EXECUTIVE SUMMARY

The project undertaken by me is “Ratio Analysis”, with reference to Areva T&D India Limited, Naini (Allahabad) The Project was carried out under the guidance of Mr. Anshul Mehrotra (Finance). In this report I have analyzed various factor to determine the company overall financial image. Areva T&D India Limited, believes in the importance of four basic guiding principles in terms of how they view themselves and their clients relationships; Quality, Service, Teamwork and Innovation. AREVA, World energy expert, offers its customer technological solutions for highly reliable nuclear power generation and electricity transmission and distribution. Areva is the world leader in energy business. It Ranks 1 st in the entire nuclear cycle and Ranks 3rd in the electricity transmission and distribution. The objective of the project was to analyze and interpret the financial statement of the company as well as to judge its operational efficiency. Four major ratios were studied under this project i.e. Liquidity Ratios, Solvency Ratios, Turnover Ratios and Profitability Ratios.

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INTRODUCTION
In any organization, the two important financial statements are the Balance sheet & Profit and loss account of the business. Balance sheet is a statement of the financial position of an enterprise at a particular point of time. Profit and loss account shows the net profit or net loss of a company for a specified period of time. When these statements of the last few year of any organization are studied and analyzed, significant conclusions may be arrived regarding the changes in the financial position, the important policies followed and trends in profit and loss etc. Analysis and interpretation of the financial statement has now become an important technique of credit appraisal. The investors, financial experts, management executives and the bankers all analyze these statements. Though the basic technique of appraisal remains the same in all the cases but the approach and the emphasis in analysis vary. A banker interprets the financial statement so as to evaluate the financial soundness and stability, the liquidity position and the profitability or the earning capacity of borrowing concern. Analysis of financial statement is necessary because it help in depicting the financial position on the basis of past and current records. Analysis of financial statement helps in making the future decision and strategies. Therefore, it is very necessary for every organization whether it is a financial or manufacturing etc. to make financial statement and to analyze it.

OBJECTIVES OF THE PROJECT
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Primary Objectives:  To provide a report that gives a complete picture of the financial state of AREVA T&D India Ltd. , Naini (Allahabad)  To locate the weak spots of the business which need more attention.  To analyze and interpret the financial statement of the company and give a proper suggestion for its improvement.  To interpret and analyze the financial ratios of the company

Secondary Objectives:  To provide deeper analysis of the liquidity, solvency, activity and profitability of the business.  To provide information for making time-series analysis i.e. for making comparison of a firm’s present ratios and with its past ratios.  To provide information useful for making estimates and preparing the plans for the future.

LIMITATIONS OF THE PROJECT
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 Research facilitates decision making and is not a substitute of decision making. It helps in providing alternative solution and is not the solution itself.  The topic is so broad to cover all the fields in just four weeks.  One of the constraints in the completion of project was the busy environment of the organization.  Although Allahabad is not new for me yet the company is establish far away from the city.  All the necessary data were not available to me due to company’s confidential matter.

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WORLDWIDE Areva is a French public multinational industrial conglomerate that deals in energy. AREVA. It is No. It is No. treatment. engineering. recycling. chemistry. The parent company is incorporated under French law as a société anonyme (public corporation).000 employees are committed to continuous improvement on a daily basis.A. The organization is World leader in energy business. services.COMPANY PROFILE AREVA. AREVA offers customers reliable technological solutions for CO2-free power generation and electricity transmission and distribution. AREVA is the government organization of France.3 in electricity transmission and distribution. and dismantling. nuclear propulsion and reactors. Areva is just a name. combustibles. The company is engaged in nuclear power generation and transmission & distribution of electrical energy. especially in nuclear power. stabilization. The French State owns more than 90%. It acquired the Naini division of Alstom in September 2005.1 in the entire nuclear cycle. inspired by Arevalo Abbey in Spain. 5 . The Global specialist in energy & transport infrastructure is in the business of providing quality solutions & system design. making sustainable development the focal point of the group’s industrial strategy. Areva’s 65. Areva is the world leader in nuclear power and the only company to cover all industrial activities in this field. It acquired the Transfer & Distribution division of ALSTOM. It is the only company with a presence in each industrial activity linked to nuclear energy: mining. Areva specializes in infrastructure. a private organization of France in 2004. enrichment. The real name of the company is S. des Participations du Commissariat à Atomique. It is the world leader in nuclear power and the only company to cover all industrial activities in this field. With manufacturing facilities in 43 countries and a sales network in more than 100.

3 in electricity transmission and distribution  Company’s Mission 1. Reach a significant position in CO2 free production systems Areva Way The AREVA way represents AREVA core beliefs. Achieve one-third of the world nuclear market and a €5Bn sales revenue 2. safer and economical CO2-free power generation and electricity transmission and distribution.AREVA: A RECOGNIZED LEADERSHIP  World leader in the energy business 1.1 in the entire nuclear cycle 2. safer and cheaper energy" 6 . It illustrates a vision structure that guides the thoughts and actions of AREVA people in attaining the ultimate goal of becoming No. Innovate to contribute to ever cleaner.1 AREVA. Deliver a double digit operating margin 3. It stipulates the way in which the goal is realized AREVA’s principles "Enable everyone to have access to ever cleaner. No.  Company’s 2011 Objectives 1. values and aspirations. No.

AREVA T&D INDIA LIMITED 7 .

The name of the company was changed from Alstom Limited to Areva T&D India Limited from 23rd September. Systems.setter in the field of high voltage switchgear and was the first to build the 765 KV sub. Circuit breakers and Medium Voltage Switch Gears. Netherlands. Growth. Automation. AREVA T&D currently employs over 4600 people in India across 16 Manufacturing Units and 22 Sales Offices. The company is present in products of upto 765 KV. France. and Services. Chhattisgarh. EHV Products: 132 KV and above HV Products: 66 KV and Above MV Products: 33 KV and Below LV Products: 11 KV and Below (Not present) • Systems 8 . formerly known as ALSTOM LIMITED was originally incorporated as General Electric Company of India (GECI) in 1911. • Products Company’s Products segment comprises of Power Transformers. Instrument Transformers. AREVA T&D INDIA LIMITED. GECI was amalgamated with the English Electric Company of India (EEI) in April 1993 and the name was changed to GEC Alsthom India. The company was promoted by GEC Alsthom. Around 70% of power flow in India’s transmission grids is managed by AREVA T&D’s Automation solutions. It came to India by acquiring the worldwide T&D sector of Alsthom. Areva T&D India divides its business in verticals like. The company has been a trend. Products. Leadership… AREVA T&D INDIA LIMITED is a subsidiary of AREVA. Areva T&D mainly focuses on Medium Voltage (MV) to Extra High Voltage (EHV) products. which has interests in GEC Alsthom Triveni.station in India with National Thermal Power Corporation Limited (NTPC) at SIPAT.Innovation. 2005. France.

ENERGY: THE CORE BUSINESS OF AREVA 9 . HVDC Substations and Gas Insulated Substations.Under this segment the company undertakes turnkey projects like building substations and switchyards. The company is also present in high-end areas like 765 KV substations. It includes Supervisory Control and Data Acquisition (SCADA) used for managing smooth energy flows from a centralized location. • Automation Automation segment comprises of hardware and software for managing energy flows from Load Dispatch Centres. • Services This segment comprises services for network planning and after sales services for products and systems business.

4 Division 10 .O r g a n iz a t io n o f th e gr o u p FR ON T E N D D iv is io n R E A C T O R S & S E R V IC E S B A C K E N D D iv is io n D iv is io n T R A N S MIS S IO N & D IS TR I B U T IO N D iv is io n • Mi n i n g • C h e m i s try • E n ri c h m e n t • Fuel • P l a n ts • E q u ip m e n t • N u c le a r S e rvi c e s • T re a tm e n t • R e c yc l i n g • L o g i s ti c s • P ro d u c ts • S e rvi c e s • S ys te m s • A u to m a ti o n • N u c le a r M e a s u re m e n ts • C le a-u p n • C o n s u l ti n g • E n g i n e e ri n g & In fo rm a tio n S ys te m s • AREVA T A 11 11 An Integrated Offer.

upgrades and operations. 2. 11 . systems.To answer its customers’ needs. nuclear fuel design and fabrication. Back-End Division: This division offers solutions for the management of used fuel. Logistics. concentration. supply of products and services for nuclear power plant maintenance. AREVA’s development strategy is based on a balanced presence in Europe. Reactors & Services Division: This division includes design and construction of nuclear reactors and other non co2 emitting power generation system. It is organized into five business units: Nuclear Site Value. mining. automation and services designed to transport and distribute electricity from the power plant to the final user. Recycling. conversion and enrichment. 4. cleanup of nuclear facilities. Front-End Division: This is the first division of AREVA which includes uranium ore exploration. For its nuclear operations. Clean-up and Engineering. Transmission & Distribution (T&D) Division: This division includes transmission and distribution operations which provide products. It includes treatment and recycling of used fuel. the group offers its customers’ valued solutions throughout the cycle: 1. 3. nuclear logistics. North and South America and Asia.

At present Naini works has installed capacity to manufacture 4929 KVA power transformers annually. The unit has the certification of IMS. distribution transformers and MV product lines. In India the only unit of Areva manufacturing Transformers is in Naini. The transformer that is below 20 MVA are called Distribution Transformers.AREVA T&D INDIA LIMITED. The Naini unit of AREVA deals with the business of Transmission & Distribution only. The Switch Gear business at Naini started in the year 1964. It is the only unit in India producing the oil base transformers. The unit is spread over a total area of 87276 meter square providing employment to 658 people. It is located 12 kilometers from Allahabad in the state of Uttar Pradesh (about 600 kms from New Delhi and 800 kms from Calcutta). The company mainly deals in the manufacturing of medium voltage 12 . NAINI (ALLAHABAD) Naini unit of AREVA T & D INDIA LIMITED was established in 1957. As a whole this T&D forms about one third of the business of the AREVA on the global scale. The unit is capable of manufacturing and servicing transformers up to a voltage range of 400 KV class. The unit is engaged in the production of power transformers.

 No transformer producer in the Northern Region.  Post Independence ‘UP’ identified as the State with highest development. testing and commissioning of transformers of 315 MVA up to 400 KVA class.  ‘Allahabad’ the Home Town of Nehru the most famous Prime Minister. Switchgear  1991 : Motor Operation Shifted  1996 : 400kv Transformer  1997 : Dist Transformer 13 .switchgears. Product History – Areva T & D India Limited (Naini Works)  1957 : Established Transformer  1964 : Motor. Switchgear Added  1985 : Introduced Vac. Locational Choice . manufacturing.Why at Naini?  UP’ the large state with highest population & maximum urbanization in the country. potential in Power Sector  ‘Naini’ the first organized industrial area planned in the country. The Naini unit is fully capable of designing.

 Sealed type air / glass cushioned transformers. ferro silicon.  Furnace transformers for calcium carbide. 14 . 2004 : Pss Introduced Workshop at Naini THE RANGE OF PRODUCTS: NAINI WORKS The product range includes power transformers of all types up to 400 kV class series.  Air furnace transformers.  Rectifier transformers. ferro chrome.  Shunt reactors of coreless and gapped core types.  Drycol breathers. ferro manganese.  Dry Type (flame proof and non flame proof) Mining transformers (approved by the Directorate General of Mining Safety).  Distribution and Power transformers up to 400 kV class.  Single phase track side transformers for railways. distribution transformers and switchgears.

 Reliance Textiles.  Ashok Leyland.  ABB.  National Hydro Power Electric Corporation.  Indian Railways.  Bhilai Steel Plant.  Indian Iron and Steel Company. At present Naini works has the capacity to manufacture 6000 MVA power transformers annually.  Bharat Heavy Electricals Limited (BHEL).  Auto booster transformers.  Western Collieries.  Damodar Valley Project.  Eastern Coalfields.  Power Grid Corporation of India. Radiators suitable for transformers.  Birla Cement.  ACC.  Indian Oil Corporation Limited.  Cochin Refinery.  National Fertilizers Limited (NEL).  L&T.  Kribhco.  IFFCO. Major Importing Countries from Naini Works      Zimbabwe Brazil China Myanmar Argentina      Columbia Croatia Greece Malawi Nepal      Australia Bangladesh Bhutan Uganda Vietnam Major Competitors in India     ABB BHEL CGL L&T     Siemens Crompton Greaves TELK SCHNIDER     BBL EMCO ECE T&R Major Customers in India  All State Electricity Board.  Oil and Natural Gas Corporation (ONGC). 15 .  Compact substations.  TC Engineers.  Kolkata Electric Supply Corporation  Ahmedabad Electricity Company.  HINDALCO.  New Delhi Municipal Corporation.  Century Cement.  Engineers India Limited.  Tata Iron and Steel Company (TISCO).

addition to AREVA’s existing power transformer factory at Naini (State of Uttar Pradesh). The four factories at Vadodara together cover an industrial surface of 350. in Vadodara. VADODARA: AREVA T&D India has inaugurated its largest manufacturing site at Vadodara  Four world class industrial units on one site  Delivering extra and ultra high voltage (EHV & UHV) transformers AREVA T&D India has inaugurated four new factories at a Greenfield site in Vadodara. Chairman and CEO of AREVA T&D. Chief Minister of Gujurat inaugurated the new facility.000 sqm of which more than 69. and other senior company representatives and customers.  To build extra capacities to take care of both domestic and export market. in the presence of Mr. . These factories are: 1. 2008. Shri Narendra Modi.000 sqm is the covered surface. Philippe Guillemot. Power Transformer factory with the largest testing capabilities in India: In . situated near Kotambi village. State of Gujarat on March 30.EXPANSION OF AREVA T&D INDIA LIMITED HOSUR:  The unit located at Bangalore is moved to a new site at Hosur to achieve the following objectives:  To build products up to Extra High Voltage (765 kV) and Ultra High Voltage (1200 kV) for the emerging needs of India’s transmission grid. These four factories are amongst a total of eight advanced technology manufacturing facilities that are being opened by AREVA on three sites across India. the new factory in Vadodara will manufacture power transformers up to 16 .

Primary Distribution Equipment: The Primary Distribution factory manufactures outdoor and indoor vacuum circuit breakers and air insulated switchboards up to 36kV. handling facilities for weights over 500 tons are sized for the production of the largest power transformers for Ultra High Voltage applications.1200kV AC and 800kV DC. latest generation high tech equipments: high speed core cutting line. circuit breakers and 17 . and prefabricated substations. ensuring the close proximity to customers. Secondary Distribution Equipment: The Secondary Distribution factory manufactures gas insulated switchgear to 36kV for distribution networks. which adds additional capacity to the existing facility at Naini. 3. In the power transformer factory. semi automatic winding machines. The new site is home to three specific factories. to help reduce CO2 emissions and electricity used during production. 4. The Vadodara factory will supply oil-immersed distribution transformers up to 30MVA. 2. and an impulse generator 1000. 2009. This new factory will improve geographical coverage across India. supporting India’s growing needs in UHV AC & UHV DC network developments. near Chennai on March 31. manufacturing gas insulated substations. MXR reclosers for overhead lines. PADAPPAI: AREVA T&D inaugurates India’s first Gas Insulated Substation manufacturing facility at Padappai  Site to also manufacture ultra high voltage (1200 kV) switchgear AREVA T&D India has inaugurated its latest state-of-the-art High Voltage manufacturing site at Padappai. Modern design circuit breakers will require less welding and contain some 40% less raw materials. The factories incorporate world class manufacturing equipment and facilities. The second Distribution Transformer factory in India: Vadodara also manufactures Distribution Transformers.

These new factories are amongst a total of eight that are being inaugurated on three sites in Vadodara. which took place in the presence of Philippe Guillemot. Disconnecting Switches factory: The third factory manufactures disconnecting switches from up to 1200kV. Benefiting from AREVA T&D’s worldwide leadership position in Disconnectors. with 20. AREVA T&D is bringing its advanced know-how to what will be a manufacturing centre of excellence. 18 . together with invited guests and customers. Thiru Arcot Veeraswamy. 3. It has an industrial surface of 58. during an official ceremony. As a global leader in the circuit breaker product segment and number one in India since 1996. government of Tamil Nadu inaugurated the new facility. Gas Insulated Substation (GIS) factory: In line with AREVA T&D’s localization strategy to become closer to its customers. the Padappai site is AREVA T&D’s hub facility in the region for high voltage. Padappai and Hosur by AREVA T&D. At Padappai. 2. 1. Circuit Breakers factory: The second of the Padappai factories manufactures and tests live tank circuit breakers from up to 1200kV. and fully equipped to meet India’s demand for extra and ultra high voltage equipment (up to 1200kV).300 sqm of covered workshop areas. AREVA will manufacture GIS up to 400kV.000 sqm. Padappai is India’s FIRST manufacturing facility for Gas Insulated Substations (GIS). is the AREVA’s first disconnector factory in India. honourable Minister for Electricity.disconnecting switches. Chairman and CEO of AREVA T&D. With its three factories. At Padappai. AREVA T&D is the world leader in GIS. AREVA is already the first company to manufacture in India circuit breakers with full spring operating mechanisms and thermal blast chambers. including in India.

It is a time series analysis. Financial ratio analysis is the calculation and comparison of ratios. On the basis of modus operandi Analysis: This analysis is made to review and analyze of financial statements of a number of years and are therefore.  Investors. liquidity position of the company. to know about the present and future profitability of the company and its financial structure.e.FINANCIAL ANALYSIS Financial analysis is the process of identifying the financial strengths and weaknesses of the firm and establishing relationship between the items of the balance sheet and profit & loss account. The level and historical trends of these ratios can be used to make inferences about a company’s financial condition.  Management. TYPES OF FINANCIAL ANALYSIS On the basis of material used External Analysis: External analysis is conducted by those persons who do not have access to the detailed record of the enterprise and therefore have to depend on published accounts and director’s and auditor’s report . in every aspect of the financial analysis. which are derived from the information in a company’s financial statements. based on financial data taken for those years. It shows comparison of financial data for several years against a chosen base year. and government agency and research scholars. to identify the firm’s ability to meet their claims i. Such type of analysis is made by investor’s. Internal Analysis: Internal analysis is conducted by the management for the reason that the management wishes to know the financial health and operational efficiency of the organization. credit agency. its operations and attractiveness as an investment. 19 . Financial Statement is example of this type of analysis. It is the responsibility of the management to maintain sound financial condition in the company. The important feature of such analysis is that as the management has access to all information relating to the organization so the analysis is more detailed extensive and correct. The information in the statements is used by:  Trade creditors.

There are different parties interested in the ratio analysis for knowing the financial position of a firm for different purposes. This type of analysis is also called Static Analysis as it is frequently used for referring to ratio development for one date or for one accounting period. or divisions or departments in the same enterprise.Vertical Analysis: This analysis is made to review and analysis the financial statements of one particular year only.  Measuring short and long-term financial position of the company.  Judging the operational efficiency of the business. Ratio analysis is to present the figure of financial statement in simple and tangible.  Assessing the solvency of the business. Ratio reflects a quantitative relationship helps to form a quantitative judgment.  Facilitating comparative analysis performance. OBJECTIVE OF RATIO ANALYSIS  Measuring the profitability. Such an analysis is useful in comparing the performance of several companies in the same group. CLASSIFICATIONS OF RATIOS The use of ratio analysis is not confined to financial manager only. as well as its historical performance and current financial condition can be determined. Ratio analysis is the process of establishing meaningful relationship between two figure and set for financial statement. RATIO ANALYSIS The term “Ratio” refers to the numerical and quantitative relationship between two items or variables. Various accounting ratios can be classified as follows:  Liquidity ratio 20 . So that the strengths and weaknesses of a firm. This relationship can be exposed as  Percentages  Fractions  Proportion of numbers Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements.

Liquidity ratios by establishing a relationship between cash others current assets provide a quick measure of liquidity. Important Liquidity Ratios are: a) b) Current Ratio Quick Ratio 21 . Leverage ratio  Activity ratio  Profitability ratio LIQUIDITY RATIOS: It is extremely essential for a form to be able to meet its obligations as they become due. due to lack of sufficient liquidity. The failure of a company to meet its obligations. and also that it is not too much liquid. loss of creditors confidence. The firm’s funds will be unnecessarily tied up in current assets. as idle assets earn nothing. or even lawsuits resulting in the closure of the company. Therefore it is necessary to strike a proper balance between liquidity and lacks of liquidity. Liquidity ratios measure the ability of the firm to cover its current obligations. A very high degree of liquidity is also bad. will result in bad credit image. A firm should ensure that it does not suffer from lack liquidity.

CURRENT RATIO Current Ratio is defined as the relationship between current assets and current liabilities. Current liabilities include outstanding expenses. bank overdraft. inventories. bills receivables.368 Table 1 1.32 1. This ratio is also known as "working capital ratio". income tax payable.36 1. marketable securities.35 1. bills payable. dividend payable.29 1.37 1.31 1.38 1. accrued expenses. It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. work in progress and prepaid expenses. Year Current Ratio 2009 1. sundry creditors.33 1.28 1.342 2008 1. sundry debtors. CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES The two basic components of this ratio are: 1) Current Assets 2) Current Liabilities Current assets include cash. short term advances.27 CURRENT RATIO 22 2009 2008 2007 .307 2007 1.3 1.34 1.

QUICK RATIO = LIQUID ASSETS___ CURRENT LIABILITIES The two basic components of this ratio are: 1) Liquid Assets 2) Current Liabilities Liquid asset includes marketable securities.074 2007 1. cash & bank.112 Table 2 2008 1. A ratio equal to or near to the rule of thumb 2:1 i.Fig 1 Interpretation: A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. Year Liquid Ratio 2009 1. QUICK RATIO Liquid Ratio is also termed as "Acid Test Ratio" or "Liquid Ratio". An asset is said to be liquid if it can be converted into cash with a short period without loss of value.16 Fig 2 23 . a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time.e. the current ratio is below ideal standard.e current assets double the current liabilities is considered as a standard or normal or satisfactory. debtors and bills receivables. 2008 and 2009. We can easily see from the above diagram that in all the three years i. On the other hand. 2007.

Financial institutions provide medium and long term loans and other creditors sale goods on installment basis. repayment of the principal amount at the maturity and the security of their loans. It can be interpreted from the above diagram that in all the three years i. Accordingly. the quick ratio is above than ideal standard.e. LEVERAGE RATIO The term solvency refers to the ability of a concern to meet its long term obligation. 2007. long term solvency ratios indicate a firm’s ability to meet the fixed interest and cost and repayment schedules associated with its long-term borrowing.  Debt-Equity Ratio  Debt to Total Fund Ratio  Proprietary Ratio  Fixed Assets to Proprietor’s Fund Ratio  Capital Gearing Ratio 24 . As a rule of thumb ratio of 1:1 is considered to be satisfactory. The long term creditors of firm are primary interested in knowing the firm’s ability to pay regular interest on long-term borrowings. The following ratios serve the purpose of determining the solvency of the concern. The long term indebtedness of a firm includes debenture holders.Interpretation: A high ratio is an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. 2008 and 2009.

Share Premium.6 0.4 0.7 0.2 0. It expresses the degree of protection provided by the owners for the creditors.DEBT EQUITYRATIO This ratio expresses the relationship between capital contributed by creditors and that contributed by owners. Year Debt Equity Ratio 2009 0. Mortgage Loan. A more highly leveraged company has a more limited debt capacity. Debt includes Debentures.1 0 DEBT EQUITY RATIO 2009 2008 2007 Fig 3 25 . Bank Loan. The higher the ratio.8 0. the greater the risk being assumed by creditors. and Equity includes Equity Share Capital.6471 2007 0.885 2008 0.9 0.1842 Table 3 1 0. Other Reserves and Credit Balance of P&L Account. General Reserve. Preference Share Capital.5 0.3 0. Capital Reserve. DEBT EQUITY RATIO= DEBT EQUITY Whereas. Loan from financial institutions and Public Deposits etc.

In this ratio.1556 Fig 4 Interpretation: Generally. 26 . debt is expressed in relation to total funds. A higher ratio than this is generally treated as indicator of risky financial position from the long. 2007.e. It is calculated as under: DEBT TO TOTAL FUND RATIO = Year Debt To Total Fund Ratio DEBT______ EQUITY + DEBT 2009 0.term point of view. both equity and debt. debt to total funds ratio of 0. 2008 and 2009.e. DEBT TO TOTAL FUND RATIO This ratio is a variation of the debt equity ratio and gives the same indication as the debt equity ratio. i. .67:1 is considered satisfactory.3929 2007 0. in all the three year company has this ratio much below than its ideal standard which means there are very less external equity in comparison to internal equity.46971 Table 4 2008 0.Interpretation: Though the ideal standard is 2:1. While with the Areva this ratio is much below than ideal standards in all the three years i.

PROPRIETORY RATIO This ratio indicates the proportion of total funds provided by owners or shareholders.8443 Year Proprietary Ratio Fig 5 Interpretation: This ratio should be . It is calculated as under: PROPRIETARY RATIO = EQUTIY____ EQUITY +DEBT 2009 0. In all the three years this ratio is above its ideal standard which means that the firm is less dependent on external sources of finance.607 2007 0. 27 .33:1 or more than that.5302 Table 5 2008 0.

027 Table 6 2008 0. FIXED ASSET TO PROPRIETORS FUND RATIO = FIXED ASSET____________ PROPRIETORS FUND (i. It can be seen that in all the three years this ratio is much below than ideal standard which shows a good solvency position for the company. The lower the ratio. the better it is for the long-term solvency of business because more proprietors’ funds will be available for working capital.417 Fig 6 Interpretation: If this ratio is less than 100% it would mean that proprietors funds are more than fixed assets and a part of working capital is provided by the proprietors.e.FIXED ASSETS TO PROPRIETORS FUND RATIO This ratio indicates the extent to which proprietors fund are sunk into the fixed assets. NET WORTH) Year Fixed Asset To Proprietor Fund Ratio 2009 1.892 2007 0. 28 .

CAPITAL GEARING RATIO This ratio establishes a relationship between equity capital (including all reserves and undistributed profits) and fixed cost bearing capital. In fixed cost bearing capital we include preference share capital and fixed interest bearing loans. 12 10 8 Fig 7 29 . Low capital gearing mean the amount of fixed cost bearing is less than the equity share capital.613 Table 7 2008 17.55 2007 13. Thus. CAPITAL GEARING RATIO= BALANCE EQUITY SHARE CAPITAL +RESERVE + P&L FIXED COST BEARING CAPITAL Whereas.302 20 18 16 14 Interpretation: In all the three years we see a low capital gearing ratio. Fixed Cost bearing capital= Preference Share Capital+ Debentures+ Long Term Loan Year Capital Gearing Ratio 2009 13.

Activity ratio measures the efficiency or effectiveness with which a firm manages its resources or assets. It included the following ratios:  Inventory Turnover Ratio  Fixed Asset Turnover Ratio  Working Capital Turnover Ratio  Capital Turnover Ratio 30 . The efficiency with which asset are managed directly effects the volume of sales.ACTIVITY RATIO Funds are invested in various assets in business to make sales and earn profits. These ratios are also called turnover ratios because they indicate the speed with which assets are converted or turned over into sales. the larger is the amount of sales and the profits. The better the management of asset.

the stock turnover ratio is much more in comparison to any of the three year.4 Table 8 SALES___ INVENTORY 2008 6.83 2007 7.INVENTORY TURNOVER RATIO This ratio indicates the relationship between the sales and the inventory. FIXED ASSET TURNOVER RATIO 31 . INVENTORY TURNOVER RATIO= Year Stock Turnover Ratio 2009 9.35 Fig 8 Interpretation: It can be interpreted from the above chart that in the year 2009.

768 2007 5. WORKING CAPITAL TURNOVER RATIO This ratio reveals how efficiently working has been utilized in making sales.773 Fig 9 Interpretation: From the above diagram it be seen that there is a fall in the fixed asset turnover ratio from the year 2007 to 2009. it shows the number of times working capital has been rotated in producing sales. FIXED ASSETS TURNOVER RATIO= COST OF GOODS SOLD NET FIXED ASSET Net Fixed Asset= Fixed Asset –Depreciation Year Fixed Asset Turnover Ratio 2009 2. This ratio reveals how efficiently the fixed assets are being utilized. 32 .898 Table 9 2008 2. In other words.This ratio is of particular importance in manufacturing concern where the investment in fixed assets is quite high.

515 Table 10 2008 3. CAPITAL TURNOVER RATIO It is used to calculate the rate of return on common equity.5225 2007 3. It is calculated as: 33 . and is a measure of how well a company uses its stockholder’s equity in producing sales.369 Fig 10 Interpretation: It can be found out from the above chart that in all three year working capital turnovers is almost three and half times in a year.WORKING CAPITAL TURNOVER RATIO = COST OF GOODS SOLD WORKING CAPITAL Working Capital= Current Assets – Current Liabilities Year Working Capital Turnover Ratio 2009 3.

Capital Turnover Ratio is almost two times.e. 2008 and 2009.41 Fig 11 Interpretation: In each year i.337 2007 2.CAPITAL TURNOVER RATIO: COST OF GOODS SOLD CAPITAL EMPLOYED Capital Employed= Equity Share Capital + Preference Share Capital + All Reserves + P&L Balance + Long term Loans – Fictitious Assets – Non-operating Assets Year Capital turnover Ratio 2009 2. PROFITABLITY RATIO 34 . 2007.773 Table 11 2008 2.

35 . These ratios can be compared during different financial years to see the overall performance of a company. It explains how profitable a company is. It measures the margin of profit available on sales.Profitability ratio can be defined as a ratio that explains the profitability of a company during a specific period of time. Some of the profitability ratios are:       Gross profit ratio Net profit ratio Operating ratio Return on capital employed (ROCE) ratio Return on equity capital Earnings per share GROSS PROFIT RATIO This ratio establishes the relationship between gross profit and sales.

36 .276 Table 12 2008 0.GROSS PROFIT RATIO= GROSS PROFIT *100 NET SALES Year Gross Profit Ratio 2009 0. NET PROFIT RATIO This ratio is also known as net margin. interest and taxes are subtracted from the operating profit. Net profit is obtained when operating expenses. This ratio provides considerable insight in to overall efficiency of the business and earnings left for shareholders as a percentage of net sales.3219 2007 0.3400 Fig 12 Interpretation: It can be seen that consistently from the year 2007 there is a fall in the gross profit ratio.

053 2008 0. It is calculated by dividing operating net profit with by sales. OPERATING NET PROFIT RATIO This ratio establishes the relationship between operating profit and sales to measure the relative operating efficiency of the company.085 2007 0.NET PROFIT RATIO = NET PROFIT * 100 NET SALES Year Net Profit Ratio 2009 0. 37 .107 Table 13 Fig 13 Interpretation: Net Profit is also consistently decreasing year by year.

TAX AND DIVIDENDS CAPIAL EMPLOYED 38 . This ratio is usually in percentage and is also known as ‘Rate of Return’ or ‘Yield on Capital’.171 2009 0. RETURN ON CAPITAL EMPLOYED This ratio reflects the overall profitability of the business.084 Table 14 Fig 14 Interpretation: It can be easily drawn from the above bar graph that operation profit is decreasing a very rapid pace year by year. It is calculated by comparing the profit earned and the capital employed to earn it.142 2007 0. RETURN ON CAPITAL EMPLOYED= PROFIT BEFORE INTEREST.OPERATING NET PROFIT RATIO= Year Operating Profit Ratio OPERATING NET PROFIT *100 NET SALES 2008 0.

This ratio reveals how the firms have utilized profitability the owner funds.528 2007 0.384 Table 15 2008 0.Capital Employed= Equity Share Capital + Preference Share Capital + All Reserves + P&L Balance + Long term Loans – Fictitious Assets – Non-operating Assets Year Return on Capital Employed 2009 0. RETURN OF EQUITY SHAREHOLDER’S FUNDS This ratio is also called as ‘Return on Net Worth’. As given in the above figure we find that it is decreasing year by year that means returns earned by the company is not adequate. The ordinary shareholder’s equity is also referred as a net worth. It is calculated by dividing earnings after taxes (eat) with net worth. RETURN ON EQUITY SHAREHOLDER’S FUND 39 .636 Fig 15 Interpretation: Return on capital employed shows the return earned by the company on the application of funds.

68 0.66 0. EARNING PER SHARE= NET PROFIT.= NET PROFIT AFTER INTEREST. It is clear from the figure that this ratio is increasing year by year that means profit earned on per share basis is increasing which is favorable to the shareholders.DIVIDEND ON PREFERENCE SHARE 40 .7 0.72 0.692 2007 0. The EPS is calculated by dividing the profit after tax by the total nos. TAX AND PREFERENCE DIVIDEND*100 EQUITY SHAREHOLDER’S FUND Equity Shareholder’s Funds= Equity Share Capital + All Reserves + P&L A/C Balance – Fictitious Asset Year Return on Total Equity Shareholders Fund 2009 0.64 0.6 0.633 Table 16 0.58 RETURN ON TOTAL EQUITY SHAREHOLDERS FUND 2009 2008 2007 Fig 16 Interpretation: This ratio shows the overall return earned by the equity shareholder which means the per share return earned. of ordinary shares outstanding.62 0.74 0.717 2008 0. EARNIGS PER SHARE The profitability of the shareholders’ investment can also be measured in many ways.

03 2008 9.05 Table 17 Fig 17 Interpretation: EPS simply shows the profitability of the firm on a per-share basis. FINDINGS 41 .NUMBER OF EQUTY SHARE Year Earnings Per Share 2009 8.47 2007 9. As it can be seen by the figure that EPS ratio in year 2008 is better than other two years which shows that the portion of a company's profit allocated to each outstanding share of common stock is more in that year.

 Current Ratio is too low.  It can be drawn from the report that sufficient amount of proprietors fund is involved in the Working Capital. This means that company has adequate liquid asset. which means that company do not have sufficient funds to meet their Current Liabilities  As there is fall in the Fixed Asset Turnover Ratio. Net Profit Ratio and Operating Profit Ratio are decreasing year by year.  Company is less dependent on External (Debt) source of financing.  Return on Equity Shareholders fund is increasing every year.  Study also shows that Gross Profit Ratio.  Inventory turnover ratio is ideal in all the three years.  Areva do not have to pay much fixed interest bearing charges. 42 . it means that fixed asset have not been used as efficiently. as they had been used in the previous year. as they have less External Equity.

 It had good dividend per share ratio which means company is distributing dividend every year which can be retained by company for expansion. 43 .  Company has sufficient cash in the form of Loan and Advances which can be utilized in other investing activities.  Company should give more emphasis on inventory management.SUGGESTIONS Below mention are the suggestions required by the company after this study:  Company can go into expansion activities by financing it from external equity.

Globally Areva. Proper technique had been used for evaluating the ratios from the financial statements. Areva T&D India offers transmission and distribution services and also manufactures power equipment. which is also a significant player in nuclear energy. Analysis and data presentation of ratios has been done through using simple tables and graph chart to show the figures in last three years. My study included the analysis and interpretation of financial statement of Areva T&D Ltd. It was not just a part of my curriculum but a real life experience of carrying out a field work.CONCLUSION An immense support from my project guide motivated me to undertake this practical project work in the most emphatic manner. derives about 44 . to get the overview of financial status of the company. My contribution included a detailed study of “Ratio Analysis of last three years financial statement of Areva T&D Ltd.

Pandey. Financial management. Khan and Jain • WEBSITES • www.areva.a third of its revenues from its transmission and distribution unit. During the study of sample 5 government companies which were the debtors of AREVA it was found that the they were given more liberty in payment terms as compared to private companies. BIBLIOGRAPHY BOOKS • Financial management.com 45 . The company plans to invest around Euro 50 million in the country`s transmission and distribution sector over the period 2007-2010. It would be more profitable if the payment terms of government’s company’s debtors are revised accordingly and they are agreed on the terms that ensures regular inflow of money and keeps the contract cash rich mostly.M. I.

arevagroup.google.com www.com www.areva-np.• • • • • www.areva-td.com www.com 46 .com www.arevatde.

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