ABSTRACT FOR “SUMMER INTERNSHIP PROJECT”

Topic- “Ratio Analysis: A tool of financial statement analysis”

Under the guidance of

Dr. Jigar Nagvadia
Assistant Professor
Of
R.B. Institute of Management Studies

Submitted By:
ENROLLMENT NO. NAME
227460592028 Preet Desai
 TABLE OF CONTENT

Chapter No. Particulars Page No.

1 Introduction of Industry 2
2 Company Detail 4
3 Literature Review 6
4 Questionnaire 9

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 CHAPTER-1
INTRODUCTION OF
INDUSTRY

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 Industry Overview: Manufacturing and Engineering Services for Elastic Components
and White Goods:

ML Springs India Private Limited (MSIPL) is a Private Limited Foreign Company incorporated in
India, primarily engaged in the manufacturing and development of various products related to
elastic components, white goods such as dishwashers and refrigerators, and mechanical design
consultancy services. MSIPL operates within the broader manufacturing sector, with a focus on
elastic components and related products. The company's involvement in the production of parts
and accessories for electrical equipment, along with manufacturing of other electrical and
electronic equipment, places it within the scope of the manufacturing of electrical machinery and
apparatus not elsewhere classified (NEC).

1. Elastic Components for Automotive and Motorcycle Industries:

MSIPL specializes in the manufacturing of primary springs for the automotive and motorcycle
industries. These elastic components play a crucial role in various applications, contributing to
the overall performance and safety of vehicles.

2. White Goods Manufacturing:

The company is also involved in the production of white goods, including dishwashers and
refrigerators. These products are essential household appliances that enhance convenience
and efficiency in modern living.

3. Mechanical Design Consultancy:

In addition to manufacturing, MSIPL offers mechanical design consultancy services. This

service involves providing expert design solutions for elastic components, helping clients
optimize their products for performance and functionality.

 Market Trends and Opportunities:

The automotive and motorcycle industries are constantly evolving, with a growing demand for
innovative and high-performance components. Similarly, the white goods sector is experiencing
advancements in energy efficiency, connectivity, and user-friendly features. MSIPL's focus on
elastic components and white goods positions it well to capitalize on these trends.

 Challenges:

The manufacturing industry often faces challenges related to supply chain management, quality
control, and keeping up with technological advancements. As MSIPL operates in multiple sectors,
managing diverse product lines and maintaining quality standards can be demanding.

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 CHAPTER-2
COMPANY PROFILE

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 Company Profile:

ML Springs India Private Limited (MSIPL) is a Private Limited Foreign Company incorporated in
India in September 2020. With its registered office located in Ahmedabad, Gujarat, India, the
company is engaged in various business activities including manufacturing, developing, and
trading in products related to laundry machines, white goods (such as dishwashers and
refrigerators), oil and gas equipment, and elastic components for automotive and motorcycle
industries. Additionally, MSIPL offers mechanical design consultancy services for elastic
components.

 Key Activities:

1. Manufacturing: MSIPL is involved in the manufacturing of elastic components used in

automotive and motorcycle industries. This includes primary springs that contribute to the
functionality of various mechanical systems within these vehicles.

2. Consultancy Services: MSIPL also provides mechanical design consultancy services. This
includes expertise in designing and developing elastic components, catering to the needs of
industries that require precise engineering solutions.

 Geographical Presence:

With its registered office in Ahmedabad, Gujarat, India, MSIPL has a strategic location that
provides access to various manufacturing hubs and markets.

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 CHAPTER-3
LITERATURE REVIEW

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 Literature Reviews:

Review of Literature refers to the collection of the results of the various researches relating to the
present study. It takes into consideration the research of the previous researchers which are
related to the present research in any way. Here are the reviews of the previous researches
related with the present study:

 Bollen (1999) conducted a study on Ratio Variables on which he found three different uses of
ratio variables in aggregate data analysis:

(1) As measures of theoretical concepts

(2) As a means to control an extraneous factor
(3) As a correction for heteroscedasticity.
In the use of ratios as indices of concepts, a problem can arise if it is regressed on other indices
or variables that contain a common component. For example, the relationship between two per
capita measures may be confounded with the common population component in each variable.
Regarding the second use, only under exceptional conditions will ratio variables be a suitable
means of controlling an extraneous factor. Finally, third use of ratios is also often misused. Only
under special conditions will the common form forgers soon with ratio variables correct for
heteroscedasticity. Alternatives to ratios for each of these cases are discussed and evaluated.

 Cooper (2000) conducted a study on Financial Intermediation on which he observed that the
quantitative behaviour of business-cycle models in which the intermediation process acts either
as a source of fluctuations or as a propagator of real shocks. In neither case do we find
convincing evidence that the intermediation process is an important element of aggregate
fluctuations. For an economy driven by intermediation shocks, consumption is not smoother
than output, investment is negatively correlated with output, variations in the capital stock are
quite large, and interest rates are procyclical. The model economy thus fails to match
unconditional moments for the U.S. economy.

 Maria Zain (2008) discuss about the return on assets as an important percentage that shows
the company's ability to use its assets to generate income. He said that a high percentage
indicates that company is good at utilizing the company's assets to generate income. He notices
that the following formula is one method of calculating the return on assets percentage. Return
on Assets = Net Profit/Total Assets. He enounce that the low percentage could mean that the
company may have difficulties meeting its debt obligations. He also short explains about the
profit margin ratio - Operating Performance .He pronounces that the profit margin ratio is
expressed as a percentage that shows the relationship between sales and profits. It is sometimes
called the operating performance ratio because it's a good indication of operating efficiencies.

 James Clausen (2009) express about the liquidity ratio. He Pronounce that it is analysis of the
financial statements is used to measure company performance. It also analyses of the income
statement and balance sheet. Investors and lending institutions will often use ratio analyses of

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 the financial statements to determine a company's profitability and liquidity. If the ratios
indicate poor performance, investors may be reluctant to invest. Therefore, the current ratio or
working capital ratio, measures current assets against current liabilities. The current ratio
measures the company's ability to pay back its short-term debt obligations with its current
assets. He thinks a higher ratio indicates the company is better equipped to pay off short-term
debt with current assets. Wherefore, the acid test ratio or quick ratio, measures quick assets
against current liabilities. Quick assets are considered assets that can be quickly converted into
cash. Generally they are current assets less inventory.

 Gopinathan Thachappilly (2009) discuss about the Financial Ratio Analysis for Performance
evaluation. It analysis is typically done to make sense of the massive amount of numbers
presented in company financial statements. It helps evaluate the performance of a company, so
that investors can decide whether to invest in that company. Here we are looking at the different
ratio categories in separate articles on different aspects of performance such as profitability
ratios, liquidity ratios. debt ratios, performance ratios, investment evaluation ratios.

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 QUESTIONNAIRE
1. General Information:
a. Name
b. Gender
c. Age
d. Designation/Role
e. Contact Information(Optional)
f. How Long have you been associated with MSIPL

2. Understanding Financial Ratio Analysis:

a. Are you familiar with the concept of financial ratio analysis?

Yes 1
No 2

b. Do you think financial ratio analysis is important for businesses?

Yes 1
No 2

c. Have you participated in any financial analysis involving MSIPL?

Yes 1
No 2

d. What types of financial ratios do you believe are most important for assessing the
company’s financial performance?

Liquidity Ratios 1
Profitability Ratios 2
Activity Ratios 3
Solvency Ratios 4

e. How can financial ratios help in evaluating a company's financial performance and
health?

3. Applying Financial Ratio Analysis:

a. What types of financial ratios do you commonly use or encounter at MSIPL?

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 Liquidity Ratios 1
Profitability Ratios 2
Activity Ratios 3
Solvency Ratios 4

b. How do these ratios provide insights into the financial performance of the company?
c. Can you provide examples of ratios that helped in assessing the company's financial
position?

4. Data Collection and Interpretation:

a. How is the data required for calculating financial ratios gathered at MSIPL?

Financial Statements 1
Management Insights 2
Accounting Records 3
Others 4

b. Who is primarily responsible for performing ratio analysis within the organization?

Finance Team 1
Senior Management 2
External Consultants 3
Others 4

c. How frequently are financial ratios calculated and reviewed for ML Springs India
Private Limited?

Monthly 1
Quarterly 2
Semi-Annually 3
Annually 4

5. Challenges and Limitations:

a. Are there any challenges you face while conducting ratio analysis for MSIPL?

Data Accuracy 1
Comparability 2
Data Reliability 3
Changes in AS 4
Others 5

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 b. What limitations do you believe ratio analysis has in providing a comprehensive view
of the company's financial performance?
c. Do you recall any past incidents or situations wherein there was a need of financial
ratio analysis at MSIPL?

6. Impact on Decision Making:

a. How do insights derived from ratio analysis influence decision-making processes
within the company?
b. Can you provide examples of strategies that have been influenced by the insights
gained from ratio analysis?

7. Future Improvements:
a. In your opinion, are there any areas of improvement that could make ratio analysis
even more effective at MSIPL?
b. Ratio Analysis of which type of ratios should be done in future to help the company in
assessing the financial performance?

8. Overall Feedback:
a. On a scale of 1 to 5, how valuable do you believe ratio analysis is as a tool for
assessing the financial health of MSIPL?

1(Not Valuable at all) 1

2(Not So Valuable) 2
3(Indifferent) 3
4 (Much Valuable) 4
5(Extremely Valuable) 5

b. Do you recall any past incidents or situations wherein there was a need of financial
ratio analysis at MSIPL?

9. Additional Comments:
a. Is there anything else you would like to share about the application of ratio analysis
in the context of MSIPL?

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