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Introduction to Finance
The term nature as applied to financial management refers to its function,
scope & objectives. Financial management, as an academic discipline, hasundergone fundamental changes in its evolution it was treated synonymously with
the raising of funds. In the current literature pertaining to financial management.
A broader scope so as to include, in addition to procurement of funds efficient
use of resources is universally recognize.
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Importance Of Finance In Modern World
Finance helps business enterprisers & management in getting over their business
problems & accomplishing their width maximization good, Knowledge of finance &
its tools & techniques provide strong & soled bases for making decision in allbusiness matters. One such very important matter pertains to investment. In the area
of investment, an entrepreneur has to decide as to What Capital expenditures should
the enterprise make, what volume of funds should be committed & how should
funds be allocated as among different investment outlets.
Another problem which the management has to resolve is related with designing
such pattern as may be helpful in maximizing or gaining per share & so also the
market value of shares. This involves examination in depth.Of some of the important issues such as from that sources are funds available?
To what extent are funds available from this sources? What is the expected cost
of future financing given sources of funds should be tapped and to what extent?
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Finance and related disciplines
Financial managing as an integral part of overall management , is not a totally
indipendent area.it draws heavily on related disciplines and fields of study, such aseconomics, accounting, marketing, production etc.
FINANCE & ECONOMICS:
The relevance of economics to financial management can be described in the light
of the two broad areas of economics :macro economics and micro economics. Macro
economics is concerned with the institutional structure of the banking system,
money , and capital markets, financial intermediaries, monetory, credit and fiscal
policies dealing with,and controlling level of, activity within an economy.
Micro economics deals with he economics decision of individuals and
organizations. It concerns itself with the determination of optimal operating
strategies.
FINANCE & ACCOUNTING
The relationship between finance and accounting, conceptually speaking, has twodimensions: 1.they are closely related to the extent that accounting is an important
input in financial decision making;
And 2.there are key differences in view points between them.
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DEFINATION OF FINANCIAL MANAGEMENT
1. financial management is the operation activity of a business that is
responsible for obtaining and effectively utilizing the funds necessary for
efficient operation.2. business finance deals primarily with raising administering and disburing
funds by privately
owned business units operating in non financial fields of industry .
3. Finance management is an area of business management devoted to a
judicious used of capital and a careful selection of sourceful of capital in
order to enable a business firm to move in the direction of reaching its
goods.
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SCOPE OF FINANCE MANAGEMENT
The approach to the scope and function of financial management is divided
into three broad categories.
(A) Traditional approach
In the traditional approach the scope of the finance function was treated in
the narrow sense of procurement of funds by corporate enterprise to meet their
financing needs.
1. The traditional arrangement in the financial institution of the capital market.
2. The financial instrument through which funds are raised from the capital
markets.
3. The legal and accounting relationship between a firm and its sources offunds.
The traditional approach evolved during the 1920s and 1930s but has
how been discarded as it suffers from serious limitations. The weakness of the
traditional approach falls in to this category.
4. Those relating to the treatment of various to emphasis attached to them.5. Those relating to the basic conceptual and analytical6. Frame work of the definition and the scope of the finance function.
(B) EXTENCIVE APPROACH:
At the other extreme is another approach, which conceders that finance is
concerned with cash only and that since nearly very business transition involves cash
directly is concerned with very thing that take place in the conduct of business. This
approach is too broad too be meaning full because if we accept this approaches the
financial manager required to go I to detail of every business acting be it concerned
with purchasing, production, marketing, personnel research and other associatedactivity.
MODERN APPROACH:
In the modern approach the finance function covers both acquisition of funds
well as their allocation.
The investment Decision:
Short term or current which in the normal course of business are convertiblein value, usually within a year i.e. working capital management.
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Capital budgeting
The most crucial financial decision for a firm is relies to selection of are assets
or investment proposal or course of action whose benefits are likely to be available
in future over the lifetime of the project.
Working capital managementIt is concerned with the management of current assets. It is an important and
integral part of financial management as short from survival is pre-requisite for long
term success. one aspect of working capital management is the trade off between
profitability and risk.
2. Financial decisionFinancing decision is concerned with the financing mix or capital structure
refers to the proportion of debt and equity capital. There are two aspacts of financing
decision.
Theory of capital structure:-
Which shows the theoretical relationship between the employment of debt and
return of shoulder?
2. Dividend policy Decisions
The third major decision of financial management id the decision relating
to the dividend policy. Two alternatives are available in dealing with the profit ofa firm. They can be distributed o the share holders in the it self. The decision has
to which course should be followed depends largely on a significant element in
the dividend decision i.e. the dividend pay net ratio, that is what proportion of net
profiles should be paid out to the share holders.
Thus, we may conclude that His modern approach involves the solution
of three major decisions. This decision when jointly taken makes financial
decision making optimal.
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CONCEPT OF BUSINESS FINANCE
Literally speaking the term `business finance` connects finance of
business activities. Thus, in order to develop the meaning of business
finance explanation of two terms business and finance are inescapable.
In common parlance the word `business` is used to denote
merchandising, the operation of some sort of shop store, large or small. It
is however, giving too narrow a meaning to the word. Business must be
under stood to embrace every human activity usually activated by the
profit motives where by mans wants are supplied.
Thus, lumbering, mining, merchandising, manufacturing, trading,
transportation, shipping, building and many other activities or businessthat helps to supply material wants. The practice of law, medicine,
dentistry and teaching, accounting nursing and entertaining represents
activities that supply distressed services.
Dictionary meaning of the term `finance` is the application of skill
or cares to the manipulation the use and the control of money .however ,it
would not be in fitness of things to place to heavy reliance on the
dictionary meaning because the word finance has a marvellous ability to
evoke different concept in the mind of difference persons.
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SCOPE OF BUSINESS FINANCE
In order to understand more clearly the meaning of business finance
it is worth while to high light the scope of business finance .At the outset,
it may be pointed at that business finance is concerned with the finance of
profit making organization only and is an important segment of privatefinance.
Finance is such one fact of broader economic activity of mobilizing
saving and directing them in investment finance includes both public and
private finance. Public finance is the study of principle and practices
pertaining to the actuation of funds, meeting the requirements of
government bodies and administration of these funds by the government
country to this, private finance concerns with producing money for
private organization and management of the money by individual
voluntary associations and corporations. Private finance therefore,
comprises personal finance, business.
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General Information
BOARD OF DIRECTORS
Mr. Kumar Mangalam Birla (Chairman)
Mrs. Rajashree Birla
Mr. M.L. Apte
Mr. M.C. Bagrodia
Mr. B.V. Bhargava
Mr. R.C Bhargava
Mr. Y.P. Gupta
Mr. Cyril Shroff
Mr. S.G. Subrahmanyan
kp
P%
Mr. D.P. Mandelia
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CHIEF FINANCIAL OFFICER
Mr. D.D. Rathi
COMPANY SECRETARY
Mr. Ashok Malu
AUDITORS
M/s G.P. Kapadia & Co., Mumbai
M/s Lodha & Co. New Delhi
REGISTERED OFFICE
GRASIM INDUSTRIES LIMITED
Birlagram, Nagda 456 331 (M.P)
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DIRECTORS REPORT
Your company has posted a commendable for the year ended 31st march, 2005.turnover, Gross
profit and Net profit have been, indeed, impressive.
Capacity utilization optimizing efficiencies and aggressive marketing of value added product have
taken your company to this performance. All of your companys business have given gratifying
results.
The VSF business performance has been noteworthy. Production at 247,952 tons was a significant
12%higher over that of the previous year. Sales volume raises marginally due to the increased
availability of cotton during the year. Realization grew by 9% at Rs 79,008 per ton, in line with the
PARTICULAR 2003 -2004
2004 -
2005
Gross turnover 6130.0 7201.1
Gross profit 1321.5 1645.9
Less : depreciation 273.1 284.5
Profit before exceptional item & tax expenses 1048.4 1361.4
Exceptional items
Surplus on pre payment of sales tax loan - 34.3
Profit before tax & diminution 1077.3 1395.7
Provision for permanent diminution in the value of investment & loans - (92.0)
Profit before tax 1077.3 1303.7
Tx expenses (298.0) (418.0)
Profit after tax 779.3 885.7
Add :-
Debenture redemption reserve written back 42.0 6.9
Investment allowance reserve written back 8.3 0.1
Balance brought forward from previous year 955.4 790.2
Surplus available for appropriation 1785.0 1682.9
Appropriation
General reserve 850.0 700.0
Propose dividend 128.3 146.7
Corporate tax on dividend 16.5 20.9
Balance transfer to balance sheet 790.2 815.3
1785.0 1682.9
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international ternd, leading to higher operating profit.
DIVIDEND
Your Board has recommended a dividend of Rs 16 per share(last year Rs 14) and seeks your
approval for the same. The total outgo of the dividend to be paid to the share holder will be Rs
167.3 crores(inclusive of Corporate Tax on Dividend @ 14.025% ) as against Rs 145.1 crores paid
in the previous year.
DEBENTURE AND TERM LOAN
Your company has raised log term Foreign Currency loans aggregating USD 50 million (Rs 221
crores ) and Rupee loan of Rs 30 crores. The funds were utilized to meet the requirement of capital
expenditure and for general corporate purposes.
Your company has repaid debenture aggregating Rs. 74 crores. Your company repurchased its own
debenture aggregating Rs.135 crores , and these have been extinguished in the books.
HUMAN RESOURCES
During the year ,the Organisational Health Survey , which is the barometer of happiness at index
in the Group , was conducted .The result have been encouraging and confirm that we are by and
large on right track as far as people processes and systems are concerned.
DIRECTORS
Mr. D.D.Rathi was appointed as a Whole Time Director of the company for a period of 3 yearsfrom 1st August , 2004 to 31st July 2007.
Mrs. Raashree Birla , Mr. B.V.Bhargava and Mr. S.G.Subrahmanyan retire from office by rotation
and being eligible , offer themselves for reappointment . a brief resume, expertise and details of
other directorships of these directors are attached along with the Notice of the ensuing Annual
General Meeting.
DELISTING OF EQUITY SHARES
In accordance with the approval granted by the shareholders, the Company. Has got its equity
shares delisted from the Stock Exchange ay Indore and Kolkata . The Company sEquity Shares hall contiune to be listed on the Stock Exchange , Mumbai (BSE) and the Natoinal
Stock Exchange of India Ltd. (NSE), which has nationwide trading reach.
Directors wish to thank Central and State Grovernment , Banks, Financial institutions, Share
holder and business associates for there continued co-operation and support.
For and on behalf of the Borad
KUMAR MANGALAM BIRLA
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Mumbai , 29th April ,2005 chairaman
AUDITORS REPORT
TO THE MEMBERS OF GRASIM INDUSTRIES LIMITED
We have audited the attached the balance sheet of Grasim Industries Limited, as at
31
st
march, 2005 and also the profit and loss account and the cash flow account forthe year ended on that date annexed thereto. This financial statements are the
responsibility of the companys management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standard generally
accepted in India. Those standards required that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit include examining , on a test basis, evidence
supporting the amount and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and significant estimates made
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by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion .
As required by companies (auditors report) order. 2003(the order) issued by the
central govt. of India in terms of sub- section 4A of section 227 of companies act,
1956, on the matters specified in the paragraphs 4 and 5 of the shade order, wefurther report that :
In our opinion, the company has an internal audit system commensurate
with the size of the company and nature of its business
The company has not defaulted in repayments of any dues to financial
institution or banks or debenture holder
On the basis of records made available to us, the company has created
securities in respect of debenture issued / outstanding during year
The company has not raised any money through a public issue during ayear.
Place : Mumbai For G.P.Kapadia & co.
Dated : 29th April, 2005 Chartered Accountants
NIMESH BHAMANI
Partner
(Membership no. 30547)
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RATIO ANALYSIS
Financial analysis is the process of identifying the financial strengths and weakness of the firm by
properly establishing relationship between the items of the Balance Sheet & Profit & Loss Account. Financial
analysis can be undertaken by the management of the firm, or by the parties outside the firm owners, creditors,investors & others. The nature of analysis will differ depending on the purpose of the analysis.
Management of the firm would be interested in every aspect of the financial analysis. It is their overall
responsibility to see that the resources of the firm are used most effectively and efficiently and that the firmsfinancial condition is sound.
Ratio analysis is a powerful tool of Financial Analysis. A ratio is defined as The indicated quotient oftwo mathematical expressions and as The relationship between two or more thing. In financial analysis a
ratio is used as a benchmark for evaluating the financial positions and performance of the firm. The rationale of
ratio analysis lies in the fact that it makes relations information comparable. A single figure by itself has nomeaning but when represented in terms of a related figure, it yields significant inferences.
PROFITABILITY RATIO
Company should earn profit to survive and grow for a long period of time. Profit is the difference
between revenue and expenses over a period of time (usually one year). Profit is the ultimate output of a
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company and it will have no future if it fails to make sufficient profits. Therefore a financial manager should
continuously evaluate the efficiency of the company in terms of profits. Profitability ratios are calculated to
measure the operating efficiency of the company.
Apart from the creditors, both short-term and long-term, also interested in the financial soundness of a
firm are the owners and management of the firm is naturally eager to measure its operating efficiently.
Similarly, the owners invest their funds in the expectation of reasonable returns. The operating efficiency of afirm and its ability to ensure adequate returns to its shareholders depends ultimately on the profits earned by it.
The profitability of a firm can be measured by its profitability ratios. Profitability ratios can be determined on
the basis of either sales or investments.
PROFITABILITY RATIOS RELATED TO SALES
These ratios are based on the premise that a firm should earn sufficient profit on each rupee of sales. Ifadequate profits are not earned on sales, there will be difficulty in meeting the operating expenses and no returns
will be available to the owners. These ratios consist of:
Gross Profit Ratio.
Net Profit Ratio.
Operating Ratio.
Expense Ratio.
Stock Turnover Ratio.
GROSS PROFIT RATIO
Gross profit is the result of the relationship between prices, sales, volume and costs. Change in the grossprofit can be brought about by changes in any of these factors. A high gross profit ratio to sales is a sign of good
management as it implies that the cost of production of the firm is relatively low. A relatively low gross margin
is definitely a danger signal, warranting a careful and detailed analysis of the factors responsible for it.
FORMULA: (SALES COST OF GOODS SOLD) * 100 / NET SALES
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Net Sales = Sales Sale of Scrap.
COGS = (Raw material + Manufacturing exp.) Increase / Decrease in stock.
Gross Profit = Sales COGS.
Gross Profit ratio of 2004-05 :
Gross Profit ratio = 2165.36 * 100/6229.26 = 34.76
The Gross Profit ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Gross Profit 1616.54 2709.83 2165.36
Net Sales 4606.20 5213.21 6229.26
Percentage 35.09 % 51.98 % 34.76 %
Interpretation
The Gross Profit ratio of Company in the year 200203 is 35.09% and in year 2003-04 is 51.98% and in
year 2004-05 is 34.76%. Which shows management efficiency of the company. In the year 2003-04 it isincreasing which is favourable for the company but in the year 2004-05 it is decreasing which is
unfavourable for the company
NET PROFIT RATIO
Net Profit Margin is also known as net margin. This measures the relationship between net profits andsales of the firm. Depending on the concept of net profits employed, the ration can be computed. The net profit
margin is an indicative of managements ability to operate the business with sufficient not only to recover from
revenues of the period, the cost or merchandise or services, the expenses of operating the business and the cost of
borrowed funds, but also to leave a margin of reasonable compensation to the owners for providing their capitalat risk. The ratio of net profit (after interest and tax) to sales essentially expresses the cost price effectiveness of
the operation.
FORMULA: PROFIT AFTER TAX / NET SALES * 100
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Net Sales: Sales Sale of Scrap.
Net Profit ratio of 2004-05:
Net Profit ratio = 885.71*100/6229.26 = 14.21%
The Net Profit ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
PAT 367.58 779.26 885.71
Net Sales 4606.20 5213.21 6229.26
Percentage 7.98% 14.95% 14.21%
Interpretation
The Net Profit ratio of Company in the year 200203 is 7.98% and in year 2003-04 is 14.95% and in year
2004-05 is 14.21%. Which shows management efficiency of the company. In the year 2003-04 it is
increasing which is favourable for the company but in the year 2004-05 it is decreasing which is
unfavourable for the company
OPERATING RATIO
Operating Ratio is the ratio that shows relationship between Costs of good sold plus operating expenses
and Net sales. It shows the efficiency of the management. The higher the ratio the less will be the margin
available to the owners of the company.
FORMULA = COGS + OPERATING EXP*100 / NET SALES
Net Sales = Sales (Income from Dividend + Income from Services + Income from Rent)
COGS = (Raw material + Manufacturing exp.) Increase / Decrease in stock
Operating Exp = Administration exp + Selling exp + Financial exp
Operating Profit ratio of 2004-05
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Operating Profit ratio = 4063.9 + 1530.67 *100/ 6229.26 = 96.86%
The Operating Profit ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
COGS 2989.66 2503.38 4063.9
OPERATING EXP 1530.67 1647.41 1963.9
NET SALE 4606.20 5213.38 6229.26
PERCENTAGE 98.13% 79.61% 96.76%
Interpretation
The Operating ratio of Company in the year 200203 is 98.13% and in year 2003-04 is 79.61% and in year
2004-05 is 96.76%. Which shows management efficiency of the company. In the year 2003-04 it is high
which is unfavourable for the company but in the year 2003-04 it is low which is favourable for the
company but in the year 2004-05 it is high which is unfavourable for the company
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EXPENSESRATIO
Another profitability ratio related to the sales is the expenses ratio. It is compared by dividing expensesby sales. The term Expense Includes.
1. Cost of good sold.2. Administrative expenses.
3. Selling and distribution expenses.
4. Financial expenses but excludes taxes, dividends, and extraordinary losses due to theft of goods, goodsdestroyed by fire and so on.
The expense ratio is closely related to profit margin, gross as well as net. The expense ratio is thus
important for analysing the profitability of a firm. As a working proportion, a low ratio as favourable, while ahigh one is unfavourable.
FORMULA: TOTAL EXPENSES * 100 / NET SALES
Total Expenses = Expenses excluding Depreciation.
The Expenses ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Total Expense 819.10 8825.46 938.46
Net Sales 4606.20 5213.21 6229.26
Percentage 17.78% 15.83% 15.06%
Interpretation
The Expenses ratio of Company in the year 200203 is 17.78% and in year 2003-04 is 15.83% and in year
2004-05 is 15.06%. Which shows management efficiency of the company. It is decreasing every year which
favourable for the company.
STOCK TURNOVER RATIO
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The number of times the average stock is turned over during the year is known as stock
turnover. It is computed by dividing the cost of goods sold by the average stock in business.
Average stock the average of opening and closing stock of the year. If however, the monthly figure
of the stock are available, the average monthly stock will give this ratio will be computed ratio.
This ratio signifies that the average stock is turned over during the year. The stock turnover ratio isthus important for analysing the stock turning capacity of a firm. If figure for cost of goods sold are not given
then the ratio can be calculated on the basis of sales.
FORMULA: COST OF SALES / AVG STOCK
COST OF SALES = SALES
AVG STOAK = OPENING STOCK + CLOSING STOCK /2
Stock Turnover ratio of 2004-05
Stock Turnover ratio = 6229.26 / 162.09 = 38.4 times
The Stock Turnover ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
SALES 4606.20 5213.21 6229.26
Avg Stock 146.61 114.82 162.09
Times 31.4 45.40 38.4
Interpretation
The Stock Turnover ratio of Company in the year 200203 is 31.4times and in year 2003-04 is 45.40timesand in year 2004-05 is 38.4times. Which shows management efficiency of the company. It is decreasing
from 2003-04 to 2004-05 year. Which unfavourable for the company . The company should increase sales
so that stock turnover ratio also increase.
Balance sheet ratio
Current ratio
Liquid ratio
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Quick ratio
Propriety ratio
Debt equity ratio
Gearing ratio
Long term debts to fixed assets
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CURRENT RATIO
The current ratio of the firm measures its short term solvency, that is, its ability to meet short term
obligations, as a measure of short term / current financial liquidity. The higher the ratio, the larger is the amount
of rupees available per rupee of current liability, the more is the firms ability to meet current obligations and thegreater is the safety of funds of short term creditors. It is expressed in times.
FORMULA: CURRENT ASSETS (CA) / CURRENT LIABILITY (CL)
Current assets: Cash & Bank balance + Stock + Debtors +
B/R + Prepaid expenses + Loans & Advances.
Current liabilities: Creditors + B/P + Bank OD + Unclaimed
Dividend + Provision for Taxation.
Calculation of current ratio of 2004-05
Current ratio :1853.93/1108.30 = 1.672:1
The Current ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
CA 1495.61 1496.01 1853.93
CL 882.87 946.37 1108.30
Times 1.694:1 1.580:1 1.672:1
Interpretation
The Current ratio of Company in the year 200203 is 1.694:1 and in year 2003-04 is 1.580:1 It is
decreasing which is not good for the company. In year 2004-05 is 1.672:1 which is better than 2003-04 but
it is less than 2002-03
LIQUID RATIO
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A variant of current ratio is the liquid ratio or quick ratio which is designed to show the amount of
cash available to meet immediate payments. It is obtained by dividing the liquid liabilities.
Liquid assets are obtained by deducting stock in trade from current assets. Stock is not treated as a
liquid assets because it cannot be readily converted in to cash as and when required. The current
ratio of a business does not reflect the true liquid position if its current assets consist largely of
stock in trade.
FORMULA: CURRENT ASSETS / CURRENT LIABILITIES
Current assets = Current Assets Stock
Current liabilities = Current Liabilities Bank Overdraft
Liquid ratio of year 2004-05:
Liquid ratio= 1573.33/1108.30 = 1.41:1
The Liquid ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Current Assets 1306.02 1339.27 1573.33
Current liabilities 882.87 946.37 1108.30
Times 1.47:1 1.41:1 1.41:1
Interpretation
The Liquid ratio of Company in the year 200203 is 1.47:1 and in year 2003-04 is 1.41:1 It is
constant which is not good for the company but in the year 2004-05 it is also 1.41:1 which shows that
companys cash & bank balance is not increasing the company should make enough effort to increase
their liquidity.
QUICK RATIO
The measure of absolute liquidity may be obtained by comparing only cash and bank balances as well as
readily marketable securities with liquid assets. This is a very exacting standard and liquidity and it is
satisfactory if the ratio is 0.5:1. It is computed by dividing the value of quick assets by liquid assets. It isrigorous measure of a firms ability to service short term liabilities. It is expressed in times.
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FORMULA: QUICK ASSETS / LIQUID LIABILITIES
Quick assets = Current Assets Inventories.
Liquid liabilities = Current Liabilities
Quick ratio of year 2004-05:
Quick ratio= 86.70/1108.30 = 0.07:1
The Quick ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Quick Assets 110.11 227.48 86.70
CL 882.87 946.37 1108.30
Times 0.12:1 0.24:1 0.07:1
Interpretation
The Quick ratio of Company in the year 200203 is 0.12:1 and in year 2003-04 is 0.24:1 It is
increasing which is good for the company but in the year 2004-05 is 0.07:1 which shows that companys
cash & bank balance is gradually decreasing which is not good for the company.
PROPRIETARY RATIO
The ratio shows the proportion of proprietor fund to the total assets employed in the business. The
proprietor fund or shareholder equity consist of share capital and reserves &surplus..
FORMULA: OWNERS FUND / TOTAL ASSETS
Owners fund = Share Capital + Res&Sur + M/S Exp P&L a/c(Dr)
Total assets = Fixed assets + Inv + Current assets
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Proprietary ratio of year 2004-05:
Proprietary ratio= 91.67/8030.93 = 1.41:1
The Quick ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Owners fund 91.69 91.67 91.67
Total assets 6536.69 7232.36 8030.93
Times 1.40:1 1.26:1 1.14:1
Interpretation
The Proprietary ratio of Company in the year 200203 is 1.40:1 and in year 2003-04 is 1.26:1 It is
decreasing which is not good for the company and in the year 2004-05 is 1.14:1 which shows that
companys finance position is not for the company.
DEBT EQUITY RATIO
The ratio is another form of proprietary ratio establishes relationship between the outside long term
liabilities and owners fund. It shows the proportion of funds provided by long term creditors and that providedby long term creditors and that provided by shareholders or proprietors. A higher ratio means that outsidecreditors has larger claim than owner of the business. If this ratio is lower, it is not profitable from the viewpoint
of equity shareholders, as benefit of trading on equity is not availed of.
FORMULA: LONG TERM LIABILITIES / OWNERS FUND * 100
OWNERS FUND = EXCLUDING PREFERENCE SHARE CAPITAL
LONG TERM LIABILITIES : SECURED LOANS + UNSECURED LOANS
Debt equity ratio of 2004-05 :
Debt equity ratio = 1974.81/4328.35*100 = 45.62 %
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The Debt Equity ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Long term lia. 2040.29 2036.89 1974.81
Owners fund 2977.29 3610.83 4328.35
Percentage 68.52 % 56.41 % 45.62 %
Interpretation
The Debt Equity ratio of Company in the year 200203 is 68.52% and in year 2003-04 is 56.41% and in
year 2004-05 is 45.62% It is good for the firms because Debt Equity is one type of debtors so It is
decreasing every year which is good sign for the company.
CAPITAL GEARING RATIO
This ratio express the proportion of preference capital and ordinary capital. In other words
it is the ratio of fixed dividend bearing capital to ordinary capital. The higher this ratio i.e. the
greater the proportion of preference capital and debenture to ordinary capital, the capital structure
of the company is said to be highly geared. In such cases the ordinary share of the company will be
speculative because due to small increase in profit the ration of return on ordinary capital will
increase substantially. The ratio is another form of proprietary ratio establishes relationship between theoutside long term liabilities and owners fund. It shows the proportion of funds provided by long term creditors
and that provided by long term creditors and that provided by shareholders or proprietors. A higher ratio means
that outside creditors has larger claim than owner of the business. If this ratio is lower, it is not profitable from
the viewpoint of equity shareholders, as benefit of trading on equity is not availed of.
FORMULA: FIXED CHARGE BEARING CAPITAL / EQUITY SHARE CAPITAL
Fixed charge bearing capital = Pref Share capital + Deb + Long term lia
Equity Share Capital = Share capital
Capital gearing ratio of 2004-05 :
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Capital gearing ratio = 1534.02 / 91.67 = 16.73:1
The Capital greaing ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Fixed charge
bearing capital
1595.86 1422.80 1534.02
Eq Share Capital 91.67 91.67 91.67
Times 17.40:1 15.52:1 16.73:1
Interpretation
The Capital gearing ratio of Company in the year 200203 is 17.40:1 and in year 2003-04 is 15.52:1 and in
year 2004-05 is 16:73:1 .
LONG TERM FUND TO FIXED ASSETS RATIO
Normally the fixed assets of business must be purchased out of fixed assets only, which includes
share capital ,reserve and long term liabilities. This ratio there fore shows the relationship between
fixed capital and fixed assets. The ratio must be 1: 1 or more i.e. the fixed capital must be more
than fixed assets or must at least be equal to fixed assets. If fixed capital is less than fixed assets , it
would mean that short term fund have been used in purchasing fixed. when these short term
obligation mature, the business would be put to trouble and may be compelled to dispose of its
fixed assets at a considerable loss to business.
FORMULA: LONG TERM LIABILITIES / FIXED ASSETS * 100
LONG TERM LIABILITIES : SECURED LOANS + UNSECURED LOANS
Long term fund to fixed assets ratio of 2004-05 :
Long term fund to fixed assets ratio = 4328.35/3194.81*100 = 135.4%
The Long term fund to fixed assets ratio of Grasim industries Ltd. is as follows:
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Years 2002-03 2003-04 2004-05
Long term lia. 2040.12 3610.83 4328.35
Fixed assets 3245.03 3195.70 3194.81
Percentage 62.8% 112.9% 135.4%
Interpretation
The Long term fund to fixed assets ratio of Company in the year 200203 is 62.8%% and in year 2003-04
is 112.9% and in year 2004-05 is 135.4% It is good for the firms because fixed capital high more
favourable it is good sign for the company.
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Composite ratio
Return on investment :-
o Return on capital employedo Return on share holder fund
o Return on equity share holder fund
Debtors turn over ( Debtors ratio )
Creditors turn over ( creditors ratio )
Fixed assets turn over ratio
Total assets turn over
Debt service ratio
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RETURN ON CAPITAL EMPLOYED (ROCE)
Here the profits are related to the total capital employed. The term capital employed refers to long-term
funds supplied by the creditors and owners of the firm. The capital employed basis provides the test of
profitability related to the source of long term funds. A comparison of this ratio with similar firms, with theindustry average and over time would provide sufficient insight into how efficiently the ling term funds of the
owners and creditors are being used. The higher the ratio, the more efficient is the use if capital employed.
FORMULA: PBIT / TOTAL CAPITAL EMPLOYED * 100
Capital Employed = Share Capital + Borrowed Capital + Reserve & Surplus.
Return on Capital Employed ratio of 2004-05
Return on Capital Employed ratio = 1442.47*100/5767.35 = 25.01%
The Return on Capital Employed of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
PBIT 658.46 1248.67 1442.47
Total CE 4478.15 4938.61 5767.35
Percentage 14.705% 25.28% 25.01%
Interpretation
The Return on Capital Employed ratio of Company in the year 200203 is 14.70%% and in year 2003-04
is 25.28% and in year 2004-05 is 25.01% It is shows the over all profitability of the business high more
favourable it is good sign for the company.
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RETURN ON SHAREHOLDERS FUND
While there is no doubt that the preference shareholder are also owners of the firm, the real owners are
the equity shareholder who bear all the risk, participate in the management and are entitled to all the profits
remaining after the outside claims including preference dividends are met in full. The profitability of a firm fromthe owners point of view should, therefore, in the fitness of thing be assessed in terms of return to the
shareholders. This is the single most important ratio to judge whether the firm has earned a satisfactory return
for its equity-shareholders or not.
FORMULA: PAT / SHAREHOLDERS FUND * 100
Return on Shareholders Fund of 2004-05
Return on Shareholders Fund = 885.71*100/4328.35 = 20.46%
The Return on Shareholders Fund of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
PAT 367.58 779.26 885.71
Net Worth 2977.29 3610.83 4328.35
Percentage 12.34% 21.58% 20.46%
Interpretation
The Return on Shareholder Fund of Company in the year 200203 is 12.34% and in year 2003-04 is
21.58% and in year 2004-05 is 20.46%. In the year 2002-03 it is low which is favourable for the company
but in the year 2003-04 it is high which is unfavourable for the company but in the year 2004-05 it is lower
than 2003-04 which is favourable for the company but company should try to make it lower.
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DEBTOR TURNOVER RATIO
A firm sells goods on cash and on credit. Credit is used as a marketing tool by a number of companies.
When a firm extends credit to the customers, debtors are created. Debtors are expected to be converted into cash
over a short period and, therefore are included in current liabilities. The liquidity position of the firm depends onthe quality of debtors to a great extend. Thus financial analyst apply ratio to judge the quality or liquidity of
debtors. Debtor turnover ratio indicates the number of times debtors turnover each year. Generally, the higher
the value of debtor turnover the more efficient is the management.
FORMULA: DEBTORS + BILLS RECEIVABLES * 360 / NET SALES
Debtor Turnover ratio of 2004-05
Debtor Turnover ratio = 522.01 * 360 / 6229.26 = 30.1 Days
The Debtor Turnover ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Receivables 429.65 484.63 522.01
Net Sales 4606.20 5213.21 6229.26
DAYS 33.5 33.4 30.1
Interpretation
The Debtors turnover of Company in the year 200203 is 33.5 Days and in year 2003-04 is 33.4 Days and
in year 2004-05 is 30.1 Days. In the year 2002-03 it was high which is favourable for the company but in
the year 2003-04 it is same which is favourable for the company but in the year 2004-05 it is lower than
2003-04 &2002-03 which is unfavourable for the company it tells us that company is recovering its money
in number of days .
DEBTORS TURNOVER RATIO
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FORMULA: 360 / DEBTOR RATIO
Debtor Turnover ratio of 2004-05
Debtor Turnover ratio = 360/ 30.1 = 11.9 TIME
The Debtor Turnover ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Days 360 360 360
Debtors ratio 33.5 33.4 30.1
TIMES 10.7 10.7 11.9
CREDITOR RATIO
We have seen in above ratio that debtor ratio given us the number of days within which amount
due for credit sale is collected. Similarly, the number of days with in which we make payment to
our creditors for credit purchase is obtain from creditor velocity.
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FORMULA: CREDITOR + BILLS PAYABLE * 360 / NET PURCHASE
Creditor Turnover ratio of 2004-05
Creditor Turnover ratio = 827.89 * 360 / 1873.05 = 159.1 Days
The Creditor Turnover ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Creditor 752.49 752.49 827.89
Net Purchase 1175.49 1372.49 1873.05
DAYS 230.3 197.2 159.1
Interpretation
The Creditor turnover of Company in the year 200203 is 230.3 Days and in year 2003-04 is 197.2 Days
and in year 2004-05 is 159.1 Days. In the year 2002-03 it was high which is favourable for the company
but in the year 2003-04 it is same which is favourable for the company but in the year 2004-05 it is lower
than 2003-04 &2002-03 which is unfavourable for the company it tells us that companys payment policy .
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CREDITOR TURNOVER RATIO
FORMULA: 360 / CREDITOR RATIO
Creditor Turnover ratio of 2004-05
Creditor Turnover ratio = 827.89 * 360 / 1873.05 = 159.1 Days
The Creditor Turnover ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Days 360 360 360
Creditor ratio 230.3 197.2 159.1Times 1.56 1.82 2.26
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FIXED ASSETS TURNOVER RATIO
Assets are used to generate sales. Therefore, a firm should manage its assets efficiently to maximize
sales. The relationship between sales and fixed assets is known as Fixed Assets turnover ratio.
FORMULA: NET SALES / NET FIXED ASSETS
Fixed Assets Turnover ratio of 2004-05
Fixed Assets Turnover ratio = 6229.26/3194.81 = 1.94:1
The Fixed Assets Turnover ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Net Sales 4606.20 5213.21 6229.26
Net FA 3245.03 3195.70 3194.81
Times 1.41:1 1.63:1 1.94:1
Interpretation:
This ratio indicates the efficiency with which the companys fixed assets are used and the company has
increased its utilization of fixed assets in the year 2004-05 which is a good sign but this should be compared withthe industry average so as to be able to determine the actual position.
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TOTAL ASSETS TURNOVER RATIO
The firm should manage its assets efficiently to maximize its sales as assets are primarily used to
generate sales. For this purpose some analyst compute Total Assets ratio. This ratio shows the firms ability in
generation sales from all financial resources committed to the total assets.
FORMULA: NET SALES / TOTAL ASSETS
Total Assets: Fixed Assets + Investments + Current Assets.
Total Assets Turnover ratio of 2004-05
Total Assets Turnover ratio = 6229.26/5048.74 = 1.23:1
The Total Assets Turnover ratio of Grasim industries Ltd. is as follows:
Years 2002-03 2003-04 2004-05
Net Sales 4606.20 5213.21 6229.26
Total Assets 4740.62 4691.71 5048.74
Times 0.97:1 1.11:1 1.23:1
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EARNING PER SHARE (EPS)
This ratio measures the profit available to the equity shareholders on a per share basis, that is, the
amount that they can get on every share held. Earning per share is a widely used ratio. Although EPS is a
measure of profitability of the firm from the owners point of view, should be used cautiously as it does notrecognized effect of increase in equity capitals a result of retention of earning.
FORMULA: PAT / NUMBER OF EQUITY SHARE
Earning per Share of 2004-05
Earning per Share = 885.71/91689485 = 96.60
The Earning per Share of Grasim industries Ltd. is as follows:
Years 2001-02 2002-03 2003-04
PAT(In Crores) 367.58 779.26 885.71
No. of Shares 91689485 91689485 91689485
EPS (FV Rs 10 Each) 40.09 84.99 96.60
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Pie Chart Of Earning Per Share
18%
38%
44% 2002-2003
2003-20042004-2005
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COMMON SIZE STATEMENT
INTRODUCTION
Apart from ratio analysis, another useful way of analysing financial statement is to convert them into
common size statement by expressing absolute rupee amounts into percentages. Common size comparativestatement prepared for one firm over the years would highlight the relative change in each group of expenses,
assets and liabilities. These statements can be equally useful for inter firm comparisons, given the fact that
absolute figures of two firms of the same industry are not comparable.
METHOD OF MAKING A COMMON SIZE STATEMENT
Under this method the income statement exhibits each expense item or group of expense items as a percentage of net sales, and net sales taken as 100 per cent. Similarly, each individual asset and liability
classification is shown as a percentage of total assets and liabilities respectively. Basically, it involves in
converting the figures expressed in absolute rupee amounts in percentages.
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COMMONSIZE BALANCE SHEET FOR THE YEAR ENDED
31STMARCH 2003PARTICULARS 31-03-2003 %
SOURCES OF FUNDS
Shareholders Funds:
Share Capital 91.67 1.45
Share Capital Suspense 0.02 0.0003
Reserves and Surplus 2885.62 50.81
Total 2977.31 52.42
LOAN FUNDS
Secured Loans 1500.86 26.42
Unsecured Loans 539.26 9.495
Documentary bills discounted with banks 35.95 0.633
Total 2076.07 36.55
Deffered tax liabilities 625.50 11.01
Total 5678.88 100
APPLICATION OF FUNDS:
Fixed Assets:Gross block 5486.12 96.60
Less: Depreciation 2330.11 41.03
Net block 3156.01 55.57
Capital W/P 89.02 1.567
Total 3245.03 57.14
Fixed assets held for disposal 25.06 0.441
Investments: 1796.05 31.62
Current Assets, Loans, Advances:
Inventories 539.95 9.508Sundry Debtors 429.65 7.565
Cash & Bank 110.11 1.938
Interest accrued on investment - -
Loans & Advances 415.90 7.323
Total 1495.61 26.33
Less:
Current Liabilities & Provisions
Liabilities 752.49 13.25
Provision 130.38 2.295
Total 882.87 15.54
Net Current Assets 612.74 10.78
Total 5678.88 100
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COMMONSIZE BALANCE SHEET FOR THE YEAR ENDED
31STMARCH 2004PARTICULARS 31-03-2004 %
SOURCES OF FUNDS
Shareholders Funds:
Share Capital 91.67 1.45
Share Capital Suspense 0.02 0.0003
Reserves and Surplus 3519.14 55.78
Total 3610.83 52.23
LOAN FUNDS
Secured Loans 1327.80 21.05
Unsecured Loans 709.09 11.24
Documentary bills discounted with banks 28.34 0.449
Total 2065.23 32.73
Deferred tax liabilities 632.50 10.02
Total 6308.56 100
APPLICATION OF FUNDS:
Fixed Assets:Gross block 5705.53 90.44
Less: Depreciation 2588.92 41.03
Net block 3116.61 49.40
Capital W/P 79.09 1.253
Total 3195.70 50.65
Fixed assets held for disposal 22.57 0.357
Investments: 2540.65 40.27
Current Assets, Loans, Advances:
Inventories 459.46 7.283Sundry Debtors 484.63 7.682
Cash & Bank 227.48 3.605
Interest accrued on investment - -
Loans & Advances 324.44 5.142
Total 1496.01 23.71
Less:
Current Liabilities & Provisions
Liabilities 752.10 11.92
Provision 194.27 3.079
Total 946.37 15.00
Net Current Assets 549.64 8.712
Total 6308.56 100
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COMMONSIZE BALANCE SHEET FOR THE YEAR ENDED
31STMARCH 2005PARTICULARS 31-03-2005 %
SOURCES OF FUNDS
Shareholders Funds:
Share Capital 91.67 1.32
Share Capital Suspense 0.02 0.0002
Reserves and Surplus 4236.66 61.08
Total 4328.35 62.40
LOAN FUNDS
Secured Loans 1439.02 20.75
Unsecured Loans 535.79 7.724
Documentary bills discounted with banks 33.54 0.483
Total 2008.34 28.95
Deferred tax liabilities 599.50 8.643
Total 6936.19 100
APPLICATION OF FUNDS:
Fixed Assets:Gross block 5897.04 85.01
Less: Depreciation 2848.17 41.06
Net block 3048.87 43.95
Capital W/P 145.94 2.104
Total 3194.81 46.05
Fixed assets held for disposal 13.73 0.197
Investments: 2982.02 42.99
Current Assets, Loans, Advances:
Inventories 678.59 9.783Sundry Debtors 522.01 7.525
Cash & Bank 86.70 1.249
Interest accrued on investment 1.09 0.015
Loans & Advances 565.54 8.153
Total 1853.93 26.72
Less:
Current Liabilities & Provisions
Liabilities 827.89 1.193
Provision 820.41 4.042
Total 1108.30 15.97
Net Current Assets 745.63 10.74
Total 6936.19 100
COMMONSIZE PROFIT & LOSS ACCOUNT FOR YEAR ENDED 31ST
MARCH 2003
(Rs. In crores )
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PARTICULARS 31-03-2005 %
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Net Sales (less of excise duty) 4606.20 100
Interest and dividend income 74.54 0.098
Other income 58.44 1.268
Increase / Decrease in stock (13.75) 0.299
INCOME 4725.43 102.5
Raw materials consumed 1175.91 25.52Mfg expenses 1244.81 27.02
Purchase of finished and other product 17.62 0.382
Payments to & provision for employ 332.24 7.212
Admn, selling ,distribution & other expenses 819.10 17.78
Interest & Dep. 422.54 9.173
TOTAL EXPENDITURE 4012.23 87.10
Profit before tax & exceptional items 713.20 15.48
Profit / (loss) on sale of trade investment (208.62) 4.529
Profit Before Tax 504.58 10.95Provision for current tax (192.00) (4.168)
Deferred tax 15.00 0.325
Tax provision of earlier years written back 40.00 0.868
Profit After Tax 367.58 7.980
Debenture redemption reserve no longer required 212.01 4.602
Inv. Allowance reserve no longer required - -
Balance brought forward from previous year 929.24 2.017
Profit Available for Appropriations 1508.83 32.75
APPROPRIATION
Proposed dividend 91.67 1.990
Corporate dividend tax 11.75 0.255
General reserve 450.00 9.769
Balance carried to balance sheet 955.41 20.74
1508.83 32.75
COMMONSIZE PROFIT & LOSS ACCOUNT FOR YEAR ENDED 31ST
MARCH 2004( Rs. In crores )
PARTICULARS 31-03-2005 %
Net Sales (less of excise duty) 5213.21 100
Interest and dividend income 141.60 2.716
Other income 58.80 1.127
Increase / Decrease in stock (24.31) 0.466
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INCOME 5389.30 103.3
Raw materials consumed 1372.49 26.32
Mfg expenses 1306.67 25.06
Purchase of finished and other product 50.47 0.968
Payments to & provision for employ 358.90 6.884
Admn, selling ,distribution & other expenses 825.46 15.83
Interest & Dep. 426.94 8.188TOTAL EXPENDITURE 4340.93 83.26
Profit before tax & exceptional items 1048.37 20.10
Profit / (loss) on sale of trade investment 28.89 0.554
Profit Before Tax 1077.26 20.66Provision for current tax (219.00) (5.581)
Deferred tax 7.00 0.134
Profit After Tax 779.26 14.94Debenture redemption reserve no longer required 42.04 0.806
Inv. Allowance reserve no longer required 8.27 0.158
Balance brought forward from previous year 955.41 18.32
Profit Available for Appropriations 1784.8 34.23
APPROPRIATION
Proposed dividend 128.34 2.461
Corporate dividend tax 16.44 0.315
General reserve 850.00 16.30
Balance carried to balance sheet 790.20 15.15
1784.98 34.23
COMMONSIZE PROFIT & LOSS ACCOUNT FOR YEAR ENDED 31STMARCH 2005( Rs. In crores )
PARTICULARS 31-03-2005 %
Net Sales (less of excise duty) 6229.26 100
Interest and dividend income 114.75 1.842
Other income 72.44 1.162
Increase / Decrease in stock 100.67 1.616
INCOME 6517.12 104.6
Raw materials consumed 1873.05 30.06
Mfg expenses 1498.77 24.06
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Purchase of finished and other product 49.02 0.786
Payments to & provision for employ 373.13 5.989
Admn, selling ,distribution & other expenses 938.46 15.06
Interest & Dep. 423.33 6.795
TOTAL EXPENDITURE 51155.76 82.76
Profit before tax & exceptional items 1361.36 21.85
Surplus on pre payment of sales tax loan 34.35 0.551Provision for diminution in value of invst& loan (92.00) 12983752
Profit Before Tax 1303.71 20.92Provision for current tax (451.00) 7.240
Deferred tax 33.00 0.529
Profit After Tax 885.71 14.21
Debenture redemption reserve no longer required 6.86 0.110
Inv. Allowance reserve no longer required 0.16 0.002
Balance brought forward from previous year 790.20 12.68Profit Available for Appropriations 1682.93 27.01
APPROPRIATION
Proposed dividend 146.68 2.354
Corporate dividend tax 20.90 0.335
General reserve 700.00 11.23
Balance carried to balance sheet 815.35 13.08
1682.93 27.01
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CASH FLOW STATEMENT
The Institute of Chartered Accountants of India (ICAI) issued the Accounting Standard (AS-3) (revised)
relating to the preparation of cash flow statement (CFS) in 1998. Initially, it was recommendatory in nature, its
preparation has been mandatory for accounting periods commencing on or after April 1,2001 for enterprises (I)which have either turnover of more than Rs. 50 crore in a financial year or (II) the shares of which are listed in
stock exchange.
Information about the cash flows of an enterprise is useful in providing users of financial statementswith a basis to assess the ability of the enterprise to generate cash and cash equivalents and the needs of the
enterprise to utilize those cash flows. The economic decisions that are taken by users require an evaluation of the
ability of an enterprise to generate cash and cash-equivalents and the timing and certainty of decision of theirgeneration.
The CFS deals with the provision of information about the historical changes in cash and cash equivalents bymeans of a cash flow statement which classifies cash flows during the period among:
Operating Activities.
Investing Activities.
Financing Activities.
A cash flow statement, when used in conjunction with the other financial statements, provides
information that enables users to evaluate the changes in net assets of an enterprise, its financial
structure(including its liquidity and solvency), and its ability to affect the amounts and timing of cash flows inorder to adapt to changing circumstances and opportunities.
An analysis of cash flow is useful for short run planning. A firm needs sufficient cash to pay debtsmaturing in the near future, to pay interest and other expenses and to pay dividends to the shareholders. The firm
can make projection of cash inflows and cash outflows to determine the availability of cash. This statement
indicates the sources and uses of cash. To put in one sentence, this statement analysis the changes in non current
account as well as current accounts to determine the flow of cash.
CASH FLOW STATEMENT
PARTICULAR 2002-2003 2003-2004 2004-2005
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(A) Cash Flow from Operating Activities
(1)Net Profit before tax &exceptional items 713.20 1048.37 1361.36
Adjustment for: -
Depreciation 254.14 273.06 284.57
Provision for Diminution in Value of Investment 6.36 - -
Interest expenses 168.41 153.88 138.76
Interest Income (39.67) (55.28) (75.38)
Dividend Income (34.87) (87.32) (39.37)
Profit/Loss on sale of Fixed Assets (Net) 9.52 0.90 (2.25)Profit on sale of Long Tem Investment (Net) - (2.76) (24.90)
Profit on sale of Current Investment (Net) (6.37) (1.79) (3.37)
(2) Operating Profit Before working Capital changes 1070.72 1330.06 1646.42
Adjustment for :-
Trade & Other Receivables 1.91 (64.28) (78.33)
Inventories 8.94 80.49 (219.13)
Assets held for disposal 1.42 2.49 1.84
Trade Payable 45.41 30.75 90.96
(3) Cash generated from Operations 1128.40 1379.51 1441.76
Diet Taxes Paid (Net) (160.39) (210.28) (391.30)
Cash from operating activities before exceptional item 968.01 1169.26 1050.46Net Cash from Operating Activities 968.01 1169.26 1050.46
(B) Cash Flow from Investing Activities
Sale of Fixed assets 5.65 5.65 19.71
Purchase of Investment and fixed assets (1223.39) (1006.07) (377.16)
Sale of Investment 30.08 53.64 666.13
Investment/Advances in Joint Venture, Subsidiary &Others
(46.52) 24.74 (1294.15)
Net Proceeds from sale of Current Investment 6.37 1.79 3.37
Interest Received 39.68 55.28 74.29
Dividend Received 34.87 86.32 39.37
Net Cash from/(used in) investment activities (826.28) (796.65) (868.44)
(C) Cash Flow from Financing ActivitiesProceeds from borrowings 597.14 410.50 326.40
Repayment of borrowings (516.61) (388.73) (354.13)
Interest paid (177.74) (173.66) (150.11)
Dividends paid (82.73) (91.57) (128.19)
Corporate dividend tax - (11.75) (16.77)
Net Cash from/(used in ) financing activities (179.94) (255.21) (322.80)
(D)Net increase/(decrease) in Cash & Cash equivalent (38.21) 117.37 (140.78)
Cash &Cash equivalent at beginning of the year 148.32 110.11 227.48
Cash &Cash equivalent at end of the year 110.11 227.48 86.70
(Cash & Cash equivalent represent Cash & Bank balances)
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BIBLIOGRAPHY
I have referred to the following books and websites in making the final project.
ANNUAL REPORTS.
a. Annual Reports of Grasim Industries Limited of the year 2003.
b. Annual Reports of Grasim Industries Limited of the year 2004.
REFERENCE BOOKS.
a. Financial Management (I.M.Pandey).
b. Financial Management (Khan & Jain).
c. Financial Management (B.S.Shah).
SOURCES OF INFORMATION
52
8/6/2019 Copy of the Coca Cola Report
53/53
WEBSITES.
a. www.indianinfoline.com
b. www.google.com
c. www. grasimindustrieslimited.com
Articles.
a. Indian Express Newspaper (Bombay) Ltd.
http://www.indianinfoline.com/http://www.google.com/http://www.dutronindia.com/http://www.dutronindia.com/http://www.dutronindia.com/http://www.indianinfoline.com/http://www.google.com/http://www.dutronindia.com/