Professional Documents
Culture Documents
Introduction
Introduction to finance:
Finance studies and addresses the ways in which individuals,
businesses, and organizations raise, allocate, and use monetary resources
over time, taking into account the risks entailed in their projects. The
term "finance" may thus incorporate any of the following:
➢ The study of money and other assets.
➢ The management and control of those assets,
➢ Profiling and managing project risks,
➢ The science of managing money,
➢ As a verb, "to finance" is to provide funds for business or for an
individual's large purchases (car, home, etc.).
The field of finance deals with the concepts of time, money and
risk and how they are interrelated. It also deals with how money is spent
and budgeted. Finance works most basically through individuals and
business organizations depositing money in a bank. The bank then lends
Financial Management:
Management of funds is an important aspect of financial
management. Management of funds acts as the primary concern
whether it may be in a business undertaking or in an educational
institution. Financial management, which is simply meant dealing with
management of money matters.
1. Specific objectives:
a) Profit Maximization:
It is consider as an important goal in financial decision making in
an organization. Maximization is the condition achieving the maximum
target profit with available resources in an economic and efficient
manner.
b) Wealth maximization:
It refers to the maximization of wealth by maximization in the
market value of shares of a company. The efficient of an organization
maximizes present not only for shareholders but for including
employees, customers, suppliers and community at large. It is the
ultimate objective of every organization.
1. General objective:
a) Balance asset structure:
b) Liquidity:
Liquidity refers to available cash and it is an indication of positive
growth of a company. It is an important factor for meeting the short and
long term obligation of a firm.
d) Efficiency:
e) Financial discipline:
There shouldn’t be any mishandling of funds, misuse etc. Proper
discipline should be practiced in matters relating to finance, its flow and
control. This can be done through various techniques like budgeting
funds flow statement etc.
2. Financing Decisions:
A financial manager has to procure funds from different sources. He has
to decide the quantum of funds and the type of source that he should use
for the firm. There is a cost attached to every source of fund and hence
balance has to be maintained between debt and equity.
3. Dividend Decisions Making:
Dividend decision making pertains to an analysis of the right amount of
dividend to be distributed to shareholders. It has to take care of the legal
restrictions and accounting processes before giving a dividend. The
correct decisions have to be taken regarding the percentage of reserves
before distribution of dividends.
financial manager may have the problem of low liquidity as all the funds
may be used to make the profitable. Similarly, if there is too much
availability of funds but the firm does not make use of them then a cost
will be attached to it. Hence the scope of financial management is to
balance conflicts in profitability and liquidity.
BOARD OF DIRECTORS
PRESIDENT
Chief Chief
Finance Finance
Manager Manager
(Controlle (Treasurer)
Financial performance:
Financial performance is about knowing how the firm is doing
and what its financial condition. The stakeholders of a firm are
interested broadly knowing about the firm’s financial conditions. Of
course, their specific concern may differ. Trade creditor and short term
lenders are interested primarily in the short term liquidity of the firm its
ability to pay its due in the next 12 months or so. Terms lending
institutions and debenture holders have a relatively longer time horizon
are concerned about the ability to service its debt over the next five to
ten years. Long term shareholders and managers who want to make a
career with the firm are interested in the profitability and growth of the
firm over an extended period of time. To understand the financial
performance and conditions of a firm, its stakeholders look at their
financial statements .viz.
1. The Balance Sheet
2. The Profit and Loss Account
Note: The companies Act requires that the annual report of the
company, a public document that is sent to shareholders, contain the
balance sheet, the profit and loss and account, the Director’s report and
the auditor’s report. Though not presently required by law, most of the
companies present fund flow and cash flow statement as well in the
annual report.
Analyzing financial performance:
Financial analysis depends primarily on financial; statements to
diagnose financial performance. If properly analyzed and interpreted,
financial statement can provide valuable insights into a firm’s
performance.
1. Balance sheet:
It is also referred to as statement of financial position or condition,
reports on a company's assets, liabilities, and Ownership equity at a
given point in time.
2. Income statement:
It is 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.
Profit & Loss account provide information on the operation of the
enterprise.
3. Statement of retained earnings:
It explains the changes in a company's retained earnings over the
reporting period.
It indicates various means of how the funds have been obtained and the
way of using the funds in a certain period.
2. Comparison:
Mere splitting up or regrouping of the figures found in the
financial statements into the desired component part is not sufficient for
judging the profitability and the financial status of an enterprise. After
the figures contained in the financial statements are dissected or split
into the required comparable compound parts and must be compared
with each other and their relative magnitudes (i.e., their relationship
must be measured)
3. Interpretation
After the financial statement are analyzed or dissected into
comparable components parts and it is measured through comparison the
results must be interpreted.
Horizontal analysis is that which covers financial data of more than one
year. The figures for various years are presented horizontally over a
number of columns. This type of analysis is also called dynamic
analysis. Vertical analysis, also known as static analysis, covers a period
of one year only and analysis is made on the basis of one set of financial
statements.
1. Management:
Management of a company is interested in its financial condition,
profitability and progress. It uses a number of methods, tools and
techniques available to it to analyze the financial data.
2. Shareholders:
Shareholders are the suppliers of basic capital to run the business.
Such capital is exposed to all the risks of ownership. Shareholders are
interested in the profitability, dividends declared and market value of
their holdings.
3. Creditors:
Creditors include short-term creditors like bankers, trade creditors
and also long term credit grantors like debenture-holders and financial
institutions etc. All creditors are mainly interested in the short term and
long-term solvency of the company. They are also interested in
4. Purchaser of Business:
Any person interested in the purchase of a going concern analyses
the financial statements to determine its real value. It makes an
assessment of the financial and operating strengths and weaknesses of
the business.
5. Government:
Financial statements are used by various government departments
like Income Tax, Sales Tax, Excise Duty etc. to determine the tax
liability of the company.
1. Common-size statements:
2. Trend percentage:
This analysis is an important tool of horizontal financial analysis.
This method is immensely helpful in making a comparative study of the
financial statements of several years. Under this method trend
percentages are calculated for each item of the financial statements
taking the figures of base year as in the starting year is usually taken as
the base year. The trend percentages show the relationship of each item
with preceding year’s percentages. These percentages can also be
presented in the form index. Numbers showing relative changes in
financial fact of certain period. This will exhibit the directions (i.e.,
upward or downward trend) to which the concern is proceeding. The
trend nations may be compared with the industry in order to know the
strong or weak point of the concern. These calculations are only for
major items instead of calculating for all items in the financial
statements.
Definition:
Foulke, define this statement as:
6. Cost–Volume–Profit Analysis:
Cost – Volume – Profit Analysis is a technique for studying the
relationship between cost, volume and profit. Profit of an understanding
depends upon a large number of factors. But the most important of these
factors are the cost of manufacture, volume of sales and the selling
prices of the product.
7. Ratio Analysis:
Financial ratio analysis is the calculation and comparison of ratios
which are derived from the information in a company's financial
statements. The level and historical trends of these ratios can be used to
Introduction to insurance:
Life Assurance was born in England when the first policy
providing temporary cover for a period of 12 months was issued as easy
as 1583 A.D. The Amicable Society started granting fluctuating sum on
death since 1705 and a fix sum since 1757, with the development of
mortality tables, the life Assurance acquired a scientific character. The
Equitable Society founded in 1762 was the first Society established on
scientific basis.
prevalent in those times. The Indian Life Assurance Companies were the
first to regulate the life insurance business in 1912. In 1928, the Indian
Insurance companies act enabled the government to collect statistical
information about both life and non life insurance business. Later, the
insurance Act of 1938 was passed and department of insurance under
authority of superintendent of insurance was established for the
administration of the Act. Up to 1939, 199 companies were working in
India. However, the period 1939-55 was marked by:
➢ Series of amendments to the insurance Act, 1938.
➢ Appointment of a committee under the Chairmanship of Sir
Cowasji Jahangir to enquire into and to recommend measures to
check certain trends and undesirable features in the management of
insurance companies.
➢ The findings of the subcommittee on insurance under the National
Planning Commission headed by Pt. Jawaharlal Nehru.
➢ Partition of India.
➢ De-valuation of rupee on September 18, 1949.
➢ The insurance Amendment Act.
➢ GIC and its subsidiaries are not to hold more than 5 percent in any
company.
➢ Use of revised mortality tables by LIC and revision of premiums
after every 10 years.
➢ Transfer of LALGI and IRDP schemes to concerned government
authorities.
The insurance sector began its reform process with the passage of
the IRDA (the Insurance Regulatory and development authority) bill in
Parliament in December 1999. However with the setting up of IRDA,
the government has once again de-regulated the sector opening it for the
private players. The entry of private players has enabled the industry to
look at alternative distribution channels. To get the maximum pie of the
premium, every insurance company is adopting new distribution and
marketing strategies. In the last two years alone, the economy has
witnessed some fundamental changes in the Indian insurance industry.
Some few years ago the entry of private players was banned in
India but its only after first stage of economic reforms the situation has
become better with the entry of private sector. As of now the govt
insurance companies like Life Insurance Corporation of India, GIC
etc. It holds the majority of market share whereas the private players are
slowly catching up the race. As of now the private players have
concentrated on urban markets more and less on the rural markets and
messages like the family’s happiness. It has been more than 5 years
since private insurance companies’ lunched operations in India, which is
depicted in the Table given below.
Royal Sundaram Sundaram Finance Roya Sun, UK Life & Non life
SOURCE: www.knowledgedigest.com.
Industry profile
Introduction:
The Insurance sector in India governed by Insurance Act, 1938,
The Life Insurance Corporation Act, 1956 and General Insurance
Business (Nationalization) Act, 1972 Insurance Regulatory and
Development Authority (IRDA) Act, 1999 and other related acts. With
such a large population and the untapped market area of this population
insurance happens to be a very big opportunity in India. Today it stands
as a business growing at the rate of 15 - 20% annually. Together with
banking services, it adds about 7% to the country’s GDP. In spite of all
this growth the statistics of the penetration of the insurance in the
country is very poor. Nearly 80% of Indian populations are without Life
Insurance cover and the Health Insurance. This is an indicator that
growth potential for the insurance sector is immense in India. It was due
to this immense growth that the regulations were introduced in the
insurance sector and in continuation “Malhotra Committee” was
constituted by the Government in 1993 to examine the various aspects of
the industry. The key element of the reform process was participation of
overseas insurance companies with 26% capital. Creating a more
efficient and competitive financial system suitable for the requirements
of the economy was the main idea behind this reform.
Since then the insurance industry has gone through many sea
changes. The competition LIC started facing from these companies were
threatening to the existence of LIC. Since the liberalization of the
industry the insurance industry has never looked back and today stand as
the one of the most competitive and exploring industry in India.
What Is Insurance?
Types of Insurance:
Insurance policies cover the risk of life as well as other assets and
valuables, such as, home, automobiles, jewellery at all. On the basis of
the risk they cover, insurance policies can be classified into two
categories: Life Insurance and General Insurance. As the term suggests,
Life Insurance covers the risk involved in a person's life, while General
Insurance provides financial protection against unforeseen events, like
accident, flood, earthquake, disease, etc.
Insurance - Kind of Investment:
245 Indian and foreign insures and provident societies taken over by
the central government and Nationalized. LIC formed by an act of
1956
parliament, viz. LIC Act, 1956 with a capital contribution of Rs. 5
crore from the government of India.
Towards the end of 2000, the relation ceased to exist and the four
companies are at present, operating as independent companies.
The Indian insurance industry saw a new sun when the Insurance
Regulatory and Development Authority (IRDA) invited the applications
for registration as insures in August 2000. With the liberalization and
opening up the sector to private players, the industry has presented
promising prospects for the coming future. The transition has also
resulted into introduction of ample opportunities for the professional
including chartered Accountants.
Insurance Market-Present:
The insurance sector was opened up for private participations four
years ago. For years now, the private players are active in the liberalized
environment. The insurance market have witnessed dynamic charges
which includes presence of a fairly large number of insures both life and
There is pressure from both within the country and outside on the
Government to increase the Foreign Direct Investment (FDI) limit from
the current 26% to 49%, which would help JV partners to bring in funds
for expansion.
pensions. The IRDA has issued the first license for a standalone health
company in the country as many more players wait to enter. The health
insurance sector has tremendous growth potential, and as it matures and
new it matures and new players enter, product innovation and
enhancement will increase. The depending of the health database over
time will also allow players to develop and price products for larger
segment of society.
Also as the private sector control over 30% of the life insurance
market and non - life market, the public sector companies still call the
shots. The country’s largest life insurer, Life Insurance Corporation of
India (LIC), had a share of 70% in the new business premium income in
2009.
Global standards:
While the world is eyeing India for growth and expansion, Indian
company are becoming increasingly world class. Take the case of LIC,
which has set its site on becoming a major global player following a
280–crore investment from the Indian government. The company now
operates in Mauritius, Fiji, the UK, Sri Lanka, and Nepal and will soon
start operation in Saudi Arabia. It also plans to venture into the African
and Asia-Pacific regions in 2006.
The year 2005 was a testing phase for the general insurance
industry with a series of catastrophes hitting the Indian sub-continent.
However, with robust reinsurance programme in place, insurers have
successfully managed to tide over the crisis without any adverse impact
on their balance sheets.
With life insurance premiums are being just 2.5% of GDP and
general insurance premiums being 0.65% of GDP. The opportunity in
the Indian market place is immense. The next 5 year will be challenging
but those that can build scale and market share will.
Company profile
Introduction:
The partnership:
HDFC Standard Life first came together for a possible joint
venture; enter the Life Insurance market, in January 1995. It was clear
from the outset that both companies shared similar value and beliefs and
a strong relationship quickly formed. In October 1995 the companies
signed a 3 years joint venture agreement. Around this time Standard Life
purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank,
further strengthening the relationship.
The next three years were filled with uncertainty, due to changes
in government and ongoing delays in getting the IRDA (Insurance
Regulatory and Development authority) Act passed in parliament.
Despite this companies remained firmly committed to the venture.
Vision:
'The most successful and admired life insurance company, which
means that we are the most trusted company, the easiest to deal with,
offer the best value for money, and set the standards in the industry'.
'The most obvious choice for all'.
Mission:
Values:
SECURITY:
INNOVATION:
Recognizing the different needs of our customer, we will be
offering a range of innovative products to meet these needs.
Team work
Joy and Simplicity
Guiding Principles:
Customer Care and Satisfaction.
Corporate Governance.
Creativity and Innovation.
Competitiveness.
COMPETITORS:
Life Insurance Companies
Aviva Life Insurance
Bajaj Allianz Life Insurance
Zonal
Chief
Sales Administration
Insurance
Chief
Finance
Branch
Finance
Zonal
Administrative
Business
National
Zonal
Senior
Asst.
Finance
Team
Administration
C.E.O
B.O.D
Manager
Branch
Executive
Finance
Manager
consultants
Branch
Officer
Manager
Sales
Dept.
Officer
Officer
Supervisor
Executive
Manager
Officer
Protection Plans:
HDFC Term Assurance Plan
HDFC Loan Cover Term Assurance Plan
HDFC Home Loan Protection Plan
Children's Plans:
HDFC Children's Plan
HDFC Unit Linked Young Star II
HDFC Unit Linked Young Star Plus II
HDFC Unit Linked Young Star Champion
Retirement Plans:
HDFC Personal Pension Plan
HDFC Unit Linked Pension II
HDFC Unit Linked Pension Maximiser II
HDFC Immediate Annuity
Savings & Investment Plans:
HDFC Unit Linked Endowment Plus II
HDFC SimpliLife
HDFC Unit Linked Endowment II
HDFC Unit Linked Enhanced Life Protection II
HDFC Unit Linked Wealth Maximiser Plus
HDFC Unit Linked Endowment Winner
HDFC Endowment Assurance Plan
HDFC Money Back Plan
HDFC Single Premium Whole of Life Insurance Plan
HDFC Assurance Plan
Group Plans:
Group Term Insurance Plan
Group Variable Term Insurance Plan
Group Unit Linked Plan - Gratuity
Group Unit Linked Plan - Superannuation
Group Unit Linked Plan - Leave Encashment
As all these areas form the basic infrastructure for establishing the
highest possible customer service standards.
Strong Promoter:
HDFC Standard Life is a strong, financially secure business
supported by two strong and secure promoters – HDFC Ltd and
Standard Life. HDFC Ltd’s excellent brand strength emerges from its
unrelenting focus on corporate governance, high standards of ethics and
clarity of vision. Standard Life is a strong, financially secure business
and a market leader in the UK Life & Pensions sector.
Investment Philosophy:
We follow a conservative investment management philosophy to
ensure that our customer’s money is looked after well. The investment
policies and actions are regularly monitored by a formal Investment
Committee comprising non-executive directors and the Principal Officer
& Executive Director.
We understand that customers have invested their savings with us
for the long term, with specific objectives in mind. Thus, our investment
focus is based on the primary objective of protecting and generating
good, consistent, and stable investment returns to match the investor’s
long-term objective and return expectations, irrespective of the market
condition.
helps customers understand their latent needs at the first instance itself
without focusing on product features or tax benefits. Need-based selling
process, 'Disha', the first of its kinds in the industry, looks at the whole
financial picture. Customers see a plan not piecemeal product selling.
Focus on Training:
Training is an integral part of our business strategy. Almost all
employees have undergone training to enhance their technical skills or
the softer behavioural skills to be able to deliver the service standards
that our company has set for itself. Besides the mandatory training that
Financial Consultants have to undergo prior to being licensed, we have
Protection:
Need for a sound income protection in case of your unfortunate demise
Investment:
Need to ensure long-term real growth of your money
Savings:
Save for the milestones and protect your savings too
Pension:
Need to save for a comfortable life post retirement
Health:
Cover for health related exigencies
Equity funds:
Primary invested in company stock with a general aim of capital
appreciation.
Risk and Return: Medium
Cash Funds:
Some time known as money market funds invested in cash, Bank
deposits and money market instruments.
Risk and Return: Low
Balanced Funds:
Combining equity investment with fixed interest in the
instruments.
Risk and Return: Medium
Onwards onwards
Surrender charge:
This is the charge we will apply when the policy is surrendered. It
is equal to 30% of the difference between the regular premiums
expected and received in the first two years of the contract.
Other charges:
The following is the set of other charges that we will take from
your policy.
Charges Explanation
Alteration charges:
Current charges cannot be charged without prior approval from
IRDA. The fund management charge cannot exceed 2% per annum. The
surrender charge can be increased subject to a maximum of 10% of the
fund applicable for the first 3 years. The policy administration charge
Parentage:
HDFC Limited:
HDFC Limited, India's premier housing finance institution has
assisted more than 3.4 million families own a home, since its inception
in 1977 across 2400 cities and towns through its network of over 271
offices. It has international offices in Dubai, London and Singapore with
service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist
NRI's and PIO's to own a home back in India. As of December 2009, the
total asset size has crossed more than Rs. 104,560 crores including the
mortgage loan assets of more than Rs.90,400 crores. The corporation has
a deposit base of over Rs. 23,000 crores, earning the trust of nearly one
million depositors. Customer Service and satisfaction has been the
mainstay of the organization. HDFC has set benchmarks for the Indian
housing finance industry. Recognition for the service to the sector has
come from several national and international entities including the
World Bank that has lauded HDFC as a model housing finance company
for the developing countries. HDFC has undertaken a lot of
HDFCSL Milestone
Received the PCQuest Best IT Implementation Award 2008 for
Consultant Corner, the applications for its financial consultants,
Received the 2008 CIO Bold 100 Award for its mobile workforce
portal and the Special 2008 CIO Security Award for a secure computing
environment, including identity management respectively.
Research Methodology
Title of the study:
‘Financial statement analysis’
A Study has been conducted in the area of “Financial statement
analysis.” And title of the study is:
DATA COLLECTION:
The data can be of two types:
➢ Primary Data:
Primary Sources are original sources from which the researcher
directly collects data that have not been previously collected. Primary
➢ Secondary Data:
Secondary Data are those data which are already collected and
stored and which has been passed through statistical research.
In this project, secondary data has been collected from following
sources:
Annual Report
Other material and report published by company
Research designs:
Research Design is the way in which the research is carried out. It
works as a blue print. Research Design is the arrangement of conditions
for the collection and analysis of data in a manner that aims to combine
relevance to the research purpose with economy in procedure.
Exploratory Research:
An exploratory research focuses on the delivery of ideas and is
generally based on secondary data. It is a preliminary investigation a
preliminary investigation which does not have a rigid deigns. This is
because a researcher engaged in exploratory study may have to change
his focus as a result of new ideas and relation among the variables.
The study conducted through exploratory research with the help
of data obtain from the secondary data, there is no specific sample
design made or questionnaire used to obtain information
Data Type:
The data used for the study is secondary data:
Source of data:
➢ Insurance company broacher
➢ IRDA web site
➢ Companies web sites
➢ Annual report of company
Only limited sample size had been considered for the study and
therefore, the conclusions drawn based on this may not be a reflection of
the entire industry.
Financial statement:
➢ Profit and loss account is prepared to ascertain the results of
business operations called net profit or net loss of the business for
an accounting year.
➢ The balance sheet is prepared to indicate the financial position.
Object of balance sheet is prepared to know the soundness of the
business indicated by its assets and liabilities.
➢ In balance sheet there are 2 major things to learn before is
Current Assets:
The term ‘Current Assets’ includes assets which are acquired with
the intention of converting them into cash during the normal business
operations of the company.
Current Liabilities:
The term ‘Current Liabilities’ is used principally to designate such
obligations whose liquidation is reasonably expected to require the use
of assets classified as current assets in the same balance sheet or the
creation of other current liabilities or those expected to be satisfied
within a relatively short period of time usually one year. The term
current liabilities also includes amounts set apart or provided for any
known liability of which the amount cannot be determined with
substantial accuracy e.g., provision for taxation, pension etc.
CHAPTER SCHEME
Introduction:
• This chapter deals with giving complete information about the title
selected.
Industrial profile:
• This chapter contains details on which industry belongs to.
Company profile:
• This chapter describe the nature of the company when, who and
where the company was established. The profit, growth, losses, its
competitors, objective, mission, vision of the organization etc.
Research design:
• This chapter deals with the framework of the entire project.
Findings:
• This chapter analyses the important finding done during the start
and completion of the project.
Suggestion:
• This chapter explains in providing probable suggestion to the
various issues related to the project title.
Conclusion:
• This chapter deals with providing an overall conclusion of how the
project was selected, its important findings, corresponding
suggestion and the experience of the researcher in taking up such a
project.
Comparative Statements:
The elements of financial position are shown in a comparative
form so as to given an idea of financial position at two or more periods.
Any statement prepared in a comparative form will be covered in
comparative statements. From practical point of view , generally two
financial statements (balance sheet and income statement) are prepared
in comparative form for financial analysis purpose. Not only the
comparison of the figures of two financial position and operative results.
Sources of funds:
Shareholders’ funds:
Credit/[debit] fair
184,435 (77,610) +262045 337.6
value change account
Policyholder funds:
Credit/[debit] fair
205,087 (296,885) +501972 169.1
value change account
From profit and loss account we find that the company has
increased by 23.1% of profit from previous year.
Sources of funds:
Shareholders’ funds:
Credit/[debit] fair
(77,610) 3881 -81,491 -
value change account
Policyholder funds:
Credit/[debit] fair
(296,885) 193,745 -490,630 -253.2
value change account
From profit and loss account we find that the company has
increased by 73.1% of profit from previous year.
Sources of funds:
Shareholders’ funds:
Credit/[debit] fair
3881 - +3881 100
value change account
Sub-Total 13,263,13
8,360,441 +4,902,691 58.6
2
Policyholder funds:
Credit/[debit] fair
193,745 91,247 +102,498 112.3
value change account
Current assets have increased by 61% and cash and bank balances
also increased 33.6%, investments also have huge increased on the other
hand there has been an increase in loan by 47.3%. The current liabilities
have increased by 60%. This further confirms that the company has
revised long term finances. It doesn’t affect the working capital.
Sources of funds:
Shareholders’ funds:
Credit/[debit] fair
- 73,105 -73,105 -100
value change account
Policyholder funds:
Credit/[debit] fair
91,247 209,569 -118,322 -56.5
value change account
INTERPRETATION:
The above table shows that the share capital has huge increased in
the second year. While comparing all the year there is a big jump in
second year, but in the year 2010 there is a small increased in share
capital of 9.6% only. To make more strength of financial position of the
firm, the firm needs to increase the shareholder funds.
Amount Aggregate
Years change % change
omitted amount
2006-2007 65,902 0 0
2008-2009 552,892 0 0
2009-2010 552,892 0 0
INTERPRETATION:
The table shows that the reserves and surplus are increasing only
in the year 2007-2008. It shows that there is no change of reserve and
surplus in the year 2008-2009, & 2009-2010. The company needs to
focus on ploughing back of profit to retain more reserves and surplus in
future.
Aggregate
Amount
Years change % change
omitted
amount
INTERPRETATION:
The table shows that the policy liabilities are decreasing in all the
years. It means the policyholder funds are decreasing day by day. In the
year 2010 the policy liabilities is 29.5. While comparing to 2009, the
policy liabilities are increasing by 10.1%
(In Rs.000)
Aggregate
Amount
Years change % change
omitted
amount
INTERPRETATION:
The above table shows that the provision for linked liabilities is
fluctuating. And in this current year there is a huge increased in
provision for linked liabilities while comparing to previous year which is
not good for company.
2006-2007 - - -
2007-2008 - - -
INTERPRETATION:
INTERPRETATION:
We can see that shareholder investment of the firm is increasing
very fast as compared to 2008. The investment in the year 2008 is very
INTERPRETATION:
We can see that policyholder investment of the firm is decreasing
year by year as compared to 2007. In 2008 & 2009 the investment of the
firm are decreased and in the year 2009-2010 the investment is increased
to 44.7% as compared to 2008 & 2009. This is the indication of good
financial position of the firm.
Aggregate
Amount
Years change % change
omitted
amount
INTERPRETATION:
The above table shows that the loans have increased during the
year 2008, 2009 & 2010 as compared to 2007. The liquidity position of
the company shows wide fluctuation. From the below graph it is clear
that the short term loans made by the company have gradually fluctuated
(In Rs.000)
Aggregate
Amount
years change % change
omitted
amount
INTERPRETATION:
The above table shows that fixed assets of the firm are
fluctuating. In the year 2010 the company fixed assets value shows
negative results it means the fixed assets is not purchasing from the
sources of long term finance. The firm needs to invest fairly good
Aggregate
Amount
Years change % change
omitted
amount
INTERPRETATION:
The cash balance is showing an increased trend during the year
2007-2008. We can infer that liquidity position of the firm is good in the
year 2007-2008. Liquidity position of the firm is fluctuated and it is
showing negative sign in the year 2008-2009 and 2009-2010. In the
above graph we can see that the liquidity position of the firm sounds bad
during the year 2008-2009 and2009- 2010 and it shows negative trends.
The company has to take measures to improve the cash and bank
balance position.
a. Diagram showing percentage change in cash and bank
balances:
INTERPRETATION:
The above table shows that advances and others assets of the firm
are fluctuating. In the year 2010 the company advances and others assets
value is showing negative results it means the advances and others assets
is losing from the company. The firm needs to take good measures to
increases its advances and others assets. The company needs to focus on
increasing its advances and others assets to increased in working capital.
INTERPRETATION:
We can see that current liabilities have increased during the year
2007-2008. The current liabilities are fluctuating and it shows
decreasing in the year 2009 and 2010. It does affect working capital
there by decreased liquidity and management will find it difficult to
manage day to day expenses of the firm. More the current liabilities then
current assets decreased at net current assets or working capital.
(In Rs.000)
Aggregate
Amount
Years change % change
omitted
amount
INTERPRETATION:
We can see the provision have increased during the year 2007-
2008. The provision is fluctuating and it shows negative trend in the
year 2009-2010. There is increased in provision during the year 2007-
2008. It does affect working capital there by decreased liquidity and
management will find it difficult to manage day to day expenses.
(In Rs.000)
Aggregate
Amount
Years change % change
omitted
amount
INTERPRETATION:
From the above table we can see that the company needs to
improve its current assets to avoid its adverse effect on working capital.
The above table makes it clear that company needs to increase its current
assets to maintain working capital. From the graph we find that the
financial position of the company sounds bad.
Finding
The aggregate change amount of share capital for 2007, 2008, 2009 &
2010 are 1,814,430 i.e. 29.3% 4,699,211 i.e. 58.7% 5,251,821 i.e. 41.3%
and 1,721,820 i.e. 9.6%. There is a small increased of share capital i.e.
9.6% only in 2010. Share capital is increasing in all the year, while
comparing all the year there is a big jump of 58.7% in 2008. To make
more strength of financial position of the firm, they need to increase the
shareholder funds.
The aggregate change amount of policy liabilities for 2007, 2008, 2009
& 2010 are 5,903,535 i.e. 51.4%, 6,975,216 i.e. 40.1%, 4,725,672 i.e.
19.4% and 8,574,489 i.e. 29.5%
The aggregate change amount of fixed assets for 2007, 2008, 2009 &
2010 are 131,540 i.e. 21.75%, 595,746 i.e. 80.93%, 115,906 i.e. 8.7%
and -303,929 i.e. -21%. In 2007-2008 there was an increase in
percentage of fixed asset. At the end of 2010 there is a huge decrease in
the value of fixed assets as compared to all the years.
Suggestion
Company has to develop zeal to increase its profit. The company should
utilize the available resources in proper manner.
The company assets in the form of loans and advances are to be verified
and appropriate measures have to be taken for the collection of same
time.
The liquidity position of the company in the base year is weak; still the
company should take steps to improve the liquidity position.
The overall analysis reveals that the company’s performance all the year
is good. But they are suffering from inadequate working capital, so the
steps have to be taken to improve it for all the years.
Conclusion
We can say that there should be an efficient financial
management system in the organization. It should overcome the adverse
condition and minimize its losses and protect firm from facing the
negative condition of liquidity. In tomorrow’s economy the world will
belong to those who are open to creative, imaginative and flexible to
changes, having open mindless, strength of taking risk and an innovative
spirit. These entire characteristics can lead the company on a successful
path.
Based on this study the major findings are that from the overall
finance point of view, company is not performing to a very high degree
level of achievement. This study indicates that in order to improve the
overall performance of company (‘HDFC Standard Life Insurances
Company Ltd’) the management must take all possible steps to review
and modify various policies, cash budgets, inventory status by using
sound information management system. This will enable the
management to have a close control over the various operations.
Bibliography
Referred Books:
COST & FINANCIAL ACCOUNTING
S.K. GUPTA
NEETI GUPTA
MANAGEMENT ACCOUNTING
SHASHI K. GUPTA
R. K. SHARMA
FINANCIAL MANAGEMENT
SHASHI K. GUPTA
FINANCIAL ACCOUNTING
REDDY
REDDY