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"A Study On Financial Performance Analysis With Reference Worldgate Express Lines International Pvt. LTD'' Chapter - I
"A Study On Financial Performance Analysis With Reference Worldgate Express Lines International Pvt. LTD'' Chapter - I
an
important
aid
to
financial
performance
analysis.
Financial
firm.
Essential to bring out the history.
Significance and meaning of the financial statements.
Objectives of Study:
Primary Objectives:
To understand the financial statements of Worldgate Express Lines
International Pvt Ltd.
Secondary Objectives:
To
To
To
To
To
Research Methodology
Research Design
This is a systematic way to solve the research problem and it is important
component for the study without which researches may not be able to
obtain the format. A research design is the arrangement of conditions for
collection and analysis of data in a manager that aims to combine for
collection and analysis of data relevance to the research purpose with
economy in procedure.
Meaning of Research Design
The formidable problem that follows the task of defining the
research problem is the preparation of design of the research project,
popularly known as the research design, decision regarding what, where,
when, how much, by what means concerning an inquiry of a research
study constitute a research design. A research design is the arrangement
Primary Data.
Secondary Data.
Primary Data
The primary data are those informations, which are collected afresh and
for the first time, and thus happen to be original in character.
Secondary Data:
The secondary data are those which have already been collected by some
other agency and which have already been processed. The sources of
secondary data are annual reports, browsing internet, through magazines.
1. It includes data gathered from the annual reports of Worldgate
Express Lines International Pvt Ltd.
Methodology Used:
Types Of Financial Statements Adopted: Following Two Types of Financial
Statements Are Commonly Used in Analysing the Firms Financial Position
1. Balance Sheet.
2. Income Statements.
CHAPTER-II
INDUSTRY PROFILE
LOGISTICS INDUSTRY
Logistics is the management of the flow of resources, not only
goods, between the point of origin and the point of destination in order to
meet
the
requirements
of
customers
or
corporations.
Today
the
and
the
positioning
of
companies
on
international
COMPANY PROFILE
Worldgate Incorporated in Singapore in January 1990, Worldgate is
managed by a dedicated team of experienced shipping and air freight
professionals.
Ship Agency
International Freight Forwarding / Consolidation / NVOCC
Logistics Management
relations
Facilitate a highly interactive environment to meet all customers
information,
supply chain
Ensure adherence at all times to the documented standard
operational procedures
Ensure our information system and the information contained meet
Ship's Agency
Worldgate's Ship Agency division features enthusiastic and helpful
staff who are backed by years of operational experience in handling all
types of vessels. The Ship Agency team also has a track record in handling
Containerize Vessel and Breakbulk Carrier, as well as securing suitable
cargo for both tramper and liner operators.
Worldgate's extensive range of Agency services include:
Transhipment
International
Freight
Forwarding
operation
is
who
use
Singapore
as
their
Transhipment,
Distribution,
Logistic Management
Worldgate Logistics Unit manages warehousing, inventory control,
cataloguing, sales and purchase order processing, labelling, packaging,
domestic deliveries, transportation, distribution, shipping and any other
value added services.
Worldgate tailors total logistic solutions, allowing a customer to
concentrate on their business, production and marketing, by entrusting
the logistic to cargo specialists. For customers, the Logistic Management
service has proven to be a cost effective and efficient arrangement.
CHAPTER-III
REVIEW LITERATURE
Financial Performance Analysis:
The term financial performance analysis also known as analysis and interpretation of
financial statements , refers to the process of determining financial strength and weaknesses
of the firm by establishing strategic relationship between the items of the balance sheet ,
profit and loss account and other operative data. Analysing financial statements by Metcalf
and Titard Financial analysis is a process of evaluating the relationship between component
parts of a financial statement to obtain a better understanding of a firms position and
performance by Myers
Financial Performance:
The word Performance is derived from the word parfourmen, which means to do,
to carry out or to render. It refers the act of performing, execution, accomplishment,
fulfilment etc. In border sense, performance refers to the accomplishment of a given task
measured against preset standards of accuracy, completeness, cost, and speed. In other words,
it refers to the degree to which an achievement is being or has been accomplished. In the
Words of Frich Kohlar The performance is a general term applied to a part or to all the
conducts of activities of an organization over a period of time often with reference to past or
projected cost efficiency, management responsibility or accountability or the like. Thus, not
just the presentation, but the quality of results achieved refers to the performance.
Performance is used to indicate firms success, conditions, and compliance. Financial
performance refers to the act of performing financial activity. In broader sense, financial
performance refers to the degree to which financial objectives being or has been
accomplished. It is the process of measuring the results of a firm's policies and operations in
monetary terms. It is used to measure firm's overall financial health over a given period of
time and can also be used to compare similar firms across the same industry or to compare
industries or sectors in aggregation. The purpose of financial analysis is to diagnose the
information contained in financial statements so as to Jude the profitability and financial
soundness of the firm. Just like a doctor examines his patient by recording his body
temperature, blood pressure, etc. Before 37 making his conclusion regarding the illness and
before giving his treatment, a financial analyst analysis the financial statements with various
tools of analysis before commenting upon the financial health or weaknesses of an enterprise.
The analysis and interpretation of financial statements is essential to bring out the mystery
behind the figures in financial statements. Financial statements analysis is an attempt to
determine the significance and meaning of the financial statement data so that forecast may
be made of the future earnings, ability to pay interest and debt maturities (both current and
long term) and profitability of a sound divided policy.
Types of financial analysis:
Financial analysis into different categories depending upon
(1) The material used and
(2) The method of operation followed in the analysis or the modus operandi of
analysis
Types of financial analysis
On the basis of material used
External
Internal
Horizontal
Vertical
Analysis
Analysis
Analysis
Analysis
External analysis
Internal analysis
External analysis:
This analysis is done by outsiders who do not have access to the detailed internal
outsiders include investors, potential investors, Creditors, Potential Creditors, Government
Agencies, Credit Agencies and General Public. For financial analysis, these external parties
to the firm depend almost entirely on the published financial statements.
Internal analysis:
This analysis is undertaken by the persons namely executives and employees of the
organization or by the officers appointed by government or court who have access to the 8
books of account ( internal accounting records) and other information related to the business.
On the basis of modus operandi:
According to the modus operandi financial analysis can also be of two types
Horizontal analysis
Vertical analysis
Horizontal analysis:
Horizontal analysis refers to the comparison of financial data of a company for
several years. The figures for this type of analysis are presented horizontally over a number
of columns. The figures of the various years are compared with standard or base year. a base
year is year chosen as beginning point. This type of analysis is also called dynamic analysis
as it is based on the data from year to year rather than on data of any one year. The horizontal
analysis makes it possible to focus attention on items that have changed significantly during
the period under view.
Vertical analysis:
Vertical analysis refers to the study of relationship of the various items in the financial
statements of one accounting period. In this types of analysis the figures from financial
statement of a year are compared with a base selected from the same years statement
Methods of financial analysis:
The following methods of analysis are generally used:1. Comparative Statements.
2. Trend Analysis.
3. Common-Size Statements.
4. Funds flow Analysis.
5. Cash Analysis
6. Ratio Analysis
7. Cost-volume-Profit Analysis
Comparative statements:
The comparative financial statements are statements of the financial position at
different periods of time .the elements of financial position are show in a Comparative
Statement provides an idea of financial position at two or more periods. Generally two
financial statements (balance sheet and income statement) are prepared in comparative form
for financial analysis.
The Comparative Statement May Show:
1. Absolute figures (rupee amounts)
2. Changes in absolute figures i.e. increase or decrease in absolute figures.
common size balance. The common size balance sheet can be used to compare companies of
differing size. The comparison of figures in different periods is not useful because total
figures may be affected by a number of factors. It is not possible to establish standard norms
for various assets. The trends of figures from year to year may not be studied and even they
may not give proper results.
Trend Analysis of Balance Sheet:
Trend analysis is Very important tool of horizontal financial analysis. This analysis
enables to known the change in the financial function and operating efficiency in between the
time period chosen. By studding the trend analysis of each item we can known the direction
of changes and based upon the direction of changes, the options can be changed.
Trend =Absolute Value of item in the statement understudy *100
Absolute Value of same item in the base statement
Ratio Analysis:
Ratio analysis is used as a technique of analysing the financial information, contained in the
balance sheet and profit and loss accounts, for a more meaningful understanding of the
financial position and performance of a firm. The relationship between two accounting
figures, expressed mathematically, is known as a financial ratio. A ratio helps the analyst to
make qualitative judgment about the firms financial position and performance. Several ratios
can be calculated from the accounting data contained in the financial statements. The parties
which generally undertake financial analysis is short term creditors, long-term creditors,
owner and management. In view of the requirements of the various ratios, ratios are classified
into the following four important categories.
Liquidity ratios
Leverage ratios
Activity ratios
Profitability ratios
Liquidity Ratios:
It is extremely essential for a firm to be able to meet its obligations as they become
due. Liquidity ratios measure the ability of the firm to meet its current obligations. A firm
should ensure that it does not suffer from lack of liquidity, and also that it does not have
excess liquidity. The failure of a company to meet its obligations due to lack of sufficient
liquidity, will result in a poor creditworthiness, loss of creditors confidence, or even in legal
tangles resulting in the closure of the company. A very high degree of liquidity is also bad;
idle assets earn nothing. The firms funds will be unnecessarily tied up in current assets.
Therefore it is necessary to strike a proper balance high liquidity and lack of liquidity.
The most common ratios which indicate the extent of liquidity or lack of it are
Current ratio
Quick ratio
Other ratios include Cash ratio, Interval Measure and Net working capital ratio.
Current Ratio:
The current ratio is calculated by dividing current assets by current liabilities.
current ratio=
current assest
currrent liabilities
Current ratio is a measure of the firms short term solvency. It indicates the availability of
current assets in rupees for every one rupee of current liability. A ratio of greater than one
means that the firm has more current assets than current claims against the, Current ratio of 2
to 1 or more is considered satisfactory. Current ratio represents a margin of safety for
creditors.
Quick Ratio:
Quick ratio also known as acid-test ratio establishes a relationship between quick
assets and the current liabilities. Cash is the most liquid asset. It is calculated by dividing
quick assets by current liabilities.
This ratio indicates the extent to which the assets of the companies can be lost without
affecting the interest of the creditors of the company. Higher the ratios better the long-term
position of the company.
Activity Ratios:
They are primarily used for studying a firms working capital situation. A wellmanaged firm should have good activity ratios. 43 Working Capital Turnover Ratio: The
working capital turnover ratio indicates whether or not working capital has been effectively
used in making sales.
Working Capital Turnover Ratio:
The working capital turnover ratio indicates whether or not working capital has been
effectively used in making sales.
Working capital turnover = Sales / Net current assets
Inventory Turnover Ratio:
This ratio also known as Stock Turnover Ratio establishes the relationship between
costs of goods sold or net sales during the given period and the average amount of stock held
during the period. This ratio reveals the number of times finished stock in turnover during a
given accounting period.
Higher the ratio the better is it because it shows the finished stock is rapidly turned in
to sales. On the other hand, a low stock turnover ratio is not desirable, because it reveals the
accumulation of stock.
Debtors Turnover Ratio:
This ratio indicates the velocity of debt collection of a company. In other words it
shows the number of times average turnover during a year. A Higher Debtor Turnover Ratio
indicates a more efficient is the management towards debtors and low ratio ratio implies
inefficient management of debtors.
Total Assets Turnover Ratio:
The asset turnover ratio indicates how efficiently management is employing Assets.