1

CONTENTS

CHAPTE TITLE PAGE

R NO
NO
ABSTRACT
1 INTRODUCTION
1.1 About the study
1.2 About the industry
1.3 About the company
2 MAIN THEME OF THE PROJECT
2.1 Objective of the study
2.2 Scope and limitations of the study
2.3 Research Methodology
2.4 Review of Literature
3 ANALYSIS AND INTERPRETATION
4 FINDING,RECOMMENDATIONS AND CONCLUSION
4.1 Findings
4.2 Recommendations
4.3 Conclusion
5 APPENDICES
6 BIBILIOGRAPHY

LIST OF TABLES
 2

CHAPTER TITLE PAGE NO

NO
3.1 3.1Balance sheet of year(2005-2006)
3.2 3.2Balance sheet of year(2006-2007)
3.3 3.3Balance sheet of year(2007-2008)
3.4 3.4Balance sheet of year(2008-2009)
3.5 3.5 Current Ratio
3.6 3.6 Liquid Ratio
3.7 3.7 Absolute Liquidity Ratio
3.8 3.8 Fixed Assets Ratio
3.9 3.9 Net Working Capital Ratio
3.10 3.10 Debt Equity Ratio
3.11 3.11 Proprietary Ratio
3.12 3.12 Fund Flow statement(2005-2006)
3.13 3.13 Fund Flow statement(2006-2007)
3.14 3.14 Fund Flow statement(2007-2008)
3.15 3.15 Fund Flow statement(2008-2009)
3.16 3.16 Common Size Balance Sheet
3.17 3.17 Balance sheet of year(2005-2006)
3.18 3.18 Balance sheet of year(2006-2007)
3.19 3.19 Balance sheet of year(2007-2008)
3.20 3.20 Balance sheet of year(2008-2009)

LIST OF CHARTS

CHAPTE PAGE NO
R TITLE
NO
3.2.1 Current Ratio
3.2.2 Liquid Ratio
3.2.3 Absolute Liquidity Ratio
3.2.4 Fixed Assets Ratio
3.2.5 Net Working Capital Ratio
3.3.6 Debt Equity Ratio
3.3.7 Proprietary Ratio
 3

ABSTRACT

THANGAVELU TEXTILE LIMITED is the profitable leading organization

and succeeds over the Competition in the market. The study is necessary to look after its
financial position with its own figures for the five years (2005 to 2009) and analysis them
for it success. The study insists to identify the company position and to give suggestion to
improve it. The main objectives of this project work are to find out the comparative
balance sheet, income statement etc. The analysis is based upon the secondary data and
the study period is limited to that extent. At last, it has been found out that company has
good financial position
 4

INTRODUCTION ABOUT THE STUDY

Finance is regarding as the lifeblood of a business enterprise in general

finance is the key store of every operational activities of the business in the respect all
the business concern need money to make more money.
Finance means allocation of money at the particular moment of time it is
wanted. Finance function refers to that the procurement of funds and their effective
utilization.

DEFINITION
A branch of economics concerned with resource allocation as well as
resource management, acquisition and investment. Simply, finance deals with matters
related to money and the markets. To raise money through the issuance and sale of debt
and/or equity.

According to “Phiulippauts, financial management is concerned with

management decision the result in the acquisitions and financing of long term and short
 5

term credits for the firm. As such it deals with the situation that required selection of
specific assets as well as the problem of size and growth of an enterprise.

According to “Joseph and Massive, Financial Management is the

operational activity of a business that is responsible for obtaining and effectively utilizing
the funds necessary for efficient operations”.

"The objective of financial statements is to provide information about the financial

position, performance and changes in financial position of an enterprise that is useful to a
wide range of users in making economic decisions."Financial statements should be
understandable, relevant, reliable and comparable. Reported assets, liabilities, equity,
income and expenses are directly related to an organization's financial position.
PURPOSES OF FINANCIAL STATEMENT:

Owners and managers require financial statements to make important

business decisions that affect its continued operations. Financial analysis is then
performed on these statements to provide management with a more detailed
understanding of the figures. These statements are also used as part of management's
annual report to the stockholders.
Employees also need these reports in making collective bargaining agreements (CBA)
with the management, in the case of labor unions or for individuals in discussing their
compensation, promotion and rankings.
Prospective investors make use of financial statements to assess the viability of investing
in a business. Financial analyses are often used by investors and are prepared by
professionals (financial analysts), thus providing them with the basis for making
investment decisions.
Financial institutions (banks and other lending companies) use them to decide whether to
grant a company with fresh working capital or extend debt securities (such as a long-term
bank loan or debentures) to finance expansion and other significant expenditures.
Government entities (tax authorities) need financial statements to ascertain the propriety
and accuracy of taxes and other duties declared and paid by a company.
 6

Vendors who extend credit to a business require financial statements to assess the
creditworthiness of the business.
Media and the general public are also interested in financial statements for a variety of
reasons.

1.2- FINANCIAL STATEMENT AND RATIO ANALYSIS

Financial ratios are a popular way for users of financial statements to

develop insights into the financial performance of companies. By controlling for the
effect of firm size on the level of performance, ratios enable financial statement users to
examine how a firm has performed relative to its peers and relative to its own historical
performance. A firm’s ratios can differ from its peers or its own historical performance
because it has selected a different product market strategy, because its management team
has become more effective at implementing its strategy, or because it has selected a
different financial strategy. . A financial ratio is a relationship that indicates something
about a company's activities, such as the ratio between the company's current assets and
current liabilities or between its accounts receivable and its annual sales. The basic source
for these ratios is the company's financial statements that contain figures on assets,
liabilities, profits, and losses. Ratios are only meaningful when compared with other
information. Since they are often compared with industry data, ratios help managers
understand their company's performance relative to that of competitors and are often used
to trace performance over time.
Ratio analysis can reveal much about a company and its operations.
However, there are several points to keep in mind about ratios. First, a ratio is just one
number divided by another. Financial ratios are only "flags" indicating areas of strength
 7

or weakness. One or even several ratios might be misleading, but when combined with
other knowledge of a company's management and economic circumstances, ratio analysis
can tell much about a corporation. Second, there is no single correct value for a ratio. The
observation that the value of a particular ratio is too high, too low, or just right depends
on the perspective of the analyst and on the company's competitive strategy. Third, a
financial ratio is meaningful only when it is compared with some standard, such as an
industry trend, ratio trend, a ratio trend for the specific company being analyzed, or a
stated management objective. Financial ratios can also give mixed signals about a
company's financial health, and can vary significantly among companies, industries, and
over time. Other factors should also be considered such as a company's products,
management, competitors, and vision for the future.

COMPATIVE FINANCIAL STATEMENT

Comparative financial statements are these statements which have been
designed in a way so as to provide time perspective to the considering of various element
of financial position embodied in such statement. Both the income statement and balance
sheet can be prepared in the form of comparative financial statement.

INCOME STATEMENT
The income COMPARATIVE statement discloses net profit and net loss on
account of operation. Comparative income statement will show the absolute figures for
two or more periods. The absolute change from one to another period if desired the
change terms of percentage.

COMPARATIVE BALANCE SHEET

Comparative balance sheet as on two or more different dates can be used for
comparing assets and liabilities and finding out any increase or decrease in those items.

COMMON SIZE FINANCIAL STATEMENT

Common size financial statement are those in which figures reported are
converted into percentage to some common base, in the income statement the sale figure
is assumed to be low and all figures are expressed as a percentage of sales. Similarly in
 8

the balance sheet the total of assets or liabilities is taken as 100 and all the figures are
expressed as percentage of this total.

TREND PERCENTAGES
Trend percentages are immensely helpful in making a comparative study of
the financial statement for several years. Under this method trend percentage are
calculated for each item of the financial statement taking the figure of base year as
100.The trend percentages show the relationship of each item with its preceding year’s
percentages. The trend ratio may be compared with industry ratios in order to know the
strong and weak points.

NATURE OF FINANCIAL STATEMENT

According to the American Institute of Certified public Accountancy
financial statements reflect a combination of recorded in the financial are not depicted in
the financial statement however material they might be, for example, fixed assets are
shown at irrespective of their market or replacement price since such price is not recorded
in the books.

LIMITATION OF FINANCIAL STATEMENT

 9

Financial statement or prepared with the object of presenting a periodical

review or report on the progress by the management and deal with the,
Status of the investment in the business and
Result achieved during the period under the review

ABOUT THE INDUSTRY

The Indian industry is one of the largest in the World with a massive and textiles
manufacturing base. Textile industry in India is the second largest employment generator
after agriculture and it accounts for more than 30% of the total export Today textile
sector accounts for nearly 14% of the total industry output. Indian fabric is in demand
with its ethnic colored and many textures. The textile sector accounts about 30% in the
total exports. India earns around 27% of the foreign exchange from exports of textiles.

The textile industry is expected to generate 12 million new jobs by 2010.It

generates massive potential for employment in the sector from agriculture to industrial.
Employments opportunities are created when cotton I cultivated. There are approximately
1200 medium to larges scale textile mill in India.
 10

HISTORY OF TEXTILES INDUSTRY

The history of textile is almost as old as that of human civilization and

as time moves on the history of textile has further enriched itself. In the 6th and 7th
century BC, the oldest recorded indication of using fiber comes with the invention of flax
and wool fabric at the excavation of Swiss lake inhabitants. In India the culture of silk
was introduced in 400AD, while spinning of cotton traces back to 3000BC. In China, the
discovery and consequent development of sericulture and spin silk methods got initiated
at 2640 BC while in Egypt the art of spinning linen and weaving developed in 3400 BC.
The discovery of machines and their widespread application in processing natural fibers
was a direct outcome of the industrial revolution of the 18th and 19th centuries. The
discoveries of various synthetic fibers like nylon created a wider market for textile
products and gradually led to the invention of new and improved sources of natural fiber.
The development of transportation and communication facilities facilitated the path of
transaction of localized skills and textile art among various countries.
 11

SEGMENTS

Textile industry is constituted of the following segments.

Ready Made Garments

Cotton Textiles including mill made/power loom/hand loom
Man Made Textiles
Silk Textiles
Woolen Textiles
Hand Crafts including carpets
Jute

THE FUTURE OF THE TEXTILE INDUSTRY

In the next decade India’s textile Industry is likely to do much better. As the
domestic fiber consumption is low, there is low there is potential for increasing domestic
consumption in tandem with the projected GDP growth of 6-8 percent and this would
lead to the growth of the 6-7 percent per annum.
India can also capitalize on opportunities in the export market. The industry is
to generate 12mn new jobs in various sectors
 12

POFILE OF THE COMPANY

Thangavelu Textile Mills Ltd is engaged in manufacturing of fabric, polyester,

cotton, yarn. The company was incorporated during 1993 at kamala Nagar Colony, Salem
District located in Tamilnadu. When I started it capacity of 10000 spindles and it is
engaged in the manufacturing of the cotton yarn.

When the sound of knowledge of the promoters, the company could establish.
Following the de licensing of textile sector during 1998, competition among cotton yarns
spinning mills grew rapidly.

The constitution of the company in the beginning was a partnership, which was
later a limited company .The founder chairman Mr.Thangavelu and Managing Director of
the company and his two sons Mr.T.Surendran and Mr.T.Senthilnathan are the board of
the directors. They do not have any other business interested and they toiled since its
inception to bring the company to its present level of medium Enterprise from the level of
small scale Industry.

PROMOTORS & BOARD OF DIRECTORS

 13

Mr.P.Thangavelu,
Chairman and Managing Director,
Thangavelu Textiles Mills Ltd,
Salem.

Mr.T.Senthilnathan
Director, Thangavelu Textiles Mills Ltd,
Salem.

Mr.T.Surendran,
Additional Managing Director,
Thangavelu Textiles Mills Ltd,
Salem.

PLANT LOCATION

MILLS : 11/1, Thathampatti,

REGISTERTED OFFICE:
Kamaraj Nagar Colony,
Salem- 636014.
11/1, Thathampatti,
Kamaraj Nagar Colony,
Salem- 636014.

AUDITORTS : Mr.Elangovan and Natrajan

Salem.

BANKERS : State Bank of India,

Salem.
 14

FINANCIAL INSTITUTIONS

Industrial Development Bank O India Limited, Chennai.

OTHER GROUP OF INDUSTRIES

Thangavelu Spinning Mills –Manufactures of fabric, polyester

Thangavelu Garments - Manufactures of cotton blended fabrics

Thangavelu Fashions - Manufactures of grey cloth

Textiles Software Solution- Manufactures of Software especially for Textiles

Industries
 15

THE ORGANISATIONAL STRUCTURE

The Organization has 8 departments which are as follows.

Production Departments

Marketing Departments

Finance Departments

Human Resource Departments

Software Departments

Electrical Departments

Purchase Departments

Quality Departments

PROCESSING OPERATION
 16

1.4- OBJECTIVES OF THE STUDY

The following are the objectives of this research:

1. To analyze and interpret the financial reports of selected textile companies.

2. To appraise the financial position using the ratio analysis.

3. To accomplish the common size analysis.

4. Interpret post-retirement obligations and funding implications for future performance.

5. To determine the level of profit generated.

6. To determine the expense and investments of the company.

7. To study the liquidity position of the concern by considering the position of current
liabilities.

8. To study the trend percentage it’s helpful in making a comparative study of the
financial statement of several years.

LIMITATIONS OF THE STUDY:

1. There is a limitation related to the analysis of the result, as researcher doesn’t have
modern software available to analyze the findings so the result is based on manual work.

2. The availability of funds is the one of the limitations while doing this research as a
student it is difficult for the researcher to manage the funds.

3. The time period for the research is very short because it is difficult to conduct a full
time research for a student.
 17

4. The financial data cannot be estimated accurate for the future period.

5. The analysis and interpretation of the concern is based only past performance.

RESEARCH METHODOLOGY AND DESIGN

This chapter presents the basic methodology and requirements in

research. It includes the method of research, source of data, treatment of data, and tools,
which were used in the study.

RESEARCH INSTRUMENT

This research is based on secondary source of data and consists of annual

reports, articles, web sites, and books.

FINANCIAL TOOLS
Ratio analysis

Statement of changes in working capital

Common size statement

Fund flow statement

 18

Comparative Balance sheet

REVIEW OF LITERATURE:
Ratios are a valuable analytical tool when used as part of a thorough
financial analysis. They can show the standing of a particular company, within a
particular industry. However, ratios alone can sometimes be misleading. Ratios are just
one piece of the financial jigsaw puzzle that makes up a complete analysis. (Leslie
Rogers, 1997)

Financial ratios are widely used to develop insights into the financial
performance of companies’ by both the evaluators’ and researchers’. The firm involves
many interested parties, like the owners, management, personnel, customers, suppliers,
competitors, regulatory agencies, and academics, each having their views in applying
financial statement analysis in their evaluations. Evaluators’ use financial ratios, for
instance, to forecast the future success of companies, while the researchers' main interest
has been to develop models exploiting these ratios. Many distinct areas of research
involving financial ratios can be differentiated. (Barnes, 1986) Financial ratios can be
divided into several, sometimes overlapping categories. . Trend analysis works best with
three to five years of ratios. The second type of ratio analysis, cross-sectional analysis,
compares the ratios of two or more companies in similar lines of business. One of the
most popular forms of cross-sectional analysis compares a company's ratios to industry
averages. These averages are developed by statistical services and trade associations and
are updated annually. (Ezzamel, Mar-Molinero and Beecher, 1987)
 19

Financial ratios can also give mixed signals about a company's financial health, and can
vary significantly among companies, industries, and over time. Other factors should also
be considered such as a company's products, management, competitors, and vision for the
future. (Fieldsend, Longford and McLeay, 1987) There are many different ratios and
models used today to analyze companies. The most common is the price earnings (P/E)
ratio. It is published daily with the transactions of the New York Stock Exchange,
American Stock Exchange, and NASDAQ. These quotations show not only the most
recent price but also the highest and lowest price paid for the stock during the previous
fifty-two weeks, the annual dividend, the dividend yield, the price/earnings ratio, the
day's trading volume, high and low prices for the day, the changes from the previous
day's closing price. The price to earnings (P/E) ratio is calculated by dividing the current
market price per share by current earnings per share. It represents a multiplier applied to
current earnings to determine the value of a share of the stock in the market. The price-
earnings ratio is influenced by the earnings and sales growth of the company, the risk (or
volatility in performance), the debt equity structure of the company, the dividend policy,
the quality of management, and a number of other factors. A company's P/E ratio should
be compared to those of other companies in the same industry. (Garcia-Ayuso, 1994)
 20

TREATMENT OF THE DATA

The data and information that was gathered was interpreted and analyzed by
using different financial tools.

BALANCE SHEET OF THE YEAR OF (2005-2006)

TABLE NO: 3.1

 21

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BALANCE SHEET OF THE YEAR OF (2006-2007)

TABLE NO: 3.2

 22

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 23

BALANCE SHEET OF THE YEAR OF (2007-2008)

TABLE NO: 3.3

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 24

BALANCE SHEET OF THE YEAR OF (2008-2009)

TABLE NO: 3.4

PARTICULARS 2008 2009 EFFECT ON WORKING

CAPITAL
Increase Decrease
Current Assets
Inventories 303268 304990 1722
Debtors 623811 1010050 386239
Cash in Hand 159779 115450 44329
Cash at Bank 88 2273 1072135 189862
Loans and Advance 5561355 3660157 1901198
Total 7530485 6162782
Current Liabilities
Creditors 6033386 5346 6028040
Other Liabilities 209659 320173 5000000 110514
Tender Deposit 10000000 5000000
Provision For Tax 1070000 1500000 430000
Total(B) 17313045 6825519
Working Capital(A- -9782559 -662737
B)
Decrease in working 9115322
Capital
-662737 -662737 11605863 11605863

CURRENT RATIO

Current ratio is the relationship between current assets and current liabilities.

Current assets
Current ratio = -----------------------
 25

Current liabilities
A Current ratio of 2:1 is considered ideal. That is for every rupee of current liabilities
there must be current assets of Rs.2. If the ratio is less than two it may be difficulties for
my film to pay current liabilities. If the ratio is more than two it is an indicator of idle
funds.

TABLE NO: 3.5

CURRENT RATIO

Year Current assets(rs) Current liabilities Ratio

2005 16478118 24360214 0.68

2006 7008874 20805743 0.34
2007 10879408 22917698 0.47
2008 7530486 17313045 0.43
2009 616278 11225519 0.55

Source: Annual Report

INTERPRETATION

From the above table the current ratio was increased from the year 2005. It
shows increase in current ratio.

CURRENT RATIO

CHART NO: 3.2.1

 26

LIQUID RATIO

Liquid ratio is also called acid test ratio because it is tee acid test of a concern’s
financial soundness. It is the relationship between liquid assets and liquid liabilities.
Liquid assets are assets which are easily converted into cash.

Liquid Assets
Liquid Ratio = -------------------------
Liquid Liabilities

TABLE NO: 3.6

LIQUID RATIO
 27

Year Liquid assets Liquid liabilities Ratio

2005 7006918 24360214 0.29
2006 6594956 20805743 0.32
2007 10636170 22917698 0.46
2008 7227218 17313045 0.42
2009 9568392 11225519 0.85

Source: Annual Report

INTERPRETATION

The above table shows that the liquid ratio of the company. The standard
norm of the liquid ratio is 1:1. In the year 2009 was increased.

LIQUIDITY RATIO

CHART NO: 3.2.2

 28

ABSOLUTE LIQUIDITY RATIO

This ratio is also called as “Cash ratio or Super Quick ratio”. This ratio is
calculated when liquidity is highly restricted in terms of cash and cash equivalents
Marketable securities
Cash ratio = Cash + ---------------------------
Current Liabilities

An ideal cash position ratio 0.75

TABLE NO: 3.7

ABSOLUTE LIQUIDITY RATIO

Year Liquid assets Liquid liability Ratio

2005 2429.76 20248.53 0.120
2006 1360.38 23349.85 0.058
2007 2021.49 22972.39 0.087
2008 1900.21 25832.12 0.073
2009 2304.42 31047.98 0.074
 29

Source: Annual Report

INTERPRETATION

The above table shows that the absolute liquidity ratio of the company. The
standard norm of the ratio is 9.51.Company was not satisfactory during the above study
period because the ratio was below the stand norms.

ABSOLUTE LIQUDITY RATIO

CHART NO: 3.2.3

 30

FIXED ASSETS RATIO

Fixed assets ratio is the relationship between fixed assets and capital employed.

Fixed assets
Fixed assets ratio = --------------------------
Capital employed.

Capital employed = Fixed assets + Current assets –Current liabilities

TABLE NO: 3.8

FIXED ASSETS RATIO

Year Fixed assets Capital employed Ratio

2005 75065.22 86086.21 0.871
2006 71780.44 87165.02 0.823
2007 72995.94 86900.67 0.839
2008 79593.70 82801.56 0.961
2009 86800.34 107294.16 0.808

Source: Annual Report

 31

INTERPRETATION

The fixed assets ratio for the year 2005 was 0.871%.It was decreased in 2006
with 0.823%.In the year 2007-2008 was increased with 0.39 to 0.961. So, the financial
manager should take action to raise the fixed assets ratio of the investment.

FIXED ASSETS RATIO

CHART NO: 3.2.4
 32

NET WORKING CAPITAL

Net working capital shows current assets and current liabilities with capital
employed.

Net working capital ratio = Net working capital /capital employed

TABLE NO: 3.9

NET WORKING CAPITAL

Year Net working Capital employed Ratio
capital
2005 110209.99 86086.21 0.128
2006 15384.58 87165.02 0.176
2007 16661.48 86900.67 0.191
2008 10958.86 82801.56 0.132
2009 8003.47 107294.16 0.074

Source: Annual Report

INTERPRETATION

The net working capital ratio for the year 2005 was 0.128. It was 0.176 in
2006, 0.191 in 2007, 0.132 in 2008 and 0.074 in 2008.
 33

NET WORKING CAPITAL RATIO

CHART NO: 3.2.5

DEBT EQUITY RATIO

This ratio is ascertained to determine long term Solvency position of a

company. Debt equity ratio 1:1 is considered desirable.
Long Term Debt
Debt Equity Ratio = -----------------------
Shareholders Fund

Long Term Debt = Secured Loan + UN Secured Loan

 34

Shareholders Fund = Share capital + Reserve and Surplus

TABLE NO: 3.10

DEBT EQUITY RATIO

Year Long Term Debt Shareholders Fund Ratio

2005 25399.20 44923.55 0.565
2006 25003.25 46543.33 0.537
2007 30813.38 52251.81 0.589
2008 55939.94 57650.50 0.970
2009 55243.90 64000.98 0.863

Source: Annual Report

INTERPRETATION

The above table shows that the debt equity ratio of the company. The standard
norm of the debt equity ratio is 2:1. Here the debt equity ratio of the company was not
Satisfactory.

DEBT EQUITY RATIO

CHART NO: 3.2.6

 35

PROPRIETARY RATIO

Proprietary ratio is the relationship between proprietary funds and total

tangible assets.
Shareholders Fund
Proprietary Ratio = -------------------------
Total tangible assets

Proprietary Fund = Share capital +Reserve and Surplus

Total Assets = Fixed Assets + Investments + Current Assets + Loans and Advances
 36

TABLE NO: 3.11

PROPRIETARY RATIO

Year Shareholders fun Total assets Ratio

2005 44923.55 10741750 0.418
2006 46543.33 111733.64 0.416
2007 52251.81 121500.39 0.430
2008 57650.50 154699.51 0.372
2009 64000.98 169127 0.378

Source: Annual Report

INTERPRETATION

The above table shows that the proprietary ratio of the company. From the
above table the proprietary ratio was showing a decreasing trend during the study period.

PROPERIETARY RATIO

CHART NO: 3.2.7

 37

FUND FLOW STATEMENT OF THE YEAR (2005-2006)

TABLE NO: 3.12

PARTICULAR 2005 2006

Source Of Fund
Share holders funds 16246.15 16512.56
Loan Fund 50865.17 44185.35
Total 67111.32 60697.91
Application Of Funds:
Fixed Assets 19175.28 17736.27
Investment 3709.33 53282.21
Current Assets 56937.23 53282,21
Total 79821.84 73776.81
Less: Current Liabilities & 17327.02 16409.55
Provisions
Net Current Assets 62500.82 57367.26
Miscellaneous Expenditure 4616.50 3330.65
Total 67111.32 60697.91

INTERPRETATION:
 38

From the above table shows that the inflow of funds 2005-2006 it has been
decreased and out flow of funds also decreased.
FUND FLOW STATEMENT OF THE YEAR (2006-2007)
TABLE NO: 3.13

PARTICULAR 2006 2007

Source Of Fund
Share holders funds 16512.56 17724.15
Loan Fund 44215.12 34734.46
Total 60727.68 52458.61
Application Of Funds:
Fixed Assets 17736.27 17491.18
Investment 2758.33 2702.03
Current Assets 53400.48 56485.24
Total 73895.08 76678.45
Less: Current Liabilities & 16498.05 26660.22
Provisions
Net Current Assets 57397.03 50018.25
Miscellaneous Expenditure 3330.65 2440.38
Total 60727.68 52458.61

INTERPRETATION:

From the above table shows that the inflow of funds 2006-2007 it has been
decreased and out flow of funds increased in the year.

FUND FLOW STATEMENT OF THE YEAR (2007-2008)

 39

TABLE NO: 3.14

PARTICULAR 2007 2008

Source Of Fund
Share holders funds 17724.15 23257.20
Loan Fund 34751.09 29167.86
Total 52475.24 52425.06
Application Of Funds:
Fixed Assets 17491.18 19602.00
Investment 2702.03 2702.03
Current Assets 56452.12 64674.05
Total 75545.33 86980.99
Less: Current Liabilities & 26610.47 35985.55
Provisions
Net Current Assets 50034.86 50994.54
Miscellaneous Expenditure 2440.38 1430.53
Total 52475.24 52425.06

INTERPRETATION:

From the above table shows that the inflow of funds 2007-2008 it has been
decreased and outflow of funds increased in the year.

FUND FLOW STATEMENT OF THE YEAR (2008-2009)

TABLE NO: 3.15

PARTICULAR 2008 2009

Source Of Fund
Share holders funds 23257.20 32744.47
Loan Fund 29167.86 26444.93
 40

Total 52425.06 59189.39

Application Of Funds:
Fixed Assets 19602.00 26711.99
Investment 2702.03 2702.03
Current Assets 64676.05 88581.08
Total 86980.08 117995.10
Less: Current Liabilities & 35985.55 59226.40
Provisions
Net Current Assets 50994.53 58768.70
Miscellaneous Expenditure 1430.53 420.69
Total 52425.06 59189.39

INTERPRETATION:

From the above table shows that the inflow of funds 2008-2009 it has been
increased and out flow of funds increased in the year.

COMMON SIZE STATEMENTS OF CURRENT ASSETS AND

CURRENT LIABILITIES FOR THE YEAR 2005 TO 2009
TABLE NO: 3.16

PARTICULARS 2005 2006 2007 2008 2009

Current Assets % % % % %
Inventory 57.48 5.91 1.80 4.03 4.95
Sundry Debtors 24.54 40.05 27.53 8.0 16.39
Cash and Bank 2.86 4.53 17.83 13.84 19.27
balance
Loans and 15.12 49.51 52.84 73.85 59.39
advance
Total Current 100 100 100 100 100
Assets
Current
 41

Liabilities
Current 100 100 97.49 93.82 78.02
Liabilities
Provision 0 0 2.51 6.18 21.98
Total Current 100 100 100 100 100
Liabilities

INTERPRETATION
From the above table the proprietary ratio was showing a decreasing trend
during the study period.

COMPARETIVE BALANCE SHEET OF THE YEAR (2005-2006)

TABLE NO: 3.17

Particular 2005 2006 Inc/Dec Inc/Dec(%)

Current Assets 56937.23 53282.21 -3655.02 -6.42
Fixed Assets 19175.28 17736.27 -1439.01 -7.05
Investment 3709.33 2758.33 -951.00 -25.64
Total Assets 79821.84 73776.81 -6045.03 -7.57
Current 39610.21 36872.66 2737.55 -6.91
Liabilities
Miscellaneous - 4616.50 3330.65 -1285.85 -27.85
Expenditure
Share Capital 8227.63 8227.63 - -
Reserve & 8018.52 8284.93 266.41 3.32
Surplus
Total 60642.86 56715.87 -3756.99 -6.21
liabilities(A)
Secured Loans 1268.26 20360.99 -10619.27 -83.75
Unsecured Loans 34026 20310.32 -13716.00 -40.31
Total Loans(B) 46706.58 22392.31 -24314.27 -52.06
Total Liabilities 10717.44 79108.18 28071.26 -26.19
& Capital (A)+
(B)
 42

INTERPRETATION:

The table shows that a total Assets has been decreased by -7.57%. The total
liabilities and capital has been decreased by -26.19%.

COMPARETIVE BALANCE SHEET OF THE YEAR (2006-2007)

TABLE NO: 3.18

Particular 2006 2007 Inc/Dec Inc/Dec(%)

Current Assets 53400.45 56485.24 3084.79 5.78
Fixed Assets 1736.27 17491.18 -445.09 -1.38
Investment 2758.33 2702.03 -56.30 -2.04
Total Assets 73895.05 76678.45 2783.40 3.77
Current Liabilities 16498.05 26660.22 10162.17 61.60
Miscellaneous - 3330.65 2440.38 -890.27 -26.72
Expenditure
Share Capital 8227.63 8227.63 - -
Reserve & Surplus 16512.56 17724.15 1211.59 7.34
Total liabilities(A) 44568.89 55052.38 1048349 23.52
Secured Loans 20390.76 19335.67 -1055.09 -5.17
Unsecured Loans 20310.32. 12466.81 -7843 -38.62
Total Loans(B) 40701.08 31802.48 -8898.60 -21.86
Total Liabilities & 85269.97 86854.86 1584.89 1.89
Capital (A)+(B)

INTERPRETATION:
The above table shows that a total asset has been increased to
3.77% and the total Liabilities and capital has been increased by 1.86%.
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COMPARETIVE BALANCE SHEET OF THE YEAR (2007-2008)

TABLE NO: 3.19

Particular 2007 2008 Inc/Dec. Inc/Dec.(%)

Current Assets 56452.12 64676.05 8223.93 14.5
Fixed Assets 17491.18 19602.00 2110.82 12.07
Investment 2702.03 2702.03 - -
Total Assets 76645.33 86980.08 10334.75 13.48
Current 26610.47 35985.55 9375.08 35.23
Liabilities
Miscellaneous - 2440.38 1430.53 -1009.85 -41.38
Expenditure
Share Capital 8227.63 8227.63 - -
Reserve & 9496.52 15029.57 5533.05 58.26
Surplus
Total 46775.00 60673.28 13898.28 29.71
liabilities(A)
Secured Loans 19352.30 148883.77 -4468.53 -23.09
Unsecured Loans 12466.81 11908.61 -558.20 -4.48
Total Loans(B) 31819.11 26792.38 -5026.73 -15.80
Total Liabilities 78594.11 89465.66 8871.55 11.29
& Capital (A)+
(B)

INTERPRETATION:

The table shows that a total assets has been increased to 13.48 % and the
total liabilities and capital has been increased by 11.29

COMPARETIVE BALANCE SHEET OF THE YEAR (2008-2009)

TABLE NO: 3.20

Particular 2008 2009 Inc/Dec. Inc/Dec. (%)

Current Assets 64676.05 88581.08 23905.03 36.96
Fixed Assets 19602.00 26711.99 7109.99 36.27
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Investment 2702.03 2702.03 - -

Total Assets 86980.05 117365.1 30385.05 34.93
Current 35985.55 59226.40 23240.85 64.58
Liabilities
Miscellaneous - 1430.53 420.69 -1009.84 -70.59
Expenditure
Share Capital 8227.63 4438.93 -3788.70 -46.05
Reserve & 15029.57 28305.54 13275 .97 88.33
Surplus
Total 60673.28 923915.56 31718.28 52.27
liabilities(A)
Secured Loans 14883.77 17267.07 2383.30 16.01
Unsecured Loans 11908.61 7433.66 -4474.95 -37.58
Total Loans(B) 2672.38 24700.73 -2091.65 -7.81
Total Liabilities 87465.66 948616.29 861150.63 984.55
& Capital (A)+
(B)

INTERPRETATION:

The above table a total asset has been increased to 34.93% and the total
liabilities and capital has been increased by 984.55%.

FINDINGS, RECOMMENDATIONS AND CONCLUSION

FINDINGS

From the analysis of the last five years of Thangavelu Textiles Mills Ltd., reveals that the
Followings finding:-
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1. From the above table the current ratio was increased from the year 2005. It
shows increase in current.
2. The above table shows that the liquid ratio of the company. The standard
norm of the liquid ratio is 1:1. In the year 2009 was increased.
3. The standard norm of the ratio is 9.51.Company was not satisfactory
during the above study period because the ratio was below the stand norms.
4. The fixed assets ratio for the year 2005 was 0.871%.It was decreased in
2006 with 0.823%.In the year 2007-2008 was increased with 0.39 to 0.961.
5. The net working capital ratio for the year 2005 was 0.128. It was 0.176 in
2006, 0.191in 2007, 0.132 in 2008 and 0.074 in 2008.
6. The standard norm of the debt equity ratio is 2:1. Here the debt equity
ratio of the company was not satisfactory.
7. From the above table the proprietary ratio was showing a decreasing trend
during the study period.
8. From the above table the proprietary ratio was showing a decreasing trend
during the study period.
9. The table shows that a total Assets has been decreased by -7.57%. The total
liabilities and capital has been decreased by -26.19%.

10. The above table shows that a total asset has been increased to 3.77% and
the total liabilities and capital has been increased by 1.86%.

11. The table shows that a total asset has been increased to 13.48 % and the
total liabilities and capital has been increased by 11.29.

12. The above table a total asset has been increased to 34.93% and the
total liabilities and capital has been increased by 984.55%.
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SUGGESTION

The company which maintains the ideal ratio is not good, in this company. The
ideal ratio is not maintained, from it’s we suggest that the company should either
decrease their liabilities or increase their assets.

The lower debt equity ratio, the higher degree of protections enjoyed by the
creditors so that the company has to control the both debt equity and debt assets ratio.
 47

The average assets cannot be reduced so that the company has to increase their
sales as like in the year 2005-2006. And the company should use their assets in the
effective manner to get more profit.

I) The Company has to maintain their debt equity as like in the last year (2008-2009).

II) The cost should be in control as like the previous year.

III) The company has to use their working capital for their day today expenses.

CONCLUTION

The study undertake on the financial performance of the Working Capital and
Common Size statement of Current Assets and Current Liabilities for the year 2005-
2009. The analysis reveals that the short term solvency position is not good, but the long
term solvency position is satisfactory. So, the firm has healthy condition of finance for
long term. The study reveals that the company must maintain certain level of working
capital to increase the net profit as it is fluctuating every year.
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APPENDICES

Schedule 31.3.2009 31.3.2008 31.3.2007 31.3.2008 31.3.2005

Particular No

s
Liabilities
Share Capital 01 44,38,000 44,38,000 44,38,000 44,38,000 44,38,000
Reserve and 3595,667 32,25,992 2748820 799344 5889182
Surplus
Secured Loans 02 2,36,42,61 2,13,46,00 17131581 - -
0 0
Current Liabilities 03 66,08,039 11225519 24360124 20305743 2291698
& Provision
Total Liabilities 4,24,4661 4,44,41,64 3,96,11,90 3,01,04,51 3,13,22,92 4,03,45,22
0 1 1 8 5 7
 49

Assets
Fixed assets 04 36840060 38278859 32084553 10934388 7960754
C.A. loans and 05 48904 304990 303268 243238 413918
advance
Sundry Debtors 06 632925 1010050 623811 2407837 321976
Loans and 07 1095234 1187543 5561355 2134850 3467646
advances
Cash and bank 08 471838 312976 2407837 1042052 4044315
balances
Profit and Loss 15446082 8290722 - - -
accounts
Total Assets 20 4,24,46610 4,44,41,64 3,96,11,90 3,01,04,51 3,13,22,92
1 1 8 5

BIBILOGRAPHY

JOURNALS

Annual Report of TVT LTD (2005-2009)

BOOKS

I.M.Pandey Financial management vikas publications ninth edition.

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Prasanna Chandra Investment and analysis of financial management, TATA McGraw

Hill second edition.

WEBSITES

www.indiachina.com.

www.business.mapsofindia.com.

www.fibre2fashion.com.
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