Ratio Analysis In Financial Management

ABOUT THE COMPANY

Delhi Transco Limited, a successor company of erstwhile Delhi Vidyut board came into existence on 1st July 2002, as a State Transmission Utility of the National Capital. After unbundling of DVB the distribution sector has been handed over to private companies while the generation and transmission are still with the government. Over the years, DTL has evolved as a most dynamic performer, keeping pace with the manifold challenges that confront the ever increasing demand-supply power situation and achieving functional superiority on all fronts.

Being the capital of India and the hub of commercial activities in the Northern Region, coupled with the prosperity of population, the load requirement of Delhi has been growing at a

The objective of ratio analysis is to judge the earning capacity,financial soudness and operating efficiency of an business organization. The use of ratio in financial management analysis helps the management to know the profitability,financial position (liquidity and solvency) and operating efficiency of an enterprise.

There are various advantages derived by the use of accounting ratios. It simplifies, summarizes and systematizes a long array of accounting figures to make them understandable. It is also useful for diagnosis of the financial health of an enterprise. This is done by evaluating liquidity, solvency, profitability, etc Such an evaluation enables management to assesses financial requirements and the capabilities of various business units. Ratios are helpful in business planning and forecasting. The trend ratios are analyzed and used as guide to future planning. What should be the course of action in the immediate future is decided, many a times, on the basis of trend ratios. The accounting ratios are of great assistance in locating the weak spots in business even though the overall performance may be quite good. Management then can pay attention to the weakness and take remedial action. For example if the firm finds that the increase

The goal of such analysis is to determine performance and efficiency of the firm management, as reflected in the financial records and reports. Its main aim is to measure the firm 's liquidity, profitability and other indicators that business is conducted in a rational and orderly way .Here ratio analysis is taken as the primary tool for examining the firm 's financial position for performance of Delhi Transco