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A SUMMER TRAINING REPORT ON

FINANCIAL ANALYSIS

OF R-TEK MOULD

SUBMITTED TO S.C.D GOVT COLLAGE LUDHIANA In partial fulfillment of the requirement for the two years Full time post graduate degree in

M.COM. Business innovations (M.B.I)

Supervised by: Prof: Sanded Banal

Submitted By: Ramandeep Kaur (M.B.I)

Department of M.COM Business Innovations S.C.D GOVT. COLLAGE. LUDHIANA. 2011-2012

CERTIFICATE

This is to certify that the project work done on Quality Management in R-Tek Mould is a bonafide work carried out by Miss Ramandeep Kaur under my supervision and guidance. The project report is submitted towards the partial fulfillment of two year, full time degree of M.Com Business Innovations. This work has not been submitted anywhere else for any other diploma/degree. The original work is carried during 1st June 2012 to 15th July 2012 in R-Tek Mould.

Name and Sign of Industry Guide Mr. Ravinder Singh

Name and Sign of Faculty Mr. Ashwani Bhalla

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Date: Name of Student Ramandeep kaur Roll No. _________________________

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ACKNOWLEDGEMENT
This report could not have been possible without the help of certain people and utilising support of R-Tek Mould. I would like to express my sincere gratitude towards Mr. Ravinder Singh (General Manager) for his technical guidance, invaluable and constructive criticism and vital encouragement throughout the entire project which helped me to get inside into the working of R-Tek Moulds and to relate the theoretical knowledge imparted by our esteemed faculty members in the course of M.Com Business Innovations to the present scenario of corporate body. I also express my sincere thanks to Dr. Ashwani Bhalla professor and program coordinator and my respective Major Advisor Mr. Sandeep Bansal professor of Department of Commerce and Business Innovation, S.C.D. Government College Ludhiana, under whose valuable guidance this project was completed. I express my sincere thanks to the whole team of R-Tek Mould for giving all the facilities during my training period. Indeed, the words at my command are not adequate to convey my heart full thanks to respective parents for the encouragement and inspiration given by them.

Ramandeep Kaur

Introduction to R-Tek Mould R-Tek Mould came into existence in 1985 under the very special guidance of Sh. Kulwant Singh Matharu. It is serving the industry for about 17 years. rubber compression moulds and polyurethane moulds and their mouldings. Started from a scratch. . much more research and development work was done till 1990 and the lead was taken by Sh. Kulwant Singh Matharu. Ravinder Singh Matharu who is son of Sh. The concern was established as a small-scale industrial unit and now it’s one of leading suppliers of plastic injection Moulding tools. pressure.

accuracy. Em Cee Cee Sports Private Limited is dealing in tools and dies. engaged in manufacture of Automobile parts. the company has strong potential in foreign market. The company has a dedicated quality assurance department along with a team of experienced quality control supervisors. competitive prices and professional work force. Auto parts. The company is enjoying a prestigious market all over the globe and working with a motive of customer satisfaction. Indian Air Force for spare parts. These products are fabricated with the high grade raw material that is procured from reliable vendors to ensure that the products are of high quality and meet the global standards. The company has done some marvellous jobs dealing with some leading brands like J. Bike Headlights Lens. with Eastman Industries the company is dealing Injection Moulds. Bajaj Pulsar. The company was endowed with ISO 9001:2008 certification and is in process to achieve more in this line. Bajaj Discover. Autocrat is a reputed company since 1992. Aluminium Casting. and other plastic products. The company prioritize is maintaining quality. The company is in process of getting TS 16949 certification. and Honda Activa. Autocrat is an integral part of R-Tek Mould. Motorcycle parts. tools and die. .J. who ensures quality at all levels of production process. R-Tek Mould strictly adheres to international quality and safety norms of the automobile industry followed by leading manufacturers and automobile giants and works to ensure zero-defect products. suppliers of Headlight glass.Besides straightening its hold on domestic market. Bike Visor. It provides headlight glass to Bajaj CT 100. Bajaj Platina. Visors. Hero Cycle Limited is buying tool and die. Jonex for Sports Die and mould. It is one of leading manufacturers. R-Tek Mould also provides Turn Key Projects to its clients.

Fabricated under the supervision of well qualified and experienced professionals.M. In Plastic Injection Moulding Section their portfolio of products includes optimum quality Head Light Lens. the products are acclaimed for their outstanding attributes. E. precise design and reliable service life. For this they are using world’s best injection moulding machines with a capacity from 60 to 440 Tons. Precision Surface Grinders. such as dimensional accuracy. To complete target from concept to finished Product they have 3D Scanner. and complete conventional tool room machines. The die casting machine capacity is from 40 to 250 Tons and also they have complete infrastructure to finish Pressure Die Casting Components. . Aluminum Casting Products & Plastic Components. Cad-Cam Software. Aluminum Die Casting Moulds. and Wind Shield Glasses of Indian Bikes for replacement market.R-TEK MOULD A young and dynamic organization. They have developed a state-of-the-art infrastructure that aids us in efficiently meeting all our business objectives.D. The Tool and Die manufacturing facility is furnished with Vertical Machining Centers. which have earned specialization in manufacturing And supplying a comprehensive range of Plastic Injection mould.

.Objectives of the Company • • Excellent distribution network To achieve and maintain a lead position as manufacturer of automotive components • • To ensure steady growth in business and fulfill its social obligations To build up high degree of customer confidence by sustaining standards of excellence in product quality. • • • • To develop human resource to increase their efficiency and productivity Care of environment and to discharge factory waste responsibly To build a strong customer base by satisfying them Maintaining high quality output by implementing various quality checks.

Kulwant Singh Matharu .S. R-TEK Mould came into existence in 1975 under the very special guidance of Sh. much more research and development work was done till 1990 and the lead was taken by Sh. Ravinder Singh who live in Bombay and were doing the rubber business. The idea of starting the business came to the mind from the relatives of S. Ravinder singh matharu is currently the manager of the company. A CLAY MOULD IS USED FOR CASTING BRONZE STATUES. Sh. He took training from them in Bombay and then came back to Ludhiana and started their own business.HISTORY:DIE IS A BLOCK OF METAL WITH A SPECIAL SHAPE OR WITH A PATTERN CUT INTO IT THAT IS USED FOR SHAPING OTHER PIECES OF METAL SUCH AS COINS OR FOR MAKING PATTERNS A MOULD IS A CONTAINER THAT YOU POUR SIFT LIQUID OR SUBSTANCE INTO WHICH THEN BECOMES SOLID IN THE SAME SHAPER AS THE CONTAINER E. He strengthens the progress and brings the company to the new heights. Started from a scratch. Matharu. Ravinder Singh Matharu who is the son of Sh. Third generation Mr. Amrit Singh Matharu is very keen to get the company up to a higher mark. K. WHEN IT IS COOLED OR COOKED. . He has done his masters from abroad and now providing his creative skills to enhance the business growth and development.G.

Literature Review of R-Tek .

so that the business can be carried out in a synchronized manner. they store and label them. Quality being the most crucial factor has helped them in developing a distinct position in the market. Our infrastructure is capable of meeting the bulk needs of the customers. production department and packing department. For this.The Company has its whole focus on quality. quality assurance. The quality analysts ensure that the end product is free from all kinds of defects. The quality testing department helps the company to check the quality of the product as it measures the quality so that the product can be produced according to the quality the customer wish. Infrastructure is segregated into following units:• • • • • Quality Testing Production Research & development Logistics Inventory and warehouse Quality Testing: . The products are checked on the following parameters of quality:• Durable finish . Their prime motive is to provide exclusive and superior quality products to our clients. They conduct regular tests to determine the quality of products. The manufacturing unit is segregated into various departments such as research and development. they procure products from trusted and reliable vendors.Infrastructure They have a well constructed infrastructure that is built in a wide area. Our infrastructure is equipped with sophisticated and latest machineries. In order to maintain the uniform size of goods.

• Efficiency • Long working life • Performance Product Range On the strength of its expertise in the development and manufacturing components R-Tek has explored new horizons to provide diverse range of products. .

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Plastic Components .

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Headlight Glass .

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Organizational Chart Departments The researcher encompassed the study of four departments namely Accounts and Administration. Designing. The basis for departmentalization was functional. . Production and Marketing.

Once the normal design is finalized by the customer. a normal design is set. It includes maintenance of showroom and a look into the requirements and problems of day to day administration. architectural services. In a nutshell this department deals with the trouble shooting of any problem. The team of designer tailor makes the products according to the needs of the customers. etc. it also takes into account the installation part at the customer site after the dispatch of the product. plan and control the company’s financial affairs. It also keeps a track of things with regard to civil construction. Apart from all these. the in house administration of the company is also taken care of. networking. a designer accompanied by . Two executives assisted them. It is also concerned with bank facility availed by the employees. Major activities undertaken in this department are as follows Setting the normal design According to the initial measurement told by the customer. Two aspects namely affordability and aesthetics are focused upon.ACCOUNTS AND ADMINISTRATION DEPARTMENT This department is headed by Balwinder Singh. It also analyze. Eight creative designers assist him. This department is broadly concerned with the acquisition and use of funds by the company. electrical work. Moreover. DESIGNING DEPARTMENT This department is headed by Inderpal singh. project co-ordination.

The department is headed by Mr. the designers make the production design. Eight marketing executives assist him. Marketing department is assisted by two IT personals who help in online advertising and Search Engine Optimisation (SEO). • • Human Resource Department: This department is headed by Mr. advertisement and sales promotions are taken care under this. He is assisted by 2 executives. Various activities like product packaging. Then according to it a design is set and the price quotations are made. Innovative designs – The team of designers also trigger out the brain cells to create innovative designs. Tajinder Singh. branding. Sandeep Sharma. Setting the production designs.marketing personnel visits the construction site and takes the final measurement. Various aspects of HR are taken care of : . When the deal is finalized and after receiving 50% of the amount from the customer. • Marketing Department: This department deals with springboard of all activities. This design clearly demarcates the technicalities so that it becomes easier for the production personnel to understand.

• Production Department: - This department is headed by Mr.• Leave Facility: All employees are entitled to 12 days of casual leave and 2 days of sick leave (monthly). Candidates are recruited after proper training. During this period. The raw materials are supplied mainly by four companies namely Novapan. • Recruitment: The company spells out its requirements to the consultancies about the suitable candidates. he is not given any individual project. Quality Control: This sub department is mainly concerned with the inspection of raw materials. product analyzing. say more than a week. . Spacewood. production and dispatching. Four supervisors are in charge of four different activities such as quality control. Abhishek Kumar. one need to inform it 10-12 days before. Bhutan Board and Nepal Board and Nuwood. • Job Rotation: Job rotation is adopted by the company so that there is development of multi-faceted skills in vacancies and to cope up with increasing work load. In case of long leave. • Training: A selected candidate is put on training for 15 days to 1 month.

The fully control on the inventory is made by the company taking EOQ model in mind. Thus this department is very much helpful to the company. for the purpose of conducting shared research on new technologies for the benefit of the consortium's member companies. the product is thoroughly inspected here. After receiving the production design. So that the wastage of time could . industry.As there is need to store the material in the factory so warehouse help to store the material. molding. often with the support of government. after completion of production process and before dispatch. boring and hot press and post formed. Production: 26 persons comprising of machine operators and helpers are involved in this sub-department. Product Analyzing: This sub-department is mainly concerned with targeting and scheduling. or national level. edge bending. Research and development (R&D) consortia are formed by manufacturing companies. It consists of five operations namely cutting. it targets as to when the work needs to be completed and schedules the whole process. Inventory and warehouse: . Research & development: - Research and development (R & D) is a process intended to create new or improved technology that can provide a competitive advantage at the business.The raw materials obtained are with respected with regard to requirements and specifications. Again.

• Water Chillers. • For Tensile test we have UTM machine.be reduced and production moves as smoothly. In Plastic Moulding Section it has: • Cincinnati Feromatic 80 Ton to 440. Computer. Their bulk investments in the infrastructure have ensured that it is equipped with all the requisites facilities in various sections which are detailed as under: In Designing Sector it has: • 3D Scanner • Intel. • Cad Cam Software. • Mould temperature controllers. In Tool and Die section it has: • Surface Grinder IDROMIN -600 • Tig Welding. Xeon. Mig Welding • Lathes . • Dehumidifiers • Auto Loaders In Pressure Die Casting section it has: • Machines from 80 Tons to 250 Ton Capacity. Infrastructure is one of the reasons that provide effective customization services to clients.

25 Million (or up to Rs.T makes • Hydraulic Planners. North America . • Vertical Milling H.up to 20% Company USP • • • Experienced R & D Department Good Financial Position & TQM Large Product Line MAJOR MARKETS:Australia/NZ . South/West Africa.) Export percentage: . • Diamond Polishing Machines.East/Middle Africa. South/West Europe. South East Asia.M. 1 Crore Approx. South America. • Complete Measuring Instruments. • Lapping Machines. Caribbean .• Radial & Bench Drilling Machines. North Africa. Annual turnover:Up to US$ 0. Indian Subcontinent.

EM CEE CEE SPORTS PVT LTD is dealing in Tool and Die. Their products are widely applauded for its special features and unmatched quality. They are enjoying a prestigious market all over the globe and working with a motive of "Customer Satisfaction". they are planning to launch a new and innovative range of Tail Lamps. INDIAN AIR FORCE for Spare Parts. They are dealing Injection Moulds.Expansion Plan Backed by the skilled team of professionals. Their priorities are maintaining of quality. The main thing is they are going to make bullet proof head lights for bikes. Head Lights & Side Indicators in the replacement of Indian bike market. they have achieved new hikes in the competitive market.J. The products offered by them are widely used in many sectors.JONEX for Sports Die and Mould. competitive prices and professional work force. They cater products to the sectors such as:• • • Sports Sanitary & Water supply Indian Railways . HERO CYCLE LTD. Aluminum Casting. With EASTMAN INDUSTRIES.is buying Tool and Die. accuracy. We are dealing J. The company has done some marvelous jobs like dealing with some of leading brands. Product Application Due to premium quality products. tool and die.

.• • • • • • • Hand Tools Electrical Indian Defense Automobile Textile Kitchen Ware Agricultural WHY R-TEK MOULD??? Their Products are known for accuracy in fitment and quality as per standards.

MOULD SECTION "Autocrat" is a reputed company since 1992.• • • State-of-the-art Plastic Moulding Infrastructure. The organization incorporates novels of changing technologies and strives to manufacture the products that confirm to international standards. They care for environment safety. they at Autocrat. their core values have been innovated with continuous improvements. Motorcycle Parts. Bike Headlights Lens. reliability. Committed to impeccable quality of products. have successfully earned a name for us in the market place.R-TEK Mould . It is their mission to establish their wide presence at every corner of the country and offer quality products at competitive prices. With years of experience. timely delivery of consignments and competitive pricing. engaged in the manufacture and supply of Automobile Parts. Their workshop is equipped with all safety norms. Completely safe packing with heavy ply cartoons and boxes to prevent any kind of damage • • • • Customer oriented services Lenses are unbreakable and having no coloring effect. They aim at achieving continued improvement in quality. economy and safety so as to retain competitive edge and increase our market share. Visors. Plastic Mould . and other plastic products. Auto Parts. Bike Visor. Excellent distribution network.

R-TEK Mould Make : Model : Item : Part no : R-TEK Mould 2011 Tool & Die Agriculture Plastic Part Click to view large .R-TEK Mould Make : Model : Item : Part no : R-TEK Mould 2001 Plastic Injection die Y-Cone Textile Click to view large ------------------------------------------------------------------------------------------------------------------------------------- Tool & Die .Make : Model : Item : Part no : R-TEK Mould 1995 Plastic Mould Sports T Click to view large ------------------------------------------------------------------------------------------------------------------------------------- Plastic Injection die .

R-TEK Mould Make : Model : Item : Part no : R-TEK Mould 2004 Injection Mould Battery box cap Click to view large Pressure die casting mould .R-TEK Mould Make : Model : Item : Part no : R-TEK Mould 2005 Mould design Model Click to view large ------------------------------------------------------------------------------------------------------------------------------------- Injection Mould .R-TEK Mould Make : Model : Item : Part no : R-TEK Mould 2010 Pressure die casting mould grinder front .------------------------------------------------------------------------------------------------------------------------------------- Mould design .

R-TEK Mould Make : Model : Item : Part no : R-TEK Mould 2004 Tool & Die Battery Both Mould Click to view large ------------------------------------------------------------------------------------------------------------------------------------- Injection Mould .Click to view large ------------------------------------------------------------------------------------------------------------------------------------- Tool & Die .R-TEK Mould Make : Model : Item : Part no : R-TEK Mould 2001 Injection Mould Fork die Click to view large ------------------------------------------------------------------------------------------------------------------------------------- Pressure die casting mould .R-TEK Mould Make : Model : R-TEK Mould 2010 .

Applicability of these products is in various automobile industries and service . we are offering the superior quality of Pulsar headlight Glass and we use the fine quality of raw materials to manufacture these products.Hero Honda (MODEL.Click to view large PRODUCT OF R-TEK Mould design .Pulsar Dtsi Digital) Unbreakable Headlight lens .R-TEK Mould (MODEL-2010)Unbreakable Headlight lens – Bajaj (MODEL.Platina) Unbreakable Headlight lens – Bajaj (MODEL.R-TEK Mould (MODEL-2004) Pressure dies casting mould .Headlight lens.Hero Honda (MODEL.Discover) Unbreakable Headlight lens . The design of these products is such that they can easily fit into Pulsar.(MODEL.R-TEK Mould (MODEL-2005) Injection Mould .CT 100) Bike head glasses To provide the better head light solution.passion) Unbreakable Headlight lens – Bajaj (MODEL.Splendor plus) Unbreakable Headlight lens – Honda (MODEL.Activa) Unbreakable Headlight lens .

Contact of parting line.R-TEK Mould (MODEL-1995) Fabricated under the supervision of well qualified and experienced professionals. We have developed a state-of-the-art infrastructure that aids us in efficiently meeting all our business objectives.Hero Honda (MODEL. Air vents.Super Splendor) 4. Long serving life. Flow of plastic melt. Exact fittings.D. our products are acclaimed for their outstanding attributes.Hero Honda (MODEL.Activa old model) Plastic Mould . indicator glass . Quality of the products is checked in various parameters to meet the requirements of our clients. We consider What they do to make mould Precision? The function of mould.pulsar) 2. Unbreakable Visor glass – Baja (MODEL. E. and complete conventional tool room machines.M.centers. Unbreakable Visor glass .Splendor Plus) 5. Features: • • On time delivery. Type of mould. Clamping force required. Cad-Cam Software. Feeding balance. precise design and reliable service life. Visor glass – Baja (MODEL. Runner design which maximize .Discover Dtsi) 3. indicator glass – Honda (MODEL. Precision Surface Grinders. An ISO 9001:2008 Certificate has been endowed to us to complete target from concept to finished Product we have 3D Scanner. 1. Our Tool and Die manufacturing facility is furnished with Vertical Machining Centers. such as dimensional accuracy.

In tool & die we are leading organization in the regional ISO 9001.efficiency in both raw material use and energy consumption in molding. While designing a mould we consider.  Feeding balance  Contact are of parting line  Runner design which maximize efficiency in both raw material use and energy consumption in moulding.Precise dimension.R-TEK Mould (MODEL-2011)- Our company is engaged in Tool & Die Profession since 1985. H-11. P-20. • • • • • Standard ejector pins. . 2008 has been awarded us & we are committed to do as Standard. Tool & Die . EN-31. Standard Sprue bush Standard Pillar bushes for our tool & die. We use material for moulds. Standard Springs. Or as per customer requirement.  The function of mould  Type of mould  Flow of plastic melt  Air vents  Clamping force required. Corrosion resistantDurable. H-13.

Pulsar Head Glass. To manufacture these products. Bajaj Platina Head Glass. Applicability of these products is in various industries such as automobile electrical. We offer these products in various shapes and sizes to meet the requirements of our clients. Ct 100 Head Glass. (Unbreakable Glasses) Injection mould Our expert teams are engaged in manufacturing and supplying the best quality of Hot Runner Plastic Injection Mould. The design of these products is such that they provide the accurate shape to plastics. Corrosion resistant  Durable  Precise dimensions Head light glass Being a well known manufacturer. we are engaged in manufacturing and distributing the superior quality of Headlight Glass that are manufactured using the fine quality of raw materials. textile. we use the premium quality of plastic steel (P20) that make our products to last for longer period of time. Features: Sturdy design  Smooth finishing  Minimum maintenance . sports Indian defence and agriculture. Activa Head Glass and Bajaj Discover Head Glass. The array of products that are offered by us includes Passion Head Glass.

Orignal colour. Team comprises of: Skilled employees  Quality analyst  Marketing personnel  R & D personals QUALITY ASSURANCE OF R-TEK An ISO 9001: 2008 Certificate has been awarded to them and they are working as per ISO norms.Our visor glass is as good as OEM. Due to their dedicated efforts they have gained a distinct edge in the competitive market.Visor glass Our motorcycle visor glasses are made from high quality plastic granules. no decolouration effect and easy in fittment. They have vast knowledge of concern field and work with common objective of providing utmost satisfaction to their clients. R-TEK TEAM They owe their success to dedicated and constant efforts of their proficient team. They follow safety norms. This part is unbreakable. With such equipped unit they are capable of meeting the mounting demand of their customers within the given time frame. . They keep in mind the safety of their work team.

They keep in mind safety of their work team.An ISO 9001:2008 Certificate has been endowed to R-TEK and they are in process of getting TS 16949. Quality Assurance of R-Tek Mould R-Tek Mould is an ISO 9001:2008 certified company. They have a well equipped unit which is capable of producing quality products thereby meeting the mounting demand of their customers within the given time frame. ISO 9001:2008 ISO 9001:2008 specifies requirements for a quality management system where an organization:• needs to demonstrate its ability to consistently provide product that meets customer and applicable statutory and regulatory requirements. and .

Aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory requirements.

All requirements of ISO 9001:2008 are generic and are intended to be applicable to all organizations, regardless of type, size and product provided. Where any requirement(s) of ISO 9001:2008 cannot be applied due to the nature of an organization and its product, this can be considered for exclusion. Where exclusions are made, claims of conformity to ISO 9001:2008 are not acceptable unless these exclusions are limited to requirements within Clause 7, and such

exclusions do not affect the organization's ability, or responsibility, to provide product that meets customer and applicable statutory and regulatory requirements.

TS 16949
ISO/TS16949:2002 , the technical specification, was approved and issued in March 2002, as an automotive sector-specific QMS set of requirements which uses ISO 9001:2000 (verbatim) as its base.

It replaced ISO/TS16949:1999 based on ISO 9001:1994, and is intended to be an alternative to QS-9000:1998 and other national automotive OEM supplier requirements. (See QS-9000:1998 Sanctioned Interpretations released for July 1, 2002, at www.QS-9000.org).

Corporate Social Responsibility
R-TEK recognizes the importance for corporate social responsibility with its partners and senior management reaching the goal in a co-ordinate and committed fashion. They know that there is a need to maintain the highest level of professional integrity with regard to their clients, staff and professional regulators, along with others with whom they interact. Their work relationship is transparent and managed with a view to guarantee personal development of each employee and recognition for the deserving employees. The health and safety of their employees is extremely important and they take every measure to make R-TEK a perfect place to work offering a cordial working environment. R-TEK specific labour and health & safety commitments have been formalized in its “Health, Safety and Social Policy”, which has been communicated to all R-TEK’s employees, to Suppliers and is hereby published for External Community’s convenience. They believe that helping the local community is not just something they choose to do but is actually an important part of business. R-TEK conscious efforts to monitor the impacts of its operations on the environment and is committed to further reduce them and to be nominal. Their objective is to combine the lower environmental impacts with operational efficiency and cost saving. The manufacturing processes are regularly monitored, with specific attention paid to energy consumption for which specific programs are set to increase the efficiency and reduced the negative impact on nature.

7 1/2. of Employees: 50-60 People Major Markets: Indian Subcontinent.autocrat. Australia. East Asia. Industrial Area .in Business Type: Manufacturer. Ldh.com. New Zealand. www.rtekmould.C.co. Exporter. Email: autocratindia@gmail. Caribbean .com Website: www. North Africa. Service Provider Year of Establishment: 1985 Annual Turnover: Up to Rupees 1 Crore (approx. Hargobind Nagar.Company Profile Company Name: R-Tek Mould Office and Works: Street No.) Export Percentage: Up to 20 per cent Primary Competitive Advantage: • • • Experienced Research and Development Department Good Financial Position and Total Quality Management Large Product Line No.

INTRODUCTION OF FINANCIAL ANALYSIS OBJECTIVES OF FINANCIAL ANALYSIS IMPORTANCE OF FINANCIAL ANALISIS COMPANY PROFILE • • • HISTORY OF COMPANY MISSION OF COMPANY TURNOVER REPORT OF COMPAY RESEARCH METHODOLOGY:-INTRODUCTION OBJECTIVES OF STUDY .CONTENTS PREFACE……………….

INTRODUCTION • • FINANCIAL ANALYSIS RATIO ANALYSIS HYPOTHESIS RESEARCH PROCESS OBSERVATION ANALYSIS OF DATA ANALYSIS OF DATA $ DATA INTERPRETATION OBJERVATION & CONCLUSION SUGGESTIONS AND LIMITATIONS BIBLOGRAPHY .

. I try and evaluate the various ratios to appreciate their impact on company’s performance over the last three years. Critical decisions of distributing dividends. Issue of bonus debentures and other current news are analyzed and their impact on the bottom line of the company is assessed. Later. The financial statements of last three years are identified. Through a through industry and a company analysis.PREFASE The project assigned to me was to study the financial health of any organization in the country. Inventory. As a benchmark. I am to understand the external factors influencing the company and its decision making. Investment and Employee related liabilities for the FY 2011. I finally. along with the analysis of various components of the company vis-à-vis other competitors with the same segment. I also study the accounting policy of the company is also studied with respect to valuation of Fixed Asset. or rather. a company that has been also made by Mr Ravinder Singh. Ravinder Singh are made. I decided to choose one of India’s biggest companies in a sector that has rapidly grown over the last few years and a company where leaders like Mr.

.OBJECTIVES OF STUDY • To have a deeper insight into the comparative study of R-TEK mould using ratios. • To know about the past and present trends as well as predict about the future.

. The study will help us to know about the past and present trends as well as predict about the future.RESEARCH METHODOLOGY Research problem: To access the comparative financial position of the company and suggest remedial measure to improve the financial position in future. Research objective: The main objective of this project is to have a deeper insight into the financial position if the company and make comparative analysis of balance sheet and profit and loss account of the company with the major competitor of the market .

A . Secondary data: Secondary data means data that is already available i. Descriptive type of research has been used. It includes the following documents:  nnual report and financial statement of the company.Research design: Research design is a best plan or a model for the collection of formal information. But in my project report only secondary data is used. primary and secondary sources.. Collection of data: Basically there are two sources through which data is collected i. it is concerned with describing the characteristics of a particular individual or a group.e.e.. they refer to that data which have already been collected. This method involves the study of various documents available in the organization which may Contain information required for the study.

These reports are usually presented to top management as one of their bases in making business decisions. management may:  Continue or discontinue its main operation or part of its business.  Make or purchase certain materials in the manufacture of its product. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports.  Acquire or rent/lease certain machineries and equipment in the production of its goods.FINANCIAL ANALYSIS Financial analysis refers to an assessment of the viability. Based on these reports. stability and profitability of a business sub-business or project. .  Issue stocks or negotiate for a bank loan to increase its working capital.

. Financial analysis is the process of identifying the financial strength and weaknesses of the firm by properly establishing relationship between the items of balance sheet and profit and loss account. schedule of changes in working capital. common-size statements.’ There are various methods or techniques used in analyzing financial statements.  Other decisions that allow management to make an informed selection on various  alternatives in the conduct of its business. such as comparative statements. trend analysis. They play a dominant role in setting the framework of managerial decisions. INTRODUCTION OF FINANCIAL ANALYSIS Financial statements are prepared primarily for decision-making. But the information provided in financial statements is not an end in itself as no meaningful conclusion can be drawn from these statements alone. cost-volume-profit analysis and ratio analysis.Make decisions regarding investing or lending capital. funds flow and cash flow analysis. The information provided in financial statements is of immense use in making decisions through analysis and interpretation of financial statements.

refer to the process of determining financial strength and weaknesses of the firm by establishing strategic relationship between the items of the balance sheet. Just like a doctor examines his patient by recording his body temperature. etc before making a conclusion regarding the illness and before giving his treatment. The purpose of financial analysis is to diagnosis the information contained in financial statements so as to judge the profitability and financial soundness of the firm. also known as analysis and interpretation of financial statements’.MEANING OF FINANCIAL ANALYSIS The term ‘financial analysis’. By financial statements we mean two statements:(1) (2) Profit ant loss account or Income Statement. blood pressure. Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set-of statements and study of the trend of these factors as shown in a series of statements”. Balance sheet or Position Statement. . profit and loss account and other operative data. a financial analyst analysis the financial statements with various tools of analysis before commenting upon the financial health or weakness of an enterprise.

OBJECTIVES FINANCIAL ANALYSIS These are main objectives of financial analysis:(1) Measuring the profitability: . Values of assets and liabilities can be compared and the future prospects of the business can be envisaged.The main objective of a business is to earn a satisfactory return on the funds invested in it. purchases sales. It also helps in knowing the capacity to pay the interest and dividend.The trend and other analysis of the business provides sufficient information indicating the growth potential of the business (5) Assessing the growth potential of the business:-The trend and other analysis of the business provide Sufficient information indicating the growth potential of .Financial Statements of the previous years can be compared and the trend regarding various expenses. gross profit etc. (3) Assessing the growth potential of the business:. Financial analysis helps in ascertaining whether adequate profits are being earned on the capital invested in the business or not. can be ascertained. (2) Indicating the trend of Achievement: .

Stability- The firm’s ability to remain in business in the long run. 4. Assessing a company’s stability requires the use of the income statement and the balance sheet. which reports on the company's results of operations.the business. Both 2 and 3 are based on the company's balance sheet. as well as other financial and non-financial indicators. which indicates the financial condition of a business as of a given point in time. A company's degree of profitability is usually based on the income statement. 2. its ability to pay its obligation to creditors and other third parties 3. without having to sustain significant losses in the conduct of its business. (6) Assess solvency of the firm: .The different tools of an analysis tell us weather The firm has sufficient funds to meet its short term and long term liabilities.its ability to maintain positive cash flow. while satisfying immediate obligations. Goals Financial analysts often assess the firm's: 1. . Solvency in the long-term. Profitability - Its ability to earn income and sustain growth in both short- term and long-term. Liquidity .

These ratios are calculated by dividing a (group of) account balance(s). etc. for example: Net income / equity = return on equity (ROE) Net income / total assets = return on assets (ROA) Stock price / earnings per share = P/E ratio . taken from the balance sheet and / or the income statement. profitability. This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future. • Comparative Performance- Comparison between similar firms. by another.Methods Financial analysts often compare financial ratios (of solvency. growth. including present and future values.): • Past Performance last 5 years for example). Across historical time periods for the same firm (the • Future Performance - Using historical figures and certain mathematical and statistical techniques.

This . As indicators.  ne ratio holds little meaning. a group of items can be expressed as a percentage of net income. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance. A ratio's  values may be distorted as account balances change from the beginning to the end of an accounting period.  Seasonal factors may prevent year-end values from being representative. Financial ratios face several theoretical challenges • They say little about the firm's prospects in an absolute sense. Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amounts.  They fail to account for exogenous factors like investor behavior that are not based  upon economic fundamentals of the firm or the general economy (fundamental analysis). Another method is comparative analysis.  Changes in accounting policies or choices can yield drastically different ratio values. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Their insights about relative performance require a reference point from other time periods or similar firms • They say little about firm’s prospects in an absolute sense. ratios can be logically interpreted in O at least two ways. Vertical or common-size analysis reduces all items on a statement to a “common size” as a percentage of some base value which assists in comparability with other companies of different sizes. For example.Comparing financial ratios is merely one way of conducting financial analysis.  Financial ratios are no more objective than the accounting methods employed. Their insights about relative performance require a reference point from other time periods or similar firms. Use average values for such accounts whenever possible.

Comp-motive analysis presents the same information for two or more time periods and is presented side-by side to allow for easy analysis. Types of Financial Analysis There are various types of financial analysis into different categories. But we are classified financial statements into two categories (1) ON THE BASIS OF MATERIAL USED (1) External Analysis (2) Internal Analysis (2) ON THE BASIS OF MODUS OPERANDI (1) Horizontal Analysis (2) Vertical Analysis .provides a better way to determine trends.

The following methods of analysis are generally used: (1) (2) (3) (4) (5) (6) Comparative statements Common – size statements Trend Analysis Fund flow statements Cash flow statements Ratio analysis .METHODS OF FINANCIAL ANALYSIS The analysis and interpretation of financial statements is used to determine the financial position and result of operations as well. A number of methods and devices are used to study the relationship between different statements.

COMPARATIVE STATEMENTS The comparative financial statements are statements of financial position at different periods. (4) Increase or decrease of percentage. Any statement prepared in a comparative form will be covered in comparative statements. of time. The two comparative statements are:(1) Comparative Balance sheet (2) Comparative Income statement . generally two statements are prepared in comparative form for financial analysis purposes. Not only the comparison of the figure of two periods but also be relationship between balance sheet and income statements enables an in depth study of financial position or operative results. The comparative statements are show: (1) Absolute figure (rupee amount) (2) Change in absolute figure (increase or decrease in absolute figure) (3) Absolute data in term of percentages. From practical point of view. The elements of financial position are shown in a comparative form so as to give an idea financial position at two or more periods.

(2) Long – term financial position. group of items and computed item in two or more balance sheets of the same business enterprise on different dates. . The change in periodic balance sheet items reflects the conduct of business. The comparative balance sheet has two columns for the data of original balance sheets.(1) COMPARATIVE BALANCE SHEET The comparative balance sheet analysis is the study of the trend of same items. The fourth column may be added for giving percentages of increase or decrease. Guidelines for Interpretation of Comparative Balance Sheet While interpretation Comparative Balance Sheet the interpreter is expected to study the following aspects: (1) Current financial position and liquidity position. The changes can be observed by comparison of the balance sheet at the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise. A third column is used to show increase in figures.

739.00 1.141.18 LIABILITIES CAPITAL UNSECURED LOAN SECURED LOANS (FROM BANK) ASSETS Amount 2010 20.270.00 1.802.99.90. Balance Sheet As on 31st March Amount Amount 2010 2011 10.93.00 78.00 42.272.11 73.86.970.40 25.00 1.300 49.60 RAWMATERIAL 75.03.77 6.92.33.181.600.70 69.700.91 16.35.01.00 19.00 21.89.313.300 49.73 42.29.493.946.16.81.800.15.700.65.75.00 10.07 OTHERS) SUNDRY CREDITOR OTHER PROVISION 15. Prepare a comparative Balance Sheet and study the financial position of a concern.382.00 ----------- 23.88.200.91.54.040.000.863.00 8.208.00 --------1.81 2.708.54.95 FIXED ASSETS CASH IN HAND 10.550.22 SUNDRY DEBTORS -------STORES/ CONSUMABLE INVESTMENTS SECURED LOANS (FROM 11.75 Amount 2011 24.750.700.636.95. AUTHORITIES .336.068.300.08 STOCK-INPROCESS FINISHED GOODS ADV.00 BANK BALANCE 20.221.181.000 2.23 71.00 29.RECBLE IN CASH DEPOSITS BALANCE WITH REV.81.00 7.23 4.(3) Profitability of the concern The following is the Balance Sheet of a concern of R-TEK MOULD for the year 2010 and 2011.

75 ----------55.382.23 71.00 ----------5.040.02.000.950.29.065.09.070.45 BALANCE WITH REV.00 --------1.81.000.600.00 42.270.532.42 ------------100 -----------------1.00 10.91 ---------173.00 INCREASE/ DECREASE 3.70 69.00 18.58 173.91.650.863.700. AUTHORITIES 21.38 570.16.70 44.73 173.272.31 172.73 42.86 77.89.02 7485233.COMPARATIVE BALANCE SHEET ASSETS FIXED ASSETS CASH IN HAND BANK BALANCE SUNDRY DEBTORS STORES/ CONSUMABLE INVESTMENTS RAWMATERIAL STOCK-INPROCESS FINISHED GOODS ADV.221.RECBLE IN CASH DEPOSITS 2010 20.700.81 2.700.00 73.92.54.00 2.00 ---------------------------------------1983628.00 1.75.40 25.000.38 31.83 PERCENTAGE 18.11 73.00 78.85 .91 16.00 29.73.00 49.86.739.00 4.300.23 4.00 1.54.104.336.141.605.03.800.86.200.00 2011 24.750.00 7.800.14 -82.88.00 49. 01.90 -1394922.970.550.300.

08 74.690.93.22 INCREASE/ PERCENTAGE DECREASE 12.81.22.181.18 2011 23.87 1.405.02 75.07 -------- -------------- ----------- 15.233.90.65.85.208.60 365820.946.181.72 .95 3.51.493.35.14.00 5501605.00 8.708.00 1.636.04 134.95 10.20.77 6.322..80.00 19.COMPARAIVE BALANCE SHEET LIABILITIES 2010 10.85 1.313.300.33.802.000.068.95.68 CAPITAL UNSECURED LOAN SECURED LOANS (FROM BANK) SECURED LOANS (FROM OTHERS) SUNDRY CREDITOR OTHER PROVISION 11.15 601.01.60 22.92 -60.99.92 1983628.62 115.15.00 20.

e. 58 and cash are also increased and liabilities are less increase compare to assets.73.690 i. and 078. 18. 115. Current liabilities also have been less increase.070 i.e.INTERPRETATION:- (1) The comparative balance sheet of company R-TEK reveals that during 2011 there has been increased in fixed assets of 3.38% while capital has been increased during 2011 12. This further confirms that the company has raised long-term finances even for the current assets resulting into improvement in liquidity position of the company. 53. This fact depicts that the policy of the company is to purchase fixed assets from the long-term sources of finance thereby not affecting the working capital. .51. (3) The overall financial position of the company is satisfactory. (2) The current assets have been increased by 15.68%.

First two columns give figures of various items for two years. The comparative income statement gives an idea of the progress of a business over a period of a time. . income statement also has four columns. The change in absolute data in money value and percentage can be determined to analyze the profitability of the business.(2) COMMPARATIVE INCOME STATEMENT The Income statement gives the results of the operations of a business. Third and fourth columns are used to show increase or decrease in absolute amounts and percentages respectively. Like comparative balance sheet.

An increase in sale will not be always meaning an increase in profit. A decrease in operating profit may be due to an increase in operating expenses or decrease in sale. decrease the figure of operating profit. Non-operating expenses such as interest paid. we get a figure of net profit. losses from sale of assets. (3)The increase or decrease in net profit will give an idea about the overall profitability of the concern.Guidelines for Interpretation of Income Statements The analysis and interpretation of income statement will involve the following steps: (1) The increase or decrease in sales should be compare with the increase or decrease in cost of goods sold. writing of deferred expenses. When all non-operating expenses are deducted from operational profit. The operating expenses such as office and administrative expenses. etc. selling and distribution expenses should be deducted from gross profit to find out operating profit. . An increase in operating profit will result from the increase in sale position and control of operating expenses. (2) The second step of analysis should be the study of operational profit. payment of tax. The amount of gross profit should be situated in the first step.

65.11.40 63.084.15 --------------- .48.51.64.014.The following information prepares a comparative Income Statement of R-TEK MOULD:- 2010 SALES COST OF GOODS SOLD INDIRECT EXPENSES RATE OF INCOME TAX 70.034.825.44 ------------- 2011 77.50 62.22.00 9.787.00 9.919.

2 7 9.91.40.00 ---------5.5 0 62.30 63.834.20% and gross profit not sufficient to compensate for the increase in indirect expenses.83.64.18.6 EXPENSES 0 PROFIT BEFORE TAX LESS:TAX NET PROFIT AFTER TAX INCOME 9.48.74 0.014.20 ---------5.0 LESS:.10% .10 0.084.706.44 5. It may be conducted .034.33 14. Net profit also decreased by 0.30%.COST OF 0 GOODS SOLD GROSS PROFIT ABSOLUTE PERCENTAG CHANGES E % 7.22.30 ---------0.00 21325. The indirect expenses are increased by 0.35% while the cost of goods sold has decreased nearly by 0.40.160.160.26.919.00 7305.825.65.20 70.COMPARATIVE INCOME STATEMENT PARTICULARS AMOUNT 2010 SALES AMOUNT 2011 77.15 5.787.51.4 LESS:.74% thereby resulting in an decrease in gross profit of 0.11.0 0 10.173.35 -46906.868.0 0 14.00 ---------21325.00 INTERPRETATION:(1) The comparative income statement given above revel that there has been increase in net sales of 10.020.00 0.834.INDIRECT 0 14.20 0.18.

The common-size statements may be prepared in the following way: (1) The total of assets or liabilities is taken as 100. The analyst is able to assess the figure in relation to total value.SIZE STATEMENT The common-size statements. balance sheet and income statement are shown in analytical percentages. 50000. then it will be 10% of total assets [50000*100/500000]. The short-coming in comparative statements ant trend percentages where changes in items could not be compared with the total have been covered up. The are shown as percentage of total assets. Similarly. The total assets are taken as 100 and different assets are expressed as a percentage of the total. For example. 5 laths and inventory value is Rs. various liabilities are taken as a part of total liabilities. These statements are also known as component percentage or 100 percent statements because every individual item is stated as a percentage of total 100. .that not a sufficient progress in the company and the overall financial position of the company is not good. (2) The individual assets are expressed as a percentage of total assets 100 and different liabilities are calculated in relation to total liabilities. total liabilities are total sales. if total assets are rest. COMMON.

The relation of each liability to total liabilities is similarly expressed.(1) COMMON-SIZE BALANCE SHEET A statement in which balance sheet items are expressed as the ratio of each asset to total assets and the ratios of each liability are expressed as a ratio of total liabilities is called common-size balance sheet. following assets are shown in a common-size balance sheet: Rs.00 100. 00. 2.00 The total figure of assets rest. Cash in hand and at bank Sundry debtors Stock Land and building Plant and machinery Total Assets: 5.000 2.000. .000 Percentage 2.000 1.000 25.000 20. For example.00 50. 00. is taken as 100 and all other assets are expressed as a percentage of total assets.000 50. 00.00 12.50 25. The relation of each asset to total assets is expressed in the statement.50 10.

91.29.81.636.07 (FROM OTHERS) SUNDRY CREDITOR OTHER PROVISION 15.270.300.181.11 73.300 49.90.23 4.60 RAWMATERIAL 75.00 .81 2.91 16.00 8.75.54.00 42.95.00 29.600. Balance Sheet As on 31st March LIABILITIES Amount 2010 CAPITAL UNSECURED LOAN SECURED LOANS (FROM BANK) 10.33.708.550.08 STOCK-INPROCESS FINISHED GOODS ADV.70 69.23 71.15.300 49.00 10.00 1.00 --------1.00 1.RECBLE IN CASH DEPOSITS BALANCE WITH REV.739.35.181.040.18 Amount 2011 ASSETS Amount 2010 20.700.00 78.86.970.75 Amount 2011 24.03.92.221.73 42.65.54.200.000.802.00 BANK BALANCE 20.336.40 25.382. SECURED LOANS 11.00 7.313.81.000 2.946.800.88.77 6.272.22 SUNDRY DEBTORS -------STORES/ CONSUMABLE INVESTMENTS 19.00 1.99.863.The following is the Balance Sheet of a concern of R-TEK MOULD for the year 2010 and 2011. Prepare a common-size Balance Sheet and study the financial position of a concern.00 21.068.01.89.750.700.700.00 ----------- 23.493.208.93.16.95 FIXED ASSETS CASH IN HAND 10.141.

AUTHORITIES COMMON-SIZE BALANCE SHEET ASSETS 2010 PERCENTAGE 2011 PERCENTAGE .

FIXED ASSETS CASH IN HAND BANK BALANCE SUNDRY DEBTORS STORES/ CONSUMABLE INVESTMENTS RAWMATERIAL STOCK-INPROCESS FINISHED GOODS ADV.77 30.92 0.78 0.970.23 71.23 4.75 55.73 42.65 10.85 ----------------------100 COMMON-SIZE BALANCE SHEET LIABILITIES 2010 PERCENTAGE 2011 PERCENTAGE .90 1.863.39 100 ----------74.11 73.05 2.700.00 21.605.00 42.00 --------1.382.750.59 39.40 25. AUTHORITIES 20.85.700.30 0.200.27 19.040.98 3.89 0.81 1.89.86.43 0.270.89 5.272.91.00 1.000 2.54.46 0.00 10.00 36.29.03.00 7.336.RECBLE IN CASH DEPOSITS BALANCE WITH REV.600.92.01.00 78.000.739.70 69.16.75.91 16.221.300 49.141.233.65 0.700.78 24.300 49.10 6.02 0.00 29.75 1.07 2.54.00 32.550.88.81.56 1.800.81 2.

18 19.93.00 OTHER PROVISION 1.85 26.85.56 8.81.99.07 3.23 11.00 20.605.07 20.02 29.01.17 1.493.208.181.22 31.95 10.46 100 19.90.00 -------- --------------- 15.35.708.67 23.181.313.63 16.65.946.95.068.77 6.15.00 55.60 75.01.233.08 74.636.802.300.25 1.33.CAPITAL UNSECURED LOAN SECURED LOANS (FROM BANK) SECURED LOANS (FROM OTHERS) SUNDRY CREDITOR 10.00 8.01 100 INTERPRETATION .

(1) COMMON-SIZE INCOME STATEMENT .

In case the volume of sales increases to a considerable extent.44 ------------- 2011 77. The following information prepares a common-size Income Statement of R-TEK MOULD:- 2010 SALES COST OF GOODS SOLD INDIRECT EXPENSES RATE OF INCOME TAX 70.65.The items in income statement can be shown as percentage of sales to show the relation of each item to sales.64. The increase in sales will certainly increase selling expenses and not administrative or financial expenses.22.51.919.014.40 63. the selling expenses should be reduced at once. a relationship is established between sales and other items in income statement and this relationship is helpful in evaluating operational activities of the enterprise.00 9.48.50 62.825.084.787.034. In case the sales are declining. So.15 --------------- COMMON-SIZE INCOME STATEMENT .00 9. administrative and financial expenses may go up.11. A significant relationship can be established between items of income statement and volume of sales.

40.20 ---------5.22.48.PARTICULARS SALES AMOUNT 2010 PERCENTAGE AMOUNT % 2011 100.084.825.2 7 9.70 ------6.868.834.18.85 19.23 13.15 12.69 77.00 78.160.INDIRECT 0 14.54 7.034.20 PERCENTAGE 100.160.00 ---------5.69 5.45 6.44 5.11.5 0 62.787.51.6 EXPENSES 0 PROFIT BEFORE TAX LESS:TAX NET PROFIT AFTER TAX INCOME 9.COST OF 0 GOODS SOLD GROSS PROFIT 63.91.4 LESS:.18.00 80.834.00 INTERPRETATION .014.0 0 14.919.173.70 70.64.0 LESS:.15 -----7.65.40.77 21.83.

(1) The sale has been increased in 2011 as compare to 2010 but percentage of gross profit to sales has gone down. (2) The decrease in cost of sales as a percentage of sales has down the profitability from 21.54% to 12.15. TREND ANALYSIS .45%.23 to 19. (3) The indirect expenses are increased in 2011 as compare to 2010 So ratio is also goes down from 13.

2003 suppose the following trends are determined.. generally the first year. The figure of base year are taken as 100 and trend ratios for Other years are calculated on the basis of base year. The information for a number of years is taken up and one year. then sales of 2003 will be taken as 100 and the percentage of sales for all other will be calculated in relation to the base year. This method determines the direction upwards or downwards and involves the computation of the percentage relationship that each statement item bears to the same item in base year. if sales figures for the year 2003 to 2008 are to be studied. i. For example. The analyst is able to see the trend of figures. 2003 2004 2005 2006 2007 2008 100 120 110 125 135 140 The trend of sales shows that sales have been more in all the years since 2003. is taken as a base year.The financial statement may be analyzed by computing trends of series of information.e. whether upward or downward. Procedure for Calculating Trends .

(3) Trend percentages are calculated in relation to base year. The increase in sales may not increase profits if the cost of Production has also gone up. If this increase in current assets is accompanied by an Equivalent increase in current liabilities. (2) The figure of base year is taken as 100. FUNDS FLOW STATEMENT . Each year‘s figure is divided by the base year’s figure. then this increase will be unsatisfactory. An increase of 20% in current assets may be Treated favorable. The interpretation of trend analysis involves a cautious study.(1) One year is taken as a base year. Generally. If a figure in other year is less then the figure of base year the trend percentage will be less then 100 and it will be more then 100 if figure is more then base year figure. the first or last year taken as a Base year. The mere increase or decrease in trend percentage may give misleading Results if studied in isolation.

The basic financial statements. THE FUNDS FLOW STATEMENT IS A STATEMENT WHICH SHOWS THE MOVEMENT OF FUNDS AND IS A REPORT OF THE FINANCIAL OPERATIONS OF THE BUSINESS UNDERTAKING. reveal the net effect of the various transactions on the operational and financial position of the company. IT IS A STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS. It reveals the financial status of the company. . The profit and loss account reflects the results of the business operations for a period of time. IT INDICATES VARIOUS MEANS BY WHICH FUNDS WERE OBTAINED DURING A PARTICULAR PERIOD AND THE WAYS IN WHICH THESE FUNDS WERE EMPLOYED. The balance sheet gives a summary of the assets and liabilities of an undertaking at a particular point of time. It contains a summary of expenses incurred and the revenue realized in an accounting period. the balance sheet and profit and loss account or income statement of business. IN SIMPLE WORDS. The assets side of a balance sheet shows the deployment of resources of an undertaking while the liabilities side indicates its obligations the manner in which these resources were obtained.

interest and dividend. SUCH A STATEMENT ENUMERATES NET EFFECTS OF VARIOUS BUSINESS TRANSACTIONS ON CASH AND ITS EQUIVALANENTS AND TAKES INTO ACCOUNT RECEIPT AND DISBURSEMENT OF CASH. wages. it may have drained out (used) for some other purpose. This movement of cash is of vital important to the management. A CASH FLOW STATEMENT SUMMARIESES THE CAUSES OF CHANGES IN CASH POSITION OF A BUSINESS ENTERPRISES BETWEEN DATES OF TWO BALANCE SHEETS. This may be because (1) Although huge profit have been earned yet cash may not have been received or (2) Even if cash have been received. A firm needs cash to make payment to its suppliers. In fact.CASH FLOW STATEMENT Cash plays a very important role in the entire economic life of a business. But many a time a concern operates profitably and yet it becomes very difficult to pay taxes and dividends. etc. CASH FLOW STATEMENT IS A STATEMENT WHICH DESCRIBES THE INFLOWS (SOURSES) AND OUTFLOWS (USES) OF CASH AND EQUIVALANTS IN AN ENTERPRISE DURING A SPESIFIED PERIOD OF TIME. cash is to business enterprises? It is very essential for a business to maintain an adequate balance of cash. to incur day-to-day expenses and to pay salaries. what blood is to a human body. .

It is the process of establishing and interpreting various ratios for helping in making certain decisions. ratio analysis is not an end in itself.RATIO ANALYSIS Meaning Ratio is an expression of relationship of one figure with another it may be defined as the relationships or proportion that one amount bears to other financial ratios express arithmetical relationships between two figures or two groups of figures which are related to other. . It is only a means of better understanding of financial strength and weakness of a firm. Ratio analysis is a technique of analysis and interpretation of financial statements. However.

large figures or group of figures are presented precisely so as to make them understandable. The way. IMPORTANCE OF RATIO ANALYSIS . estimation can be made regarding the financial position of a business concern. It can be called as the heart of financial analysis. in which we estimate the health of our body through heart beats. Analysis of business activities: On the basis of the comparative study of ratios. The main objectives of ratio analysis are: 1.OBJECTIVE OF RATIO ANALYSIS Ratio analysis is the important technique of financial analysis. results related to the progress or failure of a business concern can be easily obtained.with the help of Ratio. may make no sense but if two related items are studied in comparison to the others may suggest something significant. Relative study: The facts and figures expressed in financial statements if studied in isolation. 3. 2. Conciseness: . similarly through the technique of ratio analysis.

This is affected through the use of trend analysis.Ratio analysis is the most important tool of financial analysis: 1. . 4. With the help of the financial analysis one can ascertain whether the trend is favorable or unfavorable. 3. co-ordination.e. 2. i. Helpful in communication: Through ratio analysis it is possible to know the changes that had taken place in business between two periods. Helpful in trend analysis: The ratio analysis facilitates a firm to consider the time dimension into account. whether the financial position of a firm is showing any improvement or deterioration over years. communication and control. It helps to make an inter-firm comparison either between the different departments of a firm or between two firms employed in the identical types of business or between the same firms. Helpful to management: The ratio analysis is proves to be of significant value to the management in the process of discharge of its elementary functions such as planning. Useful in comparative study: Ratio analysis is also helps in comparative study.

7. solvency. Helpful in determining the standards: Keeping in mind the old ratios and present operating efficiency. profitability and capital gearing ratios is detailed information can be gathered related to financial soundness of any institutions? . the standard can be fixed. Helpful in evaluation of financial soundness: with the help of liquidity.5. Helpful in effective control: On the basis of ratios. 6. On the comparison of standard ratios with actual ratios adverse financial position can be found out and corrective. In this way ratio analysis is considered to be the essential part of budgetary control and standard costing. by establishing standards the effective control can be exercised upon the activity of the firm.

. to test the Liquidity. a number of financial statements. For example. 2. Possibility of window-dressing: Ratio depends on figures of the financial statements.LIMITATIONS OF RATIO ANALYSIS 1. Only a part of the information needed in the process of decision taking: It should also be remembered that ratio analysis helps in providing only a part of the information needed in the process of decision making. As a result. Limited Use of a Single Ratio: A single ratio in itself is meaningless. it does not furnish a complete picture. 4. Hence. one single ratio used without reference to other ratios may produce misleading results. the figures are window dressed. The qualitative factors which are so important for the successful functioning of the organization are completely ignored and hence. the correct picture cannot be drawn up by the ratio analysis. whatever conclusion drawn may get distorted. the grant of credit to an enterprise may depend more upon the character and capacity of the owner than on the conclusion drawn from the so called Ratio analysis. Ignores Qualitative Factors: The ratio facilitates wholly quantitative analysis only. For example. But in most cases. In other words. 3. make use of all the Liquidity ratios.

6. In other words. For example. the grant of credit to an enterprise may depend more upon the character and capacity of the owner than on the conclusion drawn from the so called Ratio analysis. a number of financial statements. The qualitative factors which are so important for the successful functioning of the organization are completely ignored and hence. whatever conclusion drawn may get distorted. Hence.5. make use of all the Liquidity ratios. Limited Use of a Single Ratio: A single ratio in itself is meaningless. Different meaning to accounting terms . one single ratio used without reference to other ratios may produce misleading results. For example. Ignores Qualitative Factors: The ratio facilitates wholly quantitative analysis only. it does not furnish a complete picture. to test the Liquidity.

4. Effect of price changes are not taken into account: A change in the price level can seriously affect the validity of comparisons of ratios computed for different time periods. Difficulty in Evolving Standard Ratio: It is very difficult to ascertain the normal or standard ratio in order to make proper comparison. 5. Variations in Accounting Policies: Comparison between two variables proves worth provided their basis of valuation is identical but in reality it is not possible. 2. Personal bias: Ratios are only means of financial analysis and not end in itself. They can be affected with the personal ability and bias of the analyst. CLASSIFICATION OF . A financial analyst is more concerned the probable happenings in the future rather than those in the past. 3. 1.Comparisons are also made difficult due to differences in definition of various terms used in computing ratios. Historical Analysis: Ratios delve in the past as they are obtaining from the financial statements which are considered to be historical documents.

Liquidity Ratios 2. Capital Structure Ratios 3. Profitability or Profit Earning Capacity ANALYSIS AND INTERPRTATION . Activity or Turnover Ratios 4.FINANCIAL RATIOS 1.

KEY RATIOS:- (1) CURRENT RATIO (2) LIQUID RATIO (3) STOCK TURNOVER RATIO (4) ABSOLUTE LIQUID RATIO (5) GROSS PROFIT RATIO (6) NET PROFIT RATIO (7) FIXED ASSETS TURNOVER RATIO (8) TOTAL ASSETS TURNOVER RATIO (9) WORKING CAPITAL TURNOVER RATIO (1) CURRENT RATIO:- .

60 CURRENT LIABILITIES 11.5 0 .17.99493.630. It is determined by dividing current assets by current liabilities.00 19.82.00 15.291.03 2. This is evident from the table and graph given below:- YEAR 2009 2010 2011 CURRENT ASSETS 18.5 2 1. The higher the ratio. the more liquid the company.46.552. it is believed that.58 32.04 47.60 CURRENT RATIOS 1.68 2.48 Current Ratio 60 50 40 30 20 10 0 1 2 year current asset current liabilities current ratio 3 4 3 2.313.99.984.65.5 1 0.Current ratio is defined as an indicator of short-term debt paying ability of a company. CURRENT RATIO = CURRENT ASSETS CURRENT LIBILITIES Here we observe that the current ratio of R-TEK MOULD is increase in FY 2009 and 2010 and increase in last year also.

00 15.55 1.term obligations as and when they become due.04 19.125 0.60 LIQUID RATIOS 0.62 CURRENT LIABILITIES 11.00. LIQUID RATIO= LIQUID ASSETS CURRENT LIBILITIES Here we observe that the liquid ratio of R-TEK MOULD is increase in FY 2009 and 2010 but decrease in last year.43 .493.152.58 18.691. It is determined by dividing liquid assets by current liabilities.65.(2) LIQUID RATIO:Liquid Ratio also known as Quick Ratio or Acid test ratio is more rigorous test of liquidity than the current ratio.984.17. The term ‘liquidity’ refers to the ability of a firm to pay its short. This is evident from the table and graph given below:- YEAR 2009 2010 2011 LIQUID ASSETS 6.15.313.99. Liquid ratio may be defined as the relationship between current or liquid assets or current or liquid liabilities.65. An asset is said to be liquid if it can be converted into cash within a short period without loss of value.00 19.313.

2 0 1.4 0. The purpose is to see whether only the required minimum funds have been locked up in inventory. .8 (3) STOCK TURNOVER RATIO:Stock turnover ratio is also known as inventory turnover ratio is normally calculated as sales/average inventory or cost of goods sold/average inventory.6 30 20 10 0 1 2 year liquid asset current liabilities liqud ratio 3 4 0. It is determined by dividing the cost of goods sold by amount of average inventory at cost. It would indicate whether inventory has been efficiently used or not. Inventory turnover ratio indicates the number of times the stock have been turned over during the period of times the stock have been turned over during the period and evaluate the efficiency with which a firm is able to manage its inventory.2 1 0.liquid ratio 70 60 50 40 0.

64.44 1.00 AVERAGE INVENTORY AT COST 11.5 3 2.11.44 4.21.5 4 3.400.00 62.5 0 ratio .69.825.STOCK TURNOVER RATIO= COST OF GOODS SOLD AVERAGE INVENTORY AT COST Here we observe that the stock turnover ratio of RTEK MOULD is increase in FY 2009 and 2010 but decrease in last year.5 1 0.56.00 14.100.84.079.5 2 1.919.00 38.00 STOCK TURNOVER RATIOS 2.500.37 63.61 STR 70 60 50 40 30 20 10 0 1 2 year COGS AVERAGE INVENTORY STR 3 4 5 4. This is evident from the table and graph given below:-- YEAR 2009 2010 2011 COST OF GOODS SOLD 28.

54.14. debtors and bills receivable are generally more liquid than inventories.984.6 2.65.17.0 0.59.32 0 15.07 0 19. ABSOLUTE LIQUID RATIO= ABSOLUTE LIQUID ASSETS CURRENT LIBILITIES Here we observe that the absolute liquid assets ratio of RTEK MOULD is increase in FY 2009 but decrease in 2010 but increase in last year also.82 0 .60 CURRENT ABSOLUTE LIQUID LIBILITIES RATIOS 11.(4) ABSOLUTE LIQUID RATIO:Although receivables.313.632. This is evident from the table and graph given below:-- YEARS 2009 2010 2011 ABSOLUTE LIQUID ASSETS 3.313. yet there may be doubts regarding their realization into cash immediately or in time. It is determined by dividing the absolute liquid assets by current liabilities. Hence.010. some authorities are of the opinion that the absolute liquid ratio should also be calculated together with current ratio and acid test ratio so as to exclude even receivable from the current assets and find out the absolute liquid assets.65 1.0 0.64 5.99493.

5 2 1. it is calculated by dividing the gross profit by sales.5 0 1 2 year ABSOLUTE LIQUID ASSET ABSOLUTE LIQUID RATIO CURRENT ASSET 3 4 ratio 15 20 0 (5) GROSS PROFIT RATIO:Gross profit ratio measures the relationship of gross profit to net sales and is usually represented as a percentage.5 10 1 5 0. GROSS PROFIT RATIO= GROSS PROFIT *100 NET SALES OR .Absolute Liquid Ratio 25 3 2. Thus.

14 G.95 21.520.27 SALES 24.63 14. This is evident from the table and graph given below:- YEARS 2009 2010 2011 GROSS PROFIT 9.P Ratio 90 80 70 60 50 40 30 20 10 0 1 2 year GROSS PROFIT SALES GROSS PROFIT RATIO 3 4 45 40 35 30 ratio 25 20 15 10 5 0 .60 14.91.40 77.48.084.22.50 GROSS PROFIT RATIO 39.40.75.COST OF GOODS SOLD * 100 SALES Here we observe that the gross profit ratio of R-TEK MOULD is increase in FY 2009 but decrease in 2010 and decrease in last year 2011 also.040.GROSS PROFIT RATIO= SALES.173.868.83.23 19.787.00 70.

48.40.58 5.16.16 5.00 70.69 .50 NET PROFIT RATIO 17.834.22.06 7.787.520.084.529. This is evident from the table and graph given below:- YEARS 2009 2010 2011 NET PROFIT 4.(6) NET PROPIT RATIO:Net Profit ratio establishes a relationship between net profit (after taxes) and sales.69 6.159.40.40 77.12 SALES 24. selling. NET PROFIT RATIO= NET PROFIT AFTER TAX *100 NET SALES OR NET PROFIT RATIO= NET OPERATING PROFIT *100 NET SALES Here we observe that the net profit ratio of R-TEK MOULD is increase in FY 2009 but decrease in 2010 and decrease in last year 2011 also. administrative and other activities of the firm. and indicates the efficiency of the management in manufacturing.18. This ratio is the overall measure of firm’s profitability and is calculated by dividing the NET PROFIT AFTER TAX by NET SALES.

N. Fixed assets turnover ratio is calculated by dividing COST OF GOODS SOLD by FIXED ASSETS. FIXED ASSETS TURNOVER RATIO= COST OF GOODS SOLD FIXED ASSETS OR FIXED ASSETS TURNOVER RATIO= SALES CAPITAL EMPLOYED .P Ratio 90 80 70 60 50 40 30 20 10 0 1 2 year NET PROFIT SALES NET PROFIT RATIO 3 4 18 16 14 12 ratio 10 8 6 4 2 0 (7) FIXED ASSETS TURNOVER RATIO:Fixed assets turnover ratio is the relationship between sales or cost of goods sold and fixed/capital assets employed in a business.

R 70 60 50 40 30 20 10 0 1 2 year COST OF GOODS SOLD FIX ASSETS ED FIX ASSETS TURNOVER RATIO ED 3 4 3.03.825.23 20.23 FIXED ASSETS TURNOVER RATIO 1.37 63.5 ratio 2 1.079.23 24.5 3 2.040.6 F.5 0 .1 2.00 FIXED ASSETS 15.64.270.56.919.11.205.80 3.A.80.00 62. This is evident from the table and graph given below:- YEAR 2009 2010 2011 COST OF GOODS SOLD 28.T.5 1 0.Here we observe that the fixed assets turnover ratio of R-TEK MOULD is increase in FY 2009 and increase in 2010 and increase in last year 2011 also.29.

(8) TOTAL ASSETS TURNOVER RATIO:- Total assets turnover ratio is the relationship between sales or cost of goods sold and total/capital assets employed in a business.605.83 .01.919.56.37 63.00 62.079.63 55.76.85.00 TOTAL ASSETS 9. This is evident from the table and graph given below:- YEAR 2009 2010 2011 COST OF GOODS SOLD 28.15 0. TOTAL ASSETS TURNOVER RATIO= COST OF GOODS SOLD TOTAL ASSETS OR TOTAL ASSETS TURNOVER RATIO= SALES CAPITAL EMPLOYED Here we observe that the total assets turnover ratio of R-TEK MOULD is increase in FY 2009 and decrease in 2010 and decrease in last year 2011 also.85 TOTAL ASSETS TURNOVER RATIO 2. Total assets turnover ratio is calculated by dividing COST OF GOODS SOLD by TOTAL ASSETS.02 74.825.64.92 1.11.933.233.

5 0 3. The working capital ratio is calculated as dividing by COST OF GOODS SOLD by AVERAGE WORKING CAPITAL. bills receivables.R 80 70 60 50 40 30 20 10 0 1 2 YEAR COST OF GOODS SOLD TOTAL ASSETS TOTAL ASSETS TURNOVER RATIO 3 4 1. cash.T. This ratio is indicates the number of times the working capital is turned over in the course of a year.5 3 2.T.5 1 0. the current assets like debtors.A. stock etc. The working capital is taken as: WORKING CAPITAL= CURRENT ASSETS – CURRENT LIBILITIES Working capital turnover ratio indicates the velocity of the utilization of net working capital.5 2 RATIO (9) WORKING CAPITAL TURNOVER RATIO:Working capital turnover ratio of a concern is directly related to sales. .

R 70 60 50 40 30 20 10 0 1 2 Y EAR C OST OF GOODS WORKIN C G APIT AL WORKIN C G APIT T OVER RAT AL UR IO 3 4 5 4.5 2 1.72.825.C.23.36 W .56.37 63.5 0 RATIO 3 .99 26.061.T.57 14.5 1 0.46 WORKING CAPITAL RATIO 3.56. This is evident from the table and graph given below:- YEAR 2009 2010 2011 COST OF GOODS SOLD 28.5 4 3.11.27 4.43 2.64.00 WORKING CAPITAL 8.5 2.079.WORKING CAPITAL TURNOVER RATIO= COST OF GOODS SOLD (AVERAGE) WORKING CAPITAL Here we observe that the working capital turnover ratio of R-TEK MOULD is increase in FY 2009 and increase in 2010 but decrease in last year 2011 also.480.00 62.502.919.

82 19.69 2.14 6.48 0.83 .07 21.8 3.36 0.43 1.68 0.23 7.1 4.06 1.125 4.44 0.61 2.92 2010 2.6 2.44 0.32 39.27 2.55 2.95 17.03 1.69 3.FINDINGS $ CONCLUSION COMPARATIVE CHAT R-TEK MOULD KEY RATIOS CURRENT RATIO LIQUID RATIO STOCK TURNOVER RATIO ABSOLUTE LIQUID RATIO GROSS PROFIT RATIO NET PROFIT RATIO FIXED ASSETS TURNOVER RATIO TOTAL ASSET TURNOVER RATIO WORKING CAPITAL TURNOVER RATIO 2009 1.15 2011 2.43 1.

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Types of Financial Analysis There are various types of financial analysis into different categories. But we are classified financial statements into two categories (1) ON THE BASIS OF MATERIAL USED (1) External Analysis (2) Internal Analysis .

The following methods of analysis are generally used: (2) Comparative statements (3) Common – size statements .(2) ON THE BASIS OF MODUS OPERANDI (1) Horizontal Analysis (2) Vertical Analysis METHODS OF FINANCIAL ANALYSIS The analysis and interpretation of financial statements is used to determine the financial position and result of operations as well. A number of methods and devices are used to study the relationship between different statements.

The elements of financial position are shown in a comparative form so as to give an idea financial position at two or more periods.(4) Trend Analysis (4) Fund flow statements (5) Cash flow statements (6) Ratio analysis (7) Cost. generally two statements are prepared in comparative form for financial analysis purposes. of time. Any statement prepared in a comparative form will be covered in comparative statements. The comparative statements are show: . From practical point of view. Not only the comparison of the figure of two periods but also be relationship between balance sheet and income statements enables an in depth study of financial position or operative results.volume profit analysis COMPARATIVE STATEMENTS The comparative financial statements are statements of financial position at different periods.

The two comparative statements are:(1) Comparative Balance sheet (2) Comparative Income statement (1) COMPARATIVE BALANCE SHEET . Increase or decrease of percentage.(5) Absolute figure (rupee amount) (2) Change in absolute figure (increase or decrease in absolute figure) (3) (4) Absolute data in term of percentages.

The comparative balance sheet analysis is the study of the trend of same items, group of items and computed item in two or more balance sheets of the same business enterprise on different dates. The change in periodic balance sheet items reflects the conduct of business. The changes can be observed by comparison of the balance sheet at the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise. The comparative balance sheet has two columns for the data of original balance sheets. A third column is used to show increase in figures. The fourth column may be added for giving percentages of increase or decrease.

Guidelines for Interpretation of Comparative Balance Sheet

While interpretation Comparative Balance Sheet the interpreter is expected to study the following aspects: (1) Current financial position and liquidity position. (2) Long – term financial position. (3) Profitability of the concern.

The following is the Balance Sheet of a concern of RTEK MOULD for the year 2010 and 2011. Prepare a comparative Balance Sheet and study the financial position of a concern. Balance Sheet As on 31st March

INTERPRETATION .

The comparative income statement gives an idea of the progress of a business over a period of a time. income statement also has four columns. The change in absolute data in money value and percentage can be determined to analyze the profitability of the business. Like comparative balance sheet.(2) COMPARATIVE INCOME STATEMENT The Income statement gives the results of the operations of a business. First two columns give figures of various items for two years. . Third and fourth columns are used to show increase or decrease in absolute amounts and percentages respectively.

. The amount of gross profit should be situated in the first step.Guidelines for Interpretation of Income Statements The analysis and interpretation of income statement will involve the following steps: (1) The increase or decrease in sales should be compare with the increase or decrease in cost of goods sold. An increase in sale will not be always meaning an increase in profit.

payment of tax. decrease the figure of operating profit. writing of deferred expenses. (3) The increase or decrease in net profit will give an idea about the overall profitability of the concern. Nonoperating expenses such as interest paid. etc. COMPARATIVE INCOME STATEMENT . An increase in operating profit will result from the increase in sale position and control of operating expenses. selling and distribution expenses should be deducted from gross profit to find out operating profit.(2) The second step of analysis should be the study of operational profit. A decrease in operating profit may be due to an increase in operating expenses or decrease in sale. losses from sale of assets. The operating expenses such as office and administrative expenses.

EX .

INTERPRETATION .

various liabilities are taken as a part of total liabilities. The total assets are taken as 100 and different assets are expressed as a percentage of the total.SIZE STATEMENT The common-size statements.COMMON. total liabilities are total sales. The are shown as percentage of total assets. Similarly. These statements are also known as component percentage or 100 percent statements because every individual item is stated as a . balance sheet and income statement are shown in analytical percentages.

For example. For example. then it will be 10% of total assets [50000*100/500000].000 20. 50000. The short-coming in comparative statements ant trend percentages where changes in items could not be compared with the total have been covered up. The analyst is able to assess the figure in relation to total value. (1) COMMON-SIZE BALANCE SHEET A statement in which balance sheet items are expressed as the ratio of each asset to total assets and the ratios of each liability are expressed as a ratio of total liabilities is called common-size balance sheet. 5. (2) The individual assets are expressed as a percentage of total assets 100 and different liabilities are calculated in relation to total liabilities. The common-size statements may be prepared in the following way: (1) The total of assets or liabilities is taken as 100. if total assets are rest.000 Percentage 2.50 10. following assets are shown in a common-size balance sheet: Cash in hand and at bank Sundry debtors Rs. 5 laths and inventory value is Rs.percentage of total 100.00 .

00 100.000 2. The relation of each liability to total liabilities is similarly expressed.000 50.000. 00.000 12. 2. 00.000 1.00 50. is taken as 100 and all other assets are expressed as a percentage of total assets. The relation of each asset to total assets is expressed in the statement.50 25. BALANC SHEET .00 The total figure of assets rest. 00.Stock Land and building Plant and machinery Total Assets: 25.