21mbaa53 Fsa Project

A STUDY ON FINANCIAL STATEMENTS AND FINANCIAL
PERFORMANCE ANALYSIS OF VOITH GmBh
Submitted by
SURYA C L
Register No: 21MBAA53
MASTERS OF BUSINESS ADMINISTRATION
Under the Guidance of

Dr. N.UMA DEVI M.Com., B.Ed., M.B.A., M.Phil., Ph.D.,
Associate professor
BSMED, Bharathiar University
BHARATHIAR SCHOOL OF MANAGEMENT AND

ENTREPRENEURDEVELOPMENT (BSMED)
BHARATHIAR UNIVERSITY
COIMBATORE- 641046
OCTOBER 2022
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BHARATHIAR SCHOOL OF MANAGEMENT AND
ENTERPRENEUR DEVELOPMENT
BHARATHIAR UNIVERSITY
COIMBATORE – 641046
PROJECT REPORT CERTIFICATE
This is to certify that the project entitled
A STUDY ON FINANCIAL STATEMENTS AND FINANCIAL

PERFORMANCE ANALYSIS OF VOITH GmBh
Submitted to
Bharathiar University in partial fulfillment for the degree of
MASTERS OF BUSINESS ADMINISTRATION
is a bonafide record of the project work carried out by
SURYA C L
21MBAA53
.............................. ..............................
Faculty Guide Director i/c
Dr. N.UMA DEVI Dr.RUPAGUNASEELAN
Assistant professor, BSMED Professor, BSMED
Submitted for Viva – Voice Examination held on..............................
................................. .................................
Internal examiner External examiner
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DECLARATION
I, SURYA C L hereby declare that the project entitled “A STUDY ON
FINANCIAL STATEMENTS AND FINANCIAL PERFORMANCE

ANALYSIS OF VOITH GmBh” submitted to Bharathiar University in partial fulfillment for
the award of the degree in MASTERS IN BUSINESS ADMINISTRATION is a record of original
research submitted by me during the period of my study in Bharathiar School of Management and
Entrepreneur Development, Bharathiar University, under the supervision and guidance of Dr. N.UMA
DEVI M.Com., B.Ed., M.B.A., M.Phil., Ph.D., Assistant Professor, Bharathiar University,
Coimbatore and it has not formed the basis of any degree / diploma / associate fellowship / or other
similar title to any candidate of the University.
Date :
Place : Signature of the candidate
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ACKNOWLEDGEMENT
I am greatly indebted and convey my most sincere thanks to our Director of Bharathiar
School of Management and Entrepreneur Development (BSMED) Dr.K.
RUPAGUNASEELAN and my project guide Dr. N. UMA DEVI M.Com., B.Ed., M.B.A.,
M.Phil., Ph.D., Associate Professor, BSMED, Bharathiar University for their valuable guidance
and encouragement to complete this project successfully.
I am extremely grateful to Mr. SATHYA RAJ, FINANCE OFFICER who helped me to
carry out my work.
I am thankful to all the people who have given precious time and provided me with
requisite data without which this project would not have completed. I would not forget to thank
other members who treated me with respect and helped me in the best of their capacity.
I would like to acknowledge whole hearted support of my parents, faculties, friends and
FLOW LINK SYSTEMS employees who helped me at various stages in completing this work
successfully.
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ABSTRACT
Companies produce financial statement to know the financial condition at the end of the
year and the operating result during the period. No matter how carefully prepared, financial
statements are essential historical document. They tell what has happened during a particular series
of years. The most valuable information to most users of financial statement, however; concerns in
predicting the future by means of comparison, evaluation and trend analysis. In this flexible and
dynamic business environment financial performance analysis is a critical part of a company. The
analysis of financial performance is a process of evaluating relationship between component parts
of financial statement to obtain a better understanding of the company’s position and performance
which helps to know what will happen in the future. The use of financial statement analysis and
interpretation in investment decision has been addressed by a series of authors. Reports are prepared
helpful to determine profitability of a company and specifically returns on investment, optimal
management decisions have been stated. Here findings and suggestions are stated.
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CONTENTS
CHAPTER TITLE PAGE NO
1 INTRODUCTION 1
1.1 BACKGROUND OF THE STUDY 2
1.2 THEORETICAL CONCEPT 3
1.3 LITERATURE REVIEW 10
1.4 STATEMENT OF THE PROBLEM 16
1.5 NEED FOR THE STUDY 16
1.6 OBJECTIVES OF THE STUDY 16
1.7 LIMITATIONS 17
2 ORGANIZATIONAL PROFILE 20
2.1 HISTORY OF PAPER INDUSTRY 21
2.2 BUSINESS ENVIRONMENT RISKS 24
3 RESEARCH METHODOLOGY 36
3.2 RESEARCH DESIGN 36
3.3 SOURCES OF DATA 37
3.4 PERIOD OF THE STUDY 37
3.5 TOOLS USED 37
ANALYSIS & 42
4 INTERPRETATION
FINDINGS SUGGESTION &
5 CONCLUSION 95
BIBLIOGRAPHY 102
ANNEXURE 104
LIST OF TABLES
TABLE NO TITLE PAGE NO
CURRENT RATIO
TABLE 1.1 47
TABLE
TABLE 2.1 QUICK RATIO TABLE 49
DEBT EQUITY
TABLE 3.1 51
TABLE
NET WORKING
TABLE 4.1 CAPITAL TABLE 53
PROPRIETARY
TABLE 5.1 RATIO TABLE 55
GROSS PROFIT
TABLE 6.1 TABLE 57
NET PROFIT MARGIN

TABLE 7.1 TABLE 59
RETURN ON EQUITY
TABLE 8.1 TABLE 61
INVENTORY
TABLE 9.1 TURNOVER 63
TABLE
TABLE OPERATING PROFIT

10.1 TABLE 65
ASSET TURNOVER
TABLE
11.1 RATIO 67
INTEREST
TABLE 12.1 COVERAGE RATIO 69
CORRELATION
TABLE 13 TABLE 73
CORRELATION
TABLE 14 TABLE 73
GROSS PROFIT
TABLE 15.1 TABLE ( TREND 78
ANALYSIS )
NET PROFIT TABLE

TABLE 16.1 ( TREND ANALYSIS ) 79
RETURN ON ASSET
ANALYSIS )
WORKING CAPITAL
ANALYSIS )
DEBT EQUITY
TABLE 19.1 TABLE 82
( TREND ANALYSIS )
COMPARATIVE
TABLE 20 84
TABLE
OPERATING
TABLE 21.1 91
LEVERAGE
FINANCIAL
TABLE 22.1 93
LEVERAGE
LIST OF CHARTS
CHART NO TITLE PAGE NO
CURRENT RATIO
CHART 1.2 47
CHART
CHART QUICK RATIO

2.2 CHART
49
DEBT EQUITY
CHART 3.2 51
CHART
NET WORKING
CHART 4.2 CAPITAL CHART 53
PROPRIETARY
CHART 5.2 RATIO CHART 55
GROSS PROFIT
CHART 6.2 CHART 57
NET PROFIT
CHART 7.2 MARGIN CHART 59
RETURN ON
CHART 8.2 EQUITY 61
CHART
INVENTORY
CHART 9.2 TURNOVER 63
CHART
OPERATING PROFIT
CHART 10.2 CHART 65
ASSET TURNOVER
CHART 11.2 RATIO 67
INTEREST
CHART 12.1 COVERAGE RATIO 69
GROSS PROFIT
CHART 15.1 TABLE ( TREND 78
ANALYSIS )
NET PROFIT TABLE

CHART 16.1 ( TREND ANALYSIS ) 79
RETURN ON ASSET
ANALYSIS )
WORKING CAPITAL
ANALYSIS )
DEBT EQUITY
CHART 19.1 TABLE 82
( TREND ANALYSIS )
COMPARITIVE
CHART 20 85
CHARTS
OPERATING
CHART 21.1 91
LEVERAGE
FINANCIAL
CHART 22.1 93
LEVERAGE
INTRODUCTION
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1.1 BACKGROUND OF THE STUDY
The complex nature of today’s business world and the transformation of the entire world
into a global village have been of great concerns to managers of all forms of business
organizations. According to Ojuigo (2001), the problems of managers are multi - varied because
of inefficiency in management of poor decision outcomes of these organizations. Therefore, the
managers are unable to achieve the organizational objective within time.
As diverse as business is, its controllable and uncontrollable factors influence all
decisions which ultimately lead to the realization of set objectives. To achieve this, management
needs reliable, authentic and relevant information from the financial statements to efficiently
facilitate decision making.
It must be noted that every business stores at making at least from investments
“sustainable profits” so as to stay afloat and continue in business. Therefore, profit being the
concern of every manager is a factor in business. To achieve this, available information from the
financial statements of organizations must be analyzed, interpreted and used as a basis for
decision making.
A financial analyst needs financial statements of companies to be able to identify

operating and financial problems which may affect the companies. Thus, any person who analyses
the financial statements of firms should be able to identify the cause and effect of financial and
operating problems of such firms. The cause of any financial or operating problem is an event,
which produces an effect (the problem). However, in order to identify the cause and effect, the
system, which represents an indicator f the problem, should be observed. This process is referred
to as interpretation. According to this, it is the responsibility of the financial manager or analyst
to enable better management decisions.
The symptoms could be:
 Declining liquidity
 Declining profit
 External debt recovery period
 Increased volume of inventory
 Declining return on total assets
 Increasing operating expenses etc
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FINANCIAL ANALYSIS AND INTERPRETATION ASSIST IN THE
- Identification of organizational performance through the use of analytical data.
- Identification of empirical relationships between operating results and those items

which have influenced the achievement of the results.
- Identification of historical data order to determine which internal or external factors have
exerted positive or negative influence on the operating results.
1.2 THEORETICAL CONCEPT
Companies produce financial statement to know the financial condition at the end of the
year and the operating result during the period. No matter how carefully prepared, financial
statements are essential historical document. They tell what has happened during a particular
series of years. The most valuable information to most users of financial statement, however;
concerns in predicting the future by means of comparison, evaluation and trend analysis (Miller,
1992; 95).
In this flexible and dynamic business environment financial performance analysis is a

critical part of a company. The analysis of financial performance is a process of evaluating
relationship between component parts of financial statement to obtain a better understanding of
the company’s position and performance which helps to know what will happen in the future.
The use of financial statement analysis and interpretation in investment decision has been
addressed by a series of authors in one way or the other. In some instances, the sue of this analysis
to determine profitability of a company and specifically returns on investment and optimal
management decisions have been stated.
FINANCIAL STATEMENTS
According to Meigs and Meigs (2003), financial statements are a structured

representation of the financial position and financial performance of an entity. The objective of
financial statements is to provide information about the financial position, financial performance
and cash flows of an entity that is useful to a wide range of users in making economic decisions.
Financial statements also show the results of the management’s stewardship of the resources
entrusted to it. To meet these objectives, financial statements provide information about an
entity’s:
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i) Assets
ii) Liabilities
iii) Equity
iv) Income and expenses, including gains and losses
v) Contribution by and distribution to owners in capacity as owners, and cash flows A
complete set of financial statement comprises:
1) A statement of financial position as at the end of the period:

2) A statement of comprehensive income for the period;
3) A statement of changes in equity for the period:
4) A statement of cash flow for the period.
5) Notes of Account comprising a summary of significant accounting policies and other
Explanatory information; and
6) A statement of financial position as at the beginning of the earliest comparative period
when an entity applies an accounting policy retrospectively or makes a Retrospective
restatement of items in its financial statements or when it reclassifies Items in its
financial statements.
OBJECTIVE OF A FINANCIAL STATEMENT ANALYSIS
Business decisions are made on the basis of the best available estimates of the outcome
of such decisions. According to Meigs and Meigs (2003), the purpose of financial statement
analysis is to provide information about a business unit for decision making purpose and such
information need not to b limited to accounting data. White ratios and other relationships based
on past performance may be helpful in predicting the future earnings performance and financial
health of a company, we must be aware of the inherent limitations of such data.
According to Meigs and Meigs (2003), the key objectives of financial analysis are to
determine the company’s earnings performance and the soundness and liquidity of its financial
position. We are essentially interested in financial analysis as a predictive tool. Accordingly, we
want to examine both quantitative and qualitative data in order to ascertain the quality of earnings
and the quality and protection of assets. In periods of recession when business failures are
common, the balance sheet takes on increase importance because the question of liquidity is
uppermost in the minds of many in the business community.
However, when business conditions are good, the income statement receives more
attention. Nevertheless, a financial analyst has to grapple on the above complexities of using
financial statement analysis to achieve a specific purpose.
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USES AND USERS OF FINANCIAL STATEMENT
According to Akpan (2002), financial statement may be used by users for different purposes:
A. OWNERS AND MANAGERS:

Require financial statement to make important business decisions that affect its
operations. Financial analysis is then performed on these statements to provide management with
a more detailed understanding of the figures. These statements are also used as part of
management’s annual report to the stockholders.
B. EMPLOYERS:
Also need these reports in making collective bargaining agreements (CBA) with the
management, in the case of labour unions or for individuals in discussing their compensation
promotion and rankings.
C. PROSPECTIVE INVESTORS:
They make use of financial statements to assess the viability of investing in a business.
Financial analysis are often used by investors and are prepared by professionals (financial
analyst), thus providing them with the basis for making investment decisions.
D. FINANCIAL INSTITUTIONS:
Financial institutions (banks and other lending company) use them to decide whether to
grant a company with fresh working capital or extend debt securities (such as a long term bank
loan or debentures) to finance expansion and other significant expenditures.
E. GOVERNMENT ENTITIES:
Government entities (Tax authorities) need financial statements to ascertain the property
and accuracy of taxes and other duties declared and paid by a company.
F. VENDORS:
They require financial statement to access the credit worthiness of the business
G. MEDIA AND GENERAL PUBLIC:

They are also interested in financial statements for a variety of reasons.
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CLASSIFICATION OF FINANCIAL STATEMENT
According to Diamond (2006), all watchful business owners have an innate sense of how
well their business is doing. Almost without thinking about it, these business owners can tell you
any time during the month how close they are to butting budgeted figures. Certainly, cash in bank
plays a part, but its more than that. Helpful is the nowtine review of financial statements. They are
three types of financial statements. Each will give important information about how efficiency
and effective the business is operating.
1) INCOME STATEMENT:
The income statement shows all items of income and expense for arts or crafts business.
It reflects a specific time period. So an income statement for the quarter ending March 31, shows
revenue and expense for January, February and March, if the income statement is for the calendar
year-ending December 31, it would contain all the information from January 1 to December 31.
Note that the normal accounting period for income statement is 12 months or year. Income
statements are also known as profit and loss account. The button line on an income statement is
income less expenses. If when income is more than expenses it is known as net profit and when
expense is more than income it is a net loss.
2) BALANCE SHEET
Accounting is based upon a double entry system. For every entry into the books there has
to be an opposite and equal entry. The net effect of the entries is zero, which results your books
being balanced. The proof of this balancing act is shown in the balance sheet when Asset =
Liability + Equity. The balance sheet shows the health of a business from day one to the date on
the balance sheet. Balance sheet are always dated on the late day of the reporting period. If you
have been in business since 1st January 2011 and your balance sheet is dated as of 31
December of the current year the balance sheet will show the 27 results of your operations
from 1st January 2011 to December 31, 2011.
3) STATEMENT OF CASH FLOWS

The statement of cash flows the ins and outs of cash during the reporting period. You may
be thinking-well who needs that type of report? I will just look at the checkbook. Good point,
unless you are reporting things that don’t immediately affect cash such as depreciation, accounts
receivable, accounts payable. If I could only choose one of those three financial statements to
evaluate the ability of a company to pay dividends and meet obligations (indicating a healthy
business), I would pick the statement of cash flows. The statement of cash flows takes aspects of
the income statement and balance sheet and kind of crams them together to show cash sources and
uses for the period.
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4) THE STATEMENT OF RETAINED EARNINGS
The statement of retained earnings shows the break down of retained earnings. Net
income for the year is added to the beginning of year balance, and dividends are subtracted. This
results in the end of year balance for retained earnings. Remember that expenses, revenues and
dividends impact retained earnings. Since net income equals revenue minus expenses, we need to
include dividends when computing end of period retaining earnings, plus net income and minus
dividends.
RELATIONSHIP AMONG THE STATEMENT OF FINANCIAL
POSITION, INCOME STATEMENT, STATEMENT OF CASH
FLOWSAND STATEMENT OF RETAINED EARNINGS.
As mentioned above, the balance sheet shows the financial position at a point in time. It
therefore cannot contain information that is related to some period, such as sales or wages
expense. It is a common practice to include beginning of a period balance sheet as well as an end
period balance sheet in a financial report. This way the reader can form an opinion about how the
firm’s financial position has changed. The cash flow statement and the income statement-
statement both give information about the firms performance over the period, albeit from
different angles.
The cash flow statement explains the change in cash. In other words, it explains how the
beginning of period cash has turned into the end of period cash by differentiating between
operating, investing and financial activities. The income statement shows a presentation of the
sales, the main expenses and the resulting net income over the period. Net income is based on
accounting principles which gives guidance/rules on when to recognize revenues and expenses,
whereas cash from operating activities, obviously is cash based. As dividends do not reduce net
income, the income statement does not always explain the change in retained earnings over the
year (Net income always equals the change in retained earnings when no dividend is paid out).
The statement of retained earnings is 29 included to show how equity has changed because of net
income and possible dividend payments. It shows the beginning value of retained to which net
income is added and dividends subtracted, resulting in end of year retained earnings.
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TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS AND INTERPRETATION
Financial statement users and analysts have developed a number of techniques to help
them analyze and interpret financial statements. According to Diamond (2006) the most common
of these includes, horizontal, vertical and ratio analysis. All of these techniques focus on
relationships among items in the financial statement themselves. In trying to understand the
current financial position of firm and its future outlook, it is important, to consider changes from
year to year as well as trends over several years. One way to accomplish this is to use comparative
financial statements and the five-or-ten year summary of data found in the firms annual report to
spot important or emerging trends.
HORIZONTAL ANALYSIS
Horizontal analysis focuses on the naira (N) and percentage changes that have occurred
in certain accounts from year to year, Pendey (2005). Using percentage changes is better for
comparative purposes than using actual naira changes.
VERTICAL ANALYSIS:
On the off chance that at this sort of investigation an examination is made at the
quantifiable relationship at the different things in the finical statement in a specific information
such an examination is helpful in looking at the execution at a few organizations in a similar
gathering, or department or offices in the comparative association since this investigation relies
upon the information for cone period, this isn't helpful for fitting examination at the organization's
budgetary position.
RATIO ANALYSIS:
The gauge the monetary state and execution of a venture the money related investigator
needs sure under sticks cone at such rustics every now and again utilized is a proportion or list,
seating two pieces at budgetary information to each other's. Proportions, as an apparatus at
monetary administration, can be expressed as (a) rate, (b) part, and (c) an expressed correlation
between numbers. As per batty, The term “accounting ratios” is utilized to portray imperative
relationship which occur between figures uncovered in monetary record, in a benefit and
misfortune account, in a budgetary controller, framework, or in some other chronicled at the
bookkeeping association. Financial ratios can be isolated into specific classes on the premise at
the things which are utilized for proportions. Four sorts at financial proportion are ordinarily
utilized.
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ADVANTAGES OF EFFECTIVE ANALYSIS
 Demonstrate the money related feasibility of a business adventure. Enables you to build a
Model of how you may perform monetarily if certain procedures, occasions and plans are
completed.
 Allow you to manage your business right way and assume responsibility for your income.
Identify potential dangers and money shortages to keep the business out of the budgetary
inconvenience.
 Allows you to quantify the genuine money related activity of the business against the
investigation monetary arrangement and make alteration where vital.
 Provides an estimation of future money needs and whether extra private value or getting
is essential.
 Provide a standard against which to quantify future execution.
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1.3 LITERATURE REVIEW
 RACHCHH MINAXI (2012)

"Execution he has pointed and guided that the fiscal report examination incorporates
breaking down the budget summaries to remove information that can help basic leadership". Pg.
no.3-88.This investigation depicts the way toward assessing the connection between area parts of
the budget reports to get a comprehension of an element's position and execution.
 PRATHEEPKANTH (2011)
"Impact among capital structure and organization's execution or position" Worldwide
Journal of Financial Studies 6.1: 13.The examination dependent on optional information was
found from the budget report printed by business. He utilized different factual instruments like
proportion, connection, relapse examination ANOVA. He decided his examination that the
business organizations for the most part rely upon the obligation capital. In this way, they need to
pay more intrigue costs.
 JIGHYASU GAUR (2010)

"Influence has a negative connection with capital structure" Journal of Operational
Research, 244(2), 540-554. The investigation underpins the hypothesis that the influence of a firm
negatively affects execution. The other variable, which is working capital proportion, is again an
imperative measure since it is the liquidity by which the firm deals with its operational viewpoint.
Firms dependably endeavor to diminish the process duration of borrowers and stock in order to
pick up however much as could reasonably be expected.
 NEUMANN AND ROBERTS (2008)

“Financial occasions are indicated more esteem". This investigation portrays money
related measures are given additional incentive over non-budgetary measures and ROI is the
single execution gauge to which directors give more weightage.
 I.M.Pandey (2007)
“Managing Company’s Funds and Profits” Sixth Edition, Pg. no 1.58, The goal of this
examination money related factors given in budget summaries seriously which will recommend
the activities which one may need to start to improve the association's monetary condition.
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 THE BRITISH ACCOUNTING REVIEW
“Planned Management, Leveraging and clarifying your immaterial cost drivers” The British
Accounting Review G32; G17: This section depicts
(1) Assembling a model of act for every business independently,
(2) Information gathering,
(3) Information examination and explanation,
(4) Recovery and correspondence data.
 KRISHNA PRASAD UPADHYAY (2004)

“Assorted sorts of budgetary proportions”. In this examination he utilized dissolvability
proportion, liquidity proportion, effectiveness proportion, productivity proportion and valuation
proportion. Various estimates like quantifiable profit, return on value, return on resources,
acquiring per share, profit per offer, and resource use proportion are utilized to evaluate the
benefit of the organizations. He finished up his investigation expressing that the dissolvability
position of the two organizations isn't sound and credit creation limit is great in both the
organizations in total.
 JONAS ELMERRAJI (2003)

“Inspect money related items quickly with proportions". Pg. no 36- 39. This examination
characterizes the different direct speculators would prefer to leave their choices to destiny than
attempt to manage the terrorizing of monetary proportions. Truly proportions aren't that scary,
Even on the off chance that you don't have a degree in business or cash. Utilizing proportions to
settle on educated choices in regards to a speculation bodes well, when you realize how make use
them.
 KAKANI ET AL. (2001)

“Determinants of firm execution” Diaries of independent company the executives, 45(1),
5-22. This study analyzed the determinants of firm execution for 566Indian firms. They apparatus
ROA, ROCE, income proportion, Sales to resource, net 20 overall revenue, net revenue, return on
Net worth and so forth., as reliant variable and size, age, influence, working capital proportion,
business assemble association and so on., as determinants of firm execution and found that
estimate, showcase use and global broadening had a positive connection with market valuation for
firms. A company's proprietorship creation, predominantly the dimension of value possession by
nearby money related Institutions and Dispersed open investors, and the influences of the firm
were essential variables influencing its monetary execution.
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 ZOPOUNIDIS (2000)
“Money related proportion investigations for assessing little and medium size
undertakings execution”. Diary of Banking and Finance 37, no.3: 927-936. This examination
proposed methodological structure dependent on budgetary proportion investigations for
evaluating little and medium size endeavors execution, Hsieh and Wang (2001) in their
investigation analyzed and concentrated on the need of picking applicable monetary proportions
for the assurance of examination. They proposed new technique for finding helpful money related
proportion and moreover underscored that industry contrasts in item, in size and have its very own
one of a kind business rehearses and inward and outside circumstance hence financial proportion
examination ought to accord business which suit it the most.
 HITCHINGS (1999)
“Ratio checked is a complex and valued tool”. Journal of the operative Research Society
1-17.In this study realized that ratio examination is a complex and valued tool in credit
assessment which is to estimate the capability of a mortgagor to meet its debt obligations.
 BOLLEN (1999)
“Ratio variables in info analysis” This study describes the ratios as indices of concepts; a
problem can arise if it is retreated on other indices or variables that hold a common component.
 KENNEDY AND MULLER (1998)

"Budget summaries are a push to oversee the significance and importance of fiscal
reports actualities". In The Finnish Journal of Business Finances pg., no 1.3.This investigation
depicts that the gauge might be made of the prospects for future income, ability to pay premium
and Debt maturates (both present and long haul) and benefit and sound profit approach.
 ATKINSON ET AL. (1997)
"The Impact of Budgets" S. Imprint, Management Accounting. This examination

comprehends and survey the esteem got from providers and workers, the esteem given by the
partners and the proficiency of procedures connected in the financial element and its vital
properties. Along these lines, we can say that execution estimation assumes the job of
coordination, watching and analysis of financial element's exercises.
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 EPSTEIN AND MANZON (1997):
This investigation estimating execution ought to incorporate more non-monetary pointers
to supplement the money related ones, specifically as to client sentiment and execution of inside
procedures
 JAGANNADHA RAO (1991)

“Financial performance of the company is the cumulative result”. Pg. no 33.This study
states that there is poor condition of financial performance of the corporation is the cumulative
result of unfavorable factors such as continuous low capacity utilization of the units, fall in sugar
recovery in some of the units, poor operational performance, high cane price advised by the State
Government and paid up by the company, low levy price of sugar.
 SHAIKH SALMAN MASOOD (2020)

The purpose of this project is to financially study company Tata Motors Limited by doing
ratio analyses and research. Both quantitative and qualitative methods were used for this report.
Qualitative methods are introduction and literature review. Quantitative methods are analyses and
charts. Information is taken from yahoo finance for three years: 2017,2018,2019. This report
shows whether the changes are major or minor and the financial position of Tata Motors Limited.
 P MOHAMMED BUHARI SALEEM (2020)

P Mohammed Buhari Saleem Conducted a study on the nestle India limited. Profitability
ratio is used to analyze the company's ability to generate income as compared to its expenses and
other cost associated with the generation of income during a specified period. Profitability ratios
also compare income statement accounts and categories to show a company's ability to make
profits from its operations. Profitability ratios concentrate on a company's return on investment in
inventory and other assets. These ratios normally show how well companies can achieve profits
from their operations. Investors, creditors can use the profitability ratios to evaluate a company's
return on investment based on its relative level of resources and assets. In other words,
profitability ratios can be used to evaluate whether the companies are making enough operational
profit from their assets. In other words, profitability ratios relate to efficiency ratios because they
show how well companies are using their assets to generate profits. Profitability is also important
to the concept of solvency and going concern. Profitability ratio indicates the final result of the
company.
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 SAIFKULAIB (2020)
Saifkulaib conducted a study on the financial position of Sony. Sony Corporation is a
brand in the electronics sector and works as the trans-national media company, for producing and
selling the goods according to the demands of the customer. This shows that the strategies of a
business and the culture of an organization directly impact the individual who plays a major role
in strategy development and focuses on the mission of the business. Financial decisions of the
organization are taken after analyzing the financial statements and the financial ratios which will
define the liquidity or profitability 9 position of the company. Sony has a great command over
this business industry because it is adapting itself to the changing business environment.
 DR SEEMA THAKUR (2019)

Dr Seema Thakur Conducted a study on the Dabur India limited. Financial Performance
Analysis of Dabur India Limited talks about accounting analysis and financial analysis and to
assessment of the viability, reliability and profitability of a business. The main indication behind
this study is to investigate the financial functioning position of the Dabur India Limited. This
investigation is done with help of secondary data which is collected from the Annual Report of
the Dabur India Limited. The financial performance can be estimated by using various financial
utensils such as Liquidity ratio, Profitability ratio etc. Based on the study, findings have been
reached that the company has got enough funds to encounter its obligations including debts & as
well as liabilities. The income statement of the Dabur India Limited shows sales of the company
improved every year at good rate and profit also greater than before every successive year.
 BSR MURTHY (2018)

BSR Murthy conducted a study on the financial statements of Hatsun Agro Product Ltd.
The Financial Statement analyses helps to see the current performance condition of a firm
compare past performance. The performances of Companies are dependent more on the
management's ability in formulating strategic plans and the efficient implementation of its
strategies. The Result and Remedies can be helpful for management of a firm, it is attempts to
analyze the financial statements and measure the performance in terms of assets utilization and
profitability activities. In detail the research methodology used for the study that has focused on
the past and present performance of a firm, the data was collected from income Statement and
balance sheet from website. The study has been undertaken on the evaluation of financial
performance of company at a particular period. Financial analysis is important to plan to control
the firm's financial resources. Researcher has used various Analysis techniques of Financial
Statement.
14
 CHILUKURI, H., & VARGHESE, S. (2016)
Chilukuri, H., & Varghese, S., conducted analysis on financial statements of Ashok
Leyland Limited, India. The Current Ratio reveals the relationship between current assets and
current liabilities. This ratio also reveals that how efficiently the working capital of the firm is
used. If Current Ratio is equal to 2, it indicates that the concern has the ability to meet current
obligations. Here the Current Ratio has decreased in 2013 and then its showing increasing trend
every year. It is a good Sign for the company. Over all, the Current Ratio is less than 2. It indicates
that the concern has difficulty in meeting its current obligations. The Quick Ratio reveals the
relationship between quick assets (current assets – inventories) and current liabilities. This ratio
also reveals the ability of the firm to convert its current assets quickly into cash in order to meet its
current liabilities.
 R RAMANAN (2015)
R Ramanan conducted a study on the analysis of financial statements of Reliance
Industries Limited (RIL). The ratios used in this project are in terms of solvency, turnover, and
profitability ratios. The trend analysis has done for the indicators such as Sales and Expenses. The
company performance was good during the period 2010 and 2011, but in 2012 and 2013 the
company performance was not good, due to recession in European countries and affected the
exports of the company. Then slowly the global economic condition was improved a little bit in
2014, and the customer demand for the retail products and oil exports increased in the year 2014.
15
1.4 STATEMENT OF THE PROBLEM
The centrality of a legitimate money related investigation in any modern concern can't be
overemphasized. Under the present inflationary condition, investigation of funds is maybe more
essential than even administration of benefit and this requires most extreme consideration and
endeavors of the account administrator. It needs watchful consideration as every one of its
segments require diverse kinds of treatment and it tosses steady consideration on exercise of
aptitude and judgment, mindfulness of monetary pattern and so forth., because of earnestness and
complicacy the fundamental significance of the examination.
The counter inflationary measure taken up by the Government, making tight cash
condition has set investigation of the funds in the most testing zone of the board and it requires a
one of a kind ability for its administration. Today, the issue of overseeing Cash has the
acknowledgment of discrete substance, so its examination and the board is of significant
significance to both interior and outside expert to pass judgment on the present position of the
business concerns especially paper industries in this Digitalized Economy.
1.5 NEED FOR THE STUDY
Financial summary examination is used to find the examples and associations between
spending report things. Both inside organization and outside the organization (demonstrate as
inspectors, leasers, government and examiners) of the financial reports must figure/find an
association's productivity, liquidity, and dissolvability. The most broadly observed techniques
used for cash correlated clarification examination are design examination, common size
verbalizations, and extent examination. The need of the study is to find how paper machine
manufacturing companies perform in the developing world towards digitalized environment.
1.6 OBJECTIVES OF THE STUDY
(i) To analyze the profitability of the VOITH GmBh group.

(ii) To analyze and compare the financial position of the company for every five year.
(iii) To measure the short term as well as long term creditworthiness of the firm.
(iv) To determine the liquidity position of the company based on the turnover.
(v) To make suggestions for improving the profitability and liquidity of the company.
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1.7 LIMITATIONS
 NOT A SUBSTITUTE OF JUDGEMENT
An examination of fiscal report can't occur of quality choice. It is just a way to achieve
ends/results. At last, the choices or judgment are taken by a participated individual or examiner
on his/her knowledge and expertise.
 BASED ON HISTORICAL DATA
Just past data of bookkeeping data is combined into the finance reports, which are
dissected. The future cannot be much the same as past. Consequently, the study of fiscal reports
can't give a 26 premise to planning, upcoming gauge, foreseeing, and arranging.
 PROBLEM IN COMPARABILITY
The measure of business concern is changing as per the volume of exchanges. Hence, the
figures of various budget reports lose the normal for similarity.
 RELIABILITY OF FIGURES
Some of the time, the segments of the fiscal summaries are changed by window dressing.
Provided that this is true, the examination of budget summaries results in false or inane.
 DIFFERENT PROCEDURES OF ACCOUNTING AND FINANCING
The end heap of rough material is resolved at purchase cost. The end heap of finished
things is a motivation at market cost or cost esteems whichever is less. At the point when all is
said in done, the end stock is regarded at expense or market esteem whichever less is. It suggests
that the end heap of unrefined material is regarded at expense or market esteem whichever less is.
So; an expert should keep in view these concentrations while making examination and
illumination by and large the results would bamboozle.
 CHANGE IN ACCOUNTING METHODS
There should be uniform accounting techniques and frameworks for number of years. In
case there are ordinary changes, the fig of different periods will be unprecedented and uncommon.
In such a case, the examination has no regard and sense.
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 CHANGES IN THE VALUE OF MONEY
The procuring impact of money is diminished from one year to other year on account of
extension. It produces issues in relative examination of monetary outlines of different years.
 LIMITATIONS OF THE TOOLS APPLICATION FOR ANALYSIS
There are diverse instruments utilized by an investigator for an examination. Despite the
fact that the use of a specific instrument or procedure depends on the aptitude and routine with
regards to the examiner. In the event that an inadmissible gadget or strategy is connected,
absolutely, the outcomes are misdirecting.
 NO VALUATION OF MANAGERIAL ABILITY
The aftereffects of the investigation of fiscal reports ought not to be taken as a suggestion
of fortunate or unfortunate administration. Subsequently, the administrative capacity can't be
estimated by examination.
 CHANGE OF BUSINESS SITUATION
The circumstances and conditions of one firm can never be like another firm. Also, the
business condition and conditions of one year to resulting can never be comparable.
Subsequently, it is hard for investigation and correlation of one firm with another.
18
CHAPTER SCHEME
Chapter 1: INTRODUCTION
Chapter 2: CONCEPTUAL BACKGROUND & LITERATURE REVIEW

This chapter describes Industry Profile, organizational profile.
Chapter 3: RESEARCH DESIGN

This chapter describes problem statement, need of study, objectives,
research methodology, limitations, scope of the project, chapter
organization.
Chapter 4: ANALYSIS AND INTERPRETATION

Analysis and interpretation of financial statements and financial ratios is covered
here.
Chapter 5: FINDINGS, CONCLUSION AND SUGGESTIONS

Summary of findings, Conclusion and Suggestions is covered under this
chapter
BIBLIOGRAPHY Annexure – Financial Statements
19
ORGANIZATIONAL PROFILE
20
2.1 HISTORY OF PAPER INDUSTRY
The word paper derives from the Greek term for the ancient Egyptian writing material
called papyrus, which was formed from beaten strips of papyrus plants. The immediate
predecessor to modern paper is believed to have originated in China in approximately the 2nd
century CE, although there is some evidence for it being used before this date. Papermaking is
considered to be one of the Four Great Inventions of Ancient China, since the first papermaking
process was developed in China during the early 2nd century CE by the Han court eunuch Cai
Lun.
China used paper as an effective and cheap alternative to silk, letting them sell more silk,
leading to a Golden Age. The use of paper spread from China through the Islamic world, and
entered production in Europe in the early 12th century. Mechanized production of paper in the
early 19th century caused significant cultural changes worldwide, allowing for relatively cheap
exchange of information in the form of letters, newspapers and books for the first time. In 1844,
both Canadian inventor Charles Fenerty and German inventor F.G. Keller had invented the
machine and process for pulping wood for the use in paper making. This would end the nearly
2000-year use of pulped rags and start a new era for the production of newsprint and eventually
all paper out of pulped wood.
AD 610
Chinese papermaking techniques reached Korea at an early date and were introduced to
Japan in the year 610. In these two countries, paper is still made by hand on a large scale in the
old tradition, preferably from the fresh best fibers of the mulberry tree (kozo in Japanese).
Following the cooking process, the long, uncut fibers are merely prepared by beating, which
gives the paper its characteristic look and excellent quality. The latter is due, among other things,
to multiple, rapid immersions of the mould, which results in a multi-layer fiber mat. Very soon,
knowledge of papermaking spread to Central Asia and Tibet and then on to India. When the
Arabs, in the course of their eastern expansion, neared Samarkan they too became acquainted with
the production of paper and paper mills were subsequently set up in Baghdad, Damascus and
Cairo, and later in Morocco, Spain and Sicily. Owing to the lack of fresh fibers, the raw material
used by the Arabs was made almost entirely from rags: however, their defective and poorly
designed processing equipment (such as breaker mills) produced a rather inferior ground pulp.
But, by using this method, with screens made of reeds, thin sheets were made and then ‘coated’
with starch paste. This gave Arabian paper its good writing properties and fine appearance. The
export made Arabian- made paper along with the secrets of its product.
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18TH CENTURY
During the 18th century there had been some concentration of craft activities in large
operations, the ‘manufactories’, which were dependent on skilled papermakers organized into
craft groups. The efforts made to step up production as much as possible and to have many of the
jobs done by machine (partly to get round the constraining rules of papermakers’ craft ‘usages’)
culminated in the design and construction of paper making machines. The initial model was the
vat that was used by J.N.L. Robert, who built the first flat-screen papermaking machine in 1798.
This was further developed in England, mostly by Donking and the Fourdrinier brothers. Shortly
afterwards other types appeared, like the Dickinson’s cylinder machine, and machines which
filled wire moulds transported on an endless chain and couched the sheets on an continuous felt.
Flat screen and cylinder machines, which were first seen in the
19TH CENTURY
There were continually improved and extended to include a dryer section. This soon led
to a considerable widening of the paper web and to an increase in production speeds. It also
heralded industrialization. In this new era, the small operators who were unable or unwilling to
afford machines sought to survive with piece-work or by producing special grades, but they were
sooner or later compelled to discontinue their activities. Others had to adapt their existing
buildings or set up new mills elsewhere
19TH & 20TH CENTURY
The history of the paper industry in the 19th and 20th centuries can be broken down into
five partly overlapping periods, each marked by definite trends.
In the first stage (from about 1800 to 1860), all work sequences previously performed by
hand were mechanized. This included the rag preparation, the use of fillers, pulp beating, the
paper machine with its various parts, and the machines required for finishing the paper (the head
box, wire section, press section, dryer section, units for reeling, smoothing and packaging).
During the second stage (about 1840 to 1880), efforts were made to obtain rag substitutes
on an industrial scale (ground wood pulp and chemical pulp) and appropriate industrial plants
(ground wood and chemical pulp mills) were developed.
22
The third stage (1860 to 1950) was marked by the enlargement of the web width, an
increase in working speeds, the introduction of electric drive and further improvements to various
machine parts. Machines designed specifically for the production of particular paper and board
grades (for example the Yankee cylinder and multi-cylinder machines) were also developed. The
web working width grew from 85 cm (1830) to 770 cm (1930), while production speeds rose
from 5 m/min. (1820) to over 500 m/min. (1930).
The fourth stage (1950 to 1980), which was still dependent on the old methods as far as
the mechanics were concerned, brought unprecedented changes in papermaking. Alongside
further increases in web width and working speeds, there was the use of new materials (thermo
mechanical pulp, deinked recovered paper, new fillers, processed chemicals and dyes), new sheet
forming options (e.g. by twin-wire formers), neutral sizing, greater stress on ecology (closed
loops) and, most of all, automation. The operational impact of these changes was: specialization
in certain paper types; development of new paper grades (LWC - lightweight coated paper);
corporate mergers; company groups with their own raw material supply and trading organizations;
closure of unprofitable operations.
1980 ONWARDS The fifth stage leads into the future. The evolution of new sheet-
forming principles (with fluid boundaries between paper and non-woven fabrics) and chemical
pulp processes have been the main process improvements. However, the situation on the global
market (increased demand, above all in the Third World, trends in chemical pulp prices, problems
of location), are again raising capital intensity and encouraging the formation of big company
groups with 36 international operations. At the same time there are definite opportunities for
smaller, local firms satisfying specific needs.
SWOT ANALYSIS –
 Growing domestic paper market

 Up to date researches
 Know how in non wood pulping and applications
 Well developed printing industry
 Local market knowledge
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COMPETITIVE WEAKNESSES
 Fiber shortage, especially virgin wood fiber
 Small and fragmented industry structure, many non competitive mills/machines
 Highly skilled and job specific manpower is not available
 Quality and availability of some of the domestic pigments and chemicals
 Environmental problems of most of the small pulp mills
 Low standard of converting industry
 Infrastructure, transportation
 High cost of raw material including wood, non wood and
 Waste paper High energy costs
 High cost of financing
 Impact of high local taxes (sales tax, entry tax, etc.)
 Low input into mill level R&D Competitive opportunities.
 Domestic market potential.
 Modern, world scale paper machine would be cost competitive in most grades.
 Forest plantation & potential.
 Integrates of combined wood and agro based papermaking.
 Government literacy program – increase in demand.
 Printing papers Low labor costs (allow cost effective sorting of imported mixed waste)
 Export potential.
MANAGING RISKS AT PAPERS INDUSTRIES
Risks are integral to business. At papers industries, risk management encompasses an

organized and coherent process of identifying, assessing and managing the existing and potential
risks in a planned manner. The management strives hard to balance business risks and
opportunities and analyze potentially negative or positive outcomes.
2.2 BUSINESS ENVIRONMENT RISKS
Competition as well as supply-demand imbalances in the paper, packaging and wood

product industries – which are mature, capital-intensive and highly competitive – impact
profitability. Economic cycles and changes in consumer preferences may reduce product demand
and affect profitability. The ability to respond to evolving customer tastes and develop new
products on a competitive basis entails continuous market and end-use monitoring. Increased
input costs comprising energy, fiber, other raw materials.
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BUSINESS RISKS
Business development risks are mainly related to the Company’s strategy and also
include risks related to availability of natural resources, raw materials and energy.
RAW MATERIAL RISKS
Non-availability of fiber may disrupt the supply chain, forcing the Company to pay
higher prices or alter manufacturing operations. The primary raw materials consumed by the
Companies are bagasse (a by-product of sugarcane), wheat straw and other long-fibres like
softwood, old gunny and kraft carrier board etc.
HUMAN RESOURCE RISK
A talented and hardworking human pool is the key to the success at Papers industries.
The Company evaluates the competence of its personnel through surveys and other assessments.
Structured programmes are conducted to train employees and an annual succession planning
Process hedges against attrition.
CLIMATE CHANGE RISKS
To mitigate the effects of climate change, Paper industries seeks opportunities to reduce
its carbon footprint. The Company implements clean, affordable and safe energy practices
required for the production, transportation and reduction of energy consumption. Additional
measures include energy-efficiency initiatives, use of carbon-neutral biomass, utilization of
combined heat and power and sequestration of carbon dioxide in forests’
MARKET RISKS
Risks related to demand, price, competition, customers, suppliers and raw materials are
regularly monitored and evaluated to get a perspective of the Company’s profit-making potential.
Cyclical product prices are affected by changes in capacity and production in the industry.
Customer demand for products, which also determine prices, is influenced by economic
conditions and inventory levels.
25
FINANCIAL RISKS
Financial risk management insulates against fiscal volatility. The objectives and
principles are defined in the Company’s financial risk policy, which is regularly reviewed and
approved by the Board of Directors. Besides, compliance is monitored by internal controls and
audits.
INFORMATION TECHNOLOGY RISK
In a business environment information is necessary to support business processes the

development of new IT infrastructure and monitor IT processes continually. These activities
reduce risks related to internal control and financial reporting, besides promoting informed
decision making.
INDUSTRY PROFILE
Introduction of paper industry in India:-
The paper industry in India could be classified into three categories according to the raw
material consumed.
1. Wood based
2. Waste paper based
3. Agro based
The Indian paper industry produces 10.11 million tons paper per annum, just 1.6% of
the total world production of 394 million tons, paperboard and newsprint. Needless to say, at
present, India lags far behind compared to international standards. The Scandinavian countries,
USA, Russia, China, Indonesia and Japan are the major players in the field of pulp and paper.
These countries have some of the best available raw material for paper production and state-of-
the-art technology.
“Some of the major players in the paper industry of India are BILT, ITC Paperboards &
Specialty Papers Division, APPM, SPB, TNPL, Rainbow Papers, JK Papers Ltd., Century Pulp
and Paper, The West Coast Paper Millis Ltd., Hindustan Paper and Abhisek Industries Ltd. “The
industry requires around 2.5 million of land for pulpwood plantation to fully meet the
requirement. Therefore, government support is required,” said Yogesh Agarwal, president of the
Indian Paper Manufacturers Association.
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VOITH GMBH
J.M. Voith GmBh, (GmbH is an abbreviation of the German phrase “Gesellschaft mit
beschränkter Haftung,” which means "company with limited liability.") with headquarters in
Heidenheim, Germany, is one of the world's leading producers of paper making machines and
turbines for hydropower plants. Four independent divisions are organized under the umbrella of
this holding company: Voith Sulzer Paper Technology, maker of machines and systems for the
production of mechanical pulp, paper and paper finishing; Voith Turbo Power Transmission, a
company that produces automatic transmissions for buses, coaches and trucks, drive systems for
rail vehicles, and hydrodynamic couplings and drive systems for industrial use; Voith Fluid
Machinery, maker of turbines, storage pumps, and control technology for hydro powerplants and
marine technology; and Voith Appleton Paper Machine Clothing based in Appleton, Wisconsin,
producer of forming fabrics, wet felts, dryer screens, and measuring technology for paper and
board making machines. J.M. Voith is also actively involved in research and development in each
of its fields. With production companies in Europe, North and South America, and Asia, as well
as sales offices in more than 100 countries on all continents, J.M. Voith is a global player with
about 80 percent of their sales generated from exports. As the company entered a new century, it
remained a Voith family owned business.
HISTORY OF J.M. VOITH AG
1825-67: FOUNDATIONS FOR SOLID ENGINEERING BUSINESS
In 1859 Voith invented the pulp refiner, a grinder that made better quality paper by
diminishing the splinter content of the rough pulp. Voelter became Voith's most important
business partner, as together they built wood grinding machines for a growing market, which
enabled Voith to enlarge his workshop and construct a brand-new foundry.
1870-1913: EXPANSION UNDER FRIEDRICH VOITH
In 1870, Maschinenfabrik J.M. Voith started building 100 PS-Henschel-Jonval turbines.

Two years later the company built the first Francis turbine, an American invention that was
greatly improved in design and efficiency by Friedrich Voith, his engineers, and associates. Those
improvements made possible a great variety of uses for this turbine type, and J.M. Voith acquired
a reputation for his special expertise in turbine design and technology. All this was at a time when
power plants were being built all over the world, and turbines to generate electricity were in high
demand.
27
1914-60: WARS AND RECOVERY UNDER HANNS VOITH
The end of World War II marked another serious interruption in Voith's history. Not only
was 15 percent of the workforce dead or missing, but there was literally no demand for Voith
paper machines, and the company found itself once more isolated from its international market. By
1947, of the three Voith brothers only Hanns Voith, the youngest, was still alive. He, along with
his close friend Hugo Rupf, led the company out of the postwar dilemma. Fortunately,
Heidenheim was not destroyed by bombs during the war. At first, the Voith company survived by
repairing damaged bridges, locomotives, and American military vehicles, and even began a foray
into the manufacture of saucepans. However, just one year after the war had ended, orders from
abroad began rolling in again. Among them was an order from the Turkish government for a
brand-new paper factory.
1961-90: GROWTH AND INNOVATIONS
The market for Voith turbo transmissions and hydraulic couplings, which had thrived
especially in the 1950s, had resulted in the establishment of a new production facility in
Heidenheim and of the Voith Turbo KG subsidiary for transmissions in Crailsheim and other
branch offices abroad. In 1961 another subsidiary for managing the couplings market, the Voith
Getriebe KG, was set up. Another successful Voith invention was the retarder, a hydrodynamic
brake that was nearly wear-free and therefore very reliable. Retarders were built into coaches,
trucks, and rail vehicles, and in the 1960s they were used in the United States for diesel
locomotives that hauled freight trains almost five kilometers in length through the Rocky
Mountains. In the early 1980s J.M. Voith introduced electric speed control systems for mobile
and stationary brakes and eventually whole drive systems
PRINCIPAL SUBSIDIARIES:
 Voith Sulzer Papiermaschinen GmbH;

 Voith Hydro Kraftwerkstechnik GmbH;
 Voith Sulzer Paper Technology North America Inc.(United States);
 Voith S.A.-Paper Technology Division (Brazil);
 Voith Sulzer Papiermaschinen AG (Austria);
 Shanghai Voith Paper Machinery Co. Ltd. (China);
 Voith Sulzer Stoffaufbereitung GmbH; Voith Sulzer Finishing GmbH;
 Voith Sulzer Papiertechnik Service GmbH; Lindsay Wire Inc. (United States);
 Appleton Mills Papermaking Supplies Industry Co. Ltd.(China);
 Voith Vertriebsgesellschaft Antriebstechnik GmbH;
 Scharfenbergkupplung GmbH; Voith Turbo GmbH (Austria);
28
 Voith India Private Ltd. (India);
 Voith Hydro GmbH (Austria);
 Voith Hydro Inc. (United States);
 Voith S.A.-Power Generation Division (Brazil);
 Shanghai Hydro-Power Equipment Co. Ltd. (China);
 Voith Dienstleistungen GmbH.
CHRONOLOG
YKEY
DATES:
 1867: Maschinenfabrik J.M. Voith incorporated in Heidenheim, Germany.
 1903: First foreign subsidiary is established in St. Pölten, Austria, and Voith delivers the
world's most powerful twin water turbines to Niagara Falls power station.
 1913: Third Voith generation takes over the family business.
 1922: J.M. Voith introduces the Kaplan turbine with mass producing power
transmissions.
 1950: J.M. Voith GmbH is founded.
 1961: J.M. Voith delivers the world's largest newspaper machine to Finland.
 1965: Voith's paper machine division sets up a subsidiary in Sao Paulo, Brazil.
 1977: Voith's paper machine division sets up a subsidiary in Appleton, Wisconsin.
 1992: The family holdings are split between Voith heirs.
 1994: Voith Sulzer Papiertechnik GmbH is founded.
 1997: J.M. Voith reorganizes, with all stock held by the Voith family and German banks.
ADDITIONAL DETAILS
 Private Company
 Incorporated: 1867 as Maschinenfabrik J.M. Voith
 Employees: 12,650
 Sales: DM 3.9 billion ($2.33 billion) (1999)
 NAIC:
29
PRODUCT / SERVICE DETAILS
 Paper Industries Machinery Manufacturing;

 Turbine and Turbine Generator Set Units Manufacturing;
 Other Commercial and Service Industry machinery Manufacturing
PRINCIPAL COMPETITORS:
 Harnischfeger Industries, Inc.;

 Metso Corporation; Parsons & Whittemore Inc.
 VALMET & CO.,
VALMET - 220 YEARS OF INDUSTRIAL HISTORY
Valmet is a leading global developer and supplier of process technologies, automation

and services for the pulp, paper and energyindustries.
With automation systems and flow control solutions they serve an even wider base of
process industries.
We aim to become the global champion in serving our customers. Their 17,000
professionals work close to our customers and are committed to improving our customers’
performance – every day.
The company has over 220 years of industrial history and a strong track record in
continuous improvement and renewal. In 2022, a major milestone was achieved when the flow
control company Neles was merged into Valmet. The combined company's net sale in 2021 was
approximately EUR 4.5 billion based on the respective company figures. Valmet’s shares are
listed on the Nasdaq Helsinki and the head office is in Espoo, Finland.
30
They serve our customers with more than 100 service centers, nearly 100 sales offices,
more than 40 production units, and 16 R&D centers around the world.
Services business line provides customers with flexible and fit-for- purpose services
throughout the lifecycle to improve process performance and reliability. Our Services' offering
increases the environmental efficiency and cost-effectiveness of our customers’ production
processes, while ensuring safeand reliable operations.
Automation Systems business line delivers automation solutions ranging from single
measurements to mill- or plant-wide process automation systems. They are designed to
maximize the profitability and sustainability of customers’ businesses by improving production
performance, quality management, raw material and energy efficiency, and cost-effectiveness.
Pulp and Energy business line provides technology solutions for pulp and energy
production, as well as for biomass conversion and emission control. The technologies maximize
the value of renewable raw materials, while increasing production efficiency and minimizing the
environmental impact.
Paper business line delivers complete production lines, machine rebuilds and process
components for board, tissue and paper production. The technologies are designed for high
process and environmental efficiency, flexibility, reliability and safety. The solutions have a
modular structure with as much standardization as possible, and they are easy-to-use and cost-
effective.
Flow Control business line delivers mission-critical flow control technologies and
services for the continuously evolving needs of various process industries. We help our
customers to improve their process performance and environmental efficiency, and to ensure the
safe flow of materials.
31
OUTPUTS
PROCESS TECHNOLOGIES
• Pulping process equipment, process islands and complete pulp mills
• Individual board, tissue and paper machine sections, complete production

lines and machine rebuilds • Boiler islands, power plants, heating plants
• Environmental solutions
• Technologies for converting biomass into fuels, chemicals and materials

Automation
• Distributed Control Systems (DCS)
• Quality Control Systems
• Analyzers and measurements
PERFORMANCE AND SERVICE SOLUTIONS
• Industrial Internet and remote solutions Services

• Spare parts and components
• Maintenance and shutdown management
• Outsourcing services
• Production consumables
• Process support and optimization
• Process upgrades
• Remote solutions and services
32
CUSTOMERS’ END PRODUCTS
 Pulp
 Paper
 Board
 Tissue
 Energy Biomaterials and fuels
INDIAN PAPER MILLS FUTURE WOOD REQUIREMENT & GENERATION
India has a total forest area of about 75 million ha which forms only 22.8% of the total
geographical area (328 million ha) of the country. Forests in India are fast disappearing. At the
time of independence more than 22% of India’s geographical area was covered by dense forests.
Recent satellite surveys show that hardly 11% of the area now supports closed forests, i.e. forest
with 40% crown cover even though the national forest policy enunciated soon after independence
in 1952 that at least 33% of geographical area of the country should be under forest cover.
Further, the per capita forest area in India is only
0.064 ha against the world average of 0.64 ha. Out of 69.09 million ha of the forest cover
recorded, nearly 28.84 million ha are degraded forestlands. The productivity of Indian forest is
only 1.34 m3/ha/yr against the world average of
2.1 m3/ha/yr. Earlier forests were the main resource for wood and bamboo based raw material for
paper industry. Depletion of forest areas and reduction in volume of extraction has hit badly
supply of raw material to the wood based industry.
In recent times, the demand for the fire wood, timber and industrial wood in the country
continues to grow because of increasing population and the growth of economy. The Indian
Forest Act-1927, The Forest Conservation Act-1980, The National Forest Policy-1988 and The
National Forest Commission 2003 are the umbrella legislation and framework for forest
protection and conservation. Under these acts, rules and policy, the supply of raw material to
wood based industries is phased out from forests. Participation of the private sector, even in
reforestation of 28.84 million ha degraded forestlands and Joint Forest Management is not
allowed as per the policy guidelines. In the National Forest Policy 1988, the wood based
industries have been advised to encourage agro forestry for raising plantation to meet the raw
material demand. Agriculture sector in the country covers about 143 millionout of which 40
33
million ha is classified as degraded. Hence, non-forestlands such as private lands are explored for
raising tree crops to augment the available wood resources. In the course of time social and farm
forestry emerged for meeting the wood demand of the paper industry.The wood based paper mills
in India continue to face challenges with forest-based raw material. Pulp and paper industry
consumes 3% of total national requirement of wood while, the major consumption being fuel
wood (89.5%) and timber (7.5%).
Presently the annual pulp production is 2.71 million tons from 9.83 million tons of wood.
Nearly 20% of wood is procured from government sources while, 80% is from agro farm forestry
sources. The bamboo and wood requirement is 0.82 and 9.01 million tons per annum respectively.
The strategy adopted by the industry to meet the ever-growing demand of wood on a sustainable
basis is to obtain wood from social and farm forestry plantations. Over a period of 22 years the
paper industry has promoted nearly 642,208 ha plantations, which is estimated to produce 38.53
million tons of wood at 60 tons per ha yield. However, if we consider last 11 years plantations of
Eucalyptus, Casuarina, Leucaena and Acacia as standing crop, it is to the tune of 321,104 ha
which can produce 19.26 million tons of wood. At the felling cycle of 4 years, the wood
production annually is 4.8 million tons. The current level of planting by the paper mills is 50,000
ha per annum. Apart from the industrial efforts, farmers on their own are raising plantations. In
the recent years several private eucalyptus clonal nurseries have sprang up and an additional
20,000 ha area every year is planted. This is adding to the general availability of wood to the
industry.
Hence, the industries wood demand of 9.83 million tons annually is met through farm
forestry plantations only. Paper companies are aggressively looking at farm forestry to cut down
on the landed cost of wood. With transportation cost accounting for nearly 30 to 50% of the wood
cost, developing farm forestry plantations near the manufacturing units are being pursued
vigorously by the mills. Considering the future demand of paper of 24 million tons by 2025, an
additional 12 million tons of wood is needed.
34
RESEARCH METHODOLOGY
35
Research is a logical and systematic search for new and useful information on particular
topic. Research is not confined to science and technology only. There are vast areas of research
in other disciplines. Research is "creative and systematic work undertaken to increase the stock of
knowledge"."It involves the collection, organization, and analysis of information to increase
understanding of atopic or issue. A research project may be an expansion on past work in the
field. Research projects can be used to develop further knowledge on a topic, or for education. To
test the validity of instruments, procedures, or experiments, research may replicate elements of
prior projects or the project as a whole.
3.1 RESEARCH METHODOLOGY
Research methodology is the specific procedures and techniques used to identify select,
process and analyse information about a topic. Research is done with the help of study
experiment observation analysis comparison and reasoning. Research Methodology chapter of a
research describes research methods, approaches and designs in detail highlighting those used
throughout the study, justifying my choice through describing advantages and disadvantages of
each approach and design taking into account their practical applicability to our research. The
present study on the short term solvency and the profitability of the selected companies comprises
the following research design.
3.2 RESEARCH DESIGN.
Research design is the framework of research methods and techniques chosen by a

researcher. The design allows researchers to hone in on research methods that are suitable for the
subject matter and set up their studies up for success. The design of a research topic explains the
type of research (experimental, survey, correlational, semi experimental, review) and also its sub-
type (experimental design, research problem, descriptive case-study). The Research design
adopted for this research work is analytical research design. It involves the study and evaluation
of the available information or data in the process of explaining the complexity in it. The research
use the fact or information already available it analysis the information to make critical
evaluation. The analytical research explains how and why things happened. The present analytical
study does the critical evaluation of Voith for the period of 5 years.
36
3.3 SOURCES OF DATA
The source of data of this study is the secondary data. The data as like company's annual
report from the company's website and moneycontrol.com are taken. The major sources of data
are from the balance sheet of Voith and Valmet.
3.4 PERIOD OF THE STUDY
Last five years financial statements of the companies are taken for the study.
3.5 THE TOOLS USED
The tools used for the financial statement analyse are
 Ratio analysis
 correlation
 Trend analysis
 Comparative Balance sheet
 Leverage calculations
37
I. LIQUIDITY RATIOS
This type of ratio helps in measuring the ability of a company to take care of its short-
term debt obligations. A higher liquidity ratio represents that the company is highly rich in cash.
1. CURRENT RATIO:
The current ratio is the ratio between the current assets and current liabilities of a
company. The current ratio is used to indicate the liquidity of an organization in being able to
meet its debt obligations in the upcoming twelve months. A higher current ratio will indicate that
the organization is highly capable of repaying its short-term debt obligations.
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES
2. QUICK RATIO:
The quick ratio is used to ascertain information pertaining to the capability of a

company in paying off its current liabilities on an immediate basis.
QUICK RATIO = (CASH AND CASH EQUIVALENTS + MARKETABLE SECURITIES + ACCOUNTS

RECEIVABLES) / CURRENT LIABILITIES
II. PROFITABILITY RATIOS
This type of ratio helps in measuring the ability of a company in earning sufficient
profits.
38
I. GROSS PROFIT RATIO
Gross profit ratios are calculated in order to represent the operating profits of an organization after
making adjustments pertaining to the COGS or cost of goods sold.
GROSS PROFIT RATIO = (GROSS PROFIT / NET SALES) * 100
II. NET PROFIT RATIO:
Net profit ratios are calculated in order to determine the overall profitability of an organization
after reducing both cash and non-cash expenditures.
NET PROFIT RATIO = (NET PROFIT / NET SALES) * 100
III. OPERATING PROFIT RATIO:
Operating profit ratio is used to determine the soundness of an organization and its
financial ability to repay all the short term and long term debt obligations.
OPERATING PROFIT RATIO = (EARNINGS BEFORE INTEREST AND TAXES / NET SALES) * 100
IV. RETURN ON CAPITAL EMPLOYED (ROCE):
determine the profitability of an organization with respect to the capital
ROCE = EARNINGS BEFORE INTEREST AND TAXES / CAPITAL EMPLOYED
39
III. SOLVENCY RATIOS
Solvency ratios can be defined as a type of ratio that is used to evaluate whether a
company is solvent and well capable of paying off its debt obligations or not.
1. DEBT EQUITY RATIO:
The debt-equity ratio can be defined as a ratio between total debt and shareholders fund.
The debt-equity ratio is used to calculate the leverage of an organization. An ideal debt- equity
ratio for an organization is 2:1.
DEBT EQUITY RATIO = TOTAL DEBTS / SHAREHOLDERS FUND
2. INTEREST COVERAGE RATIO:
The interest coverage ratio is used to determine the solvency of an organization in the
nearing time as well as how many times the profits earned by that very organization were capable
of absorbing its interest-related expenses.
INTEREST COVERAGE RATIO = EARNINGS BEFORE INTEREST AND TAXES / INTEREST EXPENSE
40
IV. TURNOVER RATIOS
Turnover ratios are used to determine how efficiently the financial assets and liabilities of
an organization have been used for the purpose of generating revenues.
1. FIXED ASSETS TURNOVER RATIOS:
Fixed assets turnover ratio is used to determine the efficiency of an organization in

utilizing its fixed assets for the purpose of generating revenues.
FIXED ASSETS TURNOVER RATIO = NET SALES / AVERAGE FIXED ASSETS
2. INVENTORY TURNOVER RATIO:
Inventory turnover ratio is used to determine the speed of a company in converting its
inventories into sales.
INVENTORY TURNOVER RATIO = COST OF GOODS SOLD / AVERAGE INVENTORIES
3. RECEIVABLE TURNOVER RATIO:
Receivable turnover ratio is used to determine the efficiency of an organization in

collecting or realizing its account receivables.
RECEIVABLES TURNOVER RATIO = NET CREDIT SALES / AVERAGE RECEIVABLES
41
ANALYSIS &
INTERPRETATION
42
CURRENT RATIO
When it comes to the identification of a business’s solvency, which is its

ability to spend its short-term obligations with the use of existing assets, one can
utilize many accounting ratios. One of the most commonly used ones is the current
ratio, which aids in the evaluation of the comprehensive financial status of an
enterprise.
The current ratio aids in the measurement of a firm’s ability to pay for its short-
term obligations or the ones that are due within 12 months. It allows analysts and
investors to understand the way in which a business can increase its current assets
as much as possible on the balance sheet for clearing the existing debt and other
dues.
CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES
CURRENT ASSETS
Current assets are all assets listed on a company's balance sheet expected to
be converted into cash, used, or exhausted within an operating cycle lasting one
year. Current assets include cash and cash equivalents, marketable securities,
inventory, accounts receivable, and prepaid expenses.
CURRENT LIABILITIES
Current liabilities are a company's short-term obligations due and payable in

one year or one business cycle. Common current liabilities found on the balance
sheet include short-term debt, accounts payable; dividends owed, accrued
expenses, income taxes outstanding, and notes payable.
A company with a current ratio of 2:1, current assets twice as large as

current liabilities. A current ratio less than 1, indicate the company might have
problems meeting short-term financial obligations.
46
Year 2021 2020 2019 2018 2017
Total current 2,842,518 2,816,894 2,912,971 2,880,645 3,049,353

assets
Total current
liabilities 2,391,808 2,341,494 2,133,821 2,025,523 1,994,822
Current Ratio 1.18:1 1.20:1 1.36:1 1.42:1 1.52:1
€ in thousands
TABLE 1.1
Voith GmbH
1.800
1.600 1.529
1.422
1.365
1.400
1.188 1.203
1.200
1.000
0.800
0.600
0.400
0.200
0.000
2021 2020 2019 2018 2017
current Ratio
CHART 1.2
INTERPRETATION
The above table and graph shows clearly that from all the previous year,
the company has maintained current ratio between 1.5 - 1. From the above stated
criteria the current ratios fall below the standard measures of 2:1.
47
QUICK RATIO
The quick ratio measures a company’s ability to fulfill current obligations

without selling assets or borrowing money. The quick ratio is more cautious than
the current ratio, which recognizes all current assets as current liability coverage.
Only the most liquid assets available to fund short-term debts and
commitments are considered in the quick ratio. Liquid assets are ones that can be
converted into cash quickly and readily in order to pay bills.
The higher the ratio, the better the company’s liquidity and financial health.
Furthermore, the lower the ratio, the more likely it is that the company will have
trouble paying its debts.
FORMULA
(Current Assets – Inventory – Prepaid Expenses)

= Liquid assets
Quick Ratio =
Current Liabilities
LIQUIDASSETS
Liquid assets on the balance sheet are cash, accounts receivable, marketable
securities, and inventory.
CURRENT LIABILITIES

A ratio of 1:1 indicates that current assets are equal to current liabilities and
that the business is just able to cover all of its short-term obligations.
48
Year 2021 2020 2019 2018 2017
Total quick assets 2,161,074 2,224,982 2,313,674 2,277,129 2,501,528
Total current
liabilities 2,391,808 2,341,494 2,133,821 2,025,523 1,994,822
Quick ratio 0.90:1 0.95:1 1.08:1 1.12:1 1.25:1
€ in thousands
TABLE 2.1
Voith GmbH
1.400
1.254
1.200 1.084 1.124
1.000 0.950
0.904
0.800
0.600
0.400
0.200
0.000
2021 2020 2019 2018 2017
QUICK RATIO
CHART 2.2
INTERPRETATION
The above graph and table can be interpreted with the quick ratio >1 from
the year 2017-19. That is, the company is fully able to meet its short term
obligations. But when it comes to year 2020 & 2021, the quick ratio is below 1. It
can be interpreted that the company faced some issues in facing its short term cash
requirements.
49
DEBT EQUITY RATIO
Debt is the money that the company owes. When a company borrows
money, the amount it needs to return is the debt. A company usually pays interest
on its debt. Equity is the money the company owns. It is commonly known as
shareholder’s equity. Shareholder’s equity is the owner’s investment in the
company. With the debt to equity ratio, you can find out if the company’s financing
depends on borrowings or equity. It also shows if the company has enough equity
capital to take care of all outstanding debts.
Most companies have either a high or low debt-equity ratio. Few companies
have a debt-to-equity ratio of 1:1. This shows that the company’s finances are met
equally by debt and equity. A ratio of less than 1 shows that a company’s finances
are more by equity than through debt. A ratio greater than 1 shows the company’s
financing is done more by debt rather than equity.
FORMULA
Debt/equity = Total debt / total shareholder’s equity.

THE TOTAL LIABILITIES
The total liabilities include short-term debts, long-term debts, and fixed
payments obligations.
SHAREHOLDER’S EQUITY
Total amount of capital gathered from equity share holders
A high debt-to-equity indicates high risk. A low debt-to-equity ratio means
the equity of the company’s shareholders is bigger, and it does not require any
money to finance its business and operations for growth.
50
Year 2021 2020 2019 2018 2017
Total liabilities 4098,763 4133,312 3510,576 3335,934 3631,956
Total equity
1014,777 1083,469 1246,060 1340,319 1365,924
Debt equity ratio 4.03:1 3.81:1 2.81:1 2.48:1 2.65:1
€ in thousands
TABLE 3.1
DEBT EQUITY RATIO

4.039
4.5 3.814
4
3.5 2.817
2.488 2.658
3
2.5
2
1.5
1
0.5
0
2021 2020 2019 2018 2017
DEBT EQUITY RATIO
CHART 3.2
INTERPRETATION
From the above table and graph, the interpretation can be done as the
company facing a high debt equity ratio compared to last 4 years with upward
trend line from last 4 years. The more the debt equity ratio defines, that the
company is operating more in the debt than equity. In the above case the company
uses more debt finance than their equity. The larger the debt equity is highly risk
as well as it also provides fund to operate the equity funds.
51
WORKING CAPITAL
Working Capital means those liquid funds, whether in the form of cash,
deposits in a bank, or either way, which an enterprise keeps to manage the day-to-
day running expenses of the business. It is a measure of a company’s liquidity,
efficiency, and financial health.
WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES

CURRENT ASSETS
Current assets are all assets listed on a company's balance sheet
expected to be converted into cash, used, or exhausted within an operating cycle
lasting one year. Current assets include cash and cash equivalents, marketable
securities, inventory, accounts receivable, and prepaid expenses.
CURRENT LIABILITIES

Suppose a company has a positive WC (meaning the current assets are more
than the company’s current liabilities). In that case, the company is in a good
position in terms of efficiency, liquidity, and overall financial health.
On the other hand, if the company with Negative Working Capital refers to a
scenario that, company has more current liabilities than current assets. It implies
that the available short-term assets are not enough to pay off the short- term debts.
52
Year 2021 2020 2019 2018 2017
Current assets 2,842,518 2,816,894 2,912,971 2,880,645 3,049,353
Current liabilities 2,391,808 2,341,494 2,133,821 2,025,523 1,994,822
Net working capital 450,710 475,400 779,150 855,122 1,054,531
€ in thousands
TABLE 4.1
NET WORKING CAPITAL
1,200,000 1,054,531
1,000,000 855,122
779,150
800,000
450,710
600,000 475,400
400,000
200,000
0
2021 2020 2019 2018 2017
NET WORKING CAPITAL
CHART 4.2
INTERPRETATION
From the above table and the graph, the working capital of the company can
be clearly understandable. For the past 5 years the trend line of the working capital
is facing downward. Initially at 2017 the company had a working capital more
than 10 lakh. But it is clear that the company had facing some shortage in working
capital in nearby last 2 years. The company might face some trouble in dealing its
short term requirements.
53
PROPRIETARY RATIO
Proprietary ratio is a type of solvency ratio that is useful for determining the
amount or contribution of shareholders or proprietors towards the total assets of
the business. Proprietary ratio also known as Equity Ratio or Net worth to
total assets or shareholder equity to total equity, Establishes relationship
between proprietor's funds to total resources of the unit. Where proprietor's
funds refer to Equity share capital and Reserves and surplus.
Total resources refer to total assets.
PROPRIETARY RATIO = PROPRIETOR'S FUNDS / TOTAL TANGIBLE ASSETS

Proprietors funds refers to the funds provided by equity shareholders
Tangible assets include all assets except goodwill, preliminary expenses
etc.
A high proprietary ratio indicates that a business is in a strong position and

provides relief to creditors. Normally more than 0.75, that indicates that the
company has financed its assets from equity rather than external sources.
A low proprietary ratio shows the dependence of the company on the debt
financing in order to run its business. A low ratio declares that the company
financed its assets from external debt options.
54
Year 2021 2020 2019 2018 2017
Total equity 1,014,777 1,083,469 1,245,060 1,340,319 1,365,924
Total tangible assets

5,113,540 5,216,781 4,755,636 4,676,253 4,997,880
Proprietary ratio 0.19:1 0.20:1 0.26:1 0.28:1 0.27:1
€ in thousands
TABLE 5.1
PROPRIETARY RATIO
0.2866
0.3 0.2733
0.2618
0.25 0.1984
0.2076
0.2
0.15 PROPRIETARY RATIO
0.1
0.05
0
2021 2020 2019 2018 2017
CHART 5.2
INTERPRETATION
The above table and graph, shows the proprietary ratio of the company.
Since 2017 the company’s proprietary ratio lies below 0.28, the company used
most of its debt for financing assets. The ratio declined to 0.19 in 2021, indicates
that only 19% of the assets are financed with the equity, and remaining 81% of the
assets are outsourced.
55
GROSS PROFIT
Gross Profit Margin Ratio, sometimes also referred to as gross margin, is a

type of profitability ratio. It helps to measure how much profit a company makes
from the sale of goods and services after deducting the direct costs. In simple
words, it is a simple metric to measure the company’s profitability. Also, it helps to
evaluate how efficiently the company is using its labour and raw materials during
the production process. The gross profit is calculated in a company’s income
statement after deducting the cost of goods sold from the total sales. The cost of
goods sold considers only the company’s direct costs, not indirect costs. The direct
costs are variable as they change with the quantity of production. Examples of
direct costs are direct labour and direct materials.
GROSS PROFIT MARGIN = (NET SALES – COST OF GOODS SOLD)/ NET SALES
NET SALES – is deducting any sales returns, discounts or allowances from

the total sales. Net sales give more accurate information than total sales.
COST OF GOODS SOLD (COGS) – is the direct costs during the production
process like the direct materials and direct labour. Indirect costs and other fixed
costs are not a part of in the COGS. On the face of it, a gross profit margin ratio
of 50 to 70% would be considered healthy
A high gross profit margin indicates that a company is successfully

producing profit over and above its costs.
A low gross profit margin means the ratio percentage is below industry
norms and potentially down from the company's prior periods. In essence, they
aren't generating strong sales prices relative to cost of goods sold, or COGS, which
are costs to make or acquire products.
56
Year 2021 2020 2019 2018 2017
4,339,866 4,189,208 4,284,812 4,251,332 4,241,717

Net sales
Cogs
-3,493,792 -3,329,211 -3,381,302 -3,334,519 -3,258,227
( direct expenses )
Gross profit 846,074 859,997 903,510 916,813 983,490
Gross profit margin 19.4% 20.5% 21.0% 21.5% 23.1%
€ in thousands
TABLE 6.1
GROSS PROFIT MARGIN

24.00%
23.19%
23.00%
21.09% 21.57%
22.00%
20.53%
21.00%
19.50%
20.00%
19.00%
18.00%
17.00%
Gross profit margin
2021 2020 2019 2018 2017
CHART 6.2
INTERPRETATION
The above table and graph shows the gross profit of the company. The company
had a strong return on gross at 23% in 2017. Then it steadily decreased year to year and
reached the lowest gross return at 19% in 2021. The gross profit margin has a downward
straight trend line. The company earns ideal return on the goods they sold and with
reduced cost of goods sold (COGS).
57
NET PROFIT MARGIN
Net profit is another important parameter that determines the financial health
of your business. It shows whether the business can make more than what it
spends. You can use your net profit to help you decide when and how to work
towards expanding your business and when to reduce your expenses.
For a business owner, it is important to know the difference between profit

and profitability. Profit is an absolute number which is equal to revenue minus
expenses. Profitability, on the other hand, is a relative number (a percentage)
which is equal to the ratio between profit and revenue.
Profitability is a measure of efficiency and it is useful in determining the

success or failure of a business.Net profit tells you about the profitability of your
business. Knowing about the same has several advantages
beneficial for the business. Furthermore, lenders and investors look at your
company’s net profit to check if you own the capability to pay your future debts.
NET PROFIT MARGIN = NET PROFIT / NET SALES
NET SALES – is deducting any sales returns, discounts or allowances from

NET PROFIT - the actual profit after working expenses not included in the
calculation of gross profit
A good margin differs significantly depending on the industry and size of

the business, but generally, a net profit margin of 10% is considered average and a
20% margin is considered high (or “good”), and a 5% margin is considered as low
58
Year 2021 2020 2019 2018 2017
Net sales 4,339,866 4,189,208 4,284,812 4,251,332 4,241,717
Net profit 1,287 6,344 72,453 53,245 595,743
Net profit margin 0.029% 0.151% 1.69% 1.25% 14.04%
€ in thousands
TABLE 7.1
NET PROFIT MARGIN

16.00%
14.04%
14.00%
12.00%
10.00%
8.00%
6.00%
1.69%
4.00%
0.15% 1.25%
2.00% 0.03%
0.00%
net profit margin
2021 2020 2019 2018 2017
CHART 7.2
INTERPRETATION
The above table and the graph can be interpreted clearly that there is a huge
drop in the net profits of the company. The company holds the record of the
highest of 14% of the net profit in 2017. Then the total net result dipped t0 1.2%
and in the year 2020 it crossed below the level of 1% and in 2021 the least profit
margin of 0.029% recorded.
59
RETURN ON EQUITY
The Return on Equity (ROE) Ratio is an accounting ratio of a company’s net profit
to its total shareholder equity. There are two basic sources of shareholder equity. The
money that was originally invested in the company is the first and original source. The
second source is retained earnings, which the company can accrue over time as a result of
its operations. It basically shows how much profit a company makes for every rupee
invested by its shareholders. It’s commonly given as a percentage. Preferred
shareholders, an unique type of investor are not included in the ROE calculation. The
preference shareholders are guaranteed a fixed dividend payment every year, As a result,
it indicates the profitability of the company as earned by ordinary shareholders.
RETURN ON EQUITY RATIO FORMULA
RETURN ON EQUITY (ROE) RATIO = Net Income / Shareholder’s Equity
NET INCOME = Total Revenue – Cost of Goods Sold- Operating

Expenses- Interest Payable – Taxes
SHAREHOLDER’S EQUITY = Total Assets – Total Liabilities or Share

Capital + Retained Earnings + Other Reserves
ROE is used when comparing the financial performance of companies

within the same industry. It is a measure of the ability of management to generate
income from the equity available to it. A return of between 15-20% is considered
good. ROE is also used when evaluating stocks, as well as other financial ratios.
60
Year 2021 2020 2019 2018 2017
Net income 1,287 6,344 72,453 53,245 595,743
Shareholder’s 4,339,866 4,189,208 4,284,812 4,251,332 4,241,717

Equity
Return on equity 0.000296 0.001514 0.016909 0.012524 0.140448
€ in thousands
TABLE 8.1
RETURN ON EQUITY
0.16
0.1404
0.14
0.12
0.1
0.08
0.06
0.0169
0.04
0.0125
0.02 0.0015
0.0002
0
Return on equity
2021 2020 2019 2018 2017
CHART 8.2
INTERPRETATION
The above table and graph shows clear that the return on equity has not even
crossed 1 during last 5 years. The company’s balance sheet clearly shows, the
company has lesser equity and more liabilities. This indicates the company has low
return on equity. more over it can be clearly said that the company uses more of its
current and non current liabilities for capital employment. The equity capital is
used to the least extent.
61
INVENTORY TURNOVER
Inventory turnover refers to the amount of time that passes from the day
an item is purchased by a company until it is sold. One complete turnover of
inventory means the company sold the stock that it purchased, less any items lost
to damage or shrinkage. The inventory turnover ratio is the number of times a
company has sold and replenished its inventory over a specific amount of time.
The formula can also be used to calculate the number of days it will take to sell the
inventory on hand.
The turnover ratio is derived from a mathematical calculation, where the

cost of goods sold is divided by the average inventory for the same period. A
higher ratio is more desirable than a low one as a high ratio tends to point to strong
sales. Knowing your turnover ratio depends on effective inventory control, also
known as stock control, where the company has good insight into what it has on
hand.
INVENTORY TURNOVER RATIO FORMULA
INVENTORY TURNOVER RATIO = Cost of Goods Sold / Avg.

Inventory AVERAGE INVENTORY = (beginning inventory + ending
inventory) / 2 COGS = the starting inventory + purchases – ending
inventory
The ideal inventory turnover ratio will be between 5 and 10, meaning the
company will sell and restock inventory roughly every one to two months. For
industries with perishable goods, such as florists and grocers, the ideal ratio will be
higher to prevent inventory losses to spoilage.
62
Year 2021 2020 2019 2018 2017
Cogs 3,493,792 3,329,211 3,381,302 3,334,519 3,258,227
Average inventory 932,634 895,253 903,164.5 849,583 841,145.5
Inventory turnover 3.746:1 3.718:1 3.743:1 3.924:1 3.873:1
€ in thousands
TABLE 9.1
INVENTORY TURNOVER
3.950 3.925
3.900 3.874
3.850
3.800
3.746 3.744
3.750
3.719
3.700
3.650
3.600
2021 2020 2019 2018 2017
CHART 9.2
INTERPRETATION
The above graph and table shows the inventory turnover ratio for the past 5
years. The beginning and end year inventory value is taken to calculate average
inventory. The company used its inventory effectively at 2018 with the highest
value at 3.9, followed by 2020 and 2021 with 3.7 and 3.7 respectively.
63
OPERATING PROFIT OPERATING PROFIT RATIO
Operating Profit Ratio is referred to as the ratio that is used to define a

relationship between the operating profit and the net sales. Operating profit is also
known as Earnings before interest and taxes (EBIT) and net sales can also be
defined as the revenue that is earned from the operations. Net sales consist of cash
and credit sales. Therefore, the operating profit ratio helps in comparing the
operating profit earned by a business in relation to the revenue that will be
generated by the business.
If operating profits are falling [lower than expected], it either means we are
missing our revenue targets, or we’re spending too much. The latter is easier to
control, so my first line of defense would be to do a review of expenses. I’d also
look carefully at our product margins and the returns we are getting on our
advertising spend. It’s always a constant balancing act.”
OPERATING PROFIT = Gross Profit – Operating expenses
OPERATING EXPENSE - Advertising and marketing, Insurance, Legal fees
GROSS PROFIT = REVENUE – Cost of Goods Sold.
Operating income usually does not include any investment income generated
through a part stake in another company. This also includes the investment income
that may be associated directly with the core business operations of the secondary
company. An operating profit ratio of about 20% is considered good, and below
5% is considered low.
64
Year 2021 2020 2019 2018 2017
Gross profit 8,46,074 8,59,997 9,03,510 9,16,813 9,83,490
Operating expenses -7,56,911 -7,98,451 -7,29,174 -7,68,939 -8,02,838
Operating profit 89,163 61,546 1,74,336 1,47,874 1,80,652
€ in thousands
TABLE 10.1
Operating profit
180,652
200,000
174,336
180,000
147,874
160,000
140,000
120,000
100,000 89,163
80,000 61,546
60,000
40,000
20,000
0
Operating profit
2021 2020 2019 2018 2017
CHART 10.2
INTERPRETATION
The above table shows the company is has good operating profit. This is
considered the company is facing huge operating expenses. But the income
statement shows the company has some other operating income so the profit
portion of the company doesn’t get affected. The company has the lowest operating
profit at 2020 with 61,546. Then the company faced operating profit of 89,163 in
the year 2021.
65
ASSET TURNOVER RATIO
Asset turnover ratio is the ratio between the net sales of a company and total
average assets a company holds over some time; this helps in deciding whether the
company is creating enough revenues to make sure it is worth it to hold a heavy
amount of assets under the company’s balance sheet. In simple terms, the asset
turnover ratio means how much revenue you earn based on the total assets. And
this revenue figure would equate to the sales figure in your Income Statement. The
higher the number the better would be the asset efficiency of the organization. It’s
being seen that in the retail industry, this ratio is usually higher, i.e., more than 2.
ASSET TURNOVER RATIO = NET SALES / FIXED ASSETS
NET SALES is deducting any sales returns, discounts or allowances from

FIXED ASSETS are assets that are held for the long term and are not
expected to be converted into cash in a short period of time. Plant and machinery,
land and buildings, furniture, computers, copyright, and vehicles are all examples.
If the ratio is less than 1, then it’s not good for the company as the total
assets cannot produce enough revenue at the end of the year.
If the ratio is greater than 1, it’s always good. Because, that means the
company can generate enough revenue for itself.
The retail sector, an asset turnover ratio of 2.5 or more could be considered
good, while a company in the utilities sector is more likely to aim for an asset
turnover ratio that's between 0.25 and 0.5.
66
Year 2021 2020 2019 2018 2017
Net sales 4,339,866 4,189,208 4,284,812 4,251,332 4,241,717
Average assets 77,21,930.5 75,94,599 70,93,762.5 71,75,193 76,77,526.5
Asset turnover ratio 0.562:1 0.552:1 0.604:1 0.593:1 0.552:1
€ in thousands
TABLE 11.1
ASSET TURNOVER RATIO
0.604
0.62 0.593
0.6
0.562
0.552 0.552
0.58
0.56
0.54
0.52
2021 2020 2019 2018 2017
CHART 11.2
INTERPRETATION
The above graph represents the Asset turnover ratio for the last 5 years. The
company has the highest asset turnover in the year 2019 with the ratio 0.604. Then
the ratio declined to 0.5 in 2020, and reached the level of 0.562 in the year 2021.
This clearly shows the company does not use assets efficiently to make part in total
net sales. The company has the other part of operating income, so this lower ratio
has less impact in the profit of the firm.
67
INTEREST COVERAGE RATIO
The interest coverage ratio is a debt and profitability ratio used to determine
how easily a company can pay interest on its outstanding debt. The interest
coverage ratio is calculated by dividing a company's earnings before interest and
taxes (EBIT) by its interest expense during a given period.
The interest coverage ratio is sometimes called the times interest earned (TIE)
ratio. Lenders, investors, and creditors often use this formula to determine a
company's riskiness relative to its current debt or for future borrowing.
INTEREST COVERAGE RATIO = INTEREST EXPENSE / EBIT
EBIT=Earnings before interest and taxes
The lower the ratio, the more the company is burdened by debt expenses and
the less capital it has to use in other ways. When a company's interest coverage
ratio is only 1.5 or lower, its ability to meet interest expenses may be
questionable.
While looking at a single interest coverage ratio may reveal a good deal about a
company’s current financial position, analyzing interest coverage ratios over time
will often give a much clearer picture of a company’s position and trajectory.
Looking at a company's interest coverage ratios on a quarterly basis for, say,

the past five years, lets investors know whether the ratio is improving, declining,
or has remained stable and provides a great assessment of a company’s short-term
financial health.
68
YEAR 2021 2020 2019 2018 2017
EBIT 1,65,000 1,39,000 2,15,000 1,93,000 2,41,000
INTEREST
31,331 28,138 38,732 25,327 76,408
EXPENSES
INTEREST
COVERAGE 5.26:1 4.94:1 5.55:1 7.62:1 3.15:1
RATIO
€ in thousands
TABLE 12.1
INTEREST COVERAGE RATIO

7.62
8
5.26 5.55
7 4.94
6
5 3.15
4
3
2
1
0
2021 2020 2019 2018 2017
CHART 12.2
INTERRETATION
The above ratio calculation tells about the company’s interest towards it earnings.
The company had the highest interest coverage ratio in the year of 2018 at 7.6:1. Then
it gradually decreased in the next immediate 2 years. But in the last year the interest
coverage ratio ramped up to 5.26. this indicates that the company faces less financial
expense ( interest ) In all the last 5 years.
69
CORRELATION
70
CORRELATION
Correlation between sets of data is a measure of how well they are related. The
most common measure of correlation in stats is the Pearson Correlation. The full
name is the Pearson Product Moment Correlation (PPMC). It shows the linear
relationship between two sets of data.
Correlation coefficients are used to measure how strong a relationship is

between two variables. There are several types of correlation coefficient, but the
most popular is Pearson’s. Pearson’s correlation (also called Pearson’s R) is
a correlation coefficient commonly used in linear regression.
A positive correlation is a relationship between two variables in which both

variables move in the same direction. Therefore, when one variable increases as the
other variable increases, or one variable decreases while the other decreases. An
example of positive correlation would be height and weight. Taller people tend to be
heavier.
A negative correlation is a relationship between two variables in which an

increase in one variable is associated with a decrease in the other. An example of
negative correlation would be height above sea level and temperature. As you climb
the mountain (increase in height) it gets colder (decrease in temperature).
Advantages of correlation analysis
 Awareness of the behavior between two variables: A correlation helps to identify

the absence or presence of a relationship between two variables. It tends to be
more relevant to everyday life.
 A good starting point for research: It proves to be a good starting point when a
researcher starts investigating relationships for the first time.
 Uses for further studies: Researchers can identify the direction and strength of
the relationship between two variables and later narrow the findings down in
later studies.

71
value = RELATIONSHIP
+.70 or higher Very strong positive relationship
+.40 to +.69 Strong positive relationship
+.30 to +.39 Moderate positive relationship
+.20 to +.29 weak positive relationship
+.01 to +.19 No or negligible relationship
0 No relationship [zero correlation]
-.01 to -.19 No or negligible relationship
-.20 to -.29 weak negative relationship
-.30 to -.39 Moderate negative relationship
-.40 to -.69 Strong negative relationship
-.70 or higher Very strong negative relationship
72
CURRENT QUICK DEBT PROPRIETARY INVENTORY ASSET INTEREST
RATIO RATIO EQUITY RATIO TURNOVER TURNOVER COVERAGE
CURRENT
RATIO
1
QUICK RATIO 0.993 1
DEBT EQUITY
RATIO
-0.881 -0.820 1
PROPRIETARY
RATIO 0.873 0.810 -0.997 1
INVENTORY
TURNOVER
0.773 0.727 -0.794 0.831 1
ASSET
TURNOVER 0.088 -0.012 -0.521 0.506 0.094 1
RATIO
INTEREST
COVERAGE -0.215 -0.325 -0.239 0.274 0.263 0.708 1
RATIO
TABLE 13
SHARE
GROSS NET AVERAGE
NET SALES HOLDER'S
PROFIT PROFIT INVENTORY
EQUITY
NET SALES 1
GROSS
0.999 1
PROFIT
NET
0.999 0.999 1
PROFIT
SHARE
HOLDER'S 0.999 0.999 0.999 1
EQUITY
AVERAGE
0.989 0.98 0.991 0.992 1
INVENTORY
TABLE 14
73
INTERPRETATION OF CORRELATION
 There is a very strong relationship between current ratio and quick ratio. The
correlation value lies near to 1 @ 0.993
 Debt equity ratio is equally related with current ratio and quick ratio at the
correlation level of 0.88
 In proprietary correlation it is positively correlated with current ratio and quick

ratio. But negatively correlated with debt equity ratio the level of -0.99
 The inventory turnover ratio is also negatively correlated with debt equity ratio
at the r value of 0.77
 Asset turnover ratio is positively correlated with the other ratios except
proprietary ratio and debt equity ratio with a negative r value
 HIGHEST POSITIVE RELATION
Current ratio and quick ratio
 HIGHEST NEGATIVE RELATION
Proprietary ratio and debt equity ratio
74
TREND ANALYSIS
75
TREND ANALYSIS
Trend analysis is an analysis of the trend of the company by comparing its

financial statements to analyze the trend of the market or analysis of the future
based on past performance results, and it’s an attempt to make the best decisions
based on the results of the analysis done.
Trend analysis involves collecting the information from multiple periods and
plotting the collected information on a horizontal line to find actionable patterns
from the given information. In Finance, Trend Analysis is used for Technical
analysis and Accounting analysis of stocks.
1 – UPTREND
An uptrend or bull market is when financial markets and assets – as with the
broader economy-level – move upward and keep increasing prices of the stock or
the assets or even the size of the economy over the period. It is a booming time
where jobs get created, the economy moves into a positive market, sentiments in
the markets are favorable, and the investment cycle has started.
2 – DOWNTREND
Companies shut down their operation or shrank the production due to a

slump in sales. A downtrend or bear market is when financial markets and asset
prices – as with the broader economy-level – move downward, and prices of the
stock or the assets or even the size of the economy keep decreasing over time. Jobs
are lost, asset prices start declining, sentiment in the market is not favorable for
further investment, and investors run for the haven of the investment.
Trend analysis also involves finding patterns occurring over time, like a cup
and handle pattern, head and shoulder pattern. The head and shoulders (H&S)
pattern are one of the most widely used chart patterns by traders in the stocks and
Forex markets. Traders can identify the pattern from the three tops that form, with
the middle indicating the highest price trend and the end of an uptrend.
76
The trend is a friend, is a well-known quote in the trader’s fraternity. The
trader makes a good profit by following the trend, and trend analysis is not an easy
task. It required eyes on details and an understanding of the market dynamics
Market. Dynamics Market Dynamics is defined as the forces of market constituents
responsible for the shift in the demand and supply curve and are therefore
accountable for creating and reducing the demand and supply of a particular
product.
The trend analysis in accounting can be used by management or the analyst

to forecast future financial statements. Following blindly can be dangerous if a
proper analysis of the past event is not done.
PERCENT CHANGE = (CURRENT YEAR AMOUNT – BASE YEAR

AMOUNT) /BASE YEAR AMOUNT
BENEFITS OF TREND ANALYSIS
 MEASURE FINANCIAL PERFORMANCE
Using trend analysis methods to measure the financial performance of your

organization over a specific period of time can help you make better decisions
regarding the future of the company. If you spot any issues or potential concerns
regarding the future financial health of your business, you can alter your
company’s processes to head them off at the source.
 ENABLE COMPARISON
One of the other key trend analysis benefits is the ability to chart a comparison
between your business and a competitor, while you could also compare your
company’s performance to the industry standard. This can help you assess your
firm’s weaknesses and strengths, identify gaps, and implement changes to make
your company a more viable proposition in the future.
 ANALYZE LIQUIDITY AND PROFITABILITY
Trend analysis can help you understand your company’s short-term liquidity
position, while it may also help you to measure the long-term solvency of the
business. In addition, you can use trend analysis of financial statements to measure
your company’s profitability over a certain period of time.
77
TREND ANALYSIS OF GROSS PROFIT FOR UPCOMING 5 YEARS
In thousands
YEAR GROSS PROFT
2017 983,490
2018 916,813
2019 903,510
2020 859,997
2021 846,074
2022 802482.4
2023 769317.6
2024 736152.8
2025 702988
2026 669823.2
TABLE 15.1
1200000
GROSS PROFIT TRENDLINE
983,490 y = -33165x + 1E+06
1000000 903,510 846,074 769317.6
800000 736152.8
916,813 669823.2
859,997 802482.4
600000
702988.0
400000
200000
0
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
CHART 15.2
INTERPRETATION
The above trend line indicates clear that, the company is facing an absolute
downward trend line. The average gross profit down is at 3,31,64.8 per year. This
downward trend line should be eradicated so that the company has to increase the net
sales and also reduce direct costs towards sale of goods.
78
TREND ANALYSIS OF NET PROFIT FOR UPCOMING 5 YEARS
In thousands
YEAR NET PROFT

2017 595,743
2018 53,245
2019 72,453
2020 6,344
2021 1,287
2022 -224929.5
2023 -348510.8
2024 -472092.1
2025 -595673.4
2026 -719254.7
TABLE 16.1
Net Profit trendline

800000 595,743
y = -123581x + 516558
600000
400000
200000 72,453
53,245 6,344 1,287
0
-200000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
-400000 -472092.1
-224929.5
-348510.8
-600000 -719254.7
-800000 -595673.4
CHART 16.2
INTERPRETATION
The above trend line indicates clear that, the company is facing an downward
trend line of net profit. The company’s net profit downed to 53,245 from 5,95,743. That
is huge dip in the net profit of the company. This explained after all gross and direct
expenses, the company cant able to meet out its administration expenses and financial
expenses.
79
TREND ANALYSIS OF RETURN ON ASSET FOR UPCOMING 5 YEARS
In thousands
YEAR RETURN ON ASSET

2017 7.759569439
2018 0.742070631
2019 1.021362077
2020 0.083533048
2021 0.016666817
2022 -2.919
2023 -4.534
2024 -6.148
2025 -7.763
2026 -9.377
TABLE 17.1
RETURN ON ASSET TRENDLINE

15
y = -1.6145x + 6.7677
10 7.759
5 1.021 0.083
0.742 0.016
0
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
-5 -2.919
-4.534 -6.148 -9.377
-10
-7.763
-15
CHART 17.2
INTERPRETATION
The above trend line clearly indicates the return on asset has an downward
trendline. In 2017 the company had an return on asset at 7.7%. Then it dipped to largest
extent and ended at 0.72%. Then above a slight increase in 2019, from year 2020, the
company is facing a downward line and in 2021 it reached least to less than one percent.
80
TREND ANALYSIS OF WORKING CAPITAL FOR UPCOMING 5 YEARS
In thousands
YEAR WORKING CAPITAL
2017 1,054,531
2018 855,122
2019 779,150
2020 475,400
2021 450,710
2022 246773.4
2023 88037.0
2024 -70699.4
2025 -229435.8
2026 -388172.2
TABLE 18.1
WORKING CAPITAL TRENDLINE

1200000 1,054,531
1000000 779,150 y = -158736x +
1E+06
800000
855,122
600000 450,710
88037.0
400000
200000 475,400 246773.4
-70699.4
0
-200000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
-400000
-229435.8
-600000 -388172.2
CHART 18.2
INTERPRETATION
The above trend line indicates the future trend line on working capital. The past
year has an downward trend till 2021 with the capital 4,50,710. As predicting future, the
past data is considered to the most extent.
81
TREND ANALYSIS OF DEBT EQUITY RATIO FOR UPCOMING 5 YEARS
In thousands
YEAR DEBT EQUITY RATIO
2017 2.66
2018 2.49
2019 2.82
2020 3.81
2021 4.04
2022 4.4
2023 4.8
2024 5.2
2025 5.6
2026 6.0
TABLE 19.1
DEBT EQUITY RATIO TRENDLINE

10
9
y = 0.4086x + 1.938
8
7
6 4.8 5.2
6.0
5
4.04
4 2.842.4
2.66 3.81 5.6
3
2
2.49
1
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
CHART 19.2
INTERPRETATION
The above trend line gives a view on the debt equity ratio for the company
towards upcoming 5 years. Since the last 5 year data tells that there is an increase in debt
equity ratio arrived at 4.04% in 2021. The trend analysis predicts that the debt equity
ratio will be 5.6% in 2025 and 6.0% in 2026.
82
COMPARATIVE
STATEMENTS
83
COMPARITIVE TABLE 20 (€ million )
BASIS VALMET VOITH
Net sales 3935 4260.35
Cost of goods sold 2943 1516.00
Gross profit 992 846.07
Other operating income 33 342.83
Other operating expenses -33 -929.88
Operating profit 399 89.1

Profit before taxes 395 80.09
Income taxes, total -99 -73.57
Profit for the period 296 1.28
Total non-current assets 2057 2271.02
Total current assets 2363 2842.51
Total inventories 662 681.44
Total assets 4420 5113.54
Total equity 1332 1014.77
Total non-current liabilities 520 1706.95
Total current liabilities 2569 2391.80
Total equity and liabilities 4420 5113.54
84
SALES (€ million )
3935
VALMET
4260.35 VOITH
C - CHART 1
GROSS PROFIT (€ million )
846.07 VALMET
992 VOITH
C - CHART 2
85
OPERATING PROFIT (€ million )
450
400
350
300
250
200 OPERATING PROFIT
150
100
50
0
VALMET VOITH
C - CHART 3
INCOME TAX (€ million )
73.57 VOITH
Income taxes,
99 VALMET
-120 -100 -80 -60 -40 -20 0
C - CHART 4
86
PROFIT FOR THE PERIOD 2021
350 million )
296
300
250
200
Profit for the period

150 2021
100
50
1.28
0
VALMET VOITH
C - CHART 5
TOTAL EQUITY AND LIABILITIES & TOTAL

ASSETS (€ million )
4420 5113.54
100%
80%
Total equity and

60%
liabilities & Total
assets
40%
20%
0%
VALMET VOITH
C - CHART 8
87
CURRENT LIABILITIES (€ million )
2569
2600
2550
2500
2391.8 current liabilities
2450
2400
2350
2300
VALMET VOITH
C - CHART 7
CURRENT ASSETS (€ million )
VALMET 2842.51
current assets
VOITH 2363
0 500 1000 1500 2000 2500 3000
C - CHART 8
88
OPERATING LEVERAGE
&
FINANCIAL LEVERAGE
89
OPERATING LEVERAGE
Operating Leverage can be defined as the capability of the firm to use its fixed
expenses to generate better returns.
VARIABLE COSTS
As opposed to fixed costs, variable costs vary with the number of units produced.
In other words, they are directly proportionally with units produced. E.g., Raw
materials consumed to produce the finished product. Say the company is in the
business of assembling a mobile phone, and the battery is a raw material for the
company. In this case, the cost of batteries consumed will be a variable cost for the
company as the volume is dependent directly on the volume of the total production
of mobile phones in a given period.
Operating leverage measures the company’s fixed costs as a percentage of its total
costs. Therefore, a company with a higher fixed cost will have higher leverage than
a higher variable cost.
Lower operating leverage – This implies lower fixed costs and higher variable
costs. In this case, a company has to achieve minimum sales, covering its fixed
costs. Once it crosses the break-even point where all its fixed costs are covered, it
can earn once it crosses the break-even point where all its fixed costs are covered, it
can earn incremental profit in terms of Selling Price minus the Variable Cost, which
will not be very substantial as the variable costs are high. When the operating
leverage is low and fixed costs are lower, we can safely conclude that the break-
even units a company needs to sell to suffer a no loss & no profit equation will be
comparatively lower.
Higher operating leverage – This implies lower variable costs and higher fixed
costs. Here, as the fixed costs are higher, the break-even point will be higher.
Operating Leverage Formula = SALES – VC (VARIABLE COSTS) / EBIT
90
In thousands
2021 2020 2019 2018 2017
SALES - VC 8,46,074 8,59,997 9,03,510 9,16,813 9,83,490
EBIT 1,65,000 1,39,000 2,15,000 1,93,000 2,41,000
OPERATING
5.128 times 6.187 times 4.202 times 4.750 times 4.081 times
LEVERAGE
TABLE 21.1
OPERATING LEVERAGE
7
6.187
6
5 5.128 4.75
4 4.081
4.202
3
0
2021 2020 2019 2018 2017
CHART 21.2
INTERPRETATION
From the above table and calculation, the operating leverage of voith
Group can be said it is downward trend in the last 2 years. In the year 2018, the
company faced an upward trend comparing with the last year. The trend dips at the
immediate next year to 4.2. In the year 2020, operating leverage reached its 5 year
high at 6.1 times. Then in the year 2021, operating leverage dips around 1 time and
reached 5.1 times.
91
FINANCIAL LEVERAGE
Financial leverage is the use of debt to buy more assets. Leverage is

employed to increase the return on equity. However, an excessive amount of
financial leverage increases the risk of failure, since it becomes more difficult to
repay debt.
The financial leverage formula is measured as the ratio of total debt to total
assets. As the proportion of debt to assets increases, so too does the amount of
financial leverage. Financial leverage is favorable when the uses to which debt
can be put generate returns greater than the interest expense associated with the
debt. Many companies use financial leverage rather than acquiring more equity
capital, which could reduce the earnings per share of existing shareholders.
When the leverage value is higher, the company relies more on debt than on
equity. High leverage makes lenders offer loans at a higher interest rate. As a result,
the interest expenses of a company increase, negatively affecting its finances.
However, the value should also not be too low as it would mean the company’s
reliability on equity for raising funds. In scenarios where equity is more, the effect is
adverse on the earnings per share (EPS).
FINANCIAL LEVERAGE FORMULA = EBIT / EBT
Financial leverage is important as it creates opportunities for investors. That

opportunity comes with risk, and it is often advised that new investors get a strong
understanding of what leverage is and what potential downsides are before entering
levered positions. Financial leverage can be used strategically to position a
portfolio to capitalize on winners and suffer even more when investments turn sour.
92
In thousands
2021 2020 2019 2018 2017
EBIT 1,65,000 1,39,000 2,15,000 1,93,000 2,41,000
PBT 80,094 73,169 1,46,551 1,51,836 6,82,400
FINANCIAL
2.06 times 1.89 times 1.46 times 1.27 times 0.35 times
LEVERAGE
TABLE 22.1
FINANCIAL LEVERAGE
2.5
2
1.89
2.06
1.5
1.27
1.46
1
0.5
0.35
0
2021 2020 2019 2018 2017
CHART 22.2
INTERPRETATION
From the above table and graph, financial leverage is clearly increasing
from the year 2017. The company uses funds well and it is financial freedom is
high. It can also be said as the interest is reducing and there is no effect in the profit
after tax.
93
OPERATING FINANCIAL
CATEGORY LEVERAGE LEVERAGE
Involves borrowing
Involves the use of fixed
money to build capital
Meaning cost assets in the
that makes businesses
company’s operation
pay interests
Risk Involves business risk Involves financial risk
Relationship Sales and EBIT EBIT and EPS
More as the cost of

Preferred Less
borrowing is less
94
FINDINGS
SUGGESTION &
CONCLUSION
95
FINDINGS
 The company has maintained current ratio between 1.5 - 1. From the above stated
criteria the current ratios fall below the standard measures of 2:1. The current ratio
tends to fall in the previous five years steadily.
 When it comes to year 2020 & 2021, the quick ratio is below 1. It can be interpreted
that the company faced some issues in facing its short term cash requirements. As
similar to current ratio, quick ratio of the company is also in the downward trend.
 As the company facing a high debt equity ratio compared to last 4 years with
upward trend line from last 4 years. The company uses more debt finance than their
equity. So the company has to face high financial expense which affects the net
profit. But the other operating income source lifts the net profit form loss.
 The company had facing some shortage in working capital in nearby last 2 years. The
company might face some trouble in dealing its short term requirements. Working
capital is needed for every manufacturing company to run its prime capital. In this
case the working capital of the company declines in the past 5 years.
 Proprietary ratio indicates the relation between the owners fund towards the assets
of the company. In this case the company’s assets are seemed to be financed mostly
by debt capital. The ratio declined to 0.19 in 2021, indicates that only 19% of the
assets are financed with the equity, and remaining 81% of the assets are outsourced.
 Even the gross profit margin has a downward straight trend line. The main revenue
of the company is from sale of goods. The sale value affected, which resulted in
decrease in the gross profit of the company. The company earns ideal return on the
goods they sold and with reduced cost of goods sold (cogs).
96
 Since net profit and gross profit are positively related to the maximum, when one
decreases another decreases significantly. Net profit refers to the original profit of
the company after all its operating and financial obligations. There is a huge drop in
the net profits of the company. The least profit margin of 0.029% recorded in 2021.
 The company used its inventory effectively at 2018 with the highest value at 3.9,
followed by 2020 and 2021 with 3.7 and 3.7 respectively.
 Operating profit of the company also seems to be decreasing trend. Since there is a
decline in the gross profit of the company, it has an strong impact on its dependents,
such as net profit and operating profit. There is a huge decline of operating profit in
the year 2020, and then in the immediate next year, it tends to increase slightly.
 As same as operating profit there is a decline in the asset turnover ratio of the
company from the year 2017 -2019. But thereafter, there is a increase in this ratio in
the year 2021. This ratio indicates the relation of sales towards the assets used for
the manufacturing.
 The interest coverage also seems to be increasing in the past 2 years. Before that
there is a decline in the interest ratio, which indicates that the company had an
strong control over the financial expenses.
 Correlation results indicate there is an highly positive relation between the current
ratio and quick ratio. When one increases, the other increases. When one decreases,
the other decreases. Similar to that there is an strong negative relation between the
proprietary ratio and debt equity ratio.
 Trend results indicate that gross profit ratio, net profit ratio, working capital ratio,
return on asset ratio are falling and by the year 2017 some of the ratio even have the
chances of reaching negative.
97
 There is an upward trend in the debt equity ratio, which indicates that if this
situation is not controlled by the management by reducing debt capital, the debt of
the company tends to raise at huge level in the future which also results in high
finance costs.
 Comparative charts interprets that sales of the company are similar and the various
stages of profit also seems to be same. But at the end result of net profit compared to
VALMET, VOITH earns lower net profit due to merger acquisition in the previous
year. Such expenses are quoted in the statement of profit or loss as the other
expenses which majorly affected the net profit.
 Operating leverage of VOITH group are considered higher. The cost of materials
used for production ( COGS ) are compared to the total sales. So that there is an
strong operating leverage. The factor of operating leverage includes all direct
expenses incurred in the production of goods.
 Financial leverage of the company seems to be lower compared to its operating
leverage. There is an financial leverage of 2 times, which is considered low. This
financial leverage indicates the company’s relation towards its financial
commitments. The factor there is an huge debt capital, the cost of such capital paid
( INTEREST ) will have the impact on the net profit.
98
SUGGESTIONS
 Voith GmBh and valmet have similar amount of sales. Voith has larger
amount of operating expenses compared to valmet and co. The financials of
the company Valmet indicates that, there is a strong control over interest and
other financial obligations. So VOITH company should have control over
their financial obligations.
 Voith has to reduce their operating expenses by reducing administration and

other transportation expenses. Operating expenses are in higher volume as
the company is operating in various companies. This includes cost of
transport to increase at higher level. The disruption in the global logistics
during the COVID had an strong operating cost increase.
 As it is a multinational company, the administration and other expenses are

in higher amount. The company should find alternative way to reduce
expenses. There is an administrative level action in the year 2019. The
company involved in the activity of merger and acquisition. To write off
immediate debt of the subsidiary company and to repair the assets of the
acquired company, such expenses are shown in the profit and loss statement
as other expenses and an note is given regarding that.
 There is huge amount of debt capital, as it is an family owned business, the

company is restricted in purchasing equity shares, in order to be debt free,
the debt liability should be reduced to gain creditability. The cost of debt
capital is paid irrespective to profit or loss. Even if there is no profit the
99
company has to meet its cost of debt capital. So there is strong financial
obligation every year which has an strong impact on the total net profit of
the company.
 Company”s asset is not used to the almost extent towards production, the
asset turnover ratio indicates such inefficiency. Asset allocation and
administration must be considered. When assets are used inefficient the cost
of implemented capital in the assets are considered to be less efficient. The
resources employed in the business must be used to its larger extent so that it
regarding its capital employed it can meet its financial obligations.
 As the world is developing towards digital economy, there will be

surge in paper demand. Therefore the company should focus on
developing its portfolio. The company involved in mostly producing
capital goods. The company meets its demand from the arising countries
with its partner companies in the respective countries. This results in high
decrease in the operating cost of export and other tax costs.
100
CONCLUSION
As we continue to weather the pandemic, many industries are finding ways
to work through the upheaval of previously predictable markets. Little by little,
consumption is back on the upswing. More buying is happening online. The price
of paper continues to fluctuate globally. The low supply of recycled raw material
had increased the costs for paper companies to produce their wares and availability
of the raw material continues to be unreliable.The COVID-19 pandemic is posing
serious challenges to the pulp and paper industry due to its disruption to global
industrial supply chains. However, it has potential to create positive demand for a
variety of paper products such as personal hygiene paper products, food packaging
products, corrugated packaging materials, and medical specialty papers. Thus,
traditional pulp and paper manufacturing operations are expected to be
transformed, upgraded, and integrated to reduce the risks associated with this
pandemic. In addition, the bio refinery process may open an opportunity for the
traditional pulp and paper industry.
The pulp and paper industry comprises companies that use basic raw
materials (e.g. wood) to produce pulp, paper, paperboard, and various cellulose-
based products. Such activities are closely related to the development of the global
economy and the construction of social civilization (NPCS Board of Consultants &
Engineers 2017). According to the official data, annual global paper and board
production and consumption capacities have reached 419.7 million metric tons and
423.3 million metric tons 2020, 2021 respectively. The digitalization of world
economies and disruption to global industrial supply chains made such companies
making profit from papers to attain loss. They should involve in diversification
of their business portfolio with new innovation and technology.
101
BIBLIOGRAPHY
102
Kakani Ramachandhran (2019) Financial statement
Raghu Palat (2020) Fudamental and statement analysis
Jagadish R. Raiyani (2019) Financial Ratios and Financial Statement Analysis –
P. MOHANA RAO (2017) FINANCIAL STATEMENT ANALYSIS AND REPORTING
M.Y.Khan, P.K.Jain (2014) Financial management
ONLINE SOURCES
www.investing.com
www.economictimes.com
www.economictimes.indiantimes.com
www.businessline.com
www.monetarycontrol.com
www.etmoney.com
www.mothilaloswal.com
www.voith.com.annualreports
www.valmet.annualreports
https://www.statista.com/topics/1701/paper-industry
NPCS Board of Consultants & Engineers (2017) “Manufacture of Thinners & Solvents
(Properties, Uses, Production, Formulation with Machinery Details),”
Statistics (2019) “Paper Industry – Statistics & Facts,” M. Garside Publisher
Worldometers (2020) “COVID-19 corona virus pandemic,” Retrieved: April 7,

2020. URL: https://www.worldometers.info/coronavirus
103
ANNEXURE
104
2021 2020 2019 2018 2017
Sales 4,260,350 4,173,101 4,276,490 4,209,057 4,223,248
Changes in
inventories 79,516 16,107 8,322 42,275 18,469
NET SALES 4,339,866 4,189,208 4,284,812 4,251,332 4,241,717

Cost of materials -1,977,789 -1,827,750 -1,901,813 -1,887,634 -1,842,819
Personnel expenses -1,516,003 -1,501,461 -1,479,489 -1,446,885 -1,415,408
COGS (direct
expenses ) -3493792 -3329211 -3381302 -3334519 -3258227
GROSS PROFIT 846074 859997 903510 916813 983490
Other operating
income 342,839 377,528 396,243 391,131 400,918
Depreciation and
amortization -169,863 -167,886 -119,271 -120,602 -129,588
Other operating
expenses -929,887 -1,008,093 -1,006,146 -1,017,569 -1,042,001
non recurring result -21,899 -32,167

OPERATIONAL
RESULT 89,163 61,546 174,336 147,874 180,652
Share of profit/loss
from companies
accounted for usingthe -6,470 -7,799 -6,512 1,610 7,592
equity method
Gains/losses from
associated 562,575
companies
Interest income 9,675 28,460 12,316 8,660 17,819
Interest expenses -31,331 -28,138 -38,732 -25,327 -76,408
Other financial
result 19,057 19,100 5,143 19,019 -9,830
Result before taxes
from continuing 80,094 73,169 146,551 151,836 682,400
operations
INCOME TAXES -73,577 -60,262 -57,383 -66,690 -82,306
Net result from 6,517 12,907 89,168 85,146 600,094

continuing operations
Net result from

discontinued -5,230 -6,563 -16,715 -31,901 -4,351
operations
NET RESULT 1,287 6,344 72,453 53,245 595,743

· Net result
attributable to
shareholders of the -9,059 -3,157 70,711 45,015 590,171
parent company
· Net result
attributable to 10,346 9,501 1,742 8,230 5,572
holders of non-
controlling interests
Consolidated Balance sheet of Voith GmbH, as on September 30 2017 to 2021
€ in
thousands
ASSETS 2021 2020 2019 2018 2017
Current assets
I. Inventories 681,444 591,912 599,297 603,516 547,825

II. Trade receivables 744,140 674,797 657,084 687,984 713,899
III. Receivables from customer-specific contracts 573,952 539,446 541,204 346,729 323,929
I V. Securities 51,337 122,693 355,757 617,974 601,812
V. Current income tax assets 33,996 33,524 50,045 49,945 52,263
VI. Other financial receivables 95,127 119,913 116,715 93,168 101,289
VII. Other assets 138,854 146,819 146,398 116,227 110,544
VIII. Cash and cash equivalents 511,165 581,766 417,874 341,691 581,947
IX. Assets held for sale 12,503 6,024 28,597 23,411 15,845
Total current assets 2,842,518 2,816,894 2,912,971 2,880,645 3,049,353
Non-current assets
I. Intangible assets 975,224 986,805 532,813 520,600 515,676

II. Property, plant and equipment 1,019,772 1,028,065 923,832 898,764 978,459
III. Investments accounted using equity method 48,758 21,222 25,658 21,920 32,006
I V. Securities 12,779 11,945 12,181 11,687 11,734
V. Other financial assets 55,622 50,966 60,065 92,008 105,954
VI. Other financial receivables 47,913 41,657 52,804 61,907 89,411
VII. Other assets 18,544 14,453 16,580 15,939 10,749
VIII. Deferred tax assets 92,410 244,774 218,732 172,783 204,538
Total non-current assets 2,271,022 2,399,887 1,842,665 1,795,608 1,948,527
Total assets 5,113,540 5,216,781 4,755,636 4,676,253 4,997,880

€ in
thousands
Equity and liabilities 2021 2020 2019 2018 2017
Equity
I. Issued capital 120,000 120,000 120,000 120,000 120,000

II. Revenue reserves 925,988 1,040,815 1,086,916 1,169,964 1,138,763
III. Other reserves (181,385) (224,617) (109,446) (96,047) (37,664)
IV. Profit participation rights 6,600 6,600 6,600 6,600 6,600
Equity to shareholders of the parent company 871,203 942,798 1,104,070 1,200,517 1,227,699
V. Profit participation rights 96,800 96,800 96,800 96,800 96,800

VI. Other interests 46,774 43,871 44,190 43,002 41,425
Equity attributable to non-controlling interests 143,574 140,671 140,990 139,802 138,225
Total equity 1,014,777 1,083,469 1,245,060 1,340,319 1,365,924
Current liabilities
I. Provisions for pensions & similar obligations 33,180 32,904 32,499 30,857 29,319
II. Other provisions 287,411 283,060 250,600 278,575 343,082
III. Income tax liabilities 37,185 38,994 19,860 24,450 46,968
IV. Bonds, bank loans interest-bearing liabilities 155,061 243,011 109,096 125,779 82,516
V. Trade payables 569,575 537,532 531,647 510,585 509,741
VI. Liabilities from customer-specific contracts 938,859 845,256 816,919 93,720 45,623
VII. Other financial liabilities 233,490 216,919 247,898 230,509 234,080
VIII. Other liabilities 137,047 142,310 123,755 730,156 703,493
IX. Liabilities directly associated with the 0 1,508 1,547 892 0
assets classified as held for sale
Total current liabilities 2,391,808 2,341,494 2,133,821 2,025,523 1,994,822
Non-current liabilities
I. Provisions for pensions and similar obligations 799,529 825,733 835,049 713,432 747,282
II. Other provisions 139,651 139,823 130,383 156,355 190,611
III. Income tax liabilities 99 (87) (100) 254 277
IV. Bonds, bank loans interest-bearing liabilities 632,548 665,036 290,357 325,284 551,363
V. Other financial liabilities 36,194 36,992 29,747 26,678 35,635
VI. Other liabilities 45,417 42,097 46,364 48,269 58,222
VII. Deferred tax liabilities 53,517 82,224 44,955 40,139 53,744
Total non-current liabilities 1,706,955 1,791,818 1,376,755 1,310,411 1,637,134
Total equity and liabilities 5,113,540 5,216,781 4,755,636 4,676,253 4,997,880

CALCULATION OF FINANCIAL AND OPERATING LEVERAGE USING THE INCOME STATEMENT
€ in
thousands
2021 2020 2019 2018 2017
sales 43,39,866 41,89,208 42,84,812 42,51,332 42,41,717
variable cost -34,93,792 -33,29,211 -33,81,302 -33,34,519 -32,58,227
Adjusted gross 8,46,074 8,59,997 9,03,510 9,16,813 9,83,490
Ebit adjusted 165000 139000 215000 193000 241000
Result before
taxes from
80,094 73,169 1,46,551 1,51,836 6,82,400
continuing
operations
Income taxes -73,577 -60,262 -57,383 -66,690 -82,306
Net result from

continuing 6,517 12,907 89,168 85,146 6,00,094
operations
Net result from

discontinued -5,230 -6,563 -16,715 -31,901 -4,351
operations
Net result 1,287 6,344 72,453 53,245 5,95,743
Note :
The company adjusted its EBIT for better assessments in their operation. For a brief understanding
refer the context provided by VOITH GmBh in their annual report 2021.
Source : Voith annual report 2021

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A STUDY ON FINANCIAL STATEMENTS AND FINANCIAL

PERFORMANCE ANALYSIS OF VOITH GmBh

Under the Guidance of

BHARATHIAR SCHOOL OF MANAGEMENT AND

PROJECT REPORT CERTIFICATE

This is to certify that the project entitled

A STUDY ON FINANCIAL STATEMENTS AND FINANCIAL

Submitted for Viva – Voice Examination held on..............................

I, SURYA C L hereby declare that the project entitled “A STUDY ON

FINANCIAL STATEMENTS AND FINANCIAL PERFORMANCE

TABLE 2.1 QUICK RATIO TABLE 49

NET PROFIT MARGIN

TABLE OPERATING PROFIT

NET PROFIT TABLE

CHART QUICK RATIO

NET PROFIT TABLE

A financial analyst needs financial statements of companies to be able to identify

The symptoms could be:

 External debt recovery period

 Increased volume of inventory

 Declining return on total assets

 Increasing operating expenses etc

- Identification of organizational performance through the use of analytical data.

- Identification of empirical relationships between operating results and those items

1.2 THEORETICAL CONCEPT

In this flexible and dynamic business environment financial performance analysis is a

According to Meigs and Meigs (2003), financial statements are a structured

complete set of financial statement comprises:

1) A statement of financial position as at the end of the period:

OBJECTIVE OF A FINANCIAL STATEMENT ANALYSIS

A. OWNERS AND MANAGERS:

G. MEDIA AND GENERAL PUBLIC:

3) STATEMENT OF CASH FLOWS

RELATIONSHIP AMONG THE STATEMENT OF FINANCIAL

POSITION, INCOME STATEMENT, STATEMENT OF CASH

FLOWSAND STATEMENT OF RETAINED EARNINGS.

 Provide a standard against which to quantify future execution.

 RACHCHH MINAXI (2012)

 JIGHYASU GAUR (2010)

 NEUMANN AND ROBERTS (2008)

 KRISHNA PRASAD UPADHYAY (2004)

 JONAS ELMERRAJI (2003)

 KAKANI ET AL. (2001)

 KENNEDY AND MULLER (1998)

 ATKINSON ET AL. (1997)

"The Impact of Budgets" S. Imprint, Management Accounting. This examination

 JAGANNADHA RAO (1991)

 SHAIKH SALMAN MASOOD (2020)

 P MOHAMMED BUHARI SALEEM (2020)

 DR SEEMA THAKUR (2019)

 BSR MURTHY (2018)

1.5 NEED FOR THE STUDY

1.6 OBJECTIVES OF THE STUDY

(i) To analyze the profitability of the VOITH GmBh group.

 NOT A SUBSTITUTE OF JUDGEMENT

 BASED ON HISTORICAL DATA

 DIFFERENT PROCEDURES OF ACCOUNTING AND FINANCING

 CHANGE IN ACCOUNTING METHODS

 LIMITATIONS OF THE TOOLS APPLICATION FOR ANALYSIS

 NO VALUATION OF MANAGERIAL ABILITY

 CHANGE OF BUSINESS SITUATION

Chapter 2: CONCEPTUAL BACKGROUND & LITERATURE REVIEW

Chapter 3: RESEARCH DESIGN

Chapter 4: ANALYSIS AND INTERPRETATION