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1
1. OBJECTIVES OF THE STUDY
To analyse the financial position of ProvibTech India Pvt. Ltd.
To assess the operating profitability and efficiency of ProvibTech
India Pvt. Ltd.
To assess the short term liquidity and long term liquidity and solvency
position of ProvibTech India Ltd.
To undertake a comparative intra-firm study of ProvibTech India Pvt.
Ltd.
2
2. INTRODUCTION Finance is defined as the provision of money when it is required. Every
enterprise needs finance to start and carry out its operation. Finance is the
life blood of an organization. So finance should be managed effectively.
Financial Statements are prepared primarily for decision making. Financial
Analysis refers to the process of determining financial strength and
weakness of the firm by properly establishing strategic relationship between
the items of the balance sheet and profit and loss account.
There are various tools and techniques used in analyzing financial
statements are: comparative statement, common size statement, ratio
analysis, fund flow and cash flow analysis is used for decision making by
various parties.
In this project, efforts have been made firstly, to analyse and select the
information which is required for taking decision.
Secondly to arrange the information in a way to highlight significant
relationship.
Finally to interpret and draw conclusions.
3
COMPANY PROFILE
4
3.1. ABOUT PROVIBTECH- INNOVATIVE MACHINE MONITORING
ProvibTech is a growing manufacturer and service provider for vibration
monitoring, measuring and analysis products.
Headquartered in Houston, Texas (United States), with additional offices in
Germany, India and China, ProvibTech has been providing highly reliable
machinery vibration monitoring solutions for leading manufacturers and
public utilities worldwide for more than ten years.
ProvibTech’s broad product line offers solutions for every application, such
as online protection systems for monitoring high-value critical machinery,
portable vibration data collectors for routine predictive maintenance, and
easy-to-use vibration analysis software for balance of plant equipment.
ProvibTech’s robust product designs and ISO 9001 certified manufacturing
capabilities allow us to offer warranty in the industry at two years.
5
ProvibTech’s state-of-the-art R&D facility continues to keep our product
capabilities at the leading edge of the industry, with features such as the
highest channel density of any 19” rack mounted system in the world,
universal interchangeability with sensors from other leading manufacturers,
and an industry-unique proximity sensor caliberation circuit that allows field
linearization for any manufacturers probe and extension cable combination.
ProvibTech’s broad product portfolio includes equipment certified by CSA
and ATEX for use in hazardous areas and products specially designed to
withstand harsh and corrosive environments.
All of this comes with ProvibTech’s strong commitment to providing world
class products and outstanding customer service while offering the best
pricing in the industry.
Having concentrated in machinery protection and vibration monitoring for
more than 10 years.
ProvibTech is strengthening its position in the global market base on the
high technologies reliability and customer service.
ProvibTech provides one of the industry’s complete offerings for the
monitoring and protection of critical machines and balance of plant
machines.
6
ProvibTech will continue to provide the innovative machinery vibration
monitoring products and outstanding customer service which has led to
ProvibTech being the fastest growing vibration company in the world.
Many of ProvibTech's products have explosion area approval. Most of the
products are also certified by CE.
7
3.2. PRODUCTS OF PROVIBTECH
1. Monitors
PT2060 Multi-Channel Critical Machine Monitor
DM200 Dual Channel Vibration Monitor
DTM Series Distributed Transmitter Monitor
DTM10 Proximity Module
DTM20 Seismic Module
2. Transmitters
TM016 Two Wire Velocity Vibration Transmitter
TR Series Transmitters for Vibration and Axial
Position
3. Sensors
Proximity Probes
Accelerometers and Velocity Transducers
Accessories, Cables and Monitors
8
4. Vibration Switches
PT500 Mechanical Vibration Switch
VS102 Electronic Vibration Switch
PT580 Digital Electronic Vibration Switch
5. Condition Monitoring
PCM 360 Condition Management System
PCM370 Plant Management System
PT908 Portable Vibration Meter
9
3.3. ORGANISATIONAL STRUCTURE OF PROVIBTECH INDIA PVT.
LTD.
President- Mr. Akash Sharma
Managers:
Admin division- Ms.Neha, Mr. Gagan
Finance division- Ms. Sarika, Mr.Kamal, Mr. Neeraj
Marketing division- Mr. Akash Sharma
Service division- Mr. Anand Rajput
President
Manager Manager Manager
Admin
Sales
Admin Division
Finance Division
Finance
Marketing Division
Installation & Commisioning Service
StoreServiceDivision
10
3.4. CLIENTS OF PROVIBTECH INDIA PVT. LTD.
Name of the Company LocationBhagwati Power and Steel RaipurBOC India Ltd KolkataBPCL AllahabadCairn Energy Jodhpur, RajasthanFlaktwoods India ChennaiFlowmore GurgaonGactale Turnkey Projects MumbaiGammon India Ltd MumbaiIndustrial Sales & Services JamshedpurIntelligent Enterprise Solutions Ltd ThailandJaiprakash Power Ventures Ltd. NCRMacawber Beekay Pvt. Ltd KolkataMahendra Sponge & Power Ltd. RaipurMasibus Automation & Instrumentation Pvt. Ltd. GujaratNational Thermal & Power Corporation Ltd. (NTPC) Baren, RajasthanPower Concepts Pvt. Ltd. DelhiPrakash Industries ChattisgarhProtech Monitoring DelhiSai Autotech Vadodara,GujaratSolution Engineering PakistanSolutronix PakistanSparco Cooling Tower Ltd. ThailandSPIG Cooling Towers India Pvt. Ltd. VadodaraVedanta Sterile Energy Ltd. OrissaYokogava India Pvt. Ltd. Bangalore
11
LITRATURE REVIEW
12
4.1. ANALYSIS OF FINANCIAL STATEMENTS
Financial Statement analysis is largely a study of relationship among the
various financial factors in a business as disclosed by a single set of statements
and a study of trend of these factors as shown in a series of statements.
In the opinion of Kennedy and Macmillion- “by establishing strategic
relationships between the components of balance sheet and profit and loss
account and other operative data, it unveils the meaning and significance if
the various items embodied in the financial statements”.
4.2. TOOLS AND TECHNIQUES OF FINANCIAL ANALYSIS
A variety of tools and techniques are available to the financial analyst.
Financial Analyst chooses the techniques to suit the requirements of different
enterprises under different situations.
These tools and techniques are:
I. COMPARATIVE FINANCIAL STATEMENTS
In Comparative Financial Statements, two or more balance sheet and / or the
income statement are shown simuntaneously, in columnor form to facilitate
comparison.
It is a horizontal analysis of the firm in which figures for more than one year
are shown side by side to study the trend of different items.
It can be prepared for both balance sheet and income statement.
13
It is useful for identifying the direction of changes and to study the trend in
different indicators of performance of an enterprises.
Comparative Income Statement
It is prepared to study the trend of different items of income statement by
studying simultaneously the income statement of two or more periods. It is useful
to analyse the changes of amount and direction of changes in sales, cost of goods
sold, operating expenses, operating profit, different heads of expenses and
incomes from one period to another.
Comparative Balance Sheet
It is prepared on the lines of comparative income statements. It is useful for
analyzing the changes in the financial position over a period of two or more years.
It is useful for identifying the direction of changes in the amount of the working
capital, fixed assets, long term liabilities, capital, retained earnings, reserves and
surpluses.
II. COMMON SIZE FINANCIAL STATEMENTS
In Common Size Financial Statements, the relationship of different items
of financial statement is established with some common base.
The sales figure is assumed to be 100 and all figures are expressed as a
percentage of total sales.
Common Size Income Statement
14
It is useful for identifying the relative importance of different components of the
sales revenue. By computing similar ratios for the previous years, the reasons for
the decline or increase in the profit may be identified.
In order to prepare the Common Size Income Statement, the following procedure
is followed:
a) The total of sales revenue is taken as 100.
b) Each item of the expense is expressed as a percentage of total of sales
revenue.
c) Each item of the revenue is expressed as a percentage of total of sales
revenue and the profit is also expressed as a percentage of total sales
revenue.
Common Size Balance Sheet
The procedure for preparing the Common Size Balance Sheet is as follows:
a) The total of the asset side or the total of the capital and liabilities side is
taken as 100.
b) Each type of asset is expressed as a percentage of total assets.
c) Each item on the ‘capital & liabilities’ side of the balance sheet is
expressed as a percentage of total of the capital and liabilities of the
balance sheet.
In order to have a comparison of one year with that of another year, it is necessary
to ensure that the organization has followed consistently the same accounting
policies and practices from year after year.
15
III. RATIO ANALYSIS
Ratio Analysis is a powerful technique of financial analysis.
Ratio is an expression of the quantitative relationship between two
numbers.
The term ‘accounting ratios is used to describe significant relationship
between figures shown on a balance sheet, in a profit and loss account, in a
budgetary system or in any other part of the accounting organization.
Usefulness of Ratio Analysis:
Provides greater insight into the profit ability and financial position of
the concern.
It simplifies the comprehensive financial data available in financial
statements.
It is helpful to assess the operating efficiency of the firm by determining
whether the assets are being used efficiently or not.
It is very useful for planning and forecasting.
It helps in locating the factors which led to the failure of the business,
thus management can take necessary corrective and remedial measures
to overcome them.
It is useful for comparison the performance of the firm with that of other
firm and of industry in general. It also makes the comparison of
different units in the same firm i.e. the intra-firm comparison.
It is helpful in ascertaining the trends in profits, sales, costs etc. and
enables to judge the performance of the concern over the years.
16
IV. CASH FLOW ANALYSIS
Cash Flow Statement analyse the movement of funds in terms of cash i.e.,
cash transactions where cash moved in and out of the organization.
The movement of cash into the organisation, is called cash inflow.
The movement of cash out of the organization is called cash outflow.
Cash Flow Statement is prepared to know the changes in cash position
from one period to another. It is a statement which shows the sources and
applications of cash and the manner in which cash has been utilized during
the year.
It includes only the cash transactions. The cash may be generated from
sources, like, cash operating profit, sale of fixed assets, issue of share
capital for cash, issue of other securities for cash, etc.
The application of cash may be cash operating loss, purchase of fixed
assets, payment of tax, dividend, redemption of debentures, repayment of
borrowings, etc.
If the sources exceed the applications of cash during a year, it would be an
increase of cash and if reverse is the case, the cash balance would decrease
during the period.
This type of financial analysis is useful for short term planning by the firm.
It is an important tool for the management of cash and finds out the
liquidity position of the firm.
In India, the preparation of cash flow statement is governed by AS-3 issued
by Institute of Chartered Accountants of India.
17
RESEARCH METHODOLOGY
18
The study involved internal financial analysis of ProvibTech India Pvt. Ltd.
which is situated at Ashram, South Delhi over a period of 6 weeks.
The study is extended to the accounts department of ProvibTech India Pvt.
Ltd.
During this study, efforts are made to analyse the financial position and
performance of the company in India.
Financial Analysis Tools Used:
Comparative Statements (Income Statement and Balance Sheet)
Common Size Statements (Income Statement and Balance Sheet)
Ratio Analysis
Cash Flow Statement
5.1. RESEARCH DESIGN : DESCRIPTIVE RESEARCH
Descriptive research seeks to describe the current status of an identified
variable.
The researcher does not usually begin with an hypothesis, but is likely to
develop one after collecting data.
The analysis and synthesis of the data provide the test of the hypothesis.
Systematic collection of information requires careful selection of the units
studied and careful measurement of each variable.
19
5.2. SOURCES OF DATA
Primary Data
Secondary Data
To generate primary data for the analysis, discussion was made with
company’s accounts manager and accountants. The data collected
from such discussions are coordinated, analysed and integrated in
this study.
To generate secondary data, various other sources were used:
- Accounting records of the company viz. Annual Audit Financial
Statemens (Income Statement and Balance Sheet)
- Catalogues / Magazines
- Internet
5.3. SAMPLING INSTRUMENT
The Sampling Instrument used in this project study is Financial Statements
(Profit and Loss Account and Balance Sheet) for the last 5 financial years
(2009-13).
20
5.3. LIMITATIONS OF THE STUDY
The study is restricted to a period of six weeks only, so some additional
financial analysis are not covered in this study.
The accuracy of financial analysis largely depends on how accurately
financial statements are prepared.
The financial analysis of financial statements of the concern provides only
the quantitative information about the company’s financial affairs and it
fails to provide qualitative information such as management-employee
relation, customer’s satisfaction, etc.
Past performance (Good or bad) is not a perfect indicator of future
performance.
The financial analysis reveals only the past performance of firm and it is
not necessary that the same conditions have to be repeated in the future.
21
DATA ANALYSIS
22
6.1. COMPARATIVE INCOME STATEMENT OF PROVIBTECH INDIA
PVT. LTD. (FINANCIAL YEARS 2009-13)
Particulars 31.03.09 31.03.10 31.03.11 31.03.12 31.03.13
Net Sales
Less: Cost of Goods Sold
795211.00
785074.45
2856402.34
2731962.96
6025987.71
5859714.27
8401163.42
8044475.46
8093258.00
8271290.00
GROSS PROFIT
Less: Operating
Expenses
10136.55
349187.25
124439.38
1286619.92
166273.44
1855934.68
356687.96
1395770.34
(178032.00)
1137032.00
OPERATING PROFIT
Add: Other Incomes
(15511.04)
-
(242654.80)
526366.18
(1689661.2)
175307.46
(1039082.4)
1337917.00
(1315064.00)
18223.00
EBIT
Less: Interest
(15511.04)
0
283711.38
0
(1514353.7)
684.37
298834.60
17809.00
(1296841.00)
0
EBT
Less: Tax
(15511.04)
0
283711.38
34862.00
(1515038.1)
59130
281025.60
121975.00
(1296841.00)
62690.00
EAT (15511.04) 248849.38 (1574168.1) 159050.6 (1359531.00)
23
Interpretation 1:
Net Sales of ProvibTech India are increasing from 2009 onwards. However
there are low net sales in 2013 (2012-13) i.e. Rs. 80.93 lakhs as compared to
the previous financial year i.e. Rs.84.01 lakhs.
24
The Company has lowest net sales (in Rs.) in 2009 (2008-09) i.e. Rs.7.95
lakhs.
The Company has highest net sales (in Rs.) in 2012 (2011-12) i.e. Rs.84.01
lakhs.
Interpretation 2:
Total Revenue of ProvibTech India is increasing from 2010 onwards.
Increase in Total Expenditure of ProvibTech India is less than the increase in
its Total Revenue in 2010 onwards.
25
2009: The company has incurred highest operating expenditure of Rs. 34.91
lakhs. The company has generated the lowest revenue of Rs. 7.95 lakhs.
2010: The company has incurred lowest operating expenditure of Rs.13.21
lakhs. The company has incurred low operating expenditure as compared to
its revenue and its Total Revenue has increased and is more than that of
previous year.
2011: The company has incurred low operating expenditure as compared to
its revenue. However the same is high as compared to that of previous year.
And its Total Revenue has also increased and is more than that of previous
year.
2012: The Company has generated highest Revenue of Rs.97.39 lakhs. The
company has incurred low operating expenditure as compared to its revenue
and the same is low as compared to that of previous year. Total Revenue has
also increased and is more than that of previous year.
2013: The company has incurred high operating expenditure as compared to
its revenue and the same is high as compared to that of previous year. Total
Revenue has declined and is low than that of previous year.
26
Interpretation 3:
2009: Total Revenue of ProvibTech India started increasing from 2009
onwards. The Company has lowest Revenue of Rs.33.82 lakhs. However in
this financial year the company has high operating expenditure of Rs.7.95
lakhs as compared to its revenue. The Gross Profit of Rs. 10136.5 is lowest
in this financial year.
2010: Total Revenue has increased and is more than that of previous year.
Company’s Operating Expenditure has increased and is more than that of
previous year. However the same has not increased more than its revenue in
27
this financial year. The Gross Profit has increased to Rs. 1.24 lakhs and is
more than that of previous year.
2011: The company has incurred highest operating expenditure of Rs.18.5
lakhs. Increase in total revenue is more than the increase in that of previous
year. The Gross Profit has increased and is more than that of previous year.
2012: Increase in total revenue of the company is more than the increase in
that of previous year. The operating expenditure incurred in this financial
year is less than that of previous year. The Gross Profit has increased and is
more than that of previous year.
2013: The company has generated low total revenue in this financial year as
compared to that of previous year. The operating expenditure incurred in this
financial year is less than that of previous year. The Gross Profit has become
negative (Gross Loss).
28
Interpretation 4:
2009: ProvibTech India has earned the negative EBT/EAT (loss) of
Rs.15511. There is no income tax incurred in this year.
2010: EBT and EAT increased in this financial year. However the increase
in EAT is less than the increase in EBT. The company has paid income tax
from this year onwards.
29
2011: The company has earned a negative EBT and EAT (losses) of Rs. 15.1
lakhs and 15.7 lakhs respectively. The company has paid an increased
amount of income tax as compared to that paid in the previous year.
2012: EBT and EAT increased in this financial year and this increase is
more than that in the financial year 2010. However the increase in EAT is
still less than the increase in EBT. The company has paid an increased
amount of income tax as compared to that paid in the previous year.
2013: The company has earned a very negative EBT and EAT (losses) of Rs.
12.9 lakhs and 13.5 lakhs respectively as compared to that in the financial
year 2011. The company has paid an increased amount of income tax as
compared to that paid in the previous year.
30
6.2. COMPARATIVE BALANCE SHEETS OF PROVIBTECH INDIA
PVT. LTD.
(FINANCIAL YEARS 2009-10)
Particulars 31.03.09 31.03.10 Increase or
Decrease
Percentage
Increase or
Decrease
SOURCES OF FUNDS
Authorised Share Capital
Paid Up Capital
Reserves
Net Profit
1000000.00 1000000.00 - -
100000.00
-
83473.50
100000.00
-
79440.00
-
-
(4033.5)
-
-
(4.83)
100000.00 179440.00 79440.00 79.44
APPLICATION OF FUNDS
Fixed Assets
Less: Depreciation
909864.50
268669.10
1044401.51
420441.11
134537.00
151772.00
149
56.4
Net Block
Investments/Fixed Deposits
641195.40
134000.00
623960.40
903766.00
(17235)
769766.00
(0.26)
57.4
31
Current Assets: 1066886.96 1271096.34 294209.40 27.5
Sundry Debtors
Closing Stock
Cash In Hand
Cash at Bank
Accrued Interest
Security Deposits
Bills Recievables
Advance to Staff
Other Advances
97549.60
-
386733.98
335303.38
-
122300.00
-
125000.00
-
561897.52
-
213444.90
290800.17
25372.38
162260.00
17321.37
-
-
464347.00
-
(173289)
(44503.13)
25372.38
17321.37
(125000.00)
-
47.6
-
(44.8)
(13.2)
100
14.16
100
(100)
-
Current Liabilities 1782218.91 2641881.91 859663.00 482.3
Sundry Creditors
Advances from Customers
Bills Payable
Provision for Income Tax
Other Provisions
Other Liabilities
Preliminary Expenses
Long Term Borrowings
380903.00
-
112281.66
-
-
1289034.25
30000.00
-
564117.67
240561.00
47252.50
34862.00
-
1755088.74
22500.00
-
183214.6
240561.00
(65029.00)
34862.00
-
466054.00
(7500)
-
48.10
100
(57.9)
100
-
36.15
25
-
32
(FINANCIAL YEARS 2010-11)
Particulars 31.03.10 31.03.11 Increase or
Decrease
Percentage
Increase or
Decrease
SOURCES OF FUNDS
Authorised Share Capital
Paid Up Capital
Reserves
Net Profit
1000000.00 1000000.00 - -
100000.00
-
79440.00
100000.00
-
186584.27
-
-
-
-
179440.00 286584.27 107144.00 59.7
APPLICATION OF FUNDS
Fixed Assets
Less: Depreciation
1044401.51
420441.11
680181.11
211389.59
(364220.40)
(20905.16)
(34.8)
49.7
Net Block
Investments/Fixed Deposits
623960.40
903766.00
512744.40
853766.00
(111216.00)
(50000.00)
(17.8)
(5.5)
33
Current Assets: 1271096.34 2236310.35 965214.00 76
Sundry Debtors
Closing Stock
Cash In Hand
Cash at Bank
Accrued Interest
Security Deposits
Bills Recievables
Advance to Staff
Other Advances
561897.52
-
213444.90
290800.17
25372.38
162260.00
17321.37
-
-
680181.11
852663.00
211389.59
4148.00
65381.65
-
17497.00
-
405050.00
118283.6
852663.00
(2055.4)
(286652.17)
40009.30
(162260.00)
175.70
-
405050.00
21.05
100
(0.96)
(98.5)
157.6
(100)
10.01
-
100
Current Liabilities 2641881.91 3331236.48 689354.50 26.09
Sundry Creditors
Advances from Customers
Bills Payable
Provision for Income Tax
Other Provisions
Other Liabilities
Preliminary Expenses
Long Term Borrowings
564117.67
240561.00
47252.50
34862.00
-
1755088.74
22500.00
-
696374.17
-
49136.24
59130.00
-
2344695.92
15000.00
-
132256.57
(240561.00)
1883.7
24268
-
589607.2
7500.00
-
23.44
(100)
3.9
69.6
-
33.4
33.33
-
34
Particulars 31.03.11 31.03.12 Increase or
Decrease
Percentage
Increase or
Decrease
SOURCES OF FUNDS
Authorised Share Capital
Paid Up Capital
Reserves
Net Profit
1000000.00 1000000.00 - -
100000.00
-
186584.27
100000.00
186584.27
234712.96
-
186584.27
48128.70
-
100
25.7
286584.27 521297.23 234713.00 81.9
APPLICATION OF FUNDS
Fixed Assets
Less: Depreciation
680181.11
211389.59
1129090.50
688351.50
448909.40
476962.00
66
225.6
Net Block
Investments/Fixed Deposits
512744.40
853766.00
440739.00
-
(72995.40)
(853766.00)
(14.04)
(100)
(FINANCIAL YEARS 2011-12)
35
Current Assets: 2236310.35 1238846.10 (997464.25) (44.6)
Sundry Debtors
Closing Stock
Cash In Hand
Cash at Bank
Accrued Interest
Security Deposits
Bills Recievables
Advance to Staff
Other Advances
680181.11
852663.00
211389.59
4148.00
65381.65
-
17497.00
-
405050.00
-
150477.00
15426.00
773757.83
28880.65
199266.00
36880.00
-
34158.76
(680181.11)
(702186.00)
(195963)
769609.8
(36501)
199266.00
19383
-
(370891.3)
(100)
(82.3)
(92.7)
(185.3)
(55.8)
100
110.7
-
(91.5)
Current Liabilities 3331236.48 5098292.00 1767055.60 53.04
Sundry Creditors
Advances from Customers
Bills Payable
Provision for Income Tax
Other Provisions
Other Liabilities
Preliminary Expenses
Long Term Borrowings
696374.17
-
49136.24
59130.00
-
2344695.92
15000.00
-
-
-
3757704.84
130335.00
1214707.10
-
7500.00
-
(696374.17)
-
3708568.60
71205.00
1214707.10
(2344695.92)
(7500)
-
(100)
-
75.4
120.4
100
(100)
(50)
-
36
(FINANCIAL YEARS 2012-13)
Particulars 31.03.12 31.03.13 Increase or
Decrease
Percentage
Increase or
Decrease
SOURCES OF FUNDS
Authorised Share Capital
Paid Up Capital
Reserves
Net Profit
1000000.00 1000000.00 - -
100000.00
186584.27
234712.96
100000.00
421297.00
115116.00
-
234712.8
(119596.9)
-
125.7
(50.9)
521297.23 536413.00 15118.8 2.90
APPLICATION OF FUNDS
Fixed Assets
Less: Depreciation
1129090.50
688351.50
587129.00
110124.00
(541961.5)
(578227.5)
(4.80)
(84.01)
37
Current Assets: 1238846.10 4427384.00 3188538.00 257.3
Sundry Debtors
Closing Stock
Cash In Hand
Cash at Bank
Accrued Interest
Security Deposits
Bills Recievables
Advance to Staff
Other Advances
-
150477.00
15426.00
773757.83
28880.65
199266.00
36880.00
-
34158.76
-
554261.00
6229.00
163062.00
43944.00
286926.00
2223626.00
-
12626.00
-
403784
(9197)
(610695.8)
15063.4
87660.00
2186746.00
-
(21532.7)
-
286.33
(59.6)
(78.9)
52.15
44
592.9
-
(63.03)
Current Liabilities 5098292.00 3751470.00 (1346822) (26.4)
Sundry Creditors
Advances from Customers
Bills Payable
Provision for Income Tax
Other Provisions
Other Liabilities
Preliminary Expenses
Long Term Borrowings
-
-
3757704.84
130335.00
1214707.10
-
7500.00
-
2705794.00
-
102305.00
62690.00
880681.00
102305.00
7500.00
855500.00
2705794.00
-
(3655400)
(67645)
(334026)
102305.00
-
855500.00
100
-
(97.2)
(51.9)
(27.4)
100
-
100
38
Interpretation 5:
2009: The company has high level of Current Assets of Rs.10.66 lakhs
against its Net Fixed Assets of Rs.6.41 lakhs. Also in this financial year
there are no Reserves and any Long Term Liability.
2010: There is an increase in the level of current assets and fixed assets
from 2009 onwards. Like in previous year, in this year too, the company has
high level of Current Assets of Rs.12.71 lakhs against its Net Fixed Assets
39
of Rs.6.23 lakhs (less as compared to the previous year). Also, there are no
Reserves and any Long Term Liability.
2011: Likewise, in this year, the company has increased level of Current
Assets of Rs.22.36 lakhs against its Net Fixed Assets of Rs.5.12 lakhs (less
as compared to the previous year). Also, there are no Reserves and any Long
Term Liability.
2012: There are reserves of Rs.1.86 lakhs. However the level of current
assets and fixed assets has declined to Rs. 12.38 lakhs and Rs. 4.4 lakhs
respectively.
2013: The company in this financial year observed a tremendous increase in
the level of current assets worth Rs. 44.27 lakhs. Reserves increased to Rs.
4.2 lakhs. While fixed assets’s net block stood at Rs.4.7 lakhs i.e. more than
the previous year. Also, The company undertaken a Long term liability of
Rs. 8.55 lakhs.
40
6.3. COMMON SIZE INCOME STATEMENT OF PROVIBTECH INDIA PVT. LTD.
Particulars 31.03.09 31.03.10 31.03.11 31.03.12 31.03.13
Net Sales
Less: Cost of Goods Sold
100.0
98.7
100.0
95.6
100.0
97.2
100.0
95.7
100.0
102.1
GROSS PROFIT 1.3 4.8 2.8 4.3 (2.1)
Less: Operating Expenses 43.9 45.04 30.7 16.6 14.04
OPERATING PROFIT (42.6) (40.64) (27.9) (12.3) (16.14)
(For Financial Years 2009-13)
41
Interpretation 6:
2009: The Cost of Goods Sold (COGS) of 98.7% is within the percentage of
sales (100%). The Gross Profit is 1.3% of the net sales.
2010: The Cost of Goods Sold (COGS) of 95.6% is within the percentage of
sales (100%). The company has earned maximum gross profit of 4.8% as a
percentage of sales (100%).
2011: The Cost of Goods Sold (COGS) of 97.2% is within the percentage of
sales (100%). The Gross Profit percent fell down to 2.8% .
2012: The Cost of Goods Sold (COGS) of 95.7% is within the percentage of
sales (100%). The Gross Profit percent increased to 4.3% which is low as
compared to that in the financial year 2010.
2013: The COGS has exceeded to 102.1% as the percentage of sales (100%).
This has resulted into a negative gross profit (2.1%).
6.3. COMMON SIZE BALANCE SHEET OF PROVIBTECH INDIA PVT. LTD.
42
(For Financial Years 2009-13)
Particulars 2009 2010 2011 2012 2013
Assets
Current Assets:
Sundry Debtors
Closing Stock
Cash In Hand
Cash at Bank
Accrued Interest
Security Deposits
Bills Recievables
Advance to Staff
Other Advances
100
4.93
-
19.5
16.9
-
6.18
-
6.32
-
100
24.2
-
10.01
12.5
1.09
7.07
0.74
-
-
100
23.3
29.2
7.24
0.14
2.24
-
0.59
-
13.8
100
-
6.35
0.65
32.6
1.21
8.41
1.55
-
1.44
100
-
53.8
0.60
3.53
4.2
27.8
21.5
-
1.22
TOTAL 100 100 100 100 100
Fixed Assets:
Computers
Furniture and Fixtures
Office Equipment
Telephones
5.51
19.5
-
1.08
7.85
13.6
-
0.79
5.52
11.21
-
1.02
2.76
8.98
6.86
-
3.35
-
7.93
-
EPABX
Air Conditioner
Other Fixed Assets
0.44
4.37
1.43
0.32
3.21
11.33
0.22
2.95
0.72
-
-
-
-
3.45
4.21
TOTAL 32.33 37.10 21.64 18.6 18.94
43
TOTAL ASSETS 100 100 100 100 100
Liabilities and Capital 100 100 100 100 100
Current Liabilities:
Sundry Creditors
Advances from Customers
Bills Payable
Provision for Income Tax
Other Provisions
Other Liabilities
21.3
-
6.3
-
-
72.3
21.3
9.10
1.78
1.31
-
66.4
20.9
-
1.47
1.77
-
70.3
-
-
73.7
2.55
-
-
58.7
-
2.22
1.36
19.1
2.22
TOTAL 99.9 99.89 94.44 76.25 255.5
Long Term Liabilities
Unsecured Loan
Capital and Reserves:
Equity Share Capital
Reserves
-
5.6
-
-
3.7
-
-
3.01
-
-
1.96
3.6
18.5
2.17
9.14
Total Shareholder’s Fund 5.6 3.7 3.01 5.56 29.81
TOTAL LIABILITIES AND
CAPITAL
100 100 100 100 100
Particulars 2009 2010 2011 2012 2013
44
Interpretation 7:
2009: The company has 4.93% content of sundry debtors in the total asset
portfolio, 19.5% content of cash in hand in the total asset portfolio, 16.9%
45
content of cash at bank in the total asset portfolio, 6.18% content of security
deposits in the total asset portfolio and 6.32% content of staff advance in the
total asset portfolio.
2010: The company has 24.2% content of sundry debtors in the total asset
portfolio, 10.01% content of cash in hand in the total asset portfolio, 12.5%
content of cash at bank in the total asset portfolio, 1.09% content of accrued
interest in the total asset portfolio and 7.07% content of security deposits in
the total asset portfolio and 0.74% content of bills recievables in the total
asset portfolio.
2011: The company has 23.3% content of sundry debtors in the total asset
portfolio, 29.2% content of closing stock in the total asset portfolio, 7.24%
content of cash in hand in the total asset portfolio, 0.14% content of cash at
bank in the total asset portfolio 2.24% content of accrued interest in the total
asset portfolio and 0.59% content of bills recievables in the total asset
portfolio and 13.8% content of other advances in the total asset portfolio.
2012: The company has 6.35% content of closing stock in the total asset
portfolio, 0.65% content of cash in hand in the total asset portfolio, 32.6%
content of cash at bank in the total asset portfolio, 1.21% content of accrued
interest in the total asset portfolio 8.41% content of security deposits in the
total asset portfolio and 1.55% content of bills recievables in the total asset
portfolio and 1.44% content of other advances in the total asset portfolio.
2013: The company has 53.8% content of closing stock in the total asset
portfolio, 0.60% content of cash in hand in the total asset portfolio, 3.53%
46
content of cash at bank in the total asset portfolio, 4.2% content of accrued
interest in the total asset portfolio 27.8% content of security deposits in the
total asset portfolio and 21.5% content of bills recievables in the total asset
portfolio and 1.22% content of other advances in the total asset portfolio.
47
Interpretation 8:
2009: The company has 5.51% content of computer in the total asset
portfolio, 19.5% content of furniture & fixtures in the total asset portfolio,
1.08% content of telephones in the total asset portfolio, 0.44% content of
48
EPABX in the total asset portfolio, 4.37% content of air conditioners in the
total asset portfolio and 1.43% content of other fixed assets in the total asset
portfolio.
2010: The company has 7.85% content of computer in the total asset
portfolio, 13.6% content of furniture & fixtures in the total asset portfolio,
0.79% content of telephones in the total asset portfolio, 0.32% content of
EPABX in the total asset portfolio, 3.21% content of air conditioners in the
total asset portfolio and 11.33% content of other fixed assets in the total
asset portfolio.
2011: The company has 5.5% content of computer in the total asset
portfolio, 11.2% content of furniture & fixtures in the total asset portfolio,
1.02% content of telephones in the total asset portfolio, 0.22% content of
EPABX in the total asset portfolio, 2.95% content of air conditioners in the
total asset portfolio and 0.72% content of other fixed assets in the total asset
portfolio.
2012: The company has 2.76% content of computer in the total asset
portfolio, 8.98% content of furniture & fixtures in the total asset portfolio,
6.86 % content of office equipment in the total asset portfolio.
2013: The company has 3.35% content of computer in the total asset
portfolio, 7.93% content of office equipment in the total asset portfolio,
3.45% content of air conditioner in the total asset portfolio and 4.21%
content of other fixed assets.
49
50
6.4. CASH FLOW STATEMENT OF PROVIBTECH INDIA PVT.LTD.
(2009-13)
Particulars 2009 2010 2011 2012 2013Cash Flows from Operating
Activities
Cash receipts from customers
Cash paid to suppliers and
employees
795211.00
430512.70
2856402.34
1812437.22
6025987.70
4872236.00
8401163.42
6174743.72
8093258.00
7087929.00
Total
Less: Income Tax Paid
1225723.70
-
4668839.50
34862.00
10898223.70
59130.00
14575906.40
130335.00
15181187.00
62690.00
Net Cash from Operating
Activities
1225723.70 4633977.50 10839093.70 14445571.40 15118497.00
Cash Flows from Investment
Activities
Interest Received
Less: Purchase of Fixed
Assets
-
909864.50
25372.38 65381.65 28880.65
-
43944.00
-
Net Cash from Investment
Activities
909864.50 25372.38 65381.65 28880.65 43944.00
Cash Flows from Financing
Activities:
Long term loan - - - - 855500.00
Net Cash from Investment
Activities
- - - - 855500.00
Net increase in cash and cash
equivalents 1234367.20 (217792.20) (288707.50) 573646.50 847687.00
51
Cash and Cash equivalents at
the beginning of a period
Cash and Cash equivalents at
the end of a period
512330.00
722037.20
722037.20
504245.00
504245.00
215537.50
215537.50
789184.00
789184.00
1636871.00
Interpretation 9:
52
In 2009, cash flows of ProvibTech India are from- operating activities and
investment activities. Where the former is more than the latter. And Net
Increase in cash is maximum in this year.
In 2010, cash flows of ProvibTech India are from- operating activities and
investment activities. Where the former is more than the latter. And Net
Increase in cash is minimum in this year.
In 2011, cash flows of ProvibTech India are from- operating activities and
investment activities. Where the former is more than the latter. And there is
a pinch increase in the cash and cash quivalents.
In 2012, cash flows of ProvibTech India are from- operating activities and
investment activities. Where the former is maximum and the latter is still
very less than the former. And there is a pinch more increase in the cash and
cash equivalents as compared to that of previous year.
In 2013, cash flows of ProvibTech India are from- operating activities and
investment activities. This year the former has also declined. However the
company has undertaken financing activity in the form of long term loan.
Also net increase in cash and cash equivalents is much more than that of
previous year.
53
6.5. RATIO ANALYSIS
1) Liquidity Ratios: It refers to the ability of the firm to meet its current
obligations as and when they become due.
Current Ratio: It establishes the relationship between the current assets and
the current liabilities.
Current Ratio= Current Assets
Current Liabilities
54
Interpretation 10:
Year Current Assets Current
Liabilities
Current
Ratio
2009 1066886.96 1782218.91 0.6:1
2010 1271096.34 2641881.91 0.48:1
2011 2236310.35 3331236.48 0.67:1
2012 1238846.10 5098292.00 0.96:1
2013 4427384.00 3751470.00 1.18:0
55
The above table shows the current ratio which has declined from 2009
onwards keeping in view the ideal current ratio. However in 2013, the
same has raised to 1.18:1 which is more than the ideal current ratio.
Inference:
The ideal current ratio is 1:1. This means that the content of current
assets should be same as the content of current liabilities of the
company.
Although from 2009-2012, the actual current ratio is not meeting the
ideal current ratio and it shows that the content of company’s asset is
less than the content of its current liabilities.
But In 2013, the current ratio is 1.18:1. This is a favorable situation
for the company as it shows that its current assets are more as
compared to the current liabilities.
Quick Ratio/Acid Test Ratio/Liquid Ratio : It establishes the relationship
between liquid assets and current liabilities.
Quick Ratio= Quick Assets
Current Liabilities Quick Assets= Current Assets-Prepaid Expenses-Closing Stock
Year Current
Assets
Prepaid
Expenses
Closing
Stock
Quick
Assets
Current
Liabilities
Quick
Ratio
2009 1066886.96 125000.00 - 1782218.91 1782218.91 0.5:1
56
2010 1271096.34 - - 2641881.91 2641881.91 0.48:1
2011 2236310.35 405050.00 852663.00 3331236.48 3331236.48 0.2:1
2012 1238846.10 34158.76 150477.00 5098292.00 5098292.00 0.2:1
2013 4427384.00 12626.00 554261.00 3751470.00 3751470.00 1.02:1
Interpretation 11:
The above table shows the quick ratio which has declined from 2009
onwards. However in 2013, the same has raised to 1.02:1 which is
more than the ideal quick ratio.
Inference:
57
The ideal current ratio is 1:1. This means that the content of quick
assets should be same as the content of current liabilities of the
company.
Although from 2009-2012, the actual quick ratio is not meeting the
ideal current ratio and it shows that the content of company’s asset is
less than the content of its current liabilities.
But In 2013, the current ratio is 1.02:1. This is a favorable situation
for the company as it shows that its quick assets are more as compared
to the current liabilities
2) Activity Ratios/Turnover Ratios/Asset Utilisation Ratios/Efficiency
Ratios:
It is concerned with measuring the efficiency with which the asset is
managed.
It is a measure of movement and reflects how frequently an asset has moved
or turned over during the period.
Stock Turnover Ratio (STR) : It establishes the relationship between the
cost of goods sold during a given period and the average inventory held
during the year by the firm.
58
STR= Cost of Goods Sold (COGS)
Average Inventory
COGS= Net Sales-Gross Profit
Average Inventory= Opening Stock + Closing Stock2
Year Net Sales Gross
Profit
COGS Opening
Stock
Closing
Stock
Average
Inventory
STR
(times)2009 795211.00 10136.55 785074.45 - - - -
2010 2856402.34 124439.38 2731962.96 - - - -
2011 6025987.71 166273.44 5859714.27 - 852663.00 426331.50 13.7
2012 8401163.42 356687.96 8044475.46 852663.00 150477.00 501570.00 16.03
2013 8093258.00 (178032.00) 8271290.00 150477.00 554261.00 352369.00 23.47
59
Interpretation 12:
The above table shows the Stock Turnover Ratio (STR).
In 2009 and 2010 respectively, there are no opening stock and closing
stock of the company. Hence there is no STR.
The STR of the company has increased from 2011 onwards.
Inference:
As such there is no ideal STR. The higher is this ratio, the better it is.
60
Although there is no STR in 2009 and 2010 respectively, but from
2011 onwards the firm has observed an increased STR which is a
positive sign for the company indicating quick sales of its products.
Debtor Turnover Ratio (DTR) : It establishes the relationship between net
credit sales and the average debtors
DTR= Total Sales
Accounts Recievables (Closing)
Average Collection Period (ACP) (in months) = 12
61
DTR
Year Total
Sales
Accounts
Recievables
DTR
(times)
ACP
(approx)2009 892760.00 97549.00 9.15 1.3
2010 3418299.00 561897.00 6.08 1.9
2011 6706168.00 680181.00 9.8 1.2
2012 8401163.42 - - -
2013 8093258.00 - - -
62
Interpretation 13:
The above table shows the Debtor’s Turnover Ratio (DTR).
In 2009, DTR is 9.15 times but in 2010, it fell to 6.08 times.
In 2011, DTR is 9.8 times which is more than that of 2010 (6.08
times) but less than that of 2009.
In 2012 and 2013 respectively, there are no debtors. Hence there is no
DTR.
The approx average collection period in 2009 is approx. 1.3 months.
63
The approx average collection period in 2010 is approx. 1.9 months.
The approx average collection period in 2011 is approx. 1.2 months.
Inference:
As such there is no ideal DTR. The higher is this ratio, the better it is.
Although there is no DTR in 2009 and 2010 respectively, but from
2011 onwards the firm has observed an increased DTR which is a
positive sign for the company indicating highly liquid accounts
recievables.
The Average Collection Period (ACP) should be as low as possible.
ProvibTech India’s ideal ACP is less than 2 months in the financial
years.
And the chart, clearly indicates that the company’s actual ACPs is less
than 2 months i.e. these are meeting with the ideal ACP. Hence, a
positive situation for the company.
64
Creditor’s Turnover Ratio (CTR): It establishes the relationship between
net credit purchases and the average trade creditors.
CTR= Net Credit Sales
Average Accounts Payable
Average Accounts Payable= Trade Creditors + Bills Payable.
Average Payment Period (APP) (in days) = 12
CTR
65
Year Net
Credit
Sales
Trade
Creditors
Bills
Payable
CTR
(times)
APP
(approx)
2009 97549.00 380903.00 112281.00 0.19 63.1
2010 561897.00 564117.00 47252.00 0.91 13.1
2011 680181.00 696374.00 49136.00 0.91 13.1
2012 - 2705794.00 3757704.00 - -
2013 - - 62690.00 - -
66
Interpretation 14:
The above table shows the Creditor’s Turnover Ratio (CTR).
In 2009, CTR is lowest but in 2010 and 2011, it is maximum and
constant.
In 2012 and 2013 respectively, there are no credit sales. However in
both the years bills payable exists. Whereas trade creditors are there
in the former and not in the latter.
67
The approx average payment period in 2009 is approx. 1.19 days.
The approx average payment period in 2010 is approx. 1.91 days.
The approx average payment period in 2011 is approx. 1.91 days.
Inference:
The ideal CTR is neither too low nor too high.
Although there is no CTR in 2012 and 2013 respectively, but from
2009 onwards the firm has observed an increased CTR which is a
positive sign for the company indicating the credit worthiness of the
company.
The Average Collection Period (ACP) should be as shorter as
possible. ProvibTech India’s ideal ACP is 3 days and in the chart it
clearly indicates that ACP is less than 3 days.
It shows that the company is meeting its ideal CTP/ACP.
Fixed Assets Ratio (FAR): It indicates the efficiency of the fixed assets
towards contribution to sales.
FAR= Net Sales
Net Fixed Assets
Net Fixed Assets= Gross Fixed Assets – Depreciation
68
Interpretation 15:
Year Net Sales Fixed
Assets
Depreciation Net
Fixed
Assets
FAR
(times)
2009 795211.00 909864.50 26866.10 641195.40 1.24
2010 2856402.34 1044401.51 420441.11 623960.40 4.55
2011 6025987.71 680181.11 211389.50 5127440.40 8.85
2012 8401163.42 1129090.50 688351.50 440739.00 19.06
2013 8093258.00 578129.00 110124.00 477005.00 16.9
69
The above table shows the Fixed Asset Turnover Ratio (FATR).
In 2009, FATR is lowest but in 2010 onwards, it started increase with
every efficient contribution to sales of the company.
In 2012, the company has witnessed the maximum FATR of 19.06
times.
In this year (2013), this has fallen down to 16.9 times.
Inference:
As such there is no ideal FATR. The higher is this ratio, the better it
is.
ProvibTech India’s FATR has increased in every financial year.
However in 2013, the same has fallen down as compared to that of the
previous year. But still it is satisfactory.
The company is meeting its ideal FATR and this indicates the higher
efficiency in the utilization of the fixed assets.
70
3) Solvency Ratios: These ratios are used to assess the long term solvency of
the business.
Proprietory Ratio: It establishes the relationship between shareholder’s fund
and total assets of business.
Proprietory Ratio= Shareholders’ Fund (share capital + reserves)
Total AssetsYear Share
Capital
Reserves Shareholders’
Fund
Total
Assets
Proprietory
Ratio
(times)2009 100000.00 - 100000.00 1708082 0.050
2010 100000.00 - 100000.00 1805056 0.055
2011 100000.00 - 100000.00 2749054 0.036
2012 100000.00 186584.27 286584.27 1679585 0.17
2013 100000.00 421297.00 521297.00 4904389 0.10
71
Interpretation 16:
The above table shows the Proprietory Ratio of ProvibTech India.
72
In 2011, Proprietory Ratio is lowest but in 2013, it started increasing
with increase in the fixed assets of the company.
In 2012, the company has witnessed the maximum Proprietory Ratio
of 0.17 times.
In this year (2013), this has fallen down to 0.10 times.
Inference:
As such there is no ideal Proprietory Ratio. The higher is this ratio,
the better it is.
ProvibTech India’s Proprietory Ratio has not increased in a stable
manner. This shows that the creditors can be suspicious about the
repayment of their debt which indicates greater risk to the creditors.
As seen in the chart, all the Proprietory Ratios of the company are
below 50%. This is quite alarming to the creditors.
73
7. FINDINGS AND CONCLUSIONS OF THE STUDY
FINDINGS :
ProvibTech India’s cash flow from operating activities i.e. revenue from
sales has increased in 2013.
There are certain heads of the company which are negatively influenced viz.
EAT, Gross Profit and Net Profit due to increased operating expenditure and
it is more than the total revenue of the company.
74
The company has sufficient and infact a good composition of current assets
in its assets portfolio. This shows that the liquidity position of the company
is strong.
In This year (2013), the company has incurred a long term liability in the
form of an unsecured loan.
The liquidity ratios of the company are showing its favourable liquidity
position.
The activity/turnover ratios of the company are showing positive signs.
In this year (2013), the company has no debtors because of which its DTR
could not be ascertained.
In this year (2013), the company has no creditors because of which its CTR
could not be ascertained.
Proprietory Ratios of ProvibTech India over the years may indicate a quite
alarming for its future creditors.
75
CONCLUSIONS:
Financial analysis is the process of selection, relation and evaluation. The
focus of financial analysis is on key figure in the financial statements and the
significant relationship that exist between them.
The analysis of financial statements is a process of evaluating the
relationship between component part of financial statement to obtain a
better understanding of the firm’s position and performance.
76
This financial analysis is done using the tools like ratio analysis and
common size balance sheet. These tools show us the company position in
terms of liquidity, profitability, solvency, bankruptcy and stability.
By using these tools we came to a conclusion that the firm should improve
its sales by improving its marketing technique like advertisement in
newspaper, television, radio etc. so that it can gain goodwill and publicity.
The company should produce products that competes the competitors and
make available to public at a reasonable rate and time. Even it should use the
present new technology and improve the consumption of resource
efficiently.
Since it’s a Private Ltd. firm and cannot generate additional funds from
public issue of shares, it may go for long term debt/loan from banks to fulfill
its funding requirements.
In the changing economy scenario the financial performance has to be better.
Even though the firm’s profitability, liquidity and other positions are
satisfactory it can even reach higher position or increase its profit if the
above said suggestion are considered.
77
8. RECOMMENDATIONS
The company may undertake measures to control its operating expenditure
since from the last few financial years it has incurred more operating
expenditure than its total revenue which has resulted into negative profits.
Since ProvibTech is a Pvt. Ltd. Company so it may raise additional funds
from the bank to undertake marketing initiatives for its brand promotion. It
may help it increasing its sales.
The creditors may find become suspicious about the unsecured loan taken up
by the company in 2013 only because the company’s proprietory ratio is not
78
satisfactory. So, it may keep some amount as reserves to meet unforeseen
circumstances in the future.
In 2011, the company’s DTR has fallen down as compared to its previous
financial years. Consequently, In 2012 and 2013, there are no debtors of the
company because of which its DTR is nil. Ideally, DTR should be as high as
possible. But low or no debtors indicates that the company has no accounts
recievables in its current asset portfolio. So the company may decide to
change this situation and may opt for liberal credit policy but it should
neither be too liberal nor too restrictive.
In the past financial year as well as in this current year (2013), there are no
trade creditors of the company because of which its CTR is nil. It indicates
that the company has no short term creditors.
Low or no trade creditors seems as a good indicator that the company is
operating with good liquidity, provided that its liquid assets are sufficient
enough to do so.
In 2011, the CTR of the company is high as compared to that in the previous
year. However the average credit period allowed by its suppliers is same as
it was in the previous year. So the company may change this situation and its
CTR should neither be too low or too high.