Professional Documents
Culture Documents
TABLE OF CONTENTS
I 1.1 INTRODUCTION 1
1.2 :STATEMENT OF THE PROBLEM 1
1.3 :OBJECTIVE OF THE STUDY 2
1.4: METHODOLOGY 2
1.5 SOURCES OF DATA 2
1.6 : PERIOD OF STUDY 3
1.9 : TOOLS 4
II REVIEW OF LITERATURE
2.1 INTRODUCTION 4
2.2 REVIEW 4
9
2.3 : REFERENCE
III COMPANY PROFILE 13
IV DATA ANALYSIS AND
INTERPRETATION 22
CONCLUSION
5.1 : FINDINGS 49
5.2 : SUGGESTIONS 50
5.3 : CONCLUSION 51
REFERENCE 52
ANNEXURE 53
LIST OF TABLES
LIST OF CHARTS
2 LIQUID RATIO 25
4 DEBT RATIO 29
5 SHAREHOLDER EQUITY
31
RATIO
6 RETURN ON INVESTMENT
33
RATIO
7 NET PROFIT RATIO 35
8 RETURN ON ASSETS 37
LIST OF CHARTS
2 LIQUID RATIO 26
5 SHAREHOLDER EQUITY
32
RATIO
6 RETURN ON INVESTMENT
34
RATIO
7 NET PROFIT RATIO 36
8 RETURN ON ASSETS 38
CHAPTER-1
INTRODUCTION
CHAPTER-I
1.1 INTRODUCTION
Financial performance is a subjective measure of how well a firm can use assets
from its primary mode of business and generate revenues. This term is also used general
measure of firm's overall financial health over a given period of time and can be used to
compare a similar firm's across the same industry or to compare industries or sectors in
aggregation. The financial performance of the company can be analyzed using the
company's balance sheet, income statement and cash flow. Financial statement analysis is
the process of analyzing a company's financial statement for decision making purposes
tand to understand the overall health of an organization.
1
1.2 STATEMENT OF THE PROBLEM
Now a day’s finance plays a vital role in all industries. As this company faces
many financial problems regarding their business activities, this study has been taken to
solve the problems.
1.4 METHODOLOGY
This study is focused on the profitability and solvency position of the company.
It is based on secondary source of data. This study covers the two years financial
performance of National plastics PVC.
2
1.5 SOURCES OF DATA
Balance sheet
The overall period of data collected for this study is 2018 to 2020.
The study entitled "A Study on the Financial Statement of National plastics pipes" is to
analyze the financial performance for the past two years.
The study is based on the financial position of the firm by using Ratio
analysis. Financial statements help the management to analyze profit, liquidity and
efficiency and etc. This analysis will give the exact picture of the company. This study
will also help management to take managerial decisions.
3
The data were derived only from the secondary sources so the
accuracy may not be ensured.
1.9 TOOLS
The tools that are to be used in this study to analyze of the financial
Statement is,
Comparative statement.
1.10 CHAPTERIZATION
4
The report of the present study - a study on FINANCIAL
STATEMENT ANALYSIS OF NATIONAL PLASTICS PVC has been organized
and presented in five chapters.
CHAPTER - I : Introduction
5
CHAPTER-2
REVIEW AND LITERATURE
6
CHAPTER-2
2.1 INTRODUCTION
2.2 REVIEW
4
Pepa Kraft (June 2000)4 have examined a dataset of both
quantitative adjustments to firms reported U.S GAAP financial statement
numbers and qualitative adjustments to firms credit ratings that Moody’s
develops and uses in its credit rating process. First document differences
between firms reported and Moody’s adjusted numbers that are both large
and frequent across firms. For example, primarily because of upward
adjustments to interest expense and debt attributable to firms off- balance
sheet debt, on average, adjusted coverage (cash flow- to-debt) ratios are 27
percent (8%) lower and adjusted leverage ratios are 70 percent higher than
the corresponding U.S. GAAP ratios. They then find that Moody’s hard
and soft rating adjustments are associated with significantly higher credit
spreads and flatter credit spread term structures. Overall, the results
indicate that Moody’s quantitative adjustments to financial statement
numbers and qualitative adjustments to credit ratings enable it to better
capture default risk, consistent with it effectively processing both hard and
soft information.
5
the financial statement ratios. This monograph discuss the evolution
within the financial distress prediction
6
Kari Joseph Olsen (April 2011)6 investigates the relationship between
narcissistic personality characteristics in CEO’s of fortune 500 companies
and financial performance measures of earnings-per-share (EPS) and stock
valuation. Using panel data from 1992 through 2009, we show that firms
with narcissistic CEO’s have higher earnings-per-share and share price
than those with non- narcissistic CEO’s. We examine the mechanism
driving the observed results and find that narcissistic CEO’s are more
likely to increase reported EPS through real and operational activities
rather than accrual-based manipulations. The findings suggest that
narcissistic personality characteristics of top executives affect financial
performance measures through the executive’s decisions and influence
over the firm’s operational activities rather than through accrual and
accounting decisions.
Bruce K. Behn, Giorgio Gotti, Don Herrman (September 2011)7
Their research on publicly traded U.S firms provides evidence that
managers engage in classification shifting to opportunistically manage
“core” earnings. We extend this line of research in a border
international setting, by examining (1) whether the level of investor
protection affects managers decisions to engage in classification shifting
behaviour and (2) whether coverage by financial analysis mitigates this
behaviour. Based on an international sample of firms from 40 countries,
we observe evidence consistent with classification shifting in both strong
and weak investor protection countries using four separate measures of
investor protection. We then explore the potential monitoring role of
financial analysts in mitigating classification
Marshall Geiger, Joyee Van Der Laan Smith (February 2012)9. They
examine the effect of stakeholder orientation versus shareholders
orientation, and the level of cultural secrecy on individuals perceptions of
earnings management practices. Examining perceptions from 1,260
7
participants from 13 countries indicates that individuals from stakeholder-
oriented institutional backgrounds were less accepting of earnings
management, including both accounting earnings management and
operating earnings management activities, than participants from
shareholder- oriented institutional backgrounds, and that individuals from
secretive cultures were more accepting of both types of earnings
management activities. Our findings provide evidence of the anticipated
perpetual differences across countries with respect to earnings
management and suggest the need for further research linking
perceptions to reported earnings management resources.
8
2.3: REFERENCE
9
in the Missing Month..,”
10
11
CHAPTER-3
COMPANY PROFILE
12
CHAPTER-III
3. Location : Karumathampathi
4. District : Coimbatore
13
9. Raw material : Crude oil, Natural gas
The company was registered under the name of NATIONAL PLASTICS PIPE
INDUSTRIES (pvt) ltd Coimbatore on 22nd April 2000 under the Indian company act 1956. The
14
company is situated in Karumathampatti, which is the boundary of Coimbatore municipality.
sri.M.V. Muhammed haji was the founder of NATIONAL PLASTICS PIPE INDUSTRIES.
The company states its Vision as “TO BE THE BRAND WHICH STRIKES
15
To raise its brand name.
Undertake market research studies to assess the consumption and demand
of pipes in the country.
Promote consumer awareness about plastic pipes.
Take up census/surveys useful to the industry, the Government and policy
planning bodies.
1. Production Department,
2. Marketing Department,
3. Finance Department,
4. Human Resources Department,
5. Quality Control Department.
1. Production Department
RAW MATERIALS
The main raw material required compounded PVC resin. Presently both PVC&
Polyethylene Plastics raw materials are indigenously manufactured. Other compounding
materials like Plastisizers, Stabilizers, Lubricants and fillers are also manufactured in India. No
problem is envisaged for procurement of PVC resin and the other required compounding
materials. The raw materials required are as follows:
16
o PVC resin :150.00MT
o DOP: 6.80 MT
o Stabilizers :3.20 MT
o Processing acids : 1.20 MT
o Colorant:0.70 MT
o Filler: 10.20 MT
2. MARKETING DEPARTMENT
Marketing department is only income generating department, all
other departments generate payment or cost, it does not mean all other departments
are burden to firm, every generating of satisfied customer etc.
3. FINANCE DEPARTMENT
Every business organization requires funds for operating its business. The
funds were obtained by issuing shares and debentures. The accounts were audited as
per the rules and regulations under Companies Act 1956.
5.QUALITY DEPARTMENT
As the quality of the product is considered the force which draws
the customer to the company the quality of the edible oil produced were checked
efficiently by the quality control department.
17
SABIC,
LG Chem,
INEOS.
18
CHAPTER-4
19
CHAPTER-4
ANALYSIS AND
INTERPRETATION
4.1CURRENT 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 hoe a company can maximize the current assets on its balance
sheet to satisfy its current debt and other payables.
Formula:
20
TABLE NO: 4.1
INTERPRETATION:
The above table depicts the relation between current assets
and current liabilities. Current ratio is higher during the period 2017-18 at
5.92 and lower during the period 2018-19 at 1.55 and again it has increased
during the year 2019-20 at 4.31.
21
CHART NO: 4.1
22
4.2: LIQUIDITY RATIO
Liquidity ratio measures the firm’s ability to pay off current dues
I.e., repayable within a year. Liquidity ratio is otherwise called as “short
term solvency ratios”.
FORMULA:
INTERPRETATION:
The above table depict the relation between current assets and
current liabilities. Liquid ratio is higher during the period 2017-18 at
1.04 and lower during the period 2018-19 at 0.20 and again it has
increased during the year 2019-20 at 0.55.
23
CHART NO: 4.2
24
4.3: CASH POSITION RATIO:
This measures the ability of an organization to cover its short-term
obligations. If the ratio is greater than one, it means that the company has adequate
cash on hand to continue to operate. A cash position can also be found by looking at
a company's free cash flow (FCF).
FORMULA:
INTERPRETATION:
The above table depicts the relation between cash& bank balance
and current liabilities. Cash position ratio is higher during the period
2017-18 at 0.95 and lower during the period 2018-19 at 0.20 and again it
25
has increased during the year 2019-20 at 0.55.
26
4.4: DEBT EQUITY
The debt-to-equity ratio compares a company's total liabilities
to its shareholder equity and can be used to evaluate how much
leverage a company is using. Higher-leverage ratios tend to indicate a
company or stock with higher risk to shareholders.
FORMULAE:
INTERPRETATION:
The above table depicts the relation between total liability and
total shareholders’ equity. Debt equity ratio is higher during the period
2017-18 at 0.20 and increased during the period 2018-19 at 0.86 and
again it has decreased during the year 2019-20 at 0.30.
27
CHART NO: 4.4
28
4.5: SHAREHOLDER EQUITY RATIO
The shareholder equity ratio indicates how much of a company’s
assets have been generated by issuing equity shares rather than by taking
on debt. The shareholder equity ratio, expressed as a percentage, and is
calculated by dividing total shareholders ‘equity by the total assets of the
company.
FORMULAE:
INTERPRETATION:
The above table depict the relation between total shareholders’ equity total
liability and total assets. shareholders equity ratio is higher during the period 2017-18
29
at 0.83 and decreased during the period 2018-19 at 0.74 and again it has increased
during the year 2019-20 at 0.76
30
4.6: RETURN ON INVESTMENT RATIO
Return on investment is a simple ratio that divides the net profit (or loss)
from an investment by its cost. Because it is expressed as a percentage, you can
compare the effectiveness or profitability of different investment choices.
FORMULAE:
INTERPRETATION:
The above table depicts the relationship between net profit and total
investment. Return on investment ratio is lower during the period 2017-18 at 0.68
and increased during the period 2018-19 at 4.60 and again it has decreased during the
year 2019-20 at 1.89.
31
CHART NO: 4.6
32
4.7: NET PROFIT RATIO
The net profit margin, or simply net margin, measures how much net
income or profit is generated as a percentage of revenue. It is the ratio of net
profits to revenues for a company or business segment. Net profit margin is
typically expressed as a percentage but can also be represented in decimal form.
FORMULAE:
Net Profit Ratio = Net Profit After Tax / Net Sales * 100
INTERPRETATION:
The above table depicts relationship between net profit tax and
net sales. Net profit ratio is lower during the period 2017-18 at 11.34 and
33
increased during the period 2018-19 at 11.35 and again it has gradually
increased during the year 2019-20 at 13.27.
34
CHART NO: 4.7
35
4.8: RETURN ON ASSETS
FORMULAE:
INTERPRETATION:
The above table depict the relationship between net income and total
assets. Return on assets is higher during the period 2017-18 at 0.93 and
lower during the period 2018-19 at 0.83 and again it has gradually
36
increased during the year 2019-20 at 0.93.
37
CHART NO: 4.8
38
4.9COMPARATIVE BALANCE SHEET:
NON-CURRENT ASSETS
(i)Investments
6.68 902.01 -895.33 -0.99
(ii)other financial asset
225.13 166.93 58.2 0.348
Non-current tax assets
275.93 275.93 0 -
Other non-current asset
316.90 403.17 -86.27 0.213
39
CURRENT ASSETS
Trade receivable
16,531.54 12,300.53 4231.51 0.344
Cash and cash equipment
9,406.27 9,268.03 138.24 0.0149
bank balance other than
above 489.00 418.69 71 0.169
Other financial asset
1,470.36 2,078.30 -607.94 -0.292
Other current asset
8,731.80 4,832.45 3899.35 0.806
Total assets
75,767.52 59.994.45
EQUITY AND LIABILITY
EQUITY
Equity share capital 665.00 665.00 00 0
Other equity 55,684.02 49,205.05 6,478.97 0.131
NON CURRENT
LIABILITY
FINANCIAL
LIABILITIES
Borrowings - 62.58 - -
Provision 777.92 676.26 101.66 0.150
Different tax liabilities (net) 1,338.94 1,572.48 233.54 0.148
Other non-current liability 669.59 824.56 -154.97 0.187
40
CURRENT LIABILITIES
FINANCIAL
LIABILITIES
Borrowings 8,668.30 29.22 8,639.08 296.65
TRADE PAYABLE
i)Total outstanding dues
to micro enterprises
small enterprises 102.61 69.40 33.21 0.478
ii)Total outstanding dues to
credit or other than micro
enterprises and small
enterprises 4,107.98 4,182.88 -74.9 -0.017
Other financial liabilities 747.73 1, 101,13 -353.83 -0.320
Other current liabilities 401.73 478.73 -77 -0.160
Provision 265.07 208.94 56.13 0.268
Current liability(net) 2,339.06 981.20 1357.86 1.383
TOTAL
EQUITY AND
LIABILITIES 75,767.52 59,994.43 15,773.09 0.262
INTERPRETATION:
41
COMPARATIVE BALANCE SHEET FOR THE YEAR 2019-20
ASSETS
NON-CURRENT ASSETS
42
Non -current tax assets 512.83 275.93 236.9 0.858
Other non-current asset 1,793.01 716.90 1,076.11 1.501
CURRENT ASSETS
43
CURRENT LIABILITIES
FINANCIAL
LIABILITIES
Borrowings 9,612.57 8,668.30 944.27 0.108
TRADE PAYABLE
i)Total outstanding dues
to micro enterprises
small enterprises 57.43 102.61 -45.18 -0.440
ii)Total outstanding dues to
credit or other than micro
enterprises and small
enterprises 4,674.27 4,107.98 566.29 0.1378
Other financial liabilities 570.53 747.73 -177.2 -0.236
Other current liabilities 4,48.31 401.73 46.58 0.115
Provision 336.12 265.07 71.05 0.268
Current liability(net) 1,401.47 2,339.06 -937.59 -0.400
TOTAL
EQUITY AND
LIABILITIES 83,509.32 75,767.52 7741.8 0.102
INTERPRETATION:
44
45
CHAPTER-5
46
FINDINGS, SUGGESTIONS AND CONCLUSION
CHAPTER-V
5.1 : FINDINGS
Debt equity ratio is highest during the year 2018-19 at 0.86 and
decreased at 0.30.
PROFITABILITY RATIO
47
Return on investment ratio is increased during the
period 2018-19 at 4.60 and lowest during the year
2019-20 at 1.89.
5.2: SUGGESTIONS
48
instead of getting the funds from outside.
5.3: CONCLUSION
49
REFERENCE
BOOKS
Neeti Gupta.
2. Principles of Management Accounting – Dr. S.N. Pillai and bahavathi.
WEBSITE
1. www.wikipedia.com
2. www.investopedia.com
50
ANNEXURE
51
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2020
52
BALANCE SHEET FOR THE YEAR 2019
53
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2019
54
BALANCE SHEET FOR THE YEAR 2018
55
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2018
56