SCHOOL OF BUSINESS AND MANAGEMENT

PROJECT REPORT

ON

“FINANCIAL ANALYSIS”

AT

BAJAJFINANCE

Submitted in the partial fulfillment of the Requirement of Degree of

Master of Business Administration

Session: 2018-2020

Submitted to: Submitted by:

Prof. Shreya Bhargava Aman Jindal

Associate Professor MBA (DUAL)4SEM

SBM SBM
 ACKNOWLEDGEMENT

A Project report has never been the sale product of the person whose name appears on the cover.
There are always some people whose guidance proves to be of immense help in giving its final
shape. So, it is my first duty to express my gratitude towards all of them.

Success in my endeavor calls for co-operation and the valuable for director Prof. Rajesh
Mehrotra and I am thankful to Prof .Shreya Bhargava who has provided me supervision and
guidance during my project work. I cherish to record my thanks to management of BAJAJ
FINANCE.

I am also extremely thankful to god who is the ultimate guide providing me with valuable insist,
courage and determination at every doorstep, if I don’t mention here that love, affection & co-
operation which I received from my family members. They too helped me a lot in completing
this report.

Aman Jindal
 PREFACE

Practical training is an important part of theoretical studies. Any professional degree remains
incomplete without practical exposure. The students are required to develop deep into the
intricacies of the human resource related activities.

It covers all that which remains uncovered in the classroom. It offers all that which remains an
invaluable treasure of experience. It offers an exposure to practical of management of business
organization.

As we know well that practical training plays an important role in future building of an
individual. One can easily overcome the fear from that life in which he has to join as a member
after sometime.

Just theoretically knowledge is not sufficient for the success of an individual to one should have
practical knowledge about theory of general life.

I have been given an opportunity to do practical training at Auto load solutions LLP. I availed of
this opportunity is a very satisfactory manner and I think it will be much beneficial for me in
future building.

Learning is like eating food. It is not how much one eats that matters, what counts are how much
you digest. Knowledge is potential power wisdom is real power. Knowledge becomes poor only
when it is acted upon.

The research and methodology includes the research procedure, research, research design,
sample design, data collection and finally limitations of study. The methods used for conducting
survey are by preparing a structured questionnaire and then taking the views of respective
respondents.

Aman Jindal
 TABLE OF CONTENT

S. No. PARTICULARS PAGE NO.

1-5

CH – 1 INTRODUCTION TO THE TOPIC

CH – 2 COMPANY PROFILE 6-23

24-43

CH – 3 LITERATURE REVIEW

44-51

RESEARCH METHODOLOGY

 Objective Of Study

CH – 4  Significance Of Study
 Limitation Of Study
 Relevance Of Study
 Hypothesis Of Study

52-61

CH – 5 DATA ANALYSIS AND INTREPRETATION

FINDINGS 62-66
CH – 6
• CONCLUSION
• SUGGESTIONS &RECOMMENDATION
ANNEXURES 67-71

• BIBLIOGRAPHY
 CHAPTER-01

INTRODUCTION
TO
THE TOPIC
INTRODUCTION:-
We know business is mainly concerned with the financial activities. In order to ascertain the
financial status of the business every enterprise prepares,certain statements, known as financial
statements. Financial statements aremainly prepared for decision making purposes. But the
information as is provided in the financial statements is not adequately helpful in drawinga
meaningful conclusion. Thus, an effective analysis and interpretation offinancial statements is
required.
Analysis means establishing a meaningful relationship between various items of the two
financial statements with each other in such a way that a conclusion is drawn. By financial
statements we mean two statements.
I. Profit and loss Account or Income Statement
II. Balance Sheet or Position Statement
These are prepared at the end of a given period of time. They are the indicators of profitability
and financial soundness of the business concern. The term financial analysis is also known as
analysis and interpretation of financial statements. It refers to the establishing meaningful
relationship between various items of the two financial statements i.e. Income statementand
position statement. It determines financial strength and weaknesses of the firm.
Analysis of financial statements is an attempt to assess the efficiency and performance of an
enterprise. Thus, the analysis and interpretation of financial statements is very essential to
measure the efficiency, profitability, financial soundness and future prospects of the business
units.

Meaning of Financial Analysis:-

The process of evaluating businesses, projects, budgets and other finance-related entities to
determine their suitability for investment. Typically, financial analysis is used to analyze whether
an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income statement, balance sheet.
Definition of Financial Analysis:

According to Finney and Miller “Financial analysis consists in separating facts according to
some definite plan, arranging them in groups according to certain circumstances and then
presenting in a convenient and easily read and understandable form.”

Objectives of Financial Statement Analysis

The major objectives of financial statement analysis are as follows

1. Assessment of Past Performance:

Past performance is a good indicator of future performance. Investors or creditors are interested
in the trend of past sales, cost of goods sold, operating expenses, net income, cash flows and
return on investment.

2. Assessment of current position:

Financial statement analysis shows the current position of the firm in terms of the types of assets
owned by a business firm and the different liabilities due against the enterprise.
3. Prediction of profitability and growth prospects:

Financial statement analysis helps in assessing and predicting the earning prospects and growth
rates in earning which are used by investors while comparing investment alternatives and other
users in judging earning potential of business enterprise

4. Prediction of bankruptcy and failure:

Financial statement analysis is an important tool in assessing and predicting bankruptcy

and probability of business failure

5. Assessment of the operational efficiency:

Financial statement analysis helps to assess the operational efficiency of the management of a
company. The actual performance of the firm which are revealed in the financial statements can
be compared with some standards set earlier and the deviation of any between standards and
actual performance can be used as the indicator of efficiency of the management.
HYPOTHESIS OF THE STUDY
The Financial Analysis has become an essential tool of the management for controlling costs and
maximizing profits.

This requires a careful working out plans in advance for all divisions of the company, their
implementation and investigating the cause of variances between anticipated and actual results.
The financial analysis and its administration are one of the principal means of meeting its end.

To have the proper control over him variance budget involves:-

1. Establishment of effective control.

2. Continuous comparison of actual with planned task for the achievement of target.

Limitations of Financial Statement Analysis:

Although financial statement analysis is highly useful tool, it has two limitations. These two
limitations involve the comparability of financial data between companies and the need to look
beyond ratios. 

InvestopediaexplainsFinancialAnalysis

“One of the most common ways of analyzing financial data is to calculate ratios from the data to
compare against those of other companies or against the company's own historical
performance. For example, return on assets is a common ratio used to determine how efficient a
company is at using its assets and as a measure of profitability. This ratio could be calculated for
several similar companies and compared as part of a larger analysis.”
Introduction & How Company Perform its Financial Analysis

Originally incorporated as Bajaj Auto Finance Limited on March 25, 1987, the non-
bank singularly focused on providing two and three wheeler finance. After 11 years in the auto
finance market, Bajaj Auto Finance Ltd launched its initial public issue of equity share and was
listed on the BSE and NSE.

At the turn of the 20th century, the company ventured into the durables finance sector. In the
subsequent years, Bajaj Auto Finance diversified into business and property loans as well.

In the year 2006, the company’s assets under management hit the Rs.1,000 crore mark and is c

urrently at Rs.52,332 crore. 2018 saw the company’s registered name change from Bajaj Auto Finance
Limited to Bajaj Finance Limited.
CHAPTER-02
COMPANY
PROFILE
BAJAJ FINANCE

Bajaj Finance Ltd (Formerly Known as Bajaj Auto Finance Ltd) is one of the leading Non
Banking Financial Corporation in India. Headquartered in Pune the company's product offering
includes Consumer Durable Loans Lifestyle Finance Digital Product Finance Personal Loans
Loan against Property Small Business Loans Home loans Credit Cards Two-wheeler and Three-
wheeler Loans Construction Equipment Loans Loan against Securities and Rural Finance which
includes Gold Loans and Vehicle Refinancing Loans along with Fixed Deposits and Advisory
Services. The Reserve Bank of India classified the company as an Asset Finance Company. Bajaj
Auto Finance Ltd was incorporated on March 25 1987 as a private limited company. On 20
October 1987 it became a deemed public company u/s 43A(1) of the Companies Act 1956. On
24 September 1988 it was registered as a Public Limited Company. On 5 March 1998 Bajaj Auto
Finance registered with RBI as a Non-Bank Company. In 1994-95 Bajaj Auto Finance came out
an initial public offer and was listed on the BSE and NSE.Initially the company as was promoted
by erstwhile Bajaj Auto Ltd and Bajaj Auto Holdings Ltd. As per the scheme of de-merger of
erstwhile Bajaj Auto Ltd the shareholding of Bajaj Auto Ltd in the company has been vested
with Bajaj Fiserv Ltd.In order to offer various finance schemes the company opened many
branches in various locations throughout the country. During the years 1991-95 the company
opened their branch offices at Hyderabad New Delhi Chennai Bangalore Mumbai Nagpur
Vijaywada Nasik Vishakhapatnam Kolkata Goa Madurai and Pune.During the year 1995-96 the
company completed their first Real Estate Project for Nayan Co-operative Housing Society Ltd
at Pune. Also they opened their branch offices at Baroda and Trivandrum. During the year 1998-
2003 they opened their branch offices at various places which include Chandigarh Cochin Indore
Ludhiana Surat Kolhapur Bhopal Bhubaneshwar Calicut Erode Jalgaon Jullundhar Kanpur
Lucknow Raipur Rajkot Salem Solapur Udaipur Tirupati Amaravati Amritsar Bhavnagar
Durgapur Jamshedpur Jodhpur Kopergaon Mehsana Mysore Siliguri and Vellore.During the year
2003-04 the company entered into the financing of Personal Computers. They opened their
branch offices at Hissar Hubli Patiala Rourkela Agra Ahmednagar Ajmer Akola Alwar Ambala
Anand Bharuch Bhilai Chandrapur Dindigul Eluru Guna Gurgaon Himatnagar Jagadhri
Jamnagar Karaikudi Karimnagar Karur Kottayam Kurnool Navsari Nellore Palghat
Rajahmundry Sangli Tanjore Tirunelveli and Ujjain during the year 2004-05.During the year
2005-06 the company opened Loan Shoppes with a view to enhance their direct marketing
activity and their brand awareness. They opened 22 shopes and 14 new branch offices during the
financial year. During the year 2006-07 the company opened 11 new branch offices in which the
total number of branches has gone up to 113. Also they cover 280 towns through their branch
network.The company launched new product lines/extensions during the year 2007-08. They
launched IPO financing for high networth customers acquisition of AAA rated securitization
transactions personal loan cross sell programme to their existing customers and financing for
personal computers to SMEs. On 6 September 2018 the name of the company was changed from
Bajaj Auto Finance to Bajaj Finance.In 2013 the company makes Rights issue in the Ratio of
3:19. On 1 November 2014 the company acquired 100% shares of Bajaj Financial Solutions for a
consideration of Rs. 17 crore from its holding company Bajaj Finserv to promote the business of
housing finance. Bajaj Housing Finance Limited a wholly owned subsidiary of Bajaj Finance
received certificate of registration on 2 October 2015 from the National Housing Bank to
commence housing finance business.In June 2015 Bajaj Finance raised Rs. 1400 crore through
Qualified Institutions Placement (QIP). On 8 August 2017 Bajaj Finance entered into an
agreement with One Mobikwik Systems Private Limited (Mobikwik) and invested an amount of
Rs. 225 crore in the equity shares and cumulative compulsorily convertible preference shares
(CCPS) of Mobikwik a mobile wallet major. Post conversion of CCPS Bajaj Finance would hold
approximately 10.83% of equity in MobiKwik on a fully diluted basis. In September 2017 Bajaj
Finance raised Rs. 4500 crore through Qualified Institutions Placement (QIP). The QIP was
priced at Rs. 1690 per equity share of Rs. 2 face value. On 11 October 2017 Bajaj Finance and
LG Electronics India announced the launch of an exclusive OEM co-branded card - LG Bajaj
Fiserv EMI card that will enable customers to buy all LG products at no cost EMI option across
all LG formats.
VISION, MISSION & CORE VALUES

Vision

Highly customer oriented, humane and system run global organization with a concern for Society

Mission

We are a dedicated, proactive, loyal & accountable group of people with a quest for excellence
through latest financial policies, people empowerment and brand equity to produce world class
products by adopting best business practices and ethics.

CORE VALUES

 Human Dignity
 Sincerity
 Commitment

 Honest

CORPORATE INFORMATION

CHAIRMAN

MR. RAHUL BAJAJ

BOARD OF DIRECTORS:-
  Mr. Rahul Bajaj Chairman

 Dr. Rajiv Bajaj Director

 Dr. D.J. Balaji Rao Director

 Mr. Madhur Bajaj Director

 Mr. AtulRaheja Director

 Mr. D.J. Balaji Rao Whole Time Director

 Mr. Jatender Kumar Mehta Managing Director

 Mr. Sanjiv Bajaj Managing Director

AUDIT COMMITTEE:-

 Mr.Nanoo Gobindram Pamnani Chairman

 Dr. Gita Piramal Member
 Mr. Naushad Forbes Member
 Mr. Jatender Kumar Member
 Dr. R.C. Vaish Member

AUDITORS:-

 M/s A. Kumar Gupta& Co.,

 Chartered Accountants, Ludhiana

INTERNAL AUDITORS:-
  M/s KRA & Associates
 M/s SinghiChugh& Kumar
 M/s Doogar& Associates

SECRETARIAL AUDITORS:-

 M/s Chandrasekaran Associates,

 Company Secretaries

SENIOR MANAGEMENT EXECUTIVES:-

 Mr. N.P. Singh ED (Human Resource)

 Mr. V.K.Gupta ED (Commercial)
 Mr. Sharad Jain Chief Financial Officer
 Mr. KishorKarnataki CEO (Commercial Vehicle)
 Mr. Manoj Mishra President (Passenger Car)

BANKERS:-

 Canara Bank
 State Bank of India
 Citi Bank
 United Bank of India
 Royal Bank of Scotland N.V. (India)
 HDFC Bank Limited
  Deutsche Bank
 ICICI Bank Limited

ORGANISATION’S VISION:-

“Highly customer oriented, humane and system run global organization with a concern for
society“

ORGANISATION’S MISSION:-

“To be a dedicated, proactive, loyal & accountable group of people with a quest for excellence
through latest technology, people empowerment and brand equity to produce world class policies
or finances by adopting best business practices and ethics.”

IMS (INTEGERATED MANGEMENT SYSTEM) POLICY:-

“In line with organizations Vision & Mission, to remain committed for total satisfaction of the
customers, associates and society at large, through excellence in quality, value for money, on
time finances and continual improvement.

ASPIRATIONS:-
 To build a world class Company through reliability and be a great place to work.
 Company’s vision is to make the Company the best in class in whatever they do,
globally.
 The policies and services they offer should be comparable to the best in the world,
 Company’s business process and systems should set benchmark for others.
 To earn the respect of the competitors and be loved by our stakeholders.
 The Company should be the most preferred company to work for any employee.
 He should feel like an owner, be able to live his dream, fulfill all his professional goals
and enjoy while doing so.
BAJAJ FINANCE STRENGHT IT’S EMPLOYEES

HR MISSION:-

“To promote and sustain the culture of developing world class leaders for value addition in every
sphere of original activities while fulfilling employees’ professional and personalsatisfaction.”

BAJAJ FINANCE INFRASTRUCTURE

Its most of the infrastructure are situated across India, which forms the backbone of the structure
called "BAJAJ FINANCE".

Today in India “BAJAJ FINANCE” is providing many different financing schemes or fascilities
like gold loan, home loan, digital product finance, emi card, loan against fd, 2&3 wheeler
finance, retail emi and much more.
KEY INDICATORS:-

Year ended March 2015 March2016 March2017 March 2018 March 2019

Gross Profit Margin (%) 9.78 11.02 10.09 9.62 8.90

0Net Profit Margin (%) 3.42 3.38 2.17 0.65 1.63

Export Sales/Net Sales (%) 4.53 4.40 4.67 6.25 9.71

Debt/Equity 0.74 0.52 0.69 1.13 0.90

Earning Per Share (Rs) 8.84 12.17 7.53 3.17 6.64

Dividend Per Share (Rs) 2.00 2.25 1.50 1.00 1.50

Book Value/Share (Rs) 52.70 62.34 68.11 68.08 75.46

DISTRIBUTIONOFSHAREHOLDINGS AS ONMARCH 31, 2015:-

Nominal Value of Total face

Number of %total face
shares %total holders value
holders Value
(In Rupees) (In Rupees)

1-5000 11,890 80.16 1,72,26,300 8.05

5001-10000 1,746 11.77 1,26,58,520 5.92

10001-20000 672 4.53 97,59,100 4.56

20001-30000 189 1.27 49,33,880 2.31

30001-40000 76 0.51 7,07,550 1.7

40001-50000 71 0.48 32,58,810 1.52

50001-100000 97 0.65 67,09,620 3.14

100001&above 94 0.63 15,66,28,350 73.23

Total 14835 100.00 21,38,82,130 100.00

SHARE HOLDINGS PATTERN AS ON MARCH 31, 2016:-

S.No. Category No. of Shares % of shareholding

1
Promoters 'Holding

Indian Promoters 72,68,350 33.98

Bodies Corporate 38,94,504 18.21

2
Non Promoters' Holding

Mutual Funds and UTI 0 0.00

Banks, FIs, Insurance Companies 0 0.00

Foreign Institutional Investors 88,939 041

 Private Corporate Bodies 36,07,399 16.87

Indian Public 63,35,149 29.62

NRIs/OCBs 1,93,872 0.91

TOTAL 21388213 100.00

INDIAN CUSTOMERS :-

 Hero Honda Motors Ltd.

 MarutiUdyog Ltd. (Suzuki J.V.)
 Honda Motorcycle & Scooters India Pvt.
 TVS Motors Ltd.
 Suzuki Motorcycle Ltd.
 New Holland Tractors (India) Ltd
 Yamaha Motors India Pvt. Ltd.
 Hero Motors Ltd.
 International Tractor Ltd

INDIAN CUSTOMERS (TIER 1):-

 Bharat Seats Ltd.

 Carraroindia Ltd.
 CaparoMaruti
 DeiphiAutomotives
  Denso India Ltd.
 Gabrial India Ltd.
 Honeywell
 IKEA
 India-Nippon Electricals Ltd.
 Mitsuba Sical India Ltd.
 Sundram Clayton Ltd.
 Tata Motors Limited
 Toyota (India)

EUROPEAN CUSTOMERS:-

 Delphi-Spain
 Delphi-Poland
 Honeywell
 Piaggio
 Tenneco Automotive-Belgium
 Supersprox-Czech

NORTH AMERICAN CUSTOMERS:-

 Delphi Automotive Inc. USA

 Tenneco Automotive (Mexico)

SEGMENT WISE SHARE IN 2009-2018 (AS PER DOMESTIC SALE)

ENGINEERING:-
HEAD OFFICE:-
 Bajaj Finance Limited, Survey No 208/1/B, 4th Floor, Viman Nagar, Pune, Maharashtra, India,
Pin code – 411014.
BAJAJ FINANCE

Tel No: -   020 3040 5060

Email: -   wecare@bajajfinserv.in.

Official Website: www.bajajfinserv.in
CHAPTER-03
REVIEW
OF
 LITERATURE

REVIEW OF LITERATURE

Financial Analysis
We know business is mainly concerned with the financial activities. In order to ascertain the
financial status of the business every enterprise prepares, certain statements, known as financial
statements. Financial statements are mainly prepared for decision making purposes. But the
information as is provided in the financial statements is not adequately helpful in drawing
a meaningful conclusion. Thus, an effective analysis and interpretation of financial statements is
required.
Analysis means establishing a meaningful relationship between various items of the two
financial statements with each other in such a way that a conclusion is drawn. By financial
statements we mean two statements.
(i) Profit and loss Account or Income Statement
(ii) Balance Sheet or Position Statement
These are prepared at the end of a given period of time. They are the indicators of profitability
and financial soundness of the business concern. The term financial analysis is also known as
analysis and interpretation of financial statements. It refers to the establishing meaningful
relationship between various items of the two financial statements i.e. Income statement
and position statement. It determines financial strength and weaknesses of the firm.
Analysis of financial statements is an attempt to assess the efficiency and performance of an
enterprise. Thus, the analysis and interpretation of financial statements is very essential to
measure the efficiency, profitability, financial soundness and future prospects of the business
units.

Definition of Financial Analysis:

In the words of Finney and Miller:

“Financial analysis consists in separating facts according to some definite plan, arranging them
in groups according to certain circumstances and then presenting in a convenient and easily read
and understandable form.”

Investopediaexplains Financial Analysis:

“One of the most common ways of analyzing financial data is to calculate ratios from the data to
compare against those of other companies or against the company's own historical
performance. For example, return on assets is a common ratio used to determine how efficient a
company is at using its assets and as a measure of profitability.

The process of evaluating businesses, projects, budgets and other finance-related entities to
determine their suitability for investment. Typically, financial analysis is used to analyze whether
an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income statement, balance sheet
and cash flow statement.

Financial analysis serves the following purposes:

Measuring the profitability

The main objective of a business is to earn a satisfactory return on theFunds invested in it.
Financial analysis helps in ascertaining whether Adequate profits are being earned on the capital
invested in the business Ornot. It also helps in knowing the capacity to pay the interest and
dividend.

Indicating the trend of Achievements

Financial statements of the previous years can be compared and the trend regarding various
expenses, purchases, sales, gross profits and net profit etc. can be ascertained. Value of assets
and liabilities can be compared and the future prospects of the business can be envisaged

Assessing the growth potential of the business

The trend and other analysis of the business provide sufficient information indicating the growth
potential of the business.

Comparative position in relation to other firms

The purpose of financial statements analysis is to help the management to make a comparative
study of the profitability of various firmsengaged in similar businesses. Such comparison also
helps the management to study the position of their firm in respect of sales, expenses,
profitability and utilizing capital etc.

Assess overall financial strength

The purpose of financial analysis is to assess the financial strength of the business. Analysis also
helps in taking decisions, whether funds required for the purchase of new machines and
equipment’s are provided from internal sources of the business or not if yes, how much? And
also to assess how much funds have been received from external sources.

Assess solvency of the firm

The different tools of an analysis tell us whether the firm has sufficient funds to meet its short
term and long term liabilities or not.
PARTIES INTERESTED
Analysis of financial statements has become very significant due to widespread interest of
various parties in the financial results of a business unit. The various parties interested in the
analysis of financial statements are:
(i) Investors: Shareholders or proprietors of the business are interested in the wellbeing of the
business. They like to know the earning capacity of the business and its prospects of future
growth.
(ii) Management: The management is interested in the financial position and performance of
the enterprise as a whole and of its various divisions. It helps them in preparing budgets and
assessing the performance of various departmental heads.

(iii) Trade unions: They are interested in financial statements for negotiating the wages or
salaries or bonus agreement with the management.
(iv)Lenders: Lenders to the business like debenture holders, suppliers of loans and lease are
interested to know short term as well as long term solvency position of the entity.
(v) Suppliers and trade creditors: The suppliers and other creditors are interested to
know about the solvency of the business i.e. the ability of the company to meet the debts as and
when they fall due.
vi) Taxauthorities: Tax authorities are interested in financial statements for determining the
tax liability.

(vii) Researchers: They are interested in financial statements in undertaking research work in
business affairs and practices.
(viii) Employees:They are interested to know the growth of profit. As a result of which they
can demand better remuneration and congenial working environment.
(ix) Government and their agencies:Government and their agencies need financial
information to regulate the activities of the enterprises/ industries and determine taxation policy.
They suggest measures to formulate policies and and regulations.
(x) Stock exchange:The stock exchange members take interest in financial statements for the
purpose of analysis because they provide useful financial information about companies.
Thus, we find that different parties have interest in financial statements for
different reasons. Thus, we find that different parties have interest in financial statements for
different reasons.

TECHNIQUES AND TOOLS OF FINANCIAL STATEMENTANALYSIS

Financial statements give complete information about assets, liabilities, equity, reserves,
expenses and profit and loss of an enterprise. They are not readily understandable to interested
parties like creditors, shareholders,investors etc. Thus, various techniques are employed for
analyzing and interpreting the financial statements. Techniques of analysis of financial
statements are mainly classified into three categories.

(i) Cross-sectional analysis

It is also known as inter firm comparison. This analysis helps in analyzing financial
characteristics of an enterprise with financial characteristics of another similar enterprise in that
accounting period.
For example, if company A has earned 15% profit on capital invested.
This does not say whether it is adequate or not. If we analyses further and find that a similar
company has earned 16% during the same period, then only we can make a conclusion that
company B is better. Thus, it turns into a meaningful analysis.
(ii) Time series analysis
It is also called as intra-firm comparison. According to this method, the relationship between
different items of financial statement is established, comparisons are made and results obtained.
The basis of comparison may be :
– Comparison of the financial statements of different years of the same business unit.
– Comparison of financial statement of a particular year of different business units.
(iii) Cross-sectional cum time series analysis
This analysis is intended to compare the financial characteristics of two or more enterprises for a
defined accounting period. It is possible to extend such a comparison over the year. This
approach is most effective in analyzing of financial statements. The analysis and interpretation
of financial statements is used to determine the financial position. A number of tools or methods
or devices are used to study the relationship between financial statements. However, the
following are the important tools which are commonly used for analyzing and interpreting
financial statements:

 Comparative financial statements

 Common size statements
 Trend analysis
 Ratio analysis
 Funds flow analysis
 Cash flow analysis

Comparative financial statements

In brief, comparative study of financial statements is the comparison of the financial statements
of the business with the previous year’s financial statements. It enables identification of weak
points and applying corrective measures. Practically, two financial statements (balance sheet and
income statement) are prepared in comparative form for analysis purposes.
1. Comparative Balance Sheet
The comparative balance sheet shows the different assets and liabilities of the firm on different
dates to make comparison of balances from one date to another. The comparative balance sheet
has two columns for the data of original balance sheets. A third column is used to show change
(Increase/decrease) in figures. The fourth column may be added for giving percentages of
increase or decrease.
While interpreting comparative Balance sheet the interpreter is expected to study the following
aspects:
(i) Current financial position and
Liquidity position
(ii) Long-term financial position
(iii) Profitability of the concern
(i) For studying current financial position or liquidity position of a concern one should examine
the working capital in both the years. Working capital is the excess of current assets over current
liabilities.
(ii) For studying the long-term financial position of the concern, one should examine the changes
in fixed assets, long-term liabilities and capital.
(iii) The next aspect to be studied in a comparative balance sheet is the profitability of the
concern. The study of increase or decrease in profit will help the interpreter to observe whether
the profitability has improved or not After studying various assets and liabilities, an opinion
should be formed about the financial position of the concern.

Comparative Income statement

The income statement provides the results of the operations of a business. This statement
traditionally is known as trading and profit and loss A/c. Important components of income
statement are net sales, cost of goods sold, selling expenses, office expenses etc. The figures of
the above components are matched with their corresponding figures of previous years
individually and changes are noted. The comparative income statement gives an idea of the
progress of a business over a period of time. The changes in money value and percentage can be
determined to analyses the profitability of the business. Like comparative balance sheet, income
statement also has four columns. The first two columns are shown figures of various items for
two years. Third and fourth columns are used to show increase or decrease in figures in absolute
amount and percentages respectively.
The analysis and interpretation of income statement will involve the following:
 The increase or decrease in sales should be compared with the increase or decrease in
cost of goods sold.
 To study the operating profits
 The increase or decrease in net profit is calculated that will give an idea about the overall
profitability of the concern.
COMMON SIZE STATEMENTS AND TREND ANALYSIS

The common size statements (Balance Sheet and Income Statement) are shown in analytical
percentages. The figures of these statements are shown as percentages of total assets, total
liabilities and total sales respectively. Take the example of Balance Sheet. The total assets are
taken as 100 and different assets are expressed as a percentage of the total. Similarly, various
Liabilities are taken as a part of total liabilities

Common size balance sheet

A statement where balance sheet items are expressed in the ratio of each asset to total assets and
the ratio of each liability is expressed in the ratio of total liabilities is called common size
balance sheet.
Thus the common size statement may be prepared in the following way.
 The total assets or liabilities are taken as 100
 The individual assets are expressed as a percentage of total assets i.e.
100 and different liabilities are calculated in relation to total liabilities For example, if total assets
are Rs10 lakhs and value of inventory is Rs 100,000, then inventory will be 10% of total assets=
(10000 *100)/100000 

Common size income statement

The items in income statement can be shown as percentages of sales to showthe relations of each
item to sales.
Trend percentage analysis (TPA)

The trend analysis is a technique of studying several financial statements over a series of years.
In this analysis the trend percentages are calculated for each item by taking the figure of that
item for the base year taken as 100. Generally the first year is taken as a base year. The analyst is
able to see the trend of figures, whether moving upward or downward In brief, the procedure for
calculating trends is as :
 One year is taken as a base year which is generally is the first year or last year.
Trend percentages are calculated in relation to base year.

The financial statement analysis is important for different reasons:

HoldingOfShares
Shareholders are the owners of the company. Time and again, they may have to take decisions
whether they have to continue with the holdings of the company's share or sell them out. The
financial statement analysis is important as it provides meaningful information to the
shareholders in taking such decisions.

Decisionsand Plans
The management of the company is responsible for taking decisions and formulating plans and
policies for the future. They, therefore, always need to evaluate its performance and effectiveness
of their action to realize the company's goal in the past. For that purpose, financial statement
analysis is important to the company's management.
Extension of Credit
The creditors are the providers of loan capital to the company.Therefore they may have to take
decisions as to whether they have to extend their loans to the company and demand for higher
interest rates. The financial statement analysis provides important information to them for their
purpose

InvestmentDecision
The prospective investors are those who have surplus capital to invest in some profitable
opportunities. Therefore, they often have to decide whether to invest their capital in the
company's share. The financial statement analysis is important to them because they can obtain
useful information for their investment decision making purpose.

CONCEPTUALISATION

Tools and Techniques of Financial Statement Analysis:

Following are the most important tools and techniques of financial statement analysis:

1. Horizontal and Vertical Analysis

2. Ratios Analysis

Horizontal Analysis or Trend Analysis:

Comparison of two or more year's financial data is known as horizontal analysis, or trend
analysis. Horizontal analysis is facilitated by showing changes between years in both dollar and
percentage form. 

Trend Percentage:
Horizontal analysis of financial statements can also be carried out by computing trend
percentages. Trend percentage states several years' financial data in terms of a base year. The
base year equals 100%, with all other years stated in some percentage of this base. 

Vertical Analysis:

Vertical analysis is the procedure of preparing and presenting common size

statements.Common size statement is one that shows the items appearing on it in percentage
form as well as in dollar form. Each item is stated as a percentage of some total of which that
item is a part. Key financial changes and trends can be highlighted by the use of common size
statements. 

Ratios Analysis:

The ratios analysis is the most powerful tool of financial statement analysis. Ratios simply means
one number expressed in terms of another. A ratio is a statistical yardstick by means of
which relationship between two or various figures can be compared or measured. Ratios can be
found out by dividing one number by another number. Ratios show how one number is related to
another. 

Profitability Ratios:

Profitability ratios measure the results of business operations or overall performance and
effectiveness of the firm. Some of the most popular profitability ratios are as under:

 Gross profit ratio

 Net profit ratio
 Operating ratio
 Expense ratio
 Return on shareholders’ investment or net worth
 Return on equity capital
 Return on capital employed (ROCE) Ratio
  Dividend yield ratio
 Dividend payout ratio
 Earnings Per Share (EPS) Ratio
 Price earnings ratio


Liquidity Ratios:

Liquidity ratios measure the short term solvency of financial position of a firm. These ratios are
calculated to comment upon the short term paying capacity of a concern or the firm's ability to
meet its current obligations. Following are the most important liquidity ratios.

 Current ratio
 Liquid / Acid test / Quick ratio

Activity Ratios:

Activity ratios are calculated to measure the efficiency with which the resources of a firm have
been employed. These ratios are also called turnover ratios because they indicate the speed with
which assets are being turned over into sales. Following are the most important activity ratios:

 Inventory / Stock turnover ratio

 Debtors / Receivables turnover ratio
 Average collection period
 Creditors / Payable turnover ratio
 Working capital turnover ratio
 Fixed assets turnover ratio
 Over and under trading
Long Term Solvency or Leverage Ratios:

Long term solvency or leverage ratios convey a firm's ability to meet the interest costs and
payment schedules of its long term obligations. Following are some of the most important long
term solvency or leverage ratios.

 Debt-to-equity ratio
 Proprietary or Equity ratio
 Ratio of fixed assets to shareholders funds
 Ratio of current assets to shareholders funds
 Interest coverage ratio
 Capital gearing ratio
 Over and under capitalization

Advantages of Financial Statement Analysis:

There are various advantages of financial statements analysis:

 The major benefit is that the investors get enough idea to decide about the investments of
their funds in the specific company.

 Secondly, regulatory authorities like International Accounting Standards Board can

ensure whether the company is following accounting standards or not.

 Thirdly, financial statements analysis can help the government agencies to analyze the

taxation due to the company. Moreover, company can analyze its own performance over
the period of time through financial statements analysis.

OPERATING CYCYE CONCEPT

The duration or time required to complete the sequence of events right from the purchase of raw
materials for cash to the realization of sales in cash is called operating cycle or working capital
cycle. The operating cycle consists of three phases:

In phase 1, cash gets converted into inventory. This would include purchase of raw materials,
conversion of raw materials into work-in-progress, finished goods and terminate in the transfer
of goods to stock at the end of the manufacturing process. In the case of trading organization,
this phase would be shorter as there would be no manufacturing activity and cash will be
converted into inventory directly. The phase will, of course, be totally absent in case of service
organizations.
In phase 2 of the cycle, the inventory is converted into receivables as credit sales are made to
customers. Firms which do not sell on credit will obviously not have phase 2 of the operating
cycle.
The last phase, phase 3, represents the stage when receivables are collected. This phase
completes the operating cycle. Thus, the firm has moved from cash to inventory, to receivables
and to cash again.

Besides fixed working capital, a business may need additional working capital to meet the
growing demands of busy seasons at stated intervals. If the demand for the products of the
business goes up at any time it needs additional funds to pay for more materials, labor and other
expenses and to meet the requirement of cash balance to be maintained in the changed situation.
This additional working capital needed to feed the operating cycle in busy business periods is
known as variable or temporary working capital. It is called variable or temporary because the
business does not need it always but it is required according to the need of the
situation.Generally the importance of variable working capital is more acute in business concern
having seasonal market demands. Variable or temporary workingcapitalmay be further sub-
divided into (a) seasonal working capital and (b) special working capital.

The additional working capital required by a concern to carry out its operating activities in busy
seasons of high market demands is known as seasonal working capital. Businesses which mostly
have seasonal demands of their products like ice- cream, colddrinks, wool and likely products
manufacturing concern may need huge amount of seasonal working capital. In other business
concerns to the market may rise to the peak in some particular time period. So in all types
ofbusiness a portion of working capital may be preserved for meeting seasonal needs. On the
other hand, the portion of working capital that is needed by a concern to meet the extraordinary
requirements of special situations is known as special working capital. This is called
specialworking capital because it is needed in special situations and not in normal circumstances.

Diagrammatic representation of the concept of working capital

GENERAL NATURE OF BUSINESS:

The working capital requirements of an enterprise are basically related to the conduct of the
business. According to the nature of business they have to maintain a sufficient amount of cash,
inventories and book debts. The industrial concerns require fairly large amounts of working
capital though it varies from industry to industry depending on their assets structure.

PRODUCTION CYCLE:
Another factor which has a bearing on the quantum of working capital is the production cycle.
The term “production or manufacturing cycle” refers to the time involved in the manufacture of
goods. It covers the time-span between the procurement of raw materials and the completion of
the manufacturing process leading to the production of finished goods. To sustain such activities
the need of working capital is obvious.

BUSINESS CYCLE:
The working capital requirements are also determined by the nature of the business cycle. The
variations in business conditions may be in two directions: (i) upward phase when boom
conditions prevail, and (ii) downward phase when economic activity is marked by a decline.
During the upswing of the business activity the need of working capital is more as opposed to the
downward phase of the business.

PRODUCTION POLICY:
The requirement of working capital also depends on the production policy of the firm. In
manufacturing concerns having mostly seasonal demand for the product the production policy is
a significant determinant of working capital.

CHANGES IN PRICE LEVEL:

General increase in price level increases working capital need of a firm because the firm has to
pay more for maintaining the previous level on working capital.

GROWTH AND EXPANTION:

As a company grows, it is logical to expect that a larger amount of working capital will be
required. The critical fact is however, is that the need for increased working capital funds does
not follow the growth in business activities but precedes it.

AVAILABILITY OF RAW MATERIALS:

In case raw materials are easily available on soft terms the firm does not require maintaining a
huge inventory of raw materials. Such a firm does not require blocking up huge amount of
working capital for this purpose. On the contrary if raw materials are scarce and its supply is
irregular and seasonal in nature the firm needs to store a reasonable quantity of raw materials in
hand. The working capital need of such a firm is significantly high.

DIVIDEND POLICY:
The payment of dividend consumes cash resources and, thereby, affects working capital to that
extent. Conversely, if the firm does not pay dividend but retains the profits, working capital will
increase.

DEPRECIATION POLICY:
Depreciation policy also exerts an influence on the quantum of working capital. Depreciation
charges do not involve any cash outflow. The effect of depreciation policy on working capital is,
therefore indirect.
At NCL depreciation is provided on straight line method at the rates specified in schedule- XIV
to the companies act, 1956. However where the historical cost ofthe depreciable asset undergoes
a change, the depreciation on the revised amortized depreciable amount is provided
prospectively over the residual useful life of the asset based on the rates specified in schedule-
XIV to the companies act, 1956. Depreciation on assets installed/ disposed off during the year is
provided with respect to the month of addition/ disposal thereof.

CURRENT ASSETS:
The list of current assets comprises inventories (including raw materials, work-in-progress and
finished goods and spares), sundry debtors including receivables, readily realizable securities and
tax reserve certificates, short-term investments, accrued incomes, prepaid expenses (not in the
nature of deferred charge), cash at bank, and cash in hand.
In NCL current assets are:
 Inventories (stores & spares, raw materials, semi-finished products)
 Sundry debtors
 Cash & bank balances
 Interest receivable/accrued
 Loans & advances etc.
CURRENT LIABILITIES:
The list of liabilities includes trade creditors, accounts payable, outstanding or accrued expenses,
bank overdraft, outstanding liabilities, short-term loans and borrowings and certain obligations
including different provisions, i.e., provision for taxation, proposed dividend etc.
In NCL current liabilities are:
 Sundry creditors
 Advances from customers
 Security deposit

Other liabilities etc.

FACTORS TO BE CONSIDERED WHILE ESTIMATING WORKING

CAPITAL REQUIREMENT

 Total costs incurred on materials, wages and overheads.

 The length of time for which raw materials remain in stores before they are issued to
production.
 The length of the production cycle or work-in-progress, i.e., the time taken for conversion
of raw materials into finished goods.
 The length of the Sales Cycle during which finished goods are to be kept waiting for
sales.
 The amount of cash required to pay day-to-day expenses of the business.
 The amount of cash required for advance payments if any.
 The average period of credit to be allowed by suppliers.

IMPORTANCE OF WORKING CAPITAL RATIOS

 Ratio analysis can be used by financial executives to check upon the efficiency with
which working capital is being used in the enterprise. The following are the important
 ratios to measure the efficiency of the working capital. The following, easily calculated,
ratios are important measures of working capital utilization.

RATIOS Formulae Result Interpretation

Current Ratio Total Current =X It is the relationship between the amount

Assets/Total times of current assets and the amount of
Current Liabilities current liabilities. It measures the short-
term liquidity position of the firm.
Acid-Test Ratio Total Current =X Similar to the Current Ratio but takes
Assets- times account of the fact that it may take time
Inventories/ to convert inventory into cash.

Total Current
Liabilities
Working Capital Sales/Working =X A Higher Working Capital Ratio means
Turnover Ratio Capital times lower investment in working capital and
better profitability.
Stock Turnover Sales/Inventory =X days On average, you turn over the value of
Ratio(in days) your entire stock every x days. You may
need to break this down into product
groups for effective stock management.

Current Assets Sales/Current =X It reflects the efficiency in generating

Turnover Ratio Assets times sales by Current assets.
 CHAPTER–04
RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. Scientifically .In it,
we study the various steps that are generally adapted by a researcher in studying his research
problem along with logic behind them.

MEANING OF RESEARCH

Research comprises defining and redefining problems, formulating hypothesis or suggesting

solutions, collecting, organizing and evaluating data making deductions and reaching
conclusions and at last carefully testing conclusions to determine whether they fit the formulated
hypothesis.

OBJECTIVES OF THE STUDY

BROAD OBJECTIVES:

 To find out the efficiency of financial analysis in BAJAJ FINANCE.

  To have a practical experience of the functioning of the Finance Department of BAJAJ
FINANCE.

 To study how of financial analysis practices plays an important role in supporting other
activities of BAJAJ FINANCE.

SPECIFIC OBJECTIVES:

 To gain familiarity with the various components of financial analysis in BAJAJ

FINANCE

 To judge the success of the management in carrying on the daily transactions of the
company.

 To gain an in-depth knowledge of the tricks of managing the daily financial activities of
BAJAJ FINANCE

 To find out the difference between the theoretical and practical aspect of financial
analysis To study and come out with any solution for improvement of working capital
management at BAJAJ FINANCE.

RELEVANCE OF THE STUDY

The study is done on the topic of financial analysis in the company.

This topic includes:

  The planning and control of revenue and expenditure. It helps in deciding whether or not
to commit.

 Resources to a particular long-term as well as short term, projects whose benefits to be

realized during the year or more than one year.

It is of utmost important to avoid less revenue and more expenditure during the year in the
company. This decision though taken by the individual concern is of national importance
because it determines employment, economic growth and economic activities. Overall Budgeting
plays an important role in identifying and managing the fund and expenses in the organization.
That is why the topic chose for the study is very relevant.

SIGNIFICANCE OF THE STUDY

Financial information is the ART OF BUSINESS MANAGEMENT. Study of project needed

for the systematized effort to gain new knowledge. It is systemizing study consisting of a
problem using the hypothesis for the collection of the facts, data, analysis and conclusion.

 To know about the financial analysis of BAJAJ FINANCE and the manager ina working
towards the company. This is very useful and helpful in the performance of the company.

 To know about the turnover of the company. It will Continue or discontinuities main
operation or part of its business;
 Make or purchase certain materials in the manufacture of its product;
 Acquire or rent/lease certain machineries and equipment in the production of its goods;
 Issue stocks or negotiate for a bank loan to increase its working capital;
 Make decisions regarding investing or lending capital;
 Other decisions that allow management to make an informed selection on various
alternatives in the conduct of its business.
 The Financial Analysis function performs in-depth analysis of the institution’s financial
and operating results independently of the business units and prepares management
 reports for Senior Management and the Board. This function is generally found as a
separate unit only in larger institutions

LIMITATION OF THE STUDY

 Time is the real factor, which affects the study i.e. the time duration of eight weeks for
the project work, is very short span of time to conduct effective study.
 Some departments are remaining untouched to this exercise. Hence it does not bring
complete picture of organization’s competence level.
 Scarcity of needful printed documents on the topic.
 All the employees and officers were found very busy in their working hours.
 Many a times my guide and others executives were not available in their seats because
they were busy in their allied work so as a researcher I have to visit many a times to meet
them and discuss on my topic.
 The questionnaire being objective type could not have provided much opportunity for
employees to give much ideas and suggestions.

RESEARCH DESIGN
A research design is a framework or blueprint for conducting the research project. It gives
details, of the procedures necessary for obtaining the information needed to structure or solve
research problem. A research design involves following components:

1. To define the information needed.

2. To design the exploratory, descriptive and casual phases of the research.
3. To specify the measurement and scaling procedures.
4. To appropriate form of data collection.
5. To specify the sampling process and sample size.

RESEARCH DESIGN WHICH IS USED IN THIS RESEARCH

1. DESCRIPTIVE RESEARCH:

Descriptive research studies are concerned with describing the characteristics of a

particular individual or group. For e.g. Studies concerned with specific prediction with
narration of facts and characteristics concerning individual group or situation are example
of descriptive research also comes under descriptive research

2. DIAGNOSTIC RESEARCH:

Diagnostic research determines the frequency with which something occurs or it’s
associated or not is an e.g. of diagnostic research design. Descriptive as well as
diagnostic studies share common requirements are grouped together.
METHODOLOGY

The data which I have collected for making this project is combination of both primary and
secondary data.

PRIMARY DATA:

This data had been collected through meetings and interviews with various managers and
employees of the finance department located in the administrative building of NCL. At the same
time I had visited various departments for collection of data. The departments that had been
visited are as follows:-
 Main Cash Department
 Billing and Operation Department
 Budget Department
 Pay Section
 Excise Department.
 Welfare & Miscellaneous Bill Section
  Sales Department
 Project Management Department

SECONDARY DATA:

Apart from the primary data certain secondary data were required for this project. Following are
the sources of secondary data:-
 Annual Reports
 Cost & Budget Reports
 Creditors Reports
 Debtors Reports
 Inventory Reports
 Cash Report
 Materials Report
 Production Reports
 Sales Reports

EXECUTIVE SUMMARY

LPG or Liberalization, Privatization and Globalization as it is referred in short today have

changed the scenario of corporate world and management of enterprises in our country. It has
now become more important to not just manage an organization but to achieve corporate
excellence simultaneously as the future belongs to learning and performing organizations.
As every business concern irrespective of its size, nature, and age needs funds to carry out
business operations such as purchase of raw materials, payment of wages and other day-to-day
expenses, working capital becomes an important and integral part of business. Working capital is
the life blood and nerve centre of a business because no business can run successfully without an
adequate amount of it. Therefore, to manage working capital in any sector is a challenging job.
The project report titled “A Comparative Study on FINANCIAL ANALYSIS with special
reference to BAJAJ FINANCE” deals with this matter and is based on the in-house industrial
training at BAJAJ FINANCE, pertaining to the requirement for the BBA from “DAV
INSTITUTE OF MANAGEMENT, FARIDABAD.” Unless organization learn to manage its
working capital, success, will be exclusive. Thus, the effectiveness of an organization depends
on the strength of its working capital management as it is core to the whole system in recent
years has become more crucial for achieving rapid economic growth of our country.

The project contain the basic postulates of working capital, procedures for the analysis of
working capital, ratios being used to define the working capital and the impact of shortcomings
in the management of it . All this had been done to get a clear view of the techniques of
FINANCIAL ANALYSIS in “BAJAJ FINANCE”.

Focus of the study problem

Aim of this work is to evaluate financial data of BAJAJ FINANCE in order to recommend
managerial actions in respect with financial management. Another principal interest is investor
point of view. The evaluation mostly relies on ratio analysis. From managerial point of view
needs for diversification of product portfolio and handling ambiguity of company production
capabilities were identified. As financial performance is improving there is opportunity for
higher debt financing of the company.
Financialstatementanalysis of firms presents you an intuition on how
the corporation is conducting its program. For stockholders who are interested in finding out
whether the management is properly utilizing the corporation’s resources to create shareholder
wealth, a financial analysis of a corporation will be able to help investors come to proper
decision. As such, financial analysis of a corporation has several items, including capital
budgeting and capital structure decisions when the analysis of financial statements is done for the
management of the firm. The performance of competitors within the industry, and the viability
of business’s future can be evaluated through financial statement analysis.
Viability of a project can be found out through a financial statement analysis which can be
performed by financial analysts employed by the firm. Projects that would bring in the maximum
amount of revenues over the course of time over similar projects are recommended by financial
analysts to the management. Expected returns from projects are provided by financial analysts to
the management. Analysts employed by the business can also give the management suggestions
on whether to issue new stocks or borrow money to fund new projects. Financial analysts will
recommend whether a new project should be undertaken or invest the money somewhere else,
essentially performing capital budgeting decisions.
Financial Institutions will carry out a financial statement analysis of a business to see how strong
its fundamentals are, and then use their findings to either make good investments for themselves,
or pass on the findings to their clients.

CHAPTER-05
DATA ANALYSIS
AND
INTREPRETATION

CALCULATION & INTERPRETATION OF RATIOS

Q1. CURRENT RATIO:

Current ratio = Current Assets
Current Liabilities
Calculation :

Year 2019 2018

Current 40000 38000
assets
Current 23000 21000
liabilities
Ratio 1.73.9 1.80.9

CHART:
 6
5
4
Series 1
3
Series 2
2
Series 3
1
0
Category 1 Category 2 Category 3 Category 4

Interpretation:
In 2019 current ratio was 1.75 which is decreased to 1.69 in the year 2018. As
compared to last year Current Assets has increased because of increase in
Inventories, Cash and Bank balance and other Current Assets but Current Ratio
has decreased because of excess advance received from debtor , decrease in Cost
of Removal of over burden, and increase in current liability .

Q2. QUICK / ACID TEST/ LIQUID RATIO :

Quick Ratio = Quick/ liquid Assets

Current liabilities

Calculation :

Year 2019 2018

Quick 3406.48 1458.94
assets
Current 23696.97 21686.07
liabilities
Quick ratio 0.14:1 0.07:1

CHART:
 25000

20000

15000
2019
10000 Series 3

5000

0
Quick assets Current liabilities

Interpretation:

In 2018 quick ratio was 0.07 which has increased to 0.14 in 2019. Quick assets
have increased by 133% and Current liabilities have increased only by 9% Due to
which quick ratio has increased by 100%. The management has taken a great
effort in maintaining high quick assets as compared to last year.

Q3. STOCK TURN OVER OR INVENTORY TURN OVER RATIO:

Inventory turnover ratio = Cost of good sold

Average inventory
Cost of goods sold = Opening Stock+ Purchase + Direct Expenses - Closing
Stock
Average inventory = Opening stock + Closing stock

Calculation:

Year 2019 2018

COGS 51000.72 454738.36
Avg. 5094.255 4004.18
inventory
Ratio 10 Times 113.16times
 CHART:

70000
60000
50000
40000
2019
30000
Series 3
20000
10000
0
COGS Avg. inventory

Interpretation: In 2018 inventory turnover ratio was 10.16 times which is

reduced to 9.08 times. Reduction of Inventory turnover ratio in 2019 may be due
to increase in cost of goods sold with increase in sales as compared to last year or
due to non availability of opening balance of inventory in the year 2018.

Q4. DEBTOR TURNS OVER RATIO:

Debtor turnover ratio = Net credit sales

Average debtors
Average debtors = Opening Debtor + closing Debtor
2

Calculation:

Year 2019 2018

Sales 155235.59 143719.15
Debtor Nil 289.19
Ratio Nil 496.9Times

NOTES: Debtor in the year 2019 is -594.18 because of excess advance

received from customer therefore debtor is considered nil.
 Chart:

160000
120000
80000 2019
Series 3
40000
0
Sales Debtor

Interpretation: Debtor turnover ratio in the year 2018 is extremely high i.e.
564 times. The ratio is too high because the entire sale done by the project is
according to the agreement with customer. The debtor shown on the closing day
of financial year is not received by the customer because customer has time to
pay his liability in near future. So the project is not worried about the Bad debts

Q5. GROSS PROFIT RATIO:

Gross profit ratio = Gross profit * 100

Net Sales

Gross Profit = Sales- Cost of goods sold

Calculation:

Year 2019 2018

Gross profit 88087.87 77980.79
Net sales 130035.59 120009.15
Ratio 58 % 59 %
 160000
140000
120000
100000
80000 2019
60000 Series 3

40000
20000
0
Gross profit Net sales

Interpretation:

In the year 2018 gross profit ratio was 59 % which is decreased to 58% in the year 2019.
The project gross profit has increased with increase in sales as compared to last year. The
project gross profit ratio has decreased by 1% due to increase in direct expenses.

The company has sound position to meet its non-operating expenses and also enough
capable to pay taxes and royalty to the government.

Q6. OPERATING RATIO:

Operating ratio = Operating Cost*100

Net Sales

Calculation :

YEAR 2019 2018

Operating Cost 60000 51000.54
Net Sales 100000.59 100019.15
Ratio 59.99% 50.99%

 Chart
 160000
140000
120000
100000
80000
60000
40000
20000
0
Operating cost Net sales

Interpretation:

In the year 2018 operating ratio was 45.05% which is reduced to 44.18% in the
year 2019. Reduction in operating ratio will contribute more to net profit .
Reduction in operating ratio may be possible due to reduction in cost per tones.

Q7. NET PROFIT RATIO:

Net profit ratio = Net profit after tax *100

Net sales
Calculation :

Year 2019 2018

Net profit 82105.48 67010.72
Net sales 135235.59 123719.15
Ratio 60.71% 54.16%

 Chart
 160000
140000
120000
100000
80000 2019
60000 2018
40000
20000
0
Net profit Net sales

Interpretation:

The net profit of the company has been increased by 6.55% as compared to last
year. In 2018 project net profit was 54.16% which increased to 60.71% in 2019.
Net profit of the project has been increased due to increase in sales/ production,
reduction in cost per tones, and better control on operating expenses. The net
profit of the project reveals sound business of the project and strong financial
position.

Q8. WORKING CAPITAL TURNOVER RATIO:

Meaning:

Working Capital Turnover Ratio = Cost of Sales

Net working capital

Calculation :

YEAR 2019 2018

COGS* 50047.72 40738.36
WORKING CAP. 10238.6 11339.93
RATIO 4.88 times 3.59imes

Charts:
 70000
60000
50000
40000
2019
30000 Series 3
20000
10000
0
COGS WORKING CAP

Interpretation: In the year 2018 ratio was 3.11 times which is increased to
3.52 times in the year 2019. As compared to last year working capital has been
utilized very efficiently. In 2019, the reciprocal of this ratio( 1/3.52=0.284)
shows that for sales of RS 1 company requires 28 paisa as working capital.
This ratio is very helpful to forecast the working capital requirement on the
basis of sales.

Q9. CREDITOR TURNOVER RATIO:

Creditors turnover ratio = Net Credit Purchases

Average creditors
Average creditors = opening creditors + closing creditors
2
Calculation :

YEAR 2019 2018

CREDIT 38301.77 39152.12
PURCHASE
AVG. 22691.52 21686.07
CREDITORS
RATIO 1.69 times 1.81times

Credit purchase include consumption of stores and spares, social overhead,

owner& fuel, repairs& contractual expenses.
 Chart:

80000
60000
Series 3
40000
2019
20000
0
Credit purchase Avg.creditors

Interpretation: A high creditor’s turnover ratio indicates that creditors not

paid in time while a low ratio gives an idea that the business is not taking full
advantages of credit period allowed by the creditors. Since creditors turnover
ratio has decreased from 1.81 times to 1.69 times which represents those
creditors are paid in time. It’s a good sign for the company.

CHAPTER-06
 CONCLUSION
AND
SUGGESTION

Conclusion

After analyzing the ratios of BAJAJ FINANCE and its competitors, the main thing to be noted is
that the company has improved its performance very well as compared to its previous years
ratios.

But on the other side, the analysis shows that with the continuous improvement in performance
of BAJAJ FINANCE, itis still in backward position if compared it with the other competitors.

But we can also say that because of its continuous improvement BAJAJ FINANCE is also giving
them a tougher competition and will definitely acquire a better position in the future.

Interpretation:
In 2018 current ratio was 1.75 which is decreased to 1.69 in the year 2019. As compared to last
year Current Assets has increased because of increase in Inventories, Cash and Bank balance
and other Current Assets but Current Ratio has decreased because of excess advance received
from debtor , decrease in Cost of Removal of over burden, and increase in current liability .

 Interpretation: A high creditor’s turnover ratio indicates that creditors not paid in
time while a low ratio gives an idea that the business is not taking full advantages of
credit period allowed by the creditors. Since creditors turnover ratio has decreased from
1.81 times to 1.69 times which represents those creditors are paid in time. It’s a good sign
for the company.
 Interpretation: In the year 2018 operating ratio was 45.05% which is reduced to
44.18% in the year 2019. Reduction in operating ratio will contribute more to net profit.
Reduction in operating ratio may be possible due to reduction in cost per tones

SHORTCOMINGS AND CONCLUSION

 The profitability of the project is getting affected due to the holding of cash as idle which
is increasing year after year.

 The company follows a good credit policy of debtors but a risk of bad debts is always
present in high debtors.

 The company has an excellent short-term liquidity position and it should look forward to
improve it in the future.

 Uneven trend in holding period of raw materials is a problem in NCL and this is affecting
the liquidity of the company.
  DCH has increased its loans and advances over the four years which shows that the
company is engaged in modernization of machinery. It is very essential because it helps
the company to compete with other competitors in the market. The company should carry
on such modernization plans in future as well.

 The working capital ratio in NCL is low and measures should be adopted to increase it in
future.

 The management of the project had been successful in timely recovery of accrued
interest from the concerned parties.

 The holding period of finished and semi-finished product in company has increased over
the four years though the turnover has gone up. Having such kind of situation of situation
further can cause a major impact on the liquidity of the company.

 On the whole after this detailed study of the working capital management practices in
company, it can be said that DCH is managing its working capital quite efficiently and its
techniques are in sync with the latest practices of the Indian coal industry.

 Time is the real factor, which affects the study i.e. the time duration of eight weeks for
the project work, is very short span of time to conduct effective study.
 Some departments are remaining untouched to this exercise. Hence it does not bring
complete picture of organization’s competence level.
 Scarcity of needful printed documents on the topic.
 All the employees and officers were found very busy in their working hours.

 Many a times my guide and others executives were not available in their seats because
they were busy in their allied work so as a researcher I have to visit many a times to meet
them and discuss on my topic.
 The questionnaire being objective type could not have provided much opportunity for
employees to give much ideas and suggestions.

MAJOR OBSERVATIONS AND RECOMMENDATION

Market share: The Company’s main motive should be to increase their market share.
Manyinvestors before investing see the market share in the market. So if the company wants to
increase the value they have to increase the market share. This can be achieved by creating a
competitive edge over its competitors. The company has to increase its sales by various means
like maintaining good relationships with the customers, allowing good credit facility and also by
reducing cost so as to provide a competitive price in the market. Proper marketing strategies can
also help the company in having good sales.

Investments: The Company has invested in various fields which is good as it has diverse its
risk but there are some loop holes in the investment too. The company should also invest in there
is free return also. The company didn’t invest in either of the risk free return. The company
should invest inthe government securities and debentures so that the company should be risk free
up to some percentage.

Payment policies: Payment policies followed by BAJAJ FINANCEshould be reviewed time

to time and steps should be taken for prompt payments so that the good vendor database can be
maintained.

Collection period:BAJAJ FINANCE has a low debtor turnover ratio and a very high
collection period of 90days which implies excessive blockage of funds as debt which might
result in stagnation of the business. Attempts to reduce down the debtors turnover ratio to 30
days should be made which would ensure better availability of funds for business operations.

Proper training:The personnel must be given training for proper use of equipment’s and
materials so as to avoid damages which will result in saving the repair and maintenance cost.

FINDINGS OF THE STUDY

 The company uses the other methods of analysis like comparative balance
sheet, income and expenditure account, cashflow statement etc.

 Proper procedures are followed in systematic manner in order to operate upon

financial budgets, analysis.

 The market position of the company is also very sound.

 The facilities provided to the employees are appreciable.

 The working environment is also up to date and makes the employees fulfill
their duties responsible.

 The financial position of the company is sound.

 The company‘s project financial department runs the project smoothly.

 To make working capital management various ratio analysis is used and their
interpretation is made.
 ANNEXURES

BIBLIOGRAPHY

Books:
 C.R.KOTHARI Research methodology, new age international publishers.
 Shrivastava T.N., (2009), Business research methodology, Tata McGraw -
Hill Education private limited.

Online References:

 WWW.Bajajfinservlending.in
 WWW.Slideshare.com
 WWW.Salesforce.com
 WWW.EBCO.COM
News Paper:
 Economic Times
 Times of India

World Wide Web

 www.Bajaj Finance.com
 www.economictimes.com
 www.businessfinancemag.com
 www.investopedia.com
 www.planware.com
 www.myiris.com/share/company
 www.contentlinks.asiancerc.com/sbicap/market.asp

APPENDICES

BAJAJ FINANCE
Standalone Balance Sheet in Rs. Cr.
Mar 19 Mar 18 Mar 17 Mar 16 Mar 15

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 182.90 182.90 173.57 173.57 173.57

Preference Share Capital 250.00 250.00 0.00 0.00 0.00
Total Share Capital 432.90 432.90 173.57 173.57 173.57
Reserves and Surplus 1,478.71 1,450.05 1,405.21 1,331.91 1,266.67
Total Reserves and Surplus 1,478.71 1,450.05 1,405.21 1,331.91 1,266.67
Total Shareholders Funds 1,911.61 1,882.95 1,578.78 1,505.48 1,440.24
NONCURRENT LIABILITIES

Long Term Borrowings 420.09 326.03 476.11 475.90 573.19

Other Long Term Liabilities 152.57 129.53 73.80 59.69 81.57
Long Term Provisions 11.01 11.55 9.35 7.08 6.43
Total NonCurrent Liabilities 583.67 467.10 559.25 542.68 661.18
CURRENT LIABILITIES

Short Term Borrowings 224.77 327.02 236.15 193.45 146.55

Trade Payables 420.39 385.01 372.74 372.18 361.94
Other Current Liabilities 1,808.32 1,751.84 1,544.77 1,503.52 1,592.51
Short Term Provisions 11.57 11.98 17.94 0.33 0.18
Total Current Liabilities 2,465.04 2,475.84 2,171.60 2,069.48 2,101.17
Total Capital And Liabilities 4,960.33 4,825.89 4,309.63 4,117.64 4,202.58
ASSETS
NONCURRENT ASSETS

Tangible Assets 27.60 36.27 35.11 29.73 26.95

Intangible Assets 1.83 2.28 1.93 2.08 0.68
Capital WorkInProgress 0.02 0.13 0.00 0.00 1.45
Intangible Assets Under
Development 0.15 0.09 0.41 0.00 0.21
Fixed Assets 29.60 38.77 37.45 31.80 29.28
NonCurrent Investments 270.75 383.45 370.07 270.46 265.36
Deferred Tax Assets [Net] 11.17 7.70 5.80 4.06 7.69
Long Term Loans And Advances 196.66 209.98 269.50 245.14 241.60
Other NonCurrent Assets 20.48 17.09 21.54 19.46 23.00
Total NonCurrent Assets 528.66 656.99 704.35 570.91 566.92
CURRENT ASSETS

Current Investments 0.00 0.10 0.00 0.05 0.05

Inventories 2,410.85 1,907.74 1,819.70 1,813.76 1,869.82
Trade Receivables 549.44 756.32 446.67 553.14 570.38
Cash And Cash Equivalents 194.12 200.99 197.63 138.07 111.36
Short Term Loans And Advances 945.45 945.94 727.57 664.66 619.09

OtherCurrentAssets 331.80 357.81 413.71 377.05 464.97

Total Current Assets 4,431.66 4,168.91 3,605.27 3,546.73 3,635.66
Total Assets 4,960.33 4,825.89 4,309.63 4,117.64 4,202.58
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS

Contingent Liabilities 447.32 404.25 441.54 666.72 649.57

CIF VALUE OF IMPORTS

Raw Materials 1.59 7.77 20.15 5.24 0.00

EXPENDITURE IN FOREIGN
EXCHANGE

Expenditure In Foreign Currency 0.44 0.47 0.31 0.37 1.17

REMITTANCES IN FOREIGN CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign

Currency
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods
Other Earnings 0.55 1.39 0.20 0.67 4.43
BONUS DETAILS

Bonus Equity Share Capital 151.16 151.16 141.82 141.82 141.82

NONCURRENT INVESTMENTS

NonCurrent Investments Quoted Market

4.83
Value
NonCurrent Investments Unquoted
260.75 383.45 369.97 270.36 265.36
Book Value
CURRENT INVESTMENTS

Current Investments Quoted Market

0.10 0.05 0.05
Value
Current Investments Unquoted Book

Value