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Chapter 6

Chapter 6

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Published by Tinku Kumar

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Published by: Tinku Kumar on Jul 15, 2012
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05/13/2014

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CHAPTER
 –
6FINDINGS, SUGGESTIONS ANDCONCLUSIONFindings from Financial Analysis
 
KSFC has huge accumulated losses in its Balance Sheet.
 
 
The liquidity position of KSFC has been found to be very satisfactory as representedby Current Ratio and Super Quick Ratio.
 
 
KSFC is heavily relying on debt as a source of funds as represented by Debt-EquityRatio.
 
 
KSFC strengthened its capital structure recently by issuing more shares which allowsit to operate flexibly.
 
 
The Corporation has not been able to earn sufficient profit to provide a margin of safety to the lenders.
 
 
The investment made in the tangible assets is not justified by the amount of incomethat KSFC is able to generate.
 
 
The amount of earnings available to the equity shareholders is very meagre.
 SUGGETIONS
 
KSFC should upgrade its system/technique of credit appraisal by imparting trainingto its staff.
 
In KSFC interest rates are high compared to the other commercial banks. Theyshould be revised.
 
The government control should be minimized and working should be done as in aprivate company.
 
Targets should be set to the recovery officers and a special incentive should beprovided to those officers who achieve their targets.
 
 
It was observed that Current Ratio and Super Quick Ratio in certain years werefound to be above the standard ratio. Hence, it is recommended that KSFC shouldtry to reduce working capital and keep it at the required level.
 
The EPS is much below the desirable ratio. Hence, there is an urgent need to raisethe earnings so that equity shareholders are suitability rewarded.

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