Gokhale Education Society’s

B.Y.K. College of Commerce

Prin. T. A. Kulkarni Vidyanagar, Nashik – 5.
‘NAAC’ Re-accredited with Grade ‘A’
ISO 9001-2015 Certified College

MORE ROHAN PANKAJ

TYBBA (Finance)
Roll No:102

Subject Teacher
(Mrs. Rama Yadav)
 University Seat No:

Gokhale Education Society’s

B.Y.K. College of Commerce

Prin. T. A. Kulkarni Vidyanagar, Nashik – 5.

‘NAAC’ Re-accredited with Grade ‘A’

ISO 9001-2015 Certified College

Certificate
This is to certify that Mr.MORE ROHAN PANKAJ of TYBBA (Finance) Roll No. 102
has undertaken and completed the Tutorial for the subject Analysis of
Financial Statements as required by the rules of Savitribai Phule Pune University for
the year 2023-2024

Date: / / Project Guide

(Mrs. Rama Yadav)
INDEX
Sr. Company Topic Signature
No name of Teacher
1 Financial Analysis of any
I. INFOWAVE
TECHNOLOGIES PVT LTD company of three years using
Trend Percentage/
Comparative Statement/Ratio
Analysis.

2 Financial Analysis of two

I.VISHAL HARDWARES different companies using
II.SHIV MACHINERIES Trend Percentage /
Comparative Statement/Ratio
analysis.
 INTRODUCTION:

Financial statement analysis is a critical tool that provides

insights into a company's financial health, profitability, and
overall stability. It involves the examination of various
financial reports, including the balance sheet, income
statement, and cash flow statement, to evaluate a company's
past, present, and potential future performance.This project
aims to delve deep into the art and science of financial
statement analysis. We will explore the key ratios, trends, and
benchmarks that help assess a company's financial standing.
Through this analysis, we will uncover valuable insights into
the company's liquidity, profitability, solvency, and
efficiency.Our journey will not only involve crunching
numbers but also interpreting what these numbers mean in
real-world terms. We will discover how financial statements
can be used to identify potential investment opportunities,
assess creditworthiness, and guide strategic decision-making.

Our journey will not only involve crunching numbers but also
interpreting what these numbers mean in real-world terms.
We will discover how financial statements can be used to
identify potential investment opportunities, assess
creditworthiness, and guide strategic decision-making.

In an era where data-driven decision-making reigns supreme,

the ability to decipher financial statements is an invaluable
skill. Whether you're a seasoned financial analyst, an aspiring
investor, or simply someone eager to demystify the world of
finance, this project will equip you with the knowledge and
tools to navigate the complex landscape of financial
statement analysis.

BYKCC/MORE ROHAN PANKAJ/TYBBA

 TREND PERCENTAGE:
A trend percentage, also called an "index number," lets you
compare financial information, such as net sales, cost of goods
sold, operating expenses, gross profit and inventory, over
time to a base period or year. It's a form of horizontal
analysis that reveals a change or trend in a company's
financial statement accounts over a period of time.

HOW TO CALCULATE TREND PERCENTAGE:

you can measure trend percentages for one or
multiple accounts to determine areas of weakness or
strength in a company's financial statements. To best
review trend percentages, organise them in a table
with one column per year and one row per account.

Trend analysis involves collecting the information from

multiple periods and plotting the collected information on a
horizontal line to find actionable patterns from the given
information. In Finance, Trend Analysis is used for Technical
analysis and Accounting analysis of stocks.

FORMULA:
Amount of change = Current year amount - Base year
amount
Trend percentage = Current year / Base year x 100

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 WHAT IS THE USE OF TREND ANALYSIS:
1)USE IN ACCOUNTING:

Trend analysis is a method of finding the changes in financial data over

time to identify patterns, relationships, and deviations. it can help
accountants to evaluate the performance, profitability, and risk of a
business, as well as to forecast future trends and make informed
decisions.

2)USE IN TECHNICAL ANALYSIS:

An investor can create his trend line from the historical stock prices,
and he can use this information to predict the future movement of
the stock price. The trend can be associated with the given
information. Cause and effect relationships must be studied before
concluding the trend analysis.

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 COMPARATIVE STATEMENT:
A comparative statement is a document that compares a
particularfinancial statement with prior period
statements.Previous financials are presented alongside the
latest figures in side-by-side columns, enabling investors to
easily track a company’s progress and compare it with
peers.The Securities and Exchange Commission (SEC)
requires public companies to publish comparative statements
in 10-K and 10-Q reports.Comparative statements show the
effect of business decisions on a company's bottom line.
Trends are identified and the performance of managers, new
lines of business and new products can be evaluated, without
having to flip through individual financial statements.

TYPES OF COMPARATIVE STATEMENTS:

There are two types of comparative statements which are as follows:

1)COMPARATIVE INCOME STATEMENT

2)COMPARATIVE BALANCE SHEET

1) COMPARATIVE INCOME STATMENTS:

Comparative Income Statement or comparative statement is a financial
statement that defines the current financial position of a business and
compares it with prior period statements. Here, financial statements of the
previous year are presented alongside the latest figures to track the company
progress in an easy way.
The primary motive of these statements is to determine the profitability of
the business by comparing two or more accounting periods.

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 THIS IS HOW THE FORMAT OF A COMPARATIVE INCOME STATEMENT
LOOKS LIKE EXAMPLE:

2) COMPARATIVE BALANCE SHEET:

A comparative balance sheet is a side-by-side comparison of the entire

balance sheet report of a current accounting period and a previous
accounting period.A date-to-date comparison within the company helps a
business owner or investor identify financial performance trends over
time. Investors can also compare companies who use the same accounting
principles for reasons such as how organizations in the same business
vertical respond to the changes in seasons.

BYKCC/MORE ROHAN PANKAJ/TYBBA

 RATIO ANALYSIS:
Ratio analysis is an accounting method that uses financial
statements, like balance sheets and income statements, to
gain insights into a company's financial health. Ratio analysis
will help determine various aspects of an organization
including profitability, liquidity and market value.
Ratio analysis is a helpful tool to determine from the outside
what is going on inside of a business because the financial
statements required to perform ratio analysis are available to
the general public. Company insiders typically do not use ratio
analysis because they already have access to much more
detailed information that will give them a better view of the
company's financial status.

TYPES OF RATIOS :
1)Liquidity Ratios: This type of ratio assesses an organisation’s
ability to deal with short term debt by liquidating its current assets.
These types of ratios in ratio analysis are used by financial lending
institutions, suppliers and banks to assess whether an organisation
is capable of honouring its financial obligations in time. Some
liquidity ratios include quick ratio, cash ratio, working capital ratio,
and the current ratio.

2)Solvency Ratios: These ratios are also referred to as leverage ratios

in that they estimate a firm’s ability to manage its financial
commitments and conduct business in the long term. This is
done by weighing a company’s outstanding debts with interest
against parameters such as its equity, assets or earnings to gauge
whether they will be able to pay these off in due time while
staying profitable. They are often used by governments, banks and
investors. Different types of ratio analysis under this category
include debt-equity ratios, equity multiplier, and debt-assets ratios.
BYKCC/MORE ROHAN PANKAJ/TYBBA
 3)Coverage Ratios: Coverage ratios help in determining a business’
ability to pay off debts and the interest generated by them. Higher
ratios indicate a higher capability to fulfil such obligations. Times
interest earned ratio, fixed coverage, interest coverage and the
debt-service coverage ratios are examples of this category.

4)Efficiency Ratios: Also known as turnover ratios, these types of

ratios in ratio analysis are used to judge the degree of efficiency in a
company’s handling of its
assets, liabilities, equity and inventory in order to generate profits.
Some important efficiency ratios include asset turnover ratio,
inventory turnover, payables turnover, working capital turnover, fixed
asset turnover, and receivables turnover ratio.

5)Profitability Ratios: Profitability ratios evaluate a firm’s ability to

generate profits concerning operating costs. Increases in these types
of ratios over time are often indicative of improving financial
performance. Comparisons of these ratios between similar
organisations in the same sector can be used to gauge relative
performance against the prevailing economic climate. Profit margin,
return on assets, return on equity, return on capital employed, and
gross margin ratios are examples of these types of ratio analysis.

6)Market Prospect Ratios: Finally, market prospect ratios, also

known as earnings ratios, are used by investors to estimate earnings
on investments. These earnings can come in the form of growing
dividends or appreciation of equity value. Dividend yield, earnings per
share, the price-to-earnings ratio, and the dividend payout ratio are
part of this category and are some of the most commonly used types
of ratios in ratio analysis.

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 WHAT IS THE SIGNIFICANCE OF RATIO
ANALYSIS?
Ratio analysis can help us understand the underlying
business intelligence of a financial statement.
Analysis over many reporting periods can help in detecting
trends and relationships while being used to project
future developments or identify risks.
If you plan to invest in certain equity or debt, it can help
you predict wealth gains and dividend pay-outs in the
long-term, thereby helping you choose the right stock.

WHAT IS THE USE OF RATIO ANALYSIS?

The ratio analysis is one of the most powerful tools of
financial analysis. It is used as a device to analyze and
interpret the financial health of enterprise. Just like a doctor
examines his patient by recording his body temperature,
blood pressure, etc. before making his conclusion regarding
the illness and before giving his treatment, a financial analyst
analyses the financial statements with various tools of
analysis before commenting upon the financial health or
weaknesses of an enterprise.
Thus, ratios have wide applications and are of immense use
today:
1. Helps in decision-making
2. Helps in financial forecasting and planning
3. Helps in communicating
4. Helps in co-ordination
5. Helps in Control
6.Utility to Shareholders/Investors
7.Utility to Creditors
8.Utility to Government
9.Tax Audit Requirements

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 Q.I Financial Analysis of any company of three years using Trend
Percentage/ Comparative Statement/Ratio Analysis.

ORGANISATION PROFILE:
Established in the year 2001, Infowave Technologies in Raviwar Karanja,
Nashik is a top player in the category Assembled Computer Dealers in the
Nashik. This well-known establishment acts as a one-stop destination
servicing customers both local and from other parts of Nashik. Over the
course of its journey, this business has established a firm foothold in it’s
industry. The belief that customer satisfaction is as important as their
products and services, have helped this establishment garner a vast base of
customers, which continues to grow by the day. This business employs
individuals that are dedicated towards their respective roles and put in a lot of
effort to achieve the common vision and larger goals of the company. In the
near future, this business aims to expand its line of products and services and
cater to a larger client base. In Nashik, this establishment occupies a
prominent location in Raviwar Karanja. It is an effortless task in commuting
to this establishment as there are various modes of transport readily available.
It is at , Near Siddhivinayak Mandir, which makes it easy for first-time
visitors in locating this establishment. It is known to provide top service in the
following categories: Mobile Phone Dealers, Computer Dealers, Computer
Repair & Services, Laptop Dealers, Laptop Repair & Services, Camera Dealers,
Mobile Phone Accessory Dealers, TV Dealers.

Infowave Technologies in Raviwar Karanja has a wide range of products and

/or services to cater to the varied requirements of their customers. The staff at
this establishment are courteous and prompt at providing any assistance. They
readily answer any queries or questions that you may have. Pay for the product
or service with ease by using any of the available modes of payment, such as
Cash, Cheques. This establishment is functional from 10:00 - 19:00.

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 BALANCE SHEET OF INFOWAVE TECHNOLOGIES
AS OF 31 MARCH

Equities & March March March

Liabilities 2019 2020 2021

Share Capital 200000 300000 400500

Loan 300000 300000 400000

Bills Payable 150000 300000 350000

General Reserve 75000 115000 200000

Total Liabilities 725000 1015000 1350500

Assets March March March

2019 2020 2021

Fixed Assets 225000 330000 460000

Investment 75000 175000 235000
Bills Receivable 125000 375500 395000
Sundry debtors 55000 125000 110000

Cash 245000 385000 150500

Total Assets 725000 1015000 1350500

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 Trend Percentage

Equities March March March Trend Trend Trend

& 2019 2020 2021 Percentage Percentage Percentage
2019 2021 2022
Liabilities

Share 200000 300,000 400500 100% 150% 133.5%

Capital
Loan 300000 300000 400000 100% 100% 133.3%
Bills Payable 150000 300000 350000 100% 200% 116.6%
General 75000 115000 200000 100% 153% 173.9%
Reserve
Total 725000 1015000 1350500 100% 140% 133%
Liabilities
Assets March March March
2019 2020 2021

Fixed Assets 225000 330000 460000 100% 146.6% 171.42%

Investment 75000 175000 235000 100% 233.3% 135.71%
Bills 125000 375500 395000 100% 300.4% 120.00%
Receivable
Sundry debtors 55000 125000 110000 100% 227.27% 52.15%
Cash 245000 385000 150500 100% 157.14% 190.76%
Total Assets 725000 1015000 1350500 100% 140% 133%

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 COMPARATIVE BALANCE SHEET:

IN THE BOOKS OF INFOWAVE TECHNOLOGIES COMPARATIVE

BALANCE SHEET OF YEAR 2019 AND 2020

Particulars 2019 2020 Absolute Percentage

Change
Share Capital 200000 300000 100,000 50%
Loan 300000 300000 N/A N/A
Bills Payable 150000 300000 150000 100%
General Reserve 75000 115000 40000 53%
Total Liabilities 725000 1015000 290000 40%
ASSETS March March
2019 2021
Fixed Assets 225000 330000 105000 46%
Investment 75000 175000 100000 133%
Bills Receivable 125000 375500 250500 200.4%
Sundry debtors 55000 125000 70000 127.27%
Cash 245000 385000 140000 57.14%
Total Assets 725000 1015000 290000 40%

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 IN THE BOOKS OF INFOWAVE TECHNOLOGIES
COMPARATIVE BALANCE SHEET OF YEAR 2020 AND 2021

Liabilities 2020 2021 Absolute Percentage

Change
Share Capital 300000 400500 100500 33.5%
Loan 300000 400000 100,000 33.33%
Bills Payable 300000 350000 50,000 16.66%
General Reserve 115000 200000 85000 73.91%
Total Liabilities 1015000 1350500 335500 33.05%
ASSETS March March
2020 2021
Fixed Assets 330000 460000 130000 39.39%
Investment 175000 235000 60000 34.28%
Bills Receivable 375500 395000 19500 52%
Sundry debtors 125000 110000 -15000 -12%
Cash 385000 150500 -234500 -60.90%
Total Assets 1015000 1350500 335500 33.05%

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 Ratio analysis

1.Current Ratio:

Current ration indicates how the expected claims are covered by current assets.

Formula:

Current Ratio = Current Assets/Current Liabilities

Hence,

Year Current Current Current

Assets Liabilities Ratio

2019 425000 150000 2.83

Times
2020 885500 300000 2.95
Times
2021 655600 350000 1.87
Times

IN 2019 AND 2020 THE CURRENT RATIO IS GOOD BUT

IN 2021 THE CURRENT RATIO IS BELOW 2:1THE
COMPANY NEEDS TO UTILISE IT RESOURCES
FULLY TO ACHIEVE THE STANDARD 2:1 RATIO IN 2022

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 2.Current Assets to Fixed Assets:

This Ratio shows proportion of current assets to fixed assets.

Formula:

Current Assets to Fixed Assets = Current Assets / Fixed Assets

Hence,

Year Current Fixed Current Assets

Assets Assets to Fixed Assets

2019 425000 225000 1.88 Times

2020 885500 330000 2.68 Times

2021 655600 460000 1.42 Times

This ratio indicates the coverage of Current assets

to Fixed assets. The higher rate of ratio are items that
the company expects to use up or sell within a year.

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 3.Total Assets Turnover:

The total asset turnover ratio compares the sales of a company to its asset base.
The ratio measures the ability of an organization to efficiently produce sales, and
is typically used by third parties to evaluate the operations of a business. Ideally,
a company with a high total asset turnover ratio can operate with fewer assets
than a less efficient competitor, and so requires less debt and equity to operate.
The result should be a comparatively greater return to its shareholders.

Formula:
Total Assets Turnover = Net Sale / Total Assets

Hence,

Year Sales Total Total Asset

Assets Turnover

2019 262000 725000 0.36 Times

2020 350000 1015000 0.34 Times
2021 450000 1350500 0.33 Times

Not only fixed assets are directly concern with the generation of
sales, but other assets also contribute to the production and
sales activity of the firm.

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 CONCLUSION
1)THE COMPANY CAN BE SAID AT MODERATE LEVEL AS WE CAN SEE
DECLINE IN CURRENT RATIO IN 2021 IF THEY CANT PAY THE SHORT
TERM LOAN AND THE SHORTTERM EXPENSES THEN IT CAN GET
DIFFICULT FOR THE COMPANY TO OPERATE.

2)THE WORK IN CAPITAL FOR YEAR:

2019-275000rs
2020-585500rs
2021-305600rs
THIS SHOWS DECLINE IN WORK IN CAPITAL IN THE YEAR 2021
SO THE FIRMS NEEDS TO INVESTIGATE AND TAKE PROPER
ACTIONS TO OVERCOME THIS SITUATION.

3)OVERALL THE FIRM IS PERFORMING FINE BUT IT CAN DO BETTER

IF NECESSARY STEPS ARE TAKEN INTO ACTION.

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 Q.II Financial Analysis of two different companies using Trend
Percentage / Comparative Statement/Ratio analysis.

ORGANISATION PROFILE:

1)VISHAL HARDWARE:
Established in the year 1986, Vishal Hardwares in Panchavati, Nashik is a top
player in the category Furniture Fitting Hardware Dealers-Hettich in the Nashik.
This well-known establishment acts as a one-stop destination servicing
customers both local and from other parts of Nashik. Over the course of its
journey, this business has established a firm foothold in it’s industry. The belief
that customer satisfaction is as important as their products and services, have
helped this establishment garner a vast base of customers, which continues to
grow by the day. This business employs individuals that are dedicated towards
their respective roles and put in a lot of effort to achieve the common vision and
larger goals of the company. In the near future, this business aims to expand its
line of products and services and cater to a larger client base.

2)SHIV MACHINERIES:
Stores in Panchavati, Nashik is known to satisfactorily cater to the demands of
its customer base. The business came into existence in 2014 and has,since then,
been a known name in its field. It stands located at Main Road,
Panchavati-422003.The business strives to make for a positive experience
through its offerings.Customer centricity is at the core of Shiv Machinery Stores
in Panchavati, Nashik and it is this belief that has led the business to build
long-term relationships. Ensuring a positive customer experience, making
available goods and/or services that are of top-notch quality is given prime
importance.

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 Balance sheet of Vishal Hardwares and
Shiv Machineries as on 31st march 2021

Equities and Liabilities VISHAL SHIV

HARDWARES MACHINERIES

Proprietors Funds 1300000 900000

Total Liabilities 1300000 900000

Assets

Fixed Assets 850000 670000

Investments 250000 75800

Current Assets 200000 154200

Total Assets 1300000 900000

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 TREND PERCENTAGE:

Equities and Liabilities VISHAL SHIV TREND

HARDWARES MACHINERIES %

Proprietors Funds 1300000 900000 69.23

Total Liabilities 1300000 900000 69.23

Assets

Fixed Assets 850000 670000 78.82

Investments 250000 75800 30.32

Current Assets 200000 154200 77.1

Total Assets 1300000 900000 69.23

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 Comparative Statements:

Vishal Shiv Absolute Percentage

Liabilities
Hardwares Machineries change change

Proprietors Funds 1300000 900000 -400000 -30.76%

Total 1300000 900000 -400000 -30.76%
Liabilities
Assets
Fixed Assets 850000 670000 -180000 -21.17%
Investments 250000 75800 -174200 -69.68%
Current Assets 200000 154200 -45800 -22.9%
Total Asset 1300000 900000 -400000 -30.76

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 RATIO ANALYSIS:

1.Debt to Equity Ratio:

Debt-to-equity (D/E) ratio is used to evaluate a company's financial leverage

and is calculated by dividing a company's total liabilities by its shareholder
equity. D/E ratio is an important metric in corporate finance. It is a
measure of the degree to which a company is financing its operations with
debt rather than its own resources.

Formula:
Debt to Equity Ratio = Long term Debt/Shareholders Funds

Hence,

Company Long term Shareholder’s Debt to Equity

Debt Funds Ratio

VISHAL 775000 945000 0.82:1

HARDWARE

SHIV 650000 721800 0.90:1

MACHINE
RIES

CHANGING RATIO
7
5
3
1
0.8
0.6
0.4
0.2

VISHAL HARDWARE SHIV MACHINERIES

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 2.Proprietory Ratio:

Proprietary ratio is a type of solvency ratio that is useful for determining

the amount or contribution of shareholders or proprietors towards the total
assets of the business. It is also known as equity ratio or shareholder equity
ratio or net worth ratio.

Proprietary Ratio = Shareholder’s Fund / Total Assets

Companies Shareholder’s Total Assets Proprietary

Fund Ratio

VISHAL 945000 1300000 0.72:1

HARDWARE

SHIV 721800 900000 0.802:1

MACHINERIES

CHANGING RATIO
7
5
3
1
0.8
0.6
0.4
0.2

VISHAL HARDWARE SHIV MACHINERIES

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 3.Current Assets to Fixed Assets:

The CA/FA ratio is obtained by dividing current assets by the fixed assets of
a firm. It is notable that the CA/FA ratio provides some significant outcomes
for the firm's investment policies.

Formula:
Current Assets to Fixed Assets = Current Assets / Fixed Assets

Hence,

Companies Current Fixed Current

Assets Assets Assets to
Fixed
Assets
VISHAL 200000 850000 0.235:1
HARDWARE

SHIV 154200 670000 0.230:1

MACHINERIES

CHANGING RATIO
0.700
0.600
0.500
0.400
0.300
0.200
0.100

VISHAL HARDWARE SHIV MACHINERIES

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 CONCLUSION:

1)Comparative data can demonstrate how a company is

performing over time and can be used to estimate likely future
performance. This data can also compare a company's financial
standing with industry averages while measuring how a company
stacks up against others within the same sector.

2)As we can see in the comparative statement balance

sheet above the current assets of Vishal Hardware LTD
are more than Shiv Machineries LTD by Rs.45800. And
there is difference of Rs.174200 in investment.

Therefore, the above case study explains the relevance of accounting

ratios in analyzing the financial statements of a company.

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