FINANCIAL STATEMENT ANALYSIS FOR BHARAT OIL COMPANY, CHENNAI By (D. Anand, Regn. No.

35103011) A PROJECT REPORT Submitted to the S.R.M SCHOOL OF MANAGEMENT In the FACULTY OF ENGINEERING AND TECHNOLOGY In partial fulfillment of the requirements For the award of the degree Of MASTER OF BUSINESS ADMINISTRATION

S.R.M. ENGINEERING COLLEGE S.R.M. INSTITUTE OF SCIENCE AND TECHNOLOGY DEEMED UNIVERSITY JUNE 2005

ii BONAFIDE CERTIFICATE

Certified that this project report titled “FINANCIAL STATEMENT ANALYSIS” is the bonafide work of Mr. D. Anand, who carried out the research under my supervision. Certified further, that to the best of my knowledge the work reported here in does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other certificate.

Signature of the Guide

Signature of the HOD

Name of the Guide

ABSTRACT A financial statement is a collection of data organized according to logical and consistent accounting procedures. The term financial statement generally refers to the two statements: (i) the position statement or the balance sheet; and (ii) the income statement or the profit and loss account. Financial statements are prepared as an end result of financial accounting and are the major sources of financial information of an enterprise.

iii Financial statements are also called financial reports. In the words of Anthony, “ financial statements, essentially, are interim reports, presented annually and reflect a division of the life of an enterprise into more or less arbitrary accounting period-more frequently a year.” The Financial statement analysis helps in finding out the following: ? Profitability and financial soundness of the company by comparing financial statement. ? It highlights nature of changes influencing financial position and performance of the enterprises with the aid of comparative Balance sheet ana lysis, common-size Balance sheet and trend percentage analysis. ? It determines the trend of the current assets, current liabilities, sales and working capital of the firm tend to change using trend analysis

ACKNOWLEDGEMENT I express my heartiest thanks and indebt ness to Shri. T.R. Pachamuthu B.Sc., M.I.E., Founder and Chairman, VALLIAMMAI SOCIETY, Chancellor, SRM INSTITUTE OF SCIENCE AND TECHNOLOGY (DEEMED UNIVERSITY) for providing me with necessary facilities to complete this project. I express my heartiest thanks to Prof. R. Venkataramani M.Tech, F.I.E., Principal of SRM INSTITUTE OF SCIENCE AND TECHNOLOGY (DEEMED UNIVERSITY), for providing me with necessary facilities to complete this project. I express my gratitude to DR. (Mrs.) S. Jayashree Suresh B.A., M.B.A. and PhD Dean, Head of the Department of Management Studies for providing me with all facilities and guidance to complete the project successfully.

Senior Lecturer for his patient guidance in making the project a grand success. my Faculty members and my Friends without whom this project have been a distant reality. . Chinnathambi. P. Chandrasekar for his useful suggestions and assistance through out the project. I would also like to thank my Institution. I would like to thank the management of Bharat Oil Company for giving me an opportunity to do the project in their esteemed organization. I wish to extend my sincere thanks to all the staff members of the Management Studies department for their untiring support. I would like to thank Mr.iv I am very much thankful to my guide Mr.

Company Profile 7. Suggestions 10. Statement of the Problem 3. Review of Literature 5. Objective of the Study 4. Introduction 2.v CONTENTS TITLES Abstract Acknowledgement Table of Contents List of Table List of Charts / Figures Chapters: 1. Analysis and Interpretation 8. Findings 9. Conclusion Bibliography Page No iii iv v vi vii 1 3 4 5 8 18 20 90 92 94 viii . Methodology and Limitations of the study 6.

3 7.11 7.20 7.34 7.31 7.4 7.32 7.2 7.24 7.23 7.25 7.33 7. 20 23 26 29 32 35 38 41 42 42 43 44 44 45 46 46 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 81 84 87 .16 7.5 7.7 7.26 7.13 7.19 7.6 7.29 7.15 7.10 7.vi LIST OF TABLES TABLE NUMBER 7.8 7.22 7.14 7.27 7.18 7.30 7.1 7.17 7.9 7.35 TABLE NAME Current Ratios Acid Ratio Absolute Liquid Ratio Inventory Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio Net Working Capital Ratio Changes in Working Capital 2001 Funds from Operation 2001 Funds Flow Statement 2001 Changes in Working Capital 2002 Funds from Operation 2002 Funds Flow Statement 2002 Changes in Working Capital 2003 Funds from Operation 2003 Funds Flow Statement 2003 Cash Flow Statement 2001 Cash Flow Statement 2002 Cash Flow Statement 2003 Common-size Balance sheet 2001 Common-size Balance sheet 2002 Common-size Balance sheet 2003 Common-size income statement 2001 Common-size income statement 2002 Common-size income statement 2003 Comparative Balance sheet 2001 Comparative Balance sheet 2002 Comparative Balance sheet 2003 Comparative income statement 2001 Comparative income statement 2002 Comparative income statement 2003 Trend analysis for current assets Trend analysis for current liabilities Trend analysis for sales Trend analysis for working capital PAGE NO.12 7.28 7.21 7.

vii LIST OF CHARTS CHART NUMBER FIGURE I FIGURE II FIGURE III FIGURE IV FIGURE V FIGURE VI FIGURE VII FIGURE VIII FIGURE IX FIGURE X FIGURE XI CHART NAME Current Ratios Acid test Ratios Absolute liquid Ratios Inventory Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio Net Working Capital Ratio Trend analysis for current assets Trend analysis for current liabilities Trend analysis for sales Trend analysis for working capital PAGE NO. 21 24 27 30 33 36 39 80 83 86 89 .

all its transactions are represented in terms of money. Hence the need and demand for rigorous financial management has increased greatly.planning. inter firm comparison enables to . allocation and control of funds. operation etc. the management requires special mention and attention. creditors. the analysis of financial statement enables to judge the earning capacity. trade union. control. is again evaluated in terms of money. The financial information of an enterprise is contained in the financial statement or accounting reports. Thus the common denominator is money or finance. lenders.viii CHAPTER 1 INTRODUCTION A company manufactures a product or renders a service. are all measured in financial terms with the onslaught of competition. The modern approach to finance function in business highlights the procurement of funds on the most economic and favorable terms to the concern and to make use of the same in an efficient manner for successful running of the enterprise. employees. organized systematically. public. Since financial is viewed as most important factoring every enterprise. taxation authorities and researchers. managerial efficiency. government and their agencies. Financial management plays a vital role in procurement. shareholders/owners. growth inflationary pressure. Similarly its performance whether its success or failures. The activities of an enterprise. They are means to present the firm’s financial situation to management. Thus. potential investors. and volatile exchange rates. The basis for financial planning and analysis is financial information. short and long term solvency. customers. It contains summarized information of the firms financial affairs.

) 20002003 by using various tools to bring out the mystery behind the figures in the financial statement. The analysis of financial statement is a process of evaluating the relationships between component parts of financial statement to obtain a better understanding of the firm’s position and performance.e. CHAPTER 2 STATEMENT OF PROBLEM Purpose of the study is to diagnose the information contained in financial statement so as to judge the profitability and financial soundness of the firm. the management will not be able to assess the financial strength of firm and to turn it to their advantage. . CHAPTER 3 OBJECTIVES ? To analyze. The study aims at analyzing the overall financial performance of the company over a period of 4 yrs (i. Thus financial statement analysis is necessary for the firms to frame the future plans and also to convert weakness into strength. After duly recognizing the important of financial statement analysis this topic has been chosen as the focus of the project. financing decision and dividend policy decision. The analysis is essential to spot out the financial weakness of firm to take suitable corrective actions. If analysis is not done. interpret and suggest on the profitability and financial soundness of the company by comparing financial statement.ix forecast and prepare budget of an organization in investment decision.

1. working capital ratio. ? To highlight changes in financial position with help of funds flow & cash flow analysis. CHAPTER 4 REVIEW OF LITERATURE 4. ability to pay interest and debt maturities (both current and long-term) and profitability of a sound dividend policy. liquid ratio. current liabilities.x ? To highlight nature of changes influencing financial position and performance of the enterprises with the aid of comparative Balance sheet analysis. absolute liquid ratio.1 MEANING: The term ‘financial analysis’. ? To analyse the short-term financial position of the firm through the various liquidity & efficiency ratios like current ratio. sales and working capital of the firm tend to change using trend analysis. stock turnover ratio etc. Financial statement analysis is an attempt to determine and meaning of the financial statement data so that forecast may be made of the future earnings.1 FINANCIAL ANALYSIS 4. ? To determine the trend of the current assets. common-size Balance sheet and trend percentage analysis. . The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. profit and loss account and other operative data. refers to the process of determining financial strengths and weakness of the firm by establishing strategic relationship between the items of the balance sheet. also known as analysis and interpretation of financial statements’.

The analysis is done by outsiders who do not have access to the detailed internal accounting records of the business firm. However. thus serves only a limited purpose.1. External analysis. . These outsiders include investors. the recent changes in the government regulations requiring business firms to make available more detailed information to the public through audited published accounts have considerably improved the position of the external analysis. potential creditors. creditors. government agencies and public. ? INTERNAL ANALYSIS.2 TYPES OF FINANCIAL ANALYSIS: It can be classified into 2 and they are: ? ? On basis of material used On basis of modus operandi. these external parties to the firm depend almost entirely on the published financial statement. For financial analysis. TYPES OF FINANCIAL ANALYSIS ON BASIS OF MATERIAL USED ON BASIS OF MODUS OPERANDI EXTERNAL ANALYSIS INTERNAL ANALYSIS HORIZONTAL ANALYSIS VERTICAL ANALYSIS ON BASIS OF MATERIAL USED: ? EXTERNAL ANALYSIS.xi 4.

Such an analysis can. However. It is also known as ‘Static Analysis’. Comparative statement and trend percentage are two tools employed in horizontal analysis. Horizontal analysis refers to the comparison of financial data of a company for several years. In this types of analysis the figure from financial statement of a year are compared with a base selected from the same years statement. sales and working capital. current liabilities. it may be used with horizontal analysis to make it more effective and meaningful. Vertical analysis refers to the study of relationship of the various items in the financial statement of one accounting period. therefore. Comparative statement. Common-size financial statement ratios are the two tools employed in vertical analysis.xii The analysis conducted by persons who have access to the internal accounting records of a business firm is known as internal analysis. ? VERTICAL ANALYSIS. This type of analysis is called ‘Dynamic Analysis’. The horizontal analysis makes it possible to focus attention on items that have changed significantly during the period under review. . Comparison of an item over several periods with a base year may show a trend developing. it is not very conductive to a proper analysis of financial statement. The various methods are explained in brief in the following paragraphs. The figure for this type of analysis is presented horizontally over a numbers of columns. Common-size statement. Financial analysis for managerial purpose is the internal type of analysis that can be effected depending upon the purpose to be achieved. Fund flow analysis (Funds Flow statement). CHAPTER 5 METHODOLOGY OF STUDY The methodology of study involves the study of the financial statement that is followed by BOC. Since vertical analysis considers data for one time period only. ON THE BASIS OF MODUS OPERANDI: ? HORIZONTAL ANALYSIS. Cash flow analysis (Cash Flow statement) and Trend analysis for the current assets. The project involves the analysis with the help of Ratio analysis. be performed by executives and employees of the organization as well as government agencies which have statutory powers vested in them.

Company’s annual reports. Ratio analysis is a technique of analysis and interpretation of financial statements. ? Interpretation of the ratios. Balance Sheets of the firm for the last three years.1 SOURCE OF DATA: The source of data comes mainly from the following: 1. but the analyst has to select the appropriate ratios from the same keeping in mind the objective of analysis. Calculation of appropriate ratios from the above data. There are a number of ratios which can be calculated from the information given in the financial statements. 2.2 RATIO ANALYSIS A ratio is a simple arithmetical expression of the relationship of one number to another. It is the process of establishing and interpreting various ratios for helping in making certain decisions. The following four steps are involved in the ratio analysis: ? ? ? Selection of relevant data from the financial statements depending upon the objective of the analysis.xiii 5. 5. The ratios that have been considered and used for the financial statement analysis in this project are as follows: 1) Liquidity Ratios – a) Current Ratio b) Acid Test Ratio . It is an expression of the quantitative relationship between two numbers. or the ratios developed from the projected financial statements or some other firms or the comparison with ratios of the industry to which the firm belongs. Comparison of the calculated ratios of the same firm in the past. It is a means of better understanding of financial strengths and weaknesses of a firm.

5. The acid test ratio is determined by the formula. the current ratio. The absolute liquid ratio is determined by the formula. acid test ratio and the absolute liquid ratio are to be calculated.3 Absolute Liquid Ratio – It is also known as cash ratio and here the receivables. debtors and inventories are not considered and the cash which is the most liquid asset is only taken in consideration.2.xiv c) Absolute Liquid Ratio or Cash Position Ratio 2) Efficiency Ratios – a) Inventory Turnover Ratio b) Receivables Turnover Ratio c) Working Capital Turnover Ratio 5.2.1.1 Liquidity Ratios The term ‘Liquidity’ refers to the ability of a concern to meet its current obligations as and when these become due.1. Also known as the working capital ratio this measures the general liquidity and is most widely used to make the analysis of a short-term financial position or liquidity of a firm. To measure the liquidity position of a firm. Current Ratio = Current Assets Current Liabilities 5. The current ratio is determined by the formula.1Current Ratio– It may be defined as the relationship between current assets and current liabilities. It is defined as the relationship between the quick/liquid assets and the current or liquid liabilities.2 Efficiency Ratios . Acid Test Ratio = Liquid Assets Current Liabilities 5.2. Absolute Liquid Ratio = Absolute Liquid Assets Current Liabilities 5.1.2.2.2 Acid Test Ratio – It is also known as quick ratio and is a more rigorous test of liquidity than in the current ratio.

These . Working Capital Turnover Ratio = Cost of Sales (or. various liabilities are taken as particulars of total liabilities. The inventory turnover ratio is calculated by the formula. The figures are shown as percentages of total assets. Debtors Turnover Ratio = Total Sales Debtors 5. It indicates the no.2.2. Efficiency ratios measure the efficiency or effectiveness with which a firm manages its resources or assets. of times the working capital is turned over the course of the year. debtors/receivables turnover ratio. Similarly.2.2. of times the stock has been turned over during the period and evaluates the efficiency with which the firm is able to manage its inventory. These ratios are called as Efficiency ratios.2 Receivables Turnover Ratio – Debtors turnover ratio indicates the velocity of debt collection of the firm. The working capital turnover ratio is calculated by the formula.xv Funds are invested in various assets in business to make sales and earn profits. To measure the efficiency of the firm the stock/inventory turnover ratio. creditors/payable turnover ratio and working capital turnover ratio are a nalyzed. The total assets are taken as 100 and different assets are expressed as a percentage of the total.3 COMMON-SIZE STATEMENT The common-size statements. Inventory Turnover Ratio = Sales Inventory 5. The efficiency of with which assets are managed directly affect the volume of sales.2. It indicates the number of times the debtors are turned over during a year. 5.1 Inventory Turnover Ratio –It is also known as stock velocity and indicates whether inventory has been efficiently used or not. Sales) Net Working Capital 5.2.3 Working Capital Turnover Ratio – This ratio indicates the no. Balance sheet and income statement are shown in analytical percentages. This ratio measures the efficiency with which the working capital is being used by the firm. The receivables turnover ratio is calculated by the formula. total liabilities and total sales.

The shortcomings in comparative statement and trend percentages where changes in items could not be compared with the totals have been covered up. The common-size statement may be prepared in the following way. From practical point of view generally two financial statement are prepared in comparative form for financial analysis purposes. It indicates various means by which funds were obtained during a particular period and the ways by which these funds were employed. 5. Absolute figure 2. 5. Any statement prepared in a comparative form will be covered in comparative statement. Increase or decrease in terms of percentage. The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. Fund Flow Statements is a method by which we study changes in financial position of a business enterprise between beginning and ending financial statement dates. . The comparative statement may show: 1. The individual assets are expressed as percentage of total assets.4 COMPARATIVE STATEMENT The comparative financial statements are statement of the financial position at different periods of time. 1. The analyst is able to assess the figure in relation to total values.xvi statements are also known as component percentage or 100-percentage statement because every individual item is stated as a percentage of 100. Absolute data in terms of percentages. Change in absolute figure 3.5 FUND FLOW STATEMENT Fund Flow Statement shows the movement of funds and is a report of the financial operations of the business undertaking. The flow of funds occurs when a transaction changes on the one hand of a non-current account and on the other a current account and vice-versa. 2. Not only the comparison of the figure of two periods but also be relationship between Balance sheet and income statement enables an in-depth study of financial position and operative results. 4. The totals of assets or liabilities are taken as 100.

Funds flow statement deals with the financial resources required for running business activities. It tells about the sources from which the working capital was obtained and the purpose for which it was used.6 CASH FLOW ANALYSIS An analysis of cash flow is useful for short term planning.xvii Fund Flow analysis reveals the changes in working capital position. The format is as follows: Fund Flow statement for the year Sources Particulars Net Profit Depreciation Deferred Revenue Expenditure Increase in Equity Capital Increase in Term Liabilities Others Decrease in Working Capital *** *** *** Total 5. **** Total *** *** Rs. to pay interest and other expenses and to pay dividends to shareholders. The firm can make projections of cash in flows and outflows and outflows for the near future to determine the availability of cash. *** *** Net Loss Redemption Share Capital Increase in Fixed Assets Dividend paid Payment of deferred Revenue Expenditure Others Increase in Working Capital *** **** *** *** of Preference *** *** *** Applications Particulars Rs. This summarizes the causes of changes in cash position between dates of two Balance Sheets. *** . The Fund Flow Statement is prepared and the sources of funds and the uses/application of funds are found and displayed in a tabular format. It indicates the sources and uses of funds. A Cash Flow Statement is a statement describing the changes in financial position on cash basis. A firm needs sufficient cash to pay debts maturing in the near future. The cash flows statement is similar to the fund flow statement except that it focuses attention on cash instead of working capital.

Similarly a minute analysis of the different applications of cash may help to slow down or reduce the cash outflows of cash. Operating profit before working capital changes Adjustments for: Trade and other receivables Inventories Trade Payables Cash generated from operations Interest paid Direct taxes paid Cash flow before items Extraordinary items Net Cash from Operating Activities Cash Flows from Investing Activities Purchase of Fixed Assets Rs. Cash flow analysis can reveal the causes for even highly profitable firms experiencing acute cash shortages. A detailed study of the sources of cash can help to improve or accelerate the inflow from each source and may even lead to the discovery of new sources..xviii The cash flow statement helps out in taking short term financial decisions and also in the preparation of cash budget for the next period. *** *** *** *** *** *** *** *** **** *** *** *** *** *** *** *** *** **** *** . The cash flow analysis can be classified into three main categories: ? ? ? Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities The format of cash flow statement is as follows: Cash Flow statement for the year Particulars Cash Flows from Operating Activities Net profit /Loss before tax and extraordinary items Adjustments for: Depreciation Gain / Loss on sale of fixed assets Foreign Exchange Miscellaneous expenditure written off Investment Income Interest Dividend Contd.

(Opening Balance) Cash and Cash Equivalents as at….? X? Y N? X² . The trend analysis is done based on the following method. For this the Trend analysis method is used to make a clear idea.7 TREND ANALYSIS: This method is used to analyse the trend in the growth of the company’s current assets and current liabilities.xix Sales of Fixed Assets Purchase of investments Sale of investments Interest received Dividend received Net Cash from/used in Investing Activities Cash Flows from Financing Activities Proceeds from issue of share capital Proceeds from long-term borrowings/banks Payment of long-term borrowings Dividend paid Net Cash from/used in Financing Activities Net Increase/Decrease in Cash and Cash Equivalents Cash and Cash Equivalents as at…. The trend equation is Y = a + bX Step1: Calculation of ‘b’ b = N? XY .(? X)² Step2: Calculation of ‘a’ a = (? Y / N) – b (? X / N) . sales and working capital. The trend equation is to be analyzed for this purpose.(Closing Balance) *** *** *** *** *** **** *** *** *** *** **** *** **** ***** 5.

The researcher has to make interpretation and show his own conclusion. the study does not cover the areas relating to industrial analysis and economic growth of Bharat Oil Company. . ? The data taken for analysis covers only a period of 2000-2003.xx Step3: Substitute the value of ‘a’ and ‘b’ in the trend equation (Y=a + bX) and plot the value of Y with respect to X in the chart. current liabilities and sales). It is not possible to analyze all the aspects in details within time allowed because of lack of time. so study is about past only. ? Analysis is only a means and not an end itself. LIMITATION OF STUDY ? The study is purely based on secondary data as obtained from the audited annual reports of company that gives only limited information regarding performance of the company. Step4: The chart is then interpreted based on the trend of the line for each Y value (current assets. ? Financial statements are prepared on the basis of certain accounting concepts and conventions any change in the method or procedure of accounting limits the utility of financial statement. The line which is seen in the chart is referred to as the trend line. it needs not be indicative of future. ? Time is major limiting factor of study.

marketing the lubrication oil of brand Shell. After proving its strength in the lubrication oil industry the organization shifted its focus in the marketing and sale of lubrication oil and it’s by products. and Naively.00. BOC has become one of the key players in the lubrication oil in South India. 6. The company’s units are located in Chennai. the company surprised everyone again by spearheading the marketing of lubrication oils in the South. Thirichangodu. The company has a strong logistics and distribution network in oil and its byproduct sector.000 litres of Oil per day. ISO 9001 certified manufacturing facility that has been extensively upgraded in the last three years.1 HISTORY In the early 90's. Now it has become a sole proprietorship. Castrol and Shell. The company started the products namely. A few years and several successes later. Elf etc. Spray drying capacity of 15 tons per day. Bharat oil company (BOC) was formed as a small partnership firm.2 KEY FEATURES IN OILS ? ? ? ? Capacity of handling 10. The firm has now marketed a number of byproducts oil for the same company. It has now consolidated its position as the largest private company in Chennai. The company also has tie up with banks for arranging loans to the producers. State of the art laboratory for process control. Castrol.xxi CHAPTER 6 COMPANY PROFILE 6. product quality control and product development. Within a short period these products have become a popular product and the company had been able to successfully sustain in the industry. The company .

2T and 4T oil of Elf & IBP. The company is the leader in oil sector among the private sector and market leader for southern region.5 CUSTOMERS OF BOC: ? ? ? ? Manufacturing industries Hotel industries Travel industries Service industries Apart from marketing lubrication oils for the company they also market and sell oil byproduct like grease to its customer. Elf. 6.xxii has 12 distribution points. strategically located for quick and easy distribution of its products. In this segment. They are planning to expand their operations in Kancheepuram. and also in Kerela and Andhrapradesh.4 SUPPLIERS FOR BOC: ? ? ? ? Castrol IBP Elf Shell 6.1 RATIO ANALYSIS . 2T oil of Shell. Chennai. 6. Lubrication oils and Grease. and IBP oils.3 PRODUCTS OF BOC The company’s markets and sells the following products: ? ? ? ? Lubrication oil of ‘Castrol’. Chengalpet. the Company’s distribution network comprises of 10 wholesale distributors and over 75 dealers for Castrol and around 50 direct selling agents for Shell. CHAPTER 7 ANALYSIS AND INTERPRETATION 7.

1.57 16511.22 423.55 125650 77000 52938.58 202519.24 39112 1420844.13 1593854.20 1478008.76 2000 2001 2002 2003 25566.A Current Liabilities: Sundry creditors Bank o/d Other C.62 Ideal Ratio: .62 respectively.45 1401360. 1.43 1782233. .46 85736 1344675.20.L Total C.1.82 9419.24 1381732.89 423.90 31462 1509470.2:1 Actual Ratio: .03 1.43 1525928.44 625650 77000 1242427.xxiii 7.1.94 1402392.9 1.24.L Current Ratio: 1949635.31 56540 1660419.24 1.08 446676 75000 12085.89 1.07 2304484.02 1997392.45.12 132120 77000 75482.1 Current Ratio Table 7. 1.1 PARTICULARS Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets Total C.2 1865332.

5 0 RATIOS Year 1.1.45.20. The company needs to improve its short-term financial position.62 RATIOS FIGURE i 7.45 Year 1.24.62] much below the accepted standard of 2:1.xxiv CURRENT RATIOS 2 1.24 Year 1.1.1 INTERPRETATION: ? Current Ratio of the company is not satisfactory because the ratios are [1.1. Low current ratio indicates that the firm shall not be able to pay its current liabilities in time.1.2 Year 1.1. .5 1 0.

? Current liabilities have been decreasing from 2001.89 423. In 2003 they had enough current assets to pay of their liabilities.44 77000 .1.12 77000 75482.55 77000 52938. ? ? Stock flows are uneven during 2001 & 2003. Even though current assets are high than current liabilities the current ratio are less than the ideal one.2 Acid Test Ratio Table 7.13 1593854.43 1525928.82 9419.94 1402392.08 75000 12085.2 PARTICULARS Liquid Assets: Cash in hand Cash at bank Sundry Debtors Other current assets 2000 2001 2002 2003 25566.43 1782233. 7. Cash in hand was constantly increasingly which showed a good sign to pay of immediate expenses. which shows a high working capital.xxv ? ? ? Bank o/d has been paid off in 2002 & 2003.22 423.

20.L Total C.1.15 1381732.24 1.45 1401360.89 1.18 Ideal Ratio: .9 1.76 1242427.90 31462 1509470. 1.20 1478008.L Acid test Ratio: 1949635.46 85736 1344675.A Current Liabilities: Sundry creditors Bank o/d Other C.2 1733212. 1.24 39112 1420844.1:1 Actual Ratio: . .45. 1.18 respectively.58 202519.02 1997392.03 1.07 1678834.57 16511.31 56540 1660419.xxvi Total L.15.

15 Year 1. Acid test ratio of the company is satisfactory because the ratios are [1.2 Year 1.1.1.2.1 INTERPRETATION: 1.45.5 0 RATIOS Year 1.xxvii ACID TEST RATIO 2 1.18] much above the accepted standard of 1:1.1.1.15.18 RATIOS Figure II 7.5 1 0.20. .45 Year 1.

xxviii 2. 5. 4. Bank o/d has been paid off.1. Cash in hand and at bank are quite high which indicates ready payment of any expenses.3 . High acid test ratio indicates that the firm is liquid and has the ability to meet its current or liquid liabilities in time. 7. which indicates a high liquidity position of the firm to pay off their credits. Current assets are more than the current liabilities.3 Absolute Liquid Ratio Table 7. The company needs to improve its short-term financial position. which is a good sign for the company. 3.

58 202519.11 respectively.05 1478008.L Total C.09 1381732.57 16511. 0.13 77000 75482.07 1401360.82 9419.89 423.94 75000 12085. 0.5:1 Actual Ratio: .05.24 39112 1420844.43 77000 52938.0.94 89508.22 423.95 152906.A Current Liabilities: Sundry creditors Bank o/d Other C.46 85736 1344675.0. .07.32 2000 2001 2002 2003 25566.31 56540 1660419.09.03 0.11 Ideal Ratio: .89 0.9 0.24 0.L Absolute liquid Ratio: 100566. 0.90 31462 1509470.xxix PARTICULARS Absolute Liquid Assets: Cash in hand Cash at bank Other current assets Total L.65 139357.43 77000 1242427.

e.04 0.1 0.3.1 INTERPRETATION ? Absolute liquid ratio is not satisfactory as it is much lower than the rule of thump i. .02 0 RATIOS Year 0.1.06 0.11 RATIOS FIGURE iii 7.05 Year 0.5.xxx ABSOLUTE LIQUID RATIO 0.09 Year 0.07 Year 0.12 0.08 0. 0.

? Here current liabilities are more than current assets.07.4 Inventory Turnover Ratio Table 7.05. which are very low than current liabilities. ? Absolute Liquid ratios are less than 0.5 namely (0.1.09.11) which shows they are in a very bad position to pay off the credits. 0. The company needs to improve its short-term financial position.4 PARTICULARS Cost of goods sold: 2000 2001 2002 2003 .xxxi ? However this ratio is not in much use even while evaluating the liquid position of a firm. 7. ? An absolute Liquid ratio does not include stocks but includes only cash and shortterm investments. 0. which shows a negative operation in the business. 0.

8 17.09 7394640.1 .04 6634977.1 22.5 4724165.13 753990.5 757770 378885 16.5 13.83 6238944.60 5336833.63 5817964.xxxii Sales (-) Gross profit Cost of goods sold Average Inventory at cost: Opening Stock (+) Closing Stock Total Stock(/2) Average Inventory at cost Inventory Turnover Ratio: (in times) Inventory Conversion Period: (in days) 719363 359681.3 257770 128885 51.9 7.80 6571954.60 740320 272687 446676 446676 125650 125650 132120 132120 625650 27.28 759662.45 6979264.1 572326 286163 20.43 612667.

3 FIGURE IV RATIOS Year 51.4. .1 Year 20.5 7.1 INTERPRETATION 1.5 Year 16.1. A high inventory turnover indicates efficient management of inventory because more frequently the stocks are sold out.xxxiii INVENTORY TURNOVER RATIO 60 50 40 30 20 10 0 RATIOS Year 13.

7.xxxiv 2. In 2003 inventory turnover ratio was high which indicates that the firm was good at their stock management 5.5 Debtors Turnover Ratio Table 7. which shows a very poor management of stocks.1.5 . Here in 2002 the company was in their efficient form of disposing their stocks on an average of 7 days which is very good indicator and they should take steps to repeat the same. This kind of irregularities increase or decrease indicates the firms inability to manage the stocks. 3. efficient management of stocks. In 2002 inventory turnover ratio was a head lower comparing to 2000. 4.

835 4.63 1592312.13 6571954.5 80 5336833. Debtors Debtors Turnover 1145693.12 1402392.13 7394640.28 4.60 6979264.2 86 Average collection Period: (in days) 1402392.12 3376087. Debtors (/2) Avg.6 4.2 1274042.12 1525928.44 3119782.67 1688043.60 2000 2001 2002 2003 Ratio: (in times) .55 3184625.xxxv PARTICULARS Net Credit sales: Sales (-) Returns Net credit sales Average Debtors: Opening Debtors (+) Closing Debtors Tot.08 1782233.08 2548085.13 87 1782233.55 1593854.28 7394640.28 6979264.43 5336833.4 81 1593854.56 1559891.43 6571954.815 4.

There is a low debtors turnover ratio.6 4.4 Year 4.1 INTERPRETATION 1.2 Year 4.1. .5.5 FIGURE V 7.13 Year 4.xxxvi DEBTORS TURNOVER RATIO 4.3 4.1 4 3.9 RATIOS RATIOS Year 4.2 4.5 4.4 4. which implies inefficient management of debtors/sales.

6 . Allowing the customer to pay after the credit period puts the firm in a stress situation as it does not have good liquidity to pay his creditors 7. The average collection period is not satisfactory because it is more than the firm’s credit term of 60 days. But in 2002.1.xxxvii 2. It took more than 80 days to collect. 5. The company should see that their collection period should be below 60 days for efficient performance. 3. 4. 2003 it has reduced which shows a good sign comparing to previous years.6 Creditors Turnover Ratio Table 7.

15 1321894.90 1381732.075 2879369.60 2000 2001 2002 2003 .57 1242427.33 6682729. Creditors Creditors Turnover 4.58 1478008.13 1134055.63 5490661.48 1439684.14 1429870.3 85 4.90 1478008.56 1242427.60 4898154. Creditors (/2) Avg.04 6615246.565 Ratio: (in times) Average payment period: (in days) 2643788.57 1025683.7 78 2268111.xxxviii PARTICULARS Net Credit purchases: Purchases (-) Returns Net credit purchases 4898154.74 2859741.33 6682729.2 87 4.58 1401360.57 1401360.63 Average creditors: Opening Creditors (+) Closing Creditors Tot.04 6615246.6 79 4.24 5490661.

xxxix

CREDITORS TURNOVER RATIO

4.8 4.6 4.4 RATIOS 4.2 4 3.8 RATIOS Year 4.3 Year 4.2 Year 4.6 Year 4.7

FIGURE VI

7.1.6.1 INTERPRETATION: 1. The average number of days taken by the firm to pay its creditors is more than 80 days.

2. But 2003 it has reduced to 78 days, which is good sign, and the company should see to perform efficiently in the coming future.

xl

3. Lower the ratio higher the liquidity position, therefore in 2000 & 2001 the firm has good liquidity position.

4. Paying of the credit within the credit period helps the firm to improve its relationship with the suppliers.

5. So 2002 & 2003 are good signs for the firm as the paid their credit within the credit period.

7.1.7 Working capital Turnover Ratio Table 7.7 PARTICULARS Cost of Sales: Sales 5336833.43 6571954.13 7394640.28 6979264.60 2000 2001 2002 2003

xli

Cost of sales Net Working Capital:

5336833.43

6571954.13

7394640.28

6979264.60

1949635.02 Current Assets (A) Current Liabilities 1344675.03 (B) Net W.C: 604959.99 [C.A – C.L] 8.8 Working Capital Turnover Ratio: (in times)

1997392.2 1660419.89 336972.31 19.5

1865332.07 1509470.9 355861.17 20.7

2304484.76 1420844.24 883640.52 7.8

7% in 2002 and then has reduced to 7.7 Year 2003 7.1. 2.xlii WORKING CAPITAL TURNOVER RATIO 25 20 15 RATIOS 10 5 0 RATIOS Year 2000 8.8%.8 FIGURE VII 7. which is a huge one. and it shows their inefficient utilization of working capital.5 Year 2002 20. . The working capital has increased to 20.8 Year 2001 19. A high ratio indicates efficient utilization of working capital and low ratio indicates otherwise.1 INTERPRETATION: 1. It also indicates the number of times the working capital is turned on.7.

94 12085.2 FUND FLOW ANALYSIS Computation of Funds Flow Statement for the year ending 2001 Schedule of Changes in Working Capital for the year ending Increase 2001 W. 4.22 in Decrease W.xliii 3.C (Rs) 13481.8%. which has showed their inefficient management.C (Rs) Current Assets: Cash in hand 25566. 7. Working capital ratio was increasing till 2002 and suddenly has fallen to 7. Sales were increasing till 2002 and have decreased in 2003.72 in Particulars 2000 .

57 16511.xliv Cash at bank Sundry Debtors Stock Other current assets Total C.32 7022 90498.9 Calculation of Funds From Operation Rs.31 267987.46 85736 1344675.A – C.86 1402392. Total C.85 344940.68 604959. Closing Balance of P&L a/c Add: Non-fund and Non-operating expenses: ? Depreciation 83476.99 1242427.68 679448.47 2000 382264.99 267987.L) Net Decrease in Working Capital 604959.58 Table 7.89 29196 29196 158933.2 423.01 186007.A (A) Current Liabilities: Sundry creditors Bank O/D Other Current liab.02 423.55 125650 77000 1997392.32 .99 336972.03 1401360.L (B) Working Capital (C.58 202519.58 679448.43 1782233.31 56540 1660419.72 604959.8 Table 7.43 379841.9 321026 334507.08 446676 75000 1949635.

Hence working capital has been used to buy fixed assets. Amount Rs. The statement of application of funds while confirming the decrease in working capital discloses that it is due to purchase of fixed assets which was Rs.74 - 381409. Computation of Funds Flow Statement for the year ending 2002 Table 7.C (Rs) in Decrease W.1 INTERPRETATION: The statement of working capital reveals a net decrease in working capital of Rs. which may lead to working capital shortage and difficulties in paying current liabilities in the near future.xlv Total (A) Less: Non-fund or Non-operating incomes: Opening Balance of P&L a/c Total (B) Funds From Operations [A-B] Table 7.74 267987.58) 11750.68 Application Tax paid Purchase of Fixed Assets Non-Trading payments Repayment of loan cr.10 Funds Flow Statement For the year ending 31-3-2001 Sources Increase in capital Funds from operations Net Decrease In Working Capital Amount Rs.42 (78747.58) (78747. 183 33507 76719.C (Rs) in Particulars 2001 .11 Schedule of Changes in Working Capital for the year ending Increase 2002 W.42 7. 267988.42 271000 381409.2.33507. 100000 11750.

6 8995.7 6470 56319.A (A) Current Liabilities: Sundry creditors Bank O/D Other Current liab.13 1593854.55 125650 77000 1997392.31 18888.07 40853.96 .90 31462 1509470.12 132120 77000 1865332.32 12085.12 Calculation of Funds From Operation Rs.61 Table 7.A – C.58 202519.17 18888.82 9419.89 1478008.90 202519.22 423.L) Net Increase in Working Capital 1401360.31 56540 1660419.32 76648.86 355861.2 52938.xlvi Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets Total C.43 1782233.31 25078 227597. Total C.3 188379.43 336972. Closing Balance of P&L a/c Add: Non-fund and Non-operating expenses: ? Depreciation 92738.96 6591 99329.17 283916.31 76648.43 188379.86 355861.L (B) Working Capital (C.61 283916.17 355861.

32) 15853.14 Schedule of Changes in Working Capital for the year ending Increase 2003 W.xlvii Total (A) Less: Non-fund or Non-operating incomes: Opening Balance of P&L a/c Total (B) Funds From Operations [A-B] Table 7. which was Rs. 18888. 15853. Hence working capital has been used to buy fixed assets.C (Rs) in Decrease W.13 Funds Flow Statement For the year ending 31-3-2002 Sources Funds from operations Raising of loan Increase in loan cr Amount Rs.2 INTERPRETATION: The statement of working capital reveals a net increase in working capital of Rs.78 18888.32) (83476.64 - 52157.64 52157.86 (83476. that may lead to working capital shortage and difficulties in paying current liabilities in the near future.86. The statement of application of funds while confirming the increase in working capital also discloses the purchase of fixed assets.64 11104 25200 Application Tax paid Purchase of Fixed Assets Net Increase In Working Capital Amount Rs.32455. 814 32454.C (Rs) in Particulars 2002 . Computation of Funds Flow Statement for the year ending 2003 Table 7. rising of loan etc.2.64 7.

82 9419.xlviii Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets Total C.89 423.13 1593854. Closing Balance of P&L a/c Add: Non-fund and Non-operating expenses: ? Depreciation 107152.47 4327 111479.66 96276.43 1525928.7 67925.90 31462 1509470.90 1381732.52 612350.A – C.73 612350. Total C.35 883640.L) Net Increase in Working Capital 52938.73 Table 7.12 132120 77000 1865332.35 883640.66 7650 7650 355861.07 8995.76 22544.47 .52 527779.52 883640.38 1478008.68 76921.A (A) Current Liabilities: Sundry creditors Other Current liab.44 625650 77000 2304484.24 39112 1420844.L (B) Working Capital (C.15 Calculation of Funds From Operation Rs.24 96276.07 75482.17 527779.07 493530 516074.

35 (92738.35 530500. which may lead to working capital surpluses paying current liabilities in the near future.96) 18740.356.3 INTERPRETATION: The statement of working capital reveals a net increase in working capital of Rs. The statement of application of funds while confirming the increase in working capital also discloses the sale of fixed assets.14047.16 Funds Flow Statement For the year ending 31-3-2003 Sources Sale of Fixed Assets Raising of long term loan Funds from operations Amount Rs. 527779.51 - 530500.17 .96) (92738. 7.51 Application Tax paid Net Increase In Working Capital Amount Rs. 2721 527779. which was used for rising of loan. 14047 497712.xlix Total (A) Less: Non-fund or Non-operating incomes: Opening Balance of P&L a/c Total (B) Funds From Operations [A-B] Table 7.2.84 18740. which was Rs. Hence working capital has been gained from sale fixed assets.3 CASH FLOW ANALYSIS Computation of Cash Flow Statement for the year ending 2001 Table 7.35 7.

l Cash Flow Statement For the year ending 31 st March 2001 Particulars Amount Rs.74 321026 158933.3.L Cash used in operation before tax Less: .Non-cash & operating incomes Operating profit before Working Capital charges Adjustments for changes in current assets & liabilities: Add: .48 (114962.28 (183) 80489.Increase in liabilities & Decrease in assets ? Stocks ? Creditors Less: .Decrease in liabilities & increase in assets ? Debtors & other C.28 (33507) (33507) 100000 (271000) (171000) (124017. Net cash used in financing activities Net Increase in cash & cash equivalents Cash & bank balance in the beginning of the period Cash & bank balance in the end of the period 4728.Income tax Net cash used in operating activities Cash flow from Investing activities Purchase of fixed assets Net cash used in investing activities Cash flows from Financing activities Raising capital Repayment of loan creditors.80489.24) Amount Rs.1 INTERPRETATION: 1.74 7022 11750. (33507).72) 9055. Cash form operating activities a re Rs. 7. . Cash flow from operating activities Net Profit before tax Adjustments for non-cash & operating items: Add: .Non-cash & operating expenses ? Depreciation Less: .28 and cash from investing activities is Rs.47) (29196) 80672.A ? Other C.01 (381841.

(171000) which due to repayment of loan creditors and increase in capital invested.42) Computation of Cash Flow Statement for the year ending 2002 Table 7. 4. Overall cash and bank balance at the end showed a negative balance of Rs. (114962. Cash from investing activities shows a negative balance due to amount spent on purchase of fixed assets.li 2.18 . 3. Cash from financing activities is Rs.

Non-cash & operating incomes Operating profit before Working Capital charges Adjustments for changes in current assets & liabilities: Add: .64 6591 15853.L ? Stock Cash used in operation before tax Less: .2 INTERPRETATION: - .39 (814) 248519.39 (32454. 7.Decrease in liabilities & increase in assets ? Other C.32 (25078) (6470) 249333.3.78) 11104 25200 36304 252368.Non-cash & operating expenses ? Depreciation Less: .95 Amount Rs. Cash flow from operating activities Net Profit before tax Adjustments for non-cash & operating items: Add: . Net cash used in financing activities Net Increase in cash & cash equivalents Cash & bank balance in the beginning of the period Cash & bank balance in the end of the period 9262.43 76648.66) 62357.lii Cash Flow Statement For the year ending 31 st March 2002 Particulars Amount Rs.Increase in liabilities & Decrease in assets ? Debtors ? Creditors Less: .78) (32454.61 (190010.Income tax Net cash used in operating activities Cash flow from Investing activities Purchase of fixed assets Net cash used in investing activities Cash flows from Financing activities Raising of long-term loan Raising of loan creditors.64 188379.

Cash has been positively used in operating and financing activities. Cash from investing activities shows a negative balance due to amount spent on purchase of fixed assets.19 . Overall cash and bank balance at the end showed a positive balance of Rs.78).95 5.liii 1. Cash form operating activities are Rs.39 and cash from investing activities is Rs. Computation of Cash Flow Statement for the year ending 2003 Table 7. 62357. (32454. Cash from financing activities is Rs. 2. 4. 3.36304 which due to raising of loan creditors and long-term loans.248519.

Cash flow from operating activities Net Profit before tax Adjustments for non-cash & operating items: Add: .L Less: . ? Stock Cash used in operation before tax Less: .41 62357.Non-cash & operating incomes Operating profit before Working Capital charges Adjustments for changes in current assets & liabilities: Add: .Decrease in liabilities & increase in assets ? Sundry Creditors.51 67925.88 16612.3.88 19824 500776.66) (493530) (495490.47) 14047 14047 480952.51 4327 18740.68 7650 (96276.Non-cash & operating expenses ? Depreciation Less: .Income tax Net cash used in operating activities Cash flow from Investing activities Sale of fixed assets Net cash used in investing activities Cash flows from Financing activities Raising of long-term loan Raising of loan creditors.47) (2721) (498211.3 INTERPRETATION: - .95 78970.Increase in liabilities & Decrease in assets ? Debtors ? Other C.liv Cash Flow Statement For the year ending 31 st March 2003 Particulars Amount Rs.36 Amount Rs. 7. Net cash used in financing activities Net Increase in cash & cash equivalents Cash & bank balance in the beginning of the period Cash & bank balance in the end of the period 14413.

500776. Cash has been positively used in investing and financing activities. Cash form operating activities are Rs. (498211.4 COMMON-SIZE STATEMENTS Table 7.lv 1. Cash from financing activities is Rs. Cash from investing activities shows a positive balance due to amount earned from sale of fixed assets. 14047.88 which due to raising of loan creditors and long-term loans.20 Common .47) and cash from investing activities is Rs. Overall cash and bank balance at the end showed a positive balance of Rs. 3. 2. 78970.36 5. 7. 4.size Balance sheet for the year ending 31st Mar 2000 & 2001 2000 Amount (Rs) ASSETS Current Assets: Percentage Total Amount (Rs) 2001 Percentage Total .

89 68.55 125650 77000 1997392.84 4.5% respectively.03 62.95 22.7 2.2 6.22 423.2 0.05 6.43 1782233.02 87.75 5.2 1242427.8 81.9 9.9 2.5%.57 16511. which indicate a good sign in 2000.94 1402392.L (A) 411000 Loan Creditors (B) Capital Current a/c (C) Total (A+B+C) Liabilties 1976655. Comparing both the years efficient management of working capital is seen in 2000.02 100 2044680.5 9.6 3.4.2 100 100000 120979.8 97.9 0.8 2.6 0.31 56540 1660419.12 140000 200000 44260.3 100 7.08 446676 75000 1949635.lvi Cash in hand Cash at bank Sundry Debtors Stock Other current assets Total CA (A) Fixed Assets: Fixed Assets (net)(B) Total Assets (A+B) LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Bank o/d Other Current liab. Working capital for 2000 & 2001 are 30. 16.99 20.31 6.34 68.2 47288 2044680.2 3.02 27020 1976655.6 1. .1 INTERPRETATION 1.02 1.8 98.3 70. Total C.4 100 12085.46 85736 1344675. 2.08 1401360.2 25566.58 202519.

100000. which is not a g ood sign and also increases outsider’s dues. Outsider’s funds constitute nearly 68.2 6.07 Percentage Total Amount (Rs) 2002 Percentage Total . Bank o/d has been raised by nearly 126%. 4.21 Common . Loan creditors have been paid off during 2001.43 1782233.02 87.498 84.98 4.22 423.684 0. 7. Fixed assets constitute only a small part in both the years.8 52938. 5.08%. Current assets constitute nearly 98. which implies fewer dues to others.55 125650 77000 0.6 0. which indicate immediate liquid of funds and also capital has been raised by Rs.7% in 2000 & 2001. Table 7. 97.2 3.lvii 3. which seems to have adequate cash to meet the obligations.size Balance sheet for the year ending 31 Mar 2001 & 2002 2001 Amount (Rs) ASSETS Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets 12085.7%.13 1593854.82 9419. 8.12 132120 77000 0. 81. 6.2% in 2000 & 2001.27 6. Cash in hand & bank is more.

Outsider’s funds constitute nearly 81.31 2044680.53 1.2 97.89 140000 140000 68.5% respectively.4.07 96. 78.48 100 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Bank o/d Other Current liab.2 INTERPRETATION 1.5 9.55 9.90 31462 1509470.16 0.07 65864 1931196.9 2. 16. Current assets constitute nearly 97.2%.31 56540 1660419. 2.502 3.2% in 2001 & 2002.9 9.8 2.63 78.8 81. (C) .2 47288 2044680.9 6. Working capital for 2001 & 2002 are 18.17 1931196.574 8.90 11104 165200 176304 200000 45421.7 2.35 100 Loan-ICICI Bank Loan Creditors Total Liabilties (B) Capital Current a/c 200000 44260.7%.07 76.3 100 1865332.5% in 2001 & 2002.3%.2 6.13 10.2 100 1478008. 96. which seems to have adequate cash to meet the obligations.2 Total (A+B+C) 7. Total C.L (A) 1401360.36 2.58 202519.lviii Total CA (A) Fixed Assets: Fixed Assets (net)(B) Total Assets (A+B) 1997392. 3. Comparing both the years efficient management of working capital is seen in 2002. which indicate a good sign in 2002. 4.

which implies more dues to others.498 84. Long-term loans have been raised during 2002.27 Percentage Total Amount (Rs) 2003 Percentage Total . Table 7. 7.44 625650 77000 3. which indicate immediate liquid of funds.43 1525928.27 6.018 64. Cash in hand & bank is more.size Balance sheet for the year ending 31 Mar 2002 & 2003 2002 Amount (Rs) ASSETS Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets 52938.55 3.82 9419.20 0.76 26.12 132120 77000 0.13 1593854.98 4.07 75482. 6. 8. Fixed assets constitute only a small part in both the years.89 423.684 0.lix 5. Bank o/d has been paid off which is a good sign.22 Common .

64 1.5% respectively.lx Total CA (A) Fixed Assets: Fixed Assets (net)(B) Total Assets (A+B) 1865332.07 96. 37. 3.24 492056.24 39112 1420844.17 1931196.66 60.502%. which seems to have adequate cash to meet the obligations.30 20.19 100 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Other Current liab.4.07 7.36 2. Current assets constitute nearly 96.502 3.35%. which indicate a good sign in 2003. Working capital for 2002 & 2003 are 18.90 11104 165200 176304 76.88 200000 58376. Total liabilities (A) Loan-ICICI Bank Loan Creditors Current 1478008.76 58.73 8. 97.76 97.76 51817 2356301.88 185024 677080.90 31462 1509470.63 78.48 100 2304484.48 100 Total Liabilties (B) Capital Current a/c (C) Total (A+B+C) 200000 45421.53 1.574 8.16 0.49 2.88 7.35 100 1381732.3 INTERPRETATION 1.798% in 2002 & 2003. .798 2.64 2356301. 2. Comparing both the years efficient management of working capital is seen in 2003.85 28.07 65864 1931196.13 10.55 9.

Outsider’s funds constitute nearly 78. 8.04 753990. Loan creditors and long-term loans have been raised off during 2003. which indicate immediate liquid of funds and also capital has not affected.16%. % 2001 Rs. Table 7. 7.90 53000 0.lxi 4. Cash in hand & bank is more.13 5817964. 6.48 6571954. Fixed assets constitute only a small part in both the years.52 11. Sundry creditors have been reduced and stock has been increased which is a good sign and also decreases outsider’s dues.23 Common-Size Income statement For the year ending 2000 and 2001 2000 Rs. % Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent 5336833. 60.47 48000 0. 5.43 4724165.80 100 88.53 11.81 .63 612667.30% in 2002 & 2003.09 100 88. which implies higher dues to others.

72 2.27 1.47 533920.04% from 1. Nearly 88.16 0.40%. .2% but operating profit has been reduced to 1.4 INTERPRETATION: 1.48 0.30 0.07 1.69 10 1.3 670513.19 0.70 16025 3170 30542.77 83476.06 3. 3.30 134307.57 1.04 0. 88.58 3913 74834. 2001.27% from 1. (2) Total Operating Exp. 5.79 8.02 0.06 4. 11. 4.52%.69%.22 78747.75 443785.32 83476.32 4096 79380.48%. Operating expenses have increased to 10. 2.75 40396.47% in gross profit for the year 2000.47 36357 49157 1427 47366.27 0.52 0.16% from 8. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 188050 2090 3329 202316.32 3.53% is spent on cost of goods sold which results in 11.32 0.21% from 1.21 7.77 90134.06 0.48%. Office expenses has reduced to 8.04 10.06 1. Total office exp.50 3894 268202. Selling expenses has increased to 2.76 0.08 8.55 0.97 536206.58 78747.4.lxii Salaries Postage & Telegram Electricity Other expenses.58 3.75 0.20 1. Total Selling exp. Net profit after tax has been reduced to 1. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.40 209500 1609.32%.48 1.02 0.

% .24 Common-Size Income statement For the year ending 2001 and 2002 2001 2002 Rs. % Rs. Table 7.lxiii 6. Comparing both the year 2001 was good and satisfactory.

27 0.72 2.81 3.51 9.7 10.73 3.02 0.07 1.72 0.53 11.2 53000 209500 1609.11 0.lxiv Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent Salaries Postage & Telegram Electricity Other expenses. Total office exp.13 5817964.25 0.32 0.49 92738.3 670513. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 6571954.06 4.16 0.55 0.08 8.04 10.75 0.28 6634977.03 0.09 100 88.45 100 89.83 759662.21 54000 275250 2410 4907 202316.16 672723.97 536206.96 0.46 0.19 0.17 0.50 111419.10 1.20 1.5 INTERPRETATION .06 1. (2) Total Operating Exp.60 56059.30 134307.59 0.76 1.96 4910 87828.32 83476.33 34245 8040 12475.27 1.77 83476.25 1.32 4096 79380. Total Selling exp.74 7.50 3894 268202.47 7394640.47 36357 49157 1427 47366.4.96 92738.02 0.19 7. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.04 753990.75 561304.07 2.

Table 7.2% in gross profit for the year 2001.6 6238944. 6.59 56000 286500 1359 5806 170507.lxv 1. Net profit after tax has been reduced to 1.4 0.25%.19% from 1.27 Rs. 10.83 759662. Selling expenses has decreased to 1. 2.08 2.45 2002 % 100. Nearly 88.03 0. Office expenses has reduced to 7.16%.7% is spent on cost of goods sold which results in 11.75 561304.53%. Total office exp.4 520172.11 0.80 4.45 .33 0.00 89.59% from 8. Comparing both the year 2001 was good and satisfactory.04%.51% from 2. (1) Selling Expense: 7394640. 89. 6979264.72 0.47%.44 7.00 89.07 2. 5.25 Common-Size Income statement For the year ending 2002 and 2003 Particulars Rs. 3.27% from 1.10% and operating profit has been reduced to 1.61 54000 275250 2410 4907 202316.28 6634977.73 10. 2002.02 0. Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent Salaries Postage & Telegram Electricity Other expenses.21%.39 10.73 3. Operating expenses have decreased to 9. 4.74 7.6 740320 2003 % 100.

96 92738.01 1. Office expenses has reduced to 7.lxvi Advertisement Sales Commission Sales Promotion exp Other expenses.07 7.17 0.4. 10.47 2189 104963.33 0. Operating expenses have decreased to 9.54 0.51 9.59%. 6.53 107152.25%.5 111419.27%.47 107152.46 0.13 0.45% from 7. 4.6 56059. 89.50 23160 8870 10230 70735.54% from 1.15 1. 2003.19%.49 92738.50% from 1.62 9.19 0.73%.51%.13 0. 3. Net profit after tax has been increased to 1. Selling expenses has increased to 1. Nearly 89. 2.03 1.11 0. 5.62% from 1.13 112995.25 0. Comparing both the year 2003 was good and satisfactory.54 1.61 in gross profit for the year 2002.6 INTERPRETATION 1. (2) Total Operating Exp. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 34245 8040 12475. . Total Selling exp.96 1.47 1.16 672723.07% but operating profit has been increased to 1.76 1.96 4910 87828.25 1.10 633167.39% is spent on cost of goods sold which results in 10.07 1.

26 Increase/ Decrease (Percentages) .lxvii 7.5 COMPARATIVE STATEMENTS Comparative Balance Sheet Year ending Increase/ 31 March Decrease (Amounts) 2000 2001 Table 7.

89 140000 200000 44260.94) 100 (63.7) 423.42) .08 446676 75000 1949635.2 68025.18 3.31 158933.22 423.55 125650 77000 1997392. Current assets have been increased by 2.2 68025.02 19102 7918 27020 12085.68) 12.57 16511.46 85736 1344675.94 1402392.lxviii ASSETS Current Assets: Cash on hand Cash at bank Sundry Debtors Stock Other current assets Total CA (A) Fixed Assets: Furniture & fixtures Other Fixed Assets Total Fixed Assets (B) Total Assets (A+B) 1976655.44 1242427.99 1401360.5 (65.01 186007. Total C.85 (29196) 315744. 1976655.5.43 1782233.L (A) Loan Creditors (B) Capital Current a/c (C) Total Liabilities (A+B+C) 7.31 56540 1660419.18 3.86 (271000) 100000 (76719.2) 270. current asset is more than current liabilities.5% but working capital is more i.e.47 (321026) 2000 47757.44 25566.45 (6.5 (34.02 2044680.45% and liabilities by 23.8 1126.72) 423.1) 23.02 2044680.01 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Bank o/d Other Current liab.2 17916 29372 47288 (13481.18 (1186) 21454 20268 (52.03 411000 100000 120979.9 75.9) 2.58 202519.1 (71.43 379841.1 INTERPRETATION 1.43 27.7 2.

which indicates poor management of funds flow.27 Comparative Balance Sheet Year ending 31 March 2001 2002 Increase/ Decrease (Amounts) Increase/ Decrease (Percentages) . Capital has been increased by 100% and loan creditors have been decreased by 65% 4. Fixed assets has been increased by nearly 75% and overall assets have been increased by 3. Sundry creditors have been increased by 12% but bank o/d has been increased by nearly 126%. Table 7.lxix 2. Overall financial position of the company is satisfactory. 5.44% 3.

2 17916 29372 52938.5 (100) (44.5 (10.07 11104 25200 36304 1160.6 (5.2 (113484.13) .2 200000 45421.7 (188379.13) LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Bank o/d Other Current liab.6) (10) 69.12 132120 77000 1865332.43) 6470 (132060.4) (9.07 16124 49740 40853.6) 5.22 423.lxx ASSETS Current Assets: Cash on hand Cash at bank Sundry Debtors Stock Other current assets Total CA (A) Fixed Assets: Furniture & fixtures Other Fixed Assets Total Fixed Assets (B) Total Assets (A+B) 47288 2044680.13) (1792) 20368 338.90 11104 165200 176304 76648.31) (25078) (150948.31 2044680.82 9419. Total C.31 56540 1660419.32 (202519.3 (5.2 (6.86 (113484.6) 12085.58 202519.L (A) 65864 1931196.3 1401360.17 1931196.1) 11104 18 26 2.55 125650 77000 1997392.89 140000 140000 1478008.43 1782233.6 8995.6) Loan-ICICI Bank Loan Creditors Total Liabilties (B) Capital Current a/c (C) Total (A+B+C) 200000 44260.90 31462 1509470.13 1593854.99) 5.07 18576 39.1 2124.

Capital has not changed but loan has been raised by Rs.3% and overall assets have been decreased by 5.6% and liabilities by 9.1% but working capital is more i. Overall financial position of the company is satisfactory.11104 and loan creditors have been increased by 18% 4. 2.e.lxxi 7.5.2 INTERPRETATION 1. Sundry creditors have been increased by 5.28 Comparative Balance Sheet Year ending 31 March 2002 2003 Increase/ Decrease (Amounts) Increase/ Decrease (Percentages) .6% 3. current asset is more than current liabilities. Table 7.5% but bank o/d has been paid off and other current liabilities have been decreased which indicates good management of funds flow. Current assets have been decreased by 6. Fixed assets has been increased by nearly 39. 5.

99) (25) 1478008.69 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Other Current liab.88 185024 (88626.88 200000 58376.69 (1612) (12435) 42.69 1931196.54 23.51) 24.24 39112 (96276.64 500776.76 52938.07 425105.90 31462 1509470.17 677080.88 19824 (6.lxxii ASSETS Current Assets: Cash on hand Cash at bank Sundry Debtors Stock Other current assets Total CA (A) Fixed Assets: Furniture & fixtures Other Fixed Assets Total Fixed Assets (B) Total Assets (A+B) 65864 1931196.66) 480952.07 16124 49740 75482.7) (67925.68) 493530 439152.04 .76 14512 37305 51817 (14047) (21.82 9419.13 1593854.89 423.50) (4.01 22544.07 2356301.66) 7650 1420844.54 (9.47 22.87) 4331.76 11104 165200 176304 200000 45421.12 132120 77000 1865332. Total liabilities (A) Loan-ICICI Bank Loan Creditors Total Liabilties (B) Capital Current a/c (C) Total (A+B+C) 425105.88 12955.33) 22.44 625650 77000 2304484.26) 373.35 12 284.01 28.90 1381732.59 (95.52 Current 2356301.43 1525928.32 (5.24 492056.07 (8995.

Current assets have been increased by 23.8% but working capital is more i. 6.33% and overall assets have been increased by 22. Sundry creditors have been decreased by 6. current asset is more than current liabilities. Fixed assets has been decreased by nearly 21. Capital has not been changed but loan has been increased by nearly 400% and loan creditors have been increased by 12% 4.51% and current liabilities increased by nearly 24.3%.e. 2.5. 5. Bank o/d has been totally paid off last year but this year long-term loan have been raised nearly by 400%. Table 7. Overall financial position of the company is not satisfactory. which indicates poor management of funds flow.01% 3.5% and liabilities has been decreased by 5. which indicates more dues to the firm.lxxiii 7.3 INTERPRETATION 1.29 .

97 536206.1 .50 3894 268202.58 3913 74834.74 10.01 4.5) 565 65886. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.70 16025 3170 30542.77 90134.77 83476. Total office exp.46 (23) 17 32.58 78747.2 23.53 44172.56 20.7) 33132 (1743) 16823.32 83476.42 11.74 4728.7 1093798.55 4728.1 5336833.47 533920.75 40396.09 Increase/ Decrease (Amounts) 1235120.32 5000 21450 (480.22 92420.13 5817964. Total Selling exp.3 670513.75 443785.6 6.04 753990.74 183 4545.41 141322.43 4724165.lxxiv Comparative Income Statement Year ending March Particulars 2000 Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent Salaries Postage & Telegram Electricity Other expenses.72 (4039.8 (10) 207 (55) 55 49.29 Increase/ Decrease (Percentage) 23.58 53000 209500 1609.7 6. (2) Total Operating Exp.22 78747.63 612667.83 136593.30 134307.1 23.80 2001 6571954.01 6.47 36357 49157 1427 47366.32 4096 79380.01 25. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 48000 188050 2090 3329 202316.

4545. 2.75 i.4 INTERPRETATION 1.e. 6.2% so overall gross profit has been increased by 23. There is an increase in net profit after tax amounting to Rs.1% and cost of goods by 23.lxxv 7.1% 4. 3.1%. .01%. Although operating expenses have increased by 25. It may be concluded that there is a sufficient progress in the company and the overall profitability of the company is good.5.6% the increase in gross profit is sufficient to compensate for the increase in operating expenses and hence there has been an overall increase in operational profits by 6. Sales have been increased by 23.

32 83476.3 18.3 670513.50 3894 268202.16 672723.75 561304.45 Increase/ Decrease (Amounts) 822686. Total Selling exp.1 11.8) (83.2 (22888.04 753990.47 36357 49157 1427 47366.49 92738.5.64 9262. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 53000 209500 1609.5 INTERPRETATION: - .97 536206.32 54000 275250 2410 4907 202316.8 31.1 19.6) 4. Total office exp.lxxvi Table 7.28 6634977.33 34245 8040 12475.6 6571954.64 814 8448.14) 2209.4 49.30 134307. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.83 759662.6 8693.36 Increase/ Decrease (Percentage) 12.96 4910 87828.32 4096 79380.79 5672.5 14 0.4 (17) 0.50 111419. (2) Total Operating Exp.6) 774.75 7.86 (2112) (41117) 11048.77 83476.30 Comparative Income Statement Year ending March Particulars 2001 Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent Salaries Postage & Telegram Electricity Other expenses.13 5817964.7 (5.8 10.96 1000 65750 800.7 26 (24.72 9262.22) 25097.15 817013.64 1.33 11.96 92738.50 1013 (65886.09 2002 7394640.60 56059.

There is an increase in net profit after tax amounting to Rs.75%. 3. Sales have been increased by 12.1%. 8448.33% the increase in gross profit is sufficient to compensate for the increase in operating expenses and hence there has been an overall increase in operational profits by 11.6% 4.lxxvii 1.64 i. Table 7.31 . It may be concluded that there is a sufficient progress in the company and the overall profitability of the company is good.5% and cost of goods by 14% so overall gross profit has been increased by 0.e. 10. 2. Although operating expenses have increased by 0.

lxxviii Comparative Income Statement Year ending March Particulars 2002 Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent Salaries Postage & Telegram Electricity Other expenses.75 561304.54 15.60 740320 Increase/ Decrease (Amounts) 415375.41 (6) 15. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 54000 275250 2410 4907 202316.13 633167.09 (43. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.28 6634977.55 7.6) 18.50 111419.32 (15.53 107152.33) (32.13 112995.62 5.96 56000 286500 1359 5806 170507.33 34245 8040 12475.60 56059.37) 10.96 4910 87828.49 92738.97 (39555.51 14413.70 4.47 2000 11250 (1051) 899 (31809.35) (41131.97 2.6) 14675.6 INTERPRETATION .23 19342.32 (18) 26.51 (2721) 17134.51 3.93) (11085) 830 (2245.72) (7.47 2189 104963.16 672723.47 107152.96) 14413.51 7394640.83 759662.96 92738.42) 19. (2) Total Operating Exp.60 6238944.18 1.4 520172.4 23160 8870 10230 70735. Total Selling exp. Total office exp.5.45 2003 6979264.45 Increase/ Decrease (Percentage) 5.54 (55.63 1575.68 396033.

7.6 TREND ANALYSIS The trend equation is to be found out for analyzing the trend in which the current assets of the Company is expected to grow by analyzing the past results.62% and cost of goods by 5.lxxix 1.97% so overall gross profit has been increased by 2.55%.e. There is an increase in net profit after tax amounting to Rs. 19. Operating expenses have decreased by 6% the increase in gross profit is sufficient to compensate for the decrease in operating expenses and hence there has been an overall increase in operational profits by 15.51 i. 3.54%. The Trend equation is y = . 2. 17134. It may be concluded that there is a sufficient progress in the company and the overall profitability of the company is good. Sales have been increased by 5.51% 4.

05 4*6 – (-2) ² 1864978. in ‘000s) 1949635. sales and working capital in the respective years. if the base year is 2002. 7. y (Rs. 2002.e. x -2 -1 0 1 ? x= -2 Current Assets.48)– (-2)* 8116844.07 2304484.(? x) ² 4*(-3592177. ‘x’ is assigned for each year keeping the third year of the study period as the base year and subtracting the other years from the base year.05 4 1 0 1 ? x²=6 -3899270.02 1997392.1 Trend Analysis of Current Assets Table 7. 2003). 2001. Here the X represents the years for which the analysis is done (2000.18 . The y values represent the value of current assets.32 Year X 2000 2001 2002 2003 Total Deviation.48 x² x*y Calculation of ‘b’: b = = = N? x*y-? x*? y N? x² . For example.76 ?y=8116844.) (2000-2002).lxxx a+bx.2 1865332.2 0 2304484.6. The trend ‘y’ values are calculated after determining the ‘a’ and ‘b’ values. current liabilities. A deviation.76 ? x*y= -3592177. the first year deviation is -2 (i.04 -1997392.

45 + 93248.55 Y= 2075835.15 .9 Calculation of ‘a’: a = (? y / N) – b* (? x / N) a = (8116844.45 + 93248.45 + 93248.35 Trend Projections for next two years.25 When X=2005 (x=3) Y= 2075835.65 Y=2075835.lxxxi 20 b = 93248.9*(0) Y= 2075835.9*(-2/4) a = 2075835.45 + 93248.45 + 93248.9*(2) Y= 2262333.9*(-2) Y= 1889337. When X=2004 (x=2) Y= 2075835.45 When X=2000 (x=-2) When X=2001 (x=-1) When X=2002 (x=0) When X=2003 (x=1) Y= 2075835.45 + 93248.05/4) – 93248.9 *(-1) Y= 1982586.9*(1) Y= 2169084.9*(3) Y= 2355582.45 Y= 2075835.

A chart depicting the trend values and the actual values can be seen. . The constant line in the chart depicts the trend values and the other one is the actual values. The trend projection of the current assets level also increases for the next two years as seen.lxxxii It is clear from the analysis that the values of Y are considerably increasing through the years during the study period.

2000 .2002 2000 2001 2002 2003 YEAR figure viii 7.2001 .2 Trend Analysis for the Current Liabilities .lxxxiii TREND ANALYSIS CURRENT ASSETS 2500000 2000000 CURRENT ASSETS 1500000 TREND ACTUAL 1000000 500000 0 1999 .6.

24 ?y= 5935410.9 1420844.06 -1660419.lxxxiv Table 7. y (Rs.24 ? x*y= -2928925.28 20 7755.06 4 1 0 1 ? x²= 6 -2689350.03 1660419.864*(-2/4) a=1487730.06/4) – 7755.89 1509470.89 0 1420844.33 Year X 2000 2001 2002 2003 Total Deviation.45 .864 Calculation of ‘a’: a= (? y / N) – b* (? x / N) a= (5935410.(? x) ² = = b = 4*(-2928925. in ‘000s) 1344675.71)– (-2)* 5935410.06 4*6 – (-2) ² 155117. x -2 -1 0 1 ? x= -2 Current Liabilities.71 x² x*y Calculation of ‘b’: b = N? x*y-? x*? y N? x² .

04 The analysis clearly depicts that the value of current liabilities of the Company are also increasing.59 Y= 1487730. When X=2004 (x=2) When X=2005 (x=3) Y= 1487730.864*(-1) Y= 1479974.45 +7755. This effect must be balanced with an equivalent or higher increase in the current assets.45 +7755. The constant line in the chart depicts the trend values and the other one is the actual values.72 Y=1487730.864 *(1) Y= 1495486.18 Y= 1487730.45 +7755.45 +7755.864*(2) Y= 1503242. .864*(-2) Y= 1472218. A chart depicting the trend values and the actual values can be seen.45 +7755.45 Y=1487730. The current liabilities tend to grow in the forthcoming years as seen and the trend projections of the values also reflect the same.lxxxv When X=2000 (x=-2) When X=2001 (x=-1) When X=2002 (x=0) When X=2003 (x=1) Y= 1487730.864*(0) Y= 1487730.31 Trend Projections for next two years.864*(3) Y= 1510998.45 +7755.

6.3 Trend Analysis for the Sales Table 7.lxxxvi TREND ANALYSIS FOR CURRENT LIABILITIES 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 1999 2000 2000 2001 2001 2002 2002 2003 TREND ACTUAL figure ix 7.34 .

966 Calculation of ‘a’: a= (? y / N) – b* (? x / N) a= (26282692.09+574997.60 ?y=26282692.lxxxvii Year X 2000 2001 2002 2003 Total Deviation.09 When X=2000 (x=-2) Y= 6858172.43 6571954.97*(-2/4) a=6858172.39)–(-2)* 26282692.44 4 1 0 1 ? x²=6 -10673666.966*(-2) .86 -6571954.32 20 b=574997. x -2 -1 0 1 ? x=-2 Sales.39 x² x*y Calculation of ‘b’: b= N? x*y-? x*? y N? x² .(? x) ² = 4*(-10266356.44 4*6 – (-2) ² = 11499959. y (Rs.44/4) – 574997.60 ? x*y=-10266356. in ‘000s) 5336833.13 0 6979264.28 6979264.13 7394640.

966*(-1) Y= 6283174.09 Y=6858172. The constant line in the chart depicts the trend values and the other one is the actual values.09+574997. A chart depicting the trend values and the actual values can be seen. The sales tend to grow in the forthcoming years as seen and the trend projections of the values also reflect the same. When X=2004 (x=2) When X=2005 (x=3) Y= 6858172.09+574997.09+574997.15 When X=2001 (x=-1) When X=2002 (x=0) When X=2003 (x=1) Y= 6858172. .12 Y=6858172.966 *(3) Y= 8583166 The analysis clearly depicts that the value of sales of the Company is increasing during the study period.966*(1) Y=7433170.lxxxviii Y = 5708176.966*(2) Y= 8008168.03 Y=6858172.06 Trend Projections for next two years.09+574997.966*(0) Y=6858172.09+574997.

2000 .lxxxix TREND ANALYSIS FOR SALES 8000000 7000000 6000000 5000000 SALES 4000000 3000000 2000000 1000000 0 1999 .6.2001 .4 Trend Analysis for the Net Working Capital .2002 2000 2001 2002 2003 YEAR TREND ACTUAL figure x 7.

31) 0 883640.47 + (-129582.054) Calculation of ‘a’: a= (? y / N) – b* (? x / N) a= (2181434/4) – (-129582.(? x) ² = 4*(-663251. in ‘000s) 604959.47 When X=2000 (x=-2) When X=2001 (x=-1) Y= 480567.52 ?y=2181434 4 1 0 1 ? x²=6 (1209919.054)*(-2/4) a=480567.08) 20 b=(-129582.98) (336972.52 ? x*y=(-663251.054)*(-2) Y= 739731.31 355861.58 Y=480567.17 883640.054)*(-1) .47 + (-129582.77)–(-2)*30683 4*6 – (-2) ² = (-2591641.xc Table 7. x -2 -1 0 1 ? x=-2 Net Working Capital.35 Year X 2000 2001 2002 2003 Total Deviation.77) x² x*y Calculation of ‘b’: b= N? x*y-? x*? y N? x² . y (Rs.99 336972.

47 + (-129582.47 + (-129582. .52 When X=2002 (x=0) When X=2003 (x=1) Y= 480567.42 Trend Projections for next two years.054)*(2) Y= 221403. A chart depicting the trend values and the actual values can be seen.xci Y= 610149.47 + (-129582.054)*(3) Y= 91821. From the trend analysis it is clear that the sales of the company will decrease in the forthcoming years too.31 The analysis clearly depicts that the value of Sales of the Company is constantly decreasing during the study period.36 Y= 480567.47 Y=480567.054)*(0) Y= 480567. When X=2004 (x=2) When X=2005 (x=3) Y= 480567.47 + (-129582. The constant line in the chart depicts the trend values and the other one is the actual values.054)*(1) Y=350985.

2002 2000 2001 2002 2003 YEAR TREND ACTUAL figure xi CHAPTER 8 .2000 .2001 .xcii TREND ANALYSIS FOR NET WORKING CAPITAL 1000000 900000 NET WORKING CAPITAL 800000 700000 600000 500000 400000 300000 200000 100000 0 1999 .

.xciii FINDINGS 1. Which infers that the net profit is increasing which is good for the company and to the shareholders. 5. 4. The sundry debtors was quite fluctuating since 2002. The company should try to maintain the same in the future. 2. It shows an increasing trend in the current year. Company’s Inventory level was very low when compared to the cost of goods sold. so the company has to control the debtors otherwise it may evade the profits of the company. So the company has make efforts to increase the inventory level otherwise the firm may go in to a stock out situation. The quick assets and current liability was fluctuating alternatively. The acid test ratio was not constant it was fluctuating in nature. The net profit turnover ratio is quite satisfactory. The Stock Turnover Ratio shows a fluctuating trend. The debtor turnover ratio shows an increasing trend. The current asset ratio was in a increasing trend for the period 2003. 3. which is not good for the firm. The changes in quick Assets show that it will not be able to meet its current obligation so the company should concentrate to maintain the ratio in a optimum level so that the company will meet all its current obligations. which was very good for company.

xciv 6. The working capital was in a increasing trend and also the sales. So the company should try to increase the working capital by reducing its current liabilities and take measures to increase the sales of the company.

7. From the Common size balance sheet, we can infer that the secured loans were in an increasing trend and sundry debtors were also increasing. So the company has to take steps to control the above said items, which will improve the performance of the company in the coming years. 8. From the Common Size Income Statement we can find that the sales was high so that gross profit was high enough to take of the operating expenses, which showed an operating profit and also net profit after tax was increasing. 9. From the Comparative balance sheet we can find that current assets was always high than the current liabilities which is a good sing for the company but loans and other creditors are high to pay off. 10. From the Comparative income statement we can find that the sales was high so that gross profit was high enough to take of the operating expenses, which showed an operating profit and also net profit after tax was increasing. 11. Even in trend percentage 2003 was the year in which current assets was higher than current liabilities and working capital was managed in an efficient way.

xcv

CHAPTER 9 SUGGESTIONS 1. From the liquidity ratios we can suggest that the company has to take immediate measures to control the debtors for which it can undertake any of the control techniques used by management professionals. 2. From the Profitability ratios, we can suggest that the company has to take steps to improve the profits for the company by applying proper control over cost of goods sold. 3. From the activity ratios we can suggest the company has to take steps to reduce the producing properties or cost of goods sold, since the increasing cost of goods sold has eroded the profits of the company. Also the company has to take steps to increase the inventory level since the average inventory level is very low when compared to the sales of the company. 4. From the financial stability ratios we can suggest that the company should try to reduce its borrowings and also try to make proper budget to reduce the producing properties of cost of goods sold which was highly increasing for the company. Also the company’s net worth level was at a satisfactory level which they should maintain the same in the coming years. 5. From the common size income statements we can suggest that the company should take steps to increase its income and should try to reduce its administration and finance charges.

6. From the trend Income statement, we can suggest that the company should try to decrease its administration expenses, which have eroded the profits of the company. So the company has to take steps to reduce the administration cost.

xcvi

7. From the Comparative Income statement, we fan suggest that the Sales was decreased in the current year and the stock was very much increased in the current year. Also the company has taken steps to reduce the operating expenses, which they should continue to do. 8. Gross profit was enough to meet the operating expenses and operating profit was high and also the net profit after tax was in an increasing nature. 9. The average collection period is not satisfactory because it is more than the firm’s credit term of 60 days. It took more than 80 days to collect so care must be taken to reduce it. 10. The average number of days taken by the firm to pay its creditors is more than 80 days. Paying of the credit within the credit period helps the firm to improve its relationship with the suppliers CHAPTER 10 CONCLUSION

From the detailed Study on Financial Analysis it was found that the company was concentrating only on increasing the sales of the company but not used any Financial Strategy to show an attractive Balance Sheet to the investors.

The company has increased its capital and has maintained the same and loans have bought to such an extent that dues have become more and more burden to the company. Also the impact of the increase in debt was seen on the reduction in Net Profit to a huge extent.

New Delhi. (2 nd edition. WEBSITES: ? ? www. Kalayani Publishers).Sharma.indianinfo.investopedia. BIBLIOGRAPHY BOOKS ? Kothari C. Reprint 2004) ? R.K.R. New Delhi Pearson education Private Limited. Financila Management (4 th edition. reducing loan borrowings. Research Methodology (4 th edition.com www. 1996) ? Malhotra. in the coming years.com .xcvii So the company can follow suitable strategies to increase the performance of the company by way of increasing the working capital. paying the credit in the due time etc. New Delhi: Viswa Prakasham. Research Methodology: Methods and Techniques.

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