A PROJECT ON

PREPARATION OF FINAL
ACCOUNTS OF A SOLE TRADER
SUBMITTED BY
Name –PAMPANA PRASANNA
CHSE roll no.- REGD NO -NA12C20012
Roll no.-IC20 – 012
College - Larambha college Larambha

Submitted for the evaluation in

Annual higher secondary examination in commerce
Subject:

Signature of student- Date-

Internal Examiner- External Examiner-

 Certificate
This is to certify that the content of this project entitled _________________
“_______________________________________________________________
________________________________ “by ____________________________
Is a bona-fide work, submitted to Larambha College ,Larambha, Bargarh for
consideration in partial fulfillment of the requirements of CHSE, Odisha for
the award of +2 certificate in commerce.
The original research work is carried out the student under my
carried out by the student under my supervision in the academic year 2020
2021 on the basis of the declaration made by his/her recommended project
report for the evaluation.

Teacher’s signature
( lect in .commerce)
Larambha college, Larambha.
 Acknowledgement

I would like to express my gratitude to my subject teacher who gave me

the amazing opportunity to do wonderful project on
“_______________________________________________________________
_______________________________________________________"
I would also like to thank my parents and my friends who helped me a lots its
finalizing this project within the stipulated time frame.
My thanks and appreciation also goes to my classmates in
developing the project and to the people who helped me out with their
abilities

Place – Signature-
Date-
Meaning :
The term “financial statement analysis” refers to the process of determining
financial strength
and weakness of the firm. It includes both analysis and interpretation. The
purpose of financial
statement analysis is to diagnose the information contained in financial
statement so as to judge
the profitability and financial soundness of the firm.
Definition:
According to Myers, “Financial statement analysis is largely a study of
relationship among the
various financial factors in a business as disclosed by a single set of statement,
and a study of the
trend of these factors as shown in a series of statement”.
Objectives and Importance of financial statement analysis:
(i) To assess the earning capacity or profitability of the firm.
(ii) To assess the operational efficiency and managerial effectiveness of the
firm.
(iii) To assess the short term as well as long term solvency position of the firm.
(iv) To make inter-firm comparison means comparison about financial position
of two firm.
(v) To assess the progress of the firm over a period of time.
(vi) To identify the reason for changes in profitability and financial position of
the firm.
(vii) To make forecast about future prospects of the firm.
(viii) To help in decision-making and controlling and provide information for
granting credit.

Tools/ Method/ Devices of financial statement analysis:

(I)Comparative statement.
(ii) Common-size statement.
(iii) Trend analysis.
(iv) Fund flow analysis.
v) Cash flow analysis.
(vi) Ratio analysis

Types of financial statement analysis:

(i) On the basis of material used:
1) External analysis.- This analysis is done by outsiders who do not have access
to know
detailed internal accounting records of the firm.
(2) Internal analysis- The analysis conducted by persons who have access to the
internal
accounting records of the business firm is known as internal analysis.
On the basis of modus operandi:
(1) Horizontal analysis- This analysis refers to the comparison of financial data
of a company for several years.
(2) Vertical analysis- This analysis refers to the study of relationship of the
various items in the financial statement of one accounting period.

On the basis of time horizon:

(1) Long-term analysis- This type of analysis is made to study the long term
financial position of a firm. It is also help in long term financial planning.
(2) Short term analysis- This analysis is made to measure the short term
solvency and earning capacity of the firm. It also helps in determining firm’s
current obligation.
Limitation of financial statement analysis:
I) Financial statement analysis is based upon only monetary factors and ignored
all nonmonetary factors.
(ii) It is only a study of interim reports.
(iii) It does not considered changes in price level when asset assets amount is
decreased.
(iv) Financial statements are prepared on the basis of going concern, It does not
give exact position.
(v) Different people may interpret the same analysis in different ways

1) Comparative financial statement:

Comparative financial statement is a tool of financial analysis used to study the
magnitude and direction of changes in the financial position and performance of
a firm over a period of time. This statement is not only the comparison of the
figures of two periods also be relationship between balance sheet and income
statement enables an in-depth study of financial position and operative results.
The comparative statement may provide:
(I) Absolute figures.
(ii) Absolute data in terms of percentages.
(iii) Increase and decrease absolute figure and also percentage.
(iv) Percentage of total
Objectives/ Need of comparative financial statement:
(I) To indicate the trend and direction of financial position and operating results.
(ii) To judge the strength and weakness of a firm in terms of liquidity, solvency
and profitability.
(iii) To indicate the magnitude and direction of changes in various elements of
financial statement.
(iv) To help the management in planning and forecasting.
 From practical point of view generally two financial statements are prepared
in
comparative form for financial analysis purpose.They are described as follows-
(A) Comparative balance sheet.
(B) Comparative income statement.
A)Comparative balance sheet:
The comparative balance sheet analysis, in the words of “Foulke”. Comparative
balance sheet of an enterprise is prepared to show different assets, liabilities and
capital as on two or mare dates so as to compare and ascertain any increase or
decrease in absolute item and also percentagechanges. The items of the balance
sheets should be represented in a classified manner in order to judge the
increase or decrease in financial position of the concern from different angles.
Objectives or Use of comparative balance sheet:
(i) It reveals the absolute and percentage changes in the assets and liabilities of a
concern.
(ii) It is useful to examine the increase or decrease in long-term and short-term
solvency of the concern.
(iii) It can be used as a tool in analyzing and evaluating the financial position of
a firm over a period of number of years.
(iv) The comparative balance sheet emphasis on change and it is a dynamic
statement.
(v) The comparative balance sheet is more useful than a simple balance sheet as
it shows data which may be used to study the trend of a business enterprise.
(vi) The progress of the concern in absolute and percentage figure can be known
from this stateme
A)Common-size Balance sheet:
A Common-size balance sheet is a balance sheet in which each line item is
expressed as apercentage of assets. A statement in which balance sheet items
are expressed as the ratio of each asset to total assets and the ratio of each
liability is expressed as a ratio of total liabilities is called common-size
balance sheet. The common-size balance sheet can be used to compare
companies of different size.
Objectives/ Use of common-size balance sheet:
(I) To study the changes in individual items of balance sheet.
(ii) To study the trend of different items of assets and liabilities.
(iii) It facilitates easy comparison.
(iv) More useful than the simple balance sheet because informed about each
element.
B) Common-size income statement:

A common-size income statement is an income statement in which each

account is expressed as a percentage of the value of sales. The items in
 income statement can be shown as percentages of sales to show the
relation of each item to sales. It is useful for preparing vertical analysis.

Objectives/ Use of common-size income statement:

) The common-size income statement also shows the distribution of profits in
form of interest, taxes, and dividends.
(ii) The common size income statement for every separate company has been
prepared individually.
(iii)It is beneficial in comparing two or more periods or two or more companies
when the productive capacity is not the same.
(iv) The comparative significance of each individual item of expenses and
incomes stands out clearly.
(v) A study of common size percentage of a company indicates the structure of
profit and loss account.
(vi) The common size income statement also shows the distribution of profit in
form of interest, taxes and dividends.

About Titan Company:

Titan Company Ltd is the world's fifth largest wrist watch manufacturer and
India's leading producer of watches. The company is engaged in manufacturing
of watches, jewelry, precision engineering and Eyewear. They produce watches
under the brand name Titan, Fastrack, Sonata, Nebula, RAGA, Regalia, Octane
&Xylys. They export watches to about 32 countries around the world. They
manufacture precious jewellery under the Tanishq brand name. Titan Industries
Ltd is a joint venture between the Tata Group, and the Tamil Nadu Industrial
Development Corporation (TIDCO).
As on 31 December 2017, Titan's retail chain comprised of 1,439 stores with
total retail area crossing 1.87 million sq.ft. nationally for all its brands.
Titan Industries Ltd was incorporated in the year 1984 and commenced their
business in the year 1986. The company set up an integrated watch
manufacturing facility at Hosur in Tamil Nadu in the year 1987 with initial
technical know-how from Europe and Japan. In October 1992, they came with a
right issue to the part of finance for its expansion programmes. In the year 1995,
they diversified into Jewellery under the brand name of Tanishq to capitalize on
a fragmented market operating with no brands in urban cities. Apart from the
domestic market, the company started the manufacturing of watches for several
prestigious international brands during the year 1997.
In the year 1998, the company launched the second watch brand, Sonata. In the
year 2003, the company leveraged their manufacturing competencies and
branched into Precision Engineering Products and Machine Building. They
diversified into fashion Eyewear by launching Fastrack Eye-Gear sunglasses, as
well as Prescription Eyewear. The company's Precision Engineering Division
supplies precision components and also manufactures dashboard clocks as OEM
to car manufacturers in Europe and America. The division also provides fully
integrated Automation solutions.
In 2012, the company won a total of 3 awards at the ET retail awards which was
held in Mumbai on the 18th of January 2012. The company also Won 2 awards
at the 12th edition of Images fashion awards night. The company has been
certified to ' OHSAS 18001: 2007 ' Management Systems. The company was
selected unanimously by the jury as the Best Governed Company 2012 by Asian
Centre for Corporate Governance & Sustainability. The company won the
Client of the Year award at the Campaign India Digital Media Awards 2012.
In 2013, the company's name was changed from Titan Industries Ltd. to Titan
Company Ltd. On 16 December 2013, Titan Company announced the opening
its 1000th retail store in Bangalore. With this, Titan became the first Indian
specialty retailer to open 1,000 stores in seven varied formats under watches,
jewellery and eyewear categories.
In 2014, the Company entered into a Joint Venture agreement with Montblanc
Services B.V. Netherlands for establishing operations in India for carrying on
single brand retail trade. Titan Company Ltd which is engaged in manufacturing
of watches/accessories, jewelry, precision engineering and eyewear stated that
their jewellery division has launched first Karigar centre for jewellery
manufacturing in Hosur.
In 2015, the company added one more feather to its Manufacturing Excellence
and Commenced World Class Stainless Steel Case production in Coimbatore.
On 23 November 2015, Titan announced that it has joined forces with HP Inc.,
one of the world's leading information technology companies, to launch a range
of smart watches in India and select international markets.
On 3 December 2015, Titan announced that its joint venture with Montblanc
Services B.V, Netherlands has commenced operations. Montblanc Services B.V
holds majority 51% stake in the joint venture company and Titan holds a 49%
stake. The joint venture company was formed for carrying on the business of
single brand retail trading of Montblanc products in India.
On 10 December 2015, Titan announced that the Reserve Bank of India has
permitted FIIs/RFPIs to invest up to 35% of the paid-up capital of the company
under portfolio investment scheme.
The Board of Directors of Titan Company at its meeting held on 6 May 2016
approved the acquisition of a majority stake in Carat Lane Trading Pvt. Ltd.
(Carat Lane) subject to due diligence. Carat Lane was incorporated on 20
September 2007 and is a leading online jewellery brand and sells its products
through its website Caratlane.com. The company has also developed omni-
channel capabilities and has currently 13 stores across the country with plans to
ramp up the retail stores significantly in the future. On 14 July 2016, Titan
announced signing of Share Purchase Agreement for acquiring about 62% stake
in Carat Lane Trading Pvt. Ltd for a cash consideration ofRs357.24 crore.
In 2013, the company's name was changed from Titan Industries Ltd. to Titan
Company Ltd. On 16 December 2013, Titan Company announced the opening
its 1000th retail store in Bangalore. With this, Titan became the first Indian
specialty retailer to open 1,000 stores in seven varied formats under watches,
jewellery and eyewear categories.
In 2014, the Company entered into a Joint Venture agreement with Montblanc
Services B.V. Netherlands for establishing operations in India for carrying on
single brand retail trade. Titan Company Ltd which is engaged in manufacturing
of watches/accessories, jewelry, precision engineering and eyewear stated that
their jewellery division has launched first Karigar centre for jewellery
manufacturing in Hosur.
In 2015, the company added one more feather to its Manufacturing Excellence
and Commenced World Class Stainless Steel Case production in Coimbatore.
On 23 November 2015, Titan announced that it has joined forces with HP Inc.,
one of the world's leading information technology companies, to launch a range
of smart watches in India and select international markets.
On 3 December 2015, Titan announced that its joint venture with Montblanc
Services B.V, Netherlands has commenced operations. Montblanc Services B.V
holds majority 51% stake in the joint venture company and Titan holds a 49%
stake. The joint venture company was formed for carrying on the business of
single brand retail trading of Montblanc products in India.
On 10 December 2015, Titan announced that the Reserve Bank of India has
permitted FIIs/RFPIs to invest up to 35% of the paid-up capital of the company
under portfolio investment scheme.
The Board of Directors of Titan Company at its meeting held on 6 May 2016
approved the acquisition of a majority stake in Carat Lane Trading Pvt. Ltd.
(Carat Lane) subject to due diligence. Carat Lane was incorporated on 20
September 2007 and is a leading online jewellery brand and sells its products
through its website Caratlane.com. The company has also developed omni-
channel capabilities and has currently 13 stores across the country with plans to
ramp up the retail stores significantly in the future. On 14 July 2016, Titan
announced signing of Share
Purchase Agreement for acquiring about 62% stake in Carat Lane Trading Pvt.
Ltd for a cash consideration of Rs 357.24 crore. Carat Lane clocked revenue of
Rs 141 crore for the financial year ended 31 March 2016. In August 2016, Titan
completed the acquisition of about 62% stake in Carat Lane.
On 12 October 2016, Titan Company announced that the company has since
inception been exploring opportunities in personal lifestyle categories. One such
category is special occasion

Carat Lane clocked revenue of Rs 141 crore for the financial year ended 31
March 2016. In August 2016, Titan completed the acquisition of about 62%
stake in Carat Lane.
On 12 October 2016, Titan Company announced that the company has since
inception been exploring opportunities in personal lifestyle categories. One such
category is special occasionethnic wear for women which will now be piloted
for understanding consumer attitudes and preferences. The pilot, which may
include setting up a few stores, is expected to last about 12 months at the end of
which the company will take a decision on the future course of action.
On 16 January 2017, Titan Company announced that it has decided to
consolidate its portfolio by migrating the Gold Plus network to become a part of
the Tanishq network. Titan said that customers in the larger cities of South India
have evolved in their tastes and aspirations and
Titan's main jewellery brand Tanishq has kept pace with them. Given that
evolution of the customers and Tanishq as well as the need to focus all energies
and resources in today's circumstances, Titan Company has decided to
consolidate its portfolio by migrating the Gold Plus network to become part of
the Tanishq network. Titan had launched its second jewellery brand Gold Plus
in 2005 for small-town South India, to better cater to the needs of the more
traditional requirements of those customers.

On 20 February 2017, Titan Company informed the stock exchanges that the
High Court of
Madras has sanctioned the Scheme of Arrangement between Titan Company
Limited and Titan
Engineering & Automation Limited for transfer of Precision Engineering
Business Undertaking
of the Titan Company Limited to Titan Engineering & Automation Limited, a
wholly-owned
Subsidiary of Titan Company, in terms of an order passed on 12 December
2016.
During the year 2016-17, Titan's eyewear division added 95 new stores. Also
during the year, the
company announced the introduction of 30 minute delivery of spectacles. The
company
purchased land during the year to set up frame manufacturing. In the watches
segment, the
company ventured into smart watch category, launching 4 smart products (Juxt,
Juxt Pro, Sonata
Act, Fastrack Activity Tracker Band) to rave reviews.
Comparative balance sheet of years 2010 and 2011 of
titan company.
Particular 31.3.2010 31.3.2011 Absolute Percentage
change Change
I- Equity and
Liabilities:-
(1) Shareholder’s
funds: 724.38 1025.38 301 41.55
a) Share capital 44.39 44.49 _ _
b) Reserve and surplus
(2) Non-current 679.99 980.99 301 44.26
liabilities:
a) Long-term
borrowing
b) Long-term 72.79 9.45 63.34 87.01
provisions
(3) Current liabilities: 0.00 41.52 41.52 _
a) Short-term
borrowing
b) Trade payable
c) Other current 0.00 0.00 _ _
liabilities 722.17 1522.70 800.53 110.85
427.42 953.90 526.48 123.17

TOTAL 2104.19 3735.56 1631.37 52.55

LIABILITIES(1+2+3)s
II- Assets:-
(1) Noncurrent assets:
a) Tangible assets
b) Intangible assets 199.36 269.57 70.21 35.21
c) Capital work-in- 63.27 13.50 49.77 78.66
progress
d) Intangible assets 12.29 16.64 4.35 35.39
under develop
e) Other noncurrent 0.00 0.00 _ _
assets
(2) current assets: 0.00 0.00 _ _
a) Current investment
b) Inventories 0.00 0.00 _
c) Trade receivable _
d) Cash and cash 1340.33 1993.83 653.5 48.75
equivalent 93.61 113.68 20.07 21.44
e) Short-term loan and
advances 186.06 1096.50 186.72 100
f) Other current assets
183.06 85.59 97.47 53.24

0.00 15.59 15.59 _

TOTAL ASSETS(1+2) 2104.19 3735.56 1631.37 52.55

Comparative income statement for the year
ended 2010 and 2011
Particular 31.3.2010 31.3.2011 Absolute Percentage
change change
I- Reverence
from operation 4703.12 6521.66 1809.51 38.46
II- Other 8.62 56.08 47.46 550.58
income
III- Total 4783.04 6576.97 1893.93 40.44
Revenue(I+II)
IV- Expenses:
a) Cost of 3166.36 4.344.88 1178.52 37.22
material
consumed 412.15 849.58 137.13 33.27
b) Purchase of
stock in trade 275.64 365.13 89.49 32.46
c) Employed 25.42 34.52 9.1 35.79
benefit
expenses 60.08 34.48 25.6 42.60
d) Finance cost 527.62 849.66 322.04 61.03
e)
Depreciation
expenses
f) other
expenses
Total 4361.72 5977.97 1616.25 37.05
expenses:
V- profit
before
exceptional 321.32 599.00 277.68 86.41
items(III-IV) 0.00 0.00 _ _
VI- less:
Exceptional
items 321.32 599.00 277.68 86.41
VII- Profit 68.08 168.59 100.51 147.63
before tax
Less: Tax

VIII- Profit 253.24 430.42 177.18 69.96

after tax
Interpretation÷ (comparatives statement).

1) The comparative income statement given above reveals that there has been an
increase in
revenue from operation of 20.47%.
2) Profit after tax increase of 52.63%.
3) The comparative balance sheet of the reveals that both current and non-
current asset increas4) The overall financial position of the company is
satisfactory.

Common-size balance sheet of titan company For years 2010

and 2011
Particular 2010 Total % 20 11 Total %
I- Equity and
Liabilities:
(1) Shareholder’s
funds
a) Share capital 44.39 2.10 44.39 1.18
b) Reserve and 679.99 32.31 980.99 100
surplus 724.38 34.42 1025.38 27.44
(2) Non-Current
liabilities
a) Log-term
borrowing 72.79 3.45 9.45 0.25
(3) Current liabilities
a) Short-term 0.00 _ 0.00 _
borrowing
b) Trade payable 722.17 34.32 1522.70 40.76
c) Other current 427.42 20.31 953.90 25.53
liabilities 149.59 7.10 2476.6 66.29

TOTAL 2104.19 100 3735.56 100

LIABILITIES(1+2+3)
II- Assets:
(1) Non-Current
assets
a) Tangible asset 199.36 9.47 269.57 8.15
b) Intangible asset 63.27 3.00 13.50 0.40
c) Capital-work-in 12.29 0.58 16.64 0.50
progress
d) Intangible asset 0.00 _ 0.00 _
under development
e) Other non-current
asset
279.92 13.30 299.71 9.06
(2) Current Assets _
a) Current Investment 0.00 _ 0.00
b) Inventories
c) Trade receivables 1340.33 63.69 1993.83 60.32
d) Cash and Cash 93.63 4.44 113.68 3.43
equivalent
e) Short term Loan 186.72 8.87 1096.50 33.17
and advances
f) Other current assets 183.06 8.69 85.58 2.58
0.00 _ 15.59 0.47
1803.72 85.69 3305.19 100
TOTAL ASSETS 2104.19 100 3305.19 100
(1+2)
Common size income statement of year 2010
And 2011.
Particular 31.3.2010 Total % 31.3.2011 Total

I- Reverence
from operation 4703.12 100.00 6521.66 100.0
II- Other income 8.62 0.18 56.08 0.85
III- Total
Revenue(I+II) 4683.04 100.18 6576.97 100.85
IV- Expenses:
a) Cost of
material 3166.36 67.32 4344.88 66.6
consumed
b) Purchase of 412.15 8.76 849.58 13.02
stock in trade
c) Employed 275.64 5.86 365.13 5.59
benefit expenses 25.42 0.54 34.52 0.52
d) Finance cost
e) Depreciation 60.08 1.27 34.48 0.52
expenses 527.62 11.21 849.66 13.02
f) other expenses
Total expenses. 4361.72 94.96 5977.97 99.27
V- profit before 321.32 6.64 599.00 9.18
exceptional
items(IIIIV)
VI- less: 0.00 _ 0.00 _
Exceptional
items 321.32 683.2 599.00 12.7
VII- Profit before 68.08 1.44 168.59 79.28a
tax
Less: Tax
VIII- Profit after 253.24 5.38 430.32 0.09
tax
Interpretation: (common-size statement)

1) The common-size income statement given above reveals that there has been
an increase in
revenue from operation.
2) It reveals that the profitability of the company increase.
3) Common-size balance sheet reveals that both current and non-current asset
increase.
4) The overall financial position of the company is satisfactory
Conclusion

This Project has been very useful to me because I learnt how to prepare
financial statements
This has improved my knowledge on financial statement which is very useful in
business and commerce every day. The work I did in this project has helped me
to understand the techniques, applications and uses of financial statement in a
business firm.
Financial statements help to understand the performance of a particular
company or enterprise without much difficulty and also help us to understand
how to prepare them in future. In this project we perform the financial statement
analysis of Titan Company. Financial statement reveals a overall satisfactory
position
Reference :

I have used following references to complete this project:

1) Fundamentals of Management accounting, Shashi K. Gupta and R.K Sharma,
Kalyani
Publishers.
2) Money control.com
3) By Ju’s .Com
4) Wikipedia
5) Website of Titan
And many more