[Music] [Music] welcome students so we are in the process of ratio analysis and trying to know about the overall financial performance of grasim industries so ah so far we have discussed the four categories of the ratios four sets of the ratios and there we try to know the return on investment then the solvency then the ah say liquidity and then the efficiency that the turnover ratios or the resource efficiency ratios ah we try to know where we try to know that with what efficiency the firm is using its resources that is the ah say from the liability side if we looked at that was net worth turnover ratio and then from the asset side if you look at then it is the fixed asset turnover issues and then we try to know the turnover of the debtors and the inventory so these all are the turnover ratios we are talking about and we are discussing so now the next set of the ratios will be talking about is that is the profitability ratios next set of the ratios will be talking about is the profitability ratio ratios profitability ratios and if you talk about the profitability ratios generally see that when you you see that when you calculate the profits we use the in statement that is called as income state and in the income statement in the income statement we have ah two parts that is trading account and p l account trading account and p and l account trading account is giving us the gross profit trading account is giving us the gross profit and p l account is giving us the net profit gross profit and net profit so when you calculate the gross profit this profit is having the further concerns where we add more indirect incomes into the gross profit and then we subtract some indirect expenses and finally we arrive at the profit that is operating profit before tax opbt and then when you subtract the tax from this then we get the operating profit after tax or you can call it as no pat that is the net operating profit after tax so we have got all this profit here from the say profit and loss account if you look at the profit and loss account of the grasim industries so when we were talking about the profit and loss account of this firm we have seen the profit and loss account of this firm is here and we have calculated the gross profit first and then the net profit so here total profit we are talking here is that is the profit before tax was something like we have taken here the raw material then we have taken this is the total incomes part where we have taken the gross sales then the net sales then the indirect incomes indirect incomes are like interest and dividend income other incomes and then the decrease in the stock and then finally we have taken all expenses which are raw material manufacturing expenses purchases of the finished products payment for employees selling a distribution administrative expenses financial or the interest cost and then the depreciation or amortization and finally we have calculated the profit before tax and the exceptional items so we have calculated here that is two one eight nine point two six and then the we have taken the exceptional items which are once in wire these incomes are once in while they are not regular incomes so we we do not sometime count these for some analysis and then we have calculated the pbt that is the profit before tax that is the profit before taxes here and then we have made the provision for tax and then we have calculated the bat that is the profit after tax so if you talk about the gross profit we didn't calculate any gross profit here in this balance sheet or in this income statement we do not have any gross profit and ah similarly if you talk about the net profit yes it is there if you say that net profit is the ah net profit here it is that is the net profit after take profit after tax yes it is 1. 1535 0. 81 for this year and 863.
21 for the this year is the net profit so if you see the old literature that the old books on the financial management or say financial analysis you will find that profitability ratios generally include the two broad ratios profitability ratios generally include the two ratios and these two ratios are one is the gp ratio gross profit ratio this is gp ratio gross profit ratio and then this is the np ratio this is the net profit ratio gross profit and the net profit ratio are the two ratios the profitability ah for the analysis of the profitability of the firm so because by the analysis is required if you look at the profit here we are getting that the firm has got a profit of one five three five point eight one crore this year and eight six three point this year it means it is a is a figure in isolation is not a relative value we have to compare that what is the level of our profit as compared to the sales so we have to take some common denominator and we have to compare many items say your profits then your exceptional incomes and your cost and everything against that denominator if the denominator is common and then numerator is changing then you will be able to find it out the relative position that 1. 35.
