Project Analysis of Financial Statement (2)

7/23/2019 Project Analysis of Financial Statement (2)

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CHAPTER-I

INTRODUCTION

FINANCIAL STATEMENT ANALYSIS

Financial statement is an organized collection of data according to logical and

consisted accounting procedures. Its purpose is to convey an understanding of

some financial aspects of a business form. It may reveal a series of activities over

a given period of time, as in the case of an income statement.

The focus of the financial analysis is on key figures in the financial statements and

the significant relationships exist between them. The analysis of financial

statements is a process of evaluating relationships between component parts of

financial statements to obtain a better understanding of the firms position and

performance.

Financial Analysis:

Financial analysis is the process of identifying the financial strengths and

weakness of the firm by property establishing relationships between the item of

the balance sheet and the profit and loss account. Financial analysis can be

undertaken by management of the firm, or by parts outside the firm.

USERS OF FINANCIAL ANALYSIS:

anagement

Trade creditors

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Investors

"overnment

#thers

Management:

anagement 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 firms condition is sound.

Ta!e Ce!it"s:

The trade creditors are to be paid in a short term solvency of the concern. The

current ratio and acid test ratio will enable the creditors to assets the short term

solvency position of the concern.

In#est"s:

The Investors are interested their money in the firms shares, are not concerned

about the firms earnings. They restore more confidence in those firms that show

steady growth in earnings. $s such, they concentrate on the analysis of the firms

present and future profitability. They are also interested in the firms financial

structure to the extent it influences the firms earning ability and risk.

$"#enment:

The financial statements are used to asss tax liability of business enterprise. These

statements enable the government to find out whether the business is following

various regulations or not.

Ot%es:

Trade associations, stock exchange and public at may also analyze the financial

statements to %udge the financial position of different concerns.

De&initi"n

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$ccording to yres 'Financial statement analysis is largely is a study of the

(elationship among the various financial factors in a business as disclose by a

single set of statement and a study of the trend of these factors as show in a series

of statements.

Financial statements ae in!icat"s "& t%e t'" signi&icant &act"s)

!. *rofitability

&. Financial +oundness

$nalysis and interpretation of financial statements therefore refers to such a

treatment of the information contained in the income statement and the balance

sheet so as to afford full diagnosis of the profitability and financial soundness of

the business.The term 'analysis means methodical classification of the data given in the

financial statements. The term 'interpretation means 'explaining the meaning and

significance of the data so simplified.

Ty(es "& &inancial AnalysisFinancial analysis can be classified in to different categories depending on the

basis of materials used. $ccording to this basis financial analysis can be of two

types.

a) E*tenal Analysis

Those who are outsider for the business do this analysis. The outsiders include

investors, credit agencies. "overnment agencies and other creditors who have no

access to the internal records of the company. These persons mainly depends upon,

the published financial statements. Their analysis serves only a limited purpose.

The position of this analysis has improved in recent times on account of increased

governmental control over companies and governmental regulations re-uiring


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more detailed disclosures of information by the companies in their financial

statements.

+) Intenal analysis: This analysis is done by persons who have access to the

books of account and other information to the books of accounts related to the

business. /xecutives and employees of the organization or by officers appointed

for this purpose by the government or the court under powers vested in them can

therefore do such an analysis. The analysis in done depending upon the ob%ective

to be active depending upon the ob%ective to be achieved through this analysis.

#n the basis of modus operandi according to this, financial analysis can also be

two types)

a) H"i,"ntal Analysis

In case of this type of analysis financial statements for a number of years are

reviewed and analyzed. The current years figures are compared with the standard

or base year. The analysis statement usually contains figures for two or more years

and the changes are shown regarding each item from the base year usually in the

form of percentages. +uch as analysis given the management considerable insight

into levels and areas of strength and weakness. +ince this type of analysis is based

on the date from year to year rather than on one date, it is also termed as 01ynamic

$nalysis2

+) etical Analysis: In case of this type of analysis a study is made of the

-uantitative relationship of the various items in the financial statements on a

particular type, such an analysis is useful in comparing the performance of several

companies in the same group, or divisions or departments in the same company.

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+ince this analysis depends on the data for one period, is nor very conductive

financial position. It is also called 0+tatic $nalysis as it fre-uently used to ratios

developed on one date or for one accounting period. Tools or Techni-ues used for

$nalysis)

!. (atio $nalysis

&. ethod of least +-uares 4Trend 5alues6

. 7omparative statement $nalysis.

These are explained in bring as follows.

./ Rati" Analysis:

(atio $nalysis is widely used tool of financial analysis. It is defined as the

systematic use of ratio to interpret the financial statements so that the strength and

weakness of a firm as well as its historical performance and current financial

condition can be determined. The term ratio refers to the numerical or -uantitative

relationship between two items8 5ariable. This relation can be expressed as.

a. *ercentages

b. Fractions

c. *roportion of numbers.

$ccounting ratios showed the relationship in mathematical terms between two

interrelated accounting figures. This is the most important tool available to

financial analysis for their work.(atio analysis is a process of identifying the financial strengths and weakness of

the firm. This may be accomplished either through a trend analysis of the firms

ratios over a period of time or through a comparison of the firms ratios with its

nearest competitors and with the industry averages. The four most important

financial dimensions which a firm would like to analyze are) li-uidity, 9everage,

$ctivity and *rofitability.

Nat0e "& Rati" Analysis:

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$ Financial ratio is a relationship between tow accounting numbers. (atios help to

make a -ualitative %udgment about the firms financial performance.

Financial Rati":

Financial (atio is a relationship between two financial variables. It helps to

ascertain the financial condition of a firm.

Ty(es "& &inancial Rati"s:

9i-uidity ratios

9everages ratios

$ctivity ratios

*rofitability ratios

Li10i!ity Rati":

9i-uidity (atio measures the firms ability to meet current obligations, and is

calculated by establishing relationships between current assets and current

liabilities.

Le#eage ati":

9everage ratios measure the proportion of outsiders capital in financing the firms

assets, and are calculated by establishing relationships between borrowed capital

and e-uity capital.Acti#ity Rati":

$ctivity ratio reflects the firms efficiency in utilizing its assets in generating sales

and is calculated by establishing relationships between sales and assets.

P"&ita+ility Rati":

*rofitability ratios measure the overall performance of the firm by deterring the

effectiveness of the firm ingenerating profit, and are calculated by establishing

relationships between profit figures on the one hard, and sales and assets on the

other.

Utility "& Rati" Analysis

$ssessment of the firms financial conditions and capabilities.

1iagnosis of the firms problems, weakness and strengths.

7redit analysis

7omparative analysis

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Time series analysis

Ca0ti"ns in 0sing ati" analysis

+tandards of comparisons

7ompany differences

*rices level

1ifferent definition

7hanging situations

*ast data

Stan!a! "& C"m(ais"n:

Time series analysis

Inter


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!. (atio provides only guidelines to the management they are only the means.

Bowever they scratch surfaces and raise -uestion. The limitation of the ratio

may force the management to have detailed investigation of the situation under

-uestion.

&. single accounting ratio is not useful at all unless it is studied with other

accounting ratios

. They are based only on the -uantitative information. Bence, -ualitative

information puts limit on the ratios

3. (atios are sub%ect to arithmetical accuracy of the financial statements.

oreover financial statement also includes estimated date like provision for

depreciation, bad and doubtful debts etc. hence, result revealed by ratios is

sub%ect to such estimates.

:. (atios are computed on the basis of financial statements which are historical in

nature.

;. Cnowledge of ratios only is meaningless unless it is also found how it is made

up.=. 9ack of homogeneity of data, personal %udgment lack of consistency etc. is the

factors which limit the conclusion to be derived on the basis of accounting

ratios.

2/ METHODS OF LEAST S3UARES 4TREND ALUES)

Dy the method of lease s-uare, a straight line trend can be fitted to the given time

series of data. It is a mathematical, as well as, analytical method. Eith its help,

economic and business time series data can be fitted and this helps in forecasting

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and predicting. The trend line is called the line of best fit. The sum of deviations of

the actual values of and the trend value 4uck6 is A and sum of s-uare of

deviations of the actual value and the trend value is the least.

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bx G A

x G bx&

bx&

G A

Dy these e-uation we can know the values of a and b i.e.

a G 8K and

b G x 8 x&

a G the mean value of values

b G rate of change

5/COMPARATIE STATEMENT ANALYSIS:

7omparative statement is those statements, which have designed in a way, so as to

provide time perspective to the consideration of the various elements of financial

position embodied in such statements. In such statements figures for two or more

periods are placed side by side to facilitate comparison. The two statements are

proposed for comparison. They are comparative income statement and

comparative Dalance +heet.

STATEMENT OF THE PRO6LEM

Kowadays due to the policy of the changing government and also due to the

competition in the globalize era, the financial performance of the $*+ is not

appreciable. Though the company developed well, it could not earn much profit as

like the other private sectors company involved in similar business. There is no

proper instruction from the authorities and from the ministry. Further there is

considerable delay in implementing the new system because of more formalities to

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change the existing system. The financial performance of the $*+ should be

analyzed well increase the profit and make the company to compete with others

doing similar business.

SI$NIFICANCE OF THE STUDY:

/very company must consider their li-uidity position, profitability and

solvency position and also the main attention should be on smooth working

capital position.

For this analysis the ratios, working capital re-uirements for the next five

years period to enables meaningful planning for the future.

(esearcher worked and applied various tables in relevant ratio from the

data collection in APS Tec%n"l"gies P#t/ Lt!/ (esearcher giving more

suitable idea to the management and developed the company in various

ways. (esearcher analysis some table in statistical approaches of trend line.

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CHAPTER-II

O67ECTIES 8 SCOPES

O67ECTIES OF THE STUDY:

The study has the following ob%ectives.

To provide a strong theoretical framework for analyzing financial

statements.

To study the growth profile of the company during the study period.

To study the financial position of the company and operation of APS

Tec%n"l"gies P#t/ Lt!/

To appraise financial soundness of the company.

To offer suggestions for improvement in the company.

SCOPE OF STUDY:

The study mainly attempts to analyze the financial performance of the

company selected for the study. The financial authorities can use this for

evaluating their performance in future, which will help to analyze financial

statements and help to apply the resources of the company properly for the

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development of the company and IT employees to bring overall growth. The

present study attempt to develop a trend analysis model for +ales and Eorking

7apital and *rofit and 9oss $ccounts. There can be forecasting to evaluate the

overall performance of the APS Tec%n"l"gies P#t/ Lt!/in future.

LIMITATION OF STUDY

!. The +econdary data like annual reports of $*+ T/7BK#9#"I/+ *5T.

9T1. Is collected from $*+ Trichy, hints the accuracy of the result of

the study will depends upon the accuracy of data provided by the

company.

&. The study covers only the period of : 4&AA; to &A!!6

. 5arious techni-ues, ratio statistical tools used in this study will have its

own limitation.

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CHAPTER-III

METHODOLO$Y

Met%"!s "& !ata c"llecti"n9-

Sec"n!ay !ata

The secondary data is derived from the annual reports, Dusiness line and

finance newspapers websites and the internal auditing books of $*+

PERIOD OF THE STUDY:

The study covers the time period of : years from the financial year &AA;TOOLS AND TECHNI3UES USED:

To analyze and interpret the financial statements of the study unit the following

tools are used in the study.

!. (atio $nalysis.

&. Trend $nalysis. 49east s-uare ethod6

. 7omparative statement $nalysis

The interpretations are also printed graphically using trend line graphs and

sub


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CHAPTER-I

DATA COLLECTION 8 DATA ANALYSIS

In this chapter an attempt has been made to analysis how efficiently the

analysis of Financial statement is managed in Dharat Beavy /lectricals limited.

Financial tools such as schedule of changes in ratio analysis, least s-uares,

comparative statements have been used for the purpose of analysis.

The financial statement involves recording classifying and summarizing of various

business transactions. It is prepared for the purpose of presenting a periodical

review or report of the progress made by the concern and deals with the state of

the investment, in the business and 0result achieved during the accounting period.

Financial statement, income statement and position statement are the outcome of

accounting process.

(atio analysis is a techni-ue of analysis and interpretation of financial statements.

It is used as a device to analysis and interprets the financial health of a firm.

$nalysis of a financial statement with the aid of ratio helps to arrangements in

decision making control.

.) C0ent Rati"

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7urrent ratio may be defined as the relationships between current assets and

current liabilities. It is the most common ratio for measuring li-uidity. It is

calculated by dividing current assets by current liabilities. 7urrent assets are those,

the amount of which can be realized within a period of one year. 7urrent liabilities

are those amounts which are payable within a period of one year. $ current ratio of

&)! is considerable ideal.

7urrent $ssets

7urrent (atio G

7urrent liabilities

TA6LE ;/. C0ent Rati"

4In lacs)

Yea C0ent Assets C0ent lia+ilities C0ent Rati"&AA;33; !.:=

&AA= !;! !A&! !.:>

&AA>


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The ideal value of current ratio &)!, but during the period of study, the current ratio

is lesser than the standard. This shows the current ratio to shows a do down ward

which indicates the inefficiency of the company to meet its current obligations.

CHART NO/.

2) Li10i! Rati":-

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The term 09i-uidity refers to the ability of a firm to pay its short J term

obligations as and when they become due. The term -uick assets or li-uid assets

refer current assets, which can be converted into cash immediately. It comprises all

current assets except stock and prepaid expenses. It is determined by dividing

-uick assets by -uick liabilities.

9i-uid $ssets

9i-uid (atio G

9i-uid 9iabilities

TA6LE ;/2 Li10i! Rati"

4in lacs)

Yea C0ent Assets C0ent lia+ilities C0ent Rati"

&AA;33; !.&

&AA= !&:>= !A&! !.&!

&AA>&! !.?

&A!A& &> !.&?

S"0ce: Sec"n!ay Data

Inte(etati"n

9i-uid ratio during the year &AA>last year decreased &A!AL&A!! to !.&?.

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1uring the period of study, the value of li-uid ratio is higher than the ideal value

which indicates the efficiency of the company to meet is immediate re-uirements.

The overall trend of li-uid ratio shows up and down ward trend.

CHART NO/2

5) P"(ietay Rati":

*roprietary ratio relates to the proprietors funds to total assets. It reveals the

owners contribution to the total value of assets. This ratio shows the long J time

solvency of the business. It is calculated by dividing proprietors funds by the total

tangible assets.

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*roprietors Funds

*roprietary (atio G


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;) Fi*e! Assets t" Net


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*roprietors funds

TA6LE - ;/; &i*e! assets t" Net '"t% Rati"

4In lacs)

Yea Fi*e! asset P"(ietay

F0n!

Fi*e! asset t" Net

'"t% ati"

&AA;

&AA= !!;= =A! A.!:

&AA>=>> A.!3

&AA?


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=) Net P"&it Rati"

Ket *rofit (atio establishes a relationship between net profit 4after taxes6 and

sales. It is determined by dividing the net income after tax to the net sales for the

period and measures the profit per rupees of sales.

Ket *rofit

Ket *rofit (atio G


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4In lacs)

Yea Net P"&it Sales Net P"&it

Rati"

&AA;=? !&.?M

&AA?:? &!3A! !.3M

&A!A &>A !!.&AM


Inte(etati"n

From the table, it is found that the net profit has been fluctuating during the study

period. In the year &AA;&A!A

CHART NO/=

&3


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>) St"c? T0n"#e Rati":

This ratio Indicates whether investment in inventory is efficiently used or not. It

explains whether investment in inventories in within proper limits or not. It also

measures the effectiveness of the firms sales efforts. The ratio is calculated as

follows.

7ost of goods sold

+tock Turnover G


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$verage stock G #pening stock H 7losing stock


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) De+t"s t0n"#e ati"

The purpose of this ratio is to discuss the credit collector power and policy of the

firm. This ratio is established between account receivable and net credit sales of

the period. The debtors turnover ratio is calculated as follows.

7redit +ales

1ebtors Turnover (atio G


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TA6LE N"/;/ De+t" T0n "#e 4Rs in lacs)

ear +ales

(s

+undry debtors

(s

1ebtors turnover ratio

&AA; &.A&

&AA>=? ?;?: !.?

&AA?

&A!AA !:?=; !.=:

S"0ces: Sec"n!ay Data

Inte(etati"n

From the table, it is found that the 1ebtor Turnover ratio has been fluctuating

during the study period. In the year &AA; in the year &AA?

further decreased to !.=:

7B$(T K#.=

&>


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B) A#eage !e+t c"llecti"n (ei"!

The average number of days that lapsed between the receipt of the invoice by

customers and the actual payment of the invoice. Ehen measured against the

credit terms obtained from suppliers, average the account period shows the length

of time during which the firm is financing the account receivable either with its

own funds or borrowed funds. The radio may be calculated as follows)

1ebtors D8(

$verage debt collection period G


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A6LE - ;/B De+t C"llecti"n Pei"!

4In lacs)

Yea De+t"s Ce!it Sales De+t C"llecti"n

Pei"!

&AA;A days

&AA>=? !>> days

&AA? days


Inte(etati"n

1ebt 7ollection period ratio in the year A;A days. In the next year A>> days. In the next

year &AA? days.

From the above it is inferred that the debt collection period shows a fluting

trend, which indicates -uick recovery of money from debtors and also indirectly

shows that the management in highly efficient in collecting debts promptly.

7B$(T K#.>

A


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) Ce!it"s t0n"#e ati":

It indicates the number of times on the average that the creditors turnover each

year. 7reditors turnover ratio indicates the number of items the accounts payable

rotate in a year. It signifies credit period en%oyed by the firm in paying its

creditors. $ccount payable includes traded creditors and bills payable.

. 7redit *urchases

7reditors Turnover (atio G


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TA6LE ;/ Ce!it" T0n"#e Rati"s

4In lacs)

Yea Ce!it P0c%ase A#eage Acc"0nt

(aya+le

Ce!it"

T0n"#e ati"

&AA;?& &!AA &.&

&AA= ;>;; &>3 &3.!=

&AA>& :> &.>=

&AA?&! 33&3 &.;=

&A!A:& .A


The creditor Turnover ratio during the year A;=. In the year A= it was reduced to &.;=. 1uring the year &A!A


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.) A#eage Payment (ei"!:

The radio gives the average credit period en%oyed by the firm from its creditors. It

can be computed as follows.

7reditors H D8*

$verage *ayment period G


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9ower (atio shows that the creditors being paid promptly. The amount payable

depends upon the purchase policy, the -uantum of purchase and suppliers credit

policy.

TA6LE ;/. A#eage Payment Pei"!s

4In lacs)

Yea

Ce!it

P0c%ase

A#eage

Ce!it"s

A#eage Payment

(ei"!

&AA;?& &!AA !:; days

&AA= ;>;; &>3 !: days&AA>& :> !& days

&AA?&! 33&3 !; days

&A!A:& !&! days


The average payment period during the year &AA;&A!! it was !&! days.

CHART NO/.

3


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..) Fi*e! assets t0n"#e Rati":

The ratio indicates that extent to which the investments in fixed assets contribute

towards sales. If compared with a previous year, it indicates whether the

investment in Fixed assets has been %udicious or not. The ratio is calculated as

follows.

+ales

Fixed assets turnover ratio G


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TA6LE ;/.. &i*e! asset T0n"#e ati"

4In lacs)

Yea Sales Fi*e! asset Fi*e! asset

T0n"#e

&AA;=? !&?! !3.:!

&AA?


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.2) Ca(ital T0n"#e Ra!i":

anagerial efficiency is also calculated by establishing the relationship between

cost of sales or sales with the amount of capital invested in the business. 7apital

turnover (atio is calculated with the help of the following formula.

+ales

7apital turnover ratio G


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TA6LE ;/.2 Ca(ital T0n"#e ati"s 4in

lacs)

Yea Net '"t% 4")

P"(iet"s &0n!

Sales Ca(ital T0n"#e

ati"

&AA;

&AA>=>? !>=? &.!

&AA?

&A!AA &.!;


Inte(etati"n

It is inferred from the above table the capital turnover ratio for the year A;. Ehere as in the year was &AA>

the year A>


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.5) Ret0n "n t"tal assets:

*rofitability can be measured in terms of relationship between net profit

and total assets. It measures the profitability of investment. The overall

profitability can be known by applying this ratio.

Ket *rofit

(eturn on total $ssets G


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TA6LE ;/.5 et0n "n T"tal assets

Yea Net P"&it T"tal asset Ret0n "n T"tal

assets

&AA;& !33>& !A.?&

&AA= &:;3 !=3?= !3.;:

&AA>


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.;) O(eating Rati"

#perating ratio is an indicative of the proportion that the cost of sales bears to

sales. 07ost of sales includes direct cost of goods sold as well as other operating

expenses. It is an important ratio that is used to discuss the general profitability of

the concern. It is calculated by dividing the total operating cost by net sales.

7ost of goods sold H Ket operating expenses

#perating ratio G


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TA6LE ;/.;

TA6LE ;/.; "(eating ati"

4In lacs)

Yea C"st "& g""!s

s"l! "(eating

e*(enses

Sales O(eating ati"

&AA;;= !A; >.?

&AA= !!?A& !3:&: >!.?

&AA>=? =?.>

&AA?&.:


Inte(etati"n

The above table clearly reveals that the #perating ratio for the year A;.?. Dut in the year A= it was slightly reduced to >!.? and in the year A>. In the year A?

year &A!A&.:.

CHART NO/.;

3&


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.=) Assets T0n"#e Rati"

This ratio is also called as Investments Turnover (atio. It expresses the

relationship between cost of goods sold 8 net sales and assetsand investments of a

firm. The figure of net sales can be used where information regarding cost of

goods sold is not available. There are many variants of this ratio accordingly as

there are differences in the concept of assets employed.

Total $ssets

$ssets Turnover (atio G


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+ales

TA6LE ;/.= Asset t0n"#e ati"s

4in lacs)

Yea Fi*e!

assets

C0ent

assets

T"tal

assets

Sales Assets

T0n"#e

ati"

&AA;! !A; !.3

&AA= !!;; !;! !=3?; !3:&: !.&

&AA>=? !.!&AA?A !.3


Inte(etati"n

From the table, it is understood that the $sset turnover ratio for the &AA;


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.>) $"ss P"&it Rati":

"ross *rofit ratio measures the relationship of gross profit to net sales and is

usually represented as a percentage. This ratio plays an important role in two

management areas. In the area of financial management, the ratio serves as a

valuable indicator of the firms ability to utilize effectively outside sources of

fund. +econdly, this ratio also serves as important tool in shipping the pricing

policy of the firm. This ratio is calculated by dividing gross profit by net sales.

"ross *rofit

"ross *rofit (atio G


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Ta+le ;/.> $"ss P"&it ati"s

4In lacs)

Yea $"ss ("&it Sales $"ss P"&it

Rati"

&AA;.AM

&AA>=? &A.! M

&AA? M

&A!A>A &>A !=.3 M


The above table shadows that the "ross profit (atio during the year &AA;.AM. In the following

year &AA>to &A.> M. In this last year was &A!A

CHART NO/.>

3;


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TA6LE ;/.

C"m(aati#e Statement &" t%e yea

2>- t" 2-B

4In lacs)

Patic0las 2>- 2-B A+s"l0te

c%ange

G "& c%ange

$ssets)

3=


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Fixed $sset !!3A !!;= &= &.;

7urrent asset !3 !;! &?>> &&.?

Total !33> !=3?> A!: &A.>!

9iabilities )

7urrent

9iabilities

=!&A >>A> !;>> &.=A

#thers !&: !:!& !>= !3.!!

Total >33: !A&A !>=: &&.&A


Inte(etati"n

From this table, it is found that the comparative statement for the year has been

fluctuating during the study period. In the year &AA;


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TA6LE ;/.B


3?


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2-B t" 2B-

4In lacs)

Patic0las 2-B 2B- A+s"l0te

c%ange

G "& c%ange

$ssets)

Fixed $sset

!!;= !&?! !&3 !A.;&

7urrent asset !; &!A; 3=& &>.?=

Total !=3?> &&:3 3>:; &=.=:

9iabilities )

7urrent

9iabilities

>>A> !!>?> A?A :.A>

#thers !:!& &:&& !A!A ;;.=?

Total !A&A !33&A 3!AA ?.=&


Inte(etati"n

From this, table was comparative statement for the year has been fluctuating

during the study period. In the year &AA= fixed assets was increased by !A.;&.

7urrent assets were &>.?=. $nd the current liabilities were :.A>.

CHART NO/.B

:A


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TA6LE ;/.

:!


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2B- t" 2-.

4In lacs)

Patic0las 2B- 2-. A+s"l0te

c%ange

G "&

c%ange

$ssets)

Fixed $sset

!&?! !;? 3> &.?:

7urrent asset &!A; &==A: ;;3& !.:

Total &&:3 &?33 ;??A !.&9iabilities )

7urrent 9iabilities

!!>?> !;:=; 3;=> ?.!

#thers &:&& &33 =&& &>.;&

Total !33&A !?>&A :3AA =.33


Inte(etati"n

In the year comparative statement from the &AA>was increased by &.?: while the 7urrent assets was increased by !.: and

current liabilities by ?.!.

CHART NO/2

:&


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TA6LE ;/2

:


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2-2. t" 2.-2..

Patic0las 2-. 2.-.. A+s"l0te

c%ange

G "& c%ange

$ssets)

Fixed $sset

!;? &&= ?>> ;A.&>

7urrent asset &==A: ;?A! ?!?; .!?

Total &?33 ?:&> !A!>3 3.=A

9iabilities )

7urrent

9iabilities

!;:=; &:= ;=>! 3A.?A

#thers &33 3?=; !=& :.?

Total !?>&A &> >:! 3&.?:

In the year comparative statement from the &AA?


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Met%"! "& Least s10ae:

TA6LE ;/2.

::


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Fitting t%e staig%t Line Ten! T" sales 4Rs/ In Lacs)

Yea Y 4Sales) 4yea

c"!es)

2 y Tent

#al0es Yc

&AA;;.3

&AA?&A&.?

&A!A

KG+ NyG&>?& NxGA Nx&G!A NzyG &3!;: NycG&>?&

Inte(etati"n

The e-uation of straight 9ine Trend is

yc G aH lex

since N x G A

aG N8K le G Nx=8Nx&

Ny G &>?& NxyG&3!;: KG: Nx&

G!A

+ubstituting the values, we get

$ G &>?&8: G :=>;.3

1 G &3!;:8!A G &3!;.:

The 9inear trend for sales by the method of least s-uares is

For &AA?

Bence y &A!A G :=>;.3 H 4&3!;.: 46

G :=>;.3 H =&3?.:

G !A:.? 4in 9acs6

For &A!A J !! x would be 3

:;


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Bence y &A!!G :=>;.3 H 4&3!;.: 436 6

G :=>;.3 H ?;;;

G !:3:&.3 4in lacs6

F"ecaste! #al0e

CHAPTER-

FINDIN$S

FINDIN$S

7urrent ratio shows a document trend indicating the company not able to fulfill

current obligations furthers this also indicate that li-uidity position of the company

is less satisfactory.

Yea 2.2 2.5

Sales

4In Lacs)

.55=/ .=;=2/;

:=


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In all the five years the current ratio is less than the ideals of &. 7reditors term

over ratio shows an upward trend and indicates better credit management.

In all the five years the li-uid ratio is higher than the ideal ratio of ! 7ommon size

financial statements clearly shoes the firm allocates half of the total current assets

to debtor.

The firms debt collection period have more than !>Adays it increased the debt

collection period year by year. It shows firms liberal debt collection policy.

&. Fixed assets turnover was !!M in the year &A!A

. 7apital turnover ratio was &.!; in the year &A!A

3. (eturn on total assets that decreased from !:.A? in the year &AA?;. $sset turnover ratio was !.3 in the year &A!A

=. "ross profit ratio has come down from &!M in year &AA?>. +ales show the increasing trend at the rate in every year.

:>


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CHAPTER-I

RECOMMENDATIONS

The current ratio of the company is below the standard ratio in all the : years

under study, Bence it should be improved at least to the standard.

The debt collection period is more than !>A days which is to be reduced or the

debt collection policy of the company is to be changed.

:?


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+uitable training may be imparted to all the executives including laborers as and

when they are recruited.

The gross profit of $*+ has to be increasedO this can be done by taking steps to

reduce the cost of sales, which have its own affect over the gross profit. $s the

consumption of raw materials holds a wider part in the cost of sales. (esearcher

who is in the hands of the company to adopt consistent pricing policy regarding

raw materials which ultimately reduce the cost of sales @ which in turn improves

the gross profit in the subse-uent years.

The company may take one of the measures for improving more profitsO sale

should be enhanced from into end through innovative marketing techni-ues. In a

competitive business world, unless @ other wise aggressive it is very difficult to

achieve its re-uired sales.

The concern must take measures to avoid dead stock J which has an adverse.

/ffect over the li-uidity of the concern. The concern is re-uired to develop an

effective inventory management system.

+ales are to be increased to keep with increased in fixed $ssets in order improve

its fixed $ssets turnover ratio.

;A


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CHAPTER-II

CONCLUSION

$*+ Technologies units buying in India come under the purview of

'K$5$($TK$ units. There are !3 more $*+ Technologies units 8 divisions. #f

this $*+ Technologies limited 1elhi is one the unit and it earns more profit for

every year continuously.

;!


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The company has been successful in meeting the demanding re-uirements of not

only in India but also international markets in terms of complicity of work as well

as Technology etc. $*+ has over the year established its reference in to=AA

countries across the world. This unit gives more employment i.e. to thousands and

thousands of workers. It gives more protection and safety to the staff working in it

besides more concentration to the welfare of the workers.

$*+ is developing corporate social responsibility such as self /mployment

generation, /nvironment protection, /ducation Bealth management and medical

aids and so an. Its focus attention is on :; adopted villages having nearly >AAAAin

habitations in addition to financial assistance.

Finally, I pray "od re-uesting to develop the unit more and in day by day. $*+

should run in successful manner in future also.

Documents

Project Analysis of Financial Statement (2)