Project Report on FINANCIAL STATEMENT ANALYSIS OF BATA SHOES AND SERVIS SHOES For the Partial fulfillment of The

Requirement Of Bachelor Degree
AND

Under the Supervision of Prof. Dukhishyam Mohanty
P.N.Autonomous College

Submitted by
Pinki Parida

(+3 Final Year Commerce) Roll No- 68103U07099 (Year: 2007-10)

DECLARATION

I, Pinki Parida, student of +3 final year commerce,Accounting Hons. Roll no-68103U07099 of P.N.Autonomous College, Khurda hereby declare that the project Report entitled ´FINANCIAL STATEMENT ANALYSIS OF BATA SHOES AND SERVIS SHOESµ is my own original work based on the survey undertaken by me. I also declare that this report has not been submitted to any other University/ Institute for the award of any degree or any professional diploma.

Pinki Parida (+3 Final Year Commerce) Roll No- 68103U07099 (Year: 2007-10)

Dukhishyam Mohanty (Faculty Guide) .N. Autonomous College. Khurda Date: Prof.CERTIFICATE This is to certify that Pinki Parida has completed her project work on the subject entitled ´FINANCIAL STATEMENT ANALYSIS OF BATA SHOES AND SERVIS SHOESµ which is based on the survey / research study undertaken by him. The project report is completed by the candidate under my supervision. It is an original unaided research study completed under my supervision to meet the partial requirement of the Bachelor Degree of the P.

Pinki Parida (+3 Final Year Commerce) Roll No. I am also thankful to Prof.68103U070199 (Year: 2007-10) . D.Mohanty. The experience which is gained by me during this project is essential for me at this turning point of my career. Akhil Chandra Chand . I am thankful to Prof.S. Last but not the least I would like to thank company officials. my friends & family members for their constant support. for supervising my research project for valuable guidance.ACKNOWLEDGEMENT I would like to express my deep sense of gratitude to the respectable guide distinguished personalities for their precious suggestions and encouragement during the project.Principal for his support.

The primary objective of financial analysis is to forecast or determine the actual financial status and performance of a project .Common Size Financial Statement discloses the internal structure of the firm. whether by current or long-term debt or by equity funding. It shows the mix of assets that produce income and the mix of the sources of capital. It indicates the existing relationship between sales and each income statement account.

«. 14 a) Liquid Ratio«««««««««««««««««««. 15 b) Leverage Ratio««««««««««««««««««« c) Profitability Ratio«««««««««««««««««« d) Activity Ratio«««««««««««««. 33 f) Statement of Cash Flow«««««««««««««««..TABLE OF CONTENT Section I a) Introduction Introduction of Bata shoes Introduction of Serves shoes Project proceedings 1.. 32 e) Market Ratios«««««««««««««««««««. Ratio Analysis«««««««««««««««««.««««. 38 18 24 ..««««.

Bata International boasts 3.000 stores to serve markets in Africa. and Asia.000 . boots and much other kind of shoes under the choice of buyers Vision: Enabling people to advance with confidence and success Mission: To make our customer prosper. our staff excels and creates value for shareholders Introduction of Bata Shoes Company Bata Ltd. With operations in 68 countries. the Pacific. All told. is a privately owned global shoe manufacturer and retailer headquartered in Ontario. Finally. women.700 retail stores and 46 production facilities. based in Toronto. The company is led by a third generation of the Bata family. Total employment for the company exceeds 50. With supervision located in Singapore. Based in Paris. Canada. sports. Bata is organized into four business units. operating out of Mexico City. Bata Europe serves the European market with 500 stores. serves the Canadian market with 250 stores. Now they started manufacturing of shoes of various kinds for men. Bata Canada. softy shoes. Bata Latin America. Bata owns more than 4.Company¶s introduction: Introduction of Serves shoes company : Serves e are in leather trade since last 25 years having a tannery. sells footwear throughout Latin America.

and evaluating the performance of managers. to monitor financial performance. Data Processing and Analysis: We can use several tools to evaluate a company. setting goals. and to decide whether to invest in the company we will use Microsoft Word and Microsoft Excel work sheets to compute the different ratios and analysis. External analysts use ratios to decide whether to grant credit. thus providing value to stake holder of the bank. to forecast financial performance. but we will use one of the most valuable tool that is ³financial ratios Ratios are useful both to internal and external analysts of the firm. For internal purposes: ratios can be useful in planning for the future. Project proceedings: RATIO ANALYSIS: (1) PROFITABILITY RATIO¶S (2) Debt & Leverage Ratio¶s (3) Liquidity & Working Capital Ratio¶s (4) shareholder ratio¶s .VISION To be the premier organization operating locally and internationally that provided the complete range of financial services to all segment under one roof MISSION To develop and deliver the most innovative products manage customer experience deliver quality services that contribute to brand strength establish a competitive advantage and enhance profitability .

accounts receivables.25 Year Current Assets Current Liabilities Current ratio 2008 1591361 1896571 2009 2427082 1896571 0. and inventories.280 . Current liabilities consist of accounts payable. and other accrued expenses BATA SHOES Year Current Assets Current Liabilities Current ratio 2008 1398003 808720 1. marketable securities. accrued taxes.840 1. current maturities of long-term debt. Inventory Turnover Period (d) Accounts Receivable Collection Period (e) Accounts Payable Payment Period (a) Current Ratio Current Ratio = Current Assets / Current Liabilities Current assets normally include cash. short-term notes payable.(1)Liquidity & Working Capital Ratio s (a) Current Ratio (b) Quick Ratio (c) Avg.73 SERVIS SHOES 2009 1652271 734907 2.

6 Quick Ratio 20x8 0.840.1.8 Quick Ratio 20x7 0. SERVIS SHOES The ratios for the last 2 years are 0.4 1.4 0.73 ratio is lower which shows low short term.280.25 respectively this1.2 0 Bata Servis Interpretation BATA SHOES The current ratio for the year.73 & 2. & 1. 2008 & 2009 is 1. (b)Quick Ratio: Quick ratio=current assets-stock/current liabilities The debt to equity ratio is the most popular leverage ratio and it provides detail around the amount of leverage (liabilities assumed) that a company has in relation to the monies provided by shareholders .2 1 0.

78 0. Inventory Turnover Period 20x7 Avg.BATA SHOES Year Current assets-stock Current liabilities Quick ratio 2008 628007 808720 0.218 Avg. SERVIS SHOES Calculating this debt ratio we can see that it was 0. Inventory Turnover Period 20x8 Interpretation BATA SHOES We can see from the above calculations that this ratios continuously decreasing in the last two years.471 & 1. 2008 & 2009 respectively.218 the year. This shows increasing the ratio of the company .51 2009 377982 734907 SERVIS SHOES Year Current assets-stock Current liabilities Quick ratio 180 160 140 120 100 80 60 40 20 0 Bata Servis 2008 892505 1896571 0.471 2009 2308826 1896571 1.

92 2009 1182566 5355170 80.2 1 0.(c)Avg.08 SERVIS SHOES Year Inventory Cost of sales Avg inventory period 1.60 .78 2009 1274289 2942432 158.4 0.8 0.6 0.8 1.6 1. Inventory Turnover Period 20x8 2008 698556 3809633 66.4 1. Inventory Turnover Period: Avg inventory period = inventory / cost of sales*365 BATA SHOES Year Inventory Cost of sales Avg inventory period 2008 769996 2327134 120.2 0 Bata Servis Accounts Receivable Collection Period 20x7 Avg.

2 among two years.85.15 in the year 2009. Long-term debt is divided by the sum of long-term debt and shareholders' equity. the sum of long-term debt liabilities and shareholders' equity) to support a company's operations and growth. it declined to 1.Interpretation BATA SHOES We can see from the above calculations that this ratios continuously decreasing in the last two years.321 2009 893 5106578 0.064 SERVIS SHOES Year Trade receivable Sales Avg account receivable 2008 1904 4521147 0.66 and in 2009 it was 1. or capitalization (i.e. In 2008 it was 1.62 . In 2008 the ratio somewhat increased to 1..it delivers the key insight into a company's use of leverage.15 2009 2844 639323 1.33. However. BATA SHOES Year Trade receivable Sales Avg account receivable 2008 3482 3964187 0. This ratio is considered to be one of the more meaningful of the "debt" ratios . SERVIS SHOES Analysis shows that this ratio was as high as 1. (d)Accounts Receivable Collection Period: Avg account receivable period=trade receivable/sales*365 The capitalization ratio measures the debt component of a company's capital structure.

Shows below standard of 2:1 (e)Accounts Payable Payment Period: .65 and 0.52.45 40 35 30 25 20 15 10 5 0 Bata Servis Accounts Receivable Collection Period 20x8 Gross Profit Margin 20x7 Interpretation BATA SHOES It is obvious from the above calculations that there is a gradual fall in this ratio over the years. 0. SERVIS SHOES The ratios for the last 2 years are.

24 .37 Year Gross profit Sales Gross profit margin 2008 711514 4521147 15.Profit Ability Ratio s (a) Gross Profit Margin (b) Net Profit Margin (c) Assets Turnover Ratio (d) ROCE (a)Gross Profit Margin: Gross profit = gross profit/sales*100 Sales to working capital give an indication of the turnover in working capital per year.29 SERVICE SHOES 2009 2164116 5106578 42. A low working capital indicates an unprofitable use of working capital. BATA SHOES Year Gross profit Sales Gross profit margin 2008 1637053 3964187 41.73 2009 1038153 6393323 16.

2008 & 2009 is. or the "working capital ratio". 41. .16 14 12 10 8 6 4 2 0 Bata Servis Net Profit Margin 20x7 Gross Profit Margin 20x8 Interpretation: BATA SHOES This liquidity ratio for the years.73 &16. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash.24 shows the ratio (b)Net profit margin: Net profit margin= PBIT/sales*100 Positive working capital means that the company is able to pay off its short-term liabilities.29& 42. 15.37 compared to standard ratio this ratio is lower which shows low short term liquidity efficiency at the same time holding less than sufficient current assets mean inefficient use of resources SERVIS SHOES The ratios for the last 2 years are. Also known as "net working capital". accounts receivable and inventory).

SERVIS SHOES This ratio increased to a great extent in 2008. which shows good short term liquidity efficiency.74 2009 663822 5106578 12. almost double of the year 2009 .23 2009 878203 6393323 13.BATA SHOES Year PBIT sales Net profit margin 2008 503999 3964187 12.71 SERVICE SHOES Year PBIT sales Net profit margin 2008 236180 4521147 5.99 30 25 20 15 10 5 0 Bata Servis Assets Turnover Ratio 20x7 Net Profit Margin 20x8 Interpretation: BATA SHOES It is very clear from the above calculations that the working capital of the Bata is gradually increasing over the years.

21 2009 5106578 191251 26.21 30 25 20 15 10 5 0 Bata Servis Assets Turnover Ratio 20x7 Assets Turnover Ratio 20x8 . BATA SHOES Year sales Cap employed Assets turnover ratio 2008 3964187 206334 19.70 SERVICE SHOES Year sales Cap employed Assets turnover ratio 2008 4521147 576630 7.85 2009 6393323 523901 12.(e) Assets turnover ratio: Assets turnover ratio=sales/cap employment The interest coverage ratio tells us how easily a company is able to pay interest expenses associated to the debt they currently have.

generally called the debt ratio.21 times in 2009. measures the percentage of funds provided by the creditors.41 2009 478203 523901 0.21 times in 2008 and 26. this company has covered their interest expenses 19. BATA SHOES Year PBIT Capital employed Return cap employed 2008 503999 191251 2.Interpretation BATA SHOES We can see from this ratio analysis that. It means they have performed pretty much same in 2008 and 2009.85 times in 2008 and 12. (d)Return on capital employed: Return on capital employed=PBIT/capital employed*100 The ratio of total debt to total assets. this company has covered their interest expenses 7.70 times in 2009.913 . SERVIS SHOES We can see that.64 2009 663822 206334 3.22 SERVIS SHOES Year PBIT Capital employed Return cap employed 2008 236180 576630 0. The proportion of a firm's total assets that are being financed with borrowed funds.

815 2009 1301301 799500 1. BATA SHOES Year Profit after Taxation Number of Shares 2008 10084037 690000 14.61 SERVIS SHOES 2009 15614020 759000 20. Earning Per Share.57 Earning Per Share Year Profit after Taxation Number of Shares 2008 3130229 650000 4.627 Earning Per Share .Interpretation: BATA SHOES Calculating the debt ratio. Earnings per share are generally considered to be the single most important variable in determining a share's price. we came to see that this company is highly leveraged one SERVIS SHOES Calculating the debt ratio. It is also a major component used to calculate the price-to-earnings valuation ratio. Earnings per share serve as an indicator of a company's profitability.EPS: Earning Per Share = Profit after Taxation Number of Shares The portion of a company's profit allocated to each outstanding share of common stock. we came to see that this company is highly leveraged one.

815 2. SERVIS SHOES The P/E ratio was 2.61 0.14 times.14 Interpretation BATA SHOES The P/E ratio was 0.68 times in the following year.49 times which is an alarming signal for the potential investors.68 2009 10 20. in 2009 it declined to 0.57 0.54 times in 2006 and increased further to as high as 0.83 times in 2006 and decreased a little bit in 2008.49 SERVIS SHOES Year Stock price per share EPS Price / Earning Ratio 2008 10 4. . However. However.) BATA SHOES Year Stock price per share EPS Price / Earning Ratio 2008 10 14. in 2009 it increased as much higher than before to 6.Price / Earning Ratio: Price / Earning Ratio = Stock Price Per Share Earning Per Shares The Price-Earnings Ratio is calculated by dividing the current market price per share of the stock by earnings per share (EPS). (Earnings per share are calculated by dividing net income by the number of shares outstanding.627 6.07 2009 10 1.

597 20.61 0. .175 SERVIS SHOES Year DPS EPS Dividend Payout Ratio 2008 00 4.21 1.Dividend cover: Dividend Payout Ratio = Earning per share Dividends per shrare The percentage of earnings paid to shareholders in dividends.57 0.815 00 2009 1.0014 14.137 2009 3. BATA SHOES Year DPS EPS Dividend Payout Ratio 2008 2.627 0.74 .

The management and financial analyst of the company analyze the financial statements for making any further financial and administrative decisions for the betterment of the company .Conclusion Financial Statement Analysis is a method used by interested parties such as investors. creditors. This report mainly deals with two companies. It is required by law that all private and public limited companies must prepare the financial statements like. and management to evaluate the past. and projected conditions and performance of the firm. current. balance sheet and cash flow statement of the particular accounting period. income statement.

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