing the results of operations during a certain period."
      According to R.P. Rustogi, "The financial statements are the end product of the financial accounting process. The financial statements are nothing but the financial information presented in concise and capsule form"
From the definitions above the purpose of financial analysis is to diagnose the information contained in the financial statements to as to judge the profitability and financial soundness of the firm, just like a Doctor examines his patient before giving treatment, a financial analyst analyses the financial statements.
Broadly the objective of the analysis of financial statement is to understand the information contained in financial statements with a view to know the weakness and strength of the firm and to make forecast about the future prospects of the firm and thereby enabling the financial analyst to take different decisions regarding the operation of a firm.
The objectives can be identified as:
  1. To assess the present profitability and operating efficiency of the firm as a whole as well as for its different departments.
  2. To find out the relative importance of different components of financial position of a firm.
  3. To identify the reason for change in the profitability/financial position of the firm.
  4. To assess the short term as well as long term liquidity position of the firm.

    Thus the term financial statement generally refers to two basic statements:
    1. The Income statement.
    2. The Balance sheet
      Besides these two statements, an organization, particularly a company may also prepare:
    1. A statement or retained earnings.
    2. A statement of changes in financial position.

      The meaning and significance of each of these statements is being briefly explained.
    1. The Income statement:
      The Income statement or profit and loss account is generally considered to be the most useful of all financial statements. It explains what has happened to a business as a result of operations between two balance sheet dates. For this purpose, it matches the revenues and shows the net profit earned or loss suffered during a particular period.  
    1. The Balance sheet:
      It is a statement financial position of business at specified moment of time. It represents all assets owned by the business at a particular moment of time and the claims (or equities) of the owners and outsiders against those accounts at that time. It is in a way snapshot of the financial condition of the business at that time. 
    1. Statements of retained earnings:
      The term "Retained earnings" means the accumulated excess of earnings over losses and dividends. The balance shown by the income statement is transferred to the balance sheet though this statement after making necessary appropriations.    
      It is fundamentally a display of things that have caused the beginning of the period retained earnings balance to be charged into the one shown in the end of the period – Balance sheet.
      The statement is also termed as Profit and Loss account in case of companies.  
    1. Statement of changes in Financial Position.
      The Balance sheet shown the financial condition of the business at a particular moment of time while the income statement discloses the result of operations of business over a period of time. However, for a better understanding of the affairs of the business, it is essential to identify the movement of working capital or cash in and out of the business. The information is available in the statement of changes in financial position of the business. The statement may emphasize any of the following aspects relating to change in financial position of the business:
      1. Changes in the firm's working capital
      2. Changes in the firm's cash position
      3. Changes in the firm's financial position.
      The term "Fund flow statement" and "Cash flow statement" are popularly used for changes in working capital and charges in cash position respectively, whereas the term "Statement of changes in financial position" is used to show the firm's total financial position.           


The information given in the financial statement is very useful to the number of parties as given below:
  1. Owners – They provide funds for the operations of a business and they want to know whether their funds are being properly utilized or not. The financial statements prepared from time to time satisfy their curiosity.

  1. Creditors – Creditors (Suppliers of goods and services on credit, bankers and other lenders of money) want to know the financial position of a concern before giving loans or grating credit. The financial statements help them in judging such position.

  1. Investors - Prospective investors who want in invest money in a firm would like to make an analysis of the financial statement of that firm to know how safe the proposed investments will be.

  1. Employees - Employees are interested in the financial position of a concern they serve, particularly when payment of bonus depends upon the profit earned. They would like to know that the bonus being paid to them is correct so they are interested in the preparation of current profit and loss account.

  1. Government – Central and State governments are interested in the financial statement because they reflect the earnings for a particular period for the purpose of taxation. Moreover, these financial statements are used for compiling statistics concerning business, which in turn help in compiling national accounts.

  1. Research Scholar – The financial statements being a mirror of the financial positions of a firm are of immense value to the research scholar who wants to make a study into the financial operations of a particular firm.

  1. Consumers – Consumers are interested in the establishment of goods according to control so that cost of production may be reduced with the resultant reduction of the prices of goods they buy.

  1. Managers – Management is the art of getting things done through others. The requires that the subordinates are doing work properly. Financial statements are an aid in this respect because the serve the manager in appraising the performance of the subordinates. Actual results achieved by the employees can be measured against the budge performance they were expected to achieve and take remedial action against the performance, if not up to the mark.


    Financial statements are prepared with the object of presenting a periodical review or report on the progress to the management and deal with the
  1. Status of investments in the business and
  2. Results achieved during the period under review.
    However, these objectives are subject to certain limitations.
    They are: 
  1. Financial Statements are essentially interim reports:
    The profit shown by the profit and loss account and the financial position are depicted by the balance sheet is not exact. The exact position is known only when the business is closed down. Again, the existence of contingent liabilities, deferred revenue expenditures makes them more imprecise.  
  1. Accounting concept and conventions:
    Financial statements are prepared on the basis of certain accounting concepts and conventions. On account of this reason, the financial position as disclosed by theses statements may not be realistic, e.g. Fixed assets in the balance sheet are shown on the basis of "Going concern concept", this means that value placed on fixed assets may not be the same that may be realized on their sale. Similarly on account of "Convention of conservation." The income statement may not disclose true income of the business since probable losses are considered while probable incomes are ignored.            
  1. Influence of personal judgement:
    Many items are left to the personal judgement of the accountant, e.g., the method of depreciation, mode of amortization of fixed assets, treatment of deferred revenue expenditure; all depend on personal judgement of the accountant. The soundness of such judgement will necessarily depend upon his competence and integrity. However, the convention of consistency acts as a controlling factor on making indirect personal judgements. 
  1. Discloses only monetary facts:
    Financial statements do not depict those facts that cannot be expressed in terms of money, e.g. development of a team of loyal and efficiency workers, enlightened management – are matters that are of considerable importance for the business, but financial statements will not depict thee.  
  1. Artificial views:
    These statements do not give a real and correct report about the worth of the assets and their loss of value, as these are shown on historical cost basis. Thus, these statements provide artificial view as market or replacement value and the effect of the charges in the price level, are completely ignored.  
  1. Scope of manipulation:
    These statements are sometimes prepared according to the needs of the situation or the management. A highly efficient concern may conceal its real profitability by disclosing loss or minimum profit whereas an inefficient concern may declare dividend by wrongly showing profit in the profit and loss account. For this, under or over valuation of inventory, over or undercharge of depreciation, excessive or inadequate provision for anticipated losses and other such manipulations may be resorted to window dressing may also be resorted to in order to show better financial position of the concern that its real position.  


    Financial statement analysis can be made on the basis of
    1. The nature of the analyst and the material used by him.
    2. The objective of the analysis.
    3. The modus operandi of the analysis.

A.  According to the Nature of analyst and the material used by him.
      1. External analysis - Those persons who are not connected with the enterprise make this analysis. They do not have access to the enterprise. They do not have access to the detailed record of the company and have to depend mostly on published statement. Investors, credit agencies, governmental agencies and research scholars make such type of analysis.

      1. Internal analysis – Those persons who have access to the books of accounts make the internal analysis. They members of the organization. Analysis of the statements or other financial data for managerial purpose is the internal type of analysis. The internal analyst can give more reliable result than the external analyst because every type of information in at his disposal.

B. According to the objective of the analysts:
      1)      Long term analysis: This analysis is made in order to study the long term financial stability, liquidity, profitability and earning capacity of the business concern. The purpose of making such type of analysis is to know whether in the long run the concern will be  able to earn a minimum amount which will be sufficient to maintain a reasonable rate of return on the investment so as to provide the funds required for modernization, growth and development of the business and meet its capital cost.  
      2)  Short Term analysis: - This is made to determine the short-term solvency, stability and liquidity as will as earning of the business. The purpose of this analysis is to know whether in the short run a business concern will have analysis is to know whether in the short run a business concern will have adequate funds readily available to meet its short-term requirements and sufficient borrowing capacity to meet contingencies in the near future. This analysis is made with reference to items of current assets and current liabilities to have fairly sufficient knowledge about the company's current position, which may be helpful for short term and long  term financial planning.                  
C. According the Modus Operandi of the analyst:
      1)   Horizontal Analysis: - This analysis is made to review and analyse financial statements of a number of years and therefore based on financial data taken from several years. This is very useful for long-term trend analysis and planning e.g., comparative financial statements.
      2) Vertical Analysis: -This analysis is made to review and analyse the financial statements of one particular year only. Ration analysis of the financial year relating to a particular accounting year is an example of this type of analysis.     


    The following techniques can be used in connection with analysis, interpretation of financial statement.  
    1. Comparative financial statement (Analysis)
    2. Common Measurement statements (Analysis)
    3. Trend percentage Analysis
    4. Fund flow statements
    5. Cash flow statements
    6. Net working capital Analysis
    7. Ration analysis

  1. Comparative financial statement
    The statements are prepared in a way so as to provide time perspective to the consideration of various elements of finance embodied in such statements. This is done to make the financial data more meaningful. This statement shows the decrease in absolute data in terms of value and percentages.
    Comparative statements can be prepared for income statement as well as position statement or Balance sheet.  
    (i) Comparative Income statement:
    The statement discloses the net profit or net loss resulting from the operations of business. Such statement shows the operating results for a number of accounting periods so that changes in absolute data from one period to another period may be stated in terms of absolute change or in terms of percentage. This statement helps in deriving meaningful conclusions, as it is very easy to ascertain the changes in sale volume, administrative expenses, selling and distribution expenses, cost of sales etc. 
    (ii) Comparative Balance sheet:
    This statement is prepared on two or more different data and can be used for comparing assets and liabilities and to find out any increase or decrease in these items. This facilitates the comparison of figure of two or more periods and provides necessary information, which may be useful in forming opinion regarding the financial condition as well as progress of the concern. 

  1. Common Measurement statements:
    This statement indicates the relationship of various items with some common item. In the income statement, the sales figure is taken as base and all other figures are expressed as percentage of sales. Similarly in a balance sheet, the total of assets and liabilities is taken as base and all other figures are expressed as a percentage to this total. The percentage so calculated can be easily compared with the corresponding percentages in other periods and meaningful conclusions can be drawn. 
    3. Trend Percentage Analysis:
    This analysis is an important tool of horizontal financial analysis. This method is immensely helpful in making a comparative study of the financial statements of several years. Under this method, trend percentages are calculated for each item of the financial statement taking in the figure of base year as 100. The starting year is usually taken as the base year.
    The trend percentages show the relationship of each item with its preceding year's percentage. These percentages can also be presented in the form of index number showing relative change in the financial data of a certain period. This will exhibit the direction (upward or downward trend) to which the concern in proceeding. These trend rations may be compared with the industry in order to know the strong or weak points of a concern. These are calculated only for major items instead of calculating for all items in the financial statements. 
    4. Fund Flow statement:
    This statement is prepared in order to reveal clearly the various sources from where the funds are procured to finance the activities of a business concern during the accounting period and also brings to light the use of which these funds are put during the said period.     
    5. Cash Flow statement.
    This statement is prepared to know clearly the various items of inflow and outflow of cash. It is an essential tool for short-term financial analysis and is very helpful in the evaluation of current liquidity of a business concern. It helps the business executives of a business in the efficient cash management and internal financial management. 
    6. Statement of changes in working capital (Net working capital analysis)
    This statement is prepared to know the net change in working capital in working capital of the business between two specific dates. It is prepared from current assets and current liabilities of the said dates to show the net increase in working capital  
    7. Ratio Analysis:
    It is done to develop a meaningful relationship between individual items or group of items usually shown in the periodical financial statements published by the concern. An accounting ratio shows the relationship between the two inter-related accounting figures as Gross profit to sales, current liabilities, loaned capital to owned capital etc.                   


    The financial statements are indicators of two significant factors:
  1. Profitability
  2. Financial soundness.

    Analysis and interpretation of financial statements therefore, refer to such a treatment of information contained in the income statement and the balance sheet so as to afford full diagnosis of the profitability and financial soundness of the business. 
    A distinction here can be made between the two terms "Analysis" and "Interpretation". The term "Analysis" means methodical classification of the data given in the financial statements. The figures given in the financial statements with not help one unless they are put in a simplified form, e.g., all items relating to "current asset" are put at one place while all items relating to "current liabilities" are put at another place. The term "interpretation" means explaining the meaning and significance of the data so simplified.
    How ever, both "Analysis" and "Interpretation" are complementary to each other. Interpretation requires analysis while analysis is useless without interpretation. Most of the authors have used the term "Analysis" only to cover the meaning of both – Analysis and interpretation since analysis involves interpretation.
    According to Myres, "Financial Statement analysis in largely a study of a relationship among the various financial factors in a business as disclosed by a single set of statements and a study of the trend of these factors as shown in series of statements"
    For the take of convenience, we have also used the term "Financial statement analysis" throughout the chapter to cover both analysis and interpretation.


A financial statement is a collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of financial aspects of a business firm. It will show the performance of the business for a given period of time in the form of profit and loss account or the revenue account and the position of business enterprise on a given date in the form of a balance sheet.
Financial statements are prepared primarily for decision-making. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statement is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense importance in making decisions through analysis and interpretation of financial statements.
Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationships between the items of the balance sheet and the profit and loss account.
Financial analysis can be undertaken by management of the firm viz., by partners or outside the firm viz., owners, creditors, inventors and others.

Statement of the problem:

The statement of changes in financial position has an analytical value as well as it is an important planning tool. It gives a clear picture of the causes of changes in the company's working capital or cash flow position. It indicates the financing and investment policies followed by the company in the past. The statement also reveals the non-current assets acquired by the company and the manner in which they have been financed from the internal and external sources.
The statement is useful as a tool of historical analysis as it helps to answer questions such as what is the liquidity position of the firm? What are the causes of changes in the firm's working capital or cash position? What fixed assets did the firm acquire? Did the firm pay dividends to its shareholders or not? If not, was it due to shortage of funds? Did the firm use external sources of finances to meet its need of funds? Could the firm pay its long-term debts as per the schedules and what are the significant investment and financing activities of the firm, which did not involve working capital, etc.,

The above question required an in depth study into the financial performance of the company based on its financial statements and to draw conclusions regarding the performance of the company and hence this study has been taken up.
Analysis of the financial performance tries to find out the reasons for shift in the financial position and tries to establish a trend of the direction in which the business is moving in. Therefore using general terminology, the statement of the problem could be generalized as a detection of reasons for variation in the financial position of the company.

Objective of the study:

The following are the objectives of the study:
  1. The primary objective of the study is to study the financial statements, profit and loss account and the balance sheet of the company.
  2. To understand the efficiency of the company.
  3. To assess the profitability of the concern.
  4. To study the solvency, liquidity and long-term financial position of the concern.
  5. To interpret the financial statement with the help of accounting ratios derived from financial statements and
  6. To make suggestions out of the findings of the study.

Scope of the study:

The study concentrated mainly on understanding and analysing the financial statements based on the previous 3 years financial statements of Titan Industries Limited.


The financial statements of the year 2003-04, 2004-05 and 2005-06 have been arranged properly for the purpose of analysis. Ratios have been used as a tool of analysis to evaluate, interpret and compare the financial performance of the company.

Sources of Data:

The required data has been collected from both primary and secondary sources.           The primary data has been collected directly from the official of the company.
The secondary data has been collected from the company in the form of annual             reports, business journals, magazine, Internet and other published information.

Analysis of data:

The ratios are calculated to know the performance of the company in terms of liquidity, solvency, profitability and overall performance ratios. Ratios are analysed keeping the standard or ideal ratio in mind and inferences are drawn from them. To illustrate the data graphs and tables are used.

Limitations of the study:
  1. This study extensively uses the data provided in the financial reports. If there is any window dressing, the findings could be misleading.
  2. This being an academic study, it suffers from time and cost constraints.
  3. The study is limited to the watch manufacturing and Jewellery unit and does not include the subsidiaries of the company, which are functioning abroad.
  4. It's purely a theoretical study.
  5. Lastly different individuals interpret the ratios in different manner.

After the completion of the study, a report has been presented in the following six chapters:
Chapter 1: Introduction to financial statement.
Chapter 2: Research Design
Chapter 3: Company Profile
Chapter 4: Ratio Analysis
Chapter 5: Analysis and Interpretation of ratios
Chapter 6: Findings, Suggestions and Conclusions.


             The simplification of time keeping may have been connected with the invention of the first clocks that were not directly dependent on the heavens. There were water clocks or clepsydras, which measured time emptying or filling or a vessel as water, flowed out of it or into it through a small opening.
              The clepsydra made possible a new way of looking at time. Sun and star clocks alike were primarily indicators marketing off the hours at which certain activities were scheduled to be performed. But clepsydra by emptying or filling of its vessel also gave a clear and concrete evidence of how much time has passed. In this sense its invention can be called the real beginning if time measurement.
               The first mechanical clock was probably invented in China in the late 1000's. However this invention was never further developed. In the western civilization the mechanical clocks were developed only in the 1200's. The spring driven clocks were probably developed in Italy in the late 1400's. The pendulum clocks during the mid 1600's.


                The first watches may have been made in Italy during the 1400's. But Peter Henlein a German locksmith traditionally has been credited with the making of the first watch. In the early 1500's, Henlein invented a mainspring to power clocks until then clocks had been driven by falling weights. Mainsprings enabled clock makers to produce small portable clocks. Watch making soon spread to England, France and Switzerland. A watch may thus be defined as " a portable clock, people use watches to tell time and also wear or carry them as personal accessories
                 The earliest watches were inaccurate and heavy. They weighed so much that they had to be suspended from a chord or a chain and worn around the neck or hanging from a belt. Early watches had only an hour hand and their cases were spherical or drum shaped.
                Many watches had a minute hand by the late 1600s but hand for the seconds did not come until 1900s. 1700s had developed the balancing spring and the escape lever mechanisms.
                During the 1600s watches became small and light enough to fit into a pocket of a jacket or vest. These pocket watches were the most popular style of watch for more than 2000years.
               Wristwatches became common in the 1800 but were designed for women only. During the World War 1 (1914 - 1918) soldiers realized that wristwatches were more convenient than pocket watches, which were powered by a tiny battery and were introduced in 1950s. Originally these watches used a balanced wheel as time base. But later models contained a vibrating tuning fork that acted as a time base in much the same way as quartz crystals do in electronic watches, appeared in the early 1970 and because of their accuracy it soon made earlier electronic watches obsolete.


Your browser may not support display of this image.                  Most modern watches are wristwatches. But some watches are designed to be carried in pockets and others can be mounted in decorative pins, rings or necklaces. Analog watches have hands that show the time by pointing to numbers as markers on a dial. Digital watches indicate the time in lighted numerals that are formed by an electronic display. Many show in addition to passing hours and minutes, seconds, day of the week, month and year.
                  Today new levels of accuracy have been achieved and the concept of the watch as a designer accessory has gained new importance.
                 As a product, the fashion goods aspect of analog has become increasingly pronounced over all product classes. In the area of technological advances, a broad spectrum of functional watches has been developed to enhance the quality of life in sports, business and everyday activities.


Titan Industries Limited (TIL)[Formerly Titan Watches], promoted by Tamil Nadu Industrial Development Corp (TIDCO) and the Tata Group is the leading manufacturer of watches and clocks. The company is also into making Jewellery.
The company incorporated in 1984 has its factory in Hosur (nr. Bangalore) in Tamil Nadu. The company markets its watches under Titan and Sonata brands and the Jewellery under Tanishq brand. It came out with an rights issue in Oct 1992 to part finance its expansion and indigenisation programmes.
TIL's has set up Titan International Marketing, an associate, in the UK. It also has a wholly owned subsidiary, Titan International Holdings, in the Netherlands.
TIL continues to be the most admired consumer durables company in the annual A&M MARG poll. It was also rated one of Asia's 200 leading companies by the Far Eastern Economic Review/AT & T for the fifth year in succession and was ranked fourth among Indian companies.
The Company was conferred the award for excellence in electronics 1998 by the Ministry of Information Technology in Consumer Electronics Category.
TIL is now looking to diversify into the highly profitable personal accessories business, leveraging on its Titan brand name.

Watch Business

Titan Industries one of the leading global watch manufacturer has 136 exclusive 'The World of Titan Showrooms across 85 towns and 137 time zone multibrand outlets across 85 towns in India as on March 31, 2003. In addition to this Titan product are also present in over 7000 dealer outlets across 1800 towns.
The company's watches are presently sold in about 40 countries of the world through marketing subsidiaries based in London, Dubai and Singapore. Titan Industries also makes watches for international labels.


Collections that fuse elegance and function to bring you the perfect wrist-wear for your work environment. Bringing the haute fashion of leather & metal Your browser may not support display of this image. combinations, the cool sophistication of steel watches and designs on the cutting edge of watch-making technology like Edge, the slimmest watch in the universe. Formal wear that is perfect for your finely-tuned sense of style.

Dress wear

Your browser may not support display of this image. Splendid dress watches for lifestyles that fly high. Fusing the ethnic with the contemporary, these designer watches come in all-gold and bicolor look with intricate bracelets and patterned dials to add that finishing touch to your ensemble.


Your browser may not support display of this image. Crafted from the metal that's driving the world wild. Watches in steel-gold, steel-leather and all-steel for the young professional with an eye on every trend. In designs that range from serious fashion to statements of minimalist funk. 

Access the raw essence of hip with these edgy FasTrack watches. Walk the fashion tightrope with groovy colours and chunky styles. Kickstart cool with Your browser may not support display of this image. bold broad straps and trendy metal bracelets for you girls and sports watches in leather & metal straps for the guys. Digital tech and trendy shapes splash oomph onto your wardrobe and smear danger on your look.
Your browser may not support display of this image. Presenting Nebula - Crafted superbly from 18 karat solid gold and inlaid with precious stones. Worthy of being handed down from generation to generation. Exquisite pieces that reveal the power of gold and tell us why man's romance with it is forever. Pure leather straps from Europe. Sapphire crystal that makes them scratch resistant. A unique number to each watch, Customised Message Engraving and a Lifetime Guarantee. And of course, some of the slimmest watches in the world.


Your browser may not support display of this image. A tribute to the everlasting bond between a man and a woman, this is a collection of diverse watches in leather, gold and steel-gold combinations – a perfect complement for any couple.


Titan Industries entered the precious jewellery segment in 1995 under the brand name Tanishq after entering the watch segment in 1987. It is India's only fine jewellery brand with a national presence Tanishq jewellery is sold exclusively through a company controlled retail chain, which now has 40 outlets and is still expanding. Tanishq jewellery is also exported to Europe, the USA, and the Middle East.

Your browser may not support display of this image. 'Innovation' has always been the motto at Tanishq. From its systematic network of retail outlets across the country, to the revolutionary system of measuring purity of gold, Tanishq has become synonymous with 'trust'. And with a range that includes both contemporary and traditional designs, it's no wonder that Tanishq is India's most aspirational brand of jewellery today.Your browser may not support display of this image.

Titan = "Of super human size and strength"
(Concise Oxford Dictionary)
The Manufacturers of India's leading watch brand and India's only national jewellery brand - using design, technology and people for unchallenged market leadership
  • Joint Venture between India's most respected business organization - the Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO)
  • World's sixth largest manufacturer brand of watches and India's leading producer of watches under the Titan and Sonata brand names.
  • Product portfolio includes watches, clocks, accessories and jewellery, in both contemporary and traditional designs.
  • Exports watches to about 40 countries around the world with manufacturing facilities in Hosur, Dehradun, Goa and manufactures precious jewellery under the Tanishq brand name, making it India's only national jewellery brand.
  • Exports Tanishq jewellery to Europe, U.S.A. Middle East and Australia
  • Extensive domestic distribution network, amongst the world's largest retail chain of exclusive retail showrooms called 'The World of Titan' with 152 showrooms and multibrand outlets named Time Zones with 144 outlets for watches.
  • Titan watches crossed 50 Million customers- an endorsement of customer delight.
  • The Tanishq Jewellery Division has 50 Tanishq boutiques.

Our Vision

To be innovative, World Class, Contemporary and build India's most desirable brands.

Our Beliefs and Values

Corporate Citizenship
We care about the environment and the community we live in and will invest a part of our resources in improving them.

We will attain and maintain excellence in all that we do.

Wealth Creation
We ensure creation of EV in all that we do for our stakeholders

Respect and care for the Individual
We value every Titanian and strive to fulfil his / her needs and aspirations

Customer Focus
We are passionate about understanding customer needs and expectations. Delighting our customers is therefore a natural outcome.

Creativity and Innovation
We are an Ideas Company: Creativity and Innovation are our lifeblood.

Performance Culture and Teamwork
We dare to dream big and work together to realize it. High performance is a way of life with us.

               The Titan factory is located at Hosur, which was once a barren rocky hillock on which the TATA'S raised the factory building. The manufacturing complex is on an area of about 2900 sq. mtrs. Gardens and lawns that are very well maintained surround it. In the garden is incorporated a working sundial, a remainder of the origin of the scientific measurement of time.
            COMPANY : Located at Hosur, Tamil Nadu.
            CORPORATE OFFICE :  Titan Industries Limited
      Golden Enclave Towers 'A'
      Airport road,
      Bangalore – 560017

REGIONAL : (a) 'His Grace'
           13, Rhenius Street
            Richmond Town    Bangalore – 560025.

      (b) 'The Metropolitan'
      9th Floor, Plot No. C-26/27
      Bandra – Kurla Complex
      Mumbai – 400051.

      (c) 5 C & D, Park Plaza,
                                                                                        71, Park Street,

       Kolkatta – 700016.

                                                                                   (d) 3rd Flr, Bhilwara Bhawan,
      40/41, Community Center New Friends Colony
      New Delhi – 110065.


          The year 1985 saw a fragmented watch market monopolized by HMT. Titan made its entry in 1986 – 87 with watches of international quality and styling. Its main intention was to rub and reduce the sales of imported watches. Secondly, as there was no quartz manufacturer, market was filled with mechanical watches. Titan created a paradigm shift from mechanical to quartz, imported to India. Titan wanted to bring about a total revolution in the Indian Wristwatch Industry and also its auxiliary sector, which occupies the manufacturing of cases, straps etc.
            The Titan factory is well equipped with latest sophisticated technological equipment's according to international standards.
              M/s Titan Industries Limited is one of the new companies, which can boost of an integrated watch and jewellery manufacturing facility. Its state- of- the- art manufacturing include:
  • Physical vapor deposition (for gold plating) at the watch plant and the preinox-refining unit at the jewellery division.
  • A factory within factory concept adopted for setting manufacturing plant within the main factory for export watches.
  • Tool room with the most advanced technology.
  • Computerized manufacturing unit.
  • A totally automatic line for assembly of movements is been installed.

                       Assembly is the last section after which the product called "movement" is made. Here the various parts coming from the treatment room are checked and assembled according to their order. Again after inspection, the cases and deals are fixed to the movement and strapping, the final product is ready.
                      Every watch has to undergo various extensive tests, which is done with special equipment's from Japan. Every step of making the watch undergoes inspection for presentation of the next TITAN watches in the market.
                M/s Titan Industries Limited is now one of the leading manufacturers of watch (both ordinary and jewellery watches) plastic alarm clocks, premium table clocks and jewellery pieces like bracelet etc.


                      Ratio Analysis is the most widely used method for analysis of financial statements. Financial statements, no doubt, contain the items relating to the profit or loss and the financial position of the concern. But the items or figure found in the financial statements will not be of much use if they are considered independently. They will be very useful only when one item is considered in the light of another item.
                   For instance, the item of net profit will be meaningful when it is considered in the   capital employed in the business. So if the items appearing in the financial statements are to be really meaningful and useful to the executives, owners, creditors etc., they should be analysed, classified and arranged in such a way that one item can be compared with another item.
                    Ratio analysis or ratio technique is one of the tools available to the financial analyst for the analysis of financial statements.
Meaning of Ratio Analysis:
                    A ratio is a simple arithmetical expression of the relationship of one number to another. According to accountant's Handbook by Wixon, Kell and Bedford, a ratio "is an expression of the quantitative relationship between two numbers". According to Kohler, a ratio is the relation, of the amount, a, to another, b, expressed as the ratio of a to b, a: b (a is to b); or as a simple fraction, integer, decimal, fraction or percentage." In simple language ratio is one number expressed in terms of another and can be worked out by dividing one number into the other.

A ratio may be defined as "The indicated quotient of two mathematical expressions" and as "The relationship between two or more things".
Ratios help to summarize the quantities of the financial data and to make           qualitative judgment about the firm's financial performance. The point to note is          that a ratio indicates a qualitative relationship, which can be in turn used to make a qualitative judgment.
Ratios may be expressed in any of the three ways-
1) Rate-which is expressed as the ratio between two numerical figures over a period of time, e.g., stock turnover is three times a year.
2) Pure ratios and Properties-which are arrived at by simple division of one figure by another relevant figure, e.g., current assets to current liabilities ratio is 2:1
3) Percentage-which is a special type of rate expressing the relationship in hundred. It is arrived at by multiplying the quotient by hundred e.g., gross profit is 25% of sales.
Significance of Ratio Analysis:
The ratio analysis is one of the most powerful tools of financial analysis. It is used as a device to analyse and interpret the financial health of enterprise. Just like a doctor examines his patient by recording his body temperature, blood pressure, etc. before making his conclusion regarding the illness and before giving his treatment, a financial analyst analyses the financial statements with various tools of analysis before commenting on the financial health or weakness of an enterprise. 'A ratio is known as a symptom like blood pressure, the pulse rate or the temperature of an individual.' It is with the help of ratios that the financial statements can be analysed more clearly and decisions made from such analysis.


   Financial ratios are tools for financial statement analysis. All uses of a/c's like share holders and potential investors lenders, and employees and their trade unions, credit rating agencies, stock exchange authorities, Govt. & their agencies use ratios.
  1. Shareholders: Some shareholders are interested in the performance of the company. So they embark upon dividend per share ration. They should also judge long terms solvency position, return on capital employed, and earnings per share.

  1. Analyst advisors: They advise the present and potential investors about their buy/sell, and lending decisions. They generally review all financial characteristics and make inter-firm comparisons.

  1. Tax-authorities: They use the financial ratios to judge the reliability of financial information presented by the assesses.

  1. Credit rating agencies: Presently in India, the rating agencies rank the companies in terms of their ability to pay-off instalments and interest on specific loan or deposit.

  1. Employees and Trade unions: They use mainly profitability ration and wage/sales ration, in the process of wage negotiation.

  1. Auditors: Like tax-authorities, auditors use ratios as a part of comparability test on the financial data provided for audit.

  1. Distress Analysis: Ratios are useful tools for forewarning industrial sickness.

  1. Determination of working capital requirement.

  1. Preparation of budgeted balance sheet.


             The ratio analysis is one of the most powerful tools of financial management. Though ratios are simple to calculate and easy to understand, they suffer from some serious limitations. These limitations should be kept in mind while making use of ratio analysis for the interpretation of the financial statements.
The following are the main limitations of accounting ratios:
1) Limited use of single ratio:
A single ratio, usually, does not convey much of a sense. To make a better interpretation a number of ratios have to be calculated which is likely to confuse the analyst than help him in making any meaningful conclusion.
2) Lack of adequate standards:
There are no well-accepted standards or rules of thumb for all ratios, which can be accepted as norms. It renders interpretation of the ratios difficult.
3) Inherent limitations of accounting:
Like financial statements, ratios also suffer from the inherent weakness of accounting records such as their historical nature. Ratios of the past are not necessarily true indicators of the future.
4) Window Dressing:
Financial statements can be easily window dressed to present a better picture of its financial and profitability position to outsiders. Hence, one has to be very careful in making a decision from ratios calculated from such financial statements. But it may be very difficult for an outsider to know about the window dressing made by the firm.
5) Change in accounting procedures:
Change in accounting procedure by a firm often makes ratio analysis misleading, e. g., a change in the valuation, from FIFO to LIFO increases the cost of sales and reduces considerably the value of closing stocks which makes stock turnover ratio to be lucrative and an unfavourable gross profit ratio.

6) Personal Bias:
Ratios are only means of financial analysis and not an end in itself. Ratios have to be interpreted and different people may interpret the same ratio in different ways.

7) Incomparable:
Not only industries differ in their nature but also the firms of the similar business widely differ in their size and accounting procedures, etc. It makes comparison of ratios difficult and misleading. Moreover, comparisons are made difficult due to differences in definitions of various financial terms used in the ratio analysis.
8) Absolute figures distortive:
Ratios devoid of absolute figures may prove distortive, as ratio analysis is primarily a quantitative analysis and not a qualitative analysis.
9) Price level changes:
While making ratio analysis, no consideration is made to the changes in price levels and this makes the interpretation of ratios invalid.
10) Ratios no substitutes:
Ratio analysis is merely a tool of financial statements. Hence, ratios become useless if separated from the statements from which they are computed.


      Ratios can be classified into different categories depending on the basis of classifications:
1.                 Traditional classification:
The traditional classification has been done on the basis of the financial statement           to which the determinants of a ratio belong. On this basis, ratios may be classified as:
    • Profit and loss account ratios: - Ratios calculated on the basis of the items of the profit and loss account only, e.g., gross profit ratio etc.
    • Balance sheet ratios: - Ratios calculated on the basis of figures of balance sheet only, e.g., current ratio, debt equity ratio.
    • Composite ratios or Inter statement ratios: - These are the ratios calculated on the basis of figures of profit and loss account as well as balance sheet, e.g., fixed assets turnover ratio, overall profitability ratio.

2.                 Functional classification:
The traditional classification has been found to be too crude and unsuitable because analysis of the balance sheet and income statement cannot be done in isolation. They have to be studied together in order to determine the profitability and solvency of the business. In order that the ratios serve as a financial analysis, they are now classified on the basis of functions or purposes as follows:
    • Liquidity ratio
    • Leverage ratios
    • Turnover ratios
    • Profitability ratios.

3.          Significance Ratios:
The ratios have been classified according to their significance or importance. Some ratios are also more important than others and the firm may classify them as
  • Primary ratio
  • Secondary ratio.


  • Balance Sheet Ratios
  • Profit and Loss Account Ratios
  • Composite/Mixed Ratios.

  • Liquidity Ratio
  • Leverage Ratio
  • Turnover Ratio
  • Profitability Ratio.

  • Primary Ratio
  • Secondary Ratio.

Liquidity Ratios: -
    It is also called short-term solvency ratios. Liquidity refers to the firm's ability to meet its current obligations as and when these become due. The short-term obligations are met by realizing amounts from current, floating and circulating assets. The current assets should either be liquid or near liquidity. These should be convertible into cash for paying obligations of short-term nature. The sufficiency or insufficiency of current assets should be assessed by comparing them with short-term (current) liabilities. If current assets can pay off current liabilities, then liquidity will be satisfactory. On the other hand, if current liabilities may not be easily met out of current assets then liquidity position will be bad. The bankers, suppliers of goods and other short-tern creditors are interested in the liquidity of the concern. They will extend credit only if they are sure that current assets are enough to pay out the obligations.

The various types of liquidity ratios are:

    • Current ratio.
    • Acid test or quick ratio.
    • Inventory on working capital ratio.
    • Absolute quick ratio.

Leverage Ratios: -
                              Leverage ratios or capital structure ratios are those ratios, which measure the long-term solvency of the enterprise. These ratios indicate the fund provided by the long-term creditors and owners. As a principle this must be an ideal mix of debt and equality in financing of firm's assets. The short-term creditors like bankers and suppliers of raw material are more concerned with the firm's current debt paying ability. On the other hand long-term creditors like debentures holders, financial institutions etc. are more concerned with e the firm's long-term financial strength. In fact a firm should have a strong short term as well as long-term financial positions. To judge the long-term financial position of the firm, financial leverage or capital structure ratios are calculated. These ratios include mix of fund provided by the owners and lenders. As a general rule, there should be an appropriate mix of debt and owner's equity in financing the firm's assets. Leverage ratios are also computed from the profit and loss items by determining the extent to which operating profits are sufficient to cover the fixed charges. Leverage ratios are calculated to measure the financial risk and firm's ability of using its debt to shareholders advantageous.

Types of Leverage Ratios are:

  • Debt-Equity Ratio
  • Proprietary Ratio
  • Fixed Assets to Net-worth Ratio
  • Current Assets to Net-worth Ratio
  • Current Liabilities to Net worth Ratio
  • Solvency Ratio
  • Capital Gear Ratio

Turnover Ratio:
                                Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affect the volume of sales. The better the management of assets, the larger is the amount of sales and the profit. Activity ratios measure the efficiency or effectiveness with which a firm manages its resources or assets. These ratios are also called turnover ratios because they indicate the speed with which assets are converted or turned over into sales.
  . The greater the rate of turnover or conversion, the more efficient utilization of management (other parameters being equal).

Types of Turnover Ratios are:

  • Working Capital Turnover Ratio
  • Fixed Assets Turnover Ratio
  • Stock Turnover Ratio
  • Debtors Turnover Ratio
  • Cash Turnover Ratio
  • Debt Collection Period Ratio
  • Creditors Turnover Ratio (Velocity)
  • Dept Payment Period Ratio
  • Current Asset Turnover Ratio
  • Total Assets Turnover Ratio

Profitability Ratios:
    The primary objective of a business is to earn profits. Profit is considered essential for the survival of a business. Profits are useful major of overall efficiency with which the operations for which a business is carried on. Poor operational performance may be indicating poor sales and hence, poor profits. Bankers, Financial Institutions, other creditors look at the profitability ratios as an indicator to assets what ever or not the firm earns substantially. Profitability ratios are those ratios that measure the profitability of the concern. They are ratios, which reveal the total fact of business transactions on the profit position of the enterprises. Profit is the difference between the revenue and expenses over a period of time. Profit is the ultimate output of the company and it will have no future if the company fails to make sufficient profits. There for, the financial manager should continuously evaluate the efficiency of the company in terms of profit; generally two major types of profitability ratios are calculated.
  • Profitability in relation to sales
  • Profitability in relation to investment

A company should be able to make adequate profit on each rupee of sales. If sales do   not generate sufficient profit it would be very difficult for the firm to cover         operating expenses and interest charges and as a result it will fail to earn any profits      for owners. The profitability of a company should also be evaluated in terms of the firm's investments in assets and in terms of capital contributed by creditors and     owners. If the company is unable to earn a satisfactory return on investment, its survival is threatened.

The various Profitability Ratios are:

  • Gross Profit Ratio
  • Net-Profit Ratio
  • Operating Ratio
  • Operating Profit Ratio
  • Return on Capital employed / Return on Investment
  • Return on Equity Capital
  • Return on Total Assets
  • Earning Per Share


The following are the four steps involved in the ratio analysis:

  1. Selection of relevant data from the financial statements depending upon the objective of the analysis.

  1. Calculation of appropriate ratios from the above data.

  1. Comparison of calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with the industry to which it belongs.

  1. Interpretation of the ratios.

1.   Liquidity Ratio

Liquidity or short-term solvency ratios are those ratios, which are intended to measure the liquidity or short-term solvency of the concern.

    1. Current Ratio
Current Ratio may be defined as the relationship between current assets and current liabilities. This ratio, also known as Working Capital Ratio, is a measure of general liquidity and is most widely used to make the analysis of a short-term financial position or liquidity of a firm.

Current Ratio is an index of the concern's financial stability since it shows the extent of the working capital, which is the amount by which the current assets exceed the current liabilities. As stated earlier a higher current ratio would indicate inadequate employment of funds while a poor current ratio is a danger signal to the management. It shows the business is trading beyond its resources.


Current Ratio = Current Assets
Current Liabilities

Ideal Ratio
The ideal current ratio is 2:1. In others words, current ratio must be double of the    current liabilities. The concern may find it difficult to pay of its debt if it is less than 2:1 or if it is more, it represents Idle Fund.

    Current Assets
    Current Liabilities
    Current Ratio

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                      It may be observed that the company has a very high current ratio against the general level of 2:1. The very high ratio of current assets to current liabilities may be indicative of stock management practices as might signal excessive inventories for current requirements and poor credit policy in terms of over extended accounts receivable or at the same time is not making use of its full borrowing capacity.    
The realization from debtors is also not up to the mark. However the ratio is declining towards the ideal ratio in the immediate years.

    1.    Quick Ratio
Quick Ratio, also known as Acid test or Liquid Ratio, is a more rigorous test of liquidity than the current ratio. It may be defined as the relationship between quick/liquid assets and current or liquid liabilities. This ratio measures the firm's ability to pay off claims of current creditors immediately. Liquid asset include Cash in hand and Cash at Bank, realizable securities and bills receivable (within a month). It does not include Stock in hand and Prepaid expenses.

The quick ratio is also an indicator of short-term solvency of the company. A comparison of the current ratio to quick ratio shall indicate the inventory hold-ups, e.g., if two units have the same current ratio but different liquidity ratio, it indicates over stocking by the concern having low liquidity ratio as compared to the concern, which has a higher liquidity ratio.


Quick Ratio = Quick Assets
Quick Liabilities

Ideal Ratio
The ideal quick ratio is 1:1; it is generally thought that if quick assets are equal to   current liabilities then the concern may be able to meet its short-term obligations.

Quick Assets 36870.30 42745.49 42248.39
Quick Liabilities 16409.55 17327.02 12644.78
Quick Ratio 2.25 2.47 3.34

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A quick ratio of 1:1 is usually considered adequate. Whereas the company has maintained the ratio well over 2.25 and has also touched 3.68 in the year 00-01.
By looking at the liquidity ratio it can be presumed that the company has maintained a healthy ratio. This will help the company to attract short-term creditors. This also shows that the company is highly liquid and hence has slow paying debtors.

2.    Leverage Ratio

Leverage ratios or capital structure ratios are those ratios, which measure the long-term solvency of an enterprise. These ratios indicate the funds provided by the long-term creditors and owners. As a principle there must be an ideal mix of debt and equity in financing of firm's assets.
    1. Debt - Equity Ratio
Debt-Equity ratio, also known as external-internal equity ratio is calculated to       measure the relative claims of outsiders and the owner (i.e., shareholders) against the firm's assets. This ratio indicates the relationship between the external equity's or the outsiders funds and the internal equity's or the shareholder's funds. The two basic components of the ratio are outsider's funds, i.e. external equities and shareholders funds, i.e. internal equities. The outsider's funds include all debts/liabilities to outsiders, whether long-term or short-term or whether in the form of debentures bonds, mortgages or bills. The shareholders funds consist of equity share capital, preference share capital, all accumulated reserves, profit and loss credit balance less loss and capital expenditure.

The ratio indicates the proportion of owners stake in the business. Excessive liabilities tend to cause insolvency. The ratio indicates the extent to which the firm depends upon outsiders for its existence. The ratio provides a margin of safety to the creditors. It tells the owners the extent to which they can gain the benefits of maintaining control with a limited investment.

Debt-Equity Ratio = Debt

Ideal Ratio
The ideal ratio is 2:1.

Debt 40671.31 46706.58 44329.31
Equity 16512.56 16246.15 16469.17
Debt-Equity Ratio          2.46          2.87 2.69

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      As you can see that the ratio had been increasing from 2.04 to 2.87 since the past two years which is above the standard requirements of 2:1. But this year the ratio decreased to 2.46. A high debt-equity ratio indicates that the claims of outsiders (creditors) are greater than those of owners, may not be considered by the creditors because it gives a lesser margin of safety for them at the time of liquidation of the firm. It can also be said that the company has utilized its long-term debts into fixed assets. A low ratio indicates claims of the owners were greater than the outsiders, a lower ratio is considered by the creditors because it gives them more margin of safety.

    1.   Proprietary Ratio
A variant to the debt-equity ratio is the proprietary ratio, which is also known as      Equity Ratio or Shareholders to Total Equities Ratio or Net worth to total Assets Ratio. This ratio establishes the relationship between shareholders' funds to total assets of the firm. The ratio of proprietors' funds to total funds (Proprietors + outsider's funds or   total funds or total assets) is an important ratio for determining long-term solvency of   the firm.

This ratio focuses the attention on the general financial strength of the business enterprise. This ratio is of particular importance to the creditors who can find out the proportion of shareholders funds in the total assets employed in the business. A high proprietary ratio will indicate relatively little danger to the creditors in the event of forced reorganization or winding up of the company. A low proprietary ratio indicates greater risk to the creditors since in the event of loss a part of their money may be lost besides loss to the proprietors of the business. A ratio below 50% may be alarming for the creditors since they may have to lose heavily in the event of company's liquidation on account of losses.


Proprietary Ratio = Shareholders' funds
Total Tangible Assets

Ideal Ratio
This ratio should be 1:3 i.e., one-third of the assets minus current liabilities should         be acquired by shareholders' funds and the other two-thirds of the assets should be financed by outsider's funds. It focuses the attention on the general financial strength of the business enterprise. 

Shareholders' funds 16512.56 16246.15 16469.17
Total Tangible Assets 73776.81 79821.84 77283.09
Proprietary Ratio 0.22 0.20 0.21

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                           As you can see that the proprietary ratio for the past two years was declining but the last year has got a higher ratio. It means that a greater portion of the total assets was funded by the borrowed funds than the owner's funds in 02 and 03, in 04 the ratio increa–sed to 0.22. At least 50% of the assets the concern should acquire must be from shareholders funds if not sufficient cover offered to the long term creditors. In the last year the company has acquired assets from the shareholders funds. This indicates the company is recovering its weakness in the general financial position and the long-term credit strength of the concern.            

    1. Fixed Assets to Net Worth Ratio
The ratio establishes the relationship between fixed assets and shareholders' funds, i.e. share capital plus reserves, surpluses and retained earnings.

This ratio indicates the proportion of fixed assets financed by the owners or the proprietors. In other words, it indicates to what extent the owners have invested funds on the fixed assets, which constitutes the main structure of the business.


Fixed Assets to Net Worth Ratio = Fixed Assets (after depreciation)
Shareholders' funds

Ideal Ratio
The ideal ratio is 2:3, which means the total investment of the company on fixed Assets should not be more the 2/3rd or 67%. If it is less it indicates the company is financially strong and can pay its debt easily.

Fixed Assets (after depreciation) 17329.68 18209.61 19764.03
Shareholders' funds 16512.56 16246.15 16469.17
Fixed Assets to Net Worth Ratio 1.10 1.22 1.20

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It is the ratio of fixed assets to net worth, which indicates the extent, to which shareholders funds are sunk into fixed assets. From the above table the ratios are 1.10, 1.22 and 1.20. These ratios indicate that the owner's funds are not sufficient enough to finance its fixed assets and the firm has to depend upon outsiders to finance the fixed assets.

    1. Current Assets to Proprietor's Funds Ratio
 The ratio is calculated by dividing the total of current assets by the amount of shareholders' funds.

This ratio indicates the proportion of current assets financed by the owners. There is no standards or ideal current assets to net worth ratio. Though there is no standard for current assets to net worth ratio, once can say that if this ratio is high, the financial strength of the concern is good and if this ratio is low, the financial position of the concern is considered to be weak.


Current Assets to Proprietors Funds Ratio = Current Assets
Shareholders' funds

Current Assets 53282.21 56937.23 54730.29
Shareholders' funds 16512.56 16246.15 16469.17
Current Assets to Proprietors' Funds Ratio 3.23 3.50 3.32

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                       This ratio indicates the extents to which proprietor's funds are invested in current assets. As you can see that the ratio had been increased in the years 02 and 03, which shows that, the current assets are partially funded by proprietor's funds.

3.    Turnover Ratio
The turnover ratio indicates the efficiency with which the capital employed is rotated in the business. Turnover ratio refers to ratios that measure the level of activities, performance or the operating efficiency of the enterprise. Turnover ratios indicate the utilization of various assets of the concern. The overall profitability of the business depends on two factors i.e., the rate of return or capital employed and the speed at which the capital employed in the business rotates.

3.1    Fixed Assets Turnover Ratio
This ratio expresses the number of times the fixed assets are being turned-over in a stated period, i.e. how well the fixed assets are being utilized.

This ratio indicates as to what extent the fixed assets of a concern have contributed to sales in other words it indicates as to what extent the fixed assets have been utilized. This ratio also indicates the firm's ability to generate sales from resources committed to fixed assets.


    Fixed Assets Turnover Ratio= Sales
    Fixed Assets

Sales 95852.47 79789.64 72478.36
Fixed Assets 17329.68 18209.61 19764.03
Fixed Assets Turnover Ratio 5.63 4.38 3.67

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                      Though the ratio has been increasing from 3.36 to 4.38 it is in a way below the standard norms of 5 times, indicating a slight under utilization by the concern which must be taken off, which is very vital as fixed assets are mainly funded by owners funds.

3.2    Sales to Working Capital Turnover Ratio
This ratio shows the number of times working capital is turned-over in a stated       period.


The higher is the ratio, the lower is the investment in working capital and the greater    are the profits. However, a very high turnover of working capital is a sign of    overtrading and may put the concern into financial difficulties. On the other hand, a     low working capital turnover ratio indicates that working capital is not efficiently utilized.


Working Capital Turnover Ratio= Sales
Net Working Capital

Sales 95852.47 79789.64 72478.36
Net Working Capital 36872.66 39610.21 42085.51
Working Capital Turnover Ratio 2.60 2.01 1.72

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Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. From the above ratios it implies that there is inefficient utilization of working capital.

3.3    Stock Turnover Ratio
This ratio establishes relationship between cost of good sold during a given period       and the average amount of inventory held during that period. This ratio reveals the number of times finished stock is turned over during a given period and evaluates the efficiency with which a firm is able to manage its inventory.  

This stock turnover ratio indicates the velocity or speed with which goods move out of the business. It also indicates whether there is over stocking or under stocking of finished goods. It helps to determine even the liquidity of the concern. A high inventory turnover ratio indicates brisk sales. This ratio is therefore, a measure to discover the possible trouble in the form of over stocking or over valuation. The stock position is very important, as it is known as the- graveyard of the balance sheet.


    Stock Turnover Ratio= Cost of Good Sold
    Average Stock


Opening Stock + Closing Stock
Average Stock =

Cost of Good Sold = Sales – Gross Profit

Cost of Good Sold 94449.64 78811.85 70662.54
Average Stock 13018.28 12835.72 12953.44
Stock Turnover Ratio 7.26 6.14 5.46

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                          As you can see that the ratio has been increasing form 4.25 to 6.14 times, that means it is increasing to touch the standard norm of 8times. This ratio measures how quickly the stock is converted into sales. A low inventory turnover implies over investment in inventories, dull business, stock accumulation, accumulation of obsolete and slow moving goods and low profits as compared to investments.

3.4.1    Debtors Turnover Ratio
Debtor's turnover ratio indicates that velocity of debt collection of firm. In simple words, it indicates the number of times average debtors (Receivables) are turned over during a year. It is also known as Receivables Turnover Ratio or Debtors Velocity.


Debtor's turnover ratio indicates the efficiency of the staff entrusted with collection of book debts. The ratio indicates the rate at which amounts are collected from debtors. It also indicates how many month's or days sales remain uncollected. It indicates the efficiency or otherwise of the firm's credit and collection policies. This ratio helps in cash budgeting since the floe of cash from customers can be worked out on the basis of sales. It even indicates the liquidity of the concern.


Debtors Turnover Ratio= Credit Sales
Average Debtors

Credit Sales 14816.17 79789.64 72478.36
Average Debtor 95852.47 19706.54 18339.37
Debtor Turnover Ratio 5.64 4.05 3.95

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It indicates the number of times the average receivable is turned over in each year. The higher the value of ratio the more is the efficient management of debtors. From the above table the ratios are 3.95 4.05 and 5.64. Inspite of the ratio increasing in the last year they are not up to the industry standards which implies inefficient management of debtors/sales and less liquid debtors.

3.4.2    Average Collection Period Ratio
The average collection period represents the average numbers of days for which a firm has to wait before its receivables are converted into cash.


Debt collection period ratio indicates the average period of credit allowed to debtors. It indicates the extent to which debts have been collected in time. This ratio is a better ratio compared to debtor's turnover ratio to judge the quality of the debtors. It indicates the time lag between the sales and the collection of debts. It is helpful in monitoring the credit and collection policies of the concern. This ratio is very helpful to lenders because it explains to them whether their borrowers are collecting money within a reasonable time.


Collection Period= Days in a year
Debtors Turnover Ratio

Days in a year 365 365 365
Debtor Turnover Ratio 5.64 4.05 3.95
Collection Period (In days) 64.71 90.00 92.00

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The average collection period ratio represents the average number of days for which the firm has to wait before its receivables are converted into cash. Though there is no standard or ideal ratio, but the shorter the average collection period the better is the quality of debtors. We find that the average collection period is ranging from 65 to 92 days, which indicates the inefficiency of the company's realization from debtors.

4.    Profitability Ratio
Profitability ratios are those ratios that measure the profitability of the concern. In other words they are ratios, which reveal the total effect of the business transaction on the profit position of an enterprise. Profit is the difference between revenues and expenses over a period of time (usually one year). The profitability ratios are calculated to measure the operating efficiency of the company. Besides management of the company, creditors and owners are also interested in the profitability of the firm. Creditors want to get interest and repayment of principal regularly. Owners want to get a required rate of return on their investment. This is possible only when the company earns enough profits.

4.1  Net Profit Ratio
Net profit ratio establishes a relationship between net profits (after taxes) and sales, and indicates the efficiency of the management in manufacturing, selling, administrative and other activities of the firm. This ratio is the overall measure of firm's profitability.

This ratio helps in determining the efficiency with which affairs of the business are being managed. This ratio indicates the quantum of profit available for the owners. An increase in the ratio over the previous period indicates improvement in the operational efficiency of proportionate of current assets financed by the owners. There is no standard  or ideal net profit to net sales ratio.


Net Profit Ratio= Net Profit (after tax)
Net Sales


Net Profit 1151.38 789.86 1309.36
Net Sales 95852.47 79789.64 72478.36
Net Profit Ratio 1.20 0.99 1.81

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This ratio indicates the firm's capacity to face adverse economic condition such as price competition; low demand etc. though there is no standard or ideal ratio the higher the ratio the better is the operational efficiency of the concern and vice-versa. The present net profit ratio is very marginal this is due to high operating costs and interest on debt.

4.2    Operating Ratio

This ratio indicates the proportion that the cost of sales bears to sales. Cost of sales includes direct cost of good sold as well as other operating expenses, (i.e., administration, selling and distribution expenses) which have matching relationship with sales. It exclude income and expenses which have no bearing on production and sales, i.e., non-operating incomes and expenses as interest and dividend received on investment, interest paid on long-term loans and debentures, profit or loss on sale of fixed assets or long-term investment.


This ratio is the test of the operational efficiency with which the business is being carried. The operating ratio should be low enough to leave a portion of sales to give a fair return to the investors. A comparison of the operating ratio will indicate whether the cost component is high or low in terms of sales. In case the comparison shows that there is increase in the ratio, the reason could be found out and the management be advised to check the increase.


Operating Ratio= Operating Cost
Net Sales


Operating Cost = Cost of Good Sold + Operating Expenses

Operating Cost 82032.38 69664.21 60376.61
Net Sales 95852.47 79789.64 72478.36
Operating Ratio 0.86 0.87 0.83

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This ratio shows the operational efficiency of the firm. It indicates the percentage of net sales that is consumed by operational cost. Higher the operating ratio, less favorable it is. In general a ratio of 70-75% is considered to be ideal for manufacturing concern, here we find that the ratio is always way above the standard norm, which is not a good indication of the operating efficiency, it should try and reduce it.

4.3    Return on Investment

It is also known as Return on Capital Employed or Net Profit on Capital Employed. It is the ratio establishing the relationship between the total profits earned and the capital employed. This ratio is an indicator of the earning capacity of the capital employed in the business.


It is a test of the efficiency of the business. This ratio is considered to be the most important ratio because it reflects the overall efficiency with which capital is used. It is the measure of the profitability of the capital employed in the business. It is useful for the formulation of the business policies for future expansion and diversification. This ratio is also helpful tool for making capital budgeting decisions; a project yielding higher return is favoured.


Return on Investment  = Net Profit
Capital Employed


Net Profit = Profit before interest and tax
Capital Employed = Equity Share Capital + Preference Share Capital + Undistributed Profit + Reserves and Surplus + Long-term Liabilities – Fictitious assets – Non-business Assets.
    Tangible Fixed and Intangible Assets + Current Assets – Current Liabilities.

Net Profit 1151.38 789.86 1309.36
Capital Employed 8227.63 8227.63 8227.63
Return on Investment 13.99 9.60 15.91

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This ratio is an indicator of the earning capacity of the capital employed in the business. This ratio is the most important ratio because it reflects the overall efficiency with which the capital is used. Though there is no standard or ideal ratio, higher the ratio, higher the earning capacity of the business. From the above ratios we can see that the return on investment decreased in 03 but increased again in 04 as it has a direct effect from profits. This shows that the capital employed has been used adequately in the last year.

    4.4    Return on Shareholders' Fund

When it is desirable to work out the profitability of the company from the shareholders point of view, then Return on Shareholders' Fund is calculated.


This ratio indicates the productivity of shareholders funds. It also gives the shareholders an idea of the return on their funds. The ratio of net profit to shareholders' fund shows the extent to which profitability objective is being achieved. Higher the ratio, the better it is.


Return on Shareholders' fund  = Net Profit after interest and taxes
Shareholders' fund


Net Profit after interest and taxes 1151.38 789.86 1309.36
Shareholders' fund 16512.56 16246.15 16469.17
Return on Shareholders' fund 6.97 4.86 7.95

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The main objective of the firm is to increase the return on equity shareholders and to maximize its earnings. This ratio reflects the extent to which this objective has been accomplished. The ideal ratio is 13%. Higher the ratio, better the results. The return was good in the year 01-02 but it has decreased in the next two years, which implies a very bad symbol to the equity shareholders.

4.5    Return on Total Assets

This ratio is calculated to measure the profit after tax against the amount invested in total assets to ascertain whether assets are being utilized properly or not.


This ratio is computed to know the productivity of total assets. Total realizable assets exclude intangible assets from the total assets like preliminary expenses debited in the Profit and Loss account, etc.


Return on Total Assets  = Net Profit after interest and taxes
Total Assets

      * 100

Net Profit after interest and taxes 1151.38 789.86 1309.36
Total Assets 77107.46 84438.34 77900.92
Return on Total Assets 1.48 1.10 1.68

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A return of 10% is considered as an ideal ratio. A return of less than 10% is an indication of lower productivity of the resources. This ratio shows the firms ability in generating sales from all financial resources. From above it can be seen that the ratios 1.68 1.10 and 1.40 are much below the standard hence are not favorable to the company. And also there is a decreasing trend in year to year. Hence the company has to maintain efficient assets in comparison of its production capacity.

4.6    Earning Per Share

Earnings per Share are the ratio between net profits available for equity shareholders', i.e. net profit after Taxes and Preference Dividend and the number of Equity Share.


Earning per share is used for calculating the return on equity shareholders funds. The more the earning per share better are the performance and prospects of the company. The increasing trend of E.P.S. enhances the possibility of more dividend and bonus shares, which ultimately has a favourable effect on the market value of the share. Normally, 10-20 times of 'Earning Per Share' are concluded as a justified market price of a share.


Earning Per Share  = Net Profit after Tax and Preference Dividend
Number of Equity Shares

Net Profit after Tax and Preference Dividend 115138000 78986000 130936000
Number of Equity Shares 42276270 42276270 42276270
Earning Per Share 2.72 1.87 3.10

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This ratio helps in determining the market value of the equity shares of the company and in estimating the company's capacity to pay dividend to its equity shareholders. Though there is no such standard norms for this ratio, the higher the EPS higher the returns to the shareholders. From the above table we can see that the EPS had been decreasing in the years before the last year. But in the last year the EPS has increased. This also shows that the earning power of the company is not that good.


Financial analysis is the process of identifying the strengths and weaknesses of the firm by properly establishing relationships between the items of the Balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm or by parties outside the firms.
The nature of analysis will differ depending on the purpose of analyst. By the use of financial statement, we can get a better 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 strengths of the firm to make their best use and to be able to spot out financial weakness of the firm to take suitable corrective action. The future plans of the firm should be laid down in view of the firm's financial strengths and weaknesses. Thus Financial analysis is starting point for making plans before using any sophisticated forecasting and planning procedures.
Understanding the past is a pre-requisite for anticipating the future. Therefore, a study has been conducted to know the performance of Titan Industries Limited and to analyze the past performance and to assess its present financial strength through the techniques of ratio analysis.
In order to make the study more specific, certain objectives were formulated which is based on the liquidity, solvency, efficiency and profitability of the firm. After the analysis of the data, a report has been presented in six chapters. The first chapter covers introduction to the financial statements, the second chapter indicates the methodology followed for the study. In the third chapter the company's profile has been studied. In the fourth chapter, the ratio analysis and its significance has been studied followed by the fifth chapter where the financial statements are analysed over a period of 3 years and an interpretation has been made of each ratio. In the sixth chapter (this chapter) based on the analysis and interpretation a through finding has been made and presented.


It is extremely essential for a firm to be able to meet its obligations as they become due. Liquidity ratios measure the ability of the firm to meet its current obligations. The liquidity ratio of Titan Industries Limited is on par with the standard norm. This is evidenced from the liquid ratios. It is in a position to meet its short-term obligations in time. There is also a very narrow gap between the collection and payment period, that is the collection period is in and around 90 days, and its payment to its suppliers is also around the same. Hence the company has no good cash position.


The short-term creditors like bankers and suppliers of raw materials are more concerned with the firm's current debt paying ability and on the other hand, long-term creditors like debenture holders, financial institutions, etc., are more concerned with the firm's long term financial strength. In fact, a firm should have a strong short as well as long-term financial position. To judge this long-term financial position of the firm, the financial leverage ratios are calculated. These ratios indicate mix of funds provided by owners and lenders.
A high debt-equity ratio of Titan Industries also indicates that the claim of outsiders (creditors) are greater than those of owners, may not be considered by the creditors because it gives a lesser margin of safety for them for further finding and at the time of liquidation of the firm. It can also be said that the company has utilized its long-term debts into fixed assets.
An average long-term solvency position of the company is also evidenced from the other ratios such as fixed assets to net worth ratio and the proprietary ratio.


Turn over ratios refer to ratios which measure the level of activity, the performance or the operating efficiency of an enterprise. Activity ratios are concerned with how efficiently the assets of the firm are managed. These ratios express relationship between the level of sales and the investment in various assets. The efficiency, with which the assets are used, would be reflected in the speed and rapidity with which assets are converted into sales. The greater the rate of turnover or conversion, the more efficient is the utilization of management, other things being equal.

The stock turnover ratio is low which is not a good sign. Though it is a fast moving consumer good that is watches, which is the basic necessity for any person in today's world. This is due to over investment in inventories, dull business, stock accumulation, accumulation of obsolete and slow moving goods and low profits as compared to investments. This ratio measures how quickly the stock is converted into sales. Hence steps should be taken to convert its stock into cash.

The debt collection and payment period of Titan is also relatively not so good. . We find that the average collection period is ranging from 73 to 92 days, which indicates the inefficiency of the company's realization from debtors.

But higher payment period is there which implies greater credit period by the firm and consequently larger the benefit reaped from the credit suppliers. But a higher ratio may also imply lesser discount facilities availed or higher prices paid for the goods purchased on credit.


A company should earn profits to survive and grow over a long period of time. Profits are essential but it would be wrong to assume that every action initiated by management of the company should be aimed at maximizing profits, irrespective of the social consequences. It is unfortunate that the word "profit" is looked upon as a term of abuse since some firm's always want to maximize profits at the cost of employees, customers and society. Except in such infrequent cases, it is a fact that sufficient profits must be earned to sustain the operations of the business to be able to obtain funds from investors for expansion and growth and to contribute towards the social overheads for the welfare of the society.

In case of Titan, the profitability position by analysis seems to be not up to the mark. The profits availed towards the payment of dividend to the shareholders are very less. This is due to high operating expenses and less profit margin.

The poor profit has resulted in the decrease of return on capital employed, which is also observed as a low rate of return to the investors which cad be reflected on the earnings per share.

It is also found that the company has failed to pay its dividends to the shareholders and its profits are not enough to transfer it to any kind of reserve to meet any contingencies in future, as well as business expansions.


After analysis and interpretation of the findings, the following suggestions are made:

  • Titan must maintain its current debt equity ratio otherwise in future if it increases it may have to shell out huge expenditure in the form of interest and this may affect the profits also.

  • Though at present the firm's liquidity position is satisfactory, it has to maintain an additional margin of liquidity in the form of cash in order to face any kind of contingencies in future.

  • The firm should make efforts to increase its profits by reducing the operating and non-operating expenditure such as transportation, administrative and maintenance expenses and financial expenses and restructuring the debt with low cost debts.

  • The return on investment of the company is not up to the mark as its investments are stagnant in various projects. The companies should Asses and check the reasons for the poor return from such investments and also see to it that the new projects become operational soon.

  • It should reduce its collection period from the debtors as it measures the quality of debtors and also a short collection period implies quick payment by debtors. This can be done by efficient utilization of its debtor's management.

  • It should also reduce its creditors turnover ratio as a high ratio might loss on the discount facilities availed or higher price paid for the goods purchased on credit. Reducing the debtor's collection period, which will lead to good cash inflows, can do this and hence the payment of the creditors can be done.

  • The working capital turnover also has to be improved which should be done by increasing its sales (by rigorous publicity and marketing, low price strategy) as working capital is directly related to sales. Debtor's collection mechanism to reduce debtor's collection period.

  • At least 50% of the assets the concern should acquire must be from shareholders funds to increase its proprietary ratio to improve long-term solvency position.


The watch industry has existed in India since post independence. The company is a market leader in the industry, however it is going to face severe competition in the years to come from both the Indian and Multi national companies due to the liberalization of the economy. The company has done well to increase its presence from being an Indian company to a global company by setting up subsidiaries in various foreign countries. The technology and design are to critical factors in this industry and the company has been heavily investing on these.  The company has also tried to increase its market presence by introducing "SONATA"  range of watches.

The company has also boosted its sales by diversifying into production of          22-KARAT Gold Jewellery "TANISHQ" and also by entering into the Table Clock and Alarm Time pieces market.

Titan Industries Ltd.  is a unit under TATA, which has a very good reputation and goodwill.

Despite all the above efforts, the analysis and interpretation show that Titan Industries Ltd. is not very strong financially.



  1. Management Accounting ( Principles & Practice)
                        ~ R.K. Sharma & Sashi K. Gupta

  1. Financial Management
                      ~ S.M. Maheshwari

  1. Cost Accounting
                      ~ S.P. Jain & K.L. Narang

Annual Reports of Titan Industries Ltd. for the years 2003-04, 2004-05 and    2005-06.



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