Project Analysis of Financial Statement (2)
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Transcript of 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
!A
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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
S"0ce: Sec"n!ay Data
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(
$verage debt collection period G
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A6LE - ;/B De+t C"llecti"n Pei"!
4In lacs)
Yea De+t"s Ce!it Sales De+t C"llecti"n
Pei"!
&AA;A days
&AA>=? !>> days
&AA? days
S"0ce: Sec"n!ay Data
Inte(etati"n
1ebt 7ollection period ratio in the year A;A days. In the next year A>> days. In the next
year &AA? days.
From the above it is inferred that the debt collection period shows a fluting
trend, which indicates -uick recovery of money from debtors and also indirectly
shows that the management in highly efficient in collecting debts promptly.
7B$(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
S"0ce: Sec"n!ay Data
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
S"0ces: Sec"n!ay Data
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 &.!;
S"0ces: Sec"n!ay Data
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?&.:
S"0ce: Sec"n!ay Data
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
S"0ce: Sec"n!ay Data
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
S"0ce: Sec"n!ay Data
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
S"0ces: Sec"n!ay Data
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
C"m(aati#e Statement &" t%e yea
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 ?.=&
S"0ces: Sec"n!ay Data
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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C"m(aati#e Statement &" t%e yea
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
S"0ces: Sec"n!ay Data
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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C"m(aati#e Statement &" t%e yea
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.