Management Information System

Tally packs enormous power to generate numerous reports for management information that assists management in taking correct & timely decisions. This enables rapid growth and better control of business. The primary concern for Management Information System of a business is to ensure that the knowledge necessary to drive critical business processes is available at the right place and time.

Management Reports & Functionalities

Ratio Analysis

Ratio, in general terminology, is referred to as a quantitative relation between two numerical values. Ratio Analysis is a way of expressing relationships between a firm’s financial numbers.

Ratios are most commonly used to analyze the financial and operational characteristics of a company. Ratios give managers a tool to conduct comparison and trend analysis.

Ratios are used to effectively monitor and plan the following :-

•     Overall financial health of the business
•          Liquidity position
•          Receivables collection
•          Payables rescheduling
•          Level of exposure to external borrowings
•          Prospective investment levels
•          Managerial decision making process

At centre (unit/division) level, ratios are one of the best tools to identify:-

• And compare centre wise profitability
• Centres that require attention in terms of additional investment, cost reduction, human resources etc. 
• The most and least preferred customers based on their performance

Ratios are effective management decision making tools. The following are some of the management decision making areas, where ratios are used :-

• expansion of business
• diversification
• raising additional working capital
• Additional investment etc. 

To view Ratio Analysis
Go to Gateway of Tally > Ratio Analysis
The Ratio Analysis Statement is a Single Sheet Performance Report for a selected period. It gives important values and key performance indicators for the company. It is one report that top management need to look at to know the state of the company’s financial health and where it is going in the short term.
The Ratio Analysis Screen is divided into two parts: Principal Groups and Principal Ratios.
The Principal Groups are the absolute key figures that give perspective to the ratios.
Principal Ratios relate two pieces of financial data to get a comparison that is more meaningful when compared with ratios of other companies.
Principal Groups and Key Figures


Working Capital – Tally follows the Accountants’ definition and is the Net Working Capital calculated as Current Assets less Current Liabilities. Financial Analysts often mean total Current Assets as Working Capital. This is a measure of the extent the firm is protected from liquidity problems.


Cash in Hand and Bank Balances – These are indicated in the Ratio Analysis screen to give the liquidity perspective.


Sundry Debtors – (Due till today) – These are two figures, total debtors and debtors that are due as on the date of the Statement.


Sundry Creditors – (Due till today) – These are figures for total creditors and those that are due as on the date of the Statement.
Sales and Purchases Accounts – These show the trading activity for the period.


Stock in Hand – This is the Stock in hand as on the date of the report. Together with Cash and Bank Balances and Debtors. Stocks complete the Current Assets aspect of Working Capital.


Net Profit – This is derived from the Profit & Loss Account and is the profit after all direct and indirect expenses.


Principal Ratios


The following ratios can be viewed in Tally :-

Current Ratio - (Current Assets: Current Liabilities): which indicates the solvency position of the enterprise. The ideal ratio is 2 under normal business conditions.

Quick Ratio - (Current Assets – Stock in Hand : Current Liabilities): which indicates the liquidity position of the enterprise. This ratio is useful in planning future cash requirements.

Debt Equity Ratio - (Loans (Liabilities) : Capital + Net Profit): which indicates the level of exposure to external borrowings and is a useful tool in determining the options of raising additional capital internally or externally.

Gross profit % – Gross Profit / total Turnover – indicates the percentage of profit earned from direct operations (manufacturing)., This ratio is useful, where an enterprise produces more than one product, in identifying the order of profitability and making decisions such as increasing production capacity, continuance of a product etc.

Net Profit % - Net Profit/ Total Turnover – indicates the percentage of net profit earned by the enterprise after considering all expenses of the enterprise.

This is useful in identifying the overall profitability of the enterprise.

Operating Cost – is referred to as the percentage of operating cost with respect to the total turnover – This ratio is useful in making decisions in the areas of cost control, cost reduction etc.

Receivables Turnover – is an analysis of debtor wise payment performance and a useful tool in identifying the most preferred and least preferred customers or agents and planning the receivables collection process.

Return on Investment – is referred to as a percentage of net profit / capital + net profit. This is a useful tool in measuring returns expected of the project/product and plan additional capital infusion, increase in production capacity (subject to market demand) etc.

Return on working capital – is referred to as the percentage of net profit to working capital (current assets – current liabilities).

Working capital turnover ratio – indicates how effectively working capital is used in terms of turnover it can help to generate. It is a useful tool in identifying the level of deployment of funds with respect to sales.

Inventory turnover ratio –turnover / inventory – indicates the relationship of inventory with respect to sales. This is a useful tool in identifying the extent of investment in stock and indicates

• Stock control measures whether to be taken in case of change in demand
• Procurement planning

CASH FLOW

A Cash Flow is a measure of a business’s financial health. It is defined as cash receipts minus cash payments over a given period of time. Through Tally, a business can analyze the following:

• Periodic cash flows
• Group & Ledger wise cash flows

Periodic cash flow statements can be used by a business to effectively analyze and plan

• The current pattern of cash flow under various heads
• The timing and certainty of its future cash flows
• The availability of excess funds-the extent and tenor of such availability for short term investment.

Group & Ledger wise cash flow statements can be used to

• Identify major heads, which require constant monitoring.
• Analyze the pattern of inflow/outflow under a particular group/ account head for planning overall cash requirement.

Cash flow statements can also be used as receipts and payments statement. This is particularly useful for businesses such as Non Profit Organizations where receipts and payments statements need to be generated.

To view Cash Flow Summary

Go to Gateway of Tally > Display > Cash/Fund Flow > Cash Flow

To view Monthly/Quarterly cash flow statement press Alt+F5 Further Display can be configured through F12 Configuration

• Appearance of names: alias / names, alias only, name/ alias, name only
• Scale factor for values: crores, ten millions, millions, ten lakhs, lakhs, ten thousands, thousands, hundred
• Periodicity to use: 4 week month, daily, fortnightly, half yearly, monthly, quarterly, weekly and yearly
• Show average details: selecting yes option will display the average of the selected period’s cash inflow and outflow at the end of the statement.
• Show with Graph: selecting yes option will display the graph in terms of period selected.

To view detailed Detailed/Condensed Press Alt+F1

To view Daily flow / Break up Press F4

Funds Flow

The Funds Flow depicts the Working Capital analysis of the company. It gives details of the movement of funds in a business, i.e. source of funds and their application. Working Capital is the net difference between Current Assets & Current Liabilities

Fund flow statements are useful tools to analyze

• The changes in the net assets
• Its financial structure
• Its solvency and liquidity
• Its operating performance
• Areas that require immediate attention
• Periodic fund flows
• Group wise and ledger wise fund flows

Display of sources and application separately for each group enables a business to identify core areas that require immediate attention and take effective steps to address the issues.

To view Funds Flow Summary

Go to Gateway of Tally > Display > Cash/Fund Flow > Fund Flow

Press Enter to get Funds flow Summary for the month