Sood MEDICINE TRADERS Pvt LTD

REPORT ON “ANALYSIS OF FINANCIAL STATEMENT” Summer training
Rahul

2009-2011 SUBMITTED TO: PUNJAB UNIVERSITY, CHANDIGARH For The Degree of M.com(e-commerce) SUBMITTED BY: NANDINI GULERIA M.COM (e-commerce)
2nd sem

[Type the company address]

SISTER CONCERNS OF SOOD MEDICINE TRADERS PVT LTD

ACKNOWLEDGEMENT

“Gratitude is a duty which ought to be paid”
Rousseau

Word cannot express the deep sense of gratitude and indebtness. I am highly grateful to Sh.Anuj sood, Managing Director SMT for granting me permission for joining their company. I pay my sincere thanks to P.K khanna (Finance Manager) under whose guidance I am able to complete my project in a fruitful way. I would like to thank all persons of Finance Department of SMT ( Hoshiarpur) without whom my project would not have been completed successfully. I also pay special thanks to Mr. Dinesh Sharma, Mr. Rakesh, Mr. Sunil Sharma & Mr. Vivek Sharma and other members for helping, guiding & encouraging me a lot for acquiring information about Financial Analysis. They made me learn financial analysis of SMT in depth and guided me to complete the project. I also pay my special thanks to the head of the various departments in the SMT under whose kind cooperation I was able to gain ample quantity of knowledge.

. It exposes students to the problem areas and provides knowledge as how to face these problems areas and provide confidence as how to solve this problem.EXECUTIVE SUMMARY The summer training in an organization is an integrated part of M. There is a gap between theory and practice and the training is aimed at removing this gap and to increase the process of communication between future manager and industrial sector.COM program.

It has its Own indigenous software for total computerization of all operation. Anti Emetics.1989 as whole sale and retailer of all kinds of pharmaceuticals products. Is producing a vide range of products like Antibiotics.Ltd. Our manufacturing Unit is one of the Unit in the state of Punjab and is reputed for producing excellent quality of Tablets. Which is an ISO 9001:2000 company fully equipped with modern production and packing units along with own Research & Development labs. Lupin. in most of the states of India and is also out sourcing some of the products from Meneil Pharma and Scott Edil .Axon Lab. At present Sood Medicine Traders is known all over the north India as one of the top ten Pharma whole sale dealers and is well known for its excellent services to customers at their door steps. Steroids. Sood Medicine Traders has a fleet of vehicles for suppliers to each & every town with its dedicated team of salesmen. Sood Medicine traders is stokists for more than 150 companies includes all top companies of India like Glaxo SmithKline. Capsules and Injectables. Cadila. Antifungals.BUSINESS PROFILE OF THE COMPANY They are in the pharmaceuticals business for the last 21 years and they established Sood Medicine Traders Private limited on 23. Ranbaxy. Muscle Relaxant and Eye & Ear Drops etc. Johnson & Johnson. Pain killers . Cipla. Ltd.02. They also have their own Manufacturing unit namely Axon Laboratories Pvt. multi Vitamines.Harmones.SMT is capable of executing orders of all of medicines to any place in India and abroad. Anti Histamines. Our other sister concern Axon Laboratories Pvt . Anabolics. Wokhardt and Aventis etc. Anti Ulcerants (PPIs).

NUMBER OF SUPPLIERS There are about 150 suppliers from whom the company use to make purchases and then they further sell it to the customers with the help of 22 sales man.Pharmacia Ltd . Their motto is to provide healthcare services at affordable cost to all our customers at their door steps. Some of the suppliers are: .

Company introduction Company Name Nature of business Brand Status Turnover Daily sales No of employees Total no of suppliers : : : : : : : : SOOD MEDICINES TRADERS PRIVATE LIMITED WHOLE SALE DEALER (STOCKIST) OF MEDICINES MEDICINES PRIVATE LIMITED COMPANY 40 crore 200 150 1500 3121.28 150 Anuj Sood 1989 Total no of customers : Sale of medicine Total dealers Managing Director Date of Incorporation : : : : .

producing. Homopathic. import and export. Crude drugs. varnishes. distributing and dealing in the either of their own and/or as commission agent in all kinds of Ayurvedic. raising. Acquiring. Basic drugs. processing. Herbs. vaternity medicines. sell. Chemicals. Alialopathic. selling. Pharmaceutical formulation. toilet requisites. importing. food products. C&F agents manipulate. photographic . pharmaceutical formulation. To provide in India or elsewhere outside India know how in the manufacturing. food products. dental goods of all description.MISSION OF THE COMPANY To set up and to carry on the business of Manufacturing. and Biochemic. exporting. Aromatic chemicals cosmetics and injectable. pigments. medicines. processing and converting all kinds of Ayurvedic. herbs. To manufacture. Aromatic Chemicals Cosmetics and injectable. preparing. buy. surgical appliances and equipments. Distribute and Trade in or otherwise deal in all types of hospital requisites. buying. Paints. homeopathic and biochemic medicine. chemicals. Optical goods of all descriptions. basic drugs. repack. crude drugs. refining.

6. To calculate the rate of profitability of the organization. 4. to evaluate the strength and weaknesses of the company on the basis of their financial statements and to ascertain the profitability of the company on the basis of analysis of its financial statements.goods antibiotic. . 3. insecticides and Apparatuses and machinery for the testing and manufactcture of the oforesaid articles and feeds and feed supplements. To study and review the present financial position of Sood Medicine Traders pvt Ltd (SMT). 2. OBJECTIVE OF THE STUDY The main objective of the summer training programme is to make students familiar with the practical aspect of the classroom learning. To find out the weakness of company working. To measure the growth rate of the organization. To find out the future prospect of the company and available opportunity in the near future. Therefore main objective of the present study is to learn and experience the practical functioning of the organization. Following are the main objectives of the study:- 1. To be conversant with the financial results system and different planning and control measures adopted by the company. To know the different measure and way to make financial analysis a successful instrument for planning and control purpose. 7. (Hoshiarpur) for the purpose of better understanding of system and making it more effective. 5.

aptitude test and a series of functional tests by which competence of the candidates at the cognitive level is assured. typing. In addition to the job related training all employees attend self-development programs. Important factor considered while selection an individual are the set of aptitude and values an individual possess. are required to go through compulsory selection testes as Candidates personality. as this determines the ultimate adjustments between organization and employee. Advertisement. . Also the candidates have to undergo training up to a particular level. Diploma and Graduate are trained for one year. Employment exchange. Recruitments is done trough following sources: 1) 2) 3) Campus interviews. LEARNING THROUGH TRAINING All classes of employees are trained. Candidates with the necessary aptitude under goes a selection test program based on assessment center methodology. Non-skilled are trained to become skilled workers and skilled are trained to acquire multiple skills. Those who are successful can jump almost four grades. There are special management programs and classes.RECRUITMENT Diploma/Graduate are recruited.

It has resulted in easy availability of loans. The payment rotations have also become faster from the dealers to the company.Memorandum Of Understanding SMT has signed MOUs with various banks all over the country for Medicine retail finance. Following is the list of the banks: CANARA BANK CAPITAL BANK PUNJAB NATIONAL BANK BANK OF PUNJAB . which helps cost cutting. which is giving a special impetus to company.

6. A distinction should. 3. . 1. 2. 5. therefore. However both analysis and interpretation are interlinked and complementary to each other. While the term analysis is used to mean the simplification of financial data by methodical classification of the data given in the financial statements. be made between the two terms. METHODS OR DEVICES OF FINANCIAL ANALYSIS A number of methods are used to study the relationship between different statements. Ratio Analysis Comparative Statements Trend Analysis Common-Size Statements Fund Flow Analysis Cash flow Analysis The comparative financial statements are statements of the financial position are different periods of time. The elements of financial position are shown in a comparative form of so as to give an idea of financial position at two or more periods. Analysis is useless without interpretation and interpretation without analysis is difficult or even impossible. interpretation means explaining the meaning and significance of the data so simplified. 4.FINANCIAL ANALYSIS The term financial statement analysis includes both analysis and interpretation.

3. The analyst is able to draw useful conclusions when figures are given in a comparative position. then the analyst will be able to study the trends of sales over different periods of time.The comparative statement may show: 1. When sales figures of previous periods are given along with the figures of current period. comparative figures will indicate the trend and direction of financial position and operating results . increase or decrease in absolute figures. The figures of sales for a quarter. .e. 4. Absolute figures (Rupee Amounts) Changes in absolute figures i. Absolute data in terms of percentages. Similarly. 2. half-year may tell only the present position of sales efforts. Increase or Decrease in terms of percentages.

Thus it shows the mathematical relationship between two related items express in quantitative form. WAYS OF EXPRESSION OF RATIO: A ratio can be broadly expressed in three ways. It may be a quotient. Meaning of Ratio Analysis: An analysis of financial statements with the help of “Ratio” may be termed as “Ratio analysis”. In this unit of expressing 100 multiply the above quotient then unit of expression becomes a percentage. Obtained by dividing one value by other. It may also be expressed in the form of proportions between two figures. A direct examination of the magnitude of two related items is somewhat enlightening but the comparison is greatly facilitated by expressing the relationship as a ratio. determining & presenting the relationship of items of financial statements. It is with the help of ratios that the financial statement can be .RATIO ANALYSIS MEANING OF RATIO A ratio is assessment of the significant of one figure in relation to other. If 100 then unit of expression multiply the above quotient becomes a percentage. It implies the process of computing. It also involves the comparison & interpretation of these ratios & use of them for further projections. RATIO ANALYSIS: Financial Analysis depends to a large extent on the use of ratio. It measures the comparative significant of individual item of income and position statements.

INTERPRETATION OF RATIO : The importance of Interpretation of ratio lies when they prove as useful true to financial analyst. .The single ratio by itself may have significance of its own. There are four different ways in which ratios may be interpreted. 1) INDIVIDUAL RATIOS : .analyzed more clearly & decisions made accruable & reliable from such analysis. seem to be made more easily when they can be rationalized with the number. The Ratio may be used as a symptom like Blood Pressure the pulse rate on body temperature and this interpretation depends upon the caliber & competence of the analyst. which appear to be concrete in nature. most creditors investors intending to have some financial commitment in firm automatically twin to a core of relationship for guidance as people prefer to work with data. Thus Ratio-Analysis is not an end itself it is only a mean of better understanding of financial strengths & weaknesses of a firm. Thus the Ratio Analysis is a process of comparison of figures against another and appraisal of ratios to make proper analysis about the strengths & weaknesses of firm’s operations. But one cannot draw any meaningful conclusions when a single ratio is considered in isolation. The judgment of the Management. So it is a powerful analytical tool for measuring performance of an organization. Quantitative Ratio-Analysis is not capable of providing precise answer to all problems faced by a financial manager or a potential fund supplier unless several ratios often related to one another are computed & then alone the whole of ratio analysis acquires some signature from the point of view of its users. NATURE OF RATIO ANALYSIS: - Despite the fact that there is no special in Ratio-Analysis as such.

although each ratio has some specific objective for a particular use some general objects of Ratio-analysis are as given below: 1) 2) 3) 4) 5) Trends in costs. controlling and forecasting etc. The main object of Ratio-Analysis is to help management in analysis and interprets the financial statement to get adequate information useful for the performance of various functions like planning. such comparisons are very significant where members of same industry face the similar financial problems. 3) HISTORICAL RATIOS : .Ratios may be interpreted by expanding the analysis & considering a group of several related ratios. What has happened during the two intervening periods can easily be communicated by ratios. Ideal ratios may be constructed and relationship is found between strategic ratios.In this approach the ratios of any given firm may be compared with the ratios of other firms in the same industry. In this way the ratio whose significance is not fully understood are made more meaningful by calculating Group Ratios. Ratio-Analysis can also be used as an instrument of managerial control These are the indicators of managerial efficiency. OBJECTIVE OF RATIO ANALYSIS : Ratio-Analysis serves the purpose of various parties interested in financial statements. which involves making comparisons over time.2) GROUP RATIO: . sales. . coordinating. Under this the ratios are studied and compared over a period of years with the results that significant trends indicating raise and falls on stability are indicated. profits and other related facts revealed by the past ratios and future events can be forecasted on the basis of such ratios. It also accomplishes the goals of communication. 4) INTERFIRM RATIOS : . which can be used for achieving desired c-ordination.This is the third approach of interpretation of Ratio-Analysis.

There importance lies in the fact that they are interpreted. NEED OF RATIO ANALYSIS: - The need of ratio analysis due to following facts: 1) Business facts shown in financial statements do not carry any importance individually. 2) Ratio-analysis is a tool for interpretation of financial statements is also needed because ratios have analyst to have a deep peep into the data given in the financial statements. Ratios calculated from the information given in financial statements categories. Hence there is a need for establishing relationship between various related items. pertaining to different purposes are classified into different .6) 7) Inter-Firm comparisons can be made easily as ratios bring uniformity in the financial data. The particular purpose of the user determines the particular ratios that might be used for financial analysis. It also aims at making profitable investments. Because different parties are interested in different ratios for knowing the financial position of a firm for different purpose. CLASSIFICATION OF RATIOS: Many types of financial ratios may be used and the purpose for which analysis is made will usually suggest emphasizing one set of ratios in preference to another.

9 2005-2006 3.4 2008-2009 2. it came down at 1.3. Only in the year of 2005. So proper steps should be taken to maintain it at optimum level.8.7.7 but the ratio shows the improvement in liquidity position of the company.LINE CHARTS CURRENT RATIO :FORMULA: CURRENT ASSETS / CURRENT LIABILITIES 2004-2005 1.7 2007-2008 3.8 2006-2007 1. As per the ‘Rule of Thumb’.4.9. In the last five years it stands at 1.9. ACID TEST RATIO:FORMULA: LIQUID ASSETS / CURRENT LIABILITIES . it should be in the ratio of 2:1.3.4. which shows the sound liquidity position of the firm.1. 2007.1.2. But the company that increases in the ratio after limit is harmful for it should consider one thing.4 Current ratio of the company is satisfactory.

It measures the firm’s capacity to payoff its current obligations and when they become due.6.2.03.03 Quick ratio is complementary to the current ratio.67 2007-2008 1.56.3 . The satisfactory norm for the liquid ratio is 1:1 is acceptable by law. The increase in the ratio is due to the increase in the sundry debtors and loan & advance ABSOLUTE LIQUID RATIO FORMULA: .71.2004-2005 0. which shows a satisfactory liquidity position of the concern. In the last five years company’s liquid ratio stands at 0.1.= ABSOLUTE LIQUID ASSETS CURRENT LIABILITIES 2004-2005 0.79 2008-2009 1.8.6 2008-2009 0.3 2006-2007 0.56 2005-2006 2.0.1 2005-2006 0.1 2007-2008 0.6 2006-2007 0.

10 .3.50:1. This ratio is fluctuating up & down with the change in the position of cash and loan & advances of the company.the absolute liquid ratios of the company are 0. But it shows a satisfactory position of cash with the company.Absolute liquidity ratio include ratio of cash.43 .03 2008-2009 22. The acceptable norm for it is 0. EFFICENCY RATIOS DEBTORS TURNOVER RATIO FORMULA: CREDIT SALES / AVERAGE DEBTORS 2004-2005 26.63 and 0.27.9 2005-2006 32.096.0. which shows a satisfactory position of the cash with the company.6 2006-2007 23. marketable securities to current liabilities. bank.9 2007-2008 24.0.0.

WORKING CAPITAL TURNOVER RATIO FORMULA: SALES/NET AVERAGE WORKING CAPITAL 2004-2005 5. Which shows a satisfactory position of debtors in the company. The debtor turnover ratio for the last five years of the company is 26.32.9 .24.4 2007-2008 10. It throws light on the collection and credit policies of the firm.43..6.9. there is no rule of thumb for the Debtor turnover ratio.Debtor turnover ratio indicates the velocity of debt collection of the firm. but much higher ratio shows the inability of the firm to sell its product on credit.6 2005-2006 4.23.9.1 2008-2009 8.03. But a high Debtor Turnover ratio indicates more efficient management of debtors.8 2006-2007 14.22.

INVENTORY TURNOVER RATIO:FORMULA: NET SALES/AVERAGE INVENTORY 2004-2005 11. there is no rule of thumb for this ratio but higher the ratio is considered good.4.6.2 2008-2009 10.1.9 2006-2007 10. Working capital turnover ratio indicates the velocity of utilization of net working capital in the firm.2 2005-2006 12. The ratio of the company for the last five years are 5. This ratio indicates the firm’s ability of generating sales per rupee of working capital.This show a decrease in every year expect one year.6 2007-2008 12.4.8.14.9.9 .10.Working capital is directly relates to the sales as it is the difference between current assets and current liabilities.8. So it is necessary for the company to improve this ratio on higher side.

12. There is no rule of thumb for this ratio but higher the ratio is considered good. which shows the fluctuation in it but still it is satisfactory for the company.9.2.6 2005-2006 0.10. The stock turnover ratio of the company for the last five years are 11.9. the lesser amount is required to finance the inventory.12. It measures the relationship between cost of goods sold and inventory level. SOLVENCY RATIOS DEBT-EQUITY RATIO FORMULA: OUTSIDER’S FUND / SHAREHOLDER’S FUND 2004-2005 0.A high Inventory Turnover ratio indicates the efficient management of inventory because more frequently the stocks are sold.2.6. On the other hand lower this ratio indicates inefficient management of inventory.99 .9 2008-2009 o.9 2006-2007 0.5 2007-2008 0.10.

9.18 2006-2007 0.0.2 2008-2009 0.57.the ratios of the company for the last five years are 0.0. If this ratio is smaller it will be favorable for the firm.0.It establishes a link between the long-term funds from outsiders and long funds available in the business.0. There is no acceptable rule of thumb for this ratio but 5055% is tolerable and not beyond .182 2007-2008 0.99.As the ratio should be less than 50% so we can say that this ratio is absolutely under control.6.99. EQUITY RATIO FORMULA: SHAREHOLDER’S FUND TOTAL ASSETS 2004-2005 0.17 . Though there is no thumb rule but still the lesser reliance on outsiders will be better option.27 2005-2006 0.

27. Higher the ratio.95 2006-2007 0. means better is the long-term solvency of the firm.2.67 2008-2009 0. FUNDED DEBT TO TOTAL CAPITALISATION : FORMULA: FUNDED DEBT TOTAL CAPITALISATION X 100 - 2004-2005 0.17 in the last five years.This ratio establishes the relationship between shareholder’s funds to total assets of the firm. This ratio indicates the extent to which the assets of company can be lost without affecting the interest of the creditors.56 2007-2008 0.0.69 .0. In the firm this ratio is increasing year by year.0.0. So we can say that the firm is strengthening year by year.9 2005-2006 0. This ratio is an important ratio for determining long-term solvency of firm.18. It is 0.18.

06 2006-2007 0.0.2008 0.2 2004-2005 0.67.95.93.It establishes a link between the long-term funds from outsiders and long funds available in the business.07 2007.0.0.0.14 2008-2009 0.As the ratio should be less than 50% so we can say that this ratio is absolutely under control.2006 0. Though there is no thumb rule but still the lesser reliance on outsiders will be better option. There is no acceptable rule of thumb for this ratio but 5055% is tolerable and not beyond .03 .55.69. PROFITABILITY RATIOS NET PROFIT RATIO FORMULA: NET PROFIT (BEFORE TAX) X 100 SALES 2005.the ratios of the company for the last five years are 0. If this ratio is smaller it will be favorable for the firm.

07.6 .06.4 2008-2009 6. Higher the ratio better will be profitability.14. administration and other activities of the company and be in the position to earn the faith of the customers.0.5 PROFIT (BEFORE TAX) / SALES X 100 2005-2006 7. selling. The net profit of the firm is not stable and fluctuates year by year.0.03.0.This ratio is very useful as if the profits are not sufficient the firm shall not be able to achieve a satisfactory return on investment.5 2007-2008 3. This indicates the firm’s capacity to face the adverse situations. The company should try to make growth in net profit by efficiency of management in manufacturing.0. The ratios for the last five years for the company are 0. GROSS PROFIT RATIO: FORMULA: 2004-2005 6.19.4 2006-2007 6.

the G. which shows a fluctuating trend in profit. but should be adequate to cover the operating expenses. So company need to take necessary action to control it.97 2006-2007 1.7.4.6. RETURN ON INVESTMENT FORMULA: NET PROFIT (AFTER TAX) X 100 SHAREHOLDER’S FUND 2005-2006 0.21 .0 2007-2008 2. A lower ratio indicates high cost of goods sold due to unfavorable purchasing policies.5. over investment etc.Gross profit ratio reflects the efficiency with which a firm produces its products.3. There are no standard norms for gross profit.6.6. lesser sales.P ratios of the company for the last five years are 6.4.09 2004-2005 0.07 2008-2009 2.5.

This ratio is one of the important ratios used for measuring the overall efficiency of the firm. it is on decreasing side. So the management of the company should take necessary action to improve this ratio RETURN ON ASSETS FORMULA: 2004-2005 0. Higher the ratio better will be the results.25 PROFIT AFTER TAX TOTAL ASSETS 2005-2006 0.37 2006-2007 1 X 100 2007-2008 1 2008-2009 0. If we ignore the year of 2004-05. which is not good from the company point of view.It shows the relationship between net profits and shareholder’s fund. This ratio reveals the how well the resources of a firm are being used.35 .

This ratio reveals the how well the resources of a firm are being used. years for the company are 0.1.1. This ratio is one of the important ratios used for measuring the overall efficiency of the firm.37.0.25.7 2007-2008 7. OF PAID UP EQUITY SHARES 2005-2006 7.0.75 PROFIT AFTER TAX NO.O.35.I Ratios for the last five EARNING PER SHARE FORMULA: 2004-2005 0. Higher the ratio better will be the results. The R.15 2006-2007 3.It shows the relationship between net profits and shareholder’s fund.7 2008-2009 7.9 .

29 2008-2009 1.7.75.7.78 2005-2006 0. SHARE CAPITAL + DEBENTURE + LONG TERM DEBT 2004-2005 0. It is calculated to know that weather the earning power of the firm has increased or not.7.15.3.7. In ITL this ratio shows a continuous increasing trend from the last four years.9 which shows that company has excellent profitability and seems satisfactory for the company LEVERAGE RATIOS CAPITAL GEARING RAITO: FORMULA: EQUITY SHARE CAPITL + RESERVE & SURPLUS – LOSSES PREF.39 2007-2008 0.7.This is a good measure of profitability.37 2006-2007 0.57 . The EPS ratios for the last five years for the company are 0.

0. The ratios for the company for the last five years are 0.5 2007-2008 64.299.0. The firm is said to be in high gear if preference capital & fixed interest bearing loans exceed equity share capital and reserve & surplus.04 100 2004-2005 53.45 .39.The term capital gearing used to describe the relationship between equity share capital including Reserve & surplus and preference share capital plus other fixed interest bearing loans.37. RATIO OF RESERVES TO EQUITY CAPITAL FORMULA: RESERVES X EQUITY SHARE CAPITAL 2005-2006 57.0.70 2008-2009 69.1. The Company is always in low gear as equity capital plus reserve & surplus are always is more than fixed interest bearing long term loans.78. So company is in good position according to capital gearing ratio.57.7 2006-2007 60.

which are. This ratio is important to know that how much profits are retained by the company for the future growth.3 2006-2007 2. RATIO OF CURRENT LIABILITIES TO SHAREHOLDER’S FUND: FORMULA: 2004-2005 1. SMT has been able to build very large amount of reserve.1 . Generally higher the ratio better is the position of the company.7 2007-2008 1. much more than its equity share capital.5 CURRENT LIABILITIES SHAREHOLDER’S FUND 2005-2006 2.25 2008-2009 2.This ratio establishes relationship between reserves and equity capital. As we analyzed the financial statements of SMT we find that over the years.

97 35417647.28 _ _ 426266 3856874.19 _ _ _ _ _ _ TOTAL (B) NET WORKING CAPITAL (A-B) INCREASE IN WORKING CAPITAL 44009713.47 8697867.7 _ _ _ 4076853.13 NET AFFECT _ _ _ _ SCHEDULE FOR CHANGES IN WORKING CAPITAL FOR THE YEAR 2005-2006 .28 773266496.04 31340793.00 11219692.SCHEDULE FOR CHANGES IN WORKING CAPITAL FOR THE YEAR 2004-2005 PARTICULAR CURRENT ASSETS INVENTORIES SUNDRY DEBTOR CASH & BANK LOAN & ADVANCES 2004 2005 INCREASE DECREASE 22526663.79 _ 69164003.98 _ 789722918.78 TOTAL (A) CURRENT LIABILITIES 25154289.28 16456422.25 22100397 7362817.98 16456422.19 8697867.57 729256783.81 _ 8359994.47 25154289.

57 13336271.69 2223120.58 96301427.86 TOTAL (B) NET WORKING CAPITAL (A-B) INCREASE IN WORKING CAPITAL 44347585.86 TOTAL (A) CURRENT LIABILITIES 16456422.98 26586207.98 _ 60804008.27 33035225 2909704.73 - .81 25367634.67 2223120.14 25367634.14 70933793.26 50616514.28 30125520.69 NET AFFECT SCHEDULE FOR CHANGES IN WORKING CAPITAL FOR THE YEAR 2006-2007 PARTICULAR CURRENT ASSETS INVENTORIES 2006 2007 INCREASE DECREASE 30125520.55 8911211.57 5973454.28 - 8911211.71 - 31340793.58 35497419.PARTICULAR CURRENT ASSETS INVENTORIES SUNDRY DEBTOR CASH & BANK LOAN & ADVANCES 2005 2006 INCREASE DECREASE 22100397 7362817.67 19275720.28 16456422.99 8025123.

26 .34 14735723.46 949973.81 3194597.SUNDRY DEBTOR CASH & BANK LOAN & ADVANCES 13336271.61 - 50616514.32 4150462.54 - 10321631.18 29518096.46 23312031.58 96301427.32 TOTAL (A) CURRENT LIABILITIES 25367634.60 1399451.99 14735723.67 2223120.72 - - 47421916.14 25367634.60 13785750.37 26586207.74 1864581.46 29518096.14 TOTAL (B) NET WORKING CAPITAL (A-B) INCREASE IN WORKING CAPITAL 70933793.84 52830128.69 NET AFFECT SCHEDULE FOR CHANGES IN WORKING CAPITAL FOR THE YEAR 2007-2008 PARTICULAR CURRENT ASSETS INVENTORIES SUNDRY DEBTOR 2007 2008 INCREASE DECREASE 33035225 22713593.93 35853874 4150462.

55 488751.84 15430242.93 .83 2571428.71 261910.84 8993265.83 2571428.26 14047661.54 34158648.18 48064038.64 - - 52830128.72 33976184.46 14087853.25 13785750.74 1864581.90 3060180.82 23312031.49 10664152.77 NET AFFECT SCHEDULE FOR CHANGES IN WORKING CAPITAL FOR THE YEAR 2008-2009 PARTICULAR CURRENT ASSETS INVENTORIES SUNDRY DEBTOR CASH & BANK LOAN & 2008 2009 INCREASE DECREASE 22713593.68 5798668.31 TOTAL (A) CURRENT LIABILITIES 29518096.82 TOTAL (B) NET WORKING CAPITAL (A-B) INCREASE IN WORKING CAPITAL 29518096.02 11445054.46 14087853.CASH & BANK LOAN & ADVANCES 3194597.87 924241.76 8993265.68 8069023.09 706846.

44 TOTAL (B) NET WORKING CAPITAL (A-B) INCREASE IN WORKING CAPITAL 12195717. It is as important to a business as blood streams to a person.82 24349003. to acquire fixed assets for research and development for making investigations. sole trader or partnership needs finance to carry on its operations.31 59335513.79 NET AFFECT MEANING OF BUSINESS FINANCE AND ITS IMPORTANCE FOR BUSINESS Finance is an indispensable for any business. quality .34 924241.49 34986510.82 24349003. to stand comfortable in the highly competitive market and finally to accomplish its targets. Every business needs finance to complete their jobs such as to promote or establish the business.44 - 10261149.62 14087853.ADVANCES 48064038. IMPORTANCE OF FINANCE FOR A BUSINESS Finance is just like lubricant oil that oils the engine of enterprise and helps it to run smoothly.28 1010325. It is foundation of sound management. Moreover finance is needed for meeting short-term requirements (working capital) and for vital permanent investments in the fixed assets. create values.72 TOTAL (A) CURRENT LIABILITIES 14087853.93 10261149. to run the business smoothly.62 33976184.Business finance is the provision of money at the time when it is required. private or public. Every enterprise big or small.

. Helps in financial planning and controlling functions. to keep right men at right job and for efficient management control system. To acquisition of funds as and when required at minimum possible cost. 5. To increase savings and investments. 4. 6. Acquisition of assets. 7. To increase goodwill of the company. 2. 3. To increase or improve profits. Proper allocation of funds. To satisfy investors. 8. The importance of the finance can be evaluated from following points: 1.control.

6) Study of Audit Reports and Balance Sheets of the company of last five years. Help from the different books should be taken for studying different concepts & theories.LITRATURE REVIEW Different type of literature is studied while preparing this report which includes: 1) CONCEPTUAL LITRATURE : Conceptual literature is that literature which relates with concepts and theories. . 5) Discussion with the people of the organization. 4) Books and magazines available in the organization library. 3) Published data in newspapers such as Financial Express. 2) EMPERICAL LITERATURE: Empirical literature consists of study made by other persons in the same field that is similar to it. Business Standard and Denik Bhaskar etc.

Mainly the information is secondary is nature.For understanding the various types of reports being set to finance departments by different sections. Collection of Data:- Collecting the required information from accounts department carried out by the study of the financial performance of (ITL) International Tractor Limited (Hoshiarpur). The whole research work can be described in following steps:1.The very first step is the recognition of various types of information. Recognition of Information: . Understanding of reports being prepared by the Units:. Base for the study is published & unpublished records prepared by accounts department. .RESEARCH METHODOLOGY The present chapter explains the objective of the study and methodology adopted to achieve those objectives. in order to understand the present system of financing data conducting personal interviews has collected from various departments. Therefore aim objective of the present study is to learn and experience the practical functioning of the organization to evaluate the strength and weakness of the company on the basis of their financial statements and to ascertain the profitability of the company on the basis of the analysis of its financial statements. The main objective of the summer training program is to make students familiar with the practical aspect of the classroom learning. which in necessary for the study of financial ratio-analysis. 3. personal interviews have been conducted with the concerned person with prior permission from concerned department head. 2.

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Mainly the information is secondary in nature but direct conservation with accounts department also was used for the study. Study of various Financial Statements:.For better understanding various ratio have been calculated and comparative statements are prepared.The strength & weakness of the financial statements have been observed in the light of the requirement of various types of information and adequacy and sufficiency of the reports being sent to the unit .By comparing the ratio of different years the analysis in made and various strengths and weakness of the firm is mentioned out. 1 Calculation of Ratio & Their Interpretation:. Base for the study is published and unpublished records prepared by accounts department.METHODOLOGY Collecting the required information from accounts department carried out the study of the financial performance of SMT Hoshiarpur. 2 Identification of Strength and weakness of the Financial Statement:.

The different types of research design used in exploratory research design are as follow: EXPERIENCE SURVEY : .  It should be such that the result of the sample study can be applied for universe with reasonable level of confidence. we try to discover the new relationship between two or more variables. mainly the Exploratory Research Design is used.  Sample design should be with small sampling errors  It must be viable in context of availability of time and funds.  It should be such so that systematic bias can be controlled. It refers to the techniques or procedure which would adopt in selecting item for the sample. In exploratory research design. TYPE OF SAMPLE DESIGN USED For preparing this report.SAMPLING & SAMPLING DESIGN Sampling design is a definite plan for obtaining a sample in a given population. FEATURES OF SAMPLE DESIGN  Sample design must result in a true representative sample of the population.

newspapers.Experience survey means survey of peoples who have practical knowledge or experience with the problem to be studied. Unstructured interviews may take place or some other approaches may be adopted. SURVEY OF CONCERNING LITRATURE IT is the most fruitful and simple method of collecting information regarding the research problem or developing hypothesis. ANALYSIS OF INSIGHT STIMULATING It is the most fruitful method of suggesting hypothesis for research. Literature includes study of different magazines and journals. This method consists of the intensive study of selected instances of the phenomenon in which one is interested. and other published or unpublished data. company reports. its main objective is to obtain insight into the relationship between variable and new ideas relating to the study. For this purpose Existing records may be examined. .

Ratio Analysis e. Common Size Statements 4. Common Size Statements c. Cash Flow Statements In the present study only four devices are used to analyze the financial performance of the company.TOOLS AND DEVICES OF THE STUDY: For analyzing the financial performance of the company the various tools or devices can be used such as: a. . Ratio Analysis 3. f. The other data is also observed for the period from 2001-02 to 2005-06. Comparative Statements b. Schedule of change in working capital. Comparative Statements Analysis 2. which are as under: 1. Trend Analysis PERIOD UNDER OBSERVATION The present study relate to the financial year 2005-2006. Trend Analysis d.

time and cost involved are high but it provides more accurate and reliable data. PERSONAL INTERVIEW METHOD This method helps in obtaining a great range of data although it requires more time.DATA COLLECTON Mainly two techniques of data collection is used in this report which area as follow: 1) OBSERVATION METHOD 2) UNSTRUTURED PERSONAL INTERVIEW METHOD. the efforts. . In this method. This method helps in obtaining much reliable and accurate data from the respondent. The interviewer has to be very apt and experienced to collect adequate and proper information from the respondent. OBSERVATION METHOD Observation deals with obtaining information that is already recorded or deals with the objectives. It provides the opportunity to interpret and collect information as per the objective. efforts and funds. The accuracy of data depends upon the capacity of observer to perceive and recording the people’s behavior. It should be conducted after establishing sufficient rapport or level of understanding with the respondent.

only comparative statement. 2. 4. Rely upon the information supplied by the organizations & various departments. So cent percent accuracy cannot be claimed. The ratios have been interpreted by comparing the standard with the actual wherever these are available in literature. 3. Time was the major limitation. . 5. 6. . The data may not be accurate. All the techniques or tools available for financial performance analysis are not used.LIMITATIONS OF THE STUDY 1. common size statement and trend analysis and ratio analysis have been used for analysis. There are not proper arrangements for the trainees. analysis.