Professional Documents
Culture Documents
on
Financial Performance Analysis and Strategis
Recommendations on IRCTC”
Subject:
Accounting for managers
Submitted By:
Trilok singh fartyal 23GSOB2010076
Salman khan 23GSOB2010517
Vikas Sharma 23GSOB2010539
Vikas raghuvanshi 23GSOB2010162
Rohan yadav 23GSOB2010271
Galgotias University
INDEX
Declaration
Acknowledgement
Executive summery
Objective of the study
Research Methodology
Introduction
Company Profile
Financial Statements
Balance Sheet
Income statement
Financial Statement analysis
o Comparative Financial Statement Analysis
Comparative Balance Sheet
Common size Balance Sheet
Trend percent analysis of Balance Sheet
Comparative Income statement
Common size Income statement
Trend percent analysis of Income statement
Cash Flow Statement
o Ratio Analysis
Current Ratio
Quick Ratio
Earnings per share
Earnings Yield
Return on share holder's fund
Net Profit Margin
Return on capital employed
o Graphical Analysis Of Ratios
Certificate
This is to certify that, Group-15 of MBA Sem-1, Sec-9 has successfully
completed the project titled "Financial Performance Analysis and
Strategic Recommendations for IRCTC” under my guidance for the
Academic Year 2023-24. The information submitted is true and original
as per my knowledge
.
Dr . Bhupendra kumar(Course Guide)
-----------------------
ACKNOWLEDGEMENT
To list who all have helped us is difficult because they are so numerous and the
depth is so enormous.
We would like thank ourPC Ma”am, Mrs. Shilpa Bahl for providing the necessary
facilities required for completion of this project.
We would also like to express our sincere gratitude towards my project guid Dr.
Bhupendra kumar whose guidance and care made the project successful.
We would like to thank college library, for having provided Various reference
books and magazines related to our project.
Lastly we would like to thank each & every person who directly or indirectly
helped us in completion of the project especially our parents & peers who
supported us throughout our project.
EXECUTIVE SUMMARY
The training at IRCTC Limited involved the day to day working at corporate accounts
departments with the senior & junior managers in the company. This project helped
me to get the deeper understanding of the process of Financial Statement Analysis
and how decisions are taken to strengthen the financial position.
For this study four years‘ comparative Income Statement & Balance Sheet have
been taken for calculating ratio analysis. Main objective in undertaking this project is
to supplement academic knowledge with absolute practical exposure to day to day
functions of the sector.
Financial analysis which is the topic of this project refers to an assessment of the
viability, stability and profitability of a business. This important analysis is performed
usually by finance professionals in order to prepare financial or annual reports.
These financial reports are made with using the information taken from financial
statements of the company and it is based on the significant tool of Ratio Analysis.
These reports are usually presented to top management as one of their basis in
making crucial business decisions.
During the summer training period at IRCTC Limited, I had close connection with
preparation of financial statements and also their analysis which was made by
professionals in the accounting team of the company. This experience was an
emphasis on the importance of these Ratios which could be the roots of decisions
made by management that can make or break the company. So, I was influenced to
allocate the aim of this project to study the details about these ratios and their
possible effects on the decisions.
OBJECTIVE OF THE STUDY
There have been various objectives for this study, the first of which is a detailed
analysis of the financial statements that is the balance sheet and the income
statement of IRCTC Ltd.
The second objective, however the most important one or in other word the principle
aim of this project is the understanding and assessment of financial ratios based on
the statements of the company.
The next aim of the project is to recognize the position of the company through those
ratios and data available. This recognition is a leading factor in changes of each and
every company and the base and root of lots of management decisions.
RESEARCH METHODOLOGY
Research framework: This study is based on the data about IRCTC LTD for a
detailed study of its financial statements, documents and system ratios and finally to
recognize and determine the position of the company.
2. The secondary data which was already prepared so these data was only used to
reach the aims and objectives of this project. These data has been collected from the
financial reports of the company.
Personal Interview:
Personal Interview method requires a person known as the interviewer asking
questions generally in a face to face contact to the other person or persons.
Different questions and information I could collect during these two methods are:
FINANCIAL STATEMENTS
Financial statements are summaries of the operating, financing, and investment
activities of a business. Financial statements should provide information useful to
both investors and creditors in making credit, investment, and other business
decisions. And this usefulness means that investors and creditors can use these
statements to predict, compare, and evaluate the amount, timing, and uncertainty of
potential cash flows. In other words, financial statements provide the information
needed to assess a company‗s future earnings and therefore the cash flows
expected to result from those earnings. In this chapter, we discuss the four basic
financial statements: the balance sheet, the income statement, the statement of cash
flows, and the statement of shareholders‗ equity. The analysis of financial
statements is provided in Part Six of this book.
The accounting data in financial statements are prepared by the firm‗s management
according to a set of standards, referred to as generally accepted accounting
principles (GAAP). The financial statements of a company whose stock is publicly
traded must, by law, be audited at least annually by independent public accountants
(i.e., accountants who are not employees of the firm). In such an audit, the
accountants examine the financial statements and the data from which these
statements are prepared and attest—through the published auditor‗s opinion—that
these statements have been prepared according to GAAP. The auditor‗s opinion
focuses on whether the statements conform to GAAP and that there is adequate
disclosure of any material change in accounting principles.
The financial statements are created using several assumptions that affect how we
use and interpret the financial data:
statements are not market or replacement values, but rather reflect the original cost
(adjusted for depreciation, in the case of depreciable assets).
of measurement is the dollar. While this seems logical, the
effects of inflation, combined with the practice of recording values at historical cost,
may cause problems in using and interpreting these values.
eriods of time. Generally, statements
are produced to cover a chosen fiscal year or quarter, with the income statement and
the statement of cash flows spanning a period‗s time and the balance sheet and
statement of shareholders‗ equity as of the end of the specified period. But because
the end of the fiscal year is generally chosen to coincide with the low point of activity
in the firm‗s operating cycle, the annual balance sheet and statement of
shareholders‗ equity may not be representative of values for the year.
Most businesses use accrual accounting, where income and revenues are matched
in timing such that income is recorded in the period in which it is earned and
expenses are reported in the period in which they are incurred to generate revenues.
necessarily coincide with cash flows. Because the financial analyst is concerned
ultimately with cash flows, he or she often must understand how reported income
relates to a company‗s cash flows.
that the business enterprise will continue indefinitely justifies the appropriateness of
using historical costs instead of current market values because these assets are
expected to be used up over time instead of sold.
requirement that there be full disclosure means that, in addition to the accounting
numbers for such accounting items as revenues, expenses, and assets, narrative
and additional numerical disclosures are provided in notes accompanying the
financial statements. An analysis of financial statements is therefore not complete
without this additional information.
one interpretation of an event is possible, statements are prepared using the most
conservative interpretation.
The financial statements and the auditors‗ findings are published in the firm‗s
annual and quarterly reports sent to shareholders and the 10K and 10Q filings with
the Securities and Exchange Commission (SEC).Also included in the reports, among
other items, is a discussion by management, providing an overview of company
events. The annual reports are much more detailed and disclose more financial
information than the quarterly reports.
COMPANY PROFILE
Indian Railway Catering and Tourism Corporation (IRCTC) is a subsidiary of
the Indian Railways that handles the catering, tourism and online ticketing operations
of the railways. The Corporation has posted impressive operational and financial
numbers during the year 2009-10. The total income of the Corporation reached
Rs.721.97 Crore registering an increase of 16.68 per cent over previous year and it
made a contribution of Rs.82.28 Crore to the Railways revenues, which was an
increase of 7.50 % over the previous year. The Corporation earned a net profit of
Rs.63.05 Crore, indicating an increase of 35.6 per cent over the previous year. It
recommended a dividend of Rs.12.61 Crore, again indicating an increase of 35.5 per
cent. The dividend payout is 63.05 per cent on the Equity Share Capital.
The Corporation realized 85 % payment of the current bills from its customers
indicating sound commercial performance. The total outstanding at the end of the
year was Rs. 232 Crore out of which Rs. 144 Crore was to come from the Railways.
The Corporation has a nationwide presence spread over 1008 stations of the Indian
Railways and 350 pair of trains. It has provided catering in 18 numbers of additional
new trains that got introduced during 2009-10 and for the first time there has been a
paradigm shift in providing mandatory catering in non-AC sleeper coaches of
Duronto Trains as against the earlier provision in the AC coaches of Rajdhani and
Shatabdi Trains. During the year 2009-10, 9 new Duronto trains have been
introduced. In the premium food segment IRCTC commissioned 13 new Food Plazas
/ Fast Food units during the year and taking the number to 78 and also
commissioned 25 Jan Ahaar outlets for sale of low priced wholesome food and
regional cuisines for not so affluent travelling passengers.
During the year, the Ministry of Railways started the process of review of Catering
Policy and recently, on 21st July, 2010, the Ministry of Railways has issued the New
Catering Policy, 2010. The revised policy has laid down that all catering services
other than Food Plazas and fast food units would be managed by Zonal Railways.
With the new challenges come greater opportunities.
IRCTC has a tremendous potential for growth in tourism and it would aim to expand
its business to become a major tourism player in the country. Also the premier
catering segment on Railways would be expanded apart from the industrial and
institutional catering business to enlarge its activities and sustain its revenues.
Two Plants of Railneer Packaged Drinking water are being operated by IRCTC at
Nangloi (Delhi) and Danapur (Bihar). During the year, the production of Railneer at
Nangloi and Danapur was 3.19 Crore and 2.23 Crore bottles respectively as against
installed capacity of 3.34 Crore and 2.45 Crore bottles respectively.
During the year, the capacity of Danapur Plant was increased from 5,500 Cartons
per day to 8,500 Cartons per day.
Two new plants at Palur and Ambernath are in the process of setting up by IRCTC.
The construction of Railneer Plant at Palur (Tamil Nadu) is in advance stage and
likely to be commissioned soon. The plan for Ambernath plant has been finalized and
the tender process is likely to start in a few months.
The Corporation continued to provide greater customer focus with improved methods
of feedback and customer complaints management and has shown continued
improvement in food and safety audit ratings as well as customers satisfaction
surveys conducted by independent 3rd parties. The majority ratings have been
above 80 %, it has also made progress in ISO certification and HACCP certification.
During the year, the Corporation‘s Tourism activities increased manifold. The
numbers of tourist have gone up by 35 %. The train / coach charters have gone up
by 55 %. The number of Bharat Darshan Trains has been increased by 30 % and Hill
charters increased by 44 %. The Corporation has successfully tied up with Kendriya
Vidyalaya for undertaking students‘ educational trips under its ―Travel to learn
schemes as well as with Tamil Nadu Government under Sarva Shiksha Abhiyan‖. At
the top end, it has successfully launched its super luxury tourist train – ―The
Maharajas‘ Express‖. The train has also been voted as best Luxury Tourist
Train in the country.
The following awards have been conferred on IRCTC :
• Rated ‗Excellent‘ for MOU Evaluation for the year 2008-09 by Department of
Public Enterprises.
• CNBC Awaaz-Travel Awards –The Special Commendation for Redefining Indian
Railways Award – 2009 for E-ticketing by Ms. Selja, Hon‘ble Minister of Tourism.
• PC Quest awarded the Excellence Award for Most Innovative Project in 2009 for
139-Rail Sampark.
• QCI DL Shah National Award on Economics of Quality – ―QCI - D. L. Shah National
Award for our initiatives on food safety and Economics of Quality‖ by Quality Council
of India by Dr. Masaki Imai , Quality Guru of Japan.
• The Grand Jury of the M Billionth Award South Asia for the year 2010 – Certificate
of Recognition SMS 139 Railway Enquiry.
• ICWAI National Quality Award for Excellence in Cost Management – 2009: First
Prize under public service sector medium category by Shri Salman Khurshid,
Hon‘ble Minister of State for Corporate Affairs.
• CNBC Awaaz Travel Award 2010 for the ‗Maharajas‘ Express-The Best Luxury
Train‘ from Hon‘ble Union Minister for Tourism, Kumari Selja.
• The India Pride Award-Gold from Shri Pranab Mukherjee, Hon‘ble Union Minister of
Finance for Internet Ticketing.
• The SKOCH‘s-The World Open Award for Integrated Train Enquiry System (ITES)
from the Controller of Certifying Authority, Government of India.The Corporation‘s e-
ticketing website www.irctc.co.in continued to be voted as one of the most popular
websites with more than one Crore hits per day. Its internet ticketing in terms number
of passengers has grown by more than 60 % and in terms of value of tickets it has
grown by more than 50 %. It touched a highof 3 lakh 7 thousand tickets booked in a
day and on an average during March, 2010 it sold more than 2 lakh 50 thousands
tickets per day.
The integrated train enquiry system has won several awards and has handled more
than 7 lakh calls per day. It has successfully launched the SMS service for providing
the train running and PNR information and handled over one crore SMS in 2009 - 10.
The Comptroller and Auditor General of India has conducted the supplementary
audit on audited accounts of the Corporation for the year ended 31st March, 2010
under Section 619(4) of Companies Act, 1956 andhas offered NIL Comments on the
same.
IRCTC has been complying with the requirements of Corporate Governance as
stipulated by the Department of Public Enterprises (DPE), Government of India.
Board of Directors
Chairman
Shri Vivek Sahai,
Chairman Railway Board and Member Traffic
Managing Director
Shri Rakesh Kumar Tandon,
Functional Directors
Dr. Nalin Shinghal,
Director (Tourism & Marketing)
Government Directors
Smt. Mani Anand
Executive Director(T&C),Railway Board,
Ministry of Railways
Independent Directors
Shri Jagdeep S. Chhokar
Shri Alok Shivapuri
Shri R.N. Bhardwaj
Shri R.K. Agrawal
Audit Committee:
Chairman
Shri R.N. Bhardwaj,
Members
Shri Vinod Asthana,
Shri Jagdeep S. Chhokar
Shri Alok Shivapuri
Shri R.K. Agrawal
Company Secretary:
Shri Rakesh Gogia
Statutory Auditors:
M/S S.P. Marwaha & Co.,
Chartered Accountants,New Delhi.
OFFICES
North Zone :
Ginger Rail Yatri Niwas,
Ground Floor,
New Delhi Railway Station,
Ajmeri Gate Side,New Delhi-110001
West Zone :
2nd Floor,
New Administrative Building,
Central Railway, CST,Mumbai-400001.
South Zone :
6A, The Rain Tree Place,
9, Mc Nicolas Road, Chetpet,Chennai-600034.
During the year 2009-10, the Corporation achieved a total income of Rs.721.97
Crore as compared to Rs.618.77 Crore in 2008-09 thereby registering a growth of
approx. 17 %. The increase in income was achieved mainly due to quantum jump in
internet ticketing (from Rs.74.81 Crore to Rs.112.07 Crore) and tourism activities
(from Rs.27.94 Crore to Rs.44.73 Crore).
Quantum jump in internet ticketing was witnessed due to excellent level of service
and upgraded infrastructure. The growth in tourism business was achieved due to
IRCTC‘s focused approach on developing tourism business segment.
A net profit of Rs.63.05 Crore was earned during 2009-10 as compared to Rs 46.50
Crore in 2008-09 due to enhanced revenue and control on expenditure. An amount
of Rs.30.00 Crore has been provided towards Haulage Charges as was provided
during the previous year. As at 31st March 2010, the Reserves and Surplus of the
Corporation stood at Rs.142.76 Crore. The Net Worth went up from Rs.114.46
Crore during the previous year to Rs.162.76 Crore during the year under review.
Educational Tours:
7,829 students and teachers have availed the facility of educational tours as
against 22,801 students and teachers during the last year to various
destinations. The decline was due to shifting of Delhi Govt. Business to
various State Tourism Corporations etc.
During the year, IRCTC made a tie-up with the Kendriya Vidyalaya Sangathan
for operating Educational Trips under its ‗travel and learn‘ scheme. A tie-up
was made with Tamil Nadu Government for operating educational tours for
children from backward and under privileged classes under the Sarva Shiksha
Abhiyan scheme, under which 3,272 children participated.
Maharajas’ Express; IRCTC‘s top end luxury tourist train – the Maharajas‘
Express was completed in the current year. The train made two trial trips from
6th – 13th and 14th – 20th March, 2010 and was formally flagged of on 20th
March, 2010 at Kolkata by Hon‘ble Minister for Railways, Ms. Mamta Banerjee
Luxury trains Palace on wheels ; fairy queen ; deccan Odyssy have given
a 100% performance.
OTHER AREAS OF INVOLLVEMENT OF IRCTC
Tourism Portal
IRCTC continue to strengthen its national tourism award winning tourism portal
www.railtourismindia.com,
as a One Stop Travel Shop meeting all the travel & tourism needs of customers. This
includes online booking of tour packages, hotels, air tickets and Cab Rental across
the country.
CAPITAL STRUCTURE
As on 31st March 2010, paid-up share capital of the Corporation stood at Rs.20.00
Crore. The Government of India holds the entire paid up share capital of the
Corporation. During the year, there was no change in the paid-up share capital.
Financial Statements of ‗Indian Railway Catering and
Tourism Corporation Limited‘(IRCTC)
Balance Sheet
In financial accounting, a balance sheet or statement of financial position is a
summary of the financial balances of a sole proprietorship, a business partnership or
a company. Assets, liabilities and ownership equity are listed as of a specific date,
such as the end of its financial year. A balance sheet is often described as a
"snapshot of a company's financial condition". Of the four basic financial statements,
the balance sheet is the only statement which applies to a single point in time of a
business' calendar year.
A standard company balance sheet has three parts: assets, liabilities and ownership
equity. The main categories of assets are usually listed first, and typically in order
of liquidity. Assets are followed by the liabilities. The difference between the assets
and the liabilities is known as equity or the net assets or the net worth or capital of
the company and according to the accounting equation, net worth must equal assets
minus liabilities.
Another way to look at the same equation is that assets equals liabilities plus owner's
equity. Looking at the equation in this way shows how assets were financed: either
by borrowing money (liability) or by using the owner's money (owner's equity).
Balance sheets are usually presented with assets in one section and liabilities and
net worth in the other section with the two sections "balancing."
A business operating entirely in cash can measure its profits by withdrawing the
entire bank balance at the end of the period, plus any cash in hand. However, many
businesses are not paid immediately; they build up inventories of goods and they
acquire buildings and equipment. In other words: businesses have assets and so
they can not, even if they want to, immediately turn these into cash at the end of
each period. Often, these businesses owe money to suppliers and to tax authorities,
and the proprietors do not withdraw all their original capital and profits at the end of
each period. In other words businesses also have liabilities.
BALANCE SHEET(as at 31st march2019)
Amt. Total
Sources of Funds:
Shareholders’ Funds
Share Capital Rs. 2,000.00
Reserves and Surplus Rs. 5,884.92
Deferred Tax Liability (net) Rs. 258.97
Rs.
TOTAL 8,143.89
Application of Funds:
Fixed Assets
Gross Block Rs. 6,137.97
Less: Depreciation Rs. -2,438.02
Net Block Rs. 3,699.95
Add : Capital Work in Progress Rs. 90.58
Rs.
3,790.53
Rs.
Investments 0.20
Deferred Tax Asset nil
Current Assets, Loans and advances:
Rs.
Interest accrued on Investment 0.10
Inventories Rs. 573.19
Sundry Debtors Rs. 19,206.69
Cash and Bank Balances Rs. 11,677.32
Other Current Assets Rs. 651.52
Loans & Advances Rs. 8,554.20
Rs.
40663.02
Less: Current Liabilities and provisions:
Current Liabilities Rs. -32,389.69
Provisions Rs. -3,920.17
Rs -36,309.86
Rs.
Net Current Assets /working capital 4,353.16
Miscellaneous Expenditure to the extent not written off or adjusted nil
Rs.
TOTAL 8,143.89
Application of Funds:
Fixed Assets
Gross Block Rs. 7,636.09
Less: Depreciation Rs. -3,423.54
Net Block Rs. 4,212.56
Add : Capital Work in Progress Rs. 995.84
Rs. 5,208.39
Rs.
Investments 250.20
Deferred Tax Asset nil
Current Assets, Loans and advances:
Rs.
Interest accrued on Investment 0.12
Inventories Rs. 519.19
Sundry Debtors Rs. 23,972.02
Cash and Bank Balances Rs. 13,732.94
Other Current Assets Rs. 448.04
Loans & Advances Rs. 13,348.30
Rs.
52,020.61
Less: Current Liabilities and provisions:
Current Liabilities Rs. -38,334.64
Provisions Rs. -7,512.05
Rs-45,846.69
Net Current Assets /working capital Rs. 6,173.92
Miscellaneous Expenditure to the extent not written off or adjusted nil
Rs.
TOTAL 11,632.51
Application of Funds:
Fixed Assets
Rs -36,309.86
Rs.
Net Current Assets /working capital 4,353.16
Miscellaneous Expenditure to the extent not written off or adjusted nil
Rs.
TOTAL 8,143.89
BALANCE SHEET(as at 31st march2022)
Amt. Total
Sources of Funds:
Shareholders’ Funds
Share Capital Rs. 2,000.00
Reserves and Surplus Rs. 19,141.04
Deferred Tax Liability (net) nil
Rs.
TOTAL 21,141.04
Application of Funds:
Fixed Assets
Gross Block Rs. 13,517.96
Less: Depreciation Rs. -5,953.83
Net Block Rs. 7,564.13
Add : Capital Work in Progress Rs. 1,636.08
Rs.
9,200.21
Rs.
Investments 0.20
Deferred Tax Asset nil
Current Assets, Loans and advances:
Rs.
Interest accrued on Investment 0.12
Inventories Rs. 620.92
Sundry Debtors Rs. 26,163.88
Cash and Bank Balances Rs. 24,810.76
Other Current Assets Rs. 841.53
Loans & Advances Rs. 14,698.27
Rs.
66,935.48
Less: Current Liabilities and provisions:
Current Liabilities Rs. -46,120.34
Provisions Rs. -8,274.51
Rs.-54,994.85
Rs.
Net Current Assets /working capital 11,940.63
Miscellaneous Expenditure to the extent not written off or adjusted nil
Rs.
TOTAL 21,141.04
We must look at the last two years of the firm's balance sheets and compare the
differences between the two in order to develop the Statement of Cash Flows.
A comparative balance sheet usually has two columns of amounts that appear to the
right of the account titles or other descriptions such as Cash and Cash Equivalents,
Accounts Receivable, Accounts Payable, etc. The first column of amounts contains
the amounts as of a recent moment or point in time, say December 31, 2009. To the
right will be a column containing corresponding amounts from an earlier date, such
as December 31, 2008. The older amounts appear further from the account titles or
descriptions as the older amounts are less important.
Providing the amounts from an earlier date gives the reader of the balance sheet a
point of reference ;something to which the recent amounts can be compared.
Comparative Income statement
A comparative income statement shows revenue and expenses over the current and
previous years, how much revenue and expenses have increased or decreased, and
the percentage they have increased or decreased.
A comparative income statement is a multi-column income statement, where the
results of multiple accounting periods are shown in separate columns. The intent of
this format is to allow the reader to compare the results of multiple historical periods,
thereby giving a view of how the business is performing over time.
The most common presentation format for a comparative income statement is to
show the results of the most recent accounting period in the column immediately
adjacent to the row titles, while the results of earlier periods are shown progressively
further to the right.
An example of this format for a multi-month presentation is March | February |
January.
An alternative presentation format is the reverse, where the results of the most
recent period are listed furthest to the right. However, this is a less usable format,
since if many columns are used, the reader cannot easily associate the line
descriptions on the far left side of the presentation with the most recent financial
results listed on the far right side.
Accounting personnel, who need to know whether the organization will be able to
cover payroll and other immediate expenses
Potential lenders or creditors, who want a clear picture of a company's ability to
repay
Potential investors, who need to judge whether the company is financially sound
Potential employees or contractors, who need to know whether the company will
be able to afford compensation
Shareholders of the business.
Purpose
The cash flow statement was previously known as the flow of Cash statement. The
cash flow statement reflects a firm's liquidity.
The balance sheet is a snapshot of a firm's financial resources and obligations at a
single point in time, and the income statement summarizes a firm's financial
transactions over an interval of time. These two financial statements reflect
the accrual basis accounting used by firms to match revenues with the expenses
associated with generating those revenues. The cash flow statement includes only
inflows and outflows of cash and cash equivalents; it excludes transactions that do
not directly affect cash receipts and payments. These non-cash transactions include
depreciation or write-offs on bad debts or credit losses to name a few.The cash flow
statement is a cash basis report on three types of financial activities: operating
activities, investing activities, and financing activities. Non-cash activities are usually
reported in footnotes.
The cash flow statement is intended to
The money coming into the business is called cash inflow, and money going out from
the business is called cash outflow.
Operating activities
Operating activities include the production, sales and delivery of the company's
product as well as collecting payment from its customers. This could include
purchasing raw materials, building inventory, advertising, and shipping the product.
Dividends paid
Sale or repurchase of the company's stock
Net borrowings
Payment of dividend tax
Disclosure of non-cash activities
Under IAS 7, non-cash investing and financing activities are disclosed in footnotes to
the financial statements. Under US General Accepted Accounting Principles (GAAP),
non-cash activities may be disclosed in a footnote or within the cash flow statement
itself. Non-cash financing activities may include Leasing to purchase an asset
There are many ratios that can be calculated from the financial statements pertaining
to a company's performance, activity, financing and liquidity. Some common ratios
include the price-earnings ratio, debt-equity ratio, earnings per share, asset turnover
and working capital
1. Investors: These are people who already have shares in the business or they are
willing to be part of it. So they need to determine whether they should buy shares in
the business, hold on to the shares they already have or sell the shares they already
own. They also want to assess the ability of the business to pay dividends. As a
result the Return on Capital Employed Ratio is the one for this group.
2. Lenders: This group consists of people who have given loans to the company so
they want to be sure that their loans and also the interests will be paid and on the
due time. Gearing Ratios will suit this group.
3. Managers: Managers might need segmental and total information to see how they
fit into the overall picture of the company which they are ruling. And Profitability
Ratios can show them what they need to know.
4. Employees: The employees are always concerned about the ability of the
business to provide remuneration, retirement benefits and employment opportunities
for them, therefore these information must be find out from the stability and
profitability of their employers who are responsible to provide the employees their
need. Return on Capital Employed Ratio is the measurement that can help them.
5. Suppliers and other trade creditors: Businesses supplying goods and materials
to other businesses will definitely read their accounts to see that they don't have
problems, after all, any supplier wants to know if his customers are going to pay
them back and they will study the Liquidity Ratio of the companies.
6. Customers: are interested to know the Profitability Ratio of the business with
which they are going to have a long term involvement and are dependent on the
continuance of presence of that.
9. Financial analysts: they need to know various matters, for example, the
accounting concepts employed for inventories, depreciation, bad debts and so on.
therefore they are interested in possibly all the ratios.
10. Researchers: researchers' demands cover a very wide range of lines of enquiry
ranging from detailed statistical analysis of the income statement and balance sheet
data extending over many years to the qualitative analysis of the wording of the
statements depending on their nature of research.
Current Ratio
The current ratio is a popular financial ratio used to test a company's liquidity (also
referred to as its current or working capital position) by deriving the proportion of
current assets available to cover current liabilities.
The concept behind this ratio is to ascertain whether a company's short-term assets
(cash, cash equivalents, marketable securities, receivables and inventory) are
readily available to pay off its short-term liabilities (notes payable, current portion of
term debt, payables, accrued expenses and taxes). In theory, the higher the current
ratio, the better.
Formula:
2019 40663.02/32389.69
=1.26
2020 52020.61/3833.64
=1.35
2021 60514.81/47852.94
=1.26
2022 66935.48/48720.34
=1.37
Quick Ratio
The quick ratio or the quick assets ratio or the acid-test ratio is a liquidity indicator
that further refines the current ratio by measuring the amount of the
most liquid current assets there are to cover current liabilities. The quick ratio is more
conservative than the current ratio because it excludes inventory and other current
assets, which are more difficult to turn into cash. Therefore, a higher ratio means a
more liquid current position.
Formula:
OR
=TOTAL CURRENT ASSET – NON LIQUID ASSET
CURRENT LIABILITIES
2019 (40663.02-19858.21)
32389.64
=0.63
2020 (5020.61-2320.06)
38334.64
=1.28
2021 (60514.81-23704.35)
47852.94
=0.76
2022 (66935.48-27005.41)
40720.34
=0.98
Earnings per share
Formula:
E.P.S. = Net Income – Dividends on Preferred Stock or Profit Available for appropriation
Average Outstanding Shares
= Rs. 10.37
= Rs. 23.25
= Rs. 31.53
= Rs. 30.39
Earnings Yield
The earnings per share for the most recent 12-month period divided by the current
market price per share. The earnings yield (which is the inverse of the P/E ratio)
shows the percentage of each dollar invested in the stock that was earned by the
company.
The earnings yield is used by many investment managers to determine optimal asset
allocations.
Money managers often compare the earnings yield of a broad market index (such as
the S&P 500) to prevailing interest rates, such as the current 10-year Treasury yield.
If the earnings yield is less than the rate of the 10-year Treasury yield, stocks as a
whole may be considered overvalued. If the earnings yield is higher, stocks may
considered undervalued relative to bonds.
Economic theory suggests that investors in equities should demand an extra risk
premium of several percentage points above prevailing risk-free rates (such as T-
bills) in their earnings yield to compensate them for the higher risk of owning stocks
over bonds and other asset classes.
=0.227
=0.330
=0.331
=0.317
Return on share holder's fund
This ratio establishes the profitability from the share holders' point of
view. The ratio is generally calculated in percentage.
The two basic components of this ratio are net profits and shareholder's funds.
Shareholder's funds include equity share capital, (preference share capital) and all
reserves and surplus belonging to shareholders. Net profit means net income after
payment of interest and income tax because those will be the only profits available
for share holders.
Formula:
Return on share holder's fund = Net profit (after interest and tax) × 100
Share holder's fund
This ratio is one of the most important ratios used for measuring the overall
efficiency of a firm. As the primary objective of business is to maximize its earnings,
this ratio indicates the extent to which this primary objective of businesses being
achieved. This ratio is of great importance to the present and prospective
shareholders as well as the management of the company. As the ratio reveals how
well the resources of the firm are being used, higher the ratio, better are the results.
Year Return
2019 2074.91 x 100
8143.89
=25.48
2020 4650.11 x 100
11632.51
=39.97
Profit margin is very useful when comparing companies in similar industries. A higher
profit margin indicates a more profitable company that has better control over its
costs compared to its competitors. Profit margin is displayed as a percentage; a 20%
profit margin, for example, means the company has a net income of Rs.0.20 for each
dollar of sales.
Looking at the earnings of a company often doesn't tell the entire story. Increased
earnings are good, but an increase does not mean that the profit margin of a
company is improving. For instance, if a company has costs that have increased at a
greater rate than sales, it leads to a lower profit margin. This is an indication that
costs need to be under better control.
Formula:
Net Profit Margin = Net profit (before interest and tax) × 100
Sales
A financial metric used to assess a firm's financial health by revealing the proportion
of money left over from revenues after accounting for the cost of goods sold. Gross
profit margin serves as the source for paying additional expenses and future savings.
Formula:
Suppose that ABC Corp. earned Rs.20 lakh in revenue from producing widgets and
incurred Rs.10 lakh in COGS-related expense. ABC's gross profit margin would be
50%. This means that for every dollar that ABC earns on widgets, it really has only
Rs.0.50 at the end of the day.
This metric can be used to compare a company with its competitors. More efficient
companies will usually see higher profit margins.
A measure of how well a company controls its costs. It is calculated by dividing a
company's profit by its revenues and expressing the result as a percentage. The
higher the gross profit margin is, the better the company is thought to control
costs. Investors use the gross profit margin to compare companies in the same
industry and well as in different industries to determine what are the most profitable.
It is also called the profit margin or simply the margin.
A measure calculated by dividing gross profit by net sales. Gross profit margin is an
indication of a firm's ability to turn a dollar of sales into profit after the cost of goods
sold has been accounted for.
Calculation of Gross Profit Margin
=44633.68 x 100
50850.85
=87.78%
=21906.46 x 100
59330.64
=37%
=44639.19 x 100
69202.47
=64.5%
=29446.73 x 100
73796.09
=40%
Return on capital employed
Formula:
ROCE should always be higher than the rate at which the company borrows,
otherwise any increase in borrowing will reduce shareholders' earnings.
A variation of this ratio is return on average capital employed (ROACE), which takes
the average of opening and closing capital employed for the time period.
Return on capital employed establishes the relationship between the profit and
the capital employed. It indicates the percentage of return on capital employed in the
business and it can be used to show the overall profitability and efficiency of the
business.
Calculation of Return on capital employed
B. External Users: are potential investors, banks, government agencies and other
parties who are outside the business but need financial information about the
business for numbers of reasons.
2. Financial institutions (banks and other lending companies) use them to decide
whether to give a company with fresh loans or extend debt securities (such as a
long- term bank loan ).
4.Media and the general public are also interested in financial statements of some
companies for a variety of reasons.
IMPORTANCE
Ratio analysis is an important technique of financial analysis. It is a means for
judging the financial health of a business enterprise. It determines and interprets the
liquidity,solvency,profitability,etc. of a business enterprise.
of costs, sales, profits and other important facts. Such trends are useful for planning.
el of activities, can be set as standards for
judging actual performance of a business. For example, if owners of a business aim
at earning profit @ 25% on the capital which is the prevailing rate of return in the
industry then this rate of 25% becomes the standard. The rate of profit of each year
is compared with this standard and the actual performance of the business can be
judged easily.
discloses the position of business with liquidity viewpoint, solvency view point,
profitability viewpoint, etc. with the help of such a study, we can draw conclusion
regardings the financial health of business enterprise.
ADVANTAGES
Ratio analysis is an important and age-old technique of financial analysis. The
following are some of the advantages of ratio analysis:
1. Simplifies financial statements: It simplifies the comprehension of financial
statements. Ratios tell the whole story of changes in the financial condition of the
business.
2. Facilitates inter-firm comparison: It provides data for inter-firm comparison.
Ratios highlight the factors associated with successful and unsuccessful firm. They
also reveal strong firms and weak firms, overvalued and undervalued firms.
3. Helps in planning: It helps in planning and forecasting. Ratios can assist
management, in its basic functions of forecasting. Planning co-ordination, control
and communications.
4. Makes inter-firm comparison possible: Ratios analysis also makes possible
comparison of the performance of different divisions of the firm. The ratios are
helpful in deciding about their efficiency or otherwise in the past and likely
performance in the future.
5. Help in investment decisions: It helps in investment decisions in the case of
investors and lending decisions in the case of bankers etc.
LIMITATIONS
The ratios analysis is one of the most powerful tools of financial management.
Though ratios are simple to calculate and easy to understand, they suffer from
serious limitations.
1. Limitations of financial statements: Ratios are based only on the information
which has been recorded in the financial statements. Financial statements
themselves are subject to several limitations. Thus ratios derived, there from, are
also subject to those limitations. For example non-financial changes though
important for the business are not relevant by the financial statements. Financial
statements are affected to a very great extent by accounting conventions and
concepts. Personal judgment plays a great part in determining the figures for
financial statements.
2. Comparative study required: Ratios are useful in judging the efficiency of the
business only when they are compared with past results of the business. However,
such a comparison only provide glimpse of the past performance and forecasts for
future may not prove correct since several other factors like market conditions,
management policies, etc. may affect the future operations.
3. Problems of price level changes: A change in price level can affect the validity
of ratios calculated for different time periods. In such a case the ratio analysis may
not clearly indicate the trend in solvency and profitability of the company. The
financial statements, therefore, be adjusted keeping in view the price level changes if
a meaningful comparison is to be made through accounting ratios.
4. Lack of adequate standard: No fixed standard can be laid down for ideal ratios.
There are no well accepted standards or rule of thumb for all ratios which can be
accepted as norm. It renders interpretation of the ratios difficult.
5. Limited use of single ratios: A single ratio, usually, does not convey much of a
sense. To make a better interpretation, a number of ratios have to be calculated
which is likely to confuse the analyst than help him in making any good decision.
6. Personal bias: Ratios are only means of financial analysis and not an end in
itself. Ratios have to interpret and different people may interpret the same ratio in
different way.
7. Incomparable: Not only industries differ in their nature, but also the firms of the
similar business widely differ in their size and accounting procedures etc. It makes
comparison of ratios difficult and misleading.
CONCLUSION
Ratios make the related information comparable. A single figure by itself has no
meaning, but when expressed in terms of a related figure, it yields significant
interferences. Thus, ratios are relative figures reflecting the relationship between
related variables. Their use as tools of financial analysis involves their comparison
as single ratios, like absolute figures, are not of much use.
company over a period of time. Decisions affecting product prices, per unit costs,
volume or efficiency have an impact on the profit margin or turnover ratios of a
company.
accounting data relationships, which give the decision-maker insights into the
financial performance of a company.
vant to the
decision under consideration from the total information contained in the financial
statements. The second step is to arrange the information in a way to highlight
significant relationships. The final step is interpretation and drawing of inferences
and conclusions. In brief, financial analysis is the process of selection, relation and
evaluation.
for analysis rather than as an end in itself. The reliability and significance attached to
ratios will largely hinge upon the quality of data on which they are based. They are
as good or as bad as the data itself. Nevertheless, they are an important tool of
financial analysis.
BIBLIOGRAPHY
https://irctc.com/annual-report.html
https://www.moneycontrol.com/financials/irctc-indianrailwaycateringtourismcorp/balance-sheetVI/IRC
https://www.irctc.com/financial-result.html
https://trendlyne.com/fundamentals/documents-annual-reports/167028/IRCTC/indian-railway-catering-tourism-
corporation-ltd/
https://www.equitymaster.com/research-it/annual-results-analysis/IRCT/IRCTC-2022-23-Annual-Report-Analysis/5128
https://www.livemint.com/indian-railway-catering-tourism-corporation/balance-sheet-annual/companyid-s0003024
https://finance.yahoo.com/quote/IRCTC.NS/financials/?
guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAIfb4ydfA41J7Q38V
ajsddkC3flQu7WCQWwXnxVGkZFOWZObfIsUxhDDDdEbwNbQeaPFKGbpGtzBk2bFj9q1wWz-
jn45SBUGrPwdkv_e4O45NxFtKRS9yHS9VKp8emuaquEgha9OvwxpiOkMQZtwli1aoskcW3oTmLlB2HlEOQrO
PLAGIARISM
SYNOPSIS
Introduction:
Financial Performance:
Overview of key financial indicators for the fiscal
year.
by IRCTC.
Conclusion:
IRCTC.