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Financial Statement Analysis

2011 – 2012

INTRODUCTION Financial management is planning organizing,

Directing and controlling various financial activities of the organization. In order to perform all the managerial function effective and efficiency, sufficient, part and present information about the form and its operation should be equipped along with this changes overtime. And this financial information can be derived from the basic financial statement. A statement portion of information required in financial decision-making is found in financial statements, particularly, the income statements and the balance sheet financial statements and the balance sheet financial statement, particularly, the income statements and the balance sheet financial statements also help in forecasting the financial effects of planning. Analysis of financial statements refers to the process of the critical examination of the financial information contained in the financial statements the process dissection, establishing relationship and interpretation there of to understand the working and financial position of a firm is termed as the analysis of financial weaknesses and strength of the firm.

Dept of Management, SKTRMEC

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Sujala Pipes Pvt. Ltd

2011 – 2012

Importance of the Study: Management is getting things, done with the use of men, material, machinery methods and money in an effective and efficient manner, the functional area, which deals with money is termed as financial management and this department of finance is treated as the key area in the organization is treated as the key area in the organization because it includes crucial decision regarding the flow and utilization of funds. The optimum decision of financial activities is with the help of a relative analysis of the financial statement relative analysis of the financial statement prepared for the time to time by the company namely income statements and the balance sheet. The theoretical knowledge will in doubt will bestow the aspirant to improve attitude skills and knowledge but the practical explosive will add a special harous to excel in to the world with high zeal and enthusiasm. For the purpose, this special study on the analysis of financial statement will entrance my knowledge in the case of the financial decision making.

Dept. of Management, SKTRMCE.

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Sujala Pipes Pvt. Ltd

2011 – 2012

SCOPE OF THE STUDY:  The critical scope of the study was confirmed with study of available financial statements of Sujala Pipes Pvt Ltd.  The present study is intended to covers a period of four years from 2007-2011 for comparative balance sheet analysis.  The Study is limited to the financial aspects of the organization and that to with their aspects which are required for the calculation and analysis of the financial statement of Sujala Pipes Pvt Ltd. Objectives of the Study:  To study the profile of Sujala Pipes Pvt Ltd.  To prepare and analyze the comparative statement i.e. income statement and balance sheet of the company. In order to know the relative change in the financial activities.  To interpret the result of the interpretation it self will facilities smooth decisions making  To study the financial statements of Hyderabad division of Vijay Electrical Ltd. for the past 5 Years.  To make necessary conclusions and suggestion.
Dept. of Management, SKTRMCE. 3

annual reports of Sujala Pipes Pvt Ltd. Secondary Data Primary Data : The Primary data is collected through the interaction with officers & executives of the company in financial & accounts department. Ltd 2011 – 2012 RESEARCH METHODOLOGY: The analysis is worked out by using various sources of data.Sujala Pipes Pvt. SKTRMCE. Dept. Company and Financial Management books. company website. Secondary Data: The secondary data is collected from printed books. like text books. newspaper. Primary Data 2. which is gathered in two ways. 4 . They are: 1. magazines. of Management.

3. the time factor is also a Limitation. 2009-2010 and 2010-2011. This is the study conducted with in a short period. The study is conducted for the purpose of fulfillment of the condition stipulated by the University for Completion of course. 5 . Dept. The study was conducted with the data available and the analysis was made according the details of the study are for the past for years only 2007-2008. 20082009.Sujala Pipes Pvt. SKTRMCE. Therefore. Ltd 2011 – 2012 LIMITATIONS OF THE STUDY: The study also suffers from the following limitations: 1. 2. so the study may not fulfillment all the requirements of a detailed investigation. of Management.

Ltd 2011 – 2012 COMPARATIVE STATEMENTS The comparative financial statements are statements of the financial position at different period of time. 1) Current financial position and liquidity position. The changes in periodic balance sheet items reflect the conduct of a business. group of items and computed items in two an more balance sheets of the same business enterprise an different dates. 6 .The comparative balance sheet analysis is the study of the trend of the same items. Comparative Balance Sheets: . SKTRMCE. Dept. Not only the comparison of figures of two periods but also the relationship between balance sheet and income statement enables an in-depth study of financial position and operative results. of Management. Any statement prepared in a comparative form will be covered prepared in a comparative form for financial statements (Balance sheet and income statement) are prepared in comparative form of financial analysis purposes. 2) Long-term financial position.Sujala Pipes Pvt. Interpretation of Comparative Balance Sheet: While interpretation comparative balance sheet the interpretation is expected to study the following aspects. The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods.

SKTRMCE. of Management. long term liabilities and capital the proper financial policy of the concern will be finance fixed assets by the issue of either long term securities such as debentures. The excess of current assets over current liabilities will give the figures of working capital. 4) The next aspect to be studied in a comparative balance sheet question is the profitability balance sheet question is the profitability of the concern. 7 . An increase in fixed assets should be compared to the increase in long- Dept. An increase in current assets accompanied by the increase in current liabilities of the same amount will not show any improvement in the short-term financial position. loans from financial institution on issue of fresh share capital. The increase in working 2) capital will mean improvement in the current financial position of the business. 3) The long term financial position of the concern can be analyzed by studying the changes in fixed assets. bonds.Sujala Pipes Pvt. Ltd 2011 – 2012 3) Profitability of the concern. 1) For studying current financial position or short term financial position of a concern one should see the working capital in both the years. term loans and capital.

Ltd 2011 – 2012 The study of increase or decrease in retained earning.Sujala Pipes Pvt. 8 . various resources and surplus etc. 5) After studying various assets and liabilities an opinion should be formed about the financial position of the concern are cannot say if short term financial position is good then long term financial position is good then long term financial position will also be good or vice-versa. Will the Dept. enable the interpretation to see whether profitability has improved or not. of Management. SKTRMCE.

energy conservative. corrosion resistance. Dept. metal and leather etc. production of raw materials. In the future the manifold applications of plastics in the field of automobiles. of Management. manufacturing of processing machinery.Sujala Pipes Pvt. with modern living. Ltd 2011 – 2012 INDUSTRY PROFILE PVC pipes poly Vinyl chloride pipes have become synonymous. This versatile material with superior qualities such as light weight. nontaxis etc. packaging and agriculture give its immense utility in PVC plastics. electronics. Equipment is 1250 crores and it provided employment at more than 8 lakh people. easy processing. The present investment in all the three segments of industry namely. glass. It is undoubtedly a product which has deeply penetrated in to common man’s life. SKTRMCE. electrical. of processing machinery and ancillary equipments sophistication. expansion and diversification of raw materials. may substitute to a large estimate of many conventional and costly industrial materials like wood. expansion and diversification of processing capacities. No wonder the industry has achieved remarkable progress in terms of supply of raw materials. 9 . At present as percent of total requirement of raw material and almost all types of plastic machines required for the industry are not adequately available. And manufacturing and diversification of processing capabilities.

5 kgs. bottles. SKTRMCE. Dept. The government of India recognized the importance of plastics in agriculture appointed on March 7th . and even in Asian countries like SOUTH KOREA it is 8.V. In its origin large scale adoption of irrigation would lead to support in demand for P. In our country plastics are used in marking essential consumer goods which are of daily use for common man.K. which at present is very low.Sujala Pipes Pvt. These levels have effected the price of the plastic products adversely. of Management. chairs etc.. The committee mane a number of recommendations for promoting the use of plastics.V.K.5 kg.C. G. water management resources. 10 . and electronics. pipes. as against the world average of 11 kgs. plastics have come to play a vital role in a variety of applications the world over. The per-capita consumption is 68 kgs in FRANCE. 33 kgs in U. Ltd 2011 – 2012 Plastics have been subjected to levies not only at the central level but also at the state and local governments. They also have applications in Agriculture. The percapita consumption of plastics is very low at 0. The implementation of the recommendations would so a long way is increasing the consumption of plastics. the committee has forecast a treatment as fright of drip irrigation through a net work of plastic tubes and pipes.Rao.Pipes LDPE tubes and play proper by lane emitters. pens. engineering 1981 a national committee on the use of plastics in agriculture under chairmanship of Dr. Such as baskets carry bags. building constructions. On account of their inherent advantage in properties and versatile in adoption and use.

polyester (PBT/PET) phendic are same of the plastic materials following under the category of engineering plastics. Engineering plastics are being increasingly used for various applications in automatic. Ltd 2011 – 2012 The committee has highlighted the importance of use of PVC resin is the manufacture of rigid pipes. Polycetal. that requires artificial manufacturing relates to true engineering plastics which is used as an alternative to (or)replacement of metals in load needing applications.O. electronic. Another variety of plastics. The plastics are classified into two classes. Nylon. Punjab and Haryana. 11 . (1) Thermo Plastics (2) Thermostats Dept. telecommunications and other industries.P. Poly carbonates. The irrigation departments in these states have taken concrete steps to incorporate canal living with LDPE (Low density) pipes on priority basis. Modified P.Sujala Pipes Pvt. Madhya Pradesh. flexible pipes and sheets which are being used for agricultural operations to carry water from place to place and living of panels and reservoirs to reduce sweepers and most important in drip irrigation sequenc A break through had already taken place in the field of channel lining with poly urethane in the state of Gujarath. SKTRMCE. of Management.

33 lakh tonees.) in India. Ltd 2011 – 2012 The thermo plastics become sufficiently soft as the applications of heat. They are cured to hard moulded piece which cannot be resofted by reheating. SKTRMCE. PVC : Poly Vinyl Chloride : Production of PVC started in 1961.86 lakh tones. 1927.Sujala Pipes Pvt. but upon further application of heat and pressure they are cured to heat and pressure. The thermostats are the initial application of heat and pressure subjected to fire. producing HDPE by the end of 1989-90 was producing 1. Products targeted of LDPE by the end of 1999 is placed at 1. HDPE : High Density Poly Ethylene : Production of HDPE in India commended in 1968.7 lakh tones. The production target of PVC by the end of 1989-90 is placed of 2.25 Lakh tones.15 lakh tones. at present there are 6 units manufactures PVC resins. against first production of PVC in the world. 12 . of Management.. The total installed capacity comes to 1. at present there are 3 units manufacturing LDPE with a total capacity of 1. Dept. at present there is a unit (Play Defins Industries Ltd. LDPE : Low Density Poly Ethylene : Production of LDPE was started in the year in 1995.

A production target of 36.000 tonnes. ABS (Acrylonitril Bujtadient Sysrenl) : The production of ABS in India started in 1978. Poly propylene : The first production of poly propylene in India commenced in 1978. the installed capacity targeted in almost 8 lakh tones. of Management. The situation was slightly improved recently and is expected to charge considerably by commissioning the major petrol chemical project in the pipe line by the year 1990. The Mahasastra Gas Cracker complex. 13 .000 tonnes is achieved by the end of 1993-94. the production target of polystyrene by the end of 1989-90 is set out to 29.Sujala Pipes Pvt. By the terminal year of the plan. the present total installed capacity is 5000 tonnes. Ltd 2011 – 2012 Polystyrene : Polystyrene was first manufactured in India in May 1987. Dept. Haldia Petrol Chemicals and Reliance petro chemicals together with the expansion of existing giants will go a long way to mitigate this long. Problems : Raw material is always been a problem to be recorded with the plastic industry. study problems. SKTRMCE.

Sujala Pipes Pvt.. Hong. Canada. Sweeden. Egypt. alcohol and calcium chloride. Apart from this. Holland. the administered pieces for basic raw materials have not been implemented with a balanced view to accommodation the interests of both consumers and manufactures. Bangladesh. The exports. Export of the Plastic Goods : Plastics have been excellent potentialities. France. SKTRMCE. Sri Lanka. India exports plastics product to as many as 80 countries all over the world. of Management. 60-70 crore per annum doubled to 129 crore in early 1990’s in 1991-92 plastic industry has taken up a challenge of achieves export target of 250 crores. On account of this domestic price of finished goods are higher than the rest of world. 85% of the polymers are made from naptha feedstock. an extra effort to boost export finished plastic goods will yield rich dividend.K. and Russia. Tawan. Dept. U. which were stagnant at around Rs .A. Major export markets for plastic products and usage are Australia. 14 . Italy. Today. The feed stocks for petro chemical industries are napritna. Hence the pricing naptha by the government has a cascading effect.S. Our country equipped with all kinds of processing machines and skilled labour and undoubtedly. Ltd 2011 – 2012 The steep rise in the raw materials as a result of imposition of duties and taxes poses another problem to the plastic industry. U.

PP.Sujala Pipes Pvt. electronics. telecommunication an irrigation and thus. Prospects : The production of various plastics raw materials the country is expected to double by the end of the seventh five year plan. Reliance are set up during the period. export promotion council has requested the government to reduce import duty on plastic raw materials supply of raw materials at international prices. Ltd 2011 – 2012 With a view to boosting the exports. the plastics and linoleums. 15 . fix duty free backs on weighed average basis and charge freight rate on plastic products on weight base interested of volume basis. of Management. there is immense scope for the use of plastics in agriculture. HDPE. century Enka. When the PCS’s capacity expansion programme is completed as well as the new plants by other manufacturers like PIL. SKTRMCE. PS and PVC is expected to touch the one million tones mark by 1989-90. Dept. the consumption of commodity plastic including LDPE. the plastic industry is on the threshold of an explosive growth. automobile.

(1) Agriculture. SKTRMCE. A dominant part of plastics of present and future improved their utilization in the following areas. Forestry and Water management (2) Automobiles and Transportation (3) Electronics and Telecommunications. Ltd 2011 – 2012 Role of Plastics in the National Economy : Plastics are get perceived as just simple colourful house hold products in the minds of common man. Building (4) Construction and Furniture especially wood substitutes (5) Food processing and packaging (6) Power and Gas distribution Dept. 16 .Sujala Pipes Pvt. of Management.

Dept.e. Sujala pipes also gone for expansion programme. ) ltd.Y. The company rightly thinks there is an inseparable relation between education and business.Y. The Brand name “Nandi Pipes” as taken from the piligrimage place called “Mahanandi” which is 15 KM from Nandyal. The name “Nandi” derives from the historical aspects of this town.”Sujala” and “Rani”.Nandyal . This company is promoted by the managing director mr . S. Nandyal was incorporated in the year 1998. SKTRMCE. They have taken over “monarch pipes” good source of employment to the people who are at both workmen level as well as administrative level. the company has “Rani Plastic Pipe Industry” as its sister concern in the manufacture of PVC pipes. Reddy I encouraging women to educate by establishing women’s college in Nandyal. S. But the flagship brand is “Nandi Pipes”. The company has 3 main PVC pipes brands. Apart from manufacture of PVC pipes. which is the main flagship. they are also in the manufacture of mineral water under the brand name “Nandi Mineral Water”. of Management. Diary products “Nandi Diary” which supplies regularly milk to the people of Nandyal and Villages in and around Nandyal. Nabdyal.Sujala Pipes Pvt.reddy .P.(match)who has decades of experience in the manufacturing industry . Mr.B. it is located in the industrial estate . The company has diversified in to various fields in the in the recent past. 17 . They are “Nandi”.P. Managing Director. Ltd 2011 – 2012 COMPANY PROFILE Sujala pipes (pvt.

The management of the company known as “Nandi group” was bestowed with another company in to their cap known as “Indian thermo plastics Ltd”.Sujala Pipes Pvt. This helps the farmers in lifting the ground water to the surface as well free flow of the water as an and when necessary. and PVC (Poly Vinyl Chloride) pipes were introduced under the same brand name later in1984-85.30 crores in the year 1999-2000. Initially the industry was producing polythene pipes (BlackPipes). Ltd 2011 – 2012 Sujala pipes which was once upon a time a sole manufacture of plastic goods now branched in to many companies. SKTRMCE. In short it can be concluded that the company enjoys 95% of South Indian market have in the PVC pipes industries. Dept. The company also provides free breakfast. Hyderabad. One of the credible things that the company does is free offer of transportation to the door steps of the customers when he purchases 100 or more pipes. Karnataka. As The main objective in stating this industry was to cater to the needs of facilitate water flow in this area which lacks rainfall and to use the water resources productively. 18 .P. has seen rapid growth in the early 90’sThe company also produces PVC fittings.the growth of PVC industry in Rayalaseema area of A. The company also has manufacturing unit at Beedar. free lunch and free dinner to their employees at factory’s canteen. Their turnover touched a remarkable figure nearly Rs. of Management.

Very recently the company had approached the Karur Vysya Bank. 19 . The company markets products through telephone orders. Industrial accidents are also nil in the company. it immediately sent to the production department as Dept. It has a wide distribution network both in A. The company which has its head quarters at Nandyal also started “Nandi Super Market”. Sujala Pipes also involved in social activities by providing free water supply to the needy people. It gives a credit of 21 days to its customers. of Management. they enjoy maximum benefits given by the government. It basically work on 2 shifts. which offers concessions to their employees.Sujala Pipes Pvt. Financially the company sounds very good. As and when the order is received.P. Residences are also provided by the company to its workforce and employees at concessionrent. They are no unions in the organization an there is good relation and working climate exists in the organization between management and employees. Karnataka. It has a wide net work of distributors all over south India. Ltd 2011 – 2012 The company also has manufacturing unit at Beedar. Nandyal for working capital loan of 150 lakhs in order to meet the changing requirements of industrial scenario. as well as neighbouring states in the South India. The company also provides free medical facilities to the employees. As the company caters to the needs of farmer and its main product is agricultural related product. Company organizes free medical camps to the poor people. SKTRMCE. It also gives loans to unemployed youth in fulfilling their career objectives.

Ltd 2011 – 2012 well as stores. SKTRMCE.)LTD.Sujala Pipes Pvt. of Management. ORGANISATION STRUCTURE OF SUJALA PIPES (PVT. Dept. 20 . Basing on the orders reqirment and availability at the stores the products are manufactured and sent.

Ltd 2011 – 2012 Production process PVC pipes : The material used in PVC pipes manufacture are : (1) PVC (Poly Vinyl Chloride) (2) Tri Basic Lead Sulphate (TBCS) (3) Die Basic Lead Sulphate (DBLS) (4) Calcium Steric (5) Lead Steric (6) Calcium carbonate (CaC03) (7) Titanic Dioxide (8) Steric Acid (9) Wax The above material are mixed in fixed proportion in a big container and they get processed in to a solidified product. Dept. 21 . Once the pipes are manufactured. SKTRMCE. As and when the requirement comes.Sujala Pipes Pvt. Immediately pipes of various diameters are manufactured by using various moulds. they will be dispatched to the destinated places. they will be shifted to warehouses. of Management.

Dept. 22 .Sujala Pipes Pvt. and practicing managers it is of a great interest to academician because the subject is still developing and there are still certain area where contra varies exist for which no unanimous solution have been reached yet. and and an an understanding understanding of the theory of financial mgt. Financial management is that managerial activity which is concerned with the planning and controlling of the firms. planning and control are one of the important tasks in financial management. Provides them with concepted and analytical assigner to make there decision skill fully. It was branch of economics. Ltd 2011 – 2012 OVERALL VIEW FINANCIAL MANAGEMENT: Before going to know more about financial statement analysis we have to know some basic knowledge regarding financial management financial analysis. SKTRMCE. financial. till 1980 and thus as a separate discipline it is of a recent origin. of Management. Practicising manager are interested in this subject because among the most curlicues decision of firm are there of which the relate theory to of finance. The subject of financial management is a immense interest to both academicians. Financial resources.

Sujala Pipes Pvt. Ltd

2011 – 2012

Financial

management

is

concerned

there

managerial decision, which results in the acquisition and financing of long-term and short-term assets of a firm. It therefore deals with situation, which call for selection of specific assets and specific liabilities as also with the problems of size and growth of an enterprise. An analysis of their decisions is boned upon exported inflows and outflows of funds and their effects on the stated management objectives. There are two well know objectives: They are: 1. Profit Maximization. 2. Wealth Maximization. However, wealth maximization is a superior objectives them that of profit maximization and keeps in pale with modern times profit maximization might have been an appropriate objective before the company form of organization man fully developed but in modern timer the corporate form of organization has to discharge it responsibilities to the shareholder, employees and the society as whole and this context profit maximization cannot be a valid objective moreover it suffers from various other draw books viz, it is vague it ignores the timing of retain and it also ignores the risk factors.

Dept. of Management, SKTRMCE.

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Sujala Pipes Pvt. Ltd

2011 – 2012

Hence wealth maximization is a better objective of financial management wealth maximization means maximizing the net present value of wealth of a course of action this concept is consistent with the objectives if maximization of owner economic welfare by maximizing the market value of the company share it also satisfies the interest the management and society as a whole. The important tasks of financial management may be summarized as follows:

Dept. of Management, SKTRMCE.

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Sujala Pipes Pvt. Ltd

2011 – 2012

(A) Financial Analysis, Planning and Control 1. Analysis of financial condition & performance. 2. Profit Planning. 3. Financial forecasting and 4. Finance control. (B) Inventing: 1. Management of consent asset (Cash, Marketable Securities, Receivables and Inventories) 2. Capital budgeting (Identification, Selection & Implementation of long-term projects. 3. Management of mergers, reorganization (C) Financing: 1. Identification of sources of finance and

determination of financing mix. 2. Cultivating sources of funds and raiding funds and 3. Disposition of profit between dividends and retained earnings. The following list depicts the various functions area of financial management:  Determine finance needs.  Determining sources of funds.

Dept. of Management, SKTRMCE.

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 Project planning and Evaluation.  Capital budgeting.  Optimum capital structure.  Cost volume profits analysis  Profit planning and control. Financial management involves taxing tour important decision viz. 3.  Corporate taxation. 2.  Fixed asset manager. SKTRMCE. 1. The investment decision. common size analysis. Dept. The financing decision. The current asset management. comparative analysis.  Acquisition and mergers. The dividend decision. 26 . Ltd 2011 – 2012  Financial analysis.  Working capital management. of Management. Decision-making requires critical analysis and careful interpretation of the published financial statement.Sujala Pipes Pvt. cash flow analysis and funds flow analysis. the common tools used by the management to facilitate analysis are ratio analysis. In general. 4.  Dividend policies.

Dept. 27 . SKTRMCE. Ltd 2011 – 2012 But rather establisher a sound and systematic basis for its rational application.Sujala Pipes Pvt. of Management.

Sujala Pipes Pvt. Dept. which is logically & consistently organized according to accruing principles. if a position. of management data regularize available as per requirement establish relationship among financial figures and makes interpretation in a simple and unbiased way. 28 . FINANCIAL STATEMENT ANALYSIS: Nature: Financial statement analysis consists of the analytical tools and techniques to the data in financial statement in order to derive from they measurement and relationship that are significant and useful for decisionmaking. SKTRMCE. Ltd 2011 – 2012 Significance: The significance of financial statement lies not in their preparation but in their analysis and interpretation of financial statement involves a study of relationship their meaning and significance the financial analysis must understand determine the the plan extend and of policies analysis. of Management. Financial Statement: A financial statement is a compilation of data. Its purpose is to convey an understanding of some financial aspects of a business firm.

The majority of firms include extensive financial statement in their annual reports. SKTRMCE. Dept. creditors. prepared by the accountant. that purpose to reveal the financial position of the enterprise the result of its recent activities and an analysis of what has been done with the earnings. and thus narrows the areas of uncertainty that is present in all decision making process financial analysis does not taxes the need for judgment but at a moment in a time. It can be used as a forecasting tool of future financial condition and results it may be used as a process of evolution and diagnosis of managerial operating as other problems areas above all financial analysis reduces reliance an institution. Ltd 2011 – 2012 The process of financial analysis can be described in various ways depending or the objectives to be obtained financial analysis can be used as a preliminary screening tool in the selection of stocks in secondary markets. According to smith.Sujala Pipes Pvt. Financial statement as normally understand. of Management. 29 . as in the case of a balance sheet as may reveal a series of a activities over major mean through which firms present their financial situation to stock holders. as financial statement are the end products of financial accounting. which receive wide distribution. refer to a set of reports and schedule which can accountant prepare at the end of a period of a time for a business enterprise. and the general public.

All the assets owned by the business and all the liabilities and claim it owner to out.. Dept. 2. of Management. They are: 1.e. maternity and realization. matching. Income Statement: The income statement also called the profit & loss a/c is the according report which summarize the revenues. the balance sheet of a point stock company must be prepared as per part of schedule of a company act separate statutory formats exists for the preparation of the formats exists for the preparation of the balance sheets of banking and insurance companies. The income statement (Profit & Loss a/c). 1. Scheduler. the total liabilities. 4. 5. There is format. The Statement of Retained Earning. SKTRMCE. expenses. The position statement (Balance Sheet). 30 . Sider and owner are listed the balance sheet must always be in balance i. and the differences between them for an accounting period the construction of income statement is in accordance with the concepts of accruals accounting period. The Position Statement: The position statement or the balance sheet shown the financial statement of a business at a given point of time. 6. Fund Flow Statement. Ltd 2011 – 2012 There are six basic financial statements of special importance.Sujala Pipes Pvt. Cash Flow Statement. 2. 3.

The funds flow statements: The terms “Fund” normally mean working capital. of Management.Sujala Pipes Pvt. 4. Ltd 2011 – 2012 3. SKTRMCE. It is a valuable tool to analyze the changes in the financial conditions of the business between two periods and helps the management in policy formulation and performance appraisal. The cash flow statement: The cash flow statement is a statement of changes in the financial position of a firm as ‘cash bases’ It is very much similar to the funds flow statement except that the cash flow statement lays emphasis on cash changes only. The funds flow statement several the sources from which funds are reveals the sources from which funds are received and the user to which there have been put. 31 . Dept.

SKTRMCE.Sujala Pipes Pvt. The statement of rational earnings: The statement of retained earnings also known as the profit and loss appropriation account. Thus. Schedules are part of the financial statement and enable a better understanding of the financial position of business. 1) On the basis of nature of information used: - Dept. the statement of retained earning is the link between the income statement and the balance sheet. Ltd 2011 – 2012 5. which describes the summarized information present ion in the income statement and the balance sheet in greater detail. of Management. including tax and low it has been appropriated. The balance after all appropriated is shown in the liabilities side of the balance sheets. is a continuation of the income statement it reveals the profit freely available after deduction of all expenses. 6. TYPE OF ANALYSIS: The process of financial analysis may be classified based on the nature of information used and as the basis of methodology of operation. Schedule: Schedules are statements. 32 .

2. SKTRMCE. It is also known as dynamic analysis a) Trends Analyses. b) Vertical Analyses: . Alternatively base years are indexed to that of base period. pertaining to a number of years. 33 .The information used is that which is freely available to any body published financial statement are an example of such information.It involves analysis and review of financial statements. Dept. by expressing various items of the statement. An attempt is made to identify the periodical trend of various items in the financial statement percentage Increases/Decreases is calculated for all such item. There is no access to internal records of an organization with increasing emphasis on disclosers in recent timer the quality of external analysis is likely to improve in the future. On the basis of methodology of operation: a) Horizontal analysis: . of Management. Ltd 2011 – 2012 a) External Analysis: . For other internal needs of the organizations.Vertical analysis involves anglicizing a single set of financial statement. b) Internal Analysis: The source of information is internal analysis is the internal for use of mgt.Sujala Pipes Pvt.

Comparative financial statement refers to comparison of financial pertaining to two different periods by putting them side by side and finding out the changes with the respect to each item of the statement and overall changes in absolute d relative changes. should be properly designed. 5) Cash flow analysis. 6) Ratio analysis. It is also known as “Static” analysis (or) structural analysis. of Management. Methods of Financial Statement Analysis: 1) Comparative statement analysis. 3) Trend analysis. Ltd 2011 – 2012 as a percentage of a particulars item. 1) Comparative statement analysis: . 2) Communalize statement analysis. 4) Fund flow analysis. which is to be compared. 34 . SKTRMCE.Sujala Pipes Pvt. comparisons. b) The accounting policies followed during the years of comparisons should be uniform if there is any A particular account head must have the same connotation for all the period of Dept. Points to be noted: a) The financial data. Quantitative relationship is established among great various items at a particular data.

In case of common size income statement. Under this method. SKTRMCE. The signs should be adjusted to ensure uniformly. A common size balance sheet shows each item as a percentage of total asset or total liabilities. Ltd 2011 – 2012 change in any policy. c) It is preferable to present financial information in vertical statement form. 35 . d) Comparative financial statement must reveal changes in both “Absolute” and “Relative” measure. a common base for comparison is created. 2) Common Size Statement Analysis: A common size statement facilitates comparison of financial statements of not only a single firm over a time period but also comparison of financial statements of different companies of financial statements of different companies for any given time. of Management. Therefore. all items are presented as a percentage of net saler.Sujala Pipes Pvt. 3) Trend analysis: - Dept. operations. Even if the Different scale of absolute figures relates to a vastly. all the times of the statement are presented as percentages or rations of a particulars item. A common size statement helps in determining the relative efficiency and sounders of a firm and helps in under standing its financial strategy.

economic policy. It helps in understandings the nature and rate of movements in various financial factors however. 3.of periods. economic conditions etc. Trend values must be read along with absolute values. Trends of related items should be carefully studied.Sujala Pipes Pvt. policy. (The reader may notice that this definition of funds flow statement comes disconcertingly close to the definition of a balance sheet. Since liabilities and assets are themselves sources and user of funds respectively even a balance sheet itself Dept. as they can affect the trend significantly. of Management. SKTRMCE. 2. Ltd 2011 – 2012 Trend analysis involves computations of index number of the movements of the various financial items in the financial statements for a no. 4. conclusion should not be drawn on the basis of a single trend. Points to be noted: 1. Fund flow analysis: A funds flow statements is a statement which explain the various sources from which funds were raised and the user to which these funds were put. Due weighted should be given to extraneous factors such as govt. 36 . The accounting policies for the entire period should be uniform. Non-Financial factors should be considered while interpreting the trend.

The major differences. its fixed assets. discharged its liabilities. 37 . built up the inventory. of Management. paid its dividends and taxes and Similarly it would enable one to see how the business managed to meet the above capital or revenue expenditure was it by raising additional capital or loans from public? Was it by stretching the trade creditors or by incurring some other liabilities? 4. between a true fund flow statement and a balance sheet lies in the fact that the former capturer the movements in funds.Sujala Pipes Pvt. Cash flow analysis: Cash flow analysis involves the preparation of a cash flow statement from one period to another. This statement is very much similar to the statement of funds flow statement focuses attention cash instead of working capital. Dept. SKTRMCE. however. While the latter merely presents a static picture of the sources and user of funds an account of this property a funds flow statement would enable one to see how the business financed so on. Ltd 2011 – 2012 may be considered a form of funds flow statement one would notice that in fact the balance sheet of most companies are increasingly being expressed in the “Sources of funds” and “Application of funds” formats. The term cash includes cash and bank balance.

1) Development industries. of Management. which come in the way of such analysis. SKTRMCE. figures for the various firms is needed in addition Dept. development of a benchmark becomes a problem. A ratio gives the mathematical relationship between one variable and another.Sujala Pipes Pvt. Yet there are certain problems. Of As there may not be any other having a presence in the same industries. Ltd 2011 – 2012 Ratio Analysis: Ratio’s are well known and widely used tools of financial analysis. 38 . Even when the company is not a diversified one. Though the computation of a ratio involves only a simple arithmetic operation. that too in the same proportion. its interpretation is a difficult exercise. The usefulness of ratios is ultimately dependent on their intelligent and skill interpretation. Problem Analysis: Analysis of financial statement using above tools can be very helpful in understanding a company’s financial performance and condition. The analysis of a ratio can disclose relationship as well as basis of comparison that reveal conditions of the ratio. company of Bench Marks: Many Encounted in Financial Statement companies have operations spread across a no.

3) Price Level Changes: . COMPARATIVE STATEMENTS The comparative financial statements are statements of the financial position at different period of time. of Management.Financial statements do not take into account changes in the price levels. the average figures over a period of time should be looked into. Any statement prepared Dept. The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. the whole exercise of analysis the statements become useless. 4) Different in Accounting Policies: . 39 . In such a case. In order to draw some meaningful results of the analysis. SKTRMCE. Ltd 2011 – 2012 to 2) the industry average - in over may t draw a meaningful conclusion.Different companies may follow different accounting policies in respect of depreciation stock valuation etc comparison between the ratio’s of two firms. Window-Diversing: Firms windowdressers the financial statements in orders to show a rosy picture. Analysis of such statements may not give a clear picture of the state of affair.Sujala Pipes Pvt. Different policies may not give the true result.

Not only the comparison of figures of two periods but also the relationship between balance sheet and income statement enables an in-depth study of financial position and operative results. SKTRMCE. 4) Current financial position and liquidity position. 6) For studying current financial position or short term financial position of a concern one should see the working capital in both Dept. 40 . 6) Profitability of the concern. Ltd 2011 – 2012 in a comparative form will be covered prepared in a comparative form for financial statements (Balance sheet and income statement) are prepared in comparative form of financial analysis purposes. Interpretation of Comparative Balance Sheet: While interpretation comparative balance sheet the interpretation is expected to study the following aspects. Comparative Balance Sheets: . 5) Long-term financial position.The comparative balance sheet analysis is the study of the trend of the same items.Sujala Pipes Pvt. The changes in periodic balance sheet items reflect the conduct of a business. of Management. group of items and computed items in two an more balance sheets of the same business enterprise an different dates.

Sujala Pipes Pvt. After studying various assets and liabilities an opinion should be formed about the financial position Will the Dept. Ltd 2011 – 2012 the years. SKTRMCE. of Management. The increase in working 7) Capital will mean improvement in the current financial position of the business. 8) The long term financial position of the concern can be analyzed by studying the changes in fixed assets. 9) The next aspect to be studied in a comparative balance sheet question is the profitability balance sheet question is the profitability of the concern. bonds. long term liabilities and capital the proper financial policy of the concern will be finance fixed assets by the issue of either long term securities such as debentures. various resources and surplus etc. An increase in current assets accompanied by the increase in current liabilities of the same amount will not show any improvement in the short-term financial position. loans from financial instritation on issue of fresh share capital. An increase in fixed assets should be compared to the increase in longterm loans and capital. 41 . The study of increase or decrease in retained earning. The excess of current assets over current liabilities will give the figures of working capital. enable 10) the interpretation to see whether profitability has improved or not.

of Management. Ltd 2011 – 2012 of the concern are cannot say if short term financial position is good then long term financial position is good then long term financial position will also be good or vice-versa. A concluding word about the overall financial position must be given at the end. 1) A change in sales is meaningful only if it is compared with a change on cost of goods sold. The changes in absolute data in the money values and percentage can be determined to analyze the profitability of the business. Income Statement: - The income statement gives the results of the operations of a The comparative income statement gives an idea of the progress of a business over a period of 2004 to 2008 time. Comparative business. 3) A change in net profit is good indicator of overall profitability of the organization. Dept. 2) A change in operating expenses might be due to change it in scale of operations or in account of change in degree of managerial efficiency.Sujala Pipes Pvt. Interpretation: The analysis and interpretation of income statement will involve the following steps. 42 . SKTRMCE.

should be mentioned whether the profitability is good or not. Ltd 2011 – 2012 4) An opinion should be formed about profitability of the concern and it should be given at the end.Sujala Pipes Pvt. It overall Dept. SKTRMCE. 43 . of Management.

32 496064 -908.3 3399.68 -144.34 7168.8 7 3066.83 978.02% 45.43 200809 11546.46 979.13 7070.06 527.43 332.88 % 11.87 NOTE. COGS =material + work in progress.74 -30.78 12.83 PBT Less Tax Net Profit 1124.3% 3.78 -144.79 38.46 (893.68 979.40 414.17 8147.66 2385.13 5198. of Management. Dept.46 1124.05% 10.54 399078 Change 1131. SKTRMCE.87 12.Sujala Pipes Pvt.6 1872. 44 .86) -14. Ltd 2011 – 2012 Comparative Income Statement for the year 200304 20042005 (Rupees in Lakhs) and Particulars Sales (l) Less: Cost of Goods Sold (ll) Gross Profit (A) = l-ll Less: Operating Expenses (B) Operating Profit (A-B) = C Add: Non-Operating Income (D) (C+D) = E Less: Non-operating Expenses 2007-08 10234.85% 35.10 5.13 1970.59 1076.58 1476.65% 36.

Ltd 2011 – 2012 Dept.Sujala Pipes Pvt. SKTRMCE. of Management. 45 .

02%. 4) Currently the firm is in improving business.87%. Ltd 2011 – 2012 Interpretation: 1) Sales are increased by 11. 2) An increase in expenditure is 36.Sujala Pipes Pvt. It shows the change in scale of operations are more and an account efficiency. 46 . 3) Net profit after tax is decreased by 12. It points towards increased acceptability of the company’s products and customer satisfaction. of Management. so the overall of change in degree of managerial profitability of the organization is not satisfactory. Dept. SKTRMCE.05% from 2007 to 2008. the profitability situation also bad. It is bad indicator of over all profitability of the organization.

2% 2.6 3027.2 4141.1 1214.46% 75% 3.4 10.2 905.7 10.A Loans & Advances Total (A): Fixed Asset Gross Block Less: Dep Net block Miscellaneous Expenses Profit & Loss A/C Cap.7 5698.6 3244.2 5698.4 2205 643 4212. W. 47 .4 1428.2 40.1 6% 0.3 4855.4 31-03-08 1342.6 6 1616.2 108.8 479.5 140.5 0.2 108.6 14. Ltd 2011 – 2012 Comparative Balance Sheet for the Year Ended 3103-07 and 31-03-08 (Rupees in Lakhs) Particulars CURRENT ASSSETS Inventory Sundry debtors Cash & Bank balances Other C.5% 8.7 1470.6 649 2595.7 1610.4 78.79 2345.125 52.76% 63.79 Long Term Funds Dept.5 41.67% 25.2 850.2 755.3 0.Capital Reserver & Surplus Total Liabilities(C+D+E) © 31-03-07 1368.1 5.6 107 1.Sujala Pipes Pvt.4 5.7% 1.I.2 46.1 1983.6% 25. Liabilities Secured Loans Unsecured Loans D Capital & Server & Surplus S.1 1608 525.1 2127.7 0.9 6% 18% 11.5 Change 26 54.1 % 1.9 961.8 587.7 2133.2 7168.7% 52.5% 28.3 706.2% 49. of Management.4 168.8 46 768.2 1668.24% 73.9 1648.8 64.6 2712.2 0.P M & E Transit Investment (B) Total Assets (A+B) Liabilities C. SKTRMCE.3 107 1.38% 0.7 1470.9% 6.1 2985.4 7168.

48 .Sujala Pipes Pvt. This inspite of a fall in cash and bank balances and sales of short-term investments. Ltd 2011 – 2012 Interpretation: 1) There has been a rise of 1. 2) The fixed assets if the company compare with the long-term funds of the company. of Management. as judged by constant in Reserver and Surplus. An account of decrease in debtors. might have changed if credits policy. 4) The over all financial position of the company appears to be satisfactory. The long term The company funds being used to fund the current assets of the company 3) The profitability of the company appears to be impressive. Dept.38% in the current assets of the company. SKTRMCE.

Ltd 2011 – 2012 Dept. of Management. 49 .Sujala Pipes Pvt. SKTRMCE.

35 10628.94 11454.42 718.58 1137. of Management.81 3307.66 26.59% 50.36 (251. 50 .08 -261.95 825.26 Change 34.59% 20.17 8147.42 Absolute 3993.13 7070.3 312.54 399.3 3399.91 15.56 718.24) -87.34 -77.68 Dept.81 22. SKTRMCE. Ltd 2011 – 2012 COMPARATIVE INCOME STATEMENT FOR THE YEAR 2007-08 AND 2008-09 Lakhs) (Rupees in Sales Particulars (l) 2007-08 11546.68 2008-09 15540.26 -261.64 979.78 1476.59 1076.66 Less: Cost of Goods Sold (ll) Gross Profit (A) = l-ll Less: Operating Expenses (B) Operating Profit (A-B) = C Add: Non-Operating Income (D) (C+D) = E Less: Operating Expenses PBT Less Tax Net Profit 979.99 688.33% 21.32 496.32% 23.Sujala Pipes Pvt.22 3358.26% 40.29 4085.52 26.98 419.2 -338.

32%. of Management.59% from 2008 to 2009. It points towards increased acceptability of the companies products and customers satisfaction. 2) An increase in expenditure is 50. 3) Net profit after tax is decreased by 26. 51 . Ltd 2011 – 2012 Interpretation: 1) Sales are increased by 34.66% it is bad indicator of over all profitability of the organization. It shows the changes in scale of operations are more and an account efficiency. SKTRMCE. 4) Currently the firm is in improving business the profitability satisfactory.Sujala Pipes Pvt. situation of the organization is of change in degree of managerial Dept.

1 52.7 221.4 7168.7 767.7% 12.5% 1% 1.A Loans & Advances (A): Fixed Asset Gross Block Less: Dep Net block Miscellaneous Expenses Profit & Loss A/C Cap.7 2121.3 4855.7 2.1% 10.4 6.4 7.7 2.3 2688.3 17.7 36.57% 9. SKTRMCE. W. Liabilities Secured Loans Unsecured Loans D Capital & Server & Surplus S.16% 0.4 107 107 79.7% Dept.6 634.8 479.P M& E Transit Investment (B) Liabilities (A+B)TA C.1 1983.Sujala Pipes Pvt.2 755.3 182.3% 1.6 121.3 107 1.4 398.8 64.8% 5.2% 43.5 442.2 850.07% 13.5 1101.51% 28.6 45. Ltd 2011 – 2012 Comparative Balance Sheet for the Year Ended 31-03-08 and 31-03-09 (Rupees in Lakhs) Particulars ASSETS CURRENT ASSSETS Inventory Sundry debtors Cash & Bank balances Other C.8% 1.8 92. of Management.6 3027.6 29.4 12 232.2 4141.4 1165.9 11.7 10.8 2752.1 2127.2 767.12% 242% 23.7% 24.8 240.1 5307.3 547. 52 .2 7168.2 0.Capital Reserver & Surplus (E) Total Liabilities(C+D+E) © Long Term Funds 31-03-08 31-03-09 Change % 1342.1 1020.2 2628.3 1678.3 96 28 6.2 1668.I.9 1648.35.5 1.2 108.64% 16.5% 4.18% 6.9 754.1 7935.4 631 4445 5076.8 2165.5 2205 643 4212.8 0.2 1.8% 7.14% 10.1 1.

Sujala Pipes Pvt. An account of decrease in debtors. SKTRMCE.16% in the Current Assets of the Company. This is inspite of a increase in cash and bank balances and sales of short term investments. 3) The profitability of the company appears to be impressive. 4) The overall financial position of the company appears to be satisfactory. of Management. Ltd 2011 – 2012 Interpretation: 1) There has been a decrease of 13. The long term funds being used to fund the current assets of the company. The company might have changed it credit policy. 53 . 2) The fixed asset of the company compares with the long term funds of the company. Dept. as judged by 2009-nil in Reserves & Surplus.

3 312. 54 .5% 93.98 419.55 1020.3% 49.34 604.42 584. SKTRMCE.09 16.60 246.29 4085.7% 2.05 Absolute 1189.35 10798.8 5931.63% Dept.Tax 11454.75 10628.37 584.54 408.81 Change 57.94 2008-09 16729.9 18. Ltd 2011 – 2012 Comparative Income Statement for the Year 2007-08 and 2008-09 (Rupees in Lakhs) Particulars Sales (l) 2007-08 15540.4% 10.28% 4% Less: Cost of Goods Sold (ll) Gross Profit (A) = l-ll Less: Operating Expenses (B) Operating Profit (A-B) =C Add: Non-Operating Income (D) (C+D) = E Less: Non.58 1137.52 133.8% 5.42 416. of Management.41 825.63% - Net Profit 718.97 117.81 655.5 688.Operating Expenses PBT Less: .52 - 133.96 291.926 18.Sujala Pipes Pvt.65% 16.95 10382.89 436.56 718.

Sujala Pipes Pvt. SKTRMCE. of Management. Ltd 2011 – 2012 Dept. 55 .

It shows the changes in scale of operation are more and an account of change in degree of managerial efficiency. Ltd 2011 – 2012 Interpretation: 1) Sales are increased by 7. bad indicator of over all profitability of It is the organization. 56 . SKTRMCE. 3) Net profit after tax is decreased by 18. 4) Currently the firm is in improving business.Sujala Pipes Pvt.3%. Dept. It points towards increased acceptability of the company’s products and customer satisfaction. the profitability situation also bad.65% from 2008 to 2009. 2) An decrease in expenditure is 2. of Management. So the overall profitability of the organization is not satisfactory.63%.

2% Dept.3 3879.7% 0.37% 7.5 388.13% 8.1 7935.I.5 84.6 634.6 690.P Transit Investment (B) Liabilities C.03% 1.1 282 1190.4 7.8 2 3.Capital Reserver & Surplus (E) Total Liabilities (C+D+E) © Long Term Funds (A+B)Total Ast 31-03-08 31-03-09 Change % 1101.1 45.1 50 54.4 11.1 107 107 8587. of Management.3 651.4 107 107 7935.50% 66.28% 83.33% 46.4% 11.5 651.8 621. SKTRMCE.4 8587.4 5135.52% 13% 8.7 1883.7 33.8% 27.03% 44.6 9.5 0.6 856.8 61.1 549.97% 12.9 4.2% 13.2 82.8 1019.8 2165.8 202.20%% 1.7 668.2 86.8 0.7 2121.2 2628.9 754.1 680.15% 16.1 5135.7 2.4 7.4 631 4445 5076. 57 .Sujala Pipes Pvt.4 28.3 2688. Liabilities Secured Loans Unsecured Loans D Capital & Server & Surplus S.19% 2.4 2425.8 2117. W.6 12.0 153.4% 13.5 442.A Loans & Advances (A): Fixed Asset Gross Block Less: Dep Net block Miscellaneous Expenses Profit & Loss A/C Cap.7 5307.8 2752.52% 15.2 2723.2 1728.8 92.4 0. Ltd 2011 – 2012 Comparative Balance Sheet for the Year Ended 31-03-08 and 31-03-09 (Rupees in Lakhs) Particulars ASSETS CURRENT ASSSETS Inventory Sundry debtors Cash & Bank balances Other C.1 6163.3 1648.

of Management. The company might have changed its credit policy. 58 . 2) Fixed asset of the company compare with the long term funds of the company. The rise in mainly an account of decrease in debtors. Dept.Sujala Pipes Pvt. SKTRMCE. This is inspite of an increase in cash and balances and scales of shortterm investments. 3) The overall financial position of the company appears to be satisfactory.7% in the current assets of the company. The long term funds being used to fund the current assets of the company. Ltd 2011 – 2012 Interpretation: - 1) There has been a decrease of 7.

83% 21.09 1570.49 Dept.43% 14.09 9234.99 -410.89 436. Ltd 2011 – 2012 COMPARATIVE INCOME STATEMENT FOR THE YEAR 2008-09 AND 2009-10 (Rupees in Lakhs) Particulars Sales (l) Less: Cost of Goods Sold (ll) Gross Profit (A) = l – ll Less: Operating Expenses (B) Operating Profit (A – B) = C Add: NonOperating Income (D) (C+D) = E Less: Operating Expenses PBT Less: Tax Net Profit 2008-09 16729.14 9228.33 701.22 236.55 2576.67 31.55 2009-10 Absolute Change 17735. 59 .43 6% 8505.04% 43.8 5931.37 458.90% 45.85 458.01 97 16.75 10382.Sujala Pipes Pvt.42 -6.37 584.49% 21.41 416.87% 1020.67 125.05% 98.67 200 125.23 1005.54% 11. of Management.52 695.05 10798.85 325.34 604.66 1147.52 584. SKTRMCE.

2) An increase in expenditure is 11. 60 . 3) A net profit after tax is decreased by 21. 4) Currently the firm is in improving business. Dept.05% it shows the changes in scale of operation are more and an account of change in degree of managerial efficiency.49.Sujala Pipes Pvt. the profitability situation also good. of Management. Ltd 2011 – 2012 Interpretation: 1) Sales are increased by 6% from 2009 to 2010. So the overall profitability of the organization is satisfactory. SKTRMCE. It points towards increased acceptability of the company’s products and customer satisfaction. It is bad indicator of overall profitability of the organization.

1 549.P M&E Transit Investment (B) ) Liabilities (A+B) C.6 444.2 629.5% 13.69% © Long Term Funds 621.59% 19.47% 1.5 5966.5 0.9 1759.63% 8.A Loans & Advances (A): Fixed Asset Gross Block Less: Dep Net block Miscellaneous Expenses Profit & Loss A/C Cap.2 28.4 59.3 1. Ltd 2011 – 2012 Comparative Balance Sheet for the year Ended 31-03-09 to 31-03-10 Particulars ASSETS CURRENT ASSSETS Inventory Sundry debtors Cash & Bank balances Other C.3 4222 0.69% 27.9 1758.9% 6.9 830.5% 2.75% 16.7 668.0 153.9% 31-03-09 31-03-10 (Rupees in Lakhs) Change % (A+B)=Total Assets Dept.11% 4% 1.8 2086.82% 75% 10.2 0. SKTRMCE.5 0.6 8646.2 1728.2 760.4 1962.4 11.7% 48.4% 5.7 1883.5 388.5 105 100 31 31.8 125 342.9 24.5 4.2 107 107 8646.Capital Reserver & Surplus (E) Total Liabilities (C+D+E) 107 107 8587. W.2 157.7 12.18% 14.2 2723.4 5135.4 2425.4 0. Liabilities Secured Loans Unsecured Loans D Capital & Server & Surplus S.1 6163.8 995.6 74.4 2325.1 5756.1 6320.8 2117.7 33.9 820 1.8 326. of Management.4 228.24% 1019.6 0.4 8587.9 2.I.3 3879.11 61.55% 0.5 10.5 38.0 6576.Sujala Pipes Pvt.2 59. 61 .799% 15.1 610.

2) The fixed assets of the company compare with the long term funds of the company. Ltd 2011 – 2012 Interpretation: 1) There has been a fall of 4% in the current Assets of the company. mainly on account of decrease in debtors. of Management. 3) The overall financial position of the company appears to be satisfactory. The long term funds being used to fund. SKTRMCE.Sujala Pipes Pvt. Dept. 62 . company might have changed its credit policy. This is in spite of in cash and bank The rise in The balances and short-term investments. The current assets of the company.

Sources: Fixed assets: 2007-525. 2009-4445m. of Management. 2011-5966m.Sujala Pipes Pvt. So the firm is maintaining good business policy.6m.1m.1m. In the year 2004 to 2008 the firm fixed assets decreased from525. 610.1m. 2010-388.5m. Secured loans: 2007-649m. 2009442.9million. The firm long-term source of funds also increased in the same level of fixed assets. Unsecured loans: 2007-2595. 2008-479. 2010-5135. 2011-326. 20112009-631m. Dept.4m. 2010-621. the increased fixed assets will give good future production possibilities.9m. SKTRMCE. Ltd 2011 – 2012 FINDINGS: Fixed assets are decreased drastically in the last five year.3m.7m. For long term run of the business the firm should maintain this policy effectively. Long-Term funds: 2008-643m. 2008-4212. The long-term financial position of the organization is depends on the firm fixed assets capacity. 63 .1million to 326.1m.

2011-629. Liquid assets are maintained considerably. 64 . of Management. 2008-64.2m. 2009-754.2m. SKTRMCE.2m. 2008-850. 2011-228.1m. 2010-668m. 2009-92.8m. Reserves & surplus: 2007-1. There is a constant in reserves &surplus of the organization its shows the firm profitability position is good. 2008-1.2m. Cash & bank balance: 2007-78. The firm has to think about expenditure. The income from operation are decreased every year the expenditure are also decreased same proportion. 2010-153.4m. The firm working capital is decreased in 2007 and 2008 comparatively the previous year 2007 and 2008 the working capital is decreased.1m. Dept. Ltd 2011 – 2012 The firm current financial position or short term financial position is depends on the working capital of the organization. Sundry debtors:- 2007-905.Sujala Pipes Pvt. Its shows firm is having considerable capital funds. The firm should think about the effective working capital policy.4m.8m.7m. The excess current liabilities over current assets will give figures of the working capital.

584. 458. The firm should try to improve operational effectives and should reduce the unnecessary expenditure so that the firm future proceeding is in good position.e.Sujala Pipes Pvt. of Management. 718.the firm has to think about profitability.42m in 2009.46m in 2007.52m in 2010. SKTRMCE. 979.68m in 2008.85m in 2011. Dept. 65 . (profit after tax) 1124. Ltd 2011 – 2012 The net profit of the organization are also constantly fluctuating i.

this will enhance the efficiency of the organization. SKTRMCE. • There should be well-organized manpower planning. • To reduce the cash crunch it is necessary for HMT • There centers. to revamp be the existing credit and budgeting policies. 66 . of Management. involved directly or indirectly to work according. should proper communication between various department and responsibility Dept. purchase. marketing etc. Ltd 2011 – 2012 RECOMMENDATIONS: • There should be effective coordination between the different department like production.. for the growth of the company.Sujala Pipes Pvt. sales. • Education about the importance of budgeting should be communicated to all concerned authorities. especially with regard to production. finance. • There should be a proper budgeting control system.

1 9.55) 16091.2 9.2 701.949.35 8050.80 5659.15 436. of Management. 67 . 2011 (Rupees in Lakhs) Schedule Year Ended 2011 Year Ended 2010 EARNINGS: - Sales 8.3 22.80 5074.32) 15875.80 Transfer to Plant Miscellaneous income 604.1 17.48 Dept. SKTRMCE.616. Ltd 2011 – 2012 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH.OUT GOING Material Personnel Depreciation Other Expenses Int.58 4471.26 2332.20 6056.10 236.83 Profit/(Loss) before tax 3615.23 - 16.55 (2345.23 8.3 6159.55 W.80 3615. on loan 9.Sujala Pipes Pvt.48 Provision for Income tax Profit/(Loss) after tax 5074.I.37 20.03 Less: .729.59 6986.P 8.32 3178.735.3 (1459.

56 19. 2010 (Rupees in Lakhs) Schedule 2009 EARNINGS: Sales Transfer to Plant Miscellaneous income W.28 3991.1 8.58 (1265.949.2 8.15 7325.32) 15875.35 8050.00 3.48 - Profit/(Loss) before tax Provision for Income tax Profit/(Loss) after tax 3615.83 3615.P Less: .41 Dept. of Management.80 5659.55 (1459.Sujala Pipes Pvt.I.OUT GOING Material Personnel Depreciation Other Expenses Int. 68 .29 312.95 419.48 3991.03 15.3 16.844.2 9.1 9.32) 15852. Ltd 2011 – 2012 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH.37 20. SKTRMCE. on loan Year Ended2010 Year Ended 8.540.62 5975.303.26 2332.41 - 9.729.87 2820.15 436.80 604.3 4471.

32) 15852.41 Profit/(Loss) before tax Provision for Income tax Profit/(Loss) after tax Dept.92 4320.58 (1265.78 (925.29 312.87 11.540.1 8.2 9.62 5975. Ltd 2011 – 2012 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH. 69 .15 7325.Sujala Pipes Pvt.3 15.OUT GOING Material Personnel Depreciation Other Expenses Int. on loan 8.08 2474.56 19.1 9.2 8.303.3 2820.546.844.3 399.92 9.75 5864.05 1206. of Management.15) 11946.00 3.64 16.02 6225.95 419.54 496.28 3991.267 4320.P Less: .41 3991.I. 2009 (Rupees in Lakhs) Schedule Ended Year Ended 2009 Year 2008 EARNINGS: Sales Transfer to Plant Miscellaneous income W. SKTRMCE.

1 8.38 3747.1 9.53 Less: .64 16. 2008 (Rupees in Lakhs) Schedule Ended Year Ended 2008 Year 2007 EARNINGS: Sales Transfer to Plant Miscellaneous income W.396.78 (925.66 (745. Ltd 2011 – 2012 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH.3 2474.38 Dept.54 496.2 9.43 4320. on loan 14.92 4320.P 10649.10 6350.87 414.2 8.267 2321.88 527. of Management.234.75 5864.OUT GOING Material Personnel Depreciation Other Expenses Int.25 1338.540.05 1206. 70 .08 10.Sujala Pipes Pvt.15) 11946.91 Profit/(Loss) before tax Provision for Income tax Profit/(Loss) after tax 8.25 3859.29 399.I. SKTRMCE.02 6225.92 3747.24) 9.3 11.

5 5863.4 2423.3 5.58 6.1 549.Sujala Pipes Pvt.2 28. of Management.7 33.7 668 153.1 5. 71 .8 1019.5 6683.9 0.2 1728.2 629.3 7. Ltd 2011 – 2012 BALANCE SHEET AS AT 31ST MARCH.1 2117.4 228.6 444.2 2723.4 5135.6 0.5 5966 6576.9 1758.7 0.1 5756.2 1759.9 -362.5 995.5 2086.5 Dept.6 326.4 11.7 12.5 3879.4 5.3 4222 6683.8 299 1883.1 1962.5 388.1 7. SKTRMCE.1 5.4 0.4 2325.5 621.5 5863. LOANS AND ADVANCES Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Net Current Assets MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) PROFIT & LOSS A/C As at Year 2011 As at Year 2010 107 107 610. 2011 (Rupees in Million) Schedule SOURCES OF FUNDS SHAREHOLDER'S FUNDS Capital Reserves & Surplus LOAN FUNDS Secured Loans Unsecured Loans APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Net Block Capital Work-in-Progress Machinery & Equipment in transit & under inspection/erection INVESTMENT CURRENT ASSETS.2 5.

3 2121.5 5863.8 299 7.9 754.9 4445.8 92. Ltd 2011 – 2012 BALANCE SHEET AS AT 31ST MARCH.3 5.4 Dept. LOANS AND ADVANCES Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Net Current Assets MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) PROFIT & LOSS A/C As at Year 2010 As at Year 2009 1.Sujala Pipes Pvt.6 45.8 442.4 7.7 6.4 5076.8 0.2 3 2117. of Management.5 5863.2 2628.1 1. 72 .4 5.1 10.7 668 153. 2010 (Rupees in Million) Schedule SOURCES OF FUNDS SHAREHOLDER'S FUNDS Capital Reserves & Surplus LOAN FUNDS Secured Loans Unsecured Loans APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Net Block Capital Work-in-Progress Machinery & Equipment in transit & under inspection/erection INVESTMENT CURRENT ASSETS.1 5.1 107 5756.5 388.58 1101.1 1883.5 2688.5 1019. SKTRMCE.7 5183.1 2.6 634.3 1678.2 5.7 33.2 3879.4 11.4 -123 2165.2 0.1 2723.3 2752.2 1728.8 0.7 2.3 7.1 549.4 11.5 630.3 5183.4 5135.4 2423.2 2.1 5.5 621.

4 1668.1 6. 2009 (Rupees in Million) Schedule SOURCES OF FUNDS SHAREHOLDER'S FUNDS Capital Reserves & Surplus LOAN FUNDS Secured Loans Unsecured Loans APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Net Block Capital Work-in-Progress Machinery & Equipment in transit & Under inspection/erection INVESTMENT CURRENT ASSETS.5 630.1 5.6 634.8 64.2 2688.2 2628. of Management. 73 .1 5.2 850.2 2.1 2.2 7.2 643 4212.4 7.Sujala Pipes Pvt.1 0.2 755.9 4445.3 1678.9 1048.4 5.7 10.2 4963.7 479.1 1983. SKTRMCE. Ltd 2011 – 2012 BALANCE SHEET AS AT 31ST MARCH.4 107 107 1.4 -123 7.1 52.3 4855.5 1101.3 5183.9 754.1 2752.1 1.2 0.3 2205 -822.3 4963.2 3 2121.5 2127.2 5.3 5076.2 2.6 45.1 2165.7 1342.8 388.5 Dept.8 92. LOANS AND ADVANCES Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Provisions Net Current Assets MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) PROFIT & LOSS A/C As at Year 2009 As at Year 2008 1.6 3027.8 10.7 5183.3 5.

4 10.2 46.2 3 2127.2 4855.3 5.4 5.8 Dept.2 1983.6 107 1.7 10.3 4963.1 1.1 2985.2 2.7 6.2 755.6 640.1 0.9 961.1 5.1 52.8 64.8 2133. 2008 (Rupees in Million) Schedule SOURCES OF FUNDS SHAREHOLDER'S FUNDS Capital Reserves & Surplus LOAN FUNDS Secured Loans Unsecured Loans APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Net Block Capital Work-in-Progress Machinery & Equipment in transit & under inspection/erection INVESTMENT CURRENT ASSETS.1 1608 479.6 3027.2 5.5 2345.6 5. of Management.1 1214.5 3244.2 905.9 1048.5 1342.4 78.1 2205 -822.1 7. SKTRMCE.8 643 4212.2 649 2595.2 525.7 3352. 74 .Sujala Pipes Pvt.1 2.1 0.2 4963. LOANS AND ADVANCES Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Provisions Net Current Assets MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) PROFIT & LOSS A/C As at Year 2008 As at Year 2007 1.2 1668.6 3352.1 1368.8 587. Ltd 2011 – 2012 BALANCE SHEET AS AT 31ST MARCH.2 850.1 7.3 107 1.

Jain: Financial Management Prasanna Chandra Management : Fundamentals of Financial WEBSITES www.K. 75 .sujalapipes. of Management.com: sujala pipes/financial statements www. Khan & P. SKTRMCE.Google. Ltd 2011 – 2012 BIBLIOGRAPHY IM Panday: Financial Management: eighth edition: Financial and Profit analysis: page no 25 to 59: published by Vikas publishers M.com: Dept.Y.Sujala Pipes Pvt.