RATIO ANALYSIS AS A TOOL OF FINANCIAL

ANALYSIS

A PROJECT SUBMITTED TO

University of Mumbai for partial completion of the degree

OF

Master Of Commerce

Under the faculty of

Commerce

BY

ANJALI RAMASHANKAR PRAJAJATI

Under the guidance of

PREETI MATHARU

VIVEKNAND EDUCATION SOCIETY’S COLLEGE OF ARTS,

SCIENCE & COMMERCE, (AUTONOMOUS)

SINDHI SOCIETY, CHEMBUR MUMBAI -400071

SEPTEMBER 2022
 Vivekanand Education Society College of Arts,
Science and Commerce, (Autonomous)
Sindhi Society, Chembur Mumbai-71

CERTIFICATE

This is to certify that Ms. ANJALI RAMASHANKAR PARAJAPATI of

M.COM (Management) has worked and duly completed his project work titled

“RATIO ANALYSIS AS A TOOL OF FINANCIAL ANALYSIS’’. During the

academic year 2022-2023 under the guidance of the PREETI MATHARU

submitted on 24th September 2022 to this college fulfilment of the curriculum of

Master Of Commerce (Management) university of Mumbai

This is a bonafide project work and the information present is

true and original to the best of our knowledge and belief.

Internal Examiner External Examiner

Course Coordinator Principal

 DECLARATION

I the undersigned Ms. ANJALI RAMASHANKAR PARAJAPATI here by,

declare that the work embodied in this project work titled “RATIO ANALYSIS
AS A TOOL OF FINANCIAL ANALYSIS’’ forms my own contribution to
the research work carried out under the guidance of PREETI MATHARU is a
result of my own research and has not been previously submitted to any other
University for any other Degree/Diploma to this or any other university.
Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography
I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical conduct.

ANJALI
PRAJAPTI
ROLL NO:27

Certified by

PREETI MATHARU
 ACKNOWLEDGMENT

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me
chance to do this project.
I would like to thank my Principal Dr. Anita Kanwar for providing the
necessary facilities required for completion of this project.
I take this opportunity to thank our In charge Coordinator DR. Varsha Ganatra
for her moral support and guidance.
I would also like to express my sincere gratitude towards my project guide
PREETI MATHARU whose guidance and acre made the project successful.
I would like to thank my college library, for having provided various reference
books and magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers
who supported me throughout my project.
 INDEX
Chapter Page
Numbers Title No

Chapter 1 Introduction 1-25

1.1 An Introduction to Financial Analysis 1-1
1.2 Meaning of Financial Analysis 1-1
1.3 Types of Financial Analysis 2-2
1.4 Usefulness of Financial Analysis 2-3
1.5 Key Elements of Financial Analysis 3-4
1.6 Meaning of Financial Statements 4-5
1.7 Objectives of Financial Statements 5-6
1.8 Users of Financial Statements 6-7
1.9 Disadvantages of Financial Statements 8-9
1.10 Major Financial Statements 9-13
1.11 About KPMG 13-24
1.12 Ratio Analysis 24-25

Chapter 2 Research Methodology 26-33

2.1 Research Methodology 26-27
2.2 Statement of the Problem 27-27
2.3 Objectives of the Study 27-28
2.4 Scope of the Study 28-29
2.5 Limitations of the Study 29-29
2.6 Significance of the Study 30-31
2.7 Research Design 29-30
2.8 Data Collection Methods 31-31
2.9 Sample Size 31-31
2.10 Hypothesis 32-32
2.11 Techniques and Tools to be used 33-33

Chapter 3 Review of Literature 34-39

Chapter 4 Data Analysis and Interpretation 40-76

Chapter 5 Conclusion and Findings 77-80

5.1 Findings 77-78
5.2 Suggestions 78-79
5.3 Conclusions 79-80

Bibliography 81-81
 LIST OF TABLES
Table Page
Numbers Table Name No

1 SWOT Analysis of KPMG 15

2 PESTEL Analysis of KPMG 16
3 Balance Sheet of KPMG 40
4 Statement of Income of KPMG 41
5 Statement of Cash Flow of KPMG 42
6 Statement of Equity of KPMG 43
7 Current Ratio 44
8 Quick Ratio 46
9 Cash Ratio 48
10 Operating Profit Ratio 50
11 Return on Capital Employed Ratio 52
12 Net Worth Ratio 54
13 Working Capital Turnover Ratio 56
14 Capital Turnover Ratio 58
15 Fixed Asset Turnover Ratio 60
16 Debt Equity Ratio 62
17 Proprietary Ratio 64
18 Debt Service Coverage Ratio 66
19 Interest Coverage Ratio 69
20 Current Assets to Fixed Assets Ratio 70
21 Debt to Assets Ratio 72
22 Equity Multiplier Ratio 75
23 Testing of Hypothesis 80
 LIST OF GRAPHS
Graph
Numbers Graph Name Page No

1 Current Ratio 45

2 Quick Ratio 47

3 Cash Ratio 49

4 Operating Profit Ratio 51

5 Return on Capital Employed Ratio 53

6 Net Worth Ratio 55

7 Working Capital Turnover Ratio 57

8 Capital Turnover Ratio 59

9 Fixed Asset Turnover Ratio 61

10 Debt Equity Ratio 63

11 Proprietary Ratio 65

12 Debt Service Coverage Ratio 67

13 Interest Coverage Ratio 69

14 Current Assets to Fixed Assets Ratio 71

15 Debt to Assets Ratio 73

16 Equity Multiplier Ratio 75

 CHAPTER 1. INTRODUCTION

1.1 AN INTRODUCTION TO FINANCIAL ANALYSIS:

Finance is the language of any business. Among the expertise necessary for understanding
and handling a business is proficiency in the language of finance, i.e. the capacity to be
able to read and comprehend financial information and also to be able to display data
through financial reports. The ability to be able to comprehend financial information is
critical for any business manager. The goals and aims of all businesses are established in
financial terms with their results also being gauged in financial terms. Finance also
incorporates examining the data enclosed inside financial statements with the aim to
facilitate valuable information to aid in management decisions. This makes financial
analysis one potent aspect of the overall role of finance. A company’s accounts and
statements contain a great deal of information. Exploring the full connotations enclosed
inside the statements lies at the heart of financial analysis.

1.2 MEANING OF FINANCIAL ANALYSIS:

Financial analysis is used to find financial stability, evaluate economic trends, financial
policymaking for the long term and the evaluation of businesses in order to determine its
profitability, sustainability and strength of earning potential. As the analysis of financial
reports also means an understanding of the functioning of business decision making which
includes observation, assessment, forecasting and all the processes that took place in any
organization, summarized within the financial statements. From the perspective of the
management, financial analysis is essential for the advancement of the company as it
sheds light on the strengths as well as weaknesses which in turn directly impact
competitiveness. There are many common ways to analyze financial data like calculating
ratios from financial statements and comparing these financial ratios to historical data of
organizations or other competitor companies.
1.3 TYPES OF FINANCIAL ANALYSIS:
There are two types of financial analysis:

Fundamental analysis and Technical analysis

1. Fundamental Analysis:
The fundamental analysis gives you the perspective of a company’s intrinsic value by
examining related economic and financial factors. It is a technique that gives you a better
conviction to identify companies for long term investment and create wealth. Analysts
prefer this technique to find stocks that are currently trading at undervalued or overvalued,
and then decide a fair market value of those stocks to help the investors in their investment
decisions. For example, if a stock is trading higher than its fair market value means the
stock is overvalued in the current market then the sell recommendation is given by the
analysts.

TYPES OF FUNDAMENTAL ANALYSIS:

 Qualitative analysis
 Quantitative analysis

2. Technical Analysis:
Technical analysts assume that prices of the stock are more likely to follow the past
trends rather price. Technical analysts use past data charts to analyze these emotions and
market fluctuations to better understand trends related to stock. Technical analysts
believe the fact that history will repeat itself and we can better understand the
opportunities to invest if we understand the past patterns or trends. However,
fundamental analysis and technical analysis both needed to make an effective market
strategy.

1.4 USEFULNESS OF FINANCIAL ANALYSIS:

1. Corporate financial analysis: This analysis is done by the company’s internal financial
analyst like the accounting department and then shared analysis reports to management to
make better decisions. This analysis includes ratios like Net present value (NPV) and
Internal rate of return (IRR).
2. Investment financial analysis: In this an external analyst analyses business for
investment purposes. Generally, analyst’s conduct two major approaches that are top-
down or bottom-up. In the top-down analysis, all the macroeconomic factors considered
before investing like which sectors have the potential to grow, then they come down to
the best companies in particular sectors for investment. In the bottom-up analysis,
analysts consider microeconomic approaches and start with specific companies and then
conduct ratio analysis the same as corporate financial analysis.

3. Credit Analysis: A credit manager can use it to examine the basic financial ratios of a
prospective customer to decide whether to extend the credit limit. Based on these
analyses he can determine whether to extend their credit limits or not.

4. Security Analysis: A security analyst uses it to help assess the investment value of
securities. Based on these analysis he can decide whether to invest in a particular security
or not.

5. Bankers and Lenders: For a banker, the tools of financial analysis aids in deciding to
sanction loans. Due to financial analysis, he can assess the profitability, liquidity or
solvency or a particular firm/ individual and then decide whether to sanction the loan or
not. Financial ratios have been used successfully to forecast such financial events such as
impending bankruptcy.

6. Unions: Unions refer to financial ratios when evaluating the bargaining positions of
certain employers.

7. Students and job hunters: Students and job hunters may perform financial analyses of
potential employers to determine career opportunities.

8. Government: Government uses financial analysis to determine profit as a basis for

taxation, grants and subsidies.

1.5 KEY ELEMENTS OF FINANCIAL ANALYSIS:

1. Revenues: Revenue is the money generated from normal business operations,

calculated as the average sales price times the number of units sold. It is a top line figure
from which costs are subtracted to determine net income. Revenue is also known as top
line because it appears first on a company’s income statement. It is also known as sales
on the income statement. Net income, also known as the bottom line, is revenues minus
expenses. There is a profit when revenues exceed expenses.

2. Profits: Profit is the money a business earns after accounting for all expenses. It is the
return investment that a business derives from the invested amount on the business.
Whether it’s a lemonade stand or a publicly-traded multinational company, the primary
goal of any business is to earn money; therefore a business performance is based on
profitability, in its various forms. It is also known as net income; net earnings, bottom
line, sales profit. Factors such as price, market trends, assets, obligations, costs etc can
affect the profit of the business.

3. Liquidity: Financial liquidity refers to how easily assets can be converted into cash.
Assets like stocks and bonds are very liquid since they can be converted to cash within
days. However, large assets such as property, plant and equipment are not as easily
converted into cash. For example, stocks and bonds are very liquid, but if you owned land
and needed to sell it, it may take weeks or months to liquidate it, making it less liquid.
Cash is the most liquid asset. Since stocks and bonds are extremely easy to convert to
cash, they’re often referred to as liquid assets. Investment assets that take longer to
convert to cash might include preferred or restricted shares, which usually have covenants
dictating how and when they can be sold.

1.6 MEANING OF FINANCIAL STATEMENTS:

Financial statements are written record that conveys the business activities and the
financial performance of a company. Financial statements are also called as ‘financial
reports’ are balances of different accounts in an effective meaningful order called the
Balance sheet and the Profit and Loss Account(Income statement) so that the information
contained therein can be easily understood, readily interpreted and used as bases for
business decision by the users of accounting information. The term financial statements
are used in modern accounting refers to two statements. These statements are the position
statement reflecting the assets, liabilities and capital of a business entity on a particular
date called the Balance Sheet and other called the Profit and Loss A/c showing the results
of the business operations during a given period. Financial statements are often audited
by government agencies, accountants, and firms etc to ensure accuracy and for tax,
financing or investing purposes. It is only at the end of all accounting processes that we
can generate these statements. These statements allow analysts to measure liquidity,
profitability, company-wide efficiency and cash flow. Financial statements are used by
different stakeholders including entity’s management, shareholders, investors, staff,
major customers, major suppliers, government authorities, stock exchanges and other
related stakeholders.

1.7 OBJECTIVES OF FINANCIAL STATEMENTS:

1. True and Fair view of financial position: Balance sheet shows the financial position of
the business i.e. it enlists the assets and liabilities. The difference between those
represents the net worth i.e. book value of the business. Decreasing in the net worth is a
bad indicator of growth. This gives the management various hints to improvise the
financial position. Financial position is presented for the current year and previous year.
Thus, the utmost objective of true and fairness is very essential here.

2. To provide information about resources: Another objective behind financial statements

is to provide information about the resources available with business i.e. production
capacity, labor hours, cash reserves, inventory, WIP percentage etc and its usage
parameters. This information helps in better understanding of the business as changes in
the utilization and acquisition of the resources helps the stakeholders to take financial
decisions.

3. To provide information about earning potential: Financial statements should also hint
about earning potential of the business. This information is for the top level management
of the organization. With the economic assets and liabilities, the management can decide
on the expansion levels. The three components of financial statements in together should
provide information about the earning capacity of the entity. Earning potential is also
linked with the utilization of available resources.
4. To form basis for decisions of the stakeholders: Stakeholders mean the owners,
directors, customers, suppliers, employees, workman, government, finance providers and
the public at large. Employees need to take decision whether to stay employed or not.
Suppliers need to think about whether to supply or not. Finance providers also have to
take decision whether it is feasible to give loans to the entity. Public needs to think
whether to invest in the entity or not. All such decisions are based primarily on the
financial statements.

5. To report on the effectiveness and efficiency of the management: Owners have no time
to attend the daily operations of the business and thus, they appoint the management to
look forward for the entity. The strong financials are the picture of the effectiveness and
efficiency with which the decisions are taken by the management. Effectiveness means
whether the purpose is served or not. Efficiency means whether the target is achieved in
reasonable time.

6. To increase the understandability of the end users: End users mean the owners, for
whom the financial statements are prepared. All the laws, regulations, accounting
standards, accounting framework, etc. are here to ensure the understandability of the end
users. Financial statements are summaries of the operations during the year and therefore
it is required to provide various disclosures to help the owners understand the statements
in a better manner. If the end users can arrive at correct decision with the help of financial
statements, this objective is achieved

1.8 USERS OF FINANCIAL STATEMENTS:

1. Corporate Managers and Executives: Financial statements provide sufficient
accounting information to executives and managers and allow them to take decisions
on important matters. They have to take decisions on efficient capital utilization,
maintaining the profit, cost control, dividend paying capacity of the company, credit
period allowed to debtors. These decisions can be taken properly after a proper
understanding of analysis of the financial statements.

2. Bankers: Bankers before advancing loan to the customers, wants to be assured of the
borrower’s ability to repay loans with interest. Therefore, they scrutinize and study
 financial statements in depth and analyze them to find out borrower’s liquidity,
solvency, and profitability.

3. Trade Creditors: Creditors before granting credit to the company would like to study
the financial strength of the company in terms of timely payment for goods supplied
to them on credit. They analyze the financial statements of the company alongside the
bank references to find their creditworthiness.

4. Shareholders: Shareholders have permanent interest in the life and operations of the
company. They want to know company’s financial strength, profitability, solvency,
liquidity. They are interested in future of the company.

5. Competitors: Entities competing against a business will attempt to gain access to its
financial statements, in order to evaluate its financial condition. The knowledge they
gain could alter their competitive strategies.

6. Customers: When a customer is considering which supplier to select for a major

contract, it wants to review their financial statements first, in order to judge the
financial ability of supplier to remain in the business long enough to provide the
goods or services mandated in the contract.

7. Employees: A company may elect to provide its financial statements to employees,

along with a detailed explanation of what the documents contain. This can be used to
increase the level of employee involvement in and understanding of the business.

8. Governments: A government in whose jurisdiction a company is located will request

financial statements in order to determine whether the business paid the appropriate
amount of taxes.
 1.9 DISAVANTAGES OF FINANCIAL STATEMENTS:
 Financial Statements are derived from historical costs:
Transactions are initially recorded at their cost. This is a concern when reviewing the
balance sheet, where the values of assets and liabilities may change over time. Some
items, such as marketable securities, are altered to match changes in their values, but
otheritems, such as fixed assets, do not change. Thus, the balance sheet could be
misleading if alarge part of the amount presented is based on historical costs.

 Financial statements only cover a specific period of time:

A user of financial statements can gain an incorrect view of the financial results or cash
flows of a business by only looking at one reporting period. Any one period may vary
from the normal operating results of a business, perhaps due to a sudden spike in salesor
seasonality effects.

 Financial statements may not be comparable:

If a user wants to compare the results of different companies, their financial statements
are not always comparable, because the entities use different accounting practices. These
issues can be located by examining the disclosures that accompany the financial
statements.

 Financial statements could be wrong due to fraud:

The management team of a company may deliberately skew the results presented. This
situation can arise when there is undue pressure to report excellent results.

 Financial statements do not cover non-financial issues:

The financial statements do not address non-financial issues, such as the environmental
attentiveness of a company’s operations, or how well it works with the local community.
A business reporting excellent financial results might be a failure in these other areas.
 Financial statements may not have been verified:
If the financial statements have not been audited, this means that no one has examined the
accounting policies, practices, and controls of the issuer that it has created accurate
financial statements is evidence of such a review.

 Financial statements have no predictive value:

The information in a set of financial statements provides information about either
historical results or the financial status of a business as of a specific date. The statements
do not necessarily provide any value in predicting what will happen in the future. For
example, a business could report excellent results in one month, and no sales at all in the
next month, because a contract on which it was relying has ended.

1.10. MAJOR FINANCIAL STATEMENTS:

Financial statements are compiled in a specific order because information from one
statement carries over to the next statement. They are prepared in the following order:

 The Trial Balance

 The Adjusted Trial Balance
 The Income statement
 The Balance Sheet
 Statement of Retained Earnings- Also called as Statement of Owner’s Equity
 The statement of Cash Flows

 Trial Balance:
A trial balance is a bookkeeping worksheet in which the balances of all ledgers are
compiled into debit and credit account column totals that are equal. A company prepares a
trial balance periodically, usually at the end of every reporting period. The general
purpose of producing a trial balance is to ensure the entries in a company’s bookkeeping
system are mathematically correct. At the end of an accounting period, the accounts of
asset, expense or loss should each have a debit balance, and the accounts of liability,
equity, revenue or gain should each have a credit balance.
 Adjusted trial balance:
An adjusted trial balance is a listing of the ending balances in all accounts after adjusting
entries have been prepared. Once all adjustments have been made, the adjusted trial
balance is essentially a summary- balance listing of all the accounts in the general ledger.
The adjusting entries are shown in a separate column, but in aggregate for each account
thus, it may be difficult to discern which specific journal entries impact each account. The
adjusted trial balance is not part of the financial statements.

 The income statement:

An income statement is one of the three important financial statements used for reporting
a company’s financial performance over a specific accounting period, with the other two
key statements of cash flows. Also known as the profit and loss statement or the statement
of revenue and expense, the income statement primarily focuses on the company’s
revenues and expenses during a particular period. The income statement focuses on four
key items- revenue, expenses, gains and losses. It does not differentiate between cash and
non-cash receipts or the cash versus non-cash payments. It starts with the details of sales ,
and then works down to compute the net income and eventually the earnings per share
(EPS). Essentially, it gives an account of how the net revenue realized by the company
gets transformed into net earnings (profit or loss).

The Net Income is calculated as:

Net Income = (Revenue + Gains) - (Expenses+ Losses)

 The Balance Sheet:

The term balance sheet refers to a financial statement that reports a company’s assets,
liabilities and shareholder equity at a specific point in time. Balance sheets provide the
basis for computing rates of return for investors and evaluating a company’s capital
structure. In short, the balance sheet is a financial statement that provides a snapshot of
what a company owns and owes, as well as the amount invested by shareholders. Balance
sheets can be used with other important financial statements to conduct fundamental
analysis or calculating financial ratios. The balance sheet adheres to the following
 accounting equation, with assets on one side and liabilities plus shareholder equity on the
other, balance out:

Assets= Liabilities + Shareholder’s Equity

Components of a Balance Sheet:
 Assets:
Accounts with this segment are listed from top to bottom in order of their liquidity. This is
the ease with which they can be converted into cash. They are divided into current assets,
which can be converted to cash in one year or less and non-current or long-term assets,
which cannot.

Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable
Inventory
Prepaid expenses

Long-term assets:
Long-term investments
Fixed Assets
Intangible Assets

 Liabilities:
A liability is any money that a company owes to outside parties, from bills it has to pay to
suppliers to interest on bonds issued to creditors to rent, utilities and salaries. Current
liabilities are due within one year and are listed in order of their due date. Long-term
liabilities, on the other hand, are due at any point after one year.

Current Liabilities:
 Interest payable
Wages payable
Customer prepayments
Dividends payable and others
Earned and unearned
premiums Accounts payable
Long-term liabilities:
Long-term debt
Pension fund liability
Deferred tax liability

 Statement of owner’s equity:

The statement of owner’s equity portrays changes in the capital balance of business over a
reporting period. It is the money attributable to the owners of a business or its
shareholders. It is also known as net assets since it is equivalent to the total assets of a
company minus its liabilities or the debt it owes to non-shareholders. Retained earnings
are the net earnings a company either reinvests in the business or uses to pay off debt. The
remaining amount is distributed to shareholders in the form of dividends.
The amount of owner’s equity is increased by income and owner contributions. The
balance is decreased by losses and owner draws. Thus, the format of the statement of
owner’s equity may include the following line items:

Beginning capital balance

+ Income earned during the period
- Losses incurred during the period
+ Owner contributions during the period
- Owner draws during the period
= Ending capital balance

 Statement of Cash Flows:

A cash flow is a financial statement that provides aggregate data regarding all cash inflows
a company receives from its ongoing operations and external investment sources.It also
includes all cash outflows that pay for business activities and investments during a given
period. The cash flow statement is believed to be the most intuitive of all the financial
statements because it follows the cash made by the business in three main ways- through
operations, investment, and financing. The sum of these three segments is called net cash
flow. These three different sections of the cash flow statement can help investors
determine the value of a company’s stock or the company as a whole. The cash flow
statement is an important document that helps open a wind interested party’s insight into
all the transactions that go through a company.

Cash flows from operations

Cash flows from investing
Cash flows from financing

1.11 ABOUT KPMG

HISTORY OF KPMG INTERNATIONAL:

KPMG International is the third-largest accounting firm in the world. Headquartered in the
Netherlands, KPMG provides accounting, consulting, tax and legal, financial advisory and
assurance services from more than 820 locations. KPMG’S member firms are located in
more than 59 countries across the globe. It is also recognized as ‘The Big Four.’

KPMG got its start in 1897; just a few years after the first American accounting firm had
been set up. The company was formed by James Marwick and Roger Mitchell, who had
both immigrated to the new world from Scotland. They set up their new partnership;
called Marwick, Mitchell and Company launched a banking practice, focusing its efforts
on one industry for the first time. This effort proved so successful that the firm later went
on to offer tailored services to companies in the industry and to mutual fund brokers.

Major diversification and expansion finally arrived at Peat Marwick in 1986, when the
company agreed to merge with Klynveld Main Goerdeler (KMG), a Dutch accounting
firm. KMG had been formed in the early 1980’s through the merger of German company
Deutsche Treuhand- Gesellschaft, Dutch firm Klynveld Kraayenhoff and Co, U.S.
Company Main Hurdman and Cranstoun and several other European and Canadian
accounting firms. The resultant international accounting federation, KMG was based in the
Netherlands and the U.S. arm had known as KMG Main Hurdman. KMG was the ninth-
largest accounting firm in the United States in 1986; while Peat Marwick was number two.
The merger of KMG and Peat Marwick created the largest accounting firm inthe world in
terms of size and revenue. In its new configuration, Peat Marwick enhanced its ability to
attract as audit clients large U.S companies with multinational operations. After approval
by Peat Marwick’s 2733 partners and KMG’s 2827 partners, the joined companies were to
be known as Klynveld Peat Marwick Goerdeleror KPMG and were to be headquartered in
Amsterdam.

VALUES KPMG BELIEVES IN ARE AS FOLLOWS:

Integrity: Integrity means we are honest, fair and consistent in our words, actions and
decisions-both inside and outside work. We take responsibility and accountability for our
day-to-day behavior and we hold ourselves to highest moral and ethical standards at all
times-even when under pressure. We keep our promises and set an example for others to
follow.

Excellence: Excellence means relentlessly delivering quality work to the highest

professional standards. We do this by staying curious and taking personal responsibility
for our learning. We constantly look to improve our work through data and insight and are
open to new challenges and feedback because that is how we develop and improve.

Courage: Courage is about being open to new ideas and being honest about the limits of
our own knowledge and experience. It is about applying professional skepticism to what
we see and asking questions where we have doubts. We speak up if we see something and
believe is wrong, and we support those who have the courage to speak up themselves.
Courage is being bold enough to step outside of your comfort zone to do what is right and
meaningful for all our stakeholders.

Together: We do our best work when we do it together: in teams, across teams and by
working with others outside our organization. Working together is important because we
know it is collaboration that shapes opinions and drives creativity. We embrace people
with diverse backgrounds, skills, perspectives and life experiences and ensure that
different voices are heard. We show care and consideration for others and strive to create
an inclusive environment where everyone feels they belong.

For Better: For better means we take a long-term view, even in our day-to-day choices,
because we want to build a stronger KPMG for the future. We never lose sight of the
importance of our role in building trust in the capital markets and in businesses. We make
sustainable, positive changes in our local communities and in society at large, striving to
make the world a better place.

SWOT ANALYSIS OF KPMG:

SWOT analysis of KPMG analyses the brand by its strengths, weaknesses, opportunities
and threats. In KPMG SWOT Analysis, the strengths and weaknesses are the internal
factors whereas opportunities and threats are the external factors.

SWOT Analysis is a proven management framework which enables a brand like KPMG to
benchmark its business and performance as compared to the competitors. KPMG is one of
the leading brands in the management and consulting sector.

Table no 1 SWOT Analysis of KPMG

STRENGTHS 1. Investments.
2. Acquisitions.
3. Good returns on Capital Expenditure.
4. Strong Brand Portfolio.

WEAKNESS 1. Below par investments in Research and Development.

2. Inadequate financial planning.
3.Below industry average profitability ratio and net
contribution%
4. Limited expansions.
 OPPORTUNITIES 1. Market development.
2. Investments in adjacent product segments.
3. Increase in customer spending.
4. New trends in consumer behavior.

THREATS 1. Shortage of skilled workforce.

2. Intense Competition.
3. New Technologies.
4. Attrition rate.
(Source: Done by researcher)

PESTEL ANALYSIS OF

KPMG:

The application of PESTEL analysis can help KPMG identify the major external
environmental forces that shape the strategy and competitive landscape and support its
strategic environmental forces that shape the strategy and competitive landscape and
support its strategic decision making process.

Table no 2 PESTEL Analysis of KPMG

POLITICAL: 1. Political Stability.

2. Changing Policies.
3. Protests
4. Bureaucracy and Corruption.

ECONOMIC: 1. Inflation.
2. Labor market condition.
3. Financial markets efficiency.
4. Business cycle stage.

SOCIAL: 1. Demographic trends

2. Equality and power distance.
 3. Gender roles.
4. Social norms and class distribution.

TECHNOLOGICAL: 1. Social media marketing.

2. Technological innovations.
3. R&D on technology and input cost structure.
4. Shortened product life cycles.

ENVIRONMENTAL: 1. Recycling and waste management.

2. Renewable technologies.
3. Weather and climate conditions.
4. Attitude towards eco-friendly products.

LEGAL: 1. Employee protection laws.

2. Consumer protection laws.
3. Intellectual Property laws.
(Source: Done by researcher)

KPMG’s current initiatives:

 Mass Hiring: The country’s top consulting and professional services firm KPMG are
on a campus hiring spree with many set to clock their highest campus intakes this
year as their businesses and revenues hit record highs. The firm will increase their
intake of fresh graduates from engineering management and undergraduate colleges
by 100- 150% visa-a-via 2019 and 2020 to meet rising demand as the need for their
consulting support has peaked across sectors amid recovery from Covid-19
disruptions.

Profiles in demand include those in business consulting, managed services and risk
advisory, officials said. A big focus this year will be on tech roles such as data
science, digital analytics, design, compliance services, cyber security etc as
consulting companies saw a huge spurt in revenue growth in technology advisory
 and other technology-related practices with most Indian companies accelerating their
digital implementation since the outbreak of Covid-19.

As per industry estimates, top consultancies together hired more than 20,000
peoplein the last six months, including fresher. Top firms, which ran into cash flow
issues mid- 2020 due to pandemic-led lockdowns and restrictions, saw demand for
consulting support; soar up after June 2020 as clients tried to adopt new business
models.

 KPMG’s CURRENT LEASE: KPMG Global Services Pvt Ltd has leased commercial
space in Mumbai for five years at a rent of Rs 37 lakh per month, documents shared
by CREMatrix showed. The consultant has leased 24788 sq. ft of space at Nesco IT
Park from October 1, 2021 to September 31, 2026. According to the documents, the
rent- free period of four months is from October 1, 2021 to February 1, 2022. The
lock-in period is for three years, the documents showed. The company has leased the
13th floor, Central B wing at NESCO IT Park from NESCO Ltd. The leave and
license agreement was registered on October 29, 2021. The lease for five years
comeswith a 15 percent rental escalation clause every three years. While the rent for
the initial four months is free, the rent for the following 32 months is Rs 37,
67,776and last 24 months is Rs 43, 32,942 the documents showed.

These deals clearly indicate that corporations have started making decisions regarding
their office spaces. Indecisiveness due to lack of clarity on the COVID situation is
gradually being replaced by decisive moves to achieve a short to medium term
objectives.

 KPMG’s approach to climate change and corporate social responsibility: As a result

of co’s shift to more remote and virtual ways of working due to COVID-19, the co-
saw a strong reduction in CO2 emissions in FY20, both in absolute and relative terms.
Going forward, learning’s from remote and virtual working could serve as
considerations for maintaining lower level of emissions in particular from business
travel. In FY20, the co reduced relative carbon emissions (CO2) by 64% compared to
2019 to 0.62 tones. Compared to the baseline year of 2016, KPMG in Denmark
 reduced relative carbon emissions by 75%. The significant reductions are a result of
reduced business travel and more importantly, fulfilling KPMG’s ambition to source
100% renewable electricity for the co’s office in Copenhagen, starting in January
2020. While pleased with this reduction, the co knows that they have an even bigger
task ahead of them in the coming years.

In 2020, the COVID-19 pandemic posed unexpected global changes to the society but
also created a momentum for change and for future-proofing of businesses in all
sectors. As a strong proponent of this crucial development, KPMG remains committed
to delivering growth in a sustainable way. Since 2002, KPMGInternational has been
signatory of the United Nations Global Compact (UNGC), upholding the UNGC’s
principles throughout the co’s global network. The co’s wasteis separated into landfill
and recyclable waste, amounting to 3,241 tons of waste to landfill and 1,427 tones
waste recycled in 2019-20. From 2020 onwards, all plastic bottles used on the co’s
premises are made of 100% recycled plastic. In fiscal 2019- 20 the co have introduced
organic waste initiatives in their offices, whereby organic waste that would have
otherwise been disposed of is separated and sent for generationof energy. 756 tones of
organic waste have been reused for energy generation in 2019-20.

 KPMG’s nurturing tomorrow’s business talents initiative: KPMG has recently

completed its Mind Your Own Business(MYOB) Academy before summer where 18
KPMG mentors supported 4 micro companies. The KPMG mentors are assigned to a
specific micro company for a period of eight months and help the company grow
through mentoring the workshops. KPMG takes on the role as business mentor for the
young boys and help them build a strategy for their micro company. This includes a
full –day goal-setting session for all micro companies hosted by KPMG, as well as
subsequent workshops tailored to each micro company’s needs and aspirations.
Finally and most importantly, the initiative allows for monitoring on other aspects of
life besides those related exclusively to the micro companies and the teenagers and
mentors often build strong bonds. Thus, the co has just started the next MYOB
 Academy and is excited to continue supporting new micro companies and aspirations
of tomorrow’s business talents with its new and innovative techniques.

KPMG’s acquisitions in recent years:

 Oracle cloud consulting firm Certus APAC: In Sept, 2021 KPMG acquired managed
IT services provider (MSP) and Oracle Cloud consulting partner Certus APAC for
cloud ERP and HCM application expertise however, the financial terms of the deal
were not disclosed. Certus APAC, founded in 2014, is an Oracle Platinum Specialized
Partner that offers cloud delivery, training and support in such industries such as
financial services, utilities, retail and government. Certus APAC also offers managed
services to keep customer’s Oracle cloud applications running smoothly. Roughly 40
Certus employees tucked into KPMG’s technology enablement teams, adding Oracle
cloud capabilities in such areas as ERP (Enterprise Resource Planning) and HCM
(Human Capital Management) software.
 Microsoft Dynamics Partner Hands-On Systems: In August 2015, KPMG had
acquired Microsoft partner, Hands-on Systems, a firm that provides Dynamics AX,
NAV and CRM services. As an implementation services partner of Microsoft
Australia, KPMG said Hands-on Systems will boost its end-to-end technology
services offering to clients. Hands-on Systems 80,000 employees moved over to
newly-created KPMG Hands-On Systems, within KPMG’s Technology Enablement
business.
 Australian FinTech Company Markets IT: In February 2016, accounting and
consulting giant KPMG had acquired Markets IT for an undisclosed sum. The
purchase of the Austrlian FinTech player improved KPMG’s expertise in the area of
Murex software, as the firm seeks to provide financial institutions with a range of
solutions in the area of regulatory compliance, cost-cutting and meeting competitive
pressures. Additional benefits from the acquisition realized in providing clients with
expertise in cost-cutting, as well as how to tackle competition from other big players
as well as the burgeoning FinTech sector.
 Cyberinc’s Identity and Access Mangement (IAM) services business: In Jan 2018,
KPMG acquired the identity and access management(IAM) business of cyber security
 services provider Cyberinc. The acquisition enabled KPMG to bolster its consulting
services and increase its digital consumer identity and privileged user management
talent and resources. With an addition of Cyberinc’s IAM business, KPMG provides
information protection to large enterprises and enable these organizations to pursue
new digital interactions and business transformations. The acquisition also represents
one of several recent moves that could help KPMG further expand its global IAM
market reach.
 Canadian cyber security services, testing firm Egyde:In April 2018, KPMG had
acquired Canadian continuous security testing and cybersecurity services firm Egyde
for an undisclosed sum. Egyde has been rebranded as KPMG Egyde following the
acquisition and Egyde’s employees have joined KPMG and will continue to work out
of their current offices in Quebec City and Montreal. The acquisition ultimately
enables both KPMG and Egyde to help their respective customers address cyber risks
like never before.
 Microsoft dynamics 365 integrator Dyanmics 365 Adoxio:In April, 2018 KPMG had
acquired Adoxio Business Solutions, a Microsoft Dynamics 365 integrator and gold-
level partner. The company serves roughly 3000 customers worldwide, including
Dynamics 365 clientele within multiple vertical markets- particularly public sector,
regulatory, manufacturing, retail and energy. KPMG was very ecstatic about this
acquisition. They firmly believed that the shared experiences and talents of their
teams will strengthen KPMG’s ability to provide comprehensive digital customer
relationship tools, analytics and solutions to their clients.
 Service now partner Wirefire Creative: In Feb,2020 KPMG acquired the ServiceNow
practice of Wirefire- known as Wirefire Creative Inc however, financial terms of the
deal were not disclosed. The addition of Wirefire Creative’s ServiceNow team to the
existing significant ServiceNow capabilities brings additional knowledge and strength
to the co’s rapidly growing technology consulting practice and allows us to further
support the growing need from organizations.

KPMG’s investments in recent years: KPMG announced investments in technology,

people and innovation and expects to spend US$ 5 Billion over the next five years to
enhance its leadership position in the digital transformation of professional services. This
investment will accelerate the digital transformation of KPMG and its clients, who will
benefit from the latest technological advancements across Audit, Tax and Advisory and
the expertise of highly-skilled KPMG professionals to help them transform their
businesses. KPMG’s investment will be prioritized in three key areas to strengthen client
relationships and capitalize on growth opportunities in a time of transformative change.
These include:

 Technology: Consistent, global cloud-based platforms to drive the quality of service

delivery and client-facing business solutions and managed services.
 People: Augmenting the digital skills of KPMG’s global workforce and expanding
talent in areas such as digital science and digital architecture.
 Innovation: Extending the range of digital offerings and winning work through
a diversified ecosystem of strategic alliances and a global innovation network.

 Five-year agreement with Microsoft to invest in cloud-based technologies: As part of

this investment, KPMG and Microsoft have signed a five-year agreement that enables
KPMG member firms and mutual clients to benefit from Microsoft technology,
innovation and advancements in Microsoft’s cloud platforms. KPMG is utilizing
Microsoft technology-including Microsoft Azure and Microsoft Azure and Microsoft
365- to create a consistent, global cloud-based platform and extend its range of digital
offerings.

 Deployment of cloud-based audit across the globe: In 2017, KPMG began its journey
to a cloud-based audit with the launch of KPMG Clara, a smart audit platform based
on Microsoft Azure. In doing so, KPMG became the first of the Big Four professional
services firms to move a cloud-based audit and is on track to full deployment across
the globe. KPMG Clara enables professionals to apply their extensive industry
knowledge to deliver high-quality audits that consistently meet applicable
professional’s standards, build trust with clients and sustain public confidence.

Key investments to help clients navigate tax and legal landscape: KPMG continues to
invest heavily in tax technologies to help tax and legal leaders and their departments
tackle regulatory change, streamline processes and data management, experience
 enhanced reporting and enable effective collaboration across departments.
KPMGwill invest more in cognitive, AI and machine learning capabilities to
transform tax and legal functions.

 Investment in people to harness the latest technology: KPMG made bold investments
in the professional development of its people by creating a world- class learning and
innovation center in Orlando, Florida. Began in January 2020, KPMG welcomed 800
partners and professionals to KPMG Lakehouse each week and lead more than one
million hours of in-person learning experiences. Drawing on advanced technology
and custom designed, flexible learning spaces-including inverted classrooms opened
to the outdoors- Lakehouse encouraged collaboration, creativity and discovery.

AWARDS AND RECOGNITIONS OF KPMG:

 ‘Universum’s World’s Most Attractive Employer’s rankings top employer’ award

(2016).
 Spot on ‘Furtune Magazine’s 100 Best Companies to Work For list’ (2017).
 Named as the top-ranked professional services firm on the Stonewall Workplace
Equality Index Top 100 rankings (2018).
 Top 10 Working Mother & Avtar ‘Best Company for Women in India’ (2020).
 Recognition by ‘The Times Top 100 Graduate Employers’ in the UK (2020).
 UK’s ‘Champion of Social Mobility Award’ (2019).
 Vietnam’s ‘Best Places to Work’ award (2020).
 Switzerland’s ‘Top Employer’ award (2020).
KPMG LOCATIONS IN INDIA:

 Ahmadabad
 Chandigarh
 Gurgaon
 Chennai
 Kolkata
 Hyderabad
 Noida
 Mumbai
 Bengaluru
 Hyderabad
 Jaipur
 Kochi
 Pune

1.12 RATIO ANALYSIS:

MEANING:
The term ratio analysis is the systematic use of ratios to interpret the financial statements
that the strengths and weaknesses of a firm as well as its historical performance and current
financial conditions can be determined. Ratio analysis compares relationship between
financial statement accounts. This means that one income statement or balance sheet is
being compared to another. These relationships between financial statements will give a
manager or investor an idea of how healthy the business operations are. Ratio analysis is
used to evaluate various aspects of a company’s operating and financial performance such as
its efficiency, liquidity, profitability and solvency. When investors and analysts talk about
fundamental or quantitative analysis, they are usually referring to ratio analysis. Ratio
analysis involves evaluating the performance and financial health of a company by using
data from the current and historical financial statements. The data retrieved from the
statements is used to – compare a company’s performance over time to assess whether the
company is improving or deteriorating. Compare a company’s financial standing with the
industry average or compare a company to one or more other company’s operating in its
sector to see how the company is doing in the market.
Financial ratios are the most common and widespread tools used to analyze a company’s
financial standing. Ratios are easy to understand and simple to compute. They can also be
used to compare different companies in different industries. Since a ratio is simply a
mathematical comparison based on proportions, big and small companies can use ratios to
compare their financial information.
 CHAPTER 2: RESEARCH METHODOLOGY

2.1 Research Methodology:

Research methodology describes the various methods to conduct the research study. It
shows the sequence of the steps which are followed in research process from beginning
of the study till the completion of the study. So, research methodology is a way to
systematically solve the problem and get insight into the phenomena.

Methodology describes the research route to be followed, the instruments to be used,

universe and the sample of the study for the data to be collected, the tools of analysis
used and pattern of deducing conclusions.

Research methodology in research is defined as the systematic method to resolve a

research problem through data gathering using various techniques, providing an
interpretation of data gathered and drawing conclusions about the research data.

Research methodology is a way to systematically solve a research problem. It may be

understood as a science of studying how research is done scientifically. It is the study of
various steps that are generally adopted by a researcher in studying the research problem
along with logic behind it.

It is necessary to know not only the research techniques but also the methodology.
Research methodology includes objectives, hypothesis, scope of the study, limitations of
the research, sample size, data collection, techniques and tools etc.

Research means any efforts which are directed to study of strategy needed to identify the
problems, areas of improvement during production and through research finding the best
solution and company’s position according to the targets set by the company.

The research design in the present study is empirical in nature. The study pertains to
secondary sources of data and these have been collected from various sources of annual
report of KPMG, research article published in journal and article published website. The
study is for the period of five years ranging from 2015-16 to 2019-20. Research
methodology includes both present and historical information. It has employed statistical
tools of non-parametric test to draw inference on hypothesis framed to compare the
profitability of KPMG Company. The study has applied 16 ratios to measure the
profitability, cash inflows and outflows. The variables used for measuring profitability,
cash inflows and outflows of the company in this study includes Current Ratio, Return on
Capital Employed Ratio, Debt- Equity Ratio, Equity Multiplier Ratio etc.

2.2 STATEMENT OF THE PROBLEM:

Klynveld Peat Marwick Goerdeler popularly known as “KPMG” is a British- Dutch
multinational professional services network and one of the Big Four accounting firms. It
is one of the leading providers of risk, financial and business advisory, tax and regulatory
services, internal audit and corporate governance. The present study makes an attempt to
study financial statements analysis on profitability, cash inflows and outflows of the
above company for five years, also the reasons of their fluctuations and how it affects the
company’s performance.

2.3 OBJECTIVES OF THE STUDY:

 The objective of the present study is to analyze the profitability of KPMG during
the study period of five years from 2015-16 to 2019-20.
 To study the theoretic aspects of financial leverage, profitability, solvency,
liquidity and efficiency.
 To examine various ratios of the company.
 To provide reliable financial information about economic resources and
obligations of company.
 To give recommendations and suggestions in order to improve the financial
performance of the company selected for the purpose of the study.
 To know about the current and the future prospective of the company.
 To know clear idea of growth over the years of the company.
 To study and examine the relevance of fundamental analysis in investment
decision making process.
 To analyze the financial and non-financial activities of the company.
  To assess various financial statements like Income statement, Balance sheet, Cash
flow, Statement of owner’s equity of the company from the last five years.

2.4 SCOPE OF THE STUDY:

 The study is based on the financial statements of the five years i.e. from 2015-16
to 2019-20 and the data is analyzed on the basis of ratios.
 Through the financial statements the analysis is done by the way of ratios, these
ratios will help to know the previous year’s performance and the present year
performance.
 By the way of ratio, the company is analyzing the performance of its finance,
whether it’s a growing company or not, the income and expenses ratios are to be
analyzed.
 It analyses the current ratio of the company.
 The quick ratio defines quick/liquid assets and liabilities to be recovered.
 The company’s overall performance is based on the financial statements and these
ratios will interpret the whole performance of Debtors, Creditors, Equity
shareholders, Preference shareholders etc.
 The study is mainly intended to concentrate on the issues relating to financial
performance of KPMG Company.
 The study only discloses the reasonableness and adequacy of working capital,
long term capital and profitability in KPMG Company.
 Financial analysis is the starting point for making plans, before using any
sophisticated forecasting and planning procedures.
 The analysis of financial statements can help to forecast the overall performance
of KPMG.
 It also helps to know the areas where the co needs to improve and reduce the errors.
 This research work is completely based on secondary data, which may be
extended to the company financial performance and also through co’s official
 websites which may help to identify factors responsible for difference in financial
performance of the company.

2.5 LIMITATIONS OF THE STUDY:

 The study is completely based on the secondary data and the limitation of using
secondary data may affect the overall results depending upon the accuracy of the
data.
 The study is only based on financial performance of one company so, inter-firm
comparison is not possible.
 The secondary data was taken from the annual reports of the company. It may be
possible that the data shown in the annual reports may be window dressed in order
to show the rosy pictures, which does not reflect the actual position of the
concern.
 The study is limited to only five years financial data.
 Errors while making calculations are likely to creep in.
 Some ratios could not be calculated as some amounts were not clearly shown in
the annual reports.
 Ratio analysis is subject to limitations of accounting methods. Different
accounting choices may result in different ratio values.
 Detailed study of the topic was not possible due to limited size of the project.
 Suggestions and conclusions are based on the limited data of five years.
 The future is uncertain.

2.6 SIGNIFICANCE OF THE PROJECT:

 To calculate to ratios from the information contained in financial statement in
order to know to profitability of the co from past 5 years.
 The study of financial statements through ratio analysis helps to know the
liquidity, solvency, profitability and turnover position of the company.
 The study of financial analysis has a great significance as it provides information
to various parties who are related with the co.
  To start any business capital plays a major role.
 Capital can be acquired in two ways i.e. by issuing shares or by taking debt from
financial institutions or borrowing money from financial institutions.
 The owners of the company have to pay regular interest and principal amount at
the end.
 Stock is ownership in a company, with each share of a stock representing a tiny
piece of ownership.
 The more shares a person owns, the more of the company he owns.
 The more shares a person owns, the more dividends he earn when the co makes a
profit.
 In the financial world, ownership is called “Equity”.

2.7 RESEARCH DESIGN:

Research design refers to the framework of market research methods and the techniques
that are chosen by a researcher. The design that is chosen by the researchers allows them
to utilize the methods that are suitable for the study and to set up their studies
successfully in the future as well.

The type of the research design used by me is Qualitative research and in this, I have
mainly focused on understanding of the concepts. A major part of my project was based
on the conclusive research design. The analysis have been done through calculation of
ratios of balance sheet and income statements of the company.

Since, the growth performance of a firm means an increase in the business over a period
of times in terms of profitability growth, efficiency growth etc of the current year in
comparison to previous years. So in this analytical study it has been utilized for
coordinating the data and carrying out the graphs and analysis.

Another type of research design used by me is exploratory research, the one which
interprets the already available information and it emphasis on particular analysis and
interpretation through available information.
PERIOD OF THE STUDY:

The study covers only one company i.e. KPMG for the period of 5 years(2016-2020).
This type of research is known as Longitudinal Research.

2.8 DATA COLLECTION METHODS:

Secondary data means data that are already available i.e. the data which is already been
collected and analyzed by someone else. The researcher uses this data for the further
study or research.

Secondary data analysis refers to the analysis of existing data collected by others.
Secondary data affords researchers the opportunity to investigate the research questions
using large-scale data sets. It helps to save time and resources of the researcher.

In this research, the data collected is secondary data from various sources like annual
reports of KPMG, articles, related websites and financial literature. The data used is
KPMG balance sheet, income statement, cash flow statement, statement of owner’s
equity from annual reports and other details from official website.

The study is fully based on secondary data that has been collected from annual reports of
the company. The study covers the periods of 5 years i.e. from 2016 to 2020.

2.9 SAMPLE SIZE:

The present study covers one co i.e. KPMG. For ratio analysis, the data has been taken
from 2016 to 2020 that is five years data. And around 16 ratios are calculated for analysis
and interpretation of KPMG’s financial position.

The universe of the study consists of all different ratios and variables of the selected co
for the purpose of the study. Here, research has been done on co’s correlation analysis of
their ratios and their financial analysis of past five years.
2.10 HYPOTHESIS:
Hypothesis is an assumption that is made on the basis of some evidence. This is the initial
point of any investigation that translates the research questions into prediction. It includes
components like variables, population and the relation between the variables. A research
hypothesis is a hypothesis that is used to test the relationship between the two or more
variables.

Importance of Hypothesis:

 It gives a direction to the research.

 It helps in devising research techniques.
 It prevents from blind research.
 It ensures accuracy and precision.

Sources of Hypothesis:

Following are the sources of hypothesis:

 The resemblance between the phenomenons.

 Observations from the past studies, present day experiences and from the
competitors.
 Scientific theories.
 General patterns that influence the thinking process of people.

(H0): There is no significant difference between the financial positions of the selected co
for the period of five years.

(H1): There is significant difference between the financial positions of the selected co for
the period of five years.
2.11 TECHNIQUES AND TOOLS TO BE USED:
According to the objective and significance of the study the necessary tools of analysis
used are ratio analysis of financial statements (balance sheet, income statement)
ofKPMG. The data of financial statements are used for calculation of ratios and
interpretation of data.

In the course of analysis in the present study, descriptive statistics, graphs and tabular data
have been used. The uses of these tools at different places have been made in the light of
requirement of analysis.

And also the most important and powerful tool of financial analysis is ratio analysis.
Ratios calculated from the accounting data available can be grouped into different classes
according to financial activity. Ratio analysis is a quantitative method of gaining
company’s liquidity, operational efficiency and profitability by comparing information
available in financial statements.
 CHAPTER 3. REVIEW OF LITERATURE

REVIEW OF LITERATURE:
A literature review is a search and evaluation of the available literature in your given
subject or chosen topic area. It documents the state of the art with respect to the subject or
topic you are writing about. It synthesizes the information in that literature into a
summary. Literature reviews are secondary sources and do not report new or original
experimental work. In the present study, the profitability and liquidity of KPMG Co have
been analyzed by considering their financial data. The study is based on secondary data
taken from published annual reports of the company. Mostof the research of the study
was conducted by the means of secondary sources through extensive library research
based on books, websites, periodicals, fresh government reports, magazines, journals etc.

Various researchers have done considerable research in the fields of accounting,

consultancy, risk, corporate laws, financial and business advisory, tax and regulatory
services, internal audit and corporate governance. This can be seen from the following list
given here below:

T. Ravi Kumar (2017): Stated in his research journal, about the financial inclusion
referring to the provision of formal financial services namely basic savings bank account,
credit facilities, payment services, insurance and so on to the poor and needy people at
reasonable prices. In this article, the writer namely emphasizes on financial inclusion in
terms of its conceptual framework, nature and causes of financial exclusion, its costs and
consequences. He has also described about the role of financial inclusion on economic
growth of the country.

Panos. M. Pardalos & Constantin Zopounidis (2019): In this research journal, the
writers have focused on the importance of financial services. According to them, in the
present era the complexity of financial problems and the vast amount of data require an
engineering approach based on analytical modeling tools for planning, decision making,
reporting and supervisory control. This article provides an overview of the main financial
applications of computational and data analytics approaches, focusing on the coverage of
the recent developments and trends. The overview covers different methodological tools
and their uses in areas, such as portfolio management, credit analysis, banking and
insurance.

M. Kabir Hassan (2018): The purpose of this study is to examine employee participation
and contribution incentives among defined contribution retirement plans. The researcher
had used the hypothesis (H0) and according to that he analyzed that there is no significant
relationship between employer’s contribution and an employee’s decision to make
contributions into his or her retirement plan. However, of those employees who are
contributing to their pension plans, the employer contribution percentage has a significant
positive effect on employee contribution rates. Therefore, theresearcher found that his
findings support the hypothesis and thus concluded that there is a direct relationship
between the average employee deferral percentage and the existence of an employer
matching contribution.

Ronald P. Volpe (2012): In this research study, the writer surveyed 924 college students
to examine their personal financial literacy, the relationship between the literacy and
students and impact of the literature on students and impact of the literacy on student’s
opinions and decisions. However, results showed that participants answered about 53%
of questions correctly. As per the survey, non-business majors, womens, students in the
lower class ranks, under age 30 and with little work experience have lower levels of
knowledge. Less knowledgeable students tend to hold wrong opinions and make incorrect
decisions. Thus, in this research he concluded that college students are not knowledgeable
about personal finance the low level of knowledge will limit their abilitiesto make
informal decisions.

John Grable (2000): This paper explores conceptual, methodological and empirical
issues related to the development of financial risk-tolerance assessment instrument.
Financial risk tolerance is a significant factor in a number of household financial
decisions, yet few recognized, valid and reliable methods of assessment are available for
use by financial service providers and educators. Empirical results from a multi-stage
development of risk assessment instruments are discussed. In this research article, the
researcher has explored the usefulness of financial risk instrument in all walks of life and
he has also encouraged researchers to further validate the usefulness of the instrument.

Stuart Michelson (2018): In this research article, the researcher has discussed the need
for a personal Web page in financial education, some of the ways Web pages can be used
to benefit students and present a survey of web page use. He has stated about how to
create and modify a Web page using commonly available computer programs. This
information allows faculty the ability to provide valuable and timely information and
materials for students.

Govind Hariharan (2000): This research paper uses a large individual-level data set to
isolate the effects of risk tolerance on portfolio composition. He has tested and confirmed
two predictions of Capital Asset Pricing Model:

1. Increased risk tolerance reduces an individual’s propensity to purchase risk-free

assets.
2. Higher risk tolerance does not affect the composition of an individual’s portfolio
of risky assets.
He finally concluded that risk tolerant investors nearing retirement do not reduce
their bond allocations in order to buy more stock.

Prem Sikka (2010): As entrepreneurial businesses, accountancy firms have

supplemented their traditional trade of selling accounting and auditing firms by
diversifying into a variety of other products and services. They have developed
organizational structures and strategies to sell tax avoidance schemes to corporations and
wealthy individuals. The sale of such services shifts tax burdens to less mobile capital
and less well-off citizens. It also erodes the tax base and brings the firms into direct
conflict with the state. This paper provides some evidence of the strategies and tactics
used by accountancy firms to sell schemes that enable their clients to avoid corporate,
sales and payroll taxes. Such strategies stimulate reflections upon the possible
trajectoriesin the development of the accountancy firms and social consequences of their
trade.
Robert. R. Trout (2015): In this research abstract, the writer has addressed an important
and often overlooked valuation issue concerning business “going concern value” in his
contribution to the Journal of Forensic Economics. However, part of his theory about
valuing a firm’s going concern value fails to meet a simple test of economic logic. To the
contrary, the value of business goodwill is related to the drawing power of the business or
its owners or employees. Legal description of business goodwill often have no mention of
associated profits. Thus, by the end of this research article the researcher concluded that,
Goodwill value is the value of the advantages that a business has developed as a result of
intangibles applicable to the specific business itself, such as name, reputation and so on.

Jinyu Tian (2017): In this research article, the writer has expressed his strong opinionson
auditor’s opinion. According to him, audit opinion verifies the financial statement of
companies published fairly. Public companies, which collect capital from public, have to
employ professional auditors to audit financial statements and get their audit opinion,
which could warrant the figures in the statement are fair. Public companies have the
motives to achieve clean audit opinion even if they cannot present fair financial statement
to the market. As for auditors, they must abide by the accounting standards and other
related regulations. In addition, they should exert effort on improving professional quality
and skills.

The limitations ofthe article is thatthe content is not enough to explain the state of studies
in audit opinion. And then he concluded that, future study should focus on the field that
how to issue fair audit opinion to obtain reasonable assurance about whether the financial
statements are free of material misstatements, whether caused by error or fraud.

Lawrence P. Kalbers (2009): The purpose of this research paper is to review critique
and integrate certain trends, events and research streams involving earnings,
management, fraudulent financial reporting, corporate governance and ethics. It provides
a brief history of relevant events and trends in financial reporting. The influence of
corporate governance and the role of ethics and behavior are introduced as part of an
integrated discussion of academic and practitioner viewpoints of earnings management
and fraudulent financial reporting.
The last section of the paper provides final observations and recommendations for future
research. The paper concludes that academic research in earnings management and
fraudulent financial reporting has become increasingly narrow in addressing important
issues and problems in practice. This paper may be useful to regulators and policy makers
to better understand the significance and relevance of academic research.

Natalia Semenova & Lars G. Hassel (2012): In a rapidly growing and changing field of
corporate responsibility and sustainable and responsible investment, the impact of
corporate social performance and corporate environmental performance on corporate
market value is increasingly important for investors and companies. Comprehensive
literature reviews indicate that the overall effect is positive but weak. This paper finds
that environmental performance and some dimensions of social performance are specific
extra- financial drivers of corporate market value. The evidence also supports weak
positive average relations that are, however, driven by industry and size differences.

Thomas.H. Eyssell (2000): In this research article, the researcher has depicted about the
importance of financial planning process and he was surprised that relatively few
registered financial planning programs explicitly provide students the opportunity to meet
with real clients on a one-to-one basis. This paper describes the structure of a financial
planning practicum developed for the purpose of providing such experience to future
financial planners. And then, he concluded his research paper by hoping that this
information will encourage others to consider offering experiential learning opportunities
to those seeking positions in the financial services industry.

Walt Woerheide (2018): In this particular research article, the researcher has analysed
answers to a question of what is the maximum number of securities required to achieve
adequate deiversification. As per the researcher, the problem of this topic is that it
assumes equally distributed holdings. He says that the portfolios are not evenly divided.
The purpose of this paper is to evaluate the ability of five different measures of
diversification to provide meaningful information about the degree of diversification of
an unevenly distributed stock portfolio. Thus, the researcher concluded that the
complement of the Herfindahal index was found to be the best of the five measures and
its explanatory power was deemed to be adequate for general use.
T. Di Matteo (2017): In this research article, the researcher has described about the tools
for investigating the scaling structure of the financial time series. Different types of
scaling are distinguished and several definitions of scaling exponents, scaling and multi-
scaling processes are given. Methods to estimate such exponents from empirical
financial data are reviewed. He has given a detailed description of the Generalized Hurst
exponent approach and substantiated with an empirical analysis across different markets
and assets.
 CHAPTER 4: DATA ANALYSIS AND INTERPRETATION.

Table no 3
Balance Sheet of KPMG for the year 2015 to 2020.

Amt in ‘000’

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

ASSETS
Non- current Assets
Software 692 940 1170 683 199
Equipment and Leasehold improvements 7019 5254 7695 6615 4725
Deposits 12416 12632 13136 13048 15310
Total Non-current Assets 20127 18826 22001 20346 20234
Current Assets
Receivables
Trade receivables 82488 111793 109095 146555 117281
Receivables from associated companies 112 122 36 66 10
Services in progress 15260 24978 30425 38050 58585
Other receivables 111727 71652 32328 33515 22003
Receivables from partners 0 0 0 0 97
Prepayments 2502 3033 2147 2862 3905
Total Receivables 212089 211578 174031 221048 201881
Cash at bank and in hand 25487 8622 6176 25437 131086
Total Current Assets 237576 220200 180207 246485 332967
Total Assets 257703 239026 202208 266831 353201

Equity and Liabilities

Contributed capital 560 560 627 49627 51400
Retained earnings 0 0 0 (21000) (15556)
Reserve for unpaid contributed capital 0 0 0 21000 21750
Total equity 560 560 627 49627 57594

Non-current liabilities
Other payables 0 0 0 2574 21220
Total Non - current liabilities 0 0 0 2574 21220
Current Liabilities other than provisions
Services in progress 22536 36907 47403 64243 60129
Trade payables 15953 19114 15655 30652 32895
Other payables 203900 168245 117982 118426 181363
Debt to partners 14754 14200 20541 1309 0
Total Current Liabilities other than
provisions 257143 238466 201581 214630 274387
Total liabilities other than provisions 257143 238466 201581 217204 295607
Total equity and liabilities 257703 239026 202208 266831 353201
(Source - https://www.kpmg.com)

Table no 4

Statement of Income of KPMG for the years ended 1st Oct 2015 to 30th Sept 2020.

Amt in ‘000’

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Revenue 368832 424003 507568 578113 690406
Other operating income 111643 71448 32062 14918 15962
Other external expenses (151458) (161617) (178146) (192588) (227201)
Gross Profit 329017 333834 361484 400443 479167
Staff costs (304557) (330573) (356598) (395717) (466484)
Depreciation, amortization and
impairment losses on software,
equipment and leasehold improvements (25219) (4254) (4179) (4966) (4904)
Operating Profit/Loss (7590 (993) 707 (240) 7779
Financial income 956 1487 0 909 0
Financial expenses (197) (494) (707) (669) (1585)
Profit for the year 759 993 (707) 240 6194
(Source - https://www.kpmg.com)

Table no 5

Statement of Cash Flow of KPMG for the years ended 1st Oct 2015 to 30th Sept 2020.
Amt in ‘000’

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Profit for the year 759 993 (707) 240 6194

Depreciation, amortization and
impairment losses 25219 4254 4179 4966 4904
Changes in working capital 17458 (17517) 26526 8981 98320

Cash flow from Operating activities 42677 (13263) 30706 13947 109418
Acquisition of software (912) (685) (970) (198) 0
Acquisition of equipment and leasehold
improvements (13964) (2052) (5880) (3201) (2530)
Deposits(net additions) 886 (216) (504) 88 (2262)

Cash flow from investing activities (13990) (2953) (7354) (3311) (4792)
External financing:
Net increase in financing (20368) (14849) (32207) 0 0
Shareholder's:
Contributed capital cash increase 0 0 67 8625 1023
Partner finance 14754 14200 6341 0 0
Partner finance paid out 0 0 0 (750) (1000)
Partner finance paid in 0 0 0 750 0

Cash flow from financing activities (5614) (649) (25799) 8625 23

Cash flow for the year 23073 (16865) (2447) 19261 104649
Cash and cash equivalents at the
beginning of the year 2414 25487 8622 6176 25437

Cash and cash equivalents at year end 25487 8622 6176 25437 131086
(Source - https://www.kpmg.com)

Table no 6
Statement of Changes in Equity of KPMG for the years ended 1st Oct 2015 to 30th Sept
2020.
Amt in ‘000’

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Equity at 1st Oct 2015-2020 560 560 560 627 49627
Capital increase at par 0 0 67 49000 1773

Reserve for unpaid contributed capital 0 0 0 0 0

Profit appropriation 0 0 0 0 6194
Equity at 30th Sept 2015-2020 560 560 627 49627 57594
(Source - https://www.kpmg.com)
 A. LIQUIDITY RATIOS:

These ratios have the ability to convert their assets to cash and pay off their
obligations without any significant difficulties. These ratios are particularly useful
forsuppliers, employers, banks etc. It is a measure of company’s ability to pay off its
short term debts as they come due using the company’s current and quick assets.
Liquidity ratio includes Current ratio, Quick ratio and Cash ratio.

 CURRENT RATIO:

The Current Ratio is a liquidity ratio that measures a company’s ability to pay short-
term obligations or those due within one year. It tells investors and analysts how a
company can maximize the current assets on its balance sheet to satisfy its current
debt and other payables.

Current assets are assets that are expected to be converted to cash within normal
operating cycle, or one year. Examples of current assets include cash and cash
equivalents, marketable securities, short-term investments, accounts receivable, short-
term portion of notes receivable, inventories and short-term prepayments.

Current liabilities are obligations that require statement within normal operating cycle
or next 12 months. Examples of current liabilities include accounts payable, salaries
and wages payable, current tax payable, sales tax payable, accrued expenses etc.

Formula: Current Ratio = Current Assets/ Current Liabilities

Table 7 Current Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Current Assets 237576 220200 180207 246485 332967
Current Liabilities 257143 238466 201581 214630 274837
Ratio 0.92:1 0.92:1 0.89:1 1.15:1 1.21:1
(Source - https://www.kpmg.com)
Graph 1

GRAPHICAL REPRESENTATION/ANALYSIS

Current Ratio

1.4
1.2

0.8
0.6
0.4 1.15 1.21
0.92 0.92 0.89 Ratio
0.2
0

2015-162016-172017-182018-192019-20

Year

(Source: Done by researcher)

Interpretation:

 Current ratio is always 2:1 it means the current assets are twice of current liabilities.
 After observing the table and figure, it is seen that current ratio is fluctuating but
is not increasing from 1.21
 Here current ratio of years 2015 to 2018 is less than 1.0 which is an unfavorable
situation as the company does not have enough cash to pay for its short term
debts.
 The current liabilities of KPMG are more than current assets.
 The current ratio is nowhere near the ideal ratio in any of the above years but
every company cannot achieve this ratio.
  However, low values do not indicate a critical problem but should concern the
management.

 QUICK RATIO:

The Quick Ratio is an indicator of a company’s short-term liquidity position and

measures a company’s ability to meet its short-term obligations with its most liquid
assets. Since it indicates the company’s ability to instantly use its near-cash assets
(assets that can be converted quickly to cash) to pay down its current liabilities, it is
also called the acid test ratio. An acid test is a quick test designed to produce instant
results.

The quick ratio measures the amount of liquid assets available against the dollar
amount of current liabilities of a company. Liquid Assets are the assets that can be
quickly converted into cash with minimal impact on the price received in the open
market, while current liabilities are a company’s debts or obligations that are due to
be paid to creditors within one year.

Formula: Quick Ratio = Quick Assets/ Quick

Liabilities Table 8 Quick Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Liquid Assets 152586 105374 68965 97068 211781
Liquid Liabilities 257143 238466 201581 217204 274837
Ratio 0.59:1 0.44:1 0.34:1 0.45:1 0.78:1
(Source - https://www.kpmg.com)
Graph 2

GRAPHICAL REPRESENTATION/ANALYSIS

Quick Ratio
0.9
0.78
0.8
0.7
0.59
0.6
0.5 0.44 0.45
0.4 0.34
0.3
0.2 Ratio
0.1
0

2015-162016-172017-182018-192019-20

Year

(Source: Done by

researcher) Interpretation:

 Standard ratio is 1:1

 KPMG has quick assets which are less than its quick liabilities for all the five
years.
 The company is not in a position to pay its immediate liabilities.
 The quick ratio is less than 1 which indicates that the company relies too much on
its inventories to pay its short term liabilities.
 The company is not financially sound in terms of paying off its current
obligations, as the quick ratio is very less as compared to the standard ratio of the
industry.
  CASH RATIO:

The Cash Ratio is a measure of the liquidity of a firm, namely the ratio of the total assets
and cash equivalents of a firm to its current liabilities. The metrics calculates the ability
of a company to repay its short-term debt with cash or near-cash resources, such as
securities which are easily marketable. This information is useful when investors
determine how much money they will be willing to loan a company if any.

In the worst-case scenario, the Cash Ratio is more like a measure of a firm’s value-say,
that the company is about to quit the business. It tells analysts and creditors the worth of
current assets that could be converted quickly into cash, and what percentage of the
current liabilities of a company could cover those cash and near-cash assets.

Most commonly, the cash ratio is used as a measure of the liquidity of a firm. This
measure indicates the willingness of the company to do so without having to sell or
liquidate other assets if the company is required to pay its current liabilities immediately.

Formula: Cash Ratio = Cash and Cash Equivalents/ Current

Liabilities Table 9 Cash Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Cash and Cash
Equivalents 25487 8622 6176 25437 131086
Current Liabilities 257143 238466 201581 214630 274837
Ratio 0.1:1 0.04:1 0.03:1 0.12:1 0.48:1
(Source - https://www.kpmg.com)
Graph 3

GRAPHICAL REPRESENTATION/ANALYSIS

Cash Ratio
0.6
0.5

0.4

0.3
0.48
0.2
Ratio
0.1 0.12
0.1
0 0.04 0.03
2015-16 2016-17 2017-18 2018-19 2019-20

Year

(Source: Done by

researcher) Interpretation:

 A ratio of 1 means that the company has the same amount of cash and cash
equivalents as it has current debt. A ratio below 1 means that the company needs
more than just its cash reserves to pay off its current debt.
 In all the above five years, the company’s cash ratio was less than 1.
 It was highest in the year 2020 i.e. 0.48 and lowest in the year 2018 i.e. 0.03.
 This situation is not at all ideal for the company its available cash in hand is less
than its current liabilities. These ratios are not in par with the average industry
ratio.
 In all the above five years, the position of the company is not favourable as the
cash and cash equivalents are not enough to pay the current liabilities.
 B. PROFITABLITY RATIOS:

These ratios show how well a company can generate profits from its operations.
Profitability ratios indicate how efficiently a company generates profit and value for
shareholders.

Higher ratio results are often more favorable, but these ratios provide much more
information when compared to results of similar companies, the company's own historical
performance, or the industry average. Operating profit, return on capital employed and
net worth ratio are some of the profitability ratios.

 OPERATING PROFIT RATIO:

Operating net profit ratio is calculated by dividing the operating net profit by sales. This
ratio helps in determining the ability of the management in running the business. The
operating margin ratio, also known as the operating profit margin, is a profitability ratio
that measures what percentage of total revenues is made up by operating income. In other
words, the operating margin ratio demonstrates how much revenues are left over after all
the variable or operating costs have been paid. Conversely, this ratio shows what
proportion of revenues is available to cover non-operating costs like interest expense.

A higher operating margin is more favorable compared with a lower ratio because this
shows that the company is making enough money from its ongoing operations to pay for
its variable costs as well as its fixed costs.

FORMULA: Operating Profit Ratio = Operating Profit after Tax/ Net Sales X

100 Table 10 Operating Profit Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Operating Profit/Loss (759) (993) 707 (240) 7779
Net Sales 368832 424003 507568 578113 690406
Ratio (0.21%) (0.23%) 0.14% (0.04%) 1.13%
(Source - https://www.kpmg.com)
Graph 4

GRAPHICAL REPRESENTATION/ANALYSIS

Operating Profit Ratio

1.20%
1.00%
0.80%
0.60%
0.40%
1.13%
0.20%
0.00%
-0.20% Ratio
-0.40% 0.14%
-0.04%
2-01.251-1%62016-172017-182018-192019-20

Year

(Source: Done by

researcher) Interpretation:

 Operating profit indicates profit of the entire business after meeting all operating
costs including direct and indirect costs of administrative and distribution
expenses.
 From the above table and diagram, it can be clearly seen that the company is
gaining profit in only two years i.e. 2018 and 2020 and rest of the three years it is
incurring losses.
 The operating profit percentage is very less as the expenses are more and as a
result profit generated is very less.
 The profit has crossed 1% to sales only once i.e. in 2020 and in the rest of the
years it is less than 1 and negative.
  RETURN ON CAPITAL EMPLOYED:

Return on capital employed or ROCE is a profitability ratio that measures how efficiently
a company can generate profits from its capital employed by comparing net operating
profit to capital employed. In other words, return on capital employed shows investors
how much profits each rupee of capital employed generates.

ROCE is long-term profitability ratio because it shows how effectively assets are
performing while taking into consideration long-term financing. This is why ROCE has
an edge over return on equity to evaluate the longevity of a company.

FORMULA: Return on Capital Employed = Earnings before Interest and Tax/ Capital
Employed X 100

Table 11 Return on Capital Employed

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

EBIT 759 993 (707) 240 6194
Capital Employed 560 560 627 52201 78364
Ratio 136% 177% (113)% 5% 7.90%
(Source - https://www.kpmg.com)
Graph 5

GRAPHICAL REPRESENTATION/ANALYSIS

Return on Capital Employed Ratio

200%
150%
100%
50%
177%
136%

0% 5% 7.90%
Ratio
-50% 2015-16 2016-17 2017-18 2018-19 2019-20
-113%
-100%
-150%

Year

(Source: Done by

researcher) Interpretation:

 Return on capital employed ratio shows how much profit capital employed
generates.
 Higher ratio is more favorable as it means that high amounts of profits are
generated by capital employed.
 For instance, return of 0.2 indicates that for every rupee invested in capital
employed, the company made 20% of profits.
 The return on capital employed is 136 % in 2016
 In the next F.Y it surged to 177%and -113% in 2018 as the company’s EBIT was
-707 in this particular year.
 In 2019 it was 5% and in 2020 it was 7.90%
 Investors are interested in this ratio to see how effectively a company uses its
capital employed for their long-term financing strategies.
  NET WORTH RATIO:

The net worth ratio states the return that shareholders could receive on their investment in
a company, if all of the profit earned were to be passed through directly to them. Thus,
the ratio is developed from the perspective of the shareholder, not the company, and is
used to analyze investor returns. The ratio is useful as a measure of how well a company
is utilizing the shareholder investment to create returns for them, and can be used for
comparison purposes with competitors in the same industry.

FORMULA: Net Worth Ratio = Total Assets – External Liabilities

Table no 12 Net worth Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Total Assets 257703 239026 202208 266831 353201
External Liabilities 257143 238466 201581 217204 296057
Ratio 560:1 560:1 627:1 49624:1 57144:1
(Source - https://www.kpmg.com)
Graph 6

GRAPHICAL REPRESENTATION/ANALYSIS

Net Worth Ratio

70000
60000
50000
40000

30000

57144
49627
20000
Ratio
10000
0
560 560 627
2015-16 2016-17 2017-18 2018-19 2019-20

Year

(Source: Done by researcher)

Interpretation:

 In the year 2016 and 2017 net worth of the company was 560.
 Although, the company saw an increase in its net worth as in 2018 it was 627.
 In 2019, the company showed an exemplary performance in terms of net worth as
it skyrocketed to 49624.
 In 2020, the net worth was 57144 i.e. the highest in five years as the company’s
assets exceeded its liabilities by a fair margin.
 From the above information we can analyze that the company performed well in
terms of net worth as the company’s assets exceeded its liabilities in all the above
five years.
 C. WORKING CAPITAL RATIOS:

Working capital ratios are very crucial for efficient use of a company’s resources by
monitoring and optimizing the use of current assets and liabilities. The goal is to maintain
sufficient cash flow to meet its short-term operating costs and short-term debt obligations
and maximize profitability. Working capital management is the key to the cash
conversion cycle or the amount of time a firm uses to convert working capital into usable
cash.

Working capital turnover, fixed assets turnover and capital turnover are few of the
working capital ratios.

 WORKING CAPITAL TURNOVER RATIO:

Working capital turnover is a ratio that measures how efficiently a company is using its
working capital to support a given level of sales. Also referred to as net sales to working
capital, this ratio shows the relationship between the funds used to finance a company’s
operations and the revenues a company generates as a result. Working capital is defined
as the amount by which current assets exceed current liabilities.

A higher working capital turnover ratio is better. It means that the company is utilizing its
working capital more efficiently i.e. generating more revenue using less investment.

FORMULA: Working Capital Turnover Ratio = Net Sales/ Working Capital

Table 13 Working Capital Turnover Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Net Sales 368832 424003 507568 578113 690406
Working Capital (19567) (18266) (21374) 31855 58130
Ratio (18.85):1 (23.21):1 (23.75):1 18.15:1 11.88:1
(Source - https://www.kpmg.com)
Graph 7

GRAPHICAL REPRESENTATION/ANALYSIS

Working Capital Turnover Ratio

25
20
15
10 18.15
5 11.88
0
-5 2015-16 2016-17 2017-18 2018-19 2019-20
-10 -18.85 -23.21 -23.75 Ratio
-15
-20
-25
-30

Year

(Source: Done by

researcher) Interpretation:

 The working capital is negative from 2015 to 2018 as assets of the company are
less as compared to the liabilities.
 This means that they are not generating the sales from working capital. It is
dependent on the equity and borrowed funds for generating the sales.
 However, the company performed tremendously well in 2019 and 2020 as its
working capital was 18 and 11 in these years retrospectively.
 The working capital turnover ratio lies between -18 to 18. This situation is not
favorable for the company in the 2016 to 2018 as 2019 and 2020 being
 exceptions. However, the company performed tremendously well in 2019 and
2020 as its working capital was 18 and 11 in these years retrospectively.
 The working capital turnover ratio lies between (18) to 18. This situation is not
favorable for the company between 2016 to 2018 as 2019 and 2020 being
exceptions.
 In the 1-3 years the company is solely dependent on the loans and equity as its
assets are less.

 CAPITAL TURNOVER RATIO:

Capital Turnover Ratio indicates the efficiency of the organization with which the capital
employed is being utilized. A high capital turnover ratio indicates the capability of the
organization to achieve maximum sales with minimum amount of capital employed.
Higher the capital turnover ratio better will be the situation.

Capital turnover compares the annual sales of a business to the total amount of its
stockholder’s equity. The intent is to measure the proportion of revenue that a company
can generate with a given amount of equity. It is also a general measure of the level of
capital investment needed in a specific industry in order to generate sales.

FORMULA:

Capital Turnover Ratio = Net Sales/ Capital Employed

Table 14 Capital Turnover Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Sales 368832 424003 507568 578113 690406
Capital Employed 560 560 627 52201 78364
Ratio 658.63:1 757.15:1 809.52:1 11.07:1 8.81:1
(Source - https://www.kpmg.com)
Graph 8

GRAPHICAL REPRESENTATION/ANALYSIS

Capital Turnover Ratio

900
800
700
600
500
400
300
200
100 Ratio
0

2015-162016-172017-182018-192019-20

Years

(Source: Done by

researcher) Interpretation:

 High capital turnover ratio indicates the capability of the organization to achieve
maximum sales with minimum amount of capital employed.
 The capital turnover ratio is fluctuating drastically in all the above years. The
ratio was the highest in 2018 and was the lowest in 2020.
 The ratio was extremely high in 2016 to 2018 and it shows that sales are
achieved with minimum capital employed.
 This situation is beneficial for the company to have high capital turnover ratio as
its ratios are exceptional.
 The company is very efficient with the use of capital employed to generate sales.
  FIXED ASSET TURNOVER RATIO:

Fixed assets turnover ratio is an activity ratio that measures how successfully a company
is utilizing its fixed assets in generating revenue. It calculates the revenue earned for
investment in fixed assets.

A higher fixed asset turnover ratio is generally better. However, there might be situations
when a high fixed asset turnover ratio might not necessarily mean efficient use of fixed
assets. The fixed asset turnover ratio compares net sales to net fixed assets. It is used to
evaluate the ability of management to generate sales from its investment in fixed assets.

FORMULA: Fixed Asset Turnover Ratio = Net Sales/ Fixed

Assets Table 15 Fixed Asset Turnover Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Sales 368832 424003 507568 578113 690406
Total Fixed Assets 7711 6194 8865 7298 4924
Ratio 47.83:1 68.45:1 57.26:1 79.22:1 140.21:1
(Source - https://www.kpmg.com)
Graph 9

GRAPHICAL REPRESENTATION/ANALYSIS

Fixed Asset Turnover Ratio

160
140
120
100
80
60
140.21

40 68.45 79.22 Ratio

20 47.83 57.26
0
2015-162016-172017-182018-192019-20

Year

(Source: Done by

researcher) Interpretation:

 Fixed asset turnover is the ratio of sales to the fixed value of assets. It indicates
how well the business is using its fixed assets to generate sales.
 Higher the ratio, the better, because a high ratio indicates that the business has
less money tied up in fixed assets.
 A declining ratio may indicate that the business has over invested in plant,
equipment or other fixed assets.
 The fixed asset turnover ratio is fluctuating. The ratio is highest in the year 2020
and is lowest in the year 2016.
 The fixed assets turnover ratio is between 47 to 140 times which is an
exceptional turnover ratio.
  This indicates that the company is using its fixed assets properly, the company has
not over invested in fixed assets, the performance and use of assets is quite
phenomenal.

D. CAPITAL STRUCTURE RATIOS:

Capital structure ratios describes the mix of a firm’s long- term capital which consists of
a combination of debt and equity. Capital structure is a permanent type of funding that
supports a company’s growth and related assets. Equity consists of a company’s common
and preferred stock plus retained earnings. Debt consists of short-term borrowing and
long- term debt. Debt Equity, proprietary and debt service are some of the capital
structure ratios.

 DEBT EQUITY RATIO:

The debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage. The
D/E ratio is an important metric used in corporate finance. It is a measure of the degree to
which a company is financing its operations through debt versus wholly owned funds.
More specifically, it reflects the ability of shareholder equity to cover all outstanding
debts in the event of a business downturn.

FORMULA: Debt Equity Ratio = Debt/ Equity

Table no 16 Debt Equity Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Total long term debts 0 0 0 2574 21220
Equity Funds 560 560 627 49627 57594
Ratio 0:1 0:1 0:1 0.05:1 0.37:1
(Source - https://www.kpmg.com)
Graph 10

GRAPHICAL REPRESENTATION/ANALYSIS

Debt Equity Ratio

0.4
0.35
0.3
0.25
0.2
0.15 0.37
0.1
0.05 Ratio
0
0.05

2015-162016-172017-182018-192019-20

Year

(Source: Done by researcher)

Interpretation:

 From the above table and diagram, it can be observed that, the debt equity ratio
was nil from 2016 to 2018 as the company did not owe any long term debt
obligations.
 In 2019, the ratio was 0.05 as the company owed a long term obligation of 2574.
 In 2020, the ratio was 0.37
 Since, the company’s ratio is less than one in all the above five years, it simply
means that the company primarily relies on wholly-owned funds to maintain its
finances.
  PROPRIETORY RATIO:
The proprietary ratio also known as the equity ratio is the proportion of
shareholder’s equity to total assets, and as such provides a rough estimate of the
amount of capitalization currently used to support a business. If the ratio is
high, this indicates that a company has a sufficient amount of equity to support
the functions of the business, and probably has room in its financial structure to
take on additional debt, if necessary. Conversely, a low ratio indicates that a
business may be making use of too much debt or trade payables, rather than
equity, to support operations which may place the company at risk of bankruptcy.
Thus, the equity ratio is a general indicator of financial stability.

FORMULA: Proprietary Ratio = Shareholder’s Funds/ Total Assets X 100

Table no 17 Proprietary Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Shareholder's Funds 560 560 627 70627 79344
Total Assets 257703 239026 202208 266831 353201
Ratio 0.22% 0.23% 0.31% 26.47% 22.46%
(Source - https://www.kpmg.com)
Graph 11

GRAPHICAL REPRESENTATION/ANALYSIS

Proprietory Ratio

30.00%
25.00%
20.00%
15.00%

26.47%
10.00% 22.46%
Ratio
5.00%
0.00%0.22%
2015-16 0.23% 0.31%
2016-17 2017-18 2018-19 2019-20

Year

(Source: Done by

researcher) Interpretation:

 From 2016 to 2018, the proprietary ratio hasn’t even crossed 1% and this is due
to the company’s limited amount of shareholder’s funds in these years.
 In 2019, the ratio was magnificent due to the company’s outrageous amount of
capital employed. This was also the highest from all the above years.
 In 2020, the ratio further dipped to 22.46% retrospectively.
 Even though, the company didn’t cross the mark of 1% in the first three years but,
the company performed exceptionally well in the next two years.
 In 2016, the ratio was 460.18
  DEBT SERVICE COVERAGE RATIO:
The debt-service coverage ratio applies to corporate, government and personal
finance. In the context of corporate finance, the debt-service coverage ratio
(DSCR) is a measurement of a firm's available cash to pay current debt
obligations. The DSCR shows investors whether a company has enough income
to pay its debts. The debt-service coverage ratio (DSCR) is a measure of the cash
flow available to pay current debt obligations. It is used to analyze firms, projects,
or individual borrowers. The minimum DSCR that a lender demands depends on
macroeconomic conditions. If the economy is growing, lenders may be more
forgiving of lower ratios.

FORMULA: Debt Service Coverage Ratio = Net Profit before Interest and Tax / Fixed
Interest Charges

Table no 18 Debt Service Coverage Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

NetOperatingIncome/Loss 42677 (13263) 30706 13947 109418
Total Debt Services 0 0 0 2574 21220
Ratio 0:1 0:1 0:1 5.42:1 5.16:1
(Source - https://www.kpmg.com)
Graph 12

GRAPHICAL REPRESENTATION/ANALYSIS

Debt Service Coverage Ratio

6
5
4
3
2
1
0 5.42 5.16

Ratio

2015-162016-172017-182018-192019-20

Year

(Source: Done by

researcher) Interpretation:

 From the year 2016 to 2018, it means that the company is unable to cover its
debt obligations in these years.
 In 2019, the ratio was 5.42 which is the highest from the above five years.
 In 2020, the ratio was 5.16 indicating that the company sufficient enough to cover
its debt obligations.
 Company’s overall performance in terms of debt coverage is poor as three out of
five times the ratio was nil.
 E. SOLVENCY RATIOS:

Solvency ratios are also called as financial leverage ratios which compares a
company’s debt levels with its assets, equity and earnings to evaluate whether a
company can stay in long term by paying its long term debts and interest on debt. It
isa key metric used to measure an enterprise’s ability to meet its long-term obligations
and is used often by prospective business lenders. A solvency ratio indicates whethera
company’s cash flow is sufficient to meet its long-term liabilities and thus is a
measure of its financial health.

Interest coverage, debt to assets and current assets to fixed assets are few of the
solvency ratios.

 INTEREST COVERAGE RATIO:

Interest coverage ratio is a measure of a company’s ability to pay interest. It equals

operating cash flows before interest and taxes divided by total interest payments.

Interest coverage ratio differs from time interest earned ratio in that coverage ratio is
based on cash flows while the times interest earned ratio is based on accrual-based
figures. Cash flows are considered a better indicator of a company’s financial position
and performance because they are less prone to distortions due to accounting policies
and estimates.

Companies need to have more than enough earnings to cover interest payments in
order to survive future (and perhaps unforeseeable) financial hardships that may arise.
A company’s ability to meet its interest obligations is an aspect of its solvency and is
thus very important factor in the return for shareholders.

A declining interest coverage ratio is often something for investors to be wary of, as
it indicates that a company may be unable to pay its debts in the future. The interest
coverage ratio is a good assessment of a company’s short-term financial health.

FORMULA: Interest Coverage Ratio = Earnings before Interest and Tax/ Interest
Table no 19 Interest Coverage Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

EBIT 759 993 (707) 240 6194
Interest Expenses 197 494 707 669 1585
Ratio 3.85:1 2.01:1 (1:1) 0.36:1 3.91:1
(Source - https://www.kpmg.com)

Graph 13

GRAPHICAL REPRESENTATION/ANALYSIS

Interest Coverage Ratio

5
4
3
2

3.85 3.91
Ratio
1 2.01
0.36
0
201-71-18 2018-19
-1 2015-16 2016-17 2019-20

-2

(Source: Done by

researcher) Interpretation:

 The interest coverage ratio measures the ability of a company to pay the interest
on its outstanding debt.
  A high ratio indicates that a company can pay for its interest expense several
times over, while a low ratio is a strong indicator that a company may default on
its loan payments.
 The Interest coverage ratio was 3.85 in 2016, which roused down to 2.01 in 2017.
 In 2018, it was -1 as the company’s EBIT was -707. In 2019 it was 0.36
 However, in 2020 the interest paying ability of the company was good because its
operating cash flows were enough to cover at least 3 times the interest payment.

 CURRENT ASSETS TO FIXED ASSETS RATIO:

The current assets to fixed assets ratio is the ratio of the company’s total current assets to
its total fixed assets. This ratio helps investors understand how effectively companies are
using their assets. Investors use this ratio to compare similar companies in the same
sector or group.

Typically, this ratio is calculated on an annual basis. The lower the ratio, the better the
company is performing since its current assets are lesser as compared to its fixed assets.

FORMULA: Current Assets to Fixed Assets Ratio: Current Assets/ Fixed Assets

Table no 20 Current Assets to Fixed Assets Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Current Assets 237576 220200 180207 246485 332967
Fixed Assets 7711 6194 8865 7298 4924
Ratio 30.81:1 35.55:1 20.33:1 33.77:1 67.62:1
(Source - https://www.kpmg.com)
Graph 14

GRAPHICAL REPRESENTATION/ANALYSIS

Current Assets to Fixed Assets Ratio

80
70
60
50
40 67.62
30 33.77
30.81 35.55 Ratio
20 20.33
10
0 2015-162016-172017-182018-192019-20

Year

(Source: Done by

researcher) Interpretation:

 From the above table and diagram, it can be interpreted that in the year 2016, the
ratio was 30.81.
 In 2017, it further surged to 35.55.
 In 2018, the company saw its best performance in terms of this ratio as it was
relatively less from all the above years i.e. 20.33
 However, in 2019 it went up to 33.77
 In 2020, the ratio was 67.62 which was poorer in comparison with all the above
years.
  DEBT- TO- ASSETS RATIO:

Total debt to total assets is a leverage ratio that defines the total amount of debt relative
to assets owned by a company. Using this metric, analysts can compare one company’s
leverage with that of other companies in the same industry. This information can reflect
how financially stable a company is.

The higher the ratio, the higher the degree of leverage and consequently, the higher the
risk of investing in that company.

FORMULA: Debt- to - Assets Ratio: Debt/

Assets Table no 21 Debt to Assets Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Debt 0 0 0 2574 21220
Assets 257703 239026 202208 266831 353201
Ratio 0:1 0:1 0:1 0.09:1 0.06:1
(Source - https://www.kpmg.com)
Graph 15

GRAPHICAL REPRESENTATION/ANALYSIS

Debt to Assets Ratio

0.1
0.09
0.08
0.07
0.06
0.05
0.04 0.09
0.03 Ratio
0.02 0.06
0.01
0
0 0 0
2015-16 2016-17 2017-18 2018-19 2019-20

Year

(Source: Done by

researcher) Interpretation:

 From the above table and diagram, it can be interpreted that from 2016 to 2018
the company’s Debt to assets ratio was nil as the company did not owe any long
term debt.
 In 2019, the ratio was 0.09 as the company incurred long term debt of 2574.
 In 2020, the ratio dipped to 0.06 as the company’s assets exceeded its debts by a
reasonable amount.
 The company is doing exceptionally well in terms of debt to assets ratio as three
out of five years the ratio was nil.
 F. LEVERAGE RATIO OR FINANCIAL LEVERAGE RATIO:
A leverage ratio is a financial measurement that assesses the ability of a company
to meet its financial obligations. A leverage ratio may also be used to measure a
company’s mix of operating expenses to get an idea of how changes in output will
affect operating income. The leverage ratio category is important because
companies rely on a mixture of equity and debt to finance their operations and
knowing the amount of debt held by a company is useful in evaluating whether it
can pay off its debts as they come due.

Equity multiplier, degree of financial and consumer leverage are some of the
leverage ratios.

 EQUITY MULTIPLIER RATIO:

The equity multiplier is a risk indicator that measures the portion of a company’s assets
that is financed by shareholder's equity rather than by debt. Generally, a high equity
multiplier indicates that a company is using a high amount of debt to finance assets. A
low equity multiplier means that the company has less reliance on debt. However, a
company's equity multiplier can be seen as high or low only in comparison to historical
standards, the averages for the industry, or the company's peers. The equity multiplier
reveals how much of the total assets are financed by shareholders equity. Essentially, this
ratio is a risk indicator used by investors to determine how leveraged the company is.

FORMULA: Equity Multiplier Ratio = Total Assets / Total Shareholder’s Equity

Table no 22 Equity Multiplier Ratio

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20

Total Assets 257703 239026 202208 266831 353201
Total
Shareholder's
Equity 560 560 627 49627 57594
Ratio 460.18:1 426.83:1 322.5:1 5.38:1 6.13:1
(Source - https://www.kpmg.com)

Graph 16

GRAPHICAL REPRESENTATION/ANALYSIS

Equity Multiplier Ratio

500
450
400
350
300 460.18 426.83
250 322.5
200 Ratio
150
100
5.38 6.13
50
2015-16 2016-17 2017-182018-19 2019-20

Year

(Source: Done by researcher)

Interpretation:

 From the above diagram, it can be interpreted that in the year 2016, the company
used more amount of debt to finance its equity as the ratio was highest in this
year.
 Year 2017, was better for the company as the ratio dipped in this year in
comparison with the previous year.
 In 2018, the ratio further slowed down which was a good indicator for the company.
 In 2019, the ratio was best in comparison from with all the above years which
simply indicate that the company used comparatively less amount of debt to
finance its assets.
 In 2020, even though the ratio moved up in comparison with the previous year but
the performance of the company was better.
 The company’s performance in terms of equity multiplier ratio was poor in first
three years. Nevertheless, in the next consecutive years it was top notch as the
company used less amount of debts to finance its assets.
 CHAPTER 5: CONCLUSION AND FINDINGS

5.1 FINDINGS:

 Liquidity position of KPMG is very down as current assets of all the above five
years are lesser than their current liabilities. The current ratio, quick ratio and cash
ratio are lesser than 1.0 which shows that the company is not in a position to pay
off its short term debts.
 Operating ratio is very low. The highest Operating ratio was in the year 2020.
Apart from 2018 and 2020, the ratio was negative in rest of the three years. This
shows that profitability of KPMG is declining.
 Return on Capital Employed is increasing every year except for the year 2018 but
overall it shows an increasing trend which is good for the company. It shows a
stable position of the company.
 The company delivered an exemplary performance in terms of its Net Worth.
Year on Year (YOY) the ratio of the company is increasing which is a great sign
for the company.
 Working Capital of KPMG is negative as current assets are lesser than current
liabilities for the first three years. This is a unfavorable situation as company does
not have enough assets which can be used for paying short term liabilities. The
company is dependent on borrowed funds and loans for production of goods.
Nevertheless, in the next two consecutive years, the working capital is positive as
the company’s current assets exceeded its current liabilities in both these years.
 The company showed a top-notch performance in terms of its Capital turnover
ratio as the ratio was surging in the first three years. It indicates that more amount
of sales are generated using the capital employed. Although, it declined in the
next two consecutive years.
 Fixed assets turnover ratio is showing an upward trend it means that the company
is using their fixed assets properly. This is a favorable situation as the company is
using their fixed assets efficiently for production of goods and smooth running of
the business.
  The debt-equity ratio of the company was phenomenal as in all the above five
years it was less than 1. The ratio was even nil in the first three years as the
company did not owe any long-term debts in these years.
 The proprietary ratio of the company in first three years was not promising as it
was less than 1. It shows that the company is relying on too much debt rather than
equity to support its operations. However, in the next two consecutive years the
ratio has increased drastically.
 The debt- service coverage ratio of the company in first three years was nil. It
shows that the company was unable to cover its debt obligations in these years.
However, in the next two consecutive years, the company had enough funds to
cover its debt.
 The company’s interest coverage ratio was poorer in 2018 and 2019 indicating
that the company may default in payment of the interest on its outstanding debt.
However, in the rest of the years the ratio was in the favour of the company.
 The current assets to fixed assets ratio of the company was poor in all the above
five years as the company had more amount of current assets in its business as
compared to its business as compared to its total fixed assets. It shows that the
company relies more on its current assets for smooth running of its business
activities.
 The company’s performance in terms of debt- to- assets was phenomenal as the
ratio was less than 1 in all the above years. It can be an indicator of financial
stability of the company.
 Equity Multiplier ratio indicates that the company is using more amount of debt to
finance its assets in the first three years. However, in the next consecutive years
the ratio has slowed down drastically.

5.2 SUGGESTIONS:
 KPMG should try to reduce the expenses by reducing cost of production and
unnecessary expenses as it would enable them to increase their profitability.
 The company should retain some amount of money as a reserve to meet its
current liabilities and for liquidity purposes.
  KPMG should try and increase their assets, as their assets are less than their
liabilities which shows that the liquidity position of the company is not good.
They should increase their assets for better, efficient and easy production. It will
decrease their expenses. More assets and less liabilities will help KPMG to pay
their short- term obligations and will maintain their liquidity position.
 The company should try and rely more on equity rather than debt to support its
operations.
 KPMG must take measures to create awareness among the customers about the
quality products they deliver at the highest level.
 The company should utilize more fixed assets rather than their current assets to
finance their operations as it will attract the investors.

5.3 CONCLUSIONS:

 KPMG is a successful firm in India as well as in abroad as accounting and

Finance sector is growing and evolving at a rapid phase. It is a third- largest
accounting firm in the world. The firm can reach great heights because of its
scientific and flexible management.
 Financial ratio analysis is a part of financial statement analysis and through this
we can get idea about the company’s past and present performance. Through past
and present position of the company the future performance can be analyzed and
accordingly decisions for smooth running of business can be taken. Ratio analysis
involves the calculations of statistical relationship between data and it is a very
popular technique of financial analysis.
 Through the study of financial analysis of KPMG, I came to know about the
company in detail and also its services, operational efficiency, financial strength
and profitability of the company.
 The company’s financial strength and profitability was anlaysed with ratio
analysis and hypothesis testing. The comparison between 5 years was made for
hypothesis testing.
The hypothesis testing was done as follows:

Table no 23 Testing of Hypothesis

SR.
NO. RATIOS HYPOTHESIS

1 Current Ratio H0

2 Quick Ratio H0

3 Cash Ratio H0

4 Operating Profit Ratio H0

5 Return on investments ratio H1

6 Net Worth Ratio H1

7 Working Capital Turnover Ratio H0

8 Capital Turnover Ratio H1

9 Fixed Assets Turnover Ratio H1

10 Debt Equity Ratio H1

11 Proprietary Ratio H0

12 Debt Service Coverage Ratio H1

13 Interest Coverage Ratio H0

Current Assets to Fixed Assets

14 Ratio H0

15 Debt to Assets Ratio H1

16 Equity Multiplier Ratio H0

(Source: Done by researcher)

 BIBLIOGRAPHY

Websites:

 https://www.kpmg.com
 https://www.accountingtools.com
 https://www.investopedia.com
 https://www.wikipedia.com
 https://www.wallstreetmojo.com
 https://www.moneycontrol.com
 https://www.et.com
 https://www.toppr.com
 https://www.accountinglearning.com
 https://www.inc.com
 https://www.coporatefinanceinstitute.com
 https://www.slideshare.net
 https://www.analyticssteps.com
 https://www.research.net
 https://www.tondfonline.com
 https://www.sciencedirect.com

Books:

 Research and Methodology in Accounting and Finance. Vipul Prakashan (First

Edition) 2018.
 Security Analysis and Portfolio Management. Vipul Prakashan (First Edition)
2018.

Magazines:

 India Today.
 Business Standard.
 Economic Times Wealth (ET Wealth).