1.

1 OUTLINE OF THE PROJECT

Financial statements are records that offer a sign of the organization’s financial
position. It quantitatively describes the financial health of the hotel. It helps in the
analysis  of company’s prospects and risks for the aim of creating business solutions.
The main objective of financial statements is to supply data regarding information
about the financial position, performance and associated degree of changes in
financial position of an enterprise which  is helpful to a wide range of users in making
economic decisions.
Financial statements should be easily perceivable, relevant, reliable and comparable.
They provide an accurate position of a company’s condition and operating results in a
condensed form. The assets that are reported , the liabilities and the  equity are
directly associated to an organization's financial position whereas reported income and
expenses are directly associated to an organization's financial performance. Analysis
and interpretation of financial statements helps in deciding the liquidity position,
profitability, financial viability, long term solvency, and soundness of a firm. There
are four basic types of financial statements: balance sheet, cash flow statements,
income statements and statements of retained earnings.
The analysis of financial statement is a method of evaluating the relationship between
component parts of financial statement to obtain a better understanding of firm
financial position. Analysis is a method of critically examining the accounting
information given in the financial statements. For the purpose of analysis the
individual items are studied and their interrelationship with other related data is
provided. Thus the analysis of the financial statements refer to modification of the
information contained in financial statement in a way so as to afford a full diagnosis
of the profitably and financial position of the firm concern. An attempt has been
carried out in this project to analyse and interpret the financial statements of THE
METROPLACE HOTELS.

1.1.1 NEED AND IMPORTANCE OF THE STUDY:

• To study the perception of retailers towards the product of the Company.

• To study the relation between the customer and the company.
• To know about the quality of the product on customer perception.
• To know how the company have to develop the product.
1.1.2 SCOPE OF THE STUDY:
• To assess the efficiency and performance of HOTEL JOYCE.
• To help the management to make a comparative study of the profitability of firm in
different periodic time.
• To study the financial position of the hotel in respect of sales expenses,
profitability and using their capital. 
• To know that what kind of financial policies are adopted by the management and
analyse whether it is efficient or not.
• To analyse whether the firm has sufficient funds to meet its short-term and long-
term liabilities or not.
• To evaluate the inventory they have, receivables and their cash management
performance.
1.1.3 OBJECTIVE OF THE STUDY
Primary Objective:
 To know about the customer’s perception towards taste and preference with
reference to THE METROPLACE HOTELS.
Secondary Objective:
 To know about the  customer opinion about “THE METROPLACE
HOTELS” service.
 To know the quality of the product.
 To identify customer perception about the competitors products/ services.
 To find the service offered by “THE METROPLACE HOTELS” is worth
for money.
1.1.4 RESEARCH METHODOLOGY
    Research Methodology is an approach to methodically tackle the examination
issue. It might be comprehended as a study of concentrating how research is done
deductively. At the point when we discuss inquire about technique we discuss look
into strategies as well as consider the rationale behind the strategies we use with
regards to the exploration study and why we are not utilizing different strategies so
examine results are fit for being assessed either by the analyst himself or by others.

 Research Area:
Research area of my study is THE METROPLACE HOTELS. More specifically
my research area is to do financial analysis of this company. It includes sales,
production, cost, profit, liquidity and solvency analysis of this company. To assess
the efficiency and performance of THE METROPLACE HOTELS.

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1.1.4 RESEARCH METHODOLOGY

Research Methodology is an approach to methodically take care of the exploration

issue. It might be comprehended as a study of concentrating how research is done
logically. At the point when we discuss inquire about strategy we discuss look into
strategies as well as consider the rationale behind the techniques we use with
regards to the exploration study and why we are not utilizing different techniques
so examine results are equipped for being assessed either by the analyst himself or
by others.

Research Area:
Research area of my study is HOTEL JOYCE. More specifically my research area
is to do financial analysis of this company. It includes sales, production, cost,
profit, liquidity and solvency analysis of this company. To assess the efficiency
and performance of HOTEL JOYCE.
Research Design:
Research configuration is a course of action of conditions for assortment and
examination of information in a way that plans to join pertinence to the reason with
economy in technique. Actually, the examination configuration is the theoretical
structure inside which research is directed.
It establishes the outline for the assortment, estimation and examination of
information. When the examination venture is distinguished and characterized
plainly the following stage is to structure the exploration. The exploration
configuration gives a total rule to examination the information. Choice with respect
to what, where, when, how much, by what means concerning a request or an
examination study establish an exploration plan.
Research configuration is required in light of the fact that the going great of the
different research tasks in this way making research as proficient as conceivable
yielding maximal data with insignificant consumption of endeavors, time and cash.
Types of Research: -
There are several types of researches, but very few are popular. Those
among the popular are:

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Descriptive research
Experimental research
Exploratory research
My examination is to be led chiefly on exploratory investigation as it were. In
exploratory research, the emphasis is on the disclosure of thoughts. An exploratory
investigation is commonly founded on the auxiliary information that are promptly
accessible. Exploratory research has the objective of planning issues all the more
unequivocally, explaining ideas, gathering clarifications, picking up bits of
knowledge and taking out unrealistic thoughts.
It doesn't have a formal and unbending plan as the specialist may need to alter his
concentration or course, contingent upon the accessibility of news thoughts and
connections among factors.
Information Collection:
While choosing about the strategy for information assortment to be utilized for the
investigation, the analyst should remember two kinds of information viz., Primary
and Secondary.
The essential information are those which are gathered once more and just because,
and along these lines happen to be unique in character. It very well may be
gathered through Observation, Interview, Questionnaires, buyer boards, and so
forth.
The optional information, then again, are those which have just been gathered by
another person and which have just been gone through the factual procedure. Right
now, of information assortment work is simply that of the arrangement.
Data used for analysis in this project has been collected from secondary sources
Like:
Journals, magazines, books and an annual report.
Periodic brochures and reviews of HOTEL JOYCE.
Organization
My project is based on the analysis of a secondary data for the company. It
includes the information from the company annual reports which includes financial
statements like balance sheet and income statements and such other information

4
form text books of financial management and journals and magazines has also
been collected
Methods of Financial Analysis
Comparative Statements Analysis
Schedule of Changes in Working Capital
Cash flow Statement Analysis
Ratio Analysis
WORKING PROCEDURE FOR THE CASH FLOW STATEMENT:
Income Statement manages stream of money which incorporates money
reciprocals just as money. This announcement is an extra data to the clients of
Financial Statements. The announcement shows the approaching and active of
money. The announcement evaluates the ability of the undertaking to create money
and use it. Subsequently a Cash-Flow explanation might be characterized as an
outline of receipts and payment of money for a specific timeframe. It additionally
clarifies explanations behind the adjustments in real money position of the firm.
Incomes are money inflows and surges. Exchanges which increment the money
position of the element are called as inflows of money and those which decline the
money position as surges of money.
PROCEDURE:
(i) Operating Activities
Income from working exercises are basically gotten from the chief income
producing exercises of the endeavor. A couple of things of incomes from working
exercises are :
(I) Cash receipt from the offer of products and rendering administrations.
(ii) Cash receipts from eminences, expense, Commissions and other income.
(iii) Cash installments to providers for products and enterprises.
(iv) Cash installment to representatives
(vi) Cash installment or discount of a Income charge.
Determination of cash flow from operating activities
There are two stages for arriving at the cash flow from operating activities

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Stage-1
Calculation of operating profit before working capital changes, It can be calculated
in the following manner.
Net profit before Tax and extra ordinary Items xxx
Add Non-cash and non-operating Items which have already been
debited to profit and Loss Account i.e.
Depreciation xxx
Amortisation of intangible assets xxx
Loss on the sale of Fixed assets xxx
Loss on the sale of Long-term Investments xxx
Provision for the tax xxx
Dividend paid xxx
Less : Non-cash and Non-operating Items which have already been credited
to Profit and Loss Account i.e.
Profit on sale of fixed assets xxx
Profit on sale of Long-term investment xxx
Operating profit before working Capital changes xxx

Stage-II
After getting operating profit before working capital changes as per stage I, adjust
the increase or decrease in the current assets and current liabilities.
The following general rules may be applied at the time of adjusting current assets
and current liabilities.
A. Current assets
(i) An increase in an item of current assets causes a decrease in cash inflow
because cash is blocked in current assets.
(ii) A decrease in an item of current assets causes an increase in cash inflow
because cash is released from the sale of current assets.

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B. Current liabilities
(i) An increase in an item of current liability causes a decrease in cash outflow
because cash is saved.
(ii) A decrease in an item of current liability causes increase in cash out flow
because of payment of liability.
Investing Activities
Investing Activities refer to transactions that affect the purchase and sale of fixed
or long term assets and investments.
Examples of cash flow arising from Investing activities are
1. Cash payments to acquire fixed Assets
2. Cash receipts from disposal of fixed assets
3. Cash payments to acquire shares, or debenture investment.
4. Cash receipts from the repayment of advances and loans made to third parties.
Thus, Cash inflow from investing activities are
– Cash sale of plant and machinery, land and Building, furniture, goodwill etc.
– Cash sale of investments made in the shares and debentures of other companies
– Cash receipts from collecting the Principal amount of loans made to third parties.
Cash outflow from investing activities are:
– Purchase of fixed assets i.e. land, Building, furniture, machinery etc.
– Purchase of Intangible assets i.e. goodwill, trade mark etc.
– Purchase of shares and debentures
– Purchase of Government Bonds
– Loan made to third parties

Step- III
Financing Activities
The third section of the cash flow statement reports the cash paid and received
from activities with non-current or long term liabilities and shareholders Capital

7
Examples of cash flow arising from financing activities are
– Cash proceeds from issue of shares or other similar instruments.
– Cash proceeds from issue of debentures, loans, notes, bonds, and other short-
term borrowings
– Cash repayment of amount borrowed Cash Inflow from financing activities are
– Issue of Equity and preference share capital for cash only.
– Issue of Debentures, Bonds and long-term note for cash only
Cash outflow from financing activities are:
– Payment of dividends to shareholders
– Redemption or repayment of loans i.e. debentures and bonds
– Redemption of preference share capital
– Buy back of equity shares.
Comparative Statement Analysis
Comparative financial statements are useful in analyzing the changes over time.
They carry data relating to two or more years and facilitate the comparison of an
item with previous years and even the future figures may be projected using time
series / regression analysis.
The two comparative statements are:
1. Balance Sheet
2. Income Statement

Interpretation of Comparative Balance Sheet

The mediator is required to contemplate the accompanying angles:
1. Current Financial Position and Liquidity Position
See the Working Capital in both the years. (WC is abundance of CAs over CLs)
The expansion in WC will mean improve in the current money related situation of
the business.
Fluid resources like Cash close by, money at bank, Receivables show the liquidity
position

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2. Long haul Financial Position
Study the progressions in Fixed resources, long haul liabilities and capital
Insightful strategy will be to back fixed resources by raising long haul reserves.

3. Gainfulness of the worry

The investigation of increment or reduction in held income, different stores and
surplus will empower to see whether the productivity has improved or not.
Translation of Income Statements
The measure of GP ought to be considered
The expansion or decline in deals ought to be contrasted and the increment or
reduction in CGS.
The investigation of operational benefits
Operational benefits = GP – Office &Admin costs – Selling and Distribution
Expenses
The investigation of Net Profits
The expansion or lessening in NP will give a thought regarding the general
gainfulness of the worry.
NP = OP – Non-working exp + Non-working Income
A conclusion ought to be framed about productivity of the worry climate is
acceptable or not.
Regular Size Statement Analysis
Taking deals to be equivalent to 100, every single other thing in the salary
explanation of a year are communicated as rates to the deals.
In the event of accounting report the absolute resources are made equivalent to 100
and every single other resource are communicated in relative rates. The equivalent
is the situation with liabilities with the all out liabilities being 100.

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Working capital:
Working capital is cash accessible to an organization for everyday activities.
Basically, working capital estimates an organization's liquidity, productivity, and
by and large wellbeing. Since it incorporates money, stock, records of sales,
creditor liabilities, the segment of obligation due inside one year, and other
transient records, an organization's working capital mirrors the consequences of a
large group of organization exercises, including stock administration, obligation
the executives, income assortment, and installments to providers.

Working Capital Formula:

You can compute the working capital of an association by utilizing the
accompanying equation:
Working Capital = Current Assets - Current Liabilities
Proportion Analysis:
A proportion is a number juggling connection between two figures.
Budgetary proportion examination is an investigation of proportions between
different things or gathering of things in fiscal reports.

Gainfulness Ratios:
Gainfulness proportions measure the aftereffects of business tasks or in general
execution and viability of the firm. The absolute most well known gainfulness
proportions are as under:

Net benefit proportion

Net benefit proportion
Working proportion
Cost proportion
Profit for investors' speculation or total assets
Profit for value capital

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Profit for capital utilized (ROCE) Ratio

Liquidity Ratios:

Liquidity proportions measure the transient dissolvability of budgetary situation of

a firm. These proportions are determined to remark upon the transient paying limit
of a worry or the company's capacity to meet its present commitments. Following
are the most significant liquidity proportions.
Current proportion
Fluid/Acid test/Quick proportion

Action Ratios:
Action proportions are determined to quantify the effectiveness with which the
assets of a firm have been utilized. These proportions are likewise called turnover
proportions since they show the speed with which resources are being transformed
over into deals. Following are the most significant movement proportions:

 Stock/Stock turnover proportion

 Indebted individuals/Receivables turnover proportion
 Normal assortment period
 Loan bosses/Payable turnover proportion
 Working capital turnover proportion
 Fixed resources turnover proportion
 Over and under exchanging

Long haul Solvency or Leverage Ratios:

Long haul dissolvability or influence proportions pass on an association's capacity
to meet the intrigue expenses and installment timetables of its long haul
commitments. Following are the absolute most significant long haul dissolvability
or influence proportions.

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Obligation to-value proportion
Exclusive or Equity proportion
Proportion of fixed resources for investors reserves
Proportion of current resources for investors reserves
Intrigue inclusion proportion
Capital outfitting proportion

1.1.5    LIMITATION OF THE STUDY

The examination led and done is explanatory, subject to the accompanying
constraints:
 This examination is basically done dependent on the auxiliary information
gave in the fiscal summaries.
 The figures taken from the budget report for examination were chronicled in
nature.
 The examination is restricted to a brief time of 4 months. This would not
picture the specific situation of organization.
 Top to bottom investigation of information is preposterous because of time
requirement.
 There might be some fragmentary contrasts in the determined proportions.
 Changes in value level will influence the equivalence of proportions
between two budgetary periods.
 A portion of the information has not given by the organization because of
support of money related mystery.

1.2 INDUSTRIAL PROFILE:

The Hotel business has been one of the most serious enterprises particularly in the
21st century. Therefore, upgrading client reliability is one of the key parts of
improving seriousness in the business just as guaranteeing business congruity. The
accommodation business is an industry that relies upon the accessibility of

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relaxation time and extra cash. A cordiality unit, for example, an eatery, lodging,
or an entertainment comprises of different gatherings, for example, office support
and direct tasks
The accommodation business is an enormous umbrella industry that contains a few
distinct divisions of organizations:
Air and land travel
Lodging
Nourishment and drink
Amusement, for example, films/theater/sports
Vacation spots
Because of the assortment of organizations, the neighborliness business is normally
one of the biggest income makers for nations. Cordiality as a rule centers around
additional cash that individuals need to spend on pleasurable things and relaxation,
however not generally. Business shows, trainings, and gatherings in various
nations can likewise influence the accommodation business enormously. While the
friendliness business can be impacted by a sort of guest, it can likewise be affected
by household and universal voyagers.
India is now and then idea of as a poor economy; in any case, as of late over the
most recent quite a long while the Indian economy has extended impressively. The
economy has begun to develop just as the individual abundance of its kin. This
local achievement has made the requirement for additional cafés, lodgings, and
diversion scenes for movement. Be that as it may, the household side of the travel
industry isn't every one of that makes India's friendliness; piece of the pie so huge.
India is a nation with a long history, and truly numerous individuals visit the nation
for profound reasons, getting guests from everywhere throughout the world. Also,
the nation has 32 national legacy locales getting history buffs, and a wide
assortment of nature holds and stops for those searching for experience. The
assortment of accessible destinations settles on India a well known decision for
some guests. This has roused numerous lodging networks like Marriott to begin
working with India to make more inns inside the nation. What assists this with
attempting is that there are a ton of void structures in India, so organizations
coming in don't need to go through cash to manufacture another lodging. Rather,

13
they take old structures, tidy them up, and make them new once more. The
recovery of the old is less expensive, and furthermore improves regions.
Different zones in the cordiality business originate from organizations that have re-
appropriated their work to India, in light of the fact that the wages are so a lot less
expensive. This gets businessmen who are meeting and working with the universal
organizations, therefore reinforcing the business.

1.3    COMPANY PROFILE:

1.4   PRODUCT PROFILE:

II     REVIEW OF LITERATURE

I. A Practitioner’s Guide (2011). By Martin S. Fridson, CFA, and Fernando Alvarez

states

Fiscal summary Analysis: A Practitioner's Guide is an efficient, careful

investigation of the difficulties confronting professionals who depend on budget
reports to settle on venture and loaning choices. In the prelude, Martin Fridson and
Fernando Alvarez express that "they will likely familiarize perusers who have just
gained fundamental bookkeeping abilities with the inconveniences that emerge in
applying reading material inferred information to this present reality."

The writers set up the focal point of the book in Chapter 1, suitably titled "The
Adversarial Nature of Financial Reporting," wherein they challenge the exemplary
reading material view that the objective of budgetary detailing is to gauge precisely
the productivity and monetary state of an organization. Despite what might be
expected, they contend, the reason for budgetary revealing is to acquire modest
capital, Simply expressed, the lower the loan cost at which an organization can get
or the higher the cost at which it can offer stock to new financial specialists, the
more prominent the abundance of its investors. From this point of view, the best
sort of fiscal report isn't one that speaks to the organization's condition most

14
completely and most reasonably, but instead one that delivers the most noteworthy
conceivable FICO assessment and value profit various. In the event that the most
noteworthy evaluations and products result from articulations that measure benefit
and monetary condition mistakenly, the rationale of guardian obligation to
investors obliges the board to distribute that sort, instead of the sort held up as a
model in bookkeeping reading material.

It is a calm evaluation of the calling; all through the rest of the book, Fridson and
Alvarez over and over show that budget reports frequently disguise as much data
as they uncover. Furthermore, to convolute issues, the creators show that a lot of
what comes to pass in the business is flawlessly legitimate, in any event, when it
appears that it ought not be.

In Chapter 8, "The Income Statement" (in Part 2), the creators give extra proof that
monetary revealing can't be fully trusted and that control of the pay explanation is
a normal practice. Organizations routinely assign costs as "unprecedented,
nonrecurring, or surprising" to give the feeling that they are one-time occasions
that ought not be a piece of future overall gain projections:

A pursuit of the Capital IQ database uncovered that 487 of the organizations spoke
to in the Standard and Poor's 500 Index announced bizarre things in any event half
of the years from 2002 to 2009. About half (230) recorded strange things in every
one of the eight years of that length.

Clearly, things that repeat every year, or even semiannually, are not uncommon,
nonrecurring, or bizarre. Experts should know about these circumstances and be set
up to recognize really one-time occasions and those that are just assigned as such
by the announcement backer.

In Chapter 9, "The Reliability of Disclosure and Audits" (in Part 3), the creators
clarify the difficulties innate in our current inspecting framework. In principle,
traded on an open market organizations are required to procure profoundly

15
prepared reviewers to approve their budget summaries every year. This
prerequisite should guarantee financial specialists that the announcements have
been set up in consistence with sound accounting guidelines.

By and by, in any case, "a strain essentially exists between norms of expert
greatness (which, it must be recognized, matter a lot to most bookkeepers) and
dread of the outcomes of losing a customer." Auditors, all things considered, are
paid by the organization giving the announcements, and they can push just so far
without losing business.

Taking a harder line may not create more full exposure for financial specialists yet
only mean giving up the evaluating agreement to another firm with an additionally
pleasing approach. Given the watched hole among hypothesis and practice in
money related revealing, clients of budget reports must give themselves an extra
layer of security through extreme investigation of the numbers.

Section 4, "Gauges and Security Analysis," is somewhat not quite the same as the
initial three. It gives a wide review of systems for use in determining and breaking
down, just as a conversation of the constraints of each. Fridson and Alvarez
perceive that these are the most significant elements of an investigator's activity,
yet they additionally recognize that foreseeing what's to come is unchangeably
testing. For instance, in the finish of Chapter 13, "Credit Analysis," they state, "At
last, credit examiners must outfit themselves with all the apparatuses depicted right
now not be made careless by them."

One last point to offer about Financial Expression Analysis is that it is shockingly
engaging, especially thinking about the class.

investigation, thus I saw the book as a genuine fortune trove of fascinating bits of
knowledge. A prepared expert, be that as it may, will without a doubt be
increasingly acquainted with the issues the writers talk about and hence may not
discover the book very as significant. Be that as it may, for anybody with a passing

16
enthusiasm for the subject, or for new examiners despite everything learning the
exchange, Financial Statement Analysis is an astounding asset.
 
II.Kimberlee Leonard ,State Farm agency in Southern California states

For most entrepreneurs, investigating budget summaries may appear to be

overpowering. While numerous entrepreneurs may re-appropriate the formation of
fiscal reports to a bookkeeper, figuring out how to break down them decides the
money related wellbeing of the organization. Fiscal reports ought to be broke down
once per year, if not quarterly, to exploit the data they offer.

Income Review
An income articulation is one of the budget summaries utilized in budgetary
examination. As the name suggests, it represents cash in and cash out. It shows the
money related dissolvability of an organization to pay its liabilities anytime.
A few organizations have repetitive incomes yet reliable costs. Realizing that the
Christmas surge needs to subsidize a moderate first quarter of costs is significant
for entrepreneurs to oversee monetary assets.

Organization Liability Review

The budget reports show the current liabilities. These incorporate business
advances, credit extensions, Visas and credit reached out from merchants. An
entrepreneur who is intending to apply for a business extension credit can take a
gander at the budget reports and decide whether he needs to lessen existing
liabilities before applying. Loan specialists take a gander at the fiscal reports and
think about the incomes, resources and existing liabilities.

Survey Assets and Inventory

The monetary record is a part of the budget report. Resources are remembered for
the asset report. Breaking down whether there is an excessive amount of stock or
too little enables entrepreneurs to get ready for up and coming deals months.

17
Keeping an excess of stock available is a potential issue that ties up cash, while not
having enough stock can prompt losing clients and piece of the pie.

Recognize Trends and Determine Steps Needed

Breaking down the budget reports from quarter to quarter and year to year help
entrepreneurs see inclines in development. A youthful business may have
misfortunes in the early years while it is creating items and a client base.
Simultaneously, explanations show whether the entrepreneur is meeting anticipated
evaluations.
On the off chance that a business is anticipating a 10 percent yearly development
however just accomplishing 7 percent, business pioneers need to search for
approaches to either reduce expenses or increment incomes. The budget report
distinguishes the data to investigate further.

Looking for Investment Capital

At the point when a business looks for accomplices or speculators, the fiscal
summaries are basic. Dissecting the announcements not just assists speculators
with deciding whether an organization is bringing in cash, yet it likewise assists
with distinguishing a sensible expense for every offer. Investors typically put
capital in an organization for development; in this manner, investor value is
characterized dependent on the capital speculation added to resources, with
liabilities subtracted, to characterize all out investor value.

III. Charles Crawford, a former commercial banker, has been a business writer in New
York since 1990. 

Singular speculators or firms that are keen on putting resources into private
ventures utilize budgetary investigation methods in assessing objective
organizations' monetary data. By analyzing past and current budget summaries -
accounting reports, salary explanations and income proclamations potential
financial specialists can shape suppositions about venture worth and desires for
future execution. Money related investigation can likewise help entrepreneurs as

18
they gauge the impact of specific choices, for example, getting, on their own
organizations.

Fiscal reports
On the off chance that a firm is keen on putting resources into an independent
company, its budgetary investigators will probably inspect the organization's past
and current fiscal reports. The target is find potential shortcomings and any issue
territories that ought to be talked about with organization proprietors. The experts
would search for abnormal developments in things from year to year and for
designs in income and benefits. Consistent development is ordinarily positive, and
serious good and bad times may be an indication of friction. Income explanations
ought to show how the business regularly gets and utilizes money.
The supervisory group of an independent company may lead a comparative
examination as a piece of a yearly survey of the business. The organization's
money related counselor or bookkeeper may take an interest in such audits.

Proportion Analysis
Proportion examination thinks about qualities inside the organization from year to
year and against different organizations and the business. Liquidity proportions, for
example, the present proportion (current resources partitioned by current liabilities)
demonstrate the organization's capacity to pay its transient commitments on
schedule. The obligation proportion (complete resources isolated by absolute
liabilities) shows the amount of the organization's advantages are given by
obligation. A lower rate shows a lower reliance on obligation. The higher the rate,
the more hazard the organization has taken on. Entrepreneurs and private venture
supervisory groups may utilize proportion investigation in their ordinary arranging,
to quantify their organizations against others in their industry. On the off chance
that proportion investigation shows that an organization has significantly more
obligation than different organizations in its industry, the proprietor may be incited
to pay off or lessen a few credits

19
Future Performance
Money related examination can help independent companies in their arranging.
Assessment of an organization's accounting report, pay explanation and income
articulation deciphering patterns and recognizing qualities and shortcomings may
yield enough data to empower the board to make projections of incomes and
benefits for three to five years. With information on patterns in the general
economy and in the organization's business, they can frame a sensible gauge of
how well the organization may admission in the coming years. Such examinations
can be useful to organizations that need to design hardware buys and different
activities.

Advantages
By utilizing master monetary investigation on a progressing premise, firms can
settle on venture choices or proposals dependent on sound thinking. Organizations
may utilize their own money related experts who might oversee the organization's
qualities and shortcomings and exhort upper administration as needs be. On the
other hand, a few organizations may choose to connect with the administrations of
budgetary specialists who could direct intermittent money related investigations.

IV. Kate Bluest has been writing for various online publications since 2005
Fiscal summaries show the budgetary status of your organization. Checking the
monetary soundness of your business can have the effect among disappointment
and achievement. For instance, appropriately investigating fiscal reports will
prevent you from going through cash that you don't have and furthermore let you
know when you can send assets to take your business to the following level.

Essential Financial Statements

There are three essential budget reports: the monetary record, the salary
proclamation and the income explanation. The monetary record shows the
fundamental bookkeeping condition: Assets = Liabilities + Owner's Equity.
Resources incorporate everything of significant worth that a business claims or is
owed, and liabilities are what a business owes. Proprietor's value the equalization

20
left over after you subtract liabilities from resources is the a lot of the business.
The pay proclamation, otherwise called the benefit and misfortune articulation,
shows the gainfulness, or scarcity in that department, of a business over a set
period. The income explanation changes over funds from gathering premise to
money premise and measures the progression of money all through the business.

Dynamic Tools
Since budget summaries help you to see a depiction of your organization's
budgetary position, they are dynamic instruments. Budget summaries Broadway
slants, the rate at which you are gathering receivables, the rate at which you are
paying banks and any income issues. For instance, accounts receivables reports
show who is paying on schedule, 30 days late, 60 days late and 90 days late.
Utilize this budget report to figure out which clients are on favorable terms, are
needing assortment endeavors or have uncollectible open solicitations (if a receipt
has not been paid inside a half year, after assortment endeavors, this is most likely
an uncollectible obligation). Records payables reports let you realize what is owed
to whom and when. You can likewise produce reports to tell you what your stock
levels are and the estimation of the stock. You can create a report to respond to
practically any question you have about your business that identifies with what you
claim, what you owe and how much cash your organization makes.

Important to Get Credit

Organizations frequently need credit as a piece of their system to remain
monetarily suitable. Organizations apply for business advances, business Visas and
acknowledge terms for a seller. In practically all circumstances, the moneylender
will request to see an asset report and run your credit report to conclude whether to
advance you credit. An asset report will show a lender how much obligation you
are conveying and how much cash is streaming all through your business.
Notwithstanding the budget summaries you hand more than, an inner records
payable report encourages you to cover your tabs on schedule and stay with your's
financial assessment high so you stay a decent credit hazard.

21
III    DATA ANALYSIS AND INTERPRETATION:

COMPARATIVE STATEMENT ANALYSIS:-

COMPARATIVE BALANCESHEET:

TABLE

Particulars 2017 2018 Increase/Decrease %

Assets
Current assets:

Cash 21,000 74,000 53,000 252

Cash at bank 2,59,000 2,31,000 (28,000) (10.81)
Stock 11,08,000 14,62,000 3,54,000 31.95
Sundry debtors 11,62,000 14,87,000 3,25,000 27.97
Total current assets (A) 25,50,000 32,54,000 7,04,000 301.11

Fixed Assets:
Gross block-deprecation 5,33,000 4,48,000 (85,000) (15.95)

Total fixed assets (B) 5,33,000 4,48,000 (85,000) (15.95)

Total Assets 30,83,000 37,02,000 6,19,000 20.07

LIABILITIES
CAPITAL:
SHARE CAPITAL 1,40,000 9,50,000 8,10,000 578
SHARE APPLICATION AD.. 7,37,000 71,000 (6,66,000) (90.36)
RESERVES AND SURPLUS - 1,40,000 1,40,000 -
Total 8,77,000 11,61,000 284000 32.38

CURRENT LIABILITIES:
CREDITORS 10,41,000 11,53,000 1,12,000 10.75
PROVISIONS 43,000 3,61,000 3,18,000 739
OTHERS - 1,34,000 1,34,000 -
Total current liabilities 10,83,000 16,48,000 5,64,000 52.07

LOAN FUND:
SECURED LOAN 11,22,000 8,63,000 (2,59,000) 23.08
UNSECURED LOAN - 30,000 30,000 -
TOTAL LIABILITIES 30,83,000 37,02,000 6,19,000 20.07

22
 

CHART

INTERPRETATION:

FIXED AND CURRENT ASSETS COMPARISON

23
COMPARATIVE INCOME STATEMENT:

Increase/Decreas
Particulars 2017 2018 e %
45,77,30
Sales 54,51,000 0 -8,73,700 16.03
40,56,50
(-)Cost of goods sold 32,10,000 0 8,46,500 26.37
22,41,000 5,20,800 -17,20,200 76.76
(-) Administrative
Expenses 8,48,100 9,17,000 68,900 8.12
Selling expenses 1,00,000 80,400 -19,600 19.6
Depreciation 79,000 82,000 3,000 3.79
12,13,900 -5,58,600 -1,34,500 11.08
Profit/loss -10,27,100 -5,58,600 16,28,700 158.57

INTERPRETATION
      The Income and Expenditures for the years 2018 and 2017 has been discussed in this section.
The company has had a total income of 45,77,300 in the year 2018 which is decreased by 16.03
% and the difference in the value is seen to be Rs. 5,20,800.
       This suggests that the company has had a growth in the year 2017. The Expenses in the year
2017 is subjected to be Rs. 54,51,000. Increased when compared to the year 2018.

INCOME AND EXPENDITURE COMPARISON

24
WORKING CAPITAL:

Working Capital =  Current Assets  -  Current Liabilities

FISCAL YEAR 2014 2015 2016 2017 2018 

ASSETS
CURRENT ASSETS:  

CASH 53,000  52,000 2,02,000 21,000 74,000

CASH AT BANK 2,39,000 4,47,000       2,77,000 2,59,000 2,31,000

STOCK  5,69,000 1,87,000 6,41,000 11,08,000 14,62,000

SUNDRY DEBTORS 11,28,000 11,95,000 12,19,000 11,62,000 14,87,000   

25
TOTAL CURRENT ASSETS  (A) 19,89,000 18,81,000 23,39,000 25,50,000 32,54,000
FIXED ASSETS:

GROSS BLOCK-
DEPRECIATION 6,13,000 6,13,000 5,69,000 5,33,000 4,48,000

TOTAL FIXED ASSETS 6,13,000 6,13,000 5,69,000 5,33,000 4,48,000

  30,83,00
TOTAL  ASSETS  26,02,000 24,94,000 29,08,000 0 37,02,000

LIABILITIES

CAPITAL:

SHARE CAPITAL 1,40,000 1,40,000 1,40,000 1,40,000 9,50,000

SHARE APPLICATION AD.. 9,00,000 6,31,000 10,21,000 7,37,000 71,000

RESERVES AND SURPLUS - - - - 1,40,000

CURRENT LIABILITIES:

CREDITORS 7,61,000 9,60,000 3,63,000 10,41,000 11,53,000

PROVISIONS 50,000 80,000 8,00,000 43,000 3,61,000

OTHERS - - - - 1,34,000

LOAN FUND:  

SECURED LOAN 7,51,000 6,83,000 5,84,000 11,22,000 8,63,000

26
UNSECURED LOAN - - - - 30,000

30,83,00
TOTAL LIABILITIES (B) 26,02,000 24,94,000 29,08,000 0 37,02,000

WORKING CAPITAL
(A-B) 4,27,000 1,58,000 5,92,000 3,44,000 7,13,000

CASH FLOW STATEMENT OF HOTEL JOYCE FOR THE YEAR 2015

PARTICULARS AMOUNT

CASH FLOW FROM OPERATING ACTIVITIES:

 Profit/Loss before Taxation 10,02,600
ADD: Depreciation     85,000

ADD: Finance Cost

ADD: Decrease in inventories

LESS: Increase in Debtors
9,17,600
1,58,000
Cash generated from operations
LESS: Tax

27
     10,75,600
      3,82,000
        (67,000)

13,90,600
   22,000

13,68,600

(1,08,000)

NET CASH FLOW FROM OPERATING ACTIVITIES

Cash flow from investing activities: 12,60,600
LESS: Purchase of assets (68,000)

LESS: Cash receipts from loans and advances 11,92,600

Cash flow from investing activities

CASH FLOW FROM INVESTING ACTIVITIES: 2,69,

Proceeds from issue of shares 000
 

NET INCREASE IN CASH

CASH AND CASH EQUIVALENT IN THE BEGINNING

28
 9,22,
600
   53,
000

CASH AND CASH EQUIVALENT AT THE END 8,69,

600

CASH FLOW STATEMENT OF HOTEL JOYCE FOR THE YEAR 2016

PARTICULARS AMOUNT

CASH FLOW FROM OPERATING ACTIVITIES:

 Profit/Loss before Taxation 1,50,600
ADD: Depreciation   71,000

ADD: Finance Cost

LESS: Increase in inventories

LESS: Increase in Debtors 2,21,600
Add: Decrease in Bank  83,000

29
 3,04,600
(4,54,000)
  (24,000)
  1,70,000

(3,400)
    (13,000)

(16,400)

4,14,000

Cash generated from operations

LESS: Tax 3,97,600
(99,000)
NET CASH FLOW FROM OPERATING ACTIVITIES
Cash flow from investing activities:
ADD: Sale of assets

2,98,600
LESS: Cash receipts from loans and advances

Cash flow from investing activities

3,9
CASH FLOW FROM INVESTING ACTIVITIES:
0,000
Proceeds from issue of shares
   

NET INCREASE IN CASH

CASH AND CASH EQUIVALENT IN THE BEGINNING

30
 (91
,400)
1,5
0,000

CASH AND CASH EQUIVALENT AT THE END

58,
600

 CASH FLOW STATEMENT OF HOTEL JOYCE FOR THE YEAR 2017

PARTICULARS AMOUNT

CASH FLOW FROM OPERATING ACTIVITIES:

 Profit/Loss before Taxation 11,31,900
ADD: Depreciation 79,000

ADD: Finance Cost

Add: Decrease in inventories

Add: Decrease in Debtors 12,10,000
Add: Decrease in cash 82,000

31
 12,92,000
4,67,000
57,000
1,81,000

 
19,97,000
    (4000)

19,93,000

1,75,000

(5,38,000)

Cash generated from operations (3,63,000)

LESS: Tax 2,84,000

NET CASH FLOW FROM OPERATING ACTIVITIES

Cash flow from investing activities:

Add: Sale of assets (79,000)

           
LESS: Cash receipts from loans and advances

Cash flow from investing activities (79

,000)
Proceeds from issue of shares 1,8
1,000

NET INCREASE IN CASH

CASH AND CASH EQUIVALENT IN THE BEGINNING 1,0
2,000
CASH AND CASH EQUIVALENT AT THE END

32
      CALCULATION OF ACTUAL LIABILITY AND SOLVENCY POSITION

1. NET CASH FLOW TO CURRENT LIABILITY:

NET PROFIT + NON-CASH EXP

NET CASH FLOW TO 
CURRENT LIABILITIES =   -------------------------------------------------------------------
CURRENT LIABILITES

NET PROFIT + CURRENT NET CASH FLOW TO

S.NO YEAR NON- CASH EXP LIABILITIES CURRENT LIABILITIES

1 2014 9,86,600 8,11,000 1.21

2 2015 3,53,000 10,40,000 0.339
3 2016 1,20,600 11,63,000 0.104
4 2017 11,09,900 10,84,000 1.02
5 2018  7,03,800 16,48,000 0.427

INFERENCE:
The higher the ratio, the greater the degree of liquidity and solvency of a firm and vice-versa.
The company has shown a good position in the year 2014 and start declining for the following
years. In the year 2018 the company has a lower degree of liquidity and solvency because of
decrease in net profit and non-cash expenses.
2.COVERAGE OF CURRENT LIABILITIES
Coverage of current liabilities refers to the product of turnover of current liabilities and profit
margin. The following formula is used to calculate coverage of current liabilities
COVERAGE OF CURRENT LIABILITIES=

33
     *
CALCULATION FOR 5 YEARS:

COVERAGE OF CURRENT LIABILITIES (2014)=

    *
INFERENCE:
Coverage of current liabilities for the year 2014 is 12.190. This ratio is refers to the product of
turnover of current liabilities and profit margin. 

COVERAGE OF CURRENT LIABILITIES(2015)=

    *
INFERENCE:
Coverage of current liabilities for the year 2015 is 0.339

COVERAGE OF CURRENT LIABILITIES (2016)=

34
     *
INFERENCE:
Coverage of current liabilities for the year 2016 is 1.0380

COVERAGE OF CURRENT LIABILITIES (2017)=

    *
INFERENCE:
Coverage of current liabilities for the year 2017 is 1.022

COVERAGE OF CURRENT LIABILITIES (2018)=

    *
INFERENCE:
Coverage of current liabilities for the year 2018 is 4.271

35
1. CURRENT RATIO:
               Current ratio is defined as the relationship between current asset and current liabilities. 
This is most widely used ratio. The standard ratio is 2:1; the current asset is twice than the
current liabilities.  If the ratio is less than 2 then difficulty may be experienced in payment of
current liability and day-to-day operations of the business may suffer.  If the ratio is higher than
2, it is very comfortable for creditors but for the concern, the funds would be locked up in this,
which may be unproductive or idle.

FORMULA:- 
                                                     Current Assets
    Current Ratio =         ------------------------------------
                                                  Current Liabilities

CURRENT CURRENT LIABILITY CURRENT RATIO

S.N YEAR ASSET
O
1 2014 8,11,000 2.45

19,89,000
2 2015 10,40,000 1.81

18,81,000
3 2016 11,63,000 1.62

23,39,000
4 2017 10,84,000 2.35

25,50,000
5 2018 16,48,000 1.97

32,54,000

36
 

INTERPRETATIONS: 

 The ideal current ratio is 2:1.here the current ratio declining over a period of time
according to time series analysis. Since the healthy current ratio is 2:1 180 degree
Freight forwarders reaches the healthy ratio in the year 2014 and 2017. Higher the
current ratio, higher the short term liquidity. Here the position of the company is good
when compared to previous year. This shows the positive position of the company.

2. CASH POSITION RATIO:

                This ratio is also called ‘absolute liquidity ratio’ or ‘super quick ratio’. This is a
variation of quick ratio. This ratio is calculated when liquidity is highly restricted in terms of
cash and cash equivalents. This ratio measures liquidity in terms of cash and near cash items and
short – term current liabilities. Cash position ratio is calculated with the help of the following
formula.
Formula:
                                        Cash and bank balance + marketable securities    
Cash position ratio   =    -----------------------------------------------------------------
                                                                Current Liabilities
CASH BALANCE CURRENT CASH POSITION
S.N YEAR +SECURITIES LIABILITIES  RATIO
O
1 2014 2,92,000 8,11,000 0.36
2 2015 4,99,000 10,40,000 0.47

37
3 2016 4,79,000 11,63,000 0.41
4 2017 2,80,000 10,84,000 0.26
5 2018  3,05,000 16,48,000 0.19

INTERPRETATION:

                            Since the cash position ratio shows that the organization’s financial position is

at the moderate stage. The result that I got is the type of oscillating manner which implies that

the company should more concentrate on its cash position.

3. ABSOLUTE LIQUID RATIO:

 Therefore, absolute liquidity ratio relates cash, bank and marketable securities to

the current liabilities. 

= (ABSOLUTE LIQUID ASSET/CURRENT LIABILITIES)

ABSOLUTE LIQUID CURRENT ABSOLUTE LIQUID

S.N YEAR ASSET LIABILITIES RATIO
O

38
1 2014 53,000  8,11,000 0.07
2 2015 52,000 10,40,000 0.05
3 2016 2,02,000 11,63,000 0.17
4 2017 21,000 10,84,000 0.02
5 2018  74,000 16,48,000 0.05

INTERPRETATION:

From the above chart it is clearly seen that the company has a very low liquid assets

when compared with the liabilities. The company has to take a corrective measure to overcome

this situation.

4. FIXED ASSETS RATIO:

                                  This ratio establishes the relationship between fixed assets and long term

funds. The objective of calculating this ratio is to ascertain the proportion of long term funds

invested in fixed assets. The ratio is calculated as given below.

FORMULA:

39
                  FIXED ASSE RATIO      =               FIXED ASSET 
                                                                        -------------------------------                                           
                                
                                                                            LONG TERM FUND
                                                       
Sl. Year Fixed Long term funds Fixed assets ratio
No.  assets
1 2014 6,13,000 7,51,000 0.82
2 2015 6,13,000 6,83,000 0.90
3 2016 5,69,000 5,84,000 0.97
4 2017 5,33,000 11,22,000 0.47
5 2018  4,48,000 8,63,000 0.52

INTERPRETATION:

40
41