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.

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

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

21 7.1 7.34 7.24 7.30 7.12 7.29 7.13 7.28 7.16 7.vi LIST OF TABLES TABLE NUMBER 7.27 7.3 7.22 7.32 7.26 7.2 7.20 7.9 7.14 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. 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 .4 7.7 7.18 7.5 7.23 7.6 7.31 7.10 7.33 7.8 7.15 7.11 7.17 7.25 7.19 7.

21 24 27 30 33 36 39 80 83 86 89 .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.

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

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

1 FINANCIAL ANALYSIS 4. ability to pay interest and debt maturities (both current and long-term) and profitability of a sound dividend policy.1 MEANING: The term ‘financial analysis’. profit and loss account and other operative data. sales and working capital of the firm tend to change using trend analysis. ? To highlight changes in financial position with help of funds flow & cash flow analysis.x ? To highlight nature of changes influencing financial position and performance of the enterprises with the aid of comparative Balance sheet analysis. . current liabilities. CHAPTER 4 REVIEW OF LITERATURE 4.1. common-size Balance sheet and trend percentage analysis. working capital ratio. ? To determine the trend of the current assets. absolute liquid ratio. stock turnover ratio etc. refers to the process of determining financial strengths and weakness of the firm by establishing strategic relationship between the items of the balance sheet. 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. ? To analyse the short-term financial position of the firm through the various liquidity & efficiency ratios like current ratio. also known as analysis and interpretation of financial statements’. liquid ratio. 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.

thus serves only a limited purpose.2 TYPES OF FINANCIAL ANALYSIS: It can be classified into 2 and they are: ? ? On basis of material used On basis of modus operandi. However. 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. ? INTERNAL ANALYSIS. The analysis is done by outsiders who do not have access to the detailed internal accounting records of the business firm. these external parties to the firm depend almost entirely on the published financial statement. government agencies and public. For financial analysis. . These outsiders include investors. potential creditors. creditors. 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.1. External analysis.xi 4.

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

Calculation of appropriate ratios from the above data. ? Interpretation of the ratios. It is the process of establishing and interpreting various ratios for helping in making certain decisions. 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 . 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. Company’s annual reports. It is a means of better understanding of financial strengths and weaknesses of a firm.xiii 5. Comparison of the calculated ratios of the same firm in the past. 5. 2. Balance Sheets of the firm for the last three years.2 RATIO ANALYSIS A ratio is a simple arithmetical expression of the relationship of one number to another. Ratio analysis is a technique of analysis and interpretation of financial statements. It is an expression of the quantitative relationship between two numbers. but the analyst has to select the appropriate ratios from the same keeping in mind the objective of analysis. There are a number of ratios which can be calculated from the information given in the financial statements. 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.1 SOURCE OF DATA: The source of data comes mainly from the following: 1.

The acid test ratio is determined by the formula.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 5.2.1.2 Acid Test Ratio – It is also known as quick ratio and is a more rigorous test of liquidity than in the current ratio. To measure the liquidity position of a firm. The absolute liquid ratio is determined by the formula. Current Ratio = Current Assets Current Liabilities 5.2.1. Acid Test Ratio = Liquid Assets Current Liabilities 5.2.1. 5.1 Liquidity Ratios The term ‘Liquidity’ refers to the ability of a concern to meet its current obligations as and when these become due.1Current Ratio– It may be defined as the relationship between current assets and current liabilities. debtors and inventories are not considered and the cash which is the most liquid asset is only taken in consideration.2.2 Efficiency Ratios . 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. acid test ratio and the absolute liquid ratio are to be calculated. The current ratio is determined by the formula. Absolute Liquid Ratio = Absolute Liquid Assets Current Liabilities 5. the current ratio.2.3 Absolute Liquid Ratio – It is also known as cash ratio and here the receivables. It is defined as the relationship between the quick/liquid assets and the current or liquid liabilities.

To measure the efficiency of the firm the stock/inventory turnover ratio. of times the working capital is turned over the course of the year. This ratio measures the efficiency with which the working capital is being used by the firm.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. 5. The efficiency of with which assets are managed directly affect the volume of sales. Balance sheet and income statement are shown in analytical percentages. It indicates the number of times the debtors are turned over during a year. These . Working Capital Turnover Ratio = Cost of Sales (or. creditors/payable turnover ratio and working capital turnover ratio are a nalyzed.xv Funds are invested in various assets in business to make sales and earn profits. Similarly.2. The working capital turnover ratio is calculated by the formula. total liabilities and total sales. debtors/receivables turnover ratio.3 Working Capital Turnover Ratio – This ratio indicates the no. various liabilities are taken as particulars of total liabilities. The total assets are taken as 100 and different assets are expressed as a percentage of the total. The figures are shown as percentages of total assets. It indicates the no. Debtors Turnover Ratio = Total Sales Debtors 5.3 COMMON-SIZE STATEMENT The common-size statements. Sales) Net Working Capital 5.2.2. These ratios are called as Efficiency ratios.1 Inventory Turnover Ratio –It is also known as stock velocity and indicates whether inventory has been efficiently used or not. The receivables turnover ratio is calculated by the formula. Efficiency ratios measure the efficiency or effectiveness with which a firm manages its resources or assets.2 Receivables Turnover Ratio – Debtors turnover ratio indicates the velocity of debt collection of the firm.2. The inventory turnover ratio is calculated by the formula.2. Inventory Turnover Ratio = Sales Inventory 5.

Absolute data in terms of percentages.xvi statements are also known as component percentage or 100-percentage statement because every individual item is stated as a percentage of 100.5 FUND FLOW STATEMENT Fund Flow Statement shows the movement of funds and is a report of the financial operations of the business undertaking. 2. 5. 5. 4. The shortcomings in comparative statement and trend percentages where changes in items could not be compared with the totals have been covered up. 1. Any statement prepared in a comparative form will be covered in comparative statement. Increase or decrease in terms of percentage. The individual assets are expressed as percentage of total assets. It indicates various means by which funds were obtained during a particular period and the ways by which these funds were employed. The comparative statement may show: 1. 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. The totals of assets or liabilities are taken as 100. 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.4 COMPARATIVE STATEMENT The comparative financial statements are statement of the financial position at different periods of time. The common-size statement may be prepared in the following way. . The analyst is able to assess the figure in relation to total values. Change in absolute figure 3. Absolute figure 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. From practical point of view generally two financial statement are prepared in comparative form for financial analysis purposes. 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.

A firm needs sufficient cash to pay debts maturing in the near future.xvii Fund Flow analysis reveals the changes in working capital position. This summarizes the causes of changes in cash position between dates of two Balance Sheets. *** *** 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. 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. 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. *** . A Cash Flow Statement is a statement describing the changes in financial position on cash basis. 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. Funds flow statement deals with the financial resources required for running business activities. to pay interest and other expenses and to pay dividends to shareholders. **** Total *** *** Rs. It indicates the sources and uses of funds. The cash flows statement is similar to the fund flow statement except that it focuses attention on cash instead of working capital. The firm can make projections of cash in flows and outflows and outflows for the near future to determine the availability 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.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. 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. *** *** *** *** *** *** *** *** **** *** *** *** *** *** *** *** *** **** *** . Similarly a minute analysis of the different applications of cash may help to slow down or reduce the cash outflows of cash. 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…. The trend equation is to be analyzed for this purpose.? X? Y N? X² . For this the Trend analysis method is used to make a clear idea.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….7 TREND ANALYSIS: This method is used to analyse the trend in the growth of the company’s current assets and current liabilities. The trend equation is Y = a + bX Step1: Calculation of ‘b’ b = N? XY . The trend analysis is done based on the following method.(Closing Balance) *** *** *** *** *** **** *** *** *** *** **** *** **** ***** 5. sales and working capital.(? X)² Step2: Calculation of ‘a’ a = (? Y / N) – b (? X / N) .

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. so study is about past only. it needs not be indicative of future. ? Time is major limiting factor of study. ? 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. Step4: The chart is then interpreted based on the trend of the line for each Y value (current assets. The line which is seen in the chart is referred to as the trend line. 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. the study does not cover the areas relating to industrial analysis and economic growth of Bharat Oil Company. ? Analysis is only a means and not an end itself. It is not possible to analyze all the aspects in details within time allowed because of lack of time. ? The data taken for analysis covers only a period of 2000-2003. . current liabilities and sales). The researcher has to make interpretation and show his own conclusion.

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

The company is the leader in oil sector among the private sector and market leader for southern region. and also in Kerela and Andhrapradesh.1 RATIO ANALYSIS . 6. Lubrication oils and Grease.4 SUPPLIERS FOR BOC: ? ? ? ? Castrol IBP Elf Shell 6. Chengalpet. and IBP oils.xxii has 12 distribution points. 6. In this segment. 2T oil of Shell. strategically located for quick and easy distribution of its products. CHAPTER 7 ANALYSIS AND INTERPRETATION 7. They are planning to expand their operations in Kancheepuram.3 PRODUCTS OF BOC The company’s markets and sells the following products: ? ? ? ? Lubrication oil of ‘Castrol’.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. Chennai. Elf. the Company’s distribution network comprises of 10 wholesale distributors and over 75 dealers for Castrol and around 50 direct selling agents for Shell. 2T and 4T oil of Elf & IBP.

12 132120 77000 75482.24 1.57 16511.A Current Liabilities: Sundry creditors Bank o/d Other C.1.07 2304484. 1.24 1381732.89 1.L Total C.1.1 PARTICULARS Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets Total C.24.45 1401360. .55 125650 77000 52938.76 2000 2001 2002 2003 25566. 1.24 39112 1420844.xxiii 7.43 1782233.46 85736 1344675.08 446676 75000 12085.2:1 Actual Ratio: .62 respectively.9 1.13 1593854.1 Current Ratio Table 7. 1.31 56540 1660419.03 1.45.43 1525928.02 1997392.20.82 9419.89 423.90 31462 1509470.20 1478008.22 423.94 1402392.58 202519.L Current Ratio: 1949635.2 1865332.44 625650 77000 1242427.62 Ideal Ratio: .

The company needs to improve its short-term financial position.1.xxiv CURRENT RATIOS 2 1.1.5 0 RATIOS Year 1.1 INTERPRETATION: ? Current Ratio of the company is not satisfactory because the ratios are [1.1.2 Year 1.20.45 Year 1.62 RATIOS FIGURE i 7.5 1 0.24 Year 1.62] much below the accepted standard of 2:1. . Low current ratio indicates that the firm shall not be able to pay its current liabilities in time.1.1.24.45.

7. In 2003 they had enough current assets to pay of their liabilities. ? Current liabilities have been decreasing from 2001.89 423. Cash in hand was constantly increasingly which showed a good sign to pay of immediate expenses.2 Acid Test Ratio Table 7. which shows a high working capital.94 1402392.13 1593854.1.12 77000 75482.55 77000 52938.43 1525928.xxv ? ? ? Bank o/d has been paid off in 2002 & 2003. ? ? Stock flows are uneven during 2001 & 2003.43 1782233.22 423. Even though current assets are high than current liabilities the current ratio are less than the ideal one.2 PARTICULARS Liquid Assets: Cash in hand Cash at bank Sundry Debtors Other current assets 2000 2001 2002 2003 25566.08 75000 12085.82 9419.44 77000 .

20.18 Ideal Ratio: .24 1.24 39112 1420844.90 31462 1509470. 1.46 85736 1344675. 1.L Total C.03 1.1:1 Actual Ratio: .20 1478008.18 respectively.A Current Liabilities: Sundry creditors Bank o/d Other C.45 1401360. 1.9 1.07 1678834.02 1997392.76 1242427.L Acid test Ratio: 1949635.58 202519.45.xxvi Total L.1.89 1. .57 16511.15 1381732.15.2 1733212.31 56540 1660419.

2.1.15.1 INTERPRETATION: 1. .1.1.xxvii ACID TEST RATIO 2 1.5 0 RATIOS Year 1.15 Year 1.18] much above the accepted standard of 1:1.5 1 0.20.45.45 Year 1.18 RATIOS Figure II 7. Acid test ratio of the company is satisfactory because the ratios are [1.1.2 Year 1.

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

0.31 56540 1660419.11 Ideal Ratio: .05 1478008.82 9419.13 77000 75482.09.89 423.58 202519.07 1401360.22 423. 0.94 89508.94 75000 12085.0.57 16511.9 0.05.89 0.43 77000 52938.A Current Liabilities: Sundry creditors Bank o/d Other C.32 2000 2001 2002 2003 25566.L Total C.65 139357.24 39112 1420844. .95 152906. 0.46 85736 1344675.5:1 Actual Ratio: .03 0.43 77000 1242427.90 31462 1509470.11 respectively.07.09 1381732.xxix PARTICULARS Absolute Liquid Assets: Cash in hand Cash at bank Other current assets Total L.L Absolute liquid Ratio: 100566.24 0.0.

02 0 RATIOS Year 0. .05 Year 0.04 0.06 0. 0.e.11 RATIOS FIGURE iii 7.1.12 0.07 Year 0.1 0.xxx ABSOLUTE LIQUID RATIO 0.5.1 INTERPRETATION ? Absolute liquid ratio is not satisfactory as it is much lower than the rule of thump i.3.09 Year 0.08 0.

which shows a negative operation in the business.05. ? Here current liabilities are more than current assets. ? Absolute Liquid ratios are less than 0. ? An absolute Liquid ratio does not include stocks but includes only cash and shortterm investments. 7.11) which shows they are in a very bad position to pay off the credits.4 PARTICULARS Cost of goods sold: 2000 2001 2002 2003 .09.xxxi ? However this ratio is not in much use even while evaluating the liquid position of a firm. 0. The company needs to improve its short-term financial position. 0.07.1. which are very low than current liabilities.4 Inventory Turnover Ratio Table 7.5 namely (0. 0.

04 6634977.43 612667.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 51.60 740320 272687 446676 446676 125650 125650 132120 132120 625650 27.1 22.5 757770 378885 16.45 6979264.80 6571954.63 5817964.8 17.28 759662.1 572326 286163 20.13 753990.9 7.5 13.83 6238944.5 4724165.09 7394640.60 5336833.1 .

1 Year 20.5 7.1. .xxxiii INVENTORY TURNOVER RATIO 60 50 40 30 20 10 0 RATIOS Year 13. A high inventory turnover indicates efficient management of inventory because more frequently the stocks are sold out.3 FIGURE IV RATIOS Year 51.4.1 INTERPRETATION 1.5 Year 16.

7.5 . In 2002 inventory turnover ratio was a head lower comparing to 2000. which shows a very poor management of stocks. efficient management of stocks. In 2003 inventory turnover ratio was high which indicates that the firm was good at their stock management 5. This kind of irregularities increase or decrease indicates the firms inability to manage the stocks. 3. 4.xxxiv 2.5 Debtors Turnover Ratio Table 7. 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.1.

Debtors Debtors Turnover 1145693.08 2548085. Debtors (/2) Avg.60 6979264.28 4.2 86 Average collection Period: (in days) 1402392.28 6979264.67 1688043.4 81 1593854.43 5336833.55 1593854.55 3184625.6 4.12 1525928.56 1559891.28 7394640.12 3376087.815 4.2 1274042.44 3119782.xxxv PARTICULARS Net Credit sales: Sales (-) Returns Net credit sales Average Debtors: Opening Debtors (+) Closing Debtors Tot.13 7394640.12 1402392.5 80 5336833.43 6571954.63 1592312.08 1782233.60 2000 2001 2002 2003 Ratio: (in times) .13 87 1782233.13 6571954.835 4.

which implies inefficient management of debtors/sales.13 Year 4.5.xxxvi DEBTORS TURNOVER RATIO 4.1.1 INTERPRETATION 1.9 RATIOS RATIOS Year 4.4 Year 4.6 4.2 Year 4. There is a low debtors turnover ratio.2 4.3 4. .1 4 3.4 4.5 FIGURE V 7.5 4.

6 . 3.1.xxxvii 2. It took more than 80 days to collect. 4. 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 7.6 Creditors Turnover Ratio Table 7. The company should see that their collection period should be below 60 days for efficient performance. But in 2002. 2003 it has reduced which shows a good sign comparing to previous years. The average collection period is not satisfactory because it is more than the firm’s credit term of 60 days. 5.

48 1439684.565 Ratio: (in times) Average payment period: (in days) 2643788.60 2000 2001 2002 2003 .33 6682729.57 1242427.56 1242427.90 1381732.24 5490661.xxxviii PARTICULARS Net Credit purchases: Purchases (-) Returns Net credit purchases 4898154. Creditors Creditors Turnover 4.7 78 2268111.075 2879369.58 1478008.2 87 4.13 1134055.14 1429870.60 4898154.63 5490661.58 1401360.74 2859741.15 1321894.57 1025683.57 1401360.3 85 4.6 79 4. Creditors (/2) Avg.33 6682729.63 Average creditors: Opening Creditors (+) Closing Creditors Tot.04 6615246.90 1478008.04 6615246.

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

The working capital has increased to 20.xlii WORKING CAPITAL TURNOVER RATIO 25 20 15 RATIOS 10 5 0 RATIOS Year 2000 8. It also indicates the number of times the working capital is turned on.8 Year 2001 19.1.7.7% in 2002 and then has reduced to 7.8%. A high ratio indicates efficient utilization of working capital and low ratio indicates otherwise.5 Year 2002 20. . and it shows their inefficient utilization of working capital.7 Year 2003 7.8 FIGURE VII 7. 2.1 INTERPRETATION: 1. which is a huge one.

4.xliii 3. which has showed their inefficient management.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. Sales were increasing till 2002 and have decreased in 2003. Working capital ratio was increasing till 2002 and suddenly has fallen to 7.22 in Decrease W.94 12085.C (Rs) 13481.C (Rs) Current Assets: Cash in hand 25566.72 in Particulars 2000 .8%. 7.

32 .xliv Cash at bank Sundry Debtors Stock Other current assets Total C.43 379841.99 336972.A – C.57 16511.31 56540 1660419.58 Table 7.L) Net Decrease in Working Capital 604959.85 344940.9 Calculation of Funds From Operation Rs.47 2000 382264.31 267987.08 446676 75000 1949635.43 1782233.58 202519.2 423.86 1402392.01 186007. Closing Balance of P&L a/c Add: Non-fund and Non-operating expenses: ? Depreciation 83476.9 321026 334507.72 604959.8 Table 7. Total C.A (A) Current Liabilities: Sundry creditors Bank O/D Other Current liab.68 604959.68 679448.55 125650 77000 1997392.99 1242427.58 679448.46 85736 1344675.L (B) Working Capital (C.03 1401360.32 7022 90498.99 267987.89 29196 29196 158933.02 423.

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.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. Amount Rs. 267988.58) 11750.33507.74 267987.42 (78747.10 Funds Flow Statement For the year ending 31-3-2001 Sources Increase in capital Funds from operations Net Decrease In Working Capital Amount Rs.C (Rs) in Decrease W. which may lead to working capital shortage and difficulties in paying current liabilities in the near future. 183 33507 76719.74 - 381409.C (Rs) in Particulars 2001 . 100000 11750.58) (78747. Hence working capital has been used to buy fixed assets.68 Application Tax paid Purchase of Fixed Assets Non-Trading payments Repayment of loan cr. Computation of Funds Flow Statement for the year ending 2002 Table 7.11 Schedule of Changes in Working Capital for the year ending Increase 2002 W.42 271000 381409.2.42 7.1 INTERPRETATION: The statement of working capital reveals a net decrease in working capital of Rs.

32 12085.55 125650 77000 1997392.96 .13 1593854.2 52938.17 283916.82 9419.17 18888.12 Calculation of Funds From Operation Rs.90 202519.43 1782233.17 355861.43 188379.xlvi Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets Total C.L) Net Increase in Working Capital 1401360. Total C.61 283916.86 355861.7 6470 56319.96 6591 99329.6 8995.31 25078 227597.61 Table 7.L (B) Working Capital (C.A (A) Current Liabilities: Sundry creditors Bank O/D Other Current liab.86 355861.43 336972.12 132120 77000 1865332.31 18888.90 31462 1509470.58 202519.22 423. Closing Balance of P&L a/c Add: Non-fund and Non-operating expenses: ? Depreciation 92738.31 56540 1660419.31 76648.A – C.32 76648.3 188379.89 1478008.07 40853.

14 Schedule of Changes in Working Capital for the year ending Increase 2003 W. which was Rs.64 52157. 18888. 814 32454. The statement of application of funds while confirming the increase in working capital also discloses the purchase of fixed assets. rising of loan etc.64 - 52157.64 11104 25200 Application Tax paid Purchase of Fixed Assets Net Increase In Working Capital Amount Rs.2 INTERPRETATION: The statement of working capital reveals a net increase in working capital of Rs.C (Rs) in Decrease W.78 18888.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. Hence working capital has been used to buy fixed assets.32) (83476. Computation of Funds Flow Statement for the year ending 2003 Table 7.64 7.2.32) 15853.32455. that may lead to working capital shortage and difficulties in paying current liabilities in the near future.13 Funds Flow Statement For the year ending 31-3-2002 Sources Funds from operations Raising of loan Increase in loan cr Amount Rs.C (Rs) in Particulars 2002 . 15853.86.86 (83476.

90 31462 1509470.17 527779.52 612350.12 132120 77000 1865332.15 Calculation of Funds From Operation Rs.90 1381732.73 Table 7.24 39112 1420844.52 527779.66 96276.7 67925.38 1478008.73 612350.43 1525928.xlviii Current Assets: Cash in hand Cash at bank Sundry Debtors Stock Other current assets Total C. Closing Balance of P&L a/c Add: Non-fund and Non-operating expenses: ? Depreciation 107152.A – C.52 883640.47 4327 111479.35 883640.24 96276.35 883640.82 9419.07 75482.66 7650 7650 355861.68 76921.44 625650 77000 2304484. Total C.76 22544.07 8995.89 423.13 1593854.07 493530 516074.L (B) Working Capital (C.L) Net Increase in Working Capital 52938.A (A) Current Liabilities: Sundry creditors Other Current liab.47 .

2.35 530500. 2721 527779.16 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. Hence working capital has been gained from sale fixed assets. which was used for rising of loan.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. 14047 497712.84 18740.3 CASH FLOW ANALYSIS Computation of Cash Flow Statement for the year ending 2001 Table 7.35 7. 7. which may lead to working capital surpluses paying current liabilities in the near future.96) 18740.51 - 530500.356.96) (92738. 527779.14047.17 .35 (92738. The statement of application of funds while confirming the increase in working capital also discloses the sale of fixed assets.51 Application Tax paid Net Increase In Working Capital Amount Rs.3 INTERPRETATION: The statement of working capital reveals a net increase in working capital of Rs. which was Rs.

24) Amount Rs.74 7022 11750.48 (114962.Decrease in liabilities & increase in assets ? Debtors & other C.3. 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 4728.01 (381841.1 INTERPRETATION: 1. 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. (33507).28 (183) 80489.74 321026 158933. .Increase in liabilities & Decrease in assets ? Stocks ? Creditors Less: .28 (33507) (33507) 100000 (271000) (171000) (124017.72) 9055.80489. Cash form operating activities a re Rs.A ? Other C.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: . 7.47) (29196) 80672.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.l Cash Flow Statement For the year ending 31 st March 2001 Particulars Amount Rs.

4.18 . Cash from investing activities shows a negative balance due to amount spent on purchase of fixed assets. Cash from financing activities is Rs.42) Computation of Cash Flow Statement for the year ending 2002 Table 7. (114962.li 2. Overall cash and bank balance at the end showed a negative balance of Rs. (171000) which due to repayment of loan creditors and increase in capital invested. 3.

64 188379.3.Non-cash & operating expenses ? Depreciation Less: .39 (814) 248519.32 (25078) (6470) 249333.2 INTERPRETATION: - .78) 11104 25200 36304 252368.64 6591 15853.L ? Stock Cash used in operation before tax Less: .Decrease in liabilities & increase in assets ? Other C.Increase in liabilities & Decrease in assets ? Debtors ? Creditors Less: .39 (32454. 7.lii Cash Flow Statement For the year ending 31 st March 2002 Particulars Amount Rs.43 76648. 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 9262.78) (32454.66) 62357. Cash flow from operating activities Net Profit before tax Adjustments for non-cash & operating items: Add: .Non-cash & operating incomes Operating profit before Working Capital charges Adjustments for changes in current assets & liabilities: Add: .95 Amount Rs.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.61 (190010.

Cash form operating activities are Rs. 2. Cash from financing activities is Rs. 4. Cash has been positively used in operating and financing activities.liii 1.78).36304 which due to raising of loan creditors and long-term loans. Overall cash and bank balance at the end showed a positive balance of Rs. 62357. (32454.95 5. 3.19 .248519. Cash from investing activities shows a negative balance due to amount spent on purchase of fixed assets. Computation of Cash Flow Statement for the year ending 2003 Table 7.39 and cash from investing activities is Rs.

liv Cash Flow Statement For the year ending 31 st March 2003 Particulars Amount Rs.3 INTERPRETATION: - .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. Cash flow from operating activities Net Profit before tax Adjustments for non-cash & operating items: Add: .88 19824 500776.51 4327 18740.36 Amount Rs.Non-cash & operating expenses ? Depreciation Less: .47) 14047 14047 480952.Decrease in liabilities & increase in assets ? Sundry Creditors. 7. ? Stock Cash used in operation before tax Less: .3.Increase in liabilities & Decrease in assets ? Debtors ? Other C.95 78970.Non-cash & operating incomes Operating profit before Working Capital charges Adjustments for changes in current assets & liabilities: Add: .66) (493530) (495490.88 16612.47) (2721) (498211.51 67925.68 7650 (96276.L Less: .41 62357. 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.

88 which due to raising of loan creditors and long-term loans. 2. 78970. 3. 14047.500776. Overall cash and bank balance at the end showed a positive balance of Rs.size Balance sheet for the year ending 31st Mar 2000 & 2001 2000 Amount (Rs) ASSETS Current Assets: Percentage Total Amount (Rs) 2001 Percentage Total . Cash has been positively used in investing and financing activities. Cash from financing activities is Rs.20 Common . (498211. Cash form operating activities are Rs.47) and cash from investing activities is Rs. 7.36 5. Cash from investing activities shows a positive balance due to amount earned from sale of fixed assets.4 COMMON-SIZE STATEMENTS Table 7. 4.lv 1.

4 100 12085.4.12 140000 200000 44260.3 100 7.2 0.31 6.84 4.5 9.89 68.6 0.9 0.6 1. Working capital for 2000 & 2001 are 30. Comparing both the years efficient management of working capital is seen in 2000.6 3.46 85736 1344675. Total C.94 1402392.2 25566.7 2.31 56540 1660419. 2.02 100 2044680.43 1782233.95 22.02 87.3 70.9 2.8 98.8 2.22 423. .03 62.L (A) 411000 Loan Creditors (B) Capital Current a/c (C) Total (A+B+C) Liabilties 1976655.2 100 100000 120979.8 97.58 202519.2 1242427.08 1401360.9 9.55 125650 77000 1997392.2 47288 2044680.57 16511.02 27020 1976655.75 5.05 6.02 1.2 6.99 20.1 INTERPRETATION 1.34 68. which indicate a good sign in 2000.2 3.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.8 81.5% respectively.08 446676 75000 1949635.5%. 16.

Current assets constitute nearly 98. Cash in hand & bank is more.2 3. which implies fewer dues to others. Table 7. 7.7%.6 0.55 125650 77000 0. 8. which is not a g ood sign and also increases outsider’s dues. 4.07 Percentage Total Amount (Rs) 2002 Percentage Total .2% in 2000 & 2001.27 6.82 9419. Loan creditors have been paid off during 2001.98 4.02 87. Bank o/d has been raised by nearly 126%. 81. Outsider’s funds constitute nearly 68. 6.100000.8 52938. which seems to have adequate cash to meet the obligations.lvii 3.12 132120 77000 0. which indicate immediate liquid of funds and also capital has been raised by Rs.7% in 2000 & 2001.21 Common .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 12085.43 1782233.498 84.2 6. 97. 5.08%.13 1593854. Fixed assets constitute only a small part in both the years.22 423.684 0.

lviii Total CA (A) Fixed Assets: Fixed Assets (net)(B) Total Assets (A+B) 1997392.58 202519.2 100 1478008.502 3.36 2.55 9. Comparing both the years efficient management of working capital is seen in 2002.L (A) 1401360.5% respectively.7%.89 140000 140000 68.07 76.16 0.2%.3 100 1865332.17 1931196.3%.5% in 2001 & 2002.07 96.9 2.2 6.7 2.48 100 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Bank o/d Other Current liab.4. Working capital for 2001 & 2002 are 18.53 1.2 47288 2044680. Total C. Current assets constitute nearly 97.35 100 Loan-ICICI Bank Loan Creditors Total Liabilties (B) Capital Current a/c 200000 44260.5 9.8 81. 16. which indicate a good sign in 2002.07 65864 1931196.90 11104 165200 176304 200000 45421.9 6.574 8. 78.2% in 2001 & 2002. 96.63 78.2 97.13 10. 4. 2.31 56540 1660419.31 2044680. 3.2 INTERPRETATION 1. (C) .90 31462 1509470. Outsider’s funds constitute nearly 81.2 Total (A+B+C) 7. which seems to have adequate cash to meet the obligations.8 2.9 9.

Cash in hand & bank is more. 8.98 4.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. Bank o/d has been paid off which is a good sign.lix 5.76 26. Table 7.43 1525928.89 423.44 625650 77000 3.684 0.018 64.22 Common . Fixed assets constitute only a small part in both the years. which implies more dues to others.498 84.27 6.20 0. 7.07 75482.55 3. Long-term loans have been raised during 2002. which indicate immediate liquid of funds.82 9419.13 1593854.12 132120 77000 0.27 Percentage Total Amount (Rs) 2003 Percentage Total . 6.

64 2356301.48 100 Total Liabilties (B) Capital Current a/c (C) Total (A+B+C) 200000 45421. which seems to have adequate cash to meet the obligations.07 65864 1931196.07 96.76 51817 2356301.30 20. Current assets constitute nearly 96. 97.24 39112 1420844.35 100 1381732.49 2.798% in 2002 & 2003.574 8.76 58.88 200000 58376.90 31462 1509470.502 3.17 1931196.76 97. 37.88 185024 677080.502%.85 28.73 8. 2.798 2.07 7.53 1.5% respectively.4.63 78.19 100 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Other Current liab.64 1. Total liabilities (A) Loan-ICICI Bank Loan Creditors Current 1478008. Comparing both the years efficient management of working capital is seen in 2003.lx Total CA (A) Fixed Assets: Fixed Assets (net)(B) Total Assets (A+B) 1865332.88 7.16 0. 3. Working capital for 2002 & 2003 are 18.66 60.13 10.48 100 2304484.35%. which indicate a good sign in 2003.90 11104 165200 176304 76.36 2.3 INTERPRETATION 1.24 492056. .55 9.

90 53000 0. 60. Fixed assets constitute only a small part in both the years.23 Common-Size Income statement For the year ending 2000 and 2001 2000 Rs.lxi 4. Table 7. 5.81 . 7. Cash in hand & bank is more.16%. % Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent 5336833. Loan creditors and long-term loans have been raised off during 2003.48 6571954. which indicate immediate liquid of funds and also capital has not affected. % 2001 Rs. 6.47 48000 0. which implies higher dues to others.52 11.13 5817964.53 11. 8.09 100 88.63 612667.80 100 88. Sundry creditors have been reduced and stock has been increased which is a good sign and also decreases outsider’s dues.30% in 2002 & 2003.04 753990. Outsider’s funds constitute nearly 78.43 4724165.

32 83476.53% is spent on cost of goods sold which results in 11. Nearly 88.22 78747. 4. Selling expenses has increased to 2. 2001.47 533920. 5.69 10 1.07 1.76 0.55 0.58 3913 74834.2% but operating profit has been reduced to 1.52%.02 0.58 3.21% from 1.21 7. .3 670513.06 1.47% in gross profit for the year 2000.47 36357 49157 1427 47366. Net profit after tax has been reduced to 1.30 134307.06 0. 3. Operating expenses have increased to 10.48 0.16% from 8.27 1.32 4096 79380.58 78747. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.02 0.16 0.97 536206. Total office exp.4.77 83476.77 90134.32 3. Total Selling exp.50 3894 268202.75 443785.79 8.57 1.72 2.04 10.32%.48 1.06 3.48%.19 0.lxii Salaries Postage & Telegram Electricity Other expenses.48%.40 209500 1609.20 1. (2) Total Operating Exp.75 40396.69%.70 16025 3170 30542.52 0.27% from 1.08 8.27 0.04% from 1.75 0. 11.40%.30 0.04 0.4 INTERPRETATION: 1. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 188050 2090 3329 202316.06 4. 2. 88. Office expenses has reduced to 8.32 0.

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

50 111419.28 6634977.19 7.76 1.47 36357 49157 1427 47366.07 2.4.32 4096 79380.73 3.lxiv Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent Salaries Postage & Telegram Electricity Other expenses.53 11.06 1.75 561304.04 10.49 92738.59 0. Total Selling exp.96 4910 87828.46 0.32 0.07 1.45 100 89.3 670513.60 56059.51 9.96 0.55 0.17 0.25 1.11 0. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 6571954.32 83476.03 0.72 2.27 0.81 3.13 5817964.27 1.16 672723.16 0.02 0.83 759662.47 7394640.10 1.02 0.96 92738.2 53000 209500 1609.06 4.75 0.04 753990.30 134307.09 100 88. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.08 8.77 83476. (2) Total Operating Exp.50 3894 268202.5 INTERPRETATION .21 54000 275250 2410 4907 202316. Total office exp.19 0.97 536206.20 1.72 0.25 0.74 7.33 34245 8040 12475.7 10.

6 740320 2003 % 100. Operating expenses have decreased to 9. (1) Selling Expense: 7394640.51% from 2.03 0. 4.59% from 8.08 2.74 7.73 3.00 89.44 7.7% is spent on cost of goods sold which results in 11. Selling expenses has decreased to 1.47%.00 89.4 520172.53%. Office expenses has reduced to 7.27 Rs. 5. 89.04%.02 0.6 6238944. 6979264.72 0.07 2.45 2002 % 100.73 10. 10.25 Common-Size Income statement For the year ending 2002 and 2003 Particulars Rs. Comparing both the year 2001 was good and satisfactory. 3.21%. 2002.33 0.19% from 1. Total office exp.27% from 1. Net Sales Less: Cost of goods sold Gross Profit (A) Operating Expenses: Office & Admn exp: Rent Salaries Postage & Telegram Electricity Other expenses.25%. Net profit after tax has been reduced to 1.lxv 1.75 561304.61 54000 275250 2410 4907 202316. 6.28 6634977.39 10.4 0.45 .10% and operating profit has been reduced to 1. Table 7. 2.80 4.2% in gross profit for the year 2001.11 0.16%. Nearly 88.83 759662.59 56000 286500 1359 5806 170507.

53 107152.47 107152.51%.54 0.96 92738.25 1.19 0. .73%.11 0.76 1.5 111419. Office expenses has reduced to 7.39% is spent on cost of goods sold which results in 10.01 1.51 9.54% from 1.03 1.50 23160 8870 10230 70735.45% from 7.96 1. Operating expenses have decreased to 9. 5. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 34245 8040 12475.49 92738.19%.15 1. Net profit after tax has been increased to 1.16 672723. Nearly 89. Total Selling exp.54 1.13 0. 6.62 9. 10.4. Comparing both the year 2003 was good and satisfactory. Selling expenses has increased to 1. 2003.25 0.10 633167.46 0.lxvi Advertisement Sales Commission Sales Promotion exp Other expenses.96 4910 87828.33 0. 3.13 112995. (2) Total Operating Exp.61 in gross profit for the year 2002.17 0. 89.62% from 1.25%.6 INTERPRETATION 1.6 56059.07 1.47 2189 104963. 2.50% from 1.07 7.47 1.13 0.27%.07% but operating profit has been increased to 1.59%. 4.

26 Increase/ Decrease (Percentages) .5 COMPARATIVE STATEMENTS Comparative Balance Sheet Year ending Increase/ 31 March Decrease (Amounts) 2000 2001 Table 7.lxvii 7.

18 (1186) 21454 20268 (52.46 85736 1344675.68) 12.02 2044680. Current assets have been increased by 2.L (A) Loan Creditors (B) Capital Current a/c (C) Total Liabilities (A+B+C) 7.55 125650 77000 1997392.1 (71.1) 23.43 1782233.86 (271000) 100000 (76719.58 202519.5 (65.01 186007.44 25566.31 158933.89 140000 200000 44260.03 411000 100000 120979.94 1402392.8 1126. 1976655.22 423.5.e.99 1401360.94) 100 (63.2) 270.43 379841.44 1242427.18 3.72) 423.42) .9) 2.02 19102 7918 27020 12085.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) 1976655.5% but working capital is more i.31 56540 1660419.45% and liabilities by 23.2 68025.02 2044680.45 (6.01 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Bank o/d Other Current liab.7) 423.2 68025.5 (34.1 INTERPRETATION 1.43 27.85 (29196) 315744. Total C.18 3.7 2.08 446676 75000 1949635.57 16511.2 17916 29372 47288 (13481.9 75.47 (321026) 2000 47757. current asset is more than current liabilities.

Overall financial position of the company is satisfactory.lxix 2. Fixed assets has been increased by nearly 75% and overall assets have been increased by 3. Table 7. Capital has been increased by 100% and loan creditors have been decreased by 65% 4. which indicates poor management of funds flow.44% 3. 5. Sundry creditors have been increased by 12% but bank o/d has been increased by nearly 126%.27 Comparative Balance Sheet Year ending 31 March 2001 2002 Increase/ Decrease (Amounts) Increase/ Decrease (Percentages) .

7 (188379.6) 12085.17 1931196.1 2124.07 16124 49740 40853.13) .31 2044680.31) (25078) (150948.55 125650 77000 1997392.13 1593854.31 56540 1660419.13) (1792) 20368 338.3 (5.3 1401360.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 2044680.99) 5.5 (100) (44.07 11104 25200 36304 1160.4) (9.L (A) 65864 1931196.07 18576 39.6 (5.2 200000 45421.2 (6.86 (113484.22 423.5 (10.82 9419.6) (10) 69.89 140000 140000 1478008.43 1782233.6) 5.58 202519.2 17916 29372 52938.90 11104 165200 176304 76648.32 (202519.43) 6470 (132060.12 132120 77000 1865332.90 31462 1509470.1) 11104 18 26 2. Total C.13) LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Bank o/d Other Current liab.6 8995.6) Loan-ICICI Bank Loan Creditors Total Liabilties (B) Capital Current a/c (C) Total (A+B+C) 200000 44260.2 (113484.

28 Comparative Balance Sheet Year ending 31 March 2002 2003 Increase/ Decrease (Amounts) Increase/ Decrease (Percentages) . Sundry creditors have been increased by 5.lxxi 7. Current assets have been decreased by 6.5.2 INTERPRETATION 1.6% 3.11104 and loan creditors have been increased by 18% 4.3% and overall assets have been decreased by 5. 5.1% but working capital is more i. Fixed assets has been increased by nearly 39.6% and liabilities by 9. 2. Overall financial position of the company is satisfactory. current asset is more than current liabilities. Capital has not changed but loan has been raised by Rs. Table 7.e.5% but bank o/d has been paid off and other current liabilities have been decreased which indicates good management of funds flow.

Total liabilities (A) Loan-ICICI Bank Loan Creditors Total Liabilties (B) Capital Current a/c (C) Total (A+B+C) 425105.68) 493530 439152.76 14512 37305 51817 (14047) (21.43 1525928.59 (95.13 1593854.54 (9.07 16124 49740 75482.69 LIABILITIES & CAPITAL Current Liabilities: Sundry creditors Other Current liab.87) 4331.52 Current 2356301.01 28.51) 24.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 1931196.88 185024 (88626.90 1381732.88 19824 (6.66) 7650 1420844.88 12955.50) (4.17 677080.35 12 284.82 9419.33) 22.12 132120 77000 1865332.99) (25) 1478008.04 .47 22.69 1931196.24 39112 (96276.26) 373.76 11104 165200 176304 200000 45421.07 425105.07 (8995.7) (67925.66) 480952.88 200000 58376.64 500776.01 22544.76 52938.90 31462 1509470.32 (5.54 23.89 423.44 625650 77000 2304484.07 2356301.24 492056.69 (1612) (12435) 42.

which indicates poor management of funds flow. 5. Current assets have been increased by 23.33% and overall assets have been increased by 22. current asset is more than current liabilities. which indicates more dues to the firm.5% and liabilities has been decreased by 5.3%. Bank o/d has been totally paid off last year but this year long-term loan have been raised nearly by 400%.3 INTERPRETATION 1. Sundry creditors have been decreased by 6.29 .5. Fixed assets has been decreased by nearly 21. Overall financial position of the company is not satisfactory.01% 3. Capital has not been changed but loan has been increased by nearly 400% and loan creditors have been increased by 12% 4.8% but working capital is more i. 6.lxxiii 7.51% and current liabilities increased by nearly 24.e. 2. Table 7.

7) 33132 (1743) 16823.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.43 4724165. Total Selling exp.77 90134.5) 565 65886.74 183 4545.53 44172.8 (10) 207 (55) 55 49.32 83476.58 78747.09 Increase/ Decrease (Amounts) 1235120. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.01 6.1 23. (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 202316.32 5000 21450 (480.55 4728.97 536206.01 25.30 134307.47 36357 49157 1427 47366.50 3894 268202.46 (23) 17 32.75 443785.7 6.2 23.41 141322.22 92420.80 2001 6571954.47 533920.75 40396.56 20.7 1093798.42 11.22 78747.58 3913 74834.63 612667.77 83476.3 670513.29 Increase/ Decrease (Percentage) 23.74 4728.13 5817964.74 10.1 .70 16025 3170 30542.6 6.83 136593.72 (4039.58 53000 209500 1609.04 753990. Total office exp.32 4096 79380.01 4.1 5336833. (2) Total Operating Exp.

It may be concluded that there is a sufficient progress in the company and the overall profitability of the company is good.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 6.5.4 INTERPRETATION 1. 6. Although operating expenses have increased by 25.lxxv 7.e. .1% and cost of goods by 23. There is an increase in net profit after tax amounting to Rs.2% so overall gross profit has been increased by 23.75 i. 2.1% 4.1%.01%. 4545. 3. Sales have been increased by 23.

5 14 0.6 8693.32 54000 275250 2410 4907 202316.3 18. (B) [1+2] Operating Profit [A-B] Less: Other expenses Net Profit before tax Less: income tax Net profit (after tax) 53000 209500 1609.6) 4.14) 2209.77 83476.2 (22888.45 Increase/ Decrease (Amounts) 822686.50 3894 268202.4 (17) 0.96 4910 87828.09 2002 7394640.8 10.1 19.16 672723.86 (2112) (41117) 11048.3 670513. (2) Total Operating Exp.60 56059.lxxvi Table 7.32 4096 79380.72 9262.28 6634977.6) 774.04 753990.50 111419.33 11.79 5672.96 1000 65750 800.5.32 83476.7 (5.50 1013 (65886.15 817013.8 31. Total Selling exp.13 5817964. Total office exp.36 Increase/ Decrease (Percentage) 12.64 9262.33 34245 8040 12475.83 759662. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.97 536206.49 92738.96 92738.6 6571954.5 INTERPRETATION: - .64 814 8448.22) 25097.75 7.1 11.30 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.30 134307.7 26 (24.75 561304.64 1.4 49.8) (83.47 36357 49157 1427 47366.

2.5% and cost of goods by 14% so overall gross profit has been increased by 0. Sales have been increased by 12. It may be concluded that there is a sufficient progress in the company and the overall profitability of the company is good.6% 4.lxxvii 1. Although operating expenses have increased by 0.31 .e.1%.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. 10.64 i.75%. 8448. 3. Table 7. There is an increase in net profit after tax amounting to Rs.

96) 14413.53 107152.49 92738.23 19342.54 15.6) 14675. (1) Selling Expense: Advertisement Sales Commission Sales Promotion exp Other expenses.47 107152.13 633167.70 4.18 1.72) (7.96 92738.35) (41131.45 Increase/ Decrease (Percentage) 5.09 (43.51 (2721) 17134.75 561304.83 759662.28 6634977.5.50 111419.4 23160 8870 10230 70735.55 7.51 14413.97 (39555.68 396033.42) 19.93) (11085) 830 (2245.54 (55.33) (32.41 (6) 15.45 2003 6979264.32 (15.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.96 56000 286500 1359 5806 170507.4 520172.60 6238944.60 740320 Increase/ Decrease (Amounts) 415375.47 2000 11250 (1051) 899 (31809.96 4910 87828.13 112995.6 INTERPRETATION .16 672723.32 (18) 26.60 56059.97 2.47 2189 104963.63 1575.37) 10. (2) Total Operating Exp. Total Selling exp.62 5.6) 18.51 3.33 34245 8040 12475. Total office exp.51 7394640. (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.

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 15.62% and cost of goods by 5. 2. The Trend equation is y = . Sales have been increased by 5.55%.e.54%.lxxix 1. 17134.51 i. 7.51% 4. It may be concluded that there is a sufficient progress in the company and the overall profitability of the company is good. There is an increase in net profit after tax amounting to Rs.97% so overall gross profit has been increased by 2. 3. 19.6 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.

the first year deviation is -2 (i.2 1865332. sales and working capital in the respective years. The trend ‘y’ values are calculated after determining the ‘a’ and ‘b’ values. 2003).(? x) ² 4*(-3592177. 7. 2002. A deviation. in ‘000s) 1949635.lxxx a+bx. current liabilities.04 -1997392.48)– (-2)* 8116844.76 ?y=8116844.6.76 ? x*y= -3592177.07 2304484.48 x² x*y Calculation of ‘b’: b = = = N? x*y-? x*? y N? x² . ‘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.e. x -2 -1 0 1 ? x= -2 Current Assets. y (Rs. 2001.32 Year X 2000 2001 2002 2003 Total Deviation.18 .05 4 1 0 1 ? x²=6 -3899270.05 4*6 – (-2) ² 1864978.02 1997392.2 0 2304484. For example. if the base year is 2002. The y values represent the value of current assets.) (2000-2002). Here the X represents the years for which the analysis is done (2000.1 Trend Analysis of Current Assets Table 7.

9*(-2) Y= 1889337.9*(2) Y= 2262333.05/4) – 93248.25 When X=2005 (x=3) Y= 2075835.45 When X=2000 (x=-2) When X=2001 (x=-1) When X=2002 (x=0) When X=2003 (x=1) Y= 2075835.35 Trend Projections for next two years.9*(1) Y= 2169084.9 *(-1) Y= 1982586.9*(0) Y= 2075835.45 + 93248.45 + 93248.9*(-2/4) a = 2075835.45 Y= 2075835.55 Y= 2075835.9 Calculation of ‘a’: a = (? y / N) – b* (? x / N) a = (8116844.65 Y=2075835.45 + 93248.45 + 93248. When X=2004 (x=2) Y= 2075835.45 + 93248.9*(3) Y= 2355582.15 .45 + 93248.lxxxi 20 b = 93248.

The trend projection of the current assets level also increases for the next two years as seen. 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. .lxxxii It is clear from the analysis that the values of Y are considerably increasing through the years during the study period.

6.2001 .2002 2000 2001 2002 2003 YEAR figure viii 7.2000 .2 Trend Analysis for the Current Liabilities .lxxxiii TREND ANALYSIS CURRENT ASSETS 2500000 2000000 CURRENT ASSETS 1500000 TREND ACTUAL 1000000 500000 0 1999 .

89 0 1420844. y (Rs.9 1420844.03 1660419.lxxxiv Table 7.28 20 7755.06 4*6 – (-2) ² 155117.864 Calculation of ‘a’: a= (? y / N) – b* (? x / N) a= (5935410.45 .06/4) – 7755.864*(-2/4) a=1487730.33 Year X 2000 2001 2002 2003 Total Deviation. x -2 -1 0 1 ? x= -2 Current Liabilities.24 ?y= 5935410.24 ? x*y= -2928925.89 1509470.71 x² x*y Calculation of ‘b’: b = N? x*y-? x*? y N? x² . in ‘000s) 1344675.(? x) ² = = b = 4*(-2928925.71)– (-2)* 5935410.06 -1660419.06 4 1 0 1 ? x²= 6 -2689350.

The current liabilities tend to grow in the forthcoming years as seen and the trend projections of the values also reflect the same.864*(-2) Y= 1472218.45 +7755. .45 +7755.45 Y=1487730. When X=2004 (x=2) When X=2005 (x=3) Y= 1487730.864*(2) Y= 1503242.59 Y= 1487730.lxxxv When X=2000 (x=-2) When X=2001 (x=-1) When X=2002 (x=0) When X=2003 (x=1) Y= 1487730.31 Trend Projections for next two years. This effect must be balanced with an equivalent or higher increase in the current assets. A chart depicting the trend values and the actual values can be seen.864*(-1) Y= 1479974.45 +7755.45 +7755.04 The analysis clearly depicts that the value of current liabilities of the Company are also increasing.864*(3) Y= 1510998.45 +7755.45 +7755.864*(0) Y= 1487730.864 *(1) Y= 1495486.18 Y= 1487730.72 Y=1487730. The constant line in the chart depicts the trend values and the other one is the actual values.

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 .6.3 Trend Analysis for the Sales Table 7.

y (Rs.966 Calculation of ‘a’: a= (? y / N) – b* (? x / N) a= (26282692.09 When X=2000 (x=-2) Y= 6858172.44 4 1 0 1 ? x²=6 -10673666.60 ?y=26282692.(? x) ² = 4*(-10266356.28 6979264.97*(-2/4) a=6858172.13 0 6979264.60 ? x*y=-10266356.39 x² x*y Calculation of ‘b’: b= N? x*y-? x*? y N? x² .43 6571954.09+574997.39)–(-2)* 26282692.lxxxvii Year X 2000 2001 2002 2003 Total Deviation. x -2 -1 0 1 ? x=-2 Sales.44/4) – 574997.32 20 b=574997.86 -6571954.966*(-2) .13 7394640.44 4*6 – (-2) ² = 11499959. in ‘000s) 5336833.

966 *(3) Y= 8583166 The analysis clearly depicts that the value of sales of the Company is increasing during the study period. 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. When X=2004 (x=2) When X=2005 (x=3) Y= 6858172. The sales tend to grow in the forthcoming years as seen and the trend projections of the values also reflect the same.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*(-1) Y= 6283174.09+574997.09 Y=6858172.09+574997.966*(1) Y=7433170.03 Y=6858172.966*(2) Y= 8008168.lxxxviii Y = 5708176.966*(0) Y=6858172.09+574997.06 Trend Projections for next two years. .

2000 .2001 .4 Trend Analysis for the Net Working Capital .6.lxxxix TREND ANALYSIS FOR SALES 8000000 7000000 6000000 5000000 SALES 4000000 3000000 2000000 1000000 0 1999 .2002 2000 2001 2002 2003 YEAR TREND ACTUAL figure x 7.

054)*(-2/4) a=480567.31 355861.17 883640.054)*(-2) Y= 739731.(? x) ² = 4*(-663251.77) x² x*y Calculation of ‘b’: b= N? x*y-? x*? y N? x² .47 When X=2000 (x=-2) When X=2001 (x=-1) Y= 480567. x -2 -1 0 1 ? x=-2 Net Working Capital.47 + (-129582.77)–(-2)*30683 4*6 – (-2) ² = (-2591641.52 ? x*y=(-663251.99 336972.98) (336972.054) Calculation of ‘a’: a= (? y / N) – b* (? x / N) a= (2181434/4) – (-129582.31) 0 883640.08) 20 b=(-129582.58 Y=480567.054)*(-1) .xc Table 7.35 Year X 2000 2001 2002 2003 Total Deviation.47 + (-129582.52 ?y=2181434 4 1 0 1 ? x²=6 (1209919. y (Rs. in ‘000s) 604959.

A chart depicting the trend values and the actual values can be seen. .36 Y= 480567.054)*(0) Y= 480567.47 + (-129582. From the trend analysis it is clear that the sales of the company will decrease in the forthcoming years too.52 When X=2002 (x=0) When X=2003 (x=1) Y= 480567.31 The analysis clearly depicts that the value of Sales of the Company is constantly decreasing during the study period.47 Y=480567.054)*(3) Y= 91821.47 + (-129582.47 + (-129582.xci Y= 610149.42 Trend Projections for next two years.054)*(1) Y=350985.47 + (-129582.054)*(2) Y= 221403. When X=2004 (x=2) When X=2005 (x=3) Y= 480567. The constant line in the chart depicts the trend values and the other one is the actual values.

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

. 4. The current asset ratio was in a increasing trend for the period 2003. So the company has make efforts to increase the inventory level otherwise the firm may go in to a stock out situation.xciii FINDINGS 1. The Stock Turnover Ratio shows a fluctuating trend. 3. It shows an increasing trend in the current year. The net profit turnover ratio is quite satisfactory. The sundry debtors was quite fluctuating since 2002. which was very good for company. 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. 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. The debtor turnover ratio shows an increasing trend. which is not good for the firm. 2. 5. Which infers that the net profit is increasing which is good for the company and to the shareholders. The quick assets and current liability was fluctuating alternatively. The company should try to maintain the same in the future. The acid test ratio was not constant it was fluctuating in nature.

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.

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

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