# A STUDY ON RATIO ANALYSIS OF FINANCIAL STATEMENTS AT BHARAT SANCHAR NIGAM LIMITED TIRUPATHI.

SYNOPSIS OF THE PROJECT Submitted By
A .GEETHA (Reg NO:501098009)

Under The Guidance of Mr. HARI KISHORE MUTYAM,

SSV School Of Management Studies & Science For Women
(Approved by AICTE,New Delhi S.V.University,tirupathi)
TIRUPATHI-517505 2009-2011

Introduction TO Finance
According to HENRY FORD "money is either an arm or a leg, you

either use it or lose it". This statement brings out the importance of money or finance. Finance is the common denomination for a vast range of objectives and major part of any corporate plan and it must be expressed in financial terms. Finance is specialized function. It required an overall knowledge of environment. Finance offers much wide scope. It includes money, banking and credit of different types and classes. In a net shell finance is described as a part of the nerve system of a business.

Financial Management
Financial Management is a service and managerial activity which is associated with providing quantitative information, primarily financial in nature and that which may be needed for making economic decisions. It is concerned with the planning and controlling of firm's financial resources. It was branch of economics till 1890 and this as a separate activity it is of recent origin.

 Introduction Of Ratio Analysis
A ratio is the relationship between two or more things. It is the indicate quotient of two mathematical expressions. Robert Anthony defines ratio as simply one number expressed in terms of another. It is calculated by dividing one into the other. Thus ratio is the quotient of

one item in terms of another. Ratios may also be expressed as percentages, by multiplying the quotient with 100. It can be used to compare the risk and return relationships of firms in different sizes.

Uses of Ratio analysis:• Aid in analysis of statements • Aid in financial forecasting • Aid in evaluation

Aid in simplification

TOOLS OF RATIO ANALYSIS: • Liquidity Ratio • Leverage Ratio • Activity Ratio • Profitability Ratio

Industry Profile:
Telecommunication Services are infrastructure services which are essential links among all sectors of the economy. Infrastructure services are a prerequisite for an economy to become industrialized; therefore, no advanced society can be without these services (Dorothy, 1986). Cellular (Wireless) Mobile Telecommunication Services: Cellular mobile communications services can be considered a new product. Although ideas and products based on mobility in telecommunications have been around since the late 19th century, the break though that enabled mass-market cellular communications occurred only in the early 1990s, with the arrival of digital technology.

Company Profile:
Bharat Sanchar Nigam Limited (BSNL)
Bharat Sanchar Nigam Ltd. Formed in October, 2000, is World's 7th largest telecommunications Company providing comprehensive range of telecom services in India: Wire line, CDMA mobile, Internet, Broadband, Carrier service, MPLS-VPN, VAST, VOLP Services, IN services etc. Within a span of five years it has become one of the largest public sector units in India.

Its head quarters are at Statesman House, Barakhamba Road, New Delhi. It has a status of Mini Ratna status assigned to reputed public sector companies in IndiaBSNL is a 100% govt. of India owned public sector undertaking. It is a technology oriented company and provides all types of telecom services namely telephone.

HIGHLIGHTS
• Bharat Sanchar Nigam Ltd (BSNL) runs the telecom services all over the country except Delhi and Mumbai. • BSNL has provided Village Public Telephones (VPTs) in 5.18 lakh villages, out of 5.93 lakh villages in the country. • BSNL has vast experience in planning, Installation, network integration Networks. • It has 327.12 lakh mobile customers as on December 31, 2008.

and

Maintenance

of

Switching

&

Transmission

Former Indian Communications Minister Thiru Dayanidhi Maran has declared year 2007 as "Year of Broadband" in India. BSNL is pioneer of Rural Telephony in India.

VISION
 To become the largest telecom service provider in Asia.

 To face the competition and excel in its operations in the Indian/Overseas
 markets by developing proper marketing strategies and entering

into joint ventures.

MISSION

 To provide world class state-of-art technology telecom services to its customers on demand at competitive prices. To provide world class telecom infrastructure in its area of operation and to contribute to the growth of the country’s economy.

PRODUCT PROFILE
India's fastest growing cellular service; along with (pre-paid service)

Cell One

ex-cel brings cellular telephony to the

masses, through innovative technology and strategic pricing. This ambitious service uses state-of-the-art GSM technology to attain global excellence and leadership in business. Our entiy into this sector has brought GSM cellular service at an affordable cost to the common man. All serving a single objective, to provide better communication.

NEED OF THE STUDY
Most of the public enterprises have become sick due to holding of high inventories, then those inventories becoming obsolete due to fast changing technology. Such industries have become a white elephants due to wrong planning of Ratio analysis the title of the study, Ratio Analysis with reference to "Bharat Sanchar Nigam Limited" is taken up with a view to  Review the working of the unit in terms of objectives and

point out the progress achieved.
 To evaluate the different aspects of Ratio analysis capital

management Receivables.

in

the

areas

of

Inventory,

Cash

and

 To analyze and study of the components of Ratio analysis.
 To discuss the pattern of Ratios and highlight whether the

unit has been operating with high / low amount of Ratios.

OBJECTIVES OF THE STUDY
 To analyze the financial performance of the company.  To measure short term and long term solvency of the business.

DATA COLLECTION AND TECHNIQUES
The Source of the data is divided in two ways: (1) Primary Data (2) Secondary Data Primary data is collected form the company through interview with the company officials and guide and by observing some raw information is collected. Secondary data is collected from the Balance Sheet of the company, Profit and Loss account of the company and Income and Expenditure of the company for the years is collected from company

annual reports of the respective financial years and theoretical part is collected from various books which are mentioned in the bibliography.

LIMITATIONS OF THE STUDY
The study is conducted in a short period, during this limited period the study may not be detailed in all aspects.

The study is done with the available data gathered from the annual reports of BSNL and analysis is made accordingly. To analysis is made on the basis of secondary data. Figures wherever appearing are sounded off to the nearest rupee in lakhs.

• The data taken for comparison is only for five years,

DATA ANALYSIS:
PARTICULARS CURRENT RATI0 QUICK RATIO CASH RATIO NETWORKING CAPITAL RATIO TOTAL DEBT RATIO 2005 1.7 4 1.6 4 0.9 9 0.2 7 0.0 9 200 6 1.98 1.86 1.22 0.35 200 7 2.46 2.35 1.71 0.42 200 8 2.47 2.33 1.72 0.45 20 09 2.2 5 2.0 7 1.4 8 0.4 2 0.0 5

0.07

0.07

0.06

PARTICULARS DEBTE

2005

2006 0.07 0.81 5.58

2007 0.06 0.93 5.52

2008 0.06 0.95 5.94

2009 0.05 0.96 5.94

QUITY 0.08 0.97 5.14

RATIO CAPITAL EQUITY RATIO INVENTORY TURNOVER RATIO DEBTORS TURNOVER RATIO TOTAL RATIO

15.70

13.29

12.27

10.18

9.34

ASSETS 1.02

0.81

0.71

0.52

0.4

TURNOVER

PARTICULARS FIXED ASSETS TURNOVER RATIO CURRENT ASSETS TURNOVER RATIO WORKING CAPITAL TURNOVER RATIO NET-PROFIT MARGIN RETURN EQUITY

2005
1.43

2006 1.30

2007 1.24

2008 1.00

2009 0.90

3.62

2.19

1.68

1.10

0.87

9.5

9.4

4.4

2.2

1.6

63.71 ON 0.99

71.48 0.85

75.77 0.75

95.73 0.67

96.54 0.62

FINDINGS:
 Current Ratio for the year 2005 was 1.74 and the year 2006 it has

increase to 1.98 and in the

year 2007 it has increased to 2.46 and

in the year 2008 it has increased 2.47 and again in the year2009 it was decreased to 2.25. So, in the all years it was above the standard norm which indicates that the firm has the ability to meet the current obligations.
 Quick Ratio for the year 2005 was 1.64 and in the year 2006-2007 it

has increased from 1.86 to 2.35 and again in the year 2008-2009 it has decreased from 2.33 to 2.07. Even though it is fluctuating every year but it is the above standard norm, which indicates effective maintenance of liquid assets.
 In overall the liquidity position of BSNL Company is effectively

maintained.
 In the year 2005 inventory turnover Ratio was 5.14, and in the year

2006 it was increased 5.58 and in the year 2007 it was increased to 5.52 and again in the year 2008-2009 it has increased to 5.94.
 The Leverage position is also maintained effectively in this company.

 The Profitability ratios like Net profit & Return on Equity indicating the effective maintenance of the profits.

 The proprietary ratio has shown a fluctuating trend. The proprietary ratio is increased compared with the last year. So, the long term solvency of the firm is increased.

SUGGESTIONS:
• Company should make efforts to utilize its fixed assets in an optimum manner. Current ratio has to be strong read. Adequate cash balance has to be maintained.

The firm has to maintain adequate working capital because excess investment in current assets yield nothing rather than lead to reducing of profit changes.

The firm has to reduce its cost of production by way of avoiding wastage, mishandling reducing of overheads etc.

• The firm should go for utilizing of spontaneous sources to the maximum extent.

Employment of funds should be increased in current assets and reduce the current liabilities.