42598927 56 Max New York Life Insurance DOUBLE New Santosh Copy

8/4/2019 42598927 56 Max New York Life Insurance DOUBLE New Santosh Copy

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SUMMER TRAININGREPORT

ON

PERFORMANCE ANALYSIS OF MAX NEW YORK LIFEINSURANCE

DONE AT

SUBMITTED IN PARTIALFULFILLMENT FOR THE DEGREEREQUIREMENTS OF MASTERS INBUSINESS ADMINISTRATION

SUBMITTED BY

AKSHAY VASHISHTH

CLASS ROLL NO.:- 1503

EXAM ROLL NO.:-

MBA(Gen)3rdSEM(F).

SUBMITTED TO

UNIVERSITY SCHOOL OF MANAGEMENT

KURUSHETRA UNIVERSITY KURUSHETRA


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SESSION 2011-2012

DECLARATION

I AKSHAY VASHISHTH , Roll no. 1503 ,Class- MBA (General ,FINAL

YEAR) 3rd semester , declares that the research project report on

PERFORMANCE analysis of max newYork life insurance is an

original piece of work done by me and as per my knowledge has not been

submitted to any college, Institute/University in any mean possible.

SIGNATURE

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MBA is a stepping-stone to management carrier. In order to achieve

positive and concrete result, the theoretical knowledge must be

supplemented with the practical knowledge. Theoretical knowledge without

practical knowledge is of little value. Theoretical studies in the classroom

are not sufficient to understand the functioning of financial concept.

Therefore, it becomes necessary to undergo any project work. Practical

project supplements the theoretical studies .

Choice of present topic of research is an effort to contribute to something

to the sphere ofFinancial analysis of max new York life insurance.

Although, a few studies on the topic relating to this have also been

conducted by the different research scholars, but I think that, new study

will also be beneficial.

This research aims to identify the key attributes of general insurance

through the survey and on the basis of secondary data from various

resources. It considers the various issue and concerns on financial of MNYL

Insurance.

I am grateful to all those who have helped me directly or indirectly in

preparing in this project. And I also believe that there is always scope for

improvement and accordingly I shall look forward to receive suggestion.

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ABSTRACT

This analytical report is about the financial situation of the MAX NEW YORK

LIFE INSURANCE COMPANY, the. This is one of the top companies of the

country with a massive share in the market of urea. This analysis would

certainly help us in knowing the current financial status of the company as

i have done .

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CONTENTS

ChapterNumber

Topic PageNumber

Chapter -1 Introduction 8

Chapter -2 History 14

Chapter -3 Company profile 19

Chapter -4 Scope of the study 34

Chapter -5 Research methodology 38

Chapter -6 Performance analysis 43

Chapter -7 Findings & suggestion 64

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Bibliography 72

LIST OF GRAPH

GRAPH NO. GRAPH NAME GRAPH page no.1 Current ratio 502 Liquid ratio 523 Debt-equity ratio 534 Proprietors ratio 545 Debtor turnover

ratio

55

6 Average collection

period

56

7 Net profit 578 Inventory turnover

ratio

58

9 Debt to total funds

ratio

59

10 Fixed assets to

proprietors fund ratio

60

11 Gross profit 6112 Operating ratio 62

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CHAPTER 1INTRODUCTION

OFINSURANCE

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Insurance or assurance, device for indemnifying or guaranteeing an

individual against loss. Reimbursement is made from a fund to which many

individuals exposed to the same risk have contributed certain specified

amounts, called premiums. Payment for an individual loss, divided among

many, does not fall heavily upon the actual loser. The essence of the

contract of insurance, called a policy, is mutuality. The major operations of

an insurance company are underwriting, the determination of which risks

the insurer can take on; and rate making, the decisions regarding

necessary prices for such risks. The underwriter is responsible for guarding

against adverse selection, wherein there is excessive coverage of high risk

candidates in proportion to the coverage of low risk candidates. In

preventing adverse selection, the underwriter must consider physical,

psychological, and moral hazards in relation to applicants. Physical hazards

include those dangers which surround the individual or property,

jeopardizing the well-being of the insured. The amount of the premium is

determined by the operation of the law of averages as calculated by

actuaries. By investing premium payments in a wide range of revenue-

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producing projects, insurance companies have become major

suppliers of capital, and they rank among the nation's largest institutional

investors.

In simple terms, insurance allows someone who suffers a loss or accident

to be compensated for the effects of their misfortune. It lets you protect

yourself against everyday risks to your health, home and financial situation.

Definition of Insurance

Insurance is a contract whereby, in return for the payment of premium by

the insured, the insurers pay the financial losses suffered by the insured as

a result of the occurrence of unforeseen events. With the help of insurance,

large number of people exposed to a similar risk make contributions to a

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common fund out of which the losses suffered by the

unfortunate few, due to accidental events, are made good.

General definition:

In the words of John Magee, Insurance is a plan by which large number of

people associate themselves and transfer to the shoulders of all, risks that

attach to individuals.

Fundamental definition:

In the words of D.S. Hansel, Insurance may be defined as a social device

providing financial compensation for the effects of misfortune, the payment

being made from the accumulated contributions of all parties participating

in the scheme.

The Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all forms of

insurance to provide strict state control over insurance business.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19

January 1956, that life insurance in India was completely nationalized,

through a Government ordinance; the Life Insurance Corporation Act, 1956

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effective from 1.9.1956 was enacted in the same year to, inter-

alias, form LIFE INSURANCE CORPORATION after nationalization of the 245

companies into one entity. There were 245 insurance companies of both

Indian and foreign origin in 1956. Nationalization was accomplished by the

govt. acquisition of the management of the companies. The Life Insurance

Corporation of India was created on 1st September, 1956, as a result and

has grown to be the largest insurance company in India as of 2006.

General Insurance Business (Nationalization) Act, 1972

The General Insurance Business (Nationalization) Act, 1972 was enacted to

nationalize the 100 odd general insurance companies and subsequently

merging them into four companies. All the companies were amalgamated

into National Insurance, New India Assurance, Oriental Insurance, United

India Insurance which were headquartered in each of the four metropolitan

cities.

Insurance Regulatory and Development Authority (IRDA)Act, 1999

Till 1999, there were not any private insurance companies in Indian

insurance sector. The Govt. of India then introduced the Insurance

Regulatory and Development Authority Act in 1999, thereby de-regulating

the insurance sector and allowing private companies into the insurance.

Further, foreign investment was also allowed and capped at 26% holding in

the Indian insurance companies. In recent years many private players

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entered in the Insurance sector of India. Companies with equal

strength competing in the Indian insurance market. Currently, in India only

2 million people (0.2 % of total population of 1 billion), are covered under

Mediclaim, whereas in developed nations like USA about 75 % of the total

population are covered under some insurance scheme. With more and

more private players in the sector this scenario may change at a rapid

pace.

CHAPTER 2HISTORY

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OF INDIAN INSURANCE INDUSTRY

The insurance sector in India has come a full circle from being an open

competitive market to nationalization and back to a liberalized marketagain.

Tracing the developments in the Indian insurance sector reveals the 360-

degree turn witnessed over a period of almost 190 years.

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The business of life insurance in India in its existing form

started in India in the year 1818 with the establishment of the Oriental Life

Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912 - The Indian Life Assurance Companies Act enacted as the first statute

to regulate the life insurance business.

1928 - The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-life

insurance businesses.

1938 - Earlier legislation consolidated and amended to by the Insurance Act

with the objective of protecting the interests of the insuring public.

1956 - 245 Indian and foreign insurers and provident societies taken over

by the central government and nationalized. LIC formed by an Act of

Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from

the Government of India.

The General insurance business in India, on the other hand, can trace its

roots to the Triton Insurance Company Ltd., the first general insurance

company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India

are:

1907 - The Indian Mercantile Insurance Ltd. set up, the first company to

transact all classes of general insurance business.

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1957 - General Insurance Council, a wing of the Insurance

Association of India, frames a code of conduct for ensuring fair conduct and

sound business practices.

1968 - The Insurance Act amended to regulate investments and set

minimum solvency margins and the Tariff Advisory Committee set up.

1972 - The General Insurance Business (Nationalization) Act, 1972

nationalized the general insurance business in India with effect from 1st

January 1973.

107 insurers amalgamated and grouped into four companies viz. the

National Insurance Company Ltd., the New India Assurance Company Ltd.,

the Oriental Insurance Company Ltd. and the United India Insurance

Company Ltd. GIC incorporated as a company.

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Major Players in The life Insurance Industry In India

Life Insurance Corporation of India (LIC)

HDFC Standard Life Insurance Company Ltd.

ICICI Prudential Life Insurance Company Ltd.

Max New York life insurance company

Om Kotak Mahindra Life Insurance Co. Ltd.

Birla Sun Life Insurance Company Ltd.

Reliance Insurance Company

Aviva Life Insurance India

Bajaj Allianz Life Insurance Co Ltd.

MetLife India Insurance company private limited

ING Vysya Life Insurance Company limited

Bharti AXA Life Insurance co. Ltd.

Star Union Dai-ichi Life Insurance Co. Ltd.

Tata AIG Life Insurance Company Limited

Sahara India Life Insurance Company Ltd

SBI Life Insurance

Shriram Life Insurance

Future General India Life Insurance Co. Ltd.

IDBI Fortis Life Insurance Co. Ltd,

Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.

DLF Pramerica Life Insurance Co Ltd (DPLI),

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AEGON Religare Life Insurance Company Limited.

CHAPTER 3

COMPANY

PROFILE

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Max New York Life Insurance

Type Private

Industry Financial Services

Founded 2000

Founder(s) Analjit Singh

Headquarters New Delhi, India

Number of locations

674 offices (2010), 139 offices dedicated torural business (2010)

Area served India

Key peopleAnaljit Singh Executive Chairman, RajeshSud Chief executive officer and Managingdirector

Products

Individual Insurance (25 products and 8riders/options) and Group Insurance (6products and 7 riders/option

s)

Employees11,666 (2010), 69,778 Agent Advisors(2010)

Website http://www.maxnewyorklife.com

19
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Privately_held_companyhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Financial_Serviceshttp://en.wikipedia.org/wiki/Entrepreneurhttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Executive_Chairmanhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.maxnewyorklife.com/http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Privately_held_companyhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Financial_Serviceshttp://en.wikipedia.org/wiki/Entrepreneurhttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Executive_Chairmanhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.maxnewyorklife.com/


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HEADQUATER OF MNYL INSURANCE COMPANY

l

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Max New York Life Insurance Company Ltd. is a joint venture between Max

India Limited, one of India's leading multi-business corporations and New

York Life International, the international arm of New York Life, a Fortune

100 company. The company has positioned itself on the quality platform. In

line with its vision to be the most admired life insurance company in India,

it has developed a strong corporate governance model based on the core

values of excellence, honesty, knowledge, caring, integrity and teamwork.

Incorporated in 2000, Max New York Life (MNYL) started commercial

operation in 2001. In line with its values of financial responsibility, Max New

York Life has adopted prudent financial practices to ensure safety of

policyholder's funds. The Company's paid up capital as on 30th April, 2010

is Rs 1782 crore. MYNL shares a market share of 5.9% in the life insurance

sector.

MNYL has multi-channel distribution spread across the country. Agency

distribution is the primary channel complemented by partnership

distribution, banc assurance, alliance marketing and dedicated distribution

for emerging markets. The Company places a lot of emphasis on its

selection process for agent advisors, which comprises four stages -screening, psychometric test, career seminar and final interview. The agent

advisors are trained in-house to ensure optimal control on quality of

training. The company currently has around 92,760 agent advisors at 710

offices across 385 cities. The company also has 36 referral tie-ups with

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banks, 24 partnership distribution and alliance marketing

relationships each.

Max New York Life has put in place a unique hub and spoke model of

distribution to deepen our rural penetration. The company has 133 offices

dedicated to rural areas. MNYL offers a suite of flexible products. It now has

43 life insurance products and 8 riders that can be customized to over 800

combinations enabling customers to choose the policy that best fits their

need. The company currently has more than 13,923 employees.

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Max New York Life Insurance

is a joint venture between..

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Max India Ltd. (74%)

A multi-business

corporation

Focused on service

oriented businesses:

- Life Insurance

- Healthcare

Other Businesses :

- Clinical Research

- Specialty Plastics

New York Life, USA (26%)

Specialist in the Life Insurancebusiness since 1845

Asset under management US

$13 billion

Has surplus & reserves over US $265

billion

Insured million of lives

(including 10 US Presidents) globally

Has always delivered on its promises

in-spite of world wars, famine and

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HOW NEW YORK LIFE ENTERED THE INDIAN MARKET:-

New York Life International, INC., a Fortune 100 company, decided to select

JOINT VENTURE as a medium to enter into the market of India. It has

chosen MAX INDIA LTD., one of the Indias leading multi-business

corporations. Through its wide network of highly competent wide network

of highly competent agent advisors and flexible product solutions, MYNL is

creating a partnership for life with its customers in INDIA to meet their life

stage needs..

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VISION

To become one of the most admired life insurance company of India.

Strong Corporate Governance Model

MISSION

Become one of the top quartile life insurance companies in India

Be a national player

Be the brand of first choice

Be the employer of choice

Become principal of choice for agents

VALUES

Knowledge:

Knowledge leads to expertise; and our expertise is in helping people protect

themselves. Perfectly combining global expertise with local knowledge, we

are India's life insurance specialist. MNYL believes that for knowledge to be

of value it must be focused, current, tested and shared.

Caring:

MNYL is redefining the life insurance paradigm by focusing on customers

first. The service process is responsive, personalized, humane and

empathetic. Every individual who represents the company is for us our

brand champion.

Honesty:

Honesty is the heart of the life insurance business. It is all about trust.

Transparency, integrity and dependability form the cornerstones of the

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MNYL experience. The company ensures that everyone who

represents the brand carries a promise: we care in word as well as deed.

Excellence:Excellence at MNYL implies the ability to perform at a consistently high

level. Focused on the value of continuous improvement in people,

processes and the organization, the company strives for the highest

standards of quality in every aspect of its business.

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ACHEIVEMENTS

MNYL Insurance felicitated with the Golden PeacockInnovation Award for the year 2008 for Excellence in

innovation in conceptualizing and marketing Max Vijay.

MNYL is the first life insurance company in India to be awarded theIS0 9001:2000 certification.

MNYL was among the top 25 companies to work with in India,according to 2003 Business World magazine, "Great Workplaces In

India", MNYL was ranked at the 20th position. This survey is the local

version of the "Great Places To Work" survey carried out every year in

22 countries.

Been among top five most respected private life insurance companiesin India according to a 2004 and 2006 Business World survey.

MNYL Insurance has emerged as one of the best employer in therecently announced Business Today-Mercer-TNS Survey of 'The Best

Companies to Work For in India'. The company was ranked 7th in the

survey and the best life insurance company to work for in India.

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Awards

BT Mercer Ranked No7 in the Best companies to Work For

Awarded the Gallup Great Work Place Award 2009

CII Exim Bank Commendation Certificate for Business Excellence

2008

Recognized as a Superbrand

Recipient of 2008 CIO 100 Award for technology implementation

Golden Peacock Award for Innovation 2008

Among the top 25 companies to work for in India, according to Business

world 2003 Great Workplaces of India

Among the top five most respected insurance companies in India as per

Business world 2004 & 2006 survey

Won Indo-American Corporate Excellence Award for Best Indo-US

company in Financial Services Category in 2006 Received Best Six Sigma Project award at Sakal Six Sigma Excellence

Awards 2006

Among top 3 in Asia Life Insurance Company of the Year Award 2007

instituted by Asia Insurance Review

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MANAGEMENT TEAM

Mr. Rajesh Sud

CEO & Managing Director

Mr. Rajit Mehta

Executive Director & Chief Operating Officer

Mr. Sunil Kakar

Sr. Director and Chief Financial Officer

Mr. John Poole

Appointed Actuary

Mr. Prashant Tripathy

Director - Strategic Planning, Business Development and Health & Retirement

Mr. V.Viswanand

Director & Head - Products and Persistency Management

Ms. Anisha Motwani

Director and Chief Marketing Officer

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VARIOUS PRODUCTS OF MNYL INSURANCE

Life is full of surprises. Unexpected events that strike without warning can disrupt the smooth

rhythm of life. You must be prepared at all times. As the primary earning member, you need to

make sure that your family is never lacking in anything even if you are taken away from them

forever. Do your best today to ensure that your family can always enjoy a comfortable lifestyle.

In double income families, both spouses should get adequate life covers especially if there are

dependent children involved. We have plans that guarantee maximum protection at a low cost.

Your parenting is perfect but is your planning adequate? Are you thinking beyond the

immediate to the future, about higher education and professional courses, in India and

abroad? Many children are keen to pursue unconventional careers. Are you in tune

with their aspirations and passions? As parents you would never let money come in

the way of your children and the fulfillment of their true potential. Our plans will help

build the corpus that allows your children to dream big and soar high.

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Let your golden years be the most precious of your life, full of freedom and choice. A

time to pursue your hobbies, travel and enjoy the good life. You will never miss your

salary cheque or be constrained by rising inflation. Even as you work hard to make a

better today, it is up to you to create a superior tomorrow. If you want to sustain your

current lifestyle even after you stop working, make that money work for you. Our

Retirement Plans will keep you comfortable and content, and let you live the life you

deserve.

Do you know the cost of healthcare has climbed faster than inflation? Medical costs

can be a big drain on finances. A medical crisis can strike anyone, anytime and may

even force an individual to dip into savings to meet these sudden and steep costs.

Such an eventuality could delay or destroy a cherished financial goal. No wonder,

health is wealth. The health of every member of the family is precious and you need to

safeguard it as a priority. Use our Health Plans to make sure your family stays fit and

fine.

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Strategic Products Plans

Most people desire a carefree life. They want to be happy and comfortable at all times.

But needs keep evolving and you must always be one step ahead. Our Strategic

Products Plans will meet your special needs and are available through additional

distribution channels. You can choose a plan to meet the planned events and

unforeseen incidents in your life.

CHAPTER 433


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SCOPE

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SCOPE OF THIS STUDY

A big boom has been witnessed in Insurance Industry in recent times. A

large number of new players have entered the market and want to gain

market share in this rapidly improving market. The study deals with MNYL

in focus and the various segments that it caters to. The study then goes on

to evaluate and analyze the findings so as to present a clear picture of

trends in the Insurance sector.

SIGNIFICANCE OF THE STUDY

1.SIGNIFICANCE TO THE INDUSTRY:

The significance for the industry lies in studying these trends that emerge

from the study. It is a rapidly changing and evolving sector. People are only

beginning to wake up to its vast possibilities. A study like this can attempt

to guide the future of the industry based on current trends.

2.SIGNIFICANE FOR THE RESEARCHER:To facilitate and provide all the

useful information of the study, the company, the insurance industry and

also provide marketing ways, methods of Max New York Life insurance.

NEED FOR THE STUDY:-

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1. The study has great significance & provides benefits to

various parties whom directly or indirectly interact with the company.

2. It is beneficial to management of the company by providing crystal clear

picture regarding important aspects like liquidity, leverage, activity &

profitability.

3. The study is also beneficial to employees & officers motivation by

showing how actively they are contributing for companys growth.

4. The investors who are interest in involving in the companys shares will

also get benefit by going through the study &can easily take a decision

whether to invest or not to invest in the companys shares.

OBJECTIVES

The major objectives of the resent study are to know about financial

strengths and weakness of MNYL INSURANCE through Financial analysis.

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The main objectives of resent study aimed as:

To evaluate the performance of the company by using ratios as a yardstick

to measure the efficiency of the company. To understand the liquidity,

profitability and efficiency positions of the company during the study

period. To evaluate and analyze various facts of the financial performance

of the company. To make comparisons between the ratios during different

periods.

OBJECTIVES

1. To study the present financial system .

2. To determine the Profitability, Liquidity Ratios.

3. To analyze the capital structure of the company with the help of

Leverage ratio.

4. To offer appropriate suggestions for the better performance of the

organization.

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CHAPTER 5

RESEARCHMETHODOLOGY

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RESEARCH DESIGN

Research design tells us about which tools & techniques are used to find

the results in a better way. It is used to describe the market phenomena

while trying to determine the association among variables.

Types of research

On the basis of theoretical study a research has many types. All of these

are distributed on the nature of research. Some of these are:

Descriptive and Analytical

Qualitative and Quantitative

Conceptual and Empirical

Applied and Fundamental

One time research

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My research is based on analytical research

Analytical research:-

In Analytical research, the researcher has to use facts or information

already available and analyze these to make a critical evaluation of the

material.

SOURCES OF DATA COLLECTION

The information is collected through secondary sources during the project.

That information was utilized for calculating performance evaluation and

based on that, interpretations were made.

Sources of Secondary data

1. Most of the calculations are made on the financial statements of thecompany provided statements.

2. Referring standard texts and referred books collected some of theinformation regarding theoretical aspects.

3. Method- to assess the performance of he company method ofobservation of the work in finance department in followed.

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LIMITATION

1. The study provides an insight into the financial, personnel, marketing

and other aspects of MNYL INSURANCE. Every study will be bound with

certain limitations.

2. The below mentioned are the constraints under which the study is

carried out.

3. One of the factors of the study was lack of availability of ample

information. Most of the information has been kept confidential and as such

as not assed as art of policy of company. Time is an important limitation.

The whole study was conducted in a period of 60 days, which is not

sufficient to carry out proper interpretation and analysis.

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CHAPTER 6

DATA ANALYSIS

&

INTERPRETATION

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Financial analysis is an attempt to understand a business operating resultsand

Financial position of the true face, from the obscure accounting data

accounting procedures will be excavated behind the economic implications

for investors and creditors to provide a basis for decisions. As the

accounting system reflects only the selective economic activity, and its

recognition of an economic activity there will be a time lag, coupled with

the imperfections of their own accounting standards, as well as managers

the freedom to choose accounting methods to make financial Inevitably,

there will be many reports are not the right place. While the audit can

improve the situation to some extent, but the auditors can not absolutely

guarantee the authenticity of the financial statements and the

appropriateness of their work only to users of the report to make the right

decisions to provide a reasonable basis, so even if audited and received

unqualified audit report of the financial statements, we can not completely

avoid that inappropriate sexual. This makes the financial analysis has

become particularly important.

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In general, the financial analysis methods include the followingfour:

1. Comparative analysis: financial information to illustrate the

relationship between the amount and number of different direction for

further analysis. This comparison can be compared to the actual and

planned, can the current period compared to the previous period, and the

same can also be compared with others in the industry;

2. Trend Analysis: in order to reveal the financial condition and operating

results changes and their causes, nature and help predict the future. The

data used for trend analysis can be either absolute, it can be ratio or

percentage of data;

3. Factors: Several factors to analyze the financial indicators of a degree

of influence, generally by means of different analysis methods;

4. Ratio Analysis: It is through the analysis of financial ratios to

understand the financial position and operating results, often by means of

comparative analysis and trend analysis.

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Advantages of financial analysis

1. Helpful in analysis of financial statements

Financial analysis is an extremely useful device for analyzing the financial

statements. Its helps the bankers, creditors, investors, shareholders etc.

2. Simplification of accounting data

Accounting ratio summarizes a long array of accounting data and makes

them understandable.

3. Helpful in comparative study

With the help of financial analysis comparison of profitability and financial

soundness can be made between one firm and another in the same

industry.

4. Fixation of ideal standards

Financial analysis help us in establishing ideal standards of the different

items of the business.

5. Study of financial soundness

Financial analysis discloses the position of business with different view-

points. It discloses the position of business with the liquidity point of view ,

solvency point of view, profitability point of view etc.

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limitation

1.False accounting data gives false ratios.

Accounting ratios are calculated on the basis of data given in profit &loss

a/c and balance sheet. Therefore, they will be only as correct as the

accounting data on which they are based .

2.Window - dressing

Some companies in order to cover up their bad financial position resort to

window dressing.

3.lack of proper standards

Circumstances differ from firm to firm hence no single standards ratio can

be fixed for all the firms against which the actual ratio may be compared.

4. Limited use of a single ratio

The analyst should not merely rely on a single ratio. He should study

several connected ratios before reaching a conclusion.

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FORMULAS FOR FINANCIAL ANALYSIS

(A) Liquidity Ratios -

Current Ratio = Current Assets

Current Liabilities

Quick Ratio = Liquid Assets

Current Liabilities

(B) Leverage Ratios -

Debt Equity Ratio = Debt

Equity

Debt to Total Funds Ratio = Debt

Equity + Debt

Proprietary Ratio = Equity

Total Assets

Fixed Assets to Proprietors Fund Ratio = Fixed Assets

Proprietors Fund

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(C) Activity Ratio -

Inventory Turnover Ratio = Cost of Goods Sold

Average Stock

Debtors Turnover Ratio = Credit Sale

Average Debtors + Average B/R

Average Collection Period = Debtors + B/R

Credit Sales Per Day

(D) Profitability Ratios -

Gross Profit Ratio = Gross Profit

Net Sales

Net Profit Ratio = Net Profit

Net Sales

Operating Ratio = Cost of sales + Operating Expenses

Net Sales

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1.CALCULATION OF CURRENT RATIO

CURRENT RATIOYEAR CURRENT

ASSETS

CURRENT

LIABITILIES

CURRENT RATIO

2006 240000 89000 2.72007 280000 100000 2.82008 320000 100000 3.22009 380000 130000 2.92010 430000 170000 2.5

CURRENT RATIO

0

0.5

1

1.5

2

2.5

3

3.5

2006 2007 2008 2009 2010

49

CURRENT

RATIO

GRAPH NO. 1


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INTERPRETATION

As a rule, the current ratio with 2:1 (or) more is considered as

satisfactory position of the firm.

When compared with 2010, there is an increase in the provision for

tax, because the debtors are raised and for that the provision is

created. The current liabilities majorly included MNYL Insurance of

company for consultancy additional services.

The huge increase in sundry debtors resulted an increase in the ratio,

which is above the benchmark level of 2:1 which shows the

comfortable position of the firm.

2.CALCULATION OF LIQUID RATIO

LIQUID RATIO

YEAR CUURENTASSETS

INVENTORY CURRENTLIABILITIES

LIQUIDRATIOS

2006 280000 23000 89000 2.882007 320000 37000 100000 2.832008 370000 37000 100000 3.332009 440000 30000 130000 3.152010 430000 34000 170000 2.32

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LIQUID RATIO

0

0.5

1

1.5

2

2.5

3

3.5

2006 2007 2008 2009 2010

INTERPRETATION

An ideal Quick ratio is said to be 1:1.

If it is more, it is considered to be better. The idea is that for every

rupee of current liabilities, there should at least be one rupee of liquid

assets.

This ratio is a better test of short term financial position of the

company than the current ratio.

Quick ratio thus is a more rigorous test of liquidity than the current

ratio. And when used together with current ratio, it gives a better

picture of the short term financial position of the firm.

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LIQUID

RATIO

GRAPH NO. 2


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3.CALCULATION OF DEBT-EQUITY RATIO

DEBT- EQUITY RATIO

YEAR DEBT NET WORTH DEBT-EQUITYRATIO

2006 2118 400024 0.0053=0.005

2007 1490 463142 0.0032=0.0032008 1069 535934 0.0019=0.001

2009 696 614099 0.0011=0.0012010 369 699435 0.0005=0.001

DEBT-EQUITY RATIO

0

0.001

0.002

0.003

0.004

0.005

2006 2007 2008 2009 2010

INTERPRETATION

Debt-equity ratio of 2:1 is considered safe.

52

GRAPH NO. 3

DEBT-

EQUITYRATIO


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If the debt-equity ratio is more than that, it

shows a rather risky financial position from the long term

points of view.

4.CALCULATION OF Proprietary Ratio

PROPRIETARY RATIO

0

1

2

3

4

5

6

7

8

2006 2007 2008 2009 2010

INTERPRETATION-

Proprietary Ratio

Year Proprietorsfund

Total assets Proprietaryratio(in%)

2006 10000 250000 42007 18000 500000 3.6

2008 15000 200000 7.5

2009 16000 230000 6.9

2010 17000 250000 6.8

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GRAPH NO. 4

PROPRIE-

TARY

RATIO


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A Higher proprietary ratio is generally treated an indicator

of sound financial position from long term point of view.

Because it means that a large proportion of total assets is provided

by equity.

5.CALCULATION OF DETOR TURNOVER RATIO

DETOR TURNOVER RATIO

0

1

2

3

4

5

6

7

8

9

10

2006 2007 2008 2009 2010

DEBTOR TURNOVRE RATIOYEAR SALES DEBTORS DEBTORS

TUNROVRERATIO

2006 10000 5000 22007 9000 6000 32008 12000 3000 42009 125000 25000 52010 100000 10000 10

54

GRAPH NO. 5

DEBTOR

TURNOV

ER

RATIO


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INTERPRETATION-

This ratio indicates the speed with which the amount is collected from

debtors.

The higher the ratio ,better it is.

6.CALCULATION OF AVERAGE COLLECTION PERIOD

AVERAGE COLLECTION PERIOD

0

1

2

3

4

5

6

2006 2007 2008 2009 2010

INTERPRETATION-

AVERAGE COLLECTION PERIOD

YEAR SALES DEBTORS 12 months/debtors/sales

2006 10000 5000 62007 9000 6000 4

2008 12000 3000 32009 125000 25000 2.52010 100000 10000 1.2

55

GRAPH NO. 6

AVERAGECOLLECTION

RATIO


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This ratio indicates the time within which the amount is

collection from debtors and bills receivable.

A higher debt collection period is thus, an indication of the

inefficiency and negligence on the part of management.

7.CALCULATION OF NET PROFIT RATIO

NET PROFIT RATIO

25

26

27

28

29

30

2006 2007 2008 2009 2010

INTERPRETATION-

Net profit ratioYear Sales Profit after tax Net profit ratio

(in %)2006 32509 86644 26.652007 46709 129830 27.802008 48200 144308 29.932009 56903 156429 27.492010 60137 167016 27.77

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GRAPH NO. 7

NET

PROFIT

RATIO


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This ratio measures of profit available on sales.

The higher the net profit ratio, the better it is.

8.CALCULATION OF INVENTORY TURNOVER RATIO

INVENTORY TURNOVER RATIO

0

2

4

6

8

10

2006 2007 2008 2009 2010

Inventory turnover ratioYear Cost of goods

SoldAverage stock Net profit ratio

(in times)2006 20009 10000 22007 56009 30000 2

2008 28200 10008 32009 36903 29000 12010 80000 8000 10

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GRAPH NO. 8

INVENTORY

TURN ONER

RATIO


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INTERPRETATION-

The higher the ratio, the better it is, since it indicates that stock is

selling quickly.

In a business where stock turnover ratio is high, goods can be sold at

a low margin of profit and even then the profitability may be quite

high.

A low stock turnover ration indicates that stock does not sell quickly

and it creates many other costs like carrying cost, storage cost etc.

9.CALCULATION OF DEBT TO TOTAL FUNDS RATIO

Debt to total funds ratio Year Debt Equity + debt Debt to total

funds ratio (in%)

2006 10000 100000 102007 10669 300000 36.92008 22007 100080 21.92009 369030 390000 94.622010 89999 254750 36.62

DEBT TO TOTAL FUNDS RATIO

0

20

40

60

80

100

2006 2007 2008 2009 2010

58

GRAPH NO. 9

DEBT TO

TOTAL

FUNDS

RATIO


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INTERPRETATION-

Generally, debt to total funds ratio of 67 % is considered satisfactory.

Because it means that the firms depends too much upon outside

loans for its existence.

10.CALCULATION OF Fixed Assets to Proprietors

Fund Ratio

FIXED ASSETS TO PROPRIETORS FUNDRATIO

Fixed assets to proprietors fund ratioYear Fixed assets Proprietors

fundFixed assets toproprietorsfund ratio(in %)

2006 480000 600000 802007 220000 300000 73.332008 350000 400000 87.5

2009 120000 200000 602010 880000 900000 97.8

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0

20

40

60

80

100

2006 2007 2008 2009 2010

INTERPRETATION-

If the ratio is less than 100% , it would mean that proprietors funds

are more than fixed assts.

If more than 100%, it would means that owners funds are not

sufficient to finance the fixed assets.

11.CACULATION OF Gross profit ratio

GROSS PROFIT RATIO

Gross profitYear Gross profit Net sales Gross profit

ratio(in %)2006 200000 500000 402007 64000 800000 82008 420000 600000 702009 30000 200000 152010 88000 900000 9.8

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GRAPH NO. 10

FIXED

ASSETS TO

PROPRIETORS RATIO


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0

10

20

30

40

50

60

70

2006 2007 2008 2009 2010

INTERPRETATION-

This ratio measures the margin of profit available on sales

The higher the gross profit ratio, the better it is.

12.CALCULATION OF OPERATING RATIO

Operating ratioYear Cost of sales +

operatingexpenses

Net sales Operating ratio(%)

2006 420000 500000 842007 25000 95000 26.322008 35000 65500 53.442009 40000 87000 462010 100000 250000 40

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GRAPHNO.11

GROSS

PAOFIT

RATIO


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OPERATING RATIO

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010

INTERPRETATION-

Operating ratio is a measurement of the efficiency and profitability of

the business enterprise.

Lower the Operating ratio, the better it is.

62

GRAPH NO. 12

OPERATING

RATIO


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CHAPTER 7

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FINDINGS

&SUGGESTIONS

FACT/FINDINGS

1. The current ratio has shown in a fluctuating trend as 2.7, 2.83, 3.2, 2.9 &

2.5 during 2006 of which indicates a continuous increase in both current

assets and current liabilities.

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2. The quick ratio is also in a fluctuating trend through out the period 2006-

2010 2.88, 2.83, 3.33, 3.15, 2.32 resulting as. The companys present

liquidity position is satisfactory.

3. The debt- equity ratio during the 2006-2010 is not good.

4. The proprietary ratio has shown a fluctuating trend. The proprietary ratio

is increased compared with the last year. So, the long term solvency of the

firm is increased.

5. As Debtors turnover ratio indicates the number of times debtors

turnover each year,

the debtors turnover ratio of last five years of MNYL insurance co. shows

that the credit management department of the MNYL insurance co. is very

efficient in recovering their debts. The debtors turnover ratio of the

company shows that the recovery of credit is very frequent, which is very

good.

6.Average Collection period of ONGC Ltd. itself states the excellent credit

management policy of the company. The company is doing exceptionally

well during last five years to recover their debtors.

7. The net profit is increased greater in the current year.

8.The higher the ratio, the better it is, since it indicates that stock is selling

quickly.

9. Generally, debt to total funds ratio of 67 % is considered satisfactory.

Because it means that the firms depends too much upon outside loans for

its existence.

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10. If the ratio is less than 100%, it would mean that

proprietors funds are more than fixed assts. If more than 100%, it would

means that owners funds are not sufficient to finance the fixed assets.

11. This ratio measures the margin of profit available on sales. The higher

the gross profit ratio, the better it is.

12.The operating profit ratio is in fluctuating manner as

84,26.32,53.44,46,40 (%) from 2006-2010 respectively.

Max New York is one of the most powerful, world class Life Insurance Co.,

gaining appreciation for their strong work ethics, excellent performance,

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professionalism and team work which led them to progress in

todays challenging environment. Though with its excellence performance

and every efforts has been made to present the most authentic and truly

representative findings, but some uncontrollable factors do affect the

performance and thus bring about some deviations and hurdles in progress.

So, with its strengths and good quality, the company is having some

weaknesses, and threats and opportunities. Its SWOT analysis is as below:

Strengths

Max New York is the largest private player in the insurance industry in

India.

Excellent services.

Customization of Products as per customers needs.

Brand Image.

Business Experience.

Strong Financial Base.

Innovative products, Technology, organization culture and climate.

Weaknesses

Lot of competitors are in the market offer same product by the title

difference in the premium and offerings.

Target only higher income group whereas other companies are trying

to catch middle-lower level people.

Higher premiums as compared to the other companies, Clients face

problems to get insured due to large number of formalities.

High targets for financial advisors and for the sales department.

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Opportunities

Huge market is literally untapped. Out of estimated 320 million

insurable markets only 20% of the population is insured.

In a conservative society of India where people are more inclined

towards risk free investments such as Bank FDs and savings rather

than equity and high risk investments insurance offers the best of

both worlds The security with high returns. So there exists high

potential for insurance company like Max New York.

In the pension field where people want good life after their

retirement.

Indian people are more emotional towards their child thats whychildren plans are selling like hot cakes.

Threats

Weak perception of private players in the minds of Indian people due

to frequent financial scams

Large number of insurance players

Existing wrong business practices of companies like LIC First

premium is paid by their agents where as IRDA suggests that even

forms to be filled by the clients themselves

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Players like Allianz Bajaj and Birla sun life with low

premium for the similar plans

Entry of many other private companies with equally strong

experience and financial strength of foreign partners making the

competition difficult and saturating the urban markets.

LIC has woken up from sleep and is following competitive strategies.

Its huge surplus in Life Fund gives a capability to lodge Price war.

Current Government policies do not encourage Gross Domestic

Savings. If the Tax Liability of the service class rises, the customer

will have little money to invest.

For the Insurance sector Government set the authority that is IRDA

(Insurance Regulatory and Development Authority) which is

undertaken to track record of all the companies and change rules day

by day more rigid which is very difficult for the companies.

CONCLUSION

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The companys overall position is at a good position.

Particularly the current years position is well due to raise in the profit level

from the last year position. It is better for the organization to diversify the

funds to different sectors in the present market scenario.

SUGGESTION

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Analyses of above conditions direct to form serious planning to

recover but as year 2008- 09 shows progress in companys condition, it is

at recovering stage. In nutshell, it can be said that Company shall review

the strategies followed in the years 2008 & 2009. This time company is

growing.

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BIBLOGRAPHY

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1.BOOKS/MAGAZINES REFFERED:

Money Outlook

D.K.Goyal

I.M.Pandey

Shashi K Gupta

2. WEBSITES REFFERED:

www.cifainsurance.com

www.moneyoutlook.com

www.maxnewyorklife.com

Documents

42598927 56 Max New York Life Insurance DOUBLE New Santosh Copy