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“Financial Statement Analysis of IDBI Federal Life
Insurance Co Ltd.”



Prof./Ms. Deepika Varshney




ROLL NO.06880303913 BATCH NO. 2013-15


Delhi 2A & 2B. Delhi-110085 i . of India) Affiliated to Guru Gobind Singh Indraprastha University. Outer Ring Road. HRD Ministry. Phase -1.RUKMINI DEVI INSTITUTE OF ADVANCED STUDIES An ISO 9001:2008 Certified Institute NAAC Accredited Grade A (Approved by AICTE. Madhuban Chowk. Govt.

2 About Organization/ Company Profile 3-5 CHAPTER – 2 LITERATURE REVIEW 2.2 Introduction to the Financial Statement 8-9 .1 About insurance 7-8 2.1 About the Industry 2-3 1.TABLE OF CONTENTS Student Declaration iv Certificate from Company v Certificate from Guide vi Acknowledgement vii Executive Summary vii List of Table ix List of Graph x CHAPTER.1 INTRODUCTION 1.

3 Meaning and concept of Financial Analysis 9-10 2.4 Objectives and Importance of Financial Statement Analysis 10 2.2.5 Details of the Ratio and Calculation Methods 10-17 ii .

5 Limitations 21 CHAPTER – 4 ANALYSIS & INTERPATATION Sample Size 20 3.4 Methods of data collection 21 3.3 Sample Design 20 3.3.1 Research Design 20 3.1 Instruments for data collection 21 3.1 Introduction to Financial Statement Analysis 23 Sampling Method 20 Population 20 Drafting of Questionnaire 21 3.CHAPTER – 3 RESEARCH METHODOLOGY 3.2 Data Collection Technique 20 3.2 .3.2 Research objective of the study 19 3.3 Research Methodology 20 3.3.1 Purpose of the study 19 3.3.

3.1 Uses & Significance of Ratio Analysis 39-41 iii 4.2 Leverage Ratio 48-50 4.5.4 Trend Analysis 36-39 Limitation of Ratio Analysis 41-43 Statement 23 4.1 Comparative Balance Sheet 23-27 4.3 Classification of Ratios 43 4.2 Common Size Income Statement 34-36 Liquidity Ratio 43-48 Ratio Analysis 39 4.2 Comparative Income Statement 27-31 4.1 Common Size Balance Sheet 31-34 4.3 Common Size Statement 31 4.6 Insurance Industry related Ratios 55-57 .2.3 Profitability Ratio 50-55 4.5.

2013 68 Annexure No 3 .Balance Sheet as on 31st March. 2014 69 Annexure No 4 .1 Over all findings 59-60 5.1 Conclusion 63 BIBLIOGRAPHY 65 ANNEXURES Annexure No 1 .Profit And Loss for Year ending 31st March. 2014 67 Annexure No 2 .CHAPTER – 5 FINDINGS AND SUGGESTIONS 5.Profit And Loss for Year ending 31st March.6 CONCLUSION 6.2 Suggestions 60-61 CHAPTER.

.Balance Sheet as on 31st March 2013 70 iv .

” This is an original work and I have not submitted it earlier elsewhere. Name: Rahul Pal Enrollment No: 06880303913 .STUDENT DECLARATION This to certify that I have completed the project titled “FINANCIAL STATEMENT ANALYSIS OF IDBI Federal Life Insurance Co. New Delhi. Ltd.” under the guidance of “DEEPIKA VARSHNEY” in the partial fulfillment of the requirement for the award of the degree of “Master in Business Administration” from “Rukmini Devi Institute of Advanced Studies.

v .

Certificate from Company .


Deepika Varshney (Project Guide) RDIAS .” under my guidance and direction.” is an academic work done by “RAHUL PAL” submitted in the partial fulfillment of the requirement for the award of the degree of “Masters in Business Administration” from “Rukmini Devi Institute of Advanced Studies. To the best of my knowledge and belief the data and information presented by him in the project has not been submitted earlier elsewhere. New Delhi. LTD.CERTIFICATE (From Project Guide) This is to certify that the project titled “FINANCIAL STATEMENT ANALYSIS OF IDBI FEDERAL LIFE INSURANCE CO.


Any work of this magnitude requires the inputs, efforts and encouragement of
people from all sides. In this project report I have been fortunate in having got
the active co-operation of many people, whom I would like to thank. I am
deeply indebted to all people who have guided, inspired and helped me in the
successful completion of this project. I owe a debt of gratitude to all of them,
who were so generous with their time and expertise.

I offer my sincere thanks and humble regards to Rukmini Devi Institute of
Advanced Studies, GGSIP University, New Delhi for imparting us very
valuable professional training in MBA.

It gives me great pleasure to express my heartfelt gratitude to DEEPIKA
VARSHNEY, my project Guide for giving me the cream of his knowledge. I
am thankful to her as she has been a constant source of advice, motivation and
inspiration. I humbly submit that without her efforts this project would have
not been conceptualized nor materialized.

I would like to thank Mr. Ezad Ahmed (Manager) at IDBI Federal Life
Insurance Co. Ltd, for giving me an opportunity to work and enlightening my
ways whenever I need in completion of this project. The strong interest
evinced by them has helped me with dealing with the problem, I faced during
my course of project work.

I am also thankful to my family and friends for constantly motivating me to
complete the project and providing me an environment which enhanced my


This financial analysis report examines the financial strength of IDBI Federal
Life Insurance Co. Ltd. Company is in insurance industry. It is to check the
performance and financial health of the Company. Overall company strategies
were reviewed and considered along with the financial analysis to come to a
conclusion for recommendation.

The reports introduction gives an overview to the insurance industry and
expands on the Strategies executed by IDBI Federal Life Insurance co. Ltd.
The financial analysis covers both Balance Sheet and Income Statement of the

It includes income statements and balance sheets, comparative income
statements, Comparative Balance Sheet and Common Size Income Statement
and Common Size Balance Sheet, and various financial statement ratios such
as liquidity, capital structure and solvency, return on investment, operating
performance, asset utilization etc.

Some Industry related ratios are also calculated like persistency ratio, Growth
rate of shareholders’ funds and these ratios shows the strangeness of the
business of the company.




Comparative Balance Sheet of IDBI Federal

insurance Co. Ltd.

Comparative Profit and Loss of IDBI Federal

insurance Co. Ltd.

Premium received by the Company

7 Current Ratio 44 8 4.5 Common Size Income Statement of IDBI 36 Federal insurance 6 4.6 Trend Ratios 36 7 4.8 Cash Ratio during Year 2010 – 2014 46 .4 4. Ltd 5 4.4 Common Size Balance Sheet of IDBI Federal 33 insurance Co.

13 Net profit Margins 54 14 4.9 Net Working Ratio from year 2010-14 47 10 4.11 Return on Equity 52 12 4.12 Earnings per Share 53 13 4.10 Proprietary Ratio 49 11 4.14 Growth rate of Shareholders fund .9 4.

56 .

No. No.1 Net Asset of IDBI Federal Life Insurance Co.4 Asset under Management of Company 37 . Ltd. 1 4.2 Premium received by the Company 30 3 4.3 Profit/Loss of Company 30 4 4. 26 2 4.LIST OF GRAPHS Serial Graph Particulars Page No.

6 Operating Expense Ratio 38 7 4.7 Net Profit of the IDBI Federal Life Insurance Co 38 ltd.8 Current Ratio 44 9 4.5 4. 8 4.5 Premium Received 37 6 4.9 Cash Ratio 46 10 .

15 Persistency Ratio 56 .14 Net profit Margins 55 15 4.12 Return on Equity 52 13 4.11 Proprietary Ratio 50 12 4.10 Net Working Ratio 48 11 4.13 Earning per Share 53 14 4.4.

16 4.16 Growth rate of Shareholders fund 57 .


1 About Insurance Industry in India With 36 crore policies. A committee established by the . Information technology (IT) services. is expected to continue enjoying strong growth at 16 per cent. The cap on foreign direct investment (FDI) also looks likely to be increased from 26 per cent to 49 per cent.000 crore (US$ 666.3 billion during FY 03–FY 13. and has the potential to touch US$ 1 trillion over the next seven years.78 million) in 2014. The Insurance Bill which has been approved by the Government of India and will in all possibility be cleared by the Parliament is expected to increase FDI inflows to US$ 10 million in the short term The total market size of the insurance sector in India was US$ 66.4 per cent. from US$ 3.4 billion in FY 13. In a bid to facilitate banks to provide greater choice in insurance products through their branches. Category leaders are business process outsourcing (BPO) at 25 per cent and consulting at 21 per cent. a proposal will likely be made which will allow banks to act as corporate agents and tie up with multiple insurers. The non-life insurance premium market also grew at a CAGR of 15. The industry aims to hike penetration levels to five per cent by 2020. India ranked 10th among 147 countries in the life insurance business in FY 13. with a share of 2. The life insurance premium market expanded at a CAGR of 16.1 billion in FY 13.5 billion to US$ 53. India's life insurance sector is the world’s largest. It is projected to touch US$ 350–400 billion by 2020.1.1 billion in FY 03 to US$ 13.03%.6 per cent from US$ 11. The life insurance industry in the country is forecasted to increase at a compound annual growth rate (CAGR) of 12–15 per cent in the next five years. the biggest spending segment of India’s insurance industry at Rs 4.

Finance Ministry of India is likely to suggest this model as an alternative to the

broking model.

Public sector banks will soon be offering their customers a choice of insurance
products from different companies as against products from a single company. The
Finance Ministry of India has written to public sector banks, asking them to turn into
insurance brokers instead of corporate agents. "By becoming brokers, banks would
now be directly responsible for mis-selling as against earlier when they were seen to
be acting as agents of insurance companies," said Mr Sam Ghosh, CEO, Reliance

IRDA body Insurance Information Bureau (IIB) has created a registry of healthcare
providers and allocated them unique IDs. By creating this database, the

regulator plans to build an analytics capability for spotting endemics, evaluating

medical cost inflation, and detecting fraud.

The insurance sector’s future looks bright, on the back of India’s favourable
demographic, greater awareness, supportive regulatory environment, policies that

improve customer-centric products, and practices that help businesses grow. India's
insurable population is projected to touch 75 crore in 2020, with life expectancy

reaching 74 years. Life insurance will continue to supplement household financial

savings, and is projected to be 35 per cent of total savings by the end of this decade,
as against 26 per cent in 2009–10.

1.2 About IDBI Federal Life Insurance

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s
premier development and commercial bank, Federal Bank, one of India’s leading
private sector banks and Ageas, a multinational insurance giant based out of Europe.
In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26%

equity each. . Having started in March 2008, in just five months of inception, IDBI
Federal became one of the fastest growing new insurance companies to garner Rs 100
Cr in premiums. Through a continuous process of innovation in product and service
delivery IDBI Federal aims to deliver world-class wealth management, protection and
retirement solutions that provide value and convenience to the Indian customer. The
company offers its services through a vast nationwide network of 2137 partner bank
branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors
and partners. As on 28th February 2013, the company has issued over 8.65 lakh
policies with a sum assured of over Rs. 26,591 Cr.

IDBI Federal today is recognized as a customer-centric brand, with an array of awards
to their credit. They have been awarded the PMAA Awards (2009) for best
Dealer/Sales force Activity, EFFIE Award (2011) for effective advertising, and
conferred with the status of ‘Master Brand 2013.”

About the sponsors of IDBI Federal Life Insurance Co. Ltd
IDBI Bank Ltd. continues to be, since its inception, India’s premier industrial
development bank. It came into being as on July 01, 1964 (under the Companies Act,

1956) to support India’s industrial backbone. Today, it is amongst India’s foremost

commercial banks, with a wide range of innovative products and services, serving
retail and corporate customers in all corners of the country from 1077 branches and
1702 ATMs. The Bank offers its customers an extensive range of diversified services
including project financing, term lending, working capital facilities, lease finance,

venture capital, loan syndication, corporate advisory services and legal and technical
advisory services to its corporate clients as well as mortgages and personal loans to its

retail clients. As part of its development activities,
IDBI Bank has been instrumental
in spo-nsoring the development of key institutions
involved in India’s financial sector
–National Stock Exchange of India Limited (NSE) and National Securities Depository
Ltd, SHCIL (Stock Holding Corporation of India
Ltd), CARE (Credit Analysis and

Research Ltd).

Federal Bank is one of India’s leading private sector banks, with a dominant presence
in the state of Kerala. It has a strong network of over 1060 branches and 1158 ATMs
spread across India. The bank provides over four million retail customers with a wide
variety of financial products. Federal Bank is one of the first large Indian banks to
have an entirely automated and interconnected branch network. In addition to
interconnected branches and ATMs, the Bank has a wide range of services like
Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards,
online bill payment and call centre facilities to offer round the clock banking
convenience to its customers. The Bank has been a pioneer in providing innovative
technological solutions to its customers and the Bank has won several awards and

Ageas is an international insurance group with a heritage spanning more than 180
years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to
concentrate its business activities in Europe and Asia, which together make up the
largest share of the global insurance market. These are grouped around four segments:
Belgium, United Kingdom, Continental Europe and Asia and served through a
combination of wholly owned subsidiaries and partnerships with strong financial
institutions and key distributors around the world. Ageas operates successful
partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia,
India and Thailand and has subsidiaries in France, Hong Kong and UK. Ageas is the
market leader in Belgium for individual life and employee benefits, as well as a
leading non-life player through AG Insurance. In the UK, Ageas has a strong presence
as the fourth largest player in private car insurance and the over 50’s market.

Ageas employs more than 13,000 people and has annual inflows of more than EUR 21

Competitors of IDBI Federal Life Insurance co. Ltd.

Life Insurance Corporation of India

HDFC Standard Life Insurance Co. Ltd

Bajaj Allianz Life Insurance Company Limited

AEGON Religare Life Insurance Company Limited

Birla Sun Life
Insurance Co. Ltd

DLF Pramerica
Life Insurance Co. Ltd.

Star Union Dai-ichi Life Insurance Comp. Ltd.

ICICI Prudential Life Insurance Co. Ltd.

ING Vysya Life Insurance Company Ltd.

Max New York Life Insurance Co. Ltd

Met Life India Insurance Company Ltd.

Kotak Mahindra Old Mutual Life Insurance Limited

SBI Life Insurance Co. Ltd
Tata AIG Life Insurance Company Limited

 Reliance Life Insurance Company Limited.
 Aviva Life Insurance Co. India Pvt. Ltd.
 Sahara India Life Insurance Co, Ltd.

 Shriram Life Insurance Co, Ltd.1
Bharti AXA Life Insurance Company Ltd.

 Future General Life Insurance Company Ltd.

 Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.


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Other examples of assets covered by . Objectives of Insurance Every day we face uncertainty and risk. Mainly insurance is used as an effective tool of risk management as quantified risks of different volumes can be insured. insurance companies offer a variety of insurance products in areas such as property. For example. Several insurances provide comprehensive coverage with affordable premiums. The periodical insurance premiums are calculated according to the total insurance amount.1 About Insurance What is Insurance? Insurance means a promise of compensation for any potential future losses. insurers can pay out relatively few claims each year while collecting premiums from the majority of policyholders who don't file claims over that same period. paying out claims. casualty and life insurance.2. Today. There are different insurance companies that offer wide range of insurance options and an insurance purchaser can select as per own convenience and preference. (Reference 1: page titled "Insurance Helps People Manage Risks") Loss Recovery A second key objective of insurance is to compensate policyholders following predetermined catastrophic events. auto insurance policyholders are reimbursed for part or all of the damages sustained by their vehicle in a collision. Premiums are periodical payment and different insurers offer diverse premium options. It facilitates financial protection against by reimbursing losses during crisis. This conclusion follows the Law of Large Numbers. insurance must satisfy a number of objectives including pooling risk. To function effectively. By collecting premiums from many individuals or organizations. Insurance offers individuals and organizations protection from potential losses as well as peace of mind in exchange for periodic payments known as premiums. ensuring the solvency of insurers and incentivizing safe behavior Pooling Risk One of the objectives of insurance is to pool the risk of a sufficiently large number of policyholders.

inventory and personal insurance include houses. Behavioral Influence 7 .

This is important because if any policyholders weren't compensated for eligible losses it would undermine society's confidence in the system. the United States government closely regulates and monitors the industry. thereby making society safer for everyone Insurer Solvency A third objective of insurance is to satisfy policyholders that insurers are financially stable and solvent. Such discriminatory pricing may cause some individuals and organizations to behave with greater caution. To ensure that insurers remain solvent at all times.Yet another aim of insurance is to promote and reward responsible behavior. Julie (2009) wrote in a publication about Financial Statement Analysis which include a review of the following: Introduction to the Financial Statement Meaning and concept of Financial Analysis . individuals with safe driving records are more likely to be quoted lower auto insurance premiums than those with unsafe driving records. Pratten. For example.

Types of Financial Analysis DeMarco. Every enterprise needs to start and carry out its operation.2 Introduction to Financial Statement Finance is defined as the provision of money when it is required. MJ (2011) explained briefly through his publication about some important factors of financial analysis. cost volume profit analysis and ratio 8 . should be managed effectively. common size statement schedule of changes in working capital. There are various methods and techniques used in analysing financial statements such as comparative statements. Therefore. Financial statement Analysis refers to the process of determining strength and weakness of the firm by properly establishing strategic relationship between the items of the balance sheet and profit and loss account. 2. trend analysis. Financial Statements are prepared primarily for decision making. Finance is the lifeblood of an organization. funds flow and cash flow analysis.

A performance financial statement is prepared for a future period. These changes have profoundly affected all our lives and it is important for corporate managers. they are used to present a historical recover of the firm’s financial development. or a job must be med about their company’s ability to meet their demands time and in this changing world. customers and suppliers to investment and the performance of the corporations on which then relay. The combine of effect of all decisions can be observed periodically when the performance of the business is judged through various financial statements and special analysis. the process of managing involves a series of economic choices that activates moments of financial resources connected with the business. tenders. Second. The operation and performance of a business depends on many individuals are collective decisions that are continually made by its management team. The Analysis of Financial Statement is . such as investment in a new facility. Every one of these decisions ultimately causes a financial impact. shareholders. First. they are used for a course of action for the firm. Some of the decisions made by management one will be the major. Financial statements have two major uses in financial analysis. raising large amounts of debts or adding a new line of products or services. In essence. It is the financial manager’s estimate of the firm’s future performance. Most other decisions are part of the day to day process in which every functional area of the business is managed.analysis and other operative data. for better or works on the condition and the periodic results of the business.3 Meaning and Concept of Financial Analysis The term ‘Financial Analysis’ (also known as analysis and interpretation of financial . services. All who depend on a corporation for products.used for decision making for various parties. The growth and development of the corporate enterprises is reflected in their financial statement. 2.

statements) refers to the process of determining financial strengths and weakness of the firm by establishing strategic relationship between the items of the balance sheet and profit and loss account and operative data. 9 . “Analysing Financial Statement is a process of evaluating the relationship between component part of a financial statement to obtain a better understanding of a firm’s position and performance”. According to Metcalf and Titard.

abilities to pay interest and debt maturities (both current and long term) and profitability of a sound dividend policy.In the words of Myers. Just like a doctor examines his patient by recording his body temperature. Interpretation means explaining the meaning and significance of the data so simplified however. A distinction should therefore be made between the two terms. While the term Analysis is used to mean the simplification of financial data by methodical classification of the data given in the financial statements. a financial analyst analysis the financial statements with various tools of analysis before commenting upon the financial health or weakness of an enterprise. Financial Statement Analysis is an attempt to determine the significance and meaning of the financial statement dates that forecast may be made of the future earnings. blood pressure etc. The term ‘Financial Statement analysis’ includes both analysis and interpretation. The purpose of financial Statement Analysis is to diagnose the information contained in financial statement so as to judge the profitability and financial soundness of the firm. before making his conclusion regarding the illness and before giving his treatment. The analysis and interpretation of financial statement is essential to bring out the mystery behind the figures in financial statements. “Financial Statement Analysis is largely a study of relationship among the various financial factors in a businesses disclosed by single set of statement and a study of the trend of these factors as shown in a series of statement”. both analysis and interpretation are interlinked and complimentary to each other Analysis is useless without interpretation and interpretation .

2.without is impossible most of the authors have used the term analysis only to cover the meaning both analysis and interpretation as the objective of analysis is to study the relation between various items of financial statement by interpretation.4 Objectives and Importance of Financial Statement Analysis The primary objective of Financial Statement Analysis is to understand and diagnose the information contained in the financial statement with the view to judge the profitability financial soundness of the firm and to make forecast about future prospects of the firm. The purpose of analysis depends upon the person interested in such analysis and his 10 . We have also used the term Financial Statement Analysis or simply Financial Analysis to cover the meaning of both analysis is and interpretation.

To access the earning capacity or profitability of the firm. It helps . To access the operational efficiency and managerial effectiveness. However. To identify the reasons for change in profitability and financial position of the firm.objective." Advantages and Uses of Ratio Analysis .5 Details of Ratio and Calculation Methods Analysis of the data on Ratio . To make forecast about future prospects of a firm. Simply. 4. 2. the following purpose or objective of the financial statement may be stated to bring out significance of such analysis: 1. To help in decision making and control. Ratio analysis helps the various groups in the following manner: To work out the profitability: Accounting ratio help to measure the profitability of the business by calculating the various profitability ratios. They use the ratio analysis to work out a particular financial characteristic of the company in which they are interested. To assess the progress of a firm over a period of time. According to Myers “Ratio analysis of financial statements is a study of relationship among various financial factors in a business as disclosed by a single set of statements and a study of trend of these factors as shown in a series of statements. 2.Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and performance of a business concern. 3. To make inter firm comparison.There are various groups of people who are interested in analysis of financial position of a company. To access the short term as well as long term solvency of the firm. ratio means the comparison of one figure to other relevant figure or figures.

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in essence. These ratios show the relationship between the liabilities and assets. Once you get the loan. is what they measure. Often liquidity ratios are commonly examined by banks when they are evaluating a loan application.With the help of solvency ratios. In this case the business has to make it possible to repay its loans. the better the position of the company.In this way profitability ratios show the actual performance of the business. This information should also be highly interesting since the inability to meet short-term debts would be a problem that deserves your immediate attention. it shows the unsound position of the business.The management to know about the earning capacity of the business concern . The Importance of Liquidity Ratios Liquidity ratios are probably the most commonly used of all the business ratios. To work out the solvency . An indicator of a company’s short-term liquidity position. In case external liabilities are more than that of the assets of the company. as part of the loan agreement. Creditors may often be particularly interested in these because they show the ability of a business to quickly generate the cash needed to pay outstanding debt. The higher the quick ratio. your lender may also require that you continue to maintain a certain minimum ratio. The liquidity ratios are: the current ratio and the quick ratio. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. On other side existing established Insurance Company the profit margin and returns are good. There is no big increase in profitability ratios IDBI Insurance Co. Liquidity ratios are sometimes called working capital ratios because that. solvency of the company can be measured. The quick ratio is calculated as: Also known as Quick Ratio = Current Assets – Inventories / Current Liabilities Significance of quick Ratio:- . Ltd.

Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. It measures the firm’s capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio.The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It is used as a complementary ratio to the current ratio. Usually a high liquid ratio’s an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm’s liquidity position is not good. generally. As a convention. 12 . a quick ratio of "one to one" (1:1)is considered to be satisfactory.

A ratio equal to or near 2 : 1 is considered as a standard or normal or satisfactory. The idea of having double the current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets.Although liquidity ratio is more rigorous test of liquidity than the current ratio. It represents the margin of safety or cushion available to the creditors. a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. yet it should be used cautiously and 1:1 standard should not be used blindly. A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been deterioration in the liquidity position of the firm. a firm having a high liquidity ratio may not have a satisfactory liquidity position if it has slow-paying debtors. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current . However. On the other hand. In the same manner. the rule of 2 :1 should not be blindly used while making interpretation of the ratio. Hence. On the other hand. It is also an index of technical solvency and an index of the strength of working capital. a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid. It is an index of the firm’s financial stability. A liquid ratio of 1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors cannot be realized and cash is needed immediately to meet the current obligations. A firm having a low liquid ratio may have a good liquidity position if it has a fast moving inventories Significance of current ratio: This ratio is a general and quick measure of liquidity of a firm.

assets. Limitations of Current Ratio 13 . the current ratio may be high but it does not represent a good liquidity position. If a firm’s current assets include debtors which are not recoverable or stocks which are slow-moving or obsolete.

therefore firm may have less cash to pay off current liabilities. Liquidity Ratio:- It is extremely essential for a firm to be able to meet its obligation as they become due. therefore. Therefore it is necessary to strike a proper balance between high liquidity and lack liquidity. The failure of the company to meet it’s obligations due to lack of sufficient liquidity. because of more stock and work in process which is not easily convertible into cash. loss of creditor’s confidence etc. Even if the ratio is favorable.A firm should ensure that it does not suffer from lack of liquidity and also that it does not have excess liquidity. Liquidity ratios measures the ability of the firm to meet its current obligations . Current Ratio:- Current ratio is the relationship between current asset and current liability. Valuation of current assets and window dressing is another problem. suggested that it should not be used as the sole index of short term solvency. This ratio can be very easily manipulated by overvaluing the current assets. This ratio is also known as working capital ratio which measures the other general liquidity and is most widely used to make the analysis of short term financial position of a firm. It is calculated by dividing the total current asset by total current liability. and. . The most common ratios which indicate the balance of liquidity are (a)Current ratio (b) quick ratio (c) cash ratio (d) interval measure (e) net working capital ratio. idle assets earn nothing.This ratio is measure of liquidity and should be used very carefully because it suffers from many limitations. It is crude ratio because it measures only the quantity and not the quality of the current assets. It is. the firm may be in financial trouble. A very high degree of liquidity is also bad. will result in a poor creditworthiness. An equal increase in both current assets and current liabilities would decrease the ratio and similarly equal decrease in current assets and current liabilities would increase current ratio.

current asset as double the current liability is consider to be satisfactory.Current Ratio=Current Assets/current Liabilities 14 A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligation in time as and when they become due. Significance: . If the information about cost of sales is not available the figure of sales may be taken as the numerator. The rule of thumb is 2:1 i.e. Net working capital is found by deduction from the total of the current assets the total of the current liabilities. This ratio represents the number of times the working capital is turned over in the course of year and is calculated as follows: Formula of Working Capital Turnover Ratio: Working Capital Turnover Ratio = Cost of Sales / Net Working Capital The two components of the ratio are cost of sales and the net working capital. Working Capital Turnover Ratio: Definition: Working capital turnover ratio indicates the velocity of the utilization of net working capital.

But the level of inventory should neither be too high nor too low.The working capital turnover ratio measures the efficiency with which the working capital is being used by a firm. But a very high working capital turnover ratio may also mean lack of sufficient working capital which is not a good situation. 15 . Inventory Turnover Ratio or Stock Turnover Ratio (ITR) Every firm has to maintain a certain level of inventory of finished goods so as to be able to meet the requirements of the business. A high ratio indicates efficient utilization of working capital and a lowratio indicates otherwise.

It is very essential to keep sufficient stock in business. all the monthly balances are added and the total is divided by the number of months for which the average is calculated. In such circumstances.A too high inventory means higher carrying costs and higher risk of stocks becoming obsolete whereas too low inventory may mean the loss of business opportunities. It is expressed in number of times. Definition: Stock turnover ratio and inventory turnover ratio are the same. Formula of Stock Turnover/Inventory Turnover Ratio: The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost. This ratio indicates whether investment in stock is within proper limit or not. Stock turnover ratio/Inventory turnover ratio indicates the number of time the stock has been turn over during the period and evaluates the efficiency with which a firm is able to manage its inventory. Average inventory is calculated by adding the stock in the beginning and at the end of the period and dividing it by two. If average inventory at cost is not known then inventory at selling price may be taken as the denominator and where the opening in inventory is also not known the closing inventory figure may be taken as the average inventory. the inventory turnover ratio may be calculated by dividing net sales by average inventory at cost. In case of monthly balances of stock. Components of the Ratio: Average inventory and cost of goods sold are the two elements of this ratio. the cost of goods sold may not be known from the published financial statements. . This ratio is a relationship between the cost of goods sold during a particular period of time and the cost of average inventory during a particular period. (a) [Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost] Generally.

(b) [Inventory Turnover Ratio = Net Sales / Average Inventory at Cost] (c) [Inventory Turnover Ratio = Net Sales / Average inventory at Selling Price] (d) [Inventory Turnover Ratio = Net Sales / Inventory] 16 .

Significance of ITR:. stock accumulation. A low inventory turnover ratio indicates an inefficient management of inventory. a low ratio signifies low profit. Sometimes. poor quality of goods. a high inventory turnover ratio may not be accompanied by relatively high profits. dull business. A low inventory turnover implies over-investment in inventories. Inventory turnover ratio measures the velocity of conversion of stock into sales. where a high ratio signifies more profit. Usually a high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold. Average Collection Period Ratio: Definition: The Debtors/Receivable Turnover ratio when calculated in terms of days is known as Average Collection Period or Debtors Collection Period Ratio. The inventory turnover ratio is also an index of profitability. It may also be mentioned here that there are no rule of thumb or standard for interpreting the inventory turnover ratio. accumulation of obsolete and slow moving goods and low profits as compared to total investment. However the study of the comparative or trend analysis of inventory turnover is still useful for financial analysis. The norms may be different for different firms depending up on the nature of industry and business conditions. . the lesser amount of money is required to finance the inventory. Similarly a high turnover ratio may be due to under-investment in inventories. The average collection period ratio represents the average number of days for which a firm has to wait before its debtors are converted into cash.

a longer collection period implies 17 .Formula of Average Collection Period: Following formula is used to calculate average collection period: (Trade Debtors × No. A short collection period implies prompt payment by debtors. It reduces the chances of bad debts. Similarly. of Working Days) / Net Credit Sales Significance of the Ratio: This ratio measures the quality of debtors.

the liquidity position of concern to pay its short term obligations in time depends upon the quality of its trade debtors. Debtors Turnover Ratio | Accounts Receivable Turnover Ratio: A concern may sell goods on cash as well as on credit. Hence. The trade debtors for the purpose of this ratio include the amount of Trade Debtors & Bills Receivables. Trade debtors are expected to be converted into cash within a short period of time and are included in current assets. Definition: Debtor’s turnover ratio or accounts receivable turnover ratio indicates the velocity of debt collection of a firm. Formula of Debtors Turnover Ratio: Debtors Turnover Ratio = Net Credit Sales / Average Trade Debtors The two basic components of accounts receivable turnover ratio are net credit annual sales and average trade debtors.too liberal and inefficient credit collection performance. And formula can be written as follows. The average receivables are found by adding the opening receivables and closing balance of receivables and dividing the total by two. The volume of sales can be increased by following a liberal credit policy. In simple words it indicates the number of times average debtors (receivable) are turned over during a year. The effect of a liberal credit policy may result in tying up substantial funds of a firm in the form of trade debtors (or receivables). 18 . then the debtor’s turnover ratio can be calculated by dividing the total sales by the balance of debtors (inclusive of bills receivables) given. Credit is one of the important elements of sales promotion. It should be noted that provision for bad and doubtful debts should not be deducted since this may give an impression that some amount of receivables has been collected. But when the information about opening and closing balances of trade debtors and credit sales is not available. It is difficult to provide a standard collection period of debtors.

.Debtors Turnover Ratio = Total Sales / Debtors Significance of the Ratio: Accounts receivable turnover ratio or debtor’s turnover ratio indicates the number of times the debtors are turned over a year. Similarly. It is the reliable measure of the time of cash flow from credit sales. The higher the value of debtor’s turnover the more efficient is the management of debtors or more liquid the debtors are. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm. low debtors turn over ratio implies inefficient management of debtors or less liquid debtors.

19 .


20 .

Ltd.2 Research objective of the study Followings are the main objectives of the project To analyses the financial position of the IDBI Federal Insurance Co. To find out the future prospective of the company.3. To find out the consolidated position of the IDBI Federal Insurance Co. Calculation of Financial statement and ration is only the clerical task whereas the interpretation of its needs immense skill intelligence and foresightedness. liabilities and equity between two dates? Why no dividends are paid though there are good profits? From where have come cash flows and how they are applied? These and many other questions need answers. With its competitors.this involves identifying the purpose and selecting suitable means of analysis. which can be possible when the financial statements are suitably analyzed Thus financial statement analysis deals with meaningful interpretation of financial data available in financial statements to serve specific purpose of organizations of such data for their decision making .1 Purpose of the study There are some questions. . Financial statement analysis is essentially purposive. Ltd. To compare the market position of the IDBI Federal Insurance Co. These could be “Is Company’s profitability adequate? Why is a profit low in spite of increased sales? Why is there liquidity problem though profitability is good? Why no reasons for changes in assets. Ltd. The role objective of the project is to help the management of the organization in decision making regarding the subject matter. 3. which arise from the study of financial statements.

21 .

Primary data is collected through collecting information from company officers. collected information this secondary data is collected through Company’s Annual Report and discussion with them. we used descriptive research in this study because it will ensure the minimization of bias and maximization of reliability of data collected. from external guide. Therefore. 3. Secondary data.1 Research Design Research is a careful inquiry or examination to discover new information or relationship and to expand and verify existing knowledge.3 Research Methodology of the Study 3.e. 3.3.One of the easiest and most popular way of evaluating performance of the organization is to compare its present ratio with the past ones called comparison and through development action plan. Interpretation of: Balance sheet Profit and loss account Annual reports . It gives an indication of the direction of change and reflects whether the organizations financial position and predominance has improved deteriorated or remained constant over the period of time.2 Data Collection Technique The data is collected by 2 methods: Primary data Secondary data. already.3. which is secondary in nature i.

1 Population: One Company from the insurance industry.3. IDBI Federal Insurance Co.e.3. 22 . Ltd.SAMPLING DESIGN 3. i.

3. which is not sufficient to carry out proper interpretation and analysis.4. One of the factors of the study was lack of availability of ample information. This study is related to the financial position of the company for the two Financial years only . financial documents and balance sheets Data collection through internet 3. 3. Ltd 3.4 Methods of Data Collection 3. The whole study was conducted in a period of 60 days. 3.3.3. IDBI Federal Insurance Co.2 Sample Size: 2 years financial data of .3.5 LIMITATIONS  The study provides an insight into the financial matters every study will be bound with certain boundaries and this study limited up to financial matters.4.3. there is no such questionnaire has been taken made for this project.3.2 Drafting of questionnaire The project is based on the secondary data. Sampling Method Convenience Sampling Convenience under non probability sampling is applied in this project.1 Instruments for data collection Basically secondary data was collected in this research. Information from the company records. Convenience sampling is a non-probability sampling technique where subjects are selected because of their convenient accessibility and proximity to the researcher. Most of the information has been kept confidential and as such as not assed as art of policy of company. Time is an important limitation.

23 .




4.1 Introduction of Financial Statement Analysis
The analysis of financial statement consists of study of relationship and trends to determine
or not the financial position and result of operations as well as the
financial progress
of the
company are satisfactory or unsatisfactory. The analytical methods
or devices, listed

below are used to ascertain or
measure the relationships among the financial statements items
of a single set of statements and
the changes that have taken place in these items as reflected

in successive financial statement. The fundamental objective of any analytical method is to
simplify or to reduce the data under review to more understandable terms.

Analytical methods and devices used in analysing financial statements are as follows

1 Comparative Statement

2 Common Size statements

3 Trend Ratios

4 Ratio Analysis

4.2 Comparative Statement
These financial statements are so designed as to provide time perspective to the various

elements of financial position contained therein. These statements gives data for all the
periods stated so as shows

Absolute money values of each of the period stated.

Increase and decrease in absolute data in terms of money values.

Increase and decrease in terms of percentage.

Comparison expressed in ratios

Percentages of total.


The Comparative Financial Statements Analysis is statements of the financial position at
different period of time. The elements of financial position are shown in a comparative form
will be covered in comparative statement from practical point of view generally two financial

1 Balance Sheet

2 Income Statements

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

Comparative Balance Sheet of IDBI Federal insurance Co. Ltd. (for the year ending on 31














736 + 1087 0.2013 31.996.2014 Increase/ % Decrease Sources of Funds Share Capital 7.Particulars 31.649 7.0136 Reserves and surplus - - - Credit / (Debit) Fair value change 969 - .4.995.3.969 (-) 100 account .

996.Sub-Total (A) 7.635) 111.996.017 + 112.175.652 account Policy liabilities 9.160 .0015 Policy Holders Fund 26 Credit / (Debit) Fair value change (1.618 7.736 + 118 0.

709.351242 (-)2.31 Provision for linked liabilities 16.452 .358.10 Funds for discontinued policies (i) Discontinued on account of non- 106.345 + 120573 112.884 + 4983724 16.92 payment of premium .772 227.

707 18.(ii) Others - Sub Total (B) 25.765.33 Application of Fund .991 30.698 + 4.755.989.

825 14.609 38.673 27.06 .320 + 605.986.843.647 2.765.Total C= (A+B) 33.434 + 4.02 Investments Shareholders 2.237.752.

465.37 Fixed assets 136.987 104.585.Policyholders 9.240 17.071 14.96 Assets held to cover linked liabilities 16.072 + 4.097.669 (-)1.230.901.466 16.001 48.32765 (-)23.816.998.755.710.17 33.222 .797 .411 5.91 Sub-Total (D) 28.63 .

287 926.324 .1 Current Assets 27 Cash and bank balances 999.963 (-)7.30 .72.

78 Current liabilities 1.205 31.Advances and other assets 1.043 (-)11.362 (-)10.321 21.4 .4.056 1.747.38 Provisions 35.617 + 357.636.162 .920.637.181.358 10.994.694 .82 Sub-Total (E) 2.296 1.565.583 2.941 + 284.

261 1.185.856 .405 (-)10.322 1.98 (E) – (F) Debit balance in Profit & Loss Account 4231116 3.93 (Shareholders' account) Sub-Total (H) 4231116 .Sub-Total (F) 1.938 .40 Net Current Assets/(Liabilities) (G) = 854.324.429.085 + 469.782.801178 (-)18.763 54.596.

825 14.73 to 5670.) An Analysis and interpretation of the above balance sheet reveals (1) Working Capital is increased from 5154. which is a positive signal for the firm because increase in Working Capital leads to a better financial position and company have more funds to do business activities.765.752.21. Ltd.3.434 + 4.986.02 9 Table No – 4.938 .429.60 38.93 TOTAL (I) = (D) + (G) + (H) 33.801178 (-)18. 1 (Comparative Balance Sheet of IDBI Federal insurance Co. 28 2014 .


Net 5670.21
W.C 5154.73









Amounts transferred from the Policyholders'

A/c (Technical Account)* (see note – 1)

Income from investments

(a) Interest, dividends & rent – gross


(b) Profit on sale/redemption

of investments -


(c) (Loss on sale/ redemption
of investments)


(d) (Amortisation of premium) / discount on

investments (net)

Other Income

(a) Miscellaneous Income


Total (A)


03 Account (Technical Account) .Expense other than those directly related to 17240 17507 267 1.841 425.54 the insurance business Bad Debts Written Off - Amount transferred to the Policyholders' 966.047 (541794) 56.

Fringe Benefits Tax / 97 11 86 88.65 Wealth tax Provisions (other than taxation) - - - a) For diminution in the value of investments - - - .Provision for tax .

178 441900 (542278) 55.178 .(B) 92.09 Profit/(Loss) before tax = (A) .432 801.30 b) Provision for doubtful debts - - - - c) Other - - - Total (B) 984.

Income Tax Profit/(Loss) after tax 92.746 Provision for taxation .708.432 801.323.548) (4231116) 92432 .178 708746 Appropriations (A) Balance at the beginning of the year (4.

(b) Interim dividends paid during the year - - - (c) Proposed final dividend - - - (d) Dividend distribution - - - e) Transfer to reserves/other accounts - - - .

Apart from this to take a clear snapshot of an insurance company’s sale we can consider the total premium receipt during the year and the premium receipt during the years are as follows Year Amount (in 000) % increase 31 2013 8.231.2 (Comparative Profit and Loss of IDBI Federal insurance Co.116) (3429938) 801178 19% Earnings per share (Face Value of Rs.12 1 each) .) *Note no – 1 Policy holder account means the account made by the insurance company in form of revenue accounts under the format of FORM L-1-A-RA according to the regulations of IRDA.Basic and Diluted (in Rs. Ltd. In which it records the total premium receipt.10/- 0.046.) Table 4.Profit / (Loss) carried to the Balance Sheet (4.834 . It is similar to sale in case of manufacturing companies like manufacturing companies’ record its produced item sale and insurance company records its product sale.

262.262. – 4. received by the Company suffe n ring b Since IDBI federal losse dy insurance got certificate of s.2014 8.3 ( Premium received by the Company) An Analysis and interpretation of the above Income Statement reveals Premium received are increased by 2. This is a positive Graph No – 4. Premium Received Amount in 000 70 4000000 00 8000000 00 3000000 0 6 0 2000000 Premium Received 0 0 1000000 0 00 9000000 0 2013 8.67%. which is positive signal for the company that business of the company is increasing.834 year 8.468 2.468 5 2014 0 0 0 0 0 0 com bs from year 2013 to pany ee2014.046.67% Table No.2 Premium is edsignal for the company. e incorporation from ROC in How c1 year 2008 and it takes ever r9 certain time to become a losse e% 32 break-even company and s has a .

429.938 s s 3000000 A m ou nt In 00 0 2500000 45 00 00 0 2000000 40 . 00000 pr of t/l os s 4.116 P r o 3500000 f t / L o 3.231.

total of the items and a common base for which is good for investors. decrease by 87.1 Common Size Balance Sheet – Common Size Statements – In the comparative statements it is difficult In a common size Balance Sheet total assets or 4 liability taken as 100 and all the figures are . to expressed as percentage of the total. comparison is provided. 4. Gain for an interpretation for in . 3 Comparative common size balance sheet for comprehend the changes over the years in different P relations to the total asset and liabilities r and capital or total net sales. . This periods o limitation of comparative statements make helps f comparison between two or more firms of to highlight i industry impossible because there isno the t common base of comparison for absolute trends / figures.3.23% which is showing that G the investment decisions are taken by the Common Size Statements are those in which r senior person of the company in an figures reported are converted in to percentages a accurate direction.12 to 1. to some common base for this financial p statement are presented as percentage or ratio to h EPS has been increased from 0.15 500000 00 00 0 0 10 00 00 0 year Loss of Company underlying causes of changes over the time period a vertical analysis is required and this is Loss on sale of investment has been not possible with comparative statements. Each percentage shows N the relation of the individual item to its o respective total.

d ms. 33 e . If it is prepared for different firms in i an industry. f it facilitates f to e judge r the e relative n soundness and helps in understanding t their i financial t strategy.

2014) Particulars 31.3. Ltd.4.995.64% Reserves .2013 % 31.2014 % of total of total Sources of Funds Share Capital 7.996.649 23.Common Size Balance Sheet of IDBI Federal insurance Co. (for the year ending on 31st march. 2013 and 31st march.52% 7.736 20.

996.017 0.635) 111.736 20.618 23.and surplus - - Credit / (Debit) Fair value change 969 - account Sub-Total (A) 7.996.52% 7.29% account .64% Policy Holders Fund Credit / (Debit) Fair value change (1.

772 0.54% Provision for linked liabilities 16.21% Funds for discontinued policies (i) Discontinued on account of non- 106.709.694 49.31% 227.175.345 0.452 42.160 27% 14.884 36.158.358.17% 16.54% payment of premium 34 (ii) Others - .Policy liabilities 9.

986.752.434 100% .Sub Total (B) 25.36% Application of Fund Total C= (A+B) 33.698 79.755.991 30.609 100% 38.989.

Investments Shareholders 2.33% Assets held to cover linked 16.071 28.57% 14.072 37.48% 16.58% 2.843.34% Policyholders 9.647 6.466 49.816.465.797 42.710.237.80% liabilities .320 7.585.

222 0.4% 104.Fixed assets 136.27% Sub-Total (D) 28.998.03% 33.73% Current Assets .987 0.901.411 87.171 85.

583 7.994.565.Cash and bank balances 999.39% Advances and other assets 1.14% 1.617 5.694 4.056 5.296 4.637.636.82% 1.747.76% 2.04% .920.94% 926.54% Current liabilities 1.15% Sub-Total (E) 2.941 7.287 2.324 2.

782.51% 1.42% (G) = (E) – (F) .205 0.596.261 5.Provisions 35.856 4.324.12% 35 Net Current Assets/(Liabilities) 854.162 0.08% Sub-Total (F) 1.085 3.322 2.10% 31.24% 1.

938 33.609 100% 38.752.434 100% Table No.986.45% 3.85% Account (Shareholders' account) Sub-Total (H) 4231116 3.429.4 (Common Size Balance Sheet of IDBI Federal insurance Co.) . Ltd.938 8.Debit balance in Profit & Loss 4231116 12.429. – 4.

2013 31. it shows the relative efficiency of each cost item for the two firms.201 4 Amounts transferred fromthe 816. 2014) Particulars 31.03. A comparative income statement for different periods helps to reveal the efficiency or otherwise of incurring any cost or expenses.2 Common Size Income Statement In a Common size income statement the sales figure is assumed to be equal to 100 and all other figures of costa or expenses ae expressed as percentage of sales.03.742 100% Policyholders' A/c (Technical Account) .3.4. Ltd. 2013 and 31st march.086 100% 960. (for the year ending on 31st march. Common Size Income Statement of IDBI Federal insurance Co. If it is being prepared for two firms.

dividends & rent – gross 176.Income from investments (a) Interest.685 194924 (b) Profit on sale/redemption of 17.691 4264 investments - 36 .

(c) (Loss on sale/ redemption of (5.422) (692) investments) - (d) (Amortisation of premium) / 71.118 83173 discount on investments (net) Other Income (a) Miscellaneous Income 452 667 .

92 1243078 129.47% 425047 44.076.11% 17507 1.841 118.82% related to the insurance business Bad Debts Written Off - Amount transferred to the 966.Total (A) 1.39% Expense other than those directly 17240 2.610 131.24% Policyholders' Account (Technical Account) .

001% Tax / Wealth tax Provisions (other than taxation) - - a) For diminution in the value of - - investments b) Provision for doubtful debts - - - .Fringe Benefits 97 0.01% 11 0.Provision for tax .

c) Other - - Total (B) 984.(B) 92.178 83.32% 801.432 11.Income Tax 37 .39% Provision for taxation .178 120.60% 441900 46% Profit/(Loss) before tax = (A) .

39% Appropriations (A) Balance at the beginning of the (4.548) (4231116) year (b) Interim dividends paid during the - - year .Profit/(Loss) after tax 92.32% 801178 83.432 11.323.

116) (3429938) Balance Sheet .(c) Proposed final dividend - - (d) Dividend distribution - - e) Transfer to reserves/other - - accounts Profit / (Loss) carried to the (4.231.

Since trends are sometimes significantly affected by externalities. That is very useful in predicting the behaviour of the various financial factors in the future. Time ratio can be graphically presented for a better understanding by the management.each) .) Table No–4.5(Common Size Income Statement of IDBI Federal insurance) 4.Earnings per share (Face Value of 0. 38 .10/. It is a statistical device applied in the analysis of the financial statement to reveal the trend of the items with the passage of time. Trend ratio shows the nature and rate of movements in various financial factors they provide a horizontal analysis of comparative statements and reflect the behavior of various items with the passage of time. However it should be noted that conclusions is arrived at.Basic and Diluted (in Rs.4 TREND RATIOS / Analysis Trend ratio can be defined as index number of the movement of the various financial items in the financial statement for the number of periods.12 1 Rs.

Year Asset under Premium Received Operating Expense Net Proft Management in Crores Ratio (in crore) (with respect to Sales) 2010-11 2010 811 27% -122 2011-12 2529 737 27% -70 .

2012-13 2964 805 24% 9 2013-14 3509 826 23% 80 .

6 (Trend Ratios) 2000 1500 1000 Asset under Management in crores 500 Asset 4000 under Mana geme nt in 0 crores 3500 Poly. (Asse 2010-11 t 3000 under 2011-12 2012-13 Mana geme 2013-14 nt 2500 in crore s) Graph No – 4.Table No – 4.4 Asset under Management of Company 39 .

Premium Received in Crores 860 840 820 800 780 Premium Received in Crores 760 Poly. (Premium Received 740 in Crores) 720 700 .

680 2010-11 2011-12 2012-13 2013-14 Graph No – 4.6 Operating Expense Net Proft 100 . (Operating 15 2010-11 Expense Ratio (with respect to 2011-12 Sales)) 2012-13 Ratio 40 Graph No – 4.5 Premium Received Operating Expense Ratio (with respect to Sales) 2013-14 30 10 25 5 Operating Expense Ratio 20 0 (with respect to Sales) Poly.

27% to 23%. The Asset under the ens absolute accounting figures reported in the companies hand are es financial statements do not provide a continuously of meaningful understanding of the performance increasing and the the and financial position of a firm.5 Ratio Analysis 201 3. In financial analysis. An premium received by co accounting figure conveys meaning when it the company is mp is related to some other relevant information. a ratio is used Analysis ng as a benchmark for evaluation the financial exp position and performance of a firm. an Rs. increased in year any For example. (Net Profit) incr i.50 0 -50 -100 Net Profit -150 Poly.5 core net profit may 2010-11 but after are look impressive. A ratio is defined as “the indicated quotient of two mathematical expressions” Conclusion of the Ope and “the relationship between two or more above Trend Ratio / rati things”. Since the company is just easi incorporated in 2008 so having losses in the Graph No – 4.7 Net ng beginning but company manage the loss in Profit of the IDBI in year 2013-14 and now having profit of Federal Life yea 80crores Insurance Co ltd. but the that it is declining dec but trying to improve reas the position and ing 41 .Ratio analysis is a powerful tool of financial 14 analysis. r 201 2- 13 and 4.e.

The following are the main points of importance of ratio analysis: (A) Managerial uses of ratio analysis:- 1. Ratio analysis helps in making decision from the information provided in these financial Statements. Such is the nature of all financial ratios. consider current ratio. Thus ratios have wide applications and are of immense use today. Helps in decision making:- Financial statements are prepared primarily for decision-making. It is an important technique of the financial analysis. The point to note is that a ratio reflecting a quantitative relationship helps to form a qualitative judgment. which permits a quantitative judgment to be formed about the firm’s liquidity and vice versa. It is the way by which financial stability and health of the concern can be judged. Ratios help to summarize large quantities of financial data and to make qualitative judgment about the firm’s financial performance.5. Helps in financial . is known as a financial ratio (or simply as a ratio). This relationship is an index or yardstick. 2. The relationship between two accounting figures expressed mathematically.firm’s performance can be said to be good or bad only when the net profit figure is related to the firm’s Investment. the ratio indicates a relationship. For example. It is calculated by dividing current assets by current liabilities. Theoretical background: 4. Ratio analysis stands for the process of determining and presenting the relationship of items and groups of items in the financial statements. It is used as a device to analyze and interpret the financial health of enterprise.1 Use and significance of ratio analysis:- The ratio is one of the most powerful tools of financial analysis.a quantified relationship between current assets and current liabilities.

ratio analysis helps in forecasting and planning. 3. Thus.forecasting and planning:- Ratio analysis is of much help in financial forecasting and planning. Planning is looking ahead and the ratios calculated for a number of years a work as a guide for the future. Helps in communicating:- 42 .

come to the knowledge of the managerial. His first interest will be the security of his investment and then a return in form of dividend or interest. (D) Utility to employees:- The employees are also interested in the financial position of the concern especially profitability. Section 1. if any. Ratio analysis will be useful to the investor in making up his mind whether present financial position of the concern warrants further investment or not. They are invested to know whether financial position of the concern warrants their payments at a specified time or not. Helps in co-ordination:- Ratios even help in co-ordination. in effective control of the business. which helps. ratios help in communication and enhance the value of the financial statements. Thus. Helps in control:- Ratio analysis even helps in making effective control of business. (B) Utility to shareholders/investors:- An investor in the company will like to assess the financial position of the concern where he is going to invest. Better communication of efficiency and weakness of an enterprise result in better co-ordination in the enterprise 5. Their wage increases and amount of fringe benefits are related to the volume of profits earned by the concern. 4. (E) Utility to government:- . which is of at most importance in effective business management.The weaknesses are otherwise.01 (C) Utility to creditors: - The creditors or suppliers extent short-term credit to the concern.The financial strength and weakness of a firm are communicated in a more easy and understandable manner by the use of ratios.

Various financial statement published by industrial units are used to calculate ratios for determining short term. 43 .Government is interested to know overall strength of the industry. long-term and overall financial position of the concerns.

4. if there is any major variation in the accounting ratios. Absence of standard universally accepted terminology:- . The difference in the methods of calculation of stock or the methods used to record the deprecation on assets will not provide identical data. Net profit/turnover. The following are the main limitations of ratio analysis: 1. 1984. But. The accounting system it self suffers from many inherent weaknesses the ratios based upon it cannot be said to be always reliable. Material consumed/finished goods produced.(F) Tax audit requirements:- Sec44AB was inserted in the income tax act by financial act. False results:- Ratios are based upon the financial statement. if uniform accounting policies are not adopted by them. These limitations should be kept in mind while making use of ratio analysis for interpreting the financial the financial statements. it is advisable to compare the accounting ratios for the year under consideration with the accounting ratios for earlier two years so that the auditor can make necessary enquiries. Limited comparability:- The ratio of the one firm cannot always be compare with the performance of other firm.5. inspite of its advantages.2 Limitations: Ratio analysis is very important in revealing the financial position and soundness of the business. 2. it has some limitations which restrict its use. so they cannot be compared. Stock in trade/turnover.Caluse 32 of the income tax act requires that the following accounting ratios should be given: Gross profit/turnover. In case financial statement are in correct or the data of on which ratios are based is in correct. Further. 3. ratios calculated will all so false and defective.

44 .

Personal bias:- Ratios are only means of financial analysis and an end in it self.5.Different meanings are given to a particular term. 5. Hence. Change in price effect the cost of production. 6.3 Classification of ratios: Several ratios. The ratios can be comparable only when all the firms adapt uniform terminology. 4. if the prices do not change. how so ever important it may be. as ratio analysis is primarily a quantitative analysis and not a qualitative analysis. It ignores qualitative aspect of the firm. Price level changes affect ratios:- The comparability of ratios suffers. 4. Management is interested in evaluating every aspect of the firm’s performance. others may take profit after interest and tax. Some firms take profit before interest and tax. one has to be very carefully in making a decision from ratios calculated from such financial statements. The ratio has to be interpreted and different people may interpret the same ratio in different ways. They have to protect the interests of all 45 . Ignoring qualitative factors:- Ratio analysis is the quantitative measurement of the performance of the business. Absolute figures distortive:- Ratios devoid of absolute figures may prove distortive. It shoes that ratio is only a one sided approach to measure the efficiency of the business. A bank overdraft is taken as current liability but some firms may take it as non-current liability. Window dressing:- Financial statements can easily be window dressed to present a better picture of its financial and profitability position to outsiders. calculated from the accounting data can be grouped into various classes according to financial activity or function to be evaluated. if the prices of the commodities in two different years are not the same. 8. sale and also the value of assets. 7. It means that the ratio will be meaningful for comparison. egg.

In fact. The firm’s funds will be unnecessarily tied up in current assets. loss of creditors’ confidence. Therefore. provide a quick measure of liquidity. A very high degree of liquidity is also bad.parties and see that the firm grows profitably. The failure of a company to meet its obligations due to lack of sufficient liquidity. The liquidity ratios reflect the short-term financial strength and solvency of a firm. A firm should ensure that it does not suffer from lack of liquidity.long-term financial strength Profitability ratios .long term earning power Liquidity ratios measure the firm’s ability to meet current obligations. In view of thee requirement of the various users of ratios. Liquidity ratios measure the ability of the firm to meet its current obligations (liabilities). or even in legal tangles resulting in the closure of the company. . will result in a poor credit worthiness.3.1 LIQUIDITY RATIOS: It is extremely essential for a firm to be able to meet the obligations as they become due. and also that it does not have excess liquidity. idle assets earn nothing.short-term financial strength Leverage ratios . Leverage ratios show the proportions of debt and equity in financing the firm’s assets. ratios are classified into following four important categories: Liquidity ratios . it is necessary to strike a proper balance between high liquidity and lack of liquidity. analysis of liquidity needs the preparation of cash budgets and cash and funds flow statements. by establishing a relationship between cash and other current assets to current obligations. Profitability ratios measure overall performance and effectiveness of the firm 4. but liquidity ratios.5. loss of credit worthiness.

Current Ratio: Current ratio is calculated by dividing current assets by current liabilities.The most common ratios which indicate the extent of liquidity are lack of it. are: 1. 46 .

83 Table No.026 1.7 Current Ratio Current Ratio 2 .48 1.25 1. – 4.Current assets Current Ratio = Current Liabilities Year 2010-2011 2011-12 2012-13 2013-14 Current Ratio 1.

1.6 .83 1.8 1.

4 1.1.48 1.2 .

8 .026 Current Ratio 0.1.25 1 1.

6 .0.

4 0.0.2 .

0 2010-2011 2011-12 2012-13 2013-14 .

– 4. A ratio of greater than one means that the firm has more current assets than current claims against them Current liabilities. Current liabilities include creditors. All obligations maturing within a year are included in the current liabilities. income tax. It indicates the availability of current assets in rupees for every one rupee of current liability.Graph No. short-term bank loan. bills payable. The current ratio is a measure of firm’s short-term solvency. 47 . liability and long-term debt maturing in the current year. accrued expenses.8 Current Ratio Current assets include cash and other assets that can be converted into cash within in a year. such as marketable securities. debtors and inventories. Prepaid expenses are also included in the current assets as they represent the payments that will not be made by the firm in the future.

or liquid. Other assets that are considered to be relatively liquid and included in quick assets are debtors and bills receivables and marketable securities (temporary quoted investments). Quick Ratio: Quick ratio also called Acid-test ratio. assets and current liabilities. Quick assets Quick Ratio = Current Liabilities Quick Asset = Current Asset – Stock – prepaid expense INFERENCE Since the company is belonging to the Service sector and not having any kind of stock with it. The quick ratio is found out by dividing quick assets by current liabilities. their value also has a tendency to fluctuate. it may be examined cash ratio and its equivalent to current liabilities. 2:1) 2. they may be included in the computation of cash ratio: 48 . establishes a relationship between quick. Cash Ratio: Since cash is the most liquid asset. therefore.e. Inventories normally require some time for realizing into cash. Trade investment or marketable securities are equivalent of cash. Inventories are considered to be less liquid. An asset is a liquid if it can be converted into cash immediately or reasonably soon without a loss of value. So it will equal to current ratio.INFERENCE – Solvency is increasing from the year 2011-12. Cash is the most liquid asset. which is a good signal for the company however the company is a newly establish company and due to belongingness of insurance indusrty it will take certain year to reach on ideal level All the years company is having less than ideal ratio (i. 3.

5 2.8( Cash Ratio during Year 2010 – 2014) Cash Ratio 2.36 2 2.36 Table No.118 .118 1. – 4.816 2.7 1.Cash + marketable security Cash Ratio = Current Liabilities Year 2010-2011 2011-12 2012-13 2013-14 Cash Ratio 2.

5 0 2010-2011 2011-12 2012-13 2013-14 Graph No..1.4. So after one decline company make it good in next years.118 in the year 2011.816 1.36 in the year 2013-14. has undergone many fluctuations. Net Working Capital Ratio The difference between current assets and current liabilities excluding short – term bank borrowings in called net working capital (NWC) or net current assets (NCA). In the above Table the Cash Position Ratio of Four Years (2010-2014). it was decreased to 1. It started with high ratio at first by 2.5 1.7 Cash Ratio 1 0. Ltd. The Cash Ratio of IDBI Federal life insurance Co.81 again increase to 2.7 by next year it was slightly increased in next year to 1. NWC is 49 .9 Cash Ratio INFERENCE: This Cash Ratio indicates that the capacity of the company to realize current liabilities with its liquidity position. 4.

measures the firm’s potential reservoir of funds. It can be related to net assets (or capital employed): Net working capital (NWC) NWC Ratio = (Net assets (or) Capital Employed) Year Net Working Capital Net Asset Ratio (i. however. CA-CL) FA + Working Capital 2010-11 49750 220097 0. This is not necessarily so.sometimes used as a measure of firm’s liquidity.862 2013-14 .e.765 2012-13 854322 991309 0. It is considered that between two firm’s the one having larger NWC as the greater ability to meet its current obligations.226 2011-12 561436 734277 0. rather than the difference between current assets and current liabilities. the measure of liquidity is a relationship. NWC.

capital ratio 1.927 Table no.9 (Net Working Ratio from year 2010-14) Net w.1324085 1428307 0. – 4.900 .000 0.

800 0.700 0.765 .0.862 0.927 0.

600 Net 0.0.500 .

w. capital 0.400 .

Ratio 0.200 .300 0.

0.000 .226 0.100 0.

10 Net Working Ratio 50 .2010-11 2011-12 2012-13 2013-14 Graph No. – 4.

are more concerned with the firm’s current debt-paying ability.226 in 2011 to 0. financial leverage. so this clearly shows that the firm has sufficient amount of working capital. Leverage ratios are also computed form the profit and loss items by determining the extent to which operating profits are sufficient to cover the fixed charges. Leverage ratios may be calculated from the balance sheet items to determine the proportion of debt in total financing. financial institutions etc are more concerned with the firm’s long-term financial strength.927 in 2014. To judge the long-term financial position of the firm. In fact a firm should have a strong short as well as long-term financial strength. 4. ling-term creditors like debenture holders. These ratios indicate mix of funds provided by owners and lenders. On other hand. It is . As a general rule there should be an appropriate mix of debt and owners’ equity in financing the firm’s assets.equity ratio = Net worth (NW) 2 Proprietary Ratio This ratio indicates that the proportion of total assets funded by the wner or shareholders. like bankers and suppliers of raw materials. Many variations of these ratios exist.5.INFERENCE: Net working capital has increase from 0. or capital structure ratios are calculated. 1 Debt-Equity Ratio: The relationship describing the lenders contribution for each rupee of the owners’ contribution is called debt-equity (DE) ratio is directly computed by dividing total debt by net worth: Total debt (TD) Debt . In fact a firm should have a strong short-as well as long-term financial position.3. but all these ratios indicate the same thing the extent to which the firms has relied on debt in financing assets.2 LEVERAGE RATIO: The short-term creditors.

calculated as under 51 .

Year Equity Share Current Asset Fixed Asset Total Asset Proprietary Capital Ratio .Equity Proprietary ratio = Total Asset A higher proprietary ratio indicates high sound financial position of the company from the long term point of view because it means that a large proportion of total asset is provided by equity and hence the firm is less dependent on external sources.

32 2011-12 7994561 2804141 172841 2976982 2.2010-11 6993473 1937966 170347 2108313 3.69 2012-13 .

7995649 2636583 136987 2773570 2.88 2013-14 7996736 2920941 104222 3025163 2. – 4.50 .64 Table No.10 (Proprietary Ratio) Proprietary Ratio 3.

32 2.3.88 2.50 .50 2.64 2.00 Proprietary Ratio 1.69 2.

4.00 2010-11 2011-12 2012-13 2013-14 Graph No.1.00 0.50 0..11 (Proprietary Ratio) 52 .

and it will have no future if it fails to make sufficient profits. This is possible only when the company earns enough profits. Profit is the ultimate output of a company. The profitability ratios are calculated to measure the operating efficiency of the company.INFERENCE: . two major types of profitability ratios are calculated:  Profitability in relation to sales. Profits are essential. customers and society. the financial manager should continuously evaluate the efficiency of the company in terms of profit. Profit is the difference between revenues and expenses over a period of time (usually one year).3 PROFITABILITY RATIOS A company should earn profits to survive and grow over a long period of time. Except such infrequent cases. suppliers or social consequences. It is unfortunate that the word profit is looked upon as a term of abuse since some firms always want to maximize profits ate the cost of employees. employees.proprietary ratio is more than 1 every year which indicates that all the assets are funded by the shareholders funds 4. creditors and owners are also interested in the profitability of the firm. Therefore. it is a fact that sufficient profits must be able to obtain funds from investors for expansion and growth and to contribute towards the social overheads for welfare of the society.3. Generally. irrespective of concerns for customers.5. Owners want to get a required rate of return on their investment.  . Creditors want to get interest and repayment of principal regularly. Besides management of the company. but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits.

The rate of dividend is not fixed. Nevertheless. and reserves and surplus less 53 .Profitability in relation to investment. the earnings may be distributed to shareholders or retained in the business. 1 Return on Equity (ROE) Common or ordinary shareholders are entitled to the residual profits. The shareholders equity or net worth will include paid-up share capital. A return on shareholder’s equity is calculated to see the profitability of owners’ investment. share premium. the net profits after taxes represent their return.

this ratio is one of the most important relationships in financial analysis.accumulated losses. The return on equity is net profit after taxes divided by shareholders equity. which is given by net worth: Profit after taxes Return on Equity = Net Worth ROE indicates how well the firm has used the resources of owners. The ratio of net profit to owners’ equity reflects the extent to which this objective has been accomplished. The earning of a satisfactory return is the most desirable objective of business. The return on owners’ equity of the company should be compared with the ratios of other similar companies and the industry average. This ratio is. Year . of great interest to the present as well as the prospective Shareholders and also of great concern to management. This will reveal the relative performance and strength of the company in attracting future investments. thus. Net worth also be found by subtracting total liabilities from total assets. which has the responsibility of maximizing the owners’ welfare. In fact.

Profit After Tax Equity ROE 2010-11 -428090 6993473 -6.12% .

50% 2012-13 689493 7995649 8.62% 2013-14 998430 7996736 12.49% .2011-12 120235 7994561 1.

– 4.Table No.11 Return on Equity 54 .

ROE 15.00 12.49 10.00 .

8.00 ROE 0.00 .62 5.

50 .1.

00 -6.2010-11 2011-12 2012-13 2013-14 -5.12 .

It means company earning higher year by year.62 and 12. The earnings per share (EPS) are calculated by dividing the profit after taxes by the total number of ordinary shares outstanding.-10.00 Graph No. Profit after taxes .12 Return on Equity INFERENCE: Return on equity ratio was -612%. 2012. 2 Earnings per Share (EPS) The profitability of the shareholders investments can also be measured in many other ways. 2013 and 2014 so the company achieved maximum Return on equity ratio in 2014.49% in respective year of 2011. 1. One such measure is to calculate the earnings per share. 8. – 4.50.

15 2012-13 659493 802167 0.82 2013-14 998430 802167 .EPS = No of Shares Year Profit After No of Shares EPS Tax 55 2010-11 -428090 802167 -0.53 2011-12 120325 802167 0.

82 .60 0.80 0.24 0.20 1. – 4.00 1.40 1.24 Table No.1.12 (Earning per Share) EPS 1.

15 -0.40 -0.40 EPS 0.20 0.53 -0.60 -0.0.20 2010-11 2011-12 2012-13 2013-14 -0.00 0.80 .

13 (Earning per Share) 3 Net Profit Margins Net profit is obtained when operating expenses. – 4.Graph No. interest and taxes are subtracted from the gross profit margin ratio is measured by dividing profit after tax by sales: Net Profit Net Profit Margin = Sales* Note * = Here amount of premium account (technical) is taken as sale because it is equal to sale in Insurance industry and comes after a calculation as prescribed by IRDA 56 .

administrating and selling the products. This ratio is the overall measure of the firm’s ability to turn each rupee sales into net profit. This ratio also indicates the firm’s capacity to withstand adverse economic conditions. If the net margin is inadequate the firm will fail to achieve satisfactory return on shareholders’ funds.42 2012-13 659493 816086 0. cost of production. A firm with high net margin ratio would be advantageous position to survive in the face of falling prices. selling prices.81 2013-14 998430 960742 1. Year Net profit Sales/ technical Net Profit Premium Account Margin 2011-12 120325 286306 0.Net profit ratio establishes a relationship between net profit and sales and indicates and management’s in manufacturing.04 T .

04 i 0.80 t 0.42 g 0.14 (Net profit Net Proft Margins) N Margin e t No.00 2011-12 2012-13 2013-14 Graph No.20 i n 7 5 .13 (Net profit Margins) 0.81 0. – 4. – 4.20 P r o 1.00 f 1.40 r 0.60 M a 0.

42.INFERENCE: Net profit ratio was . and 1. Since persistency is a critical factor inX the viability and success of insurance companies.04 in respective year of 2012. 081. 4. withoutX lapsing or being replaced by policies of other insurers. and 2014 so the company achieved maximum Net profit ratio in 2013-14. 2013. they constantly look for ways to increase this percentageX Persistency Ratio 79% 78% 78% 77% 77% 76% Persistency Ratio 76% 75% 75% .6 Some other technical Ratio’s related to the insurance industry 1 Persistency Ratio Percentage of an insurance company's already written policies remaining in force.

74% 74% 2012-13 2013-14 Graph No.14 (Persistency Ratio) 2 Growth rate of Shareholders Funds Year Growth Rate of shareholder fund 2010-11 60.43% 2012-13 3% 58 .84% 2011-12 9. – 4.

2013-14 21% Table No.00% 20 10- 11 20 11- 12 20 30.00% 60. – 4.84% 9.00% e of sha re hol der fun d Shareholders fund) Graph No. – 4.00% Rat 50.00% 12- 13 20 13- Growth Rate of 21% 14 share holder fund 20.16 (Growth rate of .43% 10.00% 3% Gr ow th 0.14 (Growth rate of Shareholders fund) 40.00% 60.00% 70.

59 .


60 .

(1) Current ratio of the Company is continuously increasing year by year which is positive indication for the company that company is having ability to meet short term liabilities.12% and after that company makes a good U turn and now having ROE 12% which is very early growth for Insurance Company. (3) Profitability part of the Company is performing very well. (2) IDBI Federal Life Insurance Co Ltd. The proprietary ratio of the company is on declining phase which is not a positive signal for the company.1.24per share. Is a Zero debt Company which means that there is no Fix burden on the company to pay interest every year.1 On the overall evaluation at each and every aspect. The company was registered in the March 2008 and the impact of that is showing on return on equity share holder it was negative in year 2010-11 by 6. Same with the EPS it was also negative in the beginning but after that it started improving and now Rs.36 level of cash ratio which is very high in number as compare to the last year 1. however it is more than 1 every year it means that the all assets are arrange from the funds of equity as it is zero debt company so all the assets are purchase from the funds of equity. However the current level of Current Ratio is less than the required level (i. 2: ) Cash ratio of the company is in green zone because in the year 2013 -14 company is having 2.5. the following findings are found.e.816 and the Company belongs to the insurance industry so the level of cash ratio should be high at every time because at any time company need to be settle a huge claims. 61 .

so the company performed very well for continuous three year however in the 2013-14 it was declined.(4) In the Insurance industry the main problem for the companies are to manage their NPA’s But IDBI federal is having Zero NPA till now which is very positive for the company.68% in 2011-12 and 11. The Commission Ratio paid to the shareholder was 8.  Ratio analysis is immensely helpful in making a comparative of the financial statement for several years. Fixed Asset of the company are not showing a good numbers because in the year 2010-11 it was 170347000 but in year it is only 104222000. However it a new company so losses are usual and the Company belongs to the Insurance business in which a long period required to come to the profits but still company should try to minimise the losses. there is a 38% decrease in the fixed assets of the company. An Insurance Company should require a higher amount of Cash balance in its Accounts to meet out the Claim Settlement requirements of the Cash. Suggestion Company is the situation of the loss. IDBI Federal is a newly established Company and should require increasing the fixed Assets of the Company for future Growth prospective.16% in 2012-13 and 8.28% in 2013-14.19% in 2010 -11 and 8. Fixed Assets of the Company is decreasing. Cash Amount Available in the Balance Sheet of the Company is less than the required because as the nature of the business. 62 .

Company is Carrying a Loss since incorporation and claiming the set off of the carry forward losses. Discontinued policies are increasing. – Health Insurance. Retirement plan. Company should require to work on the Marketing of the product.As the deposits are increasing in very low rate as compare to the other Insurance Sector Companies.g. Company should try to finish that loss because this loss is over shadowing the profits earned by the company in the current year. Company is adopting a good policy to get it in a safe Zone and reach to a breakeven point in 5 years of Incorporation. Discontinuation of the policies is considered as a main drawback factor in the Insurance Sector Company should work on it. . Which is very good as compare to another Insurance Companies. In some area company don’t have the product e.  Products available with company are less comparatively less preferred by the clients.

63 .

Chapter – 6 Concl usion .

64 .

IDBI Federal Life Insurance CO. we have expanded our customer reach. strengthened our Operations. Despite challenges. Ltd. In the Product wise Company is only in Life Insurance and to success in competitive business Company require to start more products like in retirement plan. As we strengthen our industry presence.IDBI Federal Life Insurance Co. 65 . Company is doing good business because the premium received by the Company is increasing year by year and customer of the Company is also satisfied with the product of the Company because Persistency Ration is regularly increasing now it is 78% which is very high than other insurance companies. is consistently driving product and service innovations to cater to the need based priorities of Indian masses and help them enjoy the goodness of life. Ltd. we are inspired to do more. is a newly started Insurance Company and trying their best to get in a positive position since it belongs to Insurance business. However IDBI achieved Break Even in Year 2013 and on moving to generate profits. We are driven by our belief to touch and transform people’s lives and create value for all stakeholders. and developed a range of innovative savings and protection Solutions to address evolving customer aspirations. It takes a lot of time to recover the cost of starting of business. Health Insurance. Low Cost Accidental Insurance etc.


66 .

investopedia. Websites www. Company Accounts. Cost and Management Accounting. Financial Accounting.comX www. July 2010 Edition.idbifederal.Text Books The Institute of Company Secretaries of India. 10 edition. th (3) Financial management. 2011. I M Pandey. Fifth Edition. S N Maheshwari. vikas publishing house pvt ltd. Arya Publications.wikipedia.comX . S K Maheshwari. Ltd Accounting for management. DK Goyal and Shelly Goyal. vikas publishing house Pvt.

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