Profitability analysis of a micro enterprise-A case study of Laxmi Vinay Poly Print Packs Private Limited

Owners and Managers are naturally interested in financial soundness of their Business Enterprise. Financial soundness can be measured in terms of operating efficiency. Operating efficiency of an enterprise means its ability to earn adequate returns to owners and depends ultimately on the profits earned by the enterprise. The profitability of an enterprise is measured by profitability ratios. In this paper, an attempt is made to do Profitability Analysis of Laxmi Vinay Poly Print Packs Private Limited. Laxmi Vinay Poly Print Packs Private Limited is a Micro Enterprise located in Cuddapah district of Andhra Pradesh state in India. It is involved in Manufacturing of various bags and in printing. Profitability analysis was done through analyzing various profit margins, Profitability ratios relating to investments and Profitability ratios relating to various expenses. Profit margins covered include Gross Profit Margin, Operating Profit Margin and Net Profit Margin. Profitability ratios relating to investments include Return on Assets (ROA), Return on Capital Employed (ROCE) and Return on Share holder's equity (ROSE). Profitability ratios relating to various expenses include Cost of Goods sold Ratio, Operating Expenses Ratio, Administrative Expenses Ratio, Selling Expenses Ratio and Financial Expenses Ratio. Chi-square test is used for testing the hypotheses formed.