A Dissertation Report Mmm

7/28/2019 A Dissertation Report Mmm

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A DISSERTATION REPORT

ON

FINANCIAL ANALYSIS

AT BHARAT HEAVY ELECTRICALS LIMITED HARDWAR

SUBMITTED TO

in partial fulfillment of the requirement for the two years full time

Post Graduate Degree

In

MASTER OF BUSINESS ADMINISTRATION (FINANCE)

SUPERVISED BY : SUBMITTED BY :

DR.SUREKHA RANA MEENAKSHI SATI

MBA

(BUSINESS FINANCE)

DEPARTMENT OF MANAGEMENT STUDIES

KANYA GURUKUL MAHAVIDYALAYA, DEHRADUN

2ND CAMPUS, GURUKUL KANGRI UNIVERSITY

HARIDWAR-2494012009-2011


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DECLARATION

I hereby declare that the study enti tled FINANCIAL

ANALYSIS in the context of H.E.E.P. BHEL being submitted

by me is a record of my own work. The study was conducted

at Finance Department, H.E.E.P. BHEL.

The matter embodied in this project report has not been

submitted to any other University or Institution for the award of

degree.

MEENAKSHI SATIMBA (BUSINESS FINANCE)


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ACKNOWLEDGEMENT

It gives me immense pleasure to acknowledge and thank all those who

have given consistent guidance, advice and encouragement in my

endeavor. I would also like to thank all those persons who have spent their

valuable time to contribute the required information to me and gave me

support while preparing this report.

I expressed my sincere thanks to my sincere thanks HOD Dr Surekha

Rana Dr Bindu Arora ,Dr Patiraj Kumari, Ms P. Panuli, Dr Nirupama Pokhriyal, MsVijayshree for administrative help. I am very thankful to all

faculty member of my collage.

I owe my sincere thanks to Mr. SHELENDER KUMAR Additional General

Manager-HRD, BHEL, HARIDWAR for providing me an opportunity to

undertake my project work in their esteemed organization and to obtain

valuable insights about the working of the firm.

I am greatly indebted to,MR. S.K ARYA BHEL HARIDWAR forhis kind

guidance and helpful suggestions.

With Sincere Thanks

MEENAKSHI SATI

MBA (BUSINESS FINANCE)


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Contents

1. Company profile

2. Introduction

a. Financial analysis

b. Financial ratio

c. Comparative balance sheet

d. Trend analysis

e. Cash flow

f. Fund flow

3. Research methodology

4. Analysis & interpretation

5. Conclusion

6. Suggestion

Bibliography

Annexure


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COMPANYPROFILE


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BHARAT HEAVY ELECTRICAL LIMITED- A CORPORATE GIANT

BHEL was established about 50 years ago to become the most important symbol of Heavy

Electrical Equipment industry in India. It ranks amongst the first few of its kind in the world.

It is the largest heavy engineering and manufacturing enterprise of its kind in India with

well- recognized track record of performance, making profits continuously since 1971-72.

The company achieved a turnover of Rs.21608 crores and gross margin of Rs.4395 crores

in 2007-08. BHEL caters to core sector of Indian economy viz. Power Generation and

Transmission, Heavy Industry, Transportation, Telecommunication, Renewable Energy,

Defence, etc. The wide network of BHELs - 14 manufacturing divisions, 4 Power sector

regional centers, 8 Service Centers, 16 Regional Offices and over 160 project sites in

India and abroad. Total manpower of about 42200 employees enable the company to

remain closer to its customers to provide them with good quality products,

fabricated/manufactured system and services at competitive prices. BHEL has

established its footprints in more than 70 countries. Having attained ISO 9001-14001

certifications, BHEL is now on its journey towards TQM. The companys inherent potential

coupled with its strong performance over the years has resulted in its being chosen as one

of the Navratna PSUs which enjoy the support from the government in their endeavors to

become global player with its prudent financial management. BHEL occupies an all-

important niche as evident by its ranking by CII amongst top nine PSUs based on financial

performance. Recently, in a survey conducted by Business India, BHEL has been rated

as Seventh Best Employerin India.


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BHELs VISION

BHELs vision is to become a world-class engineering enterprise committed to

enhancing stakeholder value and the company is striving to achieve this visualization.

BHELs MISSION

To be an Indian Multinational Engineering Enterprise providing Total Business Solutions

through Quality Products, Systems and Services in the fields of Energy, Industry,

Transportation, Infrastructure and other potential areas

BHELs VALUES

- Zeal to excel and zest for change

- Integrity and fairness in all matters

- Respect for dignity and potential of individuals

- Strict adherence to commitments

- Ensure speed of response

- Foster learning, creativity and team-work

- Loyalty and pride in the company

BUSINESS POLICY

In line with companys vision, mission and values, the company dedicates itself to

sustained growth with increasing positive economic value addition and customer

focused business leadership in the power and industry sectors.


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COMPANY'S OBJECTIVE

GROWTH:

To ensure a steady growth by enhancing the competitive edge of BHEL in existing

business, new areas and International operations so as fulfill national expectations from

BHEL.

PROFITABILTY:

To provide a reasonable and adequate return on capital employed, primarily through

improvements in operational efficiency, capacity utilization and productivity, and

generate adequate internal resources to finance the company's growth.

CUSTOMER FOCUS:

To build a high degree of customer confidence by increasing value for his money

through international standards of product quality, performance and superior services.

PEOPLE-ORIENTATION:

To enable each employ to achieve his potential, improve his capabilities, perceive his

role and responsibilities participate and contribute positively to the growth and success

of the company. To invest in human resources continuously and be alive to their needs.

IMAGES:

To fulfill the expectations, which stakeholders like Govt. as owner, employees,

customers, ant the country at large have from BHEL.


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TECHNOLOGY:

Achieve technological excellence in operations by development of indigenous

technologies and efficient absorption and adaptation of imported technologies to suit

business needs and priorities, and provide the competitive advantage to the company.

BHEL IN INDIA

REGIONAL OFFICES (POWER SECTOR): -

1. NEW DELHI (NORTHERN REGION)

2. CALCUTTA (EASTHREN REGION)

3. NAGPUR (WESTHREN REGION)

4. MADRAS (SOUTHREN REGION)

BUSINESS OFFICES:

1. BANGLORE

2. BHUBANESHWAR

3. BOMBAY

4. CHANDIGARH

5. GUWAHATI

6. JABALPUR

7. JAIPUR

8. LUCKNOW

9. MADRAS


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10. NEW DELHI

11. PATNA

12. RANCHI

13. SECKUNDRABAD

MANUFACTURING UNITS:

1. BANGALORE

2. BHOPAL

3. HARDWAR

4. HYDRABAD

5. JHANSI

6. RANIPET

7. RUDRAPUR

8. TIRUCHIRAPALLI

SERVICE CENTRES:-

1. BANGALORE

2. BARODA

3. CALCUTTA

4. CHANDIGARH

5. SECUNDRABAD

6. NEW DELHI

7. NAGPUR

8. PATNA


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14. NEW DELHI

15. PATNA

16. RANCHI

17. SECKUNDRABAD

MANUFACTURING UNITS:

9. BANGALORE

10. BHOPAL

11. HARDWAR

12. HYDRABAD

13. JHANSI

14. RANIPET

15. RUDRAPUR

16. TIRUCHIRAPALLI

SERVICE CENTRES:-

1. BANGALORE

2. BARODA

3. CALCUTTA

4. CHANDIGARH

5. SECUNDRABAD

6. NEW DELHI

7. NAGPUR

8. PATNA


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BHEL HARDWAR

At Hardwar the picturesque background of Shivalik hills, 2 important manufacturing

units of BHEL are located. The hum of the construction machinery woke up the Shivalik

hills during early 60s and sowed the seeds of one of the greatest symbol of Indo -Soviet

collaboration-Heavy Electrical Equipment Plant (HEEP) of BHEL, located on the

northern side. The plant went into production in 1967 and is engaged in the

manufacture of power generation and utilization equipment. Located immediately to the

south of HEEP is the Central Foundry Forge Plant (CFFP), set up with French

collaboration for the production of alloy steel castings and forgings required to complete

the production profile of BHEL.

HEAVY ELECTRICAL EQUIPMENT PLANT - PROFILE

The Heavy Electrical Equipment Plant (HEEP) of BHEL Hardwar was set up in technical

collaboration with USSR, for the manufacture of power plant equipment; AC/DC motors

of various sizes associated control equipment and started production in Jan. 1967.

In 1976, BHEL entered into a collaboration agreement with M/s Kraftwork Union

AG Germany for design, manufacture, erection and commissioning of large size Steam

Turbines and Turbo Generators. In 1989, BHEL Hardwar also signed collaboration with

Siemens, Germany for transfer of technology for manufacture of large gas turbine.

More than 40 % of the countrys electrical energy is generated from the power

equipment supplied by BHEL Hardwar.


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CENTRAL FOUNDRY FORGE PLANT

The Central Foundry Forge Plant was set up at Hardwar with French collaboration. The

construction started in 1974 and production was commenced in 1976.This plant has in-

built high degree of sophistication normally associated with much larger plants and has

successfully developed various intricate castings and forgings which were imported

earlier.CFFP has successfully manufactured various types of steels, e.g., creep

resistant steels, heat resistant steels, stainless steels, armor steels etc. per Indian and

International standards.

CFFP has been supplying sophisticated castings used in power sector e.g., steam

turbine castings, turbo generator press rings, hydro turbine Kaplan blades and Francis

runners, compressor castings etc. The castings have also been manufactured for

Defense, Nuclear, Chemical and steel sectors.

Critical Forgings manufactured by CFFP include: HP, IP and LP rotors and discs etc.,

From steam turbines, shafts, pole and plates, rotor bush, thrust collars etc., for hydro

sets and jackets and discharge cover for pumps besides various types of

critical forgings for defense, nuclear, steel, cement and machine building industries.

CFFP is further upgrading and augmenting its facilities in the high growth and high

technical areas. Most of the castings and forgings produced by CFFP are of import

substitution nature. CFFP has also exported motor frame and steam turbine castings

and forgings to CIS and Germany. CFFP has also won the National award for import

substitution. It has been recognized as a well known steel maker-Foundry and Forge

Master by Indian Boiler Board. The American Bureau of Shipping has also approved

CFFP for the manufacture of castings and forgings for ship building industry.


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MAJOR COMPETITORS OF BHEL

1. ELECTRO CONSULT ITALY

2. ABB SWITZERLAND

3. BEEHTEL USA

4. BLOCK & NEATCH USA

5. GENERAL ELECTRIC USA

6. RAYTHEON USA

7. WESTINGHOUSE USA

8. CNMI & EC CHINA

9. SANGHAI ELECTRIC CO UK

10. GEC-ALSTHOM UK

11. ELECTRIM POLAND

12. FRANCO TOSI FRANCE

13. FUJI JAPAN

14. HITECHI JAPAN

15. MITSUBISHI JAPAN

16. TOSHIBA JAPAN

17. ROLLS ROYCE GERMANY

18. SIEMENS GERMANY


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PRODUCT COLLABORATION

Thermal sets, Hydro sets, Motors and Prommash exportControl gear Russia

Bypass and Pressure reducing system Sulzer Brother Ltd.Switzerland

Electronic automation system/Turbine Siemens AGand generator Germany

Francis type Hydro Turbine General ElectricCanada

Moisture Separator Baloke Duerr AGGermany

Condensers ABB, Sweden

Programmable Controls GE, USA

Heat Boilers Heny Vogt Machine Co.USA

CUSTOMERS

Karnath Govt. of J & K

Gumti Govt. of Tripura

Bhandardara-1 Govt. of Maharashtra

Subbal Sindh Govt. of J & K

Kali nadi Stage-1 Karnataka power corporation Ltd.

Chibro UP Electricity Board

Ukai Gujrat Electricity Board

Chennai Govt. of J & K


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Tillari Govt. of Maharashtra

Kadamparai Tamilnadu Electricity Board

EXPORTS

Devighat Govt. of Nepal

Bhumibol Electricity Generating Authority,

Thailand

Pattani Electricity Generating Authority,

Thailand

Kulikhani Govt. of Nepal

KEY COMPETITORS:

Power Sector Giant of the World viz. Siemens Germany, ABB, General electric of USA

etc. are the major competitors of HEEP. All these are the MNCs and enjoy huge

financial and R&D backup.

KEY CUSTOMERS AND SUPPLIERS

HEEPs customer profile ranges from State Electricity Boards, Government Power

utilities like NTPC, NPC, NHPC to IPPs like Reliance Energy. HEEP has also supplied

Gas Turbine sets to overseas customers in Libya & Iraq. Power Sector Regions of

BHEL are its key internal customers. In view of expected market scenario, BHEL has

strategically decided that HEEP will concentrate on coal based Higher Rating Thermal

Sets for domestic market to fulfill the countrys vision of adding 107,000 MW capacity to


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achieve Power on Demand by 2012. Our key customer, NTPC has drawn up plan for

capacity addition of 20,000MW by 2012. HEEP has planned for execution of 34,619MW

by 2012.

MAJOR CHALLENGES:

The favorable business scenario has given the unit a major challenge of establishing

Power Infrastructure of the country in close co-ordination with its key customers. HEEP

has committed itself to meet the countrys requirements. To cater to the needs of higher

rating sets of 800MW, HEEP has collaboration with Siemens.

STRATEGIC CHALLENGES

Key Business

Cycle time reduction

State of the art technology

Cost reduction

Operational

Timely delivery

Material cost reduction

Productivity improvement

Effective utilization of machines

Human Resource

Motivation of employees


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SWOT ANALYSIS

STRENGTH (S):

Low cost producer of quality equipment due to cheap labour and fully depreciated

plants.

Flexible manufacturing set up.

Entry barrier due to high replacement cost of its manufacturing facilities.

Comprehensive turnkey experience from product design to commissioning.

WEAKNESSES (W): -

High working capital requirement due to its exposure to cash starved SEBs (State

electricity boards) and High WIP.

Inability to provide project financing.

OPPORTUNITIES (O): -

High-expected growth in power sectors (7000 MW/p.a. needs to be added).

High growth forecast in Indias index of industrial production would increase demand

for industrial equipment such as motors and compressors.

THREATS (T): -

Technical suppliers are becoming competitors with the opening up of the Indian

economy.

Fall in global power equipment prices can effect profitability.


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RESEARCH

METHODOLOGY


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RESEARCH METHODOLOGY

The term research methodology indicates an exhausted investigation into some

accepted principles and conclusion so as to bring into some new and novel facts.

Research is the process of systematic and in-depth study or search any particular

subject , topic or area of investigation , backed by collection , completion , presentation

and interpretation of relevant details/ data / information . It is carefully search or inquiry

for finding the fact which would helpful of application or utilization .

The first step towards any research is to identify the problem and to look at it

objectively . For research study choose the project of FINANCIAL ANALSIS in BHEL

There are mainly two of data .

Primary data

Secondary data

Primary data can be collected either through experiment or through survey . If the

researcher conducts an experiment , observes some quantitative measurements, or the

data , But in the case of a survey data can be collected by ; observation , personal

interviews , telephonic interviews , mailing of questionnaires , etc .

Secondary data, that data which are available in the printed form .

Data Collection : For the study purpose preferred secondary data which includes;

balance sheet , profits &loss a/c , annual reports & the internal documents .

Financial tools: Ratio analysis

Comparative balance sheet.


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OBJECTIVES OF STUDY

A. To determined the relationship of items and group of items and in the financial

statement.

To analysis short term solvency of the company.

To analysis long term solvency of the company.

To analysis profitability of the company.

To analysis turnover ratio of the company.

To study the financial position through comparative balance sheet.

To analysis efficiency of cash usage of the company.

B. To analysis increase or decrease in rupee amount of assets and liabilities as well

as in percentage


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INTRODUCTION


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INTRODUCTION

Financial analysis is assessment of effectiveness with which funds (investment and

debts) are employed in a firm. Efficiency and profitability of its operations, values and

safety of debtors claims against the firms assets. It employees techniques such as fund

flow analysis and financial ratios to understand the problems and opportunity inherent in

a investment or financing decision.

OBJECTIVES OF FINANCIAL ANALYSIS

Financial analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both short-term and

long-term. A company's degree of profitability is usually based on the income

statement, which reports on the company's results of operations.

2. Solvency - its ability to pay its obligation to creditors and other third parties in the

long-term;

Liquidity - its ability to maintain positive cash flow, while satisfying immediate

obligations; Both 2 and 3 are based on the company's balance sheet, which

indicates the financial condition of a business as of a given point in time.

3. Stability- the firm's ability to remain in business in the long run, without having to

sustain significant losses in the conduct of its business. Assessing a company's

stability requires the use of both the income statement and the balance sheet, as

well as other financial and non-financial indicators.
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METHODS OF FINANCIAL ANALYSIS

Financial analysts often compare financial ratios (of solvency, profitability,

growth, etc.):

Past Performance - Across historical time periods for the same firm (the last 5

years for example),

Future Performance - Using historical figures and certain mathematical and

statistical techniques, including present and future values, This extrapolation

method is the main source of errors in financial analysis as past statistics can be

poor predictors of future prospects.

Comparative Performance - Comparison between similar firms. These ratios

are calculated by dividing a (group of) account balance(s), taken from the

balance sheet and / or the income statement, by another, for example :

n / equity = return on equity Net income / total assets = return on assets

Stock price / earnings per share = P/E-ratio

Comparing financial ratios are merely one way of conducting financial analysis.

Financial ratios face several theoretical challenges:They say little about the firm's

prospects in an absolute sense. Their insights about relative performance require

a reference point from other time periods or similar firms. One ratio holds little

meaning. As indicators, ratios can be logically interpreted in at least two ways.

One can partially overcome this problem by combining several related ratios to

paint a more comprehensive picture of the firm's performance. Seasonal factors

may prevent year-end values from being representative. A ratio's values may be
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distorted as account balances change from the beginning to the end of an

accounting period. Use average values for such accounts whenever possible.

Financial ratios are no more objective than the accounting methods employed.

Changes in accounting policies or choices can yield drastically different ratio

values. They fail to account for exogenous factors like investor behavior that are

not based upon economic fundamentals of the firm or the general economy .

TOOLS OF FINANCIAL ANALYSIS

The commonly used tools of financial analysis are given below.

Financial Ratio

Simple comparative statements

Common size statements

Trend analysis

Cash flow statement

Fund flow statement

Financial Ratios

Financial ratios are useful indicators of a firm's performance and financial situation.

Most ratios can be calculated from information provided by the financial statements.

Financial ratios can be used to analyze trends and to compare the firm's financials to

those of other firms. In some cases, ratio analysis can predict future bankruptcy.

Financial ratios can be classified according to the information they provide. The

following types of ratios frequently are used:


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1) Liquidity Ratios

Liquidity ratios provide information about a firm's ability to meet its short-term financial

obligations. They are of particular interest to those extending short-term credit to the

firm. Two frequently-used liquidity ratios are the current ratio (or working capital ratio)

and the quick ratio.

Current ratio:- The current ratio is the ratio of current assets to current liabilities:

Current ratio an indication of the liquidity of the business by comparing the amount of

current assets to current liabilities. A business's current assets generally consist of

cash, marketable securities, accounts receivable, and inventories. Current liabilities

include accounts payable, current maturities of long-term debt, accrued income taxes,

and other accrued expenses that are due within one year. In general, businesses prefer

to have at least one dollar of current assets for every dollar of current liabilities.

However, the normal current ratio fluctuates from industry to industry. A current ratio

significantly higher than the industry average could indicate the existence of redundant

assets. Conversely, a current ratio significantly lowers than the industry average could

indicate a lack of liquidity.

FINANCIAL

RATIOS

Liquidity ratiosAsset turnover

ratios

Financialleverage ratios

Profitabilityratios

Dividendpolicy ratios


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Quick ratio:- A measurement of the liquidity position of the business. The quick ratio

compares the cash plus cash equivalents and accounts receivable to the current

liabilities. The primary difference between the current ratio and the quick ratio is the

quick ratio does not include inventory and prepaid expenses in the calculation.

Consequently, a business's quick ratio will be lower than its current ratio. It is a stringent

test of liquidity.

Cash Ratio: Indicates a conservative view of liquidity such as when a company has

pledged its receivables and its inventory, or the analyst suspects severe liquidity

problems with inventory and receivables.

2) Turnover Ratios:-

Turnover ratio indicates the speed with which assets are being converted or turned over

into sales. These ratios are also known as activity ratio. Activity ratios are employed to

evaluate the efficiency with which the firm manage and utilizes assets. Activity ratio

involves a relationship between sales and assets. A proper balance between sales and

assets generally reflect that assets are managed well. Activity ratios can be analysis the

Inventory turnover:-

Inventory turnover ratio indicates the efficiency of the firm in producing and selling its

products. This ratio can be calculated by dividing cost of good sold by average

inventory. The average inventory is the average of opening and closing balance of

inventory. A low ratio is pointer towards stock piling of difficult to say items whereas high

ratio indicates of fast selling items.


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Debtors turnover ratio:-

Debtors turnover ratio shows the relationship between credit sales and average debtors.

Average debtors. The average Debtor is the average of opening and closing balance of

debtor. This ratio determines the velocity of debtors i.e. number of time on an average

debtor turnover in an year. It is calculated by dividing credit sales by average debtors.

Higher the ratio it is, it shows the speedy collection of receivables.

Average collection period:-

Average collection period measures the quality of debtors since it indicate the speed of

there collection. The shorter average collection period, the better the quality of debtors.

Since a short collection period implies the promote payments by debtors.

Working capital turnover ratio:-

Working capital turnover ratio indicates the relationship between sales and net current

assets. It may thus compute net working capital turnover by dividing sales by net

working capital.

Fixed assets turnover ratio:-

Fixed assets turnover ratio indicates relationship between sales and net fixed assets.

With the help of this ratio firm can be calculated its efficiency to utilizing fixed assets. It

may thus compute fixed assets turnover by dividing sales by fixed assets.

Total Asset Turnover:-


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Measures the activity of the assets and the ability of the business to generate sales

through the use of the assets. Assets turnover ratio indicates relationship between sales

and net fixed assets

3) Financial Leverage Ratios

Financial leverage ratios provide an indication of the long-term solvency of the firm.

Unlike liquidity ratios that are concerned with short-term assets and liabilities, financial

leverage ratios measure the extent to which the firm is using long term debt.

Debt ratio: - The debt ratio is defined as total debt divided by total assets:Debt ratios

depend on the classification of long-term leases and on the classification of some items

as long-term debt or equity.A debt equity ratio of 2:1 is the norm accepted by financialinstitutions for financingprojects.Capital Employed To Net Worth Ratio:

This ratio shows relationship between debt and equity. It can be calculated dividing by

capital employed by net worth.

PROPRIETOR RATIO:

It is assumed that larger the proportion of the shareholders equity, the stronger is the

financial position of the firm. This ratio will supplement the debt-equity ratio. In this ratio

a relationship established between the shareholders fund and the total assets. A

reduction in shareholders equity signally the over dependence on outside source for

long term financial needs and this carries the risk of higher level of gearing. This ratio


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indicates the degree to which unsecured creditors are protected against loss in the

event of liquidation.

FIXED ASSETS TO NET WORTH RATIO

This ratio shows that how efficiently the fixed assets are utilized by the company. This also

shows that what portion of net worth is invested in the fixed assets.

3) Profitability Ratios

Profitability ratios offer several different measures of the success of the firm at

generating profits.

Gross profit Ratio:-

Indicates the relationship between net sales revenue and the cost of goods sold. This

ratio should be compared with industry data as it may indicate insufficient volume and

excessive purchasing or labor costs. The gross profit margin is a measure of the gross

profit earned on sales. The gross profit margin considers the firm's cost of goods sold,

but does not include other costs.

Net profit ratio:- net profit ratio helps to determine the overall profitability due to

various factors such as operational efficiency, trading on equity etc.

Return on assets:- Return on assets is a measure of how effectively the firm's assets

are being used to generate profits. It is defined as:

Return on equity:- Return on equity is the bottom line measure for the shareholders,

measuring the profits earned for each dollar invested in the firm's stock. Return on

equity is defined as follows:


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FINANCIAL STATEMENT

Financial statements are organized summaries of detailed information about the

financial position and performance of a corporate entity.

Financial statements provide an overview of a business's financial condition in both

short and long term. All the relevant financial information of a business enterprise,

presented in a structured manner and in a form easy to understand, are called the

financial statements. There are four basic financial statements. For uniformity, a

common format for each of these statements is followed:

1. Balance sheet: also referred to as statement of financial position or condition,

reports on a company's assets, liabilities, and net equity as of a given point in

time.

2. Income statement: also referred to as Profit and Loss statement (or a "P&L"),

reports on a company's income, expenses, and profits over a period of time. It is

called Income Summary in the U. S. and Canada. Profit & Loss account provides

information on the operations of the enterprise. These include sale and the

various expenses incurred during the processing state.

3. Statement of retained earnings: explains the changes in a company's retained

earnings over the reporting period.

4. Statement of cash flows: reports on a company's cash flow activities,

particularly its operating, investing and financing activities.
http://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Liabilityhttp://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Statement_of_retained_earningshttp://en.wikipedia.org/wiki/Statement_of_retained_earningshttp://en.wikipedia.org/wiki/Statement_of_cash_flowshttp://en.wikipedia.org/wiki/Statement_of_cash_flowshttp://en.wikipedia.org/wiki/Statement_of_cash_flowshttp://en.wikipedia.org/wiki/Statement_of_retained_earningshttp://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Liabilityhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Balance_sheet


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COMPARATIVE FINANCIAL STATEMENTS

Comparison of financial statements may be used to express any one of the following

types of comparison:

1. Comparison with standard figures :- comparison of actual with standard or

budgeted figures for the same period and the same firm.

2. Intra-firm comparison :- comparison of actual figures of one period with those

of another period for the same firm .

3. Inter-firm comparison :- comparison of actual figures of one firm with those of

another standard fir belonging to the same industry.

4. Pattern comparison :- comparison of actual figures of one firm with those of

industry to which the firm belongs.

5. MEANING OF COMPARATIVE FINANCIAL STATEMENTS

Comparative financial statements may refer to-

(a). financial statements of an enterprise for two or more successive accounting

years.

(b) financial statements of different enterprises for the same accounting periods.

(c). financial statements of an enterprise and an industry to which the enterprise

belongs, for the some accounting period.


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(d). financial statements based on relationship among the components of

financial statements for two or more successive accounting periods.

COMPARATIVE BALANCE SHEET

Comparative balance sheet is the balance sheet which is prepared in such a manner so

as to reflect the financing and investing activities of the business for two or more

accounting periods.

These statements facilitates the horizontal analysis since each accounting variable is

analyzed horizontally. in such statements, the figures are shown as follows.

a). in absolute monetary value

b). increase or decrease in absolute values

c). by way of percentage

OBJECTIVES OF COMPARATIVE BALANCE SHEET

To analyze information of assets and liabilities in absolute rupees, i.e., balances on

two or more comparatives dates.

To analyze increase or decrease in rupees amounts as well as in percentage by

taking the data of previous years as base.

To measure the financial position of the enterprise,

To review the past financing and investing activities and their effect on the financial

position of the enterprise.


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TREND ANALYSIS

Trend analysis is a time series analysis to determine the trend of the financial data over

a series of years. The working of the trend analysis involves the following three steps:

Step 1. Selection of a base year

Step 2. Assignment of an index number of 100 to each itemsof base year.

Step 3. Calculation of percentage relationship that each item of each year bears to the

same items in the base year.

The term "trend analysis" refers to the concept of collecting information and attempting

to spot a pattern, or trend, in the information. In some fields of study, the term "trend

analysis" has more formally-defined meanings In project management trend analysis is

a mathematical technique that uses historical results to predict future outcome. This is

achieved by tracking variances in cost and schedule performance. In this context, it is a

project management quality control tool. Although trend analysis is often used to predict

future events, it could be used to estimate uncertain events in the past, such as how

many ancient kings probably ruled between two dates, based on data such as the

average years which other known kings reigned.

A trend shown by the percentage of the item may not provide clue to favorable or

unfavorable tendencies unless such trend is compared with the trend of the item which

can be logically connected with the trend of the item which can be logically connected

with the former item , for example , a downward trend for sales accompanied by an

upward trend for inventories, bills receivables, sundry debtors , bad debts would

essentially reflect a fall in operating efficiency.
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CASH FLOW STATEMENT

In financial accounting, a cash flow statement or statement of cash flows is a financial

statement that shows how changes in balance sheet and income accounts affect cash

and cash equivalents, and breaks the analysis down to operating, investing, and

financing activities. As an analytical tool, the statement of cash flows is useful in

determining the short-term viability of a company, particularly its ability to pay bills.

International Accounting Standard 7 (IAS 7), is the International Accounting Standard

that deals with cash flow statements.

People and groups interested in cash flow statements include

Accounting personnel, who need to know whether the organization will be able to

cover payroll and other immediate expenses

Potential lenders orcreditors, who want a clear picture of a company's ability to

repay

Potential investors, who need to judge whether the company is financially sound

Potential employees or contractors, who need to know whether the company will

be able to afford compensation .

OBJECTIVE:-

The cash flow statement was previously known as the statement of changes in financial

position or flow of funds statement. The cash flow statement reflects a firm's liquidity or

solvency. The balance sheet is a snapshot of a firm's financial resources and

obligations at a single point in time, and the income statement summarizes a firm's finial
http://en.wikipedia.org/wiki/Financial_accountinghttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Income_accounthttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/International_Accounting_Standardhttp://en.wikipedia.org/wiki/Lenderhttp://en.wikipedia.org/wiki/Creditorhttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Creditorhttp://en.wikipedia.org/wiki/Lenderhttp://en.wikipedia.org/wiki/International_Accounting_Standardhttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Income_accounthttp://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_accounting


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transactions over an interval of time. These two financial statements reflect the accrual

basis accounting used by firms to match revenues with the expenses associated with

generating those revenues. The cash flow statement includes only inflows and outflows

of cash and cash equivalents; it excludes transactions that do not directly affect cash

receipts and payments. These noncash transactions include depreciation or write-offs

on bad debts to name a few. The cash flow statement is a cash basis report on three

types of financial activities: operating activities, investing activities, and financing

activities. Noncash activities are usually reported in footnotes.

The cash flow statement is intended to:-

1. provide information on a firm's liquidity and solvency and its ability to change

cash flows in future circumstances

2. provide additional information for evaluating changes in assets, liabilities and

equity .

3. improve the comparability of different firms' operating performance by eliminating

the effects of different accounting methods

4. indicate the amount, timing and probability of future cash flows

The cash flow statement has been adopted as a standard financial statement because it

eliminates allocations, which might be derived from different accounting methods, such

as various timeframes for depreciating fixed assets.
http://en.wikipedia.org/wiki/Accounting_methods#Accrual_basishttp://en.wikipedia.org/wiki/Accounting_methods#Accrual_basishttp://en.wikipedia.org/wiki/Accounting_methods#Cash_basishttp://en.wikipedia.org/wiki/Market_liquidityhttp://en.wikipedia.org/wiki/Solvencyhttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Accounting_methodshttp://en.wikipedia.org/wiki/Accounting_methodshttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Solvencyhttp://en.wikipedia.org/wiki/Market_liquidityhttp://en.wikipedia.org/wiki/Accounting_methods#Cash_basishttp://en.wikipedia.org/wiki/Accounting_methods#Accrual_basishttp://en.wikipedia.org/wiki/Accounting_methods#Accrual_basis


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Cash flow activities

The cash flow statement is partitioned into three segments, namely: cash flow resulting

from operating activities, cash flow resulting from investing activities, and cash flow

resulting from financing activities.The money coming into the business is called cash

inflow, and money going out from the business is called cash outflow.

Operating activities

Operating activities include the production, sales and delivery of the company's product

as well as collecting payment from its customers. This could include purchasing raw

materials, building inventory, advertising, and shipping the product.

Under IAS 7, operating cash flows include:

Receipts from the sale of goods or services

Receipts for the sale of loans, debt or equity instruments in a trading portfolio

Interest received on loans

Dividends received on equity securities

Payments to suppliers for goods and services

Payments to employees or on behalf of employees

Tax payments

Interest payments (alternatively, this can be reported under financing activities in

IAS 7, but not in US GAAP)
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Payments for the sale of loans, debt or equity instruments in a trading portfolio Items

which are added back to [or subtracted from, as appropriate] the net income figure

(which is found on the Income Statement) to arrive at cash flows from operations

generally include:

Depreciation (loss of tangible asset value over time)

Deferred tax

Amortization (loss of intangible asset value over time)

Any gains or losses associated with the sale of a non-current asset, because

associated cash flows do not belong in the operating section.(unrealized

gains/losses are also added back from the income statement)

Investing activities

Examples of Investing activities are

Purchase of an asset (assets can be land, building, equipment marketable

securities, etc.)

Loans made to suppliers or customers

Financing activities

Financing activities include the inflow of cash from investors such as banks and

shareholders, as well as the outflow of cash to shareholders as dividends as the

company generates income. Other activities which impact the long-term liabilities and

equity of the company are also listed in the financing activities section of the cash flow

statement.
http://en.wikipedia.org/wiki/Depreciationhttp://en.wikipedia.org/wiki/Deferred_taxhttp://en.wikipedia.org/wiki/Amortization_(business)#Accountinghttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Amortization_(business)#Accountinghttp://en.wikipedia.org/wiki/Deferred_taxhttp://en.wikipedia.org/wiki/Depreciation


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Under IAS 7, financing cash flows include:

Proceeds from issuing shares

Proceeds from issuing short-term or long-term debt

Payments of dividends

Payments for repurchase of company shares

Repayment of debt principal, including capital leases

For non-profit organizations, receipts of donor-restricted cash that is limited to

long-term purposes

Items under the financing activities section include:

Dividends paid

Sale or repurchase of the company's stock

Net borrowings

Disclosure of noncash activities

Under IAS 7, noncash investing and financing activities are disclosed in footnotes to the

financial statements. Under US GAAP, noncash activities may be disclosed in a

footnote or within the cash flow statement itself. Noncash financing activities may

include:

leasing to purchase an asset

converting debt to equity

exchanging noncash assets or liabilities for other noncash assets or liabilities
http://en.wikipedia.org/wiki/Dividendshttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Dividends


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issuing shares in exchange for assets'

Preparation methods

The direct method of preparing a cash flow statement results in a more easily

understood report. The indirect method is almost universally used, because FAS 95

requires a supplementary report similar to the indirect method if a company chooses to

use the direct method.

Direct method

The direct method for creating a cash flow statement reports major classes of gross

cash receipts and payments. Under IAS 7, dividends received may be reported under

operating activities or under investing activities. If taxes paid are directly linked to

operating activities, they are reported under operating activities; if the taxes are directly

linked to investing activities or financing activities, they are reported under investing or

financing activities.

Indirect method

The indirect method uses net-income as a starting point, makes adjustments for all

transactions for non-cash items, then adjusts for all cash-based transactions. An

increase in an asset account is subtracted from net income, and an increase in a liability

account is added back to net income. This method converts accrual-basis net income

(or loss) into cash flow by using a series of additions and deductions.


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Rules

The following rules are used to make adjustments for changes in current assets and

liabilities, operating items not providing or using cash and nonoperating items.

Decrease in noncash current assets are added to net income

Increase in noncash current asset are subtracted from net income

Increase in current liabilities are added to net income

Decrease in current liabilities are subtracted from net income

Expenses with no cash outflows are added back to net income

Revenues with no cash inflows are subtracted from net income (depreciation

expense is the only operating item that has no effect on cash flows in the period)

Non-operating losses are added back to net income

Non-operating gains are subtracted from net income

FUND FLOW STATEMENT

In every concern, the funds flow in form different sources and similarly funds are

invested in various sources of investment. It is continuous process. The study and

control of this funds-flow process (i.e., the uses and sources of funds) is the main

objective of financial management to assess the soundness and the solvency of the

enterprise.

The funds-flow-statement is a report on financial operations changes, flow or

movements during the period. It is a statement which shows the sources an application

of funds or it shows how the activities of a business is financed in a particulate period. In


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other words, such a statement shows how the financial resources have been used

during a particular period of time. It is, thus, a historical statement showing sources and

application of funds between the two dates designed especially to analyse the changes

in the financial conditions of an enterprise. In the words of Foulke,itis-

A statement of Sources and Application of Funds is a technical device designed to

analyse the changes in the financial condition of a business enterprises between two

dates.

Funds Flow Statement is not an income statement . Income statement shows the items

of income and expenditure of a particular period, but the Funds flow statement is an

operating statement as it summaries the financial activities for a period of time. It covers

all movements that involve an actual exchange of assets.

Various titles are used for this statement such as 'Statement of sources and Application

of Funds', 'Summary of Financial operations,' 'Changes in Financial Position', 'Fund

received and Disbursed', 'Funds Generated and Expended', Changes in Working

Capital, Statement of Fund' etc. Title of Funds Flow Statement has been modified from

time to time. Really it is very difficult to find a short time for such statement which carries

much to the readers regarding its contents an functions. A new interpretation of the term

'funds, has now been adopted as to include assets or financial resourceful which do not

flow through the working capital accounts. It seems to be the most suitable meaning fort

the term 'funds' but the most commonly used interpretation of the term 'funds' is

'working capital.

OBJECTIVE OF FUND FLOW STATEMENT

Funds Flow Statement is an analytical tool in the hands of financial manager. The


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basic purpose of this statement is to indicate on historical basis the changes in the

working capital i.e., where funds came from and were there are used during a given

period. The utility of this statement can be measured on the basis of its contributions to

the financial management. It generally serves the following purposes:-

(1) Analysis of Financial Position. The basic purpose of preparing the statement is to

have a rich into the financial operations of the concern. It analyses how the funds were

obtained and used in the past. In this sense, it is a valuable tool for the finance manager

for analyzing the past and future plans of the firm and their impact on the liquidity. He

can deduce the reasons for the imbalances in uses of funds in the past an take

necessary corrective actions. In analyzing the financial position of the firm, the Funds.

(2) Evaluation of the firm financing. One important use of statement is that it

evaluates the firm financing capacity. The analysis of sources of funds reveals how the

firms financed its development projects in the past i.e. from internal sources or from

external sources , it also reveals the rate of growth of the firm .

(3) An instrument for allocation of resources . In modern large scale business,

available funds are always short for expansion programmes and there is always a

problem of allocation of resources. It is , therefore, a need of evolving an order of

priorities for putting through their expansion programmes which are phased accordingly,

and funds have to be arranged as different phases of programs get in to their stride.

The amount of funds to be available to these projects shall be estimated by the finance

with the help of funds flow statement. This prevents the business from becoming a

helpless victim of unplanned action.


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(4) A tool of communication to outside the world. Fund flow statement help in

gathering the financial states of business. it gives an insight in to the evaluation of the

present financial position and gives answer to the problem where have or resources

been moving it provides a useful information to bankers, creditors, financials it provides

a useful information and government etc.regarding amount of loan required its purpose

the term of the payment and source for the payment of the loans etc. the financial

manager gains confidence born out of a study of fund flow statement in fact it carries

information regarding firms financial policy to outside world .

(5) Future guide. Analysis of fund flow statement several years reveal certain valuable

information for a financial manager for planning the future financial requirements of the

firm and their nature to i.e. short term, long term or mid term . the management can

formulate its financial policy based on information gather from the analysis of such

statement . Financial manager can rearrange firm financing more effectively on the

basis of such information along with the expected change in trade payables and various

accruals.


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ANALYSIS&

INTERPERTATION


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ANALYSIS & INTERPERTATION

Analysis and Interpretation has been done on the basic of secondary data i.e. balance

sheet (2005-06, 2006-07,2007-08,2008-09,2009-2010) for the fulfill of objective.

A. To determined the relationship of items and group of item in the financial

statement.

To analysis short term solvency of the company.





B .To analysis increase or decrease in rupee amount of assets and liabilities as well

as in percentage


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A) To determined the relationship of items and group of item in thefinancial statement.

To analysis short term solvency of the company

Current RatioTABLE: 1[Amount in Rs. Crore]

Year 2006 2007 2008 2009 2010

Current assets 16330 21062 27906 36901 42934

Current liabilities 10320 14420 20022 28322 32442

Current ratio 1.58 1.46 1.39 1.30 1.32

Inference:

Table indicates that current ratio values are 1.58, 1.46, 1.39, 1.30, and 1.32 for years

2006, 2007, 2008, 2009, 2010 respectively. Current ratio is highest in year 2006 i.e.

1.58 and lowest in 2009 i.e. 1.30.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2006 2007 2008 2009 2010

current ratio


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Quick ratio

TABLE: 2[Amount in Rs. Crore]

Year 2006 2007 2008 2009 2010

Quick assets 11387 15702 20781 26640 30886


Quick ratio 1.10 1.08 1.03 0.94 0.95

Inference:

Table shows that quick ratio varies values are1.10, 1.08, 1.03, 0.94 and 0.95 for

year 2006 ,2007,2008 ,2009 and 2010 respectively. Quick ratio is highest in year 2006

i.e. 1.10 and lowest in 2009 i.e.0.94.

0.85

0.9

0.95

1

1.05

1.1

1.15

2006 2007 2008 2009 2010

Quick ratio


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Absolute liquid ratio


Year 2006 2007 2008 2009 2010

Cash & bank 4134 5808 8386 10314 9790


Absolute liquid ratio 0.40 0.40 0.42 0.36 0.30

Inference:

This table shows absolute liquid ratio values are 0.40, 0.40, 0.42, 0.36 and 0.30 for

year 2006 ,2007,2008, 2009, 2010 respectively. Absolute liquid ratio is highest in year

2008 i.e. 0.42 and lowest in year 2010 i.e. 0.30.

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

2006 2007 2008 2009 2010

Absolute liuuid ratio


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Debtors turnover ratio

TABLE: 4

[Amount in Rs. Crore]

Year 2006 2007 2008 2009 2010

Turnover 13374 17238 19305 26212 32861

Average debtors 7168 8432 10835 13975 18332

Debtors turnover ratio 1.86 2.04 1.78 1.87 1.79

Inference:

This table indicates that debtors turnovers ratio value are i.e. 1.86, 2.04, 1.78,

1.87 and 1.79 for year 2006 ,2007,2008 ,2009 and 2010 respectively. Debtors turnover

ratio is highest in year 2007 i.e. 2.04 and lowest in year 2008 i.e. 1.78.

1.65

1.7

1.75

1.8

1.85

1.9

1.95

2

2.05

2.1

2006 2007 2008 2009 2010

Debtors tournover ratio


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Average collection period

TABLE :5


Year 2006 2007 2008 2009 2010

No of working days 360 360 360 360 360

Debtors turnovers ratio 1.86 2.04 1.78 1.87 1.79

Average collection period 193 176 202 192 201

Inference:

This table shows that average collection period values are 193,176, 202,192 and 201for

year 2006 ,2007,2008 ,2009,and 2010. Average collection period is highest in year

2008 i.e. 202 and lowest in year 2007 i.e. 176.

160

165

170

175

180

185

190

195

200

205

2006 2007 2008 2009 2010

Average collection period


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Stock turnover ratio


Year 2006 2007 2008 2009 2010

COGS 10751 13459 14840 21332 26236

Average inventory 3744 3981 4977 6787 8537

Stock turnover ratio 2.87 3.38 2.98 3.14 3.07

Inference:

This table shows that stock turnover ratio values are 2.87, 3.38, 2.98, 3.14 and 3.07 for

year 2006 , 2007, 2008, 2009, 2010 respectively.

Stock turnover ratio is highest in year 2007 i.e. 3.38 and lowest in year 2006 i.e. 2.87.

High turnover ratio is an indicator of expansion of business which is in year 2007.

2.6

2.7

2.8

2.9

3

3.1

3.2

3.3

3.4

3.5

2006 2007 2008 2009 2010

Stock tournover ratio


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Inventory holding period

TABLE :7[Amount in Rs. Crore]

Year 2006 2007 2008 2009 2010

No of working days 360 360 360 360 360

Stock turnover ratio 2.87 3.38 2.98 3.14 3.07

Inventory holdingperiod

125 106 120 114 117

Inference:

This table shows that inventory holding period values are 125,106,120,114,117 for year

2006, 2007 , 2008 , 2009 and 2010 respectively. Inventory holding period is highest in

year 2006 i.e. 125 and lowest in year 2007 i.e.106.

95

100

105

110

115

120

125

130

2006 2007 2008 2009 2010

Inventory holding period


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Fixed assets to proprietary ratio

TABLE :8


Year 2006 2007 2008 2009 2010

Fixed assets 982 989 981 1471 2415

Proprietary fund 7301 8788 10774 12938 15917

Fixed assets toproprietary ratio

0.13 0.11 0.09 0.11 0.15

Inference:

Table shows the fixed assets ratio values are 0.13, 0.11, 0.09, 0.11 and 0.15 for year

2006, 2007, 2008, 2009 and 2010 respectively. The ratio is highest in 2010 i.e.0.15 and

lowest in 2008 i.e. 0 .09 less fixed assets to proprietary ratio indicates the good

position of company.

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

2006 2007 2008 2009 2010

Fixed assets to proprietary ratio


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Fixed assets ratio to long term debt

TABLE :9


Year 2006 2007 2008 2009 2010

Fixed assets 982 989 981 1471 2415

Long-termdebt

558 89 95 149 128

Fixed assetsratio to longterm debt

1.75 11.12 10.3 9.8 18.8

Inference:

Table shows the fixed assets ratio to long term debt values are 1.75, 11.12,10. 3,

9.8,18.8 for year 2006 ,2007,2008 ,2009 ,2010 respectively. Fixed assets ratio is

highest in year 2010 i.e. 18.8 and lowest in 2006 i.e.1.75.

0

2

4

6

8

10

12

14

16

18

20

2006 2007 2008 2009 2010

Fixed assets ratio to long term

debt


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Debt equity ratio

TABL E: 10

[Amount in Rs. Crore]Year 2006 2007 2008 2009 2010

Externalequities

10878 14509 20117 28481 32568

Internalequity

7301 8788 10774 12938 15917

Debt equityratio

1.4 1.6 1.8 2.2 2.0

Inference:

This table implies Debt equity ratios value are 1.4, 1.6, 1.8, 2.2 and 2.0 for year

2006 , 2007 ,2008 ,2009 and 2010.Debt equity ratio is highest in year 2009 i.e.2.2 and

lowest in 2006 i.e. 1.4. The ideal norms of Debt equity ratio are 2:1.

0

0.5

1

1.5

2

2.5

2006 2007 2008 2009 2010

Debt equity ratio


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Gross profit ratio

TABLE :12


Gross profit 2623 3779 4465 4880 6625

Net sales 13374 17238 19305 26212 32861

Gross profitratio

19.6 21.1 23.12 18.6 20.16

Inference:

Table shows that gross profit ratio values are 19.6, 21.1, 20.3,18.6 , 20.16 for year

2006, 2007 , 2008, 2009 , 2010 respectively. Gross profit ratio is highest in year 2008

i.e. 23.12 and lowest in 2009 i.e. 18.6.. A high Gross profit ratio is sign of good

management.

0

5

10

15

20

25

2006 2007 2008 2009 2010

Gross Profit Ratio


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Net profit ratio

TABLE :13


Inference:

Table indicates that net profit ratio values are 12.55, 14, 14.8, 11.9 and 13

.1 for year 2006,2007,2008,2009,2010respectivily. Net profit ratio is highest in 2008 i.e.

14.8 and lowest in year 2009 i.e. 11.9

0

2

4

6

8

10

12

14

16

2006 2007 2008 2009 2010

Net Profit Ratio

Year 2006 2007 2008 2009 2010

Net profit 1679 2415 2859 3118 4311

Net sales 13374 17238 19305 26212 32861

Net profitratio

12.55 14 14.8 11.9 13.1


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Operating ratio

TABLE: 14 [Amount in Rs. Crore]

Year 2006 2007 2008 2009 2010

Operating profit 11033 13630 15618 22612 25305

Net sales 13374 17238 19305 26212 32861

Operating ratio 82 79 80 86 77

Inference:

Table shows that operating profit ratio values are 82,79,80,86 and 77 for year

2006, 2007, 2008, 2009, 2010 respectively. In year 2009 operating ratio is highest

I.e.86 and 2010 it is lowest i.e. 77. Highest ratio is sign of proper usage of working

capital or efficiency of company.

72

74

76

78

80

82

84

86

88

2006 2007 2008 2009 2010

Operating ratio


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Return to net worth


Year 2006 2007 2008 2009 2010

Net profit 1679 2415 2859 3118 4311

Net worth 7301 8788 10774 12938 15917

Return tonet worth

22.9 27.4 26.5 24.2 30.8

Inference:

Table indicates that return to net worth values in year2006, 2007,2008,2009,2010 as

22.9, 27.4, 26.5, 24.2, 30.8 respectively .Return to net worth is highest in year 2010i.e.

30.8 and lowest in year 2006 i.e. 22.9.

0

5

10

15

20

25

30

35

2006 2007 2008 2009 2010

Return to net worth


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Total capital turnover ratio

TABLE: 16


Net sales 13374 17238 19305 26212 32861

Total capital employed 7001 7640 8873 10091 12988

Total capital turnoverratio

1.91 2.25 2.17 2.59 2.53

Inference:

This ratio shows that relationship between sales and capital employed. High ratio is

sign of good position of company. In this table ratio values are 1.91, 2.25, 2.17, 2.59

and 2.53 for 2006,2007,2008,2009 and 2007respectively. Ratio is highest in year 2009

i.e. 2.59 and lowest in year 2006 i.e. 1.91

0

0.5

1

1.5

2

2.5

3

2006 2007 2008 2009 2010

Total capital turnover ratio


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Cash in current assets

TABLE: 17


Cash & bank 4134 5808 8386 10314 9790

Current assets 16330 21062 27906 36901 42934

Cash in currentassets

25 28 30 71 77

Inference:

This table shows values of cash in current assets in the year 2006, 2007, 2008, 2009

and 2010 i.e. 25, 28, 30, 30,71,77 respectively. Highest ratio in year 2010 i.e. 77 and

lowest in year 2006 .The higher ratio show efficiency of cash uses is command.

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010

Cash in current assets


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Turnover of cash in sale

TABLE: 18


Year 2006 2007 2008 2009 2010

Net sales 13374 17238 19305 26212 32861

Cash & bank 4134 5808 8386 10314 9790

Turnover of cashin sale

3.23 2.96 2.30 2.54 3.35

Inference:

This table shows that turnover of cash in sale ratio values are 3.23, 2.96, 2.30, 2.54,

3.35 for year 2006, 2007,2008,2009 and 2010 respectively. This ratio highest in year

2010 i.e. 3.35 and lowest in year 2008 i.e. 2.3.

0

0.5

1

1.5

2

2.5

3

3.5

4

2006 2007 2008 2009 2010

Turnover of cash in sale


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B. To analysis increase or decrease in rupee amount of assets andliabilities as well as in percentage

Fixed assets

TABLE: 19


Fixed assets 982 989 981 1471 2415

Increase/Decrease +7 -8 +490 +944 -

Percentageincrease/Decrease

0.71 -0.80 49.9 64.1 -

Inference:

This table is showing that is fixed asset is increasing from the year 2008 to 2009 which

shows that company investing in fixed asset show blockage in cash investment.

-10

0

10

20

30

40

50

60

70

2006 2007 2008 2009

Percentage Increase/Decrease


66/73

Investment


Year 2006 2007 2008 2009 2010

Investment 8 8 8 52 80

Increase/Decrease 0 0 44 28 -


0 0 550 53 -

Inference:

This table shows that investment is constant in year 2006 and 2007(i.e. 0,0) where as

changes raised in investment in year 2008 and 2009 ( i.e. 550,53)

0

100

200

300

400

500

600

2006 2007 2008 2009

Percentage increase/Decrease


67/73

Current assets

TABLE :21


Current assets 16331 20980 27906 36901 42935



28 33 32.2 16 -

Inference:

This table shows that current assets is increase in year 2006, 2007 and 2008(i.e.28,33

and32.2) but investment decrease in year 2009 (i.e.16).

0

5

10

15

20

25

30

35

2006 2007 2008 2009



68/73

Current liabilities

TABLE :22





38 39 41.5 14.5 -

Inference:

This table shows that current liabilities is constantly increase in year 2006, 2007, 2008

(i.e. 38, 39 , 41.5and 14.5) where as decrease in year 2009 (i.e14.5).

0

5

10

15

20

25

30

35

40

45

2006 2007 2008 2009



69/73

Reserves and surplus


Year 2006 2007 2008 2009 2010

Reserves andsurplus

7057 8543 10284 12449 15428



21 20 21.05 23.9 -

Inference

This table shows that reserves and surplus is constantly increase in years 2006, 2007,

2008 , 2009 and 2010 i.e. 21, 20, 21.05 and 23.9 respectively.

18

19

20

21

22

23

24

25

2006 2007 2008 2009



70/73

Share capital

TABLE :24


Share capital 244 244 489 489 489

Increase/Decrease - 245 - - -


- 100.04 - - -

Inference:

This table shows that share capital in year 2006 and 2007(i.e. 0,0) where as changes

raised in investment in year 2008 but decreasing in 2009 ( i.e. 550,53) respectively.

0

20

40

60

80

100

120

2006 2007 2008 2009

Percentage increase/deacease


71/73

Findings

After data analysis, the findings can be drawn as:

Current ratio value in year 2010 is 1.32. Current ratio value highest 1.58 in year 2006

and lowest 1.30 in 2009.

Quick ratio is highest in year 2006 i.e. 1.10 and lowest in year 2009 I.e. 0.94.

Absolute liquid ratio is highest 0.42 in the year 2006 and lowest 3.30 in the year 2010.

Debtors turnover ratio highest value in year 2007 i.e. 2.04 and lowest in year 2008 i.e.

1.78

Average collection period is highest in year 2008 i.e. 202 and lowest in 2007 i.e. 1.76.

Stock turnover ratio highest value in year 2007 i.e. 3.38 and lowest in year 2006 i.e 2.87

and inventory holding period is highest value in year 2006 i.e. 1.26 and lowest in year

2007 i.e. 106

Debt equity ratio value highest in year 2009 i.e. 2.2 and lowest year 2006 i.e. 1.4

Proprietary ratio is highest in year 2008 and lowest in year 2006.

Gross profit ratio highest in year 2008 i.e. 23.12 and lowest value in year 2009 i.e. 18.6

Net profit ratio in year 2008 i.e. 14.8 and lowest in year 2009 i.e. 11.9

Cash in current asset higher value in year 2010 i.e. 77 and lowest in year 2006 i.e. 25

Fixed asset to long term ratio , highest value is 18.8 in year 2010 and lowest value 1.75

in year 2006

Return to net worth highest 2010 i.e. 30.8 and lowest in year 2006 i.e. 22.9

Total capital turnover ratio, highest value in 2009 i.e. 2.59 and lowest value in year 2006

i.e. 1.91


72/73

Conclusion

After data analysis and finding the conclusion is drawn as:

The current ratio of the company is 1.32. The current ratio is 1.5, 1.46, 1.39 and1.3 respectively. The quick ratio is 0.95. The Q.R for the four previous year are-

This ratio shows company liquidity position is not so well.

Debtor turnover ratio of the company is 1.79 in current year and previous year

1.86, 2.04, 1.78 and 1.87 respectively. Debtors turnover ratio highest 2007 but

not in current year.

Inventory turnover ratio increases in year 2006, 2007 then decreases in 2008

and again increase in 2009 and decrease in year 2010. High turnover indicate of

expansion which is only year 2007.

Debt equity ratio is good for company point of view.

Turnover of the company is 32861 in year 2010 which is more than previous year

2009 i.e. 26212

Gross profit is constantly increase year after year. gross profit is increasing in

year 2006, 07,08, 09 and 2010 i.e. 2623, 3779, 4465, 4480 and 6625

respectively

Net profit after tax is constantly increased.


73/73

Suggestion

Company should focus on current ratio and quick ratio.

Average collection period is fluctuating and debtors turnover ratio is slightly

decline for there is need for improvement on average collection period and

debtors turnover.

There should be proper arrangement of debt funds.

Cash in current assets is find out in increasing position so the company is pay

attention on that.

A Dissertation Report Mmm

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